BBC On The Record - Broadcast: 28.04.02

Interview: MATTHEW TAYLOR, Liberal Democrat Economic Spokesman

says the Liberal Democrats are still prepared to spend more and raise more taxes than the Labour Government is planning to.

JOHN HUMPHRYS: With me is the Liberal Democrat's Treasury Spokesman Matthew Taylor. Mr Taylor, are you still the party of tax and spend? MATTHEW TAYLOR MP: Well I think this week, we're not only the party that's been proved right on tax and spend, we're also the only party that's honest. A theme that didn't come out very strongly there but we did tell people before the election what needed to be done. We're glad to see Labour doing it on health. We're half-way through a process, the comprehensive spending review's not yet complete, we have to see what announcements are made there. We may see big improvements for education too as a result of this Budget. I hope so. In which case, no, we're not going to ask for tax increases that we don't need, we have some very big other things that we also want to say about how that money is spent, how people can be reconnected with those spending decisions and how the staff themselves can be freed up, so that they can actually deliver high quality healthcare and education without government interfering in day-to-day work which simply means a deterioration of standards. HUMPHRYS: So, you're a party of tax and spend where necessary? TAYLOR: Absolutely, and we've always said that. We've always said we will put... HUMPHRYS: ...nothing's changed then? I mean, just to be quite clear, nothing's changed? TAYLOR: We would put a penny on Income Tax to fund education improvements we said, if that's necessary. And as we looked at each Budget process, we did the calculations on what we wanted to spend and on what government money was available. Now at this moment in time, those education improvements haven't been made, you've just heard in the report, abolition of tuition fees, cutting secondary class sizes, dealing with the real problems of growing student debt which is deterring the poorest students from applying to go to university, which simply creates a block to opening up the divi..., removing the divides in society. But if the government delivers those, we're not going to ask for more money just for the sake of it. We never have. And let's be clear on the history of our party has been to be ahead of the game in saying where things need to go. We were the first to call for independence of the Bank of England. No-one now would say that was wrong. Yet both Labour and Conservative campaigned against us on it. We said that taxes needed to rise to put services right, Labour have finally acknowledged that and we may now see the improvements, but only if they're well spent and what we want to talk about is the way that that spending takes place, how we can decentralise in this country... HUMPHRYS: ...okay. TAYLOR: we can make those investments work. HUMPHRYS: But of course you've got to raise money in order to spend money, I mean, that we all know, the government's going to spend a lot more on health and you've said that you'd go along with that. Would you still spend more though, would you want to spend more on public services in the round than Labour is currently spending? That's the only question really isn't it? Given that we know what they're going to spend on, more or less. TAYLOR: Well, let's look back at that alternative budget that I presented... HUMPHRYS: I'd rather look forward... TAYLOR: ...well, let's test it against what he's up. He's put the money into health that we called for. It's taken a long time coming, but providing it's well spent, then we believe it can make the difference, we don't need therefore more money than they're spending, so long as they spend it well... HUMPHRYS: ...on health... TAYLOR: ...on education, those improvements still haven't been made, so at this moment we would need the money, but he's raised a lot of money, he hasn't announced how he's going to spend it. It's there for him. He said the comprehensive spending review will target education. Again, if he spends it well, then we might not need that money. On pensions, we said we wouldn't have the pension credit, we'd give pensioners rises on the basic state pension, particularly older and poorer pensioners and we'd still make that change because what we know about the Chancellor's pension credit is that one-and-a-half-million poorer pensioners who he says need this money, even on his own figures, won't claim it because they find it either too demeaning or too complicated. HUMPHRYS: Right, so there'd be some money involved in that obviously. And there are things that you want to spend money on that they do not intend to spend, for instance, tuition fees, that sort of thing, personal care to the elderly in nursing homes and all that. All of which costs a lot of money, you've already done that in Scotland, it's already been done in Scotland, you are prepared to raise the money in taxes to spend that additional money given that the government doesn't itself do it. TAYLOR: I think we'll probably have to raise much less money at the next election than we argued had to be raised at the last because the government will have gone a long way towards that. But if there is more money needed to be raised to improve the services in the way that we suggest, we will again be honest about it and I think it's one of the most important things that we've pledged to do, because if you see the breakdown in trust in politics, if you see the cynicism that now meets Labour announcements, because they've spun so many times, they've lied so many times about what they're doing and then they've cheated the electorate because I simply don't believe that this wasn't planned before the General Election. Did it come as a blinding flash of light just after the election they'd have to spend money? I don't think so. Why was it that in 1997 they said no National Insurance rises and at the last election they didn't, because they knew what they wanted to do, but weren't prepared.... HUMPHRYS: ..right, so... TAYLOR: ..and all of that is breaking the trust between people and politicians. So we will be straight with people, we will continue to do that, but we will go one step further. We're now exploring ways to give people greater control of how the money is spent. So for example on the Health Service, why not, instead of just hypothecating as it's called, earmarking a rise to the NHS, why not earmark a whole tax to the NHS and make sure that when people pay that tax, they know it will go to hospitals... HUMPHRYS: ...or schools? TAYLOR: ..if it changes, they know that will be an improvement for hospitals or cutback in hospitals. HUMPHRYS: Or schools maybe? TAYLOR: ...and perhaps the same for schools too... HUMPHRYS: So you might be prepared to say to people another penny on tax..that will go...the result of that tax rise, all of that money will go to schools, you'd be prepared to do something like that. TAYLOR: I would like to see local government given the freedom but also a fair tax system, Council Tax isn't fair enough to do this, but a fair tax system, maybe local income tax, and then able to take the choices about whether they make extra investment in their local schools. But I do believe this, if we are going to get services right in the future, we are going to have to give people more ownership in their own community of those institutions and the ability to take decisions on funding on them. Schools are primarily a local service so why not... HUMPHRYS: Precisely, but I mean you could ear-mark a certain amount of money that would go from central government, from the Exchequer to local authorities to be spent only on schools, an additional to the product of an penny extra on income taxes. You could do that and you'd be prepared to think about that? TAYLOR: I've already said publicly that I would like the party to look at the possibility of using a local income tax for funding local schools, that would mean a cut in National Income Tax, you'd transfer monies currently spent... HUMPHRYS: But, you'd need more money on education, you've just said that. TAYLOR: I'll come to that, first of all transfer money currently held nationally to locally and allow them to make those spending decisions locally, and then allow them to vary it, so that if you want to put more money into local schools and people are prepared to vote for you to do that, providing that local authority is properly accountable why not allow that to take place, just as we also need in the National Health Service to allow doctors and nurses far greater control delivering a front-line service. HUMPHRYS: You said you support Labour's budget broadly, but as far as national insurance increases concern for employers as opposed to employees, what about that, are you going to vote for that or against it? TAYLOR: We have two real problems with Labour on this one as being the honesty point. And second, why have they chosen national insurance rather than income tax, which is what we proposed. Because national insurance is a little less fair, the burdens fall more on the poor than on the rich, and it is also putting a burden through the employer's national insurance rise on business at a time when manufacturing is in sharp recession, and when manufacturing will be hit hardest. We won't block the money going in, we're not going to vote against the principle of that money going in,...(INTERRUPTION) .....we will propose changes to the National Insurance Bill that they will bring in, to bring it more in line with our proposals to remove the burden from manufacturing that will hit jobs, further... the sharp decline we're seeing in manufacturing we're seeing at the moment, and instead using public...(talking together).... HUMPHRYS: So here's this company that would have to pay five thousand quid in extra national insurance because it employs however many people. Would they have to pay that five thousand quid or not? TAYLOR; Under our proposals that we put forward in an alternative budget we would have raised basically the same money..... HUMPHRYS: Can I ask you what happens now, whether you are actually going to vote against that increase? TAYLOR: That's what I'm explaining. Our proposal was to put the new fifty per cent rate on income over a hundred thousand pounds, those lucky enough to earn that, and that would have raised basically the same money as the employers' national insurance rise. The difference is that it wouldn't hurt jobs. Well, what we can do is propose amendments to the Government's National Insurance Bill that will effectively replicate that so... HUMPHRYS: .....then what would he do? TAYLOR We're not going to block that money for the Health Service, because the primary issue is to get that money into the Health Service. We're not going to stand in the way of something that we've called for, for many years. We haven't done it in the best possible way, but we want to see that happen, and now we want to make sure it's well spent. HUMPHRYS So you don't like it but you'll allow it to happen. TAYLOR Well, the National Health Service is the primary important thing now, getting those doctors and nurses in, getting people treated. We hate the fact that Labour lied about this before the election. We hate ... we dislike the particular choice of the tax they've made, but it is close enough to what we've proposed that we're not going to stand in the way of it. 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.