11/11/2011 Daily Politics


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Afternoon, folks. Welcome to the Daily Politics on Friday. Is Europe


facing "Armageddon"? Or at the very least a Lost Decade? There are


fears the crisis in Europe could tip the whole world back into


recession. President Obama appealed directly


to European leaders last night to take drastic action to avert global


In the face of the euro crisis, can Britain avoid another downturn? As


the Chancellor prepares his autumn statement there is a fierce battle


raging across Government about how to save the economy.


As Theresa May fights for her political survival in a row about


Britain's borders, we ask a former Home Secretary if the Home Office


All that coming in the next 30 minutes of public service


broadcasting at its finest. With me today, no expense spared. Mehdi


Hasan from the New Statesman and Rachel Sylvester from the Times.


Welcome to you both. As we come on air the Greeks are due to swear in


their new Prime Minister. His name is Lucas Papademos. We


reported he would be the new Prime Minister of Greece a week ago, and


we were wrong and then, but we are right now. We might be wrong again


He's a former vice-president of the European Central Bank. The Italians


are also likely to appoint a so- called technocrats government led


by the former EU commissioner Mario Monti. You Macie a bit of a pattern


here, a former central bank European governor coming in, into


Athens and Rome to replace democratically-elected politicians.


The Italian senate is voting later on austerity measures designed to


avoid a bailout. But will these technocrats be able to save the


euro and prevent economic disaster? Can they prevent economic disaster


and carry their people with them? There is now increasing anxiety


that across the pond but the Eurozone's inability to sort itself


but could drag America into recession again. The US Treasury


Secretary said this morning that Europe must move quickly to resolve


the crisis. Maybe you should not hold his breath. Nick Clegg said


this morning time was running out. The situation is clearly very


serious. The clock is ticking. We don't have much more time to wait.


We need a solution, eight decisive solution and the Eurozone, not just


for euro-zone itself for all UK, but for the world economy. That is


why with each passing day the urgency for a clear, decisive


solution becomes ever more pressing. We're joined now by the editor of


City AM, Allister Heath. Even if nothing dramatic happens, are we in


much doubt that the Eurozone and probably Britain as well I heading


back into recession next year? afraid that's very likely. The


Eurozone is already in recession and the UK economy may be


contracting as a re- -- direct result of that. The problem is, if


you're a business in Britain, you don't want to invest or hire people


because you do not know how bad the situation is going to get. There is


a huge amount of uncertainty out there. A couple of technocratic


leaders in a couple of European countries is not going to be enough


to resolve this because the challenges of our massive and the


threat is spreading from one country to the next. It is all very


well for the Americans to say something must be done but what


needs to be done is extremely complicated and nobody agrees on


what has to be done and it involves a whole bunch of governments doing


slightly different things, not just someone at the centre pulling a


lever. It seems Greece is a sideshow and all eyes are on Italy.


France is now coming up on the rails as well. Are the only two


people mattering in this at the moment Nicolas Sarkozy and Angela


Merkel? Do we have any idea what they propose to do if, for example,


French bonds, under pressure or the Italians are simply unable to get


rid of their debt. That is the big question. Will they announce some


sort of course I merger to make the countries closer together very


quickly. Forget the fringe countries and go for the integrated


fiscally a politically integrated countries to try and save the last


60 years of European integration. Those are the kind of questions


they must be asking each other. French bonds have already started


to go up and they have to pay almost twice as much as the Germans


to borrow, which is very significant. The cost in which


Spain can borrow has been creat -- creeping up on a daily basis. I


think the crisis is spreading to the other countries. The only be


the euro-zone economy immune from this is Germany -- beak euro-zone


economy. There is no surprise there because there is no plan to resolve


it. There are trillions of Euros in debt and the only thing people are


talking about is getting central bank to print money to buy the debt.


It could be a short term solution, but is the buying of Italian debt


over the last couple of days calming things down a long service


of -- long-term solution? It's not a long-term solution to say a


central bank needs to federalising or socialise trillions of debt and


otherwise there is no plan we hereof. I am very worried about all


this and I do think that the French and Germans may decide to try and


take emergency, drastic action to change the politics of the European


Union. If that happens, there would be a major opportunity and a major


headache for the British Government because it would bring forward the


day there is a new treaty and a choice that needs to be made with


the UK in wary one study in the EU. The how likely to -- how likely is


this because the Eurozone is -- how likely is the Eurozone going to


survive? I was just reading the Economist to predicted that


financial crisis and he said any three things can save the euro, one


if the ECB becomes an unlimited lender of last resort, too, if it


cuts rates to zero, and three if Germany starts doing fiscal


stimulus. I don't think any of those three will happen in the


foreseeable future, if ever. I guess, sadly, we are heading to an


Armageddon situation. If any of us knew that we'd make an awful lot of


money. It doesn't look good, and the problem with the markets is it


is to do with confidence on the one thing lacking undermined his


confidence. Nobody seems to know what they are doing. None of the


leaders -- the think the market's lack is confident. None of the


leaders know what they are doing and that leadership is what is


missing. Putting aside the short term, if you look at the to


systemic solutions possible, either a closer fiscal union with massive


transferred payments, or a break-up of the Eurozone where the Club Med


countries go there away and you haven't more than euro-zone. Either


of these, and they may be right in the long term, I suggest you it


would put such a shock to the system in the short term that it


would either throw Europe into deep recession. I'm afraid to say a


thing that's absolutely right. Even with a combination of the two


options. All these options require a default on some debt and probably


require at least one country, if not more, leaving the euro. What


that really means is huge amounts of so-called wealth being wiped out,


and that is a massive shock to the system which will make people


poorer and hit a lot of institutions, not just banks, but


pension funds, companies, so the recession is unavoidable,


especially in Europe, and probably in the UK as well. Thank you very


much for marking our car bomb that. We didn't promise did she you up --


marking it hour card on that. We did not promise to cheer you up. So


while Europe implodes, what about over here? Ahead of the autumn


statement on November 29th. Which we'll carry live here in a Daily


Politics Special. There is a debate raging as to what should be done to


secure economic growth. Earlier in the week the CBI said it was time


to "get shovels in the ground" and called for "Plan A plus". This was


echoed in the Telegraph this morning by more than 30 leading


businessmen who have called for the government to scrap the 50p rate of


tax, increase the personal tax allowances and bring forward


spending on infrastructure. However it's believed any planned tax cuts


would run into considerable opposition from the Liberal


Democrats. Speaking to the BBC yesterday Vince Cable said that,


"It is difficult to make tax cuts in an environment where we are


trying to get budget discipline and bring the deficit down". Earlier


this year David Cameron commissioned businessman Adrian


Beecroft to come up with a series of proposals on how to make Britain


more competitive. He's proposed relaxing employment laws to make it


easier for companies to fire staff, in the hope that they will be more


willing to take risks and hire people. It's an idea that's been


welcomed by the Prime Minister's policy guru Steve Hilton, but has


Joining me now is the Liberal Democrat peer, Matthew Oakeshott,


and Andrew Haldenby who is the director of Reform, a right wing


think tank. Is this idea dead in the water and now? It looks like


it's and it is a terrible shame because I think it was by far the


best idea put forward in this Parliament to improve growth and we


just have to compare ourselves to the other continental countries


like France and Germany. Over the years we have had more relaxed


employment laws, lower unemployment and we want more of the same and


his ideas would definitely have reduced employment in the country.


Would it? The problem is is a lack of demand. A lack of demand for our


exports because the rest of the world looks like it is going into


recession. A lack of demand from consumers because real living


standards are falling and the lack of demand from business because it


is not investing. So even if you had the most liberal labour laws in


the world, I don't really understand how that get you growth


at this precise time. I would agree with you two years ago but we are


to use on from the recession and has holes have improved their


financial position. Consumer spending is in the tank. People


have been saving and paying off their debts in getting in a


stronger position. Companies are ready to invest if they have the


right rules and regulations. Employment laws is by far the best


focus for politicians. I am flabbergasted, amazed, that David


Cameron should have blocked this. He is probably doing it to keep


your lot happy. We need to act both on the supply and the demand side.


He is talking about the supply side, and there are some good ideas but


also... I think there is something to be said for bringing in four


small businesses the automatic enrolment of putting everyone into


an automatic Chekhov for a pension scheme, because the danger of that


is there is a regulatory burden and dictate spending at -- it takes


spending out of that question. He also has wacky ideas, meaning he


was trying to cut down women's rights in the workplace and that


has been seen off in a panic by Number Ten. But to actually make it


Ahsan, spot culture is quite wrong. You mention Germany. -- based


sacking on the spot culture. Germany have tougher labour laws


and they are doing better and they have good manufacturing in that. We


want to encourage people to support and nurture their staff so sacking


them on the spot is not right. Coming to the demand side, where


the real problem is, and we have collapsed consumer confidence, not


nearly enough spending in the economy and not nearly enough


investment. The businessmen have a point, which we have thought about


for some time, which they must be more capital investment in


infrastructure and particularly housing. Vince Cable, George


Osborne, I am doing my bit feeding in. How much more will there be?


They should be a lot of capital investment. Just a minute. On the


current side, cutting the 50 p rate there is no evidence that improves


entrepreneurialism. Where they are right, and it is a Lib Democrat


policy, is increasing the personal allowance at the bottom because


every pound you put into the pocket of a low-paid work is going to go


out and get spent. Why don't you put in the pockets of everyone


around here? A below paid get a very small percentage of the


overall tax break. But it does help incentives to work, at the bottom.


On the capital side, which is important, where we have these low


interest rates we should not be treating them as a virility symbol


we should see them as a fantastic opportunity to get long-term


capital in, many billions from the private sector. That is what the


Greeks did for the last 10 years. am talking to the big institutions.


It might work in the city, but maybe not in the real world.


does. They are desperate to see things with a return on housing,


Politicians do themselves no favours when they play this old


card. The Prime Minister wrote an article calling for more


infrastructure two weeks ago. It created 1,000 jobs. There are 2.5


million people unemployed, he created a 1,000 jobs. It is not


like the 1930s, you don't absorb hundreds of thousands of people


with infrastructure problems. do! You don't. I said housing. That


is the key. Last year we had 100,000 houses completed, the worst


since 1923. Where you get white van man motoring and getting jobs is by


having much more housebuilding. That is what we are talking about


with of private sector. The rest is... Housing is real. Do you get a


sense of fiddling while Rome burns? You stole the words from my mouth.


To fiddle with maternity rights and Employment Rights while we are on


the verge of another great depression is absurd. You talked


about a lack of demand, that is the key. When people talk about needing


to improve consumer spending, one of the reasons people are not


spending is because they are worried about losing their jobs.


The coalition says Let's Make your jobs even more insecure. Her the


coalition is not saying that. venture capitalist said let's make


people's jobs more insecure. him speak. I will blame you for one


thing. What about VAT? If you want one proposal that will kick-start


the economy is cutting VAT back to 7.5%. It has raised inflation,


damaged small businesses. Her what about the bond markets? You will


add 12 million to the deficit. much will cutting the 50 p tax?


Can I respond on VAT? VAT cut across the board is much too


expensive. It would be very... What Lib Dems believe and I have been


arguing for and has been argued in government is we have a cut on VAT


on house improvements, house repairs. That would be very


effective. That is Lib Dem policy and has been picked up by Ed Balls.


A targeted VAT cut is very important. Rachel, we have seen an


argument between the two sides of the coalition, but there's even an


argument about this in the Conservatives. Absolutely. As much


if not more than Tory Lib Dem, it is a blue one blue fight. It is


exemplified by Lord Young and Lord Heseltine, the two advisers on


growth to the Prime Minister. Lord Young is a Thatcherite who is the


regulatory, low-tax, a lot of enterprise. Lord Heseltine wants


intervention, he is in charge of the regional growth fund. David


Cameron has got bits of both. He is struggling between the two at the


moment. He is calling on Europe to have a big bazooka. We need a big


bazooka here, too. Lord Heseltine is an honorary Liberal Democrat for


this purpose, like Ken Clarke. Thank you very much. All will be


revealed on 29th November in the pre-Budget statement taking place


in the afternoon. It will be live on BBC Two.


Now, security at our borders has been front of most people's minds


this week, not least Theresa May's, with the news that the UK Border


Agency relaxed rules on entry into the UK this summer. Theresa May


appears to have survived, but you don't need a long memory to know


that this is not exactly the first time the Home Office has been in


trouble over immigration. In the first of our new series looking at


what happens when the dust settles on a political storm, Adam speaks


to Charles Clarke about the foreign Crisis at the Home Office, where


have I heard that before? The Home Secretary, Charles Clarke, is under


intense pressure after admitting more than 1,000 foreign criminals


were released from British prisons instead of facing deportation.


Parliament heard that convicted murderers and rapists from abroad


were still on the streets when they might have been sent out of the


country. It was a failure, I have acknowledged that and it must be


got right. Amid the public or cry, opposition politicians called for


Charles Clarke to resign. The Home Secretary's position is now


untenable. Looking back from his new job at the University of East


Anglia, he still accepts errors were made, but he says the media


storm just got too big. People haven't been considered third


deportation and the media was entirely justified to make that


point. However, what it then became overlaid with was the politics of


the moment and the issue of the overall political situation facing


the Prime Minister and the Labour government at that time. That


became a bigger story and there was some element of the media which


were very varied aggressive in their attacks, but only because of


the issue itself, but the overall political picture. And 10 days into


the crisis, Labour suffered a disastrous set of local election


results which littered Tony Blair reshuffling his cabinet. -- which


led to. A drop to Tony Blair and note the day before the reshuffle


saying to things. Firstly, in my view he should make it clear that


he would remain as Prime Minister until 2008. Secondly, if he didn't


want me to continue as Home Secretary, I didn't want to serve


in another role. He asked me to come round to Number Ten


immediately, which I did. He said it was my view -- his view for me


not to think -- remain as Home Secretary. Five years on nearly all


foreign prisoners are now considered for deportation, but


that doesn't mean they actually all leave. The latest figures show 3775


released foreign prisoners are still living here, including 87 who


have served terms for most serious crimes. Charles Clarke says things


didn't improve after he was sacked. The Home affairs Select Committee


looked into the situation in detail, I gave them evidence. Their


conclusions, I thought, not an exoneration, but no criticism. The


Home Office is a department dealing with tough problems and it is


always in the firing line. I was told when I first arrived by the


then permanent secretary at that total problems would always occur


in the Home Office. I said I thought that wasn't acceptable, we


could predict many of the things that would happen. It was our job


to get on top of that and stop it happening. My sadness about this is


I believe I was on course to do that. In his autobiography, Tony


Blair says he now regrets Charles Clarke left the Cabinet. He felt he


should not have sacked me as he did and I agree with that! But it is in


politics -- but in politics it is the judgment you make at the time


that count. History might have been different. A man who thinks he


should not have been sacked! Joining us now is Tony McNulty -


former Labour MP and former immigration minister. Are Veronique


echoes of the foreign prisoner crisis in the current crisis? --


are there any echoes. One crucial one, and that is that Charles stood


up and take it on the -- to good on the Gyan himself. He did not say to


anybody, find me a body to put in front of me to shield me and blame


everyone but himself for the issues. That is to his credit. Theresa May


will rue the day when she has almost sacked -- found somebody


guilty and then said, let's see what went wrong. If a senior


minister tells their civil servants to do something and they do that


and then do something else, which they have been explicitly told not


to do, what should a minister do? They should go through the entire


process, give the person their day in court and then arrive at a


decision. You shouldn't do it backwards. Brodie Clark will


contest that he did not do it at all. His boss said she did. I know


Rob Whiteman very, very well, but a dark he is backing the Home


Secretary. He has been imposed six weeks of up he had barely been


there three or four weeks and would not have someone brand new have...


I think we saw it a bit with Ed Miliband next week, a problem for


Labour on immigration. No matter if the Tories are not living up to


their promise or have made a mistake or blaming civil servants,


rightly or wrongly, the general perception of the country is you


have made a Horlicks of immigration and you have no standing on it.


That is right to an extent. It is wrong, but the perception is right.


Yvette Cooper got to that when she was talking to Theresa May. We


recognised in 2005 what we needed to do. Charles is right that the


prescription we had post 2005 was the right one.. Bases, economically


driven. -- points basis. The systemic problems were being dealt


with when the foreign national prisoners stuff brewed. But I think


on balance, it is wrong for aid to go anywhere near this on Wednesday


and he should have left it to Yvette. Rather like Ken Clarke, I


thought he would have learned from Ken Clarke. When Ken Clarke was


embroiled in the issue over rape sentencing, Ed Miliband knows he


was wrong to use the precious time of PMQ has to go on that narrow


focus. Give Me Your brief headline thought on the whole Theresa May


business this week. Whether she survives on what is a separate


question. With Rome burning, Ed Miliband shouldn't have used all


his questions. Labour never understand that they will not win


the populist argument on immigration with the Conservatives.


They will not win the Daily Mail vote. Even the Conservatives don't


win the Daily Mail vote! They have to make a different, more


interesting case about immigration and migration. It is just that


competence, it is not about immigration or numbers or anything,


it is about competence and whether Theresa May lost it. It is very


dangerous to go to war with civil servants. We shall see what happens.


Tony, thank you. Thank you. Get on with your memoirs!


Time now to see what else has been going on in the last seven days -


here's Giles with the week in 60 Home Secretary Theresa May found


herself in the middle of an immigration row, minus cat. She


claimed former borders Chief Brodie Clark took a pilot scheme to relax


the rules further than authorised all but he doesn't beat. On Tuesday


it was arrivederci Silvio, but at least he'll have more time to spend


with his friends. A dashing Prince rode into battle this week after


the much respected FIFA tried to ban footballers wearing a


Remembrance poppy. Wills won,. James Murdoch was back facing


questions from one MP who clearly sees him as less Harry Potter, more


Michael Corleone. You must be the first Mafia boss in history who


didn't know he was running a criminal enterprise. Mr Watson,


please. I think that's inappropriate. Across the pond,


Rick Perry forgot his own policies. It is three agencies of government


when I get there that are gone. Commerce, education and... What is


the third one? Oops. The words he was looking for were


Department of Energy. He may soon have plenty of time to remember


that. That's all for this week. Jo will


be back here on Monday with more Daily Politics. And join Jon Sopel


for the Politics Show on Sunday, BBC One at 3.10pm - he'll be


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