25/10/2012 Newsnight


25/10/2012

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


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Transcript


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Tonight, reasons to be cheerful are three. Growth up, unemployment down,

:00:14.:00:18.

inflation down. But with 1400 British jobs lost at Ford, and no-

:00:18.:00:22.

one predicting a straight road to recovery, is the Government's

:00:22.:00:28.

austerity programme really working? From double-dip to Olympic blip,

:00:28.:00:33.

sources of long-term growth are very hard to find.

:00:33.:00:36.

We will debate the politics and explore whether the good economic

:00:36.:00:41.

news depends on where you live. We will hear from economists and

:00:41.:00:44.

business experts whether scare talk of a triple-dip recession could

:00:44.:00:48.

move from fantasy to fact. Also tonight, you turn up for a

:00:48.:00:51.

hospital appointment and find out they have lost your file, and it

:00:51.:00:58.

ends as more than just a clerical mix-up. I took the tablet involved,

:00:58.:01:04.

I regained consciousness, I was on the floor, my feet elevated,

:01:04.:01:07.

receiving an intravenous drip to revive my blood pressure. It did

:01:07.:01:13.

that much harm. As the long war in Afghanistan comes to close, there

:01:13.:01:19.

is more than a billion spent in aid, is the British Government about to

:01:19.:01:24.

abandon the Kabul Government, corrupt, and support local

:01:25.:01:32.

community groups. We will speak with our guest tonight.

:01:32.:01:35.

Good evening, for the Government today came the best news on the

:01:35.:01:40.

economy for a long time. The strongest quartly growth in five

:01:40.:01:45.

years. -- quarterly growth in five years, bringing an end to the

:01:45.:01:50.

longest double-dip recession since the 1940s, outpup rose a quarter

:01:50.:01:55.

per cent up from the previous quarter. Economy has been

:01:55.:01:59.

flatlining, which dampened any prospect that George Osborne, like

:01:59.:02:03.

his predecessor, would be singing in the bath to celebrate. Paul

:02:03.:02:06.

Mason is here with the good news and the bad and the ugly. Tell us

:02:07.:02:11.

the good news first.Le If there were dinners held and

:02:11.:02:17.

cocktail parties thrown, and the occasional Gucci handbag given away

:02:17.:02:21.

to secure the London Olympics, it was worth it. This was the Olympic

:02:21.:02:25.

effect, 1% growth in a quarter is very, very healthy, and would be

:02:25.:02:29.

the envy of any developed country. Bu however, it is not a quarter's

:02:29.:02:33.

growth or rate of change that economists worry about, it is the

:02:33.:02:37.

amount and size of the economy theself. This is the graph Mervyn

:02:37.:02:40.

King worries about, and George Osborne should. Here it is, the

:02:40.:02:44.

size of the UK economy, the amount of output over the last four years,

:02:44.:02:48.

of output over the last four years, and as it animates. We there it is.

:02:48.:02:54.

That is the problem, today's 1% surge in a quarter, that is the

:02:54.:03:01.

last bit there. Really we have a long way to go to recover where we

:03:01.:03:06.

were before the crash. This is real, because we know 200 jobs were

:03:06.:03:09.

created in the last three months. Even if they are, as some people

:03:09.:03:13.

say, part-time shop assistants, whatever, they are real jobs, and

:03:13.:03:20.

it is real growth. The problem is, can it be sustained? Can it? Is it

:03:20.:03:24.

sustainable? Look, there is evidence of a bit of a surge of,

:03:24.:03:29.

what we call, broad money. The money supply in the economy. This

:03:29.:03:34.

predates the summer of growth that we had. But economists, according

:03:34.:03:38.

to one theory, if you get a bit of a surge of money, over the next few

:03:38.:03:41.

months, it should surge into the economy in the form of growth. In

:03:41.:03:44.

other words, what that might be telling us, might be, is that

:03:44.:03:48.

quanative easing is working. If it's working we might not need any

:03:48.:03:52.

more of it. But, ultimately, the fate of the whole economy hangs on

:03:52.:03:55.

how we get out of the kind of recession we are in. The kind of

:03:55.:04:01.

recession we are in, spelled out by King only last week, is one where

:04:01.:04:04.

everything's depressed because of the amount of debt in, in the

:04:04.:04:12.

economy, in people's own lives, and until that is sorted, even with the

:04:12.:04:18.

Olympic, as we are about to see, were pretty spectacular, doesn't

:04:18.:04:23.

turn things round. The crisps you ate, the beer you drank, the gym

:04:23.:04:28.

you joined, the tickets you might have bought. Today's figures showed

:04:28.:04:32.

the Olympics did help Britain bounce back out of its double-dip

:04:32.:04:36.

recession. The Chancellor allowed himself to be mildly pleased.

:04:36.:04:40.

are plenty of risks out there, look at the data from the euro zone this

:04:40.:04:43.

week, that shows us there is still a difficult economic situation in

:04:43.:04:47.

the world. But, if we stick with what we are doing, getting the

:04:47.:04:51.

deficit down, creating jobs, fixing the deep-seated problems in the

:04:51.:04:56.

British economy, then I think you can see now that it is going to

:04:56.:04:59.

deliver the kind of underlying prosperity we want to see in this

:04:59.:05:02.

country. The breakdown of the big picture

:05:02.:05:08.

looks like this. A rebound in manufacturing, added 0.2% to GDP in

:05:08.:05:11.

the last quarter. The continued collapse of construction wiped that

:05:11.:05:16.

out. But the very strong growth of services, including Government

:05:16.:05:20.

services, boosted output by 1%. And in case you are interested, Olympic

:05:20.:05:24.

ticket sales accounted for a fifth ticket sales accounted for a fifth

:05:24.:05:26.

of that. It is very encouraging that the

:05:26.:05:28.

economy has pulled out of the recession at last, and the strength

:05:28.:05:33.

which with which it has refounded as well. The concern is this isn't

:05:33.:05:35.

necessarily a sign that the economy has momentum and will improve from

:05:35.:05:39.

here on. In fact, there are a number of indicators that suggest

:05:39.:05:43.

the economy is losing momentum, that this was just a temporary

:05:43.:05:47.

bounce, due to the bank holiday effect, and the Olympics, and as we

:05:47.:05:52.

go towards the end of the year, there is signs that growth,

:05:52.:05:56.

momentum, will slow. If the euro crisis is ultimately responsible

:05:56.:06:00.

for depressing growth here, the only certainty is, the Olympics are

:06:00.:06:05.

over, but the troubles of Europe are not.

:06:05.:06:09.

Obviously has been for the past couple of years, the political

:06:09.:06:12.

battleground, and will be through to 2015. What are the challenges

:06:12.:06:15.

for the political parties on this? We are about to hear two

:06:15.:06:19.

politicians, I doubt we will hear both of them shout, hurray, green

:06:19.:06:25.

shoots, it is all solved. In fact, the challenges are for policy

:06:25.:06:29.

makers, the policy being made, primarily, by the Bank of England,

:06:29.:06:33.

the Bank of England's quanative easing policy, as I said earlier,

:06:33.:06:39.

what may have ultimately given this some omph and some sustainability.

:06:39.:06:42.

The question being discussed in the rarified atmosphere of Central

:06:42.:06:46.

Banking, is do we need more. Do we need more quanative easing, do we

:06:46.:06:51.

print more money, do we then tear up some of those IOUs that the Bank

:06:52.:06:55.

of England is buying? In other words, to write off bits of

:06:55.:06:59.

Britain's debt. That is a serious debate going on. I suspect, and

:06:59.:07:03.

this number was so big today, and so surprisingly big, that might be

:07:03.:07:07.

on the backburner, that might have decided that bit of the debate.

:07:07.:07:12.

Then you have the question which again the Chancellor can't do much

:07:12.:07:16.

about, it is his own statistician, the Office for Budget

:07:16.:07:19.

Responsibility, is the Chancellor going to miss his deficit target.

:07:19.:07:23.

Is he actually going to miss the targets he set himself? Maybe this

:07:23.:07:27.

1% doesn't answer that one way or another. The implications are we

:07:27.:07:32.

will have to wait, the next big predictable event is the Autumn

:07:32.:07:36.

Statement by is the 5th of December? If it is judged that

:07:36.:07:40.

growth is not strong enough long- term, and this is a blip, for

:07:40.:07:45.

Britain to meet the targets it has set itself, then the choice will be

:07:45.:07:50.

more austerity, quite hard to do, given the state of the coalition.

:07:50.:07:55.

Or some tax cuts paid for by changes in Government policy, or a

:07:55.:08:01.

slowdown in austerity. There is even talk of a secret stash of �25

:08:01.:08:05.

billion, sitting in the Bank of England, that is a by-product of QE.

:08:05.:08:08.

There is all kinds of things that we are about to be discussing in

:08:08.:08:11.

the next two months. Big strategic things the Chancellor can't do.

:08:11.:08:15.

What he can't do and hasn't been able to do through policy alone is

:08:15.:08:19.

to manage growth. That growth was magiced into existence, by the very

:08:19.:08:25.

act of winning the Olympics. Chris Leslie is on Labour's

:08:25.:08:28.

Treasury team, and Michael Fallon is the Business Minister, and not

:08:28.:08:31.

often on the programme talking about good news. The good news will

:08:31.:08:34.

keep on coming, says the Prime Minister, will it? It is

:08:34.:08:37.

encouraging news, and what is happening now is all the signs seem

:08:37.:08:40.

to be pointing in the right direction. We have unemployment

:08:40.:08:43.

falling and inflation half what it was a year a these good figures

:08:43.:08:46.

today, better than the City and forecasters expected, Britain

:08:46.:08:51.

coming out of recession. There is a long way ahead. But the good news

:08:51.:08:55.

will keep on coming? It is a long road ahead, but the signs of

:08:55.:08:59.

recovery are there now and pointing in the same direction. Do you not

:08:59.:09:03.

worry that you will sound complacent when people look at the

:09:03.:09:07.

last year and in 2011 where we were in the economy? There is no

:09:07.:09:09.

complacency, that is why we are continuing to rebalance the economy,

:09:09.:09:14.

and reform in the way we get more house building done, reforming

:09:14.:09:17.

planning laws, guarantees for infrastructure, and looking at job

:09:17.:09:21.

creation, getting more finance through to small businesses. Look

:09:21.:09:23.

at private sector job creation over the last year. Since this

:09:23.:09:26.

Government came into office, we have created over a million private

:09:26.:09:33.

sector jobs. There are more people working now than in 1971. Given

:09:33.:09:37.

that caution, could you say you will rule out a triple-dip

:09:37.:09:41.

recession? Nobody can rule out the road ahead. You are not ruling that

:09:41.:09:44.

out? You can't be sure what lies ahead. More problems in the

:09:44.:09:49.

eurozone, Germany looks as if it is going backwards. What we can say,

:09:49.:09:53.

is although it is a long way ahead, these are encouraging signs,

:09:53.:09:56.

pointing in the same direction and Britain is now recovering. The

:09:56.:10:00.

confidence theself, from today's figures, I think, will be extremely

:10:00.:10:03.

important. Chris Leslie, growth up, unemployment down, inflation down,

:10:03.:10:09.

that's three bullets in the Labour Party idea that we need a Plan B,

:10:09.:10:12.

isn't there? This is positive news, but it is about time we had some

:10:12.:10:16.

good news, quite frankly, with the state of the economy. We have had

:10:16.:10:23.

two very long years of flatlining, and with the greatest respect to

:10:23.:10:29.

Michael. He he talks about it as if we shouldn't worry about it. The

:10:29.:10:32.

point is, that is a permanent hit to our productive xasty. It has

:10:32.:10:37.

meant living standards have fallen. We have seen the resilience of the

:10:37.:10:40.

economy severely hit. When you think what b what is coming.

:10:40.:10:46.

there anything you can say tonight without talking down the economy?

:10:46.:10:49.

You are. I'm not, it is perfectly reasonable to look at what is

:10:49.:10:53.

around the corner. If you look at the 80% of cuts still to be felt

:10:54.:10:56.

from the Chancellor's Spending Review. If you look at the tax

:10:56.:11:01.

rises around the corner, the living standards, the eurozone, all of

:11:01.:11:06.

those raise the key question, are we more resilient now because of

:11:06.:11:11.

Government policy, or are we just hoping this is going to be the

:11:11.:11:17.

trend for the future. I hope it is, but we need to do far more than

:11:17.:11:21.

take this complacent attitude. wish you hadn't said all that.

:11:21.:11:25.

Nobody is complacent. My job as Business Minister is to visit

:11:25.:11:27.

businesses, up and down the countries businesses are fed up

:11:27.:11:31.

with politicians like you talking down the economy. We need more

:11:31.:11:33.

confidence, we need more confidence now, and this growth figure today

:11:33.:11:39.

will give us a bit more confidence. We need action, an approach to

:11:39.:11:43.

stimulating the economy, and focusing on growth, instead of

:11:43.:11:46.

sitting back, crossing your fingers and hoping something will turn up.

:11:46.:11:51.

Because the strength of the economy is not good enough. We have, not

:11:51.:11:56.

only have we got a flat economy. There you go again, talking it down.

:11:56.:11:59.

I hope it will get better. We have to make better progress. You made

:11:59.:12:07.

that point. But the OBR said austerity reduced real GDP in

:12:07.:12:10.

2011/2012 by 1.4%, the argument is this Government has made things

:12:10.:12:13.

harder for people unnecessarily and cut back on growth T would have

:12:13.:12:17.

been better if you had not done that? We had to get the deficit

:12:17.:12:21.

under control, we were spending �160 billion more than coming in

:12:21.:12:25.

taxes, that was a worse deficit than Greece. We had to get that

:12:25.:12:29.

sorted out. We are slowly doing. That we have dealt with a quarter.

:12:29.:12:33.

At the expense of growth? We have dealt with a quarter of it all

:12:33.:12:37.

already. Statement we have been trying to rebalance the economy. --

:12:37.:12:41.

tailt we have been trying to rebalance the economy. -- at the

:12:41.:12:46.

same time we have been trying to rebalance the economy, we have too

:12:46.:12:48.

much expenditure, we are rebalancing the economy,

:12:48.:12:52.

encouraging the economy. You will hit your fiscal targets, we will

:12:52.:12:56.

hear in the Autumn Statement? will see from the independent OBR

:12:56.:12:59.

where we are with the targets, it is not up to us, we have an

:12:59.:13:02.

independent body that will do that. There is a big point here.

:13:02.:13:05.

don't know if you have hit the fiscal targets? We will see from

:13:05.:13:08.

the OBR if we have hit them. Times have been tough over the last

:13:08.:13:12.

couple of years, a pay freeze ayes cross the public sector, we have

:13:12.:13:17.

tried to help with the council tax freeze and so on. The signs are we

:13:17.:13:23.

are coming out of recession. talk as if the last few years don't

:13:23.:13:25.

matter. There are careers affected and businesses gone under, what

:13:26.:13:29.

will you do to make up the ground four our lost competitiveness. As

:13:29.:13:32.

we have been standing still, Germany have been accelerating and

:13:32.:13:36.

the United States. They have not been accelerating. They have grown

:13:36.:13:43.

at 3.3% in the last few years, hour growth is 0.6% over a two-year

:13:43.:13:46.

period. While we have been standing still, the strength of our economy

:13:46.:13:51.

relative to those other economies has fallen back. We need to regain

:13:51.:13:55.

ground. I need a strategy Government about regaining the

:13:55.:14:00.

ground we have lost? Strategy has been there all along, it is to

:14:00.:14:03.

encourage private sector employment, while you are obsessed with public

:14:03.:14:07.

spending. It is to back the new technologies and industries,

:14:07.:14:09.

industries outside London and the south-east. To ensure that new jobs

:14:09.:14:13.

are being created. We are doing that all the time. The Ford

:14:13.:14:16.

announcement today was very disappointing for those who make

:14:16.:14:21.

Transit vans in Southampton, but they committed to the new low-

:14:21.:14:24.

carbon diesel engine made in Dagenham, a huge commitment by Ford.

:14:24.:14:27.

Other companies are coming in behind them, and vesting in Britain.

:14:27.:14:31.

We can't start talking the economy down. On that point, would you like

:14:31.:14:36.

to take this opportunity to apologise for leaving us with a

:14:36.:14:45.

structural deficit as Ed Balls, the shadow Chancellor pointed out?

:14:45.:14:48.

Nobody knew the economic crisis would be. You have been very weak

:14:48.:14:50.

on this? The Conservatives said they would match the spending plans

:14:50.:14:54.

of the last Government. Would you like to apologise for getting all

:14:54.:14:57.

that wrong? All sorts of lessons should be learned. Let me tell you

:14:57.:15:02.

one thing, the economy was recovering in 2010, we were growing.

:15:02.:15:06.

You had a worse deficit than Greece. George Osborne pulled that rug of

:15:06.:15:08.

confidence from underneath the economy, we have been treading

:15:08.:15:14.

water for two years. That has hit our strength as an economy,

:15:14.:15:18.

worldwide. There is a serious cost. Where do you think the million new

:15:18.:15:21.

private sector jobs have come from. You are satisfied with the plan and

:15:21.:15:25.

the way things are. Tell that to people's living standards have been

:15:25.:15:28.

severely affected, tell the people whose careers have been hurt by the

:15:28.:15:31.

policies you have put in play, and, in fact, we have so many more

:15:31.:15:35.

problems around the corner. There you go again you are talking it

:15:35.:15:39.

down. You don't think the tax rises are a problem or the public service

:15:39.:15:44.

cuts, 80% not. It is keeping him going, it is talking the economy

:15:44.:15:47.

down again. I'm being realistic. You are not, you are talking us

:15:47.:15:51.

down. On that point of realisim or talking it down, we will leave it

:15:51.:15:55.

there. Thank you very much. Today's growth figures are an

:15:55.:15:58.

estimate based on the country as a whole, that means the good news has

:15:58.:16:02.

not been evenly spread around. Some areas of the country may find

:16:02.:16:07.

today's talk of recovery a strange notion. We have a sense of what the

:16:07.:16:11.

economists' figures mean for the real economy. We have been to

:16:11.:16:14.

Lincoln today. Amid the atrocious weather, which

:16:14.:16:18.

held back the rest of the UK economy, Lincolnshire also got to

:16:18.:16:21.

taste the Olympic spirit, as the torch made its way through the city.

:16:21.:16:26.

But it will take an awful lot more than Olympic ticket sales to raise

:16:26.:16:29.

average incomes here in Lincolnshire, which currently lie

:16:29.:16:33.

in the bottom five regions in the country. Average salaries in

:16:34.:16:39.

Lincolnshire are around �14,500, much less than half those in

:16:39.:16:42.

central London. Many work in minimum wage jobs, like

:16:42.:16:45.

construction. But house completions have halved in four years, so it is

:16:45.:16:49.

tough for builders here to make any money. I think it has been a

:16:49.:16:54.

struggle for a number of years, to be honest. The levels of activity

:16:54.:16:58.

that we have got at the moment are only really being sustained by

:16:58.:17:01.

Government initiatives that are helping out. And the problem with

:17:01.:17:06.

the Government initiatives is bureaucracy and red tape has

:17:06.:17:09.

delayed those initiatives? They take a long time to come to from

:17:09.:17:15.

you i, the New Buy Scheme we applied for six months ago, we are

:17:15.:17:18.

frustrated we can't put that in place. The other minimum wage

:17:18.:17:23.

sector is agriculture. Farming now accounts for 6% of Lincolnshire's

:17:23.:17:27.

income, down from 12%. This year's awful wet weather didn't help

:17:27.:17:33.

either. Even the warmer third quarter was deemed too dark by many

:17:33.:17:37.

farmers. And the third minimum wage sector, mass manufacturing, is also

:17:37.:17:43.

depressing rather than adding to the local economy. The Kimberly

:17:43.:17:47.

Clarke nappy-making factory said it would close yesterday, a week after

:17:47.:17:51.

Seven Seas said they would be shutting their Humberside plant.

:17:51.:17:56.

But if Lincolnshire can get more place like this, they would be --

:17:56.:17:59.

places like this, they would be very pleased. The smell is medieval,

:17:59.:18:05.

but the plant brand new. It automatically screens, separates

:18:05.:18:10.

and pulps 800,000 bottles an hour. It is the largest and most

:18:11.:18:15.

profitable recycling plant in the world H Coca-Cola not been their

:18:15.:18:18.

junior partners had might never have been built, due to the banks

:18:18.:18:21.

being unwilling to lend. This is the finished product, this is the

:18:21.:18:27.

material that came in the front door as a waste product, gone

:18:27.:18:32.

through all our processes and now suitable for manufacturing into new

:18:32.:18:37.

plastic bottles. Would you regard yourself as optimistic?S Absolutely,

:18:37.:18:42.

I'm a glass -- absolutely, I'm glass half full person, the future

:18:42.:18:47.

is not just bright for this future, the sector, and the green sector as

:18:47.:18:50.

a whole. Oil will run out at some point. People should be concerned

:18:50.:18:53.

about the amount of people on the planet, the consumption going on.

:18:53.:18:56.

We have to reduce waste and reinvent waste, that is exactly

:18:56.:19:02.

what we are doing here. It ticks so many boxes, creates jobs, adds

:19:02.:19:12.
:19:12.:19:12.

value, it is all good news. Eco Plastics not alone. See minutes

:19:12.:19:17.

has a turbine engine plant in Lincoln, and it is expanding.

:19:17.:19:21.

Lincolnshire is no microcosm of the UK economy, it is the least

:19:21.:19:25.

ethically diversified and the most rural. It is going through similar

:19:25.:19:30.

pangs of rebalancing away from low tech and into high-tech. If average

:19:30.:19:33.

incomes continue to stay low, it is hard to see future generations

:19:33.:19:36.

staying in the county of their birth.

:19:36.:19:42.

With us to assess all of this are WPP advertising group chief

:19:42.:19:50.

executive, Sir Martin Sorrell, the director of the think-tank Marquez

:19:50.:19:56.

and Ann Pettifor from the office of -- Macroeconomics, and Ann Pettifor

:19:56.:20:00.

from the Office of Budget Responsibility. A few months ago we

:20:00.:20:06.

were all doom and gloom, and here we are cheery on 1% growth, I don't

:20:06.:20:10.

take either too seriously what I learned from the Bank of England is

:20:10.:20:15.

the first estimates of GDP are not where things turn out to be. It

:20:15.:20:19.

could go down or up. It doesn't change the picture we have for some

:20:19.:20:22.

time, which is fundamentally this economy is growing a little bit,

:20:22.:20:27.

but not fast enough. The figures are uneven because of the Olympics,

:20:27.:20:30.

the Jubilee, lots of special factors. Lots of special factor,

:20:30.:20:34.

are you cheered up, obviously it is better than the alternatives?

:20:34.:20:38.

Absolutely, it is good news. But there are three big threats facing

:20:38.:20:43.

us, still, the first is the vast overhang of debt on the private

:20:43.:20:48.

banking sector, and the fact that hasn't been handled, restructured

:20:48.:20:51.

or mgtd. Secondly, synchronised austerity around the world. The

:20:51.:20:56.

United States, the whole of Europe, and increasingly Japan, and China

:20:56.:20:59.

unwilling to come to the rescue of the rich western countries again.

:20:59.:21:04.

For me, thirdly, this links to what Paul was saying, is the failure of

:21:04.:21:08.

the monetary authorities to co- ordinate and to work with the

:21:08.:21:12.

fiscal authorities to manage, if you like, this injection of money

:21:12.:21:16.

into the economy, so that it is used for productive purposes. It is

:21:16.:21:21.

that failure of those two big institutions and authorities to

:21:21.:21:25.

come together, that means money is being printed and sprayed around,

:21:25.:21:28.

and goodness knows where it is going, and those who need money,

:21:28.:21:32.

the productive end of the economy are not getting it. And the

:21:32.:21:38.

Government is standing back saying nothing to do with them.

:21:38.:21:42.

You talked about austerity being a straitjacket as far as growth is

:21:42.:21:45.

concerned. Did you take Michael Fallon's point we had to do it, and

:21:45.:21:51.

the Government had to do it, and broadly, the strategy is working?

:21:51.:21:54.

In the short-term I agree what the Government has done. It hasn't

:21:54.:21:58.

actually lowered spending, it has reduced the rate of increase of

:21:58.:22:02.

spending, it is up from �700 billion, projected to be �750

:22:02.:22:06.

billion in four years time. They reduced the rate of increase, lower

:22:07.:22:10.

interest rates, improved the credit rating and et cetera. We announced

:22:10.:22:13.

our results, they are the lowest rate of growth across the world we

:22:13.:22:18.

have seen he across the world for two years, it was poor quarter for

:22:18.:22:25.

us. The UK was wrong, up about 4-5% in the quarter, this year 3-4%,

:22:25.:22:31.

last year we have up 8%, added 2,000 jobs. Our position in the UK

:22:31.:22:35.

has been strong. There are four things people are worried about in

:22:35.:22:45.

business, September was a pivitol pwhont month, we -- month, we saw a

:22:45.:22:51.

decrease in business. Brazil, Russia and all the growth economies,

:22:51.:22:55.

the BRICs, increasing tensions in the Middle East, Syria, Lebanon,

:22:55.:23:00.

the Israelis attacking, Iranian and nuclear institutions or even visa

:23:00.:23:06.

versa, last but not least, probably the elephant in the room, is what's

:23:06.:23:12.

going to happen in the US after the election. What l Romney or a re-

:23:12.:23:16.

elected Obama -- will Romney or a re-elected Obama, I think Obama has

:23:16.:23:21.

the advantage, it will be close, there will be a House of

:23:21.:23:25.

Representatives controlled by the Republicans, and the Democrats

:23:25.:23:30.

controlling the Senate, we will be in that gridlock. Maybe some

:23:30.:23:33.

modified plan, along the lines we have seen before, which President

:23:33.:23:38.

Obama wanted to bring in, and then ignore the report that he wanted to

:23:38.:23:46.

bring in a Simpson Bowles like after the election. The preliminary

:23:46.:23:51.

Ications are that we are not masters of our own destiny, that

:23:51.:23:55.

George Osborne has levers he can pull, but the factors are beyond

:23:55.:23:59.

his control or any politician's control in this country?

:23:59.:24:02.

absolutely agree with you. The big threats from the UK economy often

:24:02.:24:06.

come from abroad. One of the things that went wrong in the decade up to

:24:06.:24:10.

the financial crisis, is a risk that came up from abroad, problems

:24:10.:24:14.

in America, that affected us here, we have had big oil price rises,

:24:14.:24:18.

that is what has held the economy back. It wasn't just austerity. It

:24:18.:24:22.

is absolutely right. I want to take issue with something Anne said, you

:24:22.:24:25.

commented on the fact, I feel sensitive about quanative easing,

:24:25.:24:29.

since I was there when we started it off. It was perfectly good

:24:29.:24:34.

evidence that it was very helpful to companies in the initial stages,

:24:34.:24:37.

it helped them borrow more cheaply. It is unfair to say of the

:24:37.:24:40.

Government they are not doing anything today, the new Funding For

:24:40.:24:43.

Lending scheme is a good scheme that should help get credit going

:24:43.:24:47.

in the economy. The truth is, against the head winds they face,

:24:47.:24:51.

there is a limit to what can be done. Because you can't suddenly

:24:51.:24:55.

say to businesses, with the background of all the things that

:24:55.:25:02.

Martin has set out, that everything will be Rosie and let's leave it.

:25:02.:25:08.

just think that the banks' lending numbers that came out recently are

:25:08.:25:10.

really bizarre. They show firms in the economy are lending to banks,

:25:10.:25:14.

and banks are not lending to the real economy. There is negative

:25:14.:25:18.

lending. That is bizarre. It is almost unheard of in our history.

:25:19.:25:22.

To some extent that is true. I say this, of course the Chancellor can

:25:22.:25:26.

do something about the overhang of private debt, but by the utter

:25:26.:25:30.

focus on public debt, and ignoring the vast overhang of private debt,

:25:30.:25:34.

the Chancellor is avoiding dealing with what is a real big structural

:25:34.:25:39.

threat to the economy. You have to give the economy some credit, just

:25:39.:25:43.

this week the supply chain financing move was an attempt to

:25:43.:25:47.

try to provide an alternative to bank financing. What we saw,

:25:47.:25:53.

interestingly, we went to the ECB to see Mario Draghi the week before

:25:53.:25:57.

last, 23 of the companies out of 25 said they were having a tough

:25:57.:26:01.

September. What surprised me was the ECB was surprised by that. What

:26:01.:26:04.

was described as the September *Cliff. I thought that the

:26:04.:26:08.

quanative easing we saw from Draghi and Bernard, and the quanative

:26:08.:26:13.

easing we saw from -- Bernanke and the Chinese, signalled they saw

:26:13.:26:18.

what was happening, and I hoped they had seen it before business

:26:18.:26:23.

saw it. Lending contracted today businesses in the eurozone in

:26:23.:26:26.

September, which explains the challenges you face. Businesses are

:26:26.:26:32.

sitting on �2 trillion -- $2 trillion of net capital. They are

:26:32.:26:36.

afraid of investing that, firstly, because of austerity, and secondly,

:26:36.:26:40.

because customers are not walking through the door. The point Michael

:26:40.:26:44.

Fallon made, was figures like this will boost confidence and release

:26:44.:26:48.

some cash? I'm not sure that is really true. Partly because, we

:26:48.:26:50.

have all been talking about the international factor, the worries

:26:50.:26:55.

about what will happen in the US, post election, the fact that the US

:26:55.:26:59.

is far from resolved, the fact that China seems to be slowing down.

:26:59.:27:03.

Everybody knows the big spending cuts, in a sense, are still to come

:27:03.:27:08.

in the UK. The fiscal tightening will worsen next year, against that

:27:08.:27:11.

background companies may invest a bit more. One day in the recovery

:27:11.:27:16.

we will surprise and the recoverly will emerge. I would be surprised

:27:16.:27:21.

if today's data is the move on to that summit upwards. If the

:27:21.:27:25.

Chancellor does miss his targets, Autumn Statement could result in,

:27:25.:27:29.

presumably, tax rises, further spending cut, more austerity, one

:27:29.:27:34.

way or another, or him saying fiscal targets don't matter? He's

:27:34.:27:37.

certainly not going to say they don't matter. He might say, and

:27:37.:27:40.

personally I think this would be a reasonable thing to say, that

:27:40.:27:43.

various things happen, particularly the eurozone crisis, since they

:27:44.:27:49.

came into office, and he will take a little bit longer, that would

:27:49.:27:52.

seem perfectly sensible. There was this lost decade and we wouldn't

:27:52.:27:59.

see a return until 2018. reduced to predict a double-dip

:27:59.:28:03.

recession, I will give you the opportunity toe predict a triple-

:28:03.:28:07.

dip recession? No, we are bouncing along the bottom, it is corrugated

:28:07.:28:12.

and it is painful. There is a painful analogy, but we will be

:28:12.:28:16.

bumping along the bottom, in western Europe, including the UK,

:28:16.:28:20.

less so UK and Germany, they are bookends with France, Italy and

:28:20.:28:25.

Spain, sandwiched inbetween in more difficulty. Anne, triple-dip?

:28:25.:28:29.

think there will be, because we precisely have not dealt with the

:28:29.:28:32.

banking crisis, and precisely because of synchronised austerity,

:28:32.:28:39.

I'm with the IMF, very scared about the synchronised austerity, and

:28:39.:28:42.

with the Governor of the Bank of England, who said yesterday, unless

:28:42.:28:46.

the private banking sector was prepared to take losses, we will

:28:46.:28:49.

never be able to address the crisis, because we have the overhang of

:28:49.:28:53.

debt which is the real drag on the real economy. I kind of agree with

:28:53.:28:58.

that. I'm not sure we have had a double-dip recession, but whether

:28:58.:29:02.

or not growth goes up or down, we have an extended period in front of

:29:02.:29:06.

us of sluggish growth, where we have to slowly get to grips with

:29:06.:29:09.

these problems. It is not going to be easy and there is not much

:29:09.:29:14.

Governments can do about it. Corrugated bottoms all round! It is

:29:14.:29:17.

a tale sadly for many of us, you turn up for the hospital

:29:17.:29:21.

appointment, and the records are not there and the test results are

:29:21.:29:24.

lost. Now medical bodies, backed by the Government, hope to avoid, that

:29:24.:29:30.

by giving you, the patient, access to your own medical note. They call

:29:30.:29:33.

it giving patients control. Some fear it is a means of shifting

:29:33.:29:36.

responsibility for the failings of the health service, on to the

:29:36.:29:44.

patients themselves. The first year has revealed what we

:29:44.:29:50.

all expected, a vast amount of silent good work, a great deal of

:29:50.:29:57.

relief, and a great deal of gratitude. Nye Bevan's devotion to

:29:58.:30:02.

establishing the National Health Service was inspirational, Don

:30:02.:30:10.

Atwell was one of the multitudes he inspired. His direct influence

:30:10.:30:13.

inspired me to become a trainee administration manager in the

:30:13.:30:16.

National Health Service. That was at 16 years of age. You were

:30:16.:30:21.

working with medical records from the beginning? Booking outpatient

:30:21.:30:26.

appointments, meeting the patients, and checking them in. 60 years on

:30:26.:30:30.

Don's talent for keeping records is a skill that is helping his very

:30:30.:30:40.
:30:40.:30:46.

survival. Every week three million people use the NHS, the notes

:30:46.:30:50.

relating to their treatment are stored in depots many niels away,

:30:50.:30:54.

on many, many sheets of paper. This is a typical medical records

:30:54.:30:59.

library. There are scores like this, all over the country. This is in

:30:59.:31:03.

Birmingham, where there are 1.4 million patients' medical records

:31:03.:31:08.

being kept. They go back decades. But the system is cumbersome,

:31:08.:31:11.

complicated, and it is collapsing under the weight of so much vital

:31:12.:31:17.

information stored on paper. It is just not working.

:31:17.:31:21.

In my experience, notes are never where you want them to be. If you

:31:21.:31:26.

want them in cardiology, they are in orthopaedics, or the kidney team,

:31:26.:31:31.

et cetera. Patients with multiple problems, under many departments,

:31:31.:31:36.

may have their notes all over the hospital. Maybe two, three or four

:31:36.:31:40.

files in different places. It is causing real problems for patients,

:31:40.:31:43.

is it? It causes terrible problems for patients. You can imagine

:31:43.:31:47.

coming to clinic with a complex medical problem, and seeing a

:31:47.:31:53.

doctor who has got one, thin, folder with a blank sheet of paper

:31:53.:31:58.

saying "temporary notes, can't find notes". For 25 years Don has had a

:31:58.:32:02.

chronic heart condition, these days he minutes and logs every hospital

:32:02.:32:06.

appointment and test results for himself. He has learned, from

:32:06.:32:09.

experience, when he goes for treatment, and he has been

:32:09.:32:12.

everywhere, too often his medical records won't turn up. From his

:32:12.:32:16.

local hospital in Chester, he has been to London, Liverpool,

:32:16.:32:20.

Cambridge, Cheshire, Bristol, Manchester, back and forth, again

:32:20.:32:26.

and again. The health service should have

:32:26.:32:32.

built up a large fail on him, but if they did, we will never know.

:32:32.:32:37.

arrived at the hospital and greeted with the comment, I'm sorry we have

:32:37.:32:41.

bad news, you can't make this up, but we have lost your records.

:32:41.:32:45.

your records? Lost your records. What sort of records? 25 years of

:32:45.:32:51.

clinical records have got lost. As Don will tell you, when the

:32:51.:32:57.

records aren't there, there can be trouble. I'm in the cardiac ward

:32:57.:33:02.

and a consultant says to me, I want you to take this tablet. I said I

:33:02.:33:11.

can't tell take that, it -- I can't take that, it will have an adverse

:33:11.:33:14.

reaction. He said he wouldn't give me pain medication if I didn't take

:33:14.:33:22.

it. So I took it. He regained consciousness, on the floor, feet

:33:22.:33:29.

up, and receiving an intravenous drip to relieve my blood pressure.

:33:29.:33:34.

To avoid such catastrophes, University College Hospital

:33:34.:33:37.

Birmingham has been one of the first hospitals to transfer all

:33:37.:33:43.

records on toe confusion. It means confusion over drug doses has been

:33:43.:33:46.

dramatically reduced. Are you saying it makes a difference to

:33:46.:33:50.

patients' mortality on computer rather than paper? We have just

:33:50.:33:55.

published something in a scientific journal that demonstrates a more

:33:55.:33:59.

than 16% reduction in mortality emergencies, which results in the

:33:59.:34:03.

misdosage of drugs, give patients the drugs they are described and

:34:03.:34:06.

fewer die. We have 100 patients a year fewer dying in this

:34:06.:34:10.

organisation than we did three years ago. In Birmingham they say

:34:10.:34:13.

computerisation has helped. They are going further, trying to give

:34:13.:34:18.

patients access to their records on-line. This woman, who has

:34:18.:34:21.

rheumatoid arthritis, is one of the first to benefit. What you can get

:34:21.:34:26.

on the system now is they will show a little graph over time, my iron

:34:26.:34:30.

levels being a perfect example, started dropping off around

:34:30.:34:35.

November last year. It wasn't quite so obvious until you could see it

:34:35.:34:40.

in graph format, there it was. Plain as day. Do you feel better

:34:40.:34:46.

informed? I do. I have more of a basis for asking questions. But he

:34:46.:34:56.

willen works in the NHS as an information -- Elln works in the

:34:56.:35:01.

NHS, and has been aptitude for statistics. Patients are given

:35:01.:35:05.

freer access to their own medical records. It is an idea increasingly

:35:05.:35:08.

popular with medical bodies, like The Royal College of Physicians.

:35:09.:35:13.

Others argue in the long-term, it will simply mean doctors shuffling

:35:13.:35:16.

their responsibility, on to those least able to cope, their patients,

:35:16.:35:21.

the sick. The Government has said, by getting

:35:22.:35:25.

access to their notes, patients will have control over their

:35:25.:35:29.

treatment. It is right in line with Government thinking. And leading

:35:29.:35:34.

doctors' groups are also keen. most, I think, it is very welcome.

:35:34.:35:41.

They want to move in this direction. But it is because they want

:35:41.:35:47.

patients to have the opportunity to manage their own disorder, to make

:35:47.:35:52.

decisions. It is opportunity but is it responsibility? It carries

:35:52.:35:54.

responsibility. So the patient has responsibility rather than the

:35:54.:36:00.

physician? Not rather than, as well as. Duncan Diamond, a consultant

:36:00.:36:04.

for 40 years, says patients should be informed, but warns full access

:36:04.:36:07.

to their records will create further problems. I struggle to see

:36:07.:36:13.

how that will put the patient in control. A lot of the medical

:36:13.:36:17.

records will use terminology and numbers that nobody outside the

:36:17.:36:22.

medical profession is familiar with. That seems to me to introduce yet

:36:22.:36:25.

another potential gremlin into a difficult system. What about the

:36:25.:36:29.

notion that the patients could at least be the backstop, at least

:36:29.:36:32.

they would have control over their own? How do they co-ordinate it.

:36:32.:36:38.

They can come in and say hello doctor X, and I saw doctor. A and B,

:36:38.:36:41.

here are the records that your organisation is unable to find, I

:36:41.:36:45.

have got them. It is still a terrible indictment of the system,

:36:45.:36:48.

that relies upon someone who is ill and vulnerable, and maybe not at

:36:48.:36:56.

their best, worried, anxious, with anxious, worried relative to tro

:36:56.:37:01.

dues an add minutes -- relatives, to produce an administrative task

:37:01.:37:07.

that hospitals should do. Many think patients will need a

:37:08.:37:11.

degree of sophistication. What about those patients who aren't

:37:11.:37:14.

able? Those patients won't pick up the challenge and will continue to

:37:14.:37:19.

feel they want to be managed on a rather one-sided basis. What will

:37:19.:37:23.

happen to them? We will continue to do it that way, for those patients

:37:23.:37:28.

who want to engage much more in shared decision-making, shared

:37:28.:37:33.

management, we are right up for it and we want to see that. Some, like

:37:33.:37:39.

Don, see this as blind stumbling towards a two-teir health service w

:37:39.:37:46.

patients in the know, like him, OK, but the rest left floundering..

:37:46.:37:50.

Because I have argued and chased, but you can't expect the ordinary

:37:50.:37:54.

person to do that. It is not feasible. And ever more removed, he

:37:54.:37:59.

fears, from the dreams he still nurtures for the NHS.

:37:59.:38:06.

Britain has spent more than billion pounds in aid to Afghanistan. But a

:38:06.:38:12.

report by MPs raised the sposability that it may have been

:38:12.:38:15.

better -- possibility that it may have been better to give less to

:38:15.:38:24.

the Government and more to the local groups. The litmus test on

:38:24.:38:28.

whether British and US troops have succeeded is whether the lives of

:38:28.:38:32.

women have been improved for the better.

:38:32.:38:39.

My guests are with me. Laura Jane Patient of the British

:38:39.:38:49.
:38:49.:38:50.

Are the people of Afghanistan significantly better off now than a

:38:50.:38:53.

few years ago? They are better off, but there is a long way to go on

:38:53.:38:57.

things like women's rights. I think of the project on improving women's

:38:57.:39:02.

rights in Afghanistan as maybe 10- 20% of the way achieved since 200.

:39:02.:39:06.

There is a huge way to go, which is why the continued support of the

:39:06.:39:11.

international community, after 2014, is so crucial. But the question is,

:39:11.:39:16.

where should that support be directed? Do you think that after

:39:16.:39:21.

2014, those advances, modest though they may be, are going to be

:39:21.:39:25.

sustainable, or Afghanistan will just go back to the way it was?

:39:25.:39:29.

think there is a real danger of the progress that's been made turning

:39:29.:39:32.

around and going back and in the wrong direction. I think in terms

:39:32.:39:38.

of what the best way is to prevent that, what the best way is to

:39:38.:39:41.

deliver services, it varies from sector to sector and region to

:39:41.:39:45.

region, across the country. What donors need to do, they need to

:39:45.:39:49.

look hard at what is going to be the most effective way of

:39:49.:39:53.

delivering services to the people who need them. Sir William, the

:39:53.:39:58.

argument, according to the argument appearing to be made by MPs today,

:39:58.:40:01.

is the Afghan Government is fundamentally pretty useless and

:40:01.:40:07.

pretty corrupt, we all know that. Perhaps more money and more effort

:40:07.:40:11.

should be spent on other people, NGOs and so on, avoiding the

:40:11.:40:14.

Government where possible. What do you make of that argument? I think

:40:14.:40:19.

it is a forked choice. You have to do both. The reality is, if you

:40:19.:40:25.

only invest in NGOs, and there is a capacity problem here, not many

:40:25.:40:28.

NGOs can effectively do what we want them to do, those who are

:40:28.:40:33.

effective we are supporting, I say "we", I'm no longer responsible for

:40:33.:40:37.

this. The Government is definitely supporting. Unless you try to help

:40:37.:40:42.

the Government. The structure of the state in Afghanistan and to

:40:42.:40:46.

improve it, whatever you do through an NGO network will be short lived.

:40:46.:40:49.

Isn't part of the problem that the British and American Government,

:40:49.:40:52.

because of justifications for the war, in keeping troops and losing

:40:52.:40:56.

lives in the war, have had to be a bit softer on the Kabul Government

:40:56.:40:59.

in public, than they were in private, and you know some of the

:40:59.:41:02.

terrible difficulty with that Government, it is not really

:41:02.:41:07.

functioning very well is it? would all love the Kabul Government

:41:07.:41:11.

to be more effective and less corrupt. But it is a country which

:41:11.:41:16.

has had a Government which for 30 years has been in internal conflict.

:41:16.:41:20.

So overnight it won't be reformed. I disagree with the premises that

:41:20.:41:25.

the lit tus test will be the situation of women after don litmus

:41:25.:41:30.

test will be the situation of women over ten years. The reason we went

:41:30.:41:34.

in was to free Afghanistan from a terrorist organisation. The litmus

:41:34.:41:41.

test will be leaving a functioning state that has the prospect of

:41:41.:41:44.

succeeding. We have to address women's issues. There are five

:41:44.:41:50.

million kids in school, 40% of them are girls. Education for girls is a

:41:50.:41:57.

fundamental building block for the future. What do you make of that

:41:57.:42:02.

argument, that women are not the reason why we went into Afghanistan

:42:02.:42:06.

and not the reason why billions were poured into the country?

:42:06.:42:11.

don't agree, there was a lot of rhetoric about the evils of the

:42:11.:42:14.

Taliban and the horrible state of women, it was used very stragically

:42:14.:42:17.

as way to justify the war. I feel like a lot of people, including

:42:18.:42:21.

people like Tony Blair, and Cherie Blair, made promises to Afghan

:42:21.:42:24.

women at the time of the invasion, and this is the moment where we

:42:24.:42:28.

really see whether those promises will be kept or not. Do you see the

:42:28.:42:32.

point that you can, of course, fund NGO, but you can't stuff them full

:42:33.:42:36.

of money. And without a functions state, not much they will do will

:42:36.:42:40.

last. There is there has to be a functioning state left behind in

:42:40.:42:45.

Afghanistan, or the whole project will crumble? I think it is, of

:42:45.:42:47.

course, important to have a functioning state. Is it possible

:42:48.:42:52.

for the UK to create a functioning state in Afghanistan. I don't think

:42:52.:42:57.

it is within the UK's power. The state may be functioning or not, it

:42:57.:43:00.

may continue to function or not. There are a lot of unknowns ahead.

:43:00.:43:03.

But this report that came out today does a really good job of

:43:03.:43:08.

illustrating some of the ways in which NGOs can deliver services on

:43:08.:43:11.

the ground, in areas that the Government just can't achieve that.

:43:12.:43:17.

So I don't see any reason to be sceptical about funding NGOs, and I

:43:17.:43:21.

don't see funding NGOs as undermining the role of the

:43:21.:43:25.

Government. We see services delivered through NGOs in many

:43:25.:43:31.

countries. The Government has a role in regulating those NGOs,

:43:31.:43:33.

licensing them, providing quality assurance. That doesn't undermine

:43:33.:43:39.

or go around the Government. William, do you worry that when

:43:39.:43:46.

British people see the news tonight, and two more British soldiers named

:43:46.:43:49.

victims of the fighting there. And they will look on that money that

:43:49.:43:55.

has been spent, and they will look with some concern to the future and

:43:55.:43:58.

what happens after 2014 a lot of people thinking it is a waste?

:43:58.:44:02.

understand it, I don't think it will have been a waste. I think at

:44:02.:44:08.

the end of 2014 which the time the troops withdraw. It is not end of

:44:08.:44:12.

our time in Afghanistan, it is the combat engagment. We will continue

:44:12.:44:16.

to work on things, building the state, making sure they can collect

:44:16.:44:19.

taxes. I think it is false choice. I'm not arguing we shouldn't

:44:19.:44:23.

support NGOs and only the state. We are actually doing both. And I

:44:23.:44:27.

think that's the important thing to remember. That at the same time you

:44:27.:44:30.

are trying to support women's groups, empower civil society, and

:44:30.:44:34.

do what you can, you are also, at the same time, trying to make sure

:44:34.:44:38.

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