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UK Shadow Chancellor, Michael Howard
UK Shadow Chancellor, Michael Howard

BBC BREAKFAST WITH FROST INTERVIEW:

MICHAEL HOWARD MP SHADOW CHANCELLOR OF THE EXCHEQUER

OCTOBER 14TH, 2001

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

DAVID FROST:

Well with events in Afghanistan dominating the headlines it may have been hard to spot that the Conservatives held their annual conference in Blackpool this week. The new leader Iain Duncan Smith was flanked by his fledgling Shadow Cabinet before a crowd of the party faithful. One of the few faces many of them could recognise was the new Shadow Chancellor, Michael Howard, a former Home Secretary. Mr Howard certainly made his mark while in government, now he's one of the most senior MPs in the entire Shadow Cabinet, arguably the most experienced as well and he joins me here right now. Michael good morning.

MICHAEL HOWARD:

Good morning David.

DAVID FROST:

Before coming on to the sins and, of omission and commission and whatever that you see over the last week or so, the thing we just touched on there with Steve, to what extent you, would you, would you say that the botched nature of the privatisation was partially responsible?

MICHAEL HOWARD:

Hindsight's a wonderful thing isn't it? What I have absolutely no doubt is that privatisation could have been made to work. A week before Stephen Byers announced his decision last weekend the Rail Regulator said what the industry needs is stability, predictability, clarity of responsibility, sound incentives and environment that's friendly to investment. It hasn't had any of those things over the last four years, it certainly hasn't had them now and if it had those things over the last four years it could have been made to work.

DAVID FROST:

What would you have done in the current situation, if you had been Stephen Byers last Friday, nine days ago?

MICHAEL HOWARD:

I would have done exactly what the Rail Regulator whom he, his predecessor, John Prescott appointed said was needed, I would have provided what was needed, stability, predictability, clarity of responsibility, sound incentives and an environment that was friendly to investment, that's what should have been done. Instead what we've seen is naked confiscation of the worst kind, you've heard Steve Marshall talk about the thousands of employees that are affected, there are thousands of pensioners affected, there are thousands of people whose pension funds have invested in Railtrack and in a way even more fundamentally as the, as the Independent newspaper pointed out last Tuesday the capital markets have learned to their cost that they can't trust the government and that is going to have very far-reaching ramifications on the ability of the government to bring private sector money and private sector resources into the public services, the great public service infrastructure projects that matter so much for the quality of life in our country.

DAVID FROST:

And we, we heard Steve also saying there, quite surprisingly in a way, that while they wait for this decision on the rail link there is no legal action they can really take because they need the government's good will. What is there that you can do about this?

MICHAEL HOWARD:

Well what I'm going to do later today is to write to the Chairman of the Financial Services Authority and I'm going to ask him whether he intends to conduct an inquiry into what has happened. There are a number of ways in which there may well have been breaches of the regulations, for one, in one respect it's perfectly possible that investors will be able to say with some considerable justification that they have been misled following the government's announcement in April that it would make one and a half billion pounds available and its decision now to renege on that commitment. And there are also questions which a number of commentators have raised about the extent to which there was a false market in Railtrack shares because the decision to all intents and purposes must have been made before it was announced last weekend. Indeed according to one of today's newspapers the phone call to Ernst and Young to put in place the final preparations for this was made the same day as the attack on the World Trade Centre, on September the 11th, and we know what the attitude was in Stephen Byers' department to using that terrible tragedy as cover for making announcements of this kind from Jo Moore's infamous email.

DAVID FROST:

And you don't think that maybe Margaret Thatcher comes out of this the wisest of all by deciding that British Rail wouldn't be a successful privatisation?

MICHAEL HOWARD:

Well I don't know that, that that was ever a final decision that she took. In her government we had our priorities for privatisation, I don't think she's on record as ever having said she would never have privatised the railways. You need the private sector involved in order to get the investment which is necessary, a huge amount of investment is necessary and as other privatisations have proved that is the way to bring in the investment that's needed to improve the services that people want. Now it could have been made to work as the Rail Regulator pointed out just a week before the announcement last weekend.

DAVID FROST:

Do you think we are entering a phase where the government will indeed, as people say, may have to consider raising taxes or cutting public spending and which of those two would you dożas Shadow Chancellor, as Chancellor?

MICHAEL HOWARD:

I think that's, that's perfectly possible, I don't have the up-to-date information on, on, on the figures and I'm, I wait to see the figures with great interest. What is clear, if your question is about the state of the economy more generally, what is clear is that there were problems before September the 11th, we as a country were spending more than we were earning, there had been a balance of payments deficit for five years, the first time that's happened since the 1880s or 1870s, the government was planning to spend more money at faster rates than the economy was growing and most worryingly of all our competitiveness was slipping, we'd gone from 9th to 19th in the world competitiveness league and that affects the ability of every British business to win orders and create jobs and that is what it's all about.

DAVID FROST:

At the same time things like inflation and all those things were, were looking pretty good. But Michael thank you very much for being here this morning.

MICHAEL HOWARD:

Thank you David.

DAVID FROST:

Pleasure to welcome you back.

END


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