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DERMOT MURNAGHAN: So Ed Miliband made what looks like a savvy political move last week. He’s promised to force a vote in the Commons over the Mansion Tax, it’s an idea of course long supported by the Liberal Democrats but it’s not coalition policy so the Lib Dems have got a choice. They can either vote with Labour for the policy or stick with their coalition colleagues and oppose it. So which will it be? In a moment I’ll speak to the Business Secretary, Vince Cable. So let’s a very good morning to the Business Secretary Vince Cable who’s in Cumbria today and Mr Cable, first of all are you heartened to find that Labour are converts to the Lib Dem idea of a Mansion Tax?

VINCE CABLE: Well I wouldn’t say heartened, I’m glad they’ve seen sense. It is a very sensible proposal which is designed to deal with extreme inequalities of wealth, it’s also designed to puncture the bubble in massive house prices particularly in London and the south east at the top end of the range and the idea of a levy of 1% on values above £2 million, it’s an idea whose time’s come so I think the Labour party are probably playing political games but nevertheless, it’s welcome that they’re endorsing it.

DM: So if it does come to a vote in the House of Commons, as Liberal Democrats, the original proposers of the tax, you would have to support it wouldn’t you?

VC: Well it depends entirely how they phrase it. If it is purely a statement of support for the principle of a Mansion Tax I’m sure my colleagues would want to support it but very often in these opposition days they can’t resist the temptation to make party political point scoring and drag in other issues like the 10p rate and if that happens then I’m sure we will not. It depends, it’s up to them to be statesmanlike and sensible in how they approach it.

DM: Okay, but if it is just that, I was talking to Chris Leslie a little bit earlier on this programme from Labour’s Treasury team, he seemed to be using Lib Dem calculations to estimate how much they might raise from it so it seems pretty much your policy.

VC: Well indeed, let’s see what they have to propose. We have been very clear about this for a long period of time, in opposition we worked up this proposal, did the practical assessment of it and it’s out there, we certainly argue it within the coalition that this is something we’d like to see on top of the other tax policies that we’ve successfully pursued in government, lifting the tax threshold, lifting enormous numbers of people out of income tax. We’d like to see the Mansion Tax too and we are happy to look at what the Labour party are putting forward.

DM: Is it true that you’ve also been looking at, I know it is a policy document the Mail on Sunday have got their hands on, you are looking at the issue of an overall wealth tax, looking at people’s global assets?

VC: No, we’re not. This is not party policy, let’s be very clear about it. There is a working group that is coming up with ideas on a wide variety of things and I saw it for the first time in the newspaper this morning. Some of their ideas are interesting, some of them are a bit whacky, the idea of taxing jewellery is completely impractical and intrusive, the idea that you combine together people’s properties probably doesn’t make a great deal of sense because people’s second homes are already subject to Capital Gains tax and income tax on the rent so there are ideas in there that I’m sure will not get any further but we have a democratic process, we have activists who come forward with ideas, we debate them and then we make policy but we are a long, long way from that and these ideas are most emphatically not our party policy.

DM: But what we can draw from that is okay, you have got this policy committee looking at those kind of ideas, you wouldn’t necessarily stop at a Mansion Tax, you might look at other measures of people’s wealth?

VC: I think we will want to stop at a Mansion tax and make that work, it’s very clear, it’s clearly understood, it raises substantial revenue, it’s fairer, it distributes wealth at the extremes of the property market, getting that in place is what we’re committed to doing.

DM: If it does come to this, just back to this vote on the Mansion Tax if it is that, and I’m sure that Labour are going to craft it very carefully so it is something the Lib Dems can support, isn’t that going to be a break of the coalition’s collective responsibility if you did vote for it?

VC: Well you are raising a lot of hypothetical questions here. We have a policy, we are very clear about it, we’re open about it, it’s something we disagree with our Conservative colleagues in the coalition government. It doesn’t stop us working together in the national interest, it’s up to the Labour party the way they feel with their opposition, let’s see what they put down on paper.

DM: Okay, right, we’ll move on. Coming from the G20 in Russia, the Chancellor obviously signed up to this one, not to a Mansion Tax but cracking down on multi-nationals, trying to co-ordinate internationally to get more tax out of them. Do you really believe that that is possible any time soon?

VC: Well it’s certainly possible to make progress because what is happening is very often international companies play one country against another, take advantage of differentials in tax rates or in the tax base and it is obviously sensible that government should co-operate in order to deal with abuse. There are a lot of things we can do domestically and that we are doing but other things will require a co-ordinated approach. We have all these international tax havens, some of which are reputable, some of which are not, and it does require co-ordinated action in order to deal with them. There’s been a common approach for example to Liechtenstein which has reduced some of the abuse, the British government has an agreement now with Switzerland which deals with some rich individuals. Corporations deal with much more complex tax questions but we’ve got to deal with that on a co-ordinated basis and the Chancellor is quite right to emphasise the potential for working together with other countries, Germany are critically interested in doing so.

DM: But what more can you do domestically, Secretary of State? You are cutting Corporation tax.

VC: Well that’s right and it’s perfectly sensible that we have a basic rate of corporation tax which is competitive in international terms. What is not acceptable is if some companies operate for example by manipulating transfer pricing as it’s called or royalty payments in order deliberately to frustrate the will of parliament. What is happening nationally, we’re introducing what’s known as a general anti-avoidance rule, the Australians have a similar principle and if it is clear that companies as well as individuals are setting out to flaunt the will of parliament – they may do it technically in a legal way but if they are deliberately avoiding tax then we have some ability to take action.

DM: As we approach the budget, your department is one of those tasked with trying to find, trying to spark elusive growth and one of the issues I know that has been discussed, and I want to know how close you are to proposing it, is the idea of putting money in consumer’s pockets by giving them shares in some of the banks that are effectively nationalised, of course RBS is the one that is most publicly owned so to speak.

VC: Well I’ve referred to this in a speech a couple of weeks ago. It is one of several options available for, well it is predominantly RBS, to some extent Lloyds, we have a minority stake there, and there are a variety of options in play in terms of how it eventually finds its way back into private ownership. There is no great urgency about this because these banks can’t be sold now, their share price is far too depressed and we’ve really got to concentrate on the more immediate question which is making sure that they support the real economy, that they get money particularly into small and medium sized companies many of which still have enormous difficulty getting access to bank capital on reasonable terms.

DM: Okay but free shares for the public?

VC: Well that’s one proposal and it is something the Liberal Democrats have argued in the past as a sensible way of ensuring that in the course of time the public get the benefit from these banks into which they’ve sunk enormous amounts of money but as I stress, this is not an urgent policy decision, it’s one of the options out there that we need to continue to evaluate.

DM: Let me ask you, as we look at the issue of growth, the role that immigration and particular skills play in the growth of this country. You’ve expressed concerns in the past about some of the dimensions of this government’s squeeze on particularly the highly skilled workers who want to come to this country. Do you think things are going to get tighter rather than looser and that therefore could affect growth?

VC: Well there is a risk. We are trying to strike a very difficult balance, the public want to be reassured that immigration is under control and this government has introduced tougher, more effective measures but equally we don’t want to keep out people who can help our economy to grow and one controversy has been around overseas students. We don’t have a limit on that but they do fall within the definition of the cap on immigration so we want to have an open approach there. Whether there are people who have genuine unique skills that the economy needs, well of course we should have a flexible system, we should have a system whereby people are working senior positions in international companies and are needed to operate those companies, they should be able to come easily. If we have visitors from China who wish to come and shop here or invest here, we should have a flexible arrangement. It is striking a balance, it is difficult but we want to send a message to the world that we are open to business but we also have an effective, firm immigration policy.

DM: Would that message be sent out if restrictions are put on Romanians and Bulgarians who want to come here in 2014?

VC: Well I think they are two different issues mixed up with the Balkan countries. There is freedom of movement within the European Union, it is one of its basic principles, a lot of British people live and work in other parts of Europe and the Europeans come here. I think the issue that has aroused a lot of concern in the public is the way that people, or some people, are apparently able to take advantage of welfare services and we do need to look at the principles in allowing access to the welfare system, that it is either based on residence or a contributory principle, to ensure that there isn’t abuse of that system.

DM: And I suppose another dimension of this being discussed today by the Home Secretary, Teresa May, do you agree with her that life should be made more difficult in this country for foreign criminals to remain here if they have served their sentences, quite often they appeal about their human rights and that judges should only fulfil those appeals under extraordinary circumstances?

VC: Well I’m sure she’s right that the public mood, and that is across the political spectrum, believe that if people have committed very, very serious offences in this country then they should be deported if that’s the appropriate penalty but we can’t be in the business of second guessing individual judge’s decisions. We have an independent judiciary, we’ve got to respect that but if she wants to bring in measures to prevent serious abuse of the system by overseas criminals I’m sure that would be widely welcomed.

DM: But actually look at some of those articles within the Convention on Human Rights.

VC: Well there is a review process taking place on the Convention and the Convention of Human Rights of course is nothing to do with the European Union as you know, it’s to do with the Council of Europe. It’s one of those things that people applaud when it makes good decisions and it’s attacked when it makes bad ones. A few weeks ago one of my constituents, Nadia Aweida, her case was upheld in the European Court in terms of her right to wear the Christian cross and everybody thought, this is excellent, this is freedom and the kind of thing we believe in but when we have a bad decision related to a foreign criminal, everybody dumps on the European Convention. So let’s … we can’t just attack the basic principle of the system because we get bad cases. Going back to your original question, of course Theresa May is right that if there is serious abuse and very bad people are allowed to stay here because of anomalies in the law, we’ve got to deal with that.

DM: Okay, Secretary of State, thank you very much indeed. Business Secretary, Vince Cable.