............................................................................... ON THE RECORD STEPHEN DORRELL INTERVIEW RECORDED FROM TRANSMISSION: BBC-1 DATE: 09.10.94 ............................................................................... JOHN HUMPHRYS: Good afternoon. The Tories are packing their kit bags for Bournemouth ... and there's no shortage of troubles to pack in them. I'll be talking to the man John Major thinks might succeed him one day about the BIGGEST problem ... how to make the Tories look different from the new Labour Party. That's On The Record after the news read by Moira Stuart. NEWS HUMPHRYS: Welcome back. Right up until mid-day on Thursday the Tories were sunk into the deepest gloom. There they were, preparing for their own conference this week, and every newspaper in the land trumpeting the Blair triumph. And then the vote was taken in Blackpool on Clause Four, the clouds parted and they spied a ray of sunshine. At last, a real difference between Labour and Conservatives that they could exploit to the full. But was it that significant? Is there enough distance between the policies of the two parties to persuade defecting Conservative voters to return to the fold? Some Conservative MPs say "NO". UNNAMED MAN: We have got to establish clear blue water as we put it between our policy positions and those of the Labour Party. HUMPHRYS: I'll be asking Stephen Dorrell, the Cabinet minister and, allegedly, the apple of John Major's eye, how people like THAT are to be persuaded. And what about the Tory Party itself? We have the results of some new research which shows that it is not a happy band of brothers and sisters. Things have got to change, they say. UNNAMED WOMAN: We should be the ones that have a say in who runs our Party, they've got to remember it is our Party. HUMPHRYS: And John Sergeant will be with us anticipating the big announcement at the Party Conference, will Michael Heseltine hit the right note perhaps with an exciting new announcement. But first the challenge for John Major in winning back his lost supporters. He believes his trump card is the way the economy is performing but it may not be as easy as that, as Kim Catcheside reports. **** JOHN HUMPHRYS: Now, Stephen Dorrell, George Gardiner has a point hasn't he, you've got to put clear blue water between yourselves and the Labour Party on those critical issues. STEPHEN DORRELL MP: I'm absolutely certain that the first thing you have to do in politics is to discipline yourself, not to strike attitudes and decide policies by the labels people attach to them. What we have to do is to look at the real issues, the levels of spending and the taxes necessary to pay for them. The proposals, the position for example of the Labour Party on the Social Chapter, the obligations which would arise from that if Labour were in office which would make employment prospects more difficult in Britain. We don't have to strike attitudes, we have to look at substantive issues and decide them on their merits, one by one. HUMPHRYS: You do, though, have to meet the concerns of your supporters and they are concerned that there is not enough difference between you and them. Particulaly, let's deal with it, tax and spend. DORRELL: Well you certainly have to go through the issues as I say, one by one, listening to what your supporters and indeed the country more generally want to see the Government do. Now on tax and spend, the position it seems to me is very clear. We are committed as a Party,
from all individuals within the Party, committed to restraining government expenditure in order to hold down the tax bill. It's no good talking about tax without first looking at spending. The two are the same issue, they're the opposite side of the same coin. Everybody understands that and the way you deliver, as we are committed to do, a continued reduction of the tax burden, is by first restraining expenditure. Anybody who believes that Labour would be better at holding down government expenditure that the present government, I don't think is thinking straight. HUMPHRYS: But you haven't been very good at holding down spending. Spending is higher now than when you came into power. DORRELL: Spending as a share of national income is actually significantly lower than when we came to power and what we've done... HUMPHRYS: Forty-four, forty-five per cent DORRELL: It was forty nine per cent at the bottom of the recession of the 1970s, the average through Labour's years in office was over forty seven ... HUMPHRYS: We're not talking about that, we're talking about what it was when you came in and what it is now. DORRELL: We came in, I remind you, at the top of what passed for a boom in the Labour years. That does have an effect, everybody knows it has an effect on the share of income taken by the state. HUMPHRYS: But Labour isn't committed to spending. DORRELL: Well, hang on a second. What we're asked to believe, if we're to believe that Labour will hold down taxes more effectively than the present government is that they'd be more effective at restraining the huge pressures for growth in health service expenditure, education expenditure, social security expenditure. It's no good at talking about spending in the abstract. There are four major programmes which account for the lion's share of government expenditure. If you're not prepared to face difficult tough decisions, both on the use of resources, on the total level of resources and on the way they're managed within health, education, social security and defence, you will not deliver control of the tax burden. HUMPHRYS: And the reality is that the Labour leadership has been abosolutely clear we will make no spending commitments whatsoever until we look at the books and see what we can afford. Exactly the same position as yours in short? DORRELL: Yes, indeed that is if they deliver it, exactly the same as ours. But what you then have to do is to ask whether in reality, people believe that Labour would apply that discipline one by one to the spending programmes. HUMPHRYS: And the answer to that is 'yes' according to the opinion polls, they believe Labour's better at handling, is going to be better at handling the economy than you have been. You've lost public support on that, this is the whole point. DORRELL: But hang on a second. We've got two years to test this. HUMPHRYS: You've had fifteen years to test it. DORRELL: No, no, no. For the future let's take Labour at face value. Let's assume they really have changed their view on tax and spend. For the next two years we shall be watching them. If they, as they have done throughout the last fifteen years, argue for more resources, argue against spending reductions, then their change of stance is shown to be a sham. The only way you can deliver control of the tax burden is by addressing, tackling difficult spending decisions. We know they're difficult, Labour have always opposed that in the past. If there's now a change, if they now support us when we're restraining those spending programmes, then we'll believe it but if they don't, I won't. HUMPHRYS: But you know that they do already. I have in front of me a copy of the letter, you will recognise it, you wrote it to Gordon Brown not very long ago, April of this year and you pointed out to him that the various pledges that people in his Party have asked him for, amount to no more than aspirations, long term targets; phrases such as 'as resources allow' are used, your own words those, not mine. You do accept that that is what they're talking about. You pointed it out in your own letter. DORRELL: With respect you're talking about a different thing. What I'm talking about is the specific decisions the government will announce as a result of this year's public expenditure survey on Budget day this year, the same thing again next year. Let's see whether Labour supports every one of those disciplines because if Labour doesn't support them, Labour is showing why it won't deliver a control of the tax burden. HUMPHRYS: But the point I'm making is that between you - in terms of your aspirations - there is no difference and as far as your supporters and indeed the rest of the country believes, according to the opinion polls - we've only got that to go on because Labour hasn't been in power after all for so long - they believe that Labour is going to be better at this than you are. Now there's only one way you can persuade them otherwise and that's by your actions. DORRELL: Indeed and by contrasting our actions with Labour's actions. The electorate doesn't have to just to look at what people say they'd like to do, we're all in favour of apple pie and motherhood. HUMPHRYS: Of course DORRELL: They have to make a judgement about which Party is most likely to deliver it and there's two years at least left till the next election where the elecorate will be able to examine what we say and do about public expenditure and what Labour say and do about the proposals we table, and let's look at the contrast on actions, not on words. HUMPHRYS: And what you say and do, specifically and do on taxation. You've got to cut taxes and you've got to do it soon according to all the evidence put in front of us including that focus we've just been looking at. DORRELL: But you're just raising tax assuming that it's a different issue from ... HUMPHRYS: No, what I'm doing is I'm telling you what your own supporters say. You saw that focus group just as I did a moment ago and they are absolutely clear, and you heard George Gardiner, absolutely clear, you have to raise...cut taxes and you've got to do it now. DORRELL: Yes and the way we do it is by following the route we've just talked about. There's nothing - tax and spending aren't different issues, the discussion we've just had about addressing difficult issues on expenditure, that is how you deliver tax cuts and if Labour support all our spending disciplines over the rest of this parliament and go into the next election without even a hint of extra resources for education or health, then I'll believe them. I don't believe that will happen and I don't believe most of the electorate think that will happen. HUMPHRYS: So what you're saying to me quite clearly then is unless there are substantial cuts in government spending, you will not be able to deliver on those tax cuts. DORRELL: What I'm saying is that the means, that the way you deliver controlling the tax burden, bringing down the tax burden is by controlling government expenditure. That can be done, there are two means by which it can deliver tax reductions. Either you cut the absolute level of expenditure or you control, you stop the growth of public expenditure HUMPHRYS: Or you do both, yes. DORRELL: And allow the economy to grow so that the public sector takes a smaller share of national income. HUMPHRYS: Or you do both. DORRELL: Or you do both. HUMPHRYS: And at the moment you have, well it is possible to do both in the perfectly managed economy. At the moment you have the problem of enormous borrowing. Now you don't believe, do you, that you ought to cut taxes when borrowing is high? DORRELL: I'm quite certain that the right stance for the government is to pursue the course set out in last year's budget statement, namely to control spending, to raise the extra revenue to pay for that spending without needing to borrow. HUMPHRYS: But you've also said it is better to tax than to borrow. DORRELL: Precisely. That's - I've just said the same thing in different words. HUMPHRYS: Right, exactly. So therefore unless you get borrowing down substantially - that's my word, not yours, but I want you to agree with it, or I'm asking you to agree with it - there aren't going to be any tax cuts. DORRELL: And the prospect for tax cuts is created within our spending plans by reducing the spending number in order to make room for reduced tax revenues. HUMPHRYS: Right, so was I right then, unless you get borrowing down substantially there can be no tax cuts? DORRELL: Well I don't actually see the connection. The way you deliver tax cuts is by cutting spending. HUMPHRYS: Yes DORRELL: We've said what we think we can borrow, that's given. HUMPHRYS: And cutting spending will have an effect on borrowing, clearly. DORRELL: Yes. HUMPHRYS: I mean if you're spending less - and you don't have to be an economist to work this one out ... DORRELL: Precisely. If you spend less and you can afford to borrow the amount that was set out in the Government's plans then you can cut tax. So the relationship is nothing to do with borrowing, borrowing is given. The relationship is between spending and taxation. You cut tax by cutting spending. HUMPHRYS: Well I'm only pursuing this particular relationship because you have raised it yourself on a number of occasions. It is better to tax than to borrow and it's a pretty straightforward question isn't it. Unless you get borrowing down substantially you will not be able - you should not attempt to deliver on those tax cut promises. DORRELL: Yes I agree with that but we have set in place the plans that will deliver the borrowing reductions that we think are necessary. HUMPHRYS: Well that's fine. So what then...good...so we've agreed on that. If borrowing stays at - let us say - twenty eight billion pounds by the end of next year, on that basis you would not be able to cut taxes, would you? DORRELL: No. That's exactly the point I am making. We've set out what we think is a responsible level of borrowing and unless circumstances change we have to assume that the responsible level of borrowing will not change. HUMPHRYS: And the Treasury thinks it will be twenty eight billion pounds at the end of next year. DORRELL: Well the Treasury will publish their forecasts on budget day. HUMPHRYS: But that is the current figure, that is the figure we have to go on. And the following year, twenty four ... twenty one billion. DORRELL: If that's the figure in the Red Book then that's the figure. HUMPHRYS: Exactly. So on the basis of those figures you are not going to be able...you shouldn't...it would be imprudent to cut taxes. DORRELL: Assuming everything else is given. What actually happens of course in the real world is that each year Treasury Ministers sit down and make a new assessment of what they think is responsible in the changed circumstances. HUMPHRYS: ...based on how much money is coming in and how much money is going out. DORRELL: And the total level of activity in the economy and in the international context and so forth. HUMPHRYS: Absolutely so. Unless the recovery continues at a pace and unless you cut spending, there aren't going to be any tax cuts, are there? DORRELL: No. That's quite right. Unless you reduce spending you can't deliver tax. The reason I hesitate when you bring borrowing into the issue is that I think that borrowing is something you have to fix as a 'given' according to the circumstances you are in. HUMPHRYS: Yes, but you can't separate the two, can you? DORRELL: Yes, you can actually. HUMPHRYS: If you spend more than you have got you have to borrow to fill the gap. DORRELL: What you must do is decide first - before you engage in this argument - what you can afford to borrow. And then you make your judgements about how much you have to tax based on how much you decide to spend. HUMPHRYS: Fine, so how much can you afford to borrow and cut taxes, then? DORRELL: That's a decision for the Chancellor and he will announce his conclusions on Budget Day. HUMPHRYS: You've been financial secretary to the Treasury, you know about these things, what's your view? DORRELL: I've been financial secretary to the Treasury and one of the things I learned as financial secretary was that Chancellors like to make their own decisions about government borrowing. HUMPHRYS: All right, but you know the sorts of levels that we have just talked about and that the Treasury is projecting. Do you reckon that borrowing at that level would rule out tax cuts? DORRELL: With great respect, you are not going to draw me into making the Chancellor's budget judgement for him. HUMPHRYS: No I rather thought I wouldn't do that but at the very least you have made it quite clear that unless borrowing comes down substantially there can be ... there should be no tax cuts. DORRELL: No, that's what you have tried to put into my mouth. What I have said is that the Chancellor will make his own judgement about borrowing and then around that he will have to ensure that he taxes sufficient to meet his spending commitments. If he wants to reduce tax he will first have to reduce expenditure. HUMPHRYS: And there should be real, deep cuts in expenditure should there in that case, to go along the lines that George Gardiner is running up there? DORRELL: That goes back to the two options for reducing the tax burden that are open to any government. One is to cut in absolute terms government expenditure, which gives you a short-term cut in taxation, the other is to hold government expenditure and allow it to take a smaller share of national incomes so the tax burden falls in the longer term. HUMPHRYS: So tax and spend questions cannot be divorced from the state of economy? DORRELL: Of course that is true. HUMPHRYS: And that is precisely what Tony Blair said in his speech last week. Those very words. DORRELL: That is 'real apple pie and motherhood' it's hardly a blinding insight to say that tax and spend can't be divorced from ... HUMPHRYS: No, but what I am suggesting to you is that there isn't this great gulf of clear blue water between you that George Gardiner wants to see. DORRELL: Well look, the laws of arithmetic apply to both parties. Actually what's happened at Labour's conference this week, I think, is rather encouraging from the government's point of view, because what they've done - far from taking the initiative in the argument about politics - is slowly to bring themselves up to date onto ground that the government have been occupying for fifteen years. The story of Labour politics over the last decade has been the story of eating words. Ten years ago...this is an important point...ten years ago they were in favour of withdrawing from the European Community, they were in favour of unilateral disarmament, they were against council house sales, they were against the market economy. They were in favour of nationalisation. They have thrown all that overboard - quite right too - they've put themselves on the government's ground. But! But! all they've done is to validate what we have done so far. They still haven't addressed themselves to what happens next. Let me give you two examples: I want to pick up the point of unemployment. They say they are interested in unemployment. What I think we need to find out from Labour is why they want to import into Britain the Labour market practices they have in France, they have in Spain, they have in Italy, which in all three of those countries has delivered higher unemployment than we have here and unemployment that is still rising at a time that it is falling here. If you are seriously interested in unemployment, it seems to me you should be doing it the way we do it, not the way they do it. I expect Labour in five years' time will agree with that too but they haven't caught up with that element of our programme yet. HUMPHRYS: Let's talk about law and order. Traditional Tory supporters no longer see you as the Party of law and order. DORRELL: Well it's clear, isn't it, that over the last fifteen years in this country and in every other country in the world we have seen a continuing problem with social discipline - law and order. Of course crime didn't begin in 1979, it's a continuing and worrying trend. HUMPHRYS: No, but it's something that you were sworn to deal with and people said: "Yes, the Tories are the Party of law and order". They no longer say that. DORRELL: Well, what we have done is first of all to introduce dramatic increases of resources for the police, we have sought to reform the police to make them an even more effective body; we have sought to increase the powers of the courts, we have improved the arrangements in prisons - the penal system that courts send people to. All of those things are within the power of government to do - we have done them - done many of them against opposition from Mr Blair and his friends. HUMPHRYS: Oh, he didn't vote against the Criminal Justice Bill, you know that. DORRELL: Mr Blair did vote against the right ... ending the right to silence, which is an interesting illustration of the point. All of us, in common sense, think that if you are talking to somebody and he refuses to answer, aren't you entitled to draw some implication from that? Well, courts have never been able to do that in the past. I think they should be able to when they are dealing with somebody charged with a serious offence. HUMPHRYS: You tell me the things that you are going to do, the things that you have done. The fact is it hasn't worked and you have lost the support of your own people. On this critically important issue they trust Labour more than they trust you. Not only your supporters - the country as a whole. DORRELL: Well, what the evidence shows clearly is that people - including the government - are worried about the trend of lawlessness and social discipline. What the government has been doing is seeking to do something about very much of it - over opposition from our political opponents. HUMPHRYS: But eighty eight per cent of your supporters - according to the latest opinion poll, the Daily Express this morning and indeed the Daily Mail - say you have been ineffective in that. DORRELL: Well, in the sense that the crime figures until quite recently were recording increases, we haven't delivered the same advances we have delivered on the economy, for example. Actually, as it happens, the crime figures are now starting to turn better. HUMPHRYS: Well it depends on how you read it. The British Crime Survey says that isn't the case, it is misleading because people
aren't reporting crime. But anyway the important point is that your people don't believe that you have delivered what you promised and you have now, if anything, moved on to the Labour agenda because there is a clear link - suggested in the latest Home Office proposals - between unemployment and crime. Another important Labour point. DORRELL: No, actually, a rather important difference, as it happens, between the Conservative Party and our opponents. I think when Mr Blair talks about 'causes' (plural) of crime, as though there is a whole ... crime is a disease, there's all kinds of causes (plural) in society, that he misunderstands crime altogether. Crime is a decision. It's a decision by one person to break the law and violate the rights of another and no one takes...I take second place to no one in my commitment to seeking to remove social deprivation. That's important. But what I do not accept for one moment is the proposition that social disadvantage is an excuse for crime. HUMPHRYS: Tony Blair's never suggest that it is an excuse. He's talked about it as a cause. DORRELL: What does he mean them? When he next comes into your studio, ask him what the other 'causes' of crime are. HUMPHRYS: I will, but I'm asking you at the moment - we have only got a few seconds left. You could put clear blue water between you on these issues if you adopted more of the Right-wing agenda on this particular one. For instance, eighty six per cent want tough manual labour for prisoners. Ninety two per cent want a dramatic increase in the number of policemen on the beat. Seventy five per cent say no prosecution for vigilantes. Now we've not time to comment on each of those but what I am suggesting to you is: here is an opportunity to put clear blue water between yourself and them. DORRELL: Well, look at our record in terms of the measures we have introduced on crime and look at their record on the ones they have opposed. There's already plenty of clear blue water there. HUMPHRYS: Stephen Dorrell, thank you very much. DORRELL: Thank you.