Philip Hammond interview

On Sunday 10 October Andrew Marr interviewed Transport Secretary Philip Hammond.

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

ANDREW MARR:

Well to a real king now or a court at any rate. David Cameron's speech to his party conference last week urged the public to pull together and insisted the cuts being introduced by the government would be worth it in the long run. Well among the departments in line for a really big cut is the transport department. The man in charge of delivering that, while keeping planes, trains and automobiles still just about moving, is the Transport Secretary Philip Hammond. Welcome.

PHILIP HAMMOND:

Thank you.

ANDREW MARR:

So you are facing a whacking great 25% or more cut in your budget. This must be very bad news, particularly I would have thought for rail travellers because rail fares are going to have to rocket, aren't they?

PHILIP HAMMOND:

Well the government's first priority is to reduce the deficit that we've inherited, and every department has to make a contribution to doing that and transport will make its contribution. But we also have a very important role to play in securing economic growth and supporting economic growth, and indeed in securing the government's carbon reduction targets for 2020. So we'll have a balanced approach which contributes to deficit reduction while supporting economic growth and carbon reduction.

ANDREW MARR:

I know we can't go into the figures and so on before the review, but how, broadly speaking, are you going to do it?

PHILIP HAMMOND:

Well we've announced our plans for a high-speed rail network. This is the …

ANDREW MARR:

That's the spending side. I'm thinking about the cutting side.

PHILIP HAMMOND:

Yeah, well this is a big strategic plan, although it won't involve spending significant sums of capital money in this parliament.

ANDREW MARR:

Right.

PHILIP HAMMOND:

Of course we've got to look at how we do things more efficiently and effectively, particularly in our railways. We've had reports recently from the Office of Rail Regulators suggesting that our railway is up to 40% more expensive than comparable continental railways to run and operate, and that's not fair to taxpayers, it's not fair to fare payers, and we've got Sir Roy McNulty doing a review of the railway for us.

ANDREW MARR:

You say it's not fair to fare payers, but it looks to everybody from the outside as if we're going to have fewer new carriages, fewer new trains, therefore more overcrowding and considerably higher fares.

PHILIP HAMMOND:

Well the balance that we've got to get right is between continuing investment in improving the customer experience, the passenger experience, which means new trains, new carriages, network improvements on the one hand; and recognising the cost to the taxpayer and the limit of the taxpayer's capability in these very difficult times to keep putting more and more money into the railway. So that's the balance that we've got to get right. But in the long-term, in fact in the medium-term, the only solution to this is to drive out costs from the railway - to make sure that our railway is operating as efficiently as the best across Europe, so that we can get a better deal for fare payers and a better deal for taxpayers.

ANDREW MARR:

You said that you were going to be a friend to the motorist, and I wonder how that's going. Are you going to rip out quite a lot of the speed cameras, some of the obstructions and excessive signage? You're removing, I think, the bus lane from Heathrow. What else are you going to do to help motorists?

PHILIP HAMMOND:

Well I said I would end Labour's irrational war on the motorist because the enemy is carbon and congestion and we need to tackle carbon and congestion, not motoring per se, because in many parts of the country, particularly rural areas, the car is the only practical means of transport. So yes the M4 bus lane will be going. That's within my direct control because it's Highways Agency road. But beyond that, we have an agenda of localism, of letting local authorities decide what's right for their areas. So in terms of dealing with congestion, dealing with road safety issues, speed cameras, this is for local people to decide how best to tackle the priority issues in their areas. It's really not for Whitehall to dictate.

ANDREW MARR:

One of the people who's been if not dictating at least talking very forcibly about what you need to do is Boris Johnson, who says it would be a disaster not just for London but for the economy of the UK as a whole if investment in transport - he's thinking obviously of Crossrail but also things like buses and so on - was halted.

PHILIP HAMMOND:

Well the Chancellor said in his emergency budget speech that the capital that was … first of all that we won't cut capital spending any further than Labour had proposed to do, so we wouldn't take the easy option of simply cutting capital in order to maintain current spending; and, secondly, that the capital that is available will be spent in areas where it supports economic growth. And that gives me cause for encouragement because transport infrastructure clearly is one of the areas where public investment directly supports economic growth.

ANDREW MARR:

And Crossrail itself, can you give a promise on that?

PHILIP HAMMOND:

Well we've said we're very committed to the Crossrail project. But, like every other big capital spending project, Crossrail must deliver value for money. We've got to be sure that we've driven out every ounce of surplus cost in that project.

ANDREW MARR:

But assuming you can squeeze it down to what you consider efficient, then it goes ahead?

PHILIP HAMMOND:

There'll be an announcement on October 20th, but I think the government has already made it clear that it's committed to the principle of the project. The issue is about getting the costs down to an affordable level.

ANDREW MARR:

Okay, alright. Are you worried about a double dip recession?

PHILIP HAMMOND:

No, all the indicators - Bank of England, OECD, IMF - predict that the UK economy will continue to grow and that unemployment will fall continuously each year over the lifetime of this parliament because of the actions that George Osborne took in his emergency budget and that he will flesh out in the spending review.

ANDREW MARR:

Now you're a guy who knows about the numbers and you were looking over the numbers before the election campaign. When people talk about "phasing" these cuts more, how would that work if that was the decision?

PHILIP HAMMOND:

Well we've always said that the reductions in public spending will be over a four year period. This isn't going to be a cliff edge next year. So departments will reduce their spending in line with the plans agreed by the Chancellor over the period of four years. So you know if a department's reducing its spending by 25% overall, it won't be 25% in year one. It'll be maybe 6% in year one and 6% in year two. So these are manageable cuts over a period of time.

ANDREW MARR:

And presumably when you're looking at the economy as a whole, you can finesse the timing of that to ensure that you're not going to cause a double dip recession?

PHILIP HAMMOND:

Well the plans that the Chancellor will set out in his spending review statement on October 20th will set out a pattern of reduction for departments over the four years of the spending review, so departments will have clear and firm budgets. And our view has always been that fiscal policy should be set for the medium-term and monetary policy should be used to deal with any short-term shocks.

ANDREW MARR:

Right, so that means that you can play around a little bit with the timing if you have to?

PHILIP HAMMOND:

Well the Bank of England's got monetary policy to deal with any short-term shocks to the economy. While our fiscal policy, which is about getting the structural deficit eliminated by the end of this parliament should stay on track because that's the key message that markets have received that's restored confidence, that's got British interest rates down, that's got the IMF giving us a clean bill of health, and frankly that's got our economy starting to get back on track for future sustainable growth.

ANDREW MARR:

The graduate tax is dead, isn't it?

PHILIP HAMMOND:

Well the Business Secretary has said that a graduate tax would be unfair and unworkable, and I think that's the right call.

ANDREW MARR:

And at the same time people are picking up their papers today and looking at the notion of £12,000 fees and are presumably pretty put off and not a little frightened by that?

PHILIP HAMMOND:

Well what's clear is that we have to change the way we fund higher education in this country. Higher education is very important to Britain's future economic growth, but we can't go on, as we've done in the past, taxing people on low incomes in order for the taxpayer to meet the greater share of the burden of financing higher education. So it is right that those who benefit from higher education make a contribution to it, and it is right also that those who benefit the most by going into very high paid work contribute the most.

ANDREW MARR:

So if you go to university and you do well and you get a high paid job, in the future you will be paying more. Now whether you call it an extra bit of income tax or whether you call it some kind of variable interest payment, the effect will be that people will come out of university under a Conservative led government and be paying well over 50% tax rate?

PHILIP HAMMOND:

No, I don't think that's right. I think there's a world …

ANDREW MARR:

I don't see how it can't be right.

PHILIP HAMMOND:

… I think there's a world of difference between a graduate tax where people simply because they've gone through university and have used the student loan facility to do so for the rest of their lives are being asked to pay a higher tax rate, and a variable interest rate on student loans where people who have borrowed money have the interest rate varied so that those with the lowest incomes have their interest rate effectively subsidised while those on the highest incomes contribute something additional to provide that subsidy.

ANDREW MARR:

Are your colleagues in the defence department pushing it a bit?

PHILIP HAMMOND:

Well, look, what happens in a spending review is that individual secretaries of state argue the case for their department, and each of us passionately believes that the work that our departments are doing is crucially important and that's the way a proper and open spending review process should work.

ANDREW MARR:

Okay. Any thoughts on the shadow cabinet? Interesting new team.

PHILIP HAMMOND:

Well some surprises. I mean it wasn't quite the new generation of Labour politicians that Ed Miliband has talked about. There was rather a lot of familiar faces there - people who were in the last government, people who've been around the formation of Gordon Brown's economic policy for years, people who must share in the guilt for the crisis that we've got ourselves into. But I must say I was a bit surprised by Alan Johnson's appointment. Not the obvious choice when the economy is going to be the clear focus over the next few weeks.

ANDREW MARR:

Even as you speak, he is studying the Economics Primer, he assures us …

PHILIP HAMMOND:

(over) He's studying the Economics Primer, yuh.

ANDREW MARR:

So that's good. Alright.

PHILIP HAMMOND:

And he must tell us what he's going to do …

ANDREW MARR:

Indeed.

PHILIP HAMMOND:

… because that's what we need to hear from Labour.

ANDREW MARR:

Alright. Philip Hammond, thank you very much indeed.

INTERVIEW ENDS

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