................................................................................ ON THE RECORD FRANCIS MAUDE INTERVIEW RECORDED FROM TRANSMISSION BBC-1 DATE: 21.6.98 ................................................................................ JOHN HUMPHRYS: But first the Conservatives' problems. Peter Temple-Morris didn't exactly help yesterday when he said he was joining
the Labour Party, but compared with some other problems that was a relatively minor matter. The big problem of course is Europe - the divisions over the Single Currency in particular eventually destroyed John Major's leadership and those divisions remain. Kenneth Clarke has made that clear yet again. Mr Hague's policy he said, lacks credibility. Well, in our Brighton studio is the Shadow Chancellor Francis Maude. Good Afternoon to you Mr Maude. FRANCIS MAUDE: Good afternoon. HUMPHRYS: So, Peter Temple-Morris hasn't helped has he? MAUDE: Well, I think it's all a bit of a storm in a teacup really. Peter Temple-Morris left the Conservative Party nearly a year ago, and not voluntarily. The Whip was withdrawn because he was so obviously not comfortable with us, and for the last year nearly he's been sitting on the Labour benches, so to describe this as a defection is, what you might call an exaggeration. HUMPHRYS: Having said that though, your leader has not had a good year has he. I mean you're still, he in particular is still making no impact at all. MAUDE: Well, I think he's made considerable impact. This has been a very difficult year for us, inevitably. Labour has been coasting on the back of this extraordinary golden economic legacy that they inherited from us. No government's ever come to office with an economy as strong as this one is, and they also came in with this great fund of good will behind them. You know, we'd been in power for eighteen years and it's not surprising people had got sick of the sight of us, and they felt that Labour was a low risk alternative, and they didn't need the Conservatives any more, so obviously it's been a terribly difficult year, But instead of wingeing and moaning about it, William's calmly and sensibly got on with putting through some very important reforms of the party, not very interesting to people outside, but essential, a necessary pre-condition for rebuilding our success, making a series of extremely important and thoughtful speeches about the future direction of policy and to begin to restate traditional Conservatism in terms that are important and acceptable to the coming millennium, and this is an important way to begin the process, but this is a long haul, none of us have had any illusions about that. HUMPHRYS: But to suggest that he's doing very well is a bit odd isn't it. I mean it's quite helpful if your leader is approved of by the people at large, and particularly by his own party, but look at his approval rating. It's minus fourteen - minus fourteen per cent, and that's with Tory voters. MAUDE: But it takes time for all this to come through. Labour has begun to make mistakes, and to make big mistakes. They've had a very bad few weeks, the economy is turning wrong in all sorts of ways. They were re-elected with this absurd theme tune: things can only get better, but actually, if you look at what's happened, you've had inflation up, you've had unemployment now turning up, you've had taxes up by the equivalent of five pence on the basic rate of Income Tax. You've had interest rates up now six times, and Eddie George says there's another one on the way this morning. You know, they aren't getting better for people. In all of these ways things are beginning to get bitter for home owners, for businesses, for people who fear for their jobs, for consumers who see the cost of living going up, as well as the waiting lists and the class sizes which are still going up despite Labour's so-called early pledges to reduce them. HUMPHRYS: But.... MAUDE: It will take time for this to play through into mainstream politics, and for Labour to pay the price, and we have to be patient, and we have to carry on showing up their inadequacies, showing up their mistakes, opposing them when they're wrong and giving them support - robust support as we will when we think they're doing the right thing. HUMPHRYS: But the thing is, they're getting away with it aren't they, and you can see it in Mr Blair's own approval ratings. Compared with your leader's minus fourteen per cent, his is plus seventy
-eight per cent, and the problem is that he doesn't appear even to have the full whole-hearted support of his own back-benchers. I mean listen to Eric Forth, who is a loyalist - describes himself as a loyalist anyway, and he said this week,: dissatifaction on the back-benches, he said there's a lot of the grass-roots are not enamoured of the leader either. Well I mean, there's a man who's in favour of the leader. MAUDE: I don't find - I don't find.......You know, William Hague won the leadership election with a clear majority. He's established absolute dominance over Tony Blair in the House of Commons, so the Conservative - we in the House of Commons see William make mincemeat of Blair every week at the Despatch Box. That's why Tony Blair's so reluctant to come there because he knows he's going to get cut into little pieces. William is brilliant at that - he's a brilliant orator, and we in the parliamentary party see that, and the party out in the country will see it more and more as time goes on, and they get more exposed to him. But it takes time to do all this, and we have to carry on with it, but there is no sense that there is a lack of support for William. HUMPHRYS: Well, depends who you talk to doesn't it. Talk to Ted Heath for instance..... MAUDE: Well, you only talk to people who do - who are..... HUMPHRYS: On the contrary, I'm talking to you right now. MAUDE: Well, but given support John, is there a news story in Conservative Party supports William Hague? Of course
there isn't. The news story is finding people who want to criticise him. HUMPHRYS: Well, it's not a question of having to dig around and find them. I mean they're jumping up to tell you. Ted Heath went on television this week, a former Prime Minister, and what did he say. He said: Hague is..Mr Hague is not mounting a credible opposition, it's not enough (let me finish what he said), it's not enough just to find ways of being rude to the Government, because you were going on a bit earlier about how effective you are as an opposition, we must work out positive policies. The implication being quite clearly that that isn't what you are doing. MAUDE: Well, no, I agree that we have to work out positive policies and in time we will do that. It would be absurd to do it now because they'd be out of date by the time the election came round and we want to spend the time consulting, listening, hearing what people think of the issue that we ought to have policies about. We can produce ivory tower policies easily now, but if they are not addressing what people are concerned about it wouldn't be very useful. But I mean this is a party which goes back a long, long time. It's the longest standing, most successful political party in the history of democracy. It was around a long time before I or William Hague or even Ted Heath was around and it will endure long after we are all gone. And those of us who have custody of it, for the time being, we are only its trustees, and trustees hand over to other trustees. The torch is being handed now to a newer generation of Conservatives who have a sense of the history of our party and our country and wish to build on it. And it's for us to take brave decisions about the path we should be going and to justify it and, you know, that's what we are doing. We are building on very successful foundations for this Conservative Party. We had a terrible election after eighteen years in office. It was almost inevitable that we would, it was terrible. People were sick of the sight of us and so we have to get on and rebuild calmly and sensibly, based on principle and based on a real understanding of the history of this country and the history of the party. HUMPHRYS: Right, well I don't know how brave it is to attack the government, for instance on inflation rates, which is what you've been doing at the moment, again just then. But not telling us what you think, where should interest rates be, for instance, you don't tell us that. MAUDE: I don't consider it my job to second-guess the Governor of the Bank of England. He has a very difficult job. He's been given an almost impossible task by the government and he has to set interest rates and his committee, in the best way that they can. All I'm saying is that the government has made it incomparably worse by attacking savings, which has meant that money hasn't been taken out of spending into saving, if anything the reverse has happened by introducing a national minimum wage which will itself raise earnings and thus add to inflation. By all of these things the government has made it worse by increasing taxes, therefore increasing people's cost of living. All of this stokes up inflation and so you have this extraordinary phenomenon developing so that now a lot of serious commentators are talking about the possibility of a word I only barely remember from my youth, the last time there was a Labour Government, stagflation. The combination of the economy stagnating and let's face it manufacturing industry is already in recession while inflation is not in control. And Gordon Brown's casual abandonment of fiscal discipline two weeks' ago, when he just said, you know, we are going to go on a spending spree, what one commentator called this week, the biggest spending spree since the sixties. All of that adds to inflation and that makes the job of Eddie George and his committee, incomparably more difficult and that's why people today are going to have listened to Eddie George and thought: gosh, am I really going to have to face another mortgage interest rate rise. Our businesses, hard-pressed businesses who are facing a really tough time at the moment, facing another interest rate rise and people whose jobs are on the line, thinking why is this happening and they look at what's going on and they look at the burden of taxation, this government is increasing. Tax is increasing, tax is up- HUMPHRYS: You made that point. MAUDE: -interest rate up. Inflation up. Regulation up and they know that all of these things act together, conspire together to make the outlook for the economy look much worse that it has. HUMPHRYS: It's an interesting attack but the problem with that is, that as Eddie George said this morning, it takes two years for inflation to seep through into the system. Well who was in charge two years' ago - you were. MAUDE: Yes, but what he is doing now, is he is acting to counteract what's going on now, which will come through into inflation later. Obviously he's not putting interest rates up today in order (both talking at the same time). HUMPHRYS: -what you were doing two years ago. MAUDE: You asked this specific question. He's putting up interest rates today, to effect what's going to be happening in eighteen months, two years' time and what he sees is a minimum rate, a minimum wage which is going to stoke up inflation. He sees higher taxes, not all of which has come through yet, which is going to stoke up inflation, a higher burden of regulation, some coming from Brussels but some home-grown, which is going to make it more difficult for the economy to work efficiently. He sees all of that going into, and at the same time the abandonment of fiscal disciple, Labour showing once again that they can't be trusted with public finances, that they are returning to tax and spend and he's taking steps now to counteract the measures. HUMPHRYS: -alright- MAUDE: It was an extraodinary admission that was made earlier this week, that his monetary policy committee, when they met last to raise interest rates, didn't know that a few days later, Gordon Brown was going to completely alter his fiscal strategy. HUMPHRYS: Alright, let's talk about- MAUDE: -that made the outlook for inflation worse. HUMPHRYS: Let's talk about something outside the economy then, where again it would appear to some you've been letting-many that you've been letting the government make all the running. And that's reform of the House of Lords. Now, I gather reading the papers this morning that you have got a policy on that, now, or you are about to announce it and that is that you are quite prepared to get rid of the hereditary peers and you will have a chamber that is part nominated by some sort of commission and part elected. Is that right? MAUDE: We are not in the business of putting forward an alternative proposition. The government has got- HUMPHRYS: So it's not right, that story is wrong is it? MAUDE: Let me finish. The government has got itself into an extraordinary muddle. They thought it was a quick, easy, populist thing to do, to say we will get rid of hereditary peers from the House of Lords, without giving any thought to waht you replace it with. And so there's some basic questions which remain unanswered: do they want the House of Lords to be stronger. HUMPHRYS: I'm asking what you want? MAUDE: Well let me finish. Do they want the House of Lords to be stronger than the House of Commons. Do they want it to be weaker and none of these questions are answered and so you've got this extraordinary position where if hereditary peers are abolished you will have it, their places presumably filled with placemen appointed by Tony Blair and so-at a stroke Parliament will lose two-thirds of its independent non-party members. And this is an extraordinary position to have got themselves into and it adds up to what we've said all along, it is utterly wrong to embark on reform of one chamber of Parliament without knowing what you want to create in its place. HUMPHRYS: You've made that point very clearly. In a sentence, could you tell me whether you have the sort of proposals that I've just put to you. Is that right or is that wrong? MAUDE: Well, we're not in the position of putting forward definite proposals. We- HUMPHRYS: Right. Let me move on. MAUDE: We-and it's for the Government to come forward. They haven't even come forward with options, let alone firm proposals. HUMPHRYS: Let me move on to-to Europe, then. We heard Ken Clarke on that subject again this morning and what he seemed to be saying was that William Hague has - what was the expression he used? - impaled himself on a hook because he's ruled out membership of the MU during the next two Parliaments. He calls it ten years. I know you don't like that expression but there we are. MAUDE: Because it's not what we've said. HUMPHRYS: Alright. He thinks-He thinks that what Mr Hague ought to do is to be a little more pragmatic and adjust his policy if circumstances change. If, for instance, it's seen that the Single Currency is working rather well. Now, is he prepared to be pragmatic, as opposed to dogmatic? MAUDE: Well, I agree that. I utterly agree that we should have a pragmatic policy and that is exactly what it is because the dogmatic cause is to say as Mr Blair and Mr Brown have done: we're committed to it in principle because that means that even if the economics of it look crazy - and, you know, the Treasury Select Committee itself said Labour dominated, said in a recent report that even in five years' time it's going to be impossible to know whether this is going to work economically for us. So, you know, the dogmatic thing is to say: we're committed in principle. That's the position we got ourselves into wrongly with the ERM ten years ago, where we committed in principle and, then, you're in a box from which there's only one exit which is to join it, whether it's right for us, or wrong for us. So, that's the dogmatic position. The pragmatic position is to say: we are opposed to early entry and we've defined that because we're politicians we work in terms of a Parliament, for this Parliament and the next. HUMPHRYS: OK. But, if circumstances change - that's the point I'm trying to get at. MAUDE: Well, let me just finish the point. You asked me the question. I'd like to finish the answer. The point about that is that at the end of the next Parliament, Britain would still have its options open. Now, a lot of us have serious doubts about whether this will ever be economically advantageous to us, that the costs are likely always to exceed the benefits. But, you know, we've got open minds and that remains to be proved. HUMPHRYS: Right. OK. Fine. You've got open minds. In other words- MAUDE: Well, let me just finish the-We've got doubts whether- HUMPHRYS: I'd like to get in the odd question! MAUDE: Well, no danger about that! There's no-We have doubts about whether you can create a monetary union, a currency union without a political union flowing from it. But, again, you know, it's possible that it may turn out that this can be done. In which case, experience will make the case. So, that if it's not going to make that case before the end of the next Parliament. HUMPHRYS: So, that if before the end of this Parliament - or, perhaps, early on in the next Parliament - wherever it happens to be, if it seems that the Euro is working and is proving popular with people here - people here are saying: actually, we think it would be rather a good idea to go in now - rather earlier than you're talking about as the minimum period - are you in the position where you might say: ok, we will change our mind we'll go for it or is that two terms absolutely set in concrete, impaled upon a hook, as Ken Clark puts it. MAUDE: Well, it isn't being impaled upon a hook. It's simply setting out a policy which we believe in. HUMPHRYS: Unchangeable - cannot be changed? MAUDE: Well, let me make it quite clear. It is perfectly possible that in the next Parliament - after three or four years of the Euro working - it will look like a success for the founder members on the Continent. But, it would still be wrong in that time period for us to join, for the very simple reason which has nothing to do with what you - whether you think it's in principle right or wrong. It's simply to do with the sheer economics of it that our economic cycle is different. At the moment, our interest rates are about double what Europe's - the continental, the Continent of Europe's are - because our cycles go differently. We're at the top of our cycle. Europe is only just beginning its recovery. The Continent's only just beginning its recovery. So, they have low interest rates which their economic cycle demands. Our economy for reasons none of us fully understand tends to be more closely aligned with that of North America. Now, that's not a new phenomenon. That's been the case for a long time. It may change althought it hasn't done - if anything, it's gone the other way. It may change and our economy may converge cyclically with that of the Continent. HUMPHRYS: And, then, you'd say ok? Then, you'd say: fine, we can go in? MAUDE: Well, at that stage, it becomes an economic option. You can have a serious debate about it. At this stage- HUMPHRYS: Right. MAUDE: -it is not an option and in the next Parliament, it's-it's fantasy to believe that the cycles will have converged after decades of being separate- HUMPHRYS: Right. MAUDE: -to the extent that that becomes reality. And, what we have said is: that before this becomes a serious option, it has got to be tested in bad times as well as good so we can see how- HUMPHRYS: OK. MAUDE: -robust it is. And, that's all-That's why what we have adopted is essentially a pragmatic policy which keeps Britsin's options open for the future and if it is a success and if we are paying an economic penalty for it being excluded - which I have to say doesn't look likely at the moment - and if it is possible to have a currency union which doesn't inevitably bring a political union and a European superstate in its wake - then, we can have a serious discussion about it. HUMPHRYS: Right. Francis Maude- MAUDE: And, that's not going to happen in this Parliament or the next. HUMPHRYS: There we must end it. Many thanks for joining us. MAUDE: Thank you. .....oooOooo....