30/10/2012 Newsnight

It was bad, but it wasn't as bad as many had feared. The tropical storm

that hit the American east coast was ferocious, electricity stations

exploded, houses burned to the ground, tunnels flooded. But in the

end, for all the pain, New York could take it. How will history

measure the impact of the great storm of 2012.

REPORTER: How long do you think it will take to get life back to

normal? Life back to normal, a long time. Right across the street you

can see the whole of Hoboken, flooded, cars floating, still.

will hear from the man who was Mayor of Norl lones during

Hurricane Katrina. Here at home, has the great promise of capitalism,

that we could all look forward to rising standards of living ended.

We are told today many more of us will be worse off in ten years time

than we were ten years ago. We will discuss with, among others, the

boss of British Gas, and the Conservative minister they say has

two brains. Thus far, over 30 people have been

killed by the storm which hit the east coast of the US last night. It

had already killed twice that number in the Caribbean. But they

didn't die on television. The storm's effects on the city that

never sleeps was pretty stunning, it close the Stock Exchange and

theatres and interrupted the election campaign. It has been a

stark reminder for a country built on the belief in the possible, that

there are limits. We go and join Mark Urban in Manhattan.

Whereabouts, precisely, Mark? We're on 30th and 1st A&E about a

third of the way, down Manhattan island, or two thirds, whichever

way you look at it. You can see a few Bocas behind me, up town,

everything down town has no power, we have power up town. What you can

see if you go down there, is great modern city deprived of its life

force, electricity. People are out on the streets, talking, they can't

cook, they can't do anything in their flats. They are in groups in

the dark trying to make sense. In some places restaurants are using

candles and storm lat terns to carry on as normal -- lant terns to

carry on as normal. Homeless people in terrible straits. While the

water has receded from the streets, the thing about that part of

Manhattan, the built up, Wall Street area, so many buildings go

two or three floors underground, those floors are flooded. We saw

pumps working to try to clear them of water. In one building thereof

20 feet of water still down -- there was 20 feet of water still

down there. That could be a long haul. It is a new reality the city

is waking up to, and we witnessed earlier across the river today.

Welcome to Hobo ke, n, a poor city on the New Jersey side of the

Hudson. Play like this felt the worst of it. By the time we got

there, the water had already fall bin four feet. On the heights above,

power lines had been brought down across this street. Bringing life

to a halt. Nobody was ready for this, this

never happened before it was devastating. I have a house down

the jersey shore, it is under water they tell me. In this deluge, the

poorest have been hit hardest. We found the emergency services saving

a homeless man. Looking like a biblical character, escaping a

biblical torrent, he had waited it out on some high ground until

rescue arrived. Nature's irresistable force, in New York,

met an immovable object, America's greatest city. That city is now

working hard to restore normality. The damage we suffered across the

city is clearly extensive, and it will not be repaired overnight. The

two biggest challenges facing our city going forward are getting our

mass transit system up and running, and restoring power. I think it is

fair to say that you should expect, given the extent of the damage,

power may be out in lot of places for two or three days, and maybe

even a little bit longer than that. I don't know what's going on, what

the hell is this? Last night, the had Hurricane hit New York.

Shorting out power supplies in spectacular fashion. In places, the

subway flooded, and one of the city's hospitals, bereft of

electricity, had to evacuate hundreds of patients. Around 9.00pm,

we lost our power, unfortunately the hospital's back-up generators

also failed. They had to evacuate, about 215 patients from the

hospital in the middle of the night. People were like, if can you help

evacuate patients from the hospital, then come out. But we heard that

patients were being carried down the stairs, because the elevators

weren't working. In many states, not least Washington DC, the damage

was minimal. The President's decision to suspend campaigning, in

order to take charge of the situation, appeared entirely

justified. I was on the phone for the third time yesterday, last

night, with the President of the United States. He called me at

midnight last night, to check in on how things were going. He was

seeing reports about how bad things were in New Jersey. The co-

operation from the President of the United States has been outstanding,

he deserves great credit. Has the President used the situation as the

city struggles to get back on its feet to his political advantage. It

certainly looks that way. He's remaining in charge of the relief

efforts, eschewing the campaign, while his rival, Mitt Romney, has

indicated he will resume his campaigning activities tomorrow.

But this could still turn bad for the President. If people go days

without power, and cities do not get moving again, it could turn

into a toxic blame game. Something Mr Obama seems to understand all

too well. My instructions to the federal

agency has been, do not figure out why we can't do something, I want

you to figure out how we do something. I want you to cut

through red tape, bureaucracy, there is no excuse for inaction at

this point. I want every agency to lean forward, and to make sure that

we are getting the resources where they need to be, as quickly as

possible. This crisis hardly matches up to 9/11, but New York is,

once again, at the centre of a national drama. And the proximity

of election day, only emphasises, more strongly, what's at stake.

Let's just catch up now with Mark in New York. The bigger picture,

Mark, politically? Well, the fact that the election is less than a

week away is colouring everything. So the President, for example, says

that he is still not returning to the campaign trail, officially, in

order to co-ordinate the relief efforts, yet we hear he's coming to

New Jersey tomorrow, to go on fact- finding mission. Of course,

exercising control, looking in charge, he will also be meeting

governor Christie, who we heard from in the piece. There's a

Republican, who seems to be giving him fulsome public support in this

crisis. The politics of that too complex, but it would seem, that he

doesn't want Governor Romney to win, he wants to position himself for a

bid for the presidency next time round. Politic suffuse all of this.

Mitt Romney, in order to try to look relevant, is going back on the

campaign trial tomorrow. The difficult thing for him, of course,

will be to appear to be doing something responsible and serious,

while the President is managing this crisis. One man who knows

about natural disasters is Ray Negan the Mayor of New Orleans

during the Hurricane Katrina. He joins us from Dallas. What has had

been like watching this storm hit the east coast? Well, it's been

fairly surreal for me. This storm was very dangerous, it had an

incredible footprint. It wasn't as strong as Hurricane cat treen

national cirriculum but I'm catching in -- Hurricane Katrina,

but I'm catching how well the Government and the federal state

are co-operating. President Obama is doing an outstanding job of

making sure that the resources. I love the fact that he's saying no

excuse from any of his federal agencies, get the job done. So the

system is working much better now than it worked begin Hurricane

Katrina hit you? -- working much better than when Hurricane Katrina

hit you? It seems to be working much better. This is the second

Hurricane that has threatened the east coast. I could see from the

previous Hurricane, they were using some of the techniques and lessons

we learned, which I outlined in my book, Katrina's Secrets. It seems

we have learned hard lessons, but they are being put into action, and

the responses with FEMA positions assets and water and food for

citizens, is working much better than it did during Hurricane

Katrina. What do you learn about human behaviour from this sort of

natural disaster? Well, it's going to be interesting in the next

couple of phase. They have gotten through the pre-storm event, the

storm event, now the aftermath, I think is just as difficult. Because

frustrations are going to start to mount. No matter how quickly they

restore power, or get the debris cleaned up, many citizens will

still be frustrated. They will want to see their city back the way it

was before the storm hit. And that's just not possible. So

managing expectations, managing frustrations going forward, is

going to be a key challenge. Especially when you have an

election cycle that's right upon us. Managing lawlessness, you

discovered, didn't you? Well, lawlessness for us, keep in mind

Hurricane Katrina was so devastating, 80% of the city of

devastated and under water. People thought it was the end of the world.

In modern, urban people, just don't have a stockpile of food and water

to eat and to drink. So looting started for survival. Then once it

got to the point where no-one was really stopping it, because we were

rescuing people, then opportunistic people took over and it got a bit

out of hand. What do you expect to be the political impact. We saw

then the Governor of New Jersey, being really handsome in the

tribute he paid the President, although he's actually of Mitt

Romney's persuasion, in theory? Yeah, he's a Republican, Governor

Christie, but I know him. He's a good man. And he's just telling the

truth. President Obama has stepped forward, he's been in constant

communications, is the way I understand things have gone. He's

forced his people to really focus on responding at a much higher

level. And President Obama, before he became President, was a US

senator, and he visited New Orleans after the storm, I visited him in

his office several times, he helped us a lot. He learned a lot from

Katrina and he is applying those lessons. Thank you for joining us.

Now, unless you are very rich indeed, it can't have Es kaiped

your notice, this country has become -- escaped your notice, this

country has become a very costly place to live. The staples of life

are more expensive than ever, and wages have simply not kept up.

People on low to middle incomes, working people, not those on

benefits, face the prospect of being poorer in 2020 than they are

now. Once upon a time, benign employers raised pay to keep pace

with the cost of living. If they didn't, trades unions organised

strikes to meet the need. Now it is different, something has gone badly

wrong, and the promise of western capitalism, of ever rising rates of

pay, has turned out to be a cheque that's bounced. What's to be done?

Tonight we are taking a report from an organisation called the

Resolution Foundation, who have got their own ideas to tackle the

problem. First Allegra Stratton reports.

These kids, and then their kids, and the kids of their kids, they

would suffer setback, but broadly their's was to be a steady march

across sun lit uplands. We all know about the American dream, but that

faulted some decades back. In Britain, we would keep on never

having had it so good. Except the muscles carrying us up the hill are

jamming. Women are driven from the job market by the cost of child

cautious and women and men by machines. Sheltering inside the

home, with the declining wherewithal to pay for that home.

Assume the economy returns to average levels of growth, by 2020,

lower income households could still be at incomes not seen since 1993,

middle income families could be seen at incomes last seen in 2001,

that is according to this man, and 11 otherwise men and women. During

the mid-1990s, through to the early 2000, we had a good period, then

things turned a bit darker after that. It happened for a number of

reasons. In part the share of GDP going to profit, rather than out to

labour, rows in that period, there was money left -- rose in that

period. There was money back to the worker. There were more costs on

employers, that squeezed wages more. The population were getting older,

there were greater pension contributions, and high levels of

wage inequalities in this country. If you were down the spectrum, a

lot of money was sucked into the pockets of the better off. We

didn't do well for sharing out the gains from growth during some of

those years. The Resolution Foundation's commission of 12

eminent people across public life probed figures like this. Why from

2003-20008 did the incomes of low to middle households grow by just

0.3%, while the economy grew 1.4%. The boiler of living standards may

not be working any more, can these chaps fix it? I believe I need to

do more nowadays. My mother and father would have had to do then, I

need to do more than they did then. Why do you think that? Just to live

on a nice level, and where I would like to be. One of the

commissioners, Phil Bentley, is the managing director of British Gas.

This hourglass economy is lousy jobs at the bottom and lovely jobs

at the top, so a lot of unskilled work out there, quite a few jobs at

the stop which are skilled, but in the middle not so much, you see

your role as helping with that middle? All our people at British

Gas have got really important skills. Just they are either in the

customers' homes, helping reduce the energy bill, or getting the

heating working. British Gas, by its own declaration, has been

training people to light the gas lights of London for 200 years, you

have always been training, what is different about the jobs market now.

This isn't a choice, you need to train them? We have great guy, as

you guys will attest, 50 people apply for every one place. There

are fewer jobs around like our jobs. Either you are a graduate or off at

university, sometimes in low-paid jobs. In the middle there, these

are the skills that require dexterity, require hard work, and

people can progress. Bentley sound like a disciple of pre-distribution,

that is the Labour leader's big idea. For the uninitiate, it is the

feeling that the state can no longer redistribute wealth so,

employers need to do more. We can't expect the state to bail us out, we

have to do it with our own skills, and operate in a competitive world

out there. And Britain has to compete. That goes back to skills

from schools, apprentices, all the way through, we're competing as

Germany, competing against Singapore and the rest of the world.

Bentley and the other commissioners believe kprot Britain must spend

more on wages. -- corporate Britain must spend more on wages. They show

how on the bottom three sectors of the bar chart.

Paying the minimum wage to reflect the cost of living wouldn't exactly

break the bank. And then, what about opening the

door to many people who currently feel slightly shut out. Over the

last 30 years, many households have seen living standards rise, because

women entered the work force. If it's to be reversed, to too will

its effects on people's pockets. This is another of the Resolution

Foundation's commissioners. Gaby used to do a job like mine. She was

the Observer Newspaper's political editor, until she really did leave

to spend more time with her family. Gaby doesn't pretend her economic

situation is typical of those on low-to-middle income jobs. She

knows first hand what it is like to balance childcare with care for

your career. What I liked about the idea of this report, is it took

what is often seen as fluffy female issues, like childcare, working

motherhood, and said these are not add-ons to politics, these are core

economic issues, and getting women back to work, making sure people

can work when they want to work, is absolutely critical to the future

of the economy and GDP, I liked that hard-edged approach.

report shows that UK female employment remains at significantly

lower levels than other advanced economies. The UK is 15th in the

OECD for employment between wages of 254665. If we were to move up as

those better achieving economies, it would mean mail I don't know

extra women going into employment. The gap opens -- a million extra

women going up into employment, the gap opens up with mothers to non-

mothers. There is, of course, another generation just as busy

looking after yet another generation. The 55s-65s, who look

after either their grandchildren or elderly parents or both. Childcare,

social care, a wrap-around welfare state. There are problems at two

ends of the scale. Everyone thinks about working mothers, there is a

real problem with over 55s as well, a gap in the labour market, some

could be working and can't. Some reach 55 and they are ill, they

have heart problems, and they can't all be in work. However, there are

a lot of people who probably could work. What we were looking at is

whether there are financial incentives, say you allowed them to

keep more of their money stage. You would use the Nics threshold, more

of those people could be in work. So, after a year, the commission

has come to Andrews end, it recommends increasing the urpbt --

the an end, it recommends increasing childcare for 3-4-year-

olds to 25 hours a week. It would allow people to take part-time jobs,

charged the at �1 an hour or �10 a week. The commission would reduce

taxes for low-paid, older workers, to encourage them to stay in work.

And finally, once and for all, the commission would solve the thorny

problem of social care and how to fund it. So, a report that shows

that there is a way, now over to Westminster to gauge if there is a

will. Gathered here are three of the

people who contributed to the lives standards commission. Phil Bentley,

the managing director of British Gas, Sally Russell of Netmums, and

Clive Cowdrey, the chair of the Resolution Foundation. And a

businessman, also with us, is lets let lets, the Universities'

Minister and author of a book called the Pitcher: How The Baby

Boomer Stole Their Children's Future. We will take the issues in

three sections. First David Willetts, I would like to ask you,

this is not about recession, retrenchment, it is about something

going fudgely wrong with the way the economy works, do you accept

the analysis? Yes, I do. It traces this trend back to the beginning of

this century, even earlier in the US. I think it is a very important

report, and something that will promote a lot of debate. There is

no sign it will get any better without some sort of action, and

frankly, sticking plaster sort of action is what much of this

proposal is? I don't think we should, nothing is inevitable, can

you do things. Even in the report we have just seen, the apprentices,

the Government is creating more apprentices, absolutely, to have

more people in the middle income jobs, which is where this report

identifies the squeeze is happening. I think we can partly tackle that,

by training people, giving the best qualifications to get well-paid,

secure jobs. That is what more apresent at thiss are about. There

is a lot more to do. Even in a recession, we are trying to tackle

it. Let's lock at the central worry in this, people's standards of

living are not rising because rates of relative pay are not rising at

the rate they should be. Why does that matter? It isn't as if people

were starving in 1939, which is -- 1993, which is the comparison we

are getting to? One of the reasons people weren't starving is the

introduction of tax credits, which means we have been topping up

household incomes, to the tune of around �500-�600 a year. We have a

tax credit bill at �32 billion a year. I don't think anybody

believes across the whole political spectrum, that amount of money can

go up. Therefore, that lever for topping up income is not available

to us any more. The other lever households had available was

personal borrowing, but personal borrows in households running at

140% of income, therefore, that lever is unavailable, we have to do

something that makes work pay. That means increasing skills, and

putting the focus to get more people out to work, by removing

second earner problems. How worried were you about what you found out

in the investigation? I was really worried, actually. I was really

surprised to see the original graph that was shown to me before I

joined the commission was one which showed GDP going up, and suddenly

there is a disconnect, you find living standards used to go up in

line and are now plateauing, and to see it is going on for much a long

period is quite worrying. I will come to you in a second Phil

Bentley. The most obvious solution to the problem of keeping yourself

warm and buying enough to eat, is transaction as old as civilisation,

you sell your labour or skills. The worry is the ability of companies

to move jobs anywhere in the world, the disappearance of entire

catagories of job, and a certain lethargy, that takes over nations

where no-one fears to go hungry any more, it doesn't seem to work any

more. Here are facts and figures from the

Resolution Foundation and their Commission on living Standards.

The chart shows growth in productivity and wages, wages of

the median worker at the middle typical worker in the economy. It

shows between 1970 they grew at a similar rate, after that,

productivity continued to trend upwards very rapidly, real wages

don't grow very fast at median at all.

Phil Bentley, it seems to me the request from both employers and

business generally, and Government, was that productivity in this

country had to be improved. People have done that. Productivity has

improved, but they haven't seen the benefit? I think there's some

companies that have invested in their work force, and you talk

about the old tradesmen of old. These were the skills that when

people didn't want to go to university, we were well paid, like

those apprentices up seen were British Gas. They earn �28,000 a

year when they are fully qualified. They have skills available now to

make a good living for the rest of their lives. You think what struck

me as being on the commission, was there was still a lot of industries

paying the minimum wage. I don't think that is a good thing. We

haven't got enough companies investing in labour, and investing

in skills. You're a businessman, why would any businessman in his

right mind pay more than he needs to? Because it is good business to

do that. When our engineers go into our customers' homes, our customers

expect them to be the very best. They are properly trained and

working in a hazardous environment, gas and electricity, carbon Monday

knock side. We want the best engineers, and our customers expect

that. Your customers pay for it through the nose. What is the price

of gas since 2000? The price of gas has gone up. I knew you would ask

that question. Of course I would, there is a degree of hypocrisy

about this, isn't there? Prices have come up, they are 8% of

household expenditure. When you talk to people where they are

feeling the pinch, it is always energy prices early on. You are

grunting assent here? I get that point. This is why we are investing.

Those apresent at thiss you saw, they are going in installing smart

metres, insulation in the home, energy-efficient boilers. They are

paying you so much money, that is why? Companies like our's are

investing in our customers' homes and saving customers money because

they are more energy efficient. That is one aspect of the

investment going into the energy industry. The question here, the

core question is the question of skills. Why is the basic level of

skills in this country so low? think apprenticeships went out of

fashion. Essentially the old industry that had apprenticeships

suffered, and the new industries weren't investing in

apprenticeships, but we really are reversing that trend. 250,000

apprenticeships, more of the funding into the hands of the

employerers to get the training they need. -- employers to get the

training they need. That could tackle the problem the proper

report has identified, the squeezed middle, those who don't have the

skills and training to hold down a good middle income job. We can

tackle that with the apprenticeships we are delivering.

You are not doing anything to bring down energy prices either?

Prime Minister talked about this week. The fact is you can also

bring in competition and the opportunity for going to the lowest

tarrif available. Both sides of the equation. Better-trained people

with well-paid jobs, and absolutely, competition, contestability,

getting the best deal on offer to hold down prices. Now, what

conclusion did you come to about what's gone wrong with the basic

desire to acquire skills in the work force here? I think there is a

problem with matching whether those skills will help you find the right

kind of work. We have seen a change in the structure of the employment

market and the economy. In the ten years we are in now, 2010-2020, we

will, as a country, create two million professional level jobs,

400,000 service level jobs. During that same ten years we will lose

800,000 mid-level, administration and manufacturing jobs. So matching

up the skills you are going to get, and seeing that you are gaining

those skills, will actually earn you more during your working

lifetime. That is why we need a joined-up policy around this, so

the skills agenda matches with the economic policy, to see Britain

being able to create the jobs in that mid-level size. I think you

find a lot of companies are not investing in the skills that they

used to. That is something that we see, some of our engineers get

poached by other companies that aren't investing. I think one of

the things the Government could do is give more support to recognise

aTrent pissship -- apprentice schemes, and when we have contracts

with local Government, we have always gone where with the lowest

price. We need to look at how many people were trained, and the

lasting skills that have been laid down here. You essentially want a

form of bonded labour, don't you, you train somebody, you want them

to be compelled to stay with you for two or three years? 967% of our

engineers stay with us -- 96% of engineers stay with us because they

want to develop their career. The point I'm making is the other

companies are not investing in the same way. I don't think the

poaching is a problem, I think if you invest well people are loyal

and they will stay with you. There are problems for the small

companies, we are trying to reduce the red tape and provide a bigger

cash bonus for every small company that takes on an apprentice, an

extra �1500 matters. It does matter. We like to think of the unions as

partners, that is the right way in the modern world. One of the

mechanisms you could use would be to raise the minimum wage to the

living wage level. Do you think that would be a help? I think that

would make a huge difference to many families across the country.

We are seeing people who are really just struggling who are working on

minimum wage at the moment. They are just really not making ends

meet. We see that all the time through the work that we do on the

website. But I think also it is about women in work as well. We are

going to come to that aspect in just a moment or two. Before we

leave the question of the minimum wage, you have already conceded

there is a problem. There is an element of a solution here. Will

you raise the minimum wage, will you match the minimum wage and the

living wage? What we can do, we can improve the living standard of

people on the minimum wage by take them out of tax. We have now people

on the minimum wage not paying income tax. Until this year you

could be on the minimum wage and facing incomes tax as well. That is

what the Government can do. I'm wary of increasing the minimum wage

substantially because there is a risk it hits employment. We have

created over a million new jobs in the private sector, even during

austerity, it shows you can make things work. Do you worry about the

raising of the minimum wage? No, I don't, we pay well above the

minimum wage. What we found in the report, there are sectors where

jobs will not move overseas, if you are working in a shop, or working

in catering, you can't do that from China. So let's make sure we pay

the right minimum wage for the right sectors. Let's go on to the

question of women in the work place, one of the really big changes of

the last 50 years, in order to maintain the standard of living

they feel they need, it is now the norm, very often, for both parents

to work. That, in turn, creates a need for some way of caring for

children. Here are some facts and figures.

The question we were trying to answer, and the chart answer, is

asking what happens when you increase the hours worked in the

labour market by the second earner in the household, and what happens

to childcare costs and income after faxes. By the line towards the

bottom end of the chart, the share of childcare costs increases as you

move towards longer hours in the labour market. By the time you get

to full-time work, the childcare costs take out a substantial chunk

of net income, and there is a difference between the net income

line on the right hand side of the chart.

OK, now Willetts let, why is childcare so expensive here? It is

a very good question. Childcare in this country. Answer it? I will

have a try. Childcare in this country is unusually expensive. I

think it is overregulated and overcomplicated. We had a big

attack on child minders, a big fall in the number of child minders,

which is cost effective in delivering childcare. The funding

has gone in complicated different funding schemes, there is

management time in collecting the funding. There is a certificaties

of problems we are trying to tackle, in tough sometimes r times, to help

women with childcare. You were just getting on to it a second ago, or a

few minutes a is this a growing problem, do you hear more and more

people worrying about it? Absolutely, we have seen a change

in the last ten years. It is interesting when you look at the

longer picture to see that women were working increasingly from

about 55-70% over 30 years. But in the last ten years it has trailed

off. We are not seeing the growth in female employment. And one of

the key reasons for that is the cost of childcare, it has gone up

so much. It is making it unaffordable. It is just not worth

working if you have to pay out that much in childcare. What do you

think, Phil Bentley, could be done, then, to get around this problem?

We certainly think there should be more free childcare available.

for by? Well, you think one of the suggestions we have is how we fund

our recommendation, one area might be means testing Winter Fuel

Payment, for example. One might be, you have probably got some concerns

there. What we have called for in the report, is the current 15 hours

of childcare a week should be extended in two days. First, an

additional fen hours should be available at -- ten hours should be

available for �1 an hour, a minute national charge, and it should be

extended into the school holidays, those are the issues that prevent

somebody making the decision to go to work. The second thing we have

asked for in the second earner situation, is when the second

earner, typically again, the woman, begins to work, she's able to earn

the first �2,000 of that before it eats into what the house how old is

receiving in tax benefits. What has this to do with the state? State

wants a strong, viable middle-class, a group of people able to afford to

hold their head above water without falling back on to welfare benefits.

That is a central social goal for administrations for a very long

time. Do you think it is the state's job? I think Government can

do parts of this. Part of Iain Duncan Smith's reform, in the old

days you couldn't get help with your childcare costs if you are

working less than 16 hours a week, we have got rid of that. We have

extended help with parents of children aged two, so they get free

assistance on low incomes. Again, even in stuff -- tough times we are

trying to tackle the fundamental challenges to help struggling

families to help with their costs. There are things we can do.

Philosophically, why does the state have to do it? I would believe that

Governments have a responsibility to be alongside people trying to do

the right thing. If you are trying to raise kids, and you both want to

go out to work, and it is overregulated so the costs are too

high, we should tackle the red tape. If you are finding the tax credit

system is penalising you, we should get rid of the penalty. We are

working through to it to help those trying to work. The bottom half of

workers receive 12p in the pound for every pound the country earns

of GDP, but they have 50% of the vote. This is ten million working

people, one third of the working population, who live in six million

homes and have five million children living in those homes.

This is a group increasingly aware they have been left behind by that

decoupling. And their votes can be bought? Their issues can be

addressed. As we go into 2015 and certainly by 2020, this is a

segment of the population that right across the political spectrum,

people will be seeking to show they have made proportionate responses.

Thoo these are the strivers David Cameron was talking about the other

week. These are people who have absolutely mainstream values, they

are trying to do the right thing. They are entitled to feel in return

that politician of whatever pairt are on their side and trying to

tack -- party, are on their side and trying to tackle their problems.

The New Society, which seems to be emerging from the changed economy

of this country, looks very different from what went before.

That group, the "squeezed middle", between the richest and the poorest,

seems to be growing and growing. The question that arises is

fairness, not just between rich and poor, but between young and old.

For the third time, a few figures. This chart shows male employment

rates in the UK, relative to the OECD for different ages of men.

What is striking is it shows how poorly we do in terms of men aged

55 or over. Male employment rate is much lower in the UK than other

OECD countries. This is because the relatively poor work performance of

less skilled men, who worked in more traditional jobs that have

collapsed in the labour market over the last 40 years. Looking at the

question of old people. What did you discover about old people, and

why there were fewer working? a complicated decision to work as

you get older. In your late 50s you are quite likely, given longevity,

to have somebody you are looking after, who is in their late 70s and

early 80s. It is not always an easy decision to work. For those who

want to, the difficulty is the jobs available, might be in comparison

with your benefits, only a marginal improvement in your household

income. One of the recommendations in the report, is you would raise

the level at which national insurance contributions are charged,

from �7,500 to �10,000, once you reach the age of 55. That can make

the difference for people. Why did you do that? We have tried to

tackle the problem. We have got rid of the compulsory retirement age.

I'm wary of special age-related rules on national insurance, we

will look at the proposals. people don't pay national insurance,

do they? That is why it would be a rather odd structure. You could tax

them back into work, couldn't you? We have, in the budget. You might

remember the controversy about it. I remember exactly how you danced

around on that? We have, quite rightly, said you should pay the

same rate of income tax, on the same allowance, whether you are

waged 45, 55, 65. That was controversial at the time, it was

the right decision, because it was fair between people of different

agencies. You know there is an unfairness here between young and

old, don't you? I think our society is not offering a fair enough deal

to the younger generation, I accept that. It was one of the things the

Government...Why Not do something about it? I'm decribing some of the

things we have done. We have got rid of the compulsory retirement

age, we have got a fair income tax allowance that applies to people

whatever their age. The apprenticeship investment is to

provide better opportunities for young people. This is all done even

when we are facing this tough competitive environment. A key

point is we have 50 applicants for every one apprentice, there are

great people out there who really want to work, if we can give them

the skills they will get the job done. We need more jobs, more

companies, dare I say it, like British Gas, investing in the

future generations. Some great people out there, we have to get

work for them. Do you have any old people coming on oh aye what's that

then present tisship? We have had a father and son aplay, and an ex-

footballer, a marine biologist. What is the cut-off? There isn't

one. Someone who is 65 could apply? I met one of our engineers, worked

in Doncaster, started in 1951, 60 years service. I bet you wouldn't

take him on? He only retired last year. No compulsory retirement

agency. You would take on someone that old? We would if they want to

work. To train as an apprentice? Frankly, we would like more

opportunities for young people. Didn't you think, when you were

writing this report, that some old kojers, some old people, might feel

they have worked a long time, they are entitled to put their feet up?

That is a personal choice. But for many people, the household budget

is so tight that doesn't feel like a choice. You are saying we can't

pay for it any more? The tax credit system has reached the limit of

making meaningful improvements to the household income. We have to

make work pay so if people want to work they K that is by removing

barriers, one of the barsers is at 55, you go to work, and the job

might pay �10,000-�12,000, and you are in a position where a

meaningful proportion of what you want to take back into the

household is going in national insurance contributions. As opposed

to staying home and getting all the been fits old people can get. You

must be in favour of means testing them? We made specific pledges in

the last election. We are going to honour those pledge, and meanwhile,

because of the changes in the income tax rules, because we are

getting rid of the compulsory retirement rules, we will have more

older people working, that is their contribution, and more people are

doing so. You want older people to work past retirement age? We got

rid of the compulsory retirement age. It was part of a new contract.

At the same time we have got rid of the special tax allowance, if you

are older, by raising everyone else's tax allowance. That is a new

expectation that people will have to carry on working. It is a tough

decision, but we have made it. you tried this out on any old

people fed up with working? personally haven't. I think we need

to be, my particular audience is the mums bit. We have talked to

them about all sorts of issues. I do think that the Government has

done a lot. They really need to look hole listically at this as an

issue, -- holistically, as an issue. There is a commission on childcare

going on at the moment. It is looking at markets and regulation,

but not the possibility of investment in this field. Which

would do so much more. So there are all sorts of thifrpbgs. Again with

the universal cred -- things. Again with the Universal Credit coming

along. There is great work to try to make work pay, but the second

earner bit will have a huge impact, a very negative impact on, again,

women in work. It is about joining the dots up and making sure it all

pulls together. What do you make that have? One of the reasons we

have tried to improve the rules on childcare for parents with young

children, is to encourage the second earner to work, I'm sure

there is more things we need to do. The one thing we have misseded in

all this, is the international framework. All around the world

there are other countries rise to go this type of challenge. We face

competitive challenges from elsewhere. One of the other reasons

to get this right is the rest of the world is not standing still.

Getting more people into work, parents with young children into

work, older people staying on in work, those are all the type of

things we need to do to make our country more prosperous.

The newspapers now. The Mail saying there will be an

It was announced tonight that Disney is to buy Lucas Film and to

make three more Star Wars movies, with episode seven scheduled for

cinemas for 20 17, for those who doesn't give a flying saucer, good

night, but those traumatised by the last set of Star Wars movies, we

will live you with some consolation. Lord Vader, this is commander Laki,

she will overseat interrogation unit. I look forward to working

with you Lord Vader. You are beautiful! Vader? What, I mean, eh,

destroying the rebel base will be a beautiful victory. Quite Lord Vader.

Please continue. What? Vader? fine, I just need to go to the

fine, I just need to go to the toilet. Out of my way! Hello, a

change in the weather to come, as we see more significant rain and

winds arriving through the night. And that's going to mean a breezy

start to our day, with the rain sitting across North West England,

Wales and down into the south west. By the middle of the afternoon, it

is a wet and windy afternoon for the Lake District. Perhaps to the

east of the Pennine, to the Midlands, staying dry but cloudy.

Disappointingly cool, the best of the weather in the south-east.

Heavy, persistent rain into the south west by the middle of the

afternoon. That means a fairly damp affair, if you are taking young one

us out for trick or treating. The same in South Wales with a

disappointing nine degrees. For Northern Ireland and Scotland, a

bright and breezy afternoon with scattered showers. A cool day.-8

degrees at the very best. A similar story for much of Scotland. I

suspect a lot of cloud and rain around on Wednesday. Sunny spells

and scattered showers for Thursday, and the temperatures struggling.

Six or seven degrees to the far north. Further south of that for

England and Wales T looks as though we will have the rain to clear away