:00:44. > :00:48.Morning, folks. Welcome to the Daily Politics.
:00:48. > :00:51.A new dawn for a modern fighting force, or a cut too far? The
:00:51. > :00:56.Defence Secretary outlines plans to cut the army by a fifth, to 82,000
:00:56. > :01:00.troops, by 2020, and increase the number of reservists.
:01:00. > :01:04.MPs debate the shape and scope of a new inquiry into banking. Ed
:01:04. > :01:08.Miliband is still pushing for a judge to run the show, but looks
:01:08. > :01:11.likely to lose the Commons vote. So, will Labour play ball, and join a
:01:11. > :01:17.parliamentary inquiry instead? Remember the prawn cocktail
:01:17. > :01:23.offensive? We'll debate which party's best for business, with a
:01:23. > :01:27.big cheese in the world of PR, and the head honcho of Pimlico Plumbers.
:01:27. > :01:30.And how to solve the eurozone crisis. We'll be joined by Next
:01:30. > :01:40.chief executive, Lord Wolfson. He's just awarded a big prize for the
:01:40. > :01:42.
:01:42. > :01:46.best answer. No, it's not a Daily All that in the next half hour. And
:01:46. > :01:49.with us for the whole programme today is the businessman and PR man
:01:49. > :01:51.Roland Rudd, who also chairs Business for New Europe, a pro-
:01:51. > :01:54.Europe lobbying group. Welcome to the Daily Politics.
:01:54. > :01:57.So, Bob Diamond's evidence to the Treasury Select Committee yesterday
:01:57. > :02:00.has been described by some MPs on the committee as "implausible", and
:02:00. > :02:10.has left many questions unanswered about the Barclays rate fixing
:02:10. > :02:10.
:02:10. > :02:13.scandal. Did he really not know about it until this month? Today,
:02:13. > :02:17.Westminster's attention shifts to what form an inquiry into all this
:02:17. > :02:21.should take. The government wants a parliamentary committee to report
:02:21. > :02:24.by Christmas, Labour is arguing for a judge-led inquiry that would have
:02:24. > :02:30.a wider remit. The decision will be voted on in the Commons this
:02:30. > :02:40.afternoon. Let's get the latest from our political correspondent,
:02:40. > :02:43.
:02:43. > :02:47.Ross Hawkins. What his neighbours think? There will move the vote, I
:02:47. > :02:54.think. What then happens, will they fall in behind the government or
:02:54. > :02:59.will there resist? Ruabon, you would have to find that out when it
:02:59. > :03:04.happens. There are plenty people around here wondering whether they
:03:04. > :03:14.went push it to recruit. Enabler, this is bizarre. You would have
:03:14. > :03:17.
:03:17. > :03:22.thought competing MPs would be discussing how to beat the bankers.
:03:22. > :03:26.At the heart of his politically is that fantastic on England battle
:03:26. > :03:29.between the trots lower at the Shadow Chancellor. Government
:03:29. > :03:34.people are saying, Ed Balls may have been Children's Minister but
:03:34. > :03:38.he was running a shadow treasury operation and has questions to
:03:38. > :03:46.answer. Labour is saying, if you listen to what Bob Diamond said, he
:03:46. > :03:52.wasn't talking about ministers try to fiddle LIBOR, beacons and was
:03:52. > :03:57.that it looked weak, and the worry was that somebody would try to
:03:57. > :04:02.privatise it. MPs are suggesting maybe George Osborne should have
:04:02. > :04:07.played a long again. One has said he endures and played his hand. And
:04:07. > :04:15.what we heard from Bob Diamond didn't so that's it what we saw in
:04:15. > :04:21.the memo from Barclays. You'd do no city in lot, with big
:04:21. > :04:26.business. Is there apprehension that they will be constantly
:04:26. > :04:30.inquired into. There, we have to stand back from what happened,
:04:30. > :04:36.which of course was appalling and wrong, and Bob Diamond made that
:04:36. > :04:43.very clear. 2 million people working the financial-services in
:04:43. > :04:49.the UK. Last year, but bankers made up �60 billion of and, of the NHS
:04:49. > :04:54.budget. If we constantly attacked the financial have since,
:04:54. > :05:03.politicians from all political parties, we have to be careful. It
:05:03. > :05:07.will damage London. There's something gone wrong. If you
:05:07. > :05:14.invested �1 in Barclays into the air and fire, as a shareholder,
:05:14. > :05:19.what would it be worth today? would be worth significantly less.
:05:19. > :05:23.29p. You would have lost some did cent of your investment. Stints
:05:23. > :05:33.different and far when Bob Diamond joined the board, how much as the
:05:33. > :05:42.
:05:42. > :05:49.trout that? 1 harder than -- how much has he trousered? Pay has gone
:05:49. > :05:54.wrong, not just in the banks. It is an issue, investors have woken up
:05:54. > :05:59.to it and are much tougher. I agree. It is slightly unfair to stay Bob
:05:59. > :06:03.Diamond has presided over this collapse in bunny. He ensured
:06:03. > :06:13.Barclays was not bail that by the government. You have to give him
:06:13. > :06:14.
:06:14. > :06:17.some credit. Now it's time for our quiz. Last
:06:17. > :06:20.year, the chief executive of Next, Simon Wolfson, offered a quarter of
:06:20. > :06:23.a million pounds prize in a competition to find the best
:06:23. > :06:27.solution for dealing with a collapse of the eurozone. The
:06:27. > :06:30.question for today is this: Who won? Was it: a) George Osborne. B)
:06:30. > :06:35.Former Prime Minister Tony Blair. C) Roger Bootle from Capital
:06:35. > :06:39.Economics. Or d) an 11-year-old Dutch schoolboy. At the end of the
:06:39. > :06:42.show Simon Wolfson himself will give us the correct answer.
:06:42. > :06:46.In about 30 minutes, the Defence Secretary Philip Hammond will
:06:46. > :06:49.announce the details of his review of the size and scope of the
:06:49. > :06:53.British Army. At the time of the Strategic Defence Review, the
:06:53. > :06:57.government said they wanted to make the Army smaller. This report will
:06:57. > :06:59.tell us what the new Army will look like. So what can we expect to
:06:59. > :07:03.hear? In 2010, the Army's strength was
:07:03. > :07:08.about 102,000 troops. The government wants to get that number
:07:08. > :07:13.down to 82,000 by 2020. No regiments will be axed entirely, as
:07:13. > :07:17.this was deemed too politically risky. But battalions are expected
:07:17. > :07:22.to go. Out of 36 infantry battalions, five are expected to be
:07:22. > :07:26.disbanded. Four armoured units will be merged into two. And support
:07:26. > :07:32.elements, such as the Signals and Engineers will be reduced by around
:07:32. > :07:35.30%. The government has insisted on regional balance, so some full-
:07:35. > :07:37.strength English units with a strong recruiting record will go,
:07:38. > :07:47.but others in Scotland that have struggled with recruitment, will
:07:48. > :07:50.
:07:50. > :07:52.survive. To compensate, the Army will become more reliant on the
:07:52. > :08:02.Territorial Army, with the number of deployable reservists expected
:08:02. > :08:05.
:08:05. > :08:09.to double to 30,000. To find out what this will all mean, we're
:08:09. > :08:19.joined now by the former Chief of the General Staff Lord Dannatt. And
:08:19. > :08:24.by the Shadow Armed Forces Minister, the Labour MP Kevan Jones.
:08:24. > :08:30.It seems there's from politics in his, a Scottish regiment where the
:08:30. > :08:38.cuts will not fall as badly. BBC Scotland is reporting they have
:08:38. > :08:45.been saved. The new Chief of General Staff has had a difficult
:08:45. > :08:53.task. The Army was one event to present years ago, but has now got
:08:53. > :08:57.to come the to 82,000, a huge management of. A lot of factors
:08:58. > :09:06.have had to come into play. If Scotland than they have been said,
:09:06. > :09:11.that is the relatively narrow point of view. Five regular but Hudson --
:09:11. > :09:17.battalions there, go and demanded four. But this one will be reduced
:09:17. > :09:22.to make company. That means that the name has been stayed. But it is
:09:22. > :09:32.unfair to say and Scotland is playing it up, that Scotland has
:09:32. > :09:33.
:09:33. > :09:37.been treated lightly. It is a reasonable proportion. At the time
:09:37. > :09:43.we are doing these cuts to the regular army, we're meant to be put
:09:43. > :09:48.in more money into the was there, but there isn't just an issue of
:09:48. > :09:53.quantity, this will require a step change in the quality of the
:09:53. > :10:00.reservists. Most certainly, and there's a lot of risk. There's one
:10:00. > :10:06.thing to take it will be reduced to a 2000, the Army. And anything we
:10:06. > :10:10.would have 30,000 reservists. That will only happen if sufficient
:10:10. > :10:20.resources are made available, training days, opportunities, and
:10:20. > :10:25.overseas expires this. Prisoners as alarming people to free up time.
:10:25. > :10:31.mobilise reservists, it is a year. The Americans have already gone
:10:31. > :10:35.done this road, American is of better-trained, a lot more in Iraq
:10:35. > :10:44.and the piston. The Americans have the national guard, part of the
:10:44. > :10:50.fabric of the nation. And they have risen. There are National Hunt
:10:50. > :10:55.trainer -- in their national culture, it is considered a
:10:55. > :11:01.patriotic duty to release your employees. It is amiss, the
:11:01. > :11:07.government will have to manage that this very carefully. If
:11:07. > :11:17.circumstances in future on not as benign and, they may have to
:11:17. > :11:25.
:11:25. > :11:31.Rover's decisions. -- reverse. I think everybody is agreed no
:11:31. > :11:34.matter who was in power, there would be cut. But, where you stand
:11:34. > :11:43.on what the government intends to do with the Army? The problem we
:11:44. > :11:48.have got here, we have the green paper of, this has been a Treasury
:11:48. > :11:53.layered with you. The review said the Army should be reduced, we
:11:53. > :11:57.would be able to deploy one large and too much grows more operations
:11:57. > :12:02.but it has been cut further. The question is whether there's
:12:03. > :12:07.assumptions can still be met. The reason they are being done so
:12:07. > :12:11.quickly in his eighties the 8% cuts in the defence budget. We were
:12:11. > :12:17.planning to have the defence review and then make changes over appeared
:12:17. > :12:24.of five years. Why don't think in the current economic and its if you
:12:24. > :12:30.run power you wouldn't be having it Treasury-led review. We produced in
:12:30. > :12:36.green paper. It was part of the process, we were committed to the
:12:36. > :12:40.defence review. Are was part of looking for savings in the
:12:40. > :12:46.department. They would have been done over a period of time. The
:12:46. > :12:55.problem here, there's a huge risk in terms of the business. There is
:12:55. > :13:02.an important issue. Been 1998 defence review was a good review,
:13:02. > :13:11.we were relatively in balance and actually, and there was time to
:13:12. > :13:19.look at these issues. The 2010 review was a gates it, in this age
:13:19. > :13:26.of austerity, there wasn't the money. The �38 billion black hole
:13:26. > :13:29.was inherited, another 10% cut which had to be found.
:13:29. > :13:39.government can't explain it, the problem is the government has
:13:39. > :13:40.
:13:40. > :13:44.hidden behind that. I am sorry, this is nonsense. Every procurement
:13:44. > :13:50.programme you funded... Wait a minute. On one answer the question,
:13:50. > :13:57.they have run Beckett been in Parliament, and not justified it.
:13:57. > :14:01.They need to do that. A simple question, on using every
:14:02. > :14:08.procurement programme Labour had signed off before it lost was
:14:08. > :14:13.funded? It was a have a 10 years. The report said the only way you
:14:13. > :14:20.would get near a dyche billion pounds if you added a flat budget.
:14:20. > :14:30.Was in the programme funded? Thing ever of in victims of... Look at
:14:30. > :14:31.
:14:31. > :14:36.the National Audit Office report. One thing this government said was
:14:36. > :14:41.it would have a defence review once in every parliament. The next
:14:41. > :14:45.preliminary process has begun. We really do need to get a national
:14:45. > :14:51.debate going about what the character and future of complex...
:14:52. > :15:01.We did not really have that debate. When you have identified the issues,
:15:02. > :15:02.
:15:02. > :15:07.you can properly apply resources. have endured a terribly tough time.
:15:07. > :15:11.They have had the slicing of their budget in previous years. We need
:15:11. > :15:17.to have a political consensus saying we cannot shrink the size of
:15:17. > :15:22.the Army anymore. All this talk about wars after Libya are all
:15:22. > :15:29.going to be fought from the air, we do not need boots on the ground, is
:15:29. > :15:34.absolutely wrong. We will have to leave it there. We have not had the
:15:34. > :15:37.statement of the Defence Secretary yet. That will be happening in
:15:37. > :15:41.about half an hour. Which political party do businesses most trust to
:15:41. > :15:45.deliver for them? Once upon a time, it was easy. The Conservatives were
:15:45. > :15:51.the bosses' party. Today, as Giles has been finding out, the world is
:15:51. > :16:00.much more complicated. Politicians in this 21st Century world wide web
:16:00. > :16:04.of business like meeting the guys. And girls. It is no longer a matter
:16:04. > :16:07.of pandering to pinstripes but without business believing. You
:16:07. > :16:11.have the answers to creating a world that lets them flourish. You
:16:11. > :16:14.won't win. In the past, the politics was simple. Labour backed
:16:15. > :16:23.workers and unions, Tories backed business and bosses. It was just
:16:24. > :16:28.the way things were. Business principles up in the DNA of the
:16:28. > :16:32.Conservative Party. It stands for free enterprise, individual
:16:32. > :16:36.incentives, rewards and business confidence. To Mrs Thatcher's
:16:36. > :16:39.Conservatives in the 1980s. Privatise, deregulate and light the
:16:39. > :16:43.blue touch paper of rocketing business growth was the answer to a
:16:43. > :16:45.decade of economic stagnation. For Tony Blair, New Labour's prawn
:16:45. > :16:55.cocktail offensive was winning the confidence of business, central to
:16:55. > :17:00.making them electable, and staying electable. For 30 years, but
:17:01. > :17:04.coherent business message has been lowered the top rate of tax, lower
:17:04. > :17:09.corporation tax, free up labour markets, light the blue touch paper
:17:09. > :17:18.and all will be well. The Conservative Party were better at
:17:18. > :17:23.that narrative. In 2012, that story is not right and it does not work.
:17:23. > :17:26.Both parties are wrestling for a new narrative. Labour's attempt at
:17:26. > :17:31.that message is to define the ethical goal of entrepreneurism.
:17:31. > :17:38.Let me tell you what the 21st century choice is. I look on the
:17:38. > :17:43.side of the wealth creators of the asset strippers? -- are you on the
:17:43. > :17:49.side? Producers trained, invest, invent and sell - things Britain
:17:49. > :17:52.does brilliantly but not enough. They are interested in the fast
:17:52. > :17:57.buck. The Conservatives say their entire game plan for the future is
:17:57. > :18:00.neither predator nor producer but predicated on the private sector.
:18:00. > :18:04.You only have to listen to the rhetoric of this government, to
:18:04. > :18:10.what we're trying to say about how we will lead to this recovery. It
:18:10. > :18:14.is all about private sector led to a recovery. It is about new
:18:14. > :18:16.businesses, enterprise. And to demonstrate the world has changed,
:18:16. > :18:26.it is worth reminding ourselves today's Business Secretary is a
:18:26. > :18:35.
:18:35. > :18:39.Liberal Democrat. Giles Dilnot reporting. And we've been joined by
:18:39. > :18:45.Charlie Mullins, managing director of Pimlico Plumbers. Who do you
:18:45. > :18:49.trust more to look after the interests of your business? I trust
:18:50. > :18:55.the Tories Roberttown not sure who we can trust these days. Certainly
:18:55. > :19:03.the Tories. -- but I am not sure. Maybe 20 years ago you would have
:19:03. > :19:08.been more enthusiastic. Life is tough but there is such a lot going
:19:08. > :19:14.on at the moment there is a lot of uncertainty. For me, I am confident
:19:14. > :19:22.with the Tories. Mrs Thatcher used to understand small business. Her
:19:22. > :19:25.father used to earn at the grocer's shop. We started in 1979, the same
:19:25. > :19:31.time that Margaret Thatcher became Prime Minister. She gave me and
:19:31. > :19:36.lots of other people inspiration to hope we could succeed in business.
:19:36. > :19:44.Who would have been an inspiration in this Cabinet David Cameron,
:19:44. > :19:49.George Osborne. I'm -- I think we are drinking from the same teapot.
:19:49. > :19:56.The situation when Labour was there, we had no contact at all. It was
:19:56. > :20:01.not acknowledging us. I have had Theresa May, Boris Johnson, George
:20:01. > :20:07.Osborne. I had been to see David Cameron at Number 10. They are
:20:07. > :20:12.prepared to listen to us. Labour went out of its way to court
:20:12. > :20:17.the vote of business. They wanted it to be part of the New Labour
:20:17. > :20:23.project. We cannot yet say that of Mr Ed Miliband -- Ed Miliband, can
:20:23. > :20:29.we? I think he agrees with the premise of Tony Blair. That is that
:20:29. > :20:34.Labour need some business support to get elected. Tony Blair did it
:20:34. > :20:40.incredibly well in his three elections. He always had business
:20:40. > :20:44.people endorsing him. The last Labour administration, it was
:20:44. > :20:49.conspicuous by their absence. Everyone thought Peter Mandelson
:20:49. > :20:54.did a great job as Business Secretary but it did not translate
:20:54. > :21:00.into endorsements. That is the problem. You helped open doors in
:21:00. > :21:06.the 1990s before and after power. You help to bring about this affair
:21:06. > :21:11.between New Labour and business. Who is doing that now? Actually, I
:21:11. > :21:17.think Chuka Umunna is very good and is doing it. What the Government
:21:17. > :21:22.needs to do is, there is no obvious person who it is the cheerleader
:21:23. > :21:26.for business from the coalition. Business people always said the two
:21:26. > :21:30.great people in that department where Peter Mandelson and Michael
:21:30. > :21:36.Heseltine. Both believed in business and went out of their way.
:21:36. > :21:41.There is no such person today. It is lacking and we need one. What
:21:41. > :21:46.Labour did before and what they are doing now, they spend a lot of time
:21:46. > :21:51.schmoozing the boardrooms of the city and the FT-SE 100 companies.
:21:51. > :21:57.They do not spend so much time dealing with companies like this.
:21:57. > :22:01.That may be true. It is a missed opportunity. We have a situation
:22:01. > :22:05.where I believe the Tories are working with small businesses. They
:22:05. > :22:11.have lowered the business tax rates and of cutting the red tape. They
:22:11. > :22:15.are helping get apprentices up and running again. Have you seen an
:22:15. > :22:20.improvement in the quality and number of apprentices question but
:22:20. > :22:25.you must depend on that. I worked with The Prince's Trust, getting
:22:25. > :22:34.youngsters into work. I believe The Apprentice scheme is working.
:22:34. > :22:41.you seen a cut in red tape? Have you seen any red tape really?
:22:41. > :22:46.believe they will cut some of the red tape for employing people.
:22:46. > :22:52.have not yet? I believe their wealth. With Labour, they made
:22:52. > :22:58.themselves busy in business and probably too busy - leaving it to
:22:58. > :23:03.Gordon Brown but the bankers. them why Labour is the party of
:23:03. > :23:08.business. A self-made man, runs a great business, employers lots of
:23:08. > :23:15.people. 200 apprentices, proper skills. If Labour wants to come
:23:15. > :23:21.back to power, he has to win over Pimlico Plumbers. He is doing a
:23:21. > :23:27.good job -- Chuka Umunna is doing a good job in talking to business
:23:27. > :23:33.leaders. You have got your work cut out! Have you hired anybody extra
:23:33. > :23:38.since the top tax rate was cut? course we have. The other man has
:23:39. > :23:47.to come back and pay me my bet. You know, been used since we had before.
:23:47. > :23:50.I will give you a court if I have a dripping tap! -- a call. Now
:23:50. > :23:53.earlier in the programme we set you a little quiz. Last year, the chief
:23:53. > :23:56.executive of Next, Simon Wolfson, offered a quarter of a million
:23:56. > :24:06.pounds prize in a competition to find the best solution for dealing
:24:06. > :24:15.
:24:15. > :24:25.with a collapse of the eurozone. Well, Simon Wolfson, joins us now.
:24:25. > :24:31.So who won? Roger Bootle. economist won. Did you get any
:24:31. > :24:36.entries from politicians? We did get an entry from a politician but
:24:36. > :24:40.it is anonymous, so other much telly it was. Did Alastair Darling
:24:40. > :24:47.attempt? I am not even going to narrow it down. You did not get
:24:47. > :24:52.mine? We did. We put it straight into the bin. The winning entries
:24:52. > :24:58.suggested the net overall effect of one or more countries leaving the
:24:58. > :25:03.eurozone would be positive. Do you agree with that? In the long run,
:25:03. > :25:08.yes. Short-term pain and then long- term recovery. That is the story of
:25:08. > :25:13.the destruction of any structure that contains the market. At the
:25:13. > :25:17.moment, you have overvalued currencies in the South,
:25:17. > :25:22.undervalued currencies in the north. Break that structure and there will
:25:22. > :25:28.be overvalued debt which needs to be written down. Long term, the
:25:28. > :25:32.prize is this. A 20% unemployment in Spain, 15 in Ireland and
:25:32. > :25:37.Portugal. Those people need jobs. Without devaluation, they will not
:25:37. > :25:43.get them. Are you talking about a number of countries leaving the
:25:43. > :25:47.eurozone? Ultimately one hopes it can all muddle through and sort
:25:47. > :25:52.itself out. It looks increasingly unlikely. The trouble with all the
:25:52. > :25:56.rescue packages is all they're doing is refinancing debt. They are
:25:56. > :26:01.not addressing the issue of employment and growth in southern
:26:01. > :26:06.European countries. The choice Europe seems to face at the moment,
:26:06. > :26:11.for a country like Greece, stay in the euro and have austerity for as
:26:11. > :26:15.far as the eye can seek or take the pain - probably worse than
:26:15. > :26:22.posterity to begin with - by devaluation of leaving the eurozone
:26:22. > :26:27.but begin to start climbing up again. -- austerity. 80% of Greeks
:26:27. > :26:36.are in favour of remaining within the euro. That is because there is
:26:36. > :26:40.no such thing as an orderly exit. Simon talked about the short-term
:26:40. > :26:45.gain -- pain for the long-term gain. That would be horrific. It would
:26:45. > :26:52.lead to a situation far worse than we have now. With devaluation, you
:26:52. > :26:58.get a fillip from dead. After the war, there were DM16 to the pound.
:26:58. > :27:03.-- from it. Were we eight times better off than the Germans?
:27:03. > :27:07.problem is, in the absence of the devaluation, have to countries
:27:07. > :27:14.where inflation is running miles ahead of gross, how do they get out
:27:14. > :27:19.of it? It is the same with the company or an individual. -- ahead
:27:19. > :27:25.of growth. You have to say at some point, we will write off the debt
:27:25. > :27:29.and start again. The country that most successfully grew out of the
:27:29. > :27:35.Depression was Great Britain and that is because they took the
:27:35. > :27:39.decision to devalue. That led immediately to growth. We have
:27:39. > :27:44.devalued constantly over a series of decades and I do not think we
:27:44. > :27:49.are richer for it. Is it a good idea for countries to run inflation
:27:49. > :27:54.constantly ahead of interest rates and the answer is, note. Where
:27:54. > :28:03.there is a clear distortion in the market, should a one-off action be
:28:03. > :28:07.taken? -- no. The Greeks do not want austerity either. Let me ask
:28:07. > :28:14.you this. A quarter of a million pounds is a lot of money. Do you
:28:14. > :28:19.get value for money? I could not have hoped for better. We got very
:28:19. > :28:29.high-quality entries was a two runner can -- runners up were
:28:29. > :28:30.
:28:30. > :28:39.fantastic papers. Thank you for coming on and explaining that.
:28:39. > :28:44.Thanks to Rolo and as well. I will be back tonight at 11:35pm. --
:28:44. > :28:50.Rowland. We will have Michael Portillo, Alastair Campbell and