16/01/2014 Daily Politics


16/01/2014

Andrew Neil is joined by Danny Finkelstein to discuss all today's political news, including a warning from former US defence secretary Robert Gates about UK defence cuts.


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engaging in a civilised dialogue on immigration. I do not agree, I do

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not think it is possible for Conservatives to go back on

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modernisation. I don't think those Conservatives to go back on

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people committed to it have retreated. Let the welcome our

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viewers from Scotland. We've been joined by viewers in Scotland who

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have been watching First Minister's Questions from Holyrood. Not only is

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it over, that none of these issues are part of the modernisation

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agenda, partly the reason is it failed. It failed to get an overall

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Tory majority. Your modernisation agenda was essentially about

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appealing to the chattering classes within three square miles of here,

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and came up with nothing for striving, working class and lower

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middle-class voters. I do not think the argument was perfect. I do not

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agree. First of all, the Conservative party did succeed in

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forming a government in circumstances where its previous

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election results were badly hit. The swing to the Conservative party was

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massive. But it did poorly in Scotland and the North West. And not

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well enough with ethnic minorities. Among the kind of people who elected

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Margaret Thatcher and Tony Blair. I am self-critical, there were things

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we argued correctly which were important, and other things which

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did not get the attention. It became important when the Conservative

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party was dealing with such a large deficit. What has posed a big

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challenge to the ideas we were developing was it did not -- it

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turned out a period of no growth, and cuts. You mentioned the minimum

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wage. As if that was part of the modernisation agenda. What is the

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equivalent of the modernising agenda this time, compared to vote blue, go

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green, big society? First of all, the big society issues raised by

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David Cameron, a broken society, that is not over. We have to return

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to that. Secondly, it does have to reflect the fact different economic

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times mean you have to deal with issues of the incomes of the low

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wage in a more competitive way. Which your modernisation agenda had

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nothing to stay in 2010. Are we agreed? I had better move on! I

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agree it wasn't complete. It was highly politically successful. If

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the conservatory had not done what it did, it would not have got close

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to winning power. Tell us briefly, it is dead agenda, to fight this

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next election. I do not agree. We must not retreat from social liberal

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issues. Secondly, it does have to make sure people feel, even on

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issues like welfare, it is being fair, as well as being tough. And it

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has got to find ways to appeal to people on low incomes and showed as

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the country recovers, it will have the interests of everyone. Those are

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tough, new challenges. We will see. Now, the NHS. It's been likened to a

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national religion, and many joined Hands Off Our Hospital campaigns to

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save local services from closure. I am at Saint Thomas 's Hospital,

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Parliament is across the River Thames. Let us find out what people

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think about the politics of the NHS. There are a lot of things to educate

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people. Staying of drink and smoking. The accident and emergency

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locally was full of people at new year with injuries from drink. Which

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is wasting a lot of money. The friend I am visiting, she is 21,

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unexpectedly she caught meningitis. They have treated her for the last

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six months for free. She has been an inpatient for ages. To think how

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much that is costing? I dread to think. We complain about tax. When

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something like that happens, if it wasn't covered... Someone has

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recommended the idea of an NHS tax, specifically for the NHS, would that

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work? It is good the way it is. You never know when you will need it. I

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have been helping all my life but any time and could need an operation

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or procedure that costs thousands of pounds. I think it is OK the way it

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is. It does get larger and larger. And we have an ageing population. As

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health care services get better. That increases the total amount of

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people who need to be taken care of. Yes, it is a big, black hole. You

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sound it up perfectly. But then you are a medical student.

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The government should sort out the NHS. What if it costs more money and

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there is no end to it costing more money? I don't know, I can't help

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you there. I don't blame him! Danny Finkelstein recently proposed a

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complete re-think in our approach to NHS spending. And we're joined by

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Vidhya Alakeson, from the Resolution Foundation, to discuss his medicine

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for the health service. Danny, what do you think should

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happen? It is more I think people do not appreciate how rapidly it is

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increasing as a proportion of national income. It is a big

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decision, do we want to, in 50 years, be spending ?1 in every ?5 on

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health care? What I want to do is to link what we spend on the NHS with

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taxation. An NHS tax? If you appeal to someone we are going to spend a

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greater proportion of income on health. There are good arguments for

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that. You would have to suggest an increase to pay for it. People would

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no longer feel the NHS should keep on spending without anybody having a

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grip on how much it was costing. On my tax return, I would see so much

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money on income tax, and on the NHS tax. You could turn national

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insurance tax, as an example, into specifically an NHS tax. A bit of it

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does go to the NHS. What you make of that? I question to -- the extent to

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which a hypothecated tax would change the state of debate and

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fundamentally change what people expect from the NHS. As every

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country gets richer and spends more on health care, where do we stop

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spending on other aspects, if we want to spend more on health care?

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It is what the opposition wants. We should expect to spend more on

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health care. Isn't that the problem, wouldn't people say, just take more

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of that money from my tax? We were spending more on an army at the

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start of the programme, now it is health. The conversation was, should

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we be spending more on the army? I am in favour on spending more on

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everything. Are you? You are not, really. It depends who is spending

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it. I am certainly in favour of spending more on defence, and health

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care. I think we are spending too much on the welfare on certain

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aspects. Let me come back. It seems to be right, as you say, as we get

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wealthier, when the health service was set up, I was part of the

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first-generation looked after by the NHS, at our health spending would

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fall, it was projected. But the costs of technology and someone is

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rising. If that is the one area in public spending which will rise,

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doesn't it mean on the left and right you have to look at government

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pulling out of other areas? That is one option. You could grow the tax

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base by keeping more people in work, so we have to get more of the

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ageing population in work for longer. Would you increase taxes?

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That is a bigger conversation than just about the NHS. At the moment,

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there any conversation is what can be cut? But also, where can we raise

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tax revenue? There is potentially a revenue raising agenda in terms of

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funding an NHS. We will suddenly have to pay more for the NHS. One

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puzzle would be a hypothecated tax. In other areas, you can do more. We

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want the best of everything is what I meant. The NHS is no different. We

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cannot do that without regard to how much it costs. It is increasing

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rapidly as a proportion of public spending. We haven't got the deficit

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down because the proportion of money spent on the NHS is rising.

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Therefore we haven't got the deficit down as quickly. We need to be

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realistic. Where would you get the money from? For a start, new money

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to the NHS doesn't necessarily lead to better care. There is a huge

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amount of money we need to spend better. Less in hospitals and more

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on the community. Ring-fencing the NHS and cutting social care to an

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extreme, is that a sensible way forward?

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Last month, George Osborne announced the Government's intention to

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abolish the cap on student numbers. The Government wants an extra 60,000

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students in higher education at an eventual cost to the taxpayer of ?2

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billion a year. So we have already spent another ?2 billion. The move

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will, in part, be funded by selling off the student loan book. But do

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the numbers add up? We can talk now to the blogger and writer Andrew

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McGettigan. What is wrong with the government's idea to sell off the

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existing student loan book and use it to finance more university

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places? There are a number of problems with the Autumn

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statement's presentation of figures, but ultimately student loan figures

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lose money. You send them out into the world, and you get it back over

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30 years, but how much do you estimate you lose on that loan? Back

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in the 2010, rents of spending review, we thought we'd only lose

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30p in every pound -- comprehensive spending review. But now we expect

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to lose 40p in every pound. You have to find that funding therefore from

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somewhere else. Selling alone that loses money, and you might not get

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what they are worth when you sell them to the provider, especially if

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you've you have to compensate the purchase with future subsidies going

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the other way because they cannot change the terms, that means you end

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up going over the cliff. You have to put some money in from somewhere

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else. That is the fundamental question about sustainability. But

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if you sell the loan, securing it, whoever buys the loan book, surely

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it's their responsibility to get the loans. The government has the money.

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It won't happen in this case because they are collected through HM RC, so

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that is where the primary collection occurs and that's where it will

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continue to come from. The current management process, is it up to

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scratch to deal with that sale? I suspect you think not. The National

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Audit Office thinks not. It said the current setup was not fit for

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purpose and it needs to remodel the repayment collection, so if you

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enter a contract with the private sector, where you have a target on

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collection performance we might see money going the other way because

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the systems in place are not fit to meet the targets. Thank you for

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joining us and outlining that. We are joined by David Willetts, the

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University Minister, and John Denham. Welcome to you both. What do

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you say to Andrew? It's right to have more people going to

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university. We don't have a target but it's great to have the

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opportunity. It's good for them and the economy and we can finance that

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by bringing forward the proceeds of the sale of the student loan book.

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The policy is right within its own terms. It's simple. Young people

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want to go to university and everybody who has that qualification

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has the ability and aptitude to do it should have the opportunity. We

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are unusual for a western country where there are tens of thousands

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each year who want to go to university and we slam the door in

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their face. Most countries don't do that. George's ambition, quite

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rightly, is that people have the aptitude and ability should be doing

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it. He said that when he looked at the Autumn statement measures, but

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one that did the most for the long-term performance of the British

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economy was giving more people the chance of getting a university

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degree. But is it true that 40% of the loan book will never be repaid?

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That is the current estimate, and it changes every time there is a new

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estimate. It usually goes up. It has been going up the last few years,

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but why is simple. We said you pay back more if you are earning more

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than ?21,000 per year, so as earnings have underperformed since

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the forecast, every time there is a new set of earnings data, which

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shows what we assumed they would be, it effectively makes the ?21,000

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threshold more generous. It was generous when we started and it is

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more so now. That is a deliberate policy. If you admit, as we stand at

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the moment, before the higher loans have really begun to work through,

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that 40% of the loans you will never get back, why don't you just cut the

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student fees by 40%, which would be less of a deterrent for people to go

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and try to make sure that you collect the remaining 60%? The good

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news is that fees are not a deterrent. Nobody pays up front. We

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have had record numbers of applications, and better than that,

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record applications from people from low income backgrounds, so they

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understand the system. John, what is your reaction? Let's take the

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non-repayment of fees. If you have a child going to university paying

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?9,000 per year, there are effectively paying ?6,000 for the

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education and ?3000 per fees that will never be paid. If you did not

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spend so much on debt cancellation, you could put it into higher

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education and the fees could come down. We now see that the course the

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government has taken, outside the ideological idea of having high

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fees, is wrecking family finances and is very bad for public

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investment. If we shifted every penny we could into teaching we

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could bring the fees down to about ?10,000 for the average three-year

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degree instead of ?25,000 at the moment. What is your response? It's

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not wrecking family finances because families are not paying for it. We

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cannot predict who will be earning what in later life, but we say if

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you earn more than ?21,000, you pay back. If you are less well paid, you

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don't pay back. It's a gradual scheme that means nobody need worry.

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You only pay back through income tax. You said to me in a

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Parliamentary reply that 50% of people never paid the loans off in

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full. So you get 40% of the money not paid back, and 50% of people do

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not pay back in full. So that means that these people, 9% of everything

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they earn over ?21,000, they will pay for 30 years and they still

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won't have cleared what they earn. That makes it a terribly bad deal

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for them and the taxpayer and the economy. What is saying is they are

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paying a 29% rate of income tax. But if people are earning a lot, they

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should pay for their education. If you shifted it away from a high fee

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policy, nobody would be paying the 29% rate of income tax. Ineffectual

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writing of 100%. If someone is earning a lot of money, they should

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pay that. All you have to do is reduce the rate of debt

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cancellation, spend that on fees, on teaching people and the fees will

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come down. More people will have loans that they can pay off, they

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will borrow less in total and they will be paying less in total. That

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is what we could do. Is it right to take away the cap? Should you leave

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that universities? Ideally is you want people to go to higher

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education, but the financing system is like raising a mortgage to

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financial annual holidays. Sooner or later you hit the buffers. You have

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to have real money to do it with. By the way, who is going to buy the

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loan book? We are expecting significant interest from within the

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city. Financial institutions? It will be a knock-down price, that is

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the trick. I just wondered who would buy it. Probably The Royal Bank of

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Scotland. If it's cheap enough. The night we see the first ever

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Westminster correspondence dinner. Tickets are like gold dust. But

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apparently just 50 pairs of tickets have been allocated to members of

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the Westminster press pack. The Prime Minister's soiree is set to be

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a rather less glamorous affair than that held by our friends across the

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pond. Let's see how it goes down in DC. Thank you. How do you like my

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new entrance music? My next 100 days will be so successful I'll be able

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to complete it in 72 days. And on the 73rd day, I will rest. The first

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black president. That's unless you screw up. And then it's been a big,

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what's up with the half white guy? I'm continuing to spread our agenda

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globally and around the world, as well as internationally. Barack

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Obama, he's already a lame duck, so why wait? Picking the right actor to

:20:54.:20:57.

play him was the challenge. As it turns out, the answer was right in

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front of us all. Daniel Day Lewis. Were you nervous about playing him?

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Yes, I was. Look, look. Let me be clear about this. You wouldn't

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believe how long it takes to put these ears. I want to talk about

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some serious issues. OK, here it comes. Nuclear prior inflation --

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nuclear proliferation. Nuclear proliferation. Nuclear

:21:33.:21:41.

proliferation. You can see it is a huge production in America. It takes

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days and days beforehand, about 1800 people go, massive parties around it

:21:49.:21:51.

as well. Not going to be quite the same in London, I think. Two people

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who definitely won't be attending are Michael White, of the Guardian,

:21:57.:22:00.

and Paul Staines, aka Guido Fawkes. I don't think they could get the

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tickets. Why are we doing this? It's a revival of an old thing, a bit of

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a White House thing, I used to go there, in enormous basements under

:22:10.:22:15.

the Hilton hotel. A big loving, everybody scratches each other's

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back. That is not the British way. It is more the French way, dare I

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say it. It's a people, the biggest room they can get in Westminster

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security problem -- it's 170 people. Why am I not going? Only 50 tickets

:22:30.:22:36.

for couples, and I've it all before. Let the young people enjoy

:22:37.:22:40.

themselves. Do you wish you were there? You have to pay me to go to

:22:41.:22:45.

some of these events. A good thing if you take your wife, she has

:22:46.:22:49.

missed you all these evenings, with your mistress if your French, and

:22:50.:22:53.

you get some brownie points from her for all the things you've done. What

:22:54.:22:59.

a lovely thing to say. He is softening. I think he's selling out.

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I gate-crashed the Downing Street Christmas party, the kids get to see

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Santa, some guy called George Osborne and the wife gets a new

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hairdo and enjoys immensely and it gets off my back. He goes to all the

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parties now. No harm in it. In America it is built around the

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president, and we don't have one here. There has been an argument

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that the leader of the opposition will not go because he does not get

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to speak, only the Prime Minister would. They have all got egos, these

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chaps, otherwise they wouldn't ball over the -- volunteer for the job.

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He is both Mr Thatcher and Mr Reagan, that is why Francois Holland

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got away with it, his estate. It's a different game. Although he might

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want to contradict me, we are less deferential here. Is the Prime

:23:52.:23:57.

Minister sweating over this question on getting the jokes right? They are

:23:58.:24:02.

quite risky, some of the joke. You saw Barack Obama doing his Daniel

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Day Lewis. Just imagine Cameron or Ed Miliband doing that and being

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completely slated for it, because we don't have the same reaction here.

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It is quite risky, I think. Last time I heard him speak at one of

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these events, it was like the monthly lobby lunch at Westminster,

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and he made a joke about his European speech and said it was like

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Tantric sex, the more you waited, the better the speech would be. And

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then the speech was an absolute disaster. He should have stuck to

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the Tantric sex. Will you gate-crashed? I don't think so. I

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would be writing about all the parties I went to if I did that. It

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happens to us all. What an amazing break out of lack of hostility, so

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we say thanks to all of our guests. I am back tonight for This Week with

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David Ginola, Ross Kemp, Jane Moore, Diane Abbott, Michael Portillo and

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Miranda Green at 11:35pm on BBC One. And I will be back here tomorrow as

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well, if I wake up in time. Is anyone else working yet? Goodbye.

:25:14.:25:15.

Andrew Neil is joined by Conservative peer and Times journalist Danny Finkelstein to discuss all today's political news, including a warning from former US defence secretary Robert Gates about UK defence cuts. Plus a look ahead to the inaugural Westminster correspondents' dinner with the prime minister.


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