Premiership of Tony Blair
Prime Minister of the United Kingdom
First Ministry and Term
Second Ministry and Term
Third Ministry and Term
The premiership of Tony Blair began on 2 May 1997 and ended on 27 June 2007. Whilst serving as Prime Minister of the United Kingdom, Tony Blair concurrently served as the First Lord of the Treasury, the Minister for the Civil Service, the Leader of the Labour Party (until Gordon Brown was declared Labour leader on 24 June 2007) and a member of parliament for the constituency of Sedgefield in County Durham. He remains a Privy Counsellor, having first been appointed in July 1994 when he became Leader of the Opposition. Blair is the Labour Party's longest-serving Prime Minister, the only Labour Prime Minister to have led the party to victory since 1974, and—having led the party to three consecutive general election victories—also the only Labour Prime Minister to serve two full consecutive terms. Blair is both credited with and criticised for moving the Labour Party towards the centre of British politics, using the term "New Labour" to distinguish his pro-market policies from the more socialist policies which the party had espoused in the past.
In domestic government policy, Blair significantly increased public spending on health and education while also introducing controversial market-based reforms in these areas. In addition, Blair's tenure saw the introduction of a minimum wage, tuition fees for higher education, constitutional reform such as devolution in Scotland and Wales and progress in the Northern Ireland peace process. The British economy performed well and the real incomes of Britons grew 18 per cent during 1997–2006. Blair kept to Conservative commitments not to increase income tax in the first term although rates of Employee's National Insurance (a payroll levy) were increased. He also presided over a significant expansion of the welfare state during his time in office, which led to a significant reduction in relative poverty.
On 7 September 2006, Blair publicly stated he would step down as party leader by the time of the TUC conference in September 2007. On 10 May 2007, he announced his intention to resign as Prime Minister on 27 June 2007.
- 1 First term (1997–2001)
- 2 Second term (2001–2005)
- 3 Third term (2005–2007)
- 3.1 G8 and EU presidencies
- 3.2 London to host the 2012 Summer Olympics
- 3.3 2005 London bombings
- 3.4 Education reforms, 2006
- 3.5 Local elections on 4 May 2006 and cabinet reshuffle
- 3.6 Darfur
- 3.7 Debate over Muslim women wearing veils
- 3.8 Cash for Honours
- 3.9 Resignation as Labour Party leader and Prime Minister
- 4 Chancellorship of Gordon Brown (1997–2007)
- 5 References
First term (1997–2001)
Independence for the Bank of England
Immediately after taking office, Chancellor of the Exchequer Gordon Brown gave the Bank of England the power to set the UK base rate of interest autonomously, as agreed in 1992 in the Maastricht Treaty. This decision was popular with the British financial establishment in London, which the Labour Party had been courting since the early 1990s. Together with the Government's decision to remain within projected Conservative spending limits for its first two years in office, it helped to reassure sceptics of the Labour Party's fiscal "prudence". Associated changes moved regulation of banks away from the Bank of England to the Financial Services Authority- and these changes were unwound in 2013 following perceived failures by the FSA in the banking crisis.
The Blair Government decided against joining the Eurozone, and adopting the euro as the currency to replace the pound sterling. This decision was generally supported by the British public, and by all political parties in Britain, as well as the media.
On 24 June 1998, The Sun had famously put the front-page headline "IS THIS THE MOST DANGEROUS MAN IN BRITAIN?" beside a photograph of Blair, when it was still uncertain whether he would lead Britain into the euro or stick with the sterling currency.
In the early years of his first term, Blair relied for his political advice on a close circle of his staff, among whom was his press secretary and official spokesman Alastair Campbell. Campbell was permitted to give orders to civil servants, who had previously taken instructions only from ministers. Unlike some of his predecessors, Campbell was a political appointee and had not come up through the Civil Service. Despite his overtly political role, he was paid from public funds as a civil servant. Also in Blair's team were a number of strong female aides, who acted as gatekeepers and go-betweens, including Anji Hunter, Kate Garvey, Ruth Turner and Sally Morgan.
A significant achievement of Blair's first term was the signing, on 10 April 1998, of the Belfast Agreement, generally known as the Good Friday Agreement. In the Good Friday Agreement, most Northern Irish political parties, together with the British and Irish Governments, agreed upon an "exclusively peaceful and democratic" framework for the governance of Northern Ireland and a new set of political institutions for the province. In November 1998 Blair became the first British prime minister to address Dáil Éireann.
Blair's first term saw an extensive programme of changes to the constitution. The Human Rights Act was introduced in 1998; a Scottish Parliament and a Welsh Assembly were set up; most hereditary peers were removed from the House of Lords in 1999; the Greater London Authority and the post of Mayor of London were established in 2000; and the Freedom of Information Act was passed later in the same year, with its provisions coming into effect over the following decade. This last Act disappointed campaigners, whose hopes had been raised by a 1998 White Paper which had promised more robust legislation. Blair later described the FoIA as one of his "biggest regrets", writing in his autobiography, "I shudder at the imbecility of it." Whether the House of Lords should be fully appointed, fully elected, or be subject to a combination of the two remained a disputed question. 2003 saw a series of inconclusive votes on the matter in the House of Commons.
Significant change took place to legislation relating to rights of lesbian, gay, bisexual and transgender people during Blair's period in office. During his first term, the age of consent for homosexuals was equalised at 16 (see Sexual Offences (Amendment) Act 2000) and the ban on gays in the armed forces was lifted. Subsequently, in 2005, a Civil Partnership Act came into effect, allowing gay couples to form legally recognised partnerships. At the end of September 2006 more than 30,000 Britons had entered into Civil Partnerships as a result of this law. Adoption by gay couples was legalised, and discrimination in the workplace (Employment Equality (Sexual Orientation) Regulations 2003), and in relation to the provision of goods and services (Equality Act (Sexual Orientation) Regulations) were both made illegal. Transgender people were given the right to change their birth certificate to reflect their new gender as a result of the Gender Recognition Act 2004. Tony Blair has, as a result of his achievements, become a popular figure among LGBT people.
Tony Blair's touch was less sure with regard to the Millennium Dome project. The incoming government greatly expanded the size of the project and consequently increased expectations of what would be delivered. Just before its opening Blair claimed the Dome would be "a triumph of confidence over cynicism, boldness over blandness, excellence over mediocrity". In the words of BBC correspondent Robert Orchard, "the Dome was to be highlighted as a glittering New Labour achievement in the next election manifesto".
During his first term as prime minister, Blair raised taxes; introduced a National Minimum Wage and some new employment rights; introduced significant constitutional reforms; promoted new rights for gay people in the Civil Partnership Act 2004; and signed treaties integrating Britain more closely with the EU. He introduced substantial market-based reforms in the education and health sectors; introduced student tuition fees; sought to reduce certain categories of welfare payments, and introduced tough anti-terrorism and identity card legislation. Under Blair's government the amount of new legislation increased which attracted criticism. Blair increased police powers by adding to the number of arrestable offences, compulsory DNA recording and the use of dispersal orders.
According to one study, in terms of promoting social equality, the first Blair Government "turned out to be the most redistributive in decades; it ran Harold Wilson's 1960s' government close." From 1997 to 2005, for instance, all the benefits targeted on children through tax credits, Child Benefit and Income Support had gone up by 72% in real terms. Improvements were also made in financial support to pensioners, and by 2004 the poorest third of pensioners were £1,750 a year better off than under the system as it used to be. As a means of reducing energy costs and therefore the incidence of fuel poverty, a new programme of grants for cavity wall and loft insulation and for draught proofing was launched, with some 670,000 homes taking up the scheme. Various adjustments were also made in social welfare benefits. Families were allowed to earn a little more before housing benefit was cut, and the benefit was raised for families where the breadwinner worked part-time, while 2 million pensioners were offered automatic help with their council tax bills, worth £400 each, although many did not take advantage of this benefit. According to one study, the Blair Administration's record on benefits, taken in the round, was "unprecedented," with 3.7% real terms growth each year from 2002 to 2005.
Under the years of the Blair Administration, expenditure on social services was increased, while various anti-poverty measures were introduced. From 2001 to 2005, public spending increased by an average of 4.8% in real terms, while spending on transport went up by 8.5% per annum, health by 8.2% per annum, and education by 5.4% per annum. Between 1997 and 2005, child poverty was more than halved in absolute terms as a result of measures such as the extension of maternity pay, increases in child benefit, and by the growth in the numbers of people in employment. During that same period, the number of pensioners living in poverty fell by over 75% in absolute terms as a result of initiatives such as the introduction of Winter Fuel Payments, the reduction of VAT on fuel, and the introduction of a Minimum Income Guarantee. To reduce poverty traps for those making the transition from welfare to work, a minimum wage was established, together with a Working Tax Credit and a Child Tax Credit. Together with various tax credit schemes to supplement low earnings, the Blair Government's policies significantly increased the earnings of the lowest income decile. In addition, under the Working Time Regulations of 1998, British workers gained a statutory entitlement to paid holidays.
Between 1997 and 2003, spending on early years education and childcare rose in real terms from £2 billion to £3.6 billion. During Blair's first term in office, 100 "Early Excellence" centres opened, together with new nurseries, while 500 Sure Start projects began. Although the number of children fell, the amount of state support to families with children increased, with money paid only to them (child contingent support) going up by 52% in real terms from 1999 to 2005. The Blair Administration also extended to 3-year olds the right to a free nursery place for half a day Monday to Friday. Tax credits assisted some 300,000 families (at January 2004) with childcare costs, while the 2004 budget exempted the first £50 of weekly payments to nannies and childminders from tax and National Insurance, restricted to couples earning not more than £43,000 per annum. The Countryside and Rights of Way Act 2000 extended a legal right to walk to about 3,200 square miles of open countryside, mainly in the North of England.
During its first year in office, the Blair Government made the controversial decision of cutting lone-parent benefit, which led to abstentions amongst many Labour MPs. In March 1998, however, Brown responded in his Budget statement by increasing child benefit by £2.50 a week above the rate of inflation, the largest ever increase in the benefit. Public expenditure on education, health, and social security rose more rapidly under the Blair government than it did under previous Labour governments, the latter due to initiatives such as the introduction of the Working Families Tax Credit and increases in pensions and child benefits. During the Blair Government's time in office, incomes for the bottom 10% of earners increased as a result of transfers through the social security system.
New rights for workers were introduced such as extended parental rights, a significant raising of the maximum compensation figure for unfair dismissal, a restoration of the qualifying period for protection against unfair dismissal to 12 months, and the right to be accompanied by a trade union official during a disciplinary or grievance hearing, whether or not a trade union is recognised. In addition, an Employee Relation Act was passed which introduced for the first time the legal right of employees to trade union representation. In 2003, the Working Families Tax Credit was split into two benefits: a Working Tax Credit which was payable to all those in work, and a Child Tax Credit which was payable to all families with children, whether in work or not. During Blair’s time in office, over 2 million people had been lifted out of poverty.
A proportional voting system was introduced for the election of Britain’s MEPs, while legislation changing executive structures in local government was passed. Regional Development Agencies were set up in the 8 English regions outside London, and changes were made to the regulation of political parties and referendums, with the introduction of a new Electoral Commission and stricter spending rules. In addition, voting experiments resulted in an opening up of postal voting and reform of electoral registration, while the right of hereditary peers to sit in the House of Lords was abolished after 700 years. In addition, the Water Industries Act 1999 ended the right of water companies to disconnect supplies "as a sanction against non-payment."
The Employment Act 2002 extended rights to paternity, maternity, and adoption leave and pay, while the Police Reform Act 2002 established community support officers and reorganised national intelligence gathering. The Adoption and Children Act 2002 enabled unmarried couples to apply to adopt while speeding up adoption procedures, while the Private Hire Vehicles (Carriage of Guide Dogs) Act 2002 banned charges for guide dogs in minicabs. The International Development Act 2002 required spending to be used to reduce poverty and improve the welfare of the poor. The Travel Concessions (Eligibility) Act 2002 equalised the age at which men and women become entitled to travel concessions. Under the Homelessness Act 2002, councils had to adopt homelessness strategies and do more for those homeless through no fault of their own, and the Commonhold and Leasehold Reform Act 2002 made it easier to convert long-term residential leasehold into freehold through "commonhold" tenures. The British Overseas Territories Act 2002 extended full British citizenship to 200,000 inhabitants of 14 British Overseas Territories, while the Office of Communications Act 2002 set up a new regulatory body known as the Office of Communications (Ofcom). The Enterprise Act 2002 included measures to safeguard consumers, while also reforming bankruptcy and establishing a stronger Office of Fair Trading.
Non-European immigration rose significantly during the period from 1997, not least because of the government's abolition of the primary purpose rule in June 1997. This change made it easier for UK residents to bring foreign spouses into the country. The former government advisor Andrew Neather in the Evening Standard stated that the deliberate policy of ministers from late-2000 until early-2008 was to open up the UK to mass migration.
In 1999, Blair planned and presided over the declaration of the Kosovo War. While in opposition, the Labour Party had criticised the Conservatives for their perceived weakness during the Bosnian war, and Blair was among those urging a strong line by NATO against Slobodan Milošević. Blair was criticised both by those on the Left who opposed the war in principle and by some others who believed that the Serbs were fighting a legitimate war of self-defence. One month into the war, on 22 April 1999, Blair made a speech in Chicago setting out his "Doctrine of the International Community". This later became known by the media as the "Blair doctrine", and played a part in Blair's decision to order the British military intervention in the Sierra Leone Civil War in May 2000.
Another significant change in 1997 was the creation of the Department for International Development, shifting global development policy away from the Foreign and Commonwealth Office to an independent ministry with a Cabinet-level minister.
Second term (2001–2005)
In the 2001 general election campaign, Blair emphasised the theme of improving public services, notably the National Health Service and the State education system. The Conservatives concentrated on opposing British membership of the Euro, which did little to win over floating voters. The Labour Party preserved its majority, and Blair became the first Labour Prime Minister to win a full second term. However, the election was notable for a large fall in voter turnout.
War in Afghanistan
Following the 11 September 2001 attacks on New York and Washington, Blair was very quick to align the UK with the United States, engaging in a round of shuttle diplomacy to help form and maintain an international coalition prior to the 2001 war against Afghanistan. He maintains his diplomatic activity to this day, showing a willingness to visit countries that other world leaders might consider too dangerous to visit. In 2003, he became the first Briton since Winston Churchill to be awarded a Congressional Gold Medal by the United States Congress for being "a staunch and steadfast ally of the United States of America", although media attention has been drawn to the fact that Blair has yet to attend the ceremony to receive his medal. In 2003, Blair was also awarded an Ellis Island Medal of Honor for his support of the United States after 9/11—the first non-American to receive the honour.
War in Iraq
Blair gave strong support to US President George W. Bush's invasion of Iraq in 2003. He soon became the face of international support for the war, often clashing with French President Jacques Chirac, who became the face of international opposition. Widely regarded as a more persuasive speaker than Bush, Blair gave many speeches arguing for the overthrow of Saddam Hussein in the days leading up to the invasion.
Blair's case for war was based on Iraq's alleged possession of weapons of mass destruction and consequent violation of UN resolutions. He was wary of making direct appeals for regime change, since international law does not recognise this as a ground for war. A memorandum from a July 2002 meeting that was leaked in April 2005 showed that Blair believed that the British public would support regime change in the right political context; the document, however, stated that legal grounds for such action were weak. On 24 September 2002 the Government published a dossier based on the intelligence agencies' assessments of Iraq's weapons of mass destruction. Among the items in the dossier was a recently received intelligence report that "the Iraqi military are able to deploy chemical or biological weapons within 45 minutes of an order to do so". A further briefing paper on Iraq's alleged WMDs was issued to journalists in February 2003. This document was discovered to have taken a large part of its text without attribution from a PhD thesis available on the internet. Where the thesis hypothesised about possible WMDs, the Downing Street version presented the ideas as fact. The document subsequently became known as the "Dodgy Dossier".
Forty-six thousand British troops, one-third of the total strength of the British Army (land forces), were deployed to assist with the invasion of Iraq. When after the war, no WMDs were found in Iraq, the two dossiers, together with Blair's other pre-war statements, became an issue of considerable controversy. Many Labour Party members, including a number who had supported the war, were among the critics. Successive independent inquiries (including those by the Foreign Affairs Select Committee of the House of Commons, the senior judge Lord Hutton, and the former senior civil servant Lord Butler of Brockwell) have found that Blair honestly stated what he believed to be true at the time, though Lord Butler's report did imply that the Government's presentation of the intelligence evidence had been subject to some degree of exaggeration. These findings have not prevented frequent accusations that Blair was deliberately deceitful, and, during the 2005 election campaign, Conservative leader Michael Howard made political capital out of the issue.
Then Secretary General of the United Nations, Kofi Annan, stated in September 2004 that the invasion was "illegal", but did not state the legal basis for this assertion. Prior to the war, the UK Attorney General Lord Goldsmith, who acts as the Government's legal advisor, had advised Blair that the war was legal.
British Armed Forces were active in southern Iraq to stabilise the country in the run-up to the Iraqi elections of January 2005. In October 2004, the UK government agreed to a request from US forces to send a battalion of the Black Watch regiment to the American sector to free up US troops for an assault on Fallujah. The subsequent deployment of the Black Watch was criticised by some in Britain on the grounds that its alleged ultimate purpose was to assist George Bush's re-election in the 2004 US presidential election. As of September 2006, seven thousand and five hundred British forces remain in Southern Iraq, around the city of Basra. After the presidential election, Blair tried to use his relationship with President Bush to persuade the US to devote efforts to resolving the Israeli-Palestinian conflict.
In an interview with David Frost on Al Jazeera in November 2006, Blair appeared to agree with Frost's assessment that the war had been "pretty much of a disaster", although a Downing Street spokesperson denied that this was an accurate reflection of Blair's view.
After fighting the 2001 election on the theme of improving public services, Blair's government raised taxes in 2002 (described by the Conservatives as "stealth taxes") to increase spending on education and health. Blair insisted the increased funding would have to be matched by internal reforms. The government introduced the Foundation Hospitals scheme to allow NHS hospitals financial autonomy, although the eventual shape of the proposals, after an internal struggle with Gordon Brown, allowed for less freedom than Blair had wished. But with the supply of healthcare services increasing less quickly than demand, benefits from the NHS have not yet increased to the same degree, and the NHS had an £800 million deficit for the 2005/6 financial year.
The peace process in Northern Ireland hit a series of problems. In October 2002, the Northern Ireland Assembly established under the Good Friday Agreement was suspended. Attempts to persuade the IRA to decommission its weapons were unsuccessful, and, in the second set of elections to the Assembly in November 2003, the staunchly unionist Democratic Unionist Party replaced the more moderate Ulster Unionist Party as Northern Ireland's largest unionist party, making a return to devolved government more difficult. At the same time, Sinn Féin replaced the more moderate SDLP as the province's largest nationalist party.
In its first term, the government had introduced an annual fixed tuition fee of around £1,000 for higher education students (rejecting requests from universities to be allowed to vary the fee), with reductions and exemptions for poorer students. At the same time, the remaining student maintenance grant was replaced with a low-interest loan, which was to be repaid once the student was earning over a certain threshold. In 2003, Blair introduced legislation permitting universities to charge variable fees of up to £3,000 per year. At the same time, the repayment of student loans was delayed until the graduate's income was much higher, and grants were reintroduced for some students from poorer backgrounds. It was claimed the increase in university fees violated a promise in Labour's 2001 election manifesto, though this claim is arguably unsustainable if the relevant promise is interpreted strictly and literally. At its second reading in the House of Commons in January 2004, the Higher Education Bill which contained the changes was passed with a majority of only five, due to a large-scale backbench Labour rebellion. A defeat was averted by a last-minute change of intention by a small number of Gordon Brown's backbench allies..
On 1 August 2003, Blair became the longest continuously serving Labour Prime Minister of the United Kingdom, surpassing Clement Attlee's 1945–51 term.
The Hutton Inquiry into the death of Dr. David Kelly reported on 2 August, ruled that he had committed suicide, and despite widespread expectations that the report would criticise Blair and his government, Hutton cleared the Government of deliberately inserting false intelligence into the September Dossier, while criticising the BBC editorial process which had allowed unfounded allegations to be broadcast. Evidence to the inquiry raised further questions over the use of intelligence in the run up to the war, and the report did not satisfy opponents of Blair and of the war. After a similar decision by President Bush, Blair set up another inquiry—the Butler Review—into the accuracy and presentation of the intelligence relating to Iraq's alleged weapons of mass destruction. Opponents of the war, especially the Liberal Democrats, refused to participate in this inquiry, since it did not meet their demands for a full public inquiry into whether the war was justified.
The political fallout from the Iraq War continued to dog Blair's premiership after the Butler Review. On 25 August 2004 Plaid Cymru MP Adam Price announced he would attempt to impeach Blair, hoping to invoke a Parliamentary procedure that has lain dormant for 150 years but has never been abolished. However, of 640 MPs in the House of Commons only 23 backed the Commons motion—officially known as an Early day motion—in support of considering "whether there exist sufficient grounds to impeach" Blair (a 24th MP signed the motion but later withdrew his name). The Early Day Motion has now expired.
In April 2004, Blair announced that a referendum would be held on the ratification of the EU Constitution. This represented a significant development in British politics: only one nationwide referendum had previously been held (in 1975, on whether the UK should remain in the EEC), though a referendum had been promised if the Government decided to join the Euro, and referendums had been held on devolved structures of government in Scotland, Wales and Northern Ireland. It was a dramatic change of policy for Blair, who had previously dismissed calls for a referendum unless the constitution fundamentally altered the UK's relationship with the EU. Michael Howard seized upon this "EU-turn", reminding Blair of his declaration to the 2003 Labour Party conference that "I can only go one way. I haven't got a reverse gear". The referendum was expected to be held in early 2006; however, after the French and Dutch rejections of the constitution, the Blair government announced it was suspending plans for a referendum for the foreseeable future.
During his second term, Blair was increasingly the target for protests. His speech to the 2004 Labour Party conference, for example, was interrupted both by a protester against the Iraq War and by a group that opposed the government's decision to allow the House of Commons to ban fox hunting.
On 15 September 2004 Blair delivered a speech on the environment and the 'urgent issue' of climate change. In unusually direct language he concluded that "If what the science tells us about climate change is correct, then unabated it will result in catastrophic consequences for our world ... The science, almost certainly, is correct." The action he proposed to take appeared to be based on business and investment rather than legislative or tax-based attempts to reduce carbon dioxide emissions: "it is possible to combine reducing emissions with economic growth ... investment in science and technology and in the businesses associated with it".
On 19 October 2003 it emerged Blair had received treatment for an irregular heartbeat. Having felt ill the previous day, he went to hospital and was diagnosed with supraventricular tachycardia. This was treated by cardioversion and he returned home that night. He was reported to have taken the following day (20 October) more gently than usual and returned to a full schedule on 21 October. Downing Street aides later suggested the palpitations had been brought on by drinking lots of strong coffee at an EU summit and then working-out vigorously in the gym. However, former minister Lewis Moonie, a doctor, said the treatment was more serious than Number 10 had admitted: "Anaesthetising somebody and giving their heart electric shocks is not something you just do in the routine run of medical practice."
In September 2004, in off-the-cuff remarks during an interview with ITV News, Lord Bragg said Blair was "under colossal strain" over "considerations of his family" and that Blair had thought "things over very carefully." This led to speculation Blair would resign. Although details of a family problem were known by the press, no paper reported them because according to one journalist, to have done so would have breached "the bounds of privacy and media responsibility."
Blair underwent a catheter ablation to correct his irregular heartbeat on 1 October 2004, after announcing the procedure on the previous day, in a series of interviews in which he also declared he would seek a third term but not a fourth. The planned procedure was carried out at London's Hammersmith Hospital.
Third term (2005–2007)
The Labour Party won the Thursday 5 May 2005 general election and a third consecutive term in office, although Labour got fewer votes in England than the Conservatives. The next day, Blair was invited to form a Government by Queen Elizabeth II. The reduction in the Labour majority (from 167 to 66) and the low share of the popular vote (35%) led to some Labour MPs calling for Blair to leave office sooner rather than later; among them was Frank Dobson, who had served in Blair's cabinet during his first term. However, dissenting voices quickly vanished as Blair in June 2005 took on European leaders over the future direction of the European Union.
G8 and EU presidencies
The rejection by France and the Netherlands of the treaty to establish a constitution for the European Union presented Blair with an opportunity to postpone a UK referendum and Foreign Secretary Jack Straw announced that the Parliamentary Bill to enact a referendum was suspended indefinitely. It had previously been agreed that ratification would continue unless the treaty had been rejected by at least five of the 25 European Union member states who must all ratify it. In an address to the European Parliament, Blair stated: "I believe in Europe as a political project. I believe in Europe with a strong and caring social dimension."
Chirac held several meetings with Schröder and the pair pressed for the UK to give up the rebate won by Margaret Thatcher in 1984. After verbal conflict over several weeks, Blair, along with the leaders of all 25 member states, descended on Brussels for the EU Summit of 18 June 2005 to attempt to finalise the EU budget for 2007–13. Blair refused to renegotiate the rebate unless the proposals included a compensating overhaul of EU spending, particularly on the Common Agricultural Policy which composes 44% of the EU budget. The CAP stayed as it was agreed upon in 2002 and no decision about the budget was reached under the Luxembourg presidency.
Now it fell to Blair to broker a deal on the EU budget during the UK's Presidency of the European Union during the latter half of 2005. Early international opinion, particularly in the French press, suggested that Blair held a strong opening position partly on account of the concurrence of British presidencies of the EU and G8. However, early in the UK's six-month term the 7 July 2005 London bombings distracted political attention from the EU despite some ambitious early statements about Blair's agenda. Domestically, Blair faced further distractions from European affairs including a resurgent Conservative Party under its newly elected leader David Cameron, and assessments of the British presidency's achievements under Blair have been lukewarm in spite of some diplomatic success including a last-minute budget deal. One of the results of which was an agreement to increase British contributions to the EU Development Budget for new member countries, which effectively reduced the UK rebate by 20%.
London to host the 2012 Summer Olympics
On 6 July 2005, during the 117th International Olympic Committee (IOC) session in Singapore, the IOC announced that the 2012 Summer Olympics, the Games of the XXX Olympiad, were awarded to London over Paris by only four votes. The competition between Paris and London to host the Games had become increasingly heated particularly after French President Jacques Chirac commented three days before the vote that "one cannot trust people [ie: the British] whose cuisine are so bad." The surprise win by London over the perceived frontrunner Paris was said to have been decided by the presence of Blair at the IOC session. Irish IOC member Patrick Hickey said, "This is down to Tony Blair. If he hadn't come here I'd say that six to eight votes would have been lost and London would not be sitting here today winners".
2005 London bombings
On Thursday 7 July 2005, a series of four bomb explosions struck London's public transport system during the morning rush-hour. All four incidents were suicide bombings. Fifty-six people were killed and 700 injured. The incident was the deadliest single act of terrorism in the United Kingdom since 270 died in the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland and replaced the 1998 Omagh bombing (29 dead) as the second most deadly terrorist attack on British soil. It was also the deadliest bombing in London since World War II.
Blair made a statement about the day's bombings, saying that he believed it was "reasonably clear" that it was an act of terror, and that he hoped the people of Britain could demonstrate that their will to overcome the events is greater than the terrorists' wish to cause destruction. He also said that his determination to "defend" the British way of life outweighed "extremist determination" to destroy it. On 13 July 2005, he told that international co-operation would be needed to "pull up this evil ideology by its roots".
On 21 July 2005, a second series of explosions were reported in London, two weeks and some hours after the 7 July 2005 London bombings. Four controlled explosions, of devices considerably less advanced than those of the previous attacks, were carried out at Shepherd's Bush, Warren Street and Oval underground stations, and on a bus in Shoreditch. Even though the attacks on the 21st were less severe than those on the 7th, Blair was reported to have said that the bombings in London today were intended "to scare people and to frighten them, to make them anxious and worried". He went on to say how the "police have done their very best, and the security services too, in the situation, and I think we have just got to react calmly and continue with our business as much as possible normal".
Concerns about terror attacks led to 10 Downing Street requesting media organisations not to identify the location of Blair's 2005 summer holiday. After Blair attended a public function it was acknowledged that the holiday was in Barbados, as a guest of the singer Cliff Richard with whom Blair has stayed before. During a renewed stay there in August 2006, Blair refused to endorse calls for a ceasefire in Lebanon.
A Guardian/ICM poll conducted after the first wave of attacks found that 64% of the British population believed that Blair's decision to wage war in Iraq had led indirectly to the terrorist attacks on London. The public did however indicate approval of Blair's handling of the attacks, with his approval rating moving into positive territory for the first time in five years. In December 2005, the Prime Minister was presented with the "Statesman of the Decade" award by the EastWest Institute, a trans-Atlantic think tank that organises an annual Security Conference in Brussels.
Proposed laws to cope with the threat of terrorism proved extremely controversial; an amendment to require that glorifying terrorism be deliberate to be an offence was rejected in the House of Commons by just three votes (a result initially announced as a one-vote margin, due to a miscount). The proposal to allow terrorist suspects to be held for questioning for up to 90 days was defeated on 9 November by a margin of 31 with 49 Labour MPs voting against the government. Instead, MPs supported an amendment to allow questioning for 28 days proposed by veteran backbencher David Winnick. This was Blair's first defeat on the floor of the House of Commons since he became Prime Minister in 1997, and most commentators saw this as seriously undermining his authority.
Education reforms, 2006
The introduction of further reforms to the education system, which restricted the involvement of local education authorities in opening new schools, proved controversial. Labour backbenchers opposed to the proposals produced a rival manifesto, and the Bill to introduce the changes was delayed while the government negotiated with them. The Conservative Party declared its support for the reforms, making passage certain but increasing the likelihood that Labour MPs would vote against them. On 15 March 2006, the Education and Inspections Bill passed its second reading, with 52 Labour MPs voting against; had the Conservative Party also voted against it would have been defeated.
Local elections on 4 May 2006 and cabinet reshuffle
The local elections in England on 4 May 2006 dealt a blow to Blair, with the loss of 317 seats and 18 councils. This result was thought to be partly continued fallout from public dissatisfaction over the decision to invade Iraq, and partly due to a scandal concerning the Home Office's mishandling of foreign criminals' deportation. At the same time, an affair of the Deputy Prime Minister John Prescott with his diary secretary had been made public. Further, some Primary care and Hospital Trust sustained significant deficits and had to release staff, which called into question the position of Health Secretary Patricia Hewitt. On 5 May, Blair reshuffled his Cabinet. Most significantly, Home Secretary Charles Clarke and Foreign Secretary Jack Straw were relieved of their duties and many other positions were reassigned.
Blair urged his fellow EU members on 20 October 2006 to send a strong message to the Sudanese government that it must allow a UN force into Darfur, arguing that it is a critical time for Darfur and therefore a chance for the EU to strengthen the pressure on the Sudanese government.
Debate over Muslim women wearing veils
A debate over Muslim women wearing veils developed after Leader of the Commons Jack Straw said he asked women in his constituency to remove them when they visited him. The Prime Minister believed that this was a "mark of separation" and made some "outside the community feel uncomfortable". He also backed Kirklees Council, which suspended a classroom assistant Aishah Azmi for refusing to remove her full face veil at school.
Cash for Honours
Blair was interviewed in connection with the "Cash for Honours" investigation by the police in December 2006, the first time that a serving Prime Minister has been questioned by police regarding a criminal investigation. He was interviewed for a second time on 26 January 2007 after the arrest of Downing Street official Ruth Turner. An embargo was placed on this news at the request of the Metropolitan Police until 1 February.
Resignation as Labour Party leader and Prime Minister
After Labour's 2004 conference, on 30 September 2004, Blair announced in a BBC interview that he would serve a "full third term" but would not fight a fourth general election. No term limits exist in British politics, and such an announcement was historically unprecedented. Blair said he would give "ample time" for his successor to establish himself before the next general election, likely to be held in 2009 or 2010.
Following the 2005 election, there was constant speculation over the date of Blair's departure. At Westminster, he was expected to retire after the proposed UK referendum on a European Union Constitution, but the constitution being thwarted at referendum in other countries negated any need for one in the UK (such a major issue as a union-wide constitution would require unanimity amongst the EU's member states). The 7/7 terror attacks also reduced the likelihood of an early departure. Speculation as to the likely timing of Blair's departure increased in May 2006, following Labour's poor results in English local elections.
On 5 September 2006, a letter signed by 17 Labour MPs called for Tony Blair to resign. On the same day 49 other Labour MPs signed a statement supporting Blair's departure timetable. The next day The Sun reported that Blair would step down as Labour leader on 31 May 2007, and as Prime Minister when a new leader is elected. That same day, seven of the MPs who signed the letter resigned as Parliamentary Private Secretaries (unpaid and unofficial posts assisting Government ministers).
On 7 September 2006, Blair announced that the 2006 Labour Party conference would be his last as leader (in other words, he planned to resign by September 2007). He did not announce a specific timetable for either his departure or the election of a new leader, but he did state that he would "set a precise date" at some point in the future. On 26 September 2006, he restated this at Labour's annual conference "this is my last conference as leader".
His successor was widely expected to be Gordon Brown, the then Chancellor of the Exchequer, who launched his leadership bid on 11 May 2007. The only other politician to formally declare himself a contender for Labour leadership following Blair's departure was left-wing Labour MP John McDonnell, who launched his campaign on 14 July 2006. To stand in the leadership contest, candidates required the nominations of 12.5% of sitting Labour MPs—then 44 MPs.
On 2 May 2007, on the 10th anniversary of taking office, Tony Blair announced that he would be stepping down as Prime Minister in a matter of weeks. He further encouraged Gordon Brown as his successor as leader of the Labour Party. On 3 May, it was further clarified by Downing Street that the exact date of resignation would be announced on 10 May. The following election of a new leader of the Labour Party was expected to take 48 days.
On 10 May 2007, Blair held a Cabinet meeting where he told his ministers about his resignation plans and later making a speech at the Trimdon Labour Club in his Sedgefield constituency before announcing at a press conference that he would step down as Prime Minister on 27 June 2007 and that he would be asking the NEC to begin seeking a successor as Labour leader immediately. His deputy, John Prescott, announced that he was also stepping down as Deputy Prime Minister later in the day at his local meeting in Hull. Blair began a world tour with a visit to Paris on 11 May to visit newly elected French president Nicolas Sarkozy. His last two major events were the 33rd G8 summit in Heiligendamm and the European Council summit from 21 and 22 June 2007.
Gordon Brown was duly elected Labour leader as the only successfully nominated candidate with 313 nominations compared to John McDonnell's 29 at close of nominations on 17 May 2007, the result being declared formally and coming into effect on 24 June 2007 with Tony Blair resigning as Prime Minister on 27 June 2007 and Gordon Brown being asked to form a government by the Queen later that day. Blair stepped down as an MP immediately triggering a by-election. He has declined the traditional seat in the House of Lords offered to former prime ministers, commenting that it is, "not my scene"
Chancellorship of Gordon Brown (1997–2007)
Gordon Brown served as Chancellor of the Exchequer of the United Kingdom from 2 May 1997, the same day that the Labour Party returned to power for the first time in 18 years, to 27 June 2007, when elevated as Prime Minister. It was the second-longest continuous period of office of any chancellor, surpassed only by Nicholas Vansittart two centuries before. Brown's time as chancellor was marked by major reform of Britain's monetary and fiscal policy architecture, by a wide extension of the powers of the Treasury to cover much domestic policy, and by largely benign economic conditions.
Brown's ten years and two months as chancellor of the exchequer set several records. He was the longest-serving Labour Chancellor of the Exchequer ever, ahead of Denis Healey, who was chancellor for 5 years and 2 months from 5 March 1974 to 4 May 1979. On 15 June 2004, he became the longest continuous serving chancellor since the Reform Act 1832, passing the figure of 7 years and 43 days set by David Lloyd George (1908–1915). However, William Ewart Gladstone was Chancellor for a total of 12 years and 4 months in the period from 1852 to 1882 (although not continuously). Brown stated his chancellorship had seen the longest period of sustained economic growth in UK history, although part of this growth period started under the preceding Conservative government in 1993, and the details in Brown's growth figures have been challenged, as have his more general claims to have created the conditions for prosperity and declining poverty levels.
Major acts as Chancellor
Bank of England
On taking office as chancellor, Brown gave the Bank of England operational independence in monetary policy, and thus responsibility for setting interest rates. At the same time, he stripped the Bank of England of its regulatory powers, giving them to the newly created Financial Services Authority, whose board is appointed by the treasury.
Taxation and spending
Brown adhered to Labour's 1997 election pledge not to increase the basic or higher rates of income tax. He reduced the starting rate from 20% (pre-1997) to 10% (1999) before abolishing the starting rate in 2007, a decision that led to an immense backbench revolt, and reduced the basic rate from 23% (pre-1997) to 22% (2000) and then 20% (2007).
Brown increased the tax thresholds in line with inflation, rather than earnings, which rise more quickly during periods of economic growth. This results in fiscal drag in which more taxpayers are drawn into the upper rates (e.g. in 2000–01 there were 2,880,000 higher-rate taxpayers, whereas in 2005–06 there were 3,160,000).
In one of his most controversial decisions, in 1997 Brown also introduced taxation of pension funds. Documents subsequently released under the Freedom of Information Act showed that civil servants warned at the time that the move, which generated £5bn in tax revenue, could lead to the closure of many occupational schemes, which subsequently came to pass. In 2008, a biographer of Brown, Tom Bower, claimed that Brown had originally sought a larger sum from pension funds, but backed down in the face of opposition.
In contrast, corporation tax fell under Brown, from a main rate of 33% (pre-1997) to 30% (1999) and then 28% (2007), and from 24% to 19% for small businesses (although the lower rate is set to rise to 22% by 2010).
Under Brown, telecom radio frequency auctions gathered £22.5 billion for the government. By using a system of sealed bids and only selling a restricted number of licences, they extracted high prices from the telecom operators. Germany at this time applied a similar auction; some allege that these together caused a severe recession in the European telecoms development industry (2001 Telecoms crash) with the loss of 100,000 jobs across Europe, 30,000 of those in the UK. But, as Paul Klemperer, one of the designers of the auctions, points out, "[t]he United States held no 3G auctions, yet telecoms companies lost just as much: in fact, they lost more."
Once the two-year period of following the Conservative's spending plans was over, Brown's 2000 Spending Review outlined a major expansion of government spending, particularly on health and education. In his April 2002 budget, Brown raised National Insurance to pay for health spending. Brown has changed tax policy in other ways, such as the working tax credits. This is one of several ideas borrowed from the US Clinton administration whereby welfare payments are accounted for as negative taxation. The separate means-testing process for tax credits has been criticised by some as bureaucratic, and in 2003–04 and 2004–05 problems in the system led to overpayments of £2.2bn and £1.8bn respectively. However, economic theory suggests tax credits can strengthen work incentives for those at the margin between employment and unemployment, and the IFS has estimated the reforms brought at least 50,000 single mothers into part-time work.
The Centre for Policy Studies found the poorest fifth of households, which accounted for 6.8% of all taxes in 1996-7, accounted for 6.9% of all taxes paid in 2004-5. Meanwhile, their share of state benefit payouts dropped from 28.1% to 27.1% over the same period.
According to the OECD UK taxation has increased from a 39.3% share of GDP in 1997 to 42.4% in 2006, going to a higher level than Germany. This increase has mainly been attributed to active government policy, and not simply to the growing economy. To have brought this about with only one explicit tax rise has led to accusations of Brown imposing stealth taxes. A commonly reported example resulted in 1997 from a technical change in the way corporation tax is collected, the indirect effect of which was for the dividends on equity investments held within pensions to be taxed, thus lowering pension returns and allegedly contributing to the demise of some pension funds. The Treasury contend that this tax change was crucial to long-term economic growth: the existing corporation tax system created biased incentives for corporations to pay out profits as dividends to shareholders (including pension funds, who could then reclaim the tax paid) rather than to reinvest them into company growth (which would result in corporation tax being paid). The old system of corporation tax was widely viewed by economists as a constraint on British economic growth.
Growth development and employment
Brown pointed to two main accomplishments: growth and employment. An OECD report shows UK economic growth averaged 2.7% between 1997 and 2006, higher than the Eurozone's 2.1%, though lower than in any other English-speaking country. UK unemployment is 5.5%, down from 7% in 1997 and lower than the Eurozone's average of 8.1%.
In October 1997, Brown took control of the United Kingdom's membership of the European single currency issue by announcing the Treasury would set five economic tests to ascertain whether the economic case had been made. In June 2003 the Treasury indicated the tests had not been passed.
Between 1999 and 2002, Brown sold 60% of UK gold reserves at $275 an ounce. It was later attacked as a "disastrous foray into international asset management" as he had sold at close to a 20-year low. The UK eventually sold about 395 tons of gold over 17 auctions from July 1999 to March 2002, at an average price of about US$275 per ounce, raising approximately US$3.5 billion. By 2011, that quantity of gold would be worth over $19 billion. He pressured the IMF to do the same, but it resisted.
When Labour were re-elected for a third successive term at the 2005 general election (though with a vastly reduced majority following the landslide victories at the previous two elections), many MP's spoke of the Labour election victory as being Brown's achievement rather than Blair's; while Blair was facing criticism as prime minister for leading Britain into wars in Afghanistan and Iraq, Brown was receiving credit for helping secure a strong economy for Britain.
On 20 April 2006, in a speech to the United Nations Ambassadors, Brown outlined a "Green" view of global development:
… far from being at odds with each other, our economic objectives and our environmental objectives now increasingly reinforce each other. … Environmental sustainability is not an option – it is a necessity. For economies to flourish, for global poverty to be banished, for the well-being of the world's people to be enhanced – not just in this generation but in succeeding generations – we have a compelling and ever more urgent duty of stewardship to take care of the natural environment and resources on which our economic activity and social fabric depends. … A new paradigm that sees economic growth, social justice and environmental care advancing together can become the common sense of our age.
Other statements and events
In 2000, Brown started a major political row about higher education (referred to as the Laura Spence Affair) when he accused the University of Oxford of elitism in its admissions procedures. He described the University's decision not to offer a place to state school pupil Laura Spence as "absolutely outrageous" and implied its decision was based on her background rather than her academic potential. This started a major and hotly argued row in the media in which Oxford strongly denied these accusations. With his comments, Brown can arguably be credited with raising widening participation to Higher Education up the political agenda. However many of his opponents said Brown's comments were ill-founded, including Lord Jenkins (then Chancellor of the University of Oxford) who said "nearly every fact he used was false," and that Brown's speech had been a "little Blitzkrieg in being an act of sudden unprovoked aggression".
Anti-racism and popular culture
During a diplomatic visit to India in January 2007, Brown responded to questions concerning perceived racism and bullying against Bollywood actress Shilpa Shetty on the British reality TV show Celebrity Big Brother saying, "There is a lot of support for Shilpa. It is pretty clear we are getting the message across. Britain is a nation of tolerance and fairness." He later said the debate showed Britain wanted to be "defined by being a tolerant, fair and decent country."
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