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DAVID FROST: And he's here right now, the leader of the Liberal Democrats, Charles Kennedy. Charles, good morning.

CHARLES KENNEDY: Good morning David.

DAVID FROST: What about this story on the - now your first reaction to this story I quoted earlier from the Telegraph - I'll double my five million gift to Tories says tycoon. Your first reaction was probably I wish we'd got someone like that, but what else is your reaction to that?

CHARLES KENNEDY: I think this is worrying. I mean wealthy people are perfectly entitled in a free society to donate to any political cause or any other charitable cause that they wish - nothing wrong with that. Political parties should declare these things, we've always taken that view. But I do think that once you're getting into the scale of individual donation that we've seen - two million here, two million there for Labour, five million for the Conservatives, possibly doubling up to ten million - that really does become, I think, offensive to a lot of people's sense of fair play, and a lot of people frankly would consider it a little short of obscene. The other thing about the individual involved, whom I don't know and I cast no aspersions on him, is that he's also making statements that of course they wouldn't get money if somebody like Kenneth Clark became leader of the Tory Party. Now should it be for wealthy tycoons to start dictating who becomes the democratically elected leaders of our parties - I don't think so.

DAVID FROST: What in general would you say Charles about your closeness with Labour? Would you say that the Liberal Democrats are closer to Labour than a year ago, or less close?

CHARLES KENNEDY: I think that if you look at the working relationship between the two parties, it has been less intensive in the second half of this parliament than it was in the first. Now partly that's inevitable, as elections get closer parties get more focused on their own activities, partly it's because quite a lot of the, the constitutional work was done in the first half of the parliament - PR for the European elections, devolution to Wales and Scotland, a degree of freedom of information and so on. Now there's still outstanding work but there's no doubt it has relaxed, but let me kill stone dead some of the, the idle speculation that's been in the press over the last period since Christmas. They're talking about pacts and deals and so on. Let me be quite clear about this, no pacts, no deal, no nonsense from the Liberal Democrats.

DAVID FROST: But at the same time there will local pacts, probably.

CHARLES KENNEDY: No there won't. There will not be local pacts.

DAVID FROST: Well there will be local people who know what the wise thing to do is. To tactically vote. That won you, tactical voting won you 12 seats at the last election, the psephologists say.


DAVID FROST: You actually need pacts, though, Charles, you can't -

CHARLES KENNEDY: No we don't - no we don't need pacts. It would be quite wrong for party leaders, anyone of the three of us, to stand at Westminster and say to people, you should be voting tactically in this constituency or that part of the country. It wouldn't work anyway, it would be an affront to democracy that sort of thing. You're right, if people want to form their own conclusions based on their local knowledge, that's entirely up to them, but it's not for us to stand at Westminster and direct the traffic on this one, certainly not. And, you know, each party, Conservative, Labour,. Liberal Democrat, we all have our targets to meet, either seats we want to win or seats we're defending, and there's no great surprise that we give considerable emphasis there, but I want every Liberal Democrat vote in every constituency I can get at the next election - as well as more seats in the next House of Commons. And I think we're reasonably on track to achieve that, I think the other parties will need to keep a wary eye on us when this election comes round.

DAVID FROST: And obviously you've suspended for the time being, up to the election, the joint, the joint cabinet committee with Labour -

CHARLES KENNEDY: No - no we haven't suspended it actually, we haven't suspended it - it hasn't met for some time but there's still discussion between the

DAVID FROST: - that's interesting, everyone thought it had been suspended -

CHARLES KENNEDY: No, it's not been suspended at all.

DAVID FROST: They said the last meeting was last July.

CHARLES KENNEDY: That's right, it was just summer time, there has been still working relations between the parties on outstanding items, like, for example, House of Lords reform - that's going to have to be attended to - but the joint cabinet Committee - into which I think at times a bit too much mystical quality is placed, I mean people can talk to each other without having to troop up to Downing Street

DAVID FROST: But no meetings for six months is quite a big gap.

CHARLES KENNEDY: Well, we've had two meetings since I've become leader, both have looked at practical agendas. Now those agendas have advanced a bit but I'm a believer in meetings when there's something to decide. If you're not in a position to decide something, I'm not in favour of meetings just for the symbolism of it.

DAVID FROST: And the future of the joint cabinet committee, or indeed of the relationship with Labour or any closeness, really depends on whether they come through with a manifesto guarantee that there will be a referendum on PR. It all now depends on that, doesn't it?

CHARLES KENNEDY: It always has been the case that no leader of our party could maintain a constitutional relationship with the potential governing party, as Labour is at the moment, if they were to resile on the commitment that they gave at the last election, alas didn't honour in the course of this parliament, to give the voters a say on whether they want the status quo for the voting system or whether they want a different system that would give each vote the same value, right up and down the country. If we had that incidentally, that part of the discussion we've been having earlier would become redundant, because people wouldn't have to think about not voting for what they really want but perhaps voting for something to stop something they prefer would hate to have altogether. In other words using almost a second preference vote under the first past the post system. So that's the position, Labour will reach a conclusion, Robin Cook has said earlier today, as chair of their policy forum, that he remains personally committed, that he's not anticipating, as far as I gather, that there will be a change in that commitment, but they know our position and they will have to make their minds up.

DAVID FROST: If they made up their minds in what you would regard as the wrong way, and they didn't include this commitment in the next manifesto, what could you do?

CHARLES KENNEDY: Well I can't obviously write the Labour Party manifesto, I've got enough on my plate with the contents of the Liberal Democrat one, let me tell you, but the issue about what they put in the manifesto becomes an issue for after the next election. Now if Labour, or ourselves or, depending on the arithmetic, some combination thereof working on a constitutional programme, are able to do something about getting voting reform, let's do it. But if they're no longer interested then the issue in that sense, if the government won't pursue it, if they are the government after the next election, the issue is off the agenda anyway. But if it's off the agenda, then I'm afraid relations between the parties are firmly off the boil.

DAVID FROST: Firmly off the boil and the joint cabinet committee would probably not survive.

CHARLES KENNEDY: Oh I would doubt that, that it could possibly maintain into the future if at the end of the day the principal item that you want to talk about on the agenda of that joint cabinet committee had already been ruled out by one of the partners on the committee.

DAVID FROST: Well that's very clear, very clear indeed. And in terms of, and in terms of the other referendum, in your conversations with Tony Blair, have you discussed that as well, the referendum on a single currency?

CHARLES KENNEDY: Yes we have, over the period of the last 15 months or so, quite a number of occasions, I think it's a shame that they didn't go for a referendum in principle earlier in this parliament. Let us hope that after the next election we will get one sooner rather than later and we will all have, those of us in on the pro-European side in all parties, will have to put our shoulders to the wheel to try and win it. You've got to win by means of persuasion. I would link this issue, actually, to what you were talking to William Hague about last week, the leadership debates. If you shy away from people, you're not willing to go in front of the television cameras and put your case and try and persuade, that doesn't auger well both for the election, but also for a referendum campaign thereafter. I hope the Prime Minister will reconsider his position on these debates because in a modern age people have got a right to see. Now if he doesn't, I'm quite happy to debate William.

DAVID FROST: You'd debate William. There's a reference to that -


DAVID FROST: - in one of the papers today, you'd have a debate with William if the authorities, television authorities would let you.

CHARLES KENNEDY: Very - very happy so to do, and if that creates legal problems, for the broadcasters, then why don't we get a body like the Hansard Society, an independent body or a publication, The New Statesman, The Spectator, I don't mind, and put the two of us on a platform and let people listen to what we've got to say. If Tony Blair doesn't want to be there, that's entirely a matter for him.

DAVID FROST: But in fact, yes, would the ratings rival Who Wants to be a Millionaire, do you think?

CHARLES KENNEDY: Well, would William or I have to phone a friend? Would that be Tony, sitting watching at home?

DAVID FROST: Well that could be you in your - incidentally is there, in the old hung parliament scenarios, is there ever likely to be, particularly in this next election, any possibility in a hung parliament, of you forming a coalition with the Tories, or is that so out of the question that it's ridiculous to even discuss it?

CHARLES KENNEDY: I think at the moment it is a practical impossibility. There are such fundamental disagreements on Europe, on their whole approach to the economy, their tax and tax cutting agenda, which is not realistic, the figures don't add up, their hostility in terms of civil liberties, it is, pretty much unimaginable as things stand at the moment. Maybe they might see sense and get back into decent mainstream Conservatism but they're not showing any signs of sense at the moment.

DAVID FROST: But if, for instance, Paddy Ashdown said, that, you know, he would have found a real problem with Jack Straw in a coalition because -


DAVID FROST: of him not being a highly Liberal -


DAVID FROST: - home secretary. You might have the odd difficulty with having a, sharing a seat in a cabinet with Ann Widdecombe, possibly.

CHARLES KENNEDY: I think that would make for interesting viewing, to say the least, you could sell tickets for that one. But I don't suppose that it's remotely possible that's going to happen.

DAVID FROST: The, everybody says, you know, the thing is, and some of the polls show it, that the Labour Party has moved so much towards the middle, to the centre, that your strategic opportunity or gap is on the left, to go to the left of Labour on a number of issues.


DAVID FROST: On the other hand, that wouldn't be very good in Tory leaning seats.

CHARLES KENNEDY: Well it would be a great mistake for us to present or try and position ourselves to the left of Labour. Labour used to be the left, to the left of where they are now, and look where it got them - absolutely nowhere, except guaranteed defeat after defeat after defeat. What we're certainly going to be in this election, we're going to be more honest and transparent about taxation, we're going to say to people the emphasis - and I think the public demand out there isn't for more tax cuts, which the other two are going to have a Dutch auction about - it is for decent, better quality public services, in health, in schools, in pensions and so on. Now that will distinguish us, but I think that's more socially progressive than Labour - I don't think it's to the left of Labour.

DAVID FROST: But at the same time, I mean on, like the suggested 1p on, for education and so on -


DAVID FROST: - haven't Labour, with the new figures they've announced, aren't they spending all the money you could spend at the moment?


DAVID FROST: Will another three billion make, make a difference?

CHARLES KENNEDY: It will make a difference, because Labour stuck to the Tory spending plans for the first half of this parliament. The extra resources that are now going in are only going, to a certain extent, make up for the deficiencies that they allowed to deepen in the first half. So they've been a great disappointment. Now we do have a costed package in which we will be saying, for example, penny on income tax, 3.1 billion pounds. We'll be saying 50 pence for every pound above 100,000, that raises about another three billion - you can do a lot on pensions, on the health service with that. We will be coming forth with a package and saying 'look folks you can't get nothing for - something for nothing in this world' and I think people will respond to that because they know that's true. The Conservative figures don't even begin to add up. They're changing week by week by week. So we will have a very distinctive position I think, on these issues, and on other issues at the election - the environment, Europe, civil liberties - I think this is a big opportunity for the Lib Dems, I really do.

DAVID FROST: But in terms of the area we were just discussing, you're really saying we're the only party that's honest about our tax and spend plans.

CHARLES KENNEDY: I think we're the most honest by far - no, no doubt about that. And that's what people want to hear, people are fed up with the kind of slanging match you get at Prime Minister's questions, where it's not just the ya-boo-ery, but it's the fact that the impression would be given by the other two that somehow you can carry on eroding the tax burden and magically improving the quality of the public services. Now people know from running their own family budgets, that just doesn't work. We're going to put that on a national level, and that will be a big choice for people come this campaign.

DAVID FROST: And people say sometimes, my goodness if Charles Kennedy, if he'd joined Labour rather than the SDP, he'd be a cabinet minister now, he'd be getting twice the salary, he'd be on the road, closer on the road to being a prime minister and sometimes, do you sometimes think about that possible turning point in your ..?

CHARLES KENNEDY: I don't. Actually this week, coincidentally, marks, I think the 20th anniversary of the launch of the SDP, so I'm at my most nostalgic as we speak, thinking about this issue, but no I don't because if I look at the election manifesto I was elected on first in 1983, the then SDP/Liberal Alliance manifesto, we've stuck with consistency to our principles. Tony Blair, who was elected at the same election for the first time as me, 1983, look at the manifesto he stood on and look what he's doing today. There's not the same philosophical or principle consistency there at all. I can sleep secure at night and I'm quite happy about that.

DAVID FROST: Well I'm glad about sleeping arrangement, that's terrific, but I mean when you see the red boxes, people carrying red boxes, do you sometimes think 'I wish that was me'?

CHARLES KENNEDY: No what I really think is I wish that the contents of those red boxes, in terms of the decisions that they're leading to, were more in line with what we argue.

DAVID FROST: What did you think this week about the story, we've mentioned it today of course, how do you react to the story about the Internet babies?

CHARLES KENNEDY: Well I think like most people in the country, shock and concern. And this is a good example, of which we are seeing more and more and I suppose we will across a whole range of, if you like, moral and ethical concerns, where the instantaneous and global nature of technology is posing big international problems for governments, for politicians, for decision-makers generally. Government have got, I think in draft, some legislation which they're proceeding to bring forward now, and that's obviously something we'll look at constructively with an eye to doing anything we can to help - I hope all the parties will take the same view.

DAVID FROST: I would have thought all three parties would happily co-operate, that's what you'd like to see on this issue?

CHARLES KENNEDY: Yes, I think in fact that William Hague had already indicated that. One of my own colleagues, Mark Oaten, the MP for Winchester, who in fact earlier in this parliament had put forward his own private Member's proposals on the future of adoption, so let's hope that a lot of that good sentiment can be built into this legislation.

DAVID FROST: What about the next election Charles? Forty-seven seats. A lot of people say if you kept that figure, or near to it, you'd have done bloody well. Do you, are you really confident you can do better?

CHARLES KENNEDY: I'm very optimistic we can do better, for this reason. A year ago, under a year ago, we got our best ever national share of the vote since I've been in the House of Commons - 28 per cent at the local elections. The only parliamentary bye-election which we've seen the seat actually changing hands in the course of this parliament was when we took Romsey off the Conservatives. Now remember, the Conservatives won Romsey with a healthy enough majority on what was their worst election night for 150 years. And there they are, against a Labour government, and they lose it to us. Now if that sort of pattern is repeated, in other parts of the country at the next election, not only will the Liberal Democrats win more votes - and that's important for the PR argument in the future - but we will be taking support and seats from both the other parties. We'll make big inroads against Labour with their disillusioned supporters -

DAVID FROST: Well in fact -

CHARLES KENNEDY: - north of England, take on the Conservatives too.

DAVID FROST: - in terms of, in terms of the actual share of the vote, it was at its lowest when you got 47 seats and over the last four elections it's gone down 26, 22, 18, 17. Hasn't it?

CHARLES KENNEDY: That's right, and now we've got the credibility that having so many more MPs gives us, plus the bigger bases we're in coalition government in Wales and Scotland, we can point to things like the abolition of tuition fees in Scotland, wouldn't have happened unless we'd insisted on it, isn't happening at Westminster; free personal care for the elderly, that's going to happen in Scotland, not happening in Westminster, we've insisted on it; so we can now point to people and say that's Liberal Democrat democracy in government.

DAVID FROST: Charles, thank you very much for being with us this morning.


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