BBC On The Record - Broadcast: 25.06.00

Film: PAUL WILENIUS looks at the Government's plans for big increases in Public Spending. Will the promises of more money persuade voters who feel the Government hasn't delivered improvements in services like health and education.



PAUL WILENIUS: Tony Blair's election roadshow's back on the move. And this time he'll be promising lots of money for public services, if he wins. And the party's pinning its hopes on Gordon Brown because they know voters think they've failed to deliver improvements to health, education and transport. Chancellor Gordon Brown will soon reveal a huge multi-billion pound boost to public spending over the next three years. And at the next election, voters will be asked to trust Labour to deliver the expected improvements in public services. But this flies in the face of conventional wisdom, which says that elections are won by tax cuts not spending increases. The Chancellor's got so much money in the bank ready to hand out because of a combination of good luck and good management. Labour hopes his spending review will be the platform for the next election campaign. And like this security company, the government hopes nothing will get in the way of delivery. ANDREW DILNOTT: I think we could easily see plans that increase public spending by the end of the comprehensive spending review by fifteen billion pounds a year or so relative to where it is now. After all taxes went up in the early part of the Parliament by the equivalent of twenty billion pounds a year so there really is scope to increase public spending quite a lot. GILES RADICE: The Prime Minister recently addressed the PLP and has made it quite clear that we'd be fighting on our record of economic competence the jobs we've created for the economy and also above all on the public services and the extra investment we've managed to put into public services, education, health in particular and of course we've promised more to come, so that's a strong pitch . WILENIUS: But the government's problem is that voters may be sceptical about offers of tempting prizes, rather than hard evidence of delivery. MARK FISHER: Of course in the past governments, or indeed political parties that base their campaigns on a huge expenditure, however justified that expenditure, haven't always been successful - the public don't like their votes being purchased, or attempted to be purchased, in that way. DAVID HEATHCOAT AMORY: Where I think they're suspicious is when politicians then say well now we've got all this billions and we're now going to make everything better with it and I think that the public, they can't feel or see or touch a billion pounds - what they can see is whether the police service in their area has got better; whether the promised bypass for their town or village has actually been built - it's that that people judge them on. WILENIUS: It's the judgement of the voters which worries Ministers most. On The Record asked a focus group company often used by Labour, to gather together some women from Langley near Heathrow. They all voted for Tony Blair in 1997. They were asked to give their verdict on the government's spending programme. The message is a worrying one for Labour. CHERYL: It's the age old saying - seeing is believing and we've all be disillusioned so far. I think everyone in this room has been disappointed. KAREN: I think if people could see an improvement in the services or an increase in the services then I think we'd be flying the flags and voting for Labour with all of our hearts. JANET: I think we expected to see changes straight away - well within a year - but we've hardly seen any change in anything in three years so you tend to be a bit disillusioned with them don't you. WILENIUS: So there's now a demand for quick delivery, to shows results in time for the next election. Senior Labour figures also want the government to show it's listening to voters and has kept its promises. PETER KILFOYLE: I think that what he needs to do is to speak to his Cabinet colleagues in the Department of Health certainly, Transport, perhaps Education, Employment, DTI, and ask them where he can have a very very fast impact by committed resources in given areas. They would be best placed to be able to tell him where he could have very very positive results on the ground in a relatively short period of time, not just for the sake of it, not just because it's good politics which it is, but because I think it's important that he reinforces the faith of people in elected politicians to deliver on the promises which they've made. FISHER: The spending review is not simply about the figures - important though those are; they are an indication of the direction the government wants, goes - wants to go in. We've got to convince the public again that we really are listening to the public, over the last few months, and that we have thought about our programme and are responding and that this new round of public expenditure is responding to people - rather than telling them what's good for them. WILENIUS: Here at the Treasury, Gordon Brown is still polishing the spending package he hopes will help deliver election victory for Labour. But although voters want better public services, they don't want to pay higher taxes. So to win a second term, Labour may need to show taxes won't go up, and could even go down. Their heaviest weapons in elections are always deployed on the issue of tax and in the recent past it's helped produce repeated victories for the Conservatives. In 1992, the Tories hit hard at Labour's shadow budget, which admitted the better off would pay more. By 1997, the Conservatives had to rely on a general warning against NEW taxes, as Labour had promised no rise in income tax. RADICE: I think that in '92 people thought of us as a sort of instinctive tax and spenders, what we've shown is firstly that's not the case, but secondly that actually provided you run an economy effectively you can afford increases in spending and that's actually the best way to do it, rather than have large tax hikes. HEATHCOTE-AMORY: The only promise that the government has kept on taxation is not to increase the rate of income tax, or indeed corporation tax; but they've found plenty of other ways of increasing the overall burden of taxation. They've removed things like the Married Couples' Allowance; they've put up fuel duties; they've taxed pensions; they've increased stamp duty They've got away with a lot of stealth taxation; so the burden of taxation has risen enormously. SAM: Because they've abolished tax relief on mortgages , taken away relief if you've got children and they may have lowered the rate in pound a penny or a couple of pence or whatever, but they've taken it away with the other hand. KAREN: It always feels to me as if they're doing it in sneaky chunks like the petrol . Petrol used to go up by a penny a gallon, now it goes up by a penny a litre, and to me that's just outrageous. JANET: They're lowering the tax in the pound on what you pay but then they're taking in petrol and other things, its the same old story as with other governments, they give with one hand and take it away with the other, and you always end up worse off. WILENIUS: Gordon Brown cut income last year and some felt that sent the wrong signal. But others in the party feel further tax cuts may be needed. RADICE: We're not going to put up direct taxes, the rate of direct taxes, just like we did last time in the last election - we have to make that clear, and I think maybe in the field of indirect taxes, there, people think for example that petrol taxes have gone up too much and I think that something needs to be done on the petrol issue. KILFOYLE; There's no doubt in my mind that it's preferable to raise public spending on public services than to indulge in more tax cuts. If I was in a position to twist the Chancellor's arm I would suggest that he brought forward his commitment to substantially raise the basic old age pension and bring it forward to this year, because it's right in itself principally but also because it would be further evidence that the government is listening to what pensioners in this instance are saying and also learning from their mistakes. WILENIUS: But it doesn't matter where the tax promises come from, many voters simply don't believe them. Taxes might go down at first, but they soon go back up. And the voters fear they'll have to pay the bill. LINDA: There's only one source the money can come from and that is from the people who pay tax. It can only come from people who are earning money. It's the only place the money is going to come from - so it can only come from us, can't it? WILENIUS: When Labour goes to the polls , it will be far different election from any in recent memory .Gordon Brown may be able to promise big spending increases , without necessarily scaring off the voters. But the government still needs to do more to prove that taxes won't go up, and that higher spending really will make things better. JULIE: What you want them to do is to come to you and say to you - This is what we promised you when you elected us, and this is what we've brought you and compare what they've promised and what they've actually given us so that we can say oh yeah, it isn't exactly what you said, but it's getting there. DILNOT: I think it's important to realise that as far as the comprehensive spending review that's announced in this summer is concerned there's very little chance of there being delivery this side of an election in May of next year for example because the numbers that are announced this July are meant to affect public spending from next financial year, from the year beginning next April. Well in one month there's no chance that you can get a significant amount of delivery. WILENIUS: So without real improvements in public services, the government will have to make even more promises and hope the voters will trust them again , to deliver more in the future. INTERVIEWER: Is the Labour Party's promise of higher spending going to persuade you? MICHELLE: I'd have to wait for a while to see what comes out of this year whether anything sort of happens, whether it does improve or not , and then I'd just take it from there. INTERVIEWER: Do you trust them? MICHELLE: No. WILENIUS: Although Labour may be struggling to maintain momentum, they can take some comfort as many in our focus group still don't trust the Tories. KAREN: I don't see anything from the Conservatives that would change my mind - that, that's the reasoning. LINDA: I really would hate to vote Labour again - I really mean that - cause they've done nothing for me at all but then neither does Hague. WILENIUS: Tony Blair's Millbank machine is gearing up for election action , possibly as early as next May. Victory may be secured by distrust of the Tories if high spending helps the government reconnect with the voters. But others fear a May poll will be too early and it may be best to delay the election. KILFOYLE: The election can be anytime between now and May 2002, I don't think that there's anything sacrosanct about the Spring of 2001. If I had a choice to make I would certainly be looking towards the Autumn of next year rather than the Spring to allow time for these very positive initiatives to bear fruit on the ground. FISHER: There is no need to have an election next Spring; and indeed it would be a year before the full term of this Parliament. So the government has the ability to choose next Spring, or next Autumn, or indeed even go beyond that - and can afford to listen very carefully to the mood of people; perhaps in a way that it hasn't always, listened to the mood of people in Scotland or Wales or London in recent months. WILENIUS: Ultimately election timing is the greatest weapon but also the greatest worry for all Prime Ministers. Does Tony Blair go early, relying on promises of higher spending ? But if he goes to the end of electoral road to show more evidence of delivery, that might increase the risk of the Tories sneaking past him.
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.