................................................................................ ON THE RECORD RECORDED FROM TRANSMISSION BBC-1 DATE: 12.5.96
................................................................................ JOHN HUMPHRYS: Good afternoon. The Tories say THEY are the tax-cutting party. I'll be suggesting to the Chancellor that he might want us to BELIEVE that, but in reality he's not going to be able to deliver. That's after the News read by MOIRA STUART. NEWS HUMPHRYS: It's become an article of faith for many Tory MPs that if there are no more tax cuts before the next Election they can kiss goodbye to their seats. So there would have been a few long faces on Friday afternoon when the Chancellor poured cold water on that prospect at the Scottish Tory Party Conference. I've been talking to the Chancellor and you can hear that interview after this report from Emma Udwin. HUMPHRYS: Chancellor, you told us on Friday that the economy is doing terribly well, so why were you so down beat about the possibility of tax cuts? KENNETH CLARKE MP: I wasn't at all down beat about the economy which is plainly going to get stronger towards the end of 1996 which is much stronger than any other major European economy which is producing rising personal incomes and failing unemployment, and so on. The problem is of the public finances. I am committed, the Government's committed to getting public finances down to a balanced Budget, in the medium term. The forecasts of revenue have been disappointing. We have problems with BSE and other things that are coming out of the reserve and therefore we're saying we're on course, going to be a strong economy, going to have a tax cutting agenda but it's going to be a sensible one and it's going to be, as we can afford it, as I've always said. HUMPHRYS: The problem is, isn't it, that it's not - and you acknowledge that in that answer - it's not growing fast enough. The question is whether it's growing fast enough for you to be able to deliver what your colleagues clearly think is needed to win the Election - in time. CLARKE: Well economic growth is coming through. I mean we await to see whether it hits my three per cent by the end of the year. I haven't resiled from that yet because.. HUMPHRYS: Yet? CLARKE: Well, because I think, I'll prove some of my critics wrong again. It is going to get stronger as the year goes on. We're having perfectly sustainable increases in consumer demand, the housing market is looking more attractive. Manufacturing remains very competitive and it'll pick up as soon as our continental markets pick up. We do have the growth. The problem is we've got a mistake in the forecasts of the revenues, I think. So, that we kept public spending under control, hit that on the button but we've got less tax coming in than we expected. Do have some things coming in on the Reserve, which always faces Chancellors. What I'm saying is: here's a framework of policy. It's a policy which is going to make us a strong industrial economy, growth that's going to last. He's going to get tax cuts but they're going to be real tax cuts, tax cuts that will last because when we make them we'll only make them because we can afford it and because it's in the interests of the economy. HUMPHRYS: The fact is growth was half in the first quarter what you'd expected it to be. That's a big drop. CLARKE: No, I didn't. I don't put forecasts forward quarter by quarter. HUMPHRYS: No, but you forecast what it's going to be over the year. CLARKE: Oh, sure. HUMPHRYS: And, it was half in the first quarter what it should have been for that, if you were working at more or less equally. Now, I know you don't do it exactly equally but more or less. CLARKE: No, my forecasts are always going to be slow in the first bit of '96, faster in the second half. Like, last year, we had a strong recovery in the first half of 1995 and it got slower. It's a dip and it's going up again. HUMPHRYS: Yeah, but you heard what Minford said. CLARKE: The other thing about first quarter figures is they always get changed. One of the things that lies behind a lot of my discussions on policy, lay behind my discussions with the Governor of the Bank on interest rates last year. As you look at these figures and they're the first figures that come out of the statisticians and then you find they revise them. And, I wouldn't be at all surprised if those first quarter figures aren't revised by, you know, a few months time when we'll all have forgotten them. HUMPHRYS: So, you don't believe those figures then? CLARKE: I believe them. I believe they're the best that have been done so far but the first quarter figures for 1995 were revised. They were revised long afterwards and at the moment the message I get from British industry is that nobody's complaining, they think the circumstances are very good. The message from the retailers is that consumer demand is getting very strong, the messages out of the housing market are very encouraging, and we still see unemployment falling. The second half of last year was meant to be a slowdown, but still the statisticians can't quite explain why unemployment was still, on any sensible view, dropping quite substantially and steadily. HUMPHRYS: You say a good message from British industry. What they're actually saying - the CBI people are saying that their order books are very flat for the next few months, so you've got that problem, you've got the fact that for the last six months our factories have been producing fewer goods than they had been previously, so you haven't got the kind of growth that you yourself believe you need to do what you want to do with it. CLARKE: Well, the CBI review forecast is actually rather good. The CBI do their surveys and the survey remains extremely optimistic. Manufacturing's had a difficult time because Germany's slipped back into recession, the French market's very flat, America's still sort of struggling to recover, our overseas markets have held us up, and there were some stocks piled up in manufacturing industry which are being run down. But the manufacturers expect the rest of year to get stronger, so do I, I think investment's going to be stronger in the remainder of the year. I think you'll find most financial forecasters are arguing about how much we're going to speed up in the rest of 1996, not whether we will or not, but that's not the root of the tax problem. HUMPHRYS: Well, let's just stay with that just for a moment then. It may or may not be the root of the tax problem, but it is important, and you're going to have to speed up one hell of a lot according to your own expert Patrick Minford one of your wise men - we heard him in the film there - going to have to grow at five per cent, and that's virtually impossible for the rest of the year, if you're going to meet the target. CLARKE: Well, Patrick Minford is one out of six of my wise men, and he's an interesting chap to have there because he's always one against five, he's been a complete loner for as long as he's been on it. HUMPHRYS: Nobody thinks you're going to get three per cent, none of them thinks you're going to get three per cent this year. CLARKE: They're not a - well above your one-point-six per cent, which was your ......... HUMPHRYS: They're nowhere near three per cent. CLARKE: The deepest pessimism you are projecting, and I have been at times..sometimes been wrong. At times I've been more right than most of the forecasters... HUMPHRYS: ...well I'm sorry to... CLARKE: ...over the last three years and they all say it's going to speed up, and forecast you know, two-point-three, two-point-four, two-point-five, two-point-six, they're quite commonplace, my three per cent's on the high side, but all the signs out there in the market place it could be achieved. Last year 1995, ...... HUMPHRYS: But you say it is on the high side. CLARKE: 1995 - compared with the other forecasts, but 1995 which people said was a year that was going flat, that worked out about two-point-six per cent, and if that applies to ..... HUMPHRYS: You were on the high side them as well weren't you. CLARKE: No, no, I've been fairly reasonably accurate throughout, and if 1995 was a flattish year, and doing better than that in 1996 is perfectly, perfectly possible, because the British economy is in such good shape that's because we've stuck to a framework of policy, on the public finances, low inflation and so on, in its growth, rise in incomes, more jobs. Tax cuts have got to be fitted as part of that. HUMPHRYS: All of that may be true. The economy may be as strong as you are suggesting, but the question is, your problem is time. Can it come right in time to deliver what you've got to deliver if you're going to win the next election, and this is the problem, the budget is in November, and it's November this year, not three or four years' time, that's your problem. CLARKE: But what I intend to deliver over the next twelve months and beyond actually, because we need this to keep going way towards the end of the century - that's why the election result is so important. What I intend to deliver to the men and women of this country is an economy that's growing steadily throughout the year. People are going to find their real disposable incomes rising. They're already finding some benefits from the tax cuts I've made. They're finding that there's more confidence in the market-place, consumers are beginning to spend more, and that month by month is going to get stronger through 1996 into 1997. The budget's part of that, and I haven't even started work on my Budget. Now you've got the first pre-Budget programme of the year, six months before I deliver it and before I've even started work on it, and the Budget's got to fit in with that, and the Budget as I keep saying - we'll have tax cuts, but only if we can afford them. Taxes depend on public spending, taxes depend on demands on the economy, and we will cut taxes if we can but only if we can afford it, only if we're going towards a balanced budget, only after we've spent the money we need to spend on schools, on hospitals on the police service, the things which those voters want just as much as they want the tax cuts. HUMPHRYS: Well precisely, so we're talking about balancing budgets aren't we, as you say - if we can afford it. And your problem again is that we're borrowing far more than we ought to be, far more than you expected us to be at this stage. CLARKE: I'd leave out the far but we are, of course we are borrowing..we're borrowing more than we expected to be, not because we've lost control of spending, we've had the three toughest years of public spending control since the war and we deliver it, on the button, now Governments haven't done that for years. This year's public spending round involves a one per cent real terms cut in the total of public spending. I don't think any Government's done that that I can recall, certainly not in my time in Parliament. HUMPHRYS: We'll come back to that in a moment but let's get to this question of... CLARKE: ...the tax revenues are down, mainly because of forecasting...and yes we do have to adjust to that. The public don't expect the Chancellor of the Exchequer to wave away the real world and start responding to some of the people you saw on the television who seem to think that all you've got to do is cut taxes come what may and people vote for you. Well I think the public aren't that stupid. I do think the public like the idea of taxes. I hope they agree with me that successful economies are low tax economies but they're not going to vote for politicians who just cut taxes in the teeth. Now all the policy declarations I've made in the last two or three years, particularly when the policies I've set out for the last two, three years, have given Britain the healthiest economic recovery in Western Europe. HUMPHRYS: You're not telling me that you are not worried about the amount we're borrowing, are you? CLARKE: I'm determined to get it down. My aim has always been to get it down to balance in the medium term. A Chancellor's life is full of worries, but a Chancellor's life has got to be based on policy commitments that keep you on course and I think one of the things I've done has been more open, the way I propose to run the economy, whilst I've been Chancellor than most of the people I can remember and I've actually stuck to it. And by the time we get to the election I will turn round to the electorate and say: there you are unemployment has come down three quarters of a million so far, more by then I hope. That we have the lowest inflation we've had for fifty years, young people buying houses have got the cheapest mortgage rate they've had for thirty years abd we have more new jobs created in the British economy and people's living standards are rising quite strongly as well. HUMPHRYS: And as a nation we are in... CLARKE: ...you can do worse than that as a Chancellor and you can throw it all away if you give in to the kind of people, you know, some of the people you interviewed when they were eating their sandwiches and drinking their wine, who think it's a very simple matter of just cutting taxes, or to the Labour Party who think it's a very simple matter of promising to spend money all over the place on this, that and the other thing and pretending you don't have to pay for it. HUMPHRYS: But you should have added on to that little list, shouldn't you - and we are in hock to a greater extent than I had hoped that we would be. You are not going to meet your borrowing targets are you. CLARKE: Well...we are borrowing more than I intended, I concede to that all the way through and that lies behind the message I've given the speeches. We have a tax cutting agenda, I am a tax cutting Chancellor by instinct but not in the...like the old days of before an election cut the tax on beer approach which no doubt worked once upon a while in today's sophisticated, very difficult world, I will cut taxes but when I cut taxes you'll know the tax cuts will last, they're not going to be reversed and the tax cuts are being made because it's good for the real economy, good for British industry, business and commerce to have a low tax workforce. HUMPHRYS: And it is going to be more difficult to cut taxes responsibly if you are borrowing more than you had planned to borrow. CLARKE: Yes, taxing is part of the borrowing, you have to borrow the difference between what you tax and what you spend and if anybody gives you tax cuts on the back of borrowing more, which is what Denis Healey did before 1979, you can be sure disaster lies ahead. That's what the Labour Government did when it got thrown out in 1979. HUMPHRYS: And everybody says you cannot win an election, especially your own MPs say, you cannot win this next election unless you cut taxes. CLARKE: Some of our MPs say... HUMPHRYS: Many of your MPs... CLARKE: A minority... HUMPHRYS: I wonder if we put it... a large number, let's settle for a large number. CLARKE: I meet them every day John, ....I actually think my approach of saying yes, we want to cut taxes but we'll only cut taxes when it's an honest thing to do, it's based on our policy of getting borrowing under control. I think the vast majority of Conservative MPs agree with that and they like me, meet people all the time who do not want to be given tax cuts at the expense of the schools and the hospitals and the police because Tory voters feel as strongly about resourcing those as they do about the tax cuts. HUMPHRYS: Indeed they do but they also feel strongly about this thing called trust don't they. CLARKE: Surely. HUMPHRYS: And when a Government says to them, or a party says to them, vote for us and we will cut taxes, they say: alright we'll do that. If you then don't, if you then leave them with a bigger tax burden overall, forgetting about income tax exclusively, but a bigger tax burden overall, they will say well that trust has been damaged now so next time around - we don't want promises - we want deeds, we want you to deliver. CLARKE: Well I think that's a very important background, one reason why we're still winning back the confidence of people quite slowly. Last time we made a genuine mistake, we thought the recession was nearly over, we committed ourselves to tax cuts and then we found the recession went on, we got heavily into debt and we put up taxation. I inherited the job of putting up taxation and we hurt people and they remember those promises and they remember the taxes and therefore they want to see us get back down again but they...this time they're looking cautiously out of the side of their eyes, is this for real. I've set out to try to restore the reputation of the Conservative Government, the competence in running the economy. I think I've restored it. It's also necessary that people should trust what we say about the ecoonomy, that's why I keep saying: yes of course I still want to cut taxes, of course the Conservatives want to cut taxes as much as they did in the last election but when we cut taxes we can afford it, when we cut taxes it's going to stay down, we're going to cut taxes because we're so competent at controlling Government and public spending and the Labour Party are plainly incompetent, with promises they can't afford and occasional excursions into policy like this ridiculous child benefit thing which they will have to pull back like mad because they've chosen a particularly senseless way of trying to raise money. HUMPHRYS: But we're back to this old problem then aren't we. You've got an election coming up. It can't be more than a year away, give or take a few days, and they want tax cuts by then. Because you've just acknowledged it, you said trust is terribly important, we let them down, you said in that answer, we made a mistake last time. Well okay, you made a mistake may be they'll let you get away with that mistake but you've got this time to prove it, Bill Cash says you're going to lose the election unless you cut taxes. CLARKE: Well I don't agree with Bill Cash. We might cut taxes but I really do not think, as Bill...I haven't heard Bill's remarks, Bill's advocating .... HUMPHRYS: "It could cost us the election". CLARKE: Come what may...not Chancellor of the Exchequer. HUMPHRYS: He said you weren't as well. CLARKE: People want the Conservatives to cut their taxes but only when it's sensible to do so and that point, you know.. HUMPHRYS: But, they say it all the way through.. CLARKE: When people vote in a General Election, I hope what they ask themselves is, you know, when it comes to economic issues, who's best at running the national economy. Who's going to make it more likely that the firm I work for does quite well. Under what Government is my job likely to become more secure, under what Government is it likely that our living standards will rise. Well living standards have risen very strongly under the Conservative Government since 1979. They're rising againg in 1996 and it's on a secure basis. I mean, no one accuses me of creating a pre-election boom. But, the economy is doing well because it's really doing well. It's real money going into people's bank accounts, their wallets and their pockets and we can create more of that but only if we behave sensibly. And only if the politics is aimed at the really firm economic objectives of the Conservative Party. HUMPHRYS: And behaving sensibly means not cutting taxes when you're borrowing more than you ought to be? CLARKE: That's right. So, as I prepare the budget what I shall have to do and, I shall only do it... HUMPHRYS: ...any tax cuts..that's what you're saying.. CLARKE: You don't know. I don't know. Your so-called experts don't know yet... HUMPHRYS: Your so-called experts - not mine. CLARKE: But, I will only settle my budget at about a fortnight, probably, before I go up to the House of Commons to deliver it and then I will have the clearest idea one can have then of where revenue's going, where public spending is going; what I've agreed with my colleagues, how much of the reserve I've got left and then I'll have a clear view of what also is the state of the real econony. Does it need a little fiscal easing, does it need a little fiscal tightening. All those things lead to a budget. So in May to have my backbenchers going around saying: must have a penny off income tax or else we'll lose heavily, have a tuppence off income tax we might just get in....income tax we'll have a working majority. People listening to the programme aren't going to want that kind of thing and people who think tax cuts equals election victory, in that way, are - I'm afraid - seriously mistaken. HUMPHRYS: But, you're closing off an option for yourself here, aren't you? CLARKE: No, I'm not. .. HUMPHRYS: Well, let me give you the option. CLARKE: Only when you can trust me to do something because I'm doing it on a sensible basis. HUMPHRYS: Alright, let me give you what many of your colleagues would regard as a very sensible basis. You can find the money, they will say. You can find the money. You've told us you've held down public spending. What they will say is cut it more - slash and burn - get rid of some of these expensive programmes. Bring in these Social Welfare programmes. That's where the money can come from. We're a Tory Government. That's what we ought to be doing. CLARKE: Well, most of the people who say that tend to be the people who are completely useless when it comes to describing where the money will come from. I am quite a hawk on public spending and I see this year's public spending figures are actually the toughest.. we haven't delivered them yet. But, they're the toughest that any Government has tried to deliver for at least thirty years. And of course we'll change the Welfare State. I'm not just defending a static Welfare State. I was the guy who reformed the Health Service and in Education I set up this independent inspectorate and I got League Tables going and all this kind of thing. My second Budget: I had a whole package of dependency into work proposals; subsidising low-paid jobs through Family Credit, making it all the more attractive all the time to move into work. Last year, I announced this package that deals with problems of long-term care, actually making sure that people are encouraged to provide for themselves, plus the State provides for those that can't; giving some incentives to those people who are thrifty. Constant welfare reforms have been a theme of my political career. And with Peter Lewis's (phon) help, I've reached the situation where the Social Security budget is now growing slower than the economy, as a whole, is growing. HUMPHRYS: But, after a phenomenal increase. This is the point and what you seem to be saying is... CLARKE: It's been increasing ever since Beveridge.... HUMPHRYS: Of course, it has. CLARKE: And we've never slowed it down as much as we have now, to the extent where it is now. If you can keep the Social Security budget growing slower than the GDP is growing, you're actually reducing the take that Social Security takes from the real economy. Sounds very modest but there's absolutely no Government - Conservative or Labour - succeeded in doing that consistently in my lifetime. HUMPHRYS: Just means that "The Titanic", when it hits the iceberg, will be going a little bit more slowly than it otherwise might have been but it's still going to hit the iceberg and sink. CLARKE: This ain't "The Titanic". This is....we are far ahead of most other western countries in creating a pretty dynamic market economy and reforming our welfare system, so that it's affordable but still meets the expectations of the modern population. In the western world, people want public services, they want a safety net, they want people who are disabled to have benefits, they expect people to be helped to look after themselves in their old age and they expect a pension system that's trustworthy and we've always increased that in line with inflation and actually, attacking the details of it has let to our succeeding. HUMPHRYS: Right. CLARKE: ...in controlling Social Security spending like never before. So it's affordable, with great savings between now and the end of the century, compared with what otherwise it would have cost. HUMPHRYS: So, there's going to be no slash and burn borrowing. Borrowing you have already acknowledged is a problem. Receipts aren't where they ought to be...VAT. So, in short we can actually say and I'll return to the subject again - no chance of tax cuts is there? CLARKE: No slash and burn but a consistent flow of extremely good policies. HUMPHRYS: Not going to be fast enough. CLARKE: I listen to Chris Smith coming out with waffle and I listen to Gordon Brown saying that the parents of sixth formers are going to lose their Child Benefit. This is the answer to a package of extremely serious reform and what we're on course to have is public spending, taking in a decreasing amount of GDP. My forty per cent target is getting in our sights - very, very ambitious target compared with anywhere in western Europe and leaving more for investment, more for business, more for personal incomes. We have been growing faster than the Germans and the French throughout the 1980s. We've growing faster than them again. We have falling unemployment, which nobody else has in Western Europe. That is a policy within which we will fit tax cuts, as and when we can through our next period of office and this period of office but not at the expense of sensible, economic policy. HUMPHRYS: Ah! In other words, I suggest not fast enough and let me suggest.... CLARKE: In any case, you're, for the sake of this argument adopting the Bill Cash line that all the electorate are going to think of when they go to the ballot box next year presumably, is whether we cut taxes in the last Budget. HUMPHRYS: Well, you've already told me that we've got to restore trust and I don't know how else you restore trust other than by meeting the promises you made. But, anyway let's look at.... CLARKE: Well, I made tax cuts last year and last year I made tax cuts, I cut the total of public spending to pay for them.....so nothing wrong with that. I put up the resources for education, schools and hospitals. So, the Labour Party didn't know whether they agreed or not when they abstained on the whole thing. Now, will I be able to do that again -
don't know. But, I'm quite open about the judgments I will make about whether I'll do it again or not. What's happening to borrowing, what's happening to revenue, what's happening to spending. HUMPHRYS: But, let's give you a reason why you're in, in another sense, in a bit of a straitjacket and that is that you are quite determined that we should meet the convergence criteria for Maastricht, the Maastrich convergence criteria, to get into, if we need to, if we want to at the time, to get into a Single European Currency. Now, that puts you into a straitjacket doesn't it? CLARKE: No, not at all. But, I've always said the Maastrict criteria made good economic common sense for us and the rest of Western Europe. They say you should have a fiscal deficit of less than three per cent. It's not good enough. In my opinion, you should aim for balance - and the Germans agree with me. They think you should be tighter than that -
you should go for low inflation - quite right. One reason we've ruined ourselves, compared with our competitors in the past, is we've always had higher inflation. This is now a low inflation economy, the lowest it's been for fifty years. Those Maastricht criteria are a perfectly good measure of what a right of centre politician should regard as good economics in the late 1990's. But, I go beyond in my own criteria of-For inflation: two and a half per or less, that's a British inflation target. My own frontier is movement towards balanced Budget, that's a British Conservative target I've set myself. HUMPHRYS: Well, alright. But... CLARKE: And they coincide with the Maastricht criteria but that doesn't govern my Budget judgment. HUMPHRYS: But you are sympathetic, you've already said so. You describe the Government as being sympathetic. Others take issue with that, but nonetheless you're sympathetic to the notion of Britain joining the European Exchange Rate, the European Monetary Union. Your problem is that you've got therefore to meet those criteria whether you want to or not and
the message that that sends again to your backbenchers is a really difficult one isn't it. They don't like that. CLARKE: Well, and I think I said I was sympathetic. I don't think I've ever said the Government was sympathetic as some of my critics have said. But, anyway, what the Government has done and I - you know, may be pardoned for saying this - is we keep our options open. There are circumstances where it could be to our advantage if the strongest northern European economies achieve really stable economic conditions. And, on a sensible basis, go into economic and monetary union, terms that will retain fiscal discipline and low inflation, and create a really competitive stable area across northern Europe, to attract all inward investment from outside, see the fastest growth in trade. The British have got to say "Well, we might join that". HUMPHRYS: If we do, though, can we meet the criteria? CLARKE: If as the Euro-sceptics say the whole thing is some sort of political agenda to try to erode the nation-state which I don't think it is, but if people started altering the convergence criteria, and trying to make it some kind of political blueprint for other things, I actually think on a slightly more sensible basis than my Euro-sceptic friends..... HUMPHRYS: What they're saying is why adopt this strait-jacket, because if you really want to meet this..... CLARKE: ... strait-jacket. The most sensible position to be in is to say we will choose whether it's in our interest or not when the time comes, and one way in which we'll help influence things is remain involved in the discussions. It's only the people who believe in both Reaganomics and Euro-scepticism who think I set my Budgets with the Single Currency in mind, because I don't. I set Budgets in the interest of the British economy, and I will make my decision about whether or not I think Britain should join the Single Currency when the time comes in the interests of the British economy, and as it happens I personally think controlling public spending, getting down public borrowing, heading for lower taxation, keeping inflation low, all that's extremely good out there for you know, businesses and jobs and prosperity. HUMPHRYS: But there is as you acknowledge there is deep suspicion of you and your motives as far as Europe's concerned on the part of many people. One of the reasons for that is what we're going through at the moment, this terrible beef crisis. Now, we seem to be being told that there is - we ought to be taking some kind of retaliatory action - we ought to be drawing up this plan to retaliate against Brussels if we don't get the ban on beef lifted, and I'm told, we read it in the paper this morning, the Sunday Times, that there is this document that's been circulated to Cabinet Ministers saying, "Tell us what you're business is going to be in Europe over the next few weeks, and let's see whether we can't put a bit of a spoke in their wheels". Have you signed up to that? CLARKE: I haven't read up to everything in this morning's papers, but as you may have noticed over the last week or two what the papers have said about Europe and beef has rather varied a bit from day to day. HUMPHRYS: Well what members of your Cabinet have said it. CLARKE: They say it's leaks, but I think it actually speculation, and they change it from day to day. HUMPHRYS: Is that true.....clear it up for us then. CLARKE: What's important for beef, is we win back confidence in our beef, we win back our beef market. Part of that is getting the European ban lifted undoubtedly, because the ban is not justified scientifically, we have perfectly good beef, and we've got to restore confidence in that and they've got to restore confidence in their own beef. The European Union was about the last place to impose a ban, and I hope it will be one of the first to start easing it and lifting it. Because we're in the European Union we can negotiate with them and put pressure on them trying it out, but I mean the Americans and the Canadians banned our beef six or seven years ago. The Australians have banned it, New Zealand's banned it, Hong Kong's banned it, Saudi Arabia has banned it, scarcely anyone in the world takes it. HUMPHRYS: But they don't cause the smoke to come out of the ears of many of your backbenchers in the way that the... CLARKE: My Euro-sceptic friends have not yet started saying we should withdraw from NATO or leave the Commonwealth. HUMPHRYS: And they're nor in the European Union, that is the point. CLARKE: Within the European Union what we have to do, is tell the ban is unjustified - there's no scientific basis. HUMPHRYS: We've done that. CLARKE: You're doing damage to your own beef industry and not to ours, and I trust we're going to see the ban eased. HUMPHRYS: Yes, but you've done all of that. CLARKE: And I will support absolutely any sensible proposition that makes if more likely that the ban should be lifted. Let's concentrate on the beef farmer and the food industry, and confidence in good healthy British beef rather than political gesturing, as again some of the people you tried to get into you..... HUMPHRYS: So this document that has been circulated then by David Davis it seems, the Europe Minister, that's political gesturing is it? CLARKE: I don't know - I'm not sure quite which document you're referring to but I do not start discussing documents with you, or any other journalist, which is why you.... presumably because people like me keep our discussions within the Government, you get such wildly varying speculation in the newspapers all the time. HUMPHRYS: Well, let's try and end the speculation, then. But let's be helpful to the audience, then. If that document - when that document comes to you - you will say I'm not having anything to do with this. I'm not getting involved in Brussels bashing. CLARKE: I judge any document, any proposal, on whether or not it's likely to get this beef ban lifted. I will agree to anything that actually accelerates the process, getting British beef back into world markets. We have to do something with ourselves, which is what we are doing to demonstrate to the world that we can restore confidence by going beyond what science requires, in order to illustrate that our beef is perfectly healthy. And that is the only approach to Europe that one could possibly adopt. HUMPHRYS: You'd have to be a bit tough, at this stage, wouldn't you, because there's an awful lot of muttering against you. What did we see - one Minister quoted in "The Sun" yesterday. I'll read you his quote, in case you didn't see it. "Ken has been disloyal. If he doesn't see sense, John - John Major - must show some steel and make an example of him. It's time to prove we won't be pushed around any further. CLARKE: Well, I trust that...takes any notice at all of mutterings in "The Sun" or anywhere else. I mean, people who wish to speak to me can speak to me. I think, what I do is pursue a consistent policy. I've been to more councils of ministers than most people have hot dinners in the last seventeen years. I've had more rows with my European colleagues, been more isolated in councils of Ministers than half of my noisier populist friends in the backbenches could ever begin to contemplate. I go to the Council Finance Ministers, blocking withholding taxes. I go to the council finance Ministers vetoing ill-thought out carbon energy taxes. I will go to Europe and they know that I'll have a damn, great row with my European colleagues, only if it helps the British beef industry. If it does, I'll do it and if it's just a political gesture, I don't want to support that and I will...I think, you'll find we'll make progress on the European front on the beef issue. HUMPHRYS: Chancellor, thank you very much, indeed.