06/07/2012 Daily Politics

Morning, folks, and welcome to the Daily Politics.

More coalition trouble this morning with the Lib Dems threatening to

withdraw support for parliamentary boundary changes if Tory MPs derail

plans for Lords Reform. We'll talk to a Tory rebel who's not for

turning. After the anger and acrimony, the Inquiry. But after

Balls and Osborne's bust-up, can MPs really get to the bottom of the

banking scandal? As the Met Office forecasts a month's rainfall in the

next two days in parts of the UK, many homeowners will be living in

fear of floods. But with a deal between Government and the

insurance industry expiring in less than a year, could they soon be

left high and dry - or low and wet - when the waters rise?

And it's a long way from anarchy in the UK as Johnny Rotten joins the

Question Time panel. So how did the punk legend do? We ask his fellow

panellist, and something of a rocker himself, Alan Johnson, for

his verdict. So all that's coming up in the next

half hour. With us for the whole programme today, Amber Elliott from

Total Politics magazine and our old friend Ian Collins. Total madness!

And our old friend Ian Collins. You are our old friend? Yeah! Now, the

coalition air is thick with threats and intrigue this morning. No

change there, then. According to sources to Nick Clegg, there could

be "serious consequences". The Liberal Democrats via an interview

given by one of the Deputy Prime Minister's departing advisers are

warning David Cameron that changes to Parliamentary boundaries much

prized by Conservatives could be at risk if Tory MPs derail the Lib

Dem's pet project, House of Lords reform.

We're going to be joined by one of the rebels that the Lib Dems want

to warn off, Peter Bone, MP. Good morning. Good morning to you. Are

you frightened, going to act? Are you going to retaliate as a result

of this threat? Quaking in my poots, I think, the threat from the

Liberals. They just can't be trusted. The deal was they got this

wretched AV vote in return for the boundary review. They all voted for

that bill. I actually voted against the bill, and now because they

didn't get what they wanted in the AV they're now saying it's all

about House of Lords reform. Hold on. That was in the coalition

agreement. House of Lords reform, bringing forward proposals, seating

agreement, but nothing about that. You had the Prime Minister saying

it was a third term priority. had a manifesto too. Why are you

renegging on it? You did not say that. Your manifesto said you would

seek a consensus on House of Lords reform. It's only because of people

like you we don't have a consensus. A consensus is a consensus. We're

still seeking it, haven't quite made it yet. Do you take the threat

seriously? Because it's pretty hard in the current system for the

Tories to get an overall majority even if you do well in the polls.

If you don't get boundary reform, it's almost mission impossible.

don't agree. I think if we had a strong Conservative Government,

perhaps as a minority Government for six months to a year then went

to the country, we'd get an overwhelming vote and have a clear-

cut Conservative majority. I think the Liberals messing around like

this just proves the sooner we get to a minority Government, the

better. How high would you put the chances of getting a Conservative

Government? I think if we govern as a minority Government and for

instance brought in definite plans for an EU referendum, a bill of

rights, tougher on immigration and things like that... You're not

going to get any of that are you? Not with the Liberals. Not getting

it even from David Cameron. I don't know. If he was free to be

Conservative Prime Minister, we could govern and put our case to

the country in due course, and I think that's - nobody really

seriously thinks this coalition can stagger on to 2015 when you can't

trust for one moment the Liberal Democrat members of it. Is this

just the normal sort of coalition politics, or do we take seriously

the Lib Dem threat? I think, you know, it's quite fun politics,

really, because Nick Clegg has upped the ante without saying a

word. You have had his advisor who left yesterday, and he's put the

situation out there where the Lib Dems have said, look, if you don't

do this for us, we'll stop boundary review - stop the boundary changes.

Would you leave them? I think this is just the beginning step. Given

it's a here-today-gone-tomorrow advisor following Steve Hilton to

the United States. It's great for Nick Clegg because if it doesn't

work out he can say it was just my advisor. That's why you wonder what

it's all about, Alfie, even though your name not Alfie! Because when I

interviewed Nick Clegg on the Sunday Politics and said, "If you

don't get Lords reform, will you retaliate?" He said, "One of the

good things about this coalition is we don't in for tit for tat

retaliation." Peter Bone needs to have a word with Mrs Bone on this

occasion because they seem to have lost the idea of what a coalition

is all about. If Peter thinks seriously the Conservatives can

govern with 50 less seats in a minority Government such as that I

am afraid he's living in cloud coup-coup land. One final thing -

stand back from it all and give me your prediction, when this

timetable - call it the guillotine notion determine debate on the

House of Lords reform comes before, there will be Tory rebellions,

given that Labour will abstain or vote against, will you have enough

rebels to win this vote to stop Lords reform in its tracks?

wouldn't stop Lords reform in its tracks, but it would cause problems.

Will you? I think there is enough votes it in, but I don't think in

the end the Government will move the programme motion. Why move a

motion when you know you're going to be beaten? Carry on with the

legislation... That would mean the Lords reform would carry on in the

House and gum up the works. We'll see how much it does. Remember, all

parties before the election were in favour of scrutinising legislation

fully, full scrutiny. What does it matter that MPs stayed through the

night to look at it? It's about time you did some work. Good to see

you. Now, there is another inquiry on

the way - this time about the rate- rigging scandal that took down Bob

Diamond this week. But agreement did not come easy.

Yesterday's debate on the banking inquiry was dominated by

acrimonious exchanges between Ed Balls and George Osborne about

comments by the Chancellor alleging that his Shadow had questions to

answer over pressure put on Barclays to lower the LIBOR rate in

2008. It was quite a piece of parliamentary theatre.

Impugned my integrity - he has said - no, and he has made an allegation

in The Spectator and all over the newspapers. He has no evidence -

because there isn't any because it's untrue - and he knew there was

no evidence because he knew it was untrue, and he said it anyway

because that is the character of the man, Madam Deputy Speaker.

idea that I am going do take lessons in integrity from a man who

smeared his way through 13 years of Labour Government, who half the

people who ever served in him thinks he was a disgrace in his

post is another thing. Another quiet day in Westminster.

Where does this all leave the banking inquiry? Well, Labour had

wanted a judge-led public inquiry. But after the Government won the

vote in the Commons, the opposition offered qualified support to a

parliamentary inquiry led by the Tory Treasury Select Committee

chair Andrew Tyrie. Questions remain about the effectiveness of a

parliamentary inquiry following criticism of Mr Tyrie's Committee's

cross-examination of Bob Diamond. If you could call it a cross-

examination. It's also unclear whether a politician-led inquiry

can overcome the increasingly partisan tone of the debate about

where responsibility lies for the rate-rigging and wider banking

scandal. With us now is Michael Fallon,

Conservative Deputy Chairman and Chris Leslie, Shadow Financial

Secretary. Welcome to you both. Let's not go through the whole

argument again we had yesterday afternoon. We're going to have a

parliamentary inquiry. The Government wants it. Labour will

reluctantly go along. Do you have a view as to what shape this

parliamentary inquiry should now take? Obviously, we would have

preferred the judicial, but given we are where we are, there are a

number of things to be resolved. There is the question of is there

going to be officials and secretariat? Couldn't be Treasury

officials. They're in the frame. think the Chancellor said there

were going to be discussions in the usual channels. We want to see what

those are. I have to say, you mentioned in the outset, because

this is more than just Barclays, because we're talking about

potentially dozens of banks around the world being involved in this, I

think the public will be saying, you know, is this an inquiry with

sufficient independent importance and stature? I understand that is

why we are still... As you said, we are where we are. We had that

debate yesterday. Let's not go over old cold milk here. Do you have an

idea what - how this inquiry should be constituted? Should it have an

independent secretariat? Should it - people testify under oath, which

doesn't usually happen? Should there be a QC to teach you how to

ask questions? Look, Labour have backed down on the inquiry they

wanted. We have agreed we have parliamentary inquiry. In turn

we're happy to listen to Labour if they have constructive suggestions

about how this inquiry should be framed. In answer to your questions,

yes, more resources can be provided. Parliament cost could do that the

National Audit Office might be able to help. Your second question I

think was on... Should people testify under oath? They can

testify under oath. The Parliament can require that at the moment.

has the power to do that. It does. Finally, I think you said, should

we have a lawyer involved? You can have a lawyer advising the

committee. You do have that. Should you have a prominent QC there to

advise you as a team, to have back- up questions? Certainly to advice.

I don't think our concessions would understand that we would have to

hire somebody to ask the questions for us. Certainly, you could have

legal advice. The Treasury Select Committee already has a lawyer who

advises. The difficulty is, is this the right moment to be trying to

sort of forge a new way of Constitutionally investigating this

within a parliamentary process - oaths and QCs, and so forth. It

would have been better - and the public expect - it should have been

straight away, get into that independent judicial inquiry where

the rules are already set out. You're revisiting yesterday.

can't repeat it three times when we heard it endlessly yesterday. You

may be right or wrong, but we are where we are. I am trying to decide,

what should the scope of the inquiry be? What lessons can we

learn given we have legislation going through. We have already had

a judicial inquiry going on by the States. The facts are out there.

What we need to do is know how to change the legislation already in

front of Parliament to learn the lessons. The inquiry we have had

sparked off by the Americans, not the British, was about particular

LIBOR fiddling - two types of fiddling - one by officials, one by

rogue traders. We have not had an inquiry into why the culture of the

City has been dragged down to the level now where every day we open

our papers and some other bank is having its collar felt for mis-

selling, cheating, lying and paying themselves shed loads of money they

don't deserve. Exactly. We have legislation, Andrew, in front of

Parliament at the moment to better regulate the City, so we need to

learn very quickly from this inquiry. Which isn't good enough.

Which isn't good enough. Speed is of the essence. We have learned the

lessons. We can get them into the bill in front of Parliament. After

the Trace Select Committee in front of Bob Diamond where you barely

laid a finger on him, do you think you need a QC to do this? There

were three different aspects to the LIBOR inquiry - 2005, 2007 and 2008,

and each member was per suing their own line of questioning. Of course,

that can be better organised. One of the advantages of this

particular new committee is there will be more expertise there. There

will be somebody there from the House of Lords there as well. It

will be smaller, more focused, a slightly narrower inquiry. It can

get on with this every week now until Christmas. Is it Labour's

contention that in the autumn of 2008 the Government played no part

whatsoever in trying to get the LIBOR rate down? Well, I mean,

there is a distinction between governments of all parties who will

want to have a view about the level of interest rates, unemployment

inflation and then a suggestion - no, no, this is important - then a

suggestion that somehow manipulating or fraudulently

fiddling figures has to be the route to be pursued. That's not

what I asked you. I am not asking you have... Absolutely. I am asking

you is it Labour's position that it was not your policy to depress

LIBOR in the autumn of 2008? governments want to make sure

interest rates are affordable. That's not the answer to my

question. The key allegation the chance loor was insinuating is

somehow key individual Ministers including Ed Balls had been somehow

complicit in the manipulation fraudulently... No, no, that's not

the allegation. Is it your position that Mr Balls or Ms Vadera or

anybody else played no part whatsoever, directly or indirectly,

in influencing LIBOR policy? We'll go through them. Ed Balls has said

he's not had those conversations about LIBOR... I didn't ask you. I

said indirectly or directly? She's gone on the record and talked

about... She said it was a concern. The paper she commented upon.

Phillip Hammond, for example, a Shadow Chief Secretary, also talked

about LIBOR... You were the Government, Chris. There is a

difference between saying interest rates should be affordable and

implying you should somehow... sorry. A criminal approach to

fiddling the figures. Nobody wanted to do that. The issue is not should

interest rates be affordable. was. You need to reread your

history. The issue was wholesale lending for the banks had

completely dried up and the LIBOR rate was going through the roof. It

was a matter of life or death. It was not about affordability. I ask

you one more time - are you saying the Labour Government at no stage

directly or indirectly put pressure on the bank to lower LIBOR?

Diamond himself said in response to a question from Michael, were

Ministers putting pressure on you to fiddle LIBOR? His answer was, "I

didn't believe that no." Diamond being instructing, which is

entirely different. The answer you're looking for, for indirectly

is yes, because he was the City Minister. You can't be the

Government and have no indirect connection between what's going on.

Do you understand the interest between fiddling figures? It wasn't

George Osborne's best moment. Somehow he was sitting around the

table with a calculator and abacus trying to instrument what the rate

should be is preposterous. The Government of the day were not

indirectly linked at some level with what is going on in the City -

you must know that. Part of the problem is we seem to be doing an

inquiry before anyone started an inquiry. Yesterday in the Commons

we had a situation where it was sort of very unparliamentary to a

certain extent. It got very personal. The worry with this is it

sets a precedent. You then go into an inquiry which is a parliamentary

inquiry... If someone accused you of fiddling figures you would want

to defend your position. George Osborne overplayed his position. I

have spoken to Conservative MPs who tell me he's overplayed his hand.

Some were on the record. Yesterday we saw Ed Balls who can be very

tribal - he's not so good at taking it. We're finished. But here's a

prediction. We'll come back do this. As you may have noticed, it is

chucking it down out there. According to the forecast, parts of

the UK can expect a month's worth of rain in the next 48 hours. The

Met Office told us it would be dry. It is what makes the British summer

great! But for many whose homes are at risk of flood, the threatened

downpour is serious stuff. And it could get worse if a deal on flood

insurance between the government and the industry expires next year.

Here is Len Tingle, our political editor in Yorkshire.

This man demonstrates brand new flood defences just fitted to his

front door. Affected, he hopes, to keep out the water. Five years ago,

this is what happened to his street. This is just outside Barnsley in

South Yorkshire. The nearby river burst its banks and locals were

rescued by boat, waves up to five feet high burst through doors, and

destroyed everything in sight. There had not been a single flat

here since the 1950s. The Environment Agency says it cannot

reduce the risk of it happening again to less than once every 25

years. That is a risk too far for insurance companies. I would need

to pay 800, 900 pounds more. could be far worse. Across all

affected areas, at temporary deal between the government and effected

insurers are keeping coverage in place. The deal runs out next year

and the insurers want a new one, with government agreeing to

underwrite property in the highest areas. If we ever managed to get

insurance again. This man is the Finance Minister. Last week he

toured some of the latest area has to be inundated. Here he is near

Halifax in West Yorkshire. We are reducing the spending over four

years by 6%. It is a real priority for us. Broadly speaking, we're

spending similar amounts as the previous government because we're

spending the money smarter. couple of days later, the Prime

Minister visited and neighbouring town. He had a clear message for

the insurers. We need a clear deal with the insurance companies so

that they do what it says on the 10, they provide people with insurance.

Labour warns of falling insurance crisis. At a flat summit in Hull,

there were claims that government spending cuts are deeper than

admitted. Spending on flood defences was cut by this Government

by more than 30 %. The insurance industry have accepted that but

they have said, do not expect us to take up the risk. As the

politicians and insurers argue, the tide of fear and uncertainty grows.

These pictures must have made many reach for their insurance policies.

The fear is that if there is next time, those policies may not exist.

Len Tingle there. And Aidan Kerr, who is Head of Property at the

Association of British Insurers, joins us. Good morning. If the

current agreement is not replace, will you simply stop insuring those

at risk? We're committed to ensuring those who are at risk of

flux. But the fact is that the risk is increasing over time. --

insuring. But if you do not get that agreement with government,

will you stop providing insurance? Insurance will always be available

but as the risk increases, the cost will go up. The issue is about

affordability. I think I would take that as a no. Does the Government

need to ensure that no household in the UK becomes uninsurable? It is a

joint responsibility between the government and the insurance

industry. What do you need from the government? They a government needs

to work with the insurance industry as they have been doing so far.

What does it need to do? It needs to work with us to develop a model.

We need to agree with government a kind of pooling system that allows

those most at risk to be supported by the market more widely. If you

have such a system, and the taxpayers going to be or on the

line for this? -- are going to be responsible for this? The insurance

industry would still hold on to a lot of the risk. There is always a

risk of flooding. I was interviewing a meteorologist last

weekend he was saying that every year we have this conversation. The

risk is always there. You pick and choose where you want to pay and

who you want to insure. For most people come my insurance is very it

affordable. Flood insurance is part of a standard home insurance

package. Where it has happened, people can still get their

insurance renewed. The problem with the packages there is no

stipulation as to how much that will cost. So you do not want to

take the risk? Your parents fear a flood risk. It they live in St Ives.

What would you say? There are 5.2 million homes at risk of flooding.

The Government is planning to cut flood defences. You have a

situation where the last government agreed a deal where they would keep

up flood defences in return for insurance companies subsidising

homes at risk, but we have a situation where this government is

a bit more free-market about it and not keen on the idea. That leaves

people in a difficult situation. They buy annual sled insurance and

in one year's time, they do not know what will happen. Do you think

you will get a deal with the government? I certainly hope so.

Thaw This week, scientists in

Switzerland found the God particle, Andy Murray reached the semifinal

at Wimbledon and we learnt that TomKat were no more. But what else

has been happening in the Westminster village, I hear you

ask? Here is the Week In 60 seconds. The former Defence Secretary Liam

Fox sparked a debate about a potential referendum on Europe. It

sounded a bit like the hokey-cokey. The now ex-boss of Barclays

appeared in front of the parliamentary committee to be

questioned over the interest-rate fixing debacle. He is such a

diamond geezer, as he was on first- name terms with everyone.

George, this was reprehensible behaviour. Nick Clegg gave his

response on the scandal to the children's programme Newsround.

They have got to be responsible for when things go wrong. He said that

being in power may 10 feel like he had had a lobotomy. All the really

big brains head for Question Time, and John Lydon of the sex Pistols,

who disappointed many of his fans by being sane. I do not want my

drugs taxed. And to discuss John Lydon, aka

Rotten's, performance on Question Time last night, we can speak to

his fellow panellist, and something of a rock 'n' roller himself, Alan

Johnsosn, who joins us from Hull. Good morning. How it did he do?

did all right. It is always easier for someone who is not a politician,

because they do not have a constituency to answer to, they are

not expected to take blame for things that happen in the past, at

the moment are in the future. But I thought he captured the mood. I

would think this because I agree with him about having a judge led

inquiry. He was nervous beforehand. He had a go about the smoking ban

beforehand with me but I do not reveal green room conversations.

Did he makes sense on the big issues of our time? Yes, he did. He

made sense on banking and he had important things to say. He puts on

a bit of an act that he is an anarchist, but actually, there is

some establishment in hand. We had this amazing drug confession as

well, but that came from the Tory MP who was on the programme. What

did you make of him? I want to watch wise old men like Alan

Johnson to impart his wisdom. I thought it was preposterous. He

wheeled out some vacuous platitudes. He did at this thing that you can

do it on a show when you're not a politician, you can come to a

crescendo at the end Divya point. He even interrupted the audience.

If people want to be entertained, E C was entertaining. It is Question

Time, it is not supposed to be entertaining. Alan Johnson, are you

telling me that John Lydon is your adviser on banking policy now?

but the name is quite appropriate, because something rotten is