02/07/2017 Sunday Politics Scotland


Andrew Neil and Gordon Brewer with the latest political news, interviews and debate.

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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.


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