opening of parliament. >> hello and welcome to the record review. it is a look back at the big events of westminster over the last few months. coming up, it is the economy. as britain's debt goes up and up, they wonder how they can balance the books. they had used money to build the houses after months of scandal. . .

>> but i have to say, the purpose of asking this question must be either he's got policy that he wishes to push forward -- so we can do better. or he's simply talking down britain. >> he normally does a listing out and france and germany went into recession at same time as britain yet they came out before. can the prime minister answer this, given that those countries are in growth and we

are not in growth, can he tell us what he meant, and i quote, that we are leading the rest of the world from recession. >> mr. speaker, not one policy -- we have taken action to restructure the banks and nationalize and we have taken action for the fiscal stimulus, opposed by the party. we have taken action to keep unemployment down. they have been wrong on the recession, they will be wrong on the recovery. mr. speaker, the voice may be that of a modern public relations man, the mind-set is that of the 1930's. >> the fact is when you look at the prime minister's claims, the claim that we were to be better, that was worse.

the claim that we are out of recession, we are still in recession. and the claim of boom andbust, is that the claim sdm>> -- the more he talks, the more he saves. >> mr. brown continued at a dig of the conservative candidate, richard park that would benefit from an inheritance tax. >> the only person that has made a specific pledge, not just a promise but in legislation to reduce tax in the coming budget is the prime minister. to raise the threshold and that he can tell us now, is he still planning to do that, we would like an answer.

>> mr. speaker, it's interesting this exchange -- this exchange started with the great ideas of the economic policy and he's ended up having to defend his own policy. mr. speaker, the question he has to answer, the issue mr. speaker, the issue that concerns the whole country is that inheritance tax cuts to millionaires will cost us nearly $2 billion pounds that we should spend on the public deficit. and the issue for the inheritance tax for the few, i have to say with him and mr. goldsmith, the inheritance is dreamed up. >> mr. goldsmith later told bbc he was given up his status.

later revealed the pre-budget and he had cuts of the senior staff services of 25,000 pounds. and he had on top of a half percent rise announced and he said he wanted to assure the economic recovery. >> at the time that public is clear, we must reduce the spending to half of the deficit. mr. speaker, we take these positions from positions of strength. >> this is under investment of health and education. >> thus the announcements, the at is to go back to 17.5%, inheritance tax is to be held

at the current level, not increased. and to have above inflation for one year, and to scrap the schemes of bonuses. >> they can use capital base, but if they insist of paying rewards, i am inclined to put money back to the taxpayer. i include one off levy of 50% of bonus of 25,000 pounds. this will be paid by the bank, not the bank employee and measures will be introduced with immediate effect. high paid bank staff will have to pay as usual income tax on bonuses they receive. and this will include our speculation that banks will levy back on bonuses. >> the financial deficit had to

be hard and yet front line services must be protected. >> this cannot be done without a further difficult decision. i intend to increase those from national insurance by 12.5 pence until 2011. and i will raise the insurance that is payable and no other will pay contributions as result. >> he was accused of not dealing with britain's debt. >> will he take the tough spending decisions before the election or completely duck them. we were promised a pre-budget report and what we got was a pre-election report. >> he moved on to the chancellor's proposal for bankers. >> we said that we warned him to stop big bank pay outs. but let's w7clear, they will pay out a load of bank bonuses

that they shouldn't and put a windfall tax on them and declare it a triumph. >> oand he concluded like this. >> the prime minister always called himself. -- himself the nation's bank financer. and so he is, and now like every other failed monster of the universe, he's coming to the taxpayer and asking to be bailed out. and he must remember this, that most bailouts stop at the start. >> and coming to be table, saying that it was clear that britain's problems are great. >> there have been many at the top, and they would not have

been obsessed as the chancellor is today of drawing tactical dividing lines. >> saying that this would be a good budget for bingos and accused mr. darling of that. >> what the government is assuming of the increase, anfql what is the basis of this assumption. it's like the story of the economist and giving them something to eat and saying let's assume the tin opener. and the government is assuming the growth. why. half of the government has made an estimate've -- estimate of the risk. >> the scottish nationalist said it wasn't a budget for growth. >> what this is to confirm the

cuts. why did the chancellor not take the advice of even his own scotland people of scotland to assure the recovery and yet to weaken the ability of scotland to recover. >> so how did this deliver past westminster. >> it's in the markets of whether it's good far enough to pay off the deficit. but the basic argument comes down to timing. it's not down to asterity. when you look at the arguments made by the different parties, all three parties have outlined the asterity properties. the liberals have the sweeping of asterity. but the real difference is timing. and what you find is the con

servetives saying we have to start paying back money now, because if we don't pay off the deficit we won't get economic growth. but you cannot pay off the deficit until you get economic growth. in other words we have to wait. cynically that's the argument that the government can put off the pay off to the general election, and the latest thing you want to do is carry through a series of cuts. and the government said it would be reckless to pay public spending now. >> is this going to divide the parties in the run-up to the election? >> there is narratives that the government wants to develop that they see as a dividing line. and their argument is that they are in the business of protecting core public service. whereas they maintain the core,

and they ensure that money went into key public services. it has to be said when you look at the two parties, both will protect the nhs. on that area there is a broad agreement. and the tourists are suggesting that there is a fee on public sector pay. when you strip out the rhetoric and the dividing guidelines, it's not that far apart. so grave is the economic debt, we are talking about billions of pounds, is so grave is it wd that all parties are aware that we have to do something. and that will mean tax rises and spending curving and an entrenchment in public services.

>> there will be more from norman later in the program. we come inside of the heart of parliament to look at a story that continues to cast a shadow over westminster, expenses. of the labor group to apologize. >> back in march before the daily telegraph lent stories on finances, and jackie smith found herself on the front pages. there were complaints that she had loaned her home in london her home allowance. this was upheld but ms. smith said sorry. >> i sought and received from the authorities that supported my main home designation.

and indeed i spent more nights in london than the other residence. i never split my designation and only maintain one home. the committee recognizes that the taxpayers would not be worse or better off of the result of me making a better decision. >> a few days later there was an apology to pay 13,000 pounds in allowance. he came to the parliament to apologize and there was investigation of complaint that mr. nolte claimed this allowance. christopher was asked to investigate the claims of jackie smith and mcnotty.

and this was brought further of what was claimed from moats to duck houses. mp's were told to claim properties. and this was to be scrapped and what they claim is to be phased out and a ban claiming relatives. there was a release from the bbc and stephen hammon who works for the parliament. >> i will start with you, it seems odd that mp's can hire relatives in the first place. >> i suppose it is, and your

family is part of your lifestyle. i have worked for the parliament for 25 years, and in the last general election of the retired i was of the election and my husband was there at the same time. and i thought it was the best way forward, i worked with stephen and i have years of experience in the commons. >> it does seem a little unfair doesn't it. do you think we will see mp's wives for this. >> that has been rumored and =6

>> it looks like unjust or unintentional enrichment. you either have money into your household or capital gain on the property. it may not be a loss to anyone else but it's a gain to the members. >> let's look at some other things we are expecting to come out. what about the suggestion that future mp's can only rent homes. >> we would welcome an end to the second home allowance as we have seen in the past. it was never the right thing that even unwitingly as a point that mp's would use taxpayers money.

the second home is a misnomer, what we want mp's to have is the ability to do a job well. they don't need more than one home, but they need a main home and if they want to buy a second home that , should come out of their own pocket. >> do you believe that mp's should accept this? what is the mood on the benches? >> i believe that some agree and some would be happy. but i believe that the majority is like mine but there have been some cases of serious abuse. and secondly it's a completely nonsense of a system of a property empire.cr if you look at the taxpayers and arguing things that accounted -- could cost more and rent could cost more. and not employing family

members. >> but transparency is important now. >> yes, that's right and i think that the majority of mp's will be in that view. >> in your dealings with constituents is there sense of anger? >> we never had anger, my husband was a [inaudible] saint and people would appreciate that. >> i understand that labor. >> yes, and basically i think that people appreciate dealing with me. in many cases they will phone up with a huge problem and after a bit ylwñi may say, look am the mp's wife as well as the secretary and it seems to calm them a bit. >> a few days later the kelly report was officially published and we asked what they thought

of it. >> we hear of christopher kelly of the rumors are leaked. >> the most crucial of the issues is accommodation. the main recommendation here is that support of mortgage should cease and in the future the members of parliament should be only offered that of rent and in some cases hotels. >> christopher kelly had more reasons. >> it is considered a package as a whole, and i think that cherry picking is a bad idea. once you open something up like this, who knows where it will stop. >> next they move on the floor

of the house of commons and that kelly would be the head of the authority. and mp's are less thrilled as he gets double of what they get paid. >> he will be paid a maximum of 100,000 pounds per year. order, order. >> harriet harmon came to the dispatch box and said they would have to take this without the commons vote. >> this house of commons has yet to fully resolve this damaging episode. but with clear acknowledgment of the public anger, with firm action already taken with the kelly report and the staeblt -- establishment of the standards authority, this will be resolved. >> the days of stock houses and fancy mortgages days are over.

>> on behalf of this, i would like to thank christopher and his colleagues of producing a full report which conclusions we should accept and take forward. i am clear that christopher kelly's proposals should be implemented. >> very much approve of the approach that the leader of the house is taking in this matter. we should be assured to implement what she's laid out in her statement. my colleagues will be happy to support her. >> so the lewis increase will be a thing of the past, and they are asking for a hefty pay rise to make up for it. >> i ask how much of this is overshadowed of westminster? >> i think it's overshadowed,

this parliament will be the moat, it will be forever identified with the expenses argument, that's ultimately overshadowed everything. and the part of that if you look at the number of mp's leaving this parliament, it's a staggering number. it's clear that we see one-third of the mp's. and not the sole reason, not just those who abused the system but a lot of mp's feel bruised by it. and a lot of mp's feel what is the point of being an mp. so we will see a massive clear out. and that's one consequence. and the other thing to say, it's not over. because we still have to get

legislation through parliament to implement this christopher kelly's proposals. and thomas legg still has to send out his final bill. so the whole saga will continue to rippling along. and some proposals such as not employing your spouse, that's not liable to kick in for another five years. it seems there is more to go with the expenses saga. >> norman smith, while that was going on in the commons, there was more in the lord's house. the committee was chaired for the battle. the review was set up by lady of the house and a newspaper claimed that some peers are willing to take money to make

changes to some bills through parliament. i asked what his action would do? >> they would have a wide report and asked to be totally independent and asked to do a job of the individual members of the house of lords. and they would relate that in fact-finding investigation and then it would be pushed on when the facts are established, pushed on the committee system we have. but the key point of our recommendation list is that they have got to be seen as transparently independent. up to now the clark parliaments have been responsible for much of this process. this is not a judgment of the way he's done his job, it's an attempt to say that the amount of work and the public perception of integrity is

such that a new person is needed. >> could you look at the costs? >> we could take the economic argument, but that is one point, first of all, we are not salaried, we are part-time. we come out of a sense of duty and privilege to do the job of scrutinizing legislation from the house of commons. >> isn't negligible that you will move to peers of paid. >> but the point of your question is this, that is not a question of salary. it's a question of using the position of influencing legislation, influencing the life of the chamber in a way which will give you financial gain. that's over influence, that's what we said that we want to ban

parliament processes for that reason. the question of whether or not we will be salaried. that's lying in the hands of another committee. and people shouldn't be confused that we are set up to look at the entire backing of the house, we have to await their results. >> isn't this sad and that the house is not full of gentlemen? >> you can take that view, but i like to think that my colleagues do f(can honest, clear-cut job and do it because they çfare asked to do it. i don't think it's a sad day for the house of lords, i think it's a realistic day, it's a day of moving ahead into real waters and new areas. and with i real attempt to gain integrity. >> and that wasn't all, gordon

brown asked for review of the top services to look at the lord allowances. and that's about the claim of second homes. it recommended in an increase of the daily cost to 200 pounds. and reduction in the overnight allowance. peers debated the changes just before parliament broke for christmas. >> i know that some members of this house of the net effect to appropriate or dis employ of the house, my lords we must guard against this. we have a house we are proud and we must obtain the wealth

of disverity. >> the position was taken that other officials cost less and the cost of pay is 125,000 pounds. >> in france it's more and in united states it's 278,000 pounds. and even your lord draws 72,000 pounds. it's a bit sloppy to imply that your lordships cash in, in a costly way. because my lordships are not costy and your lordships do not have this, and this report does not change that. but it may be more sensitive to the realities of life. >> my lords i think i have said before, it's 43 years since i first entered this palace seeking my first job. i did for the sense of what it is and what