Labour to end link with state socialism

New Clause IV reveals conversion to private sector

The Labour Party national executive will today assert its commitment to a competitive and thriving private sector in a new Clause IV of its constitution, marking a decisive conversion to a market economy.

The executive will be formally asked to agree the final break with state socialism embodied in the 77-year-old Clause IV of the party's constitution and to replace it with a new declaration of aims and values committed to the creation, as well as to the redistribution, of wealth.

The text, agreed by Tony Blair, the Labour leader, and his deputy John Prescott at Mr Blair's London home last night, will make no mention of "full employment", the target sought by some prominent union leaders and others on the party's left wing.

Instead, its wording will define the task of a dynamic market economy as the creation of wealth needed by the nation, and provision of opportunity for all to work and fulfil his or her potential. Labour leaders are confident that the new phraseology will satisfy most party members of its commitment to what Gordon Brown, the shadow Chancellor, yesterday called a "full employment society".

Senior Labour sources refused to divulge details of the text last night. But the new clause is understood to recommit the party to redistribution of wealth, power and opportunity into the "hands of the many and not the few".

It will assert a continuing role of "public ownership", in a passage believed to make clear not only that it will be the task of a future Labour government to deliver high-quality public services but also to ensure that where concerns are vital to the public interest they should be either in public ownership or wholly accountable to the public.

The text is expected to make clear that rights will be matched by individual responsibilities in a socially just society in which co-operation will achieve what individuals alone cannot. Mr Brown, in a speech to the Scottish Labour conference in Inverness yesterday, went out of his way to say that the enduring "socialist values" of "the power of all of us to promote the good of each" were shared by the majority of the British people.

The new text is the boldest attempt undertaken by the post-war Labour Party to embrace a dynamic market economy and to draw a line between left-of-centre values of "solidarity" and the individualism of new-right economic liberals, most graphically embodied by 13 years of Thatcherism.

David Blunkett, the shadow education spokesman, confirmed on BBC TV's Breakfast with Frost yesterday that he did not expect the text to contain the words "full employment". He added that it would be a general statement of aims and values and not a list of detailed policies.

Mr Brown said in his speech: "It's about casting out poverty; banishing discrimination; conquering injustice; an equitable distribution of wealth, power and opportunity. It's about rewards and income in the hands of the many and not just the few; public services owned and accountable to the people of our community; an economy - yes public and private - run in the interests of all."

A Labour government would, he went on, create a society "built not on the shifting sands of political expediency but on the solid rock of social justice [with] everyone, no matter their birth or background, able to fulfil themselves".

He, too, refused to commit Labour to a full employment policy. The party would instead "use every instrument of government" to end mass unemployment in pursuit of "the goal of a full employment society".

Left-wing traditionalists at the conference, who lost last Friday's Clause IV vote, dismissed Mr Brown's statement as "a meaningless fudge". Mary Picken, head of the pro-public ownership Campaign for Socialism, said: "Tony Blair says we should say what we mean and mean what we say, but this is hopelessly unclear. Gordon Brown talks of `public services owned and accountable to the people'. But what is a public service? Is it just the NHS, or does it also include railways and the public utilities?

"The beauty of Clause IV is that it expressed all the values that Gordon Brown has outlined while including the mechanism - public ownership - by which they could be achieved. He has restated the aims without saying how we can fulfil them."