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Friday, 22 February, 2002, 21:03 GMT
PM pledges 'reform and investment'
Tony Blair on TV
Mr Blair defended private sector involvement
Tony Blair has given his strongest hint yet that taxes will be raised to fund improvements in public services.

In a speech to the Scottish Labour conference in Perth, the prime minister promised an "invest and reform" programme for public services.

He cited work with the private sector as an example of this reform and said Labour "could not afford to wait" in key areas like the NHS.

Three themes emerged during Mr Blair's speech at the Dewar's Centre - Labour's "social democratic vision", public services and "the world stage".

It's not difficult to work out why other systems in Europe are better - they spend more and have done for years

Tony Blair
After a tense morning session, in which trade union leaders expressed grave doubts about the party's approach to public services, the prime minister denied claims that Labour was giving out "mixed messages".

He said the old consensus over the NHS had been replaced by a debate over whether to guarantee free universal care or develop a "US-style pay as you go".

"I'm in no doubt that the basic principle is as right for today as it was for the 1940s," he said.

Anti-terrorism effort

"The NHS is not wrong in principle. It is right and I call on this party and the millions of decent people who believe in it to fight for it.

"On any basis, we remain a relatively low-taxed economy. But there is a price to be paid for under-investment and we are paying it now.

"It's not difficult to work out why other systems in Europe are better - they spend more and have done for years."

Tony Blair and Jack McConnell
Mr McConnell was backed by the PM
Mr Blair did not state that he was in favour of raising taxes but his backing for the "basic principle" of the NHS while calling for more resources is being widely interpreted as a hint of tax rises in the approaching Budget.

He also spent a considerable part of the speech underlining the importance of the global effort to stamp out terrorism.

Describing "the world stage" as the third challenge facing his government and party, Mr Blair accused political opponents of wanting to "retreat into isolationism".

He said that trying to bring peace to the Middle East was of utmost importance and said this would remain a priority.

Elsewhere, he thanked the party faithful for their help in securing an historic second terms for the party and paid tribute to the "great dignity" of Scotland's former First Minister Henry McLeish.

He also backed Jack McConnell as a "fine successor" who had already shown that "he has what it takes to be an outstanding first minister".

The BBC's John Pienaar
"Mr Blair is driving the argument for reform"
Scottish political editor Brian Taylor reports
"The unions are ideologically opposed to public private partnerships"
General Secretary of the Scottish TUC Bill Spears
"Reform in itself it not necessarily good"
See also:

22 Feb 02 | Scotland
Labour facing defeat on policy plans
22 Feb 02 | Scotland
Liddell resumes 'nat-bashing' role
22 Feb 02 | Scotland
Blair skates on thin ice
22 Feb 02 | Scotland
Elections loom for Scottish Labour
21 Feb 02 | Scotland
Scots back tax for health service
20 Feb 02 | Health
Free care for elderly tops poll
07 Feb 02 | Scotland
Bell tolls for Scottish MPs' seats
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