................................................................................ ON THE RECORD RECORDED FROM TRANSMISSION BBC-1 DATE: 26.1.97
................................................................................ JOHN HUMPHRYS: Good afternoon. If a Labour Government is to achieve all it promises it MUST cut unemployment. But can it? I'll be suggesting to the Shadow Secretary David Blunkett that their plans don't hold water. The UK Independence Party thinks it can capitalise on our fears about Europe. I'll be talking to its leader. And ... the House of Lords. A Labour Government would throw out all those old dukes and earls ... but then what? We'll be trying to find out. That's after the News read by Paul Burden. NEWS HUMPHRYS: The UK Independence Party wants Britain to drive clear out of Europe. But will its unique approach do more harm than good to the cause it champions? And Labour wants to drive hereditary peers out of the Lords. But then what..? LORD KENNET: At the end of the day we should be left with a hundred per cent appointed chamber. The greatest quango in the land now that would be, well that would be almost unthinkable wouldn't it? HUMPHRYS: But first Unemployment. Gordon Brown told us last week that a Labour Government wouldn't spend any more of our money than the Tories are planning to spend. But they've also told us there are lots of things they would do that aren't being done at the moment. So, how would they square that circle? Well, they CLAIM they'd be spending an awful lot less on paying out dole money because they would radically cut the number of people out of work. And the big gun in their armoury is a plan to take two hundred and fifty thousand young people off the dole. They'd use a Windfall Tax on the privatised utilities to pay for the various schemes. The Shadow Employment Secretary, David Blunkett, is in our Sheffield studio. Good afternoon Mr Blunkett. DAVID BLUNKETT MP: Good afternoon, John. HUMPHRYS: So, an awful lot depends on this Windfall Tax, doesn't it? And, yet we're now seeing various problems arising which could throw the whole plan into doubt - the whole of your plans? BLUNKETT: Well, there's a propaganda campaign being run by a very small group of individuals and companies, aided and abetted by the Tory Party. There is no problem as there was with the Windfall Tax on the banks in 1981, when Sir Geoffrey Howe imposed it. We will use this money to actually ensure that a quarter of a million young men and women have the opportunity to earn their own living, to learn, to be able to contribute by getting them into work. They've been out of a job or education for more than six months and obviously there is the adult long-term unemployed men and women as well, and we intend through our programme opportunities to earn - to get them back into work and to allow them to earn their own living as well. HUMPHRYS: You said there are no problems, but there's absolutely no question of your packages, your plans, being funded in any other way - right? BLUNKETT: Well, the programme's very clear. If we can kick-start over the first Parliament of a Labour Government, the hundreds of thousands of people who are currently out of work - and want a job - into a job, then they stop receiving benefits - it's not just Unemployment Benefit but what are known as passported benefits; Housing benefit, Free School Meals and the like. So, we cut the Benefits Budget and at the same time they start paying Tax and National Insurance. So, we lift the Treasury's income and we can reinvest that money - as Tony Blair and Gordon Brown and myself have said -
into Education, into Training and of course, therefore, into further work. HUMPHRYS: Indeed, but I'm talking about how you pay for that kick-start and how you fund those plans to get the whole thing up and running. And, what I'm saying is that given that there might be the smallest, tiniest, weeniest little problem with the Windfall Tax, there's no other way you would fund it than through that - no Windfall Tax, no plans? BLUNKETT: Well, the Windfall Tax will be combined with other measures and I shall be putting forward what are known as new employment zones which will offer people personal job accounts. And those personal job accounts will be made up of the existing benefits that they receive - the money that's coming in from European funds, the Single Regeneration Budget which is the successor to the Urban Programme, the investment in our inner cities and towns. And, of course we can combine that with money that's already being spent by Training and Enterprise Councils. Put that together with the contribution of employers and you have a programme which the Windfall Tax can assist and support so that we'll have neighbourhood matching the needs of a neighbourhood with the needs of people to have a job, learning for work which will skill people and get them back into the opportunities - and of course the private sector, the employment start programme where we would subsidise to the tune of seventy-five pounds for adult long-term unemployed - seventy-five pounds a week, the jobs in the private sector. HUMPHRYS: But you're not telling me that your employment programmes will not be conditional on what you can raise from the utilities, are you? You're not suggesting that if you don't get that money, you can do it anyway? BLUNKETT: The extent and speed of what we can manage will depend on the amount and the speed with which we can gain the Windfall Tax and I think everybody viewing today would want us to be able to raise that money - not simply because it's right morally that those young people and the long-term unemployed should have a job - and that the one family in every five that has no one in work but they're of working age, can actually start to be independent and self reliant - but because the rest of us depend on young people having hope, not being on our streets with despair. HUMPHRYS: I take all of that point, but-but you confirm then that it is conditional on how much you can raise from the Windfall Tax. Now, you can't be entirely sanguine about that, can you? You don't know how much money you're going to raise from that tax, you don't when you're going to get it, you do know that it's going to be challenged in the courts. It's surrounded by problems, isn't it? BLUNKETT: Well, we don't know that it's going to be challenged in the courts. The Conservative Party claimed wrongly that they'd got an opinion on this. What they got was someone who said that they could give them an opinion. So we're not at all phased by this at all. We're sanguine about the extent of the problem. We're talking about over the last five years over ten million men and women have experienced some period of Unemployment. We're talking about two and a half million people who've experienced that twice in the last five years. HUMPHRYS: No, I understand that. I do take that point. I mean, you spelt out what the problem is very clearly, indeed. But I'm looking at your proposed solution and I'm suggesting to you that that solution is beset with problems. It is highly likely - many people in the utilities have confirmed this - that the plan will be challenged. You don't know when you're going to get the money. If you are going to get the money, you don't know how much it's going to be. So you can't just sit there this morning and say: oh, yeah, of course, it's all going to happen, because we know it's going to happen and here is how it's going to happen - you can't do that. BLUNKETT: Well, I am saying that we're determined that the Windfall Tax will be levied, that it will be applied, in the way I've described, to get people out of welfare and into work, to free them, to give them self determination in their lives. And, then, they will be paying back into the coffers rather than drawing on them, thereby encouraging and enabling us to be able to switch resources into Education and Training. For instance, back in 1979 - people often over eighteen years forget this - Unemployment and benefits payments for those out of work was half the amount that we then spent on Education. It's now more than we spend on Education. Well, that is an absolute disgrace and the notion that we can't go back to an era where the majority of people who wanted a job had one, where they could contribute into the coffers, where we had a sane society. We spent on Education and skills for the future. Of course, we can go back to that if we can kick-start the programme. And, that's what the Windfall Tax is all about. HUMPHRYS: Exactly. That's what the Windfall Tax is all about and you've got to have it in order to kick-start the programme. But, let's assume - and, this is a very reasonable assumption, isn't it? - that there are some delays, at the very least. After all, Gordon Brown has said that he's going to consult with the regulators. Now, that clearly suggest there will be delays of at least some months - possibly many, many, many months. What are you going to do? Are you going to start spending on your kick-start immediately you get into Government, or are you going to wait until some of the money from the Windfall Tax comes in so that you can spend it? BLUNKETT: Well, the preparatory work will begin immediately. Now, I don't simply mean about the logistics and the administration of getting the schemes off the ground. I'm talking about ensuring that people are getting the skills and the training in advance, which
is why we've said that we'll open one million individual learning accounts for men and women who have a desire to have those skills. HUMPHRYS: Yeah, but- BLUNKETT: We've identified the resources for it, we'll prepare through the personal job accounts and the combining through those pilot programmes of all the resources that are currently swilling about, including benefits, so that people can prepare to invest their lives, their future in our schemes. HUMPHRYS: Yeah, but that's something separate. I'm talking, you know what I'm talking about, I'm talking about your plans that are funded by the Windfall Tax specifically. Now will you get those going before the money has started to come in, or will it be conditional upon that money coming? Can't start until the money comes in? BLUNKETT: Well, I'll repeat what I said to you earlier, that the speed and extent of what we can do will depend on the flow of resources, but there's nothing at all to stop us engaging in these imaginative programmes that will prepare people, prepare the ground, prepare the design of the projects for the investment needed. In other words, you have to have the programmes up and running before the investment can bite. Therefore we can spend the first crucial months of a Labour government getting the programmes in place, getting them up and running, ready for them to be invested in. HUMPHRYS: But you can't actually start the programmes, the specific programmes that we've been talking about, until you've
got that money. So there might be some delay, and indeed it might be quite a long delay if the conditional, if the timing of the programme, the start of the programme, depends upon that money coming in. Could be quite a long delay, couldn't it? BLUNKETT: Lets make it clear, most of those who are likely to be affected in terms of drawing down the thirty-three billion pounds of profit - some of the thirty-three billion pounds of profit that's been made by the utilities since 1992 - many of those are already prepared, they've already put aside in their forward planning the resources necessary, including- HUMPHRYS: Well, it .....they've got to be desperate to give it to you, does it? BLUNKETT: Well, including-Well, it'll make it extremely difficult for them to argue that they can't afford to do it, including those - and it is now a majority of the former utility holdings which are held by people overseas. HUMPHRYS: Let's assume that there is a bit of delay - let's assume perhaps there's a long delay but the scheme is up and running. Okay? It has actually begun. Now, you want to get two hundred and fifty thousand young people off the register, and that is, as you say, going to kick start this whole process by which you're going to start saving a great deal of money that at the moment is in a sense wasted money, because it's being paid to people who ought to be in productive employment. That's the whole essence of the scheme, isn't it? BLUNKETT: That and the long term adult employment.......... HUMPHRYS: Absolutely, but on your card, your little card, that you've given to everybody, you've got five pledges and this is one of those five pledges - the other one isn't. So this is an absolutely key thing. The maximum you would save even if you've got all of those two hundred and fifty thousand young people off the Unemployment Register - as they are at the moment - is two billion pounds. Now, it may sound a great deal of money, but when you look at how much the entire Government spending is - three hundred and fifteen - whatever it is - billion pounds - drop in the ocean. BLUNKETT: Well, actually, it's a great deal more than that because we have income as well as Saving Certificates. HUMPHRYS: I've allowed for both that. BLUNKETT: We have income as well as Savings Certificates- HUMPHRYS: No, that's what I've taken that into account with that two billion BLUNKETT: -which count for the long term unemployed as well as- HUMPHRYS: No, no, you're - with respect - you're confusing the two things now. Let us be quite clear what we're talking about. BLUNKETT: As well as for the quarter of a million. Well, I'm not confusing you at all. I'm simply saying there is a clear pledge - and, it's one we will make an absolute priority on the Under Twenty-fives -
but it's not instead of, it's as well as, tackling the long term problems of those who have been out of work for over a year and more than two years. HUMPHRYS: Let's not confuse these two issues. At the moment, we're talking about this central pledge of yours - this two hundred and fifty thousand young people - which by your own description this morning, is going to kick start this whole process. Now what I'm telling you is that we've done the figures - and various other people have done the figures - and what you would say, at the very, very best - assuming you got all of those two hundred and fifty-five hundred youngsters off the Unemployment Register - would be two billion pounds. Now I'm suggesting to you that's not a great deal to transform society as we know it. BLUNKETT: Well, it's as much as the Liberal Party are parading as their one p on Income Tax for Education and Training. HUMPHRYS: We're not talking about the Liberal budget, we're talking about you. BLUNKETT: Well, I am. I'm talking about ensuring that we can switch that money from the benefits of the welfare budget into Education and Trade, which incidentally will then be a further lever for people being skilled for the new technologies for the global economy of the new century. And that's what it's all about, enabling people to lift their horizons and with it the added value of their work, and therefore the income they generate, and therefore the taxes that they pay into the National Exchequer. It's a spiral upwards, rather than a spiral downwards. And secondly, John, I wonder whether your calculations have taken into account the hidden costs of a quarter of a million young men and women who've been out of work or education for more than six months. What's happening on our streets, and in our inner city areas? HUMPHRYS: You know as well as anybody that you can't calculate that in pounds, shillings and pence. BLUNKETT: But, it's there. HUMPHRYS: Well, of course it's there, but what we're looking at is your claim that this is a really significant amount of money. It's impossible to do an interview with a senior Labour spokesman without having this thrust at you as an example of how a Labour government will transform our society. We're going to save this huge amount of money, going to kick start the whole process, which you're accepting this morning. But in fact we're talking about a very small amount of money in real terms - a tiny proportion. BLUNKETT: Firstly, I'm not accepting that the maximum we could raise is two billion pounds. HUMPHRYS: No. The maximum you would save - that's what I'm telling you. BLUNKETT: Because, I think that-Well, the young people who reach twenty-five without jobs, or further education, and with hopelessness, become the long term adult unemployed, which actually is a more costly programme. Not merely in terms of the individual, but their families. One in five families are working age with no-one working - three million children, four hundred thousand more than there was a year ago. Now that has a hidden cost. If the children have to be paid for as well in the benefits we pay out for them - both the direct benefit and the passported benefit, it adds up to a very, very large figure indeed. HUMPHRYS: You are adding rather a lot on at the moment, aren't you? You're throwing in the kitchen sink. BLUNKETT: I'm telling you how it is, and that really raises another issue, which is - as you know, at the end of last week we talked about the choice, and enabling policies, for those who are single parents, and have children of school age - I'm looking also to the fathers of those children - where they're with us, where it's not widows - and asking the question - given that we've over three quarters of a million men who have been unemployed for more than a year, many of those will be fathers of children. Let's get them back into work as well, let's give them the personal job accounts that I've described. HUMPHRYS: I'm not disputing any of the merits of the case at all. The point I'm making to you is that the claims you have been making for this scheme have been grossly over stated. That's the point I am making to you. BLUNKETT: I'm claiming they're not. HUMPHRYS: I'm basing this on economic arguments. Now look, of course there are all kinds of moral reasons, there are all kinds of social reasons why young people should have work rather than unemployment. Nobody disputes that for one second. But you are telling this country: Gordon Brown says we're not going to raise any more money, but it doesn't through taxes or through income taxes, but it doesn't matter because we're going to save all this money by not having to spend it on two hundred and fifty thousand kids out of work. BLUNKETT: Which is true. HUMPHRYS: But it is not true, because the amount you are actually going to raise is trivial out of the whole saga. BLUNKETT: I haven't seen your calculations, and if I had, I'd therefore be able to comment on them with greater accuracy. All I can tell you- HUMPHRYS: It's the IFS, it's the CBI, it's all sorts of other things. BLUNKETT: Well, I haven't seen the ones that you've put together. HUMPHRYS: Unemployment Select Committee. BLUNKETT: All I can tell you is this, that we're spending as a nation thirty billion pounds on Unemployment and related benefits to Unemployment. That we're spending ten billion on those one parent families who are currently with children of school age. Now some of that will be saved - not all of it - we're not for a moment disputing that it won't be thirty billion pounds. I'm saying that taken together, the new deal for the under twenty-fives, the opportunities to earn programme for the longer term unemployed, and our skills programme - which is carefully costed and will give a million people individual learning accounts for them to skill themselves - that over a period of time will save billions of pounds. HUMPHRYS: Everything rests on you cutting Unemployment - whether we're talking about young people, people in longterm unemployment - who have been unemployed for many, many years, or whatever. Everything rests on this one. This is absolutely fundamental. But here's the
irony. A lot of what you plann to do - if you get into power - would risk putting up Unemployment - the Social Chapter, for instance. British companies will incur costs that they don't have a the moment. BLUNKETT: John, tell that to the Halewood workers. Tell them about the Social Chapter. HUMPHRYS: There might be many more Halewoods - that's the point. BLUNKETT: Well, because they-The German workers, with the benefit of being consulted, of having works councils, are gaining the employment of the workers at Halewood with the Social Chapter, with wage levels much higher than at Halewood and with costs five hundred pounds and more per car greater than Halewood. So, I'm afraid the Tory argument about the Social Chapter costing jobs is simply blown sky high. HUMPHRYS: Well, I don't quite see how Halewood proves that at all. What you are saying is that we are losing some jobs at the moment - that is true. We're gaining many jobs at the moment as well and what I'm suggesting to you is this: if you push up the costs of British industry then, you're going to make it more difficult, rather than easy, to create new jobs. Of course, Halewood has happened and that's deeply regrettable, obviously it is. But, there could be many more like that. BLUNKETT: Well, I-I hope there are not. I hope that we will be attracting jobs in. And, clearly, every time there's a job created the Government claim credit for it. Everytime there's a job lost, they blame Europe, the Trade Unions or somebody else. Now, the Americans have a National Minimum Wage - just to head this straight on. They have a National Minimum Wage, which was put up just before the Presidential Elections with both the Republicans and Democrats scrambling onboard. They've created ten million jobs over the last four years. They have a dynamic economy. It is not affected by that National Minimum Wage and the most responsible companies here and across the world are welcoming our measures because treating your workers well, informing them, consulting them - it is actually what the Social Chapter is all about - actually, just makes good sense, in terms of getting the best from the workforce. HUMPHRYS: Well, that may or may not be the case. We'll talk about that in a minute if we've got time. But, let's stick with the Social Chapter for a moment. Our social cost - the costs of employing labour in Britain, at the moment - are dramatically less than in Germany and France. In Britain, Unemployment is falling; in Germany and France it is rising. Just look at the cost. The non-wage costs, I'm talking about here, as a percentage of people's pay. In France, forty-three point five per cent. In Germany, twenty-one per cent. In Britain, ten point four per cent - can't dispute those figures. They've OECD figures. So, if you start pushing those costs up it is going to make it more difficult, clearly. BLUNKETT: Well-well the Social Security system is actually based on those Employment costs in France and Germany - whereas it isn't in Britain. So, the comparisons are not all that helpful. The truth is that the reason why Germany and currently Spain as well are attracting major international companies, like Ford, to move their employment there are twofold. One: the protection which exists for workers and, therefore, the difficulties for companies, if you like, withdrawing from those particular areas. And, secondly, the capital investment because the combination of high added value, capital investment and a skilled workforce is the way we'll survive in the future. We can't survive by actually competing on low wages with the developing countries. It's simply impossible. HUMPHRYS: Nobody's suggesting we should do that. BLUNKETT: Well, we can only compete on high skills, high added value and consequently high wages. And, anyone who's against people being paid well for working well, frankly, want to go out to the Electorate and tell them head on. HUMPHRYS: I'm not talking about wages. I'm talking about extra costs as a result of the Social Chapter. They're already seeing what's happening. Only a couple of measures so far - more in the pipeline. BLUNKETT: John, they're not as a cost on the Social Chapter. This is the mythology that's being peddled. They're part of the Social Security system in those countries, not attached to the Social Chapter. The Social Chapter is about people having the right to be consulted, about works councils in companies that have workers in more than one European state. Now, that doesn't threaten anyone and neither does associated changes that are being welcomed in other countries with Right-wing governments - more Right-wing than the current muddle and confusion that we're getting out of the Tory Party. HUMPHRYS: Of course, the Social Chapter - if certain measures are introduced - we've already seen some of them that would actually add to costs - Paternity Leave, for instance. BLUNKETT: Such as? HUMPHRYS: Well, Paternity Leave is one of them. But, we've got others in the pipeline. BLUNKETT: But, it's unpaid. Paternity Leave's unpaid and- HUMPHRYS: But, you-you tell any employer-Oh, come on, you tell any employer that he can afford to lose somebody for six months, or whatever it happens to be and replace him without extra cost, you know that that's nonsense. BLUNKETT: That's why it's important to consult with those employers, to hear and to respond to the needs of smaller companies who are affected. HUMPHRYS: Yes, but they don't have any say in it once we've signed up to the Social Chapter. BLUNKETT: To ensure that they can negotiate and can phase in those changes and that's what we're committed to doing. HUMPHRYS: They have no say. Employers have no say. Once we have signed up to the Social Chapter we are going to have to accept certain things that we might not want to accept - full recognition for part-time workers, for instance. All of these things are going to add to the costs of employment and that is going to have an affect. BLUNKETT: Full time treatment for part-time workers was recognised by the House of Lords, and whether the Government like to say so or not, they've had to accept that. And, quite rightly, too, because we've had an explosion in part-time employment and there's no reason why men and women - it's actually more women than men - should not be protected - simply because they work fewer than thirty-five or forty hours a week. HUMPHRYS: David Blunkett, thank you very much, indeed.