BBC On The Record - Broadcast: 25.02.01

Interview: MATTHEW TAYLOR MP, Liberal Democrat Treasury spokesman.

Are the Liberal Democrats really being honest with the voters about their plans for tax and spending?



JOHN HUMPHRYS: Matthew Taylor that last point is an important one isn't it, you say that you support extra taxes for extra spending on education but when you have a specific case, as in Bristol, you bottle out and you say, oh no, we won't support it here. MATTHEW TAYLOR: Well if you can find the money in other ways as our group in Bristol pointed out you could, then why ask the taxpayer for money you've already got. But more important than that, there is an issue about...for the public not just how much they pay, but how well it's spent and the fact is in Bristol they spend more than most councils, they have a higher Council Tax than most councils and worst results in the schools. That suggests that it isn't primarily the money, it's how it's being spent and that's the criticism that the Liberal Democrats made. But you look nationally, the Labour Government in this Parliament have actually managed to spend a lower proportion of the national cake, on health, on education, on pensions and that's why we see problems building up in the Health Service, the longer waiting lists, that's why we see the larger class sizes and that's why we saw just seventy-five p for pensioners this year. HUMPHRYS: The reality is that in Bristol there is now as a result, in part of your decisions and your tactics there, there is going to be less spending on education. And the reason for that is perfectly straight-forward, you calculated didn't you, that it would cost you votes if you came out in support of higher taxes. So when it comes down to it you sort of abandon the moral high ground for the rather grubbier lower ground of winning votes. TAYLOR: No, what we're about is spending money wisely and if Bristol... HUMPHRYS: ... there'll be less money spent on education now than there would have been had you supported the extra tax. TAYLOR: Well, we will see. That's the case Labour failed to make and I think if they'd made it people would have supported their schools but the fact is, the money was there in other ways, there is no reason for those cuts to happen in schools in Bristol because they have the money available to them and if Labour want to make some kind of political gesture by punishing schools, they can, but that's not a business the Liberal Democrats are in. The business that we're in, right across the country, and we've shown it in councils, we've shown it in Scotland, is making sure that investment takes place. Look at the difference it made getting the Liberal Democrats in coalition in Scotland and you can see the difference we could make at Westminster. We've delivered free care for the elderly, we've delivered abolishing tuition fees in Scotland, we've also been able to get more money into health and education in Scotland and what we are saying to the electorate nationally, if you believe as we do, that there needs to be well spent investment, sort out schools, get rid of tuition fees, cut waiting lists in hospitals, make sure old people don't have to sell their homes in old age to pay for their care, we can deliver all of that, it will cost some money. We're not going to pretend like the Conservatives you can get some money without having any effect either on taxes or public spending - they say you can cut taxes with no cut in spending - that's nonsense. We say, there is a need for some very clear investment in these services, people know that because they use the hospitals and schools, there is a cost to that, but it is an affordable one. HUMPHRYS: Ah, well, you say there is a cost to it and that's the problem isn't it because what Bristol showed is that when they are faced with the choice, I mean they may well tell a pollster, oh yes, I want to spend extra money on the Health Service and education and all that, when it actually comes down to putting that cross somewhere where it means they will have to spend more money, they will have to pay out in their taxes, they say, no thank you, don't want it. TAYLOR: Well, this isn't the only referendum that's been... HUMPHRYS: No, no indeed but it's a very significant one.. TAYLOR: ...we saw a referendum in Milton Keynes where people did not vote for the lowest increase, they did vote for an increase to support schools and other services. We saw in the past similar work in Tower Hamlets where people actually voted for increases and the issue seems to be whether people believe it will be well spent, it will be delivered where it's needed and whether it's affordable. So on the one hand you have Labour Bristol, taxing more than most councils and delivering a worse service, where people rightly say, well the money doesn't seem to be doing the job you want it spent better before we'll give you more and on the other hand, you've got national government where people have seen eighteen years of Conservative cuts, followed in the first three years with Labour, with Labour actually spending less than the Conservatives planned and of course they're jacking it up now for the General Election but it's not actually bringing it back to where even the Conservatives had it, as a proportion of national wealth, and that's the difference we will make. We will spend some more, not much, but some more of that national cake and it will deliver those improvements in services. HUMPHRYS: Right, well let's come to that, not much, the fact is, you're trying to make us believe that we can have a good deal of extra spending for a very very small increase in taxes. I mean if you look sorts of things you are talking about, we heard a list in Iain Watson's film there, but massive increase in Overseas Aid spending, very substantial increase there indeed, reducing the ten pence rate of tax for poorest people down to zero. These are going to cost serious money and you're proposing, what, the odd penny? TAYLOR: What we've made absolutely clear is that the tax proposals we make are the limit of the tax proposals we will make and... HUMPHRYS: ...not sure I follow that - you mean you'll make no more promises... TAYLOR: ...there are no other plans, there are no other plans, the penny, the increased tax for people on their earnings over a hundred thousand pounds a year will cover... HUMPHRYS: ...yes but it won't cover it all that's the point I'm making... TAYLOR: ...will cover the things that we guarantee... HUMPHRYS: ...what, including cutting the ten pence rate to zero for instance? TAYLOR: No. HUMPHRYS: No. TAYLOR: And as you film made clear, we've said of course there are other things. We're ambitious for Britain and as the economy grows, we can spend more without raising taxes. That's common ground between all parties. HUMPHRYS: So in other words, let me be quite clear about it. That was a sort of wish list really then. That wasn't a set of proposals, so you are not promising to cut the ten pence rate to zero, that is the case? TAYLOR: No. We will do that when we can. HUMPHRYS: Right - if you can. TAYLOR: If we can - and will be a priority but we're not going to bankrupt the country to do it and we are certainly not going to bankrupt people by demanding unreasonable taxes but there are some things that do need to be done in health and education and improving pensions that we don't think can wait. Labour made the mistake of waiting and that's why people are disappointed because they haven't been able to deliver, if we are going to make those increases, improvements in services, we will have to ask people for little but it will be no more than a penny on the basic rate and it will be no more than the ten per cent increase on earnings over a hundred thousand pounds a year. So it's affordable, it's not asking people for money that they can't afford. Nobody likes paying taxes but everybody uses the schools and hospitals, everybody either faces the need to have a good pension or knows a pensioner who does and their family. HUMPHRYS: Okay, well let's look at the health spending then. You're going to save two-point-four billion pounds, substantial amount of money, by cutting the drugs bill. Now you heard what the Institute for Fiscal Studies said in that film, you can't do it because it will damage the drugs industry to an unacceptable extent, most of the extra spending that you propose, most of the extra spending that you propose depends on you doing it. They say you can't do it without damaging the drugs industry hugely. TAYLOR: I will publish tomorrow details of our health spending and what you will see in that is that we make a very clear differentiation between the money we will pay for from tax and that includes some of the money from the higher rate of tax on high earners and with that we'll deliver us one-point-six billion of improvements and that will deliver the staff, the improved pay for staff, the improved beds, that will cut the waiting list and it will also deliver the abolition of having to pay for your care in old age and being forced to sell your home in the process. What it won't deliver is the cuts in prescription charges and the... HUMPHRYS: ...eyes, dentistry and all that sort of thing... TAYLOR: ...no, that will be delivered... HUMPHRYS: ...all of that? - an awful lot is going to be delivered for a very small amount of money isn't it? TAYLOR: ...all costed, all costed through, all based on official government figures, no question about that and we will set it all out in detail, but we are not going to claim it'll deliver all of it. The second bit is to start, to stop the rip-off by drug companies of the NHS. The NHS does not have the kind of purchasing that for example New Zealand has pioneered and brought down the escalation of pharmaceutical costs as a result. They've done it without damaging pharmaceutical companies and we know and we know... HUMPHRYS: ...slightly different scale of things we are talking about here... TAYLOR: ...absolutely... HUMPHRYS: ...New Zealand doesn't quite have the drugs industry that this country does. TAYLOR: Absolutely, a much smaller purchaser managing to buy things much more cheaply than the NHS does because they've used their bargaining power. We believe the NHS can do even better because of its size and muscle in the market. At the moment, pharmaceutical companies describe this market as a premium market, where they can charge premium prices to the NHS, we think that's wrong and we don't accept the argument that the British taxpayer should pay for drugs research, whilst everyone else around the world gets the benefit of cheaper drugs prices and therefore better cancer care, more doctors and more nurses than we do. HUMPHRYS: Right, you are going to cut four hundred million pounds by chopping Social Security fraud gosh! - where have I heard that one before. You'll acknowledge that that has been around for quite..I can't remember any spokesman sitting opposite me who hasn't said we are going to do that. But, the point is this and it's a very important point made by the IFS. If you've done it, fine, use that money and spend it on something but don't spend the money before you have saved it, that's not honest. TAYLOR: I took a very strong stand when I took on this role in the Party to say 'look, I will not guarantee anything I cannot be certain of'. So the tax proposals we make, which we believe are affordable will deliver the guarantees that we make. What I will not do is promise that savings will deliver the improvements, so the pensions are paid for by that increase in top rate tax for very wealthy people, wholly delivered by and we can guarantee it to pensioners... HUMPHRYS: Sorry, I thought you told me that increase in top rate tax was also going to pay for bits of the Health Service. TAYLOR: It's more than enough to do both is the answer. Two point nine billion will pay the pensions increase, the rest will release money for the Health Service. So we can deliver both. But the fact is we want to do more, we want to do work for asylum seekers because we think that the way in which asylum seekers are supported at the moment is simply wrong. Giving people vouchers doesn't work, it's demeaning and ultimately.... HUMPHRYS: ..all this extra money on the Overseas Aid budget. TAYLOR: As I say - no that's not in our guarantees... HUMPHRYS: That's not a guarantee, that's something else that's out is it, that's a wish list one? TAYLOR: We are publishing our guarantees, which are investment in education, investment in the Health Service, investment in pensions, more police on the beat and we will make a start on that move on Overseas Aid but we will not publish what we can't deliver. All of that will be set up tomorrow, that's why we are launching the alternative budget, but let's be absolutely clear - we know that over time any economy, and all parties agree on this, there's difference between us. Over time there is..more resources become available and you can do things. Most of them are absorbed in giving people reasonable pay rises, but nevertheless that money is there. What we are talking about is the guarantees we make. We are not..nobody will get a leaflet and pretend that they will get things that they don't get. Those leaflets they'll get, the manifesto will set out detailed improvements in education, abolition of tuition fees, average class sizes of just twenty-five in primary schools, the improvements in the Health Service, extra doctors and nurses. The guaranteed improvements in pensions, all of those will be paid for by the tax rises and there will be no more - and unlike the other parties, because we set it out in that way there will be no need to resort to stealth taxes, so we can guarantee no stealth taxes in the way the others can't. HUMPHRYS: Just a final very quick thought, you'd acknowledge would you this is all just a start. I mean it's only two per cent isn't it, if it all worked out for you there's only be two per cent on top of the.. just a start? TAYLOR: In any service, over time they need more money to deliver the service adequately, if only to pay decent salaries and to pay for the new equipment that this there. But what we can guarantee to deliver is the abolition of tuition fees, lower class sizes, more doctors and nurses to cut down waiting lists, big improvements in pensions. Those are fully funded, they come in right at the start of the Parliament and therefore unlike Labour, we will deliver, we won't disappoint and there won't certainly be the big cuts you'd get from the Conservatives. HUMPHRYS: Matthew Taylor, many thanks.
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.