BBC On The Record - Broadcast: 24.11.02

Interview: Michael Howard MP, Shadow Chancellor.

Do the Tories still plan to cut taxes and regulations?

JOHN HUMPHRYS: Michael Howard welcome, I don't know whether you are going to answer some of those questions, we've been told you won't answer, we shall see, but... MICHAEL HOWARD MP: No shortage of helpful advice. HUMPHRYS: Lots of advice. You agree, I take it, that you are not yet trusted with the economy and you can't win an election until you are. HOWARD: I think we are still paying a high price for our entry into the Exchange Rate Mechanism, very ironic because everybody was in favour of what we did; the Labour Party supported our entry, Liberal Democrats, TUC, CBI, everybody thought it was a great idea, and also ironic because we are the only party that's actually learned the lessons of that and are determined not to take this country into the Euro but, of course, there are serious lessons to be learned and I think that people are going to turn with us, turn to us, and look much more sympathetically at what we are proposing as they begin to appreciate the scale of the present Government's mis-management of our economy and the way in which they are squandering the golden legacy which they inherited from the last Conservative Government. Let's look at just er, just er, one or two things. We've heard about the tremendous burdens that they are placing on business, huge burdens, fifteen billion pounds a year the CBI says, tax and red tape combined. And it's not as though we're getting anything for it; we produced figures at the beginning of last week showing that if you look at the Government's own targets, and their own assessment of those targets, they're failing forty per cent of the targets they set for the public services in 1998, seventy five per cent of the targets that they set in 2000, so they're not delivering value for money to the people of this country and we're producing figures today which show that if they properly accounted for all their borrowing liabilities, the PFI liabilities, the PPP liabilities, network, rail and all that, they are pushing at the very limit of what Gordon Brown says is a safe and sustainable level of debt, so the problems are mounting up as a consequence of actions this Government has taken and I think people are going to look much more positively and sympathetically at what we are arguing instead. HUMPHRYS: The trouble is, when they look at what you're arguing, they're entitled to say, well, actually, we're not quite sure what they are arguing. If you take tax, for instance, people don't know what you stand for. Iain Duncan Smith says, "maybe we can cut taxes", Oliver Letwin says "maybe taxes will actually have to go up" and that's why you don't have the credibility that you need. HOWARD: Very clear. We believe in the advantages of a local tax economy, we know that low tax economies are the most productive and dynamic the world over, and we know the damage that is being done, and Digby Jones of the CBI and others who have said it, from the burdens of tax on business, making business less competitive, affecting productivity, really making it much more difficult for business people to win orders and create jobs, so that's the way in which we approach these things... HUMPHRYS: But they don't know about your tax position...I mean... HOWARD: Well... HUMPHRYS: Iain Duncan Smith says...let me give you an example of why there is less credibility than there ought to be...Iain Duncan Smith says "under Tories, all public services will improve"...all of them, the whole lot: education, health, police and all the rest of it...and taxes will be lower. Now people don't believe that, they say we stopped believing the tooth fairy a long time ago, you can't do that. HOWARD: That's why we will convince people as we come forward with really detailed policies which will show how we are going to improve the public services. Now let me refer you to a sentence from Labour's 1997 manifesto... HUMPHRYS: I would rather you talk about your own policies... HOWARD: It's directly relevant to this. They said, in 1997, the level of public spending is no longer the best measure of the effectiveness of Government, and they were right. They've forgotten all about that, and if you ask them now how they're going to improve the state...the current state of affairs in terms of health or education or law and order or transport, all they can talk about is the extra money they're spending, we're spending billions more they say, but Patrick Minford was absolutely right in your clip, what we've got to show is that there's a better way of delivering public services, a much more effective way which will give this country the public services that we want and need, getting away from the centrally-driven monolithic status model which Labour is still devoted to and as we do the work on that and as we show people how we can do it, I think that they will see how in the medium to long-term, we may not be able to do it straight away... HUMPHRYS: Ah... HOWARD: But in the medium to long-term, we will be able to deliver better public services... HUMPHRYS: Ah, but that is... HOWARD: and lower taxes. HUMPHRYS: But that is exactly the point, isn't it, because Francis Maude said that yes, reform may very well work, but it will cost more in the first Parliament, in other words, what he is saying is we need to make it clear that there will be no cuts in taxes in the first Parliament, even if, indeed because of, the reforms that we want to review (sic), so you're acknowledging that, are you, that for the first Parliament, no cuts in taxes? HOWARD: No, I'm not acknowledging that at all and if Francis has done the detailed work which enables him to come to that judgement, I would be delighted to see it, but the honest answer to your question is that we do not yet know. We are doing the work on the public services, very detailed work, we will produce it all, we'll put it before the people and will cost it, and we'll say how we're going to finance it, and it is possible that in the, in the very short-term, because of the crisis that we face in the public services and because there may be transitional costs in moving to a new method of delivery, it may be that in the short term we won't be able to say we will offer you immediate tax cuts. HUMPHRYS: Short-term being a couple of years, which is what your official, well your official seems to be suggesting that... HOWARD: I don't know where that quote came from and it certainly didn't come from me. HUMPHRYS: So.....years.... HOWARD: I do not know the answer yet, but our policy and our approach is crystal clear: we believe in a low tax economy, we know that it's the most dynamic, we know that it delivers the goods for the people of the country who live in that kind of economy and we will get there as soon as we can, but we recognise that there's a crisis in the public services. We have ways, we have plans, of how to deal with that crisis, it may involve some short-term costs, and we won't shrink from them. HUMPHRYS: Right, business. You've got to win back the confidence of business leaders - business people, not just business leaders - all business people, and what they want to hear you talking about is precisely cutting taxes, cutting regulations as well - we'll come to that in a moment - but they want you to say "we will cut back business taxes". By definition, you're not going to be able to give them that promise, are you? HOWARD: Well, I don't know yet, but we will have to see, we will have to do all the sums. I think that it would be regarded as highly irresponsible of me, we're still probably two and a half years away from the next election, if I were to say "I know today that I'm going to be able to promise tax cuts at the next election". HUMPHRYS: Well, you've got to have a philosophy, haven't you? HOWARD: We have a philosophy, and I have explained the philosophy to you .... HUMPHRYS: But...without any's so difficult. HOWARD: No, no. I have explained the philosophy: we believe in low taxes, we continue to think that that is the best way of running an economy, but I have no idea what kind of fiscal situation we are going to be facing in two and a half years' time, I don't know how much worse the crisis in the public services will have got in two and a half years' time, so it would be very irresponsible for me today to say "yes, I am definitely going to be able to promise..." HUMPHRYS: Well exactly, so therefore... HOWARD: "...lower taxes at the next election..." HUMPHRYS: And if you can't....? HOWARD: I'm being prudent. HUMPHRYS: Yes, quite so and you've explained to us where prudence gets - or at least boasts of prudence can get you. The problem is you cannot promise them that, indeed you can't promise them anything and unless you can do that they're entitled to say, they are saying whether they are entitled to or not, they are saying: we don't trust this lot. And look at the result, twenty per cent confidence in their ability to handle the economy. How are you going to get out of that? HOWARD: I don't think that comes from anything I've said. That comes as was clear from your... HUMPHYRS: ...from a whole series of things. HOWARD: It comes more than anything else from our entry into the Exchange Rate Mechanism and the circumstances in which we left it. HUMPHYRS: But it's ten years ago. HOWARD: That's right, people have long memories about this sort of thing. Our philosophy is clear and as we get closer to the next election the practical implications of that and how we work them out in detail and what our proposals for the public services involve will be spelled out in great detail because I'm very keen that the electorate should have a real choice at the next election. That's what we're going to provide them. HUMPHRYS: Right, well, given this real choice then. I take your point about taxes, you can't do all the sums because you haven't got all the sums yet, or you haven't got all the figures yet. Regulations. HOWARD: Yes. HUMPHRYS Broadly speaking, we want to cut regulations. Well, every single Conservative government in my moderately long life has said we want to do that. We've seen the result of it, it hasn't worked, as we've just heard in that film. And again you're saying we want to do it without being specific. HOWARD: I am being specific. HUMPHRYS: Give me a whole raft. HOWARD: Okay. First of all people rightly say we weren't as successful at dealing with this as we should have been when we were in office. I accept that, but things have got very much worse. Last year there were.... HUMPHRYS: So what are you going to cut? Sorry to cut you short but I am looking for these specifics. HOWARD: There were four-thousand, six-hundred and forty-two regulations last year, new regulations, fifty per cent up on 1997. Now the problem is a systemic one. So we've got to make systemic changes. It's not a question of saying..... HUMPHRYS: Rhetoric, they'll say that's rhetoric. HOWARD: No, no, it's not rhetoric because I'll tell you what the changes are going to be. You can have sunset clauses in regulations so that they expire after a period of time, unless you start the whole process again. You can require government departments to reduce the number of regulations for which they're responsible year on year. You can exempt small firms from regulations, you can make the process of assessing the cost benefit impact of a new regulation independent.... HUMPHRYS: And you'll do all of that, you'll do all of that, that's a pledge, right. HOWARD: These are the kinds of ideas we are looking at which will actually reduce the number of regulations. HUMPHRYS: Alright. HOWARD: So I'm telling you how we're going to do it. HUMPHRYS: Right, let's turn then in the last couple of minutes to two separate subjects - the firefighters' dispute for a start - sixteen per cent they want, John Prescott - I'll be talking to him in a minute - seems to think that maybe that's a talking point at least. Would you give them sixteen per cent? HOWARD: And Gordon Brown has now ruled it out. They are, they are.... HUMPHRYS: Well we'll see. Hang on, before you attack them, you tell me whether you would give them the sixteen per cent. HOWARD: No, they are - the government has mishandled this crisis because that is what it is, in the most dreadful way. It is a shambles. The offer which was described by government ministers last week as uncosted, half-baked, irresponsible, a range of government ministers, a whole array of them were saying that. Now John Prescott says they were very close to a do-able deal. The truth is that the government can't have it both ways. It's either got to stay out of these negotiations and leave them to local authorities and say if necessary there's no more money available, or it's got to get into them and take part in them. It can't have it both ways and that's why we're in the shambles we're in. HUMPHRYS: And the other thought I wanted to put to you as former Home Secretary. Roy Whiting has been sentenced to fifty years in jail for that appalling murder. Your reaction to that? HOWARD: Well, I've no quarrel with the tariff which David Blunkett has set. It may very well be that I would have set a similar tariff if I'd still been Home Secretary. But, why do you think it's been announced on a Sunday? I think that's very strange. I champion the right of Home Secretaries to have this power. I agree with David Blunkett that Home Secretaries should continue to have this power, but it doesn't help our cause when serious announcements of this kind are released on a Sunday instead of being told first to Parliament as part..and released as part of the government's news agenda to try and distract attention from the mess the government's in on the economy, on the firefighters' strike and on so many other issues. HUMPHRYS: Michael Howard, many thanks. HOWARD: Thank you.
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.