Stephen Byers, the Secretary of State for Trade and Industry, has promised MPs from the north of England the review will contain “substantial” measures to bridge the divide. He said: “There is a north-south issue which can’t be ignored by a Government that was elected to govern for all our people. If we have regional disparities, which we do, it’s the job of government to have an active policy to address that.”The Government’s rethink follows growing criticism from Labour MPs that it has neglected the party’s traditional strongholds in an attempt to woo Middle Britain. Ministers will deny giving special treatment to the Labour heartlands, arguing that the middle classes will benefit from the boost to health and education spending. But Mr Brown believes it is in the whole nation’s interests to prevent an underclass being permanently cut off from the prosperity enjoyed by the rest of the country.Under the new system, across-the-board targets for improving the national average performance on health, education and employment will be replaced by new minimum levels for these services in all parts of the country. The Treasury will allocate money to Whitehall departments only after they sign up to these public service agreements.

“You can raise standards by 10 per cent nationally without shining a spotlight on the areas that need the most help,” a close Brown ally said yesterday. “We need to close the gap.”The tougher new targets will include raising numeracy and literacy levels. In health, the new targets will aim to improve services offered by hospitals and GPs “by bringing the rest up to the level of the best”. The New Deal programme will be expanded to cut unemployment among people from ethnic minorities. Mr Brown will promise to close the “inequality gap” between white and black people with the same qualifications.Although the Treasury will not impose direct penalties on departments that fail to meet its 200 new targets, it will take account of their performance when considering their future bids for cash.

The targets will be published, putting ministers under pressure to reach them.Mr Brown’s blueprint, which will run until the financial year 2003-04, will in effect map out the programme for Labour’s second term.. Claims that the Government is hopelessly split over the euro increased last night when Downing Street slapped down Robin Cook for saying that Britain’s entry into the single currency was “inevitable”. Claims that the Government is hopelessly split over the euro increased last night when Downing Street slapped down Robin Cook for saying that Britain’s entry into the single currency was “inevitable”.
And as Number 10 continued to claim that there was no split, the president of the European Central Bank, Wim Duisenberg, renewed pressure for Britain to join. Labour’s national policy forum will debate the issue today at its annual meeting in Exeter.A Downing Street spokesman said that despite the Foreign Secretary’s statement that he believed Britain would inevitably enter the euro, the Government was agreed that it would only do so if the conditions were right. “It is our objective to join a successful single currency provided the economic conditions are met It is not inevitable but it is our objective,” he said.

On Thursday, Mr Cook had welcomed opinion poll findings that most people thought it was inevitable Britain would join the euro. “I think they are right,” he said.Yesterday he was backed by Mr Duisenberg, who reiterated his claims that Britain had satisfied nearly all the conditions for membership. In an interview with the Italian newspaper, Il Sole 24 Ore, he said that the British economy was “suffering greatly” because it remained outside the single currency zone. He said: “The United Kingdom satisfies all the conditions for entry, except that of the exchange rate.”The performance of the British economy is admirable, but it is suffering greatly because it is not participating in the euro. That said, the decision is for the British people.”The Tories were quick to capitalise on the apparent difference of opinion within the Government.