06/12/2011 Daily Politics

Afternoon, folks - welcome to The Daily Politics. Stock markets have

fallen across Europe following a warning that the creditworthiness

of almost the entire eurozone could be downgraded. The announcement by

the agency Standard & Poor's suggests there's a possibility that

France and Germany could lose their Triple A status within three months.

British exports are already falling due to the crisis in Europe. MPs

debate the economy here this afternoon. We'll be talking to the

Deputy Chair of the Conservative Party. Could we see another crisis

in Britain's care homes similar to the collapse of Southern Cross? MPs

warn it might happen all over again. And we'll be looking at what the

political parties have to do to And with us for the whole programme

today is the businessman Dr Chai Patel, who now runs over 200 former

Southern Cross care homes. Nice to be here. Which brings us neatly to

our first story, because a group of MPs say more action is needed to

prevent another care homes crisis similar to the collapse of Southern

Cross. The Public Accounts Committee say some providers in

England are amassing huge debts, and they've called for better

monitoring of the care system. This morning, the Health Committee was

also discussing long-term care. They heard from Andrew Dilnot, who

chaired a commission into how to best fund the system, and he was

less than complimentary about the current situation. My view is that

everybody in the social care system is inappropriately served at the

moment. That means all of us. The risk of needing care in your Olda

age is greater than the risk of falling pregnant. That's because

half of us are not going to fall pregnant, but three-quarters of us

will need care in our old age. And at the moment, the system does not

work for any of us, effectively. It does not work for people looking

forward to the possibility of needing care, it does not work for

people at the point of needing care - the system is bust. Well we're

joined now by the chair of the Public Accounts Committee, Margaret

Hodge. How bad is it? We looked just at care homes, not at the rest

of the system. I think it is a very worrying situation. If you look at

Southern Cross, and why it collapsed, I think there are two

main reasons. Firstly, it depended on high local authority rates - two

thirds of the people going into care homes are funded through local

authorities. That's nationally. all their fees are paid by the

local authority. Which makes local authorities are vital in this

respect. Quite. And local authorities have had their funding

cut, so the care homes get less income. At the same time, the care

homes are funded through a lot of borrowing, and interest rates have

gone up. They were funded when interest rates were low. So we have

got a pretty unsustainable model. Not just Southern Cross, but one of

the other big four providers, four Seasons, we understand, has got

into trouble. And let me make another point, because of the local

authorities cannot put people into the care homes because the prices

are too high, what then happens is that people stay in hospital, they

block beds in hospitals, and that's another cost to the public purse.

For the individuals, it is a terrible thing. Is it as serious as

the politicians are making out? is serious, yes. There are

different components. The funding contraction is serious and it is

only going to get worse over the next two or three years, as the

local authorities were now to have more money. Absolutely, and the

austerity measures have hardly even kicked in yet, I think. This is a

property backed investment, and as you know, properties have debt.

Whether the debt is too high or too low is hard to tell at the moment,

because this was done before 2005, 2007. And to have four years of

real reduction in fee rates, I do not mean just inflation, real

production, has meant that the funding has rarely contracted. At

the same time, a policy of keeping people at home, which has a good

policy, has taken another 7% of demand away from care homes.

did you buy these Southern Cross homes? I did not. My job was to

help out in terms of the restructuring of Southern Cross,

and we have got a management contract to run one third of the

homes. Huo owns them? They are owned by a property company. So, we

brought the two together. Part of the problem at Southern Cross, and

why I don't think Southern Cross will happen again, is that firstly,

it was twice as large as the nearest competitor, it was so big

that nobody else could have taken it. And secondly, it was entirely a

landlord and tenant based company. It was a very complex structure.

You could not put it into administration, which is what would

normally happen, to get an orderly transfer, which is why it took so

long. None of the other companies, including four Seasons, are much

easier to manage. I wonder if size matters that much in these

circumstances. What should the Government do? I agree that size

did not matter, care homes are going broke every week. The first

thing is that the Government has got to act. They are doing a lot of

thinking, producing papers. They're aware of the problem? They are

definitely aware of the problem. I think they are trying to run away

from the problem, trying to make everybody else accountable - local

authorities, the Care Quality Commission, but I think think this

is a problem for government. I think this should be taken out of

party politics, this issue is hugely important and will grow in

importance, we have got an ageing population. You and I might end up

having to go into a care home. We have got to sort out the funding.

Andrew Dilnot said the system is bust. What should be done? I think

it is going to be the old mixture - for those who can afford it, they

will have to contribute more to their care when they are elderly,

but the worst thing is if we do nothing, it will be the poorest who

cannot afford to pay for their own care, and they will suffer the most.

If we want us all to be in it together, we have got to find a

solution which prioritise his, in a constrained and there but, spending

for poor people, but also gets the balance between public and private

contributions. What do you think should be done? I totally agree on

the first point, the process, this is a multi-party issue, this is not

party political, we need consensus. The second part is funding. This is

a chronic issue, right across the world, in fact. We need planning

for the short, medium and long term. The Dilnot report starts to tell

you what to do for the next five or 10 years, and we need a long-term

policy, so the next generation can start either saving or buying

insurance products, or knowing that there will be joint funding. But

there is no transparency right now. We have got this situation which

has almost guaranteed -- which is almost guaranteed, each one of us

is going to get old. Is there not a strong chance that some will have

to be taken back into state ownership? Well, I think if we're

going to leave it in the market, it has to be a much more tightly

managed market. This is not an issue where you can allow market

failure. Southern Cross, 31,000 people, suddenly thinking, where

are we going to be tomorrow? I think this is too important to

leave it to the vagaries of the market. The market did not fail.

will wait and see. This subject will not go away, we will come back

to it. To something different, time for the daily quiz. The question

for the daily quiz. The question for today is... What programme

would David Cameron like to bring back for Christmas Day? Is it a)

Dad's Army? B) The two Ronnies? C) Spooks? Or d) To The Manor Born? At

the end of the show we hope Chai will give us the correct answer.

it was me, I would like to see Spooks comeback. That does not mean

it is the right answer. Standard and Poor's has booked almost all

eurozone countries on a warning regarding their credit rating.

Louise Cooper, who's a markets analyst for BCG Partners, is here

analyst for BCG Partners, is here in Westminster. Is this a knockout

blow from Standard and Poor's? the point of view of the markets,

Standard and Poor's are not telling us anything we did not know already.

If you look at the reaction from the financial markets today,

equities are down a little bit, European government bonds are

little changed, and the insurance market for sovereign debt is also

little changed. So, to be fair, Standard and Poor's are playing

catch-up. A lot of the concerns they talk about, five particular

concerns, frankly, a lot of investors have been worried about

for at least a month. Is it likely to happen, with France and Germany?

Many market players have been saying that the AAA rating of

France is going to go. That is not new news. The new news was Germany,

that was a bit of a surprise. If you look at Standard and Poor's,

when they put countries on credit watch, there is about a 50 got a

chance that they will beef -- they will be downgraded in the future.

But if you look at the five reasons - tightening credit, eurozone

countries finding it more expensive to borrow money, disagreements with

policy makers, massive levels of eurozone debt and a recession in

are unlikely to change. I look at them and think, nothing I see will

indicate any of that is being changed. So, it is a realistic

response. What about our rating? That appears to be saved at the

moment - are we considered a safe haven? It is all dependent on

growth for the future. We have definitely seen investors fleeing

the eurozone, not wanting to own euro sovereign debt. They have

piling into UK sovereign debt gilts, Swedish debt, Danish debt, because,

frankly, we are not in the eurozone. However, our debt figures do not

look pretty, and are unsustainable if we have a recession. And so, we

are a safe haven for the moment, the Bank of England is buying gilts,

which brings down our borrowing costs, yes, we are not in the euro,

but do not be complacent about the future for the UK. I'm joined now

by George Eustice, who is a member of the all-party parliamentary

Fresh Start Group, which is looking at our relationship with Europe.

Welcome to the programme. Looking at this deal which has been put

forward to deal with the debt crisis, would you like to see a new

European Treaty of all 27 countries, or just the 17 and euros countries?

I think to be credible, it needs to be an agreement at the level of the

27. I think Germany would want that as well. They want to use the

machinery of the European institutions to enforce these new

rules. If it was just another level of the 17, they would not be able

to get the European Court of Justice engaged, to hand out

sanctions, and if they do not have that, then they have got something

which is no better than what they have got already, with the

stability and growth package. also it is probably the only

realistic chance for the British Government to try and renegotiate

Pact powers from Brussels, if there is a treaty of all 27 countries.

That's right. That would give credibility, but it would also give

us an opportunity to repatriate certain powers and protect are own

interests, particularly in the City. But why on earth would France and

Germany, for example, be interested in any concessions to Britain? They

have said as much, Sarkozy has said, we will do this with or without

Britain. Why on earth do you think we would get concessions? They

might say that now, but they are grown-ups as well. Once you get

around a table and have a discussion, it is absolutely

legitimate for Britain to raise this. There are some 50 EU

directives coming down the track which affect the City. London

dominates financial services in Europe. We have got to make sure we

have some kind of veto on the emergency brake procedure, and we

say we should have that in respect of these 50 new regulations coming

Well, as George Eustice and the Fresh Start group debate our future

within Europe, the impact of the eurozone crisis is already being

felt in the UK today. Jo, bring us Yes, as faith in the euro continues

to melt, just how much heat are we already feeling from the eurozone

In a series of gloomy announcements, the Chancellor delivered the news

that predictions for growth within the UK economy have been downgraded

from 2.5% to just 0.7% for 2012. Much of this was blamed on

uncertainty in the eurozone. Weak economies in Europe have also hit

UK exports, with a reduction of 1.4% in the number of exports to EU

countries, our biggest market, in the three months to September. The

Chancellor has also claimed instability within Europe is a

reason behind rising unemployment in the UK. Last month he said,

"There's no doubt that jobs in Britain have been hit by what's

going on in the eurozone." Many eurozone countries have seen big

fluctuations in their cost of borrowing. However, bond yields for

the UK have remained relatively stable so far, but with large

public debts we are certainly not guaranteed safety in this area.

With the crisis deepening and the UK economy on a knife edge, can we

avoid heading back into another I'm joined now by Michael Fallon,

Deputy Chairman of the Conservative Party, and Chris Leslie, who's

Labour's Shadow Treasury Minister. Welcome to you both. Michael Fallon,

the Eurozone is clearly going to form a much tighter block now, it

is going to move towards its own tax-and-spend and budget policies.

Huge change to the European Union. Time to live up to your promise of

your party and repatriate some powers? We have always wanted to

repatriate some powers, things could be done better at the

national level than the European level but the priority at the

moment is to make sure the Eurozone sorts out its problems. We have a

huge domestic British interest in making sure the Eurozone does not

go on in this crisis and they solve their problems. That is the first

thing we want to see come out of this week and the meetings taking

place. We are just cheerleaders, we are not part of that, because we

are not in the euro-zone. So we can support what they are doing it, but

we are going to support it in the knowledge that it is a systemic

change in the nature of the European Union. So it isn't that

time for you to live up to your promise? We have had promises of

systemic change before, we will see whether that transpires. We have

had various agreements from other countries to operate in different

ways and so on, but let's be clear about this, if the Eurozone

countries want to form a smaller grouping, they must use the

European institutions to use that - - do that. We heard George Eustice

agree with that, they must use European law and the European Court.

Do you want the Eurozone to be a tighter, closer group? As a

currency, we wanted to work, it is in our interests that it does not

collapse and it polices itself. know all that, but Mr Sark cosy and

Angela Merkel say the way to do that is to do what they agreed in

Paris -- Nicolas Sarkozy. They want the rest of Europe to take that on

have the Government, it seems, support that approach. If we are

supporting a more coherent Eurozone, what is the response, the

consequence for Britain? What they have said it is they now say they

want to abide by the rules, they want to set themselves tough rules.

What do you say? I know what they say, I read the newspapers. You

just said you want them to do it, of what is the consequence for

Britain? The consequence if they get on and do it is that our

national interest is protected as well, I'll economy is protected and

the Eurozone problems won't come over the Channel -- our economy. We

want the currency to succeed, we don't want it to fall apart. Let's

see if I can do better with Labour. If they proceed to have a tighter,

deeply Eurozone, what would the Labour policy response be? It I

think it depends when we see the details of this treaty whether it

is going to be pro-growth, of whether it is going to solve

economic problems or if we are just going to be kicking into the long

grass a whole set of constitutional changes that may not come to pass

for 5, 6, 7 years. We need to see the details of this. We need

negotiations that are focused on a growing economies and not austerity.

You are dodging the question as well. I am not. The don't need to

see the detail to understand that if the Eurozone becomes essentially

a fiscal union, with constant, combined, common tax-and-spend and

budget policies, and forced from the centre, which is what the

Germans want, I ask again, what are the consequences for Britain in its

relationship to this new Eurozone? They could be very significant,

possibly detrimental. We literally to have to see where this is going.

I suspect that just as the market go up-and-down week by week, the

changes that we see in the politics are also far from certain. We have

heard about the Standard & Poor's downgrading this week, it makes it

look as though we are all very much focused on the European Central

Bank's role as lender, rather than the possibility of a big bail out,

which is what we really should have been pushing the Eurozone countries

to do. It is really important and I am really exasperated by the fact

that government is not focusing not less. -- on this. The Germans and

the French and our own government are not focusing it on growth. If

we have a coalition, it should be to earn some revenues, to deal with

the debt crisis. Why we are not doing that... They say they are

going to meet every month to focus on growth policy, so that is not

quite true. It is part of the deal. I want to come back to you, you are

the governing party and your party told us that if the Europeans

wanted to make major changes, and I can't imagine a bigger change than

what is being proposed that the Eurozone, then you would use that

opportunity to repatriate powers. And yet that is a word you won't

even use this morning. They are not proposing to take any power away

from us, they are proposing to work much closer together, to have the

fiscal union to poll taxes and spending Bath pull taxes and

spending and have, and enforcement. That is not an opportunity, in your

view, unlike your colleagues, to renegotiate our relationship.

it is our opportunity to protect British interests. To make it clear

to the 17 that they can't legislate for the 27. They shouldn't. You see

what I have to put up with? It is tough, I can see that. What would

you like to say? We have to remain relevant and to do that, we have to

sit in the centre of vessels you can't if you are not to the euro-

zone. The -- we have to sit in the centre of this. This is a good time

to be baking lot of friends. People say we cannot be end of the

sidelines but as the country, both of these parties have been decided

-- both of these parties have decided we should be in the

sidelines because they are against joining the euro. Thank goodness.

They stop us going in. We have got a serious risk. This idea that we

are a safe haven is nonsense. things be to think about, the Tax

Payers Alliance have written out, for repatriating. 20 items.

Don't say we aren't here to help. The British curry industry employs

around 100,000 people and is worth �3 billion a year to the economy.

But does that make it an appetizing prospect for politicians searching

for votes among the Asian community? Adam's been

investigating. The British Curry Awards, held in

London last week, and lapping up the chicken tikka, a host of

politicians, most of them Tories. With my colleague Eric Pickles, I

have been discussing how we can get a curry College up and running.

There are more curry cost -- restaurants in London that in

Mumbai and Delhi combined. And they won't just popping in for Paul the

Dons, according to the founder of the event. The da poppadoms. Some

of the family is here are working at the different sectors, there is

if you devote. In Epsom, Enam Ali has seen a big change in the

community's political tastes. my generation and my father's

generation, maybe somebody wasn't their cup of tea. Maybe by birth,

you can say they are Labour supporters. These things have

changed. I have seen for the last five years, a huge change. But back

at Westminster, this prominent Labour Peer says that targeting the

Asian vote is difficult. It doesn't actually exist. You say Asian,

because of we can't say Indian, because there are a lot of

Pakistani as well, but already Asian is a fudged the word. We

don't want to talk about religion too much. But you have a very

different Asian voters although the Countryfile stock and he is right,

according to the latest research. - - all over the country. Figures

have bad that Asian communities are overwhelmingly Labour voters, but

the Indians are more likely to vote for Conservatives than those with a

Pakistani background. All of this is a complicated mixture of many

different ingredients. You might say just like an award winning a

curry. It is all in the writing.

I'm joined by the entrepreneur and crossbench peer Lord Bilimoria, and

Dr Chai Patel is still with us. Lord Bilimoria, is there such thing

as an Asian vote in a homogenous sense? The agent BT makes up 4% of

the committee in this country -- Asian population. What I have

discovered is there is a meritocracy and the Asians have

blasted through the glass ceiling, reaching the very top in every

field you can imagine and that 4% contributes double at proportion to

the economy of this country. In Parliament, look at the House of

Lords, we have 24 Asian members, the House of Commons there are 17,

11 Labour, six Conservative, so the Asians are really coming to the

fore. We have a Cabinet minister who is Asian, the deputy leader of

the Liberal Democrats. But are they adequately represented? If you look

at the proportion of the population, around 3% in both Houses, much

better than when we were. When you did a split in terms of party

allegiance, all right, more Labour, but do you think that that has also

changed? Predominantly, the Asian vote would have voted Labour 20 or

30 years ago, but has it changed? That has changed as well. Labour

are the more Popular Party but the question is, well and Asian become

Prime Minister and I have always said there will be at an Asian

prime minister in my lifetime, but only one in five think that will

happen. The So You are an individual isolated on that point.

Dr Chai Patel, the subject of immigration, particularly none EU

immigrants in business terms and the Government wanting to set curbs,

because they can, has that made it difficult for people on the Indian

sub-continent? Is it detrimental? don't think it has made it

difficult for the Indian sub- continent, but it has made it

difficult generally in business. That mobility has made the EU work,

and I think it is a pity we have gone that way but if I can comment

on the Asian vote, I think it is just that lazy and clumsy to talk

about the Asian voters as it was about that was the woman and the

Basildon man. What you need to look at is the several generations. Some

of my old uncles behave more like Indians and my nephews, who were

born here, they operate like regular breaks. So is it pointless

for political parties trying to tailor votes to the Asian vote?

the question of immigration, I think the Government has made a

serious mistake with the immigration Kapo. The number of

Indian students applying to British universities is plummeting.

Academics at Oxford and Cambridge, 30% are foreign and these

immigration policies are affecting them. Add the curry industry

desperately need chefs and we should set up schools, but in the

meantime, we need to have flexibility and the Government is

being too blunt about this. terms of other Asian Friendly

Policies, Dr Chai Patel, what about plans to restrict the number of

dependents brought into the country. Would that have a negative impact

on the Asian vote? Definitely, given the relevance of family and

the way family works, that is something that would be viewed as

usually negative. Thank you. Just time before we go

to find that the answer to the quiz. The question was what programme

would David Cameron like to bring back for Christmas Day? Chai Patel,

any idea? Spooks. He did. Well done. And anyway, thanks to all of our