08/03/2012 Daily Politics

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.