10/07/2012 Daily Politics


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


continues. Labour call on George Osborne to apologise for claiming


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


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


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


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


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


Conservative backbenchers demand the government takes back powers


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


And David Cameron rolls out the red carpet for French President


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


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


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


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


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


suggestion from the Conservative backbencher Nick Boles that the


Government should consider cutting things like winter fuel payments


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


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


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


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


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


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


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


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


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


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


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


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


calculations post 2015, presumably because it would be too difficult


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


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


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


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


dangerous territory, particularly for a Conservative-led government


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


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


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


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


does the Conservative backbencher Andrea Leadsom. Allies of the


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


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


an interview with the Spectator magazine that Ed Balls was clearly


involved in discussions about reducing the LIBOR interbank


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


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


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


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


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


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


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


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


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


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


she thought George Osborne should apologise for his allegations about


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


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


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


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


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


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


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


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


the Chancellor but he should reflect and the government should


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


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


intended to have given the impression they were meant on in


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


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


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


there was some government jiggery- pokery from the last government


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


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


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


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


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


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


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


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


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


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


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


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


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


is different from making private gain out of misleading information.


It might be legitimate for ministers to intervene, but the


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


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


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


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


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


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


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


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


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


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


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


sentences. Do ministers have questions to answer? Labour


presided over that whole culture. Whether ministers were involved or


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


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


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


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


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


liquidity getting back into the market? These are legitimate


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


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


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


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


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


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


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


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


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


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


mails were going backwards and forwards to find ways of bringing


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


difficult issue. Ministers might for example with a floating


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


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


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


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


doing, these are legitimate concerns and they require that sort


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


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


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


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


are legitimate concerns. There are legitimate policy concerns, and


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


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


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


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


there an implication not that they are trying to manipulate but


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


Confusion here is deliberate. Of course people wanted liquidity in


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


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


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


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


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


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


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


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


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


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


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


important industry but what has been brought out through the


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


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


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


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


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


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


Union. The Fresh Start project includes Conservative MPs such as


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


policies on their lengthy list of possible renegotiations, they think


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


perhaps push for regionalisation of the Common Fisheries Policy. They


suggest stopping the use of the Strasbourg seat of the European


Parliament, and allowing Member States to impose an income


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


prospect of withholding contributions to European


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


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


been joined by one of the Conservative MPs who wrote the


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


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


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


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


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


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


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


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


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


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


That in itself would become a catalyst for renegotiation.


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


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


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


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


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


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


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


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


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


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


through negotiation, has made some sterling progress over the last


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


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


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


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


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


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


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


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


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


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


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


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


relationship with the European Union is changing, and the nature


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


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


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


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


with Europe, because that relationship is going to be


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


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


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


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


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


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


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


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


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


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


more fundamental renegotiation after the next general election.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


the Lisbon Treaty says renegotiation can only happen after


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


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


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


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


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


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


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


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


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


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


Fisheries was something he gave away for New Zealand Agriculture.


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


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


there will be negotiation by Britain about its relationship with


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


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


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


economies, otherwise we will sink into the Mediterranean abyss.


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


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


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


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


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


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


renegotiation. This paper is about starting that detailed heavy


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


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


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


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


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


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


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


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


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


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


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


culturally and historically, has never been an enthusiastic entity


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


very important to the European Union in certain areas, like


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


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


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


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


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


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


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


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


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


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


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


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


very important point, that the burden of regulation ought actually


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


Essentially, the Government cannot agree on any development in


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


plenty of disagreements within the EU. The relationship between


Germany and France, the relationship between Germany and


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


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


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


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


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


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


exchange rate mechanism, and arguably any chance of joining the


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


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


it launched at midnight on New Year's Day.


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


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


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


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


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


every motorist driving in Britain had to drive their car using


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


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


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


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


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


Ireland, they overheated and stalled, other countries which


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


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


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


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


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


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


to succeed. Unfortunately, or fortunately perhaps, it cannot


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


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


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


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


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


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


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


the political integration within the eurozone, which might have


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


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


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


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


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


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


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


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


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


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


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


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


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


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


might think strengthened public opinion against the euro and I


actually think the whole event was overblown economically. But


politically its consequence was to harden opposition against the euro.


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


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


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


productivity terms with Germany and the other North Sea neighbouring


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


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


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


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


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


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


of massive currency valuations? Just after Black Wednesday, the


French did think about putting import controls on some British


goods because of the British devaluation and people will start


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


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


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


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


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


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


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


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


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


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


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


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


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


European government, and fiscal transfers automatically every year,


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


are about debasing the currency. Thank you.


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


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


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


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


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


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


conference in the Downing Street State Dining Room and an audience


with the Queen at Windsor Castle. Francois Hollande last visited


London in February during the presidential election campaign. At


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


the socialist candidate to roast beef in the House of Commons


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


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


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


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


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


the first one. Frankly David Cameron should have received him


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


alleged that the British government had facilitated access to Bill


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


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


this, but very quickly they developed a relationship because


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


government are talking to opposite numbers with different political


philosophies from different political parties. Francois


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


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


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


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


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


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


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


the powerhouse of the European Union for decades. Is Francois


Hollande just putting on a pretence until the parliamentary elections


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


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


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


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


matter of grave concern on the Continent and deep irritation as


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


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


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


opportunity to talk about repatriating powers, and will he


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


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


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


we should wait until the relationship between the eurozone


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


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


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


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


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


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


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


day of debate - yesterday the Deputy PM weathered a stormy


session with dozens of Conservative backbenchers denouncing the


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


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


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


flawed institutions and this bill is about fixing a flawed


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


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


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


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


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


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


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


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


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


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


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


had House of Lords reform in their manifestos and yet backbenchers


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


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


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


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


opportunity to scrutinise, amend and approve the bill accordingly.


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


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


expensive nationwide referendum in which the people overwhelmingly


rejected a proportional representation voting system. Now


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


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


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


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


deeply confused and dangerous piece of legislation which will prevent


real reform, reduce diversity and deep expertise in our political


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


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


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


motion, which effectively allows the Government to push the


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


looking quite likely, with scores of Conservatives pledged to vote


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


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


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


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


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


The expectation is that the Government will win that one,


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


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


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


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


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


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


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


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


whipping operation, the party managers trying to get people to


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


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


emerged that actually, the Conservative whips are soft-


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


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


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


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


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


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


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


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


joined by the former leader of the Liberal Democrats Charles calendar


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


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


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


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


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


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


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


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


the two Houses of Parliament necessarily be upset by making the


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


people there would regard themselves as more legitimate, they


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


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


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


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


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


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


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


Foreign Secretary. We have actually had the Foreign Secretary there


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


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


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


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


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


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


Parliament act. But you could imagine situations in which there


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


the political composition of a second chamber might be completely


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


government's manifesto. All these conventions exist precisely because


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


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


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


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


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


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


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


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


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


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


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


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


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


century, discussing a house of parliament which is still


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


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


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


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


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


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


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


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


Nick Clegg in terms of his leadership ambitions, and wanting


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


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


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


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


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


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


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


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


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


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


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


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


the remainder of this Parliament, essentially, further constitutional


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


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


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


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


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


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


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


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


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


next few years. The Autumn Statement is the next big


parliamentary event coming down the track after the summer recess.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


Iain Duncan Smith, they were called nightwatchmen. Sometimes people


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