26/02/2013 Daily Politics


26/02/2013

Jo Coburn with the latest political news including reaction to the Italian election result, plus pensions expert Ros Altmann.


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Good afternoon. Welcome to the Daily Politics. Liberal Democrat

:00:45.:00:49.

officials meet police officers to discuss allegation of the sexual

:00:49.:00:52.

harassment of women, made against former Chief Executive Lord Rennard,

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he will have the latest. A comedian and disgraced former Prime Minister

:00:58.:01:02.

win voters' approval in Italy's general election, it is no joke for

:01:02.:01:07.

the euro as it bridges political instability. What lessons can the

:01:08.:01:12.

Conservatives learn from Mitt Romney's defeat in the US

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Presidential election? We will have David Frum. Don't hold back, London

:01:20.:01:25.

Assembly members fail in their attempt to block Boris's budget for

:01:25.:01:29.

the capital. Birmingham voepbts big budget cut, but what will it mean

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for local services? -- votes for. All that in the next hour, with us

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for the whole programme today, is the pensions and investment expert

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Ros Altmann. Welcome to the programme. Let us start with the

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continuing problems facing the Liberal Democrats, following

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allegations that former Liberal Democrat Chief Executive Lord

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Rennard had sexual harassmented women who worked for the party. He

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has denied the allegation, Nick Clegg said the morning he wouldn't

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provide a running commentary on the investigation, but the Business

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Secretary Vince Cable did at least give a walking comment on his way

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to work this morning. REPORTER: How do you feel that Nick

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Clegg has handled the situation. am just going to the cab and I am

:02:13.:02:18.

focused on that. Did you feel annoyed he was putting out the

:02:18.:02:22.

allegation and it seemed to change. I am not going to add to what I

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said. I was comfortable with that. You didn't know about the

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allegations? I have nothing to say about that. Are you worried it

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might affect the Eastleigh by- election? I am working hard in the

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by-election as all my colleagues are. We have a very good local

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campaign, I am not worried about that. Let us go to our political

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correspondent Vicky Young. Liberal Democrat MPs are meeting this

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afternoon, they do that regularly, but is the party in crisis? It has

:02:52.:02:57.

been an appalling few weeks not just with Chris Huhne pleading

:02:57.:03:01.

guilty, and the accusations that Chris Rennard of course deny, so I

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don't think any of them are pretending this is an easy time.

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The problem is it is the handling by Nick Clegg originally of the

:03:08.:03:12.

original complaint, did he handle those properly? Did the staff round

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him handle them properly? They are the questions he will have to

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answer. The way he seemed to change his story about initially not

:03:20.:03:24.

knowing, then saying there were general concern, with the party

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they are trying to focus on the two investigations they set up. They

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say that is the only way to get to the truth of this. They accept

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there is a big question about from seedures in the party, particularly

:03:36.:03:42.

for those who are activists who aren't necessarily ep employed, how

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do they speak out? That is what they will focus on and try to

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improve. Liberal Democrats on this programme have said that this is

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the story that Westminster is obsessed with. There is no doubt

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there has been an enormous amount of interest in it, relating to a

:03:58.:04:02.

man the public won't have herd of. There is a by-election on Thursday.

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Yes, people in the party aren't blaming the newspapers or saying it

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is politically motivated. They think it's a serious issue, they

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know a lot of the front pages are continuing because there is this

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crucial by-election in Eastleigh where the Liberal Democrats are

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still, according to the polls in front of the Conservatives. They

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say they are focusing on still of course trying to win that crucial

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seat, I have been told today they have about 200 volunteers helping

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out. Half the Parliamentary party are down there, they have cancelled

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their meeting this after noon, because so many are down in

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Eastleigh there is no point in holding it. Their focus will be on

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trying to win ta by-election. They hope if they can pull it off, the

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attention will fall back on David Cameron and why he hasn't been able

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to win that by-election, given that the circumstances have been

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appalling for the Liberal Democrats. Ros Altmann, what is your

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impression? Well, it is an unfortunate story and the timing is

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dreadful. I can't help feeling there must be some political

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motivation behind the timing of the allegations, which have only just

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surfaced now, whereas the incident happened so many years ago.

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Allegedly. Allegedly. There is a lot of talk about structures in

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organisation, one of the resluice look at whether the right

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structures were in place, in Liberal Democrat organisation, to

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teal with complaints like this, that is an issue that would affect

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most organisations, in your experience do organisations have

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proper struck churs this place to deal with it? There are many who

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don't really take the issue of this kind of sexual harassment seriously

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enough. It is improving and it has improved over the years, but there

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is this difficulty and this fine line between what is acceptable and

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what is not. If a chap is touchy- feely and puts his around you is

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that acceptable? Most people would say it is fine. If it goes beyond

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that, how do women really deal with that, and how do organisations deal

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with helping women to, if you like, rein in wandering hands. Many men

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treat it as a joke. One doesn't want to take it out of proportion,

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it is clear there was something inappropriate going on, it is also

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clear it wasn't taken seriously enough. We are not clear of course,

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these are allegation, and they have been strenuously denied, but as you

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say, it is difficult, sometimes to know how to deal with them, we will

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be following this story for the rest of the week. The voters of

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Italy have spoken, but it may be a while until we can interpret what

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they have said. The origins of the current political battle in Italy

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go back to November 2011 when Italy's former premier Silvio

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Berlusconi was forced to resign Taff country's borrowing costs

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rocketed out of control. Berlusconi blamed a conspiracy by Germany for

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his downfall. In his place the President appointed Mario Monti, to

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head a technocratic Government. However, Mr Berlusconi got his

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revenge at the end of last year, when he withdrew Parliamentary

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support for Mario Monti's administration, sparking this

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week's election. But the results emerging today threaten it --

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Italy's and with it Europe's economic stable. No party is

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clearfully a position to run the country. Mario Monti's party

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suffered a disastrous defeat only polling 10%. The Democratic Party

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led by former Communist Pier Luigi Bersani have won the election in

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the lower House, but Italy iest's constitution guarantees them a

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majority there Berlusconi's party did better in the Senate where the

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result means a hung parment. The joker in the pack has been Beppe

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Grillo, a comedian whose 5 Star Movement received a quarter of the

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vote, with policies promising tax cut, free internet and a 20 hour

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working week. With us now are two expatriate observers of Italy's

:08:13.:08:23.
:08:23.:08:25.

political scene. Welcome to both of you. Do you agree with word on the

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street if itly it is a country that is ungovnernable? Yes, I would say

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it is, and it is disappointing, that there is no clear majority

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there. Are you surprised? surprised. I mean, I think, the in

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the run up to the election, I think the feelings were slightly

:08:46.:08:51.

different, but I think it is clearly disappointing that there is

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no clear majority and of course, markets do want a clear majority,

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the economy need a clear imaginety, it is important to have a stable

:09:00.:09:07.

Government. Now, of course, from my personal opinion, I would have very

:09:07.:09:12.

much liked Pier Luigi Bersani to get a clear majority. Who would you

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like to have seen lead a coalition and be Prime Minister. I have been

:09:16.:09:20.

for a decade with the Labour parties in Europe. I would have

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liked Pier Luigi Bersani to have a more stable and clear majority, in

:09:24.:09:28.

which actually, in the lower chamber this did happen, and I

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think the main point here, is really, and it is important for

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those who are listening to us, to understand this, the electoral

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system is very complicated, and it is a legacy of the Berlusconi

:09:42.:09:46.

Government, and a legacy of Berlusconi who introduced a

:09:46.:09:50.

complicated electoral system to make sure he secured the place in

:09:50.:09:54.

power. Before we talk about the economic impact we can go to Rome

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and speak to Chris Morris. Hello and welcome to the Daily Politics.

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You are on the streets with people who have just voted. It is a bit of

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as me, isn't it? --s me. It is a extraordinary result. You have a

:10:09.:10:14.

movement that no-one really heard of four years ago, which has taken

:10:14.:10:18.

the highest number of votes of any single party. It sun precedented.

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We have seen across Europe in the last few years, in France people

:10:23.:10:27.

voting against austerity. In Greece voting against austerity. Again in

:10:27.:10:32.

a more dramatic way, I think, a clear majority of voters rejected

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the kind of austerity which people perceive as being imposed from

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Brussels. They rejected the old political class by voting in huge

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numbers for this insurgent movement who is led by a stand up comedian

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who is saying the politicians should be sent to the lunatic

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asylum. It is a humiliating defeat for Mario Monti who was brought in

:10:56.:11:01.

to try and stabilise things in Italy. Yes, I mean he barely

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scraped 10% of the vote. This was the man, in effect, imposed on

:11:06.:11:10.

Italy by a combination of Brussels and Berlin in 2011, the

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technocratic Prime Minister, who was sent in to sort out the Italian

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economy, it wasn't popular, then I think he made a mistake, he decided

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to run in the elections, he was a university Professor, a European

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Commissioner and during the election campaign, veteran

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campaigners like Silvio Berlusconi ran rings round him. I think his

:11:33.:11:38.

gamble, if you like, to triand put himself into the middle of Italian

:11:38.:11:43.

politics has failed. Is there a chance that Silvio Berlusconi could

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return as Prime Minister? At the moment n the current snartkwhree is

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very unlikely, if there was another election, who knows? He did better

:11:54.:12:00.

than many outsiders were expecting. We have three scenarios, one there

:12:00.:12:05.

is another election. It is possible the 5 Star Movement could do better

:12:05.:12:10.

next time. The second would have to be Beppe Grillo changing course and

:12:10.:12:14.

agrees to work with the coalition, that seems unlikely, the third

:12:14.:12:19.

option would be a grand coalition between left and right. Something

:12:19.:12:22.

that has never happened before. If that were the case it would be led

:12:22.:12:25.

by the centre-left with Silvio Berlusconi playing a role. From

:12:25.:12:30.

this set of results it means his political career is alive but he

:12:31.:12:38.

won't be Prime Minister any time soon. What is your' sesment now?

:12:38.:12:43.

Has Italians have they rejected austerity, is that what this is

:12:43.:12:47.

about? I think the election of, I mean the support for Beppe Grillo

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is a bit more mixed in terms of interpretation. This is the comic.

:12:52.:12:56.

First of all there was no rejection of the euro as such. If you look at

:12:56.:13:02.

the polls in Italy. Italians tend to support the euro by a majority

:13:02.:13:07.

of seven to three. Seven out of ten Italians support the euro. This was

:13:07.:13:10.

a very big vote against the political class, the establishment.

:13:10.:13:17.

The fact it thatn't been able to rejuvenate it. And the same faces

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from 20 years ago are still round now. Austerity in a sense

:13:21.:13:26.

accelerated this process, it was, it was much easier for Beppe Grillo

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to get his message across, because people are clearly feeling the

:13:30.:13:36.

squeeze. But I think that the clear message here, is one for Italian

:13:36.:13:38.

politician, we are fed up of you, that is what they have said. We

:13:38.:13:42.

want some change. What is this going to mean economically? Because

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the markets will be spooked by this. The eurozone isn't out of the long-

:13:48.:13:51.

term crisis it has been in, and further uncertainty in Italy is

:13:51.:13:57.

just going to make it worse. Indeed. I think the problem here is that

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markets have been happy until say, a few weeks ago, generally once...

:14:04.:14:10.

He is going to save the euro from collapse. Then it started turning a

:14:10.:14:16.

bit more wary because data showed the recession is still hitting hard.

:14:16.:14:20.

The eurozone periphery and more generally. Is this election a

:14:20.:14:23.

turning point? Is this another one of the moments we have seen time

:14:23.:14:29.

and again where investors, all of a sudden decide that no, we, we have

:14:29.:14:33.

given up on the euro. We don't think this is a process which is

:14:33.:14:37.

going to continue. Will they test the willingness of the European

:14:37.:14:41.

Central Bank to do whatever it takes to save the euro? This is the

:14:41.:14:46.

question in the mind of many investors now. Are we there yet? I

:14:46.:14:49.

don't think so, there is is a lot of uncertain tirblgs people will

:14:49.:14:52.

want to understand how political developments, what political

:14:52.:14:56.

developments we have in Italy and how Brussels responds. It is

:14:56.:15:06.
:15:06.:15:10.

The big question is to see what Pier Luigi Bersani and the

:15:10.:15:15.

Democratic Party, the question is, what will Pier Luigi Bersani do,

:15:15.:15:21.

and look at the possible scenarios. What are the policies which will

:15:21.:15:27.

get them support? Italy is a country which needs reform. We want

:15:27.:15:36.

every word in Europe a government that makes us pay fair taxes,

:15:36.:15:41.

tackles unemployment, particularly youth unemployment. The question

:15:41.:15:50.

for countries like Italy, Spain, is really how do we do, how do they

:15:50.:15:55.

get their finances in order? And how do they do this in such an

:15:55.:16:02.

unstable situation? This isn't just about Italy, Italy is the catalyst.

:16:02.:16:06.

Markets are saying, lots of European countries have massive

:16:06.:16:11.

problems he. The standard recipe of austerity has been rejected by the

:16:11.:16:17.

electorate. Understandably, it is painful, especially for the middle

:16:17.:16:26.

classes, the majority. Italy has, for a long time, had governments

:16:26.:16:30.

which changed, minority governments which fall, political uncertainty

:16:31.:16:35.

has been a feature of Italy for a long time. Other countries are

:16:35.:16:40.

bound up with in this, in the euro. The problem for Italy is finding

:16:40.:16:42.

someone who will garner enough support to push through those

:16:42.:16:49.

reforms, who will that person be? At the moment, we do not know. It

:16:49.:16:54.

who would you like to see? What Italians have told the politicians

:16:54.:16:58.

is none other people who are in power at the moment. Not this

:16:58.:17:04.

comedian. Beppe Grillo is not even standing in this. Italians have

:17:04.:17:08.

said they would rather have something experienced new faces. If

:17:09.:17:14.

you look at them, many have university degrees, good

:17:14.:17:18.

professional experience. The message was, we do not want any of

:17:18.:17:26.

the old faces to lead Italy in the future. That is the message. Who

:17:26.:17:32.

will emerge out of this? One of the centre-right it will be harder, the

:17:32.:17:36.

party is structured around Silvio Berlusconi. On the centre-left,

:17:36.:17:41.

there are new faces who have emerged, one of them is the Mayor

:17:41.:17:46.

of Florence, who was defeated in the primaries by Pier Luigi Bersani.

:17:46.:17:50.

People are now suggesting he may have a second chance because Pier

:17:50.:17:56.

Luigi Bersani is so weak at the moment. If there is data, looking

:17:56.:18:01.

at the data, the result of the elections, one thing is important

:18:01.:18:10.

to say. In 2000 added, Berlusconi and his party had 48%. 2008. That

:18:10.:18:16.

meant he was able to form a state government. Now, at 18%. It is

:18:17.:18:23.

disappointing Berlusconi is still there. Amazing. As a woman, I can

:18:23.:18:28.

say, it has been difficult... does that say about the Italian

:18:28.:18:36.

electorate, and... He has a significant share of the vote.

:18:36.:18:45.

Beppe Grillo is new into the political landscape. He is anti-

:18:45.:18:55.

establishment. It may well be that, in the current situation now, there

:18:55.:19:02.

has to be some responsibility in saying, what can we do now? Is

:19:02.:19:07.

there the possibility to go on? Will there be a government by next

:19:07.:19:13.

week? Parliament will not convene until mid-March. The question is,

:19:13.:19:19.

will there be a government in a month? The question is really for

:19:20.:19:23.

the sunny macro and those in Parliament to answer. I do not

:19:23.:19:31.

think the Democratic Party will create a college. It would be more

:19:31.:19:35.

so part for Beppe Grillo and his movement, allowing him to play the

:19:35.:19:40.

protest party role and do even better in a year's time. We could

:19:40.:19:46.

have him back on in a month's time, a year's time. Now, what might the

:19:46.:19:49.

British Conservative party learn from the result of last November's

:19:49.:19:51.

US presidential election? The right-wing Republican candidate

:19:51.:19:54.

Mitt Romney lost out, of course, to Barack Obama. There's been much

:19:54.:19:56.

soul-searching in Republican circles about the result. Political

:19:56.:19:59.

commentator and former speechwriter to George W Bush, David Frum, has

:19:59.:20:04.

just written a book about why Mr Romney lost, and I spoke to him a

:20:04.:20:12.

little earlier. So, how did Mitt Romney lose the

:20:12.:20:20.

election? The first false narrative blames technology, the President's

:20:20.:20:24.

team did have better voting technology. The second says that

:20:24.:20:30.

the vote was all about immigration, he didn't do well enough. The

:20:30.:20:36.

largest group of Hispanic and mixed Americans, you would expect them to

:20:36.:20:41.

vote for Democrats. The mystery is that Mitt Romney lost among upper

:20:41.:20:47.

income immigrants and he lacked in middle-class economic message. Why

:20:47.:20:54.

should be typical American family vote for him? Until Republicans to

:20:54.:20:56.

run up middle-class economic messages, they will not be

:20:56.:21:02.

competitive. Is there an identity crisis within the republican party?

:21:02.:21:12.
:21:12.:21:13.

Not enough of one, it needs more of a crisis. It is better than after

:21:13.:21:17.

2000 and it when there was a mental freeze. Even now, the party is not

:21:17.:21:22.

taking the full measure of what happened. The Republican Party

:21:22.:21:28.

dominated American politics until 1988. Many who run the Republican

:21:28.:21:33.

Party remember that, they are not appreciative that since then, the

:21:33.:21:41.

Republican Party has won the majority of the vote only one time.

:21:41.:21:51.
:21:51.:21:53.

Is the butter Col -- the Battle of where it stands in difficulty?

:21:53.:21:59.

need better data, better voting lists, use of social media. Some

:21:59.:22:03.

believe they have to change on the immigration issue but that does not

:22:04.:22:08.

address the concerns of middle- class Americans. It is not a

:22:08.:22:14.

surprise it does poorly among lower income most recent immigrants. The

:22:14.:22:18.

surprise it does so poorly among higher income people, who are not

:22:18.:22:26.

married, from professional backgrounds. How to win the middle

:22:26.:22:32.

classes? How do they when back that centre-ground? George Osborne said

:22:33.:22:36.

after Barack Obama won again, voters on both sides of the

:22:36.:22:46.

Atlantic want social liberalism and economic toughness. Times are tough.

:22:46.:22:53.

Our situation is different from Britain. The US is able to borrow

:22:53.:23:00.

money, at 1.5% for 10 years, there is nothing like a debt crisis in

:23:00.:23:05.

the United States. We need to restore economic growth. One way is

:23:05.:23:10.

to have a more stable political system. Our economy would be

:23:10.:23:16.

growing at 2% but for what is happening in Congress where we have

:23:16.:23:25.

had three artificial fiscal crisis. My forget his Republicans need to

:23:25.:23:31.

be culturally modern, environmentally responsible.

:23:31.:23:37.

Culturally modern is a range of issues, it has to do in the

:23:37.:23:44.

American context with having a less extreme view on guns. A message of

:23:44.:23:48.

economic inclusion which does not speak only to people who are in

:23:48.:23:54.

business. Can we learn lessons from what happened to Mitt Romney in

:23:54.:24:00.

terms of providing an inclusive, socially liberal agenda? We have

:24:00.:24:06.

much to learn from British Conservatives. They have accepted

:24:06.:24:10.

the obligation to discover ways to be culturally modern and reflect

:24:10.:24:14.

society. They have had great success with certain types of

:24:14.:24:19.

immigrant groups, those poor likely to be self-employed, professionally

:24:19.:24:26.

educated. We have to come here to learn, not the other way around.

:24:26.:24:29.

what can Conservatives learn from the 2012 US presidential election,

:24:29.:24:36.

if they are to win here in 2015? Joining me now is director of

:24:36.:24:38.

market research company Populus, Rick Nye, formerly of the

:24:38.:24:41.

Conservative Research Department, where he was a key proponent of

:24:41.:24:47.

Tory modernisation. Also here is the Conservative MP Peter Bone.

:24:47.:24:50.

The can the Conservatives learnt anything from the mistakes made by

:24:50.:24:57.

Mitt Romney? To be fair, they have tried to over the last eight years.

:24:58.:25:01.

David Cameron is seen as a more modern, more inclusive type of

:25:02.:25:11.

Conservative, sometimes he maybe goes too far for the taste of some

:25:11.:25:18.

people within his party. Does he go too far for you? I do not think it

:25:18.:25:28.
:25:28.:25:28.

is really about David Cameron, this argument about modernising... It is

:25:28.:25:33.

superficial. People want to know what the Conservative Party stands

:25:33.:25:40.

for. As long as we have a policy and agenda, we will do fine. What

:25:40.:25:47.

does the Conservative Party stand for? On Europe, we will have a

:25:47.:25:51.

referendum, that is clear blue water between us and the other

:25:51.:25:58.

parties. And social issues? He is governing the party with the Lib

:25:58.:26:03.

Dems. That is the real problem, how do we establish a Conservative

:26:03.:26:08.

philosophy, while governing with the Lib Dems. What is stopping him?

:26:08.:26:13.

You blame the Liberal Democrats, what is he being stopped doing?

:26:13.:26:19.

Human rights, we would have a British Bill of Rights. You would

:26:19.:26:24.

go ahead with proposals on same-sex marriage? That was an aberration

:26:24.:26:29.

which came from I do not know where. Do not see that as culturally

:26:29.:26:34.

modern, the things which are important for a modern party to

:26:34.:26:44.

win? No, absolutely not, centre the cent of backbench ins --

:26:44.:26:49.

backbenchers failed to support the Prime Minister. If we concentrate

:26:49.:26:54.

on that, it is a big mistake. that symbolic of what the

:26:54.:26:58.

Conservative Party in your mind needs to continue doing to

:26:58.:27:05.

modernise and continue to detoxify? Or is it a backward step?

:27:05.:27:10.

difference is deeper than that. The reason why David Cameron doesn't

:27:10.:27:13.

have a majority and relies on the Liberal Democrats is because not

:27:13.:27:17.

enough people saw that the Conservative Party had changed and

:27:17.:27:23.

become culturally modern and sensitive to their needs. Peter

:27:23.:27:31.

thinks it is because there wasn't enough blood and thunder...

:27:31.:27:35.

about being on common ground where most people were, before the last

:27:35.:27:40.

election, if you had promised a referendum, UKIP would have come on

:27:40.:27:45.

board and we would have had a majority. You always talk about

:27:45.:27:51.

centre-ground, you want to be on common ground. You need to capture

:27:51.:27:54.

the middle class which is what David Cameron has done it so well

:27:55.:28:01.

in terms of moving the Tories through this decade. It was clear

:28:02.:28:09.

before that lots of people at the beginning, 2000, 2004, just felt

:28:09.:28:16.

that the Tories were not for them. Tony Blair was an extraordinary

:28:16.:28:20.

politician who moved his party along.

:28:20.:28:25.

David Cannon has captured some of that. Why was he successful? He

:28:25.:28:32.

spoke about what mattered to real people. People who do not wake up

:28:32.:28:36.

in the morning and think, a wonder what this will do with the European

:28:36.:28:43.

Union. They think about the cost of living. Law and order. They wonder

:28:43.:28:48.

whether they have a government on their side. Those are the things

:28:48.:28:58.

David Cameron needs to focus on. Not purity over Europe. Tony Blair

:28:58.:29:02.

stood on things that people cared about. Any politician who wants to

:29:02.:29:09.

win has to stand on those issues. But you didn't win a majority in

:29:09.:29:19.
:29:19.:29:25.

2010. We listened to back... This is the rubbish... According to what

:29:25.:29:31.

the polls said... This is the great misunderstanding, immigration is

:29:31.:29:34.

the number-one issue because of the European Union. People don't

:29:34.:29:40.

associate it with the European Union. Was David Cameron wrong to

:29:40.:29:47.

offer a referendum and give in to backbenchers? He wanted to stop the

:29:47.:29:51.

conversation from dominating Parliament particularly inside a

:29:51.:29:56.

fractious elements of his party. There is only so much oxygen in the

:29:56.:30:02.

room and if it is taken up with rows over Europe, that is the way

:30:02.:30:07.

to a landslide defeat. It also bought off the UKIP

:30:07.:30:13.

challenge which politically was really clever. It immediately

:30:13.:30:18.

dissipated the support in the way it was growing for UKIP. David

:30:18.:30:28.
:30:28.:30:32.

It could be pause the Prime Minister believes it is the right

:30:32.:30:36.

thing to do. In terms of winning the next election, that is the key

:30:36.:30:40.

for you, and you disagree on the direction of the Conservative Party.

:30:40.:30:44.

To win the next election he needs f you like, both wings to fly, yes,

:30:44.:30:48.

he needs to address some people who are dissatisfied with the

:30:48.:30:53.

Government's record so for on things such as moving further on

:30:53.:30:56.

benefit, even dealing with immigration, some people are voting

:30:56.:31:01.

UKIP who won't take yes for an answer, trust me on that. He needs

:31:01.:31:05.

the middle classes, there are as many people who voted Liberal

:31:05.:31:08.

Democrat in 2010, that we need voting Conservative who say they

:31:08.:31:13.

would consider voting Conservative in 2015 as Tories have defected to

:31:13.:31:21.

UKIP. Well, I do like the evidence, it is just the way you misinterpret

:31:21.:31:25.

id. What you need is get the UKIP voters back but you need to get the

:31:25.:31:29.

people who didn't vote. That is the key to it. The fact a turn out is

:31:29.:31:33.

so low. Get those back voting Tory and forget the Liberal Democrat,

:31:33.:31:40.

they won't vote for us in 100 years, you are on a different planet.

:31:40.:31:44.

the dif -- different planets we will leave it there. Quantative

:31:44.:31:48.

ease, not perhaps the talk of the dog and duck but a key part of the

:31:48.:31:53.

bank and the attempt to revive the economy. 375 billion has been

:31:53.:31:58.

created by the bank, and used to purchase Government debt. Keep

:31:58.:32:03.

interest rates down, and as a consequence stimulate growth. Has

:32:03.:32:08.

QE been good for us? Has it worked? Perhapss more to the point, what is

:32:08.:32:13.

it? We sent our reporter to find out. Out and about at the Bank of

:32:13.:32:16.

England, today's teaser is, can you say quantitative easing?

:32:16.:32:26.
:32:26.:32:28.

Quantitative easing. Pardon? Quantitative easing. Quantitative.

:32:28.:32:33.

That is difficult. Quantitative easing. No. Quantitative easing,

:32:33.:32:39.

hard to say, harder to spell. Trust me. It is not to be confused with

:32:39.:32:44.

QE, Queen Liz be. QI, which is quite interesting or the QE 2-2

:32:44.:32:49.

though there as been more than one phase. What is it? Quantitative

:32:49.:32:55.

easing, or QE, is often December -- described as printing money, but

:32:55.:33:01.

that is misleading. QE is lending from the Bank of England, �375

:33:01.:33:06.

billion of new money from the Bank of England has been used to buy

:33:06.:33:10.

Government bonds. What that has done is reduce the interest rate on

:33:10.:33:15.

those Government bonds, and longer term interest rates generally for

:33:15.:33:19.

borrowers. Which has been good from the economy from that point of view

:33:19.:33:24.

but bad for savers. It is not about printing money. But quantitative

:33:24.:33:29.

easing, or QE has made Britain look like a good bet and allowed

:33:29.:33:32.

politicians to paint a positive picture of the handling of the

:33:32.:33:38.

economy of is all as Rosie as it might seem? The problem with QE it

:33:38.:33:42.

lets politician off the Hook. Here in the UK we have a coalition

:33:42.:33:46.

Government. Pretty much hampered then, not much they can do, and

:33:46.:33:51.

there was you have the Bank of England doing all the heavy lifting,

:33:51.:33:56.

all by monetary policy. It is all based on interest rates. It is not

:33:56.:34:01.

based on fiscal policy. Some people think the money could have been

:34:01.:34:07.

used better. One of problems is new money has come are the Bank of

:34:07.:34:13.

England and end up washing round financial markets. You could use it

:34:13.:34:18.

to fund a new invest bank. You could use it to fund the Green

:34:18.:34:21.

Investment Bank to help renew infrastructure. You could also fund

:34:21.:34:25.

housing associations, to start building new homes again, in

:34:25.:34:29.

Germany, the state investment bank there is funding the retrofit, of

:34:29.:34:33.

all the existing home, to bring down energy costs stkpw. A new man

:34:33.:34:41.

will take over at the helm of the Bank of England. Mark Carney, head

:34:41.:34:48.

hunted by George Osborne from the Bank of Canada, is he a QE man?

:34:48.:34:51.

Given the slow progress of the economic recovery, it is on the

:34:51.:34:56.

card we could have more QE. When Mark Carney comes in, it gives the

:34:56.:35:01.

bank an opportunity to review how it is doing QE. He might bring in

:35:01.:35:05.

new ideas from his experience in Canada and seeing what has happened

:35:05.:35:09.

in North America. It is a good opportunity for the bank to start

:35:09.:35:13.

using new tools to try and be more effective in stimulating the

:35:13.:35:17.

economy. It might not trip off the tongue but quantitative easing is a

:35:17.:35:22.

big part of economic life. It might be round for some time to come.

:35:22.:35:27.

Quantitative easing. Says it better than most people in the studio.

:35:27.:35:31.

With me the economist Leigh Caldwell and our guest of the day

:35:31.:35:36.

Ros Altmann. Is it working? There is no growth. Quantitative easing

:35:36.:35:40.

is really the only thing that stood between us and the fate of Spain

:35:40.:35:44.

and Greece. Spain and Greece, Spain particularly was in a similar

:35:44.:35:48.

situation to the UK, three or four years ago, running a Government

:35:48.:35:53.

deaf set of between five and 10% a year, having to bail out bank, they

:35:53.:35:58.

didn't have the option of their own central bank which could print

:35:58.:36:05.

money to help finance that. So the Bank of England has allowed the

:36:05.:36:07.

British Government to continue its deficit spending policy wit has

:36:07.:36:11.

been forced to do keep the economy at least on some kind of even keel,

:36:11.:36:16.

and so we have not had the same rise in unemployment and the same

:36:16.:36:22.

level of collapse in growth than, and indeed negative growth Spain

:36:22.:36:26.

and Greece have had. We would be worse off without it? That That is

:36:26.:36:30.

always the Bank of England's argument. Because it has happened

:36:30.:36:34.

we count prove what would happen if it didn't. We haven't got the way

:36:34.:36:40.

of Spain and Greece. Not short-term, but that is because we have a free

:36:40.:36:44.

currency, that doesn't mean we have solved the problems at all. What QE

:36:44.:36:50.

does is, it creates new money, os sentencibly to ensure that bank

:36:50.:36:56.

lending will support the economy. It hasn't work. You have driven

:36:56.:37:00.

down long-term interest rate, but because of the side effects of QE,

:37:00.:37:05.

which are particular to the UK economy, you have weakened growth

:37:05.:37:09.

in other areas so although you have one foot on the accelerator, you

:37:09.:37:13.

have the other foot on the brake. We have double-dip recession, it is

:37:13.:37:19.

not like the economy has done well. GDP might have retracted again.

:37:19.:37:24.

might have a triple dip recession, I hope not. Inflation has been

:37:24.:37:28.

higher than other area, so I don't think QE has worked at all. What

:37:28.:37:32.

would you have done instead? The point is, would you have done some

:37:32.:37:37.

quantitative easing, would you have had some money being circulated by

:37:37.:37:42.

the Bank of England, and then stopped it, now? Effectively the

:37:42.:37:47.

first round of this printing new money might have been worth trying

:37:47.:37:54.

in 2009. We were clearly heading for a major catastrophe. It is an

:37:54.:37:57.

experiment and maybe that would have worked. The next two rounds

:37:57.:38:01.

were just trying to help the Government finance the fiscal

:38:01.:38:05.

deficit and trying to fool the markets our economyen isn't as bad

:38:05.:38:13.

as it would look. We should be using new money to underpin

:38:13.:38:19.

investment drebgsly. It is mask -- directly. It is masking the true

:38:19.:38:22.

state of the economy and stopping decisions being made to bring us

:38:22.:38:26.

into growth to stimulate the economy. Then we will come on to

:38:26.:38:30.

investment. The Bank of England would argue it is not its job to

:38:30.:38:33.

decide whether to invest in infrastructure or a green bank or

:38:33.:38:37.

these things, the Bank of England's job is to provide the money the

:38:37.:38:40.

economy need and then the Government's job is to decide how

:38:40.:38:48.

to spend that. Now, I would not say that QE is the only thing that

:38:48.:38:52.

should be done, I do personally, I think Government should invest more,

:38:52.:38:56.

that the economy does need to continue its transition from

:38:56.:39:01.

finance and housing based economy of five years ago, to a more

:39:01.:39:05.

broader based economy. Now, and inflation is part of that deficit

:39:05.:39:12.

spending is a part of that. QE is necessary to help that process

:39:12.:39:18.

happen. Yes, there are some negative effects. What would you

:39:18.:39:22.

say to anyone retiring and trying to buy private pension in the last

:39:22.:39:27.

year or so who has lost undoubtedly has lost potential income they will

:39:27.:39:32.

never get back? I sympathise with those people. The value of pension

:39:32.:39:37.

assets, over the last few years has been higher than it would have been

:39:37.:39:42.

without QE so the trade off is a pension fund is larger, the Stock

:39:42.:39:46.

Market has gone up by 50% since 2008, but long-term rates are lower

:39:46.:39:52.

so there is a trade off there. I understand that Ros's viewpoint is

:39:52.:39:56.

about helping the pension, we can't sacrifice the whole economy for

:39:57.:40:01.

that. I think my view is, that what we have done is taken money away

:40:01.:40:05.

from people who don't have big debts and could be spending it, and

:40:05.:40:11.

we frighten them into stoping spending. We have impoverish add

:40:11.:40:16.

group of older people. If you like we have emasculated the grey pound.

:40:16.:40:19.

The inflation rates have been higher for older people. They have

:40:19.:40:23.

cut their spending, so by introduced a policy which is

:40:23.:40:28.

supposed to stimulate growth, you have hurt growth, from those groups

:40:28.:40:33.

of people who could have spend it. Anyone buying an annuity, the value

:40:33.:40:38.

of their pension fund has not gone up more than the fall in the value

:40:38.:40:41.

of the annuities they buy. argument goes without quantitative

:40:41.:40:46.

easing, interest rates may well have gone up. That would have hurt

:40:46.:40:50.

a bigger group of people, surely. We have to differentiate between

:40:50.:40:53.

long and short-term interest rates. What is crucial for the economic

:40:53.:40:58.

position is short rates. Mortgage rates are dependent on short-term

:40:58.:41:02.

interest rates, the fact long rates come down doesn't make much

:41:02.:41:07.

difference to consumer spending. Most key rates depend on short

:41:07.:41:10.

rates, therefore pushing down long term rates has had a negative

:41:10.:41:14.

impact because of the term structure of the private sector UK

:41:14.:41:19.

balance sheet, where pushing down long rates hurts companies

:41:19.:41:24.

sponsoring pension scheme, hurts people buying pensions and has

:41:24.:41:29.

caused a problem for corporate UK as well as the household sector.

:41:29.:41:35.

You have said QE is de-- designed to solve a psych llingical problem,

:41:35.:41:41.

which suggests it is nothing to do with economics The two are closely

:41:41.:41:47.

linked. There is a particular problem called money illusion, the

:41:47.:41:54.

bank aims for a positive rate. If inflation were to fall low tore 0

:41:54.:41:57.

or 1% it would hamper the adjust. Of the economy. People don't want

:41:57.:42:02.

wage cut, they don't want to accept price cuts but inflation allows the

:42:02.:42:05.

economy to be more flexible. Inflation at the moment, of course,

:42:05.:42:10.

is killing people in terms of standard of living. Their wages are

:42:10.:42:17.

worth less, spending how o -- power is worth less. Anything policy that

:42:17.:42:22.

was designed the keep inflation higher is doing to make life more

:42:22.:42:26.

difficult. Remember it is a reflection of people's wages

:42:26.:42:31.

increasing and wages are increasing, probably not quite as fast as cost

:42:31.:42:39.

but they are going up 2%, so the effect on wages is not as high a it

:42:39.:42:46.

is some timeing to -- some sometimes thought to be. With

:42:46.:42:50.

strict financial constraints it is none an easy task to set budgets.

:42:50.:42:54.

We will hear about the decisions that Birmingham is facing. Let us

:42:54.:42:57.

see what happened at the London Assembly yesterday when Labour's

:42:57.:43:01.

members spotted an absent sorry member might mean they could defeat

:43:01.:43:05.

Boris beers budget. To go they had to vote that he should leave the

:43:05.:43:09.

chamber. Perhaps unsurprisingly, that didn't go down too well..

:43:09.:43:15.

that means then, that we then thank the Mayor for his attendance,

:43:15.:43:21.

because the assembly members have decided they have no... They are

:43:21.:43:26.

you saying they are advocating their duty to scrutinise me? Are

:43:26.:43:32.

you saying they haven't got the guts to put questions to me. Great

:43:32.:43:35.

supine protoplasmic invertebrate jellies! That is it. They don't

:43:35.:43:41.

want to ask me questions you have been cheated. Your Labour, your

:43:41.:43:46.

Labour accomplices have failed in their duty. Mr Mayor, Mr Mayor,

:43:46.:43:56.

In the end, the missing Conservative came back in, so Boris

:43:56.:43:58.

got his budget through. This afternoon, it's Birmingham's turn.

:43:58.:44:08.
:44:08.:44:12.

120 city councillors will meet, to decide on spending for next year.

:44:12.:44:14.

Depending on your political persuasion, it will lead to

:44:14.:44:17.

swingeing multi-million pound cuts, or much-needed multi-million pound

:44:17.:44:20.

savings. So, what will it mean for the million people governed by

:44:20.:44:23.

Europe's largest local authority? Mary Rhodes from Inside Out in the

:44:23.:44:30.

West Midlands has been finding out Here, the government's money

:44:30.:44:38.

problems mean nothing to these young people.

:44:38.:44:43.

I want to give back what they gave me. This Saturday Club in at Selly

:44:43.:44:50.

Oak is only here because of him. Cash run-out, so dale run over.

:44:50.:44:55.

There are a lot of grateful parents. There is very little in this area

:44:55.:45:05.
:45:05.:45:06.

now. Children with special needs. This is a valuable centre. Dale is

:45:06.:45:10.

keen for a maths lesson, we give him the chance to meet the

:45:10.:45:17.

political power-brokers. This is the scale of the cuts

:45:17.:45:25.

Birmingham City Council has to make, by 2017, they have to save 715 --

:45:25.:45:34.

�600 million. The next year, �100 million. They have to lose �24

:45:34.:45:39.

million from the children and families budget. To put that into

:45:39.:45:44.

context, the amount they have to save, �70 million more than it

:45:44.:45:51.

costs to build the new City Hospital. That is a lot of money.

:45:51.:45:57.

They are cutting quite a large sum from a vulnerable group in society.

:45:57.:46:02.

Birmingham will have to cut services to bridge the �600 million

:46:02.:46:12.
:46:12.:46:13.

funding gap. Is it fair? In a 2013, we have made sure, unlike other

:46:13.:46:23.
:46:23.:46:26.

parts of the public sector, we need to be brave, radical and bold.

:46:26.:46:31.

did you make of what eric pickles had to say? He had some very good

:46:31.:46:36.

points. We need to make the cuts where we need to but it can be

:46:36.:46:42.

difficult. You can't just get on with life, it will affect a lot of

:46:42.:46:50.

society. It is a balancing act. * Robert bought is the leader of

:46:51.:46:59.

Birmingham city council and controls a �3.5 billion budget --

:46:59.:47:06.

sir Albert Bore. Eric pickles say he wants local government to be big,

:47:06.:47:11.

bold and brave. How were you rise to that challenge? We will do

:47:11.:47:16.

exactly that by looking at the services in the way we are. The

:47:16.:47:19.

people of Birmingham will see what we are spending our money on.

:47:19.:47:26.

Exactly what it is. And take a view which services we should

:47:26.:47:31.

discontinue, and decommission. It is the end of local government as I

:47:31.:47:38.

have known it. It has been an interesting journey.

:47:38.:47:44.

They have accepted cuts have to come in but have reassured me they

:47:44.:47:48.

will be hopeful about the cuts and think about society as a whole when

:47:48.:47:53.

making these decisions when cutting services. I am more positive. All

:47:53.:47:58.

we can do is wait for them. We joining me now to discuss what

:47:58.:48:02.

that might mean for the rest of the country is Brandon Lewis, the

:48:02.:48:05.

Conservative local government minister. And our guest of the day,

:48:05.:48:10.

Ros Altmann, is still with us. Are you happy that they have said,

:48:10.:48:17.

to balance the books, it is the end of local government as he knows it?

:48:17.:48:21.

Local government has risen to the challenge. They have had big

:48:21.:48:26.

savings to make. It accounts for a quarter of all public spending.

:48:26.:48:32.

There is a challenge, local government is moving forward to a

:48:32.:48:37.

new future working in a different way with communities. Including

:48:37.:48:43.

cutting Children's Services by �24 million in Birmingham. They have to

:48:43.:48:48.

balance the books. Are you happy they're making �24 million of cuts

:48:48.:48:53.

to Children's Services. They have to look at what they need locally.

:48:53.:48:58.

That is what localism is about. Are they making the right decisions

:48:58.:49:04.

with the assets they have got. Should they be looking at how they

:49:04.:49:08.

maximise income elsewhere which many councils are doing. Councils

:49:09.:49:14.

own millions of pounds of assets. On average, local authorities face

:49:14.:49:20.

an average �61 cut in central government funding per head of

:49:20.:49:25.

population. Even up to one had and �60 per resident, some including

:49:25.:49:35.
:49:35.:49:39.

the poorest areas in the country. Is that fair? -- �160. You are

:49:39.:49:46.

hitting some of the poorest parts of the country, with �160 per

:49:46.:49:51.

resident per year, higher than the average. I had a debate this

:49:51.:49:58.

morning talking about Knowsley in Liverpool where they have is spent

:49:58.:50:05.

per head of �3,200. Constituencies like mind and, in deprived areas,

:50:05.:50:11.

we start from a very different point. The average is still only

:50:11.:50:15.

1.3% change in terms of spending power.

:50:15.:50:20.

My real concern here, looking at the composition of local government

:50:20.:50:25.

spending. We are seeing that spending on children is being cut.

:50:25.:50:30.

One of the big reasons for that is, in huge chunk of local government

:50:30.:50:33.

spending has to go on social care, particularly for increasing numbers

:50:33.:50:40.

of older people, depending on where you are in the country. There are

:50:40.:50:44.

greater proportions of older people. Also, on the local government

:50:44.:50:49.

pension payments. Those two areas are pretty difficult to cut at all

:50:49.:50:55.

if not impossible. So that means you will get other cuts happening

:50:55.:51:00.

elsewhere particularly for children. I do not want to see more of this

:51:00.:51:04.

inter-generational envy. Should one perhaps take the social care budget

:51:04.:51:08.

and pension budget outside the normal local of 30 discretionary

:51:08.:51:14.

spending, so you can make more rounded decisions about what the

:51:14.:51:18.

composition of local services should be. It is a good example,

:51:18.:51:23.

the local government pension scheme, a funded scheme, 89 different

:51:23.:51:28.

schemes in the country. Local government can come together and

:51:28.:51:35.

rationalise that. But york council says sharing services would only

:51:35.:51:38.

save �170,000 which is nothing in terms of the millions that council

:51:39.:51:44.

has to say. If you are demanding those savings from services that,

:51:44.:51:53.

by law, councils have to provide. I disagree with the point, the

:51:53.:52:00.

previous administration was looking at savings of half a million pounds.

:52:00.:52:06.

They are finding about �1 million in a year in savings. In London,

:52:06.:52:11.

looking to save �50 million a year, we shouldn't underestimate by

:52:11.:52:17.

coming together. Anybody in business will say they must be able

:52:17.:52:23.

to find savings. Redefining services that a council bylaw has

:52:24.:52:33.
:52:34.:52:34.

to provide. A statutory duty to provide. How will they do that?

:52:34.:52:39.

Lancashire is the cutting council tax by 2% this year. There are

:52:39.:52:44.

things local councils can do. number of statutory duties the

:52:44.:52:51.

council has to provide by law. are always looking at what local

:52:51.:52:56.

government provides. It is always under review. Where are you with

:52:56.:53:00.

this review? We have cut quite a lot and looking to cut further.

:53:00.:53:10.

Which services... A lot of it is time and money spent on reporting

:53:10.:53:15.

back to central government. In terms of services, they have the

:53:15.:53:20.

power to decide locally what they deliver. Most importantly, it is

:53:20.:53:28.

about how you spend that money. How you work together. Rather than...

:53:28.:53:37.

Many councils, small authorities, small districts, they are coming

:53:37.:53:43.

together. What should they stop doing? We have published a document

:53:43.:53:49.

to look at sharing management, services, procurement. Take care of

:53:49.:53:53.

the pennies and the pounds will take care of themselves.

:53:53.:53:58.

Recommendations take them all the way through from really big savings,

:53:58.:54:05.

through to some of the small things. Is it achievable? If you are a big

:54:05.:54:09.

council providing social adults care, providing for poor parts of

:54:09.:54:14.

the country, it isn't possible to make those sorts of savings? As we

:54:14.:54:20.

guffawed, it will be increasingly impossible for local councils -- as

:54:20.:54:26.

we go forward. Clearly, at the moment, they have cut the amount

:54:26.:54:32.

they are paying people to provide care. They can't cut it any more.

:54:32.:54:38.

We will need to look again at what areas of local authority spending

:54:38.:54:48.
:54:48.:54:49.

we can use with discretion and can may be financed centrally.

:54:49.:54:52.

Now, for the last few weeks, there's been a dramatic by-election

:54:52.:54:56.

battle going on. The end of the race is on the horizon, and the

:54:56.:55:00.

result will be felt all the way to Westminster. That's right. It's Bob

:55:00.:55:03.

Servant's fictional fight for the Dundee seat of Broughty Ferry,

:55:03.:55:06.

which concludes on BBC 4 this week. Let's have a look at Bob's

:55:06.:55:10.

preparation for the big hustings. Mental preparation! That the game.

:55:10.:55:16.

It all starts with this. Brain food. We should probably go over some

:55:17.:55:24.

policies. Quite the opposite, but at the great debate is, Churchill,

:55:24.:55:33.

Thatcher. They thought on their feet. Is that your plan?

:55:33.:55:36.

We're lucky enough to be joined from Glasgow now by Bob Servant.

:55:36.:55:40.

He's better known, of course, as actor Brian Cox.

:55:40.:55:45.

Any tips for the candidates in the dramatic by-election in Eastleigh,

:55:45.:55:51.

apart from brain food? A I don't think I have many tips

:55:51.:55:57.

for them, just carry on doing the inadequacy they continued to do!

:55:57.:56:01.

How very profound. Tell us why you are so keen for Scottish

:56:01.:56:08.

independence? Well, I just think, I am more keen about English

:56:08.:56:12.

independence as Scottish independence. England will go

:56:12.:56:18.

independent as well. We really have, our political system is failing us

:56:18.:56:26.

daily. And what we get on the news every day. And it may be Scottish

:56:26.:56:29.

independence would be away of shaking these islands up in away

:56:30.:56:33.

they haven't been shaken up for a long time. Do you still live in New

:56:33.:56:39.

York? I spend more time here because I am the rector of Dundee

:56:39.:56:43.

University, my children don't even recognise me in more because I am

:56:43.:56:50.

hardly in New York. So we can't accuse you of hypocrisy. Nabbing

:56:50.:57:00.
:57:00.:57:01.

macro, I lived in this country -- no. I have never been away, I have

:57:01.:57:08.

always come back. My work has taken me to America, doing movies. We

:57:08.:57:14.

don't have a film industry here. Would today's Brian Cox grown up in

:57:14.:57:18.

Dundee make it to Hollywood? because one of the problems in this

:57:19.:57:24.

country today is there is no social mobility any more, a child like me

:57:24.:57:28.

would not be able to go to drama school because, simply, they would

:57:28.:57:33.

not be able to afford it, to pay back their fees. As a kid, and went

:57:33.:57:43.
:57:43.:57:44.

to drama school, �11 a week I had, 1961. 1963. I had my grant paid. My

:57:44.:57:50.

mother was a widow. I was taken care of by the Scottish education

:57:50.:57:55.

or authority. We have seen more and more children being marginalised,

:57:55.:58:02.

having to pay back. We have seen a sector of society being ignored.

:58:02.:58:08.

Will there be a rise for more independent candidates? I think so.

:58:08.:58:13.

I am worried about Eastleigh, I am worried about the by-election, what

:58:13.:58:18.

will happen to the Liberal Party. We do need a third force but that

:58:18.:58:24.

has been diminished. I do believe that we don't want to go back to

:58:24.:58:27.

the two party system but, unfortunately, the leader of the

:58:27.:58:30.

Liberal Democrat has shot himself firmly in the foot.

:58:30.:58:37.

We will come back to that on another day. That's all for today.

:58:37.:58:43.

Thanks to our guests. The one o'clock news is starting over on

:58:43.:58:49.

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