14/05/2012 Daily Politics

Afternoon all. When the Government calls on us all to work harder, let

me be the first to respond, as Eric Pickles told me yesterday on the

Sunday politics, "You've got to work harder." Here I am working an

extra Monday shift, for love, for nothing, except for the dili

politics for the love of it N Greece they are working overtime

trying to get together a coalition Government. Here at home, public

sector workers are on the war path, nurses, doctors, the police, all

rejecting calls to tighten their belts. Speaking of war paths the

Ministry of Defence is gearing up to say it has found a way of

disappearing a giant black hole in its long-term procurement budget.

Will it be fit for purpose? It is Alastair Campbell's turn in front

of Lord Leveson this afternoon. Perhaps we will find out how Tony

Blair signs off his texts. Stay tuned for the big news. Well, that

in the next half an hour of solo public service broadcasting. If you

have any thoughts or comments on anything, then you can keep them to

yourself... No, sorry you can Tweet using the hashtag tag. Now with us

for the ride is Michael Howard. Welcome. Thank you.

But first, my own self-less contribution of getting rid of the

deficit. When I read William Hague's suggestions that business

leaders stop complaining and work a wee bit harder then I took it to

hard. Eric Pickles took it to heart, by telling me the same thing to my

face yesterday. I think we should all work harder. I should work

harder. You should work harder. don't have an extra hour in the day.

You are doing Sundays. So you are doing your bit. What evidence do

you have that these people are not working very hard? I think the

point that William is making and it is a very reasonable one and it

comes back to the earlier point is, Government cannot create Government.

It can create the conditions, but we'll only be able to do this if we

all work harder. Well, what can I do? Roll up my sleeves for some

extra hard work. Let's talk about this with Michael Howard. Just how

does this work - politicians, Cabinet ministers lecturing us to

work harder? You've had a great compliment from Eric Pickles who

said you are doing your bit. So you can bask in that reflected glory.

And the - it is a point of Government line - it's not the best

to come up with. It would be very odd if somebody said we don't need

to work as hard as we are working, we should not work harder. People

are working harder. We work longer hours than our European neighbours.

People are working hard from chief executives of big companies to

nurses on the ward. Ifing harder is the answer we'd -- if working

harder is the answer we'd have a boom economy. I travel abroad a

fair bit and it is very frustrating when you go to companies in

different parts of the world and you - countries in different parts

of the world, and you find German companies there exporting. Italian

companies there exporting. And you very often don't find as many

British companies there exporting as you would like. I think there is

something in our business culture - of course there are many, many

great exceptions to this observation - but there is

something in our business culture which has made many of our

businesses less adventurous and perhaps less ambitious in terms of

getting into these export markets and we have to export more. That is

one of the ways in which we'll come out of the economic mess we're

still in. But in terms of per capita, we export more per capita

than any other country in the world. We have to do more. We have to do

better That cannot be working harder... Does it go down well at a

time when it is tough for people, when people's living standards are

being squeezed for longer than any time since the 1920s, for a Cabinet

of millionaires, and inherited wealth to tell us to work harder?

Look, if you have a Trade Minister, Lord Green, who is working hard,

going all over the world, you have others encouraging British business

to get out there and really pitch for the orders that they can win

and create jobs and create wealth in this country, it is perfectly

reasonable to say there is more that can be done and you travel

abroad. You know this is true. There is more that British business

can do to win the orders that are out there, waiting to be won.

is all - this all resonates with what used to happen in Harold

Wilson's day in the 60s, "I'm backing Britain." Nothing wrong in

backing Britain. There is if it doesn't mean anything. It is up to

the Government to create the conditions in which business can

prosper and if you... You say you meet all these businessmen, when

you go abroad, they will tell you that they don't think the

Government's economic policy gives them a chance to prosper. They

don't say that. If we didn't have the determined attempt to bring

down Britain's borrowing then they certainly would not have a chance

to prosper. That is absolutely essential. That is an essential

precondition. As Eric Pickles said, the Government can create

conditions in which wealth can be created, but Government cannot do

it on its own. I put it to you that the real issue is not people

working harder - unless it could be for people who work more

effectively. The real issue facing business and chief executives is

not how hard they work. The fact is they are sitting on a cash pile of

�750 billion and they are not investing it in Britain and the

only reason they cannot be is because they don't think the

Government has created the conditions for business to invest.

Look, you know perfectly... That is true. Not entirely. Of course it is

true they are sitting on a great cash pile, but the reason why...

Why are they not investing in it? Because we live in extremely

uncertain times. I wish we didn't. We live in uncertain times. We will

probably talk about Greece and the euro in a moment or two. We are

indeed. I would love British business to be investing that money.

I don't think you can blame the fact they are not doing so on the

Government. An interesting topic. It's been a slippery market on the

European Stock Markets yet again. With Greece in per pettual

political crisis, questions being asked about the future of the

eurozone, is that any surprise? 125 to the pound, which I guess will

make Europe cheaper this year and does not help our exports T chor us

of disapprove -- the chorus of disapproving voices are in Greece

and Germany. Mrs Merkel lost the biggest state in Germany in local

elections yesterday. There are a few unhappy workers here too.

For austerity, that has been the economic model of choice here and

in Europe and in the last few years across the continent. Political

opposition show nos sign of retreating. Here doctors will start

to vote on whether to take their first industrial action since the

1970s, in a bitter dispute with the Government's controversial

pensionry forms. The Royal College of Nursing is claiming overworked

staff and job cuts have left the NHS facing a desperate situation.

It says that 61,000 posts are at risk across the health service. A

figure which the Government disputes. On Thursday more than

30,000 off-duty police officers, they marched through central London

to protest at cuts in the police service. Europe are chucking out

governors in Greece. Coalition talks appear to be close to

collapse, largely due to disagreements over the austerity

programme forced on them by Europe. Tomorrow the new French President,

Francois Hollande, who came to power on anti-austerity pledge,

well he will meet for the first time the German Chancellor, Mrs

Merkel, to argue for a different approach. Even Mrs Merkel has felt

the displeasure of her people. Her Christian Democrat party suffered a

regional defeat. The result many are interpreting as

a verdict on the austerity programme.

So, pretty grim times all around on this side of the channel and

elsewhere. He joins us now, he is one of Labour's Treasury team.

Welcome to the programme. Let me come to you first - it is a fiscal

nimbyism you see. People accept there'll have to be cuts, to get

the deficit down, to get the debt down, but not in our back yard!

is understandable and not a very surprising reaction. It is easy to

forget the basic economics here. If you have been borrowing too much

and you need to carry on borrowing, the rate of interest you will pay

depends on how credit-worthy you are. If you are seen to be making

determined attempts to bring down your borrowing, you pay lower

interest rates. That is one of the best ways you can encourage your

economy to grow. If you start to borrow even more, the rate of

interest you pay will go up and that would be one of the greatest

imped meants to economic growth. This is not rocket science but it

is something it is easy for people to forget. What do you say to that?

I think you have to have a balanced approach T difficulty is that the

Government don't show much sign of accepting that. Yes, we have to

take action... Ultimately? Ully matly we do. In order -- ultimately

we do. To deal with the high borrowing levels. There are 150

million more than the Chancellor was predicting - you have to get

growth into the economy. The Government seem to be saying it is

just about austerity, it is just about the expenditure side, nothing

about getting the economy moving, generating income, revenue to get

back into the balance. That is all we have been saying for 18 months

now at least. Alistair Darling had it in his plan. Of course there are

tough decisions on expenditure, but we need to get the economy moving.

That is where the Government is failing. You have done nothing to

make people understand that there will have to be cuts. You attacked

the Government for cuts, but you accept there are cuts yourself, but

you never emphasis that. We always said we need a balanced approach.

Yes, we are criticising the Government, as the phrase goes for

going too far and too fast. The key thing here is we have said, yes,

there are certain circumstances where reductions in expenditure are

necessary. I give you the example of policing for example. Instead of

the �20 billion reductions, we... That is the one example you always

bring out. There are other examples elsewhere. Do you think the cuts

have caused -- if you think the cuts are the reasons why the

economy is not growing, how much has been cut since the coalition

came to power? Of course they had their so-called Emergency Budget so

called after the general election. There was a significant amount

taken out of capital eke pen diure. Overall? We have not begun --

expenditure. Overall? We have not begun... In the first two years,

that feast is finished. How much have the coalition cut? I think

they are certainly trying to reduce that sense that the Government are

going to be active in economic policy. How much has been cut from

public spending? Taking the last Year of the Labour Government and

the financial year just finished, which means two full years? I don't

have the figures with me. They are �8 billion. Public spending last

year was �8 billion lower than the last year of Labour and the public

spending had just gone up by �36 million. What I am trying to get to

you is why would an �8 billion cut throw us into recession? There is a

confidence issue and a demand issue here. If you think we've had the

sense of confidence for consumers, the demand in the economy, it's

just not been there. We've had choices taken by the Government

that have removed confidence. If Government isn't there to play a

counter sickicallyal role. If consumers do not spend, if there is

no stimulus then we will go back into recession. We are in recession.

This is a serious situation. We are not generating the revenues to get

ourselves out of the hole. Let me come to Michael Howard N the first

Budget, 2010, the OBR, endorsed by the Government, made predictions

for growth this by now, by now, by the summer of 201, the economy

would have grown by 4.3 -- 2012, the economy would have grown by

4.3%. How much has it grown by? hasn't. It has grown by 0.4% in

these two years, which is one-tenth of what the Government said it

would grow by. When I interviewed Eric Pickles yesterday and other

Government ministers, they seem bereft of any ideas to get growth

going. First of all, you have got to go behind the label of growth.

You have got to examine what people mean. What Chris Leslie means is

borrowing more and spending more. There are things you could do to

encourage growth which don't involve extra spending and

borrowing. You would do things to free up the labour market. The

Government is taking some measures in the de-regulation Bill, which

When the leader of the Opposition went to Barnsley the other day, he

said he wanted to make it more difficult for employers to dismiss

people, more difficult. Sorry Michael... He's going completely

the other way. Is the ideology of the Government that making it

easier to fire people is the best way to get out of the recession?

You've asked me a question and I'll answer it. Everybody who has looked

at these things all over the world knows, if it's ease tkwror fire

people, it's easier to hire people. And more people are hired.

should be making it ease tkwror hire them. So we need, for

example... ALL TALK AT ONCE Can I move onto Greece. We all know

that if the eurozone goes south, that whatever our economic policy

here, it's bad news for Britain. Does the Labour Party have a

position on Greece's future in the eurozone? Is it your view that

Greece should continue with the austerity pact and stay in the

eurozone or actually, that's just going to be so painful it should

get out? There is an anxiety that the obsession with austerity will

be very short lived and might be self-defeating not just in terms of

the growth agenda across Europe, but possibly provoking a reaction

from Greece... There is a reaction already. We know the situation...

Let me explain. It's not necessary for Labour to have a policy. I'm

just asking whether you have. my point of view I think it would

be disastrous to see the eurozone breaking up. It would be very bad

to see... You're opposed to the anti-austerity party's in Greece?

think the key thing, without getting embroiled in the

maccinations of Greek politics, the key thing is there has to be more

effect made to find a longer term solution. Trying to extricate

Greece from the euro would then put the spotlight on what's happening

in Spain, in Italy and elsewhere, Ireland, Portugal, you name it.

Once one country leaves and there's a sense of that exit door there,

it's the fear of contagion. That's not what the Germans are saying and

they're the ones picking up the bills. Speaking personally, should

Greece still make a go of this austerity deal or should it pack it

in and leave the euro? Greece is going to have to face a long time

of austerity whatever it does. There are no easy choices facing

Greece. There would be a great deal of disruption if it left the euro.

And it wouldn't be, that wouldn't make it possible to avoid austerity.

I think they face a very unenviable choices, but there are wider

questions of the future of the euro more generally. JP Morgan, I want

to finish on that, you've seen the 2 billion loss again. What is the

difference between an investment bank and a casino? I think that,

hopefully, we're getting to a position where investment banks are

going to be ring-fence add way from the retail part of the economy, the

thing that cash machines and all the rest of it. We've had the

investment banking and retail banking world so linked that we

need to pull it... That's not the right answer. Shall I give you the

right answer? One is a well managed and has effective risk controls.

The other is an investment bank. ( Boom-boom.

Right. Who's the author of that wonderful definition? I think we

got it on Twitter. We're not very original here! All right. Are we

saying goodbye to Chris Leslie now? It's been a pleasure. Thank you for

having me stphr. Parting is such sweet sorry.

Sometimes we're a party leader stands on an issue and where they

want him to stand is like instructions for line dancing, step

to the left, move to the right, just spin on the spot. Michael

Howard is nodding. He knows I speak the truth on this issue. Since the

Budget and bad local election results the call for David Cameron

has been resolutely to move right, right, right. But will he? Should

he? Gyles has been finding out. A PM doesn't just have to run a

country, but a party. If that's the Conservative Party, then it means

keeping a very broad range of views all happy under one banner. Never

is that job harder than when things aren't going your way in the

country and the people paying the political price are your foot

soldiers, who can go from Councillor to critic in the space

of a count. Since the Budget the Conservatives have gained a

reputation for incompetence. Many people who are not natural

Conservatives assume the Conservatives support the better

off, they're a bit heartless. But they think they're competent and

they get votes from people who say, I don't terribly like their outlook

on life, but they know how to run things. When they lose that bit of

their reputation, as they did for example in the 1990s, they're sunk.

So would a so-called right shift, a move to more stridently

Conservative views on tax, public spending and society give the core

and possibly voters a window of assurance about the future? For

some it's not even about the right, the problem is the middle. At the

top of the party there is almost an obsession with capturing the centre

ground. I think that drives us to take our eye off the ball

occasionally, off those big issues and we get detracted at looking at

issues, such as the redefinition of marriage, or Lord's reform or wind

turbines, which actually, don't make much stopbs people outside.

That's not their main concern in the street. They're not worried

about the red benches. They're more worried about the red lines on

their monthly statements. contribution is let's be positive,

let's say what can make Britain a better place. Let's not be

ideological. There are good ideas out there. They're sometimes called

right, sometimes left. Let's go for the common ground. That's where

more people are in support and recognise where the common ground

is now. It's not where some people say the centre ground is. Such

voices stress they're still supportive of the PM but keen to

give him options. The party doesn't need to lurch to the right.

Elections are fought on the centre ground. David Cameron is more

popular with the public than Conservative Party grandees and

colleagues should remember that. Divided parties lose. That's not in

the interest of our party. Personally I don't think it's in

the interest of our country. Anyone who thinks previous party leaders

haven't presided over their own tugs of war between the party's

wings are delewding themselves. The skill is to be either strong enough

to hold the line you want... lady's not for turning. Or allow

both sides a few victories to hold balance. Which path David Cameron

favours following may be determined less by convincing Conservative

argument, and more by the convines of what coalition will allow.

-- confines of what coalition will allow. What do you say to Tories

who want a more robust Toryism? What the Government has got to do,

what any Government should do, is per sue the policies which are

right for the country. That's got to determine what policies you put

into place. It's complicated by the fact we have a coalition Government.

I support this coalition. I'm in the a great fan of coalitions in

general. I'd much prefer there to be a single party Conservative

Government. We take that for granted, you'd want that. I would.

If we had a majority, but we didn't get a majority. So you have to have

compromises in coalition. You know the criticism of your colleagues,

you know this as well as I do, they know they're in coalition. They

know they can't get everything. They can't get everything for the

very good reason they didn't win the election. Exactly. But they

feel that the Lib Dems, who make up a sixth of Parliament, are getting

a lot more than they're getting, that Mr Cameron listens to the Lib

Dems a lot more than he does his own backbenchs. What do you say to

that? I'm not sure that's right. I'm right in saying that's the

feeling, correct? I think people take that view. I'm not sure it's

right. You put yourself in the shoes of the Prime Minister, he's

got to try and do what's right for the cub tri-- country. He know

what's he think sz right. He has to take into account the views of

coalition partners. On issues like Lord's reform or gay marriage, are

these things the coalition should pursue in the particular economic

climate we've been talking about? Well, I don't know to what extent

Lord's reform is going to be pushed through. It seems to be a bit of an

open question. You don't sound too keen on it. Well, all the parties

work committed to it in their manifestos last time. That's

perfectly true. We're going to have a bill. It's going to start in the

House of Commons. We'll have to see what happens to it. You don't sound

convinced. I agree with those who've said that people in the

street are worried about much other things at this particular time.

I'll take that was a yes. Gay marriage, is that a core

Conservative principle? No, it's not. But it's not in the Queen's

Speech. The Government is consulting about it. It's a

perfectly reasonable thing to consult about. A lot of people hold

up bar ris Johnson and say look, London is a Labour city, but he won

London with a strong populist Tory message. What do you say? I think

that, look, London was essentially ape contest between two person --

essentially a contest between two personalities. It was the nearest

thing we have in this country to a presidential election. You vote

individually. You vote directly for the individuals not indirectly as

we normally do. So personalities played a part in that election to a

greater extent than is usual in our politics. Boris won because he's

Boris. Are you content to put the current woes of the Conservative-

led coalition down to mid-term blues or are you not worried there

is something more fundamental afoot, that these are tough times, people

may be prepared to live with tough times if they see a light at the

end of the tunnel, but if the Government gets a reputation for

incompetence and being out of touch, that's worse than just mid-term

blues? Obviously, that's a danger. All governments go through rough

patches. That's why the term "mid- term blues" has become such an

accepted part of our political jargon. The big question is a lot

of governments come out of those rough patches and recover and go on

to win the next election. Not all governments do. I'm confident that

this is a rough patch, out of which this Government will come.

there was an interesting feature of the elections for Labour, which is

not to the Conservatives' advantage, which is once again Labour began to

establish itself in a party strong in every part of the country. They

held onto Glasgow. They did well in the west of Scotland. They took

back South Wales. They increased their position in the north of

England. They started winning seats again in the Midlands and the south.

Whereas increasingly your party looks like a regional party of

London and the south. No-one is going to pretepbld that the local

elections were a triumph for the Labour Party. I'm saying is that a

trend, does that make you pause to think, this could be more than mid-

term blues? Well, nobody knows. That's an honest answer! Nobody

knows. My take on it, I'm confident that the Government can recover.

Nobody knows for sure. The local elections were not a triumph. We

have to learn lessons from what's happened in the last few weeks. I

think the Government will ref cover, but we'll come back, no doubt in

two or three years' time and know the answer. In two or three years'

time when the coalition parties go their separate way to fight the

election as separate parties and we're agreed they'll do that,

correct? Yes. Should the Conservatives include in their

manifesto a rev dumb on Europe - in -- referendum on Europe -in or out?

You're asking me to write the manifesto two or three years out.

I'm asking what you think? depends entirely on the

circumstances at that time. It might be a sensible thing to do at

that time. It might be idiotic. it just a matter of principle?

at all. One thing I think is pretty clear, lots are going to happen to

the European Union between now and the next election. There are going

to be many developments. In the light of those developments we

should decide that question. 2015 we may not recognise it.

knows. Indeed. I don't know. Whoever thought a

poll significance would tell me that, honesty has broken out.

Police officers from every force in England and Wales are gathering for

their annual conference. Theresa May is due to address them on

Wednesday in what's likely to be a tense encounter. It follows the

march in London last week of 30,000 police officers, protesting at cuts

in the service. Police officers cannot strike. Such is the feeling

within the organisation that there are plans to ballot members on the

subject this Autumn. Paul McKeever is Chairman of the

Police Federation of England and Wales. He joins us from our

Southampton newsroom. Welcome. What kind of reception are you going to

give the Home Secretary this time? The Home Secretary hopefully is

somebody who will listen. You have a former Home Secretary there,

Michael Howard, somebody who we held in very high regard indeed. He

was very successful Home Secretary. He used to listen to us. He would

meet with us and listen. We hope the Home Secretary will do the same.

Michael Howard didn't have to preside over huge cuts. We even had

Labour in here earlier saying that even they would have to cut the

police. Not by as much, but they wo. I ask again, what kind of reception,

what mood are your members in in the way they're going to treat the

Home Secretary when she arrives? She is the Home Secretary and we

have to recognise her office. The questions will be asked of the Home

Secretary will be clear. Why have the coalition Government given

policing such a low priority? Why is it they've chosen to increase

some budgets like overseas development by 34%, which would be

a larger budget than policing? Why, when we're facing what is in effect

a four-year pay freeze and additional contributions to

pensions, like everybody else in the public sector, why are we

facing pay reviews taking more money out of our pockets? We're

trying to be fair about this. When the coalition came into office, we

listened to Sir Denis O'Connor who said we could cut by 12%, we

accepted that. To see 20% and more, it will be disastrous for policing.

Let me put that to the former Home Secretary and Conservative peer.

Why is a Conservative-led Government cutting the police

budget by 20% and increasing Thank you very much about the nice

things he seed about me. The Prime Minister has said and I agree with

him that we're not going to balance our budget on the world's poor.:

Will you on the back of the police instead. The Home Secretary had an

independent look at the terms and conditions of the police and that

has come forth with some recommendations and she's wanting

to put those recommendations into effect. I am sure she'll listen to

what the police have to say. The police have to recognise that we're

in very difficult times and we all have to accept.... Now the Police

Federation have said they think that things can not continue as

they are. It is not just the budget cuts you are against. You continue

like the reforms as well? Some of the reforms are leading to a

fundamental change in British policing T accountability we have

is being lost by the wholesale privatisation in some forces. We

are losing the resilience F you remember last year, during the

riots, we managed to get 16,000 officers out on the streets to

quell those riots. That is almost the number we're looking to lose

over the next few years. We accept there has to be a cut. Education

was set by a similar per cent. The public's safety is being put at

risk by some draconian changes. you accept that the police service

needs to get much more -- do you accept that the police service

needs to get much more efficient? We were the first to call for a

Royal Commission, to look fundamentally at policing to. Have

this piecemeal change which is going on, it will lead to a

different police service. We have questions about the report carried

out by Tom Windsor as well. There are some real doubts in our mind

that we'll be able to keep the public safe. You have a

disillusioned police service. Almost every officer off duty was

in London last week. 35,000 police officers trying to get across how

fundamental these changes are and that public safety is being put at

risk. You have a police service saying we understand there has to

be a cut. You have got the head of the Police Federation there telling

me he understands there are some restrictive practises they have to

get rid of. Despite that attitude, which is not exactly an attitude

akin to Arthur Scargill's miners many years ago. You have managed to

get 30,000 police on to the streets of London against a Conservative-

led Government. Something has gone wrong. I can understand that police

officers feel very strongly about these things, just like the others

that you mentioned at the beginning of this interview, doctors, nurses,

others feel strongly. We live in difficult times, I am afraid.

People who do feel strongly are nevertheless going to have to

accept that the world has changed and because the world has changed,

we've got to change the way we do things. There has to be a dialogue.

I am sure the Home Secretary will listen to what Paul and his

colleagues say. At the end of the day, we have to recognise that

really difficult measures have to be taken because of the

circumstances we're in. Very briefly. I have to say we cannot

understand why the Government has given policing such a last -- low

priority. The protection of citizens is at risk. Well, we're

going to have to let Michael Howard go. He worked hard. Eric Pickles

would be proud of him - your productivity has been huge. We saw

all revelations about the relationships between the press and

politicians since David Cameron came to power, including how he

signs off his text messages. Yes, we deal with the big issues of our

times. This afternoon we will see how it worked out when Tony Blair

was at Number Ten. Alastair Campbell will be in front

of the bench. You must have been aware when you were Tory leader of

this incredibly close, deep relationship between News

International, the Murdoch organisation, and the Government?

Who could be unaware of it. Certainly, I was, yes. Was there

nothing you could do? You needed the support of the Sun and other

papers. Sure. Was it impossible to break into? That's right. I failed.

Do you think that had an impact, on for example the 2005 election?

think you can exaggerate the extent... The Sun took a while to

make up its mind in 2005, didn't it? I had some hopes at some point.

I will tell you, here is a scope for this programme, Andrew.

Excellent! I asked Rupert Murdoch directly for his support at the

2005 election. He said, my heart is with you, but I am afraid my head

isn't. So he'd had enough of new Labour by

then, he kind of wanted to go with you, but he wanted, he thought

better stick with Labour. How interesting.

Well, we will see what Mr Campbell has to say this afternoon. In these

days t Prime Minister didn't do texting and there wasn't so many e-

mails around. I didn't know how to text in 205. I saw you doing it --

2005. I saw you doing it on the way in here today. How did you sign it

off? It was an e-mail. As usual it will be a busy time for us hard-

working and I say it again "hard- working" political journalists Mr

Pickles. Tomorrow will see Ed Miliband shuffle his Cabinet. Peter

Hain says he will stand down. Keep an eye out for whether Blairites

still have a job. On Thursday Francois Hollande is oh -- on

Tuesday Francois Hollande is sworn in as France's new President. He is

expected to hold emergency talks with Angela Merkel to discuss the

continuing crisis. On Wednesday the Treasury will await the employment

figures as well as the Bank of England's inflation report.

Then in the evening, the Conservative 1922 Committee, a sort

of trade union of Tory backbenchers, will vote for positions on the

executive. The Tory leadership will hope for some loyalists to try and

steady the ship. Let's get the views of two hard-working political

journalists. Very hard working - I am told Mr Pickles. Amber Elliott

from Total Politics magazine and the Guardian's Nick Watt.

First of all, are we going to get a Labour reshuffle? Yes, I think we

are. We know there is a vacancy. Peter Hain has said he wants to

resign as Shadow Welsh Secretary. There probably will be a reshuffle.

You will perhaps look at a reshuffle or the thinking about a

reshuffle after that speech tomorrow. The big question is; does

it go further than filling the slot vacated by Peter Hain? What the

Labour Party sources are saying is, look we had a big reshuffle last

year f you like the 2010 reshuffle, when they brought on really

talented people who were elected at the last election. Will they do

something like you just said there? Is Liam Burn going to be moved

aside? There's a battle going on. Blairiates today are saying we --

Blairites today are saying they support him. What do you think? An

extensive reshuffle or just fill the hole left behind by Peter Hain?

I think we'll see a mini-reshuffle. I think Ed Miliband is happy with

where his party is I think we might see Liam Burn lose one of his

positions. Perhaps we will see a reshuffle there. The other thing to

consider is David Miliband's role. There have been rumours and

whispers about where he might head. I am hearing he is not moving.

So we will not see perhaps him move up quite yet. And Nick, this new

mantra from the Government, we had it from Mr Hague yesterday in the

Sunday Telegraph, from Mr Pickles on the Sunday politics - that we

all node to work harder, particularly chief executives need

to work harder - as a spin line, how would you rate that out of ten?

Zero or one? Kit not apply to you, me and Amber because we could not

be working any harder. Think the Government needs to be careful. The

Conservative Party like to think of themselves as the friend of

business and they seem to have found themselves getting into a

spat with business leaders. It is interesting that Peter Mandelson

said one of the reasons high the Labour Party lost the last election

is because they didn't have any business leaders on their side. You

had the Queen speech last week, there appeared to be, as far as

businesses were concerned, not enough measures in there to promote

growth, so they are not happy. If the Tories were in power on their

own, you would probably see some serious supply side reforms coming

through. We talk about the report by the venture capitalist, talking

about it being easier to sack worker who are not working hard.

They are in coalition, so they are slightly ham strung. Cannot do all

they want to do, can the Conservatives. They need to think

carefully. A Government at war with business - not really the right

place to be. Particularly a Conservative-led Government. Amber,

these elections to this 192 committee it is really a - it is a

-- 1922 Committee, it is a test. What are they going to do? Are they

going to put a bunch of loyalists on to that executive? There is a

group among the David Cameron lot called the 301 Group. They tend to

be loyal. Perhaps they are ambitious about where they want to

go. They are standing for a lot of the executive positions. There is a

feeling perhaps it has something to do with David Cameron trying to put

his stamp on the backbenches. The other thing is there is an Old

Guard there at the moment. Perhaps we should not just see it as

Cameron's people trying to put their mark on this, but a younger

group of 2010 intake MPs coming up, saying we want a bigger role in our

backbenchers. I think you have worked hard enough. Take a quick

tea break and be back for another 18-hour shift. With us are Monday's

members, Laura Sandys, Jenny Willott and for Labour Kate Green.

Welcome to you all. Are you excited about the reshuffle? I don't think

it is the biggest story we are thinking about today. We have a

competent team across the Labour Party. Are you waiting by your

phone? I am not waiting by my phone. Who ever it is... I am very happy

with the job I am doing. Who ever is doing whatever job we are a

strong team and we are sharing ideas together. That is

controversial for a member to say. Just ask you to be independent for

a few seconds - would you like, in your own view, to see a

minireshuffle or an extensive reshuffle? I -- mini-reshuffle or

an extensive reshuffle? I don't think there is any need for an

extensive reshuffle. We are getting our message across to more and more

of the voters. I don't see the need for a major reshuffle. Would you

like to see David Miliband? I think he has tremendous strengths. Would

you like to see him brought back in? I am happy to see him in.

are happy in or out? I think David has his own views. Is there

anything about David you would not be happy about? He must have the

opportunity... You will not express a view. He will be a huge asset to

the team, but it is up to David to say what he wants to. Even I know

that bit. I was interested in your opinion. That is what we do on

shows like this. Tell me about this working harder nonsense? What it is,

it's about as a country we need to regain some of our ambition. I

didn't see the exact quote directed at business. No William Hague

talked about justice King, the person who runs Sainsbury's. He

picked out the head of the British Chambers of Commerce and said, they

should work harder. Why are you picking a fight with people who

already work hard? Having run two businesses myself I know how hard

business people work. What is important is that we get that

sepbts of ambition internationally. I think -- sense of ambition

internationally. There is a lot Government can do when it comes to

exports. That is an area we have not, as a country, over the past 15

years we have left it. coalition Government didn't say

Government and ministers and business - we've got to get

together more and push the export drive. It said, you business folk

I can't say what William Hague intended by his comments. What bit

didn't you understand? You can't solve everything by legislation.

Government can't solve everything itself. In my constituency I

represent a city centre. There say huge diverse range of businesses

there. Actually, a lot of the medium sized businesss are doing

well. They're very ambitious, taking on new staff. When they can

get bank loans, they're expanding very often. The issues facing

businesses and holding some of them back are a whole range of different

issues, many of which are outside the hands of the Government itself.

I think that it's up to everybody to be playing their part in it to

make sure that we build the economy. You can't solve everything by

legislation? Absolutely. Do you go to Lib Dem conferences? I've been

going to Lib Dem conferences for years. Every problem there is,

there's a demand for legislation. think it's clear thaw can't

actually solve everything by legislation. You say that -- will

you say that at the Lib Dem conference this year? We have been

saying for years, if you have too much legislation you can make

things very, very difficult for businesses. Too much regulation

makes things more complicated. do you think about the work harder

mantra? Businesses in my constituency will be shocked and

offended. The reason some of them are sitting on piles of cash is

because of a lack of confidence. And uncertainty. Exactly, Andrew.

The smaller businesses are saying they can't get credit. They're

struggling many of them to get finance out of the banks, despite

the reforms that the Government apaifrptly has tried to put in.

totally agree that legislation is not what we need. What we need is

growth. That comes from businesses. One of the measures I would have

suggested one looks at into the future is how we kin sent vice

those cash mountains -- can incentivise those cash mountains to

be releezed. We used to have the business expansion scheme. One way

to do it may be not to lecture businessmen to work harder and

encourage them to invest more. would love to see some of those

businesses invest in their supply chain, in smaller businesses within

their supply environment. Well, supply chain interesting, because I

want to move on, don't go away. Talking about the biggest supply

chain in the country in a second. In a little over an hour's time the

Defence Secretary will be giving a statement to the House of Lords on

defence spending. The details are pretty closely guarding, but the

one thing to come out over the weekend is that Mr Hammond believes

he's found a way of making the �38 billion black hole in the MoD

budget disappear. Sent this magic man to Greece, if this is true.

Here on the Daily Politics, we're old and suspicious enough to want

to wait and read the fine print. Commander John Muxworthy Commander

John Muxworthy of the UK National Defence Association, which

campaigns on defence spending and strategy is in our Plymouth studio.

Thank you for joining us. Do you think, is he going to pull off this

magic, is the procurement budget back on track? There's a well known

saying that I'll corrupt that it's financial talk that, if you can

make anything you like, there's lie, damn lies and Treasury statistics.

If they've clear today fine, but what is so damaging is the cuts

that they've done to the military, the navy in particular, not just

because it's my service, but it's all interdependent. The savings,

the cuts are supposed to have provided whether it's �38 billion

or whatever, I don't necessarily believe it, but the savings have

not been justified. The throw ago way of Ark Royal and the Harriers,

for instance, didn't save money. It cost the Libyan campaign three

times what it would have cost if we hadn't had that cost. It wasn't a

saving. The other thing, if I might add it, when there were the Nimrods

that they didn't want and they changed their minds, they threw

away �4 billion, now that emaciated the armed forces, so did the

carriers and there are no savings. It's not right because defence is

the first priority of any Government and so says the Prime

Minister. Indeed. Of course, we've just had

the police on the programme saying they're the first front line

service as well. You all seem to be, any time TV presenters will be

claiming to be the first fronts line, though that obviously won't

be too credible. You talk about the cuts. As a commander, you're a

naval man, you're getting two of the biggest aircraft carriers the

Royal Navy has ever had in its long and distinguished history. Thank

goodness. You have astute class subMarines, which are state-of-the-

art, even Americans don't have subMarines as good of that. You

have a destroyer which cost �1 billion a piece, ahead of anything

else in the field, what more do you want? It's not nearly enough.

There's a three to one ratio in anything in the military. If you

wanted a ship on station for some operation, you need three. Because

one will be in maintenance, one will be training and it's the same

with service personnel. We can't afford three aircraft carriers,

commander. We'll probably make do with two, but it's the silly idea

that we would then maybe put them into storage. Of course, I missed

out of course, you're getting the new jump jet strike 35 fighter as

well. That means you won't have to put one in storage, you'll have the

two. There's no logic to that. Don't get me... That would take a

whole new programme. What I have to say, they're trying to get defence

on the cheap. Give me the one example you said of the type 45

which are superb ships. Six isn't enough because when SDSR98, the

really serious review, because SDR 10 was rubbish, just financially

driven, merely financially driven, the navy asked for 14 type 45s,

they were cut down to 12, that was rdge. That was going to cost �12

billion. In fact, they then changed their minds, the Government changed

their minds, not the board, they were well advised, it took three

years for that decision, but now we get six. And the price has doubled,

not because of the military's fault, but because of Government, the MoD

and Treasury constantly changing their minds. All right. Defence is

being emaciated. All right. Stick with us. I'm going to speak to the

politicians and see what you think. When you were campaigning at the

last election, did you think you would be pre-siding in a Government

with this cutting down process by 20%, giving us the smallest Army

since we fought the Boar war. Which didn't go very well I should point

out. Having worked at the Centre for Defence Studies for many years,

actually I think we needed a realignment of our capabilities. I

appreciate that we had �38 billion of black hole. No-one wants defence

to be cut, but we've got to rationalise it and also, in my view,

make it much more flexible and nimble for a different set of

defence requirements and defence threats that we have. He says it's

going to be too small, we won't have enough. To do what? I think we

should be looking very clearly at what we need to do in terms of

international trade, which is very much the naval sector. We need to

be looking to invest more in cyberdefence and we need tone sure

that we have a capability that's flexible. We have got a lot of

static or have in the past had a lot of static platforms and I think

that actually, what we're doing is designing a defence system for the

future, but yes, appreciate it's on a budget. We still spend more on

defence than 99% of the world's countries. About �40 billion a year.

All we ever hear from the military is we want more and we never get a

great bang for the buck. Here's a radical idea to get steam coming

out of your ears, why do we need three separate services in Britain

now, with all the generals and admirals and all their, wing

commanders, why don't we have one massive UK/US style marine force

that does everything? That would be brilliant. I wish we had the

numbers of the US Marine Corps. We have just flogged all our Harriers

to them for �1 million an aircraft. Do you know how much it cost us?

�20 million. The approach this this has been wrong. The whole country

lacks military experience now. 30, 40 years ago, they'd been in World

War II, they'd had conscription. Now we don't have it. There's no

understanding in politics on the whole, there are a handful of

people in Parliament who have got military experience. We, the UK

national defence association, with admirals, generals, civilians, all

sorts of people, have submitted seven major reports in detail, by

experienced people. It's all been turned down and ignored. This is

where it is going wrong. One quick one... I'm sorry. I'm sorry to

interrupt. We've given you a fair run. I need to move on and get on

some other subjects. Thank you for joining us. You're welcome. Let me

come to you, aren't you getting concerned that the longer time goes

on, the more elusive economic growth seems to be, that you're

doing the cuts, though you've only just started, you've put taxes up.

We have an economy that's flatlining. We saw some progress

last year, which has gone backwards, which is disappointing. There are

measures both in the Budget and in the Queen's Speech that will make a

difference. There's going to be a significant amount of investment in

renewable technologies, in the Green Investment Bank. The

Government's bringing forward legislation... You don't expect

that to kick off economic growth, do you? I think it will make a real

part in some parts of the country. Some of the green jobs we've looked

at recently, which you're so proud of, have cost �300,000 a piece.

don't know what in particular you're referring to, Andrew. Nick

Clegg's regional development fund as well, one of the jobs he created

there cost �200,000. That's not going to mop up unemployment.

talking about different things now. I'm talking about both. Talking

about the investment bank, the Government putting in �1 billion.

How many jobs will that create? idea is that will leverage in

private investment to create a pot of money that's available for

invstment in jobs and new technologies. The solar power

people have just said they're pulling out, they've cut the

subsidies. That's not what I'm finding in my area. They have said

they are pulling out. I am finding... We're going to get this

economy growing through a Green Revolution? If you want to know the

great renewable story is in my constituency where we have the

largest windfarm in the world. 5,000 people have been coming in

and out of Ramsgate harbour over the last couple of months and it is

going to be, they're looking to reinvest... What are these 5,000

people doing, building an off-shore windfarm. They're looking to get

more off the back of the reform. is seriously your investment that

growth comes back to the economy because of a Green Investment Bank?

There are small businesses which we support and have always supported

as a coalition. The deregulation... They can't get money to invest.

deregulation legislation coming through is going to be focused on

them. Then you look at the big infrastructure projects.

Electricity market reform will invite a lot of engineering jobs

into the sector. What would Labour do to get growth going? We wouldn't

have taken so much money out of the economy. And we would put it back

in more quickly. The Green Investment Bank is not going to be

lending for another five years. We can't wait. We need money in the

economy now. Where would you get that money from? It's a mix of

first, not rushing to cut rates of tax for the wealthiest and to make

sure that we keep money flowing around the economy. You'd borrow

more? The borrowing, the starting point, wouldn't start from here,

the borrowing is larger now than the Government had planned as a

result of their failure. Would you borrow more yes or no? If we

started today we would live what we're inheriting from this

Government, which is higher borrowing. Would you borrow more or

not? I have time for one word? know you're not going to get one

word. We'll leave it there. That's all for today. Thanks to our guests.

The One o'clock news is starting over on BBC One now. Jo is back