ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Well David Cameron’s EU speech is finally behind him, he must be relieved, he can now sit back and enjoy a united party, content and optimistic about the years ahead. Fat chance! There’s talk in three newspapers this morning about a leadership challenge and of course we’re teetering on the brink of a triple dip recession. In a moment I’ll speak to the Chairman of the Conservative Party, Grant Shapps. Let’s say a very good morning to the Conservative party chairman, Grant Shapps, and let me start Mr Shapps with the EU referendum. It’s all a bit nebulous at the moment what particular powers you want to see repatriated, are you going to be explicit about those in your next manifesto?

GRANT SHAPPS: Actually of course by the time of the next manifesto we also will have published enabling legislation so everyone will be able to see exactly what we want to do, the law for the referendum will be published, people will be able to look at that and actually understand the process but it is actually quite straightforward, I don't think we need to over-complicate it, David Cameron has been very clear. We’ll have a negotiation and then we’ll put the results of that negotiation, whatever they are, to a referendum which will be yes, an in/out referendum that people can make up their own minds on.

DM: It is very clear and then it will be very clear for the public because they will have a scorecard, won’t they, in which they can judge the Prime Minister and others in their negotiations and if they don’t get, if you don’t get what you want they can say you have to vote no and the Prime Minister would have to vote no.

GS: Well look, how one person votes is frankly not the point here because the entire country will be given the vote and that’s the good thing about a referendum, it means that your vote, my vote, the Prime Minister’s vote, they all have equal weight in all of this so people will be able to judge, they’ll decide for themselves whether they think the negotiation has provided enough. The Prime Minister has been very clear, he wants us to stay in Europe but also clear that the British people feel that things are not really working at the moment, this is a debate which is out there, it’s not going to go away, we need to settle it once and for all.

DM: But if you ask for specific powers back and you don’t get them, then logically those that have carried out the negotiations have to say no. That’s exactly what the Mayor of London has said, he’s said that but logically he has to accept that he might have to vote no if those powers aren’t repatriated to the United Kingdom, whatever they may be.

GS: Well you are trying to tempt me into trying to pre-empt negotiations which haven’t happened, the PM has been pretty clear about this, he thinks there’s a range of different powers that he thinks we should run here from Westminster rather than from Brussels. I think that most people in this country agree that Europe isn’t what we originally what we signed up for, it has changed dramatically and so let’s see if we can get some of those powers back. Now of course you’re right, if we can’t get any powers back at all then we’ll be in a different position. We’re confident that we’ll be able to through negotiation and then everyone can have their say.

DM: Okay, you said it there, if you don’t get those powers back you’re in a different position and then it’s just that logical point, as the Mayor of London has said, then logically if you are still in power then you have to vote no if you don’t get what you ask for.

GS: Well as I say, how any individual votes is all very well but tens of millions of people will be empowered to make this decision so actually in a sense it doesn’t really matter how I vote, it matters how your viewers vote and they’ll decide depending on whether they think the new negotiation, the new position with Europe is appropriate or not. We’ve already had Merkel and other leaders saying there can be a negotiation, of course there can, this country is perfectly at liberty to do that and people can decide, do they think they’ve got enough and do they want to be in or out?

DM: Okay, well there are lots of questions I put to you about your position, there’s lots of questions about the opposition’s position on a referendum. They’re just saying quite simply this is a distraction, look at the state of the economy at the moment.

GS: I think it is absolutely true that there are many other issues, creating jobs, helping the most vulnerable in society, so many other things that we need to focus our time on and are, that doesn’t mean that you can just or should just ignore a big central issue which affects everything that we do in our daily lives so I think it’s right to be doing both things at the same time, I think that’s a mainstream position for the British people and that’s why I welcomed the Prime Minister’s speech this week, I think a lot of people have welcomed it and it has gone down very well.

DM: Would you welcome the Labour party backing a referendum?

GS: You know, I’m Chairman of the Conservative party, it’s not for me to recommend to other parties what they do. I would suggest that they don’t know what they’re planning to do, they haven’t been able to quite say. We think they ruled it out and then an hour later seemed to rule in a referendum, I really don’t know. Right now it looks as if, if you want a referendum on Europe, if you want to have a say and be able to help determine this country’s future when it comes to relationship with the EU then probably the only thing is to vote Conservative at the next election but we’ll have to wait and see when Labour decides what they’re going to do.

DM: Well that point that Labour make about the economy at the moment, how would you describe the state of the economy at the moment?

GS: It’s tough, it’s an uphill battle. We are, back to the question of Europe and the rest of the world, we’re fighting the headwinds from a global economy which isn’t doing much, a European economy which is in recession and so things are very difficult. That said, there are some brighter spots. Just this week we’ve seen some new employment figures showing there are more people in work than ever before, nearly 30 million people, more women in work than ever before in this country. I think that’s very good news and also the big fundamental problem that we’re facing, the deficit, we’ve cut a quarter of that deficit so far and it is a work in progress, we’re making progress on several of these fronts.

DM: Would that be a price worth paying if you can continue progress on the deficit, a price worth paying in terms of a triple dip recession, if this quarter is negative we’re back into triple dip.

GS: Well look, everyone wants the economy to be growing and we’re focusing on some big projects to help that happen, not just in the short term – and by the way, in the short term if you want more growth you can add to the debt and buy more growth, that doesn’t actually help because you end up with a bigger debt in the end and more problems to resolve. We’re doing the long term things to help this country grow, for example high speed rail, High Speed 2, and we’ll be saying more about that very shortly. Those things will help structurally to make this economy grow better, grow faster, operate more efficiently. That’s great but actually, as I say, in real people’s lives the big issue is do you have a job, are you able to find a job? I would say having more people in work than ever before is I think a really big achievement.

DM: But in real people’s lives they’re saying what is the government doing to help us, are you doing anything other than cutting? You’ve heard from the International Monetary Fund, an organisation that you set great store by, saying look, it might be time to think about more stimulus. Goldman Sachs have also been making a similar point.

GS: Well look, what are we doing to help average families, people who are worried about meeting their expenses, meeting their mortgages? We’ve got the lowest interest rates in this country for very many years which have been sustained low for a long time and that’s because we’ve been tackling the deficit. It would only take a 1% rise in interest rates to add a thousand pounds a year to people’s bills. We’ve had three years in a row where we’ve been freezing the council tax, that’s real help to people, it’s help now, not having to wait for that to come through because that’s being provided and we’ve tried to do a bunch of other things. For example we’ve scrapped 10p worth of petrol duty rises which the previous government had in place so we’re trying to do those practical things but of course you’ve got to get the economy going longer term, jobs and prosperity depend on things like the national infrastructure ….

DM: And you’ve patently failed to do that for the last fifteen months. Growth is flat, it’s not working, isn’t it time to think again? Isn’t the hair shirt being overdone?

GS: Well look, what is more important – stopping the country from going bust and creating jobs or simply saying well look, the only answer to any of this is more spending, more borrowing and more debt? I think actually we are hitting that balance of all those additional people in work which is really good news and helping the deficit reduction at the same time. A quarter of the deficit has been dealt with so far. People have to make a choice, do you want to go back to square one, do you want to go through all of this pain again, do you want to start dealing with the deficit from scratch, effectively giving the car keys back to the people that crashed the economy in the first place? I think that would be completely crazy, having gone through all this pain to get this far I think it is absolutely right that the country pushes on and we get the job done.

DM: It’s interesting, Mr Shapps, you’re setting great store about employment figures and how they have held up remarkably well during all the difficulties, let me talk about one of the major employers in this country, Starbucks, an organisation that feels that the criticism, particularly from the Prime Minister, has been overdone. Do you think it has or do you think you’re going to keep hitting on companies like that and saying pay more tax?

GS: I don’t think we ever single out a single company but I do think that companies in this country need to pay their way, I think they need to do what’s right as far as that’s concerned and I think most people watching this would agree, companies should pay their fair share of taxation and that applies to that company and anyone else you’d care to mention. It certain applies to the millions of smaller businesses in this country, people who work very hard, build up their companies from scratch often and are paying their fair share of taxes all the way through so the same rule has to apply to everyone.

DM: Okay and can I ask you finally, Mr Shapps, you’ll have seen no doubt on the front pages of some of the papers today, the thought of a stalking horse, a challenge to the Prime Minister’s position in the form of Adam Afriye, presumably you know him quite well. Do you think he is planning some kind of leadership challenge?

GS: No, I know Adam as you say pretty well, he says it is completely untrue, is quite annoyed by the whole thing. It is just one of those silly stories that appears from time to time. No, I think the big central problems that this country faces over creating jobs, over trying to get the economy moving, over cutting the deficit, all of those things are works in progress but the Prime Minister is doing a great job with it and these distractions are just things which are written to fill the pages of papers I’m afraid.

DM: Okay, and just lastly on these distractions, do you take the comments of David Waugh, the Lib Dem MP, his comments about the state of Israel and the way it treats the Palestinians, the parallels with the Holocaust, particularly at this time when we are remembering the horrors of the Holocaust?

GS: It’s Holocaust Memorial Day today and I thought his comments were deeply offensive, very regrettable and I very much hope that the Lib Dems will be having stern words with him tomorrow.

DM: Okay, Mr Shapps, thank you very much indeed. Grant Shapps, Conservative party chairman.