............................................................................... ON THE RECORD RECORDED FROM TRANSMISSION: BBC-1 DATE: 02.10.94 ............................................................................... JOHN HUMPHRYS: Good afternoon, we're in Blackpool for the Labour Party conference. The new leadership has done a remarkably good job of appealing to the uncommitted voter. This week they have to persuade the party faithful here that they haven't sold them down the river in the process. I'll be talking to Gordon Brown. That's after the news read by Moira Stuart. NEWS HUMPHRYS: Hello again and welcome back to a new series of On The Record. How things have changed since the old one! The Labour Party has a new leader and deputy leader. Some say it's a new party. And very attractive it is, too, to many people who'd never have dreamed of voting for the old one. We'll be considering that, and talking to Gordon Brown about their economic policies: are they really new? HUMPHRYS: Gordon Brown, that is your problem, it's a bit of a conundrum isn't it, you've got to satisfy the old Labour and the new, you are doing pretty well with the new, at least on the evidence of that poll in particular, but, you are worrying the old. GORDON BROWN MP: Well I can understand people are worried about change and I can understand people's fears, but I think what the film did not bring out is that this a new economics in the sense we have a completely new analysis of what is wrong with the economy and what I've been saying, and I've been saying it for two years now, is that the real problem of the British economy - and this explains what we can do about inflation and enployment and about industry. The real problem of the British economy is the diminished capacity, it is simply too small, it is too technologically unsophisticated, we have not invested sufficiently in industry and in people and in our social and economic fabric and the failure has actually been a failure of ideology, a Conservative ideology that equates the presence of opportunity with the absence of Government. Instead, we believe that Government must work with industry, public and private sector must work together to address these problems, so we have an analysis of what's wrong - under capacity - what the Conservatives have failed to, which is a level of investment in the economy, we explain it philosophically - a failure of ideology - and then we can move to Labour's prescriptions, new prescriptions for investment in industry, like our investment agreements, investment in people and investment in our infrastructure and it's to achieve a high level of sustainable growth, what has evaded the British economy for fifty years now - a level of sustainable growth that we want to achieve under a Labour Government that we say no quick fix, but we will deal with these fundamental problems that the Conservatives have failed to address. HUMPHRYS: And although old Labour will accept that yes, there are those fundamental problems, and they'll agree with you on the ultimate destination, they don't agree, it seems, many of them at any rate, on how you are going to get there, so how do you persuade them in particular that they are wrong and you are right? BROWN: Well I think we can persuade them and I think there are signs, not just from your opinion poll, but from the motions down at the Labour Party Conference, from the acceptance of documents that we have put round to educate the Party about what's happening, that people are moving towards the analysis that we have been putting forward. HUMPHRYS: Twenty per cent of the motions down for this conference are saying let's have more borrowing, fifty per cent on the economic debate say let's have a bit of re-nationalisation? BROWN: I don't think you'll find that is the
case at all, when the Conference votes on the motions tomorrow I think you'll find that people understand that the lack of productive capacity in the economy that the fact that the economy is too small, is the source of problems of highunemployment, and you can only deal with our goal of full employment by addressing that problem, it is also the source of problems of trade deificit, but equally, it is the source of problems of inflation and it is true to say that as long as you've an economy that is too small, where there is under investment, you'll have problems of both low growth, high unemployment, high public borrowing and inflation and unless you understand the basis of our analysis, that it is genuinely new economics for a global economy, then I think people will reach wrong conclusions and it's my job of course to get that message across. HUMPHRYS: This isn't just new economics for a new kind of global economy, this is the Holy Grail that you've discovered...they've been searching..the Labour Party, the Tory Party have been searching for it for fifty years, and you've discovered it just like that? BROWN: But we have looked very carefully at what's wrong, we've looked at the experience of other countries, I'm not saying it's going to be easy but I think anybody looking at this country will understand that every time the British economy expands, it happened under Nigel Lawson, it's happened previously, that we run into problems, we don't haveenough skills, there's not enough investment in industry, there are too many bottlenecks and then the inflationary pressures start to come as we import more and more. Now, how do you address that problem and the new economics is about addressing that problem by recognising that the problems of capacity lead to problems with inflation as well as unemployment and unless you address the problem of capacity, you will have the boom-bust economics of the 1980's. HUMPHRYS: Even if you do all that, even if you address all those problems, it's going to be a very very slow business isn't it, it's going to take time. BROWN: I think you've got to make a start, I have said and I said on Tuesday there is no quick fix, but you've got to make a start. The problem with this Government is it will not admit the problem therefore it cannot actually begin to start solving the problem. HUMPHRYS: So you're going to make a start... BROWN: Of course we are going to make a start but first of all we are going to show that the measures for longterm investment in people and in industry are capable of raising the sustainable growth rate of the economy, now, we have got entirely new measures to deal with these problems and I think it's got to be understood as well our proposals for example, for investment agreements, for longterm investment, for the university for industry to deal with the problems of skills, are very important... HUMPHRYS: But you...I'm sorry...you can't say to two and a half million people who are out of work if you realistically expect to get re-elected, hang on for, I don't know, three years, five years, ten years, until all these things have worked through, those new graduates going to these new universities when industry are going to come out and transform the economy, you can't say that, that's no way to enter an election is it? BROWN: That's why as we move into the election we'll announce the immediate programme of measures we will take, suitable to the conditions of the time, but the important thing is that you make a start, you make a start by dealing with the problems of under investment, you make a start by re-allocating, as Harriet Harman has been suggesting, expenditure, rescue expenditure to renewal expenditure, you make a start by dealing with the problems of under investment generally and you make a start.... HUMPHRYS: But you haven't got that money to reinvest, the rescue money because you are still paying the unemployed. BROWN: And you make a start and I was coming to this with the problem of unemployment, I don't think anybody is in any doubt that what I would do as we come to the election is announce the emergency measures we will take to reduce the levels of unemployment... HUMPHRYS: By how much? BROWN: ...I will also show how that is going to be funded and I will also show how that is part of our longterm proposals for dealing with the under capacity of the economy....Well I think it's important to understand there is no conflict between pursuing our objectives of high growth and low inflation and having an emergency programme to deal with unemployment, which is not inflationary in itself and I think as we move nearer the election, it will be appropriate to put down these measures. HUMPHRYS: So what sort of number of new jobs is this emergency programme going to create? BROWN: You will have to wait and see John because... HUMPHRYS: Do you have no idea? BROWN: We've got to look at the circumstances that will arise as we move nearer the election, we don't know what's going to happen in the stage of the economic cycle, we don't know what the condition of the economy two years from now exactly is going to be, we don't have theinformation that Government Ministers have at the moment as they prepare for the Budget.... HUMPHRYS: But you've been terribly positive about analysing the problems? BROWN: Of course, because it's a longterm problem that I think people immediately you look at the problems facing the British economy and you explain under-capacity, the lack of capacity in terms of underinvestment over the longterm, people understand what's got to be done, now the difference between us and the Conservatives is that we recognise thatproblem has got to be addressed and we will address it. The Conservatives can't even begin to accept that that is a problem. HUMPHRYS: But even though you have a whole mass of figures to look at at the moment, even though you know what you'll get from the council house sales and all that kind of thing, you've no idea at all how many jobs you might create in the first year or five years? BROWN: John, you are obviously going to be persistent and you are finding ingenious ways of asking the same question....but you're asking me... HUMPHRYS: Well it isn't just me that is asking them though is it? BROWN: No but you're asking me to set down targets in terms of numbers for a situation two and a half years from now, what I am saying to you is that we recognise what the problem is, we recognise that to reduce unemployment there will have to be immediate measures, we recognise also we'll have to say how these are going to be funded but I am not going to let that detract from the central analysis of what's wrong, and I think British people are beginning to understand that analysis, that you need a new economics to deal with the undercapacity of the economy and it can only be done by the measures that we have been outlining, which rest on a new relationship between Government and industry. HUMPHRYS: All right I'll give up on figures because obviously I'm not going to get anywhere there..... BROWN: Well John, you can press if you like.. HUMPHRYS: No no no no point in wasting time if you're not going to tell me, but on targets now you do accept then, your answer seemed to suggest that you accept that there will be targets at some stage just not yet, you will have a target for the number of new jobs you intend to create by this time next year? Is that the case? BROWN: What I've said is a Labour Government, we will set down inflation and growth targets, now our employment objective is very clear... HUMPHRYS: Does growth targets include new jobs? BROWN: Well, of course, growth targets means that you are out to get new jobs and I have said that we will have... HUMPHRYS: No, no that wasn't the question. BROWN: Well John, I don't know what the question is then because I've said...I've said we will have an emergency employment programme, clearly you can see from that how many jobs are likely to be created as a result and that will be announced at the time of the election. But we are not going to get into the business of announcing figures two years before an election - we will do that at the appropriate time - and I think you again are asking the same question, if I may say so, in a different way. HUMPHRYS: No, No I think this is a very different question because your own deputy leader is quite adamant that you should have a target, a very clear target by which you can be judged. BROWN: Well, a long term target is of course the aims of the 1944 White Paper... HUMPHRYS: So that hasn't changed? BROWN: High and stable levels of employment.. . HUMPHRYS: Two point five per cent unemployment? BROWN: People can be absolutely...well there's come argument about what fictional unemployment is, but the long term aim is exactly as has been put down by John Prescott. HUMPHRYS: Full time employment? BROWN: Of course it's giving people employment opportunities, whether they want full time or part time work. Some people want to work part time, other people want to work full time, and people have got to have these opportunities. HUMPHRYS: Yes, but, when you talk about the 1944 White Paper figure, that rested on the basis of full employment, that is to say a full time job, it's not part time jobs. BROWN: I think, John, you're trying to say that Sir William Beveridge would never have favoured the development of part time work. Part time work is in some cases what many women work...want as far as their work is concerned, full time jobs are in many cases what both women and men work, and we have got to meet the objective of employment opportunities for all. HUMPHRYS: So has your definition changed from the Beveridge definition? BROWN: A definition of the government objective being high and stable levels of employment has not changed, and I think John Prescott and Tony Blair put that very well in their leadership campaigns when they set out the goal of Labour Party economic policy. HUMPHRYS: But why this is important is because in the past, when the Tories say after new unemployment figures and new employment figures are produced, the unemployment rate is coming down, they're going to be doing that for a very long time now, you, your party says, "no they're not, they're only part time jobs, they don't count". BROWN: No, the difference between ourselves and the Tories is very clear. They have abandoned the 1944 objective, we have not. I believe... HUMPHRYS: But you've watered it down, if it includes part time jobs. BROWN: We haven't watered it down, we are applying it to the new circumstances of the time. I don't think you would want to force a woman into a full time job if she wanted a part time job. HUMPHRYS: It's not the point. BROWN: And I think employment opportunities for all, what was sought in 1944, high and stable levels of employment, remain an absolutely central objective for Labour Government, and I don't think anybody is in any doubt about that. HUMPHRYS: Well, let's be clear then so that there isn't any doubt, you would include part time jobs? BROWN: Well, of course, we'd include all jobs. HUMPHRYS: Right, so that has changed, because what Beveridge was talking about quite clearly was full time jobs for the wage earner, in principle, because you know as well as I do that many of these part time jobs (if I can finish this point) many of these part time jobs are wives of men who are in work. BROWN: But this may be the difference between what you are saying is old and new. If you are assuming that the right employment pattern is men working and women staying at home, then that is.. HUMPHRYS: No, I'm not making any assumptions.. BROWN: ..and if you're saying that was the Beveridge assumptions then I don't accept that. It is employment opportunities for all, and that is the work that people want to do, and I believe that that is more in keeping with the modern labour market, but it represents a commitment to high and stable levels of employment. HUMPHRYS: If you have a million people in part time work, whether they are the wives or the spouses of other people in full time work, if you have that figure, you will include that in your overall time, you will say, if we've got two million in full time, and a million in part time, you will say we have three million people in work. BROWN: Our objective is high and stable levels of employment, the jobs that people want to do, if people want to do part time jobs, depending on what hours they want to work, then that is important to them and it is important to us. HUMPHRYS: Let's move on to what you're going to do with all this extra money that you're going to have as a result of running the economy so much better. Let's make this up...and you agree that there is going to be more money available to you, because you will manage the economy better than the Conservatives have done. BROWN: Well, let's just look at the growth rates and that explains why. Under the Conservatives growth has been something in order of one point six per cent a year, and that is half the historic rate... HUMPHRYS: You're going to get it up. BROWN: ...that was achieved in terms of growth. Even in the nineteen nineties, with all the predictions from Kenneth Clarke, is to be one and a half per cent. Now, it is the business of government to raise the sustainable level of growth, otherwise we will not have the public services we want, we will not be able to tackle unemployment in the way we should, and of course we will be running trade deficits with our industry weakened. So that is a central objective of government, and I think people understand that that is very important to achieve. HUMPHRYS: So you have all this extra money sloshing around. What are you going to do with it, and I know you'll say you are going to do all these things, but what is your priority? You have a certain amount of money to play with. Are you going to cut taxes with it? Are you going to cut spending, so that you've got.... or what are you going to do, are you going to reduce borrowing? Where is all that money going to go, what's your priority, what is your instinct? BROWN: Well, I think John, you would understand the first priority is to increase the sustainable level of growth and that's very important. HUMPHRYS: But I'm making the assumption that you've done that. BROWN: And the measures we take, that I've been outlining are important to achieve that. If we can of course achieve very high levels of growth, then we would want to improve - as many people who run the country see the state of - our public services, and that is very important to us. Now of course, if we can make the improvements in the public services that people want to see, and are satisfied with, then I've said, as any I think sensible Treasury spokesman from the Labour Party would say, that if there was scope, we would want to reduce the burden of taxation particularly on low income Britain. HUMPHRYS: But what's your instinct? If you ask this of a Tory politician, of Kenneth Clarke for instance, he will say, and let's not talk about the record, because there will be different views on that, but he will say, "I am by instinct a tax cutter". Are you, Gordon Brown, Shadow Chancellor, possibly future chancellor, by instinct a tax cutter? BROWN: Well by instinct I want to make people better off. It may be cutting the taxes, but it may also... HUMPHRYS: Every Chancellor would say that. BROWN: But it may be improving the public services, and I think it's important to recognise that if the Conservatives are saying they're going to have tax cuts, at the expense of our National Health Service or education, then I think the public won't accept that, but just
remember this, the divide between us and the Conservatives is that they have said they would put taxes down, but have continued to put taxes up, and I think that when people realise as they move to the next election, that it's been the equivalent of a seven p in the pound rise in the basic rate of income tax, they're not going to think about the Conservative instincts, they're going to think about the Conservative failure. HUMPHRYS: But the reason I put the question to you: "are you a tax cutter, or not?" is because many people still believe you are actually going to put taxes up when it comes to it. I spoke to John Prescott, deputy leader of the party yesterday, high income earners are going to pay considerably more. Pretty straightforward that, isn't it? BROWN: Well, I think John Prescott was talking about what I've been talking about. I had a speech on Thursday talking about the undeserving rich... HUMPHRYS: He wasn't....high income? High income earners aren't the undeserving rich. BROWN: He was, and I think he's explained it in another interview today. What John Prescott and I have been drawing attention to are abuses that have been allowed to develop in the tax system under the Conservatives, that have got to be dealt with as a matter of urgency. I will outline many of them tomorrow. They include the tax privileges governing share options, they include controlled foreign companies and using tax havens overseas, they include excess profits on the part of the utilities, and these are abuses that have got to be dealt with, and they're not just loopholes, they're abuses that have been allowed by government decisions, so that's what John was referring to, and that's what I'm referring to. HUMPHRYS: Well, let's be very clear about this then, because it's going to become terribly important, it already is terribly important, isn't it? In some ways it cost you that last election. Is a high income earner part of the undeserving rich? BROWN: No, of course not, there are undeserving rich people who have benefitted from tax avoidance, tax loophole, tax excesses. I want to see... HUMPHRY: And there's the other lot and the other lot are not going to pay higher taxes under a Labour Government, is that the case? BROWN: Well, John, I've said, and I think we've had a number of interviews about this, that I'll announce the tax rates... HUMPHRYS: That's a cop out. BROWN: You keep finding different ways of asking the same question. HUMPHRYS: No, no, I'm not asking...look I don't want, I'd love you to tell me the rate of tax you're going to have in your first Budget, but clearly you're not going to that, it would be silly to press you on that. What I'm pressing you on is whether the high income earners, of whom John Prescott spoke yesterday, can expect to pay more under a Labour Government, for reasons of fairness and ideology as much as anything else. BROWN: Well, that John, will depend on the tax rates, and I'll announce these at the appropriate time. But what I have emphasised...what I have emphasised, is that we don't want to tax people as a matter of envy, or a matter of reflex action. We will only tax people in relation to the services that we can provide for them, and when we make these decisions, we'll be fair in doing so. Now, I think it's right that I should set down the principles. I think people approve of these principles and understand they're not applied by the Tories. HUMPRHYS: I don't know what the principles are, though, you see, because you're not telling me. BROWN: You're actually trying to force me into announcing tax rates, and I'm not going to do that. HUMPHRYS: No, well actually, since you mention that, and I do happen to have a note of it here, we spoke exactly a year ago, and I asked you this very question then, you'll remember it, and you said perhaps if you invite me back a year from now, I'll give you the figures. BROWN: Yes, and what we're going to do, in our economic policy commission, is look at these matters, and I'll announce them at the appropriate time. And the appropriate time... HUMPHRYS: This is a year on. BROWN: Well, I think the appropriate time is when we've finished the work of our economic policy commission and moved nearer the elections. HUMPHRYS: But look let's forget about specific figures. What I'm trying to get at is the principle of whether, under a Labour Government, high earners, and that was the expression that Mr Prescott used yesterday, high earners should expect to pay more as a matter of principle, under a Labour Government. That's a very straightforward question. BROWN: When I say, as a matter of principle, that we will not tax for taxation's sake, I've answered your point. HUMPHRYS: I don't think you have. I don't understand this. BROWN: When we announce tax rates to deal with the needs of the community, we will tell people what their payments will be, but I think it's right to wait until you see the state of the economy, until we know what point we're in in the economic cycle, and till we know what needs have got to be met, and we will announce these decisions at the appropriate time. I think the important thing is to understand there are certain things can be done by the Conservatives at the moment to deal with the abuses, and that's what I mean by the underserving rich, and the something for nothing elite. Millionaires pay no tax whatsoever. HUMPHRYS: But you've acknowledged that there is a... BROWN: Even under a Conservative Government that says it's going to be fair. HUMPHRYS: But you've acknowledged that there is an enormous gap between the undeserving rich, and high income earners. You've acknowledged that. And what I'm asking.....you've been quite clear that the undeserving rich are going to pay more. I'm asking you to confirm what John Prescott said yesterday, that the high income earners will pay more as well. John Prescott clearly believes that to be the case. BROWN: And what John was referring to is exactly what I'd been saying on Tuesday and Thursday, that we will deal, and call on the Conservative Government, to deal with these abuses at the moment. Tax loopholes, changes and mistakes in the tax system, made by the Conservatives, but as far as rates are concerned, and he's made that clear again today, and we are in total agreement about this, we'll announce them at the appropriate moment. HUMPHRYS: Gordon Brown, thank you very much indeed. ...oooOooo...