12/12/2011 Daily Politics


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And good afternoon. Welcome to the Daily Politics here at Westminster,


where the stage is set for the mother of all family arguments in


the Commons this afternoon. He says he was right to veto a new European


treaty that would have seen the Eurozone countries forming a new


fiscal union. The Prime Minister insists that it would not have been


in Britain's interest. But he says he is bitterly disappointed. The


Deputy PM says it will be bad for jobs, bad for growth and leave this


country a pygmy on the world stage. And what about him? It is back to


"I agree with Nick".. Remember that phrase from the election last year?


The Labour leader is accusing the Tories of failing the country and


mishandling negotiations. All three will be in the Commons


this afternoon in what promises to be a highly charged parliamentary


occasion, with the future of Europe at stake and the Westminster


coalition under extraordinary pressure.


That parliamentary statement will be at around 3:30pm this afternoon.


We will be taking the political pulse of members of all three main


parties in the next half-hour. With me throughout the programme is the


businessman Sir Martin Sorrell. If you have any thoughts or comment on


anything we are discussing, send them to us. But first, the economy


itself. More dire predictions this morning, this one from the Standard


Chartered Bank, which says the British economy is already


shrinking and will continue to stagnate until at least halfway


through next year. Martin, do you see the UK economy returning to


recession? No, actually. I have seen the numbers through to


November. We have just finished doing our budgets in New York over


the last couple of weeks. While the UK has been vibrant this year, we


are up about 10% against five to 6% for the company as a whole, we have


added 10% to the number of people in the country, so it is at about


14,000. A but growth is flatlining. Generally, but our business has


done well. It is certainly not flatlining. That is your view, but


you do not think the country as a whole will be back into recession?


No, I think it will be low levels of growth. That is subject to


nothing catastrophic happening. If an Italian or Spanish bank went


down, which some say is a possibility, less so a French or


German bank, because they would be bailed out. But if that happened,


all bets would be offered. I was asked last week whether we would we


do our budgets -- whether we would redo our budgets, and if that sort


of thing happened, you would be back to a layman's scenario, or the


business back budgets are in much better shape than they were.


that is a potential event, that the Eurozone fails or that a major bank


in one of the Eurozone countries fails. The bank failure is much


more short-term. The Eurozone failure is something, given the


decision the Prime Minister made, is more in the air. But is the


crisis in the Eurozone or anything connected to it the main reason for


lack of British growth? It is partly to do with the Eurozone. The


Government has reduced the rate of increase in spending. It has not


cut spending is. It has addressed the issue of getting the deficit


under control, which the Americans have not done. The Americans will


face the same issue after their election in mid- November next year.


Should Britain consider slowing the deficit reduction programme? In my


view, no. It is a bit like turning around the company. You have to


deal with the revenue and cost side, and then put in place a growth


policy. The statement from the Chancellor was a plan being put


together. It is not fully fledged doubt. I would like to see a more


robust, visionary plan for the next three and a half years of this


government. They have to get it together, otherwise they will go to


the nation with the country in the same condition of slow growth. It


will not be a pretty picture electorally. The deputy prime


minister Nick Clegg has said some increases in executive pay, which


has become an even bigger issue, are irresponsible. I do not know


which ones he is referring to, but if you look at WPP on its own, you


have to look at it in the competitive environment in which we


operate. We still work in an international and highly mobile


workplace. Is that less of an argument these days, particularly


in the Times now? No. You will probably have a record year that


WPP. We have to look at that in relation to what is happening


competitively. We still have to compete against private equity


companies. The UK, we have 40,000 people here. Our total workforce is


150,000 worldwide. His Nick Clegg referring to companies based in the


UK or operating in the UK that are working on a worldwide stage, or is


he just referring to UK-based businesses? It might be true in the


context of UK-based businesses, but not for us in 2011, or 2012.


Now, after David Cameron will do his veto at the EU summit on Friday,


the coalition pre-Christmas cheer has descended into open warfare.


David Cameron will face MPs later to explain why he did not put his


signature to a new European back to try to stem the euro crisis. Deputy


prime minister Nick Clegg has angered many Tories by saying David


Cameron's decision threatened to turn Britain into a pygmy on the


world stage. All is not well around the


coalition Christmas table. Peace and goodwill are nowhere to be seen.


Following the summit, David Cameron said: however, the deputy prime


minister Nick Clegg spoke out yesterday, saying it was bad for


Britain. It now looks as though the 26 other members of the EU will


sign the so-called new fiscal compact for the Eurozone. What was


on the table was a plan to stop Eurozone countries allowing their


annual structural deficits to exceed 0.5% of GDP. There will be


automatic penalties for countries to break the rules. Euro countries


will have to submit their budget plans to the European Commission


for approval. David Cameron wanted legal protection for the City of


London from excessive EU regulations, but his European


colleagues rejected his demands and he refused to sign. So can the


coalition survive this spot of pre- Christmas indigestion? Let's speak


to our deputy political editor. There will be many Tory Euro-


sceptic MPs who will be delighted by what they see as David Cameron's


bulldog spirit. Will there be a sense of euphoria in the House of


Commons this afternoon? Among some, there will be cheering and applause.


But the question is what they say beyond that. How far do they ask


for more? Do they say, this is just the start, let's look for


repatriation of powers and have a referendum? Or do they say this is


enough for now? Dealing with the Euro-sceptic wing of the


Conservative Party, David Cameron has managed expectations. What


about the Liberal Democrats - how difficult will it be for Nick


Clegg? It will be difficult for Nick Clegg and David Cameron. Both


of them need to manage the coalition. It will be under a huge


amount of strain as a result of this. For many Liberal Democrats,


their position on Europe is something fundamental. There will


be a fair expression of anguish over what has happened from the


Liberal Democrat benches this afternoon, when the Prime Minister


gives his statement. The question is how much the Conservatives are


prepared to allow the Liberal Democrat to express that view


almost to let off steam, and how much it develops into a fundamental


fissure. The problem with Europe is that it is not a one-off issue like


electoral reform or specific policy like tuition fees. Europe is


something that is with us day in, day out. It involves constant


decision-making. If it becomes a Fisher, you could potentially have


rows further down the line. With us now is the former Foreign


Secretary Sir Malcolm Rifkind. From the Lib Dems, their former leader


Sir Menzies Campbell. And joining Sir Martin, Sir Menzies and Sir


Malcolm is the no doubt future Sir Douglas Alexander, the shadow


Foreign Secretary. Before we get carried away, Menzies Campbell, how


is a bitterly disappointed Nick Clegg going to sit in the Commons


this afternoon as part of a coalition government after David


Cameron vetoed a deal that he said his bat for Britain? Because the


coalition government is essential in the economic interests of this


country. So you will give up any other Liberal Democrat plan?


overwhelming need is to restore economic stability in the UK. That


is why we entered into the coalition agreement. The coalition


agreement also provides clearly that there should only be a


referendum is an -- if there is any transfer of powers from Westminster


to Brussels. What happened on Friday is disappointing. There is


no point in hiding that, but it does not reflect a transfer of


powers, so no referendum is required. It is of course a setback,


but I am not willing to allow it to become a source of permanent


division. What made Nick Clegg changed his mind in his response


from what he said immediately after the summit and Sunday? The benefit


of hindsight. It is not surprising that after a few days, when the


full facts and implications begin to be known, that people's emphasis


would change. Look what happens when we have a Budget in this


country. On the Tuesday, it is hailed as the best thing since


sliced bread. By Sunday, people reach different conclusions.


that what you would expect from the deputy prime minister? One of the


problems of 24 hours-a-day news is that people are expected to make


instantaneous response has. David Cameron was in Brussels and


Nick Clegg is in his flat in Sheffield being called up at 4


o'clock in the morning. Apparently without a clue of what was going


on? No, there was a common position. Nick Clegg agreed to proposals


which he described as being reasonable, which I believe to be


reasonable as well. And that broke down. There was an inevitability


about the position in which David Cameron found himself. If you are a


student of European history, which all three of us are, for the last


25 years, we have found ourselves often at odds with Europe.


Therefore, we have few obvious and immediate allies. We have not got a


history of co-operation. That was the background against which David


Cameron found himself operating. Malcolm Rifkind, what does David


Cameron need to do this afternoon? Does he need to stop a sense of


euphoria to make it even more difficult for Nick Clegg and the


Liberal Democrats? There will not be euphoria as a whole. The crucial


point is to establish what has happened and what has not happened.


You have had a lot of comment over the last 48 hours about Britain


being isolated and not being at the table when important decisions are


made. Actually it's, ever since the single currency was created some


years ago, there has been an empty seat at the table because the UK,


by said -- deciding not to join the single currency, has not been


involved in discussions amongst Eurozone members. All that will


happen now is that the subject being discussed by Eurozone members


will also cover the issues agreed inter-governmental the last Friday


on fiscal union and tax harmonisation and so forth. Either


we took the right decision not to join the single currency or we


didn't. Are you saying that there is no isolation when Britain will


be one country among 26 that could make decisions ahead of European


summits, and Britain will find it difficult to undo or negotiate a


position from that standpoint? has been true for ten years.


there are countries outside the Eurozone that have signed up to the


treaty. They will not necessarily be around the table either. It will


not make much difference what Slovenia, Bulgaria or Romania think


on issues that affect the City of London. We have a situation where


for ten years, since the single car as he was created, the UK, rightly,


by deciding not to join that single currency, cannot expect to be


involved in discussions about it. So the Liberal Democrats are wrong?


We will be no more isolated than we have been for ten years.


Immigration, environment of foreign policy, defence - these are issues


in which Europe has a fundamental interests. They are all issues in


which the UK has a important contribution to make. If you want


an illustration of that, the co- operation between Great Britain and


France in respect of Libya, one of the most successful operations of


its kind in recent history, that capacity will not go as a result of


what happened on Friday. What would you have done on Friday? There was


a deal to be done, and we would have got a better deal. You would


With the benefit of hindsight, what has emerged was that actually,


there was a leader who was motivated by a party interests,


rather than national interests, the words of Nick Clegg. And a leader


that got a bad outcome for Britain, again, the words of Nick Clegg.


That is where we have ended up. The fact that we went into these


negotiations without Denmark, Poland, Sweden, it was not a


coincidence, it was a conscious choice by David Cameron to walkout


of the grouping in order to get the Conservative Party leadership. That


is a terrible indictment of British diplomacy. I think that's a


ridiculous charge, that he walked into negotiations deliberately


without a friend. You have to ask yourself, what would Gordon Brown


have done in similar circumstances? Because he was by no means an


enthusiast for Europe. The fact is, we paid the price for 20 years when


we have not appeared to be fully engaged, and it was an inevitable


conclusion, that when David Cameron put forward what he did, that he


was going to be knocked back. was not fate, this was choice. What


would Gordon Brown have done differently? I travelled with


Gordon Brown to Brazil, literally to each corner of the globe, in


order to get the support of the G20 in the face of the crisis in 2008.


But you need to answer the question on behalf of Labour, would you have


signed up? First of all, we would have had a different approach, by


talking to other countries. And you would have signed up? We would say,


why was he not in a position to ask for a seat at the table, when the


reality is that when 26 countries now sit down on a monthly basis,


Malcolm knows that those issues will have a profound impact on


Britain. We would have asked for different protections in relation


to the single market, and the terrible truth is that David


Cameron came away with a position where 26 countries now, if they so


choose, have the capacity to defeat Britain on qualified majority


voting and financial the donation. It was not a veto, it was a defeat.


There is the question, what exactly did you veto? There was nothing


actually in the communique which was going to directly damage the


City of London at that point. suggestion is being made that this


was all done because of party pressure and so forth. What the


Euro-sceptics, of which I am not one, were asking for, was to demand


repatriation regarding fisheries, working-time directives, things


that were nothing to do with the eurozone or the financial problems.


He refused to do that. What he concentrated on was something


absolutely crucial to the economic and financial future of the country,


which is the City of London, rather similar to what Angela Merkel has


been doing, refusing to allow the European Central Bank to be used as


a bank of last resort. So each country has its own perception.


are you saying that the City of London has now actually been


safeguarded? What about all of this qualified majority voting, with


Britain excluded? That has always been a threat. It would have been


much more of a threat if these new powers, which these countries were


seeking, had been sanctified as being European Union treaties. When


they are European treaties, not only do you have the risk of


qualified majority voting, the European Court of Justice can try


and enforce it, the European Commission - but in fact none of


that will be possible now. They would be enforceable by law, that's


the difference. This is a faire point. What the European Court of


Justice would have had the ability to enforce were the rules of the


eurozone, in relation to the eurozone. In relation to the City,


we are still as vulnerable as we were last week, we are even more


vulnerable, because the way you win in these matters is by having


allies. Was he right, David Cameron, and in this discussion, have our


interests been safeguarded? instant response which Menzies


Campbell referred to is a difficult one. My instinct is that it is


better to be inside than outside. The Google response to China was to


withdraw. I think that was a mistake. This is similar in essence


to me. It is much better to be inside, working with the powers


that be, rather than outside. I think the issue about... Whatever


the rights or wrongs of it, the perception will be, and I have been


speaking to an Indian businessman this morning about where he would


locate, given what has happened in the last 72 hours, the perception


will be that the UK is outside western Europe, and this is a


problem. This was exactly the argument when we declined to join


that currency in the first place. People said it is better be deep


inside, but sometimes you have got to make a judgment. We have two


strikes against us, and it is three strikes and you're out. How worried


are you about further calls for repatriation of powers? The


Europeans will feel emboldened, won't they? No, David Cameron has


already shown, by refusing to raise the issue of repay tuition last


Friday, he concentrated on the issues which were being discussed


at the summit, and he was right to do so. The attitude today for David


Cameron is not to be too affected by the congratulations from the


backbenches, but to stand up to the Euro-sceptics, who, as Malcolm


Rifkind rightly says, want to take Britain out of Europe altogether.


That would be deeply, deeply damaging. From business, the


perception is that this was a political decision, not an economic


decision, and that's the problem. The perception, rightly or wrongly,


is that it was made because of the pressures being put on the Prime


Minister and the coalition. It is our duty to overturn those


perceptions. We will all be watching this afternoon. So, the


Government is divided over Europe, and everyone is waiting for a


crucial Commons statement from the Prime Minister. What does that


remind you of? The 1990s, when the Tory party nearly tore itself apart


over the Maastricht treaty, laying the foundations for the EU we know


today? Up to a point, maybe. But there are some crucial differences.


Adam has been looking back in his history book to find out how much


all of that is relevant to today. Here's a coincidence, the day David


Cameron vetoed the decision was the 20th anniversary of John Major


agreeing to the Maastricht treaty. I think it was a very good result


for Britain. In 1991, he kept the UK out of the chapter on social


policies and the early stages of the euro. But it sparked a war in


his own party. The idea that we're going to be able to control the


European Community, in imposing these regulations on employers in


this country, is pie in the sky, and a triumph of hope over


experience. Parliament must put this stalemate over Europe behind


it. I am not prepared to let it poison the political atmosphere any


longer. I have tracked down two of those foot soldiers, Sir Teddy


Taylor, now happily retired by the seaside, and Rupert Allison, also


known as espionage author Nigel West, to find out if any of this is


still relevant today. Maastricht was the general principle of ever


closer union. Whenever we mentioned that, we were told, this is


nonsense, political union will only go to a certain point, the idea of


a United States of Europe is absolutely Darfur. -- absolutely


laughable. Well, that's exactly where we are heading now. It was


absolutely obvious, why didn't people see it? It couldn't work.


The treaty got through Parliament, but a year later, eight Tory rebels


lost the whip, and effectively formed a kind of party within a


party, which held John Major's government to ransom, because he


had such a tiny majority. It meant every single vote mattered. It was


very sad, the Chief Whip was banging on a toilet door, trying to


get him out! Yet new lows reports at the time portrayed them as


heroes. -- portrayed them less as heroes, more like weirdos. My own


view is that we were right. My own parliamentary constituency had the


opportunity to ditch me when I lost the whip, and to my gratitude, the


whole of the constituencies supported me. There's no euro


enthusiasts at all, apart from Ken Clarke. As the new crop of Euro-


sceptics gather to hear the current Prime Minister in the Commons today,


they view this period with mixed feelings. Some cringe, others say


this is when their political views were forged. The Conservative MP


Richard Shepherd was one of those so-called Maastricht rebels - do


you feel vindicated now? I have no doubt that what we did was right.


And this was the Maastricht treaty, it made us citizens of the European


Union, but predicated all the mess that we are in now, and it


challenges the very central themes of British history. For instance,


our constitution - who is the master, who governs, who is


accountable to anyone in this international morass? You were


painted there, along with some of your colleagues, as outcasts - did


you feel you were very much on the fringes of the party? No, I didn't,


and I don't think it is true to say that of the rebels. The change, the


seismic shock to the party, was the removal of the whip. In fact, what


you heard was a 22 person committee, and as you know, the Government had


to send us in the post membership of the party again within six weeks.


So it wasn't a big deal. They were on the back foot. But the themes


that I am talking about, Angela Merkel said exactly what we said


all of those years ago - this is a political project. And yet we are


looking at an economic catastrophe, possibly. And when you hear people


say, this is political, when it is economic, you know you're in real


trouble. And last weekend, Friday, that's what you saw. They're going


on a political project, and knock attacking it as if it were an


economic project. Sir Martin Sorrell, those same arguments are


still what we will be hearing this afternoon? Yes, the argument is


about who has political power. It reminds me about what you see


inside agencies. In the old days, the country managers would object


to the European headquarters having control over their budgets. So, it


is a political decision which was taken, and really, the fundamental


problem is an economic one. terms of the mainstay of the


Conservative Party now, do you feel your views are being shared and


held by a significant number? you're seeing the new generation


coming up, who will just find this incomprehensible, why are we still


struggling on such profound issues? Do you think there will be a push


for further repatriation of powers from Brussels and possibly a


referendum? This is like a huge smokescreen has gone up since


Friday's decision, it takes time for the cloud to you're. And there


will be come backs on this. After all you have now got non-


functioning democratic governments in Italy and Greece. These will all


create their own momentum, I think. And so I would like to see how it


settles down, but I think the drift is, I have to say, irrevocably, to


use a word from the Maastricht treaty, because that is what this


currency is supposed to become irreversible - words from the


treaty... Very briefly, you say that is the drift, so would it be


impossible for the coalition to continue? The division is clearly a


very deep and important one. And you have made the point that this


is a very difficult moment for the Liberal Party, too. Because to have


a general election at this time would not be helpful. Thank you


very much. That's all for today. Thanks to our guests, and


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