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BBC BREAKFAST WITH FROST INTERVIEW
MICHAEL PORTILLO MP JULY 16TH, 2000

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

DAVID FROST
Now at the last election Michael Portillo made an unexpected exit from national politics at that point, but last year he was re-elected to the Commons and this past week he's been at the forefront of our politics. The Tories' absolute guarantee on cutting taxes, whatever the economic circumstances, has been modified but the promise to lower planned government spending is very much on, as one commentator said last week, we've finally got a real divide in politics again. Michael, good morning.

MICHAEL PORTILLO
Good morning to you David.

DAVID FROST
First of all a word about the tax guarantee, it had to, it had to be modified in terms of being unconditional, didn't it?

MICHAEL PORTILLO
Well it was certainly being misunderstood, misrepresented and we wanted anyway to move to something that was more specific and more solid, we wanted to be able to give people the assurance that we will plan the public finances in such a way that we would raise public spending, have more money for public services but raise it in a responsible way, in a sustainable way that also then allowed room for there to be tax reductions during the time of our period in office.

DAVID FROST
Coming on to that spending, you've said that overall public spending will grow less quickly, certainly not more quickly than the economy as a whole and people have done various calculations from, I think the IFS said that, that in the third year would mean a difference of £12 billion in reduction, some have said £16 billion, where would that come from?

MICHAEL PORTILLO
Well none of those figures work in that way for two reasons. The first is that the government's figures for what it's going to spend are really castles in the air, I mean as you were saying to me about tax guarantee, you know, can you guarantee that in any circumstances, you know you have to say to the government are you really telling me that in four years time you're going to be spending all these extra billions, you're going to be increasing public spending every year much faster than our national income is growing, whatever the economic circumstances? Even if the economy goes into decline? Even if the tax revenues don't occur? Are you guaranteeing us all that money? So that's the first thing, I would say you can't compare my plans with theirs because mine are clearly sustainable and theirs are not clearly sustainable.

DAVID FROST
Well they would say they are sustainable, partially of course by the increase in taxes and so on, that they're, they're confident that in the worst circumstances there'd only be a one per cent borrowing requirement in one year which was three per cent under the Tories?

MICHAEL PORTILLO
No, no, that's not the worst circumstances David, they are counting on the economy growing every single year by about two and a quarter per cent, they are counting on the economy having grown for 12 successive years. Now in what period in our history have we seen 12 successive years of growth? And what happens if that doesn't happen because none of us knows the future, surely the only prudent thing to do is to plan to increase public spending, have more for public services but to do it in a way that is sustainable, to do it within the increase in income in the country. I mean no family would plan on the basis that in four years time it was going to be routinely every year spending more money than it earned and no business, I think, would plan on that basis either. And so one really has to ask why the Chancellor of the Exchequer has made this amazing u-turn, why he's given up all claim to be prudent. But you know at the time of the election they were saying to us public spending isn't everything, public spending, they said, isn't the way to reduce unfairness or poverty and it's not worked because what matters is the effectiveness of public spending. And during the first years of this government of course what people have seen is that the Chancellor has said, oh I've spent £19 billion more on education, I've spent £21 billion more on health, but people I think now are entitled to say, oh really, well what happened to that because the health service is no better, the morale in the health service is actually lower, the waiting lists are longer, the hospitals are dirtier, the classrooms and the class sizes in our schools are bigger, there are fewer policemen. You've not been spending the money effectively.

DAVID FROST
But if however you're going to be stricter on this then the likelihood is that you will be spending less on public services whether it's £12 billion or £16 billion?

MICHAEL PORTILLO
Well we¿

DAVID FROST
On all, on all the measures that one looks at at the moment?

MICHAEL PORTILLO
Well we're going to have to be more prudent about it but I, but I, again I think commonsense tells people that if you're more prudent about money that means you're going to get better value for money, you're going to spend it better. I mean anybody who has any contact with government and everybody does when they go to the social security office, when they go to their local authority, nobody has the impression, do they? That the government is spending all of our money just as efficiently and just as perfectly as it could possibly be spent. Do you know the government spends £11,500 of our money every second, every second and are you telling me that that money is being perfectly spent? So when this government came to office they said the important thing was how well money was spent, they said they were going to bear down on ministers who weren't efficient, they weren't going to give them more money until they'd cleaned up their act, they said they were going to save money on the welfare budget. But all of that has gone out the window now and all they're talking about is more and more public spending and that is coming from people, and that is coming from people who can ill-afford to pay it because you know what this Chancellor has done? He's not like Denis Healey, he's not a Chancellor who says you know I'm going to squeeze the rich until the pips squeak, remember Denis Healey saying that. This Chancellor has put, put the extra taxation on petrol and he's abolished married couple's allowance, he's abolished mortgage interest relief and he's taxed cigarettes and he's taxed alcohol and this money therefore is coming from, from ordinary families and it's coming from pensioners, it's coming from people who can ill-afford it and it's been taken from all those people by the Chancellor so that he can have the gratification of saying look how generous I'm being.

DAVID FROST
But at the same time you clearly would be expected to and even wanting to probably, spend less on public services than Labour are going to do and in fact to find the space for some tax cuts, so when they say that you will spend less than that you would say proudly that you would, would you?

MICHAEL PORTILLO
I would say proudly that we're going to do something that is sustainable. I mean what happens to Labour at the end of their three years when they've, they've got a surplus at the moment, you see, they've built up a surplus but now they're planning to blow all that, that's all going to be spent, then we're going to go back into deficit and still the spending is going to go on year after year, more than the country is actually growing, more than the economy is growing, they're going to go on spending it so then the only option they've got is to raise taxes again and then on, and on, and on, now that isn't sustainable because we know that piling taxes onto the economy makes the economy work less well.

DAVID FROST
But, but, but why don't you just say simply you must, you must logically spend less on public services to fulfil the things about tax cuts and your criticisms right now of Labour's spending, you are going to spend less on public services, aren't you?

MICHAEL PORTILLO
But what I want to¿

DAVID FROST
But aren't you¿

MICHAEL PORTILLO
But what I want to¿

DAVID FROST
But aren't you?

MICHAEL PORTILLO
But what I want¿

DAVID FROST
But aren't you?

MICHAEL PORTILLO
Well I want you to¿

DAVID FROST
But aren't you?

MICHAEL PORTILLO
Is a clear impression¿

DAVID FROST
We shall equal in a minute the Michael Howard interview, but you are aren't you?

MICHAEL PORTILLO
We are going to sustain a level of public spending over the years but I reckon actually on my policy that over the years I will be able to spend more on public services.

DAVID FROST
More?

MICHAEL PORTILLO
More because the economy will not go on growing if you put this great burden of tax onto it which Labour is planning to do. In other words it's so familiar this, Labour is having a splurge and we all know what happens to splurges, they end in things going wrong and then everything has to be cut back and everything has to be you know cut back to the bone again, now I'm saying if you plan on a sustainable policy of public spending then year after year you can do that, the thing won't go wrong, the thing won't come apart in your hands, you'll be able to spend more. But in the, in the intervening years when we're keeping control of public spending, making sure that it grows just as fast as the economy, in those years we're putting pressure on civil servants, on people who administer our budgets to do things more efficiently, to achieve value for money.

DAVID FROST
Yes¿

MICHAEL PORTILLO
To get rid of bureaucracy, to get rid of red tape, all the things that at one time Labour claimed that it was in favour of¿

DAVID FROST
But whenever people say that it never materialises, waste and all that stuff is all, is a sort of alibi?

MICHAEL PORTILLO
No don't be so defeatist, if we are spending £11,500 of taxpayer's money every second don't be so defeatist as to say we can never spend it better than we spend it now. I mean anybody who goes down to the social security office or anybody who goes to their local authority I think would give you 100 suggestions as to how you could do things better.

DAVID FROST
That's possibly true in those, those micro-areas like¿and maybe in some mega areas but the thing remains however, that you're going to have to not do some things that Labour, I mean William Hague has said that whatever Labour's spending is on the health service, that that's sacrosanct, but that means that presumably that education, defence, law and order are not sacrosanct?

MICHAEL PORTILLO
Well for a rate at which we plan to spend money is going to be different from Labour's rate. Now because our policy is sustainable I think that over the years we will be actually be able to put more into public services than Labour because they are splurging and we are committing ourselves to something which is absolutely sustainable and consistent. I think, I think that is a very important point.

DAVID FROST
But where would you make the economies that you would have to make if you're going to make tax cuts?

MICHAEL PORTILLO
But in any case, look I just don't accept that Labour's figures are any sort of baseline against which we should judge ourselves. You must, you must ask Labour ministers, you must say to them, if you would, my modest proposal David, you must say to them are you guaranteeing this money? Are you saying that in four years time you're going to spend all these billions whatever's happened to the economy, even if against your best hopes the economy's gone down, the tax revenue isn't there, the deficit is spiralling, you're going to go on committing yourself to spending much more year by year than the economy is actually growing? I mean that's quite an interesting question, isn't it? If they, if they say yes they're guaranteeing it in any circumstances I think there'll be a fantastic loss of confidence in this government.

DAVID FROST
Because rather like your tax cuts guarantee, you can't say anything, you're saying you can't, you can't say and they can't say anything three or four years ahead with a guarantee or with a certainty?

MICHAEL PORTILLO
Well what you can plan on is what we're planning on, that you would go on spending at a rate that over, over many years of history has proved to be sustainable. I mean many years of history says, you know, the British economy grows two, two and a quarter per cent a year. But what they're betting on is something that has never happened before and that, that is why ours, our approach, I think, is reasonable and prudent, why their approach is imprudent. But what I think people have to ask is, you know why are they making so many promises when they've broken all their promises before.

DAVID FROST
They've not broken all their promises, there are a few but there are a number that have, out of that 170-odd that have definitely come through, but not all their policies?

MICHAEL PORTILLO
Well the ones that they got elected on, you go out there and ask people if they really think that the health service has got better you'll get a resounding raspberry from the British people. You go out and ask them if they think that standards in education have improved, you go out there and ask them whether they've done anything about law and order, crime is rising, there are fewer policemen than there used to be. These were the promises on which they were elected David¿

DAVID FROST
But five promises they really pledged though¿

MICHAEL PORTILLO
The, what class sizes, absolutely was.

DAVID FROST
Yeah well class sizes¿they're going to deliver on that?

MICHAEL PORTILLO
Waiting lists have, well they're not overall, not overall, the class size¿

DAVID FROST
In the, in the pledge that they made they're going to come up, not secondary schools admittedly but in terms of primary schools they're going to deliver on that?

MICHAEL PORTILLO
Well David I don't think when people elected Labour that they thought it was the tiny little promises so that they could find a clever way of saying they've met it after three or four years. The fact is people were told that health was going to get better and education was going to get better and the last time that Gordon Brown made a big public spending announcement which was in 1998, he said here's £21 billion for health and here's £19 billion for education and he said all our problems are going to be over, this is going to be a transformation of health, a transformation of education and people know he's simply hasn't delivered. What they're aware of is that he's put this huge amount of tax onto them, £670 for every family of extra tax, this enormous tax on petrol, a very unfair tax now.

DAVID FROST
Would you reduce the tax on petrol definitely, would you give a guarantee on that?

MICHAEL PORTILLO
Well¿I, I'm not getting into the business of guarantees, what I will do at the time of the next election is I will show you how I will be able to reduce taxes and then I will tell you what my priorities within that would be.

DAVID FROST
And what would be your priorities on borrowing, I mean you've got, Gordon Brown's got the golden rule and the sustainable investment rule, would they be your two golden rules or would you have a different criteria for borrowing?

MICHAEL PORTILLO
Well I'll, I'll have to look at Gordon's rules because he has a, he has a habit of, of breaking his own rules I'm afraid, I mean he's a great one for making one thing appear like another and you know whenever he makes a statement everybody rushes to the small print and everybody looks at what he doesn't say rather than what he does say so I will want to have a very good look at his promises and his rules and whether he's really keeping them or not. I think everybody knows that when he makes his statement on Tuesday they'll want to check and double-check the figures because there'll be stuff there that's been announced and re-announced and figures that aren't new figures and there'll be small print and there'll be all sorts of tricks and devices in there. I mean even the BBC, you know, at the time of the last budget advertised its budget coverage by saying we're going to tell you all the things that the Chancellor isn't going to tell you because we've got to a stage now that whenever the Chancellor gets up people simply don't believe what he says.

DAVID FROST
I still don't see how you'll do as well as Labour when spending a lot less money, as you said it takes time for the money to come through and the benefits to be seen as I'm sure things are coming through with education and so on, but I just don't see Michael, in terms of the overall penumbra of what you've been saying, how you can do better than Labour with less money?

MICHAEL PORTILLO
But spending, as Labour used to say, isn't everything and what is important is that we should be on a sustained course. What we can do in three years, a binge, a great big party is not the party, the point is what can we do year after year. The point is that we in the Conservative Party are ambitious for Britain in the long-term, we don't just believe that having raised people's taxes as they have, we should blow all the money in three years, gain great credit¿they want to win the election, they want to spend their way to winning an election bribing the electorate with their own money, they have no care for tomorrow, they don't care whether this is sustainable, they don't care what's going to happen after three years.

DAVID FROST
So is this, is the equation that people have been writing about this week Michael, that it's, Labour tax more but spend more, Conservatives tax less but spend less, I mean is that the choice?

MICHAEL PORTILLO
No I would say it was Labour tax more and deliver less, Conservatives tax less and deliver better.

DAVID FROST
So that¿

MICHAEL PORTILLO
We spend our money better and everybody knows this, if you put pressure on a budget actually you make people do better, you get value for money. If people think there's an unlimited amount of money coming in there'll make no effort to spend it better, they'll be, they'll make no effort to take care of the money. I mean Gordon Brown has got to the stage, I'm afraid, where he's forgotten that the money comes from ordinary people, they've completely lost touch this Labour government, with ordinary people, they don't realise that £670 on a family's spending which is the extra amount of tax they're paying is a huge amount of money for ordinary people. It's the difference between living comfortably and living at the edge, they don't realise that paying £50 to fill the tank of the car with petrol is a serious amount of money because Labour have now lost touch with their ordinary voters and people that I speak to are well aware of the tax increases, they can see that, that is absolutely evident but they don't believe the promises because they've had so many promises from Labour, they've been told that Labour has spent so much and they've seen so little for it, no improvement in health, no improvement in education, a deterioration in crime, fewer policemen, that is not a very impressive record.

DAVID FROST
We'll leave it there Michael, thank you very much indeed, and we'll obviously be talking to Mo Mowlam later on who may take a slightly different view¿

MICHAEL PORTILLO
It's possible.

DAVID FROST
It's possible, it's possible.

END

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