02/07/2012 Daily Politics


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Good morning and welcome to the Daily Politics. The bank rate


fixing scandal has sent shockwaves through the industry and claimed


its first scalp - Barclays chairman Marcus Agius resigns and says "the


buck stops with me", but could Barclays chief executive Bob


Diamond be next? Conservative MPs tell David Cameron


his promise of a referendum on Britain's membership of the EU is


just "jam tomorrow". Mr Cameron is preparing to report to the House of


Commons after last week's EU summit, but has the Prime Minister just


made more trouble for himself? Also today: we have got to get the


pro-European message across. And we have got to do that before


breakfast, before lunch, and Michael, before dinner as well.


European leaders fight to keep the euro show on the road, we ask,


whatever happened to those who supported Britain joining the


currency of the ten years ago? British Rail - we are getting there.


And should Britain's were always be brought back into public ownership?


We will talk to Labour's Shadow Transport Secretary, Maria Eagle.


All that in the next half-hour. With us for the programme today is


the economist Will Hutton. Let's kick off with the latest on the


back great fixing scandal. It has been confirmed this morning that


the chairman of Barclays, Marcus Agius, is to stand down, say the


company's reputation had suffered a devastating blow. But at


Westminster, the pressure on the bank, which last week paid a record


its �290 million in fines, is set only to increase. Critics say chief


executive Bob Diamond should carry the can because he ran Barclays'


investment bank during the period when its traders were trying to


manipulate the LIBOR rates. He is set to face a grilling by the


Commons Treasury Select Committee on Wednesday, where he will


probably be asked about reports that at one stage, employees


believed they were acting on instructions from the Bank of


England. Labour leader Ed Miliband has called on Mr Diamond to go,


saying there needs to be more than a change of leadership at the back.


Labour are also calling for a year- long public inquiry into the


culture of the entire banking industry. But the Government notes


that it has already ordered a review of the workings of the


interbank lending rates. The Business Secretary Vince Cable says


the serious Fraud Office is having a fresh look at the evidence from


the rigging scandal, raising the prospect of a criminal


investigation. And the wrongdoing at Barclay's could be the tip of


the iceberg, with up to 20 other banks and financial firms still


under investigation. We are joined now by Zia Ullah, a partner at the


law firm Pannone, and who was former head of sanctions at


Barclays. Did you have any idea this was going on, and are you


shocked that your colleagues were involved? - absolutely not. And


totally shocked. 99.9% of people who work for Barclays would also be


shocked at what has been revealed. In terms of Barclays being the


first to settle, an indication that this is the tip of the iceberg, do


you agree that this is widespread, and we are only hearing about


Barclays because they agreed to settle? Absolutely. I have been


slightly disappointed at some of the comments made by some of the


political commentators with respect to what action should or should not


be taken against Barclays. I do not say that as a former employee, I


say it more in terms of my criminal legal practice. There is serious


prejudice being caused here by a lot of the comments being made and


the furore in relation to Barclays. You say rightly that it is the tip


of the iceberg. There are a number of institutions being investigated


by the FSA and regulators across the globe. It is wiser for people


to await the outcome of those investigations before shouting from


the treetops as to what they think should happen. Do you think there


has been paid judge or reporting against Barclays when this has


probably spread throughout the industry? -- do you think there has


been prejudicial reporting? To a degree, I agree with that. There


are a number of banks being investigated. In the States, the


FBI are launching an investigation. It is a much bigger story than


Barclays. But I was surprised that you were head of compliance - the


FT reported on Friday that there were three incidences of


whistleblowers, people try to draw attention to the Compliance Office,


of this game in LIBOR in 2006. That must have been on file, mustn't it?


Firstly, I worked for group compliance, and as far as I


understand it, the FSA investigation relates to a


different department. That is an example of the complexity of this


issue. We are talking about a massive institution, with different


sectors. This is why there has to be an investigation. What sort of


investigation? Barclays themselves are announcing this internal


investigation. It can't just be a 41 trading desk in one investment


bank. The other banks will have to follow suit. There will have to be


an investigation led by a judge. Like Leveson? Like that, into


proprietary trading desks. Is that a good idea? It is not for me to


judge whether it is right or wrong. That is a fair comment as to


whether there should be a wider investigation. The issue I have


with what has happened of the past few days is that issues like what


the Department of Justice said in relation to Barclays' conduct has


not been reported. They said their conduct had been extraordinary in


terms of the corporation they had given into the investigation. They


have enabled the investigations to carry on. That isn't important


point that Bob Diamond made in his letter to Andrew Tyrie, the


chairman of the select committee. He made the point that he has


collaborated. Other banks will be upset with Barclays, because they


would say Barclays has "last", if you like, and turned over a lot of


evidence to the regulators. So Barclays may end up in a better


position. Should Bob Diamond go? Probably. Should he go? It is not


for me to say. Do you think that would help Barclays? You have


talked about the fact that you feel they are being held up unfairly as


culpable. Would it help if Bob Diamond went? Not the Sara Lee. He


should be judged on what he has done for the back, both for


shareholders, investors and others inside the bank. They should not be


judged by political commentators on the wider issues relating to his


bonus or the credit crunch. We are mixing a lot of different issues


here. If you are talking purely about LIBOR, let's talk about that.


On that issue, then, should he go or should there be a criminal


investigation? The FSA has engaged in a long-standing investigation


into what happened with LIBOR. This has not come out of the blue. They


have been engaged for more than 12 months. They have also engaged with


other prosecuting authorities in the US and UK. Whether there should


be a criminal investigation will have been assessed already by these


bodies. The situation Bob Diamond finds himself in is not unlike the


situation some ministers find themselves in when a political hue


and cry goes up. You have to lance the boil, and the way we do that in


Britain is through accountability and someone taking the rap. Perhaps


if politicians did the same, there might be more of a case. Aspect


that Bob Diamond will have to do it. Whatever the rights and wrongs,


Barclays will have to say it is different now.


After appearing to rule out an in- out referendum on Britain's


membership of the E one Friday, yesterday David Cameron wrote an


article suggesting that a future Conservative government may hold a


referendum at some point, although he did not say when. That has not


please some Tory backbenchers, who are demanding that the PM gives a


cast-iron guarantee of a referendum. Remember that expression? This


morning, the former Defence Secretary Liam Fox added fuel to


the fire. In the last hour, he said he supported calls for a referendum,


but added that now is not the right time. I would like to see Britain


negotiating new relationship with the EU, based on economic rather


than political considerations and set out in clear and unambiguous


language. If we succeed, a referendum should be held and


formal acceptance advocated. If, on the other hand, this approach is


rejected outright or falls short of our necessary red lines, we would


have no alternative but to recommend rejection and consider


departure from the European Union. I am joined now by the Gidley de


Nigel Farage and the Conservative MP Stewart Jackson, who resigned


last autumn as a ministerial aide after he voted in favour of a


referendum. Stewart Jackson, what was your reaction to David


Cameron's comments that there may be a referendum at some point?


welcome them as far as they go, but there is a danger that we are not


learning the lessons of the cast- iron guarantee that the Lisbon


Treaty promised on the referendum. You can only play FTSE and


titillation with the electors for so long before there is a


discrepancy between what voters think you are saying and what you


are actually saying. We want an unambiguous commitment, a road map


to real negotiation at this historic juncture with the EU and a


referendum to let the people decide. Do you want a renegotiation first


and then an in-out referendum? morning, I was at Liam Fox's speech,


and he made a very coherent case that the Europhiles want an


immediate EU in out referendum because they think they can win it


through scaremongering and, basically, lies about our role


outside the European Union. I think we need firstly to use the


opportunity of this historic moment in European-British relations to


use that leverage to drive a hard bargain and get powers back from


the EU before we go for a referendum. Nigel, you could say


that the Conservatives have moved a long way in six months, even if


they are not satisfying backbenchers. The promise of a


referendum would make you know and void? I heard that Cameron speech.


It was the most pro EU speech he has ever given. It was passionate -


we must stay part of the EU, it brings enormous benefits to this


country, and I do not want a referendum because I have made my


mind up and we should stay in. The need for UKIP is greater than it


has ever been. I am very nervous about this renegotiation, because


we may finish up in a 1975 top position where we apparently won


back fisheries in the Solent, and it is put to a referendum and we


are kept trapped inside the European market. Isn't there a


worry that the way Tory backbenchers are behaving well end


up splitting the party, and in the end, the party will have a


fractious time which will do it no good? We won the argument


historicist. We were told to rule out EU membership for one


parliament. People like Will Hutton thought it was fantastic, when


actually, it is a recession causing mechanism inflicting poverty on


millions of Europeans. Why don't you join UKIP, then? Because the


party best placed to take on this historic challenge to trust the


people is the Conservatives. your leader is explicit in thinking


EU membership is a good thing, and the British must not be allowed a


vote in case they give the wrong answer. He said so on Friday.


and I agree that we should not sign up to the Common Market referendum


in 1975 into greater creation of one country called Europe. It is


time we trusted the people. People do not just senior -- people do not


trust senior politicians any longer. But you said yourself that you have


been banking on having a say, and you have been denied it. One is not


mutually exclusive of the other. You can press for renegotiation.


David Cameron has to be clear and specific, with a time frame about


what that renegotiation will be, whether it is social policy or


justice etc. Isn't that sensible, Nigel? This is not the time to have


this argument. We might as well see, as William Hague was saying, what


kind of Europe we end up with after they have sorted themselves out.


You are right in one way that several countries may leave the


Eurozone, and that could change the shape of the EU. But what is for


certain is that we will get an EU that is ever more deeply integrated,


ever more undemocratic. And as the EU itself is moving on and changing


into something different, now is the right time for us to have that


debate. There is no guarantee of an exit with a referendum. There is no


guarantee, but I was a businessman. I got involved in politics because


I felt these three parties were offering us no choice on this issue.


Where I agree with Nigel is that UKIP is a major threat to the


Conservative Party at the general election. If they Paul above a


certain percentage, like 5%, if they pull above that, the chances


of the Conservative Party getting an overall majority diminish


rapidly. Therefore, it is in our interest as a party as well as the


national interest to take this debate head-on and have a mature


debate. The stronger UKIP is, the more likely a referendum will


Your reaction to this argument about many Tory backbenchers


feeling deprived. They are being marched up the hill by David


Cameron. This referendum would make it final, with an to it? I am very


suspicious. I am not sure they are the democratic instrument there you


say they are. The second point is, I think in/out, a lot of people


work in the car industry, a lot of people work in the City of London


and in higher education who think, leaving the European Union will


give us a kick up the butt. Because you are on the centre of right,


there is 10%, 20% of the population who are very passionate about it.


An enormous number in the centre up unconvinced. You have never asked


opinions! I believe we vote MPs and they take decisions in the House of


Commons on our behalf. People are going to vote for this because of


the X Factor. That is a really complacent and patronising attitude.


There is a global trade world. Why be locked into a backward looking,


overtaxed, credit union? You have not moved on since the 1970s.


are 60 countries around the world that now have a free trade


agreement with the European Union. As their biggest export market,


we're asking for the same thing. are going to move on. The British


economy may not have much going for it at the moment, but there is one


thing... At least we're not in the eurozone! Younger viewers may not


remember but, at the turn of the century, there was a campaign to


get Britain to sign up to the single currency, spearheaded by


Tony Blair and uniting such diverse figures as Charles Kennedy, Ken


Clarke and Peter Mandelson. Now you would think pro-euro campaigners


would be keeping pretty schtum right now but, believe it or not,


there are a few brave souls willing to put their heads above the


parapet. We sent David into the heart of the City to seek them out.


The debate has been dominated by the Euro-sceptics. A their heady


days of 1999 when all the hip kids were damp with the euro and wanting


to keep the pound was distinctly Square. These days, not so much.


The wisdom is that wise -- while staying out that we dodged a pretty


big economic bullet. Here at the Daily Politics we like to grab hold


of the wisdom and slap it about. There is a school of thought that


says if Britain had joined the euro we might be better off than we are.


I am always struck that George Osborne and Ed Balls say how lucky


we are that we did not join the euro - how bad things would be had


rejoined. I look around at the state of the British economy and


think, could it really be worse than theirs? The only major economy


in the G 28 in a double dip recession. We have a deficit the


size of Greece. Bigger fall in output and France or Germany. Could


it really have been worse than that had we join the euro? Some people


think if we had to join the euro, it might have kept our economy a


bit more honest. Britain has been getting by since the 1960s on


periodic devaluations of the pound. On this occasion we devalued the


pound 25% against the euro. We went down 25%. The Bank of England has


been printing a lot of money to try to keep the economy afloat. We


could not do that if we work in the euro. Probably we should not do all


rely on that as the long-term route forward. Surely the idea of Britain


ever joining the euro in the future it is unthinkable, isn't it? In 20,


30 or 40 years' time, Europe will have a single currency. The


pressure is on Britain to join that. The eurozone main look crazy right


now but the campaign to take Britain into the euro is not dead -


it is only sleeping. David Thompson reporting. Will you admit you got


it spectacularly wrong? I do not accept the terms of the question.


The euro will survive. The situation in Britain economically


is a disaster. Philip Stephens made the point and he is right. We are


four years into this recession. Out book is billed 4% below the peak. -


- output is still. We're in profound trouble. One of the


disastrous things that happened by not joining the euro is that


because the city is very big, it sat in a lot of capital abroad and


pushed up the exchange rate to sky- high levels. We have had a big


devaluation of more than 25%. The response has been very


disappointing. We have had the guts pulled out of the backbone of our


economy by not having a fixed relationship with the euro. Now I


think... A witch you like to see Britain join the euro? I went. --


would you like? All those rioting pictures of the Greeks, we could


play pictures of last summer's riots. The Nazi party is on the


rise in Greece. These riots are persistent. Use an implement over


50% and being forced into a downward deflationary spiral.


much better here? We're in a double-dip recession. We have Lord


Monk saying that Britain should not rely on a weak currency. Will


Hutton has said for too long the pound was too high. Let it float


and find its level. We join the exchange-rate mechanism and saw


what a total disaster it was. -- joined. We may see democracy and


gross back to Europe. He neglected to mention a had a real-terms


increase in public expenditure which was completely unsustainable.


We went to �702 billion with a massive structural deficit. If we


work in the euro, it would not have low ridges to do with monetary and


fiscal policy. -- leverage us to deal. It is strange that they are


not apologising for the creation of the United States of Europe. People


are being forced into poverty and destitution in record numbers. We


may have seen that here. It is not exactly made in Britain. There is


acute poverty. There is acute poverty in Britain, acute social


distress in Britain. The idea it is a Nirvana and social distress there.


Why have the Greeks voted to stay in the euro? There was a centre


Left movement of which was trying to get out. Everyone in the Greek


election wanted to stay in the euro. We would hardly be punching above


our weight. They backed of the matter is, we have more exports


received from the European Union they meet export. The export more


to Ireland them Russia or China. Our trade arrangements would, in


any case, be guaranteed by the World Trade Organisation. The idea


that we would be in a darkroom when no one would want to speak to us.


There is a big world out there. We are a global trading nation.


Nothing preventing us from exploiting all those opportunities.


Yes, there is. I am going to stop you there. We could go on all trade.


Thank you very much. -- all day. Now, how many of you remember this?


British Rail have come up with something called customer care


school. People will notice the difference. Sorry seems to be the


hardest word. British Rail. We are getting there. Yes, it was the ill-


fated attempt of British Rail to re-brand in the 1980s. Not that it


did them much good! Well, today a think-tank has published a report


suggesting that the national rail network should be brought back


under public ownership in order to halt big fare increases and prevent


private companies from making huge profits. The Labour Party are still


in the middle of a policy review but are said to be interested in


the idea. To find out why, we're joined by Maria Eagle, Labour's


Shadow Transport Secretary. We are talking about renationalising?


report says Buchan bring back part of the network into public


ownership without buying out and recreating British Rail. You would


not want to do that! We have made no decisions as shed. If I consider


this to be an interesting contribution. -- as yet. Passengers


are being clobbered with the highest fares in Europe at the same


time we are putting in �4 billion of subsidy into the system. The


report says the fragmentation has costs of up to �1.2 billion the


year. That ought to be used instead of dealing with the preparation


into running the services. We could cut fares if that were to be the


place - us. Can you legislate to keep the system as was? -- the case.


Labour Party policy is to say we will cap the fare rises and remove


the capacity the current government has given back to increase fares by


more pampered cap. We have said we would do that. The fragmentation of


the industry is costing �1.2 billion a year. What would you do


with the companies that are currently running the train


operating services? The report suggests this is not about going am


buy-out contracts. The franchises are sometimes handed back.


Sometimes they do not work properly. They come to an end. At the moment,


the East Coast Main Line, one of the most proper -- profitable lines,


is being run by a non-profit-making company. Do you think the rises in


fez up a huge issue? Rail fares in Britain have been going up in real


terms since privatisation. If you are a key meeting in any part of


the country, you are effectively being taxed. -- are commuting.


Fragmentation does cost. There has been quite a lot of innovation


being brought into the rail industry. And the investment and


the money that comes with it. have state ownership of the


railways. It is just not owned by the UK government. I wondered


whether there might be a feature - we are talking about the John Lewis


model. -- a future. It would be interesting to run the railway


system like this. Employees would have a stake in running the system.


It is a public service. Whether bringing it back into the kind of


public ownership we saw in Britain 25, 30 years ago, is the answer, I


think would be prettied of a book to sell. -- pretty difficult to


sell. We are looking at whether the not the dividend model could be


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