16/01/2012 Daily Politics


16/01/2012

Jo Coburn has the latest political news, interviews and debate. With guest John Walker - Chairman of the Federation of Small Businesses.


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Transcript


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Afternoon, folks, welcome to the Daily Politics.

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

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

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- they're always knowingly overselling themselves.

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The Government came to power promising to reduce the burden of

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

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

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

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

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

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

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

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

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

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

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

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

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

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if the eurozone resolved its problems, the economy would

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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reliance on the eurozone is something that needs to be tackled

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

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

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reliance on the eurozone is something that exporters need to

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look carefully at. Looking for alternative markets that are not

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

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

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

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

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

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

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one of the advantages of being a small business, particularly

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

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

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

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

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

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

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These days, party leaders are falling over themselves to decry

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boardroom excess and to promote their remedies to tame the

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capitalist beast. David Cameron has been cracking the

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

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

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give shareholders of big companies a binding vote on executive pay

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

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

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

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between the highest paid executive and the company median average.

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

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Conservative top dogs clashed again Conservative top dogs clashed again

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

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

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companies and train companies ripping people off. People said

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

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

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

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

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

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prime ministership calling for more responsibility. There was a book

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

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

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

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

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

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

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

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

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

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

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corporate world. Those are lazy stereotypes. Firms that have

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

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

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perform better. With us now is the Liberal Democrat

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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We want to also engaged the professionals and the business

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

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

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

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

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

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

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

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

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

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

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

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

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

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beneficial in improving productivity, reducing staff

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absenteeism, reducing staff turnover, improved performers over

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

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

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

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

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

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

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

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

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

:10:02.:10:07.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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good to encourage employee involvement. It might be easier to

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do with larger businesses with publicly quoted shares. And also

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

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

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

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

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

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

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

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

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

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would encourage employee involvement. A lot of small

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business people involve their employees in significant decisions

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

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

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

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

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

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

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

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

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raise awareness. We will talk about red tape.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

:15:53.:16:03.
:16:03.:16:04.

operation to date. Ministers have claimed certain pension savings

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

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complication is the politics of coalition. Vince Cable has launched

:16:13.:16:16.

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

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

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:16:32.:16:32.

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

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

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

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against permanent regulation that is too heavy until something goes

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

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

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

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

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

:17:08.:17:15.

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

:17:15.:17:20.

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

:17:20.:17:25.

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

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

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

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

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going to Brussels as well. The European credit Council have

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already negotiated the first exemption for small businesses from

:17:51.:17:58.

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

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

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

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

:18:11.:18:18.

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

:18:18.:18:23.

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

:18:23.:18:29.

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

:18:29.:18:39.
:18:39.:18:40.

year that future regulations will not apply to micro businesses.

:18:40.:18:44.

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

:18:44.:18:49.

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

:18:49.:18:53.

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

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

:18:58.:19:08.
:19:08.:19:08.

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

:19:08.:19:13.

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

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

:19:18.:19:24.

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

:19:24.:19:33.

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

:19:33.:19:40.

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

:19:40.:19:43.

to GB disappointments as public policy overtakes the need to

:19:43.:19:50.

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

:19:50.:19:53.

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

:19:53.:19:59.

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

:19:59.:20:02.

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

:20:02.:20:07.

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

:20:07.:20:14.

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

:20:14.:20:18.

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

:20:18.:20:21.

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

:20:21.:20:28.

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

:20:28.:20:33.

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

:20:33.:20:37.

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

:20:37.:20:42.

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

:20:42.:20:47.

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

:20:47.:20:52.

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

:20:52.:20:57.

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

:20:57.:21:02.

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

:21:02.:21:09.

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

:21:09.:21:12.

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

:21:12.:21:17.

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

:21:17.:21:22.

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

:21:22.:21:27.

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

:21:27.:21:31.

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

:21:31.:21:37.

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

:21:37.:21:44.

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

:21:44.:21:47.

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

:21:47.:21:51.

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

:21:51.:21:55.

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

:21:55.:22:03.

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

:22:03.:22:07.

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

:22:07.:22:13.

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

:22:13.:22:17.

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

:22:17.:22:22.

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

:22:22.:22:28.

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

:22:28.:22:32.

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

:22:32.:22:36.

the government should do more to grow the economy and bring

:22:36.:22:44.

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

:22:44.:22:48.

were controversial. You have watered them down as Liberal

:22:48.:22:57.

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

:22:57.:23:02.

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

:23:02.:23:07.

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

:23:07.:23:12.

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

:23:12.:23:16.

extending the period before which the auto and Romans for pensions

:23:16.:23:23.

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

:23:24.:23:28.

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

:23:28.:23:32.

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

:23:32.:23:37.

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

:23:37.:23:42.

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

:23:42.:23:49.

Brussels. The most fundamental thing with employment law is that

:23:49.:23:54.

businesses want to treat their employees fairly and have some

:23:54.:23:57.

balance. It is the continual changes in regulation which have

:23:57.:24:01.

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

:24:01.:24:05.

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

:24:05.:24:11.

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

:24:11.:24:15.

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

:24:15.:24:20.

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

:24:20.:24:23.

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

:24:23.:24:27.

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

:24:28.:24:32.

by the Queen to celebrate the diamond jubilee? Michael Gove

:24:32.:24:36.

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

:24:36.:24:41.

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

:24:41.:24:45.

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

:24:45.:24:47.

Secretary could draw some inspiration from gifts given to the

:24:47.:24:54.

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

:24:54.:25:00.

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

:25:00.:25:03.

if you prefer something more practical, the Queen has received

:25:03.:25:08.

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

:25:08.:25:11.

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

:25:11.:25:16.

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

:25:16.:25:21.

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

:25:21.:25:25.

outrageous suggestion. Downing Street have said it is not

:25:25.:25:30.

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

:25:30.:25:35.

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

:25:35.:25:39.

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

:25:39.:25:44.

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

:25:44.:25:49.

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

:25:49.:25:55.

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

:25:55.:26:01.

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

:26:01.:26:07.

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

:26:07.:26:14.

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

:26:14.:26:17.

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

:26:17.:26:21.

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

:26:22.:26:28.

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

:26:28.:26:33.

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

:26:33.:26:43.

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

:26:43.:26:48.

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

:26:48.:26:53.

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

:26:53.:26:58.

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

:26:58.:27:01.

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

:27:01.:27:06.

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

:27:06.:27:11.

your suggestion be, from the Federation of Small Businesses?

:27:11.:27:15.

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

:27:15.:27:20.

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

:27:20.:27:26.

our members would be delighted to provide the procured services for

:27:26.:27:30.

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

:27:30.:27:35.

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

:27:35.:27:39.

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

:27:39.:27:44.

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

:27:44.:27:48.

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

:27:48.:27:52.

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

:27:52.:27:55.

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

:27:55.:28:01.

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

:28:01.:28:08.

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

:28:08.:28:12.

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

:28:12.:28:17.

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

:28:17.:28:22.

remember novelty presence. Whoopee cushions, no expensive presents.

:28:23.:28:27.

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

:28:27.:28:32.

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

:28:32.:28:35.

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

:28:36.:28:41.

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

:28:41.:28:44.

Jo Coburn has the latest political news, interviews and debate. With guest John Walker - Chairman of the Federation of Small Businesses.

Discussions include capitalism with the Business Minister Ed Davey, and Royal Gifts with Kate Williams, after Michael Gove suggested taxpayers should buy the Queen a yacht to mark her jubilee.


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