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Monday, 4 June, 2001, 18:32 GMT 19:32 UK
Matthew Taylor quizzed

To watch coverage of the forum, select the link below:

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Matthew Taylor was promoted, after successfully running Charles Kennedy's leadership campaign, to the economy brief for the Liberal Democrats.

He is responsible for their tax and spending policies - traditionally Liberal Democrats have favoured a tax rise to pay for specific services such as education.

Issues discussed included how difficult it was for an opposition party to win support for their economic plans when the economy is doing well, Matthew Taylor also talked about his views on joining the euro, something his party firmly supports,

Matthew Taylor answered a selection of your questions in a live forum on Monday 4 June.


A transcript of this interview is below:

News Host

Hello and welcome to the BBC News Online election forum, I'm Carol Walker, BBC political correspondent and I'm joined today by Mathew Taylor who is the Liberal Democrat Treasury spokesman, who's here to answer the questions that you've put in e-mails. Welcome. Thanks a lot for joining us. Now first of all a question from Duncan Harris from Northwich in Cheshire, he says that after reading your manifesto he's unclear on the overall policy on taxation, including indirect taxes. Are you in favour of increasing the total tax take, reducing it or keeping it static. It's increased under Labour he points out, what would you do.

Mathew Taylor:

Well, what's happened under Labour is the tax burden's gone up but only to clear the deficit the Conservatives had. Spending's actually gone down so they're no longer spending more than they're taxing, they've balanced the books, but we're seeing less spent on pensions, education and health as a proportion of national income in this parliament than it was under the Conservatives. That's why waiting lists are longer, that's why class sizes are larger.

News Host:

So what would you do?

Mathew Taylor:

The answer is if you want extra doctors and nurses, if you want extra teachers, if you want more policemen and a better pension, you obviously have to find some extra money so we'd put a penny on income tax to pay for our education proposals, we'd increase the top rate on people earning over £100,000 a year slightly and that pays for big pension increases and for the health service and there's a slight change on capital gains tax that does the rest. That's all. No stealth taxes. A guarantee of that. We don't need them and indeed we promise that every year the taxpayers would get a letter to explain any tax changes and what that money is used for. So stealth taxes would end once and for all.

News Host:

But this question¿..

Mathew Taylor:

A very slight increase in the tax burden to pay for pensions, health, education and police.

News Host:

What sort of percentage point would you be thinking of?

Mathew Taylor:

It's about 1% overall. That's some £8bn pounds rising over £10bn by the end of the parliament. You can't get something for nothing but the typical person working full-time and paying tax, you're talking about a couple of pounds a week.

News Host:

Okay, so it's a 1% increase in the total tax burden. If we could move on to Vicky Bolton from Winchester, she says that opinion polls show that people are willing to pay more tax but this isn't what people vote for when it comes to the elections. So how will the Lib Dems win the hearts and minds of particularly those earning more than £100,000 who as you've pointed out you're going to tax at 50%.

Mathew Taylor:

Well first of all lets remember that even that is lower than Margaret Thatcher had, she had 60% on incomes over £70,000 until 1988 so for most of the time she was in office. The 1p on income tax will only return us to the level where the Tories had it when they left office, so we're not talking penal tax rates, in fact it will be lower than it is most other countries. Lower even on the top rate than in places like New York, let alone in other European countries. But of course some people will say, no I'm not going to pay that because I just want to keep my money. But I think most people understand that if they want a health service that works, schools that work, a decent pension, more police on the beat, it will cost a bit. And after all, none of us really are better off if we save a couple of pounds a week on our tax but our house is burgled and when we need an operation we can't get it, have to wait months, are more likely to die in this country than other countries who invest more in doctors and nurses, or have to pay extra for private tuition to get our children through their exams because the teachers simply haven't got the time in the classroom because the class sizes have risen so large.

News Host:

But are you worried that the ratings you're seeing in the opinion polls may be inflated because people are more like to say, oh yes of course I'm willing to pay a bit more but when it comes down to that moment in the polling booth, they're actually not.

Mathew Taylor:

Well I think people know you can't get something for nothing and if you look at what's happening in the polls we're gaining votes now from both Labour and the Conservative Party. It looks very likely and we're optimistic that we're going gain seats and of course people can see the difference that makes in Scotland already where by getting more Liberal Democrats into the Scottish Parliament we delivered increased spending on health and education, we've got rid of student tuition fees and we're about to get rid of old people having to sell their homes to pay for care in their old age because we'll provide it through the National Health Service. So I think actually that's something that people welcome. It's more honest, there's no evidence that people have turned away from it, what they have turned away from is the bogus claim from the Conservatives that they can cut taxes without cutting services like education, health and pensions and equally Labour saying they're going to improve these services yet somehow they're also going to cut taxes. You can't get something for nothing and I think people understand that.

News Host:

Okay well Alex Fine from Stourbridge wants to know whether income tax will rise in the second, third, fourth and fifth years of a Liberal Democrat government to pay for improvements in public services.

Mathew Taylor:

No, there's no need for that. Of course, the penny on income tax will be paid every year through the parliament as will the new top rate. So we get that money every year to improve these services, in fact it goes up gradually as incomes are rising. But we have set our plans for the full five years of the parliament. Interesting enough neither the Conservative nor Labour Party have done that. They've only said what they will tax for the first two or three years but the Liberal Democrat plans are for the full parliament and all the independent analysis has said that our plans do add up.

News Host:

But Tim Pearce of Leicestershire says: is it just a coincidence that the increase in tax proposed by the Liberals is exactly the same as last time despite a change in what it will be spent on and what has been spent in the last four years. Isn't this a sign of the Liberals not really having a clue about how to run the country's finances.

Mathew Taylor:

Actually we've said always that the penny on income tax is for education, we've never changed on that. We are this time putting more into health and pensions because it's so obvious that the 75p rise left pensioners behind, hospitals are in greater crisis than before, but we're asking the top earners to pay for that improvement. Is it a coincidence? No, because the things that we want to do cost this much money and Labour have failed to do them. In fact Labour have spent during this parliament less on education as a proportion of our national wealth than the Conservatives did before them, and that's why we see student tuition fees, that's why we see class sizes rising for most children.

News Host:

Okay, well Mark Mann from Cambridge wonders whether this would actually risk the stability of the economy. Increasing taxation, increasing spending doesn't that risk the stability of the economy.

Mathew Taylor:

First of all it's not a huge increase, it's significant because we're putting it into very specific things, we're not spreading it thinly, we're putting it where it matters in education, health and pensions. But it's not certainly going to raise us even to the levels of tax as I said earlier common in other parts of the country.

News Host:

You're not running risks with inflation.

Mathew Taylor:

The key thing with inflation and the management of the economy is to balance the books and because all our policies are paid for there's no issue of destabilising the economy. There is an issue for both Labour and the Conservatives because in both cases they haven't explained how they'll find the money for their policies and that means that potentially either they don't carry out those policies as Labour have failed to deliver the improvements they promised, or they'll have to borrow and borrowing does risk a return to the boom and bust that we saw under the Conservatives.

News Host:

Okay lets move on to talk about the euro because we've got a question from Gavin Smith from Leeds. He says is it or is it not the case that if we join the euro we may have to accept responsibility for the national debt of other countries in the Euro zone. Now of course your party's committed to joining the euro as soon as possible.

Mathew Taylor:

No, we're only committed to it if people vote for it in a referendum. We won't join and ..

News Host:

But you're very keen ¿

Mathew Taylor:

We think there are some important advantages because it will mean lower interest rates, saving typical mortgage payers £500 a year, it will save business all the risks of the fluctuation in the pound. We see the pound at the moment uncompetitive so we're losing jobs in car manufacturing, in steel, in farming, so yes we do think there are advantages, but that's an issue for the referendum and for ultimately the British people to decide. But the question that was asked, do we have to take on the debts of other countries. The short answer to that is no. It's actually specifically ruled out under the Maastricht Treaty other countries cannot take on the liabilities of those who may mismanage their economy. So any country whether it's Germany, France, Italy or anywhere else runs up debts, those debts are for them to deal with, not for anyone else.

News Host:

Okay now, Tony Porter from Wrexham in Wales says we've become an economy largely based on service sector industries in the face of the steady destruction of manufacturing, farming and mining industries. What would your party do to reverse this potentially disastrous trend.

Mathew Taylor:

It's absolutely right. Since Labour were elected we've actually seen a continuing speeding up of job losses in these areas. Some 70,000 jobs lost in farming, half a million jobs lost from manufacturing and there are some important things that need to change to deal with that. First of those, just on farming, we desperately need to use our position in Europe to reform the common agricultural policy to make sure that support goes to the family farm and to maintaining the environment and the work the farmers do for that as well¿.

News Host:

That's going to take a very long time to do though, isn't it.

Mathew Taylor:

Rather than being creamed off by the supermarkets and the big ¿businesses which happens at the moment. Well actually there's a lot of support for that in Europe but we need to get that negotiated and through, it has to be a priority for government if we're to save farming. But the second thing, and equally important, and it will help farming and it will help industry, is this issue of getting a more competitive pound in the long run by getting to the euro by in the short run by managing the economy not just on the basis of interest rates but in order to get a more competitive pound.

News Host:

So by talking up the likelihood of going into the euro for example, that might in itself bring the pound down somewhat against the euro.

Mathew Taylor:

Well what we need to do is make sure that we negotiate a competitive exchange for the pound and what happened in other countries was that once that figure had been agreed then actually it was met. Now that's why British industry, Ford, the other big car companies, the steel companies, they're all saying they are going under at the moment because of the high pound. They need government to do it. And whether or not we join the euro, that ought to be an important objective of government. Stability in the economy is no good if you have instability on the exchange rate and the other two won't talk about it because they will not talk about the issues linked into the euro but this ought to be important whether or not we join the euro.

News Host:

But you wouldn't go in for some old-fashioned support for industries that were in decline.

Mathew Taylor:

What we would do is we would help farming with the present crisis from foot and mouth and the tourist industry and in many other rural businesses that have been hit, and we would also stop the subsidies for arms exports and use that money to invest in developing high-tech environmental industries that are the big growth area and also of course, very important protecting our environment in the long term.

News Host:

Well we've got a question on environmental impact from Sophie Unwin in London. She wants to know how your party is proposing to de-link environmental ¿.from economic growth, in particular what commitments can the Lib Dems make to channel investment into preventing waste at source rather than spending the money on clear up costs such as building new and dangerous, or rather potentially dangerous incinerators.

Mathew Taylor:

Of course I've just given one example of redirecting money away from arms and into environmental industry, here's another example. We should be putting a lot more time and effort in to reuse and re-cycling of waste rather than simply burying it or burning it. And other countries have shown the lead on that. Many other countries can show recycling rates where they actually use usefully half of all their waste. In this country it's less than one in ten and that's something we believe can and should be changed. Strong targets and again that support for the environmental industries to make sure that it happens. We all benefit if we protect our environment, it creates jobs, it helps protect the environment for future generations and in very many cases in the long run it actually saves money too.

News Host:

Okay, so what about green belt housing. Steve Taylor from Nottingham wants to know what your views are on using valuable green belt land for housing in rural areas.

Mathew Taylor:

Well one of the terrible things about green belt development is if you've got old houses that need improvements, to be stripped out and reused and the investment put in, you're taxed on that with VAT. But if you built a new house on a green field site there's no VAT to pay. So surprise, surprise developers want to build on the green fields and they don't want to make use of the existing sites and existing housing.

News Host:

So you'd change those rules would you.

Mathew Taylor:

We'd change those rules. What we would do is we'd bring in VAT on new build and use the money from that to cut it on housing renovations and repairs which for most householders will be very good news indeed and would help to protect the countryside too. Where there is building in the countryside, and of course for some rural communities some building is important we'll also make sure that the council can say up to half of that housing has to be affordable homes for local people, not just more executive suburban homes with local people simply unable to afford a place to live. If they're in communities which often actually have relatively low incomes.

News Host:

Okay one final question from Ken Brown in Stroud. He wants to know many seats you would need to win in order to become the official opposition, and is this a realistic target for this or the next election. Is this something your leader's been talking about, about whether you're going to become the realistic opposition, how many seats.

Mathew Taylor:

Well, there's no way of knowing that because it also depends on how many seats the other parties win, particularly the Conservative Party. But it does look like the Conservative Party is going to be losing seats, it looks pretty certain that the Liberal Democrats will be gaining seats so we are extremely optimistic that we're going to be much stronger in the next parliament. Who knows, maybe the official opposition, but there's a way to go before polling day. What we can say with some confidence is we think we'll be the effective opposition because what we do know is that the Conservative Party is about to go into a bout of recrimination and civil war, almost certainly a contest over who's going to be leader. They're going to be knifing each other in the back, arguing amongst themselves so it will fall to the Liberal Democrats if Labour is re-elected to be the effective voice and of course we are pressing for the investment in health and education and pensions and police that Labour have so far failed to deliver whereas the Conservative Party want cuts.

News Host:

Okay you've talked about the Tories although they're still likely to win more seats than you, how many seats would you like to win in order to become this effective opposition that you've talked about.

Mathew Taylor:

To be effective in opposition firstly is to make a good case and I think we're doing that. And secondly we need people to support us to show that they want that investment in health, education, pensions and police that Labour have failed to delivery and the more votes and the more seats we get the more effective we'll be.

News Host:

Okay well Ken Brown that was Mr Taylor's answer we didn't specifically get a figure but thank you very much indeed, that was Matthew Taylor the Liberal Democrats Treasury spokesman talking to me Carol Walker on the BBC's New Online election forum and that's it for today.

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