16/09/2011 Daily Politics


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16/09/2011

As George Osborne warns that Britain is not immune to troubles in the Eurozone, has the City learned its lessons from the financial crisis? Jo Coburn presents.


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Alone and welcome to The Daily Politics on Friday. As George

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Osborne warns that Britain is not immune to troubles in the eurozone,

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has the City learned the lessons of the financial crisis? And after a

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bruising year of lost referendums and other setbacks, how are the

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Liberal Democrats feeling as they head towards party conference? And

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what does the future hold for the Tories? We are joined by one of the

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brightest young stars. And talking of big ideas, we go

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back to the free school in Slough which opened its doors for the

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first time this week, Langley Primary School. We started with a

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proposal, and then it picked up more and more support. And now, it

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And with me today, Sue Cameron of the Financial times, and Jackie

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Ashley from The Guardian. Later today, George Osborne will join

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European finance ministers to discuss the global financial crisis.

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This morning he has told an audience of business people in

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Manchester that the fate of the euro cannot be a matter of

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indifference to Britain. indifference to Britain.

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Here at home we are not immune to what is going on on our doorstep.

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America and the eurozone are our two biggest export markets. But I

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am confident that we can weather the storm. That was George Osborne.

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He's talking about Britain not being immune, Sue Cameron gone but

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it seems that the banking system is better regulated, but nonetheless,

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is not immune to Rogue Traders? Absolutely, what a spectacular

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disaster. And it comes almost three years exactly since the collapse of

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Lehman Brothers. It is a terrible problem for confidence. As George

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Osborne says, although Britain might be in a better position to

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weather the storm, we are certainly not immune from such storms. It

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seems as though the whole system is staggering from crisis to crisis.

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And then, in the middle of it, you get UBS losing �2 billion. It is

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the same greed, the same driven profit at any price. That's the

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point - is it about culture, is that culture still so very

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prevalent, do you think, Jackie Ashley? I think the very fact that

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he could lose that much money without anybody noticing, it must

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have been going on for some time, presumably. Another interesting

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thing, in the report on banking which they're all considering now,

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I don't think there is any mention of dealing with Rogue Traders like

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this. So I think this will happen again, unless more reforms are put

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in place. I suppose it could be grist to the mill for those who

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support the separation between retail and investment banking.

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can you stop it? If they go off and have a gamble, how can you stop it?

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This time last year, things were challenging enough for the Liberal

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Democrats. But since that party conference, the party has had a

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torrid time. Rebellions over tuition fees were followed by

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defeat in the AV referendum, and near annihilation at the local

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elections. Add in agonies over the NHS, boundary changes which could

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hit the party hard, and this week promises to be even more

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challenging for the party. Our political correspondent Carole

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walker joins us now. What do you think will be top of the agenda?

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think the overall problem for the party will be how it can set out a

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really distinctive Liberal Democrat voice, one which appeals not just

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to Liberal Democrat activists, but to voters more widely, without

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becoming some sort of internal opposition to their coalition

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partners. Clearly, there are some key flashpoints on this. We know

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that on the NHS, for example, some very senior figures in the party,

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including Baroness Williams, are very unhappy indeed that the

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leadership at the moment are planning to have just a topical

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discussion and a question-and- answer session on this. They want

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to have a proper motion which they can vote on to set out their

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opposition to some of the changes which are being brought in in the

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NHS, even though those changes have been amended somewhat. They're

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trying to force a vote in the Conference on that. Beyond that, it

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will be fascinated to see what kind of tone we get on things like

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taxation. The Lib Dems are very opposed to any moves to scrap the

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top 50p rate on tax. They want the effort to go into lifting people at

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the bottom end. And indeed, concerns on things like benefits

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changes, in particular the ideas being floated about removing some

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of the benefits from rioters. I'm joined now by the Liberal

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Democrat MP Tom Brake. On health, is it time for your colleagues like

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Baroness Williams to be quiet on this issue? Certainly we have made

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a huge amount of progress on the bill. The Government came forward

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after the listening exercise with more than 180 amendments. I think

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it has been substantially improved. So, they should shut up? There may

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be scope for more negotiations behind the scenes, but in terms of

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the broad brush of the bill, I think that it is what is going to

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be. So, the Liberal Democrats will not be able to vote on this, the

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party faithful? We're going to have a question-and-answer session on

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the subject, I'm sure the members will want to express their views.

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But broadly speaking, we have made the changes which were needed to

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the bill, particularly addressing people's concerns about

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privatisation. That does not sound very democratic, it sounds like

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you're running scared of what my -- what they might vote for. The we

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had a very democratic conference in the spring, we had a motion which

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set out clearly what we were going to do. You have had a pretty awful

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year, electorally, and now we have had the boundary review, and it

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looks as if the Liberal Democrats are going to come off worse in

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terms of seats being split up and lost, not least your own... If you

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talk to any of the political parties, they will probably say the

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same thing. But how do you feel about your seat? Clearly, if the

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Boundary commission proposals go ahead, it becomes a completely

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different -- seat. It gets split in half and gets joined up with parts

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of Croydon. My personal opinion is that that is not a natural

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community, and the boundary commission will need to look at it

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again. You did vote for these proposals in the first place. But

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now it looks as if you and others are saying you do not like the

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results? What we voted for was that there should be 50 fewer seats, we

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accept that. The Boundary commission has come forward with

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proposals, and I think we are entitled to put forward alternative

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suggestions. Will you vote it down if it does not go the way you would

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like? It is far too early to say what the outcome might be. If any

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vote takes place, it will be in 20,013. -- it will be in 2013.

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it will be difficult for you and other Liberal Democrats. Do you

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accept that many of your colleagues have built up personal connections

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with the electorate, which you will now lose? If the boundaries are

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changed, then of course we will have to establish ourselves in an

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adjacent part of the constituency. But I'm confident that my

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colleagues are capable of doing that. You do not feel stitched up?

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No, I think the Boundary commission have conducted an exercise which to

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a great extent has been a desktop exercise. We now have to come back

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to them and say, you need to look again, particularly at natural

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communities, and their historic links, and how they co-exist.

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Looking at taxation, the party has always said that it wants to take

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people out of the bottom end of the scale, something you say you have

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partly achieved. You're also clear that the 50p tax rate should stay

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for the moment. But is there a possibility of trading that, seeing

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it abolished, if you got your mansion tax? Again, it is far too

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early to say. We have said clearly that we are committed to increasing

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the tax threshold, up to �10,000, by the end of the parliament. We

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are on track to do that. And we believe that at this present moment,

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we need to maintain the 50p tax, because people on low and middle

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incomes are suffering. But would you be prepared to see the 50p tax

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rate abolished if you had some kind of mansion tax or land value tax at

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the other end? I'm not part of the Treasury team. But what would you

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like to see? It is too early to say. It is above my pay grade. Well, I

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think it is not going to happen. The Tories just will not have it.

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They will not have a mansion tax. I think it will be the issue which

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will show the dividing lines between the two parties in the

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coalition. There will be a debate about the 50p tax rate, because it

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is symbolic. It says what each party stands for. It will be very

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interesting what comes out at the end. At the present moment in time,

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with the economic threats which we are facing as a country, and the

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difficulties for people, particularly on low incomes, I

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think it would be completely unsustainable for us as a party to

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get rid of the 50p rate. But the Conservatives are saying, yes, we

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need to do it to stimulate business. But it will be much harder for them,

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now that they have had this disaster with the UBS, politically,

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to get rid of the 50p tax rate. what if this review, in January,

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says that it makes no money for the Treasury and harms the economy,

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what would your position be then? We will consider the report

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carefully. Those arguments have been deployed in the past, but I

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would want to examine the detail. It sounds as if you would not be

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prepared to even look at the idea of abolishing that 50p tax rate.

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Maybe we can do things in terms of, if there is an issue about the 50p

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rate, and issues to do with tax evasion and tax avoidance, then

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that is something we could address. But again, I think the message

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which that would give, at this present moment in time, would be a

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very, very bad message. Do you agree with Chris Huhne that Nick

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Clegg would make a tremendous European Commissioner? I'm sure

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that if...! I'm sure that Nick Clegg, in future years, when he is

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considering alternatives, maybe that is something he would consider.

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But personally I am very happy with Nick Clegg as party leader. He's

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doing a great job. It was borne out in a recent opinion poll in the

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Times, which showed that as a party, we have both the right policies,

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according to a substantial number of people, as well as the right

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leaders. So much for the Lib Dems, but what

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about the Tories? It should not be forgotten that they did not

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actually win the general election last year. The coalition still has

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more than three years to run. But a group of Tory MPs have written a

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book which sets out their vision of a future without the Liberal

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Democrats. Looking into their crystal ball, they see their ideas

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returning David Cameron to Downing Street at the next election, but

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also but in Britain firmly on the path back to greatness. They're

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calling for radical reform of the Health Service, patients to be held

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responsible for drinking, smoking and diet, and being asked to

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contribute more for excessive and preventable dependency on the NHS.

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They think lower tax rates are the answer to kick-starting growth,

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arguing that it previously worked for countries like Estonia, which

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has a flat rate of 26%. The book is bursting with new ideas, but they

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have nothing to say about David Cameron's pet project, the "big

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society", perhaps because that slogan failed to win the day in

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2010. We are joined by one of the authors, Conservative MP Chris

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Skidmore. Let's be clear, you have got no time for the idea, I presume,

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that the coalition might continue beyond this Parliament. Absolutely

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:13:18.:13:19.

it will depend on the election in 2015, the voters. But what about

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you, you would not want that? want to fight for a Conservative

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government, with David Cameron as the Conservative Prime Minister.

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But what about the view which has been expressed to me by people

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within the party, and MPs like Nick Knowles, that being dependent on

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Liberal Democrat support is preferable to relying on MPs on the

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right of the Tory party? I'm a Tory MP, and many of the 150 new MPs

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fought as Conservatives, and we want to fight as Conservatives at

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the next general election. This is why we have put this book together

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now. We have probably less than 1,000 days until the collision ends.

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We need to get these ideas out for discussion. So Domitian -- the

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coalition ends. Have you had in the input from people at the top of the

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party? The book has only just been published. You said the coalition

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is at its best when it is bold, and it is bold when it is Conservative,

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so presumably you feel the Government has suffered by being

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constrained by the Liberal Democrats? When you look at Iain

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Duncan Smith's welfare reforms, capping housing benefit, when you

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look at Michael Gove's fiscal policies, these are successful

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policies which are working, but overall, they are Conservative

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policies. Hopefully when it comes to the general election, the

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electorate will have realised that within the coalition, it has been

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the Conservative Party which has presented radical reform. Three

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schools, NHS reforms, nothing to do with the Liberal Democrats...

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disagree. Clearly, as a coalition, the different parties have pushed

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parts of their manifesto with varying degrees of success. An

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assessment on The Politics Show actually said that three-quarters

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of the programme of the coalition was emanating from the Liberal

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Democrats. But on those issues we There are Liberal Democrat

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ministers in those departments, but it may be that the overall flavour

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comes more from the Conservatives' manifesto. In other areas of policy,

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it will be a Liberal Democrat emphasis that comes across.

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feel that NHS reform has been watered down because of the Liberal

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Democrats? Not at all. The Health Select Committee made very similar

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recommendations to what has happened about clinical

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commissioning groups. We would agree that we have to make reform

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of the NHS is to survive for the next 30 years, otherwise it is

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going to run out of money with the ageing population. One of the

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things you have said in the literature is that patients should

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be held responsible in the future for lifestyle choices, so excessive

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smoking, drinking, diet and obesity. You say they should be expected to

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contribute more. How? This is a debate that we need to have. First

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and foremost, we want to stay within the context of the NHS

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constitution, free at the point of delivery, but when you look at

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services in the NHS and you look at people who are dependent on it,

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some people persistently use NHS services, and resources are being

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taken up... How do they contribute more? That is something we have to

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discuss. You're talking about contributing financially? It may be

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the case that if somebody has told that they have to stop leading a

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lifestyle in a certain way and they persistently refused, the NHS and

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the doctors have the ability to act on that. In what way? Should they

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be refused treatment? Should they pay? It may be that they could be

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paying through a social insurance scheme. When you look at the rest

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of Europe, the Netherlands, for example, they have a compulsory

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scheme which the state subsidises. They have a reset mechanism which

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ensures that the most probable patients, those with genetic

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disorders, the insurance companies compete for that. We do not put

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that idea in the book, but in terms of funding the NHS by 2050, it will

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need about �230 billion in order to cover the ageing population. We

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have to find that somewhere eventually. You have hinted that

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the idea of social insurance. It has always been difficult to

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suggest it. How would you persuade an electorate to sign up for that?

:17:49.:17:54.

David Cameron has said, we will not go down that route. It is not

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something for 2015. The Netherlands spent 25 years discussing how to

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fund their healthcare system. We could have a conversation or 25

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years. We have a commission talking about the social care, and we may

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have to look at an insurance mechanism in order to fund

:18:08.:18:12.

residential care. You talk about people who smoke a lot and eat too

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much and drink too much. By and large, these tend to be the poorer

:18:16.:18:20.

groups in society, and it seems to me the only answer is to say that

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they are going to have to pay. But surely cannot be right, it is not

:18:24.:18:29.

an election-winning formula. Balance that in the book with what

:18:29.:18:32.

happens in the United States where you create health gaps. We do not

:18:32.:18:36.

focus on who is using the NHS, and when you look at statistics

:18:36.:18:41.

elsewhere, about 10% of the population are responsible for 40%

:18:41.:18:45.

of the costs. If you target and intervene on that percentage, you

:18:45.:18:50.

can bring down costs dramatically. How do you marry that with the

:18:50.:18:53.

anti-nanny state that we hear so much about Greta Marc Dutroux not

:18:53.:19:03.
:19:03.:19:05.

want public education about not drinking and smoking. The approach

:19:05.:19:08.

is universal. The reason why the NHS does not deliver as much as it

:19:08.:19:12.

could is because millionaires get the same treatment as the people

:19:12.:19:16.

who desperately-needed. What do you think about that idea? I am pleased

:19:16.:19:20.

that Chris is putting his forward as an idea, something we can

:19:20.:19:25.

discuss, because we generate a lot of discussion in coalition. You are

:19:25.:19:29.

dead against it! We might want to put into play ideas that you

:19:29.:19:32.

achieve what Riz is trying to achieve by putting additional

:19:32.:19:37.

taxation on fatty foods, for instance. -- Chris. Generally, you

:19:38.:19:42.

look fairly shocked at the idea. What I am comfortable with is that

:19:42.:19:45.

in coalition we are grown-up enough to discuss these ideas and come

:19:45.:19:53.

forward with a decision... You are sitting on the fence, Tom Brake.

:19:53.:19:58.

strong, puritanical idea of, we will tell you how to live your lies,

:19:58.:20:01.

the rich will be able to enjoy themselves because there will

:20:01.:20:04.

always be doctors who look after them. The people who will suffer

:20:04.:20:08.

are the poorest. People have to take greater individual

:20:08.:20:12.

responsibility over their own lives. Having universal service, we have

:20:12.:20:17.

not focused on how people can take individual responsibility. Without

:20:17.:20:21.

money, they cannot. And dedication as a role. There is an entire

:20:21.:20:27.

slimming industry, a multi-million- pound industry... Don't we know it!

:20:27.:20:33.

I'm afraid we're going to have to wrap it up. Now, over the past year,

:20:33.:20:36.

the Daily Politics has been following the progress of a free

:20:36.:20:39.

school being set up near Slough. Last week, Langley Hall Primary

:20:39.:20:42.

School opened its doors for the first time. In a moment, we will

:20:42.:20:48.

speak to the woman who set it up, but first Adam Fleming goes back to

:20:48.:20:57.

Day three of a new term at a new school. The second that you walk

:20:57.:21:00.

into this building, you can take it is is a school that has been open

:21:00.:21:05.

for less than a week. First of all, everything is immaculate, and the

:21:05.:21:14.

air is the full of smell of fresh Langley Hall is one of 24 free

:21:14.:21:18.

schools that opened this month. It is publicly funded, free from local

:21:18.:21:22.

authority control, and it was set up by the owner of an education

:21:22.:21:26.

company. On the Daily Politics, we have followed its progress from the

:21:26.:21:32.

birth of the idea to the first chime of the school bell. It is a

:21:32.:21:38.

bit like a snowball coming down a hill. It started with a proposal,

:21:38.:21:41.

obviously, and as it started to roll, it picked up more and more

:21:41.:21:46.

support, more and more people into the project. Things started rolling

:21:46.:21:50.

in June last year when potential free schools applied to the

:21:50.:21:54.

Department for Education. That was followed up in December 2010 by a

:21:54.:21:59.

very detailed business plan, 250 pages long. In April, parents

:21:59.:22:03.

applied for places, a leap of faith because they did not know which

:22:03.:22:06.

building it would be in. Some free schools Ali had their funding

:22:06.:22:14.

agreed late last month, which was a little bit last minute. -- Only.

:22:14.:22:19.

has been bumpy. At every level, all the way along the line, the delay

:22:19.:22:22.

we experience in releasing funds, you are ready to go, just waiting

:22:22.:22:27.

for that release, because things take time to put in place. Some

:22:27.:22:30.

involved in the project think the government will not let the school

:22:30.:22:35.

be free enough. I think the term free school is a misnomer, because

:22:35.:22:40.

in actual fact we have more red tape than ordinary schools. They

:22:40.:22:44.

have insisted on putting in extra layers of financial controls to

:22:44.:22:51.

make sure that we cannot misuse public money. Money is one of the

:22:51.:22:54.

things that worries the critics. Nick Clegg claims he prevented free

:22:54.:23:02.

Something that has always been denied by the Conservative

:23:02.:23:05.

Education Secretary, Michael Gove. Labour say that town hall education

:23:05.:23:10.

budgets will be cut as a result. None of that seems to bother the

:23:10.:23:14.

parents of Langley Hall, where it is home time. I think it was about

:23:14.:23:19.

it being a new school, it is exciting. I am a mature parent, it

:23:19.:23:24.

looks like it is going back to what it was before. Like all reforms to

:23:24.:23:27.

education, a lot of time will have to pass before we know whether the

:23:27.:23:30.

free schools policy is really working.

:23:30.:23:35.

Adam Fleming reporting, and we are joined by Sally Eaton, director of

:23:35.:23:38.

education at the Langley Hall primary school. It has been a long,

:23:38.:23:43.

hard road. It certainly has. Give us a flavour of what it has been

:23:43.:23:47.

like. It has been challenging, as you can imagine, and we did not

:23:47.:23:52.

expected to be anything else. The timescale was, I suppose, one of

:23:52.:23:56.

the challengers. We had 10 weeks to refurbish a rather large building,

:23:56.:24:02.

and it looked as if that was an impossible task, but we managed it.

:24:02.:24:08.

Four days before we actually opened, we have no tables and chairs,

:24:08.:24:12.

because the company that was going to deliver them to us went into

:24:12.:24:17.

liquidation. We had to find replacements. I see, yes, so

:24:17.:24:22.

difficult majestically. Yes! Picking up on what one of your

:24:22.:24:25.

colleagues said, free schools is a misnomer because you remain weighed

:24:25.:24:30.

down by bureaucracy and rules and regulation. Is that how you feel?

:24:30.:24:35.

Yes, I mean, we met almost on a weekly basis from someone from the

:24:35.:24:38.

DFB all the way through the process. They wanted to know what our

:24:38.:24:44.

policies and procedures were. There were times when they advised,

:24:44.:24:49.

strongly advised that things were changed. So yes, you know, we were

:24:49.:24:56.

very much rained in and sort of kept together. Is that how you

:24:56.:24:59.

understood it was going to be at the beginning, the idea that he

:24:59.:25:04.

would be more free to do your own thing? Yes, I think we did. I think

:25:04.:25:10.

we will be free with our curriculum, and that is very important to us.

:25:10.:25:12.

Although the national curriculum will be the bedrock and the

:25:12.:25:18.

foundation of what we do, we want to be able to look at the creative

:25:18.:25:24.

arts and other subjects and perhaps develop them in a different way.

:25:24.:25:27.

Sue Cameron, the idea of free schools here does not sound as free,

:25:27.:25:32.

or from the film, as free as the Secretary of State and the

:25:32.:25:36.

government said it would be, free of local authority control, free

:25:36.:25:40.

with the curriculum. You have got Whitehall on your back. It sounds

:25:40.:25:45.

as though you have! I think it is a pity. It is clearly quite difficult,

:25:45.:25:51.

it is a new concept, and if they just said, you can do what you like,

:25:51.:25:55.

or something pretty close to that, when things went wrong... One of

:25:55.:25:59.

the good things about the schools, there is an element of them being

:25:59.:26:03.

pilot projects, so different things can happen. Some are bound to be

:26:03.:26:07.

more successful than others. You have to be careful that to have

:26:07.:26:10.

some financial controls at the beginning. But it does sound as

:26:10.:26:15.

though they have overdone it. not know, it is public money. If he

:26:15.:26:18.

wanted to use your own money and charge fees, you can have a private

:26:18.:26:23.

school, but they should be some accountability on that. On the idea

:26:23.:26:27.

of profit not being allowed, should they? Sweden argues that is what

:26:27.:26:31.

made them successful. I worry when profit comes into education like

:26:31.:26:35.

that. If it is government money, the state says it will educate the

:26:35.:26:39.

nation's children, and then somebody else makes a profit.

:26:39.:26:42.

not think it is necessary either. The money that we have got coming

:26:43.:26:46.

in is perfectly sufficient, and it just brings in an element that

:26:46.:26:51.

might be confusing. Thank you very much. Time now to see what else has

:26:51.:26:59.

been going on in our round-up of David Cameron began the week in

:26:59.:27:02.

Moscow for the first official talks since the poisoning of almost by

:27:02.:27:07.

Alexander Litvinenko in London in 2006. The Prime Minister said he

:27:07.:27:12.

wanted to rebuild the relationship. The Russian Prime Minister, Dmitry

:27:13.:27:20.

Medvedev, he would have made a good KGB agent. Warnings of cuts to

:27:20.:27:22.

pensions, the Labour leader Ed Miliband upset activists by

:27:22.:27:27.

refusing to support strikes. believe it was a mistake to have

:27:27.:27:30.

strikes at the last summer, and I continue to believe that. Nick

:27:30.:27:34.

Clegg revealed a prescription for growth, getting the country to work

:27:34.:27:38.

building new roads, rail and broadband projects, but there was

:27:38.:27:41.

gloomy news as unemployment rose sharply, particularly among the

:27:41.:27:46.

young. Mr Cameron denied claims of complacency. If we were not taking

:27:46.:27:51.

a step, you have to make the cuts! At plans for a shake-up of

:27:51.:27:55.

constituency boundaries left many MPs are stunned and even some big

:27:55.:27:59.

beasts worry about their future. Ken Clarke, Member of Parliament

:27:59.:28:06.

for Rushcliffe. How very candid, as ever, of Ken Clarke. Thank you to

:28:06.:28:11.

my guests. Enjoy the conferences. That is all for this week, but I'll

:28:11.:28:18.

be back on Sunday at 1:35pm on Sunday on BBC One what the Politics

:28:18.:28:22.

Show. We will be back on the Daily Politics next week with all the

:28:22.:28:25.

news from Birmingham. Until then, we will leave you with that rare

:28:25.:28:28.

As George Osborne warns that Britain is not immune to troubles in the Eurozone, has the City learned the lesson from the financial crisis?

After a bruising year of a lost referendum, broken pledges and now the prospect of boundary changes that will cost them seats, how are the Liberal Democrats feeling as they head to party conference?

What does the future hold for the Tories? One of their young stars thinks it is time they started thinking radically about life - and policy - after the coalition.

The programme returns to Langley Hall free school in Slough which opened its doors for the first time this week.

Jo is joined by Tory MP Chris Skidmore, Lib Dem MP Tom Brake, plus the Guardian's Jackie Ashley and Sue Cameron of the Financial Times.