27/04/2012 Newsnight


The day's headlines with Gavin Esler. As Liam Fox sets out an alternative economic strategy, does the chancellor of the exchequer agree? Paul Mason is on the case.

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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


As Liam Fox sets out an alternative economic strategy, does the chancellor of the exchequer agree? Paul Mason is on the case.

David Grossman has the latest on the hunted culture secretary. Is the idea that Lord Leveson judge Jeremy Hunt's dealings with Rupert Murdoch tenable?

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