On Sunday 25 July Andrew Marr interviewed the Shadow Chancellor Alistair Darling MP. Please note 'The Andrew Marr Show' must be credited if any part of this transcript is used. ANDREW MARR: Now then, new figures on Friday confirm the British economy has been growing in recent months faster than at any time in the past three years. Does that therefore mean that the medicine applied by Gordon Brown and his Chancellor over the past two years did in fact work? Because, on the other hand, there were certainly fierce disagreements between the two of them as to exactly what the required medicine was. So who called it right? Alistair Darling, good morning to you. ALISTAIR DARLING: Good morning. ANDREW MARR: Let's start talking generally about the economy because everybody greeted these figures with a certain amount of surprise, but also relief. Do you think, therefore, that we are putting the recession fears behind us or is there a possibility of a double dip still, do you think? ALISTAIR DARLING: I think the figures are very encouraging and it bears out what I've been saying for the last two years. We needed to support our economy to get it growing again. The figures last Friday were good, but no-one could possibly say we're out of the woods yet. You know if you look at the nitty-gritty of the figures, there are signs that you know we've still got some way to go. I think the big risk now is that the policies which the new government is choosing to implement - because remember these figures on Friday demonstrate one thing very clearly, that far from things being worse than they thought, the economy is actually growing faster, our borrowing is lower - the risk is you derail that recovery or you end up with the economy bumping along the bottom, which means you don't repay your borrowing as fast as you want, nor can you do the things you'd want to do as a government. ANDREW MARR: So with the sort of dust and smoke and noise of the election now behind us, do you still think that this government is cutting too fast and too deeply? ALISTAIR DARLING: I think they're taking a hell of a risk. And what's clear is they're choosing to do this. They're going to take another £40 billion out of the economy, which will damage some of the things that I think really matter to our country's future. They're choosing to do it. They don't have to do it; they're choosing to do it. You know everybody knows you've got to get your borrowing down, but I always wanted to do that in a sensible way, a measured way - at the same time making sure that the economy had the capacity to grow in the future. Look what's happened to Ireland. Ireland got downrated by the credit rating agencies last week. They cut right across the board, yet the credit rating agency concerned said look, we doubt they've got the capacity now to grow. That's the risk that this lot are taking, and I don't think that risk can be justified. ANDREW MARR: It's very hard to sort of pinpoint one issue during an election campaign which has a big impact, but Labour's jobs tax was something the Tories used against you on the national insurance rise which you were putting in. And we now read from Peter Mandelson's book that you were quite keen on the idea of VAT going up instead of doing that. Was that a battle you wish in a way you'd won? ALISTAIR DARLING: Well yeah, obviously. There's a choice really: you can put up VAT or you can put up an income related tax, which is what the national insurance is. Actually the present government have got both. It's been rather missed. They're both putting up national insurance and the VAT's going up. The advantage of VAT is it brings in a lot of money. It would have allowed you to have done you know a lot to take down the deficit, but also given you money to spend on things that actually matter, and would have mitigated some … ameliorated some of the worst effects of reductions. ANDREW MARR: Yuh. ALISTAIR DARLING: But you know you can make a respectable case frankly for both, but you know it's no secret - I said it at the time, and since Peter has actually spelt out the gory detail … ANDREW MARR: (simultaneously) Some detail. ALISTAIR DARLING: … I'm not going to deny what was patently true. ANDREW MARR: Yes. You had a very rough time from time to time with your old colleague, Gordon Brown. I mean you talked about "the forces of hell" and so forth. How bad was it? I mean did you know that you he was trying to take your job away from you? ALISTAIR DARLING: Look, a lot of this is fairly well documented and I've said you know often enough I think there will come a time when you know mature assessment of our government … And you know despite Peter's book, a lot of the things we did in the last thirteen years on health, education, on constitutional reform, we have a good story to tell and we mustn't trash that record. ANDREW MARR: No. ALISTAIR DARLING: But yeah, of course there were some bumpy times. And the last three years, you know I'm not for one moment pretending that … ANDREW MARR: Pretty hellish. ALISTAIR DARLING: … everything was wonderful. It wasn't. ANDREW MARR: Yuh. Among the arguments that were swilling around at the time also was whether the government could or should have spotted the banking crisis coming earlier on. Gordon Brown said I think in Africa yesterday that again he wishes, he wishes he'd spotted it earlier. ALISTAIR DARLING: Well don't we all? But you know this isn't something that is just attached to us. There is not a government in the world, a central bank in the world or a regulator in the world who did spot it coming whether it's in America, here, Europe, the Far East. Nobody did. And they should have done because one of the things that is critical is it's the relationship between the financial institutions that actually caused the problems because they're so dependent on each other. You know, people didn't … People don't realise that banks borrow billions off each other every day, and when that system gummed up the entire system crashed. Now you know I think, as in so much in politics, when this happened it would have been much better to have said so right at the front look mistakes were made. Let's learn from those mistakes and then let's move on. But you know that didn't happen. ANDREW MARR: It didn't happen. And do you think the government, your government should have been a bit more worried about spending earlier on? Again there's the suggestion that Tony Blair was worried about the levels of government spending sort of way before the great argument about whether you can say the word 'cuts'. ALISTAIR DARLING: Well, look, firstly let's not forget that when we went into this crisis our debt had been reduced to the second lowest of any of the big seven countries. So you know that's very important. And yes we were running a small structural deficit, but it was a small structural deficit and I have not and I will not trash our record in terms of what we were trying to do in schools and hospitals and so on during that period. And I think the problem was that I think we got into a situation where everybody thought that the big revenues from the banks were going to continue forever and a day. Remember those were the days when the Royal Bank of Scotland used to make £8 billion a year and actually people said isn't that terrible, they're making all that money? Well you know they're not quite in that position now. ANDREW MARR: No, sure. ALISTAIR DARLING: That was the real problem. But you know I think it demonstrates though that you know caution is no bad thing. ANDREW MARR: If you had been able to persuade Gordon Brown to use the word 'cuts' and talk frankly about cuts a little bit earlier in the process, do you think you'd have got a better election result? ALISTAIR DARLING: Well I've always been of the view that you know we won the war, if you like, you know against what happened in the banking system, but we failed to make the case for what we would do when things returned to normal. I think - and I've always said this - that if you say to people look, it's not the banking crisis that's caused the large borrowing, we'll get all that money back; but when you go into a downturn, you maintain your expenditure, you get yourself through into recovery. As you can see it worked, and I'm very clear about that. But you then say let's shape the future. And the tragedy is for us we're no longer in government. You know you've got this odd coalition now that I believe is going to do things I think a lot of people will not like and will be quite damaging. Now, I'm sorry we missed that opportunity. What we've got to do as a Labour Party now is to make sure that we recover that ground with the new Leader, whoever it is, because there is a good argument to be made for what we say. ANDREW MARR: And you are not standing for the shadow cabinet this time. ALISTAIR DARLING: No. ANDREW MARR: Does that mean that you're bowing out of frontline politics for good? ALISTAIR DARLING: No, it means I'm not stand… You know I want a year or so in the back benches. There's plenty to do. I want to reflect on what I want to do in the future. But I'm not leaving. You know I haven't spent the last thirteen years in government twenty-two out of twenty-three years on the front bench just to walk away now. You know I'm still relatively young. ANDREW MARR: Indeed you are, Alistair Darling. ALISTAIR DARLING: Actually very young. ANDREW MARR: Very young. A very young Alistair Darling. Thank you very much indeed. ALISTAIR DARLING: Thank you. INTERVIEW ENDS
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