Hague: 'Lessons will be learned'

Please note 'The Andrew Marr Show' must be credited if any part of this transcript is used.

Shadow Foreign Secretary William Hague cautions all politicians to beware of leading Russians - while their country is acting like a 'bully'..

ANDREW MARR: After months of huge opinion poll leads when all they had to fear was complacency, life's become just a little tougher for the Conservatives last week.

The Prime Minister almost seems to be enjoying himself as the economic crisis grows.

As we've heard, the Shadow Chancellor George Osborne's tete-a -tete with a Russian billionaire threw an unwelcome spotlight onto the party's links with the rich and powerful.

Well I'm joined now from Yorkshire by the Shadow Foreign Secretary William Hague. Good morning, Mr Hague.

WILLIAM HAGUE: Good morning.

ANDREW MARR: Can I � It's not great for the image of your party or for the image of politics, all this hanging around with shady Russian billionaires, is it?

WILLIAM HAGUE: Well let me say this.

You've discussed on your programme quite a bit the image of politics as a whole, and I travel around the world quite a bit as Shadow Foreign Secretary and I must say that there aren't many countries in the world, even in Europe, that have a less corrupt political system than ours in Britain, whichever political party we are looking at.

And when there is any potential exception to that, our media do of course go crazy. They try to get to the bottom of anything that's going on.

Now that's why transparency is important and George Osborne has been absolutely right to set out all his contacts, Mr Deripaska - what happened at them, what they discussed. I think it's quite important for Peter Mandelson to do the same because this drip-drip revelation of things gives the impression there's something to hide.

ANDREW MARR: Do you feel comfortable about the fact that your party is taking so many donations from companies which while they might be formally British are controlled by foreign citizens?

WILLIAM HAGUE: Well all the donations that we take, so far as we know, are absolutely within the law. They are properly checked out and so I don't think there's any suggestion here that anybody in any of the donations of recent times is doing anything illegal.

Party financing laws are quite difficult to frame because of course once you get into the ownership of companies, well then what proportion of them has to be British owned? It's quite difficult to sort that out, but if people have a better idea for financing laws we'll look at it.

The parties have been discussing these things for the last year without the Labour Party ever wanting to address the problem of trade union finance and its immense influence over Labour, over the Labour Party, the Labour leadership and Labour policies. So really all of that has to be looked at in the round.

ANDREW MARR: But as Shadow Foreign Secretary, you know that there is a particular problem with a group of very, very wealthy Russians. You know that we in the West have a very serious problem with President Putin at the moment. Do you not give your colleagues advice? Should you not be giving your colleagues advice about just staying a little clear of these characters?

WILLIAM HAGUE: Well I think we all learn something from a media storm, and certainly I have in the past and George Osborne is a very, a very brilliant colleague of mine actually and a very close friend and we will all learn things from these situations. But you are quite right about Russia. Our dealings with Russia are very, very difficult. I've just come back from Georgia on Thursday where I met refugees from South Ossetia who are not allowed back to their homes in Russian controlled territory after the war in August.

And I actually - and this is on a much bigger scale of foreign policy - I have a great fear that many European countries want to go back prematurely to business as usual with Russia when it is not an appropriate time to do that as things stand. Russia has been a party to ethnic cleansing in Georgia and we do need to stand up to the bully otherwise we will pay even more later to stand up to the bully at a later stage. So that should, that background should of course condition all our contacts with Russia and with leading Russians at the moment.

ANDREW MARR: And so to be clear, for the Conservative Party to even think of taking money from a man who is the bully's best friend, or one of Mr Putin's best friends, would be an abominable thing?

WILLIAM HAGUE: Well let's also be clear - and again George Osborne has been very clear about that - that no money was asked for, no money was solicited. If any was offered, it was refused. No money was given to the Conservative Party. So that has, as far as I'm concerned, that has all been made clear.

Now, as I've said, we do need in the one area where there is a potential conflict of interest but we just don't know - in the area of Peter Mandelson's dealings with Mr Deripaska - we and I think the whole country do want to know transparently about the meetings that have happened and what was discussed at them and whether they ever discussed aluminium tariffs and so on.

If Peter Mandelson could put the record straight on that, then I think the media could move on to these immense issues of what's happening in a recession now in this country and these immense issues in foreign policy such as the ones I've just touched on.

ANDREW MARR: Well let's move on to those ourselves then. How do you think British politics is going to change as a result of the recession? I mean clearly the tone is going to be different, but what about your own party and the way it's presented itself? Are you having to adjust to these new conditions?

WILLIAM HAGUE: I think it's very important for the parties to say what they can actually do to help people during the recession and I think it's very important to set out the framework for the future, so that we will be in better shape for the future.

And the Conservative Party has been, as you know, busily doing both of those things and much of our conference was about creating budget responsibility for the long-term future. We're going into this recession with one of the biggest budget deficits in the world - as a proportion of our GDP more than Nicaragua, more than Uganda. Gordon Brown was so convinced he'd abolished boom and bust that he didn't think he had to set any money aside for the future. And that long-term framework has to be established.

The Conservative Party is addressing that, and in addition what can we do to help people now. And I think there the ideas are coming from the Conservative Party - to cut the rate of tax on small businesses, to freeze council tax for two years with the help of local councils, to do things like that that actually help people in their daily lives now. And those ideas are coming from us in the Conservative Party and they will continue to do so.

ANDREW MARR: So given all of that, you must be frustrated and surprised that Gordon Brown appears to be the beneficiary at the moment of what's happening?

WILLIAM HAGUE: Oh, I think it would be counting chickens far too much in advance to think that Gordon Brown has been the beneficiary. I don't think that's the case at all.

I think people can increasingly see - and certainly will see as the economic situation that looks to be upon us develops - that compared to when Gordon Brown became Chancellor, we have inflation three times higher, we have government debt higher, we have �5,000 on average more in taxes for every family in the country, we're going into this recession in one of the worst prepared states of any of the developed countries - certainly of the G7 countries.

Other countries have been taking their budgets back to balance or improving their public finances. So I think it would be very strange if the electorate rewarded Gordon Brown for that and I don't think they will do so. I think they do want a change at the next election. The Conservative Party has to keep living up to being that change and we will do so.

ANDREW MARR: Well speaking of change, what about the American elections because clearly that is the other huge international story. Just give us your reading of what a difference it would make to see for instance Barack Obama - it may still be McCain, we don't know - the scale of the change that's going to happen in America.

WILLIAM HAGUE: Well of course it would be a big change. If Barack Obama wins with a huge Democratic majority in the Senate and the House of Representatives - and that certainly looks like a serious possibility - then you do have a President in Washington who begins with enormous power. And, as you know, we don't choose in the Conservative or Labour Parties in Britain between who we want to win. We have to work with either side. But in that scenario, you get a President with enormous domestic power and indeed in foreign affairs.

In either situation, the demands on the new US President to give a lead in foreign policy, to reinvigorate American foreign policy in a way that gives a lead in the world in dealing with Russia on issues such as the ones that I've mentioned, on dealing with Iran, on putting a new focus on Afghanistan which is sliding backwards at the moment - these are immense responsibilities and very difficult because the financial crisis is weakening American power in the world. So the new American President has to be an extraordinary leader and I think we're fortunate there are two such good candidates to possibly fulfil that role.

ANDREW MARR: Diplomatically said. Finally, you've watched the economy very, very closely; Party Leader yourself in the past. How bad do you think it's going to get now here?

WILLIAM HAGUE: We don't know. No politician knows. They're kidding you, indeed as any economist, if they tell you how bad things are going to get, and it's very important for us as the opposition and indeed the government not to talk things down, not to destroy people's confidence. One of the things Alistair Darling did wrong the other week was to say it would be the worst for 60 years, which was not the message from the Chancellor that should be going out to the country.

But clearly after Friday's GDP figures, the economy has turned down. Now we need to restore confidence in the economy and a good start is to take some of those practical measures I've been talking about to help people and set out the long-term framework for the future. But neither I nor any economist, however experienced, knows how bad it is going to get and we would be kidding you if we said we did.

ANDREW MARR: And in a word, do you see yourself taking over the economic brief at some point?

WILLIAM HAGUE: No, I do not. I came back into the frontline of politics, which was a difficult decision for me, to help David Cameron and to do foreign affairs and that is what I intend to keep on doing. I can tell you the challenges are quite enough in the foreign affairs field - all the ones that I've mentioned and many more - and the outlook, the sky is darkening in foreign affairs just as it is in the economy and I am particularly applying myself to that brief.

ANDREW MARR: William Hague under dark skies in Yorkshire, thank you very much indeed for joining us this morning.

INTERVIEW ENDS

Please note "The Andrew Marr Show" must be credited if any part of this transcript is used.

NB: This transcript was typed from a 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

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