:00:00. > :00:04.powerful storms to hit the region in 30 years. Those are the headlines.
:00:04. > :00:17.Now, time for HARDtalk. Welcome 30 years. Those are the headlines.
:00:17. > :00:22.HARDtalk. The battle lines for the next British general election are
:00:22. > :00:26.being drawn up. With the economy growing after years of stagnation,
:00:26. > :00:31.David Cameron's conservatives are claiming vindication for their stiff
:00:31. > :00:40.dose of fiscal austerity. The Labour conference has to convince the party
:00:40. > :00:46.that the centre—left has the better pass for a quick recovery. My guest
:00:46. > :01:13.Welcome to the programme. Three years in opposition. Soul—searching
:01:13. > :01:24.believes that the inside of the and plenty of reviewing. Why do
:01:24. > :01:24.believes that the inside of the party is puzzled about the direction
:01:24. > :01:29.the Labour Party wants to go in party is puzzled about the direction
:01:30. > :01:42.this anaemic recovery... They are been setting the weather. We have a
:01:42. > :01:46.this anaemic recovery... They are not exactly boasting so much as
:01:46. > :01:48.economy, which is that for the first time in a long time, we have signs
:01:48. > :02:00.OECD says we will grow by 1.5% year. We are not disputing growth,
:02:00. > :02:02.boast about this recovery when this but it is rich for the government to
:02:02. > :02:11.boast about this recovery when this is the slowest recovery on record,
:02:11. > :02:11.for most people, this economy does not feel like it is fixed. For most
:02:11. > :02:18.getting harder than ever. The reason not feel like it is fixed. For most
:02:18. > :02:20.getting harder than ever. The reason for that is simple. In 38 of the 39
:02:20. > :02:27.months that David Cameron has been Prime Minister, prices have been
:02:27. > :02:31.rising much faster than wages. We will get to the economic argument in
:02:31. > :02:34.a moment, but I want to start with just looking at what the Labour
:02:34. > :02:38.Party is doing to define itself today. John Prescott, a senior
:02:38. > :02:46.minister in the Blairite and Brown government, says we are failing
:02:46. > :02:48.minister in the Blairite and Brown William Labour need radical change
:02:48. > :02:52.to our policies and our delivery so that people know what we are is
:02:52. > :02:58.standing for —— we in the Labour Party. We are still... You had three
:02:58. > :03:03.years to think about it. We are Party. We are still... You had three
:03:03. > :03:07.years away from manifesto time. First, we got back in touch with the
:03:07. > :03:10.people who left us at the last election. The last election was
:03:10. > :03:14.people who left us at the last terrible result for the Labour
:03:14. > :03:19.Party. Two thirds of working people said that Labour was not a party in
:03:19. > :03:23.touch with them. For the party of working people, that was a heck
:03:23. > :03:25.touch with them. For the party of an achievement. Ed Miliband has
:03:25. > :03:32.turned those figures around. With respect, he has not. The figures for
:03:32. > :03:33.him are terrible. He has some of the lowest approval ratings for any
:03:33. > :03:38.opposition leader in modern times lowest approval ratings for any
:03:38. > :03:43.opposition leader in modern times assessment of who do you touch ——
:03:43. > :03:48.trust to manage the economy, George assessment of who do you touch ——
:03:48. > :03:54.farther ahead than Ed Miliband and Osborne and David Miliband, out
:03:54. > :04:02.farther ahead than Ed Miliband and Ed Balls. You could have said much
:04:02. > :04:05.Thatcher in the past. Ed Miliband has defined this living standards
:04:06. > :04:12.crisis and this is what is going to define the next election. People
:04:12. > :04:14.at the last election? The answer for question. Am I better off than I was
:04:14. > :04:28.at the last election? The answer for the vast majority of people in this
:04:28. > :04:31.phrase. Surely the weather is set by the Conservative description for
:04:31. > :04:35.managing the economy, which is that in the end, the main priority is
:04:35. > :04:42.drawing down debt, getting rid of deficit that the state has been
:04:42. > :04:46.running. They are course over the next four or five years to deliver a
:04:46. > :04:48.balanced budget and your party seems to have bought into that new weather
:04:48. > :04:54.Chancellor Ed Balls now says he to have bought into that new weather
:04:54. > :04:58.apply iron discipline to the public finances. He is effectively buying
:04:58. > :05:02.into the austerity programme of finances. He is effectively buying
:05:02. > :05:11.Conservatives. Labour has always responsibility. The deficit was
:05:11. > :05:19.brought down dramatically before the financial crash hits. I have to
:05:19. > :05:21.interject. You are the one who left that infamous note when Labour left
:05:21. > :05:33.office that you were afraid there traditional note left by every chief
:05:33. > :05:39.secretary since the 1930s. I don't think so. The political record is
:05:39. > :05:43.there. Do you regret that? It has dogged you every day since you wrote
:05:43. > :05:48.it. Even yesterday, we had Nick Clegg talking about that note. It
:05:48. > :06:04.was a sign to the British people is an old Treasury position. ——
:06:04. > :06:12.tradition. Did it demonstrate an arrogance that you did not care
:06:12. > :06:26.you accept that Ed Balls and Ed mess? It was nothing more than an
:06:26. > :06:29.you accept that Ed Balls and Ed Miliband have now bought into the
:06:29. > :06:39.increase in a two—day spending but by the government? We have said
:06:39. > :06:40.increase in a two—day spending but what we have also said is that we
:06:40. > :06:43.should listen to the wise heads what we have also said is that we
:06:43. > :06:51.the IMF, who say that what Britain needs right now is for us to ring
:06:51. > :06:56.investment to the order of about £10 billion. That would make a great
:06:56. > :07:07.difference to the situation in this construction workers back into work.
:07:07. > :07:11.left—wing headbangers. They are sensible, reasonable people, and
:07:11. > :07:14.they are sending the people of Britain a clear message that we
:07:14. > :07:19.believe the Chancellor should listen phrases... Iron discipline, working
:07:20. > :07:24.within the spending forecast... phrases... Iron discipline, working
:07:24. > :07:27.that is the message Ed Balls is sending, how does that fit with
:07:27. > :07:31.that is the message Ed Balls is capital expenditure programme you
:07:31. > :07:46.are talking about? Is Labour talking have said... Argue?We have been
:07:46. > :07:50.saying, trust us, we will borrow more in the future? We will send out
:07:50. > :07:54.those public spending plans closer to the election but if we were in
:07:54. > :07:58.power today, we would say that we should listen to the IMF, bring
:07:58. > :08:01.forward capital investment to get the economy growing faster, and
:08:01. > :08:03.forward capital investment to get challenge, this is the challenge for
:08:03. > :08:08.most people in Britain today, is that because there is a little work
:08:08. > :08:09.to go around, wages are taking a hammering. The average family in
:08:09. > :08:15.Britain today makes exactly the hammering. The average family in
:08:15. > :08:20.as they did back in 2000. People are £1500 per year poorer than they
:08:20. > :08:21.as they did back in 2000. People are at the last election. You say you
:08:21. > :08:28.cannot make borrowing commitments generally, and this gets to the
:08:28. > :08:31.radical and different agenda from the Conservative party, are you
:08:31. > :08:40.taxes to ensure that you can deliver the Conservative party, are you
:08:40. > :08:46.taxes to ensure that you can deliver responsibly? Then act we have said
:08:46. > :09:02.86% this year while small companies tax? You will be taxed higher under
:09:02. > :09:04.86% this year while small companies struggle to get credit and 1 million
:09:04. > :09:10.young people are locked out of work. It back but that is still not going
:09:11. > :09:15.to get the money that you need for this capital expenditure. But with
:09:15. > :09:25.respect, we say that a tax on bank young people locked out of work
:09:25. > :09:28.respect, we say that a tax on bank a job. Second, we say there should
:09:28. > :09:31.be a mansion tax on property is worth more than £2 million, because
:09:31. > :09:39.that will give us the money to introduce a 10p rate of tax for
:09:39. > :09:41.that will give us the money to low—paid. Put that together with a
:09:41. > :09:47.serious plan to take on the energy companies, a plan to bring forward
:09:47. > :09:51.different set of choices. What about higher tax rates for the rich, for
:09:51. > :09:54.example? The Liberal Democrats, supposedly a centre ground party in
:09:54. > :09:59.their description, is talking about that. You are the left of centre
:10:00. > :10:03.Labour Party. Many people around the world are going to start wondering
:10:03. > :10:08.when the Labour Party is going to redistribution message, part of
:10:08. > :10:13.which would be significantly more tax on the wealthy in this country?
:10:13. > :10:25.see the public finances picture election? Everytime George Osborne
:10:25. > :10:26.see the public finances picture government is borrowing billions of
:10:26. > :10:28.pounds much more than they forecast. government is borrowing billions of
:10:28. > :10:30.pounds much more than they forecast. Who knows what that picture will
:10:30. > :10:34.look like once we get to 2014 or Who knows what that picture will
:10:34. > :10:42.us. We know that the picture will 2015. It would be irresponsible
:10:42. > :10:42.us. We know that the picture will not be pretty. Absolutely. And so 18
:10:42. > :10:54.your particular area, Work and not be pretty. Absolutely. And so 18
:10:54. > :10:57.your particular area, Work and Pensions. You have written and been
:10:57. > :11:08.also Australia... And in many of involved in some interesting studies
:11:08. > :11:09.also Australia... And in many of those countries, the left has not
:11:09. > :11:12.performed very well recently. You those countries, the left has not
:11:12. > :11:16.performed very well recently. You say part of the reason is that those
:11:16. > :11:20.in the squeezed middle are now very redistribution and when it comes to
:11:20. > :11:25.welfare, they are very wary on wasteful public spending. Is that
:11:25. > :11:34.your way of saying that Labour welfare, benefits, pensions? That
:11:34. > :11:41.there must be a new way? Yes.What is it? First, we have to set a cap
:11:41. > :11:44.on the annual welfare budget. The government has already done that.
:11:44. > :11:50.They have not done it yet. They government has already done that.
:11:50. > :11:55.still in consultation. But we know they will do it. They say that if
:11:55. > :11:59.you are without a job, a family without a job, you cannot have an
:11:59. > :12:03.overall package of benefits that amounts to more than the average
:12:03. > :12:08.wage, £26,000 per year. Do you support that? We believe there
:12:08. > :12:15.should be a benefit cap but we want Conservatives are happy for people
:12:15. > :12:20.They have set no cap on the amount of time someone should be able to
:12:20. > :12:23.spend out of work. We don't think that's right. We don't believe
:12:23. > :12:27.people should be able to languish on the dole for more than two years. We
:12:27. > :12:32.say there should be a limit on the dole of two years. That is it. And
:12:32. > :12:42.then no more unemployment benefit? Exactly. And then what? We will
:12:42. > :12:43.then no more unemployment benefit? sure there is a supply of jobs
:12:43. > :12:47.available for those who have been out of work for two years and we can
:12:47. > :12:50.do that I changing the pension tax rates of the very rich. But the
:12:50. > :12:54.message should be simple. You cannot live a life on welfare. Once you
:12:54. > :12:59.I am afraid you have to get a job. have been out of work for two years,
:12:59. > :13:02.I am afraid you have to get a job. We will invest in your chances
:13:02. > :13:10.who think that you talk way too you have to take them. You are
:13:10. > :13:12.who think that you talk way too tough and give out the wrong message
:13:12. > :13:20.benefits but I very interested to about labour and Liberal's policies
:13:20. > :13:20.benefits but I very interested to hear you say that you accept the
:13:20. > :13:27.welfare in the UK. Would you reverse hear you say that you accept the
:13:27. > :13:35.welfare in the UK. Would you reverse it or not? We think there should not
:13:35. > :13:47.government has done? We believe independent panel of experts to
:13:47. > :13:49.government has done? We believe at the right cap in London and
:13:49. > :13:53.second—guess what conclusion they will make. Just on one more issue,
:13:53. > :13:57.some call it the better in tax. will make. Just on one more issue,
:13:57. > :14:03.a penalty for those who live in social housing and have what is
:14:03. > :14:09.regarded as a spare bedroom. Very definitely guarantee to reverse
:14:09. > :14:12.regarded as a spare bedroom. Very We think this is an iniquitous,
:14:12. > :14:17.vicious attacks. You have condemned it, but would you reverse it? Then
:14:17. > :14:22.we think it should be dropped and at the manifesto, we will set out how
:14:22. > :14:28.we will deal with it when in office. watching that this tax will be
:14:28. > :14:33.eliminated under do? We have said we will set out our plans for the
:14:33. > :14:39.election. We think it should be dropped now. Look, people are being
:14:39. > :14:41.pushed into extraordinary debt by this. The figures are out now that
:14:41. > :14:46.show one third of people hit by this. The figures are out now that
:14:46. > :14:49.bedroom tax are already in arrears. That is after just five months.
:14:49. > :15:02.18 months? I have to ask you a on earth is it going to be like
:15:02. > :15:08.Benefits and tax credits account for Benefits and tax credits account for
:15:08. > :15:21.and would if we cut the benefits ballooned and went up to 13% by
:15:21. > :15:24.and would if we cut the benefits bill? Yes, we think that what's
:15:24. > :15:27.and would if we cut the benefits strike could soak —— Social Security
:15:27. > :15:40.to come down for a simple reason. Welfare went up during the crash.
:15:40. > :15:43.That's what happens in a recession. You need those automatic stabilisers
:15:43. > :15:52.to work. The problem is, it's not That is not sustainable. What is the
:15:52. > :15:59.target for labour? To cut eye how much, in percentage terms, when
:15:59. > :16:02.target for labour? To cut eye how are in power? We will have to look
:16:02. > :16:08.at the state of the books. Who knows what's going to happen? We have
:16:08. > :16:13.at the state of the books. Who knows put the Social Security system back
:16:13. > :16:18.believe you do that by getting people back into jobs. I'm getting
:16:18. > :16:22.the sense that there will be real cuts, real—time cuts, the status quo
:16:22. > :16:27.can't be allowed to be returned cuts, real—time cuts, the status quo
:16:27. > :16:29.Let's get some important principles. Any benefit system in the Western
:16:30. > :16:36.world has to address these issues. Universal benefits, is labour now
:16:36. > :16:45.actively seeking to change those universal benefits? By that I mean,
:16:45. > :16:49.automatically entitled, whatever their status or wealth, to a free
:16:49. > :16:58.bus pass, free TV license, a winter fuel are allowance. This is a great
:16:58. > :17:02.question. Every generation has to strike a balance between universal
:17:02. > :17:05.benefits and targeted benefits. This is the end of the era of universal
:17:05. > :17:11.benefits. There will be some that state. Why?Was the national health
:17:11. > :17:15.service is quite important. Child and effort for those who need it is
:17:15. > :17:22.quite important. Education systems universal benefits, what's the logic
:17:22. > :17:34.about... Even pensions. It needs to that says, actually, we have to
:17:34. > :17:36.about... Even pensions. It needs to be changed. Let me turn this around.
:17:36. > :17:44.restore. Restoring child benefits be changed. Let me turn this around.
:17:44. > :17:45.for those who are wealthier, we can't restore that. We fuel payments
:17:45. > :17:49.for the wealthy of pensioners, we can't restore that. We fuel payments
:17:49. > :17:51.for the wealthy of pensioners, we believe they should go. Free bus
:17:51. > :17:58.But some things should be more believe they should go. Free bus
:17:58. > :18:00.But some things should be more universal. So, labour introduced
:18:00. > :18:05.automatic second private pensions for people. The government has
:18:05. > :18:09.carved 1 million people out of that system, mainly low—paid women. We
:18:09. > :18:14.think that should be reversed. Secondly, this is something I feel
:18:15. > :18:21.passionate about, the way we treat scandal. People who are vulnerable
:18:21. > :18:25.are trapped in a system that denies them personal safety, access to
:18:25. > :18:25.are trapped in a system that denies and sometimes a home and care.
:18:25. > :18:30.That's wrong. That's why we say and sometimes a home and care.
:18:30. > :18:33.should look at ideas, as they have in Australia, for comprehensive
:18:33. > :18:37.disability insurance, that brings together social care and the back to
:18:37. > :18:40.work system and a new universal system. Got that. A quick final
:18:40. > :20:50.thought on what you say is a radical Looking at one stat, 47% of European
:20:50. > :20:55.exports to China right now confident Germany. How will Britain change
:20:55. > :21:00.that? I've been obsessed with this question. How will Britain pay its
:21:00. > :21:04.way in a world that's been dominated by Asia for some time? I've come out
:21:04. > :21:09.of my research as an optimist. Britain has huge potential but we
:21:09. > :21:18.need to get our act together. That's what Germany has done over the last
:21:18. > :21:23.labour's commitment to raising the minimum wage, taxing financial
:21:23. > :21:26.services in a whole new way, the overall envelope which suggests
:21:26. > :21:34.labour costs would rise under the Labor Party, is that really going to
:21:34. > :21:42.Britain won't win a race to the bottom. Many factory workers are
:21:42. > :21:43.paid 90% less than British workers. But we have seen an ultra efficient
:21:43. > :21:50.simple. What you see is Germany But we have seen an ultra efficient
:21:50. > :21:57.simple. What you see is Germany becoming very high value as an
:21:57. > :22:00.China, for example, is to become partners in innovation. One wants
:22:00. > :22:05.have some great universities. We become a leading science power.
:22:05. > :22:23.in the Pacific century, perhaps should be bringing those things
:22:23. > :22:25.in the Pacific century, perhaps globalisation and want it to stop.
:22:25. > :22:31.They want to stop the bus and get consumer boom in Britain over the
:22:31. > :22:36.next ten years. Our investment is still bad. The only way I think
:22:36. > :22:38.next ten years. Our investment is can grow in the years to come is by
:22:38. > :22:48.becoming a mighty trading nation again. That, I'm afraid, means
:22:48. > :22:53.you more friends further away. China's consumer market may grow by
:22:53. > :22:57.There is no other market in the world that will grow at that speed.
:22:57. > :23:00.We need to get in there. Final thought. Is a part of this, part of
:23:00. > :23:05.the UK succeeding in exploiting thought. Is a part of this, part of
:23:05. > :23:10.is on offer in Asia, is the UK working presumably with Europe.
:23:10. > :23:12.Absolutely. Look at what's happening in the UK today. The Conservative
:23:12. > :23:20.in our referendum, the Lib Dems in the UK today. The Conservative
:23:20. > :23:23.patently moving in that direction. The Labor Party may go into the
:23:23. > :23:27.election as the only party telling the British public but you cannot
:23:27. > :23:29.have a vote on the state of the European Union. Everyone I spoke to
:23:29. > :23:34.when I was writing my book said European Union. Everyone I spoke to
:23:34. > :23:38.we should be using our membership to the world's greatest free—trade
:23:38. > :23:43.blood to battle open the doors exporters. —— club. Instead, we
:23:43. > :23:47.blood to battle open the doors destroying our political capital in
:23:47. > :23:51.Europe by asking for a referendum. Last question. Your message is,
:23:51. > :24:06.it. We are saying that now, when we know it so important we stay in
:24:06. > :24:08.need so much growth, there is a chance to restore our power as a
:24:08. > :24:13.mighty trading nation, we should be harnessing the EU or that political
:24:13. > :24:16.purpose. Instead, we are destroying what political capital we have got
:24:16. > :24:19.and destroying our influence. We have to end there. Liam Byrne,