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JOHN HUMPHRYS: But first let's get down
to business. There's never been a Labour government that's cosied up to
business quite like this one. And it's mutual. There's never been a time
when business leaders have been so enthusiastic about a Labour government.
But is that about to change? Indeed, is it changing even as we speak? There's
no doubt business likes many of the things the government has done - especially
a sound and stable economy. But they do NOT like all the red tape that
this government said it would cut and hasn't. And they do NOT like the
uncertainty over Europe... the reluctance by Gordon Brown even to acknowledge
that we may be closer to joining the Euro than we were a couple of years
ago. The Trade Secretary Stephen Byers is one of those Cabinet ministers
who's identified as a Euro enthusiast and he's with me.
They've a point don't
they, Mr Byers, they are getting fed up and one reason is that the government
is not enthusiastic enough about the Euro, you won't as it were get off
the fence and show them some action which is what they want.
STEPHEN BYERS: Well we have got off the
fence and we've put forward a very clear policy as far as the Single European
Currency is concerned and I actually think it's a policy that most business
people recognise as being sensible, it's looking at five economic tests
which the Chancellor has laid down and then if they are met, we have said
that we would recommend that in principle we should join a Single European
Currency so the Government, then Parliament and then the people will need
to agree.
HUMPHRYS: But staying out is damaging
manufacturing industry, that seems to be by most people's standards an
uncontested fact. Let me give you a few facts, you will be familiar with
them I have no doubt, Alan Donnelly, one of your own people used to be
the Party Leader in Europe, in Brussels 'joining would make dramatic improvements
to economies like the North East' he says that this week, or last week
as it is now. A few days ago we had the boss of Nissan, Mr Ghosn saying
'we cannot make a decision about future investment up there until we have
guarantees that we can count on' and we have Toyota this week, this weekend
saying if this goes on, he means this uncertainty, additional investments
in Derbyshire must be considered unlikely. Damage is being caused isn't
it.
BYERS: I think if we look across
the whole of manufacturing there are some sectors actually which are doing
very well, pharmaceuticals, chemicals, telecommunications, aerospace. There
are some others that are facing difficulty, particularly those that are
exporting into the Eurozone and that is because of the relative strength
of the pound against the weakness of the Euro and of course I think it
is worth reminding ourselves that it is the Euro that has been the weaker
currency. The pound for example is at a six year low against the US dollar
at the moment. So it is a sterling Euro issue but as more than half of
our exports go into that Eurozone, clearly it has a direct impact on a
number of key sectors, particularly certain parts of manufacturing. Those
companies and those commentators I think recognise the importance of a
policy which is based on economic principles and seeing that those tests
are met. What would be the worse thing for the Chief Executive of Nissan
is to adopt the policy which the Conservatives have got of saying we are
going to rule it out for at least the next Parliament because that would
then mean that investment decisions would not come to the United Kingdom
and we would lose jobs as a result.
HUMPHRYS: But you say anyway as
a result of what is happening now, that is what the man who runs Nissan
said specifically this week.
BYERS: He was a bit more guarded
than that and he did say he'd want to talk to the Prime Minister and myself
about their prospects as they saw them. But what I found interesting in
engaging in the discussion with business people who make these investment
decisions is that provided they know that early in the next Parliament
we are going to assess the five economic tests then they can understand
that in the national interest that is the correct approach for the government
to adopt.
HUMPHRYS: Can I come to that in
just a moment because I just want to pursue, I certainly don't want to
leave that issue, what to pursue what Mr Ghosn, the Nissan man has said,
and a story that has appeared this weekend about Nissan which says that
you are preparing a big package, a hundred million pounds is being talked
about which would, as it were, encourage Nissan to go ahead with that very
big development, the Micra car development to sort of compensate them for
the difficulties they are facing that you have already explained, the sterling
Euro difficulties.
BYERS: That isn't the case. I haven't
seen the speculative news story that you referred to..
HUMPHRYS: ..no persuasion for them?
BYERS: Well, I mean like any car
company in an area like the North East they would be entitled to regional
selective assistance if the application is an appropriate one. It may be
that which the newspaper article was referring to. But that is perfectly
right and proper we have done it with a number of industries but nothing
to do with the relative strength of sterling.
HUMPHRYS: Nothing to do with that at all.
So if they came along to you and said, if Mr Ghosn came along to you and
said 'look, we have got this problem with the exchange rate, it is costing
us a fortune, bail us out as it were you'd say no'.
BYERS: I would certainly say no.
That is no part of an industrial policy for the twenty-first century.
HUMPHRYS: Alright. But if they
come along asking for investment assistance, couched in different terms,
then you'd say yes.
BYERS: We would do that but we
would do it with any company whether they are trading in Europe or trading
elsewhere.
HUMPHRYS: But you see you yourself
have said when you are talking about the manufacturing industry, we would
be able..they would be able rather, manufacturing industry would be able
to plan ahead with confidence knowing that we are part of a single currency.
So you yourself have acknowledged, haven't you, that that knowledge, set
someway in the future certainly, a small way in the future, would help
them considerably.
BYERS: Well I mean there are clear
benefits from joining a successful single currency which is why we have
said that in principle we are prepared to join provided it is in the economic
interest to do so and the sorts of benefits we would get, for example are
transparency of costs, improvements in trade and currency stability. That
will come from being part of a single currency. And of course that does
tie in with some of the points that Carlos Ghosn made earlier this week.
But of course the real issue I think for business is to know and to have
the guarantee, that we are not going to let this drift, that early in the
next Parliament those five economic tests will be assessed.
HUMPHRYS: Right, and that is crucible
isn't it as Helen Liddle one of your ministers has said 'we certainly envisage
a very early referendum'. You agree with that?
BYERS: Well Helen was talking about
something else in fact if you read the transcripts of her interview, she
wasn't talking about that, she was talking about notes and coins becoming
common currency.
HUMPHRYS: This is a slightly different
point isn't, this is where she was talking specifically about the referendum
and that is a direct quote from what she had to say and I don't think that
was contested.
BYERS: Well it was actually and
I've read what she said...
BYERS: Well it was actually and
I've read what she said......
HUMPHRYS: What - that particular
bit?
BYERS: Yes, because what she said
was that it would be earlier than expected but she was talking in relation
to how we could adopt the Euro in terms of coins.....
HUMPHRYS: No, I think that is a
separate thing. She was talking specifically about the referendum at this
point in the discussion with that German journalist and she says 'we certainly
envisage an early referendum'. Nothing to do with notes and coins and
all that kind of thing which of course there was some kind of confusion
about as you say.
BYERS: Well to clarify the government's
position on this: What we have said is that we will assess the five economic
tests early in the next parliament. If they're not met then it will not
be in the national interest to join a single currency and therefore there
will not be a referendum.
HUMPHRYS: Right. Well let's try
and clarify that a bit now because what business leaders would like is
they would like to have a clearer idea about your intentions. They would
get that if you were able to say whether you believe they or we are any
nearer to meeting those five economic tests. I mean there is no reason
to delay that sort of statement until after the election is there? I mean
it's perfectly clear what's going on to everybody.
BYERS: But there are different
views John as you know, where we are. But I think the important thing
for government is to get into a situation where we're not giving a running
commentary every week on the progress .........
HUMPHRYS: ..... it doesn't have
to be every week........
BYERS: ....well how often should
it be then?
HUMPHRYS: Well let me tell you
what Alan Donnelly said and we'll come to that in a second. 'No, there's
no problem in assessing the five tests before the election. If you leave
it until two months say before a referendum it's too late to get the message
across'. Good man as you say Alan Donnelly (both speaking at once)...
you approved of him earlier.....
BYERS: Well I still do and that's
the sort of campaigning issue that Alan's referring to isn't it and there
is an issue about how you can campaign for a yes vote if there is going
to be a referendum. But you see in all of this, it's not a sort of campaigning
tactical thing, I mean the Euro, is not in the short term, the Euro is
going to be forever if we join it in reality and so we've got to get it
right, we've got to take our time and we've got to make those assessments
of the five economic tests and we've said when we will do it will be early
in the next parliament.
HUMPHRYS: But look - the Chancellor
produces key economic statistics at least twice a year so since the five
tests were first established when was it, two and a half, nearly three
years ago now, we've had how many - a dozen, fifteen of these sets of statistics?
Are you really saying that there is no way of telling at this stage after
all of those assessments and statistics have been pushed into the grinder
that you can't tell whether the ball is bouncing, to use that old phrase,
'closer to the target' or further away from it? It's obvious isn't it?
BYERS: John, you know as well as
I do that there is a difficulty in having an adult debate about the single
currency and if the Chancellor every six months.......
HUMPHRYS: Why?
BYERS: ..... because of the way
the media deal with this matter.......
HUMPHRYS: But that's politics isn't
it.......that's got nothing to do with economics.........
BYERS: Well it's not actually politics
it's the way media have an obsession about a particular issue and have
a sort of textural analysis about every word that everybody says about
the issue. But it is.... But when you get to the absurd situation....
I mean I use the same words when I talk about the single currency on every
occasion, that's not terribly newsworthy but if I deliver them rather more
quickly and I become enthusiastic, if I do it rather more slowly (both
speaking at once)
HUMPHRYS: Oh come on, there's a
bit more to it than that. I mean you've spent a part of this interview
telling what the great advantages of joining a successful currency would
be. If it were Gordon Brown sitting in..........
BYERS: Because you asked me the
questions..... but if you asked me the question of what the disadvantages.........
HUMPHRYS: ....yeah, but let me
put it to you this way - if Gordon Brown..............
BYERS: .... And I'd answer them......
HUMPHRYS: .... Of course you would
but if Gordon Brown was sitting in that chair and I talked to him about
the currency in exactly the same way that I've just been talking to you,
he would say - 'let me tell you why we're not going to jump in.... let
me tell you why we have to be cautious..... let me tell you about boom
and bust, let me tell you about our five year plan...... and he would
BYERS: ... well I'm coming to boom
and bust in a second........
HUMPHRYS: .... I thought you possibly
would.... And he would not have given me, as indeed he didn't the other
day when I spoke to him for several minutes about this particular thing
- a single encouraging word. Now you sit there and you say 'well I see
these benefits' and those are the things uppermost in your mind because
you have recognised that many people in manufacturing industry, very serious
people with an awful lot of money to invest in this country are deeply
worried about it.
BYERS: They're concerned about
our approach but I think the policy that we have which I've outlined this
morning and touched on the benefits of joining a successful single currency
are ones which they fully understand because they realise that they're
not going to have a government which is going to say 'we're going to join
at any costs'. If the economic conditions are wrong then it's going to
be very damaging and in fact, I mean if we were to join tomorrow at the
present exchange rate it's going to be very damaging to manufacturing and
that's the last thing in the world that they want.
HUMPHRYS: But tell me why you cannot
say, as the OECD.... I've got a quote from the OECD which you will know
by heart: 'You, the UK, is projected to be closer to the Euro Centre of
gravity, the economic centre of gravity than some of the current countries
that are actually already IN the currency'. Now why you as a government
cannot say, 'Yeah, well actually we think that's probably true'. I mean
look at it, you can see what's happening with the interest rates, you can
see what's happening with inflation and all the rest of it so clearly the
indications are in that direction and it may be that they will switch around
- of course it may be that they'll go in another direction but why on earth
you, Stephen Byers, being an intelligent man talking to some very intelligent
viewers can't say -'Yeah.... That's the way the thing goes'.
BYERS: Well look John, we've said,
and the Chancellor said this very clearly in October 1997, the Prime Minister
repeated it February last year - we're not going to join a single currency
this side of a general election.
HUMPHRYS: That's accepted......
BYERS: So why assess it?
HUMPHRYS: Because it's the intelligent
way to go about it (both speaking at once ).
BYERS: Because it's speculation.
People think - are they going to change their policy? Are they going
to change before the next general election? Far better to say, 'look,
there will be... we will assess them but not on a sort of monthly basis,
not even six monthly, but we'll do the assessment when it might lead to
a referendum if those five tests are met.
HUMPHRYS: All down to political
timing then isn't it?
BYERS: Not at all. It's not at
all. I mean, my own view, being very frank about this, and I believe that
we should join a successful single currency if those five economic tests
are met - we will never convince the British people to join if we were
to bounce them into that on the back of a general election victory.....
HUMPHRYS: Well that sounds precisely
what's going to happen....
BYERS: .... It isn't going to happen.....
HUMPHRYS: ..... everyone says two
minutes after the election 'oh we've suddenly discovered in the last three
weeks or something that those tests have been met. My goodness gracious
me, we'd no idea for three years and now all of a sudden we've discovered
that those tests have been met so let's go and join up folks'.
BYERS: Well I can assure you and
the viewers today John that that is not what's going to happen, that's
we said we will to assess them early in the next parliament and to clarify
the point there needs to be a clear distinction between the general election
and the assessment of those five economic tests.........
HUMPHRYS: .... Meaning what in
terms of.....
BYERS: .... Well I'll explain why
that's the case because if the five economic tests are met then the British
people are not going to vote in favour of joining a single currency if
they feel they've been bounced into it. They want to look at it, they
want a serious debate and then they'll vote.
HUMPHRYS: So a long gap then between
Gordon standing there and saying 'we've passed the test folks - good news'
a long gap between that and a referendum?
BYERS: No. We've said that we
will assess the five tests early in the next parliament and then if they're
met then we will put the issue to the people in a referendum.
HUMPHRYS: How soon?
BYERS: We will assess the five
economic tests early in the next parliament.....
HUMPHRYS: Meaning within months
- I take it?
BYERS: It will be early.
HUMPHRYS: Okay. So weeks, even,
perhaps?
BYERS: I doubt if it would be that
early.
HUMPHRYS: So let's settle for months
and then having done that, you will then, whether they are favourable or
otherwise, the result that is, whether your assessment is favourable or
otherwise you will say to the people of Britain 'right, now you can have
your vote'?
BYERS: No, because, well, no because
well, because if the five economic tests are not met....
HUMPHRYS: ....no referendum....
BYERS: ....there will be no referendum.
HUMPHRYS: Right.
BYERS: ....because we will not
recommend....
HUMPHRYS: ....because you will
not recommend....
BYERS: ....it will not, it will
not be in the national interest to do so....
HUMPHRYS: ....but if they are....
BYERS: ....and that shows, John,
if I can say this, that shows that it's economic considerations which are
paramount, not a quick political fix. But actually the five economic tests
are real tests, they'll have to be met, if they are met, then the government
will recommend to parliament and parliament will recommend to the people.
HUMPHRYS: So based purely on economic
considerations, that decision will be taken.
BYERS: Yes.
HUMPHRYS: Alright. Now another
reason I left out by the way all the stuff about subjective test and all
that, but that's perhaps for another, because I want to you about something
that exercises business hugely and that is red tape, something you know
a great deal about, another reason why business is losing faith in you.
You are stifling their enterprises they believe, with all the new regulations,
and let me give you just a couple of quotes - Chris Humphries who runs
the British Chambers of Commerce 'despite the rhetoric, the reality is
the government has dramatically increased the regulatory burdens, threatening
small business, strangling the very enterprise they are seeking to promote.
Digby Jones CBI 'best role for government is to create an environment and
butt out - regulatory burdens introduced by you - says the BCC costing
business ten-billion pounds a year. Now that is a damning indictment from
people who were on your side, originally.
BYERS: Well you know that we contest
those figures from the British Chambers of Commerce. But I think there's
a clear distinction that we need to draw here, between bureaucratic burdens
on business, which is the form-filling and the box-ticking, which I have
no time for and I want to remove that and I think we have taken steps,
which are making a real difference as far as businesses are concerned.
That's on the one side, on the other, are the minimum standards that we
want to introduce into the work-place and that means things like the National
Minimum Wage, the working-time directive, which gives people four weeks
paid holiday for the first time as an entitlement, the rights to give part-timers
the same legal position as full-timers in the workplace. Now those are
minimum standards, that's not red-tape or bureaucracy, some of our opponents
actually say that they are one and the same thing. We believe they're
not. We believe that providing minimum standards in the workplace is sensible,
it motivates staff, it allows employers to retain them and also makes sure
that they are far more committed to the job that they are working in, improving
productivity and so on.
HUMPHRYS: Yeah, I mean you can
say what you will about the British Chambers of Commerce, but your own
man, Chris Haskins, Lord Haskins, who you appointed to run the regulatory
task force, he said, when task force was approached, approached government
departments for advice, in this case on the restaurant sector, it received
seventy, seven-zero, separate guidance booklets, one-thousand-five-hundred
pages, that's bonkers, isn't it.
BYERS: Well, that's giving guidance
and if people don't want us to give guidance then that's something we can
do, but actually if you talk to them....
HUMPHRYS: .....War and Peace wasn't
as long as that....
BYERS: ....but John, if you talk
to employers, they actually want us to give guidance about how the regulations
are to be implemented in practice.
HUMPHRYS: ....that's not what he
said..
BYERS: ....well Chris must be getting
a different view being expressed to him, but if I get the view expressed
to me from people who deal with the DTI that they don't want guidance,
then I'm more than happy not to give it
HUMPHRYS: Let me give you another
of these little lists that I'm doing a lot of in this discussion about
the sort of directive and things that you are talking about. Working time
directive, minimum wage, unfair dismissal, trade union recognitions, working
families tax credit, part-time workers rights, parental leave introduced
last December, time off for emergencies. Now that is a very short list
of some of the things that they now, businesses now have to get involved
in and have to be responsible for and if you take that last one, parental
leave, there is a concern now, a very strong concern that as you put it
yourself in an interview you did recently, that, on parental leave and
emergency time off is just the beginning. The next stage perhaps and this
isn't what you said, but I'm asking you whether it's what you meant, the
next stage is that employees will be paid to take that parental leave and
so on. Is that going to be the next stage?.
BYERS: Well as you know there is
a review group which is looking at the whole question of parental leave
and also statutory maternity pay, which I am responsible for leading and
we will issue a document probably before the turn of the year...
HUMPHRYS: So it's possible....
BYERS: ....but no decisions, honestly,
no decisions have been taken yet. But actually the list is interesting
because I think it does throw up the clear distinction between red-tape
and bureaucracy, which is the form-filling....
HUMPHRYS: Yes I understand that.
BYERS: ....and that should provide
a minimum standard.
HUMPHRYS: ......but all of these
things, but all of these things involve form-filling themselves......
BYERS: ....well that's the real
issue you see. Now as you may know, when I took over at the Department
of Trade and Industry I inherited the national minimum wage and a proposal,
that in every wage slip there should be a two-hundred-and-fifty word statement
saying what the national minimum wage was and that was to go into every
wage slip, for everybody, whether it's a cleaner or a cabinet minister.
Now I stopped that because it was going to cost something like two hundred
million pounds a year...
HUMPHRYS: ....are you going to
peg the national minimum wage to earnings growth, that's what everybody
seems to think you are going to do?
BYERS: Well, we've given the Low
Pay Commissioner a new remit to report to us next year and one of the issues
that they will be able to look at will be the increases in earnings. In
the past they were restricted to increases in inflation effectively, now
they can look at earnings, but also they will need to take into account
the impact of low pay and the minimum wage on particular sectors and levels
of employment, they've got a more rounded approach they can look at.
HUMPHRYS: So, it could mean, again,
could, I know you've not taken a decision of course, but it could mean
quite a substantial increase in the minimum wage, couldn't it?
BYERS: Well, the important thing
about the minimum wage is it is a wage, it is a payment for people in work,
and therefore I took the view it was wholly appropriate that they....the
low-pay commission should be looked at increases in earnings, because that's
what people get paid, rather than linked with inflation. It's making the
break between the national minimum wage being seen almost as a state benefit
to be uprated annually in line with inflation and actually linking it and
looking at it in the context of what goes on in the work place and I happen
to think it is better to look at it in relation to what goes on in the
work place which means the rise in average earnings.
HUMPHRYS: I will be shot by many
people watching this programme if I don't ask you about IR35, that's an
Inland Revenue regulation, strictly speaking the Chancellor's affair, I
suppose, but one that means that an awful lot of small business people,
people who run their own little businesses, especially in the IT sector,
find utterly crippling, it's going to cost them, it is costing them a fortune
and they are saying we cannot carry on if this carries on. Are you going
to think about rowing back from that?
BYERS: Well, IR35 was introduced
to ensure that people couldn't use service companies as a way of escaping
their responsibility for tax and national insurance.....
HUMPHRYS: ....and it's had massive
ramifications, people writing to me all the time at this programme saying
we are going bust, we have actually had to close down.
BYERS: Well, I'd be surprised that
people, because they now have to pay tax and because they now have to pay
national insurance in the way in which we all have to, they are being treated
fairly like everybody else. If they were using service companies as a
device to escape their liabilities, then I think it's right and proper
that we....
HUMPHRYS: ....but will you look
at it again?
BYERS: ....well we want a fair
tax system, in the context of a fair tax system, we review all of our proposals.
HUMPHRYS: Steve, thank you very
much indeed.
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