31/08/2011 Newsnight

When is a delay a defeat? It looks as if the reform of the banking

system, which everyone so recently agreed was urgently necessary,

isn't going to happen any time soon. So, economics editor, have the

bankers won? Jeremy, there are ten- year-old boys who play football for

England before any banking reforms are introduced at this rate. If the

coalition can't corner the bankers any time soon, what about top tax

payers. Getting the fabulously wealthy to shell out for just the

right vintage royal Royce or Bentley has never been difficult,

but paying taxes, not so much. That is the great battleground of

British politics at the moment. We ask politicians from the three main

parties how much tax we should all pay, and how it should be raised.

Before he got the prime ministerial limo, David Cameron signalled he

was a social liberal, but is he? What, for example, is he trying to

do to the abortion laws. And we go deep under the Balkans, to see the

finest cave wildlife in the world. Is the survival of extraordinary

life forms put at risk by prospect of membership of the European Union.

It will be a couple of weeks yet until we learn what fate is

proposed for the banking system of this country. To the obvious

irritation of people like the Business Secretary, Vince Cable,

the bankers' advocate claim banking reform will derail the country's

fragile recovery, and tonight the Government has indicated it has

listened to them. Any ri forms won't take - reforms won't take

effect any time this side of the election. Our economics editor is

here. So just talk us through it?

This morning it was all war, war between Vince Cable and George

Osborne, the Liberal Democrats and the banks. You don't get headlines

like this unless somebody has rung up a few newspaper editors and

talked to them. The sub stafpbs Liberal Democrats want a faster

pace - the substance was Liberal Democrats want faster pace than the

Tories, and there was a split Quotes:

You fast forward to this afternoon, and Vince Cable goes on camera, it

is not so much war. There is no division, what I said to the Times

this morning is that given all the financial volitility and

instability that is in the world at the moment, it is all the more

important that we have reform of the banking system. How we do that,

we have got to await the final report of the Banking Commission,

that is in a couple of weeks time, that will deal with the mechanisms

and timing. Wonderful. What is the substance of

the banking reform proposals? British banks are universal banks,

they do investment, retail, business lending, high street

lending, the point of the reform is to stop them blowing up, like three

of them did so spectacularly in 2008. The idea behind the

independent Banking Commission's proposal, is first of all, you

cause them all to hold more capital, �10 for every �100 of risk. Then

there is struck tue, the ring- fencing proposal amounts to this,

banks that have investment arms, the risky bit, and the retail arm,

with the savings from the high street, you force them to treat the

retail bit as a separate bank. You give it enough money to survive if

things all go wrong. The banks they say they can't do this, look at the

economy, the economy is flatlining, more businesses are screaming out

for credit, we can't seem to provide enough of it, some

businesses are so busted they can't even have the credit were we to

provide it. It has to be postponed, and some briefings, out of the

banking sector, have mentioned this year, 2019, as the point at which

he they would like it to come in. Some people in the banking sector,

some experts in banking think this is a little bit is ingenious.

banks are playing - Disingenious. The banks are playing a canny game,

they know change is on the way and likely. It is in their interests to

delay this change for as long as possible, to defer it for as long

as possible, in the hope that in the end it will go away. There is a

hope that they are under pressure at the moment to extend credit,

clearly the economy is fragile, but I think there has to be a limit to

this, you can't keep on pushing this out forever. If we are going

to have meaningful banking reform it needs to happen in a reasonable

time frame, in my opinion. politics of all of this?

Banking Commission's proposal on ring-fencing is about the most

timid one could imagine of all the things on the table. They got very

annoyed when I and other journalists suggested they had been

nobbled, they were saying everything is still on the table.

The more radical proposals could still happen. Then, George Osborne

pre-empted them, by accepting this least radical of all the proposals.

And Vince Cable is known to want to go further. It is not just any old

issue for Vince Cable, he has written a book about why they

should go further and split the banks up. Those close to him have

always thought, if he doesn't get something close to what he wants on

this, he does begin to look a little bit like a hostage. This is

his issue, if he doesn't get it, what is he there to do.

To discuss if the bank reforms should be delayed for so long, I'm

joined by the former Deputy Chairman at Barclays, and external

director at the Bank of England, and also David Pitt-Watson, a fund

manager, and maybe of the cross- party Banking Commission. A

precursor to the Vickers Commission, which we so eagerly await. The

banks argue it is risky without a delay, is it? Let's be clear about

the problem we have here, where you have a universal bank, you have the

retail bank that's lend to go businesses and taking our deposits,

and you have what people call the casino banking. If the banks are

too big to fail, the tax-payers are subsidising the casino banking. The

aim of the ring-fencing is to stop people having to subsidise that

casino banking. That seems to me to be entirely reasonable. There is a

second reason that you want the ring-fencing, Jeremy, if people

think they are in institutions that are too large to fail, they will

keep lending and lending and lending, they will know they are

bailed out because they are too large to fail, the markets don't

work. Getting this implemented, it will take a little time, the notion

it will take years and years and years, I can't see why that isness

radio. You accept at some point - Necessary. You accept at some point

there will be separation? No, I don't. I we need banks to be safe,

but once you have the concept of "too big to fail", that doesn't

come from the bankers, but politicians who don't want

depositors to lose any money. Once you have the two big to fail

principle, you have to have regulation to control what the

bankers do. The trouble with regulation in trying to run a bank

sensibly and prudently, is everybody behaves right up to the

line of regulation. As soon as that happens then you get danger. So

what I would do, is to try to go back to avoiding the totally too

big to fail presence pel, and try to ensure, if - principle, and try

to ensure, if bank failed, all creditors, including depositors,

would lose 10% of their money, and that would put a great premium on

running a bank safely, and that is what is needed, there would be

reward for those running bank safely. What do you make of that

argument? It is radical proposition, what is being suggested. I don't

think most people put their money in bank thinking it could all go

wrong and they will lose some of it. If we are putting money in bank it

is sensible that money should be ring-fenced and looked after

properly. But we need some how not to have the situation, and Martin

would agree with this, where, for years and years and years, because

of being too big to fail, that the investment banking activities of

our large banks are effectively being subsidised, in no small

measure, by the taxpayer, and I think Martin would agree with that.

They didn't ask for that subsidy, that comes from a political

decision not to let the banks fail. The banks that got us into this

trouble, in 2007, were not universal banks, they were New York,

Bradford & Bingley, and Lehman Brothers, none of which were

universal banks. The universal banks were Barclays, HSBC, and

Lloyd's before the merger, they did not get us into trouble. The Royal

Bank of Scotland though? That was nothing to do with the problem of

running universal banks, that was due to a series of absolutely

insane acquisitions, which he had made, which made it totally unsound.

It was not failure of a universal banking system. This is addressing

a problem which isn't really there. If a universal bank is run sensibly,

it isn't danger. What do you make of the argument that these

proposals really only address banking institutions in this

country, particularly in London, of course, and that they therefore, if

implemented, put this country at a serious disadvantage as regards the

rest of the world? Of course other countries have different model,

much more draconian in the United States. A different but much more

draconian measures in Switzerland, for example. As you said in your

introduction, the ring-fencing, rather than the spliting of the

investment bank and the retail bank, actually is one of the softer ways

of achieving what it is we are trying to achieve, which is that

tax-payers don't subsidise investment banking activities, and

the investment banking activities are subject to the market. So other

countries are doing this in slightly different ways. I don't

think there will be a such exodus from London because of this.

Frankly, if you were Angela Merkel, would you wish to subsidise an

investment bank. Why are you shaking your head so much? It would

be great disadvantage to London, it would make UK banks, UK-owned banks,

much less competitive internationally, if we weren't

allowed to have universal banks. you think the banking sector is too

big in this country? I don't think it is too big if it is sensibly run.

It is a bit of an "if" if you take the experience of the Royal Bank of

Scotland? Not to me, my approach would make them sensibly run. I

think Vince Cable has always been very anti-banks, and he has always

thought that the banking system was far too big for the rest of the

economy. A cure to that is to make the rest of the economy bigger.

Actually the banking system, not only does it employ hundreds of

thousands of people, which is very important, it also contributes an

enormous amount of tax. Our banks are regarded as world leaders. So

it is something which you throw away at your peril.

I would agree with that. One point I think is funny, which is how we

have managed to link the ring- fencing of the banks to growth in

the economy. Because I can't see where there is an economic linkage

there, the bit that lends to the economy, will still be within the

ring-fence. It will still have a low-cost of capital. This shouldn't

really make any difference to the growth in the economy. I don't

quite understand why that argument has come from.

Thank you both very much. The question of what to do with the

banks has illuminated the divisions within the coalition. When it comes

to managing the economy, Conservative and Liberal Democrats

instincts are very often completely at odds, nowhere is that more

starkly illustrated than when it comes to tax, who should pay it and

how much. The flash point is the 50%, top rate of income tax for

people earning more than �150,000 a year. It was brought in by the last

Labour Government, the Liberal Democrats are fans, plenty of

Tories think it is absurd and fairly unnecessary. As political

slogans go at the moment, tax the rich is hard to beat. Rich is one

of the maddeningly hard words to define, assuming you can decide who,

the next big problem is how. Getting the fabulously wealthy to

shell out for just the right vintage Rolls-Royce or Bentley, has

never been too difficult, paying tax, not so much. How to make them

pay more? Well that is one of the big battlegrounds of British

politics right now. Before the last election, Labour

set a tax trap, the Conservatives as obvious as a high-visibility

jacket. Introducing a new 50p tax rate on incomes above �150,000, to

kick in after the election. They were hoping that the Conservatives

would promise to scrap it. So far the Conservatives, or the coalition,

indeed, hasn't, but George Osborne, the Chancellor, desperately wants

to. If only he could find the political cover.

I think the only way they are going to resolve this is to swap the 50p

tax with something that looks just as painful, equally as painful for

the high earners, whether that is going to raise much money is

debatable, I don't think this is about taxation about raising

revenue, this is about taxation for political purposes not economic

ones. Getting the mechanics of the tax system right, so the rich pay

more, is notoriously difficult, people change their behaviour, and

there are unintended consequences, for example, you could be the

billionare owner of a �500,000 Bentley and not pay tax. If you

were struggling to put a clapped out Ford on the road, that is �100

The public is urging the Government to lower taxes. By bringing in

Popular tax cuts would cost the Exchequer �15.5 billion. The

Liberal Democrats in the coalition want to introduce a mansion tax to

hit the rich where they live, by hitting them where they live, or at

least live for a few weeks in the summer, most years.

In some of the more prestigious locations in London, the properties

are being bought by people not so much to live in, but as somewhere

to keep their wealth. Safe during the troubled times. These are the

biggest safety deposit boxes in the world.

True, some of the pads here could set you back tens of millions of

pounds, but look on the bright side w a good accountant, and the right

status, the only tax you will have to pay on buying, owning or selling

them is �26 a week in council tax. Whilst the community secretary,

Eric Pickles, has called a mansion tax, a big mistake, other

Conservatives think there might be something in the idea.

supposedly have 5% stamp duty above �1 million for house, but all those

houses are sold within company tax wrappers. Essentially the rich

people buying and selling these are paying 0.5%, rather than 5%. We

need to close that tax loophole. I would also like to see capital

gains tax applied, to overseas residents, who are currently still

exempt from that. Yes they should investment in business assets and

create jobs, but when it is UK property, I don't see why we would

want to encourage them pricing everyone else out of the market,

not living in that property, then selling it and not paying any tax.

Labour too has rather changed its tune. Remember how Peter Mandelson

once famously declared himself intensely relaxed about people

getting filthy rich. Well, listen to the current leader. My party

must change. We were intensely relaxed about what happened at the

top of society, I say no more. Some commentators say that now in

all parties the political heart is overruling the economic head.

are going through a period in Britain right now where people

aren't asking how do we get the most money out of the rich, they

are asking how can we be seen to hurt the rich. It is a very big

question, I'm concerned this will lead us back to where they were in

the 70 where is the very wealthy will do their business elsewhere.

It might be the equivalent as the Rolling Stones leaving Britain, and

Michael Caine not doing any films here. They are a few examples. What

about the entrepeneur, the scientists, the artists, who came

when we cut the top rate of tax, they may go now. In troubled

economic times there aren't many votes in speaking up for the

superrich. Everyone right now is competing to be the party of the

underdog. Here to discuss this is the Conservative MP, John Redwood,

Lord Newby, who speaks on Treasury issues for the Liberal Democrats,

and the shadow Treasury minister, Chris Leslie. What is tax for, it

is a force for good in itself and it pays the bills? It is to pay the

bills for our large and expanding public sector. We have record

spending every year under the coalition and as we did under

Labour, we need to pay those pills. Can taxing be a force for good in

itself? It is the price you pay for a civilised society, if you don't

tax people and have public service what kind of society is that. You

don't want to tax people to punish them, you want to tax people in a

way that is seen as far as possible to be fair. I think you probably

want to have as low tax as possible generally, but not at the expense

of good quality public services. We have always taken the view we want

progressive taxation, in other words, fairer taxation, where the

wealthiest people pay the greatest share. That is really the principle.

But ultimately you are coming together as a society, pooling

revenues, money, and as a society, as a community, achieving more than

you would achieve as individuals alone, with health insurance, for

example, rather than an NHS. Let's take the specific question of the

50p rate of tax, we don't know, and the Chancellor of the Exchequer

doesn't know how much this tax is raising, and won't know for a while.

It is said by many to be a Philing amount by comparison with the rest

of the - Philing amount by comparison with the rest of the

amounts. There is a dispute about that, HMRC are being asked to look

again. The last time the Chancellor gave an answer in the House of

Commons, it was �3 billion, it is not small sum at all. I think he

has political motive. What I'm getting at is it a good thing?

all want to tax the rich more to make a bigger contribution to the

public sector. Because it is fairer the richest pay a bigger proportion.

Fairness enters into it? Of course. What are the rates you optimise to

get the biggest rates from the rich. When we cut it to 40% in the 1980s,

after a period of high tax rates, the amount the rich paid shot up,

both in absolute terms and as a proportion of the total. We don't

want to go back to brain drain Britain of the 1970s which proved

you were cutting off your nose to spite your face with the high rates.

How do you encourage rich people to pay more tax? Nobody enjoys paying

tax. Rich people will not pay tax. Warren Buffet, one of the richest

men in the world said he wanted to pay more tax? I welcome that. Quite

a number of his friends. Unfortunately he's not living here?

He needs to just send a cheque in. One of the interesting questions is

Warren Buffet thinks he should be paying more. A lot of French

industrialists are saying they should be paying more. We have

heard nobody in the UK suggesting that perhaps, given the

difficulties we are in, at the top end of the income scale, that they

might be paying more, it is an interesting thing. I think that tax,

that the rich should be paying what seems to be a fair whack. The 50p

rate, in my view, is completely justified as long as we have a

fiscal crisis. We moved as a party, we moved off it, because we thought

over the long-term, once people are paying over half their income in

tax there are disincentives. Now we think they should be paying it.

socially corrosive is it, as we saw in that report, there are very

large numbers of extremely rich Russians and others, living

particularly in the capital, and not making a great contribution, as

far as we can see, apart from driving up property prices so other

people can't afford to live there. How socially corrosive is that, how

do you tax them? That is why we are in favour of the called mansion tax.

Last year 60% of all houses sold in the UK that were valued at over �2

million, were bought by foreigners, they are not even non--dom, they

don't live here, they make no contribution. It is like a safety

deposit box, it is a safe haven. Our view is they should be paying

something for the privilege of owning property here. The reason

they want it has to be paid for, in part, it is the security, it is the

fact that it is a stable society. What would you think as a proposal?

It is not a proposal I'm seeking, you have to be careful with capital

gains tax. We have seen the increase in the rate to 28%, as a

result the Treasury is forecasting a �500 million revenue loss

compared with this year, that is the full year effect of the rate.

That makes point, if you overdo the rate you tax the rich less. Most of

the guys aren't paying any capital gains tax at all, should they?

Obviously one needs to look at non- dom taxation in the round and make

that calculation about how much contribution they do make.

should be looked in to at least then? Of course they need to look

at what contribution people are making. They are making no

contribution? That is an assertion, I suspect you will find that

foreign capital and foreign purchases coming to London is

making a big contribution. London has been the outperforming economy

in the Labour years and again under the coalition. It is something to

do with the vibrancy and the money being brought into London. What

would you do? What you have to do is make sure you have those fair

principle that is you apply, at a time when - principles that you

apply. At the time when George Osborne is increasing taxes on the

poor, not just VAT, but big changes to housing benefit, cutting tax

credits. To even talk about cutting this 50p rate on that richest 1

bears in society does seem very perverse. This is the interesting

point about which priority to tax cuts are there. Which taxes should

be cut. You have said you are extremely doubtful about the 50p

rate of tax? I think we are collected less revenue. I want to

tax the rich more and poor less. I would agree with the Liberal

Democrats about taking more people out of tax. What is the priority

for tax that should be cut? I would take people out of income tax in

the way the Government is doing. the key issue of the day is this

flatlining economy we have got with no growth, you need to get some

money into the pockets of ordinary people, which is why we have

suggested a temporary VAT cut in order to kick start the recovery.

It has already been killed off by a Spending Review that is going way

too far and too fast. If we could do that and have a steadier pace of

Spending Review changes, that probably would be the best way to

get growth back in. If you get growth, you get revenue for the

Exchequer, that is the best way. Cutting VAT at this point is hugely

expensive, if you are doing anything, you should have a small

number of targeted tax cuts, which would immediately stimulate growth.

For example, the Government introduced a tax holiday on

National Insurance, employees in start-up, it hasn't worked because

not enough new companies have started. But existing companies,

who want to take on more people, are worried about the cost of doing

it, if you extended that holiday to existing small firms, you have a

really good targeted way of increasing employment and

consumption at the same time, rather than across the board, very,

very expensive VAT cuts. Thank you all very much indeed.

Last night we reported on who might in future advise women thinking of

having an abortion. This was intended to be unbiased, but

Newsnight found questions raised about how impartial soment of the

organisations are. Is this a move away from the social liberalism of

David Cameron's early days as Prime Minister, to a more morally sense

rouse tone. The Government said it wanted to

change the rules so clinics offering termination services are

not also tasked with advising. But This is supposed to be an

organisation giving independent advice. Today Care Confidential

said the manual was no longer in use. But the very existence of this

advice has raised questions about whether the Government is seeking

to give a privileged position to a particular moral view. In response

today, Number Ten appeared to But over recent months, senior

Tories have seemed increasingly comfortable talking the language of

morality. When the Archbishop of Canterbury attacked welfare

policies, Iain Duncan Smith argued that there was a moral imperative

to tackle worklessness. And following this month's riots, David

Cameron spoke of "restoring a stronger sense of morality". Well

tomorrow morning's Guardian is reporting that Number Ten is

proposing to retreat from the proposals on the abortion law

reform, but Downing Street is saying tonight that there are no

such plans, we understand that Andrew Lansley is one of the people

who has said he will vote against the proposal if it comes to a vote.

With us now are my guests. What are we to make of this

position on the abortion laws? think Number Ten is trying to

distance itself from the Nadine Dorries amendment very, very fast.

I think you will see sunnor people in the coalition come out in the

next few days doing just that. Mr Cameron is comfortable to a

point with moral language, you think you said in your package

after the riots he spoke of the need to put morality back into

public life, but a little bit of morality in public life goes a long

way, in terms of its political impact. What you don't want to end

up with is a big argument about abortion, he didn't intend to have

that. It is a backbench amendment, it is interesting for those

preoccupied by this, and motivates them strongly, but it is not

something he would want to define the coalition in any way. What is

your response to the u-turn reports? It looks like the

Government was initially in favour of what is a liberal proposal to

extend the number of organisation who is can provide counselling to

women seeking abortions. When it looked like the proposal was about

restricting choices to the so- called independent advisers and

excluding the abortion providers from the pool of organisations who

could deliver the advice, they backed off. I think what actually

they believe in is quite a liberal proposal, which is to say there

should be as many organisations providing advice as possible, that

shouldn't be an exclufive list - exclusive list. You wouldn't call

Nadine Dorries as a liberal on this? Her original frame was to

widen the choice of organisations, that is quite liberal. Is it your

reading, then, that this is an administration that is socially

liberal? I think it is socially liberal. But social liberalism

always comes to a point where people say we know what you are

liberal about, and the big problem is what to do about it. That is

where it gets awkward for David Cameron. He wants to be seen as

socially caring, sometimes the things you need to do as socially

caring come up against socially liberalism. In the autumn he will

go on about care homes and wanting to have more children taken out of

care and adopted or fostered. You have to make stringent decisions

and some people disagree or take different views. Whether you call

that socially liberal, he would call it socially responsible.

he talks, as he talked after the riots about a sickness in our

society, what side is he coming at that from? He's being Conservative

there, he's recognising, firstly, the response to the riots was one

of imposing law once more and asserting primacy of law and order.

His analysis and the explanation of what is going wrong in society, it

is historic for him, he has been talking since he became Tory Party

leader in 2005 about the importance of restoring the social bond

between communities and family and restoring a healthy society. I

don't think that runs counter to a liberal world view, but it is one

that requires a recognition of the importance of relationships,

tradition, stability, and so on. There will be tensions, there are

tensions within all of us. We all want to be free and determine our

own fate and destiny and what we do with our bodies, in this question

about abortion, on the other hand we want to belong and be part of

something. We want to be part of a community that we can believe in.

This tension is natural one in the human heart, and one that politics

is all about resolving. Policy by policy. A lot of it is with people

talking about the role of the state. They are taiching the state to what

their own view is. If Mr Cameron is doing something that is seen to

push back the state he can't be socially responsible. That is

something he has to be clearer about. You can see's constantly at

the moment being accused of not being a moderniser. If you look at

the accusation it is modernising in the way of the Labour Party. Or

taking a solution that relies on the state in some form. He has

never really, despite many years, and work by people like us, he has

never found the clear language to say the state can't be the provider

of all solutions and it is better to have a lot of other providers to

help with things. And then with the abortion row how quickly it is

coming up questioning if he's an older moralising politician. It is

difficult for him. It is a difficult thing to prevent? Anne is

right, it is difficult to articulate a philosophy of freedom

in the context of the social obligations we have and the Prime

Minister believes in. There are two forms of modernisation, there is

the modernisation Tony Blair epitomised, all about the fetish

for the future, and liberty and individual freedom. And the

modernisation I think David Cameron represents, which is recognising

what has gone wrong with society, and the need to restore the social

ponds and the relationships so key to social well being. That doesn't

always require a socially liberal set of policies, it actually

requires some fairly old fashioned policies, about family formation,

encouraging couples to stay together. That hasn't happened and

the coalition hasn't done. That Those who say it is an incredibly

right-wing Government, are wrong. Conservative backbenchers think the

Liberal Democrats tail is wagging the Tory dog in the Government and

they have had to abandon their more socially Conservative instincts. If

you look at what they believe in, they would like to see more of the

policies n tax and benefits in particular, that sustain healthy

families, and run something against the libertarianism that we saw in

the last years of Labour. You are getting slightly into pick and mix

here. The problem they have politically is sometimes, it is

hard on any given issue to guess straight away which way they are

going to move. You could say that is a good thing, they are thinking

on their feet and being flexible. But we know that politics is about

reckon ability and leadership, if you come back and then address the

riots in that tone, and I think that was a tone that would be

recognisably Conservative, but on the other hand you are saying you

are socially liberal and looking at everything with an open-mind. He

has to find clarity of tone in the conference season, I think the tone

is incoherent rather than the policies. In a couple of years time

Croatia will become the 28th member of the European Union. It is seen

there as way of finally escaping the visceral subterranean politics

of the Balkans. But for the real underground of the country, its

literal underground, and specifically the astonishing

variety of wildlife, membership of the EU is another proposition

already. The EU has strict concerns for the variety. The amazing

animals of the Balkan caves, the best cave wildlife in the world,

ought to be protected. As we report, the prospect of joining the

European Union might actually be endangering them.

Welcome to the realm of the first Europeans. The last survivors of an

earlier earth, who found refuge below.

They have travelled a unique evolutionary journey, which

scientists are only beginning to map. Look what we have found, it is

a sponge. Jana Bedek and her team have just

won an international award for revealing the secret life of caves.

And championing the fact that when it comes to cave dwellers, Europe

has the best. The other continents have their own

animals, rich fauna within rainforest, Maureen ecosystems and

so on, in this area of Europe we have cave fawn national cirriculum

really important at world level. This is the only fresh water cave

sponge in the world. Recent scientific advances have shown us

just how important cave life is. It is very distinctive, there could be

waeb of life in this cave that is completely different from one a

kilometer or two down the road. And yet, just as we are realising how

important cave life is, it comes under particular threat.

These unusual entities cling to existence in a massive shard of

limestone, which splits Croatia and parts of its Balkan neighbours.

Over many millions of years, water has dissolved untold thousands of

caves, tunnels and rivers. Here, the underworld is much more than a

myth. But modern Croatia seems untroubled

by what lies beneath. It they are emerging from a recent turbulent

past, with an ardent desire to develop. Politically that means

joining the European Union. Economically it means lots more

roads, railways and power plants. The Government's view is that with

40% of the country undershot by cave networks, these precious

environments must give up some treasures. Some caves have been

destroyed because of a need for building some very important

national ij fra structure. Of course the - infrastructure. Of

course in nature protection we have to think first of all to protect

them. If some valuable caves have to go, for development, that's

acceptable? Probably, yes. I can agree with that.

Some have already gone. This is Ogulin, a small town, hiding a

dirty secret. As you can see, unfortunately, in this cave people

were dumping their rubbish for dozens of years. That's disgusting

isn't it. Is this acceptable in the caves of Croatia? This is common.

Almost near every settlement we have similar scenarios. It is just

full of what society wants to forget. In some caves there are

even unexploded bombs. The train takes Jana to her favourite

underground stop, and the direction she would like to take with

Croatia's caves. This is Postonja, just across the border into

Slovenia. As a member of the EU, European law

protects the species and plentiful tourists help pay the bill.

Beautiful, and yet chilling. It feels totally alien. It is like a

melting ice-cream, it looks soft but it is hard.

These are the creatures who truly belong here. Without eyes or

pigment, they are totally adapted to life without light. On top of

the food chain, the cave salamander, presumed in the past to be a baby

dragon. It was proved this animal could live up to 60, 70 years,

perhaps even 100 years. 100 years old? It could be. Amazing. Where

are we going now? We will go to a non-tourist part. We are now around

two miles into the mountain. Unseen in the waters and on the walls all

around us are ancient species. Over ten million years the climate of

Europe swung wildly with ice sheets and deserts scouring life from the

surface. Some animals retreated here. It was the shielded bunker

for life. Surviving environmental Armageddon, down here, safe in the

dark. Does that mean we have some of the oldest, in fact the oldest

animals of Europe down here? believe we can say here that these

cave animal, and we can prove with Monday elect later DNA that these

animals are older, maybe the oldest lineage of animal that is survived

on the European continent. They survived in these areas for some

million years, it is not acceptable that they will be exbe ticket

because of human activity. Extinct because of human activity.

This is the latest threatening human activity, hydroelectricity,

that floods caves and valleys alike. At least 20 schemes are planned

across the country. It may yield low carbon power, but it is high

impact on local wildlife. And down towards the eastern tip of the

country, near Dubrovnik, is the latest battle front. Right

underneath the border with Bosnia, and once a frontline in the Balkan

war. It is a struggle even to reach the mouth of the cave. Not much

further I'm told. But that hasn't put off engineers from planning to

seal the cave network with a huge concrete barrier. This river is

connected with subterranean passages, channels, with the

entrance we are near. When we calculate all the species we have

found in this cave, this cave is the richest with animals in

Croatiania. They want to put 130ms of on Crete into the cave. That

will completely destroyed all habitats. Croatia is expected to

join the European Union in two years. And tighter environmental

laws from then should help protect these animals. But Jana believes

that membership deadline is hastening the current destruction

deadline. They are rushing for all the permits needed, by the time we

will be in the European Union it would not be possible to get them.

Now is the only chance to get all the permits to have this power

plant. The EU's representative in Zagreb

is aware of the risk, but insists their vigilance protects habitats,

even prior to membership. I am my impression is this country is

preparing itself very well for implementing the regulatory

framework of the European Union, and that is a process that does not

happen overnight. You are sure, are you, that Croatia isn't getting its

dirty work over now in the two or three years before they join?

because in the meantime the officials of the European

Commission will be very close in contact with the Croatian

authorities. Keeping a close eye on them? Yes. Europe's surface life is

well documented, but down here, we're just beginning. Jana finds at

least one new species on every field trip, and has hundreds

awaiting recognition. Fears remain this scientific resource will be

lost in a rush to develop, and we will move straight from ignorance

to elimination. Radio 4 listeners can hear,

although not see, more of Croatia's environmental challenge in Costing

That's all from Newsnight tonight. At sunset this evening the people

of would the son basset in Wiltshire marked the end of the

custom they have established in marking the return home of the

bodies of service personnel killed in action abroad. Hundreds of

Hello there. Most of us will have another dry day on through, and

another fairly cloudy day. That said southern countryies of England

and Wales should have lovely September sun yin, by the afternoon

feeling warm in the country. A few breaks over Northern Ireland

England. Over much of East Anglia expect cloud. The southern counties

should brighten up, there should be good spells of sunshine. In the

sunshine it will be warm. A breeze picking up across the south west,

elsewhere in the sun it will feel pleasant, temperatures up to 21.

Same goes for South Wales, sunny spells and a lot of cloud. Pretty

grey too in Northern Ireland. Here every now and then we may get some

breaks in the cloud, a hint of sunshine. Threatening rain over the

Western Isles late in the day. The north-east of Scotland may see

sunshine at times. Overall northern Britain will be cloudy, but dry on

Thursday, that rain pushing into the Western Isles late on Thursday,

it spreads widely across parts of the north on Friday, in the south

most of England and Wales should be warmer with sunshine, temperatures

should well reach the mid-20s in the capital. In the south sunny