NB: THIS TRANSCRIPT WAS TYPED FROM A TRANSCRIPTION UNIT RECORDING AND NOT COPIED FROM AN ORIGINAL SCRIPT: BECAUSE OF THE POSSIBILITY OF MIS-HEARING AND THE DIFFICULTY, IN SOME CASES, OF IDENTIFYNG INDIVIDUAL SPEAKERS, THE BBC CANNOT VOUCH FOR ITS ACCURACY. ............................................................................... ON THE RECORD PETER LILLEY INTERVIEW RECORDED FROM TRANSMISSION: BBC-1 DATE: 22.11.92 ............................................................................... JONATHAN DIMBLEBY: Secretary of State - big spending Peter Lilley. Your budget has been spared; the price is a ballooning public debt. Let's look at the immediate predicament you face. It can't go on like that, can it? PETER LILLEY: Well, let's first of all get it quite clear that it was unequivocally good news that I was able to announce, first of all, that we've kept our promise, the promise I made at the Party Conference to maintain support for those who are affected by the recession; second, that we're channelling more help to those in greatest need; and, third, that we're keeping the pledges we made at the election time to the elderly and families. It was rather interesting that all the media had booked me for interviews after the statement that I had to make on Social Security and, once they heard that it was good news, they said "Sorry, we're not interested in good news" and they didn't want to bill it. I'm very glad that you want to discuss these matters today. DIMBLEBY: You poor old thing! Now, let's come to the question. LILLEY: Yes. In answer to your question, it is difficult, and it was difficult to maintain support for all those in need and with entitlement to benefit in the depths of the recession, but we've done it and I think that's a gauge of our good intent towards people in that position. DIMBLEBY: Yes, but you can't go on like that is my point. You can't go on being responsible inevitably willy-nilly for a growing debt which is already reaching (by the Chancellor's own consent) alarming proportions. LILLEY: I certainly don't, any more than he does, like to see a large debt of this kind, but we both recognise, we all recognise, the Government recognises, that in a recession expenditure on those who are affected by the world recession has to be maintained and goes up and one, it's reasonable to accommodate that rise in spending, but its new control total accepts that. What we want to see, of course, is the economy beginning to grow again, the jobs begin to grow again and that will be the best way of getting my budget down through having people coming off the unemployment register and back into paid employment. DIMBLEBY: That would follow as day follows night. However, at the moment, you are in night and the debt is growing. Does this not mean that unless you're prepared, you and your colleagues are prepared to accommodate ever growing debt, you're going to have to face up to reality in the form of either major cuts on the one hand, or that nettle of increased taxation on the other? LILLEY: Well, we're determined to get back to balance in the course of the cycle, the economic cycle, that we accept that the depressed state of the economic cycle you do have a high level of borrowing. The Chancellor has to make a fine judgement on just how high it can be and we had a very tough spending round overall to ensure that it wasn't higher than this. DIMBLEBY: Except that real spending went up by approaching four per cent, as you know. Now, let me put it to you in this way then - would it not be unwise for someone who has the strength of view as you, and indeed the Chancellor has about the level of debt that there now is, and the prospects - and you know as well as I do that the City is forecasting up to fifty billion and beyond - I don't expect you to confirm or deny that, but that's the forecast, and they haven't been too low in the past, these forecasts. I put it to you again, it would be extremely unwise, would it not, under those circumstances to rule out having to either cut more severely on the one hand, or increase taxation on the other? LILLEY: Well, the Chancellor will have to make that decision when he comes to his budget and future expenditure rounds will undoubtedly have tough decisions to take, but I think it was right this time round to focuss, first of all, within my budget on areas where we could save money without cutting benefits to which people were entitled. That meant looking at operating costs and at fraud, because we don't want to see money going to people whom Parliament never intended it to reach. DIMBLEBY: I'll pick up on that in just a moment, but, that aside, you are effectively saying "I, Peter Lilley, am on auto-pilot; if we get out of recession, great, my budget will fall, otherwise I shall be fighting to maintain it exactly as it is, however great that might be and however much it contributes to the debt". LILLEY: Obviously, we will look at areas where growth appears to be exceptional, particularly if it's related to factors which aren't connected with the recession, and there'll be other important decisions we have to take which you mentioned and nettles I'll have to grasp, not least on the retirement age for, or the age at which people are entitled to the State pension. So there are a lot of difficult questions that I'm going to have to face up to, so it won't be a question of being on auto-pilot. DIMBLEBY: Right. Well, we'll come straight in. If you're not going to be on auto-pilot, let's just have a look at these difficult questions that you are going to face up to. But first of all get somethings out of the way. If we can just do a brief checklist, if it's convenient to you as well. That is, you are going to continue for the lifetime of this Parliament, or at least will you are on watch, in the hot seat, to up-rate benefits in line with inflation? That is a continuing commitment and you won't back off that? LILLEY: We pledged in our Manifesto to up-rate annually both pensions and benefits for children and families, and we'll continue to do that. DIMBLEBY: So there may be some benefits which could not be up-rated in line with inflation? LILLEY: There are not specific pledges related to other benefits. DIMBLEBY: Which ones do you have in mind that, therefore, would not necessarily be committed? LILLEY: That's not quite the same as I have anything in mind. I'm just telling you the facts. In our Manifesto.... DIMBLEBY: Just remind the, viewers who may be in receipt of these benefits, those ones that aren't so committed. LILLEY: The two pledged ones were the basic retirement pension and child benefit. None of the others are pledged in our Manifesto. DIMBLEBY: Right, let's put it the other way. The others, not pledged, could be up for grabs if they had to be given the predicament that you're in - you wouldn't dissent from that? LILLEY: As you've seen, we were in a very difficult situation this year and we made it a priority to ensure that people in that position on those other benefits were protected. DIMBLEBY: OK. Now those universal benefits that there now are - child benefit, pensions - they will remain universal while you're on watch. No change in that? LILLEY: We made it clear enough the position in our Manifesto that we're pledged to them roughly as they are at present. DIMBLEBY: Roughly as they are? LILLEY: Well, I'm, I just say that because I suppose there are all sorts of technical things one can do, but that doesn't mean I've got some hidden agenda up my sleeve, but the - I forget the exact wording of the Manifesto - but it was quite clear we intended to maintain a reliance on the basic pension and child benefit come out of this.... DIMBLEBY: I haven't heard the wording yet, I don't want to bore you with the wording, but can I assume that you don't believe there's any ambiguity in that wording of any kind? LILLEY: Well, of what kind? DIMBLEBY: Well, any ambiguity that would lead one to believe other than that if you're in receipt of a universal benefit and if it is going to the mother, in the case of child benefit, and to all the families, that won't change. LILLEY: It was quite explicit on that, and it was quite explicit on this. DIMBLEBY: OK. I was just, literally just checking, as it were. Now, of course, the problem there is that had you not made that commitment, which doubtless got you some votes from key components of the British constituency, you would have been in a position to do significant cutting had you chosen, because those universal benefits are more expensive than benefits that some parts of your Party in the past - and not least that part of the Party to which you are, with which you are associated - were jolly keen to change, and targetting NOT universal benefits. LILLEY: Well, what we have done is focussed increased resources on the benefits that go to those in greatest need. We gave an extra three hundred million pounds a year, starting this October, going to elderly people - two pounds for a single person, three pounds for a couple, who depend on means-tested benefits and have nothing much above their basic pension. And we've given seven hundred million pounds across the whole spectrum of means-tested benefits by no longer requiring people to make any contribution to Local Government taxation. That's worth two pounds eighty a week to the average couple. DIMBLEBY: But that's not my point. My point is you could have saved an enormous money from this burgeoning budget, not that you're giving more and more to people. LILLEY: But you were making the point that it's very expensive to put money on universal benefits, to the extent that we want to help people. We've been focussing it on the mot needy and that's one of the principles I spelt out when I became Social Security Secretary a few months' ago. DIMBLEBY: While maintaining universal benefits, universally up-rated. Let me go to the point that you yourself touched on - these nettles - and let's deal with the, our pension nettle. Do you have it in mind, as was being urged upon you by one of your colleagues, that you should raise the level of pension to sixty-five to all - you're going to have a common age, you're committed to that. Are you tempted by the idea of going up to sixty-five for all? LILLEY: We spelt out in our consultation document - the results of which we are now considering - three different options. One of them was making it uniform at sixty-five, the other making it at sixty and a mid-point at sixty-three, plus variants involving a degree of flexibility. I'm in the process now of narrowing down the options but I'm afraid I'm not going to tell you where we're heading but sometime in the course of next year we will announce our conclusion to that process. DIMBLEBY: You'd have to be pretty wet behind the ears, given your financial resources, to suppose that you would bring it from sixty-five down to sixty for everyone, or indeed that you would equalise at sixty-three if you COULD get it up to sixty-five for everyone? LILLEY: Well, no doubt the financial implications will be an important factor we will take into account but we should be clear that we're talking about a change which is only going to be introduced probably in the next century. There has to be a period when people who've been basing their life's expectations on retiring at a certain age are allowed to fulfil those expectations, and people who are either afraid or hopeful that we're going to bring in this change next year needn't sit on the edge of their seats - it's going to be some years hence. DIMBLEBY: Are you tempted..is it on your agenda for consideration to tax benefits? LILLEY: Well, of course, the retirement pension is taxable. There are a number that are not. We've always made it clear that.. DIMBLEBY: Child benefit was what was in my mind. LILLEY: Oh, I thought you were thinking of invalidity benefit. DIMBLEBY: And invalidity benefit. LILLEY: We've always made it clear that it is..has been our intention for ten years in principle to bring within taxation invalidity benefit. It hasn't proved possible because of the practical difficulties. We actually print on the form that goes to people that that is an expectation at some stage but I can't tell you whether, and when, it will be possible to overcome those practical difficulties. DIMBLEBY: So far.. LILLEY: On child benefit.. DIMBLEBY: Please, please.. LILLEY: I'm happy to evade that question but I'll answer it if you want me to. DIMBLEBY: I was just about to pick it up. LILLEY: On child benefit, it has been made extremely difficult and I think a number of Chancellors have probably looked at it and financial secretaries. It is extremely difficult to introduce taxation, particularly the idea that you might make it subject to a higher rate of tax if there's someone in the household who's paying a higher rate of tax. Now, that we have independent taxation for men and women because the basic principle there would be infringed if you were taxing a benefit which goes to the mother because of the husband's income when you don't unify their two incomes for taxation purposes. It would be both practically difficult and difficult in principle. DIMBLEBY: So, that's effectively ruled out? LILLEY: That is extremely difficult to see how that could be done. DIMBLEBY: What you've given me so far - you said you were grasping some nettles - you seem to have..one or two nettles you taken hold of and discarded very swiftly and the others are nettles with a very gentle sting.. LILLEY: Well, the State pension age is a major nettle - let's make no bones about that - because one way or the other it affects either to the benefit or men or to the disadvantage of women - half the population. We've got to I think and it's sensible to reach a decision on a uniform pension age but I don't kid myself.. DIMBLEBY: When will you announce that? When will you announce that? LILLEY: In the course of next year. But I don't kid myself that any conceivable conclusion and solution we reach will be universally popular - it won't. DIMBLEBY: And you won't delude yourself in the basis of what you've said that you're going to be in the business of going to the Chancellor and saying: "Hey, Norman.." (or whoever it is in the future).. LILLEY: Norman... DIMBLEBY: I've done... Sorry? LILLEY: Norman, I said. DIMBLEBY: Sorry. I thought you had...you're not going to be able to say to him: "I've got such wonderful wheeze. I, in my true Thatcherite clothes have come up with wonderful wheezes of saving a lot of money, for cutting the proportion of your spending that's taken by my department. What you have to say to him, may I suggest to you, is this: "That I'm pretty good at tinkering around the edges - I'm going to have another
crackdown on fraud - but when it comes to serious fundamental business you may have thought I was your man - I'm not." LILLEY: Well fraud is not to be dismissed lightly. We reckon that we'll be able to save as a result of our efforts, identify and stop a billion pounds a year of fraud. Now that's an increase of a third. And without that billion pounds where would we have got the money to give the billion pounds extra to those in need. So there's a direct relationship between the battle against fraud and the help we give to those in need. DIMBLEBY: The figure that you...you play around with these figures you hope to get - we've had five hundred million now you give up a billion, but we're talking about half of one per cent, at most, of your budget. This is peanuts. LILLEY: It's over one per cent actually. DIMBLEBY: Well, it's peanut terrority. LILLEY: Well, I mean we're talking about a budget the major components of which are quite clearly determined and people expect them and no-one's suggesting that you can suddenly gouge huge holes in the social security budget. What we have to look for is ways where sensible savings can be made that aren't going to impinge on those on greatest need. DIMBLEBY: And without being too technical - even that figure is a highly theoretical figure because built into it is a multiplier of something like thirty-two. So you have to divide into thirty-two to get the cash saving because the real saving that you've got in there is one that is based on the assumption that they would go on defrauding for another thirty-two weeks after you've caught them. LILLEY: It's based on fact and experience of what does happen...oh yes... and what it doesn't include is any deterrent effect. I would hope that the very publicity that these measures have received will have a deterrent effect over and above that but we're not including anything for that. DIMBLEBY: You'll forgive me if I'm sceptical. I read.... LILLEY: I may or may not forgive you. DIMBLEBY: I read your speech and many people were entertained by your Gilbert and Sullivan lines on fraud. But I just wonder when you talk about rooting out those young ladies who get pregnant just to jump the housing list - how many such young ladies have you identified? LILLEY: Well, the BBC on Newsnight the other night helpfully did identify a case study of that... DIMBLEBY: How many have you got on your list? LILLEY: Oh, well, by definition I don't have a list of all those who are in one way using the system or defrauding the system because they don't come forward and identify themselves. DIMBLEBY: And how do you distinguish those ... LILLEY: But what I did do in that speech and linked it very closely with the fact that only one in three absent fathers pays a penny towards the children that they left behind with the single mother. We're pressing ahead with a child support agency and that's a major and radical reform that will require absent parents - usually absent fathers - to make a contribution to the upkeep of their children even if they've left the household. DIMBLEBY: I'm interested in these pregnant women because, on the face of it, it's a sort of cheapshot for the gallery unless you can say: "I know there are roughly so many of them" (as you've just given me a figure for fathers) "and I know how to identify that they've done it for these heinous reasons rather than for a whole lot of complicated social reasons. And one might be tempted to conclude from that that it's a rather callow and regrettable error of taste that you made unless you can come up with facts, figures and numbers. LILLEY: Well as I say the Newsnight did substantiate it the other night.. DIMBLEBY: I'm asking you...I'm not interested in what Newsnight did. Frankly, I'm asking what you think. LILLEY: I think other people probably can
authenticate what I have said with greater authority than I can merely reinforcing and reinstating it. DIMBLEBY: So you're a hearsay man. LILLEY: Well.. DIMBLEBY: If people say it, it has to be true and you build that into policy..? LILLEY: If you broadcast people saying to camera that they are in this position, then that's reasonable to believe them is it not? DIMBLEBY: I just think that what it does is.. LILLEY: Perhaps you didn't see this programme. DIMBLEBY: I just wonder..I occasionally fail to watch even Newsnight. I just put back to you this thought that while you go on about fraud and rooting out fraud is not exactly a new trade in politics, every Secretary of State comes along - your predecessor tried it, his predecessor tried it - and you're always trying out new areas to root out fraud. Very much endorsed by the public - don't misunderstand me. But, it's a great diversion from your key problem and you, I suggest to you, are not facing up to your key problem, you've lost your ideological bottle. LILLEY: No. I think it clearly has to be a first priority to look at ways of saving money which don't impinge on benefits. Then, you have to look at benefits which are growing rapidly and ask yourself if that growth is accounted for just by the recession or some other factors. We looked at, for example, invalidity benefit, one of the fastest growing and largest benefits and we thought it right to tighten up on the medical procedures so that we make more efficient use of our resources to ensure that it isn't going to people who aren't entitled to it and that will save certain sums of money. We've got other major decisions to make, radical decisions on State pension age and so on. So there's an agenda, but I'm not the sort of person who believes that you can come in, reform the whole of Social Security by some comprehensive reform. I'm a step-by-step person just as in the reform of taxation we approached one area of taxation after another, brought in sensible reforms and the whole added up to more that the sum of the parts. DIMBLEBY: You are a new Majorite pragmatist, not an old radical no-turning back Thatcherite. This Thatcherite's for turning isn't he? LILLEY: I'm just referring to the process of tax reform as a model for what we're doing on Social Security reform which was carried out under Mrs Thatcher with the help of John Major in the Treasury too and I think that's the sensible approach to these things. DIMBLEBY: We'll watch that sensible approach Secretary of State. Thank you very much.