05/07/2012 Daily Politics


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Morning, folks. Welcome to the Daily Politics.


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


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


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


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


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


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


parliamentary inquiry instead? Remember the prawn cocktail


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


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


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


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


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


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


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


Europe lobbying group. Welcome to the Daily Politics.


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


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


has left many questions unanswered about the Barclays rate fixing


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


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


should take. The government wants a parliamentary committee to report


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


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


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


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


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


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


happens. There are plenty people around here wondering whether they


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


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


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


between the trots lower at the Shadow Chancellor. Government


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


he was running a shadow treasury operation and has questions to


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


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


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


privatise it. MPs are suggesting maybe George Osborne should have


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


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


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


business. Is there apprehension that they will be constantly


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


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


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


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


budget. If we constantly attacked the financial have since,


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


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


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


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


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


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


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


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


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


Diamond has presided over this collapse in bunny. He ensured


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


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


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


a million pounds prize in a competition to find the best


solution for dealing with a collapse of the eurozone. The


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


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


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


show Simon Wolfson himself will give us the correct answer.


In about 30 minutes, the Defence Secretary Philip Hammond will


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


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


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


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


hear? In 2010, the Army's strength was


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


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


this was deemed too politically risky. But battalions are expected


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


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


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


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


strength English units with a strong recruiting record will go,


but others in Scotland that have struggled with recruitment, will


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


Territorial Army, with the number of deployable reservists expected


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


resources are made available, training days, opportunities, and


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


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


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


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


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


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


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


government will have to manage that this very carefully. If


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


procurement programme Labour had signed off before it lost was


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


of pandering to pinstripes but without business believing. You


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


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


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


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


Conservative Party. It stands for free enterprise, individual


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


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


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


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


cocktail offensive was winning the confidence of business, central to


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


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


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


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


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


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


that message is to define the ethical goal of entrepreneurism.


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


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


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


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


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


neither predator nor producer but predicated on the private sector.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


incredibly well in his three elections. He always had business


people endorsing him. The last Labour administration, it was


conspicuous by their absence. Everyone thought Peter Mandelson


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


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


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


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


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


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


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


great people in that department where Peter Mandelson and Michael


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


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


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


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


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


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


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


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


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


improvement in the quality and number of apprentices question but


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


moment, you have overvalued currencies in the South,


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


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


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


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


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


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


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


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


not addressing the issue of employment and growth in southern


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


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


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


posterity to begin with - by devaluation of leaving the eurozone


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


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


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


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


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


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


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


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


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


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


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


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


Depression was Great Britain and that is because they took the


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


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


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


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


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


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


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


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


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


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


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


Rowland. We will have Michael Portillo, Alastair Campbell and


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