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Afternoon, folks, welcome to this Daily Politics conference special

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live from Birmingham. They are working up a head of steam

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against the rich, the Tories, their partners.

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Later this morning, the Business Secretary, Vince Cable is to unveil

:00:38.:00:43.

his plans for curving ective pay. We bring that live. The party is in

:00:43.:00:48.

Tory bashing mode, in the hope it restores the identity and repair

:00:48.:00:54.

its ratings in the polls. They are dire. That is for the

:00:54.:01:01.

party and its leader, Clegg. The party are at 11% and 60% of the

:01:01.:01:04.

people have no idea when the Lib Dem leader stands for.

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Vince Cable is to vent his annual splurge of populism before the

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party faithful. Last year he called the bankers, perspectives and

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conmen. This year, he is targeting highly paid executives. He is

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talking to the Energy Secretary, Chris Huhne, about all of that and

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more. We go existential and ask, why are we here? Why oh, why? Does

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a Lib Dem conference matter were you are in coalition with the

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:01:44.:01:45.

So, all of that and more is coming up in the next hour.

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It is TV conference gold. Public service broadcasting at its finest.

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With us to kick it off we have Sam Coates from the Times and Nick Watt

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from the Guardian, despite that, they are both friends, both of them.

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What is the mood of the conference? This is cheery. This is the first

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time in three or four years where there has not been a great fight at

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conference. What a lot are hoping is that broadly speaking the polls

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have bottomed up. There is an ever so slightly uptick in many of the

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opinion polls, they are hoping it will not get worse and they can

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start rebuilding the reputation ahead of a next election. Yes it is

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bad, but I was speaking to a senior Lib Dem official, who said if you

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remember how unpopular Tony Blair was after the Iraq war, he still

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managed to win in 2005. We have to remind people that things are not

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as black as they are sometimes painted.

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What do we make of the status of Nick Clegg? Back in May you may

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have thought this would be a lynch mob it is not that, but what...? I

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was at a fringe event, he spoke, half of the people in the audience

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were speaking amongst themselves? We all like to talk about economics.

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We have to take the economics analogy. That the Liberal Democrats

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have experienced sick kl growth, but the underlying structural

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position is dire. The growth is that at the time of the alternative

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vote when they lost they were on the floor. Nick Clegg looking like

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he was bleeding. They have managed to differ enSecretary of State

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themselves on the NHS, the tails are up, but the underlying

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structural position, facing the electorate in 2015, that is not

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looking good, they are still at the 11, 12% in the opinion polls.

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That is your views, but I have made a wee extra in Glasgow.

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Here in Birmingham, there is more security than ever it must mean

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that the Lib Dems matter at least. The theme of the conference is in

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Government on your side, but not if you are a Tory. They may be in

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coalition with the Tories, but the Lib Dems favourite sport at this

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conference is whack a Tory. Like the Tories, the Lib Dems are

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worried that the economy is grinding to a halt, but unlike the

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Tories, there are many Lib Dems who would like to see more fiscal

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stimulus and more printing of the money. I asked Danny Alexander if

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his plan A was still working or if there was a need for a plan A plus

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or even a plan B? The credibility that we establish, the commitments

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that we have made on the deficit reduction mean we are not facing

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the problems that many countries are facing. Looking around the

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eurozone there are doubts about the capacity of leaders to make the

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right decisions. Looking to the United States, their

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downgrade came from the rows going on in their political system.

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Having political leaders who take difficult decisions and sticking to

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them is important at a time like this. That is the view from the

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bridge, but what is the view from the deck along -- among the Lib Dem

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rank and file? Have you reservations about being in bed

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with the Tories? Of course! But is there no alternative? In this case,

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that was the, it was the least worst decision that could have been

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made at the time of the election. think that the two coalition

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partners have worked together rather more co-operatively than

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imagine that they may have at one point.

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That they could have been scratching their eyes out? That

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could have been a possibility. Would you like a badge? It does not

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express what I feel. I like the coalition... So you may wear that?

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Would you like to hold on to it? will keep it

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Four months away in a terrible local election results in the

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defeat of the alternative vote referendum, Nick Clegg must have

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felt that Birmingham would turn in a lynch mob, but it has not. The

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position is secure, but the average Lib Dem activist is still uneasy,

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even angry about being in bed with the Tories.

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Gems of wisdom, I think. Would you not agree? What would we do without

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you. I know. 50P tax rate? Am I right in

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thinking that they are going along in getting rid of it as George

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Osborne wants to do it, provided that they get something in return?

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And don't forget that George Osborne has done this study, he has

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said that he cannot get rid of the 50p tax rate until 2013 as it has

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to be in line with the pay freeze for the public sector workers, but

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there must be two things, one, getting the money you would have

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raised from the richer people through the mansion tax and the

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focus on tax cuts has to be on the lower earners and raising the

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coalition allowance, it talks about raising that lower income earn up

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to �12,000 so nobody on minimum wage has to be on that rate of tax.

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All of this Tory bashing, do the Tories care? There will be lots of

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Lib Dem bashing by the time we get to a Tory conference in a couple of

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weeks' time. So this is grown up? Yes. This is

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about reminding the party that they can have freedom inside of the

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coalition. Take the 50p tax rate, it is not live, it does not feel to

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me inside government. It is an artificial construct.

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To differ enSecretary of State? between the two parties and to

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cheer the troops along it is depressing that the coalition

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policy work like that, but that is what it takes. They have a licence

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to disagree, they will get to the same position. What is interesting

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is what Vince Cable will be saying when he is talking about cracking

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down on boardroom pay. His people are saying that this is going to

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happen over David Cameron's dead body, so that they know it is

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unlikely to happen. They know it will not happen. David Cameron is a

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young, fit chap, he will be fine. They know it will not happen. You

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have to say why are you doing it? It is one thing to differ

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enSecretary of State yourselves from the Conservatives, but they

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must not be a mini opposition. If you are putting up these ideas,

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that Vince Cable knows is not going to happen, you have to be careful

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not to cross the line. But there is a bigger problem for

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Vince Cable. It is this: Most of the business world would like a

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Business Secretary that champions business. He seems to needle at one

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end and what the objection for many Tories is that he does not to

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anything for the growth and the expansion of the private sector

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that is critical. Somebody prepared to put the rocket boosters behind

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British business, rather than making it difficult.

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:09:07.:09:08.

We will put that to the director of -- to Miles Templeman.

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In a moment we are talking to Chris Huhne, first, a couple of emergency

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debates this morning. Let's hear what was said from the conference

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floor. The fundamental liberal principles

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of a free independent, and unfetered estate, holding power are

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sacrosanct for Liberal Democrats, but so, also, are the democratic

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principles of accountability and transparency. We do not tolerate

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unethical behaviour from other professional groups that hold great

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responsibility, we must not tolerate it from our journalists.

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Freedom and accountability are not incompatible. So this motion

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insists on a pulsory code of conduct to be the part of every

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journalist's contract. We have sufficient officers who are trained

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who have the sufficient equipment, but need the leadership to be

:10:07.:10:12.

effective. We need policies like restore tiv justice that prevent

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reoffending rather than draconian sentences being passed because

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magistrates and judges come under political pressure.

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With me now, via popular acclaim, the energy and Climate Change

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Secretary, Chris Huhne. A big title? Not as big as your 's,

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Andrew! That is true. Tim Farron, I believe he is the President of Your

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party? He is. He -- He says that the Government would be, "A

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nightmare without the Lib Dem ministers" Is he right? It would be

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more interesting. Is nightmare? To be clear, I do

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think that the political balance of the government is a coalition,

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between the Liberal Democrats who have a clear, independent stand on

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a number of issues and the Conservatives also who come from a

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different political tradition. We have to come promisise. There is

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nothing to be ashamed of in come promisising. If we had not to get

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us out of the economic problems that time that we had, it would

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have been difficult in failing to compromise in the budget over

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losing the triple A status. Now, Europe. Should Greece be given the

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next trench of emergency aid? is to be entirely up to the

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eurozone and entirely up to the conditions... When I have not been

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involved in the negotiations, I think it is key that the Greeks

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stick to their commitments. Not to cut? Part of the problems

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began when the Greek Government did not present accounts which were

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correct about the size of their budget deficit and the size of the

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debt. They got into the Euro area under false pretences.

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But we knew that? No we did not. France did it, so did Italy? No. No.

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No other country has actually falsified its national accounts in

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the same way that Greece did. But Italy did not meet the criteria

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it got in with 112 % of GDP? If you are so far away from the criteria

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that there is no room for interpretation, there is the other

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room, Italy, was the debt falling, it was, that was allowed, there was

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wriggle room, but the Greek Government presented figures that

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the current Government found out about at the election that were

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completely false. It was like Enron falsifying their accounts, that is

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really outrageous. OK. You follow these things closely.

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In your view, is it inevitable that Greece will default? No. Nothing is

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ever inevitable. Is it likely? In the current

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circumstances, the real issue for Greece and the eurozone is to put

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together a package that allows it to be a sustainable solution going

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forward. One of the difficulties if Greece were to default is that

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there are a number of banks within and outside of the Euro area that

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could be negatively affected. I remember back in the crisis that we

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had here in the UK in the 1980s, when we had Lloyds and the Middles

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who had more than their entire capital reserves outstanding, even

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to American companies, all in default. If we crystallise the

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default then and there, we would have had two big High Street banks

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going bust. We did not do that. We waited, they built up reserves, in

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the threatened is the Brady restructuring to ensure a long-term

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:14:13.:14:30.

My hunch would be that we have underestimated the political will

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of people on the Continent to keep the show on the road. I believe, in

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general, it is rash to assume that things are going to fall apart in

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the European Union. Actually, our experience is that Europeans use a

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good crisis to build up, solve the problem and get back on the road.

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The Financial Times this morning has done calculations, using the

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same methodology as the Government, and has discovered that the

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structural deficit, the bit which does not disappear when growth, is

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actually �12 billion higher than the government calculated. Does

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that mean there will have to be more austerity measures?

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Financial Times, bless them, is a journalistic organisation, not a

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well-established and reputable authoritative international

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economic organisation. Take the IMF, the OECD, both of them for the

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serious calculations of the structural balance. They know that

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different methodologies to the Treasury. I think that is more

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likely. So the Financial Times is wrong? I have no idea whether it is

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wrong or right, but the government should not, given that we have put

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in place a framework with the Office for Budget Responsibility,

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an independent body with a lot of resources designed to come up

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with... But they have used the OBR's mechanism to calculate this.

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Are you saying the FT is not authoritative on these matters?

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does that have the final word. One of the things that we are clearly

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going to see is that the director of the Budget -- the Office for

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Budget Responsibility will hold forth on these matters. That is the

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appropriate body for putting forward, if there is a problem of

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this sort, to the government, and the OBR is the independent body

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under started that is charged with coming up with this analysis, that

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they find a problem, we will respond to it. -- and a statute.

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those calculations are right, and we will find out from the OBR, if

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there is a �12 billion structural deficit, bigger than you have been

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proceeding along, will we have to cut more? It is absolutely clear

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that the Government is committed to ensuring that we have a sustainable

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structural balance, that is an absolutely key commitment. It has

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what has got us out of the dangers on that we were in immediately

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after the election. -- the danger zone. A number of countries have

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fallen into economic crisis since then, even though they have smaller

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budget deficits than we do. We have been able to get out of that danger

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zone because our commitment to incredible physical programme.

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still not clear if you're going to have to cut more. 9 am I, because

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it will depend on the recommendations of the OBR. --

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neither am I. That is the appropriate way of doing it, not

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reacting to something that appears in newspapers, no matter how

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reputable they are. I used to work for the Economist, not the

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Financial Times. We were colleagues for a brief period. It is 50% and

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by the Financial Times. And a very good investment it has proved for

:17:39.:17:42.

them! We are going to hear from Vince Cable in a minute. What has

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he done for business? I think the key thing he has done is to make

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sure that with the deregulation that is going on, where we can get

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rid of excessive red tape, that is being done... What is the big

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thing? It is a whole raft of rules. What is the biggest the regulatory

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change? The obviously follows his department, and I follow mine. I am

:18:11.:18:14.

the Secretary for Energy and climate change. The singers beggars

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proposers what we are trying to do on the planning rules, which is

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very controversial. That the single biggest proposal. Is that his

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department? It is part of the deregulation, part of the growth

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review... Of so what has he done for business? That is a key thing.

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It is not his department. He has been involved in the road review

:18:36.:18:41.

from the beginning, coming up with the ideas that we have been putting

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in government. -- the growth review. He will continue that work as he

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has done since the election. Miles Templeman is the head of the

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Institute of Directors. What are you looking for from Vince Cable

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this morning? We are certainly not looking for what we think we can to

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get about executive pay, quite the wrong issue to be talking about

:19:05.:19:08.

when we are really trying to encourage growth, stimulating

:19:08.:19:13.

investment, get overseas people to come here. It is that to be talking

:19:13.:19:19.

about that topic at this stage. -- daft. War would be wrong with Kevin

:19:19.:19:25.

executive pay? The ratio to normal pay is far higher than it has ever

:19:25.:19:29.

been. For a start, you are only talking about the very top

:19:29.:19:33.

executives. Most executives get nothing like that, as he would

:19:33.:19:39.

appreciate. The average director earns about 75,000, a good salary.

:19:39.:19:45.

That is a non-executive. No, no, that is an executive director.

:19:45.:19:50.

in the FTSE 100 for 250, they earn a lot more than that. Not most

:19:50.:19:56.

directors. In the 1950s, they earned about 40 times average

:19:56.:20:02.

earnings. Today they earn 400 times average earnings. Why? It varies

:20:02.:20:07.

dramatically between companies, as you know. Basically, you are in a

:20:07.:20:10.

marketplace of directors. You have got to pay them what they can get

:20:11.:20:14.

internationally, and that is the price. It is the same in any sport

:20:14.:20:18.

or music or anything. The top people are earning a lot more. What

:20:18.:20:21.

I would like to see is more emphasis on how we get the lower

:20:21.:20:25.

paid people to earn more, rather than trying to hold back those were

:20:25.:20:29.

creating wealth and stimulating business. A wee are about to hear

:20:29.:20:33.

from Mr Cable. I just hope we will be an odyssey in going up in a

:20:33.:20:39.

second. Can I just ask you this, do you take what he is saying

:20:39.:20:42.

seriously, or is it just conference rhetoric? I hope it is just

:20:42.:20:45.

conference rhetoric, because it is not something that would help

:20:46.:20:50.

business and the economy. All right. We are going to have delivered

:20:50.:20:54.

there, he is on his feet. Straight into the conference hall to hear

:20:54.:21:00.

When I joined up, I had very mixed feelings about the coalition. Like

:21:00.:21:08.

many of you, I looked for good precedents. I thought of Clement

:21:08.:21:11.

Attlee and Aaron Bevan, working with their Tory opponents,

:21:11.:21:18.

Churchill and Beaverbrook, setting aside their political differences

:21:18.:21:22.

in a common cause. Of course, that coalition unleashed the great

:21:22.:21:29.

liberal reforms. You could say, well, that was war, that was

:21:29.:21:35.

different, and it is different. But we now face a crisis that is the

:21:35.:21:41.

economic equivalent of war, and this is not a time for business as

:21:41.:21:48.

usual for politics as usual. The financial crisis is still with us.

:21:48.:21:53.

It never went away. And we can now say that recovery has stalled in

:21:53.:22:00.

the United States and the position in the eurozone is, well, Dyer. But

:22:00.:22:06.

it is wishful thinking to imagine that we have a healthy economy

:22:06.:22:10.

which has somehow been infected by a dangerous foreign virus, because

:22:10.:22:18.

many of our problems are home-grown. Gordon Brown regularly advised the

:22:18.:22:23.

rest of the world to follow his British model of rock, but the

:22:23.:22:27.

model was flawed. -- growth. It led to the highest level of household

:22:27.:22:33.

debt in relation to income in the world. It produced a dangerously

:22:33.:22:40.

inflated property bubble. It encouraged bloated banking, while

:22:40.:22:45.

manufacturing declined at an unprecedented right. And then they

:22:45.:22:48.

socialised the cost of the crash through a massive budget deficit,

:22:48.:22:55.

the biggest of any major economy. And his disciple, Ed Balls, highers,

:22:56.:23:00.

well, sort of apologised, but now advocates policies that would

:23:00.:23:05.

repeat that disaster. -- has. What this period of crisis should have

:23:05.:23:12.

taught us, above all, his humility. And humility in politics means

:23:12.:23:17.

accepting that one party does not have all the answers. Recognising

:23:17.:23:27.
:23:27.:23:37.

that working in partnership is And it has been hard, and it has

:23:37.:23:44.

required courage from our party to withstand the tribalism which is

:23:44.:23:47.

British politics at its worst. And it has not been possible for the

:23:47.:23:51.

party to get its own way on everything. I mean, I regret this

:23:51.:23:55.

year that we did not secure a tighter control on bank pay and

:23:55.:24:01.

bonuses, for example. A bad message was sent that unrestrained greed is

:24:01.:24:06.

acceptable, and we now know where that leads. What we do have are

:24:06.:24:11.

very real achievements. My team in the business department, and I want

:24:11.:24:18.

to acknowledge David Willetts and our own outstanding minister Ed

:24:18.:24:26.

We have not only made a major contribution to deficit-reduction,

:24:26.:24:30.

but we are now helping recovery. We are greatly expanded

:24:31.:24:34.

apprenticeships, giving respect and recognition to the 60% of young

:24:34.:24:39.

people who do not pursue academic study at universities. We have

:24:39.:24:44.

protected our science budget, and we have launched a chain of

:24:44.:24:47.

Technology Innovation centres promoting the technologies of the

:24:47.:24:51.

future. We have established a green investment bank to promote major

:24:51.:24:57.

green projects, and Nick Clegg has driven the regional growth fund,

:24:57.:25:02.

investing in businesses up and down the country, not just in the south-

:25:02.:25:06.

east. And we, and Ed Davey in particular, have done what

:25:06.:25:10.

Conservative and Labour governments failed to do, legislate for the

:25:10.:25:15.

necessary reform of the Royal Mail, with worker shares, providing a

:25:15.:25:21.

stable future for the post office network. And then, after a

:25:21.:25:27.

generation of manufacturing decline, we brought jobs back to Britain in

:25:27.:25:32.

stealer at Red Care, a motor vehicle supply chains, electric

:25:32.:25:36.

vehicles, and in aerospace through Rolls-Royce, Airbus and Augusta

:25:36.:25:40.

Westland. And this morning, Jaguar and Land Rover announced that they

:25:40.:25:46.

are to build a new engine plant in the West Midlands, a massive boost

:25:46.:25:56.
:25:56.:26:02.

for British manufacturing and for And that is what I mean by a

:26:02.:26:12.
:26:12.:26:15.

business recovery, cars, not But this work is just beginning.

:26:16.:26:21.

Because to turn Britain around, we need much more. And I have three

:26:21.:26:28.

priorities, stability, stimulus, solidarity. Stability in the

:26:28.:26:33.

government's finances, the deficit problem, and in our banks. Stimulus

:26:33.:26:37.

to support growth, and that sustainable growth based on

:26:37.:26:43.

business investment, exports, green technology and manufacturing. And

:26:44.:26:50.

solidarity to give people a sense of a shared society, reducing our

:26:50.:26:55.

appalling inequalities of income and wealth, and creating a

:26:55.:27:00.

responsible capitalism. Let me start with stability. The last

:27:00.:27:05.

government promised an end to boom and bust, but it gave us both. And

:27:05.:27:11.

it left us a dangerous, unsustainable budget deficit. And

:27:11.:27:17.

cutting that deficit is a thankless and unpopular task, but it is

:27:18.:27:24.

unavoidable if our country and party are to be taken seriously.

:27:24.:27:28.

And the government's tough approach to deficit reduction is often

:27:28.:27:35.

attacked as ideological, as right- wing. The truth is that financial

:27:35.:27:39.

discipline is not ideological, it is a necessary condition for

:27:39.:27:46.

effective government, and I see us following in the footsteps of

:27:46.:27:52.

Stafford Cripps and Roy Jenkins in post-war Britain, and it brought

:27:52.:27:57.

the Canadian Liberals, Scandinavian Social Democrats, the Clinton

:27:57.:28:02.

Democrats in United States, because they understood, unlike today's

:28:02.:28:07.

Labour Party, that the progressive agenda of centre-left parties

:28:07.:28:17.
:28:17.:28:23.

cannot be delivered by bankrupt I think most of the British public

:28:23.:28:27.

to get it, but there are politicians on both Left and Right

:28:27.:28:32.

who do not, and some of them believe that governments, like

:28:32.:28:37.

Father Christmas, they draw up lists of tax cuts and giveaways,

:28:37.:28:41.

and they assume that Santa Claus will pop down the chimney and leave

:28:41.:28:47.

presents under the tree. This is childish fantasy. Some of them, for

:28:47.:28:50.

example, believe that if taxes on the wealthy are cut, new revenue

:28:51.:28:55.

will miraculously appear. And I think the reasoning is something

:28:55.:29:00.

like this, all those British billionaires who demonstrate their

:29:00.:29:05.

patriotism by hiding from the taxman in Monaco for some Caribbean

:29:05.:29:10.

bolt hole will come rushing back to pay more tax at a lower rate. Well,

:29:10.:29:20.
:29:20.:29:23.

I'm afraid that my view of this is Financial stability is not just

:29:23.:29:29.

about the Government's deficit. Massive potential instability is

:29:29.:29:35.

caused by British-based global banks whose combined assets are

:29:35.:29:41.

over 400% of the size of our economy. The largest of any major

:29:41.:29:47.

country. And that the present, banks offered a one-way bet. If

:29:47.:29:53.

they gambled and win, they fill up the bonus pool, and when he loses,

:29:53.:29:58.

the taxpayer pays. And the Independent Banking Commission, the

:29:58.:30:03.

Vickers commission, provides a means to stop this dangerous

:30:03.:30:09.

nonsense. The commission's key findings, which are two separate

:30:09.:30:12.

retail and casino banking, must be put in place. Legislation will

:30:12.:30:22.
:30:22.:30:28.

start soon, and it will be APPLAUSE.

:30:28.:30:34.

And if there are any doubts about the need for radical reform, the

:30:34.:30:41.

UBS rogue trader is to dispel them. We simply cannot have rogue

:30:41.:30:45.

institutions, exposing taxpayers to the risk of exploding financial

:30:45.:30:52.

weapons of mass destruction. APPLAUSE.

:30:52.:30:57.

But the banks must also perform their basic economic function.

:30:57.:31:03.

Which is channeling our savings, into productive investment.

:31:03.:31:07.

They are doing so. Productive British business and banking are

:31:07.:31:13.

currently at odds. Banks operate a bit like a man who

:31:13.:31:16.

either wears his trousers around his chest stifling breathing, which

:31:16.:31:23.

is what they do at the moment or around their ankles, exposing their

:31:23.:31:30.

assets. APPLAUSE

:31:30.:31:38.

That's if they have any! We want the trousers around the middle!

:31:39.:31:44.

Steady lending growth, especially to protective British businesses,

:31:44.:31:49.

small-scale enter prices, that is what they have to do. No more feast

:31:49.:31:55.

and famine in bank lending. APPLAUSE

:31:55.:32:00.

Now the big economic policy question now is how-do we pro gres

:32:00.:32:04.

from financial stability to growth? -- progress from financial

:32:05.:32:08.

stability to growth? With business and consumer confidence so low,

:32:08.:32:13.

there is a responsibility on Government. My job is to support

:32:13.:32:16.

businesses. That means promoting British

:32:16.:32:19.

commerce in the big emerging markets that have been neglected in

:32:19.:32:23.

the past. It means keeping Britain open to

:32:23.:32:27.

inward investment, to trade, to students and skilled workers.

:32:27.:32:33.

It means cutting red tape which is suffocating growing companies which

:32:33.:32:39.

create jobs. Well, I I will not provide cover

:32:39.:32:46.

for the ideological deendents of those who once sent children up

:32:46.:32:50.

chimneys. Panic in financial markets will not be stopped by

:32:50.:32:57.

scrapping maternity rights. APPLAUSE

:32:57.:33:03.

But the immediate threat is lack of demand.

:33:03.:33:09.

With consumers, companies and governments cutting spending, there

:33:09.:33:15.

was once a talk of a paradox of thrift where everyone in every

:33:16.:33:23.

country is individually wise, but collectively foolish, leading to a

:33:23.:33:27.

downward spiral. A lot of the responsibility for countering this

:33:27.:33:32.

rests on the bank of England, to relax monetary policy, but

:33:32.:33:39.

government can also act. We can use Chris Huhne's Green Deal to

:33:39.:33:44.

generate 100,000 jobs, we can leverage private investment through

:33:44.:33:49.

the growth fund and the Greenpeace Investment bank. We can allow

:33:49.:33:54.

councils to use planning permission, using the permissions for social

:33:54.:33:58.

housing.. We can step up investment in our clapped out infrastructure.

:33:58.:34:02.

There are tens of billions of pounds of British savings in

:34:02.:34:05.

pension funds and insurance companies ready to invest in

:34:05.:34:11.

transport, energy, broadband and housing if the regulators can

:34:11.:34:15.

ensure a reasonable, mot raid return. As Danny announced

:34:15.:34:20.

yesterday, the the Government is putting serious money behind local

:34:20.:34:24.

infrastructure, but even with a stimulus to support the recovery,

:34:24.:34:28.

the next few years will be difficult.

:34:28.:34:34.

Living standards are being squeezed by continued high imported

:34:34.:34:38.

inflation. The painful truth is that Britain is now a poorer

:34:38.:34:43.

country as a result of the financial crash.

:34:43.:34:48.

The public will only accept continuing us stairity if it is

:34:48.:34:54.

seen to be fair. Yet there is currently a great sense of

:34:54.:34:58.

grievance that the workers and the pensioners are paying the penalty

:34:58.:35:02.

for a crisis that they did not create.

:35:02.:35:12.
:35:12.:35:13.

APPLAUSE And I want a real sense of

:35:13.:35:23.
:35:23.:35:30.

solidarity. That does not mean that we go around in green bowler hats

:35:30.:35:35.

carrying suitcases, but we have as a party made clear our priorities

:35:35.:35:40.

for continuing to lift lower than average earners out of tax and the

:35:40.:35:43.

wealthy must pay their share. What the Liberal Democrats should focus

:35:43.:35:49.

on are the vast disparrities of wealth. Much of it in inflated

:35:49.:35:52.

property and land price, artificially generated by the boom

:35:52.:35:59.

of the last decade. A few weeks ago a house changed hands for �140

:35:59.:36:04.

million. One newspaper headline said without

:36:04.:36:14.
:36:14.:36:15.

a sense of irony, "Oligarchs are being priced out of Central London"

:36:15.:36:22.

Yet the owners pay no more tax than men of -- many of the occupants of

:36:22.:36:28.

a family semi-. When some critics attack our party policy on a tax on

:36:28.:36:34.

properties over �million, you have to wonder what part much the solar

:36:34.:36:39.

system they live in, but let me be clear, there is absolutely nothing

:36:39.:36:44.

wrong with generous rewards for those who build up successful

:36:44.:36:47.

businesses. For those who create wealth and

:36:47.:36:57.
:36:57.:37:06.

People accept capitalism, but what they want is responsible capitalism.

:37:06.:37:12.

As for irspibl capitalism, some of you may have noticed that one of

:37:12.:37:17.

the big media companies has recently had a spot of bother! I

:37:17.:37:21.

think that you know who I'm referring to. All I would say about

:37:21.:37:27.

it is this: The Labour Party, the Conservatives, even the Scottish

:37:27.:37:32.

nationalists spent years queuing up to pay them homage. What makes me

:37:32.:37:38.

proud of our party is that we never compromised oifs in that way.

:37:38.:37:42.

APPLAUSE -- come promisised ourselves in

:37:42.:37:52.

that way. APPLAUSE

:37:52.:37:58.

What I want to do is to strengthen the best of British business.

:37:58.:38:03.

I have taken two initiatives in particular. I have asked Professor

:38:03.:38:11.

John Kay, together with Sir John Rose, the former boss of Rolls-

:38:11.:38:15.

Royce. They have commitment to long-term investment, training, R

:38:15.:38:22.

and D. I have asked them to look at how we make our stock markets and

:38:22.:38:27.

institutional investors get out of this short-term speculative mind

:38:27.:38:32.

frame. I am separately consulting on how best to tackle the

:38:32.:38:36.

escalation of executive pay. Which in many cases have lost connection

:38:36.:38:41.

with the value of shares, let alone average employee pay.

:38:41.:38:49.

APPLAUSE It is very hard to explain why

:38:49.:38:55.

share holders can vote to cut top pay, that the managers then ignore

:38:55.:39:00.

the vote. Surely pay should be transparent and not hidden from

:39:00.:39:06.

share holders and the public? So, I want to call time on payouts for

:39:06.:39:11.

failure. APPLAUSE

:39:11.:39:17.

Let me... Let me just say in conclusion, that when my staff saw

:39:17.:39:24.

my draft of this speech, they said that they could see the grey sky,

:39:24.:39:29.

but where are the sunny uplands? I have to say that I'm sorry, but I

:39:29.:39:34.

can only tell it as asee it. I think that people are not

:39:34.:39:37.

projecting ten years ahead when they are worrying about how to

:39:37.:39:42.

survive the next ten days to their pay day, but I do sense a deeper

:39:42.:39:47.

truth, that the public is tired of being lied to by politicians and

:39:47.:39:57.

promised what cannot be delivered. The truth is that there are

:39:57.:39:58.

difficult times ahead. Britain's post-war pattern of ever rising

:39:58.:40:04.

living standards has been broken by the financial collapse. But I

:40:05.:40:09.

believe that we can turn the economy around and we will.

:40:09.:40:13.

In the coalition agreement we promised to put fairness at the

:40:13.:40:19.

heart of all that we do. As we rebuild our broken economy

:40:19.:40:24.

from the rubble, the Liberal Democrats know that you can't do

:40:24.:40:31.

one without the other. So we must now do both, fairness and recovery.

:40:31.:40:41.
:40:41.:40:42.

Thank you. APPLAUSE

:40:42.:40:47.

Nick Clegg getting on to his feet there to give Vince Cable a

:40:47.:40:53.

standing ovation. A rather more low-key Vince Cable than some

:40:53.:40:59.

expected. He attacked the Tory supplysiders with the low rate of

:40:59.:41:04.

tax. Attacking yet again the banks, calling for a stimulus, although

:41:04.:41:09.

not clear if this was to be a new stimulus. He went through a range

:41:09.:41:12.

of existing policies. He is slightly constrained as it is the

:41:12.:41:17.

policy of the coalition not to have further stimulus in the sense of

:41:17.:41:23.

new money. He attacked the ideological descendents of those

:41:23.:41:28.

who sent children up chimneys, though he did not say who they were.

:41:28.:41:31.

He also called as had been trailed in the papers and the broadcasts

:41:31.:41:36.

this morning for greater controls on executive pay, but all that he

:41:36.:41:41.

announced was an investigation to be led by the former chief

:41:41.:41:44.

executive of Rolls-Royce into how stock markets and institutional

:41:44.:41:49.

investors can get away from the speculation, so that it highly

:41:49.:41:53.

likely to be that radical and he is consultanting about what to do on

:41:53.:41:57.

executive pay. So I suspect in the boardrooms of the City of London up

:41:57.:42:00.

and down the country, they are breathing a little sigh of relief.

:42:00.:42:04.

Let's find out from the head of the Institute of Directors, Templeton,

:42:04.:42:08.

he has been listening to the speech in London. What did you make of it

:42:08.:42:13.

Miles Templeman? It was like you, it was much milder than we were

:42:13.:42:19.

expecting. Much we agreed with. The emphasis on growth, on planning

:42:20.:42:24.

liberalisation, and infrastructure. So those things are key to growth.

:42:24.:42:29.

I was glad, apart from the bashing of the banks again that he kept off,

:42:29.:42:32.

largely, the whole issue of executive pay.

:42:32.:42:36.

So, you are not frightened? He has not frightened the horses by what

:42:37.:42:42.

he said on executive pay? It was strongly billed but in your view

:42:42.:42:46.

turned out to be pretty much milk and water? I think that is as it

:42:46.:42:51.

should be. It is not the issue that we should be talking about now. We

:42:51.:42:54.

know that the share hold verse a responsibility. That is in place.

:42:55.:42:59.

It is increasingly transparent what is happening. I think that is

:42:59.:43:03.

improving. We are on that track. What we don't need is anything

:43:03.:43:06.

further. Could you answer the question that

:43:06.:43:09.

Chris Huhne seemed to have difficulty in answering to me a few

:43:09.:43:14.

minutes ago, what in your view has Vince Cable done for business?

:43:14.:43:21.

thought it was a good question. I think he said one or two things, on

:43:21.:43:26.

a presentships they have been goofpltd we support that. The

:43:26.:43:29.

planning on regulation -- the planning on infrastructure. The

:43:29.:43:34.

regulation, we have not had progress, but a lot of fine words.

:43:34.:43:38.

I think that the enterprise zone is a good one, but will it be

:43:38.:43:43.

effective? We will wait and see. There are some areas, but not a lot

:43:43.:43:47.

of progress yet,ual it is a difficult environment. Do you think

:43:47.:43:52.

he was re fefring to you or the Institute of Directors as the

:43:52.:43:57.

ideological descendents of those who want to send children up

:43:57.:44:00.

chimneys? I don't know who. He did not follow through on it at all any

:44:01.:44:06.

way. No. I think what we need from him is a much stronger voice

:44:06.:44:10.

supporting business. We don't need the problems in business, but the

:44:10.:44:13.

support. We need that internationally as well as at home.

:44:13.:44:17.

He is doing that. Do you think that Vince Cable is

:44:17.:44:23.

that strong voice? He's got to be, otherwise we never get the inward

:44:23.:44:28.

investment. Is he? Well, the less he talks about bashing banks and

:44:28.:44:31.

executive pay, the better. Miles Templeman, thank you very

:44:31.:44:35.

much. Now, it is a hard life here at

:44:35.:44:39.

party conferences, I'm sure you realise that. Not only do we wade

:44:39.:44:43.

through countless fringe events, endless drinks receptions it is our

:44:43.:44:48.

duty to go and to get our heads around the impenetrable language

:44:48.:44:53.

that the political parties like to use on these occasions, but never

:44:53.:44:59.

fear, in the first of our series of conference jargon busters, who are

:44:59.:45:06.

you going to call? The Daily Politics and Andrew Dilnot, our own

:45:06.:45:10.

dictionary, he's been out and about in Birmingham, looking at the

:45:10.:45:17.

powers of the Lib Dem conference. Of all of the party conferences,

:45:17.:45:24.

the Lib Dem seas arguably the most powerful. The conference is the

:45:24.:45:28.

sovereign body of the party. It is responsible for making policy and

:45:28.:45:33.

all policy flows from it. Not always a source of comfort to

:45:33.:45:37.

the leadership, however, not everything voted on in conference

:45:37.:45:47.
:45:47.:45:49.

actually make it is into an There is part of the party will

:45:49.:45:53.

have suggested things they want to discuss, and they pass that on to

:45:53.:45:56.

the federal committee, who choose which ones will be debated at

:45:56.:45:59.

conference, and then members will get to vote on them and turn them

:45:59.:46:04.

into policy. Oh, yeah, how do they vote? Each member is issued with a

:46:04.:46:07.

voting card that comes with their conference pass. That allows them

:46:07.:46:13.

to take part in the full debates, which I chaired by the President of

:46:13.:46:17.

the party or his representatives. He or she have the final say in any

:46:17.:46:23.

decision. That was Giles Dilnot. With me now

:46:23.:46:29.

part two MPs July overtaking notes, Duncan Hames and Tessa Munt. What

:46:29.:46:34.

is the point of a Liberal Democrat conference that might it is a good

:46:34.:46:41.

time to get together, to recharge our batteries. You are in a

:46:41.:46:44.

coalition with no power to implement what to discuss. Are you

:46:44.:46:48.

sure? To anyone policy that you have passed this week that will be

:46:48.:46:54.

adopted by the coalition. -- Tell Me one policy. In March, as a

:46:54.:47:00.

result of the demands we wanted to the health reforms, conference

:47:00.:47:03.

flexed its muscles, and we have seen the impact of that in

:47:03.:47:07.

legislation. What have you done this week? We have had the

:47:07.:47:12.

discussion about having a response to looking at drugs and the problem

:47:12.:47:15.

of drugs that inflicts massive damage on all of our communities. I

:47:15.:47:21.

know it is a very unpopular topic, but it is what we have called for,

:47:21.:47:25.

a structured and proper look at the impact. I listened to parts of the

:47:25.:47:28.

debate. Do think the government will adopt it? We have to ask, and

:47:28.:47:32.

we will see. We will have a go, won't we? Would you hold your

:47:32.:47:36.

breath for it? We have got to do something, we cannot ignore the

:47:36.:47:40.

problem any longer. Isn't there a danger that your conference is

:47:40.:47:44.

becoming more like the Labour and Conservative conferences, which

:47:44.:47:49.

over the years have a bath into rallies? Well, I guess your viewers

:47:49.:47:53.

can judge that over the next couple of weeks. I think they will say

:47:53.:47:55.

that Liberal Democrat conference has been different to the

:47:55.:47:58.

conferences they will see in the next couple of weeks, which are

:47:58.:48:02.

dominated by the platform. What is the mood of this conference?

:48:02.:48:06.

think it is a slightly different one from normal, been at perhaps

:48:06.:48:09.

when we met back in March, people were still slightly shell-shocked

:48:10.:48:13.

about the fact that we were in power. What has happened in his

:48:13.:48:16.

last little while is that, having recovered from the damage that we

:48:16.:48:21.

were inflicted in May, what has happened now... In what way have

:48:21.:48:25.

you recovered? Q and n% in the polls. I do not mean in polling

:48:25.:48:32.

terms. What we have got is an opportunity to actually rebuild our

:48:32.:48:36.

thoughts, think about the impact policies. What has changed is that

:48:36.:48:41.

we have grown up a little bit, I think. That is what power has done.

:48:41.:48:47.

I think it probably has. Are you growing up? We certainly have to

:48:47.:48:51.

leave quite a lot of old habits behind. We need to roll our sleeves

:48:51.:48:55.

and concentrate on making a difference, rather than talking

:48:55.:49:00.

about a vision for what might be, instead making sure that it happens.

:49:00.:49:04.

Do you want to change the rules of conference? Does it need to be

:49:04.:49:09.

modernised? Does it needs to be more dynamic, interesting? No.

:49:09.:49:13.

think it was pretty interesting when the issue that was of great

:49:13.:49:17.

concern to the whole country was being discussed at our last Lib Dem

:49:17.:49:22.

Conference... You are back in March again! This is now set them up.

:49:22.:49:26.

This was an experience we never had in opposition, and I'm sure we'll

:49:26.:49:30.

have other debates like that again. I think that has reinvigorated Lib

:49:30.:49:33.

Dem Conference, to know that the debates here can make a difference

:49:33.:49:36.

in government Airway that they never could before. Is it true that

:49:36.:49:43.

he will miss the speech are your great leader? I am all start house

:49:43.:49:50.

that you do such a thing? It is just a one-off. Is it true that you

:49:50.:49:55.

are going on your honeymoon? That is right, yes. Isn't Birmingham

:49:55.:49:59.

enough of a honeymoon for any Lib Dem? An old liberal city, a fine

:49:59.:50:03.

tradition. Where could you go that could better Birmingham? It is

:50:03.:50:07.

certainly a great prelude to my honeymoon to have spent his time at

:50:07.:50:12.

conference. Where are you going? That's is a state secret, Andrew.

:50:12.:50:15.

thought you believed in transparency! A bit of privacy as

:50:15.:50:22.

well. You're also marrying a Theroux -- fellow anti-. I have

:50:22.:50:32.
:50:32.:50:33.

already married there. I did not get an invite! So you donate the

:50:33.:50:38.

honeymoon did go on to Birmingham, is that what happened? -- delayed.

:50:38.:50:41.

We manage to come to conference, but I figured that while the other

:50:41.:50:44.

parties are having their conferences, that is when we will

:50:44.:50:50.

be leased list. We be taking the lead Dem manifesto or the Orange

:50:50.:51:00.
:51:00.:51:00.

Book on honeymoon? I think we might Stop you might think the Liberal

:51:00.:51:03.

Democrats are a soft and cuddly party, but we know differently.

:51:03.:51:07.

They are turning nasty. The knives are out, and not just towards

:51:07.:51:11.

Labour, they barely mention in these days. They are having a go at

:51:11.:51:21.

The our coalition partners are sometimes helpful. I thought of

:51:21.:51:24.

asking George Osborne for some jokes for his speech, as he knows a

:51:24.:51:33.

lot about gags. They get worse! But I did not want to get up his nose

:51:33.:51:39.

about it. I thought I went to queue for too long tonight, because I

:51:39.:51:44.

want to get back to my hotel room to watch Strictly. Do you watch it?

:51:44.:51:48.

Coming back to George Osborne, I heard that he is keen to get on a

:51:48.:51:55.

show as well. He wants to do a line dance. It probably damages my

:51:55.:51:58.

efforts as getting anything through the court ever again. But never

:51:58.:52:05.

mind. I'm afraid divorce is inevitable, so has your President I

:52:05.:52:09.

took the liberty of seeking legal advice about how we stand any event

:52:09.:52:12.

of a World Cup, and there is good news and bad news. Good news, we

:52:12.:52:17.

might get half of Ashcroft's money. Bad news, we have to have Eric

:52:17.:52:25.

Pickles at the weekends. With me now, the Foreign Office

:52:25.:52:29.

minister Jeremy Browne. Welcome to the Daily Politics. That afternoon.

:52:29.:52:34.

Does all this Tory bashing get your pulse racing? I think he expected

:52:34.:52:39.

at the party conference, no doubt there will be some Lib Dem bashing

:52:39.:52:43.

at the Labour and Conservative conferences as of. I let it wash

:52:43.:52:48.

over me. You are not going to be embarrassed when you next bargain

:52:48.:52:54.

to thought Tory boss at the Foreign Office. No, I don't think I will. I

:52:54.:52:58.

have missed what you call Tory machine. Really? It has been hard

:52:58.:53:03.

to avoid. I think all party conferences, as long as I have been

:53:04.:53:08.

going to them, have had people taking a knock at the other two

:53:08.:53:13.

parties, and all three parties did, and probably the public do not

:53:13.:53:16.

respond well, but sometimes the party faithful quite enjoy it and

:53:16.:53:20.

it raises their spirits. But why are you bashing the Tories more

:53:20.:53:25.

than Labour? I do not know if we are. Oh, yes, you are! I suppose

:53:25.:53:28.

there might be concern in some quarters that we do not appear to

:53:28.:53:32.

have lost our distinctiveness, and maybe people feel there is an

:53:32.:53:35.

audience for showing that we are different in spirit from the

:53:35.:53:38.

Conservatives, but I think is pretty peripheral to what is

:53:38.:53:43.

happening at a conference as a whole. The Secretary of the 1922

:53:43.:53:48.

Committee of backbenchers, Mark Pritchard, once a vote on Britain's

:53:48.:53:53.

membership of the European Union. - - once. That was in your Lib Dem

:53:53.:53:56.

manifesto last year, so presumably you are in favour of that. I do not

:53:56.:54:02.

think it end -- it is anything that is likely to happen soon, and the

:54:02.:54:05.

Prime Minister has said that, at Mark Pritchard, a perfectly

:54:05.:54:09.

reasonable MP, the needs to raise that with the leader of his own

:54:09.:54:13.

party, I think. But it was in your manifesto, I will read out the

:54:13.:54:16.

words. The European Union has evolved significantly since the

:54:16.:54:22.

last public vote on membership over 30 years ago, 1975, when we voted

:54:22.:54:26.

to stay in. The Liberal Democrats remain committed therefore to a

:54:26.:54:31.

referendum. We had the coalition agreement that was forged in the

:54:31.:54:34.

days after the general election, and there was no commitment to a

:54:34.:54:38.

referendum on Britain's membership of the European Union. So it is not

:54:38.:54:42.

party policy any more. When the Prime Minister and the Deputy Prime

:54:42.:54:46.

Minister feel that is a necessary measure to take, then no doubt it

:54:46.:54:49.

will be taken, but it isn't anything that is being contemplated

:54:49.:54:53.

at this stage. To be honest, if you look at what is happening in Greece

:54:53.:54:55.

and other countries in the eurozone, a referendum on Britain's

:54:55.:54:59.

membership is not the number one issue with regard to Europe at the

:54:59.:55:02.

moment. What actually matters most in Europe is whether the currency

:55:02.:55:06.

which many countries in the European Union belong to is going

:55:06.:55:11.

to go even further into crisis, and that is what is preoccupying people.

:55:12.:55:17.

So should we filed his promise in your manifesto alongside tuition

:55:17.:55:21.

fees as not worth the paper it was written on? -- should we file this

:55:21.:55:28.

promise. Let me put it this way. I was born in May 1970, and we abide

:55:28.:55:35.

many general elections since then. -- we have had. No Lib Dem

:55:35.:55:41.

manifesto commitments implemented that any of those general elections.

:55:41.:55:43.

2010, three quarters of our manifesto commitments implemented

:55:43.:55:48.

in government. It is an amazing achievement for a party that only

:55:48.:55:52.

as 8% of the seats in the House of Commons, we are in coalition with

:55:52.:55:55.

the Conservatives in the national interest because no party won the

:55:55.:55:59.

general election. No party has a mandate to implement this party

:55:59.:56:03.

manifesto in full, but for the first time in my grandparents

:56:03.:56:06.

lifetime we are implementing large parts of our manifesto. People who

:56:06.:56:10.

have voted Lib Dem for decades in the Wilders years have reasons to

:56:10.:56:17.

be ecstatic that their vote now cancels and they -- that their vote

:56:17.:56:21.

now counts for something. Would it make sense that Britain would

:56:21.:56:25.

prosper if it loosened its ties with the EU? Our relationship with

:56:25.:56:29.

the EU is in the agreement that the parties arrived at after the last

:56:29.:56:32.

general election, and we are working very constructively, the

:56:32.:56:36.

government as a whole, within the European Union, and I can give you

:56:36.:56:39.

a couple of examples. We have just signed a free-trade agreement with

:56:39.:56:43.

South Korea, a country I have responsibility for within the

:56:43.:56:46.

Foreign Office. That is a great success. We are co-ordinating

:56:46.:56:51.

policy across the European Union with regards to Syria. I think that

:56:51.:56:57.

is an important shed bit of policy. Two good examples, but what is the

:56:57.:57:02.

answer to my question? Would we prosper if we loosened our ties

:57:02.:57:05.

with the EU, as William Hague has claimed? The point and making is

:57:06.:57:10.

that the government has a settled position on the EU, and in practice

:57:10.:57:13.

on a day-to-day basis we are working very constructively with

:57:13.:57:16.

the other members of the European Union to deliver British objectives.

:57:16.:57:20.

Tim Farron, the President of your party, says that the government,

:57:20.:57:24.

this current government, would be an absolute nightmare without Lib

:57:24.:57:29.

Dem ministers. Is he right? It is a hypothetical question, because no

:57:29.:57:33.

party won the last general election, so we have a coalition as a result

:57:33.:57:36.

of the British people deciding that no party decided to govern alone.

:57:36.:57:39.

The British people came to the conclusion that they did not want

:57:39.:57:43.

any party to be in government implementing its manifesto in its

:57:43.:57:47.

entirety on their own. So it does not sound like you agree with the

:57:47.:57:51.

phrase absolute nightmare. They, as a result, have given as a situation

:57:51.:57:54.

where we needed to forge a coalition, and that is what we have

:57:54.:57:59.

done. If I wanted to join the Conservative Party, if I wanted to

:57:59.:58:02.

implement Conservative Party policies, I could have done that. I

:58:02.:58:06.

did not do that, I joined the Liberal Democrats, and I'm proud of

:58:06.:58:09.

the contribution they are making to government, but we finished third

:58:09.:58:12.

in the general election. We do not deserve to govern outright or on

:58:13.:58:16.

our own, we did not win a mandate. We are in collision with the

:58:17.:58:19.

Conservatives, and lover of making every effort to put the country

:58:19.:58:23.

back on a street. Would you like a badger that says don't panic Quetta

:58:23.:58:30.

mark what are the other options? I love tax cuts, I love the euro.

:58:30.:58:35.

Would you like that? No. I love nuclear power. Love is a bit strong.

:58:35.:58:42.

How about I love the coalition? think that reflects the mood are

:58:42.:58:46.

all hard-headed people. That is it for today. We are back tomorrow at

:58:46.:58:49.

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