In his first newspaper interview on regional government, Prime Minister Tony Blair explains in an exclusive interview with Political Editor Chris Lloyd his conversion to the cause, what benefits a regional assembly might bring his constitituents in Durham, and his relationship with colleagues Gordon Brown and Alan Milburn.

Q Why have you come round to the idea of regional government?

A I have been very impressed by what I have seen in Scotland, Wales, Northern Ireland and London.

It's very interesting how, now that their government is suspended, how many people in Northern Ireland miss the fact that they had ministers living in their part of the world that were actually focusing exclusively on their problems.

If you look at other countries around the world, Britain has been traditionally incredibly centralised.

Until we came to power, no other country in the world was organised as centrally as we were. It was crazy.

I think there are certain issues - economic development, transport, the environment -that are better handled on a regional basis.

There is no point taking anything other than a regional view of economic development.

I'm the Sedgefield MP. If Newcastle or Teesside is doing really well, that is good for my constituency, even though it doesn't cover those areas.

To look at Teesside and Tyneside as two different parts of the country is absurd. They are not. They are intimately linked.

Also, I didn't simply want to add another tier of government. We are moving towards unitary local government, which will mean more efficient local government.

Finally, I think it depends on what sort of self-government you operate. I think this is sensible. It's not trying to do too much, but the budget it will be handling directly is over £500m, which is a lot of money.

My move from being initially sceptical to being convinced that this is a right thing is, I think, echoed by other local civic leaders in the North-East. I think the mood is more in favour of this now.

The North-East is potentially very, very strong and I think it will be stronger still with this measure of regional government.

Q Is there a North-East identity?

A People have their own very strong local identity - you only have to look at the football teams to realise that or, indeed, village by village; Trimdon Colliery and Trimdon Grange. But I think people do identify themselves as part of the North-East as well.

Q In an assembly, should the south of the region worry about being dominated by the more populous north?

A We reinstituted government for London. It again is a place of many different parts - Kensington, Chelsea are not the same as Dagenham. But I think there is an increasing view, whether people agree or disagree with the decisions taken there, they want them taken locally.

Q The Northern Echo believes any North-East assembly should be based in Durham City to show this is more than a "Geordie Parliament". Do you agree?

A Obviously the location is of importance, although, in the end, the most important thing is what the assembly does and how effectively it performs.

Q Is there a danger that we will end up with a confusing plethora of different forms of local government?

A There won't be a hotch potch. If regional government comes, there will be unitary government, which is rational.

I still am personally in favour of directly-elected mayors. I think it is best to have a big personality in charge of the locality - Ray Mallon has certainly made an impact in Middlesbrough.

Q Do you see a North-East assembly becoming more powerful over time?

A I don't think you should set an arbitrary limit on how it can progress, but, as we've done in Scotland and Wales, we have to make a start. Its budget is big and its decisions important.

Q Is regional government part of a European plot to fragment the United Kingdom?

A This is complete nonsense. Some people are so obsessed by this European-thing that there is not a single issue that is not seen in terms of Europe. I don't know what this has got to do with Europe. Europe is not deciding this; the people of the North-East are deciding it, and they will decide who is elected.

I think the 'no' campaign is based on no better argument than an assembly hasn't happened before and so it shouldn't happen now.

Q What role will Darlington's MP, Alan Milburn, have and why have you brought him back into the Cabinet?

A Alan will co-ordinate the development of policy across Government.

The forward agenda that we are drawing up now - the economy, law and order, health, education and issues to do with pensions - he will help bring it together, which is important as a lot of these policies interrelate.

It is a big job and I had to persuade him pretty hard because he was pretty determined not to come back, but I think that this is a job that is just right for him.

He's not having to run a big department, which I think was taking up a lot of his family time, and this will enable him to play a role in government.

He's a big talent and so far as possible in government, you want as many of the talents as you can.

Q How well do you really get on with Chancellor Gordon Brown?

A I've learnt enough about politics in the last ten years of being at the top to know there is an element of soap opera to it.

I don't even bother reading it any more. We have worked closely together for ten years and we shall continue to do so.

I don't think people should pay attention to everything they read - apart from this interview, which is absolutely the goods!