Blair: Economy key to election

Key battle ground: Labour will fight election on economy

Prime Minister Tony Blair is putting Labour's handling of the economy at the heart of its campaign to win the next election.

Mr Blair believes he can convince voters that the strong economy and falling unemployment is due to good management rather than good luck.

I think the big issue is the economy

Tony Blair

Speaking on BBC TV's Breakfast with Frost programme on Sunday morning, he said: "I think the big issue is the economy and in my view will be the key battleground."

The interview comes at the end of a week in which the Labour Party has been dogged by questions over party funding.

 Click here to watch the full interview

'No cover up'

Mr Blair said Labour would emphasise its commitment to stability and investment in public services in the next election campaign.

Mr Blair gave no hint of a date

"I think what is really important and gives me a sense of confidence and not complacency, is that people can see the Labour party as the party of economic competence," he said.

It was a strong defence of the government's achievements in what is expected to be an on-going assault on the Tories in the run up to a general election.

Mr Blair rejected accusations of a "cover up" over large donations to the party.

A row over the naming of major donors was fuelled when it emerged that Robert Bourne - the man heading the consortium which is set to buy the Dome - had boosted party coffers by £33,000.

This followed criticism of Labour after its attempts earlier last week to keep private millionaire publisher Paul Hamlyn's donation of £2m.

Labour says voters are concerned about return to boom and bust

Mr Blair said he was "glad" the party had the support of "successful entrepreneurs".

He also signalled during the interview that the government was planning to offer further financial incentives to teachers, nurses, police and other vital workers in tough inner-city areas and in the expensive areas of London and the south east.

He appeared to step back from suggestions that a referendum on the euro would be held early in the next Parliament if Labour won, saying it could be delayed for more than 18 months after the election - a timescale which would make entry within a second Labour term difficult.

Electioneering

The prime minister refused to indicate when a forthcoming election might be held, but the interview is seen as part of an attempt to kickstart electioneering ahead of a possible May ballot.

Mr Blair told the programme he had the "right sort of vision" to lead the country, and said he would be standing for a full second term.

On Tuesday in a speech in the West Country Mr Blair will mount an attack on the opposition.

Labour ministers claim that shadow chancellor Michael Portillo has lost control of his colleagues in drawing up the spending plans for a future Tory administration and believe he is vulnerable to attack.

Labour's own polls have shown that voters are still concerned about a return to a boom and bust economy, according to a party source.

Brown blast

But at the same time as Mr Blair's robust comments on Labour's economic stewardship, the Liberal Democrats accused Chancellor Gordon Brown of being deliberately over-cautious in his budget projections to allow for targeted pre-election tax cuts.

Treasury spokesman Matthew Taylor said figures showed Mr Brown had underestimated his budget surplus by an average £8bn a year and unemployment by 225,000.

"Gordon Brown's Prudence is about to be dumped in favour of Lady Bountiful. Brown has been seduced by the Tory tax-cutting agenda," Mr Taylor said.

Mr Blair's interview with David Frost is the first of a three-part series dedicated to questioning each of the three main party leaders ahead of an election predicted for 3 May.