02/10/2011 The Politics Show West


02/10/2011

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In the West: $$ NEWLINE We're going to tell you the cost of the new

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super hospital at Southmead in Bristol. Under the PFI scheme it's

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a figure that will make your eyes water.

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Labour optimistic of a West Country comeback, maybe things can only get

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Apology for the loss of subtitles for 2152 seconds

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The today we meet the politicians getting hot under the collar about

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the cost of our new hospital. At �100,000 a day will the private

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finance deal proved to be good value for us? Previous governments

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borrowed all the money they could and still wanted to do more. It was

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only only rider at the Labour conference for our two remaining

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Labour MPs. They say things are looking bright for them. We will be

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talking to the Conservative MP for First, the Politics Show can reveal

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the enormous cost of building the new hospital under the

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controversial private finance initiative. When you take into

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account interest, it is �100,000 a- day and rising every year for 30

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years. That is �4,000 an hour and it does not include maintenance. Is

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it fair to lumber our children and grandchildren of those costs? I

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will be asking a Tory minister and Like so many of our hospitals,

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these buildings at Frenchay were designed during the Second World

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War. They may have been state-of- the-art then, but now the rooms are

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crumbling. The cost of rebuilding them was too high so the NHS Trust

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decided to build an entire new hospital down the road in Southmead

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with a price tag of �430 million. With no money available from the

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Treasury they had to look for private finance.

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The foundations for PFI dealers in the NHS were laid by John Major and

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built upon by Tony Blair. Over 100 hospitals like this one in

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Southmead have now been developed. Concerns from the Health Secretary

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Andrew Lansley who has warned 22 trusts, including the one building

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this hospital, will struggle to afford the payments. He lays the

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blame at the last government's door. Not at all because the government

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borrows money to invest in infrastructure. We were faced with

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the devastation of our hospitals, our schools, we have just got to

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look at Bristol. All the schools that were being built and a Labour

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government desperate to bring forward capital expenditure and to

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build up public transport, schools and hospitals. PFI was a mechanism

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to do that. Did it work perfectly? Well, I think we can see that some

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of them were not well negotiated. Overall, I think whoever you speak

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to, there are pros and cons for a PFI. In the end, we got our schools

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and hospitals. The building work here at Southmead Hospital should

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be finished at 24 teams. The cost will fix at �430 million. Just like

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when you take it a mortgage, you need to pay back interest. Over 30

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years the trust will pay back �1.7 billion. That is liked by one

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hospital, pay for four. They say it is a good deal. Previous

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governments borrowed all the money they could and still wanted to do

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more. So they borrowed of private companies. We PFI it is like

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relaxing out on your own credit card and going to a high interest

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lender. The trust declined our interview request but said they can

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afford the repayments. May said PFI was their only option. Funding for

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the NHS in England has come under fire as budgets are tightened. In

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some cases, there has been a real terms decreasing funding. We should

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be funding -- were read. The entire focus on the NHS is value for money.

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I have been saying for a very long time that it simply does not

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deliver value for money, particularly in the current climate

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when we're trying to take services out of hospitals and deliver them

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more cheaply. It does not make sense to have expensive PFI deals.

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I hope the numbers stack up but I fear they do not. In a few years'

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time, this building site will be a state-of-the-art hospital with more

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rooms than anywhere else in the country. Of course that comes with

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a hefty price tag, more than �100,000 per day. The NHS are

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committed to spending bills -- billions on hospitals that were

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built now but we will be paying for long after many of us have retired.

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It will be a beautiful hospital, but is it worth it? With me to

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discuss this is a Rebecca Pritchard who is the director of Grant

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Thornton and the Conservative MP for Weston-super-Mare. Rebecca, at

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�100,000 a day for the new hospital, is it worth it? It sounds like a

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lot of money, but it is an age hundred bed hospital. When you look

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at that cost, it represents something less than 7% of the

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trust's budget. It is a larger number, but it is delivering a

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fantastic service. �100,000 is about the cost of a GP per year.

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The cost of A GP every single day,. It is a big commitment, but that is

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what it takes to finance and run a hospital of that size. It does not

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sound like good value. It is hard to look good value purely on

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financial terms, but that is what people are focusing on. At the time

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that this deal was done, the cost of finance for the private sector

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was really high. Since the crash of Lehman Brothers, the cost of

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borrowing in the private sector have been higher than in the past.

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John Penrose, we are going to get the benefit of this shiny new

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hospital. It will be great, but our children and grandchildren will be

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paying probably when it is clapped out at the end of its 30 your life

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for. Absolutely. PFI is like a mortgage, some are good value and

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some are bad. This may be good, but around the country there are

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examples of very bad value PFI contracts. Hugh and I and all our

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viewers and their children will be paying for that for a very long

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time. Can they be renegotiated? they can. It is difficult, but we

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are engaged in doing precisely that. We cannot sit by and pour money

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down the drains. Companies who have lent the Smiley are not going to

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say, pay us less, are they? finance arrangements are quite

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complex and difficult to unwind. In all cases, the projects are being

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financed by banks at a fixed rate. It is difficult to terminate those

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arrangements without incurring a lot of cost. It is probably about

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working as flexibly as you can with the contracts and maybe with the

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NHS and central Government. Whatever happens in the world,

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these are fixed costs which Southmead cannot get out of. That

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is right. Not without a substantial penalties. That is the nature of

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PFI deals. Why did we go for them? Why not say, we need this hospital,

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let's write a cheque? At the time, the Government could not afford to

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invest that level capital. We are paying over a period of 30 years,

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but it is not just about private finance. The substantial amount of

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risk is transferred through PFI. That is a fixed cost to the public

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sector, it is true, but the cost will never be higher than what is

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agreed at the outset. If the performance is not up to scratch,

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payments do not occur either forced up is it time the Government said,

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if we cannot pay for things in future, we should not do them

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because it is not fair to lumber future generations with these

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costs? Absolutely. That is why we are trying to bring down the

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deficit as quickly as we can. You're saying the government will

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not be doing any more PFIs? We will only do them in future if they

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represent good value. In the past, as we have just heard, PFI deals

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were done because they did not appear on the Government's balance

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sheet. They were invisible to us as voters. It was a way of pushing

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costs under the carpet. It will all be visible from now on. There will

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be nowhere to hide and we will only do it if it represents good value

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in future. People will say Labour have had no choice but to embrace

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PFIs because under Conservative rule, hospitals were not built,

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schools were not built, wards were not painted and public services

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when to rack and ruin. They managed to raise our national debt had at

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the fastest rate since the end of the Second World War. The watering

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if Forest which had not been watered for years. They borrowed so

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much on the nation's credit card, and we're now trying to pay it back.

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They did not think there was enough so they were even more under PFI.

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think people exaggerate just how significant that PFI costs are.

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Andrew Lansley made a huge cry about the cost of PFI hospitals,

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but the PFI hospitals represent less than 1% of the NHS budget. It

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is a significant number, but of a very, very large number. It is

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trying to distract from the case that there is a lot of pressure on

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health budgets, cuts in real terms because of the services that are

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having to be delivered, and the whole basis on which hospitals get

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paid has changed. That is a lot of care for its buildings. At the end

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of the day it is a building. It is staff who make the health service.

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I am sure you have been deserved need and Frenchay and what is there

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is not sustainable. It had to be sustainable and it makes perfect

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sense for up a new facility to replace the Southmead and Frenchay

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hospitals. The thing now is to look forward. How can PFI be using a

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smarter way? It is probably going to be about looking at finance

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terms which are not for 30 years. But you'll be playing hardball when

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you negotiate with the help the authorities? We were equally with

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the private and public sector. Both sides end up having expert advice

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to make sure they know exactly what do they are getting into. One of

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the issues are with PFI, we talked about the �100,000 a day, the way

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that the Department of Health Structured the deals, the charge as

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it starts out is 100% subject to inflation every year. It is indexed

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by inflation. In other PFI projects they say, we do not want that much

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inflation and agree on lower levels. The fact that inflation is running

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so high at the moment put on pressure if. We have to leave it

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there for the time being. You have heard of Billy No Mates,

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the one who sits alone. I know how they feel! That is a bit like the

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Labour Party in the West. Just two of their MPs are in this area and

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they do not run any councils. But Ed Miliband tried to turn all that

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around at the council this week -- conference this week. Did he

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impress the party's supporters from It really is just them. Of the

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West's 30 MPs, only two are Labour. The party controls no consuls in

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the region and on some they do not have a single councillor. So dawn

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primero -- Kerry McCarthy and dawn Roll back a quarter of a century,

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to when dawn first won her seat and it was actually worse. I remember

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in 1987 when I was the only one in the south-west. Good friends and

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colleagues lost their seats and we miss them, but what we know, is

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that we cannot rebuild from that and can make sure we have lots were

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MPs a gains. At least in Liverpool they were joined by a decent

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contingent of delegates from the region. Trying out his first full

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conference was Thomas. Sometimes, especially in a place like

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Gloucestershire where we do not have many Labour MPs, it can be a

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depressing time. When you come to things like this, you realise there

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are people worse off than you, but also a lot of people think like we

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do. We're doing the right thing and the Tories are doing the wrong

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thing. And there was much to lift I am at my own man. I am going to

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do things my own way. When I gathered together a group of party

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members, the mood was good. They have had plenty joining them in the

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south-west. I think it is upbeat. Her I was a member in the 1980s,

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after the defeat in 1979. There was a long period of feuding,

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infighting and it became very unpleasant and disruptive. There is

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nothing of that around at the moment. If you get knocked over at

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any general election there is a low ebb, but the Labour Party have

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picked up extraordinary wealth. extraordinarily well. As a member

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it restores your faith that they are like minded people all over the

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United Kingdom's doing the same thing. The son shone brightly on

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Labour this week and the party felt better about itself. In Liverpool,

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and the public have not been terribly excited. More worryingly,

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inside the conference and there has been grumbling, especially from the

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unions. One of the biggest cheers of the

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week was a from a speech by Dave Prentice of UNISON. Fighting

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government changes to pensions. It is potentially very divisive.

0:52:130:52:16

Labour leadership insists there should not be strikes while talks

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are ongoing. For those with close links to unions it is not easy. We

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you oppose strikes if talks are still ongoing question mark there

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is not a question of there being strikes while talks are ongoing.

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And if negotiations are there, you should be at the table negotiating.

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As I understand that the Government is that the table but not prepared

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to negotiate for. On this, and much else, a Labour must watch and wait.

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Their fate will turn on how the coalition performs.

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The Conservatives gather this week for their party conference, but

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with gloomy skies hanging over the economy, they will be forced to ask

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if they are on the right track with their economic policies. And there

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is the big question of how to win an outright majority of the next

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elections. John Penrose is still with me. Can

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you name one thing that has gone right for you about the economy?

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Yes, I can. We have managed to start bringing the deficit under

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control. Without getting treated the same way as Greece has been.

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When we took over, it was a real possibility that the financial

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markets would go after Britain in the same way that they went after

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Greece. But it is going up, isn't it? It is coming down from this

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year onwards. Unemployment is up, inflation is high, jobless totals

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are going up. It is a completely awful in-tray which we have been

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left with. You are now 15 months on, sixteen. The sorts of measures

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which you have to tick, any Economist will say, it takes a

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while for that stuff to start feeding through. If you look at the

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people and the Bank of England, at they reckon an interest rate

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decision they take today will feed through in two years' time. There

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is nothing on the horizon, where is the sunshine? We even had a wet

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summer! The tourism industry is one of the rays of sunshine. It is

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doing well. It is growing faster than the rest of the economy. The

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economy is still growing, not as fast as we would like. That is in

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spite of the fact there has been awful international economic news

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as well. People have been worrying about double-dip recession, we are

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not in that territory and a lot of other countries are. We have of

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what is happening in the Eurozone, we're doing better than them albeit

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difficult. With people and Weston- super-Mare feeling the squeeze, how

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long is their patients? I think people, everybody I talk to, is

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worried. They are feeling the squeeze. People also understand

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this will take some time. I do not think people expect this to be

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quick. It will take four-five years to get the deficit down to zero.

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That is before we even start repaying the debt., what are your

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chances of winning an outright majority next time? I am torn

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because it is always wrong to take the electorate for granted, you

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should never do that. I do not want to take anything for granted, but I

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hope we will do well and get more seats than we have now falls up

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with the Lib Dems in tow? We will have to wait and see. We're aiming

0:55:490:55:53

to increase the number of seats each time but saw the other two

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raider parties. We do come to an agreement with the Lib Dems,

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perhaps you do not run in Weston- super-Mare, we will not run

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somewhere else? He would have to ask David Cameron and Nick Clegg

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about that one. I will! That it is it from the West this week. The

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Politics Show continues in Manchester. If you want to get in

0:56:160:56:19

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