ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Well Bob Diamond has taken the hit for the Barclay’s rate rigging scandal but what about those senior Whitehall figures who were mentioned in the conversation between the Deputy Governor of the Bank of England and the former Barclays Chief Executive? Well in a moment I’ll be speaking to Labour’s former Chief Secretary to the Treasury and now of course Shadow Home Secretary, Yvette Cooper. Good morning Ms Cooper.

YVETTE COOPER: Good morning, Dermot.

DM: You of course during the height of the banking crisis, as I mentioned there, were a senior Whitehall figure, a senior figure within the Treasury. What conversations did you have with senior Bank of England officials?

YC: Well I didn’t and I think there have been a lot of smears coming from the Conservatives in particular about this which is really unfortunate because there is a very serious issue here about the scale of criminal behaviour taking place within our banks, things that should be frankly being prosecuted where we need proper public inquiry. That’s what we should be having, that’s what we should be talking about and instead I think it is really unfortunate that George Osborne, the Chancellor of the Exchequer, has simply been engaged in political smears which even his aides have now admitted were not true.

DM: Well if you had that judge led enquiry you want, no doubt you’d be called because of your experience during those crucial 18 months when you were in the Treasury, in government and you’d be able to say, after being sworn in you’d be able to say you never had a conversation during those 18 months with Paul Tucker, the Deputy Governor of the Bank of the England?

YC: Well I didn’t have a discussion, I was the Chief Secretary at the time so obviously dealing with public spending rather than banking issues so I didn’t discuss these issues with Paul Tucker.

DM: But you all were in a lot of crisis meetings weren’t you during the height of the banking crisis weren’t you? We know about them, we reported about how you burnt the midnight oil at the Treasury to try to save the British banking system but you had no conversations, none of your people had conversations with the Bank of England?

YC: Well what we were talking about at the time was a fear that banks were going to go bust, a fear that people were going to lose their savings and also that banks weren’t lending to small businesses and we were rightly I think concerned about that, the Treasury was rightly concerned about that and even the Conservative opposition at the time were expressing concerns about that and I think that was really hugely important for people but instead, what’s being alleged is that somehow government ministers were involved in somehow condoning or supporting criminal behaviour by banks.

DM: I don't think that is the allegation because something I am trying to clear up is …

YC: Well that is the allegation unfortunately that the Chancellor has put.

DM: … is how connected you were with the crisis and how closely you were monitoring. You say you were concerned about the level of interest rates and lending to individuals and small businesses, presumably then you were concerned about the Libor rate because warnings came from the Bank of England as early as 2007.

YC: Well of course the big issue was could you get the banks lending to each other and lending to small businesses? Could you get the credit guarantee scheme working effectively? I think that is a very different issue from what actually seems to have been going on around fiddling figures and so we knew at the time that there was serious risk taking, that the banks had been taking too much risk. We also knew at the time that they had been dealing in these complex derivatives round the world and back again, not understanding the risks they were taking and that’s what was causing this financial crisis. What we’ve learned since as a result of this FSA investigation is that in fact there has been actually criminal behaviour taking place, that figures were being fiddled and I think it is a serious concern that for example the Serious Fraud Office, that should have been investigating that, which has had a 25% cut in its funding, actually turned down the opportunity to investigate that last year because they said they didn’t have the resources to do it. So what the government should be doing is giving the Serious Fraud Office some of the money for example from this huge fine that Barclays have had to pay, use some of that to make sure there is a proper investigation and that people actually face charges for what has gone wrong.

DM: It’s a good idea but just trying to clear up who the senior Whitehall figures were that Paul Tucker and the note that Bob Diamond took, I mean was there no contact at all between senior Whitehall figures and the Bank of England about this Libor rate that was out of kilter, that you’d been warned about a year before?

YC: Well I didn’t have discussions with Paul Tucker, I know that other Treasury Ministers have also discussed this and so …

DM: So nobody, to your knowledge nobody in the Treasury, you were warned a year before about the Libor rate not being a true representation of the rate at which banks were lending to each other, nobody talked to the Bank of England to your knowledge?

YC: Well there were all kinds of discussions going on rightly about getting banks lending more, which does affect the Libor rate and is about actually making sure that banks aren’t about to go bust, so of course those discussions were taking place. I know that Paul Tucker is going to give evidence to the Select Committee tomorrow and we’ll obviously hear what he has to say then but I think the wider issue here is making sure that you can have a proper inquiry into what happened rather than having the smears and the political game playing which I just think is actually demeaning for the Chancellor of the Exchequer. His aides have admitted that the accusations he was making were false and I hope that he will now as well.

DM: Do you think it’s getting personal, I mean he is your husband, Ed Balls, but I’m asking you as another Labour front bencher, do you think it’s getting personal, we’re seeing a visceral element to politics here between particularly Mr Balls and the Chancellor?

YC: Well I think the whole of the House of Commons was angry about it but I think George Osborne really crossed the line. There’s always debates, people take different points of view and I think he crossed the line, I think everybody was angry about that and I hope he does properly withdraw.

DM: Let me ask you this about Barclays though, do you think they still make a positive contribution to British society? We’ve seen the Mayor of London, Boris Johnson, saying it still is a proud British institution which does a lot of good for our society, not least pays a lot of tax and employs a lot of people, do you agree with that?

YC: Well look, the financial services industry more widely is hugely important to the British economy, to the world economy and is about a huge number of jobs in Britain. That is one of the reasons why it is so important to get to the bottom of this because you cannot have the City of London being somehow tarnished and discredited by dodgy dealings going on and I don't think the government properly understands the scale of public anger about this but also the damage it would do to our long term reputation and to jobs, that’s why you have to have I think this serious inquiry that the government is still blocking and I really wish they wouldn’t, I think they are making the wrong decision, but also the criminal prosecution.

DM: But we’ve got to be careful not throwing the baby out with the bathwater, I mean Barclays makes a positive contribution to British society. On your own website there are images of you at a school where Barclays are promoting money skills for young people.

YC: Of course, of course and you want, there are people who work in Barclays banks in my constituency and in constituencies right across the country who are working really hard and who will feel as mortified as everybody else by what’s been happening but the government can’t just duck this and pretend it’s all going to go away. This started, if you go back to 2008 when we first realised what crisis was going on in the financial sector, it has got to be sorted and that’s why you have to have this public inquiry. They shouldn’t duck it.

DM: Now I know you want to talk to us obviously as Shadow Home Secretary and a worrying story on the front page of the Sunday Telegraph today about terror threats and the worries about security at the Olympics. Do you think all that can be done is being done and that the Olympics are as safe as they possibly can be?

YC: Well I think obviously the police and security services are working extremely hard to keep everybody safe through the Olympics and we should all support them in that but I’m very worried about this report in the Sunday Telegraph, I think it’s extremely serious. According to the reports it does seem that a terror suspect who was viewed by the Home Office and the courts twelve months ago as being such a serious risk he had to be banned from London and kept out of the capital, then twelve months later the Home Secretary herself decides to downgrade the counter terror powers so he cannot be kept out of London and the consequence is that he is then discovered to be visiting Stratford, travelling near the Olympic Park repeatedly and has now been arrested as a result. So it really looks as though someone who is a serious terror suspect has been able to go close to the Olympic Park as a result of the Home Secretary’s own decision to reduce counter terror powers.

DM: So you don’t see this as a failure of the security services, it goes all the way to the top, it goes all the way to the government?

YC: Well this man had previously, according to these reports, and we don’t know the full story but according to these reports this man had previously been banned from London. The Home Secretary herself took the decision to downgrade the powers so he could no longer be banned from London. As a result of him coming back into London he has now been to Stratford repeatedly. We don’t know what the security threat was as a result of that, I think the Home Secretary needs to tell us, she needs to confirm whether it is true that he was able to go to the Olympic Park as a result of her decision to downgrade those powers and also tell us what additional security resources have had to be used now putting that right, because this is stretching the security services at a time when we need them doing everything possible to keep the Olympics safe.

DM: So questions for the Home Secretary there and lastly, as Shadow Equalities Minister, Shadow Minister for Women as well, you’ve done some research haven’t you, looking at the effects of the recession, particularly on older women, that they seem to be suffering disproportionately.

YC: Yes, this is quite a concerning review because we’ve all talked about this squeezed middle but actually what seems to be happening is you’ve got a stretched middle generation. You’ve got women in their 50s and 60s who find they need to look more after their grandchildren because the cost of child care is going up, they also having to look after elderly parents where social care has been cut and what we also now find is they’ve taken the brunt of the increase in unemployment with a 40% increase in unemployment amongst this group of women over the last two years. The government is not listening to them, they’ve not got a voice at the moment and the government is just blind to the real pressures on this generation of women.

DM: Okay, but what specifically can be done if you’ve identified that and I’m sure the research is absolutely robust, what government policy could change, bar fixing the economy so that we all benefit?

YC: Well fixing the economy would help. We’re in a double dip recession at the moment as a result of the government’s policies, that is deeply damaging for women and everybody else. I think also, we campaigned against the big hit to their pensions because women in their 50s have been particularly heavily hit by the change to the pension age, unfairly hit far more than anybody else. Also I think the government should get a move on with the social care reforms because it is again this generation of women who are particularly under pressure and we want to establish an Older Women’s Commission to hear the voices of that stretched generation.

DM: Shadow Home Secretary, thank you very much indeed, Yvette Cooper there.