10/01/2012 Daily Politics

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