I’m delighted to be here with Alistair today.

We will talk about something at the very heart of this Government’s ambitions: something I’ve fought for throughout my political career and still believe in passionately today.

That is to combat poverty and social exclusion, and create a society of security and opportunity for all.

Where social justice prevails. Where individuals, families and even whole communities are not cut adrift from the rest.

We made this task a priority for government. That is why the Prime Minister set up the Social Exclusion Unit in 1997.

And before I continue, I would like to pay a tribute to Moira Wallace, the Unit’s Director, and all her staff, for their excellent and groundbreaking work. Thank you Moira.

Four years on we have achieved a dramatic change in how Government works, resulting in real improvement to the lives of real people.

After the last election Tony asked me to oversee work in this area by taking personal responsibility for the work of the Unit to ensure our priorities are reflected across Government departments and beyond.

I base my beliefs on Labour’s traditional values.

More than fifty years ago, democratic socialists aspired to a fair society that recognised the worth of each individual. That means having the opportunity to realise their potential to the full – for each individual to have the chance to bridge the gap between what they are and what they could become.

Underpinning this principle was a simple commitment: to minimum standards for everyone through universal provision.

And we’ve seen some success in combating Beveridge’s five evils of unemployment, want, disease, squalor, and ignorance. Millions have been moved from poverty to better circumstances. The majority no longer live in slums or substandard housing. Mass unemployment and widespread chronic illness are hopefully things of the past. People have some security in old age and support when they are sick or unemployed.

But fifty years on, the economy looks very different. Globalisation, advances in technology and the decline of traditional industries have significantly changed the labour market. Society too has changed – family changes, such as the rise in single parent households, have led to growing number of children facing poverty, and communities have become more polarised and fragmented.

Low economic growth and high inflation led to massive disinvestment in social capital, damaging the economic infrastructure and undermining key services – social services, education, and health. This led to poor and failing services and a demand for huge financial re-investment. No better example of the consequences of the failure to provide long term capital investment in public services can be seen than the problems now facing Britain’s railway industry.

In 1997, we inherited record levels of post-war poverty and deprivation. Britain was suffering from appalling rates of social exclusion.

Simply uncovering the true extent of poverty and deprivation was a crucial first step. The facts are sobering!

• By the mid-1990s, mass unemployment with a shocking 1 in 5 children living in families where no-one worked;

• we had more adults unable to read and write than anywhere in Europe;

• incomes had risen, but the gap between the richest and poorest had grown;

• we had by far the highest rate of teenage pregnancies in Europe;

• and every night, nearly 2000 people were sleeping rough on our streets.

It’s a terrible indictment that the gulf between the haves and have-nots had widened so dramatically.

Behind these national statistics are lives and communities, blighted by deprivation. But in some places, social exclusion is even more acute and more entrenched. It’s too often the case that services are worst where they are needed most.

In my own constituency, take the Preston Road area, one of this Government’s New Deal for Communities areas.

In 1999, it faced acute social problems that were significantly worse than both the city of Hull as a whole, and the national average.

For example:

• unemployment was 5% across England, 11% in Hull. Preston Road? 19% - nearly four times the national average and twice the Hull average;

• England 48% of pupils achieved 5 good GCSEs, 23% in Hull. Preston Road? 15%. And similar differences for reading and writing standards, free school meals and truancy;

• England 12% of housing had no central heating, Hull 29%. Preston Road? 40%. And tenancy in public and social housing in England was 23%, in Hull was 37% and in Preston Road was 87%;

• England 19% of households received housing benefit, 32% in Hull. Preston Road? 81%.

All these factors and more fed the cycle of deprivation that scarred the lives of Preston Road people.

As one resident told me: "I’ve lived here all my life. I love living here. But not like this."

And Preston Road isn’t unique. Across the land are neighbourhoods just like it – where public services have let people down, badly. Indeed 7 million people in England live in the poorest 10% of wards and 40% of the population live in the 88 most deprived local authorities to which the National Strategy for Neighbourhood Renewal applies.

It’s unacceptable that the poorest communities are so often served by the worst schools. That they suffer the highest levels of unemployment. That public transport serves them worst. That GPs in communities where health is poorest often have the longest lists. That burglary rates are highest in the areas where people have least.

This cruel shambles was no accident.

It happened because economic and social policies created a downward spiral of poverty and social exclusion. Indeed the characteristics of economic growth with ‘trickle down’ policies and a ‘stop-go’ economy failed to reduce poverty and by creating longer periods of unemployment and lower wages fed the cycle of deprivation and poverty.

But we know this is just plain wrong. Everybody wants and deserves the same opportunities: a good home, a good job, a good education. Without those chances, anyone would be knocked off course.

And we know how hard it can be to get back on track.

We know people became trapped – by lack of opportunity. Trapped – by grinding poverty. Trapped – in neighbourhoods where services passed them by. A culture of worklessness prevailed. Horizons were narrow and opportunities limited. There was little hope for a better future.

So what has changed?

We now have a Government that is creating that hope; we are building and sustaining that better future. Traditional values in a modern setting. I welcome the acknowledgement in your report "Responsibility for All" that the Government has made the fight against poverty and social exclusion a priority from the start. I note the report’s criticisms.

This Government is meeting that challenge today with a radical programme for poor and excluded people to help them lift themselves into the mainstream of society.

The crucial first step was for a stable economy, and reduced public borrowing. Without this commitment our programme would have fallen at the first hurdle. We had to create the right economic climate. Instead of wasting billions of pounds on debt interest payments and the costs of unemployment, we are now reinvesting in our public services and getting over 1 million people back to work.

We know that economic prosperity and social justice go hand in hand. They are two sides of the same coin.

Our solid economic policies have enabled us to adopt a rigorous and strategic approach to tackling social exclusion. It’s a dual approach – tackling both low incomes and failing services.

We are addressing poverty caused by low income, whether by wages or benefits. Our approach is neither old style means testing which stigmatises, nor paying the same benefits to everyone.

The National Minimum Wage and improved bargaining position of workers have benefited millions.

Our approach is both universal and progressive:

• universal because we aim to help everyone;

• and progressive because we aim to do more for those who need it most.

You will be aware that we set an ambitious target to halve child poverty by 2010. The huge improvements we have achieved is by a combination of tax, welfare benefits and other programmes to achieve this long term target.

Child Benefit raised by record amounts---26% in real terms for the first child since 1997.

We are integrating the tax and benefits system with our new tax credits. That means on top of child benefit, the new Children’s Tax Credit provides up to 520 pounds extra a year for the 5 million families who need it most.

And The Working Families Tax Credit is now making work pay for nearly 1.3 million families.

A lone parent earning £160 a week before the WFTC is now taking home £260 a week.

That, together with other measures has brought 200,000 more lone parents into work since 1997.

It’s the same for pensioners. Helping all with the basic state pension, but giving most to those who need most - tackling pensioner poverty through the new Minimum Income Guarantee of £100 a week for a single pensioner in 2003 whilst helping lower and middle income pensioners with the new pension credit to reward saving.

So our approach helps all and is progressive, because it gives most to those who need it most. As Gordon said at a Fabian Conference last January, this is what we mean by ‘progressive universalism.’

And can I say here that our hearts go out to Sarah and him.

I would like to record my admiration for his personal commitment, his skills and his humanity.

The reforms he has helped to shape, including the new tax credits system, are an essential part of our agenda to tackle social exclusion.

But as I said, fighting social exclusion requires that as well as raising people’s incomes we have to improve public services. This too requires an approach that is both universal and progressive.

Universal since we raise expenditure on public services for everybody –a total of £243 billion this year on core services -, and progressive as we channel much of the new money to improve public services in our poorest communities.

But because there are groups of people, and certain neighbourhoods, that have lost out on public services more than anyone else, we have to give more help to them.

For years, bad services have stored up social problems. Only when they are up to scratch for every single person in society can we claim success.

A year ago, the Social Exclusion Unit published the National Strategy for Neighbourhood Renewal. This is now being taken forward by the Neighbourhood Renewal Unit. It’s a long term strategy that aims to make postcode poverty a thing of the past.

The principle at the core of our neighbourhood renewal strategy – and indeed all of our programmes to tackle social exclusion - is to make mainstream services work properly for everyone.

We’re pumping in extra money to do this – some further £43 billion in total into public services over the next three years. My priority is to make sure it helps most those communities which face the lion’s share of the problems and failures of public services.

That is why departments are now being measured on where they are doing worst not on the average. Health, education, crime and housing are just some of the areas where we’ve introduced what we call floor targets – the minimum standards which every area in the country should reach. For deprived communities it means better schools, improved health care, safer streets and better housing.

Extra resources are important – but on their own they will never break the cycle of deprivation.

We have taken decisive steps to make Government work better in delivering its services.

We have galvanised our efforts across departments to address the connections between social problems – and tackle those issues that used to fall between the gaps.

This is because social exclusion is not about single, isolated issues but complex and interconnected social problems.

Why does someone sleep rough on the street? There is a complex set of factors at play. Not having a home is just one part of it. Drug and alcohol problems, mental health issues, family breakdown can all be factors too.

And take race. The problems of Oldham, Burnley and Bradford cannot simply be explained by a single issue. A whole host of complex problems in education, housing, unemployment and crime - as well as discrimination and racism – contributed to the disturbances last summer.

It’s the same in our most deprived neighbourhoods. You can’t blame deprivation on one single issue – be it housing, unemployment, education, health or crime. All these issues are linked in a complex way. They combine to create that spiral of decline.

This requires a different Government response. Not only putting social inclusion at the core of every department’s work, but also making them work better together. Make no mistake, the old mentality of thinking in departmental silos, of not going beyond departmental boundaries, has to change. And it is changing.

Take the example of our new Connexions Service which provides a personal adviser for every young person. One adviser provides a single point of access to a full range of services for young people: careers advice, health advice, help with education, even access to help with mental health or benefits, and much more.

Joined up Government is the aim. Connexions is an example of the reality, not only of how we are joining up Government, but also of how this Government is prepared to invest in the future to prevent new generations of socially excluded.

Most governments are notorious for their short-termism. That’s where this Government has broken new ground. All analysis shows that social exclusion can start early in life. We’re investing substantial resources in long term programmes that will prevent others growing up in social exclusion and poverty.

• The £1.4 billion Sure Start programme targets help to the under-fours in deprived neighbourhoods;

• the £450 million Children’s Fund will set up projects to prevent 5 to 13 year olds from becoming socially excluded;

• and as the Connexions service expands across the country, more and more teenagers as they make the transition into adult life will be getting the help they need.

As our young people grow up, we will begin to see what a difference this kind of investment can make in the future.

But our dual "incomes and services" approach is already having a real impact on the lives of millions.

• More than 300,000 young people into work through the New Deal;

• Rough sleeping down by two-thirds;

• Teenage pregnancy falling;

• Thousands of teenagers going back into education and training;

• The £900 million Neighbourhood Renewal Fund has been set up for the 88 most deprived areas to tackle deprivation and improve local services.

I’m always encouraged when I see examples of how this is working in practice.

I mentioned Preston Road in Hull. Here, incomes have risen, crime is down, truancy is down, education results are up and the percentage of house s without central heating has fallen from 41% to 25%.

But both for Government and our local partners there’s a lot of hard work to make these changes happen.

There is more to do.

That’s why it’s so important that the Social Exclusion Unit works on new areas of policy.

Its current projects focus on

• raising educational attainment of children in care,

• the cycle of reoffending among ex-prisoners,

• transport and social exclusion,

• and young runaways.

And at the same time, we must all continue to drive forward the programme of change I’ve outlined.

We take social exclusion so seriously that we’ve set up a special Cabinet Committee, which I chair, to make sure progress happens. Together with the Social Exclusion Unit it has already begun to focus Government Departments on their responsibilities to deliver floor targets for public services right across Government.

To make this fully effective will require fundamental change in the culture of Departmental decision making and in the nature and structure of Government which we intend to bring about.

Not just to chase progress – but also to make sure that we learn the lessons from how it’s being done so far. Our programmes – like the New Deal for Communities – are breaking new ground. And there are inevitably lessons to be learned for how we go forward from here.

These 39 NDC areas are hotbeds of innovation. They have taught much about new approaches that can deliver real results on the ground. Successful schemes are developed:

• by genuine partnerships involving the local community and the agencies that serve it;

• and by widening participation and empowering local people.

I’ve talked a lot about Government today.

But our partnership with front-line workers like teachers, social workers and the police; charities, business and local government, as well as local citizens themselves, are also all critical to making our programme of change work. Your conference is called ‘Building Partnerships for Social Inclusion’ – and that’s precisely what we have been doing and will continue to do.

The national cross-departmental approach is mirrored by much more effective multi-agency working on the ground.

Local authorities are key players. New ways of working have inevitably led to some stresses and strains, especially over shared decision making with community groups and local priorities and their financing.

Leadership at all levels is necessary for communities to develop the skills and confidence required to break the cycle of deprivation and poverty in these neighbourhood areas.

This bottom-up approach has been a fundamental change leading to higher commitment and achievement all round.

The potential is tremendous. Closer working between local authorities and those they represent will improve vital services.

The principles of eradicating poverty at home apply equally to our international policy. We are reducing the burden of debt for the poorest countries so that they can devote more resources to essential services such as health and education.

Whether locally, nationally or internationally we can not ignore our responsibilities. It is unacceptable that, in a world of 6 billion people:

• more than a billion live on less than a dollar a day

• 4 out of 10 people are without access to clean water

• 2 billion people live without access to electricity or "clean" fuel for heating and

- 100 million children live on the streets.

Gordon Brown will make proposals to help tackle this at the Financing for Development conference in Monterrey in March and I am chairing a new Cabinet Committee to prepare for the World Summit on Sustainable Development in Johannesburg in September. Tackling global poverty will be one of the key issues there.

When it comes to poverty no country is an island – its effects in one country are felt in others. It is as well to remember that today is Martin Luther King day. It may be a holiday in the United States, but it reminds us that there should be no rest in the fight against racism, deprivation and social exclusion.

We have an ambitious programme to tackle social exclusion at local, national and international level.

I have summed it up as progressive universalism: a guaranteed minimum for everyone, with more for those who need it most. That applies equally to income and to the provision of public services.

Taking this forward will require courage and leadership. Leadership from the centre. Leadership from departments. But we know we can only succeed if we continue to engage with all our partners.

Our values remain unchanged. They are traditional values in a modern setting where economic prosperity and social justice are recognised as two sides of the same coin and inter-dependent.

Social justice requires social inclusion for all in our society treating all as of equal worth. The existence of millions of people in social exclusion cries out for action. That is our challenge. This Government intends to meet it.