19/09/2012 Newsnight


19/09/2012

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There's no easy way to say this, we made a pledge, we didn't stick to

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it, and for that I'm sorry. The leader of the Liberal Democrats

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tries to look like he's eating humble pie, the most naked

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political stunt in recent years was a mistake. He wants to say sorry.

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Haven't we heard this stuff before. Broken promises. There have been

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too many in the last few years, too many in the last 30 years. I will

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be asking the second-best known Lib Dem in Britain, whether there's any

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more reason to believe them this time than last.

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Coming soon to a Government service near you, we gain look through how

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the public spending savings will be made.

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Tonight for the first time, a further sense of cuts come down the

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track, and how more welfare cuts, is the pain elsewhere.

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If only European magazines were more deferential, they would never

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publish the photos. A Swedish magazine defends its decision to

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print the photos. What does royal biographer Andrew Morton think.

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And bankers say they are prepared to throw billions at Spain, we ask

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is Spain prepared to take the medicine in return.

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Well, Hallelujah, a politician has apologised for breaking his promise.

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The leader of the Liberal Democrats couldn't quite bring himself to put

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it so bluntly, but he is going to say sorry. Oddly, he's chosen the

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most desCid dited form of communication known to man, the --

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discredited form of communication known to man, the party political

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broadcast. He now admits he hadn't a clue what he was doing when he

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voted voted about student fees. The apology to be broadcast the week of

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their party conference is a collector's item.

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Stkpwhrp the symbolism of a country in a mess was no accident. At the

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last election Nick Clegg promised to clean things up.

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Broken promises. There have been too many in the last few years, too

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many in the last 30 years. In fact, our nation has been littered with

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them. Whilst all the parties are suffering from low levels of voter

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trust, perhaps this is why the Liberal Democrats are suffering

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most. That the people who voted for them feel most let down. Choose

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real change. Short of opening a vain and sign anything blood, Nick

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Clegg could -- vein and signing in blood, Nick Clegg could not have

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made his apology about tuition fees any stronger. The plans I believe

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the Labour Party and Conservative Partys are cooking up together to

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raise the cap on tuition fees, we will resist and vote against any

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lifting of the cap. The students and Liberal Democrat activists

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loved it, only one problem, skip forward a few months, and Nick

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Clegg is not only in Government, but instructing his party to vote

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for an increase in the cap of tuition fees from �3,000 to �9,000.

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Skip forward quite a few more months, to the eve of this year's

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Lib Dem party conference, and Nick Clegg decides he has to apologise,

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profusely, without his tie or jacket. We made a promise before

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the election that we would vote against any rise in fees under any

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circumstances, that was a mistake. It was a pledge made with the best

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of intentions, but we shouldn't have made a promise we weren't

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absolutely sure we could deliver. I shouldn't have committed to a

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policy that was so expensive when there was no money around. Not

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least when the most likely way we would end up in Government was in

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coalition with Labour or the Conservatives. Who were both

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committed to put fees up. This is a move straight out of the Tony Blair

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PlayBook, concede, apologise, and move on. It is just that many of

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the people who voted for Nick Clegg at the last election have already

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moved on, according to the polls, to other parties. This isn't really

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aimed at them, more at his nervous party activists and members who are

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meeting in Brighton this weekend for the party conference. The

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question is, will it make the blindest bit of difference.

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Although I don't expect them all to come blooding back tomorrow, I

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think people can say, OK, we thought they were wrong about that,

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now they have admitted they were wrong about that, now let's look at

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what else they are saying. If they like what else we are saying, and I

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hope a lot of people will recognise that the Liberal Democrats are

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making this Government a better and fairer Government, and if they like

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what they see now, there is no reason not to come back and vote

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for you. So, I hope that we will have succeeded in drawing a line

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under what wasn't a happy episode for us as a party, and that people

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will start to come back eventually. The Lib Dem's polls haven't

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improved since last year's party conference. Not only has it lost

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half of its support since the election, the majority of those

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that are left Iasi the polls, declare themselves -- left, say the

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polls, declare themselves dissatisfied with Nick Clegg. This

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broadcast seems an appeal to the few. We were right to leave the

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comfort of opposition to face the realities of Government, we are

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fighting for the right things too, rebuilding the economy to make it

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strong, changing the tax system to make it fair. Defending the

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vulnerable in the tough times. That is what my party believes in, that

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is what I believe in. And if we have lost your trust, that's how I

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hope we can start to win it back. So, has Mr Clegg got anything to

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fear from his party? Some senior Liberal Democrats close to the

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Deputy Prime Minister think the Business Secretary, Vince Cable, is

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on manoeuvres. In July, he told a newspaper, that he didn't exclude

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being party leader one day, now that "the worship of youth has

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diminished", who on earth could he have mefpbt. Our political editor -

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- meant. Our political editor is with us. This is a pretty fine

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kettle of fish? It is so nuanced. The political problem will be, that

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it isn't a straight forward apology, it is an apology for process, for

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making the promise in the first place, and then the nature of the

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U-turn. There will be trouble on. That let's accept he has done T I

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will explain what I think. What is odd, in the polls you would expect

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this to be a leader on his knees. If you look around the country in

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seats where the Lib Dems have MPs, they are bearing up well in

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elections and by-elections, this is Nick Clegg ahead of the elections,

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two-and-a-half years away from a general election, trying to clear

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the decks, get some credit. As it was said in that package, he's very

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critical of Clegg before, this is Nick Clegg trying to get credit for

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some of the things like increasing the personal tax allowance, and

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possibly be able to lead the party into the next election. This is

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basically Nick Clegg trying to save his leadership. I think that it

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will be difficult, given what we have said about the nature of the 0

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apology. One of the things, it is also going to be difficult because

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Vince Cable, when put to people in polls, polls better than Nick Clegg.

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That is becoming the concrete truth. Very fortunate we have him here.

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Indeed. Vince, why has it taken two years to get around to apologising

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for this? We have apologised before. But I think, to be frank, people

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were so angry, that people weren't listening. Now they are listening.

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I think the other reason for the timing is Nick wants to make it

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absolutely clear, it is a distinction between the pledge,

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which was wrong, and which he and we have apologised for, and the

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policy which we are now operating, which we don't apologise for, is

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actually in many ways an improvement and now in operation.

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You also want to apologise do you for what you said and did before

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the election? Yes, we are collectively responsible, we all

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participateed in that. It is not just Nick Clegg, it is the whole

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parliamentary party wants it apologise? Yes, it is, he has said

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this as part of it, I share the responsibility, I don't shirk from

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it. The odd thing is, you were warned before the election that the

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policy was unaffordable by Danny Alexander, weren't you? Indeed.

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That's where the apology is justified. Yet you chose to make a

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commitment in the manifesto that it was affordable? There is a

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distinction between the manifesto and the pledge. The manifesto, 80%

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of which we carried into the coalition agreement, that we knew,

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when we joined the coalition, we would have to compromise on that.

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The pledge was different, that's what Nick Clegg is referring to.

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But you had been told, you have just conceded, before the election,

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that the pledge was unaffordable? If it had been affordable other

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things would have had to go. were told by Danny Alexander in a

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confidential memo? I worked in economic affairs, he was part of

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the team. We realised we would have to make cuts in Government. Yet you

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chose to say it was affordable, you chose to say it was all costed out?

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That is where the apology is due, and rightly so. Did you personally

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believe it was affordable? I was sceptical about the pledge, but we

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agreed collectively to do it. I take my share of responsibility for

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that. Did you personally believe it was affordable? I personally was

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sceptical about the whole fees policy. You signed this pledge

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knowing it was possibly unaffordable? I signed the pledge

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on the basis that had we been in Government on our own, which was

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the commitment, we would have put through that policy. And we have

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done so. Nick Clegg in that broadcast appeared to suggest that

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had you formed a Government other than in coalition with Labour or

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Conservatives, you might have been able to implement it? Is that what

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thought, if so you are living in fantasy world? I wasn't living in

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fantasy world, because for a year before the election, as wul

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remember, probably more than any of the other -- as you well remember,

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probably more than any of the other people, was spelling out the need

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for cuts. It was a policy commitment that would have cost

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money, had we implemented it, other things would have to go. Did you

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tell Nick Clegg it was unaffordable? It was an unwise

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commitment to have made. We regret that. That was the basis of the

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apology. Did you tell Nick Clegg it was probably unaffordable?

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discussed this between ourselves, as part of our leadership team,

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there was scepticism, as part of the whole fees debate. We agreed

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collectively to support it, I take my share of responsibility for that.

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Who in the leadership team agreed with you that it was possibly

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unaffordable? It is not a question of individuals. It clearly is? You

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had deep reservations, you were sceptical about it, you have just

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said? I was sceptical about any significant financial commitment

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before the election, for reasons we have spelt out. But the parties

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agree their policies, we agree them collectively, we take on board

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things, we personally feel unhappy about, that is how decisions are

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made in parties, and in Government. It is called collective

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responsibility, and I was part of that. It was a stunt? No, it was

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not a stunt. It was part of a genuinely felt wish to assist the

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student population. We weren't able to carry through with it, but it

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was certainly deeper than the stunt. What else would you call something

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that you would deeply -- you were deeply sceptical about being able

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to afford, and you were advised was unaffordable, yet your leader chose

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to go through with, nonetheless? One has to make a distinction

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between the manifesto, that we had already agreed to, that was

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actually even more radical. It talked about phasing out fees, and

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the pledge, which was about freezing them, actually the pledge

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didn't go as far as the manifesto, that our party had decided it

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wanted to campaign on. You know, with the luxury of behind sight,

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people like me will say we were sceptical of the whole thing at the

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time. That is not the point, the point was, whatever views we had at

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the time, we all collectively signed this pledge, it was wrong,

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and Nick has apologised, and we collectively apologise for it. We

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now wish to have the debate about what is the sensible policy on

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universities. I think what we have done in office, something we are

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pleased of having done, we are careful to advocate. Can you give

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us a guarantee now, that everything, be it in this narrow distinction,

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either in the manifesto, or in some election stunt, anything you prob

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miswill be stuck to at the next election? After our experience --

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you promise will be stuck to at the next election? After our experience

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we will not go in with a lot of expensive commitments. We have been

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apologetic, all three parties in the past have made pledges to

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students about either not increasing or not introducing fee,

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all three parties went back on those commitments in office. We

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have been badly punished for it. We have lost a lot of trust. And we

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are acknowledging it. But this is not unique to our party. Do you

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recognise the damage you have done to trust in politics? It has done

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damage. That is why Nick is speaking in such heart felt terms.

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It is tragic in the way, I knew young people who weren't going to

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vote, who saw your campaign and pledge and went out. I know people

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who went leafleting for you, and then they were betrayed? Certainly

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they were very disillusion, we have had that anger, I have encountered

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it on a one-to-one basis with students I have met. I go around to

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university Camron pusses and there is a significant reappraisal, and

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people understand the fee, not paying cash, what we introduced in

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practice is a form of graduate tax. People pay in relation to their

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income, over their lifetime. It is a more progressive system, the one

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we inherited nobody pays upfront fees. You didn't say that at that

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time? No we didn't. Now that is embedded, we have a good policy for

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higheredcation, I'm very happy to go out and defend it. We want to

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make a distinction and having made a pledge we shouldn't have done.

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There are bad times just around the corner. Already Government

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departments spending tax-payers' money are having to make serious

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savings, right now, this Government, which came to power promising to

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sort out the vast debt run up by Labour predecessors, is running a

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big debt than they did. And whichever party takes power after

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the next election will have to find more savings, the worst is yet to

:15:37.:15:47.
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come. What will that be like the - the Institute for Fiscal Studies

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has thought the unthinkable, and we have looked at the conclusions.

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You have seen incisions to public policing, to hospitals to libraries,

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right now, these cuts only go as deep as 2014, the scissors only

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keep on snipping for two years. Then they stop abruptly the year

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after next. Currently there are detailed plans, right now there is

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a great big white piece of paper. No cutting, let alone spending. But

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there will be, and the first cuts won't have been the deepest.

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Newsnight has been given a simulation of the next round of

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spending cuts, on tonight tonight's programme for the first time we

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give you the figures and implications of the figure. The

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current spending round lasts until 2014, after that there will have to

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be new cuts, fresh cuts, cuts upon cut, behind closed doors, in the

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Treasury, they are looking at these figure, they will loom large in

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:16:52.:16:53.

your lives, and they will loom large in the next general election.

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Here is the number cruncher in chief? What people haven't done now

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is to look at what the pain would be like for spending departments,

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we have calculated if you held NHS spending constant, or you cut

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welfare, or decided to increase taxes.

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We have already seen cuts 2.3% to all Government departments, in

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order for the Chancellor to meet his own target of bringing the

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budget into surplus by the end of 2017, he would have to do more than

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the 2.3, he would have to do 3.8%. These are new items to be cut, not

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a continuation of the same. For the first time tonight, the Institute

:17:36.:17:40.

for Public Policy Research for Newsnight, tells us what they

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actually mean, from 2015-2017, �8 billion less on the NHS, education

:17:46.:17:56.
:17:56.:17:57.

would see a cut of �4 billion. The eagle eyed among you will say

:17:57.:18:00.

we have forgotten the ring-fenced departments, it is not certain, but

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likely, that any Conservative Government will maintain the ring-

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fence, Westminster is humming about keeping the ring-fence but stuffing

:18:09.:18:13.

it with new responsibilities like social care. The IPPR is clear,

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keeping the ring-fence for the NHS and Department for International

:18:18.:18:21.

Development would mean 6% cuts to other departments, if you protected

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education too, it would be cuts of 8% to other departments. If this is

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too be a straubgt and you forgive crude calculation, it would mean

:18:33.:18:37.

the lost of some 70 though defence personal, and 20,000 police

:18:37.:18:41.

officers. -- 0,000 defence personal and

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20,000 police officers. What a painful future, that is why they

:18:46.:18:50.

are looking to make cuts to the welfare putting, it polls very well

:18:50.:18:53.

with target voters t would allow the Government to cut no further

:18:53.:18:58.

than the amount it is cutting right now, 2.3% in budgets that aren't

:18:58.:19:03.

ring-fenced, it wouldn't have to go as deep as the 3.8%. Cutting

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welfare effectively halves the cuts other departments, defence, home

:19:07.:19:13.

and education, must undergo. The Chancellor thinks the �10

:19:13.:19:18.

billion to the welfare budget have a logic, and Lib Dems have to

:19:18.:19:22.

accept them, otherwise they are sanctioning deeper cuts elsewhere.

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The IPPR think-tank think it is a choice. You can choose to raise

:19:26.:19:31.

more tax, cut certain forms of spending and not others, or cut

:19:31.:19:35.

welfare, that is the public debate, whether we have the right inkind of

:19:35.:19:41.

mix of options ashrailable. There are Lib Dems wondering out loud if

:19:41.:19:46.

it needs jump leads in the economy for more spending. The think-tank

:19:46.:19:50.

says more capital spending means more cuts to departments, large

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ones, of 5.4%. If it all sounds like too much pain. In order to

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meet its target the Government could go for a different kind of

:19:56.:20:01.

pain, tax rises instead of spending cuts. It could try and bring in �20

:20:01.:20:04.

billion in tax revenue, a mansion tax, the Lib Dem favoured option,

:20:04.:20:09.

would only bring in a tenth of that, �2 billion, in order to get up to

:20:09.:20:12.

that scale, you are looking at putting 4p on the basic rate of

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income tax. After an election, the Government

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could delay the whole thing, choosing to spend an extra �20

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billion, investment in capital projects, lower than average cuts

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to departmental spending, without cutting welfare. They could even

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temporarily cut taxes. At this, those concerned about the UK's

:20:35.:20:41.

level of debt shake their head. absolutely would not delay, because

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delay costs, it costs you more money, particularly in debt

:20:45.:20:48.

interest payment, and also you get political uncertainty because

:20:48.:20:52.

everybody starts to wonder are you serious about this or not. All

:20:52.:20:56.

politicians in all parties, I think, should be focused on doing this as

:20:56.:21:00.

quickly as possible. All of this sound incredibly difficult for a

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Government to do one year ahead of a general election. The suspicion

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is they won't do it, they won't do a vast Comprehensive Spending

:21:09.:21:12.

Review, but instead hand out one- year spending pots, to tie

:21:12.:21:15.

departments over to the other side of the election. When they get to

:21:16.:21:19.

the other side, if this Government is elected, maybe they will chose

:21:19.:21:24.

to delay the whole thing. When you look at the numbers it is quite an

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attractive option. Our artist, Patrick Blower, and the

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IPPR, have tried to help you find forms and colour between the lines,

:21:33.:21:37.

in what is ominously a blank piece of paper.

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Now, it was Sweden today, and some fearless journalist in Denmark says

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it will be there tomorrow. The editors of celebrities magazines

:21:46.:21:49.

across Europe remain resolute, they will not be gagged by the threat of

:21:50.:21:53.

lawsuit. The public must be free to gawp at the breasts of the wife of

:21:53.:21:58.

the second in line to the British thrown throne. It is in the British

:21:58.:22:06.

interest, you see -- throne. It is in the British interest. When we

:22:06.:22:16.

have Magna Carta, Voltaire, ends with a huge lens pointed at the

:22:16.:22:23.

future Queen. I will talk to my guests in a minute.

:22:23.:22:27.

According to some reports this was William and Kate dancing to

:22:27.:22:32.

celebrate their victory in France. True, yesterday, a French court

:22:32.:22:37.

ordered Closer magazine to hand over all copies of the photographs

:22:37.:22:44.

within 24 hours or face punitive daily fines. The mood was buoyant.

:22:45.:22:49.

TRANSLATION: This is great result. This morning French police tried 0

:22:49.:22:54.

close in on the photographer, raiding Closer's offices for clues

:22:54.:23:00.

to his or her identity. Today a Swedish celebrity magazine, joined

:23:00.:23:03.

France, Ireland and Italy, in publishing the pictures, a Danish

:23:03.:23:11.

weekly also promises what it calls a 16-page spread, full of photos of

:23:11.:23:14.

England's future Queen, to be published tomorrow. In all this

:23:14.:23:17.

will bring the total number of countries to see these images on

:23:17.:23:24.

their news stands, to five. The royal decision to sue early in the

:23:24.:23:28.

public life of their marriage, has been viewed by many as an attempt

:23:28.:23:33.

to draw what is inevitably called a line in the sand, and prevent the

:23:33.:23:37.

level of press harassment experienced by William's mother,

:23:37.:23:42.

Diana. With this topless story following them around their Far

:23:42.:23:49.

East tour, has it backfired. We have the editor of the Swedish

:23:49.:23:55.

magazine, she's in Stockholm now. From Los Angeles we are joined by

:23:55.:23:59.

royal biographer, Andrew Morton. Would you be happy to have yours

:23:59.:24:04.

gawped at around the world? sorry, I didn't hear the question.

:24:04.:24:08.

What would you feel if somebody were to take photographs of you

:24:08.:24:13.

sunbathing top lesson holiday, in private, and publish them in

:24:13.:24:20.

magazines around the world? It is quite OK, because even as a private

:24:20.:24:27.

citizen you always rufpb the risk, because it has -- run the risking,

:24:27.:24:31.

it has been happening to people sunbathing and published in ads and

:24:31.:24:39.

so on. What is the public interest in publishing these? This is

:24:39.:24:47.

nothing unusual for our magazines here, because we write about

:24:47.:24:53.

relationships, amongst celebrities, and we have published pictures of

:24:53.:24:59.

Sienna Miller, Sharon Stone, et cetera, they have been more nude

:24:59.:25:07.

than Kate. It is nothing unusual. It may not be unusual, I'm just

:25:07.:25:14.

asking you what the public interest is? Because there was such a fuss

:25:14.:25:19.

about the pictures, even though they were very nice in the context.

:25:19.:25:25.

I mean it is photographs of a loving couple, who is married, it

:25:25.:25:28.

is nothing scandalous, they are not something adult rouse, or cheating

:25:28.:25:33.

or something like that. It is a married couple, it is a very nice

:25:33.:25:43.
:25:43.:25:44.

relationship, It is celebrities. They are not entitled to their

:25:44.:25:50.

privacy? Of course they are, but, I mean. Not according to you (under

:25:50.:25:53.

his breath) We report these pictures like any other pictures.

:25:53.:25:58.

How much did you pay for them? very much. How much? I can't tell

:25:58.:26:05.

you that. Why not? Because it is among. Because we don't disclose

:26:05.:26:10.

that because we have competitors that want to know what we pay for

:26:10.:26:16.

pictures and so on, so I can't tell you that. But it is not much, it is

:26:16.:26:24.

nothing amazing. It is just what we pay for other pictures of this kind.

:26:24.:26:29.

The invasion of other people's lives? Do you know who the

:26:29.:26:33.

photographer was? I can't tell you. Can you tell us the name of the

:26:33.:26:36.

photographer? No, I can't tell you anything about, that I have no

:26:36.:26:40.

comment about that issue, I'm sorry. Do you know who took them?

:26:40.:26:45.

bought them, like we buy any other pictures. We get an offer, and we

:26:46.:26:51.

say yes or no. In this case we said yes, because we think they are

:26:51.:26:56.

quite lovely pictures of the couple. You know they specifically asked

:26:56.:27:00.

for these photographs not to be published? We bought them on Friday

:27:00.:27:07.

the 14th. We are a weekly magazine, it takes some time to print it. We

:27:07.:27:16.

bought them on Friday the 14th of. Do you regret -- Friday the 14th.

:27:16.:27:20.

Do you regret publishing them? don't. You don't care they wanted

:27:20.:27:25.

to keep them private? That was after. We had already bought the

:27:25.:27:33.

pictures and done the work. We treat any celebrity, whether they

:27:33.:27:38.

are royal or they are actors or actresses or singers the same. We

:27:38.:27:44.

don't treat them any different if they are royal. So ...You Treat

:27:44.:27:50.

them with contempt? That is your opinion. You clearly don't respect

:27:50.:27:55.

their right to privacy. Andrew Morton, how much does this sort of

:27:55.:28:00.

event remind you of Diana's troubles with the media? I think

:28:00.:28:06.

the irony about this whole event, which has gone from a storm in a B-

:28:06.:28:13.

cup, to a storm in a DD-cup, if Diana and Charles in the early days

:28:13.:28:18.

of their marriage on a similar kind of holiday, you would have 20, 30

:28:18.:28:22.

photographers trying to get pictures. In a curious kind of way,

:28:22.:28:26.

Prince William is getting a fraction, a mere taste of what

:28:26.:28:31.

Diana went through in her life. Although he's clearly distressed by

:28:31.:28:41.

it. Yes, what you are seeing by Prince William is a genuine step

:28:41.:28:44.

change in the way they are handling it. They have used the Middleton

:28:45.:28:49.

family over the past few years as a kind of stacking horse with regards

:28:49.:28:54.

to privacy. Prince Charles in the past would standby the old royal

:28:54.:28:58.

motto, never complain, never explain. Prince William seems to be

:28:58.:29:02.

of a different generation. He believes that part of his life is

:29:02.:29:06.

private, and part of his is public, when it is public he's on display,

:29:06.:29:11.

when it is private there is a red line there. And he's prepared to go

:29:11.:29:16.

to court. That does seem to me to set a precedent. Is he going to be

:29:16.:29:19.

taking photographers, editors, magazines around the world to court

:29:19.:29:24.

for the next 60 years. But he's entitled to expect that if he's,

:29:24.:29:30.

the best part of a kilometer from any public position, that he is in

:29:30.:29:34.

private, and that privacy should be respected, isn't he entitled to

:29:34.:29:37.

respect that? Yes, of course, everybody is entitled to respect

:29:37.:29:43.

that. But it is a bit like the Harry thing as well. When you are a

:29:43.:29:48.

celebrity, and it doesn't matter if you are a Hollywood celebrity or a

:29:48.:29:58.
:29:58.:29:59.

British royal, you are never really private. So, in a sense, you are at

:29:59.:30:09.

the mercy of photographers. As far as William is concerned, he clearly

:30:09.:30:12.

is seeing this through the prism of his mother's experience of the

:30:12.:30:18.

media, which eventually, accidentally, was fatal. That is a

:30:18.:30:22.

difficult thing to live with, isn't it? Yeah, I think there is a huge

:30:22.:30:26.

overstatement in the public about what's been said about this. I

:30:26.:30:31.

doian that, as we all know, died as a result of a drunk driver, driving

:30:31.:30:37.

too fast in a built-up area. This is a long-range photograph taken of

:30:37.:30:41.

Kate Middleton taking her top off. I think that the reaction of

:30:41.:30:50.

William has been disproportionate, because it is ratchetted up the

:30:50.:30:56.

ante. And counter-productive? Ultimately yes. This has gone from

:30:56.:31:03.

being what was a small magazine in France, to being a worldwide could

:31:03.:31:08.

go flagellation and talking point - - conflagration and talking point,

:31:08.:31:13.

William is very different to his father, his father is what you call

:31:13.:31:18.

a Downton Abbey royal, a patrician, and aristocrat, believing his life

:31:18.:31:26.

is essentially lived in public, and Prince William seems more of an

:31:26.:31:31.

Archasica Avenue royal, who thinks he's leading a private life and

:31:31.:31:35.

from time to time dips in and out of the royal world. We are in a

:31:35.:31:39.

phoney war sort of state in the euro crisis, the basic problem, the

:31:39.:31:43.

bankruptcy of some incompetently or dishonestly run southern European

:31:43.:31:48.

states, is as bad as it ever of, but the European Central Bank's

:31:48.:31:55.

promise to stand behind them, seems to have stayed the hands of the

:31:55.:32:00.

gamblers who make-or-break national economies. But people in Germany

:32:00.:32:03.

have yet to be convinced that propping up these countries is a

:32:03.:32:09.

worthwhile spend of their taxes. Paul Mason, our answer to no sir

:32:09.:32:14.

tro dam mus is here. -- no sir dam mus is here.

:32:14.:32:19.

Tell us what is going on? If you can sort Spain out you sort the

:32:19.:32:21.

acute phase of the eurocrisis, everything the European Central

:32:21.:32:28.

Bank did over the summer was aimed at Spain. Just to recap, Mario

:32:28.:32:38.
:32:38.:32:51.

And? The effect, let's have a look. Here is the Spanish Stock Exchange.

:32:51.:32:56.

It falls by a third over the year. And as soon as Draghi speaks in

:32:56.:33:00.

July, not when he acts in September, when he speaks in July, there it is,

:33:00.:33:03.

it is back, it is significantly back up already. And now let as

:33:04.:33:08.

look at the all-important bond yield, this is what it costs Spain

:33:08.:33:12.

to borrow over ten years, it is rising as the panic rises towards

:33:13.:33:17.

July, Draghi speaks and down it has gone. This creates for the Spanish

:33:17.:33:20.

Government a bit of a dilemma, things are getting better, before

:33:20.:33:23.

they have done anything. And there is a temptation, with the Spanish

:33:23.:33:28.

Government, to do nothing. The only problem is, things are also falling

:33:29.:33:35.

apart. Tomorrow you will seal the boss of Catalonia, a major region,

:33:35.:33:38.

go and demand fiscal autonomy with Spain, he will call an election,

:33:38.:33:41.

and won't get it. We had disturbances on the streets tonight,

:33:41.:33:45.

and a huge demonstration at the weekend. I have been speaking to

:33:45.:33:48.

two veteran Spanish politicians, about how to get out of this

:33:48.:33:55.

impasse. For the railway workers who took over Madrid's main station

:33:55.:34:05.

this week, time is running out. 65 billion euros worth of cuts and tax

:34:05.:34:13.

increases are hitting wages and jobs hard. That is what brought

:34:13.:34:17.

more than 100,000 on to the streets last Saturday. But there is more

:34:17.:34:24.

austerity to come. Soon the Spanish Prime Minister,

:34:24.:34:28.

will be forced to take a bail out. The conditions are likely to be

:34:28.:34:31.

tougher still. It has become an article of faith in Spain that the

:34:31.:34:36.

country has to modernise and become competitive. But the closer you get

:34:36.:34:40.

to the politicians here, the more you realise how few of them are

:34:40.:34:44.

prepared to accept what that means, for them, their supporters, their

:34:44.:34:52.

party and system they have been running for the past ten years.

:34:52.:34:57.

So, is Europe really prepared to throw hundreds of billions of bail

:34:57.:34:59.

out cash at the political class that brought this country to its

:34:59.:35:04.

knees? One man who helped design modern

:35:04.:35:14.

Spain is former socialist Prime Minister, gone sal lays, he's --

:35:14.:35:19.

Gonzales, he's scathing about Mr Rajoy's Government. TRANSLATION:

:35:20.:35:23.

impression is the Government doesn't know what to do. It is not

:35:23.:35:27.

that it doesn't know what to do, it doesn't know what to do with the

:35:27.:35:31.

Spanish economy, nor does it know what role Europe should play.

:35:31.:35:38.

believes Spain should take a bail out, but based on the austerity

:35:38.:35:42.

plan, it should stop waiting and propose its own solution now.

:35:42.:35:47.

TRANSLATION: It has to be a Spanish proposal, this "proposal" from the

:35:47.:35:51.

Government, let's wait and see what the others are doing, is wrong,

:35:51.:35:54.

they should say this is my position and this is what we want and the

:35:54.:35:59.

answer will be either yes or no. All this year, Spanish politicians

:35:59.:36:04.

have had to live with the specter of social unrest. Last week one-

:36:04.:36:08.

and-a-half million Catalans took to the streets of Barcelona, demanding

:36:08.:36:15.

outride independence. The region, one of Spain's richest, is bust.

:36:15.:36:18.

TRANSLATION: People protest with good reason, they don't know where

:36:18.:36:24.

we are heading. Including the Catalan mobilise and the one in

:36:24.:36:26.

Madrid, nobody has a serious explanation of what the Government

:36:26.:36:29.

wants to do, except for what the Prime Minister says, we do what we

:36:29.:36:33.

have to do, even if we don't like it T you have to explain what you

:36:33.:36:43.

are doing and why. Spain's banks, part nationalised,

:36:43.:36:48.

are to be bailed out to the tune of 100 billion euro, with EU tax-

:36:48.:36:52.

payers' money. But it will be politically

:36:52.:36:56.

sensitive, tens of thousands of ordinary savers were encouraged to

:36:56.:37:01.

buy shares in the busted banks, and they could lose a lot. But the

:37:01.:37:04.

crucial question for Madrid remains the conditions on the sovereign

:37:04.:37:08.

bail out. Germany wants them tough, Spain's man on the European

:37:08.:37:13.

Commission begs to differ. I think more strict surveillance or

:37:13.:37:17.

monitoring, on how the different obligations and commitments are

:37:17.:37:22.

implemented, is always good. you don't think Spain needs any

:37:22.:37:26.

additional, substantive, austerity measures, imposed from outside?

:37:26.:37:30.

With the information available right now, I don't think so. I

:37:30.:37:35.

think what Spain needs is to regain confidence in the way those

:37:35.:37:40.

recommendations and those commitments have been implemented.

:37:40.:37:46.

Even as Spain waits, and protests, the pro-euro political class sees

:37:46.:37:49.

this as a moment to go forward. There have been strong calls out of

:37:49.:37:53.

Brussels for a rapid move to fiscal union, political union, and calls

:37:53.:38:01.

here in Britain for a referendum. Which he does not agree. What we

:38:01.:38:05.

need is to see how the European Parliament and the European

:38:05.:38:10.

Commission, that we are accountable before the European Parliament, we

:38:10.:38:15.

show the citizens that our decision, our strategies, our discussions,

:38:15.:38:19.

are as democratic and as transparent and understandable as

:38:19.:38:23.

the ones that are taking place in the national parliament. What does

:38:23.:38:28.

that, I'm not sure what that means does that mean there will be a

:38:28.:38:34.

referendum? I'm in favour of a parliamentary democracy. I think

:38:34.:38:38.

this democratic election, in 2014, the European Parliament election in

:38:38.:38:44.

less than two years, is a very, very important day for all the

:38:44.:38:48.

Europeans, because there the majority of the representive of the

:38:48.:38:52.

people that will be sitting there, will be those who will have in

:38:52.:38:59.

their hand most of the most important decisions for our future.

:38:59.:39:03.

These are the massive stake, solve the Spanish crisis, and for some,

:39:03.:39:07.

it is fast forward, to political and fiscal union. But few expect

:39:07.:39:12.

the coming bail out to be welcomed by Spain's people, and if Spain

:39:12.:39:18.

does get the bail out demanded by the senior politician, will Germany,

:39:18.:39:23.

so vilified here, buy it? Here to discuss this we have the

:39:23.:39:31.

chairman of business for New Europe, the UK Independence Party MEP, and

:39:31.:39:35.

the Pref fesor of economics and strategy at the LSE. -- Professor

:39:35.:39:41.

of economics and Strategy at the LSE. Would you say it appears the

:39:41.:39:45.

strategy appears to be working? does, it is an extraordinary

:39:45.:39:49.

decision by Mario Draghi to say he would do whatever it take,

:39:49.:39:52.

including buying bonds. It was a brave decision and the Governments

:39:52.:39:57.

have to ask for it. Even though some things he's doing is right, he

:39:57.:40:03.

needs a greater sense of urgency. One thing is asking right now for

:40:03.:40:08.

the bail out that is needed. Can it last? I don't think so, it is a

:40:08.:40:11.

short-term solution, in the end, when the conditions for this bail

:40:11.:40:16.

out are laid out, the Spanish Government will have to face

:40:16.:40:21.

reality. And the people will react to this. I don't think this will

:40:21.:40:26.

solve the problem. I think the European Union is part of the

:40:26.:40:33.

problem. And the European Union is not going to bring the solution for

:40:33.:40:38.

this situation. I think you know, they need to think differently.

:40:38.:40:43.

Just before we talk about Spain, the Germans, the head of the

:40:43.:40:46.

Bundesbank was saying the other day that this was like something out of

:40:46.:40:51.

Faust, they are really, really worried, aren't they? And rightly

:40:51.:40:55.

so? They are of two mind, this solution allows them not to

:40:55.:40:59.

actually pay, but to find another way to pay. As long as the bluff

:40:59.:41:04.

works? I mean the problem is, exactly, if you are not supporting

:41:04.:41:08.

the solution, it is not really credible, and in the end it might

:41:08.:41:13.

fall apart. For it to work it needs real strong support, and for people

:41:13.:41:18.

to believe these can be implement. Is there a logical inconsistentcy

:41:18.:41:23.

in all of this, how can you say you will do whatever it take, to keep

:41:23.:41:27.

every country within the euro, and at the same time say, there are

:41:27.:41:31.

going to be conditions for any kind of bail out? You are right in the

:41:31.:41:34.

sense of who is actually going to blink first, that is going to be

:41:34.:41:38.

one of the big things in the whole of this bail out, but I think Mario

:41:38.:41:43.

Draghi has made very clear, it is irreversible, once ask you for the

:41:43.:41:47.

help, you get the help, you will have to embark on the structural

:41:47.:41:50.

reform. The sense of momentum will take the countries through that,

:41:50.:41:54.

and it will be helpful. You are seeing the structural reform

:41:54.:41:58.

actually happening already in Spain and in Greece, we need more of it

:41:58.:42:02.

and with a sense of urgency. Do you get the feeling the Spanish will

:42:02.:42:05.

accept the conditions? Government is hesitating to long.

:42:05.:42:09.

They really need to step forward and ask. It is better to ask now

:42:09.:42:13.

when the situation is relatively calm, than to wait for the next

:42:13.:42:16.

panic and suddenly on Friday night say you are desperate. Then the

:42:16.:42:20.

Dutch and Germans will come piling on with extra condition. That is

:42:20.:42:25.

what happened with the bank rescue. The bank rescue was supposed to be

:42:25.:42:31.

just that. It is about printing money, to sort out the situation.

:42:31.:42:37.

And to keep the eurozone going. It would be much better to allow these

:42:37.:42:43.

countries that do not really have the economies at the level they

:42:43.:42:50.

should be, to allow them to leave the eurozone, and the value and

:42:50.:42:53.

default. They won't leave the eurozone, they don't want to.

:42:53.:42:58.

don't want to leave. Printing money for the UK and the US they have

:42:58.:43:03.

been doing that. When the euro of introduced, the Spanish people were

:43:03.:43:10.

mad, because a coffee of worth one pesata, the following day it was

:43:10.:43:20.
:43:20.:43:20.

worth one euro. That is a very cheap coffee? 100 pesetas, the

:43:20.:43:29.

following day it was 166pesetass, the people weren't happy, then the

:43:29.:43:34.

European comes in and injects the funding, but it was short-term.

:43:34.:43:38.

the moment you think Spain would be better off out of the euro? I think

:43:38.:43:44.

that not only Spain, not only Spain, but you know, many of the countries

:43:44.:43:49.

in the southern part of Europe, that do not have the level. What

:43:49.:43:54.

about the alternative being canvased, which is this fast

:43:54.:43:58.

progress towards fiscal union and all sorts of other institutions

:43:58.:44:02.

which make it impossible for that sort of thing to happen? The key

:44:02.:44:06.

thing is the banking union, basically what has been happening

:44:06.:44:10.

is this vicious look between the banks of the country get weak, then

:44:10.:44:15.

the state, back the banks, gets also weakened. Or indeed the other

:44:15.:44:20.

way round. You can't have a bad Government pulling down a good bank

:44:20.:44:28.

or visa versa. With fiscal union you only need a minimum amount of

:44:28.:44:35.

fiscal union to get through. You don't need eurobonds and that.

:44:35.:44:42.

essence of the banking union is a European deposit insurance. And you

:44:42.:44:46.

are playing regulator and resolution authority. It is deposit

:44:46.:44:49.

insurance, this has not been agreed by Germany, I don't think that

:44:49.:44:55.

Germany is ever going it agree to this deposit insurance. This

:44:55.:45:00.

banking union is a treem of Mr Barroso, that's all -- a dream of

:45:00.:45:06.

Mr Barroso, that is all. I'm afraid that is not it. Talking about

:45:06.:45:09.

dreams among the European political class, the difficulty is when they

:45:09.:45:15.

choose to act them out? Exactly. They come up and the commission has

:45:15.:45:19.

been drawing policies and proposals for the last decade. They have

:45:19.:45:24.

injected money and it money has been wasted. Things that two weeks

:45:24.:45:34.

ago. Nothing has happened. Things that two years ago would have been

:45:34.:45:38.

considered unconceivable have happened. This is acting like any

:45:38.:45:42.

grown-up Central Bank. He saved a crisis, we would have had a huge

:45:42.:45:47.

financial crisis in July if he hadn't done that. He has postponed

:45:47.:45:52.

the cry he is.S That is the key point. Has he postponed the crisis,

:45:52.:45:55.

and mixed it, flattened it? because you can already see big

:45:55.:46:00.

changes in Spain, there have been proper labour reform. No way.

:46:00.:46:03.

there are. There are greater variations of pay in Spain. The

:46:03.:46:07.

fact is he needs to do more, and the best thing to do is ask for the

:46:07.:46:13.

help so it can happen now. comparison between the UK and Spain

:46:13.:46:18.

is very useful. The UK had the worst problem in the financial

:46:18.:46:22.

sector, the reason the financial sector didn't drag the state, is

:46:22.:46:27.

you have the a Central Bank that can back the state with pounds.

:46:27.:46:37.
:46:37.:46:37.

Spain doesn't have that, the state is being dragged down by the

:46:37.:46:42.

financial sector. In the UK we had an effective bail out of the banks

:46:42.:46:45.

done with recapitalisation. In Spain you have had had four

:46:45.:46:49.

attempts, that is why you need the European Stability Mechanism, where

:46:49.:46:54.

actually you get an independent institution that actually

:46:54.:46:58.

recapitalises a bank, not going through the nation. That is wrong,

:46:58.:47:02.

it should be closed down. I want you to ask you a simple and trivial

:47:02.:47:07.

question, these two clearly think this is going to work, what is your

:47:07.:47:09.

prediction for, well you have reservations, but a lot of things

:47:09.:47:15.

need to be done. I'm an optimist. What is your prediction for 18

:47:15.:47:19.

months time, how many countries will still be in the euro? I think

:47:19.:47:25.

know, I know the EU from the bottom of my heart, so I know that they

:47:25.:47:29.

will drag on and on and on. They will drag on.S What the

:47:29.:47:35.

answer? The answer is, that I think Greece is going to leave in the

:47:35.:47:43.

near future. We are down to 16, and then? Spain will follow. Spain will

:47:43.:47:46.

take some time, Spain will be the end of the eurozone. If Spain

:47:46.:47:53.

leaves it will be the end of the eurozone. And I am sure. No such

:47:53.:47:56.

look luck. We will have all 17 this. The commission will do all it can

:47:56.:48:00.

to save it. That is all from Newsnight tonight, more tomorrow,

:48:00.:48:10.
:48:10.:48:14.

until then, gie good night. -- good Hello, there was plenty of

:48:14.:48:17.

Hello, there was plenty of September sunshine around today.

:48:17.:48:20.

Much less tomorrow. We will see some rain across that central slice

:48:20.:48:24.

of the UK. Quite a wet day for northern England, southern Scotland

:48:24.:48:29.

and Northern Ireland. Chilly too, 11 in the castle. Further south the

:48:29.:48:33.

temperatures are higher, some breaking through now and again

:48:33.:48:37.

across southern counties of London. It will feel reasonably pleasant

:48:37.:48:41.

when the sun comes through. The winds fairly light as well. A fine

:48:41.:48:45.

afternoon across south-west England, across most places in Wales, a fair

:48:45.:48:51.

bit of cloud. North Wales still prone to patchy

:48:51.:48:53.

light rain. Northern Ireland the rain may ease for a time, it is

:48:53.:48:57.

likely to come back in again through the afternoon, turning

:48:57.:49:04.

fairly heavy at times. The rain assisting across the central belt

:49:04.:49:07.

of Scotland. Scotland at the sidedly on the low side, 10-11 or

:49:07.:49:14.

best. Brightening up through Friday. It

:49:14.:49:17.

goes the other way for southern part. Generally dry for Thursday,

:49:17.:49:21.

the rain moving in, as we go into Friday. The weather front that has

:49:21.:49:25.

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