Jean Eaglesham, Chief Political Correspondent, and Bob Sherwood, London and South-East Correspondent, interviewed Tessa Jowell, Olympics and London minister, at Labour party headquarters on Thursday 10 April

Financial Times:So we've had the Terminal 5 problems, concerns over non doms … is London losing its shine?

Tessa Jowell: No, I don't think there's any evidence of that, and I think that this provides the context for this election; which are the future challenges that London will face if London is to retain its place as the financial services capital of the world, certainly a contender for the creative industry capital of the world, and it's to remain as a world class city.

First of all, the expectation is that London's economy will continue to grow, and the economy of London, and the resilience of the economy of London, has a major impact on the economy of the rest of the country and growth in the rest of the country. That's the first thing.

The second major challenge is the potential skills deficit. By 2020, 50 per cent of the jobs in London will require people who are qualified at degree level or above. Now one of the reasons that it's so important that the mayor, Ken, has been given leadership responsibility for skills in London is that this is a target, we're at I think 43 per cent at the moment, but it's a difficult 7 per cent to close when you take account of the level of virtually structural skill shortages in some sectors of the London labour market. The scale of the political drive that will be necessary to get London on track to meet that target is very substantial.

The third challenge for London is the risk of polarisation, and the risk that the middle classes, that young couples will be forced out of London because of the unaffordability of housing in London. And that's why the commitment that Ken has made to 50 per cent affordable housing over the next four years against an annual build of 30,000 units is so important, making a material and practical contribution to closing that potential gap. There are two features that people love about living in London. Its diversity and tolerance, but also, London is a public city; the public spaces, the public realm. You know, a city that people feel is by and large at ease with itself. Now if you get polarisation, then that sense of ease is threatened.

And then I think the final point is, in the context of London's future, is to look at the enormous demand for additional capacity on public transport, which will increase by I think an estimated 40 per cent by 2020, and that's why Crossrail is so vital, a £16bn project, twice the size and scale of the Olympics, and it is imperative that that is overseen by a mayor who has a very clear record of competence on delivery, and that is Ken.

FT: On T5, do you think that has damaged London? Are you concerned about it?

TJ: I think that conditions at Heathrow have damaged London, and I think that… I suspect if you're viewing the prospect of coming to London for business from another part of the world, you may just simply roll it all up into the trouble you expect when you get to Heathrow. I think that provided the problems are resolved and don't recur, then I think that over time people will forget this pretty disastrous first month.

FT: Do you think Ken is right to oppose a further runway at Heathrow; to oppose expansion there?

TJ: I'm both heavily involved in Ken's campaign and a government minister, and I think that in fairness, I shouldn't make any specific comment on that because that's obviously something … now the consultation has come to an end, that needs to be considered within government, and I think it's probably not a good thing for government ministers to pop up expressing their personal views on this.

FT: The wider perception of London as a business city to international business people is that Heathrow, the airport doesn't work; the Tube PPP fiasco, the tube doesn't work; congestion is pretty much back to where it was before the congestion charge; the roads are being dug up everywhere. There's a wide perception that the city just doesn't work.

TJ: Well, I always think you've got to test perception against fact, and that is the very worst perception on a bad day. In fact, if you take the bus network, we've seen an increase of 50 per cent in the numbers of people travelling by bus. Actually, the tube does work, and the upgrade programme is going ahead. Congestion is certainly still a problem in London, but Ken has taken a very firm hand with the utility companies about dealing with the congestion problems that are caused by roadworks, so in a sense, each of those problems which you could expect to face in any major city, are problems which are a justification for a strong mayor providing leadership and having a very clear strategic responsibility across London.

And remember, tested against the facts, companies around the world want to do business in London and from London. So certainly, there are Monday morning problems, there may be wet Friday afternoon problems, and nobody would be for one moment complacent about those, but the fact is that London is one of the most attractive cities in the world to do business in, and both government and Ken as mayor want to go on building the attractiveness of London by addressing some of what might otherwise be structural weaknesses, lack of skills and inadequacy of infrastructure.

FT:You say you're not becoming complacent, but to some in the business community, it can sound like complacency, because they think well, hang on, I don't want to come to London for a meeting; I don't want to fly in; I don't want to have my conferences there if we can do it in Paris or Frankfurt.

TJ: That's why confidence in Heathrow is absolutely critical, and the quality of welcome that people get at Heathrow is absolutely critical. And I think that BAA has to be responsible in a sense for every bit of lost business to London from people making that kind of decision. Now I think that what you're pointing to is a risk, and a risk that would be exacerbated by a sense of complacency, but I don't think you'll find anybody who is complacent about the risk to London's economy of failure to sort out Heathrow. And I don't just mean in terms of it becoming a functional airport, but an airport that it is, as some European airports are, a positive pleasure to arrive in.

TJ: As the operator.

FT: But do you think they're taking that responsibility seriously enough?

TJ: Well, if you judge by the last… the circumstances of the last month, was it a failure of seriousness in the responsibility? I very much doubt it. Was it a failure to plan properly; to do a sufficient number of dry runs and trial testing? Well, maybe. I think we've yet to have the post-mortem on what went wrong.

But I think that there does need to be a shared responsibility for maintaining international confidence in London and a willingness to accept shared responsibility if that confidence is in any way dented, because the global markets are unforgiving, and the business that we're trying to attract from around the world is highly mobile.

And you are absolutely right that if London isn't a safe and appealing perch on which to land, then these people will go elsewhere, which is why we have to redouble our efforts to get them to come to London. And I don't think anybody has demonstrated more seriousness about London as the world's financial centre than Ken Livingstone as mayor has.

FT: It's not just BAA though, is it, it's British Airways as well

TJ: Yes, I'm not sure I can go right through the charge sheet of those who are responsible for what went wrong at Terminal 5.

FT: But those two companies, BAA and BA, and the way it was built up… and then to crash the expectations so badly, so reputationally damaging.

TJ: Well, I think what people want to see is first of all… I mean, this point about fact and perception, people want to feel that those responsible for running Heathrow share the same reality as they do, and recognise that queues are not a figment of the imagination; that discourtesy is not a figment of the imagination, and that the threat of lost luggage is not a figment of the imagination; that these are part of reality, and that the only way to address these problems is to accept that and to set about putting in place the solutions.

And I think that one of the ways in which you build confidence is from that position; to say, okay, we did make mistakes, there were failures in the following areas, this is what we're now going to do to put it right, and to follow through on those solutions. There is nothing more infuriating than if you're standing at Heathrow and your plane's late, and somebody is being rude to you and you've lost your bag, and somebody telling you that you've got it wrong, and it's not quite how you've experienced it for the last two hours.

FT:Should the chief executive resign?

TJ: That's a matter for the board of BA. That's not a matter for the minister for London.

FT: Could we move on to another aspect affecting the city? On the non doms tax change, obviously, Ken has said he's concerned about it, he's concerned about the impact of financial workers maybe going overseas, do you take that concern seriously?

TJ: I certainly do, and I welcome the fact that the proposed regime is now much simpler, clearer, and that the ambiguity that was giving rise to such anxiety has been clarified. And I welcome the fact that Ken, sort of counter intuitively against Ken's political past, spoke up for the contribution that non doms make to the economy and to the wealth of London.

FT: Some people in the business community would say the government didn't handle it well, in terms of there was this long period of uncertainty before, as you said, the clarification came through. Do you think there's any validity in that?

TJ: I think we all have a collective responsibility here, and I think again, it's part of this whole business about accepting the way decisions are seen. And if, as you rightly say, FT:an, people in business felt that this was initially unclear and, therefore, in a very volatile situation gave rise to uncertainty, I think we have to accept responsibility for that. But I think that what's got lost in this was that the proposition was a Conservative proposal before the government made its proposals. But I think the position on this is very clear which is that non doms who choose to live and work in London make a major contribution to the wealth and success of London.

FT: On another related tax issue … there is a concern over the abolition of the 10p tax rate, and there's a suggestion that this will hurt Labour at the local elections. Do you think the concern is overblown?

TJ: I think it's, at this stage, hard to judge whether it will have an impact. In the thousands of people that I've met or encountered over the last few weeks of campaigning, a tiny handful of people have actually raised this with me.

The argument has been very clearly made that this is part of creating greater simplicity and fairness in the tax system. But there is obviously a group, single people between 60 and 65, who are likely to be worse off … the tax changes are in place, but I think that both the prime minister and the chancellor have made it very clear that they're sticking by the 10p rate.

I think that we'll have to look over the next year to see whether this does turn out in practice to be unfair, in which case, I think as Geoff Hoon in discussion with back benchers has made clear, there is an opportunity to come back to it in the pre-budget report. But I wouldn't want anyone to get the idea that the government is about to alter its position on this.

FT: Talking to backbenchers this week, there did seem to be a slight disconnect between what they thought they'd got in terms of reassurances that there would be some help for this 5.3 million, and the line out of No. 10 … And there just seems to be this unease; backbenchers feeling that you can't have Labour hitting a very low paid group of people, and particularly just ahead of local elections.

TJ: I think that the job for government is to provide a clear explanation of the reasons that the changes were introduced in the first place, and why they are fair in pursuit of a more equitable tax structure. That is the argument that has to be made.

But I think that like any responsive government, if you find that in practice you create perverse effects, then you have to respond to that. So in that sense, both parts of what you're saying are true; that No. 10 and No. 11 have signalled that this is the policy and this is the position of the government. Rather like the consultation on Post Office closures, backbenchers have a job to provide a daily reality check for government, and I think it's the job of government to take very seriously the specific issues that are raised by what are very far from being the usual suspects who will always rebel against the government. These are people who are very thoughtful and very considered in what they say, so I think they have to be taken very seriously.

FT: Coming on to the mayoral contest, what do you think are the chances of Ken winning, and how bad is it if he loses?

TJ: Well, I think it's very close. Ken recognises, and we all recognise that he is going to have to work for every vote.

I believe that as Londoners are faced with the very clear choice, which is to re-elect Ken for another four years as a mayor who is a passionate and committed Londoner, and even whose worst enemies can't really criticise his record of effectiveness and success in bringing London to the point where it is generally regarded as a world class city, and a world leader in many respects. And being mayor of London is a serious job, and I think that as Boris Johnson's policies become subject to closer and closer, more detailed scrutiny in the course of the campaign, the weakness, both in him as a credible candidate, and in his policies, is being revealed very particularly.

And if your normal audience are game shows and you're an entertainer, then doing what Boris Johnson has done, which is to produce lots of very colourful policies in very colourful language, can be quite appealing, until you look at the, in a sense, in the cold light of day at what this actually means. And he has offered many attractive policies like air conditioning on the tube, like buses that go all round London, like the replacement of bendy buses, but what he has been completely unable to do is to tell Londoners how much they'll cost and how they will be paid for.

And so the charge against Boris Johnson is that he is making promises which are unrealisable, unrealistic, and unfunded, and therefore will inevitably be broken; alongside Ken Livingstone's promises which are very carefully costed, and which very much build on successful policies of the last eight years; policies which have been driven through by sheer political will in many cases. That's the part of the job description for the mayor of London that you can't legislate for. It's strength of character, clarity of vision, and the ability to connect big vision to the means of delivery, and that's what Ken Livingstone has done on neighbourhood policing.

I mean, I don't think there's any point in going on telling people that crime has fallen when people feel unsafe on their streets, but what people do recognise is that the more visible presence of police on the streets is greatly reassuring, and there will be 1,000 more across London, together with the fact that everybody has got the mobile number of their local neighbourhood police sergeant. That's the kind of thing which sounds small in the scale of big politics, but is incredibly important when you're looking at how you address fear of crime.

FT: In terms of campaigning, does it concern you at all that you've only got one paid for evening newspaper in London, and that has taken quite an aggressive stance against Ken?

TJ: Oh, the Evening Standard have… They would say that they've exposed Ken Livingstone's record to scrutiny; that they have certainly done. I hope that over the next three weeks, we will see Boris Johnson's policies exposed to similar scrutiny.

FT:Do you think they've failed to do that?

TJ: I don't think they've done that so far; no. But personally, I've been in this game for long enough never to attack the messenger, and I think that we have a campaign strategy which very much plays to Ken's strength, and the more Ken engages directly with Londoners, is out and about, is the person that he is, I think that the better he will do.

And I think that it's a general challenge for modern politics that you have to get under the radar of national media … I think that modern government will only be successful if it's led by people who show a degree of humility, reflectiveness, willingness to listen, and a pretty high level of what I'd almost call emotional intelligence. That's what, together with the toughness, that enables decisions to be made and implemented. But I think that the public appetite for politics is for a different kind of politics than it was five or ten years ago, and I think Ken Livingstone has responded very well to that challenge actually.

FT:Is there a hurdle for Ken in that three terms is a lot, and there's a bit of a fatigue factor?

TJ: Well, I think that's inevitably something that we've had to address. Going for a third term is quite different from a candidate standing untried, untested and fresh for the first time, but if you come back to, and I think that this is why as we get closer to polling day, we're seeing the polls narrow, because increasingly, people are realising that this is a serious election, that there are very serious choices and clear choices to be made between, if you like, celebrity policies, the kind of things you'd offer off the top of your head, and seriously costed policies which build on the success of London, the safety, and the security of London. And I think that increasingly people are realising that Ken Livingstone is the safe bet for mayor. He is the person who will drive London forward in a way that will continue London's success and will protect the standard of living of Londoners.

FT: Is Ken sort of the City candidate? Because … Boris is more anti the tall buildings strategy, perhaps more likely to be less welcoming towards immigration [and] promotion of London internationally

TJ: Well, he started off saying that he was going to close the offices in Mumbai and Shanghai, until he was howled down by the London First audience, and during the course of that hustings… I mean, I wasn't actually there, but I gather he moved from, oh well, do you think they're a good idea? Oh well, maybe I'll rethink it; to oh well, maybe they should stay open. Well, that's no way to make policy during the course of one hustings. In practice … when you see Ken operate around the world, you understand why he's seen as a world class mayor among his peers, and the impact that the offices in… particularly in Mumbai and Shanghai have had on London's profile in those cities, and on inward investment from both India and from China, both of which are absolutely vital markets; of course they are.

FT:And the closure of those offices would be hugely damaging for the City?

TJ: The point is that, in the context of global turbulence, you cannot have uncertainty dogging London's economy, and you cannot have the City of London dogged by uncertainty and risk. And as I was saying earlier about non doms, so much international capital now is highly mobile that we can't afford that on the strength of a whimsical vote for Boris Johnson that millions and millions of pounds are not going to come to London and create jobs for Londoners, but are going to go somewhere else where a potential investor regards the investment as being more secure.

So yes I do, Bob, to go back to your question. I do think that Ken is the City candidate. And I've known Ken for 35 years, and we've always been, until more recently, we've occupied different parts of the leFT: of centre spectrum, but Ken is a realist, and he understood 12 years ago that you couldn't be leader of a city like London and not embrace capitalism, international capital, and realise that success was going to be reliant on the confidence of the City, and that's what he has set about doing with very great success. So he has unlikely allies in the City who see the strength of his leadership as being good for their businesses.

FT: Do you think a victory for Boris Johnson could create the sort of uncertainty that could see millions of pounds of investment going out of London?

TJ: I do. And I am also prepared to bet that in parts of the Tory leadership, there is an aFT::olute horror that Boris Johnson may win, and would, if you like, be the most visible performer in what they hope to be a potential Tory government. I think that for London, Boris Johnson would be a disaster for all the reasons that I've said. Amiable, funny, affable chap though he is, he is not a mayor of London.

And just remember, you don't have to like the mayor of London, you have to have a mayor of London who is going to stand up for the city, who is going to bring wealth to the city, and who is going to preserve the diversity and the tolerance of the city, and I think that those again are the, if you like, the two axes on which Ken has been so highly effective. He's been both the best and greatest advocate of the City of London and London's economy, while at the same time being the most visible, vocal and effective advocate for the nature of London as the city that it is; a city of diversity, and a city of tolerance.

FT:How bad will it be for Gordon if Ken loses?

TJ: We're not thinking about that, FT:an.

FT: I'm assuming it's a lot closer race than you may have predicted a few months ago?

TJ: I think it's a much closer race than four years ago

FT: I mean a closer race than it may have seemed a few months ago.

TJ: I think it's a closer race than was certainly the case a year ago; certainly. But then the Tories didn't have a candidate. It's worth remembering that Boris Johnson is what, the Tories' sixth choice for mayor?

FT: He seems to be doing better than people might have predicted though.

TJ: Well, I think that his support has a number of components, not least, ah well, the luxury that you can have a few weeks out from a campaign of saying, well, does it really matter? What difference is it going to make? And what we've seen is that as we get closer to polling day, people focus on the real nature of the job, and the importance of the job of being mayor. And they realise the risks. I think the reason the polls are closing is that in increasing numbers, Londoners are understanding the risk of Boris Johnson as mayor of London, but also, the benefits of Ken Livingstone being returned for a third term.

FT:Is your attack principally going to be focused on his policies or his lack of experience?

TJ: Well, the two are connected. I don't think that this should be a campaign which is about personality, for better or for worse, and nor do I think that it should be a personally abusive campaign, and I don't think anybody likes that kind of politics.

I think that it has to be a campaign which focuses in a very rigorous way on analysis of the issues and analysis of the respective policies of the two candidates, and also, that follows the priorities of Londoners. And the priorities of Londoners are very clear; crime, transport, and the… I was going to say the cost of living, but it's both the cost of living and the quality of life in London.

And that's why on crime, you have a contrast between Ken's pledge of more police officers as against Boris Johnson's refusal to support the tough anti crime measures like longer sentences for people carrying guns in the Criminal Justice Bill of 2003. On transport, you have Ken Livingstone's commitments to upgrade and improve the capacity of public transport in London, the extension of the freedom pass … against Boris Johnson's uncosted proposals. And on quality of life, you've got the confidence of Ken; in the city, the commitments on affordable housing, the environment and so forth.

FT:Is it right, the story about the £5 swear box?

TJ: Honestly, it was a joke; J-O-K-E. And it deserved to be treated as no more than a J-O-K-E.

FT: About funding about the campaign, there's a perception that Ken's a bit short of money; Boris Johnson doesn't seem to be. We can't see the donations. One, how are the campaign finances looking? Is it going to be a struggle? And two, on the issue of donations, why are you not publishing those donations before the election?

TJ: They will be … I'll check that for you exactly when they will be, but they will be published … in accordance with the Electoral Commission's rules for registered donees. And the Labour party, for the purposes of the Ken Livingstone campaign, is the registered donee. So I'll get for you, it's very easy to get for you the date on which the donations to the campaign will be published. But they are fully in accordance with the rules. And the Evening Standard story…

FT: Obviously, Boris is publishing all of his donations … Why not just publish them and be done with it?

TJ: Well, again, the difference I think is really between Boris Johnson being actively engaged in fundraising for his own campaign, and as you know, Ken in this campaign and the last campaign has been aFT::olutely clear that he doesn't want to know who's donating to his campaign … he relies, and quite rightly, on the Labour Party to run the financing of his campaign for him, and I think that's the right and proper way to do it. So the Labour party will act in accordance with the rules. This is not about Ken Livingstone. Ken is the Labour party candidate for the purposes of donations to the campaign. And the second point, Bob, was…?

FT: Just in terms of campaign finances.

TJ: I expect that the Boris Johnson campaign will outspend our campaign, but ultimately, we're relying on the people of London to vote for the security of their future and the future of London, and not to take a risk with Boris Johnson. And at the end of the day, all the money in the world won't buy that kind of confidence that Ken has earned through his record as mayor.

FT: So it's not going to be campaign finances that…?

TJ: No.

FT: You're not concerned about that being a factor in the…?

TJ: It would always be nice… Everybody who's involved in any campaign would always like to have more money to spend, wouldn't they? But no, our campaign is out there, and this ruthless analysis of policy, not personality.

FT:Just quickly on the Olympics and on this whole controversy around the torch and so on and so forth, what's your view on the Lib Dems who said today the Chinese shouldn't take it to Tibet and it would be provocative? What's your sense on that?

TJ: I think it's fair to say that there is … certainly is a crisis in that we all, at all times, want to maintain a distinction between politics and sport. There is almost uniquely here, or unusually here, a sort of collision between the two, and I think that what we've seen so far in the global relay is the really passionate expression of feeling about resolution of the status of Tibet. And I hope that…. there is untold Chinese pride invested in the success of the Games. I hope that they will also recognise that the success of the Games is now in the eyes of the world predicated on their willingness to engage with the Dalai Lama who has met the two conditions for dialogue, and that dialogue can open on a resolution to the status of Tibet.

FT: On the specific question of actually taking the torch to Tibet, do you have any view on that?

TJ: Well, I think… I mean, this is a decision for the Chinese, but I think that what opinion round the world hopes is that the Chinese will actually take very seriously the nature and the strength of the protests, and not do anything which is a) provocative, and b) could lead to violence and loss of life.

FT:On Crossrail … the budget is large, but absolute. And my understanding is the government have said this is the amount of money; after that, the risk is on London.

TJ: Yes, exactly. And as I say to everyone, £9.325bn is what the [2012] Olympics have got to come in at, and in exactly the same way on Crossrail, £16bn is what is there to pay for it.

FT: And is it the mayor that is the one person responsible to bring that in … as a figurehead?

TJ: Yes. The mayor will oversee the delivery of that project, therefore, competence at managing big projects, bringing them in on time, is an absolute prerequisite, which is why Ken Livingstone is really the only one of the candidates who could possibly be trusted with a project of that scale, not just in terms of cost, but [in terms of] importance to London. It will be the largest public sector project I think ever in this country.