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TERRY DIGNAN: Where is Michael Howard
heading? On Friday he was in his Folkestone constituency visiting schools
and GP surgeries. At the last election many Conservatives believed the
party ignored public services. They want the shadow chancellor to put that
right. But it may mean downgrading some of the party's most sacred beliefs.
When Michael Howard was
first elected here in Folkestone nearly two decades ago he was an ardent
Thatcherite - a low tax, low spend Conservative who also believed that
government should regulate private enterprise as little as possible. But
has the time now come for him to admit that these policies are nowhere
near as popular as they once were. That's the question which goes to the
heart of the debate over how the Conservatives can regain their reputation
for economic competence.
Trust in the Conservatives
to run the economy competently collapsed after the early nineties. In September
1991 ICM asked who had the most successful economic policies? The Conservatives
won the support of forty-one per cent of voters, Labour just twenty-four
per cent, the Liberal Democrats eleven per cent. But since then the big
two parties have swapped places. In a recent poll on economic competence
the Conservatives were down to just twenty per cent, Labour up to thirty-nine,
the Liberal Democrats way behind on eight. Some former Conservative policymakers
believe these figures are disastrous for the party's electoral prospects.
DAVID MAWDSLEY: Since the early nineties, I mean
ever since the ejection from the ERM, the Conservative Party Party has
trailed the Labour Party on economic competence and that's absolutely vital
because without a lead on economic competence, I don't think the Conservative
Party stands a chance of winning the next election.
DIGNAN: Last week children at Mandella
Primary walked to school in a campaign to encourage parents to leave the
car at home. With them, local MP Michael Howard, who says public services
like education are now his priority, not cutting taxes. But with taxes
rising under Labour, is this the time to back away from a tough tax cutting
message, asks a right of centre think tank?
SHEILA LAWLER: The message which Conservatives
wrongly to my mind took from their defeat in the 1990s was that they had
to be more cuddly, more apparently voter friendly and stop giving these
hard messages. I think that the party should be bold, should go to the
country promising to cut taxes, to lower public spending, that this will
be good for the overall economic prosperity of the country and good indeed
for the Conservative Party.
DIGNAN: The children of Mandella
Primary arrive safely. The Conservatives want better value for the money
spent on schools and hospitals. But reforming public services would also
allow the Tories to reaffirm their commitment to cutting taxes, says one
of Michael Howard's economic advisers.
PROFESSOR PATRICK MINFORD: So I think the first thing the Conservatives
should do is focus on the efficiency of delivery of public services, not
let's throw money at it which is wasted, let's spend money that is necessary
and make sure it's effectively used and that will provide economies to
cut taxes.
DIGNAN: But is taxation such a
big issue for voters? When asked by the polling company Mori in October
of this year what were the most important issues facing Britain today,
forty-five per cent said the National Health Service, thirty-five per cent
defence and terrorism, thirty-two per cent education, twenty-eight per
cent crime. But in the same poll a very small number of voters - just four
per cent - said tax. Some Conservatives argue the party has little to
gain - and much to lose - if it promises to cut tax.
MAWSLEY: If the Conservative Party
wants to be taken seriously on its pledge to put public services first,
which is what Iain Duncan Smith has said his mission is to do, I think
it has to make a choice, and I think it will make it very difficult for
them to say that on the one hand and on the other hand to be offering billions
of pounds of specific tax cuts.
DIGNAN: Michael Howard was a member
of a Conservative government which reformed the National Health Service.
He believes GP practices like this one became more efficient as a result.
He's promising further change should his party win the next election. But
one of his predecessors as Shadow Chancellor warns that reform will be
expensive and will leave no room for tax cuts.
FRANCIS MAUDE MP: We do have to stress that the
demands of the public services, which are failing in this country, which
urgently need structural reform which will itself cost extra money, will
demand extra money in the short term. Therefore we should make it clear
that we would not expect to be able to cut taxes in the first parliament
after being elected, I think that's a perfectly reasonable thing to say.
DIGNAN: At the last election Jonathan
Marland was a Tory candidate. He's also been an advisor to the party on
its relations with business. Until these improve, he says, the party won't
win back its credibility on the economy.
JONATHAN MARLAND: Well I think the business community
lost faith with the Conservatives after the last election. The party is
clearly making noises about reducing the burden of tax on businesses and
also regulation, but I think businesses want them to be more specific.
DIGNAN: Jonathan Marland runs Janspeed
which makes car exhausts in Salisbury, Wiltshire. Although he praises many
Labour policies on enterprise he criticises business tax rises - by forty-seven
billion pounds under Labour, claims the employers' organisation, the CBI.
Jonathan Marland made his fortune in the Thatcher years. He wants a return
to a regime of low business taxation even though some Conservatives argue
this would put Michael Howard in a dilemma - where would the money come
from to pay for such a policy?
MARLAND: Well as a businessman
I very much hope we'll got back to tax regime that the Conservative Party
started in the early nineties which was a much lower tax regime, lower
National Insurance Contributions.
MAWDSLEY: I think it is very, very debatable
quite how high up the list of political priorities business tax cuts would
sit, when compared with personal tax cuts, or more resources for initiatives
on the public services such as law and order, in any list of priorities
of what the next Conservative government would do in office.
DIGNAN: Business thrives when government
leaves it alone - that's a strongly held Conservative belief. A recent
Institute of Directors' report says regulations and red tape have increased
under Labour by as much as six billion pounds a year. Yet the Conservatives
are unclear about which regulations they would scrap if they came to power.
Companies like this complain
bitterly about government red tape and they are pleased the Conservatives
are now really laying into Labour over the issue. But so far Michael Howard
hasn't explained how many government regulations he would get rid of -
a dozen? a hundred? a thousand? Until he answers this question it's hard
to see how the Conservatives can regain the confidence of business. Given
their record, promises to cut red tape are certain to be greeted sceptically.
MAUDE: People will tend to look
back, particularly at the 1990s and see that the burden of regulation increased
during that time. So, they're used to hearing politicians talking about
cutting red tape and they're used not to believing it. So I wouldn't place
very much store on a commitment to reduce regulation.
DIGNAN: And anyway, many regulations
are pushed through by the EU - so there's not much the Tories could do
about them.
MAWDSLEY: Lots of it emanates from Europe
and you know, for some of this, we've given away the power to reverse this
regulation and you know, no matter what the Conservative Party in government
would want to do, it might not be able to reverse some of that regulation.
DIGNAN: But what about regulations
drawn up by the UK government? Meeting with his Shadow Treasury team ahead
of this week's pre budget statement, Mr Howard warned the economy was slowing
down because of the burden of red tape. Although his advisers want much
of it scrapped, it's not clear this would be terribly popular.
MINFORD: Well there's a mass of
regulation, mainly concerned with the labour market that Labour has brought
in and the damaging effect of that could be very large, so it could be
reversed. Fairness at Work Act, has given a substantial new privileges
to unions, I think those could be cut back.
MAWDSLEY: The problem of course for the
Conservative Party now is that businessmen need specifics particularly,
they want to know what specific regulations, what specific red tape and
bureaucracy is going to be cut by an in coming Conservative Party government,
they're not persuaded by political rhetoric. To do that, the Conservative
Party is going to have to tread on very, very politically sensitive terrain,
because most of these regulations refer to employment law and health and
safety at work legislation and that's very, very sensitive.
DIGNAN: Back in Folkestone the
outlook is less than favourable. It is for the Conservatives, too, unless
they restore their reputation for economic competence. That could mean
ditching policies which once made the party successful. But others have
a different message for the Tories - be true to your core beliefs.
LAWLER: You must get back to being
the party of low public spending, low taxation and high growth, which is
high prosperity, and as a party that has always been your message and when
you abandon that message you really abandon the very basis of your raison
d'�tre.
DIGNAN: So where is Michael Howard
heading? He says he won't tell us until closer to the next election. But
time is not on his side. By then the electorate will want to know what
the Conservatives would do if they were again given responsibility for
managing our economy.
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