BLAIR announces new Cabinet and claims reform mandate

<br>LONDON (AP) _ Victorious Prime Minister Tony Blair quickly moved to shape his Cabinet for his second term Friday, after paying a ceremonial call on Queen Elizabeth II. <br><br>To the surprise of many,

Friday, June 8th 2001, 12:00 am

By: News On 6

LONDON (AP) _ Victorious Prime Minister Tony Blair quickly moved to shape his Cabinet for his second term Friday, after paying a ceremonial call on Queen Elizabeth II.

To the surprise of many, Blair replaced long-serving Foreign Secretary Robin Cook, reassigning the outspoken politician as part of a major Cabinet shakeup.

Hours after his sweeping win at the polls on Thursday, Blair received a congratulatory telephone call from President Bush. White House spokeswoman Claire Buchan said the president told Blair that he ``looked forward to working with him and other European leaders'' and was also looking forward to seeing Blair when he visits Europe next week.

After a private audience with Queen Elizabeth II at Buckingham Palace, Blair returned triumphantly to his official Downing Street residence, waving and chatting with supporters as he and wife Cherie walked the last half block home.

Bleary-eyed but smiling, the 48-year-old leader said voters had given his Labor Party a mandate to continue the changes they began in 1997, when Blair's first victory ended 18 years of Conservative rule. His win was so resounding that opposition leader William Hague resigned as party chief a few hours after the results came in.

``I want to say what an enormous privilege and honor it is to be trusted with the government of this country,'' Blair said. ``It has been a remarkable and historic victory for my party but I am in no doubt at all as to what it means. It is a mandate for reform and for investment in the future and it is also very clearly an instruction to deliver.''

The prime minister pledged in his campaign to bolster Britain's ailing health care system and improve education and public transportation. He also promised to hold a referendum on joining the euro if a set of economic tests are met, which could happen in as little as a year.

But Blair spent much of the day with his outgoing ministers, pondering a second term whose key challenges will likely include a referendum on British entry into the European single currency.

In the Cabinet reshuffle, Cook was replaced by Jack Straw, who oversaw home affairs in the last government. But he remains in the Cabinet as leader of the House of Commons, a largely organizational role that will be widely seen as a demotion.

A politician with a reputation as a sharp thinker and strong debater, 51-year-old Cook served as foreign secretary since Labor's electoral victory in 1997.

Praised by many for his tough-minded handling of the 1999 Kosovo crisis, Cook has also been called a prickly figure, and is said to bristle at what he views as Labor's obsession with image.

Another high-profile figure, Deputy Prime Minister John Prescott, moves from the Department of Transport to become cabinet office minister. Blair also promoted four women to senior Cabinet positions.

Traders were jittery Friday about that impending reality, and the pound plunged past a 15-year-low against the dollar, casting a shadow over Blair's celebration.

For the battered and divided Conservatives, it was a day of self-examination. Party members hunkered down for what could be a bitter internal fight to replace the humiliated Hague, who stepped down from his leadership post hours after official results showed him on the wrong side of the Blair landslide.

``I wish I could have led you to victory, but now we must all work for our victories in the future,'' Hague told supporters outside Tory headquarters in London. ``It is vital for leaders to listen and parties to change.''

The party heavyweights considered likeliest to succeed him mostly laid low Friday, but rumors about the leadership race were already flying. So were recriminations after a campaign some Tories thought focused on all the wrong issues.

Bookmaker William Hill favored Hague's No. 2, Michael Portillo, giving the center-right son of a Spanish refugee 11-to-10 odds to take the party's helm.

Iain Duncan Smith, a right-wing protege of former Prime Minister Margaret Thatcher, was also considered a strong candidate. So were Kenneth Clarke, the leader of the party's moderate, pro-Europe faction and Ann Widdecombe, its spokeswoman on domestic issues.

The indomitable Thatcher _ blamed by many for overshadowing Hague with her frequent campaign appearances _ admitted the defeat was a body blow, but promised the Tories would recover. ``Make no mistake _ the Conservative Party will be back,'' she declared.

Across the political spectrum, there was morning-after hand-wringing about the dismal turnout. In a country where more than 75 percent of eligible voters normally go to the polls, many were shocked that only 59 percent turned out this year, the lowest since 1918.

``It is a very discouraging day for all those who care about politics and democracy,'' said Charles Kennedy, leader of Britain's third party, the Liberal Democrats.