21/10/2011 Daily Politics


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21/10/2011

Andrew Neil is in Westminster with all the top political stories of the day.


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Afternoon, folks. Welcome to the Daily Politics, which is now going

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to be presented by me on a Friday. So please don't switch off.

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Celebrations on the streets of Tripoli as a tyrant is slain but

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what does the future hold in a post-Gaddafi Libya? It is crunch

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time for the Eurozone but Germany and France have already postponed

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the crunch from Sunday's summit to another one on Wednesday? We'll be

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asking Shadow Chancellor Ed Balls how he would tackle the problem.

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They'd keep sterling, the BBC and the British Army. It's been called

:00:58.:01:08.
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Independence Lite but will the And with me today are Janan Ganesh

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of the Economist and Vincent Moss of the Sunday Mirror. Welcome to

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the programme. There are new and disturbing images this morning and

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we have decided not to show them. It seems that he was captured alive

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and could have been deliberately executed. The transitional council

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is claiming he died in a firefight. This will matter little to the

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people of Libya. They are celebrating after 42 years of

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despotic rule. There are big questions about whether the

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National Transitional cancer can establish a stable government. --

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National Transitional Council. To Philip Hammond was asked about this

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this morning. There is some optimism that can be achieved. It

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is a relatively wealthy country. There is some oil. The Libyan

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people have shown restraint over the past few months. Most people

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who have been to Tripoli in particular have been complimentary

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about the way that life has returned, quite significantly, to

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normal in areas of the country that were liberated. There is reason for

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optimism. We will be looking to provide any assistance we can to

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the NTC and in showing that transition is smooth. Are you as

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optimistic as the new Defence Secretary? I think it is less bleak

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than it was in Iraq in 2003. It will be less compulsive. It poses a

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huge risk. It is a political risk for David Cameron. He has gone

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through an extraordinary journey. In January he was worst place than

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any other Western leader. -- placed. He has been criticised. I think he

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was unfairly criticised for pursuing narrow, British, economic

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interest. That is a legitimate part of foreign policy. He has gone from

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that position in January of being seen as too dry and cynical in his

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foreign-policy to where he is now - being seen as one Western leader

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who is ahead of the curve. Potentially a year from now, he

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will be presiding over at a distance the more chaotic picture.

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At the moment I are more sanguine about Libya and Iraq and

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Afghanistan. -- I am more sanguine. He never quite know where things

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will go. He will probably say it is worth the risk. It is. This is the

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simplest part. It is about controlling the people and unifying

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them into a military that works under civilian control. Just hope

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that you can build the nation. is very tribal. There was a talk of

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a lot of Al-Qaeda based in Libya and there is a Muslim Brotherhood.

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It is not necessarily plain sailing, is it? That is the prospect of

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political risk. At the moment David Cameron will be quite happy. So

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will other members of the British political scene. That is not just

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his victory. It is a victory for William Hague. His basic appetite

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for the job was being questioned. Did he ever find his major?

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seems to have. A year ago, there were questions as to whether he

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would remain in the job for much longer. Does it give them an

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appetite to do something else? is always the risk. There is no

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doubt that David Cameron took the risk. It could have been disastrous

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for him. He has problems with the economy and with his backbenchers

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on Europe. I expect that Liam Fox hopes that he had been around for

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another seven days to have overseen S. I expect the dictator's Union is

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feeling a bit fragile, after seeing what happened to Saddam Hussein and

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Colonel Gaddafi. There were European Union flags being shown in

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Tripoli last night as Libyans celebrated the key role European

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nations played in the over broke of Colonel Gaddafi. The flag-waving in

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Europe has been a lot more muted. The eurozone crisis now unfurled at

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the summit of European leaders in Brussels on Sunday. This was meant

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to be the big weekend for Nicolas Sarkozy and Angela Merkel -

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Europe's odd couple. They have to patch up their differences over

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expanding the euro rescue fund and dealing with Greek debt if there is

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to be any chance of a plan emerging. The E F S S has got 440 billion

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euros capacity. The bail out cake will have to be enlarged if it is

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to do with the growing threat to Europe's banks and even to big

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economies like Italy and Spain. Nicolas Sarkozy and Angela Merkel

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disagree over how much it should be expanded by and in what way. The

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French want to turn the fund into a bank that can offer of two trillion

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Euros of its own loans. The Germans, who feel they have to pick up the

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tab, would prefer the fund to act as an insurer - with the trillion

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Euros of eurozone debts. Nicolas Sarkozy is resisting pressure from

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Angela Merkel to cut Greek debt. He feels that such a move would hit

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French banks hard. They have a lot of that debt and billions in bank

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capital -- bank recapitalisation and it would threaten their credit

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rating. The differences between France and Germany are still so

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great, after all these talks, there will have to be another summer -

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not on Sunday - that will go ahead but on Wednesday to try to get an

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agreement. Will any plan make a difference if Greece cannot deliver

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on its austerity programme? Ireland also had to push through spending

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cuts and tax rises. Things seem to be going a little better over there.

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Our correspondent is in Dublin. The Irish are beginning to see a little

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light at the end of the tunnel and it is not an oncoming train. Yes,

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Andrew. You are philosophical. If you want to find out about stoicism,

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instead of going to Athens, come to Dublin. They are what the Financial

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Times's Court -- called the role- model for austerity. They are

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getting on with it. They have seen taxes increase and pay packets

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reduce. In spite of all of that, with unemployment now over 14%,

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they are not riots in the streets. There is a small protest near the

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Central Bank but nothing on the scale we are seeing certainly

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increase or other cities across Europe. They are getting on with it

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because the economy is growing, because of exports. They hope to

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return to the markets and borrow like other company -- countries

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within a year or so. Is there a feeling among voters that there is

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a sense that maybe they could be through the worst? A long way to go.

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Maybe the worst is over and there is some growth coming into the

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economy. Yes, certainly there has been growth in terms of exports.

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They are concerned about the world economy affecting that. There has

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been growth in the domestic economy but it has been squeezed. Whether

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people think things will get better or not, I'm sure. There is a Budget

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coming in December. The Government is debating whether they cut

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something like 3.6or 4.4 bn euro out of public spending. Yesterday

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they had their homework marked by the troika, the EU and the IMF.

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They said Ireland was doing very well. The nuances of what they were

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saying was that they were suggesting that Ireland could ease

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up a bit. They are concerned they could engender the revolution on

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the streets we have seen in other parts of the world. We will have to

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come over and see. Thank you for being with us today. Instead of

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going to Dublin will join from Sheffield by Ed Balls. Welcome to

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the Daily Politics. If you were heading for the Brussels summit

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this weekend, what would you be advising our European partners to

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do? I think there are three things you need. You need a plan, critical

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agreement for the plant and it has to work. None of those things are

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in place. There is not a plan, the politics is very divided and no

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decisions can be made. I fear the danger is the plan will not be the

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right one. You have to say to the European Central Bank, you have to

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do whatever it takes to show Italy and Spain will be supported by the

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collective in the eurozone. The quid pro quo has to be that in

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Italy there has to be a clear political deficit reduction plan.

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You will not have stability unless you say collectively we are going

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to stand by each other in the eurozone for now and that means a

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very substantial commitment to inject billions and billions of

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pounds of resources, if necessary. Without that the markets will doubt

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whether or not there is a real political commitment to hold this

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together. That is where the contagion, the tensions, low growth

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and market worries come from. There also has to be a commitment to a

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balanced plan. If you tried to go too quickly, it does not work. In

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Ireland, as we were just hearing, they have cut VAT recently

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temporarily. There is a debate about moving to a more balanced

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plan. Unemployment is high. Markets are not lending yet to Ireland.

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Navigating your way through is very difficult. The need to have

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political agreement and a plan for jobs and the economy. Without that

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you cannot make progress. No one is following your advice. They are

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cutting the deficit much more quickly than we are cutting hours.

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The Germans and French are also cutting their deficits. You seem to

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be a lone voice. No one else seems to want these policies. The deficit

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will be reduced more quickly. You're just hearing troika saying

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to the Irish, you may need to ease off and move to a more balanced

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plan. What you have to do is have a credible plan for the deficit. It

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has to be one that works. If you have flat lining growth and

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unemployment is rising, the market is saying it is not working and the

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debt will be going up rather than dam. Borrowing is under pressure.

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In Italy, with the level of debts they have - twice as high as ours

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plus high interest rates - debt gets worse. You need those plans.

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If you say you will do it with austerity, that will not work. The

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other part of the problem is you have to have collective political

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commitment in the eurozone. Until France and Germany can reach a deal,

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I have to say David Cameron - in my view - should have been in Berlin

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and Paris this week saying to people in the interests of Europe

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and Britain, get this sorted out. He has been stuck in an internal

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party wrangle. You are a lone voice in theirs. You are in isolation.

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Angela Merkel does not agree. She wants to cut the deficit at a

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higher rate. Even the French Socialist candidate wants to cut

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the deficit. Who agrees with you? When we see the chaos of the summit

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not reaching agreement, you are saying I should be following a pass

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being prescribed by Angela Merkel. I'm not saying you are wrong. You

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are right. It has happened before. He agrees with you? That would be

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quite a punt to take. The eurozone is going into what is the biggest

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political crisis of our lifetimes. It is incredibly dangerous.

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Austerity is not working. The ECB is mooted. There is no way of

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standing behind Italy. In Britain, we have a deficit plan and we have

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a political agreement to deliver it. It is the wrong plan because it is

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going too fast. In need to look at an employment and growth. The idea

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you can look at the eurozone and said Britain would be better to

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follow their plan, good grief! asked a much simpler question that

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people can follow. It seems your position is that Ed Balls is right

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and everyone else is wrong. Angela Merkel does not agree with you and

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nor does Nicolas Sarkozy. The Spanish do not agree with you. The

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Irish do not agree with you. The French socialists do not agree with

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you. I simply ask again, who does agree with you? We did not join the

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euro, Andrew, what a good decision that was! You have taken credit

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endlessly for that. It seems to me, as I say again, you may be right or

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you may be wrong. As you sit in Sheffield, you are an isolated

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figure in the European debate. Sometimes you have to have the

:15:57.:16:02.

strength to make an argument which is right. And the outside the

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consensus. A year ago, I said if we cut the deficit in Britain this

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fast it would be bad for Britain. The Conservative Party and many

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commentators said we would get growth, unemployment would come

:16:15.:16:20.

down and borrowing would come down. There has been a year of flat

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lining and markets a doubting whether Britain will get the growth

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we need. It looks weathered the optimists of the year ago have got

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it wrong. In Britain we have to change course and Europe needs to

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change course as well. Austerity and a lack of political direction

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are not working. Let's assume that Ed Balls is right and the rest of

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the world is wrong. Let me ask you on this. It would seem to me, and

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you're right about the failure of leadership in Europe. It has been

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kicked into touch again. It would seem that, in the longer term, the

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only way the have to go is to break up the eurozone and take out the

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weaker members so you have an optimum currency area in the north

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or you have, as the British government is proposing, a much

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stronger fiscal union with transfer payments and eurozone economic

:17:16.:17:26.
:17:26.:17:26.

I personally think that you can make a larger monetary union work

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across an optimal currency area, plus if you have got the political

:17:31.:17:36.

commitments. The problem is, Italy is probably OK if it gets its

:17:36.:17:39.

deficit sorted out, but the others have got to stand by the Italians

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and that is not working. I am for political integration, and I am for

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the things which need to be done to make that happen. The problem this

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weekend is that the French and Germans cannot face up to that. Our

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government is sitting in London not doing the diplomacy we should be

:17:56.:17:59.

doing and it is going to end up with jobs and investment lost in

:17:59.:18:04.

Britain because what happens in the Eurozone matters. I understand that

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but if you, like the Government, are urging deeper fiscal unions for

:18:08.:18:12.

the Eurozone countries with massive transfer payments and an economic

:18:12.:18:16.

policy for the Eurozone, by definition that redefines our

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relationship with Europe. It would then change. We would face a 17

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country bloc, which would out vote us on every major issue. Wouldn't

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we then have to change our relationship but the logic of your

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policy and Mr Osborne's policy was followed through? The logic of the

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Monetary Union is deeper fiscal integration. Of course that means

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that that changes over time and Britain has to deal with that. The

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thing I find worrying about the Conservatives is they seem to think

:18:47.:18:50.

that the only way to sort out Europe and a relationship with

:18:50.:18:55.

Europe is essentially for Britain to walk away. That is so defeatist.

:18:55.:18:59.

That is not government policy. is the view of very many

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Conservative MPs who will be rebelling next week. It is pretty

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much what George Osborne hen sat in the House of Commons. He should be

:19:07.:19:12.

leading the arguments through Europe, not walking away. The

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single market, the labour market, financial services matter across

:19:16.:19:21.

the whole EU area, not just the Eurozone. Us not being in those

:19:21.:19:25.

debates is incredibly dangerous. Stay with us. Let me get some

:19:25.:19:31.

reaction from our guests. If we are urging the Europeans to do what we

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would not do ourselves, doesn't that changed our relationship over

:19:35.:19:42.

time with Europe? I think a 17 country core Eurozone area would

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effectively be the European Union. That would set the terms of

:19:46.:19:50.

economic and fiscal policy and even business regulatory policy for the

:19:50.:19:54.

European Union as a whole. You can imagine in the longer term, British

:19:54.:19:58.

membership coming into question. Its interests would diverge from

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the core. Ed Balls is right. The ultimate solution to the Euro

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crisis is some kind of fiscal harmony. That will not happen for a

:20:06.:20:10.

long time. It will not involve us. And it would be very difficult for

:20:10.:20:16.

the existing Euro countries to get there. What is your take on it?

:20:16.:20:19.

think people are very depressed by the lack of political leadership.

:20:19.:20:23.

People need unity of purpose and they're not getting that. It does

:20:23.:20:26.

not reassure the markets. The think the British could make a

:20:26.:20:29.

difference? I think people would listen if the Conservative Party

:20:29.:20:33.

were not split down the middle. We have the potential for 100 Tory MPs

:20:33.:20:39.

rebelling on Monday. And quite a few Labour MPs. It is a bad message.

:20:39.:20:43.

It echoes the lack of political leadership. It is an issue that

:20:43.:20:49.

will, on Monday. It is not a party political point, but I would like

:20:49.:20:53.

to come back to what I have said. It seems to me that if the Eurozone

:20:53.:20:57.

goes down the route of fiscal integration and economic harmony,

:20:57.:21:03.

and we are not part of that, whatever British politicians say,

:21:03.:21:08.

that will enforce a redefinition of our relationship with the EU. Can I

:21:08.:21:13.

get a final reaction to that? is right. It is a challenge for our

:21:13.:21:17.

generation but I have to say, millions of jobs and investment in

:21:17.:21:23.

our country depends upon hour access to that wider market.

:21:23.:21:28.

that is all covered by WTO rules. You also know that the integration

:21:28.:21:31.

of financial services and the single market goes way beyond the

:21:31.:21:35.

WTO. We are negotiating that at the moment and Britain is not punching

:21:35.:21:40.

its weight. Margaret Thatcher, Gordon Brown, John Major, all of

:21:40.:21:44.

them would have been demanding to be at the summit, getting it sorted

:21:44.:21:48.

out. David Cameron has walked away. That is not in our national

:21:48.:21:52.

interests. We have to shape the debate so we keep investments in

:21:52.:22:02.
:22:02.:22:02.

Britain. Ed Balls, thank you very much... SNP politicians at their

:22:02.:22:07.

conference in Inverness this weekend are, as usual, considering

:22:07.:22:10.

the wisdom of being part of the UK. They have a spring in their step

:22:10.:22:13.

now. Their manifesto promised a referendum but now there is top of

:22:14.:22:18.

another action, independence light -- to Independence Lite, or

:22:18.:22:25.

devolution max, it depends what direction you are coming at it from.

:22:25.:22:29.

Still no word on when a debate -- a referendum might be held. John

:22:29.:22:39.

Sweeney joins me. Before I get on to Independence Lite, can ask you,

:22:39.:22:43.

your administration has been boasting about how you plan B is

:22:43.:22:48.

doing better than Mr Osborne's first plan. The Scottish economy,

:22:48.:22:53.

however, is flat lining as bad as the British economy. The Scottish

:22:53.:22:56.

economy delivered as much growth in the second quarter as the UK

:22:56.:23:02.

economy. The growth is modest. The decisive difference is the fact

:23:02.:23:06.

that unemployment in Scotland is lower than the rest of the UK and

:23:06.:23:12.

employment levels are higher. 0.2%, almost nothing. State

:23:12.:23:18.

spending is bigger in Scotland. Before the people that are affected

:23:18.:23:21.

by being in employment and not being in employment, it matters a

:23:21.:23:27.

great deal. It is a consequence of the way we have used our investment,

:23:27.:23:31.

particularly capital investment, to support the future of Scotland.

:23:31.:23:35.

What concerns me about the UK Government's approach is that they

:23:35.:23:41.

have reduced capital expenditure in Scotland by 36%. That is a direct

:23:41.:23:44.

threat to economic recovery. That is why I have boosted capital

:23:44.:23:48.

spending programmes with the flexibility and already have access

:23:48.:23:54.

to, to him -- to support employment and growth. If everything is so

:23:54.:23:58.

great, why is life expectancy widening between Scotland and

:23:58.:24:04.

England? That is in certain parts of Scotland. It is an issue in

:24:04.:24:07.

certain parts, and it is about long-term health issues connected

:24:07.:24:12.

with alcohol and tobacco and poor standards of living. The Scottish

:24:12.:24:17.

Government is taking measures, such as minimum pricing of argol, to

:24:17.:24:21.

interrupt the fact that it is deemed acceptable for us to flood

:24:21.:24:26.

the market with very cheap alcohol, which has damaging consequences for

:24:26.:24:30.

individuals, and that is why we are trying to tackle that and encourage

:24:30.:24:33.

people to lead a healthier lifestyle and take more modest

:24:34.:24:37.

approaches towards alcohol and tobacco consumption. There is a

:24:37.:24:41.

public health agenda we need to put forward, an integral part of our

:24:41.:24:46.

economic approach. Good luck with that. B&Q of independence, I know

:24:46.:24:52.

that has galvanised the conference. -- the issue of independence. Why

:24:52.:25:02.
:25:02.:25:03.

not just have your referendum now? Are you what we would call just a

:25:03.:25:10.

bit feartie? Which I would translate as a chap who was a bit

:25:10.:25:15.

frightened. I did not need any translation, but I'm glad you gave

:25:15.:25:20.

that translation. What we set in May is that we would have a

:25:20.:25:23.

referendum in the latter stages of the parliament. We sometimes get

:25:23.:25:27.

this from people like yourself, why did you not stick to that things

:25:27.:25:30.

that you said, why do you not all right you commitments? That is

:25:30.:25:34.

precisely what we will do. Give us a date for the referendum. When

:25:34.:25:38.

will it be? Later in the parliament. When? Later in the parliament.

:25:38.:25:45.

When? It will be later in the parliament. When? We will specify

:25:45.:25:50.

the date. A will you do it on the anniversary of Blackburn? That

:25:50.:25:54.

would be a really great decision for a forward-looking country, to

:25:54.:26:00.

have an independence debate on the anniversary of a medieval battle.

:26:00.:26:05.

If that is your interesting suggestion, we will consider it.

:26:05.:26:11.

And you have not. Do you think I came up the Clyde on a banana boat?

:26:11.:26:14.

We will have our referendum in the latter part of the parliament,

:26:14.:26:18.

exactly when we said it would be. The one technical point you did not

:26:18.:26:22.

mention is that our manifesto was endorsed by about 45% of the

:26:22.:26:26.

electorate in Scotland. It gave us a majority in parliament for the

:26:26.:26:30.

first time. That is a mandate that I think people in the UK Government

:26:30.:26:36.

should begin to respect. But you will not give us the debate. Is

:26:36.:26:42.

this Independence Lite, or devolution max? There would be no

:26:42.:26:50.

Scottish army under this, correct? I think the concept of another

:26:50.:26:53.

option short of independence, hear me out, that has got to be fully

:26:53.:26:58.

defined by those who would argue for that proposition. The Scottish

:26:58.:27:02.

Government, in our proposals, set out how a model of this could look.

:27:02.:27:05.

You're right, defence would be an issue reserved to the United

:27:05.:27:10.

Kingdom under that had a model, but it is for those who advocate the

:27:10.:27:13.

concept of strengthened powers for Scotland within the United Kingdom,

:27:13.:27:18.

short of independence, to define that proposition. The Scottish

:27:18.:27:20.

Government will engage constructively with an increasing

:27:20.:27:24.

number of people who argue for that approach. In five seconds, you are

:27:24.:27:29.

still going for the Full Monty? going for the Full Monty. Separate

:27:29.:27:34.

army, seat in the United Nations, the rest of it? I want Scotland to

:27:34.:27:37.

be in a position to be a progressive country that is moving

:27:37.:27:42.

forward, generating wealth and can take its own decisions. For me,

:27:42.:27:47.

that means independence. Scottish independence now

:27:47.:27:52.

unstoppable? I don't think it is likely. What you will see in the

:27:52.:27:55.

next few years is a deliberate attempt by the SNP to drive a wedge

:27:56.:27:59.

between Edinburgh and London by highlighting issues such as NHS

:27:59.:28:03.

reform and slow-growth. We have run out of time but thank you for being

:28:03.:28:08.

with us. That is off raw this week. We will be back on Monday for more

:28:08.:28:11.