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Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST: And now as promised, we said we'd have the Shadow Chancellor, Michael Portillo, and indeed we do. Good morning. How are you Michael?

MICHAEL PORTILLO: Good morning David, very well.

DAVID FROST: The news this week about the wider range of things that you're going to match Labour on, not just health and education but transport, defence and law and order and so on, is a tremendous tribute to the shrewdness of the judgement of Gordon Brown, is it really that you think he got these figures about right?

MICHAEL PORTILLO: We, we think he's got his main figures absolutely wrong, which is that he wants government spending to grow faster than the underlying growth rate of the economy, which means in plain language that he wants to spend more than the country can afford.

DAVID FROST: But if you're going to do exactly what he's doing in health, education, transport, defence and law and order -

MICHAEL PORTILLO: Then we're going to do different things elsewhere. Which is how we made eight billion pounds worth of savings against his numbers, and that is a very significant difference because it is the difference between growing the economy - sorry growing government spending faster than the economy is growing, or growing government spending in line with what the economy can afford, that's a big difference. And also eight billion pounds, which we can then give back to people in tax reductions, the people who've been paying too much tax under Gordon Brown, will be a very significant help to them. And the people I'm talking about in particular are pensioners, who have paid far too much tax under Gordon Brown, hard-working families, people who are trying to save, who really have been caned by Gordon Brown, and small businesses. These will be the people that we will be targeting tax cuts. Because I think Gordon Brown has long ago forgotten that the money that he disposes of, that he spends, is not Gordon Brown's money, it is the people's money, and he doesn't have a right to spend it all. But the people who created the money, the people of this country, have a right to keep some of it for themselves, and that's what we'll do for them.

DAVID FROST: The perennial battles, obviously, as you know Michael, is to make people believe that it's possible for you to cut eight billion or 16 billion or whatever the figure is -

MICHAEL PORTILLO: That's eight billion.

DAVID FROST: Yeah, I know -

MICHAEL PORTILLO: It's eight billion.

DAVID FROST: Debated -

MICHAEL PORTILLO: No, no, there is no debate, I mean these are our plans after all aren't they and we have a right to tell you what our plans are. You can, certainly you can debate our plans, you can disagree with our plans, but we, we have the right to tell you what the plan is. Our plan is that by the year 2003-4, that's the year that begins, the financial year that begins two years after the election, we would save eight billion pounds on Labour's plans. Now that means actually that we would increase public spending by about 63 billion pounds, and Labour are planning to increase it by 71 billion pounds - the difference between us is eight billion. And we have laid out, in great detail, where we would make those savings. We'd make them in the Department of Trade & Industry, the Department of the Environment, Transport & Regions, we'd make them by changing some of the welfare policies, tackling welfare reform, in a way that Gordon Brown said he would before the election but hasn't.

DAVID FROST: But then, but if, just these, here, people have been having fun with these things so they say here, here this is a Labour speech, but how can they save 500 million from lone parents with children over 11 when to do this they assume every lone parent goes back to work on day one -

MICHAEL PORTILLO: No but we don't talk about that.

DAVID FROST: - on the same day they abolish the New Deal for Lone Parents.

MICHAEL PORTILLO: But you see that -

DAVID FROST: Over to you.

MICHAEL PORTILLO: Well that's a typical Labour misrepresentation, first of all I've already told you that all our figures are for what happens in the year that begins two years' after the election, so nobody's saying it's going to happen the next day. But let me tell you the amount of income support, claimed by lone parents whose children are over 11, is 725 million pounds, and on top of that they get housing benefit and they get council tax benefit as well, so it's a very large sum indeed. And we are saying indeed that after two years we could save a proportion of that which would be 500 million pounds. We're not, we're not saying we're going to save it all - of course we're not - and we're not saying we're going to save it the day after - all these figures have been done very, very carefully, they've all been worked out, and the more that Labour misrepresent them and the more that Labour misrepresent the calculations that underlie them, the more actually I think to serious observers, they'll prove that we have done our homework.

DAVID FROST: Well here's another one, we can't go through the whole lot -

MICHAEL PORTILLO: No, but I have to take the one you're asking me about.

DAVID FROST: Here's, here's just one more. How can they save 200 million from regional assemblies when the government is not spending any money on them at all and has no plans to?

MICHAEL PORTILLO: Well that is a disgraceful statement by the Labour Party because they are committed to regional assemblies. John Prescott says day after day that he's committed to regional assemblies, and we've asked a parliamentary question as to what would be the annual cost of the regional assemblies and the answer is 205 million pounds, now Labour can't have it both ways, they can't say we're committed to regional assemblies, John Prescott tells us we're going to have regional assemblies, we've costed them as 205 million pounds but we're not going to spend it - now that really is Micky Mouse economics by Labour isn't it? That money must be in the figures because they have promised to do it. And of course we will not do it, and therefore we will save money.

DAVID FROST: That's a very good debating point, there is no planned expenditure for elected regional government they say. Anyway, there's -

MICHAEL PORTILLO: Well that - if that were the case, that would mean that Labour was telling lies and I, I just am not prepared to believe that they are telling lies about their intentions, are you?

DAVID FROST: But what about this unsustainable level of spending that - I know you're only going to do it for two or three years but I mean it's going to be repugnant to you isn't it?

MICHAEL PORTILLO: What you mean that in the first year we have to live with Labour's figures?

DAVID FROST: Yes.

MICHAEL PORTILLO: Well I mean that's a fact of life. You know, if you are steering your supertanker it takes a while to turn it round, you just have to be very, very frank about that. I think we're in a, a dangerous position as a nation because the government has committed us to spending more each year than the nation can afford and that's over four years, this year and the next three. And this is at a time when people are feeling jittery about what's happening in the United States, we don't know what's going to happen next. This will be a time for governments to follow prudent policies. Unfortunately Gordon Brown is following an imprudent policy, this is the time when he's chosen to promise the earth to everybody in Britain, having promised them before, by the way, and failed to deliver, pitifully. Not only having promised not to put up their taxes and then having done so, but also having promised better public services and having failed on that, he now believes that his best tactic is to promise the moon and the earth again. But this is not the time to be doing that because we ought to be growing our government spending only in line with what the nation can afford, at a time when we don't know what lies around the corner because of the upsets in the American economy.

DAVID FROST: What, what is your view, what is your prediction about the American economy?

MICHAEL PORTILLO: I, I make no prediction. I think the job of a chancellor, and the job of a shadow chancellor, is not so much to make predictions as to follow policies that will be robust in any circumstances, including even bad circumstances. My policies would be robust in any circumstances, my policies would protect the British economy against whatever might happen abroad. Gordon Brown is exposing the British economy to the worst of the storms outside.

DAVID FROST: What do you feel about the debate this week on abortion? Liam Fox wanting, if possible, for abortion to be stopped?

MICHAEL PORTILLO: Well I think the important thing to say is that the Conservative Party has no line on abortion, will never have any line on abortion, does not wish to raise a debate on abortion, will not mention abortion in the manifesto, this is not a matter of party politics in Britain and as far as I'm concerned it never will become so.

DAVID FROST: And as a former minister of defence, were you glad that William was welcoming the idea of women in the front line?

MICHAEL PORTILLO: Well many women want to be in the front line and that's what I think William was reflecting. Actually many women are in the front line, of course they serve on Royal Navy ships and if they're involved in war they're on the front line. I've met women recently who are serving in AS 90, guns, in those guns on tracks, which will be at the front line, so there has been some movement in this direction. I think the ultimate decision for how far that goes, how far it can be extended, must be a question for the chiefs of staff, the Chief of Defence Staff and the chiefs of the three forces.

DAVID FROST: Inevitably one has to mention at these times, with perhaps three months to go to the election, the latest opinion poll which was 50/31 for Labour and all the statistics that show that governments always catch up more than oppositions in the period leading right up to an election and so on - how could - how can you perform a miracle?

MICHAEL PORTILLO: Well let me give you some other statistics. The national elections that have been held since the last general election have been the local elections and the European elections - and the Conservatives won both of those. There's been a high propensity of Conservative voters turn out and a low propensity for Labour voters to turn out. The other thing is, I remember at the end of July last year, Labour were this sort of margin ahead. By September we were ahead. Because, you know, in politics some, sometimes something happens and opinion is volatile. We, we have recorded recently, we think something like 32 per cent of people haven't made up their minds - now that's easily enough to decide the election. So there's everything to play for, the volatility is there and we showed last year that in the space of six weeks the opinion polls can go absolutely belly up.

DAVID FROST: So that's, that's the hope?

MICHAEL PORTILLO: Well it's not, it's - all right, it's what we want to happen but we're not hoping for it, we're working for it.

DAVID FROST: Working for it. And you think it can come to pass?

MICHAEL PORTILLO: I think it can come to pass and what we're doing now - I've laid out our plans for public spending, I'm now going to lay out our plans for taxation, and more importantly for our vision of society. I tell you what appals me under Gordon Brown is the way that progressively people have been dragged into dependence on the state. He's taxed our pension funds, he's made people save much less money for the future, people feel less confident about the future and meanwhile at the other end pensioners are being means-tested, more and more pensioners brought into means tests, more and more he has to apply elastoplast to the system. I want a completely different sort of society. I want a society in which people are encouraged to save, feel that it's worthwhile to save and when they've reached retirement they look back on their lives and they realise that it was worthwhile saving. And we're going to produce major changes, major reforms to encourage the society in which people save for the future. That's going to be the Hague society as opposed to the welfare society of Gordon Brown.

DAVID FROST: Michael thank you very much for being here this morning, we thank you, Michael Portillo, and now an update on the news headlines. [NEWS] DAVID FROST: They say you are no longer hungry for power Michael.

MICHAEL PORTILLO: We are all hungry - not for power but for the opportunity to serve, and we're going to fight very hard.

DAVID FROST: But you would still like to be leader one day?

MICHAEL PORTILLO: We'd all like to be serving our country in office, as a government under William Hague, thank you.

DAVID FROST: There we are, our thanks to all of our guests and we're back at the same time next Sunday.

INTERVIEW ENDS

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