ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Well the Liberal Democrats want to raise the income tax threshold for a fifth time. They say they want to put cash back into the pockets of workers, but can they actually afford it? In a moment I’ll speak to the Chief Secretary to the Treasury, Danny Alexander. Let’s say a very good morning then to the Chief Secretary, good morning to you Mr Alexander. These plans to push the tax threshold up even higher than you originally envisioned, how far advanced are they? Will they be enacted by 2015?

DANNY ALEXANDER: Well what we are saying today is that we will reach the £10,000 threshold next April, that means that 26 million working people will have £700 more of their own money to keep themselves than they had back in …

DM: That’s accepted but what about £10,500?

DANNY ALEXANDER: £10,500 is what the Liberal Democrats will be pushing for, for a decision at the budget next year in order to deliver that next step, if you like, on the allowance journey in 2015.

DM: Well tell us about those negotiations. We heard your leader saying that he has had to push already against the Conservatives to get the increases that we’ve had announced already so this is going to be a big battle isn’t it?

DANNY ALEXANDER: Look, it is quite true that at each and every fiscal event during this parliament that we, the Liberal Democrats, have pushed hard for the next steps on the personal allowance. We’ve pushed hard because we think it is important in difficult times that the tough choices that we’ve taken as a coalition are reflected in putting money back into people’s pockets. That’s what we are trying to do as a government.

DM: Ah, that’s my next question, how you would pay for it? You are more or less saying there than that you’ll slow deficit reduction, is that it?

DANNY ALEXANDER: No, we are not going to divert one iota from our economic plan. It is that economic plan that has led to improved growth, that is helping to ensure there have been an extra 1.4 million jobs created in this country and all those things …

DM: So how much does it cost then? An extra £500 on the tax threshold?

DANNY ALEXANDER: How you pay for it will be set out at the time of the budget next year. Right now we are in the middle of discussions about the autumn statement, that will be announced in less than three weeks’ time and this is not on the agenda for the autumn statement.

DM: Are you going to announce this in the budget?

DANNY ALEXANDER: This is for the budget in 2014 so we haven’t really started the detailed negotiations for the budget 2014 yet. We have had some initial discussions in the quad, we discussed this a few weeks back. I think the Conservatives understand that this is the key Liberal Democrat ask if you like and …

DM: You seem pretty confident it is going to be in that budget.

DANNY ALEXANDER: What I am confident about is that we will push very hard for this as Liberal Democrats. Every time before when we have said at a fiscal event, this is our top priority as Liberal Democrats, the Conservatives have come back and said this is our top priority be it Corporation Tax or whatever, and we’ve been able to find ways because we are willing as a government to take difficult decisions, to pay for those things and I intend to do that again because it is right that we should provide a bonus for workers in this country at a time when frankly it is the hard work of our working people and businesses who are pulling out of the difficulties in the economy.

DM: So then will people at the top pay for it? You must have seen, it is quite an interesting analysis isn’t it, in the front of the Sunday Times today, saying 1% of the working population, the top 1%, pay 30% of all tax. Will they be paying more tax?

DANNY ALEXANDER: We haven’t agreed how we will pay for it but if you look back at our record over the past three and a half years, we have consistently taken steps to clamp down on tax avoidance and tax evasion by the wealthy and big business, we have taken some decisions too to ask the wealthiest to pay more. It is right that the wealthiest should pay more at a time when as a country we are trying to take some very difficult decisions – difficult decisions in the welfare system, difficult decisions about public expenditure, difficult decisions on taxation for the wealthy too – but it is also right that given that one of our key objectives as a government is to grow the economy and get more people into work, that we should improve people’s incentives to work by putting more money in their pocket.

DM: Okay, talking about growth in the economy, let’s look at the overview and you’d be aware that a lot of commentators are saying well look, we’re doing the same old same old here again. We’ve got a bit of a consumer boom, we’ve got a housing bubble in places – we’ve discussed that before, help to buy is doing that and if we had really rebalanced the economy, as you said you would do three years ago, if you really had rebalanced the economy then the balance of payments would be closing, that gap would be closing but it’s not, we’re not exporting any more.

DANNY ALEXANDER: Well rebalancing the economy is not an instant thing that you get by waving a magic wand but I’d say that we’re making progress actually. If you look at the growth figures for the last two quarters, not only have they been very healthy growth numbers but when you look beneath them at the composition of that growth, all of the key sectors of the economy are growing together. In fact we have had two quarters of growth in all four of the major sectors of the economy for the first time for more than a decade.

DM: Where is the growth coming from?

DANNY ALEXANDER: Well look at employment for example, actually we’re seeing jobs created in every part of the country. Strong job creation in the north-west of England for example and in Scotland so it is not just in London and the south-east. You mentioned housing …

DM: That’s geographical rebalancing, we were talking about sector rebalancing weren’t we? That’s what you were also talking about, the march of the manufacturers, it hasn’t happened.

DANNY ALEXANDER: There are a whole number of different elements to rebalancing – regionals, sectorial, the two combined to some extent because different sectors are strong in different parts of the country, that’s why we’re investing in infrastructure, it’s why for example High Speed 2 and our big programme of investment in the road network is such an important part of how do we rebalance our economy in the long term so I’d say rebalancing is not a job that can be done overnight but I think we are making progress on it. Take Help To Buy for example, we’ve discussed this before, we saw the first figures for it and actually 75% of the transactions that had been supported by Help To Buy in its first month took place outside London and the south east of England. The average house price being supported by a Help To Buy mortgage is £165,000 so we are helping to lift the economy in all parts of the country.

DM: But are you telling people who buy through Help To Buy and indeed not necessarily through that, that house prices will always go up, that they’re not going to lose money? Shouldn’t there be a health warning on this?

DANNY ALEXANDER: Of course and Help To Buy doesn’t change any of those health warnings and in fact …

DM: But they are being told they are getting on that ladder, a ladder that always goes up.

DANNY ALEXANDER: In fact the tougher regulation that we’ve put in place, the banks, financial services, the way mortgage lending takes place and so on, means that there is more attention being paid to that in decisions that banks take to issue mortgages. Help To Buy doesn’t change any of that, what Help To Buy changes is the fact that if you are someone who comes from an ordinary background, who doesn’t have lots of wealth behind them, who can’t afford a massive deposit as many people can’t when they get started on the housing ladder, that you can if you are a responsible person, if you meet all the bank’s criteria, you can get a mortgage, you can get started but you have to make those judgements for yourself with the bank before you decide whether to embark on that.

DM: And can I ask you about another dimension of housing, those people who can’t afford to buy and there are many millions of them in this country of course as well, the so-called bedroom tax, the spare room subsidy? Have you had a robust discussion with your father about the merits of that, working as he does for the Housing Association, he has seen some of the strains and pains that it is causing people?

DANNY ALEXANDER: Of course I’ve discussed it with my dad. I don’t know any family where fathers and sons don’t have disagreements on one thing or another from time to time but he has made some good points to me actually about the fact for example that in remote rural areas, where his Housing Association operates, it is very hard to find appropriate properties just down the road so people sometimes have to move a long way.

DM: That’s my point.

DANNY ALEXANDER: That’s why, just a few months back, we increased the budget for discretionary housing payments, the extra money that we give local authorities to help people who are in difficult situations and one of the areas that we increased it most was precisely those rural communities. So yes, I’ve had plenty of conversations with my dad about this, he is entitled to his view, I wouldn’t be a Liberal if I tried to silence my dad, he’s got the right to make his views heard but I’ll make my views heard too.

DM: Okay, and what about those discussions within the coalition again, listening and hearing as we are today – and we’re going to be hearing from Francis Maude about this independent review of trade union power – do you really think we need to have this at this time? Industrial relations aren’t bad at all, the Business Secretary said they are quite good.

DANNY ALEXANDER: They have been good actually. In the last few years we’ve been through a time when industrial relations in this country have been reasonably benign. Actually that might be surprising given that as Chief Secretary I’ve been responsible for making some very big reductions in budgets for various public services yet we have been able to work with the unions to do things like reform public service pensions, control public service pay. What this review is going to look at is not just unions but employers too. It is right to say that in circumstances where there have been various reports of tactics that are underhand being used in those industrial disputes that we should have an independent review, we should look at on both sides, employer and employee, what’s been going on and take a view about ….

DM: And maybe bring in new laws as a result, anti-union laws?

DANNY ALEXANDER: Well let’s see what the review says. We’ve got a very reputable independent guy who is going to take this forward, let’s see what he says. If there are measured, sensible, prudent reforms that could help to improve the industrial relations landscape in this country yet further, I’d be up for that. What I’m not up for is a bunch of union bashing.

DM: As a Liberal Democrat are you up for lowering the age of consent for sex to 15 as John Ashton has been suggesting, looking into it anyway, from the Faculty of Public Health? Is that something where the law would catch up with reality?

DANNY ALEXANDER: I don't think this is an area where we should be making changes to be honest. I think that there is a need to improve sex education in schools, we also see that this country sadly has one of the highest rates of teenage pregnancy of any developed country and I think improving education and awareness is an important part of that but I don't think changing the age of consent should be part of that debate.

DM: Do you think most people are getting their sex education, sexuality education, from TV and social media? You know where I’m going here, I’m talking about people like Miley Cyrus appearing on network television tonight, we don’t know what she’s going to do but already … I mean would you be comfortable, I know you’ve got two young daughters, would you be comfortable with them in prime time sitting down and watching with you, as presumably they do, and they say to you ‘Daddy, what is she doing with her bottom?’

DANNY ALEXANDER: Certainly as a father of children I want to make sure that the things that they are seeing on television and on the internet are appropriate. I also want to make sure though that the education system is equipping children with the skills if you like to understand why that is happening, to respond to it appropriate and to be educated about sex in a way that makes them realise … you know, these are big choices that children have to make. My children are very young yet, I haven’t had to start doing that as a parent yet but I think it is important to …

DM: The gyrating, okay, twerking, some of that is a bit disturbing as a parent isn’t it, when your children are watching?

DANNY ALEXANDER: Well they haven’t watched it, I think partly because I haven’t watched it either so … Buy yes, I think we have to be careful about that, what’s on in prime time TV. My daughters are great fans of Strictly Come Dancing and we watch that as a family, by and large I think it’s on the right side of the taste line but you’re right. That’s why I think it is education that’s important here, I think them saying let’s focus the debate on the age of consent feels like it is the wrong place to be focusing the discussion.

DM: Okay, Danny Alexander, thank you very much indeed, the Chief Secretary there.