UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 300-i

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

LIAISON COMMITTEE

 

 

THE PRIME MINISTER

 

 

Tuesday 6 February 2007

RT HON TONY BLAIR MP

Evidence heard in Public Questions 1 - 115

 

 

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Oral Evidence

Taken before the Liaison Committee

on Tuesday 6 February 2007

Members present

Mr Alan Williams, in the Chair

Mr James Arbuthnot

Mr Kevin Barron

Mr Alan Beith

Sir Stuart Bell

Michael Connarty

Sir Patrick Cormack

Mr John Denham

Mr Andrew Dismore

Mr Frank Doran

Mike Gapes

Mr Michael Jack

Mr Edward Leigh

Rosemary McKenna

Andrew Miller

Dr Phyllis Starkey

Mr John Whittingdale

Mr Phil Willis

Dr Tony Wright

Mr Tim Yeo

Sir George Young

________________

Witness: Rt Hon Tony Blair, a Member of the House, Prime Minister, gave evidence.

Q1 Chairman: Welcome, again, Prime Minister to your tenth session of questions with the Committee. Can I emphasise that this will not be the Prime Minister's final appearance before the Committee; I have negotiated an arrangement with him where once he has announced the date on which he intends to stand down we will negotiate a date for a final appearance which will give us a chance to, perhaps, have a review of the past ten years. As normal, the Prime Minister has not been told the questions that are going to be asked today. Incidentally, with reference to the later hearing, do not bother to 'phone - he has not told me yet! Today we have one overarching theme because this is, essentially, seen as the Prime Minister's subject, his Policy Review, and we are breaking it down into four sections: the first is environment and energy; the second public services - the role of the State; third, security, crime and justice, and, finally, Britain and the world. We also have a slight change in procedure in that as this is something so closely associated with the Prime Minister we have agreed he shall make a brief (I emphasise "brief") presentation of his review before we start. Also, you should all find in your places, including the press desks I hope, a copy of four charts which the Prime Minister has indicated he would like to refer to during his presentation. Prime Minister, would you like to introduce your review?

Mr Blair: Thank you very much, Alan. Let me try and run through this very quickly. I know we provided a 50-page background document to the Committee some days ago, and obviously there are voluminous papers that inform this Policy Review across Government. I will go through this presentation very quickly because we just picked out one or two key aspects of it. It is partly, also, in response to the fact that we have had a lot of questions tabled to us about the review, asking how Members of Parliament and various committees can be involved in debating the conclusions. If I can take people through the slides very quickly, essentially, it is looking at both the lessons learned in the last ten years and the challenges for the next ten. It divides, effectively, into the four subject areas that you have indicated, plus, obviously, the economy. The Cabinet level working groups are established in each of the areas; there is then the involvement of the junior Ministers and there is also a public engagement process, which I can come to in a moment. What is coming out of this? In relation to the role of the State and public services, we would, obviously, say there have been substantial improvements that have been made in key public services. You can see, for example, many fewer failing schools, if you look at the numbers of schools that are now below the floor targets; that is under 25 per cent with five good GCSEs. It has fallen from about 600 schools in 1997 to some 47. There is almost an identical improvement in the numbers of schools getting over 70 per cent five good GCSEs. However, that is against the background of people expecting far more from the public services they have, in particular, the ease of access in relation to the National Health Service and the far greater emphasis from people in public services on what I would call the consumer aspect of what they expect from a modern public service. The emerging conclusions in this particular group of issues are very much, therefore, around empowering the consumer, and that has also got the implication of a greater diversity of supply, breaking down the barriers between the public, private and voluntary sectors, and very much an emphasis on prevention and early intervention. A lot of the costs that we are going to have to fund as a country, in terms of welfare and health, could be significantly reduced if we made earlier interventions to try and prevent problems arising rather than simply deal with the problems once they have happened. As I was saying on the radio the other morning, there is a very clear notion now that although much of policy helps lower and middle-income families there is a group at the very bottom of society that is often very, very hard to reach, and which increasingly we believe needs specific policies to deal with. There are the capabilities of the public sector which are moving from policy advice far more to delivery and performance management, and then there is the reshaping of Whitehall to have a more strategic role. Then, if you look at security, crime and justice, (I apologise for taking this at a pace but I think it is the only way since I know people will have read the background document), crime rates have fallen substantially but, frankly, as we indicate, two-thirds of our people actually believe crime is rising, not falling, and that is part of the bigger picture to do with security, to do with anti-social behaviour and to do with the problems outside people's front door as opposed to where they see the overall big picture in relation to crime. There are many issues that then arise out of that. The first is how you, as I think is increasingly happening in policy, target the offender and not the offence. In other words, if someone is a drug abuser there is not much point in simply penalising for the crime of burglary if the reason they are committing burglary is they have got a drug addiction. You are going to have to deal with the reasons why they are committing those offences. The underlying causes of crime continue to be immensely important, but, again, I would have to say I think there is a huge challenge, particularly in relation to kids brought up in dysfunctional families, often in areas of very acute deprivation, that almost transfer that from generation to generation. There are new types of powers that are being introduced the whole time, in anti-social behaviour and serious and organised crime, which tend to be more summary in nature. That raises significant civil liberty concerns for people. There is how we have more effective non-custodial sentences. One of the reasons why the prison population has risen is because people do not have sufficient faith in non-custodial sentences. There is how you join up the criminal justice system as an effective service, and there is also the fact that people today want far more locally accountable policing. Part of the issue on the police mergers was although there are very good reasons for suggesting mergers in certain cases, people now look at their policing not on a countywide basis or a city-wide basis but on a community basis; they actually want local policing, accountable to local people, very much specific, almost, to their ward or their district rather than a bigger unit. Then if you go to energy and the environment, which is the first subject we will come upon, again we have got a good record because we are meeting our Kyoto commitments. The chart I draw attention to is the one on the right-hand side of page 7. The UK is 2 per cent of global emissions. The US and China are now 40 per cent. The fact is, without a global agreement to cut CO2 emissions, there is no way, whatever Britain does on its own, that we are going to make a difference here. If you move to the emerging conclusions, what therefore do we need? We need a radical global framework for after 2012; one that involves America, China and India as well as the Europeans and others; we need, particularly within Europe, an ambitious European energy and climate plan. We need, obviously, within our country to give continued leadership - we have got the Climate Change Bill coming up shortly. The key thing, we believe, is that you will not get action by companies, individuals and countries unless you set a carbon price. So you need a framework that enables a carbon price both within the UK, within Europe and then globally, in order to incentivise the necessary investment. We need to engage the citizen and we need, obviously, to make sure that what we are asking other people to do is happening within the public sector itself. Finally, the fourth topic, Britain and the world. The best way of describing this is to say that over the past ten years, whether you like it or you do not like it, there is no doubt at all Britain has pursued a distinctive foreign policy that has been based, essentially, on the view that (a) we need to be engaged in all the major debates in the world (we need, in other words, very much an interventionist and not an isolationist policy) and (b) that it is attempted to be values based - again, leave aside whether people believe we succeeded or not, that has certainly been its underlying theme. So whether it is climate change or action in respect of poverty in Africa or the Middle East Peace Process or world trade, we have been very active on the soft side ("soft" in terms of non-military side) of international action but, at the same time, obviously, within interventions in Afghanistan, in Iraq, in Kosovo and Sierra Leone, we have been prepared to use military power as well. So it has been a combination, if you like, of hard and soft power that has defined our foreign policy. The other thing I would say, and I think this is particularly important in the light of the debate that is happening in our country and, also, in other similar countries, is we have two key alliances at the heart of our foreign policy: a strong partnership inside Europe and a strong alliance with the United States of America. There are views about both; some would say we should be more Euro-sceptic; some would say we should distance ourselves from America. We have taken a very deliberate view to be firmly anchored in each of those relationships. That is a huge question for the future: do we want to continue on that path or do we want, for example, to choose more of a European way over an American way? So that is the debate that is going on there. I would say that for us now the critical thing is to say: "Well, given what foreign policy we have had over the last decade, highly interventionist, based on hard and soft power, with those alliances, Europe and America, is this the right way forward for our country now or should we take a step back, maybe, and not be so engaged in these international issues as we have been?" To sum-up domestic and foreign policy in five minutes is a little difficult, but I think that gives you a sense, with the background papers, on where we are moving on each of these main policy areas. It is a perfectly sensible thing for a government at the ten-year point, but also for the country in the mid-term of Parliament, to debate where we are, what are the future challenges and where we should go in meeting them.

Q2 Chairman: Thank you - brief as promised. You will have seen suggestions that this project is very much to do with trying to find your successor. Is that an undue suspicion?

Mr Blair: I think it is because the fact is it is across Government. The Chancellor and I are both involved in all the policy groups and it is an attempt to say what are the challenges for the next ten years, and we are doing it collectively as a Government. Out of this will come future policy directions; what will not come is a detailed set of plans in each area or, still less, a manifesto for the government for the future. However, what it will do is establish what have been the key elements of policy in the last ten years and what are the key directions for policy in the next ten, and I think this is a sensible point at which we can have that debate within government - also in the country, frankly, since all of these issues are extremely hot issues in the country. Should we be going further with public service reform? Should we be holding back on it? Have we got the right balance between liberty and security, or is the Government going too much towards security and too little to liberty? Should we have this hard and soft power mix or not with these alliances? This is a perfectly sensible moment for the Government of the country to say: "What does the future hold for us in the decade ahead?"

Chairman: We move, then, on to the first section, environment and energy.

Q3 Mr Yeo: On climate change, Prime Minister, given the strength of your rhetoric, which many of us admire and applaud, will you be happy when you leave office later this year that carbon emissions will actually be higher then than when you came to Number 10 Downing Street?

Mr Blair: No, of course not, which is why it is important that we set out a programme that is going to get them down in the years to come. For example, without some of the action to be taken, like the climate change levy, and so on, and greater measures on energy efficiency, they would be even higher still. No, it is important, and this is what the Climate Change Bill will do to set out how we can make an even bigger impact on potential emissions. In the end, the key will lie in building the European Trading System up. I do think that will be absolutely fundamental to it. For example, increasing the renewable obligation for transport fuel; making sure that the individual has a clear idea (we will probably put forward plans for each individual to be able, if they want, to see their own carbon footprint and how they reduce it); making sure that you have a carbon budget so that every year you will see how you make progress on this; making sure we have a bigger investment in renewable energy, increasing the energy efficiency for new buildings - all of these things will be part of a forward plan for the Government. We have done better than most countries, although we have not done well enough.

Q4 Mr Yeo: If they are part of a forward plan, and indeed factors like the EU Emissions Trading System will only really have an impact several years down the road, and we have had a situation where, in the last four years, carbon emissions in Britain have been rising, what are the current policies as opposed to these future promised changes that are going to reverse this upward change in carbon emissions?

Mr Blair: If you look just at the last year, for example, the growth has been either very slight or very slightly down. So we have come from a position where we are making substantial improvements on it: for example, the differentiation for excise duty now, the encouragement to use more fuel-efficient sources and what the individual can do. If every individual in the country took just three energy-efficient light bulbs into their home you would have an equivalent amount to saving the whole of the street lighting in the UK. All of these things are important. The truth is, as we know, that at each stage of this there is a balance between what we do as a country and what other countries do. If you remember, when we introduced the Climate Change Levy, which is making a difference - I do not know - of seven or eight million tonnes of carbon, there was a fierce debate that we were penalising British industry, making it uncompetitive vis other European countries. We have shown that we can remain competitive whilst doing that, but all the way through you have to balance those two things: what you are doing individually to set the leadership path and what the rest of the world is doing collectively, given that we are only 2 per cent of emissions.

Q5 Mr Yeo: The conclusion from Nick Stern's report was very strongly that urgent action will be much more cost-effective than any action years down the road. Given that the first big policy statement by the Government after the publication of Stern's report was the Pre-Budget Report, do you agree with Friends of the Earth when they described the Pre-Budget Report as a "feeble" response to Stern?

Mr Blair: No, I do not, actually. My experience - and I say this with the greatest respect to the green NGOs - is that the plaudits you get from them are few and far between because it is in their nature that whatever you do is not enough. I totally understand that is where they are coming from but if you look at what this country has done, and I think this is recognised worldwide, we have been a leader in the climate change debate; we have, as a country, reduced significantly our greenhouse gas emissions and indeed met and exceeded, doubled, our Kyoto targets, and we are one of the very few countries to do so. The Pre-Budget Report in some of the measures that it set out is another stage of the journey. The main thing will be the Climate Change Bill that is going to be published in the next few weeks, and that will set out how we are going to have a more rigorous attempt to reduce CO2 emissions in the time to come. As I say, all the way through you have got to be careful that you are balancing what you do as a country to provide leadership and what other countries are prepared to do themselves. The ultimate answer, let us be under no doubt about this at all, is in a global agreement, and that is why we established at Gleneagles this G8+5 dialogue, and that was the first attempt, if you like, to break the impasse of Kyoto. It is working. If the German Presidency this year can find agreement, as I hope they can, on the principles of a new, post-Kyoto international framework, that is the single best thing we could do as a country to make progress on this issue.

Q6 Mr Yeo: Will the rigorous Climate Change Bill include annual or very frequent targets for cutting emissions?

Mr Blair: It will not have annual targets because we do not believe that is practical, but it will include targets for set periods of time, yes. That is entirely sensible for us to do because it gives us the necessary flexibility but still imposes rigorous targets on the Government. You will find when the Climate Change Bill happens that it will be, certainly, the most radical thing that has been brought forward from Government on the issue to do with green energy, and I think it will make a significant difference. However, I repeat what I have said before, the international aspect of this, in Europe and at the G8+5, is the single biggest thing that will make a difference on this issue. I will be holding further talks with the Americans and others in the next few weeks on this issue; I think there is a changing mood in America as well, which is very positive, and that is why I think it is possible (I do not say as yet "probable") that we will get an agreement at least to the principles that should govern the Kyoto framework after 2012. Those principles, in my view, have got to include (1) a stabilisation goal for climate, (2) some form of agreement to set a carbon price through a capping trade system, and then (3) technology transfer for the poorer and emerging economies.

Q7 Sir George Young: Prime Minister, within the theme that Tim has just mentioned, can we focus on transport, which is the only area where carbon emissions are higher than in 1990, and within that look at aviation, which hardly gets a mention in this document, where emissions were up by 111 per cent since 1990. When you were here a year ago we asked you about the airport duty tax, and what you said is, if you are going to make an impact (to use your words) there has got to be "a pretty hefty whack". Was restoring the airport duty back to £10 for European travel in the Pre-Budget Report a "hefty whack" or was it a light tap on the wrist?

Mr Blair: It was a step. I do not think I was that keen when I spoke to you last on having a hefty whack on the average consumer. I do think on this, because I have had a certain amount of criticism on this myself, the most important thing on aviation is that (1) we get aviation into the European trading system, which we have now got the European Commission to agree from 2011, I think it is, and (2) that we continue the research into, for example, lighter air frames or increased fuel efficiency of aviation fuel. I personally think, and I know this is not a very popular view in certain quarters, that it is just not serious or practical to say to people "Don't travel by air".

Q8 Sir George Young: So when the Chancellor said, in the Pre-Budget Report, that the Government recognised the role that air passenger duty can play in tackling the climate change impact of aviation, was he right or wrong?

Mr Blair: He is absolutely right. Again, stating the obvious, and I am sure you would recognise this from the time you were in government, you have got to balance the different views of people. If you did (and, as I say, I do not think I was advocating a hefty whack on consumers last year; I think I was more or less saying I do not think that is very sensible) you would simply get a backlash from, often, incidentally, some of the lowest-income families, for whom cheap air travel has been a great bonus. I do not think we should be too dismissive of that.

Q9 Sir George Young: I want to come back to whether you will hit your targets if you do not take these serious decisions. On aviation, if you get on a domestic flight CO2 emissions score; if you get on an international flight they do not - they are off the balance sheet. That has to be wrong. Should we not score all emissions from all flights from the UK, wherever the destination, instead of just the domestic ones?

Mr Blair: You probably know more about this than me, but is there not a big debate about, then, how you deal with incoming flights and so on, and what the balance of that is for other countries? The only thing I am saying to you, Sir George, is this: is it not a fact that you will need to make sure that this is done on a global basis? Otherwise the danger is you simply hit UK consumers and UK airlines when, actually, our airline emissions, however you calculate them, are a tiny percentage of overall ----

Q10 Sir George Young: However, somewhere in the equation international emissions should be scored, and at the moment they do not seem to be.

Mr Blair: Is it not also an issue to do with the fact that, for example, Heathrow is a big, hub airport and, therefore, you can get yourself into all sorts of difficulties, I fear, on this, but I am happy to look into that and I can give you a more detailed reply.

Q11 Sir George Young: Can we look at Road Transport. In the document that you sent us you take the credit for a landmark demonstration of road pricing. I think that was the London Congestion Charge, which the Government played very little role in promoting.

Mr Blair: With respect, we played some role in it, since we set up both the London Assembly and the Mayor, and the power to introduce it.

Q12 Sir George Young: When he wanted to do it the Government was nowhere.

Mr Blair: I do not say we were nowhere but I think most people have recognised it was a ground-breaking move. To be honest, I was dubious about it myself but I have to take my hat off to Ken Livingstone - I think he was right about it.

Q13 Sir George Young: It comes back to leadership, in that you were prepared to let somebody else make the running whereas, at the beginning of the presentation, you were saying we are going to need leadership to drive up the targets.

Mr Blair: Sir George, you can make these points but, in the end, most people would accept from the outside that Britain has been a leader in climate change. For example, the Climate Change Levy was a huge thing. I think we were one of the first, if not the first, countries round the world to introduce such a proposal. If you look at the recent increases in the demands for energy efficiency in buildings, there is an immense amount we have done. I think the mood on this issue is changing the whole time. When we first introduced the Climate Change Levy, when we first started this as part of our international discussion and when we first tried to get Europe to introduce the European trading system, the mood was very different. There is a fairer wind behind us today and, therefore, to this extent I think you are right that we can probably be bolder today than we could have got away with politically a few years back.

Q14 Sir George Young: One last question: if you look at the real cost of both driving and flying, they are more affordable now than when you started; if you look at bus and train fares, they have gone up by 31 per cent and 16 per cent. If you want a sustainable and balanced transport policy, and also one that is fair on people with low incomes, should you not actually have reversed those two indicators instead of having them going further apart?

Mr Blair: No, because I think you would have done tremendous damage to people who need to use the car. The best thing is to improve fuel efficiency, which we are - new cars are far more fuel-efficient than the old - and to give greater incentives, as we are doing - there is something like a £200 differential now - for the most fuel-efficient vehicles. This is practical policy making. I suppose, thinking back to the days when I was in opposition and you were in Government, if you were sitting here answering these questions you would have said to me: "You have got to balance out the interests of various different people". If you ended up imposing massive additional fuel duties, for example - remember the fuel protests we had in the year 2,000 - you have got to balance these things and get the balance right. I recall at the time, in the year 2,000, there were many people, I think even in your own party, who were more or less backing the fuel protesters. So, you have to strike a balance. That is all I am saying. I think we are doing the maximum we responsibly should as a country, or will when we introduce the new Climate Change Bill, whilst providing a tremendous amount of energy and commitment in getting the international agreement that is the only way we are going to make a difference on this issue. Otherwise, we end up penalising the British consumer when others are not taking any of the strained circumstances, where they have to in order to make a difference on this issue, because we are such a small part of the overall problem.

Q15 Mr Doran: I am particularly interested in the traditional fuels, coal, oil and gas, and how we can continue to use these, as, inevitably, we will have to, and deal with the consequences. You are probably aware of carbon capture as a new technology which has not been fully developed yet, but Scottish and Southern Energy and BP have plans to redevelop Peterhead Power Station in the North East of Scotland, along with the Miller gas and oil field to give, potentially, the UK a world lead with significant export potential as well as carbon savings. However, BP and Scottish Energy are making it clear that they do not think they are getting enough help from Government - in fact, BP maybe making an announcement this week to that effect and deferring the project. Is it the case, or is there anything at all in these claims of a lack of Government support?

Mr Blair: I am actually very committed to the BP and Peterhead project; it is a very exciting project for carbon capture and storage and if it comes off it will have a big impact not only in its own right, since I think it is about a quarter of a million homes it will heat, but, also, obviously, as a demonstration model for carbon capture and storage it will be immense. The trouble is we have now got about eight or nine different projects all competing, because it requires a significant injection of Government money, and we are having to look at which of these projects is the right one to put the Government money into. That decision will be made later this year, but I certainly would not want to see the BP project go down; it is a fascinating and interesting idea. The trouble is, now that we have got other people who are in the same market with the same type of project, we cannot, as it were, have a bias towards one company or another; we have got, in the end, to choose which is the best project to put our money in. In my job you become very familiar with all the different euphemisms for giving people money, and when they say "more support" what they actually mean is "large amounts of government money". We may do it and it may be that project that gets it, but we are just having to analyse what the claims of the competing projects are.

Q16 Mr Doran: There is bound to be a continuing problem because industry is saying already that they cannot make the progress on climate change to develop the technology without some form of government support. It is important that there is a strategy. Obviously, the announcement by the Chancellor on the setting up of an Energy Technology Institute with the potential for £1 billion worth of investment from public and private sources is quite an exciting idea. I am particularly excited because I think it should be located in the energy capital of Europe, Aberdeen, which is quite close to my heart. Can you say a little more about how the Government sees this development of industrial technology and, particularly, the role that the DTI is likely to have to play in that?

Mr Blair: I think an institute is a very exciting idea, and the idea that we can then link up also with other similar ventures elsewhere in the world. What we have got to do is, essentially, three things: we have, first of all, as I said earlier, got to have an agreement internationally to set a carbon price. You might do that in different ways in different countries but the single biggest driver towards greater fuel efficiency and green energy will be a carbon price that incentivises business and industry through the market to develop the new technology. That is the biggest thing that we could do. The second thing, however, is that we should be investing in renewable energy and things like research into how combined heat and power might work more effectively, and carbon capture and storage, and so on. Some of the work of the institute will be part of that. The third thing is that we have an idea, which I think will emerge from this Policy Review, of a major project which we will try and agree internationally for one particular type of energy to be dealt with in a different way. It may well be that carbon capture and storage is where we go with it, but the idea would be similar in fact to when, for defence purposes, countries came together and pooled their research and technologies to develop the potential of nuclear capability. So I think there is a real possibility of getting ourselves and the other Europeans, the Americans, the Japanese and others into a major project which will allow us, in relation to a particular form of new energy source, to make the investment in the research and the technology necessary to deliver it. All of those ideas are things that we are actively discussing with other countries at the moment. However, we should not be in any doubt about this at all; there will be requirements for individuals to change their behaviour, although I personally think you will not get people to give up the motor car or give up cheap air travel, but there are lots of things that we will ask individuals to do, or help individuals to do. However, the thing that will make the biggest difference is if you get the investment in the science and the technology that will allow us to develop, for example, the fuel cell for the motor vehicle and carbon capture and storage, which would mean that you deal with a lot of the problems that otherwise burning a lot of coal and oil give you. Nuclear energy (again, this is controversial), I am sure, is going to be part of the mix in the future. So all of these issues are going to be major parts of what this Government or any government does in the future. I repeat again, I think energy security is the other thing that is pushing this. Round the world people are becoming increasingly anxious about the future of their energy supply, the security of that energy supply and how you make sure you are not dependent on imports from unstable parts of the world of oil, or gas, or coal. So I think a combination of climate change and energy security will be putting a tremendous focus on this issue. I suspect that at the next election energy security and climate change will be the big issues in that election campaign, as defence was, for example, in the 1980s.

Q17 Mr Jack: Prime Minister, you have painted a big, exciting, interesting world picture, as always, when it comes to climate change issues, but in March we are told that you are going to produce an Energy White Paper. Why can it not be a Climate Change White Paper, bringing together all the strands of this argument, both national and international, to help give focus to the policy strands that you have developed and put before the Committee earlier?

Mr Blair: If you combine it with the Climate Change Bill it will bring both sides together.

Q18 Mr Jack: Why can we not have a White Paper that says "Climate Change White Paper" - something on the front to give focus?

Mr Blair: If you publish a Bill called the "Climate Change Bill", I guess that provides a focus ----

Q19 Mr Jack: Can you not have a White Paper that has that and gives a focus at the same time?

Mr Blair: This is a bit of an obsession on the White Paper front!

Q20 Mr Jack: I did write to you about this before and you subcontracted the answer to the Energy Minister, who said: "We are not too het up about the title of it", giving me hope that we would have a document that said "Climate Change" on the front cover.

Mr Blair: Maybe we will do a special one for you ----

Q21 Mr Jack: This is the first time I have been promised my own White Paper, thank you.

Mr Blair: I do not think it particularly matters whether you have a Climate Change Bill or a Climate Change White Paper, and a Bill is somewhat more advanced than a White Paper, if I remember rightly, but basically the answer to your point is we are going to be bringing both together because the Energy White Paper will deal with, particularly, the question of how we secure our energy supply in the future. Also, it will deal with issues to do with how we have a more efficient use of energy, but it will deal particularly, obviously, with the nuclear power issue and with the new licensing regime and the question of how, and if so how quickly, we can replace the existing generation of nuclear power stations. I think there will be enough in it to get your teeth into.

Q22 Mr Jack: That sounds quite a meaty sandwich and I look forward to my own version. The Climate Change Bill, Prime Minister, you say, is going to be exciting and galvanising and get us all going. I have been running an initiative in my own constituency to make it the most energy efficient in the country, and it is an uphill struggle to gain even a limited pot of resources to put in place an organiser to help all of these initiatives actually happen on the ground. What is this Bill going to do to galvanise community based activity so that all of these messages can actually happen on the ground? At the moment, your climate change initiative from Defra is spending the equivalent of 3p per head on getting the message across. What is going to be different?

Mr Blair: I do not think it is the amount of money we spend that gets the message across but it will deal with things like, for example, the renewable fuels obligation, and the fact that we hope we can double the target in respect of that.

Q23 Mr Jack: Why is it that there are companies who are in the refining business making, at the moment, biofuels who are putting notices out to their stockholders - I was talking to one only last week who said that because the price of oil has come down but the duty rebate on biofuels has not risen to take into account the changed oil price they are cutting back on refining capacity.

Mr Blair: It is precisely those things, plus of course the Budget, that we will be looking at. To be fair, I think you have got a point on the biofuels. I was visiting a company the other day who were making precisely that point to me. Overall, what you will find is there will be a set of measures that will allow both companies and individuals to make a far greater contribution to combating climate change. You have got the Energy White Paper and then, of course, you have got the G8 Summit and the European Council, both of which will, in respect of the European energy position and emissions trading, take major steps forward. Then, of course, you will have the G8+5 dialogue that I continue to think is actually the only practical way ----

Q24 Mr Jack: Fifty per cent of the houses in this country, for example, cannot take advantage of cavity wall insulation. You made a lot of play about new houses and better insulation, and that is very good and we applaud that, but what is the message going to be, either in the Bill or the White Paper, to the 50 per cent of householders who would like to do something but are struggling? They look at the rate of return on wind, photovoltaics and solar heat and say: "My God, I can't deal with the payback on that". How are you going to bring those people in meaningfully to make a real leap forward in reducing energy consumption?

Mr Blair: Precisely those things will be dealt with in the Climate Change Bill. How you incentivise people and the degree to which the Government provides its own financial support is another matter.

Q25 Mr Jack: In Germany, Prime Minister, they have far more use of solar power and wind power and it costs the Government not one euro. Can we not move to a model like that?

Mr Blair: One of the reasons the Germans do this (I think it is in Munich they have done particularly well) is through micro-generation - in other words, you are able to put back into the grid the energy that you are generating. I think it is precisely these kinds of things you will find -----

Q26 Mr Jack: The key, Prime Minister, is the price that is paid back. In Britain you get 4.5p for every kilowatt that you generate at home compared with anywhere between 12p and 14p to buy in. In Germany it is the reverse. Are we going to be as dynamic as that? The Government has told people, for example, that we are going to have a digital turn off: old television out, digital in. Are we going to be as bold to say: "Old light bulbs out, new, energy-saving light bulbs in; old, energy-wasteful equipment out", and so on? Are we really going to be that revolutionary?

Mr Blair: What I think we will be is radical and bold but, also, sensible and practical.

Q27 Mr Jack: What are you going to nail your colours to? It is all right painting these big pictures, but what are you going to do?

Mr Blair: We are doing a lot and will do a lot more, but if you were to tell people that the light bulbs they have in their home - I know you guys have got your own policy review and we will see what you come out with - incentivising people is fine; actually telling people what light bulbs they can have in their own home, I will leave that one to your policy review.

Q28 Sir Patrick Cormack: Prime Minister, I am really glad you are not going to extend the long arm of the law into the living room. You have got your White Paper and you have got your Bill. These are complex issues, and you have got to take people with you. Nuclear has got to be a component, in my view, and, clearly, in yours. Is this not a Bill that, above all others, deserves the most detailed examination, and can you promise this Committee it will have pre-legislative scrutiny?

Mr Blair: I do not know what commitments have been given on that, Sir Patrick, and I am very happy to look at that without giving commitments on it. The desire will be, certainly, to not just have the maximum scrutiny but the maximum consensus on it as well.

Q29 Sir Patrick Cormack: That is the point.

Mr Blair: Yes. I think it may well be possible - it should be possible - to get broad, cross-party consent. Some people may, as we have just heard, want to go further on other aspects, and less far on some aspects but I think the broad principles of it will be basically agreeable to most of the House. On this pre-legislative scrutiny, let me come back to you on it in case they have got some particular reason, for reasons of wanting to move it quickly, why they do not want to do that. If I can come back to you on that.

Q30 Sir Patrick Cormack: I would be grateful because this is the sort of Bill that does need looking at in the House of Commons. You are well aware that in your time as Prime Minister a great many extremely important Bills, some of them highly controversial, have left the House of Commons with large numbers of their clauses and, indeed, whole sections not debated at all, and had it not been for the House of Lords they would not have been debated at all. I put it to you, Prime Minister, that for this to happen to the Climate Change Bill would be completely and utterly unacceptable.

Mr Blair: I have heard what you say and I think it is a perfectly reasonable case, but let me come back to you on the precise way in which we intend to handle it. In general terms, it is obviously right that the more consensual this is the better.

Q31 Mr Yeo: Can we just finish off this section on climate change by going back to the question of taxes, as you have referred more than once to the role taxes can have in addressing climate change. Would you agree that a green tax is one whose purpose is to change behaviour rather than to raise revenue?

Mr Blair: Yes. My general experience of taxes is that they are designed to raise revenue whatever other purposes people say. Of course, it is important that in order to qualify properly as a green tax they have some sort of impact on behaviour that is designed to reduce the impact on the environment.

Q32 Mr Yeo: Do you think that the two examples, one of the raising of air passenger duty in the Pre-Budget Report, and the differential you referred to about Vehicle Excise Duty for different types of cars, are actually having an effect on people's behaviour or are they just building up the Treasury coffers?

Mr Blair: No, I think the duty differential undoubtedly does and I think the air passenger duty will have some impact. Sometimes people say, for example, (and I know this is a point that is often made) that the proportion of, as it were, green taxes has gone down not up in the past few years. The reason for that was the removal of the fuel duty escalator. Having gone through the fuel protest myself, it was a reminder to me of the fact that, as I said a moment or two ago, however radical your proposals are they have also got to be sensible, particularly in areas where you are going to impact heavily on what people regard as also their right, which is to drive if they have to drive and to be able to take flights to visit different countries or even within our own country. You have to strike a balance, is all I am saying. Any government would have to strike a balance. I am well aware of the fact that some of what I have said today will not be very palatable to some of the green groups, but I realised that that was bound to be the case some time ago.

Chairman: We now move on to public service, the role of the state. Phil Willis, please.

Q33 Mr Willis: Prime Minister, the Strategy Unit Report indicates that in terms of driving up the quality of the public services there will be tensions created between the bottom-down role of the state, the horizontal pressures coming in with new delivery systems but, in particular, this bottom-up, so this consumer choice and indeed empowering the individual and the citizen. Could you say what evidence there is that patient choice in health drives up quality? What evidence do you have for that?

Mr Blair: A lot of evidence, on waiting lists particularly. The big falls in waiting lists ---

Q34 Mr Willis: About quality.

Mr Blair: I think for a lot of people the one major component of the quality of their healthcare is the speed of access to the health service. I keep saying to people that a lower waiting list is far less of an issue today; when we came to office in 1997 it was the issue.

Q35 Mr Willis: Prime Minister, you are going off on another tangent. I want you to ask you a specific question, which is about the quality of healthcare. I asked you where is the evidence to show that increasing patient choice actually improves the outcomes. Where is the evidence?

Mr Blair: What I am saying to you is that if you are a patient who is waiting a long time, for example, for a cataract operation, and you now get it done within a few months rather than two years that improves the quality of your healthcare.

Q36 Mr Willis: Let me move on to look at this bottom-up pressure in terms of hospitals and particularly in terms of elective surgery, and follow that through. How meaningful is choice if in fact the hospital you go to is not selected by the individual patient, is not even selected by the GP, but in fact is selected by faceless bureaucrats working at the PCT, all of whom are employed directly by the state? How is that bottom-up choice influencing healthcare?

Mr Blair: The way that choice influences healthcare is, for example, a patient will go along to see the GP and they will offer a range of different hospitals that they could go to. I think increasingly as this develops over time the patients will be able to see how the hospital performs and whether they think they are liable to get the right type of care. All the evidence we have, including, incidentally, the patient surveys that we do, show that choice is really popular with patients.

Q37 Mr Willis: If you go, Prime Minister, to York in North Yorkshire, which has the largest deficit at the moment, none of that happens at all. The doctor cannot choose the local hospital because it is the PCT that is making the menu for the patient to choose at the end of the day. That is not choice by the individual empowering and changing the service, it is the state dictating what you can have according to the budget that is available, and the rest is an illusion, Prime Minister.

Mr Blair: I do not think it is an illusion really. There would be individual circumstances, and I do not know enough about the particular healthcare situation in your locality as to what the issues are to do with the deficit and how that is managed and so on. But when payment by results comes in, which means that the money really does follow the patient, then I think it is a very sensible thing for us to be able to maximise capacity anywhere in the system so that, for example, a patient instead of having to wait a long period of time can get a shorter wait by going elsewhere. What we are about to do over the next few weeks, incidentally, is to announce a whole series of things on the diagnostic side where we will be using partnerships between the public and the independent sector to mean that you shorten the diagnostic waits, because very often what happens to the people is that they have to wait a long time getting, for example their MRI scan or this type of thing. I think that most people in the modern world expect to have some say over the services provided for them. If I were to make a criticism of the Government on choice it would be to go faster and further and not do not go there at all.

Q38 Mr Willis: So in terms of dentistry, where people had, when you came into office, a free NHS dentistry service, where was the bottom-up pressure to dismantle that in large parts of the country and to create a private sector led dental care service, to which they have to pay?

Mr Blair: That is not what happened.

Q39 Mr Willis: That is the reality, Prime Minister.

Mr Blair: The reality is this, surely? When the dental contract was changed back in 1990 - and if one is absolutely frank about it I think there were things driving this change that would have impacted on any government - a lot of dentists decided that they would go into private practice. In so far as it is possible we have recruited more NHS dentists and so on, but dentistry is a changing world. I do not think that you can compare that to what I would say are the routine elective operations or non-elective operations happening within the health service today. The issue to do with dentistry is that it is a changing service here and right around the world because the nature of dental care is changing so fast.

Q40 Mr Barron: The central targets inside the National Health Service, it would be churlish not to say that the issue around waiting lists and waiting times, particularly for orthopaedic surgery and others, have been a success and they have certainly moved them. When the Health Select Committee was taking evidence last year in relation to the current deficit situation one thing that struck us was the central target on A & E waits of four hours - 98 per cent was the actual figure that people had to meet. We were told by several NHS Chief Executives that the movement from 95 per cent to 98 per cent was a very expensive figure to get that last three per cent of the target. The real question is: why did we say it was 98 per cent and not 95 per cent? Was this evidence-based?

Mr Blair: It was really to try and get the last bit of it done so that you really had that quantum shift in improvement in the Accident & Emergency services. Although, to be fair, what you have heard and I have heard myself from people who work in Accident & Emergency departments, as we refine those targets, moving forward, which we will do in the years to come where we have a different system operating in the health service anyway, then I think we can probably take account of some of those worries. Accident & Emergency is a very good example of where, whatever people say - and there is a report from someone today saying that the targets are all fiddled - the best judgment on Accident & Emergency is anyone who has experienced Accident & Emergency today compared with ten years ago, and it is significantly better - significantly better. I do not think that that would have been achieved without a central performance driven target backed up, of course, by the work that we had, which is the modernisation team that went to each Accident & Emergency department, and who said, "Here are the changes in practice that you can make." I remember the meeting in Downing Street several years back when we decided to establish that way of doing it because I was saying to people, "This is absurd. If your Accident and Emergency department handles millions of people a year it is, if you like, the shop window of the NHS, and since there are Accident & Emergency services that work well we have to be able to make that work in all different places." I think if we had not had that sentry-driven approach in this instance we would never have had the quantum shift in improvement that had. The interesting thing is that when the BMA were attacking us on Accident & Emergency services a few weeks ago in parenthesis they said, "Of course, the service has been transformed over the last ten years."

Q41 Mr Barron: Do you think then that this top-down setting of targets in areas like this, given that there has been improvement, is the way forward for the future, or do you think that we should have local made targets in terms of what should be happening in healthcare?

Mr Blair: That is a very good question. I think it depends on what area you are dealing with. I would say that in certain areas - cancer, again, having a central target helped. I do not believe we would have got the big changes in waiting lists if we had not gone from 18 months down to 12 months down to nine, down to six. But given that there is a virtual revolution in the financial accounting within the health service that is going on now, I think it will allow us in time to minimise the central targets and to have what I call a more self sustaining set of changes in the system. Because the money is following the patient, patients will have greater choice, there will be incentives for GP services and primary care to pull things back out of the acute sector. The basic problem in our healthcare system, but also in healthcare systems around the world - incidentally, there is no country you can go to where there is not a raging debate about the state of their health service because you have growing numbers of elderly people, masses more cures and treatments, new technology, increasing demand and expectation - and the thing that comes out of all of them is how you get the most appropriate care in the most appropriate setting. If you ask any Accident & Emergency consultant they will tell you that probably half of the people who go to their A & E should not really be in A & E. If you look at the numbers of people who are going into hospital because they have a chronic condition which could be managed outside the hospital it is a very significant number of the hospital beds that we have. As you improve the numbers of people who have day case surgery and so on you will find a big, big change, and what we have to watch is that there is a proper alignment between the central targets and the reality of very diverse local provision driven by local need. I agree that that is the big question for the next Comprehensive Spending Review certainly over the next few years for Government.

Q42 Mr Barron: Would not the logic say, given that patient choice currently is informed in terms of waiting times at the hospitals that are on offer, as it were, that patient choice is going to take over from this national target setting and it will be the patient who will decide, on the basis of what is on offer locally, where they are going to go and not necessarily the National Health Service or Richmond House telling them what targets they should work to?

Mr Blair: I think you are absolutely right. In years to come that is where you want to get to, but you are a way off it yet. I do not think we should underestimate what has been achieved in the health service over the past few years. Indeed, what I thought was interesting about the Today programme's set of analyses of the health service is that what began at the beginning of the week as "Where has all the money gone?" at the end of the week was, "Are the improvements enough?" There is no doubt at all that the health service has improved and improved significantly. I think you are right that going forward the question is that when you introduce a new financial system, which we are doing through payment by results, when you have practice-based commissioning on an across the board scale and when you have patient choice, when these three parts of the new system are embedded then the degree to which you need central targets will be significantly diminished. It is just that you are a way off that yet, and my fear is that if you withdrew the central pressure at the moment the system would start to retreat.

Q43 Andrew Miller: The Review Paper talks about empowering consumers and reshaping Whitehall and in the transformation of government review published a couple of weeks ago refers to a delegated committee for developing information sharing across the public sector. The DWP in fact on 15 January made a statement about this. It is an important structural change in the way that Whitehall works. What guarantees will the public have that their data will not be improperly accessed and how do you envisage a rapid procedure being developed to ensure that errors in databases can be corrected?

Mr Blair: We are looking at this across Government now and Hilary Armstrong is chairing the relevant Cabinet committee on it. This is a really important question but I do think we need a better public debate about it. It will be possible for people to object to their details going on the electronic patient record, but let us be under no doubt at all that an electronic patient record across the National Health Service has the possibility of immense improvements in service and savings lives. Of course you have to have proper safeguards but I find this really quite a curious situation. We think of this "Big Brother" thing coming in with an electronic patient record and using the new technology, when what it is going to mean, very simply, is that if, for example, you are taken ill in a different part of the country from where your GP is you can access immediately the details of somebody's health care - what drugs they may need or want to use - and it can hugely speed up both the quality of care and, potentially, the difference between the care being appropriate and therefore saving someone's life or not.

Q44 Andrew Miller: Beyond health, what about departments like the DWP?

Mr Blair: Again, it depends on what information is there, but I think it is sensible for us to share as much information as possible, subject to proper safeguards.

Q45 Andrew Miller: How do you see the citizen having the right to correct errors that appear on this database? After all, human error occurs.

Mr Blair: Of course, and I think the very thing that we are looking at now is how do you make sure that if an error is discovered that it is corrected as soon as possible, and also that the individual has maximum transparency of the information that is held on them? I find this curious, for example, in the context of the whole identity card debate because the actual information on the identity database is basically what is on your passport - it is not a great deal of information, the average store card has more information; and also if you take Google Earth now and what it can do in terms of going down the street in which people live. Someone was saying the other day that Government is creating this great new database with this massive information on individuals, and we are not. The technology now exists to be able to share data in order to give people an improved service; for example, many people will now do their car tax on line - it is a better way to do it. I think provided that there are proper safeguards - and we do need to make sure it is subject to proper debate and proper scrutiny - then it would be bizarre, when in every other walk of life the technology is being used to enhance service, that in the public service we have put down a barrier.

Mr Willis: The issue of human rights, Prime Minister. Andrew Dismore.

Q46 Mr Dismore: Prime Minister, if someone dies in custody because of a gross failure in the management system to protect him should the prison service or the private prison company be held accountable through the Corporate Manslaughter Bill?

Mr Blair: This is the debate we were defeated on in the House of Lords last night and we will take it away and look at it again. Let us see what we can do. The worry here is if you apply corporate manslaughter in these particular circumstances whether you end up causing a real problem for the way in which the prison or the custody system will work in respect of people who can, obviously, from time to time, pose a real threat to the people who are trying to restrain them. I do not think I will say any more about it than Patricia Scotland said last night, which we will look at.

Q47 Mr Dismore: One further point on that. There have been various suggestions - quite strong suggestions - behind the scenes that if this new parliament decides that it wants to have this in the Bill the Government would withdraw the Bill rather than allowing that to go ahead. Could you dispel those suggestions now for us?

Mr Blair: I have not heard that, I must say. No, I think it is important that we have the Bill but we are going to have to make up our minds on this. Our desire was to try and accommodate reasonable opinion as much as possible; it is just that, as often happens in government, we have two very diametrically opposed views as to what the right thing to do is and we need to try and make a balanced judgment about it.

Q48 Mr Dismore: Due to the uncertainty of what is a public authority under the Human Rights Act is privatisation and contracting out not undermining the protections of the Act for the most vulnerable people, like the elderly and disabled, placed by councils, for example, in private sector care homes?

Mr Blair: I do not think so because I think that anyone who is providing a public service is clearly subject to the same rules, but I think that this issue to do with the delivery of service is one of the main things that will come out of the Policy Review. I think the emerging conclusion is that we need to go even further in breaking down the barriers between the public, private and voluntary sector. I, for example, think that the voluntary sector can play a hugely enhanced part in delivering services, for example for offenders and offender management - it is a big debate for people - but I do not think that using the voluntary sector in this way would in any shape or form displace the basic protection of people.

Q49 Mr Dismore: The problem is that decisions of the Court of Appeal have made it clear that the Human Rights Act does not apply, for example, to private sector care homes, and the only way it can be done is very indirectly through local authority contracting. Is that not something we need to deal with through either winning a case, which we have so far not been able to do, or, alternatively, amending the Bill to clarify that this is what applies?

Mr Blair: I think you are right in saying that there is an issue there. The way to deal with it is to make sure that public and private bodies are treated the same when they are providing a public service, rather than stopping the private body or the private group, whether it is voluntary or independent, having a role in the delivery of services.

Q50 Mr Leigh: Good morning, Prime Minister.

Mr Blair: Good morning, Edward.

Q51 Mr Leigh: I am a Conservative, so relatively speaking I am a friend of yours this morning!

Mr Blair: Thank you!

Q52 Mr Leigh: You talked about the voluntary sector to Andrew just a moment ago, and clearly you want to increase the role of the voluntary sector. The trouble with the voluntary sector is that it is heavily dependent on faith groups, and the inconvenient thing about faith groups is that they have strong opinions. Do you agree, for instance, with Archbishop Vincent Nicholls when he said, "Those who are elected to fashion our laws are not elected to be our moral tutors and the wise among them would not wish it either." Do you agree with him?

Mr Blair: I think that the faith-based agencies, for example in relation to adoption, do fantastic work, and that is why we have set this two-year period, effectively, and an independent assessment of how we make sure they carry on their excellent work. But there is a problem, if I can service it very openly, which is that I certainly believe that we should not discriminate against people on the grounds of their race, their gender or indeed their sexuality. So the question is, how do you measure those things up in circumstances where a faith-based agency - and I totally understand the reasons for that - say, "We have a conscience objection" to, for example, adoption by gay couples. We are trying to find a way to make sure over this next couple of years that the catholic adoption agencies carry on their excellent work - as they do excellent work and are very dedicated people - but at the same time you remove discrimination. These types of debates are always difficult but if people are sensible enough we can find a way through it. It may be by having consortiums, for example, and there would be a gateway into adoption which would allow this issue to be taken care of, because I think it would be a tragedy if those adoption agencies did not carry on their good work. But I also think, personally, that we do not want a situation where we are discriminating against people on the grounds of their sexuality.

Q53 Mr Leigh: So discrimination trumps conscience in this regard?

Mr Blair: It is not that it trumps conscience, but supposing - and I am not suggesting this for a single moment - that you had a particular group that said for various reasons they believed that women were not suitable to do various things? It is very difficult. These are areas where you are absolutely at the cusp of what are difficult judgments that we all have to make as law makers and I tend, myself, to try not to take an absolutist view. But I could not in the end justify a situation where you would discriminate, where you effectively say in legislation that you are going to allow discrimination.

Q54 Mr Leigh: Could I just stop you there? I agree with you entirely, but then why in the ten years that you have been Prime Minister have you left on the statute book a blatant piece of discrimination which says that if any member of the Royal Family marries a Roman Catholic then they should be kicked out of the Royal Family? Why have you left it on the statute book?

Mr Blair: Good point, Edward!

Q55 Mr Leigh: Is it not state organised hypocrisy in this regard?

Mr Blair: I think it is terrible, terrible!

Q56 Mr Leigh: Do something about it then.

Mr Blair: Absolutely. When we come to talk about the ten-year legacy we can pick that out as a major omission. These are questions that I think people of goodwill can find a way through. Most people in our society today do not want to discriminate against people on the grounds of their sexuality, and I may say particularly in circumstances where the catholic adoption agencies do have a policy of allowing adoption by single gay men. So I think in those circumstances how do we make sure that the principle of discrimination is protected and the children that desperately need this service are also protected? I am committed to finding a way through it. I actually believe, away from all the thunder of the public debate, that we will find a way through this that will allow these adoption agencies to continue their work. For very obvious reasons I happen to believe that faith is a good not a bad thing, so I think in the end we never want to reach a situation where people who do have a religious faith feel in any sense that they are being shut out of either the political system or being able to provide a great service to people in a faith-based way.

Q57 Mr Willis: Prime Minister, I think we will return to the Act of Settlement a little later. I think it needs a longer session!

Mr Blair: I was just thinking that it might be something for my successor really! It is a useful one to leave around!

Mr Willis: Dr Wright.

Q58 Dr Wright: Prime Minister, the Strategy Review is a very good thing, in my view, and it has some chance of lifting the quality of public debate. I think you are to be congratulated for it. Could I test one of its assumptions? It talks about the state and it says in one of its conclusions that a range of pressures will require a new role for the state. What I would like to know is do you think that that role is going to be bigger, smaller or about the same size as now?

Mr Blair: I think it will mean a smaller centre but when the state moves to what I would call a more strategic role I think it has two implications: one, that you distinguish even more between the state as commissioner and the state as provider - in other words, you open up a diversity of supply in public services. That is why you have a new system in the health service with independent providers; why you have a different range of schools, Trust Schools, City Academies, Specialist Schools, et cetera; and why you involve the voluntary sector and the independent sector more in the provision of services. So it has that implication, and the second implication is that within Whitehall itself we need a far greater focus on what I will call the delivery of project management skills, rather than the traditional policy adviser.

Q59 Dr Wright: But those are to do with how the state organises itself. What I am asking you is, at the moment the state takes about 42 per cent of GDP. The evidence from this Review shows that the pressures on the state are getting bigger all the time; the expectations are getting larger all the time. What I am asking you is, does that mean that the state itself gets bigger, or does it mean that we ask people in the future to pay for things that they do not pay for now?

Mr Blair: That is obviously a very good question. That is not so much how the state organises itself, but you mean the actual overall public spending as a proportion of the national income? I do not have in my own mind - people have in politics over the last 30 or 40 years, and I remember Roy Jenkins famously doing it in the 1970s - a particular figure that is the right figure or approximately the right figure as public spending as a proportion of GDP. Supposing we even wanted to keep it round about where it is now but deal with the pressures for the future, then I think it will mean that we have to change what government spends its money on. Let me give you an example. I do not believe that we will be able to provide our pensions or public services in the future unless we raise significantly the proportion of people of working age in work, probably getting it up to 80 per cent. That will mean, for example, that when we publish David Freud's Welfare Reform Programme, which we will do probably at the end of this month or early next month, there will be some quite difficult proposals in relation to how people come off benefit and into work - lone parents, people on incapacity benefit and so on. That is one area, if you like, in which we are going to have to look at how we rebalance what is almost a generational compact between those of working age today and those who are going to be pensioners in the future.

Q60 Dr Wright: Let me just try this one more time?

Mr Blair: Sorry, have I not answered it?

Q61 Dr Wright: The demands of state are getting bigger all the time; your own evidence shows this. How do we respond to it? The Opposition tell us that they would not let the state grow in line with economic growth; they think that there is a magical commodity called social responsibility, which is going to fill the gap. Something has to fill the gap because the gap is there and your own figures show it. So what I am saying is, is it, for example, as you are introducing charges for using roads or for tuition fees, that that is going to be extended and we are going to be talking about things like health charges and charges in other areas? Is that one of the responses to what you are showing here?

Mr Blair: I do not think for health and for education that that is so, but you have just mentioned areas where there will be, for example road pricing in the future. I do not believe you will get consent for general taxpayer funded massive investment in transport, I think you will have to do that - and we are looking at it in relation to Crossrail, incidentally, now - on a basis that spreads the cost. So in that sense, yes, you are right, but I can give you another example of where government may spend less in one area in order to spend more in another.

Mr Willis: The issue of public engagement is crucial. Rosemary McKenna.

Q62 Rosemary McKenna: You rightly said, Prime Minister, that many of the issues in the Policy Review are hot topics in the country and will be over the next few years, yet there is evidence of political disengagement. How can we address that? How can we re-engage people in the political process?

Mr Blair: This is a very big question in politics as to what the issues are around disengagement. I think the most important thing is that people feel that their politicians, their political leaders of whatever party are engaged in debating the real issues that really concern them. How many of us know? Whatever things are in and out of the news every day, if you were to get any group of people in any one of our constituencies and say, "What is the principal issue?" they would probably say anti-social behaviour and what is happening in the street outside their front door. Aligning those two things is extremely difficult but I think we do need, more than ever before, particularly for the reasons that Tony was just giving, a public debate about where do we want to spend money, what is the balance and what is the responsibility? This is the heart of the pension legislation we have. We have decided that we are going to give a basic state pension foundation which is going to be re-linked to earnings now, but on top of that the individual is going to have make up the difference.

Q63 Rosemary McKenna: I think we do need a big debate but the national media do not seem to want to be involved in that. Is it going to be, as you have done in Number 10, with the website, and with the petitions, that individual MPs are going to interact with constituents in a way that is one to one rather than a big public debate?

Mr Blair: My own view is that politics will move forward and political parties - and government as well - will have to find completely different ways of engaging with people, using new technology. Some of what we are doing here is stakeholder engagement and citizens' forums and things, but it is immensely difficult. If you look at this it is a problem for any major, industrialised democracy around the world today it is how do you engage people in a major debate in circumstances where a lot of what is in the news basically works by impact? And in my view, today it is scandal and controversy. A policy debate is not very interesting for people in terms of news coverage. So how do you get people to engage in these big debates? I think you have to go out and find different ways of doing it, using the Internet and new technology. I thought the way that the Today programme did the health thing last week, just to mention it again, was quite an interesting way of having a more extensive debate and more in-depth over a period of time. We are all trying to come to terms with the fact that you have a completely different atmosphere in which political debate takes place today. After all, we have Sure Start, for example, and children's centres which are a whole new frontier of welfare provision, and there is a whole set of things that people want the state to do more for them. Sometimes we have this debate about the "nanny state" but my experience is that on certain issues, yes, the public will object to the nanny state, being told what to do, or whatever, but in lots of other areas people want the state to do more and not less. Childcare is a very obvious example. As people try and balance work and family life, they are not saying, "Get the state out of childcare," they are saying, "Give me some help." What was interesting, for example, was the smoking debate which many of us, myself included, came into thinking, "Well, people may just say this is a step too far for the state", but actually I am not sure that they did in the end. In the end they said, "No, we want you to intervene in this area." There is a very difficult set of questions there that comes up for us. Where I do think there is a big change is that people do want to have greater power and control over whatever service the state gives them. That is why I think the other part of this agenda has got to be about treating people as consumers and as taxpayers. They are not going to put up with a paternalistic service that is handed down from on high where they are just told that they are lucky to have it; that is not the way they look at it any more.

Chairman: Thank you. We now move on to security, crime and justice. John Denham will open on that.

Q64 Mr Denham: Prime Minister, as you say, crime is down substantially and even if people believe that crime is rising their personal fear of crime is also down, so there is good news, but we now spend more of our national income on law and order than any other industrialised country. Has the Policy Review come to any conclusions about whether we are getting value for money for all that spending?

Mr Blair: I think that there are emerging conclusions that mean quite a big change in the way that we will develop the criminal justice system in the future. I think there are three basic conclusions. The first is that you do need to target the offender and not the offence, and yet still the basic position of the criminal justice system is to look at the offence and not the offender. I think that, secondly, non-custodial sentences and making them effective so that the public and the community has confidence in them - for example, extending the community payback scheme - is very important. Then the third aspect of it is this business to do with early prevention and intervention. I think one of the biggest issues we are going to face as a country in the next ten years is - and I got into all this problem when I was talking about this a few months ago when people said "Baby ASBOs" and all this nonsense, but if you talk to any primary school teacher today they will be able to tell you the kids they think are going right off the rails aged six or seven, and sometimes even earlier than that - how you deal with a small number of very dysfunctional families. I think that is a major question going forward for us.

Q65 Mr Denham: Thank you, Prime Minister. Just on non-custodial sentences and making them more convincing, is there any reason you can think of why people doing community payback should not do part of their sentence in a recognisable uniform?

Mr Blair: No, I think it is perfectly sensible if they do do that.

Q66 Mr Denham: Thank you, Prime Minister. On value for money, the astonishing thing is that the sharp fall in crime was in the early years of your leadership when we were spending rather less on law and order. Since 2001, we have had 30,000 extra police officers, about 10,000 more CSOs, a big increase in police staff, and yet the number of offenders actually brought to court has fallen. How can we have such a big investment in the resources of the Police Service, backed up by big investment in DNA and no obvious improvement in the effectiveness of the police force itself?

Mr Blair: My recollection is that the number of offenders brought to justice has increased in the past few years not decreased.

Q67 Mr Denham: There has been a sharp increase, which I acknowledge, in fixed penalties for drunkenness and in cautions for cannabis possession since the downgrading, but according to the papers that ministers got from your own Policy Unit there has actually been a fall in the number of cases going to court. Even if it was level it seems a very poor return for such a sharp increase in the number of police officers and CSOs.

Mr Blair: The other thing I would say, though, is if you take the British Crime Survey which is, on one measure, the best measure of crime, then obviously there has been a substantial fall, but there is more crime being recorded and the recording of crime is better than it has ever been. I would say that part of the reason, however, for this problem - and this is the background for the Government's review - is that the sophistication of organised crime, particularly organised crime in relation to drugs and people trafficking, plus anti-social behaviour, means that we have got a far tougher task than we have had before.

Q68 Mr Denham: I am interested, Prime Minister, in where the Policy Review will take us because according to the papers that were put to ministers in November, they said that top-down targets in police performance have provided improvements but also some perverse incentives such as offenders brought to justice resulting in thousands of cannabis cautions." Secondly, it said that "strong accountability at local level could ensure system pressure on the police but there has been a lack of political will to take that forward." Is that your political will, Prime Minister?

Mr Blair: I think these are fair comments actually. For example, when we had a problem in London on street crime - and if you remember it was rocketing and I called everyone in and we sat down and we worked out a proper plan to deal with it - you have always got a risk that when you are targeting a particular issue which is a hot issue that people want something done about that you take your eye off other things. That is one aspect of this. The second aspect is how you get better police accountability. It is not a central government political will that is a problem. It is that what you need is the local mechanisms whereby the police and the local community are interacting in a far better way. That is part of what we want to propose in the course of this Policy Review so that more of it is done at the basic command unit level rather than at the level of the county or the metropolitan force.

Q69 Mr Denham: But would it be fair to say that the return so far for all the extra police officers and CSOs has been disappointing?

Mr Blair: I do not think I would say that, however what I do believe is when you look at how the nature of crime is changing and the types of crime that we are going to deal with, then the reforms that we are trying to introduce in the criminal justice system are of greater importance, I think, than ever before. For example, we know that 50 per cent or 60 per cent of acquisitive crime is driven by drug abuse. We have increased dramatically the amount of drug treatment places and so on. However, we still do not have the system in the state that I would like it, which is that anybody who is arrested for certain categories of this type of acquisitive crime is tested for drugs and if they are tested positive they then go into drug treatment and go into it quickly, otherwise they may not get bail or otherwise at the end of it they may get a custodial sentence. I still think we have got to gear up to a far greater degree on that. I also think, incidentally, in relation to the way that the court processes work that we still have a long way to go even though we have significantly reduced ineffective trials and the amount of time that is wasted in adjourned hearings and so on; we still need to do far more.

Q70 Mr Denham: Prime Minister, you have emphasised early prevention a number of times. Again in the papers that were put to ministers by your Strategy Unit ministers were told: "Much of the focus of policy in recent years has been on enforcement and punishment even though effectiveness is likely to be greatest from preventative interventions." Do you accept that analysis, given that we have had so many Criminal Justice Bills and yet the co-ordination of different government departments in early prevention dealing with dysfunctional families is still way short of where it should be? Can you explain why the emphasis has been so distorted away from what you once called "action on the causes of crime" which is going to be more effective?

Mr Blair: I would say two things about that. First of all, I do not think one should ever ignore the fact that the public out there do actually want tough measures of enforcement against those who are committing criminal offences and one of the reasons why the prison population has been rising, I think for the last 12 or 14 years, is precisely because the public, reflected in the sentencing, have been saying, "We want tougher sentences for people." I do not think it is an either/or but I agree you have to do more on early intervention. I think the real issue for us is not that we have not done a lot on the causes of crime, actually we have - the New Deal, Sure Start, additional nursery provision, inner city regeneration, which has had a big impact in many, many areas - it comes back to, and this is where I think the policy gap is and I agree with you on this, the real problem which is that if you take something like Sure Start, for example, which I think has been tremendously successful and is very popular in local communities, the families that you want to get engaged with it are families that do not always come forward, and therefore you have got to have a different way of going out and making sure they are bound into the system. That is why we are looking at things like, for example, the Dundee Family Project and so on. It is a very difficult thing, let us be quite clear about this, but in my view you are going to have to say to some of these families before they get into serious law-breaking, "You are off the rails. We are not going to carry on supporting you through the benefits system or putting large sums of money in from social services unless you are within a proper, structured environment with rules that you have to abide to and if you do not abide by those rules you are going to find you liberty increasingly constrained." That is a very heavy thing to say when people are not necessarily yet involved in law-breaking, but my view is that is what it needs. None of that means, incidentally, that at the other end of it you will not have to take tough enforcement measures against those who are committing serious crimes but the basic review is showing that unless you have this targeted early intervention, you are always going to be running to catch up.

Q71 Mr Beith: Before we leave enforcement measures, let us just have a look at prisons. The policy says that "without action, upward pressure on prison numbers will continue." You seem to treat prisons as if they are a solution whereas in fact they are pressure cookers of violence, increasingly dangerous for prison officers and dangerous for prisoners and disgorging prisoners with a huge tendency to reoffend. So what is the action that is going to reduce this upward pressure on prison numbers?

Mr Blair: Again, Alan, one has got to be careful here because you have always had a high reoffending rate from prisoners, but government is subject to two countervailing pressures here which it has got to make sense of because the public out there think that prison sentences are not tough enough.

Q72 Mr Beith: What is the action? You speak about action to reduce upward pressure.

Mr Blair: The action I think is this: to make sure that you have non-custodial sentences that are sufficiently robust and tough and treated as such, but then that it is the people that really need to be in custody that are in custody, that is one answer, and the second answer is to make sure that you treat the offender and not the offence. For example, I think it is worth us investing a lot more on ensuring that when people leave prison it is not just that they have some contact with their probation officer, but for example issues to do with housing and employment are also dealt with, because often what happens to these young men is that they come out of prison, they may actually want to take a different avenue in their life but they do not find the opportunities there and then they get drawn back into the same net of criminality that they emerged from before.

Q73 Mr Beith: We all agree with you about that but we are worried that that is not where some of the money is going. I need to move you on to another key aspect of what you are saying which is you talk about the need for a trade-off between liberty and security and you talk about all the technologies which can now be used, you said earlier it was bizarre to worry about the Government using these new technologies, but if you are trying to make the trade-offs between liberty and security what, in your mind, are the liberties which have to be protected against the encroachment of security policy. Can you name me a couple of things which for you are the borderlines; this far we do not go.

Mr Blair: The basic principles of the criminal justice system must remain intact and what that means is that you have a system that convicts the guilty and acquits the innocent, but let me give you two examples of where I think this is very difficult. The first is in relation to things like fixed penalty notices and indeed to the new powers that we are giving the Serious and Organised Crime Agency to fight serious and organised crime. The truth is that a summary judgment is made in fixed penalty notices for drunk and disorderly or low-level disorder of one sort or another. These powers that will allow the Serious and Organised Crime Agency to freeze people's assets and accounts are also summary powers. The person then has to go to court in order to retrieve the situation rather than the other way round. I do not see, however, that you can fight crime in any other way.

Q74 Mr Beith: Nothing actually came out automatically. When I pressed the button of asking you what are the things you worry about, things like presumption of innocence, fair trial, prohibition of torture, habeas corpus, freedom of association - are these not concepts that you immediately apply when someone comes to you with a new wheeze for a new policy that can be used to fight crime?

Mr Blair: Yes of course, but let us just go to the practical problem of decision-making in the area.

Q75 Mr Beith: This is a trade-off and there has to be some way of protecting basic liberties.

Mr Blair: Of course but here is the issue and let me give you another example, the DNA database. We have expanded that DNA database. That is the reason why you keep reading in the newspapers about rapists from ten or 20 years ago now being convicted. I do not know how many crimes we are now helping solve through it but it is thousands, right, and these are sometimes rapes and murders where otherwise we would never have a chance of getting a conviction. What I am saying to people is I understand that this is a difficult thing that you put everybody who comes in contact with the criminal justice system on this database but, on the other hand, if you do not have that database then there are people who are walking the street today who may commit a very serious criminal offence who should in fact have been convicted and found guilty. The fixed penalty notice is a classic example.

Q76 Mr Beith: I know the story, I am quite familiar with the system.

Mr Blair: That is the point I am making to you that these are difficult things. The reason we introduced these summary penalties is because the police were saying to us, "Look if someone is drunk and disorderly and we are expected to take them through a six-month court process and in the end they get a fine, we are not going to do it."

Q77 Mr Beith: I am just trying to find out if there is some mechanism whereby you test policies against basic civil liberties considerations. Another one for example is the danger that that power will be misused, so when you saw the elderly heckler being bundled out of the Labour Party Conference on terrorism powers, when you see somebody punished or prohibited from reading out a list of names of war dead in Whitehall, do you not stop and think, "We have created powers which are wide open to abuse and used for the wrong purposes?"

Mr Blair: Look, I do not think there has ever been a heckler more apologised to in all the history of heckling and now as an additional punishment for us, and probably for him, he is sitting on Labour's National Executive, so let us not get this completely out of kilter! Also, incidentally, the idea that people are not entitled or not able to make their points about being against the war - come off it.

Q78 Mr Beith: Abuse of power is the question, or misuse, let me say misuse of power.

Mr Blair: The answer to your question is, yes, of course in respect of any proposal you test it against the fundamental issues to do with the criminal justice system, but my point to you is that the difficulty is that in some of these areas there is a very hard choice that has to be made. For example, before we had ASBOs there was nothing to protect people in their local communities. The ASBO is a change in the traditional way the criminal justice system works. I just tell you, if you go into any local community their worry is, "How do we get the ASBO and enforce it?" not "Why is it there?" and I think we have got to be careful as law makers that we are not literally living on a different planet from the public out there who is saying, that yes, of course people's basic civil liberties are important but my basic civil liberty not to have my window put in by a gang of hoodlums is also something that we want you to protect.

Q79 Mr Beith: We are back to not having a system for testing.

Mr Blair: But we do have a system for testing it.

Q80 Mr Denham: Prime Minister, if I could move us on; do you now support the Home Secretary's proposals to split the Home Office?

Mr Blair: We will take a decision on that in the next few weeks, John. Obviously this is a proposal that the Home Secretary has put to us and we have got to consider it within Government. I do think, though, that we will need to change the basic structures within Government as to how we handle terrorism to make sure that we handle it more effectively, yes.

Q81 Mr Beith: Prime Minister, I am just trying to clarify, are we talking about three central departments - the Home Office, some new department, and the Department for Constitutional Affairs?

Mr Blair: No, the proposal is if you bring the anti-terrorism measures into the Home Office then obviously there is some part of the Home Office whose responsibilities you would then reduce.

Q82 Mr Beith: Where is it going?

Mr Blair: That is the issue. There is no point in me speculating on it. It basically would involve two departments.

Q83 Mr Denham: Prime Minister, two further questions about the proposals. Reorganisation in government or in all organisations usually reduces performance, even if it improves it in the long term. Is now the right time to be reducing the performance of the Home Office?

Mr Blair: Certainly not, no, but if you look at the areas of concern in relation to the Home Office, they are areas where I think the measures that are being put in place now are the measures that will improve performance and should not be disturbed by any reorganisation in relation to terrorism. This is really being driven by how we structure properly our response to the terrorist threat that we face, that is here, that will last, and which I think most people around the world accept is a generational struggle.

Q84 Mr Denham: To follow that point, Prime Minister, most of the issues that we have talked about in the last 15 minutes have been about the day-to-day law and order issues that concern ordinary citizens, however worried they are about the dangers of terrorism. How do you prevent a department which is focused and set up with the aim of tackling terrorism above all else neglecting all of these day-to-day issues of anti-social behaviour, of vandalism, of burglary, which affect the ordinary everyday lives of citizens? Is there not a danger that we will go further away from the day-to-day concerns of ordinary people?

Mr Blair: I think you can guard against that danger and it is a danger that you have in any event because you deal with different types of crime. If I can say a word in defence of the Home Office - and not many people do - I have dealt with this now for ten years and there is no doubt at all in my mind, though for obvious reasons given the publicity attendant on the Home Office there will be a lot of doubt in other people's minds, that the Home Office is an infinitely better functioning institution today than it was ten years ago. You only have to look at, for example, asylum and immigration to realise that the procedures are a world away from where they used to be. In relation to law and order, if you talk to a lot of people within the criminal justice system they would say there are big improvements that have been made. Just to give an example that is not often used, a few years back only just over 60 per cent of fines were actually enforced; it is over 80 per cent today (and it needs to be higher), and so there are changes that have been made that are big improvements. Some of the issues that we have recently had in the news like foreign national prisoners and so on are issues that have not arisen in the last few years; it is for the first time a stone has been lifted up and we have seen what is there and had to deal with it. I think it is very important that we carry on the focus on these other issues. One of the emerging conclusions from this Policy Review is that you have really got three different types of criminality. The trouble with our system is that it tackles each of them as if they are just part of one generic issue called crime, but actually terrorism, organised crime (and particularly drug-related crime), and anti-social behaviour are three different aspects of the criminal challenge that we face and they require different policies in each area as a matter of fact. One of the things that we therefore want to do out of this Policy Review is try to get a far more sophisticated approach which recognises that how you deal with the terrorist threat and how you deal with anti-social behaviour is not really part of the same system.

Q85 Dr Starkey: Prime Minister, can I pick you up on an aspect of what you have just been talking about. Britain is becoming an increasingly diverse society and likely to become even more so. Why is the issue of community cohesion being considered within this section of crime and security? Does not that distort the whole thing and is there really a link about promoting cohesion, which must be about social justice, and tackling extremism?

Mr Blair: This is difficult, Phyllis, because obviously there is an area of community cohesion - for example poor inner city estates and how their standard of living is raised - that has not got anything to do with the terrorist issue but there plainly is an aspect of community cohesion that does. In the next new weeks Ruth Kelly will be announcing a programme as to how we engage particularly with the Muslim community in a different way and in a way that confronts in a more radical and I think head-on way the extremism in parts of that community. I think we have got to do that. An aspect of community cohesion, whether we like it or not, is to do with this terrorist issue.

Q86 Dr Starkey: You said in your speech Duty to Integrate that it is "not about culture and lifestyle ... it is about integrating at the point of shared, common unifying British values"; but what evidence is there that teaching British values would actually reduce extremism?

Mr Blair: I think there is an aspect of this which is a real hearts and minds struggle and I think that a lot of this extremism is based on sectarian religious views, a view of separateness but in term of values rather than in terms of culture, and I think that teaching people from an early age, in fact not just teaching them but demanding that these are the common values - tolerance, respect for other people, a belief in diversity as a good not a bad thing - are important both in confronting right-wing racism and the BNP and so on and also those people within the Muslim community, albeit a minority, who have a mirror image view of a society that is not going to integrate and cannot integrate.

Q87 Dr Starkey: Do you not think that there is a danger that by implying these common values are not part of Islam that you are actually reinforcing extremist views that the conflict is between Islam and Western democracy?

Mr Blair: I would not say that I in any shape or form implied that those values are not part of Islam; in fact I think they are part of Islam. Moderate Muslim opinion would subscribe absolutely to the belief that there should be freedom of religious expression and thought and that people should be tolerant towards people of other religions. I think the majority of Muslim people in this country are not extremist at all. In fact my experience, incidentally, is that when you actually engage with the real Muslim community, the first thing they say to you is, "We hate the idea that the Muslim community is stigmatised by these few idiots and extremists," and so I think it is actually very important - and I think I said this in my speech - that we recognise that it is not the Muslim community that is refusing to integrate, it is a small section, and actually they do not represent either the true spirit of Islam or the true spirit of the Muslim community here.

Q88 Dr Starkey: Can I ask you another question about the Duty to Integrate because it does seem to be directed almost exclusively at minority populations and yet a recent MORI poll showed that 25 per cent of Britons say that they would prefer to live in an all-white area and the recent incidents on Big Brother clearly showed that racist bullying is still quite prevalent. Do you believe that there are parts of the majority population that needs a better understanding of British values?

Mr Blair: I think, in fairness, the 25 per cent is both significantly less than in other European countries and also significantly less than it was, and indeed I did give some figures in that speech about how the proportions of people who would mind if their children married into a different ethnic background family had gone from the negative to the positive, if you see what I mean, from the point of view of community relations. My assessment of the people of this country is that they are not racist at all. There are pockets of racism, of course there are, but I think this country is quite proud of its diversity today. I think it is a very healthy thing that in the political debate all the mainstream political parties are in favour of a society that is proud of its diversity. I do not doubt that there is still a way to go with certain sections of the majority population but in the end I am quite optimistic about this, provided that we do not try and tell people that there is not a problem when there is. Sometimes I get into difficulty because people say, "Why are you targeting this small minority of the Muslim community? Why do you keep saying it is with the small minority of the Muslim community?" and my answer to that, I am afraid, is because it is, and there is no point in us pretending that it is not. This particular extremism (which is world-wide) has grown up based on a perversion of the faith of Islam. They are not Hindus, they are not Sikhs, they are people who profess the faith of Islam, although they are acting wholly contrary to its proper spirit.

Q89 Dr Starkey: In regard to extremism that is clearly the case but in regard to social cohesion it is many of the minority communities which are not enjoying full access to education, employment and housing as the rest of us are. Surely, there is a danger that by constantly focusing on dealing with extremism you are not giving enough of an emphasis to ensuring that everybody can enjoy the rights that they have within our society? That is the danger of coupling the two together and pushing it into security.

Mr Blair: I think that is a fair point, but here is the problem. We are actually doing a lot to raise the expectations and the results in a lot of the different communities. For example, if you look at, I think I am right in saying, children of Bangladeshi parents, their achievement rates have gone up significantly, the same I think with Afro-Caribbean kids, and you often find that you get it from both sides because the Muslim community says, "You are concentrating on us when the majority of us are reasonable," and then you find the other ethnic minority communities saying, "You are always talking about the Muslims; you never pay any attention to us." It is difficult because the trouble is you do have this particular and specific problem that is about the Muslim community and you cannot really deny that. On the other hand, you are right, of course community cohesion is about far more than just dealing with this extremism problem. One of the reasons why inner city regeneration, for example, in the poorest areas of London, is very important is precisely for promoting that community cohesion. One of the things that we are trying to do now, and I think this through the school system will be important, is to ensure that --- for example, if you go to the East End of London you will find some of the poorest communities in the whole of the country with high levels of unemployment comparatively and then two or three miles up the road you have the City of London with a skills shortage, so I agree totally with you that community cohesion cannot simply be about how we deal with Muslim extremism.

Dr Starkey: Thank you very much.

Chairman: We now move to our final area, Britain and the world and Mike Gapes.

Q90 Mike Gapes: Prime Minister, the Policy Review admits that our activist, multilateralist agenda is not widely shared internationally by most major players; why is that?

Mr Blair: Because I think that traditionally countries have had a very clear distinction between their interests and whatever values they happen to espouse. I think what we have said, and I personally believe this is the way the international community should and will develop, is that in the end that is a false distinction, and that, for example, if you want to tackle extremism world-wide sensibly then tackling poverty in Africa is a major part of that. Do you see what I mean? I would say that actually your values-based policy and your interests-based policy coincide today because that is the consequence of an inter-dependent global community.

Mike Gapes: Perhaps we can explore some of these areas about how to win hearts and minds internationally and we will begin with Europe and Michael Connarty?

Q91 Michael Connarty: Prime Minister, I am very glad I arrived on this Committee in time to at least ask you a few questions. Can we agree that this document a Treaty establishing a Constitution for Europe as far as the UK is concerned is in fact dead and that despite the meeting of the 20 countries in Madrid and the scurrying of Sherpas around Europe, at least in the EU it is in permanent vegetative state? How do you suggest that the EU should then be rescued from the institutional mess that it now faces?

Mr Blair: First of all, the reason why I have always hesitated in saying that the European Constitution is dead is that you have got a large number of countries in Europe that have ratified it and in the interests of diplomacy it is not a great thing to charge around saying that it was a pointless exercise for them to do it. The fact is, as I have always said, if the French and the Dutch referendums remain, and they do remain, then it is difficult to see how that Constitutional Treaty in the form in which it is is the way forward. The Germans have got to take forward now the discussion on what might be done for the future. My view is that the best thing for Europe is to focus, in the immediate term at least, on what are the rules that would make for a more effective European Union, and that is a matter that we can discuss, but we should always be part of this debate. I never quite understand what the point is in us rushing around emphasising the deadness of it because in the end it depends on the whole of Europe coming to an agreement as to what its future status will be.

Q92 Michael Connarty: I do not think you actually answered that question. You did give views on the whole process but you did not suggest how we might get out of the constitutional mess.

Mr Blair: I think you focus on what are the rules that will make Europe work most effectively. The issue here is you have got to distinguish two separate things. The first is Europe needs to change the way it works at 27. It was not working collectively very effectively at 15. With 27 countries it is a perfectly sensible debate to have - how do you make the European rules more effective because you want an effective European Union. There is then a second dimension to this which is there is a large part of European culture that likes to focus on the issue to do with constitutions and constitutional change and so on. They have a different tradition from the tradition we have in this country where we do not have a written constitution. They usually have written constitutions and they focus on these things in a different way. Those two issues got amalgamated in the Constitutional Treaty. What I am saying is I think for the moment Europe should work on what makes it more effective at 27.

Q93 Michael Connarty: Thank you. Turning to another matter, Chancellor Merkel has said that under the German Presidency there is a need to challenge and possibly reduce the power of the European Commission to rebalance democracy in the EU. How will you support her in this process?

Mr Blair: Well, it depends in a sense what it is that is being proposed there. My experience of the European Commission is that people think it is a bad idea when the European Commission is telling a country to do something that it does not want to do and it is a good idea when it is telling other countries to do something they do not want to do, and you actually do need a strong European Commission, for example for the Single Market to completed, and if we want liberalisation of services to be driven through Europe we need a strong European Commission to do it. On the other hand, where I agree with Chancellor Merkel completely is that you do not need the European Commission to be, as I think someone once famously said, interfering in every nook and cranny of national life. You do not need it to do that and the reason why I think it is so important that Britain is constructive in Europe today is that we have got a fantastic opportunity as a country because the sentiment of Europe has moved away from a European Commission over-regulating and interfering in this and that to one where for the first time the European Commission is boasting about its deregulation agenda rather than its regulation agenda.

Q94 Sir Patrick Cormack: Prime Minister, you have made it quite plain that you intend to attend the summit in June, which will be presumably your last as Prime Minister. What discussions on these crucially important issues of the Constitution and future rules for Europe and so on are you having with your likely successor, and will you take him with you to be by your side for the summit in June?

Mr Blair: We will have the normal procedures that apply to any summit but of course we discuss it across the whole of Government. We have not actually got to the stage where we have got a proposal for the German Presidency, so at the moment, as I think was saying in the House of Commons the other day, we are just in the position of having informal discussions with the Germans and with other countries, but we are a long way off getting a firm proposal yet.

Q95 Sir Patrick Cormack: I accept that but we are not such a long way off perhaps having a transition here. Some will much regret that and some will not, but the fact of the matter is that you, wisely or unwisely, made it plain that you would be going and we now know roughly when you are going and what I am concerned about is your conversations with your likely successor, because we can all make a reasonable stab as to who we think it might be. Can you assure this Committee that you are absolutely confident that there will be a seamless transition - to coin a phrase - as far as European affairs are concerned?

Mr Blair: Sir Patrick, for the first time we have got these guys picking up their pens again and scribbling very attentively - I pay tribute to you for that! We will of course handle this in a way that is best for the interests of the country.

Q96 Sir Stuart Bell: Prime Minister, you were very frank, I thought, in your opening remarks when you said that we ought to define the future debate on our relationship with the United States and the European Union and you also said there ought to be a debate on what our role should be in the world. It is an interesting statement from you since we have, as you said, been very interventionist over the last ten years, and the European Union does not have hard power, it only has soft power as you said yourself last week on the floor of the House at Question Time. How do you see this relationship developing in the European Union in such a way that we could have a common foreign policy that is not quite stand-alone from that of the United States but does make a difference from that of the United States?

Mr Blair: Well, I would distinguish between two things, first of all how you get a better European Common Foreign and Security Policy and then the relationship with the US. I think it is important that Europe has a stronger Common Foreign and Security Policy. I supported European Defence. We are now doing a number of different missions.

Q97 Sir Stuart Bell: It is ten years since St Malo.

Mr Blair: It is some time since St Malo and we do ten different European missions around the world. I think that is very important. I also think, for example, if you look at the E3 negotiation with Iran it has been important for Europe to operate closely together, so I favour a greater degree of common policy there. I think the big question for us as a country is to do with our relationship with Europe and our relationship with America and how we put the two together. The reason why I think it is really important we debate this at this stage as a country ---- I do not often give publicity to speeches of opposition spokesmen but William Hague made a speech the other day calling for really a move from the American policy that we have at the moment and for a more euro-sceptic European policy. I think this is a huge debate for us as a country. I think we need to debate this very carefully. This is just my ten years' experience talking, leaving aside my own personal view in a way, but I think before we distance ourselves from America either as Britain or as Europe we really need to work out whether that is a sensible thing to do or not. I think for Britain in the early 21st Century we are a country with a tremendously proud history, we are doing exceptionally well as a country in many ways, but we have got to face the fact we are a country of 60 million within a relatively small geographic space and for us to have weight and power and influence we need these two big alliances to be kept strong. That is why I have always said keep at the centre of Europe and be strong in Europe. It does not mean to say you have to go along with everything that Europe is doing, that is not the point, the point is it is like the European Constitution debate, always keep in the debate there, keep at the centre of events, build strength for this country through our European relationship and never give up the transatlantic relationship that is of such fundamental importance. What was interesting about the Hague speech was that he was suggesting that instead we developed a closer set of relationships with Asia Pacific, in particular China, India and Japan, but let me tell you this is a major thing to decide on your foreign policy. Britain will be in a far stronger position in its relationship with China, India or Japan if it is strong in Europe and strong in America. This is a false choice for us, in my view. I am the person above all who can give evidence as to the difficulty and sometimes the political penalty you pay for a close relationship with the US, but we should not give that up in any set of circumstances in my view. If we do want to give it up then my plea to people is for God's sake do it consciously, do not drift into it because there is a general strain of public opinion that moves in that direction. It is a big, big thing for us to decide as a country. One of the things we want to do in this Policy Review is to say, "Look, here is a distinctive foreign policy we have had, these have been the two pillars of it, Europe and America, do we want to maintain that and, if we do, what is the price that we are prepared to pay as a country for maintaining it?"

Mike Gapes: Prime Minister, I think we will move on to some of those diffiuclties now. James Arbuthnot.

Q98 Mr Arbuthnot: Prime Minister, on the battle for hearts and minds in Iraq, you talked in answer to Phyllis Starkey's question about a perverted view of Islam. Since we went into Iraq the number of people who seem to be following this perverted view of Islam has rocketed upwards. Do you think we are losing the battle for hearts and minds?

Mr Blair: No, I do not think we are losing it but personally I do not believe, to take the implication of your question, that we are going to win it until we stop pandering, in my view, to a view of our foreign policy that I regard on any sensible analysis as ridiculous, and that ridiculous view says that when you remove Saddam or remove the Taliban out of Afghanistan and give people a UN-backed process towards democracy somehow you are in some way fuelling Muslim extremism. The fact is that people who are killing innocent Muslims in Iraq and in Afghanistan are these Muslim extremists, the same kinds of extremists that worldwide are trying to cause this type of carnage. We will defeat them and win hearts and minds. You see, winning hearts and minds is not just about reaching out to people, it is also, I am afraid, sometimes about standing up to them and saying, "Your value system is a value system that is wrong". I think part of the problem with a large part of Western opinion is that it kind of buys this argument that somehow it is our fault they are like this rather than their fault.

Q99 Mr Arbuthnot: But do you think that we are winning the propaganda battle for Western values in the Islamic countries?

Mr Blair: I would distinguish between the majority and the minority. I had this conversation with British troops in Basra before Christmas when I was there and several of them said to me since we have been doing this operation in Basra, "Don't let the pitchers and the people throwing stones blind you to the fact that actually the majority of Basrawis just want security to go and raise their families in prosperity and are perfectly content to live in peace with their neighbours, whether they are Sunni or Shia". I think that this hearts and minds issue is, yes, of course, at the moment tremendously difficult because there is this huge weight of propaganda coming against us and if you look at these websites that show these terrible pictures of what might be happening in different parts of the world of course there is an attempt to use what happens in Iraq or Afghanistan or, indeed, Chechnya or Kashmir or half a dozen other places, now Sudan and Somalia and so on, to radicalise people. We will not win this hearts and minds issue unless we are prepared to be proud of the values that we have and realise those are basic human values, they are not Western values.

Q100 Mr Arbuthnot: Moving on to Afghanistan, are we, do you believe, winning the battle for hearts and minds there because there is a serious concern about the strategy? We seem to be suggesting that in Afghanistan there should be a rule of law whereas it is a country which has traditionally always relied upon tradition instead and we are suggesting that there should be a strong central government, something which has never been prevalent in Afghanistan, at the same time as we are destroying the livelihood of many of the people who live there. What do you think our chance of success in that cocktail of things is likely to be?

Mr Blair: First of all, I do not accept that we are destroying the livelihood of many of the people in Afghanistan, actually the Afghan economy has grown and doubled in size in the last five years. It is true that we are eradicating some parts of the drug crop, although not as much as we need to do. I also think there is a balance between strong centre and strong regions but that is not the real issue in Afghanistan. The real issue, and again it is perfectly obvious if you go and talk to people who have travelled in Afghanistan, they will tell you the majority of people there do not want the Taliban back, they know perfectly well what the Taliban means: it means they live in a state of poverty and oppression.

Q101 Mr Arbuthnot: Neither do they want central government.

Mr Blair: If you were to talk to most of them at the moment they would say that the problem is not an overarching central government, the problem is making the writ run in individual areas. Afghanistan will always be heavily decentralised but it should be heavily decentralised within a system that has basic democratic principles underpinning it. Any of these countries operate in a different way from our type of country, of course they do, they are at a far earlier stage of development, but I still think the most interesting thing about Afghanistan, Iraq or anywhere else is that there is a myth sometimes that democracy is alien to the culture of these types of people, and it is not. Why should it be alien to anybody? There is a reason why no two democracies have been to war and that is because basically democracy, as Churchill once famously said, is the worst form of government except for any of the other forms. The fact is that most people in the end want the right to elect their political leaders because that frees them from the prospect of groups like the Taliban or highly oppressive states taking away their basic freedoms.

Q102 Mr Arbuthnot: Do you think that the corruption that we are currently seeing in large areas of Afghanistan has got anything to do with the prevalence of the warlords in their regions at the moment?

Mr Blair: Well, of course the warlord situation has been there for a long period of time and corruption is not something that is new in Afghanistan but, on the other hand, for the first time in many of these areas, and this is what we are trying to do down in the Helmand Province, people are getting the ability to function in a different and better way. One of the reasons why we have got the problem in the Helmand Province is precisely because the Taliban are trying to move back in. They are fighting back, they are trying to move back in to take back the area, and we have got to push them back again. This will be something that will take a considerable period of time but it is worth doing to prevent Afghanistan going back to where it was because 11 September arose out of Afghanistan. Afghanistan is not just a failed state but a failed state that was used as a training ground for terrorism.

Q103 Andrew Miller: You referred earlier, Prime Minister, to William Hague's speech the other day. The Independent's take on it was headlined "Hague calls for tough Iran sanctions". You have previously talked to this Committee about the sanctions with Iran, but is there not an inherent problem there, reflecting on previous exchanges, that the policy of sanctions against Iran's Government is not exactly going to win the hearts and minds of the Iranian people, is it?

Mr Blair: It is difficult here. Just in parenthesis, there is no way you will get tougher sanctions against Iran except in alliance with the US and through the European Union, just to put that point back in there for a moment. Look, this is always the danger with sanctions, is it not, that the sanctions necessarily attach themselves to the government of a country and that can have an impact on the people. On the other hand, I think Iran was surprised that we got the UN resolution and the action that is being taken financially against Iran is having an impact. The truth is because of the policies being pursued by the Iranian President you have got a situation where the Iranian people are facing a squeeze on their living standards and you have had a flight of capital, reduced investment and so on.

Q104 Andrew Miller: Do you think the events that have occurred in the last few days with the Iranians showcasing some of the nuclear technology with reporters going around and being shown part of it is a step in the right direction or is that just a show?

Mr Blair: Well, I think the trouble is that Iran is in danger, as I have said before, of making a miscalculation. The fact is the Iranian strategy that is being pursued at the moment is to carry on in defiance of the international community trying to develop nuclear weapons capability and is to create circumstances in the region in the Middle East, in relation to Hezbollah in Lebanon, Hamas in Palestine, elements of the Shia militia, particularly JAM in Iraq, where their strategy is to create the maximum trouble for us and for the region. I think that it is a miscalculation because in the end they are going to find that they assemble a very large coalition against them.

Q105 Mike Gapes: Prime Minister, you referred to a Shia issue there. Is there a danger of a generalised Sunni/Shia conflict and actually would outside intervention not make it more difficult to control that situation rather than allowing the people within Iran who are currently opposing the Government of President Ahmadinejad to actually remove him?

Mr Blair: As was said by the Americans just the other day, nobody is planning military intervention in respect of Iran but there is an increasing frustration across the whole of the region, and I get this practically every week from talking to other leaders in the region, with the strategy that Iran is pursuing. The fact is it is trying to prevent reconciliation across the region and I think that is very short-sighted and very foolish. For example, if they were to play a constructive role in Iraq it would be of immense help to the international community and it would also be of immense help to Iran in the end since they do not want chaos on their borders, so I agree with you. It is always important to distinguish between the Iranian people who I suspect are equally dismayed at the strategy of the Iranian Government and that government themselves.

Q106 Mike Gapes: Can I take it from what you have just said then that you are ruling out military action against Iran?

Mr Blair: The formula that the President of the US has always used that I think is sensible is that you cannot take ay option off the table but nobody is talking or planning military intervention, and that is not what the international community wants; it is not what we want. However, it is important that Iran understands that at the moment it is doing two groups of things that are really unsettling: the international community and opinion in their region. One, they are developing this nuclear weapons capability in defiance of the United Nations as well as the main powers, but, two, they are round the region deliberately fomenting sectarianism and conflict when they should be responsibly backing, again, the will of the international community for, for example, a resolution in Israel/Palestine, a resolution in Lebanon, peace in Iraq. At the moment what they are doing is deliberately doing the opposite. As I say, nobody is talking about military intervention in respect of Iran but people are increasingly alarmed and concerned at the strategy they appear to be pursuing. If they changed that strategy, if they started offering some sign that they were prepared to deal differently with things, I think they would find that a whole series of doors would open up to them but at the moment they are not prepared to do that.

Mike Gapes: Could we move on to Africa?

Q107 Mr Dismore: Could I ask you about China's growing involvement in Africa? As The Economist put it, "China's straightforward approach is an attractive alternative to the pernicketiness of the IMF, the Paris Club" in that they are "not interested in pressing African governments to hold elections or be more democratic", for example, their support for Sudan or Zimbabwe governments. You have put a huge amount of effort into supporting initiatives to help Africa, value-based initiatives. Are your efforts to bring good governance to Africa being supported or undermined by the Chinese activity there?

Mr Blair: People understand why China has a need to buy commodities and energy for economic growth. What is important though is that China is part of the international community's desire to combine development in Africa with proper systems of governance. Again, through the G8+5 dialogue there is a chance for China to be part of that solution and I hope that, for example, in relation to the Sudan they play a constructive role. I know it is not quite fitting into either of those two categories, but I think people understand China's need for economic growth but they also look to China for responsibility in how they conduct themselves, given that they have a far greater role in Africa than before.

Q108 Mr Dismore: But do you think China should be doing more to try and work on some of the value-based initiatives, which have started to make real progress, particularly since the activities that you put forward in the G8 and so forth? Are they being undermined by the "no questions asked; give them the money policy"?

Mr Blair: I would not say that they are being undermined but I think a big part of our conversation with China now, not just us but other countries', is, "Look: if you are going to have this far greater strategic role in Africa how do you make sure that this role is conforming to the principles the international community has set out, because otherwise, frankly, it is a very short-term policy for everybody?". For all the challenges, which are obviously immense, it is worth just pointing out that it is now regularly the case that governments change hands democratically in Africa in a way that a few years back would have been absolutely unthinkable, and I think there is a lot of progress that has been made on governance and I think it is incredibly important that that is not undermined. I do not believe China has any desire or intention to undermine it but as they occupy that more powerful position so the responsibility on them becomes all the greater.

Q109 Mr Dismore: There is a Chinese presence in South Africa today at the start of a tour of Africa. South Africa actually brought trade tariffs in to try and deal with cheap imports from China - a significant problem, basically, Chinese manufacture undermining, again, African attempts to develop their own economies. Is there an issue relating to Chinese economic activity in Africa apart from their desire to get more materials and support governments?

Mr Blair: I think we all face the same issue in respect of China, actually, whether in Africa or outside, which is that this country already has but is going to have even greater, in the 20 years to come, political and economic power. One major part of the Policy Review, actually, is a focus on China in the future. China's political and economic power is going to be vast. My point is that it is best to bind China in to multilateral and to negotiated solutions. That is why, for example, on the world trade deal an important part of our dialogue is with the Chinese in respect of this as well. It is far better to have them as part of an international trading system than to have countries striking bilateral deals or putting in tariffs or whatever. One of the things that I think is emerging from the international negotiation at the moment is a desire to build the G8+5 into something where China, and India, indeed, as well as the other countries who are part of the five, feel part of the essential international discussion on the critical issues we face, whether it is world trade or Africa or climate change or terrorism. One of the things that has really changed is the idea that the G8 can just exist as a G8, excluding China and India and so on. It is just not realistic politics any more.

Q110 Mike Gapes: While we are on China, are we doing enough to press them on human rights issues, particularly their lack of trade union rights, lack of a free press, their own appalling human rights record?

Mr Blair: Again, every time I meet the Chinese leadership this is a major part of my dialogue with them, and let me tell you what they say. I have talked about this with Premier Wen on many occasions, and, actually, to be fair, I have found him very open on the issue. What he says is, "Look: we are a country of 1.3 billion people. We are trying to put together an economic development programme that covers the east coast, which is doing extremely well, second world going on first world, and the western interior of the country, which is often third world, and maintain our political cohesion at the same time", and he says there is not an issue about the direction in which they are going but there is an issue about the pace.

Q111 Mike Gapes: But we have a human rights dialogue, the EU has a human rights dialogue, and really the human rights situation in China has probably got worse in many respects.

Mr Blair: There are various disagreements, I think, about that. Look: it is part of the dialogue we have with them the entire time, of course it is. At the same time we want to make sure that our relationship with China is strong and also that we do manage what is the emergence of this colossal economic and political power. That is the world of practical politics.

Q112 Sir Patrick Cormack: Prime Minister, I do not suppose anybody, looking back, would have said that either the British Government of the day or the official Opposition of the day got it right over the Balkans in the early 1990s, and those of us who spoke out at the time made ourselves very unpopular. Then the policy changed and we came to Dayton, and after that you in your turn took a bold initiative in Kosovo, and I think most people would think that what you did then was absolutely correct. How do you view the situation now, particularly in view of the renaissance of Serbian nationalism in the recent elections in Serbia and what do you think is the ultimate and proper solution for Kosovo?

Mr Blair: On Kosovo I will actually be having meetings this week about what is the right constitutional position for Kosovo moving forward, and it is a very sensitive issue in Serbia, but I think that a greater degree of independence is pretty clearly the direction in which policy moves. I think in respect of the Balkans that it will require a lot of work over a long period of time but I do not think we should ignore the fact that the Balkans today gives us a prospect for peace, probably for the first time in a century or more, and actually I think that even in respect of what is happening in Serbia there are some countervailing forces that are interesting and positive. I think the most important thing for the Balkans ultimately is that they get the sense that if they continue to move in the right direction they have the prospect of European Union membership. You see, the great thing for all of these countries is that they have to go through a painful period of adjustment and reform. The reason why eastern European countries after the fall of the Soviet Union made such immense and radical changes was because they could always point to the house on the hill that they were going towards, which was European Union and NATO membership, and they were able to say, "Look: there are all these problems. It is tremendously difficult when you are moving a huge industrial restructuring programme forward, but however difficult this path is you can always see the house on the hill that you are aiming for." As a result of that probably the pace of change in those eastern European countries was greater than in probably any group of countries worldwide ever in terms of political and economic development. I think in respect of the Balkans, although we must be careful about making false promises to countries, nonetheless the best thing we can offer in the end is the prospect of integration into the broader European family because I think that will stiffen the resolve of the people who want to make the right type of economically progressive and democratic changes in those countries.

Q113 Sir Patrick Cormack: I agree entirely with your general argument, Prime Minister, but on the specific subject of Kosovo, where you say you will be having talks soon, do you yourself favour an independent, new nation of Kosovo or, as many would prefer, an autonomous province within Serbia?

Mr Blair: I would prefer, before committing myself finally to that, to have the right discussions with Mr Ahtisaari and others who will be handling this for the international community. You are trying to balance here the reality of what has happened in Kosovo with not alienating Serbia in particular in a way that disables or disturbs their own political system. At this very moment I would not want to commit myself finally to the precise status but I think it is pretty obvious what people in Kosovo want.

Q114 Mike Gapes: Prime Minister, can we bring this to a conclusion by going back to something that you said at the beginning? You talked about Britain's having a distinctive foreign policy over the last ten years. Do you think that the emphasis we have had on hard power and a highly interventionist, robust military policy has undermined our ability to win hearts and minds?

Mr Blair: No, I do not. It is like when people say to me sometimes, "Your relationship with America is a big problem in the Middle East". No, it is not. The relationship with America is what opens a lot of doors everywhere, including in the Middle East. For better or for worse this country in the last ten years has been right at the forefront of every single major international issue, whether it is terrorism, climate change, Africa, whatever it is. You have to be prepared in those circumstances to be engaged with hard power where it is right and necessary to do so, and we are fortunate in having magnificent Armed Forces but we also need again, and this is the purpose of my defence speech a few weeks ago, to take a conscious decision that we will remain in the forefront of that. I think there are countries round the world which have now retreated to a soft power position only and I do not think we should do that.

Q115 Mike Gapes: Are you confident that your successor will continue your approach or will there be a rebalancing towards a greater emphasis on soft power?

Mr Blair: No, I am confident that that approach will continue. You only get the ability to exercise the soft power properly if you are also prepared to do the other difficult things. When we did the G8 at Gleneagles, where we put Africa and climate change on the map, in my view without a strong relationship with the United States we would never have had those two issues on the agenda in that way. I think most people, if they were being honest about it, would accept that that is the case. That is the choice that we have got and I think that when the country thinks about it and has a debate about it --- that is why, as I say, one of the things I want to happen through this Policy Review, and actually I think it would be good for politics, is to stimulate a big debate about these types of issues. That would be a great thing for politics. Should you move away from the US? Should you go for Euro-scepticism or not? These are huge questions. Debating them, I think, and looking at the implications seriously of changing policy in these areas is one major part of making people understand the types of things that politics and politicians really are concerned about rather than a lot of what passes in and out every day of the headlines.

Chairman: Prime Minister, our time is up. May I thank you again. As always, you have covered an incredible range of questions over the two and a half hours. In view of my earlier statement about the arrangement we have for another meeting, it is slightly difficult to close. If I say, "Hope to see you soon", I will be deemed to have made a political statement, so can I just say that I look forward to our next hearing whenever it may be. Thank you.