On the Politics Show, Sunday, 15 February 2009, Jon Sopel interviewed The Conservative Leader, David Cameron MP.
The David Cameron interview Sunday, 15 February 2009
JON SOPEL: I'm joined now by the Conservative Party Leader, David Cameron. Welcome to the Politics Show. Thanks very much for being with us. So, should these bonuses be paid.
DAVID CAMERON: Basically no. I mean those banks that are owned by the taxpayer or where the taxpayer has a lot of stake, it's completely wrong to be paying bonuses. I warned the Prime Minister about this back in October. The Prime Minister said then, he was going to lay down conditions, but he seems to have been completely asleep on the job and the government have been completely incompetent on this. I think the key point here is the taxpayer, people who work hard, who put money and paid their taxes are seeing billions of pounds of taxes go in to these banks and yet, large bonuses are still being paid. Now that is just wrong, and people watching this programme will think why are my hard earned taxes going to support these banks and then being paid out in bonuses. Now of course … (interjection) …
JON SOPEL: I just want to be clear about what you mean. Do you mean nobody gets a bonus.
DAVID CAMERON: No, I'm not going to, I, I wouldn't deny the teller in the bank, the one thousand or the two thousand pound bonus if they were on a modest salary, of course, you know, in fact I mean most organisations when they do incredibly badly and 2008 will go down as a disastrous year for these banks, most organisations would see actually bonuses affected for everybody. But I wouldn't stipulate that you couldn't have the one or two thousand pound bonus for those sorts of staff.
JON SOPEL: Why not. Why not when they've taken taxpayers billions. Their bonus is that they've still got jobs. There are an awful lot of people who've been unprotected in the jobs market, who have been made unemployed, bonus or no bonus.
DAVID CAMERON: Well I think you have to have a limit somewhere and I'm saying, I think one or two thousand pounds, to the person who's you know, absolutely blameless who's been working in the branch of Lloyds in Witney High Street, who've met all their targets and done everything they should, they're probably only earning sixteen or seventeen thousand pounds, a very modest amount. I think, it, it, that I don't think is what we're talking about here. What I'm talking about is the bonuses to the Board, bonuses to senior executives, bonuses to big traders, bonuses to the big money earners, that is completely wrong, when it's coming out of taxpayers money and the government should have said that in October. They had that opportunity, they completely failed, but I would argue even now, particularly with RBS, which we own 70% of, they are about to pay out a billion of pounds of bonuses in respect of the year 2008. Now 2008 has been a disastrous year for RBS, they've had to take twenty billion pounds of taxpayers money; they should not be paying out these bonuses and the government should be saying so.
JON SOPEL: But what about those contractual difficulties where people have got it written in. Do you want to have the situation where taxpayers dollars are then getting involved in litigation, over whether it is lawful to stop these bonuses.
DAVID CAMERON: But I think the point is this, that these jobs, these salaries, these bonuses, none of them would be being paid were it not for the fact that the taxpayer stepped in to support the banks. So I think … (interjection)
DAVID CAMERON: I think have look, to - politics is about choices. I'm telling you what my choice is. I think you say no to bonuses, to those banks that are owned in part or whole by the taxpayer. I would make an exception for the people at the bottom of the chain, who weren't responsible for this, but in respect of one or two thousand pounds. Otherwise, no bonuses for 2008 in those banks that we own or part own. For the future, then I think we should be looking at a solution. Instead of what the government is doing, let's be clear here, they're having a review which means that the bonuses for 2008 will be paid, and because the review won't report till the end of the year, there will probably be bonuses paid in 2009. Instead of another review, instead of the dithering, what we need is a decision and I think the decision should be along the lines that future bonuses should only be paid in shares and those shares should only be cashable in, as it were, when those banks are no longer relying on taxpayers support. I think that is the sort of approach that we need and a decisive government would give us that.
JON SOPEL: Okay, your Trade Spokeman, Ken Clarke, yesterday said that the merger of Lloyds TSB and HBOS had been a disaster and shouldn't have been allowed to happen. Do you agree.
DAVID CAMERON: I think that it is now looking like a bad decision. Now let's rewind to October and remember the situation we were in then. You know it looked as if major banks were going to fail and we argued that the government was right to step in and stop the major banks from failing. Why? I think people … an answer, because they've seen their taxpayers money go in to it. Why? Because if the major banks collapse, you don't just get a recession, you get a depression, you get a slump, that's the lesson from the 1930s. So the merger of HBOS and Lloyds, was presented to us as the way of stopping a major bank, HBOS, from collapsing. The people who objected at the time, were objecting on the basis of competition policy or many actually were objecting in Scotland, they wanted to see the Bank of Scotland effectively to remain … (interjection)
JON SOPEL: You were …
DAVID CAMERON: No, I didn't want to see HBOS collapse.
JON SOPEL: So is Ken Clarke wrong then, to have said it was a disaster and should not have … (interjection) …
DAVID CAMERON: I think he was, I think he was very perceptive at the time to have questioned it. As I say, I think the point was to … (interjection)
JON SOPEL: … (overlaps and unintelligible)
DAVID CAMERON: Well I think you know, we, we were very, I was very concerned, I didn't want to jump on the bandwagon of saying, let's have, keep HBOS independent because it's a Scottish bank and all the rest of it, which was where most of the pressure was coming from. The government made a decision, I think that really, the people who really have to answer this question are those, the shareholders and the managers of HBOS and of Lloyds and the government, who knew much more of the details of the deal and the real problems at HBOS, which weren't as publicly known.
JON SOPEL: Do you think partial, I mean temporary nationalisation may have to be the solution now for Lloyds HBOS.
DAVID CAMERON: It may have to be, I hope that isn't the case. We hope that this organisation can sustain itself and can sort through its problems but you know, it, we can't rule it out; it may happen.
JON SOPEL: Do you think that it might be the best solution now given the shares dropping by a third on Friday.
DAVID CAMERON: I don't think it's the best solution cos I think banks are better off in the private sector. I think there are real dangers from nationalisation, the taxpayer is now you know, accountable for every single decision in this bank and every single bad asset and bad loan it has. So I don't want to see that happen but we have to recognise that these things, this might happen and we have to be prepared for that.
JON SOPEL: Just, you talk about all these taxpayer billions, might we have to claw back some of that money. Should people have to be - pay some of those bonuses back, some of the people who we read about, have received absurd sums of money.
DAVID CAMERON: I certainly don't rule that out but I think the most important thing is the question, here and now, what do we do with the bonuses for 2008, I couldn't have been clearer about that. And what do we do for the future and what do we do for the future in the banks we own, well we've talked about that. That is only share bonuses and only cashable in when the taxpayer is no longer propping up those banks. And then there's the broader question, well what about the bonus culture. Now look, I believe in free markets and free trade and people showing enterprise and taking responsible risks. And it …(interjection) Let me just make this point. It is important that we don't have bonus systems that put at risk financial institutions that then put at risk the economy. So we do need to regulate bonus structures, to make sure that people aren't being rewarded for irresponsible risk taking.
JON SOPEL: And in light of the comments that you've made about bankrupt Britain, Italian levels of debt and all the rest of it, don't you have to revisit some of your own spending priorities.
DAVID CAMERON: Well I think we, we have already because obviously, we've come off Labour spending plans. We've said that they're no longer affordable. I've been warning for some time now, about the very frightening levels of public debt. It is a very worrying situation. The government is already planning next to borrow 8% of GDP and that's assuming the economy starts to grow again on the 1st July. Now I hope that happens but a lot of people say it won't happen. In which case the debt figures are going to be truly horrific and we're ….. (interjection)
JON SOPEL: Let's talk about one or two specifics. Could it still be a priority then to raise the level of inheritance tax to a million pounds. So that people leaving estates worth a million, don't pay any tax.
DAVID CAMERON: Well we have specifically said how we'd pay for that, which is a different approach of taxing the non domicile residents and so that tax cut, the inheritance tax cut, and also the cut to stamp duty for first time buyers, which I think is particularly important now the housing market is such difficulty, we specifically said …. (interjection)
JON SOPEL: Just on inheritance tax. Is that still a priority.
DAVID CAMERON: Well we said how we'd pay for it so that is a tax cut … (interjection)
JON SOPEL: … you could use that money elsewhere. Are you still saying that you will stick to that or do you think that is something that should be reviewed.
DAVID CAMERON: That's a promise that we've made and a promise that we want to deliver.
JON SOPEL: So there is no delay on that at all.
DAVID CAMERON: No. That's something we want to deliver.
JON SOPEL: Even though - most of the non doms have gone home.
DAVID CAMERON: Well I don't think that is the case. We've obviously, for the next - at the election, when it comes, we'll set out in our manifesto, very precisely, what our pledges are but we've made that a very clear pledge and also make this argument, that in terms of you know the consistency of our approach, remember, when the government produced its budget and its genius idea cutting VAT by 2.5%, which has added 12.5 billion pounds to our national debt, we opposed it, we voted against it. So you know, we have consistently said that they are living beyond their means and this is a debt crisis, and you've not going to get out of it by having ballooning public debt either.
JON SOPEL: You said earlier in the interview about the fact that politics is about making choices and the choice you're making is to support inheritance tax proposals of people on a million pounds. You say it's funded, but you could use that money elsewhere for … people that are unemployed, who more desperately need help.
DAVID CAMERON: Yeah, I think that look - it's a tax cut paid for by a tax increase. What we don't have is any unfunded tax pledges. We always say where the money is coming from.
JON SOPEL: What I'm trying to argue with you is what are the priorities and you seem to be saying that the priority is that you give a million pounds for people that they can leave in their estates, in the inheritance tax, free of tax. What I'm suggesting to you is that there may be more urgent priorities, when you've got two million people unemployed.
DAVID CAMERON: That's why we have a three billion pound programme for getting the unemployed off the unemployment register and back in to work, by allowing companies to have some of the benefit of the reduced unemployment when they come off the register. You know, so we do have aggressive plans for getting the country out of these difficulties but I don't believe the right thing to do is tear up all the pledges that you've made. But as I say, look, I'm the one who's been warning about how tough the fiscal situation is we're going to inherit, how high the debt is, how difficult it's going to be and at the next election, we'll have to set out in a very frank manifesto, I mean it may not be the most thrilling document people are going to read, it's going to be very clear about what a difficult situation we're in and what the priorities are and what the early steps will be.
JON SOPEL: I just want to pick you up on some of the phraseology that you've used. You've talked about bankrupt Britain, the Broken Society, the Age of Mass Unemployment, and I could produce reams of … . Aren't you talking the economy down.
DAVID CAMERON: No, I don't believe I am at all. I mean look, I think we've still got, in this country, we've still got many advantages. We've got brilliant companies, fantastic universities, great inventors. We produce brilliant, creative arts and other endeavours. You know, we've got lots going for us. I think I'm being frank about the difficulties we are in. I think for the government to accuse me of talking the economy down is ridiculous when you know, I've …
JON SOPEL: … that said 53% of ordinary people thought that Cameron was talking the economy down for political purposes and risks making things worse by damaging confidence.
DAVID CAMERON: Well I don't, I don't think that's right. I mean the government can't seem to get their story straight at all about the economy. The Prime Minister, one minute is saying, there's a depression and the next minute he's criticising his Chancellor for saying it's the worst for sixty years. So they've got to be clear about where they think they are. I have warned consistently, because I happen to believe it's true, about the dangers of the ballooning deficit. I don't try, I try very carefully not to use apocalyptic language about the state of the economy and the truth is we are in a bad recession but we will get through it. But I do think - one of the things I think we need actually is a government that's able to wipe the slate clean. You know I think it's difficult to get out of where we are, when you've got the Prime Minister who won't admit that you know, boom and bust is still with us. Who won't accept some of the mistakes made in Britain. We've got to wipe the slate clean and say, look, these are the mistakes we made with the regulatory system. This is how we let bank lending go on for too long and go too far. We should have done more to put tax money aside for a rainy day. You need a government that can wipe the slate clean and then actually help to build the confidence. Cos in the end, that's what gets you out of recession, it's confidence that people can go out and spend and invest and employ and they need a government actually to help, that's going to own up to the problems and set a clear path for the future.
JON SOPEL: And we've been talking about all the problems of bankers, you're about to give a job to an ex-banker, David Freud. Can you confirm that he's moved over to the Conservative Party. The guy who advised the government on welfare reform.
DAVID CAMERON: Yes, I think he's a hugely impressive figure. Obviously, one of the biggest challenges a new government will face will be the challenge of yes, frankly, mass unemployment. The fact that we've seen you know, now we're up to two million people unemployed and everyone believes it's going to get worse. One of the big challenges is going to be getting Britain back to work and also getting those people who have been stuck on benefits for a long time back to work. I think David Freud has done more than anyone else to highlight how we can improve our welfare system and improve our training and job system and he'll be a key part of the new Conservative government.
JON SOPEL: Lord Digby Jones has said today that the Job Centres are not fit for purpose. Have the Conservatives got any proposals that would alter that.
DAVID CAMERON: Yes. Job Clubs. I think as well as Job Centres and Job Centre Plus, which, you know, the staff there do a very good job under difficult circumstances but I worry they're going to be quite overwhelmed by the scale of job losses. One of the truths about helping people who are unemployed get back in to work, is it's not just the Job Centre and the list of vacancies. It's also having the confidence. It's making the contacts. It's talking to other people who've just lost their job and working with them, to try and find a new job. Job Clubs worked in the last recession. I think they can work in this recession. I've actually asked my candidates and Members of Parliament to help set them up and many have already done so. I would actually like to see the government get behind Job Clubs. They're also - it's not a huge expense of government money to get them going. But they can really help unemployed people to find vacancies and get back to work.
JON SOPEL: And I know on Tuesday, you're going to unveil some kind of, I think Green Paper, you call it, on localism. Doesn't everyone agree with localism, doesn't everyone say, oh well it will be great to hand power down to the lowest level possible.
DAVID CAMERON: Well the trouble is, they might say it, but they don't do it. I mean we've got a government now that has set up this enormous regional bureaucracy, which I think we can get rid of and drive those powers down to the local level. We've got a government that issues so many orders and instructions and bureaucratic targets to local government, we can sweep a lot of that away. One of the things we should do in this recession, is try and make sure that we build a stronger, more resilient, more balanced economy for the future, and a more local economy, where we have more local decision making, I think is a very key part of that; so you'll see a very exciting paper on Tuesday, with huge proposals for decentralisation, sweeping away that regional layer, giving more power to local government, to drive it out to the lowest level, so they can help build those strong economies of the future.
JON SOPEL: David Cameron, thanks very much for being with us. Thank you.
DAVID CAMERON: Pleasure.
END OF INTERVIEW WITH DAVID CAMERON
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The Politics Show Sunday Sunday, 15 February 2009 at 1200 GMT on BBC One.
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