................................................................................ ON THE RECORD RECORDED FROM TRANSMISSION BBC-1 DATE: 13.6.93 ................................................................................ JONATHAN DIMBLEBY: Good afternoon and welcome to On The Record. As if it weren't bad enough to have Norman Lamont plunge his stilletto between your shoulder blades, the polls this morning are telling the Prime Minister that he is the most unpopular leader that Britain has had since the end of the second world war. In today's programme I'll be asking Michael Heseltine whether John Major is not merely down but on his way out as well. It has surely been the worst few days in the political life of the Prime Minister. Even if there is no challenge to his leadership this year, it is plain that in the eyes of many in his party he is now on probation. Politics IS a rough old business - a fact which no-one appreciates better than the President of the Board of Trade Michael Heseltine, who is at his home in the country. Michael Heseltine, in his parting shot, Norman Lamont said that if the government's approach didn't change, it wouldn't survive and it wouldn't deserve to survive. Do you agree with him? MICHAEL HESELTINE: I think that you must always recognise the tension that anyone making a resignation speech of that sort injects into the political debate. I don't think it's necessary for me to agree or disagree, I merely observe it as the historic phenomenon of a Chancellor setting the record the way he wants us to see it. I'm more interested of course in what the government is going to do, in what the government is determined to do in the critical areas ahead. DIMBLEBY: Well we'll come to that, when you, when you..... HESELTINE: We've got some difficult issues to face. DIMBLEBY: Yes, we'll come to those, but just as this is a major contribution from the ex-Chancellor and people will want to know how seriously his words should be taken, let me ask you when he says "there is something wrong with the way we make our decisions", should we discount that? HESELTINE: I think that all of us realise that democracy means every so often you actually listen to or are elected by people, you give premises, you set a context that limits government's ability to take decisions. If you have back-benchers that won't support you, that limits government's ability to take decisions and there's no way in which a Prime Minister can ignore the political and democratic realties of the job that he does. A Chancellor will be arguing from a slightly different vantage point. DIMBLEBY: You should decide what is right, and then decide the presentation, not the other way wrong - not the other way round. You discount Lamont on that? HESELTINE: I wholly think that that is what the government is doing. We have now got two overwhelming issues which confront us. One, is the state of the economy and we are fighting that battle, we are certainly got other aspects of the battle to win but in one very important way you can see the results of what we've been trying to achieve. The economy is coming out of recession rather earlier than equivalent economies. We've got interest rates and inflation down, we've got a competitive currency. We've now got to deal with the twin deficits of course, very important, but nobody can suggest we haven't been taking some very difficult decisions along that route. DIMBLEBY: Now Sir Norman, Sir Norman said that this speech was a "dud" speech. Do you agree with him? HESELTINE: Well I gave my view about that on the Today Program. I see it as part of the high passion of politics. Any Prime Minister who's going to lose his Chanceller knows that there will be an explosion of some sort and he will take that into account, and he'll know that it will be a relatively short term explosion, and that he has in his judgement no choice but to face that risk. DIMBLEBY: A wise old bird of British politics, Tristan Garrel-Jones (phon) today tells Norman Lamont that he "inhabits a colossal glass house" and adds "I hope he'll keep his stones in his pocket". Do you share that view? HESELTINE: Well we all use our own language, I mean Tristan uses his, he's got his own perspective on these things, I use my language. I don't have to copy the words of colleagues however much I may agree or disagree with them. DIMBLEBY: When you say it's an explosion, are you saying that this is just an emotional, bitter outburst in effect? HESELTINE: No, no, no, no, no, I'm not saying that. I'm saying that if you are a Chancellor and a Prime Minister in what is always a brittle relationship, you have a different perspective of events. The Chancellor wants to achieve the macro-economic policies to which his own policy objectives are totally committed. The Prime Minister wants that as well, but he has to see the wider political context, and there will be, there always is, a tension between those two offices. DIMBLEBY: So the Chancellor in effect if that's the case, was failing to understand that Prime Ministers have to be political and not just driven by policy? HESELETINE: Well, I, I mean you can try and prize it all apart and inject whatever motives you like, I can only tell you this, that if you are the Prime Minister and you are going to lose your Chancellor, you are going to have an explosion of one sort or another, and in those circumstances the Chancellor who has gone is very likely, and you would take this into account, to come to the House of Commons, or to write a book, or to write articles, or whatever it may be, and put his side of the story. It's for the historians to actually work out where the balance actually lays ......after the event ... DIMBLEBY: Yeah but you're a member, you're a member of this cabinet. HESELTINE: Sure, sure... DIMBLEBY: Do you side with the Prime Minister, or do you side with the former Chancellor? HESELTIME: You know perfectly well that I have consistently argued that the Prime Minister is the leader of our party, is entitled to our support, is pursuing policies which I strongly support, and so I have no difficulty about these things, but what is so difficult I think, for the commentating world, is to understand the processes of democracy that lead to discussion within cabinet. That doesn't mean to say you've got a divided cabinet, merely that you've got a cabinet doing its job, and with all these issues, and public expenditure's no exception to these matters, there are many sides of the argument, many alternatives to be considered, and ways .. DIMBLEBY: Now a few days, a few days, um, before he became Chancellor, Kenneth Clarke, using his words, said "the government was in a dreadful hole". After the events of this week, it can hardly be described as any shallower can it? HESELETINE: Well, I made a speech which said that there was turbulence ahead, and I think there is turbulance ahead. I think there are three issues which are going to cause us considerable difficulties. The economy is obviously one, the education testing battle is another and there is the inevitable tensions and discussions about the whole of the European question. And so ... DIMBLEBY: If you take the first of those, let's take the first of those, the economy. HESELTINE: Yes .. DIMBLEBY: The government faces the, um, the need to either increase taxation or cut public spending or a combination of both. That is bound to make what is now the most unpopular Prime Minister since such polling records were kept, even more unpopular is it not? HESELTINE: Well, if I were to advise the Prime Minister on this matter, it's not important between elections to be popular, it's important to be right, and therefore the decisions that need to be taken, have to be taken, and in my view, having been through some considerable period of experience in these matters in earlier years, if you take the right decisions, and you are proved right, then people judge you at the time when you are asking for a new mandate, and they forget the judgements they made when you took the difficult decisions. DIMBLEBY: Now to take the difficult decision this time ... HESELTINE: Can I just remind you, Jonathan can I just remind you, I was a member of the 1981 Cabinet, Mrs. Thatcher had been overwhelmed in the House of Commons because the back-benchers wouldn't agree to the deal that she was trying to do with the Argentinians over the Falklands. We had to back down in the face in the miners, and we had, she had actually, lost control of the cabinet on the public expenditure issue. You cannot think of a more appalling prospect for a Prime Minister than that. Actually she went on to win a triumphant election victory two years later. DIMBLEBY: After the Falklands war. Do you, do you take the view that for the cuts to be effective, they have to be of a character which makes them unpopular because they will have to be painful. HESELTINE: I think it'll be very difficult to go through the public expenditure round and the new budget judgements that Ken Clarke has to reach without a degree of pain. I mean the fact of the matter is that we are facing, let us put it in the starkest language, a bill for fifty billion pounds to sustain living standards in this country today that we do not earn. Something has to be done about it, otherwise just at today's rates of interest, that fifty billion will cost three billion, over three billion pounds a year, this year, next year, next decade, and what do you think our children would actually say if they saw that we had passed on to them bills of this proportion so that we could enjoy living standards we couldn't pay for. DIMBLEBY: Um, it's going to make that decision of the government, whatever those cuts are, um, even more unpopular is it not when people realise that this is a consequence, and I use your term here, a consequence of quotes "our profligacy", namely, I presume, the government's profligacy. HESELTINE: Oh no, no, no, no, no not just the government's profligacy, our society's profligacy. The fact is that we ... DIMBLEBY: The voters have been profligate. HESELTINE: Sorry. DIMBLEBY: Voters have been profligate. HESLETINE: The whole of Britain is living beyond its means, that the problem. We have created over decades an infrastructure of entitlement and opportunity way beyond the nation's capacity to pay for and we are now stacking up bills which will be visited in subsequent generations if we do not deal with the issue, and so the Prime Minister in my view has got that very simple choice. It is by trying to get away with it, trying to sort of keep it going, to sustain the present situation in the hope that better times come and that we win an election without people fully realising it. As an alternative to that we take the difficult decisions. In my view the cabinet will take the difficult decisions and rightly so, but that will not be popular in the short term. That will not deter us either. DIMBLEBY: But you see you talk all the time and your colleagues do the same thing, as if you hadn't been in power for nearly fourteen years. This fifty billion deficit, the voters clearly will justifiably want to say, is your deficit, not their deficit, it's your bad decisions. HESELTINE: Yes of course, everybody wants to try and pass the buck somewhere else. DIMBLEBY: That's what you're doing isn't it? HESELTINE: No, no, no, no, I'm saying it is our responsibility, and by our, I mean the whole of our society, and politicians and people have allowed the impression to be sustained that we can maintain these living standards despite the fact we haven't got the revenue to pay for them, and we're going to have to reveal the difficulties and the traumas of this situation with a stark clarity this autumn, and not before time. DIMBLEBY: Now John Redwood, your new colleague in the cabinet has just said, "Our manifesto said no to increased income taxes. It was right then, it is right now". Is he speaking on behalf of the cabinet? HESELTINE: He is obviously as a cabinet minister speaking in a way that reflects the views of the cabinet. DIMBLEBY: Now, that's very interesting then. You're saying it is not right to have income tax increases? HESELTINE: I'm not saying anything of the sort. I am saying ... DIMBLEBY: Well, let me put the words of him again to you, so you're speaking for the cabinet. "Our manifesto said no to increased income taxes, it was right then, it is right now." You say you're speaking for the cabinet on that.HESELTINE: Yes, I said that those are the views that would be today held by the cabinet, those are the manifesto views, but what I'm also saying and this is the self-evident fact if you were the new Chancellor, is that you will revisit all the options and all the difficult decisions, and you will find in practically every case that there is a manifesto commitment which blocks off the options, and if you then say "Fine, we've made a manifesto commitment, all the options are blocked off", well I tell you it won't be fifty billion deficit we're dealing with next year, it will be a bigger one. DIMBLEBY: Well precisely, that's why I ask you now is it your view. HESELTINE: Well, let's now ..... DIMBLEBY: Just a minute I want to ask you, is it your view now.... HESELTINE: I'm going to help you, I'm going to help you short circuit this set of questions. DIMBLEBY: I wonder. I wonder. HESELTINE: Yes, I am. I'm always on your side, deep down. DIMBLEBY: Yes. HESELTINE: I am not going to discuss individual measures so that you can ask me this direct question, will I or will I not argue for this or that, because you know perfectly well that these issues are yet to be discussed, it is for the Chancellor to make the judgement and the cabinet to back him.... DIMBLEBY: Well of course, of course, that's extremely helpful.... HESELTINE: ....predigest ...... DIMBLEBY: ..it's extremely helpful of you, as you say it's extemely helpful of you. Just let me put this question to you. You can decide whether of not it's an appropriate question for you to answer or not in a second. The question is do you take the view now that it is right not to have income tax increases? HESELTINE: No, I've just told you, I'm not prepared to be taken down the road of being put in front of every conceivable option which I have to consider in order for you to try and get me to advocate them or block them off, .... DIMBLEBY: John Redwood's not as coy as you are. HESELTINE: Well he's a younger man. DIMBLEBY: Ah, younger man. Younger men make mistakes. The .... HESELTINE: No, no, they haven't been through some of these traumas in the way that I have. But can we get onto another point which is absolutely fundamental. In all this analysis of the problem of the government, the one thing that is very difficult to get people to take seriously is that there is no equivalent society to us in the world that is not in the same sort of difficulty and the thing that is actually underlying public unease is not so much the specifics of the British situation, as the generalisation, and the generalities of this world recession. DIMBLEBY: So this poor old government, poor old Prime Minister are suffering the consequences of what the world recession in respect for political leaders? HESELTINE: Yes, that's true. It's very uncomfortable to try and get people to understand that, but the fact is that all the sort of questions that you are asking about this government in Britain, are being asked in Germany, in France, in Japan, in America because the electorates in those countries feel very much the same unease. Now of course this has a very limited appeal in domestic terms because people with their own anxieties want results from their government, but the fact of the matter is that we now live in a very much shrunken world with inter-related economics and it is very very difficult for any one government to have the muscle and the economic power to buck what is actually happening in that huge world market place. DIMBLEBY: Given that electorates have the capacity to throw governments out, even if unjustifiably, is the Prime Minister on probation now? HESELTINE: No, I don't think the Prime Minister is on probation at all. I think the Prime Minister is entitled to say to the Conservative Party: you chose me, I was elected as your leader, we have a very clear programme, we're going to have tough times ahead, but in my experience as Conservative Leader I believe that I can take you through it, and we will come out, and we will win the next election. DIMBLEBY: He says in an interview ... HESELTINE: I think he's going to be winning the next election. DIMBLEBY: He says in an interview in one of today's papers that he doesn't think there'll be a leadership - he doubts there'll be a leadership challenge this year but you can't tell afterwards. Do you think there might be a leadership challenge? HESELTINE: No. DIMBLEBY: At no stage? HESELTINE: I don't think there's going to be a leadership challenge, but you see the Prime Minister, the Prime Minister's in the very interesting position - I mean John Major is an extremely straight guy. He answers direct difficult questions honestly. The problem with doing that is that everybody then devours the answer and says, "Oh look, he's accepting there may be a leadership challenge". Technically there is no doubt there can be leadership challenges. He's only saying that. It isn't a news story, it's of no considerable interest that he should admit the technicalities of the existence of ..... DIMBLEBY: Absolutely not. Given that you like him, give direct and clear answers to difficult questions, if he does choose to go, Douglas Hurd has already ruled himself out as a prospective candidate for the leadership, Ken Clarke says he would like to be leader one day, are you with Hurd or with Clarke on this. HESELTINE: Jonathan, you know you're a monkey. You spend your time psyching up Ken Clarke and Michael Hurd, now you're trying to do it to me again. I keep telling you that John Major is going in my view to win the next election and if I may dare say it humbly with all the humility that you expect from me, DIMBLEBY: You can. HESELTINE: I'll be out there punching for him. DIMBLEBY: You'll be out there punching for him and you're not going to tell us whether you're ever a candidate for the leadership again or not? HESLELTINE: I cannot more explicitly tell you that I'm a member of John Major's cabinet. I think he will be there at the next election and I will be there trying to get him re-elected. Now what else can I possibly say that has got any relevance to the subject? DIMBLEBY: Very little, except I suspose you could say you can foresee ....... HESELTINE: BOTH TALKING TOGETHER. DIMBLEBY: You could add, you can forsee no circumstance (gap in tape)..as challenger for the leadership. HESELTINE: Yes, well, I could say that, but I'm not going to say that because I think that that would produce a belly laugh from people like you who'd produce some sort of historic precedence in which we have no need to be concerned at this moment. DIMBLEBY: President of the Board of Trade, thank you. HESELTINE: Thank you. ...ooOOoo...