................................................................................ ON THE RECORD CHRIS SMITH INTERVIEW RECORDED FROM TRANSMISSION BBC-1 DATE: 30.6.96
................................................................................ JOHN HUMPHRYS: Well Chris Smith there we are. You've been thinking the unthinkable and now we know what it is, with a few changes at the margins, but acceptance of the main things that the Tories have been doing all these years that you have opposed. That's what thinking the unthinkable has turned out to be. CHRIS SMITH: No. Not acceptance of what the Tories have been doing and what we've proposed this week is wholly distinctive, especially from what Peter Lilley and his predecessor's Secretary of State have been all about. What they've been wanting to do is to cut the Welfare Bill by slicing away, salami slicing tactics, bit by bit at the benefits which go to different groups within society. I don't want to do that because I want a Welfare System yes, that saves money, but I want to save money by getting people back to work, not by demeaning the people who have to depend on the Welfare State. HUMPHRYS: But you are not committed and I emphasise that word committed, you are not committed to changing some of the most important reforms that they have introduced are you? SMITH: There are some of the reforms that they have introduced which I think will need changing. There are others that perhaps not. There is so much that'as changed. We're not going to be able to do everything all at once, of course not, and we have to judge whatever we can do by what the country can afford. Let's take it step by step, but I want to undo some of that damage. HUMPHRYS Well, taking things step by step is one thing. Saying, "I am committed to changing some of the things we most dislike", you're not prepared to say that. SMITH: Well, I am. Let's take for example the position of the very poorest pensioners, because at the moment we have some six hundred thousand pensioners in this country who get nothing but the basic state pension. They are entitled even under present circumstances to receive income support, but for a variety of reasons they don't actually get it. Now, the present government have done absolutely nothing about trying to ensure that these six hundred thousand pensioners get what is their rightful due. Many of them are living something like fourteen pounds a week below the bread line. Now that, in a civilised society at the end of the twentieth century I don't think is acceptable, and we've got very specific proposals to try and put that right. HUMPHRYS: Right. Well, let's look at pensions in the round then. Now, one of the things that you did not like, you were fundamentally opposed to, was when they broke the link between pensions increases and wage increases and they related it instead, they related pensions increases instead to inflation, to prices. Now, you were fundamentally opposed to that, you condemned it, you said it was immoral, it was illegal and all the rest of it. You have abandoned the promise to restore that link. SMITH: And what we've said and I think rightly said, is that we can't in advance of an election commit ourselves to a specific figure, or even a specific formula, because we need obviously to test anything in government against what the country can afford. HUMPHRYS: So you've abandoned the link. SMITH: We're not going to make absurd promises which then can't be fulfilled. What however, we have said and this is actually terribly important - in the pensions document that we published on Friday we've said that the principle, the over-arching principle that we want to put in place is that all pensioners, both today's pensioners and tomorrow's pensioners should be able to share fairly in rising national prosperity. HUMPHRYS: Very nice warm words indeed, but it isn't the same as saying there ought to be a link, because of the dignity of pensioners, there ought to be a clear link which is what you have always said, between increased.. SMITH: Not just warm words John, not just warm words, because what we've said is that that principle is one of the very key things that we want to be judged on in government. HUMPHRYS: But the link was the key thing. SMITH: And indeed we're proposing that we should set up an independent body, a strong independent body with
representatives of pensioners included on it who will monitor what our performance is in government against that principle. That's the important principle, not a particular formula or a particular figure, the principle of ensuring that pensioners share in rising national prosperity. That's the important thing. HUMPHRYS: We're talking about a legal framework, that is to say a clear link between one thing and the other and this sort of vague, unspecified promise of sharing in the national wealth. They knew exactly, the pensioners knew exactly what they wanted, and you believed that was what they should have and now you're saying you're not going to give it to them. SMITH: It's not a vague promise. It's a very clear commitment, a very clear principle, and we've said we will be judged on it in government and we want pensioners up and down the country to judge us by it. HUMPHRYS: You're being judged on it now. Jack Jones who runs the pensioners organisation says it must be restored and he'll make damn sure at the next Labour Party conference if he possibly can, that it will be restored. Pensioners object. You saw them on that film there. SMITH: I have regular and very friendly discussions with Jack Jones, and we will continue to do so and in government we will continue to do so. We won't ignore the pensioners' movement in the way that the present government have done. We will make sure that we sit down on a very regular basis and we will expect them to hold us to account on what I believe is an extremely important principle. HUMPHRYS: But you know as you sit there, that Jack Jones is not going to come out of one of those meetings with you and say, "Well, I've got what I wanted", because what he wants is - he couldn't be clearer about it - is the restoration of that link that you were committed to. SMITH: What we can't do in advance of an election, is put forward a specific figure or a specific formula, because we don't know what the state of nation's finances are going to be, we haven't seen the books, we don't know what the country is going to be able to afford when we come into government. What we're going to do is have a look at that, see how the economy is growing and make sure that pensioners can share in that growth. HUMPHRYS: Right. Well, then let's look at.... SMITH: That, I think is a very important commitment. HUMPHRYS: Let's look at this question of sharing in that growth then, as you put it. Here is the consequence if I can suggest to you, of abandoning that link. The poorest pensioners will become even poorer relatively than the richest. Now, that isn't me saying that. That's your own Social Justice Commission, the BORIE (phon) Commission very worried about that fact. Hence it said, there must be a compulsory second state pension. You've abandoned that too. SMITH: No, we haven't. There is of course compulsion in the present system. Anyone who is employed has to contribute.. HUMPHRYS: Anyone who is employed. SMITH: Four-point-eight per cent of their earnings, partly from the employer, partly from the employee, into a second pension. It can either be SERPS, or it can be a personal pension, or it can be an occupational pension. What we want to do is to take that element of compulsion which is there in the system at the moment and make it work better for people, because personal pensions, the so-called, very mis-named appropriate personal pension pushed by this government, it's the darling of Peter Lilley's entire pensions policy, have been a very bad buy on the whole for the people who've taken them out. We want to do better than that. That's why we want to create an entirely new framework for second tier pensioners and use that existing amount of compulsion in the system in order to ensure that people can get better value for money. HUMPHRYS: People can get better value for money if they've got a job, if they can afford to make those contributions. If they can't, as Frank Field made clear in that film, it's tough on them isn't it? SMITH: That is why we've also suggested that we should use the SERPS structure to create what we call a citizenship pension for those people with particular caring responsiblities during parts of their, what would otherwise be their working... HUMPHRYS: We're talking about a small group of people here. SMITH: Oh, we're talking about millions of people HUMPHRYS: We're not talking about the entirety of pensioners who cannot afford the kinds of things that you were talking about. SMITH: You are talking - when you talk about people who have caring responsibilities, and you're not talking about a tiny group of people. You are talking about many millions of people in this country... HUMPHRYS: But, you're not talking about the totality. SMITH: ..and we want to make sure that they can build up credits in their pension so that they get a second pension, as of right. HUMPHRYS: But, there will be people left without second pensions, won't there? SMITH: There will be no one who is in
employment, or who has caring responsibilities, under the scheme that we're proposing who will be without .. HUMPHRYS: Absolutely. SMITH: ..a second pension. HUMPHRYS: But, you didn't answer the question. I said, there will be people left without a second pension and there will be. SMITH: Well, if someone has been unemployed throughout the entirety of their working life, then, they would not have been able to make contributions from earnings into a second pension. But, that would happen whatever sort of second pension policy you put together. What we do want to do of course, is to ensure that no-one is in that position because that's where the Welfare to Work proposals that we have to avoid people becoming longterm unemployed, in that fashion, become so important. HUMPHRYS: But the point Frank Field makes and many others agree is that unless there is compulsion here those loopholes - and, there are people who are going to fall through them - and, they will continue to fall - they are at the moment. They will continue to fall through them unless SMITH: But, but- are you suggesting... HUMPHRYS: ..you close those loopholes. I'm telling you what Frank Field says. SMITH: Wait. Are you suggesting that someone who is unemployed throughout their life should be compelled to pay from their Unemployment Benefit into a second pension? HUMPHRYS: The State would pay. The State would pay. That's the whole point. SMITH: And, that-that-that is-That is- HUMPHRYS: Of course not! If they don't have any money.... SMITH: That's to be expected? HUMPHRYS: ....they cannot pay. But Socialism... SMITH: Well, that's... HUMPHRYS: ...is 'sposed to say: if they can't pay, the State will pay for them. I thought that's what it's all about. SMITH: That is why the concept of the citizenship pension, for those with caring responsiblities.. HUMPHRYS: Carers. For carers. SMITH: ..is actually so important because that means that people who by - not by virtue of being deliberately idle, but because of their circumstances aren't able to earn and therefore contribute will be able to build up credits in their pension so they can get a second pension as a right. HUMPHRYS: People who are not clever are going to have to rely on the generosity of future Governments, to make sure that they're going to be alright in their old age. That's what it amounts to, isn't it? SMITH: Yeah. HUMPHRYS: That's what you're committing them to? SMITH: That is why the basic State Pension is the foundation stone on which everything else should be built and that is why, also, we want to direct some special help to those people right at the bottom of the income scale - the poorest pensioners, the six hundred thousand at the moment who have nothing other than the basic State Pension. We believe that they deserve better than the treatment they're getting at the moment. HUMPHRYS: And, that is precisely why they want you to restore the link. SMITH: That is why we've put forward proposals for a Pension entitlement, to make sure that people can get their due, that
don't have to live below the breadline, which is what they are doing at the moment. HUMPHRYS: The Institute of Fiscal Studies has looked at your proposals and has concluded that there is effectively no difference - very little difference, to quote them directly - between your proposals and those of the Government's. SMITH: Well, they're wrong because what the Government has done, the fundamental building block of Government Pension policy is to leave it all up to the private sector. Personal pensions - they keep on telling us - are the answer to everything. Well, they aren't. What we're putting in place instead is a real partnership between Government and the private sector, to create much better, much better-regulated second-tier pensions and to couple that with help for the people right at the bottom and the Citizenship Pension for those who have caring responsibilities. HUMPHRYS: Alright. Let's move on to another area: the Job Seekers' Allowance, which means that whereas the 'dole' used to last for twelve months it's now going to last for six months. Now, when that was introduced, you fiercely opposed it. You said you would change it back again. That's been abandoned as well. SMITH: No. We fiercely opposed it, when it was introduced - certainly - and we pointed out what we think are going to be the problems that will come in training from it. HUMPHRYS: You said: we will get rid of it. SMITH: We didn't actually make that.. HUMPHRYS: Well, Ian (phon) McCartney said exactly that. I have the quote. SMITH: What we did however was to identify was what we think will be the problems that come in train from the Job Seekers' Allowance. Now, remember, it hasn't come in yet for the great majority of people. It comes in in October. What we're saying in the document on welfare to work is that we will review what happens as the Job Seekers' Act is implemented. If, indeed, the major problems - particularly the creation of a trap for husbands and wives at seven months, which is the real problem that we believe will come in train with the Job Seekers' Allowance. If that is as fierce, as we believe it to be, we're going to look at how we can get rid of that problem. HUMPHRYS: I'm puzzled. I am genuinely puzzled here. Ian McCartney said "We will get rid of it". No ifs, ands and buts"we will get rid of it" - your own spokesman. SMITH: No. What the team - both the Employment team and the Social Security team - did as the Job Seekers' Act was going through was to point out all the difficulties that we believe are likely to come in train. HUMPHRYS: He would not have misled the House, would he? I mean, if he meant we'll get rid of it.. SMITH: We still believe that there are likely to be major problems that come in train from the Job Seekers. Thus, indeed, in the document we published on Monday we point them out. But, what we want to do is to see what happens when it's introduced in October. Let's see what the consequences are. If they're as perverse as we think they are, then we've got a commitment there clearly in the document to review the workings of the Job Seekers' Act and we'll take a very good look at it and tackle those problems as they arise. HUMPHRYS: But it's pretty clear isn't it that you're not going to put that money back in, any more than you are going to restore the link between Pensions and Wages? And, the basic reason for that is - we learned this morning from the reports about what's in the road to the manifesto - which is going to be published this week - is that Tony Blair's view is that State spending has gone far enough and we can't keep spending to solve social problems. That's the view isn't it? SMITH: Well very often you don't need to spend more in order to solve... HUMPHRYS: But, sometimes you do. SMITH: ..to solve social problems and indeed there are some aspects of spending that maybe are not so necessary and that's one of the reasons why I've taken a very careful look at the amount of fraud in the benefit system at the moment. I believe there are substantial savings to be made from that. Some things the Government have not even been prepared to look at such as Landlord Fraud in the Housing Benefit system. Let's take a very serious look at that because I think we can save some money there. HUMPHRYS: Sure and you don't, as you say you don't always have to spend money to solve social problems but it has been something in the past that your Party has been prepared to do. It has looked at a particular social problem and almost, invariably, say we'll sort that out.We'll raise taxes if necessary to help the old aged pensioners, to help the out of work, whatever it may be. Now that is something which no longer applies to the new Labour Party, isn't it? SMITH: Well, I have to remind you John that people are paying much more in tax at the moment... HUMPHRYS: That wasn't the question and you're well aware of it. SMITH: ...back in 1992 and that's why we don't think that the ordinary people of Britain ought to be burdened with extra taxation under a Labour Government. What we want to do is to see if we can use existing resources much better and we believe we can. And, we also want to see, as we save money, as we save money from tackling fraud in the benefit system, as we save money from getting people back to work altogether. So the Benefit bill comes down as more people get back into Employment. Let's see how we can use that money to undo some of the damage the Tories have done. HUMPHRYS: You may be... SMITH: That, I think, is a very sensible approach. HUMPHRYS: And you may well make some progress but you seem to be agreeing with me when you say that if it doesn't, if those things don't work you ain't going to spend that money. You're not going to say to people there is this problem with our old aged pensioners, whoever it happens to be, but we are not going to tax you a bit more to help them out. SMITH: We're not.... HUMPHRYS: You're quite clear about that, aren't you? SMITH: We're not going to spend money we don't have. We're not going to increase the taxation burden on the ordinary people of Britain. That's very clear. But what I do want to do is to make sure that as we help people to get off benefit back into work - and we have a whole raft of proposals and the policies that we announced on Monday to help to do that - the benefit bill will come down. All the international evidence shows that. HUMPHRYS: Right. SMITH: Where this sort of approach has been tried it does. And, then we can look at how we can best deploy the resources that that frees up. HUMPHRYS: Let me invite you to put yourself in the position of somebody who's been in the Labour Party for many, many years and who thought that being in the Labour Party meant he was joining an outfit that said if there is a problem, a real deep seated social problem, we are prepared to court even a bit of unpopularity may be, but we are prepared to spend the
money to sort out that problem. Now he finds that the leadership of the Labour Party says: No, that isn't the policy any longer. And, he wonders whether it's the same Party that he's joined. Indeed some of your own MPs. We've got Paul Flynn, one of your own MPs in the newspaper this morning saying it isn't the party I joined. Tony Blair has hijacked this party and he's now considering whether he's going to stay a member of it or not. Put yourself in the position of those people - how do you feel? SMITH: Well, Paul Flynn is a very good friend of mine and I'm absolutely confident will be fighting the next Election as a Labour candidate. HUMPHRYS: He's not absolutely confident. SMITH: And, sitting in the Parliamentary Labour Party after the Election. What I would say to people who question that is very simple: we haven't abandoned philosophy, we haven't abandoned our objective which is to tackle insecurity, to tackle poverty, to tackle want. We want to make sure that we get people back to work. We don't believe in clobbering the rest of Britain in order to do it. We do believe that we can make progress and I think the policies that we've put forward this week will help us to do so. HUMPHRYS: Chris Smith, thank you very much, indeed. ...oooOooo...