including france and germany, uk yes yet to show signs of coming out of the recessions. prime minister's questions tend to place the blame on the prime minister. .

given that those cuptries are in growth and we are not in growth, can he tell us on earth he meant when he said, and i quote, we were leading the rest of the world out of recession. >> not one policy -- we have taken action to restructure the banks and nationalize opposed by the party opposite. we have taken action to keep unemployment down as a result of creating jobs opposed by the opposition. we have taken action for international cooperation opposed by the opposition. they have been wrong on the session, 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 this -- is that of the 1930's. >> the fact is, when you look at the prime minister's three central claim the claim we were

better prepared for other countries, that was wrong, our deficit was worse than other countries. the claim that britain was leading the world out of recession, we're still in recession. isn't it the case his three biggest claims are his three biggest failures? >> the more he talk the less he actually says. >> mr. brown continued as a conservative candidate richmond park who would benefit from the conservative policy to raise the limit before people paid inheritance tax. zhr >> the only person who -- the only person who made a specific pledge to reduce inheritance tax in the coming budget is the prime minister he legislated to raise the threshold from 350,000

to -- from 325,000 to 350,000. perhaps he can tell us now, is he still planning to do that? we'd like an answer. >> mr. speaker, it's interesting that -- it's interesting that that the great ideas of economic policy, he's ended up having to defend his own policy on inheritance tax. the question he has to answer, the issue, mr. speaker, the issue that concerns the whole country is that inheritance tax costs to millionaires will cost us nearly two billion pounds we should be spending on the public damages. now the issue for the country, is it public services for the many or inheritance tax cuts for the few. with him and mr. goldsmith, their inheritance tax policy seems to have been dreamed up on the playing fields of eton. >> mr. goldsmith said he was

going to give up his status. a few days late they are chancellor unveiled his mini budgets known as the prebudget report he confirmed taxes of 50% on bonuses of more than 25,000 pounds. mr. downing also noted a rise in national insurance by 1%. at the address -- as he addressed m.p.'s he said he want t.d. promote growth without wrecking the country's economic recovery. >> once the amount is secure he must meet our bam bishes -- ambitious target to half the deficit. we take these positions from a position of strength. >> and the a.p. is to go back to

17 1/2%. inheritance tax is frozen at its current level, not increased as previously pledged. an above inflation rise in some pensions for one year and a scheme for inefficient heating boilers. he turned to bankers ibo nusses. >> they can use profits to build up capital base but if they insist on paying substantial rewards, i'm determined to call money back for the taxpayers. i've decided to introduce a special one-off levy on any bonus of more than $150,000 pounds, this would be paid by the bank, not the employee. high-paid bank staff will, of course, also have to pay, as usual, income tax at the top rate on any bonus they receive.

this levy is expected to yield just over half a billion pounds. >> the deficit had to be halved, yet frontline services must be protected he said. >> this can't be done without a further difficult decision. i intend to increase further employee insurance by a further half pence and to protect those on modest income, i've decided to raise the starting point from which national insurance is payable and no one under $30,000 pounds would pay. >> would he face the tough spending decisions before the general election, or would he completely duck them? we were promised a prebudget report and what we got was a pre-election report. >> he moved on to the proposal for bankers. >> we said two months ago we warned him to try to stop big cash bonuses being paid out.

i said we should look at a tax system. let's be clear. they're going to pay out a load of bankers ibo nusses they shouldn't have been paid out in a first place, put a one-year wind fall tax on them and declare it a triumph. the best result will be if it curves bank bonuses without kur bing bank lending. >> and it ended like this. >> he prided himself on being the nation's banker. he has been. now like every other failed master of the universe, he's coming to the taxpayer and asking to be bailed out. but he should remember this most bailouts start with a change at the top. >> the liberal democrat treasury spokesman said it was clear britain's economic position was still very grave. >> there have been genuinely great later chance -- labor

chancellors in the past. roy jenkins amongst others. they would not have been upset with drawing tactical dividing lines. >> he said this has been a good budget for bin go and boilers and he accused mr. darling of making assumptions. >> what the government has assumed today is high rates of economic growth, 3 1/2%, what is the basis for this assumption? it's a little like the old story of the economist who is given a tin of food to eat and says, let's assume the existence of a tin opener. the government is saying, let's assume economic growth. why? half of the -- has the government made any estimate of the risk which is a very real risk of the economy reverting to a double dip recession or to continue stagnation? >> the scottish nationalist said it was not a budget for growth.

>> this prebudget statement was specifically to confirm the cuts in what was capital scotland announced earlier this year. why did the chancellor not take the advice of even his own colleagues in scotland to have more years before filing capital expenditure, to protect the recovery, rather than ensuring the cuts come now and weaken the ability to have scotland to recover. >> how did it go down outside west minutes her i ask our political correspondent. >> there's still a lot of concern further in the markets as to whether it's gone far enough to put us on the path to paying off deficit. it actually comes down to timing. when you look at all the arguments made by the different parties, all three parties outlined what they want to do.

they have 12 billion pounds of cuts, but the real difference is timing. what you find is the conservatives say, look, we've got to start retrenching now, got to start paying back money gow n.o.w., because if we don't pay off the deficit, we'll never get economic growth. the government, the liberal democrats argue, you can't pay it off until you have growth. i suppose cynically a lot of people will say, that's the government saying let's put the pain off until after the general election. and there is the view that because the general election is a few months away that the last thing you want to hear is about a series of cut. they say it would be reckless to try to cut spending now. >> is this going to show us a dividing line between the parties in the run up to the election? >> there's a narrative which the government wants to develop which they do see as a dividing line and their argument is,

they're in the business of protecting core public services whereas they say the toreys are largely indifferent to the fate of public. when you look at the policy os they have two parties, both said they'd protect the n.h.s., so on that area, there's a broad agreement. there's agreement on public sector pay because toreys are also suggesting -- tories are suggesting a cap on public sector pay. when you strip out the rhetoric and dividing lines, which i think the government has sought to create, actually the parties are not that far apart. i think so grave is the economic hole weir in in terms of the deficit, when we're talking about $178 billion, an absolutely massive deficit, so great is it, i think politicians are aware we have to do something and that will mean tax

rises and spending cuts and it's going mean a significant retrenchment of public services. >> we'll hear more from norman later in the program. we've come inside parliament's central lobby to look at another story that continues to cast a shadow of westminster -- expenses. some came to apologize for claims they made. back in march, before the "daily telegraph" listed the expenses and allowances, jackie smith found her finances on the front pages. there were complaints she had wrongly designated a home in london belonging to her sister as her primary residence. an inquiry was launched, the complaints were upheld and she launched an apology. >> i thought an perceived -- and received written advice that

supported my main home designation. indeed, i spent more nights in london than in redwich. i have never slipped my designation and i only one home. there is no evidence the taxpayer would be worse or better off if i made a different designation. >> another former minister apologized after being forced to pay 13,000 pounds in second home allowances. he said his second home -- he claimed a second home lived in by his parents. he came to apologize after the committee determine head claimed on the house after he married and moved out.

sir christopher was asked to investigate those claims by jacqui smith and tony mcnulty. but the time scale was brought forward after claims that m.p.'s had flipped properties. m.p.'s were told to rent properties in future. there will be a ban on employing relatives. just ahead of the report, official release, i spoke to labor m.b. andrew, and sally hammond, wife of conservative m.p. steven hammond who works as his assistance. >> let's start with you. to the public it seems odd that m.p.'s can employee relatives in the first place. >> i think it does but an m.p.'s

job is not just a job, it's a lifestyle. your family is expected to be part of it anyway. in my case, i've worked for members of parliament for 25 years and at the last general election, the m.p. i was working for retired, i was offered a job for his successor, but my husband was elected. i thought the best way forward was to work with stephen. i thought it would seem strange if i went to work for one of his colleagues. >> do you think we're going to see m.p.'s wives going back around? >> that's been rumored. i'm sure because of the work she's done over a long period of time, it's clear where an m.p. can employ a relative and it can be better than employing someone

else. there have it's a hard case. but -- and here's the but -- i don't think we're any long for the a pgs where we can plead even on me the merits to an advantage. the problem with employing relative the same with mortgages , i don't claim a second home allowance and i can speak more objectively, it looks like unjust or unintentional enrichment. you might have money going into your household or capital gain on your property. it may not be a lot to anybody else but it's a gain to a member or member's family. that's what people object to. >> let's look at some other things we're expected to come out. what about suggestions that future m.p.'s should be only able to rent homes. would you welcome that? >> we welcome an end to the second home allowance as we've seen it in the past. it was never the right thing that even if unwittingly, there's a point to be made,

m.p.'s were unable -- were able to build properties on taxpayer money. as a second home is actually a misnomer. what we want m.p.'s to have is the ability to do their job well. they don't need a home, they need a choose a main home for their family, that's right, but then they need a place to do their job effectively. if they want to buy a second home, that should come out of their own pocket. >> do you think m.p.'s will accept this? >> some people are unhappy about this, but i think the majority opinion will be, like my own, that there may be a few cases of serious abuse, there have been a few cases of that kind, second, it is a completely nonsense call rule of retaining the system, even if it doesn't, taxpayers can argue it might coost the

taxpayer more, rent might cost more, not employeing family members might cost more. >> transparency is everything. >> i'm afraid that's right. we have to be seen to be behaving like normal people. i think the majority of m.p.'s will be of that view. >> in your dealings, with constituents, in your communications with them, if -- is there still a sense of anger? do you think that's abated? >> we've never had any anger against us at all. my husband -- i think people appreciate me being here. basically, i think people appreciate steven and me in many cases they'll phone up with a huge problem, i might say, look i'm the m.p.'s wife as well, can i help? it seems to calm them a bit actually. >> a few days later, the kelly

report was officially published. we asked one man what he made of it. >> there's a proposal that's been widely leaked. but one surprise, the crackdown starts new. >> the most controversial issue is accommodations. our main recommendation here is a support for mortgage interest should cease and that in future, members of parliament should only be reimbursed the cost of rent or in a few cases where that offers better value for money, hotels. >> a new parliamentary standards authority is in charge of bringing in the rules. they told them -- he told them not to pick and choose the recommendations. >> i hope you see it's been quite carefully constructed to address issues that have been raised. once you open up something like

this, who knows where it will stop. >> next, the expenses road show moved to the floor of the house of commons. the speaker announced kelly will be head of the new authority. m.p.'s were less than impressed to hear he'll be getting almost double what they get paid. >> he'll be paid a maximum of 100,000 pounds per year. order. >> he said they have to take the punishment without a common vote. they listened that the gravy town was finally hitting the buses. >> this house of commons has yet to fully resolve this episode, but with clear acknowledgment of the anger work the kelly report and the establishment of the parliamentary standards authority this will be resolved. >> m.p.'s queued to accept that

days of phantom mortgages were over. >> i'd like to thank sir christopher and his colleagues for producing a thorough report whose conclusions we should accept in full and take forward. i am clear, sir christopher's kelly's proposals should be implemented in full without equivocation. >> i very much approve of the approach that the leader of the house is taking in this matter. you can be assured of our support if there are procedures required to implement what she's laid out in her statement, my colleagues will be happy to support her. >> so tax funded property empires will be a thick of the past, but they're lobbying hard for a pay raise to make up for it. >> i asked how much of a shadow

the expenses saga continues to cast over westminster? >> i think it's overshadowed this parliament. you have parliaments that are remembered for all sorts of thing the long parliament, whatever, this will be forever identified with the expenses saga, which has overshadowed everything and one part of that is you look at the number of m.p.'s leaving the parol. , there's a staggering number. it's possible we'll see the biggest clear out of m.p.'s since the second world war, perhaps a third of m.p.'s standing down. a very large part of the reason is the expenses saga. a lot of m.p.'s in the just those who abused the system but a lot of m.p.'s feel bruised by it. a lot of them were pillried in their local paper, they have no chance of standing again and a lot of them feel, what's the point of being an m.p.? it's a tough existence, and

we'll see a mass i clear out. that's one consequence. the other thing to say is, it's not over because we still have to get legislation through parliament to implement the sir christopher kelly proposals. the guy looking into the bills which he felt should be paid back, he's got to send out his final bills. the whole saga, it seems to me, will keep on rippling along. some of the proposal, not being able to employ a spouse, that's liable not to kick in for five years, it seems to me there's still a ways to go. >> while all of that was going in the house of commons, there were troubles aplenty in the house of lords. a group of peers recommended a committee of its own. it was chaired by lord eems who wanted an end to them -- a

newspaper claimed some peers had been willing to take money to make changes for some bills going through parliament. i asked what the standards commission would actually do. >> they'd have a very wide range. they would be totally independent and it -- they would be asked to do a job in which complaints brought to them about individual members of the house of lords, they would then relate that in terms of fact finding investigation and then it would be pushed on when the facts have been established, pushed on to the system we have. but the key point of our recommendation of this is that they've got to be seen as transparently independent. up to now, the parliaments has been responsible for much of this process. this is not a judgment on the way he has done his job. it's an attempt to say, look, the amount of work involved in

this and above all the public perception of integrity is such, it's got to be a new person doing it. >> there's already a commissioner of standards in the house of commons, couldn't you share that one and cut some costs? >> it would be easy to take the economic argument, as we call it, but it ignores one point. first of all, we're not salaried. we're part time. we come out of a sense of duty and privilege to do the job of scrutinizing legislation coming from the house of commons. >> but isn't it inevitable you'll move toward being paid. one of your other recommendations is you shouldn't receive money for advocacy. >> 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 would be -- which would give you financial game. that's what we've said we wanted, ban parliamentary concessions for that reason. the question of whether or not we're going to be salaries, that's lying in the hands of another committee and people mustn't confuse what we have been set up to do with the other committee, which is looking at the financial backing of the house. we've got to await its results. >> don't you think this is a sad day for the house of lords? doesn't it mean the house of lords is no lodger full of honorable gentlemen anymore? >> i don't take the that sue. i'd like to think the vast majority of my colleagues do an honest, very, very clear cut job and they do it because they're proud to be asked to do it. i don't think it's a sad day for the house of lords. i think it's a very realistic day. it's also a day in which we can say it's moving ahead, moving into new waters, moving into new areas, but it's doing so with a

real attempt to gain integrity. >> gordon brown asked the senior salaries review body which sets pay for top civil servants and members of the armed forces to take a look at lords' allowances. it recommended an increase in the daily attendance allowance to 200 pounds to include office costs, but a reduction in the overnight allowance from 174 pounds to 140 pounds. peers debated the changes just before parliament broke for christmas. >> i know some members of the house this could lead to a number of members disengaging if this house and returning to the house which is largely wealthy, retired, southeastern. my lord, we must guard against this. we now have a vibrant house of

which we are all proud and we must retain the wealth of our diversity. >> a conservative opposite number took objection to the claim that other cubtries was less. >> in the united states of america, 258,000 pounds. the equivalents draw 72,000 pounds a head on average. it is sloppy to imply that your lordships cash in a significantly more costly way. your lordships are not costly. your lordship, i believe, do not have snouts in the trough this report should not and does not change that fact. but it might be more sensitive to the realities of life. >> my lords, i think i've said to you before, it's 43 years since i first entered this palace seeking my first

political job. i did so with a sense of awe for what it is and what it stands for and awe i retain to this day. my predecessor on these benches once likened public trust to carrying a very valuable glass vase across a highly polished floor. it's our turn to do the carrying. voting for this motion tonight will be one way of ensuring we do not slip. >> i'm astonished that there's not a single woman among the 10 members of the review body and perhaps that's why they believe that m.p.'s and peers should have no family life and be content with a one-bedroom flat. like the recommendations that peers should be allowed to travel first class on the grounds they need to work should dispatch their spouses to a crowded standard class carriages or worse, to share standard-class sleepers is petty and small minded and