................................................................................ ON THE RECORD RECORDED FROM TRANSMISSION BBC-1 DATE: 30.5.93 ................................................................................ JONATHAN DIMBLEBY: Good afternoon and welcome to On The Record. Number Eleven then is under new management. But what's so different about Ken Clarke - except of course that he is not Norman Lamont. I'll be asking the new Employment Secretary David Hunt to explain how the voters will benefit from John Major's night of the long knife. ***** So nice Mr Major has finally done it: a fully frontal knife in the chest of his good friend Mr Lamont who exits stage right as Mr Clarke swashbuckles on from the left to assume the unassailable crown of Chancellor. But the theatricals aside, where does this leave John Major, his government and the country? David Hunt, one of the many familiar faces now sitting on a different cabinet seat is the new Employment Secretary. Secretary of State, can we try and clarify a little bit the meaning of this reshuffle. As far as I can see, Lamont was sacked because he was carrying out Government policy to the letter and to great effect. DAVID HUNT, MP: Well, personalities may change and, in fact, they do change and they have changed pretty frequently over the fourteen years we've been in power, but the policies and the principles stay the same, and those Conservative policies and principles have brought Britain a great deal of success. DIMBLEBY: Yes - but Margaret Thatcher never sacked a Chancellor. When they were in trouble - like Sir Geoffrey Howe was in the early eighties - she stood by him. HUNT: Yes, but it's a Prime Minister's prerogative to make these decisions and I give just one example where you've seen a lot of change. In my position as Secretary of State for Employment, you've seen a lot of Secretaries of State, but the policies have stayed the same ever since Jim Prior and Margaret Thatcher decided a step by step approach to industrial relations. We've moved from a situation where the British disease was known throughout the world and now last year we had fewer working days lost through strikes than we've had for over a hundred years, so it's marvellous success. DIMBLEBY: Yes, but given what you describe as marvellous success, can you think of any other Chancellor who has managed to bring inflation down from over ten per cent to under two per cent, brings interests rates down from fifteen per cent to six per cent, and then is rewarded by his good friend with being given the door, shown the door? HUNT: You've cited the very statistics that I used a couple of days ago to describe Norman's tenure as Chancellor of the Exchequer as being a record over which he had every right to look back with pride and he has achieved a great deal. But you will know that a change of personality brings a new impetus and a new approach. DIMBLEBY: Um - which leads me to suggest that the truth of the matter is that the reason why he had to go is because the body politic needed a scapegoat. HUNT: No, I don't... I think these sorts of examples really don't prove anything at all other than it's the policies and the principles that matter, and I'm very optimistic and confident about the future. We're going to have the fastest growing economy in the whole of Europe THIS year and next year as well, and that's going to open up a number of opportunities, and we have to seize those opportunities. DIMBLEBY: Yes, granted that. Let's be reasonably politically realistic. That phrase that I used of body politic needing a scapegoat came from the mouth of an extremely shrewd politician and a very good friend of yours - one Michael Heseltine. He said that that was the case - has he got it wrong? HUNT: No, because there are various ways of describing this, but what I'm saying to you Jonathan is what matters are the policies and the principles. Now, of course... DIMBLEBY: Of course the policies and principles matter, but what also matters is why a senior figure is removed from Government. Now you say it's the Prime Minister's prerogative; you say it's happened that reshuffles have taken place in the past; you say you believe in the policies and principles. Let me put it to you that what the public would like to know is whether or not the Prime Minister has or hasn't recognised that they, the City and others, believed that Lamont, whatever his virtues, had lost credibility. Did he recognise that? HUNT: Well, Prime Ministers make these decisions for a variety of reasons but they have every right to do so. Now the decision has been taken, I'm telling you Jonathan that I believe that this country can be more confident than ever before; there are great opportunities ahead of us; I believe my particular task will be to get unemployment down and down permanently, and improve the quality of training, and all these policies you will see carried through since 1979, gaining renewed impetus as a result of changes in personalities. DIMBLEBY: Yes, are we saying that now the renewed impetus.... is the Government in a stronger position, and John Major in a stronger position than the Governments and John Major were before Norman Lamont got the stab in the chest? HUNT: Well, if you judge us by the past, then you will see that every time there have been changes there has been a strengthening of the Government's position and, of course, people are now looking forward to the next General Election - I'm confident we shall win that Election just as we've won all those since 1979. DIMBLEBY: You see, Norman Tebbit, another pretty shrewd judge of the political scene, says things aren't going to improve simply by shuffling people around. HUNT: No, not at all. They'll only improve provided we stick to our policies and that is exactly what we are doing. DIMBLEBY: Okay then. What does Kenneth Clarke have (which is what I said in my introduction) apart from the fact that he is not Norman Lamont? HUNT: Well, I've always believed - and if you remember I was in the Whips office for some time under Margaret Thatcher - that reshuffles have a very salutary effect because they bring in a new mind, a new personality and a new approach, and I've known Kenneth Clarke for many years now. There is no doubt that he's one of the most experienced members of the Government. He was in the Heath Government in the early seventies and was seen then as a great rising star, and he will prove to be so again. DIMBLEBY: And will he be more effective at conveying the policies to the public than his predecessor? HUNT: Well, I must admit, if I have any criticism it is that we're extraordinarly good at getting across our message at the time of General Elections, but I have some criticism of myself included in getting across that message in between Elections, and I think Kenneth Clarke will greatly add to our ability to do just that. DIMBLEBY: That's a very unusual piece of self-criticism to come from a member of a Cabinet. You're saying that, with a bit of luck, Kenneth Clarke, will get your message across in a way that you lot before him have failed to do? HUNT: No, I didn't say that. What I said was that we're pretty poor in between Elections at getting across our message clearly and firmly. That is mainly because, of course, we involve ourselves more in the issue of Government than in the issue of politics and that is the whole responsibility of Government. When it comes to Elections, of course, we can cast that to one side and really concentrate on the political fight. DIMBLEBY: Okay, let's suppose is that what your suggestion that Kenneth Clarke doesn't allow his eye to wander away from that particular ball of getting the message across. He's renowned as what? The master of the pirouette recently in government but you say he's got no room to move on policy. HUNT: Well he found room to move when he came to the House of Commons on unit fines and I think the House of Commons appreciated that and if you look back again when we have determined policies which aren't working then we come to the House of Commons and explain that and change the policies but on the economy it's a very different situation. If you look back to 1979, the policy of sound money, low inflation, low interest rates, high manufacturing productivity which is now at record levels have been themes running all the way through and I can't for a moment see those changing. DIMBLEBY: So you cannot see any shift in policy from the policy that was being carried out to John Major's orders by Norman Lamont? HUNT: There's no need for it. Those polices are working through. Why is it that we're the fastest growing economy in the whole of Europe not only this year but next year as well and that's an independent view from within the European Commission. Why is it that we are being so successful in industrial relations, in productivity, in manufacturing. All these key areas, why is it, it is because our policies are working. DIMBLEBY: The public doesn't seem to believe that at the moment but perhaps they will come to do so. Let us take one area which the public's pretty unhappy with, is Ken Clarke going to be as robust in the search for cuts in public spending where it might hit health, where it might hit pensions, where it might hit prescription charges? HUNT: Well one of the most important things that's going to happen this year is that we're going for the first time ever to have a unified budget in the autumn. Now that budget is going to balance income with expenditure and it's the first it's ever happened and I welcome that because it is very important to get the two marrying across in a sound sensible way. DIMBLEBY: Another, of course, of the previous Chancellor's major achievements. The question is he going to be just as robust? For instance, is Michael Portillo's axe going to be just as sharp in that area as it would have been if Lamont had been there? HUNT: Well in my experience as Secretary of State for Wales where in effect I was the Treasury in Wales, I had an overall budget and I had to decide in the six thousand million pounds, the priorities within that budget. What I always tried to focus on Jonathan, and I think we've lost sight of this in the commentators verdict on this shuffle, is not the amount of resources but the targetting of those resources. We have all these negative arguments about how much all time when in fact the argument should be are we getting value for money and are we targetting every penny and every pound in the best possible way? DIMBLEBY: But Portillo made it very clear that however uncomfortable it may be for the electorate because of the predicament that the economy is in, he may have to target by making clear that there will be those who will have pay for prescriptions. That is an option, it remains an option presumably despite the change in Chancellor? HUNT: Yes, but all political parties are examining this whole area of public expenditure. The Labour Party, if you remember, have set up a commission and they're ruling nothing out. Governments too have always to concentrate on whether we have the priorities right in public expenditure, of course we do. DIMBLEBY: Now will Mr Clarke be just as robust in considering the possibility of further tax increases? HUNT: As far as Kenneth Clarke is concerned he will have to make his own decisions as and when he comes to deliver his budget later this year but we have a reputation as a government all the way through and Kenneth Clarke has been a minister all the way through, of when necessary making decisions which might be unpopular but will be seen with hindsight to have been right and we don't try escape those decisions. DIMBLEBY: And that means that further tax increases remain on the table, that's a possibility? HUNT: You will have to await the budget. Later this year Kenneth Clarke will reach his decisions and then present them to the nation in the first ever unified budget. DIMBLEBY: But we could not put a piece of tissue paper between Norman Lamont saying, just before his fall, I may have to do something elsewhere in the tax system because of the deficit and Kenneth Clarke's equal readiness to look for that possibility. HUNT: Well Jonathan you will have to await the budget. I always think this sort of speculation isn't at all helpful. The moment to reach these decisions is as Kenneth Clarke approaches that unified budget later this year. DIMBLEBY: Alright. The other area where the government has been in rhetoric, pretty tough, is on public sector pay. Can we assume, given Mr Clarke's reputation and his relationships with the public sector unions that he will insist that public sector pay is borne down on to a level of a maximum of one point five per cent not only this year but next year as well? HUNT: Well as far as this year is concerned I believe our policy on public sector pay has been a remarkable success. We have yet to make decisions for next year. But if you look at this year, we have been remarkably successful in keeping down public sector pay because people recognise as we come out of recovery, as we come out of recession, if we are to recover permanently then we have to keep down the level of pay and that's particularly so to improve our competitiveness in the private sector. DIMBLEBY: Are you saying that the government has an open mind on whether or not in the year '94/'95, the limit should remain at
between one and one point five per cent? HUNT: What I have said is what we've always said - which was we've announced the policy for this year and that has been stuck to remarkably successfully. We will have to announce our decision for next year. DIMBLEBY: I was under the impression - maybe falsely - that it was Government policy for next year as well. HUNT: Well, we certainly need to have a policy on public sector pay but the level of it has to be announced, and will be announced, in the usual way. DIMBLEBY: So what you are saying is it could be easier? It might not be borne down on so firmly? HUNT: No, I have not said that. DIMBLEBY: It's hardly likely to be tighter is it? HUNT: I have said what our policy is for this year - we will have to see how the economy now recovers and I believe we have got grounds for considerable optimism, but only if we keep down the level of public sector pay. DIMBLEBY: You see if I were a public sector pay negotiator hearing that I'd be saying to my members - okay, we had it tough this year, but under Ken Clarke and with our new Employment Secretary in place, maybe the Government's going to be a bit softer on this. HUNT: No, not at all. I haven't given any indication of that whatsoever and you only have to look into the private sector, where you will find very substantial, large companies where the workforce hasn't had a pay rise for some considerable time. Now that is, of course, now being reflected in the public sector too, and I believe our policy's been a remarkable success. DIMBLEBY: Yes, but you will well know that if the economy does take off the pressure upwards on private sector pay - because of the bottlenecks in the economy - will be very considerable and it will be followed, similarly, in the public sector. HUNT: Yes, and I agree that is why we have to be firm on public sector pay, but the details of the policy we shall announce in the usual way. DIMBLEBY: Okay. One difference that the Party will detect - and certainly the Euro-sceptics have been already shouting quite loudly about - is the memory that Ken Clarke did not sing in his bath after
Black Wednesday. He is wholly committed to a return to the ERM in due course. HUNT: Well, we have a totally united policy on this. In Cabinet we've discussed it on several occasions and we believe that there is merit in having some sort of mechanism, but the existing Exchange Rate Mechanism has certain basic fundamental flaws within it, and there is also a divergence between some of the major economies. Now, in that sort of situation we couldn't begin to contemplate re-entering such a mechanism. DIMBLEBY: But when those fault lines are sorted out there is no reason why we should not - once the convergence occurs - there is no reason why we should not. HUNT: Well, I have a particular view that in private industry, however big the company may be, there is a need for stability in Exchange Rates. You don't want a small manufacturer of components to have to worry about Exchange Rates when selling in the single market to Milan or Stuttgart. Now that's terribly important and at some stage we will have to find the best way of resolving that problem. DIMBLEBY: Now, in the long-term, that means in one way or another that you share the view - indeed, that Ken Clarke expressed after Black Wednesday - that we WILL return to the ERM. You can't say to the Euro-sceptics who have been asking you and the Chancellor and others to say - all the economic spokesmen to say - Oh, tell us that you're forgetting about the ERM and then we'll be happy. You certainly can't tell them that, can you? HUNT: Well, I talk to colleagues in the Parliamentary Party, and in the Party, a great deal about Europe, and I think we've now got away from all those rather tedious arguments over Maastricht and I hope we can put them behind us for good, because there's a great deal to be achieved by being closer to the heart of Europe and that is where John Major's always wanted us to be. Now that has... carries with us.. the effectiveness of the Single Market depends on stability in Exchange Rates. DIMBLEBY: And that is another way of saying that in some form of another we need the ERM under the right circumstances. HUNT: Well, let's just wait and see. The conditions are not appropriate at the moment to consider rejoining the Exchange Rate Mechanism. We all want to see that stability, we all want to take advantage of the Single Market. We all want to see a stronger, more powerful, peaceful and prosperous Europe. Now that may have to be achieved by having some form of system to ensure stability in Exchange Rates, but that's not on the agenda at the present time. DIMBLEBY: Meanwhile, you would agree, I presume,
with what the new Chancellor said - before he became Chancellor - the other day
that the Government is still in a dreadful hole. HUNT: Well, there are various ways of expressing it. I think that was a rather good way. From time to time we do need to sharpen up our political edge. That's the way I would put it. We do need to focus on getting our message across to people in language that they can understand, and also to talk up our successes. I believe that's what we've done in Wales, remarkably successfully. We have a lot to be proud about in this country. DIMBLEBY: Okay. Meanwhile, you say it's a good way of expressing it - you're in a deep hole, you say you've got to sharpen up the edge - you're not going to be able to do that to prevent yourself discovering that you reach your Newbury in Christchurch, are you? HUNT: Well, the trouble with by-elections, Jonathan I must tell you, is that the Liberals are a remarkable Party because they can encompass anybody of any view. They are the ultimate protest vote and I remember canvassing around Newbury, finding people who totally disagreed with some fundamental tenets of Liberal policy but they said "We're going to vote Liberal because you'll still be in Government tomorrow" - but I believe, notwithstanding the result at Newbury, the situation in Christchurch is very different. DIMBLEBY: You only just said that in time to stop me suggesting to you that okay, you're going to lose Christchurch, it's really because the Liberals pick up the protest vote. Anyway, we will see, we will see. HUNT: We will WIN Christchurch - you wait and see. DIMBLEBY: We'll see, we will see. David Hunt, thank you very much. HUNT: Thank you. ...oooOooo...