BBC On The Record - Broadcast: 24.11.02

Film: Conservative Film. Terry Dignan looks at what the Tories need to do to restore their credibility on the economy.

TERRY DIGNAN: Where is Michael Howard heading? On Friday he was in his Folkestone constituency visiting schools and GP surgeries. At the last election many Conservatives believed the party ignored public services. They want the shadow chancellor to put that right. But it may mean downgrading some of the party's most sacred beliefs. When Michael Howard was first elected here in Folkestone nearly two decades ago he was an ardent Thatcherite - a low tax, low spend Conservative who also believed that government should regulate private enterprise as little as possible. But has the time now come for him to admit that these policies are nowhere near as popular as they once were. That's the question which goes to the heart of the debate over how the Conservatives can regain their reputation for economic competence. Trust in the Conservatives to run the economy competently collapsed after the early nineties. In September 1991 ICM asked who had the most successful economic policies? The Conservatives won the support of forty-one per cent of voters, Labour just twenty-four per cent, the Liberal Democrats eleven per cent. But since then the big two parties have swapped places. In a recent poll on economic competence the Conservatives were down to just twenty per cent, Labour up to thirty-nine, the Liberal Democrats way behind on eight. Some former Conservative policymakers believe these figures are disastrous for the party's electoral prospects. DAVID MAWDSLEY: Since the early nineties, I mean ever since the ejection from the ERM, the Conservative Party Party has trailed the Labour Party on economic competence and that's absolutely vital because without a lead on economic competence, I don't think the Conservative Party stands a chance of winning the next election. DIGNAN: Last week children at Mandella Primary walked to school in a campaign to encourage parents to leave the car at home. With them, local MP Michael Howard, who says public services like education are now his priority, not cutting taxes. But with taxes rising under Labour, is this the time to back away from a tough tax cutting message, asks a right of centre think tank? SHEILA LAWLER: The message which Conservatives wrongly to my mind took from their defeat in the 1990s was that they had to be more cuddly, more apparently voter friendly and stop giving these hard messages. I think that the party should be bold, should go to the country promising to cut taxes, to lower public spending, that this will be good for the overall economic prosperity of the country and good indeed for the Conservative Party. DIGNAN: The children of Mandella Primary arrive safely. The Conservatives want better value for the money spent on schools and hospitals. But reforming public services would also allow the Tories to reaffirm their commitment to cutting taxes, says one of Michael Howard's economic advisers. PROFESSOR PATRICK MINFORD: So I think the first thing the Conservatives should do is focus on the efficiency of delivery of public services, not let's throw money at it which is wasted, let's spend money that is necessary and make sure it's effectively used and that will provide economies to cut taxes. DIGNAN: But is taxation such a big issue for voters? When asked by the polling company Mori in October of this year what were the most important issues facing Britain today, forty-five per cent said the National Health Service, thirty-five per cent defence and terrorism, thirty-two per cent education, twenty-eight per cent crime. But in the same poll a very small number of voters - just four per cent - said tax. Some Conservatives argue the party has little to gain - and much to lose - if it promises to cut tax. MAWSLEY: If the Conservative Party wants to be taken seriously on its pledge to put public services first, which is what Iain Duncan Smith has said his mission is to do, I think it has to make a choice, and I think it will make it very difficult for them to say that on the one hand and on the other hand to be offering billions of pounds of specific tax cuts. DIGNAN: Michael Howard was a member of a Conservative government which reformed the National Health Service. He believes GP practices like this one became more efficient as a result. He's promising further change should his party win the next election. But one of his predecessors as Shadow Chancellor warns that reform will be expensive and will leave no room for tax cuts. FRANCIS MAUDE MP: We do have to stress that the demands of the public services, which are failing in this country, which urgently need structural reform which will itself cost extra money, will demand extra money in the short term. Therefore we should make it clear that we would not expect to be able to cut taxes in the first parliament after being elected, I think that's a perfectly reasonable thing to say. DIGNAN: At the last election Jonathan Marland was a Tory candidate. He's also been an advisor to the party on its relations with business. Until these improve, he says, the party won't win back its credibility on the economy. JONATHAN MARLAND: Well I think the business community lost faith with the Conservatives after the last election. The party is clearly making noises about reducing the burden of tax on businesses and also regulation, but I think businesses want them to be more specific. DIGNAN: Jonathan Marland runs Janspeed which makes car exhausts in Salisbury, Wiltshire. Although he praises many Labour policies on enterprise he criticises business tax rises - by forty-seven billion pounds under Labour, claims the employers' organisation, the CBI. Jonathan Marland made his fortune in the Thatcher years. He wants a return to a regime of low business taxation even though some Conservatives argue this would put Michael Howard in a dilemma - where would the money come from to pay for such a policy? MARLAND: Well as a businessman I very much hope we'll got back to tax regime that the Conservative Party started in the early nineties which was a much lower tax regime, lower National Insurance Contributions. MAWDSLEY: I think it is very, very debatable quite how high up the list of political priorities business tax cuts would sit, when compared with personal tax cuts, or more resources for initiatives on the public services such as law and order, in any list of priorities of what the next Conservative government would do in office. DIGNAN: Business thrives when government leaves it alone - that's a strongly held Conservative belief. A recent Institute of Directors' report says regulations and red tape have increased under Labour by as much as six billion pounds a year. Yet the Conservatives are unclear about which regulations they would scrap if they came to power. Companies like this complain bitterly about government red tape and they are pleased the Conservatives are now really laying into Labour over the issue. But so far Michael Howard hasn't explained how many government regulations he would get rid of - a dozen? a hundred? a thousand? Until he answers this question it's hard to see how the Conservatives can regain the confidence of business. Given their record, promises to cut red tape are certain to be greeted sceptically. MAUDE: People will tend to look back, particularly at the 1990s and see that the burden of regulation increased during that time. So, they're used to hearing politicians talking about cutting red tape and they're used not to believing it. So I wouldn't place very much store on a commitment to reduce regulation. DIGNAN: And anyway, many regulations are pushed through by the EU - so there's not much the Tories could do about them. MAWDSLEY: Lots of it emanates from Europe and you know, for some of this, we've given away the power to reverse this regulation and you know, no matter what the Conservative Party in government would want to do, it might not be able to reverse some of that regulation. DIGNAN: But what about regulations drawn up by the UK government? Meeting with his Shadow Treasury team ahead of this week's pre budget statement, Mr Howard warned the economy was slowing down because of the burden of red tape. Although his advisers want much of it scrapped, it's not clear this would be terribly popular. MINFORD: Well there's a mass of regulation, mainly concerned with the labour market that Labour has brought in and the damaging effect of that could be very large, so it could be reversed. Fairness at Work Act, has given a substantial new privileges to unions, I think those could be cut back. MAWDSLEY: The problem of course for the Conservative Party now is that businessmen need specifics particularly, they want to know what specific regulations, what specific red tape and bureaucracy is going to be cut by an in coming Conservative Party government, they're not persuaded by political rhetoric. To do that, the Conservative Party is going to have to tread on very, very politically sensitive terrain, because most of these regulations refer to employment law and health and safety at work legislation and that's very, very sensitive. DIGNAN: Back in Folkestone the outlook is less than favourable. It is for the Conservatives, too, unless they restore their reputation for economic competence. That could mean ditching policies which once made the party successful. But others have a different message for the Tories - be true to your core beliefs. LAWLER: You must get back to being the party of low public spending, low taxation and high growth, which is high prosperity, and as a party that has always been your message and when you abandon that message you really abandon the very basis of your raison d'ĂȘtre. DIGNAN: So where is Michael Howard heading? He says he won't tell us until closer to the next election. But time is not on his side. By then the electorate will want to know what the Conservatives would do if they were again given responsibility for managing our economy.
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.