Prescott 'will play key negotiating role'

John Prescott will play a key role in negotiating major government reforms on pensions and welfare in the coming months, the prime minister insisted today.

Tony Blair was speaking after he stripped the deputy prime minister of his departmental responsibilities but allowed him to keep his salary, official residence and cars, following the revelation about his affair with his diary secretary.

The move prompted outrage from opposition parties, who asked what exactly Mr Prescott, who is also deputy leader of the Labour party, would be doing for his £134,000 annual ministerial salary.

Speaking at his monthly press conference this lunchtime, however, Mr Blair insisted Mr Prescott's role as chairman of various cabinet committees involved some "very, very tough decisions" to which the deputy prime minister was ideally suited.

"The whole point about cabinet committees is that they are set up to resolve problems that stretch across a lot of departments – it is not just about chairing meetings but its about organising solutions to problems," he said.

"I have always found John one of the best people to try to cut a deal across government in a whole range of difficult issues."

During the cabinet reshuffle last Friday, Mr Prescott's responsibilities for local government and the communities were transferred into a new department, headed up by former education secretary Ruth Kelly.

Gordon Brown yesterday suggested details of Mr Prescott's new role would be released over the coming weeks, but Mr Blair could not confirm this, saying only he was not the first prime minister to have someone "organise things" for him.

"The important thing is to focus on the work he will be doing – he is able to focus on that more than previously when he also had a department to work," Mr Blair said.

"I think for the next period of time, if you look at the months to come and the next parliamentary session, we have got a huge agenda moving forward, and it requires an immense amount of political brokerage and immense amount of management."

His comments come after transport secretary Chris Grayling yesterday wrote to Mr Prescott with a whole list of questions about what he would be doing.

"What, specifically, are your new responsibilities? What proportion of your time will be allocated to matters related to the Labour party?" he asked.

"What provision is the prime minister making for the reimbursement of the taxpayer for the relevant proportion of your overall costs for the time allocated to Labour party work?

"Specifically, will the Labour party make a contribution towards the running costs of your ministerial car, and will it make a contribution towards the costs of running your office?"