18/10/2011 Daily Politics


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18/10/2011

Andrew Neil and Jo Coburn are in Westminster with all the top political stories of the day.


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Afternoon folks, welcome to the Daily Politics. $$NWELINE Retail

:00:27.:00:33.

prices are rising at 5.6% - a record high in modern times. So how

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much damage is it doing to our economy? And should we act to stop

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it running out of control? We're awaiting this man's verdict

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on Liam Fox. The Cabinet Secretary, Sir Gus O'Donnell's report is out

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this afternoon. But will it simply raise more questions than it

:00:47.:00:57.
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answers? And the junior minister, what do they do? Keep the engines

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of Government running order just the unglamorous stuff?

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All that in the next half an hour. And with us for the whole programme

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today is the former Labour Home Office and Work and Pensions

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:01:29.:01:33.

minister, Tony McNulty. The inflation figures? They're

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pretty dreadful and much worse than expected. Inflation on the broad

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RPI measure is getting close to 6%. And it's rising fastest on those

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essentials most households have to buy - food on the table, petrol in

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the car, heating for the home. Energy prices up 8.6%. The Bank of

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England says inflation will start to fall next year. And that's

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likely as the January rise in VAT falls out of the index and a flat-

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:02:08.:02:08.

lining economy puts downward pressure on prices. Commodity

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prices are also weaker because the world economy is weaker. Oil-price

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is are coming down, gas prices, too. I've written about this on my

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latest blog on the Daily Politics website. Dreadful figures? We are

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heading towards this woeful combination of no growth, and

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inflation creeping. The Japanese had that for the best part of 10

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years. The Swedish had that after their banking crisis for some time.

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You need to do something on one element or other. The Bank of

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England might be right, we do not know. Something needs to be done to

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get some growth back in the economy. That will be difficult because what

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is going on in the eurozone. It is not easy to see what can be done.

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It is a systemic problem. The Labour Party says cut the VAT, and

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just as the rise in VAT had an effect on the way up, it would have

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a temporary effect on the way down. It would have 12 billion -- at 12

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million to borrowing in the sovereign debt crisis? George

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Osborne has one club in his bag and that is it. They need to get the

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balance right between growth and borrowing. This mantra we have had

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in the last week, you don't borrow your way out of a crisis. Actually,

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historically that is what nations have done. We will add to borrowing

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this year, �122 billion. All four on predicted reasons because of

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higher unemployment, higher benefit bills, which cannot be right.

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you add to the borrowing, which is the Labour policy. We don't know

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how much, but some estimates suggest around 20 billion when you

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add on the holiday in National Insurance, as some are suggesting.

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Is it conceivable you could add 20 billion to borrowing and not end up

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paying a higher interest on your bombs? That is the difficulty.

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bombs. It is how temporary it is before it kick-starts the growth.

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There is a name game which says it might mean things going wrong with

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higher borrowing. At the moment that we are flat lining and

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standing still. At the moment we are paying 2.5%, it is an historic

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low. It is only just a bit above Germany. If we abandon our deficit

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reduction plans, the debts are being added to, but if the market

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saw the deficit-reduction plans being reduced they could take

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flight, push up the yields and your stimulus would all go in higher

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interest payments? This is where the Tories have got it wrong. It is

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not just either their plan A, or recklessness. Ed Balls, Ed Miliband

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are saying clearly, you have got to do something to generate growth in

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the economy. Of course, you need to address deficit reduction, but the

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markets are smart enough to understand there has got to be

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something other than this austere plan A which is not working.

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Really? Because any time there has been a deviation by the Greeks,

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Portuguese or the Spanish, French and the Italians, the market's

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verdict is ruthless. Yields shoot up, the Spanish and the Italians

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are paying over 5% and their deficits are smaller than ours?

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There has got to be and there is an alternative to what George Osborne

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is doing. There has to be. We're joined now by the Treasury minister,

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David Gauke. Welcome to the programme. Do you accept with

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inflation now rising between five and 6%, most people's pay will be a

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zero rise or a very small rise? Living standards are being

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squeezed? Yes, this does have an impact on living standards. That is

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why we have taken decisions on reducing the fuel duty, so it is

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now six pence per litre lower than it would have been under the plans

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we inherited. That is why we are freezing council tax and the

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personal allowance for income tax has been increased. These are

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difficult times, but given we don't have a lot of room for manoeuvre

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because of the state of public finances, we are doing what we can.

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The squeeze on living standards is worse for the reasons I mentioned

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earlier. The biggest price rises are on those things we have to buy.

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Flat-screen TV is are not rising, but we don't all need them. We need

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to heat our homes, we need to put petrol in the car and we need to

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put food on the table. They are all rising by more than 5%? It is right

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global commodity prices are driving price rises up across the board,

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and that is why we have inflation creasing at the moment. We accept

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that and within the limited room for manoeuvre we have, we are

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trying to do what we can to reduce some of those pressures. Does the

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Treasury share the optimistic view of the Bank, that inflation is

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going to come tumbling down next year? It is not just the Bank of

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England that believe inflation is going to fall. The OECD, IMF...

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you share it? We look at the assessment the Bank of England has

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done. I understand the Treasury looks at what the Bank of England

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says, my question is simple and I would appreciate an answer! Do you

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share the Bank's view on inflation? We don't disagree with the Bank of

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England's view and that you are others that inflation will fall

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towards the end of this year and threw 2012. You think it will fall

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before the end of this year? That is the Bank of England youth.

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know that, but what do you think? It is there, or they're about. That

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is about right. Whether it will be December, January, we shall see.

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But the view, most commentators think inflation will fall over the

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months ahead. I don't think we have had to on the programme before, and

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come back before Christmas to see if your prediction is right. I look

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forward to it. I think it will be an interview you do not like.

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think you might be right. The official report into the former

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Defence Secretary, Liam Fox, and his dealings with his close friend,

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Adam Werritty, will be published later today. It's been written by a

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man called, Sir Gus O'Donnell, he's the most important civil servant in

:09:10.:09:20.
:09:20.:09:21.

the land. He is retiring at Christmas. So you might expect him

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to produce a pretty weighty document? Indeed, we're told that

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the report runs to - wait for it - a whopping TEN pages! That's

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probably a first in the history of the civil service. So, Jo, what

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earth-shattering revelations can we expect? Prepare yourself a!

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The judgement from Sir Gus O'Donnell, or GOD, as he's known,

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will be published later this afternoon. The BBC understands the

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report will say Liam Fox broke the ministerial code in his dealings

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with his friend, Adam Werritty. Mr Werritty claimed to be Liam Fox's

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adviser and joined the former Defence Secretary on 18 foreign

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trips, arranging meetings for him despite having no official

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Government or Conservative Party role. The report will acknowledge

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that Liam Fox did not gain financially from the arrangement.

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But there are still questions about how Mr Werritty funded his business

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activities and whether he gained from his frequent access to Liam

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Fox. I'm joined now by our Deputy

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With us now is the former commander of British troops in Bosnia, and

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now the Tory MP for Beckenham. We are greedy had no choice but to

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step down? Correct. There is a number of people from Labour and

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the media don't want to let this go. He has fallen on his sword but they

:10:44.:10:48.

don't think this story is over? have to wait until the report when

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it comes out. But it will be -- we will have to reconsider them. But I

:10:57.:11:01.

think it will run longer. Do you think he will come back into

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Government? Peter Mandelson seemed to do it a few times. I hope he

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does. He was a very good secretary of state who gripped the situation.

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Trying to grip the MoD is like trying to make an impression on a

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huge ball of petite. Anything you have made an impression, you get

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off and it goes back. It is getting bigger and bigger? It is probably

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platinum. I remember I was in the MoD as a Major and Michael

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Heseltine, I remember him saying, "right, we will get a grip of this.

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Ritual moans will be sorted we will be inefficient MoD and this is how

:11:45.:11:52.

it is going to be". That was in the early 80s. Liam Fox had done his

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homework in the job, he had been the shadow secretary and had a

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lifelong interest in these policies. What does Philip Hammond know about

:12:00.:12:08.

this? I do not know. I have not asked him. I suspect he knows

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enough. I suspect what the ministry of defence requires at his level is

:12:13.:12:18.

strategic direction and political decisions. He will get plenty of

:12:19.:12:22.

men of -- military advice from the civil servants at the top and the

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generals. They might run circles around him. The MoD might get back

:12:27.:12:32.

into the game. A lot of them did not like Liam Fox because he was

:12:32.:12:37.

his own man. Now they have someone who was not an expert in this area,

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he was an accountant? If they think that, they are on a loser. Philip

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Hammond is an exceptional minister already. Where do you think the

:12:47.:12:52.

Adam Fox, Adam Werritty story goes now? I think in the end, whatever

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is in this report will end up being a forward to a whole exercise which

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will be much longer in the end and go to this whole transition being

:13:03.:13:07.

in generis from opposition to Government. And that is where Liam

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Fox has fallen down. Nobody gets in the room of a secretary of state

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without the Secretary of State's say-so. The Secretary of State does

:13:17.:13:25.

not have any private meetings excluding civil servants. User the

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Secretary of State? I mean the Secretary of State. The Secretary

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of State is the only one who can say, I don't care if he thinks the

:13:39.:13:42.

civil servants should be in this meeting, I don't think they should

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be. It is all driven from the Secretary of State. What you're

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saying is the permanent Under- Secretary should know what is going

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on? He does, but the Secretary of State is king in his own fiefdom. I

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don't think there is this innocence, or naive at the that is betrayed.

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Is that why Tony McNulty, they have revealed Liam Fox met other defence

:14:12.:14:20.

ministers. That could not happen unless Liam Fox said so? Absolutely.

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Does that surprise you? Nothing surprises me any more. The facts of

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the matter is, I agreed with what to say about the problem of

:14:31.:14:35.

transferring from opposition into Government. Let's be quite clear,

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Liam Fox made an error of judgment. I'm quite sure there is no money,

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nothing like that being involved, personal and game. He made an error

:14:46.:14:52.

of judgment. -- personal gain. It has cost him dear and I think it is

:14:52.:14:58.

very sad. I think that is right in terms of Liam Fox. Facility and

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ability for Adam Werritty to make money, there is no question. Fat is

:15:03.:15:09.

a question that should be answered this afternoon. -- that is.

:15:09.:15:19.
:15:19.:15:21.

pages, you will speed read it and For any politician aspiring to high

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office, a stint as a junior minister is a must. You might have

:15:25.:15:33.

a red box and a ministerial car, but his five years as Parliamentary

:15:33.:15:35.

Under-Secretary with responsibility for paperclips really the fast

:15:36.:15:40.

track to the top? You think of government, you think

:15:40.:15:43.

of the big beasts, the Prime Minister, Secretary of State,

:15:43.:15:48.

Whitehall mandarins. But those with slightly less glamorous job titles,

:15:48.:15:52.

the Parliamentary Under-Secretary of State, for example, barely get a

:15:52.:15:56.

mention. They are the junior ministers, the tier of middle

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management that helps keep the wheels of government in motion.

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There are over 60 junior ministers across the 20 departments of

:16:04.:16:08.

Whitehall. That is almost one in 10 of all MPs. William Hague at the

:16:08.:16:13.

Foreign Office has six junior ministers, four ministers of state

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and two parliamentary Under- Secretaries. No partridge in a pear

:16:17.:16:21.

tree, though. What do they do? Well, as memoirs can confirm, the dull

:16:22.:16:25.

and unglamorous jobs that the Secretary of State doesn't want.

:16:25.:16:28.

Norman Baker as Parliamentary Under-Secretary for Transport. A

:16:28.:16:32.

look at his portfolio reveals he is also responsible for alternatives

:16:32.:16:37.

to travel, amongst other things. The Department of Energy and

:16:37.:16:42.

climate change's Ministry of State Charles Henry is responsible for

:16:42.:16:46.

Smart Meters and lean regulation. At the Foreign Office, David

:16:46.:16:50.

Lidington can include ministerial correspondence and communications

:16:50.:16:54.

amongst his long list of responsibilities. It is hardly the

:16:54.:16:59.

West Wing. A junior minister's job is really to sell government policy.

:16:59.:17:03.

Oh, and cover the behind of the Secretary of State in some of those

:17:03.:17:08.

tricky media interviews. Just ask someone who has done it.

:17:08.:17:14.

certainly have to speak for them. Cabinet ministers often suddenly

:17:14.:17:19.

disappeared, leaving junior ministers to hold the can and go on

:17:19.:17:22.

the Today programme when the Riz Ahmed unpopular decision. But

:17:22.:17:25.

nobody really notices them, disappearing off the scene when

:17:25.:17:30.

there is difficult politics. Don't assume that just because you have a

:17:30.:17:33.

red box and minister in your job title that you actually have any

:17:33.:17:37.

power. It depends entirely on Number Ten. At the Prime Minister

:17:37.:17:42.

and people around him are interested in you, then you have

:17:42.:17:47.

influence. I was a specialist in Europe, Tony Blair's area. I had a

:17:47.:17:51.

lot of walk in rights to Number Ten. But if you are favoured or not, a

:17:52.:17:56.

junior minister must still watch what they say. Remember this?

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of the egg production in this country is sadly infected with

:17:59.:18:03.

salmonella. There was only one junior rule that every junior

:18:03.:18:08.

minister must obey if they want to survive. Don't overshadow your boss.

:18:08.:18:13.

A few days before the 2005 election, there was a huge profile on me as

:18:13.:18:17.

the most influential minister of foreign affairs in Britain, just

:18:17.:18:21.

after the election I found I was no longer a minister. If there is no

:18:21.:18:25.

real perk, power or influence, why do people do it? Well, it looks

:18:25.:18:29.

good on your CV. Your own coffee machine, drinks cabinet in the

:18:29.:18:39.
:18:39.:18:39.

office, shining name plaque... We are joined by Norman Baker. How

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fulfilling his it being a junior minister? Very fulfilling. I don't

:18:44.:18:49.

have a coffee machine or a name plaque. I have a ministerial bike

:18:49.:18:52.

that I chose myself. It depends on your relationship with the

:18:52.:18:57.

Secretary of stake. Philip Hammond was willing to let me get into

:18:57.:19:01.

areas of the department where I was able to get money for the Treasury,

:19:01.:19:04.

for a transport fund. I was given areas like rail performance to deal

:19:04.:19:09.

with, which is quite fulfilling. Another dynamic which is different

:19:09.:19:13.

from Denis McShane's time, we have a coalition government. There is a

:19:13.:19:16.

different dynamic there. You would have said the same thing when you

:19:17.:19:20.

were run government. Now would you say that all would you agree with

:19:20.:19:24.

Chris Mullin, who says it is low- level drudgery and utter lack of

:19:24.:19:27.

influence? I wouldn't have been so upfront about the fact that the

:19:27.:19:31.

last government was a coalition as well! I don't agree with Chris

:19:31.:19:35.

Mullin. I've read his books and I think they are entertaining. But I

:19:35.:19:39.

think junior ministers are central to the operation. But they don't

:19:39.:19:43.

have any real influence? They do, it depends on the Secretary of

:19:43.:19:47.

State. I had the great fortune to work with very strong secretaries

:19:47.:19:50.

of state that would let you get on with it. The one thing a junior

:19:50.:19:56.

minister craves is there a little bit of a policy that they can

:19:56.:20:02.

determine and run themselves. it's not just Chris Mullin, maybe

:20:02.:20:06.

you two are the exception to the rule. Lord Digby Jones described it

:20:06.:20:10.

as one of the most dehumanising experiences a person can have.

:20:11.:20:14.

Peter Hennessy said that junior ministers are the wretches of the

:20:14.:20:20.

Earth and are often treated as such. I don't recognise that. In my

:20:20.:20:23.

department we have junior ministers that have areas of responsibility

:20:23.:20:26.

and get on with it. Philip Hammond was keeping his finger on the pulse.

:20:27.:20:31.

He was expected to do that. He was a competent Secretary of State for

:20:31.:20:34.

Transport. But he recognised he couldn't do everything and in

:20:34.:20:38.

certain areas there was specialisms that we have which ought to be used.

:20:38.:20:41.

A good manager, a good Secretary of State, will allow junior ministers

:20:41.:20:47.

to flourish in that way. How do you feel, in the thick of it, you see

:20:47.:20:50.

special advisers running around and exerting influence. That must be

:20:50.:20:57.

frustrating? It's different in a coalition. They have special

:20:57.:21:01.

advisers in the coalition? Well, we have special advisers, for whether

:21:01.:21:04.

they are Tory or Lib Dem secretaries of state. I have a Lib

:21:04.:21:08.

Dem responsibility in the coalition to make sure that Liberal Democrat

:21:08.:21:13.

policies are delivered. So why have a hierarchy to the Secretary of

:21:13.:21:16.

State and to Nick Clegg. Isn't that the difference? In the coalition,

:21:16.:21:20.

is less likely that Norman Baker, the only Liberal Democrat... In the

:21:20.:21:25.

village! In the Department of Transport, he's more likely to be

:21:25.:21:28.

told off by the Secretary of State, it's easier for the Secretary of

:21:29.:21:34.

State to tell him to get back into his box? The distinction between

:21:34.:21:37.

the two parties will have to be blurred. He will be part of the

:21:37.:21:41.

overall team. Ind the end, you have to tell special advisers where to

:21:41.:21:46.

get off, whether they are in coalition or otherwise. They say,

:21:46.:21:51.

the Secretary of State wants this. You say, politely, well, tell him

:21:51.:21:57.

to pick up the phone and ask me! He were elected you? The special

:21:57.:22:00.

advisers for Transport are conservative. So they answer to the

:22:00.:22:02.

Secretary of State, they don't answer to me and I don't answer to

:22:02.:22:08.

them. It's a different dynamic. he's got it all wrong? If it's an

:22:08.:22:17.

exaggeration, like Yes, Minister was an underestimate! There are

:22:18.:22:21.

only two countries in Europe with higher inflation than Britain. �10

:22:21.:22:28.

to each of you if you can name them? Liechtenstein. Spain? In

:22:28.:22:36.

Europe? That is one, what is the other? Do I get �5 for that? No, 10

:22:36.:22:43.

if you name both. Greece? Estonia? They are playing each other in the

:22:43.:22:47.

European Championships! It would be a lot riskier to give it to an

:22:47.:22:49.

investment banker. The backbench committee of the

:22:49.:22:53.

Commons will meet an hour to decide which question they are going to

:22:53.:22:58.

put forward for the House of Commons chamber. All eyes will be

:22:58.:23:02.

on whether they will choose the issue of a referendum on our

:23:02.:23:05.

membership of the European Union. One leading campaigner for a

:23:05.:23:08.

referendum is Nikki Sinclaire. She was once of the UK Independence

:23:08.:23:14.

Party, now an independent MEP. She went from town to town, championing

:23:14.:23:18.

of the referendum calls. Recently, she delivered a petition to Downing

:23:18.:23:23.

Street. It ran to about 100,000 signatures. She took a long MPs

:23:23.:23:27.

from both the conservative and Labour parties that wanted it put

:23:27.:23:31.

to a vote. Welcome to the Daily Politics. Even if you get this vote

:23:32.:23:36.

comedy will not get a referendum, will you? I think it's unlikely at

:23:36.:23:39.

this stage. The idea was to put pressure on the Government and we

:23:39.:23:44.

have done that by collecting that 100,000. These were 100,000 voices

:23:44.:23:47.

that I brought down to Downing Street. I am the guardian of those

:23:47.:23:52.

voices. Since we collected his 100,000, we have actually got it up

:23:52.:23:56.

to 120,000. Wouldn't you have more influence inside the Conservative

:23:56.:24:00.

Party, strengthening the Euro- sceptic wing? The Conservative

:24:00.:24:04.

Party has promised a lot on Europe but they failed to deliver.

:24:04.:24:08.

Remember the cast-iron promise of... I do indeed, there are plenty of

:24:08.:24:12.

Conservative backbenchers take your view. But you don't have the

:24:12.:24:17.

influence they have on the outside? An independent, so I can speak to

:24:17.:24:22.

all parties. But I'd like to see what MPs turn up. Hopefully we will

:24:22.:24:26.

get the debate. It had been said that it would happen. What

:24:26.:24:29.

conservative and Labour MPs, they will turn up and put their vote to

:24:29.:24:33.

this, and I ask people at home to write to their MPs and make sure

:24:33.:24:38.

they turn up. We need to put pressure on the politicians. This

:24:38.:24:42.

is a debate that is long overdue. We have argued about it for 30

:24:42.:24:46.

years plus. We need to have a formal debate in this country, a

:24:46.:24:53.

binding referendum. Do you think we should have a referendum? I'm not

:24:53.:24:59.

sure. The Government are in a very strange position. They promise that

:24:59.:25:03.

if there is another Lisbon Treaty, then they should have a referendum.

:25:03.:25:07.

But that wouldn't be in or out? might come back to bite them, it

:25:07.:25:10.

would only be written in terms of in or out. Whole coverage would be

:25:10.:25:15.

that you cannot have one on an esoteric treaty without it being in

:25:15.:25:19.

or out. I'm fairly agnostic, which is appalling for Euro-sceptics,

:25:19.:25:23.

that I should be agnostic on something so important. But I think

:25:23.:25:27.

they might get that in or out referendum by stealth, possibly the

:25:27.:25:34.

worst of all words. How? If there is a Lisbon part two, if the

:25:34.:25:37.

Government stick to where they are and say they will have a referendum

:25:37.:25:43.

on it, then that will become, de facto, a referendum on in or out.

:25:43.:25:49.

If they lose it, it opens up the whole question. Your government

:25:49.:25:54.

promises a referendum on Lisbon, we never got it. Surely, if there is

:25:54.:25:58.

to be major treaty changes again, why shouldn't there be? There

:25:58.:26:02.

should be, I agree with the Government on that. Whether it

:26:02.:26:07.

becomes in or out in all but name, the referendum you are after, I'm

:26:07.:26:14.

not sure. Just to be clear, you're recruiting sergeant at the moment

:26:14.:26:18.

is the President of the commission. For him to argue they should be a

:26:18.:26:25.

5% increase in the budget, and that the answer to the euro-zone is the

:26:25.:26:30.

political integrated project that Europhiles have wanted all along,

:26:30.:26:35.

that is good for the Euro-sceptic cause. Can we trust Mr Cameron? We

:26:35.:26:40.

were promised referendums. The wording was changed under the

:26:40.:26:44.

Labour government. The next treaty changes likely to be with the

:26:44.:26:47.

eurozone. Cameron would say that we are not in that, so therefore we

:26:47.:26:51.

should not have it. I don't know about the legislation, but it has

:26:51.:26:55.

been cast that if there is a treaty change, there should be a

:26:55.:27:05.

referendum. If you got a referendum on in or out, most Euro-sceptics

:27:05.:27:06.

would still vote yes to stay in? would take issue and say that

:27:06.:27:12.

actually, in an opinion poll commissioned with YouGov last month,

:27:12.:27:17.

more importantly for Conservative Party, 66% of Conservative voters

:27:17.:27:22.

would vote to leave it. But even Euro-sceptics like William Hague

:27:22.:27:27.

said that they would still vote yes to stay in. They want to change it

:27:27.:27:31.

and repatriate powers, but they don't want to leave? It's amazing

:27:31.:27:33.

what they say in opposition. never said he would lead in

:27:34.:27:39.

opposition either. To leave the European Union, under Article 50 of

:27:39.:27:48.

the Lisbon Treaty, to renegotiate, you need unanimity from 27 states.

:27:48.:27:53.

Euro-scepticism, there was a time when it was regarded as... Well,

:27:53.:27:58.

particularly by fashionable opinion, as a rarefied form of madness. It

:27:58.:28:03.

is now mainstream British opinion? I think so. What is interesting is

:28:03.:28:07.

how many of... And we will see it from the meetings this morning...

:28:07.:28:14.

How many of the new Tory intake are sitting there. I thrill -- still

:28:14.:28:18.

think it's a minority pursuit on our benches. The only people bath

:28:18.:28:24.

with he would work Kate Hoey, the regulars. It shouldn't be seen as a

:28:24.:28:28.

conservative thing. There as many Euro-sceptic Labour people as well.

:28:28.:28:34.

I'm not sure of that. In your heart of hearts, will we still be in the

:28:34.:28:41.

European Union in 10 years' time? Hopefully not! That is two words!

:28:41.:28:45.

know what you hope, it is what you thought I was asking about. Thanks

:28:45.:28:49.