Interview with Michael Howard

                          CANNOT VOUCH FOR ITS ACCURACY. 
                                ON THE RECORD      
RECORDED FROM TRANSMISSION: BBC-1                              DATE: 29.11.92 
JONATHAN DIMBLEBY:                     Good afternoon and welcome to On the 
Record.  In today's programme: the Council Tax has arrived but not yet on your 
doorstep.  What are you in for?  I'll be asking the Environment Secretary 
Michael Howard: how do model councils avoid charging higher bills for cuts in 
                                       This week, momentarily overshadowed by 
the announcement that the Queen was to pay tax, the government unveiled the 
first details for England of the new tax which from April you will pay instead 
of the Poll Tax.  After the fiasco of the Community Charge the government is 
acutely anxious about the likely reception for the Council Tax.  It's still of 
course early days but already there are murmurings of revolt - and most 
especially, as Martha Kearney now reports, in the Tory heartlands of southern 
DIMBLEBY:                              Secretary of State, you are aiming a 
double-barrelled shotgun at many millions of households, most of all in the 
South and the South-East.  Higher taxes on the one hand, and poorer services on 
the other. 
MICHAEL HOWARD, MP:                    I'm not sure that shotguns is a very 
helpful metaphor at all.  What we have to do is to try and make sure first of 
all that public spending is kept under control and Local Authority spending is 
a very important part of that (over a quarter), secondly, that bills are kept 
to reasonable levels. 
                                       I have every sympathy with Tessa Gibbons 
who said that her income isn't going up and she doesn't want to have to pay 
bigger bills.  And that is why we have emphasised that it's important for 
Councillors to keep within the public sector pay guidelines that we've set out, 
to make the most of their resources, to use them efficiently and we believe 
that if they do that they will not have to cut services. 
DIMBLEBY:                              Let's look at those things in more 
detail.  There is your transition relief that is designed to ease the pain, but 
people should not run away with the idea, should they, that that pain is 
removed - it is simply partially deferred until next year and maybe the year 
after.  In the end, the full amount has to be paid.  
HOWARD:                                Transitional relief is what's its name 
implies.  If you are changing the basis on which people pay towards the cost of 
Local Authority services and, of course, it's a smaller proportion, less than a 
fifth of the cost of Local Authority services will be raised through the 
Council tax, but if you are to change the basis on which that money is raised, 
there will inevitably be some people who pay more than under the system it 
replaces, and some people who pay less, and in order to ease that transition, 
we are providing three hundred and forty million pounds to make sure that those 
in modest value houses at the bottom bands - in Band "A" pay no more than one 
pound seventy five pence a week extra - and then that increases until you get 
to Band "H", where we think that they ought to get protection if they're to be 
asked to pay three pound fifty a week extra. 
DIMBLEBY:                              But none the less, they will not only be 
paying millions of households in the South-East relatively more this year, they 
will be paying relatively more next year and it is concentrated in your own 
heartlands - as Sir Rhodes Boyson's pointing out when he talks about being fair 
to our people. 
HOWARD:                                Well, the principle that lies behind the 
Council tax is that if you live in the same Band property anywhere in the 
country you will pay the same Council Tax, if your Council behaves sensibly and 
is reasonably efficient, across the country, so that does provide a kind of 
benchmark for accountability. 
                                       But, of course, if you have a 
property-based tax then those parts of the country which have the highest 
number of high value properties will pay somewhat more. 
DIMBLEBY:                              But then what the people in the South 
are going to say is "We pay more for our houses, exactly the same kind of 
houses they have in the North - that's enough of a burden now in any case - and 
on top of that he's going to dump this tax round our neck". 
HOWARD:                                Well, I think that we have done a great 
deal to limit that effect.  As you know, people in the top Band will pay no 
more than three times as much as people in the bottom Band.  It'll be a hugely 
fairer system than the old Rates system - six million people will receive 
single person discounts, where there's only one person in the house - three 
million people won't pay anything at all, people on income support, and a 
further two million people will get help with their Council Tax.  So I think it 
is a fair system that tries to reflect the needs of everyone. 
DIMBLEBY:                              At the moment, you well know people in 
the South and South-East especially are having terrible trouble because of the 
fall in value of their properties.  You would not dissent from the view that 
the impact of the Council Tax on property prices in the South-East is likely to 
be depressive. 
HOWARD:                                Oh, I would dissent from that because.. 
DIMBLEBY:                              It's hardly likely to stimulate is it - 
the prices? 
HOWARD:                                I remember people saying that the effect 
of the Community Charge was going to be that prices of properties would go up, 
and we certainly didn't see that after the Community Charge had been brought 
in.  So I think that any effect which the Council Tax would have on house 
prices is likely to be very, very marginal and insignificant.  I don't think 
that's going to be an important factor. 
DIMBLEBY:                              But it's not going to be marginal 
upwards, is it?  That would be a daft notion. 
HOWARD:                                I don't think it's likely to have any 
significant effect on the price of property. 
DIMBLEBY:                              Now, let's look at the other barrel that 
I put to you - the cuts barrel.  Not least in model Tory Councils, Councillors 
are saying "we are going to have to make serious cuts".  In Barnet "arms and 
legs" he was talking about.  Now, you have to take what he says seriously, do 
you not? 
HOWARD;                                Well, of course I take what everyone 
says seriously and I don't want to see cuts in services.  I think there perhaps 
has been a bit of a tendency to rush to judgement on the figures which were 
produced last Thursday.  There are a significant number of changes - Barnet, 
for example, as you pointed out - won't be responsible for Further Education 
next year.  We've had to adjust the budgets to reflect that.  We've had to 
adjust the budgets to reflect population changes, and so the comparisons that 
are being made are sometimes comparisons that don't fully reflect all these 
DIMBLEBY:                              But not, for instance, in the case of  
Barnet, just on this point - because these are complicated areas - they have 
taken Further Education into account. You have taken Further Education out, 
yet, and you've taken the money out, so the effect of that is entirely neutral 
and they're still saying we're going to have to find more money and we're not 
going to be able to find it within your rules. 
HOWARD:                                Well, I can tell you that the standard 
spending assessment, which we have provided for Barnet for next year, is an 
increase on the notional standard of spending assessment for this year, and 
it's notional because of these adjustments which I've just described. 
                                       Now, the figures that I produced last 
Thursday are part of a consultation exercise - they are there for consultation 
purposes.  People from Barnet can come in and talk to my officials and talk to 
me and say "we don't think that you've got these figures right; we think that 
you've made a mistake;  we think you are not taking this or that into account 
and, of course, if they convince us that we have made a mistake, or that we 
haven't properly reflected what we have set out to reflect, of course we will 
look at these figures again.  We think we've got them right. 
DIMBLEBY:                              And I'll come to that again a little bit 
later, but this - what you refer to as this notional increase - the truth is 
notional increase is at three point one per cent generally that you're allowing 
for spending increased.  It's "funny money".   This is not money that's 
available to spend in Councils that have already this year spent more than you 
had expected them to spend.  There's no increase at all for those. 
HOWARD:                                Well, first of all, first of all, it is 
not a notional increase.  It is an actual increase - this year's standing, 
standard spending assessment over last year's standard spending assessment.
It has to be a notional standard spending assessment to take account of the 
changes, but it's a real increase. 
DIMBLEBY:                              But the standard spending assessment, 
Secretary of State, as you know,  is not in practice what people have spent in 
this year.  They've spent more than that. 
HOWARD:                                I have to compare like with like and I 
compare this year's standard spending assessment with next year's standard 
spending assessment.  Now, of course, it's perfectly true that councils 
quite often spend more than the standard spending assessment.  They find some 
money from their balances and they spend more and I daresay a number of 
councils will want to do that next year.  They will find money from their 
balances and they will spend more.  But I can't - that is not to compare like 
with like.  I am comparing like with like. 
DIMBLEBY:                              Let's take Barnet as one example - and 
we could take a host of other not dissimilar examples in the South as you 
know - they are saying we need fifteen million pounds, even if we make 
efficiency savings, we still need eleven million pounds more than you're going 
to let them have after you've put the cap on.  Well, they can't get that out of 
the balance - out of a little bit here and there in the budget. 
HOWARD;                                Yes, but we've never approached these 
matters on the basis of giving Councillors what they say they need.  Of course, 
Councillors will always come - they do every year.  They come to the Department 
and they say this is what we need and the figures which they produce are always 
much higher than what the country can afford. 
                                       We have to take into account what the 
country can afford and where people are experiencing difficulty, where we have 
had a very difficult spending round in which we've tried very hard to protect 
capital spending, then we have to say to Local Authorities - "You too must 
share in trying to keep Government spending, public spending, under control, 
and you will have to husband your resources sensibly and efficiently. There is 
a very, very important consequence of following the public sector pay 
guidelines, which I would like you to do, and that will enable you to provide 
the services which your residents expect you to provide next year, without 
increasing Council taxes and without increasing your spending. 
DIMBLEBY:                              Now, Secretary of State, given all that 
you've just said and for the moment take all of that for granted, and I'm going 
to come back to a couple of things in a moment.  Take it for granted first, 
these Councils (like Barnet, Harrow, you name them) are, by their own account, 
and generally by your account, prudent, sensible Tory model Councils.  That's 
the first point. 
                                       Second point is - in the real world, 
because they HAVE spent more than your assessment, they WILL have to make cuts. 
That's not to discount that you're asking them to be in the national interest - 
they will have to make cuts, won't they? 
HOWARD:                                Not necessarily. 
DIMBLEBY:                              How not? 
HOWARD:                                Because as you yourself have pointed 
out,  they have spent more than their standard spending assessment in previous 
DIMBLEBY:                              So they've got to claw it back... 
HOWARD;                                No, not necessarily.  Local Government 
in general, Local Authorities across the country, have two billion pounds worth 
of balances.  They very frequently seem to be able to find money in their 
balances to spend more than their standard spending assessment.  Councils which 
have done that in previous years may well be able to do it again next year.  
They have balances, they are free to spend them.  What I have to do is to set 
standard spending assessments and the Government grant is based on those 
assessments, and provides a very large proportion indeed of the total spending 
which Local Authorities undertake. 
DIMBLEBY:                              You are capping at something like eleven 
million below what Barnet, for example, thinks it wants to spend.  Now,  let 
me put to you one aspect of spending which you - and certainly I haven't seen 
anywhere else - touched upon at any detail.  You talked about (what I said 
I was going to come back to) the pay question - the guidelines up nought to one 
point five per cent increases only next year in public sector pay across the 
board, on average. 
                                       So far, already, Local Authorities are 
committed to pay settlements for next year way above that - three or four times 
above that - four per cent, five per cent, in the case of the police, six and a 
half per cent.  Now, given that that's the case, in order to get back to your 
figure of one point five per cent, they'd have to be cutting pay next year. 
HOWARD:                                No, I don't believe that that is the 
case - the police pay settlement extends into part of next year. 
DIMBLEBY:                              Six months. 
HOWARD:                                And it's perfectly true that it is 
higher than the guidelines but I don't believe that it is the case that local 
authorities will have to cut pay as you suggest, I don't believe that will be 
necessary.  But it is very important when people in the private sector are 
having to accept pay standstills and are indeed, in many cases, having to 
accept pay cuts and redundancies, it is very important that people in the 
public sector should make similar sacrifices so that jobs can be preserved.  
DIMBLEBY:                              I'm not quarrelling with your general... 
HOWARD:                                Can I just add this. 
DIMBLEBY:                              Yes. 
HOWARD:                                We've seen statements in the last few 
days from the heads, the leaders of local authority associations in which they 
have acknowledged that it will be necessary to keep within the guidelines to 
save jobs, that there is a trade-off between pay and jobs and that is the case. 
DIMBLEBY:                              But I'm suggesting to you that that 
would be fine if there weren't already these commitments.  You said you don't 
believe it will be necessary.  Let's take the police for example, your example. 
National decision, this isn't local authorities saying we want to pay you so 
much, six and a half per cent, it runs at six and and a half per cent for the 
first six months of next year.  The other manual workers are over four per cent 
until later in the year.  The fire services until November next year, at five 
per cent.  That's fifty per cent, half the workers in most local authorities 
have these kind of increases and you're telling me that they can all stick 
within one point five per cent for the year without either massive cuts or, 
which is surely what will happen, laying people off, more on the dole queue. 
HOWARD:                                No, I don't accept what you're putting 
to me. I think that it will be possible for local authorities if they spend 
sensibly and if they maintain any public sector pay settlements which they have 
to make and haven't yet made within those guidelines, to be able to 
continue to provide services without laying off people.  Of course, they must 
look to see that they provide those services efficiently, of course, they must 
look to see that they're not employing three people to do a job which two 
people can do. 
DIMBLEBY:                              Barnet's already been doing that. 
DIMBLEBY:                              They say the most they could save, up 
to five million, if they're really...if they pare away at the bone now let me 
put it to you, with respect, it is not credible for you to say they can square 
this circle.  They can't both meet all their service requirements including 
the new statutory ones which were touched on in that film - the homeless, more 
people needing free school meals and so on, as well as preserving nursery 
classes, preserving teacher numbers and at the same time pay these increased 
bills when you say in order, in order to achieve a preservation, a protection 
of the services, they've got to get their wage bills down to nothing or one per 
HOWARD:                                You very frequently find councils saying 
at the start of a exercise of this kind, well, we couldn't possibly do that... 
DIMBLEBY:                              They're lying to you are they?... 
HOWARD:                                Of course, I'm not saying they're lying. 
DIMBLEBY:                              Having you on, crying wolf? 
HOWARD:                                No, I'm saying that this is their first 
reaction and that when they look at the figures much more carefully and when 
they look at the figures in more detail and when, no doubt they consider, as 
they have in previous years, the extent to which they can spend more by using 
their balances, I believe that they will come to conclusion that if they keep 
within the guidelines and if they spend their money sensibly, they will be able 
to continue the services which they have provided for their residents. 
DIMBLEBY:                              You use this wonderful, political, 
bureaucratic phrase, using money sensibly.  These people are not about to be 
spending their money sillily are they? 
HOWARD:                                Well, it's neither a bureaucratic nor a 
political phrase, it is something which is at the heart of the responsibility 
of local government and indeed, central government for that matter.  And if 
you're to do it... - just let me finish if I may - if they're to do it, it does 
mean a constant re-examination of the services that they provide, of the way in 
which they provide them, of the arrangements that they make, looking to see if 
they are making the most of competitive tendering, if they market testing their 
services in order to ensure that their residents get the best possible value 
for money.  And it would be very remarkable if local authorities, even local 
authorities like Barnet and Harrow and the other ones you've mentioned, are 
going absolutely everything that they can at this moment in order to achieve 
maximum efficiency in the services which they provide. 
DIMBLEBY:                              So you're saying that these councils, 
these good, solid, Tory councils, can do so much more by way of efficiency and 
meeting the need that they can save figures of nine, ten, eleven, twelve, 
fourteen, fifteen million pounds and pay these extra wages that they have to 
HOWARD:                                No, because in most cases, you will find 
that the figures that you've just mentioned, the need to save fourteen, fifteen 
million in an authority like Barnet, is a figure that is arrived at on the 
basis of a false comparison.  A comparison such as the one which you put to me 
earlier, comparing budget with standard spending assessment not a sensible 
comparison to make.  I would suggest to... 
DIMBLEBY:                              They talking about real savings to get 
back into your capping level. 
HOWARD:                                I would suggest to you that when people 
make sensible proper comparisons, comparing like with like and fully explore 
the need for savings and the potential for savings in their budgets, they will 
find that they will be able to achieve what I say they can achieve. 
DIMBLEBY:                              Okay, suddenly now Barnet starts to look 
at these figures sensibly and Harrow and all the rest, they look at them 
sensibly rather than in the excited way in which you clearly think they must be 
looking at them so far and they're watching this programme and I should think 
now they're saying, he thinks we haven't look at them sensibly, he must be...  
Well, I don't now what they're saying.  I wouldn't dare to say what they're 
HOWARD:                                Let's not speculate. 
DIMBLEBY:                              let's not speculate, Secretary of State,
but you said earlier in the interview and want to pursue this just briefly.  
You said that they can come and see you if they think they've been unfairly 
treated and you'll listen to them, you'll hear what they say.  What's the point 
of that if you don't give them more money if you're persuaded they're right? 
HOWARD:                                Well, if we've got something wrong, if 
we have made a mistake in our calculations, if we have failed to reflect 
something which we wanted to reflect because we've set out in tremendous detail 
in the reports which we published on Thursday, the precise approach which we've 
taken to decide how much money we think they need to spend next year.  Then, of 
course, we will listen to them and we will look again at all the figures which 
we have used in the light of the points which they've made to us. 
DIMBLEBY:                              Now does that mean if you look again and 
you accept the points and you accept they've got a case that you are able to 
say, we will under certain circumstances come up with more money or not? 
HOWARD:                                What we set out on Thursday was the 
basis on which we intend to distribute the very large amount of money that the 
government will make available to local authorities next year and remember that 
that grant is one point two billion pounds more than we made available this 
year.  A very significant increase, three point seven per cent more than the 
money we made available this year.  So we're not cutting the amount of money we 
make available to local government, we are very significantly increasing it. 
DIMBLEBY:                              We're been through that side of the 
argument.  Now let me put the question again, are you able to find more money 
in principle or not? 
HOWARD:                                In the figures which we published on 
Thursday, we set out the basis on which we intend to distribute that amount of 
money.  Now if local authorities come to us and say, your proposed distribution 
is wrong, it doesn't fully reflect our needs, you've made some mistake in your 
figures, whatever.  We will look at what they say and we will look again at our 
figures in the light of the points which they make.  That is the purpose of the 
consultation exercise on which we've embarked. 
DIMBLEBY:                              I'm sure that's what goes on.  The 
question I asked and what people want to know is:  is that figure of one point 
two billion it, or is there more because you're certainly aren't going to have 
people coming forward saying you've got your figures wrong, you're paying us 
too much. 
HOWARD:                                Well, it may well be that as a result of 
some point or other which one council makes, we need to look at the way in 
which we've treated that across the board and we may find we haven't been 
consistent and there may need to be adjustments elsewhere. 
DIMBLEBY:                              Rob Peter to pay Paul? 
HOWARD:                                No, no, no, of course, there has to be a 
limit because there has to be a limit to the amount of money the country can 
afford...(interruption) just as... - just let me finish - just as we in 
central government were capped by the Chief Secretary to the Treasury in the 
amount which we can spend on all sorts of desirable services.  We had to form a 
view as to what the country could afford and we've had to form a similar view 
as to what we can afford by way of grant to local government.  It's a very 
significant increase on this year - three point seven per cent increase. 
DIMBLEBY:                              And that's it? 
HOWARD:                                That is it in terms of the total amount 
but if we have got something wrong in terms of the distribution, then, of 
course, we will look at the points which Councillors make to us. 
DIMBLEBY:                              So overall there is no new money even if 
they come and see you and persuade you that they're being hard done by.  One 
final and very brief thought, if you've got all this wrong, they ain't going to 
show you any mercy, are they, in the Tory heartlands? 
HOWARD:                                I don't believe we've got it wrong and 
I'll tell you one important thing which people shouldn't leave out of the 
count.  I believe there's a very general desire across local government, Labour 
local authorities as well as Conservative local authorities, to put these 
arguments behind us to make a success of the Council Tax.  No-one wants to go 
through the upheaval of introducing yet another new system of financing local 
government.  I believe the Council Tax will succeed. 
DIMBLEBY:                              Secretary of State, thank you.