Tony Blair propelled New Labour to power in May 1997, campaigning with the slogan ‘New Labour – New Britain’. From the time he became party leader in July 1994, he took full advantage of the difficulties encountered by John Major's weak and divided Conservative government. Blair had two core objectives, both of which reflected reactions to his party's lack of success in four successive elections held since 1979. He aimed to position what he called ‘New Labour’ as a responsible, slightly-left-of-centre party that would strive to achieve Labour's traditional goal of protecting the vulnerable and enhancing the life chances of the disadvantaged. At the same time, however, New Labour would not threaten the interests of Britain's increasingly prosperous middle class. Mr Blair and his colleagues believed that they could achieve these ends by demonstrating that their party was capable of managing the economy effectively – indeed, more effectively than their Conservative rivals. The resulting prosperity would provide the revenue needed for greatly enhanced social policy investment. New Labour thereby would deliver a highly attractive confluence of compassion and competence to government policy. During much of its long sojourn in the political wilderness Labour had been widely regarded as too great a risk to be trusted with the reigns of power. The party might care deeply about increasing public welfare, but it was incompetent to do much, if anything, about it. Blair aimed to change that longstanding perception and keep it changed.

Basking in the glow of his 1997 landslide victory, Blair's government got off to a terrific start. Labour experienced an extended honeymoon, enjoying enormous opinion polls leads over the demoralized Conservatives. By sticking firmly to the Conservatives’ spending plans for the first two years, as it had promised to do during the 1997 election campaign, New Labour demonstrated fiscal responsibility and consolidated a reputation for managerial acumen that it had begun to acquire almost by default in the wake of the 1992 Exchange Rate Mechanism crisis. By handing control of interest rates to the Bank of England's Monetary Policy Committee, Blair displayed his determination to run monetary policy in the service of controlling inflation, rather than as a handmaiden of party interests and the exigencies of the electoral calendar. Political business cycles would give way to sound economic stewardship in the national interest.