BBC On The Record - Broadcast: 26.11.00

Film: POLLY BILLINGTON reports on the Conservative Party's tax and spending policies. The Shadow Chancellor, Michael Portillo MP, says that taxes and public spending would be lower under the Conservatives. But is that what the voters want?



POLLY BILLINGTON: Christmas is coming, and people are beginning to think about the presents they'll give. Politicians are also pondering on what they'd give people after the next election. Labour's Gordon Brown is offering lots of goodies to tempt the voters; Tory Michael Portillo is saying he'll spend less money on them as he wants to keep taxes down - but will people worry that public services would suffer under the Tories in comparison to Labour? PAM WATTS: There has been a shift in people's attitude, that they do want a higher service, we're a wealthier nation, we expect a higher standard of living. And, more recently it has become obvious that someone's got to pay for it and people are more attuned to that. KEN CLARKE, MP: The public don't want tax cuts if it's at the cost of quality in their public services, I'm quite sure they don't. BILLINGTON: The Tories want to keep spending below the level of growth of the economy. Independent experts suggest they'll probably need to spend between five and ten billion pounds less than Labour. So which areas of government - and therefore which voters - would find they'd get a smaller present from Michael Portillo than they'd been promised by Gordon Brown? ANDREW DILNOT: Between now and the election campaign the Conservatives are going to have to be much clearer about precisely how much less than the current government is planning to spend, they will seek to spend and the areas where they want to get the money from. I think its reasonable for them to say that they want to wait until nearer the election before doing that, but they're certainly going to have to do it pretty soon. BILLINGTON: The Tories have already said they won't spend any less than Labour on health. And Michael Portillo's committed to giving something more for pensioners. Ann Widdecombe's been promised a generous present from Mr. Portillo for law and order. And the Conservative Defence spokesman hopes to get more for the armed forces. So lots of the bigger items on Mr. Portillo's list are accounted for - which suggests he'll have trouble keeping his shopping bill down. The Tories believe he will make significant savings by cutting out bureaucracy and waste. DAVID HEATHCOAT-AMORY, MP: We want a, a smaller state that does what it does better with fewer civil servants. I mean the, the, the cost of central government has grown by over two billion pounds under this government. There are endless extra civil servants, which are entirely unproductive in an economic sense. We need faster growing businesses, and fewer civil servants, and less red tape. And that's why it's gone wrong. CLARKE: If you're going to make any real difference when you're in government it is no good assuming that everything you want by way of extra resources is going to come from cutting out waste and growth in the economy, they're the easy bits, very nice when it happens. You've got to make some policy changes and you're confined in the policy changes that you can make by the desire of the public for ever better public services - which is right - and by the fact that you probably have your own policy ambitions as well. BILLINGTON: So some tough decisions have to be made by Michael Portillo. And it's not the first time either. He tried to cut back spending as a Treasury Minister in the early 90s, critics say without much success. If cutting waste doesn't work, he'll have to get to grips with spending less on public services than Labour. The Tories have already marked out Welfare for cutbacks, and right-wingers have other suggestions about where Mr. Portillo's axe might fall. JOHN TOWNEND, MP: We have to reform the social security system, the Labour government promised to do so and use the savings on Health and Education. In actual fact the expenditure has continued to soar and its almost a hundred-and-twenty billion. Overseas aid, forty per cent goes to Europe, I think that should be repatriated like the fish. We can spend the money better, and they are spending it mainly in North Africa which is as a result of French influence. A lot of the money is wasted - we could make savings there. CLARKE: When I was Chancellor I set a target of getting below forty per cent of GDP by way of public spending and we just about got there. Now there were plenty of people who said, oh, that's er, modest, you must go much further, but of course we shed blood to get there, and it was all my right-wing minimalist minor government colleagues who fought for their budgets and made it most difficult to get that low. There's a level of public service and public support which you provide in a western European society that's going to make it very difficult to get much lower than we are now, as a proportion of GDP. BILLINGTON: Now the Tories have the Trade and Industry budget in their sights. Privately many Tory right-wingers believe they could do away with the DTI altogether; that might not be politically viable, but the man in charge reckons he can slash ten per cent off the overall budget; more than four-hundred million pounds. That's not just running costs; it would mean reducing the funding on business support services, from export promotion to e-commerce. HEATHCOAT-AMORY: What I've been told by businesses, particularly small businesses, is that they don't want all these delivery programmes of an administrative nature - what they want are lower taxes and fewer regulations. So I'm going to use some of the money which I save in order to cut business rates, particularly for small businesses. And I think that would benefit the great majority of businesses, instead of the comparatively few who benefit from these schemes which are delivered by the Department or their offshoots. GEORGE COX: Personally, I think we should support small business. Small business is very much at the heart of the economy, and not just being a small business, or creating a small business, but growing. And if you think, what is necessary to do that, it's spreading knowledge, making it easier to start a business, providing funding where it's not required for.., where you can't get it from any other source, providing knowledge, providing support - that's what small businesses need. They need that more than a thousand pound off business rates. BILLINGTON: For a business like Acorn Storage Equipment in Sittingbourne in Kent, such savings could mean cutting off a lifeline. Some of the money that would be axed by the Tories funds local support services for small and medium-sized businesses. Business Link Kent backed Pam Watts when she relocated and expanded her company, assisted her in getting a DTI grant and helped shed light on building up her business. WATTS: If you look at the grant I've received from the DTI and the advice I've had and the cost of that advice, it amounts to quite a large amount of money and the sort of tax cut I'd have to have to replace that would - I just can't see any government being able to come up with that to be honest. So, no it's not gonna happen to me. So I'll go for Kent Business Link and the advice they give and any grants that are available to help me expand. BILLINGTON: The Conservatives don't believe the DTI is very effective at picking out what's best for businesses. They think the energy of the free market is a better way of giving a lift to the economy. HEATHCOAT-AMORY: I don't think that politicians and civil servants are very good at targeting help. I think it's much better to leave it to the dynamism of the market; leave it to businessmen themselves to trade, to invest and prosper and export. And they do need some information on which to do that. There is a role for government but it's expanded out of all recognition and it's absorbing resources which should be better used in keeping the burden of taxation down. PETER KITCHING: The DTI is traditionally one of the weakest departments in Government, its budget in comparison with the vast budgets of the DETR and DefE is really quite pitiful for the job that it has to do. For a government, for any government, that trumpets that we need an enterprise economy to contemplate in any way reducing and not increasing, the DTI's budget and therefore the enterprise in the economy, is clearly gross mis-statement and gross misunderstanding of the situation. BILLINGTON: Nearly half a billion pounds from the DTI's budget is a start but it still leaves the Tories with a lot of savings to make. There's a problem though; if they're specific about where the axe will fall, someone is going to squeal. And if they are vague, Labour can accuse them of wanting to cut popular services like schools and hospitals and that could damage the Tories at the ballot box too. All of this is because the Tories hope promising to spend less than Labour will tempt the voters with the prospect of tax cuts in the future, but is that what voters really want? In the political market place many voters are shopping around for the best deal like these in Kent. The Tories have promised to match Labour's commitments on health and pensions. They haven't made the same pledge yet on other popular services. Unless they do though voters may conclude that services like education aren't as close to Tory hearts as they are to Labour's. DILNOT: I think the fact that they've ring-fenced health certainly makes other areas look more vulnerable to cuts or proposed cuts relative to what the Labour government would do, but where are you going to make those cuts, education, another large programme, but education is also an area where I think the Conservatives feel under some threats. I think they may feel they need to match Labour's spending on education. COX: There's very few if any areas of public expenditure that any of us would really like to see cut. You don't want to see less spent on health, or less spent on education, or less spent on defence. So it is very easy to be positioned as cutting something and then someone some says, "Which of these will you cut?" And that's a very hard argument to then win. BILLINGTON: The leader of Kent County Council has been dubbed the most powerful Tory in the country. Sandy Bruce-Lockhart controls a budget of a billion pounds and he doesn't cut budgets for the sake of it. His pitch to the voters in '97 that got him elected, emphasised spending rather than saving. SANDY BRUCE-LOCKHART: We decided to make only five commitments which we knew we could keep. The first thing was to retain and fight for the retention of our grammar schools. Secondly was put more money into adult education, into youth education, into our libraries and re-open and extend library hours and finally to put money into voluntary organisations and to restart grants to village and community halls. BILLINGTON: He's also spending money on family centres like this one he's visiting in Gravesend. He senses that tax cuts are not the voters' priority in the way they used to be. People who depend on public services like schools, hospitals and public transport want their politicians to organise and fund them well and that means investing for the future. The issue of whether people prefer having a tax cut in their pockets or a bit more spent on services is something that Sandy Bruce-Lockhart has researched. BRUCE-LOCKHART: There undoubtedly has been a shift over the last ten years. I think if you'd asked that question ten years ago the answer quite simply would've been lower councils tax, full-stop. People are now saying, yes, clearly we want our council tax to be low but we also want to see quality services. BILLINGTON: But voters have a history of telling pollsters they prefer money spent on public services yet at election time the results haven't always turned out that way. Strategists designing the Tory offering at the next election are hoping that tax cuts can yet again be their trump card. HEATHCOAT-AMORY: Tax is still a live and potent issue - so we are going into the election pledged, over time, to get that burden of taxation dropping back again; and one of the ways we can do it is to slim down the process of government itself, cut out the unnecessary expenditure programmes, concentrate on the front line services that people want, and help the economy to grow. CLARKE: When you have a good run you can deliver some tax cuts but I think people put the economic well-being of the country before tax cuts and I think they put the quality of their hospitals and their medical services and their schools and their universities before tax cuts and you therefore require very good government to be able to produce tax cuts every now and again. BILLINGTON: If the voters conclude throwing money at problems hasn't worked under Labour - maybe they'll conclude money isn't the answer. But they'll want to be reassured that public services will be safe before they trust the Tories with the nation's finances.
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.