05/06/2013 Newsnight

What goes up must come down. They claim. Except in the case of house

prices, in an economy virtually on life support why does the

Government think it is so important the housing market keeps on rising?

So is the Chancellor's help to buy scheme moronic, as one expert put

it today, we do a bit of economics 101.

We will discuss what is so special about this market that makes it

worth manipulating. This Afghan man risked his life for

Britain as an interpreter, now he's in Germany as an illegal immigrant.

I'm not free. I have no freedom and I have no life. Our political

editor has news on what Ed Miliband will say Labour's going to do about

the welfare system. And we're in Turkey again, not with the liberals

protesting against the Prime Minister, tonight we hear from the

people who put him in power and want him to stay there for as long

as humanely possible. Sitting comfortably, feeling your

house increasing in value while you watch television. Six middle-aged

people in ten in the south-east has assets worth more than half a

million pounds, the biggest chunk is their house. It is not the same

across the country and there are areas across the country. In some

places house prices have more or less nothing to do with what people

get in exchange for their labour. Yet Britain's politicians seem to

have decided that owning property is a good thing in itself, they

want to make it easier. The latest initiative stpor the taxpayer to

help people with their -- is for the taxpayer to help people with

their mortgages. What that really means is the taxpayer is

contributing to a housing bubble. Every day someone else piles in to

criticise George Osborne's help to buy scheme. Today it's Albert

Edwards, the head of global strategy at Societe Generale, who

calls it a "moronic policy", he joins a growing number of others

including the Governor of the Bank of England, the IMF and the Office

for Budget Responsibility who have all, in more polite terms,

questioned the wisdom of the scheme. When the Government starts to lend

people money who can't get money on commercial terms, this really is

very dangerous. It is pumping money into a housing market where prices

are already very high relative to earnings. Firstly, and secondly it

is actually exposing the taxpayer to tremendous risks as well. What

is the problem? To answer that we have to look at what's happened to

the relationship between housing demand and housing supply. It is

worth rembering that when economists talk about demand they

are not just talking about want. We all "want" a five-bedroom house in

the centre of London with a pool in the basement. The question is do we

have the money to pay for it, if we can't afford it can we get someone

to lend us the money. That is where the banks came in. These days they

are a little less enthusiastic. At the moment banks are requiring

borrowers to put more of their own money into a house purchase,

typically a 20% deposit, that is the bank's insurance policy. The

price of the house would have to fall 20% before the bank loses any

money. Many buyers, even though they are happy to take on the debt

can't come up with such a large deposit. Now obviously there are

two things that could happen at this point to help achieve a sale.

The first is, and obviously what the buyer would prefer is that the

seller drops their price a bit. Now the seller would rather the buyer

magically found some extra cash from some other source. Well with

help Help to Buy that is the taxpayer who helps lend the money

to fill the gap. Under the scheme the buyer would stump up 5% and the

bank stumping up 90%, and in this way the taxpayer will guarantee 20%

of the loan. The Help will help thoughs denied the chance to buy

their first home to buy their first home. In a market where first time

buyers have been denied that chance for five years, it is important to

give them a boost to allow them achieve their ambitions to become

homeowners. But the scheme isn't so much aimed at helping buyers first

time or otherwise as helping the housing market. One minister is

quoted as saying the intention is to create a building boom, and he

"couldn't care less who owns the bloody things". As it stands the

Government hasn't ruled out the scheme to those buying second homes.

Nor in the Commons today did the Prime Minister rule out helping

foreign buyers. Will British tax- payers' money be used to fund the

mortgages of foreign citizens who buy property here. The Chancellor

will set out details in this in the announcements he plans to make.

critics say that those struggling to get on the housing ladder would

be better served by the Government letting prices fall, not

intervening to help them borrow more money. It is very difficult

for a Conservative Government both to allow house prices to fall

naturally, but also to liberalise planning, given the sorts of areas

that the coalition Government MPs represent. But actually if we are

going to resolve the housing crisis in the UK what we need to do is

liberalise supply. Critics say the result of this Government activity

is to maintain house prices at a higher rate than the market would

otherwise set. That obviously suits the people who build houses. The

Government wants them to build more. But, could we be inflating another

bubble? The figures show that house prices are still at historically

high levels in terms of income. And, the latest numbers for housing

starts and mortgage lending are both up too, but still at

historically low levels. I am not worried at all about an inflation

bubble. At the moment the market is about half what it should be in

transactions and prices are being stagnating. This is not adding fuel

to a fire, this is really giving a smoldering fire a little poke to

keep it going. We already have a bubble in house prices which has

never really properly deflated. This bubble is caused by

restrictions on supply, it is the restrictions on supply that need to

be tackled, not simply pumping more air into the balloon. This kind of

housing market intervention of course doesn't have an entirely

glorious his he troo. It was the US Government helping people buy

houses who wouldn't otherwise afford them that was one of the

causes of the sub-prime crash. One of the problems is Governments find

it very easy to get into the mortgage business, far harder to

get out. Jake Berry is a Conservative MP who spent time as

parliamentary secretary to the Housing Minister and is now part of

the Prime Minister's policy unit. Stuart Baisley is the executive

chairman of the home builders association, representing most of

those building new houses in this country. Nicola Horlick is a

business woman who runs her own investment fund. What is it about

the housing market that makes it legitimate to rig that market but

not others? We are not talking about rigging the market. We are

saying that we as a Government are absolutely determined to back hard

working families who want to buy their first home, or move that up

that property ladder. It is not about rigging a market. It is

ensuring they get an affordable mortgage. You are interfering in

the market. You are interfering in the market. I think it is frankly

all very well for people sat around the table who already own their own

home. Are you saying people should save up for 15 years. I'm not

saying anything, I'm trying to get to the facts, you are intervening

in this market in a way you think it is illegitimate to interfere. If

you tried to fix, for example, something that is going on in

banking that is illegitimate, is it not. This market you think it is OK

to start rigging? In banking the Government has the Funding for

Lending Scheme, which is about increasing lending to businesses,

in housing we are doing something very similar. It is enabling people

with a small deposit to get an affordable mortgage. Actually we

are not talking about going back to ridik125% mortgage as in the last

market. It is the principle of fixing the market, do you think

this is an intervention in the market? I do, I think the result

will be that house prices will rise and I think houses are too

expensive in this country and too big a proportion of people's income

is taken up by housing. It is reflected in the rental sector as

well. If you have capital prices rising then wreoints go up. -- Then

rents go up. You have to have a degree of sympathy, people can't

afford to get into the market, this is a good thing isn't it? I don't

think it is a good thing if house prices go up. It means for the next

generation too much of their income will be taken up in housing costs.

The overall cost of this is huge, it is �3.5 billion. Whilst I agree

it is good to inject money into the economy, I would much rather than

money was spent on building hospitals and schools rather than

more houses. We are actually talking about the next generation

because it is about helping first time buyers to take the first step

on the ladder. Not everyone has the ability to go and take money from

the bank of mum and dad to come up with that big deposit. If people

are financially stable and can afford the mortgage and save a 5%

deposit they should be able to buy their own home. The problem with

these types of schemes is someone will come along and reverse the

policy and the prop is taken away and those people may find a

negative equity when prices go down again. Can I clarify a point of

fact, this is only for first time buyers is it? No, but it does

enable first time buyers to enter the market. We don't know if it is

only for British people, do we? Labour Party has made great play of

saying this will enable foreign nationals to buy property, it with

huge loo complicated EU rules around this, the -- hugely

complicated EU rules on this and the Government is working to make

sure they don't get the benefit of the guarantee. You have introduced

a policy and you are not sure whether under the policy a Romanian

plumber will be able to move to this country with his family and

get tax-payers' money? This policy isn't about Romanian plumbers, it

is not hoards of people waiting to make money out of the property

market. This is about people buying their own people, people in areas

like I represent in Lancashire, want to go buy their own home, not

as a money-making exercise but a safe place to bring their family

out. You don't know what will happen with those people, you have

just said so? The Labour Party removed the nationality

qualification from all Government housing policy, we are looking at

closing the loopholes. You love this, because it is the taxpayer

giving you money? We like the scheme. We have been talking to the

Government for schemes like this. Of course you do, it is money for

free? We have to put it in the context that we are in a major

housing crisis and it has been building for the best part of 20

years. It is not just a function of the economic recession. What has

happened in the economic recession over the last five years one of the

casualties has been the people who normally would have borrowed beyond

to 85-95% of their first purchase or purchase of the home have been

unable to access the mortgage market in a way that historically

has been the case. The scheme that the Government have introduced,

first of all you have to separate it into two sections. At the moment

we have an equity loan part of the scheme, that came in on the 1st

April, it got off to a good start. It is building on schemes that have

been around for a while, which have been jointly funded by the house

building industry and now the Government alone. The second wider

part of the scheme which comes in next January is the mortgage

guarantee piece. If you go back in time, when we bought our first home

mortgage insurance guarantee policies were absolutely the norm.

It was impossible to get a mortgage beyond 80% without such a thing.

Paid for by the taxpayer? No paid for by the private sector. Does

this work if the market does what you clearly want it to do which is

to not keep roaring away making houses more expensive? One of the

reasons we have had problems with the housing market is the lack of

supply which is partly to do with our planning laws, one of the

things the Government could have chosen to do rather than doing what

they are doing, which I think will fuel house prices further would

have been to relax those planning laws and make more land available.

They have done some? A little bit and they have backtracked on some

of the things they were going to do. They were going to say people could

build extensions without planning permission, that isn't going to

happen. That doesn't relate to new homes, we have seen an 20% increase

in the number of planning permissions given. Developers don't

apply for planning permission and don't build houses unless people

can get the cash to buy them. At the moment we have a situation

where people have to come up with �20-�30,000 as a deposit. That is

clearly unsustainable. We have to find a way to enable people who

can't afford to get a reasonable mortgage. Why is it necessary for

people to own their own homes. The point was made in America it all

went horribly wrong and there were towns like Detroit, which were

completely decimated as a result. Give a straight answer to the first

question there, why is it so important that people own their own

homes? I don't think it is important whether people own their

own homes or not. It should be up to people if they want to do so,

they should be free to do so, the Government should support them. I

own my own home, I want to be part of that British dream that says I

can own my own house and pay the mortgage off, I can pass it on to

my children. Lots of other people do too, if you want that the

Government will support you. As far as you are concerned in the

industry, you mentioned that there used to be a differently funded

arrangements, not by the taxpayer. As far as you are concerned now,

trying to look forward, once we have started on this sort of

interference in the market we have to continue with it don't we?

have to continue with it at least for the next three years. And after

that? It depends whether insurance companies step back into that space

and are prepared to underwrite mortgages or whether lenders are

prepared to lend higher loan-to- value mortgages as well. That

depends on the macro-economic situation and how the economy

recovers. This only works if house prices keep on going up? I think

the problem is if you stop the scheme and you don't have

circumstances where the lenders are suddenly going to be more lenient

then you will find that prices will go down when the prop is removed.

People will feel conned. They have been lured into buying a house and

suddenly the value has gone down, it is a dangerous strategy. Then

you are in American sub-prime territory? Sub-prime is very

different. We are not talking about irresponsible lending, at least we

are not talking about that. We have to put this in the context of

getting realistic a little about the state of the housing market in

this country. We are only building roughly half the homes we need. We

have five million people on social housing waiting lists, 1.8 million

families the length and breath of the land. Do you think house prices

will always rise? I don't think that at all. Do you think they

should? The evidence over the past four or five years not that. I

don't think people should buy a house with an intention of making a

profit out of the house. As a country we have a duty, in my

opinion, to find a way of providing homes for people whatever the

tenure of the home will be, for rent or purchase, and people should

buy the home as a long-term strategy of somewhere to live, not

something to make a short-term profit out of. Are we going into a

bubble here? Potentially. Part low at the hands of the Government?

Potentionally we could be. I think that potential could be tempered of

course by the real reforms we have seen of the planning system, which

will increase supply. Also that we have seen Government land come

forward, public land, which is available for building on. I think

once those reforms really start to come through the system we will see

many more development opportunities being started and being built by

developer. A good few "thinks" and coulds" in what you have said --

"coulds" in what you have said there? I think the Government has

fixed the supply side, ensuring planning permission for developers

and land to build on and ensuring there is planning to build the

houses. We need end users to buy the houses. This is also about

helping to rebuild the economy. Every home that is built creates

jobs, jobs leads to taxes and hopefully helps with the economic

recovery. That money could have gone into commercial building. We

could have build more schools and hospitals. �3.5 billion is an awful

lot of money to be injecting into the housing market at this point.

I'm not suggesting we should do this, I sound like a spokesman for

the Conservative Party which I'm really not. I think in this context

the Government is to be applauded, for once there is joined-up

thinking here. Of course you like this, you are being given tax-

payers' money. You have to look at it alongside the planning reforms

which hopefully will sort out the supply side, adding on the private

rented sector initiatives, that is another big area we need to get

right. More money for affordable housing and the get Britain

building. Do you think we are in a bubble? I don't, or in any danger

of going into a bubble in the short-term. We are dealing with a

very moriand housing market. We are returning to business as usual,

with reasonable loans at reasonable rates. We have had five years where

we saw prices drop 20% in some regions, while it helps with some

prices we can't afford to keep going like that. British combat

forces will leave Afghanistan next year. The Prime Minister has told

us that Britain will honour the debt it owes to the Afghans who

risked their lives by working as translators for us there, by

allowing them to come to Britain too. There is a catch the welcome

and benefits now apply to those only to those working since 2012,

others have to fend for themselves. The story you are about to hear is

the tale of a man who had the misfortune not to meet David

Cameron's deadline and his work has brought death to his family.

In the seven years since British troops entered Helmand, the

fighting has been unrelenting. The risks high. Ambush, attack,

sniper fire, and the roadside bombs that have killed and injured so

many British troops and Afghan civilians. Every step of the way on

every patrol the troops go out on is an Afghan interpreter, a Pashtu

speaker who takes the same risks on the frontlines and the even greater

risk of being labelled a collaborator. In September 2008 I

joined British troops in the town of Gamsir, at a dangerous satellite

base that had come under repeated attack. One of their translators

was called Barri Shams, or Bari to the troops. He was popular, and

regularly risked his life and treated a soldier hit by schrapnal.

His commanding officer commended him. Today his life is very

different. This is the accommodation provided by the

German Government. Yeah. The former Major James Driscoll found Barri

where he has been for two years, in a German immigration camp. How many

people share this kitchen? 100? voice on the video recording is his

former Major in Helmand, James Driscoll, he visited Barri where he

has lived for more than two years, in a German immigration camp. He

lives here with some of his brothers and immigrants from all

over the world. He managed to contact the commander to tell him

what happened in Helmand and afterwards. James Driscoll went to

record that story. My family got warnings from the local, from the

Taliban, I can say. They were saying your son is not supposed to

work with the infidel. And then they gave warnings straight to my

father in the mosque. Then my father was giving a straight answer,

he said my son is doing a good job. If he's working with the coalition

forces they are coming here to build our country, to build our

homeland. I'm proud of my son. And then the next two days, early in

the morning my family heard the shots and when they went outside

they saw his dead body. Whose body? My father's dead body, they shot my

father. My mother was telling me if I was her son I have to get out

from here. I have to get out from here. My mother was pushing me to

go away, go away. Anywhere you want to go, go away. You are in trouble.

They will kill you, they will kill you. He also paid an agent to

illegally transport him to Europe. In Greece he was given a fake

passport. But when he arrived at Munich airport he was arrested. Now

he and his brother are in limbo. His application for asylum in

Germany has been rejected, he can't travel to Britain, and it is too

dangerous for him to go home. go back to Afghanistan everybody

knows in my village. I have no family there, where do I go? Where

do I go? If I go there I have no family. Or the second, if they can

kill my father they can kill my brother, they can kill me as well.

It is a long way from the feeling he had when he was with British

troops. We were like a family. They took care of me. I had no weapons

during the mission, during the patrols, but always I had good

friends that they were telling me we are with you, we are like family.

I'm young and I can work and without work I have no life. I want

to be like others. I want have freedom. Do you not feel free at

the moment? No, I can feel myself not free, I'm not free. I have no

freedom and I have no life. We only know about this case because he was

lucky enough to find the e-mail address of his former commander.

And although he's now left the army, James Driscoll felt responsible for

the translator who had taken so many risks to help his men. And

even on one occasion had helped save the life of one of his

Sergeants. A lot of the interpreters become more than work

colleagues they become friends to the British troops they work with.

They spend hours moving around on patrol, invariably a close bond is

built between the British soldiers and interpreters. To see him in

that situation is akin to seeing one of your own soldiers, one of

your friends in that situation. And I think not just myself, but anyone

who knew him would desperately want to help him. The MoD told us it

operates a programme to address intimidation, which applies to all

local employees who serve with British forces at any time during

the operation for any duration. And can include, in extreme cases, the

option of relocation to the UK. But critics say the bulk of help will

only go to those Afghans still working for Britain as late as last

December. And excludes hundreds of interpreters. Sadly the package is

half-baked, it says hundreds of Afghans risking their lives working

shoulder-to-shoulder with the British forces, and some of them

can't, depending on an arbitary date cut off by Whitehall. Barri

Shams lost it all trying to flee and has lost much more besides.

you feel angry at the British Army for this situation? It is a

question that sometimes yeah. But all I can say, no, I'm not angry

from the British Government. I'm stuck in Germany. I'm stuck in

Germany, I want to go to the UK. If I was there, if they would not give

me a response or this freedom, in that time, yeah, but now I only

hope I have that the British Government will take me out from

this situation. Well now, forget Plan B, the Labour

Party is about to announce it will cap this country's massive social

security bill. It is expected Ed Miliband will admit tomorrow that

the public's faith in the system has been shaken and he will claim

his party can fix it. In so doing he will accept austerity targets

while claiming his party has better ideas about what to do with the

money there is. The talk of iron discipline earlier this week will

be replaced with stuff about having a "laser" focus. We What will he

say? The man behind your head, Ed Miliband, there is three of him

actually. In the 90s he was the man who before Gordon Brown brought

over from the states the idea of tax credits. He's central to what's

been a huge part of the ballooning welfare budget over the last few

years or decades. He will tomorrow say if Labour came into Government

they would cap that every three years you would see, is this rising

too much, tax credits, housing benefits, other elements of the

welfare budget that have so far been cut by this budget, without a

limit placed on them. He would say they would say it is ballooning too

much and they are not happy with it. There will be a cap? There will be

a cap. What is happening, a lot of politics and a lot of policy, that

is why it is rather interesting. The politics is that actually he's

not the first to say he would like to do this. The politics is that

the coalition has said in their budget that actually they would be

bringing forward something rather similar. What they are trying to do

and have successfully so far been doing is boxed Labour into a corner

where they are not the Labour Party they are the welfare party, David

Cameron says it all the time. So they are happy with welfare

spending, they have had previous policies the coalition supported

brought forward and Labour have happily, they have been very

worried about packing them, so Cameron et al have been able to say

you are too soft on welfare. Tomorrow the speech is intended and

will show that actually they are toughening up on this stuff. It

will upset a lot in their own party. So there will be a cap and some

other mechanism for spending the welfare? How do you bring this down

if you do not want to be the nasty Coalition cutting stuff. The way

you do it, according to his speech tomorrow, I promised I wouldn't

mention the word "predistribution" I have done it. With housing

benefit this is a huge part of why it is going up. What do they do,

they will build more houses, ip ceasing supply so rent would go

down -- increasing supply so rent would go down. I see your face,

with tax credits how do you bring down that bill? The way you bring

it down is say to companies we will give awe tax rate if you pay more

to people in their salaries in the first place, there by meaning

people don't need to have as much of their salary burp bumped up. The

question will be tomorrow if you don't manage to bring in these

reforms, building more houses, does it turn around very quickly? I

think the jury would turn around quickly would it come out within

three years. If you don't manage to do that, would you cut to meet your

cap or get rid of your cap? We will find out doubtless tomorrow.

We have a Treasury Minister in the last Government, we have the head

of the think-tank The Centre for Social Justice. How big a deal is

this? It is a very big moment. Several things going on at once.

First, an enormous amount of policy, when many people have criticised

the Labour Party for not want to go do policy at the moment. A very

symbolic line in the sand about being physically prudent, not

spending what we -- fiscally prudent, not spending what we don't

have. And a lot of exciting work around welfare reform, heading off

the fact that the Government was going to do something themselves at

the Spending Review in a few weeks time. How big a deal is it?

Labour it is a really big deal, for the rest of the country and the

wider community this has been discussed for quite some time. The

concept of the dreaded predistribution is a wonky way of

saying prevention is better than cure. That is what most people,

including myself have been rabbiting on for a number of years.

It is big for Labour, I can see why it is a key moment for them

tomorrow. I think they are catching up, the train is leaving the

station and they are trying to get on it. Let's look at the cap. If

you don't meet the cap what happens? We don't know. But...It

not really a cap. It is inflexible a cap? What seems to be happening

is there will be some kind of target for what nerds call the AME

budget, which includes social security. The key word you have

used just now is "target". It is a target, it is not a cap? I'm not

the Government. But it is some kind of limit. Anyone who thinks about

this realises if it is a cap there comes a point where you have spent

the welfare and you can't give people any. That is a gap. A target

is, "this is what we would like to do". Don't take my words, if they

say cap tomorrow they mean cap. The point I was trying to make is that

it is a very large budget. You can do a lot within that and still stay

within the cap. There is an enormous scope for policy

intervention. The cap of something the Chancellor talked about in his

budget recently. Again it is actually probably close to

unworkable if you do it in a serious way. Labour tomorrow will

be saying we will deliver serious savings. This cap can't be a

meaningless figure. They will have to set something ambitious and work

within it. That again is a fairly new concept for Labour. The rest of

the country thinks we spend too much on welfare. Things like tax

credits and housing benefit have been chasing the targets. What is

wrong with the system at the moment is we pick up the pieces of poverty

and chase the symptoms. If Labour today and tomorrow will say we will

deal with the root causes of poverty then great but that is not

new. Wonderous that nobody has thought of it before, that you

solve the benefit problem by creating more employment,

brilliant! Also big problems like housing benefit inflation, it is

not new. The howing benefit -- housing benefit one is exciting,

from what I understand they are talking about they are planning to

enable local authorities to cap rents, in effect, by giving them

various powers to work with existing landlords, at the moment

what happens particularly in high property price areas is you have

substandard housing that is very expensive that the taxpayer pays

for people to live in so they are not incentivised to work because

they face a huge poverty trap. The people who win are the landlords.

Any kind of shift there is, that is an enormous shift in policy. People

will see that Labour has some interesting plans for the long-term

challenge. That is an important contribution. But they have, I

think, rightly or wrongly taken a judgment of opposing most of the

welfare reforms that cut the budget now. They want jam today and jam

tomorrow without the pain of now, which is having to take place. They

sort of think that the Welfare Bill will come down natural he lot.

Under the previous Labour Government when growth was flowing

through the economy and jobs were being created the welfare budget

went up 40%. That is what you want is growth, but Welfare Bills rise?

The coalition Government has said they will project the "automatic

stablisers" please let me finish, it will be worth it. Do you have

to! The unemployment benefit going up when the economy shrinks, it is

actually a tiny proportion of the social security budget. So there

are other things going on that need to be addressed. It was a genuine

inquiry, I mean if the argument is that you reduce the benefit bill by

increasing employment which demands growth in the economy, when you had

growth in the economy when you were in Government the Welfare Bill went

up? Because there is an underlying problem to do with the way the

economy functioning, particularly for people not working. That is a

structural problem that needs to be addressed by all parties. The

Labour Party seems to be saying that they are prepared to get to

the human family side of what is going on and take away problems

that are stopping people going to work if they are elderly and only

want to work part-time, or they have young children and want to

access the labour market in a different way or had disincentives

to work. So what is exciting about this, I think, is that it is

actually starting to talk the language of people, rather than

talking simply about cuts or macro- economics. You are not talking the

language of people tonight, I will tell you that for free! One point

on the living wage which is a key way they will say they will bring

low pay up to scratch. The living wage, even the people who designed

it say it is an opt-in scheme. Again this is a real punt in terms

of business. Can you explain what that means, an opt-in scheme for

the living wage? You can't legislation for all companies to

use the living wage not the minimum wage. There is a thought that if

you introduce it tomorrow jobs will be. I like the idea it is still

optional, and they have to get around that. The living wage is the

weakest thing of what is being talked about. They are saying the

Government would give some kind of grant to a business. It is a tax

credit in a different form. Tifg it to the company rather than the

individual. It is great if companies with pay the living wage,

I'm not sure that is about structural reform. So that's not

the most important part of what they are doing. The important part

of what they are doing is reforming housing benefit, which rises and

rises and rises, and needs some kind of change to the way it works

whilst protecting the individual, that means doing something to what

landlords are getting. The incentives to work also. Also the

contributory system. I understand that Ed Miliband is expected to say

that we have always been the party of work, the clue is in the name,

"Labour". The welfare state created by the Labour Party for a previous

generation was about giving people proper social insurance, where if

they paid in they would get something out. That implies more

should pay in to get something out. Making that contribution principle

at the heart of what the welfare state should be. Without jargon I

will make a point. If you are saying certain people deserve more

than others, which is what contributory welfare is about, you

are bringing up the strivers, skivers debate. Secondly on

something like contributory welfare, it will either cost more money or

people will lose something. If you are giving more to some and less to

others. I think it it doesn't answer the point they have been

critical themselves. Thank you all very much you can have a private

chat about jargon now. We are off to Turkey, for a change not another

point about protest from a well educated elite. The Prime Minister

who so angered them is democratically elected. He has also

led his country through a period of unprecedented growth. What is not

to like say his supporters. Proof that you can be both elected and

autocratic. Yet to all the protestors' demands that he quit,

he can respond that people voted for him in numbers. Who are his

supports and what do they see in him. What started as a protest

about trees has turned into an all- out rebel. This is effectively an

autonomous zone. The symbols of the global protest movement are

everywhere. The tents, the vendetta mask, the flag of the Gay

Liberation Movement. Today they were mixed with the more

traditional symbols of protest. Tens of thousands of workers on

strike came to the place where their kids had driven the police

away from to join the party. At the cost of two dead and 4,000 injured,

the young people of Turkey have turned Taksim Square into a free

urban space, like we saw Greece and in Egypt. The difference is what

they are up against, once you get beyond the barricades is a

different Turkey. The bridge over the Bosphorus is where you leave

Europe and enter Asia. All around there is evidence of rapid economic

growth. But beyond the big city bubble the political dynamic is

very different. I have come to the town of Pasha.

Places like this are part of PM Recep Tayyip Erdogan's political

heartland. The offices of the ruling AK Party barely matter, the

political agenda is set here. These are the people who have given Mr

Redogan three general election victories and who are dead against

the protest in Taksim Square. If you speak to the protesters in

Istanbul they think the reason very few people in a place like this

would support them is essentially because of the propaganda in the

newspapers. If you look, though, it is a mixed bag. This newspaper, a

conservative right-wing newspaper compares the Taksim Square

demonstrators to what they call PKK terrorists. For the other

newspapers they are a little bit more conciliatory. "message

received" is the headline on both these newspapers. In fact, the real

source of support for Redogan and the party in a town like this is

not propaganda da but the fact of economic development. -- propaganda

but the fact of economic development. TRANSLATION: I'm 72

years old and never had it so good, my pockets are full of money. We

have become spoilt, everyone doesn't just have one car but two

cars. Why? Because they are rich now. TRANSLATION: There is no

better Government in the world than this Government. This is the best

Government Turkey has ever had. Mr Redogan works all day and all night

-- Mr Recep Tayyip Erdogan works all day and night, if you look at

his eyes they are swollen and he can't see well because he worked so

hard. The KA party rose after other parties failed to stem the Islamic

tide. Those who lived through that are scornful about what is

happening in Taksim Square. TRANSLATION: When we had the

headscarf ban in the past we didn't resort to what they are doing now

in Istanbul. We didn't break anything. We prayed and we said

that the Prime Minister Recep Tayyip Erdogan would solve this

problem over time. He has given rights to the all law ys and the

Kurds and he will sort -- Alawites and the Kurds and he will sort this

problem too. We never alarmed or attacked anyone. Today the

protestors went to anchor ra to lay their demands in front -- Ankara to

lay their concerns in front of the Deputy Prime Minister, tomorrow Mr

Erdogan returns. What happens next depends on the tens of thousands of

young people who have suddenly found a political voice.

Today I think it is maybe it is early for a revolution. But it is

too, too late for Erdogan. Because many journalists, many people here

are the people who voted foreredrd before. But they voted for Erdogan

but Erdogan works for a minority. If you win here you will not stop?

Yeah because it isn't just a park, it isn't just a cultural thing. It

is a democracy and freedom demand against the fascism of Erdogan. We

know he's a fascist leader and we will overthrow him by these

people's vote. The Government is in a bind, with every demonstrator

armed with a smartphone, any attempt to crack down on such a

diverse movement would be reputational suicide. But the

movement has momentum. At some point everybody knows these iconic

bus barricades will have to go. Either the police break in or the

Government climbs down. With tension rising and violence flaring

in other cities, and people beg arrested simply for tweeting. The

people who built this barricade are happy for the moment to stand in

the shadows behind it. Meanwhile for the west there is a major

headache. We just got used to Erdogan's Turkey being a Muslim

democracy. But democracies and barricades do not really go

together. Quietly, brick by brick, this young urban secular part of

Turkey is preparing for the worst. That's all from Newsnight tonight.

One of those life imitating art moments in Australia, or life

imitating The Thick of It. The opposition spokesman on immigration

was getting into his stride at a news conference, or feeding the

chucks as they call it there, when he understood not to be the story

of the moment. Our Government has looked the other way and not lifted

a fringeer. It's all right. That warmed you up! The other

issue... Nice to be popular, the weather has turned a corner since

June. Plenty of warm sunshine to come for most of us during Thursday.

This time the cloud over the Midlands and eastern England

clearing away during the afternoon. The odd afternoon shower through

Northern Ireland, few and far between, most of Scotland having a

very pleasant afternoon. You get a breeze off the North Sea still

chilly, 12 degrees in Aberdeen. The odd shower popping up across the

borders into the northern Pennines, they will be few and bar between,

many places misses them. For many places, temperatures getting into

the low 20s, just near the North Sea coast cooler with the breeze

off the sea. Somewhere across south-east Wales, perhaps south-

west England got up to 23 or 24 degrees. But lots of that strong

sunshine on offer. And absolutely glorious afternoon across Wales and

most of the Midlands. We are looking at temperatures around 21

in Manchester, perhaps even higher. As you can see for most places it

doesn't really change through Thursday and into Friday. Bristol

could well hit 23, possibly 24. I wouldn't be surprised if there is a