25/06/2012 Daily Politics


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Good morning. Welcome to the Daily Politics.


So England are out of the football and the pain that is Wimbledon is


about to begin. Oh, well. At least its stopped raining! On the


programme this morning: David Cameron sets out huge changes to


the welfare system. The under-25s may lose their housing benefit


under a future Tory Government in a bid to end what he calls the


"something for nothing culture of entitlement". Have you ever


wondered what a Central Bank actually does? We go behind the


scenes at the Bank of England. And do you grind your teeth when you


hear about things being "accessed", "catalysed", "showcased" or


"impacted"? We meet the minister who has declared war on pointless


buzz-words. All that in the next half hour. And with us for the


whole programme today is Dr Deanne Julius, the American economist and


former member of the Bank of England's Monetary Policy Committee,


who is now the Chairman of the Foreign Affairs think-tank Chatham


House. Welcome to the programme. Let's start with Scotland, where


the "Better Together" campaign is being launched as we speak with the


former Chancellor, Alistair Darling, saying that Scotland will be


stronger if they retain the union. I hope that as somebody who feels


passionately about the future of the country in which I have lived


many years, is that I can encourage them to stay in the United Kingdom


because of the strength it brings us at home and because of the


influence it gives us abroad. Alistair Darling. How should he go


about persuading his fellow countrymen in Scotland that the


union is the best way forward? think he should focus on the


economics case. The identity politics could be strong, but the


economic case is clear-cut. That Scotland will be disadvantaged.


Devolution means devolving assets and liabilities. In the case of


Britain our debt is actually high these days, thanks to the financial


crisis and the bailing out to the Royal Bank of Scotland among other


things. So Scotland would take on its share of that debt. It would


have to finances it on the world capital markets.


Alex Salmond is not proposing that Scotland join the Euro, for example.


It would be difficult, so in that sense separation on a financial


economic basis, no doubt he will not want to frighten the horses in


Scotland? Even if he keeps the pound, what that means is that


Scottish banks will be supervised from London it means that when


Scotland needed to borrow money to finances its own budget deficit, it


sounds like they would be running a deficit, they would have to do that


with Scottish issues, the Scottish- backed pound debt that puts them in


the same situation that Italy is in or Spain. Are you saying that


Scotland could not survive on its snon Not at all, but it would be


more detective than the pro- devolution people paint it. They


would not have control of their currency, they would need to really


develop a track record and credibility in economic management.


Alex Salmond has talked long and hard about the Reeve knews that


Scotland should have gotten and would get from the North Sea oil,


that Scotland's fortunes would rest largely on that? I think he is


right that the fortunes would rest largely on oil, but it is a huge


bet. 30 years ago it would have been a great bet. That is why the


deal was done with the formula, giving more revenues to Scotland


than it produced in taxes, but now production in the North Sea has


been declining in the last decade. Most of the big fields have been


discovered, so unless there is a massive new recovery, it is unlike


that the revenues for the Scottish oil will be there. They will go


down. Now, the coalition has introduced some of the biggest


changes to the welfare system in 60 years, but today, the Prime


Minister is to talk about new changes. David Cameron is to float


the idea of removing Housing Benefit from many under 25s,


forcing them to live with parents. He is to suggest limited


unemployment benefit to two years, a system used in parts of America


and hint at restricting handouts for those with large numbers of


children. Here is Labour's Stephen T hirbgs mms talking about it today.


The Government is right to be worry being the Welfare Bill. The


Government should be concentrating on ensuring that there are jobs


available for young people, requiring them to take the jobs up,


but there are over 1 million young people out of work. There are not


the jobs, so threatening them with throwing them on the streets is not


going to help. Well with us now is one of the


Conservative members of the Work and Pensions Select Committee,


Harriet Baldwin, good morning, welcome to the programme.


Is this back to basics on the welfare state, the end of


compassionate conservatism? Is it compassionate to have a situation


where a young person's whose family have never been in the benefit


system, stays at home in their childhoodhood bedroom until they


are able to afford to move out on their own, and then looks across


the road to see someone in the benefit system, presents to the


Housing Association and is able to move into accommodation.


So what do you say to the critics, Labour this morning, that young


people will be out on the streets. 165,000 people who don't have


enough commercial money to pay for rents, what will happen.to them?


is vital that the welfare state acts as a support to those sorts of


young people coming out of care, or perhaps are fleeing from domestic


violence, they absolutely need that new start in life, but if they


would be able to live at home with their parents until past the age of


25, I don't think that is unreasonable for us to have a


discussion and as a state say it does make sense to put you on a


even playing field with some of the other young people. Do you agree


with people choosing having to have children and for the financial


reward then avoid working? I don't think so, but I do think for a


young person at the age of 16, 17, who has had a child, and is able


therefore to move into accommodation with that child, and


then is actually automattically entitled to further increases in


accommodation and further increases in income if they have more


children, I think you cannot be surprised that today in families


with four or more children I think it is, or five or more, more of


them are workless than in work. You are on regard saying that


unemployed families should get child tax credits for no more than


four children? That is what I floated in a study, said that the


automatic entitlement should end. We should have conversations about


requiring skills, education, to try to help you bring the children up


out of poverty. Are the policies sounding cruel or


sensible? Something must be done. I'm not sure about with which


policies should be addressed, but it is clear that the country has


gotten itself into a situation where it cannot afford the Welfare


Bill it has. It is almost a quarter of Government spending. It is


transferring from taxpayers to various sorts of welfare recipients.


Housing Benefit is a huge part of that �20 billion. So the solution


is hard to come up with. Nothing is easy, but something must be done.


It was in the States that Clinton brought in reforms in the 90s, that


ended the automatic entitlement to additional welfare. If you were an


out of person work who had never taken on training, but the


automatic entitlement went. But cab you achieve it? Can you


save another �10 billion, which is what the Chancellor would like to


see after the next election by targeting working age benefits


alone? Does it not need to be spread over the generations,


looking fo for, at example, the pensioners? The package must be


looked at. Housing Benefit strikes me as one of the areas to be looked


at. I was shocked as a person who had not grown up in the country, to


learn once you have accommodation in social housing that you have it


for life life. That seems ridiculous. What about targeting


elderly pensioners's benefits that they get? The Prime Minister is to


make it clear that the 2010 fan festow says we will not touch it,


but I have said that for a company director, they would get a winter


fuel allowance and a large cash for fuel in the winter. Buts that what


a manifesto pledge. You don't think that the Prime


Minister should change that? Well, he is the Prime Minister. You have


said that something must be done. You both said it that times are


tough, that we should be looking at those winter fuel payments for


example? I am on the record as saying we should look at that for


the richer. Why 2015? Because of the manifesto


arrangement. It is not a huge amount of money.


But if we are talking about saving �1.2 billion, you have �10 billion


to find you will not getting from targeting working age benefits


along, or Housing Benefit, but look across the board? Indeed, but that


is what they are doing with the idea of a welfare cap.


That seems sensible. This is a Labour policy, to have a regional


been fifth cap. I think it would make sense to look at different


parts of the country where the housing a less expensive and set it


lower than the 26,000 we have set it at nationally. Why should it not


be for the coalition, looking at Housing Benefit now? I think we


should be raising the debate now. It would be interesting to hear


what the partners would say on this. They have been collaborative so far.


I think it is healthy to have the discussion. I hope that there is


area with common ground with the Liberal Democrats, but given how


slow the process of welfare reform is, it took two years to get the


welfare act through in Parliament, but we have to think about it now.


How happy with the backbenchers? Imagine they would be happy.


They would support this? Is it standing David Cameron in good


stead, trying to appeal to what people say, the red meat for the


Conservative Party? It is down the people we meet every week in our


constituencies. They work hard. They take home at the end of the


day less than someone would on benefits with a large number of


children. I don't think it is fair to the children not to have that


conversation with the parent or parents and I don't think it is


fair to other taxpayers to be necessarily supporting that as a


long-term lifestyle choice. Harriet Baldwin. Thank you very much.


Have you ever wondered what the bank of England does? Or the


European Central Bank? Teetering away. Well, we have wondered. So we


sent Susannah to the Bank of England Museum to see what she


could find out. # Went to the bank just to get a


little money # Well, he told me that they re


choir was # I started feeling funny. # The


Bank of England is aiming to keep the prices of the power to set the


interest rates. The bank, every month has a meeting


of the International Monetary Fund, they decide whether to move the


interest rates up or down. The point of doing that is to try to


meet the inflation target of 2%. So using the bank rate or the interest


rates, is really to try to keep inflation under control.


But the European Central Bank fulfils that role if your currency


is the Euro. There are 17 different countries in the eurozone, which


means that the ECB has to come up with a one size fits all interest


rate. If we had a German Central Bank


maybe the interests rates would be higher for Germany than Greece or


Spain. So there are discussions with the counsel of the ECB, but


the governments have to deal with the fact that their country is not


in sink with the rest of the eurozone.


Mervyn King is thought to be in favour of using more of what is


known as quantitative easing. It is described as printing money,


but it is creating money electronically at the bank. What


the bank does with it, is it goes to financial institutions and says,


basically, give us your gilts, which are a supersave risk-free


government debt. So a transaction takes place and the financial


institutions use the cash to buy riskier assets. That gets the money


into the economy, it creates a demand bolsters confidence as the


money moves around. The European Central Bank has the


power to do quantitative easing too, although it has chosen not to.


Increasing the amount of money in the economy, which is what


quantitative easing does, can raise inflation.


If the money is spent, quite rapidly, when the economy has not


stepped up its production, then there is more demand than is being


produced in the economy. That creates some bottlenecks and


inflationary pressures. The bank can -- the Bank of England


can bail out as the learned of last resort, but the European Central


Bank does not have the power. Although they are under pressure to


do more. It is more difficult for the ECB to


bail out a bank directly. They have lent a lot of money to banks, but


the responsibility is still very much with national Government.


In if the eurozone ends up with banking union, the ECB could look


The central banks, like the Bank of England and the European Central


Bank, have key roles in stabilising the European economy. With a Cisse


member of the German parliament, representing the Christian Social


Union, the sister party to Angela Merkel's Christian Democrats.


Welcome to the programme. What you say to other European leaders who


say that the Germans are the problem here, that they are Paul


King the use of the European Central Bank to bailing out


southern European countries? only the Germans, all the Eurozone


member countries have already spent a lot of money on bail out. We paid


for Greece alone more than 100 times as much as the United States


did after the Second World War with the Marshall programme. It is not a


question of money, it is a question of political consequence. These


countries have to show the political will to undertake the


necessary reforms and fiscal consolidation necessary. Do you not


think that countries like Greece and Italy with EU governments are


showing that they are willing to take the steps that are necessary


to deal with their structural debt problems, but they need more help


because of the spiralling problem of debt and the fact that the


markets have got their grip on these countries? We need a mix of


policies, but to suggest that the amount of money Eurozone member


countries should pay will lead to overstretched bail-out funds. There


is a limit of effectiveness of financial aid, and also a limit of


political acceptance in the recipient countries as well as in


the donor countries for. Do you think Angela Merkel is the most


unpopular leader on the Continent at the moment? It is not a question


of how popular a leader is, the question is whether the


contributions of a country are adequate to solve the crisis.


you see the Germans, that they could do more, that Angela Merkel


is the key to unlocking the crisis? And at the moment, she is refusing


to take the steps that other leaders are asking her to do.


think she is walking a tightrope. The German perspective is


irrelevant. That is her constituency. If I were in her


place, I would be reluctant to take on an open-ended commitment to


support countries over which there is no effective fiscal control. She


has a difficulty there although I'm sure she is committed to saving the


Euro. She is under pressure to do more. Is that not the point? Angela


Merkel does not want the Euro to collapse. Germany has done well out


of it. Are Germans not worried that that is the consequence? In order


to avoid the collapse of the Euro, the donor countries will have to


keep their own credibility. This is not a question of Germany alone. It


is a question for France and Italy. They will have to keep their


credibility. Will we will have to keep the credibility of the bail-


out fund. This is the crucial question. In the end, do you think


that there will have to be full fiscal and political union for the


Euro to survive? We need closer economic co-ordination at the -- at


least. Full banking union? You would be a supporter that? -- in


support of that. All the discussions of fiscal union or


banking union always lead to a discussion on fresh money. This


will not be sufficient. We will have to undertake structural


reforms in the framework of the European Monetary Union, but the


crisis cannot be solved by fresh money alone. Do you think it is


inevitable, even though there is a new government in Greece, that


Greece will leave the Euro eventually, that they will not be


able to survive? It is not the German Government's position, but


my personal view is that Greece will have to do that to regain


competitive ness -- competitiveness. Her do you do that? If you do that


within that the Euro, we would have to cut social benefits, and keep


the high living costs. This will cause social tensions. I would


prefer, and I believe it would be better for Greece to do this


outside the Eurozone. Of course, this would cause problems. But they


could recover quicker outside the Eurozone. In that what Angela


Merkel wants? It is my personal view. Do you think that is right?


Do you agree that in the end, that is what Greece will have to do?


Eventually, they will have to relieve -- leave the Euro. It seems


they are in an unsustainable position, not just economically but


politically. They have had difficulties, with a messy


coalition which is promising things which are not on offer. It seems


that they will have to leave, possibly not in the next three or


four ones, because agreement a been patched together, but by the end of


the year, certainly, they will be out. I doubt they will leave


voluntarily. They will have to be forced out. The trigger will


probably be the troika, the IMF, the ECB and the Europeans saying


"We cannot release additional bail- out funds because you have not


capture Cross's". The would like that to happen? -- kept your


promises. In Portugal, Spain and Italy we see political consensus on


the necessity of structural reforms and fiscal consolidation. This is a


great difference with Greece. There is more time and chance to recover


for Spain and Italy especially. For example, looking only at public


debt, including implicit debt, Italy is even stronger than Germany.


The debt, including a plus a debt, will be at 192% in Italy, with 146%.


Italy is a strong economy. They will have to keep his credibility.


One thing I can guarantee is that we will be talking about this at


months to come. Thank you very much. Time for a paradigm shift.


International developed minister -- international development minister


Alain de Gaulle -- Alan Duncan has issued a memo a urging staff to


stop using buzzwords in internal memos. He says that staff risked


damaging Britain's reputation by using language that the rest of the


world does not understand. Let us look at what has gotten so hot


under the collar. What are some of the words that targeting the


Minister so hot under the collar? He does not want to hear anyone


leverage or mainstream anything. And he certainly does not like what


he describes as a meaningless term of "Going forward". In the memo he


says "We do not ever access, showcase, catalyse or impact


anything." He finds a baffling when a sentence begins "Grateful for


you're" Instead of "I would be grateful for Europe." And whatever


you do, do not refer to his apartment's work in "The


humanitarian space." The team here had a holistic approach to this,


cascaded down and decided to facilitate the booking of the key


contributor to help achieve maximum impact. I have practised at all


morning! Alan Duncan is here for some quality face time. We are


primed for upwards the back. Were you cringing? I was cringing.


Otherwise, you are perfect of course. I am on my best behaviour


here, hoping that I do not misuse or abuse the English language. Is


this just about grammar? Are you just fed up with the phrases that


are used, the jargon that is used, in the media world and the


political world? Both. I describe myself as a grammar fascist. I send


staff looking for a lost'sometimes. This is also about meaning.


Sometimes people choose words to suggest purpose, with insufficient


thought behind them. If you cannot express yourself clearly, it


suggests you're not thinking clearly and if you're not thinking


clearly, we end up with rotten policy. Is it the case that this is


our culture revolves, that people use those phrases, "At the end of


the day," "Damning report," Is that just how people speak? Of course


some of these words emerge and you do not want to destroy the


evolution of language. The danger and Whitehall is that you end up


with Whitehall war for which people in individual departments


understand but nobody else does. -- waffle. Do they understand it?


there is a danger they do not understand it. Who is the worst


offender? I would never name anybody. My office a brilliant and


they have got the message. By and large, the great thing about


officials and the British Civil Service is that if you make your


views clear, they will respond. They are professionals. What they


do not like above all is uncertainty. I hope I have given


some clarity. I have to say, the quality of the written word now


coming across my desk as inevitably improved. We are no longer the


hippy wing of government. Economists like you're the worst


offenders. When we speak to each other, yes. -- You are the worst


offenders. When I was at the Bank of England, I had to learn to speak


economic speak. But I applaud Alan for what he's doing because I think


one of the great remaining advantages the British have on the


international stage is that they can speak English properly.


have they been mimicking Americans in some way, by using that more


colloquial language? I think business is often the worst


offender. Some of the language that creeps into the boardroom is


laughable. But perhaps the worst American habit is when the verb --


they've her a noun, they take a noun, like showcase, "You're


showing something," And the next thing that happens is you are


showcasing it. I would like to stamp on that. Do you think about


that? Perhaps I can respond. What annoys me about the English use of


words, "To be perfectly honest," I despise that phrase. We are all


perfectly honest. And if we are not, we should not say that we are.


is like being half pregnant. either honest or you're not!


dislike people calling something of fierce. If it is surely obvious,


one needn't say it. If it is not truly obvious, that is such a


future. We have to avoid saying, "Of course you know." People might


not know. There is a question of the BBC being institutionalised and


there is a language that grows up in institutions like the BBC and in


Parliament. David Cameron, we looked briefly through his speeches


and he uses "Wake-up call." What is that? Literally waking you up?


suppose it is. Let me give you a BBC example. "We now battle


things." Battle against them. Gradually this Americanisation, or


American turn of phrase has crept into a number of BBC news bulletins.


The rough things like "Only time will tell," And so energising. What


is that Kim acolyte synergy, when you're working together. -- What is


that? We like Synergy, when you are working together. Are these phrases


meaningless or are they nice ways of finishing off reports? I think


that one is all right, because sometimes poetic turns of phrase


become widely used and then become widely understood. So long as they


are grammatical and not horrible, horrible twist of language, then I


think we can live with them. Who is the worst offender, politician-


wise? I do not think I can think of anyone. The Department of Education,


I would nominate as a department that is particularly bad when it


comes to jargon. Why? I was on the Learning and Skills Council for two


years and it took me 18 months to figure out what in the world all


these terms meant. And we will leave that thought in every one's


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