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DERMOT MURNAGHAN: Let’s talk about government spending now because the budget backlash is still running. Taxes on grannies, pasties and philanthropists are still making headlines but the government is holding firm. Joining me now from Leeds is the Shadow Chief Secretary to the Treasury, Rachel Reeves, a very good morning to you. Can I start first with this row about large charitable donations, do you have any sympathy with the government on this because it is after all a dimension of the so-called tycoon tax, an attempt to make sure that the very rich pay their fair share.

RACHEL REEVES: I don’t really have much sympathy, the people I have sympathy with are the charities and the people who rely on those charities. We’ve had Macmillan, Help the Hospices, UNICEF, Oxfam, all come out and criticise this change and say it is going to cost them dearly but most of all it’s going to cost the people who get support from those charities dearly and everybody wants to cut down on tax avoidance but I don't think that giving money to help find cures for cancer or giving money to help people in some of the poorest parts of the country or the world is avoiding tax, it’s doing something good, it’s putting money to do good and I think that cutting down on avoidance is something very different indeed.

DERMOT MURNAGHAN: So you are quite relaxed, I mean there was a case quoted wasn’t there, a person not named, someone giving £4 million to charity cutting their tax bill therefore to nought. You are relaxed with that continuing for the very rich because of course it does benefit the charities as you say?

RACHEL REEVES: Well the government have talked about cutting down, that some people are giving money to dodgy charities, now if that’s happening then the Charities Commission needs to investigate and of course we don’t want people giving money to dodgy charities but we’ve got our major charities, universities and arts organisations in this country saying that it’s going to cost them. Yes, we want to make sure that people are paying their fair share of tax but the people who seem to be losing out from this change aren’t tax avoiders, it’s the charities and the people who rely on the charities that are going to be hit hard.

DERMOT MURNAGHAN: Okay, let’s go down the bottom end now and the so-called granny tax, this change in the age related allowance. Ever since the budget was delivered, you have been very concerned about that and …

RACHEL REEVES: I’m sorry, I’m not hearing you.

DERMOT MURNAGHAN: I’m sorry, are you having problems hearing me there? Just work on the ear piece there, it’s come a bit dislodged.

RACHEL REEVES: Yes, okay.

DERMOT MURNAGHAN: The granny tax, Rachel Reeves, problems with that ever since the budget was delivered, now this is the changes in the age related allowance which the government has said is a simplification and of course the overall tax allowances are going up for everyone at the bottom end of the starting rate of tax.

RACHEL REEVES: They’re not going up for pensioners. Pensioners are going to be losing out, four million pensioners are going to losing £83 a year because of these changes and people coming up to retirement next year are looking to lose up to £320 and that’s a massive hit for pensioners. Pensioners have already faced the increase in VAT which has hit them hard, they are having to deal with higher gas and electricity bills, with higher food prices and pensioners who have put something aside during their working lives and saved and tried to do the right thing so that they’re not a burden when they come up to retirement, are now going to find their tax bill is much higher and the government say this is a simplification. I think that’s a real insult to millions of pensioners, it’s not a simplification for them, what it is for them is a tax grab and the government are putting taxes up for ordinary people and pensioners while 14,000 millionaires are going to get an average tax cut next year of £40,000. Now those are the choices that this government have made, those are the priorities of this government, giving a tax cut to the very wealthiest whilst asking ordinary people and families and pensioners to pay more and that is what we need to know about this government.

DERMOT MURNAGHAN: Hang on a minute, you do seem to be leaving out the tax cut because of the rapid increase in the threshold, 23 million people benefiting from that according to the government.

RACHEL REEVES: Well the Institute of Fiscal Studies have looked at this in the round and have said if you take into account changes for example to the tax credits, the average family with children is going to be about £250 worse off from this April and that’s on top of the VAT increase, so the government are giving with one hand with an increase in the tax allowance but taking much more away with the other hand by cutting tax credits and putting up other taxes. So the families who are affected for example by the changes in the number of hours you need to work to access tax credits, they are going to be saying it’s all well and good to have a personal allowance increase but if the government are taking much more from me with tax credits, me and my family are going to be much, much worse off this year and that’s the verdict of the Institute of Fiscal Studies.

DERMOT MURNAGHAN: Okay, can we get close to Labour thinking on which bits of these parts of the budget you would change or keep? You seem to be saying on the tycoon tax, okay you want to see as much given to charities as possible, what about then the age related allowance? That’s something that a Labour government would restore is it?

RACHEL REEVES: Well we’re going to be forcing a vote this week in the House of Commons, first of all on the cut in the top rate of tax from 50 to 45p, we’re going to be forcing a vote on that and opposing that change and we’ll be forcing a vote on the granny tax and voting on whether that should go through and we’ll be voting against that raid on pensioner’s incomes and we’re urging MPs from all parties, from Liberal Democrats, from Tory party MPs who have spoken out against these changes, they have got a chance of a choice this week about how they vote but Labour will be leading those calls this week to oppose the cut in the top rate of tax for the very wealthiest 1% and voting against this raid on pensioner incomes.

DERMOT MURNAGHAN: You conveniently ignored though the fact, Mr Cameron was pointing it out, that the state pension went up with its biggest ever increase this April.

RACHEL REEVES: Well the reason that the state pension is going up is because inflation is going up and the rising cost of living is meaning that pensioner households and other households as well are seeing rising costs of fuel prices, of train and bus fares, of food prices and the increase in the state pension just reflects the fact that prices are rising by 5% a year and it’s right that pension benefits go up in line with inflation but that’s not a real increase, it’s just to keep pace with the rising cost of living. It’s very disingenuous for the government to claim that that is somehow giving extra money to pensioners, it is just keeping track with the rising cost of living and nothing more than that. It just shows how out of touch this government is if they think that is some extra benefit or reward for pensioners, all it does is keep pace with the rising prices that pensioners are facing and the reality is that pensioners are going to be worse off because of the granny tax, they’re not going to be better off because of an increase in the state pension that just keeps track with the rising cost of living.

DERMOT MURNAGHAN: Okay, Rachel Reeves, thank you very much indeed.