TONY Blair is in a good mood. The general election may only be 52 days away, the terrorism bill is having a difficult passage through parliament, and the Northern Ireland peace process is foundering, but talking to him on the plane to Scotland yesterday, it is hard to credit he has a care in the world.

He is keen to read what Mark Ellen, one of the members of Ugly Rumours, his old rock 'n' roll band, has written about him in the Word magazine. He met up with Mr Ellen last month in a Birmingham hotel, and laughs at the recollection of the look on the receptionist's face when he greeted his old friend. Mr Ellen said he would savour the look for the rest of his life.

He is in Dundee today to rally Labour activists for the forthcoming general election.

Gone are the days when he feared he might be tripped up over the details of Scottish life. Devolved issues are a matter for Jack McConnell, although it is stretching credulity to believe that Mr Blair, and other senior cabinet colleagues, in private, are not urging further and faster reform of Scotland's public services.

En route last night to Kirkintilloch, where he faced robust criticism over his controversial anti-terrorism legislation, the prime minister was talking about his plans for the G8 summit at Gleneagles in June. He rejects the suggestion that he is highlighting climate change and poverty in Africa as a way of atoning for Iraq.

"I've always said the international agenda has to be a broader one than security, " he says. "I believe the international community must act together to tackle global problems.

"I always did. Remember we were instrumental in putting the Kyoto agreement together and we have always highlighted the plight of Africa. The idea of atonement for Iraq is wrong. I hope noone has got that impression.

They were certainly not given it by me. On both these issues, we have a very long track record about them as a government, and I have them as an individual."

Although the US has not signed up to the Kyoto agreement, or the International Finance Facility, the UK's initiative to provide development aid for the poorest countries, Mr Blair predicts confidently they will make progress at Gleneagles.

He says: "There is a big evolution of American policy going on, and I think people aren't quite understanding it.

It is having quite an impact, the same as the election in Iraq has had a big impact. At the Palestinian conference in London this week, there was a different spirit.

"Many of the Arab countries were saying why they were now under pressure from their people because the elections in Iraq. They are moving towards a more democratic future."

He is not spending time agonising over the question of the trust, even post-Iraq. He declares: "I think people have to make a judgment about it in the end.

"We said we would deliver on the economy, we have. We said we would deliver more jobs, we have, deliver the minium wage, we have, deliver the Scottish Parliament, we have. We said we'd deliver extra investment for health and education, we have, greater equality for people, we have.

"People agree or disagree over Iraq, and that is people's right but we'll have to agree to disagree. But when you take a really difficult decision on anything that's not populist, the right question is was it the right decision."

He acknowledges that Iraq has been and remains problematic, but thinks the Tories have consistently targeted him. "Look, they were going to say one of two things about this government.

They were either going to say that we could not competently run the economy, and they couldn't do that, so they were going to go for a character attack and that's what they have done. They were calling me a liar before the last election, before Iraq was ever heard of, so that is what they do."

He has plans for a radical third term but does not accept that the party was less than radical in his first two terms.

"I think we were. I think we were radical in economic terms but our task for our third term is to complete the transformation of the welfare state for today's world - choice in public services and power to parents and patients, to exercise control in the system, maintain the basic principle of the welfare state that it is free at the point of use, while breaking new ground in areas like childcare, better provision for families, balancing work and family life, reforming the pension system, making it more sustainable for people in the long term.

"That is what I think it is about, opening up opportunities for people in a changing world, making a welfare state for the twenty-first century. I think we are on the verge of being able to do that, but we need a third term to do it."

He denies spending too much time on the foreign stage, insisting instead that most of his time, even during the last three years, was spent on domestic politics. But he is unrepentant about the time he did spend on international affairs.

He says: "Post-September 11, I took the view that this country had to be absolutely involved in the decisionmaking in the international community for our security and our own economy.

"The other thing I would say about my involvement about foreign affairs, I have done it for Britain, I have not done it for anyone else. I actually thing it is important.

It is important to be at the top table. Even six months ago, people were saying all this rubbish about Blair being a bridge between Europe and America, it's all over. Well, it's not true, the atmosphere at the Palestinian conference, for example, was remarkable."

Mr Blair's relationship with Gordon Brown is beyond repair, but he refuses to be drawn on their relationship and nor does he express regret that the chancellor has taken so much credit for domestic policy. Instead, he says: "The public they look at the government, and the record of the government.

They acknowledge Gordon has been a hugely successful chancellor, and Gordon would be the first to say that the credit belongs to the government."

He will not comment on Mr Brown's prospects after the general election. Not only would it be presumptuous to take the election for granted, he says journalists would then ask him about the prospects of his other colleagues. Few believe the next chancellor will be anyone other than Mr Brown, so it is just possible Mr Blair is being mischievous.

The only issue on which he is not optimistic is the Northern Ireland peace process. He believes they "can still do it" but accepts it is very difficult. He does not even rule out the possibility of the IRA once again exporting the troubles to the British mainland, but insists there is no room for compromise.

"Ambiguity has been a friend of ours, but it isn't any more. There's now a change and we've said if you want to be part of the political process, fine, but you can't be in the political process and get involved in bank robberies and the execution of people that you don't like."

Mr Blair spent last night in St Andrews writing his speech. It is certain he will be advocating Labour's way, rather than Howard's.