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DERMOT MURNAGHAN: Now with the UK economy crawling forward, one industry is bucking the trend. Once written off as a lost cause, British car manufacturing is now booming. Last month saw a 23% growth and thousands of new jobs created but with profits going abroad do we really benefit in this country? In a moment I’ll be speaking to the former Business Secretary, Lord Mandelson, but just let me alert you about who’s watching the discussion and tweeting today. They are John Higginson, political editor at the Metro, we’ve got Andrew Woodcock, political editor at the Press Association and they are joined by Kevin Schofield, political correspondent at the Sun. They provide their reactions via Twitter and you can read those on the side panels of your set, you can also follow on our website skynews.com/politics and you can join in if you use the hashtag #murnaghan. Well let’s say a very good morning then to Lord Mandelson.

PETER MANDELSON: Good morning.

DERMOT MURNAGHAN: Thank you very much for joining us. Just first of all a quick reaction to this big political story, the cash for access allegations surrounding the Conservative party. How potentially damaging to the body politic and in particular the Conservatives is this in your estimation?

PETER MANDELSON: I think it is very damaging, I think it’s degrading, not just for the Prime Minister obviously and the Conservative party but for everyone in politics. What we’ve seen on the television is gross, it leaves an extremely unpleasant taste in the mouth and I think what it also does though is point to reform of the rules and of party political funding. We tried to changes these rules and get an all-party agreement on them before, we didn’t succeed. I think that discussion now needs to be reopened.

DERMOT MURNAGHAN: Because all parties seem to have suffered from these things when in government, we think of Cash for Honours during the …

PETER MANDELSON: Not quite, I think you’ll …

DERMOT MURNAGHAN: … New Labour, you know, a major police investigation and …

PETER MANDELSON: Allegations that were unproven.

DERMOT MURNAGHAN: There were no charges, indeed but you talk about the need for change, it doesn’t seem to take place.

PETER MANDELSON: Well it doesn’t because the parties are unable to agree. The Conservative party wants to protect its big donors and the individuals who give a colossal amount of money to the Conservative party. The Labour party wants to protect its trade union donors. Now they have got to find an accommodation between these two competing point of view. As I say, we had a serious enquiry into this during the last Labour government. It ended in stalemate. I think now for all the parties, if they were caring and thinking about the quality and the standing of politics as a whole, they would all agree to reopen those discussions.

DERMOT MURNAGHAN: But rich and powerful people will get access to the higher levels of government won’t they?

PETER MANDELSON: I’ve got nothing against people contributing to politics. Some people contribute their time, others contribute money but there has to rules, there has to be transparency and there have to be limits, both on spending and on cash raising.

DERMOT MURNAGHAN: Let’s talk about the car industry then, as my introduction touched upon there.

PETER MANDELSON: Good news.

DERMOT MURNAGHAN: We’re basking in the good news of especially Nissan’s new investment in their new model in Tyne and Wear, 2000 new jobs to be created there. It’s interesting that Ed Miliband, the Labour leader, attributed part of that to your years as Business Secretary, he said didn’t he that the new Nissan investment is the culmination of your approach, of Labour’s approach. Would you really take those laurels?

PETER MANDELSON: Well I would take some of them in this sense. When I came back to the government at the time of the financial crash in 2008, one of the key sectors of our economy that was facing a major crisis as demand for cars and trucks collapsed, was the auto sector that was heading over a cliff and so we worked very quickly and very closely with the automobile sector to do the following, not just to make sure that the funding was in place to enable them to keep producing cars and different models and we introduced, do you remember the scrappage scheme that stimulated demand. But what we were doing, I think more importantly, for the long term of this sector and for Britain’s manufacturing base as a whole was investing in their new technologies. Their green, their energy efficient, their hybrid technologies, their integrated electronics systems and in the process we were investing in their research and development, we were investing in their skills base but also, crucially, investing in the auto component supply chain and that supply chain is absolutely vital. It doesn’t simply support directly what the car industry is doing here, it supports other industries, not just in Britain but in Europe as well.

DERMOT MURNAGHAN: Okay, I want to ask you in a minute whether you think the present government therefore isn’t doing that kind of thing but just on Nissan specifically, of course there is a plaque outside the plant that says opened by one Right Honourable Prime Minister Margaret Thatcher in 1986, I mean it was Conservative industrial policy that bought Nissan to the north-east, that put the money in, that did the union bit …

PETER MANDELSON: Because we welcomed the Japanese in particular but other foreign companies as well and frankly it doesn’t matter where these companies have their headquarters, it’s where they are undertaking the research, the development, the investment in technology …

DERMOT MURNAGHAN: But the issue is the credit for getting them there.

PETER MANDELSON: Yes, but they came to this country because people saw that we had a real potential here and what we’ve got to do in Britain is focus absolutely laser like on our international competitiveness, on the undoubted comparative advantages, the strengths and the opportunities we have in this country and make sure that we have the resources available to exploit those advantages. Now there there is a job primarily for the private sector but also for government. I mean we have suffered in this country for thirty odd years from a mind-set that says that the best industrial policy is to have no industrial policy at all. Now I’m not saying that the last Labour government got everything completely right but we were doing things that were more right towards the end of our time in government on industrial policy and that’s what I want to see from this present government.

DERMOT MURNAGHAN: And you think this present government is not interventionist enough, I mean you must have read your successor’s leaked letter, Vince Cable’s letter, with some interest which talked about the lack of a compelling vision for industrial strategy. Do you think Mr Cable is frustrated and would like to get his hands, his sleeves rolled up and his hands a bit dirtier on this?

PETER MANDELSON: What Vince said in his letter to the Prime Minister was that the coalition is presenting no compelling vision of the future beyond and apart from deficit reduction. Now obviously it would be very interesting to know from Vince Cable whether he thinks in the light of the budget that compelling vision of the future is now in place. I don't think it is because I think that was the budget was about was about sort of re-dividing the cake and sort of looking at what sort of small incremental slices can be given here or there rather than growing the cake as a whole and that is what we have got to concentrate on in this country. We have got to look long-term, shareholders have got to look long-term, banks have got to do so, governments have got to do so. We’ve also got to make sure that the scale of public and private resources are available to enable companies to grow and to exploit their advantages so that we’ve got to think big as well as long-term but also we need broad political support for industrial policy, both across government but also between government and opposition …

DERMOT MURNAGHAN: Do you think it’s there? I mean it’s not there at the moment is it?

PETER MANDELSON: Well I think it is there …

DERMOT MURNAGHAN: Do you think that the current Labour leadership is taking too much of an anti-business stance when we see what Ed Miliband said about Steven Hester, what he says about predator companies, what he said about the 50p tax rate? I mean do you support him on that?

PETER MANDELSON: I don’t like a lot of the language but I share the sentiment that we need more effective efficient sort of capitalism in this country. We’ve got to think long-term rather than short-term and that is an injunction not just for business in the City but for government as a whole.

DERMOT MURNAGHAN: Do we need a 50p tax rate?

PETER MANDELSON: Well hold on a moment, just let me make one point. You talk about Labour, I read a very important and I think a very influential and intelligent speech by Labour’s Shadow Business Secretary, Chuka Umunna, the other day …

DERMOT MURNAGHAN: He was on my programme last week.

PETER MANDELSON: It was delivered in Liverpool. And the point I want to make is this, this coalition comes into office and spends basically the first two years sort of unpicking a lot of what we were thinking and doing. They then find themselves arrived at a point when they have to start reinventing the wheel. It then takes them another year or two to travel up the learning curve which is what we’re seeing now. What we need is governments to sort of pick up and continue from the wise actions and policies of the previous government and provide that long term coherence and continuity for business because that’s what is going to give them the sense of confidence and predictability.

DERMOT MURNAGHAN: But confidence of course for their senior executives and business leaders to know what rate of tax they’ll be paying and of course under New Labour, under Tony Blair and Gordon Brown when they came into power, they made it absolutely clear, you made it absolutely clear that you weren’t going to put up the top rate of income tax, that was one of the basic planks of getting elected in 1997, it was 40p and it would stay at that. Of course in the dying days of the government you were in it went up to 50p and now it’s come down to 45p, they have no coherence on this, the top business leaders and top earners who might bring wealth to this country. Do you think it should be 50p, 45p or 40p?

PETER MANDELSON: Well fortunately, or unfortunately, I am not in a position to effect the top rate of tax in this country. What I would say to you though is this, when we put it up to 50p we didn’t intend it to be permanent. We did it because we wanted to deliver a powerful signal to the country that everyone was going to shoulder their fair share of the burden. Now in my view, 50p in the medium term is not sustainable. Whether or not however you should bring the top rate down this year is a different question altogether, I think probably it was not the right thing to do even though I believe that keeping it up at 50 is, as I say, not indefinitely sustainable.

DERMOT MURNAGHAN: You talked about not liking some of the language, did you like some of the language then in terms of Mr Miliband and others on the Labour front bench asking the Conservative front bench whether they benefit from this cut in the top rate or not? I mean there must be a lot of property millionaires on the Labour front bench, Miliband must be a property millionaire.

PETER MANDELSON: Well, it’s the sort of stuff of politics.

DERMOT MURNAGHAN: Stuff of politics?

PETER MANDELSON: It is the cut and thrust of the House of Commons but the more important point I think is, as I said right at the beginning, not how we re-divide this cake but how we make sure that it grows in the future and there is see an essential partnership, a collaboration between government and the private sector in this country. If we do not get that right, if we do not focus as I say laser like on the advantages we have and to capitalise on those, everyone pulling in the same direction, then we are simply not going to be able to make our way and earn our living as we need to do during the course of this century.

DERMOT MURNAGHAN: Would you like to play a role still? It sounds as if you are still buzzing with ideas, you talk about that continuity and being part of the process.

PETER MANDELSON: Well I am buzzing with ideas because I felt that I was embarking on something when I came back to government and was cut off in my prime but that’s politics, that’s the electoral verdict of the public. What I would like however to see now, now that the coalition is in office is them not trying to sort of reinvent everything and not trying to scrap one handbook simply for short-term tactical reasons, political reasons, because it belongs to another government, it belongs to another party. They’ve got to build on what works and if we did that more successfully in this country we would be a lot better off.

DERMOT MURNAGHAN: Can I ask, have you been in touch with the Chancellor George Osborne? You had that famous falling out over a certain holiday …

PETER MANDELSON: Yes, it brought us together.

DERMOT MURNAGHAN: Well apparently he is a big fan of yours to take over at the World Trade Organisation.

PETER MANDELSON: So I hear, yes.

DERMOT MURNAGHAN: Have you had any discussions about that with the Chancellor?

PETER MANDELSON: I don't think it’s going to arise simply for this reason, that the World Trade Organisation which I know very well because I negotiated within in on Europe’s behalf for many days, weeks, nights and weekends, has been led by a European now getting on for two terms, I think they’ll probably want a non-European.

DERMOT MURNAGHAN: Okay and I just want to ask you lastly, Lord Mandelson, I’ve got to ask you this, about the third runway at Heathrow. Of course your government supported it, the incoming government said no and now it seems it’s back on, do you think it’s essential in terms of Britain’s future?

PETER MANDELSON: This is exactly the sort of long term planning, investment and infrastructure that we have got to get right in Britain. We took a very tough decision in the last government, no sooner had we made it than David Cameron announced that he would scrap it on coming in to office. Inevitably he is having to review it all over again. Governments, Prime Ministers in particular, have got to think big, they have got to think for the long term, they have got to focus on what is going to make us internationally competitive. That’s David Cameron’s job and if he reopens it then I will support him.

DERMOT MURNAGHAN: Lord Mandelson, thank you very much indeed for coming in. A fascinating interview there with the former Business Secretary, Lord Mandelson.