On the eve of the Labour Party conference, the Shadow Chancellor of the Exchequer tells Anthony Bevins of his plans for the economy
A CRITICISM made of Labour's counter-inflation policy is that it lacks beef, the so-called Big Idea. The Shadow Chancellor, John Smith, is contemptuous of that attack:
I don't believe in big ideas myself because I think a big idea is just a euphemism in many cases for a slogan. What we are after is a strong economy and a socially responsible society. I think you can get that. I don't know whether that's a big idea or not. I think it's a sensible, practical, achievable, moral idea. That's good enough for me.
So there was no Labour anti-inflation lever?
Life is too complicated for that. I don't think you can just pull a lever. You suggest we should be looking for something non-pragmatic. I don't think there is a non- pragmatic solution to inflation. Inflation is a complex phenomenon.
I think you have got to analyse what's causing inflation and do your best to meet it in every aspect of government policy. That is not a smart answer. I don't prance on to the stage waving a wand and say, "I have got the answer to this, just follow me." I don't believe it is a problem of that type.
Since he had a heart attack two years ago, John Smith has taken to hill- walking with a vengeance. In his room at the House of Commons, he has a wall-chart of Scotland with so many red pins stuck in it that it looks like a battle-plan for Labour constituencies. The pins are, in fact, stuck on every one of the 65 hills, the Munros, that he has conquered since last year. But the biggest uphill climb could be yet to come: the economy. "I think I will have one of the most challenging jobs there has ever been in British politics," he says.
But he is not daunted by the task; rather impatient to recover some of the ground neglected during the "lost years" of Thatcherism. He faces opinion polls, however, that reflect doubts about Labour's ability to run a sound economy. One suggested that 40 per cent of voters thought the Conservatives were still most likely to produce the most successful economic policies, compared with only 28 per cent for Labour, and a further quarter uncommitted.
Mr Smith finds that hard to swallow:
I think public opinion is changing very rapidly because there is manifest evidence now of Tory incompetence: we have the high rate of inflation; we have almost no growth; we have the highest balance of payments deficit in our history . . . The Labour Party is significantly ahead in the opinion polls and that's one of the reasons why.
Yet Kenneth Baker, the Conservative Party chairman, this week expressed supreme confidence that the Conservatives would again decapitate, if not slay, the many-headed monster of inflation and go on to win the next election. Just as they had done twice before. Mr Smith says he is encouraged by that complacency:
The reason why the Conservatives won the 1983 election was really non- economic. I think it was largely due to the fatal divisions in the Labour Party. I think they won the 1987 election on the credit boom. Now they're paying for it.
According to Mr Smith, people's votes are determined by a mix of self- interest and national interest; with individuals apportioning different weight to each factor. He adds:
I think there is a growing feeling that some of the things they don't like about Thatcherism have not been justified. We've paid the price but not got the prize. I think that's the principal disappointment about Thatcherism.
But, if self-interest was to dominate, it could well come on taxes - with the feeling that many voters, particularly those in the South, would risk jumping from the frying pan of high-rate mortgages into the fire of Labour's higher personal taxes. "We're not proposing a high personal taxation," says Mr Smith.
We are proposing that the top rate of tax should go up to a level of 50 per cent instead of a top level of 40 per cent. I think that's a moderate taxation increase which many people will not find unreasonable.
So Mr Smith really is a pragmatist? "Yes, happy to be thought of as one." He had no ideological hang-ups at all?
I have very strong principles. But I have always insisted in all my political actions that, while we must be driven forward by what I call a moral imperative, it must express itself in terms of sensible and workable economic policies. I am certainly not prepared to go any other way forward. I have made it very clear that we will earn before we spend.
Mr Smith has many more hills to climb yet.
From `The Independent', Friday