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DERMOT MURNAGHAN: Now mortgages would rise by nearly £1000 a year if we left the European Union, that’s the warning from the Prime Minister this morning, the short term uncertainty of leaving the union would lead to tighter credit conditions he says and fuel a rise therefore in interest rates, that’s according to the Remain camp.  Well I’m joined now by the Energy Minister and Vote Leave campaigner, Andrea Leadsom and a very good morning to you.  Just to pick up there on what Tom Watson was saying, do you agree that Nigel Farage was right or wrong to make those comments about dangers to women of remaining within the European Union?

ANDREA LEADSOM: Well I don’t feel at all happy about that angle.  You just read out what he actually said which I think is slightly different to him saying effectively you’ll be attacked if you stay in, that’s clearly not what he said but equally I think scaremongering is a bad thing so I don’t support that kind of campaigning, no.

DM: But the analysis being that refugees and migrants that get into Schengen countries of course don’t get in necessarily to the UK within the European Union but at the moment if they do, as Nigel Farage is saying there, eventually acquire EU passports then they are free to come to the UK whenever they like.

ANDREA LEADSOM: Well I think it certainly is true to say that because this referendum affects the next generation, I have three children, it affects my children, your children, our grandchildren, so it’s not a decision for the next couple of years so simply to say that those problems aren’t going to be ours may absolutely be true for the next five years or so but it won’t necessarily be true for the next generation.   

DM: So you are not entirely comfortable with Nigel Farage there absolutely and perhaps you put it more strongly but what about this though, discovered by the Mail on Sunday today as well, within elements of the Leave campaign people who have been supporters of the English Defence League and the British National Party, some pretty far right extremists.

ANDREA LEADSOM: Well they are nothing to do with the Vote Leave campaign.  

DM: Well they have been out campaigning, out leafleting, things like that.  

ANDREA LEADSOM: Well people go out and say all sorts of things in the name of things which aren’t necessarily …

DM: I’m sure during your campaign in the general election campaign you make sure your supporters are all Conservatives.  

ANDREA LEADSOM: Well obviously the Vote Leave campaign is quite a broad range of people and certainly Vote Leave don’t support or advocate any of the unacceptable views being part of the campaign but this is not a general election, as I say, this is an incredibly vital decision that will affect the next generation for our country so people do need to be able to go out there and speak passionately about their deeply held views and so certainly passions are aroused and as the Prime Minister said, everybody – which is why he allowed his ministers to campaign as they wanted – everybody should do what they think is in the best interests of their country so for me having had 30 years in finance, having three kids of my own, I passionately believe that we will do so much better if we take back control, regain our national sovereignty, regain our democracy and make our own way in the world.  Economically the future is very bright for us.  

DM: I wanted to get onto that mortgage claim in a moment or two but just on the campaigning, it’s been said particularly as we are going to have more flesh I suppose on the Leave picture coming from the two distinctive leaders of it now, Boris Johnson and Michael Gove and they are looking like an alternative government, they’re coming up with a manifesto.  We’ve got the future Prime Minister perhaps in Boris Johnson and maybe his Chancellor, Michael Gove.  

ANDREA LEADSOM: Not at all.  The interesting thing is that all the way through the campaign the Remain side have been saying well what would you do, what would you do, what would you do?  Of course during the period before purdah when government machinery has to stop helping the Remain side it would have been madness to have put forward any ideas because they could just be squashed by the machinery of government.  Now that we’re in the purdah period which is the three week period before the referendum now we are able to literally just put out some options.  This is not an alternative manifesto, this is not a general election, this is simply saying there is £10 billion every year which would be an independence dividend – that figure is not in dispute, it’s money that currently every year goes to the EU that we get nothing back for, £10 billion a year and what the Vote Leave campaign is trying to do is to put forward some suggestions on things like scrapping VAT on fuel, on giving more money to the NHS and so on, that would be options.  That is not a manifesto and it’s certainly not policy commitments and it is definitely not an alternative government.

DM: Do you think, I mean that argument about the £10 billion that is given to the EU, do you think that should apply to other monies that the UK gives to foreign nations?  We’ve got the aid budget, £12.2 billion, should  that be cut as well or do you accept that that has a benefit to the UK, the argument from your government being that if we help nations that are poorer than us well it pulls everyone up and is good for world trade.  Doesn’t that apply to the EU as well?

ANDREA LEADSOM: The key difference of course is that the EU controls that money so the gross figure is £19.1 billion a year last year, that’s the gross figure and that’s controlled by the EU so the rebate is agreed by the EU…

DM: But the principle of pulling up economies that are weaker than ours, that’s what the EU does, that helps us as well doesn’t it?

ANDREA LEADSOM: Yes but the difference is that we’re in control.  Our aid budget, which I am a big supporter of for exactly the reasons you say, it helps us if we help the poorest because then hopefully we will alleviate some of the tendency to migrate which incredibly risky for these migrants …

DM: So the aid money is well spent?

ANDREA LEADSOM: The aid money I believe is an important budget.  You can always argue about whether this bit or that bit wasn’t well spent but at the same time it is a democratically elected national decision.  The difference between that and the money that goes to the EU is it’s all under their control so that £19.1 billion they decide if we get a subsidy for our farmers, they decide if we get a rebate and that is only valid until 2020, they can then decide to not give us the rebate anymore and then the sum we’d be paying over would be £19.1 billion a year or indeed more and that would be up to the EU.  

DM: What about this mortgage claim, a rise on the average mortgage by nearly £1000 a year, you’ve worked in the Treasury, you are economically literate, we well know that and you’d be aware of the argument that uncertainty means that interest rates may have to rise amongst other things to protect the pound in international money markets for the time being while the UK sorts itself out if it has left, it may be hard to get our hands on credit and therefore under the laws of supply and demand mortgages go up.

ANDREA LEADSOM: So there’s two things I’d like to say there with my delving from my financial experience.  The first one is that there is an old City saying which is buy on the rumour, sell on the fact.  Very important, what it means is that traders, fund managers, position themselves before an event and they hope to make profit from the event so you see the pound going up and down. As a matter of fact it is now exactly where it was before this all started so the idea that it is dropping like a stone because of fears of the referendum are simply not true but what they do is position themselves ahead of the event, then after the event they close out those positions and they deal with a new reality so actually to suggest there is some kind of systemic crisis is nonsense.  I lived through sterling crashing out of the ERM, through the financial crisis in 2008, through Barings Bank going bust, those were systemic crises, financial crises, this is not that.

DM: So you think the pound will be fine, if there is a vote to leave no change?

ANDREA LEADSOM: I believe that the pound goes up and down, it’s a floating currency so it floats.  If it goes down a bit that’s good for exports, if it goes up a bit that’s good for us going on holiday to Europe, it floats, it’s a floating currency so to say because it goes down it’s a disaster or because it goes up it’s a disaster is simply not true, there are winners and losers and a bit of volatility in advance is likely but afterwards people close out their positions and deal with the new reality.  But if I may just say, economic forecasting is not a science, it’s an art.  You have an economic model and the results that you get out of it are entirely dependent on the assumptions you put in …

DM: As you found when you were in the Treasury.  

ANDREA LEADSOM: Indeed, indeed.  

DM: I’m sorry we’re out of time, Andrea Leadsom, Energy Minister, very good to see you, thank you very much indeed.