BBC On The Record - Broadcast: 06.10.02

==================================================================================== 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 ==================================================================================== ON THE RECORD RECORDED FROM TRANSMISSION: BBC TWO DATE: 06.10.02 ==================================================================================== JOHN HUMPHRYS: Good afternoon. What ARE the Tories to do to revive their flagging fortunes as they arrive in Bournemouth for their annual conference? I'll be talking to Oliver Letwin, the man regarded as one of the few successes on their front bench team. If we DO join the Euro will Gordon Brown have to jettison his ambitious spending plans? I'll be talking to the Trade Union Leader Bill Morris about that. That's after the news read by Fiona Bruce. NEWS HUMPHRYS: Later in the programme I'm going to be talking to the Shadow Home Secretary Oliver Letwin about the Tories' problems on the eve of their annual conference and we'll be looking at the problems facing the countries in the Euro zone. What will THEY mean for US if we join up? But let's first take a quick look at the political news of the past week. JOHN HUMPRHYS: Sunny Blackpool weather but a few storms over the leader's heads. Constituencies were unhappy about the Government's stand on Iraq. And inside the conference hall the Trade Unions caused a defeat over the involvement of private firms in the public services. But Tony Blair refused concessions. TOMY BLAIR: I believe that we are at our best when at our boldest. HUMPHRYS: Then an American President boldly went where none had gone before. BILL CLINTON: Conference,Clinton Bill, Arkansas CLP. HUMPHRYS: Clinton had swept into town with the 'Unusual Suspect' Kevin Spacy. He had a political message of support for Tony Blair. But most delegates seemed more impressed by the personal than the political. On the other side of the Atlantic, President Bush won congressional support for action against Iraq, but at the UN there is still strong opposition with Russia and France rejecting a tough new resolution. Top marks for presentation but black marks for attainment. The A'Levels fiasco continues to haunt the Education Secretary Estelle Morris, as more than ninety thousand candidates have their grades reviewed. And John Major was well known for liking a curry in the evenings. But no-one suspected quite how much. Least of all the Tories who are suffering the political indigestion. First the poor old Tories. How many times have we said that in the past few years? It doesn't seem to matter what they do, or who they have as their leader, the country remains resolutely unimpressed. The opinion polls show them permanently stuck in the doldrums and even now that some support for the government seems to be slipping away it's not going to THEM but to the Liberal Democrats. What can they do? Well, they could decide what they stand for for a start. That's what the leadership's critics say. If they're really serious about "modernising" and presenting a different face to the world why don't they get on and do it? I'll be putting that to Oliver Letwin after this report from Terry Dignan. TERRY DIGNAN The Conservatives of Cambridge await the arrival of their guest of honour - Oliver Letwin. He brings with him from Westminster a message of hope. The Tories can win again but only if they change. Otherwise they'll be all dressed up with nowhere to go. These are the most loyal of the Conservative Party's followers, they keep coming to events like this in good times and bad and in recent years it's mainly been bad. A year ago they hoped better times were round the corner when they made Iain Duncan Smith their new Party leader. But so far he's not been able to widen his appeal beyond this hard core of Conservative supporters. ARCHIE NORMAN MP We can't underestimate the seriousness, the gravity of the situation facing the party, I know that Iain Duncan Smith doesn't. We come third amongst young people after - under the age of twenty five - we come third amongst all women under the age of thirty five I believe. DIGNAN A year on from Iain Duncan Smith replacing William Hague, these Conservative activists would be forgiven for thinking things should be looking a lot brighter. But enticing the voters back to the party has proved to be more difficult than even they imagined. Indeed, if the polls are to be believed, under Iain Duncan Smith they've made little or no progress. PROFESSOR PAUL WHITELEY At this stage of the electoral cycle he is not doing much better than William Hague did at his stage of the cycle after 1997. He's got a long long way to go before he registers with the electorate and has a significant impact. DIGNAN Twelve months ago On The Record asked some former Conservative voters in Hemel Hempstead in Hertfordshire why they'd rejected the Party. We're back to see if they've returned to the fold. They haven't. UNNAMED WOMAN: Around about a year ago Iain Duncan Smith was made leader of the Conservative Party. How have things changed in that time? UNNAMED WOMAN You have to struggle to think of the name of the leader and what he looks like and he's leading the Party - where? UNNAMED MAN: When he came in, I thought him being a military man he'd have some life in him - there's no get up and go in the man to actually fight for whatever he believes in. UNNAMED WOMAN Well they swapped one bland leader for another bland leader and we're not quite sure where they're going. So, they need to be a more vocal. UNNAMED WOMAN: It's more fiery under the previous leader who for the moment name escapes me. I can't even remember it...William Hague that's right. DIGNAN This is the hotel where Iain Duncan Smith and his Shadow Cabinet met a week or so ago to try to map out a new route back to power after so many years in the doldrums. The problem Iain Duncan Smith faces at meetings like this is that he gets conflicting advice. On one side of the argument are the so called modernisers - their motto is out with the old and in with the new. They are impatient for the Conservative Party to change and change quickly. On the other side of the divide are those who are wary of change. They are especially worried that between now and the next election they might upset too many voters who still hold traditional Conservative values. And which side does the party leader come down on? Well the modernisers feel that too often at meetings like this his instincts lie with the cautious brigade. This week the spotlight will be on Iain Duncan Smith in Bournemouth at the Conservative Conference. With one poll showing the party now competing with the Liberal Democrats for second place after Labour, Duncan Smith is being urged by modernisers to throw caution to the wind on the big issues of the day. If he doesn't take on the traditionalists, they argue, the Tories will sink further. NORMAN On one side you've got the reformers like me wanting to go faster, on the other side you have people who are sceptical, but the time has come now at this Conference where on some of these big issues he needs to define where he stands because otherwise there won't be a sense that it's coherent, that it's indelible, that it's lasting. WHITELEY This is exactly what Tony Blair did in the fight with the left on Clause Four of the party constitution back in the 1990s and it helped to establish his position as a strong leader in the minds of the wider public so it might not be a bad thing for Iain Duncan Smith to pick some fights selectively in order to attract attention. DIGNAN But using the Conference to bash Tory traditionalists, to show the party has changed, would leave many activists feeling disenchanted. JILL KIRBY It seems to me to be false to suggest that you have to sort of kick all these people in the teeth in order to prove that you're something different. I think if you make the argument coherently and on the basis of the Conservative solutions to different problems then you bring everybody with you, you can bring your traditional supporters if you like and you can also reach a wider audience. DIGNAN The Party's modernising wing believe this week's Conference here in Bournemouth will provide a big test as to whether or not the Conservatives really are changing. There won't just be a state of the art set on show, to prove the party is now listening to the outside world there'll be speeches from organisations you don't normally associate with a Tory gathering, groups representing lone parents, victims of domestic violence, even trade unionists will have their say. But it will take more than a new style conference to show that underlying attitudes within the Conservative Party have fundamentally altered. NORMAN We have a long long way to come back and that is exactly why this Conference should be a real landmark, a real punctuation point, a point at which we are able to say and the public are able to say afterwards, this is a different kind of Conservative Party, it has changed beyond recognition from the one that lost the last Election. DIGNAN The Tories lost despite their traditional promise to cut taxes. These Hemel Hempstead voters regarded extra money for health and education as more important. UNNAMED WOMAN: But at the moment if you look at the two choices - investing or cutting tax. UNNAMED MAN: Invest. UNNAMED WOMAN: Investing. UNNAMED WOMAN: When they were in power before they sold the public the low taxation card and I think it proved that it didn't work because when the Tories went out of power the NHS was in a hell of a mess so was education, schools were suffering from lack of resources and I don't think it can be sold any longer. WHITELEY The Conservatives have a problem to think out how they're going to deal with this tax spending issue when they are seen by the average voter as extremist on it. NORMAN On issues like taxation and public services we have to establish once and for all whether we believe that investment in public services, properly delivered through reform public service, which might mean increasing taxation, is something we're prepared to contemplate. DIGNAN Once the Conservatives scaled the heights of British politics. And they will again if they stay true to their traditional tax-cutting philosophy, according to those who reject the modernisers' thesis. JOHN REDWOOD I think the Conservatives must go into the next election offering lower taxes and I think it is very easy to do so because we have a government which is characterised by tax and waste on a massive scale. DIGNAN: But the modernisers have another target in their sights - privatisation - a policy still dear to the hearts of those who promoted it in the 1980s. REDWOOD: Privatisation of commercial enterprises was pretty unpopular in the 1980s but we did it and we proved that it worked. Who would now go back to a nationalised phone monopoly when you had to wait six months to get a line installed. I think we need to pick it up and turn it into a really good agenda that will modernise health and education and transport in exactly the way that we Conservatives modernised telephones in the 1980s. NORMAN: The general public still think we're primarily motivated by privatisation, by profit, by the objective of reducing taxation for generally better off people, and we have to destroy that image once and for all. DIGNAN: Asking these party activists to abandon traditional Tory policies on taxation and public services is one thing. Getting them to embrace changes in attitudes to homosexuality quite another. The so-called Section 28 law bans local authorities promoting homosexuality. Labour wants to scrap it. So do Tory modernisers to show the party is now more respectful of minorities. NORMAN The fact is Section 28 has never behaved.... changed anybody's behaviour anywhere and it's something that Westminster politicians get worked up in a lather about, we should put it on one side, it stigmatises a group of people who feel strongly about it, you know socially liberal Britain in an open tolerant Conservative Party, which say this is a relic which has no affect on people's lives and it should be abandoned. KIRBY: I think it would be sad if the Conservative Party got dragged into you know we can only show we care if we wear this, you know pro gay thing on our sleeve. If I were invited to say to my MP you know this is what you should do, then I would have to say I personally would rather stick with Section 28 than have nothing to replace it. DIGNAN Respect for traditional values is part of the Tory Party's DNA. So are modernisers right to want change because many voters no longer share these values. REDWOOD I don't think you attract people by going out to them and saying, we've noticed that you belong to a little group and we now love your group very much, they will say, well so what? Every politician says that. DIGNAN What unites the party is a feeling that the Conservatives aren't doing well. And the views of these former Tories of Hemel Hempstead may explain why. UNNAMED MAN And you don't take any notice of the leader because you think he is that bland they are going to get nowhere. UNNAMED WOMAN I think they have had a great opportunity with changing the leaders and at that timing they could have grasped and taken that by the horns and just come out with a whole new policy and revamped the whole party but I am afraid they fluffed it. NORMAN We're ambitious for Iain Duncan Smith and you know my advice to him is that slow change is no change, people just won't notice it and the time has come now to pin your colours to the mast, and particularly because nobody pays much attention to oppositions nowadays, we've got to shout loud from the rooftops about it. This Conference should be the point at which the pace quickens and the Party is faced by Iain Duncan Smith with the unavoidable choice of change or die. DIGNAN The painstaking ascent to power has barely begun. Indeed Iain Duncan Smith says he's only at base camp. But many Conservatives fear he'll go the way of his predecessor and take his party down with him. HUMPHRYS: Terry Dignan reporting there. JOHN HUMPHRYS: Oliver Letwin do you accept that you're not changing fast enough? OLIVER LETWIN MP: Well I certainly accept that we have a huge difficulty to overcome and that very large numbers of people in the country are not currently clear about what we stand for, so this conference has got to establish a clear trademark which we've been trying to build up over the last year and I accept that it's extraordinarily important that we achieve that, yes. HUMPHRYS: Do you agree with Archie Norman that slow change is no change? LETWIN: Well, I agree with Archie that it's got to be noticeable change, I think that's the point he's making, you've got to get it across... HUMPHRYS: Otherwise there's no point in it, is there? LETWIN: Precisely. We're in politics and politics exists alas, I think, from your point of view a very good thing, in programmes like this. It doesn't exist in the back room where we're all discussing these things internally. So, we've got to make the new trademark something that people actually notice. I don't think it's...we can do that in a day or a week though. When you say slow and fast, I think it's very important to distinguish between radical change and a radical approach which is necessary and something which has an impact in a second or a minute or a week, we can't just make that... HUMPHRYS: ...or a year? I mean if you haven't done it by the end of this conference will you be starting to worry just a little? LETWIN: Well of course it's important that this conference creates something that people like yourselves who are serious commentators are going to notice. HUMPHRYS: More importantly, people like the focus group made up of former Tories... LETWIN: ...I don't imagine, even in my most optimistic moments that we can get through to the nation as a whole in one conference, or indeed in one month or one year. I think we've got to build it gradually, it's got to be consistent, coherent, repeated. What Mrs Thatcher taught us was that, you know, between '76 and '79 when she was evangelising for a new approach to the economy that's now mainstream, everybody accepts, the Labour Party included broadly accept it, she taught us that you have to say it over and over again from lots of different angles, lots of different ways before the message gets through and that's going to be true with this too. We're now talking about a radical approach to the quality of life issues, the public service issues, the question of whether big government running everything from Whitehall, which is broadly what the Labour Party's been doing, is a good approach, or not as we think. And if we're trying to get that shift across, a shift from concentration on the economy to concentration on public services with a fundamentally and authentically Conservative approach to those things, that's going to take us some time, we shouldn't imagine we can do it overnight. HUMPHRYS: Well let's try and break then down a wee bit. You mention Mrs Thatcher, it's a very long time since she was in power, and she stood in most people's minds for privatisation and lots of other things of course, but privatisation was the big thing in most people's minds. That's what the public thinks you're still about, apparently, which is quite extraordinary after all those years isn't it? And worrying? LETWIN: She - it is worrying of course if people have misapprehensions, it's bound to worry a politician. What she was about was free markets in place of command socialism as a way of running the economy, I parody slightly, but that's roughly what was going on. Now the problem for the Tories is that we won that argument. Our problem is success. The Labour Party broadly bought into that, you remember the '83 election when they were trying to turn Britain into Czechoslovakia, roughly the time when the Czechoslovaks were trying to turn into Britain. It was easy to win election at that time, we just said you know, here look at the Labour Party manifesto, people vote for us. We're not in that situation any more. We're in much more like an American situation where you know Democrats and Republicans have differences, but we all accept that the free market is broadly the way to run our economy. Now we've got the problem that people in Britain have got richer, very much richer, but their quality of life is still very poor. They can't get into a hospital when they want to, their children are not being very well educated. They can't move around the country as the transport system doesn't work. There's crime on their streets. These are the things that people now expect government to deal with. And the Labour Party won the '97 election, and won again last time, just as we saw in your focus group, because people believed that Tony Blair was attending to those issues, and he was right to do that, and they also believed, and this is where I think he's misled them, that he was going to achieve miracles through big government. If you did things right from Whitehall, and you ran everything, top to bottom, schools, loads of paperwork, loads of monitoring, loads of targets, same with the police, same with the National Health Service, run every hospital from Whitehall, it's going to work. Now, the jury's out, we're not far enough advanced after five years for everybody to have concluded it won't work, I think it won't, we've got the period between now and the time the British public wakes up to the fact it isn't working, to establish in their minds, which is what we're beginning to do at this conference, that there's an alternative. We can give people a way out of being run by Whitehall. HUMPHRYS: And the trouble with that answer is that it will lead people to think that we're right, very crudely if we believe they stand for more privatisation, you use the word market forces, and that's fine but I mean when they hear Liam Fox for instance, your Health spokesman talking about the NHS he invariably talks about having to raise more private money, encouraging people to take up private health insurance and all that sort of thing, so they're actually quite right to think that you haven't changed very much and you do not intend to change very much. LETWIN: Well hold on, because one of the things that Liam has announced in just the last twenty-four hours is that apart from possibly charging people when they abuse the system by failing unnecessarily to turn up for an appointment, we've ruled out charging the NHS. Now a lot of people were afraid... HUMPHRYS: ...ruled out charged for GP visits? LETWIN: The Labour Party has been trying to suggest that we were going to introduce new charges and what Liam has released is the fact that we are not going to do that. We are not going to introduce new charges in the NHS... HUMPHRYS: there will be no GP visits specifically and I mention that of course because your own leader has talked about it, no charges for GP visits, absolutely full stop. LETWIN: That's included in what's been announced. Now that means that people don't, I am not saying everybody will immediately understand that, but if we keep at it and make it clear, we're not about trying to charge people for things, we're about trying to liberate people from a system that doesn't work well, and which the Labour Party is trying to make better by working from on top the whole time, and try and find other routes, now we've... HUMPHRYS: ...and one of those other routes is to encourage people to go private, more people to go private? LETWIN: ...well when you say go private, look... HUMPHRYS: ...take out private health insurance. LETWIN ...well look at what's been announced about Education. What we've said is that it would be right for people to have the chance to take some of the money and establish their own schools if there is stuck.....if, the, all the failures of these public services most affect the people who can least defend themselves at the moment. If you're in an inner city you'll stand a much better chance, so to speak, a much worse chance if you like, of having a bad school than you do if you're in a nice rural area like mine in West Dorset and so you have people who don't have a loud voice, they don't have much effect on bureaucracy, they're trapped in a bad inner city school, what can they do? We're suggesting that we should liberate them. We should let them do what they do in Denmark, Holland, where they can establish, voluntary bodies can establish, church groups can establish, parents can establish a school and take the money and use it there. Now this is not privatisation... HUMPHRYS: Oh, it's private sector solution. LETWIN: Well, if you like, like the Prime Minister was talking about at the last Labour Conference a week ago. Why should people be any more scared of what we are suggesting, than what he was talking about. The difference is we mean it and he doesn't. HUMPHRYS: Ah, well, I can't answer on why people should be more scared or less scared. But the fact is they are, most people...if you look at the..different area of course, but Railtrack, most people - sixty-one per cent I think - say that they want to see Railtrack taken back into public ownership. They are nervous about, distinctly nervous about private sector solutions. LETWIN: But, the Prime Minister clearly believes that he can sing a good song and persuade a lot of people that the melody is a lovely one if he talks about trying to provide the best possible service, turning the NHS into a service rather than a structure, except that's not what he's doing. What he is doing is running this thing from on top, what we are suggesting is actually making these things a service, actually providing people, neighbourhoods, communities, the ability to escape from something which is a rigid structure, use the service, not privatise it, enable them to get something better for themselves. Now, I agree that at the moment people don't know that's what we are saying, they are not aware that what we are stressing is that government doesn't have to run everything in order to have collective effort, it can have liberty and collective effort without big government and it can work better. HUMPHRYS: So, if they believe, as they appear to believe, that you are for the market, more market solutions rather than public... LETWIN: But these aren't market solutions because they are coming, they are publicly funded solutions. HUMPHRYS: Sounds very much like it don't they. LETWIN: Well, no, because they are publicly funded.... HUMPHRYS: You are giving people public money as it were, or giving them back their own money if you like, in your terms, but then, but then, to take that money to the market. In other words, put it into private solutions. LETWIN: If you like to put it as a market, you can, you can talk about the word if you want to.... HUMPHRYS: Well, that's what we're talking about, certainly in the case of schools for instance. LETWIN: Well you can use the word if you want you, but I don't think, let's go to Liverpool. There's a school there, called The Belvedere School, it's run by a charitable trust, it operates on a basis which costs, I think, about six hundred pounds less per pupil, per year, on average than the Liverpool maintained schools do. Now, I wouldn't call that a market. HUMPHRYS: No, on the other hand, they might as well go to an independent school organisation and say, can you set up an independent school in our area and would be absolutely fine by you. That clearly is the market. LETWIN: Except that you see in, in Holland and Denmark and Sweden and places, people don't think in these terms, they recognise that education's something different from the market in the sense of something that you trade as a commodity, they recognise they are not talking about profits here, and you're not talking about private people paying private money, you're talking about public funds, supporting a service, to give people excellence, by enabling them both individually to make choices and collectively in civil society to get on and provide themselves with things that are excellent. Now that's the shift we're trying to achieve and I think it's important, particularly commentators such as yourself are actually capable of making these distinctions, and we distinguish between three things. There's state socialism run from on top, which is what Tony Blair gave up on the economy but is still doing in the public services, there's a free market everywhere with everything turned into profits, we don't believe in that, we're not advocating that, and then there's, if I can use the word, a middle way. There's a way of trying to have public funds, yes, taxpayers money, yes, support for communities and collective effort, yes, but not all run from on top by Whitehall and that's what we're aiming at. HUMPHRYS: Right, right, or the third way. LETWIN: The third way, we'll have to call it, I suppose. HUMPHRYS: ...yes, quite so. Tax then? And this is all part of the same theme clearly. People see you as tax cutters, still - at least that's what our focus groups and the polls tell us. Is that because you haven't done enough to persuade them otherwise or is that because you want to see, be seen as that? LETWIN: Well, some of each I suppose that's to say. Well let me explain exactly what I mean. There's no doubt that the Conservative Party has been, is and always will be, if given the choice between two alternatives with no reason to go one way or the other, in favour of reduced rather than increased tax as a part of GDP. We think it's good if people have more of their own money to spend, that's our general background, but we recognise that the current situation of this county is such that the public services are not working very well, in fact we've been saying for a year that we've come to this realisation, alright you may say very late, but we've come to it and we really understand that point, we understand that's what people think about them and we understand objective studies which we've been doing for the last year prove it. And we know that we've got to reform them, but we also know that until we've reformed them or at any right got the plan straight for reforming, we will not know how much it will cost and we don't know what the fiscal arithmetic will look like, what the tax and spend of the government will look like when we get to the next election, now when we get there, and we have our plans for reform in proper detail, we know what it will cost to fund those plans so we can actually provide excellent services and the way I describe it, not all run by Whitehall, but publicly funded, when we know the costs of that, we know what the arithmetic looks like, then we'll say as we go into that election, with at that moment in Britain's history and against that background, the need to provide excellent public services we can or we cannot afford to have any tax cuts. We may well say we can't afford it. HUMPHRYS: And you might even say tax rises? LETWIN: We might even say that, we don't know where we're going to get to until we get there, we accept that, and that's why there's been a change, now I accept it's going to take time for people like ........ to understand, the change is that instead of saying we're going to have tax cuts and then as an afterthought we'll try and do the best with the public services, we're saying we're going to make the public services excellent and we'll work out against a background of desiring tax cuts if ..... .get them, whether that is feasible or not feasible at that time. HUMPHRYS: I think it might take quite a, many of us, quite a while to get used to the idea, that the Tory party as a tax rising, or a tax increasing party. LETWIN: ...well it's not... HUMPHRYS: ...that's what you're saying is a possibility. LETWIN: Tory governments have from time to time raised taxes... HUMPHRYS: ...indeed they have. LETWIN: ...from time to time reduced taxes. You do whatever is sensible under the circumstances. The question is, what is the basis which you're starting with, the background. Are you aiming, as I think from time to time anyway Gordon Brown is aiming, to raise taxes because he thinks it's somehow morally good, or an excellent... HUMPHRYS: ...well because he wants to redistribute wealth which is now what you are yourself coming towards. LETWIN: The problem is that he is not redistributing wealth properly because when he, it came out in the film, when he spends a huge amount without reforming the public services he wastes a huge amount. Do you know we've got to the point where the National Health Service has just slightly more administrators than beds. Now this is an absurdity. HUMPHRYS: Well I can remember the same sort of conversation with people like you many years ago when you were in power we then had more administrators than nurses and all that sort of thing. But let's look at the state of the public services as they are at the moment and, of course you don't have all the books open in front of you and maybe you haven't seen all the figures but you've seen an awful lot of them. As things stand, do you think more needs to be spent on, putting aside the efficiency argument of course you will say we must include efficiencies of course everybody, again ever Opposition says that. Is there, as things stand an argument for raising more money in taxation for better public services? LETWIN: Well the first thing I'd say is we're not just talking about improving efficiencies within the current regime, we're talking about a different approach of public services... HUMPHRYS: Ok. LETWIN: ...and I don't know is the clear answer. HUMPHRYS: There might be, therefore? LETWIN: There might be. There may not be. I don't know what our reform plans are going to cost. I'm not spinning a line, I genuinely don't know, because we know the direction in which we want to move, we want to liberate people and communities to provide things which are better, rather than having it run from on top, we have not worked out all the details of that, and until you do, it would be crazy to speculate about exactly how much it will cost. The government is currently adding a vast amount to spending on public services, so by the time we get to the next election vastly more than is currently being spent will already be spent, I think it's about forty-thousand-million pounds a year more will be spent at the time of the next election than currently is being spent if I remember the figure correctly. Now against that background and looking at our reforms, we are going to have to ask ourselves the question - will that level of funding, fund through our reforms real excellence in provision. HUMPHRYS: Let's look at another area in which people are worried and how you have to persuade them that you are changing and that's the selection of candidates. We read in The Mail this morning that there is a plan, that there was a plan that passed across Iain Duncan Smith's desk, to, were discriminate against white male heterosexual candidates. Mr Duncan Smith told us this morning that he had seen that plan and had dismissed it. Now isn't your problem precisely that. He seemed to be quite pleased that he dismissed it because he killed a story that The Mail maybe would not have liked. But perhaps he should have said - quite sensible, we do have to do a bit of positive discrimination to get more women and more Asians and so on into the party, into our candidates. LETWIN: There are two things to separate here, there are methods and there are achievements. The method, incidentally I have never seen this piece of paper so I don't know what it recommended, but the method is clearly something we need to go on discussing, we need to find a way which balances two things. We don't want to turn the Tory Party into a kind of Stalinist apparatus which I'm afraid sometimes the Labour Party comes too close to being... HUMPHRYS: ...neither do you want it to be an old club of white males? LETWIN:, no I was just going to say, and the other side is that we want to try to stop having an arrangement which is frankly just weird, it's not, it's not that, that I believe in sort of absolute quotas of one kind of person or another but in every other occupation nowadays, I mean my wife is a senior civil servant, she works, she's been educated, she expects to be part of a world, there are other women like her working in similar positions around her and there are men and we don't expect to walk into a doctors' surgery or into a lawyers' office these days and find just men, so it's very odd when you look at the Tory benches and they are not of course just men, I have some very sterling women colleagues, I mean Theresa May is the Chairman of our party at the moment, Caroline Spelman is one of our leading front bench spokesmen, member of the Shadow Cabinet, but nevertheless, the fact is you look round the benches, it's still white males largely, and clearly we want to do something to change that, just to be like everything else that's all, we, this isn't a sort of great drive to have particular numbers of this or that but simply to be normal and we want to achieve that without, as I say, doing something which I think is really very closer to democracy in the long run which the Labour Party has done too much of, which is running absolutely its own party like it's trying to run the public services from on top... HUMPHRYS All right, final thought about where you are now, and where you would perhaps like to have been at this position in your history. We've got people like Ken Clarke, Steven Norris, Malcolm Rifkind, John Major all offering their criticisms in one way or another, quite severe criticisms in some cases, particularly of the leadership of Iain Duncan Smith himself and some of the approaches that he's been taking. This is not just froth and bubble is it? This is serious stuff isn't it at this stage? LETWIN: Evidently it's serious that we've just come out to a Party Conference, and a lot of things from our past have come to hit us. If you expect me to tell you..... HUMPHRYS Come on it's not that. I'm not talking about John Major's affair or whatever. I'm talking about serious criticism of where the Party has been where it's going under Iain Duncan Smith's leadership and that's the point and we have Michael Haseltine, telling people apparently though ....they didn't manage to get a comment from him but neither did he deny it as I understand it, his view was that it's time for a change. Time for a change of leadership LETWIN I think it is an extraordinary idea that when you have been working for a year to try to get together a fundamental shift in a political Party's attention and a fundamental change in the way it goes about dealing with an issue as big as the public services and quality of life. I think it's a very strange idea that the person you have selected as your leader who's been doing that work who is for the first time at this Party Conference going to be laying out the first products of it, which is where it is going to take us two, three, four years may be more than that to get to the end of and show people that in a way that works. It's a very strange idea that you should say: Well he hasn't achieved a miracle in a year.. HUMPHRYS No, they're saying he's made no impact, that's what they are saying, he hasn't made an impact. LETWIN Yes, but you see I think this idea of impact at an early stage in the Parliament is not only illusory but really dangerous. When we were at this stage..... HUMPHRYS: The leader shouldn't make an impact? LETWIN But Mrs T, Mrs Thatcher you must admit in the end did make an impact - good or bad she made an impact , I happen to believe it was good, but even those who think it was bad agree she made an impact. At this stage of her ten year as leader of the opposition people were saying she is invisible she's not making a .. HUMPHRYS Alright, how long has he got then to make an impact? LETWIN He's got as long as it takes, because this is a long... HUMPHRYS He has .... LETWIN: Yes.... HUMPHRYS: Well, he gave himself eighteen months.....and it's a year now. LETWIN He'll have my support until we're finished with it, because I know that this isn't an easy thing, if it was an easy thing we would all have done it long ago. HUMPHRYS Oliver Letwin, thank you very much indeed LETWIN Thank you. HUMPHRYS: It's decades since the idea was first floated that European countries should share a single currency. And it's long been recognised that it would work only if there were strict rules to stop individual governments borrowing too much money and undermining the confidence of the world in the currency. So they devised something called the Stability Pact... with fearsome consequences for anyone who broke the rules. But now many countries are worried that it means they will have to cut back spending on public services that they regard as essential. That fear is shared by many in this country when or if we join up. Bill Morris is the leader of one of Britain's biggest unions and that's what he's worried about. I'll be talking to him after this report from Paola Buonadonna. PAOLA BUONADONNA: France is gearing up for the fight against crime - violent crime in particular is on the rise and the new government has promised to put ten per cent more officers on the streets. It's what voters would like in Britain too, but it doesn't come cheap. In order to afford improvements to the public services while the economy is in trouble - and without putting up taxes - France will run up a bigger deficit. To be part of the Euro, France and other countries agreed a tough set of rules known as the Stability Pact which determined how much they could borrow. Now these rules are being challenged by governments unwilling to rein in public spending and balance their budget as they promised to do, and France is the worst offender. Many in Britain too worry that if we join the Euro, the Government will have to cut down investment in public services. But many also warn that if the Stability Pact is weakened or even abandoned altogether the credibility of the Euro would be seriously undermined. The Pact requires France and the other members of the Single Currency to keep their borrowing under control, below three per cent of their national income, with a commitment to balance their budgets by 2004. KENNETH CLARKE: The aim was to ensure that you had financial stability inside the new Eurozone and that no one maverick government could run irresponsible public financing policies that would cause problems for everybody. BUONADONNA: But last week, when it became clear that France, Germany, Italy and Portugal were not going be able to meet their obligation by 2004, the European Commission granted them a two year extension, warning them at the same time that the party will then be over and they won't to be let off again. PEDRO SOLBES: If experts analyse in depth what we are proposing they would realise that we continue to stick to the Pact as concerned not breaching the three per cent and reaching the close to balance in the medium term. What we have introduced is a kind of improvement exactly not to postpone again these ideas of the medium term balanced budget. BUONADONNA: The new French Europe minister Noelle Lenoir is the guest of honour at a party at the German Embassy in Paris. The two countries argue that the relaxation of the deadline does not fundamentally undermine the Pact. NOELLE LENOIR: We have welcomed, the Prime Minister has welcomed the proposal of the Commission of two extra years because in the present international context, when you look for instance at the fall...the downfall of the shares, you see that there is a context of global uncertainty and sometimes some flexibility allows to respect and to give more credibility to very rigorous rules. BUONADONNA: But the view from Belgium and some other Eurozone members is very different. They fear this is just the first step in a strategy to weaken the Pact. They have paid a huge political and social price to meet its strict requirements and the impression that bigger, more influential countries are getting away with large deficits without suffering any sanctions is bitterly resented here. DIDIER REYNDERS: To be a member of the Eurozone it was very important to organise some sacrifices in Belgium, an increase for the taxpayers of the tax payments, a cut in some investments in some social expenditure and since 20 years, it was a long process. So after 20 years of difficult times, of sacrifices, it's very strange to see that it was an obligation for the small countries and it is possible to have a deviation for the large countries in Europe. BUONADONNA: But France would rather upset its EU partners than pick a fight with its strong trade unions. Last week a protest against privatisation plans brought more than forty thousand public sector workers onto the streets of Paris. The new government can't afford to ask of its voters the same sacrifices made by Belgium and some believe that even two year delay will leave countries like France in difficulties. ALAN SIMPSON MP: Extending the compliance period for the Stability Pct is just like getting two extra years on death row, you don't want to be sentenced to death for a crime you didn't commit and that's what I think Europe is going to have to turn round and say. We are not guilty of this and we want release, not a delay in execution. BUONADONNA: Of course Britain isn't part of the Single Currency so Gordon Brown's hands aren't tied by the Stability Pact in quite the same way. But as the government agonises over whether to hold a referendum on the Euro, there is growing concern about the impact that membership could have on public expenditure in Britain too. SIMPSON: I think the Chancellor has already been told that it would require twenty billion pound cuts in Britain's borrowing or spending and the impact that that would have on Labour's investment programme for schools, for hospitals, for you know the whole health or transport agenda, this would be disastrous, it's disastrous even before you begin to factor in the effect of the downturn in the global economy. So he would be mad to go down that path and the one thing you have to say about Gordon Brown is that he is not either politically or economically insane. JOHN MONKS: I think it's a totally false argument that is being put forward. The reality is that we are well within the limits of the Stability Pact, in fact Gordon Brown's own rules are very very tough as well on borrowing for investment and we are in a good position and I think it's a real red herring this idea that somehow joining the Euro is an alternative to spending on public investment. It's important that we do both and that's the tactics that this country should pursue. BUONADONNA: Yet a sluggish economy could threaten the British Chancellor's budget plans if a decision to join was taken this side of the next election. KENNETH CLARKE MP: I think the British government are worried by the Stability Pact but in a different way. They're sooner or later going to have to put up taxation if they commit themselves to these spending plans. What they're a bit worried about is that with the slowdown they might have to put up taxation before the next election. BUONADONNA: In order to keep people on board at a difficult time the French Government believes it makes sense to ask for more flexibility in the way the Pact is applied and this view is shared by union leaders in Britain, even those who don't feel that the Single Currency poses an automatic threat to public spending. MONKS: I think the Growth and Stability Pact would benefit from greater flexibility, the kind of flexibility that is encapsulated in the rules that Gordon Brown has laid down for the British economy - the so called golden rule that you can only really borrow for investment purposes but you can borrow when the economy is in a dip to give a boost to, to economic growth which is what is happening with spending at the moment in Britain. BUONADONNA: Since its introduction the Euro has performed rather badly, so it is wise to tinker with the complex mechanism of the Stability Pact? Even some in the pro-Euro ranks fear the return of wild spending by some Single Currency members, the consequences of which would be suffered by all. KENNETH CLARKE: I'm worried about it because it is part of a sustained effort by rather irresponsible Finance Ministers to get out of the Stability Pact because it's politically difficult for them. I hope I'm mistaken. I think the Germans will certainly try to get up to speed and get to the balanced budget over the cycle but the French I'm not so sure - this difficulty will spread if we are not careful. REYNDERS: It's very important because we need more confidence, confidence from the investors, but also for the consumers in all the European Union member states. And I'm sure that it's very important to do that, to have that, that we stick to the Pact, stick to our engagements and this Pact of stability and growth Pact, it's a clear engagement from all the member states and I'm sure that it's important to do that, to go in the right direction with the Pact, but also to keep our goals on medium term. Medium term means in two or three years of course, a balanced budget or a budget close to balance. BUONADONNA: If people here in Britain get the feeling that there are different spending rules for different countries and that budgetary discipline in the Eurozone is a matter of choice rather than a strict requirement this could have implications for the referendum on the Single Currency. It would give ammunition to those who believe that the Euro lacks credibility and is not worth joining. HOWARD FLIGHT MP: The implication of fudging the Stability Pact or even getting rid of it would be that this would be a dangerous unsafe currency because it would mean that individual country members could go merrily borrowing huge amounts if they got governments that wanted to do it, presenting at some stage in the future the threat of inflation and bringing the contagion to everybody else. So it would be a, if you like, an unsafe currency to join and down that alleyway, who wants to join an unsafe currency? BUONADONNA: But just like here in France, ordinary people in Britain are more worried about the safety of their streets than that of the Euro. And if the Pact were to be enforced with little scope for flexibility, concern about the fate of public services could prevail in the debate at home. SIMPSON: It will undermine the referendum campaign and far from the Euro appearing to be Britain's destiny I think it will be recast as Europe's folly. It's not an issue that will prove to be a selling point for the British public, whether or not the Prime Minister feels destined to be part of it. BUONADONNA: The fight against crime may need more than a few extra policemen, yet policing the Euro is proving to be more complicated still. Despite its name the Stability Pact is adding to the uncertainty surrounding the Euro on both sides of the channel. HUMPHRYS: Paola Buonadonna reporting there. JOHN HUMPHRYS: Bill Morris, Tony Blair says our destiny lies in the Euro. Do you agree? BILL MORRIS: Our economic future certainly lies in Europe. It's our travel to work area, it's our recruitment area and it's our investment area but to suggest it's a matter of destiny that we join the Single Currency, I beg to differ. HUMPHRYS Your colleague John Edmonds says that British companies at the moment are competing with one hand tied behind their backs. MORRIS: Well, I think that a lot of the arguments coalesce around manufacturing and it's been suggested that if we was to join the rate at which we joined would give British manufacturing a one off boost. Well, it may well do that, but that's like, you know taking a flutter on the Foreign Exchange Market. What British manufacturing really needs are some of the fundamental fault lines about investment, about skills, about productivity, those are the issues which will make a difference in the market place as we compete with the rest of the world. HUMPHRYS: And this from your perspective is where the Stability Pact comes in as well because if we were to join and we were to be subject to the rules of the stability Pact, to the extent to that they are being enforced, you'd have grave misgivings. MORRIS: Well, that's right we've all been concentrating on the five tests, which are scheduled to be assessed next year, and what we've taken our eye off from is the plague of the Stability Pact because this Stability Pact is like a tight corset and it means that you have to pay a very, very, very high price if you put a little bit of weight on. In this instance, public sector borrowing, and it seems to me that you have to have some control, but the control has got to be much, much more flexible than the Stability Pact because all over Europe we see in France, in Germany, in Italy, in Portugal, we see the Stability Pact at work and the result of much of that is high and rising unemployment. So, we in Britain at the moment can make a choice, we can join with the Stability Pact and forget our public services in terms of the expenditure and improvement or we can take the latter. HUMPHRYS: Forget them? MORRIS: Well, that's right what I'm saying John is that you can't have both at this particular point of our economic cycle. You cannot have both the Stability Pact and continue declining investment in our public service you have to choose. HUMPHRYS: Well, what Ken Clarke says he recognises that choice obviously, but what he says is you put up taxes and that's the way you pay for your public services. So you don't have to borrow, after all if you are raising loads of money from us, the public, then you don't have to borrow the money. MORRIS: Well, there is a limit as to how much you can put up tax in terms of the threshold of acceptance and putting up taxation is something which will react negatively against what we want to do in expanding public service and indeed in expanding the private sector, but I think that the proposition which I know that the Chancellor have indicated that rather than concentrate so strictly on the Stability Pact, at the three per cent deficit level, what we should be looking at is to look at total public spending as a percentage of GDP and the suggestion coming out of the Maastricht Treaty that that should be about sixty per cent and it gives us manageability over the economic cycle and not judge it sort of year by year or month by month and it seems to me that there is something in that to be properly and constructively examined. HUMPHRYS: So it's your understanding that the Chancellor himself is worried about the effect, more than worried about the effect of the Stability Pact. MORRIS: Well, he hasn't confided in me, but I am quoting... HUMPHRYS: ...perhaps he has a little bit. MORRIS: I'm quoting The Sunday Business today which indicates that that is a proposition which could be advanced, because everyone recognises that in the long-term, subject to all the conditions, there is some value in being part of a marketplace, where you only have one currency. But it cannot be at any old time and at..with any old conditions. It has got to be right for us and at the moment my argument, quite straight and simple: public service is number one priority, when you get public services right, which will inform the voters' experience at the next General Election, you are guaranteed a third term, that is when you turn your mind to all these other complexity about Stability Pact. HUMPHRYS: Except that you're not going to get it right, you're not going to get them right within the next two or three years are you, you're not going to get the NHS right, you're not going to get schools right, you might start putting them right, you might begin the process, but nobody not even Tony Blair I think believes that you are going to have the NHS whistling along merrily in three years from now. MORRIS: Oh you'll see measurable improvements John you'll see measurable improvement. It's about whether we get on the London Underground, whether you know this, the waiting time to get into the hospitals has been significantly reduced and of course we're making tremendous progress, for example, on the class sizes coming down from thirty-plus, thirty-five, forty down to thirty which is government policy, so I disagree that you won't see measurable improvement I think you can and I think voters' experience will be informed by those improvements, when you do that, that's when you get onto the single currency and all the attendant problems that goes with it. HUMPHRYS: What that means is that there could be no question of a referendum on joining the Euro between now and the next election? MORRIS: I don't think there will be one anyway because we have our own economy which is slowing down I think, the growth rate I suspect might well be downgraded, I think it will come in under two per cent at their end, there's some difficulty in Germany as we have seen in terms of whether the German political system will last given the coalition there because there are some competing priorities there, firstly the Greens are asking for extension in public spending, the employers are asking for reduction in public spending and the trade unions are not in the mood for labour market reform so there is some instability and you can go all around and have a look, we've got a whole plethora of elections pending here and, you know, we just cannot in my view absorb a referendum in this particular parliament, particularly against the uncertainty of what may or may not happen in Iraq. HUMPHRYS: But the government is effectively locked into, Tony Blair specifically said last week that he wouldn't, he couldn't understand this argument about Iraq, he thinks that's absolute nonsense that that might push the referendum aside, but the government is locked in, in this sense isn't it, that they have said if the five tests are met, there are huge imperatives, huge reasons why we should join the single currency now Gordon Brown has embarked upon testing the tests and it's very likely indeed isn't it that by next June or possibly earlier he'll pop up and say - ah, the tests have been met satisfactorily. Are you saying even then we should not have a referendum? MORRIS: Well the prime minister in his speech said if the five tests are met we should go for it. He didn't say when we should go for it, to govern is to choose, and to choose is about priority. HUMPHRYS: Ah but the message is coming from him, particularly when he's asked about would Iraq push it all away and all the rest, the message is coming from the, the mood music certainly is that once those tests are met we should go for it as soon as is respectable. MORRIS: Well the political imperative does not lead you to that conclusion. I've just talked about the uncertainty in terms of our economy, German economy, the Iraq war and the plethora of elections that we have to win, it's election overload, so the political imperative is win the general election by fixing public service and return to the Euro thereafter. HUMPHRYS: If there were to be a referendum, in a sentence, your union, or you anyway would campaign against going in? MORRIS: As things stand there is no case to support, that's in line with what the British people think and that's where we are. HUMPHRYS: Bill Morris thanks very much indeed. MORRIS: Thank you. HUMPHRYS: And that's it for this week. Don't forget about our web-site if you're on the internet. Until the same time next week, good afternoon. 26 FoLdEd
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.