ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Well the battle for London is hotting up with polls this week putting Ken Livingstone two points ahead of his rival Boris Johnson. We spoke to Ken Livingstone a bit earlier you may remember and now the current London Mayor joins me from Trafalgar Square where he is helping to celebrate Chinese New Year. A very good morning to you Mr Johnson, let me put Ken Livingstone’s point to you first of all, he says you’re frightened of debating with him to clear the air on the issues that are arising between you.

BORIS JOHNSON: Well we’ve had four years in which to discuss these matters, there was an election ages ago and if you look at the diary ahead there are going to be umpteen debates between me and Mr Livingstone in which Londoners will be able to feast at leisure on the arguments between us but I think the key points that he made ….

DERMOT MURNAGHAN: Hold on a minute Mr Johnson, wait, sorry, umpteen dates? Which is the first one then, have you got one pencilled in?

BORIS JOHNSON: As far as I … it’s all been set up by the team, as far as I know there’s a business debate and all sorts of stuff being set up.

DERMOT MURNAGHAN: A live debate, would you do one on Sky News then?

BORIS JOHNSON: As we did last time, Dermot, you’ll remember it was a triumph. We did it I think from a town hall in Kensington and Chelsea and I’m sure we’ll come up with something equally entertaining this time. I think we should really talk about the substance though. Go on.

DERMOT MURNAGHAN: Well that’s what we hope for so let’s talk about some of the issues again, some of the issues that they want to talk about, that Mr Livingstone wants to talk about is he says you have really med him and misrepresented him on the issue of fares on public transport in London, you accused him of lying about it.

BORIS JOHNSON: Well I certainly think it’s a swindle to pretend to Londoners that you can magic money from nowhere and then cut fares. If you look back at the record of the last administration which he led, what they said was they were going to freeze fares or cut them and then came in and whacked them up by 12.7 to 12.9%. What I won’t do is mislead Londoners about the real state of the position. We can’t go back, Dermot, to the kind of voodoo economics of the Labour administration, Labour government that racked up these huge debts and got us into the mess that we’re in. We’ve got to be straightforward with people. Of course I want to bear down on fares and by the way, I reckon that under us fares will be considerably less burdensome on Londoners in the medium and long term because we’re the guys that have actually been cutting the waste in City Hall that Ken Livingstone accumulated. He spent, he squandered hundreds of millions. This is an administration that he represented, that he led, that I think spent £37,000 on one trip to Havana. Well what did that produce for Londoners? They spent 34 million quid on a bunch of architects drawings for a tram that never had any chance of existing. We’ve had to cut billions out of budgets that have been frankly profligate to right size the TFL budget and against a background of real cuts across the public sector and to deliver upgrades in our Tube service. He’s got to explain what he would cut, what he would cut – he would either have to cut a major Tube upgrade, he’d have to cut huge numbers of buses in outer London or he’d have to get rid of something like the Freedom Pass which people really value.

DERMOT MURNAGHAN: Okay, well, all things to be debated. We look forward to those being given a full airing when Mr Livingstone can answer back on those. Londoners also want to know would you be a mayor, if elected, who would ….

BORIS JOHNSON: He’s just been talking to you, he’s had plenty of time on your show.

DERMOT MURNAGHAN: Indeed he has and you’ve got plenty of time as well. Would you be a Mayor that would serve a full term? It’s said that you would have an aspiration to get back into parliament, if there’s an election 2015, a general election, you’d have to stand then wouldn’t you?

BORIS JOHNSON: Of course I want to serve a full term, I want to build on some of the things that we’ve done. If you look at our record over the last four years, I think it’s incredibly creditable given the difficult economic times that we’ve been going through. Crime is down 10% overall, the murder rate has been cut by a quarter, that’s a statistic Dermot, you cannot fudge, the murder rate is down by a quarter, we’ve secured record numbers of …

DERMOT MURNAGHAN: Police numbers are down, police numbers are dropping.

BORIS JOHNSON: … in the Tube. Well let me say a bit about that because I think that that came up earlier on. Actually under this Mayoralty, because of the reductions we’ve been able to make in waste, because we’ve been able to right size the police budgets, we’ve been able to get one thousand, about one thousand more officers on the streets at the end of this mayoral term than there were at the beginning and the proof of the pudding is in the eating. We are having a significant impact on crime in spite of the recession, I want to go on doing that for the next four years.

DERMOT MURNAGHAN: What about this issue of the bankers? I think you both accept the huge contribution in terms of revenues that the City makes not just to London but to the UK economy as a whole and you called in the past for us not to make pariahs out of bankers. Should Steven Hester be given his bonuses, should he be allowed to access his long-term incentive plans in terms of the huge number of shares he may get?

BORIS JOHNSON: Well I have said quite a lot about this already. I think it’s unfortunate that one guys salary is starting to stand for the whole industry and for banking when actually what’s happened with RBS is distinct and I think it is very important that everybody understands there is a clear distinction between RBS and other types of bank. This is not a free-booting private sector institution in which individuals are awarded according to the risk they take and all the rest of it, this is a state owned bank, Dermot, and obviously I think Mr Hester’s position is very difficult because he got a contract with Alistair Darling and Gordon Brown which he wants to stick to. I happen to find it, and I think many people will find it very peculiar that a state owned bank can be paying out bonuses as if it were a private sector institution but what I don’t want to see happen is that all this furore about all this anger that has been directed towards RBS, somehow to contaminate the entire financial services industry which is vital for our city. We have 325,000 people involved in financial services in London and it would be absolutely nuts to think that they are all somehow tarred with the brush of the fat cats who take excessive bonuses and all the rest of it.

DERMOT MURNAGHAN: What about the rate at which they pay tax? We know you’re not a fan of the 50p very top rate of tax for very high earners, I mean there’s no chance of that going in this parliament now is there, after rows like this and benefit caps and public sector pay freezes, that 50% is here to stay you’ve got to accept.

BORIS JOHNSON: It certainly looks that way, Dermot, we’ve got to be realistic about that. I don’t see any sign of it going soon but all my job is to do is to argue that in the long term, and you can’t hope for London, a great international market city, to compete with other capitals, if we have tax rates significantly higher than our major competitors and that’s a point that I think it’s my duty to make. I’d like to take people on low incomes out of tax, I’d like to reduce tax across the board, of course that’s the right approach to the economy but I think you are probably right in your political analysis, Dermot, that to go for the 50p tax rate in the current climate is probably unlikely but my job is to continue to remind people the downsides, the economic downside, the risk of not doing something to restore London’s reputation around the world as a great entrepreneurial city, a place where tax rates are not punishingly high.

DERMOT MURNAGHAN: Mr Johnson, you praised the Prime Minister for his use of the veto last year in the EU, he is heading off again for the summit this week and there’s some sense that he might have to climb down on some of the issues, in particular talking to those eurozone countries and others about allowing them to use EU institutions as they move ahead on this fiscal treaty.

BORIS JOHNSON: I think the euro issue is one that does concern me greatly because when I look at what’s happening in the eurozone economies, I think the problems of the euro are causing a lack of confidence and one of the key things we want to do here in London is to keep that confidence going, that’s why it is so important to stress some of the achievements of the London economy. We’re doing a great job in promoting infrastructure investment, that’s generating thousands of new jobs, I think 14,000 on Cross Rail alone, the Olympic site is generating new jobs but I am worried about the eurozone.

DERMOT MURNAGHAN: But that wasn’t the question, Mr Johnson, the question was about the Prime Minister, do you fear that after his veto he may be about to climb down on some of the issues you praised him for?

BORIS JOHNSON: As I say, I’m anxious that the wrong approach may be taken on the eurozone. Let’s be clear Dermot about what’s really happening in the eurozone. It’s a fiscal problem, of course it’s a fiscal problem in that periphery countries have been allowed to run up huge debts and need to bailed out continuously and there is a lot of anxiety about the banks, that’s certainly true but there’s also a monetary problem in the sense that the euro is obviously working as an instrument for allowing the more competitive economies in Europe really to dominate and if you look at German unemployment figures and you contrast them say with Spanish unemployment figures, Germany has got record employment, Spain has got record unemployment and that is a monetary phenomenon as much as anything else because the unit labour costs of the periphery countries are not allowing them within a single currency zone to compete in the way that they should.

DERMOT MURNAGHAN: Given that analysis, do you think that Britain should put any more money into the IMF as the Chancellor seems to be indicating, that could be used to bail out eurozone countries?

BORIS JOHNSON: If it can be made to work then obviously I’ll support any solution that works in the long term, my concern is that there’s a real difficulty in the whole structure of the euro and as David Cameron rightly said in his speech the other day, they need to address the fundamental problems and they need to address them fast.

DERMOT MURNAGHAN: Okay, Mr Johnson, thank you very much indeed. Mayor Boris Johnson there at the celebrations of the Chinese New Year overlooking a very spectacular Trafalgar Square there and a pledge from Mr Johnson to hold a debate with his main rival Ken Livingstone at some point in the campaign, the Mayoral elections on May 3^rd.