Shadow business secretary and electoral reform supporter John Denham talks to Andrew Sparrow about the graduate tax, higher education, and why the Lib Dem leader should avoid the AV campaign
On the wall of John Denham's office in Portcullis House is a map of Britain produced by the Municipal Journal, coloured in such a way as to show which party controls which council. It was produced in 2010 and, not surprisingly, it's mostly blue. This is something that should worry all Labour MPs. But the shadow business secretary is one of the very few Labour MPs who represents a southern seat outside London – he held Southampton Itchen with a majority of just 192 – and he has got a particular interest in how his party can win in England. However, if he finds the MJ map depressing, he did not let it show. He was relentlessly positive throughout our interview, which covered policy, the state of the Labour party and Denham's resignation as a minister over the Iraq war. Here are the highlights:
• Denham suggested Nick Clegg and the Lib Dems should take a low profile in the alternative vote campaign to avoid damaging its chances. "There is a real issue of judgment about whether some people's image is so bad it would actually damage the AV campaign," said Denham, a strong supporter of electoral reform. "Too close an association between the AV campaign and one single political party, the Liberal Democrats, won't help the overall campaign," he said.
• He said it would take Labour time to win back the support of business. "We did lose the support of business, and people will not flood back overnight," he said.
• He said Labour had to "articulate the concerns of people in commuter towns". In an echo of Nick Clegg's claim to be speaking up for "alarm clock Britain", Denham said Labour had to be "speaking about the lives of people who get up at 6 o'clock in the morning, or earlier" to commute into work.
• He dismissed Lord Browne's report as "not a serious piece of analysis" in what it had to say about the graduate tax.
• He signalled that Labour will delay producing details of its graduate tax proposals until much closer to the next general election.
• Around "a couple" of Labour ministers told him that they wished that they too had resigned over the Iraq war, he revealed. He did not say who they were.
At the end of the interview Denham suggested we should have talked more about growth. There were several questions about this when I posted a blog earlier in the week inviting readers to suggest things that I should ask, but we ran out of time. If you want to know what Denham thinks about growth, do read his recent speech on the subject to the Smith Institute. As for everything else, here's the transcript of our conversation.
Winning back lost Labour voters
Q: When I invited people to post questions for this interview on a blog, I was struck by the number of disillusioned Labour voters who wanted to ask you why they should return to Labour. Like keithwebb [at 10.02am] who said he left Labour "after Iraq and lack of action on workers rights and lack of promotion of industry". Or Marion57 [at 10.15am], who also mentioned Iraq and wanted to know what the party could do "to persuade past Labour activists back to the fold". What do you have to say to people like that?
A: If you look at what the Tory-led government is doing, you can see the destruction that is being caused to our country, to working families and to the poorest communities by a very different set of values to the Labour party. Whilst, of course, people who broadly support Labour will always find things that they disagree with - and I left the government over the Iraq war - nonetheless I believe that a government with Labour values, working hard to put them into place, offers a far better choice for the people of this country. It's as simple as that.
Resigning over Iraq
Q: You mentioned your resignation in 2003. When you resigned, were you told that you would never be a minister again?
A: No. There was no discussion of it either way. I'm not the sort of person who would have been influenced by a discussion about my future. My own personal view was that I had no right to expect that I would come back into government because I could understand that lots of colleagues had loyally supported the government, even though they had misgivings.
Q: Since then, have any of your government colleagues said to you that they wished they had done the same thing?
A: A few have, a few have. But very few. Many have said that they respected my decision but disagreed with it. So it would be wrong to suggest that there were a lot of people who actually said I wish I had done what you have done. But I can probably think of a couple.
Q: Your resignation speech seems remarkably prescient in the light of what happened in Iraq. ["It will turn many parts of the world against us, undermine friendly governments, fuel terrorism and those who will join it in the future, and make it more difficult to sustain international action against common problems," Denham said at the time.] Yet, as far as I know, you have never publicly stood up and said "I told you so". How have you managed to resist the temptation?
A: I can't see how there would have been a value in doing that. To me, the whole reason I'm involved in politics is to be involved in changing the world. I'm not interested in striking positions. I could not personally say that going around after the Iraq war vote saying "I told you so" was going to make any difference to anybody. I would rather devote my energy, as I did, to doing jobs in parliament where I felt at the margins I might be making a difference.
Labour's relations with business
Q: In Tony Blair's memoirs, he writes about the moment during the 2010 general election campaign when 30 or more business leaders came out to support the Tories over national insurance. Blair phoned Peter Mandelson to ask if Labour had any of its own business supporters, and Mandelson said: "No, they won't come out for us." Blair said he thought losing business support was hugely damaging because voters believe what chief executives say about the economy. "Once you lose them, you lose more than a few votes. You lose your economic credibility. And a sprinkling of academic economists, however distinguished, won't make up the difference," Blair wrote. Do you think Blair's right about that?
A: The first thing is that there is no future for the Labour party if it is not a party that understands the importance of private sector business success and growth. He's making an electoral observation. I would make a more fundamental one. Unless the Labour party understands that a critical part of the world and country we want to create is one in which private companies do well, one in which setting up your own business is as important to social mobility as going to university or having an apprenticeship, we will not succeed as a party of government.
The second thing is that you have to have businesses, or at least enough businesses, prepared to support you, or to endorse you, or to acknowledge that you would be a good party for business in order to succeed. That measure of economic credibility is a good one. So Blair is right about that. That does not mean that you have to therefore go round saying, what does business want, let's do that. Because had we done that, we never would have done the minimum wage.
Q: What's happening to bring business back? I'm hard pressed to see anything that has happened over the last six months that shows the party trying to win back those people who wouldn't come out for Peter Mandelson?
A: Look at the speeches I've been making about growth. Look at the issues that we have raised repeatedly, about the chaos in the planning system, about the destruction of the regional development agencies, about the withdrawal of funding for regional growth, our criticism of the chaotic way they are dealing with broadband - where it gets ripped out of [the Department for Business] only because of [Vince] Cable's personal failings. There are a whole series of issues where we have very clearly been setting out the view that would be shared by the majority of business. Indeed, Richard Lambert's speech on growth - it owed nothing to the speech I had made the week before, but it was very similar in its analysis.
Q: But is there any evidence yet that these business people will be prepared to vote for you?
A: You've got to recognise two things. One is that we did lose the support of business, and people will not flood back overnight. It's a matter of rebuilding confidence and the relationships with business. Secondly, businesses are pragmatic. Most business people, however they vote, are not primarily driven by political considerations, but by who is going to be good for business. So there will, for some time to come now, be an understandable view in business that they need to deal with the government in place.
Q: The standard Tory charge against Labour is that there's hardly anyone in the shadow cabinet who has actually run a business, and that means that you, institutionally as a party, somehow don't understand them. Do you think there's any truth in that?
A: I don't think so. But it is something that people like me, who have certainly run what these days would be called a social enterprise and when I did it used to be caused a charitable business, do nontheless recognise. It is very important to put in the effort to understand people who do business, and what makes business tick.
Tuition fees and the graduate tax
Q: One of the people who posted a question on the blog [bingethinker at 7pm] wanted me to ask you how can Labour "take the moral high ground on tuition fees when Labour introduced them? Does this smack of hypocrisy?" What would you say to that?
A: What I would say to that is that we had got public spending on higher education to record levels, that we had reached the feasible limits of public investment in higher education given the other priorities, like under 5s provision and apprenticeships. So introducing top-up fees meant that the universities got more money, the expansion of student numbers could continue and universities were able to address some of the quality issues that they were concerned about.
These fees from the government are nothing about raising money for higher education. The higher education teaching budget has been cut by 80%, and cut by 100% for most subjects, which means that instead of the fees being a top-up on record levels of public expenditure, they are actually replacing entirely publicly funded degrees. Graduates are being asked to pay for the whole of their degree on most courses.
Q: Can you clarify what Labour's position is on the graduate tax? Is it party policy to have one? Or just to look at it?
A: It's party policy that we want to move towards a graduate tax. We look at the repayment system proposed by the government. There are two problems. One is that the cost is huge. That is because graduates are being asked to pay for the whole of their degree. But, secondly, if you look at the profile of payments, the costs fall most heavily on the middle-income graduates in average graduates jobs. They pay a much higher proportion of their lifetime earnings and their annual earnings than the people in the highest-earning graduate jobs. A graduate tax enables you to have a fairer system of repayment.
Q: Isn't it the case that a graduate tax would also impose a much higher cost on students over their lifetime?
A: No. The first thing you've got to ask is how much does the graduate have to pay for. If you make the graduate pay for the whole of the cost of their degree, it is going to cost a lot of money, whether you call it a graduate tax or a fee system. But the idea of a graduate tax is not about the amount that you pay. It's about the profile of who pays and whether those who are best able to pay make the biggest contribution. It doesn't cost any more than a fee system and, arguably – although I would not make this the major argument – should be simpler to administer.
Q: Lord Browne looked at the graduate tax in his report on tuition fees (pdf) and he produced one chart [on page 10] with at least eight objections to a graduate tax. One of which was that all the money needed would not start coming in until 2041. Do you take those objections seriously?
A: That was not a serious piece of analysis. Basically Browne looked at one way of doing a graduate tax. It was a straw man of his own choosing.
Q: Do you mean by that he was assuming the graduate tax would have to meet the entire costs of tuition, not just part of it?
A: There are lots of different ways of doing one. We are not going to start setting out the detail of higher education policy, or graduate contributions, so far away from an election when so many of the impacts of the new market system are unknown. But we don't accept the Browne report as a description of a graduate tax. We will obviously work on the way to move towards a graduate tax as we move towards the next election. We are certainly not going to start producing a detailed plan now when you haven't even seen the beginning of this huge upheaval in higher education. Clearly, what matters is that the policy that we have at the next election works for higher education as we find it then, not as higher education was before the reforms in 2010.
Q: I wouldn't expect you to have a worked-out proposal now for one moment, but there are people who say that a graduate tax is inherently unworkable. I'm just trying to find out whether you think this really can work, or whether this is just a holding position.
A: Moving towards a graduate tax can work. There's no doubt about that. As with all policies, there are issues that you are going to have to work through. In doing that you also have to make sure this is going to work for whatever state the higher education system is in in three years' time, or five years' time.
Q: Nick Clegg was asked about this in a Guardian interview before Christmas. He tried hard to get officials to come up with a way of getting a graduate tax to work. He said the "turning point" was when they explained to him that European students would continue to be able to pay upfront fees, because they are taxed differently, and that therefore British students would still have to have the option of paying upfront fees, and that this would benefit the rich. At that point he decided it was just undoable.
A: They are introducing a system that is going to mean that poor students from, say, Estonia or Lithuania will get a British taxpayer subsidy to have an education at British universities. There are all sorts of issues that arise from being in the European Union. I don't believe that there any issues about us being in the EU that are fundamental, in the Whitehall jargon, "showstoppers" that make a particular policy unworkable.
What Nick Clegg is trying to do is wriggle out of three things. One is he promised not to do this. Secondly, he has chosen to impose much bigger cuts on universities than the rest of the public services and has backed an ideological rightwing idea that all graduates should pay for their degrees. The man who said before the election that this would be a disaster now says this is a better system. He is throwing smokescreens all over the place to justify his decision. What he says is he thinks this is a better system than the one that we have at the moment. I don't agree.
Merging universities with the Department for Business
Q: You're shadowing a department that is in charge of universities and business. You were in government when the decision was taken to merge the two. As one reader on the blog [simonk at 11.06am] asked, do you think that was sensible?
A: I became secretary of state at innovation, universities, and skills. [Setting up that department] was a good decision because I think it is better for further education and higher education to be in essentially an economic department rather than a pure education department. That's controversial. But I actually think higher education and further education generally will get a better deal for being recognised for what they are, which is huge drivers of prosperity and growth and jobs. The decision to merge [the Department for Innovation] with [the Department for Business] I think you can argue both ways. It does create a very big department, and therefore managing it and leading it is a challenge. On the other hand, I can't say I'm so exercised about it that I think you should rip them back out again.
The alternative vote campaign
Q: You're a supporter of AV. Do you think the campaign is going well at the moment?
A: Yes, I think so. There's a lot to play for.
Q: Why do you think it's going well? I can't see much evidence of that. [The YouGov tracker figures on this chart show that support for AV fell quite sharply towards the end of last year, although it does seem to be picking up a bit now.]
A: Well, the more recent opinion polls are suggesting that there are rather more people who support change than don't support change. And there's a large group of undecided people. I therefore think that it's all to play for.
What's quite important is that the AV referendum is seen as a chance for voters to have a say about what sort of voting system they want, not another chance for politicians to tell people what they should vote for. So whilst people like me will be clear about where we stand, it's not our referendum. It belongs to the British people.
Q: Someone posted a question on the blog [padav at 12.13pm] about this saying, given your support for AV, will you condemn the "scurrilous and nakedly tribalistic activities of Charlie Falconer and his stalwart band of Luddite wreckers" in the Lords over the AV bill.
A: No. Because I think the scandal – and it is one of the things that is making the AV campaign much more difficult – is putting together the very simple proposition that people should be able to choose whether they want to change the electoral system with a completely unrelated process of not just reducing the number of seats in the House of Commons, but doing away with all the procedures and safeguards and effectively the independence which has governed boundary changes in the past. I think that's outrageous. And I'm very proud of people in the Lords who have said this is a complete break with all the history and tradition about how in our constitution we deal with issues of constituency boundaries.
Q: Do you think Labour collectively ought to be doing more to campaign for AV?
A: The reality is the party is split on AV. There isn't a consensus position and even if you tried to force a majority vote one way or another at conference it would simply have shown that people in the party have strongly held, different views. So in reality the party as a national organised campaigning machine can't be on one side or the other.
Q: Would you share a platform with Vince Cable on AV?
A: I don't think I want to get into a game of going through lists and lists of who is acceptable and who isn't.
Q: I haven't got a list. I'm just asking about Cable.
A: I'm sure at some point in the election campaign I will share platforms with people who are not of my party who also support electoral reform. I don't have a bar to doing that. I think there is a real issue of judgment about whether some people's image is so bad it would actually damage the AV campaign.
Q: You mean Labour people should not campaign with Nick Clegg?
A: Well, does that encourage your voters to go out and vote yes or not? I'm not quite sure. On the AV campaign, the judgment is going to be two-fold. One is, we are going to be working hard nearly everywhere to get the maximum Labour votes for the local elections. That's why it's been so daft to have the referendum on the same day as the local elections. Most Labour people, including me, are first and foremost going to campaign for every Labour vote. The second thing is, if I'm sharing a platform, is that going to make us more or less likely to win the AV referendum? And is it going to detract from or add to the local campaign we're doing in the elections? I think it's going to be that sort of judgment.
Q: On that basis, would the Lib Dems be best advised to take a long holiday in April? That seems to be implication of your analysis.
A: It is one very good reason for making it clear the AV referendum is an opportunity for the British people to decide on their voting system, and to avoid any suggestion that the AV issue belongs to a particular political party. That would be right in any case. But at a time when that political party is particularly unpopular, too close an association between the AV campaign and one single political party, the Liberal Democrats, won't help the overall campaign.
Labour's election rules
Q: On voting systems, Ed Miliband has said he would like to change the way Labour elects its leader. Have you got a view as to what he should do?
A: Not a fixed view. There's a good case for looking at the millions of people who support us, for example those in the trade union movement who of their own free will give money that they know goes to the Labour party ...
Q: They get a vote anyway.
A: They get a vote, but the turnout was very low [in the union section], much lower than any of us would have liked. In electing the leadership, and in wider participation in the Labour party, we need to engage them far more fully than we do at the moment. There is a case for looking at how we could reach out to people who are long-term supporters.
Q: Do you think it's important to keep an electoral college that gives greater weight to the votes of MPs?
A: I'm not sure about people like me who have more than one vote in the electoral college. I think that there is some value in having a system that gives a reasonable weighting to members of parliament. You can argue against that, but there is the Iain Duncan Smith history in the Tory party. There are systems where you can end up with a leader who's standing is so low in the parliamentary party that they find it difficult to function as leader.
Labour and the south of England
Q: I want to ask about Labour and the south. You spoke about this to the Fabian Society last year.
A: Almost annually for the last 20 years, I think.
Q: I was struck by this line in your speech. "Perhaps the greatest danger to the party in opposition is that the centre of gravity of party thinking settles on the concerns of the areas where we did win; and not in those where we lost." You've now got a shadow cabinet which is now almost half filled with MPs from Yorkshire. Are you concerned that the centre of gravity has shifted too much to the north?
A: No. Because I think there have been clear issues where we have obviously been expressing concerns which are widely shared across the whole country, including the south of England. For example, our criticism of the health service reform, or our campaign against the police service cuts, or the privatisation of the Forestry Commission. We are taking issues that have a deep resonance in the south and west and eastern parts of England, as they do in other parts of the country.
But I think that we also have to recognise that the Labour party has got to rebuild in the south, as we did after 1992. We are in a very similar position. We had 10 MPs then [in the south of England, outside London]. We have 10 MPs now. So, in the run-up to the local elections and beyond, there has to be a huge organisational and political effort to rebuild the Labour party.
Q: Is there anything more that Labour should be doing, organisationally or in policy terms, to win support in these areas?
A: I'm not going to say the party should be doing more, because I think the party is doing the right things. But it is very important that we, for example, articulate the concerns of people in commuter towns. On average, if you live in the commuter towns around London, your living costs are 20% higher than the national average. The Labour party needs to be seen to be speaking about the lives of people who get up at 6 o'clock in the morning, or earlier, to get to the station to come to London, to pay a very high train bill, to work long hours. If they are working in the public service, to have their pay frozen and bigger pension contributions. We need to be very clear that the idea of an active policy for growth is not an issue just about poorer northern regions. When you see Pfizer pulling out of Kent, you realise that government policies, or the lack of them, goes to the heart of the very prosperity that people have enjoyed in the south-east.