14/10/2012 Sunday Politics North West

$:/STARTFEED. Up in the air as the BAe merger deal with EADS bomb site,

Apology for the loss of subtitles for 2174 seconds

what next for beat that 16,000 , and up in the North West...

Up in the air, is the BA Dee -- BAE merger deal collapses, what next?

The risk is that Typhoon continues to do less well manager and if that

is the case, there will be more job cuts.

cuts. cuts.

The at report coming up. That report coming up and two Lancashire

MPs keen to discuss it. This week we have Mark Hendrick, the Labour

MP for Preston, and Jake Berry, the Conservative MP for Rossendale and

Darwen. A very unsettling time? It is. These discussions have been

going on for some months. They were later and then because of stock

exchange rules, BAE and EADS had to make announcements to the world.

During that time, the work force have been very concerned about it.

The fact that this deal has now failed and is dead means that the

work will continue Aziz added his begins -- business as usual. There

is concern about the long-term and whether or not a deal will be done

in the future. We beat Ed Day to make sure that Britain and Europe

have a strong defence industry. -- we need a deal. Also, this is a

company that has such impact across Lancashire? Absolutely. Earlier

this week I was meeting apprentices who work in the supply team at BAE

Systems. Let's not talk them down. It is a fantastic company, it has a

full order book and his deal was described as an opportunity rather

than a necessity. Let's get a little bit more detail on this.

The two companies already work together on building this - the

Eurofighter Typhoon. The merger would have created the world's

largest defence, security and aerospace group. And for BAE, it

would have been a return to the civil aviation markets, which it

left six years ago when it sold its 20% holding in Airbus to EADS. But

the French and particularly the German government wanted large

national stakes in the new company, which Britain would not accept.

What next for the company and its 16,000 employees at plants across

the North West? They are known for the Typhoon, but

their doomed romance has been more of a whirlwind. It is a large

regional employer, but works in the most sensitive of industries. And a

merger with EADS would have created a huge global company. This is a

fantastic opportunity, something which should have perhaps happened

15 years ago. This may be our last chance to make one large European

companies that can take on the rest of the world. So what went wrong?

France and Germany wanted to keep sizable stakes in the new company.

Britain didn't want them to take more than 9% and there was a fear

that if they did, lucrative contracts with America would be at

risk. One Lancashire MP went to Washington to check. Investors,

because of the surprise, and they think it was the wrong choice, well,

but it -- question the confidence in members of the Board of the

company. But in the long term, but order books speak volumes. BAe's

order books as a prime and sub- contract there are some of the

happiest in the business. The supply chain means more than

60,000 people across the north-west rely on BAE Systems for their

livelihoods. Workers were unsure what the proposed merger meant for

their jobs and that uncertainty remains. I'd like to hear that from

our point of view, this is a strong plan for the business and that we

can deliver the business plan, delivered a probability back into

the business and sustained -- sustain employment. BAE Systems is

still one of the world's biggest defence players. But some believe

the failed merger leaves the company looking vulnerable.

risk is that Tie Fein continues to do less well than it should add if

that is big case, it is not good for the future. Workers' futures

are still uncertain and for now, BAE Systems is single, but some

analysts think it is open to a possible takeover from a US company

and may still end up tying the knot. We are joined by Professor Eric

Grove. It is a stark warning from the analyst, sighing that he

thought it was a pretty grim picture. What do you think? I would

be a bit more optimistic. Commentators are saying it has not

made a huge amount of difference. It is our loss of face for the

management but BAE Systems remains a big contractor. I am not sure

that any American company is actually bad keen on a combination

with -- that keen on a combination with BAE Systems. From the

Pentagon's point of view, I think they wanted the BAE and EADS thing

to go forward, because they wanted a competitor for their existing big

companies. Some American reports showed that, as long as the

structure was acceptable to the USA. The structure on offer was not. The

Americans were not willing to accept 9%. It turned into something

that was. That is what the management wanted. They saw it as

an opportunity to reform the organisation in such a way as it

was still competitive in the American market and would still

have the advantage of the broader civil market as well. Was a

government keen on this deal? one of the MPs who wrote to the

Prime Minister to express concern about the interference from the

French, German and Spanish governments in the combined company

if it had gone ahead, I think big government could see commercial

advantages for the Day preceding but quite correctly, it has

concerns of protecting British workers first and foremost. Isn't

there an argument but having that merger would have led to better job

prospects because it would have been a company doing more things?

In the longer term. In the short to medium term, there are plenty of

contracts. The typhoon project, and also the Joint Strike Fighter,

where we are building an aircraft with Americans. The question is

about the long term, about aircraft being built. He will have the

technology and there is it going to go? There is the production were to

be? There are big questions for the future, 10 or 15 years from now.

Are you pleased or disappointed that Biddy hasn't gone through?

will see what happens in the future. I am reassured that we are not what

you have a company employing 16,000 people in the North West

predominantly controlled by the French and German government. We

have seen it time and again. What I am asking is if the percentages for

that foreign governments had been brought down to 9%, we do have been

in favour of it or not? As I said earlier, I think BAe has a future

as an independent business within the UK, a British business. We have

a special relationship with United States and I should think the USA,

if the commercial argument is that with their jobs in Lancashire will

be more secure if the go-ahead, but I would like to support it. -- then

I would look to support it. Professor growth? It was pretty

clear that... Sorry to interrupt, do you think bap national politics

played a role? I think it is interesting to hear whether

commentary is coming from politically in that Euro-sceptic

members of parliament were seen to be rather against it for a broader

reasons, but for good reasons as well, perhaps. Clearly, politics

has triumphed in the end. What about the argument that we should

not have been doing this, because this was a very important cuppa

before national security and regardless of what kind of peewee.,

it should remain purely British? is not -- regardless of what kind

of deal we.. I think in the longer term we needed a more secure

company. There were drawbacks about it some people thought it as a

European takeover. Recently, there was talk about combining EADS with

a French firm. One of the EADS people, they said do you think we

would be allowed to take over Talis? Berra were clearly some

people in EADS who saw this as the European takeover. I am not sure

this was objectively be case, especially if it could be

restructured in such a way. I feel very sorry for the management teams

in BAe and EADS, who wanted to use this to diminish the political

control over the company. What do you want to see happen? One thing

we have forgotten is the reason we lost the India contract is because

the could not make a strong case and did not have a great deal of

help from the government. This was selling Typhoon aircraft to India.

One of the reasons discussions began was because of the failure of

that. If this had been a wholehearted venture, those Typhoon

aircraft would have been bought by India because we would not have had

the same level of competition. not think leading with the Germans

helped. If ever there was a project they should have been led by

Britain. In the longer term there has got to be a deal. What I want

to see is what was on the table from the companies. The reduction

in the share of the ownership by a European countries and a reduction

of governance on the board. It was the refusal of the German

government to decrease its influence in EADS business. I think

that is deeply concerning for people worried about jobs and

growth in Meite Show and the North West. We don't want jobs being

exported to Germany. If something can take politics out of this

defence contractor and protect our jobs, it will be at deal.

Do you remember two weeks ago, Jack Straw giving some advice? He said

Ed Miliband had to use simpler language explaining his ideas.

I knew what he meant when he talked about redistribution. But if I

stood on my soapbox, my audience would dissolve rapidly. Now Jack,

don't switch off your TV but yes, it's time to talk aboutp

redistribution, which involves raising wages for the lowest paid -

one of the Labour leader's favourite ideas. Stuart Pollitt has

been looking at what it is and how it's already happening in parts of

the north-west. Howls of anguish from the 80,000 rich people...

For most of the last century, politicians debated the pros and

cons of wealth distribution. Are we will continue to cut taxes in

general and income tax in general. Now there is a new political word

on the agenda breeze -- 3 distribution.

Basically, it is serving up more money up front in pay packets,

rather than topping your salary cake with the icing of tax credits

and benefits. For Glenys, it means an extra �1 an hour. She's one of

1,200 Manchester city council staff now paid a living wage instead of

the minimum wage. Air -- any extra money has got to go somewhere and

usually it goes on bills. It does help, but little bit extra, it does

help. The national minimum wage is currently �6.19 an hour. The living

wage, set annually by an independent panel, is �7.20. That

equates to annual salary rising from around �12,000 to �14,000.

Labour-controlled Manchester was the first council to introduce a

living wage three years ago. This week it agreed on a figure of �7.15

per hour. It will cost us �200,000 a year, out of a �580 million

budget is not a huge amount and is worthwhile. Do you understand that

people said there are better things to spend money on? Were think we

get the benefit for the money we spend. Our turnover in our staff

has halved since we introduced the Manchester minimum wage. A few

miles away, yet in some ways worlds away, Tory-run Trafford is planning

to adopt a living wage from April. I don't care whose idea it is as

long as we are able to support ourselves. So you are happy to

implement it with the Labour Party? I want to make sure we reward our

staff. I think it is going to have poll's -- positive benefits for

Trafford and I am not political about discarding something because

it might have come from what is viewed as a Labour idea. No it's

introduced by -- let's introduce economic theory. There was problems

about direct benefit to a local economy from will be spending.

Research shows that those on lower incomes will spend a higher

proportion of money locally, so the theory goes, pay more and that many

crinkles up to small businesses. would expect it would grow up to

other parts of the public sector and I think I have already heard

conversations in the business sector about the possibilities of

going further than the minimum wage. The Manchester based think-tank is

in favour of the living wage but admits there are downsides.

Businesses would say that this was more expenditure. There is an

argument to said that if businesses were to go down this red that it

would increase the amount of the legal employment because less

people would be paying people legally. Ed Ben Barnes is it is

important. David Cameron said it is an idea whose time has come. For

Glenys, it means every day life is easier to swallow.

We now have Professor Damien grim shot from Manchester business

School. What is the motivation? There are multiple variations of

motivation. The research we have completed shows one important

motivation is that after a series of job cuts in local councils,

managers are seeing that many of these low-paid workers are working

much harder giving the same amount of services, but with fewer

colleagues to share the work. They think a living wage is a good

reward. Another reason is that local councils are looking to their

locality, seeing higher rates of poverty, especially among the

workforce, and we have heard about the trickle of theory. You give

poorer people more money and that supports local business, does that

work in reality? Is that a theory that works? It is complicated. It

depends. What happens when somebody receives a living wage is that

there Perry is made up from the base rate to �7.20, outside London.

It depends also whether you receive tax credits. Tax credits reduce as

the which goes up. It is good news for the Treasury. There is no

immediate impact on household. A lot of the local government

workforce are women are back -- in part-time jobs suit will not

necessarily receive tax credits and they will have a significant

increase. Research shows that the lower the income, the more they

spend. Are you clear that this has big benefits? Of course. We have to

move away to a high quality wage economy and a living wage economy.

The way to do that is get employers to be more family friendly, so to

speak. Let's see more employers giving child care and more

employers are looking at subsidising meals. Does it suggest

that the minimum wage is to know? In it does, but the minimum wage is

quite formulaic. The government puts down the formula and there is

a procedure. When the Labour government introduced a minimum

wage, their work workers paid �1.50. It was a big step forward. To be at

�6.19, the minimum wage now, is a big step forwards. The working

living wage offered at Preston council and Trafford Council of

�7.20 is an even bigger step forward. There -- they are not good

wages but better than previously. Do you think we government should

move the minimum wage are birds? The introduction of the living wage,

taken on voluntarily across the country, and one of the main people

making progress is Boris Johnson, who has signed up 250 companies in

the city, including banks and law firms, it is an idea whose time has

come and is usually welcome. What I am worried about are those people

who are not getting a living wage, on the minimum wage. The Institute

for low pay is said that if the minimum wage was to increase

significantly, it would immediately increase unemployment. At a time

when we have unemployment falling, a welcome move in the unemployment

rate, I do not think this is a time to significantly put up the minimum

wage but a living wage is welcome, and as many companies have done

this across the North West. affordable is it? There are many

American stories of living wages, because they are far more prevalent

in America than in Britain. Those studies by economists, especially

in California, show that when you look up the benefits to paying

minimum wage, it at ways the cost. The benefits I am thinking of our

livings -- savings in recruitment because staff turnover goes down.

It has been trapped in a number of councils we have visited.

Manchester council has done an analysis of what happened to staff

turnover on low-paid occupations when they brought up the wage. This

needs to be done so that you can track it costs against the benefits,

which are immediate and over a long term. You also bring and instil

commitment and loyalty among workers. Do you think about what

Jake was talking about, in terms of the private sector and putting

pressure on them, is that something we will see? The private sector

low-wage market is a funny animal. Too many employers think the

national minimum wage is it going rate of employment and it is not,

it is to stop exports to Asian. It is not our rate of play. A third of

employers in the cleaning pay minimum wage, but you need to

reward skills. Thank you.. Here's the week's political news in

60 seconds. The biggest ever independent

investigation into police wrongdoing is to be carried out

following the findings of the Hillsborough Independent Panel last

month. Serving and former officers will be investigated over the

deaths of 96 Liverpool fans. Don't dump it on us - anti-nuclear

campaigners in Cumbria say any jobs boost produced by a waste site will

be offset by the damage to the image of the Lake District. The

council is considering its options. Life's a gas, or it could be in

Lancashire, at least after the Chancellor George Osborne said he

was going to look into tax breaks for fracking on the Feyld coast.

that Britain is not left behind as gas prices tumble.

Filming has begun on the first collaboration between Pinewood

Shepperton Studios and the Isle of Man government. The Manx

authorities paid �12 million for a stake in the home of the James Bond

and Harry Potter films. And Alicia definitely wasn't off

key but Manchester City Council is to publish a full report next week

into the �400,000 it spent on putting a concert on by the

American singer. Second appearance for Alicia Keys

in our news. Let's talk about where we are politically after the party

conferences. Do you think Labour is in a stronger position than when it

went in? Without a doubt. Ed Miliband has stamped his authority

on the party and become a lot more credible with the public. He did a

fantastic speech, as most people agree. Will anyone have heard it?

Her I'm sure they read about it in the newspapers on saw it on TV.

David Cameron says he wants to spread privilege. Privilege, by

nature, is for the few and not the many. I saw Jake Berry put a

plodding up on television, respond to that? -- I saw Jake Berry

applauding it. Speed king for 70 minutes with out notes is an

achievement especially when you have nothing to say. He only

mention the deficit for 30 seconds. A the biggest single issue facing

the country. The first way of dealing with the problem is

admitting you have a problem. you for being with us. Next week we