On Sunday 21 March Andrew Marr interviewed Chancellor of the Exchequer Alistair Darling. Please note 'The Andrew Marr Show' must be credited if any part of this transcript is used. ANDREW MARR: Last week's better than expected figures on the public deficit does make Wednesday's Budget perhaps rather more intriguing than it might otherwise have been. How Alistair Darling chooses to spend the extra billions he's unexpectedly found in his back pocket will tell us something important about Labour's approach to the election and what they'd do if they won another term. Well I'm joined by the Chancellor of the Exchequer now. Welcome. ALISTAIR DARLING: Good morning. ANDREW MARR: Good morning. Let's start by asking about the bank issue, the bank tax. Your government has said pretty clearly that you want to move by international agreement. The Conservatives have said they will move on a bank levy even if there isn't international agreement. Don't they have a point that it's time to take a lead on this? ALISTAIR DARLING: I think it could only work if there was an international agreement. And actually when I met my fellow finance ministers in Canada a few weeks ago, we agreed that we would work together to get such an international agreement because I think it's right that banks make their contribution to society generally. There's a separate issue: how do we make sure that we get our money back from the money we put into the banks? We will have our shareholdings. We'll be able to sell Northern Rock, for example. You'll see that bank is almost standing on its own two feet again, so I'm pretty confident we'll be able to do something there. In addition to that, the banks have paid us already 5 billion pounds worth of fees in relation to the extra support we made available. So I think we'll get our money back. But the important thing is to remember with this industry. Yes it's had its traumas and, yes, there's been some ridiculous things that have happened. This is an industry though that employs over a million people in this country and it is taking a hell of a risk, the Tory approach, in saying well actually they seem to be slightly indifferent to that. And I agree with the Philip Hammond of three weeks ago rather than the Philip Hammond of today. This is a policy they've made on the hoof. It's not the first time they've done it. They're getting the big judgements wrong; they're making things up for the next headlines. And I think, frankly, the Tory approach is pretty misguided, it's not thought out. Our approach is a much more sensible one and it'll work. ANDREW MARR: Let's turn to the Budget, if I may. Two possible budgets, I suppose, that you could produce. One is the one which says this is a very, very difficult time. These are austere times. There's a huge amount of money to pay back and life is going to be you know in many ways harder for the next few years. There's that kind of budget. There's the sort of Alistair Darling budget. And there's what some people have characterised as a sort of Gordon Brown budget - in other words a bit of that, but some jolly not rabbits out of hats perhaps this time, but sort of hamsters or guinea pigs out of the hat; a few election sweeteners. So which budget is it going to be? ALISTAIR DARLING: Well it'll be our budget, and it will very much … it'll be a budget that's focused on growth. If you look at what's happened over the last 15 months or so, we have had to take extraordinary action to support our economy - every bit of it, incidentally, opposed by the Conservatives. The public finance figures you saw last week are reflecting the fact that by supporting the economy, we are getting our revenue starting to come back in. Had we not done it, had we simply abandoned any support for the economy … ANDREW MARR: Sure. ALISTAIR DARLING: … we'd have been in deeper debt levels; we would have had more borrowing. So we're coming through that. The challenge for us this week is to make sure that we get growth in the future. Now if you look at what's happening in the world just now, in the developing countries - in Asia, South America - you are seeing quite good growth figures. For those developed countries in the West, our challenge is to make sure that government is prepared to do what is necessary to get growth. And when you look at what's happening in our industries, a little bit of government help can unlock a lot of private sector investment, and that is going to be the focus this week. ANDREW MARR: So you've got a little bit of extra money more than you'd hoped for on the tax side, tax receipts, but can you promise me that the next day the headlines aren't going to say 'Alistair Darling's budget sweeteners' or 'Pre-election giveaway' or anything of that nature? ALISTAIR DARLING: There's no question of giveaways. What we are looking at is how can we make sure that we can get more private sector investment coming back into the economy, so we get growth, so we get jobs in the future. Now … ANDREW MARR: Sorry, just pushing on that. ALISTAIR DARLING: Yes, of course. ANDREW MARR: Any money that's available to spend in a different way will go for industry, will go for investment, and will go for the economy; will not come to individuals to persuade them to vote Labour rather than Conservative at the next election? ALISTAIR DARLING: Look, I think the mood of people just now is they want to see a sensible, workmanlike budget - a budget for the times in which we live. A budget for ensuring that we secure the recovery because we're not out of the woods yet. You can see that in our country and other countries as well. But crucially a budget that's looking to the future. One of the … You know if you look at what's happening to us at the moment in industry, for example … ANDREW MARR: So no sweeteners, no handouts, no giveaways? ALISTAIR DARLING: Well I've said that I don't think the mood of the times is for giveaways. The mood of the times is for a budget that will look to the future. If you look at our industries, for example. Take the car industry last week. Twelve months ago, people were predicting that you know it was facing ruin, and yet you had the Nissan announcement, you had the Ford announcement. Nearly half the diesel engines in all Ford cars are made in Britain. With a little bit of government help, we've been able to unlock private sector investment. That will bring jobs in the future. ANDREW MARR: Yes. ALISTAIR DARLING: Now there's other sectors too - the creative industries, the pharmaceutical sector. All those areas are ones where we need to help if we're going to get the jobs that will come in the future. ANDREW MARR: And yet … ALISTAIR DARLING: It is very, very important that we do that. ANDREW MARR: And yet this is a strange kind of budget because it's weeks ahead of a General Election which is going to be a very, very tough fight. Surely the Prime Minister and No. 10 are telling you all the time give us some help, give us some help in the battleground constituencies, something in that budget? ALISTAIR DARLING: Look people are not daft. They know perfectly well that we've got to make sure that not only do we secure the recovery. We've got to get our borrowing down. And, frankly, any politician who planted a Christmas tree on the table and said, "There you are", people would just roll their eyes and say, "Oh well, you know you've clearly lost touch." What I will present to Parliament this week will be a sensible budget. I hope it will do the right thing by the country, by the people of this country. But, crucially, it's looking to the future. If we're going to unlock private sector investment, then government has to play a part in doing that. And I intend to make sure that we do that, so that we can, I can with confidence say to people - and there's a big difference between us and the Tories who for the last 15, 18 months have just said no, we wouldn't do anything. Government can't do it all. Government can't stand in the shoes of business people and make their decisions, but government can make a difference. It can make the difference between there being jobs in the future and opportunities for people in the future and simply resigning yourself to a decade of austerity. I don't accept that Tory argument. I think government can do more than that. ANDREW MARR: Sure. Are you going to need, if you win the election, another budget? Are you going to have to have an emergency budget, do you think? ALISTAIR DARLING: No, no. ANDREW MARR: So just one this year? ALISTAIR DARLING: We have … In this country, we have a budget once a year. ANDREW MARR: Right. ALISTAIR DARLING: We have a pre-budget report obviously. And of course this year we'll also be doing the spending review because the three year spending programme comes to an end at the end of March 2011. But the two events - the budget, the pre-budget report - that is not going to change. ANDREW MARR: Can I ask you about tax because a lot of people in your party would say given the parlour state of the public finances, you still haven't raised taxes enough - whether it's VAT going up to 20% or whether it's perhaps higher taxes or for more of the top earners in this country. Can you just give us some indication about whether taxes have in your view hit the roof in terms of what you can take from the economy to fill the hole, or whether there's still more? ALISTAIR DARLING: I think I've said before that I didn't raise the top rate of tax for people earning over £150,000 as a matter of ideology. I did it because we had to make a contribution to getting our borrowing down. And you know I … ANDREW MARR: (over) The question is really is that enough of a contribution? ALISTAIR DARLING: I think you've got to remember that tax rates have got to be competitive. People are more mobile than they were in the past. You've also got to make sure that whatever your tax levels, that they are reasonable. Now I've made it pretty clear that I thought putting the tax rate up to 50 pence whilst we get through this period, that was justified, but I'm very conscious of the fact that we've got to make sure that our tax rates are properly competitive. It's all about - and sorry to keep coming back to this, but it matters. ANDREW MARR: Sure. ALISTAIR DARLING: That if we are serious about getting a greater share of jobs in the future, you've got to make sure this country is competitive; you've got to make sure it's got a robust financial system; you've got to make sure that we're doing what we can to make sure our industries can tap into these massive markets. But we will not do it unless we play our role; we stand behind, we help people and we help businesses. ANDREW MARR: Well the reason I ask about it partly is that because Peter Mandelson, who would have agreed with every word that you've just said, I'm sure, also says and taxes may have to go up again after the election. ALISTAIR DARLING: I think … ANDREW MARR: I wonder about, for instance, VAT. Is that on the table? ALISTAIR DARLING: No. I said last December that I had a choice. You know I could have put VAT up or put national insurance up, and I thought national insurance was the better way to do that. But you know no chancellor is ever going to sit here and go through every single tax rate and say no, that's never going to change. That would be complete nonsense. What I can say is I have set out what I believe is a credible plan to get our deficit down over a four year period. I've said repeatedly that's not negotiable. That's not going to change at all on Wednesday; we're going to do that. But I've also got to make sure that everything else I do, whether it's tax or spending, that you know we remain a competitive country, a good place to do business, a good place to live. ANDREW MARR: You famously gave a gloomy but accurate account of what might be coming just ahead of the recession, as it was about to hit us, and you were pretty much proved right by that. Do you think politicians, including yourself, are being honest with the country, however, about the depth of the hole that we're in and the time it's going to take to dig ourselves out of it? The IFS has talked about the 2030s before the money is repaid and we're back on the kind of even keel that we ought to be. I mean we will both be old men by then. ALISTAIR DARLING: Well I hope that we have been straightforward in the sense that you know we all know we've been through one really very, very substantial downturn, certainly the largest in excess of 60 years. It will take time. But if you look at unemployment and the public finance figures, this perhaps illustrates the uncertainty that we're facing. If I'd been talking to you - in fact I think I was talking to you 12 months ago - and I'd said to you that unemployment is going to be a lot less and that the public finances were beginning to show an improvement - and you know we're not out of the woods there either yet - you'd have thought well that's daft. There's a lot of volatility, there's a lot of uncertainty around just now. What I can do is give my best estimate of what I think is happening. And, equally, when it comes to reducing the deficit, I think it's sensible to do it over a four year period, to half it over a four year period. To go further and faster, as the Tories are proposing, I think would present a risk to our recovery that I'm frankly not prepared to take. ANDREW MARR: You used a wonderfully vivid phrase about the Prime Minister's aides recently. You said "the forces of hell" had been unleashed on you recently. You heard Philip Hammond saying, oh well, Ed Balls will be the Chancellor even if Labour win the election. So what are your relationships with the Prime Minister like? Do you expect to be Chancellor if you win? ALISTAIR DARLING: Our relationship's very good and, frankly … ANDREW MARR: It's a funny kind of very good, isn't it? ALISTAIR DARLING: No, we've known each other for a long, long time, as you know. You know to parody Mrs Beaton, let's first win the election. I think the election, it's getting closer between the parties, it's all to play for. And there's a big … You know … ANDREW MARR: And if you do, would you expect to be Chancellor afterwards? ALISTAIR DARLING: I'm focusing on the budget and on winning the election. That is the thing that is in the front of my mind because I think there's a big argument between us and the Tories about the future of this country and what government can do and the difference it can make. And that's, frankly, where I'm going to be concentrating over the next few days and the next few weeks. ANDREW MARR: Alistair Darling, for now thank you very much indeed. ALISTAIR DARLING: Thank you. INTERVIEW ENDS
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