ANY QUOTES USED MUST BE ATTRIBUTED TO MURNAGHAN SKY NEWS

DERMOT MURNAGHAN: Now then, we are going to have a look at the Sunday papers, focusing on the business pages now and I’m delighted to say we are joined by former Chancellor and now Conservative peer, Lord Lawson. A very good morning to you, Lord Lawson.

LORD LAWSON: Good morning to you.

DERMOT MURNAGHAN: What have you picked out first? You have picked out this issue, I know it’s an issue close to your heart, of 101 Tory MPs revolting over wind farms on the front of the Telegraph today.

LORD LAWSON: That’s right. I’m very glad to see it because wind power is about the most stupid way of generating electricity you could possibly imagine. It is an environmental eyesore and an affront, it is heavily subsidised, it produces very expensive electricity even when the wind is blowing but of course the wind is only blowing at an adequate speed something like 25% of the time so you have to have back up power for that and it is absolutely crazy. It is all in the name of combatting global warming, I’m sure you agree it is really intolerable the global warming we’re suffering from at the present time.

DERMOT MURNAGHAN: Well it is winter. The issue though, you know the counter arguments well but we do need new industries, we are looking to reinvent particularly our manufacturing sector, this is a golden opportunity is it not, to create these? As we’ve heard from the government there are tens of thousands of jobs in the green economy.

LORD LAWSON: That’s all a lot of economic nonsense but you’re not alone – and I’m sure you don’t believe it but you’re not alone in voicing this. There was a distinguished French economist, there are not many modern distinguished economists but this was in the 19^th century, who pointed out that if you went around breaking windows you’d be creating jobs for glaziers but that doesn’t mean to say it is a sensible thing to do. What is sensible – there will always be jobs available, there will always be opportunities for work because people have desires, people have needs, people have wants and business will satisfy them – what you want are jobs that are productive, jobs that can produce something on a positive basis. Subsidising jobs which is done heavily in wind power is crazy and is actually destroying wealth and destroying growth.

DERMOT MURNAGHAN: Well it happens in a lot of other areas but can I just ask you personally, given how dear this was to Chris Huhne’s heart while he was Energy Secretary, you’d like to have seen him gone on that basis?

LORD LAWSON: Well certainly he had presided over an energy policy which is the worst energy policy – and I speak as a former Secretary of State for Energy, more than 30 years ago but it is the worst energy policy we’ve had in this country for a generation or more. It is bad for the economy, bad for business, bad for the taxpayer and bad for the consumer who is having to pay higher and higher prices that they can’t afford so a rethink is needed. I believe incidentally, and I’m not normally one of those who think that government reorganisations achieve much but I think you need to separate out energy and climate change. Put climate change policy back in the Department of the Environment where it used to be and then energy can go into the Department of Business and Industry where you can have then a sensible energy policy and if Ed Davey has done himself out of a job, then he’ll go down in history as the first Minister who has ever done that.

DERMOT MURNAGHAN: Well this isn’t an interview, it’s a paper review so Lord Lawson, your second paper, the bankers themselves say it might be the end of the big bonus era, well for obvious reasons I suppose. This is in the Observer.

LORD LAWSON: Yes, I think everybody knows the bank bonuses have got completely out of hand but the question is why and there is a real problem with banking that needs to be addressed. Now I believe it is beginning to be addressed. The capitalist system is far away, proved itself, even the Chinese accept this now, far and away the most successful system for creating economic wealth, economic growth, economic development and that’s great for the developing countries incidentally as they embrace capitalism. But capitalism works because there is a discipline that if you do something stupid, if you are greedy or incompetent or whatever, you are likely to go out of business. The trouble with banking is that there isn’t that discipline, they are big enough … they are too big to fail and if they make these mistakes they have to be bailed out.

DERMOT MURNAGHAN: Yes but people say about Stephen Hester, well he wasn’t doing any of that, he was brought in to fix something that was broken and at a rate that was well below many of his peers.

LORD LAWSON: I have no criticism of Stephen Hester, that’s not the point. The point is that there are bonuses that are being paid partly on the back of too big to fail, that they can take huge risks because they know they will have to be bailed out by the taxpayer. That has to change and the government has promised to put in place legislation dividing, separating out the risky investment banking from the normal commercial banking, loans to individuals and small businesses and so on. I believe more needs to be done on the accountancy front – it sounds very boring and it is very boring but in fact what has been happening is that bankers have been able to collect real bonuses, real money, on the back of purely paper profits, unrealised profits which often are never realised and I’m really glad to see that the Head of Banking Stability at the Bank of England has recently been saying this has got to be changed. So as I say, the huge bonuses are a symptom and what you need to do is to deal with the causes.

DERMOT MURNAGHAN: Well Lord Lawson, thank you very much indeed for that paper review. We only got through two stories but ideas rich, thank you very much indeed for your thoughts there on bonuses and wind farms.

LORD LAWSON: Thank you.