02/07/2017 Sunday Politics Scotland

It's Sunday morning and this is the Sunday Politics.

Her position may be safe for the time-being.

But what about Theresa May's policies?

As ministers drops hints about easing the public sector pay

cap, is the Conservative Party undergoing a rebrand?

Jeremy Corbyn takes to the streets to call for an end to austerity.

But with his party's divisions on Brexit thrust into the open

is his post-election honeymoon coming to an end?

And, with Brexit talks under way, we know there's plenty at stake

for Britain, as it negotiates a new relationship.

But what's at stake for the remaining EU countries?

We speak to a leading European politician.

With the economy here described as being in a "precarious position",

I'll be asking the three main political parties who's to blame,

And, on the eve of Wimbledon, I'm joined by the three top seats

of political commentary, Tom Newton Dunn, Isabel Oakeshott

They'll be serving up aces throughout the programme.

Is the Government going to change its policy on public sector pay?

for public sector workers would remain in place

until 2020, saving up to ?5 billion a year by then.

Earlier this week there were rumblings that the policy

would be reviewed, before the Treasury weighed in to suggest

The new Environment Secretary, Michael Gove, was asked about it

on the Andrew Marr show earlier today.

I was Education Secretary and I know the schoolteachers pay review body

Not a poodle but they work underneath the overall strategy

set by the Chancellor, set by the government.

They take account of that, but they also take account

of other questions as well, including the number of people

who are entering the profession, whether we need to have an increase

in pay in order to ensure we get the best people in the profession.

These pay review bodies have been set up in order to ensure we can

have authoritative advice on what is required in order

to ensure the public services on which we rely are effectively

staffed and the people within them are effectively supported.

I think we should respect the integrity of that process.

I'm not an individual, I am a member of the government,

Michael Gove. Two U-turns in one day, maybe going for the hat-trick

this week. It sounds they are thinking of ways of loosening up the

pay freeze but Mr Hammond doesn't want it to come out until the autumn

budget. That is absolutely right. My understanding is the deal is already

done. We've reported this week that 20 quite senior Tory MPs went to see

the new chief of staff on Wednesday, to make it very clear indeed they

would be voting for a budget that allowed the public sector pay freeze

to continue. Fine, we're going to do this, we're going to give fresh

advice to the pay review bodies that there remit has been expanded but we

cannot do it today because it's a victory for comrades Jeremy Corbyn

if we do. There we see, in a sense, the weakness of ten Downing St. They

can't direct this policy themselves. They are overruled by Mr Hammond

from Mr 11, and it only takes about 20 Tory MPs to say, hey, this is

what we want and at the very least the government has to listen to them

very seriously. They have to listen to the man they have to act, because

very seriously. They have to listen that is the fragility of the new

House of Commons. We saw it last week on another issue. If you have

20 people saying hey has got to rise in the public sector, beyond the

cap, pay will rise in the public sector beyond the cap, because they

won't be up to get it through the House of Commons. I think there are

other issues involved beyond the numerical situation in the Commons.

Lots of MPs came back after that election, including Gavin Barrell

who is in number ten, who lost his seat, saying teachers and others

were saying we can't carry on with the pay restraint up until 2020. I

think it is going to happen for a combination of reasons. What happens

to deficit reduction? The deficit is going to rise this year. There were

a few Tory MPs but not many who feel it is wrong for the party to

capitulate, having made such a point of principle about posterity, that

it looks very, very week just to be caving in. I think Steve is right.

This isn't just about the maths and the -- in the House of Commons, Tory

MPs are frightened in a way I have never known them frightened before,

at the momentum behind Jeremy Corbyn at the moment. There is a real

feeling about the Tory brand being really in a very, very difficult

place at the moment, where Tories look nasty, there isn't nearly

enough sympathy and it feels politically impossible to stick with

the pay limits as they are. That may be one reason that will keep Tory

MPs in line, because the last thing they want at the moment is an

election. When they say the country doesn't need on another election it

means the Tory party doesn't mean another election, isn't that right?

That's right and I think the view is settled. Notwithstanding frenzied

speculation in Sunday newspapers, the daily newspapers are a lot more

responsible! LAUGHTER But every Tory MP says to Reza until

the end of Brexit, we don't want to open Pandora's box. -- Theresa May

until the end of Brexit. The problem still remains, she does have a lot

less authority, which is why you get bigwigs left, right and Centre for

Michael Gove to Damian Green and Justine Greening rattling that

instant more money. You have to keep the balance by leaving by consensus

and a general for all, which we are in danger of looking like this

morning. OK, we will see. So it's not exactly what you might

call "strong and stable", but after a turbulent couple

of weeks, it appears the Prime Minister has

brought less instability, The Government's legislative

programme is in place and Brexit So has Theresa May done

enough to steady the ship It's been an action-packed story

of suspense, drama and intrigue. The latest instalment,

hotly anticipated. "I got us into this mess",

she told her MPs after the election, This week, Theresa May

tried to do just that. To get the Democratic Unionist

Party's ten MPs to back the minority government,

the PM pledged ?1 billion Opposition parties branded it a bung

and as the week went on, some have their own MPs

who are less than enthusiastic. Mr Speaker, I can barely put

into words my anger at the deal But having signed that piece

of paper, the Tories now had a tight working majority of 13 to pass key

Commons votes. It was, at the very

least, breathing space. So, a deep breath and, midweek,

and Labour proposal that the cap on public sector pay rises

should be lifted. Some Tory MPs, including ministers,

agreed, in principle. Labour's challenge failed,

but the Government had We will listen to what people

in this house have said before The public sector pay cap,

by the way, was designed to save ?5 billion for the public

purse by 2020. But the policy looks like it

could be on its last legs. Thursday was the big moment,

the Queen's Speech, which passed, Tory support for a Labour amendment

led to a government pledge to front abortions in England for women

from Northern Ireland. The ayes have it,

the ayes have it, unlock. The last-minute compromises in this

Queen's Speech suggests the Prime Minister is acutely aware

of the arithmetic in Parliament. She will have to listen more

to her own MPs and they know that. One former Cabinet minister told me

every time seven of us get together, And yet, after this week,

the Prime Minister may not be such I think the ship is

certainly steadier. I think there is a degree

of what I call a rolling probation for the Prime Minister

at the moment. And I think the Prime Minister's

performances in the chamber, Prime Minister's Questions,

we had the first one back this week, where she reasserted

a deal of her authority. And I think there is a great deal

of relief and respect for that. Others say the party

should reflect on more It doesn't matter if we have

Alexander the great or the Ark Angel Gabriel as leader,

unless we have fundamental reform. At the moment, often we have these

policies but it's like a whole load of clothes pegs without a washing

line, bringing them together. So we need to explain

what we are about. The Conservative Party

is there to help working The Conservative Party

is there because we are the party of the ladder of opportunity to get

people up that ladder. We have a moral purpose, too,

just as the Labour Party do. Several MPs told me the debate

within the party is still when, Anybody who says it will definitely

be Theresa May as the leader of the Conservative Party

going into the next general election It might be, I have

to say at the moment it's But conversely, there is absolutely

no appetite whatsoever, thre are no manoeuvres going on,

no operations going on to instigate a leadership challenge

to have a new leader of the Conservative Party

in the immediate future. One theory is that Theresa May stays

on as PM to negotiate To be something of a scapegoat

for what will be, at best controversial,

at worst, deeply unpopular. And then, to move aside to make way

for a less tarnished leader, who can take the Conservatives

into the next general election. It's the immediate future

Theresa May will be focused on. This week, a G20 meeting in Hamburg

with other world leader chums. Back home, she can't

take her friends for granted and told her own MPs,

she'd serve as long Joining me now is the Minister

for International Trade Greg Hands. Welcome to the programme. Good

morning, Andrew. Do you agree with your old Treasury boss, George

Osborne, who said easing up on austerity would risk the mistakes of

the past which led Britain to the point where there was no money left?

There is no change in government policy. We must live within our

means. That is the right thing to do. We have reduced the deficit by

three quarters since 2010. That is work that is still ongoing. It's

very important that we keep budget discipline, because it's impossible

to pay for our public services without having a growing economy,

the taxes coming into pay for all the services people want and expect.

How can you continue to cut the deficit, it's actually rising this

year compared to last year, how do you continue to cut the deficit? ?1

billion to find for the DUP, you have to find the money you could in

debt because you couldn't change national insurance, and if you

loosen up on the public sector pay freeze, you have to find money for

that as well, how do you do both? It's important to have a prudent

policy, a prudent fiscal budget policy. The Chancellor will be

laying out his budget in the autumn... How do you square the

circle and me all these demands? Your own ministers are talking about

them and yet continue with deficit reduction? It's very important to

consider what we have done on public sector pay. Actually by having that

cap in place we have saved around 200,000 public sector jobs. We have

done a lot for the lower paid public sector workers by raising the

personal allowance... I'm not asking about that, I'm asking how do you

meet the demand for extra public spending and continue with deficit

reduction? I think over the last seven years the government has had a

very good record on this, Andrew. In terms of being able to reduce the

deficit... While still putting in place increases in public funding.

For example, in the Conservative manifesto we pledged 4 billion extra

on schools and 8 billion extra on health. We can do the two together,

but it does require that budget discipline overall, making sure that

something is to get out of control. You were a number two in the

Treasury during George Osborne's tenure. You protected pensioners

with triple lock, free bus passes, the Winter fuel allowance but

trebled tuition fees on young folk made it impossible for many of them

to get a foot on the property ladder. Is it any wonder young

people to vote for you? I think that's an important question for us

and an important question as we look at the election. That's why I asked

the question, what is the answer? We have to improve our offer and young

people and provide more housing. I think we need to look at more money

into schools, improving our schools as we go forward and making sure

that cities like mine in London are made more liveable and more

cost-effective for young people. Why haven't you done that in the past

seven years? Instead you have secured the pensioners and you have

knocked young folk may have turned against you. Why should young people

believe in capitalism if they have no chance of accruing any capital? I

think what we have done over the last seven years has actually been

to build more homes. We just need to build the more quickly. Your record

of building homes is even worse than the last Labour government and you

know that. 62% of 18-24 -year-olds voted Labour. 62%. 56 of 25-35

-year-olds. You didn't build enough houses for these people. That is one

of the reasons why we are addressing that. Why haven't you addressed it?

1.5 million new homes over the course of this Parliament and what

we have done that with things like starter homes, shared ownership,

it's much more flexible forms of tenure to make sure homes are more

attractive to younger people, particularly younger people starting

off in life. Ministers have bent telling me this for seven years and

you never do it. -- been telling me. That is what the programme is

designed to do. We have been building more homes. We need to

accelerate that. We'll phone need an open conversation about how we

improve elsewhere for young people in schools and universities and so

on that. OK, Brexit. You are the International Trade Minister. Will

the UK leave the customs union in March 2019, and if it doesn't make

its own trade deals? Our position on exit and the customs union is

unchanged. What is it? To leave the single market and Customs union. But

other components of free trade agreement with the European Union

and customs arrangements, so we have frictionless free trade with the

European Union. Will that happen by March 2019? That is the negotiation

that has just started. I am not putting an end state on that. What

I'm saying is the objective in this is to make sure that we frictionless

trade with the EU and come to a future customs arrangements to buy

it's not clear we will be able to start making our own trade deals

after March 2019? Once we leave the European Union, yes, I am clear we

will be able to make our own trade deals. March 2019? When we leave the

single union and the customs union we come to an arrangement with the

European Union. We will be able to make free trade deals but at the

moment we can't because we are in the EU. Will you be able to make

them if there is a transition period? That remains to be seen. You

might not. We have only just started the negotiation. You had a year to

think about it. To think about a transition period and when it might

start and then... What we are clear about is there should be no cliff

edge for businesses in the UK and the European Union and to make sure

the trade continues as frictionless as possible. We don't yet know if we

will be able to make our free trade deals during the transitional

period? It could be postponed until 2021 or 22? We don't yet know if

we're going to have a transition period, to be fair. The objection in

all of this is to have frictionless free trade with the European Union

and come to a customs arrangement. That is the objective.

You are minister for London so let's turn to the Grenfell Tower disaster.

Kensington and Chelsea Council is in chaos. The leader resigned on Friday

and the chief executive has gone as well. That is what I mean, it is in

chaos. We're waiting for a new leader for the council because it is

important for local democracy to have its say. It is quite a big

thing for government to to go in and put a Council on special measures.

It is in a state, you have lost the chief executive, you've lost the

council leader, it is lacking in experience and surely if there is

ever a time to send in the Commissioners to get a grip of this

crisis, it is now? We are waiting for a new leader. There is an

interim chief executive coming over from Lewisham Council. Clearly,

there will be lessons to be learned and that is a matter for the public

enquiry. There will be an election within the Conservative group on the

council. There are very capable councillors in Kensington and

Chelsea. We haven't seen much sign of that, did you have any

involvement in the resignation of the council leader? I spoke to him,

like all council leaders do. I spoke to him, I spoke to the previous

leader and the leader of might of the council. It is natural that MPs

speak to their council leaders on an ongoing basis. We know the Council

opted for cheaper cladding because they want good costs. So that cheese

pairing is inevitable in town halls when central government, has yours

has done, cut their budget by 40%? I don't accept the premise to that

because a lot of financing has been devolved back to local government.

But you have cut local government financing by 40%. There is 200

billion available over the rest of this Parliament to the local

councils and we believe that is fair. Kensington and Chelsea Council

spent ?8.6 million on this refurbishment. It is not necessarily

a shortage of funds. Indeed, they have 274 million in reserves and

they put people at risk to save ?300,000. If that is not a case of

putting in the Commissioners, what is? That is a matter for the ongoing

enquiry and the lessons to be learned from that and how it

happened is a matter for the different enquiries, including the

public enquiries. Thank you. a stronger hand in the Brexit

the election last month was to get But it's worth remembering that

there's a lot at stake for both After all, the UK is a major net

contributor to the EU budget and a big trading partner for the 27

countries remaining in the EU. When Mr Davis and Mr Barnier kicked

off the talk a couple of weeks ago, the tone was businesslike

and broadly constructive. The two men agreed that the first

age of the negotiation The rights of EU citizens

living here and British The financial settlement

that the UK will pay the EU, On citizens rights, the EU published

their proposals three weeks ago, and the UK Government came forward

with their plan last Monday. The UK offer, however,

was greeted with scepticism. The Dutch Prime Minister

Mark Rutte said... But elsewhere, some EU figures have

begun to worry about the financial implications of Brexit

for the remaining 27 countries. Gunther Oettinger, the EU's budget

Commissioner, said this week that Brexit would leave a hole

in the EU's finances of at least That's because the UK is a net

contributor to the budget. The UK also runs a large trade

deficit with the EU. Last year we bought ?312

billion worth of goods That is 71 billion more

than we sold to the So the introduction of trade tariffs

would be costly for both sides. The Brexit negotiations

will continue every month. Mr Davis and Mr Barnier

will have their next face-to-face meeting in Brussels on Monday

the 17th of July. Joining me now from Rome

is Roberto Gualtieri. He's a Socialist MEP,

and part of the European Welcome to the programme. The

British government has published a detailed plan to protect the rights

of EU citizens living in the UK. The EU response was highly critical,

will that be the EU's response to everything Britain proposes? First,

we welcome the intention to protect EU citizens. But, our reading of the

plan is that it falls short of its own ambitions, so there are a number

of issues to be clarified. I think also to be corrected. For instance,

while our proposal is based on a new low, this is based on a UK low and

there are no guarantees that might be changed in the future. Then there

is the famous issue of enforcement, which is based on UK courts. And

third, there are a number of rights which seem to be missing. For

instance, a family member will have to make his own request for settled

status and we consider that an conceivable there might be two

different answers. My own child, for instance. You are right, there are

things to discuss. This wasn't a take it or leave it offer by the

British government, it was the beginning of a negotiation. But

Michel Barnier said it lacked clarity and vision. Someone else

said it was worrisome and the Dutch Prime Minister said there were

thousands of questions left unanswered. These are not helpful

responses? It is not an issue of tones, it is an issue of the start

of the negotiation, indeed. We are commentating the paper, identifying

what is good, and the rights similar, there are a number of

loopholes and there are some more from the issues relating to the

legal status... It just sounds very constructive. Instead of saying,

this is a good start, but there is much more to do. But you just sound

negative. No, I don't think so. My first sentence was, I welcome the

intention to protect the rights of EU citizens. That is a very

constructive sentence. Then one has to be consistent and to find a

mechanism which fully guarantees the right and the negotiation, and they

are exactly for this purpose. Brussels is now worrying about how

to fill the huge financial hole that Britain's departure will create in

EU revenues. There is a number of ideas being floated at the moment,

introduce an EU VAT supplement or take an axe to the common

agricultural policy which is about 40% of the budget. Does that appeal

to you? There are two different problems. The first is to define the

settlement, which has to be an integral part of the withdrawal

agreement. We are not looking for fines, we are looking for only

commitment to be paid. Then there is the issue for the future, were of

course the union will have to reassess and redefine and improve

its mechanism in its own resources so it can have an efficient finances

in the future. So what do you want, and EU VAT or cutting money to

Italy? I think the union deserves a better system of resources. This is

for the future and we are working on that. Do you agree with the bustle's

commission every member of the EU should adopt the euro by 2025? Yes,

of course it is possible. Like it was for the United Kingdom, for

Denmark, but in principle, the members of the union members of the

union. So we think it would be good to a allowed the euro. There is the

political will of the country to be taken into account but I think the

euro has proven to be a successful currency, protecting citizens. I

expect the membership will be broadened in the future. Why is it's

GDP below what it was 15 years ago and the industrial output is below

them what it was in 1984 so the euro hasn't been successful to you. You

now run a massive deficit with Germany, where is the success? It

should not be confused, the currency with the economic crisis we had. The

also mistake in the conductor of the economic policy. We are changing

austerity politics for more growth policies. Your country hasn't grown

since you join the euro. The economic policy is another thing, so

we need to change the economic policy. The common currencies is a

strong protection for all of us. Your country hasn't grown since you

joined the euro. I don't think your assessment is correct. Yes it is. By

the way now, Italy is growing and that is good. Europe is growing. In

2017 it is growing more than the US and the UK. Do you accept if Britain

had stayed in and been forced to join the euro in 2025, there is no

public opinion support for joining the euro here? This is a joke.

Whenever they say, if the UK had stayed in the union, the UK would be

forced to join the euro. This is not true. That is what the Brussels

delegation said. The Brussels commission said it thinks everybody

in the EU should adopt the euro by 2025. As I said, no. If you want to

make a political statement, you are free to do so. But the fact is, the

member of the delegation to the euro are supposed to join. Members who

have decided to stay out of the euro, are free to stay out of the

euro whilst they are in the EU. That is perfectly possible. Thank you for

speaking to us from Rome today. Jeremy Corbyn has had a bit

of a spring in his step Indeed, despite the party's

internal splits, Labour But earlier this week,

Labour's divisions on Brexit were thrust into the open as 50

Labour MPs defied the party line to vote in favour of a backbench

amendment calling for the UK to remain members of the EU single

market and customs union. One of those rebels was Labour MP

Stella Creasy who had this to say What a lot of us are saying

is we want, in these negotiations, To have a government that has forced

through a hard Brexit, especially in the light

of the general election result, with the public very clearly

rejecting Theresa May's approach, And across the house, again,

there are MPs saying, We don't know what is possible

to achieve, but what we do know is if you walk in the room

and you throw away something like single market membership,

which 650,000 jobs in London alone are part of that,

it's irresponsible. I'm joined now by the Shadow Justice

Secretary Richard Burgon. Welcome to the programme. Thank you.

On Thursday 49 MPs, almost a fifth of the Parliamentary party, rebelled

against the leadership over Brexit, including three shadow ministers,

were subsequently sacked by Jeremy Corbyn. Labour is now more divided

on Brexit than the Tories? I don't think so. I think the amendment was

regrettable and premature, and I agree with the Labour deputy leader

Tom Watson, when he said he was disappointed about that. Actually,

the difference in the Labour Party, the difference of nuance on the

single market between those who definitely want to be a member of

the single market, including some people who backed that amendment,

and those who want tariff free access to the single market. The

reality is, not just on Brexit, but a whole host of issue, it's the

Conservative government that is completely divided and that odds

with itself. If it is just nuance and you are not divided, Mark our

card. The Chancellor said single access market mentorship is not on

the table, the Brexit secretary said it should be and another shadow

ministers speaks about seeking reformed membership of the European

market and the customs union. Which one is Labour policy? Brexit is a

settled issue, in that Labour accents Britain is leaving the

European Union but we believe Britain has to have a relationship

with the institutions. Which one is Labour policy of these three

statements? Labour believes that we should be having a job 's first

Brexit. A Brexit that puts the economy first. As our manifesto

says, Britain's leaving the European Union, for example that also means

the freedom of movement of labour, and the UK's part of that, will end

when Britain leads the EU. Do you want freedom of movement to end?

What we do want to end is the practice of unscrupulous employers,

only recruiting workers from abroad and also an scrupulous employers

trying to use the free you movement of labour to breakdown -- drag down

terms and conditions. You can do that if we are in or out of the

single market. Do you want freedom of movement to end? It is inevitable

the freedom of movement will end. Do you want it to do is a question that

that is the difference. Your manifesto said what you just said, I

asked you if you want it to end? What Labour wants is Brexit that

puts jobs on the economy that is. What Labour doesn't want is to put

immigration and fall 's immigration targets as the Conservatives did on

the table. What is the answer? It's quite simple, the free movement of

labour will end in terms of when the UK leads the European Union.

Labour's priority is not any other issue than jobs on the economy being

put first and that is really important. Putting jobs on the

economy does, should we leave or stay in the customs union? I think

we need to leave all the options open on that. We need to negotiate

without putting options off the table. You can't negotiate unless

you know what your aim is, is it to leave or stay in the customs union?

British manufacturers gain a lot, and their workers, in jobs, in terms

of the current arrangement with a customs union. What we want is an

equivalent benefit. We want the benefits of being in the customs

union, even if when we leave the European Union we can't be in the

customs union. These are the kind of demands that Theresa May should be

making, and her ability to do so, I'm afraid, has been severely

weakened by the fact you can't even command a majority now after she

asked for a majority to do so. You have criticised the government for

saying no deal is better than a bad deal, which I understand. But does

that mean Labour's position is that any deal is better than no Deal? Any

deal better than no Deal? No, no. It would be strange to say any deal is

better than no Deal. We want a good deal for Britain. But if you can't

get that? We are confident a Labour government could get that, we want a

job 's first Brexit that puts jobs first and puts living standards

first and doesn't use, as the Conservative government has tried to

do, Brexit as a smoke screen to try and create some kind of low

regulated tax haven... You could be in government for very shortly and

the in these negotiations. If the EU does not budge on demanding 1

billion euros divorce Bill, would you just sack that for the sake of

any deal or say no? -- suck it up? Labour won't be sucking up to

anyone, the EU or anyone else. A Labour government would negotiate

hard for Britain. What if they wouldn't budge? On the demand for

100 billion euros? What would you do? These are hypothetical

scenarios, and these negotiations are nuanced and compensated. Labour

would campaign, in opposition, hold the government to account for and in

government deliver jobs first Brexit, that puts the economy does.

The kind of post-Brexit Britain we want to see is one in which there is

investment in industry, assistance from the government in industry and

are more equal society with high wage jobs. Ian Wright Fricke, your

new party says Labour is currently too broad a church. Do

broad church, socialists and trade unionists and long may it be so. You

don't agree? The Labour Party is a broad church and it should be. Do

you support lowering the threshold of MPs needed, that you need to get

to stand for the Labour leadership? It is going to be debated at your

autumn conference? This question isn't seen as dead about the

leadership election many people predicted would occur after the

general election won't be occurring. Do you support? Tom Watson says

Jeremy Corbyn is secure for many years. I do believe all parties,

including the Labour Party, need to be made more democratic. We have a

membership of well over half a million and I would like the members

to have more say in our party's policies and in the way the party is

run. Jeremy Corbyn spoke at a left-wing rally in London yesterday.

Among the crowd there were placards calling Theresa May a murderer,

pictures of Mrs May's head on communist flags and Trotskyite

banners. Are these the kind of people Mr Corbyn should be

associating himself with, if he is a Prime Minister in waiting? The

reality is when you speak at an outdoor meeting, you have no control

who turns up or who is walking past. You have no control over the kind of

banners people make. I understand the hundred and 50,000 members of

the public at that event. No, there won't, 15,000. I spoke the night

before the general election, in an event in Leeds city centre. For all

I know, there could have been all sorts of people walking past,

watching. The key thing is to judge Jeremy by his words, Judge Labour by

our words on what we've done. We do believe in a new kind of politics.

Also politics committed to changing our society for the better. OK,

Richard Burgen, thank you for joining us today. It is coming up to

11:40pm. Good morning and welcome

to Sunday Politics Scotland. A leading think tank

here says our economy's I'll be asking the Government

and the leading political parties where the problem lies,

and what needs to be done. And, she would have been a strong

contender but decided not to stand. What stopped Jo Swinson from going

for the Lib Dem leadership? There's been a warning that Scotland

may be slipping into recession. In fact, Scotland may be

in recession right now. We'll know for sure when we get

the official figures this week. But aside from that,

we've seen several recent reports from experts concerned

about sluggish growth So what needs to be

done to improve things? For the last mile, experts reckon

Scotland's economy is a bit like a lock in the summer. It is very

definitely there, but apart from a few ripples, there has not been much

action. That begs an important question. Is Scotland's economy in

trouble? This week a report from the Fraser of Allander Institute, and

economic think tank, said that Scotland had been stuck in a cycle

of low growth and continues to lag behind the UK as a whole. Could a

bit more trouble over the hill? Aspects have predicted that

Scotland's economy is in a precarious position and could be

headed into recession. How do you go about stimulating economic growth?

Bar from the calm waters, in a heart of Glasgow, in this creative digital

agency is part of the economy of the future. Clients want what they have

to offer but the problem is employing people with the right

skills. Over the years we have seen a change in the universities and

colleges, changing their curriculum, but I sympathise with them because

somebody, we live and breathe this every day, a course might start in

September and by December some of the teachings of what they are

trying to do might already be out of date. We do understand that it is

past, but we are seeing in terms of finding the high-quality people, it

is probably more a competitive market these days. We are finding it

quite tough to get those people in. What we tend to seek, and I'm going

by when we recruit, if it is a marketing or brand related job, we

inundated and could probably come down to a short list and be picking

one of five easily. There seems to be typically that the shortage of

skills comes from the technical development side of things. And when

it comes to the wider economy, what do the experts think are the main

issues? In the fall had a bad consequence for the north-east,

which can be spread out across the rest of Scotland. I guess other

parts of the country have lacked dynamism in the last ten years, so

we have got a situation where the Scottish economy is performing at

pretty poorly for a fairly long period of time. Are there any

measures, long short-term, that the Scottish Government can implement to

try and improve things? They should be looking at the long-term factors,

what we're thinking about is infrastructure investment, and much

more clear skills policies to ensure that if businesses do want to come

to Scotland, there are people available that could make these

businesses prosper. And private sector entrepreneurs like David

reckon that governments have to play a direct role. There is a general

responsibility for the Government to stimulate growth. We have went

through a period of austerity, I do think that very much generate a

negative head down attitude, and I think to the spending increase,

obviously with an a sensible limit, would definitely help stimulate that

thinking. Boosting the economy is something politicians are always

reflecting on what with concerns about a possible Scottish recession,

Ferguson minds? -- focus minds Here to discuss some of the issues

arising from that is -- the Scottish Government's Minister

for Employability and that report mentioned said the

weakness in the Scottish economy cannot be just explained by the fall

in oil price and the effect of oil and gas industry cannot beat Spain

by Brexit, because the economy down south is doing well at the moment.

It says instead it would appear that the economy is not a cycle of low

growth, weak investment and fragile confidence. Why do you think that

is? First thing to reflect on is that the Fraser of Allander

Institute do say that about two thirds of the sluggish growth in the

economy, it is in fact down to the downturn in oil. Just like no one is

denying that oil and gas is a big factor, what they are saying is that

they cannot explain, such weakness cannot beat Rangers by the downturn

in oil and gas. I am not saying it is solely that, but to two thirds of

it. Just like what else is going on? There are other underlying trends

that need to get under the skin off, but the other thing we should

reflect on, there are other strengths in the Scottish economy. I

asked you why you think there is a weakness beyond the fall in the oil

and gas industry. What is your answer before you start to how

marvellous everything is? I wasn't going to say it is marvellous, I am

not denigrating the nature of the challenge we face. We have seen in

the last quarter, attraction in the economy, I am not seeking to

downplay that. I would caution against Scott currently talking down

the Scottish economy. I am not talking anything down, I am asking

you to explain why you as it represented of the Government, the

Scottish economy other than oil and gas is still so weak, relative to

the economy in a mess of the UK? The point and try to make is that

ultimately I would agree we cannot be totally down to oil and gas. Two

thirds of it by the Fraser of Allander Institute balls own

measure, clearly there are issues about confidence in terms of people

utilising capital and putting it productively into the economy....

Why should be a problem here and not in England? I would beg to differ

will stop economic performance all in all has not exactly been a

powerhouse either. Ultimately... Between the end of 2015 and in 2016,

the British economy grew by 1.9%. The Scottish economy do not grow at

all. Over in the last year, this logic on eBay grow, comm-mac Where

already clear on that. This year coming, it will grow again. Any last

quarter, it was challenging. As we go into the... We need to work with

the capital to get the confidence to invest, that is something we are

constantly doing to our economic strategy and labour market strategy,

we have got the Scottish growth. Let me not ask your question but let the

Fraser of Allander Institute ask you. They say, what our economy

needs more than ever is clear policy strategies backed by concrete

action. The Scottish economy has been flat-lining for two years,

contrary to what you have said. The EU referendum result was known 12

months ago. What genuinely new policy actions with immediate effect

had been taken in the response of what has been the impact? With

respect, I don't think the economy has been flat-lining. I was not

saying anything other than what the Fraser of Allander Institute has

said. What is your answer to the question? We got the Scottish growth

scheme, ?500 million. That supports businesses to export. Small business

owners which continues to support small medium enterprise sector,

which lets remember, we have expanded that game, it still takes

100,000 businesses of having to pay business rates. This is not having

any impact. The impact is that the Scottish economy is possibly being

going into recession. We measure economic growth in quarterly cycles.

I am not trying to downplay or denigrate the concerns that exist

about the last quarter where we did see some contraction in the Scottish

economy. Any time that happens, immediately summon could say we're

on the brink of recession. We'll see the latest GDP figures this week. I

am not going to presuppose them. There is a lot to be confident about

the Scottish economy. Scottish oil and gas... Let's forget about

recession. And they are saying they should be confidence in the sector,

which has accounted for so many of the issues of the last two years. I

except that two quarters, it is a narrow definition. It is not really

the most important thing. The important thing is growth in the

Scottish economy is substantially below growth in the British economy

and has been for several years. You don't seem to have any explanation

for that. Other than oil and gas. I've already said we need to imbue a

greater sense of confidence to those who have capital to invest. Why is

that specific to Scotland? If you look across the UK, there is a

regional variation, we're positive... The difference is... The

UK's economic growth is predicated on London and the south-east. Other

parts of the UK, we are doing better. Better than some parts but

what has happened is that for many years Scotland was doing relatively

well compared to areas of England, like the north and even the

Midlands, and that is not happening any more. Go here is lower than in

most of these areas in England. In the latest figures, if you look at

the labour market, we have a very resilient labour market,

unemployment is at a 25 year low. That is lighter because they

dropping out of the labour market. More people went into employment I

went into inactivity. Inactivity as an economic measure is all to often

misunderstood. That includes people who are studying and fun and higher

education. What you have done is disputed the

Fraser of Allander Institute figures. You have district --

disregarded my interpretation. You have come up with no explanation

about whether the government is concerned about the situation. Have

you got any big idea or a you going to chug on and continue what you are

doing? We would be concerned with a contraction. Give me one idea. We

will continue to do what we are seeking to do. We are investing in

people to make sure they have opportunity to advance in the labour

market through education, apprenticeships. We are investing in

our transport infrastructure. To have 100% broadband coverage by

2021. These will be necessary to ensure we have economic progress.

The problem is the Scottish economy is flat-lining relative to the rest

of the UK. They may be marvellous in the long term but they are not

addressing the specific problem. To the contrary. If you take it back,

this is where I am not disputing the Fraser of Allander Institute and

what they are saying. We would like to see more growth and the project

in this year the economy will continue to grow. Jamie Hepburn,

thank you very much. Well, for a couple of alternative

perspectives on the Fraser of Allander report,

I'm joined by two MSPs. From Edinburgh, Dean Lockhart

of The Scottish Conservatives, and with me here in Glasgow,

Scottish Labour's Jackie Baillie. Dean Lockhart, do you accept this

explanation that there is nothing to explain? No, not at all. This is a

real indictment. A leading institute in Scotland have said we have had a

lost decade under the SNP. That is right. Scotland was Mike economy is

underperforming, we are on the brink of recession. While the rest of the

UK economy is one of the strongest in Europe... Fraser of Allander

Institute say it is not just oil and gas. What is your explanation of

what that is. Can I see a couple of things. To grow the economy, if you

look at successful economies worldwide, Singapore, Germany, you

need a whole government approach. Every department needs to be aligned

to grow the economy. We have not here in Scotland Scottish Government

that has its priorities elsewhere. Nicola Sturgeon has said that

independence transcends the case for the economy for national wealth. As

Jamie Hepburn has the listing, they have the listing initiatives. The

problem seems to be that they are not addressing whatever that

specific problem in Scotland is and it is still unclear. Economists are

unclear about it. Politicians are unclear about it. The Fraser of

Allander Institute is very clear when they see that the Scottish

Government's approach of having the strategy... It is less clear what

those policies should be. It is about successful implementation.

Having focus on what works and the economy and this government after

ten years, they do not understand. Give me one big idea of yours. We

have published on a UK wide level 140 page industrial strategy that

incorporates a centre approach to the economy that is basically, it is

supported by the Royal Society of Edinburgh, the Scottish Whisky

Association who have asked the Scottish Government to support a UK

wide industrial strategy. That is what we are seeing. We want a new

approach to the economy and that is about harnessing a strength in

different sectors. Food and drink is a success. That is what we should be

doing. We should be focusing on a UK wide level. Jackie Baillie, what is

your explanation? If you look at the Scottish economy, over the past ten

years, it has grown by 1.2%. That is a really small figure when you

compare it to the preceding seven years where they grew by 17%. The

thing that has been common in the last ten years as a constant

obsession with independence, and I have to say when you talk to

businesses, businesses hate uncertainty. They did not like

Brexit because of the uncertainty. They do not like the threat of an

independence referendum because of the uncertainty. There is little

hard evidence to back that up. There have been good figures for foreign

direct investment in Scotland. It is difficult to argue that. If you look

at foreign direct investment in 2014, it dropped. If you look at

foreign direct investment in the property market, it dropped

significantly. It is not as saying it. Even if we concede the point

that the threat of an independence referendum might affect this, it

does not explain what you have said that over the last decade, 1.2%

growth. I am not sure what the current figure is for the UK, but it

is much higher than that. The UK grew at a higher rate. The Scottish

economy, particularly in the last two years... It is a combination of

different factors. In the last two years the difference between the

Scottish economy and the UK economy has then start, and that is about

oil and gas. What we need to get beyond saying it is this sector and

that sector. We have to understand it is the Scottish economy as Apple

and to bring into play the actions required to make a difference. We

have an economic strategy. Give me one. With exports, about 100

companies are responsible for a 60% of our exports. They tend not to be

SME 2-mac which is the backbone of the Scottish economy. If you invest

in small to medium enterprises to ensure that they are taking on board

export opportunities, that is one mechanism for growing the economy.

Investing in skills is another. Companies tell us all the time there

is a skills gap in Scotland. Construction, engineering, they are

needed to boost the Scottish economy. There is a reduction in the

number of students at colleges, the very place they learn the skills.

The skills point, the chap in the film was making that point as well.

He said that people coming out of universities are not really equipped

with the skills that they need. Again, why is that a problem given

that education has been such a priority, not just on the creed of

the SNP but before that? It is, Gordon. It is a problem here. Nicola

Sturgeon said education would be her top priority. What we have seen

under the SNP in the next -- last decade, new Morrissey is dropping.

Is the problem that the one that Jackie Mark -- Jackie Baillie

identified. Is it something about people taking the wrong, not the

wrong degrees, but people should be a later date liberal arts degrees if

they want, there are not enough people doing the type of degrees

that would be useful to the company we saw in the film? Again, in order

to address the issue we need a hall of government approach which is to

prioritise the economy. And going to education, it is about college

places which are essential. It is all very well having great

universities. Scotland has world-class potential. But college

places are essential because they provide training for people who can

fill that skills gap. We are going to have a wee bit there. Thank you

both very much indeed. -- going to have to leave it there.

Now, maybe in a couple of years' time, Jo Swinson might stand

She had the chance this time around, but instead she decided to go

for the deputy leadership, which she won with a unanimous vote.

Meanwhile, Vince Cable looks like the overwhelming favourite

You are now the deputy leader of the Liberal Democrats. Why did you not

stand to be leader of the Liberal Democrats? It's not a job that I

wanted to be doing. At the moment. I thought it through, lots of people

said lots of lovely messages encouraging me to stand, but at the

end of the day it had to be my decision. It is a huge job that you

cannot do lightly. And work between my constituency response teams in

East Berkshire where I have been recently re-elected, and other

aspects of my life, it did not seem to be the right thing to do. --

where I have been recently be elected in East Dumbarton Sheriff.

You made some comments at the time. Let me say at the time, a feminist

but I am, I have two underwater bloke in my position would do. Many

would run for a leader like a shot. Just because a man would do it does

not make it the right thing to do. Which left a lot of people,

feminists and others, mystified by what you meant. A lot of people

don't understand what I meant. Your first question to me was querying

why I did not run for a leader. Sometimes there is an assumption in

politics that anybody who is a member of Parliament member as

Scottish parliament must automatically must always want to be

doing the leadership role. I would be questioning that assumption about

why that assumption exists. Part of that is gender. There are

expectations that are often put on men and women, and indeed that can

be quite constraining on men who might not necessarily fit that what

is perceived to be the outer note stereotype that they were perhaps

pressure to do as well. Are you saying that it is something you

would not like to do. No. So you would like to do it at some point? I

you should never say never. I'd note you should never say never. I'd note

-- I did not predict that Theresa May would call another election. I

am not going to planet the rest of my career right now. Many people are

saying, should Vince Cable become the leader, which looks likely,

National treasure though he is, he is 74 no. He would be 79 if you made

the heroic assumption that this parliament will last for five years

and he may well not even want to lead the party into another

election. People are saying you would at that point Stefan. Or at

least and for a leader. Vince had made clear that he is perfectly

prepared to do that. He has reference in Gladstone who became

Prime Minister at 82. We should not be ageist about this and making

assumptions. People have got a lot to offer, politics from young

people. I have been involved in getting young people involved in

politics. And we should not be rating people off because they are

older. Should you be called upon to lead the Liberal Democrats into the

next election, assuming it could be in two weeks' time, let's assume it

is not. Let's assume it is several weeks away -- years away. Would you

be prepared and would you feel you would be after that? I have made my

decision when Tim resigned as the leader of the Liberal Democrats. I

thought about it carefully and to my decision. I have said never, you

have to have a look at the situation at the time. Do you buy Tim Farron's

decision and explanation for why he resigned? Hearing Tim talk about it

and before he made his public decision, he was clear. It made him

feel personally very unhappy that that sort of inner turmoil and

therefore, you know, you hear him saying that. You cannot fault them

for coming to the conclusion that he did. I hope he could have stayed on.

He was a good leader of the party. Do you think it is a good or bad

situation. I am sure that you would not agree with some of Tim's views

on homosexuality, for example. But he clearly felt that it own personal

views were incompatible, being a political leader. Even though you

might agree -- disagree with his views, is it a healthy situation

when someone feels they cannot read a political party because of their

religious views? I am a humanist and I do not believe in God. People of

faith do contribute a lot to society. Politicians should be

judged by the policies they've bought and the votes that they cast

as parliamentarians on behalf of the people that they represent. I did

feel uncomfortable at some of that questioning. I understand that

people have the right to ask the questions. The focus should be on

how people act. I think Tim always stood up for equality. The Liberal

Democrats have got a proud history of doing that. Suppose the argument

would be that as long as you support policies, which are equal rights

policies, your private opinions should be your private opinions.

There has been a long debate about whether faith has got a role in

politics. It was Tony Blair's team who said we do not to God. There are

a lot of people in the country who are going to church, there are a lot

of people who are Muslim Jewish who have got all sorts of faiths

beliefs, we are a stronger country and our politics. We have a Muslim

era of London. We want to be embracing people of faith and

politics. One thing that may happen is a big realignment in British

politics. We have got to rather obviously wanes of the Labour Party.

There are any number of divisions between the Conservative Party. Some

who want the negotiations on a softer line or harder line. There

could be a big realignment of softer could be a big realignment of softer

-- British politics. That is what the Liberal Democrats lived for. Do

you think there will be and what role do you think the Liberal

Democrats can play? I figure we have a opportunity in a

strong parliament with the Conservatives don't have an overall

majority, they have done their deal with the DUP on key votes of

confidence and supply, but otherwise to get business to they are going to

convince Parliament, and that means that parties working together. Can

you foresee a situation where there would be a realignment in British

politics in the sense that you could have a new sectors party with

elements of the Labour Party and elements of conservatives and

presumably a role for the Liberal Democrats as well as Mac that is

speculation, in reality we have got a strong Liberal Democrat party who

are providing that voice that I do think many people want in terms of

wanting a party that is padding after... You did not make the

picture that you wanted to expect it to. We increase our seats by 50%. We

have got... That has increased by 50%. I had a bacon roll when I

arrived at Pacific tea this morning, that is 100% increase on the number

of bacon rolls I normally eat in the morning. These figures, 8-12. You

were hoping to get 30, 40 C to get back on serious business. We got the

highest number of members and our party's history, we have increased,

representation at Westminster and the most diverse group we have ever

had, which I think it is a real strength. We have got momentum.

Would I have preferred more seats? Obviously. But one of the things

about this election to yesterday parliament and therefore the fool

devastating impact of Brexit is perhaps as clear as it will become.

Particularly if you start to look at economic indicators. We have also

put a very clear marker down that we have been saying we think people

should have a final say on Brexit, if they deal because back is a poor

one, and when it comes back, and I feel very much it will be a bad

deal, there would be more people who look at Liberal Democrats and we

were right. Thank you very much indeed.

And time now for a look at the Week Ahead.

Well, I'm joined now by Times columnist Magnus Linklater,

and Angela O'Hagan from Glasgow Caledonian University.

The economy, Magnus, there doesn't be a problem. Yes, not just oil and

gas. Listening to your various exchanges earlier, it is quite clear

that in a sense I get the impression that the SNP Government is

struggling with this. They seem to be on the one hand in denial about

the reality of what faces us, which is Scotland hovering on the big of

recession, could be in recession, I know these are technical terms, but

clearly it is flat-lining, think that was a phrase. Despite you think

there is a problem? There are different problem for different

people, and always when we're this situation, the economy flat-lining

of whether it is a recession, how that plays out for different people.

We have seen over the years the cycles of recession and how they

effect on women and men differently, and in the economic policies and

strategies coming forward, we need to be addressing that is the core

issue as well. The problem is, Magnus, your diet of a certain age,

and when I hear politicians are talking about this, I remember being

a business journalist in the 1980s and they all said exactly the same

thing. Getting spin offs from Silicon Glen, about helping small

and medium enterprises so that they can grow, it is about investment and

skills, that is a secret. Here we are all these years later and

Scottish economy grew quite well in the meantime. I'm not sure it had

anything to do with any of these things the Government were doing

rather than just general growth in the British colony. As you know,

Government are not very good at getting involved in business, but

they are... It is important that they set out certain signals and I

think that while you cannot argue that independence is self has

necessarily been a distraction, nevertheless there has been a vacuum

in terms of economic policy. I would be hard pressed to say whether the

SNP really stands on how to grow the Scottish economy, they've got this

growth commission coming up, a lot is pinned on that, I don't have what

it will say, but there has been this absence of leadership in terms of

why Scotland should be going and how that economy should grow and where

emphasis should be. The world does not... Since I was being told me

since the 1980s, China has grown to the second largest economy in the

world. Things around us change very fast. Liberalisation, we have just

finished hearing from Jo Swinson about the affects of Brexit, clearly

that is a concern for the Scottish economy. The point that Fraser of

Allander Institute make is that it cant explain Scotland, because the

rest of the UK is doing rather well and leaving me you as well. Brexit

cannot really explain this. To go back to your question to Magnus

about your fellow contributors about what we can do, think we have seen

some glimpses and sparks of innovative thinking from the

Scottish Government. There is a lot of positive discussion about

includes a growth and what we meant by that. From my perspective, it is

about recognising the centrality of care to our economy, and investment

in social care and child care, not just for the workers who can access

those services and build the workforce, but for building a

workforce with in and building the economy with those sectors, as

central to a economic infrastructure. That is the kind of

language we heard a few years ago and we have seen investment in

childcare from the Scottish Government, but we need a bit more

boldness and conviction about the inclusive growth dynamic. Magnus, do

you think... I remember in that enormous white paper the Scottish

Government produced for independence there was some vague talk about

German style model, something three may thought about, getting unions

and employers, having a sort of German style training system.

Doesn't seem to have featured much. I think the difference is that,

under Alex Salmond, you felt that you did have this kind of stuff with

the SNP were never going with business, he was business friendly.

I don't get that same impression from Nicola Sturgeon. In defence of

Nicola Sturgeon, she could say, but look at what Alex Salmond used to go

on about, renewables, Saudi Arabia of wind, the whole idea that

Scotland could have a new industry, not just have lots of wind turbines

but have an industry which dealt particularly the offshore

next-generation, and it has not happened. I think it is next week

there is a decision on whether Scotland's large offshore wind

energy plant of the Firth of Forth gets the go-ahead or not. If it does

not, if that falls, we have no offshore. Magnus Meitner is one in

the Pentland... This is the big one. A lot hangs on that. The is a

contract, or am I wrong, Angela, between Alex Salmond's business

approach and a... He was off to China, she gave off an image of

Scotland is open for business which is not really there any more. I

think they can see all sorts of other international perspectives,

but what we have seen a important shift in the discourse that our

economic and social policies had to go hand-in-hand. Guys like we have

to leave it there. I'll be back at the

same time next week.