Listen to prayers for peace, Blair tells North's leaders

"No retreat from the road to the future" was Mr Tony Blair's uncompromising message for Labour, Britain and Northern Ireland …

"No retreat from the road to the future" was Mr Tony Blair's uncompromising message for Labour, Britain and Northern Ireland yesterday, in a conference speech dominated by the challenges ahead and the duty of government to take the tough decisions.

Speaking ahead of today's series of bilateral meetings on the next steps in the political process, the Prime Minister praised Northern Ireland leaders who had had to "close their ears to the prejudices of their own parties and to listen to the prayers of the people for peace".

And while he rallied his party with the vision of a "third way" rooted in family, the sense of community, and internationalism, he told conference bluntly there would be no backing down on tough new rules on public spending and borrowing, or on the independence of the Bank of England. Labour, he said, had "an iron Chancellor" and "an iron commitment". And to Tories and others who urged him to scrap the bank's independence and devalue the pound he said: "We've sacrificed long-term strength far too often playing that game."

The Prime Minister used his conference speech to announce "targeted policing" initiatives initially in 20 "crime hotspots", and, courtesy of changes in the law on how lottery money can be spent, an extra £400 million for specialist health, education and environment projects.

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Mr Blair also confirmed that next month would see publication of the first ever government paper on the family, offering ideas to give practical support to parents and children; help in dealing with poverty; balancing work and family; action on domestic violence, teenage pregnancies; and supporting marriage.

He challenged the media not to use this "as an excuse to dredge through the private lives" of public figures: "Accept that whatever our individual weaknesses, our collective strength lies in making the institution of the family work for the good of Britain."

He used a key passage of his speech to proclaim the end of "the crude individualism" of the 1980s. "It's up to me" he said was being replaced by "it's up to us . . . The spirit of the times is community."

And Mr Blair won some of his strongest applause with a reference to the continuing controversy over the case of Stephen Lawrence. "Deny opportunity, leave injustice or discrimination unchecked and we lay waste the genius of a nation.

"When a young black student, filled with talent, is murdered by racist thugs, and Stephen Lawrence becomes a household name not because of the trial into his murder, but because of an inquiry into why his murderers are walking free, it isn't just wrong, it weakens the very bonds of decency and respect we need to make our country strong."

Attacking the Scottish National Party, Mr Blair said it looked at England as the Tories did to Europe. "Enough of this narrow chauvinism masquerading as idealism," he declared, denouncing separatists and advocates of the status quo alike as the enemies of the Union.

And he rejected the "right-wing myth" of choosing between the United States and Europe. "Stronger in Europe means stronger with the US." Repeating his desire to see the euro succeed, and for British business to prepare for it, Mr Blair cast his approach as "decentralise where possible, integrate where necessary".

That sentiment, he said, would win support throughout Europe, and Britain could play a leading role in shaping Europe's future.

But the dominant and recurring theme of Mr Blair's speech was of the challenges faced by British businessmen and by New Labour in key policy areas like education and welfare reform.

With teaching unions already threatening strike action over any attempt to introduce performance-related pay, Mr Blair said he had been to many schools since becoming Labour leader. "The minute you meet the head you know if it's a good school," he said. "And if a head teacher rises to the challenge of turning round a failing school, why shouldn't they earn £60,000 or £70,000 a year?" To applause he continued: "Equally if they cannot run the school properly, they shouldn't be running the school at all."

Mr Blair said: "Don't tell us we're unprincipled and unjust. For there is no greater injustice to inflict on a child than a poor education."

On the welfare state, Mr Blair said: "It is because I believe in its principles, purpose, value, that I know it needs change. So when we bring forward proposals for change in our welfare reform bill don't tell us it is a betrayal of the welfare state when in truth it is the welfare state's salvation."