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DERMOT MURNAGHAN: Now with just under 100 days until the London mayoral election, the battle seems to be on a knife edge with one poll this week putting Ken Livingstone two points ahead of his rival Boris Johnson. Well we’ll be speaking to Mr Johnson later in the programme but first Ken Livingstone joins me now, a very good morning to you Mr Livingstone. As I say, with those polls narrowing and the big Johnson lead evaporating, as I say that poll putting you in the lead, it’s all getting rather testy isn’t it? You’ve been facing accusations about your fares policy and you hit back saying he’s showing his dark side now, Mr Johnson.

KEN LIVINGSTONE: Well if he would just come in and debate. For three and a half years he has refused every invitation to debate with me and we could sort this fares issue out because it’s quite clear, in every previous recession ridership on the bus and the Tube went down, this is the first time it hasn’t and I most probably would have made the same mistake, you couldn’t anticipate this.

DERMOT MURNAGHAN: This is the surplus that there is?

KEN LIVINGSTONE: The fares surplus. So therefore all I’m saying is, we’ve got the most expensive fares in the world, we don’t need all that money, you can’t spend it, they’ve been using it to pay off debt early. Put it back in Londoners pockets. Each traveller whether it’s the trains, the Tube or the bus, has got another £250 a year to spend, they’ll spend it in local shops, it will help the local economy. Just like Ed Miliband is arguing for a cut in VAT, just to put some money back in people’s pockets.

DERMOT MURNAGHAN: The Johnson team say you’ve lied about fares in the past, that during your administration, it depends which way you cut it but they actually went up.

KEN LIVINGSTONE: Absolutely but if you actually look, the day I became Mayor in 2000, you got on the bus in London and you paid a pound, you got on the bus in outer London and you paid 70p. After eight years of inflation when I left office you could go anywhere in London on the bus for 90 pence. That was a real cut given inflation.

DERMOT MURNAGHAN: Okay but in so many other areas the row goes on, doesn’t it? Police, Mr Johnson said that he’ll still have more police on the streets than when he took power in spite of the cuts of numbers that have taken place. There are rumours going round that you want to reverse the alcohol ban on the Tube and sanction council tax rises.

KEN LIVINGSTONE: Those last two are complete untruths and fabrications. The police cuts is interesting though. Finally this week Boris Johnson admitted that 1,700 police jobs have been lost in the last 18 months. He spent two years saying oh police numbers are up. I’ve pledged that we’ll reverse those cuts, every cut in front line policing will be restored. We know it’s not like ten years ago when I didn’t have to make difficult choices but …

DERMOT MURNAGHAN: Have you got any figures in mind? I mean 33,000 or thereabouts in the Met was about the high watermark.

KEN LIVINGSTONE: We’ve lost 1700, we are committed to restoring those. You see I am not promising to do 101 things, that fares cut and restore policing, these things we know we can afford to do and when you’ve got a Mayoral budget of £13 billion, if you can’t restore a few police numbers and cut the fares a bit, then there’d be something really wrong.

DERMOT MURNAGHAN: What about council taxes? Mr Johnson doesn’t want to see them rise.

KEN LIVINGSTONE: Absolutely right through these four difficult years to freeze council tax. I am taking the same approach, freeze the council tax, keep fares down, keep a bit more money in people’s pockets because everyone is struggling to pay their fuel bills, to even pay for food, inflation has been horrendous lately and anything that can help you just get buy will be good for the economy, it will keep more people in work but everywhere I’ve been in London, whether you’re in Bexley or in Barnet, all the local shopkeepers are struggling and anything that will gives money back that people will spend locally is worth doing.

DERMOT MURNAGHAN: So you’re throwing the gauntlet down or whatever it is now, and saying to Boris Johnson, saying to the Mayor, come and debate all these issues with me, let’s have it out in the open?

KEN LIVINGSTONE: I would love it, for three and a half years everyone has been trying to set up these debates and he’s declined every one. Now you can’t turn round as he did this week and say I’m lying about fares and then refuse to debate. I’ll tell you what, he’s on later, why don’t you say to him I’m happy to come in next week, you can sort it out for us.

DERMOT MURNAGHAN: Thank you for that suggestion, Mr Livingstone. In terms of how this is all paid for, I’m looking back over your administrations and of course you presided over, you were the Mayor of London while the City of London went through that extraordinary boom, talk about bankers bonuses now, they were bigger while you were in power. You didn’t make any attempt to rein those in, you didn’t say anything about it, you didn’t tax them.

KEN LIVINGSTONE: I would have done if I could have, if I’d had the money.

DERMOT MURNAGHAN: But now you feel we should really get stuck into the bankers, if they are paid these bonuses, up to 80% taxation rate?

KEN LIVINGSTONE: There’s a clear choice. Boris Johnson has spent much of the last year campaigning to cut the top rate of tax on the richest 1%. I think that’s wrong. If someone is paid a million pound bonus, that’s as much as the average British person earns in a lifetime. What can you spend all this on? This inequality hasn’t helped our economy, the dominance of finance over manufacturing has meant you have wiped out most of the jobs that working class men used to get that used to allow them to keep a family and have a decent and respectable standard of living. I think we need a balanced economy so fine, if a bank is deciding should we locate in London or New York, the Mayor’s job is to try to get them to come to London.

DERMOT MURNAGHAN: Exactly but you’re saying to them if you earn over a million pounds we’ll tax you at 80%.

KEN LIVINGSTONE: No, no, we’ll sit down and work it out. I don’t have any [inaudible], the Chancellor does. The Mayor’s job is to build other opportunities. We need to build some modern high tech manufacturing. Germany is stilt the second largest exporter of manufactured goods, they didn’t neglect their manufacturing industry.

DERMOT MURNAGHAN: But do you think 50%, you say Boris Johnson has pronounced on cutting it, do you think it’s not high enough?

KEN LIVINGSTONE: I think if someone is earning over a million pounds they could pay a bit more.

DERMOT MURNAGHAN: How much more?

KEN LIVINGSTONE: It’s up to a Chancellor to sort that out.

DERMOT MURNAGHAN: It was 60% under Mrs Thatcher, would that be about right?

KEN LIVINGSTONE: Well that wouldn’t be bad. We didn’t think she was a dreadful leftie did we and it was 60% under Mrs Thatcher for eight years and no one accused her of being a loony leftie.

DERMOT MURNAGHAN: Okay 60% then but over a million 80%.

KEN LIVINGSTONE: No, no, the Chancellor’s got this job. If the Chancellor wants me to deal with all that …

DERMOT MURNAGHAN: It is just a signal that the Mayor of London would be sending out because of course you understand, and you spoke about it when you were in power, the centrality of the City of London to London’s economy and indeed to the UK’s economy, the proportion of GDP it generates is huge.

KEN LIVINGSTONE: The only real threat, the only real rival to us as a financial centre is New York. Banks aren’t going to relocate to Shanghai because there’s all the political uncertainty about the future in China, who knows which way it will go? When you sit down and you add in not just government tax but the Federal state taxes and the local city taxes, when we appointed Bob Kylie who was working in New York to come to London, we said we’ll compensate you for the extra tax you have to pay in Britain but when we sat down and worked it out, those three taxes together were the same as you paid in Britain, so there is an awful lot of false nonsense here. If you just compare the government tax with what happens in America it looks bad but in America they’ve got the state tax and the city tax.

DERMOT MURNAGHAN: So what is the message the would-be Mayor of London is sending out to those who would come here and do financial transactions, is it that we would like a tougher tax regime and we don’t want you getting those bonuses either?

KEN LIVINGSTONE: A fairer tax regime.

DERMOT MURNAGHAN: Steven Hester from RBS?

KEN LIVINGSTONE: I’ve known some of the richest people in the world, I had to deal with them. They don’t seem any happier to me. Remember Robert Maxwell? He stole from his pension fund, from his staff, because although he was a multi-millionaire, he wanted to live like a billionaire. What really matters in a city, why people come to this city, isn’t just the money but is the comfort that you have here in a very relaxed and tolerant city.

DERMOT MURNAGHAN: Quality of life.

KEN LIVINGSTONE: Amazing quality of life. There was a big fear that all our bankers were going to relocate to Frankfurt but what do you do in Frankfurt on a Saturday night, Dermot? They are here because this is an amazing world city.

DERMOT MURNAGHAN: That’s an interesting subject. Can I just ask you, is there much collaboration between your team and Ed Miliband’s team in the Labour leadership because it is seen as very, very important isn’t it, for Mr Miliband’s future, a Labour victory in the capital?

KEN LIVINGSTONE: It is absolutely. It is the best working relationship I’ve had with any Labour leader since sadly the late John Smith died and we sit down, we don’t have any great disagreements, he’s thrown all the resources into this. I’m just completely comfortable that in Ed Miliband we’ve a Labour leader who will make a fairer Britain if he becomes Prime Minister and I want to do everything to actually get him elected.

DERMOT MURNAGHAN: Okay, Mr Livingstone, thank you very much indeed. All will be revealed on May 3rd and we will be putting some of those points to the current Mayor of London, Boris Johnson, next.