29/07/2011 Newsnight

Tonight, the long, slow, self- inflicted mess of British tabloid

newspapers, from the families of murder victims allegedly hacked, to

the disgraced private detect yef i Glenn Mulcaire, who says he was

acting - detective, Glenn Mulcaire, who saves acted under instruction

who saves acted under instruction from News of the World.

Now libel payments in the Joanna Yeates case.

And guilty of contempt of court. Can the tabloids free themselves

from the cycle of decline. Apologies, sackings, investigation,

and further falls in circulation. We will hear from the detective

investigating Sarah Payne's death, and why he thinks he was hacked. We

will debate whether the British popular press is committing suicide.

The New York Stock Exchange opened today, perhaps not taking the

prospect of debt default completely seriously, as Congress and the

President continued to play chicken for control of the US economy.

we don't come to an agreement we could lose our country's AAA credit

rating. Not because we don't have the capacity to pay our bills

wrecks do. But because we didn't have a AAA political system to

match. Good evening. One of the reasons

the British press is so vigorous is because it is probably the most

competitive in the world. With more or less every newspaper seeing its

readership getting older, younger readers not buying papers and the

obvious challengers from the Internet, you might they think we

are now witnessing the perfect storm. Phone hacking, libel case,

contempt of court, and that was just today. The News of the World

might not be, in the end, the only tabloid to close. We will hear from

the detective in the Sarah Payne murder investigation in a moment

and debate whether the popular press has a future.

After yesterday's revelations, that the mother of the murdered

schoolgirl, Sarah Payne, had her phone hacked, by the News of the

World investigator, Glenn Mulcaire, today, Mulcaire himself entered the

fray. Hinting he might now reveal all. Responding to last night's

claims by the paper's then editor, Rebekah Brooks, that he had acted

alone in hacking Sara Payne's phone. Mulcaire didn't deny he had done

. There has been a lot of dumping on the reputation of Glenn Mulcaire,

rather unably I guess, given what he has done. Let's remember he

served time in prison for phone hacking. He's one of the few people

that can actually say he's taken his medicine. His statement today

is clearly saying to the company, if you carry on like this, I will

spill the beans F Mulcaire was going to speak out, this really

will crack this case open. I hope he does. If that's not enough for

the Murdoch press, today the Sun, along with seven other papers, paid

unknown libel damages to Chris Jefferies, lard Lord of the

murdered Bristol architect, Joanna Yeates. The Mirror, were also fined

�50,000 for contempt of court, and the Sun, �18,000. Chris Jefferies

is the latest victim of the regular witch-hunt and character

assassination, conducted by the worst elements of the British

tabloid media. Also today an intriguing story about Louise

Mensch, the Conservative, who was one of the toughest MPs at last

week's Murdoch hearings. She issued a statement about her

friendship with the violinist, Nigel Kennedy, pretty much

admitting she had once taken drugs with him. Mensch's statement was a

response to a mysterious David Jones, someone claiming to be an

investigative reporter, who had also sent his e-mailing inquiry to

Look, good on Louise Mensch for dealing with this. I don't care

what Louise Mensch did in night cluebs in the 1990, what she has

effectively done today is give a finger to a low life journalist who

tried to dig up dirt on her years ago, probably because she's

involved in exposing the truth on hacking and involved in the

committee. She has my full support. I seriously hope whatever story is

trying to peddle this story will think again. Isn't it legitimate,

that journalists should look into the background of prominent MPs, we

are talking about law breaking? Context is everything.

This is a really miserable time for the tabloid newspapers. With their

methods under attack from the British public, from the police,

politicians and now most likely the inquiry led by Lord Justice Leveson.

They face testify competition, not just from traditional broadcasting,

but now from the Internet and other social media. And whilst nearly all

newspapers have seen a significant fall in circulation, in recent

years, for the tabloid press, the drop in sales has been particularly

bad. Tabloid newspapers have been in

decline for some time, over the last 20 years, in terms of the

circulation they have declined 35- 40%, more than 12 million paid

copies today to fewer than eight million paid copies per day. They

have also seen a decline in advertising, particularly in recent

years, on the back of the recession. That has meant that profitability

of tabloid newspapers has also declined. So while tabloid

newspapers are clearly more profitable than their quality

counterparts, it is also the case that it is becoming harder and

harder for them to achieve the kinds of big profits that they were

able to achieve in the past. Nine years ago Glenn Mulcaire made

a name for himself, by scoring the first-ever goal for the newly-

formed AFC Wimbledon, who next year start in the Football League.

honest we should have scored earlier in the game. Tonight,

Trigger Mulcaire threatens even more dramatic shots. Hinting he may

yet name big names in the hacking Joining me now is Detective Chief

Inspector Martyn Underhill, he was the liaison officer with the Payne

family and investigated Sarah Payne's death. I had a lot of

contact with Sara Payne, and got to know her personally very well. We

used to speak to each other a lot on the phone, even when the case

finished. I remember in 2002, I got a phone call at home on Saturday

afternoon from a very high senior executive from News of the World,

who I knew. He said to me, we have got a story we are going to print

about you tomorrow and the Payne family, I would like you to make a

comment. He told me the story, which was outrageous and not true.

I said, I don't know where you got that from, but that is completely

untrue, if you print that I will sue will you - sue you. They said

they have a very good source you might as well admit it. I said the

source was wrong and I will sue. The story was never printed, Sara

and the family and I denied what was alleged. The matter was never

resolved in my mind, I never knew why that phone call took place, or

where the information came from. And then the phone hacking story

came in, and one thing that struck me about the senior executive from

News of the World, was that if he had a source, and he had asked me

for a comment, which I gave, he could have printed that story, but

he didn't. I think that source was illegal, I think that my phone was

hacked, my police phone was hacked. Because Sara used to leave me

messages on the answer phone and I used to leave messages. You know

the name of the executive, who was it? I don't want to name that

person, because that person hasn't had a chance to reply to what I'm

saying tonight. Suffice to say it was a senior member of the team of

the News of the World, and has been named in the scandal. Can you tell

us what the story was about, even though it was false? I'm only

talking about it now because of the hacking scandal. It has remained

private for eight years, and I don't want to discuss it. This was

a newspaper that was helping Sara Payne, she thought? So what were

they up to? Sara and I have a very good friendship. We have never

agreed on News of the World. When I was a serving police officer, and

now, I always told her that the News of the World saw Sara Payne as

a commodity, she sold newspapers. Sara was fefrently committed to

Sarah's Law, and still is, I respect her for that. I did try

after this phone call from the executive in 2002 and several times

since, I said the newspaper will turn on a sixpence, you are a

commodity and they will hurt you. Are you basically saying they were

double dealing, on the one hand they were helping her and on the

other hand digging dirt? The phone call I received in 2002 clearly

showed double dealing, I said to her to leave the paper. She

believes in Sarah's Law passionately, News of the World

achieved massive amount with Sarah's Law, which I'm proud to

have been part of. I can understand why she didn't leave, I warned her

saying the paper is double dealing. The events of the last few days

have shown that. You don't want to talk about the story because it was

false? It was, completely. This about your conduct as a police

officer, or were they looking in supposedly private matters, they

were digging dirt? This was private matters between myself and the

Payne family, which would have been embarrassing for me personally and

my relationship at that time and would have been terrible for the

Payne family as well. Did the Payne family, or Sara not say this is

terrible, it is clearly wrong, they shouldn't be doing this. You said

obviously she was committed to going ahead with Sarah's Law, and

being helped in that. But this is pretty awful? It was awful at the

time, and it still is, they were digging dirt. And clearly, in my

view, they were hacking phones, mine and Saras, she did challenge

the News of the World over it, and I did, saying I would sue. To be

fair I never had a good relationship with the News of the

World, I was a police officer dealing with the Payne family, I

was constantly in conflict with the news. I have met all the executive,

Rebekah Brooks, and others, because of the Sarah's Law campaign.

wouldn't name this executive tonight, but in Operation Weeting,

and subsequent inquiries you could? I have named the News of the World

executive to Operation Weeting, but I'm not prepared to name them

tonight. Now joining me is the academic and

writer, Sarah Churchwell, the Conservative MP, Jacob Rees-Mogg,

and the former People editor and editor of the British journal

review, Bill Haggerty. Is this tabloid - are the tabloids slowly

committing suicide? I don't think the, I think there have been very

disgraceful things that have gone on, these are working their way

through the courts and the contempt of court action, not to mention the

hacking trials that either have taken place or will go ahead.

see they still have an important role in British life. They do act

as a disinfectant? They sell millions of copies and are free,

competitive, aggressive press, and keeping British public life honest.

It would be great loss if we didn't have an effective and free press.

But they don't stick within the law. It is not that we need new laws

within the law of contempt and libel, and we're hearing a lot

about phone hacking? It is quite right the law should be applied.

And it is being applied. It is hard to see legally what the problem is.

You don't need more laws, just apply the ones that exist. Do you

think the tabloids are slowly unravelling, they face a lot of

competition, not just with each other but other sources of

information? I think the problem s I agree we need a free press. If we

needed any evidence we need a free press, the story wouldn't have

broken if it weren't for the Guardian. For would the MPs'

expenses scandal? They provide us with investigation, accountability,

they are providing a forum for all kinds of things we need. The

problem with the tabloids we have been seeing here, is they haven't

been behaving like journalist, but novelist, they have been saying

what they felt like. It is not about operating within the bounds

of the law, they have clearly been breaking the law. They have been

making things up, and they haven't operated within the boundaries of

journalistic ethics. Beyond that they are breaking the law. It seems

to me there are two problems, the law needs to be enforced, as you

said, it is being enforced, too often it is left to individuals to

try to pursue civil case, which often individuals can't do. But

there does need to be some kind of reckoning about journalistic ethics.

Not just reckoning about journalistic ethic, perhaps the

press has never been entirely respectable, perhaps that is a good

thing. But journalists used to read essential law for journalist, they

used to know what libel and contempt was? I think you are right.

It is essential they are not respectable. It isth has always cut

corners and been - it has always cut corners and been close to the

edge, but not this. It is over relatively recent years, I hope

that what has happened now, and there May may be more to come, will

stop it and put it back on track. Do you think it is the popular

press and it is popular because it is popular, because people want to

read it, do you think it is declining, it doesn't have the

capacity to influence things that it perhaps did a year ago? It is

declining b but not with what is happening now, it may decline

further, but the Internet gave it a terrible body blow, and the

industry hasn't found Outtara to harness the Internet and use it to

make profits. This story about Louise Mensch, we heart MP, Tom

Watson say it is ridiculous, but that story about what she may or

may not have done in her 20s, coming up now, does it suggest that

some people are out for revenge to try to get her? There's no evidence

of that. I was at Oxford with Louis when she never seemed to have more

than a small glass of sherry, I'm surprised by the revelations.

didn't dance on tables with Nigel Kennedy yourself? No I didn't, I'm

not a great dancer on tables. The timing is highly suspicious, I

would certainly agree with that. It is very odd that the papers should

be going back to raking up things people may or may not have done.

you think there is a fear in MPs, there was a fear that member who

talked to MPs about what the newspapers might drag up, there was

a degree of fear? I have never really believed that. I was only

afraid of Nigel Dempster thrfrbgs a worry about gossip story, it is -

there was a worry about gossip stories, it was never a serious

worry. There is too much concentration on spin, and that the

Government had to control the media. That lasts for a relatively short

time. New Labour was very good at it in its early days, and became

bad at it as the press saw through it. And that created a feeling that

the press was more powerful than it ever was. Do you think we will end

up with a new reinvigorated Press Complaints Commission, the boss

quit today, is that what we want? You need some kind of regulation.

You need some kind of accountability. I don't believe it

should come from the Government. The obvious objections to

Government controlling the press is precisely that you no longer have a

free press. You have to have the ability to criticise, investigate,

and not to be partisan and political. It needs to be something

with teeth, that can say, not just if you have broken the law, but

things like printing the facts matters. It matters if you make

things up wholesale. If you are a newspaper and claiming to tell the

truth t should matter and does matter. There will be more burdens

on newspapers from now? I think, but self-regulation has to be the

way forward. It hasn't worked properly, without a doubt. There is

not one political party that warrants statutory regulation of

the press. Indeed it would be very bad for democracy and the country,

were that to happen. But I do think there has to be major overall of

the Press Complaints Commission, a serious one, that is going to be

very difficult to. Do Do you think another newspaper - - very

difficult to do. Do you think another newspaper will go. I spoke

do you when the News of the World went? I think under these

circumstances no, but one could go with falling circulation and

inability to harness the Internet make profits. People seem to forget,

many people seem to think the newspapers are a public service,

but they are not, they have to make profits to survive. When they say

newspapers only want to sell papers, it is true. Did you weep when the

News of the World went? I didn't, I very rarely saw the News of the

World,ly confess it always wrote about celebrities I had never heard

about, it wasn't my weekend reading. I do like the Sun, however, I have

always thought it is a very well written, good political newspaper.

I would be sorry if that got into trouble. But I think newspapers

always have waxed and waned, this is not the first newspaper to have

closed. The ska Telegraph - the Telegraph incorporates any number

of newspapers that have closed over the years.

The idea of the richest country in the world, deciding not to pay its

debts, sound like a cross between a nightmare and a joke, but President

Obama was not in a jokey mood when he lectured Congress today about

the failures of the American political system. To get to grips

with raising the debt ceiling. The clock is ticking towards a possible

debt default next Tuesday w profound impli cakess for the

world's financial markets - with profound implications for the

world's financial markets. In the new film, Campaign America,

he leads the world out of crisis, who is the hero and who is the

villain, does he need saving from himself. Right now a $14 trillion

debt monster threatens to knock the financial world off course, sending

it into a slowdown or worse. To defeat it Republicans and Democrats

must unite. All they have to do is to lift the US Treasury's debt

limit by Tuesday. Which hero can wake the US up from a financial

nightmare, born of political The American people have made it

abundantly clear, they don't want us to raise the debt limit, whether

it is a short-term raise or a long- term raise. It is the President who

doesn't seem to understand the magnitude of our national debt.

Taxes are too low to cover spending, and the TEA Party, won't let them

rise, but for every dollar the US spends it has to Moran than 30 cent,

old-style Republicans are angry. The idea seems to be, if the House

GOP refuses to raise the debt ceiling a default crisis or gradual

Government shutdown will ensue, and the public will turn en masse

against Barack Obama. Republican House that failed to raise the debt

ceiling would some how escape all the blame. Then Democrats would

have no choice but to pass a balanced budget amendment and

reform entitlements and the TEA Party Hobbits could return to

middle earth, having defeated Mordor. Today there was a renewed

push to get the deal done. There are plenty of ways out of this mess.

But we are almost out of time. We need to reach a compromise by

Tuesday, so that our country will have the ability to pay its bills

on time, as we always have. Bills that include monthly social

security cheques, veterans' benefits and the Government

contracts we have signed with thousands of businesses. Keep in

mind f if we don't do that, if we don't come to an agreement, we

could lose our country's AAA credit rating. Who actually does the US

Government owe money too? There are small holdings by investment funds

and oil exporters, of the foreign cet creditors, the biggest is China,

followed by Japan and the rest of the world. No wonder China is often

called America's credit card. The biggest lender to the US Treasury

is the US itself, institutions from pension funds to the Federal

Reserve. The sharpest critics of the United States have described it

as a country with Social Democratic spending and TEA Party taxes, you

can't go on like, that but it is still hard to believe we are

talking about the world's wealthiest country, perhaps not

being able to pay its billsment how likely is that nightmare - its

bills. How likely is that nightmare society? A US sovereign default,

even if it is technical, short lived, made good in a matter of

days, will cause n my view, a worldwide recession. It is going to

completely disrupt financial markets from here to Tokyo.

chances of that are now small, but not negligible. What is more likely

than not, that next week there will be a fudge, no default, but no

convincing package of reform either. If so, analysts say, the US would

lose the AAA credit rating that allows it to borrow cheap money.

Getting to that new equilibrium, where the new underline safety of

the dollar is less than before, where this anchor of global

stability is becoming more brittle, that will require higher yields and

a much weaker dollar, and the combination will be weaker activity

in the US because of the higher interest rates, and weaker activity

in the rest of the world, because the US will be exporting with

weaker demand to the exchange rate. The trouble is there are banks and

private institutions around the world whose rules say they must

invest in only AAA rated securities. If the US gets downgraded, they

will be holding thrillions of US debt against their own rules.

problem is, if the US moves away from AAA rating, what do they do?

Now in a small country they would sell their bonds, but in the case

of the United States, the bond market is so huge, it is so big,

and the ownerships are so large, that it is really the central banks

that will have to change their mandate, rather than selling these

bonds. Because there wouldn't be enough buyers? Well, there wouldn't

be enough buyers in the world really, the world's not big enough

to absorb the amount of debt the US has.

Whatever Captain America's trouble, international investors are more

likely to waive the rules rather than dump dollars. As the market

opened, investors must have been wondered if a debt-free US could

ever be taken seriously. My guests are with me. Would

Republicans rather see the richest nation on earth default on its

debts than raise taxes? Thank you, first of all, for the opportunity

to come on your show and talk about grassroots American politics, which

I wrote a book about, it is called Right Angle, perhaps after the

events of the last two days I should have called it Handbook for

Hobbits. We don't want to see the country default, we don't think

that is where it is headed. In your report you talked about paying our

bills and defaulting in the same sentence. They are really two

different things. We can pay our bills n fact we have $200 billion a

month coming in, our bills are $145 billion, we have enough to pay

bills. The world should not be concerned. We have a net safety.

The world is concerned and so is senator John McCain, he said it is

crack political thinking and called you a political Hobbit. Yes he did.

But what he for gth got about The Hobbit trilogy, is The Hobbits win

in the end. What is going on is the bill is the safety net bill, that

covers our paying our bills every month. What we're really talking

about here is the deficit spending that is going on, and how do we

stop the deficit spending, no-one can spend in the deficit without a

consequence. Our consequences are coming up right now. How does

defaulting on your debts help. That I think senator McCain was

suggesting you're living in some kind of fantasy calling you a

Hobbit. He wasn't suggesting you defeat Mordor? We are not living in

fantasy. And our demand is that we live within our means. Which is a

balanced budget amendment. That is what we are asking for. Balance the

budget. That is what we want, first of all, is for them to take that up,

and senior Harry Reid says he has no choice, he does, we have -

senator Harry Reid says he has no choices. We have said cut, and

balance. Senator Harry Reid defeated you. But the big point

surely is that this could very easily be a rerun of the mid-1990s,

when a Republican Congress couldn't agree with a Democrat President,

and Bill Clinton won the next election by landslide, because the

country, in the end rallied round him? I think when you talk about

politics in America, you need to look back at 2010. We sent a clear

mandate, it was over two third of our country that agrows we need to

balance this budget, - agrees wrecks need to send a balanced

budget amendment to the people. We need to quit spending like we are

spending. That is what we are asking them to do, deal with this.

We are not sending them to default. They are putting us in this

situation. They are in the majority, they could come up with something

themselves, instead, Senator Harry Reid just sits back and says no, no,

no. Instead of presenting something himself. Are you concerned how this

is seen around the world. The British business secretary, Vince

cable said the world economy was being held hostage by American

right-wing nutters? Of course we're concerned about how the world will

be impacted by what we do. And that's why we are taking steps to

make sure that we correct the course we are on. We don't want to

drag the whole world economy down. That is why we need to correct our

economy and the best way to do that is to get a balanced budget

amendment in place, and then deal with this situation that we're in

by cutting and capping. Thank you very much, we will watch with

interest what happens over the next few days.

Now Michael Crick is here on his last appearance on Newsnight to

help us review the papers. What have we got. The front page of the

Telegraph is saying MPs on the Culture Select Committee are

Culture Select Committee are preparing to recall James Murdoch

after three senior former News International executives have

disputed the evidence he and Rebekah Brooks gave last week.

Interesting story on the front page of the Guardian, they say Miliband

is taking his first steps towards reconciliation with his brother, by

agreeing to be an unofficial ambassador from the Labour Party to

university and college campuses. Another story that struck me on the

front page of the Financial Times, about our former colleague Laura

Kunsberg about how when she joined ITV recently she took 60,000

Twitter followers with her. You're in that story? I did the same sort

of thing, I have a more modest band of followers. I decided not to loaf

them here and hope they will come with - leave them here and hope

they will come with me. That is all from us, it is Michael's last show

before he quits journalism to join channel 4 we leave you with a few

of the politicians he has made friends with over the past few

years. REPORTER: Aren't you taking the quiet man business a bit far.

Why are all the heaviests trying to get me out of there. Wouldn't be to

be better to spend the next week. Jeffrey Archer, clip, clip, clip,