BBC TWO: NEWSNIGHT: CONSERVATIVE LEADERSHIP DEBATE BETWEEN KENNETH CLARKE MP & IAIN DUNCAN SMITH PRESENTED BY JEREMY VINE

JEREMY VINE For one night only the Tory hustings, Kenneth Clarke and Iain Duncan Smith head to head on the future of their party. Who can bring the Conservatives back from the brink?

Good evening and welcome to Newsnight, welcome also 5 Live listeners who are joining us. This is a one-off in the Tory leadership debate; the first and only time Kenneth Clarke and Iain Duncan Smith will debate the future of their party with each other in public. Listening to them here in the studio are eight Tory members from around the country. Eight that is from the 300,000 strong electorate, which has already started, picking the winner by post. Three of them are Duncan Smith supporters, chosen incidentally by his team and another three are chosen by the Clarkeites. Also here listening from the other side of the studio are members of a rather bigger electorate, from the six million voters who deserted the Conservatives in 1992 and '97. They will judge whether either of these two men has the magic touch that will bring them back on board.

Well we hear from the two candidates in just a moment. But first let's take a quick look if we can at their political CVs. On the screen behind me starting if we can with Kenneth Clarke; Paymaster General, his first cabinet job in 1985. And after that Chancellor of the Duchy of Lancaster in 1987. Health Secretary, '88; Education Secretary from 1990; Home Secretary from 1992 and then the really big job Chancellor Exchequer from 1993 to '97.

And now if we can we will have a look at the political CV of Iain Duncan Smith MP - 1997 to 1999, Shadow Social Security Secretary and then 1999, Shadow Defence Secretary.

So looking at the two CVs there Mr Duncan Smith, you'd concede would you that it's no contest?

IAIN DUNCAN SMITH Well if it's all about how long you've been in government and whether you're elected a few years back and able to take a ministerial job then that would be the issue, but I don't think it is the issue. The issue here is whether the experiences that you have whether inside parliament or outside parliament are sufficient actually to bring some knowledge to the job that I want to do and Ken wants to do. I have lots of experiences outside of parliament. I've been involved in running a business, I've had to see others and I've also been made redundant myself, I know what it's like to suffer the indignities of policies that have gone wrong.

JV On the CV there we put up on the screen you've got a severe vacuum in your political CV.

IDS I joined the party here in parliament in 1992 and they were out of power by 1997. But I will say you know Tony Blair has actually not had any ministerial experience either, it didn't stop him leading his party and going on to being Prime Minister.

JV You think Mr Blair is doing a good job do you?

IDS I don't' think that anything he does wrong...by the way I think he does a lot wrong has necessary anything to do with his lack of experience as a Minister, it has to do with the fact that he is fundamentally wrong on a number of key political issues. Not least of which is the way I think they're going to hurt the economy quite dramatically.

JV Now you've said a number of times when people have talked to you about your lack of experience "oh when I was in the Commons as an MP.." and you were going through phase of rebelling and so on, you said you were offered some government jobs. But today Mr Major, the former Prime Minister on television said that's not true.

IDS I have never made a big issue out of it...I tell you exactly...

JV You claimed you were offered government jobs...

IDS After the Mastrich issue I was offered by the Whips a parliamentary private secretarialship, one was with Jonathan Aitken and the other was with I believe the Lord Chancellors Office...but they were small jobs...

JV Mr Major says that's not true.

IDS Well I'm telling you now it happened and you can go and ask Jonathan Aitken if you want and others, I mean the fact is that it happened. But they are not big issues. I don't by any means claim that these are jobs that sit with the Chancellor of Exchequer or anything like that, they were just simply first rungs on the ladder. I felt it would be unfair on the government at that stage if I took something because I thought it would lead to some division and I didn't think that was necessary.

JV Mr Clarke do you think the hole in his CV is a problem?

KENNETH CLARKE I'll offer him a job, I don't think that really arises. As you say I would hit most of these problems running, I've had experience of running quite a lot of departments of State. The thing I'm looking forward too...I've been shadowed by most of the members of the Labour Party, I've been shadowed by Blair, I've been shadowed by Brown, I've been shadowed by Cooke...I've debated John Prescott a lot...

JV I'm asking about his record, whether you think it's a problem.

KC I think Iain is someone I would offer a job in my Shadow Cabinet now.

JV He's going for leader Mr Clarke?

KC I know he is, I'm going for leader as well, that's why I think I'm going to be offering him a job in my Shadow Cabinet...

IDS Ditto Ken, I'll think I'll do the same to you!

JV Your CV of course Mr Clarke has a problem as well doesn't it, because when we get to 1997 your CV stops dead, blank; you took a look at the Conservative front bench in Opposition and you thought I don't want a part of that?

KC No I wanted actually to have a break from being in a ministerial office for so long. I've actually spent the best part of a quarter of century as a front bench spokesman debating social security, health, industry, and transport at one point... And the idea of just shadowing one department for the whole parliament was something I thought would not revive my enthusiasm for politics. What I did therefore was I debated on the economy, taxation, health service, probably made more speeches on that that any other subject in the last parliament, the reforms of the House of Lords, the attempt to get rid of...

JV But you were out of the game as far as the front bench opposition was concerned weren't you?

KC Oh yes, I was offered the Deputy Leadership by William, but I'm giving you the reason why I resigned... At that time William did what Iain says he's going to do now, he had some pro-Europeans in, but then Iain and others said that the policy we all had on which we were agreed on the single currency which was not for the foreseeable future, didn't mean much, a lot of these advantages was changed.

IDS No, no Ken...

KC That led the pro-Europeans leaving the Shadow Cabinet, but that didn't involve me I'd left already, I was attacking the government, I've spent most of the last four years attacking the government as a back bencher on a broad range of issues on which...

IDS Can I just clarify this because I just don't agree about that. The policy that William had by the last election was the one that he wrote up in a number of articles in which he actually stated. What happened was there was some mess about whether or not it was the foreseeable future or in the lifetime of the next parliament and Norman Fowler and others within the government and Norman I believe is supporting you were absolutely clear William should settle on the position that he'd announced in the leadership election. That's all it was and he went back to that and we were all happy about that. I felt content with that and so did others, pro-European you say and others were sceptical. So I don't think there was any sudden pressure or shift from me, far from it, others like Norman who were absolutely adamant that that was the right position to take...

JV Mr Clarke, are you happy with that?

KC Well I think its relevance is to what happens now actually...I don't think there's anybody more Euro sceptic in the Conservative Party than Iain. The position was we spent the first three months with a policy, expressing the policy of not for the foreseeable future; we did actually have a party conference where I was as much in accord with the policy as you were I thought. Then you and David ... Henry said we must...it's not for the parliament...

IDS Ken with respect that's not the case. The truth was that what William had stood on, the position on Europe, go back and check this, I promise you there's no point in getting in dispute about this, this is all in the past. But others like Norman Fowler absolutely agreed and felt that it was right for him to re-state that position. It just happens to be that the interpretation of the policy in the first few months was incorrect, that was all. I didn't have a huge drive to do it more than anybody else. It was the fact that until this was clarified it would lead to difficulties...that's the past though Ken...

KC I don't want to dispute that, I don't think it's relevant now. I mean going back to what's just been revealed by Liam Fox that before the election the decision was taken not to campaign on health and education and these issues, it was decided to campaign on Europe, 12 Days To Save The Pound and all that kind of thing. Now I had been advising William, I'd been advising colleagues, in my opinion we should fight on the big domestic issues, health and so on. But you were amongst those who made the decision not to campaign on health and education...

IDS With respect Ken there were three days allocated and launched for education during the campaign, three times that Theresa May and others actually stated our education policies. There were other moments when we did both pensions, a whole variety of issues. The problem was as I think you can understand that there was less interest in getting on to what I consider to be the major subjects and I agree with you here, I think we do agree about this, that actually what we need to do as a party is to get on to those public service issues and we weren't able to do that enough during the election which was why it wasn't so good for us.

KC You just didn't have the time to get around to it? IDC No, we got around to it, the problem was none of this was reported at that time, I promise you, you can go and see Teresa about it...she was frustrated as I was. I kept saying let's get on to education, let's make sure that we've done it, try it again, try it again...

JV We're going to come back to Europe separately obviously, so let's just pause that there for a second if we can. But going back to the CVs. Is it a problem for you that Mr Clarke's' goes blank, this marvellous resume goes blank after 1997?

IDS Oh no come on look I'm the first to say that Ken had just spent a long time in government, always pretty continuous, he came to 1997, it was a disastrous defeat; you know everybody wants to resolve their lives as they must afterwards and as far as I'm concerned Ken is a colleague and a friend and talented and I'm sure he wants to give it his best for the party...

KC It only goes blank because you're my listing offices and we worked in government, if you wish to consult the pages of Hansard, you'll find it was not blank...

JV You didn't have any Shadow post that was my point about it...

KC Mr Gordon Brown would have rather liked it to be blank I think...I think my comments and criticisms on his budgets were rather helpful to Mr Brown because I believe then and I believe now he made quite a lot of serious errors and we're about ...let's look to the future... we're about to discover the consequences...

JV You mentioned what you were doing since 1997, of course embarrassingly some of that's come up today hasn't it, because you've been working with great Ken Clarke vigour for British American Tobacco, BAT, are you uneasy Mr Clarke about today's allegations that the company is actually taking part in the smuggling of cigarettes?

KC This has been livened up again today with my picture stuck in the middle of pieces which plainly had nothing to do with me, I think you'll find it's no co-incidence that the dear old Guardian is trying to liven it's up anti old-fashioned tobacco story...

JV It's not true?

KC It's certainly not true, there's absolutely nothing...it's inconsistent...is what I said the last time these were run.

JV Would you know if it was true?

KC I'll tell you where I think these stories come from, I think they come from Millbank because I've been trying to work it out, I don't think Iain's people have anything to do with this rubbish I'm sure they haven't...It's no co-incidence that several newspapers, The Times and The Guardian actually have produced this the same day. I'll tell you who is behind that, Alistair Campbell; Alistair Campbell's produced a left-wing Labour MP who is prepared to hint he'll recall a Select Committee in order to liven this up. Why do you think the Labour Party has produced it today because they want to influence the outcome of this election? And I'm flattered the Labour Party want to stop me winning this election, but I haven't had a Conservative voter in this campaign take any notice of this nonsense at all...

JV You don't think this hundred thousand pounds a year job is starting to sully your name?

KC I certainly do not, I think it's an extremely reputable company and my role in the company has been made sure that these allegations have been independently investigated by lawyers and they're being looked at by the DTI and frankly attempts to warm it up by journalists trying to exploit the fact I'm current and news is not... It's just the kind of think Millbank knowingly actively try to get their friends in the press at a time like this.

JV Alright, okay, Mr Duncan Smith here are some of the people that support you. Peter Dawson, you're a Ken Clarke supporter, how is it that with Mr Clarke's CV looking so substantial as it does, Mr Duncan Smith seems to be running so strongly in this campaign?

PETER DAWSON Interesting point but I think that the Conservative Party is talking about its future, it wants to explore all options and I'm not convinced really by any of these polls because where is the membership? They may talk with activists, people that are prepared to say that, 300,000 people is in fact very difficult to find where they are. I believe and the ground swell of support that Ken is getting throughout the country, that in fact he is well on the way to being able to win.

JV Okay, Lesley Finlayson you're a Duncan Smith supporter, you chose to ignore the Ken Clarke CV in all its glory?

LESLEY FINLAYSON Yes absolutely. I've got the greatest respect for you Ken but you were an excellent Exchequer under Margaret Thatcher, but Margaret had the privilege of having the old Tory grandees to keep the back benchers and the loose cannons like Frances Maude, Anne Widdecombe and some of Portillo's men under wraps, we don't have that. I see you as one of the Tory grandees, one of the people to hold these backbenchers in tight behind Iain to make this party united to go forward. Because of your age and no disrespect, at the end of the next election if you were to win it, you would be coming to nearer 70. Iain is a young man to go forward. I see you there, I respect you greatly, you are a grandees and I see your role in bringing this party together and controlling the loose nails of some of our MPs.

KC Well I don't quite understand how I'm a unifying influence whilst I'm not leader but I'm not a unifying influence if I am leader. One of the things I think all Conservatives want to get back to is exactly what you described, the fact we were a unified party in the Eighties and the Nineties and that requires all of us to concentrate on the need to do that in order to win an election. My views were the same when I served with Margaret Thatcher as they are no. What did Margaret Thatcher do when knowing my views, I was then in her government she promoted me. We didn't have ideological battles about it, she surrounded herself with people with pro-European views like myself and we found we were able to accommodate a broad range of views, we certainly concentrated on the domestic agenda, Margaret made sure of that and we were a very powerful reforming government that did a great deal of good for this country. I can see a similar party unless you actually get people who are just determined to make trouble, which after two serious election defeats, I think a leader who is elected by all the membership is actually going to be able to demand of his members...

JV Lesley is an Iain Duncan Smith supporter, are you satisfied with that?

LF No, not at all, no. I think with the greatest respect Ken's had his day, he really has. Iain is new bloody, he is in touch with people on the streets, he works very hard in his constituency, he works with people, he's been there, he's just a family man, a hard working man, he stands on his principles, he has integrity and he don't change his mind because public opinion expects him to. He will stand by his beliefs but he won't force other people to go down what he believes, he will listen to other people, he will bring them together. I don't believe he'll be headstrong and just go out there.

JV Okay, let's take a view from another Clarke supporter. Jane Ellison, does that sort of thing not concern you when you look at Mr Clarke?

JANE ELLISON No, I'm afraid I can't agree with Lesley in the remarks she made, I think she made a very inaccurate statement about Mr Clarke's age for a starter in calculating that. But I think this is about how people appeal to the electorate. I think some of the things that have just been said are real red herrings. Are big task is to bring back the missing Conservatives.

IDS I agree.

JE The people who have deserted us over the last two elections and they didn't desert us because we weren't right wing enough, I mean I think that's one incontrovertible fact and it is certainly the biggest issue we have to address. How can we re-engage with the mainstream of British politics and offer this country what it's crying out for, effective opposition and then an effective alternative government.

IDS I agree with that.

JV Can I just come in on that point if I can because one of the things that it sometimes seems in this contest is that your party's' catastrophic performance in the last election is being glossed over particularly by you Mr Duncan Smith

IDS I'm not glossing over...

JV Well you call the William Hague leadership a platform on which we can build.

IDS There were things that William Hague did and what we did in the last four years, which do give us a platform...

JV You won one seat in four years...

IDS Hold on I'm not saying that 2001 was anything short of a terrible election defeat, what I am saying however was that in the four years sadly we didn't get anywhere near as close to the things that we needed to do, but there were good things that were done. The party fought an election and came together much better than it's done for a long time. We had some good policies and good positions on things like environment, on education, we weren't able to launch them or sell them as hard as we could. But the reality was there are good platforms to build from there. What I am saying however and I agree that the point now for us, the issue for us, for Ken or myself whoever becomes the leader is how to reach out across a broader range of subjects than we were able to tackle by the last election. I call these the quality of life issue, public services, the health, the education, the idea about care in the community as well as law and order, and those are the big subjects...

JV Can I just stop you for a second, you've used that phrase again, you've called it the good platform, how can winning one seat...

IDS I said good subjects actually...

JV You said again a good platform that William Hague...the result was a good platform...

IDS I didn't say the result was a good platform, I said the work put in, in the last four years gave us a platform on which to build now...to construct these, it wasn't a wasted four years.

JV Do you agree with that Mr Clarke?

KC I think William Hague had an impossible task, I don't think we should make William a scapegoat because it really was an impossible task being leader of the Opposition after the last election. I was probably very lucky that I didn't get in. But there's no doubt the then Shadow Cabinet in my opinion made a bad strategic decision in the last two years and we've gone with the wrong agenda, we used the wrong tone and we didn't go about things the right way. Both of us are now saying the same things about the agenda, which actually I've already said I was then debating and then talking about.

I think the point about winning back Liberal Democrat and Labour voters is key, if you're going to win an election, what you've got to do is not appeal to yourself, not talk to each other, what you've got to do is talk to people who used to be Conservative who are now voting Liberal Democrat, now voting Labour and they're young very many of them. They want us to take firstly a more enlightened issue on a lot of lifestyle things which Michael Portillo called his modernising agenda, he was actually describing an approach to other people's lives, which I have been taking rather automatically throughout my whole lifetime. You need to go back to talking about economic policy where we allowed Gordon to rather get away with murder in the course of the last election. And you do need to do the work of having some solid policies, education, health, in order to change the way they're delivered to meet...

IDS The lady over there did say something which was very interesting, we can go on saying that we want to get on to these broad agendas and I agree with you, I think we have to because these are the quality of life issues that actually matter to people. But what I think you said earlier on was we don't want to just go off to the right or to the left or whatever it happens to be and I agree about that, because I don't think the majority of the public actually see things in right and left. What they see is that their father who can't get the hip replacement he wants and his quality of life has gone and they talk about that and they talk about failing schools and having children trapped in those... So actually part of the problem is language and part of the other problem is that we didn't actually say here is the failure of a sort of state monopoly and here's how we're going to change that and broaden out. Now that's what we have to do, we have to give other people quality, quality of life and much greater choice and this is how we have to tackle it through the public services, so it's not right or left, it's just what works, what succeeds is how Conservatives...

JV But in the election campaign you probably both concede that you allowed your agenda to be somewhat dominated by Europe, so I want to talk about that issue first if we could. We'll come on to the other issues as well. But I want to put on the screen if I can the Thatcher letter from yesterday, Margaret Thatcher writing in The Daily Telegraph, "I simply do not understand how Ken could lead today's Conservative Party to anything other than disaster", she said. "Time and again the Conservatives would be exposed as either hopelessly split or deeply cynical." And that Mr Clarke is right at the heart of your problem isn't it? That you're going to be leading if you win a party you disagree with?

KC Well both of us agree we've had ten years of the Conservative Party of being exactly in the situation that Margaret has described, it's got if anything worse in the recent past sometimes rather than better, we both agree that that now has to be put behind us. But Margaret's motives behind this were this awful "e" word again she's suddenly intervened and decided she agreed with Iain, we've got to move into a more Euro sceptic position than we were last time. Now actually if Margaret had asked herself the question that the young lady in the audience just asked: In 2001 is it right that we should be dominated by this? Isn't it right that we should ask how are we going to appeal to people who were voting against us, people who vote for pro-European parties like the Liberal Democrats; people who vote for New Labour....

JV It's an important issue isn't it?

KC ...I think if Margaret asked herself that question then she'd see why people like me who were actually very privileged to be her Ministers when she was in office, she didn't have my views when we were there then, she'd understand why people like me are in a better place to win back these floating voters, than people who are dominated by Margaret Thatcher or take Margaret Thatcher's advice...

JV Alright Mr Duncan Smith is shaking his head, let him come in...

KC ... Margaret's intervention in the last election, which promptly lampooned William as somebody who was wearing a Margaret Thatcher wig...

IDS We agree about one thing Ken here on this Europe issue which is somehow we want to deal with it by putting it in its rightful place as an issue, but not every issue, it's not to dominate. So if we agree that then the difference really is how do you do that? My problem is that the only way you can settle this is by leading through the majority of the party who do not want to enter the Euro, in fact the majority don't want to enter the Euro in the country. So my position is you stand with that when the referendum comes the party opposes that, but what you do have is tolerance therefore for the small minority who may wish to take a different view. I think that's the way to handle it, they can be in the Shadow Cabinet, they can be in the front bench, when the moment comes they can step down, they can campaign for it with passion, with honesty, I tolerate that absolutely. My point is if you do it the other way around Ken and I think this is the real issue what do you do if you are at odds with the party when Mr Blair comes back from the next inter-governmental conference. You know the party wants to go one way and perhaps you might want to go the other, that's the real issue. Or when the referendum comes for the Euro if you were to hold it at the next election when as honest as you always are about this and great credit for that, but however that is going to take a different line to the party. They'll tease this out every single time and we will break up over this for four years.

JV Mr Clarke.

KC Well Tony Blair's not come back from any conferences with my agreeing with him and I do not anticipate that situation arising. One of the problems in the European Union at the moment seems to me is you've got weak social democratic governments, ... ..., Blair, they're not delivering anything. I could make I think a rather powerful attack on what he has brought back from recent conferences. I don't in order to avoid divisions in the party, I don't because my position is rather different from the rather ferocious Euro sceptic, Euro-phobic attacks...You quote in your leaflet someone who actually praises you, whose an intelligent Europhobe...the attacks that he gets at the moment, I would take a more balanced and moderate view. But Tony Blair knows perfectly well I attack him frequently on issues of that kind...

JV ...Let me use that Thatcher phrase again, Lady Thatcher's letter says that you're party will be...

KC ..Not Lady Thatcher again...

JV Well leave out the fact it's her for a second if you can, hopelessly split or deeply cynical again isn't that the way it's going to happen with you as leader?

KC I think it's deeply cynical to keep harping on about Lady Thatcher myself and I...

JV Don't worry that it's her...

IDS Let's just put Lady Thatcher's letter to one side and just get on with this...

KC A great Prime Minister but not always the greatest source of advice about to win elections in 2005...Let's get back...because we sound as though we're agreeing... I'll tell you what troubles me. Of course I think we should respect each other's opinions, that's what we did when we were in office, that's how we used to win elections. I think on the single currency where it's all going to be decided by a referendum. The public are now going to regard that as an election deciding issue, we can actually just have freedom of speech and freedom of vote and actually tell the public we're going to leave it to a referendum. My understanding is you're going to still have an official policy, which will bind everybody in the Cabinet until they're let loose for three weeks in a referendum and your policy will be harder than Williams. Your policy will be we will never join the single currency in any circumstances.

IDS Ken I'm being honest, you're honest, I think we both are about this. I'm not going to be voting for the single currency, I think for constitutional reasons it isn't going to work for us. I actually don't by the way think it's going to work for the rest of Europe...

KC But that's now to be the official policy of the party?

IDS No, the policy that come the referendum I will lead the party which does not want...we had a vote on this last time Ken, over 85% of the party said they didn't want it and the majority of the country don't want it. So it's nothing extreme about saying I'm on the side of the majority...

KC Over 85% did not say we should never join; your opinion is not the policy for which 85% voted...

IDS Let me just take you to this because it's about how you deal with those who don't want that position. I have never said they will there after have to say they suddenly had adopted this position because they were in the Cabinet. I would say quite happily that they can make it clear that they will be making a decision on that when the moment comes and that the good thing about being in a Shadow Cabinet run by me is that the tolerance is there and the understanding that they do not have to say I absolutely agree with this but I am happy to be in the Shadow Cabinet on that basis.

KC We might be doing some more good for the Conservative Party here than some of our predecessors have been doing in the last day or two...

IDS Absolutely..

KC Can I ask a question to the right of this, why are you so upset by my saying that they should all be free to give their honest opinion now? One of the things that's key I think to being in Opposition...

IDS No-one's going to stop you from giving an honest opinion at any time is there Ken...

KC ...is getting Blair out of government, is to have an approach to politics, which contrasts with Blairs'. Now people know we have a variety of variety of views, all I'm saying is that we should all give our honest opinions because it's politicians again... I don't see why you can't have a Shadow Cabinet where people like you can say never in any circumstances will I vote for it, people like me could say if and when the economic circumstances came right I probably would, you'd have ... between, that would defuse it. You say that will cause divisions, cynicism, difficulties...and we've all just got to keep quiet really until the referendum.

IDS I think it will Ken, let me just answer that because it's quite important this. One of the big areas that is going to cause serious problems is look as far as I can see if you were the leader and at some point Mr Blair is going to call a referendum, what happens then? During the course of that time you will want to clearly share a platform with him, you did it before, you sat down with him and Gordon Brown and you said I agree with them. The problem is that the Labour Party will love that because what that says to them is that here is the leader of the Conservative Party who is completely in tune with us but the rest of the majority of the party is not. They'll feed that split and feed that division and I feel it's manageable from the other side, that's the difference between us. I think it has to be managed from the majority of the party and you think it can be managed from the minority of the party.

KC You and I are having a very constructive debate so I'm not going back to the times when you enthusiastically voted for them, which is something I've never done...This dealing with what happens the public don't have this problems with the referendum. The reason 12 Days To Save The Pound and so on did not work was that the public said but that's a referendum issue, that's a separate point...

IDS That's my point, you can put it on one side with clarity...

KC If you have an election and referendum the Conservative Party may get excited about it but the public won't, they'll say I can now choose a government, I can decide whether I want a modernised Conservative Party or whether I want this dreadful shallow lightweight Labour government to continue and they can ...

JV Gentlemen I want to break in...hang on, hang on...

IDS ...the principle of the Euro, have a little debate on it...where Ken goes and the rest of the party goes...

JV Just on a point of fact did you say that you would never vote on the Euro just then?

IDS Yes, I've said I'll never vote for the Euro, I believe it on constitutional grounds, Ken knows that, I've said it many times.

JV Britain should never go into it, yes?

IDS Yes.

JV It's not the Hague position, it's a move on from the Hague position?

IDS I've always been clear on that.

KC That's a harder line than the business for sterling...There's nobody more Euro sceptic than Iain in parliament, I'm sorry to keep going back to Europe. Iain and I have had this throughout this election because its people like William Hague, Michael Ancram, and Margaret Thatcher say oh we can't have Ken because of his views on Europe... There's nobody more Euro sceptic than Ian, Bill Cash is a keen member of his party and the other thing of course...

IDS So is Michael Ancram...

KC Iain is quite clear that he would leave the Union...

IDS This is a ridiculous red herring...

KC He voted for Bill Cash's' bill on a referendum on the subject.

IDS Yes, because I believe that it's right to give people a say about their constitution.

JV It's conceivable you might want to pull Britain out of Europe...

IDS Hang on the same answer is due from Ken. This is the hypothetical if you don't get your way then suddenly you either have to leave or you can't stop it. Look we have vetoes; we can stop what we don't want now.

JV But you've got that in reserve have you, that position?

IDS No because what I'm saying to you is if people in the European Union as has been expressed I have to say by Mr Schroeder and Mr Josper wants actually to go to a super state which I believe is what many of them do, the answers' we're not going to go that and so we have to stop that.

JV You would never advocate withdrawal from the EU as Prime Minister?

IDS No because I think the EU would have withdrawn from us on that basis...

JV Let's just have a look...

IDS No, I want to get this across, it's fair, see Ken look you have said your policy...

KC I'm looking at your quotations, unfortunately when you get to this level of politics, when you say things people do look at what you've said in the past...

IDS And I'd like you to answer this question of me. You say that is where I will be and that we will have to leave if we don't get our way, but you said publicly that you want a decentralised Europe and you believe a of Europe of nation states. So if those in the European Union that disagree with you on that are winning their way and want to go deeper into this what I call super state, federal state, then surely the same point is made to you, at some point you're going to have say "no". Now the only question between us is where does that line lie and when do we define what is and what isn't acceptable?

KC I have not only always said that I'm in favour of a Union of nation states, I have always said that we should veto any attempts to move into the levels of taxation, veto any attempts to move into the levels of public spending, indeed I have vetoed proposals not in that area, but actually I did veto the with-holding tax. I've also taken part in bitter fights against the Social Chapter and so on... Of course I think Europe needs reform and I'm quite prepared to resist confidence being taken into areas where nobody wants Europe to take over any responsibility from the nation states and always will do. But just going back to your position, you're using the language of renegotiation of the Treaties, now that's new, that wasn't our official policy.

IDS Re-negotiating treaties every time there's an inter-governmental conference for goodness sake Ken you know that, you've said that in the past...

KC But surely it's quite obvious...

IDS Why does it always have to be one way though Ken...

KC & IDS (They talk across each other)

JV I'm going to break in gentlemen, we want you to hear from some of the...these are the people who are not voting for you because of this argument, so do you mind if we hear from them please because they've been listening to this for years. Sir, John Drinkwater, tell us what you make of this discussion you here. When did you last vote Conservative, 1997.

JOHN DRINKWATER 1997, yes.

JV So what do you make of that? JD I was very interested actually in what the gentlemen were saying. The fact of the matter is I feel that the party has got to change and I think it must be united and everybody in the party's got to be in the boat, pulling on the oars in the same direction. Until that happens I don't think there's much chance of them winning the next election.

JV Yvonne Somrani, I know you also gave up voting Tory after the 1997, the John Major election, tell us what you think of the dialogue here?

YVONNE SOMRANI Well I think it's a bit hard to say never the Euro, I personally think we ought to wait until the referendum to see what the general people feel about it, rather than just say never. But as you say we need to all pull together on this really.

JV What about you Tony Lewis, because you gave up on the Tories even further back in '92.

TONY LEWIS Ninety-two, yes. I think it's very refreshing to hear Ken Clarke talk about the possibility of reviewing the reforms and not the whole hearted far side that I think he's been portrayed as in the past. I certainly think it's equally refreshing to hear the positive way that both candidates are looking in the same direction, all be it they do have significant differences that we've got to resolve. This is just the start of the debate; I don't think that what we talk about now is anywhere near...

KC Iain and I have been starting from the same message throughout this campaign, for heaven sakes let's get on to the economy and day by day the press and now the great grandees of our party keep saying no, no, no, you must talk about Europe. Now the two of us are debating it, the choices, do we get more tolerant and have a balanced view, I'm not suggesting we move to federalism, I'm anti federalist, but let us have a balanced view that just is a bit more accommodating... It's relevant I'm afraid but I had to challenge Iain, the reason I am frankly personally sceptical about his claims to be the great unifier on this issue. He holds more Euro sceptic views than William Hague, there's nobody in the party with the possible exception of Bill Cash whose working on his campaign who holds more Europhobic views than Ian. Even in his own literature he quotes and praise...it's from someone who doesn't actually support him, it's a bit like one of those theatrical ... it's two words taken out, that he's described by somebody as an intelligent Europhobe...

JV You've said that already...can I take one more...don't go on too much. Roy Davenport, for you listening to the argument here, do you see the Conservative problem as chiefly a European issue problem or you do think the divisions go wider?

ROY DAVENPORT I think they go a lot wider. I think what bothers me as somebody who hasn't voted for quite a while is that the European issue is there. We've going to go for a referendum, I've listened to you two and you haven't made me want to jump up and down and say "yes, I'm going to vote Tory next time." I'm much more interested and much more concerned about the domestic situation, about education, about the National Health Service, about Local Government, about the public service, but all you're doing is arguing and arguing, you're going back over history and you're accusing each other...you're like little boys in a playground. No, I said this, no you didn't, oh yes you did. It doesn't matter. We're going to have a referendum, most members of the public are reasonably intelligent or the ones who are going to swing...

JV Let's go on with this issue...

KC I've made speeches about the economy, I've made speeches about education...now this is the only time I'm debating with Iain anywhere...so we're discussing Europe in public...

JV Well let's leave Europe...are you happy with that Mr Duncan Smith?

KC A unified table.

IDS I thought the conversation was quite constructive actually anyway...

KC That's what I thought as we started the whole campaign.

JV Before we go on to some of the specific issues, let's just talk about unity generally. With Europe parked to one side, how you hold the party together. Now Mr Clarke if Mr Duncan Smith, will you work for him?

KC I certainly will work for him, I'd work for the Conservative Party...I don't want to shadow a department...I can tell you this Iain as I told William. I didn't not joint William's Cabinet because of European problems; I just said we didn't have any then. I told William I prefer to attack my old enemies from the backbenches which I did and I did whenever I got the opportunity.

JV Would you try to sway him Mr Duncan Smith?

IDS Well I certainly would try and persuade Ken but...

JV It doesn't all go well...if you can't work together...

IDS Well if you knew Ken as well as some of us do when Ken makes his mind up I'm sure he'll stick to it. But listen my view is either candidate, I think Ken and I absolutely agree upon this, I hope we do, that whoever wins this contest I think the other has the duty to work their hardest to bring the party back together and so that we actually get on with fighting what I think is a disastrous Labour government and I really do think the Liberal Democrats are getting away with murder at the moment.

JV Would you work on his front bench team?

KC If Ken is kind enough to offer me something I owe it as a duty to do my level best on that sort of basis.

JV Well there's a solution its buy one get one free isn't it, vote for Mr Clarke and they would get you as well! That's sorted...

IDS I don't think I'm going to win Ken's vote after this particular debate

KC We are both equally committed to the Conservatives. We've come back to the whole point of this election, that both of us want to get rid of the dreadful lightweight, shallow Labour government we have in power at the moment. We don't believe they're going to perform well over this parliament, we're quite prepared to co-operate with each other, we're quite prepared to work together, both of us are going to fight the Labour Party and try and get rid of Mr Blair. You have a totally unified table on that, you did when you started, you have now, the question is how best we can turn that into government, we're back to the ladies' question, that means we've got six million people to attract back to the company. We've also got to make a very good job of exposing the weaknesses of Mr Blair...

JV Here's the fascinating thing though the two of you, there's a hole in the contest isn't there, because Mr Portillo has been blown out of it. There are people who will vote in the contest, who are already voting by post who wanted him in it. We've got two of them here in fact. Andre Walker, you at the moment can't see a winner you want from either of those two is that right?

ANDRE WALKER No, I can't. I think if you look at them they are talking about health and education all this, but in reality when you scratch it, what you look at is two very much polarised candidates on many important issues. Sitting here today I've observed I think Iain Duncan Smith likes to talk a lot more about health and education and appears to be more flexible. But then if you look at Ken Clarke he appears to have more gravitise and charisma and it really is about strengths and weaknesses. I think they both have fundamental weaknesses that give me a real problem about deciding which one I'm going to go for.

JV What do you think is missing then from the contest?

AW Well to be honest as a Conservative Party member I think all the other candidates who wanted to get the leadership, I don't think we should have narrowed it down to two. But as we have I don't think there's much point in necessarily slagging of the candidates and pointing out weaknesses and whatever. But I think there is an issue with Ken on flexibility and how he's willing to interact with people who don't agree with him, but that said he is incredibly popular, we always get told walking around that he would be a great leader and the rest of it. So you just don't know do you?

JV Carl Porter, you're also struggling to find a candidate that you want to vote. Are you with the Portillo agenda?

KARL POULSEN I think I agree a lot with what my colleague at the front has said and coming back to what the chap over there said a few moments ago, what concerns me is that in the past sort of 45 minutes we've had an incredible slanging match between two very senior Conservatives which hasn't engendered any enthusiasm amongst floating voters.

JV So what do you want to see that you're not seeing?

KP I want to see them talking about issues. I think a lot of it tonight Jeremy if I must say is a little bit down to you because you steered the debate on to Europe first and we haven't even touched on health and education...

JV We thought we'd get it out the way...

KP Well we've got 15 minutes left, so I think you have some of the responsibility for that. But we have to get our messages across, we had very good policies I think at the last General Election on health and education, the trouble was when we were getting out on to the doorsteps people didn't want to listen because the media agenda was being hijacked by the issue of Europe, and we do need to put that to one side and get on fighting what is a chronically appalling government.

JV Let's turn then to the bread and butter issues, vital, vital issues on which the eventual leader will campaign day after day. And education we'll take first of all. Ken Clarke, says he's going to look at way of abolishing university tuition fees and he will set up a Commission to develop education policy. Iain Duncan Smith says he's going to propose a new system of education credits so that children in failing schools can go to a different one. He also wants to give schools a greater say over their budgets. Mr Duncan Smith is what you're proposing here a kind of voucher system; can you say the word "voucher"?

IDS You can say the word "voucher" but it isn't actually the same as this. This policy that I'm looking at and again I'm not going to make these policies up, set in concrete because we're going need to discuss these and look at them carefully. What I'm trying to indicate here is that one of the problem we had when we talked about education is we tend to talk about it from the top down. We started talking about giving greater power to schools, which I agree and believe in, giving them greater control over money. But for parents who are in real difficulties in constituencies like mine in cities where they are being failed mostly by Labour councils that trap them in failing school, they want to know specifically how their lives are going to be improved.

Our problem is that we have never really...well certainly not for some years been able to say directly to them here is how we're going to help you out whilst we sort the problem out. The credit system that I'm talking about here is literally specifically targeted at parents who are trapped, who say I don't want to go to that school, it's got bad discipline problems, my child has had enough, I want a decent education, it's got such rotten records and it's not going to help my child. We ought to be able to say to them okay fine, well here in that case because the State failed you, then here take the credit, go out to another school if there is and can be found one, you can top it up if you want and for those on marginal low incomes we could probably even because it is so narrow and focussed look for ways of giving some form of grant to that...That seems to me to be the beginnings of a real sense that we are that engaged on what their problem is, that we really want to solve it...

JV Mr Clarke...

KC I don't think it's necessary actually because I actually agree that money should go with the pupil in line with parental choice. When we looked at vouchers and credits in the past...Keith Joseph actually rejected it...it's a long time ago. I don't think they turned out to be necessary. The problem is that given that what one needs to do is to allow much more parental choice and one needs people to go to schools of their choice, they're go to the succeeding ones; they want to do something about those who find their own schools are not good enough is actually we never saw the problem of enabling the popular and successful schools to expand. Labour is repeating the error of putting all the money into the failing ones, so that actually you almost get rewarded for failure. I actually think we've got to tackle the question of how do you accommodate the move into new schools, how do you open new schools to actually satisfy parental demand. At the moment what happens is that everybody suddenly realises that is the place where their children have the best opportunity, first the classrooms fill, then they become bulging, then all the parents get turned away, meanwhile all the money is being given to the one down the road where the pupils are not going, that needs to be tackle. All these vouchers and credits are not really tackling the thing. Structure's not the biggest problem; the biggest problem is professional self-esteem with the teachers, giving them back more control over how they teach the children. It's not good enough just to bombard them with more and more targets, you've go to give them back their professional self-respect, so they can use their own judgement to how best to get their pupils up to the standards...

JV So while concentrating on enlarging the good schools...

IDS Listen I'm in complete agreement with the idea that good schools should expand, I mean I don't think there would be any difference on that and I sense that we would be in agreement about how to focus money and control them on schools. I'm particularly struck when I go round schools that the way the teachers tell me the way they've been deserted by the government, they can't for example exclude pupils anymore who are really troublesome and difficult. At the same time headmasters say look I have teachers rather say I'd love to be able to say to very difficult parents who don't match up to everything, I'm going to make this school contract enforceable.

But you know there is one other dimension and that is the bit that I would like to introduce, it's that for far too long we've allowed in the Conservative Party this debate about education, health, to be set around Labour's perimeters, which is that only the State has a game to play in this. We should really look at countries...France, in Holland for example I was struck by this when talking to a Dutch friend that over 70% of school pupils in secondary education are actually educated in what we would define as the private sector, paid for in part or whole by the state. And the Dutch friend of mine said the thing about us is we say they have a right to choose and because the money follows them we've actually improved our education system. There is no question; their education system is better than ours, most of them. We've got to look at novel ideas like that and say how do we expand quality, not just sit back on Labour's agenda.

JV On the bread and butter issues, let's look at what you've both said on health during this campaign. Iain Duncan Smith wants a system where the State can't carry out an operation; the parent can use the credit for the cost of the treatment and have it carried out privately. Mr Clarke's policy, he wants to look at developing packages to help individuals make their own provision for their own future health care and residential care. But Mr Clarke looking at the brochure that you put out during this leadership contest there's a startling lack of specifics in it and we've trawled it for some policy and health and you'll probably admit there isn't one.

KC The policy on health is firstly to go back to decentralising control again. What happens is that Alan Milburn following Frank Dobson at the moment is trying to run the entire health service from White Hall with the assistance of a Number Ten policy and again we have managers and commissions being bombarded with fresh initiatives, fresh targets, producing ever-more statistical returns, the money is parcelled out in little bits. I want actually the money again to be passed down to the managers and commissions, with fewer and important priorities set to them, then stuck to consistently, let's go back to decentralising agenda where people in the NHS Trust and people in the GP practices, people in the community services actually have their professional pride given back. But also their ability to serve their own patients...

JV In the words of a famous American ..., this is ... all over again isn't it because you were on this track in the Eighties?

KC We were on this track but we didn't get it right, it was bureaucracy, it's not being run that way now, it's a starting point, coupled with putting in the money and investment which the government is doing again. There I agree you do have to look at the continental model and not just look at taxation but to encouraging the employer provision, the social insurance provision and the private choice to take more responsibility for care that will actually add to the resources we have. I've always believed that. This idea of allowing a doctor just to refer to a private patient, that was actually in respect ... 1990...

JV Do you think the fact that Mr Clarke has a point? Do you think the fact that Mr Clarke has all this experience in the Thatcher years as Health Secretary disqualifies him or qualifies him on health?

IDS He's qualified like any other politician who is willing to listen to ideas. I mean Ken is right on one thing and I simply say this is key to the whole debate. Look the problem with us in this country again is that this sort of Labour dogma that says only the State can provide us has left us trapped with a low performance. When you compare it to France or to Holland our other colleagues and friends they have a higher quality of outcome than we do. But the real problem here is that it's no good us then saying to the public what we're going to do, is we're going to decentralise and all that...Yes of course we must do that but it leaves them completely cold. We have to say to them how is this going to affect the quality of your life? And what I try to do is give an example, if we're able to start at the same time by saying look it's unacceptable that someone waits two years for a hip replacement then what we have to say is, well we set some sort of time that we believe this treatment ought to be carried out. If the State is unable to do it within that time, then we really have to say it's time to say they must be moved out to wherever we can find that treatment because it's important the treatment, not the system...

JV Will that not leave you open to the charge that it's a privatisation agenda and all the rest of it?

IDS But that's my point I think this debate is now too big for politician to play stupid games about what people should and shouldn't have. I don't want to be the leader of a party or Prime Minister who actually turns around and says you will get what I say you can get when I think it's good enough. I actually think every other country in the western world has now accepted the fact that health provision is about a mix of voluntary, private and State and the one difference is they get they treatment earlier and they it often at higher quality levels because the staff are not so over-stretched.

KC I think you certainly can as we did and we're trying to do give to the GP the power to refer the patient to wherever best and quickest they can get the service, that's what we actually did and that's what Frank Dobson stopped. You don't need all this Americanised credits and vouchers arrangement in my opinion to do that. One final point I would make it is important if you make these changes which the public are ready for, they do trust you to continue to stick to the free at the point of treatment principle of the National Health Service. We mustn't forget when you go into the health service you're actually enabling people today's patients as you make the changes, and the present patients, the elderly in particular they're not able to get private provision.

JV I want to go back to our former Tory voters just to ask you on a general theme as we close, whether or not you think that either of these gentlemen has what it takes to get Mr Blair out of Number Ten, Craig Ramage, what do you think?

CRAIG RAMAGE I think representing Scotland I would like to see a fresher approach to obviously what's been going on in Scotland with the Tory party. There's a lot of damage still up there, I'd like a younger candidate like yourself to be leading the party with fresh ideas and I think Mr Clarke's days have probably gone as far as Scotland's poll tax is concerned.

JV Do you think you've heard some encouraging stuff here?

CR Yes, I'm not quite sure yet where I would go but I think prefer the younger attitude.

JV Doreen Leigh what do you think about what you've heard tonight?

DOREEN LEIGHT I feel that Mr Clarke has the experience, he comes over, you actually believe what he says. I believe what he just said about the National Health Service was very good. And where doctors can send you where you can get the treatment as quick as possible.

JV Roy Davenport

RD I still think they've actually got on to more of the bread and butter issues now, I still think they're arguing and slagging each other off. Having listened to them both they've both got some very good ideas and it's a pity they can't formulate those ideas. But also they need to be at the moment a credible opposition and they're not even that, they're not knocking the government.

JV What about their personal qualities, what do you see when you look at them?

KC I prefer to cringe here...

RD No, what actually spring to mind, was an old lion and a young fighter, I think they would work very well together, I'm not quite sure in which order.

JV Well personal appeal will matter, thank you for that, personal appeal will matter in the television age. Do you get sick of people saying you look like Hague's dad?

IDS No! Listen I get a lot of this, we may share the same hairline but I must say to those who say that you can't have a hairline like mine, I actually thought we were meant to be the tolerant and inclusive party, now the Conservative Party, not rule out 50% of the male population. So no I think all that is peripheral flimflam. The truth is what I think the British people want is they want somebody who is clear about their policies, clear about where they want to go and also in this age of Labour spin, they're sick of tired of being told one thing and then find somebody's done another. Let's cut through that and say what we say is what we believe and what you're going to get.

JV And Mr Clarke your image the beer and the cigars and the hush puppies, it's all cultivated isn't it?

KC It's not all cultivated at all indeed it's wasted on me, it's a parody of what I think is a slightly more attracted but slightly more restrained sort of reality. There hasn't been much beer drinking and the rest of it, if I light up a cigar in the course of a day of course everybody photographs me and it looks like I've been chain-smoking non stop since the day started. My blokish image which had to be explained to me when it first started what a bloke was in this context, my blokish image does not qualify me to being Prime Minister or anything else. I think my enthusiasm for politics, my combative instincts I hope will be useful, as Blair and Brown have discovered to their cost in the past, in taking on this government and exposing its weaknesses. My enthusiasm for politics, my enthusiasm for the content of politics, improving the public services, running the economy of this country properly I hope will have that appeal to the centre ground which we've lost. I fear what is attracting me back to the front bench in the present role is that I don't think the Shadow Cabinet in the last parliament quite made it despite the enormous difficulties I know that they faced.

IDS Some of us really did punch hard Ken and I hope you'd accept succeeded in landing...

KC I know I've been there, done that...One thing we both agree on I trust we hate being in Opposition, we've lost twice now, we've got to judge how to get those young, sometimes professional business people who just don't think of voting Conservative their voting New Labour or Liberal and whose style, whose policy is actually going to attract them back.

KC & IDS (Talk over one another)

JV Mr Clarke and Mr Duncan Smith thank you both very much indeed, that is the end of tonight's debate, thank you again to our two candidates and to the members of our audience...