Press Office

Aired: Monday, 12 January, 2009 19:30
Jeff Randall Live

Jeff Randall speaks to Alistair Darling live from Number 11 Downing Street

TX: 1930, Monday 12 January 2009

This transcript is issued on the strict understanding that Sky News’ Jeff Randall Live must be credited.

Full Transcript

 
JEFF RANDALL:
Good evening, I’m Jeff Randall. Welcome live to Number 11, Downing Street. Tonight, in the hot seat, the Chancellor of the Exchequer. Here at Number 11 Mr Darling is facing problems on all sides, recession has arrived but could something much worse be lurking round the corner? Thousands of jobs across the economy are being lost, the government says it can help but how? Despite billions thrown at the banks there’s no end in sight to the credit crunch, will the tax payer be forced to cough up yet again? And then there’s the property crash, house prices are falling at the fastest rate on record, thousands face losing their homes, millions face negative equity. So what can this man, Alistair Darling, do to get us out of the mess? He’s got 25 minutes to tell us his plan.

Good evening, welcome to Jeff Randall Live, now at on Sky News at this time every night from Monday to Thursday. Barack Obama says that it’s the worst crisis of our lifetime, many observers say we haven’t seen anything like this since World War Two. Over the next twelve months, it’s here at 11 Downing Street that the Chancellor will take decisions about our economy that could decide whether you’ll still have a job, a house or just hope by this year’s end, so can this man pull it off? Good evening, Alistair Darling.

ALISTAIR DARLING:
Good evening.

JEFF RANDALL:
Many thanks for inviting us in here to what I believe is the sitting room, is it not, where the likes of Disraeli and Churchill and Gladstone came to ponder their thoughts before preparing the nation’s budgets. Let me read to you something that another former Chancellor once said, and this is a quote: "A weak currency is the sign of a weak government which is the sign …" Let me re-read that: "A weak currency is the sign of a weak economy which is the sign of a weak government." That was Gordon Brown and he was right, wasn’t he?

ALISTAIR DARLING:
I think you’re seeing a lot of volatility in currencies just now but you started off with a quote from Barack Obama and he is absolutely right, we are living in extraordinary times. In the past you heard of recessions in one country or in a region perhaps, here you have had certainly for the first time since maybe the 1930s a situation where every country in the world is now being affected by a dramatic downturn in their economies and the challenge for all of us, whether it’s me sitting in London or whether it is my counterparts around the world, is what can we do individually and what can we do together to ensure that we all get through this, helping people in work, helping people in businesses, that’s the big challenge that all of us face.

JEFF RANDALL:
But with all due respect, Chancellor, it’s not the same for everyone is it, because hard nosed investors are buying dollars, they’re buying euros and they’re dumping sterling, that’s telling us something about this country’s prospects.

ALISTAIR DARLING:
To do with the currency point, if you look over the last few months, the last year or so, there has been a lot of volatility and you’d expect that in this time …

JEFF RANDALL:
It’s not volatility, Chancellor, it’s one way traffic, downhill for sterling.

ALISTAIR DARLING:
No, that’s not true, there has been a lot of volatility but the key thing is we all face the same conditions and primarily they are being driven by what is colloquially known as the credit crunch, an extraordinary drying up of credit in the banking system. It started in America in 2007, it spread within a few months across here, we saw it in Northern Rock but now every country in the world … if you look at the headlines in newspapers in whatever country you want, you will see the same problem with banks not lending, businesses feeling the pinch as a result, all of us face these problems. The key thing when you face a situation like this is you need to do what’s necessary at home but you also need to act together and to my mind there are two things that we need to deal with. One is to take action to try and support the economy, that’s why I put money into the economy in the pre-budget last November, Barack Obama is going to do the same thing when he takes office next week, Chancellor Merkel in Germany is about to announce a fiscal stimulus. Countries right across the world have done it. The second big challenge because the fiscal stimulus is important but unless that also sees increased lending by banks to people and to businesses, then the length of this recession will be so much longer, those are the two big challenges that we face. Now all of us face that, whether we are here in Britain or in any country you care to name, we’ve all got the same problem.

JEFF RANDALL:
So what was Gordon Brown going on about when he said a weak currency means inevitably a weak government?

ALISTAIR DARLING:
Well if you remember the time that he said it, which I recall was in the mid 1990s, we had at that time an extraordinarily weak government under John Major, it couldn’t take decisions, it was paralysed. Europe had actually paralysed it in the same ways that actually you don’t have to look too far today, the Tories still have problems with European divisions. What you had at that time was a government that wasn’t able to govern. Now the position that we face at this time is we’ve had a period of eleven years of strong growth, we’ve reduced the amount of debt that we inherited during that time. At the same time, yes, we did increase spending on things like schools and hospitals and police, transport, housing, because we needed to and actually at the time no one argued that but as I say, the problem we face today, the problem that has hit the world in a very, very short period which is why you are seeing such dramatic downturns at the present time, when you look at unemployment going up in Germany for the first time in something like three years, unemployment going up in America and of course we’ve had job losses sadly announced today, a question you ask yourself is what do you when you’re faced with all that? To my mind there is no question but government to take action. If you don’t take action, if you leave people to get on with it, let recession take its course as the Tories seem to be suggesting, that means the cost to every man, woman and child in this country will be far, far greater. The cost of doing nothing, as we’ve seen in the past, comes at a very, very heavy price indeed.

JEFF RANDALL:
Let’s come back to the problems of the weak pound later. I certainly agree with you that the economic problems we’re facing are complex and profound and quite a few people have contributed to those issues. Now along the way we have had apologies from the banking regulator, the FSA, for the mistakes it made and more recently we had an astonishing apology from the boss of Barclays Bank for the part that his bank and other bankers had played in this mess. Would you care to apologise to the British public for the role that you have played in all this?

ALISTAIR DARLING:
Well …

JEFF RANDALL:
Not you personally, the government, the government’s egregious blunders.

ALISTAIR DARLING:
If you look back at what’s happened …

JEFF RANDALL:
Well an apology … are we not owed an apology by the government?

ALISTAIR DARLING:
There are many lessons to be learned, there are many people who with the benefit of hindsight you could have said should have done different things or done things different to the way that they did, I think what’s rather more important surely is to recognise where mistakes have been made in the past and undoubtedly one of the biggest mistakes is that we did not have a system that was capable of spotting where problems were starting to arise in different parts of the world but actually if you look at the amount of credit that was available …

JEFF RANDALL:
Including here?

 

ALISTAIR DARLING:
There is not a country in the world where there aren’t lessons to be learned but if you look at the source of this problem, you had cheap credit, you had an imbalance between what was happening in the developed countries and the developing countries. Yes, that should have been spotted; yes, there are things that we could have done better but I have to say that we in this country were actually calling for exactly that international surveillance eight or nine years ago. It led to the setting up to the form of financial stability which is pretty limited actually, it was the first step but it is pretty limited given the scale of what we now face but of course if you look at the regulatory system, there are lessons to be learned, of course if you look at what happened on the boards of banks there are lessons to be learned. The key thing though is people say okay, will you learn from those lessons, will you put in place measures to make sure that we try and reduce the risk of this sort of thing happening again.

JEFF RANDALL:
But many of those mistakes made by government will end up ruining people’s lives. No apology to them?

ALISTAIR DARLING:
How can anyone not feel sorry for anyone who is facing either a personal catastrophe of losing a job or they might lose their business, of course people are concerned about that but the key thing is if you look at the problems we face today, their origins are complex, there are a whole host of people where I’m sure if you had your time over again you’d have done a whole host of things differently. The fact that for eight or nine years countries refused to accept the problems that were developing, when you had an awful lot of cheap credit starting to arise, the imbalances between what was happening in China and the borrowing that was going on in say the United States, of course there are lessons to be learned from that but the question that I think now is important and certainly the ones that my constituents ask me, is what are you going to do to put it right? In particular they want to know what the government is going to do in order to help people who lose their jobs get back in to work, hence the announcement today. What are you going to do to get banks lending again, what are you going to do to help people in businesses, that’s what people are asking us and that is frankly where our focus should be.

JEFF RANDALL:
You see I don’t really see this, Chancellor, that you had no warning, it popped out of thin air, it was all to do with ghastly bankers and the Americans and Mrs Thatcher and things from time gone by. Labour has been in power for 12 years, you call the shots, you run the regulatory system, you set up the regulatory system, recently you said the regulatory system is ‘not geared up to multi national global banks’. Well …

ALISTAIR DARLING:
I’ve just been saying that, yes.

JEFF RANDALL:
But we’ve had those for years, multi national global banks, they didn’t suddenly arrive. You have been driving the car and now its crashed.

ALISTAIR DARLING:
I’m not suggesting for one minute that you can trace today’s problems back to Mrs Thatcher or Harold Macmillan or Gladstone for that matter, I’m not suggesting that at all. Of course if you look at what’s happened over the last few years there are lessons to be learned in our regulatory system and everybody’s regulatory system but the difference, and the real problem that’s become manifest over the last few years, is that you can have a robust regulatory system in your own country – and remember we ended self regulation eleven years ago and put in place a different system of regulation – but the problems that are affecting us now are when you get problems that start in one part of the world that may not get spotted by that country’s home regulators, which then spread to other parts of the country. Of course if you look at Northern Rock, the FSA made a mistake there, as you rightly recognised, but we were saying and Gordon Brown was saying when he was Chancellor, that one of the things we did not have in advanced economies was the mechanism that would spot problems happening in country A and we could try and sort them out before they started spreading to country’s B, C and D.

 

 

JEFF RANDALL:
But that’s what we paid you to do, was to spot the problems. Let’s be fair, the FSA took it on the chin, the bankers have taken it on the chin, are you saying … you know, you can’t just keep blaming other people, are you saying that the government has got nothing to apologise for?

ALISTAIR DARLING:
Look, I made a point right from when this started that I was not sitting there blaming all and sundry. All of us have to reflect on what has happened, have to reflect that over the last few years we had this problem which culminated in the sub-prime market in America. All of us have to accept responsibility for what was happening there but the key thing surely is yes, you accept responsibility, yes when you need to improve things, tighten things up then you need to make sure that you do that and we are doing so, we have got legislation going through parliament even tonight in relation to the banking system, but we also have to ask ourselves when faced with, as you said, the most extraordinary downturn, the most dramatic downturn that we’ve seen in generations, we have to ask ourselves how do we get bank lending going again, we also have to ask ourselves what can we do to support people and the economy, especially on a day like this and also, as we come through the other side, as we will and the World Bank predicts that the world economy will doubt in the next twenty years, that we take advantage of it and secondly that we don’t repeat some of the mistakes that we’ve seen over the last few years.

JEFF RANDALL:
All right, Chancellor, we’re going to have to leave it there just for the moment, we’ll talk about some of those issues after the break but we do need to take a break. This is the show where we interview the top movers and shakers in business and politics. If you want to see previous interviews such as my interview with Barclays Group Chief Executive, John Varley, go to Skynews.com/JeffRandall. You will also find comprehensive coverage of the recession on the Sky News website. This is Jeff Randall Live, coming up on Sky News after the break, more from the Chancellor here at Number 11, Downing Street.

END OF PART ONE

 

PART TWO

JEFF RANDALL:
Welcome back to Jeff Randall Live, now on Sky News from Monday to Thursday at 7.30. We’re at Number 11 Downing Street talking to the Chancellor, Alistair Darling, more from him in a minute, first the top stories….

We’re back here with the Chancellor. So much talk about so little time, one of the big issues is spending and borrowing. The government clearly is determined to let borrowing rip, next year you forecast that borrowing could top £118 billion, maybe more. I think what a lot of people in the country don’t understand is this: if too much debt, too much borrowing were the problems, how can yet more borrowing, getting people to borrow more, to spend more, possibly be the solution?

ALISTAIR DARLING:
Okay, I understand that, it is a question that’s frequently raised when I speak to people about this. The problem is that at the moment you have got a situation where people are perhaps losing their jobs, they are not spending as much, because of the credit crunch there is less money available. Why is that a problem? Well for example if you have got less money you might go down to your local shop, spend less money, therefore the man who runs the shop who might employ a couple of people, he lays them off and that’s two people who are spending less money and so on. That problem we’ve seen before in successive economic downturns and perhaps typically it was seen in the 1930s when John Keynes, the economist, spotted this problem when he saw that when money wasn’t being spent and people closed down, it had disastrous consequences. If at a time like that, when the government does need to let borrowing rise – and don’t forget, in addition to … I am allowing borrowing to rise at the moment but I have also made it clear that we need to get the budget back into balance in the medium term – but if we do not do this, if we don’t ensure that we support businesses, support people and help them get back into work, use the power of public spending to maintain jobs because we’ll need people who are educated in the future, we’ll need schools, we’ll need hospitals and transport and so on, if you don’t do that then the recession will be far longer and deeper than might otherwise be the case and the cost of that, as we saw in the 1980s and the 1990s is immense, not just in human terms but economic terms, the cost is immense. That is why I, together with just about ever other finance minister across the world, have taken the decision that the right thing to do is to support the business. For individuals you might say right, I’m getting a shortfall in my income, then I reign in. Unfortunately if governments do that you end up with disastrous consequences.

JEFF RANDALL
I absolutely would say that because in 1997 when Labour came to power household savings rates in the United Kingdom were about 11% of average income, last year they fell to zero, so people have got themselves in trouble by over borrowing, over mortgaging, lashing up on credit cards – you can’t really be telling them, save the British economy, carrying on spending.

ALISTAIR DARLING:
Obviously we want people to be able to live within their means, we want people to save for the future, we want people when they are taking on a mortgage or a loan for whatever, to make sure that they can repay it, that’s absolutely right. What I am saying to you though is, as was pointed out very eloquently in your own newspaper today by a distinguished economist Roger Bootle, that if governments behave in the same way and they simply start cutting back on public spending now, more people would lose their jobs, a lot of the services that people depend on would come to an end, businesses that depend on people going in to their shops, buying their goods and services would find they have got even less customers and you would find that a difficult situation became so much worse. Now government as we saw in the 1930s, as we’ve seen in other times and in other parts of the world, governments have a key role to play. That’s why president-elect Obama is so clear, that as the Americans who were scarred by the effect of the Great Depression in the 1930s, he is determined that they will not repeat that mistake again. Now countries right across the world, there is hardly a country in the world now that doesn’t recognise that we need to take action individually to help our economies as a whole through public spending, through bringing capital projects forward, by reducing the amount of tax that basic rate tax payers pay from April, helping pensioners, people with children and so on – it’s putting money into the economy and that will make a difference. Put another way, as others have said, doing nothing comes at a cost and Cameron may think that but I profoundly disagree with that.

JEFF RANDALL:
Well we’ll leave the Tories for another day, doing nothing sounds like a piece of spin dreamt up by one of your back room boys but anyway, let’s look at the facts. Labour has been in power 12 years, after all that time – and I’m reading the facts here – unemployment is higher than when you came in, probably going to go to two and a half million next year, maybe more. Your budget numbers suggest that all sorts of difficulties lie ahead, home repossessions will definitely go up this year, they could hit 75,000, the worst number ever. Personal bankruptcies are soaring, the financial system is in chaos and the pound is on its knees. Can you be proud of that record?

ALISTAIR DARLING:
Hold on, I think you are giving a partial account of it. In the last 12 years nearly three million more people went into work. Now of course at a time like this when you have got a severe downturn that is affecting every country in the world, this is truly a global problem, yes, unfortunately people are losing their jobs, that’s why today and in my pre-budget report in November I announced measures to allow people to get back into work. Unfortunately at a time like this you can’t stop people losing their jobs but you can do your damnedest to get them back into work In addition to that, if you look at the state of schools, hospitals and transport, as I said to you earlier in the first part of this programme, we increased investment in that, yes, we did that because it was important we did it and I don’t remember too many people say you shouldn’t do it and we decreased the amount of debt that we had at the same time. I am not arguing that there aren’t things, more things to be done or things that you can always do better. What I am clear about at a time like this is, when you are faced with the problems we have been discussing in the wider economy, or in the banking system where you have got this extraordinary situation where banks simply lost the confidence to deal with each other and the banking system was facing collapse last October, of course we had to take action that you wouldn’t have contemplated even twelve months ago.

JEFF RANDALL:
Chancellor, I really appreciate your time, it’s great being here, many thanks for inviting us in. I’m afraid we have run out of time, we could have gone on for an hour, maybe two but I think all of us would wish you luck in 2009 because there’s no much swinging on it.

ALISTAIR DARLING:
Thank you very much, take care.

JEFF RANDALL:
Many thanks indeed. You’ve been watching Jeff Randall Live, now each night of the week here on Sky News, Monday through to Thursday. Tomorrow I’ll be talking to Sir Stuart Rose of Marks and Spencer, on Wednesday to union leader, Derek Simpson and on Thursday to the Chairman of Channel Four, Luke Johnson. Not a bad first week. 

 
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