06/12/2011 Daily Politics


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Afternoon, folks - welcome to The Daily Politics. Stock markets have


fallen across Europe following a warning that the creditworthiness


of almost the entire eurozone could be downgraded. The announcement by


the agency Standard & Poor's suggests there's a possibility that


France and Germany could lose their Triple A status within three months.


British exports are already falling due to the crisis in Europe. MPs


debate the economy here this afternoon. We'll be talking to the


Deputy Chair of the Conservative Party. Could we see another crisis


in Britain's care homes similar to the collapse of Southern Cross? MPs


warn it might happen all over again. And we'll be looking at what the


political parties have to do to And with us for the whole programme


today is the businessman Dr Chai Patel, who now runs over 200 former


Southern Cross care homes. Nice to be here. Which brings us neatly to


our first story, because a group of MPs say more action is needed to


prevent another care homes crisis similar to the collapse of Southern


Cross. The Public Accounts Committee say some providers in


England are amassing huge debts, and they've called for better


monitoring of the care system. This morning, the Health Committee was


also discussing long-term care. They heard from Andrew Dilnot, who


chaired a commission into how to best fund the system, and he was


less than complimentary about the current situation. My view is that


everybody in the social care system is inappropriately served at the


moment. That means all of us. The risk of needing care in your Olda


age is greater than the risk of falling pregnant. That's because


half of us are not going to fall pregnant, but three-quarters of us


will need care in our old age. And at the moment, the system does not


work for any of us, effectively. It does not work for people looking


forward to the possibility of needing care, it does not work for


people at the point of needing care - the system is bust. Well we're


joined now by the chair of the Public Accounts Committee, Margaret


Hodge. How bad is it? We looked just at care homes, not at the rest


of the system. I think it is a very worrying situation. If you look at


Southern Cross, and why it collapsed, I think there are two


main reasons. Firstly, it depended on high local authority rates - two


thirds of the people going into care homes are funded through local


authorities. That's nationally. all their fees are paid by the


local authority. Which makes local authorities are vital in this


respect. Quite. And local authorities have had their funding


cut, so the care homes get less income. At the same time, the care


homes are funded through a lot of borrowing, and interest rates have


gone up. They were funded when interest rates were low. So we have


got a pretty unsustainable model. Not just Southern Cross, but one of


the other big four providers, four Seasons, we understand, has got


into trouble. And let me make another point, because of the local


authorities cannot put people into the care homes because the prices


are too high, what then happens is that people stay in hospital, they


block beds in hospitals, and that's another cost to the public purse.


For the individuals, it is a terrible thing. Is it as serious as


the politicians are making out? is serious, yes. There are


different components. The funding contraction is serious and it is


only going to get worse over the next two or three years, as the


local authorities were now to have more money. Absolutely, and the


austerity measures have hardly even kicked in yet, I think. This is a


property backed investment, and as you know, properties have debt.


Whether the debt is too high or too low is hard to tell at the moment,


because this was done before 2005, 2007. And to have four years of


real reduction in fee rates, I do not mean just inflation, real


production, has meant that the funding has rarely contracted. At


the same time, a policy of keeping people at home, which has a good


policy, has taken another 7% of demand away from care homes.


did you buy these Southern Cross homes? I did not. My job was to


help out in terms of the restructuring of Southern Cross,


and we have got a management contract to run one third of the


homes. Huo owns them? They are owned by a property company. So, we


brought the two together. Part of the problem at Southern Cross, and


why I don't think Southern Cross will happen again, is that firstly,


it was twice as large as the nearest competitor, it was so big


that nobody else could have taken it. And secondly, it was entirely a


landlord and tenant based company. It was a very complex structure.


You could not put it into administration, which is what would


normally happen, to get an orderly transfer, which is why it took so


long. None of the other companies, including four Seasons, are much


easier to manage. I wonder if size matters that much in these


circumstances. What should the Government do? I agree that size


did not matter, care homes are going broke every week. The first


thing is that the Government has got to act. They are doing a lot of


thinking, producing papers. They're aware of the problem? They are


definitely aware of the problem. I think they are trying to run away


from the problem, trying to make everybody else accountable - local


authorities, the Care Quality Commission, but I think think this


is a problem for government. I think this should be taken out of


party politics, this issue is hugely important and will grow in


importance, we have got an ageing population. You and I might end up


having to go into a care home. We have got to sort out the funding.


Andrew Dilnot said the system is bust. What should be done? I think


it is going to be the old mixture - for those who can afford it, they


will have to contribute more to their care when they are elderly,


but the worst thing is if we do nothing, it will be the poorest who


cannot afford to pay for their own care, and they will suffer the most.


If we want us all to be in it together, we have got to find a


solution which prioritise his, in a constrained and there but, spending


for poor people, but also gets the balance between public and private


contributions. What do you think should be done? I totally agree on


the first point, the process, this is a multi-party issue, this is not


party political, we need consensus. The second part is funding. This is


a chronic issue, right across the world, in fact. We need planning


for the short, medium and long term. The Dilnot report starts to tell


you what to do for the next five or 10 years, and we need a long-term


policy, so the next generation can start either saving or buying


insurance products, or knowing that there will be joint funding. But


there is no transparency right now. We have got this situation which


has almost guaranteed -- which is almost guaranteed, each one of us


is going to get old. Is there not a strong chance that some will have


to be taken back into state ownership? Well, I think if we're


going to leave it in the market, it has to be a much more tightly


managed market. This is not an issue where you can allow market


failure. Southern Cross, 31,000 people, suddenly thinking, where


are we going to be tomorrow? I think this is too important to


leave it to the vagaries of the market. The market did not fail.


will wait and see. This subject will not go away, we will come back


to it. To something different, time for the daily quiz. The question


for the daily quiz. The question for today is... What programme


would David Cameron like to bring back for Christmas Day? Is it a)


Dad's Army? B) The two Ronnies? C) Spooks? Or d) To The Manor Born? At


the end of the show we hope Chai will give us the correct answer.


it was me, I would like to see Spooks comeback. That does not mean


it is the right answer. Standard and Poor's has booked almost all


eurozone countries on a warning regarding their credit rating.


Louise Cooper, who's a markets analyst for BCG Partners, is here


analyst for BCG Partners, is here in Westminster. Is this a knockout


blow from Standard and Poor's? the point of view of the markets,


Standard and Poor's are not telling us anything we did not know already.


If you look at the reaction from the financial markets today,


equities are down a little bit, European government bonds are


little changed, and the insurance market for sovereign debt is also


little changed. So, to be fair, Standard and Poor's are playing


catch-up. A lot of the concerns they talk about, five particular


concerns, frankly, a lot of investors have been worried about


for at least a month. Is it likely to happen, with France and Germany?


Many market players have been saying that the AAA rating of


France is going to go. That is not new news. The new news was Germany,


that was a bit of a surprise. If you look at Standard and Poor's,


when they put countries on credit watch, there is about a 50 got a


chance that they will beef -- they will be downgraded in the future.


But if you look at the five reasons - tightening credit, eurozone


countries finding it more expensive to borrow money, disagreements with


policy makers, massive levels of eurozone debt and a recession in


are unlikely to change. I look at them and think, nothing I see will


indicate any of that is being changed. So, it is a realistic


response. What about our rating? That appears to be saved at the


moment - are we considered a safe haven? It is all dependent on


growth for the future. We have definitely seen investors fleeing


the eurozone, not wanting to own euro sovereign debt. They have


piling into UK sovereign debt gilts, Swedish debt, Danish debt, because,


frankly, we are not in the eurozone. However, our debt figures do not


look pretty, and are unsustainable if we have a recession. And so, we


are a safe haven for the moment, the Bank of England is buying gilts,


which brings down our borrowing costs, yes, we are not in the euro,


but do not be complacent about the future for the UK. I'm joined now


by George Eustice, who is a member of the all-party parliamentary


Fresh Start Group, which is looking at our relationship with Europe.


Welcome to the programme. Looking at this deal which has been put


forward to deal with the debt crisis, would you like to see a new


European Treaty of all 27 countries, or just the 17 and euros countries?


I think to be credible, it needs to be an agreement at the level of the


27. I think Germany would want that as well. They want to use the


machinery of the European institutions to enforce these new


rules. If it was just another level of the 17, they would not be able


to get the European Court of Justice engaged, to hand out


sanctions, and if they do not have that, then they have got something


which is no better than what they have got already, with the


stability and growth package. also it is probably the only


realistic chance for the British Government to try and renegotiate


Pact powers from Brussels, if there is a treaty of all 27 countries.


That's right. That would give credibility, but it would also give


us an opportunity to repatriate certain powers and protect are own


interests, particularly in the City. But why on earth would France and


Germany, for example, be interested in any concessions to Britain? They


have said as much, Sarkozy has said, we will do this with or without


Britain. Why on earth do you think we would get concessions? They


might say that now, but they are grown-ups as well. Once you get


around a table and have a discussion, it is absolutely


legitimate for Britain to raise this. There are some 50 EU


directives coming down the track which affect the City. London


dominates financial services in Europe. We have got to make sure we


have some kind of veto on the emergency brake procedure, and we


say we should have that in respect of these 50 new regulations coming


Well, as George Eustice and the Fresh Start group debate our future


within Europe, the impact of the eurozone crisis is already being


felt in the UK today. Jo, bring us Yes, as faith in the euro continues


to melt, just how much heat are we already feeling from the eurozone


In a series of gloomy announcements, the Chancellor delivered the news


that predictions for growth within the UK economy have been downgraded


from 2.5% to just 0.7% for 2012. Much of this was blamed on


uncertainty in the eurozone. Weak economies in Europe have also hit


UK exports, with a reduction of 1.4% in the number of exports to EU


countries, our biggest market, in the three months to September. The


Chancellor has also claimed instability within Europe is a


reason behind rising unemployment in the UK. Last month he said,


"There's no doubt that jobs in Britain have been hit by what's


going on in the eurozone." Many eurozone countries have seen big


fluctuations in their cost of borrowing. However, bond yields for


the UK have remained relatively stable so far, but with large


public debts we are certainly not guaranteed safety in this area.


With the crisis deepening and the UK economy on a knife edge, can we


avoid heading back into another I'm joined now by Michael Fallon,


Deputy Chairman of the Conservative Party, and Chris Leslie, who's


Labour's Shadow Treasury Minister. Welcome to you both. Michael Fallon,


the Eurozone is clearly going to form a much tighter block now, it


is going to move towards its own tax-and-spend and budget policies.


Huge change to the European Union. Time to live up to your promise of


your party and repatriate some powers? We have always wanted to


repatriate some powers, things could be done better at the


national level than the European level but the priority at the


moment is to make sure the Eurozone sorts out its problems. We have a


huge domestic British interest in making sure the Eurozone does not


go on in this crisis and they solve their problems. That is the first


thing we want to see come out of this week and the meetings taking


place. We are just cheerleaders, we are not part of that, because we


are not in the euro-zone. So we can support what they are doing it, but


we are going to support it in the knowledge that it is a systemic


change in the nature of the European Union. So it isn't that


time for you to live up to your promise? We have had promises of


systemic change before, we will see whether that transpires. We have


had various agreements from other countries to operate in different


ways and so on, but let's be clear about this, if the Eurozone


countries want to form a smaller grouping, they must use the


European institutions to use that - - do that. We heard George Eustice


agree with that, they must use European law and the European Court.


Do you want the Eurozone to be a tighter, closer group? As a


currency, we wanted to work, it is in our interests that it does not


collapse and it polices itself. know all that, but Mr Sark cosy and


Angela Merkel say the way to do that is to do what they agreed in


Paris -- Nicolas Sarkozy. They want the rest of Europe to take that on


have the Government, it seems, support that approach. If we are


supporting a more coherent Eurozone, what is the response, the


consequence for Britain? What they have said it is they now say they


want to abide by the rules, they want to set themselves tough rules.


What do you say? I know what they say, I read the newspapers. You


just said you want them to do it, of what is the consequence for


Britain? The consequence if they get on and do it is that our


national interest is protected as well, I'll economy is protected and


the Eurozone problems won't come over the Channel -- our economy. We


want the currency to succeed, we don't want it to fall apart. Let's


see if I can do better with Labour. If they proceed to have a tighter,


deeply Eurozone, what would the Labour policy response be? It I


think it depends when we see the details of this treaty whether it


is going to be pro-growth, of whether it is going to solve


economic problems or if we are just going to be kicking into the long


grass a whole set of constitutional changes that may not come to pass


for 5, 6, 7 years. We need to see the details of this. We need


negotiations that are focused on a growing economies and not austerity.


You are dodging the question as well. I am not. The don't need to


see the detail to understand that if the Eurozone becomes essentially


a fiscal union, with constant, combined, common tax-and-spend and


budget policies, and forced from the centre, which is what the


Germans want, I ask again, what are the consequences for Britain in its


relationship to this new Eurozone? They could be very significant,


possibly detrimental. We literally to have to see where this is going.


I suspect that just as the market go up-and-down week by week, the


changes that we see in the politics are also far from certain. We have


heard about the Standard & Poor's downgrading this week, it makes it


look as though we are all very much focused on the European Central


Bank's role as lender, rather than the possibility of a big bail out,


which is what we really should have been pushing the Eurozone countries


to do. It is really important and I am really exasperated by the fact


that government is not focusing not less. -- on this. The Germans and


the French and our own government are not focusing it on growth. If


we have a coalition, it should be to earn some revenues, to deal with


the debt crisis. Why we are not doing that... They say they are


going to meet every month to focus on growth policy, so that is not


quite true. It is part of the deal. I want to come back to you, you are


the governing party and your party told us that if the Europeans


wanted to make major changes, and I can't imagine a bigger change than


what is being proposed that the Eurozone, then you would use that


opportunity to repatriate powers. And yet that is a word you won't


even use this morning. They are not proposing to take any power away


from us, they are proposing to work much closer together, to have the


fiscal union to poll taxes and spending Bath pull taxes and


spending and have, and enforcement. That is not an opportunity, in your


view, unlike your colleagues, to renegotiate our relationship.


it is our opportunity to protect British interests. To make it clear


to the 17 that they can't legislate for the 27. They shouldn't. You see


what I have to put up with? It is tough, I can see that. What would


you like to say? We have to remain relevant and to do that, we have to


sit in the centre of vessels you can't if you are not to the euro-


zone. The -- we have to sit in the centre of this. This is a good time


to be baking lot of friends. People say we cannot be end of the


sidelines but as the country, both of these parties have been decided


-- both of these parties have decided we should be in the


sidelines because they are against joining the euro. Thank goodness.


They stop us going in. We have got a serious risk. This idea that we


are a safe haven is nonsense. things be to think about, the Tax


Payers Alliance have written out, for repatriating. 20 items.


Don't say we aren't here to help. The British curry industry employs


around 100,000 people and is worth �3 billion a year to the economy.


But does that make it an appetizing prospect for politicians searching


for votes among the Asian community? Adam's been


investigating. The British Curry Awards, held in


London last week, and lapping up the chicken tikka, a host of


politicians, most of them Tories. With my colleague Eric Pickles, I


have been discussing how we can get a curry College up and running.


There are more curry cost -- restaurants in London that in


Mumbai and Delhi combined. And they won't just popping in for Paul the


Dons, according to the founder of the event. The da poppadoms. Some


of the family is here are working at the different sectors, there is


if you devote. In Epsom, Enam Ali has seen a big change in the


community's political tastes. my generation and my father's


generation, maybe somebody wasn't their cup of tea. Maybe by birth,


you can say they are Labour supporters. These things have


changed. I have seen for the last five years, a huge change. But back


at Westminster, this prominent Labour Peer says that targeting the


Asian vote is difficult. It doesn't actually exist. You say Asian,


because of we can't say Indian, because there are a lot of


Pakistani as well, but already Asian is a fudged the word. We


don't want to talk about religion too much. But you have a very


different Asian voters although the Countryfile stock and he is right,


according to the latest research. - - all over the country. Figures


have bad that Asian communities are overwhelmingly Labour voters, but


the Indians are more likely to vote for Conservatives than those with a


Pakistani background. All of this is a complicated mixture of many


different ingredients. You might say just like an award winning a


curry. It is all in the writing.


I'm joined by the entrepreneur and crossbench peer Lord Bilimoria, and


Dr Chai Patel is still with us. Lord Bilimoria, is there such thing


as an Asian vote in a homogenous sense? The agent BT makes up 4% of


the committee in this country -- Asian population. What I have


discovered is there is a meritocracy and the Asians have


blasted through the glass ceiling, reaching the very top in every


field you can imagine and that 4% contributes double at proportion to


the economy of this country. In Parliament, look at the House of


Lords, we have 24 Asian members, the House of Commons there are 17,


11 Labour, six Conservative, so the Asians are really coming to the


fore. We have a Cabinet minister who is Asian, the deputy leader of


the Liberal Democrats. But are they adequately represented? If you look


at the proportion of the population, around 3% in both Houses, much


better than when we were. When you did a split in terms of party


allegiance, all right, more Labour, but do you think that that has also


changed? Predominantly, the Asian vote would have voted Labour 20 or


30 years ago, but has it changed? That has changed as well. Labour


are the more Popular Party but the question is, well and Asian become


Prime Minister and I have always said there will be at an Asian


prime minister in my lifetime, but only one in five think that will


happen. The So You are an individual isolated on that point.


Dr Chai Patel, the subject of immigration, particularly none EU


immigrants in business terms and the Government wanting to set curbs,


because they can, has that made it difficult for people on the Indian


sub-continent? Is it detrimental? don't think it has made it


difficult for the Indian sub- continent, but it has made it


difficult generally in business. That mobility has made the EU work,


and I think it is a pity we have gone that way but if I can comment


on the Asian vote, I think it is just that lazy and clumsy to talk


about the Asian voters as it was about that was the woman and the


Basildon man. What you need to look at is the several generations. Some


of my old uncles behave more like Indians and my nephews, who were


born here, they operate like regular breaks. So is it pointless


for political parties trying to tailor votes to the Asian vote?


the question of immigration, I think the Government has made a


serious mistake with the immigration Kapo. The number of


Indian students applying to British universities is plummeting.


Academics at Oxford and Cambridge, 30% are foreign and these


immigration policies are affecting them. Add the curry industry


desperately need chefs and we should set up schools, but in the


meantime, we need to have flexibility and the Government is


being too blunt about this. terms of other Asian Friendly


Policies, Dr Chai Patel, what about plans to restrict the number of


dependents brought into the country. Would that have a negative impact


on the Asian vote? Definitely, given the relevance of family and


the way family works, that is something that would be viewed as


usually negative. Thank you. Just time before we go


to find that the answer to the quiz. The question was what programme


would David Cameron like to bring back for Christmas Day? Chai Patel,


any idea? Spooks. He did. Well done. And anyway, thanks to all of our


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