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Mike Baker:
Prime Minister, you are launching this consultation on the idea of performance-related pay for teachers but, as I am sure you are aware, you are going to face some opposition because teachers particularly tend to think that their profession is one which involves teamwork and they are reluctant to go down a path which means some being paid more than others.

Tony Blair:
I do understand that we have to mount a campaign of persuasion for people in the education profession but there is a very powerful case that we are making. We are putting a vast amount of extra money into education from this April but it has to be money for modernisation and we have to be making the changes that allow us to appraise teachers' performance better, to pay those teachers who are making a particular contribution well, to encourage teachers who want to to stay in the classroom and to give special bonuses, if you like, to those schools that are improving most rapidly, coming out of difficulty and making enormous strides forward. We have got to be using the money in the system that we are going to be putting in to lever-in far higher standards of performance.

Mike Baker:
How are you going to make the decision about which schools should get that bonus for increased performance pay?

Tony Blair:
This isn't going just to about those schools with the top results, it is also going to be about paying bonuses to schools that for example come out of being a failing school far more rapidly than people thought or make a particular leap forward and it is going to be judged according to the assessments and targets that the school has and if the school does particularly well then we think it is right to reward that school.

We are also very keen to make sure that those head teachers who are turning round difficult schools, again making a huge difference to the improvement of their school and running a good school, get rewarded properly as well. To my mind, if a head teacher takes on a difficult primary and secondary school and really makes an excellent job of turning it round we should be prepared to reward them as you would other professions in other walks of life.

Mike Baker:
But what about the individual teacher who is doing a very good job but perhaps is not surrounded by such good colleagues and the school is not going to get its bonus payment? Isn't that individual good teacher, much needed in that school, going to lose out?

Tony Blair:
No. The teacher won't lose out because we are also making sure in the changes we are making to the way that we reward performance for teachers that we can reward that on an individual basis so if a teacher is doing a particularly good job within a school then there is going to be the ability to reward them properly.

People say isn't this going to divide up people within the school but of course head teachers are making assessments about teachers the whole time, those who are going to become head of departments, those who are going to get promotion in the school. No-one is going to lose out on this but it gives us the ability to bump up considerably the teachers' pay for those teachers that are really doing well and I think that is right because I want to see a situation in which we have teaching back recognised as a profession which has got respect, which has got dignity and which has proper rewards attached to it but I think the public will expect us as the government to say if we are putting in this extra money and this extra investment, we demand high standards of performance in return.

Mike Baker:
You could do a lot for teacher morale and no doubt for recruitment if you gave them a guarantee that the Pay Review Board award was to be given in full and not phased like last year. Can you give them that assurance?

Tony Blair:
I always say when I am asked about the Pay Review Boards before they come out that people have to wait for the publication before we make our decision known but we are aware of the fact that it is necessary to recruit and retain teachers and motivate them properly but it is also necessary to change the basis upon which they work so that we can get the very best out of them.

Mike Baker:
But would you accept that the phase-in probably did more damage to this government's reputation in teachers' eyes than probably anything else that you have done?

Tony Blair:
It is always difficult when you phase though I think people understand both with schools and with hospitals that we have had two very tough years of public spending. We have to do this because we inherited a vast £28bn borrowing requirement from the previous government. We could never have got interest rates down, frankly, if we hadn't taken the measures necessary to cure the fiscal deficit. We have done that, we are now able to put in the biggest increase in health and education spending the country has ever seen from this April; it is going into both schools and hospitals but it is money for modernisation.

We are going to be changing the way that we analyse and assess the performance of hospitals, we are going to be introducing new primary care groups into healthcare, we are going to be making sure there are new efficiency targets in health and in schools in exactly the same way, we are making it very clear that we expect standards and performance to come with the money. The days when governments just sat there and threw money at the problem are over, we have got to target those resources very carefully, spend them wisely and make sure that the whole time we are trying to introduce an ethos of performance and standards as well as those of good rewards.

Mike Baker:
So performance pay is going to be something for something. What is it you are going to want in return from teachers? Some of them think it is going to be longer hours.

Tony Blair:
It is really high standards of performance, that's what we really want and we need to have specific targets for schools in terms of their improvement and we need to have a real sense, particularly with the heads of schools, that the school is not tolerating ambling along.

You have got the situation in the British education system where a certain group of schools at the top do extremely well and you have got a certain group of schools at the bottom who are failing and they need special measures and we have got the new powers now to do that. But then you have got quite a large group of schools in the middle that aren't failing certainly in a technical sense but just aren't doing nearly as well as we need them to do. We are putting an investment into for example new computer technology in schools, we have got this vast additional sum of money coming in to improve the infrastructure of schools, 2000 schools have already started in terms of building works within the school to try and build better classrooms and all the rest of it, thousands more will gain over the next two or three years.

We are putting in all this additional investment and we have got the extra money for the teachers' pay but in return for that we are saying: Now come on! We have got to sort out some basic problems here! We can't tolerate people in the teaching profession who aren't up to the job, we have got to make it easier to get rid of heads or teachers that simply can't teach or run a school properly and we have got to have a situation where when we are putting in that extra money and rewarding people better we are getting something back in return.

I think that is a fair deal, it is what the public I believe would expect from this government, expect us to put the extra investment in but they expect us also to call for the reform in return.

Mike Baker:
You have said you want to reform the stages of the teaching profession. It is not just about pay, is it? If you look across the Channel, a lot of teachers have more autonomy in what they teach and how they teach and what one does hear from the teaching unions here is that they feel that if you are telling them how to teach with things like the literacy hour, then that cuts across their professional status and that could be getting in the way of the recruitment problem.

Tony Blair:
We have introduced more flexibility in the national curriculum. In respect of the literacy and numeracy strategy of the government, we are prepared to tolerate a lot of flexibility within it but it has got to work. What we are not prepared to do is have a situation where we have all sorts of theories tried out and they don't work. We want our kids at the age of 11 to come out of primary school and we should have the vast bulk of those able to read and write and do the necessary basics properly and if they are not able to do that there is something fundamentally wrong with our system and at the moment over 40 per cent of them in certain areas can't. We are not trying to be overly prescriptive as to how we get the standards up but we are insistent that those standards must rise.

Mike Baker:
Finally, you have got very ambitious targets for educational standards. Would you accept that the biggest threat to achieving those targets is the recruitment problem?

Tony Blair:
I certainly accept that that is one major part of it and this is why it is so important that we persuade the teaching profession that the deal that we are offering, which does involve change, involves big rewards for those who are doing the job properly and can help us usher in an entirely new era of the teaching profession in which they are properly respected and properly rewarded too.

But I think there is another issue as well and that is we simply have to bring about a different type of culture in the way that we look at education, where we simply don't tolerate the levels of failure that we have in the present system. When I look at some of the inner city schooling, no wonder parents feel they have to move out or feel that they have to try and make other arrangements for their children. It is just not acceptable. Every single child that is denied a proper education is a child that isn't given a proper start in life.

If we begin in our minds with that type of attitude and we are trying to bring about that type of culture in education so that we get a real sense of national purpose and national vision behind raising education standards, then we will get there.

We have taken a whole range of measures, some of them very tough indeed, to deal with this in our first 18 months in government. The next part of this is saying we have sorted out the problems in the national budget, we can now get this extra investment into education but we are only doing it on the basis that we get proper attachment to standards and performance in return and that is the deal and if we can get the country behind that and the education profession behind that we have got a chance of succeeding.