BBC On The Record - Broadcast: 24.06.01

Interview: DAVID DAVIS MP, who was Chairman on the Public Accounts Committee in the last parliament.

Would the Conservatives move to the right if he became the Party's leader.



JOHN HUMPHRYS: So, to our other contender David Davis, who also launched his campaign just a few days ago. Mr Davis had a successful business career before he became an MP in 1987. John Major made him the Minister for Europe in his government. He served for three years. He did not join the Shadow Cabinet when the Tories were thrown out. Instead he became the chairman of the powerful Public Accounts Select Committee - the committee that holds the government to account for the money it spends and he has rapidly moved into the seat vacated by Iain Duncan-Smith. Good afternoon, Mr Davis. DAVID DAVIS: A new skill acquired. HUMPHRYS: A new skill, well done. Your colleagues seem to want, your colleagues in the party seem to want to take back the centre ground, that's how they seem to think they can recover their position. But you are coming from the right. DAVIS: Yes, I don't think the centre ground is a good description. What we have to take back is that part of the political agenda that the public care most about, have cared most about actually for fifty years. That is public services, law and order, health, education and of course the economy. At the moment the economy is going fine, so it's the other three they care about. HUMPHRYS: But it's on the economy, it's on economic policy that you mostly, it seems to me, want to have, what was the phrase we used to use all those years ago - clear blue water - let's resurrect the phrase clear blue water for the purpose - I'm trying to remember who said that, one of your party chairmen I think wasn't it, way back when, Jeremy somebody or another. Anyway, you want to promise bigger tax cuts, that's what you are about isn't it. DAVIS: Well, I think it's a bit more complicated.. HUMPHRYS: Yeah, but let's try and deal with things that people will understand clearly, that's one of the positions from which you come. DAVIS: Of course, we want a lower tax economy but there are good reasons for that which actually impinge on public services as well and it's very simple, if you have low tax rates, you get high growth rates. If you have high growth rates, you get high tax takes and that allows you both to increase spending and continue the decline in rates as you go along, that's what happened in the 1980s, Margaret Thatcher successfully did that in the 1980s, we lost that, the grip on that at one point and the government is about to throw it away again. HUMPHRYS: So, that means that you would offer bigger tax cuts next time around if you had the choice? DAVIS: Well I think we have got to look very carefully at what we can do to save money, bear in mind... HUMPHRYS: But why do you even have to think carefully about - you've just made a very convincing case, some people might think, for a lower tax economy, therefore it follows you would offer bigger tax cuts. Unless of course you are spinning me here. DAVIS: No, no, you know I don't believe in spin. HUMPHRYS: Well that's what you say, we'll test that in that next few minutes. DAVIS: You can test that as you say in the next few minutes. But firstly, a low tax economy will deliver both more money into people's own pockets, we are not taking away their money afterall. Secondly, it will deliver more growth and it's growth that actually generates the income out of which we can pay for greater public services. To do that, to get on that virtuous cycle is the hardest part and you do that by attacking the waste inefficiency and the method of delivery of public services. HUMPHRYS: Which of course is what every single government since the year dot has said it will do, including your last for eighteen years, you were attacking all of those things. DAVIS: Slightly differently of course, I have spent the last whole Parliament actually, studying this exact point. HUMPHRYS: That is true but you've got to start that virtuous circle somewhere haven't you and what you did last time in the election, you offered out of the four hundred odd billion pounds that we spend, you offered cuts of two per cent to enable.. DAVIS: Eight billion. HUMPHRYS: Eight billion pounds, to enable people to spend. That was pretty small wasn't it by any standards it was small, you thought it was half hearted so therefore you'd offer more next time, that's what I'm trying to get at. DAVIS: It always starts small and you start the virtuous circle slowly and then it grows.. HUMPHRYS: But you said it was half-hearted? DAVIS: It grows beyond that. HUMPHRYS: Yes, but you said, you have said that that was half hearted, what was done last time was half hearted, so therefore you would do something that was whole hearted next time. DAVIS: We've got to press that case, of course we have got to press that case. What I said was the presentation of the case was half hearted, I've suddenly recognised the quotation you were talking about. HUMPHRYS: Ah, confused and half hearted... DAVIS: What I said was is that we have got to persuade the public of the importance of this case. We've got basically an economically illiterate case being put to the public by a lot of commentators. I'm sure not you... HUMPHRYS: Certainly not. DAVIS: And what we have to do is to make the case, to make the case that I've just made to you about the relationship between growth rates and tax rates, low tax economy leads to high growth rates and high growth rates gives you right..the ability to both spend and... HUMPHRYS: If it's so incredibly obvious, why on earth didn't your party do that the last time around then. Why, when one of your people, Oliver Letwin, said well maybe it could be as high one day as twenty billion, my goodness, they hid him away in the deepest reaches of Dorset. DAVIS: With the greatest of respect, I've taken two self-denying ordinances in this, I want to see my party pull together again and I'm not going to go into criticising either individuals or indeed historic tactics. I mean that's a simple fact on that. HUMPHRYS: Alright then, but something else you said, one of your quotes rather than somebody else's, you didn't want to get into, I think the phrase was 'a Dutch auction of ever higher spending policies'. So you would promise lower spending on public services. DAVIS: No, no, what I'm saying here is that it's the wrong approach completely to just think about how much money you're going to spend. What you should be thinking about, what matters to people on the ground is how well they're treated, what their life expectancy is, we've got a Health Service at the moment that kills five-thousand people a year for infections they didn't have when they go into hospital, tens of thousands from cancer, cardiac disease, strokes and so on, and tens of thousands more because of mistakes, these are, medical mistakes. These are things that will not be solved by money, they're going to be solved by the way we run the Health Service, and what I want to see is a Health Service where in, where we, not privatise it, we personalise it. We actually give people more... HUMPHRYS: ...sounds like a spin word to me, personalise. DAVIS: ...well no it isn't, it means something, it means giving power to the patient, power to the GP to choose hospitals for example. I see no reason at all why we should not be able to have free at the point of delivery a choice of healthcare for people, because that way you're going to get pressure on the system to actually give better quality health care and actually better value for money healthcare. HUMPHRYS: But let's be quite clear about this, you would be prepared to spend less, because you've said, chucking money at it doesn't solve these problems and you've said you want a lower tax economy and all the rest of it so therefore if one adds up those two facts what one comes down unless of course you're afraid to say this because you can see how it might be spun, you would therefore want to spend... DAVIS: ...clearly John, you've actually not followed my argument, I've not done it well enough, I've not presented it well enough... HUMPHRYS: ...no I'm sure the fault lies with me, let me try and clear it up very very simply. You want to... you do not believe chucking money at the Health Service solves the kind of problems you've just described, you want to have a lower tax economy, having a lower tax economy means ultimately spending less, unless of course you can increase the wealth of the nation by other means... DAVIS: ...that's right... HUMPHRYS: ...but that... DAVIS: ...no by other means... HUMPHRYS: ...that as you say takes time. You've got to create that virtual circle, so in the meantime would you be prepared to say, "we'll have to cut a bit more out of public spending?" DAVIS: No no no no. You don't have to cut, after all these..we're talking about different rates of increase in fact, but take the last government, over the course of the last government, lots of money thrown at the Health Service as we did in previous years, but there wasn't actually any increase in Health Service employment at all. That money must have gone somewhere else, we actually don't know where that money went. The point I am making is that what people care about is the delivery, what they get from their hospitals, how, if they go to hospital, let's say they've got, let's say they've got stomach cancer, in this country, they have got a quarter of the survival chance they have in Germany and about a third of what they have in France. We should be looking at these other systems and seeing whether or not we can deliver those sorts of survival chances... HUMPHRYS: ...ah well that's... DAVIS: ...and then, once you've done that, you say how much we're going to spend. This is, that's the way round... HUMPHRYS: ...that is a very interesting comparison isn't it? Because of course the French and the Germans spend hugely more than we do, particularly on things like... DAVIS: ...but in different ways too. HUMPHRYS: Ah. In different ways. And you know where they get that extra money from. They get it from people taking out private insurance, that's where they get their money from, you approve of that? DAVIS: Well, I think we've got to look at all the systems. There, they've got compulsory insurance systems, the difference between a compulsory insurance system and a state insurance system is minor in some respects... HUMPHRYS: ...but there's also an extra top-up of private insurance as you well know, in France you can spend more money and they do. DAVIS: But again you're rushing back to the sum of money, the simple fact of the matter is that we actually health care results which are as bad as people who spend a lot less than we do, what we should be looking at here is how is it delivered, what is it that actually leads Germany to deliver four times as good a result in let's say stomach cancer, or twice as good a result... HUMPHRYS: It's partly much more money. DAVIS: Well it's not four times, or twice as much money. HUMPHRYS: Oh it isn't but it depends how you spend that money. DAVIS: It's how you spend it. That's precisely the point. And that's what I've spent four years looking at. Time and time again, the failure of our system. Failures in terms of people dying... HUMPHRYS: ...right. DAVIS: ...failure in terms of operations being cancelled. These are very serious issues which if you just reduce them to simply, how much cash? You're actually answering the question the wrong way round. HUMPHRYS: So in other words, I'm trying to work out what you mean in relation to what Tony Blair is doing for us, proposing to do for instance. Not a lot of difference between you because he says precisely this, he says it's all about efficiency, it's all about delivery and so on, and so on and so on. DAVIS: I mean, he knows the words... HUMPHRYS: ...not much difference... DAVIS: ...oh yes there is. He knows the words, he doesn't know the tune unfortunately. HUMPHRYS: ...well I don't know the tune that you're singing either to be perfectly frank. DAVIS: ...take for example, take for example the use of private sector in health care he's talked about, I approve of that, but what I want to see is that done transparently so that we can actually measure the difference between the private sector and the public sector... HUMPHRYS: ...that's a question of management, I'm looking now at much more profound policy than that. DAVIS: ...it's actually a question of accountability to parliament as well. HUMPHRYS: True... DAVIS: ...because they're trying to say that PFI cannot be looked at by parliament, that's actually a very important part of the system. I mean we're disagreeing into rather technical details... HUMPHRYS: ...well I want to avoid doing that, because what most people will say, as you've just said, if I get stomach cancer, heaven knows I want better treatment than I'm getting at the moment and yes... DAVIS: ...and that can be done. HUMPHRYS: Without any extra money at all? DAVIS: No, no not without any extra money. HUMPHRYS: Ah well, there we are, you see. This is the problem that we have... DAVIS: ...but what I'm saying to you... HUMPHRYS: ...here is a man who wants to cut taxes but you don't want to spend... DAVIS: ...cutting taxes in the long run will not lead to lower revenues, it leads to higher revenues. If you look at Margaret Thatcher's era, right at the beginning, when this was a really contentious issue, you went from time when you had a Labour government which had high tax rates and low growth, almost zero growth... HUMPHRYS: But there is this thing called the Laffer curve isn't it, and once you get beyond a certain, but anyway... DAVIS: Exactly. HUMPHRYS: Getting technical, getting technical again. DAVIS: Getting technical. But a vigorous economy delivers better scope for public spending than a, than a... HUMPHRYS: And you've got to get that vigorous economy. Now one of the things that this government has done is introduce a minimum wage against which your party was wholly opposed in the early stages, now is wholly in favour. You yourself have described it, and I quote, as a cruel confidence trick on the poor, you said that only last year. So you'd rescind it? DAVIS: No, I'll tell you why. I mean why... BOTH SPEAKING TOGETHER DAVIS: Let me explain why it's a cruel confidence trick on the poor... HUMPHRYS: ...just answer that first point though, it would go, would go, would it? DAVIS: ...no no, you have to, no... HUMPHRYS: ...oh it wouldn't go? DAVIS: You have to understand why it's a cruel confidence trick on the poor. When the minimum wage was introduced it increased by twenty-six pounds a week the average cost of, the average amount paid to somebody on the minimum wage, head of a family, someone like that. Of that twenty-six pounds, he got five pounds. He kept five pounds, the government kept the other twenty-one. The whole system we now have, has most of the money taken back by the government. Now we've now got a new system, the Working Families Tax Credit. What we have to come up with here is a new system of getting these people out of the dependency culture and that requires a whole new strategy, not just the question of the minimum wage, the whole question of how this, how this funding works, we've got more than a million extra people... HUMPHRYS: ...and as part of your strategy you would get rid of the minimum wage? DAVIS: I'd certainly look at that, I'm... HUMPHRYS: ...look, come on, you see we're back to this old spin thing. You said it was a cruel confidence trick, that's very very strong language indeed. How could you in all conscience continue to inflict upon this nation a cruel confidence trick? You couldn't, could you? DAVIS: No we wouldn't, no we wouldn't... HUMPHRYS: So you'd have to get rid of it? DAVIS: Absolutely not, and what one would look at is how the, how the figures work out for the man, for the, or the woman, who is actually receiving this income. What happens to their employment... HUMPHRYS: ...I understand all of that but you see... DAVIS: ...what happens to their employment prospects? What happens to their income? Now when it was done, it was under a previous welfare system and those are the numbers I just gave you... HUMPHRYS: ...I'm not arguing with you about that... DAVIS: ...now what we have to look at is a strategy for ensuring their employment at the same time as improving their income... HUMPHRYS: ...but if you... DAVIS: ...and we've got to do that with one of the worst welfare systems that I've ever seen... HUMPHRYS: ...but if you... DAVIS: ...working family tax credit, tax credit. Now the priority actually bluntly is to get out of the dependency culture, once we're out of that we worry, we worry about how you improve their ability... HUMPHRYS: ...in order to pursue the, and we haven't got very long here, in order to keep this, to get out of the dependency culture, you've got to encourage the free market, you said the minimum wage was abandoning our belief in the free market another reason why you cannot surely sit there this afternoon and say, "we might keep it." You can't, you've got to say, "we'll get rid of it" surely? DAVIS: No no, we've got to say what actually, look at the detail of the, you cannot just make sweeping judgements, one of the points I was trying to make in this whole leadership cabaret is the point about modern Conservatism is you are bringing fundamental principles to apply to modern problems which you've got to understand how the problem is delivered. Now I suspect at the end of the day we'll end up with a minimum wage which is, which is not growing up the way the current one's going, but what we have to look at is the welfare system and get out of that first, dependency culture is the most dangerous thing we have. HUMPHRYS: David Davis, thank you very much indeed. DAVIS: Thank you.
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.