Tony Blair has warned Keir Starmer to “close off the avenues” of the populist right by keeping tough controls on immigration. The former prime minister said the new government should tackle parties such as Nigel Farage’s Reform UK by dealing with people’s grievances while sticking to the centre ground to hold Labour’s electoral coalition together. However, he said he believed that immigration should be celebrated for the good it had done the country, adding that the Conservative party’s “mad” approach to the issue had damaged the economy. In his first interview since Labour won power last week, Blair also urged Starmer to “be realistic” about how tough it could be to hit his climate targets, and he predicted that the UK would ultimately have join a “regional grouping” with European neighbours to compete on the world stage. The Tony Blair Institute is holding its Future of Britain conference in London on Tuesday at which Blair will also argue that public sector adoption of artificial intelligence could realise £12bn in savings a year by the end of this term. But it was his comments about how to tackle the rise of the radical right that will hit a nerve inside the new Labour government, after Reform UK won five seats in last week’s election and took 14% of the votes cast. Blair told the Guardian: “Progressives should be thinking about the answers, but you’ve got to understand what the populist does. The populist usually doesn’t invent a grievance, they exploit the grievance. If you want to close off their avenues for increasing support, you’ve got to deal with the grievance. That’s why Keir is absolute right in saying you’ve got to have controls on immigration. “That doesn’t mean to say we don’t celebrate the good that immigration can do, because it does an immense amount of good for this country, but you do need to have controls.” Starmer, who has said he will stave off the populist right by making a material difference to people’s lives, has just diverted tens of millions of pounds from the Rwanda scheme to set up the new Border Security Command as part of plans to tackle illegal migration. Blair said the government should also take law and order “really seriously” and be “really careful” on cultural issues that were being exploited by the right, saying: “Labour has got a coherent [electoral] coalition, provided you pitch things in the centre.” The former prime minister, who campaigned for remain in the EU referendum, said he understood Starmer’s caution towards a closer relationship with Europe after the party’s 2019 election disaster. “You’ve got to take this carefully,” Blair said. “I totally understand the reason for caution. You’ve just got to take this step by step.” While he could not predict whether the UK would ever rejoin the single market or customs union, he said: “The one thing I’m absolutely sure of is that Britain will need to be part of the political family on its own continent. “Now quite what form that takes, I don’t know. But the absolutely essential thing for a country like Britain to realise, because we have become very inward looking as a country, is that within the next two decades you are going to have three giants in the world – America, China, probably India. And the only alternative all other countries will have is to be in regional groupings that give you collectively what you won’t have individually.” He said the decision, as a result of Brexit, to cut off migration from Europe had been the “most mad thing”, as it meant swapping young people working in hospitality for high levels of immigration from Asia and Africa. Blair, who said he sat up until 1am on Thursday night to watch news of Labour’s election victory, said he was in regular contact with Starmer. “I don’t really offer advice but if he wants to talk about things, we talk about things,” he said. “I was so happy that the Labour party has finally come back. If it’s not in power, it can’t do anything. He’s taken the party from its worst ever defeat to one of its greatest ever victories. In some ways it’s the greatest victory, given the challenge.” He was cautious about the government’s plans to treble solar capacity, double onshore wind and quadruple offshore wind as key milestones towards achieving net zero emissions by 2030. “I’m 100% in favour of Labour doing everything it can to meet its targets, so don’t misunderstand me,” he said. “It’s just one thing I think Labour should be very open about is the Tories on this, as in so many other areas, have left a complete mess. “The gap between what they promised we would be in a position to do and where we are now is massive, and you’re talking about quadrupling renewable energy … with the best will in the world its going to take some time. It’s not that I think Labour should give up on its ambitions. It’s just it should be realistic about how tough it’s going to be.” Ahead of the conference, Blair suggested that AI was the 21st century’s equivalent of the Industrial Revolution, and the government should grip its potential to improve public services and cut costs. “I don’t think people have really grasped that it’s going to transform literally everything,” he said. “People still say: ‘Yeah, maybe, but it’s all a bit science fiction,’ but you’ve got to look at what’s coming down the track. “What I will say to people about this is, people were scared of the Industrial Revolution. But one of the things that you learn when you study history is that what is it invented by human ingenuity is not just disinvented by human anxiety. It’s a fact. The most important thing for policymakers right now is to understand it is a fact. And it’s going to accelerate.” Blair has proposed digital identity cards to help people access services such as the health and benefits systems, but this has been rejected by ministers. “The civil liberties arguments are important until you realise the amount of information you give to Amazon, Netflix, your local supermarket,” he said. “You can put very strong protections in place, and should, of course, but the important thing is not to see it as a control mechanism for government.”