................................................................................ ON THE RECORD RECORDED FROM TRANSMISSION BBC-1 DATE: 26.11.95
................................................................................ JOHN HUMPHRYS: Good afternoon. Business leaders are apparently becoming disillusioned with the Tories and they're worried about the budget on Tuesday. I'll be asking the Trade Secretary what the government can do to make friends once again in the board rooms of Britain. That's after the News read by Moira Stuart. NEWS HUMPHRYS: Ian Lang, in that speech at the CBI you had to appeal to business to support you and not the Labour Party. In other words you couldn't take their support for granted in the way that perhaps once you would have been able to. That's worrying for you isn't it. IAN LANG MP: We would never take business's support for granted. We always work closely with business and it is part of our job to present our policies and recommend them to business and to contrast them with the policies that they are being offered by the Labour Party, so I don't see any dramatic change. What I was saying to the CBI Conference was: look at the detail of the policies that we are offering. Look at the details of the policies that the Labour Party are offering and the choice becomes clear and one that you can't afford not to make. HUMPHRYS: It appears not to be that clear to them does it? LANG: Well I think it is pretty clear to most of them because most of them are very strongly opposed to the Social Chapter for example. Mr Blair was at the Conference the day before and implied to them that the Social Chapter was no more than a set of principles that he could pick and choose which aspects of it he would support. A very different flavour from his speech to the TUC a little earlier I may say. But in reality it isn't that, signing on for the Social Chapter would bind us in to accept by qualified majority voting a whole lot of measures that business does not want, which would add to their burdens. HUMPHRYS: But we'll come back to that in a moment, if we may. But what happened, the reaction to Mr Blair was favourable. They gave him a longer ovation than they gave your good self or even the Deputy Prime Minister Mr Heseltine. LANG: Well they're very polite at the CBI and it was the first time I think they had a Labour Leader. HUMPHRYS: ....more polite to you perhaps. LANG: They were polite to me, I had a very good hearing as well and I got the very clear impression from discussions with them that they strongly support the agenda that we are bringing forward for business. Indeed the CBI and many others in business have worked with us on that agenda. Much of the policies that we are advancing in our competitiveness White Paper, through our benchmarking schemes, through our winning programme of measures which we developed with the CBI. HUMPHRYS: Well all of that may be true but they appear not to be very impressed by it. We found no difficulty at all in getting people to talk to us about their concerns at what the government has been up to and is going to get up to. They are concerned about the way you have gone. LANG: Any organisation is going to seek to influence the government of the day and the opposition parties.. HUMPHRYS: It's rather more than that isn't it... LANG: ....in the development of their agendas as they move towards the next election. I could quite understand any businessman seeking to stress us on our policies, or this, or that or the next thing just as they press the opposition but I am confident that our policies are the ones that find favour with them, indeed they have said so to me. They were very complimentary about some of the things the government is doing. HUMPHRYS: Well I've no doubt they would be complimentary to your face, as you say they are a polite bunch of chaps and women but look at what they say, as it were behind your back when they are answering questions. The Institute of Management, we saw the result of it there carried out a survey, fifty-four per cent of its members, Britain's bosses think you are out of touch with their needs. LANG: I don't think that's right. HUMPHRYS: Well? LANG: Because for example we are going round at the moment talking to small businesses and holding conferences all over the country to discuss with small businesses what they perceive as the biggest problems they face and how we can best help them. We have a whole range of measures to help small businesses to our credit. For example, some of them may have forgotten that the tax rate paid by small businesses when we came into office was forty-two pence in the pound, it's now twenty-five pence in the pound. The VAT threshold has been raised for them four fold and in a host of other ways, in budget after budget we have brought in measures to help small businesses, to recognise their needs and that's why there are over a million more small businesses in existence now than there were when we came into office. HUMPHRYS: It's a shade unlikely, isn't it, that if you had done all these wonderful things for them, and you may well have done them, and they were so impressed with them, that they would have forgotten about them. They care about their businesses, they are worried about their businesses but the message is that you aren't getting through to them, that's the problem for you. LANG: Well I think these conferences that we are holding...we are getting through to them and they are getting through to us. There is this two way flow of information and I absolutely understand why they want to press their case on us, for various measures that they regard as important. I understand why some of them are having a less easy time than they would like. We have gone through a situation when in order to rein back public expenditure as a porportion of GDP, to get the public sector borrowing requirement down so that we can keep inflation low and interest rates low and provide precisely the stable economic base that business wants, we've had to take difficult decisions and that's made things rough for some of them. HUMPHRYS: Well indeed and you accept therefore that the balance is at the very least tilting somewhat. That the amount of support for you is diminishing, the amount of support for the Labour Party is increasing, do you accept that is happening? LANG: No I don't accept that is happening and what's more I don't accept that the economy in general is having the kind of problems that you are implying. If that were so why are we creating jobs at twice the rate of France or Germany. Why have we created half a million jobs.. HUMPHRYS: That's a rather different point isn't it. I mean you're talking now what you're doing, I'm asking you how you are perceived and you say you don't believe the balances. Let me give you one other little quick figure if I may and that is another Institute of Management Survey: sixty per cent to twelve per cent were in support of you the last time that was surveyed, the previous time the survey was carried out last year. Now it has shifted forty to thirty per cent. Now that is quite a big closing of the gap isn't it. Doesn't it bother you at all? LANG: Well you get these surveys in which figures move up and down in different circumstances against the background of the latest statistics and against the background of what questions are being asked. What I am suggesting is that our broad agenda is one with which business is in sympathy, is one that has generated growth and prosperity in this economy, has created a stable economic environment. I'm not arguing that every sector in the economy is riding high but we are at a situation now where for example, to look at manufacturing industry, the one with which we are normally hit by Labour as having decimated. The truth is that our manufacturing industry is producing more now than it has ever done before, output is at a record. Exports are at a record, employment in manufacturing is rising not falling, so there are very important areas of our industry were we are doing very well at the moment. HUMPHRYS: But if the perception that I talk about persists on the part of business then that has got to be terribly worrying for you when it comes to a General Election doesn't it because what it means is you won't be able to say to people: "look, Labour is the big bogey man of business, you daren't vote for them because look what they'll do, they'll devastate us". If businessmen themselves aren't saying that, terribly difficult for you to say it. LANG: All we need to do is to point out to the electorate precisely what our agenda is and precisely what the Labour Party's agenda is. Now I'm mentioned the Social Chapter which would add about two billion pounds to business's costs and would create an impost upon them from Europe which many of them regard as unacceptable. Take another one which is perhaps more important, which is the National Minimum Wage. Now I know that business does not want the National Minimum Wage, it would add four and a half billion pounds by the CBI's estimate to their costs, and if everyone above the minimum wage sought to restore differential levels, as the trade unions have made it clear they would do, then a minimum wage brought in at four pounds would lose about nine hundred thousand jobs. Business doesn't want that and I don't believe small businesses or individual employees want it either. HUMPHRYS: You know and I know that those sorts of figures of the numbers of jobs lost are estimates and you also know, because Mr Blair has said so time and again that when a Labour Government comes in, if a Labour Government comes in, they'll be no minimum wage, no level set. What he has said is that we will talk to business, we will consult and after we've consulted with the unions, with business, with all sorts of other people, then we will set the level. And that message and this is what I'm talking about, I'm not talking about the effects because we could spend from now until Christmas discussing that, what I'm talking about is the perception that they are creating and that seems - by your own admission, marginally at any rate - to be working against you. That's the problem isn't it. LANG: Well the Labour Party is seeking to fudge it, they are ducking out from disclosing the figure. They're playing what I've described as... HUMPHRYS: They don't have a figure. LANG: They're playing what I've described as scratch-card politics. But even John Prescott himself, the Deputy Leader of the Labour Party, has admitted that jobs would be lost by bringing in a National Minimum Wage. I am arguing that it would reduce our competitiveness. Now I'm not arguing in favour of low wages because we actually have on the whole very good wages. Indeed if you look at a production worker on a factory in the UK, a single man is paid more than anybody in Germany, France, Italy or other countries in the European Community in terms of net home pay. HUMPHRYS: Then there's nothing to worry about. LANG: But there are others for whom a National Minimum Wage would create a new floor in their company, it would require companies, particularly small businesses, to pay people more than they could afford. That would mean they'd have to chose between their customers because they become less competitive or their staff and they would have to shed labour. HUMPHRYS: The fact is that Labour is prepared to consult and that is what business hears, isn't it? That's what businessmen tell you now increasingly, they are not going at it like a bull at a gate. They are prepared to listen to what we have to say and, clearly, at the CBI they were listening to what Mr Blair had to say and there was a good deal of approval. Otherwise, why did you have to appeal to them. Why did you have to say you cannot afford not to come down on our side? LANG: Because I believe that is true and I am keen to make sure that British business does not suffer. I want to build on the successes of recent years to continue to close the gap that we have so effectively closed by improving our productivity in recent years. HUMPHRYS: Right. LANG: The Labour Party is not consulting on the issues of the Social Chapter or the bringing in of a National Minimum Wage or the restoration of some powers to trade unions. They are committed to those things. What they are doing is fudging the detail in order to avoid being caught out. HUMPHRYS: But let me put to you a few of the things that appear to worry business leaders. Things that you are doing, not that the Labour Party may or may not do. For instance, the prospect of tax cuts. The Director General of the CBI saying: we're worried about this because tax cuts. If you cut taxes, there is going to be less money to spend on capital projects. Now, I'm not asking you what's going to be in the Budget because I know you can't tell me that or you wouldn't even if you could. It's pretty basic logic, pretty basic commonsense. Cut money on taxes, less money you spend on other things. That's what he keeps saying. LANG: Well, they're suggesting that you shouldn't cut Capital Expenditure because they want to see continuing expenditure on infrastructure. What we are contemplating is raising the profile of the private finance initiative. HUMPHRYS: But they know that. LANG: They know that - yes - and they welcome it but they want it to be made easier and to work more effectively for them and so do I. We've already got about two billion pounds worth of contracts left under the private finance initiative. We expect to have about five billion left by the end of this financial year. So, it is beginning to take off very effectively. What I believe is important is that the Chancellor takes a view of the overall state of the economy and decides on whether or not he will increase taxes, or reduce taxes or leave them unchanged on the basis of whether that will best help the economy to perform, to allow us to continue to grow on the basis of a stable economic base, keeping inflation low. That is the kind of stable base that industry wants most of all. HUMPHRYS: So, are you telling me that if there are to be cuts in Capital Expenditure by the Government to save money for whatever purpose it may be that the private finance initiative will make up those cuts. So, there won't be real cuts in capital projects - is that what you are saying? LANG: Well I can't get drawn into what the Chancellor will decide to announce on Tuesday. HUMPHRYS: Of course not. I've accepted that but I'm following up what you've just told me. LANG: What I'm saying is: if industry are worried about infrastructure, then they must recognise that the private finance initiative is there and is increasingly expanding to enable infrastructure expenditure to take place quite independently of Public Expenditure levels. HUMPHRYS: Right. And that would, therefore, make up any cuts there might have to be in other directions. LANG: That would be a very considerable assistance. But let's not lose sight.... HUMPHRYS: But it wouldn't make up the cuts. So, in other words, they're right to be worried that there would still be - this is what they're worried about. I'm not telling you what I think, I'm telling you what they think. LANG: Well, if I may just finish. I can't tell you whether it will make up the difference because I don't know what the Chancellor's sums will be. HUMPHRYS: So, their worries may be real. LANG: But, the point I wanted to make is that investment is not just public sector investment. The vast bulk of investment is private sector investment and if you look at what has been happening, investment has been going ahead more strongly in this country in recent years than it has in many other countries in the European Union. It's now running at some six times the level it was under the last Labour Government. And, just to give you one component of that investment, look at the investment that comes from abroad into Britain. That is the verdict of the global economy on how much more efficient Britain has become and how much more attractive a location it has become. That we're now attracting hundreds of companies a year, bringing tens of thousands of jobs and billions of pounds of investment into this country. That's broadening our industrial base. It's diversifying the range of activities in which we are good at and it is generating the growth in employment and increasingly in prosperity that is so important to us. HUMPHRYS: They, the business leaders, are also worried about tax cuts because the implications about that for Public Borrowing - PSBR - would have to be larger if you cut taxes and the implications of that, then, for interest rates. Interest rates might well have to go up. They are terribly worried about that. LANG: You've mentioned two of the components that the Chancellor has taken into account and I'm absolutely sure he will, in drawing up his overall calculation. He's not going to go for irresponsible cheap, short-term headlines. He's not going to go for gimmicks, of the kind the Labour Party has been going for. He is going to continue to commit us to the longterm recovery and regeneration of this country. And, it is those difficult decisions, taken several years ago, that have enabled Britain to emerge from recession faster than the rest of the European Community. That is why we have unemployment two per cent below the European average and why we have new jobs being created and new companies starting up and expanding. HUMPHRYS: So, no vote winning tax cuts on Tuesday? LANG: I don't know. You will have to wait and see what the Chancellor comes out with on Tuesday. HUMPHRYS: You've just told me he's not going to do that. LANG: He's not going to go for cheap, short term gimmicks. That's what I told you. He's going to continue to commit us to the longterm regeneration of Britain and make us the enterprise centre of Europe. HUMPHRYS: Is he going to steal Labour's thunder by bringing in 'Windfall Tax'? LANG: I don't think Labour has very much thunder and as for that 'Windfall Tax'. Again, I've no idea what the Chancellor is planning but I have noticed that Mr Brown seems to have forgotten that a 'Windfall Tax' is, by definition, a one-off tax. It doesn't recur year after year. He's committed it not only to a ten or eleven different spending projects but projects which would continue year after year. What is clear is that the Labour Party's sums simply do not add up and that is one illustration of it. HUMPHRYS: Business wouldn't like it, if he did do that, would they? If he did decide to steal the thunder - I'll use that phrase, even if you don't like it, and bring in a windfall tax because what that would be saying to business is: you make a bit of profit. Tories take it back from you. LANG: Whatever the Chancellor does on Tuesday, you can be sure that he will have thought through, very carefully, the implications for the economy, the implications for the environment in which business must operate and I'm quite certain that he will not depart from our long-term commitment, to providing a stable base, with low inflation, keeping interest rates at as low a level as compatible with the expansion of the economy. HUMPHRYS: You seem to be leaving open the door for a Windfall Tax by a Conservative Chancellor? LANG: Well, I've already made it very clear that a Windfall Tax is a one-off tax. The Labour Party has promised to enter into spending programmes that would run for many years and they've committed it to eleven different projects. It simply doesn't make sense. The context in which it is being advanced is clearly one of short term gimmickry on the part of the Labour Party. And, no wonder, they've fallen out amongst themselves over Mr Brown's tax proposals. HUMPHRYS: Let me give you something else that business leaders are worried about and that is your Party's attitude - your Government's attitude - towards Europe. They're afraid that you will take - from their point of view - the wrong decisions on Europe because of pressure from within your own party. LANG: No. I don't think that's likely, at all and you have to remember that the biggest step forward that Europe has made in the last few years has been the completion of the Single European Market. That, for many people, many businesses in particular, was what Europe was
all about. It was getting a free trading area in the European Community where British business could compete on a level playing field with the rest of Europe. Something like sixty per cent of our trade is with Europe. It is a vitally important market to us. We are increasingly competitive with it. Indeed, we're leading the field by many yardsticks. So, we are not going to reverse the benefits for our business community that have been derived from Europe. What we want to make sure is that Europe does not become Fortress Europe. We want Europe to be open to the rest of the world. We believe in trading globally and we have been working very hard to liberalise trade across the Atlantic and multi-nationally around the whole world. HUMPHRYS: So, do you not recognise that some business people are terribly worried about what's happening here? The attitude that you're taking - your Government is taking - towards- and you heard somebody from the Chamber of Commerce in that film saying: we are worried because when we go to business people in Europe and say: we want to do busines with you. They say: but in another few years' time you'll be right on the fringes of Europe. So, what's the point? I mean, are you not hearing that message? LANG: We are not on the fringes of Europe. We are leading the agenda. HUMPHRYS: No but I'm asking you whether you are
hearing that message coming from so many business people? LANG: Well, you get individual businessmen saying different things. There are some businessmen whose trade is primarily with the Far East or with the United States of America. I recognise the importance of those markets. I've been to both areas since I've become President of the Board of Trade, leading trade missions and trying to open up trade with them, to very good effect. We're now in surplus with our trade with the Asian Tigers. Those are important markets for us. Threats we were told they were but we're turning them into opportunities. So, we are trading with Europe and with the rest of the world and we recognise the strength that both can bring to Britain. HUMPHRYS: Yeah. But, I'm taling about the real experiences of real business. You've spent a great deal of time in Westminster and you've spent a great deal of time quite properly dealing with politics. They are over there. They are on the continent of Europe and they are talking to business, trying to do deals and they're coming back and saying: it's becoming more difficult because of the way this Government is heading on Europe. You seem to be dismissing that. LANG: I was in Germany two weeks ago and I met the chairman of BMW; I met the chairman of Seimens, Micro Electronics. They and other businessmen, whom I met in Germany, were singing the praises of Britain and they regard our agenda as the right agenda for Europe. HUMPHRYS: Well they would do, wouldn't they? I mean, you're the Secretary of State. LANG: They regard us as leading the way in Europe and they have committed their- They've backed up their words with their resources. They have invested in Britain because they see us as leading the way in Europe. They believe our agenda of keeping labour markets flexible, of reducing non wage labour costs - those additional burdens that come in on top of labour costs - are keeping them low and they recognise, too, that we look globally; that we do not confine ourselves just to Europe; that we are strongly committed to Europe, where we have such strong investment and export interests but that we also recognise the benefit that Europe and, indeed, Britain can have from the rest of the world. HUMPHRYS: There's also this worry isn't there that the British Government is getting a reputation? I'm tempted to say it again, or more so for being an awkward customer. And, the problem with that is that when it comes to trying to get our message across, people are not going to listen to us because we're on the edges, because we're always the awkward squad. LANG: Well it's always very easy to be a pushover. Mr Blair has committed the Labour Party to accepting more- HUMPHRYS: No. But, I'm not talking. With the greatest respect, I'm not talking about Mr Blair here. LANG: But I am. I am. HUMPHRYS: I'm talking about the Chairman of Barclays Bank- LANG: I am. HUMPHRYS: -who said in our film - you heard him there - "we're worried about the way it's going". Now, the Chairman of Barclays Bank's a pretty sophisticated sort of bloke, isn't he? He knows what Mr Blair has done. LANG: Yes. HUMPHRYS: He knows what you have done and it's him I'm quoting and it's him I'm asking you to respond to. LANG: Well, now, if I can answer your question. The Labour Party and the person of Mr Blair is willing to commit themselves to more qualified majority voting, losing our veto on important issues of importance to business. HUMPHRYS: I've no doubt that if that's true Mr Buxton, the Chairman of Barclays Bank, knows that too. LANG: Now, by contrast, I'm not so sure whether business in general does realise it. Mr Blair did not make- HUMPHRYS: What? They're that naive! LANG: Mr Blair did not make it clear in his speech to the CBI. Indeed, he implied the opposite. HUMPHRYS: But if you know it why don't they know it? LANG: The Social Chapter is no more than a set of principles. HUMPHRYS: Oh! LANG: But we by contrast are prefectly willing to be awkward if we believe that Britain's interests are thereby best protected. And that is why the Prime Minister stuck out and won for Britain the right to decide whether and when we join the Single Currency, whether and when we join the Social Chapter. HUMPHRYS: Yeah. LANG: But we believe in fighting for Britain's interests where we see them jeopardised in Europe. HUMPHRYS: What I'm putting to you is that business people tend to be a pretty sophisticated lot. They know what's best for their business. They're very experienced people. They talk to all manner of people and you seem to be saying: "I know better than they do what's good for them". LANG: No, I'm not! I'm saying that I talk to a lot of businessmen, as indeed we do as a Party. But, most of our agenda has been developed with co-operation and, indeed, reflects their views and they will say so if you ask them. But, obviously, there are issues on which one individual in one business will have one particular viewpoint and another individual in another will have a different viewpoint. We have to bring those interests together and advance them nationally. HUMPHRYS: Final five seconds: have you offered a job to the Princess of Wales? LANG: No, we have not and nor have I discussed it with the Prime Minister. HUMPHRYS: Ian Lang, thank you very much, indeed. LANG: Thank you. ...oooOooo...