Blair has stated that his government will not drastically diverge from the previous policies of limited government, fiscal discipline, private enterprise, and individual responsibility. He has promised no new nationalization of utilities, no new public spending, and no new taxes to buttress the welfare state. Blair has described New Labour as no longer a "tax and spend party, but rather a responsible party, a law and order party, a pro-business party." Soon after taking office, Blair signaled an historic change in economic policy by ceding control over interest rates to the central bank (Bank of England), drawing cheers from the Conservative opposition, European leaders, and financial executives. Many have interpreted this decision as an indication of Blair's commitment to fiscal discipline. Mindful of the next general election in 2001, the government presented an expansionary fiscal policy in March 2000 with a sharp increase in spending on National Health Services (NHS), projected to be around 6% in real terms for three years. In July 2000 the government presented a blueprint for modernizing the NHS, investing heavily in staff and facilities and allowing for serious input from individual patients. In 2003, spending on healthcare was set to rise by 7.2% a year until April 2008, an investment which was to fund 80,000 more nurses and 25,000 more doctors.
Labour's victory brought several constitutional changes to the UK. After decades of debate, Labour organized a referendum on devolution of a Scottish and Welsh Parliament. The referendum was held on 11 September 1997 and produced clear majorities for two propositions that created a separate regional Parliament and gave these Parliaments limited taxing powers. The Scottish and Welsh Parliaments were formally opened in 1999.
Blair also proposed to reform the House of Lords to make it more "compatible with a democratic society." In October 1999, a new measure came into effect that abolished 650 hereditary peer seats in the House of Lords. Instead, the House of Lords elected 75 of their numbers to sit alongside 500 life peers, several senior judges, 26 bishops of the Church of England, and 15 deputy speakers elected by the whole house from among the hereditary peers. His government has already discontinued the practice of recommending knighthood for senior MPs leaving Parliament. Such awards are to be bestowed based strictly on merit.
Local council and city elections on 4 May 2000 sent a mixed message to the modernizing program of Tony Blair and the Labour party. Blair opposed the candidacy of Ken Livingstone, a former Labour politician for mayor of London. Due to Blair's heavy-handed attempt to prevent Livingstone from running for mayor, he was forced to run as an independent. The publicity served Livingstone well and London voters overwhelmingly supported him. The success of Livingstone seems to suggest that Blair is losing touch with the core voters of the old Labour party. In 2001, however, Blair postponed nationwide municipal elections, due to the spread of food and mouth disease among cattle, sheep, and pigs.