25/05/2012 Newsnight

Next week it will be the Culture Secretary having to explain himself

to Lord hef will lef, today we learned that lawyers -- Lord

Leveson, today we learned that lawyers warned him off the BSkyB

bid, and then he was in charge of the decision himself. Will he be

hearing the same thing he told his special adviser, Adam Smith. Then

you had meeting with Mr Hunt? That's right. Can you remember

precisely what he said. To the best of my recollection is everyone here

thinks you needing to, is what he said. The Deputy Chairman of the

Conservative Party is here to tell us what we should make of the

revelations. The SNP want the people of Scotland to say Yes Yes

Yes to an independent Scotland. the parliament can run education,

why not the economy. If it can be trusted to protect our own people,

why can't we protect the country. Also tonight, as Catalonia and

Spain's fourth largest bank teeter on the brink. Is this the

Eurovision they and everybody else want to lose.

Hello, good evening. The Leveson Inquiry has rapidly become

Westminster's version of Wimbledon. Endless hours of early summer

diversion with a revolving cast of exotic character. For the Culture

Secretary rbgts Jeremy Hunt, there is little amusing --, Jeremy Hunt,

there is little amusing for the drip, drip ammunition for his

critics. Today the inquiry heard he was warned by his lawyers not to

mention the bid to Vince Cable. After weeks of the world discussing

his likely demise, Jeremy Hunt, the Culture Secretary, was given double

protection. From below, the man he sacked came out in his support. And

from above, the man who refuses to sack Mr Hunt did the same. You are

all over the front of the newspapers today. Way before Levitt

got to work, David Cameron was up with the lark, and on ITV's setee,

he was by no mean chillaxed. He did act impartially, because he took

independent at every stage, and he followed independent advise. I

didn't want anybody to have the job, I wanted Vince Cable, the existing

secretary to go on and do the job. We heard of close contact between

Frederic Michel, and the former adviser Adam Smith. The 191 phone

calls and 799 texts exchanged in 11 months. Mr Smith, who said he felt

under bombardment, said he couldn't remember telling Frederic Michel

that it would soon be game over for the bid's opponents. But he could

imagine having a conversation along those lines. On other conversations

he was more vague. What about the reference to judicial review, Mr

Smith. Do you think there was a discussion about that? There may

well have been a discussion about it. There may well have been, or

there was a discussion? I can't remember. How much to News Corp's

likes was Mr Hunt's special adviser. It is an e-mail from last year.

This is the one that I do regret the most. By this stage I was

probably coming towards the end of my tether, as it were, and I sent

him a text to get him off my back. But I certainly don't think anybody

in the department would have said that's what I had been doing, and I

certainly ofn't doing anything on their behalf. But in hindsight I

shouldn't have sent it. It was an attempt to molify him. Adam Smith

was told to resign after the department's permanent secretary,

Jonathan Stephen, saw the e-mails and felt they -- Jonathan Stevens,

saw the e-mails and felt they were inappropriate. I struggled to

understand why, as what seems to be, he came under intense pressure, he

didn't talk to somebody about that. It didn't need to be me, it could

have been someone else. The inquiry heard when Vince Cable was in

charge, on the very day Mr Hunt was warned off lobbying him, by

departmental lawyers, he pressed the Prime Minister to intercede. So

what did the permanent secretary think of Mr Hunt's time in charge?

Mr Stevens, who said they worked in a small office, stressed Jeremy

Hunt had always been scruplous about his quasi-judicial role,

handling the bid. But then Mr Stevens had been unaware what Adam

Smith had been up to until hours before the sacking. Mr Smith was

asked about events in the small office in the time before the event.

Was the mood relaxed? No, it was very pressured and one of the most

stressful I had experienced. said you agreed you had just been

doing your job and left the office at 8.30pm that evening. That have

the reflection of the conversation between myself and the other

special advisers. The next morning he arrived to find Mr Hunt had been

having meeting, then Mr Hunt met him. Can you remember precisely

what he said? To the best of my recollection, is that everyone

there thinks I needing to. And go he did, his boss, Mr Hunt, remains.

It is his turn before Mr Leveson on Thursday, on Monday it is Tony

Blair. The Deputy Chairman of the party is

with me now. Nice of you to come in. The crucial allegation this evening

is Jeremy Hunt misled parliament when he said he had made absolutely

no interventions. We now understand that he tried to make those

interventions. He didn't intervene, the memo he sent the Prime Minister

is absolutely clear, I have it here. He said it would be totally wrong

for the Government to get involved in a competition issue, which has

to be decided at arm's length. However, he did think we should

meet to discuss the policies issues thrown up afterwards. He tried to

set up a meeting with the Business Secretary after he had been told

not to? He tried to set it up, after the decision was going to be

taken. The decision needed to go to the Competition Commission by the

31st December, the following month what he did, it was his policy area,

he was responsible for media ownership. It was his policy area

it was natural he wanted to reflect on the issues involved, discuss

them in Government, once the regulator, the Competition

Commissioner had decided whether or not to refer the bid. He was given

advice, 19th of November, it would be unwise to do so, it would be

unwise to tell Vince Cable what he thought. And then he set up a

meeting, or tried to set up a meeting with that memo through the

Prime Minister as well. Let's be clear he didn't send that memo to

Vince Cable. He sent it to the Prime Minister? He did not send it

to Vince Cable, he sent nothing to Vince Cable. Why not if there was a

recommendation from the lawyers that it would be unwise to do so?

The memo says, in November, Ofcom will issue their report by 31st of

December, it would be wrong of Government to get involved. But he

does think that they should discuss any policies thrown up as a result,

in other words, afterwards. lawyers in your department to say

not to do something, would you issue a memo to do the thing you

were warned not to do. He didn't do that. Wouldn't it have stopped you

from writing a memo asking to do what you had been told not to do?

He makes it absolutely clear, that there will be issues to be

discussed, big policies about media ownership, once the regulatory body,

the Competition Commission has been told not to refer. He has been told

not to talk to the Business Secretary, and then he attempted to

do so? He does not send a memo to the Business Secretary. He asked

for a meeting with him? He suggests to the Prime Minister that once all

this is over, once the regulator has decided, yes then there will be

a need to look at the general question of media ownership. Given

he sent that memo, was it wise for the Prime Minister to ask Jeremy

Hunt to be responsible for the bid. Was there no-one else available,

knowing what he knew then about Jeremy Hunt and's position?

Prime Minister took the cabinet secretary's advice on, that the

cabinet secretary took legal advice. The cabinet secretary looked at

everything Jeremy Hunt had said previously in public. He knew what

Jeremy Hunt thought before he gave him the position? He was quite

satisfied that the statements Jeremy Hunt had issued earlier,

long before, and don't forget he was shadow Culture Secretary. The

cabinet secretary was quite satisfied, having taken legal

advice that those statements would not amount to helping him prejudge

any of these issues, and they didn't. It must strike you as quite

odd that after he is given responsibility that he asks Ofcom

if he can share the report but not with interested parties. Why would

you want to ask that, though? you are dealing with the

competition issue like this h you are negotiating on things like the

undertakings that you are going to require. You are obviously

negotiating with the person that has put in the bid. There a lot of

contact. Negotiating in favour of one side and not the other?

Absolutely not. The permanent secretary, by the way, completely

coroborated Jeremy Hunt's evidence to parliament, that he did not

favour the bid. The permanent secretary goes out of his way,

today, to say that at every turn he took the advice of the regulator,

and limited his own discretion. Let's look at some of Adam Smith's

words. He said he had to resign because he had created a perception

of impropriety. You heard Adam Smith in that clip, he was told the

night of Rupert Murdoch's evidence he would be -- James Murdoch's

advice that he will be all right, and then told the next morning that

most people there thought he should go, because of the headlines,

presumably. Is that the right way to treat an adviser, a junior

employee in his office? It was the scale of the texts and the

inappropriateness of some of them. By Adam Smith afterwards realised.

Which was clear the night before? It became much clearer the

following day. The sheer scale, the number of texts. After the

headlines told him that? After everybody had gone through the e-

mails and texts. Jeremy Hunt told him he was doing his job. You know,

as I do, they are very intertwined those roles, Adam Smith wouldn't

have gone off on a leg without Jeremy Hunt knowing what he was

doing? He wouldn't have resigned if he hadn't accepted he had gone too

far and acted inapropriately. One point here, he was clearly under

pressure, not just from those in favour of the bid, there was the

BBC. Doesn't it feel a little bit shameful for someone to take the

rap for something that comes from higher up? He was the one doing the

texting. There were others opposing the bid, Channel 4, the BBC,

lobbying the department all the time. This was a young man, under

enormous pressure. Thank you for coming in.

As Scotland was bathed in sunlight and blue skies, was the best advert

the nationalists could have hoped to, as they linked arms, fixed

grins and launched the campaign for independence. But the Scottish

Government doesn't want the referendum until 2014, that is a

long time to hold a smile. The yes yes campaign's preference is to

keep the Queen and the pound. We look at how it could work, the

report contains flash photography. It is often called the most

successful union the world has ever seen. It is certainly made for a

striking flag. The two crosses have more or less

lane comfortably over each other for 400 years, in just over two

years it could look so different. The question for us, as we begin

this journey, is how do we mobilise that sentiment. From the beginning

the Scots were agrieved that the Red Cross overlaid the blue one,

today the descendants of that agrieved party, launched that

campaign -- launched the campaign for independence. We want a

Scotland that is greener, in the words of the declaration, greener,

fairer and more prosperous. If the parliament can run education, why

can't it run the economy. If it can be trusted to run the health

service, why can't had represent Scotland internationally. If it can

be trusted to protect our own people, then why can't we protect

the country, and do so without the obscenity of nuclear weapons.

Ahead of this launch, the Save The Union campaign, sought to spike

their opponents' guns. Not yet up and running, they released an

opinion poll, it showed only 33% of Scots would opt for independence,

57% would reject it. They also dug into the views of the SNP voters,

polling of them suggested 58% of those who voted for the SNP last

May, would back independence. 28% of SNP voters opposed it.

The SNP say they are not surprised by this morning's polling. That is

why, they say, they need a two-and- a-half lead-in time to the

referendum. To give people time to get used to the arguments on how

defence and social security would work post independence. There has

been possibly a slight change in language. The SNP appeared to know

they had independence diehards in the bag, and they need to reach out

to middle Scotland. That is why this morning they made a slightly

different argument. That is our preference would be to remain

within sterling, we think that would be good for Scotland in terms

of the stability of that. We also think there would be advantages,

big advantages to the rest of the UK as well. Because it would mean

the UK's balance of payments would still get the advantage of

Scotland's massive oil export, our whiskey exports, and other exports,

that would help to support a sterling zone. Keeping the pound,

some people call it independence light, and say it raises more

questions than it answers. They say the Scots would end up with no MPs

in Westminster, and a monetary policy set in Threadneedle Street

at the Bank of England. They believe Scotland would have ended

up being more dependant on London than it was before. Some think it

is a foolhardy exercise. When Czechoslovakia split up in 1992

into two separate countries, they thought they would have a monetary

union. They both agreed to this, it didn't work. It lasted all of five

week. That is because they spent four of them figuring out how to

end it. The problem wasn't really the international monetary system,

or the speculator or the banks, it was ordinary people, wondering what

was going to happen to their money, their contracts, ordinary

businesses, and they moved their money from one side of the country

to the other. To ease this transition, one way the SNP think

they can bring in revenue, is a cut to corporation tax. The Scottish

Government has said that it would like to emulate Irish policy on

corporation tax. At some point reduce the British rate of

corporation tax, currently in place in Scotland, to around 12.5%, that

is the Irish rate. That would mean that Scotland would have to find an

extra �1.8 billion in revenue, to fill the gap that was caused by

that decrease. The SNP have their own facts and

figures, when they tell Scots that independence could make them �500

richer, per person, per year. One opinion poll sut65% of respondents

supporting an independent Scotland. They show the latest figures could

bear that out. Their official statisticians show last year that

Scotland contributed to more in UK taxes than it got in return, to the

tune of �500 a person. The Save The Union campaign will be kicking off

in June, and headed by Alistair Darling. Why are they waiting until

the end of June. Alex Salmond is due shortly before the Leveson

Inquiry. Labour believes the SNP was damaged in local elections

recently, because of the recent suggestion of a link between Alex

Salmond and Rupert Murdoch. Labour believe it tarnished Salmond's

reputation as a man of the people, and it damaged them in the local

elections and might damage their campaign for independent. Back at

the flag's inception, Scotland and England were still separate. Today

begins a two-year debate to decide if they will be again. The former

Chancellor of the Exchequer, Alistair Darling, has been helping

toe organise the No Campaign. When I spoke to him earlier, I asked how

prominent a role he would play. will play a major role, along with

other political parties, and crucially, along with people who

are not allied with political parties. This is not an argument

won by two sets of politicians arguing with each other over the

next two-and-a-half years. We have to engage Scottish opinion, and

what will be the biggest dwegs we make as a country, for -- decision

we make as a country for perhaps 300 years. These are important

decisions to be discussed. I believe very strongly that Scotland

would be better off remaining part of the UK. These are arguments that

have to be pursued and debated. Isn't the blunt truth that the SNP

currently have the only charismatic voice in Scotland at the moment?

you look at the poll published today, opinion on independence

hasn't shifted really in the five years since the nationalists took

power here. Their momentum hasaled, there is no doubt about it. They

did not -- has stalled, there is no doubt about it. They didn't do as

well as they thought in Scottish elections, have a look at the polls,

they are not shifting opinions. The reason is, prom people in Scotland

are pretty canny. Would a single currency work for two nations?

nationalists have changed their position, they were in favour of

the euro until the beginning of the year. Then they said they would use

the pound like Panama uses the dollar, when it was pointed out

that interest rates would be fixed by a foreign currency, they say

they want a currency union. The problem with currency unions, as we

can see in Europe, they lead to increasing economic and then

political union. So what is the point of leaving a union, only to

arrive back in a situation where you are forced back into it. And

you have all the problems that you see with the euro just now. Where

you have to have your budgets agreed by some sort of central body.

We have to send our budgets down to London. This is nonsense and will

be exposed as such, and the majority of people in Scotland will

see it as complete nonsense. Could you see the -- If you look at the

MPC at the moment, it doesn't have representation from different parts

of the UK, it has people on it, whose expertise is trying to

forecast what will happen on inflation and setting interest

rates. It is not a representative body. If you think about it, if

Scotland decided to leave the UK, why is it that the remaining parts

of the UK will say here is our Central Bank and here is our policy

committee thatics ifs interest rates. But we are having -- that

fixes interest rates, but we are having someone from another country

on it. We are invite bid the nationalists to take unquantified

risk with our future, at probably the most uncertain time in modern

timesment we are in a very difficult situation, we have a

European situation that seems to be getting worse by the day. Problems

with banks there, as well as the economy. They are asking for risks

they can't quantify. Would you in any circumstances countenance a

second question on the referendum balance, that said, shorthand, deaf

very max? I don't think you can put another question on the ballot

paper, unless you specify exactly what it is. The problem with what

is known as devo max and plus, is it is not defined. There are 57

varieties of these things. I'm inclined to agree with the SNP's

deputy leader, on this point and this point alone, she said unless

you have a specific defined opposition you can't quantify it on

the ballot paper. We understand independence and being part of the

UK, that is the question to put on the ballot paper, we don't have to

wait two-and-a-half years for that. We could have that referendum now,

and the only reason we don't have it now is Alex Salmond doesn't

think he can win, he wants to sit it out, I don't think that is right

for Scotland. Stuart Hosie is the SNP's Treasury spokesman in

Westminster, he's in the Dundee studio. You heard there from

Alistair Darling that they were being asked to take unqualified

risks at the most uncertain economic time. Why would you choose

such a vulnerable moment to convince people this was a good

idea? Alistair Darling made a whole series of assertions in his package.

It amounts to no more than the usual scaremongering. We have seen

them, and the best one was the stuff about the Central Bank. The

Bank of England's our Central Bank as well. It is completely

independent. What would happen with independence, of course, is because

the Central Bank doesn't work or set debt targets or deficit target

or growth targets, and the Government and the MPC studious low

avoid commenting on fiscal policy, is the Scottish Finance Minister,

and a UK Chancellor, would have exactly the same powers, that is

monetary discipline set by the Central Bank. It sets interest

rates, and its remit is set by the Chancellor of the Exchequer, you

heard there from a former Chancellor that Scottish

politicians would not have a place at that table, wouldn't that worry

you? UK politicians don't have a place at the table, because it is

completely independent. The only target which is set is the

inflation target, that is sensible. In a currency union, if you agree a

"stability pact", say deficits to run more than 3% over the cycle,

that is extremely sensible. We are very comfortable with that.

know the Treasury is involved in major decisions, like quanative

easing, you have to approve things like that. What was spelled out, is

you wouldn't have a force in the economic cycle and movement n with

what would be essentially your own country? That is simply not the

case. You accept the discipline of the Central Bank, of course you do,

in relation to monetary policy S what we would have, and it is a

thing we don't have now, is full control over all of the fiscal

levers, in order to grow the economy, and not make the same

austerity policy driven mistakes that the UK Government are making,

and Alistair Darling made when he was Chancellor, laying out �87

billion worth of taxes and cuts. You don't have to look very far to

Europe to understand it is not a great idea to shoe horn two

economies into one monetary policy? That is right, the reason we have

problems in Europe is preSicily that. Productivity in Greece and

the rest are not the same. wouldn't be able to make those

decisions independently? Productivity is across Scotland and

the UK is near idea ka. You don't epbtder a currency union with --

identical, you don't enter a currency union with those

differences, it is not the same as southern Greece and northern

Germany. You heard the poll that showed 30% would vote yes if it was

asked today. Doesn't it tell us a lot about your confidence in your

campaign, that it is not even on the table for another two years?

it is going to be in 2014, that is the promise we made at the election.

In terms of today's poll, it was one poll, it was a very strange,

skewed question, but we will set that aside. Some polls have showed

independence ahead, others not so well ahead. What we need to do is

run the campaign, get it bottomed out, published a detailed

prospectus and win the argument. someone offered you devo max, a bit

more power, the SNP would be happy with that? The SNP stands for

independence, and we want independent, and the campaign was

launched today. More gloomy news from the eurozone

today, Spain's fourth-largest lender, Bankia, has requested a 90

million euro bail out, on top of 4.5 billion euros appealed for

earlier in the month. In Catalonia, regional Government could be unable

to pay their bills. Could this be the year where many countries try

their hardest to lose, because it would cost millions to host next

year. The spannic Prime Minister denied remarks she was alleged to

make last year, which would be -- the Spanish contestant has denied

remarks she was alleged to have made last week which would be to

lose would be better. # If you love someone

# Follow your heart # I am close to the

# Border line # Um come on a dance

Paddy O'Connell has the enviable task for covering Eurovision for

the BBC, he joins us now. I guess the joke used to be that nobody

voted for Britain, because they didn't really like us, now if you

didn't like us, you might vote for us, right? Well, no-one can dislike

Spain, and you can probably speak the language. What has happened

here is Pastorus has come back from comments that a TV executive said,

for heaven's sake don't win because it costs too much. It costs many

millions to stage this circus. Everyone wonders about being landed

with a bill in a time of austerity. But the Spanish girl says she's in

it to win it, and don't report those remarks you earlier did.

much did Azerbaijan throw at this one? Look behind me, this was

briefly the world's largest flag hole, it is 300ms away. Then

Malaysia made a larger one. This is the size of half a football pitch.

Look at the light display. This is a new stadium. This is like the

Olympic stadium, built for Eurovision. Which I think is

getting your priorities right. But here it has come with a lot of

human rights questions attached. We have been covering in other parts

of the news bulletins. If you take aside the question of the

construction costs, they are paying about 45 million euros to say to

the world, here we are, we have Eurovision, and we have vast oil

wealth, and you haven't. In the midst. Euro crisis, what is your

redirection for the way the voting patterns will go tomorrow. We are

post-soviet bloc era stuff now, aren't we? Greece is not going to

give 12 points to Germany, let's start there. We have Ireland here,

they rely on votes from the UK often, and they have got those two

chirpping little quiff creature, Jedward, with a mobile water

fountain, they are a country in crisis. Spain are here, Greece are

here, Italy's here, I think they should all support each other,

really, in it this time, show -- in this time, show a currency country

kuen. -- currency union. I don't know who will win, Sweden are the

favourites. Have a great night, thank you very much.

Next week, ahead of the Jubilee, we look at modern Britain, through the

writers of previous great regins, we have Shakespeare on Monday,

Shakespeare and leadership. They all see themselves at the party

conference, standing up and rousing the troops. As with Henry V, it is

quite cynical, and it doesn't solve the problem of how to govern.

that to come on Monday, that is all from Newsnight tonight, from all of

from Newsnight tonight, from all of us here, a very good night.

Good evening. The mercury soared to 29 degrees in some places this

afternoon. Not as humid to start with tomorrow, an easterly wind

bringing in the humid conditions. Temperatures always around the mid-

teens along the coast, thanks to the breeze off the North Sea. We

are getting into the mid-20s in the west. The sun will be every bit as

strong. In the channel island, Cornwall, and the ielgs of silly,

cloud later, a few rumbles of thunder in the night and with rain.

Most completely dry. The torch passing through Cardiff to Swansea,

clear skies overhead. Temperatures of around 25-126. Clear and sunny

throughout, across Northern Ireland too, as it will be in Scotland.

None of the mist and low cloud that bothered us on Friday morning. Blue

skies to start with and blue skies to finish as well. The only threat

to misty low cloud across the Shetlands. Paris sharing the heat

as well. Elsewhere in Europe, Amsterdam cooler, and Berlin, a bit

more cloud here. Some thunderstorms to come in Rome and Athens during

the weekend, and it will temper the temperatures some what.