:00:18. > :00:26.One of Britain's foremost political magazines, the Spectator, name and
:00:26. > :00:30.my guest today as their new, of the year. She is a backbench
:00:31. > :00:34.Conservative MP. She was described as a potent mix of authority,
:00:34. > :00:39.restless this and feel it is. She has been causing trouble for the
:00:39. > :00:46.Prime Minister, putting against him on Europe and drawn up a plan on
:00:46. > :00:49.how he should repatriate powers from Europe. She has also been
:00:49. > :00:59.making suggestions on the way London's banks have been working.
:00:59. > :01:15.
:01:15. > :01:22.How does she think they should Andrea leads and, welcome to
:01:22. > :01:27.HARDtalk. Thank you. -- Andrea Leadsom. American politicians said
:01:27. > :01:33.that every big trading disaster happened in London. There was a
:01:33. > :01:38.point when it did feel like that, wasn't there? There was. Obviously
:01:38. > :01:42.London is the world's leading global centre. The US has a problem
:01:42. > :01:48.with that but a lot of activity takes place here. That is because
:01:48. > :01:52.we have got the right language, a good times on and we have got
:01:52. > :01:56.London, the city poor people want to come and live. It is not
:01:56. > :02:02.surprising that this is the world's global training centre. We have had
:02:02. > :02:08.our fair share of scandals. There was JP Morgan, HSBC facing
:02:08. > :02:12.allegations that failed to stop Mexican drug money. A lot of banks
:02:12. > :02:18.have London operations in the frame. Is there a problem that the
:02:18. > :02:24.culture? There has been. The key issue has been the build-up of a
:02:24. > :02:30.huge oligopoly of banking in London. It started in the 1990s, when I was
:02:30. > :02:35.running the team at Barclays. We saw on enormous number of mergers.
:02:35. > :02:39.A lot of brand-names and fund managers as smaller banks and
:02:39. > :02:45.building societies all been bought up. We have got a real oligopoly of
:02:45. > :02:50.banks. Perhaps five major banks with 89 % of all personal current
:02:50. > :02:55.account customers. There is a great concentration in the UK. As we know,
:02:56. > :03:00.over the last decade, they have built up enormous leverage.
:03:00. > :03:05.Regulation was fairly tight. Certainly not focused on the right
:03:05. > :03:09.areas, which is the massive expansion of balance sheets and the
:03:09. > :03:15.amount of risk-taking in global markets that was going on in the UK.
:03:15. > :03:21.The position we found ourselves in, one analyst said that he had never
:03:21. > :03:27.known it so bad. Is that how you feel about the situation of her
:03:27. > :03:31.banking is in London? I think it has changed a great deal now since
:03:31. > :03:34.the financial crisis. In the build- up to the financial crisis, there
:03:34. > :03:38.was a huge amount of positions taken on which were funded by
:03:38. > :03:42.overnight loans from other banks. It was about leverage. He was
:03:42. > :03:48.talking about the scandals of the summer where particular things were
:03:48. > :03:52.going wrong in bangs. He argued it was worse than 2008, the height of
:03:52. > :04:01.the crisis. His argument was to do with some of the scandals, not
:04:01. > :04:06.least the libel. I would say that lie boar was symptomatic off a
:04:06. > :04:10.culture of making money and, therefore, perhaps, elbowing out of
:04:10. > :04:14.the way be good procedures, the good compliance officers and all of
:04:14. > :04:18.the other role of banking pictures risk-management. Certainly,
:04:18. > :04:22.anecdotally, I have heard from a number of people I have met through
:04:22. > :04:26.my work in the Treasury Select Committee and outside of that,
:04:26. > :04:30.people from my banking days, they say that risk officers were
:04:30. > :04:33.undermined because banks were making so much money that they did
:04:33. > :04:39.not need to abide by the rules. That is a big mistake, once you
:04:39. > :04:46.allow that culture to take hold. The way should explain be a talking
:04:46. > :04:49.about the rate set by the banks what interest rates are. You are on
:04:49. > :04:53.the Treasury Select Committee who looked into this. Afterwards you
:04:53. > :04:58.said that politicians are useless a getting to the truth behind the
:04:58. > :05:03.scandal, despite all your grilling and questioning of the likes of Bob
:05:03. > :05:07.Diamond. What I actually said was that on that occasion, when Bob
:05:07. > :05:12.Diamond came before us, that someone could accuse us of having
:05:12. > :05:15.been useless because we had no time to prepare. The issue with select
:05:15. > :05:19.committees is very often that they call an inquiry because something
:05:19. > :05:24.is very topical and there is not the time to get the in-depth
:05:24. > :05:28.information. Certainly for me, because I had been involved in many
:05:28. > :05:31.markets in my early twenties, it is very clear to me that in a dealing
:05:31. > :05:35.room, compliance officers us sitting there. You also have a
:05:35. > :05:39.morning meeting over the Tannoy per you talk about what is going on on
:05:39. > :05:45.the markets. We are not have the availability of any information
:05:45. > :05:49.about how things were recorded, were at their concerns about the
:05:49. > :05:52.way the rate was fixed? In terms of that first meeting, we were not
:05:52. > :05:56.prepared for it in a sense of having background information.
:05:56. > :06:00.Since then, it has been the Commission for banking standards
:06:00. > :06:04.which has looked into this. There was a suggestion from a colleague
:06:04. > :06:09.of years that you and he had been blocked from the commission,
:06:09. > :06:14.despite being, in his words, the obvious candidates for being on the
:06:14. > :06:19.commission. He seems to suggest it would be a whitewash and which were
:06:19. > :06:25.both too outspoken. Was he right? There are good people on the
:06:25. > :06:29.commission. Because it was a joint committee of the House of Lords and
:06:29. > :06:35.the House of Commons, it could only take a small number of members of
:06:35. > :06:39.each party. Would you have liked to have been on it? Of course.
:06:39. > :06:44.have experience because you were in Barclays, working in Berkeley's for
:06:45. > :06:48.25 years in the city. Barclays weren't the only culprit. Sure.
:06:48. > :06:53.Certainly there are other people with good experience. That is the
:06:53. > :06:57.way the cookie crumbles. suggestion it could end up being of
:06:57. > :07:03.white washed, that they would get to the bottom. I don't agree with
:07:03. > :07:10.that. I am feeling very satisfied. I am about to give evidence myself
:07:10. > :07:14.on the subject of bank account accountability. I think that is --
:07:15. > :07:18.portability. That is an example of how detailed they want to get.
:07:18. > :07:21.There are looking into issues around competition, which is
:07:21. > :07:25.something that we and the Treasury Select Committee have tried to
:07:25. > :07:29.highlight as one of the critical problems of planting in the UK
:07:29. > :07:33.today. You have clear ideas about what should happen. -- banking. You
:07:33. > :07:39.want to make sure we do not see these problems again. There is this
:07:39. > :07:45.idea that you could just leave your bank account. Yes. The. Macabre
:07:46. > :07:49.bank accounts is 55 % of people have never switch back to Cowes.
:07:49. > :07:54.Most people see it as complicated because you have to change your
:07:54. > :07:59.number, your details, your standing orders and so on. We have this
:07:59. > :08:05.oligopoly of banks who each have a Clearing system instead what we
:08:05. > :08:10.could do, to create a shared central utility into which every
:08:10. > :08:15.bank could hold their bank accounts. Then, in effect, you would
:08:15. > :08:20.completely remove the barriers of entry for new banks and be as
:08:20. > :08:23.customers could move bank accounts over night every day of the week if
:08:23. > :08:28.they wanted, keeping the same details. Standing orders would not
:08:28. > :08:33.have to be moved and so on. want the entrance and the market.
:08:33. > :08:37.That is the key to this. We have ended up in a position where we
:08:37. > :08:42.have too small a number of very powerful banks and the culture has
:08:42. > :08:47.been wrong. There is a custom -- custom of poor customer service.
:08:47. > :08:54.Many people are angry. It is one of our key strategic industries. It
:08:54. > :08:59.employs over one million people. It generates around 11 % of tax take.
:08:59. > :09:05.Yet, people are furious with banks because they see them as having so
:09:05. > :09:12.badly damaged the economy. I think if we saw a raft of new entrants,
:09:12. > :09:17.not just new medium-sized players, Bergin money, Metro Bank, also,
:09:17. > :09:21.some new regional banks as a new community banks, specialist lending
:09:21. > :09:25.banks and the like, that requires an absolute removal of the barriers
:09:25. > :09:28.to entry. The Independent Commission on
:09:28. > :09:32.banking has looked at this and decided not to recommend the
:09:32. > :09:36.introduction of portable accounts. Can you change their mind? That is
:09:36. > :09:41.what I am open. It was there because commission that looked at
:09:41. > :09:45.this issue of accountability. He decided to go for a 7-day switching
:09:45. > :09:50.process, which simply means you have to move your bank accounts and
:09:50. > :09:57.standing orders but you do it faster. What I am arguing, and I am
:09:57. > :10:06.not alone, is that a huge raft of the Challenger banks, the likes of
:10:06. > :10:10.bridging Money and Meadowbank, who are keen to be able to access a
:10:10. > :10:15.Clearing System and properly offer a service to their customers... At
:10:15. > :10:19.the moment, if you are a bank to clear as with RBS, when they had
:10:19. > :10:24.their problem a couple of months ago but their processing system and
:10:24. > :10:30.in they are completely packed up for two weeks, that affects all of
:10:30. > :10:34.the banks. -- system in India. For those new bands, it is essential
:10:34. > :10:40.they get direct access to systems so they can offer better service to
:10:40. > :10:46.customers. You would favour of splitting it in the retail and
:10:46. > :10:52.that has not stopped banks filling in the past. Look at Northern Rock.
:10:52. > :11:00.Why should it make a difference? don't she usually support the idea
:11:00. > :11:06.of a complete split. -- usually. What I have said is that refill
:11:06. > :11:12.ring-fencing is all very well. You get some of the disadvantages of
:11:12. > :11:16.splitting without the advantages. If you have a fenced Bank, there
:11:16. > :11:20.are ways you can push the boundaries. If you are a retail
:11:21. > :11:25.bank, if your corporate customers want to do for an exchange with you,
:11:25. > :11:30.do they have to open a new account of your investment banker not? If
:11:30. > :11:35.you have separated those two things, you don't have the grey area, you
:11:35. > :11:39.have a clear answer. You increase the risk of moral hazard. This is
:11:39. > :11:44.an argument made by the chief executive of RBS, Stephen Hester,
:11:44. > :11:49.he says you must be careful because people can be made bankrupt by the
:11:49. > :11:54.Government. If you are art retail ring-fenced banks, you are too big
:11:54. > :11:59.to fail. Two important to fail. If you are rational customer, you
:11:59. > :12:03.would want to bank with that ring- fenced bank on the grounds that she
:12:03. > :12:08.would be bailed out in the event of a problem. Inadvertently, you give
:12:08. > :12:12.even more power to those retail banks. They are the ones who would
:12:12. > :12:16.be saved in the event of a crisis. A quick thought about the sell-off.
:12:16. > :12:21.You think the Government should be selling off parts of the banks that
:12:21. > :12:28.it owns. A bizarre idea, given the struggle to sell off what they have
:12:28. > :12:32.thus far. It is all tied up in better banged competition. One of
:12:32. > :12:36.my colleagues and I have heard from a number of would-be bankers,
:12:36. > :12:40.people who want to set up a bank and have found that there are
:12:40. > :12:43.enormous regulatory hurdles to setting up a bank around things
:12:43. > :12:48.like providing capital Burgess's there uselessly that perhaps they
:12:48. > :12:53.have not got or, indeed, to demonstrate what you would do and
:12:53. > :12:58.then being turned down. -- which sits there used to sleep. The
:12:58. > :13:02.problem is, the FSA and going forward, the regulatory of
:13:02. > :13:06.authority that will regulate banks and future, neither of them has a
:13:06. > :13:12.specific competition objective. Neither has the direct incentive to
:13:12. > :13:16.enable new banks to be established. They have lots of down sides if a
:13:16. > :13:21.bike is established and then fails, they have no incentive to enable
:13:21. > :13:28.them to set up. I think it is all set-up -- tied up with Bank
:13:28. > :13:32.competition. If you can reduce the barriers to entry and divide banks
:13:32. > :13:42.backing to their original retail brands, you could actually create a
:13:42. > :13:46.
:13:46. > :13:51.You have a very fixed idea. You say that you do not want to leave, you
:13:51. > :13:55.want to renegotiate. It is hard to see how you're going to get what
:13:55. > :14:03.you want. A complete negotiation on Britain's terms of his relationship
:14:03. > :14:08.with Europe. I do not think that I am a tricky to the PM. I think that
:14:08. > :14:11.he used in favour of a him?
:14:11. > :14:15.him? On the matter of whether the British people should have a
:14:16. > :14:22.referendum. That was a backbench proposal. I do think that the
:14:22. > :14:25.British people should have their say. That is vital. I had been
:14:25. > :14:28.completely in agreement with the government's approach to
:14:28. > :14:34.renegotiating Britain's relationship within the European
:14:34. > :14:39.Union. The reality is that the entire basis for establishing the
:14:39. > :14:43.EU has changed since the financial crisis. Britain is not responsible
:14:43. > :14:49.for the southern European debts and the crisis that has now ensued. We
:14:49. > :14:56.are not responsible for the problems with the euro. It is in
:14:56. > :15:00.Britain's interests that the euro survives and sort itself out. While
:15:00. > :15:06.they do wish to create a eurozone fiscal union, we would like to be
:15:06. > :15:11.able to give them that. We must also protect British interests.
:15:11. > :15:17.are setting up this idea that while they are going for federalism, we
:15:17. > :15:23.will negotiate our own specific deal for Britain. That is why the
:15:23. > :15:30.Labour MEP said that the reputable point is that the euro reformers,
:15:30. > :15:36.such as you, simply cannot deliver. They need an agreement from all 27
:15:36. > :15:39.member states. She says that you are confused. She says the work
:15:40. > :15:45.hard but will Labour is nothing more than smoke and mirrors.
:15:45. > :15:50.simply does not have control over the EU in the way that you would
:15:50. > :15:54.like. I think that she is completely wrong. The Lisbon Treaty
:15:54. > :16:00.was the treaty to end all treaties. Yet we're here staring down the
:16:00. > :16:04.barrel of a new treaty to create a eurozone fiscal union at the time
:16:04. > :16:08.of the new treaty. It is entirely expected and required that the
:16:08. > :16:11.British government will come up with its own articulation of what
:16:11. > :16:17.Britain wants in return for establishing that eurozone fiscal
:16:17. > :16:22.union. I too had European ambassadors saying that I am
:16:23. > :16:30.cherry-picking. That is not the case. Look at the scale of what
:16:30. > :16:35.you're suggesting. It is a major overhaul. In fact it is, at the
:16:35. > :16:42.moment I'm working with a group of conservative colleagues to it --
:16:42. > :16:47.looking for. And number of those renegotiations are things that are
:16:47. > :16:51.already a government policy or ballet are things for which there
:16:51. > :17:00.is a lot of is a lot ofalready. For example, the repatriation of the
:17:00. > :17:05.local element of structural funds. Europe has paid over seven years
:17:05. > :17:11.$33 billion to the euro. Britain received a 9 billion of that back.
:17:11. > :17:16.We had converted 80 euros. It is then being sent back to last. Why
:17:16. > :17:22.not just keep it. You have said you were to look at employment law,
:17:22. > :17:27.farming, fishing, crime, not a structural structural hose
:17:27. > :17:33.areas, we are looking at whether we want to renegotiate. The government
:17:33. > :17:36.has already said that they are looking for an opt-out in the
:17:36. > :17:41.justice and home affairs directives. We are saying that if we do that
:17:41. > :17:46.then we should look at multilateral international agreements in
:17:46. > :17:50.exchange for signing up to EU directives. The problem with such a
:17:50. > :17:54.directive is that it comes under other European Court of Justice for
:17:54. > :17:58.arbitration. Having signed up for something that we like the look of,
:17:58. > :18:01.it then gets amended under qualified voting. We end up with
:18:01. > :18:06.something we do not like. We have the possibility of a treaty and the
:18:06. > :18:12.promise of a referendum with the new treaty. You are saying that we
:18:12. > :18:16.do it these renegotiations of these areas and at some point, quickly,
:18:16. > :18:22.in order to be able to say, let us put this referendum before the
:18:22. > :18:26.British people. These are the terms of the negotiation. T Ward in, out,
:18:26. > :18:32.or middle option? As far as I'm concerned, we will need to
:18:32. > :18:36.articulate a British vision for British relationship within the EU.
:18:36. > :18:42.The EU and not try to push us out. We are the third biggest
:18:42. > :18:48.contributor to the Budget. We are seen as exceedingly helpful.
:18:48. > :18:51.terms of how it would work, it is hard to see the process of how it
:18:51. > :18:55.would work. But you could put something before the British people
:18:55. > :19:00.that would be meaningful. As far as fresh
:19:00. > :19:04.fresh Start project that I founded and leading is not calling for a
:19:04. > :19:07.referendum at the moment. We're talking about trying to articulate
:19:07. > :19:13.a British version of our relationship with the EU that we
:19:13. > :19:22.would be calling on. We would be calling on the Conservative
:19:22. > :19:27.government to call upon the EU... in the way that we wanted to, will
:19:27. > :19:31.we be better off out? Leaving the EU is extraordinarily complicated.
:19:31. > :19:37.It is not a matter of leaving it overnight. There is a negotiation
:19:37. > :19:43.involved. It is not unknown. If we were to leave the EU, if we had a
:19:43. > :19:48.very careful and British interested renegotiation, it would be possible
:19:48. > :19:52.to leave the EU under good terms. Make no mistake, it would be
:19:52. > :19:57.extremely painful for a period of time. You cannot just leave it
:19:57. > :20:01.overnight. Every EU legislation has been enacted into British law. Even
:20:01. > :20:08.if you left it, you have a mass of laws that y laws that yecide to do
:20:08. > :20:13.something with. That would be better than staying in as we are?
:20:13. > :20:17.Exactly as we are, yes. That is why we're doing this work to
:20:17. > :20:24.renegotiating a better term for Britain. There is a spectrum along
:20:24. > :20:29.which it you achieve a percentage of it. Along this line, colleagues
:20:29. > :20:34.will say that on the basis of only achieving 30% of it, I would leave.
:20:34. > :20:38.Others would say that they would stay in on that basis. That is up
:20:38. > :20:43.to the individual. What we must do is renegotiate a better
:20:43. > :20:48.relationship for Britain. We must give it our best shot. We are in
:20:48. > :20:57.one of the most advanced democracies in the world. A year to
:20:57. > :21:00.a rare, a female Conservative MP. There is another well-known
:21:00. > :21:05.Conservative MP who recently gave up on politics because she said
:21:05. > :21:12.that in her situation, it was just too hard to balance the work life
:21:12. > :21:15.with her home life. There were particular circumstances for her.
:21:15. > :21:23.How hard it had he found it? You have children, your active
:21:23. > :21:28.politically. His is difficult? think I am older than her, sadly. I
:21:28. > :21:33.have worked all my life. My children are my priority. If I had
:21:33. > :21:39.to choose, I would drop politics for family. I think that the
:21:39. > :21:43.balance is just right for me. My children have gotten used to it.
:21:43. > :21:46.you think that people find that difficult? They are not used to men
:21:46. > :21:52.saying that. So the idea that you're saying that your children
:21:52. > :21:56.come first. I hope not. I think that I approve every day that I am
:21:56. > :22:00.completely committed to politics. I have wanted to do it since I was 13
:22:00. > :22:07.years. My children and now at the age that I was when I decided to
:22:07. > :22:11.become an MP. They're in their teens, so you knew very young?
:22:11. > :22:15.they will come into Parliament and they will sit through a debate and
:22:15. > :22:19.they will be proud of their mother. That makes me feel fantastic. They
:22:19. > :22:25.love to see it. They love to see their mother on TV and their mates
:22:25. > :22:30.at school say that I had done this or that. That is embarrassing, but
:22:30. > :22:34.we have the balance right. I am somebody who will be there at the
:22:34. > :22:40.important netball match or rugby match. I will be there at the
:22:40. > :22:44.Christmas concert and that sort of thing. You set up something called
:22:44. > :22:48.the Parent Infant partnership. It is to help mothers who have had
:22:48. > :22:54.post-natal depression. That is the starting point. You experience
:22:54. > :22:59.something like that? Yes, with my first child. Having been capable
:22:59. > :23:06.and doing well in bargaining - -- banking. It was like falling off a
:23:07. > :23:10.cliff. For me, it did not last long. I'm grateful for that. But for many
:23:10. > :23:17.people, not just post-natal depression, but also drug problems
:23:17. > :23:22.or teenage mothers, are certainly post-natal depression that leaves
:23:22. > :23:27.mothers and other family members, fathers and close relatives, you're
:23:27. > :23:31.trying to care for a baby and simply cannot. The key point in
:23:31. > :23:35.setting this up is that a baby who does not have a sympathetic,
:23:35. > :23:44.empathetic Caraher, suffers in terms of their own brain
:23:44. > :23:48.development. Between the aid of a zero and two, an infant's brain
:23:48. > :23:53.does in certain directions because of neural connections made in the
:23:53. > :23:58.early life. A baby literally learn some earliest experiences how its
:23:58. > :24:02.will haul lifelong emotional health will shape up. It is critical that