:00:07. > :00:11.They are frustrated and disappointed and not going to take
:00:11. > :00:14.it any more. Public sector workers close schools and operating
:00:14. > :00:19.theatres today to protest at reforms to their pensions. Even
:00:19. > :00:23.people who wanted to work couldn't get there, disruption, the unions
:00:23. > :00:27.said, was unfortunate, but necessary. We are all getting
:00:27. > :00:32.poorer, can we afford to pay them what they demand. A lot of people
:00:32. > :00:37.in the private sector really don't see any need for what we are doing.
:00:37. > :00:40.You try to justify your situation with their's, it is proving very
:00:40. > :00:44.difficult. The General Secretary of the main union involved, and the
:00:45. > :00:48.minister responsible are both here. Today, more evidence, as if we
:00:49. > :00:52.needed any more, that it's going to be years before incomes recover to
:00:52. > :00:56.the level they were at even nine years ago.
:00:56. > :01:01.As the experts run the numbers on yesterday's announcements, it is
:01:01. > :01:11.clear the poor could suffer heavily, and the pain could last a decade.
:01:11. > :01:15.We are committed to resolving contentious and difficult issues
:01:15. > :01:24.through dialogue. What was the LSE thinking of taking money from
:01:24. > :01:27.Muammar Gaddafi's son, we speak to his examiner.
:01:27. > :01:31.There were teachers, council officials, health workers and even
:01:31. > :01:36.a light dusting of weather forecasters out on strike about
:01:36. > :01:40.their pensions today. The gaze of the media settled on demonstrations,
:01:40. > :01:43.television loves a bit of shouting. Facts are another story, it is
:01:43. > :01:47.claimed that two million people were on strike, it is also claimed
:01:47. > :01:51.that only one in three civil servants went out. The Prime
:01:51. > :01:56.Minister called the protests a damp squib.
:01:56. > :02:00.According to the TUC, this was the biggest day of industrial action in
:02:00. > :02:07.a generation. According to the Prime Minister: It looks like
:02:07. > :02:09.something of a damp squib. At the start of the march in
:02:09. > :02:14.central London, there was competition between the unions to
:02:14. > :02:18.get the most placards into the marchers hands. Get rite of that.
:02:18. > :02:23.Even the police were giving stuff out. Usefully the police have
:02:23. > :02:27.handed out these leaflets so everyone can know what to expected.
:02:27. > :02:32.We will look at what officers will be wearing, you can expect to see
:02:32. > :02:36.officers in yellow jackets and traditional police hats, check!
:02:36. > :02:45.There was no such discernable dress code for the marchers. There was a
:02:45. > :02:49.smattering of performance art radical. But mostly, staff went
:02:49. > :02:55.casual, for whom this was no fun day out, but a regretable and
:02:55. > :03:00.necessary protest. If you are going to get a pension based on average
:03:00. > :03:03.earnings over the years, in the 1970s I used to take home �20 a
:03:03. > :03:09.week, if that was put into an average pension, it is nothing, it
:03:09. > :03:13.is an insult. That part of it would be index-linked, it is still better
:03:13. > :03:18.than most people in the private sector can ever hope to get?
:03:18. > :03:22.wouldn't say so. You wouldn't? That is what the statistics say, isn't
:03:22. > :03:26.it? I wouldn't say so. I would say society needs to look at stopping
:03:26. > :03:31.rich people choosing whether they pay tax, and that those people who
:03:31. > :03:33.make communities function pay the tax to keep the communities
:03:33. > :03:37.functioning. The destination of this march was Westminster.
:03:37. > :03:41.Although the demonstration itself was still about two hours away, the
:03:41. > :03:46.controversy was swifter. Arriving in time for Prime Minister's
:03:46. > :03:50.Questions. Why does the Prime Minister think so many decent, hard
:03:50. > :03:56.working public sector workers, many of whom have never been on strike
:03:56. > :04:00.before, feel the Government simply isn't listening. The reason people
:04:01. > :04:06.are going on strike is because they object to the reforms that we are
:04:06. > :04:10.making to public sector pensions. But I believe those reforms are
:04:10. > :04:17.absolutely essential, and as the former Labour pensions secretary,
:04:17. > :04:22.Lord Hutton said, and he said this, "It is hard to imagine a better
:04:22. > :04:27.deal than this". He is privately delighted the unions have walked
:04:27. > :04:32.into his trap. That is the reality, he's been spoiling for this fight.
:04:32. > :04:37.Today, he now backs the strikes, why? Because he's irresponsible,
:04:37. > :04:41.left-wing and weak. The Prime Minister has dismissed
:04:41. > :04:44.today's action as something of a damp squib. However, the politics
:04:45. > :04:48.of this isn't quite fully formed. That is why the parties are having
:04:48. > :04:53.to rather gingerly find their way around it. The big question is this,
:04:53. > :04:58.where does the average voter put themselves today? Are they, even if
:04:58. > :05:02.they are not here in person, marching alongside these public
:05:02. > :05:08.sector workers, angry at what they think is a deal that has been
:05:08. > :05:13.imposed on them. Or are they at home, looking at their own finances,
:05:13. > :05:17.feeling the pinch of these austere times, feeling these people have it
:05:17. > :05:22.easy. In the battle of public opinion, affordability and fairness
:05:22. > :05:25.are two key measures. This graph from the Hutton Report into pension,
:05:25. > :05:28.show seen before most of the changes made, the cost of public
:05:28. > :05:32.sector pensions as a proportion of GDP is coming down and will
:05:32. > :05:36.continue to do so well into the future. Affordability, then, is not
:05:36. > :05:39.the most compelling argument. cost of public service pensions is
:05:39. > :05:43.forecast, by the Government, to decline as a share of national
:05:43. > :05:48.income going forwards. We can afford that, if we want to. But a
:05:48. > :05:54.far smarter question, is it the best use of our money, or should we
:05:54. > :05:58.be making less generous promises to public sector workers, freeing up
:05:58. > :06:03.resources to spend elsewhere, lower taxes or higher spending elsewhere,
:06:03. > :06:06.you make the choice. Was it a mistake to introduce the question
:06:06. > :06:10.of affordability as being one of the factors here in this debate.
:06:10. > :06:14.Afterall, you will be aware of the graph, the graph that everyone
:06:14. > :06:18.keeps showing us of declining proportion of GDP going to public
:06:18. > :06:22.sector pensions in the future? that graph is one where they have
:06:22. > :06:28.already factored in the reforms that the Government have made. What
:06:28. > :06:31.Lord Hutton is saying...Some them, only the change to the
:06:31. > :06:34.inflation uprating, the other changes aren't in that graph?
:06:34. > :06:38.graph that Lord Hutton produced, after we had already announced
:06:38. > :06:42.changes that affected the contribution rates, that is one of
:06:42. > :06:45.the biggest reforms we are making, they are baked into that graph.
:06:45. > :06:49.Lord Hutton has said the deal we are putting forward is necessary,
:06:49. > :06:55.right and generous. Affordability, sustainability, the different sides
:06:55. > :06:58.of the same coin. So, that's it, we have reached the
:06:58. > :07:03.end of the march. Big Ben is over there, the question is, what
:07:03. > :07:07.happens now, where does this wave of public sector anger go next?
:07:07. > :07:11.With us now is the cabinet office minister, Francis Maude. Do you
:07:11. > :07:15.understand why so many people are angry? I understand that they are
:07:15. > :07:19.concerned about what their pensions are going to look like, and what
:07:20. > :07:24.they are going to be. We're steadily explaining that actually
:07:24. > :07:29.the cost of public sector pensions has risen by a third, by �10
:07:29. > :07:33.billion in the last ten years, and actually, the costs has fallen on
:07:34. > :07:38.the general taxpayer. People are living much longer, so we need to
:07:38. > :07:42.expect people, generally, to work longer. These people already have a
:07:42. > :07:48.pay freeze, they learned yesterday if they get a pay rise at the end
:07:48. > :07:53.of that freeze it will be 1%, they have learned also that 700,000
:07:53. > :07:56.posts in their fields are going to disappear. You can't be surprised
:07:56. > :08:01.if they come to the conclusion that there is an agenda going on here
:08:01. > :08:06.that is not about the public finances? The agenda is completely
:08:06. > :08:12.about having, on pensions, about having sustainable and good public
:08:12. > :08:17.sector pensions for the future. But they have to be sustainable and on
:08:17. > :08:20.a basis that is fair to public sector workers and fair to the tax-
:08:20. > :08:27.payers whose taxes support these pensions. Since there is a
:08:27. > :08:30.proportion of GDP, the burden of these pensions is falling. It is
:08:30. > :08:35.clearly not just about money, it is about politics too isn't it?
:08:35. > :08:41.burden is falling, because of the reforms. There were a number of our
:08:41. > :08:44.reforms which were already factored into that graph. And there were
:08:44. > :08:47.other reforms which were projected under the last Government, and
:08:48. > :08:52.hadn't been implemented, and the detail hadn't been worked out and
:08:52. > :08:57.put in. The Institute of Fiscal studies says it is all affordable?
:08:57. > :09:01.Anything is affordable if you are willing to sacrifice other things.
:09:01. > :09:10.The office of budget responsibility projected that without reform the
:09:10. > :09:14.cost to the taxpayer would be an additional several thousand pounds
:09:14. > :09:20.individually. You want to take this money and spent it on something
:09:20. > :09:25.else, to penalise them? We are not penalising them. For those wanting
:09:25. > :09:29.reforms, we need to know what will we cut �7 billion from. At the end
:09:29. > :09:34.of these reforms, public sector workers on lower and middle incomes
:09:34. > :09:37.will be able to retire on a pension at least as good, in many cases
:09:37. > :09:41.they expect, many will be expected to work longer. Because they are
:09:41. > :09:45.long to live longer. They will be asked to pay more towards it, so
:09:45. > :09:50.there is a fairer balance to what they put towards their pensions and
:09:50. > :09:58.the employer, the taxpayer puts towards them. Is there a question
:09:58. > :10:01.of 3.2%, is that negotiable at all for you? We said that there f there
:10:01. > :10:04.are ways the unions can put forward delivering those pension schemes
:10:04. > :10:07.delivering those savings, we are willing to listen. I have to tell
:10:07. > :10:10.you, no suggestions have been put forward.
:10:10. > :10:13.The baseline for everything that you are saying, both in this and
:10:13. > :10:19.yesterday, is that we have all got to accept that life is going to get
:10:19. > :10:22.a lot worse, isn't it? Life will be tough. We inherited a massive
:10:22. > :10:26.budget deficit. The office of budget responsibility concluded in
:10:26. > :10:30.its analysis that the size of the boom was greater than we envisaged,
:10:30. > :10:33.and the deep depth of the crash, of the bust, was greater. Actually the
:10:33. > :10:37.consequences of that, we will have to live with and we will have to
:10:37. > :10:42.work our way through. I want at the end of this, there could be really
:10:42. > :10:47.good public sector pensions, for decent public servants, who make
:10:47. > :10:51.their lives devoted to this important calling of public service.
:10:51. > :10:55.Wouldn't you also say one of the consequences has been for you to
:10:55. > :10:58.abandon some of the principles you laid out at the time you were
:10:58. > :11:02.elected. For example, the idea that work must always pay. When you look
:11:02. > :11:07.at what you did to Working Tax Credits yesterday, and what you did
:11:07. > :11:10.to benefits, one of them being frozen and benefits rising by 5.2%.
:11:10. > :11:15.Don't you conclude that you have abandoned that principle? I don't
:11:15. > :11:19.accept that for a second. What I'm concerned with here today is with
:11:19. > :11:26.the reforms to public sector pensions. Just to focus on this.
:11:26. > :11:29.be clear about this, you wanted the job seekers allowance to go up by
:11:29. > :11:37.5.2%? If you want to talk about the Autumn Statement, that is fine, I'm
:11:37. > :11:43.here to talk about this industrial relations dispute, and the case for
:11:43. > :11:47.public sector pensions reform. you want the jobseeker's allowance
:11:47. > :11:51.to go up by that much? I'm here to talk about the strikes today and
:11:51. > :11:57.the case for reform of public sector pensions. It is worth making
:11:57. > :12:00.the point that there are negotiations going on a daily basis
:12:00. > :12:06.here. You said your final offer was on November 2nd, this whole thing
:12:06. > :12:10.is in the context of your attitude to work. I ask you again, did you
:12:10. > :12:19.want the jobseeker's allowance to go up by 5.2%? I'm not getting into
:12:19. > :12:22.all of that. The fact is...That what the Lib Dems got out of the
:12:22. > :12:25.Autumn Statement, wasn't it? have had a tough set of decisions
:12:25. > :12:29.to make in the Autumn Statement. As a Government we work together very
:12:29. > :12:31.closely this is a Government that has come together, two parties
:12:31. > :12:35.coming together, to work in the national interest, to clear up the
:12:35. > :12:39.mess left by the last Government. Actually, putting all of this
:12:39. > :12:42.together, in a way that has delivered a credible plan for
:12:42. > :12:48.reducing the deficit, which gives us the lowest interest rates. We
:12:48. > :12:52.were able to actually have a lower interest rates, even than Germany,
:12:52. > :12:55.that takes quite a lot of determination and loadership and a
:12:55. > :12:59.long-term view of what's -- leadingship and a long-term view of
:12:59. > :13:02.what's going to work. We will go back to negotiate public sector
:13:02. > :13:06.pensions. I thought you made your final offer? There are discussions
:13:06. > :13:10.all the time. It wasn't the final offer? There were negotiations with
:13:10. > :13:14.the civil ser service. I hope you will ask Mark Serwotka when he
:13:14. > :13:18.comes on, why he wasn't on those discussions yesterday. Bear with us,
:13:18. > :13:22.and we will come to that. Reform of public sector pensions necessary,
:13:22. > :13:25.the Government says, because of the dismal state of the country's
:13:25. > :13:31.finances. Between a fifth-and-a- quarter of people with a job work
:13:31. > :13:34.for the state. Although in some warts of the -- parts of the
:13:34. > :13:40.country it is a higher proportion. Many of those who work in the
:13:40. > :13:44.private sector and contribute to the taxes that fund private sector
:13:44. > :13:48.workers' pensions say they don't know they are born. We have been
:13:48. > :13:51.finding out who is really better off, public or private. A show of
:13:51. > :13:56.strength on the streets of Birmingham. Several thousand
:13:56. > :14:03.workers from the public sector foregoing a day's wages, in the
:14:03. > :14:08.hope of, as they see it, protecting years of their pension. Meet
:14:08. > :14:12.Theresa Footes, husband Tom and daughter Kyra. She's a primary
:14:12. > :14:22.school teacher aged 36, because of the increase in the pension age,
:14:22. > :14:23.
:14:23. > :14:26.she will retire on �12,000 on the age of 68, she had been expecting
:14:26. > :14:32.�18,000. I paid into the pension, I knew what I was getting out of it.
:14:32. > :14:36.Now it is taken away from us. Now it is not Martin McGuinness what we
:14:36. > :14:44.pay in, pay more and work longer. As her husband acknowledges, that
:14:44. > :14:50.argument -- Now it doesn't matter what you pay in, pay more and work
:14:50. > :14:52.longer. Her house acknowledges that argument is difficult to accept.
:14:52. > :14:56.is difficult because of the situation people find themselves in,
:14:56. > :15:00.you try to justify your situation with their's, it is really very
:15:00. > :15:03.difficult. At this cash and carry in the city centre, strike day
:15:03. > :15:06.means more people shopping but fewer to serve them. About a fifth
:15:06. > :15:11.of staff are parents who have stayed home because schools have
:15:11. > :15:16.closed. For a worker in the private sector, it can be hard to feel much
:15:16. > :15:19.sympathy for those on strike. Sumeet Chadha is marketing manager,
:15:19. > :15:23.a-year-older than Teresa, his salary is about the same as her's.
:15:23. > :15:28.He has made no pension provision, eventhough he could have paid into
:15:28. > :15:32.a company scheme. I do feel that most people are to blame for their
:15:32. > :15:36.own situations. I can understand the people going on strike, on the
:15:36. > :15:42.one side of things, and the other side I can understand why the
:15:42. > :15:46.Government is doing this. Should that have been in place in the firs
:15:46. > :15:50.understand stand, were there too many -- first instance, were there
:15:50. > :15:54.too many benefits paid out? There is a deficit, to get the economy
:15:55. > :15:57.back on track something needs to be done. The other big benefit is
:15:57. > :16:00.wages, do public sector workers get a better deal there. It is
:16:00. > :16:05.difficult to measure. But the Institute for Fiscal Studies has
:16:05. > :16:09.had a go. Above the horizontal line is where public sector wages
:16:09. > :16:16.exceeded those in the private sector. Women have consistently
:16:16. > :16:20.done better. Throughout the 1990s, for both sexes, the public sector
:16:20. > :16:25.gap narrowed. Men with private sector jobs were made more than
:16:25. > :16:27.those in the public sector. The difference has grown again,
:16:27. > :16:32.accelerating dramatically in the time of the financial crisis, that
:16:32. > :16:39.cut private sector wages more than the public sector. The IFS thinks
:16:39. > :16:44.that won't last. In recent years public sector pay has moved ahead
:16:44. > :16:48.of private sector pay. Not by design, it is just private sector
:16:48. > :16:55.pay growth has been subdued in the recession. There is two years of
:16:55. > :16:59.pay squeeze with another two years coming. By 2014/15, comparing a
:16:59. > :17:03.like-for-like basis, this would be sufficient to erode away the public
:17:03. > :17:10.sector premium for men that we currently believe exists. They have
:17:10. > :17:14.put on quite a display today, and a pretty noisy one at that, once all
:17:14. > :17:18.the shouting has faded away. The question for the future is whether
:17:18. > :17:21.the unions will be able to capitalise on that, and expand
:17:21. > :17:26.support on voters, many not benefiting from the pensions they
:17:26. > :17:29.would like to protect for the future, or whether this disruption
:17:29. > :17:33.will alienate precisely the people whose support they so desperately
:17:33. > :17:37.need. The Government wants to cut the bill to the taxpayer, but if
:17:37. > :17:40.public sector workers won't make the higher contributions ministers
:17:40. > :17:44.expect, and join the millions in the private sector who don't save
:17:44. > :17:47.at all for their old age, then the next generation may be facing a
:17:47. > :17:50.much bigger bill. Mark Serwotka, the General
:17:50. > :17:55.Secretary of the Public and Commercial Services Nuion, is with
:17:55. > :18:01.us now. And Francis Maude is still here. Let me speak to you for a few
:18:01. > :18:04.minutes first. Are you embarrassed that so many of your members
:18:05. > :18:09.protesting today have better conditions and pensions to look
:18:09. > :18:13.forward to than many people in the private sector? I'm not embarrassed
:18:13. > :18:16.about that at all. It makes me determined to make the case that
:18:16. > :18:20.there should be fair pensions for all, and the problems in the
:18:20. > :18:23.private sector won't be solved by slashing the hard-earned public
:18:23. > :18:28.sector pensions of which people were promised for decades. Where do
:18:28. > :18:32.you think all the tax income will come from? As you have just seen in
:18:32. > :18:36.your report, the cost of public sector pensions, as a proportion of
:18:37. > :18:40.GDP is falling. We have made the changes, five years ago, that
:18:41. > :18:48.modernised the scheme, took account of people working longer. And the
:18:48. > :18:52.result of that is they fall from 1.9% to 1.4% of GDP. You don't deny
:18:52. > :18:55.people are living longer, you presumably accept there is a need
:18:56. > :19:00.for change occasionally? There was a need for change five years ago,
:19:00. > :19:04.we did a deal with the then Labour Government. We were told it would
:19:04. > :19:08.last for 50 years. I don't accept the premise that because everybody
:19:08. > :19:12.supposedly lives longer we have to work lot longer. Many people will
:19:12. > :19:17.never live to 68 and see the pension that many of them have
:19:17. > :19:20.worked so hard for. I don't buy into the notion that in the sixth
:19:20. > :19:25.biggest economy in the world that if you live longer you work until
:19:25. > :19:30.you drop. If the case was so transparent, why did so much of the
:19:30. > :19:33.Civil Service come out on strike today -- fail to come out on strike
:19:33. > :19:38.today? It was somewhere between a quarter and a third of the Civil
:19:38. > :19:42.Service, the majority were working. He has had a good go, let me make
:19:42. > :19:45.the point. The Government's behaviour has been extraordinary?
:19:45. > :19:49.We are not talking about that, I'm asking you why so many people
:19:49. > :19:55.failed to come out today? saying two million people were on
:19:55. > :20:02.strike. Nonsense. 90% of the PCS members. They weren't u know
:20:02. > :20:05.perfectly well it is not true. will be able to analyse that in the
:20:05. > :20:09.future. It is the latest example of a Government who is either
:20:09. > :20:14.deliberately misleading people or doesn't understand what the issues
:20:14. > :20:18.are. Anybody who left parliament. Check the methodology. Did you get
:20:18. > :20:25.people to count how many people weren't at work today? It is
:20:25. > :20:29.146,000, I have it down to the last number. You claim it is 146,246,
:20:29. > :20:33.even if everyone was at work, the idea they could get that figure
:20:33. > :20:37.within five hours is laughable. We know this is paysically an attempt
:20:37. > :20:40.to try and see. The Civil Service doesn't work that fast? They are
:20:40. > :20:45.not there. Senior Civil Service members on
:20:45. > :20:49.strike. Are you accusing the minister of making it up?
:20:49. > :20:53.accusing the minister of misleading and potentially lying to people
:20:53. > :20:57.about a number of questions. That is a serious accusation to make.
:20:57. > :21:01.will back it up. Mr Maude says what he knows to be untrue, that people
:21:01. > :21:08.will get better pensions if they are lower or middle incomes, proved
:21:08. > :21:13.to be put to him earlier. Mr Maude also said. Let me say what I said.
:21:13. > :21:17.Just hear what he said. Quickly put him right? You are putting up an
:21:17. > :21:22.aunt Sally to knock it down. I have said explicitly that people on
:21:22. > :21:26.lower and middle incomes will retire on a pension which is as
:21:26. > :21:31.good, and in many cases better, than what they currently expect to
:21:31. > :21:36.retire on. They may work longer and they will pay more towards it.
:21:36. > :21:42.your researchers go on the pensions calculator, it shows that is
:21:42. > :21:45.nonsense. It is also nonsense. are not comparing like with like.
:21:45. > :21:52.It is your calculator. It is nonsense that the Hutton graph
:21:52. > :21:57.assumed the reforms, do your homework, three major reforms, it
:21:57. > :22:03.dopbl factored one. The national saud dit office accept the changes
:22:03. > :22:07.a few years ago cut the contributions by 14%. We have an
:22:07. > :22:13.extraordinary case of minutes tears hurling insults like school boys,
:22:13. > :22:19.making up fantasy figures and refusing to talk about the issues.
:22:20. > :22:23.Not a pen of the money. Why don't they enter discussions, the other
:22:23. > :22:28.union leaders were there and engaging in a serious way with the
:22:28. > :22:32.issues which matter to your members, you weren't there. You haven't
:22:32. > :22:36.negotiated. Let me finish. haven't answered the question yet,
:22:36. > :22:41.why didn't you go? They weren't negotiations. You chose not to go,
:22:41. > :22:47.how do you know? My General Secretary goes, and all they are is
:22:47. > :22:50.exchanges of information between officials. Nonsense, utter nonsense.
:22:50. > :22:54.Let me finish, the negotiations are with Government officials, what
:22:54. > :22:58.they have said to us is, that is our final offer, as you correctly
:22:58. > :23:01.put, now we want our officials to talk to you about how to share out
:23:01. > :23:05.the pain. We are saying we're not interested in sharing out the pain.
:23:05. > :23:10.You need to make concessions on the big question of forcing people to
:23:10. > :23:15.work longer, forcing them to pay more money in. Not a penny of which
:23:15. > :23:20.goes into any pension fund, it all goes to George Osborne's coffers.
:23:20. > :23:23.You want them then to get tens of thousands left. It is daylight
:23:23. > :23:31.robbery, that is why you will not debate the issues, there is smoke
:23:31. > :23:36.screens all over the place. If it is so wrong to move to CPI rating,
:23:36. > :23:44.why is in the own pension scheme for your own staff members, you
:23:44. > :23:50.have moved from RPI uprate to go CPI. You have increased your
:23:50. > :23:55.pension contributions for your own staff, not the modest 3.2%, but 10%,
:23:55. > :23:58.why? Moralise, come down to union headquarters, we haven't increased
:23:58. > :24:01.the contributions, we don't have any. We are consulting and
:24:01. > :24:06.negotiating with our staff union about changes to a scheme, which
:24:06. > :24:10.has had a valuation. Unlike the Civil Service scheme which hasn't
:24:10. > :24:16.had a valuation. It is only because you are making those changes. J
:24:16. > :24:20.where we are trying to see if the scheme can be stablised and giving
:24:21. > :24:26.people fairly generous pay offers, you are giving us a cut over four
:24:26. > :24:30.years, and asking public sector workers to pay more and it all goes
:24:30. > :24:36.to George Osborne. Not to George Osborne personally, that is absurd.
:24:36. > :24:40.To his coffers in the Treasury. Is it into pensions. I want to give
:24:40. > :24:49.Francis Maude a very quick opportunity to respond to this
:24:50. > :24:54.accusation that you lied? It is not a new one from Mark. What I would
:24:54. > :25:00.just say is come, put your pride aside, come to the negotiating
:25:00. > :25:04.table, engage as all the other union General Secretarys engaging,
:25:04. > :25:08.come and talk, you may find there might be something to the benefit
:25:09. > :25:14.of union members. If you wear your blinkers and refuse to engage you
:25:14. > :25:17.are letting down your members. up Lionel Barber's offer, get your
:25:17. > :25:21.ministers into negotiations with us tomorrow, we will all about there.
:25:22. > :25:29.We are not talking to official about difficultying up the pain.
:25:29. > :25:34.You must negotiate about stop -- difficult -- divvying up the pain.
:25:34. > :25:37.J Get off your high horse and come. You get off your high horse when
:25:37. > :25:46.you have millions in the bank and low paid workers suffer.
:25:46. > :25:50.All this discussion takes place in the murky gloom cast by yesterday's
:25:50. > :25:54.resitation of the awful mess we are in by the economy.
:25:54. > :25:59.Now the words to describe Britain is the lost decade. Comparisons
:25:59. > :26:02.with Japan in the 1990s, the only straw to be grasped at, and an
:26:03. > :26:07.imaginary one, is the decade might have begun a few years ago, then it
:26:07. > :26:16.may not be a decade at all. It could be much longer. Our economics
:26:16. > :26:20.editor, Paul Mason, takes a mosh bid interest in this sort of thing.
:26:20. > :26:23.-- morbid interest in these sorts of things. Good news today?
:26:23. > :26:27.thing happening on the global front is the equivalent of the doctor
:26:28. > :26:34.walking into the waiting room and saying hey, everybody, it is great
:26:34. > :26:37.we have a whole new supply of vaccine against but Bonnic plague,
:26:37. > :26:41.and the patients go why do we need it? The central banks today have
:26:41. > :26:46.come out and pumped a lot of dollars into the global system. The
:26:46. > :26:50.reason is, that the European banking system is short of dollars,
:26:50. > :26:55.this is like filling up the ATMs in case there is a run on the banks.
:26:55. > :26:59.It is a big gesture, it sent the markets wild for a few hours,
:26:59. > :27:03.really, the reason they have done it is because we are entering a
:27:03. > :27:08.period of sisters now and the European Summit on the 9th of
:27:08. > :27:17.December. They want to make sure no accidents take place. Going back to
:27:17. > :27:20.yesterday's news, which was really, really bad. Does it look like a
:27:20. > :27:23.lost decade? The Institute of Fiscal studies, which tries to rake
:27:23. > :27:28.through the figures and find out what they really mean, has been
:27:28. > :27:32.delivering its verdict today. We have some of the graphs to show you.
:27:32. > :27:41.This is one. I don't know what year you were born in. I was born in
:27:41. > :27:45.1960. This graph here shows the shape of debt in our lifetime. The
:27:45. > :27:50.changing shape of public spending over the years. As you can see, in
:27:51. > :27:55.the last 10-15 years, we have this Labour period when it generally
:27:55. > :28:00.rose every year. If you look at the general historical trend it has
:28:00. > :28:03.been patchy. Now, what the IFS has said, is look, we are going into
:28:03. > :28:10.seven years where it always falls. If you compare it to the historic
:28:10. > :28:12.trend, we have never had a period like it. This is by way of
:28:12. > :28:17.explanation to the rancour we are now hearing. We are going into a
:28:17. > :28:22.period of toughness. Here is another graph. This is departmental
:28:22. > :28:28.spending, it looks a bit like a mountain, since 1998, it is
:28:28. > :28:33.generally gone up as a pro-portion of GDP. Now it is set to generally
:28:33. > :28:36.go down. Back to below where it was in the late 1990s. It is a big sea
:28:36. > :28:40.change in almost every figure we look at.
:28:40. > :28:47.How does this relate to what it feels lick? You can feel the
:28:47. > :28:52.rancour there. Let's look at one thing. We are talking here about
:28:52. > :28:56.much of yesterday being dominated by public sector workers. The
:28:56. > :29:01.Institute for Fiscal Studies has done calculation on how badly it
:29:01. > :29:08.will affect general workers standard of living. What we see, a
:29:08. > :29:18.7.5% in real incomes for households. Between 2009 and next year. That is
:29:18. > :29:22.
:29:22. > :29:32.why it feels so bad pltd. -- so bad. That is why it is feeling rancour
:29:32. > :29:36.
:29:36. > :29:43.ous on the streets. When will it come back? It comes back in 20 26.
:29:43. > :29:47.We have an adviser to George Osborne, and the Professor of
:29:48. > :29:57.political economy at the University of Warwick, and written several buy
:29:57. > :30:03.oing fees of John Ke ynes. Does it feel like a lost decade to you?
:30:03. > :30:08.does, if you look behind all the clatter and clamour of the last few
:30:08. > :30:13.days, and as you have just had, the real story is this time it is
:30:13. > :30:18.really different. You and I have lived through a lot of booms and
:30:18. > :30:22.busts, Barber, Lawson and the rest. They have been like hangovers from
:30:22. > :30:28.a wild party, people have taken the pay, and life has continued as
:30:28. > :30:33.usual. I think what has crystalised this week is it will not be like
:30:33. > :30:41.that. We will lose through this a large chunk of our national income,
:30:41. > :30:46.and people's earnings and standard of living will not shift over two
:30:46. > :30:51.years. Have you ever seen anything like this? It is compared to the
:30:51. > :30:57.great depression of 1929-1932. It is not as deep, but lasting a bit
:30:57. > :31:01.longer. I think there is a great chance there will be a lost decade,
:31:01. > :31:07.a miserable decade. It is sometimes called the new realisim, it need
:31:07. > :31:17.not be. It is a consequence of policy. You mean to say we need not
:31:17. > :31:21.have a lost decade. The solution is keepbsian? It is. I believe -
:31:21. > :31:24.Keynesian. It is, I believe you need to build up not cut down. If
:31:24. > :31:28.you cut down you will not cure your deficit, and the income of the
:31:28. > :31:36.economy, the economy will shrink. The country is bankrupt? No it is
:31:36. > :31:40.not. When you have lots of, that is talking in money terms, that is
:31:40. > :31:44.just money. If you have a lot of long-term resources that are idle,
:31:44. > :31:50.20% of capacity isn't being used, how can you talk about being
:31:50. > :31:56.bankrupt. Are you looking forward to a lost decade? Based on the
:31:56. > :32:06.numbers, the decade starred five years ago. We have the biggest boom
:32:06. > :32:06.
:32:06. > :32:15.and bust in history. I'm with two clever economists here. In the real
:32:15. > :32:20.world, I think the idea that we have a problem based on borrowing,
:32:20. > :32:23.and the solution is to have more borrowing to get the borrowing down,
:32:23. > :32:28.and in the process sacrificing interest rates, as of yesterday
:32:28. > :32:33.lower than Germans, doesn't stack up. You don't believe that will
:32:33. > :32:37.last? It has lasts for over a year now. This is the Government line.
:32:37. > :32:41.It isn't. If you look at what has happened to interest rates, Britain
:32:41. > :32:46.has been a safe haven, rates have come down, that is worth �10
:32:46. > :32:51.billion, a pretty big fiscal stimulus to mortgage holders across
:32:51. > :32:55.the country. You save on interest rates by having interest rates very
:32:55. > :33:01.interest rate interests, �28 billion from the Chancellor. If, in
:33:01. > :33:07.order to get that, you are reducing your revenues by �50 billion, you
:33:07. > :33:12.have a negative number. That is the consequence of cutting down. Other
:33:12. > :33:21.economists do disagree with you on this point, Sir. Economists never
:33:21. > :33:25.agree on anything. The collective noun should be disagreement. We
:33:25. > :33:29.have a debt problem, we need to grow our way out of it. Yesterday
:33:29. > :33:33.the business leaders welcomed what was said, against very little
:33:33. > :33:39.fiscal head room. I don't think in my constituency this feels like a
:33:39. > :33:43.lost decade, but a difficult deck taid. I wonder if it is not just a
:33:43. > :33:48.decade, are we not getting to the point of reckoning, which is the
:33:48. > :33:52.consequence of decade of post-war spend anything this country.
:33:52. > :33:58.not going to intrude on the economics argument, except to say
:33:58. > :34:03.we have lost a big chunk of our national wealth, already.
:34:03. > :34:06.That means, when we come out the other side of this, even if we grow
:34:06. > :34:14.strongly from now on, Britain will be another country, a different
:34:14. > :34:19.place. What sort of place will it be? We will have a smaller economy,
:34:19. > :34:24.and a smaller rather more select Comic Relief welfare state. I'm not
:34:24. > :34:29.advocating this as policy, this is the facts of life. We will have a
:34:29. > :34:33.smaller international footprint, no more Afghanistans, no more Iraqs,
:34:33. > :34:38.no more aircraft carriers or fancy planes to fly off them. We will
:34:38. > :34:48.have to own up, as a still pretty wealthy, middle-ranking country,
:34:48. > :34:54.with a lotless in terms of pretensions. You don't still think
:34:54. > :34:59.we will sit at the top table? a delve fulfiling prophesy, of
:34:59. > :35:02.course we will have a smaller economy if we declare a quarters of
:35:02. > :35:05.the population is redundant. By definition we have a smaller
:35:05. > :35:09.economy. What is happening at the moment is their skills and spirit
:35:09. > :35:13.is simply being rusted away by them not being employed. I agree
:35:13. > :35:19.entirely with you when you said you need growth. I'm glad you said that.
:35:19. > :35:22.You have to grow your way out of debt, not cut your way out of debt.
:35:22. > :35:26.Is there an argument for quality of growth. You mentioned skills, a
:35:26. > :35:30.very important point. One of the things I see as a governor of two
:35:30. > :35:33.schools in my constituency, is a complete sea change in the way
:35:33. > :35:38.people think of basic qualifications, no more gaming the
:35:38. > :35:44.league tables that only a civil servant in Whitehall reads. Let's
:35:44. > :35:48.make sure every child gets at least a C in GCSE mathematics. We have
:35:48. > :35:57.let a generation down by not doing that.
:35:57. > :36:01.A slightly separate point. Can I ask your economist friend here. How
:36:01. > :36:11.much do you think of the pretence being maintained of our position in
:36:11. > :36:12.
:36:13. > :36:18.the world, is if based on an illusion for the last 20 years.
:36:18. > :36:22.With respect the two are absolutely linked. Stature in the world, it
:36:22. > :36:24.was Admiral Mike mull lan, the head of the American Armed Forces, who
:36:24. > :36:33.said the biggest threat to our security and position in the world
:36:33. > :36:40.is the state of our economy. The two are linked. If our economy was
:36:41. > :36:47.based, as it was, I think, on, if you like, a rather fraudulent
:36:47. > :36:51.belief had a -- that the financial sector would produce vast amounts
:36:51. > :36:55.of tax revenue forever and ever. It is now clear it is not going to. We
:36:55. > :37:00.have to make that adjustment and adjust our view of ourself in the
:37:00. > :37:07.world as well. The figures are against you. I was very struck by
:37:07. > :37:10.the graph we had of a huge boom in spending, from 2002 on wards that
:37:10. > :37:16.was fuelled by borrowing. The Government spent more than it took
:37:16. > :37:18.in taxes every year, whether we agree to do that going forward, and
:37:18. > :37:23.an expectation of continuing financial services taxation. These
:37:23. > :37:28.are choices to make. For me, the choices are about getting back to
:37:28. > :37:33.an economy that is built on private sector growth. Where Government is
:37:33. > :37:39.on the side of businesses rather than meaningless regulation in
:37:39. > :37:42.their way, giving our young people the best skills they could get, and
:37:42. > :37:46.building infrastructure, creaking in this country. These are all
:37:46. > :37:51.things the Government is saying is critical choices we want to make
:37:51. > :37:59.with limited monetary head room. We could be in a better position after
:37:59. > :38:04.the last five years, and a more sustainable position. First of all,
:38:04. > :38:08.the deficit was extremely small in the years of the Labour Government
:38:08. > :38:15.Not oh aye what's that then cording to the IFS, they called it a drift,
:38:15. > :38:18.every year from 2005. A very small drift, and people confuse the issue
:38:18. > :38:23.by talking about structural deficits. I don't think you will
:38:23. > :38:27.want to have a big discussion on what is a structural deficit.
:38:27. > :38:32.come another night with a lot of time. You need a lot of time and it
:38:32. > :38:35.is all based on dubious figures of one kind and another. The gap
:38:35. > :38:40.between what you take in taxes and you spend. In the real world people
:38:40. > :38:45.understand what that is. Robert seeps to think, I don't think we
:38:45. > :38:48.should be in total thrall to the bond markets. But he seems to think
:38:48. > :38:52.we can have Keynesianism in one country, that we can do what we
:38:52. > :38:56.like in terms of borrowing and spending. And our interest rates
:38:56. > :39:06.will stay at Germany levels. think both Ed Balls and George
:39:06. > :39:07.
:39:07. > :39:11.Osborne have a point. Oh dear. I think we have to be realistic,
:39:11. > :39:19.you can't ignore what used to be known as the zur Rick, now spread
:39:19. > :39:24.more evenly throughout the world. Two quick points, firgs of all --
:39:24. > :39:29.first of all, our success rates were not entirely an illusion, and
:39:30. > :39:33.depended on fictional money. They were unsustainable. They were
:39:33. > :39:39.unsustainable because they weren't sustained. Everything's
:39:39. > :39:42.unsustainable that collapses in retrospect. That doesn't mean it
:39:42. > :39:46.wasn't sustainable at the time. have the highest level of public
:39:46. > :39:50.and private debt all through that period. The argument that we have
:39:50. > :39:53.low interest rates because everyone has enormous confidence in the
:39:53. > :39:57.Government's fiscal policy. We have very low interest rates, partly
:39:57. > :40:00.because people don't know where else to put their money, partly
:40:00. > :40:05.because the Bank of England has been printing money. Thank you very
:40:05. > :40:09.much. One of Britain's most prestigious
:40:09. > :40:13.universities, took something of a pasting today. It learned what an
:40:13. > :40:18.independent inquiry had to say about its decision to take money
:40:18. > :40:21.from Colonel Gaddafi's son, only weeks after giving him a doctorate.
:40:21. > :40:26.The London School of Economics boasts of 16 Nobel Prize winners,
:40:27. > :40:32.there was no danger of the Libyan dictator's son joining them. There
:40:32. > :40:37.was some uncertainty whether he was entitled to his PhD.
:40:37. > :40:41.1234 The Gaddafi Foundation devotes itself to humanitarian work,
:40:41. > :40:45.especially in the social, economic, and culturally, and the human
:40:45. > :40:51.rights field. The human rights field under
:40:51. > :40:54.Gaddafi. Saif is committed to resolving
:40:54. > :41:01.contentious international and domestic issues, through dialogue,
:41:01. > :41:06.debate and peaceful negotiations. Dialogue and negotiations, under
:41:06. > :41:15.Saif and his family. I have come to know Saif as someone who looks to
:41:15. > :41:20.democracy, civil society, and deep liberal values. The Professor was a
:41:20. > :41:26.big fan of Saif Gaddafi, he was his mentor and securing the �1.5
:41:26. > :41:33.million donation. This all makes him as the Pearsonification and
:41:33. > :41:38.naivity of the LSE. There was a chapter of failures in the report
:41:38. > :41:41.identified. Saying the LSE allowing links between it and Libya to
:41:41. > :41:45.become overwhelming, affecting judgments across the board.
:41:45. > :41:49.Although three departments refused to teach him on the grounds he
:41:49. > :41:53.wasn't up to it. The fourth, philosophy, accepted him, they
:41:53. > :42:02.wanted to believe Saif Gaddafi was a good guy, representing hope. He
:42:02. > :42:11.was charm itself, addressing an LSE audience last year, his tongue
:42:11. > :42:18.Albanian chic over his father's ways. In theory, Libya is the most
:42:18. > :42:24.democratic place in the world. APPLAUSE
:42:24. > :42:28.Because, in theory, in theory. And then months later, back in
:42:28. > :42:33.Tripoli, there was Saif, on TV, threatening rivers of blood if the
:42:33. > :42:38.protests didn't stop. It is not as though they weren't warned. Lord
:42:38. > :42:44.Woolf wolf noted that a Professor here spoke of the risky gamble of
:42:44. > :42:53.tying the LSE's reputation so close to Saif Gaddafi. What he turned out
:42:53. > :42:58.not to be a reform at all. It came to pass, Lord Woolf wolf says the
:42:58. > :43:02.London School of Economics goes under known name, the Libyan School
:43:02. > :43:06.of Economics. For students at the LSE, the Gaddafi affair can be
:43:06. > :43:13.regarded as an object lesson in ethics and economics, a course they
:43:13. > :43:19.may have not signed up to, but are learning fast. At the student
:43:19. > :43:25.newspaper, they see money as the root of the problem. The LSE has
:43:25. > :43:31.the reputation as an institute that drives for money. This was another
:43:31. > :43:37.project to desperately to up what we have. The young Gaddafi was no
:43:37. > :43:46.genius, he duped his supervisors by using the works of others. Another
:43:46. > :43:54.suggested Saif purchased his degree. The �1.5 million was pledged weeks
:43:54. > :43:59.after his PhD. The leadership denies the claims. There was no
:43:59. > :44:02.evidence in the report that we sold a doctorate. We deny that
:44:02. > :44:06.completely. I'm sure you are aware from the report, that, in fact, we
:44:06. > :44:15.reduced to take any money, while he was a student, that is a very, very
:44:15. > :44:19.strict policy. He was, in some senses, the LSE's star student, and
:44:19. > :44:29.now Saif Gaddafi stands indicted for war crimes. They must wish they
:44:29. > :44:29.
:44:29. > :44:38.kept the doors locked. With us is Lord Desai, one of Saif Gaddafi's
:44:38. > :44:43.PhD examiners at the LSE? Was he a talented student? Yes. At that
:44:43. > :44:47.what? Talented as an LSE student. Did you know his essays had been
:44:47. > :44:53.written by somebody else? Not that, I wasn't involved in t I was only
:44:53. > :44:58.involved with his PhD, I examined his PhD. Which also was written by
:44:58. > :45:02.someone else, wasn't it? I went through the oral examination, for
:45:02. > :45:09.two-and-a-half hours, with myself and fellow examiner, from
:45:09. > :45:16.Southampton. And he did all right, we were able to question him, and
:45:16. > :45:19.he answered the questions, then we asked him to do more work, because
:45:19. > :45:23.we were not happy with the thesis as it was, and it was submitted.
:45:23. > :45:30.Are you sure he wrote the bit he submitted to you? You can't be
:45:30. > :45:34.subjected to that rigorous, oral examination, on top of what you
:45:34. > :45:38.have written. What do you think about the fact that while he was
:45:38. > :45:47.rewriting it, he was actually asked for a large dop lol of cash for the
:45:47. > :45:51.LSE? -- dollop of cash for the LSE? I was not aware of it until I read
:45:51. > :45:56.the report. We were, as an exampler, I was absolutely following the
:45:56. > :46:00.rules. -- examiner I was following the rules. In your judgment he was
:46:00. > :46:03.entitled to the PhD? He was entitled or I wouldn't have signed
:46:03. > :46:09.the form. There is no shadow of doubt in your mind that he might
:46:09. > :46:13.have been admitted to the LSE because he was the son of a filthy
:46:13. > :46:20.rich dictator? Originally there was a debate he shouldn't be admitted
:46:20. > :46:24.because he was the son of a filthy rich David Kelly Tateor, I would
:46:24. > :46:28.suggest if you admit someone you don't look at who their mother or
:46:28. > :46:34.father is. This is enormously damaging for the LSE? It is a huge
:46:34. > :46:39.damage to the brand. As the report shows, it was, when confronted with
:46:39. > :46:49.power and money, we let our standards go. Why doesn't the LSE
:46:49. > :46:50.
:46:50. > :46:55.withdraw his PhD, at least? It is not up to the LSE to withdraw a PhD
:46:55. > :46:59.after it is given, because just the LSE didn't do due diligence on