10/07/2012 Daily Politics


10/07/2012

Jo Coburn with the latest political news, interviews and debate. Guests include former Chancellor of the Exchequer Lord Lamont and former Liberal Democrat leader Charles Kennedy.


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Transcript


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Hello and welcome to the Daily Politics. And the finger-pointing

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continues. Labour call on George Osborne to apologise for claiming

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that Ed Balls was involved in the bank-rate fixing scandal. A Tory MP

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agrees. But William Hague says the Chancellor has nothing to apologise

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for. So who's right? Nick Clegg's dreams of an elected

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Upper Chamber are in doubt as MPs prepare to vote on the Deputy PM's

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cunning plan. We've got the latest on the parliamentary manouverings.

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Conservative backbenchers demand the government takes back powers

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from the EU. We'll hear from one of them.

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And David Cameron rolls out the red carpet for French President

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Francois Hollande. But will a slap- up meal and a cosy chat in Downing

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Street make up for the PM's decision not to meet the socialist

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candidate last time he was in town? All that in the next hour. And with

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me for the whole programme today is the former Conservative Chancellor,

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Norman Lamont. Welcome to the Daily Politics. Let's kick off with the

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suggestion from the Conservative backbencher Nick Boles that the

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Government should consider cutting things like winter fuel payments

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and free bus passes for well-off pensioners. Mr Boles - tipped by

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many as a future Government minister - put forward the idea in

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a speech this morning. Is that something you would agree with him

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on? It is very difficult politics, it would meet a lot of opposition,

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but I do agree with it and I myself have been eligible for the winter

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fuel allowance for quite some time. I have only taken it for two years.

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And a bus pass? Yes, I do have one, which I do use, but I don't think I

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should. Do you think it was a mistake for David Cameron to rule

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it out? I was watching on television the other night an

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audience of pensioners and when this was put to them there was

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complete unanimity - we have paid our taxes, but actually it isn't

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rational or entirely fair. Do you think it should be part of the

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calculations post 2015, presumably because it would be too difficult

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now for David Cameron to go back on his word? I don't think it can be

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done in the short term, I doubt if the coalition would agree to it,

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but we are talking about means testing and it would mean poorer

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pensioners would still get the hell. If as you say, politically very

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dangerous territory, particularly for a Conservative-led government

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one might argue if they win a majority next time? That's right.

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The problem is that once you give the benefit it is extremely

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difficult to take it away. Should George Osborne apologise to Ed

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Balls? The answer depends on who you talk to. Labour say yes, as

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does the Conservative backbencher Andrea Leadsom. Allies of the

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Chancellor say no, that he's got nothing to apologise for. What's

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the row all about? It's the allegation George Osborne made in

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an interview with the Spectator magazine that Ed Balls was clearly

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involved in discussions about reducing the LIBOR interbank

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lending interest rate. Yesterday, the Bank Of England's deputy

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governor Paul Tucker was given the chance to give his side of the

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story. Did Jeremy Hewitt or any other person encourage you to lean

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on Berkeley's or and the other bank? At a looming not. To do any

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government minister encourage you to lean on Berkeley's or any other

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bank to lower the LIBOR submissions? At a moving not. --

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absolutely not. If I may add one thing, what's more, I don't think I

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spoke to the treaty throughout this period at all. Did Ed Balls ask you

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to lean on a bank, or any other government minister? No, No. Last

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night, Andrea Leadsom, a Conservative MP, was asked whether

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she thought George Osborne should apologise for his allegations about

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Ed Balls. Yes, I do. Obviously he made a mistake and he should

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apologise but it was a very valid discussion at the time about who

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knew what and it is now being completely squashed by Paul Tucker.

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It is a valid conversation to have hard, and now at a personal level

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he probably would want to apologise. We've been joined by Labour's

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Shadow Business Minister Pat McFadden. I am pleased to be here

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but I am not the shadow business minister. You were once? Old habits

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die hard. Should he say sorry to Ed Balls? We can spend time chasing

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the Chancellor but he should reflect and the government should

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reflect on the way they conducted themselves in the last week. These

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were serious issues. Barclay's put out this information which was

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intended to have given the impression they were meant on in

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some way by the Bank of England to change the LIBOR raids. In the

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evidence from Paul Tucker we are clear that no official from the

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last government asked him to lean on Berkeley's. The whole impression

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there was some government jiggery- pokery from the last government

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going on has been completely squashed. Am I taking from that

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that he should apologise to Ed Balls? He has certainly been wrong.

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I specifically asked Paul Tucker about Ed Balls and his denial was

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as emphatic as any other minister, and this reflects on the Chancellor

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because rather than focusing on the issues in banking he has chased a

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political hair and tried to make a political point. But so have you by

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asking him to apologise. He it has backfired because it has not been

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borne out by the testimony. What do you say to that, Norman Lamont?

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didn't much like the scenes in the House of Commons last week and I

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didn't think they reflected very well on Parliament. If there is an

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allegation Ed Balls intervened, it doesn't stand up. There is an

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allegation between a minister, if he or she were to say to a bank

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there is a public policy reason we would like rates to be lower, that

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is different from making private gain out of misleading information.

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It might be legitimate for ministers to intervene, but the

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evidence is that they didn't even do that. We will come on to that,

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because as you say there might be real reasons for the government to

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talk to banks at the time of the crash. On the basis of that,

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wouldn't draw a line under this whole saga if the Chancellor just

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said "I'm sorry". I think possibly he did overplay his hand and I

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didn't like the atmosphere in the House of Commons. This is a very

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serious issue and I think it is very clear ministers did not

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intervene in any improper way. Judge -- George Osborne said

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ministers had questions to answer, which is not quite the same thing.

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Yes, and various and ambiguity as to who precisely was referring to.

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As in all these things it is a question of connecting two

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sentences. Do ministers have questions to answer? Labour

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presided over that whole culture. Whether ministers were involved or

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not, and Paul Tucker has said they weren't, are there other questions

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to answer about what went on? phrase "questions to answer" Has

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:09:45.:09:46.

been thrown about in a desperate way to leave an -- and nasty smell

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in the air. There was a world of difference between legitimate

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policy concerns and what we were talking about with Paul Tucker. Was

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liquidity getting back into the market? These are legitimate

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questions. That is a world away from the allegations made. On that

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basis, it has not been proven so far if the government intends to

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pursue it. Let's talk about government ministers or civil

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servants in the Treasury talking to Barclays and the Bank of England

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because they were concerned about the lending rate. Wouldn't you

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expect them to be doing that at that time? There was concern

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because the Barclay's rate seemed to be an out runner and they were

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worried it would illustrate or prove to be the case that Barclays

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could not fund itself. That is what ministers were worried about.

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it look to some people suspicious that those conversations and e-

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mails were going backwards and forwards to find ways of bringing

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:11:12.:11:13.

rate -- LIBOR down. Does this come close to crossing the line? It is a

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difficult issue. Ministers might for example with a floating

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exchange rate say whether they wanted it up or down. LIBOR is used

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for contract as well, and it is both a policy and regulatory issue,

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it is very complex. Why haven't Labour, out more strongly in terms

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of making the case that this is what ministers at the time were

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doing, these are legitimate concerns and they require that sort

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of correspondence to go on? I think they have. They have said they had

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concerns about liquidity in the market. The Jeremy Heywood e-mails

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you refer to our about policy. They are about we have put this scheme

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in place, why hasn't it had the effect we thought it would? They

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are legitimate concerns. There are legitimate policy concerns, and

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there is telling a bank to do something dishonest - they're very

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different things and the second did not happen. It is difficult when

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the public can't listen to transcripts... He is an educated

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man who knows very different. you have the text of an e-mail, is

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there an implication not that they are trying to manipulate but

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finding ways to bring it down? There is no need for any confusion.

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Confusion here is deliberate. Of course people wanted liquidity in

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the markets, they wanted a policy package, but that is very different

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from any indication to a bank that they should do something dishonest.

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Norman Lamont, are you pleased Bob Diamond won't be taking most of his

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bonus? Yes, although I think most people will be astonished that he

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gets any bonus. We have got to be very careful with this whole debate,

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how we conduct ourselves in the future. Undoubtedly this was a

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scandal, there was wrong doing, but we must not flagellate ourselves so

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much that would discredit the whole UK banking system in perpetuity.

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There were things that have to be put right, but we have got to

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remember that you can't just banish the banking system and have growth

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in our economy. You have got to be pragmatic about this. It is an

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important industry but what has been brought out through the

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regulators reports is that there is a cultural problem in that bank

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which has seen this and other regulatory breaches, and what I

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would want to see it is evidence that the bank takes its cultural

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:14:15.:14:21.

problem seriously and changes the culture to restore trust. A group

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of Conservative MPs have published a "shopping list of requirements"

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today on what powers they want the UK to take back from the European

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Union. The Fresh Start project includes Conservative MPs such as

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Andrea Leadsom, George Eustice, and Chris-Heaton-Harris. Amongst other

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policies on their lengthy list of possible renegotiations, they think

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Britain should insist on a veto for EU financial services regulation or

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perhaps push for regionalisation of the Common Fisheries Policy. They

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suggest stopping the use of the Strasbourg seat of the European

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Parliament, and allowing Member States to impose an income

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:14:56.:14:58.

threshold on immigrants from other EU countries. The MPs float the

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prospect of withholding contributions to European

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development funds if they are not reformed, and they think there

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should be radical reform of the Common Agricultural Policy. We have

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been joined by one of the Conservative MPs who wrote the

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:15:21.:15:24.

report, just in the nick of time. Can I start with you, George

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Eustace. I have had a brief look at the things you would like

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repatriated. You offer a series of options - green, amber and red -

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but the red options would have to be withdrawal entirely, do you

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I do not agree. This is a green paper, there are a lot of different

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proposals in there. We are saying, this is setting out a series of

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alternatives. Some of them do not require any negotiation with the EU,

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some of them would require some renegotiation. And the red options

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are areas where Britain could, if it wanted, take unilateral action.

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It would technically put us in breach of some of the EU treaties.

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That in itself would become a catalyst for renegotiation.

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Somewhere, we have to cut this Gordian knot, where people say it

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is impossible to renegotiate with the EU, what if they say no? The

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answer to that is not to say, therefore we will leave and give up,

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the answer is to say, we will take action through Parliament to

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unilaterally set aside certain areas, to bring them to the table

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and encourage them to negotiate. I think there are a lot of potential

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for us to make many changes. Some examples, like withdrawing from the

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Common Fisheries Policy - make is that an Indian itself, or is it a

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negotiating tool to get a whole range of things for you? I think

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the Common Fisheries Policy is a good example where the Government,

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through negotiation, has made some sterling progress over the last

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nine months. If the commission put through what is currently proposed,

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we're actually going to have a repatriation of fisheries policy in

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all but name, and you will have groups of national governments

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taking their own decisions. What makes you think you will get what

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you want? If it had been that easy, one presumes these things would

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have been done by now. Is it not the case that Britain does not have

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partners with whom it can negotiate in the EU, because of what has gone

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on over the last year or so, they will just say no? No, the case is

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that nobody has actually tried to renegotiate yet. Not only this

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government, but in the last 10 years, we had a Labour government

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which wanted to continue to hand powers over. I agree with a lot of

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what you're saying, but one important thing is that our

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relationship with the European Union is changing, and the nature

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of the eurozone is changing. It is becoming much more integrated and

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will become more so, and those changes require Britain's agreement.

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We have got to wait until those things come forward, and when that

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happens, we have a chance to say, we want a different relationship

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with Europe, because that relationship is going to be

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different, come what may. How long do you think that would mean

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waiting? I think it would be wise to wait before doing most of the

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things which George is suggesting. This will happen in time, but I

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think the Prime Minister is right, that the idea of a referendum now

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long would be completely wrong. But a referendum in which there were

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three options, in a few years' time, would be the right course. Are you

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prepared to wait to? Absolutely, I am prepared to wait. A referendum

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would come at the end of the process, not at the beginning. I

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think there are some things we can do in the short term. But I accept

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that a lot of things we will need to get in our manifesto, to do the

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more fundamental renegotiation after the next general election.

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some extent, they are taking over your territory here, if they are

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promising not just Tory MPs to be part of this group, but also the

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Government, to renegotiate, to repatriate powers, at the end of

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which there may be the prospect of a referendum, what has UKIP got to

:19:30.:19:35.

offer? The poles say that people want a yes or no question, as

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simple as that. The point I would like to make would be that many of

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the things you are talking about would require unanimity. You would

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have to get 26 member states to agree to them. It is cloud-cuckoo-

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land. This is a set-up job to try to kick this into the long grass.

:19:58.:20:03.

No, that is nonsense. I reject this defeatist idea. But how do you get

:20:03.:20:11.

over unanimity? The point is that even if you left the EU, you would

:20:11.:20:16.

have to renegotiate some kind of re-entry to that single market.

:20:16.:20:20.

Norway accepts 75% of the laws which come from the EU, but has no

:20:20.:20:25.

say on their formulation. So we have better negotiate from inside

:20:25.:20:32.

rather than from outside. Norman Lamont is saying, we have a stick

:20:32.:20:35.

with which to threaten the EU, in terms of getting what Britain would

:20:35.:20:44.

like. It says clearly, I have got it in front of me, this article of

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the Lisbon Treaty says renegotiation can only happen after

:20:47.:20:51.

we have handed over control. So, you're doing it the wrong way round.

:20:51.:20:55.

We should have the referendum first, then we start the negotiation, not

:20:55.:20:59.

the other way around. How much of a chance do you think the Government

:20:59.:21:05.

house of repatriating powers? Norman Lamont is saying, we could

:21:05.:21:09.

use the threat of not agreeing to close the fiscal union for the rest

:21:09.:21:16.

of the EU? I have got some time for Norman Lamont's point. It is

:21:17.:21:20.

absolute cloud-cuckoo-land to think that at the moment, we can pick and

:21:20.:21:24.

choose what we want from the European Union. The unanimity rule,

:21:24.:21:30.

and other rules, will stop that process. It is a two-way process.

:21:30.:21:36.

When Ted Heath joined the European Union, whatever it was called then,

:21:36.:21:40.

Fisheries was something he gave away for New Zealand Agriculture.

:21:40.:21:44.

It is give-and-take. So, they will want things from us. If they do

:21:44.:21:49.

move towards fiscal union, if they do, then you will see the fact that

:21:49.:21:52.

there will be negotiation by Britain about its relationship with

:21:52.:21:56.

that union. I would hope that at some stage we will join that, I

:21:56.:22:00.

don't think we can live as an offshore island indefinitely. Our

:22:00.:22:03.

job is to keep the economy up with the Germans and the North Sea

:22:03.:22:07.

economies, otherwise we will sink into the Mediterranean abyss.

:22:07.:22:15.

do you say to that? When we joined the European Community, back in

:22:15.:22:22.

1972, it made up 30% of global trade. It is now 15% and shrinking.

:22:22.:22:30.

We should be tying ourselves to an area closer to home, not to the

:22:30.:22:35.

slowest growing economic bloc in the world. The more there is no

:22:35.:22:39.

firm promise of a referendum, do you not think it is driving people

:22:39.:22:44.

into the arms of UKIP? Not at all. We need to prepare for that

:22:44.:22:47.

renegotiation. This paper is about starting that detailed heavy

:22:47.:22:53.

lifting work. It is very lazy just to talk about having a referendum.

:22:53.:22:57.

What we really need to do is to work out the kind of relationship

:22:57.:23:01.

we want with the European Union. As Norman Lamont said, things are

:23:01.:23:05.

changing, there is a fork in the road. Whether or not some countries

:23:05.:23:09.

leave the euro, or whether or not they integrate further, it is going

:23:09.:23:15.

to be forcing change, and we should be there, ready with proposals..

:23:15.:23:19.

But do you accept what this might mean in terms of relationships with

:23:19.:23:23.

France and Germany, that it will make those more difficult, even

:23:23.:23:27.

with the threat of what might happen in terms of closer fiscal

:23:27.:23:35.

union? Britain would be seen very much to be on the outside? I think

:23:35.:23:39.

heads of government are grown-up people, they know that Britain,

:23:39.:23:44.

culturally and historically, has never been an enthusiastic entity

:23:45.:23:49.

in favour of integration. They know that. They accept that. Britain is

:23:49.:23:53.

very important to the European Union in certain areas, like

:23:53.:23:58.

foreign policy, for example, what happened with Libya, though it was

:23:58.:24:04.

not strictly speaking an EU thing. They know very well that Britain

:24:04.:24:07.

has a special position and a special attitude. I think they

:24:07.:24:10.

understand that perfectly well. terms of the plan that you're

:24:10.:24:17.

putting forward, it is no different to David Cameron's, is it? It is in

:24:17.:24:22.

terms of saying that there are things right can do right now. They

:24:22.:24:26.

have started on some of the coalition commitments, and I think

:24:26.:24:30.

it is highly likely that they will exercise the opt-out from the

:24:30.:24:37.

justice and home affairs laws. And I think they have done well to

:24:37.:24:40.

safeguard our interests when it comes to things like the budget,

:24:40.:24:46.

where they have pressed for a freeze. And the Government are also

:24:46.:24:51.

examining the regulatory cost, the cost on the economy, and this is a

:24:51.:24:55.

very important point, that the burden of regulation ought actually

:24:55.:25:05.
:25:05.:25:05.

to be quantified, so that we know what the cost of membership is.

:25:05.:25:11.

Essentially, the Government cannot agree on any development in

:25:11.:25:16.

relation to the European Union. We have got a range of opt-outs, and I

:25:16.:25:19.

think the relationship, and I do not agree with Norman Lamont on

:25:19.:25:22.

this, I think the relationship is getting worse. We are having this

:25:22.:25:26.

debate, the eurozone are having a debate about whether they are going

:25:26.:25:30.

to be able to continue or not, but I think that for Britain to raise

:25:30.:25:37.

this question is a bit like, I mean, William Hague's analysis that the

:25:37.:25:41.

euro is a house on fire with no exit doors, and if there is a house

:25:41.:25:45.

on fire, we are arguing about some boundary fences down the bottom of

:25:45.:25:52.

the garden. We are not saying we should disrupt the process and a --

:25:52.:25:56.

disrupt the process now. We are saying that once they come up with

:25:57.:26:00.

some proposals for fiscal union, which will be some years away, that

:26:00.:26:05.

is the point at which you put your demands on the table. We have

:26:05.:26:11.

waited 37 years, if you're under 54, you have not had a vote on this.

:26:11.:26:15.

What we originally voted on was for trade, but it has now turned into

:26:15.:26:20.

the embryo of a European superstate. What we are actually saying is, why

:26:20.:26:24.

did this house catch fire? Let's make sure it does not catch fire

:26:24.:26:32.

again. But you have been calling for closer union. We are actually

:26:32.:26:35.

calling for the EU to go in a different direction. All of these

:26:35.:26:39.

proposals are about taking back some powers from the European Union.

:26:39.:26:44.

We talk about disagreements between Britain and the EU, but there are

:26:44.:26:46.

plenty of disagreements within the EU. The relationship between

:26:46.:26:50.

Germany and France, the relationship between Germany and

:26:50.:26:54.

Greece and Ireland, for example. Do not get so obsessed about our

:26:54.:27:04.
:27:04.:27:04.

relationship. You will have more time to talk, but I'm going to say

:27:04.:27:07.

goodbye to George Eustice, so, thank you very much. It was the

:27:07.:27:11.

year that Windsor Castle burned down, bill Clinton was elected in

:27:11.:27:15.

the United States, and the UK suffered its worst-ever financial

:27:15.:27:20.

crisis until, this one. Norman Lamont brought Britain out of the

:27:20.:27:24.

exchange rate mechanism, and arguably any chance of joining the

:27:24.:27:29.

euro when it came. Giles Dilnot has been finding out why Lord Lamont

:27:29.:27:33.

might feel that in the end he did the UK a big favour. A decade ago,

:27:34.:27:39.

it launched at midnight on New Year's Day.

:27:39.:27:44.

NEWSREADER: In Athens, where history dominates the skyline...

:27:44.:27:49.

With irony like that, it is no surprise Euro-sceptics have often

:27:49.:27:53.

suggested that Europe has been living with a hangover ever since.

:27:53.:27:57.

Why? Because they fully believe the euro was not an idea that went

:27:57.:28:02.

wrong, it was an idea that was wrong. Imagine if we said that

:28:02.:28:06.

every motorist driving in Britain had to drive their car using

:28:06.:28:10.

exactly the same gear at the same time, it would be ridiculous. Some

:28:10.:28:14.

would be stalling, some would be driving too fast, some would be

:28:14.:28:18.

ending up in the ditch, yet that is pretty much how monetary union

:28:18.:28:22.

works, it says that the dear settings within each economy, the

:28:22.:28:25.

interest rates, have to be set at the same rate. So countries like

:28:26.:28:29.

Ireland, they overheated and stalled, other countries which

:28:29.:28:33.

could have done with higher interest rates could not get them.

:28:33.:28:36.

Having a single interest rate for all of Europe was inevitably going

:28:36.:28:43.

to end in recession and disaster. So, why, if it was so clearly silly,

:28:43.:28:53.
:28:53.:28:59.

would Europe have embraced such an economically flawed plan? I think a

:28:59.:29:03.

single European state is what has been in the process of construction

:29:03.:29:07.

since the 1950s. The euro was an extension of that. It can be made

:29:07.:29:12.

to succeed. Unfortunately, or fortunately perhaps, it cannot

:29:12.:29:15.

succeed with all of the current members. It is perhaps no surprise

:29:15.:29:20.

that having stood on the abyss, Lord Lamont, who had to announce

:29:20.:29:26.

mechanism, is no great believer in the euro. But should he accept a

:29:26.:29:30.

bit of blame? I think another problem with the eurozone project

:29:30.:29:34.

is that it tried for too long to make it possible for Britain to be

:29:34.:29:39.

a member. For a long time, the British dangled a bit of ankle,

:29:39.:29:44.

saying we might join, we might not, and I think that process retarded

:29:44.:29:47.

the political integration within the eurozone, which might have

:29:47.:29:51.

meant that it would not have been facing the same problems today. I

:29:51.:29:55.

think we are much more likely to see a eurozone in which Germany

:29:55.:29:58.

sends money every year to weaker parts of the eurozone to raise

:29:58.:30:03.

their growth. We are much less likely to see one in which Germany

:30:03.:30:09.

agrees to guarantee everybody's debts. We need to admit that the

:30:10.:30:13.

grand designs of the elite are colliding with reality. It is

:30:13.:30:17.

coming into collision with the laws of maths, and so we will always

:30:18.:30:21.

come off second best. The sooner we recognise that and unwind the

:30:22.:30:31.
:30:32.:30:39.

position we are in, the better for John Monks, the Labour peer is here,

:30:39.:30:42.

Aziz and Norman Lamont. If it wasn't for Black Wednesday, do you

:30:42.:30:51.

think we would be signed up to the euro? No, I don't. Membership did

:30:51.:30:58.

not imply it was a glide path towards the euro. Nigel Lawson was

:30:58.:31:05.

a strong opponent of the euro. I have always been against the euro,

:31:05.:31:15.
:31:15.:31:15.

but I think Britain's exit from the currency arrangement with the euro

:31:15.:31:19.

might think strengthened public opinion against the euro and I

:31:19.:31:26.

actually think the whole event was overblown economically. But

:31:26.:31:31.

politically its consequence was to harden opposition against the euro.

:31:31.:31:38.

Do you agree with that? It has certainly hard and some of position,

:31:38.:31:42.

but most will be to illuminated our problems since the Second World War

:31:42.:31:47.

in particular, witches that our economy does not keep pace in

:31:48.:31:52.

productivity terms with Germany and the other North Sea neighbouring

:31:53.:32:00.

countries, the Nordic countries. We have to devalue periodically -

:32:00.:32:05.

Norman was in charge during a major problem. Was it built on a false

:32:05.:32:09.

premise because people don't have economies that move at the same

:32:09.:32:15.

time? They is may be true, but if there was no euro now and we are

:32:15.:32:21.

hit by this financial crisis, the currencies would be going up and

:32:21.:32:24.

down all over the place. Can you run a single market on that basis

:32:24.:32:30.

of massive currency valuations? Just after Black Wednesday, the

:32:30.:32:35.

French did think about putting import controls on some British

:32:35.:32:38.

goods because of the British devaluation and people will start

:32:39.:32:43.

responding. It is not an easy option, not having the single

:32:43.:32:50.

currency. How would countries have responded if we had had separate

:32:50.:32:57.

economies? A trade would go on, and I don't believe the single market

:32:57.:33:03.

requires a single currency. I don't think there was any real evidence

:33:03.:33:07.

that exchange rate fluctuations inhibit trade. If you look at where

:33:07.:33:11.

trade is growing fastest in the world, in the Far East between

:33:11.:33:18.

Asian countries, all of whom have separate currencies. I don't

:33:18.:33:23.

believe that currency fluctuation... I think they are a necessary means

:33:23.:33:27.

of adjustment. If you had national currencies in the last five years,

:33:27.:33:32.

what has happened in the eurozone would have been a lot happier.

:33:32.:33:37.

that basis, if you think it was ill-conceived from the start, this

:33:37.:33:42.

idea of a single currency, was it that or was at that it didn't have

:33:42.:33:49.

the political union following it? few had a European state, the

:33:49.:33:54.

European government, and fiscal transfers automatically every year,

:33:54.:33:58.

then it might work. You would still have the problem of differential

:33:58.:34:05.

inflation rates and productivity rates, which is at the bottom - at

:34:05.:34:09.

the heart of the problem. The fact that southern Europe can't compete

:34:09.:34:14.

with Germany. Do you think Germany needs to bail out those countries

:34:14.:34:20.

in order to bring the imbalances closer together? That logic will

:34:20.:34:26.

not be followed. Because Germany doesn't want to do it? Exactly.

:34:26.:34:32.

a not shell, what has Europe done for the working man here? Europe

:34:32.:34:37.

was always about healing the scars of the 20th century and the world

:34:37.:34:41.

wars, and that is what the ever- closer union phrase was about as

:34:41.:34:47.

well. I think Europe has brought prosperity and peace to a large

:34:47.:34:52.

part of Europe. Those hearts outside to the east have not done

:34:52.:34:54.

so well and it has brought democracy to countries which didn't

:34:55.:35:01.

have it before, so don't knock Europe. There is a danger many in

:35:01.:35:05.

Britain will throw everything out of the window. I think it is

:35:05.:35:10.

ludicrous to do that. Our interests are with our neighbours. I would

:35:11.:35:15.

like to be in the North Sea Premier League rather than the

:35:15.:35:19.

Mediterranean Second Division, but at the moment we are in danger of

:35:19.:35:23.

being in the second division. you would like Great Britain to

:35:23.:35:29.

join the euro at some stage? And you would like to be in northern

:35:29.:35:34.

Europe? That is where we have got to be. Our destination is to get

:35:34.:35:40.

into those countries that can compete and do well with the rest

:35:40.:35:45.

of the world rather than relying on quantitative easing, all of which

:35:45.:35:50.

are about debasing the currency. Thank you.

:35:50.:35:57.

We can show you some live pictures of the visit from the French

:35:57.:36:02.

President, Francois Hollande. He is in London today, his first visit to

:36:02.:36:10.

the UK since he was elected two months ago. We can see live

:36:10.:36:13.

pictures now of Monsieur Hollande being given a Guard of Honour in

:36:13.:36:16.

the quadrangle of the Foreign Office buildings in Whitehall. He's

:36:16.:36:19.

then due to have lunch with the Prime Minister, followed by a press

:36:19.:36:22.

conference in the Downing Street State Dining Room and an audience

:36:22.:36:24.

with the Queen at Windsor Castle. Francois Hollande last visited

:36:24.:36:27.

London in February during the presidential election campaign. At

:36:27.:36:30.

the time David Cameron refused to meet him and Ed Miliband treated

:36:30.:36:33.

the socialist candidate to roast beef in the House of Commons

:36:33.:36:39.

instead. Last month David Cameron said he would roll out the red

:36:39.:36:42.

carpet for wealthy French people who wanted to move to the UK to

:36:42.:36:52.
:36:52.:36:53.

escape a planned 75% tax rate for top earners. Ralph joke was not

:36:53.:36:57.

appreciated in Paris, I seem to remember. We've been joined by the

:36:57.:37:04.

French journalist Agnes Poirier. Is it ill-fated, this meeting? It is

:37:04.:37:08.

the first one. Frankly David Cameron should have received him

:37:08.:37:13.

when it was quite clear for months he would be elected. So you think

:37:13.:37:22.

he snubbed him? I think so, perhaps. Francois Hollande is extremely

:37:22.:37:27.

persuasive. Even a private meeting would have allowed them to get to

:37:27.:37:31.

know each other so now they have got to do it months later when we

:37:31.:37:39.

have got such a busy international agenda. So you think it was a faux

:37:40.:37:46.

pas? Yes, but let's not dwell on it. What about Francois Hollande

:37:46.:37:51.

himself? How do you think he has been feeling before this visit,

:37:51.:37:55.

bearing in mind being snubbed, and the joke they didn't appreciate

:37:55.:38:00.

about French businesses coming over here. It is true, they didn't quite

:38:00.:38:09.

like that. Will the French billionaire's start taking the

:38:09.:38:14.

Eurostar to London? I doubt it. They have got so much on her plate,

:38:14.:38:17.

I don't know whether they will choose today to talk about the

:38:17.:38:22.

contentious issues because there are a lot of them. There are some

:38:22.:38:28.

moments for rejoicing, like what they're doing in defence. It is

:38:28.:38:35.

going very well. On Syria, and some international issues, they share

:38:35.:38:45.
:38:45.:38:45.

the same opinion. If you are talking about top rates of tax,

:38:45.:38:49.

austerity spending, will they get on? It is difficult to say because

:38:49.:38:54.

they don't know each other basically. I think people get over

:38:54.:39:00.

these things. I remember when John Major was Prime Minister, it was

:39:00.:39:06.

alleged that the British government had facilitated access to Bill

:39:06.:39:10.

Clinton's security records and what he had been up to politically as a

:39:10.:39:13.

student, and Bill Clinton was supposed to be very offended by

:39:13.:39:18.

this, but very quickly they developed a relationship because

:39:18.:39:23.

they had, things to discuss. It is frequently the case that heads of

:39:23.:39:28.

government are talking to opposite numbers with different political

:39:28.:39:33.

philosophies from different political parties. Francois

:39:33.:39:38.

Mitterrand always got on very well with Mrs Thatcher. Really, despite

:39:38.:39:44.

some of the old wood spats? Didn't he say she had the eyes of Caligula

:39:44.:39:51.

and the lips of Marilyn Monroe? think that may have been a

:39:51.:39:55.

compliment! The event its relations may have been strained before this

:39:55.:39:59.

meeting started, you think in terms of policy they will be able to get

:39:59.:40:06.

down... Yes, don't forget Francois Hollande has his own differences

:40:06.:40:10.

with Angela Merkel as well. The Franco-German relationship has been

:40:10.:40:17.

the powerhouse of the European Union for decades. Is Francois

:40:17.:40:22.

Hollande just putting on a pretence until the parliamentary elections

:40:22.:40:27.

are behind him? But he started off with an abrasive approach to Angela

:40:27.:40:33.

Merkel so he has to mend fences there as well. And that is the more

:40:33.:40:38.

important relationship, isn't it? No, Britain is always very

:40:38.:40:44.

important, especially with Europe. Where does Britain stand? It is a

:40:44.:40:48.

matter of grave concern on the Continent and deep irritation as

:40:48.:40:55.

well. Will he make that deep irritation known? I think he

:40:55.:41:00.

already has. He recently said Europe is not a self-service

:41:00.:41:05.

restaurant, nor is it the cash till. David Cameron could use the

:41:05.:41:10.

opportunity to talk about repatriating powers, and will he

:41:10.:41:15.

get a sympathetic ear from Francois Hollande? Probably not. I don't

:41:15.:41:20.

think he will be talking about that at this stage because David

:41:20.:41:24.

Cameron's view is that that is a game that should be played long and

:41:24.:41:27.

we should wait until the relationship between the eurozone

:41:27.:41:33.

and the rest of Europe has become clearer. What has been fiscally

:41:33.:41:37.

proposed for the eurozone needs to become clearer before he will put

:41:37.:41:42.

forward any ideas. There is a handshake, if the journalist will

:41:42.:41:48.

get out of the way of the shot. They are going into Number 10,

:41:48.:41:52.

probably for lunch. It's crunch time for Nick Clegg's

:41:52.:41:55.

Liberal Democrats in the Commons today, as MPs vote on the

:41:55.:41:58.

Government's plans for reforming the House of Lords. It's the second

:41:58.:42:01.

day of debate - yesterday the Deputy PM weathered a stormy

:42:01.:42:02.

session with dozens of Conservative backbenchers denouncing the

:42:03.:42:12.
:42:13.:42:14.

proposals. Here's a flavour of yesterday's debate. Mr Speaker, no

:42:14.:42:16.

one doubt the commitment and public-service of many members of

:42:16.:42:22.

the House of Lords, but dedicated individuals can't compensate for

:42:22.:42:26.

flawed institutions and this bill is about fixing a flawed

:42:26.:42:31.

institution. The in his preamble to the draft Bill, he said the House

:42:31.:42:38.

of Lords performs its work well. Is he saying it works in practice but

:42:38.:42:46.

not in theory? As I will come to in a minute, I think it is both flawed

:42:46.:42:50.

in theory because of its lack of democratic legitimacy and flawed in

:42:50.:42:55.

practice because the status quo is not sustainable. Well who pledged

:42:55.:43:03.

today that he will not take their places in the House of the reformed

:43:04.:43:13.
:43:14.:43:14.

House of Lords? I am making the case for the government's bill.

:43:14.:43:18.

People need to feel Parliament belongs to them, so will he give

:43:18.:43:26.

people a vote on their proposals? think a referendum is not justified

:43:26.:43:30.

in this instance. Do doesn't he think that people watching this

:43:30.:43:37.

debate will be been used? In 2010, they voted for three parties which

:43:37.:43:41.

had House of Lords reform in their manifestos and yet backbenchers

:43:41.:43:47.

from some of those parties are now trying to block it. People voted

:43:47.:43:53.

for it in 2010, let's get on with it. I want to repeat what my right

:43:53.:43:56.

honourable friend has made clear - we want the House of Lords reformed,

:43:56.:44:02.

we do not want this bill stock in the Commons, but we want the

:44:02.:44:08.

opportunity to scrutinise, amend and approve the bill accordingly.

:44:08.:44:14.

We will vote against the programme motion tomorrow night. This bill

:44:14.:44:18.

ignores the will of the people. Only one year ago we had an

:44:18.:44:24.

expensive nationwide referendum in which the people overwhelmingly

:44:24.:44:28.

rejected a proportional representation voting system. Now

:44:28.:44:33.

the deputy prime minister is ignoring the will of the people. PR

:44:33.:44:41.

was rejected, so let's bring it in for the Other Place he says. What

:44:41.:44:46.

contempt. Member of this house can differ on the underlying issues,

:44:46.:44:51.

but they can't differ on the flaws in the billing itself. It is a

:44:51.:44:54.

deeply confused and dangerous piece of legislation which will prevent

:44:54.:44:59.

real reform, reduce diversity and deep expertise in our political

:44:59.:45:04.

system. It would be a catastrophe for this country if this bill was

:45:04.:45:14.
:45:14.:45:17.

After yesterday's difficult session, Nick Clegg will be hoping he can

:45:17.:45:20.

muster enough support this evening for what is known as the programme

:45:20.:45:23.

motion, which effectively allows the Government to push the

:45:23.:45:27.

legislation through. If the Liberal Democrats loos that vote, and it is

:45:27.:45:31.

looking quite likely, with scores of Conservatives pledged to vote

:45:31.:45:36.

against, it is not clear whether the bill can survive. We can get

:45:36.:45:39.

the latest from James Landale, in the lobby, just outside the House

:45:39.:45:44.

of Commons. What thugs are going to happen later on? There will be two.

:45:44.:45:49.

First of all, at 10 o'clock, there will be a vote on the principle of

:45:49.:45:53.

the bill - do you or do you not support the idea of Lords reform?

:45:53.:45:56.

The expectation is that the Government will win that one,

:45:56.:45:59.

because they have the support of the Labour Party, which supports

:45:59.:46:03.

the principle of the reform. Then there will be that crucial

:46:03.:46:07.

programme motion. Essentially, it is the timetable. The Government

:46:07.:46:11.

says this bill should have about 10 days of detailed scrutiny. All the

:46:11.:46:17.

many opponents, from all sides, say, no, 10 days is not enough for a

:46:17.:46:23.

bill of such complexity or of such constitutional importance. It is on

:46:23.:46:27.

that that the real battle will be had, and it is this which will

:46:27.:46:32.

determine whether or not the bill will get there. Talking about the

:46:32.:46:35.

whipping operation, the party managers trying to get people to

:46:35.:46:38.

vote with the government, how stern is that looking at the moment for

:46:38.:46:46.

the Tory MPs? What is interesting is that a line of thought has

:46:46.:46:50.

emerged that actually, the Conservative whips are soft-

:46:50.:46:59.

pedalling on this. It was explained to me like this - on the less

:46:59.:47:04.

experienced MPs, a hard line is being taken, but on more

:47:04.:47:09.

experienced MPs, like Malcolm Rifkind and people like that, you

:47:09.:47:12.

have to take a different approach, and it is because of that that the

:47:12.:47:17.

whips have gone soft on MPs like that, so this is why the idea has

:47:17.:47:27.
:47:27.:47:28.

come out that the Conservatives are not really trying hard on this one.

:47:28.:47:32.

They think they are making some progress, but if you push them,

:47:32.:47:40.

they do not think they are going to get enough votes. We have been

:47:41.:47:44.

joined by the former leader of the Liberal Democrats Charles calendar

:47:44.:47:51.

year. Welcome to the programme. -- Charles Kennedy. How important is

:47:51.:47:55.

this issue of Lords reform to the party? It is very important to the

:47:55.:48:01.

party. Given the loss of the AV referendum, it is the other big

:48:01.:48:06.

piece of constitutional reform to which we are wedded, as a party.

:48:06.:48:10.

But it is also important to our long-standing analysis of the

:48:10.:48:14.

failings of British politics, and how it needs to be improved. It is

:48:14.:48:17.

not just all about the House of Commons and the voting system, it

:48:17.:48:24.

is also about the House of Lords as well. Why would the balance between

:48:24.:48:26.

the two Houses of Parliament necessarily be upset by making the

:48:26.:48:34.

Lords democratic? I think once you have an elected House of Lords, the

:48:34.:48:37.

people there would regard themselves as more legitimate, they

:48:37.:48:42.

would feel that the conventions which had governed the two houses,

:48:42.:48:45.

the restraint which has been shown by the House of Lords when the

:48:45.:48:48.

Commons has a difference opinion, I think they would feel, we are just

:48:48.:48:53.

as good as you, we are as legitimate as you, we are as

:48:53.:48:57.

elected as you, why should we not disagree with you? And I think

:48:57.:49:00.

there would have to be more ministers in the House of Lords. I

:49:00.:49:05.

do not see why we should not have the Prime Minister there, or the

:49:05.:49:09.

Foreign Secretary. We have actually had the Foreign Secretary there

:49:09.:49:13.

even when it has not been elected. I think the whole balance of power

:49:13.:49:16.

would alter, just as you can see the way the European Parliament is

:49:16.:49:21.

acquiring more power, since it has been elected, just as the Scottish

:49:21.:49:27.

Parliament is demanding and getting, before independence, more powers.

:49:27.:49:30.

But the Commons would still ultimately be able to get its own

:49:30.:49:36.

way. Why do you say that? Because they would be able to use the

:49:37.:49:42.

Parliament act. But you could imagine situations in which there

:49:42.:49:51.

was complete deadlock on -- complete deadlock. Don't forget,

:49:51.:49:55.

the political composition of a second chamber might be completely

:49:55.:49:59.

different, it might have a Labour majority, whereas the Commons might

:49:59.:50:05.

have a Conservative majority. would be gridlock, wouldn't it?

:50:05.:50:08.

Whatever systems you go for, you could go for a Washington-style

:50:08.:50:15.

system, or a continental-style system, but even under the existing

:50:15.:50:23.

system, it takes goodwill and common sense on the part of the

:50:23.:50:26.

personalities involved for any system to operate. If we change to

:50:27.:50:31.

the kind of system which is applied, it will change the dynamic, Norman

:50:31.:50:34.

Lamont is absolutely right, and the House of Lords could be very

:50:34.:50:39.

bloody-minded, if they so wished. But they can do so under existing

:50:39.:50:44.

procedures. So you have got to have a degree of faith in the

:50:44.:50:50.

commonsense and the goodwill of the politicians involved. But I think

:50:50.:50:53.

the moderation in the House of Lords at present comes from the

:50:53.:50:58.

fact that it is not elected. They know that they could be under the

:50:58.:51:01.

cosh at any moment from the House of Commons if they abuse their

:51:01.:51:07.

powers, if they go frustrating what is in the manifesto of a party. It

:51:07.:51:11.

is the doctrine that you do not vote down something which is in a

:51:11.:51:16.

government's manifesto. All these conventions exist precisely because

:51:16.:51:22.

the House of Lords is not elected. When I first arrived in the House

:51:22.:51:26.

of Lords, I remember, I was inclined rather to vote against the

:51:26.:51:30.

government, and I remember a former Speaker speaking to me, jack

:51:30.:51:35.

Wetherall, now dead, alas, but he said to me, I would not do that if

:51:35.:51:39.

I were you, that is not what the House of Lords should be doing.

:51:39.:51:42.

should we have a second chamber which is full of people who were

:51:42.:51:48.

appointed? Is it not time to modernise? I reject the idea that

:51:48.:51:53.

this is more modern. I think there is nothing wrong with an appointed

:51:53.:51:58.

chamber. That chamber only have limited powers. The powers it has

:51:59.:52:03.

are merely to advise and to revise. No law can be made under the

:52:03.:52:07.

current system without the House of Commons being satisfied. What do

:52:07.:52:13.

you say to that? I do not shirk from the word modernisation, I

:52:13.:52:17.

think that is exactly what it is. We're sitting here in the 21st

:52:17.:52:20.

century, discussing a house of parliament which is still

:52:20.:52:25.

structured essentially on the basis of the 17th century and the 18th

:52:25.:52:35.

century. I think we need to get a few hundred years up to date.

:52:35.:52:39.

Modernisation is the word, because it is indefensible for this day and

:52:39.:52:45.

age to have a second chamber of, in a modern, developed democracy,

:52:45.:52:51.

where there is not a single person elected in it. Charles Kennedy,

:52:51.:52:56.

what do you think the impact will be if it fails? I think there will

:52:56.:53:00.

be initially a bad impact for the coalition. It will be a knock for

:53:00.:53:03.

David Cameron in terms of his leadership, it will be a knock for

:53:03.:53:06.

Nick Clegg in terms of his leadership ambitions, and wanting

:53:06.:53:10.

to drive this proposal forward. This proposal has come from both

:53:10.:53:14.

sides of the coalition. So, it will have a bad effect in the short term.

:53:14.:53:19.

I don't think it will end the coalition. It is not a deal breaker.

:53:19.:53:23.

I think there will have to be, which there would have had to have

:53:23.:53:27.

been anyway, some reassessment of where the coalition goes next. But

:53:27.:53:31.

the fact that the coalition remains intact seems to me something that

:53:31.:53:36.

we can take as read. Do you think there will be Liberal Democrats who

:53:36.:53:41.

will feel, we did not get tuition fees how we wanted, we did not win

:53:41.:53:45.

the of a referendum, we did not get Lords reform, so what will be left

:53:45.:53:50.

for the Liberal Democrats? If you take constitutional issues first of

:53:50.:53:55.

all, let's saved his runs out of steam, does not go anywhere, just

:53:55.:54:00.

for the sake of argument, it could be that you might have to say, for

:54:00.:54:07.

the remainder of this Parliament, essentially, further constitutional

:54:07.:54:11.

reforms have got to be parked. But that raises the question, what do

:54:11.:54:16.

you put in their place? Are there other reforms that you can look at?

:54:16.:54:22.

I have not been part of that brainstorming process. But I hope

:54:22.:54:25.

that process is already under way, because it needs to take place, for

:54:25.:54:28.

the second half of this Parliament, which will be very different from

:54:29.:54:33.

the first half. As we know, the second half of Parliament tend to

:54:33.:54:37.

go much more quickly. Also, there will be the key Spending Review,

:54:37.:54:41.

and Liberal Democrats will have to be thinking about further cuts,

:54:41.:54:44.

perhaps cuts to welfare, which there will have to follow over the

:54:44.:54:47.

next few years. The Autumn Statement is the next big

:54:47.:54:50.

parliamentary event coming down the track after the summer recess.

:54:50.:54:54.

Clearly, when we see how the economy has gone over the next

:54:54.:54:59.

quarter or so, decisions will have to be taken, I hate these phrases

:54:59.:55:09.
:55:09.:55:13.

myself, but is it a Plan A, or a plans something else? As we get

:55:13.:55:16.

into all of this parliamentary nitty-gritty over Lords reform,

:55:16.:55:20.

there is the prospect that some MPs might be thinking of devious ways

:55:20.:55:26.

to torpedo the bill. Heaven forbid. One of the tools that the disposal

:55:26.:55:30.

of politicians is the ancient art of filibustering. Here is a little

:55:30.:55:37.

history lesson. This Roman senator was one of the first politicians to

:55:37.:55:40.

use the filibuster. The rules of the Senate meant that all business

:55:40.:55:45.

had to be concluded by dusk, so he talk until nightfall to block laws

:55:45.:55:49.

he did not like. More recently, Labour members of the House of

:55:49.:55:53.

Lords attempted to do the same thing with proposals to change the

:55:53.:55:58.

voting system. We will be aware that 650 is the product of three

:55:58.:56:08.
:56:08.:56:11.

prime numbers... 630 of course is the product of four prime numbers.

:56:11.:56:16.

And just for reasons of political balance, here is a well-known

:56:16.:56:24.

Conservative MP practising the ancient art. When I was a child, I

:56:24.:56:34.
:56:34.:56:35.

had a mug, which had some wonderful lines on it. I eat my own chicken

:56:35.:56:43.

and ham. I have lawns, I have fruits, I have flowers. So, God

:56:43.:56:48.

speed the Plough, success to the farmer. How very poetic! That was

:56:49.:56:52.

Jacob Rees-Mogg. I suppose some people are better at filibustering

:56:52.:56:57.

than others. I don't know why you are looking at me. I was looking at

:56:57.:57:03.

both of you. Have you ever engaged in that? I don't think I would have

:57:03.:57:09.

the physical energy. How long did your budgets tend to come in at?

:57:09.:57:13.

Well, once television came, the budget became dominated by the

:57:13.:57:19.

television schedules, so one could not be like Mr Gladstone. Do you

:57:19.:57:25.

think it is a rotten tactic? don't think so. You were laughing,

:57:25.:57:30.

both of you. Yes, it is like listening to another age, it is

:57:30.:57:36.

hard to believe that was just a few months ago, from Jacob Rees-Mogg!

:57:36.:57:43.

That was in the elected House of Commons, modernisation! It is

:57:43.:57:49.

legitimate. Yes, I think it should be allowed, because Houses of

:57:49.:57:52.

Parliament, whether it is Congress, whether it is here, whether it is

:57:52.:58:00.

the ancient Senate, are based partly on the principle of rhetoric.

:58:00.:58:07.

It is legitimate in that sense. The very first film I ever served on

:58:07.:58:12.

was the privatisation of British Telecom. There was a retired trade

:58:12.:58:16.

union general secretary who was an ace at filibustering, and used to

:58:16.:58:22.

keep the place going all night. this particular motion on Lords

:58:22.:58:26.

reform is voted down, we may see a lot more of people like Jacob Rees-

:58:26.:58:33.

Mogg. You will indeed. During the Maastricht business 20 years ago, I

:58:33.:58:39.

was a European spokesman for the party, and there was people like

:58:39.:58:49.
:58:49.:58:49.

Iain Duncan Smith, they were called nightwatchmen. Sometimes people

:58:49.:58:52.

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