16/03/2014 Sunday Politics South

Morning folks. Welcome to the Sunday Politics. George Osborne's fifth

Budget will offer more tax relief for the lower paid but not for

middle income earners being thrust into the 40p tax bracket. That's our

top story. Ed Balls says millions of people

aren't feeling any benefit from the recovery. We'll discuss the economy

with big political beasts from Labour, the Conservatives, and the

Lib Dems. Now that Ed Miliband has effectively ruled out an in/out EU

referendum, how does UKIP deal with Tory claims that a vote for UKIP

In the south: After the floods, the means no chance

In the south: After the floods, the clean`up. The prime minister

promises to spend restoring confidence in the safety

of cycling. The three areas of London getting a cash boost to try

something different. And with me as always our top

political panel - Nick Watt, Helen Lewis and Janan Ganesh. They'll be

tweeting their thoughts using the hashtag #bbcsp throughout the

programme. So, just three months after his last major financial

statement, George Osborne will be at the despatch box again on Wednesday,

delivering his 2014 Budget. The Chancellor has already previewed his

own speech, pledging to build what he calls a "resilient economy". The

message I will give in the Budget is the economic plan is working but the

job is far from done. We need to build resilient economy which means

addressing the long-term weaknesses in Britain that we don't export

enough, invest enough, build enough, make enough. Those are the things I

will address because we want Britain to earn its way in the world. George

Osborne's opposite number, Ed Balls, has also been talking ahead of the

Budget. He says not everyone is feeling the benefit of the economic

recovery, and again attacked the Government's decision to reduce the

top rate of tax from 50 to 45%. George Osborne is only ever tough

when he's having a go at the week and the voiceless. Labour is willing

to face up to people on the highest incomes and say, I'm sorry,

justifying a big tax cut at this time is not fair. We will take away

the winter allowance from the richer pensioners, and I think that's the

right thing to do. George Osborne might agree, but he's not allowed to

say so. That was the Chancellor and the shadow chancellor. Janan, it

seems like we are in a race against time. No one argues that the

recovery is not under way, in fact it looks quite strong after a long

wait, but will it feed through to the living standards of ordinary

people in time for the May election? They only have 14 months to do it.

The big economic variable is business investment. Even during the

downturn, businesses hoarded a lot of cash. The question is, are they

confident enough to release that into investment and wages? Taking on

new people, giving them higher pay settlements. That could make the

difference and the country will feel more prosperous and this time next

year. But come to think of it, it strikes me, that how anticipated it

is, it's the least talked about Budget for many years. I think that

is because the economy has settled down a bit, but also because people

have got used to the idea that there is no such thing as a giveaway.

Anything that is a tax cut will be taken away as a tax rise or spending

cut. That's true during the good times but during fiscal

consolidation, it's avoidable. -- unavoidable. There is a plus and

minus for the Conservatives here. 49% of people think the government

is on roughly the right course, but only 16% think that their financial

circumstances will improve this year. It will be a tough one for the

Labour Party to respond to. I agree with Janan. Everyone seems bored

with the run-up to the Budget. The front page of the Sunday Times was

about fox hunting, the front page of the Sunday Telegraph was about EU

renegotiation. Maybe we are saying this because there have not been

many leaks. We have got used to them, and most of the George Osborne

chat on Twitter was about how long his tie was. Freakishly long. I

wouldn't dare to speculate why. Anything we should read into that? I

don't know. For a long while there was no recovery, then it was it is a

weak recovery, and now, all right, it's strong but not reaching

everyone in the country. That is where we are in the debate. That's

right, and the Conservative MPs are so anxious and they are making

George Osborne announcing the rays in the personal allowance will go

up, saying it might go up to 10,750 from next year, and Conservative MPs

say that that's OK but we need to think about the middle voters.

People are saying the economy is recovering but no one is feeling it

in their pocket. These are people snagged in at a 40p tax rate. The

Tories are saying these are our people and we have to get to them.

He has given the Lib Dems more than they could have hoped for on raising

the threshold. Why is he not saying we have done a bit for you, now we

have to look after our people and get some of these people out of that

40% bracket? Partly because the Lib Dems have asked for it so

insistently behind-the-scenes. Somebody from the Treasury this week

told me that these debates behind the scenes between the Lib Dems and

Tories are incredibly tenacious and get more so every year. The Lib Dems

have been insistent about going further on the threshold. The second

reason is that the Tories think the issue can work for them in the next

election. They can take the credit. If they enthusiastically going to

?12,000 and make it a manifesto pledge, they can claim ownership of

the policy. The Liberal Democrats want to take it to 12,500, which

means you are getting into minimum wage territory. It's incredibly

expensive and the Tories are saying that maybe you would be looking at

the 40p rate. The Tories have played as well. There have been authorised

briefings about the 40p rate, and Cameron and Osborne have said that

their priority was helping the lowest paid which is a useful

statement to make and it appeals to the UKIP voters who are the

blue-collar workers. And we are right, the economy will determine

the next election? You assume so. It was ever that is. It didn't in 1992

or 1987. It did in 1992. Ed Miliband's announcement last week

that a Labour government would not hold a referendum on Europe unless

there's another transfer of powers from Britain to Brussels has

certainly clarified matters. UKIP say it just shows the mainstream

parties can't be trusted. The Conservatives think it means UKIP

voters might now flock back to them as the only realistic chance of

securing a referendum. Giles Dilnot reports.

When it comes to Europe and Britain's relation to it, the

question is whether the answer is answered by a question. To be in or

not to be in, that is the question, and our politicians have seemed less

interested in question itself but whether they want to let us answer

it. Labour clarified their position last week. There will be no transfer

of powers without an in out referendum, without a clear choice

as to whether Britain will stay in the EU. That seems yes to a

referendum, but hold on. I believe it is unlikely that this lock will

be used in the next Parliament. So that's a no. The Conservatives say

yes to asking, in 2017, if re-elected, but haven't always. In

2011, 81 Tory MPs defied the PM by voting for a referendum on EU

membership: the largest rebellion against a Tory prime minister over

Europe. Prompted by a petition from over 100,000 members of the public.

The wrong question at the wrong time said the Foreign Secretary of a

coalition Government including selfie-conciously-pro European Lib

Dems, who had a referendum pledge in their 2010 manifesto, but only in

certain circumstances. So we have the newspapers, and the public

meeting leaflets. UKIP have always wanted the question put regardless.

But Labour's new position may change things and The Conservatives think

so. I think it does, because, you know, we are saying very clearly,

like UKIP, we want a referendum, but only a Conservative government can

deliver it because most suffer largest would say it is possible in

the first past the post system to have a UKIP government --

sophologists. And then it's easy for as to say that if a UKIP vote lets

in a Conservative government, then they won't hold a referendum. UKIP

seem undaunted by the clarifications of the other parties, campaigning

like the rest but with a "tell it how it is, just saying what you're

thinking, we aren't like them" attitude. They seem more worried

about us and what we want, and I don't see that in the other parties.

In parts of the UK, like South Essex, it's a message they think is

working. They are taking the voters for granted again and people have

had enough. People are angry, they see people saying they will get a

vote on the European Union, but then it just comes down the road. They

were quick to capitalise on the announcements, saying only the

Conservatives will give you say, so does it change things? Not really.

We have been talking about a referendum and having a debate on

the European Union for years, and the other parties are playing catch

up. They have a trust issue. Nobody trusts them on the European Union

and that is why people come to us. Who the average UKIP voter is, or

how they voted before is complicated, and what dent they

might make on Conservative and Labour votes in 2015 is trickier

still, but someone's been crunching the numbers anyway. We reckon it is

between 25 and 30% of the electorate broadly share the UKIP motivation,

so to top out at that level would be difficult. That's an awful lot of

voters, but it's not the majority, and this is the reason why the main

parties can't afford to just openly appealed to the UKIP electorate too

hard because the elections are won and lost amongst the other 70%, the

middle-class, the graduate, the younger, ethnic minorities. An

appeal to the values of UKIP voters will alienate some of the other

groups, and they are arguably more significant in winning the election.

Whatever, the numbers UKIPers seem doggedly determined to dig away at

any support the other parties have previously enjoyed.

Giles Dilnot reporting. UKIP's leader, Nigel Farage, joins me now

for the Sunday Interview. Nigel Farage, welcome back. Good

morning. So the Labour Party has shot a fox. If Ed Miliband is the

next by Minister, there will not be a referendum customer there's a long

way between now and the next election, and Conservative party

jobs and changes. We had a cast-iron guarantee of a referendum from

camera, then he three line whip people to vote against it, and now

they are for it. What the Labour Party has done is open up a huge

blank to us, and that is what we will go for in the European

elections this coming year in May. I think there is a very strong chance

that Labour will match the Conservative pledge by the next

general election. There may be, but at the moment he has ruled it out,

and if he does not change his mind and goes into the election with the

policy as it is, the only chance of a referendum is a Tory government.

If you think the Tories will form a majority, which I think is unlikely.

Remember, two thirds of our voters would never vote Conservative

anyway. There is still this line of questioning that assumes UKIP voters

are middle-class Tories. We have some voters like that, but most of

them are coming to us from Labour, some from the Lib Dems and a lot of

nonvoters. But it come the election you failed to change Mr Miliband's

line, I repeat, the only chance of a referendum, if you want a

referendum, if that is what matters, and the polls suggest it doesn't

matter to that many people, but if that is what matters, the only way

you can get one is to vote Conservative. No, because you have a

situation in key marginals, especially where all three parties

are getting a good share, where we will see, and this depends a lot on

the local elections and the European elections, there are target

constituencies where UKIP has a reasonably good chance of winning a

seat, and that will change the agenda. Every vote for UKIP makes a

Tory government less likely. Arab voters are not Tory. Only a third of

the UKIP boat comes from the Conservative party -- our voters are

not Tory. -- the UKIP vote. It was mentioned earlier, about blue-collar

voters. We pick up far more Labour Party and nonvoters than

conservatives. On the balance of what the effect of the UKIP boat

is, the Tories should worry about us, they should worry about the fact

they have lost faith with their own electorate. Even if there is a

minority Ed Miliband government, it means no referendum. Labour and the

Liberal Democrats are now at one on the matter. The next election is in

a few weeks time, the European elections. What happens in those

elections will likely change the party stands and position on a

referendum. The fact that Ed Miliband has said this means, for

us, our big target on the 22nd of May will be the Labour voters in the

Midlands and northern cities, and if we do hammer into that boat and we

are able to beat Labour on the day, there's a good chance of their

policy changing. One poll this morning suggests Labour is close to

you at 28, the Conservatives down at 21, the Lib Dems down at eight. You

are taking votes from the Conservatives and the Liberal

Democrats. We are certainly taking votes from the Lib Dems but that is

comparing the poll with one year ago when I don't think most people knew

what the question really was. You seem to be in an impossible position

because the better you do in a general election, the less chance

there will be a referendum by 2020. No, look at the numbers. Only a

third of our voters are Conservatives. When we have polled

voters that have come to us, we asked them if there was no UKIP

candidate who would you vote for, less than one in five said

Conservative. Less than one in five UKIP voters would be tempted to vote

Conservative under any circumstances so the arithmetic does not suggest

we are the Conservative problem, it suggests we are hurting all of the

parties and the reason the Tories are in trouble is because they have

lost their traditional base. Why do you think Nick Clegg is debating

Europe? I think they are in trouble, at 8% they could be wiped

out, they could go from 12 to nothing and I think it is a chance

for Nick Clegg to raise their profile. They are fringe party with

respect to this contest so I see why he wants to do it. One of our big

criticisms is that we have not been able to have a full debate on

national television on the alternatives of the European Union

so I am looking forward to it. How are you preparing? I think you can

be over scripted with these things. Are you not doing mock debates? No,

I am checking my facts and figures and making sure that I can show the

British people that in terms of jobs, we would be far better off not

being within the European Union, not being within its rule book, not

suffering from some of the green taxes they are putting on the

manufacturing industry. The idea that 3 million jobs are at risk, I

want to show why that is nonsense. Who do you think is playing you in

their mock debates? They probably went to the pub and found someone!

We will see. You have promised to do whatever it takes to fund your

European election campaign, how much has been given so far? Just give it

a few weeks and you will see what Paul is planning to do. He has made

a substantial investment in the campaign already. How much? I'm not

answering that for now. We are well on our way to a properly funded

campaign and our big target will be the big cities and the working vote

in those communities. Your deputy chairman Neil Hamilton is another

former Tory, he says so far we haven't seen the colour of his

money. Exactly two weeks ago, and things have changed since then. Mr

Sykes has written a cheque since then? Yes. This morning's papers

saying you will be asking MEPs to contribute ?50,000 each, is that

true? Over the next five years, yes. Not for the European campaign. So

lack of money will not be an excuse. We will have a properly funded

campaign. How we raise the kind of money needed to fund the general

election afterwards is another question. What is UKIP's policy on

paying family members? We don't encourage it and I didn't employ any

family member for years. My wife ended up doing the job and paid for

the first seven years of my job. She is paid now? Until May, then she

comes off the payroll am which leaves me with a huge problem. In

2004 you said, UKIP MEPs will not employ wives and there will be no

exceptions. An exception was made because I became leader of the

National party as well as a leader of the group in European

Parliament. Things do change in life, and you can criticise me for

whatever you like, but I cannot be criticised for not having a big

enough workload. No, but you didn't employ your wife when you had told

others not to do it your party. Nobody else in my party has a big

job in Europe and the UK. We made the exception for this because of

very unusual circumstances. It also looks like there was a monetary

calculation. Listen to this clip from a BBC documentary in 2000. It

is a good job. I worked it out because so much of what you get is

after tax that if you used the secretarial allowances to pay your

wife on top of the other games you can play, I reckon this job in

Stirling term is over a quarter of ?1 million a year. That is what you

would need to earn working for Goldman Sachs or someone like that.

I agree with that. More importantly the way you really make money in the

European Parliament is being their five days a week, because you sign

in every day, you get 300 euros every day, and that is how people

maxed out. The criticism of me is that I am not there enough so

whatever good or bad I have done in the European Parliament, financial

gain has not been one of the benefits. There have been

allegations of you also employing a former mistress on the same European

Parliamentary allowance, you deny that? I am very upset with the BBC

coverage of this. The ten o'clock news run this as a story without

explaining that that allegation was made using Parliamentary privilege

by somebody on bail facing serious fraud charges. I thought that was

pretty poor. You have a chance to do that and you deny you have employed

a former mistress? Yes, but if you look at many of the things said over

the last week, I think it is becoming pretty clear to voters that

the establishment are becoming terrified of UKIP and they will use

anything they can find to do us down in public. Is an MEP employs his

wife and his former mistress, that would be resigning matter, wouldn't

it? Yes, particularly if the assumption was that money was being

taped for work but was not being done. Who do you think is behind

these stories? It is all about negative, it is all about attacks,

but I don't think it is actually going to work because so much of

what has been said in the last week is nonsense. A reputable daily

newspaper said I shouldn't be trusted because I had stored six

times for the Conservative party, I have never even stored in a local

council election. I think if you keep kicking an underdog, it will

make the British people rally around us. Is it the Conservatives? Yes,

and the idea that all of our voters are retired colonels is simply not

true. We get some voters from the Labour side as well. Would you

consider standing in a Labour seat if you are so sure you are getting

Labour votes? Yes, but the key for UKIP is that it has to be marginal.

Just for your own future, if you fail to win a single soul -- single

seat in the general election, if Ed Miliband fails to win an outright

majority, will you stand down as UKIP leader? I would think within

about 12 hours, yes. I will have failed, I got into politics not

because I wanted a career in politics, far from it. I did it

because I don't think this European entanglement is right for our

country. I think a lot of people have woken up to the idea we have

lost control of our borders and now is the moment for UKIP to achieve

what it set out to do. Will UKIP continue without you if you stand

down? Of course it will. I know that everyone says it is a one-man band

but it is far from that. We have had some painful moments, getting rid of

old UKIP, new UKIP is more professional, less angry and it is

going places. Nigel Farage, thank you for being with us.

So, what else should we be looking out for in Wednesday's Budget

statement? We've compiled a Sunday Politics guide to the Chancellor's

likely announcements. Eyes down everyone, it's time for a

bit of budget bingo. Let's see what we will get from the man who lives

at legs 11. Despite some good news on the economy, George Osborne says

that this will be a Budget of hard truths with more pain ahead in order

to get the public finances back under control. But many in the

Conservative party, including the former chancellor Norman Lamont,

want Mr Osborne to help the middle classes by doing something about the

4.4 million people who fall into the 40% bracket. Around one million more

people pay tax at that rate compared to 2010 because the higher tax

threshold hasn't increased in line with inflation. Mr Osborne has

indicated he might tackle the issue in the next Conservative manifesto,

but for now he is focused on helping the low paid. It's likely we will

see another increase in the amount you can earn before being taxed,

perhaps up another ?500 to ?10,500. The Chancellor is going to flesh out

the details of a tax break for childcare payments, and there could

be cries of 'house' with the promise of more help for the building

industry. The Help To Buy scheme will be extended to 2020 and there

could be the go-ahead for the first Garden City in 40 years. Finally,

bingo regulars could be celebrating a full house with a possible cut in

bingo tax. And I've been joined in the studio

by the former Conservative chancellor Norman Lamont, in Salford

by the former Labour Cabinet minister Hazel Blears, and in

Aberdeen by the Lib Dem deputy leader, Malcolm Bruce. Let me come

to Norman Lamont first, you and another former Tory Chancellor,

Nigel Lawson, have called in the fall in the threshold for the rate

at which the 40p clicks in. I would have preferred an adjustment in the

Budget but I agree with what you are saying, it sounds like the

Chancellor will not do that. My main point is that you cannot go on

forever and forever increasing the personal allowance and not

increasing the 40% tax threshold because you are driving more and

more people into that band. It is an expensive policy because in order to

keep the number of people not paying tax constant, you have to keep

adjusting it each year. When this was introduced by Nigel Lawson, it

applied to one in 20 people, the 40% rate, it now applies to one in six

people. By next year, there will be 6 million people paying base. Why do

you think your Tory colleagues seem happy to go along with the Lib Dems

and target whatever money there is for tax cuts rather -- on the lower

paid rather than the middle incomes? They are not helping the lowest

paid. If you wanted to really help the lowest paid people you would

raise the threshold for national insurance contributions, which is

around ?6,000. Is it the Lib Dems stopping any rise in the 40p

threshold? We are concentrating on raising the lower threshold because

we believe that is the way to help those on lower incomes. Whilst they

haven't benefited as much as the lower paid they have participated

and I think people understand right now, if you were going to prioritise

the high earners, when we are still trying to help those on lower and

middle incomes who haven't enjoyed great pay increases but have got the

benefit of these tax increases, that is why we would like to do it for

the minimum wage level. But the poorest will not benefit at all. The

poorest 16% already don't pay tax. Why don't you increase the threshold

at which National Insurance starts? You only have two earned ?5,500

before you start to pay it. You've got to remember that the raising of

the threshold to ?10,000 or more was something the Tories said we could

not afford. Why are you continuing to do it? If you want to help the

working poor, the way would be to take the lowest out of national

insurance. The view we take is they are benefiting, and have benefited

from, the raising of the tax threshold. You now have to earn

?10,000, we hope eventually 12,500, and that means only people on very

low wages. If you opt out of national insurance, you're saying to

people that you make no contribution to the welfare system, so there is a

general principle that people should participate and paying, and also

claim when they need something out. We thought raising the threshold was

simple and effective at a time of economic austerity and the right way

to deliver a helpful support to welcoming people. -- working people.

With the Labour Party continue to raise the threshold, or do they

think there is a case that there are too many people being dragged into

the 40p tax bracket? If Norman Lamont thinks this is the right time

to benefit people who are reasonably well off rather than those who are

struggling to make ends meet, then genuinely, I say it respectfully, I

don't think he's living in the world the rest of us are. Most working

people have seen their wages effectively reduced by about ?1600

because they have been frozen, so the right thing is to help people on

modest incomes. I also understand that if the 40% threshold went up,

the people who would benefit the most, as ever, are the people who

are really well off, not the people in the middle. The Conservatives

have already reduced the 50p tax on people over ?150,000 a year, and we

have to concentrate on the people going out to work, doing their best

to bring their children up and have a decent life and need a bit of

help. I think raising the threshold is a good thing. We would bring back

the 10p tax, which we should never have abolished, and do things with

regard to childcare. At the moment, childcare costs the average family

as much as their mortgage, for goodness sake. We would give 25

hours free childcare for youngsters over three and four years old. That

would be a massive boost the working families. We are talking about

nurses, tube drivers, warrant officers in the army. There are many

people who are not well off but have been squeezed in the way everybody

has been squeezed and they are finding it continuing. I am stunned

by Malcolm's argument where everybody should pay something so

you should not take people out of national insurance, but the

principle doesn't apply to income tax. You can stand that argument on

its head and apply it to income tax. Most people don't see a difference

between income tax and national insurance, it's the same thing to

most people. It is true that it isn't really an insurance fund and

there is an argument from merging both of them. But we have

concentrated on a simple tax proposition. Norman is ignoring the

fact the people on the 40% rate have benefited by the raising of the

personal allowance. To say they have been squeezed is unfair. The

calculation is that an ordinary taxpayer will be ?700 better off at

the current threshold, and about ?500 better off at the higher rate.

It is misleading to say the better off we'll be paying more. I agree

with Hazel, if you go to the 40% rate, it's the higher earners who

benefit the most, and we won't do that when the economy is not where

it was before the crash. How much will the lower paid be better off if

you reintroduce the 10p rate? Significantly better off. I don't

have the figure myself, but they'd be significantly better off and the

Budget should be a mixture of measures to help people who work

hard. That is why I think the childcare issue has to be

addressed. ?100 a week of the people with childcare payments. It is a

massive issue. We want the job is guaranteed to get young people back

into work. There's been hardly any discussion about that, and we have

nearly 1 million people who have been out of work for six months or

more, and as a country we need to do something to help that. 350,000

full-time students, so it is a misleading figure. It is not a

million including full-time students. All parties do this. It

sounds to me, Malcolm Bruce, you have more in common with the Labour

Party than you do with the Conservatives. You want an annual

levy on houses over ?2 million, so does Labour. A lot of your members

want to scrap the so-called bedroom tax and so does labour. You think

every teacher should have a teaching qualification, and so does Labour.

Your policy on the EU referendum is the same. Let me go on. And you want

to scrap the winter fuel allowance for wealthy pensioners. We want to

make sure we get the public finances in order and we have grave

reservations about the Labour Party promises. But they followed your

spending plans in the first year. The point we are making is we can

make a fairer society and stronger economy if you keep the public

finances moving towards balance. We don't think the Labour Party will

take a stand that track. It is interesting that the Labour Party

want to introduce the 10p rate that Gordon Brown abolished. We consider

that before we can -- committed to the 0% rate -- we considered that.

It makes a complicated system difficult and we think it's better

doing it that way. As a fiscal conservative, why are you talking

about any tax cuts when the deficit about any tax cuts when the deficit

is over ?100 billion, and effectively, anything you propose

today can only be financed by more borrowing. I totally agree with you.

I said that this week. I thought the best thing would have no Budget. The

main thing is to get the deficit down. My argument is is that you

have an adjustment in tax rates it should be shared between the

allowances and the higher rate, but I don't think that the progress on

the deficit is something we can give up on. This is still a very long way

to go. We're only halfway through. Hazel, does it make sense to borrow

for tax cuts? I am reluctant to do this, but I agree with both Norman

and Malcolm. Malcolm Bruce wants to borrow for tax cuts. We absolutely

need to get the deficit down and get finances on a strong footing. But we

also have to think about having some spending in the system that in the

longer run saves us money. We all know we need to build new homes. I

don't think it's necessarily the right priority to give people in

London mortgage relief in terms of ?600,000. We have to get the balance

right. Sometimes it is right to spend to save. I'm afraid we have

run out of time. There will be plenty more discussion in the lead

up to the Budget on Wednesday. It's just gone 11:35am. You're

watching the Sunday Politics. We say goodbye to viewers in Scotland who

leave us now for Sunday Politics Scotland. Coming up here in 20

minutes, Frances O'Grady, the General Secretary of the TUC, joins

us discuss the Welcome to Sunday Politics South, my

name's Peter Henley. On today's show: It might have stopped raining

but there's still the clearup from all the flooding to be done. We'll

be hearing whether the government's bailout scheme for all the

homeowners and farmers affected is actually working. More on that

shortly. First, let's meet the two politicians who'll be with me for

the next 20 minutes. George Hollingbery is the Conservative MP

for Meon Valley and John Denham is the Labour MP for Southampton

Itchen. Welcome both. John you have been highlighting the cost of living

in the South seeing that wages have dropped in real terms with people

more than ?2000 per year worse off. Housing costs are rising. Isn't that

cost of living crisis for people knew they would be getting when they

voted for austerity? I do not think so, they got by no the government

would have sorted out the budget and the economy. Keegan the south`east

winds are actually worse than other parts of the country. `` here in.

House prices have risen, child care is more expensive here than in

London. There is a real cost of living crisis. If you had actually

followed the strategy we had in 2010 when the economy was growing you

would have seen more growth which would have reduced more taxes to get

the deficit down faster. What has actually happened as we are in the

worst position today because we have had three years with no growth. The

cost of living crisis did not have to be as bad as it is and if we do

the things Labour wants to do, get a real house building programme going,

cut and freeze interest rates, reform the energy market, there are

practical things a government could do to tackle the cost of living

crisis. That is the future, what about the history? I do not want to

go into labour's ideas, that is up to them but everyone knows who

crashed the car in the first place and we had to deal with that. ?140

billion had to be found. This country simply had to cut spending.

In the last year, unemployment has fallen by 23% in the south`east. The

economy is now one of the fastest growing in Europe and by next year

probably one of the fastest`growing in the GE. There is a long way to go

yet, the deficit still needs to be dealt with. What has actually

happened, which I find very strange coming from Labour, is that this

time around the unemployment that arose during the recession was

massively reduced because people took a view they would rather not

see wage rises and keep their jobs for the longer term, that is what

has happened. We have many jobs with low wages and many with low

productivity, people cannot afford the rising cost of living. The

deficit no longer needs to be dealt with now than it did three years

ago. It has not worked. It has worked and all you need to do is

look at international comparisons to know. We know we are the

fastest`growing economy in Europe. We will talk further about what

George Osborne will do in the budget any moment. A few weeks ago,

politicians, and the media to be honest, were completely obsessed

with water. Pouring down from the sky, bubbling up from the ground,

surging through people's homes. But now, the sun's shining, the Prime

Minister has waded in, and the government's providing compensation.

Problem solved. Well, maybe not quite, as our Berkshire political

reporter Patrick O'Hagan has been finding out.

This is `` seeds, silage might cut to feed the cows during the winter

when they are indoors. This should be cut in May but you can see the

graph is dead. This man has sheep and cattle and those graphs and

crops on his farm. He farms 1700 acres in all. The recent floods left

much of them underwater. It is only in the last few days that the water

has receded, exploding `` exposing the thick mud. It is only when you

see all your hard work floating down the river that you feel miffed. For

this woman the past few weeks have been some of the worst of her life.

The water had risen from the lamp post outside to within three inches

of the corner of my house. The water began rising until it was under her

floorboards but thankfully got no higher. She is still desperately

upset. I cannot put into words what... I cannot explain how awful

it has been and how important it makes you feel. The Prime Minister

has offered grants of up to 500 pounds to make your home resistant

to floods, to get one, you apply to your local council. Angela does not

know if it will be worth the effort. If we put in an application will it

take years to go through the sausage machine? I do not know the best way

to do it. In thousands of homes have been affected and should be

eligible. For big organisations like Basingstoke and Deane council, bids

are in already. It has bent ?400,000 on the floods and is applying to the

government scheme which helps councils cost the dash cover the

cost of emergencies. There is no way in which our residents should foot

the bill for something which is after all a natural disaster. I am

very confident we will get the money back. Farmers are offered

compensation of up to ?5,000 each but when dealing with our farm of

1700 acres in size, by thousand pounds does not get you very far.

Don't get me wrong, we are very thankful for the money, it did not

have to be done, but it is a drop in the ocean. Money is available to

help farmers replace damage crops and help homeowners re`waterproof

their walls and also to help councils recoup their costs but with

few ready to sit down and do the necessary paperwork it will be

months before we know if the money pledged by the government will be

enough to meet demand. In One of the first places to be affected in the

south was Hambledon in Hampshire, with roads disappearing under the

floodwater at the beginning of the year. It's only been this week that

they started removing the sandbags from the village. Tony Higham is the

chair of the Hambledon Flood Action Group and joins us now. It is the

human cost as much as the stuff you can put into spreadsheets and claim

back. Lost business as well as houses flooded. Yes, I felt so

terribly sorry for those people whose lives had been stood up side

down, people who are paddling in water at the moment, for the last 72

days our flight has gone on, you cannot evaluate that in human costs.

Lost business as well from people who would have been doing work on

some of those houses and cannot, people who could not get out to

their vans as well. It is easy to look out for the shops or the pub

but if you are a window cleaner, a Gardner or a cleaner or something

and you cannot get to your clients you cannot work. Are people thinking

about filling those forms in? They are. At the moment we are trying to

stop people from flooding so it is still early days. The council will

have got the deal ready quite soon. You were a National Flood Forum,

were you not? Is the feeling they are one of anger? Are people saying

if you had spent more money we would not have this problem? Of course. Is

it important we do not forget about that now the sun is out? It is

important not to just have a barbecue summer and forget about it.

In 1944 we had this big ditch through the village of Hambledon and

that was filled in so that American tanks could be parked in the village

for D`day, our forefathers had it all sorted but what we have to do

now is replicate that ditch. The rowdy huge amount of lessons to be

learned, are we up to it as a country or are we wasting our time

trying to deal with something that has not happened for 70 years?

Hambledon has not had money spent. Are we ready as a country? I do not

think any country can afford to be ready for the kind of biblical

damage we suffered. It is worth noting that due to the efforts of

this government and the previous government, the trouble that was

encountered this time and the number of homes flooded were substantially

lower than 2001. It is something we can celebrate from both sides of the

political fence. I do not think with the kind of deluge we saw any more

investment would have made a huge difference. Winchester this time

flooded much later and for lifelong ban it had done previously and one

of the key differences was just above Winchester the Moors had been

in new ownership and the flooded in a different way and did not reach

out which helped Winchester. I think we should worry that some of the

expertise may be lost if we get as many redundancies as are planned in

the environment agencies, staff who know about this stuff. The chief

scientific officer said with climate change events like this will happen

more and more often. That was a big investment started in flood

prevention. We have got to sustain that. My worry is that the secretary

of state removed flood prevention from his list of departmental

priorities and he does not believe in climate change. There are no

magic wands but you need government who understand these once in 100

year events that happen every four or five years now. They are going to

happen more often and investing in dealing with floods will be as much

a part of the national infrastructure as railways or roads

or railway lines. The key test will be, do they now understand this is

not something that can be put on one side? What feeling do you get about

that? As far as our pipe is concerned, this is obviously an

investment, we have had the Environment Agency rules formula for

the last nine years, the formula still remains. You think the formula

is wrong? Yes, you divide the number of properties protected into the

cost of the pipe and if it does not work, they will say it does not work

this year or next year or ever, then we have a problem with the formula

for a small rural community. The Prime Minister has said more

flexibility has to be used as far as this formula is concerned for small

rural communities. Thank you for talking to us about it. In just

under two months we'll be going to the polls to elect the next European

Parliament. We've heard a lot recently about how the parties will

renegotiate terms or offer an in/out referendum. But what's their pitch

to get us to vote for them at the end of May? We went over to Brussels

to talk to MEPs from the five parties with representation in our

region. Over the next five weeks we'll be hearing from all of them,

today it's the Liberal Democrats. The reason to vote Liberal Democrat

is because we believe in making this place work. It needs a lot of reform

but we are here leading because for reform, we are determined to get the

benefits of Europe for Britain. Until recently he was one of the

UK's most the new European politicians. He counts

crime`fighting among his achievements in the last five years.

I have continued some of my earlier work in getting our police forces

working together across frontiers to tackle the increasing problem of

internationally organised crime. This is one of the areas where I

think Britain benefit hugely from our membership of the European Union

and weird I disagree with the Visa me and those conservatives who want

to bring us out of things like the European arrest warrant. Surely at

the moment it is for controlling our own borders and increasing our

sovereignty? It says and I am pleased to see the cutting

government has done much more of that than the previous government

did. To fight crime, as any police officer will tell you, you need to

have your police forces and your judiciary is working together. One

of my jobs as an MEP is to explain what I do here. I spent time talking

to people, people who often have experience through their

professional lives, with other parts of the European Union, we have to

tell them what we do and why. I wish there were more people arguing that

case. We are the party of in. We will go out and take on the

anti`Europeans, the narrow nationalists in this debate. We

cannot have a country who would say you can put the blankets over your

head and hope the world would go away. I want us to be a generous,

tolerant and outward looking country. That means being a member

of many of the great institutions we have helped to shape. I Cannes

surely this is bad timing for people who share your opinions. The tabloid

press say people of the United Kingdom are viscerally opposed to

our membership of the European Union. I do not believe that, I feel

people have got thoroughly fed up with this negative debate about

Europe and constantly taking credit for Westminster for everything that

goes right while blaming Brussels for what goes wrong. We might see an

increase in the turnout at this election and I think more of the

pro`Europeans will come out and make themselves heard. And over the next

few weeks we'll be hearing in turn from the Conservatives, UKIP, Labour

and the Green Party. Wednesday sees the budget of course, what are you

hoping to hear from the Chancellor? A starting rate of being tax or 40p

tax threshold being raised? I think the decision to cut the top rate of

tax was wrong at a time when the country is struggling. I think there

should be changes to the bank bonuses so we can afford to have a

proper job creation or gram for long`term unemployed young people. I

would like to see action taken to freeze and cut business rates. The

things Labour have been setting out our things we would do if we were

writing the budget this week. I doubt we will see those things.

These are things Ed balls would do as Chancellor? They are things we

have set out that we would do if we were in government facing the

challenges of today. Although the growth we have had at the moment is

welcome it is a long way from being sustained and being fair. There are

many families here in southern England who viewed the economy is

doing better then they look at their own pockets and household incomes

and it does not feel like that to them. In those circumstances why was

cutting the top rate of tax a priority for the country? There are

still redundancies to come, all the austerity still has to carry through

and people 's wages will not rise, we saw that with the public sector.

The public sector pay rise this year will be 1%. Why Glasgow people are

not feeling better. Every household, a government, anybody is any

position where they cannot afford their expenditure, they have to cut

it back. In the public sector the biggest cost is people and we have

to keep a tax `` that. And the very bottom end I want to see the

threshold rising, more people taken out of tax at the bottom end. In

other words, fewer people paying any tax at all. The people who earn the

least read the least tax that seems obvious. To be clear, the best way

we can help the United Kingdom and its way forward in the world is to

make sure we can pay our way. The only way to do that is control

public spending. If we have got room for tax cuts they should be at the

bottom end. If I was in the health service I would think you have spent

?3 billion on a health service reorganisation that nobody wanted so

the government is prepared to waste money on that scale, they are in no

position to lecture people about how they spend. We managed to maintain

the health service in real terms. Let's move on. Now our regular

round`up of the political week in the South in 60 seconds, and where

we discover that everything has a price. What price peace and quiet?

?1000 according to Gatwick Airport who are offering the cash to people

living nearby if they are allowed to build a second runway. Oxford City

Council say rising property prices are causing them to offer properties

as far away as Birmingham. Many say that is too far. The army tried to

save a shilling by replacing regular soldiers with reservists but

admitted mistakes in the outsourced recruitment process may leave them

short`staffed. Launching a new Parliamentary maths group is Gosport

MP backed teaching maths to those aged 18 to improve jobs. Some fancy

engineering in these drones being tested by Sussex Place, the cost of

this idea in the sky is ?35,000 each. Everything has a price. This

week we are mourning the death of Bob Crow and Tony Benn, everybody in

the eulogy said men of principles but at the time a lot of people

disagreed with those principles, are we typically? Know, most people in

Labour politics actually said they respected Margaret Thatcher. They

did not agree with her but there is a desire in politics and the public

for conviction politics. People were you know what they stand for and

where they are coming from. I was pleased people from the right paid

tribute to these two men. I saw Tony Benn in theatre, he was very

entertaining to listen to. There is room for those people in politics

and in life, he was a remarkable man. That's the Sunday Politics in

the South, thanks to my guests George Hollingbery and John Denham.

Don't forget to keep up`to`date with southern politics by reading my

blog, there's the failure marked success. -- not

success. Andrew, back to you. Has George Osborne got a rabbit in

his Budget hat? Will the Chancellor find a way to help the squeezed

middle? And how do Labour respond? All questions for The Week Ahead.

And joining Helen, Janan and Nick to discuss the budget is the general

secretary of the Trades Union Congress Frances O'Grady. Welcome

back to the programme. I know the TUC has a submission, but if you

could pick one thing that you wanted the Chancellor to do above all, what

would it be? We want a budget for working people, which means we have

to crack the long-term problem of investment in the British economy.

Certainly I would like the Chancellor to merit that title they

want of the new workers party, and take action on living standards, but

if they're going to do that it's got to be about unlocking investment. In

the period where the economy has been flat-lining there has been

little business investment, but there are signs towards the end of

last year that it is beginning to pick up. But a long way to go. The

problem is we have key industries like construction and manufacturing

that are still smaller than they were before the recession. The

government itself, of course, has slashed its own capital investment

budget by half. There is plenty of good and important work that needs

to be done from building houses to improving the transport system, to

improving our schools. And the government really needs to pick up

that shovel and start investing in our economy to get the decent jobs

we need, the pay increases we need, and that in itself will help

stimulate demand. It was Alistair Darling who cut in 2011, and it's

interesting that Ed Balls in his plans for the next parliament would

run a current budget surplus by the end of the parliament as opposed to

George Osborne who would have an overall budget surplus. That gives

Ed Balls or -- more wriggle room to do what you talk about, but he is

reticent to talk about it. He does not want to say that he has an

opportunity to spend on investment because he fears if he says it he

will be attacked by the Conservatives for being

irresponsible. Why is business doing this? The recession was deeper than

any since the war and the recovery was slower than almost any since the

war. The lag, the time it takes to get over that is longer than anyone

expected. I read the same evidence as you towards the end of last year

pointing to money being released, and it depends what it is released

on, whether it is capital investment or bringing in people on higher

wages. The one surprise in the downturn is how well the employment

figures have done, but they have not invested in new capacity and they

are sitting on a lot of dosh. I looked at one set of figures that

said if you took the biggest company in Britain, they have about 715

billion pounds in corporate treasury -- the biggest companies. I think

it's reduced a little but they are sitting on a mountain in dash of

skills. Yes, but they're not investing in skills, wages, or

sustainable jobs. The new jobs we have seen created since 2010, the

vast majority of them have been in low paid industries, and they are

often zero hours, or insecure, or part-time. So it's not delivering a

recovery for ordinary working people. Government ministers, as you

know when you lobby them, they are anxious to make out that they know

the job is not done and the recovery has just begun, but the one bit they

are privately proud of, although they can't explain it, is how many

private-sector jobs have been created. A lot of unions have done

sensible deals with employers to protect jobs through this period,

but it's not sustainable. The average worker in Britain today is

now ?2000 a year worse off in real terms than they were. On a pay

against price comparison? It doesn't take into account tax cuts. The

raising of the personal allowance is far outweighed by the raising VAT.

Does the raising of the threshold which the Lib Dems are proud of and

the Tories are trying to trade credit for, does it matter to your

members? -- take credit for. It matters that it is eclipsed by the

cuts in benefits and know what is conned any more. We're going to hear

a lot about the raising of the allowance, but as long as the real

value of work, tax credits, things like that, people won't feel it in

their pocket, and they will find it harder and harder to look after

their family. When you look at the other things that could take over

from consumer spending which has driven the recovery, held by house

price rising in the south, it is exports and business investment, and

you look at the state of the Eurozone and the emerging markets

which are now in trouble, and the winter seems to have derailed the US

recovery. It won't be exports. Indeed, the Obie Eich does not think

that will contribute to growth until 2015 -- OBI. So the figures we

should be looking at our business investment. And also the deficit.

The deficit is 111 billion, and that is a problem, because we are not at

the end of the cutting process, there are huge cuts to be made. I

understand we are only a third of the way through. That will

definitely affect business confidence. It is clear that the

strategy has failed. Borrowing has gone up and it's not delivered

improved living standards and better quality jobs, so cutting out of the

recession is not going to work. The structural budget deficit was going

to be eliminated three weeks today under the original plan. They missed

target after target. Every economist has their own definition of that. I

think Mark Carney is right when he says that fundamentally the economy

is unbalanced and it is not sustainable, growth is not

sustainable. But if it clicked on, it would be more balanced. It is not

just north and south and manufacturing a way out with

services, but it is also between the rich and everybody else. What do you

make of the fact that there will effectively be another freezing

public sector pay, or at least no more than 1%? Not even that for

nurses and health workers. But they will get 3% progression pay. 70% of

nurses will not get any pay rise at all. They get no progression pay at

all. I think this is smack in the mouth. Smack in the mouth to

dedicated health care workers who will feel very, very discontented

about the decision. Danny Alexander, I saw him appealing to

health workers do not move to strike ballots and said they should talk to

their department. But about what? Is that real pay cut has been imposed,

what are workers left with? So do you expect as a result of yet more

tough controls on public sector pay that unrest is inevitable? I know

some unions will be consulting with their members, but ultimately it's

always members who decide what to do. It does seem to me insulting not

to at least be honest and say that we are cutting real pay of nurses,

health care workers, on the back of a ?3 billion reorganisation of the

NHS that nobody wanted and nobody voted for. Their long-term changes

taking place here that almost talks about -- there are long-term

changes. It is how lower percentage wages have become of GDP on how big

the percentage of profits is. It seems to me there is a strong case

for some kind of realignment there. The biggest event of my life, in

this world, is the entry of a couple of billion more people into the

labour supply. At the end of the Cold War, India and China plugged

into the global economy. If there is a greater supply of that factor of

production, logically you conclude that wages will fall or stagnate and

that has been the story in this country and America and large parts

of Western Europe in the last generation. What is not possible is

for governments to do much about it. They can ameliorate it at the

margins, but the idea that the government controls living

standards, which has become popular over the last six months, and the

Labour Party have in establishing that, and I don't think it's true.

George Osborne's options are astonishingly limited compared to

public expectations. If wages have reached a modern record low as

percentage of GDP, who is going to champion the wage earner? We have

lost Bob Crow, Tony Benn passed away, so who is the champion? The

trade union movement is the champion of ordinary workers. We need those

larger-than-life figures that we will mess. Have you got them yet? We

have a generation of workers coming through. One thing about the loss of

Bob Crow is that the whole union movement has responded strongly to

that, and we want to say that we are strong and united and here to stand

up for working people and we will fight as hard as Bob Crow did.

Whoever replaces Bob Crow or Tony Benn, we can be sure they will not

come from Eton because they all have jobs in the government. I want to

put up on the screen what even Michael Gove was saying about this

coterie of Old Etonian 's. He's right, is he not? He's

absolutely right. We have the idea of the manifesto being written by

five people from Eton and one from Saint Pauls. A remarkable example of

social mobility that George Osborne, who had the disadvantage of going to

Saint Pauls has made it into that inner circle. Here is the question,

what is Michael Gove up to? If you saw the response from George

Osborne, there was no slap down, and they know this is an area they are

weak on an David Cameron will not comment on it. If this had been a

Labour shadow minister making a similarly disloyal statement, they

might have been shot at dawn. But there is a real tolerance from

Michael Gove to go freelance which comes from George Osborne. It's

about highlighting educational reforms that he wants to turn every

school in to eat and so it won't happen in the future. But it's also

pointing out who did not go to Eton school and who would be the best

candidate to replace David Cameron as leader, George Osborne, and who

did go to Eton school, Boris Johnson. Michael Gove is on

manoeuvres to destroy Boris Johnson's chances of being leader.

It's a good job they don't have an election to worry about. Hold on. I

think they are out of touch with businesses as well as working

people. You ask about who is talking about wage earners. Businesses are.

They are worried that unless living standards rise again there will be

nobody there to buy anything. We are running out of time, but the TUC,

are enthusiastic about HS2? We supported. We think it's the kind of

infrastructure project that we need to invest in long-term. He could, if

we get it right, rebalance north and south and create good jobs along the

way -- it could. Thank you very much tool. I have to say that every week

-- thank you very much to you all. That's all for today. I'll be back

next Sunday at 11am, and Jo Coburn will be on BBC Two tomorrow at

midday with the Daily Politics. Remember if it's Sunday, it's the

Sunday Politics.