On Sunday 21 March Andrew Marr interviewed Shadow Treasury Secretary Philip Hammond. Please note 'The Andrew Marr Show' must be credited if any part of this transcript is used. ANDREW MARR: Well in a few moments, I'm going to be talking to the Chancellor, Alistair Darling, whose budget on Wednesday is expected to outline ideas for a global tax on investment banks. This would be Labour's preferred option for clawing back some of the billions in state funds swallowed up by the banking sector. Yesterday, however, the Conservatives said that if they win the General Election, they would introduce a unilateral tax on banks regardless of whether or not it gets international agreement. That will be news, or would have been news to the Chief Secretary of the Treasury, Philip Hammond, because … - Shadow Chief Secretary, I should say - this is what he said not so long ago, a few weeks ago on Newsnight. CLIP: NEWSNIGHT 25 JAN 2010 ANDREW MARR: Philip Hammond joins me now. PHILIP HAMMOND: Good morning. ANDREW MARR: So a huge change of tack. Why? PHILIP HAMMOND: Well it's become clear that this is now going to happen. The US is going to introduce a banking levy. Sweden has already done so. The consensus is growing, and at some point you have to make a decision to take some leadership. And we've now said that we will introduce this levy in the UK, and we will continue to push for international support for that levy. ANDREW MARR: But you've said, your leader has said he's going to do it whether or not other people follow. There you were saying there's no point in doing it unilaterally, whether or not other people follow it. It has to be international. Now it doesn't have to be international. PHILIP HAMMOND: We need to build an international consensus. We will introduce a banking levy in the UK. We said very clearly, David said very clearly yesterday that if the international consensus doesn't build further, it will have to be designed in a way that doesn't undermine UK competitiveness. That would be … ANDREW MARR: (over) You said that was pointless. You said that was pointless. PHILIP HAMMOND: But by saying that we will go ahead and implement the levy, we'll put a levy in place and then we will continue to go out there and argue the case for international support for that levy, so we build it from the front as leaders. ANDREW MARR: You can't sit there, surely, and say that you were pleased to hear what David Cameron was saying yesterday, given what you've been saying? PHILIP HAMMOND: Well of course I was. We discussed it internally and we decided that the moment had come when we needed to move into a leadership position and say that we will definitely do this in order to give a boost to the global consensus that is building. ANDREW MARR: Nobody else is actually at the moment going for this kind of levy or tax on banks. For very good reasons - that they're all frightened that the banks will leave the country if they do it unilaterally, and that's been the problem. PHILIP HAMMOND: Well the US has made it clear that it is going for this kind of levy on banks. And, look, the British public, British taxpayers and indeed taxpayers around the world have taken huge risks to support their banking industries, and it is right that in future the banking sector makes a contribution that reflects that risk that we're all taking on their behalf. ANDREW MARR: (over) So to be clear. Even if the Americans don't do it, we will still do it - even if that means banks leaving this country and going abroad? PHILIP HAMMOND: Well we will design it in such a way that it does not mean banks will leave this country … ANDREW MARR: How? PHILIP HAMMOND: … and go abroad. Well we'll put in place the structure of the levy. Clearly if the US levy has not begun, it will have to be set at a significantly lower rate - such that it doesn't become a major impediment to the competitiveness of UK banks. Once the levy is operating in the US, then it will be possible for us to set a levy at a rate which is competitive when looked at in the context of the US levy. ANDREW MARR: Let's talk about the British economy now just ahead of the Budget. A fragile recovery, but a real recovery in your view? Or is there a danger of returning to recession still? PHILIP HAMMOND: Well we all hope that it's a real recovery. And of course a lot of the markets business opinion is in a state of suspended animation, waiting to see the outcome of the election, because what they need is a clear and credible plan for reducing the deficit over a meaningful period of time, so that they can be confident that the public finances are in order and a clear and credible plan for supporting economic growth. Because it is only by getting the economy growing again, that we will ultimately get ourselves back on track. ANDREW MARR: Because your party's been pretty gung ho about the need to make quick cuts in public spending and possibly even tax rises. I know you don't want to do it, but you haven't ruled it out either. And there are plenty of economists who are worried about that - who think it's still too early … PHILIP HAMMOND: Yuh. ANDREW MARR: … that the recovery is still too fragile, and that we could return to recession. PHILIP HAMMOND: Well no-one, except apparently Liam Byrne, would rule out tax rises. Every chancellor and shadow chancellor has to keep that option open. But we've made it very clear that we believe the burden of adjustment has to be on the spending side. And our judgement is that the bigger risk to the economy is the lack of confidence that comes from not having a credible plan for fiscal consolidation, so we've got to get a plan out there which gets the deficit down to appropriate levels within the lifetime of the Parliament. And we've got to make a start in 2010 because a plan that says we'll start next year is not a credible plan in the eyes of many observers. ANDREW MARR: And you're the guy looking at the numbers in great detail. Are we going to get from you, or from David Cameron or George Osborne, further hard detail about exactly what you propose to do department by department before the election? PHILIP HAMMOND: Well I don't think we'll be able to set out department by department figures before the election. We simply don't have access to the information. But we will look at what the Chancellor sets out on Wednesday and the amount of detail that he gives; and if we can give more clarification about our own plans on the back of that, we will do. ANDREW MARR: It's a silly thing to say, of course, but politics aside as it were, what would you like to see Alistair Darling's headlines being the following day? PHILIP HAMMOND: Well I hope that Alistair Darling will set out a budget which is prudent, a budget for growth in Britain. But the real issue is whether Alistair Darling's budget counts for much. We all know that even if Labour were to win the election, Alistair Darling would not be the Chancellor. We don't know whether Labour would hold another budget after the election. So this may just be a piece of window dressing that we get on Wednesday. I think that's the real question hanging over this budget. ANDREW MARR: Well maybe that's the one I should ask you. Philip Hammond, thank you very much indeed for joining us. INTERVIEW ENDS
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