State visit and steel tariffs?

Jeremy Vine interviewed Trade and Industry Secretary, Patricia Hewitt, MP on Sunday 16 November 2003.

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Trade and Industry Secretary, Patricia Hewitt, MP

Jeremy Vine: I'm joined now by Patricia Hewitt the Trade and Industry Secretary. Thanks for coming in.

Patricia Hewitt: Good morning.

Jeremy Vine: Why is Mr Bush getting a state visit.

Patricia Hewitt: Well that of course is matter for Her Majesty but let's be clear here, our relationship with the United States is hugely important. It's not just that they are our closest and by far our strongest ally, on military matters but we have a very powerful economic relationship with them. You know we get more of the American investment that comes in to Europe than any other country.

Jeremy Vine: But there does seem to be a remarkable level of anger directed at Mr Bush, given that we are supposed to be his closest ally.

Patricia Hewitt: Well I think it's very healthy that there will be a great deal of public debate. There will clearly be very lively public demonstrations this week, and there will be an opportunity for people to look at the whole breadth of this relationship, the economic and the trading relationship, the work that we do in the world trade organisation and so on, as well as the controversial aspects, particularly over Iraq. And I hope people will take the chance to listen to what the President has to say for himself, and for his country, and say at length, in all the interviews that he will be doing this week, and then make their own minds up about that and not just listen to slogans.

Jeremy Vine: Mr Blair made the famous speech he made in 2001 about making the world a better place post 9/11, bringing democracy to the Congo was one of the things he talked about. Do you think the problem is that his vision got entangled with George Bush's vision, which was much narrower, which has turned out to be basically Afghanistan and Iraq.

Patricia Hewitt: I think what we have been able to do with our American allies and with other allies in Kosovo, in Sierra Leone, in Afghanistan and now the very difficult task of reconstructing Iraq after Saddam's brutal regime. All of that is indeed helping to make the world a safer and a more democratic place. Of course it is tough and of course we've got to stay in there dealing with the security problems in Iraq which are enormous, but I also know from all the contacts I have particularly with Iraqi women, that things are also improving for ordinary families in Iraq, we don't always hear about that from our own media.

Jeremy Vine: But we heard from Glenda Jackson there that we, Britain, seem to be as she put it, on our knees in this special relationship. And now you're dealing with these steel tariffs.

Patricia Hewitt: Erm, absolutely.

Jeremy Vine: Why is it if we've got this great relationship with the US, they're stopping us from selling them our steel.

Patricia Hewitt: Well this idea of being on our knees is absolute rubbish and ...

Jeremy Vine: (inaudible overlap)

Patricia Hewitt: .... from the moment when the United States imposed those tariffs, I stood and we stood with our steel workers and with Corus and our other steel firms, against the American administration, and we made it very plain publicly and privately, that we thought those tariffs were unlawful, we took them through the European Union ...

Jeremy Vine: Exactly. And they've done nothing.

Patricia Hewitt: Through the WTO, and we've just won the appeal.

Jeremy Vine: And they've done nothing.

Patricia Hewitt: And I hope that over the next couple of weeks, because that's all the time that is now left, President Bush, will indeed decide to lift these tariffs. The steel industry in America has now gone through a lot of very necessary restructuring, he's got his own manufacturing companies, including Ford objecting very strongly to the high prices they're paying for steel, the difficulty they've got in getting the steel that they actually need.

So I think the time has quite clearly come for President Bush to say, we've done those tariffs, we don't need them any longer, they are unlawful, even if the Americans didn't initially accept that, it is time for them to go. Because if they don't go by the 1st week of December, we will be in to a trade war with European retaliations against American imports, and we don't want that, we don't want that for our consumers, the Americans don't want it for their business.

Jeremy Vine: The old Patricia Hewitt, or maybe I should say the younger Patricia Hewitt, the left wing one, would have been out on the streets protesting against George Bush wouldn't she.

Patricia Hewitt: I would, I think even then have supported the conflict, the war in Iraq because I believe, and I still believe now, that the decision we made and the decision we made on the basis of the information we had, was the right one to deal with one of the world's frankly most disgusting tyrants, and to deal with a tyrant who was getting hold of weapons of mass destruction. We had to deal with that.

Jeremy Vine: Thank you very much.

END OF FIRST INTERVIEW

INTO SECOND INTERVIEW WITH PATRICIA HEWITT

Jeremy Vine: Patricia Hewitt is still with us. Just to go back to the big picture that the CBI were painting in their survey of 250 business leaders. They feel that you've taken a shed load of tax from them since '97, 54 billion extra and they're hurting.

Patricia Hewitt: Let's have a look at the facts on this. We've actually got the lowest business tax take across the European Union. If you look at the combination of corporation tax and employer's social security contributions, we do better than almost all our major competitors....

Jeremy Vine: Can I just, I need to say at that point that people don't, there are people who disagree with your analysis of that and they use different vectors and they say ...

Patricia Hewitt: Jeremy, I'm aware of that but what I am using the OECD figures which are the only ones that actually give you a basis for comparison across different countries and on that we come out very well.

And although the perceptions that the CBI is quoting are hugely important and I take them very very seriously, it is also important to look at the objective comparisons that are made by other organisations. Look at the World Economic Forum, look at the Economist Intelligence Unit, both of them on their international bench marking put us number three or number four in the world.

Jeremy Vine: But you do accept that tax ...

BOTH TOGETHER

Patricia Hewitt: In terms of business environment.

Jeremy Vine: You do accept that tax has gone up on business since you took power.

Patricia Hewitt: National Insurance contributions went up for reasons that I think everybody understands, because that was the fairest way in which we could get the money that was desperately needed.

Jeremy Vine: Overall I mean.

Patricia Hewitt: To make long term, to make long term investment in the national health service. In terms of business taxation, that is now going down. Indeed if you look at the CBI's recent report, not the press release, but the actual report, you will see business taxation going down not going up.

Jeremy Vine: Why on earth would they be complaining about paying more tax when you've put their tax down since '97. Is that what you're saying.

Patricia Hewitt: There are complaints about the National Insurance Contributions, and as I say, we know and we explained at the time why we did that, and why we decided that the fairest way to fund the National Health Service was to do it that way.

But I do think it's very important, you know, when business complains and for instance about the state of transport which has built up over twenty years of inadequate investment in transport, and we're doing something about that but we understand those complaints and we take them very seriously. But along side those complaints, you do also have to put the cuts in corporation tax rate, very significant.

The fact that we've reformed the capital gains tax regime for business, it's now more favourable even than in the United States. The huge investment that we're making in our science base, going up to three billion pounds a year, which is crucial as Alan Woods was rightly saying, to the future of advanced manufacturing and high tech services.

Jeremy Vine: So why is it that they do a survey of 250 of the movers and shakers, and the vast majority we gather say that Britain is declining as a place to do business in.

Patricia Hewitt: I haven't seen the details. I suspect that what that reflects is what I am hearing from business leaders all the time. They're unhappy about some things here, transport being one of the worst, although very happy about the economic stability and the very low levels of unemployment that we've delivered.

But what they're also saying to me is France and Germany are improving; so Britain remains one of the best places to do business but the gap is narrowing.

Jeremy Vine: Right. So you agree on that.

Patricia Hewitt: We do agree on that. And in a sense that's frustrating when we want to stay ahead. We want Britain to be the best place in Europe, indeed the best place in the world to set up and grow a business, and given that we get more inward investment than anybody else in Europe, I think we're not doing too badly.

But we also want France and Germany to reform their own economies, to become more dynamic and to grow. Because as we were just hearing ...

Jeremy Vine: Well they're going to overtake us aren't they.

Patricia Hewitt: But as we were just hearing from the North East, a lot of our manufacturers, a lot of our exporters are being damaged by the fact that there is so little growth at the moment in France and Germany and that is holding back the Euro Zone, who are our main trading partners.

Jeremy Vine: Another crucial area of complaint among businesses is flexibility. They believe that the whole labour market here is getting less flexible. They believe that, well, they say sixteen major pieces of employment legislation since 1997. You're going to tell them they're wrong about that as well.

Patricia Hewitt: Well let's have a look at the facts of that. I mean business in the old days was very against a national minimum wage. We introduced it, we brought employers and small businesses in with the unions to help decide what the level should be. I don't think anyone is now proposing that that should be abolished and far from destroying jobs, we've got over a million and a half more people in work than we had six years ago.

Jeremy Vine: That's one out of sixteen....

Patricia Hewitt: That's one and you'd probably get very cross with me if I tried to go through all sixteen. But you know, if you look at working time regulations, now we have a real problem there.

We have British men in particular working longer hours than in any other country in Europe, and most good employers would tell you that they don't want their competitiveness to depend on people working appallingly long hours, day in day out, week in week out.

Jeremy Vine: But you would accept Patricia as of that ...

Patricia Hewitt: What they want is the flexibility.

Jeremy Vine: Right, sorry to interrupt, but you would accept as a part of that that they are right to say that the working, the business market has got less flexible, there is more regulation. They are right to have that as their perception yes.

Patricia Hewitt: We have introduced a number of new employment laws and we're not the least bit ashamed of that because four weeks paid holiday a year and a decent package of rights for working parents, building on the - what the best of British business is already doing, I think that will help to make companies more competitive not less competitive.

And if you take, let me just mention this. If you take something like partnership and dialogue in the work place, business was very against the information and consultation directive, so were we when we thought it was going to be one size fits all. We got a sensible agreement in Europe, and we've sat down with the CBI and the TUC to agree how we're going to implement that directive and that is good for everybody.

Jeremy Vine: All right, take all these business leaders, they're going to be in a room, you're going to see them this week, Mr Blair is seeing them. You put together the fact that they say they're paying more tax, you put on top of that the fact that they believe that the whole market is less flexible for them in Britain now, and you get Alan Wood of Siemens, as we heard in David Thompson's film saying, we are on a slide. The government has to think about how it can stop that slide.

Patricia Hewitt: I am not at all complacent about our position. We have made it very clear, we want to keep our country one of the best places in the world in which to set up and grow a business. I also heard Alan, quite rightly, talk about education and about skills. Although what he didn't mention, or at any rate it wasn't in the edited version, was the enormous investment that we are making in our schools, and the fact that we have been raising the rate, the performance of our children in English, in maths, and increasingly in IT as well. Indeed on the recent PESA tests, these are the big international tests in Maths, we did, we - our teenagers, did better than almost any other country in the world, something our press didn't bother to report.

BOTH TOGETHER

Jeremy Vine: Do you think business is complaining too much.

Patricia Hewitt: I think business is absolutely right to say we need more investment in transport, we're making the investment. I think they're absolutely right to say we need more on skills and we are working with the CBI and the TUC in businesses up and down the country to get the skills we need in the work place, as well as in our schools.

NB: this transcript was typed from a recording and not copied from an original script.

Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.

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