AB: David Cameron is with me now. you weren’t the PM who bought the Olympics to this country - but would you still have wanted if we knew then what we know now about the economy  

DC: Yes it's a moment where we can put our best foot forward. It’s on time and on budget. Normally at this stage before the Olympics the government is in crisis because the venues haven't been finished. On this occasion its 95% completed but also have good legacy uses. There is a lasting use  

AB: this is a big net expenditure on a global party  

DC: i don’t think that’s true. These are world class venues for future use. There is a lot of upgrading of existing sport venue. 6/8 of main venues have all got legacy uses. Yes it’s a lot of money to spend for a short event, but it’s an enormous commercial for Britain. we're going to have investment conferences every day  

AB: Why have you double the budget for opening ceremony  

DC: It’s not Chinese in scale but it draws on our strengths and history. It’s a great advertisement for Britain. It’s probably worth between 2-5 billion in free publicity. it’s a good value. I’ll be using the time to network with world leaders and those who want to invest in Britain  

AB: what would be your Olympic event if you had to participate?  

DC: Probably tennis  

AB: Is it a good thing or bad thing if Boris Johnson were to preside over this  

DC: I very much hope he wins; I’ll be campaigning for him.  

AB: Is he your Gordon Brown  

DC: No we're very close friends  

AB: Is he the future leader of the party  

DC: He’s got a lot to offer  

AB: How long will you do this job for?  

DC: The first thing is to deal with the issues on the plate. We’ve got a very full agenda, we've got to make the right decisions. I haven't thought about the future  

AB: You disagree with Boris Johnson on top rate of tax?  

DC: We've all said that the 50 p tax rate is temporary. We don’t want high marginal rates of tax. Tax is a matter for the chancellor. We’ve got to demonstrate fairness. We’ve also got to look at the evidence of the 50p tax, is it raising a lot of revenue? These things will be decided in the budget  

AB: Bonuses are not taxed at 50p  

DC: We're trying to insure that bonuses are taxed at 50p and National Insurance. We have taken tough action on bonuses, but it’s not just bonuses where people want to see action. Pay must be related to reward.  

DC: [on RBS case in financial times} Decisions have not been finally made, some decisions were made before this government was in power. We’re looking broadly at top pay to make sure it is linked to success. People get mad at rewards for failure.  

AB: RBS lost money last year.  

DC: Giving shareholders power over remuneration, I’m glad the FT supports what we're doing.  

AB: A lot of organizations like CBI are blowing a raspberry at this idea though  

DC: I think we need to speak to CBI; you can get shareholders to get a key role on pay  

AB: Another report suggests family with children worse off than those without because of economy, and deficit not being cut because of poor economic growth.  

DC: Deficit is going down, but it needs to come down rapidly. It is going to take time. it’s important that the whole world can see that we have a plan. We didn’t hit the original targets, but we will get that debt and deficit under control. That’s why we have low interest rates. As for families, i completely understand that has caused great concern. The good thing about 2012 is that inflation should fall and pensions will be uprated.  

AB: What about 10,000 pound threshold on tax?  

DC: We'll continue to make progress on that on every budget  

AB: How close did the coalition come to falling apart over Europe?  

DC: Obviously it’s a pressure point  

AB: Did Nick Clegg say he'd walk out?  

DC: No he didn’t say that, we both wanted a treaty with safeguards and we agreed if we couldn’t get safeguards we couldn’t get a treaty. Of course the Lib Dems were disappointed.  

AB: What did you win for Britain?  

DC: I did exactly what i said i was going to do.  

DC: We've set out our conditions for contributing more to the IMF but we do need to stand back and ask ourselves why Europe and Britain are doing so poorly when world economy is growing and it is the Eurozone, we've got to deal with it. I think the Eurozone will hold together, but it’s got to solve its problems. In the long term you've got to address that there is a lack of competitiveness between Germany and southern Europe.  

AB: Do you think our continuing rising unemployment is because of the Eurozone?  

DC: It didn’t have a chilling effect on markets and confidence. Those are the two things we need to deal with. It’s better than it was but still unresolved.  

AB: We've still got problems in the UK  

DC: I want the UK to stay together, but we can’t stand in Scotland’s way if they want to ask the question do we want in or out. What the Scottish people want is a clear question. 

AB: Are you playing into Alex Salmond's hands?  

DC: We have to have the legal clarity of who is responsible for this issue. If Alex Salmond wants a referendum, why wait. This is damaging for Scotland, all the time business are asking will Scotland stay a part of UK? We are not going to dictate this; you'll have to wait to see what we're going to do. We need to resolve legal uncertainty  

AB: Two issues - Stephen Lawrence, is Britain less racist now?  

DC: We're a less racist country but we've still got a problem with racism. The country has come a huge way  

AB: Where do you stand on the inquiry?  

DC: It’s a matter for the police  

AB: First Prime Ministers Questions -    

DC: It’s been great to have a break  

AB: You don’t enjoy it?  

DC: It’s a great opportunity but i don’t think any PM enjoys it, you try and set out policies but it’s a rowdy adversarial chamber. MPs work very hard, and you get the sense that they come to the house on Wednesdays for a bit of circus maximus.  

AB: Do you ever have to apologize for Ed Miliband?  

DC: No, i haven’t had to; we understand the nature of these encounters  

AB: Do you think he'll be the man you'll face in 2015?  

DC: I try and just focus on my own party  

ENDS