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Sunday, 12 November, 2000, 14:26 GMT
Chancellor Gordon Brown

DAVID FROST: America has of course not been the only political story this week, far from it, on Wednesday the Chancellor's autumn statement was eagerly awaited by the many groups who were expecting some goodies from Gordon Brown. But did the measures in the pre-budget statement buy off the truckers who are heading for London this morning and who have given the government just that 60 day margin in which to come up with a response that they regard as satisfactory, top of the morning, Chancellor, Gordon, how are you?

GORDON BROWN: Good morning, fascinating story from America isn't it.

DAVID FROST: Isn't it.

GORDON BROWN: I think they should have taken our electoral system as well.

DAVID FROST: Well a lot of people are saying they ought to also have our Royal system too because if you separate out the head of state and the head of government it's, it's less sort of traumatic I think. But, but does the result matter to, to you or are both, both men likely to be equally pro-British?

GORDON BROWN: I think both are friends of Britain and I think we could look forward to working with either.

DAVID FROST: Yes indeed, and incidentally it's the first time you've been with us since your marriage and so congratulations again on that.

GORDON BROWN: Very kind of you.

DAVID FROST: How has marriage changed your life?

GORDON BROWN: It's been wonderful except the, the first day we were married one television company, not the BBC, sent us a letter of congratulations with flowers and it said to Gordon and Sharon they got the name wrong, we've been joking about it ever since.

DAVID FROST: Gordon and Sharon, she's not a Sharon, she really isn't. Well it's very good to have you with us and let's begin with the reactions, did you hear what Michael Portillo was saying earlier or were on you on the way in?

GORDON BROWN: I did indeed.

DAVID FROST: A response to that first.

GORDON BROWN: Well I think the Conservatives have got to answer this question, where are these £16 billion of cuts going to come from and it's no good them saying that there should be lower taxes, if they can't say where the cuts in education and health and transport and social services are going to come from. And it's no good them promising tax cuts if it means that the country would return to the old stop-go, boom and bust and my fear is under the present Conservative policies we'd both have £16 billion of cuts in health and education and social services but we'd also be back to these bad old days of negative equity where without strong management of the economy, fiscal prudence, the Bank of England disciplined rules for monetary policy, it would have this boom and bust and it's that that I'm determined to escape from. So different pressure groups feel that they don't get what they want from us in every way but it's because I'm determined to get the balance right, we want low interest rates, we want to invest in our public services and we'll be investing more in the roads tomorrow, the £200 million more in road repairs will be announced by Lord MacDonald tomorrow and we also want to be fair on taxes as well. But we have got to get that balance right and not just the pre-budget report but the budget which is going to come in, obviously next year, we will get the balance right there as well, the balance between keeping interest rates low and investing in the future and having fairness.

DAVID FROST: Because people do say, some people do say, don't they because of the pre-budget that does endanger interest rates, that interest rates may have to up as a result of that, but that doesn't concern you?

GORDON BROWN: Well we have our pre-budget report on Wednesday, all the figures go to the Bank of England in advance, they make the interest rate decisions and of course they kept interest rates on hold on Thursday and we are seeing a period where because of the good prudent management, I believe, of the economy interest rates are being kept low and on average they're four per cent lower than they were in the last 20 years and that means that people's mortgages are more than £1,000 lower than they would have been and that is where people are starting to see the progress in the standards of living which is back up by good earning figures and I believe by the cut in the basic rate of income tax we brought in.

DAVID FROST: So don't worry too much about interest rates going up, that's your message?

GORDON BROWN: Well that's a decision for the Bank of England, I, I will run and, I want the Bank of England to have its independence enhanced in the way that we have done but of course we will run the financial policies in such a way that we can keep interest rates low.

DAVID FROST: What about, the couple of stories in today's papers we ought to just turn to. In the News of the World Europe ban on Brown fuel plan, Chancellor Gordon Brown is squaring up to Brussels after it threatened to block his plans to help British truckers, is there truth in that?

GORDON BROWN: We will stand up for our plans because they're the right plans and of course there is a European vignette which is the equivalent of the Brit-disc in other countries and I'm not going to have the Commission telling us in Britain that when we want to have a fair system of, of paying for licence fees for foreign hauliers using British roads that we cannot do it. So the Commission knows that when we came into government we had a fight with them on VAT and fuel but we got it reduced and I believe that we will win this, this battle because in other countries can do it Britain must have the right to be able to do it as well.

DAVID FROST: Yes and you're sure we have that legal right, or moral right, you're confident we will?

GORDON BROWN: We've both and of course it has been a problem for some time that foreign lorries using British roads neither pay tolls on the roads as our lorries do in France, nor do they pay the disc that they have to do in Germany and Netherlands and other countries like Italy. So to introduce this Brit-disc which is a payment the foreign lorries would have to make to use British roads is in my view not only fair but it's long overdue and once we get the administrative arrangements in I'm sure that the scheme that we will put to the Commission will not only be acceptable but they will have no grounds on which to turn it down.

DAVID FROST: And what about, and what about, we've talked about pensioners and so on, what about the other needy as a result of these floods, the farmers and the people who've suffered such damage to their homes?

GORDON BROWN: Well John Prescott as you know announced £51 million last Saturday and that is to help with the flood damage. As far as the farmers are concerned I think we will have to look at a situation which is developing where a lot of land is flooded, a lot of crops are therefore in difficulty, a lot of planting is going to be difficult and I will look at that situation with Nick Brown the Agriculture Minister. We've got to be aware that these are unique floods, they're causing enormous amounts of damage, the government stands ready to looking at what we can do to help.

DAVID FROST: And, and how long will that take to work out, do you think?

GORDON BROWN: Well we'll be talking obviously to the Agriculture Department and they talk constantly to the farmers and that, I think we've got to look at this as a very special problem that has developed over these last few weeks.

DAVID FROST: Extraordinary problem, yes indeed. What about the revelations of the, how the Dome decision was made in the Mail on Sunday today, look at that what were your reflections on that?

GORDON BROWN: Well I'm not sure reading it if this is the meeting that I was actually at and I don't know about this minute, I've never seen this minute, I've never seen this report, it's never been circulated to me but there are two things I think matter about the Dome. First of all we as ministers accept collective responsibility, the whole Cabinet accepts that once a decision is made it is the Cabinet's decision, the government's decision and we decided that we would continue the project which had been started by the Conservatives and started by a Cabinet that included Mr Hague and I think the second thing that comes out of these decisions is that we did make a decision also that no money would go from the Treasury, no money that could have gone to health¿

.. DAVID FROST: You said no public money?

GORDON BROWN: No public money, there is lottery money but there is no¿

DAVID FROST: Which is sort of half public money¿three quarters public money?

GORDON BROWN: But I think the important point here is that there is no money going from the Treasury that could have gone either to health or to education or to pensions or to child benefit, there is no public money in that sense, money raised by our taxation system for purposes other than the Dome, for health and education and we decided that there'd be none of that money could be diverted to the Dome and I think it's important to recognise that throughout the whole project it has been funded by the Millennium Commission and not by money that could have gone to health, education or the public services generally.

DAVID FROST: Well although the money could have gone to other good causes, some of which might be a school that needs trampolines¿

GORDON BROWN: Yes but Parliament had decided that the millennium would be marked in with the Commission Millennium, we set it up to mark the millennium and of course there were different views about what should be done but we inherited a project, we were indeed asked by our predecessors to keep it, keep it going. Tony Blair read out in Parliament last week all the detailed decisions that have been made before we came into government and I accept that there is a collective responsibility on behalf of the Cabinet and the government for our decisions. But I do think the opposition should accept some responsibility for the original idea and indeed the visitor number targets which are the reason why the Dome has been in difficulty because they haven't been met were actually set down by the previous government.

DAVID FROST: But if you, if you look around your colleagues around the Cabinet table, if you were making that decision again you might make a different one?

GORDON BROWN: Well these were decisions made within a few weeks of coming into government but I don't think there's any point in going back at what we ought to have done, or should have done at that point. We have got to accept responsibility collectively for making that decision.

DAVID FROST: The FT and the Mail both had stories on the same day saying no tax cuts for five years, your deputy Andrew Smith has confirmed that you would have to borrow, it said, £11 billion in 2003/ 2004. The commitment to increase spending above growth meant that that was inevitable, is that true?

GORDON BROWN: Well I think you're trying to ask me and it's very kind of you to do so, on a programme a few months before the budget to announce the budget.

DAVID FROST: It is way head of the budget?

GORDON BROWN: Far better, far better to do it on this programme than in the House of Commons but you're not going to tempt me into saying what's in the budget. What we will always try to do is get this balance right between low interest rates and low inflation obviously, good public services and investing more and as I said we're doubling expenditure on the roads tomorrow so we can maintain the level of roads and that will be announced as well as on health and education and having a fair taxation system. Now we've cut the basic rate of tax from 23p to 22p, we've introduced a 10p starting rate of tax, we've cut corporation tax from 33 to 30, we've got a long-term capital gains tax cut from 40p to 10p, we've got a small business tax rate of 10p so we have cut the rates of taxation when we can do so and we're introducing a new family tax credit in March which could be worth about £10 to the, to the ordinary family. So when we can do so we have targeted our tax cuts on the priorities that I think are the country's priorities.

DAVID FROST: But the, but obviously the total tax burden as we know, this perennial tale, the figures that came out this week do show that the total tax take today is higher than taxation level you inherited in 1997, doesn't it? I mean it was, 1997 was 35.2 and then it 36.5, 37, 36.9 this year and up again 37.3 next year. So once and for all we can put that to bed, the tax burden has gone up under Labour, it may be because of success in business bringing in more tax, but the tax burden mathematically has gone up?

GORDON BROWN: The figures you're giving, it went up and then it came down, I believe from this year to, to, to, to next year and then the years after, the forecast we give are that it would be even and then perhaps even fall but these are all forecasts. It depends not only on the decisions you take about rates but on the strength of economic growth so if there's a million more people in work they are paying their taxes and paying their revenues and more money will, will come in. What I'm trying to do is to create a fair tax system and by cutting the basic rate, introducing a 10p rate, we've introduced the new working families tax credit which benefits a million people and that's very similar to what happens in America the, the, you get a tax and benefit integration so you can get the tax system paying people money which is very unique and Ronald Reagan had it in the States, we've got it in Britain now so we're introducing tax reforms that I believe are fair.

DAVID FROST: But you, understood, but you would agree with me that 36.9 per cent this year is higher than 35.2 in 1996 ?

GORDON BROWN: It's higher but it's lower than the 37 per cent the year before so it goes up and down¿a lot depends on economic growth but look at the rates and look at our general policy for fair taxation for the future and I believe people will see us helping those people who are trying to get into jobs, to work hard, to reward enterprise, these are the aims of our taxation system and incidentally also to reward savings and to encourage investment.

DAVID FROST: Thank you very much for being with us this morning Gordon.

GORDON BROWN: Thank you.

DAVID FROST: It's always a, a great pleasure to have you with us, thank you very much indeed and I know you're off now to the, to the service.

END

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