:00:23. > :00:26.Afternoon, folks, welcome to the Daily Politics.
:00:26. > :00:29.European leaders in Brussels finally came up with a plan in the
:00:29. > :00:33.wee small hours this morning which they hope will put their economies
:00:33. > :00:36.back on course. The market reaction has been cautiously positive, but
:00:36. > :00:39.the deal is short of detail in several crucial aspects and many
:00:39. > :00:47.fear the eurozone still hasn't come up with enough shock and awe to
:00:47. > :00:50.solve Europe's interminable sovereign debt crisis. They've
:00:50. > :00:56.agreed to re-capitalise the banks, write off 50% of Greek bank debt
:00:56. > :01:00.and increase the firepower of Europe's bail out fund. How all
:01:00. > :01:06.this will be financed, however, is still unclear. We'll get reaction
:01:06. > :01:09.from the city and the thoughts of two former Chancellors.
:01:09. > :01:14.Does this agreement now mean the eurozone is one step closer to
:01:14. > :01:17.being a superstate with the UK left in the slow lane? We'll be asking
:01:17. > :01:23.where Britain figures in all this and whether it will be more fuel to
:01:23. > :01:27.the fire for Conservative backbenchers.
:01:27. > :01:29.However, they do have one reason to celebrate this morning - Ken Clarke
:01:29. > :01:34.has backed down on refusing to allow mandatory sentencing for
:01:34. > :01:39.those under 18 caught carrying a knife. We'll speak to one
:01:39. > :01:41.backbencher who campaigned for the change.
:01:41. > :01:46.And no matter what's agreed across the Channel, unless Britain can
:01:46. > :01:56.start growing again there will be no chance of a recovery. We'll look
:01:56. > :01:56.
:01:56. > :01:59.at how the Government is getting on All that in the next half hour and
:01:59. > :02:05.with us for the whole programme today is lastminute.com founder and
:02:05. > :02:09.the UK digital champion, Martha Lane Fox. Welcome to the show.
:02:09. > :02:12.Thank you. Well, we all knew some sort of deal
:02:12. > :02:15.would be done, what's unclear is whether it's enough. After the doom
:02:15. > :02:18.and gloom of the past few days, it's sunshine and smiles all round
:02:18. > :02:23.as European leaders think they've thrashed out a agreement to save
:02:23. > :02:28.the euro. Firstly, European leaders agreed a significant reduction in
:02:28. > :02:33.Greece's debts. The banks have agreed in principle to take a 50%
:02:33. > :02:36.'haircut'. Secondly, European banks - but not UK ones - will also have
:02:36. > :02:46.to build up their capital by over 100 billion euros to protect
:02:46. > :02:46.
:02:46. > :02:50.against any future government defaults. And thirdly, they also
:02:50. > :02:52.agreed to boost the eurozone's main bail out fund - the EFSF - to
:02:52. > :03:02.around one trillion euros, with China possibly being asked to
:03:02. > :03:03.
:03:03. > :03:08.contribute. So will it work? Well, the market reaction has been
:03:08. > :03:13.positive. The Hang Seng in Hong Kong closed up 2.7% and here in
:03:13. > :03:18.London the FTSE was up by over 2%. The other big question is whether
:03:18. > :03:21.these economic measures will end up creating a new eurozone superstate.
:03:21. > :03:23.The summit communique included measures for a new framework for
:03:23. > :03:33.the eurozone, including a new president to rival that of the
:03:33. > :03:36.
:03:36. > :03:41.wider EU. George Osborne insisted Britain's
:03:41. > :03:46.interests would not be harmed. is in Britain's interest that the
:03:46. > :03:48.euro operates more effectively, provided the interests of all 27
:03:48. > :03:53.member-states are properly protected in key areas of European
:03:53. > :03:57.policy like the single market, competition and financial services.
:03:57. > :04:00.We are insistent that our boys will continue to be heard and our
:04:00. > :04:04.national interests are protected and we found allies among the other
:04:04. > :04:07.10 members of the EU not in the euro.
:04:07. > :04:12.We spoke to Louise Cooper from BGC Partners yesterday. Let's hear from
:04:13. > :04:17.her again today to find out what she made of it all. Welcome back.
:04:17. > :04:22.Give me your overall reaction to what has been announced. I think
:04:22. > :04:28.the urgency from European politicians has impressed the
:04:28. > :04:32.market. The fact that we are now on a journey towards some kind of
:04:32. > :04:37.resolution has impressed the market. But as we talked about yesterday,
:04:37. > :04:42.we still do not have the deal and it's still not shock and off. When
:04:42. > :04:46.we talk about 106 billion euros that needs to go into bank
:04:46. > :04:51.recapitalisation as, most people think that is half what is required.
:04:51. > :04:57.When we talk about the bail out fund, the EFSF, we don't have a lot
:04:57. > :05:01.of detail on how it will work. Greece is still left with
:05:01. > :05:05.unsustainable levels of debt. It is a good work -- thing we are some
:05:05. > :05:09.way further along the road to a solution, it is a good thing
:05:09. > :05:16.eurozone policy makers are getting a sense of urgency, but we are
:05:16. > :05:19.still a long way away from a solution. I've written a blog about
:05:19. > :05:24.this on the Daily Politics and website. I put the word voluntary
:05:24. > :05:29.in quotes when it comes to this bank haircut. It was not voluntary.
:05:29. > :05:32.In the early hours, Angela Merkel and Nicolas Sarkozy threatened the
:05:32. > :05:37.banks with Greek insolvency if they didn't act. Will the Bank
:05:37. > :05:42.shareholders put up with this? reaction of European bank shares
:05:42. > :05:50.has been phenomenal. Barclays Bank is up 13%, Royal Bank of Scotland
:05:50. > :05:55.up 10%. BNP, the French bank, up 16%. Another French bank up 16%,
:05:56. > :06:00.Deutsche Bank up 14%. We have been told banks need to raise capital by
:06:00. > :06:05.June, if they don't raise capital they will have all kinds of
:06:05. > :06:09.impositions but on them and we have news that they have to accept a 50%
:06:09. > :06:15.haircut on their Greek loans. I am not convinced it is massively great
:06:15. > :06:19.news for banks. However, what bank stocks have been hit hard by his
:06:19. > :06:24.massive uncertainty. It is almost impossible to value them because we
:06:24. > :06:31.have no idea what the future looks like. Maybe a removal of some of
:06:31. > :06:35.that uncertainty is the reason why bank stocks are rallying. We are
:06:35. > :06:40.starting to get the sort of outline as to roughly how much losses they
:06:40. > :06:43.will have to take and that means we can start to value them.
:06:43. > :06:47.eurozone is giving the implication that this is the deal that will
:06:47. > :06:51.resolve things. They admit they have not given all the answers, but
:06:51. > :06:57.they say they are on the way. We don't know whether 50% is enough,
:06:57. > :07:00.we don't know the shape of the bail out fund. And we don't know the
:07:00. > :07:06.details of the bank recapitalisation. This could
:07:06. > :07:09.dribble on and on, a constant running sore. I can guarantee you,
:07:09. > :07:14.Andrew, come 1st January you and I will be having this discussion
:07:14. > :07:20.again. This is not going away, this is not a problem that can be solved
:07:20. > :07:24.overnight. It wasn't solved overnight. The big problem is debt.
:07:24. > :07:28.When we discuss bank recapitalisations, the bail out
:07:28. > :07:34.fund, Greece, none of that is solving the underlying problem, way
:07:34. > :07:38.too much debt and we need to pay it back. The 11 page communique
:07:38. > :07:44.doesn't include much on that. will leave it there, hope we see
:07:44. > :07:46.before January! Thank you. I'm pleased to say I'm joined in
:07:46. > :07:52.the studio by two former champions of Number 11 Downing Street,
:07:52. > :07:57.Alistair Darling and Nigel Lawson. Two Chancellors for the price of
:07:57. > :08:01.one. Alistair Darling, you said of the eurozone carries on with its
:08:01. > :08:05.patch and mend approach, it is doomed to fail. Is this patch and
:08:05. > :08:09.mend? And little bit more, but not much more. What they agreed last
:08:09. > :08:13.night is what they should have agreed a few months ago. Louise is
:08:13. > :08:18.quite right, until we know how much of a write-down banks are taking,
:08:18. > :08:21.until we know that Greece has a plan that can be implemented and
:08:21. > :08:24.delivered, there will be uncertainty. If you look at the
:08:24. > :08:28.banking recapitalisation, it worked here three years ago because we
:08:28. > :08:32.could say how much was going to be put into the banks, how much was
:08:32. > :08:36.public money, which banks were affected, and that gave confidence.
:08:36. > :08:41.The third element is this rescue fund, a query as to whether it is
:08:41. > :08:44.big enough, but also what it is. It looks like it will not be cash,
:08:44. > :08:50.some sort of sophisticated financial instrument and people are
:08:50. > :08:54.wary of those. Many of them contributed to the current problems.
:08:54. > :08:57.There is a long time between now and when we will get the detail
:08:57. > :09:02.which will provide the reassurance that I think people are looking for.
:09:02. > :09:06.What is your reaction, Nigel? doesn't solve the eurozone problem
:09:06. > :09:10.not least because the eurozone problem is insoluble. It can't be
:09:10. > :09:16.solved, only dissolved. That is what will have to happen in the end.
:09:16. > :09:22.You think it will break up? I think it needs to be done in an orderly
:09:22. > :09:28.fashion. You can't have a monetary union that is satisfactory without
:09:28. > :09:32.this fiscal union, attacks union. You can't have that in a democratic
:09:32. > :09:38.set-up with a full political integration. That is not something
:09:38. > :09:43.that any body, no major country in the European Union, once. It was
:09:43. > :09:47.always a non- starter. It was an appalling thing to have started.
:09:47. > :09:53.However, we are where we are and therefore what we have got to do is
:09:53. > :09:59.buy time. That is what disagreement does. It begins the process of
:09:59. > :10:06.buying time, to enable the banks, who are loaded with sovereign debt
:10:06. > :10:10.which is worth only a fraction of its nominal amount, to replenish
:10:10. > :10:17.their reserves and their capital. The Greece is still lumbered with a
:10:17. > :10:22.helluva lot of debt. By 2020, debt will still be 120% of its GDP. This
:10:22. > :10:26.haircut does not apply to the Greek debt that is held by the IMF,
:10:26. > :10:30.billions, by the European Central Bank, billions, because these
:10:30. > :10:35.government institutions don't do haircuts. It still leaves Greece in
:10:35. > :10:38.a precarious position. It does and more than that, people might worry
:10:38. > :10:43.that if Greece is still going to be in this position in several years,
:10:43. > :10:48.what does that mean for other economies? What we needed to get
:10:48. > :10:55.from the eurozone last night is not just the bank right down, but is
:10:55. > :10:58.there a workable plan? Nobody believes the plan presently being
:10:58. > :11:02.attempted in Greece will deliver the goods. They have lost so much
:11:02. > :11:06.of their capacity to grow that it is unlikely they will service these
:11:06. > :11:10.loans let alone repay them. That brings me to the other thing that
:11:10. > :11:15.wasn't discussed last night. If you don't get growth, you'll never get
:11:15. > :11:19.your deficit down. That affects us in this country as much as it does
:11:19. > :11:22.European countries. I know it is a difficult subject for the current
:11:22. > :11:27.European leaders because they are following similar policies, but if
:11:27. > :11:32.we don't get growth this problem will go on and on and on. Yesterday
:11:32. > :11:36.was fine, several months too late, but it is nowhere near enough.
:11:36. > :11:41.Martha Lane Fox, you're nodding, but many people will say there will
:11:41. > :11:46.be no growth until the eurozone sorts out its problems. Confidence
:11:46. > :11:50.is shot to hell and the ability of the eurozone to sort out problems
:11:50. > :11:55.is a necessary precondition. Absolutely right, confidence is the
:11:55. > :11:58.trick everybody has to pull off. You have to pull off a confidence
:11:58. > :12:03.trick when you start a business and you have to pull off a much bigger
:12:03. > :12:08.and more amazing confidence trick at European level. I would still
:12:08. > :12:11.argue it is an extraordinary project to attempt. We need to be
:12:11. > :12:14.able to have scale to fight the markets that are growing in the
:12:14. > :12:19.world, whether that is the economies of Brazil or India or
:12:19. > :12:25.China. Attempting to make short Europe is as robust as possible...
:12:25. > :12:30.It is not that extraordinary on the streets of Athens at the moment. Or
:12:30. > :12:35.Madrid or Lisbon. That is true, but at the same time, those individuals
:12:35. > :12:38.would certainly say they want to be in the most competitive position
:12:38. > :12:44.and I struggle to see how we will be able to compete against
:12:44. > :12:48.economies that are growing right now. Switzerland? It has a much
:12:48. > :12:56.smaller economy based on different circumstances. How does Canada
:12:56. > :13:03.manager at? Can't is an interesting example. It is much smaller -
:13:03. > :13:08.Canada. I'm very surprised. There is no correlation between the size
:13:08. > :13:12.of an economy and its success. Singapore is a tiny little country
:13:12. > :13:17.and extremely successful. I was surprised to hear her say it
:13:17. > :13:21.because it is not a country is in the first instance that of
:13:21. > :13:30.successful, it is companies. She knows all about that. Provided we
:13:30. > :13:31.can keep an open trading system, provided there is no resort to
:13:31. > :13:35.protection of globalisation, companies can thrive whether they
:13:35. > :13:41.are based in small countries or based in large countries. Let me
:13:41. > :13:45.look at the political implications of what was decided. We didn't just
:13:45. > :13:49.get the three-pronged financial approach of the eurozone, we got
:13:50. > :13:55.quite a political statement. I know it was at the urging of Mrs Merkel.
:13:55. > :13:58.She wants a new government of the eurozone. She wants fiscal union, a
:13:58. > :14:01.kind of economic government, so the Germans can make sure they are
:14:01. > :14:05.getting value for money. They want to make sure that if they are
:14:05. > :14:09.footing the bill, the eurozone will be run in the way they think it
:14:09. > :14:15.should be run. What are the implications for Britain of a
:14:15. > :14:19.deeper fiscal integration and European eurozone government which
:14:19. > :14:23.we will not be part of? The risk is that the idea behind the European
:14:23. > :14:29.Union is you have a single trading bloc, a single market. There are a
:14:29. > :14:33.lot of things they need to do to make it so. I agree with Martha, we
:14:33. > :14:39.need a far more open and efficient market than we have at the moment.
:14:39. > :14:44.If you create, within that group, the separate 17 member group, the
:14:44. > :14:49.risk is that you have two markets. That is not an argument for us
:14:49. > :14:54.joining the euro. A but it changes our relationship. It will, and if
:14:54. > :14:59.this is what happens, we need to take stock. It would be a tragedy
:14:59. > :15:03.at the present time, when frankly most of the world's economies are
:15:03. > :15:08.struggling, for us to then leap to try to solve the next problem
:15:08. > :15:12.before he -- we have sorted out the immediate problem. The immediate
:15:12. > :15:16.problem is getting borrowing down and growth. If we ignore the first
:15:16. > :15:19.problem and move straight to the eurozone, we are getting into
:15:19. > :15:23.greater difficulties. Whether the eurozone will ever emerge the way
:15:23. > :15:33.Germany wants is another question. The Germans are saying you all do
:15:33. > :15:34.
:15:34. > :15:38.what Riise. I can see 16 members If they have the choice. The one
:15:38. > :15:45.that pays the bill is usually the piper. Is this potential change in
:15:45. > :15:50.the eurozone going to be the makings of a European superstate
:15:50. > :16:00.for the 17, as Robert Peston says on his blog, is this an opportunity
:16:00. > :16:03.
:16:03. > :16:07.to renegotiate on his -- the terms? I don't think we will go very far
:16:07. > :16:11.along this path, but there will be a two-tier Europe. One politically
:16:11. > :16:15.integrated, a superstate, and then other countries associated with it,
:16:15. > :16:19.of which we will be one. We certainly don't want to be part of
:16:19. > :16:25.the superstate. But the reason I say it will not happen is because
:16:25. > :16:28.people, whatever the Angela Merkels of this world want, but people of
:16:28. > :16:33.the major countries in Europe do not want it and will not tolerate
:16:33. > :16:36.it and will not go along with it. It is not a viable project. This
:16:36. > :16:43.project of European and political integration, and I am glad that it
:16:43. > :16:46.will hit the rocks, but it will hit the rocks. As was said last night,
:16:46. > :16:51.we now had to solve the problem but we do not know how to get re-
:16:51. > :16:58.elected. Thank you very much. A new double act in British politics, two
:16:58. > :17:01.Chancellors. They may even get a free Daily Politics mug.
:17:01. > :17:04.There could have been further problems for the Government next
:17:04. > :17:09.week over knife crime. A bill currently going through the Commons
:17:09. > :17:13.set up a mandatory minimum sentence of six months for anyone over the
:17:13. > :17:18.age of 18 caught carrying a knife. An amendment was introduced by a
:17:18. > :17:23.Tory backbencher called Nick de Bois, the MP for Paris central,
:17:23. > :17:26.calling for the law to apply to those under 18. Ken Clarke was
:17:26. > :17:30.quite dismissive of the idea earlier in this week but he seems
:17:30. > :17:35.to have changed his mind. Our political correspondent can tell us
:17:35. > :17:39.more. Nothing throws you in this job like
:17:39. > :17:43.a straight answer to a straight question. I put it to Ken Clarke
:17:43. > :17:45.that someone that looked and sounded a lot like Ken Clarke have
:17:45. > :17:55.poured cold water over the idea of applying mandatory sentences to
:17:55. > :18:00.underrate teens for knife crime early in the week, -- under 18th.
:18:00. > :18:08.And it was a backbencher Nick de Bois that had changed his mind.
:18:08. > :18:13.This was his response. That is quite right! Nick de Bois is a very
:18:13. > :18:18.sensible guy. He and the member for Enfield had a problem in Enfield
:18:18. > :18:21.and I negotiated with them. There were 17 year-olds with this offence.
:18:21. > :18:29.It is a new offence that I am creating, threatening in certain
:18:29. > :18:35.sand -- circumstances to cause injury. It is not just carrying the
:18:35. > :18:39.knife, but using it in a dangerous way. 16 and 17 year-olds really
:18:39. > :18:46.ought to go into young offenders' institutions for that. The question
:18:46. > :18:49.is how tough will it be? The headline is two strikes and you are
:18:49. > :18:54.out. We seem obsessed with the baseball metaphor when we refer to
:18:54. > :18:57.crime. There are two serious violent offences and you get an
:18:57. > :19:03.automatic life sentence. Ken Clarke says that will probably follow
:19:03. > :19:13.anyway. This morning he told me he would be consulting on the idea of
:19:13. > :19:18.
:19:18. > :19:22.making it easier for parole boards to let out of those sentences. Is
:19:22. > :19:27.this Ken Clarke having his arm twisted to be tough or is it Ken
:19:27. > :19:32.Clarke being Ken Clarke? The airy good. I put that question to Nick
:19:32. > :19:37.de Bois. -- very good. We have just seen the Justice Secretary
:19:37. > :19:41.balancing the things that he anticipates the judiciary having a
:19:41. > :19:44.view on. They do not like mandatory sentences and I think he was
:19:44. > :19:50.balancing that against reasonable demands to introduce mandatory
:19:50. > :19:56.sentencing. How did you get your way? Was the Prime Minister are
:19:56. > :19:59.aghast at the possibility of two rebellions in one week? It has been
:19:59. > :20:02.portrayed as the rebellion but I don't think it was. I first put
:20:02. > :20:06.this amendment to the bill committee going back several weeks
:20:06. > :20:10.now. During that time, when I had got the money with the
:20:10. > :20:15.parliamentary system and how to play this... You are a new kid on
:20:15. > :20:18.the block? I like that at my age! We are always light on this
:20:19. > :20:24.programme. There was a process of negotiation and it got quite close,
:20:24. > :20:28.admittedly. The deadline was between the amendment and mind.
:20:28. > :20:32.this the rebellion in the making? This was not Ken Clarke's policy
:20:32. > :20:35.and the backbenchers were backing you and not him. I have 40
:20:35. > :20:39.backbenchers good enough to sign the motion. But the point here is
:20:39. > :20:44.that mandatory sentences was introduced by the Government as a
:20:44. > :20:47.concept, but they only looked at those over 18. My argument was that
:20:47. > :20:52.we had to be consistent and try and make sure that the law attacked by
:20:52. > :20:59.the cause of the problem was, which in queues to young people of 16 and
:20:59. > :21:07.17. The Ministry of Justice said that over 416 and 17 year-olds
:21:07. > :21:12.could be jailed every year as a result of that. -- 400 people aged
:21:12. > :21:15.16 and 17 it could be jailed. That is a lot. I have never thought that
:21:15. > :21:19.legislation can solve the problem of knife crime and I am well aware
:21:19. > :21:24.of that having had lot of problems in my constituency. What they think
:21:24. > :21:30.we can achieve here is a simple message about, for the first live
:21:30. > :21:33.in youth justice sentences, what you will actually get is that you
:21:33. > :21:37.will go to prison if you use a knife in this fashion. What does
:21:37. > :21:43.that mean? Using it in a threatening fashion. You do not
:21:43. > :21:51.have to stab somebody? You already go to jail for that anyway. It is
:21:51. > :21:55.threatening, and that is what we need, and other means of capturing
:21:55. > :21:59.the problem of people thinking it is cool to threaten somebody. But I
:21:59. > :22:02.accept that is only part of the picture. We have a lot to do with
:22:02. > :22:07.early intervention and other solutions. What do you think,
:22:07. > :22:11.Martha? I have worked for a long time working with charities trying
:22:11. > :22:16.to prevent people going to prison. Nick de Bois was telling me about
:22:16. > :22:20.the rioting in the summer and I am fundamentally against anything that
:22:20. > :22:23.increases are already absolutely over the top prison system. Our
:22:23. > :22:27.prisons are collapsing. Even if somebody put a knife to your
:22:27. > :22:31.throat? I think there are clearly lots of different ways of dealing
:22:31. > :22:34.with that and I will not make a judgment on individual cases.
:22:34. > :22:37.Fundamentally I think it is important that we put as much
:22:37. > :22:42.attention into preventative and rehabilitative parts of this as
:22:42. > :22:45.anything else. I don't think he disagrees. I do not disagree and I
:22:45. > :22:49.did not finish one point. The ministry of justice might be saying
:22:49. > :22:53.that 400 people could go to jail on this. What I hope will happen will
:22:53. > :23:00.be that the strong message that is going out will be measured by
:23:00. > :23:09.success by how many... As a deterrent effect? Yeah. If you are
:23:09. > :23:13.16 or 17 you may not know that that is the law. Did the Prime Minister
:23:13. > :23:17.intervene? I do not know. We hear that he did. You must have heard
:23:17. > :23:21.the gossip. I was confident that he supported the concept behind it. I
:23:21. > :23:25.asked him a question at PMQs and he said he would look at it carefully.
:23:25. > :23:28.In fairness, I should say this about the Justice Secretary, he had
:23:28. > :23:35.a few meetings and was open to persuasion was stopped you can be
:23:35. > :23:40.fair because you have one. Nick de Bois, thank you.
:23:40. > :23:44.Our economy has become more and more and balanced with our fortunes
:23:44. > :23:48.hitched to a few industries in one corner of the country. David
:23:48. > :23:52.Cameron has vowed to change that quote. The coalition is making a
:23:52. > :23:56.big deal of their plans to rebalance the economy, everybody's
:23:56. > :24:00.favourite buzz word. Have they had any success so far and could they
:24:00. > :24:07.have any success? We went to find out.
:24:07. > :24:11.The three decades a political consensus believed that our economy
:24:11. > :24:15.and successful growth were safe in the hands of the City of London and
:24:15. > :24:19.the country's financial services sector. Not any more. Everybody is
:24:19. > :24:23.talking about rebalancing the economy and the need to reverse the
:24:23. > :24:28.decline in our manufacturing industries. Since 1970, our
:24:28. > :24:32.manufacturing base has been sliding. It represents only about one-tenth
:24:32. > :24:37.of our GDP and has been completely overwhelmed by service industries
:24:37. > :24:42.and the public sector. One of the first decisions I took when I came
:24:42. > :24:47.into this job was to put manufacturing at the centre of our
:24:47. > :24:51.long-term economic vision. business secretary was fleshing out
:24:51. > :24:54.his industrial strategy yesterday. He paid tribute to British
:24:54. > :24:58.manufacturers already producing things like semiconductors that
:24:58. > :25:04.make mobile phones and computers work. And specialist machine tool
:25:04. > :25:07.companies, exporting to the Far East and South America. There is an
:25:07. > :25:10.exchange rate which is now competitive. The Government is
:25:10. > :25:15.putting a lot of support in. There are new technologies and
:25:15. > :25:18.apprenticeships, support for finance. We think that combination
:25:18. > :25:22.of things can lift manufacturing, not to buy it was before, but
:25:22. > :25:26.certainly build on the strengths of the good industrial companies that
:25:26. > :25:30.we have in Britain. But scratch the surface of this strategy and to
:25:30. > :25:34.find an argument about money. One of the problems is that brilliant
:25:34. > :25:38.innovation that comes from having world-class universities like
:25:38. > :25:43.Oxford and Cambridge is not translating into usable research
:25:43. > :25:48.and development that can be picked up by industry. Delegates at the
:25:48. > :25:52.Science and Technology conference in London welcomed Vince Cable's
:25:52. > :25:55.recent initiatives to create technology innovation centres,
:25:55. > :26:02.which will be a link between academic research and commercial
:26:02. > :26:04.development. Places like technology innovation centres specialise in
:26:04. > :26:12.connecting investors and companies with the research they need to
:26:12. > :26:19.succeed. The problem is the funding few hundred million pounds over
:26:19. > :26:23.five years. -- is paltry. When you compare that to the amount spent on
:26:23. > :26:28.rescuing the financial sector, it is nothing. The technology future
:26:28. > :26:35.led by British brains is beguiling but it will take decades. And we
:26:35. > :26:42.need growth now. Pictures from Max's mobile phone.
:26:42. > :26:45.Quite good quality! Martha, ever since the 1950s, governments of all
:26:46. > :26:49.political persuasions have tried to rebalance the divide between the
:26:49. > :26:52.North and the South. The more they do, the wider the gap has got
:26:52. > :26:55.between the South which has got richer and the North which has got
:26:55. > :27:02.relatively poorer. Why do governments think they can
:27:02. > :27:06.rebalance the economy? It is interesting, isn't it? I was at an
:27:06. > :27:09.innovation organisation yesterday and somebody showed me the map with
:27:09. > :27:12.the fastest growing companies in the UK on it. My perception was as
:27:13. > :27:16.you have described, but actually they were spread across the country.
:27:16. > :27:20.There was an equal mixture between North and South. Clearly there are
:27:20. > :27:24.some challenges still, but perhaps there are signs that there is more
:27:24. > :27:28.of a spread of innovation happening across the country. I wonder if
:27:28. > :27:32.Government can ever get this right. In 1992 President Clinton called a
:27:32. > :27:35.jobs council to work out where the new jobs would come from and what
:27:35. > :27:38.the Government could do to help. They picked all kinds of things and
:27:38. > :27:44.one thing that never appeared on the radar was something called the
:27:44. > :27:48.internet! They never saw it coming. Governments do not have a good
:27:48. > :27:51.track record of looking in crystal balls. And I have been at round
:27:51. > :27:56.tables in Number 10 since we started our business looking at how
:27:56. > :28:00.to encourage entrepreneurship in the digital sector. But governments
:28:00. > :28:04.do have the power of convening people, bringing them together to
:28:04. > :28:08.focus on the part of the economy, which is imported. Digitally we are
:28:08. > :28:12.quite strong as a country. Quite strong. The UK is the digital
:28:12. > :28:14.champion and we are trying to be stronger. We are trying to get more
:28:14. > :28:18.and more people online and encourage them to take their first
:28:18. > :28:22.steps on the web. There could be nothing less digital than this. You
:28:22. > :28:32.have to pick the winner of Guess The Year from yesterday. It was
:28:32. > :28:36.1990. Can you say the name? Alan Robertson. Congratulations, the mug
:28:36. > :28:40.is yours. Thanks to Martha for being our guest of the day. With me
:28:40. > :28:44.on the sofa on BBC One tonight will be Alan Johnson and Michael
:28:44. > :28:50.Portillo. Will Hutton will look into the eurozone problems, Kevin