ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Well now, party conference season has kicked off with the Lib Dems up first as they meet this weekend in Glasgow and judging by what has been making the headlines, they’re looking to try to convince the public that they are the party to engage with nitty-gritty real life issues. Yesterday it was the call to bin plastic bags by charging shoppers five pence for them, today a call to reduce the cost of school uniforms but after a year of scandal, backbench rebellion and terrible polling, can the party stay united? Well in a moment I’ll speak to the Chief Secretary to the Treasury, he is of course Danny Alexander. Let’s go to Glasgow now and say a very good morning to the Chief Secretary to the Treasury, Danny Alexander. Mr Alexander, first of all, on the kind of mood there and this continually low single figure poll rating, fourth behind UKIP, these policies I mentioned – 5p on plastic bags, the cost of school uniforms – is this an attempt to say the Liberal Democrats can get something done and hopefully win back some of the public or have you made the assessment that there are large swathes of the electorate who will never vote for the Lib Dems again and won’t consider voting for you?

DANNY ALEXANDER: Well the party comes here I think in very confident mood, confident particularly because of the record of achievement we have in government, the record of delivering Liberal Democrat policies and Liberal Democrat ideas through the coalition government. You are right to say of course that as parties in government do, there are new government policies being announced this week as well as the party debates about the message that we take to the country at the next election. Look, the big task that we had when we took the decision to form a coalition was to sort out the economy, clear up the mess that Labour had made and make sure that a recovery could take hold. We’re now seeing the early phases of that recovery but we have to continue to work hard both to make sure that that recovery is entrenched and also that we ensure that people can deal with the financial pressures that they’re under. That’s why things like David Laws’s announcement today on helping to keep the cost of school uniforms down is just one of many things that we’ve been doing in government including massive cuts in income tax for 25 million working people, keeping the cost of fuel duties down and ending a lot of Labour’s increases in fuel duty, reducing council tax – there are a whole range of measures which we in government have been taking to try and make sure that as we come out of this most difficult economic situation that where government can help people with the financial pressures that they’re under, that we do.

DM: Yes, and that’s the message that you want to get out as we know but this is the penultimate conference before a general election, as a party are you taking a cold hard look at yourselves, that poll rating I mentioned and taking on board warnings from the likes of Lord Oakshott who says there is a danger of complacency and self-delusion. As it stands at the moment you are going to lose seats.

DA: Well it wouldn’t be a Liberal Democrat conference without a negative comment from Matthew Oakshott to start the week but what we are doing is looking very much at the support that we’re getting in the areas where we’re strong and if you look at local government by-elections, if you look at local council elections, you’ll see that actually in areas where we’re strong, where we get that message across to people consistently, we’ve been doing pretty well. It’s quite interesting that today there was a poll out from Michael Ashcroft that was looking at Conservative seats and actually showing that in a whole number of constituencies, the Liberal Democrats are right up there challenging to beat the Conservatives in a number of marginal seats so far from feeling negative about our future, we think that we’ve got a great record in government, we’ve got a good message to explain to the British people. I think most people in this country want a party that can both keep the economy strong and also ensure fairness in society. The only party that can do both those things is the Liberal Democrats.

DM: Okay, having raised the Ashcroft poll, part of it is because of the electoral arithmetic in this country, it’s because of UKIPs poll rating and it eats almost totally into the Conservative vote and they would let you in in some of those seats by the back door but you are behind UKIP at the moment in the polls.

DA: Look, it depends which poll you look at. Of course UKIP is a phenomenon that I think will come and go in British politics but what you have in the Liberal Democrats is a party that has proved it has made the transition from being a party of opposition to being a party of government, it is taking responsible action to sort out the economy. You know, we’re only seeing this recovery starting to take hold because of the role of the Liberal Democrats, because of the decision that we took to go in to coalition government and one of my messages today and this week to my colleagues in the party is to say we’ve got to out there and make sure we get the credit that we deserve because it’s our tough decisions that have made sure that we have been able to see the economy back onto the right track. Of course there is a long way to go but that is something that is enormously to the credit of the Liberal Democrats I think.

DM: Mr Alexander, you make it sound like it is all very chipper up there. I mentioned the cold hard look at yourself but we know one of your colleagues isn’t very happy is she and Sarah Teather, she’s leaving parliament, she’s resigning because she feels, what is it, desolate and catastrophically depressed.

DA: Obviously I am sorry that Sarah Teather had decided to step down, she has made a very good contribution over the years as an effective local MP and as a Minister in the Education Department, delivering some of the things that we promised at the last election, delivering that pupil premium which is making such a difference to the educational chances of the most disadvantaged children in our society. I disagree with her analysis very strongly, I think we are making a huge difference, I think we are making sure that as we go through this very difficult period as a country, that we’re doing so fairly, that we’re asking the wealthiest to make a contribution, that we’re investing in the future of disadvantaged children, that we’re cutting taxes focused not on the wealthiest in society but focused on the 25 million people who work hard, who pay taxes at the basic rate and where that extra £700 a year that they’re getting as we lift the tax threshold to £10,000 is only happening because we as Liberal Democrats are part of this government.

DM: Okay, another thing her departure does is of course make your party, your parliamentary party, look even more male doesn’t it? This is one of the few female MPs you’ve got, she’s leaving, isn’t it true now that you have got more male knights of the realm as MPs than women when she goes?

DA: Yes, it’s an area that we really need to improve on. We have got some very effective women in the House of Commons and in the House of Lords and in local government but we also need to see at the next election more Liberal Democrat women elected. It is something that we are working very hard to make sure there are more opportunities for under-represented groups in our target seats and I hope that we will see that next generation of MPs coming through, some very talented people, some very talented people from ethnic minorities too. It is something that as a party we really do need to improve on, you’re quite right.

DM: Let me talk to you, I mean we know you are discussing there, and however many seats you may have after the next election you may be in the position of holding the balance of power again and you’ll have read with interest I’m sure Paddy Ashdown’s interview in the Observer today. He claims, he said on Twitter actually that he has been very misrepresented, it is the worst misrepresentation he says in terms of the headline there that he’s ever seen so I’m being very careful to quote directly from Paddy Ashdown and he talks about the current coalition and says “Both sides do not like each other but they nevertheless trust each other”, so that would be the basis for continuing, if the arithmetic is right, with the Conservatives?

DA: Look, I would say two things. Firstly, the coalition government we have in this parliament with the Conservatives was formed with a view to sorting out the country’s economic problems and doing so in the right way. We are making good progress in that direction. In terms of the next parliament, the whip hand is with the British people here, it is for the people of this country to decide who they want to elect, which party they want to form a government or whether they want to give again another hung parliament. We will take our instructions, as we did last time, from the people of this country. It is not about who you like or who you get on with better, it’s about what do the British people say on polling day and whichever party has the strongest mandate should have the first chance to form a government. We as a party anchor British politics in the centre ground and I’d say to people watching that as the Labour party is pulled off leftwards by the unions and the Tory party is pulled off rightwards by some of its back benchers, that you really need the Liberal Democrats in the mix to keep this country anchored in the centre ground.

DM: Okay, so you are saying you are entirely neutral and the public will speak but with the failure of the AV referendum we’ve got some quirks, as we all know, in our electoral system so what is it, is it highest number of seats or share of the vote that decides it for the Lib Dems about who they go into coalition with because the two things can tell us different stories?

DA: Look, as we did in the last election we were very clear, it’s the party with the strongest mandate and we’ll know that when we see it, when we see after …

DM: But seats or share of the vote?

DA: Well look, we’ve always said it is the party with the strongest mandate, share of the votes and seats both matter in that equation. At the last election the Liberal Democrats, we got less than 10% of the seats but we got 23% of the vote. Sadly in the voting system that we have at the moment the two aren’t always as directly related as they should be, that’s why both seats and votes are important to whatever party has a strong mandate and that’s why I’m giving the answer that I’m giving.

DM: Yes, but we want to know what the strong mandate is. As you say, there’s the anomaly, it affects the Lib Dems who have known it for so many years, if it works that way again where you could end up with one of the bigger parties having exactly that scenario, a lower share of the vote but more seats than the other one, what do the Lib Dems decide? What is their criteria for going into coalition?

DA: Well exactly as it was last time, the party with the strongest mandate should have the first chance to form a government and of course, look, the reason the prospect at the last election of any sort of coalition between the Liberal Democrats and the Labour party was so remote was partly because the Labour party had taken an absolute hammering from the British people, partly because lots of senior Labour people had no interest whatsoever in trying to clear up the mess that they’d made but it was also that between the two parties there wasn’t a parliamentary majority. So there are a whole lot of factors at play there and my point is, it is not for me sitting here now to say I like this guy or don’t like that guy and therefore that’s what we’re going to do. The message has to be it’s for the British people to decide what sort of parliament they want and my message to the British people would be, if you want to finish the job of seeing an economic recovery and you want that job done in the right way then you are not going to get that with either a majority Labour government, which would neglect the recovery, or a majority Conservative government which would take the recovery in the wrong direction. That’s why you need the Liberal Democrats in the mix.

DM: Just one last question on that criteria because it’s interesting what you said there. We’ve got the issue of the mandate, that is foremost, but you did say during the coalition negotiations – and we know about that – the issue, you said there that there were senior figures within the Labour party who didn’t seem to be interested in clearing up the mess you say that they’d left. So trust and personality is important but what about the current Labour leadership? Does Ed Miliband, particularly after that theory of opening those discussions with David Cameron, does Ed Miliband look like a man you could trust?

DA: This is not about me making judgements about the personalities on one side or the other. In the end, if the British people decide there is a hung parliament then we’ll have to work through those issues. I would say that the Labour party though has huge challenges in terms of its credibility on the economy. They thought that they could just sit back and attack the coalition government for taking the difficult decisions to clear up their economic problems and somehow that would see them home. We are starting now to see the early stages of an economic recovery thanks to the steps that we’ve taken in government over the last few years. I think the Labour party has got a lot of growing up to do on the economy if they are to be in any way convincing to the British people. That’s why I say, I don't think you could trust a majority Labour government with the economy but nor do I think you could trust a majority Conservative government to keep our society fair.

DM: I just want to end on a question about a dimension of the current economy, that is the Help to Buy scheme. We’ve heard your colleague, the Lib Dem Business Secretary, Vince Cable, expressing some concerns that it could help stoke a housing bubble in some parts of the United Kingdom of course. Do you think, given that you helped design this policy, do you think that you may have to look again at phase two of Help to Buy if things keep going as they are with the housing recovery?

DA: Look, we’re a million miles away from a housing bubble in this country. Right now the problem that we face in the housing market is that we’re not building enough new homes and there are vast numbers of young people in work who could afford the monthly payments on their payments but simply can’t afford the deposit that they need these days to get a mortgage. The whole point of the second phase of the Help to Buy scheme is to help those people fulfil their aspirations and in doing so, to ensure there is more construction activity, that there are more new homes being built. Of course in central London, in Kensington and Chelsea, you see very high house prices but I don’t think we should allow the tail of central London to wag the dog of this policy.

DM: But it’s what the Business Secretary said. Sure, you should, we need to build more homes but you’re not going to build them in the next three months and that’s when the second phase of Help to Buy starts. The Business Secretary, Vince Cable, says well you might have to look at it again. You disagree?

DA: The second phase of Help to Buy will help to build demand for new build properties as well as ensuring, as I say, that those people that can afford their mortgage repayments but right now can’t get a deposit, will be able to fulfil their aspirations to own their own home. I don’t think that we have to rethink this policy, not least because we’ve always said it is a time limited policy for three years after which the Financial Policy Committee of the Bank of England will be able to make a judgement on, if a government wants to continue it they will be required to get their permission. It is prudent from a financial stability perspective but right now the problem in this country, the problem in my constituency in Inverness or here in Glasgow or across vast swathes of England and Wales is not a housing boom, it is getting construction going, it is getting opportunities for people to own their home. That’s the problem that we should be dealing with now so I think we should carry on with the policy as we have it planned, deliver it and help people in this country who want to own their own home.

DM: And lastly, Chief Secretary, your message to people who as we all know are struggling, people on middle to low incomes, what you said to them is quite interesting. If you are in the private sector we’d quite like you if you can from your employer to get a decent pay rise. If you’re in the public sector, which of course you are in control of, tough, you’ve got 1% and that’s the way it stays.

DA: Well my message is that we’re in the early stages of an economic recovery. That recovery is taking place because the Liberal Democrats took the decision to form a strong and stable government with the Conservatives and because we’ve taken after that, difficult decisions to get our public finances sorted out, to support the public sector to grow. Of course we’ve got to stick to those difficult decisions if we want to see this recovery really take hold. Unfortunately that means for the hard working public sector workers, the pay restraint that we’ve had for the last two years will have to continue as we’ve already announced that it will with those 1% pay rises. In the private sector of course many workers have taken significant pay cuts, they have reduced their hours, in some big factories they have been working fewer number of days and moving from full time to part time. Of course as those companies start to see their fortunes turn up, I hope the benefits of that will be shared with the workforce because I think through the decisions we are taking in government, particularly the Lib Dem promise to cut the income tax of millions of working people, we’re helping people who are struggling financially but as we see the recovery take hold we also need to make sure that the benefits of it are shared fairly across the country.

DM: Okay, Chief Secretary, thank you very much indeed for talking to us. That’s Danny Alexander, Chief Secretary to the Treasury.