24/06/2014 Daily Politics


24/06/2014

Jo Coburn with the latest news and debate from Westminster. Jo is joined by the blogger Jack Monroe to discuss a possible rise in interest rates and the meaning of poverty.


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Protests from around the world at the imprisonment of three

:00:39.:00:43.

Are we about to see a rise in the cost of borrowing?

:00:44.:00:49.

The Bank of England Governor, Mark Caney, is in front of the

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Treasury Select Committee, outlining the Bank's plans.

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And with food bank use on the rise, what makes someone poor?

:00:57.:00:59.

Politicians don't just argue about solving poverty, they also

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And with us for the whole programme today is the writer,

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At 9.41am journalists from around the world,

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including here at the BBC, took part in a silent protest against

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the imprisonment in Egypt of the Al Jazeera journalists Peter Greste,

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A court in Cairo found the three men guilty of spreading

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false news, the trio denied the charges and are expected to appeal.

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Here are some of the scenes from this morning.

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Just after the minute's silence, the BBC Director of News,

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James Harding, spoke to journalists outside Broadcasting House.

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He explained why it is important for the BBC to support the Al Jazeera

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journalists sentenced in Egypt. While we compete every day for

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stories, journalistic news organisations, we have to stand

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together when it is a question of journalists being imprisoned for

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simply doing their job or for trying to report the news. Then there is a

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bigger issue of principle here, which is why the BBC, which

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obviously has a stake in freedom of expression and the freedom of

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journalists to do their job, must stand up when something like this

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happens. Jack, your response to what has happened to these three

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journalists being imprisoned and others convicted in absencia? I

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think it is a sad day for journalism all over the world. As journalists

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we are expected to report on events as they happen and without bias and

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events in a free way. I think restricting on what you report on,

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based on the country you are reporting from or the government you

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are reporting under, is a sad day for freedom of speech and for

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journalism everywhere. Do you think journalist also be frightened of

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being into countries like Egypt and reporting on what is going on,

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because of potential consequences? I do. I think it'll have an impact on

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how what journalists choose to report. We need free dom of speech

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to learn about what is going on over the world and things can't get

:03:43.:03:45.

hidden or tucked away by corrupt or not diplomatic governments. You saw

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the pictures pictures of silent protests. How much do you think that

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will help in terms of showing solidarity? As the guy from the BBC

:03:57.:04:00.

said - we have to stand together as journalists and say this is wrong.

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Yes we compete journalists and say this is wrong.

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Yes we for news stories every day but we have to stand together and

:04:06.:04:09.

say it is wrong. Protests on social media and protests using technology

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and the internet have been quite successful in the past. It is a way

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of all get together in one place and saying - this is wrong and we all

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think it is wrong. Joining me now from Doha is

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Sue Turton, one of the Al Jazeera journalists who was convicted in

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absentia of spreading false news. Thanks for coming on to the

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programme, Sue. Your thoughts now for your colleagues n Cairo? Well,

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our thoughts really are how do we get this verdict overturned? How do

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we try to get the pressure turned up so much on the Egyptian government

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that they decide this is a travesty themselves and realise that it is

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not doing Egypt any service keeping three bona fidy, strong, independent

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journalists locked up in prison. We have tried Sol many avenues in the

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last few months since they were incars nated and as the trial has

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been ongoing. I suppose, quietly, I hoped the Egyptian judicial system

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would recognise this was politically-motivated and that we

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wouldn't be found guilty. But now we are left with a scenario that all we

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can do is keep putting on the pressure and hope that our

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colleagues around the world and the leaders, indeed, around the world do

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the same. You mentioned the politics there. How much of this is about the

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politics of the Gulf, Al Jazeera's relationship with Qatar, their

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support of the Muslim Brotherhood and Mohamed Morsi before he was

:05:33.:05:36.

removed from power? I think all of this has fed into the situation and

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what can awfully be described as a perfect storm. I think there is

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definitely a huge media crackdown going on. There has been since the

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coup last summer in Egypt. I think really because Al Jazeera Arabic is

:05:51.:05:55.

the most-watched Arabic channel, it was still being broadcast in Egypt

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and where we have a domestic media that don't say anything that goes up

:06:00.:06:03.

against the government in Egypt, Al Jazeera was still saying it on the

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it much V screens, if you like. That's fed into it. -- on the TV

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screens. Although it is true that Qatar backed the Muslim Brotherhood

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and Mohamed Morsi when he was elected into power after the

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revolution and there is no love lost now between the Qatari government

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and Egyptian government. So I think we have been caught in the middle of

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that, for sure, but all of these, I think have added to the same thing,

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really, that Egypt has wanted to, one, shut up Al Jazeera. Couldn't

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arrest any Al Jazeera Arabic reporters because they are no longer

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operating there. We were the only ones still trying to do the job

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there. And we were still trying to do the job, fairly, Bali and with no

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bias with any particular group. We were caught out when they announced

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the Muslim Brotherhood was a terrorist organisation. They decided

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to go to our guys who were still in thep country. They put me on the

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charge sheet. I left in noe. I wasn't in the country when they were

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announced as a terrorist organisation. Your movements are

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restricted. Yes, for sure I can't go to Egypt or I would be arrested. But

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the African leadership has put Egypt back in. That means if I walk into

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an African country it is beholden on them, because I'm a convicted

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terrorist in Egypt's eyes, to hand me over to the Egyptian authorities

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that. Wipes out the African continent. I cover conflict zones

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for Al Jazeera. I can't go near those but there is also the Middle

:07:47.:07:51.

East. Bahrain, Saudi Arabia, the UAE, all backing the Egyptian

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government. I have been advised by lawyers - don't think of stepping

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foot in Dubai, it would not be worth the risk. All right. Thank you.

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Today it's about Ed Miliband, and he's hiring an apprentice to

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If any of you want the job it pays ?8.80 an hour and to apply you just

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need to write 250 words explaining what interests you about working

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But what qualifications do you need for the job?

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At the end of the show, Jack will give us the correct answer.

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Now, the Governor of the Bank of England, Mark Carney, is in front

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of the Treasury Select Committee this morning to discuss the Bank's

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He's expected to shed more light on the timing and size

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Earlier this month he said a rate rise could happen "sooner

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The Bank of England has kept rates at a record low 0.5% since March

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2009, in an attempt to revive the flagging economy.

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But as the recovery continues - interest rates are expected to rise

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to more "normal" levels to stem concerns over a housing bubble

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Well, it could be good news for savers who rely

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But it's not so good for those with mortgages without a fixed rate

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of interest, who would see their monthly payments increase.

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Data from property company Savills suggests an interest rate rise

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of 1% would add ?1,312 a year to the average interest-only mortgage.

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That equates to just over ?110 a month.

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And if there's a 3% rise by 2018, the Resolution Foundation think-tank

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say 1.2 million households would struggle to afford their repayments

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Citizens Advice warning of a "financial ticking timebomb"

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But, David Miles, one member of the Bank of England's Monetary

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Policy Committee, which sets interest rates, said a rise would be

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"good news" as it represented the "sustained recovery" of the economy.

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So, are the Bank of England right to consider raising interest rates.

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We'll discuss that in a moment. But first, here is Mark Carney telling

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MPs rates won't rise until unemployment rate has fallen further

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We are making sure we use up - make sure the economy absorbs wasteful

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spare capacity concentrated in the labour market. That is, that it is

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absorbed over the forecast horizon. We think - and this is the guidance

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we have given - that that will require the start of normalisation

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of interest rates. In other words, increases in interest rates. The

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exact timing of that will be driven by the data. But the most important

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aspect of the guidance that we are giving is that our view is that the

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increases in rates over the forecast horizon, in our best estimates, will

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be limited and gradual. With us now is Fraser Nelson, he's

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editor of the Spectator magazine, and Ann Pettifor from the New

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Economics Foundation think-tank. Let's start with you. Do you think

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there is a lot of unnecessary panic in the media about interest rate

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rises? Mark Carney indicated it will be gradual, he is giving plenty of

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warning. Has this been over-hyped? No, not at all. We are heavily

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indead ited as a nation. I think the media is -- indebted as a nation. I

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think the media is right to bring up concerns. We don't understand

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deflation, so little do we understand deflation that we don't

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have a Bank of England deflation report. And deflation, the fall in

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prices and wages, effectedively, increases the cost of debt without

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even raising ing interest rates. So the value and the cost of debt is

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rising anyway. If it is exacerbated by a real increase in rates, God

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help us all who have mortgages and who have unpayable mortgages,

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effectively. Fraser Nelson, there is an argument that says to continue

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allowing people to borrow in an extended era of relatively cheap

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credit, is only going to exacerbate the problem that Ann's talking

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about, increasing personal debt And it could blow up another bubble.

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Right now we are trying to still borrow our way out of a debt crisis

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which saying - we'll make debt cheap. Borrow lots and revive the

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economy that way. That works after a while but right now, as you are

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saying, just a small increase in interest rates would mean a lot of

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people could not afford to pay the mortgage on their thousands. Nobody

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is doubting they are going to go back to the historic norms of 5%. If

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we can't take that as country, we have a proper getting bigger all the

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time. I don't think interest rates should go up to 5% tomorrow but they

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should start to crawl back up, so people can look down the line and

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see and ask themselves the question - before I take out this big loan on

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the house, would I able to afford it, if the rates were 3% or 4%. The

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Government is encouraging people to take out loans on houses,

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particularly low income earners. That's what Help to Buy is about. We

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have the Government encouraging us to borrow and condition superand on

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the and on the other hand, using the only tool that's available, ie the

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Central Bank's interest rates to clobber that and force us back,

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whereas actually what we should be looking at is how to pay down this

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department of the best way to pay it down is through income. Increase

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people's incomes and they'll be able to pay down their debt. Secondly, we

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could restructure the debt. We could make it go longer-term and so on but

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we are not doing that. We are only threatening high interest rates.

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That's scary. How big a problem, in your mind, will it be for people who

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own homes, who have mortgages if those mortgages go up, even by a

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fraction? We have heard that up to 1.2 million people would struggle to

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make their mortgage repayments if the interest rates started to rie.s

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I'm in agreement is we need to raise income rather than keep income where

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it is and raise interest rates, even creeping them up, which would make

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mortgages unaffordable from people. I have heard from people who said if

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their interest rates went up 0.5%, they are in fear of losing their

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hopes. They are spending all income on mortgage and outgoings and there

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is no wriggle room for people. Isn't Help to Buy irresponsible bearing in

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mind what has gone before n terms of the crash and the overreliance on a

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housing bubble and property market to encourage people it take out

:14:57.:15:00.

loans that perhaps not now, but in five years' time they won't able to

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afford to play back. It is deeply irresponsible. I cannot believe

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George Osborne is getting away with it. He is wanting people to buy and

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thank the Tory government for it will stop but it does not get away

:15:20.:15:24.

from the fact rates will go back up. If we cannot afford it, we are

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living in a new bubble. They would have to go up, when would you do

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it? The Bank of England does not have control of the mortgage rate,

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only the base rate. The only people who borrow at 0.5% are bankers. They

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are doing well. They can borrow at negative interest rates right now,

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which is crazy. The average is 4%. If you look at deflationary, it is

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higher than 4%. Anything between 1.75 cent and perhaps 4%. That is a

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lot more than 0.5% if you have borrowed ?300,000. Do you agree that

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the economy is recovering, unemployment is falling, growth has

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returned. When is the point where you have to lift the base rate to

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get a sustained recovery? It might come when there is a threat of

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inflation, but the threat now is deflation and we do not understand

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it. There is a threat of an asset bubble and the only way you can

:16:41.:16:43.

combat it is to put rates up to something resembling normality.

:16:44.:16:48.

There are other ways of managing asset bubbles and they refuse to use

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other tools rather than interest rates. But you cannot punish the

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people you have encouraged to borrow crazy money by using the weapon of

:17:00.:17:05.

interest rates. My point is the Bank of England is not in control of the

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process. When your bank decides on the rate of interest on your

:17:10.:17:13.

mortgage, it is a process between you and the bank. They can fix

:17:14.:17:16.

almost any rate depending on the level of risk you represent. The

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Bank of England has no control over the spectrum of interest rates, only

:17:23.:17:28.

the base rate. It has control in setting the base rate. I take your

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point to a certain degree but let's look at inflation. It is not high at

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the moment. If you used it as the benchmark to avoid and he wanted to

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increase base rates for that reason, it is not there. It is at the lowest

:17:43.:17:47.

level in four years. The bubble is in London and the south-east. If you

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took the idea that the only way to raise them is to keep the inflation

:17:54.:18:01.

low, we could expect low inflation for some time. It is a false test of

:18:02.:18:06.

whether things are overheating. We need to look at asset prices. We are

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walking into a new bubble if we do not deflate it now. What about

:18:12.:18:18.

prices? Labour has talked about a cost of living squeeze. Is that how

:18:19.:18:23.

you see it in terms of rising prices for certain goods and services

:18:24.:18:27.

compared to income? There are things more expensive, such as food. Basic

:18:28.:18:37.

food. Food prices on some products fall, but on basic supermarket

:18:38.:18:42.

ranges they are rising. Things like a jar of jam that was 19p is now

:18:43.:18:48.

31p, things like that. If you applied to those levels of

:18:49.:18:54.

inflation, daiquiri cheese at ?7 would be ?14. Because it is

:18:55.:18:59.

low-level goods, people do not notice. People who are putting them

:19:00.:19:05.

in their shopping baskets notice. I do the live below the line

:19:06.:19:09.

challenge, spending ?5 in five days to raise money for Oxfam. Over the

:19:10.:19:15.

past three years, my shopping basket with a ?5 has got smaller every year

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until this year the challenge was almost impossible because I could

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not buy ?5 and decent food to last five days. When would you put up

:19:25.:19:31.

interest rates? Definitely before the end of the year, in October

:19:32.:19:38.

time. Do you think you will do it, or he is talking about it to get the

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market to correct and count in the rate rise and he will not do it

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until after the election? I think he wants to do it. He realises his

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reputation is on the line. George Osborne does not want a rate rise

:19:54.:19:57.

before the election. I have confidence he will blow the whistle

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on this. It's something that our guest

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of the day, Jack, knows a thing or two about having spent a

:20:03.:20:06.

number of years trying to look after But an actual definition has been

:20:07.:20:09.

the cause of heated debate over And it matters

:20:10.:20:14.

because it holds the government to account and helps them work out

:20:15.:20:17.

where to direct their efforts. Speak-macro most of us think we have

:20:18.:20:30.

an idea what poverty looks like and some of us as children might

:20:31.:20:35.

remember living in it. In the debate of food banks, one can see 70 years

:20:36.:20:40.

ago food was provided for those who could not afford it. Many are

:20:41.:20:47.

fortunate in that we will not experience poverty, but many are one

:20:48.:20:52.

pay slip away from doing so. And how do we define it? Is it needing to

:20:53.:20:59.

visit a food bank like this one in London? Being poor is most of them

:21:00.:21:08.

described on as living on 60% less of the national median income.

:21:09.:21:15.

People think of the 60% of median income, which is important, it is

:21:16.:21:21.

about whether people can participate in society and how they do relative

:21:22.:21:25.

to others. If you look at measures in the child poverty act, there is

:21:26.:21:29.

one about the absolute level of income, a baseline to meet basic

:21:30.:21:35.

needs, one is about the duration of poverty, whether it is a fleeting

:21:36.:21:40.

experience, or drawn out. The other is about material deprivation,

:21:41.:21:45.

whether they have items are others consider essential. There is a

:21:46.:21:50.

problem, which is why Iain Duncan Smith wanted the relative income

:21:51.:21:58.

measure changed. The maths will tell you there are less poor. In

:21:59.:22:06.

improving times, there is an opposite. Any change in government

:22:07.:22:10.

figures runs a risk and the Treasury were not keen on a change, or a

:22:11.:22:15.

suggestion made by the man who reported for them on poverty. We

:22:16.:22:20.

keep these figures otherwise people will say you are fiddling the books.

:22:21.:22:22.

It is in adequate. keep these figures otherwise people

:22:23.:22:25.

will say you are fiddling the What we need to run alongside is life

:22:26.:22:31.

chances. The key thing is have we got measurements which while

:22:32.:22:36.

measuring a snapshot of numbers of people below the poverty line, what

:22:37.:22:40.

is happening to the children in those families? Poverty inhibits

:22:41.:22:47.

life chances, which are tricky to quantify. The other problem is

:22:48.:22:50.

statistics cannot show the difference between those choosing

:22:51.:22:55.

between heating and eating to exist and the excluded poor, who can

:22:56.:22:58.

afford to survive, but not take part in society. We try to address

:22:59.:23:06.

material need first. But we have a view of poverty that it is

:23:07.:23:14.

relational, spiritual, also. We want people to have dignity restored.

:23:15.:23:20.

Poverty is about affording housing, heating and food, which account for

:23:21.:23:24.

a greater proportion of income. It is about working in the nature of

:23:25.:23:29.

employment. If you think measuring is complex, it is nothing compared

:23:30.:23:30.

to trying to solve it. Watching that with Jack was

:23:31.:23:34.

Mark Hoban, who's been a minister at both the Treasury and the

:23:35.:23:36.

Department of Work and Pensions. What is the best way to measure

:23:37.:23:46.

poverty? It is a challenge and it is the debate the government started a

:23:47.:23:49.

couple of years ago. The measure of relative poverty that has been in --

:23:50.:24:00.

introduced, does lead to spending decisions, but it does not help

:24:01.:24:04.

government to tackle the causes, which are around education and

:24:05.:24:09.

whether you are in work. Relative poverty, using that as the

:24:10.:24:12.

definition, it can distort the way money is spent, do you agree?

:24:13.:24:19.

Relative poverty is a good measure of inequality, but I think that

:24:20.:24:26.

using relative poverty as a definition is not absolute poverty

:24:27.:24:29.

like in the third World, which is complete deprivation. It makes it

:24:30.:24:35.

harder to pinpoint resources. There will be people who always argue

:24:36.:24:41.

there will be people who earn 60% of the median and are not really poor.

:24:42.:24:50.

We need a better definition. Iain Duncan Smith tried to change part of

:24:51.:24:55.

the definition, why did the Treasury not allow it? This is a complex

:24:56.:25:04.

issue. If you wanted to do something like looking at minimum standards of

:25:05.:25:08.

living, it is difficult to quantify. Some measures we looked at was

:25:09.:25:14.

around unemployment, education, housing, management debt. Many

:25:15.:25:20.

different dimensions. It is controversial. Everybody knows the

:25:21.:25:24.

current definition is flawed. Relative poverty fell towards the

:25:25.:25:28.

end of the recession because median income fell. Why does the government

:25:29.:25:38.

not change it? It is moving to a different basket of indicators that

:25:39.:25:42.

is challenging. You outlined what you would look at, unemployment,

:25:43.:25:48.

debt, lack of education, why can you not come up with a convincing

:25:49.:25:54.

definition? The challenge is not to get bogged down in how you measure

:25:55.:25:59.

poverty, but what you do about it, to improve life chances and give

:26:00.:26:03.

young people and education to get into work, what are you doing to

:26:04.:26:06.

help people to progress up the earnings scale? How important is the

:26:07.:26:13.

definition if you use it as a benchmark to measure the government

:26:14.:26:19.

against? It is important to use as a benchmark for measuring the

:26:20.:26:22.

government, but we can get too wrapped up in definitions and being

:26:23.:26:28.

academic about it. If you ask somebody queueing at a food bank,

:26:29.:26:31.

they will not care whether you'd call it absolute poverty, fuel

:26:32.:26:36.

poverty, they know they are queueing up to feed themselves and a child

:26:37.:26:40.

and do not want to be in that situation. How do you define someone

:26:41.:26:47.

who needs extra help? People living in insecure housing and who do not

:26:48.:26:50.

have access to basic things like food and cannot pay fuel bills and

:26:51.:26:55.

cannot look after themselves in a way that is acceptable in the UK,

:26:56.:27:00.

one of the richest countries in the world and we have 1 million food

:27:01.:27:06.

parcels handed out last year. I would call that unacceptable. It

:27:07.:27:14.

seems impossible to eradicate it, and impossible challenge the

:27:15.:27:20.

government. If you look at families included in poverty, many of are

:27:21.:27:26.

working families. 85% of families are in work. The chances of being

:27:27.:27:30.

poor are higher if you are out of work. We need to make sure when

:27:31.:27:34.

families are in work we do what we can to help them increase earnings.

:27:35.:27:39.

There is part-time work and people cannot get the hours. Most of the

:27:40.:27:45.

jobs created since 2010 have been full-time. Raising the personal

:27:46.:27:50.

allowance for income tax has taken people out of tax, which helps

:27:51.:27:55.

families. Skills and training will help people to increase earnings. We

:27:56.:28:01.

need to tackle unemployment and the lack of educational achievement.

:28:02.:28:09.

Concentrating on children in poorer families would be affected.

:28:10.:28:12.

There's just time before we go to find out the answer to our quiz.

:28:13.:28:16.

The question was what qualifications do you need to apply

:28:17.:28:18.

for a new job as an apprentice working in Ed Miliband's office.

:28:19.:28:24.

Is it a degree in politics? A Masters in image management? Or

:28:25.:28:35.

GCSEs in English and maths? I would like to say GCSEs in English and

:28:36.:28:44.

maths, but it is probably the first. The last is right, you got the right

:28:45.:28:50.

answer. English and maths. Thanks to our guests. Andrew and I will be

:28:51.:28:56.

here at 11:30am tomorrow with Prime Minister's Questions.

:28:57.:29:02.

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