30/10/2012 Newsnight


30/10/2012

Live on the ground in New York, after superstorm Sandy. And what does it mean that the standard of living is dropping every decade?


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It was bad, but it wasn't as bad as many had feared. The tropical storm

:00:15.:00:19.

that hit the American east coast was ferocious, electricity stations

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exploded, houses burned to the ground, tunnels flooded. But in the

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end, for all the pain, New York could take it. How will history

:00:27.:00:30.

measure the impact of the great storm of 2012.

:00:30.:00:35.

REPORTER: How long do you think it will take to get life back to

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normal? Life back to normal, a long time. Right across the street you

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can see the whole of Hoboken, flooded, cars floating, still.

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will hear from the man who was Mayor of Norl lones during

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Hurricane Katrina. Here at home, has the great promise of capitalism,

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that we could all look forward to rising standards of living ended.

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We are told today many more of us will be worse off in ten years time

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than we were ten years ago. We will discuss with, among others, the

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boss of British Gas, and the Conservative minister they say has

:01:09.:01:19.
:01:19.:01:20.

two brains. Thus far, over 30 people have been

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killed by the storm which hit the east coast of the US last night. It

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had already killed twice that number in the Caribbean. But they

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didn't die on television. The storm's effects on the city that

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never sleeps was pretty stunning, it close the Stock Exchange and

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theatres and interrupted the election campaign. It has been a

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stark reminder for a country built on the belief in the possible, that

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there are limits. We go and join Mark Urban in Manhattan.

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Whereabouts, precisely, Mark? We're on 30th and 1st A&E about a

:02:06.:02:10.

third of the way, down Manhattan island, or two thirds, whichever

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way you look at it. You can see a few Bocas behind me, up town,

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everything down town has no power, we have power up town. What you can

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see if you go down there, is great modern city deprived of its life

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force, electricity. People are out on the streets, talking, they can't

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cook, they can't do anything in their flats. They are in groups in

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the dark trying to make sense. In some places restaurants are using

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candles and storm lat terns to carry on as normal -- lant terns to

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carry on as normal. Homeless people in terrible straits. While the

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water has receded from the streets, the thing about that part of

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Manhattan, the built up, Wall Street area, so many buildings go

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two or three floors underground, those floors are flooded. We saw

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pumps working to try to clear them of water. In one building thereof

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20 feet of water still down -- there was 20 feet of water still

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down there. That could be a long haul. It is a new reality the city

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is waking up to, and we witnessed earlier across the river today.

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Welcome to Hobo ke, n, a poor city on the New Jersey side of the

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Hudson. Play like this felt the worst of it. By the time we got

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there, the water had already fall bin four feet. On the heights above,

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power lines had been brought down across this street. Bringing life

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to a halt. Nobody was ready for this, this

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never happened before it was devastating. I have a house down

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the jersey shore, it is under water they tell me. In this deluge, the

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poorest have been hit hardest. We found the emergency services saving

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a homeless man. Looking like a biblical character, escaping a

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biblical torrent, he had waited it out on some high ground until

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rescue arrived. Nature's irresistable force, in New York,

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met an immovable object, America's greatest city. That city is now

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working hard to restore normality. The damage we suffered across the

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city is clearly extensive, and it will not be repaired overnight. The

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two biggest challenges facing our city going forward are getting our

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mass transit system up and running, and restoring power. I think it is

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fair to say that you should expect, given the extent of the damage,

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power may be out in lot of places for two or three days, and maybe

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even a little bit longer than that. I don't know what's going on, what

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the hell is this? Last night, the had Hurricane hit New York.

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Shorting out power supplies in spectacular fashion. In places, the

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subway flooded, and one of the city's hospitals, bereft of

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electricity, had to evacuate hundreds of patients. Around 9.00pm,

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we lost our power, unfortunately the hospital's back-up generators

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also failed. They had to evacuate, about 215 patients from the

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hospital in the middle of the night. People were like, if can you help

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evacuate patients from the hospital, then come out. But we heard that

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patients were being carried down the stairs, because the elevators

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weren't working. In many states, not least Washington DC, the damage

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was minimal. The President's decision to suspend campaigning, in

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order to take charge of the situation, appeared entirely

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justified. I was on the phone for the third time yesterday, last

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night, with the President of the United States. He called me at

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midnight last night, to check in on how things were going. He was

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seeing reports about how bad things were in New Jersey. The co-

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operation from the President of the United States has been outstanding,

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he deserves great credit. Has the President used the situation as the

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city struggles to get back on its feet to his political advantage. It

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certainly looks that way. He's remaining in charge of the relief

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efforts, eschewing the campaign, while his rival, Mitt Romney, has

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indicated he will resume his campaigning activities tomorrow.

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But this could still turn bad for the President. If people go days

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without power, and cities do not get moving again, it could turn

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into a toxic blame game. Something Mr Obama seems to understand all

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too well. My instructions to the federal

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agency has been, do not figure out why we can't do something, I want

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you to figure out how we do something. I want you to cut

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through red tape, bureaucracy, there is no excuse for inaction at

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this point. I want every agency to lean forward, and to make sure that

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we are getting the resources where they need to be, as quickly as

:07:25.:07:30.

possible. This crisis hardly matches up to 9/11, but New York is,

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once again, at the centre of a national drama. And the proximity

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of election day, only emphasises, more strongly, what's at stake.

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Let's just catch up now with Mark in New York. The bigger picture,

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Mark, politically? Well, the fact that the election is less than a

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week away is colouring everything. So the President, for example, says

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that he is still not returning to the campaign trail, officially, in

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order to co-ordinate the relief efforts, yet we hear he's coming to

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New Jersey tomorrow, to go on fact- finding mission. Of course,

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exercising control, looking in charge, he will also be meeting

:08:17.:08:20.

governor Christie, who we heard from in the piece. There's a

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Republican, who seems to be giving him fulsome public support in this

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crisis. The politics of that too complex, but it would seem, that he

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doesn't want Governor Romney to win, he wants to position himself for a

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bid for the presidency next time round. Politic suffuse all of this.

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Mitt Romney, in order to try to look relevant, is going back on the

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campaign trial tomorrow. The difficult thing for him, of course,

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will be to appear to be doing something responsible and serious,

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while the President is managing this crisis. One man who knows

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about natural disasters is Ray Negan the Mayor of New Orleans

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during the Hurricane Katrina. He joins us from Dallas. What has had

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been like watching this storm hit the east coast? Well, it's been

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fairly surreal for me. This storm was very dangerous, it had an

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incredible footprint. It wasn't as strong as Hurricane cat treen

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national cirriculum but I'm catching in -- Hurricane Katrina,

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but I'm catching how well the Government and the federal state

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are co-operating. President Obama is doing an outstanding job of

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making sure that the resources. I love the fact that he's saying no

:09:40.:09:43.

excuse from any of his federal agencies, get the job done. So the

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system is working much better now than it worked begin Hurricane

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Katrina hit you? -- working much better than when Hurricane Katrina

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hit you? It seems to be working much better. This is the second

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Hurricane that has threatened the east coast. I could see from the

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previous Hurricane, they were using some of the techniques and lessons

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we learned, which I outlined in my book, Katrina's Secrets. It seems

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we have learned hard lessons, but they are being put into action, and

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the responses with FEMA positions assets and water and food for

:10:23.:10:29.

citizens, is working much better than it did during Hurricane

:10:29.:10:33.

Katrina. What do you learn about human behaviour from this sort of

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natural disaster? Well, it's going to be interesting in the next

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couple of phase. They have gotten through the pre-storm event, the

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storm event, now the aftermath, I think is just as difficult. Because

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frustrations are going to start to mount. No matter how quickly they

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restore power, or get the debris cleaned up, many citizens will

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still be frustrated. They will want to see their city back the way it

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was before the storm hit. And that's just not possible. So

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managing expectations, managing frustrations going forward, is

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going to be a key challenge. Especially when you have an

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election cycle that's right upon us. Managing lawlessness, you

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discovered, didn't you? Well, lawlessness for us, keep in mind

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Hurricane Katrina was so devastating, 80% of the city of

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devastated and under water. People thought it was the end of the world.

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In modern, urban people, just don't have a stockpile of food and water

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to eat and to drink. So looting started for survival. Then once it

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got to the point where no-one was really stopping it, because we were

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rescuing people, then opportunistic people took over and it got a bit

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out of hand. What do you expect to be the political impact. We saw

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then the Governor of New Jersey, being really handsome in the

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tribute he paid the President, although he's actually of Mitt

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Romney's persuasion, in theory? Yeah, he's a Republican, Governor

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Christie, but I know him. He's a good man. And he's just telling the

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truth. President Obama has stepped forward, he's been in constant

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communications, is the way I understand things have gone. He's

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forced his people to really focus on responding at a much higher

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level. And President Obama, before he became President, was a US

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senator, and he visited New Orleans after the storm, I visited him in

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his office several times, he helped us a lot. He learned a lot from

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Katrina and he is applying those lessons. Thank you for joining us.

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Now, unless you are very rich indeed, it can't have Es kaiped

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your notice, this country has become -- escaped your notice, this

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country has become a very costly place to live. The staples of life

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are more expensive than ever, and wages have simply not kept up.

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People on low to middle incomes, working people, not those on

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benefits, face the prospect of being poorer in 2020 than they are

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now. Once upon a time, benign employers raised pay to keep pace

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with the cost of living. If they didn't, trades unions organised

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strikes to meet the need. Now it is different, something has gone badly

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wrong, and the promise of western capitalism, of ever rising rates of

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pay, has turned out to be a cheque that's bounced. What's to be done?

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Tonight we are taking a report from an organisation called the

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Resolution Foundation, who have got their own ideas to tackle the

:13:41.:13:51.
:13:51.:13:54.

problem. First Allegra Stratton reports.

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These kids, and then their kids, and the kids of their kids, they

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would suffer setback, but broadly their's was to be a steady march

:14:03.:14:09.

across sun lit uplands. We all know about the American dream, but that

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faulted some decades back. In Britain, we would keep on never

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having had it so good. Except the muscles carrying us up the hill are

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jamming. Women are driven from the job market by the cost of child

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cautious and women and men by machines. Sheltering inside the

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home, with the declining wherewithal to pay for that home.

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Assume the economy returns to average levels of growth, by 2020,

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lower income households could still be at incomes not seen since 1993,

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middle income families could be seen at incomes last seen in 2001,

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that is according to this man, and 11 otherwise men and women. During

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the mid-1990s, through to the early 2000, we had a good period, then

:14:59.:15:02.

things turned a bit darker after that. It happened for a number of

:15:02.:15:06.

reasons. In part the share of GDP going to profit, rather than out to

:15:06.:15:10.

labour, rows in that period, there was money left -- rose in that

:15:10.:15:15.

period. There was money back to the worker. There were more costs on

:15:15.:15:20.

employers, that squeezed wages more. The population were getting older,

:15:20.:15:23.

there were greater pension contributions, and high levels of

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wage inequalities in this country. If you were down the spectrum, a

:15:27.:15:29.

lot of money was sucked into the pockets of the better off. We

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didn't do well for sharing out the gains from growth during some of

:15:33.:15:37.

those years. The Resolution Foundation's commission of 12

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eminent people across public life probed figures like this. Why from

:15:44.:15:50.

2003-20008 did the incomes of low to middle households grow by just

:15:50.:15:54.

0.3%, while the economy grew 1.4%. The boiler of living standards may

:15:54.:16:00.

not be working any more, can these chaps fix it? I believe I need to

:16:00.:16:04.

do more nowadays. My mother and father would have had to do then, I

:16:04.:16:07.

need to do more than they did then. Why do you think that? Just to live

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on a nice level, and where I would like to be. One of the

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commissioners, Phil Bentley, is the managing director of British Gas.

:16:17.:16:20.

This hourglass economy is lousy jobs at the bottom and lovely jobs

:16:20.:16:24.

at the top, so a lot of unskilled work out there, quite a few jobs at

:16:24.:16:28.

the stop which are skilled, but in the middle not so much, you see

:16:28.:16:32.

your role as helping with that middle? All our people at British

:16:32.:16:37.

Gas have got really important skills. Just they are either in the

:16:37.:16:41.

customers' homes, helping reduce the energy bill, or getting the

:16:41.:16:44.

heating working. British Gas, by its own declaration, has been

:16:44.:16:48.

training people to light the gas lights of London for 200 years, you

:16:48.:16:52.

have always been training, what is different about the jobs market now.

:16:52.:16:58.

This isn't a choice, you need to train them? We have great guy, as

:16:58.:17:03.

you guys will attest, 50 people apply for every one place. There

:17:03.:17:07.

are fewer jobs around like our jobs. Either you are a graduate or off at

:17:07.:17:11.

university, sometimes in low-paid jobs. In the middle there, these

:17:11.:17:16.

are the skills that require dexterity, require hard work, and

:17:16.:17:23.

people can progress. Bentley sound like a disciple of pre-distribution,

:17:23.:17:29.

that is the Labour leader's big idea. For the uninitiate, it is the

:17:29.:17:33.

feeling that the state can no longer redistribute wealth so,

:17:33.:17:37.

employers need to do more. We can't expect the state to bail us out, we

:17:37.:17:41.

have to do it with our own skills, and operate in a competitive world

:17:41.:17:45.

out there. And Britain has to compete. That goes back to skills

:17:45.:17:51.

from schools, apprentices, all the way through, we're competing as

:17:51.:17:54.

Germany, competing against Singapore and the rest of the world.

:17:54.:17:57.

Bentley and the other commissioners believe kprot Britain must spend

:17:57.:18:02.

more on wages. -- corporate Britain must spend more on wages. They show

:18:02.:18:06.

how on the bottom three sectors of the bar chart.

:18:06.:18:09.

Paying the minimum wage to reflect the cost of living wouldn't exactly

:18:09.:18:15.

break the bank. And then, what about opening the

:18:15.:18:18.

door to many people who currently feel slightly shut out. Over the

:18:18.:18:23.

last 30 years, many households have seen living standards rise, because

:18:23.:18:28.

women entered the work force. If it's to be reversed, to too will

:18:28.:18:33.

its effects on people's pockets. This is another of the Resolution

:18:33.:18:37.

Foundation's commissioners. Gaby used to do a job like mine. She was

:18:37.:18:40.

the Observer Newspaper's political editor, until she really did leave

:18:40.:18:44.

to spend more time with her family. Gaby doesn't pretend her economic

:18:44.:18:48.

situation is typical of those on low-to-middle income jobs. She

:18:48.:18:52.

knows first hand what it is like to balance childcare with care for

:18:52.:18:56.

your career. What I liked about the idea of this report, is it took

:18:56.:19:00.

what is often seen as fluffy female issues, like childcare, working

:19:00.:19:04.

motherhood, and said these are not add-ons to politics, these are core

:19:04.:19:07.

economic issues, and getting women back to work, making sure people

:19:07.:19:12.

can work when they want to work, is absolutely critical to the future

:19:12.:19:16.

of the economy and GDP, I liked that hard-edged approach.

:19:16.:19:20.

report shows that UK female employment remains at significantly

:19:21.:19:27.

lower levels than other advanced economies. The UK is 15th in the

:19:27.:19:33.

OECD for employment between wages of 254665. If we were to move up as

:19:33.:19:36.

those better achieving economies, it would mean mail I don't know

:19:36.:19:40.

extra women going into employment. The gap opens -- a million extra

:19:40.:19:44.

women going up into employment, the gap opens up with mothers to non-

:19:44.:19:48.

mothers. There is, of course, another generation just as busy

:19:48.:19:53.

looking after yet another generation. The 55s-65s, who look

:19:53.:19:57.

after either their grandchildren or elderly parents or both. Childcare,

:19:57.:20:02.

social care, a wrap-around welfare state. There are problems at two

:20:02.:20:05.

ends of the scale. Everyone thinks about working mothers, there is a

:20:05.:20:11.

real problem with over 55s as well, a gap in the labour market, some

:20:11.:20:16.

could be working and can't. Some reach 55 and they are ill, they

:20:16.:20:19.

have heart problems, and they can't all be in work. However, there are

:20:19.:20:23.

a lot of people who probably could work. What we were looking at is

:20:23.:20:26.

whether there are financial incentives, say you allowed them to

:20:26.:20:31.

keep more of their money stage. You would use the Nics threshold, more

:20:31.:20:38.

of those people could be in work. So, after a year, the commission

:20:38.:20:42.

has come to Andrews end, it recommends increasing the urpbt --

:20:42.:20:47.

the an end, it recommends increasing childcare for 3-4-year-

:20:47.:20:53.

olds to 25 hours a week. It would allow people to take part-time jobs,

:20:53.:20:58.

charged the at �1 an hour or �10 a week. The commission would reduce

:20:58.:21:04.

taxes for low-paid, older workers, to encourage them to stay in work.

:21:04.:21:07.

And finally, once and for all, the commission would solve the thorny

:21:07.:21:11.

problem of social care and how to fund it. So, a report that shows

:21:11.:21:15.

that there is a way, now over to Westminster to gauge if there is a

:21:15.:21:20.

will. Gathered here are three of the

:21:20.:21:25.

people who contributed to the lives standards commission. Phil Bentley,

:21:25.:21:30.

the managing director of British Gas, Sally Russell of Netmums, and

:21:30.:21:32.

Clive Cowdrey, the chair of the Resolution Foundation. And a

:21:32.:21:36.

businessman, also with us, is lets let lets, the Universities'

:21:36.:21:42.

Minister and author of a book called the Pitcher: How The Baby

:21:42.:21:45.

Boomer Stole Their Children's Future. We will take the issues in

:21:45.:21:51.

three sections. First David Willetts, I would like to ask you,

:21:51.:21:55.

this is not about recession, retrenchment, it is about something

:21:55.:21:58.

going fudgely wrong with the way the economy works, do you accept

:21:58.:22:03.

the analysis? Yes, I do. It traces this trend back to the beginning of

:22:03.:22:07.

this century, even earlier in the US. I think it is a very important

:22:07.:22:10.

report, and something that will promote a lot of debate. There is

:22:10.:22:14.

no sign it will get any better without some sort of action, and

:22:14.:22:19.

frankly, sticking plaster sort of action is what much of this

:22:19.:22:22.

proposal is? I don't think we should, nothing is inevitable, can

:22:22.:22:27.

you do things. Even in the report we have just seen, the apprentices,

:22:27.:22:30.

the Government is creating more apprentices, absolutely, to have

:22:30.:22:33.

more people in the middle income jobs, which is where this report

:22:33.:22:37.

identifies the squeeze is happening. I think we can partly tackle that,

:22:37.:22:42.

by training people, giving the best qualifications to get well-paid,

:22:42.:22:44.

secure jobs. That is what more apresent at thiss are about. There

:22:44.:22:48.

is a lot more to do. Even in a recession, we are trying to tackle

:22:48.:22:56.

it. Let's lock at the central worry in this, people's standards of

:22:56.:22:59.

living are not rising because rates of relative pay are not rising at

:22:59.:23:04.

the rate they should be. Why does that matter? It isn't as if people

:23:04.:23:10.

were starving in 1939, which is -- 1993, which is the comparison we

:23:10.:23:14.

are getting to? One of the reasons people weren't starving is the

:23:14.:23:18.

introduction of tax credits, which means we have been topping up

:23:18.:23:23.

household incomes, to the tune of around �500-�600 a year. We have a

:23:23.:23:27.

tax credit bill at �32 billion a year. I don't think anybody

:23:27.:23:30.

believes across the whole political spectrum, that amount of money can

:23:30.:23:34.

go up. Therefore, that lever for topping up income is not available

:23:34.:23:38.

to us any more. The other lever households had available was

:23:38.:23:42.

personal borrowing, but personal borrows in households running at

:23:42.:23:47.

140% of income, therefore, that lever is unavailable, we have to do

:23:47.:23:51.

something that makes work pay. That means increasing skills, and

:23:51.:23:55.

putting the focus to get more people out to work, by removing

:23:55.:23:59.

second earner problems. How worried were you about what you found out

:23:59.:24:02.

in the investigation? I was really worried, actually. I was really

:24:02.:24:08.

surprised to see the original graph that was shown to me before I

:24:08.:24:11.

joined the commission was one which showed GDP going up, and suddenly

:24:11.:24:15.

there is a disconnect, you find living standards used to go up in

:24:15.:24:20.

line and are now plateauing, and to see it is going on for much a long

:24:20.:24:25.

period is quite worrying. I will come to you in a second Phil

:24:25.:24:29.

Bentley. The most obvious solution to the problem of keeping yourself

:24:29.:24:34.

warm and buying enough to eat, is transaction as old as civilisation,

:24:34.:24:38.

you sell your labour or skills. The worry is the ability of companies

:24:38.:24:42.

to move jobs anywhere in the world, the disappearance of entire

:24:42.:24:48.

catagories of job, and a certain lethargy, that takes over nations

:24:48.:24:52.

where no-one fears to go hungry any more, it doesn't seem to work any

:24:52.:24:57.

more. Here are facts and figures from the

:24:57.:25:06.

Resolution Foundation and their Commission on living Standards.

:25:06.:25:12.

The chart shows growth in productivity and wages, wages of

:25:12.:25:18.

the median worker at the middle typical worker in the economy. It

:25:18.:25:22.

shows between 1970 they grew at a similar rate, after that,

:25:22.:25:26.

productivity continued to trend upwards very rapidly, real wages

:25:26.:25:30.

don't grow very fast at median at all.

:25:30.:25:35.

Phil Bentley, it seems to me the request from both employers and

:25:35.:25:39.

business generally, and Government, was that productivity in this

:25:39.:25:43.

country had to be improved. People have done that. Productivity has

:25:43.:25:47.

improved, but they haven't seen the benefit? I think there's some

:25:47.:25:51.

companies that have invested in their work force, and you talk

:25:51.:25:53.

about the old tradesmen of old. These were the skills that when

:25:54.:25:59.

people didn't want to go to university, we were well paid, like

:25:59.:26:03.

those apprentices up seen were British Gas. They earn �28,000 a

:26:03.:26:06.

year when they are fully qualified. They have skills available now to

:26:06.:26:09.

make a good living for the rest of their lives. You think what struck

:26:09.:26:14.

me as being on the commission, was there was still a lot of industries

:26:14.:26:17.

paying the minimum wage. I don't think that is a good thing. We

:26:17.:26:20.

haven't got enough companies investing in labour, and investing

:26:20.:26:25.

in skills. You're a businessman, why would any businessman in his

:26:25.:26:28.

right mind pay more than he needs to? Because it is good business to

:26:28.:26:33.

do that. When our engineers go into our customers' homes, our customers

:26:33.:26:37.

expect them to be the very best. They are properly trained and

:26:37.:26:42.

working in a hazardous environment, gas and electricity, carbon Monday

:26:42.:26:47.

knock side. We want the best engineers, and our customers expect

:26:47.:26:51.

that. Your customers pay for it through the nose. What is the price

:26:51.:26:57.

of gas since 2000? The price of gas has gone up. I knew you would ask

:26:57.:27:01.

that question. Of course I would, there is a degree of hypocrisy

:27:01.:27:06.

about this, isn't there? Prices have come up, they are 8% of

:27:06.:27:09.

household expenditure. When you talk to people where they are

:27:09.:27:14.

feeling the pinch, it is always energy prices early on. You are

:27:14.:27:19.

grunting assent here? I get that point. This is why we are investing.

:27:19.:27:23.

Those apresent at thiss you saw, they are going in installing smart

:27:23.:27:27.

metres, insulation in the home, energy-efficient boilers. They are

:27:27.:27:31.

paying you so much money, that is why? Companies like our's are

:27:31.:27:37.

investing in our customers' homes and saving customers money because

:27:37.:27:39.

they are more energy efficient. That is one aspect of the

:27:39.:27:43.

investment going into the energy industry. The question here, the

:27:43.:27:46.

core question is the question of skills. Why is the basic level of

:27:46.:27:52.

skills in this country so low? think apprenticeships went out of

:27:52.:27:56.

fashion. Essentially the old industry that had apprenticeships

:27:56.:27:59.

suffered, and the new industries weren't investing in

:27:59.:28:04.

apprenticeships, but we really are reversing that trend. 250,000

:28:05.:28:07.

apprenticeships, more of the funding into the hands of the

:28:07.:28:11.

employerers to get the training they need. -- employers to get the

:28:11.:28:16.

training they need. That could tackle the problem the proper

:28:16.:28:19.

report has identified, the squeezed middle, those who don't have the

:28:19.:28:23.

skills and training to hold down a good middle income job. We can

:28:23.:28:27.

tackle that with the apprenticeships we are delivering.

:28:27.:28:30.

You are not doing anything to bring down energy prices either?

:28:30.:28:35.

Prime Minister talked about this week. The fact is you can also

:28:35.:28:39.

bring in competition and the opportunity for going to the lowest

:28:40.:28:43.

tarrif available. Both sides of the equation. Better-trained people

:28:43.:28:47.

with well-paid jobs, and absolutely, competition, contestability,

:28:47.:28:52.

getting the best deal on offer to hold down prices. Now, what

:28:52.:28:57.

conclusion did you come to about what's gone wrong with the basic

:28:57.:29:01.

desire to acquire skills in the work force here? I think there is a

:29:01.:29:04.

problem with matching whether those skills will help you find the right

:29:04.:29:07.

kind of work. We have seen a change in the structure of the employment

:29:07.:29:11.

market and the economy. In the ten years we are in now, 2010-2020, we

:29:11.:29:17.

will, as a country, create two million professional level jobs,

:29:17.:29:22.

400,000 service level jobs. During that same ten years we will lose

:29:22.:29:25.

800,000 mid-level, administration and manufacturing jobs. So matching

:29:25.:29:29.

up the skills you are going to get, and seeing that you are gaining

:29:29.:29:32.

those skills, will actually earn you more during your working

:29:33.:29:37.

lifetime. That is why we need a joined-up policy around this, so

:29:37.:29:40.

the skills agenda matches with the economic policy, to see Britain

:29:40.:29:43.

being able to create the jobs in that mid-level size. I think you

:29:43.:29:47.

find a lot of companies are not investing in the skills that they

:29:47.:29:51.

used to. That is something that we see, some of our engineers get

:29:52.:29:54.

poached by other companies that aren't investing. I think one of

:29:55.:29:59.

the things the Government could do is give more support to recognise

:29:59.:30:05.

aTrent pissship -- apprentice schemes, and when we have contracts

:30:05.:30:09.

with local Government, we have always gone where with the lowest

:30:09.:30:13.

price. We need to look at how many people were trained, and the

:30:13.:30:16.

lasting skills that have been laid down here. You essentially want a

:30:16.:30:19.

form of bonded labour, don't you, you train somebody, you want them

:30:19.:30:26.

to be compelled to stay with you for two or three years? 967% of our

:30:26.:30:30.

engineers stay with us -- 96% of engineers stay with us because they

:30:30.:30:35.

want to develop their career. The point I'm making is the other

:30:35.:30:40.

companies are not investing in the same way. I don't think the

:30:40.:30:44.

poaching is a problem, I think if you invest well people are loyal

:30:44.:30:47.

and they will stay with you. There are problems for the small

:30:47.:30:51.

companies, we are trying to reduce the red tape and provide a bigger

:30:51.:30:57.

cash bonus for every small company that takes on an apprentice, an

:30:57.:31:05.

extra �1500 matters. It does matter. We like to think of the unions as

:31:05.:31:09.

partners, that is the right way in the modern world. One of the

:31:09.:31:12.

mechanisms you could use would be to raise the minimum wage to the

:31:12.:31:15.

living wage level. Do you think that would be a help? I think that

:31:15.:31:18.

would make a huge difference to many families across the country.

:31:18.:31:22.

We are seeing people who are really just struggling who are working on

:31:22.:31:26.

minimum wage at the moment. They are just really not making ends

:31:26.:31:30.

meet. We see that all the time through the work that we do on the

:31:30.:31:35.

website. But I think also it is about women in work as well. We are

:31:35.:31:38.

going to come to that aspect in just a moment or two. Before we

:31:38.:31:41.

leave the question of the minimum wage, you have already conceded

:31:41.:31:46.

there is a problem. There is an element of a solution here. Will

:31:46.:31:49.

you raise the minimum wage, will you match the minimum wage and the

:31:49.:31:54.

living wage? What we can do, we can improve the living standard of

:31:54.:31:58.

people on the minimum wage by take them out of tax. We have now people

:31:58.:32:02.

on the minimum wage not paying income tax. Until this year you

:32:02.:32:06.

could be on the minimum wage and facing incomes tax as well. That is

:32:06.:32:10.

what the Government can do. I'm wary of increasing the minimum wage

:32:10.:32:13.

substantially because there is a risk it hits employment. We have

:32:13.:32:17.

created over a million new jobs in the private sector, even during

:32:18.:32:22.

austerity, it shows you can make things work. Do you worry about the

:32:22.:32:28.

raising of the minimum wage? No, I don't, we pay well above the

:32:28.:32:33.

minimum wage. What we found in the report, there are sectors where

:32:33.:32:37.

jobs will not move overseas, if you are working in a shop, or working

:32:37.:32:42.

in catering, you can't do that from China. So let's make sure we pay

:32:42.:32:45.

the right minimum wage for the right sectors. Let's go on to the

:32:45.:32:49.

question of women in the work place, one of the really big changes of

:32:49.:32:52.

the last 50 years, in order to maintain the standard of living

:32:52.:32:56.

they feel they need, it is now the norm, very often, for both parents

:32:56.:33:01.

to work. That, in turn, creates a need for some way of caring for

:33:02.:33:10.

children. Here are some facts and figures.

:33:10.:33:14.

The question we were trying to answer, and the chart answer, is

:33:14.:33:19.

asking what happens when you increase the hours worked in the

:33:19.:33:23.

labour market by the second earner in the household, and what happens

:33:23.:33:27.

to childcare costs and income after faxes. By the line towards the

:33:27.:33:31.

bottom end of the chart, the share of childcare costs increases as you

:33:31.:33:36.

move towards longer hours in the labour market. By the time you get

:33:36.:33:40.

to full-time work, the childcare costs take out a substantial chunk

:33:40.:33:42.

of net income, and there is a difference between the net income

:33:42.:33:46.

line on the right hand side of the chart.

:33:46.:33:51.

OK, now Willetts let, why is childcare so expensive here? It is

:33:51.:33:55.

a very good question. Childcare in this country. Answer it? I will

:33:55.:34:01.

have a try. Childcare in this country is unusually expensive. I

:34:01.:34:05.

think it is overregulated and overcomplicated. We had a big

:34:05.:34:10.

attack on child minders, a big fall in the number of child minders,

:34:10.:34:13.

which is cost effective in delivering childcare. The funding

:34:13.:34:16.

has gone in complicated different funding schemes, there is

:34:16.:34:18.

management time in collecting the funding. There is a certificaties

:34:18.:34:23.

of problems we are trying to tackle, in tough sometimes r times, to help

:34:23.:34:28.

women with childcare. You were just getting on to it a second ago, or a

:34:28.:34:32.

few minutes a is this a growing problem, do you hear more and more

:34:32.:34:35.

people worrying about it? Absolutely, we have seen a change

:34:35.:34:38.

in the last ten years. It is interesting when you look at the

:34:38.:34:48.

longer picture to see that women were working increasingly from

:34:48.:34:51.

about 55-70% over 30 years. But in the last ten years it has trailed

:34:51.:34:55.

off. We are not seeing the growth in female employment. And one of

:34:55.:34:59.

the key reasons for that is the cost of childcare, it has gone up

:34:59.:35:04.

so much. It is making it unaffordable. It is just not worth

:35:04.:35:08.

working if you have to pay out that much in childcare. What do you

:35:08.:35:12.

think, Phil Bentley, could be done, then, to get around this problem?

:35:12.:35:17.

We certainly think there should be more free childcare available.

:35:17.:35:23.

for by? Well, you think one of the suggestions we have is how we fund

:35:23.:35:27.

our recommendation, one area might be means testing Winter Fuel

:35:27.:35:31.

Payment, for example. One might be, you have probably got some concerns

:35:31.:35:35.

there. What we have called for in the report, is the current 15 hours

:35:35.:35:40.

of childcare a week should be extended in two days. First, an

:35:40.:35:45.

additional fen hours should be available at -- ten hours should be

:35:46.:35:50.

available for �1 an hour, a minute national charge, and it should be

:35:50.:35:54.

extended into the school holidays, those are the issues that prevent

:35:54.:35:57.

somebody making the decision to go to work. The second thing we have

:35:57.:36:01.

asked for in the second earner situation, is when the second

:36:01.:36:05.

earner, typically again, the woman, begins to work, she's able to earn

:36:05.:36:11.

the first �2,000 of that before it eats into what the house how old is

:36:11.:36:15.

receiving in tax benefits. What has this to do with the state? State

:36:15.:36:20.

wants a strong, viable middle-class, a group of people able to afford to

:36:20.:36:24.

hold their head above water without falling back on to welfare benefits.

:36:25.:36:29.

That is a central social goal for administrations for a very long

:36:29.:36:33.

time. Do you think it is the state's job? I think Government can

:36:33.:36:37.

do parts of this. Part of Iain Duncan Smith's reform, in the old

:36:37.:36:42.

days you couldn't get help with your childcare costs if you are

:36:42.:36:47.

working less than 16 hours a week, we have got rid of that. We have

:36:47.:36:50.

extended help with parents of children aged two, so they get free

:36:50.:36:56.

assistance on low incomes. Again, even in stuff -- tough times we are

:36:56.:36:59.

trying to tackle the fundamental challenges to help struggling

:36:59.:37:03.

families to help with their costs. There are things we can do.

:37:03.:37:09.

Philosophically, why does the state have to do it? I would believe that

:37:09.:37:12.

Governments have a responsibility to be alongside people trying to do

:37:12.:37:16.

the right thing. If you are trying to raise kids, and you both want to

:37:16.:37:20.

go out to work, and it is overregulated so the costs are too

:37:20.:37:26.

high, we should tackle the red tape. If you are finding the tax credit

:37:26.:37:30.

system is penalising you, we should get rid of the penalty. We are

:37:30.:37:39.

working through to it to help those trying to work. The bottom half of

:37:39.:37:44.

workers receive 12p in the pound for every pound the country earns

:37:44.:37:48.

of GDP, but they have 50% of the vote. This is ten million working

:37:48.:37:52.

people, one third of the working population, who live in six million

:37:53.:37:55.

homes and have five million children living in those homes.

:37:55.:38:01.

This is a group increasingly aware they have been left behind by that

:38:01.:38:04.

decoupling. And their votes can be bought? Their issues can be

:38:04.:38:08.

addressed. As we go into 2015 and certainly by 2020, this is a

:38:08.:38:12.

segment of the population that right across the political spectrum,

:38:12.:38:16.

people will be seeking to show they have made proportionate responses.

:38:16.:38:19.

Thoo these are the strivers David Cameron was talking about the other

:38:20.:38:23.

week. These are people who have absolutely mainstream values, they

:38:23.:38:27.

are trying to do the right thing. They are entitled to feel in return

:38:27.:38:31.

that politician of whatever pairt are on their side and trying to

:38:31.:38:35.

tack -- party, are on their side and trying to tackle their problems.

:38:35.:38:38.

The New Society, which seems to be emerging from the changed economy

:38:38.:38:43.

of this country, looks very different from what went before.

:38:43.:38:47.

That group, the "squeezed middle", between the richest and the poorest,

:38:47.:38:50.

seems to be growing and growing. The question that arises is

:38:50.:38:54.

fairness, not just between rich and poor, but between young and old.

:38:54.:39:04.
:39:04.:39:05.

For the third time, a few figures. This chart shows male employment

:39:05.:39:11.

rates in the UK, relative to the OECD for different ages of men.

:39:12.:39:16.

What is striking is it shows how poorly we do in terms of men aged

:39:16.:39:23.

55 or over. Male employment rate is much lower in the UK than other

:39:23.:39:27.

OECD countries. This is because the relatively poor work performance of

:39:27.:39:31.

less skilled men, who worked in more traditional jobs that have

:39:31.:39:34.

collapsed in the labour market over the last 40 years. Looking at the

:39:34.:39:40.

question of old people. What did you discover about old people, and

:39:40.:39:44.

why there were fewer working? a complicated decision to work as

:39:44.:39:48.

you get older. In your late 50s you are quite likely, given longevity,

:39:48.:39:54.

to have somebody you are looking after, who is in their late 70s and

:39:54.:39:57.

early 80s. It is not always an easy decision to work. For those who

:39:57.:40:02.

want to, the difficulty is the jobs available, might be in comparison

:40:02.:40:06.

with your benefits, only a marginal improvement in your household

:40:06.:40:09.

income. One of the recommendations in the report, is you would raise

:40:09.:40:14.

the level at which national insurance contributions are charged,

:40:14.:40:18.

from �7,500 to �10,000, once you reach the age of 55. That can make

:40:18.:40:22.

the difference for people. Why did you do that? We have tried to

:40:22.:40:26.

tackle the problem. We have got rid of the compulsory retirement age.

:40:26.:40:30.

I'm wary of special age-related rules on national insurance, we

:40:30.:40:35.

will look at the proposals. people don't pay national insurance,

:40:35.:40:38.

do they? That is why it would be a rather odd structure. You could tax

:40:38.:40:42.

them back into work, couldn't you? We have, in the budget. You might

:40:42.:40:46.

remember the controversy about it. I remember exactly how you danced

:40:46.:40:50.

around on that? We have, quite rightly, said you should pay the

:40:50.:40:54.

same rate of income tax, on the same allowance, whether you are

:40:54.:40:58.

waged 45, 55, 65. That was controversial at the time, it was

:40:58.:41:01.

the right decision, because it was fair between people of different

:41:01.:41:05.

agencies. You know there is an unfairness here between young and

:41:05.:41:10.

old, don't you? I think our society is not offering a fair enough deal

:41:10.:41:14.

to the younger generation, I accept that. It was one of the things the

:41:14.:41:17.

Government...Why Not do something about it? I'm decribing some of the

:41:17.:41:21.

things we have done. We have got rid of the compulsory retirement

:41:21.:41:26.

age, we have got a fair income tax allowance that applies to people

:41:26.:41:29.

whatever their age. The apprenticeship investment is to

:41:29.:41:33.

provide better opportunities for young people. This is all done even

:41:33.:41:36.

when we are facing this tough competitive environment. A key

:41:36.:41:41.

point is we have 50 applicants for every one apprentice, there are

:41:41.:41:44.

great people out there who really want to work, if we can give them

:41:44.:41:47.

the skills they will get the job done. We need more jobs, more

:41:47.:41:52.

companies, dare I say it, like British Gas, investing in the

:41:52.:41:54.

future generations. Some great people out there, we have to get

:41:54.:42:00.

work for them. Do you have any old people coming on oh aye what's that

:42:00.:42:06.

then present tisship? We have had a father and son aplay, and an ex-

:42:06.:42:09.

footballer, a marine biologist. What is the cut-off? There isn't

:42:09.:42:17.

one. Someone who is 65 could apply? I met one of our engineers, worked

:42:17.:42:23.

in Doncaster, started in 1951, 60 years service. I bet you wouldn't

:42:23.:42:28.

take him on? He only retired last year. No compulsory retirement

:42:28.:42:32.

agency. You would take on someone that old? We would if they want to

:42:32.:42:37.

work. To train as an apprentice? Frankly, we would like more

:42:37.:42:41.

opportunities for young people. Didn't you think, when you were

:42:41.:42:45.

writing this report, that some old kojers, some old people, might feel

:42:45.:42:50.

they have worked a long time, they are entitled to put their feet up?

:42:50.:42:54.

That is a personal choice. But for many people, the household budget

:42:54.:42:59.

is so tight that doesn't feel like a choice. You are saying we can't

:42:59.:43:05.

pay for it any more? The tax credit system has reached the limit of

:43:05.:43:08.

making meaningful improvements to the household income. We have to

:43:08.:43:12.

make work pay so if people want to work they K that is by removing

:43:12.:43:16.

barriers, one of the barsers is at 55, you go to work, and the job

:43:16.:43:21.

might pay �10,000-�12,000, and you are in a position where a

:43:21.:43:25.

meaningful proportion of what you want to take back into the

:43:25.:43:27.

household is going in national insurance contributions. As opposed

:43:27.:43:30.

to staying home and getting all the been fits old people can get. You

:43:30.:43:36.

must be in favour of means testing them? We made specific pledges in

:43:36.:43:40.

the last election. We are going to honour those pledge, and meanwhile,

:43:40.:43:44.

because of the changes in the income tax rules, because we are

:43:44.:43:50.

getting rid of the compulsory retirement rules, we will have more

:43:50.:43:55.

older people working, that is their contribution, and more people are

:43:55.:43:59.

doing so. You want older people to work past retirement age? We got

:43:59.:44:02.

rid of the compulsory retirement age. It was part of a new contract.

:44:02.:44:06.

At the same time we have got rid of the special tax allowance, if you

:44:06.:44:10.

are older, by raising everyone else's tax allowance. That is a new

:44:10.:44:13.

expectation that people will have to carry on working. It is a tough

:44:13.:44:18.

decision, but we have made it. you tried this out on any old

:44:18.:44:22.

people fed up with working? personally haven't. I think we need

:44:22.:44:27.

to be, my particular audience is the mums bit. We have talked to

:44:27.:44:30.

them about all sorts of issues. I do think that the Government has

:44:30.:44:36.

done a lot. They really need to look hole listically at this as an

:44:36.:44:42.

issue, -- holistically, as an issue. There is a commission on childcare

:44:42.:44:45.

going on at the moment. It is looking at markets and regulation,

:44:45.:44:48.

but not the possibility of investment in this field. Which

:44:48.:44:52.

would do so much more. So there are all sorts of thifrpbgs. Again with

:44:53.:44:56.

the universal cred -- things. Again with the Universal Credit coming

:44:57.:45:00.

along. There is great work to try to make work pay, but the second

:45:00.:45:07.

earner bit will have a huge impact, a very negative impact on, again,

:45:07.:45:11.

women in work. It is about joining the dots up and making sure it all

:45:11.:45:14.

pulls together. What do you make that have? One of the reasons we

:45:14.:45:17.

have tried to improve the rules on childcare for parents with young

:45:17.:45:20.

children, is to encourage the second earner to work, I'm sure

:45:21.:45:24.

there is more things we need to do. The one thing we have misseded in

:45:24.:45:26.

all this, is the international framework. All around the world

:45:26.:45:30.

there are other countries rise to go this type of challenge. We face

:45:30.:45:33.

competitive challenges from elsewhere. One of the other reasons

:45:33.:45:36.

to get this right is the rest of the world is not standing still.

:45:36.:45:39.

Getting more people into work, parents with young children into

:45:39.:45:42.

work, older people staying on in work, those are all the type of

:45:42.:45:47.

things we need to do to make our country more prosperous.

:45:47.:45:51.

The newspapers now. The Mail saying there will be an

:45:51.:46:01.
:46:01.:46:22.

It was announced tonight that Disney is to buy Lucas Film and to

:46:22.:46:28.

make three more Star Wars movies, with episode seven scheduled for

:46:28.:46:35.

cinemas for 20 17, for those who doesn't give a flying saucer, good

:46:35.:46:39.

night, but those traumatised by the last set of Star Wars movies, we

:46:39.:46:45.

will live you with some consolation. Lord Vader, this is commander Laki,

:46:45.:46:50.

she will overseat interrogation unit. I look forward to working

:46:50.:47:00.
:47:00.:47:00.

with you Lord Vader. You are beautiful! Vader? What, I mean, eh,

:47:00.:47:07.

destroying the rebel base will be a beautiful victory. Quite Lord Vader.

:47:07.:47:17.
:47:17.:47:20.

Please continue. What? Vader? fine, I just need to go to the

:47:20.:47:28.

fine, I just need to go to the toilet. Out of my way! Hello, a

:47:28.:47:32.

change in the weather to come, as we see more significant rain and

:47:32.:47:35.

winds arriving through the night. And that's going to mean a breezy

:47:35.:47:39.

start to our day, with the rain sitting across North West England,

:47:39.:47:43.

Wales and down into the south west. By the middle of the afternoon, it

:47:43.:47:47.

is a wet and windy afternoon for the Lake District. Perhaps to the

:47:47.:47:52.

east of the Pennine, to the Midlands, staying dry but cloudy.

:47:52.:47:56.

Disappointingly cool, the best of the weather in the south-east.

:47:56.:47:59.

Heavy, persistent rain into the south west by the middle of the

:47:59.:48:02.

afternoon. That means a fairly damp affair, if you are taking young one

:48:02.:48:09.

us out for trick or treating. The same in South Wales with a

:48:09.:48:13.

disappointing nine degrees. For Northern Ireland and Scotland, a

:48:13.:48:19.

bright and breezy afternoon with scattered showers. A cool day.-8

:48:19.:48:22.

degrees at the very best. A similar story for much of Scotland. I

:48:22.:48:26.

suspect a lot of cloud and rain around on Wednesday. Sunny spells

:48:26.:48:30.

and scattered showers for Thursday, and the temperatures struggling.

:48:30.:48:33.

Six or seven degrees to the far north. Further south of that for

:48:33.:48:38.

England and Wales T looks as though we will have the rain to clear away

:48:38.:48:41.

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