10/01/2012 Daily Politics


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Good afternoon and welcome to the Daily Politics. As you can see from


the new scenery, we have had something of a refreshed over the


Christmas holidays. There are critics of the Labour leader who


think we should be doing the same thing. Ed Miliband is making a


major speech on the economy this morning, about delivering fairness


in straitened times. It is definitely not a relaunch, he says.


In the words of Gordon Gecko, relaunch is for wimps. Ed Miliband


would probably say it is the Prime Minister who has changed his tune,


talking about curbing crony capitalism and declaring himself


the enemy of excessive boardroom pay.


Finally, a decision on high-speed rail. Trains will thunder through


the countryside at to 100 mph so we can get from London to Birmingham


in 49 minutes flat. -- 200 mph. But is it worth it?


In the words of one former Labour minister, Ed Miliband has had a


shaky start the 2012. Mutterings within the Labour Party about his


leadership keep cropping up in the press. He has sought to get back on


the front foot today, by making his first big speech of the year at the


Oxo Tower in London. We will come to that in a moment but first of


all, let's talk to our guest, Jon Moulton. Thank you for coming on


the programme. Everything is about the economy. Ed Miliband has based


his relaunch speech about the economy, and so have the other


party leaders. How do you see it for the next year? Pretty grim. The


most optimistic case is a modest amount of growth and the economy


this year and only a modest increase in unemployment. It is


very uncertain. It could be much worse than that if the eurozone


actually melt down. Do you think we will get through 2012 without more


countries going bust and possibly other banks? We have not been


allowing them to go bust. But they have gone bust on paper to some


extent. And we keep feeding them. Greece is absolutely bankrupt.


Arguably Ireland, Portugal, and a few other countries are bust. But


we do not actually call them bust. We are rescuing them, feeding them,


providing them with surplus cash, often generated by some process of


printing it. This is an odd characteristic of the current


problem. We have low rates of corporate bankruptcy, we are not


allowing companies to go bust, banks to go bust, and countries to


go bust. Would you have wanted to see the Royal Bank of Scotland


fail? Would you have allowed it to go bust? I would not have liked to


see it fail, nobody in their right mind would. Nobody would create


such an animal if we cannot take the pain of it going down. I


believe we should allow more failure much earlier. It is too


late now. Failure now will just make things much worse. You are


predicting that if things are going to carry on that way, you would let


more bikes go bust, you would allow countries like Greece to go bust? -


- more banks. From the viewpoint of a young Greek person, letting the


country go bust is probably a good idea, rather than 20 years of no


growth, austerity. In a couple of years, at the serious grief, and a


faster recovery, that would be the likely outcome. Default is not all


bad, it depends where you are sitting. What about the talk now


from all the party leaders and the Prime Minister about crony


capitalism, excessive boardroom pay? Are they right? Does it need


to be tackled? Yes, it does. It went out of control 10 or 15 years


ago. Nobody complained about it then. A few people did. Those were


the ones that did not get it! I am paid at the same rate as BBC


presenters, not well paid at all! will tell you what I get paid


later! We will come back to that later.


There have been mutterings within the Labour Party about Ed


Miliband's leadership in the press. He tried to get back on the front


for today by making his first big speech of the year at the Oxo Tower


in London. Can he battled the critics swirling around him? He was


criticised by Lord Glasman, the founder of the Labour. He said that


Mr Miliband had flickered rather than shone and nudged, not led.


Other big beasts have also weighed in. Alan Johnson said the public


remain suspicious about Labour. Labour is actually ahead in the


polls, with an average of 2% lead over the last month. But his


approval ratings are poor. One survey over the weekend showed that


only 20% of voters thought he was doing a good job as leader. 21%


thought the same of Nick Clegg and 44% thought that David Cameron was


doing a good job. Can he turn things around? There is evidence


that his argument on responsible capitalism is getting across.


Indeed, David Cameron has launched his own so-called war on crony


capitalism over the weekend. Here is what Ed Miliband had to say a


short while ago. When there is less money to spend, fairness starts


with how you are treated when you spend the money you have. And we


need a big change in the approach from Government, too. When big


companies use their dominant position to charge too much, we


must not be afraid to intervene. No company that is engaging in


predatory behaviour should be too big to challenge. That was Ed


Miliband. We are joined now by the Labour MP Tristram Hunt and Michael


Fallon, deputy chair of the Conservative Party. Tristram Hunt,


first of all, why do only 20% of people believe that Ed Miliband is


doing a good job of his role as leader? What he has done


successfully is lay out the intellectual terrain. When you


think about the squeezed middle of responsibility at the top and


bottom, when you look at what David Cameron is now saying about crony


capitalism, actually the political train has been set out by its Ed.


Our challenge now is to make sure that people say that Ed is the


leader. This is a process. We have a five-year fixed Parliament. When


you lay down the intellectual foundations, which is what Ed has


been doing, then you can make the political capital. At the moment


the message is right but not the messenger? The message is right but


not the messenger. Not according to the surveys. Don't worry about the


surveys that come and go. I am not worried about them. We are not


worried about them either. This is a fixed-term parliaments so we have


five years to make sure that people get to know Ed and understand that


they are on the same side as him. He is laying out the big issues of


today, which is about laying out the terms of modern contemporary


capitalism and have Government deals with that. So you expect to


see an improvement in the opinion polls. Now the intellectual


foundations have been made, you think there will be an upturn in


the opinion polls. There has not been. Insisting Nancy has not -- in


his 16 months there has been no improvement. But you think that


will change. Of course. You when politics on the big ideas, which is


the message of Thatcher and Tony Blair. On the big issue of economic


growth and tackling the deficit, Conservatives have got it wrong. We


got it right. We were going to halve the deficit, we were not


going to cut of growth and demand. That was the Big Issue and Labour


was right on that. Labour was right on that. OK, Ed Miliband has not


broken through so far but he will go up in the approval ratings.


There is a point when in terms of talking about responsible


capitalism, David Cameron has moved into Ed Miliband's ground. Is that


true? First of all, this is the six relaunch in 13 months as leader of


the Labour Party. He is still denying that there is a deficit


problem and there was before the financial crisis erupted. He is not


backing the spending cuts that are necessary to deal with that deficit.


He is still committed to extra spending. There is nothing new in


terms of an intellectual framework, nothing new at all. What I think Ed


was very clear about was that the crisis that the British economy


faces was not as a result simply of, for example, the first two hospital


in Stoke-on-Trent for one and a than 40 years. Lehman -- 140 years.


Lehman Brothers did not collapse because we build schools for the


future. There was a global financial collapse. There was a


deficit and we have been absolutely clear that we did not spend every


single pound wisely, necessarily. That was on the margins. The big


issue was the global financial crash which we had not seen since


the 1930s. The question now is what to do for the next Government.


Ed Miliband did say was that if the coalition listened to Labour and


cut a little less quickly and less steeply, then suddenly the economy


would be transformed. Do you believe that? Let's be clear. We


left a growing economy, falling unemployment. Is Ed Miliband trying


to convince everybody? We know that Labour would make cuts. You have


admitted it. Also, we would not been wasting money on a massive NHS


reorganisation. Referendums that people do not want. We would be


spending taxpayers' money wisely which this Government is not doing.


What would you be cutting? Defence. Legal aid. Welfare reform. Winter


fuel allowance. We could go on and on. Welfare reform, what would you


have cut? You voted against the bill for welfare reform. You voted


against our cuts, did you not? have our own process of welfare


reform but we are absolutely clear that there would be cuts there. The


big issue here is that you do not get rid of the deficit by the


narrow little cards that you are thinking of. You get rid of the


deficit by economic growth. This Government has cut off economic


growth. You should not be in the studio, you should be out there


creating wealth. I am not sitting where you are, collecting my index-


linked pension in due course. That may be a fatuous point. Let him


make his point. The level of cuts that we actually need are much


greater. You are putting debt into the economy. That debt has to be


serviced by the people that come after you. Which is as a waste of


money. It is immensely immoral. By stacking up the debt, you reduce


future growth at the expense of the current. It is wrong to think that


you get rid of it by salami sliced cuts. You get rid of it by economic


growth. That is what the Labour Party is about, getting people back


into jobs. You can pray for growth. With the public sector making up


50% of the economy, growth is quite unlikely. That is the history,


observed economic fact. You would grow the public sector beyond 50%.


Economy would grow more slowly. We would end up even weaker. Why do


you think we would grow the public sector by 50%? You have set up some


cuts, but not with much detail. Why come back to this point, whatever


you are saying is not cutting through. Why not? As the Labour


Party, the Labour movement, we need to get on the front for it to show


whether his Government is wasting money. -- front foot. You have


spelt out 1 billion of cuts in defence and in policing. Why not


spell out the rest? We have spelt out more than that. You have sat


through many years of opposition. The point is to hold the executive


to account. It is not to turn up on a programme like this and...


are laying out the intellectual background. The can do that on this


programme or anywhere as far as I am concerned. We are not doing a


line-by-line assertion. The fundamental point of getting rid of


the deficit is using economic growth. This Government has no plan


for growth. We left a growing economy and falling unemployment.


We have heard that. You will hear more of it. I am sure we will over


the next for years. It would Labour -- four years. In terms of trust in


the economy, the public still trust David Cameron and George Osborne


more. That would not be the case of any of what you have said so far


was believed by the public. We were in office when a major economic


hurricane hit the British economy. All right. The let me answer the


question. Go on. In the public mind we are associated with that, fairly


or unfairly, and fairly in my view. We have to work extra hard to set


out our plans for cutting the deficit and encouraging growth.


That was in 2007. You did not look at it until 2001. There is a view


which says who cares where Ed Miliband is? If people still decide


to vote Labour, two points ahead is enough if it is translated into


seats at the general election. The Tories they to be 11 -- need to be


11 points ahead. Putting is not popular, of course. You have not


answered my question. When it comes to an election, at the moment


Labour would still have a good chance, looking at the points, all


of a majority. They are closer to There would not be relaunch if they


thought they were in a winning position. We are the ones doing the


work and taking the tough decisions. They are the wrong decisions.


are not. You know Alistair Darling would have had to cut. If you do


not think Ed Miliband is laying out that framework, why are you talking


about crony capitalism and excessive boardroom pay, things Ed


Miliband set out a while ago? Cameron's first speech seven years


ago was on a moral capitalism. We have been introducing proposals for


more competition and proposals on excessive pay. They could have done


this in government. So it is the "economy, stupid", and


who can run it that defines the political battles ahead. That is


Babbs why we have heard both sides aggressively staking out who can


reform capitalism. Giles has been talking to the MP who coined the


phrase crony capitalism to find out what went wrong.


To all three years ago, when it became clear the scale of the


credit crunch debt crisis, our entire financial situation, there


was a lot of anger about at those greedy beggars who had stolen our


future, the bankers who gambled our money and then begged to be bailed


out. But there was also a deeper concern that this was a failure not


just of the market and capitalism, but -- but of capitalism itself.


But today politicians are not talking about the solution being


the scrapping of capitalism. Both Labour and the Conservatives think


it should just be better. But how did they get there, and are they


talking about the same thing? Capitalism is the greatest force


for economic development and wealth-creation that has ever been


developed. It is the strongest form of social advance that has ever


been created, and it is a moral institution because it relies on


trust. But trust me, most of those who do not trade millions, what the


electronic exchanges and inhabit the plate glass cathedrals of


financial Commerce think it is an ugly idea made a peer by bonuses


and reward packages that would embarrass a footballer. What


happened over the last ten years is that this country has slipped into


what I call a kind of crony capitalism, which is not real. It


is not about a day's work for a day's pay and taking real risks


with your money, it is about using other people's money to play the


financial markets and taking a lot of the gains for yourself. That is


the kind of crony capitalism we are talking about. To reform that,


don't you then have to regulate it, which is presumably what a free


enterprise group of Conservatives does not like? There are different


kinds of free enterprise. The kind I am advocating is not devil take


the hindmost social Darwinism, libertarianism, no rules and lace a


fair, it is properly governed markets to produce specific things,


and people acting according to respect and trust and institutions


that discharge their duties, governed by institutions like the


Treasury and Bank of England. so much of modern politics, that


all seems a reflection on less of a clash of ideals, but a perspective


over the management of the same ground. I disagree. There is


something different going on here. We do not know what Labour mean


when they talk about predators first as producers, but we assume


it means more state intervention and socialisation of these things.


I think that is not right. We should set up efficient


institutions to crack down on things like pay, but through


corporate governance, not necessarily legislation.


Jon Moulton is still with us. Don't we have corporate governance now? I


do not understand the difference. It is quite bizarre. Executive pay


started to roar out of control in the public world when we introduced


remuneration committees. The arrival of corporate governance


resulted actually in the acceleration of executive pay.


Isn't that because the wrong people sit on those remuneration


committees? Partly, and also because having set up remuneration,


they also had to come up with policies, so most of them set up a


policy saying, we will be in the top half of the industry, and then


they just let go for each other. But isn't it because it is the


chairmen and chief executives giving each other the same sort of


pace? That is only part of the issue. Nobody wants to inflict pain


or be an unpopular member of the board by saying the CEO is overpaid.


The whole structure does not work very well. You need to have


institutions with teeth. I am in favour of getting more shareholder


power. But there has always been shareholder power, and the evidence


shows that shareholders have rarely turned down pay packages of their


top executives. So why would that change? They have rarely had the


opportunity of voting on them. Only in the last year or two have they


been given a non-binding vote on the remuneration committees'


proposals. The contracts are already in place. As an institution,


you have to sit there and say, we have to tell the CEO he has to have


his salary reduced. It is not easy. Predators and producers - do you


think Ed Miliband was talking about you? He might have been, but he


does not know the difference. The now, in 14 years' time, you


should be able to travel from Birmingham to London in under 50


minutes, because the Transport Secretary Justine Greening, who


says she is following in the footsteps of Victorian railway


pioneers, has given the high-speed rail link the green light. The


Government says the project will cost over �32 billion and deliver


economic benefits worth �44 billion. But the claims have been disputed


by opponents of the link. One of those opponents is Martin Tett,


leader of Buckinghamshire County Council. He joins me from Great


Missenden in the Chiltern Hills, one of the areas likely to be


affected by the high-speed rail line. Are you going to take Justine


Greening to court over her decision to give a chest to the go-ahead? --


HS two? Before you get on two issues about taking anyone to court,


we will have to look at the decision and understand the detail.


We are used to take in controversial decisions as local


authorities. If there was a good business case behind this, we would


not have too many grounds for opposing it. But both our experts


and virtually every independent analyst who has looked at this


agrees that this is a flawed business case that does not deliver


good value for money in terms of what will be in excess of �32


billion worth of public expenditure. At a time of austerity, we have to


make sure this is justified. Andrew Adonis said on the radio this


morning - the whole business case rests on the fact that could every


minute spent on a train by a businessman is wasted. That does


not stack up in an era of iPods and iPhones and mobile phones. It is a


flawed business case and there are better alternatives. Andrew Adonis


is here and we will ask him about that in a moment. But it sounds as


if you are planning to go to court over this decision? I did not say


that. We will listen to what has been said and take advice from


legal and technical experts. A lot will depend on the detail. There


were 55,000 respondents to this public consultation that was


carried out. What were the results of that consultation? The


Government places a lot of store by localism and listening to people.


What was said by those people? Where is that within the document


that has been published today? We would like to see how the


Government has responded to those concerns. The government would say


they have listened to those concerns by delaying his


announcement. By about a month? That is not listening to concerns.


Andrew this morning was arguing that there is no alternative to


this. If the business case falls away and you do not accept that


people do not work on trains, the only other argument is about


capacity. We have shown that you can meet all of it past the growth


that is required by upgrading the existing line. This is a much less


expensive, better value for money way of upgrading the existing line.


You can then invest in the road and rail infrastructure around the


entire country, in the north-east, the north of England, Wales and


Scotland, which is what we need to generate jobs and economic growth.


Andrew Adonis, a former Labour transport secretary who announced


the original plans for a second high-speed rail line, the business


case does not stack up? understand what Martis signed on


behalf of Buckinghamshire. The international rule of high-speed


rail is that everybody wants the stations, and nobody wants the line.


But the line has to go somewhere. It is no surprise that Martin is


opposing it in defence of the Chilterns. Concentrating on the


business case, he says it does not stack up and that the amount of


money that would be made would not be as great as the Government says.


The facts are clear. To provide two-thirds of the capacity which


this train line provides, two thirds would cost more in cash


terms than building this line. It is inconceivable that we will not


need that capacity over the next generation. So we face a choice.


You can do patch and mend, and we could get through the next 10 or 15


years by changing here and there. But if you want to put right this


issue of capacity between the two largest conurbations in England,


London and the West Midlands, you have to either do a repeat of the


�10 billion upgrade of the West Coast Main Line, which produced


chronic disruption for ten years and still did not sort out the


capacity demands that will be required, or you do what every


other developed country in Europe and Asia is doing, which is to


build state-of-the-art infrastructure and modern


technology which will put in place the capacity required for the next


generation. Taking the capacity issue, that is a strong case by


Andrew Adonis, that purely looking at capacity, there is a sealed case


for this train line to go ahead. Patch and mend would cost a fortune.


I have read all this stuff. I do I do not find the arguments about


capacity compelling. It looks like an reasonable assumptions you get


through at least 20 years without getting to the train line router.


We have to do something in that period. We do not need to look at a


crystal ball here. We have just spent �10 billion upgrading the


West Coast main line. You are doing open heart surgery on a Victorian


railway. We would be doing the same if we went down this patch and mend


route. But you are guessing. Estimates are always out by a


bloody mile. We can be sure that just one patch and mend will cost


many billions of pounds. That is before you get to any of the


additional requirements. Do you really feel that it will be built?


It will be built. The question is whether it is built in the 2020s or


the 2040s. It would be better sooner rather than later. That is


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