ANY QUOTES USED MUST BE ATTRIBUTED TO SUNDAY WITH NIALL PATERSON, SKY NEWS

NIALL PATERSON: The Treasury is playing down this week’s Spring Statement, not so Labour who will be setting out their vision for the economy later this week. Joining me to talk about what we can expect is the Shadow Chancellor John McDonnell. Mr McDonnell, a very warm welcome to you. Let’s start shall we with that Spring Statement. You made a speech yesterday in which you suggested that the government needs to help struggling local authorities, in what way can they do that?

JOHN McDONNELL: Well the Spring Statement does give the Chancellor the opportunity of assessing the income he’s had over recent months and we’ve seen some improvement in the public finances which we welcome. I think he should be using some of that now to alleviate the struggling local authorities and right the way across the local councils in this country, whether they be Conservative or Labour controlled, to a council they are now saying that they’re in, well, near crisis. Some of them have already declared themselves near bankrupt and even Philip Hammond’s own area in Surrey, the Conservative leader of the council has said they’ve got a financial crisis facing them and they need some central government assistance because this crisis has been caused by cuts in support from central government to local councils and it’s impacting upon services I think in a way which is unacceptable. I used the example with the Chancellor both in the Budget and last week about children’s services, we’ve got the highest level of children coming into care since the 1980s, the charities are saying, children’s charities are saying this is a crisis that could turn into a catastrophe. The professionals, the Directors of Social Services, are saying we need assistance now so we are saying look, of course the management of the economy is absolutely critical, you have to be careful how you manage that, you balance your income with your expenditure but now there’s a time to start investing in public services because you know if you cut these services now it costs more in the future. Early intervention with children for example, children and families, has been cut by 40%, that means more children therefore coming into care and that means it’s even more expensive so we are saying there needs to be some assistance to councils now.

NP: So it something to be celebrated that the government has the extra money to throw at the local authorities, that we are now after ten long years running a surplus?

JOHN McDONNELL: Well the problem is this, is that we could be running a surplus now if we had invested in our economy rather than introduce the austerity measures like the Tories did. I have to say I was concerned the way that, for example, George Osborne the other day was celebrating for the first time we come into surplus even though he had missed every target. He’d promised that we were going to eliminate the deficit overall by 2015, he certainly didn’t do that and do you know, the people who have suffered as a result of this, the Conservatives seem to have no consideration for them. There’s a million elderly people out there, vulnerable elderly who are not getting the care that they should have. We’ve lost 750,000 local government jobs, we’ve had 500 Children’s Centres closed, over 400 libraries closed – people out there have lost some of the basic fabric of their local communities as a result of the austerity measures that actually were unnecessary because if we’d have used that money to invest we would have had a growing economy and we didn’t need this scale of austerity, we didn’t need austerity in the form it’s been brought about with these massive cuts and as I say, I come back to children’s services. We’re saying to the government that if they don’t accept that argument, at least accept what the professionals and the local council leaders are saying, that on children’s services the most vulnerable children in our society are being put at risk as a result of these cuts. Please, I’m appealing to the Chancellor this week to actually start investing. The gap is about two billion by 2020, we could put that money in now. If we put that money in now we could protect the most vulnerable children.

NP: Despite that very scathing sentiment, as someone often referred to as an arch-strategist within the Labour party, isn’t there a tiny little bit of grudging respect that Theresa May has done what Jeremy Corbyn has been unable to do and unite the party behind a single position on Brexit?

JOHN McDONNELL: Well her speech the other day was more about securing a truce, a limited truce within the Conservative party than it was about the interests of the country and we’ve already seen today that truce is beginning to unravel. Michael Heseltine’s statement this morning about the speech, what did he describe it as, phrases and generalisations and platitudes. We are seeing an attack on Boris Johnson by Gavin Barwell, the Prime Minister’s own policy advisor, so I don’t think the truce is going to last very long but what worries me is it was more about managing the Conservative party than it was about the future of the country.

NP: What of Labour’s position then? We have edged as far as we can I think towards knowing exactly what Labour’s position is, we have a customs union with the European Union but one which permits us to sign free trade agreements. When the European Union eventually says that’s not possible, which is the most important to you – that customs union with the EU or the sovereignty and the ability to sign FTAs?

JOHN McDONNELL: Well I don’t believe it is impossible, I think it’s perfectly possible. What we are saying is …

NP: It is perfectly possible that it’s not possible as well so I’m just asking what your priority is.

JOHN McDONNELL: Well I am optimistic it will happen and what we’ll be able to do is combine the benefits of the customs union, a customs union, which means that we will have tariff free trade and at the same time we will be able to negotiate free trade agreements throughout the world through the strength of partnership with the European Union partners that we have and I think we can secure that. Actually if we could transform, if we could transform the whole tone of the negotiations I think we could get co-operation on a scale we’ve not seen so far in these discussions. I have negotiated in Brussels in my professional life.

NP: With respect Mr McDonnell … Indeed and you are absolutely perfectly placed to answer this question but you and I both know that that’s not an answer. It’s fair to ask which you would prioritise, either the customs union with the European Union or the ability to sign FTAs, it does look as if you are trying to avoid it. Take Jeremy Corbyn this week when he was asked about this very topic, he said that his Plan B was to keep negotiating for Plan A. Does he not understand the concept of a Plan B?

JOHN McDONNELL: Well let me just explain to you what I was about to say. I’ve negotiated in Europe, I had an office in Europe, I was a Chief Exec of the Local Government Association that managed European funds and if you changed the tone of these negotiations, one in which you negotiate on the basis of mutual interest and mutual respect, you can secure deals in the benefit of everybody and we’re not willing to accept as the Prime Minister seems to think, defeat at the end of this and just walking away. We believe we can secure those negotiated deals and in talking to our European partners I believe there’s an air of constructive engagement that they want to see that they’re not getting from the Conservative party that they would get from the Labour party.

NP: Aren’t you as guilty of cherry picking then as Theresa May?

JOHN McDONNELL: Well in a renegotiation what you seek to do is lay out what your objectives are and then you negotiate around them. Now whether you call that cherry picking or negotiation it’s irrelevant, what we’re trying to do is ensure, well our objectives are clear, they have been from the beginning: protection of our economy and protection of jobs and respect for the European referendum. We believe we can negotiate a deal which will enable us to do that. We’re 18 months on now and the Prime Minister’s speech on Friday barely moved us on a whole range of issues and in some issues, well just declined to address them seriously, for example the Northern Ireland border.

NP: Indeed, indeed. I just want to move on to a couple of other topics whilst I have you here and I’m wondering what you think of Max Mosely, and I’m not referring to the leaflet that was uncovered this week, instead the interview that he gave a few days ago when he confirmed that he was of the view that it was perfectly legitimate to pay immigrants to go home, to offer them financial incentives, you know, cash for repatriation. I presume that that’s not your view.

JOHN McDONNELL: No, certainly not, of course it’s not our view and it’s the sort of proposals which we’ve condemned in the past outright.

NP: Should then the Deputy Leader Tom Watson give back the half a million pounds that he has been donated by Max Mosely? I mean I suppose you probably would want them to give it back given that it’s allowed him to build up a private office almost the same size as yours and Jeremy Corbyn’s.

JOHN McDONNELL: Well the money was given to Tom, Tom took that decision, he took that decision on the basis, I believe on the basis that Max Mosely’s views had changed from years ago …

NP: That’s my point, that’s my point Mr McDonald, that he has actually explicitly said this is my view.

JOHN McDONNELL: Please let me finish a sentence because exactly that’s what I was going to address. If those are the same views now, well Tom will really need to consider seriously exactly that relationship with Max Mosely and the finances as well because if he is reiterating his views from the past, he clearly hasn’t changed.

NP: And then there’s Monroe Bergdorf and her relationship with the party. She is your party’s new advisor on equality, she’s also someone who believes that the Suffragettes were white supremacists. International Women’s Day fast approaching, is that another view that you share?

JOHN McDONNELL: I don't know the individual concerned. I know she’s been appointed as one of our advisors, we’ll be talking to her about her views and whether these are her real … whether these are just reported views or whether they are her real views and that will be a matter obviously for the, well her employers, she’s employed directly I believe by the Leader’s Office but obviously what will happen is those views will be taken into account in those discussions. Often what I’ve found in a lot of the reportage of people’s views by some of the press, they are not necessarily the views of those people and often they are taken out of context. I’m not sure about this particular issue so it is will be obviously investigated by the Leader’s Office.

NP: There has been a lot of focus this week on yourself, a couple of interviews, an article in the Financial Times. I mean there was a quote given there that seemed to suggest you have been cultivating an image of a bank manager which to those who know you well is somewhat surprising. I think it was Diane Abbott that made that point. I’m wondering, are you really this kind of avuncular, grandfather figure in his jumper with a pocket full of Werthers Originals or does the revolutionary fervour still bubble deep within your veins?

JOHN McDONNELL: [Laughs] I am what you see. Look people, whatever people say about me I have no side to me, I express my views. Sometimes I express my views very strongly and it gets me into trouble in the media in particular but that’s the risk you raise when you have honest and principled views that you want to express. What I’m trying to do is be completely straight with people and you know, when we had the general election campaign and we published our manifesto which I was integrally involved in, we set out our views straight there and what I’ve been saying to people – and I’ve been touring round, I’ve been doing these economic conferences all round the country and I’ve been in the City speaking to asset managers week after week, I was there again last week, just saying to people look, we’re setting out our views in our manifesto, we’ll do that for the next election, I’ve set out our alternative budgeting arrangements as well. There’ll be nothing up my sleeve, when we go into government everyone will know what we’re going to do and they’ll be able to have confidence I think in our proposals and participate in developing them in detail as well and in that way, whatever image I have is irrelevant. It’s about the policies themselves, people can have confidence and believing that’s exactly what we’re going to do and actually we have an open door policy. Just to give you an example, I’ve been saying to asset managers last week, we want you to come in and help us implement these policies and if you think some of them are wrong, I want you to test them almost to destruction if you like and then, if necessary, yes we will adjust them. If you can convince us they are not going to achieve the objectives we want, we’ll change them so it will be a complete open door and in fact what I’ve been saying to meeting after meeting, when we go into government next time, everybody will be going into government because they’ll have their say.

NP: Indeed. Nothing up the sleeve of that red jumper which no doubt will read into. Very, very briefly Mr McDonald, while we have you, MPs are going to be receiving a pay rise, what are you going to do with yours?

JOHN McDONNELL: Well I use some of my wages for charity and support and that’s what I’ll continue to do as well. Whenever I’ve had a pay rise I’ve tried to do that and a lot of MPs do that to be honest and that isn’t a party political point, across the House you’ll see a large number of MPs will be looking at how they use their income to actually support things in their constituency and also a lot on international charities as well so I’ll be considering that when we get the pay rise.

NP: John McDonnell, lovely to see you, thank you for joining us.

JOHN McDONNELL: Okay, thank you.