05/07/2012 Daily Politics


05/07/2012

Political news with Andrew Neil, including former army chief Lord Dannatt on the government's restructuring plans and Next chief executive, Lord Wolfson, on the Eurozone crisis.


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Morning, folks. Welcome to the Daily Politics.

:00:44.:00:48.

A new dawn for a modern fighting force, or a cut too far? The

:00:48.:00:51.

Defence Secretary outlines plans to cut the army by a fifth, to 82,000

:00:51.:00:56.

troops, by 2020, and increase the number of reservists.

:00:56.:01:00.

MPs debate the shape and scope of a new inquiry into banking. Ed

:01:00.:01:04.

Miliband is still pushing for a judge to run the show, but looks

:01:04.:01:08.

likely to lose the Commons vote. So, will Labour play ball, and join a

:01:08.:01:11.

parliamentary inquiry instead? Remember the prawn cocktail

:01:11.:01:17.

offensive? We'll debate which party's best for business, with a

:01:17.:01:23.

big cheese in the world of PR, and the head honcho of Pimlico Plumbers.

:01:23.:01:27.

And how to solve the eurozone crisis. We'll be joined by Next

:01:27.:01:30.

chief executive, Lord Wolfson. He's just awarded a big prize for the

:01:30.:01:40.
:01:40.:01:42.

best answer. No, it's not a Daily All that in the next half hour. And

:01:42.:01:46.

with us for the whole programme today is the businessman and PR man

:01:46.:01:49.

Roland Rudd, who also chairs Business for New Europe, a pro-

:01:49.:01:51.

Europe lobbying group. Welcome to the Daily Politics.

:01:51.:01:54.

So, Bob Diamond's evidence to the Treasury Select Committee yesterday

:01:54.:01:57.

has been described by some MPs on the committee as "implausible", and

:01:57.:02:00.

has left many questions unanswered about the Barclays rate fixing

:02:00.:02:10.
:02:10.:02:10.

scandal. Did he really not know about it until this month? Today,

:02:10.:02:13.

Westminster's attention shifts to what form an inquiry into all this

:02:13.:02:17.

should take. The government wants a parliamentary committee to report

:02:17.:02:21.

by Christmas, Labour is arguing for a judge-led inquiry that would have

:02:21.:02:24.

a wider remit. The decision will be voted on in the Commons this

:02:24.:02:30.

afternoon. Let's get the latest from our political correspondent,

:02:30.:02:40.
:02:40.:02:43.

Ross Hawkins. What his neighbours think? There will move the vote, I

:02:43.:02:47.

think. What then happens, will they fall in behind the government or

:02:47.:02:54.

will there resist? Ruabon, you would have to find that out when it

:02:54.:02:59.

happens. There are plenty people around here wondering whether they

:02:59.:03:04.

went push it to recruit. Enabler, this is bizarre. You would have

:03:04.:03:14.
:03:14.:03:17.

thought competing MPs would be discussing how to beat the bankers.

:03:17.:03:22.

At the heart of his politically is that fantastic on England battle

:03:22.:03:26.

between the trots lower at the Shadow Chancellor. Government

:03:26.:03:29.

people are saying, Ed Balls may have been Children's Minister but

:03:29.:03:34.

he was running a shadow treasury operation and has questions to

:03:34.:03:38.

answer. Labour is saying, if you listen to what Bob Diamond said, he

:03:38.:03:46.

wasn't talking about ministers try to fiddle LIBOR, beacons and was

:03:46.:03:52.

that it looked weak, and the worry was that somebody would try to

:03:52.:03:57.

privatise it. MPs are suggesting maybe George Osborne should have

:03:57.:04:02.

played a long again. One has said he endures and played his hand. And

:04:02.:04:07.

what we heard from Bob Diamond didn't so that's it what we saw in

:04:07.:04:15.

the memo from Barclays. You'd do no city in lot, with big

:04:15.:04:21.

business. Is there apprehension that they will be constantly

:04:21.:04:26.

inquired into. There, we have to stand back from what happened,

:04:26.:04:30.

which of course was appalling and wrong, and Bob Diamond made that

:04:30.:04:36.

very clear. 2 million people working the financial-services in

:04:36.:04:43.

the UK. Last year, but bankers made up �60 billion of and, of the NHS

:04:43.:04:49.

budget. If we constantly attacked the financial have since,

:04:49.:04:54.

politicians from all political parties, we have to be careful. It

:04:54.:05:03.

will damage London. There's something gone wrong. If you

:05:03.:05:07.

invested �1 in Barclays into the air and fire, as a shareholder,

:05:07.:05:14.

what would it be worth today? would be worth significantly less.

:05:14.:05:19.

29p. You would have lost some did cent of your investment. Stints

:05:19.:05:23.

different and far when Bob Diamond joined the board, how much as the

:05:23.:05:33.
:05:33.:05:42.

trout that? 1 harder than -- how much has he trousered? Pay has gone

:05:42.:05:49.

wrong, not just in the banks. It is an issue, investors have woken up

:05:49.:05:54.

to it and are much tougher. I agree. It is slightly unfair to stay Bob

:05:54.:05:59.

Diamond has presided over this collapse in bunny. He ensured

:05:59.:06:03.

Barclays was not bail that by the government. You have to give him

:06:03.:06:13.
:06:13.:06:14.

some credit. Now it's time for our quiz. Last

:06:14.:06:17.

year, the chief executive of Next, Simon Wolfson, offered a quarter of

:06:17.:06:20.

a million pounds prize in a competition to find the best

:06:20.:06:23.

solution for dealing with a collapse of the eurozone. The

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question for today is this: Who won? Was it: a) George Osborne. B)

:06:27.:06:30.

Former Prime Minister Tony Blair. C) Roger Bootle from Capital

:06:30.:06:35.

Economics. Or d) an 11-year-old Dutch schoolboy. At the end of the

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show Simon Wolfson himself will give us the correct answer.

:06:39.:06:42.

In about 30 minutes, the Defence Secretary Philip Hammond will

:06:42.:06:46.

announce the details of his review of the size and scope of the

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British Army. At the time of the Strategic Defence Review, the

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government said they wanted to make the Army smaller. This report will

:06:53.:06:57.

tell us what the new Army will look like. So what can we expect to

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hear? In 2010, the Army's strength was

:06:59.:07:03.

about 102,000 troops. The government wants to get that number

:07:03.:07:08.

down to 82,000 by 2020. No regiments will be axed entirely, as

:07:08.:07:13.

this was deemed too politically risky. But battalions are expected

:07:13.:07:17.

to go. Out of 36 infantry battalions, five are expected to be

:07:17.:07:22.

disbanded. Four armoured units will be merged into two. And support

:07:22.:07:26.

elements, such as the Signals and Engineers will be reduced by around

:07:26.:07:32.

30%. The government has insisted on regional balance, so some full-

:07:32.:07:35.

strength English units with a strong recruiting record will go,

:07:35.:07:37.

but others in Scotland that have struggled with recruitment, will

:07:38.:07:47.
:07:48.:07:50.

survive. To compensate, the Army will become more reliant on the

:07:50.:07:52.

Territorial Army, with the number of deployable reservists expected

:07:52.:08:02.
:08:02.:08:05.

to double to 30,000. To find out what this will all mean, we're

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joined now by the former Chief of the General Staff Lord Dannatt. And

:08:09.:08:19.

by the Shadow Armed Forces Minister, the Labour MP Kevan Jones.

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It seems there's from politics in his, a Scottish regiment where the

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cuts will not fall as badly. BBC Scotland is reporting they have

:08:30.:08:38.

been saved. The new Chief of General Staff has had a difficult

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task. The Army was one event to present years ago, but has now got

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to come the to 82,000, a huge management of. A lot of factors

:08:53.:08:57.

have had to come into play. If Scotland than they have been said,

:08:58.:09:06.

that is the relatively narrow point of view. Five regular but Hudson --

:09:06.:09:11.

battalions there, go and demanded four. But this one will be reduced

:09:11.:09:17.

to make company. That means that the name has been stayed. But it is

:09:17.:09:22.

unfair to say and Scotland is playing it up, that Scotland has

:09:22.:09:32.
:09:32.:09:33.

been treated lightly. It is a reasonable proportion. At the time

:09:33.:09:37.

we are doing these cuts to the regular army, we're meant to be put

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in more money into the was there, but there isn't just an issue of

:09:43.:09:48.

quantity, this will require a step change in the quality of the

:09:48.:09:53.

reservists. Most certainly, and there's a lot of risk. There's one

:09:53.:10:00.

thing to take it will be reduced to a 2000, the Army. And anything we

:10:00.:10:06.

would have 30,000 reservists. That will only happen if sufficient

:10:06.:10:10.

resources are made available, training days, opportunities, and

:10:10.:10:20.

overseas expires this. Prisoners as alarming people to free up time.

:10:20.:10:25.

mobilise reservists, it is a year. The Americans have already gone

:10:25.:10:31.

done this road, American is of better-trained, a lot more in Iraq

:10:31.:10:35.

and the piston. The Americans have the national guard, part of the

:10:35.:10:44.

fabric of the nation. And they have risen. There are National Hunt

:10:44.:10:50.

trainer -- in their national culture, it is considered a

:10:50.:10:55.

patriotic duty to release your employees. It is amiss, the

:10:55.:11:01.

government will have to manage that this very carefully. If

:11:01.:11:07.

circumstances in future on not as benign and, they may have to

:11:07.:11:17.
:11:17.:11:25.

Rover's decisions. -- reverse. I think everybody is agreed no

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matter who was in power, there would be cut. But, where you stand

:11:31.:11:34.

on what the government intends to do with the Army? The problem we

:11:34.:11:43.

have got here, we have the green paper of, this has been a Treasury

:11:44.:11:48.

layered with you. The review said the Army should be reduced, we

:11:48.:11:53.

would be able to deploy one large and too much grows more operations

:11:53.:11:57.

but it has been cut further. The question is whether there's

:11:57.:12:02.

assumptions can still be met. The reason they are being done so

:12:03.:12:07.

quickly in his eighties the 8% cuts in the defence budget. We were

:12:07.:12:11.

planning to have the defence review and then make changes over appeared

:12:11.:12:17.

of five years. Why don't think in the current economic and its if you

:12:17.:12:24.

run power you wouldn't be having it Treasury-led review. We produced in

:12:24.:12:30.

green paper. It was part of the process, we were committed to the

:12:30.:12:36.

defence review. Are was part of looking for savings in the

:12:36.:12:40.

department. They would have been done over a period of time. The

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problem here, there's a huge risk in terms of the business. There is

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an important issue. Been 1998 defence review was a good review,

:12:55.:13:02.

we were relatively in balance and actually, and there was time to

:13:02.:13:11.

look at these issues. The 2010 review was a gates it, in this age

:13:12.:13:19.

of austerity, there wasn't the money. The �38 billion black hole

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was inherited, another 10% cut which had to be found.

:13:26.:13:29.

government can't explain it, the problem is the government has

:13:29.:13:39.
:13:39.:13:40.

hidden behind that. I am sorry, this is nonsense. Every procurement

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programme you funded... Wait a minute. On one answer the question,

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they have run Beckett been in Parliament, and not justified it.

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They need to do that. A simple question, on using every

:13:57.:14:01.

procurement programme Labour had signed off before it lost was

:14:02.:14:08.

funded? It was a have a 10 years. The report said the only way you

:14:08.:14:13.

would get near a dyche billion pounds if you added a flat budget.

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Was in the programme funded? Thing ever of in victims of... Look at

:14:20.:14:30.
:14:30.:14:31.

the National Audit Office report. One thing this government said was

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it would have a defence review once in every parliament. The next

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preliminary process has begun. We really do need to get a national

:14:41.:14:45.

debate going about what the character and future of complex...

:14:45.:14:51.

We did not really have that debate. When you have identified the issues,

:14:52.:15:01.
:15:02.:15:02.

you can properly apply resources. have endured a terribly tough time.

:15:02.:15:07.

They have had the slicing of their budget in previous years. We need

:15:07.:15:11.

to have a political consensus saying we cannot shrink the size of

:15:11.:15:17.

the Army anymore. All this talk about wars after Libya are all

:15:17.:15:22.

going to be fought from the air, we do not need boots on the ground, is

:15:22.:15:29.

absolutely wrong. We will have to leave it there. We have not had the

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statement of the Defence Secretary yet. That will be happening in

:15:34.:15:37.

about half an hour. Which political party do businesses most trust to

:15:37.:15:41.

deliver for them? Once upon a time, it was easy. The Conservatives were

:15:41.:15:45.

the bosses' party. Today, as Giles has been finding out, the world is

:15:45.:15:51.

much more complicated. Politicians in this 21st Century world wide web

:15:51.:16:00.

of business like meeting the guys. And girls. It is no longer a matter

:16:00.:16:04.

of pandering to pinstripes but without business believing. You

:16:04.:16:07.

have the answers to creating a world that lets them flourish. You

:16:07.:16:11.

won't win. In the past, the politics was simple. Labour backed

:16:11.:16:14.

workers and unions, Tories backed business and bosses. It was just

:16:15.:16:23.

the way things were. Business principles up in the DNA of the

:16:24.:16:28.

Conservative Party. It stands for free enterprise, individual

:16:28.:16:32.

incentives, rewards and business confidence. To Mrs Thatcher's

:16:32.:16:36.

Conservatives in the 1980s. Privatise, deregulate and light the

:16:36.:16:39.

blue touch paper of rocketing business growth was the answer to a

:16:39.:16:43.

decade of economic stagnation. For Tony Blair, New Labour's prawn

:16:43.:16:45.

cocktail offensive was winning the confidence of business, central to

:16:45.:16:55.

making them electable, and staying electable. For 30 years, but

:16:55.:17:00.

coherent business message has been lowered the top rate of tax, lower

:17:01.:17:04.

corporation tax, free up labour markets, light the blue touch paper

:17:04.:17:09.

and all will be well. The Conservative Party were better at

:17:09.:17:18.

that narrative. In 2012, that story is not right and it does not work.

:17:18.:17:23.

Both parties are wrestling for a new narrative. Labour's attempt at

:17:23.:17:26.

that message is to define the ethical goal of entrepreneurism.

:17:26.:17:31.

Let me tell you what the 21st century choice is. I look on the

:17:31.:17:38.

side of the wealth creators of the asset strippers? -- are you on the

:17:38.:17:43.

side? Producers trained, invest, invent and sell - things Britain

:17:43.:17:49.

does brilliantly but not enough. They are interested in the fast

:17:49.:17:52.

buck. The Conservatives say their entire game plan for the future is

:17:52.:17:57.

neither predator nor producer but predicated on the private sector.

:17:57.:18:00.

You only have to listen to the rhetoric of this government, to

:18:00.:18:04.

what we're trying to say about how we will lead to this recovery. It

:18:04.:18:10.

is all about private sector led to a recovery. It is about new

:18:10.:18:14.

businesses, enterprise. And to demonstrate the world has changed,

:18:14.:18:16.

it is worth reminding ourselves today's Business Secretary is a

:18:16.:18:26.
:18:26.:18:35.

Liberal Democrat. Giles Dilnot reporting. And we've been joined by

:18:35.:18:39.

Charlie Mullins, managing director of Pimlico Plumbers. Who do you

:18:39.:18:45.

trust more to look after the interests of your business? I trust

:18:45.:18:49.

the Tories Roberttown not sure who we can trust these days. Certainly

:18:50.:18:55.

the Tories. -- but I am not sure. Maybe 20 years ago you would have

:18:55.:19:03.

been more enthusiastic. Life is tough but there is such a lot going

:19:03.:19:08.

on at the moment there is a lot of uncertainty. For me, I am confident

:19:08.:19:14.

with the Tories. Mrs Thatcher used to understand small business. Her

:19:14.:19:22.

father used to earn at the grocer's shop. We started in 1979, the same

:19:22.:19:25.

time that Margaret Thatcher became Prime Minister. She gave me and

:19:25.:19:31.

lots of other people inspiration to hope we could succeed in business.

:19:31.:19:36.

Who would have been an inspiration in this Cabinet David Cameron,

:19:36.:19:44.

George Osborne. I'm -- I think we are drinking from the same teapot.

:19:44.:19:49.

The situation when Labour was there, we had no contact at all. It was

:19:49.:19:56.

not acknowledging us. I have had Theresa May, Boris Johnson, George

:19:56.:20:01.

Osborne. I had been to see David Cameron at Number 10. They are

:20:01.:20:07.

prepared to listen to us. Labour went out of its way to court

:20:07.:20:12.

the vote of business. They wanted it to be part of the New Labour

:20:12.:20:17.

project. We cannot yet say that of Mr Ed Miliband -- Ed Miliband, can

:20:17.:20:23.

we? I think he agrees with the premise of Tony Blair. That is that

:20:23.:20:29.

Labour need some business support to get elected. Tony Blair did it

:20:29.:20:34.

incredibly well in his three elections. He always had business

:20:34.:20:40.

people endorsing him. The last Labour administration, it was

:20:40.:20:44.

conspicuous by their absence. Everyone thought Peter Mandelson

:20:44.:20:49.

did a great job as Business Secretary but it did not translate

:20:49.:20:54.

into endorsements. That is the problem. You helped open doors in

:20:54.:21:00.

the 1990s before and after power. You help to bring about this affair

:21:00.:21:06.

between New Labour and business. Who is doing that now? Actually, I

:21:06.:21:11.

think Chuka Umunna is very good and is doing it. What the Government

:21:11.:21:17.

needs to do is, there is no obvious person who it is the cheerleader

:21:17.:21:22.

for business from the coalition. Business people always said the two

:21:23.:21:26.

great people in that department where Peter Mandelson and Michael

:21:26.:21:30.

Heseltine. Both believed in business and went out of their way.

:21:30.:21:36.

There is no such person today. It is lacking and we need one. What

:21:36.:21:41.

Labour did before and what they are doing now, they spend a lot of time

:21:41.:21:46.

schmoozing the boardrooms of the city and the FT-SE 100 companies.

:21:46.:21:51.

They do not spend so much time dealing with companies like this.

:21:51.:21:57.

That may be true. It is a missed opportunity. We have a situation

:21:57.:22:01.

where I believe the Tories are working with small businesses. They

:22:01.:22:05.

have lowered the business tax rates and of cutting the red tape. They

:22:05.:22:11.

are helping get apprentices up and running again. Have you seen an

:22:11.:22:15.

improvement in the quality and number of apprentices question but

:22:15.:22:20.

you must depend on that. I worked with The Prince's Trust, getting

:22:20.:22:25.

youngsters into work. I believe The Apprentice scheme is working.

:22:25.:22:34.

you seen a cut in red tape? Have you seen any red tape really?

:22:34.:22:41.

believe they will cut some of the red tape for employing people.

:22:41.:22:46.

have not yet? I believe their wealth. With Labour, they made

:22:46.:22:52.

themselves busy in business and probably too busy - leaving it to

:22:52.:22:58.

Gordon Brown but the bankers. them why Labour is the party of

:22:58.:23:03.

business. A self-made man, runs a great business, employers lots of

:23:03.:23:08.

people. 200 apprentices, proper skills. If Labour wants to come

:23:08.:23:15.

back to power, he has to win over Pimlico Plumbers. He is doing a

:23:15.:23:21.

good job -- Chuka Umunna is doing a good job in talking to business

:23:21.:23:27.

leaders. You have got your work cut out! Have you hired anybody extra

:23:27.:23:33.

since the top tax rate was cut? course we have. The other man has

:23:33.:23:38.

to come back and pay me my bet. You know, been used since we had before.

:23:39.:23:47.

I will give you a court if I have a dripping tap! -- a call. Now

:23:47.:23:50.

earlier in the programme we set you a little quiz. Last year, the chief

:23:50.:23:53.

executive of Next, Simon Wolfson, offered a quarter of a million

:23:53.:23:56.

pounds prize in a competition to find the best solution for dealing

:23:56.:24:06.
:24:06.:24:15.

with a collapse of the eurozone. Well, Simon Wolfson, joins us now.

:24:15.:24:25.

So who won? Roger Bootle. economist won. Did you get any

:24:25.:24:31.

entries from politicians? We did get an entry from a politician but

:24:31.:24:36.

it is anonymous, so other much telly it was. Did Alastair Darling

:24:36.:24:40.

attempt? I am not even going to narrow it down. You did not get

:24:40.:24:47.

mine? We did. We put it straight into the bin. The winning entries

:24:47.:24:52.

suggested the net overall effect of one or more countries leaving the

:24:52.:24:58.

eurozone would be positive. Do you agree with that? In the long run,

:24:58.:25:03.

yes. Short-term pain and then long- term recovery. That is the story of

:25:03.:25:08.

the destruction of any structure that contains the market. At the

:25:08.:25:13.

moment, you have overvalued currencies in the South,

:25:13.:25:17.

undervalued currencies in the north. Break that structure and there will

:25:17.:25:22.

be overvalued debt which needs to be written down. Long term, the

:25:22.:25:28.

prize is this. A 20% unemployment in Spain, 15 in Ireland and

:25:28.:25:32.

Portugal. Those people need jobs. Without devaluation, they will not

:25:32.:25:37.

get them. Are you talking about a number of countries leaving the

:25:37.:25:43.

eurozone? Ultimately one hopes it can all muddle through and sort

:25:43.:25:47.

itself out. It looks increasingly unlikely. The trouble with all the

:25:47.:25:52.

rescue packages is all they're doing is refinancing debt. They are

:25:52.:25:56.

not addressing the issue of employment and growth in southern

:25:56.:26:01.

European countries. The choice Europe seems to face at the moment,

:26:01.:26:06.

for a country like Greece, stay in the euro and have austerity for as

:26:06.:26:11.

far as the eye can seek or take the pain - probably worse than

:26:11.:26:15.

posterity to begin with - by devaluation of leaving the eurozone

:26:15.:26:22.

but begin to start climbing up again. -- austerity. 80% of Greeks

:26:22.:26:27.

are in favour of remaining within the euro. That is because there is

:26:27.:26:36.

no such thing as an orderly exit. Simon talked about the short-term

:26:36.:26:40.

gain -- pain for the long-term gain. That would be horrific. It would

:26:40.:26:45.

lead to a situation far worse than we have now. With devaluation, you

:26:45.:26:52.

get a fillip from dead. After the war, there were DM16 to the pound.

:26:52.:26:58.

-- from it. Were we eight times better off than the Germans?

:26:58.:27:03.

problem is, in the absence of the devaluation, have to countries

:27:03.:27:07.

where inflation is running miles ahead of gross, how do they get out

:27:07.:27:14.

of it? It is the same with the company or an individual. -- ahead

:27:14.:27:19.

of growth. You have to say at some point, we will write off the debt

:27:19.:27:25.

and start again. The country that most successfully grew out of the

:27:25.:27:29.

Depression was Great Britain and that is because they took the

:27:29.:27:35.

decision to devalue. That led immediately to growth. We have

:27:35.:27:39.

devalued constantly over a series of decades and I do not think we

:27:39.:27:44.

are richer for it. Is it a good idea for countries to run inflation

:27:44.:27:49.

constantly ahead of interest rates and the answer is, note. Where

:27:49.:27:54.

there is a clear distortion in the market, should a one-off action be

:27:54.:28:03.

taken? -- no. The Greeks do not want austerity either. Let me ask

:28:03.:28:07.

you this. A quarter of a million pounds is a lot of money. Do you

:28:07.:28:14.

get value for money? I could not have hoped for better. We got very

:28:14.:28:19.

high-quality entries was a two runner can -- runners up were

:28:19.:28:29.
:28:29.:28:30.

fantastic papers. Thank you for coming on and explaining that.

:28:30.:28:39.

Thanks to Rolo and as well. I will be back tonight at 11:35pm. --

:28:39.:28:44.

Rowland. We will have Michael Portillo, Alastair Campbell and

:28:44.:28:50.

Andrew Neil with the latest political news, including former head of the army, Lord Dannatt, on the government's restructuring plans and chief executive of Next, Lord Wolfson, on the Eurozone crisis. Also, will the political parties be able to reach an agreement on an inquiry into the banking scandal?


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