22/05/2012 Newsnight


In-depth investigation and analysis of the stories behind the day's headlines with Jeremy Paxman.

Similar Content

Browse content similar to 22/05/2012. Check below for episodes and series from the same categories and more!



Economy in trouble, the IMF chief says she still believes the deficit


cutting must go on. But Lagarde warned the Chancellor that Plan B


might soon be needed, more money printing by the Bank of England,


even cuts in VAT or national insurance.


We have got the Treasury, and the opposition, live in the studio.


Lucas Papademos, the former Greek Prime Minister, talks -- George


Papandreou, the former Greek Prime Minister, talks to Newsnight


exclusively. What will happen when people say, well Greece did this,


why not anyone else. Also tonight:


Can the John Lewis model save the British taxpayer. I don't feel the


need to move our position, I think we pay people enough. When you come


to work for the partnership, it is about more than just pay.


Julie Meyer is here to debate whether the idea is being knowingly


oversold. Good evening, the economy may be


sinking no a second recession, but the romance still seems to be


blooming. George Osborne remains "dear George", Christine Lagarde


paid tribute to him and his effort to cut the deficit. That was cited


Be Here from the Treasury, and the opposition and the opposition in a


moment. First this. If only the people who run The


Chelsea Flower Show were running the economy, there is no problem


with growth here, even in the least likeliest circumstances, like up a


ZAF folding tower. So much of British politics now is about


growth, and who has the right plan for the economy. Not surprisingly -


- scaffolding tower. So much of British politics is now about


growth, who has the right plan for the economy. Today's IMF report has


something for everyone in it, over there in the Treasury it will point


to you the bits where it says the UK economic policy mix is about


spot on, as is the Treasury's emphasis on definite reduction. The


opposition, though, will probably direct you to the bits in here


where it says how badly the UK economy is currently


underperforming, and that if this continues, well, the Government may


have to alter its course in terms of deficit reduction.


Until not that long ago, Christine Lagarde was the French Finance


Minister, and given the state of the eurozone, not everyone thinks


this is necessarily any qualification for passing judgment


on other economies. But, nonetheless, her appearance at


the Treasury this morning was eagerly attended. In essence, her


message was that the UK has done the right things, but, it is just


that we're getting the wrong results. Unfot in thely the


economic recovery -- unfortunately, the economic recovery in the UK has


not taken hold and uncertainty bounds. Growth is too slow and


unemployment, including youth unemployment, is too high. Policies


to bolster demand, before low growth becomes entrenched, are


needed. Policies like cutting interest rates from where they are


now, which is at virtually nothing, to actually nothing.


Plus, another bout of quanative easing.


And, if all that doesn't work, well it is time for a new plan. If the


economy turns out to be significantly weaker than forecast,


fiscal easing should be ard. Again, the measure -- considered. Again,


the focus would have to be on growth and lowering unemployment.


This would be a good use of the hard-won credibility of fiscal


policy and institutions in the UK. The IMF hasn't said it is time for


a full scale Plan B, slowing the pace of cuts, and spending more


money and borrowing it from the markets. But what it has said, is


that the Government can and should use fiscal policy to stimulate


growth. It can do this by cutting measures that have a low impact on


growth, such as transfers to the better-off, perhaps, Winter Fuel


Payments to the better-off, and tax contributions by the top earners,


and use that money to invest in infrastructure for the UK, and a


direct shot in the arm for the UK. The Chancellor declared himself


delighted with the assessment. Particularly coming on the day that


inflation dropped to its lowest level for two years. This morning


we had the news that inflation was down, and within 1% of the Bank of


England's target, falling from 3.5% to 3%. It means that, for the first


time since I became Chancellor, I have not this morning received the


letter from the governor of the Bank of England, explaining why


inflation is off target indeed, it is the first time since 2009 this


has happened. This brings welcome relief to


families on tight budgets. surprisingly, Labour didn't share


this assessment. The Government has to say they got it wrong. The plan


didn't work, they need a more balanced approach, that says, yes,


tough decisions on spending and tax, but without jobs and growth we


can't get the deficit down. We said a temporary cut in VAT, the IMF


agrees, bring forward infrastructure, I agree, help for


small businesses, things the Chancellor should do now. What


matters politically is what the public make of all this. Labour's


top team were today touring Olympic venues, but voters don't seem ready


to hand them any economic gold medals yet. Although they are


closing on the Government. The Conservatives have a seven-


point lead over Labour, over which of the two parties people most


trust to run the economy. We have been asking people also whether or


not they support what is known as Plan A or Plan B, with the deficit


reduction should be slower than the Government is proposing or whether


they support the Government's plan. People throughout the parliament


has been very split on it, 50-50 split, currently people are still


trusting the Conservatives more than Labour to run the economy.


Politically, probably the most significant thing said all day was


during the Q & A session at the Treasury. We can assume ministers


are trying to work out how to get this on an election poster. When I


think back to May 2010, when the UK deficit was at 11%. I tried to


imagine what the situation would be like today, if no such fiscal


consolidation programme had been decided. I shiver.


Chloe Smith from the Treasury is here, first we talk to Rachel


Reeves, shadow Treasury Minister. Strong consolidations under way,


and the deficit reduction remains essential. They couldn't be any


clearer, are they wrong? Definite reduction is important, but you


can't do that without jobs and growth. That is why this Government


are now borrowing �150 billion more than they had planned, because the


economy is in a double-dip recession, unemployment is at 2.6


million, and youth unemployment at a record high. If you have more


people out of work getting benefits and fewer people paying taxes, it


makes it hard Tory reduce the deficit. You heard from George


Osborne today, and was it wrong? Christine Lagarde has said before


that growth is absolutely essential, to get the public finances back in


order. You need growth to get the economy back on track. That is what


Labour have been arguing for consistently. But what Christine


Lagarde is saying. She's barking up the wrong tree today, is that what


you are saying? Christine Lagarde and the IMF today are saying, is


you need to have plans to boost growth, unless you are going to


have low growth entrenched. The real risk is, that the policies


that the Government have assumed, which is cutting too far and too


fast, have choked off growth, and going to cause long-term damage to


our economy, because you have people out of work, you have now


got long-term unemployment at the highest rate for a generation.


heard what she said, she said the whole idea that she was left with


in May 2010, if no such programme had been implemented, made her


shiver? Yes, and Alistair Darling's programme for deficit


reduction...Wasn't Going to come in for another year after, that it


made her shiver? That is not the case. Alistair Darling's plan for


deficit reduction, would have seen the deficit come down by more.


would not have had any cuts until 2011? That is not the case.


Alistair Darling's programme for deficit reduction, would have


halved the deficit during the course of this parliament. Now the


Government's plans are so off track that they are now borrowing more


than the plans that Alistair Darling left in place. That is


because this Government have failed to secure the recovery that you


need to get the deficit down. So you do need a deficit reduction,


but this Government aren't achieving what they set out to


achieve, because they have unemployment too high, and because


the economy is back in recession, because of the skhoiss that this


Government made, -- choices that this Government made, it is causing


long-term damage, as Christine Lagarde has said, to the British


economy. Isn't the worry for you, when she talks in those terms about


her idea of what would have happened in May 2010, when Labour


had left power, sending shivers down her back, she echos many


people in the public who think that is exactly the state that Labour


would be leaving us in now? Christine Lagarde is right, if


there hadn't been a plan for deficit reduction, and the deficit


had stayed at the levels it was after the global financial crisis,


that would be very worrying indeed. But as I said, Alistair Darling's


plans for deficit reduction, would have included increases in taxes.


We would have kept the 50p rate of tax, which has brought in �3


billion. You would bring that in? We are voting against it in the


budget, which is going through parliament at the moment. As a


policy you would bring it back in? We wouldn't be getting rid of it.


It is gone, you would bring it back in? In the budget we are voting not


to go ahead with it, 2 it hasn't gone yet. When the vote comes back


to rplt pa, we will vote against the reduction -- parliament, we


will vote against the reduction in a policy that gives money to


millionaires. That is one policy to reverse, while this Government is


giving money away to the people who need it least.


I know you didn't want to debate directly, Chloe Smith, but the IMF


there said the British economy had been flat, it hasn't been flat, has


it, it has been in recession is, we have shrunk, you dream of flat,


probably? There is no masking the difficult circumstances I think


that face us. I would be delighted to debate Rachel on any day of the


week on some of the confusion that she laid out. You refused to debate


on the programme, if you want to, great, you declined that


opportunity. The circumstances that face us include the on going


eurozone crisis, very difficult, indeed also global oil prices, very


difficult. There are a number of things going on at present which do


mean there are challenges to the UK economy. The IMF's view today is


crystal clear, which is this Government has taken the


appropriate actions. We are on track, says the OECD as well. Takes


down the deficit is incredibly important. We have already removed


a quarter of the debt that Labour left. I'm wondering how much


attention to you pay to the IMF, given they calculated back in


September that there was a 17% chance of us going into recession,


we were practically in T why are you taking these reductions and


saying you cut it by a quarter? Because the latter statement,


excuse me, the latter statement is true. You have cut the deficit not


the debt? The deficit indeed is down by a quarter, that is what we


are tackling. The debts keep on going up, that is the point? We are


on track indeed for both of the targets we have set ourselves


fiscally speaking. The OECD confirms we are on track. I'm


quoting them there. Those two reports today show we are taking


the appropriate action. The OECD report is interesting, it is there


they confirm the actions we are taking are right for growth in the


short and long-term. The IMF report again shows the credibility we have


earned, the space we have earned for ourselves and the British


economy, putting it back on track, allows us to turn to jobs' measures,


such as supporting more infrastructure, supporting houses


and businesses. You are pretty happy with where things are, you


say we are back on track? I quote the EOCD as being on track for the


plan, but circumstances arele cha eings. The report today shows our -


- are challenges. The report today shows our plans are right.


don't need a back up plan? challenges facing us now are very


serious, the actions we are taking now are the right ones. So you


don't need a back-up plan? Government keeps track of the


circumstances at random. Are you privately talking about things you


must implement if this goes wrong? Any Government, of course, keeps a


track of what goes on. Any Government has sets of plans. Our


plans for now are the right one, they are taking the right actions.


But what are those plans that are some where down the pipeline. You


heard Lagarde there talking about the need, possibly to consider VAT


cuts, national insurance cuts, are these part of what you might call


your Plan B? I think Christine Lagarde was clear today in the


point, she thought those policies may come into their own. Do you?


The point is, today's actions are the right ones for where we are, we


need to keep control of the deficit. Unlike the uncosted confusion you


have heard from Rachel and others today. We need to keep track on


those plans. Why is the head of the IMF thinking of a down-the-line


tragedy for you, when it sounds as if you are not. Why is George


Osborne making contingency plans for the eurozone f he can't admit


he's making con-- if he can't admit he's making contingency plans for


his own economy here? Circumstances are very challenges, the eurozone


is one of the largest of those things. If you look at Christine


Lagarde said, the shiver that went down her spine is at the deficit


Labour left us. That was at Greek levels. If we had not acted fa, we


don't continue to act to keep the economy on track, that is where


potential trouble could come from. It is that action that is


appropriate and right today that the IMF confirms. You heard Lagarde


saying clearly, that she would urgently consider more action, the


need for quanative easing, would you welcome that? Any such decision


would be operationally for the Bank of England to do, of course, but it


is, indeed, one of the next lines of defences. The Chancellor has to


approve that, would you like to see him say that? He has said today it


is one of the obvious tools. It is one of the tools available in the


economy at present. It can simulate demand, there are a number of


things we need to work on in the British economy, that may be one of


the tools, others are getting credit to businesses, more


infrastructure and housing. bring you back in, what was the


point you -- I will bring you back in, what was the point you wanted


to make? It is staggeringly complacent, we are �150 billion off


track when it comes to the economy, and the economy is in a double-dip


recession. That is not on track, that is seriously off track. The


IMF have said, for almost a year now, if things get worse, they have


to think about a Plan B. Last word for you, Chloe Smith. Are you


thinking about Plan B, what will that be, people are desperately


crying out for it. I cite the OECDn that we are taking the right plans


and the appropriate actions for now, that has made Britain aself and


credible place. -- a safe and credible place.


economic secretary to the President, we have just done that, let's move


on. The leader of Greece's far left anti-austerity party headed out and


said they would remain in the euro if they won the election. Alexis


Tsipras is out looking for support. Bill Clinton offered strong words


of advice on day 959 of the Greek crisis, we are counting. You cannot


get blood out of a turnip, you can't constrict public sector


activity, in the face of private restriction, and expect growth to


occur, because a confidence fairy appears on your shoulder. The


people who have put out all this money, and demanded 100 cents on


the dollar, at zero inflation, so their investment will never be


rewarded in any shape or form, all they are doing is narrowing and


narrowing the pools of future investment. Bill Clinton speaking


just outside London a little bit earlier today. Joe Lynam is here to


take us through some of the new thoughts. There is some quite


interesting zeitgeist words popping up here. The pan-European deposit


grouornity, what do they mean by that -- guarantee, what do they


mean? This is discussed in the European body politic. It is


discussed at the highest levels of the ECBT means you collectively


guarantee savers' deposits. If a bank goes bankrupt in one country,


the saver will get the money back. The idea that the European and --


the UK would bail out different people's savers, it would likely to


be Germany. It will be mentioned at the informal summit tomorrow.


we talk about project bombs, what is that about? That is the other


big thing. The markets got very excited about that today. Mostly


because project bomb sounds a bit like -- project bonds sounds a bit


like eurobonds, they will fund things like rail and infrastructure.


They want to use the European Central Bank to leverage money


already there to leverage those projects and stimulate growth. That


is going along the lines of Francois Hollande, who is having


the first council meeting tomorrow evening. Do you get the sense


either of these will go ahead? Project bonds definitely L and the


pan-European guarantee will be whispered over the can pays. The


collective pooling of euro debt, the Germans are against that, and


they have resisted proposals from the European Commission and nine


months later implemented them. former Greek Prime Minister, George


Papandreou was in London for the Google zeitgeist conference, he


spoke exclusively to us. What chance is there of Greece


staying in the euro? The Greek people, in the massive majority,


are in favour of staying in the euro. Polls say 75%. Of course,


that does mean we have to follow a difficult programme. There may be


some changes in this programme, but not huge margins of change.


that's depending on those parties taking the, the parties during the


election, who wish to produce the austerity plan, and push it through,


winning, Syriza looks as if it will may be on target, on the 17th of


June elections, to be the one that holds the key. If they hold the key,


no austerity? We have to make a choice, obviously the Greek people


in previous elections vented a lot of anger, despair, pain, because it


has been very painful in Greece, I would say we have lost a lot of our


income. GDP has gone down, in a very short time, not only because


of Greece, but a wider recessionary situation in Europe. And that, I


think, was expressed, not that Greeks don't want change, Greeks do


want change. Of korts, in Greece, if there are parties -- of course,


in Greece, if there are parties that don't want to do this, and


think it will be easy that you can have your cake and eat it too, that


will push us towards the exit. as David Cameron is saying, it will


be a referendum on the euro, is this election essentially a


referendum on the euro? I had proposed the referendum. Elections


are different. It will, of course, be in way ways a referendum, but


not a real one. When you have a number of parties, Syriza is one of


them, it is easy to say, let's have our cake and eat it too.


That's a very nice proposal, but it's outside of reality. When you


suggested a referendum, you were not backed by other European


leaders, most notably President Sarkozy. If you had been backed and


there was a referendum, would Greece be in this mess now? There


would have been a clear answer, that is very democratic. The Greek


people would have decided. They would have owned whatever decision


we would have made. Why was Sarkozy particularly against it? Again, I


would say, to go to the referendum, I believe even then the Greek


people would have said, yes, in favour of remaining in the euro,


with a package, which we then negotiated with the European Union.


I really don't understand, there were a number of reasons, possibly


he was against this referendum, that didn't help my position, of


course, in Greece. Of course now many people are um can go around to


say this is something that -- are coming around to say this is


something that should have happened. Does that mean you were deposed by


Merkel and Sarkozy? I wouldn't put it that way, that is very, very


harsh. That is a harsh decision. I think it was, what we have in


Europe, I think, is Europe has to be managed in a more open,


democratic way, where we bring in our citizens to own this process.


Europe has to become much more a construction by the citizens.


Germany have to behave differently? The Germans, they put up a lot of


money, but if we had put up this money in a different way. For


example, to create eurobond, to create a stronger firewall in the


markets, to support growth, to give more time, and I'm very glad to now


Mr Hollande, President Hollande in France, just reading with the new


leader of PASOK, saying let's give Greece more time. You back that?


do, and I want eurobonds, this is something I have been talking about


since 2009. Two questions in one, what happens if the election


doesn't go your way on the 17th of June, and you will eventually loaf


the euro, and presumably you will default like Iceland and Argentina.


The second question, what happens to the rest of Europe? The Greek


people don't want to leave the euro, it gives securities, even with


difficulties. If we leave the euro, I can tell you it isn't like


Argentina, they were pegged to the dollar, we are not pegged to the


euro, we ous it in every day life, in our contracts and banks, this is


what we have. To change the euro would mean a huge reorganisation.


But at the same time there would be a bank run, people would pull their


money out. If the drachma comes in and we devalue three or four times,


price also go up and we will destroy our economy. Maybe that


would be better for the rest of Europe? For the rest of Europe I


think that would be a negative precedent. What will happen when


people start to say, Greece did this, you know, why not Portugal or


another country. I don't want to call flames, because it becomes a


self-full -- names, but it becomes a self-fulfiling prophesy. Who


knows, somewhere down the line another country does what Greece


has done, that means that the markets will not invest in those


countries. We have to be able to say this is a stable currency, it


won't break up. We have to make decisions, not in Greece, but in


Europe also, that we do want to create the necessary structures to


make sure this currency is a currency that can stay alive. And


it can, but we have to make those decisions. Thank you very much.


The John Lewis partnership model has come a long way since 1928,


when it was formed as a way of heading off rising communist


sentiment. It has earned its place in British psyche as the cuddley


face of capitalism. Hailed by the Prime Minister as a responsible


business model. It is shared or owned by 80,000 members of staff.


Is it the panacea the economy is crying out for, could it be adopted


more widely. I will ask the John Lewis chairman


directly in a moment. First, Allegra Stratton.


Waitrose in well-heeled Marylebone. Oysters, ready to go, a stand


devoted to the different brands of pink, yes pink, champagne. Its


relevance to the rest of Britain may seem limited, but this Waitrose,


and its mother shop, John Lewis, is a blueprint for how to run public


and private realms.. Today in places across the mini-empire will


explain some of the lines, including blue berries. Running a


shop, you don't know what is happening, the sun is shining, we


are selling 100% more of strawberries and rasberries than if


the sun wasn't shining. You have to respond to, that and bring someone


here who knows about that as well as working in wine and all sorts.


Blue berries powers the sales and the in turn that powers the


powerhouse. I have come in and done extra hours to make the sandwiches.


I have. Do you get more money? you do the thing it makes the place


run smoother and making everybody happy, us happy, and the customers


happy. The Government have been shopping for ideas at John Lewis


for a long time. They like the idea of shared employee ownership, that


employees here have a meaningful stake in the economy. They believe


-- company, they believe it could work in the public sector and the


private sector to push forward a different form of capitalism. There


are those who say it is inexactly applied, and that the John Lewis


model has never knowingly been understood. Charley Mayfield is the


chairman of the John Lewis group, he's leading us through the


plumbing of the group. He explains the political attempts to


appropriate it. The Kay John Lewis's name is being used, it is


shorthand for different kinds of ownership. I'm very pleased there


is interest in a different kind of ownership, there is a risk in that,


people oversimplify it, and the message is, this is all about the


John Lewis partnership model. Shorthand, but it should be


accurate, can a John Lewis model be transplanted into the running of


public serves? I have been to some of the pilots, NHS schemes. You are


talking about people trying to do a good job, and when you create


around them a culture and give them the right information and


empowerment to do that job well, they do start preparing better.


Here you have everybody talking about getting an 80% bonus, that


fodback mechanism isn't there in public services. -- feedback


mechanism isn't there in public services, people wanting to do a


good job is always there.? profit sharing we do here, is very


important. But is it the one thing that motivates everybody every


single day. Certainly it is not the only thing. Up on the seventh floor


is what they call the partners' dining room, there partners explain


the motivation. You understood the other people out there are all your


partners, you all work as hard. You do give more. Do you work overtime?


Yes, I do. If need be. They get a bonus linked today their


company's performance, it goes some way to blunting the disparity


between their wage and the chairman's, a differential of 60-1.


Do you think it will go down beneath 60? I think it is important,


we can't ignore the market we are in. We have to attract people into


the partnership and pay them to do so. I'm comfortable with the policy.


What is happening since it was set is the rest of the market has gone


away from us, and we haven't moved our position. I don't feel the need


to move our position, I think we pay people enough, and when you


come to work for the partnership it is about more than just pay.


getting from the ideas warehouse to people's homes, it has not been a


simple process of click and collect, at first the emphasis was on the


public sector and what lessons the John Lewis model will have for that.


Except the public sector doesn't make a profit, so it was felt to be


inproper inappropriate from the model. Many feel a private


partnership is more appropriate. Critics of rolling it out across


the economy point out at the extreme end Lehman Brothers and


Enron fitted this model. You are exactly saying these shares need to


be locked into a company, so people, if a company was looking like it


was going down, those people's entire livelihoods, their jobs


would be lost or any assets or share they had would struggle?


model works extremely W one of the characteristics that makes it


powerful for us, is people's interests are locked into the


business, now and in the future. I don't think we will go bust, but


we actually run the business on the basis that never happens. Today the


partnership has 80,000 partners in it, when it was founded, it only


had 500. We were comparatively, a relatively small business then. And


we have grown, without external shareholder investment, to being


what we are today. That has happened because we have had to


rely on our performance, and latterly we have been able to


borrow from banks and other people as well. But there have been times


during our history, where partners have said we will forego bonus this


year, or two or three years, because the business is going


through a difficult patch. There is instances where people have been


asked to put money into the partnership, that was after the war.


It can gobble your money, as a partner or customer, but it remains


politicians' favourite shop. Charley Mayfield has joined us in


the studio, the chairman of John Lewis. We have the CEO of a high-


tech company, Thank you all of you for coming in. Norman Lamb, can the


rest of British business learn from that kind of partnership model. We


know that Nick Clegg, your leader, has been very keen on this? I think


it is an immensely pour powerful concept. If you give people a stake


in the enterprise where they work, it is not rocket science, but they


are likely to be more committed to it, give them some responsibility.


It is likely to drive productivity gains. All the studies show


employee-owned businesses perform better, particularly in the smaller


sized businesses. Some business schools have shown to be more


resilient through difficult economic times and more profitable.


This is a more powerful concept. And it is try to unlock the


potential of it in the economy. Surely it must feel they are coming


to you and talking about the John Lewis model because we are in


desperate times now? I don't think it is just because we are in


desperate times. What has happened is people are having a re-think


about how to run and own companies. What we have had in the UK for a


long time is a real monoculture, where people focus on a plc form of


ownership: that is not the same in other successful markets. There is


now a welcome interest in different ways to own and run companies, and


if we are an example of that, that is obviously something I'm pleased


about. Can you give more than an example, can you be a blueprint?


I'm nervous about saying to people, take on the way we run our business.


It may not be their cup of tea. Companies are successful if they


really engage their people, one way is to give them a an ownership


stake, and create the structures and culture that makes them feel


truly engaged and empowered and rewarded for their efforts.


wouldn't you endorse it, you saw happy workers making sandwiches


there, what further evidence do you need? John Lewis is a specific


treasure in the economy. It was founded as a family business for 56


years before being mutuallised. The two key features absent from any of


the Government mutuallisation so far, is the idea of the trust. It


cannot be demutuallised. That is what we are proposing with the Post


Office, the idea of a mutually owned Post Office network could be


really powerful, delivering services in the public interest,


and that model locked in for the long-term. If you look at Germany,


for example, where the workers also took a pay cut in the middle of a


boom to restructure the corporate governance there, it is worth


looking at a balance of interest in that corporate governance between


workers and leaders. Do you think it still applies to have winners


and losers in capitalism? That is just a fact, I don't think that


will ever change. The question is can we reduce, can we make it more


equitable, and make it some how that the loss is not as desperate.


And the people who are winning still have a stake in the outcome


to create a win-win-win. In the businesses with capital and


venture-backed businesses, with the IPO of Facebook, and the sale of


autonomy of Hewlett Packard not so long ago. Every time in the


technology world a big win happens, what happens is a lot of money make


money, some to set up her firms, so the to invest in other businesses,


others have lots of money to do good things with that money as well.


There is lots of ways you can win. But capitalism as a tool, yeah,


some people will win and some people had lose, that doesn't mean


even, hey I have lost, I have had to dust myself off and go back out


there again. You are smart if you learn when you lose. It is riot,


got the lesson, how can -- it is right, got the lesson, how can I


share it. How do you put it into practice, what are the things from


within Government you can do? you discover is there are all sorts


of barriers, one of them is a complete lack of awareness for the


potential for it. We are looking for the right to request, giving


employees the right to request their companies set up an employee


share scheme, not forcing, but asking firms to consider it. It is


not very scary? It gets the debate going and raises awareness, both


amongst employees and the companies that receive it. Also looking at


the idea of a single company model which could be taken off the shelf


and employed when someone wants to set up a business. Is that right?


The key thing is which is engaging the energy of the work force.


is the key. Then it is the long- term stable relationships within


the organisation. It can work in both the public sector. The John


Lewis model is only one variant of that. I think it is trou, that


there has been this monoculture -- true, that there has been this


monoculture. If you are an enprepen you are in, you are probably not


aware -- enprenen you are in, you are probably not aware of it, and


the advice is not there. The regulatory system and the tax


system, actually, current, disincentivise people from doing


this. You brought in tax breaks as a thought, now you are reviewing?


The Chancellor announced in the budget there would be a Treasury


review, that is a good start. a slow start, isn't that the


trouble with any sort of mutual t slows everything down? It won't go


on for that long. We want to get it right and make sure we get the


incentives right to ensure we can make it happen. When a business


owner is want to go retire, succession is a key moment to


create an employee and own business, they want to leave a legacy. The


tax breaks that might be available at that point might be critical to


make that happen. Another part of the trend towards ownership and


having a stake in the outcome is about the fact that more and more


young people are setting up their own businesses. That is part of the


same trend. People want to feel the ownership, but be the owner, they


are willing to do that. Why aren't there John Lewises all over the


place, you say lack of awareness, that isn't it? You don't have to go


back very far to a time when there were many more alternatively owned


businesss in the UK and the United States. Up until about the 1970s,


80% of financial institutions were in some kind of mutual interest.


They demutuallised and you can see what happened as a consequence.


Something interesting is the culture of ownership. The great


question is how do we get growth and a form of acceptable capitalism.


The tools people look to are regulatory ones and others. In my


experience, regulation almost always comes second to culture. In


our business, we have 80,000 people in working in Waitrose and John


Lewis. How it works is those 80,000 people own the business, and they


work a bit harder every single day. It is a powerful and cultural model.


Let's talk about that, people have fallen out of love with big


business, big angry capitalism? biggest trend out there is not big


business, it is setting up your own business. Not looking for a job,


but creating your own job. Individual capitalists, and bes


your on boss, by kids in their -- being your own boss, kids in their


20s can have a swing at it and start their own business. Do you


think this can work in public services, if we take it out of the


private spear, can you put it into health? There would have to be a


significant change. One of the incredible, durable successes of


John Lewis, is to be contrasted with Northern Rock, the northern


counties business established before that, embedded in the north-


east. Within 12 years of demutuallisation was a basket case.


Capitalism puts pressure on the financialisation of the assets.


That is why the idea of a trust is huge. In relation to public


services I go to a different model, a third, a third, a third. A third


workers, a third local authority or state. Would you like to see this


applied to public services? could be immensely powerful, you go


to central Surrey health, where they have services, and every


employy has a stake in the organisation. They have the ethos


of the public sector, but they have the fleet of foot that the public


sector doesn't have. Some may think, privatisation by the back door?


isn't, it is all about getting the best out of your staff. If you can


empower people and give them responsibility then it will help.


think it is true, and I share the ownership of my business with my


management team, it incentivises them. We are not just employees and


employ ers, we are sit ens in a market place and an economy, when


business is -- citizens in a market place and the economy, and when


business is good it benefits all of us. It is true but not sufficient


to say if you give ownership to everybody, the business will


therefore be more profitable. Most of the time it will, but it is not


necessarily true that. I want to talk about the climate


you feel we are in now. Firstly, economic, and is it an anti-


business climate at the moment. Is that the vibe you are getting?


of the conundrums is, when people talk about business as a third


person, they will say bad things about it. When they talk about the


business they work for, they are proud of it and will say good


things about it. There is a mismatch there. This is a real


issue about. We have clearly got to get the economy growing. One of the


reasons I'm pleased this ownership discussion has come on to the table


and is a hot area for debate, is because it can play a part in


growth. As was said, one of the interesting things is employee


ownership is shown to be best suited in small and medium sized


enterprises, some of the ones where we will need to see most of the


employment coming from going forward. Do you think the old model


is dead. Do you think top-down business models are basically pre-


2008? I don't think you can say one model will always be superior to


another. The point is, there could be a greater peculiarity of own


inship in the UK -- plurality of ownership in the UK. We are re-


thinking capitalism now? It is about corporate governance and the


way the work force is represented. On the board of John Lewis there is


five of them representing the partnership councils, five are


selected by you, and there is a working out of the common good.


That can work independent of ownership as it does in Germany.


There are issues, I would like to see a living wage for the


contracted out cleaners and them to be included in the John Lewis


partnership model. Is that something the Government would have


to take on, would that be part of it? I'm interested in what Norman


Lamb is saying. What the Government hasn't done so far, and the build


up to the Post Office is not reassuring, I'm pleased to hear


about the asset logs, but there has been the selling off of local post


offices. Those are individual, private businesses, and within


Royal Mail there will be employee ownership.


What do you need to see from the Government for this to push


further? Three things that are essential, the first is endownment,


that the assets are transferred, in perpetuity, for the nation, to the


stakeholders. The second, is this trust, which is that it can't be


then sold off. Mutuallisation, as with Northern Rock, would be


another form of financialisation and privatisation. The third thing


is the corporate governance structure so the funders, the


workers and the users can negotiate a common good together for much


loved institutions, like the Post Office and the BBC. Will you do


that? With the Post Office we are doing that, embeding that model so,


it will always have to act in the public interest, but we will give


everyone within the Post Office network. The sub-postmasters and


the employees, a stake in the business. Interestingly what you


were saying. We need it within the governance. I ThinkBroadband there


is a lot of -- I think there is a lot of common broadband T can be


really effective. -- a common brood bank that can be -- a common thread.


You would like to see it in health, with incentivised bonuses for those


who do well? Let's be open minded. We have a real challenge, we have


to make the money go further with public services, this is an


enormous challenge for the future, particularly with an ageing


population. This can unlock productivity, and can change the


culture. It is also that workers have knowledge of the details of


corporate information. And so there is a public negotiation of strategy.


That is the vital thing. How do you get over the fact that if something


is too successful, we talked about the mutuallisation a decade ago,


things demutuallise. They don't have to. One of the key successes


of the partnership rests on the fact that our interests are only


served by how we run the business. There is something about ownership


which has come to me too much -- come to mean too much about when


you sell something, you transfer ownership, rather than ownership as


being something you do to make things better. Our business is all


about that. Let me whisk you That's all from Newsnight tonight,


Good evening, another very warm today to come for many through


tomorrow. Subtle changes, a lot more cloud to begin with, for


instance. Especially round the western coasts, mist and sea fog,


the sea fog we see developing across eastern areas could linger


some what. Inland the cloud could break up. We could see the cloud


lift to higher levels. By the time we get to the afternoon isolated


and well scattered thunderstorms. They will only hit one or two of


you. Most of you will stay largely dry. The temperatures will be


limited around the coast. Sea breezes developing. Parts of


Cornwall and parts of Wales out in the west, we could see the sea fog


push in every now and again in the far Weston of northern England. For


Northern Ireland brightens up a bit. Sunnier as we saw through Tuesday


afternoon, lots of sunshine through the bulk of Scotland. Mist and sea


fog out to the coast, one or two isolated showers. The contrast


between Wednesday and Thursday on the charts for northern areas.


Temperatures, if anything, cloim a degree or two, as they will do


Download Subtitles