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ON THE RECORD
GORDON BROWN INTERVIEW
RECORDED FROM TRANSMISSION BBC-1 DATE: 22.3.98
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JOHN HUMPHRYS: Good afternoon. We're in York today
because Europe's Finance Ministers are meeting here and Gordon Brown has been
in the Chair. I'll be talking to Mr Brown about the problems the strong pound
is creating for British industry - and asking him why the poorest are still
punished most by the tax and benefits system. That's after the News read by
CHRIS LOWE.
NEWS
HUMPHRYS: The whole basis of the Budget on Tuesday
was getting people into work and making life better for those who are either on
the Dole or on very low incomes. As we know, Gordon Brown got rave reviews.
Since then - and it's always the same with Budgets - the critics have been
examining the detail and many are now saying that perhaps it wasn't as radical
as it seemed at first. It might be, of course, that this was just the
beginning and there's a lot more yet to come.
Well, the Chancellor is with me. Mr
Brown, you did obviously do a lot in that Budget, some say a lot, some say
not so much. To make it worth the poorest people working harder - they
wouldn't lose as much Benefit as they would have done previously - do you want
to do more in that direction?
GORDON BROWN MP: Yes, I think, we do. First of all, we
made changes in National Insurance. It was to help employers hire people,
particularly on lower pay; secondly, we cut National Insurance for every
employee and that was a signal about the rewards of work for everyone and not
simply the low paid. But, of course, we're looking forward to a situation
where there is a National Minimum Wage. A working family's tax credit that
helps families with children; a child care tax credit that helps families with
children, who need to have high quality childcare. And, then, you have got, I
think, the framework for a modern tax and benefit system for those in work.
We create a floor for those people who
have been low paid in the past but for families with children we do even more
and that's why I was able to say on Tuesday that a family with children, going
to work, working full-time a hundred and eighty pounds will be the minimum
family income and they won't pay tax until they earn two hundred and twenty
pounds. Now, that's quite a huge change in the Tax system because when we came
into power you started paying Tax in this position of twenty-five per cent of
average earnings. Under our proposals, you'll start paying tax at fifty per
cent. So, we have changed the situation from what it was over the last thirty
or forty years in a very radical way.
HUMPHRYS: But, it's still the case that if people
like you or I get an extra Pound in our pay packets, we will get to keep sixty
pence of it. We'll only have to give forty pence back to your Treasury. If we
were very much poorer and on certain benefits, like Housing Benefit, we
wouldn't keep very much of it at all. We might have to give ninety pence or
even more back to the Treasury. Now, do you want to eradicate that
difference?
BROWN: Well, clearly, work incentives
and, therefore, rewards from work are very important. It's the basis of our
Tax system. We want to reward work, encourage savings and investment and be
fair. Now, what we've done is, first of all, eliminate the hundred per cent
plus marginal tax rate. In other words, there were thousands of people who
earned money and for every Pound they earned, they lost-
HUMPHRYS: They were actually worse off.
BROWN: more than-They lost more than a Pound
and that's by changes in Housing Benefit as well as changes in other taxes.
We've reduced the number of people who were on seventy per cent marginal rates
- very substantially, indeed - from about six or seven hundred thousand to
about a hundred to two hundred thousand. Now, that's a very big change,
indeed. And, of course, we are bringing more people into the working family's
tax credit, partly through the child care addition and partly through making it
more generous. And, I estimate that where we have about eight hundred thousand
people on the Family Credit our new system, with higher take-up and by being
more generous will give work incentives to, perhaps, one point three, one point
four million people when it's up and running. So, that is a very, very big
change, indeed.
And, I think, the most important part of
it is, actually, the signal that is sent out. This is money coming through the
Tax system. The Tax system not taking money from people but actually giving
money to people. I can tell people precisely what they're able to take home,
if they're a family with children and that is almost something that can be in
every employment centre in the country. This is what you'll earn if you work
and I think the changes will be quite radical and, in fact, you already have
people 'phoning up. I think, we had a thousand people 'phone up the Treasury
and ask if they took this job at this hourly rate what would they earn and we
were able to tell them.
HUMPHRYS: Sure. That is what you've done but the
question remains there is still this enormous gap. Do you want to go further?
Housing Benefit, in particular, was the example I offered you.
BROWN: Well, as far as Housing Benefit is
concerned, we have a White-Green Paper, in fact, on Welfare reform in the next
few days and, I think, the important thing about the Green Paper is that by
targetting fraud and there is four billion of fraud in Social Security,
particularly in Housing Benefit but also by tackling the causes of poverty in a
far more comprehensive way than ever before, we will be able to achieve two of
the main targets of the Welfare State review.
HUMPHRYS: You're not answering the question.
BROWN: And, that is-and that is to cut-to cut
the numbers of people in poverty, to give millions of people a pathway out of
poverty by cutting the proportion of working age households in work.
HUMPHRYS: But, you're not answering the question,
are you? I'm asking you whether you are going to eradicate that difference,
that poverty trap that still exists for people who-if they're on Housing
Benefit, for instance. If they're in work, they're going to lose; perhaps,
ninety-two pence in every Pound that they earn. Now, aren't you going to-
BROWN: You're talking, John, here about a very
small number of people-
HUMPHRYS: Well.
BROWN: -because we have dramatically reduced
the numbers of people who face that marginal Tax rate ..seventy per cent.
HUMPHRYS: But, to them, it's real - it's very real
and it is a disincentive that you want to eradicate.
BROWN: But-but-but, of course, we hope-
HUMPHRYS: We're talking about hundreds of
thousands of people.
BROWN: Yes. But, of course, we hope to do
more. It is my ambition to do more over a period of time. But, this is a
fundamental Tax and Benefit reform that is eliminating the hundred per cent
plus marginal tax rate and we should get some credit for that.
HUMPHRYS: Yes, that's what you've done and you've
explained that.
BROWN: And, I think, secondly, by dramatically
reducing the number of people who face seventy per cent plus marginal Tax rates
and when you look at the figures one of the reasons that there is still people
with marginal Tax rates that are relatively high is because we're introducing a
new childcare credit and putting it right up the Income Scale so that someone
on thirty thousand pounds - a family income of thirty thousand pounds - can
still receive-
HUMPHRYS: Yeah.
BROWN: -a childcare credit.So, what we've done
is two things: we've brought more people in-
HUMPHRYS: And, you've made that point.
BROWN: Large numbers of people and, secondly,
we have reduced the marginal tax rates for the very people that we have been
concerned about. And, we've done it in a very dramatic way because there are
now huge numbers of people who are now better off.
HUMPHRYS: Right but the fact remains - let me
go back to it. It's an important point, this - that some of us get to keep
sixty pence of every extra Pound and some of us get to keep very much less than
that. It might be only a few pence. Are you aiming to eradicate that
difference?
BROWN: Well, what we're trying to do is to take
more people out of that poverty trap and more people out of the Unemployment
trap.
HUMPHRYS: But, you're still not answering the
question, though, are you?
BROWN: Well, I am answering the question
because-because, first of all, people will have higher incomes.
HUMPHRYS: But, the answer, then, seems to me to be
no, isn't it?
BROWN: No, of course, it's not.
HUMPHRYS: If you're not going to eradicate it,
then-
BROWN: I don't quite know, John, the point
you're getting to. It seems to me-
HUMPHRYS: Well-
BROWN: -that this is an academic point-
HUMPHRYS: On the contrary.
BROWN: -because-No because what we are doing
is, first of all, giving people more income in their hands and, therefore, you
can't deny that.
When we introduce the Working Family's
Tax Credit everybody who's on this Working Family's Tax Credit will, actually,
be better off. Now, if you're telling me, they're not going to be better off,
you're wrong.
HUMPHRYS: No, it's not a question of whether it's-
BROWN: The second thing is: we are reducing
dramatically the numbers of people who have a marginal Tax rate. Now, I think,
that is to our credit.
HUMPHRYS: It isn't a question of whether they're
better off or not. Some people-
BROWN: Well, I think, it is.
HUMPHRYS: No, no, no, no.
BROWN: That's the test, John. I mean, you can
have all the academic service you want-
HUMPHRYS: Oh, no! Oh! Absolutely not!
BROWN: -but the question is: are people better
off?
HUMPHRYS: No, no.
BROWN: And, they are better off.
HUMPHRYS: It isn't-It isn't the question, at all.
If I gave you an extra fiver, you'd be better off. If you thought you were
entitled-
BROWN: Better off in work.
HUMPHRYS: -to fifty quid, you'd say-
BROWN: Now, John.
HUMPHRYS: -cm'on, that's my entitlement. Look,
let me remind you-
BROWN: Hold on, hold on John. Cm'on, cm'on!
These are large numbers of people who have deterred from working because they
go to an employment office and they see a job-
HUMPHRYS: Yeah-
BROWN: -advertised at three or three pounds
fifty an hour and they say: Look, even if I worked forty hours a week, I would
not be better off.
HUMPHRYS: I understand that. That is a different
question.
BROWN: Now, they are, actually, better off in
practical terms and that must be the test-
HUMPHRYS: I fully understand that.
BROWN: -that we-
HUMPHRYS: I fully understand that.
BROWN: And, they're better off because they're
in work and because we're divising a new Tax and Benefits system. Now, let me
just tell you what more we want to do. As far as National Insurance is
concerned and National Insurance is, of course, a tax that people pay - even
although they earn relatively low earnings. Now, we want to harmonise, as I
said in the Budget, National Insurance and the Income Tax threshold. We'll
create a far simpler system for employers; we'll again contribute to the
reducing of the poverty traps and, I think, that will be an advance. Of
course, we can only go part of the way this year and we've looked at the Martin
Taylor Report on Welfare Benefits and Tax and Benefit reform and we will go
further at a later stage.
HUMPHRYS: Right.
BROWN: So, we are, already, looking at the next
stage. But, I don't think you can deny that under all the proposals that we
put forward families with children-
HUMPHRYS: No. I'm not denying that, for a moment.
BROWN: -where they're going to work are better
off and that's the test.
HUMPHRYS: I'm not denying that-on the contrary I
conceded right at the beginning of the programme that you had done something.
But the fact remains, that there are still people, in work and on benefit,
such as Housing Benefit, who lose most of their extra income because of the way
the system works. Now, you, your- let me just make this point Mr Brown - you
yourself said, a couple of years ago, at a Labour Party Conference I think I
was: it is a scandal that tens of thousands of people are paying effective
marginal Tax rates of seventy, eighty, ninety per cent, and not of forty per
cent as so many of the better off are doing. Now, what I am asking you, and
it's a very straight-let me just finish the question for the benefit of the
audience-
BROWN: I'm very happy for you to finish the
question.
HUMPHRYS: Very straightforward question: do you
want to get-do away with what you, yourself, described as a scandal?
BROWN: Well, of course we want to do more and I
have done.
HUMPHRYS: Right! No, not that. It's not a
question of doing more, it's after..
BROWN: John, can I just give you the figures?
There were six hundred and fifty thousand to seven hundred thousand people who
had marginal tax rates of above seventy per cent. Some with over a hundred per
cent marginal tax rates. We have slashed that number as a result of our
changes to something in the order of a hundred and fifty to two hundred
thousand.
HUMPHRYS: Still a big figure.
BROWN: I've already-I've already explained the
next stage of changes we want to go along, including the National Insurance
reform. But I don't think anybody can deny that to reduce from seven hundred,
or six hundred and fifty thousand-
HUMPHRYS: No denying it.
BROWN: -to less than two hundred thousand to
people on marginal tax rates and to abolish the hundred per cent plus marginal
tax rate is a very, very big advance indeed.
HUMPHRYS: But if you still have a couple of
hundred thousand people being penalised like this, it is not fair. To use your
word, it's a scandal and you're sitting there telling me you're not going to do
anything about it!
BROWN: And to have taken half a million people
out of that. In other words the vast majority of people who are hit by it, is
a tremendous achievement. And I think you ought to understand that of course
everybody, everybody who benefits from the Working Family Tax Credit is better
off. And that group of people who were paying marginal tax rates above seventy
per cent, for the vast majority of them, they are outside that trap.
HUMPHRYS: Alright, let me-
BROWN: That trap has now been removed and of
course one of the reasons that you can point to some people still hit by this
trap is because we have extended the Working Family's Tax Credit right up the
income scale. And as I said, and this is a very important point, if there are
people on thirty thousand a year, that is family incomes of thirty thousand a
year, getting the benefit of our Child Care Tax Credit, then you have to have a
taper that withdraws it as income rises. And what I am saying is that that
marginal tax rate is far further up the income scale than it was in the past
and all the people that I was talking about when I made this speech at the
Labour Party Conference have been relieved of the poverty trap that has been
such a deterrent to work.
HUMPHRYS: But not all of them. Not all of them,
because those on Housing Benefit still are penalised. Is it your ambition-
BROWN: Hold on.
HUMPHRYS: Let's put it no stronger than this.
BROWN: Hold on John. We've taken those people
who were on-who because of Housing Benefit and other benefits like Council Tax
benefit, had marginal tax rates of above a hundred per cent, there is nobody
now with a marginal tax-
HUMPHRYS: -You keep-
BROWN: But there is nobody now with a marginal
tax rate, under our proposals, of above a hundred per cent. And again-
HUMPHRYS: No, no, but just below it's ninety-two
per cent.
BROWN: Yes, but John
HUMPHRYS: Look at the IFS figures out today.
Ninety-two per cent and that is an injustice isn't it?
BROWN: But there are very few. But the very
people I was talking about at the Labour Party Conference let me just
emphasise because more people are on Working Family's tax credit and we're
helping more people, the very people at the bottom, that is the low paid, have
been taken, in most cases, out of that poverty trap. And I have already
explained-
HUMPHRYS: Yes I know you have.
BROWN: -what more we want to do.
HUMPHRYS: Indeed. But what you have not done, this
morning, is said: yeah and I recognise that there is still a terrible anomaly
there. There's 'scandal' to use your earlier word and it is our ambition to do
something about that. In other words, for instance-
BROWN: John, John, I think you're splitting
hairs.
HUMPHRYS: On the contrary, not to those two
hundred thousand people I'm not! It's very real.
BROWN: Now, John, I have said that they are
better off. They're actually better off with more money. They have more money,
even for working longer hours. They would get even more money but they've got
more money at the moment as a result of the Working Family's Tax Credit. And
of course because of the rise in Child Benefit. Secondly, I've explained to you
what is the next stage of what we want to do, which includes further reforms of
National Insurance, when we're able to do so. And of course there is the ten p
starting rate of Income Tax, that when it's right for the economy to do so, we
will introduce. Now these are all reforms down the road. And I think what you
have got to understand is that this is part of a comprehensive and quite
fundamental rebuilding of the Tax and Benefit system in our country.
You know past Governments looked at Tax
but never at Benefits. I've looked at Tax and Benefits as a whole and we've not
only slashed the numbers of people on the high marginal tax rate, at the same
time everybody is better off and I have plans to do more in the future.
HUMPHRYS: Right, but the inequality remains. We
heard, we learned this morning that you have a number of targets that are going
to be included in that Green Paper that you talked about this morning. Is
inequality going to be one of those targets?
BROWN: Yes, we're-
HUMPHRYS: Reducing, ending inequality in our
society?
BROWN: Where inequality is against the
interests of the whole society and where it cannot be justified we've got to
take action. And that's why we have a fair Budget because we're redistributing
in favour of work and in favour of opportunity. And of course more is going to
families. I'm not, however, a believer in equality of outcome. I don't
believe-
HUMPHRYS: Equality of opportunity?
BROWN: Yes, I don't believe that the purpose of
government, or indeed of action in economic and social policy, is to give
everybody the same incomes. I don't think that's good for society. I don't
think people want that. I think it's to impose things on people that they
would not accept or want. But I do believe in equality of opportunity and I
believe in a very vigorous pursuit of equality of opportunity. And I believe
the Government itself has a responsibility, a direct duty to promote equality
of opportunity, in Employment, in Education and right throughout the economy.
And that is what the purpose of much of the measures in our Budget have been.
And, of course, what I'm saying, which I think is what makes it New Labour, is
that you can have both enterprise promoted and encouraged and fairness in your
society. And this old idea in the Eighties, that you had to make a choice all
the time between enterprise and fairness, that you had to promote enterprise at
the cost of fairness, or you could promote fairness and equality of outcome,
but you could never have an enterprising economy and that would always be
secondary to what you were trying to do, we're breaking free of that. And I
think we can have an enterprising economy which gives people opportunity and at
the same time a fair society that people recognise that the opportunities are
fair and of benefit to the economy as a whole.
HUMPHRYS: And what about those people-What about
those people who can't take advantage of those opportunities? Those people who
are not able to work, whether they're old or sick, or whatever it may be. What
are you going to do to reduce the inequality - again we are back to that word
inequality - the relative inequality of those people?
BROWN: Well, we're going to give more
opportunities there as well. I've always seen Welfare reform in three stages
and the first stage was to get those people who are able to work back to work
and to provide opportunity to do so. And I said it was responsibility to take
up the opportunity but also the opportunity was a responsibility of Government
to provide and to ensure that people had training or the chance of work.
The second thing, which is what we've
done in our Budget, which is the second stage of Welfare reform, is to make
work pay. There's no point in transferring people from poverty, out of work to
poverty in work and whatever your argument is, we have made a big difference to
that, and of course the Minimum Wage and raising Child Benefit is part of that
as well.
Now the third part of the Welfare reform
strategy, is to help those and to give those a fair deal if they are incapable
of working. To recognise that we want opportunity for all those who have been
denied it and security for all those who need it. And that's why, when Frank
Field produces his Green Paper on Thursday, in line with what Tony Blair set
down as the objectives of our Welfare State review, we will be showing how we
can move to that next stage. And let me just give an example. By targetting
abuse and fraud in benefits, particularly in Housing Benefit, where we lose
four billion pounds-
HUMPHRYS: Done for donkey's years.
BROWN: -and by tackling the causes of poverty
in a far more comprehensive way, recognising that social exclusion is caused,
to a large extent by the lack of economic opportunity, we can achieve two main
objectives of our Welfare review. The first is to give people pathways out of
poverty and the second is to reduce the proportion of working age households
where nobody is working. And I think you will see on Thursday, us setting out
how we are going to achieve these two objectives.
HUMPHRYS: The Budget was based on much of what we
have been talking about this morning. Is based on people in work and you want
to give people the opportunity to work. The problem is that the jobs may not be
there, at least many of the jobs may not be there. We heard John Monks saying,
just this past week, ninety thousand jobs in manufacturing are going to be lost
because of the strength of the pound against foreign currencies. Doesn't that
worry you?.
BROWN: Well, I've expressed in both my Budget
and the previous Budget my concern for exporters. I've been quite upfront
about that and I've said that I am concerned about the effect of the pound on
exporters.
HUMPHRYS: So therefore the pound's too high?
BROWN: But what I have also said is that what
exporters fear most of all, and I think anybody who's listening who's an
industrialist or a business man or woman fear most of all, is if we were ever
to return to the stop/go instability that we had in the late eighties and early
nineties, or indeed in the early eighties where jobs were lost, businesses went
under, efficient businesses were affected, because we allowed interest rates to
go up to fifteen or sixteen per cent because inflation was allowed to-
HUMPHRYS: It's hardly stable to have sterling at
an unsustainable level is it. Where's the stability in that? They know it's
going to come down sooner or later.
BROWN: What we've done, and I think people are
starting to recognise this because it's a change in the way people look at
inflation as well as a change in the way we deal with the problems of setting
interest rates. What we've done is create a long-term framework for the first
time in this country, a long-term framework for monetary and fiscal policy.
What we've done is created the stable foundation, the Bank of England
controlling the decisions on interest rates, a five year deficit reduction plan
to get sustainable public finances, and this long-term framework is the
foundation on which we can have both low inflation and high employment. And I
said in the Budget and I repeat it, that short term pressures will not deflect
me from that long-term ambition to give Britain, for the first time, a break
from stop/go and a pathway for sustainable long-term growth-
HUMPHRYS: But as we speak-
BROWN: And just let me say about vacancies in
the economy, because John Monks raised this question about jobs. There are
two-hundred and eighty-thousand vacancies in the economy at the moment. A very
large number for this time in the economic cycle.
HUMPHRYS: Many of the - most of them in the
service industries, and what he's concerned about is the manufacturing
industries, and he says jobs are going.
BROWN: Hold on - many of them for two reasons,
one in the service industries where the Working Family's Tax Credit and some of
the changes will come through to help people there because it will make work
pay. Secondly, a large number of vacancies as a result of skill shortages, and
that's why we had measures in the Budget to deal with that. And gradually we
are tackling every one of the barriers to both jobs and growth in our economy.
The barriers to jobs or the tax benefit system, the lack of skills, the lack of
education and training. The barriers to growth in our economy, the lack of
competition, insufficient encouragement for investment for the long term, like
our Capital Gains Tax reform - now these are all major changes that for the
first time I think, for thirty years put the possibility there that we will
have a long term pattern of sustainable growth free of stop/go.
HUMPHRYS: Well, you keep using the word
sustainable. It doesn't get away from the fact that the pound is too high.
Manufacturing industry finds it too high, the unions believe it is too high.
And you appear to be saying, well, so be it!
BROWN: No, what I'm saying is, I have taken the
action for the long-term...
HUMPHRYS: Not to deal with the currency.
BROWN: I want a stable and competitive pound
over the medium term. I appreciate-
HUMPHRYS: But what's stable and competitive, I
mean that's the point.
BROWN: Hold on - hold on. I appreciate the
concerns of exporters, but what you mustn't do, which is what the previous
government did, is be deflected by a short-term problem, take action which is
contradictory with the long-term aims that you're pursuing, and end up with
the return to the instabilities of the past. And I think etched in everybody's
memories in Britain is a Chancellor ten years ago who declared an economic
miracle, and then found because he'd mismanaged the economy and through errors
of policy, that he allowed us to develop eleven per cent inflation, fifteen per
cent interest rates. And we moved from a situation where people were talking
about economic progress to the worst recession since the war. We're not going
back to that, and I think exporters agree with me that that's not what should
happen.
HUMPHRYS: Well maybe. Let's take a slightly
longer-term view then. You're going to have to take a view on the value of
sterling eventually, because you'd like to see us joining economic and
Monetary Union. It is inconceivable surely, that we could even think about
going in with sterling at this level?
BROWN: Well, as you know, I've made a number of
decisions about Monetary Union, and the Government has announced that we do not
plan to join a Monetary Union until first of all the economic circumstances
are right for us, and then after consultation both in the Government and with a
referendum of the British people, and we do not foresee that happening until
early in the next parliament.
HUMPHRYS: Unless, you said, unless there are
unforeseen circumstances. Might not the value of the pound be one of those
unforeseen circumstances?
BROWN: You see what people want - what people
want in the preparations for Monetary Union is not a period of instability in
terms of people expecting tomorrow, the next day, the week after, that the
Government's about to bounce them in to Monetary Union like the last government
bounced people into the Exchange Rate Mechanism. And I think it's absolutely
right that we have a period of stability where people can make preparations for
EMU in the knowledge that the decision will be at a particular point in time,
and it will not be made as one that bounces people into positions without
adequate warning. So as far as Monetary Union is concerned, there's got to be
a period of preparation which is also a period of stability. Where people know
exactly where we stand, we're not going to bounce people into Monetary Union
during that period of time, and then there will be a period of decision, and I
think that's right for Britain. You see what-
HUMPHRYS: The trouble with that - can I just put -
can I put this point to you. One of the problems with that, one of the reasons
perhaps, certainly indeed, why the pound is so high at the moment, is that the
speculators are using it as a kind of hedge currency. They're saying: well,
we don't know what's going to happen with the Euro, so let's pile money into
sterling, now, because we're reasonably certain that one or the other's going
to work, so we'll hedge our bets. Now, that is keeping sterling at a level
that is unsustainable as far as manufacturing industry is concerned. Doesn't
that concern you. Can you knock that? The way to deal with that would be to
say: Well, you know, let's go into ERM, perhaps, at this stage.
BROWN: But John, that's exactly - you're asking
me to change a long-term decision which is an important long-term decision for
our country. One that requires proper preparation, and one that requires, in my
view, a period of stability before a decision is made, and you're asking me to
change it overnight to deal with a short-term problem that we're facing at the
moment.
HUMPHRYS: Alright. You tell me it's a short-term
problem.
BROWN: And I'm saying to you, I don't comment
on the movements day to day of the pound. I mean that is the wrong thing to
do, but I do agree with the worries of exporters. And I have said that my
concern about that - in the Budget of course I mentioned that-
HUMPHRYS: I know you did.
BROWN: -and I believe we will have a stable
and competitive pound over the medium-term. But I also believe, and I'm pretty
clear about this, having looked at what's happened to our economy over the last
twenty or thirty years when you've had the pound going up and the pound going
down-
HUMPHRYS: Sure.
BROWN: -is that what is most dangerous for our
economy at the moment is that if we had another bout of wage inflation, we got
back to stop/go, and people felt that there was no long-term or credible
strategy for the future.
HUMPHRYS: But you tell me that this is a
short-term problem. The level of sterling at the moment, or the problems it's
creating for manufacturing industry, is a short-term problem. What does that
mean.?
BROWN: Well, John I said-
HUMPHRYS: That can only mean one thing can't it.
That you expect it to come down soon.
BROWN: I said in the Budget that I wanted a
stable and competitive pound over the medium-term. I've never disguised that
from day one.
HUMPHRYS: But what is stable and competitive?
BROWN: That is my view.
HUMPHRYS: I mean it is uncompetitive at the moment
isn't?
BROWN: But John, I think you've got to
recognise that what has derailed every government - every government in the
last thirty years is when it tries to sort short-term problems by taking action
that is inconsistent with its long-term strategy, and that happened to the
Lawson boom and bust situation at the end of the eighties. It happened to
previous Labour governments as well, and I think what people appreciate most of
all is that we've set in place a long-term strategy which is based on new
institutional foundations, the Bank of England and the inflation target at the
same time the fiscal deficit reduction plan and sustainable public finances,
and therefore we have the rock, the solid foundation on which we can actually
build for the future. And that is the best way to go, and I am not going to be
diverted from returning the economy to a sustainable path of growth free of the
boom and bust of the past.
HUMPHRYS: But you do, as you have conceded, have a
problem at the moment - short-term you describe it - medium term perhaps. But
let me just ask you this question.
BROWN: You can ask me the question, but should
we not get it in its context, that even with the worries that people have,
exports are still rising, they're still forecast to rise significantly next
year and the year after, and I think despite what people have said about many
of the problems, and I do understand that a great deal of them, exports have
continued to rise.
HUMPHRYS: Alright. Final thought then. Wouldn't
it help if you can't bring forward the date of entry into the EMU, to make it
clear that you are conducting economic policy with a view towards entry into
the EMU to meeting all those conditions?
BROWN: Well, I'm conducting economic policy in
what is the British economic interest, and that's why we want sustainable
public finances, not because Maastricht tells us because it's right for
Britain, and I'm also conducting our Macro-economic policy with the Bank of
England making these decisions, but also with me setting the long-term
inflation objective because it's right for Britain. It so happens that we
have also a policy that says in principle - in principle there are gains to
Britain from being part of a Single Currency, but the economic tests that I've
set down which are British economic tests will have to be met, and I think the
appropriate time to judge that will be early in the next parliament.
HUMPHRYS: Chancellor, thank you very much indeed.
And that's it for this week. Back at the same time next week - from York Good
Afternoon.
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