................................................................................ ON THE RECORD RECORDED FROM TRANSMISSION BBC-1 DATE: 1.12.96
................................................................................ JOHN HUMPHRYS: Good afternoon. Can anyone save the Tories' bacon at the next election? Michael Heseltine perhaps? I'll be asking him what he'd do. Referendums: are they really a substitute for proper government? And Europe...are our partners trying to get rid of our veto by the back door? All that after the news read by Chris Lowe. NEWS HUMPHRYS: Let the people vote. Labour seems to be in love with the idea of referendums but might Mr Blair be using them to go over the heads of his awkward squad? We'll have a report. And Britain is seen as the awkward squad in Europe. Our partners don't like it and they've cooked up a scheme, apparently, to go over our heads. But first, domestic politics. Last week the Conservative come-back was supposed to begin. The budget was meant to launch them confidently into the election campaign and begin the process of hacking away at Labour's enormous lead in the polls. But the budget didn't exactly have the nation dancing in the streets. The Chancellor acknowledged that he was giving a bit with one hand and taking a bit with the other. And then, two days later, he was admitting something else. In his typically robust way Mr Clarke came close to acknowledging that the Tory Party is virtually ungovernable: "There are sometimes parties that are simply not capable of being led" he said. After all, he said, we should be "beating the Labour Party out of sight." Well the man whose job it is to help lead the Tories is the Deputy Prime Minister Michael Heseltine. When I spoke to him earlier this morning I asked him why he thought they weren't beating Labour out of sight. MICHAEL HESELTINE MP: Well we are going to and the reason for that is we have the most successful economy in Europe, every day the news gets better and the interesting thing of course, for all the comment of the politicians and the commentators we're going to have a record Christmas, and that shows beyond per-adventure that people know that they're better off. HUMPHRYS: You say we are going to - when - you've been saying that for a very, very long time. HESELTINE: You look at the indicators, you can see what's happening. HUMPHRYS: When - when are you going to start beating them. HESELTINE: You can see the polls, you can see the by-Elections, you can see public confidence, negative equity's almost a thing of the past. House prices have been rising you can see that, unemployment is falling, retail sales are rising. All the classic indicators that people know that things are now much better and that always leads to an improved political climate. It will because people are going to have to make a choice. Of course they don't have to make it now but they are going to have to at the next Election, are they going to risk it all, are they going to put Labour in charge with all their intervention, their tax policies, their friendliness to the unions, their Social Chapter, all the risks that they would then bring with them that would put at risk the enormous gains which this economy is now achieving. HUMPHRYS: All that might be fine, we'll come back to the tax thing in a minute. All that might be fine if you had a year or two years or whatever to go. You've got a few months - maybe five months left. What is this cataclysmic event going to be that is suddenly going to change people. HESELTINE: There is no cataclysmic event. HUMPHRYS: But I mean at this rate it's going to be 2002 before you're ahead. HESELTINE: This is a drift of opinion and you can see it happening. HUMPHRYS: Drift is right. HESELTINE: No well it's happening. We were down what twenty-five points in the polls a few months ago, we're now up into the thirties and you can just see the way in which people are suddenly realising all those sacrifices, all those tough decisions, all that leadership which the Prime Minister displayed is developing into a very successful economic climate. HUMPHRYS: I mean it's pretty glacial isn't it. If you could wait until the year... HESELTINE: You keep saying that...it is not glacial. HUMPHRYS: If you look at the polls. HESELTINE: I've said they've moved very significantly and anyway most pollsters believe that they give a false impression. HUMPHRYS: Not that false. HESELTINE: They do believe that they are still giving a false impression. I'm not saying today that we are yet in the lead, I'm not saying that, I don't believe that as a matter of fact because I think that it is taking time for people to realise that the benefits they're enjoying in higher confidence in the shops, higher house prices, more housing starts. All of that are the consequence of the decisions the Government took and that message has to come across. As it comes across people will start saying: now what is the risk of Labour and they will see those risks evermore starkly. HUMPHRYS: Or, they might say: this was the Government that promised us tax cuts and moreover that are telling us in the poster campaigns that they are running that we have had those tax cuts. The reality is the precise opposite. Even in terms of direct taxation they haven't had it. They're paying more - fifty pounds more per family according to the Treasury's own figures. HESELTINE: The fact is that there have been twenty-five Tory tax cuts and that is a very fair.... HUMPHRYS: And loads of Tory tax increases and they end up paying more tax than they were paying. HESELTINE: Rather fewer. HUMPHRYS: The Treasury's got it wrong? HESELTINE: No, no it is the way that you extrapolate the figures. What has actually happened is that people's incomes have gone up very significantly and therefore on the higher income they paid rather more tax than they would have done on the lower income. But the fact is that they are much better off. HUMPHRYS: The average family is fifty pounds worse off according to the Treasury. HESELTINE: I'm so sorry John that is not the case. HUMPHRYS: Well the Treasury says it is. HESELTINE: The Treasury figures quite clearly are that this year coming alone people will be three hundred and seventy pounds better off after tax, after inflation, that's this year alone. If you take the time from the Budget, I mean..sorry from the Election, you'll find the figure is nearly one thousand one hundred pounds. HUMPHRYS: Okay let's take the time from the Election. According to the Treasury and these are House of Commons library figures we got from the Treasury, in the past forty-eight hours, since the last Election the average family in terms of direct taxation is fifty pounds worse off. You told them you were going to cut taxes. HESELTINE: You keep repeating the same mistake. I've just told you the... HUMPHRYS: Well the Treasury's not often mistaken on these matters. HESELTINE: The Treasury have confirmed the figures because the Chancellor wouldn't have used them otherwise. HUMPHRYS: You're using different figures from me, I'm talking about... HESELTINE: You are selecting one particular statistic and using it to give a false impression. HUMPHRYS: Because it's the one you've chosen yourself. HESELTINE: The one that I've chosen is the one the Chancellor used which is the right one. HUMPHRYS: Well... HESELTINE: I'm sorry, that is the right figure. Three hundred and seventy pounds next year for the average family and that is...you've only got to take, everybody knows interest rates have come down very significantly. That is a huge release of cash into people's spending capabilities. HUMPHRYS: Well how about denying the figure I've given you, how about denying the fifty pounds figure. HESELTINE: How can you reduce the level of tax, income tax from twenty-five to twenty-three p in the pound and say that people are worse off. How can you do that, how can you do that. HUMPHRYS: Because you...you can ask me a question and I will answer it. You cut their allowances, you push up National Insurance, that's how you do it, that's what the Treasury says you've done. HESELTINE: But you were talking about direct taxes. I'm now talking about the overall impact of all taxes. When you take the overall impact of all taxes the issue is very clear, people next year on average will be three hundred and seventy pounds better off and since the Election one thousand one hundred pounds better off and it's just worth comparing that one thousand one hundred with something like sixty pounds in the previous Labour Government. It's the most extraordinary transformation of living standards, look around you. I mean before we leave it, look around, look at the shops, look at what people are buying, look at the cars, look at the refrigerators, look at the television sets, look at the PCs, look at the videos and tell me people are worse off. It is preposterous. HUMPHRYS: If you're telling me that throughout our history we get better off I would agree with you. But if you are telling me that you have cut direct taxes as you promised to do in 1992, I am telling you - and you've not denied it because you can't because the Treasury says so - that is not true. HESELTINE: John you keep saying this... HUMPHRYS: But it's the Treasury who says... HESELTINE: ...but I'm telling you you cannot be anything other than better off in direct terms if income tax is twenty-three in the pound..pence in the pound as opposed to twenty-five. There are seven million people in this country today paying a standard rate of twenty p in the pound as opposed to twenty-five, you cannot sustain the argument. HUMPHRYS: Let's leave it at that then and move on to another reason why I suggest, perhaps, you're not doing as well at the moment as you would like to be doing. Ken Clarke, I quoted him to you earlier when I said you ought now to be beating the Labour Party out of sight. The reason he gave why you're not doing that at the moment is because this Party, this Conservative Party is one that is not capable of being led, there's your problem isn't it. HESELTINE: Now don't go on. Look I read the.. HUMPHRYS: And I heard it.. HESELTINE: I read the PA text. HUMPHRYS: Should have heard the whole interview perhaps. HESELTINE: Do you want to interview me, and let me speak, or do you want to keep yammering on interrupting me? HUMPHRYS: Go on I won't yammer. HESELTINE: The fact is I read the PA text, and there was no grounds whatsoever for the headline that is associated with that text. What Ken Clarke was doing was discussing with Jimmy Young, who is a very impressive interviewer, and allows people to say their thing, uncharacteristically if I may say so, what he was doing was discussing an anonymous Tory backbencher, so somebody said, under a Cassandra column, in an extreme left wing paper called Tribune, who had said that there were problems with the leadership of the Conservative Party. We don't even know such an MP exists, we don't even know it isn't Mandelson up to his dirty tricks department again. We don't know it isn't the same guy who savaged Tony Blair the week before, we've no idea. But Ken Clarke was talking about that particular phenomenon, and did say, that in that context, about that person, it reveals an inability to create a leadership situation, and so it does, if such a person exists, and then there is only one of them. HUMPHRYS: Right, can I ask you a question now? HESELTINE: Yes please, it's the best way out, I'll get a chance to say a few words, now it's your turn, and I won't interrupt, like you. All the time. HUMPHRYS: What Ken Clarke said was 'I congratulate John Major on his leadership qualities', but he went on to say, 'there are some parties that are not capable of being led'. Now if you're telling me that he based that - some parties are not capable of being led - on the words of one anonymous writer in a Labour publication, I'm going to suggest to you that Ken Clarke must have lost his brain for a moment there, he doesn't do that, he knew exactly what he was saying. HESELTINE: Ken Clarke does not lose his brain. I've read the text of what he actually said, and there is only one interpretation from it, and that is he was talking about this particular article. And the fact of the matter is, Ken Clarke, along with the Prime Minister, is presiding over the economic miracle that is recognised internationally as having transformed this country. I mean it's quite extraordinary to me that we sit in a swelter of gloom in this country, moaning on about this, that and the other, when when this Government was elected the economy was seen as the sick man of Europe. Today it's the Enterprise Centre of Europe, praised by international commentators, economic observers, and the recipient of massive inward investment by hard nosed foreign companies who know where the best place to invest is. HUMPHRYS: Well, let me try and explain why there was this gloom on the part of your own Chancellor then, this party that's not capable of being led. It's because every time there's a bit of a problem, or perceived to be a bit of a problem on the backbenchers, your own party, they rise in revolt. Now they did it over the Single European Currency regulations. You had a story going, you tried to get a story going about Labour's tax bombshell, and you told me about Labour's taxes earlier, so perhaps we can not touch on that for the moment, but that got wiped off the front pages because of another so called back bench rebellion, demanding a debate on this and that, forcing the Prime Minister to do something he didn't want to do, forcing Ken Clarke to stand up the day before the budget in the House of Commons and make a statement to pacifiy, or try to pacify, the backbenchers, the party that is incapable of being led. HESELTINE: Well, the fact is the party was led, the Chancellor of the Exchequer made a statement, it turned out that everything the Prime Minister and the Chancellor of the Exchequer had been saying was true, and the preoccupation and concern about the matter therefore was set on one side. Now, it is very important to recognise that in the context of Europe there are divisions right across British society. Let's have no illusions, you take industry, there are people who believe one thing, people who believe in another. You can take party politics in all parties, you should have heard Peter Shaw, from the backbenches of the Labour Party, saying the sort of things he was saying when we were having that debate, he was savaging the position of the front bench of the Labour Party, savaging it, and I don't actually get in a great state about that, because he always has been a raving anti-European and he doubtless will die a raving anti-European, that's up to him. But the fact is there are divisions in all parties, in every side of society, and throughout the industrial and commercial world, it's a very important issue. HUMPHRYS: And what we've now got is Mr Major, reportedly, saying this morning, because he has been under so much pressure, and because Tony Blair has stolen his thunder yet again with another one of his promises this time to hold a referendum on the single European currency, as you've done under certain circumstances, Mr Blair giving assurances apparently about to give assurances, that you will not go into a Single European Currency in 1999 come what may. Is that right? HESELTINE: I love this stuff. Tony Blair, in your words, has stolen his thunder. What has Tony Blair done? He's made exactly the same statement that John Major made about the referendum. No you said 'stolen his thunder'. HUMPHRYS: Because he hadn't done it previously. HESELTINE: Yes, but John Major gave the lead. John Major was out in front. HUMPHRYS: Is he going to be out in front with this as well now? HESELTINE: Tony Blair, like a sort of gambling poodle, lollops along and says 'me too', and you say 'stolen his thunder'. It's Tony Blair all over. The nuclear disarmament issue, he's now come round to our view. He was anti-Europe, now he's for Europe. He was in favour of nationalisation, now he likes privatisation. This is the man who can never be relied upon to stand on anything if public opinion even trembles he's out there with a soundbite trying to get ahead of it. You know that definition of a politician? American politician, waits to see which way the crowd in running, rushes in front and shouts 'follow me'. That's Tony Blair, you cannot trust a man like that to run this country. HUMPHRYS: Is Mr Major now taking the initiative again, and is he prepared to say to his Party 'we will not go into a Single European Currency in 1999'. HESELTINE: No, he won't say that. He will not add, or detract from the statement that he's very properly made, and which is totally consistent with the one thing that will determine the Prime Minister's view, the one thing, and that's British self interest. He knows perfectly well, and he's spelt it out, extremely articulately and very informally in a sense, at the Tory party conference in Bournemouth when he answered a question, it wasn't a set speech, he just got out there and he talked to the people straight from the shoulder, about the issue, and the issue is very, very simple. Discussions are going on about what a single currency regime would look like in Europe, if it happens. If it happens, one way or the other, in or out, it is of interest to us, because we are part of the time zone, because we have the city of London and the massive financial interests that represents. So we have to be part of any discussion about what it would be like, whether we're in or out, and in that circumstance, we're taking part, Ken Clarke is taking part, in the detailed discussions. Now in those circumstances, if you go along to people and you say to them, 'oh we're only here for the ride, we're going to have nothing to do with this, nothing to do with it at all', your ability to influence the discussion is zilch. They'll simply say if you're not going to have any part in it, don't waste our time discussing what it could be like, push off, is what they would say. HUMPHRYS: So what are the circumstances then. We know the circumstances in which you will not go into a Single European Currency, we've heard them many times. What are the circumstances in which you would? HESELTINE: Well the circumstances in a sentence are these. If the Government determined that having all the facts and all the circumstances, and all the timings in front of it, it believed that Britain had more to gain from going in than staying out. HUMPHRYS: So why might it have more to gain? Give me your own interpretation, your own vision of why, what those things might be that might decide us to go in, as early as 1999 even? HESELTINE: Well, I think the truth is that the timing is likely in terms of the actual introduction of council, to be later than that, as people know, but of course decisions would be needed earlier than that, so there is a time scale, an evolving time scale, and I think it's nit-picking to try and talk about a particular date on that John. HUMPHRYS: Alright, just give me your vision then, of those circumstances in which we would go in. HESELTINE: Well, the circumstances on which we would go in would depend upon whether economic convergence had been achieved, whether those countries that wanted to and were prepared to become members, had achieved sufficient economic convergence, and had been able to do it over a period in which confidence was gained, that it wasn't a sort of one-off fixing of the books so-to-speak, that there was no watering of the disciplines that would give people confidence about the continuation of the proper regimes, and in those circumstances we would have to decide whether Britain had more to gain than staying out than going in. That would be the case, and if you went in there would be arguments, that people would say: Well, you're going to have one currency, so you cut out the exchange costs of changing from currency to currency. If you are inside it will be argued: You're inside a big currency bloc and therefore you have the strength of a currency bloc, and you might have a more stable ability to influence world market forces. It would be argued that the disciplines of the currency bloc, if they were the right disciplines, if might in fact give you lower levels of inflation and interest levels in this country than outside. It would be argued that if you were outside that you would in any case have to adjust your economic policy to take account of what was happening. You've got all these sorts of arguments... HUMPHRYS: I take your point that there are.... HESELTINE: ... and there were arguments on the other side, but those are some of the arguments that would be paraded. HUMPHRYS: Right, and those are the advantages, yes I take your point. HUMPHRYS: But what are the circumstances in which those might come about. Can you envisage those circumstances? HESELTINE: Well, I think my answers have already given you the indication, because I've explained that you have got to get the economic convergence, you've got to have the criteria, you've got to prove that you can do it, you've got to believe in the instruments and the institutions that are going to monitor it. You've got to believe that the influence of this country in that process would be sufficient to protect your vital interests. And these are dramatic political issues. HUMPHRYS: And when you talk about economic convergence you mean more than just the financial things. You mean employment, you mean growth prospects, you mean all that sort of thing do you, apart from the obvious financial inflation, interest rates and all that? HESELTINE: Well, the essential standards by which the formuli had been drawn up are much more to do with the financial and fiscal arrangements than they are about the.... HUMPHRYS: Absolutely. You seem to be saying more than that. HESELTINE: No, I'm not saying more than that. But the judgement that you make will not be just about the arid calculation of figures. The judgement you will make will be one about the likelihood of it continuing, about the effects of transfer payments, depending on the levels of varying unemployment in different parts of the bloc that happened to be considering going forward. I mean it's a very big issue, and just the fact that we're discussing it now really won't make anyone interested in the subject realise how complex a judgement it is. That's why John ... let me go back to why we're having this discussion, because the Prime Minister said we do not know the answers to these questions, and we cannot know until we get to a position where the facts are clear. In Britain's self-interest we must be part of a dialogue, but we must not take a decision until we can see what suits this country. HUMPHRYS: Alright. HESELTINE: And brilliantly, he's secured that position in the Maastricht Treaty. HUMPHRYS Okay, but let's look at the politics of this. I mean you've spent a little bit of time there explaining what the advantages would be. There will be people in your Party listening to you and saying: There he goes again, Michael Heseltine, Euro-enthusiast. He's crazy about Europe" They will hate every word you have just said. Pretty much.... HESELTINE: It's very interesting what you've just said. Now, when you started saying to me: Now we all know what the disadvantages are, you didn't want me to talk about that. HUMPHRYS: Because we talk about it a great deal, and it's helpful to talk about the.... HESELTINE: Exactly, exactly. At that stage I said to myself, now I know what Humphrys is up to. He's trying to get me to talk about the advantages. HUMPHRYS: Reasonable enough. HESELTINE: Oh, yes, yes. So that we'd have a whole focus about the potential advantages during the course of which all the time I said these are the advantages, there are disadvantages. So that you then, having got it all written down there, can take.... HUMPHRYS: We write off script as they say... HESELTINE: You may not have a job next week if you're off script you know. HUMPHRYS: I decide on the questions, I can tell you that. HESELTINE: So that once I've talked about potential advantages, academic advantages, you can then say, "Ah now, you will have divided the Tory Party... HUMPHRYS: I didn't say.... HESELTINE: ...and we're back on this tedious debate....you said tedious... HUMPHRYS: It's not tedious at all. HESELTINE: You said: lots of people out there in your Party are saying, "Ah there he goes again". HUMPHRYS: And is not that the truth? HESELTINE: That is your attempt to get me into a position where we have this stale, arid business about division. HUMPHRYS: It isn't stale and arid if a Government is hamstrung by its backbenchers. HESELTINE: What I was trying to do was to answer your questions, intelligent questions as they were, but it was quite apparent to me from the moment you started, that you were trying to take me to the position where you could drop me into a Tory Party row, and my judgement of you is sufficiently accurate to... HUMPHRYS: If only I were as Machiavellian as you suggest. HESELTINE: ...to realise that what you were doing, and the moment I completed the answer that's what you did. HUMPHRYS: But I am putting to you the...there is nothing wrong with talking politics, you are the master of it, everybody says and what we're talking about, if I can just finish the question, what we are talking about here is a Prime Minister - perhaps - and a Deputy Prime Minister - perhaps - looking at the possible advantages of Britain going into a single European currency, now, though there may well be advantages - the whole notion - the whole concept of a single European currency and Britain's membership of it is an anathema for many people in your Party, that makes it difficult to govern, that surely is a valid question, that isn't me trying to stir up trouble - it's pointing to an obvious problem facing the Prime Minister, we have seen it in the past and I am suggesting to you we will see it again in the future. HESELTINE: We faced exactly that decision in the 1970's over Europe itself, we faced exactly that decision over the Single Market in 1985. It has always been like that but in the end if you are a Prime Minister and you lead a great Party you'll have to make up your mind, you have to persuade people and the Prime Minister very rightly has said I couldn't begin to do that until I have persuaded myself - I can't persuade myself until I have the facts - when I have got the facts I will then make up my mind and I will persuade my Party, that is exactly what Mr. Heath and Mrs Thatcher had to do - interestingly enough in the teeth of opposition from the Labour Party who are always against these things. HUMPHRYS: Yes, but you expect the two Parties to be opposed to it, but I mean we have now got the situation, we had the Chancellor going off to a conference, the ECOFIN Conference, the Financial Ministers Conference in Brussels tomorrow, and he is being watched very closely by members of your Party who are afraid that even if we are not - even though we have our opt out from the Single European Currency - there are regulations there that will affect Britain - whether we go in or not - and they are terrified of that, aren't they right to be nervous of that? HESELTINE: They are right to be interested but they are wrong to be nervous because the Chancellor of Exchequer is in every way competent to fight for this British interest, that's what he's doing. And where they would have overwhelming cause for concern is if he wasn't there because if he wasn't there just think what the people who were there would do to Britain's self interest. Do you think if Ken Clarke said: well I don't think I'll turn up on ECOFIN on Monday. Do you think the French and the Germans and all these other people well say: well the Brits aren't here we better be fair to them, we better see that British self-interest is protected. Do you think they'll do that? HUMPHRYS: Yes but even though he's there, even though he's there, he can't give the copper bottomed guarantees that they want. He offered a qualification himself in the House of Commons last week, as near copper bottomed as we can get as I recall is what he said. HESELTINE: But you see, I mean Ken Clarke is a very experienced negotiator and I've had some small experience of negotiating in Europe with our European colleagues. They're all very tough you know, they don't give an inch, they go on arguing until the ink is dry on the paper for French and German self-interest. The issue is whether we want to fight for British self-interest. This Government does, that's why we go to these conferences and constantly fight our corner. Sometimes we're unpopular because we say no. The Prime Minister said no at Maastricht, that's the danger of Tony Blair. He has said he's never going to be isolated in Europe. I can tell you how to get a position where you're never isolated, roll-over. HUMPHRYS: But, if you're doing as Mr Clarke is doing, because he has to, you've made it prefectly clear he has to, saying I can't actually give you these copper bottomed guarantees that you want on these regulations. You can understand why your backbenchers are saying: well this is a bit frightening isn't it, we've got to keep an eye on what these guys are up to. This is why I raise the question of politics that you were so dismissive about. HESELTINE: You're now talking about what comes out of ECOFIN on Monday. I think you may find rather less comes out of ECOFIN on Monday than you think. But the fact is that these discussions will be going on through to the Dublin Summit and maybe beyond that. Who knows when these issues will be resolved. That's why Ken can't give you guarantees because until the documents are agreed you cannot guarantee what's going to be in them. HUMPHRYS: They want those guarantees don't they. HESELTINE: John, they're very sophisticated these politicians. They know there's a process of negotiation going on. You cannot know the outcome of a negotiation until the documents are signed. There's no question of anything being signed and delivered at ECOFIN on Monday. HUMPHRYS: Final ten seconds. You promised a majority of sixty at the next Election for the Conservatives it must be noted. HESELTINE: Of course. HUMPHRYS: Is that still it? HESELTINE: Absolutely. HUMPHRYS: Sixty? HESELTINE: Yes we're going that way. HUMPHRYS: Michael Heseltine thank you very much indeed. HESELTINE: Thank you.