'This is abuse of police powers'

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

Former Home Secretary Kenneth Clarke says Mr Green is owed an apology.

ANDREW MARR: Now the last time Britain was in real economic trouble, a government took painful action and the country recovered, though the Government did not because the grateful nation kicked out John Major's Tories.

And the Chancellor then was Kenneth Clarke. Former Home Secretary as well. He joins us now from Nottingham. Welcome, Mr Clarke. Thank you for joining us.

KENNETH CLARKE: Good morning, Andrew.

ANDREW MARR: Can I ask, first of all, you were enthusiastic about a cut in VAT. I wonder, do you think that the pre-Budget Report is going to do enough to stave off the worst of the recession?

KENNETH CLARKE: Well, to be fair, the journalists who reported me were good journalists, the ones I gave interviews to. I stressed if we could afford it, I was in favour of VAT reduction.

Once we got the PBR, it's obvious we couldn't afford it. If we could have afforded a fiscal stimulus, I actually think a VAT cut is the best. Opinions vary, but it is targeted at spending. People are now deriding it as if cutting prices doesn't matter at all. The main effect of a VAT cut is on big ticket items - cars, carpets, furniture.

They're the things that people will think of spending their money on because it makes quite a difference with those, particularly if they know the VAT's going up again. But once you had the figures revealed to us, it was obvious that the burden of debt we'd already accumulated was so enormous, you couldn't possibly afford a fiscal stimulus in this country at all.

ANDREW MARR: So, as I said, you were there last time - 95, 96. What would you be doing now?

KENNETH CLARKE: What I would be doing now is tackling the banking crisis. This remains a banking crisis. Gordon Brown bestrode the world explaining how he'd save the globe, but his package didn't work and that's the reason the banks aren't lending at the moment.

All the politicians are doing, we're all democratic politicians, is abusing bankers, which is very popular at the moment - kind of ordering them to lend money. That is a complete waste of time, although I could blame them for causing the crisis. I can attack bankers as a democratic politician myself.

The problem is their balance sheets, the problem is all the toxic assets on the balance sheets, the problem is the banks can't lend money. Banks make money by lending it to other people and you have to address why they're not. And given that Gordon Brown's first package to rescue the banks didn't work, I think we're going to have to have another. And the fact that the public finances are in such an appalling mess and the burden of debt is so bad is going to make it more difficult to get the banking system actually functioning.

ANDREW MARR: When... Sorry�

KENNETH CLARKE: Till it's functioning, we're going to get nowhere.

ANDREW MARR: When you say we're going to need another round of this, do you mean another round of taking control of banks, putting public money in, possibly putting public officials in charge in banks?

KENNETH CLARKE: Well I'm not sure about the last, but I think we could well need some more recapitalisation. Yes, that is possible. I think at the moment I'd concentrate on guaranteeing lending a proportion of it, and doing so carefully.

But until the banks are going for ordinary commercial lending, having assessed whether the person to whom they're lending the money can afford to repay it, going for prudent lending again, you cannot get real economy functioning. And that's why we're going into such a deep recession at the moment.

ANDREW MARR: So we could end up actually with the public nationalising most of the British banking system?

KENNETH CLARKE: Well it's possible. I mean I think even the Governor of the Bank of England had to say he didn't rule that out. A great friend of mine, then the Prime Minister of Sweden, the Conservative Prime Minister wound up having to do this about 12, 15 years ago.

I was once in a government that nationalised Rolls Royce. I don't advocate nationalisation for anything, but putting public capital in, if it's necessary to get the banks to go, is something I supported. Indeed I was recommending we did that before Gordon Brown produced this package, which isn't working.

ANDREW MARR: Yes, okay. Apart from being Chancellor of course, you were also Home Secretary in your time. Had an official come to you and said, "By the way, Home Secretary, we're just off to arrest an opposition politician as part of a leak inquiry and we're going to put officers into his home", how would you have reacted?

KENNETH CLARKE: With fury. I can't control a policeman, but I can control an official. Once I heard the facts of the Damian Green case, I would have actually said this is outrageous. There is no crime, this is an abuse of police powers, this is President Nixon's America harassing a political opponent of the Government. It should stop. If they hadn't told me beforehand, I would be furious, absolutely furious.

Why didn't you come to me, something so politically sensitive. Once I heard of it, if I'd been Home Secretary, heaven forbid if I'd been Prime Minister, my first reaction would have been outrage. I would have said I apologise. I want an inquiry into who authorised this ridiculous action. And I would certainly have sent an apology to Damian Green and his family.

This is President Nixon's America and any decent lawyer, any decent policeman, any decent politician - and I actually think 90 per... - and any decent journalist - and I think 90% of people who practice those trades are decent people are absolutely horrified by using the Special Branch to rough up, not physically, but to intimidate someone who's been embarrassing the Government with political exposures.

ANDREW MARR: And what about the arrival of officers inside the House of Commons and the cutting off of email contacts with the constituents?

KENNETH CLARKE: They should have been told to go away, absolutely.

ANDREW MARR: But that does speak of Martin's failure?

KENNETH CLARKE: Well or the Sergeant at Arms, whoever let them in. You should not let them in to search a room unless they satisfy you they have reasonable grounds. Now if it's crime, of course they should. I mean my room should be searched and the speaker should allow the police to come in.

If I am accused of fraud, dishonesty - any crime of dishonesty, any crime of violence - I'm as subject to the law as you are and every other citizen. But if it turns out that what they come about is some politically embarrassing leaks which have been annoying the Home Secretary, the speaker, the Sergeant at Arms should do you know poor man's equivalent of the speakers who faced up to Charles I and Oliver Cromwell and tell them to go away and tell them about parliamentary privilege.

The last time any MP was threatened with prosecution for using leaked documents was Duncan Sands before the war and he instead of giving into the threats claimed parliamentary privilege and he was upheld. Although in that case, Duncan was getting documents from the Ministry of Defence and was using them to attack the appeasement policies of Chamberlain. What we've got this time is political rubbish that was being leaked with no, absolutely no classification or security content at all.

ANDREW MARR: Kenneth Clarke, thank you very much indeed for that.

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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