05/07/2012 Daily Politics


05/07/2012

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LineFromTo

Morning, folks. Welcome to the Daily Politics.

:00:44.:00:48.

A new dawn for a modern fighting force, or a cut too far? The

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Defence Secretary outlines plans to cut the army by a fifth, to 82,000

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troops, by 2020, and increase the number of reservists.

:00:56.:01:00.

MPs debate the shape and scope of a new inquiry into banking. Ed

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Miliband is still pushing for a judge to run the show, but looks

:01:04.:01:08.

likely to lose the Commons vote. So, will Labour play ball, and join a

:01:08.:01:11.

parliamentary inquiry instead? Remember the prawn cocktail

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offensive? We'll debate which party's best for business, with a

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big cheese in the world of PR, and the head honcho of Pimlico Plumbers.

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And how to solve the eurozone crisis. We'll be joined by Next

:01:27.:01:30.

chief executive, Lord Wolfson. He's just awarded a big prize for the

:01:30.:01:40.
:01:40.:01:42.

best answer. No, it's not a Daily All that in the next half hour. And

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with us for the whole programme today is the businessman and PR man

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Roland Rudd, who also chairs Business for New Europe, a pro-

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Europe lobbying group. Welcome to the Daily Politics.

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So, Bob Diamond's evidence to the Treasury Select Committee yesterday

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has been described by some MPs on the committee as "implausible", and

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has left many questions unanswered about the Barclays rate fixing

:02:00.:02:10.
:02:10.:02:10.

scandal. Did he really not know about it until this month? Today,

:02:10.:02:13.

Westminster's attention shifts to what form an inquiry into all this

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should take. The government wants a parliamentary committee to report

:02:17.:02:21.

by Christmas, Labour is arguing for a judge-led inquiry that would have

:02:21.:02:24.

a wider remit. The decision will be voted on in the Commons this

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afternoon. Let's get the latest from our political correspondent,

:02:30.:02:40.
:02:40.:02:43.

Ross Hawkins. What his neighbours think? There will move the vote, I

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think. What then happens, will they fall in behind the government or

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will there resist? Ruabon, you would have to find that out when it

:02:54.:02:59.

happens. There are plenty people around here wondering whether they

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went push it to recruit. Enabler, this is bizarre. You would have

:03:04.:03:14.
:03:14.:03:17.

thought competing MPs would be discussing how to beat the bankers.

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At the heart of his politically is that fantastic on England battle

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between the trots lower at the Shadow Chancellor. Government

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people are saying, Ed Balls may have been Children's Minister but

:03:29.:03:34.

he was running a shadow treasury operation and has questions to

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answer. Labour is saying, if you listen to what Bob Diamond said, he

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wasn't talking about ministers try to fiddle LIBOR, beacons and was

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that it looked weak, and the worry was that somebody would try to

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privatise it. MPs are suggesting maybe George Osborne should have

:03:57.:04:02.

played a long again. One has said he endures and played his hand. And

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what we heard from Bob Diamond didn't so that's it what we saw in

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the memo from Barclays. You'd do no city in lot, with big

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business. Is there apprehension that they will be constantly

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inquired into. There, we have to stand back from what happened,

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which of course was appalling and wrong, and Bob Diamond made that

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very clear. 2 million people working the financial-services in

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the UK. Last year, but bankers made up �60 billion of and, of the NHS

:04:43.:04:49.

budget. If we constantly attacked the financial have since,

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politicians from all political parties, we have to be careful. It

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will damage London. There's something gone wrong. If you

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invested �1 in Barclays into the air and fire, as a shareholder,

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what would it be worth today? would be worth significantly less.

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29p. You would have lost some did cent of your investment. Stints

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different and far when Bob Diamond joined the board, how much as the

:05:23.:05:33.
:05:33.:05:42.

trout that? 1 harder than -- how much has he trousered? Pay has gone

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wrong, not just in the banks. It is an issue, investors have woken up

:05:49.:05:54.

to it and are much tougher. I agree. It is slightly unfair to stay Bob

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Diamond has presided over this collapse in bunny. He ensured

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Barclays was not bail that by the government. You have to give him

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:06:13.:06:14.

some credit. Now it's time for our quiz. Last

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year, the chief executive of Next, Simon Wolfson, offered a quarter of

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a million pounds prize in a competition to find the best

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solution for dealing with a collapse of the eurozone. The

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question for today is this: Who won? Was it: a) George Osborne. B)

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Former Prime Minister Tony Blair. C) Roger Bootle from Capital

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Economics. Or d) an 11-year-old Dutch schoolboy. At the end of the

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show Simon Wolfson himself will give us the correct answer.

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In about 30 minutes, the Defence Secretary Philip Hammond will

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announce the details of his review of the size and scope of the

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British Army. At the time of the Strategic Defence Review, the

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government said they wanted to make the Army smaller. This report will

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tell us what the new Army will look like. So what can we expect to

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hear? In 2010, the Army's strength was

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about 102,000 troops. The government wants to get that number

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down to 82,000 by 2020. No regiments will be axed entirely, as

:07:08.:07:13.

this was deemed too politically risky. But battalions are expected

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to go. Out of 36 infantry battalions, five are expected to be

:07:17.:07:22.

disbanded. Four armoured units will be merged into two. And support

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elements, such as the Signals and Engineers will be reduced by around

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30%. The government has insisted on regional balance, so some full-

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strength English units with a strong recruiting record will go,

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but others in Scotland that have struggled with recruitment, will

:07:38.:07:47.
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survive. To compensate, the Army will become more reliant on the

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Territorial Army, with the number of deployable reservists expected

:07:52.:08:02.
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to double to 30,000. To find out what this will all mean, we're

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joined now by the former Chief of the General Staff Lord Dannatt. And

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by the Shadow Armed Forces Minister, the Labour MP Kevan Jones.

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It seems there's from politics in his, a Scottish regiment where the

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cuts will not fall as badly. BBC Scotland is reporting they have

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been saved. The new Chief of General Staff has had a difficult

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task. The Army was one event to present years ago, but has now got

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to come the to 82,000, a huge management of. A lot of factors

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have had to come into play. If Scotland than they have been said,

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that is the relatively narrow point of view. Five regular but Hudson --

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battalions there, go and demanded four. But this one will be reduced

:09:11.:09:17.

to make company. That means that the name has been stayed. But it is

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unfair to say and Scotland is playing it up, that Scotland has

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:09:32.:09:33.

been treated lightly. It is a reasonable proportion. At the time

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we are doing these cuts to the regular army, we're meant to be put

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in more money into the was there, but there isn't just an issue of

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quantity, this will require a step change in the quality of the

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reservists. Most certainly, and there's a lot of risk. There's one

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thing to take it will be reduced to a 2000, the Army. And anything we

:10:00.:10:06.

would have 30,000 reservists. That will only happen if sufficient

:10:06.:10:10.

resources are made available, training days, opportunities, and

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overseas expires this. Prisoners as alarming people to free up time.

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mobilise reservists, it is a year. The Americans have already gone

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done this road, American is of better-trained, a lot more in Iraq

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and the piston. The Americans have the national guard, part of the

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fabric of the nation. And they have risen. There are National Hunt

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trainer -- in their national culture, it is considered a

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patriotic duty to release your employees. It is amiss, the

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government will have to manage that this very carefully. If

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circumstances in future on not as benign and, they may have to

:11:07.:11:17.
:11:17.:11:25.

Rover's decisions. -- reverse. I think everybody is agreed no

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matter who was in power, there would be cut. But, where you stand

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on what the government intends to do with the Army? The problem we

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have got here, we have the green paper of, this has been a Treasury

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layered with you. The review said the Army should be reduced, we

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would be able to deploy one large and too much grows more operations

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but it has been cut further. The question is whether there's

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assumptions can still be met. The reason they are being done so

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quickly in his eighties the 8% cuts in the defence budget. We were

:12:07.:12:11.

planning to have the defence review and then make changes over appeared

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of five years. Why don't think in the current economic and its if you

:12:17.:12:24.

run power you wouldn't be having it Treasury-led review. We produced in

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green paper. It was part of the process, we were committed to the

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defence review. Are was part of looking for savings in the

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department. They would have been done over a period of time. The

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problem here, there's a huge risk in terms of the business. There is

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an important issue. Been 1998 defence review was a good review,

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we were relatively in balance and actually, and there was time to

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look at these issues. The 2010 review was a gates it, in this age

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of austerity, there wasn't the money. The �38 billion black hole

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was inherited, another 10% cut which had to be found.

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government can't explain it, the problem is the government has

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:13:39.:13:40.

hidden behind that. I am sorry, this is nonsense. Every procurement

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programme you funded... Wait a minute. On one answer the question,

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they have run Beckett been in Parliament, and not justified it.

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They need to do that. A simple question, on using every

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procurement programme Labour had signed off before it lost was

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funded? It was a have a 10 years. The report said the only way you

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would get near a dyche billion pounds if you added a flat budget.

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Was in the programme funded? Thing ever of in victims of... Look at

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:14:30.:14:31.

the National Audit Office report. One thing this government said was

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it would have a defence review once in every parliament. The next

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preliminary process has begun. We really do need to get a national

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debate going about what the character and future of complex...

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We did not really have that debate. When you have identified the issues,

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:15:02.:15:02.

you can properly apply resources. have endured a terribly tough time.

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They have had the slicing of their budget in previous years. We need

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to have a political consensus saying we cannot shrink the size of

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the Army anymore. All this talk about wars after Libya are all

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going to be fought from the air, we do not need boots on the ground, is

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absolutely wrong. We will have to leave it there. We have not had the

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statement of the Defence Secretary yet. That will be happening in

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about half an hour. Which political party do businesses most trust to

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deliver for them? Once upon a time, it was easy. The Conservatives were

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the bosses' party. Today, as Giles has been finding out, the world is

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much more complicated. Politicians in this 21st Century world wide web

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of business like meeting the guys. And girls. It is no longer a matter

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of pandering to pinstripes but without business believing. You

:16:04.:16:07.

have the answers to creating a world that lets them flourish. You

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won't win. In the past, the politics was simple. Labour backed

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workers and unions, Tories backed business and bosses. It was just

:16:15.:16:23.

the way things were. Business principles up in the DNA of the

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Conservative Party. It stands for free enterprise, individual

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incentives, rewards and business confidence. To Mrs Thatcher's

:16:32.:16:36.

Conservatives in the 1980s. Privatise, deregulate and light the

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blue touch paper of rocketing business growth was the answer to a

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decade of economic stagnation. For Tony Blair, New Labour's prawn

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cocktail offensive was winning the confidence of business, central to

:16:45.:16:55.

making them electable, and staying electable. For 30 years, but

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coherent business message has been lowered the top rate of tax, lower

:17:01.:17:04.

corporation tax, free up labour markets, light the blue touch paper

:17:04.:17:09.

and all will be well. The Conservative Party were better at

:17:09.:17:18.

that narrative. In 2012, that story is not right and it does not work.

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Both parties are wrestling for a new narrative. Labour's attempt at

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that message is to define the ethical goal of entrepreneurism.

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Let me tell you what the 21st century choice is. I look on the

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side of the wealth creators of the asset strippers? -- are you on the

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side? Producers trained, invest, invent and sell - things Britain

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does brilliantly but not enough. They are interested in the fast

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buck. The Conservatives say their entire game plan for the future is

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neither predator nor producer but predicated on the private sector.

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You only have to listen to the rhetoric of this government, to

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what we're trying to say about how we will lead to this recovery. It

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is all about private sector led to a recovery. It is about new

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businesses, enterprise. And to demonstrate the world has changed,

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it is worth reminding ourselves today's Business Secretary is a

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:18:26.:18:35.

Liberal Democrat. Giles Dilnot reporting. And we've been joined by

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Charlie Mullins, managing director of Pimlico Plumbers. Who do you

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trust more to look after the interests of your business? I trust

:18:45.:18:49.

the Tories Roberttown not sure who we can trust these days. Certainly

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the Tories. -- but I am not sure. Maybe 20 years ago you would have

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been more enthusiastic. Life is tough but there is such a lot going

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on at the moment there is a lot of uncertainty. For me, I am confident

:19:08.:19:14.

with the Tories. Mrs Thatcher used to understand small business. Her

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father used to earn at the grocer's shop. We started in 1979, the same

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time that Margaret Thatcher became Prime Minister. She gave me and

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lots of other people inspiration to hope we could succeed in business.

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Who would have been an inspiration in this Cabinet David Cameron,

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George Osborne. I'm -- I think we are drinking from the same teapot.

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The situation when Labour was there, we had no contact at all. It was

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not acknowledging us. I have had Theresa May, Boris Johnson, George

:19:56.:20:01.

Osborne. I had been to see David Cameron at Number 10. They are

:20:01.:20:07.

prepared to listen to us. Labour went out of its way to court

:20:07.:20:12.

the vote of business. They wanted it to be part of the New Labour

:20:12.:20:17.

project. We cannot yet say that of Mr Ed Miliband -- Ed Miliband, can

:20:17.:20:23.

we? I think he agrees with the premise of Tony Blair. That is that

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Labour need some business support to get elected. Tony Blair did it

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incredibly well in his three elections. He always had business

:20:34.:20:40.

people endorsing him. The last Labour administration, it was

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conspicuous by their absence. Everyone thought Peter Mandelson

:20:44.:20:49.

did a great job as Business Secretary but it did not translate

:20:49.:20:54.

into endorsements. That is the problem. You helped open doors in

:20:54.:21:00.

the 1990s before and after power. You help to bring about this affair

:21:00.:21:06.

between New Labour and business. Who is doing that now? Actually, I

:21:06.:21:11.

think Chuka Umunna is very good and is doing it. What the Government

:21:11.:21:17.

needs to do is, there is no obvious person who it is the cheerleader

:21:17.:21:22.

for business from the coalition. Business people always said the two

:21:23.:21:26.

great people in that department where Peter Mandelson and Michael

:21:26.:21:30.

Heseltine. Both believed in business and went out of their way.

:21:30.:21:36.

There is no such person today. It is lacking and we need one. What

:21:36.:21:41.

Labour did before and what they are doing now, they spend a lot of time

:21:41.:21:46.

schmoozing the boardrooms of the city and the FT-SE 100 companies.

:21:46.:21:51.

They do not spend so much time dealing with companies like this.

:21:51.:21:57.

That may be true. It is a missed opportunity. We have a situation

:21:57.:22:01.

where I believe the Tories are working with small businesses. They

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have lowered the business tax rates and of cutting the red tape. They

:22:05.:22:11.

are helping get apprentices up and running again. Have you seen an

:22:11.:22:15.

improvement in the quality and number of apprentices question but

:22:15.:22:20.

you must depend on that. I worked with The Prince's Trust, getting

:22:20.:22:25.

youngsters into work. I believe The Apprentice scheme is working.

:22:25.:22:34.

you seen a cut in red tape? Have you seen any red tape really?

:22:34.:22:41.

believe they will cut some of the red tape for employing people.

:22:41.:22:46.

have not yet? I believe their wealth. With Labour, they made

:22:46.:22:52.

themselves busy in business and probably too busy - leaving it to

:22:52.:22:58.

Gordon Brown but the bankers. them why Labour is the party of

:22:58.:23:03.

business. A self-made man, runs a great business, employers lots of

:23:03.:23:08.

people. 200 apprentices, proper skills. If Labour wants to come

:23:08.:23:15.

back to power, he has to win over Pimlico Plumbers. He is doing a

:23:15.:23:21.

good job -- Chuka Umunna is doing a good job in talking to business

:23:21.:23:27.

leaders. You have got your work cut out! Have you hired anybody extra

:23:27.:23:33.

since the top tax rate was cut? course we have. The other man has

:23:33.:23:38.

to come back and pay me my bet. You know, been used since we had before.

:23:39.:23:47.

I will give you a court if I have a dripping tap! -- a call. Now

:23:47.:23:50.

earlier in the programme we set you a little quiz. Last year, the chief

:23:50.:23:53.

executive of Next, Simon Wolfson, offered a quarter of a million

:23:53.:23:56.

pounds prize in a competition to find the best solution for dealing

:23:56.:24:06.
:24:06.:24:15.

with a collapse of the eurozone. Well, Simon Wolfson, joins us now.

:24:15.:24:25.

So who won? Roger Bootle. economist won. Did you get any

:24:25.:24:31.

entries from politicians? We did get an entry from a politician but

:24:31.:24:36.

it is anonymous, so other much telly it was. Did Alastair Darling

:24:36.:24:40.

attempt? I am not even going to narrow it down. You did not get

:24:40.:24:47.

mine? We did. We put it straight into the bin. The winning entries

:24:47.:24:52.

suggested the net overall effect of one or more countries leaving the

:24:52.:24:58.

eurozone would be positive. Do you agree with that? In the long run,

:24:58.:25:03.

yes. Short-term pain and then long- term recovery. That is the story of

:25:03.:25:08.

the destruction of any structure that contains the market. At the

:25:08.:25:13.

moment, you have overvalued currencies in the South,

:25:13.:25:17.

undervalued currencies in the north. Break that structure and there will

:25:17.:25:22.

be overvalued debt which needs to be written down. Long term, the

:25:22.:25:28.

prize is this. A 20% unemployment in Spain, 15 in Ireland and

:25:28.:25:32.

Portugal. Those people need jobs. Without devaluation, they will not

:25:32.:25:37.

get them. Are you talking about a number of countries leaving the

:25:37.:25:43.

eurozone? Ultimately one hopes it can all muddle through and sort

:25:43.:25:47.

itself out. It looks increasingly unlikely. The trouble with all the

:25:47.:25:52.

rescue packages is all they're doing is refinancing debt. They are

:25:52.:25:56.

not addressing the issue of employment and growth in southern

:25:56.:26:01.

European countries. The choice Europe seems to face at the moment,

:26:01.:26:06.

for a country like Greece, stay in the euro and have austerity for as

:26:06.:26:11.

far as the eye can seek or take the pain - probably worse than

:26:11.:26:15.

posterity to begin with - by devaluation of leaving the eurozone

:26:15.:26:22.

but begin to start climbing up again. -- austerity. 80% of Greeks

:26:22.:26:27.

are in favour of remaining within the euro. That is because there is

:26:27.:26:36.

no such thing as an orderly exit. Simon talked about the short-term

:26:36.:26:40.

gain -- pain for the long-term gain. That would be horrific. It would

:26:40.:26:45.

lead to a situation far worse than we have now. With devaluation, you

:26:45.:26:52.

get a fillip from dead. After the war, there were DM16 to the pound.

:26:52.:26:58.

-- from it. Were we eight times better off than the Germans?

:26:58.:27:03.

problem is, in the absence of the devaluation, have to countries

:27:03.:27:07.

where inflation is running miles ahead of gross, how do they get out

:27:07.:27:14.

of it? It is the same with the company or an individual. -- ahead

:27:14.:27:19.

of growth. You have to say at some point, we will write off the debt

:27:19.:27:25.

and start again. The country that most successfully grew out of the

:27:25.:27:29.

Depression was Great Britain and that is because they took the

:27:29.:27:35.

decision to devalue. That led immediately to growth. We have

:27:35.:27:39.

devalued constantly over a series of decades and I do not think we

:27:39.:27:44.

are richer for it. Is it a good idea for countries to run inflation

:27:44.:27:49.

constantly ahead of interest rates and the answer is, note. Where

:27:49.:27:54.

there is a clear distortion in the market, should a one-off action be

:27:54.:28:03.

taken? -- no. The Greeks do not want austerity either. Let me ask

:28:03.:28:07.

you this. A quarter of a million pounds is a lot of money. Do you

:28:07.:28:14.

get value for money? I could not have hoped for better. We got very

:28:14.:28:19.

high-quality entries was a two runner can -- runners up were

:28:19.:28:29.
:28:29.:28:30.

fantastic papers. Thank you for coming on and explaining that.

:28:30.:28:39.

Thanks to Rolo and as well. I will be back tonight at 11:35pm. --

:28:39.:28:44.

Rowland. We will have Michael Portillo, Alastair Campbell and

:28:44.:28:50.

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