Government can't 'pick winners'

On Sunday 21 December, Andrew Marr interviewed William Hague MP, Shadow Foreign Secretary

Please note 'The Andrew Marr Show' must be credited if any part of this transcript is used.

Senior Tory William Hague says companies such as Jaguar need loan guarantees, not bail-outs from Ministers.

ANDREW MARR: Now Neil Kinnock and William Hague both had the task of picking up the pieces when they were chosen to lead their parties after humiliating electoral defeats.

Each had to forge a new direction, new priorities and new policies in a bid to return to power, and each has sat in Parliament during previous recessions as unemployment and business failures dominated politics.

William Hague, can I turn to you? We'll come back onto the economy again in a minute, I'm sure, but just on the Iraqi question.

Now the troops are coming back, you're not going to get an inquiry as early as you hoped for one, but that is going to be your, one of your sort of prime demands of the early part of next year, is it?

WILLIAM HAGUE: Yes, it will. The Government keep turning their face against an inquiry, refusing to hold an inquiry. We will certainly be pressing this in the House of Commons in the coming months; and indeed if they don't set up an inquiry into the origins and conduct of the war, then one of the first actions of a Conservative government will be to do so.

And I think the whole nation now expects us to do this. Clearly major mistakes were made. Clearly there are major issues about how government departments worked together or failed to work together, and so we have to learn for the future. We have to learn for the sake of what's happening in Afghanistan apart from anything else.

ANDREW MARR: Well you mention Afghanistan, and one of the things in the papers today is that Obama wants to put another very, very large number of American troops into Afghanistan. He is clearly going to come to Britain and say we want you to contribute on a similar sort of proportion, not scale. What would your answer be to that?

WILLIAM HAGUE: Well we shouldn't rule out sending more troops to Afghanistan, but we've got to bear in mind that the British troops have borne a disproportionate share of the burden so far; that many other NATO countries have not engaged in the serious fighting that the British troops have had to do.

And so I think what we should say is yes we don't rule it out, but for more British troops to go we would expect there to be a revised and clear and effective strategy in Afghanistan, which General Petraeus is probably in the process of putting together now; much better coordination of the aid and reconstruction going on in the country because it's not military means alone that will win this; and proper equipment for those troops.

There have been shortages of helicopters, the key piece of equipment for the troops in Afghanistan for years, and unless the necessary amount of equipment goes with the troops, well then they're always going to be under resourced and finding it difficult on the battlefield.

ANDREW MARR: Let's turn back to the economy because one of the things that's being said about you is that there's Obama coming in with his big fiscal stimulus, there's Gordon Brown pro-fiscal stimulus. Does it not feel just a little chilly to be standing against it at the moment?

WILLIAM HAGUE: No, not at all. It should feel very chilly in Downing Street because this is a government that has given us the highest national debt in the developed world now. Gordon Brown is planning to double the national debt in the next five years. He will have wrought greater devastation on our public finances than any event other than a world war.

You know when people look back at the history of the last century and look at the great leaps in the British national debt, they'll say oh there was the First World War, there was the Second World War, and that was the bit when Gordon Brown was in charge and he's taking us into the recession in that situation. Now that places our country in a great difficulty in having a so-called fiscal stimulus.

ANDREW MARR: If so, that means that your party, if it wins power, is going to win power in a situation where you not only have to raise taxes - and I want to ask you about the 45p rate, it seems astonishing to a lot of people that the Conservatives are apparently in favour of a 45p rate on the rich - but also to take some very, very hard spending cuts decisions which you haven't really addressed yet.

WILLIAM HAGUE: Well we certainly expect to inherit the worst situation in the public finances we've ever inherited from an outgoing government, and that was after they inherited from Ken Clarke one of the best situations in public finances.

Now David Cameron has said I think on your programme that we hope not to be in the position of raising taxes, but of course we are going to inherit a desperately difficult situation.

The Government by the way are already cutting their spending plans. They have cut �37 billion out of their future spending plans in their own pre-Budget Report, so they are already doing some of that and you've got to bear that in mind.

ANDREW MARR: As everything deteriorates very fast at the moment, there's a whole series of hard, hard decisions to be taken - not least, for instance, bailing out the car industry. What would be the Conservative attitude to that?

WILLIAM HAGUE: Well what we advocate, indeed what we think would be much more effective than this temporary reduction in VAT, the so-called fiscal stimulus, is getting the credit going - getting the credit moving not just between the banks.

The Government have brought in a scheme to guarantee lending between the banks, but what we now want to see is a scheme to guarantee lending between the banks and businesses in the country, what we call our National Loan Guarantee Scheme, an insurance scheme. And that sort of scheme would of course help the car industry as well as be exactly what the economy needs.

ANDREW MARR: But you wouldn't be in favour of putting money in to help Land Rover at the moment - Land Rover, Jaguar at the moment?

WILLIAM HAGUE: If it's a case of helping with the availability of credit, that is one thing. If it's the Government picking winners in industry and saying we are going to in effect invest in industries and decide which ones are going to succeed...

ANDREW MARR: (over) Let lame ducks, let lame ducks fail.

WILLIAM HAGUE: ...well that is entirely different. But what businesses across the country, not just the car industry, needs now is our National Loan Guarantee Scheme. And that can be done without higher public spending, without taking the country more into debt.

We've got to think of the future generations here. Gordon Brown is going to lumber future generations with the biggest burden of debt any government has left them with other than after the Second World War.

ANDREW MARR: That is true, is it not, Lord Kinnock?

LORD KINNOCK: Well of course we've got a Loan Guarantee Scheme and we've got a panel that's supervising the issues relating to it, and what is critically important now...

ANDREW MARR: But on the debt, it is going to ...it is huge.

LORD KINNOCK: Sure, but let's get to the way in which we generate fresh growth in order to make it possible for the British economy, regardless of who's the government, to be able to stabilise its public finances again rather than do nothing and have the debt in the form of much higher unemployment and wall economics with factory after factory, plant after plant, company after company going to the wall. Now I find it interesting that William didn't give a straight answer for instance on Land Rover - what's going to happen there. If they were in government...

WILLIAM HAGUE: I gave a very straight answer.

LORD KINNOCK: No, no, no, no you didn't.

WILLIAM HAGUE: Get the credit going.

LORD KINNOCK: You said it would be a good thing if we stimulated demand in the economy by extra credit. There isn't a person in the world that wouldn't agree with that, but that doesn't address the particular case of Land Rover, doesn't address that particular case whose need is for short-term support with a repayable investment.

WILLIAM HAGUE: If there isn't a person in the world who disagrees that we should get credit going in the economy through a kind of insurance government guarantee scheme, let's do it. This is the do nothing government when it comes to doing things like that.

And you know Neil says well Gordon is going to get the growth going again, but actually what the Government has done so far has failed. The VAT cut has not got the retail sector booming, the recapitalisation of the banks has not so far succeeded in getting credit going...

LORD KINNOCK: (over) Yes, they wouldn't ...The point is there wouldn't be any banks to provide credit unless the scale and depth of recapitalisation had quickly taken place.

And it's obvious that the Conservative Party after the original week or so of non-partisanship has committed itself against the form of support being given to the banks to enable them to generate the credit, to get the borrowing going, to restore growth in the economy. So they don't join up.

ANDREW MARR: (over) So the political argument is...

LORD KINNOCK: They don't join up. They weren't joining up their thinking.

ANDREW MARR: What about, what about the other big story in the papers today - the Social Fund - this 28% interest rate going to be charged for people who are desperately needing? What would you do about that?

WILLIAM HAGUE: This is astonishing. It is outrageous. I mean the Social Fund has been there under governments of both political parties - interest free loans for people who are in real need from the Government - and that is paid back then through the benefit system.

And here we have a proposal under Gordon Brown's Government for interest rates up to 27% - the interest rates of the worst store cards, of the loan sharks going to be imposed on some of the poorest people in the country by a Labour government. That should be right out of order. It would not happen under a Tory government.

ANDREW MARR: (over) Outrageous is a perfectly reasonable word to use about that.

LORD KINNOCK: Of course. I don't know where the idea of imposing any form of interest on repayments of Social Fund loans comes from, but I know it's going to and that is absolutely no way.

WILLIAM HAGUE: It comes from the Government. It comes out of James Purnell...

ANDREW MARR: (over) But if you think of that and you think that, then it can be voted down in the House of Commons.

LORD KINNOCK: There's no point in doing it, let alone no justice in doing it.

WILLIAM HAGUE: Well then we're agreed on that, but then let's vote it down in the House of Commons. We will obviously get encouragement from the Labour rebels in the House of Lords when it comes to that point.

LORD KINNOCK: It won't even get to that.

ANDREW MARR: I suppose one final huge story we must touch on is Zimbabwe - again another sort of spiral downwards in the nightmare for that country. Is there anything more beyond standing at the sidelines and wringing our hands, which is what we're doing at the moment, that we could do?

WILLIAM HAGUE: Well if the responsibility to protect meant anything - and that is what all the nations of the United Nations have signed up to - then the United Nations Security Council would be taking the action to put the pressure on Mugabe and even directly intervening to go. But of course China and Russia have vetoed every possible action on Zimbabwe and so there is no legal basis, and without South Africa no practical basis, for direct intervention in Zimbabwe.

ANDREW MARR: So actually there's not much we can do?

WILLIAM HAGUE: That makes us very reliant on the front line African nations to do more.

LORD KINNOCK: Absolutely. And I agree with William obviously on the UN point and on the absolute need for the Southern African countries, most particularly South Africa, to impose the pressure that only they can impose.

Now gusty, little Botswana - and to be fair to them Tanzania and Zambia - have been making a real contribution. Mozambique, Namibia have been making their pressures known, but it's got to be much stronger. And without pressures from South Africa Mugabe will just continue with his absolutely vicious regime. Totally unacceptable.

ANDREW MARR: One final thought - pound and euro parity. Is this your moment?

LORD KINNOCK: No, it isn't, and nobody is going to engage in what would have to be a substantial period of economic change in order to take the pound into the euro. We will, we will at some stage, but this is definitely not the stage.

WILLIAM HAGUE: I hope we'll never join the euro. A weak currency comes from having a weak government, and those were the words of Gordon Brown himself in 1996.

LORD KINNOCK: Well I remember when we had a disastrously strong currency that came not from a strong government but from oil and fantastically high interest rates. It priced British industry out of markets. 25% of manufacturing killed in four years. That was Geoffrey Howe and Margaret Thatcher.

ANDREW MARR: Right, well we'll hear more about that perhaps in a moment, but for now thank you both very much indeed.

INTERVIEW ENDS

Please note "The Andrew Marr Show" must be credited if any part of this transcript is used.

NB: This transcript was typed from a recording and not copied from an original script.

Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy

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