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Page last updated at 09:31 GMT, Sunday, 5 July 2009 10:31 UK

Majorís warning

On Sunday 05 July Andrew Marr interviewed Sir John Major, Former Prime Minister

Please note 'The Andrew Marr Show' must be credited if any part of this transcript is used.

The former Prime Minister says cut public spending or taxes could go up dramatically.

ANDREW MARR:

Sir John Major
Sir John Major, Former Prime Minister

Now then, No. 10 strategists were hoping by now to have regained the initiative after last month's election defeat, weeks of bad headlines over MPs' expenses, but no sooner had the Prime Minister announced his plans for building Britain's future than cabinet colleagues were running up the white flag, as I was discussing - part privatising the Royal Mail - not; compulsory ID cards - not; and of course over everything else hangs the dark shadow of the recession recently confirmed as the sharpest since the 30s.

Well Sir John Major knows all about the difficulties of governing in hard times. Welcome, Sir John.

SIR JOHN MAJOR:

Good morning.

ANDREW MARR:

Thank you for coming in.

Let's start with your overview of where the economy is now because you travel the world, you talk to a lot of economists, a lot of business people.

How deep do you think the hole we're in at the moment actually is?

SIR JOHN MAJOR:

I think it's as deep as I can ever remember. I mean if you look at the contraction in the economy, which is close to 5% on a year on year basis, and then look at the size of the deficit, which is 175 billion or thereabouts on best estimates, about 12% of GDP - that's a territory we have never before been in in peacetime.

So this is about as bad as it has ever got. And I think the recovery pattern - you may get a small dead cat bounce here and there, but I think the recovery pattern is going to be very slow - and the pace and strength of the recovery may well depend on decisions yet to be taken about public expenditure and tax.

ANDREW MARR:

So when you see for instance in today's papers - we've got the Head of the Audit Commission, various outside independent experts talking about really severe public spending cuts; we read that civil servants are looking at 20% cuts because they say the politicians won't talk about it, so we better. That's realism, is it, as far as you're concerned?

SIR JOHN MAJOR:

Well I'm unsurprised by that story. I think it may well be realism. I'd be very surprised if departments up and down Whitehall and local authorities up and down the country weren't looking at very significant reductions in expenditure at the present time. It would be remiss of them not to do so. I think one just has to look at the figures. If you're talking of a public sector deficit of 12%, let us make the happy assumption that half of that may be wiped away by growth over the next few years. I think it's questionable that it will …

ANDREW MARR:

Yuh.

SIR JOHN MAJOR:

… but on happy assumptions it just conceivably might. You've still got a public sector deficit, a public sector deficit of around 90 billion.

Even that is over twice as high as we have ever had before at the worst of any recession. Even assuming we get that growth. Now either we deal with that with public expenditure reductions, or we deal with it in tax rises. If it's not going to be …

ANDREW MARR:

Or both possibly?

SIR JOHN MAJOR:

Well or probably both, yes. In fact more likely a mixture of both. But let's assume for a moment that the Prime Minister's plan not to cut public expenditure significantly holds steady. If that is the case, then you are beyond a shadow of a doubt facing very significant tax increases. Now difficult to be precisely how big, but I think we can begin to make a guess.

ANDREW MARR:

But they couldn't be only on "the rich".

SIR JOHN MAJOR:

(over) No, no … no, no.

ANDREW MARR:

They'd have to be on everybody.

SIR JOHN MAJOR:

Well of course there's already an increase of 10 pence in the upper rate from 40 to 50 to the rich, but the rich can't remotely provide the sort of money we're needing. That's relative petty cash compared to what will be needed. So you've had an increase of 10 pence in the standard rate for … in the upper rate for the rich.

I think you may well get 5 pence on the standard rate, you may well get VAT at 20%. And even if you've got that, you would not begin to bridge the gap that needs to be bridged. So it would be significantly larger than that on the assumption that you aren't going to make public expenditure reductions. So I think the debate needs now to concentrate on the reality of where we are, and it doesn't matter who's in government.

ANDREW MARR:

Yuh. So I mean …

SIR JOHN MAJOR:

This mess isn't going to change with a change of government. Someone - whoever is in government, now or later - is going to have to correct the public finances. And if they don't, if they just continue with the finances at this huge deficit, at some stage our national credit rating will collapse. If that happened, sterling would be in difficulty. If that happened, you'd get soaring interest rates. And all the good done during the 90s when we took a lot of pain to get inflation down will have been thrown away. So the situation we are now in is pretty serious and it's built up over many years.

ANDREW MARR:

And …

SIR JOHN MAJOR:

Normally …

ANDREW MARR:

Sorry.

SIR JOHN MAJOR:

It's alright, let me just make this final point. Normally in years when you have a good economic record, you begin to repay debt and you bring the deficit down. What has happened, particularly since 1999, is that even in good years with a boom, the debt has risen. And now of course the boom has gone, we have the debt, and we have the problems of the recession adding to that on a daily basis.

ANDREW MARR:

So you, I assume, talk to current Conservative leaders who must be clammy and white-faced as they confront some of these statistics at the same time?

SIR JOHN MAJOR:

Well my conversation with current Conservatives is private …

ANDREW MARR:

Of course, of course it is. But I'm just …

SIR JOHN MAJOR:

… and I have my own views. I speak for myself and no-one else. But I think the public really need to understand how deep this is. These silly exchanges about Mr Ten Percent and things of that sort totally underrate the difficulties that we are now facing. People had better understand this is an unprecedented situation. We have never seen anything like this in your lifetime or mine.

ANDREW MARR:

So as it were the old politics, which says that politicians must never talk about cuts or tax rises or they'll be punished by the voters, is probably genuinely old politics?

SIR JOHN MAJOR:

Well I think there are two things …

ANDREW MARR:

People can now talk more honestly?

SIR JOHN MAJOR:

Well I have no idea about that. It may well be that if you talk about cuts, you get punished by the electorate as you did in the past. But there are two things crossing over here, aren't there? There's the question of whether you can talk about cuts and there's the question of trust. Trust has been eroded over a long period and I think the present government have done a great deal to damage trust in parliament and trust in government. But now, the public are going to find out in the next few years exactly how serious what is now happening will be. I think the party that tells them the truth in the most explicit terms will be the long-term gainer. Whether they will be the immediate short-term gainer in the battle of oratory between now and a General Election, I can't say. But in the medium and long-term, the party that tells the public how deep the problem is and what needs to be done about it is the party that will earn the respect of the public and the trust of the public and the party that will be the long-term gainer, in my view.

ANDREW MARR:

So you would urge either of the parties in that case to say listen 5p on income tax or deep cuts - that kind of language?

SIR JOHN MAJOR:

Well I think we have to address the reality. You've got a deficit of 180 billion. Can you continue with that? No. Have you got to narrow it? Yes. Can that be done solely by growth? No. So how do you bridge the gap and what are the implications of that? And there are some opportunities here. When people think of cuts, I would argue that we are a heavily over-governed nation. When you have subsidy to some parts of the country greater than that that's provided in Cuba, you realise you are getting to be a bit of a nanny state. There is an opportunity not just to deal with the problem, but to downsize the sum total of government, which I think we should do. And by downsize the sum total of government, I don't just mean reduce the number of MPs, though I think that is right. I do mean reduce the size of the government machine. We have no need for 120 ministers and 60 PPS's. You could reduce that by a third quite comfortably and I'd happily explain to you how. And then when you've done that, downsize parliament in that respect, I think you downsize what government does. You can't forever have the government increasing its role at the expense of private endeavour and the private sector. It is a route that ends eventually in national bankruptcy, which is where the government are heading us. So I think there is a philosophical opportunity to reshape the country as you deal with the problem.

ANDREW MARR:

It sounds to me almost as if you're saying that this is a sort of 1979 moment, if I can put it that way, where there is going to have to be a fundamental change in the direction of British politics.

SIR JOHN MAJOR:

I very much hope that will be the case, though in many cases the problems now are more serious than 1979. 1979 was very bad, and it was only because of the disaster of the 1970s that the reforms of the 1980s were politically possible.

ANDREW MARR:

Which leads of course me to ask you …

SIR JOHN MAJOR:

I think now, I think now with the problems we've got, there is scope for bigger and more fundamental changes in the next parliament and beyond.

ANDREW MARR:

I was going to ask obviously whether you think David Cameron is a Margaret Thatcher scale politician?

SIR JOHN MAJOR:

Well I think he's a David, he's a David Cameron politician. No-one can know exactly what someone is like until they're in a position, and often events make people.

ANDREW MARR:

Yeah.

SIR JOHN MAJOR:

And I think he's going to face some very uncomfortable decisions in the future. I think he's made a remarkable job of changing the Conservative Party in the right direction for the last two or three years, and so I have a very high opinion of him. I very much hope he can do what still needs to be done.

ANDREW MARR:

One thing I was wondering about is he's been pretty tough on the idea of MPs not having other jobs. Now you took other jobs while you were a backbencher, and I wondered whether you actually agreed with him on that because it seems to me a lot of Conservatives, and others, would say it's a good thing to have people in parliament who have outside interests …

SIR JOHN MAJOR:

(over) Well I think …

ANDREW MARR:

… and who do understand outside interests.

SIR JOHN MAJOR:

… I think unwittingly you're slightly traducing him. What he said is he doesn't want his shadow cabinet to have second jobs in the period between now and the General Election. I think he has himself talked of the desirability of members of parliament having second jobs. The alternative to that is quite simple: you're going to have a parliament of political nerds with no interest other than politics …

ANDREW MARR:

Yuh.

SIR JOHN MAJOR:

… and very narrow interests as well. Already we have a real problem with people becoming advisers to ministers, learning the jargon, getting selected for seats and getting into parliament without touching real life on the way.

ANDREW MARR:

Yes and to get …

SIR JOHN MAJOR:

Now …

ANDREW MARR:

Sorry.

SIR JOHN MAJOR:

… I think you need to change that.

ANDREW MARR:

To get people from real life, as you call it, into politics, you and Douglas Hurd produced an interesting idea recently, which was that people should be able to get into the cabinet without being a member of either the House of Commons or the House of Lords, though answerable to both.

SIR JOHN MAJOR:

Well actually not the cabinet. I think we referred to ministers of state, just below the cabinet.

ANDREW MARR:

Right.

SIR JOHN MAJOR:

I think there's going to be a real problem getting the scale and breadth of talent. I remember going to university audiences some years ago when a very large number of the students wished to get into politics or public life. Very few of them do today. Now I think we need to look at making sure we have a government that can look out more comprehensively than we've seen in recent years. If that means changing some cherished parts of the constitution and bringing in people to serve as ministers in a particular fashion - as other countries do - I think we should look at those sort of ideas. And there are lots of other things we should do as well.

ANDREW MARR:

What about paying MPs more? About the least popular cause I can think of at the moment in this country, but yet a lot of these MPs are paid relatively little compared with what they could get in other jobs with much less scrutiny.

SIR JOHN MAJOR:

Yeah, I think that's probably right. I think … I think we will end up with much lower allowances and a rather higher basic pay. I think that is clearer, it's cleaner, it's transparent, and I think it's what the public would accept. Though the doctrine of unripe time is very real just at this, at this present moment. I mean the problem really occurred when the expenses were virtually doubled in the early 2000s. In the period before that, the expenses were far, far lower, and so the expenditure of course was constrained to far more basic things than we've seen recently.

ANDREW MARR:

A lot of this happened or started to happen while you were still in office, of course.

SIR JOHN MAJOR:

What started to happen?

ANDREW MARR:

The higher allowances that people were claiming.

SIR JOHN MAJOR:

No - no, no, no, no. No, that's not true. By the time I left government, allowances were still quite small.

ANDREW MARR:

Right.

SIR JOHN MAJOR:

It was the very big increase in I think 2002 or 3, I forget which, that made a really significant difference.

ANDREW MARR:

And what did you think when you saw these duck houses and moats and so on?

SIR JOHN MAJOR:

Well I think on the case of the moat, people have been rather unfair because I don't think that he ever claimed for the moat. I think if you check, you'll find that's the case. Some of these things were patently silly and they were patently unwise and they are indefensible. That is why I think you need a more transparent system. I think this has done very great damage to the status of parliament as a whole, and that is why I think we do need reforms. I think some of the reforms suggested are just plain silly, but I think you do need to downsize what parliament does, you do need to make it transparent what members of parliament earn and what they can claim for. And I think you need to ensure that parliament doesn't finish on Wednesday night as well. Prime Ministers Questions once a week on Wednesday does mean the House tends to empty on Wednesday night.

ANDREW MARR:

Do you think that we're very close to the position of holding parliament in such contempt that it ceases to do the job it's been doing for hundreds of years?

SIR JOHN MAJOR:

No, I think … No, I think we're short of that. I think when times are really troubled, people will still turn back to parliament. And in one sense, if the government of the day - whomsoever they are - manage to steer us successfully through this crisis, then I think the … the respect and trust of parliament will rise again. We've had these problems before. Maybe not quite so sharp or serious, but we've had them before.

ANDREW MARR:

And when you saw this MI6 story - Sir John Sawers on Facebook - did you think the Foreign Secretary's reaction was reasonable; that it's all silly and we should stop talking about it?

SIR JOHN MAJOR:

Well I think it's being overblown. I mean I know John Sawers. He's a very able man, he's a very able appointment. It's pretty unfortunate that this has happened - I think that is true. But I think when you're faced with leaving Iraq possibly too early, huge problems in Afghanistan, the mess in Pakistan, the depth of the recession, I think this falls a long way below those.

ANDREW MARR:

Sir John Major, thank you very much indeed.

INTERVIEW ENDS


Please note "The Andrew Marr Show" must be credited if any part of this transcript is used.


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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