When I came to make a speech on social policy - almost exactly a year ago - in the Rijksmuseum with Rembrandt's great painting of the Night Watch as backdrop, I was Leader of the Opposition.
Today I find myself in the magnificent Ridderzaal at the heart of Dutch democracy, this time as Prime Minister of the new Labour Government. I am delighted to have this opportunity of speaking in The Hague at the beginning of the UK Presidency.
Geography and history have made our two countries friends and allies, despite a few little naval misunderstandings in the 17th century. The Second World War brought us particularly close together. Our common trading interests and our common approach to global issues now make us natural partners in almost every area. I am personally determined to turn this into a still closer partnership, working together in the European Union and NATO. I have had an excellent discussion earlier today with Wim Kok to this end.
Let me first state clearly the vision of the new British Government: it is to find a new say, a third way, between unbridled individualism and laissez-faire on the one hand; and old-style Government intervention - the corporatism of 1960s social democracy - on the other. To find the route to social justice in a modern age. Traditional goals; modern means. We know ever-high tax and spending by Government isn't on. We know Government running industry or state subsidies doesn't work. We know protectionism and isolation won't deliver lasting prosperity in a global economic age.
But we don't want to live in a society without rules, without compassion, without justice, without any sense of obligation to our fellow citizens. I want the politics of Britain and of Europe to be based on solidarity, on the common good. But I know that the world has changed. We must change the way of achieving our goals for today.
And the change needs to be fundamental. Some paring here; some trimming there. Muddling along. That won't do.
We need to reform the European social model, not play round with it. Make it work in the long term to achieve the values it stands for. That's what we mean by New Labour. New in our means. But Labour in our aims.
Since being elected, the New Labour Government has set its course according to these principles of the third way, the radical centre if you like.
First, we have tightened public finances sharply. Next year, we will have one of the lowest levels of deficit of any major world economy. Two years after we may eliminate it. But we have tightened the deficit without raising income taxes and whilst still getting more cash to poor pensioners and to the unemployed.
Second, we have started to squeeze the inflation we inherited back out of the system. But we did it by giving the Bank of England independence over the setting of interest rates. And we have continued that with far-reaching reforms of our financial system, to make it more open and secure.
Third, we have made a firm commitment to more investment in our education system, which we have put as the top priority of the new Government. There is a huge investment going in.
But, it is a deal: investment for reform. Schools are going to have to raise standards sharply. There is a strong emphasis on discipline, high quality in teachers, and schools are being encouraged to be more flexible and imaginative in the way they work. Education Authorities are there to help schools, not control them. Teachers' unions do not set the agenda. We want partnership with those that work in our public services. But they are run for those that use them.
Fourth, we are embarking on reform of our welfare state. It is not simply the size of the budget. It is that it isn't doing the things it was established to do. We have more workless households, more people dependent on benefit, more socially excluded. We are instituting a Welfare to Work programme, giving young and long-term unemployed people the chance to work or get a skill. But in return there is an obligation to take work. There is a new emphasis on services like childcare and less just on extra cash benefits. Student finance is being reformed. Universities will get more money for investment, students numbers will be increased, but students will be expected when they start to earn reasonable sums of money after leaving university, to contribute back some of their fees. Our NHS is being reformed, with a new emphasis on better primary health care and more health prevention and less bureaucracy; in return, greater investment.
Fifth, there is an attack on crime, not just serious crime, but vandalism and juvenile offending. Parents are being held responsible for the actions of their children, in certain circumstances. Crime is the scourge of modern-day living. It often affects the poorest in our society. We are determined to bear down on it in all ways possible. But, again, in balance, we are working strongly on rehabilitating and helping offenders to regain responsible lives.
Sixth, there is a fundamental change to Britain's constitution under way, devolving and decentralising power to the nations and regions of the UK and re-vitalising local government. We are also reforming our system of voting in the European elections, incorporating directly the European Convention on Human Rights and introducing Freedom of Information legislation to open up the old-fashioned and secretive system of Government. And we are reforming the House of Lords.
Add to this the search for peach in Northern Ireland - difficult and fraught though it is - and you can see we have a full and ambitious programme.
Of course, it will take time to deliver. That is frustrating for us and for the electorate. But the work in progress is there. The course is clear. And we will get to our destination. I have no doubt of it.
However, nowhere has change been more important or decisive than in respect of Europe.
Since the election, there is evidence of a remarkable shift in public opinion in Britain. The narrow chauvinism of the years of Conservative Government are gone. There is a confidence in Britain, a sense of dynamism and adventure and, as a result, people are not frightened of Europe.
For the first time in many years there is a growing consensus in Britain in favour of constructive engagement with Europe.
It is a change of attitude that comes from results. Results at the Amsterdam summit including the protection of our border controls, ensuring that jobs are at the top of the EU's agenda through an Employer Chapter with the Treaty; strengthening Treaty provisions on the environment, on consumer affairs, on subsidiarity; extending qualified majority voting where it made sense, but maintaining the veto in areas of essential national interest.
When British people see a strong, dynamic Britain influencing Europe, they support our stance.
When they see the possible benefits for British jobs, business, living standards of Europe, they know we can make a success of it.
When they see the potential to tackle crime, reduce pollution, open markets, they know Europe can be a force for good.
The issue of Europe is beginning to break down the old political barriers in Britain.
Politicians from all parties are slowly coming together in a patriotic alliance in favour of Britain's central place in Europe.
It is an alliance of people who believe that British values of creativity, tolerance, fairness and democracy can influence the shape and destination of Europe. It is an alliance of people who believe that our future prosperity can be shaped by a successful Europe. It is an alliance of people who are hard headed about the future and hard headed about Europe's faults. People who are in favour of Europe, but in favour of a reformed Europe.
I come to this with my own perspective. I am not marked by personal experience of the scars of war. Or by painful memories of British post-war readjustment to a new world. Britain has been a member state for the entire period of my adult life. To me and most of my generation, Europe is simply the political, economic and commercial world in which I have naturally lived. When younger, I worked on the Continent, I have friends here. I want my children to grow up comfortable as both British and Europeans.
The European Union was, and remains, the prize of peace. The heartfelt cry of "the war to end all wars" has gone up twice on our continent in this century. The genius of Monnet, Spaak and Schuman was to take that heartfelt cry and mobilise it into an organisation based on the principle of democratic consent and the practical foundation of increasingly close co-operation.
Membership has been overwhelmingly in our interests. Serious conflict between Member States is unthinkable. Trade with our partners has boomed. We all benefit through easier and cheaper travel, through the new possibility to live and work in other member states, and of course through the freedom of choice, lower prices and extra jobs which are the single market's unseen benefits. Politically as well as economically, our weight in the world is increased.
We live in a multilateral world where influence comes from working with others. We willingly pay the price of pooled sovereignty in defence, for the greater prize of collective security through NATO. We should be ready to pay a similar price in the European Union for the prizes of political security and stability, liberal and open markets, higher incomes and more jobs. Security used to come from self-reliance and defensive barriers. Today, it comes increasingly from openness and the removal of barriers.
The challenge which Europe faces today is above all how to bring European issues closer to the people. We must be able to show that everything that is done in the name of Europe is only done insofar as it meets those concerns and improves Europe's quality of life, while respecting and encouraging national regional and local diversities which are part of Europe's strength.
This is the over-riding priority of our Presidency - to help create a Europe working for the people to make them feel more prosperous, safe and free because of what the European Union is doing.
* Take the Environment as an example. There is a huge amount to do: follow-up to Kyoto; action on vehicle emissions, air and water quality; adoption of an EU strategy on biodiversity; and integrating environmental concerns fully into EU policies, for example in transport, fisheries and animal welfare. Few issues are of more concern to our people.
* Then again, take another Presidency priority: Crime and Drugs - building on a programme the Dutch Presidency developed. There is increasing public concern about organised crime, drugs and illegal immigration, and their international scale. We have a formidable set of objectives. Fighting organised crime is top of the list. One key is getting Europol up and running. Member States which have not yet ratified the European Convention should get on with it. We must also do better on fraud and corruption. On drugs, we need to carry forward the EU's present comprehensive action plan and give it more teeth in the future. We will also be vigorous in our programme against the cancer of racism and xenophobia.
* On External Policy, the EU must be both effective and seen to be effective internationally. Political will, not hot air. We need to project our values on the world stage, to be open, outward-looking, supportive of free trade, human rights and democracy, and playing a major role in the great international issues of the day. We must equip Europe with better machinery. This means the right candidate to be the EU's voice on common foreign and security policy issues, and the right back-up. It also means enabling Europe to act in a sensible and co-ordinated way both politically and economically. I will not abandon Britain's freedom of diplomatic manoeuvre where this is essential, any more than Wim would abandon his. But arcane disputes must no longer stand in the way of effective action.
Of course the two great challenges Europe faces are how we enlarge Europe to take in the aspirant countries wanting to join the Union; and how we build an economically competitive and prosperous Europe for the future. In both areas the British Presidency will, I hope, have much to offer.
On enlargement, the Luxembourg European Council took the crucial decisions: an inclusive enlargement process with ten Central and East European countries and Cyprus; the start of accession negotiations with six countries; and the European Conference to include Turkey as well.
A Europe of two halves - haves and have-nots - is both morally unacceptable and economically and politically dangerous. Britain has long championed the cause of EU membership for the all these countries, including Turkey, as well as opening up EU markets to them before they join. We continue to do so.
Who would have thought even ten years ago that we would today be on the verge of reuniting Europe, with the cold war a rapidly fading, even faintly unbelievable memory? So let us keep in mind the historic importance of this transformation. The process must not be held hostage to internal wranglings. That would demean Europe.
Nonetheless, for enlargement to be successful there must be reform. The CAP must be modernised. Of course governments will have to go on spending money to keep people in rural areas, and preserve our rural environment. But the present system is a manifest absurdity, which discredits Europe and its institutions. It does not encourage competitive farming or serve our consumers well. It is time to grasp fully the nettle of reform.
Reform of the Structural and Cohesion Funds also cannot be ducked. We have to free resources for the inevitable needs of the much poorer new members. We cannot afford to exceed the present spending limits. The results need to be fair and equitable for existing and new member states alike, durable through and after enlargement, and affordable.
However there can be no doubt that the most significant event of our Presidency is the launch of EMU. We want it to succeed; and we will work hard to make its launch successful. Britain has set out its own position clearly. We believe a single currency can make sense in a Single European market. There is no insuperable constitutional barrier to our joining. The test is whether the economic benefits of EMU are demonstrably clear and unambiguous. Barring unforeseen circumstances, we want Britain to be in a position to take a decision on whether to be part of a successful single currency early in the next parliament, should the economic conditions be met. All this is settled. It is a practical and constructive approach well in line with mainstream British opinion.
The creation of a single currency is not, however, in itself alone the route to prosperity. It brings to the fore more urgently than ever how Europe prepares itself for the new economic and social challenges it faces.
EMU can be a great help to trade an to business.
But the creation of EMU will present the European economy with a significant structural shock. Price differentials will become more transparent to consumers. Huge economies of scale in production will become realisable.
Exchange rate flexibility will no longer be there. Labour mobility and fiscal transfers are not realistically available as in, say, the USA, to compensate different parts of the EU whose economies may move in different directions or economic cycles. There will be a very high premium on genuine and sustainable convergence and on the adaptability of our industry and the employability of our workforce.
Europe has to find its own way - a new Third Way - of combining economic dynamism with social justice in the modern world. This Third Way is more than the free market plus decent public services - laissez-faire economics with a warm heart. It is about active government working with the grain of the market to ensure a highly adaptable workforce, good education, high levels of technology, decent infrastructure and the right conditions for high investment and sustainable non-inflationary growth. It is about securing the flexibility that the market offers with the "pluses" that only an active government can add.
I have every confidence Europe will find this Third Way and make it work. For the path of reform and modernisation is not just something peculiarly British but part of a movement for change in Europe. Here in the Netherlands our coalition has carried through a programme of economic reform that is widely admired. And as change continues, we can see clearly the shape and direction the debate in Europe is now taking. Briefly put, the principles are these.
First, that macro-economic stability (which a successful single currency will reinforce) is the essential foundation of sustainable growth. Old style tax and spend is gone.
The challenge of macroeconomic convergence is well on the road to being met. Inflation has been subdued. Europe's public finances are in much sounder shape. The conditions of macro stability vital to underpin the single currency are almost in place.
Second, the best way to promote efficiency in production is through competition, liberalisation and open markets - not through monopoly, state subsidy or preferential procurement.
The Single Market has been a great achievement, but we must not rest on our laurels. For the Presidency I see four main priorities:
* Filling in the gaps where it is incomplete or under-performing, for example carrying through liberalisation of the energy market, and really opening up public procurement.
* Modernizing the market, for example in telecoms, to follow up lower call charges by barrier-free development of electronic commerce and ensuring the next generation of mobile telephones work everywhere.
* Reversing the alarming slippage in state aids by tightening up the rules;
* Above all, better enforcement through faster and more rigorous complaints procedures, underpinned by more effective sanctions. We all gain if the playing fields really are level. Above all, our consumers will gain if EU prices are lower through competition.
Third, Governments can best improve economic performance by addressing supply side weakness - quickening the pace of economic change, and equipping people to cope positively with its consequences - not attempting to slow change on behalf of vested interests. Here, education, skills, technology, better infrastructure and transport systems are the key; not over-regulation and burden on business. The New Labour Government is committed to the Social Chapter and a minimum wage. But, subject to basic minimum standards of fairness being in place, the best way for Governments to provide job security is through education and an employment service that helps people to new jobs and re-training throughout their working lives.
Even in the sensitive area of labour market reform, Europe has made some limited progress. Spain, Italy and Sweden have eased their employment protection legislation to encourage temporary work. France, Italy and Spain have introduced tax incentives for part time work and together with Austria and Greece have eased legal restrictions on it. Finland, France, Greece, Italy and Spain have relaxed restrictions on working hours. The aim is not to undercut social protection, but to make a modern labour market work better. High levels of unemployment are not social protection.
Reform of labour market regulation is primarily a matter for Member States. But at Luxembourg there was a breakthrough in agreeing that Europe-wide regulation would be subject to new tests of its impact on jobs. We shall pursue the implementation of this criterion during our Presidency.
And we must ensure that the next generation of EU Education, Training and Youth programmes and the European Social Fund after 2000 focus on lifelong learning, social inclusion and employability.
Fourth, that the priority in social expenditure to tackle unemployment should be for active labour market policies that offer opportunities matched by obligations to the youth and long-term unemployed, not for welfare systems that lock people in idleness and dependency.
Here we have a lot to learn from each other. Encouraging the exchange of best practice and setting appropriate targets was the theme of last year's Jobs Summit in Luxembourg. And here I would like to pay tribute to the initiative of the new French Government in promoting the Jobs Summit. We worked with them constructively towards its positive conclusion. Our task in the Presidency is to turn Luxembourg's ideas into action. The European Council in Cardiff should be the first occasion to make sure implementation is fully under way.
Fifth, that the best long term policy for new job creation is to get the conditions right in order to enable small and medium enterprise to flourish, not rely on unfocussed expansion of the public sector which has led to high taxes and high deficits.
We need the right climate for the growth of small high-tech businesses which can create the jobs of the future. During the Presidency we will be putting forward ideas for improving access to venture capital. At the same time we must improve the quality of European legislation and simplify the burdens on small business that it can impose - to help, not hinder, competitiveness. We will also take forward the suggestion made by Wim Kok of work to deal with the problem of the so-called Millennium Bug, the technology challenges of the year 2000.
Sixth, welfare systems need reform to curb spiralling costs and make work the most attractive option, as well as tackle more effectively the root causes of poverty and thereby sustain the social cohesion that is a necessary underpinning of economic success.
Many EU countries, including the Netherlands, have recognised the need for radical welfare reform which in your case has involved big changes. Many European governments - France, Austria, Greece, Germany, Italy - accept that the cost of unreformed pensions, for example, is unsustainable and have taken the first steps necessary to address these deepseated problems.
Seventh, that we need the right balance of investment plus concern for the protection of the environment to govern our policies for growth. High quality infrastructure, better public transport, cleaner air, investment in the environmentally friendly new industries. All these have a part to play in securing the twin goals of higher living standards and social justice.
These are the seven principles of the new European consensus we are step by step edging towards - the shared understandings that will be the foundation of a reformed European social model of which Britain can not only be part, but take a lead in helping to create.
Enlargement will in turn reinforce the momentum of economic reform - through the competitive stimulus of opening up a vast new market and through the reforms to Europe's internal policies that must be part and parcel of it, if enlargement is to work.
I am an optimist about Europe's future. I also believe Europe has the chance to show the world how the process of change can be managed. The world moves so fast today. Technology, travel, mass communications, 24 hr dealing in foreign exchange, jobs that are no longer for life, patterns of working unrecognisable from 40 or 50 years ago; family and community life changing.
We can show the world the right way to change. Not running from it, but not allowing it to eclipse our basic values and principles. It is a time of great challenge. And of excitement. Britain, back in the mainstream of European nations, stands ready to play its part, to the full.