BBC On The Record - Broadcast: 16.12.01

Interview: IAIN DUNCAN-SMITH MP, Conservative Leader

Clarifies his views on tax, public spending, health care, the euro, and the Conservative Party's efforts to make itself inclusive.

NICK ROBINSON: First, though to Iain Duncan Smith. The Tory leader said that the character of his leadership would be set in his first three months. People should, he said, be able to say that that bloke looks as though he knows where he's going. Well that three months is up, so can they and does he? Mr Duncan Smith joins me now. Thanks for joining us on the programme. IAIN DUNCAN SMITH: Not at all, pleasure. ROBINSON: It seems to me that is the test Mr Duncan Smith, isn't it, do people know where you are going and if you look at the opinion polls, more than half of people say, they haven't an opinion on your leadership at all. Does that worry you? DUNCAN SMITH: No, it doesn't. I think the important thing when I said about the three months, is that we as a party settled, that we recognised that we were bound together by more than we were divided over and that we were therefore giving focus to the things that frankly, most of the British people had felt we no longer cared about, or hadn't talked about. And on that, I'm very strongly on the view that it's the public services that have switched people off. They feel as though there was no alternative to the government because we didn't seem to produce one. That was there concern. ROBINSON: Well it's the public services I mainly want to talk to you about today. But just dwell briefly on this problem of you failing to make an impact, does it concern you too that the only thing that people seem to keep going on about is that you struggle to keep your voice when you are making public performances and asking questions in the House of Commons? DUNCAN SMITH: I find that sometimes the commentators are more interested in the performance than they are in the message and the reality here is that most British people want to know how their public service is going to be improved when they are failing, when they know that the government is failing over health. What they want to know is there is an alternative and to spend time as to whether or not someone's had...lost their voice or not is quite ridiculous. In truth, I spent four mouths pounding up and down the country and it's getting better. Nice for your concern anyway..(laughter). ROBINSON: Well let's turn to those public services and those policies. We thought we knew what you felt on a whole series of issues. I want to see if we still quite know what you think on these. Let's start with tax and spend. You are a tax cutter, you are a Tory, you are a Thatcherite Tory, then along comes Michael Howard, the Shadow Chancellor and he says, public services are - and I quote - "the number one priority and take precedence over everything else". Have you gone off tax cutting, do you mean that the Tories will not now promise to cut the tax burden? DUNCAN SMITH: No, I think what the public want to know from us is first of all what we think our priorities are in terms of the things that they see as failures and problems in their lives and that's what Michael Howard was talking about. He said that for us in this next Parliament we are going to focus on those issues that we think need reforming. Big change and I think the big agenda here is reform and change in the public services it gives to people greater choice and greater quality. That's what they want. But they also know that we as a party are a believer..are believers in low tax economies, in other words comparatively low tax economies are the successful ones, they are the ones that allow you to live on more money and focus that money onto those public services. So, the balance is simply saying we have to establish our credibility, in terms of how we are going to change and reform those services and then how we are going to apply that money and then, we can talk about what the burden of tax will be to the British people to support that. ROBINSON: Okay, now that's a presentational point, it may be an important one.. DUNCAN SMITH: It's a very important one... ROBINSON: need to get your credit with the electorate for talking about public services but people took you to believe... DUNCAN SMITH: ...well....producing reforms... ROBINSON: ...well people took you to mean and they wrote it up this way, that what you were saying is we've learned our lesson, we are not saying what we said at the election, which is we can both have tax cuts and improve the public services, we are saying that the number one priority, to quote Michael Howard, is the public services. We can't have those tax cuts. DUNCAN SMITH: No, he didn't say that. This is important, two things have got to be understood and this is what we've understood and I hope the media will understand this. The first is that we have four more years to run in this Parliament. The government which has already raised tax massively on the British people but done it in a way that they weren't told about, through stealth taxes, through things that they don't know, not through income tax. That's already the case and people are beginning to feel the pinch. But what they've got is another four years in which we are now seeing the beginnings of a further ramping in taxation. We have no idea where they will be in three years' time or four years' time as we run to a General Election. So for us to start now saying, this is going to be the position absolute in four years, I think the British people would say, no-one can say that. But what they want to know and what we can say, is you are failing on these public services, you have no route map. I mean for example, it's very important this, the government the other day, the Prime Minister, said they were going to increase public spending on the Health Service to be in line with the European average. Well, first of all, he said it was eight per cent and I've proved to him the other day, that that eight per cent was already being achieved in Scotland, Ireland and Wales and they were failing as well, that's the key issue. ROBINSON: Yeah, and I want to ask you about health spending and also about your ideas for reforming the Health Service. But let's just be clear about this. People thought you and Michael Howard were signalling a change, that you'd learnt your lesson from the last election, that you knew the Tories couldn't have credibility by saying we'll cut your taxes and maintain public services. What you are clearly saying to me is, no we've got a presentational problem but we can offer tax cuts and increases in public spending. DUNCAN SMITH: Don't simplify it to the extent that it then gets over read. What I'm saying to you is, our priority is to deal with the public services, quite rightly, to bring a radical set of reforms, that will give people that choice and quality. Once we've done that, we can look at how to finance that, once we don't that we can then say what is the level of tax that people will need, whether we can be able to bring that down below where the government is and at the same time, if the public understand that and we able to, to show that they will increase the level of spending and focus it better... ROBINSON: And that's what you want to do, you want to be able to say to the public, we'll cut your taxes, personal taxes, the taxpayer... DUNCAN SMITH: No, what we want to be able to say to the public is, we can do two things. We can show you that you need to reform the system, having reformed it, you can find a way of financing it which actually focuses the money directly where they need it and we then are able to say the government is taking more of your money, we want to take less, but at the same time we want to make sure on those issues, those things that you worry about, that the money is being spent and being used. That's the critical issue. ROBINSON: Let's pick up what you were talking about in terms of health spending, you've been very critical of the government, we'll talk about what they are doing in a second. What about you, at the last election, we were very clear where Mr Duncan Smith stood. You said, the party said, we'll match Labour's spending on health and education, it's a priority, that's what we mean by it. Will you do that in the future, will you say that as the government increase these spending plans, we'll match it. DUNCAN SMITH: Well let me just run that one past you, look you have a government here, that came into power on the basis that they said that their spending profile would solve the problems in the health service. What we've seen is actually, as the public know, the health service is getting worse, yet they are supposed to be spending more on it. The government then came back and said, we are going to spend even more on it and that's the solution and yet we find ten billion pounds a year now is wasted in the Health Service, in other words it doesn't go towards treatment because it's just not...the system doesn't cope and the worse bit is in this last year, they are not going to be able to spend up to seven hundred million pounds allocated on the Health Service, cause the system can't take it. You ask me, if I am going to agree with them, saying we are going to spend yet more, I say, you tell me why you can't spend the money you've already got and why you're wasting so much, before we decide whether or not, your solution is correct. The answer is it's not. They have to work the system change first. ROBINSON: Plenty of people agree on the case for reform... DUNCAN SMITH: That's my point... ROBINSON: ...and we'll talk about the reform, but it's also important to talk about money isn't it. You see, because you've travelled round Europe... DUNCAN SMITH: ...absolutely... ROBINSON: ...and you've said let's look at these other countries and how they do things. Now one of the things you want to emphasise they do, is they spend more private money. But the thing you don't emphasise very much is they all spend more public money as well, take Germany. In Germany, it would cost twenty billion pounds in this country, to reach what they spend on taxes on health. France spends more, Sweden you've been to, spends more. Even the United States of America spends more as a proportion of its national income than we do on health, so it's a simple enough question to say to you, do you therefore, want to spend more taxpayers' money on health. DUNCAN SMITH: It's a simple enough question but it's a wrong question. The question - you just hit it at the last point, when you said, even the United States spends more on health, correct. What..however we have is a government here in Britain, that seems to believe that the only way of getting health sorted is through direct taxation and spending more of people's tax money. No other system that we have visited, that is successful, actually does it that way, they have a mix of ways of spending. Some of them have a proportion of tax added to by a sort of insurance system, some have pay as you go, some have relief on that. My point here is, if you look at France for example, you have a system that spend give or take very similar amounts in tax, what they... ROBINSON: ...well not give or take similar amounts, if I may, Mr Duncan Smith, the latest OECD figures have Britain spending five point eight per cent of GDP, almost six per cent of its national pot on health from taxes, France seven point one per cent, it's a lot more. DUNCAN SMITH: Hold on, hold on. Just remember what else France spends apart from tax, that's the key point. My point is, that we look at these systems and we see that all of them are mixed systems, they are systems that have much greater voluntary, much greater private involvement and as well as a state based level. And I'm saying that the problem for us at the moment is if you just go on saying we're going to apply more tax and more tax to this system, you find that (a) it can't spend it as I showed you, and (b) it's completely over-stretched and the inefficiency becomes greater, not less. So the trick here, the important point here, is to say that you must put the reform of the system first, then you can sort out exactly how you finance it. ROBINSON: But this is partly about your credibility as you do that process, isn't it and you've told people that you want to cut their taxes and people think that if you cut their taxes you may well not be able to spend enough money on health. It won't be, to use Michael Howard's words, a number one priority. DUNCAN SMITH: Absolutely. ROBINSON: I put it to you that other countries, whatever their system, spend more of their taxes on health and you say, well I can't even promise to spend... DUNCAN SMITH: but Nick, the way to look at it is not that they spend more of their tax, they spend more of their GDP on health. You see, you're getting locked into the same old Labour argument which is, everybody spends more tax. The truth is, they do spend more of their GDP, but the reason why they get better treatment is because that GDP is better focused because it involves other mechanisms for spending money. ROBINSON: Well let's talk about those. DUNCAN SMITH: Now we're looking at that and that's the reason why Labour has ruled that out. Gordon Brown said there is no way that they are going to go down that road, that the NHS must remain as it is and simply a matter of raising tax money... ROBINSON: you've only been in office... DUNCAN SMITH: ..the public don't believe that. ROBINSON: You've only been in office three months and people don't expect you to have a detailed health plan.. DUNCAN SMITH: ...absolutely... ROBINSON: ...but they can be clear about your principles, you spelt out what Gordon Brown says his principle is, your principle clearly is, from what you've said, that people, not through taxes, must pay more themselves directly for health care, you can debate how, but they must do it. DUNCAN SMITH: Yep...what we're going to do is look at the best way that is applicable to Britain that we can bring forward that actually gives them and this is the important thing, the high jump is that it must improve quality and it must give them greater choice. Can I give you one example. I went to Sweden the other day, now Sweden is a country that had a system very similar to ours, actually probably it was closer to ours than anything else, a health system funded almost wholly through taxation. It is funded at the moment mostly through taxation. But what in Stockholm they've done is change something very important. They've actually said that patients have the right to choose their hospitals and that GPs, doctors, with them will be able to pick what they think are good hospitals. Now that major change has changed the whole attitude of treatment in the hospitals. They've even taken one hospital, treating what we would call NHS patients and moved it into the private sector, that the quality has improved dramatically, the waiting lists have collapsed, we're beginning to see how you reform a system that was very static and very rigid. ROBINSON: They've done another thing, they charge people to go to see their doctors, about ten pounds, I'm told it is to see the doctor in Stockholm, now as a principle... DUNCAN SMITH: ...they have always had a system of charging though in Sweden, which is entirely different from... ROBINSON: a principle, people have assumed that the NHS is free at the point of use, there may be the odd prescription charge, there may be a charge for your dentist, but to see your doctor it's free... DUNCAN SMITH: ...well don't say... ROBINSON: ...are you Tories saying let's think about... DUNCAN SMITH:, I'm sorry, let's start, let's stop right there before, we get this nonsense from the Labour Party, they always say this is free at the point of delivery and you want to charge. The truth is... ROBINSON: ...well we're asking... DUNCAN SMITH: ...the Labour government already charges people. They charge them for their prescriptions, you know to go and see a dentist you get charged. The reality is many people, today we see a report, probably four hundred million pounds a year being spent by people who don't have the right income, who are having to go and find private treatment... ROBINSON: this is very clear, you are saying... DUNCAN SMITH:'re being charged already. ROBINSON: ...there are lots of charges and there are no... DUNCAN SMITH: ...Labour hasn't done away with them... ROBINSON: there's a charge to see your GP, or a charge to go to the hospital... DUNCAN SMITH: ...Nick, it's a living lie that Labour tells that says this is absolutely free. Everybody who knows who uses it, knows that in certain categories you pay. The question is, right now, the system itself doesn't work to deliver even though they do pay. That's the truth. How do we reform that system first and then how do we look at the financing of that system. That's very important. ROBINSON: Let's just be clear though what you're saying is because we already pay, because you think Labour are misleading about this...we may have to pay, we Tories may have to come to you and say you'll have to pay to go and see your doctor. DUNCAN SMITH: ...but they already pay. Nick, sorry, let's stop this, no, this is a silly argument. People pay through taxation for their service. They then pay as charges when they go and buy in many categories their treatment across at the chemist, and they pay if they go and see a dentist often if they can't get an NHS one. My point is, the public already know they're paying. The problem for them is they don't get the service that they feel they ought to. That's the priority if we can get the reform changed, if we can get the structure better so that people get a better quality we can look at how we raise the extra finance, then I think people would say I'm prepared to pay and that's how I'm doing it. I'm doing it through tax, I'm prepared to look at other ways... ROBINSON: ...they may pay on health. Let's turn to a different issue, an issue with which you were associated with very, very clearly and you said that people should know where you're going, it's the Euro of course, you've been the clearest of any Tory leader, never, it's not going to happen. You won't actually countenance it. Now, why on this crucial issue are you never talking about it then. You don't talk about it, you stop other people from talking about it, is it because you think it doesn't matter very much any more? DUNCAN SMITH: ...supposed to have stopped everybody talking about it... ROBINSON: ...or is it you're a bit scared to tell people what you think about it? DUNCAN SMITH: No, not at all. I have to say that if there is one subject on which the British people are clear about the Conservative Party, I think it's probably Europe and I don't think therefore that we need to carry on and on and on about that subject right now. We are clear and the public's clear and let me just reverse this question on you slightly, if Mr Blair was sitting here, why would you not say to him, why was he so dogmatically determined to enter the Euro, because he's a believer in principle. I simply have said we at the next referendum, when it comes up, we will simply oppose it, but there is scope for those in my party who disagree to campaign for. I think that's tolerant and reasonable and that's a good position to be in. ROBINSON: The fear some have is that this is becoming a fact on the ground, notes and coins are about to come in, we saw them waved at the Laeken summit yesterday, interestingly enough, Dixons Group, they say you can go into their shops and they own a lot of them and you can use Euros. And who's the Chairman of Dixon Group, Stanley Kalms, the Treasurer of the Conservative Party, so it's going to happen isn't it? DUNCAN SMITH: ...who's also opposed to the Euro... ROBINSON: ...will he take donations in Euros, for the Tory Party. DUNCAN SMITH: As far as I am concerned, you know very well that the Dollar exists, that doesn't mean to say you have to adopt the Dollar. The whole issue about currencies is that they keep within your national democracy the power and control to set your tax rates, to also adjust your interest rates in accordance with what is necessary for you domestically. Far too many of the public remember while we were in power the ERM debacle, under the ERM where we ended up having record levels of unemployment and difficulties and problems and people don't want to return to that and my simple point is you know, they may well go to notes and coins in January, but Europe itself is heading deeper and deeper now into recession and I don't think we necessarily want to copy that. ROBINSON: And will you, now we have a new process of reform in Laeken will you do what you said in the past, which is to say we don't want this to happen at all and if I become Prime Minister, I'll renegotiate these treaties, they'll go. DUNCAN SMITH: Well we've yet to hear exactly what they've agreed at Laeken but as far as I can see there are a number of things I think the British people will be deeply uneasy about, the European Arrest Warrant... ROBINSON: ...but the key question is not..with respect your opinion is whether as Prime Minister, if you became Prime Minister, you would say to people, this has to go. DUNCAN SMITH: We're going to say to people that we want a Europe that is about nation states co-operating and trading and things that get in the way of those we'll actually want to change and things that are in favour that, we want to keep, but we want to have that and I think that's the flexible response to Europe as it is, and by the way, September eleventh showed us one very important feature which is that the old idea of the great blocks, the structured and rigid blocks, which is at the moment what Laeken was discussing, are probably over, we need greater flexibility, we need nation states to co-operate rather than be coerced. ROBINSON: One last subject I want to ask you about, whether people are clear where you're going. You were clear, you said I'll be intolerant of intolerance on the issue of race. Now then we saw your Chairman say to members of the Monday Club, it's incompatible to be in our party and believe the things that you believe, but now I read you're having them back. DUNCAN SMITH: I'm not having them back, we haven't got anywhere near that. ROBINSON: I read in the paper that... DUNCAN SMITH: ...well you can read what you like Nick in the papers, you can read what you like in the papers, but I shouldn't always believe what you hear in the papers, I see no suggestions to that extent. ROBINSON: So the Monday Club as far as you are concerned are... DUNCAN SMITH: ...we've already told the Monday Club what happened and we told them quite clearly that their whole position on race and the way that it was used and as we saw on their website, was not compatible with the Conservative Party's views on this matter and they were told that they therefore could not be part of the Conservative Party, they've had to go away and we'll wait and see what they come up with. ROBINSON: ...well, they had to go away and possibly change what they believed, I just want to be clear... DUNCAN SMITH: ..radically change... ROBINSON: ...but if they come back and say to you, okay, well we've cleaned up our website, we don't say things like... DUNCAN SMITH:'s not just a case of cleaning up websites... ROBINSON: ...this is what they used to say, we already pay host to large numbers of people of non British origin who seem to believe that everything this country's traditionally stood for is profoundly negative, they behave like lodgers in a hotel. If they just don't say that any more, they're welcomed back? DUNCAN SMITH: We didn't say that all, you're completely misusing what we said. The Chairman was absolutely clear that they could not continue as part of the Conservative Party as they held those views and they held them in a way that set an agenda which was not the Conservative Party's agenda. I think most decent and reasonable people would recognise that. Our agenda is the one that I state with the party and I'm not going to have that taken down side roads by others. ROBINSON: Is there no chance, just so I understand this, that you kick them out one day, and then say, back you come a little bit later. DUNCAN SMITH: We've made it absolutely clear that any group that holds those sort of views and makes those as a policy statement is not going to be part of the party. And I also must say, something much more positive which you don't want to rest on, is that we have changed a lot of things, I have the first Vice-Chairman who is of ethnic background, I have advisers now from an ethnic background. We are making changes to the candidate procedure, which will bring in people from ethnic backgrounds and more women, some very radical change I'm making, but I'm determined to do it, and I'm determined to make the change that brings us back into line with the way the British people think. ROBINSON: Iain Duncan Smith, thank you very much indeed for joining us today.
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.