27/04/2012 Newsnight

Tonight, Lord Leveson says it's not his job to decide the rights or

wrongs of a minister's conduct. So where does that leave the future of

the Culture Secretary, Jeremy Hunt? If the inquiry into the conduct of

the press is too much -- has too much on its plate to consider the

rights and wrongs of how the BSkyB deal was handled, what now?

If only there was someone independent whose job it is to

investigate alleged breaches of the ministerial code. ( mobile phone

rings) There is, that's lucky. If austerity hasn't taken Britain

out of recession, is the answer more austerity? The former cabinet

minister, Liam Fox, says the Government has to wake up and smell

the coffee on more spending cuts or more regulation. We hear what might

turn the economy and the Government's fortunes round from

our guests. Good evening, sources in the

Leveson Inquiry, are saying tonight that Lord Justice Leveson will not

provide an early opportunity for the Culture Secretary, Jeremy Hunt,

to give evidence. Apparently Lord Justice Leveson believes it is not

his role to judge ministerial conduct on the BSkyB takeover. Mr

Hunt informed us today that he would make available all texts and

e-mails involving his now departed special adviser, Adam Smith, to the

Leveson Inquiry. But why not, some wondered, hand them over instead to

the man whose job it is to police ministers conduct, sir Alex Allan.

Lord Justice Leveson has a lot on his plate, he already has to chew

over the relationship between the press and the public, phone hacking

and other behaviour, the relationship between press and

police, press and politicians and the regulation of the press. Now,

supposedly this groaning banquet has been added to is the fate of

Jeremy Hunt. This is at least who should decide if the minister has

done anything wrong. I will be handing over all my private texts

and e-mails to my special adviser to the Leveson Inquiry, and I'm

confident they will vindicate the position that I handled the BSkyB

merger process with total integrity. The Government thought it had a

significant ally in this view. Ministers were cheered by what Lord

Justice Leveson had to say earlier in the week. Although I have seen

requests for other inquiries and other investigations, it seems to

me, that the better course is to allow this inquiry to proceed. When

it is concluded, there will doubtless be opportunities for

consideration to be given to any further investigation, that is then

considered necessary. But there is a problem, critics point out that

the Leveson Inquiry might not report for another year, and even

then, might not specifically address the question of whether

Jeremy Hunt has done anything wrong. If only there were someone

independent whose job it is to investigate alleged breaches of the

ministerial code. (mobile phone rings) there is,

that's lucky. The independent adviser on ministerial interests is

Sir Alex Allan, and according to the opposition, he's the perfect

person to investigate Jeremy Hunt. It is a deriliction of the Prime

Minister's duty, that instead of standing up for the public and

proper ministerial behave yoir, he's having a cover-up, he refer it

to the special adviser on ministerial interests, and

recognise it is his duty as Prime Minister, and instead of hiding

behind Lord Leveson and saying it is his responsibility, which it

isn't, he should show his responsibility as Prime Minister,

and make sure the ministerial code is enforced. In comparison to Lord

Justice Leveson's groaning plate, sir Alex's is pretty empty, as far

as investigations go. He has only just taken the job, but his

predecessor did not look at Liam Fox's conduct. He only looked at

one case, Mr Malik, in the last Government, who was cleared. The

problem is, Sir Alex can't just go, he has to wait for the Prime

Minister to serve him a case to investigate. It would be a pretty

safe bet to think that Sir Alex would want to look into Jeremy Hunt,

earlier this year he said he would resign if he felt like he was being

bypassed. If I felt the hypothesis you put forward, that I was being

bypassed in favour of the cabinet secretary doing investigations, yes,

I would agree in those circumstances there wasn't any

point in my continuing in the role. If you bought folk catchia in

Morrison's today -- folk catchia, you look away now.

The Government plans for another investigation is to get Jeremy Hunt

answering questions in front of the Leveson Inquiry as soon as possible.

The Deputy Prime Minister, today, seemed to suggest, that his

appearance was being brought forward. We have already got an

agreement that Jeremy Hunt will go to the Leveson Inquiry pretty

quickly, I would like that as quickly as possible. By all means

let's look again after that has happened, and Jeremy Hunt has given

his evidence to Leveson. Having a multitude of different inquiries

and evidence sessions, they will just get crossed wires. Tonight a

spokesman for the Leveson Inquiry disputed this, saying the judge had

decided n fairness to the other witnesses, against allowing Jeremy

Hunt to jump the queue. A source has added that Lord Justice Leveson

is not the arbiter of the ministerial code, there is someone

else who can do that job. An apparent reference to Sir Alex

Allan. So tonight Jeremy Hunt is left spinning, waiting to see if

his one rogue adviser defence will work any better for him than the

one rogue reporter line worked for News International.

The shadow Treasury spokesman, Christ Leslie is in Nottingham, and

we will talk to him about the economy in a moment. I wondered

what your thoughts were on the developments in the past hour?

These are important developments, it is quite clear to most people

that Jeremy Hunt should never have been given the job in the first

place, of ajudicating on this really important matter of media

business. He was always partial, he had a bias involved in it. So the

idea that it is some surprise, Lord Leveson lef is saying, well it's

not for him, we shouldn't really see that has unusual, ultimately it

is for the Prime Minister, and this independent adviser, to be the

arbiters of the Ministerial Code of Conduct. I think people will see

this weekend, the Prime Minister ducking and dodging and trying to

find any way to shirk the fact that this is going to come back to him.

He has to take responsibility. And he should really, at the very least,

let the independent adviser make a judgment on Jeremy Hunt's behaviour.

Most people would say Hunt has to resign. What do you make of the

crossed wires point that the Deputy Prime Minister was making. In other

words, if we have a whole lot of other inquiries, and there is

police investigations going on as well, you get this entirely

entangled. Lord Leveson has been asked to look at it in its entirety,

BSkyB is part of relations between Government and media, surely it is

one for him? I think it is less of crossed wires, and more of the long

grass, really. I think the Government are trying desperately

to kick this forward, and to stop being so paralysed about this whole

Jeremy Hunt affair. The difficulty is, of course, constitutionally it

is the Prime Minister who has to take responsibility for his cabinet.

And for their behaviour. Yes, there is an independent adviser, it seems

as though he's waiting, twidling his thumbs for a case to be

referred to him, if ever there was a clear example this is it.

The traf vais of Jeremy Hunt are far from the only problem Britain

has to face. Britain is back in recession. The former Defence

Secretary, Liam Fox, has some ideas, which he claims, will turn things

around, more cuts in public spending, reforms to employment

laws, and eventually employers' tax cuts to stimulate growth. One

newspaper speculated that George Osborne agrees with that analysis.

We have been figuring out whether the Chancellor of the Exchequer

still agrees with the Government's own stated economic policy.

If there is one job that symbolises flexible Labour, it is that of a

coffee barista, you work long hours and instantly replacable. At the

London coffee festival today, they were competing for Barista of the

Year. But on Tory tables, a blast from the man who would have us all

work our socks off. Writing in the Telegraph, Liam Fox said that the

Lib Dems are blocking Britain's Basically, he means we all need to

start working like baristas. Liam Fox has a point, according to the

theory the Government believes in, deficit reduction alone does not

bring growth. You need a massive spurt of business investment to

change the mix between public and private in the British economy. And

they think what is stopping that is the rights that people at work

accumulated under work. Time to hear from the editor of a newspaper

for City of London types. George Osborne's focused on austerity,

that has really been a combination of tax hikes and a bit of public

spending reductions. He has done nothing to deregulate the economy,

and done nothing to deregulate the labour market. Fox thinks he's a

prisoner of the Liberal Democrats in that regard? That is one way of

looking at it. Another way of looking at it is he's still stuck a

bit in this consensus of the past 10-15 years. The Government

commissioned this man, venture capitalists Adrian Beecroft to tell

them how labour rights should be diluted, but he was received like a

cold cup of cappuccino. The report said you get rid of the current

unfair dismissal rules, and replace them by an automatic compensated

dismissal system. In other words, if you want to get rid of someone,

you have to pay them, say, three months, and then you can get rid of

them. That is a key change. It appears this was blocked by the

Liberal Democrats, and Vince Cable in particular. But, as always in

economics, other flavours are available.

There are some notable examples, for example, the United States,

which is said to have a very flexible labour market. It still

has getting on for 10% unemployment. So that there isn't a very close

relationship between called flexibility of the labour market

and their employment levels. The key factor in the end, is the level

of demand in the economy. Labour, in the week of the double-

dip recession, and The Hunt hunt scandal, this coalition spat is

brisk to the mill. There is no demek date that to suggest the

unfair dismissal regime in this country is the reason we have no

growth and tipped back into recession. The reason we have

dipped back into recession, because of the policies of this Government,

is abracadabra sense of demand. This is a coffee -- A lack of

demand. This is a coffee work place, if

lots of places were as nimble as these, we would see more businesses

formed and real growth? Let's be clear what Fox is talking about,

he's talking about taking away the employment rights of workers, not

normally unionised, a right to decent time off work, for holiday,

their maternity rights, all those things that people watching this

programme value, and feel plaiks a difference to them. If you asked --

make as difference to them. If you asked the dynamic coffee businesses

here today, what is your big problem, they will not say it is I

can't sack people. They will tell you the problem they have got is

there aren't people buying their coffee.

So, a man who resigned, after irregularly employing his adviser,

wants the rules on employing people relaxed. But Fox is still a senior

and influential Tory, and his intervention was, reportedly,

discussed and agreed with George Osborne. If so, one reading of the

coffee grounds is this, the Chancellor himself must think his

own policy is failing. To try to see if there is any

consensus on how to turn the economy round, we have John Redwood,

Lord Oakeshott, Labour's shadow Treasury spokesman, Chris Leslie.

John Redwood, do you think the Chancellor has been too feeble and

knows he has been too feeble? think more needs to be done,

because the current state economy is not delivering the growth we

need. I think most people agree, right left and centre, that the

best way to bring the deficit down is to get a lot more people into

jobs off benefits, so the benefit bill goes down and they become tax-

payers. That is what we want to. Do I think the number one thing we

need to do is to be much more dramatic in what we do about the

banks. One of the reasons we don't have a pror recovery is we have

very weak banks -- proper recovery, is we have very weak banks and

under a regulatory cosh stopping them lending money, the Chancellor

and the authorities need to sort that out quickly. It is all the

Vince Cable and the Liberal Democrats fault, as we heard from

Liam Fox, that you are stopping market reforms, and you personally

are against more cuts, saying it would be economic madness and self-

harm? That is to have another round of cuts, which is being talked

about by the Treasury. That would be tree foolish. They say planned

for another 5%, if -- very foolish. They say planned for another 5%.

You have heard Nick Clegg saying today there is no need for any more

cuts. Those in the Treasury trying to do it have been put back in

their box. It is amazing to come on Newsnight, and not hear anyone

being tougher on the banks than me. I agree with John. That is what is

necessary, if you talk to small businessmen, far more will you tell

you they are worried about not having the money to employ people,

rather than sacking them on the spot. Liam Fox is completely

missing the point. The point about the banks is they are under the two

biggest banks for small businesses, under the direct control of the

Treasury, and under both the Labour Government and under this

Government, they are not dealing with them. They have got to get a

grip and make them lend. Do you think Liam Fox is completely

missing the point? That is what Lord Oakeshott just said. He wants

deeper cuts, he wants labour market reform and the prospect of tax cuts

for businesses in the future? agree with Liam Fox that we need to

get the deficit down. This country is borrowing too much, it is living

beyond its means. I believe the best way of getting the deficit

down is deal with unemployment in the way they are beginning to

discuss. I don't want to criticise Liam Fox, but most serious

commentators on the economy, would identify, first of all, the issue

of banking and credit availability, in the way they have been doing

tonight. I'm all in favour of some deregulation, I think total costs

on business are too high, and selective deregulation would be

very helpful. More importantly is cheaper energy, I think the

Chancellor is on to this. He now realises our energy is totally

uncompetitive with the United States of America, if we could get

cheaper energy we would have more industry. Whatever you think of

Liam Fox's plan, at least it is a plan, and Labour's plan appears to

be to do with what the Government would do, but not as quick or as

deep, as if it is homeopathic cuts, you dilute it? It comes to

something when Liam Fox's article is further to the right of even

John Redwood's suggestion. Of course we have to deal with bank

lending, as Lord Oakeshott was saying, the Government own these

shares and not doing what it should do with the banks. Matthew is

normally the spokesman for Vince Cable, I don't know if he's

changing his mind on this. When Liam Fox and John Redwood talk

about deregulation, let's decode that for a minute. It is an obscure

phrase. What exactly do they mean, is it maternity or paternity rights,

the minimum wage, you have to spell out what you mean by the supply

side reforms, working people have been hammered enough by this

Government so far. Do you think that there is a prospect of making

it easier to fire people, and that is what some at least on the

Conservative right would like, would that be acceptable? Can I

just say, I speak for myself, since I resigned from the front bench.

Obviously I have worked with Vince Cable for a long time. I certainly

know what they are doing there. Does he share your view? You have

asked, so let me tell you, it is not that the business department is

not looking at these reforms, there has already been a change, whereby

people don't have employment protection rights for two years

rather than one. That is sense pbl, because it takes longer to --

sensible because it takes longer to work out. They are also serious

about having protected discussions, so you can have a talk with your

employee, and not risk having a great long time at the thrill

tribunal. But in general, just a minute -- industrial tribunal. But

in general, we do not agree, and I don't agree with the sack on the

spot mentalty. We think most of Beecroft is wrong. I hope Vince

shares your view, the idea of trying to make it easier to fire

people as the solution to economic difficulties is ridiculous, it

should be easier to hire people. Why don't we get a way of helping

small firms with a national insurance contribution discount.

That is the sort of thing we need to do. I think it is a bit rich

from the Labour spokesman, they slammed up the national insurance

in the last days in power. This Government has been trying to abate

national insurance increase. What labour market deregulation would

increase employment would you say? I'm very happy with what the

Government is doing, I produced 43 deregulatory ideas before the

election, none including the kind of things Liam Fox is talking about.

I'm not arguing that case. What we have a serious problem in Britain

with now is overtaxation, which have reached tax saturation point

and gone beyond it T you can see now the income tax figures fell

last year compared with the year before, because we are above the

tax saturation level. Capital gains tax is going down. I think you need

rates that raise more revenue, I think that is one of our big

problems. We have gone away from Gordon Brown's very sensible rates

of tax, to taxes at levels that don't seem to work. Anything we can

do to produce less tax on people other than the very rich, would

help demand. How about a temporary VAT cut to stimulate the economy,

John. Do you think that would be a good idea. I prefer to let people

keep more of what they earn, the Government has gone in that

direction with raising the threshold. The more we can do to

create more demand through giving people a break. People feel taxed

to death. They have been very badly squeezed by tax and inflation.

it your sense that you think the Chancellor would like to go further,

either down the road you are suggesting, or the road that Liam

Fox is suggesting, but he's either a prisoner of the Lib Dems, for

foot dragging, or he can't get it through? There is always

difficulties in a coalition, two different parties with two

different traditions have different views, I dare say the Chancellor

would like to deregulate more, he would like cheaper energy than the

current policies, that would be helpful. These are not the big

issues, what the Government needs is confidence to tackle, first of

all the banking problem, and secondly, the way the private

sector has been very badly squeezed through a very expensive public

sector, when we do that we will make progress. We are not foot-

dragging, we want to see as Liberal Democrats, is much more emphasis on

capital spending, particularly capital spending on housing, where

we could perfectly well be building 100,000 more houses a year, we

could move on to Plan A+ then. would be the kind of week the

coalition would like to forget again.

Philip Collins and Gillian Tett, who is based in the United States

for the Financial Times are here to reflect on what the Government can

do to turn around the economy and its own fortune, along with Adam

Smith. -- -- Iain Martin.

Can he survive this? I think the Government has invested a lot of

time and political energy in Jeremy Hunt, because if not they would

focus on the Prime Minister. I don't think it is something that

Leveson will deliver a report on the Culture Secretary in autumn.

How would you analyse what Lord Leveson has been saying tonight, it

looks like "not meg uv". I think Jeremy Hunt is in a precarious

position, and I wouldn't say with confidence he would stay. But the

release of his texts and e-mails suggests on the surface that he

thinks there is nothing there that will necessarily incriminate him.

He has two serious questions to answer, one about the parliamentary

statement, which it appears he released before he gave it to a

representative of news interle that. The second is whether there was an

on going -- News International. The second is whether there was an a

conversation of entirely another kind between his people and News

International. It won't be enough to say he didn't know about it.

What do you make of this, the shareholders do they care about it?

The questioning of the Murdochs did get a lot of attention in the US,

there are people who are pretty shocked by the whole thing. There

are certainly lawyers scurrying around, working out whether it will

extend into America, either because there are American citizens who

have had their phones hacked on American soirblgs or because there

is an act -- or, because there is an act that could damage News

Corporation. The bigger point to look at is it adds to a sense of

malaise about Government in generally. Not just in Britain? On

that specific point do you think it has to go to Sir Alex Allan, it has

to go to the guy who looks at ministerial conduct? Everybody

takes the Mick oit of him, but he's a former very serious civil servant,

who won't be happy at being mishandled by the Government. It is

clear that breaches of the ministerial code don't fall under

the remit of the Leveson Inquiry, and the Government is attempting to

shift it on to Leveson, and good for him, he's fighting back.

don't know if you call it Plan B or plan C or A plus, and other parts

of it you heard in the discussions tonight. Are there other all

tiornives for -- alternatives for the Government to implement now,

other than what we are doing? Government is caught between a rock

and a hard place, there are three important things happening in the

last few weeks, first the mounting evidence the economy is slowing

down in the UK, and the US and the eurozone, and the US prodowsing

disappointing figures today. The markets have remained very nervous,

we had breathing space earlier this year, once again there is a sense

of profound unease in the markets. Thirdly, we are seeing increasing

sign of voting revolt across the eurozone. You have had several

countries where you have had incumbent Governments kicked out.

You are seeing as economic pressures mount, is more and more

political and social tension coming to the fore. Which is why things

like the Leveson Inquiry is bad timing for the Government trying to

maintain credibility. How damaging is it? In a funny way the Leveson

Inquiry is a good thing, we have had a return to recession this week,

if you said six months ago that the return to recession is item number

three on the news, that would be a delighted Government. Leveson is a

distraction from a more important story, which is the state of the

British economy. The Government don't have much room for manoeuvre,

they have staked so much on this policy, I would urge them not to

double a failed strategy, as Liam Fox seems to be suggesting they. Do

they haven't got the room the American Government had for a

stimulus, and the inclination either to do so. I think they are

stuck with Plan A, with a little bit of quasi-industrial policy,

there is nowhere else to go. have to remember politically what

was supposed to have happened now. The entire Government plan was

predicated on recovery which should have happened now, and they

backdated the cuts. The worse is still to come? By 2013,/14, wages

would have recovered, sign of life in the employment market, a return

of pre-election feel-good factor, that is the basis the Government

designed their plan, now there will be cutting, most of it against the

backdrop of a stagnant economy. That is politically very, very

difficult. But they have two years to turn around, no election before

that? It is difficult to see how you relaunch this Government F it

was a majority Government you can imagine a majority Conservative or

Labour Prime Minister say let's shift direction and try more

radical policies. They are boxed in by coalition, most Tories would

want to do, as you can see this morning with Fox working as an

ambassador for Osbourne, it is difficult to know where they will

go. They have a flatlining economy. They can say, look, 25%

unemployment in Spain, we know the basket case of Greece. France may

be going in a different direction, the Netherland Government has

fallen down. They can point to the fact that the UK has not had a gilt

market crisis which, frankly, is quite an achievement, given that

groups two years ago saying that gilt was set on a bed of

it implements the cuts and uses ways that don't involve spending

money to try to boost demand, such as looking seriously at the

provision of credit in the economy. And secondly, what can do -- can it

do to keep social cohesion in doing that. There was a fascinating talk

about who Governments are hitting and imposing pain on, it is not the

same. That is tying the stories together. If you believe as a voter

that politics is a game for rich people, and certain things going on

behind the scenes, you are not sure what happens with big business and

people like Mr Murdoch and Governments, that is one of the

reasons you might be discontented, we might not all be -- we might all

be in it together but we are not in the same both? The "feel-good

factor" will be part of the incomes election, but the country feeling

bad could be good for the Government. In the sense that the

numbers have shifted on the polls, but the numbers which have

stubbornly not shifted is where people are asked whether they are

yet asked to trust the Labour Party with the economy. Until that

changes, you haven't necessarily had a transitional moment in the

political landscape. What is happening, I think, is in 2008

finance went bust, now it is politics that is going bust.

Essentially the kind of politics we have lived with since Clinton in

1992, there is 20 years since The War Room, which Blair copied and

Cameron copied rather ineptly, people can see the wiring and see

through all of it. This is big trouble for Labour too, they will

have to be committed in the next election to cuts. That has changed

what they thought they would have to do. The failure of the deficit

reduction programme is bad news for the as for the Government. We will

have to leave it now. That's all from Newsnight tonight.

The end of a week which you might think shows that politics and

satire are now merging in Britain. It seems in Australia they might

just be ahead of us, as this little gem of an interview shows.

REPORTER: Do you think he should return to the Speaker's chair,

while the civil claims are still being played out? I understand that

the Prime Minister has addressed this in a press conference in

Turkey in the last few yuers, I haven't seen what she said, I

support what it is that she said. You haven't seen what she said.

I support what my Prime Minister said. What is your view? My view is

what the Prime Minister's view is. Surely you must have your own view

on this? No, when you ask if I have my view on this, it is such a

general question it invites me to go into lots of question. It is

whether a speaker should be returned when he's facing civil

claims of sexual harassment? It is an incredibly serious manner, there

should be no tolerance for sexual harassment, in my view. But on the

other hand, these matters have yet to be established, and I support

what the Prime Minister has said. don't know what that is? I'm sure

Hello there, it isth's trying up a bit, a frosty start in Scotland,

sunny spells in Northern Ireland and northern England. For the rest

of the UK cloudy and showers. Rain develop anything the south-east.

Not too bad if you have the sunshine across northern England.

Into the Midland, a lot of cloud. The wet weather is developing

across East Anglia and the south- east of England. The weather going

downhill. Ahead of that we will find a few sharp showers breaking

out across the West Country and the south west of England. Generally

dry, I think, for Wales, there won't be an awful lot of sunshine.

The west coast most favoured, it will be cool among the cloud. The

sunshine in Northern Ireland, temperatures struggling to get into

double figures, largely dry here. Across Scotland, wintry showers

today. The odd shower around tomorrow, but for most of the

country it will be dry with a good deal sunshine. Rather chilly.

Elsewhere into Europe, we have got rain through the weekend, in

Amsterdam and Paris, behind the rain we are drawing in some war air