16/01/2012 Daily Politics


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Afternoon, folks, welcome to the Daily Politics.


All the party leaders say THEY know how to fix capitalism - Nick Clegg


says he want more firms to be run like John Lewis. Well, politicians


- they're always knowingly overselling themselves.


The Government came to power promising to reduce the burden of


regulation and red tape, so what have they done to lighten the load


for business? It is all sound bites, but I don't see any real evidence.


If you look through 2011 and regulations that came in in 2011,


there didn't seem to be any cutting red tape to me.


And what do you give the Queen for her Diamond Jubilee? The Education


Secretary thinks a new yacht might And if you have any ideas of your


own about what that Royal gift should be, please email us at


[email protected] and we'll try to read some of those ideas out


at the end of the programme. And with us for the duration today is


the Chairman of the Federation of Small Businesses, John Walker.


Welcome to the programme. First this morning, the think tank


the Ernst and Young Item Club are saying this morning that the UK may


have already slipped back into recession. And they said that even


if the eurozone resolved its problems, the economy would


probably only grow by 0.2% this year. Speaking from Hong Kong,


where he's promoting British business, the Chancellor, George


Osborne, said he was confident the Government was doing "everything it


can to get Britain through this to weather the storm".


On that claimed by the economic forecaster, do you agree with them,


is Britain already in recession? is too early to say on figures. We


need to listen to what Ernst & Young say. Many of our members


would agree that things are difficult. How long do you think it


will last? It is difficult to give predictions, but what are you


planning for? Members feel it will last for a couple of years. The VAT


caused inflation coming out of the system so hopefully there will be


less inflation caused by that, but I think it will be a year or two


before things settle down. George Osborne is looking east, his


big push today and for the rest of the week. Do you think the over-


reliance on the eurozone is something that needs to be tackled


in terms of exports? Export figures in the autumn were running at high


levels and it helped the GDP figure for the third quarter. But the


reliance on the eurozone is something that exporters need to


look carefully at. Looking for alternative markets that are not


affected by the difficulties in the eurozone can only be to our


advantage. Have what about the prospects for small businesses? If


you think it will last a couple of years, what can they do to plant?


Small businesses rely on certainty of some sort. He there isn't much


of that! Be there certainly isn't at the moment. They are resilient,


they adapt to change in working practices and surroundings. That is


one of the advantages of being a small business, particularly


entrepreneurs and the new ones coming in. They get on with things.


They have concerns about what is going on with regulation, which we


will look at later, but they get on with things. They will have to over


the next year or so. Peter Mandelson once said he was


"intensely relaxed about people getting filthy rich". But the days


of politicians keeping their noses out of executive pay are long gone.


These days, party leaders are falling over themselves to decry


boardroom excess and to promote their remedies to tame the


capitalist beast. David Cameron has been cracking the


whip, saying he wants a "war on crony capitalism". He's hinted that


crony capitalism". He's hinted that there may be new legislation to


give shareholders of big companies a binding vote on executive pay


deals. But Ed Miliband says he's the one who's been leading calls


for a more "responsible capitalism". Labour wants greater transparency


on executive pay, suggesting that companies publish a 'pay ratio'


between the highest paid executive and the company median average.


They also want to repeat the bank bonus tax. Yesterday, Labour and


Conservative top dogs clashed again Conservative top dogs clashed again


over who has been leading the charge. The people at the top


creaming off the big rewards, the vested interests like the energy


companies and train companies ripping people off. People said


that was a bit left wing and out of the mainstream. Now the Prime


Minister and his deputy are falling over themselves to say we also want


to take on crony capitalism. David Cameron was way out on this, when


it Villa band was having a night puts the people like Fred Goodwin.


-- Ed Miliband. David Cameron made speeches at the beginning of his


prime ministership calling for more responsibility. There was a book


arguing for... Michael Gove. While Labour and Conservative have


been slugging it out, enter the stage Nick Clegg. In a speech this


morning, he says he wants to create a more "balanced capitalism". He's


urging more firms to offer shares to their employees - a bit like the


John Lewis chain, which is entirely owned by its staff. And we need


more individuals to have a real stake in their firms, more of a


John Lewis economy, if you like. What many people don't realise


about employee ownership is that it is is usually under used tall in


unlocking growth. I don't value employee ownership because I


believe it is nicer, a pleasant alternative to the rest of the


corporate world. Those are lazy stereotypes. Firms that have


engaged employees, who owned a chunk of their company, are just as


dynamic, just as Xavi as their competitors. In fact, they often


perform better. With us now is the Liberal Democrat


business minister, Ed Davey. Just to take that point at the beginning,


you can buy shares anyway in a publicly listed company, so what is


different? There are some companies that are not listed, the majority


are not listed, so you can't buy shares in them. You are saying that


is what you would like to do. one of the things we want to look


at. And we are focused on the tax advantage share schemes and we want


Danny Alexander to look at those tax incentives to see whether they


can be sharpened and whether we can give a boost to ownership because


it is not only fairer for employees, but good for the economy and those


firms. Publicly listed companies are small percentage so you want to


broaden it out. Are you saying you would kick out current shareholders


or would you make it compulsory part of the package? We want to do


a major bit of work on this, we have put some ideas forward. Nick


talked about looking at the idea of a right to request from employees


asking whether or not their firm would provide some sort of employee


share scheme. But let's be clear, a right to request is a right to


request, not a right to have. These are the things we want to look at.


We want to also engaged the professionals and the business


advisers because one of the issues we have already noticed is the lack


of awareness in many sectors of the economy. This is such a good model


for corporate performance. might argue that people haven't got


much spare cash about to buy shares or invest in the companies they


work for. Is this a good time for this? Absolutely. The thing about


responsible capitalism, or whether it is reforming the banks or with


employee share ownership, it is good for growth. It is good for


productivity. The government needs to look across the piece and find


all of those areas, short-term and long-term... What evidence have you


got? The number of companies that commonly do this is very, very


small so they may be good in terms of productivity, but you don't know


how will it be if it was rolled out. He a massive amount of work has


been done looking at this. It shows that employee ownership can be very


beneficial in improving productivity, reducing staff


absenteeism, reducing staff turnover, improved performers over


the economic cycle. The evidence is pretty strong. One of the key


things I want to look at what I'm doing the work is the conditions


where employee shares were at the best. For example, one of the bits


of evidence is that you have to link it to employee involvement and


participation as well. There's a lot of work to be done, but the


evidence is very strong. This is good for the economy. It might be


good for the economy, what about the individual? Is their risk that


if you start asking employees to invest their savings in a company,


there's a big risk that if things go wrong, not only could summer


lose their job, they could also lose their savings. One has to look


at those risks and you have to be proportionate about the amount of


one's savings that are in this area. But the evidence is that over time,


companies tend to do pretty well and if you have invested in


employee share-ownership schemes in recent years you have got a much


better return. What about the Royal Bank of Scotland? The government


owns a large proportion, why not start there? We have been looking


at how could those banks should be returned to private ownership and


whether that could be more widely. Their rights issues there. This


isn't just about ownership, it is about wider capitalism. Would you


like to see that with RBS? Absolutely. Are you disappointed by


Northern Rock? No one is trying to say that employee share ownership


is a panacea for everything. That is not the argument. Our argument


is that the evidence in the UK and abroad is that this can be very,


very good for corporate performance. Surely it is incumbent on the


government to look at that and given that it can give a fairer


deal for employees, it should be worthwhile. I would point out that


has the Royal Mail minister, I have legislation through Parliament to


privatise the Royal Mail in due course and that will see the


largest ever employee share scheme for a major privatisation. We're


not just talking about this, we are taking action. Would you have liked


to have seen that for Northern Rock? Do you have just set out


Bigham evidence for doing that. have to take every issue on its


merits. A lot will depend... I am looking at turning the Post Office


into a neutral over the next few years, but I know that can't happen


until we have sorted out the finances. You can't expect people


to invest in things if they are not really good. But I believe the


evidence is very strong behind the policy. You have heard the case


about Northern Rock. Is this right for every business? I think it is


good to encourage employee involvement. It might be easier to


do with larger businesses with publicly quoted shares. And also


partnerships, which don't have shares. Anything that has a right


to request automatically rings a regulatory bell for me. Then it


involves, why can't I have it? The right to we Crest needs an answer


and we would have concerns. We would want to see the details.


will come on to regulation, but that is a point. You will be in


toilet -- involving companies are more red tape. When you see our


proposals, we will satisfied John's concerns. The evidence is that this


is good not just in large firms, but in small firms. Is there Makfi


appetite, is it practical? We will have to see the details, but we


would encourage employee involvement. A lot of small


business people involve their employees in significant decisions


already. In terms of having stakes in the company? Could it be rolled


out on a large scale? Yes, it is a new concept for very small firms to


have that. Although as I said, with partnerships in might be somewhat


difficult. A what is your ambition? Do you have figures about how much


you do want to take this on? only just started work! We are in a


hurry! We are very ambitious. But because there may be some concerns,


we may well look at exemption for micros because we don't want to tie


up small companies in red tape. One of the key reasons to do this is to


raise awareness. We will talk about red tape.


So while everyone's now talking about regulating capitalism, you


might forget that a little while ago, DEregulating things was all


the rage. When David Cameron came to power, he said he wanted the


burden of red tape on business to be lower at the end of his term of


office than it was at the beginning. So are entrepreneurs feeling a


lightening of the load? Adam has De you hate being overburdened?


Especially by pesky red tape. will want to change some of it.


That is how Joe feels running her printing business in London.


find yourself spending a lot of time trying to keep up to date.


That costs money. It costs money because we have to pay lawyers and


you have to employ it experts like HR consultancy. You then find a lot


of time is spent worrying about whether you will stay within the


law and order of this time you're spending doing that, you're not


doing your job. The business department is trying to lighten her


load with a raft of policies. First of all, there's the red tape


challenge were members of the public can go on a website to


recommend rules they think should be got rid of. Then there's the one


income of one of rule, had so government departments, if they


want to bring a regulation in, have to throw out a nod one. Last year


there were 19 ins. It has saved businesses and estimated �3.2


billion a year. Some think there's something fishy going on. Even


though the idea behind it is a good one, we have been critical of the


operation to date. Ministers have claimed certain pension savings


which have... If you use that to bring in new regulations. A further


complication is the politics of coalition. Vince Cable has launched


a consultation over there -- relaxing the rules for hiring and


firing workers. But some Tories wanted to be much tougher. In the


boardroom, it has left Joe feeling It sounds great, but there is no


real evidence. If you look at 2011, they did not seem to be a cut in


red tape. By a art of this is a permanent problem - everyone is


against permanent regulation that is too heavy until something goes


wrong. The City, anyone? Business minister Ed Davey is still


with us, as is John Walker of the Federation of Small Businesses. And


we are joined by the shadow Business Minister Toby Perkins. Ed


Davey, the verdict from business is that you have not delivered on that


the regulation. I think we are delivering. We have already


delivered in the past 18 months. We are changing the system that we


inherited. Labour past six new regulations every day, if you take


their whole term in office. What we are doing through the one in, one


out process is putting a steely discipline into process. We are not


only looking at the flow of regulations, we are also looking at


the stock of regulations that we have inherited. Beyond that, we are


going to Brussels as well. The European credit Council have


already negotiated the first exemption for small businesses from


a European harmonised directive. So we are making progress. Her but


actually, Adam says 40% of your scope is taken away from the


Government in terms of the EU directives. You cannot do anything


about it. That is a whole area of regulation that you cannot scrap.


can prove he is wrong. Not only have we achieved one already, which


will save small and medium-sized businesses between �150 million and


�300 million a year. We have also got the commission to agree this


year that future regulations will not apply to micro businesses.


There are also 19 regulations that have been brought in. It is a


significant number. A rise in the minimum wage to �6.80. Rules to


force bosses to pay for the pension for their workers. Temporary


workers are entitled to the same rights as others. There will be new


regulations. But these are quite onerous. The rhetoric does not


always match the reality. That is what the business people in that


film were saying. What is the impact? There has certainly been


progress made with what is being said. Some of the ones that have


been introduced were Brussels directives, as you pointed out. But


there will be future change in the government. There are always going


to GB disappointments as public policy overtakes the need to


respond to business. But we still have to see some of the work.


do you accept the claim that there was over-regulation during Labour's


time? We need to remember that at the end of the previous government,


the World Bank said Britain was the easiest place in Europe to do


business. We need the government to stop talking Britain down as a


place to do business. Entrepreneurs always want less regulation. I ran


my own business for five years prior to get in into government.


You do not go into a business to do regulations. Entrepreneurs always


want less. But the businesses have had 13 years of the Conservatives


are saying we are over-regulated. So we need either serious action by


will make it easier for business, or stop talking Britain down.


Ed Davey has given examples where they are making it easier. So


surely you would support that? there are concrete steps that will


make it easier. What would you like to see? We need to see what the


Government are coming up with. You heard from business people that


their experience is not getting easier. The one min, one out, is


largely a gimmick. That is not just what Labour are saying, that is the


experience of the people we interviewed in that film. Why are


they not feeling it on the ground? It takes time for some of these


things to follow through. For example, we have been looking at


increasing the period for which you can claim for unfair dismissal from


one year to two years. It was opposed by Labour, but has been


welcomed by the FSB. On Friday, Toby was asked -- asking me to


regulate the pub industry. You cannot have it both ways. But the


business people in that film said hiring and firing is the most


difficult thing. They would like lighter regulation. Why don't you


support that? We think the government should do more to make


it easier to hire people. In terms of the tribunal issue, there are


steps that can be taken. The government are on the right lines


in terms of making it easier to communicate with employees. But


only 10% of tribunal cases are about unfair dismissal. We do not


support the idea that you just make it easier to get rid of people


without any opportunity for appeal. When I ran a business, sometimes


you do have to performance manage somebody out of the business. But


the government should do more to grow the economy and bring


confidence in. Going back to Ed Davey on that issue, the proposals


were controversial. You have watered them down as Liberal


Democrats. Those proposals have not been published. Having seen them,


the majority of them are being implemented. There were in fact


implemented before the report was written. There are parts of it that


a controversial, but the majority were implemented. For example,


extending the period before which the auto and Romans for pensions


affects smaller businesses. That will be welcomed by the FSB. So


this agenda, we have not only delivered on, but we have changed


the process so that over the next few years, we will really turn the


tide. I accept that it takes time to turn around something like red


tape both that we inherited from Labour and that we have got at


Brussels. The most fundamental thing with employment law is that


businesses want to treat their employees fairly and have some


balance. It is the continual changes in regulation which have


been the problem. Can we have a period of time when there are not


any changes? That is the general criticism of government, the


chopping and changing of government. I accept that. That is why the one


min, one out discipline is reducing the flow of regulation. But because


some of the past regulation is bad, we have to simplify it.


She is one of the world's wealthiest women and is believed to


have an estimated personal fortune of �300 million. So what present EU


by the Queen to celebrate the diamond jubilee? Michael Gove


thinks he has got the answer. He has suggested that taxpayers stump


up at least �60 million to buy the Queen a new yacht. But if the


nation's finances will not stretch to a gin palace, the Education


Secretary could draw some inspiration from gifts given to the


royals over the years. Animals are a good option. In 7064, George III


received a cheetah, while his son, George IV, was given a giraffe. But


if you prefer something more practical, the Queen has received


500 cases of tinned pineapple and seven kilograms of prawns. And


Prince Charles and Princess Diana were given a ton of peat from


Somerset as a wedding present. Kate Williams, a royal historian, is


here. What do you think of the idea of a yacht? It is a pretty


outrageous suggestion. Downing Street have said it is not


appropriate. We are in austerity measures. The whole point about the


diamond jubilee is that it is a bit make-do-and-mend, polishing up the


crown with our toothbrush. We will get the barge and put a bit of


extra bling on it. The idea that the Queen gets and �80 million


yacht is ridiculous. What would she think? I think she would be pretty


surprised. She is also feeling the pinch. She has said she cannot keep


up her palaces. So can you keep up a royal yacht as well? Apparently,


the Royal Britannia takes 250 boxes of polished over three months. Who


can afford that? Not on my yacht. What are some of the most bizarre


gifts that have been given to the royals? They get all kinds of


bizarre gifts. As you were saying, when the Queen was married, she


received a cinema from the Earl and Countess of Manhattan. People send


stuff to the Queen. This and milk bottles, bits of cake, biscuits.


They think she looks hungry. they eat it, do you think? Maybe


the Queen is partial to fruitcake. I am sure she would prefer a bit of


chocolate sponge. What would you give her? I think the Queen would


be partial to a box of chocolates and to put her feet up. She is


having an exhausting year, with the Coronation and the Olympics. She


might like to sit with a cross word in front of the fire. What would


your suggestion be, from the Federation of Small Businesses?


think the proposal to do a new royal yacht in the current climate


is not particularly wise. If it were to happen, I am sure many of


our members would be delighted to provide the procured services for


it. Hopefully, it would be built in a British shipyard. Some of these


things can go abroad. But the Queen has a reputation for being fairly


frugal, so I would be surprised if she accepted a gift of that nature.


We have had a couple of suggestions from viewers. Everyone does not


think it is a terrible idea. Carr says, you do not buy gifts for


those who have everything. Ian says, not only would this be something


the nation could have pride in, but it would provide thousands of jobs


at a time of unemployment. And another viewer says, the only gift


fit for a queen is part of the public's 83% stake in RBS, as we


are not getting anything out of it. Historically, the Queen prefers


cheap presents. At Christmas, when you are invited to Sandringham,


remember novelty presence. Whoopee cushions, no expensive presents.


That was where Princess Diana fell foul. She brought cashmere jumpers,


and it was a mistake. We should club together and by the Queen a


nice, big whoopee cushion. cashmere jumpers from us. That is


all for today. Thank you to our guests. I will be back at 12


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