Blair embraces Morgan and spirit of Keir Hardie

Tony Blair plunged into the oldest of Old Labour territory yesterday, and then invoked the spirit of Keir Hardie to insist there was no distinction between the party's heartland and middle Britain.

The resonances of his visit to South Wales, for many the very birthplace of the Labour party, was all the greater because he was welcomed and accompanied by Rhodri Morgan, the man he energetically - and, in the end, vainly - fought to prevent from becoming the Welsh Labour leader.

Visiting Merthyr Tydfil, where Keir Hardy became MP in 1900 after Labour's formation, the Prime Minister paid homage to the party's ancestors by honouring the Merthyr riots in 1831 and recalling that the Red Flag had first been raised at the town's steelworks "in the struggle for freedom and justice". This, and a reference to Nye Bevan's formation of the NHS, was probably the minimum needed to satisfy Labour activists shocked by the loss to Plaid Cymru of the neighbouring seats of Islwyn, Rhondda and Llanelli in last year's assembly election.

Otherwise, Mr Blair had an uncompromisingly one-nation and New Labour message. "Don't let anyone divide this country up," he said. "We all want the same things. We all have the same hopes and fears. Ask what people are concerned about in the so-called heartlands and they will say: jobs, schools, hospitals, pensions, crime. Ask what people are concerned about in so-called middle Britain and they will say: jobs, schools, hospitals, pensions, crime." He quoted Keir Hardie as having argued at the time of Labour's formation that its purpose was to "blend the classes into one family".

The apparently warm rapprochement between Mr Morgan and Mr Blair had been skilfully choreographed in advance. The two men had, Mr Morgan revealed, enjoyed a comradely six-pack of John Smiths Bitter at Downing Street when Mr Morgan finally replaced the Blairite ultra-loyalist Alun Michael as First Secretary in Wales earlier this year. Mr Blair has let it be known that he now accepts that it was a mistake to deploy so much political capital in seeking to block Mr Morgan's candidacy and Downing Street was insistent that the Prime Minister "likes Mr Morgan and thinks he is doing an excellent job." An aide said that the two first ministers had chatted amiably on their car journey to Merthyr - including a lengthy discussion on the derivation of the word Taffy as they crossed the River Taff.

Mr Morgan will take part with Mr Blair, Donald Dewar, the Scottish First Minister and Peter Mandelson, the Secretary of State for Northern Ireland, in the first of a series of UK-wide discussions on how to match reform of the NHS to the £2bn newly allocated to it for the current financial year.

Mr Morgan, who was once Mr Blair's deputy on the shadow Energy team in the mid-1980s, sounded a slightly different note on the heartland's question when he declared as he awaited Mr Blair's arrival: "There was a wobble in 1999 in both the Assembly and European elections. To the extent that Tony Blair is emphasising the health service and coming to what is, in effect, Labour's birthplace, he is coming home to the real genuine Welsh labour heartland." But Mr Morgan went back on-message when he said that while Labour was eager to regain the heartland valley seats which it had lost to the Nationalists, it did not want to lose those seats it had newly taken from the Tories in the 1997 election, such as Vale of Glamorgan, Clwyd West and Cardiff North, which his own wife, Julie, represents. Despite their new-found camaraderie, however, Mr Blair drew the line at lying prone with Mr Morgan on a reclining airline seat unveiled by Britax when he opened the company's new plant at Cwmbran. Mr Blair initially tantalised Britax executives by declaring to Mr Morgan: "Look Rhodri, we could have you on one side and me on the other." But, in the event, Mr Blair declined to pose for a picture on the seat, saying that there would be "a number of constructions put on it, and none of them would be complimentary."

* Mr Blair launched a new scheme to help jobless over-50s yesterday with a pledge to restore dignity topeople condemned to the "scrap heap" by employers.

New Deal 50 Plus aims to get 45,000 off benefit by providing personal advisors and training worth £750 per person. The Prime Minister said that many people who have not worked for years would now have the chance to find work.

More than 2 million people over 50 will also gain from a guaranteed income of £170 a week, or £9,000 a year, for those taking full-time employment.

The £270m programme will ensure that a tax-free employment credit worth £60 a week will be paid for up to 12 months on top of an individual's earnings.