08/03/2012 Daily Politics


Similar Content

Browse content similar to 08/03/2012. Check below for episodes and series from the same categories and more!



Welcome to Daily Politics. A after the tragic loss of six


British soldiers in Afghanistan on Tuesday the head of the armed


forces claims Britain will still hold its nerve in the country. No


comfort to the bereaved, many of whom are now calling this a


pointless war. We will be talking to defence secretary, Philip


Hammond. Why does the German economy run


like a well-oiled machine? We've gone to Dortmund to find out if the


country really does do business better.


Do you know your Moody's from your Standard and Poor's? We'll be


delving into the mystical world of the credit rating agencies.


Quentin Letts will be bringing us a bit of parliamentary etiquette.


Criminal, dog, not allowed to do those. Impertinent puppy. All these


But not necessarily for be done on polliwog -- Daily Politics. Joining


We hope you are also able to watch this programme, we are told there


is a solar storm about to hit Earth. I am not sure whether I meant to be


alarmed or not. If it does he does directly telecommunications and the


National Grid could be disrupted, we can fall off there, but we do


that about once a month anyway. Last time that happened it was


somebody he put their cattle in and it blew the lines. -- somebody


plugs are their cattle in. -- kettle. Let's turn our attention to


women, especially on International Women's Day Today which Parliament


will be debating this afternoon. We have a very successful


businesswoman on the programme. Does International Women's Day


matter? Absolutely. It is quite an unusual


one for me because I'd spend my life saying ignore your agenda, be


good at what you do, but I live in a society where it expect to be


safe, educated, have opportunity, there is a whole world out there


that doesn't have those same ideas. How would you categorise woman's


progress through the professions? I think it has changed quite a lot.


My career probably spans about 30 years and I have seen a big change,


more choice for women. By and large, not always, there has been more


choice, and a do so you a lot of very successful women. I still


don't think there are enough. -- I do see a lot of very successful


woman. I happen to be on television to a lot of people know about me


but I go about my everyday life meeting extremely smart, successful


women not on television he people don't know about. I also spend my


time giving lectures and speeches to the boards of public companies.


That is a point. A lot of trade and business organisations. They are


overwhelmingly male-dominated. I would absolutely agree and I


think that is a loss for the country. We should see a more


balanced boardroom. I have just come back from a wonder. Over half


of their MPs are women. Compared to 22% in Britain. Should governments


do more, should there be quotas? Should there be affirmative action,


up or I'll be going to leave it to grow naturally? -- or are we going


to. I always worry about quotas. People feel they are forced into do


some thing. They don't like it. It can have the opposite effect. I am


not keen on quotas, but clearly it is taking too long at the moment.


The government needs to provide a structure which encourages people


to bring women into the boardroom. Time for our daily quiz. Which men


and women are free to enter. Which city has the most


billionaire's according to the sea is a Forbes rich list? London, New


York, Moscow, Ora bat in Morocco. At the end of the show Deborah will


give us the correct answer. -- Rabat. Do you know where you are?


work very hard to stay off it. I have no opinion on that title. Op


worked very hard on staying off the rich list. You have failed at that.


At influential parliamentary committee has warned the government


hasn't made sufficient plans to deal with the consequences of the


possible break-up of the euro. The Suffolk's Health Scrutiny


Committee -- the Joint Committee on the National Security Secretary was


set up to keep an eye on the National Security Council. Is this


the government has no clear or overarching strategy to guide


decision-making. He says the government has failed to focus on a


range of looming threats including the possible break-up of the euro-


zone. Scottish independence. A diversion of UK and US interests.


It also criticises the Government's approach to Afghanistan. The


current national security risk assessment doesn't even include


Afghanistan because it says it is an ongoing conflict. His is this


should change. Furthermore, David Miliband warned this morning there


was no political strategy in Afghanistan to secure the peace


after British troops withdraw. That criticism follows the death of


six soldiers who were killed in Afghanistan on Tuesday which have


been named this morning. With this now is the defence secretary,


Philip Hammond. What you say to those relatives who lost their


loved ones on Tuesday that they have lost their lives for a


pointless war? Festival, I extend by heartfelt


condolences to the relatives of the six men who died -- first of all. I


would absolutely reject the idea this is a pointless war. Batty's an


incorrect assessment. We went into Afghanistan -- we went -- that is


an incorrect assessment. We have a clear exit date in 2014 for the end


of our combat operations. The guys out there know they are doing an


important job and know what they have got left to do in the two and


a half years to our exit and they are all focused on making sure we


go out for with our job properly done, head held high so we can be


sure Afghanistan will not become a safe haven for international


terrorism. You say the job is being done and


it will be a job well done, yet a recent report by NATO says the


Taliban are getting stronger and they are helped by Pakistani


intelligence, it directly assisted by the Pakistani security services


and getting stronger. That his native. How can that be a job well


done? The report you are quoting from is


a collection of interviews with Caliban detainees. This reflects a


view of the insurgency by captured insurgents -- Taliban detainees. It


is not an objective statement. It is a view of the insurgency from


insurgents themselves. When this report quotes somebody


saying Pakistan's manipulation of the Taliban senior leadership


continues unabated, that is not true?


The situation in Pakistan is very complex and we should never forget


Pakistan is itself the world's largest victim of terrorism, more


than 30,000 Pakistani civilians have died in terrorist incidents.


The point is, there are whole areas of Afghanistan effectively under


the control of the Taliban. For so much so, there are areas where they


have helplines. We also know from this report and from other reports


that have been done and from she are hard-working journalism as well,


the army and the police have been infiltrated by the Taliban. I still


don't understand why you can say we, the NATO allies, are making


problems? I didn't say the situation was


perfect. It is getting better, we have made progress. He said some


areas of still controlled by the Taliban, you're absolutely right,


but they are smaller areas than were controlled five or six or


seven years ago. We are building up substantial competent Afghan


national security forces. More and more of the burden of security in


Afghanistan is falling on the Afghans. That is the right way. You


cannot beat an insurgency with foreign troops, you have to beat it


with a indigence -- indigenous troops.


The more we get to know about the Afghan army and the police, they


are in full dreaded by the Taliban, riddled with the Taliban. They are


run by a deeply corrupt government in Kabul.


They have been examples of infiltration. The Afghan government


after the recent terrible incidents with French troops, the Afghan


government have moved to do something serious about this, they


have moved a large number of security people into the army to


dramatically improve the vetting process.


What is to stop, were it not be regarded as a pointless war and


huge failure if once a week and the Americans and other allies get out,


if the government in Kabul, which is riddled with corruption, $11


billion of money in cash leave Kabul on pallets 40 by just about


every year -- leave before Dubai eight. If the Taliban takeover that


would make it a pointless war. That is not the outcome we are


looking for. We are creating a stronger Afghan National Army,


police service, why the international community is coming


together to make an ongoing commitment to fund the Afghan


national security forces over a long period.


The international community is very clear as the Afghans takeover


responsibility for security, the security forces will need foreign


assistance, technical assistance, training assistance, and we have


made a commitment in the UK to run an Afghan national officer Academy,


and money to allow the security forces to operate at the level of


numbers that will enable them to Secure the gains we have made. The


fact the international community is resolute on this, and the standing


together and willing to make this commitment, should send a strong


signal to the Taliban, but also to those who have joined the Afghan


National Army themselves there is a future here on the side of good,


the side of right, to defend their national territory and from our


point of view, critically, make sure Afghanistan can not become a


safe haven for terrorism again. Our national security depends on


sorting things out in Afghanistan, if that is the case why is


Afghanistan not included in the current national security risk


assessment? This is a strategic risk assessment


looking at longer term strategy. It is clearly still a risk.


The air is an operation ongoing and we are managing it on the ground. -


- There is an operation. We are conducting a military operation on


the ground. If it wasn't a risk we wouldn't be


there. Across government There are


mountains of paper written about risks and operational aspects of


Afghanistan. It is not it has been forgotten that in the structure of


documentation strategic document and captain -- tactical documents


it doesn't fit in this particular one. It is a bureaucratic and so.


It is indeed. If the argument is we have to sort out Afghanistan, the


evidence is pretty mixed at best, if it is because we feel attacks


could once again be planned there, that would put our lives and the


lives of our allies in jeopardy, why are we therefore not in Somalia,


the Yemen, Sudan, where al-Qaeda is more active there than it is in


Afghanistan? It is more active in those places


than it is in Afghanistan precisely because of the success and


effectiveness of troops on the ground in Afghanistan. A do we have


to go to these places after we leave Afghanistan?


I hope not. The purpose of the Somalia conference in London, a


very successful conference, was to build an international consensus


around how we are going to support the creation of proper governance


in Somalia. The same purpose, to close down that on Govan space that


has become a home for international terrorism and criminals and make


sure there is a proper justice system, a proper system of civil


government backed up by in the case of Somalia Africa Union troops


doing the hard work on the ground and paid for by money from other


countries, a UN money, European Union money, allowing them to do


the job that in Afghanistan we are Ordered a proper strategy be to say


to the Taliban, we don't like the way you run this country, but it is


none of our business. If you take over Afghanistan again, and Juliet


Al-Qaeda it in, we will come and get you again, as we did in 2001.


After that, it is up to you. All we care about is whether you allow


plans against us to take place. If you don't, it is yours. That is our


primary purpose in being in Afghanistan, to protect our own


national security interest. But that would be compromised if there


is not a stable, sustainable government in Afghanistan. To get


that, we need a government which reflects all shades of opinion and


all ethnic groups in Afghanistan. Simply saying to the Taliban, you


can take over as long as you don't let Al-Qaeda in ignores the fact


that there are significant other groups in Afghanistan which are


anti- Taliban. Flawed be creating a recipe for civil war. We have seen


a lot of reports on our TV screens about women in Afghanistan who are


already terrified about what will happen when the Western allies get


out. I am not a specialist on Afghanistan, but I speak to lots of


them, and each of them tells me that it could be four days, four


weeks or maybe four months at most that Hamid Karzai's government


would survive, and then the Taliban will take over. If that happens and


you have already conceded it, if we have not laid the ground for long-


term change, and the evidence is difficult to see that we have,


these people lost their lives, 404 of them, and it will have been a


pointless war. But your opinion on this is well understood. It is not


my opinion, it is what I am hearing from others. You have set out an


opinion. So we are working to ensure that there is stability in


Afghanistan after the end of ISAF combat operations. On the sustain


month of the government, after the Soviets left Afghanistan, they


continued to fund the regime for three years. So long as the money


flowed to pay the troops, that regime survived. It collapsed when


the Soviet Union withdrew the funding. That is why the


international community understands how important it is to make that


commitment over the long term to continue to fund a strong Afghan


national security forces so that they can carry on doing the job


that our brave soldiers have done. Let's hope the money ends up where


it is meant to be. Let me finish on Syria. We have seen the defection


of the senior Syrian minister. Are we in any way giving help to the


rebels on the ground? We are giving encouragement to the Syrian


opposition, but we are not providing them with any lethal


weaponry. Should we? No. That would be illegal under the current


international regime. So we are encouraging them, but we will leave


them to tough it out with a massive, well-armed, ruthless army?


approach to this is well understood. We will exert every possible


pressure on this terrible regime in Syria. We will keep up pressure on


Russia and China, who have blocked UN Security Council resolutions.


And we will continue to seek to get a UN Security Council resolution


that will up the pressure on the regime and allow members of the


international community to take action. But it has to be legal. We


have a clear framework within which we operate, and we can only do


things when they are legal. Deborah, your opinion on Afghanistan? Per


calling it pointless is difficult, because you don't know what the


alternative future would be. have made a difference. We would


all like to believe that when we walked away, we would leave a good


government that can take the country forward. Whether or not


that is true, I hope we will have made enough of a difference to have


given Afghanistan a better future. No doubt Mr Hammond will come back


in two years' time. I thought I might get an invitation before then.


You will. Do we know when in 2014 it will be? December 31st, 2014. We


will be out of operations by then. But the pattern of draw down


between now and then will depend on events on the ground and what our


allies are doing. Now, MPs will be debating social


care in the Commons later today. Like many political footballs, it


is a problem that keeps being kicked into long grass, but with


people living longer, there is increasing pressure to find a


solution. Adam is in the central lobby of Parliament. Yes, this


debate which is happening in a couple of hours' time will be


happening in the time reserved for backbenchers to bring up topics of


concern to them. We are joined by the Conservative MP Sarah Newton,


organised it, and Andy Burnham, the Shadow Health secretary. Sarah,


what are you trying to achieve? all understand that the current


system through which we provide care for people with disabilities


or chronic illnesses or the frail and elderly is not fit for purpose.


There are real issues about how it is funded. I am delighted that the


opposition have joined the government in all-party talks to


find a solution. Today is about the backbenchers on all parts of the


House showing the front benches how important their negotiations are


and how much support there is in the country and Parliament to find


a solution. It seems that this debate is always about really big


issues for the next 30 years. Can anything be done right now? Plenty.


The Government set up a commission which came up with a series of


recommendations, some of which do not cost any money. There is


sorting out the system of deciding who gets what care and how it is


paid for. Those things could be implemented without any real cost.


There are changes to the way we do some of the meanest of the means


testing around residential care and who pays for it. Then there are


other more difficult discussions about the other recommendations to


do with the shared way between the state and individual as to who pays


for care. Those are difficult and will need proper discussions.


I know you are in the middle of these cross-party talks. But some


of those things that Sarah mentions, will they be fixed in this process?


Let's hope so. Sarah puts it very well. People in the country are


looking to politicians to show some leadership here and work across


party boundaries. I pay tribute to Sarah and my colleague who are


bringing this debate, and it is a nudge to the Government to say, get


on with it. This is too important to people who are suffering great


unfairness. People are losing their homes. The quality of care is not


good enough in many cases. We need a lasting solution to give the


quality and dignity and peace of mind in old age that our pensioners


deserve. Everyone agrees that we have left this a bit late. Why has


the mettle not been grasped Until now? I did try to grasp it in their


last Parliament. Then the electoral cycle came up against me. There are


always those risks. But in some ways, that process has helped


underline the urgency. It led this Government to set up the Dilnot


Commission, who deserve great credit, because they brought


forward some proposals we can work with. Let's work forward and see if


we can get this introduced. Dilnot would only be a first step. We


should not kid ourselves that it would take away all the


unfairnesses, but it is an important first step. You led a


rally of NHS workers last night fighting against the changes to the


health service. Isn't it too late, as it will be law in a couple of


weeks? Time is running out for the NHS, sadly. But it is not too late.


We will fight to the end. But government and Parliament are not


listening, sadly. There are debates in the House of Lords today, and it


does not look like anything will change. Thousands of people signed


a petition, and the government has denied a debate. Labour has


announced that we will hold an opposition debate next Tuesday and


there will be a final chance to ditch this dangerous Bill and


protect our NHS. I will join that debate so that we can stop the


shocking scaremongering. Doctors, nurses and people in the health


service in Cornwall are getting on with making the most of these


excellent reforms, which will improve patient care. I think


doctors and nurses have different views, actually. Now we have an


interesting piece about German business. Back to you, Andrew.


How does he know what is coming up? Oh, he works for it. You are a cult


of lot, so you already know the German word "mittelstand", which is


what the Germans call the thousands of middle-sized companies which


form the backbone of their booming economy. Adam is a busy chap. He


has been to the city of Dortmund and reported on the lessons we can


learn. I have been learning the language


of the "mittelstand" - literally, the middle class, the mid-sized


German firms which earned a fifth of the country's revenue and


employer 5th of the workforce. There is a word for engineering has


and another word for exports. That is what Limo are about. They do


complicated things with lasers. They are typical of "mittelstand"


firms. They concentrate on niche engineering products and sell a lot


abroad. We need to have in-depth knowledge of two things - what the


customers do with our products, and specialised technologies to make


our products. It is important that we have specialties which cannot be


copied easily. That helps with competition from, say, China.


Europe or the States. There is another word for corporate culture.


That is important here, where they make part of the arch for at


Wembley Stadium. Like many others in the "mittelstand", this firm his


family owned. Derek is the third generation of the family in charge,


and in a few years, his son will take over. Here, not too big and


not too small is just right. family is speaking with one voice.


We do not have too many shareholders. So quick decisions


help us to make the right steps to the market. I am more than 30 years


in the company. I know all the employees in the company by name.


We would like to continue staying at around 100 employees so that I


am able to keep the situation. recent recruit from the UK is


already noticing some differences. My first impression is that they


invest for the long game. It really matters what kind of tooling they


have. They like the best kit. And they invest money into all that


that goes around it as well. Another word translates into


support for business. Out there, there is a lot of support for the


"mittelstand". Universities are keen to help, and there is an


apprentice system churning out well qualified employees and a business


bank funded by the state. It is important that the bank's support


them. But they only support them when the products coming out are


really good for the markets. They will approve it before they give


the money. But then they will give support for the next 10 or 15 years.


The reason this matters is that the CBI reckon if we could translate


this back in Britain, then how are -- they could add an extra 50


billion to the economy by 2020. Tasty.


The Bank of England has told us that interest rates are staying at


0.5%. No surprise there. But no quantitative easing either. It is


sticking out �575 billion for the I'm joined by John Cridland and


Elizabeth Truss, who has been following the German model. That we


can to you, Elizabeth. There has been endless reports on this kind


of company in Germany. Germany still had a lost decade. I would


suggest the real thing that changed was the labour reforms which began


under Gerhard Schroder, and have continued under the current


coalition. You're absolutely right. That is true. If you look at 2000,


Germany was performing badly in terms of skills, they the market


flexibility. In 2005 they had 16% youth unemployment whereas now it


is down to 8%. Be introduced more flexibility into their jobs market,


they made small companies exempt from employment regulation, unfair


dismissal regulation, created new jobs which allowed people to go


into work at much lower rates of tax, and those jobs were taken by


young people and much older people. A have to welcome our viewers from


Scotland, they have been watching First Minister's questions in the


Scottish parliament. We welcome you now. We are discussing the German


strength of middle-sized companies, not the giant All the small ones,


but the medium sized ones, mittelstand is the pronunciation.


Sorry to interrupt you. I just like to keep the Scots informed.


Absolutely. They also improved their education system. In 2000


they were 12 places behind the UK in maths. They are 12 places ahead


of us. We are in 20th position. We have had a lost decade, rather than


Germany. They doubled the length of the school day. They insisted


people so deep key academic subjects into a 16. -- studied.


Regardless of whether you are following a vocational course or


academic course they up at the level of teaching, qualifications


people studied. And reformed welfare. Some of the things we are


doing as a government they started doing in 2002. They created all


these new flexible jobs which meant it was easier for employers to take


people on and much easier for small firms to get going in the jobs


market. Would you make of that? Are there lessons to be learnt? Yes,


there are. Let's make this our decade. In the last decade Germany


dominated world exports by selling their phenomenal capital goods. The


next decade could be ours if Our companies get out into those


emerging middle-class markets, Asia, Latin America, and even now in


Africa, with our consumer goods and product. When I went through


Shanghai airport recently Jaguar Land Rover, Burberry fashion,


dozens of new holiday in Poole being set up. There are great


strengths Britain can have. Consumer goods are the preserve of


big companies. These German companies Adam was talking about


one of providing consumer goods, they are doing business to business.


That is not our strength. There are companies like that, a firm in my


constituency which produces airport security devices. They created this


new product they are exporting to China. It is about the level of


support we give those companies out in the field. Under the previous


government the number of embassies was reduced. William Hague is


saying let's get more stuff out in embassies, promote our trade.


hear it from a business woman. I guess the point I am trying to make


his widowed have, you can always find one, we don't have the


critical mass of these. It is interesting they even talk about


this. We bundle everything together in small list and medium-sized


enterprises. They are two very different things. Start-up


businesses are the next middle sized enterprises and we need to do


with them separately. The middle size are going to be able to take


advantage of the foreign markets, grown-up businesses, they can go


for it. I would go back to the unwinding of the Employment market.


It is very important. When you do that, we listen to the BT there,


talked about being flexible, quick decision-making, when you get rid


of these bindings, then you really create. Your government is unable


to do that as long as Vince Cable is business secretary. We have


heard some positive signs from the Chancellor about small businesses


and whether or not they will be exempted. Vince Cable knees look at


the evidence. -- needs to look at the evidence. I agree with Deborah,


let's be clear he we need to grow, most government policy across both


parties until recently has focused on the small enterprises. Don't


stop helping small but also help the medium-sized enterprises. We


need to focus on businesses up to 100 employees. You have even got


that to regulation for business. also need to look at young people


and how we will get young people work experience into employment.


Interesting, because they created particular contract for low earners


which made it easier for companies to take them on because I think we


do need to look at particular companies, we need to look at how


we get all companies. Remember Nationwide on BBC One, it was


regional, in the early 70s the BBC did several items, exactly like


that one, on these mittelstand companies, that was 40 years ago.


We have not got this right. Let's face the future. We have got a


great model that is broken because it was based on public spending and


consumer debt growth. Final. From you, Deborah. I want to go back to


education. -- Final's and from you. Doubling the scholar of doesn't do


it. we need relevant education. I see far too many people coming out


of the end of school, even going through apprenticeships, which are


not matched to jobs. Could they just Maghreb point out it was the


Royal Commission of 1868 that reported the British needed to


learn more about German technical education -- could I did point out.


Our producers phoned the credit rating agencies every day asking


them to come on the show, and we have tried to bribe them, but for


some reason the strange mysterious financial times, they all say no.


They did agree to appear at the Treasury Select Committee yesterday.


He has a flavour of what happened. Have you apologised to the millions


of people who lost out as a consequence? We clearly indicated


we are not satisfied with the performance of our ratings. He is


that an apology or not? It is exactly what I have indicated.


should take that as no. What I can say to you very clearly is at


Standard and Poor's there was a high level of individual ownership


and responsibility for the roles people carry out in the jobs and


very strong collective corporate responsibility about what we do.


How many people have been fired as a result of this? Because they were


incompetent? Her that is not what I said. There is a personal sense of


responsibility. We rate according to our criteria, beginning, middle,


and end and that is the way we go about the signing ratings. Ratings


are not aside by individuals, by committees. Of the ratings


investment grade into dozens of six, what percentage of those in the


structured finance instrument market did you have to downgrade? -


- in 2006. I did have their specific data. -- I do not have


that specific data. What percentage in the US market? 80%, 90%? I do


not know. Any clue at all? I do not have these numbers to hand. We can


very happily provide them. I don't think they like them, did


you get that impression? I'm joined by Michael Fallon he sits on the


Treasury Select Committee, and the former chairman of that committee,


John McFall who used to be on his programme every the day, then he


went to the House of Lords. Did he seek they have let you out. It has


been open season on the credit agencies ever since they gave all


these AAA ratings, still open season from the Treasury Select


Committee, so why do we take them so seriously? It was a pretty poor


performance yesterday, certainly not AAA. They didn't even apologise.


The answer to that question was around 80% or 90% had to be


downgraded, they had got it wrong. They were a big part of the problem


and we need to understand why things went wrong. They got paid a


ton of money for giving these great. They were paid a ton of money by


the people issuing the bonds. In the olden days they used to be paid


by investors, so questions about how they are paid, the transparency


of how they work, and competition. As you saw from the clip, there are


only three big agencies for the whole world, that isn't a very


competitive structure. Betty's Standard and Poor's, Fitch and


Moody's. -- that is. We seem to be terrified of a downgrade. Mr


Sarkozy in France came a cropper because he made such a big deal of


the AAA rating for France. Mr Osborne dined out on hour rating.


There was a big mistake. If you look at what Michael said there


isn't a market, There are three rating agencies, but there are


Moody's and Standard and Poor's, you need HMS Victory to ratings for


an endorsement so there isn't a monopoly -- two. To have an opera


for off at -- why not have a not put for-profit entity? They can


increase their business by giving good ratings for companies. Lehman


Brothers, it had an A rating for a month. Northern Rock, all of them


them trouble a ratings, why was that the case? -- all of them up


gave AAA ratings. In the end it was Arthur Andersen


came a real cropper over this. suddenly turned round and said


people shouldn't rely on them. We should take them so seriously.


Isn't the problem some pension funds and others -- other big


investors are legally or by the row and articles of association are


mandated to buy only things that are AAA rated? I was at a breakfast


in Parliament and the FSA chief executive made the point we are


hard-wired into the market so any decision by rating agencies has an


effect on the flow of credit. That is nonsense. If I had to give


advice from my lowly position to George Osborne and others, it was


safe to get a rating agencies, get on to the European securities


market authority responsible for them rather than the FSA, and


ensure we have a market and they do not interfere in sovereign debt and


other debt and upset the whole applecart. Are you AAA rated?


think you have to said the most sensible thing. To be perfectly


honest they make you very lazy. You think OK, AAA rating, and no longer


have to bother because you have done the work. I know in my


business if I am going to do business with somebody I need to


note, I did need to rely on somebody else to tell me it is OK,


they will pay. I need to understand and I think they're very dangerous


and badly applied. That is enough beating up of the


pork rating agencies. Don't go away. I would go to say happy birthday


interest rates, a rate of 0.5% is three years old today. The Bank of


England kept them on hold at that level for the 36 months -- 36


Explain to our viewers, who will be puzzled - why our mortgage rates


now rising when the administered base rate is still at only 0.5%?


Basically, the Bank of England only directly controls the base rate.


But nobody really lends and borrows at that rate. Mortgages are


depended -- determined by longer term interest rates, which are


determined by more powerful economic forces. These two have now


diverged. There are two banks -- weighs a bank can raise the money


to lend someone cashed a buy a house. The first is by borrowing


from other banks, and the cost of that has gone up partly because of


the Eurozone crisis, and secondly, by getting more in deposits. But


there are not enough deposits because there has not been enough


saving in the UK. And the banks are now starting to compete with each


other to offer higher interest rates on ISAs and those sorts of


devices. But is now fuelling into the price at which they are now


lending that sort of money. So you are now starting to see the


mortgage time bomb go off. But is to say that these years of very low


mortgages are starting to come to an end, because the cost of


borrowing on the long-term markets is going up. There is nothing the


Bank of England can do about it. A lot of the rules and regulations


that the FSA has put through are contributing to that, because by


making the banking system safer and by getting back to hold more


capital against their loans in case something goes wrong, that is


pushing up the price of money for people who want to get a mortgage.


So we are seeing the start of a big process of re-and normalisation of


interest rates, something people have been too complacent about,


because they have got used to these cheap mortgages and have forgotten


the 5% to 8% mortgages which used to be the norm. Done that for, the


0.5 base rate is irrelevant to our base rate. Banks have to borrow


long-term to finance long-term loans like mortgages. Alistair


Heath says long-term finance is rising, therefore mortgage rates


will have to rise? The air is a defect in the market. There is no


such thing as free banking. The introduction of quantitative easing,


if I was on the Select Committee, I would be looking at that. Nobody


can tell me exactly where it goes, who gains out of it. There are big


issues about a distorted market. That is leading to this, where the


average interest rate is now on a credit card, about 17%, and on a


savings rate, 0.2%. I was at a dinner the other night at which a


chief executive of Lloyds gave a great Riz -- presentation on


corporate responsibility. But he did not mention the problems with


mortgage rates. Let's say for the sake of this discussion that we


accept the analysis that mortgage rates are being driven by long-term


interest rates, which no government can control. The market's control


that. But why are banks charging me around 18% if I don't pay off all


of the credit card, and why are they are charging me almost 18% on


my overdraft? That seems like a rip-off. They have to borrow the


money. Not at 18%. It is not quite as Alistair Heath said. The bank


has been able to keep fixed rates down, because we have fiscal


credibility in this country. Now the variable rate is changing as


people are coming off their fixes and finding the variable rate


shooting up. There are long-term answers to bat, which is to have


more competition in banking, which is what we are doing. Northern Rock


are under the Virgin umbrella. Because of the way we are reforming


regulation, we should have more regulation within backs. That does


not explain the gap. The lending on mortgages is at around 4%. So they


have to be borrowing at under three, but they are charging the 18% on an


overdraft. But banks earn money through lending at an interest rate


and making charges. That is usury. But banks are not directly charging


you, because they have to buy a new computer. All of their running


costs are then wrapped up in bank charges and interest rates. People


forget that banks are a business. But I see more and more charges.


�20 here, �25 there. But they are losing money. When did you last


change your bank? That is the answer, to switch your account.


the manager of Drummond's is watching now, you are in trouble. I


have to go back to Alistair Heath. The implication you were giving is


that this rise in mortgage rates is just the beginning. Are you telling


us to prepare for higher mortgages in the months and years to come?


Absolutely. That is definitely what is going to happen. I have no idea


exactly when, because you cannot forecast these things. But over the


next few years, mortgages are going to go up. People living in this


bubble who think that mortgages will remain permanently cheap -


they are not. The change has only just started. The consequences will


be much more severe over the next few years. We have run out of time.


You will have to come back more often and see us. I have been told


you are ten times more likely to get divorced than change your bank


account. I have never been divorced, and I think I might be able to


change my bank account. I will play Michael Fallon if I do. No a,


believe it or not, MPs are subject to some rules in Parliament.


No rowdy behaviour in the chamber. You are not allowed to call a


fellow MP a liar. The list goes on, as Quentin Letts explains in the


latest of our series on the A to Z of Parliament.


O is for Order, which is kept in the House of Commons at least some


of the time by the Speaker, John Bercow. Order, order! The speaker


is the man elected by other MPs to chair the meetings in I elected


chamber. But he himself does not make up the rules. They are


contained in an important book called Erskine May. To find out


more, I have come to the parliamentary archives room.


Erskine May's treatise on the law, privileges, proceedings and usage


of Parliament, 23rd edition. That is the latest one. But the first


edition goes back to 1844. As you can see, it is occasionally updated.


Why is it called Erskine May? Well, Sir Thomas Erskine May was a young


man who came to work in the House of Commons as an assistant


librarian in 1831. He worked here for 55 years. During that time, he


realised that politicians need rules, otherwise they will


misbehave. Here is a photograph of the man towards the end of his


career. By the end of his career, he was sufficiently prominent to be


on intimate terms with the Prime Minister, receiving frequent


letters from Gladstone. Here it is. 1882, "My Dear Sir T May". There


are numerous letters like this. Name was important, and he remains


important. Although this volume looks a bit dry and dusty in this


learned environment, it is the coathanger around which all


parliamentary discourse rests. Without rules of engagement, you


will not be able to extract information from a government. Look


what happens in some of the countries where they do not have


Erskine May - anarchy breaks out. You would not be able to get away


with that in the House of Commons, mainly because of Erskine May. The


rules are very strict on what you can call people in the House of


Commons. Blackguard, criminal, dog - not allowed. Impertinent puppy,


pecksniffian cant - all of these are listed as forbidden expressions.


The next edition of this rule book will lay down the law on the use by


MPs in the Chamber of mobile phones. I wonder what Sir Thomas Erskine


May would have made of that? Mind you, when you look at that


photograph, he looks as though he may be on a mobile himself.


We are joined now by Tony Wright, who used to be an MP and has


written a book about renewing the professionalism of politics and


politicians. He is another old friend of the programme. Parliament


took a battering over MPs' expenses. I guess it is fair to say it will


take a while to recover from that? But I think it is starting to.


Parliament is in better shape now than when I left. We have some good


new people. The intake of 2010 was impressive. And I think they are


committed to making Parliament matter more. The reforms we put in


are beginning to pay off. You can see the Commons exerting itself in


ways it has not before, whether it is the Tory MP rebellion over


Europe, over 80 of them, or Labour putting a motion down on the bonus


for the chief executive of RBS, which became a game changer.


Parliament is becoming more interesting. There are far more


layers of opinion. People have greater confidence to take


seriously the business of holding governments to account, even on


their own side. When I came in, at the high point of Blairism, I was a


great Blairite, but we really did believe in controlling the place.


That made it very difficult. It is different now. Is that because


coalition government has given Parliament a new lease of life?


complicates things in all kinds of ways, and complications give you


opportunities. We have a select committee system now which is now


elected. Created by the man who died this week. Indeed, he was the


progenitor of the original Senate committee in 1979. And we reformed


them again to make them elected. So the people who run these committees


now have far more clout. Isn't one of the problems politics faces,


particularly the House of Commons, that more and more politics is


being dominated by a new generation of people who have only known


politics? That is a worry. If there is one worry I have, well, there


are lots of them, but one is the idea that there could be a


political class developing of people who have only ever done


politics. Straight out of university. That would be a big


change in our political life. We have to be inventive in thinking of


ways to bring different people in at different points in their life.


Or we will use -- we will lose the variety. It will shrivel. You have


to bring knowledge and feeling and experience. If you deprive the


Commons of feeling and experience, you really diminish it. It becomes


more like a technocrat in venture. Ever thought of getting into


politics yourself? I am told I would be no good at it! You might


stir it up. I am not sure how long I would last. I am fascinated by it,


but there is still this stigma that says, would I really want to get


involved in that? We need to get on. There is just time before we go to


find out the answer to our quiz. The question was, which city has


the most billionaire's? It was New York, Moscow, London or bat.


would say Moscow. That is the correct answer. Yes! I said New


York, but that was wrong. I agree with Deborah. Tony Wright, good to


see you. Deborah, thanks for being our guest. Thank you to all our


guests. I am back tonight UMPIRE:, with Michael Portillo, Diane Abbott,


Peter Stringfellow, David Frost and more from Quentin Letts.


Download Subtitles