18/11/2013 Daily Politics

Good afternoon. Welcome to the Daily Politics. Could the Chancellor be

thinking about a big giveaway in the autumn statement? An independent

Scotland faces higher taxes or steeper cuts in public spending

according to the Institute for Fiscal Studies. We'll be talking to

Scotland's Finance Secretary, John Swinney. Happy days for the UK

Independence Party. One of Britain's wealthiest men wants to give the

party an awful lot of dosh. We'll be asking him how much and why? And

should this man ever have become chairman of the Co-Operative Bank.

The Reverend, Paul Flowers, was caught buying crystal meth and crack

cocaine shortly after this appearance in front of MPs.

All that in the next hour, and with us for the first half of the

programme today, is the chief executive of the Royal Society for

Arts, Matthew Taylor. He used to be head of the Number ten Policy Unit,

under Tony Blair's government. So, first to Labour and the two Eds.

Because, according to leaked e-mails, Ed Miliband's team think Ed

Balls is a bit of a nightmare. Do you think they are right? When

people 's jobs overlap with one another, you will get this kind of

tension. It always exists. I do not think you should make too much of

this. It is kind of inevitable. I think there is a bigger problem,

which is the culture which exists within politics. There is an

increasingly weird kind of culture compared with other organisations.

When politicians have problems, they do not do what most organisations

do, which is to create a structure where they think strategically and

create the change process, politicians were within their teams

and they do not share ideas. It is brittle. These e-mails revealed to

us what is always known in that senior politicians have tension. In

a way, it is not relevant. If you are talking about two people at the

top of the leadership structure, on a crucial issue like the economy,

you have to share the same idea. You have to share the idea. You are

trying to give advice to your boss. You want your boss to take your

advice. You are irritated because it is getting in the way of what you

want to achieve. All this friction is inevitable. The way politics

works, the failure to think about issues in depth and work as a team.

When I worked at number ten I desperately argued there should be a

different culture for decision-making policies. You are

involved in the biggest division of all between Tony Blair and Gordon

Brown. In the end, doesn't it damage the product? If Ed Balls does not

obey orders, that is a problem. The Blair, Brown thing was very toxic.

That is an extreme example. Also, a broader question of how it is you

achieve change. The RSA is going through a change process. The team

will spend time together. There are coaches working with us. In politics

it is highly individual. You do not have those kinds of conversations.

We will wait for e-mails to be leaked. Today sees the coalition

trying to work through the tricky old problem of taxation. And it

seems they are spoiling for a scrap. Deputy Prime Minister Nick Clegg

wants to increase the personal allowance threshold to ?10,500

before the next election. It would come at a cost though, ?1 billion.

Nevertheless, George Osborne is said to be smitten with the idea, and it

is thought the Tories next election manifesto might pledge to raise it

even higher. But the influential Tory Free Enterprise Group are not

too keen. They want the Chancellor to do more for the so-called

squeezed middle by ending stamp duty for homes valued under ?500,000. And

some Tory backbenchers say there should be a cut in the headline rate

of taxation, to help increase disposable income. Earlier, Nick

Clegg spoke about this at his monthly press conference. As the

recovery takes hold, it is important that we do all we can to make sure

the largest number of people benefit from that recovery by helping them

retain more of the money that they earn. That is exactly what this idea

is about. It is a workers bonus, in order to make sure that people, as

they face high costs in their weekly and monthly household budgets, also

feels the government is doing more to help them in the way I announced

this weekend. Joining me to discuss is Conservative MP Dominic Raab.

Also by Stephen Tall. Are you against the idea of raising the

personal allowance further? Not in principle. It will do nothing for

the 5 million lowest paid. If you want to do something for them then

brace and national insurance threshold. Two things are vital. --

then raise. We should be prioritising business tax cuts, to

get the economy on track and we should not be forgetting this

squeezed middle. How would you pay for it? As you said, it will cost

about ?1 billion to do. I suspect what will happen is they will look

at the fact that growth is kicking in far higher than was expected at

this point in the recovery and that has given more wiggle room. I

suspect you will see, as the coalition gives up for the general

election, a few more of these sweeteners coming through. Now they

will go on a spending spree. They have talked about economic

management and making sure there was not going to be overspending. You

are saying there is going to be a giveaway. Debt is going up. Would

you tax the wealthy or have additional spending cuts? David

Cameron was saying he wants a mansion tax to be brought in but

that is dead in the water. The idea that austerity has gone away is not

the case. There will be spending cuts across the rest of the

department. There will be bidding process as we get towards the

general election. If it starts anywhere, we will stop at national

insurance. I disagree with the Lib Dems on this. Do you think it will

not help the poorest? Where you have got to the point where ?10,000 is

the rate at which you start paying income tax, the more you raise it,

the less you are helping people below ?10,000. National insurance

equalisation would help to address this. That would be my preference.

Are the Lib Dems behaving like an opposition party? Reaction for the

political class as a whole needs to do something honest about government

spending. Household debts are high. The first priority is economic

recovery. Let's not lose sight of the squeezed middle. That is the

mantra of labour. I am addressing what Gordon Brown did. They may be

saying it is their mantra now but it is not the answer. Is that where you

would concentrate any giveaway? This is a wonderful conversation. The

Liberal Democrats say raising this helps the poor. The Conservatives

are arguing that we should have a tax cut for the middle classes. Most

of the benefit of raising the tax threshold goes to middle income.

Those who do not benefit are over ?100,000. That is not most people 's

account of who you are talking about. The economy is the number one

thing. As I wrote today, I will be freezing interest rates and raising

the small business rate relief because the high street need a shot

in the arm. Secondly, if you look at house prices, the fiscal drought,

the average house is over ?250,000 and that is hit by the 3% rate. If

you want to help the squeezed middle, deal with that. Answer the

question about who it helps more in terms of the squeezed middle. Your

squeezed middle is who? If you are dealing with stamp duty, you need to

look at thresholds. If you are trying to buy buy a home at over

?250,000, they are not the Google which any more. If you can afford a

home of over 500,000, why should tax cuts be concentrated there? -- rich

any more. I am not against raising national insurance. We can only talk

about tax sweeteners if we are serious about government spending.

No other party is doing that. Mark Carney has said recovery is taking

hold. They are focusing on the cost of living crisis. It seems we have

moved into week help other tics. Which party can promise more things

to the electorate? -- retail politics. We still have a debt and

it is growing. In Birmingham they are talking about reducing the

number of people who work for the local authority. Politicians are

making promises left, right and centre and austerity will really

start to kick in in the next few months. This debate is very odd.

Doesn't it mean we should talk about spending? Do you think talking about

spending at all is irresponsible. Certainly not. Even when the debt is

spiralling? The Lib Dems would be one of the few parties not to say we

would ring fence NHS spending, precisely because we thought all

public spending would have to be looked at in the round. I do just

want to pick up on this point. Tax cuts do not help the low paid. I do

not agree with that at all. Too many of the lowest paid have been taken

out of tax altogether. That is a good thing. It's incentive rises

people to get back into work. If you raise the tax threshold, the bottom

earners do not get anything from it. Those people on tax credits will

lose the benefit. There are various other concessions you get, you will

lose those. Raising the tax threshold will not help the bottom

quarter. The Liberal Democrats use this policy as a way of saying, they

are wanting to help the pool. What you say to that? You just said it

does. The minimum wage is ?12,000 a year. You will be paying income tax

directly. The lowest paid on minimum wage are having to pay back in tax.

If you make sure that those on minimum wage do not pay income tax,

only 10% of that cut goes to the poorest. It needs to be properly

costed and the economy needs to be put first. I've found ?30 billion of

savings by funding the various Whitehall departments. I would

freeze non-pensionable welfare benefits. That would leave 6 billion

over to pay off the deficit. Do you agree with those proposals and those

cuts? Having only had five seconds to study that information, everyone

looks for efficiency savings. They are harder to deliver. I have set

out in a long report. Halve the number of government departments.

Would it reap the number you are talking about? I do not think I can

be accused of trying to rigourously cost what I am doing. Isn't this

just about the politics? The Liberal Democrats and Nick Clegg are trying

to claim they are champions of the low paid. It is an audacious attempt

to grab the mantle of economic management at this point in the

cycle. The Lib Dems were the only party that went into the 2010

election promising tax cuts for the low paid. The Conservatives say it

is their policy as well. What Nick Clegg is worried about is that

George Osborne will steal that. It is a pre-emptive move to try to make

sure whatever tax cuts are offered in the next budget, they are owned

by the Lib Dems. He wants credit for something that George Osborne is

jumping on the bandwagon about. We want ideas to reduce the overall tax

burden. Is Dominik right? Bleeding into this next election, the cost of

living crisis continues and that hits the squeezed middle, the sort

of policies he is suggesting will be boat winners. We have seen from the

revival of Ed Miliband, this issue of living standards and being seen

to do something about it strikes a chord. There is genuinely an issue

about living standards. We talk about symptoms. We do not talk about

the structural causes of the fact that British economy is not

generating jobs which pay people the amount of money they want for a

decent life. We're not talking about structural aspects of it. The second

we get a bit of economic growth, a bit of this school room, we are back

into throwing policies around. -- fiscal wiggle room. We are trying to

look at the economic fundamentals. The problem is, for Labour and the

Liberal Democrats, they will be offering the same array of tax

sweeteners that they will not be addressing the knock-on effect on

competitiveness which is what Matthew is fretting about so much.

I may not agree with the specific package, but if you need things to

be directed towards a specific economy, absolutely that is what we

need to be doing. Gentlemen, thank you.

There has been lots of arguing over the financial implications of an

independent Scotland, and that will continue. Both sides claim the upper

hand. Today, respected independent think tank, the Institute for Fiscal

Studies, published their report, and I asked Carl Emmerson what he

thought the impact would be. The UK as a whole faces a significant

fiscal challenge because of a loss of oil revenue and an ageing

population. Even under the most optimistic

scenario we consider, that challenge for Scotland will be greater because

oil revenues are more important to Scotland and the Scottish population

is ageing faster than that of the rest of the UK. So what will that

mean financially for the average Scot? What it means is that for the

UK as a whole, we could expect some tax rises or spending cuts over the

next 50 years, averaging about 0.8% of what the UK economy produces in

any one year. Under the most optimistic scenario for Scotland,

that number would be more like 2% of national income, significantly

greater. Your figures have been dismissed, surprise, surprise, by

the Scottish government to claim that Scots claim -- pay more in tax

per head than the rest of the UK. It is true at the moment, but that is

entirely explained by all revenue. Over the next 50 years is that

disappears, that would go in Scotland would be left with a higher

level of expending that they currently enjoy but without the

higher level of tax revenue that they currently generate. In terms of

spending, the Scottish government will argue that they would make

different decisions to compensate for any loss of oil revenue. Is that

a sustainable argument? Certainly an independent Scotland could do a

better job than the current UK Government does in setting tax

policy. You could make a difference as do things better. What is highly

unlikely is that you could do enough better things to generate enough

growth to offset this fiscal challenge. Even the most optimistic

scenario suggests that the challenge for Scotland will be far greater

than the challenge the rest of the UK would face. So an independent

Scotland would have to increase taxes further, or lose some of those

public spending commitments that they have had over the last few

years? Over the longer term, we can expect some combination of tax rises

or spending cuts for the whole of the UK. What I'm saying is that

those would be eager in Scotland, so yes, some combination of tax rises

or spending cuts would look likely. Public spending is high in Scotland,

so they could suffer disproportionately if they have to

cut those public spending commitments. Scotland could look

different than it does now. It could, and in terms of defence or

aid, Scotland will be inheriting a fairly high burden, so they could

cut those. They could cut social housing, transport, economic

development, where they spend a lot more than the rest of the UK.

Will the Scots have to payback for their extremely level of spending on

public services if they gain independence? They will have to

finance that level of spending themselves. Over the longer term in

the UK, it is conceivable that the higher spending is maintained and

financed by the UK Government. Scotland is independent, that option

wouldn't be there, so they would have to choose what level of tax and

spending they wanted. What they couldn't do is have higher levels of

spending without higher levels of tax. Is it difficult to exactly

predict Scotland's economic future because of the variables like oil

revenue? We don't know what exactly is going to happen to it or how

quickly it will diminish, and also the level of debt that Scotland

would inherit. Certainly the fiscal position that Scotland has over the

longer term is very sensitive to exactly how and when oil revenues

decline. We would consider a range of scenarios, the most optimistic

where we say that supposed Scotland gets half the debt that the UK has

an all revenue is follow the higher level as predicted by the Scottish

government for the next few years, even under that more optimistic

scenario, it still looks fiscal challenge that is considerably

greater than that facing the rest of the UK. Carl Emmerson from the

Institute for Fiscal Studies. I had hoped to be joined by John Swinney,

Scottish finance secretary, but he can't make it, unfortunately. But

Matthew Taylor is still here. What you make of the ISS report? I guess

it is bad news, because the ISS is an incredibly trusted organisation.

They won't be swayed by headline chasing. This will be pretty

authoritative. Whether it makes that much difference to the consideration

of the outcome of the referendum, I'm not sure. Either the argument

about a wonderful bonanza in streets running with Golden hurricane honey

-- gold and honey, or a more realistic argument, I think at the

moment people are unlikely to vote yes for independence because the

benefits are not clear. That is the point. It is about whether they will

be worse or better off with independents financially in terms of

literally the amount of money they will be left within their pockets.

If there is this idea that I could better off under independence,

surely that will sway voters? I'm not sure it will. There are so many

imponderables in all of this, it is a matter of faith. Most people in

Scotland have a fairly settled view on this issue and are not going to

be swayed by an argument saying it will cost ?500 here or there. If you

go to Scotland and spend time there, it does not feel like a country that

is under the oppression of the UK. My sense is that in Scotland, what

will they actually gain from this? The problem is more fundamental,

what you gain from independence? That is what is not clear. That is

what John Swinney will be setting out. He will say that Scotland may

have missed out on economic growth worth more than ?900 a head as a

result of not being an independent country, he will say that the

coalition government has been dreadful for Scotland and it would

be better to go alone. Once that argument holds some weight? I feel

great sympathy for having to wade through all this for the next year

or so, but the Scottish people will hear, it will save you ?900, it will

cost you ?600. I think people will realise it won't lead to any Big

Bang either way. See you think that when it comes down to it, it will be

an emotional decision, that the money would persuade enough people?

Unless there is a really powerful sense of what you gain from

independence, in the end, people will say, if there is no really big

gain or loss, why would we change it? It doesn't feel when you go to

Scotland at the moment that this is a country which is having itself

dramatically constrained by being part of the UK. In many ways, it has

a very dynamic economy, lots of parts of Scotland do extremely well.

If you are going to make a big change like this, you have to feel

that you are going to get a big gain, and that argument has not been

articulated. We will leave that to the SNP when we speak to them.

Last week saw the return of that's biggest annual skills event, the

skills show. Our apprenticeships working for Britain's youngsters?

David Thompson went along to find out.

If they let you try your hand at a whole lot of jobs when I was at

school, things might have been very different. Welcome to Britain's

biggest careers event, where you can try your hand at everything from

baking to welding. It is called the Skills Show, and it might change

your life. More than 850,000 people are on

apprenticeships, and one of the stars of Dragons' Den is in. All of

my business is run apprenticeship schemes, because taking somebody on

with a passion and desire for the industry they is far more important

to me than finding out that somebody can spend three years at university

getting a degree that might not be relevant and then have to catch up

with every body else. Earning while you are learning has got to be the

way forward. For ministers, these kinds of shows are a win-win thing.

There are a record number of jobs in this country, and we have got to

make sure that our young people have the skills that they need to take up

those jobs. But while the coalition is keen on boosting both the

quantity and quality of apprenticeships, the number of

16-year-olds taking them up has fallen. We had to remove some low

quality provision. There were some apprentices that didn't have jobs in

the past, and I think every apprenticeship must be a job. We

also need to make sure that every apprenticeship as a minimum of one

year in duration, and that wasn't true in the past. We have had to

remove some low quality providers, but that trend is now reversing, and

various a broad plan of action to make sure that the numbers go up as

well as that increase in quality. And if you stick at it, who knows

where an apprenticeship might take you? I started as an assistant to

the tea boy in Lloyd's of London, and found my passion working in a

shop. I got all my skills learning on the job. I had no formal

education, so my apprenticeship was being a junior shop assistant all

the way through. Apprenticeships might seem a bit retro, but

increasingly these days, they are seen as an idea whose time has come,

a solid way into the world of work. I think I will stick to my day job.

Over 1.5 million new apprenticeships have begun under this government. It

should be congratulated, shouldn't it? I think they should. And the

apprenticeships, although lots of bits of the policy haven't worked

terribly well, and we found out that most apprenticeships are being taken

up by people who are over 25 and already have a job, generally

speaking, since the late 80s, early 90s, as a country, we have taken it

seriously. In our meandering route, and there are interesting things

below the surface... There is some evidence that parents are beginning

to recognise that apprenticeship might be a good route, and it is not

always a second prize to going to university. I think it will take is

another generation to get to where we need to get to. But that culture

of university being the great Annecy, that was Labour 's fault.

They wanted to target 50% of people to go to university, and they made

it seem it was the best option. I think Labour felt that the answer to

the issue of social mobility was to make it possible for more working

class and lower middle-class young people to get into higher education,

which is commendable. But the problem is that misses at the whole

vocational route, and Britain has been worrying about how to get

people to take vocational education seriously for decade. Apprenticeship

is a step forward, and we still have to look at what we teach children in

schools, and there is still a strong bias towards the academic in

schools, and there isn't a strong enough lead into apprenticeships.

There are various things that can improve the system such as technical

colleges, but most schools think that what matters is pushing

children through academic exams. And careers advisers collapsed in

schools, so young people who need really good advice at 13 and 14,

face-to-face advice that will encourage them not to take an

unsuccessful academic route, that is the problem. If combined together,

is there the crucial issue, a job? In that film, the Minister that

talked about poor providers in the past. You accept that getting rid of

some of the poor provision and making sure that apprenticeships

have a guarantee of a job at the end might improve the quality of

apprenticeships? Employers need to buy what is needed. We need a strong

relationship between employers and schools and much more work

experience. Employers need to be more engaged in developing what

children learn in schools. There are lots of bits to this jigsaw.

Expanding apprenticeships is part of it but only a part of it. What will

bring the employers on board? Not the big employers. In places like

Germany, employers are much more involved at a gang age in schools.

What will bring them in? -- a younger age. You need a simple

system. It needs to be at Minister of -- it needs to be simple. The

language that is taught in schools, what schools feel their job is about

does not really engage employers. A lot of employers think that what is

taught to young people is not what is needed. It is about a broader set

of life skills, capacity to work in a team and communicate. Employers

say they are not getting that from young people. Young people turn up

with a sheet of qualifications that cannot make eye contact. Another

overhaul of the education system will not be welcomed. Ed Miliband

has talked about a higher level vocational qualification. He said

this is for the bottom 15%. As long as people think that is for the

bottom 15%, it is not good. It is in our British DNA about taking

vocational education seriously. There are some signs of change but

there is a long way to go. Now for a look at the week ahead. Later today,

Labour launches its strategy on childcare, they want the banks to

pay for extended free childcare for three and four-year-olds. Cameron is

also making a statement to MPs on the outcome from the Commonwealth

Heads of Government Meeting. Wednesday is Prime Minister's

Questions and we'll also be seeing the TUC's national day of action

against the use of blacklisting. The unions are unhappy that construction

companies who have blacklisted workers have still not been held

accountable. And the European Union Referendum Bill returns once again

to the Commons for the second day of its second reading today. This,

you'll remember, is the Private Members Bill, launched by

Conservative MP James Wharton. Joining us now is James Lyons from

the Mirror and Isabel Hardman from the Spectator. Isabel, it seems the

fight is on in the coalition over which party will prove the most

popular at tax cutting. There is unity at the top of the coalition

over raising the personal allowance. The Tories have said they wanted it

and Nick Clegg has said he wants to do it. Backbenchers are saying, are

be really sure this is what we want to do? Is it not better to focus on

families who may be affected by the fiscal drought. At the top they are

arguing over who takes credit for the policy but colleagues are

questioning over whether this is the right thing. So, this is about

claiming credit as the economy starts to grow and Liberal Democrats

do not want to be forgotten as the ones they claimed talking about tax

threshold. Is it about thinking ahead to the Autumn statement and

the fact there might be some giveaways? There has been better

economic news. That creates problems for George Osborne. It raises

expectations amongst his inside and what they might see out of this

statement. Isabel is not sure what will be given away. Most people want

to see that but they want to see other things as well. They want to

see higher thresholds go up and various other ideas. It is all

mounting up on the desk of George of Bourne. Demands are coming thick and

fast. The other problem -- George Osborne. Demands are coming thick

and fast. It will damage the election strategy. George Osborne

and David Cameron want to fight a rerun of the 1992 election and tried

to scare voters to death about consequences of the Labour

government. What happened about posterity and holding on to death

about consequences of the Labour government. What happened about

posterity and holding onto the purse we have got this growth. The

Conservatives do still have the opportunity to say, it is not a done

deal. We are not back to the years of prosperity yet. Stick with us and

we will finish the job. They have said, voting for Labour is a boat

for wrecking the recovery. They still have a strong message to

communicate. They have talked about the cost of living and you have

occupied that space. With Mark Carney saying the recovery is

finally taking hold, what is Labour 's answer to growth? We would have

got this a lot earlier had it not been for the coalition argument. It

will be about the old chestnut we used to hear a lot about, sharing

the proceeds of growth. This is what is interesting. The Lib Dems are

trying to outflank the Tories about what they can do for families,

partly in response to the way Ed Miliband set the agenda with the

energy price freeze. The Tories are all over the shop. They have a

completely confused message. Last week, David Cameron said he wanted a

leaner, meaner, fitter state going forward. No one wants the old days

of tax rises to pay for spending. You have a long list of expensive

demands. The coalition has managed that money for free school dinners

and marriage tax breaks. On Friday, the EU Referendum Bill makes it back

into the House of Commons. There has been a project to look at the

different clever procedures you can use to make this path into an act.

The chance of it surviving the house of lords certainly are very slim.

There was a big threat about bringing the referendum forward from

2017 towards -- to 2014. They are much more interested in what David

Cameron wants. They are worried he does not have a slimmer view of a

reformed Europe as they do. -- as slim a view. Welcome to our guests.

Let's talk about UKIP. The party has received a massive boost from Paul

Sykes, who has pledged to do whatever it takes to help the party

went next year 's European elections. He previously supported

the Conservative Party under Margaret Thatcher and Michael

Howard. He backed UKIP in 2004. He joins us from our central London

studio. Welcome to you. You say you will do whatever it takes to help

UKIP when the elections next year. How much will it take? You have a

limit of 4.5 million for the European elections. The limit spells

it out. We will be spending within the law of the land. What we want

that money to do? We want a massive awareness campaign. The British

people are almost totally aware of the power that has been transferred

to Brussels. They are asking questions about what is happening to

borders. They are not kept in the circuit. It seems to be people in

Britain, especially politicians, do not want to give the British people

the opportunity to see what it is all about. We have been holding

opinion polls up and down the country. In Yorkshire, two thirds of

Yorkshire people do not want the borders taking down on 1st of

January. Are you a member of UKIP? No. I am not a member of any party.

Will you pledged to support UKIP for the general election or is this just

about the European election? -- pledge. It is all about the European

election. You could support the Tories in the general election. I do

not vote for political parties. I am campaigning for information to be

put to the British people so they know where we have got with the EU

situation. You have made it clear about your views. Let's say UKIP

topped the poll, what will you do then? If you feel so passionately

about your messaging to the British electorate, what will you do post

European elections? We will see what happens. We have no idea. I have

only one target and that is to win the European elections. I know then

we will allow other nation states within Europe to take on our

particular model. They are trying to get democracy back and control

economies of known countries. We intervened in the euro. Everyone

sees that as a bad idea. The campaign to not abolish the pound

and not go into the euro. We won on that and now it is the bigger

picture. What about the promise by David Cameron to the Electric to

renegotiate the relationship with the EU and reform it in a way which

would be beneficial to Britain and be better to stay in? -- the

electorate. A man who wants to negotiate it wants to stay in any

way. You would have to break the treaties to start negotiating. This

is growing power from Brussels. That is the way it is. The law states,

you had to say straightforwardly, we wish to leave and then start

negotiations. You cannot start negotiations still being a member.

It is still about the party holding a referendum. David Cameron may be

nowhere in sight by 2017. Thank you very much. I'm going to have to put

some of those points to you, Simon Hart. It is a massive blow to you.

It will help UKIP topped the poll. I would not describe it as a blow. He

described it as the only election he stands a chance of winning. The

greatest prospect for UKIP, I am afraid, next year or the year after,

is the returning Labour government. That is what they are hoping to

achieve will stop that is our problem. We have to persuade people.

What we have on offer is that it strikes the right balance. Those

people with concerns over Europe had a huge economic interest in staying

in. Do you think the Conservative Party has insulted some of its

grassroots? I do take that view. We should look at every person who

decides to drift away from our camp as a failure on our part. Not a

failure on their part. We have not made those cases. There is no point

about talking about UKIP voters or sympathisers in a derogatory way. We

need to prove we are trustworthy, confident and relevant. If we can do

that, Mr Sykes and be back on our team if he so wishes. That is what

will happen. Let's see the state of the national parties after the

elections. He will give his party to the Conservatives and that will be

the election that counts. He has not said he will do that. I would like

to thank him for his long-term commitment to the freedom and

independence of this country. I must challenge this point, we are talking

about this whole debate as though it were about UKIP taking votes from

the Tories. I was up at the Northeast conference in the South

Shields constituency on Saturday. We had 300 people there. It was bigger

than some of our national conferences. It is Labour

heartland. I campaigned in Rotherham, where we came second. Our

story on education did extremely well on the Labour doorsteps. We are

a common-sense party. Are you still keen on the idea of labour

apologising for what UKIP claim was an open door policy on immigration,

awkward labour be talking about the benefits of immigration? We didn't

get everything right, and we have been clear that the transitional

arrangements should have been extended for longer. But whatever

Roger says, UKIP are a threat to the Tory party. It is a failure of

politicians rather than a failure of voters if they drift away to other

parties. But at the same time, I represent Sunderland, and thousands

of people depend on jobs at the factory there, and we have been very

clear that all of this talk about our future in Europe puts jobs and

investment at risk. And business people have been saying it is a

threat. At a time when Ford have just removed their van operations to

Turkey, it is very difficult for anyone, Nissan or Toyota, to make

the case that being outside the EU creates a problem. China exports to

Europe, America does, there are free-trade agreements with Korea,

one in the pipeline for India. When we leave the European Union, we will

have a free-trade agreement from day one, and it will be as easy to

export cars from Britain to Europe as it is today. You say that, and we

haven't got a time to talk about the possible a tea of tariffs that will

be placed on countries that are already outside the EU. They pay all

of the costs of being within a free-trade area of the EU but get

none of the benefits of sitting at the table. That me just ask the

question first of all about expectation management in the

European elections. It is factored in that you are likely to top the

poll. But if you don't, it will be a disaster, won't it? That is why we

are working hard to make sure we do, and we are grateful to Paul Sykes

for his help. You think that will clinch it for you? I think that will

make a difference. Obviously if you have more money you will do better.

So is it going their way? There are two parties with a very clear

positions. UKIP are clearly very against Europe, and the Liberal

Democrats are very clear that we should stay in. I think the donors

are obviously as confused as voters when it comes to Labour and the

Conservatives, because they are both try to sound Euro-sceptic but know

that we should stay in. Is your party confused? I think we are the

party with a referendum on the table, and we are united behind it.

This is as close as we has ever been to actually be able to give the

choice to voters. It seems to me that that is actually a major step

forward and a pretty united opposition. We know that people will

have a choice. You spend most of last week tried to stop this

happening and talk it out. You have been trying to talk at the bill

since it first came in. We spent most of the time in the last time at

the European Union for a Conservative amendment on Gibraltar,

because Gibraltar was left out of the bill. And it is your side who

has actually propose one of the more serious amendments to the Bill. But

the truth is, arguing about the menu Shi'ite of referendums is not the

big issue. -- arguing about the finer points. Because of jobs, the

environment, fighting crime, we need to be in. The conservative argument

is absolutely clear that that is a choice that voters should take. It

is not up to me. We Mac but do you want to be in or out? In or out? In

or out? I don't buy the idea that they have to be on one side of the

other. You have three old parties that all want to stay in, and one

party that wants to get out. And that is why Paul Sykes was right

when he said that this European election next year will be a

referendum. The choice for the people is that you can vote for the

old parties if you want to stay in Europe and vote for UKIP if you want

to get out. And what happens after that? We will have change the

agenda. You think all of a sudden the other parties will want to have

a referendum? I conceive example Labour offering a referendum. I'm

not sure whether these guys will. Very briefly, because I want to move

on. You did very well at last you's European elections, and it didn't

change of anal. -- it wouldn't change anything. Let's talk about

the countryside. Simon Hart, you are a former chief executive of the

countryside Alliance. Support has dropped by 20% in just a couple of

years. It goes back to what we were saying earlier on. We have to take

it seriously, any party who are losing some of its core voters...

But why are they being lost? I think it is an exasperation, an

exasperation of being in a coalition, that no one ever quite

gets what they want when they want or how they want it. Voters have

stuck by party leaders for quite a long time, and I think there is this

feeling that it is a case of, what have the Romans ever done for me?

When you draw up the list, there aren't as many things on it is

people perhaps expect there to be. So there is this feeling of

uneasiness. I don't think it is terminal. We have to persuade people

to come back and we will do that in the next election. But it would be

crazy to assume that the role vote is in the bag. It is a case of, do

not take them for granted. We will leave it there.

Paul Flowers, former chairman of the corporative bank, has been caught on

camera by the Mail on Sunday apparently trying to buy cocaine and

crystal meth. He has released a statement apologising for his

actions, and saying that during an incredibly difficult year, he did

things that were stupid and wrong. The recording was allegedly made

three days after he feared in front of the Treasury select committee to

answer questions about his stewardship of the bank. During that

session, he seems to have little grasp of some of the most basic

aspect of the bank's asset and balance sheet. Healy is being

questioned by Andrew Tyrie, chair of the select committee. It is the core

asset of a bank. And you don't know what that figure is, even roughly? I

cannot give you that figure at the moment, but I can come back to you

with a notice that would be helpful. Your total assets for June last year

are listed at 47 million. Sorry 47 billion. Just to give you an idea.

You offering me 3 billion, and I am telling you that your annual

accounts show it at 47 billion. Forgive me. And your loan book is

about 32 billion. These are very basic numbers for the chairman of

the bank. Andrew Tyrie interrogating Mr

Flowers. It didn't go very well, did it, in the select committee? How did

Paul Flowers, somebody was no banking experience, get to be

chairman of the bank? I think clearly the evidence we saw of what

has happened in the press over the weekend, Mr Flowers has made a

number of quite serious personal mistakes, and is in an difficult

position personally, going through some difficulties in his life, and

that is very sad. But the Treasury select committee should be allowed

to look at what went on at the Co-op, because we can't see those

mistakes happen again. You are talking about the allegations of

drug use, and I'm sure that we also should talk about her summary like

him, who was basically a politician, who rose through the ranks of the

corporative movement because of the unusual structure of the corporative

anchor, was it right that somebody like him, drug allegations aside,

somebody was no direct experience of banking, should reach the dizzy

heights of chairmanship of a bank? The Treasury select committee will

get to the bottom of this. What do you think? I think there are

concerns in terms of his appearance that he didn't have the grasp of the

figures or to be on top of what happened, and there has been an

attempt within the current leadership and within the previous

leadership to look around and cast blame as to what went wrong. There

was regulatory oversight. Perhaps something went wrong there. But I

think it is right that the Co-op is now not in a position to have to

rely on the taxpayer to bail it out. It is a very sad state of affairs

that the Co-op bank will not exist in the form that it has previously

existed. Because it used to be an ethical bank. Can you tell us a

little about how it works? The links that we have with the bank are part

of it but separate, and a separate ongoing financial concern. Labour

and the corporative bank have worked together for a long time, we have

shared candidates with the party and many areas. We campaign on issues

that matter and we have a good relationship. So this must be hugely

embarrassing. If you are a Labour MP sponsored or supported by the

cooperative movement, how embarrassing is this? I am a member

of the corporative party. And I am proud to be. We do great campaigning

work on issues around cost of living, public services, concerns

that people have around what matters to them. But in terms of the work of

the bank, and it is a big disappointment to many of our

customers, this needs to be put on a stable footing. The cooperative bank

has to be there to look after its customers, and this needs to be got

right for next time is that it doesn't happen again. I'm sure that

they will be looking at people going up through the ranks. His

appointment had to be sanctioned by the FSA. How did that happen? How

did they rubber-stamp that? There are regulatory issues here. I'm a

big supporter of alternative forms of ownership, and there are plenty

of successful examples such as nationwide, the Halifax and others,

who maintain a common ownership model and do well. But there are

issues around when you stop having effective financial management and

the requirements, particularly on a chairman of a bank, but I think you

would expect it to institution, however it is owned and run. And in

terms of financial contributions, they will go down, to Labour? I

think that point is the right one. The banks with larger management to

similar troubles, and of course this has to be right, but there is a

difference between the corporative party into the corporative bank. The

Labour Party has ongoing financial commit with the bank which is not

the same as the party. It is not just about the chairmanship of the

party, either stop the Co-op bank will now be part owned by the

thriving hedge fund is in America, and there is an argument about

whether it is still a corporative. Yellow this guy should never have

been in charge of a bank,. It is a failure of the regulatory system,

not a failure of that bank. And more embarrassment on banking

regulation? It was described on the radio this morning as jaw-dropping

lea incompetent. And just recently, the Government were encouraging

Lloyds bank to take over corporative branches. Thank you to all of my

guests. I will be back tomorrow. Goodbye.