Yvette Cooper MP

On Sunday 14 December, Andrew Marr interviewed Yvette Cooper MP, Treasury Minister

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

ANDREW MARR: Anyway Gordon Brown may have risen above an attack from the German finance minister, but hes still got a heck of an economic battle on his hands at home.

There were more signs this week that things are going to get a lot worse before they get better - the pound now at a record low against the euro, car manufacturers are in trouble, thousands of staff at Woolies facing job losses at Christmas.

The Treasury Minister Yvette Cooper is in Leeds. Thank you for joining us, Miss Cooper.

YVETTE COOPER: Good morning, Andrew.

ANDREW MARR: Are you as a representative of the Government alarmed by the news over the past week?

YVETTE COOPER: Well we know that were seeing the economy not just here in Britain but also right across the world under quite considerable pressure as a result of the global credit crunch really having an impact now right across the economy.

But thats exactly why weve been done so much to try and support the economy - to do things like the cut in VAT, to do things like putting more money into the economy - and I think its very welcome that were doing that now in coordination with other European countries. The more countries that are working together on the same issue, whether thats in Europe but also in America as well, the stronger the response will be and the better our chances of coming through this faster and stronger as well.

ANDREW MARR: Nonetheless, you knew it was going to be bad. Are you surprised at how rapidly things are deteriorating?

YVETTE COOPER: Well I think nobody underestimated even 12 months ago that we would be in a situation where you know the biggest bank in the world had to be bailed out by the American government just a few weeks ago. And so these are unprecedented events, you know not just I think in any of our lifetimes, but you know, according to some commentators, perhaps ever in terms of the financial crisis hitting the world.

But I think the thing that is also unusual is the scale of the coordinated action between governments - governments being prepared to act together, central banks being prepared to act together. That, I think, puts us in a stronger position to respond to this and to come through this.

ANDREW MARR: Nonetheless, I mean youve been criticised by the German finance minister, youve been criticised by the Conservatives. The most eloquent criticism it might be said of your economic policy is whats happened to the pound.

YVETTE COOPER: Well I think weve never had a policy of targeting the pound. Our policy is to target inflation. And that I think has been the right one; it has paid off over the last 10 or 11 years.

I think well recall previous attempts to target exchange rates for example through the Exchange Rate Mechanism that were not successful and caused all kinds of problems. So of course its the case that there is volatility on the currency markets, which reflects the uncertainty in the world economy.

Nevertheless, I think were plotting the right course in terms of making sure inflations coming down but particularly the action to support the economy, to support jobs and to help us come through this.

ANDREW MARR: Is it perhaps a good thing? Is it one of the things that needs to happen for the pound to weaken, to help exporters?

YVETTE COOPER: Well youre right that it does have different impacts on different sections of the economy.

So when you see the sorts of changes weve seen in recent months, then that has an impact obviously on people who are about to go abroad, tourists who are about to change their currency to go on holiday, but it does also, as you say, have benefits for exporters as well. So you know currency changes do have different kinds of impacts on the economy.

ANDREW MARR: So youre not particularly concerned about the pound at the moment?

YVETTE COOPER: Well, as I said, we dont as ministers ever do running commentaries on the currency, on the pound. I dont think thats the right thing to do. But what we also do is say that you know thats not our target.

The point, the purpose of what we do is to support the economy overall and to make sure as well that we work with other countries to do that to help people through this.

I think people you know are worried about their jobs, theyre worried about their homes, and thats exactly when you need governments to step in and act, to do something about that, to help people through it in a way that frankly I think governments didnt do in the past and I know that you know the Conservatives are still opposed today.

ANDREW MARR: Well there are also people who are also presumably worried about the vast amount of borrowing needed for your strategy and about the consequences on taxation down the line.

Do you think that theres going to be even higher government spending needed given whats going on and given your strategy, and whats that going to do to taxes in a couple of years time?

YVETTE COOPER: Well we have set out significant action to support the economy in the short-term and thats the right thing to do.

And the reason we can afford to do that is exactly because we paid down debt while the economy was growing and that does mean our debt is lower than many other comparable countries, and thats why we can increase borrowing now to support the economy in the short-term and I think thats the right thing to do. Itll actually...

ANDREW MARR: Our level of borrowing is huge, absolutely huge, and it is going to require a massive tax take to pay for it perhaps for a generation.

YVETTE COOPER: Well hang on, I think two points in response to that. Firstly, if we dont act, if we dont actually step in to support the economy now and help people through this, it will cost us more in future because we will see a recession which lasts longer, which runs deeper, which keeps unemployment high for longer. You saw for example during the 1980s that unemployment stayed at over two million for almost the entire 1980s, exactly because government wasnt prepared to do more to actually support people into new jobs and to help people through this.

So if you actually have a deeper recession, thats damaging over the long-term, and thats why I think its so important to step in. This will actually help us and it would cost us more if we dont. I think the second thing is that of course youre right, youve got to bring borrowing down in future, and weve been straight about the need to do that, but you would need to do that regardless of what happens in the short-term because the global credit crunch is affecting the income from our financial sector into the future as well.

ANDREW MARR: And briefly, if I may, is deflation now a serious worry?

YVETTE COOPER: Well it is something that some commentators have been talking about and thats why I think weve been so clear about the importance of stepping in to support the economy.

What you cant do when youre faced with this kind of global problem is just rely on cutting interest rates. Its exactly why you have to use government action, coordinated government action across the world to help support the economy as well.

ANDREW MARR: Right.

YVETTE COOPER: Interest rates alone wont do it.

ANDREW MARR: Yvette Cooper, we thought you were gutsily carrying on with the studio on fire all around you, but Im told its just steam from a heating vent outside. Thank you for...

YVETTE COOPER: I think it is outside. Its not actually a kettle in the studio thats boiling here.

ANDREW MARR: Or anything worse. Thank you very much.

INTERVIEW ENDS

SECOND TRANCHE OF YVETTE COOPER INTERVIEW

ANDREW MARR: Now Yvette Cooper has been listening to that interview. Yvette, Sir John makes some very powerful points there against your policy, not least the fact that your government is the government that has piled up the debt.

YVETTE COOPER: Well Ive got a lot of respect for John, but I just completely disagree with him on this. And you know the idea that this is a national caused problem when weve got you know all the major countries in the world now on the brink of recession as a result of...

ANDREW MARR: Well he said it was two things.

YVETTE COOPER: ...the global private sector credit crunch...

ANDREW MARR: He said it was two things: he said it was the international side; but he also said that domestically we have piled up a huge debt problem.

YVETTE COOPER: But thats not whats causing the problems we face. And bear in mind, John Majors government actually doubled the level of national debt and also pushed borrowing up to about the same proportion of national income that were seeing here; but that was as a result of a home-grown inflationary problem where interest rates hit 15%, not as a result of the biggest financial crisis to hit the world for very many generations. So I think these situations are completely incomparable.

ANDREW MARR: Alright.

YVETTE COOPER: But what I would say is I think the big difference between us is I dont think its right to do nothing. I dont think its right to just let markets take their course when you have such big forces affecting families, affecting businesses...

ANDREW MARR: Right.

YVETTE COOPER: ...across the country. Its right to step in now because that will actually help us come out of this stronger and faster.

ANDREW MARR: Yvette Cooper from steamy Leeds, thank you very much indeed.

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

Your comments

Disclaimer: The BBC may edit your comments and cannot guarantee that all emails will be published.

E-mail this to a friend

Printable version