PM's monthly Downing Street press conference

22 December 2005

Tony Blair held his monthly press conference in Number 10.

He was asked about the EU Budget, education, "rendition", Northern Ireland and world trade

• Time to "push ahead" with reform
• PM 2005 press conference archive

Opening statement

Good afternoon.  I am going to give a short opening statement then take questions.  I know many of you will be disappointed I don't have Michael Barber alongside me today to give you a full presentation on the domestic policy agenda, but nonetheless I will highlight, if I may briefly, some of the progress in key areas of public services and then say a little bit about what we will be doing in the public service agenda for the first part of next year.

This year we had the best ever primary and GCSE results.  Compared with 1998, 84,000 more pupils are leaving primary school with good reading and writing skills, and 96,000 more can do basic maths.  No London Borough now has fewer than 40% of its pupils achieving 5 good GCSEs.  In 1997 there were 7 Boroughs where the figures were less than 7%.

Figures published by the Home Office this week show that crime has fallen, 12% since the year 2002/03, and police numbers have reached a record high, along obviously with community support teams as well. 

We have every expectation that by the end of this month we will have reduced the maximum wait for an outpatient appointment to 3 months, and the maximum wait for inpatient treatment to 6 months.  In 1997 the maximum wait was 18 months.

The minimum wage is now over £5 for the first time, and interest rates and inflation continue to remain low as the country enjoys the longest period of sustained growth for 200 years.

I want to pay tribute to the hard work of staff in the public, voluntary and private sectors who have helped make this happen.  Many of them work in extremely difficult circumstances day in and day out, and they deserve our gratitude.

However, welcome though these changes undoubtedly are, we also have to identify the challenges for the future and develop the policy prescriptions to tackle them especially in a world of increasing globalisation and ever higher expectations in respect of our public services.  People today want more personalised services, they want the power in their hands, they want greater choice over the services that they use, they want them to be more flexible, more adaptable to their needs and we need as a government to help them realise that aspiration. 

Now, in the coming months we will set out plans for the next phases of reform.  In January we will publish an action plan - I was going to say in respect of - but in respect of the Respect agenda which is about tackling anti-social behaviour and the low level disorder that makes life very hard for families in local communities.  There will also be a wide-ranging Welfare Green Paper to break down the barriers that still stop people finding work, as we seek to extend opportunity further.

In the Spring we will publish a Pensions White Paper so that we take the right long-term decisions for pensions in this country which are both fair and affordable, and then there will be a White Paper also setting out our proposals for Primary Health Care and Community Health facilities to make them more flexible, more personalised, more answerable and responsive to the needs of the user.

We will also of course publish the Schools Bill as we seek to improve school standards for all our children.

So, there is a very clear choice as we enter the New Year.  We can either retreat into a political comfort zone, ducking the difficult decisions in favour of a quiet life or push ahead with the programme of change and reform that is about delivering greater opportunity to people, greater responsibility within our communities and higher standards in our public services.

Let me also be clear this is not change for the sake of it.  It is change that chimes with the public's concerns and will help deliver the kind of country and society that is in the long-term interests of Britain. 

Just before I conclude, it is worth remembering that previous reforms in the last Parliament were often described in the type of somewhat exaggerated language that some of the reforms we are talking about now are described.  You may remember Foundation Hospitals were about to mean the break up of the NHS.  As last week's independent report showed, Foundation Hospitals are doing well, they are succeeding and actually, as the report say, many of them are starting to generate reasonable surpluses which can be invested in new and better services for their patients.  They are also pioneering the ground in opening up the way the hospital is run to the direct views of the patient.

Tuition fees, you may remember, were spoken of as the government's poll tax.  It is now clear that even the Opposition support them.  Specialist schools we were told were going to create a two-tier education system.  It is now hard to find anyone who doesn't believe they make a substantial difference beneficially to education in our country, opening up opportunities to young people, and of course they have individual specialisms in subject area and strong outside sponsorship from the private and voluntary sectors. 

Criminal Justice reforms were going to bring an end to centuries of cherished freedoms and rights and they are now widely seen as rightly rebalancing the system in favour of the victim.

So I recognise this programme of reform will not be easy and I have no doubt we will all have a lot to talk about, and you will have a lot to write and talk about as we move forward.  But in the end, political leadership is about making the decisions that are right for the country, and step by step we are implementing the agenda that the public wants to see, that we were elected upon in May, and that is necessary to improve and modernise this country in the 21^st century, so we will continue with it.

Right, that is enough by way of introduction.  I thought I couldn't trespass on your patience for too long.  Nick, do you want to come in first?

Question and answer session

Question:

Prime Minister, this week the Deputy Prime Minister has attacked your education reforms, the Chancellor is distancing himself from your EU Budget deal.  Have you got the authority, the energy, to push through the reforms you say you want to make?

Tony Blair:

Well as I said to you earlier, in each stage of reform we have had difficulty.  And I think it is perfectly right that people raise the question in relation to the education reforms.  Are they actually going to improve the life chances of the kids in the poorest families and the whole point about this is, it is necessary to stand up and make the argument and carry people with us.  Now it is always going to be tough.  It always is when you are doing difficult things but I think that whatever the issue at the moment, the reason I feel a tremendous sense of confidence is that we are setting the agenda.  The truth is we should be confident as New Labour in the reform programme, because whether it is on pensions or it is on school standards, or it is on choice In the NHS, free at the point of use, or on anti-social behaviour or even on difficult things like Europe, we are the ones making the weather.  Now that is why however difficult it is we stick with it and we carry it through.  And in respect of John's comments on education, I doubt any of you were particularly surprised that that was his concern.  He does this, but he is articulating a concern that many people have and it is my job to answer it.

Question:

Isn't the point then that you may be leading, Prime Minister, but your Party has stopped following?

Tony Blair:

Well, let us wait and see you know.  I don't think that is really true.  I think that if you look back on the changes we made before Foundation Hospitals, tuition fees, you had the same types of debate and conflict and difficulty, but as I say to you, who is saying the ideas are wrong in politics today?  It is the agenda around which everyone is trying to congregate.  Now, as ever I have got fighting on the right of me, and a bit of questioning on the left of me.  That is the way it is.  But I feel very confident.  In fact I have never felt more confident about the fact that we are doing the right things for the long-term future of the country,  and that is the thing that counts in the end.  And if you do that you have got a better chance of winning through.

Question:

That is the first time you have said "I".  You have been saying "we" a lot.

Tony Blair:

I don't want any great psychological study into that one.

Question:

I wonder if I could ask you to look back over the year and how it has affected your plans to step down when they come.  I mean, has it affected it in any way and as a follow up to that, are you planning on filling the vacancy in your Cabinet, and what have you got to say to Elton John and 600 other gays getting hitched today - gay couples I should say.

Tony Blair:

I think I am probably competing, live on Sky.  It is probably a split screen there with me on one side, and Elton on the other and I know which people will be watching most avidly.  I wish him and David very well and to all the other people exercising their rights under the civil partnership law.  I think it is a modern, progressive step forward for the country, and I am proud we did it. 

And as for the rest, no I mean nothing has changed about what I think or what I want to do because, as I say, I think the interesting thing is, look, in public life today you live the whole thing in a world which - and I don't mean this as a criticism believe me of the media at all because I think that this is just the way life is - but everything thing is lived at an incredible high-octane, rather sensational pitch.  You know, if you look at the discussion of Premiership football it is exactly the same.  Everything is either about a catastrophe or it is about a massive triumph and I think what you have got to do when that is all swilling around you is keep going, provided you think you have got the right agenda and provided you can explain it to people.  As I say, what would trouble me is if I saw either to the right or to the left of me some big argument coming forward and I thought well I have got a real problem with that argument.  But that is not what I see.  I don't see that at all.  What I see is a whole lot of attacks right and left, but actually whether it is pensions or school reform or NHS reform or anti-social behaviour, we have got the ideas.

Question:

It is the end of the year, it is the perfect time to make big decisions and New Year Resolutions.  Have you decided when to stand down and hand over to Gordon Brown?

Tony Blair:

As I say I think the question in politics is about carrying the policy agenda through.  I am not saying that it is not difficult incidentally.  I am not standing here saying you know we don't have real issues on the schools stuff, on pensions, on everything.  It is right, I am battling on all front, but I am enjoying battling because I think we are doing the right thing, and then it is not such a problem.  The thing that is demoralising in politics is when you either feel you are in the wrong place and doing the wrong thing.

Question:

In the White Paper you have got a template for loosening the LEA's control over secondary schools and rethinking it.  Would it be worth passing an Education Bill that in some cases strengthened the LEA's control and largely left it unreformed?

Tony Blair:

Well no is the answer if what it does is actually hobbles schools from moving forward in the way that they need to.  But there is one very deliberate bit of strengthening, which is why I hesitated in the way that I answered it.  Local Education Authorities are going to have a stronger ability to intervene earlier with schools that are failing, but in my view that is precisely what the LEA should do.  The LEA and Central Government should have the same role.  It should be enabling, it should not be directing or controlling.  If there is one argument in British politics that I think is going on that we need to take account of it is this, and this is the reason why I am so passionate about the public service reform agenda.  We have put in a large amount of extra investment into public services.  We need to make a bigger investment in our public services, but then after you have done that, the next stage of this is really about the politics of aspiration, and it is about people feeling that in return for the money they have put in as taxpayers they have more control and more power over the system that provides the service to them.  That is what we are trying to do in health and in education. 

We are actually trying to do it in law and order and in local communities through anti-social behaviour powers.  We have always got to be the people standing up for the collective power of society whether it is through Government or in any other way assisting the individual.  But it is not the other way round.  The individual in the end is able to do better, whatever their background or their wealth, because they have got a strong, supportive, enabling Government, State, society behind them, but not on top of them, and that is the difference and that is the one argument we do have to watch, which is why I think this public service reform agenda is not just important in itself, it too is indicative of a certain attitude of mind.

Question:

.... people to the left of you disagreeing with you, but people not very far to the left of you are saying you shouldn't be tampering with that LEA control and a lot of people are wondering are you going to trim with those people, or are you going to go down like a Spanish galleon?

Tony Blair:

I think for a lot of people, look, I met most of the Labour Authority leaders the other day.  Actually I thought that they were on the whole extremely constructive about it.  And some of it is that people feel differently once they have read it than from before they have read it, and when they have read about it and for the Local Authority role I think that most Local Authorities accept that that is what they want to do.  I think there was some concern that we were trying to say that the Local Authority cannot take any decisions for the local community.  Well that is obviously wrong and that is not what the White Paper says, but I think that can be dealt with fairly easily actually.  Look, there are some people who worry, but I think we have always had this worry, we had it over tuition fees, we had it over Foundation Hospitals, but in the end you were able to carry people through.

Question:

What seems to be troubling a lot of these normally loyal backbenchers on education reform is what is going to happen in terms of admissions. Will you consider making the code of admissions statutory, would you think about strengthening the role of the adjudicator?  And given that you don't have the support of John Prescott, would you like to see some public support from Gordon Brown on education reform?

Tony Blair:

First of all on selection, look I think you are right, I think that is the worry. All I would do is draw people's attention to the White Paper which says all schools are subject to a code of practice on admissions, and that code of practice, which is legally binding, specifically forbids a return to selection. And when we legislated for City Academies for example we made it absolutely clear that that is the case, that is the government's policy. So I think again what we have got to do is to ensure that people understand that that is the case.  I don't want to go back to selection, I have never wanted to go back to selection, and that is not what we are doing. And when people say well the fact that schools will set their own admissions policy, doesn't that mean that you go back to selection? The answer to that is that foundation schools, and schools can become foundation schools with all of these freedoms by a simple vote of the governing body, foundation schools and voluntary aided schools, that is church schools and so on, they already are their own admissions authorities, and that is around about a third of the schools.  So what I think is important here on admissions is to make it absolutely clear we are not going back to selection, but that is the government's policy. And I think part of this is a fear by people that is actually, when you analyse the White Paper and what we are trying to do, simply not justified.

Question:

And does that have Gordon Brown's support?

Tony Blair:

Well Gordon does support the White Paper and I think he has said to you, and has said on many occasions, that he supports the public service reform agenda, and actually it is not an agenda that could possibly be done without the full support of the Treasury.

Question:

Prime Minister, speaking of European leaders who have expressed ignorance of the American practice of shipping prisoners back and forth through airports in Britain and Europe to countries that may practise torture, Colin Powell said this week:  "Most of our European friends cannot be shocked that this kind of thing takes place. The fact is that we have over the years had in place procedures that would deal with people who are responsible for terrorist activities, and so the thing that is called rendition is not something that is new or unknown to my European friends."  Now that you know, do you approve it or will you stop it?

Tony Blair:

Well it all depends on what you mean by rendition.  If it is something that is unlawful I totally disapprove of it; if it is lawful, I don't disapprove of it. And I think Jack Straw indicated in his parliamentary answers, in fact I think on radio as well, a case back I think in 1998 when a request had been made to us.  Now I don't know whether you would define that as rendition or not, all I know is that we should keep within the law at all times, and the notion that I, or the Americans, or anybody else approve or condone torture, or ill treatment, or degrading treatment, that is completely and totally out of order in any set of circumstances.

Question:

But should you not therefore investigate the charges that have been levelled by ...

Tony Blair:

Investigate what?

Question:

Well Amnesty International, a number of politicians in the House of Commons have come up and furnished you with flight details and the rest of it and asked for an inquiry. Given that you are concerned that if it is illegal you would want to stop it, should you not find out whether it is illegal?

Tony Blair:

I have absolutely no evidence to suggest that anything illegal has been happening here at all, and I am not going to start ordering inquiries into this, that and the next thing, when I have got no evidence to show whether this is right or not. And I honestly, it is like all this stuff about camps in Europe or something, I don't know, I have never heard of such a thing, I can't tell you whether such a thing exists.

Question:

Are you not going to find out?  Surely, by which we will be judged.

Tony Blair:

All I know is that the American practice of in certain circumstances, with the consent of the country concerned, taking someone and either removing them to another country or back to the United States, that is a practice that they have avowed, never mind admitted, for a long period of time. But you know it is not something that I have ever actually come across until this whole thing has blown up, and I don't know anything about it, and the reason why I am not going to start ordering inquiries is that I can't see a reason for doing it, I am afraid.

Question:

Happy Christmas by the way. Why are you pressing ahead with the on the run legislation which you yourself have said is very difficult and a difficult choice to make, when it has now been disowned by Sinn Fein? And similarly, do not people in Northern Ireland have some entitlement to more information than they have got about the so-called Stormontgate affair, especially in the light of Sinn Fein accusations, rightly or wrongly, that it was the security services who were responsible for the spy ring, as they call it, and your own Attorney General says there was evidence for a prosecution?

Tony Blair:

Yes, I think if we possibly can, and I keep saying this, that we are looking at what we can do and what we can put out in the public domain because I think and hope I am right in saying this, I think the Chief Constable himself has already made it clear that he believes there was evidence justifying prosecution. That is not the reason why the case was not proceeded with.  Now I think given all the speculation, which as ever is very wild on either side of the spectrum, I think it would be helpful, it would be helpful frankly for all of us if we were able to state rather more clearly what had happened, since I think it would actually lay a lot of these fears to rest that have been expressed on both sides. But this is something I have asked for advice on and it has to be done within the right legal procedures because otherwise we will all get into trouble over it.

And the on the runs, look the reason for doing on the runs is perfectly simple, it is because it is difficult to justify a situation where you have people who were convicted of serious crimes, but as part of the Good Friday agreement, if they committed those crimes before April 1998 they walk free, it is very difficult in those circumstances to say, but people who were not convicted but who may be charged if they came back in the jurisdiction, should then go to prison for the full term. So we need to find a way of dealing with it. This notion that somehow the on runs have suddenly popped up in the last few months, as you know well this has been going on for years, this discussion, what do you do about the people who are outside of the jurisdiction and that would be subject to court proceedings if they came back in. So we have got to resolve it, and it is not just a matter of Sinn Fein I am afraid, it has got to be done in the right way.

Question:

Some of your critics in the newspapers and in parliament have been trying to create difficulty between you and your Chancellor over the EU budget rebate, Prime Minister, a shocking thing to do at Christmas, but there we are.  I wondered if you could clarify it.  It has emerged in Treasury figures that what your officials and I think you have described as a billion pounds a year rebate on the rebate over the next budget cycle, 7 billion in all, will actually be nothing to begin with and then grow to 1.9 billion towards the end, and that since you agreed that the change would be permanent it is being suggested that you have created rather a considerable difficulty here for the Chancellor, who may well be Prime Minister when these large sums start kicking in. And it is even said that the senior Treasury official who was with you in Brussels, Mr Cunliffe I think he is called, was opposed to this and said it would have been better just to write a one-off cheque, without changing the mechanism by which these complicated things are calculated. And I wondered if that was true and whether your justification for choosing to ...

Tony Blair:

I think you should come here and do this, Michael, you are doing very well, keep going.

Question:

Sorry about this, my questions are normally shorter than this, as everybody knows, but whether you did it because you expect the whole budget system to be completely reformed either by your review or by changing circumstances after 2013, when it is all going to be different because Mrs Merkel is on your side Prime Minister.

Tony Blair:

Right, OK.  Look, the purpose of the agreement was quite deliberately to backload it so that we have got a reduced liability in the early years, which actually helps us fiscally, and after 2013 there is then a renegotiation of the next financial perspective. And of course the circumstances, as you rightly say, will be completely different, there is then a complete renegotiation of the circumstances for the new financial perspective.  So actually it is not a bad thing for us to do, it is actually a good thing because it backloads it towards the end of the financial period.

Question:

So the Treasury were up for that, were they?

Tony Blair:

Absolutely because for them fiscally it is easier to have the payments towards the end of that period, not the beginning.

Question:

Well why won't they say so then, because they keep equivocating on this point.

Tony Blair:

Well I don't think they are equivocating at all actually, I think they have made it absolutely clear that they support that. But look the single thing that is most important, the problem we have on this is perfectly simple, which is that what the British people think, I think significant numbers of them for very obvious reasons, is that we have agreed to give up some of the rebate, but the rest of Europe somehow aren't contributing to the costs of enlargement. The whole point about this is, and I would refer you incidentally to La Tribune newspaper, which someone brought to my attention this morning, the whole point about this is that Britain will contribute to enlargement, but actually other countries are going to have a worse net position than Britain in the next financial perspective. And for example the criticism in France at the moment is that their government is still going to be contributing to a significant part of the British rebate, despite the fact that Britain is now a wealthier country.

And the reason why it is so important to do this in this way is that actually by doing it through the rebate rather than the lump sum, this is why it is important to realise again why it is actually in our interests financially to do it this way.  If you simply paid a lump sum over, you would have to calculate that lump sum, and supposing you did at 10.5 billion euros and simply give a cheque for it, what we have actually done, because the rebate is disapplied on the actual spending in these new member states, and very rarely do new member states access all the money they are entitled to, then it is up to a maximum of 10.5 billion. So it is in our interest to have it done in this way.

Question:

... may be much less, you said they don't spend it all, you said it is disapplied to what they spend.

Tony Blair:

What I am saying is that if you end up giving a lump sum, you have to calculate the full costs of enlargement right from the very beginning and give over a cheque for it, whereas what we have done in this way is we have built up to the full costs of enlargement over the 7 years of the financial perspective. So we are actually in a better position than we would be if we had given a lump sum, that is the point of it. And what is more, because you have backloaded it towards the end of the financial period, you then have an entirely fresh financial perspective negotiation where everything then goes back in the negotiating mix again.  Now one other thing I just wanted to say to you about this is that I think what was very obvious from the European Parliament yesterday, and from what other countries have been saying, is that this reform process that we have set out is in fact going to yield real benefits.  Now I think the issue is when, but I don't think the issue really is if. I think it is clear there will be a fundamental reform package put on the table within the next 2 - 3 years, and then it will be a matter for Europe deciding which way it wants to go.

But I thought it was very interesting that there was a majority across all the main political parties in the European Parliament yesterday, whatever else they were saying, for reform. And one other thing I just want to make clear, since I told you once I got on to Europe it would be difficult to stop me, but anyway the one other thing I wanted to make clear is that sometimes people say well look in June you promised this great reform and now it hasn't really happened. What I promised in June was not that in the six months of the UK Presidency I could transform the whole of Europe, that would be a bold claim even for me to make, but what I promised was that we could agree the financial perspective and then agree a process that midway through that perspective allowed us to make fundamental change. Now that is actually what we have done, so when people ask me well what have you got out of the British Presidency, we have set three objectives:  Turkey and Croatia would begin accession negotiations, we would get a budget deal and we would get a budget deal that allowed us, thirdly, the prospect of real reform in the next financial perspective. We have achieved all those three objectives.

Question:

Prime Minister, in the past 12 months you have won an historic third term, and yet for you personally the political weather has never been choppier. Are you glad that 2005 is now drawing to a close?

Tony Blair:

And if I wished it wasn't, then I could prolong it.  No, look politics is always like this, and as you go on more in power it is more like this and you have just got to put up with that, but the benefit that you have got with the experience is that you are better able to cope with it. And as I say in a funny way I have never felt more confident about what we are doing and why, and that is just the way it is.

Question:

Prime Minister, China announced last week that it had overtaken the UK as the world's fourth largest economy. Even if you dispute their figures, and the Treasury does a little bit, the trend is inescapable. Does that worry you, and do you think that China is ready to join what would then be the G9?

Tony Blair:

When you say the Treasury disputes that a little bit, my experience is that they don't dispute things a little bit, it is not a little bit type of operation there.

Question:

It is a fascinating statistical question that we can get into if you like.

Tony Blair:

Look, China, to state the blindingly obvious, China is a country of 1.3 billion people, or however many billion it is, and we are a country of 60 million, so at some point I am afraid the Chinese economy is going to overtake not just Britain, but Japan, Germany and eventually the United States.  Now that is just the way it is. And the interesting thing about the G8 is that already the G8 is now happening, well we call it the G8 whereas we used to call it the G7, and I think informally India and China, I would find it hard to imagine you were going to have future G8 summits that they weren't in some shape or form participating in, the formal structure obviously has got to be agreed with all the members, but the Chinese economy, that is why we have got to carry on making changes in this country, and that is why Europe has got to change, the Chinese economy is going to be the dominant force that is driving everything, is the reason why you have got higher oil prices and higher commodity prices is that as the Chinese economy grows, that is the reason why climate change is so important. As China grows, two things happen:  first of all they consume vast amounts of commodities and energy; and the second is they compete with everyone on low labour costs. So we face the same threat as everyone else there.  The fact that we don't stop China overtaking us, I don't think that is down to the government, and I am sure the Treasury are right if they are saying they haven't overtaken us yet, but let's be clear, at some point they are going to, aren't they?

Question:

Prime Minister, the government has actually abandoned the Britishness test for Muslim Imams coming to this country, and before that they also dropped the idea of closing down mosques that preached hatred.  Now this Imams impression on young people and if we actually were to encourage Muslims to be assimilated into British society, why has this test been dropped, aren't we sort of creating a cultural apartheid by splitting Muslims from the rest of the community?  And may I ask on the question on rendition, if no British policeman or British customs inspector is actually allowed to go on board and inspect the CIA flights, how do we know whether they are breaking the  law or not?

Tony Blair:

Yes, but you know we don't do that to friendly powers, as far as I am aware we don't do it to France, or Germany, or Italy, or Japan when they fly in and fly out.  I am not having people boarding every US aircraft and inspecting like that, and unless someone can give me some evidence that something is happening that shouldn't be happening, or is illegal, and the Americans have made it very clear what the situation is and I accept that, as I should accept it, they are allies of ours.  In relation to the Imams, that is a very good point that you are making, but this wasn't one of the twelve points I actually put forward in August, this came I think from an earlier suggestion, but the way of dealing with this now is that we are going to consult the community, and in particular the senior Muslim clerics, before we allow someone to come in, so that we make a pre-entry check on them, and that I think in the end, I think people felt was a better way of dealing with it.  You know if you have a language test, I think the feeling was that it doesn't necessarily go to the extremism point, whereas if you check with senior clerics in this country as to whether someone is suitable or not, then you get to the heart of the issue.  Do you see what I mean?

Question:

Prime Minister, going back to your favourite subject on this whole question of the rebate, the Chancellor seems to be incredibly worked up about these figures because he effectively thinks that you have locked him into a permanent discount on the rebate which is going forward and the future financial perspectives will be 2 billion a year.  Are you effectively saying that your successor, whoever that may be, could actually negotiate that down in future negotiations, that the money you have given away on the rebate is not permanent and there is always a possibility of going back on that.  Isn't it the case that it is actually fixed?

Tony Blair:

Well the point is this, that each financial perspective is a new negotiation. And you see this is the other thing that is very important to understand here, that many of these countries who at the moment are net recipients, will become net contributors, so the whole situation is going to be different, and what is more I don't think anybody, I am not even sure that this really is the argument within the French system now, and there were some interesting comments made the other day about this in France, I think that by the time you get to the financial perspective for 2014 you are going to find the whole thing is changed, and the only point that I am making about this, and this is why it is so important for people to understand what we have done and what we haven't done, basically in the European Union budget, that part of the budget that is to do with what they call structural and cohesion funds, which is basically the economic development money, that part of the money that all the existing European Fifteen, the original fifteen countries used to get, the overall budget for that is not increasing much, but within that budget there is a massive redistribution obviously from the E15 countries to the accession countries, and that is why you get all these arguments about Objective One money, and is Cornwall still there, or Wales still there, or Scotland still there, the north east and so on. 

Now what all of us therefore have to accept, the wealthy countries, is that we are going to lose out on these structural cohesion monies and that is going to be turned over to these poorer countries. If we kept the rebate, and this is the point that other countries are making to us, and - at the risk of causing complete consternation - they may have a point, it is that if you kept the rebate in full it will mean that whilst France and Germany and Italy and Spain pay a euro to those accession countries, we in Britain would get two-thirds back through the rebate mechanism. So not unnaturally what they say is look, come on you guys are the guys that championed enlargement, we are all losing this money to the accession countries, well fair enough because that is the wealthy paying for the poor, but now you are turning round and telling us that you want two-thirds of it back. And that is why as I say it is not an unreasonable proposition.

Now the reason we had the rebate in the first place was because at that time over 60% of the budget was Common Agricultural Policy, and Britain doesn't do well out of that, and also Britain doesn't do that well out of the structural and cohesion money through the existing fifteen, but the point is that now that money is going to be transferred to the poorer countries a completely different argument applies. That is why we have kept the rebate in full on all the agricultural money, we have kept it in full on all the money we pay to the existing fifteen, and all we have done is unrebated a bit of it in respect of the accession countries. And to be honest, as you see from the French papers today, what they are saying is hang on a minute, you guys aren't actually paying your full share yet.

So it is not surprising it is a difficult argument to make. And had we not done this deal, and this is why it is just one of these things you have to do, despite the fact you get slammed for it, we would have been blamed for the budget crisis in the European Union. Right, what does that matter?  OK, you can say. But more than that we would have been blamed for the fact that those eastern and central European countries like Poland, like the Czech Republic, like Estonia, would have been unable to access that additional European money, so they would have been severely prejudiced in their economic development and we would have ended up blowing our relationship with all these countries that have been the countries whose existence in the European Union we championed and who are our supporters when it then comes to the major reform argument in two or three years time. So it would have been really not a very sensible thing to do.

Question:

Could I just preface my question, in reference to what you said a few moments ago with regard to the Treasury, correct me if I am wrong, but are you not First Lord of the Treasury?

Tony Blair:

Yes Jerry, you got that right. Right, OK moving swiftly on.

Question:

On Iran, the international community have correctly made very clear that the Iranian President is out of order for the things he has said over the last month, and you were leading the condemnations.  Iran has made it very clear it is going to continue with its nuclear programme, the E3 are trying to negotiate.  How can countries in the Middle East, especially Israel fear that he has got an agenda to wipe Israel off the map, how can they put their faith in the international community to stop Iran building their nuclear capability, what is the international community going to do. And can I also enquire, you stood here in August giving an agenda to deal with terrorism.  If you look at those items on the agenda, the 90 days was defeated, the glorification of terrorism has been watered down, what else is going to disappear? Are you in charge of this particular agenda or are other people going to push you off course?

Tony Blair:

Well on the twelve points, it is true that on the 90 days we lost the vote, as you know.  On the incitement to terrorism we have got to try and make sure that in the House of Commons we carry that point, which I think we will be able to do. And I think we put out on 15 December a full list of the issues on the 12 points, and what we have done and what we are going to do on it. On the question of Iran, you are right, it is a very difficult situation, because the European Three are meeting again today, I notice there are some tough statements I think coming out of Germany on this issue, which are greatly to be welcomed, and no it is not surprising Israel doesn't have confidence in the attitude of Iran, and the comments of the Iranian President are very, very damaging, they are damaging to international solidarity and they are actually damaging to Iran.

Question:

Two things, if you are, as you say you are, so opposed to selection, why are you wanting to change the admission rules, devolve admission rules to schools? And secondly, might you change your mind and give the House of Commons a free vote on smoking, or are you going to persist in a messy compromise that flies in the face of every health expert in the country?

Tony Blair:

Well these are two very different issues to me. Smoking is an issue, I mean it is obviously important that we resolve it, and I have got nothing really to add to what I said in the House of Commons the other day on that, we listen with interest to what people say. But it is an issue that to me is sui generis really.  Obviously the education programme is completely different, it is fundamental to the government's programme. And the point is this, that the misunderstanding I think at the heart of this is that at the moment people think that schools don't set their own admissions, they are not their own admissions authority. Actually foundation schools and voluntary aided schools are their own admissions authority now, and that is a third of schools.

Question:

And they select the children that go to their schools.

Tony Blair:

They don't, they are all subject, and this is why you have these battles with the adjudicator and so on, they are all subject to the admissions code and the admissions code is legally binding. Now as I say, what we have got to find a way of doing is making people understand that it is no part of our desire to go back to selection, that is the very thing we have stood out against, and that is why in 1998 we changed the law specifically and expressly to prohibit selection. So as I was saying a moment or two ago, we have got no intention of going back to what we have moved forward from frankly.

Question:

On smoking, Merseyside local authorities have a way to help the government out of the mess that it is in, they have a private Bill before parliament that would outlaw smoking in all pubs throughout Merseyside. Why doesn't the government support that Bill, allow that total ban to go forward as a trial scheme and then in 6 - 12 months you can judge whether it works or not.

Tony Blair:

I just don't think I have got anything more to add on the smoking side.  You know I think the reason why people think we should have legislation that applies countrywide, but I understand the issues that there are in Merseyside, and indeed in other places, and of course in Scotland you have got the situation changing there, and in the Republic of Ireland it has already changed there, so anyway we watch and see.

Question:

Moving to the Middle East, if I may, Prime Minister, what is your comment on the resignation of Judge Detliv Mehles as the head of the UN probe into the assassination of the former Lebanese Prime Minister Rafiq Hariri And do you think the expected appointment of the Belgian Judge Serge Brammertz as his successor will make the investigation more impartial?

Tony Blair:

I don't think I have got a comment really to offer on the resignation of Judge Mehles, it is just to say that I think it is important we get to the full facts and we publish them.  It is a very, very serious situation for Syria because there can't be any justification whatever for interfering in the internal affairs of Lebanon.

Question:

I just want to briefly come back to the European negotiations.  Do you actually share the impressions that have been widely reported that the new German Chancellor Angela Merkel took over a very crucial negotiating role and actually acted as a broker, and even as a secret President of the EU? And does it worry you that the new German Home Secretary said that he wouldn't exclude to use evidence that came out of torture in cases of anti-terrorism, ... where one wouldn't include people who have been tortured.

Tony Blair:

I think I will answer the first, since it is probably less inflammatory than answering the second. Chancellor Merkel played an immensely constructive role, there is no doubt about that at all, and I look forward to working with her very much. And as she rightly said at her press conference, the fact that we got a deal is a big weight off the shoulders of Europe and allows us now to concentrate on the reform agenda, which is the critical thing.  But if we hadn't got the budget deal we would still be arguing about the budget for the next year, two years, three years, and it would paralyse Europe and now Europe can move forward, and that is important.

Question:

You said to me in August, Mr Prime Minister, that the United Kingdom is ready to have a dialogue with Syria, and you mentioned the Iraqi borders and Lebanon, the Palestinians and other issues, and political developments say that Syria is committing itself to the borders, where the United States is co-operating, and Iraqi forces are co-operating to protect the borders, but it is also co-operating with the Palestinians for their elections and for the Iraqi elections, and in Lebanon it commits itself to international solutions, it cooperated with the Commission. Now dialogue or sanctions, and I believe that dialogue is more fruitful in that troubled part of the world, what is the UK's position and what are you going to do in that regard with relations with Syria?

Tony Blair:

The only thing I would say to you, Sir, is that it is very important the Syrian government understands that people don't want them just to talk about dialogue, they actually want them to do the things they should do.  Now the fact is there can be no justification for interfering in Lebanon and the Mehles report was not good reading for Syria, you have got to accept that I am afraid.  And it is important also, and this is particularly important for countries like ours who have got our troops in Iraq and our troops in Iraq are in danger from terrorist acts, it is important that Syria fulfils its obligations to stop these people crossing the border.  Now the evidence on that is at best patchy, I have to say that to you.  So I am very happy to have a dialogue with the Syrian government, but it has got to be on very, very clear terms, and it is important that they not merely say they are doing these things but they actually do them.