Chancellor Gordon Brown, Tony Blair’s most likely successor, pledged yesterday to press on with free-market reforms, risking the wrath of those who want a shift left. Parts of the Labour Party – in power since 1997 — had hoped Brown would mark a return to more traditional, left-wing values as leader but, instead, he will vow to deepen reforms to schools, hospitals and other public services.

“When commentators tell you the next election will be old Labour versus new Conservatives, tell them the truth. The next election must and will be New Labour renewed against a Conservative Party today incapable of renewal,” Brown said in a speech to Labour’s annual conference. His repeated reference to “New Labour” – a tag favoured by Blair but often eschewed by Brown – signals a truce between the two most powerful men in British politics and comes as Blair and other ministers smooth the way for Brown’s succession.

The apparent peace between two men whose clashes over the party’s direction and the succession are well documented opens the way for a united attack on leftists who oppose free-market reforms and private sector involvement in public services. Blair, despite being dogged by the divisive Iraq war, won a third straight election for Labour in May, albeit with a reduced majority. He has said he will not run for office again.

Commentators do not expect Blair to go until 2008 but a number of ministers in past days have broken with tradition and openly pointed to Brown as his obvious successor. Chancellor Brown, however, could be handicapped if the economy falters. Brown is widely credited with deft management of the world’s fourth biggest economy but he was forced to signal on Friday that economic growth this year would likely fall short of his 3.0 to 3.5 percent forecast due mainly to high oil prices. His reputation for economic prudence is also on the line with government borrowing rising and economists saying he will be forced to put up taxes. In his speech, Brown will set out his vision for a “home-owning, share-owning, asset-owning, wealth-owning democracy”, with plans to boost the number of citizens who own their own homes, shares and assets. But use of Blairite rhetoric on reform looks set to enrage union members and party traditionalists who have always seen Brown as a man far more wedded to Labour values than Blair. Unions – once the party’s backbone but now a thorn in Blair’s side – were already planning to give Blair a bruising over the use of private firms in health and education. “If Gordon Brown follows Blair’s modernisation agenda, he will lead the party to defeat at the next election,” said Derek Simpson, general secretary of the union Amicus. But Brown appears undeterred by union opposition.

<B>Katherine BALDWIN</B>