We need a public debate

On Sunday 28 June Andrew Marr interviewed Vince Cable MP, Liberal Democrats

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

The senior Lib Dem Vince Cable calls for spending cuts to be identified now.

ANDREW MARR:

Vince Cable MP

Moving now from one famous dancer who has to deal with pain to another - though it's financial pain in this case we're talking about.

The Liberal Democrats say that public spending - that great row between Labour and Tories - is actually artificial, and have called for a proper debate about cuts.

Well their Treasury spokesman, Vince Cable, we were talking about your article - welcome, thank you for coming in - your article in the Mail on Sunday.

You're not quite, if I may say so, in the hot Carlos Acosta level of dancing though …

VINCE CABLE:

Definitely not.

ANDREW MARR:

… but you're a ballroom dancer, as is well-known. In this piece, you make some interesting points - not least that when cuts come, as you believe they're inevitably going to, real cuts - without a proper public debate what happens is that the silent people or the people who don't have enough political voice are the ones who get hammered.

VINCE CABLE:

Yes, when there's a public expenditure squeeze basically two things happen. First of all, there are big cuts in capital investment, and that's happening now under this government. And the other thing that happens is that you have these broad expenditure targets and then there's a kind of bureaucratic in-fighting, and of course it's the mentally ill or the young offenders who get chopped and the bureaucracy remains.

ANDREW MARR:

And the very old as well.

VINCE CABLE:

And the worry I have about the Conservative approach to this is they say well you know we will be tough and then wait until after the election and we'll tell you exactly how we'll do it. Now that's not good enough. We've got to identify the big programmes now, which will have to be cut back.

ANDREW MARR:

And what about the suggestion that we won't have a public spending review this year? That's in the Sunday Times. Were that to be true, would that be something to be worried about?

VINCE CABLE:

It is, it is, and this is exactly the time where we do need a review of public spending. The government's argument is that there's a great deal of uncertainty, and that's correct, so you know we are dealing with a wide range of outcomes, but we've got to discuss this properly. I mean the government are saying we're not making cuts; it's only the opposition parties who'll do that.

Well actually they are cutting current spending, and once you've taken account of interest rates, for example; and capital investment, new skills and other infrastructure - that's going to be cut drastically even under this government's assumptions.

ANDREW MARR:

Looking at the scale of public borrowing and what the Bank of England's been saying, do you think that cuts of 10% - as has been suggested, you know outside a few core areas - that's a realistic thing? That's what the Conservatives are saying.

VINCE CABLE:

I don't think that kind of aggregate number is actually helpful. Because there is massive uncertainty, we're not taking that broad approach. What we can say is that the public spending position is quite dire because large areas of revenue have just disappeared.

You know of course all the North Sea oil revenue was frittered away; we've lost vast amounts of money because of the collapse of the City of London; the housing bubble's burst. So big chunks of revenue have gone and so, therefore, we need to plan on the assumption that the environment's going to be very tight.

And the best way of doing this, instead of just having these aggregate numbers - picking out big areas of spending, which we know are popular and have to be you know found in some way, and we've argued for example in tax credits, which are actually very useful for people on low incomes that go right up to £50,000 or public sector pensions which of course you have to provide.

ANDREW MARR:

You talked about the amount of money that taxpayers are putting into public sector pensions. Now I mean there are a lot of you know former school teachers and nurses and so on …

VINCE CABLE:

Yes, we're not talking about that.

ANDREW MARR:

You're not?

VINCE CABLE:

No, we're not talking about people on existing pensions who have contractual obligations. That must of course be protected. We're talking about large numbers of people now going into the public service or you know middle career, very high incomes, pretending to ret… going to retire on two thirds of final salary index-linked. This is not affordable and so we're going to have to look at changing the contribution system. I mean MPs are in this position too. Increasing contributions where necessary, changing perhaps to an average salary rather than a final salary. I mean we're looking at the different ways of doing it. But there's a massive commitment out there which we just cannot meet.

ANDREW MARR:

So public sector pensions. What other areas are on your list?

VINCE CABLE:

Well I've also mentioned tax credits …

ANDREW MARR:

Tax credits too.

VINCE CABLE:

… going up to upper income …

ANDREW MARR:

Anything else?

VINCE CABLE:

And then there are the big projects. I mean Nick Clegg went out in public a couple of weeks ago and changed our position on Trident; said that in the current environment, we just cannot afford massive long-term defence commitments of that kind. So we are arguing for non-replacement of the Trident missile system.

ANDREW MARR:

You've called the NHS "a sacred cow". Is this a sacred cow you would slaughter or protect?

VINCE CABLE:

It shouldn't be slaughtered, but we can't just sort of have arbitrary … put a ring fence round health and say well we'll slash schools and protect health. That doesn't make sense.

ANDREW MARR:

So where do you think there's excessive spending or spending that could be cut back in health, for instance?

VINCE CABLE:

Well I've argued in that article, for example, the IT scheme. I think there's a general understanding that there's a sort of massive over-commitment here that's going to have to be scaled back, though it's tricky because there are lots of contractual obligations. But there are bits of the health service that are desperately under-supported - mental health is one area - so there is a lot of need for making choices within the health service, quite apart from the overall envelope.

ANDREW MARR:

Yuh. What about, what about taxes because you as a party dropped the higher rate tax increase. Now Labour's brought it back in again and put in a higher rate tax increase, which presumably in these circumstances you'd have to stick with. Do you think you're going to be … were you in power as part perhaps of a coalition government, would you be in a position of actually having to raise taxes on ordinary taxpayers?

VINCE CABLE:

No …

ANDREW MARR:

You don't think so?

VINCE CABLE:

… we're arguing that the overall level of tax should not be raised and that's where there has to be the focus and the discipline on public spending. And indeed we're arguing that people on low pay and indeed average income should be lifted out of tax somewhat, income tax here. And although the government have introduced the 50p rate, they've left some enormous anomalies and reliefs for people on very high incomes. If you've got a million pound pension pot, for example, you don't just get more tax relief. You get tax relief at a higher rate and this is not supportable.

ANDREW MARR:

Yes. And that I think is also, part of that is also going under the current plans, as I understand it?

VINCE CABLE:

Well that's only if you're £150,000 plus, but you know there are a lot of people on very high incomes who get enormous amount of tax relief, which I mean we would argue we should stop that and concentrate tax relief right at the bottom.

ANDREW MARR:

What you're saying, it's interesting because the other big parties, the other bigger parties clearly think that to talk in this way is politically suicidal; that whatever the public say, once they hear about the details of tax - rises and spending cuts - they will flock away and vote for something else.

VINCE CABLE:

(laughing) Well I hope it isn't suicidal, but I mean somebody has to do it. And I think we have to be much more honest with people than we have in the past. The political class has to be much more honest about … Because we're dealing with a very, very difficult situation - much worse than in previous decades - because large chunks of government revenue have disappeared. There's going to be a massive discipline required in public spending and we have to talk about this in an adult way.

ANDREW MARR:

Vince Cable, thank you very much indeed.

VINCE CABLE:

Thank you.

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

Your comments

E-mail this to a friend

Printable version