16/01/2012 Daily Politics

Afternoon, folks, welcome to the Daily Politics.

All the party leaders say THEY know how to fix capitalism - Nick Clegg

says he want more firms to be run like John Lewis. Well, politicians

- they're always knowingly overselling themselves.

The Government came to power promising to reduce the burden of

regulation and red tape, so what have they done to lighten the load

for business? It is all sound bites, but I don't see any real evidence.

If you look through 2011 and regulations that came in in 2011,

there didn't seem to be any cutting red tape to me.

And what do you give the Queen for her Diamond Jubilee? The Education

Secretary thinks a new yacht might And if you have any ideas of your

own about what that Royal gift should be, please email us at

[email protected] and we'll try to read some of those ideas out

at the end of the programme. And with us for the duration today is

the Chairman of the Federation of Small Businesses, John Walker.

Welcome to the programme. First this morning, the think tank

the Ernst and Young Item Club are saying this morning that the UK may

have already slipped back into recession. And they said that even

if the eurozone resolved its problems, the economy would

probably only grow by 0.2% this year. Speaking from Hong Kong,

where he's promoting British business, the Chancellor, George

Osborne, said he was confident the Government was doing "everything it

can to get Britain through this to weather the storm".

On that claimed by the economic forecaster, do you agree with them,

is Britain already in recession? is too early to say on figures. We

need to listen to what Ernst & Young say. Many of our members

would agree that things are difficult. How long do you think it

will last? It is difficult to give predictions, but what are you

planning for? Members feel it will last for a couple of years. The VAT

caused inflation coming out of the system so hopefully there will be

less inflation caused by that, but I think it will be a year or two

before things settle down. George Osborne is looking east, his

big push today and for the rest of the week. Do you think the over-

reliance on the eurozone is something that needs to be tackled

in terms of exports? Export figures in the autumn were running at high

levels and it helped the GDP figure for the third quarter. But the

reliance on the eurozone is something that exporters need to

look carefully at. Looking for alternative markets that are not

affected by the difficulties in the eurozone can only be to our

advantage. Have what about the prospects for small businesses? If

you think it will last a couple of years, what can they do to plant?

Small businesses rely on certainty of some sort. He there isn't much

of that! Be there certainly isn't at the moment. They are resilient,

they adapt to change in working practices and surroundings. That is

one of the advantages of being a small business, particularly

entrepreneurs and the new ones coming in. They get on with things.

They have concerns about what is going on with regulation, which we

will look at later, but they get on with things. They will have to over

the next year or so. Peter Mandelson once said he was

"intensely relaxed about people getting filthy rich". But the days

of politicians keeping their noses out of executive pay are long gone.

These days, party leaders are falling over themselves to decry

boardroom excess and to promote their remedies to tame the

capitalist beast. David Cameron has been cracking the

whip, saying he wants a "war on crony capitalism". He's hinted that

crony capitalism". He's hinted that there may be new legislation to

give shareholders of big companies a binding vote on executive pay

deals. But Ed Miliband says he's the one who's been leading calls

for a more "responsible capitalism". Labour wants greater transparency

on executive pay, suggesting that companies publish a 'pay ratio'

between the highest paid executive and the company median average.

They also want to repeat the bank bonus tax. Yesterday, Labour and

Conservative top dogs clashed again Conservative top dogs clashed again

over who has been leading the charge. The people at the top

creaming off the big rewards, the vested interests like the energy

companies and train companies ripping people off. People said

that was a bit left wing and out of the mainstream. Now the Prime

Minister and his deputy are falling over themselves to say we also want

to take on crony capitalism. David Cameron was way out on this, when

it Villa band was having a night puts the people like Fred Goodwin.

-- Ed Miliband. David Cameron made speeches at the beginning of his

prime ministership calling for more responsibility. There was a book

arguing for... Michael Gove. While Labour and Conservative have

been slugging it out, enter the stage Nick Clegg. In a speech this

morning, he says he wants to create a more "balanced capitalism". He's

urging more firms to offer shares to their employees - a bit like the

John Lewis chain, which is entirely owned by its staff. And we need

more individuals to have a real stake in their firms, more of a

John Lewis economy, if you like. What many people don't realise

about employee ownership is that it is is usually under used tall in

unlocking growth. I don't value employee ownership because I

believe it is nicer, a pleasant alternative to the rest of the

corporate world. Those are lazy stereotypes. Firms that have

engaged employees, who owned a chunk of their company, are just as

dynamic, just as Xavi as their competitors. In fact, they often

perform better. With us now is the Liberal Democrat

business minister, Ed Davey. Just to take that point at the beginning,

you can buy shares anyway in a publicly listed company, so what is

different? There are some companies that are not listed, the majority

are not listed, so you can't buy shares in them. You are saying that

is what you would like to do. one of the things we want to look

at. And we are focused on the tax advantage share schemes and we want

Danny Alexander to look at those tax incentives to see whether they

can be sharpened and whether we can give a boost to ownership because

it is not only fairer for employees, but good for the economy and those

firms. Publicly listed companies are small percentage so you want to

broaden it out. Are you saying you would kick out current shareholders

or would you make it compulsory part of the package? We want to do

a major bit of work on this, we have put some ideas forward. Nick

talked about looking at the idea of a right to request from employees

asking whether or not their firm would provide some sort of employee

share scheme. But let's be clear, a right to request is a right to

request, not a right to have. These are the things we want to look at.

We want to also engaged the professionals and the business

advisers because one of the issues we have already noticed is the lack

of awareness in many sectors of the economy. This is such a good model

for corporate performance. might argue that people haven't got

much spare cash about to buy shares or invest in the companies they

work for. Is this a good time for this? Absolutely. The thing about

responsible capitalism, or whether it is reforming the banks or with

employee share ownership, it is good for growth. It is good for

productivity. The government needs to look across the piece and find

all of those areas, short-term and long-term... What evidence have you

got? The number of companies that commonly do this is very, very

small so they may be good in terms of productivity, but you don't know

how will it be if it was rolled out. He a massive amount of work has

been done looking at this. It shows that employee ownership can be very

beneficial in improving productivity, reducing staff

absenteeism, reducing staff turnover, improved performers over

the economic cycle. The evidence is pretty strong. One of the key

things I want to look at what I'm doing the work is the conditions

where employee shares were at the best. For example, one of the bits

of evidence is that you have to link it to employee involvement and

participation as well. There's a lot of work to be done, but the

evidence is very strong. This is good for the economy. It might be

good for the economy, what about the individual? Is their risk that

if you start asking employees to invest their savings in a company,

there's a big risk that if things go wrong, not only could summer

lose their job, they could also lose their savings. One has to look

at those risks and you have to be proportionate about the amount of

one's savings that are in this area. But the evidence is that over time,

companies tend to do pretty well and if you have invested in

employee share-ownership schemes in recent years you have got a much

better return. What about the Royal Bank of Scotland? The government

owns a large proportion, why not start there? We have been looking

at how could those banks should be returned to private ownership and

whether that could be more widely. Their rights issues there. This

isn't just about ownership, it is about wider capitalism. Would you

like to see that with RBS? Absolutely. Are you disappointed by

Northern Rock? No one is trying to say that employee share ownership

is a panacea for everything. That is not the argument. Our argument

is that the evidence in the UK and abroad is that this can be very,

very good for corporate performance. Surely it is incumbent on the

government to look at that and given that it can give a fairer

deal for employees, it should be worthwhile. I would point out that

has the Royal Mail minister, I have legislation through Parliament to

privatise the Royal Mail in due course and that will see the

largest ever employee share scheme for a major privatisation. We're

not just talking about this, we are taking action. Would you have liked

to have seen that for Northern Rock? Do you have just set out

Bigham evidence for doing that. have to take every issue on its

merits. A lot will depend... I am looking at turning the Post Office

into a neutral over the next few years, but I know that can't happen

until we have sorted out the finances. You can't expect people

to invest in things if they are not really good. But I believe the

evidence is very strong behind the policy. You have heard the case

about Northern Rock. Is this right for every business? I think it is

good to encourage employee involvement. It might be easier to

do with larger businesses with publicly quoted shares. And also

partnerships, which don't have shares. Anything that has a right

to request automatically rings a regulatory bell for me. Then it

involves, why can't I have it? The right to we Crest needs an answer

and we would have concerns. We would want to see the details.

will come on to regulation, but that is a point. You will be in

toilet -- involving companies are more red tape. When you see our

proposals, we will satisfied John's concerns. The evidence is that this

is good not just in large firms, but in small firms. Is there Makfi

appetite, is it practical? We will have to see the details, but we

would encourage employee involvement. A lot of small

business people involve their employees in significant decisions

already. In terms of having stakes in the company? Could it be rolled

out on a large scale? Yes, it is a new concept for very small firms to

have that. Although as I said, with partnerships in might be somewhat

difficult. A what is your ambition? Do you have figures about how much

you do want to take this on? only just started work! We are in a

hurry! We are very ambitious. But because there may be some concerns,

we may well look at exemption for micros because we don't want to tie

up small companies in red tape. One of the key reasons to do this is to

raise awareness. We will talk about red tape.

So while everyone's now talking about regulating capitalism, you

might forget that a little while ago, DEregulating things was all

the rage. When David Cameron came to power, he said he wanted the

burden of red tape on business to be lower at the end of his term of

office than it was at the beginning. So are entrepreneurs feeling a

lightening of the load? Adam has De you hate being overburdened?

Especially by pesky red tape. will want to change some of it.

That is how Joe feels running her printing business in London.

find yourself spending a lot of time trying to keep up to date.

That costs money. It costs money because we have to pay lawyers and

you have to employ it experts like HR consultancy. You then find a lot

of time is spent worrying about whether you will stay within the

law and order of this time you're spending doing that, you're not

doing your job. The business department is trying to lighten her

load with a raft of policies. First of all, there's the red tape

challenge were members of the public can go on a website to

recommend rules they think should be got rid of. Then there's the one

income of one of rule, had so government departments, if they

want to bring a regulation in, have to throw out a nod one. Last year

there were 19 ins. It has saved businesses and estimated �3.2

billion a year. Some think there's something fishy going on. Even

though the idea behind it is a good one, we have been critical of the

operation to date. Ministers have claimed certain pension savings

which have... If you use that to bring in new regulations. A further

complication is the politics of coalition. Vince Cable has launched

a consultation over there -- relaxing the rules for hiring and

firing workers. But some Tories wanted to be much tougher. In the

boardroom, it has left Joe feeling It sounds great, but there is no

real evidence. If you look at 2011, they did not seem to be a cut in

red tape. By a art of this is a permanent problem - everyone is

against permanent regulation that is too heavy until something goes

wrong. The City, anyone? Business minister Ed Davey is still

with us, as is John Walker of the Federation of Small Businesses. And

we are joined by the shadow Business Minister Toby Perkins. Ed

Davey, the verdict from business is that you have not delivered on that

the regulation. I think we are delivering. We have already

delivered in the past 18 months. We are changing the system that we

inherited. Labour past six new regulations every day, if you take

their whole term in office. What we are doing through the one in, one

out process is putting a steely discipline into process. We are not

only looking at the flow of regulations, we are also looking at

the stock of regulations that we have inherited. Beyond that, we are

going to Brussels as well. The European credit Council have

already negotiated the first exemption for small businesses from

a European harmonised directive. So we are making progress. Her but

actually, Adam says 40% of your scope is taken away from the

Government in terms of the EU directives. You cannot do anything

about it. That is a whole area of regulation that you cannot scrap.

can prove he is wrong. Not only have we achieved one already, which

will save small and medium-sized businesses between �150 million and

�300 million a year. We have also got the commission to agree this

year that future regulations will not apply to micro businesses.

There are also 19 regulations that have been brought in. It is a

significant number. A rise in the minimum wage to �6.80. Rules to

force bosses to pay for the pension for their workers. Temporary

workers are entitled to the same rights as others. There will be new

regulations. But these are quite onerous. The rhetoric does not

always match the reality. That is what the business people in that

film were saying. What is the impact? There has certainly been

progress made with what is being said. Some of the ones that have

been introduced were Brussels directives, as you pointed out. But

there will be future change in the government. There are always going

to GB disappointments as public policy overtakes the need to

respond to business. But we still have to see some of the work.

do you accept the claim that there was over-regulation during Labour's

time? We need to remember that at the end of the previous government,

the World Bank said Britain was the easiest place in Europe to do

business. We need the government to stop talking Britain down as a

place to do business. Entrepreneurs always want less regulation. I ran

my own business for five years prior to get in into government.

You do not go into a business to do regulations. Entrepreneurs always

want less. But the businesses have had 13 years of the Conservatives

are saying we are over-regulated. So we need either serious action by

will make it easier for business, or stop talking Britain down.

Ed Davey has given examples where they are making it easier. So

surely you would support that? there are concrete steps that will

make it easier. What would you like to see? We need to see what the

Government are coming up with. You heard from business people that

their experience is not getting easier. The one min, one out, is

largely a gimmick. That is not just what Labour are saying, that is the

experience of the people we interviewed in that film. Why are

they not feeling it on the ground? It takes time for some of these

things to follow through. For example, we have been looking at

increasing the period for which you can claim for unfair dismissal from

one year to two years. It was opposed by Labour, but has been

welcomed by the FSB. On Friday, Toby was asked -- asking me to

regulate the pub industry. You cannot have it both ways. But the

business people in that film said hiring and firing is the most

difficult thing. They would like lighter regulation. Why don't you

support that? We think the government should do more to make

it easier to hire people. In terms of the tribunal issue, there are

steps that can be taken. The government are on the right lines

in terms of making it easier to communicate with employees. But

only 10% of tribunal cases are about unfair dismissal. We do not

support the idea that you just make it easier to get rid of people

without any opportunity for appeal. When I ran a business, sometimes

you do have to performance manage somebody out of the business. But

the government should do more to grow the economy and bring

confidence in. Going back to Ed Davey on that issue, the proposals

were controversial. You have watered them down as Liberal

Democrats. Those proposals have not been published. Having seen them,

the majority of them are being implemented. There were in fact

implemented before the report was written. There are parts of it that

a controversial, but the majority were implemented. For example,

extending the period before which the auto and Romans for pensions

affects smaller businesses. That will be welcomed by the FSB. So

this agenda, we have not only delivered on, but we have changed

the process so that over the next few years, we will really turn the

tide. I accept that it takes time to turn around something like red

tape both that we inherited from Labour and that we have got at

Brussels. The most fundamental thing with employment law is that

businesses want to treat their employees fairly and have some

balance. It is the continual changes in regulation which have

been the problem. Can we have a period of time when there are not

any changes? That is the general criticism of government, the

chopping and changing of government. I accept that. That is why the one

min, one out discipline is reducing the flow of regulation. But because

some of the past regulation is bad, we have to simplify it.

She is one of the world's wealthiest women and is believed to

have an estimated personal fortune of �300 million. So what present EU

by the Queen to celebrate the diamond jubilee? Michael Gove

thinks he has got the answer. He has suggested that taxpayers stump

up at least �60 million to buy the Queen a new yacht. But if the

nation's finances will not stretch to a gin palace, the Education

Secretary could draw some inspiration from gifts given to the

royals over the years. Animals are a good option. In 7064, George III

received a cheetah, while his son, George IV, was given a giraffe. But

if you prefer something more practical, the Queen has received

500 cases of tinned pineapple and seven kilograms of prawns. And

Prince Charles and Princess Diana were given a ton of peat from

Somerset as a wedding present. Kate Williams, a royal historian, is

here. What do you think of the idea of a yacht? It is a pretty

outrageous suggestion. Downing Street have said it is not

appropriate. We are in austerity measures. The whole point about the

diamond jubilee is that it is a bit make-do-and-mend, polishing up the

crown with our toothbrush. We will get the barge and put a bit of

extra bling on it. The idea that the Queen gets and �80 million

yacht is ridiculous. What would she think? I think she would be pretty

surprised. She is also feeling the pinch. She has said she cannot keep

up her palaces. So can you keep up a royal yacht as well? Apparently,

the Royal Britannia takes 250 boxes of polished over three months. Who

can afford that? Not on my yacht. What are some of the most bizarre

gifts that have been given to the royals? They get all kinds of

bizarre gifts. As you were saying, when the Queen was married, she

received a cinema from the Earl and Countess of Manhattan. People send

stuff to the Queen. This and milk bottles, bits of cake, biscuits.

They think she looks hungry. they eat it, do you think? Maybe

the Queen is partial to fruitcake. I am sure she would prefer a bit of

chocolate sponge. What would you give her? I think the Queen would

be partial to a box of chocolates and to put her feet up. She is

having an exhausting year, with the Coronation and the Olympics. She

might like to sit with a cross word in front of the fire. What would

your suggestion be, from the Federation of Small Businesses?

think the proposal to do a new royal yacht in the current climate

is not particularly wise. If it were to happen, I am sure many of

our members would be delighted to provide the procured services for

it. Hopefully, it would be built in a British shipyard. Some of these

things can go abroad. But the Queen has a reputation for being fairly

frugal, so I would be surprised if she accepted a gift of that nature.

We have had a couple of suggestions from viewers. Everyone does not

think it is a terrible idea. Carr says, you do not buy gifts for

those who have everything. Ian says, not only would this be something

the nation could have pride in, but it would provide thousands of jobs

at a time of unemployment. And another viewer says, the only gift

fit for a queen is part of the public's 83% stake in RBS, as we

are not getting anything out of it. Historically, the Queen prefers

cheap presents. At Christmas, when you are invited to Sandringham,

remember novelty presence. Whoopee cushions, no expensive presents.

That was where Princess Diana fell foul. She brought cashmere jumpers,

and it was a mistake. We should club together and by the Queen a

nice, big whoopee cushion. cashmere jumpers from us. That is

all for today. Thank you to our guests. I will be back at 12