ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN, SKY NEWS

DERMOT MURNAGHAN: Now at Prime Minister’s Questions last week, the Labour leader accused David Cameron of breaking a promise to deliver tax free childcare and with just over a week until the budget, now the Chancellor is under pressure over the same issue.  He’s being urged not to cut inheritance tax and divert the money instead to childcare.  Well I’m joined now by Labour’s Rachel Reeves, she was of course Shadow Work and Pensions Secretary until September and a very good morning to you.  The Prime Minister had his answers to Mr Corbyn during Prime Minister’s Questions about tax free childcare, the extension to 30 hours and he said it has taken a while but we are going to see it in 2017.  

RACHEL REEVES: Well look, we know it is really difficult for mums and dads to balance work and family life, what most mums and dads want is the ability to go out and work and support their family but to know there is fantastic childcare available for their kids at an affordable price and at the moment for a lot of parents that is just not the case.  If you think about the average cost of day childcare, about £50 a day, a familiar sum for parents.  If you add that up, we’re talking about £10,000 a year for a place and it’s really, really tough then because you’ve got to pay for that out of your post tax earnings and what I’m saying is…

DM: But thirty hours which is government policy, we’ve heard from the Prime Minister it is going to be implemented, it is certainly heading in that direction isn’t it?  

RACHEL REEVES: Well that’s for three and four year olds, of course a lot of parents want to go back or have to go back to work earlier than that.  Many mums go back after six months or a year after taking maternity leave, most people can’t afford to wait until their child is three to enter the workforce again, there’s bills to pay, mortgage to pay, rent to pay and so one thing the government could do is extend the offer for two year olds.  At the moment if you are on very low income you get support with childcare if your child is two but only for 15 hours so they could look at extending that and what I would like to see is a universal offer of childcare.  Now that’s expensive but one way to move in that direction would be instead of cutting inheritance tax which last year benefited just 4.9% of estates, instead of increasing the threshold at which you have to increase inheritance tax, let’s use that money – a billion pounds a year by the end of this parliament – to put it into investing in childcare and then you could achieve some of those things.

DM: But would that be enough?  

RACHEL REEVES: It wouldn’t get you all the way to universal childcare but it’s a step in the right direction.  

DM: Your ambition though, you are talking of almost a Swedish, a Nordic model, aren’t you, from birth to pre-school, tax free childcare to help people with all the issues we’ve been describing.  Surely it would take more than a billion pounds a year?

RACHEL REEVES: It would certainly take more than a billion pounds but this is a step in that direction.  A billion pounds a year by the end of the parliament, that would say and if you put that into helping childcare I think that’s the right priority.  It would help mums and dads go back to work and help businesses get the productive employees they need and also …

DM: But getting to the end ambition, where else would you raise tax to pay for this?  I mentioned there some of the Nordic models, they’ve done the pact, they accept that they’ll pay higher taxes but look at the quality of the public services they get including issues like this.  

RACHEL REEVES: If you look for example at work that the IPPR, the Institute for Public Policy Research, have done, they’ve said that this pays for itself because you keep people in work, contributing to the economy and paying taxes but of course there is a cost to all these things and one thing you could do is get big companies like Google and the rest of them to pay their fair share of tax, that would definitely make a contribution towards this but I’m making a concrete proposal today that the Chancellor in his budget could say I’ve thought again, the cuts to inheritance tax is not our priority right now, instead our priority is ensuring that every child has a fantastic start in life and more mums and dads can go out and support their families.  I’m not saying that mums and dads have to go to work, some people want to stay at home and look after their children and that’s also fantastic but many need to go to work to support them and want to.

DM: Is this the sort of issue your party should be talking more about?  You’ve criticised the leadership in the past for a dereliction of duty, for discussing things that really don’t impinge on people’s lives – Trident and all the in-fighting – and here you are talking about very important things that matter to millions upon millions of people.

RACHEL REEVES: I was really pleased that Jeremy Corbyn spoke about this at Prime Minister’s Questions on Wednesday, a holding the government to account on issues that really matter and I think that is what the public are crying out for, an opposition that are holding the government to account on things that affect their everyday lives and I’ve said previously I don't think Trident is one of those. This, childcare, the National Health Service, our position in Europe – those are key issues that are going to affect people’s everyday lives and that’s what our leadership need to be concentrating on and that’s what Jeremy Corbyn was doing just this week.  

DM: Just this week, yes, but also there are the Trident rows going on, you have said that is a dereliction of duty.  

RACHEL REEVES: I think that we should be concentrating on the issues that matter to ordinary people and I think about the mums and dads in my constituency, they want to go out to work and support their families but the cost of childcare is often prohibitive. I want to make sure that when kids start at school they all start at a point where they have those basic skills of socialisation, of a love of books and learning and play and we know at the moment that some kids start at primary school aged four and a half, are 15 months,18 months behind their peers.  Actually having universal good quality childcare will help to narrow that gap and ensure that every child gets a fantastic start in life and that is so important.

DM: I’ve got a specific question here which strings together a couple of the issues we’ve been talking about, Jeremy Corbyn during last week making some comments about prostitution and decriminalising sex workers which of course is the situation in some Scandinavian countries, what do you think of that?

RACHEL REEVES: I think it’s wrong.  I think to talk about the sex industry makes it sound like it’s an industry like any other, like the pharmaceutical industry or the car industry.  It’s not, it’s the exploitation of women.  We don’t allow women to sell their organs or sell blood, we shouldn’t allow women to sell their bodies which is what prostitution is and we know that so many women who are prostitutes are doing it because they are exploited and abused and we need to get to the root cause of that, not make this normal or think that by decriminalising it, it civilises it.  There’s nothing civil about prostitution and we should crack down on the abusers.

DM: Well Mr Corbyn did make clear he was responding to a question and those were his own personal comments.  Can I ask you though, people listening to this interview and how across the issues and the costings, do you feel frustrated to be out of a front bench position?  I know you have just been off on maternity leave but there are those that are saying you’d be a better Shadow Chancellor than the current incumbent.  

RACHEL REEVES: I made a choice when I came back to work in January that I wanted to serve my constituents and my party from the back benches.  I am now on the Treasury Select Committee which is a fantastic position to have.  We’ve got the Governor of the Bank of England coming to give evidence to us on Tuesday, we’ll have the Chancellor coming to give evidence after the budget, so I am certainly not taking a back seat.  I want to carry on doing my job holding the government to account and you can do that from the back benches as well as from the front benches and I’m enjoying this opportunity as well to think a bit more creatively, to have a bit more time, to think about some of the big policy issues whether those be childcare, pensions tax relief and reform, the role of grandparents in this country and supporting them better and it is giving me a little bit of freedom to do some of that thinking …

DM: But are you going into Mr McDonnell’s office, are you two having chats together?  

RACHEL REEVES: I’ve met up with John McDonnell to talk about savings and wealth and pensions and I enjoy that discussion.  I hope this is a positive contribution to the debate that we’re having in the party at the moment about the future direction of policy and I would hope that John McDonnell and Jeremy Corbyn would support what I’m talking about today around inheritance tax and childcare.  

DM: But with your background, you’ve got a degree in Economics, you’ve worked as an economist, you’re bringing some intellectual heft to John McDonnell, you’re kind of the Shadow-Shadow Chancellor.

RACHEL REEVES: No, I’m a member of Treasury Select Committee and I’m working on the Treasury Select Committee to hold the government to account. We’re doing an inquiry at the moment into taxation, another one into our membership of the European Union and that’s really important work that I’m getting on with and really enjoying but also I want Labour to win the next election, I want to feed in to that policy making process and come up with some of the ideas to win again.  We lost the last two general elections, we urgently need, desperately need new thinking and I hope to be able to contribute to that.

DM: Ms Reeves, good to see you, thank you very much indeed for your time.  Rachel Reeves there.