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Last Updated: Sunday, 7 January, 2001, 13:33 GMT
Economy is key battleground
Rt Hon Tony Blair MP, Prime Minister
Rt Hon Tony Blair MP, Prime Minister

Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST: Well our next guest also trained as a lawyer and we're delighted he's here this morning, the Prime Minister, Tony Blair. Welcome Tony.

TONY BLAIR: Good morning David.

DAVID FROST: And in fact didn't Cherie work with George Carman at one time?

TONY BLAIR: Yes she did for a, for a number of years and we, we knew him quite well and he was a remarkable man and an extraordinary lawyer.

DAVID FROST: He was, he was super, he's left a number of quotes that will last, last for all time and so on. Well now this, this new year you didn't get your usual new year holiday abroad and some people said that was because, because this is election year, others said well it's because Leo in the tropics, he's a bit young to go to the tropics, presumably it was a bit of both was it?

TONY BLAIR: Well it was nothing to do with whether there might or might not be an election I suspected you might come at me on this one so right at the very beginning I'm afraid I'm not going to say anything on that but for various reasons we didn't, not least of which with a small baby it's a bit different travelling abroad.

DAVID FROST: Yes absolutely. And, but one thing, just one simple thing on the election to start with, but when do you stand in the next election, you will as you stand be standing for the full term won't you? I mean if you stand for the next election you will pledge to people you will be there for the duration?

TONY BLAIR: Yes I mean you don't stand for an election on any other basis than that and anyway, we'll wait and see when that comes about.

DAVID FROST: But you will when you stand, you stand for a whole term?

TONY BLAIR: Absolutely I mean you know, you put yourself forward, you put yourself forward to be elected and to lead the government.

DAVID FROST: I, I was fascinated by yesterday Michael Portillo announced that in fact the Conservatives entered into a political consensus with Labour on the need for increased spending on education and health, where did this consensus meet?

TONY BLAIR: Well I don't know, I think it's a mystery to everyone since they condemned our policies to increase spending on the public services as irresponsible, dangerous, reckless and unsustainable just a few months ago. But I think, look I think the big issue really is going to be this, the economy will be, in my view, the key battleground and literally for the first time in my party's history, the first time in 100 years, we can go into that election, not just as the best managers of the economy, but the one political party that realises that if we want to have prosperity for everyone in the future we need to make the critical investment in our public services, in skills, in science and technology, the infrastructure of the country and I think what has actually happened is that the Conservatives have in a sense lost control of their economic policy. Well a few months ago they were saying there were going to be spending cuts and tax cuts now of course they've got all their shadow ministers promising to spend even more money. Now I think there will be therefore two very clear choices before the British people at the election, stability in the economy versus the old Tory boom and bust, investment in our public services versus cuts in public services.

DAVID FROST: But do you think that William Hague, is a fit person, a qualified person to be prime minister?

TONY BLAIR: Well I think that's a judgement the British people have got to make but I don't think I've ever known the Conservative Party, as a political party in a more hopeless state than they are today, They've lost their way intellectually and politically, I think they're very divided, their policies on the economy are now completely and utterly hopeless. I mean you cannot say at one and the same time to people we're going to cut all your taxes and spend all the money at once, you can't spend this money, you know the same money twice over and I think, you know as I say I think what is really important, what gives me a sense of confidence but not complacency in this year is that for the first time in my lifetime people can see the Labour Party as the party of economic competence and I think people really understand now that for years we've had chronic under-investment in our basis public services and if we want better schools, better hospitals, more police on the streets, a proper transport infrastructure, because after all you know we're now the fourth largest economy in the world, we should be able to afford decent public services if we want that we've got to make that investment for the future.

DAVID FROST: One or two things have been huge headlines in the past week, Prime Minister, and one of those has been this whole issue, and it's, it's in the papers again today, of funding and so on, political funding, party funding and so on, which started with the anonymous donation of £2 million which turned out to be from Paul Hamlyn a man of just the greatest probity himself and so on and so forth. It was a bad mistake, presumably, to cut, cover that up for two or three days before naming names?

TONY BLAIR: Well we didn't cover it up at all of course, I mean what's happened is that this, this is a process, I mean let me just take you back one step for the first time when I became Labour Party leader we used to get all our money from the trade union movement basically, with some party contributions, and in the '92 election campaign, over 90 per cent of our money came from trade unions. When I became party leader we decided to change that, we expanded the party membership and we went out and sought donations from business and individual entrepreneurs as well because we said let's, you know, balance where the Labour Party gets its funding from. We disclosed for the first time the names of the people, there's then been the commitment that we gave at the last election to introduce campaign finance reform, there's then been a big piece of legislation going through the House of Parliament where it's been decided now and again this is the first reform that's ever been introduced into the British political system, where after a cut-off date in February names and amounts will be disclosed by all political parties. Now, so we were not under an obligation to disclose the names we've done voluntarily, the actual amounts, but we did so and we've done so in respect of these individual people. But of course we have to go to them and ask their permission to do that because that's not the basis upon which they originally gave the money. Now I'm proud of the fact incidentally, I mean you know I know I get a lot of brickbats on this, I'm absolutely proud of the fact that we've got successful entrepreneurs, that we've got disaffected Conservatives who look at the state of the Conservative Party, say that's hopeless, that's incapable of governing the country properly and support the Labour Party.

DAVID FROST: But there was a two-day hiatus there when everybody was saying it's not, none of your business, we don't have to name the names and we're not going to name the names, and then there was a change of heart which was attributed in fact to you, but the, but I mean there was that gap that people went, got very exercised about, you know that cover-up period of two days?

TONY BLAIR: Well it wasn't a cover-up period but we had to go and seek the permission of the particular individual.

DAVID FROST: So it was that, and in terms of Robert Bourne who's negotiating with the government in a way on Legacy for the Dome and, and whose donations were revealed in large headlines yesterday, is it proper, do you think, for someone to be giving money to the government with one hand and negotiating with them on the other?

TONY BLAIR: Well let's again take it back a step, the only reason why people know that Robert Bourne has contributed to the Labour Party is because we disclosed his name in the Labour Party accounts so it was there for people to see. Now in respect of the Dome, if you, if you read the newspapers the last few weeks you'd think literally, I mean if you, if you want to know why people get cynical about politics you would think literally we'd given the Dome to Robert Bourne of Legacy because he contributed money to the Labour Party and then he was about to make this other story, that he was about to make £200 million from building luxury homes on the Dome site. The facts are that the preferred bid was indeed not the Bourne bid but a bid by Nomura, that in fact was headed up by someone who is close to the Conservative Party not the Labour Party. When that bid fell through we then went to the second bid that was chosen which was the Legacy bid. He has a) no plans to develop luxury homes. B) even if he did want to he'd have to get planning permission. C) the local council have made it clear they won't give that planning permission unless there are substantial low cost houses given as well. And d) even if all those things were overcome we would get a share of the profits. So this whole business that somehow we've given, you know the Dome to Legacy because this guy once contributed to the Labour Party or even I read in one of the papers last week because he once threw a surprise party for Peter Mandelson or something, is nonsense and so is the story that he's going to make £200 million profit out of luxury homes.

DAVID FROST: Looking at the more general¿

TONY BLAIR: Just to give people the facts.

DAVID FROST: Yes, looking at, looking at the more general picture, do you think and we're going to probably have a figure, a cap of spending £15 to £20 million on an election, on an election like this, take it as £20 million for the moment. Is there any limit to the size of donation which you feel it would be proper to take, for instance if instead of £2 million out of £20 million someone offered £12 million out of £20 million, is that still alright or should there be a limit somewhere?

TONY BLAIR: Look again you know this was debated in Parliament and on the basis of the independent inquiry we set up after the election and the inquiry found that it wasn't sensible to put some limit but you should in fact disclose the amount opposite the name so that people know exactly what is happening here. But again I think¿

DAVID FROST: But would you be comfortable with someone giving £12m out of £20m?

TONY BLAIR: Well I don't think that's ever likely to happen so, so I think it's a bit of an academic question. But I mean we did, we did have a debate at the time, I mean this went on between all the political parties and as I say following the inquiry as to whether you should set some arbitrary limit and in the end we decided not to. But I guess there must come a point in time when it would be, you know odd if you were, if there was a huge proportion of your funding coming from one particular source. But you know I think it's important to point out as well the Labour Party that I run, we employ probably 250 people, I think we have 20 different sets of premises, it costs us about £25 million a year to run our political party and I think we've got to, you know, get out of this notion that there's something wrong with people contributing to political parties. In the actual balance, incidentally, just to tell you again the facts for the Labour Party today I think is something like this, 40 per cent comes from individual small donations for the Labour Party because we've increased the party membership, something like 30 per cent comes from unions, 20 per cent from these, you know, wealthy entrepreneurs and other people who will contribute and ten per cent from commercial activities¿so we've got a far better spread if you like of our funding now.

DAVID FROST: What about the idea of the public funding, the state funding of elections which some people think is a solution to some of these problems of these things looking rather dubious and dodgy or whatever, some people think it's a help but then others think why should, why should, why should the public pay the money for two people to slag off one another, what do you think about that, about¿

TONY BLAIR: I think I probably speak for any political leader of any political party when I say that will be delighted if we never had to raise a single penny piece in political funding but I don't think the support's there for it from the public and I do think it's important again to understand that when we came to office we asked the Neil committee which is the standards committee for public life to conduct this independent inquiry into the funding of political parties and they recommended against state funding. But there is some state funding actually because we give what's called short money, a special sum of money to opposition parties, indeed we've trebled the amount we give to the Conservative Party, they get about £3 million a year I think from the state to fund the Conservative Party as, as the opposition party. But I think the consensus isn't there to do it on a more wide basis and if that's the case then provided the proper transparency and rules are there, and as I say for the first time we're actually introducing legislation for this, I think we've got to recognise that it's not a bad thing, it's a good thing and I'm, as I say I'm proud of the fact that you've got people who were disaffected Conservatives, who don't like the Conservative Party today, who will come forward now and say we are business people, we're successful in life but we support today's Labour Party.

DAVID FROST: Looking at the other issues, you were mentioning the economy and so on, but obviously one of the other key issues has been delivery in terms of health and delivery in terms of education and the delay in that and so on, and if, well take the NHS, you all familiar with the different statements, 57 per cent of patients waited for more than six months for heart treatment in Redbridge and Gordon McVee says in terms of cancer it's cruelly shocking the waits and the waiting time in accident and emergency and all of those things which you're familiar with, the problems that we're short of 20,000 nurses and 5,000 of them are retiring every year, all of that stuff, now knowing what you know now, do you think that sticking to the Conservative spending plans for the first two years was in practical terms perhaps a mistake that it was a good idea for the election and you've made the pledge but in retrospect you would be two years further ahead perhaps on the NHS and teachers if you hadn't stuck to that?

TONY BLAIR: Well that's a very good point and it was as you rightly say a promise kept, we promised to do this. But no I think it is probably the most difficult thing we've done and also the most important. All my political life you have had Labour governments come in, spend money because they want to do improved public services, find then they couldn't afford it and have to cut back. If..had¿ Conservative governments engaging in not just boom and bust management of the economy but in the funding of public services. What we did and did under what was, has been brilliant stewardship by Gordon Brown, what we've done is say no, the foundation of any successful country is a stable economy so even though we inherited massive levels of debt, a £28 billion borrowing requirement when we came into office, when I became Prime Minister I was paying out in my first year on interest payments on the national debt more than I was spending on the whole of the school system of the UK, so we had to take the measures to stabilise the economy, we're now in surplus, national debt has fallen, we're now spending far less on interest payments because more people are in work, round about a million more people in work, we've therefore got fewer welfare payments as well, we can now afford on a sustainable basis, not just one year but year on year on year, to put the money into schools and hospitals and police and transport that we need.

DAVID FROST: But, but the point I was just making was, there obviously were the benefits in terms of the economy and stewardship in sticking to this pledge but obviously it held you up for two years and it's one of the reasons why, why the, the changes in delivery in the health service have not really come through yet, I think most people think the health service is no better than it was before?

TONY BLAIR: Well I don't think that's true but I'll come to that in just a moment, no this is absolutely crucial, it is no use putting the money into the health service or schools unless you're going to keep it up year on year on year. We know we've had chronic under-investment in British public services, now the transport system doesn't need an injection for a year of money, it needs five, six, seven, eight years of sustained extra investment, so does the health service, so do our schools, so do the police on our street. We can do this now because we have managed to run the economy effectively, because we've recognised that if we want a strong economy for the future the basis of its stability, we need more people into work, we need to make the work pay and then we can get the money in. Now what about the state of public services, I would, I would roughly put it like this, I think in schools people do see real improvement, in primary schools there's no doubt about it, we've had the best primary school results by a long way this country's ever seen. In respect of hospitals and doctors and nurses and so on, I would just say to people I think the glass is half full not half empty, if you look at the numbers of nurses we've got 16,000 more nurses, yes we need another 20,000 but the fact is we've got 16,000 more, we've got more doctors, every accident and emergency department in the country that needs it is being renovated now. When we had this discussion this time last year the National Health Service was going through its winter crisis, now we still have huge pressures this year, don't let me mislead you at all, but we are better placed to cope than we were before, in areas like cancer and cardiology we are training the surgeons, training the nurses necessary and in the years to come those services will get better too so we will get there on the health service in the end.

DAVID FROST: But how will you, how will you manage it on something like, will the teachers think this week the stories about the schools gazing at the prospects of four days a week and so on and so forth, the need for more teachers, how can you attract more teachers, is it mainly cash?

TONY BLAIR: Well again I think what is important is to deal with the facts here, in the vast bulk of the country this is not the great problem, I mean we have 25,000 schools, we know of only a half a dozen that are talking about, talking about not actually doing some four day week because of teacher shortages. But there is undoubtedly a problem in our inner city areas, particularly in areas like London with shortages of teachers, indeed shortages of nurses, shortages of police and that's for a very simple reason, you've got a buoyant labour market, you've got very high cost of housing and some of these jobs are tough, damn tough, if you're doing an inner city school in a difficult area, you know as a teacher you're a, you're a saint or a hero in my book.

DAVID FROST: Can you give them a bonus of some sort?

TONY BLAIR: Well I think what we have to do is to look at extra awards for teachers who are teaching in really tough schools, we've got to look at how we're improving the retention of those people by offering them the right package, not just of better working conditions in terms of pay, but better working conditions generally. We're trying to do this with nurses and with the police as well and I think you will find as a result of the extra money, for example, that we've put into police now, we've put a special fund, this is all part of the investment for the future and when the police recruitment figures are published I think in the next tend days or so you will find for the first time in seven years, in the whole of the UK, and the first time in ten years in London the numbers of police are again rising. Now we've still got a long way to go and within four years I want to have more police employed in this country than ever before and we've got the money to do it, but you will find, I think, in the next ten days the first evidence that we are in fact getting there, that we are recruiting extra numbers.

DAVID FROST: One of the problems being, as you said, booming labour market, another one being perhaps the sort of lessening of appetite for public service?

TONY BLAIR: I don't think so and I hope not and one of the reasons why we wanted to get greater awards to teachers and greater awards to people in the health service and, and additional awards for the police is in order to say you know we value your contribution. You take the work the National Health Service has done over this winter period, you know it's been absolutely amazing, I mean they are amazing people and they deserve our support and thanks and they deserve recognition by the community.

DAVID FROST: In terms of the referendum on Europe, various papers that have come out have indicated that it's going to take 34 to 40 months from a decision to hold a referendum to holding it, to getting into the, getting into the system, 34 to 40 months so that in other words you would have to have a decision in the first 18 months if you were going to get it through within five years in its entirety, the thought being that you would want to be half way through this process when an election comes up because that would be unwieldy and, and therefore the referendum would be the whole subject of the election and so on and so forth. So it would look as though if there were to be an entry by us into the single currency in the next Parliament you would have to take a positive decision within 18 months is that fair?

TONY BLAIR: Well I think what I would say to that is, yes of course there are, these timetables are, are issues but it can't be determined on the basis of whatever political considerations there are of that nature. Joining the Euro is in my view a sensible thing for this country to do in principle but in practice the economic tests we've laid down have to be met because it is an economic and monetary union. So if we're going to go into the single currency then the assessment has to be positive in relation to the economic tests and you know what you say about the timetable, well I'm not sure about those exact figures but that is not the issue for me, the issue is are the tests that we've laid down met or not and I think the sensible thing to do is to keep the option open of joining the Euro, to be positive about it, to, to say in principle yes we want to join it, to keep the tests firmly in place and then to give the people the final say in a referendum and I think that's a sensible position for Britain.

DAVID FROST: And who will decide if those five tests are passed, you're the Prime Minister, will it be you or will it be Gordon?

TONY BLAIR: Well I very much hope it will be both of us together, that would be the normal way of doing it, yes. And you know that is important because the effect on jobs and industry and investment are the key tests, now that's not to say that political considerations and constitutional questions aren't important but we have resolved those in our own mind, in favour in principle of Britain going in but it's got to be the right decision for, for the British economy.

DAVID FROST: And do you think that in fact you could survive as Prime Minister if, if you went in for this referendum and it was in the end lost, you would just carry on regardless?

TONY BLAIR: Well I wouldn't be very happy about it but I think I should leave those questions for another time.

DAVID FROST: You wouldn't be very happy about it. What about this business of a TV debate, Alistair's words were actually my hunch is that at some stage it'll happen, a perfectly good thing in principle, but have you decided that you like the idea, you love the idea, you want to do it?

TONY BLAIR: I've decided, well I decided the last time round, what I always say when this is raised is fine in principle but the details have to be worked out and I'm not spending, as we did in the last election campaign ten days arguing about it.


TONY BLAIR: We spent ten days in the last election campaign arguing about whether to have the debate and I've got no doubt there will be masses of opportunities for us to pitch ourselves¿

DAVID FROST: Well there is at least one proposal on the table isn't there, from the BBC and ITV but, and there could be others obviously, but I mean you haven't decided yet, or have you decided in principle, if five conditions are met will you go in to a debate?

TONY BLAIR: What I've said all the way through is of course I've got nothing against having a TV debate at all but it's got to be sorted out by the, you know the people who are organising these things for the political parties and I'm not wasting any time debating it, I mean let's debate the issues.

DAVID FROST: Not that. Let's, we'll try and read into that whether it's more or less likely as a result of what you've just said, it's opaque, opaque, what's not opaque is people like Irwin Stultzer ??? among other people saying that it's disastrous for Britain and in particular for you because the new President of the United States will not be as warm towards, towards you and Britain as Bill Clinton was because he knows that you were a great, great close friend of Bill Clinton's and therefore undoubtedly probably a supporter of Al Gore or whatever and that therefore writing RIP on the special relationship, it seems to me as various people have done, over to you?

TONY BLAIR: Yeah, nonsense, I mean it's just absolute nonsense, look I did have a very good and indeed do have a good personal relationship with Bill Clinton and I like him enormously but I'm the British Prime Minister and George Bush is the American President and it is my job and my duty to have the best possible relationship with them, I've no doubt at all that we will do, I have no doubt at all either that he will take the greatest care and has the greatest support and respect for the relationship Britain and America have together and I just say this, to anybody who wants to cause trouble between Britain and America, the only people who ever benefit from that are the world's bad guys, okay? I mean Britain and America standing together can sort out many of the problems in the world, indeed Britain, Europe and America standing together can do that and to set up false choices that we've got to either choose between a, a special relationship with America or whether we participate in Europe's complete bunkum and it's dangerous bunkum what's more.

DAVID FROST: When, when will you hope to meet him for the first time?

TONY BLAIR: I think they're trying to fix it up in the next, you know, few months, I mean I guess he wants to get his feet under the table as President first.

DAVID FROST: Someone said he might be coming here in March?

TONY BLAIR: I, that's, you've got better information than me then in this particular regard, I don't think, I, I doubt that he would come here but I mean I don't, I don't want to, stop him if that's what he desires to do but I think it's more likely that I will go over there some time in the next few months.

DAVID FROST: What about the situation, one of the other areas, rail, which is in chaos at the moment and you said Railtrack over-reacted in some ways, you thought, in terms of speed limits and so on, everything's going to be alright by Christmas, then it's Easter and now it's Whitsun and soon it'll be the August bank holiday or something like that

TONY BLAIR: I hope not.

DAVID FROST: And, you're not tempted obviously to renationalise because it would be too expensive, would you be tempted to do it if it was cheap?

TONY BLAIR: I think that privatisation was a disaster but it was a disaster not simply because they privatised it but because they split it up and fragmented it and one of the great problems in sorting out a difficulty like we've had after the Hatfield rail crash is that you've got these, you know, vastly different parts of the rail service that don't work together properly which is why we introduced the legislation way before Hatfield for a strategic rail authority that will have power to issue guidance and allows us to reassert some form of control over the system as a whole but you know it would be very easy for me to sit here and say the problem was simply privatisation. In my view privatisation was a significant factor in the chaos that there is but the real reason is the under-investment in the railways and the quadrupling of public investment in the railways over the next few years, all as part of this new settlement for the future, the quadrupling of that investment will in my view be fantastically important. The only way we're going to get the rail infrastructure we need is to put the money in and then as I say also reassert that form of central coordination so that we can get some proper planning into the system.

DAVID FROST: Do you think because transport's become such a huge issue that there would be a case after the next election for it to be a separate ministry again?

TONY BLAIR: I don't think that really makes a difference at all because, I mean in the work that John Prescott and Gus McDonald have done I think is excellent. The transport plan, you know the ten year plan is the answer, I mean that is the right thing to do but it will take a long time, I mean the truth is you need new rolling stock, you need a lot of the stations expanded, you need new services coming on, you need a vast amount of change and reform, it's like all our public services and you know to go back to what we were saying earlier, what we decided was that we had to take this step by step by step along the way, stabilise the economy, sort out the public finances, reduce the benefit claims on the exchequer and then with your economic stability in place, with people at work you then take the money that you then have, an investment over years in our public services to improve the situation, it's the same with transport, it's exactly the same with schools and hospitals and the police.

DAVID FROST: One vital question that's come up today and this week is the question of another Dr Harold Shipman, the danger of that. Is there something you can do do you think by means of legislation to make another Harold Shipman virtually impossible, is there anything you can really do in legislation do you think, or something else?

TONY BLAIR: The importance of the new clinical assessment authority is it is going to allow us to take action very quickly where either hospital or a GP practice, you know knows that something is wrong, or something is revealed about a particular doctor behaving in a particular way and we will then be able to go in, sort out very quickly whether there is a real and substantial difficulty and address the problem and along with the new annual appraisals for doctors that are being introduced, then I think this will make a considerable difference and it's something that is long, long overdue and even before the Shipman inquiry we had decided that we had to legislate and ensure that we had this, this authority in place.

DAVID FROST: So that there should be, no, with these measures there should be you think no, no repeat of this?

TONY BLAIR: Well I very much hope there is never a repeat of that and it is important to say the vast majority of our doctors, I mean Shipman is a wholly exceptional case, the vast majority of our doctors do a fantastic job for their patients day in day out in the country but the new authority will allow us to act very, very quickly, get an on the spot assessment, take action and along with the annual appraisal system should give us the best possible chance of this never happening again. DAVID FROST: And what, and what, and what would you say at this stage as we approach the, the next election, date great unspecified, is the most important lesson you've learnt so far in this job?

TONY BLAIR: I think that, you know it's possible to say that there are various things that I could have done better, you know you look at the 75p on the pensions and realise in retrospect that was a mistake, then I think we've corrected that position. But I think the biggest single thing I have learned is that you can't please all the people all the time but in the end it's less important to be liked than to do the job to the best of your ability according to the judgements that you make and then the country will make its own judgement on it. And I think, you know, what I've learnt about this in a sense is that I believe that I have the right vision for this country, I think it's a fantastic country, it's got huge opportunities ahead but there are big and difficult decisions and I think we've got to make sure if we are successful, whatever this election may be, if we are successful in that election then we do the right thing for the country and then I worry less about what is, you know, in the day to day wash of the newspapers or, you know, in a sense whether people like you as to whether you get the job done in the right way according to your own beliefs and convictions and that's what I will do.

DAVID FROST: Prime Minister thank you very much for being with us this morning.

TONY BLAIR: Thank you.

DAVID FROST: Happy New Year to you and to all our subscribers out there. Next week we'll be talking to a great friend of Tony Blair's, Mr William Hague, small world isn't it? Good morning.



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