06/06/2012 Newsnight

Tonight, is Spain too big to fail? Its leaders say their banks need

help from Europe, they won't accept more austerity in return. Who will

blink first? Meanwhile on the ground, the crisis

intensifies, Paul Mason is just back from Seville, some are taking

matters into their own hands, occupying houses and land. Did any

of you ever think you would be living in a squat? No. TRANSLATION:

We are here to fight or a roof, a roof over our heads, this is my

house now, nobody can throw me out, let's see them try. We will get the

Spanish Government view s and hearing from the head of the Berlin

stock exchange. What if the answer to save the euro looks like this,

will more integration choose Britain to be in or out of Europe.

The row over unpaid security stewards, we speak to the company

who provided them, an isolated incident, or something rotten in

the Government's Work Programme. How was the Jubilee reported abroad,

from ten sea to Taiwan. Good evening, Spain's banks need

more money from Europe, that is not in doubt. How much and by the

method which it happens is far from decided. The Spanish Government is

reluctant to accept a bail out for fear of the political reprecussions,

and the pain of even more austerity. Efiguress in Brussels, Berlin and

Madrid tonight are pouring over their options. Can a special case

be made for Spain, direct help for its banks with few conditions. With

the stand-off going on, how close are we to a wider banking collapse.

Paul Mason is here. What sort of plans are being mooted in Spain

tonight? A big turn around, 48 hours ago it was, we don't need a

bail out, our banks are fine. Now it is, please can we have a bail

out, and give it to us unconditionally or Europe gets it.

How much? 40 billion, more economists think, some think 400

billion. The point is, they want the money without the attached

austerity that Greece, Ireland and Portugal got made to. Do the

Financial Times, usually well informed out of Brussels, thinks

and reports that what is on offer now is that the Europeans are going

to give Spain quite a bit of money, unconditionally, at a state level,

that is it gets given straight to the banks, and the reason is s

because they have done so much austerity that they can have it

safely. So the Europeans are prepared to say what the markets

are not prepared to believe. As you say, Greece in particular is

watching this carefully. If Spain gets this money, with no strings

attached, will that be a game- changer? Massively. For two reasons,

first of all, Spain is on the verge of losing its ability to borrow.

The markets look at it and say your public finances are not sustainable.

They look at the autonomous regions, not making the cuts required. Then

you look at Greece, Greek voters are right now trying to weigh up a

gamble, one party is telling them if you don't vote for austerity, we

will get kicked out of the euro, disaster, the left is saying, no,

the Germans will blink, and the Germans will come back to the table

if you vote for us. What will it look like in Greece if, over the

next 48, 72 hours, they do blink. Big stakes here, for the entire

euro zone. Paul has spent the weekend amongst

Spaniards on the streeds Andalucia, struggling with the economic crisis

-- streets of Andalucia, struggling with the economic crisis. This is

his film. In the province of Andalucia, the

posh do weddings in style. And so do the protestors, here enacting

the marriage of a corrupt state to failing bank.

Protestors banging pots and pans, are becoming common now, an echo of

the revolt in Argentina, ten years ago, when it went burst.

They try to keep it light, but, as the crisis hits, there is simmering

anger. Many people are losing their homes,

people with children and it is now on the streets, living on charity.

Spain's economy is in recession. Many of its banks need a bail out

fast. One in four adults is unemployed. Spain has become the

test case for the European mantra of austerity.

The irony is, Spain's banking crisis is solvable, although with

large amounts of money. The problem is with the real economy, it is

shrinks fast, and theory dictates that people's wages and benefits

have to shrink as well. How low can it go, with any market in Spain,

most things are all right one or two euros.

This block of luxury flats was empty for three years. The owner

has gone bankrupt. Now it has been occupied by people's whose own

homes were repossessed. These women were among the first to move in.

They are not habitual rebels. Did any of you ever think that you

would be living in a squat? TRANSLATION: At first, the truth is,

I was frightened. Because I didn't know what could happen.

TRANSLATION: We're here to fight for a roof, a roof over our heads.

This is my house now, nobody can throw me out. Let's see them try.

The way it is going in this country, things are going to end badly. We

will be biting chunks out of each other, just for a bit of meat.

Everywhere you go in Spain there's a small savings bank, a Caja, now

many of them are bust. One bank alone, Bankia, needs 24 billion

euros to stay afloat. Spain wants the EU to give tax-payers' money

directly to these banks, so their bad debts don't get transferred on

to the Government's books. On the face of it, what could be simple

letter, you bail out the Spanish banks direct, with EU money,

bypassing the Government, avoiding the need for austerity, and

firewalling Spain from Greece. What's the problem? That's the

problem. This is unfinished skyscraper was built by one bank,

sold to another, and is now owned by a third. Many in Seville see it

as a giant folly, for, as those who have covered the story know, the

Cajas were politically controlled. The Cajas were banks who used

regular economic rules, but with a political background. So, it's like

getting politicians to grow your money. That is a CAJA? And when

they need to be bailed out by 24 billion euros, where are the

politicians? They are in the same place. Do people recognise this?

And maybe they should be answering some questions in parliament, and

maybe on trial. Europe goes pump 100 billion euros of tax-payers'

money into these banks t leaves the political apppointees who created

the mess unscathed, often with multimillion pay-offs. Andalucia's

land is rich. But decades under General Franco left it

underdeveloped, with EU membership came infrastructure. It is a region

where the state is the biggest employier, and the state is cutting

back. This farm had been abandoned to lie

fallow, now it too has been occupied by members of the Land

Workers' Union, and their supporters.

TRANSLATION: The crisis happened because the majority of people who

worked in the countryside left to go and work in the construction

boom. Only a few of us stayed behind. They brought in migrant

labour, and machinery to help with the crops. Then the property boom

collapsed, and all those people who left wanted to come back to the

land. They are trying to run it as an organic farm, this is as much a

political gesture as an economic one. Land occupations were the

scene of some of the bloodiest events in the civil war in the

1930s. TRANSLATION: I believe it will all

end with occupations, farplgs, parliamentary partys and factories,

there is no other -- apartments -- farms, apartments, factories, there

is no other way. We have to go out on the streets, fill the city

centres and occupy the land. Nobody will give us anything.

For now, what's holding Spain together is the strong social bonds,

family, religion, tradition, the welfare system, the minimum wage.

The statue depicts Our Lady of Hope, for many of these young people,

hope is all they have got. 51% of Spaniards under the age of 24 are

unemployed. TRANSLATION: We're following the

wrong path. The problem isn't public deficit, it is unemployment.

The more we strangle public spending, the more we damage our

chances of recovery. We need to recover confidence, and increase

consumption. It is a vicious circle. What we need is a system like the

New Deal. We are condemning Spain to a lost decade, like Japan had.

For now, the sun is free, and so is lunch, if you can catch it. But

this is a wasted generation. It is beginning to dawn on them things

could get worse before they could get better. A combined banking and

sovereign debt crisis for Spain would, even though, be cheaper than

Greece to solve. But bigger than Lehman Brothers, if they failed to

solve it. That is where Spanish people are scared.

What they are scared of, above all, is that the delicate social balance

they had will suddenly come to an end. Joining me now from Madrid is

Jose Maria Beneyto, a spokesman for foreign affairs in the parliament.

Joining me from Berlin, Artur Fischer, chief executive of the

Berlin stock exchange. In the studio I'm joined by the director

of the Global Economic Governance Program in Oxford. First of all,

Jose Maria Beneyto, Spain is in crisis you do need money now. How

much money do you think you need, and are you prepared to accept any

conditions attached to that money? Well, the first question is whether

indeed Spain needs money and touch. This is very difficult to know at

this stage. What has emerged is the need to get money for the

capitalisation of Bankia. This is the real problem right now. And

this was unexpected. Because it is a new story which came in the last

weeks. This is a real problem now. Anything else at the moment is a

bit of a speculation. Would you accept any conditions attached to

any money coming to Bankia, particularly? That's not for me to

decide on that. The reason I ask, the reason I ask Mr Beneyto is

because Bankia was severely mishandled, politicians were also

involved in the problems of Bankia, and European tax-payers wonder why

on earth they should give money to a failed bank, when it is throwing

good money after bad? Well, banks have been having troubles all

around Europe. You know, this is not the only case, in Spain. If you

look into the banks in Germany, the problems there were even much

higher, and there were banks managed by politicians. In many

other places in Europe, in France or Italy, this is not something new.

So the issue here is not whether Bankia was particularly bad low

mismanaged, it is an issue whether -- badly mismanaged, it is an issue

whether or not we should have a common system in Europe for banking

rescue. This is the real problem at the moment. Artur Fischer, from

your point of view, will Germany blink first and allow money to go

to Spain to help it out of its crisis? I believe it is the first

test will be on Thursday, when Spain will ask the market, I

believe, for another ten billion. Hopefully Spain will be able to get

that money in the markets below 7% .% obviously is a barrier. If that

doesn't happen, then things might accelerate quite swiftly. In that

case, I believe Germany will play by the rules, which means we have a

rescue fund, money will be lent only to a Government, not to banks.

However, I believe also that in Spain we have a completely

different problem. -- to Greece. The Spanish Government is saying it

doesn't a bail out, the idea is the banks to be recapitalised, you

don't think that will happen? simple, if Spain has to pay more

than 7% there will be no other choice. Obviously if it is higher

than 7%, then you need to take a loan out to pay the interest,

nobody would do that. Do you think it is possible that Spain would

have a bail out without conditions attached, the Financial Times is

talking about a possible bail out without the kind of austerity

measures that applied, for example, to Greece? I think there is a

middle ground here. I believe from what I hear that the German

Government understands that the Spanish Government has done a lot

of things absolutely correctly and riot, and they have started the

special measures to cut down costs some time ago. Therefore, again, as

I said earlier, the situation in Spain is quite different. However,

the banks need to be restructured, that is something which has to be

put in place. Let's come do you now on this.

Two different things here, of course, there is the short-term

problem with Bankia, there is also the possibility of a bail out,

without conditions attached, that would be a big moment, wouldn't it,

it would be a game-changer? would be, at the moment we are what

we are seeing is a very dangerous brinkmanship, it is a three-way

brinkmanship, the European Central Bank is sick of the European

leaders not making decisive moves. So the European Central Bank has

said we are going to stop doing pain relief for Europe, and force

the politicians to do something decisive. The eurozone politicians,

playing brinkmanship with Spain, they want to force Spain to accept

conditionality in return for a loan. Artur Fischer has said it has done

a lot towards this already, it sounds as if there will be an

accord? What Spain knows that is that Germany cannot afford to let

Spain go. Spain knows if there is any moment to negotiate without

conditions now is the moment. will blink first? Germany? We will

see a slightly political fudge, we will see probably a loan from the

European rescue fund, with some light conditionality, which some

how the Spanish Government finds acceptable. What we won't see is a

solution to the underlying problem. Which is that both the Government

and the banks are broke. So they are all playing with fire?

They are. Jose Maria Beneyto what do you make of that analysis?

I think is that Spain needs time. The crisis has been not just a

Spanish crisis, it is a crisis around Europe. If Spain fails, the

consequences will be very, very relevant for the rest of the

European countries, including Germany. Do you believe that if

Spain does fail, the whole eurozone fails? What I think is that we are

very clearly on the same boat, as we were from the very beginning in

the monetary union. So things have happened as they have happened, the

Spanish Government has made very strong efforts, it has done all the

homeworks, it is probably the country in the world which has done

the most reforms in the least time, concerning the size of Spain. We

have done the labour reform, we have done a cap on the expenses of

the autonomous communities. Sorry to interrupt you, I would say two

of the semi-autonomous regions were meant to cut their spending last

year and they increased their spending? No, what they did, they

didn't increase their spending, what happened was that when the

accounts were made public, there was more deficit than expected from

last year. The revenues had been less. So it is the entire problem,

it is a dynamic situation, and if you don't find a solution, then, of

course, your revenues will be less and less. Artur Fischer, what about

this point, though, that if the special measures are given to Spain,

it could possibly affect the outcome of the Greek elections.

Because the left in Greece will say, hang on in there, we don't need to

accept these austerity measures, because Germany will blink. Angela

Merkel will blink, and we will be OK? Actually, there is a potential

that could happen. But I believe in crease, the vote will be whatever -

- increase, the vote will be whatever it will be, either Greece

will vote for the austerity measures or they will not be

provide with any other money, in that casek they will most likely

have to leave the euro. In Spain it is different, the Spain yards are a

proud people, the Government has promised to see through this crisis

on their own, and the Government has been in for half a year. It

looks like they can't, and for that reason I believe the first step is

that Spain asks the fund to release money, and then the next step to

accept some, probably very light measures, which are imposed. Very

briefly? There is one positive point that has emerged today, which

is the idea that the Europeans collectise all the excess debt to

take the Government off burdens and leave them better able to sort out

their banking systems, without that we are in a dangerous space.

have had reports in from activists saying scores of people have been

killed in a village in Hama province, hard to verify, the

killings come less than two weeks after news of a massacre in Houla,

over 100 people were killed, over half of them children. Activist

groups are saying between 78 and 87 people were killed in this village,

either shot at close range or stabbed to death, or hacked to

death by shabiha, that is the Government militia, which has been

widely blamed, certain lie by activists and much of the outside

world for the killings and Houla. We obviously can't confirm these

report, nor is there any video on the Internet to back it up. But

these same groups were the first to come out with the news about Houla,

which UN observers, the following day, coroborate. We will be waiting

to see obviously whether the observers go there tomorrow, and

confirm these kind of figures. It sounds like Houla on a slightly

lesser scale. As many as 87 if not more. Is there any other reaction

tonight? The Government is giving its view, which is now coming out

in flashes on the Syrian state TV screen. Saying that Government

forces in response to pleas from local people, intervened to attack

what they are calling a nest of terrorists in that village, they

clashed and killed a number of these called terrorists, seized

guns and so on. And that, in the process, they came, they say,

across the bodies of two women and a number of children, bound hand

and foot, who the coroner, according to this official version,

said had been killed at 10.00am, yesterday, or today, rather, in

other words when the called terrorists were still there. In

other words the Government is blaming terrorist armed groups or

the rebel fighters for this massacre, as the Government itself

is calling it. And linking it to the impending meeting of the

Security Council tomorrow. Which will be addressed by Kofi Annan, as

everybody looks for a way out of this horrible drama. Thank you very

much for joining us. Back to Europe now, Britain may be

outside the eurozone, probably relieved to be a second teir player

in this crisis. But tomorrow afternoon David Cameron will be

sitting face-to-face, toe-to-toe with Angela Merkel with a following

wind from Barack Obama, more or Liz telling the German Chancellor to

come up with a plan to solve the eurocrisis and deliver long-term

future for the single currency, perhaps in the form of stronger

integration. The moment could welcome when Britain has to decide,

once and for all, Europe, in or out. Here is David Grossman.

For a whole extra long weekend it was almost as if the EU didn't

exist. For four rather soggy days we were back in the Britain that

George VI pass today his daughter. The British show no great desire to

fly the EU flag at the best of times, this weekend, forget it. But,

as the parade routes return to normal, so does politics. For the

politicians, business as usual on the eurocrisis, is, well, trying to

keep their options open for as long as possible. In a comparatively

short period we could be looking at one end, the complete break up of

the entire European project, or, at the other end, a new, vast

superstate. However, whilst a certain amount of ambiguity suits

our leaders, increasingly backbenchers are looking for

clarity and precision. The Conservative backbencher,

Douglas Carswell has won a place in the parliamentary ballot to

introduce a piece of legislation, and consulted the public as to what

law they would like. The overwhelming winner, he says, exit

from the EU. So far we have seen almost no leadership at all. We

have seen all the old certainties and cliches of the past 40 years

recycled, different ministers, they wear different colour rosettes on

election day, but no new thinking. I mean this really should concern

us. Events are changing fast in Europe, and yet we're getting the

same sold out of date platitudes and cliches recycled as if they

will see us through, they will not. The Prime Minister is in Norway

tonight, on his way to a meeting with the German Chancellor tomorrow.

Last night there was a phone call with the American President. The

subject under discussion, of course, the eurozone. I did have a

conversation with President Obama yesterday, he very decently held

off the phone call until after the red arrows had finished going over

bucking hall palace, only just. We do -- Buckingham Palace, only just.

We do share some similar views, as I said, there is the urgent action

to deal with the financial crisis in Europe. We have seen interest

rates rise so high that it is causing real problems for countries.

That is why you need a conclusive resolution of the Greek issue. You

need the firewalls, you need the bank recapitalisations, all those

things have to be done. But that is only about stablisation, we then

need to make sure we have long-term growth plans.

For some in his party, Norway was a good place for David Cameron to go

and see for himself. It provides, they think, a good blueprint of

where Britain could go. Trading with Europe, but outside the EU.

Norway is in the European Economic Area, alongside Iceland and

Liechtenstien. According to one academic, this middle way utopia is

a losery. There is a gap in the model between formal serenity and

actual dependance on Brussels on the other side. You could say in

the places and Britain for those considering it, even outside the

European Union, you can't be outside the European integration

processes, that is something you have to participate in if you don't

want to be totally isolated. Sonar way is really participating in

European integration, although we have kept some formal serenity.

Others, though, think a better example of Britain's post-crisis

relationship with the EU is not looking north to nor way, but south

to Switzerland. The Swiss are in the European free trade association.

I think a Swiss-type relationship with the European Union very much

has to be on the cards. One of the reasons why the Swiss are

prospering is because by being outside the European Union, not

only do they have free trade with the European Union, but they arery

to -- free to trade with the rest of the world, and it is outside the

world there is growing, it is countries outside the European

Union that are growing fast. If we can find a way of trading freely

with the European Union, being free to trade with the rest of the world,

we will be on to a winner. The big problem, right now, is, of

course, is that no-one can predict what will happen with the EU and

the eurozone, and Britain's relationship with both. The only

scenario we can perhaps safely discount is this one.

Daniel Hannan is a Conservative MEP, who supports a UK exit from the EU,

and Menzies Campbell, leader of the Liberal Democrats, who have always

enthusiastically usual guiseed the EU benefits. Menzies Campbell

tomorrow morning in the Times, David Owen planned to offer a vote

on EU to Britain. Do you think a vote on EU membership is inevitable

now? I don't think it would be the time to call it now at the moment.

People's views would inevitably be covered by what has happened in the

most recent past. You have to remember for the past 40 years we

have participated in the biggest single market in the world, 50% of

our exports go to the European Union. It is said that three-and-a-

half million jobs in this country depend upon the European Union.

More to the point, perhaps, since the end of the Second World War,

the European Union's been an important component in the

maintenance, not just of economic opportunity, but of political

stability. Against that background, then, a referendum on Europe, in my

view, is something which those of us who support Europe should not be

afraid of. Because I believe in an argument of the kind I have

described, that the view would prevail that Britain should remain

within the European Union. We would have a clearer picture, Daniel

Hannan. Can you sketch out, from your point of view, how it would

work, if Britain left Europe? may on the referendum, it is a bit

much to say it is the wrong time. It is always the wrong time, we

used to be told it was the wrong time because Europe wasn't an issue,

now we are told it is the wrong time because Europe is an issue.

Let the people decide. How would it work? You could do worse than

looking at the two examples you cited in your film there, Norway

and Switzerland. They are in the European free market, but outside

the common agricultural policy, and the common fisheries policy. They

pay only a token contribution to the EU budget. They control their

own borders and human rights issues. In Switzerland it is completely

different, Switzerland doesn't regard itself as being a force in

the world, the UK does? It is the absolute rule of this, when you are

discussing aspects of their relationship with the European

Union, you are always told a separate thing about the country.

You asked me about what would be the motdle for us -- model for us,

the key thing is both Norway and Switzerland export substantially

more per capita to the European Union than we do. They sell more in

percentage terms from outside than we do from the inside. Which is

what makes a nonsense of the claim about three-and-a-half million jobs.

My job depends on it, and a couple of other eurocrats and others.

would lose your job? Free to trade with the rest of the world, outside

the euro. Let's put that to Mr Campbell, what you were talking

about, jobs depending on it, Daniel Hannan's point is more jobs would

be cailted and there would be greater -- created and there would

be greater flexibility to trade outside the European Union? We are

free to trade with north and south America, which explains why the

British Government for example, hold on, let me finish. Let him

finish. In the last few months has been exercising very strong

diplomatic activity, in relation, for example, to Brazil. We are not

prevented from trading with other parts of the world. But the

European Union does allow us access to a single market, with freedom of

capital, freedom of persons and freedom of services. Let's move

this on politically. They are not bound by the common external tarrif.

There is no doubt, is there not, that Barack Obama look at Britain

as being part of a European bloc, we are more powerful because we are

part of that bloc? At the risk of stating the obvious, you are more

influential in the world if you have your own foreign policy rather

than contracting it out to Baroness Ashton and the EU diplomatic

service. To make the most obvious point, when we joined the European

Union, we thought there would be a trade off of economics versus

politics. Yes, we would lose a bit of sovereignity, and democratic

self-rule, that was a bad thing, on the other hand we would be, we

thought, gaining access to this vast, growing market. It doesn't

look that way today. The European Union is dwindling as a percentage

of the world. It was 38% of the world economy in western Europe

when we joined, it is now 25%, it will be 15% in 2020. We crazely,

while shackling ourselves into the European Union, turned our backs on

the developing markets and the Commonwealth and wider anglo-sphere,

which is where the growth is. idea that by walking out we would

some how, overnight, achieve something infinately better, simply

isn't supported other than anything other than speculation, we have the

opportunity to trade elsewhere in the world. We also, through the

European Union, have the capacity to protect ourselves, when we are

the subject of the kind of thing, happened not all that long ago in

this country, when the Americans used restrictions against cashmere

exports in Scotland to boost their claim that there should be a

different policy in relation to bananas. We couldn't write of the

rules in the single market, that would be a problem for us, we would

be excluded? Our exporters would have to meet EU standards when

selling to the EU, just as they meet Japanese standards selling to

jappafpblt I come back to the point, Norway and Switzerland sell more to

the EU, Norway two-and-a-half times as much per head as we do, and

Norway four-and-a-half times. They are in splus plus, we are in --

surplus, we are in deficit. We have run a cumulative trade surplus with

every continent in the world, except Europe. Are we really to

believe that four million Norwegians, seven million Swiss,

relying on trade agreements, furnishing their people with the

highest standards in Europe, wouldn't be able to survive running

its own affairs in its own interest is the United Kingdom.

The Diamond Jubilee wasn't a picnic for everybody, thousands worked

hard stewarding the whole affair, keeping audiences safe, happy and

in the right place. Now Lord Prescott is has been leading the

cause for a stewards inquiry, after it emerged that unemployed people

from Bristol, Bath and Plymouth, were bused to London, and left

under London Bridge to spend the early hours of the morning, and

paid nothing for their stewarding efforts. It was, according to the

Government's work programme, work experience, for others it was

nothing but a horrible experience. 700 boats, a million people lining

the Thames. Thousands of street parties across

the UK. It was a very British Jubilee, in very British weather.

But, as the long weekend came to a soggy close, we began to learn more

about the treatment of security staff working behind the scenes.

In the early hours of Sunday morning, coachs from Bristol, Bath

and Plymouth, arrived here at London Bridge, full of, mainly

young people, ready to carry out a day's work, as trainee stewards.

Many were here as part of the Government's work experience

programme, knowing they wouldn't get paid, but hoping for something

permanent in the future. Some of those coaches arrived at

3.00am, earlier than expected. Workers were told they should get

some rest for a few hours under the bridge, before starting a full

shift in the rain. If I do that there is jobs that I can do, paid,

come off of benefits, I have been on benefits for a little while now.

I'm getting fed up of being one of these people that cannot get a job.

There is no jobs out there, not really, you know, it is hard to

come across a job, and I thought, well, this job seems really good, I

got offered the job, I took it. I think they took advantage of people.

The stewards were taken on as part of the Government's Work Programme,

they were directly employed by a firm called Close Protection UK,

which Newsnight has learned, has also won two separate contracts to

supply security staff for the Olympic site. The company's

contracted and gets paid to take these people on, was it paid to

take unpaid labour? Secondly, they have an obligation to make sure

they look to the social welfare of the people that they are involved

in. They totally failed in. That they looks a if they are in breach

of their contract. This isn't just about, you know, a few volunteers

going together and hoping for a job, clearly they were. This company is

being paid, and has abused its position n my view. Close

Protection UK has apologised for what it says is a small number of

staff who complained. In a This case raises more questions

about the Government's welfare-to- work policies, one of the scheme's

largest private contractors A4e, is currently the subject of two police

investigations over allegations of fraud. And the Government was

forced to change a related work experience scheme earlier this year,

after more protests over the use of free Labour. In this separate case,

described as an isolated incident by the Government, the charity

Tomorrow's People, placed the Jubilee workers with Close

Protection UK, the organisation, run by the Conservative peer,

Baroness Scott, is being paid �3 million this year for Government

work. There is a lot riding on this for the Government, it launched the

flagship work programme a year ago this -- Work Programme, a year ago

this week. The promise, to help more than two million people into a

job by 2016. It will be the unemployment statistics that decide

the success or failure of that policy. If those numbers start to

fall, those allegations of exploitation, could be quickly

forgotten. I'm joined from Liverpool by Baroness Scott, who is

the CEO of Tomorrow's People. Baroness Scott, what due diligence

did your company do before you sent these unemployed people to work

with CPT? Well, our relationship with CP UK, has been going on now

for six months. We have placed people with them, locally, in the

Plymouth, Bristol and Bath area. All our experience of them is they

have honoured every obligation to look after them, and have a duty of

care, and provide them with good training. This was a distance they

had to come from Bath and Plymouth. Was due diligence done by Close

Protection UK about bringing these unemployed people to London, making

sure their four-day work experience, including the overnight, was

properly managed, and their welfare was properly looked after? If you

will allow me to finish, all our experience gave us confidence that

the preparations they had made for the trip to London, and the

experience would be met in the same way as it had been locally. And

what happened was...You Didn't do due diligence on this particular

trip? We did due diligence on CPUK and we had every confidence that

the arrangements in place were in the best interests of our clients.

You said the experience over the last six month, I didn't ask that,

I asked what due diligence you did on their preparedness to actually

prepare for this trip to London, by these people, on buses? All the

information we received and saw from CPUK was that the same level

of care and duty of care to our clients on this trip would be the

same as those locally. You saw the paperwork? My staff were in liaise

on with them. As I understand it, all the due diligence and the duty

of care, we had every confidence. The thing is that Tomorrow's People

as a charity and provides people for the Work Programme, and it gets

�3 million, and there is one person on �100,000 and eight people on

�50,000 a year, and when you look at what happened to unemployed

people w no power in this situation, who desperately want jobs, it could

be seen as ripe for exploitation, it could be seen that way? No, it

depends on how you want to look at this. At the end of the day, let me

be clear, what happened when the coach dropped these people off,

earlier than they should have done, and didn't allow them to stay on

the coach was unacceptable. CPUK have issued an unreserved apology,

we do the same. What we have to do is be really careful, work

experience is a vital element in an unemployed person's journey towards

getting to work. And we have got to be really careful. We do not give

the impression that work experience is not valuable and it is

exploitation. What this does appear to look like, is that it was sloppy

and it didn't really matter, and what I was wondering was, in the

light of what has happened, have you changed your relationship with

CPUK, and are you going to make sure that something like this could

never, ever happen again? The first thing we have done is we have spent

our time speaking to every client who was involved in the work

experience in London, to make sure they are OK, and to get their

feedback. That's involved our staff doing that. We are now looking at

our elements of the experience, and of all the arrangements in place,

and I can tell you that we will not allow this to happen again in the

way that it did. But, let me tell you also, that having spent,

Tomorrow's People, 30 years, really understanding what it is like for

unemployed people, we have been told by the majority of clients

that were on this experience, that notwithstanding the situation that

happened that shouldn't have done, they would be livid if this

prevents them, or spoils the opportunities that CPUK are going

to present them with the Olympics. Thank you very much.

The weekend Diamond Jubilee coverage of the River Thames pagent

on television attract 717 million people in the UK. How was it

reported elsewhere in the world. We have been trawling the tapes and

will go over at the Newsnight Jubilee Desk.

Thank you, you know what, conditions are terrible here, but

we are not going to let the weather dampen our enthusiasm. If I had a

�1 for every time I heard that last weekend, I would be richer than the

man with the kaing gull concession on the South Bank -- kag ol

concession on the South Bank. I have been up four straight nights

covering the Jubilee. What have others made of the party thrown by

Great Britain. It was a magnificent spectacle, you could almost see

through the inside of a car wash, that is England in juend. When an

oskes tra starts up, first Charles -- orchestra starts up, Prince

Charles takes up his sword, and then Camilla takes a lead, then the

family dances. They are not dancing, they are shivering. From New

Zealand, home of rugby players and Shaggy shepherds, a complaint about

the British weather. Dozens of rowers in the Queen's

Diamond Jubilee pagent, including a New Zealander, caught hypothermia

during the seven hours they were on the Thames. Organisers had been

worried the choppy tide might be a safety risk for the Kiwi crew, it

was the cold conditions that caused trouble in the end. And Moscow got

right behind the spectacle, talking about Britain's "pompus

festivities", oh those Russians. It's brilliant to be British, and

with 60 years of Her Majesty on the throne, there is no better time to

fly the flag and mark the occasion with a huge celebration. That is if

you can forget about the job cuts, slashed wages, petrol hikes and

rising education costs, in fact, unless you are among the Royal

Courts, you might be finding it hard to get festive.

Not to be outdone, Italian television hired Lord Sugar for

their coverage! The Queen's Diamond Jubilee celebrations got off to a

wet and windy start in London at the weekend. Looks like a trip to

the tower,or Taiwanese TV, less say Her Majesty is more. Which of us

will easily forget that extraordinary concert at Buckingham

Palace, that said, there have been some complaints about the BBC's

coverage, its tone, the level of knowledge. We have the little royal

teabags here. They are just chilling out. This is one of the

more unusual things. If you have eaten too much you can vomit into a

Jubilee sick bag. How lovely is that! National Theatre, the Royal

Festival Hall, we have some Semaphore on the Royal Festival

Hall. You can understand that, can't you? I haven't got a clue.

More than ten million viewers watched the river pagent. There

have been over 2,000 complaints to the BBC. But director-general, Mark

Thomson, said he was very proud of the coverage. That's just about all

from Newsnight tonight, before we go, the science fiction and fantasy

writer died tonight. We leave you with classics from Fahrenheit 451.