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ON THE RECORD
RECORDED FROM TRANSMISSION BBC-1 DATE: 7.3.93
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JONATHAN DIMBLEBY: Good afternoon and welcome to On The
Record. In today's programme: a little over a week from the Budget, the
Chancellor is subject to much competing advice about what he should do to
rescue Britain from recession. Today, facing his first Budget as Shadow
Chancellor and in his major interview since he took up the post at the General
Election, Gordon Brown goes on the record with his blueprint for recovery. The
New Economics he calls it. But is it really so new? And would it really do the
trick?
Quote: "when it is prudent to do so, we
will cut taxes". No, not the words of the Chancellor but of his Shadow, Gordon
Brown unveiling his vision of Britain's economic future under a Labour
Government. John Rentoul reports.
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DIMBLEBY: Shadow Chancellor, you call this a new
economic policy but apart from some rather trendy jargon, let me suggest to you
that really all you're up to is edging just a little bit further towards the
Tories.
GORDON BROWN: No, quite the opposite. I don't think
that your film report reflects what the new economics is. It's first of all,
an analysis of what's gone wrong: the failure to invest in industry, in people
and in our social and economic fabric and, therefore, that the problem of the
British economy is one of capacity.
It's new, secondly, because it
recognises that we live in a global economy and if you can buy capital, raw
materials and inventions round the world, as companies can, then what's going
to make the difference to our national competitiveness is our skills and,
therefore, investing in training and education is not peripheral - it is
absolutely central to the success of modern economies.
And it's new, thirdly, because it's
applying Labour's enduring and fundamental values. Individual potential,
realised in a strong and prosperous community, to the problems of the
nineteen-nineties and, therefore, we break free from the old battles between
State and market, between private and public sector, between capital and labour
and we say that the job of the community is to mobilise our resources to
advance individual opportunity and to invest in our future.
Now it's not new revisionism, it's a new
radicalism, based on our fundamental values and I don't, as I say, think your
film report gave a fair reflection of what we're actually saying.
DIMBLEBY: But you say that's all new. Forgive me,
but the.. an analysis which talks about long-term decline because of failure to
invest, the need to develop training and an end to the old divisions between
public and private - that's all the stuff that was there before the election.
BROWN: No. Let's look at it - start from a
global economy, start from the fact that the technology-driven products and
processes in which we're going to succeed in the future depend increasingly on
investing in your skills. Then move on to say "how do you apply Labour's
lasting principles to these problems?" and it is about economic modernisation
through the advancement of individual opportunity.
In other words, the public interest is
not simply about public ownership, it's not simply about the Government
financing this or that, it's boosting demand here or there - it's about the
Government addressing fundamentally the problem of capacity in the economy, our
productive potential and everybody from the Bank of England now to people on
that broadcast was saying that the real problem of the British economy is the
failure to use our capacity properly.
Now, if you don't invest, you won't
succeed, and if you don't invest in people, you won't succeed, and this
Government (as well as some people on that film) misunderstand the problem.
DIMBLEBY: Some of the people on the film being one
of your colleagues in the Shadow Cabinet, amongst others.
BROWN: Well, some people on the film being your
reporter who didn't seem to get to grips with the new economics.
DIMBLEBY: Well, we'll see.
BROWN: We're talking about basic values that
we're applying to new problems in a new age. Individual potential being the
essence of what modern Socialism is about. The use of the power of the
community being the central means by which you organise your economy and the
problem that's got to be addressed - the explanation of our long-term decline
is a failure to invest. The Conservatives can't do that because they eschew
the role of Government - we are prepared to use the power of the community for
the good of everyone.
DIMBLEBY: In some, is Gordon Brown brand new or is
he John Smith, Mark Two?
BROWN: Well, John Smith and I agree entirely
with the views that have been put across here, but we're applying our
philisophy to a new age. We recognise that we've had an environmental
revolution, that there's a technological change taking place, there's a
communications revolution. You can't - like Bryan Gould implies - somehow
retreat into one country. We're operating in an international market place
where we will succeed by investing in our industries and in our people.
DIMBLEBY: OK. Are you, as a result, saying that
you are now more enthusiastic about the market than Labour was before the
Election?
BROWN: Well, I recognise that the market does
very useful things. I also recognise that there are failings in the market
that have got to be addressed by Government. In other words,...
DIMBLEBY: Are you more enthusiastic? I know
you've got.. obviously the market's got to do certain things. We all know
that. Are you MORE enthusiastic, are you more, sort of, willing to embrace it
than Labour was previously?
BROWN: Insofar as I recognise that it's
important to extend competition in particular areas, such as banking and
financial services, I think that is a new appreciation of what Labour is
saying about what is in the public interest. But insofar as I also recognise
in the field say, of banking, or utilities, that you've got to have proper
standards set in the public interest, then I'm saying that the market is part
of the public interest but doesn't equate with the public interest. The
Government HAS to intervene, but it's got to intervene in the right ways and
not the wrong ways.
DIMBLEBY: Now this is where there's an interesting
overlap. You say Government's got to intervene in the right way, then you use
this very familiar - I called it a jargon term - "community and empowerment".
What's the difference between the community saying that the market has to
operate in the public interest, as you say, and saying the State's got to
intervene to ensure that the market does?
BROWN: Because you start from the idea of
public interest and you don't necessarily assume that that means that central
Government has got to do this or dictate that. There are certain circumstances
in which the community can organise its own affairs. There are certain
circumstances in which the public interest means merely an enabling role for
Government. There are other circumstances, like in the Health Service, where
it means that the Government must OWN the facilities, otherwise this monopoly
is left to private individuals.
DIMBLEBY: When you say the community enforces the
public interest and defines the public interest. Aside from the fact that
people say we want this or we want that, what's the difference between the
community. What is this...they're wonderful phrases community and
empowerment, aren't they? They sound good but I wonder really whether there's
anything behind the phrase?
BROWN: Well, let's start from the basic
philosophy. The basic philosophy is this, that individuals should be in a
position to realise their potential to the full. They should be able to bridge
the gap between what they are and what they have it in themselves to become and
that is a very broad view about the empowerment of the individual in a
community. In other words, government's job is always to look at how you can
advance the interests of the individual but the distinctive socialist message
is that happens best when the community acts on behalf of the individual.
Now by community, I don't mean
geographical communities necessarily, I mean recognising the inter-dependence
of us all. But when you establish that there's a public interest at stake then
there is a job for the community or for government to do but it doesn't
necessarily mean and this is where people misunderstand the position, it
doesn't necessarily mean government must own everything but what it does mean
is that there is a public interest which requires the government to act either
by setting standards or rules or acting as a partner with private industry. A
financier in some cases, an enabler of public interest that is advanced in a
fairly flexible way in the modern world.
DIMBLEBY: Well, given that it doesn't mean that
the government must own all, given that you say it's not now the question of
public versus private. It would probably help people, I put it to you, who
aren't altogether clear about what you're on about - although they might well
be clearer as a result of what you're saying now - to say not only is Clause
Four irrelevant as John Smith seems to believe it is but to make it clear to
the public that we know what we're on about, we're jettisoning that clause
about nationalising the means of production.
BROWN: Well, I've already set out what my views
are about the empowerment of the individual by the community and that, of
course, you use public and private sector means to achieve that and so that
it's not unclear, that means not just..if you like, social opportunity, a
health service provided by the community to enable individuals to be free of
ill health. It also means economic opportunity. But as far as Clause...
DIMBLEBY: But why not junk Clause Four?
BROWN: Well, as far as Clause Four is concerned
John Smith's made it absolutely clear that he's not going to spend his time
looking back to 1918 and going back into the past and into theory and ideology,
he's got a more important thing to do, as I have and that is to write the new
economic policy for the future.
DIMBLEBY: But it would be quite sensible
wouldn't it, to do it on the base of saying that's part of yesterday not part
of tomorrow, or is it that it causes such a furore in a party which people are
still suspicious about, you don't quite dare do that?
BROWN: No, I don't think so, I think you can
have a very interesting debate Jonathan about you know why Sydney Webb did this
in 1918 and what brought about this specific wording.
DIMBLEBY: Do you think it will go?
BROWN: Well, it may go over a period of time...
DIMBLEBY: Would you like to see it go yourself?
BROWN: Well my view is that there's no need for
us to spend our time looking at this at the moment.
DIMBLEBY: But that's a different kind of question,
would you like to see it go?
BROWN: Well my view is very clear, that I've
set out my philosphy is. John Smith's made it clear that he's not going to
spend his time doing that.
DIMBLEBY: Meanwhile, we have the problems that
immediately face the country because what you've been describing there is a
strategy for the long term and the kind of changes you would introduce.
There's a budget coming up. What's going to make Gordon Brown not sound like a
me-too shadow Chancellor when he responds to that budget?
BROWN: Well, I think the important thing is
building the capacity of the economy by getting people back to work. If my
theory is right, then it is the failure to use the skills and mobilise the
energies of people that's the root cause of our national economic decline. So
you've got to have a budget that does two things. One: get people back to
work and secondly, build the productive capacity of economy. Now I have sensed
over these few weeks that redundancies are continuing, indeed, rising at a
faster rate than at any point during the recession and I now believe that we
don't just need the public sector initiatives that I've talked about in the
past but we also need the government to take measures to encourage private
industry to take more people more on. In other words, to get people back to
work.
I think first of all there should be a
small business grant scheme and that would enable firms to take people on
and to invest in their future. And I believe secondly, that we should relieve
employers of National Insurance burdens if they're going to take people from
the long term unemployed register within a short period of time and get people
back to work.
Now I'm going to finance that by closing
a number of tax loopholes that I've identified in these last few weeks where
the Chancellor will simply not act because of vested interest. So these
programmes that I'm proposing are absolutely essential to back the public
sector initiatives that I've proposed to get thousands of people back to work
but at the same time I'm going to finance them from the current expenditure I
would raise from closing tax loopholes.
DIMBLEBY: The going, I have to say, however
disappointing it might be to you in brackets is, were I to be Chancellor.
BROWN: I think it would be better if I was,
given that he's not likely to do very much.
DIMBLEBY: You wouldn't be sitting here if you
didn't think that.
You said... just to pick up on detail
now because it's interesting, you haven't said this before. When you say
grants to private... small businesses, you're talking about grants directly
from government?
BROWN: Exactly.
DIMBLEBY: What kind of money have you got in mind?
BROWN: We've got to go beyond the investment
incentives of the autumn statement which haven't done enough to get industry
moving.
DIMBLEBY: And what sort of money are you thinking
of?
BROWN: Well, we're talking about substantial
sums of money. A small business grant scheme, perhaps for the engineering
industry principally, that will allow them to invest in the future, take
workers on and get people back to work.
You see what people fear is that we've a
government that will continue to talk about cosmetic initiatives on
unemployment, but will actually not get people back to work.
I've now proposed a range of public
sector initiatives which have been costed and which can be carried out. I now
propose a range of private sector initiatives which can also be taken. All of
these can be financed within the changes in the tax system that I've
recommended and the reason, of course, we're not having action from this
Government is not the absence of resources, it's the absence of political will.
DIMBLEBY: Now, let's just on that other point.
You say that all employers, you believe, who take on from the long-term
unemployed should not pay any employers' NIC - that's the other proposal.
BROWN: Well, I think that's what we should look
at. Over a period...
DIMBLEBY: LOOK AT.......a proposal - just now you
said you were going to DO it.
BROWN: Well, of course, it's the Chancellor
that's got to look at it.
DIMBLEBY: But he ought to be doing it.
BROWN: Yes, I'm proposing it to him, and what
we should do in that period, if someone is taken on within the next three
months, then for the period of the year, up to a certain amount, the Government
should relieve the employer of National Insurance Employers' Contribution to
enable more people to be taken on quickly, and now that allied to the small
business scheme that I'm proposing is a very substantial private sector
initiative and that's got to go beside the public sector initiatives, the work
experience, the community programme initiatives, the environmental improvement
initiatives, that add up to probably the most ambitious programme to get
people back to work that we've seen.
DIMBLEBY: Now, you say they could be financed out
of closing tax loopholes. Does that mean that as you are assumed to believe,
you don't believe there should be any more borrowing, that the Chancellor
should not announce an increase in the PSBR?
BROWN: I don't believe that there should be
additional borrowing for consumption, but I do believe that there is a case for
borrowing where investment is involved and I think your film reporter
misunderstood what I've been saying all along on this. Where you can justify
increased borrowing for investment purposes, just like any company, that is
something that the Government should do, and I've already suggested a private-
public task force to look at infrastructure and other projects that could be
brought into being quickly, both to get people back to work and to do something
that is useful for the economy. So I am prepared to contemplate that and, of
course, I have proposed the release of capital receipts to enable the
construction industry to build houses.
DIMBLEBY: So just to get it straight. Given what
you've just said, if you were Chancellor you would be going into the House of
Commons and you WOULD be announcing a higher PSBR?
BROWN: I would be prepared to contemplate that
but, of course, the measures that I take are likely to bring the PSBR down.
Every one per cent of growth would reduce the PSBR by something in the order of
two to three billion pounds and, of course, by reducing unemployment - which is
the aim of my policy - you're going to get public borrowing down.
DIMBLEBY: So this is Keynes again isn't it?
This is Keynes - stimulate now, stimulate now, don't worry about the borrowing
deficit, because one day you've be able to pay it off.
BROWN: No, no, it's quite the opposite. It's
saying what you do in the short-term - and this is what has got to be
recognised - what you do in the short-term has got to have long-term benefit
for the economy. You see, we're in an international economy. If you expand
demand without any attention to supply, then you could run into major
problems. But, at the same time, if you target your investment for long-term
benefit then, of course, you can both get people back to work and add to the
productive capacity of the economy. You've got always to get back to this
central point that the problem of the British economy is a problem of
productive potential, the failure to invest over a long period of time.
DIMBLEBY: But in the Budget - more borrowing.
You also talked about your tax proposals. I want to come on to the broader
view that you have about tax in just a second, but just while we're still on
the Budget. In the immediate predicament there's this great debate "should
taxes go up, should they go down, should they stay overall where they are?".
Would you, if you were Chancellor now, be saying there is a case for tax cuts,
or would you be saying under no circumstances. In fact, rather the contrary,
given that I'm going to boost borrowing a little.
BROWN: Well, I think at this particular point
in time to raise income tax or National Insurance or VAT would be a mistake.
It would probably take demand out of the economy. At the same time, I don't
think there's a case for lowering taxes at this stage. I think the important
thing, however, to recognise is that anything that the Chancellor should do
should not just be of short-term value, it's got to increase the long-term
productive potential of the economy.
DIMBLEBY: Let us then look at an intriguing phrase
you had in that speech. It's the kind of phrase that some of us wonders
whether Shadow Chancellors wish they hadn't quite made. But I'm sure you..
BROWN: I don't regret any word of that speech.
DIMBLEBY: I bet you don't. Ok, you said - I'm
summarising but you won't disagree with my summary - if we can cut tax when it
is prudent to do so, we will. Really?
BROWN: Well, of course, that should be a
realistic aim and objective of a Labour Chancellor. If we can achieve the
growth levels that we want, if we can deal with the problems of the public
services that we have then it should be part of our objectives where possible
to cut taxation. Now I've already indicated a number of means by which you can
actually do that, I've actually suggested a tax relief for training, so that we
can invest in skills. So my intentions are pretty clear but, of course, you've
got to have the growth and you've got to improve your public services.
DIMBLEBY: But does it mean that there are
circumstances you can imagine, in broad terms - I'm not asking you to say
tomorrow, the next week or whatever - where you could, given a choice, because
there's always a choice, you could say, it is in the interests of the British
economy to cut taxes rather than to increase spending?
BROWN: Well, there may be circumstances when
you've dealt with the problems of the public services where you can do that.
What I'm saying is it should never be assumed that the Labour Party wants to
tax for its own sake. This was a perception that grew, a wrong perception that
grew around our policies ....
DIMBLEBY: An understandable perception, you will
grant.
BROWN: No, I don't believe that's the case at
all.
DIMBLEBY: Come on.
BROWN: Under John Smith's proposals eight out
of ten people were going to be better off. But we don't tax for its own sake,
we are not against wealth, what we're against is poverty and the unfair waste
of individual potential.
DIMBLEBY: OK, if you're holding out this long
term prospect of possible tax cuts. Are you saying that you are referring to
possible tax cuts for the..one day, for the ordinary standard tax payer?
BROWN: Well these are matters that are, of
course, considered by our social justice commission at the moment and I think
it would be premature for me to announce Labour's tax policy for the next
election.
DIMBLEBY: You haven't backed off so far, why are
you backing off now, you know what you're saying.
BROWN: What I'm doing Jonathan, is setting down
the basic principles that we will pursue. We tax for specific purposes, to
advance individual potential and opportunity and to improve the services
available to the community. If it's prudent to do so, we would cut taxation
but, of course, we recognise that the services that we've got to meet in our
community have been under funded and under financed over a long period of time
and it's the duty of government to improve these.
DIMBLEBY: Do you no longer, you've said that under
present circumstances taxes shouldn't go up, do you build into that now that
the... those who are paying at the higher rates of tax should not be looked to
to pay more in order to re-distribute elsewhere?
BROWN: No, I didn't say that. These are
matters that have got to be looked at over a period of time, it would be
premature for me to give my Budget judgement. After all, you're not going to
get the Chancellor's Budget judgement and it's only eight days away. These are
matters that have got to be looked at but, of course, if we tax the progressive
principle there's got to be fairness. Those to can afford to pay, they should
pay, those who can't, shouldn't, has got to be applied and I retreat in no way
from that progressive principle.
DIMBLEBY: You see maybe people draw the conclusion
from that is it sounds rather exciting, this is a party that doesn't tax just
for the fun of it but there's an awful lot of spending that has to be done, so
it's not going to be in the short term A, and B maybe he's just on about
indirect taxes and not direct taxes and that direct taxes will continue to bear
down progressively in the way that you've hitherto proposed?
BROWN: Well, Jonathan, I've already set out the
principles that we will apply. I've set out the principles we'll apply to
public spending as well. But, of course, the central problem that we've got to
address is building the productive potential of the economy and it's out of
that growth that we're going to be able to fund the improvements in public
services that I want to see. But I don't hesitate from changes that would have
to be made if they can be made.
DIMBLEBY: You see, the pitch there, if I can put
it like that, behind obviously a serious policy, the pitch has to be to those
people who didn't vote for you last time. I suggest to you that everything
you've said to me, interesting as it is, is effectively, a nod and a wink to
the people of Basildon and elsewhere, which says I am really a paler shade blue
although I sound pretty radical.
BROWN: Not at all, these are fundamental
changes that we're proposing in economic policy. The Conservatives have failed
in their entirety. We are producing a new analysis of economic decline. We're
producing a new method by which we will tackle that and it draws new
conclusions and I think the people of Basildon will be interested in a party
that has done this fundamental thinking, has come up with new proposals and new
policies and a new sense of direction and hope for this country. Not just in
the short term by tackling unemployment but in the long term by addressing
these fundamental problems of economic decline.
DIMBLEBY: Gordon Brown, Shadow Chancellor, thanks
very much.
BROWN: Thank you.
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