Ruth Kelly MP: 'I don't have the choice of taking red boxes home. I have four children, and they want their mum'

The Monday Interview: Financial Secretary to the Treasury

Ruth Kelly begins number-crunching before dawn. Yet it is not billions of pounds of spending figures the Treasury minister is poring over as the light comes up, but the primary school sums of her six-year-old.

Ruth Kelly begins number-crunching before dawn. Yet it is not billions of pounds of spending figures the Treasury minister is poring over as the light comes up, but the primary school sums of her six-year-old.

The Financial Secretary to the Treasury, who has had four children since being elected in 1997, says she is used by now to the early-morning awakenings. In fact, the transition from nappy-changing to economic modelling helps her to perform in one of the Government's most demanding jobs.

"I strongly believe it helps me work better as a minister because I work during daytime hours and I do something different in the evening and get a better night's sleep," she says.

The punishing timetable, she says, helps to keep her sane while saving her from the workaholic tendencies of many of her colleagues. Even on the morning of the Budget, she spent an hour before breakfast helping her son with his homework.

"The family impose a discipline on me. If I didn't have a family I would probably be a work junkie like lots of other ministers. I would probably go home with a red box for a couple of hours in the evening, get immersed in politics and forget about real life," she says. "I just don't have that choice. I have four kids under the age of seven and they want their mum. They are wonderful."

The minister, who at only 35 is considered among the Government's sharpest thinkers, makes a point of not taking any of her papers home in the evening, systematically completing her work within office hours. In her grand Treasury office, three empty red boxes sit lined up on the floor by her desk. They have apparently been in the same place for months. "I don't take red boxes home," she says. "I try to get home to put all the children to bed."

Ruth Kelly is one of the bright young things Gordon Brown spotted and swiftly co-opted to the Treasury and she has been tipped as a future Chancellor. Before becoming an MP, she was a Bank of England economist and before that a Guardian economics correspondent, whose scoops included the disclosure that Norman Lamont, while Tory Chancellor, had broken the golden rule: that Government expenditure doesn't exceed income over the economic cycle. The story, which The Guardian led on, dominated the 1992 election campaign for an entire day.

"I did some calculations and rang up the Treasury and they couldn't deny it," she says modestly, surprised that anyone remembers.

These days, the debate about whether the "golden rule" has been broken is raging again, with the Tories and other economists claiming that Gordon Brown subtly redefined it in this month's Budget, thereby moving the economic goalposts.

This is a charge that Ms Kelly, employing her economist vocabulary like a form of weaponry, vehemently denies.

"I can tell you that we haven't shifted the goalposts in any sense, and if you go back to 1997 or 1998 when the methodology was set out we are using precisely the same methodology as we were using then," she says.

Ms Kelly is equally clear that the Treasury's announcement that it wants to find an extra £20bn to spend by imposing stringent spending cuts on each Whitehall department is not overly optimistic. Critics fear that ministries will fail to meet the target, leaving a massive hole in the Government's finances.

But Ms Kelly, with figures tripping off her tongue like a talking calculator, says "a cushion" has been built into the figures to ensure "there is room for manoeuvre". She adds: "There are a number of safety margins built into the figures. First of all, spending projections themselves have built-in safety margins. Second, they assume a trend rate of growth which is cautious. Third, we meet the fiscal rules in two ways, one by making sure current expenditure doesn't exceed current income over the cycle - and there's an £11bn margin built in there - and the other rule is the sustainable investment rule, projected expenditure peaks at 36.5 per cent of GDP which leaves a £53bn margin."

She deftly avoids ruling out rises in tax or national insurance contributions after the election but explains why, because of Prudent Gordon's planning, they will not be necessary.

"We are talking here about a situation of fiscal strength because of the action that was taken immediately after the 1997 election and the debt that was repaid at that time. We now have the lowest level of net debt of any major industrialised country and we also have borrowing under tight control as well, so even factoring in our spending plans we still meet our spending rules with room for manoeuvre, with a cushion and they are based on cautious estimates of trend rate of economic growth."

Ms Kelly's grasp of the fiscal arithmetic has never been in doubt. And with her trademark London accent (she says "yeah" a lot) she manages to make abstruse economic arguments seem almost interesting. This is lucky for the Government because she could be talking about hip replacements instead.

The MP almost became a doctor, as did her two brothers, but switched from medicine to study politics, economics and philosophy while studying at Oxford.

"I was never cut out to be a doctor," she says. "I got queasy, found it unappetising and didn't find it stimulating particularly either. I have always liked thinking about real-life issues and how I can apply my principles to helping people."

Almost everyone who meets Ruth Kelly is struck how unaffected and "ungrand" she is for a senior minister. The "number three" at the Treasury has the unpolished air of a very brainy postgraduate student who looks surprised when people compliment her. She also laughs a lot and gets enthusiastic about policies such as pensions-tax simplification, which she regards as one of her crowning achievements in government.

At the dispatch box she is formidable, reeling off figures with the same fluidity as her boss, the Chancellor. Many male MPs say they are rather in awe of her. But Ms Kelly does not always take a cool and objective approach to policy-making. As a devout Catholic, she has opposed Commons motions on embryo research, and apparently would feel uncomfortable in a ministerial post dealing with abortions, the morning-after pill or contraception in the developing world. Some believe her faith would stop her running the Department for International Development, but, although she acknowledges the importance of Catholicism in her life, she says her faith is a private matter.

"I am a practising Catholic. These are not issues I have discussed with anybody but clearly I have strong personal principles," she says. "I would have to abide by them in my political career if they are strong personal principles."

This month, Ms Kelly found herself with a real-life moral dilemma when she was confronted with 750,000 angry Equitable Life policy-holders who had found their retirement incomes slashed. Ms Kelly, in charge of formulating a government response, angered many by refusing to compensate the policy-holders and was criticised for being "callous" and even "washing her hands" of their troubles.

But she says her decision was based on many months of serious thought about the consequences not only for those who lost out but the taxpayer.

"I felt very sorry for the people who lost out on Equitable Life and have always said that. People were led to believe they were going to have much higher retirement incomes than in fact turned out to be the case," she says.

"I think we looked at every single option we could to help policy-holders but in the end we had to do what's right by the nation and other taxpayers who ultimately are the ones who have to underwrite businesses if that is the approach we take."

Ms Kelly's thorough and intellectual approach to politics has put her on a clear course for the Cabinet. But she shrinks from setting herself up as an example to women combining a demanding career with a large family.

She is also wary of predicting her career path, claiming it would be "incredibly foolhardy" for any minister to say what they would like to do next because "nearly always the opposite happens".

She adds: "I am very, very happy doing the job I am doing. I find it wonderfully stimulating, a huge challenge and I am hugely privileged.

"But I am not in this job to provide a role model or for any other purpose other than to do a good job, and that is what I try to do."

The CV

Born: 9 May 1968

Marital status: Married to Derek Gadd, four children.

Education: Westminster School, Queen's College, Oxford, MSc in economics from LSE

1990: Economics writer, 'The Guardian'

1994: Deputy head of inflation report division, Bank of England

1997: Elected Labour MP for Bolton West

1998: PPS to Nick Brown, Agriculture minister

2001: Economic Secretary to the Treasury

2002: Financial Secretary to the Treasury