30/09/2013 Newsnight

Conservative Party is on the side of hard working people, there is a

surprise, eh? Just in case anyone was confused, the Chancellor today

promised to get tougher on the jobless. For the first time all

long-term unemployed people, who are capable of work, will be

required to do something in return for their benefits and to help them

find work. The Boris Johnson fan club has turned out in force, he

granted us an audience. I don't know how much a pint of milk costs,.

Don't you think you should be concerned? How much is a loaf of

bread? I'm not standing for election, you are.

And Matthew D'Ancona tells the inside story of how the coalition

began and its growing pains. George Osborne talk Duncan Smith wasn't up

to the job and insufficient for cutting the fiscal deficit. Duncan

Smith thought George Osborne was power mad. Also tonight can anyone

account for why the US Government is about to shut up shop? I think

it is time I explain to these good people, the upcoming fiscal cliff.

Well I will try to tell you any way, why the US Government may well be

about to shut down. The writer who humanised the

turmoil in China with Wild Swans, Jung Chang on her latest work, the

forbidding Empress Dowager. Good evening from the Conservative

Party Conference in Manchester. The sun has started to rise above the

hill was the way the Chancellor of the Exchequer put it today, no word

on whether he had his hat on, but it was definitely not yet time for

"hip, hip hurray", it is clear, why take a chance when things start to

get better will be a key part of the Conservative pitch at the next

election. There were policy announcements too about work for

welfare, for example, to tickle the announcements too about work for

toes of the diminishing number of party members. The key question the

party has to resolve is how to appeal beyond that unusual group.

Ed Miliband thinks he can ror ral some of them with promises on

energy, UKIP is trying to run others off. What should the party's

offer with. Our political editor reports. All very blue in the Tory

Conference hall this morning, but would it stay true blue over the

next few days. There were pressures on the Conservative leadership

today. A redder Ed tugging one way, and a purplish Nigel in the other.

Tory MPs had different demands of their party today. They wanted the

Tory MPs had different demands of Chancellor to show he understood

the threat of Ed Miliband's price freeze, it may sound left-wing but

it is incredibly centrist. They also wanted to show they understood

the Nigel Farage threat. Throughout the day the party leadership

insisted they wouldn't be pulled in different directions by those two

men. But events today suggested they were. First up, the Chancellor,

would he take Ed Miliband seriously or mock him? What do you think? Any

politician would love to tell you that they can wave a magic wand and

freeze your Energy Bill, perhaps with all this talk of blackouts we

have been a bit unfair on Ed Miliband's leadership. We used to

think lights on, but nobody's home, turns out we're only half right!

George Osborne launched a new economic target, believing

credibility in the economy still a problem for the Labour Party. And

that they won't match him. I can tell you today that when we have

dealt with Labour's deficit we will have a surplus in good times as

insurance against difficult times ahead. As the Tory leader looked on,

there was action on the cost of living, a fuel duty freeze, not as

an ambitious as Ed Miliband power freeze, but there was the Tory

possibility of tax cuts. Yes, if the recovery ised sustained then

families will start to feel -- recovery is sustained, then

families will start to feel better off. What matters is low mortgage

rates, jobs and low taxes. George Osborne has to attract swing voters

from Ed Miliband, but he also has UKIP to contend with, denying

Tories victory in other seats. It is some force. This was UKIP leader,

Nigel Farage's arrival at conference today. We are not just a

sub-set, a rump of the Tory euro- sceptics, we are a genuine force in

British politics and we're not going to go away. Farrage had this

morning suggested Tories and UKIP candidates could strike back at the

local level, to unite the right- wing vote. One MP appeared tempted

by the UKIP colours. Why are you wearing a purple tie? Why are you

wearing a red jumper? I like it? I like it. I'm a Conservative

candidate, and always will be, if another party wants to endorse me,

that is fine. George Osborne today ruled this out, but UKIP's leader

remained defiant. There is room at local level for co-operations with

Jacob Rees-Mogg or Peter Bone. He just left the hall saying he

wouldn't countenance for it, he wants you to support his ticket as

a Conservative? They just show how desperately out of date they are.

They can't recognise that British politics is changing, there is a

new player out there. It isn't just wanting out of the European Union,

but different domestic policy. If Nigel Farage seemed tetchy, senior

Tories are also tetchy, they thought today, Monday, would be the

day they demonstrated they can walk and chew gum at the same time. Come

day they demonstrated they can walk up with policies that appeal as

much to their right-leaning, UKIP flank, as the centrist voters. But

because of Nigel Farage's hoopla, his attendance at many fringe

events, which are continuing even now, that was all overshadowed.

Margaret Thatcher wouldn't have given up on UKIPers, and nor has

this Tory leadership, they announced this conference as tough

love on welfare and Europe that she announced this conference as tough

would like and UKIP supporters would also like. Just as her appeal

was on the centre ground of would also like. Just as her appeal

politics, the Tory high-ups hope these policies appeal to swing

voters too. So Tories eye up the centre ground. This research,

admittedly from a while ago analysed people who voted Tory in

2010 but gone to Labour since. Of those a quarter say they will not

definitely vote Labour, Conservatives think they can get

them back. This evening these queues were not

for red Ed, nor Purple Nigel, but Blonde Boris. They must deal with

his popularity, and Nigel's sceptic, they have to look to their left,

right and behind them. A little earlier I popped a couple of

hundred yards over to the conference hotel to speak to the

Mayor of London, Boris Johnson. The other day you said that the sight

of the Syria vote had made you think about going back into

parliament? Yeah, but this is like, it was perfectly true. I thought it

was a great parliamentary occasion. I thought actually the Prime

Minister did brilliantly in setting out his case and the leader of the

opposition did rather less well. But it is perfectly true that I,

what I said, for the first time in five years I experienced a spasam

of nostalgia. Just as on a beautiful autumn day, with a blue

sky and the going soft underfoot I sometimes wish I was playing rugby.

But that doesn't mean that I'm going to take up rugby again does

it, I might do. You said you would think about the Prime Ministership

if the ball came loose from the scrum, are you still bound in the

scrum? Shall I tell you where the ball is now? Do, and tell us what

position you are playing too? I'm somewhere in the front forwards and

...Is It a set piece scrum or what? What it is, it is a set piece scrum

and we're going, we're driving for the line and the ball is at our

feet, and the enemy is wheeling or trying desperately, pathetically,

breaking the rules of the game to wheeling all over the place, we are

going for a pushover try. Everybody in the Conservative Party I think

now can see that we have less than two years to an election. I think

seriously they can see that there is a risk, you know. That people

who steered the ship of the economy on to the rocks will get back in

charge. I think that would be a real pity. I speak as someone who

is watching things really...You Think there is a real danger of it.

You could lose the next election? You look at the polls and you look

at the electoral mountain we have to climb and the Liberal Democrats'

refusal to be democratic or indeed liberal and do the right thing and

review the boundaries. That was completely wrong. The Tories have,

it is grossly unjust the current electoral system. It will be

difficult. But I think it is changing. I think the most

remarkable political event of the last, or series of event in the

last year or so has been the slow crumbling of the leader of the

opposition as a viable replacement for David Cameron. I think

genuinely, when I look at the options on the table for 2015 and

you have got David Cameron, who I think fulfils the job brilliant low,

or handing -- brilliantly, or handing the job back to Ed Miliband

who was on the bridge of the ship when it hit the rocks in the most

cataclysmic shipwreck of the last few years it is obvious. They have

cataclysmic shipwreck of the last divineed that people are really

feeling the pinch in terms of the cost of living? That is absolutely

right. That is where the argument will turn. We Tories should be

content to fight on that issue. You are the man who want to reduce the

top rate of tax to 40p in the pound don't you? I'm also the man who cut

council tax year after year in London. Which helps every household.

Do you even know the cost of a pint of milk? About 80p or something

like that. It is about 40p or something? One of those biggish

ones. This is a classic Boris, changing the milk. I said a pint of

milk. There you go, I don't know how much a pint of milk costs, so

what? Don't you think you should if you are concerned about the cost of

living? How much is a loaf of bread? I'm not standing for

election! You are! Why don't you know how much a loaf of bread is. I

-- I do but I'm not getting suckered into answering your

question, that is your usual trick isn't it? No! The point is you just

seem to be aligned on the wrong side? No, that is wrong. If you

look at what the Conservatives are advocating it is, I think, much,

much more sensible than the completely delusional policy that

Ed Miliband came up with last week, which was a fool's gold. He said to

people we can cut your bills and your costs but they know that those

things will inevitably go up again. They also know, I think this is the

crucial thing, that it will simply suppress the ability of the energy

companies to make the investments that we need. That is an argument,

by the way, that we won in London. I had exactly those sorts of

disputes with my Labour predecessor, Ken Livingston, who said we can cut

X and Y costs and cut fares I think he said 7% or something like that.

And actually all that would have done is take billions out of our

ability to invest in transport and we would then have to put the fares

up any way to cope with the inevitable repairs. It was a false

perspective. I think we can win. On that ground. You raised the subject

of public spending, if you had £6hun million to spend, would you

£600 million to spend, would you spend it on giving a tax break to

married couple? Is it costing that? I think this is one of those

questions where the Prime Minister made a firm commitment before the

last election, he said he was going to do it, he has done it, and I

greatly admire him for sticking to his promise. The answer to your

question is no I wouldn't? You know perfectly well it is not, I'm not

the Prime Minister. It is not my, it is not my, I'm not running these

things. You wouldn't have done it? It is not my policy that I

campaigned on. But what I admire in David Cameron is that this is

something, this is something that he promised the people of this

country and he has done it. If you were an MP of course you would have

to support the Prime Minister? Wouldn't you? If we had some ham we

could have ham and eggs, if we had eggs, I'm not an MP, I'm the Mayor

of London. I didn't prom mull gate this policy that you mention. You

personally don't believe in it? It is not my number one policy. I

didn't say number one, but I wondered if you had the money to

didn't say number one, but I spend would you spend it on giving

the feckless husband rather than the loyal and honest cohabity? The

Prime Minister said he would do it, the loyal and honest cohabity? The

he has done it, give him the credit. What happens after the Mayor of

London? That is in about three years time, that is a long time.

And as I have said before, you know, it might be that I wanted to have a

career in writing romantic fiction, for instance. Under the...It Is

possible, I suppose. Under RosieM Banks. In Matthew D'Ancona's book,

In The Together, he quotes a conversation between you and David

Cameron, you say to Cameron, this is your last election, you want to

go and earn some money? If someone said that, and pointed that out to

me earlier this evening, Matthew is a brilliant journalist and writer.

me earlier this evening, Matthew is I don't remember saying that. It is

conceivable, but I don't remember saying that. David Cameron replies

apparently "That's bollocks"! Is it. The whole story? The idea that what

you want to do when you leave the mayorality of London is to go and

make some money. You have just said, in case you weren't paying

attention that I was one thing I in case you weren't paying

had thought of doing perhaps in a vain and unrealistic way was

romantic fiction, glossy novels with embossed covers with pictures

of orchids. Perhaps adopting a pseudonym, so your hand might waver

over it. You won't make a fortune out of that? Try something else

then. Something will crop up. You have definitely ruled out the idea

of any return to parliament? I have got a very heavy and demanding job

to do. For two-and-a-half years? I'm doing it to the best of my

argument, I think we are achieving a great deal in London. I'm

determined...Could You be mayor and MP at the same time? I'm determined

to fill the unforgiving minute with 60 seconds worth of distance run

and get my job done. We have got a huge housing crisis in London, I

have to win all sorts of arguments, as you know, with the Treasury

about funding for London, about improving transport in London.

These are vital, vital things for the future of the greatest city on

earth. I think that to most of our viewers, Jeremy, those faithful few

who have not turned off in disgust, I think for most of our viewers

that is what they think I should be concentrating on. Concentrating on,

yes, but can you be an MP and Mayor of London at the same time? I think

John Wilks was, he's not possibly the best. Interesting role model

though? Well. I think I have to do the job to the best of my argument.

So it is very interesting, you have danced around the subject but not

ruled it out? What haven't I ruled out, being an MP and being Mayor of

ruled it out? What haven't I ruled London at the same time. I want to

get on with my job being Mayor London at the same time. I want to

London. I don't think you have ruled it out? I have ruled it out.

Why don't you say, no I couldn't, I couldn't do both? I did do both by

the way for a while. As did is it Ken Livingston? But, you know, this

is now a super-mass at thiscated subject. Masticate a bit more, spit

it out. I want to get on with my job of running the city. Just

before the election George Osborne made a speech in this conference

hall where he repeated the phrase "we're all in this together", who

are you kidding. But we discovered after the vote how pressent he had

been. If they wanted a stab at it, they had to be in it with somebody

else. The Liberal Democrats were the natural group to say if they

weren't natural bet fellows is an understatement. Matthew D'Ancona,

for his first broadcast interview, has written a book about a strange

forced marriage. This book being about politics, this report

contains strong language and flash photography. A doomsday message in

public. Behind the scenes a different story. On election night,

Nicholas Boles, a near parliamentary candidate, but in

practice a key player, sent a highly confidential memo to George

Osborne, David Cameron and others arguing strongly for coalition.

Cameron, his hand forced by the electorate duly delivered. The dawn

of a new politics, how often have we heard that before? Relatively

speaking the formation of the cabinet was easy. Boris Johnson, I

gathered, considered it a triumph of the public school system, a

system of which he was a product, as was David Cameron, George

Osborne, not to mention new boy Nick Clegg.

After the drama of the coalition negotiations, Clegg's strategic

task was to turn the Lib Dems from a party of protest into a party of

Government. This wouldn't be easy. First there was the ignominy of the

U-turn on tuition fees. You First there was the ignominy of the

completely sold out your principles and you have lied to your voters,

how could you do that? And then the catastrophic defeat in the

referendum on the alternative vote. Looking back on those months Clegg

confideed in private that he wasn't really leading. Clegg had watched

as his Tory counterparts had swung behind the no campaign with

devastating consequences for him. It was the end of innocence. In the

words of one senior Downing Street official, "Nick realised what we're

like, what Tories are capable of." As another Cameron ally put it to

me, "the rose garden had been well and truly napalmed". The joists of

coalition freakly groaned and -- frequently frowned and creeked. But

Clegg always felt that he was the fall guy, the person who took the

blame for the disagreements. As he told one

In all the rows with Cameron over Europe, welfare and Lords reform,

the backdrop was always the Lib Dems' terror of electoral

destruction. When he withdrew support for the boundary review, a

review that might well have delivered the Conservatives victory

in the 2015 election, Clegg was quite clear.

"This is an existential threat sorry, you should have thought of

this before the AV Reverend come". The message to Cameron was an

abject terror that Nick Clegg couldn't admit in public. He often

said to his friends that he thought he would be gone in three months.

Today Clegg it still standing, but the experience of the coalition has

been one of the perils as well as the possibilities of Government.

Under the canvas of the coalition's the possibilities of Government.

big tent there was room for plenty of punch-ups, few as bitter as the

feud over welfare between George Osborne and Iain Duncan Smith the

Work and Pensions Secretary. George Osborne thought Iain Duncan Smith

wasn't up for the job and inferior to business of cutting the deficit.

Iain Duncan Smith thought George Osborne was power mad, and enjoyed

Lording it over a former Conservative leader. As one

familiar with IDS's sensitivities put to me, imagine waking up one

morning and finding out Anta Dec are running the -- Ant and Dec are

running the country?! The Conservatives' first conference in

power for 14 years ought to have been a jab worry, but it was marred

by Iain Duncan Smith's fury when George Osborne announced that child

tax-payers would lose. I thought we were a team, if we are going to do

this, we have to work as a team. The Prime Minister promised to talk

to George, George Osborne thought that IDS lacked the IC. You see Ian

giving presentation and realise he's not clever enough. And was too

squeamish for austerity? He opposed every cut. Iain Duncan Smith

resisted George Osborne's efforts to get him reshuffled. The contempt

between the two men hardened into one of the coalition's structural

problems. Committees proliferated under the coalition, informal

negotiation and personal chemistry became more important if anything.

I was repeatedly told that there were only three people who could

change David Cameron's mind, George Osborne, Andy Coulson, his Director

of Communications and Steve Hilton, his maverick senior adviser, now on

sabbatical in California. There is only so much that can be said about

Andy Coulson, who left his post in January 2011 and now faces charges

over alleged phone hacking when he was editor of the News of the World.

Coulson offered to resign in July 2009 when new and more serious

allegations started to appear in the papers. But Cameron hung on to

his comms magician for another year-and-a-half, with politically

disastrous consequences. Hilton was the PM's other addiction, brilliant,

and unpredictable. His cfrgs were extraordinary. In May 2012 he

screamed at the head of the home Civil Service over what Hilton had

said about Civil Service cuts. He was reproached on more than one

occasion by Chief of Staff, Edward Llewellyn. Look you have to watch

it, we don't want that sort of reputation. What did Cameron want,

he backed enough Hilton, but not reputation. What did Cameron want,

Hilton felt to truly transform the country. Before departing on

sabbatical in California, he toyed with the idea of becoming Boris

Johnson's Deputy Mayor, a provocation too far, both men

decided. It is a curiosity of the coalition that no account of its

inner life is complete without mentioning a figure who operated

entirely outside its borders as Mayor of London. When Cameron

stopped where Tory MPs fell, Boris rose, on he positioned himself as

more euro-sceptic and pro-growth. Re-elected as London mayor in 2012,

he turned the Olympic games into the greatest leadership campaign

launch in history. Hoovering up credit as he put to one friend. His

ambition to be Prime Minister was increasingly overt. To one friend

he announced his intention to drive a T-54 into Number Ten. On the

night of his second victory over Ken Livingston, Boris had said to

Cameron. This is my last election, Dave, I want to go and earn some

money. Cameron replied simply and accurately. That is bollocks! A

Boris speech or seemingly off the cuff remark would illicit a sharp

response from Cameron, an e-mail, or sharp Texas he told friends.

Dave was pretty bloody direct. According to one aide Boris would

end up apologising. Mate, sorry, I messed up. The relationship between

the two men remains the coalition's most fascinating story. In

Manchester, as ever, it is one of the main talking points, is Boris

the Tory Messiah or has he peaked too soon. Creeking, groaning,

splutering, the coalition still stands, it has weathered economic

hardship, war overseas, an NHS cry and much else. The romance of the

rose garden has gone. What remains is a new form of governing, flawed

but surprisingly robust. When Nick Clegg gets down, his wife Miriam

tells him, the only way to get back at them is to show them coalition

can work. To that extent at least, he and his colleagues seem to have

proved their point. Matthew D'Ancona is here to chew over the

turbulent history and future of the coalition, and with him are the

journalists Rachel Sylveter and Iain Martin. George Osborne says he

doesn't think that Iain Duncan Smith is stupid, David Cameron says

he doesn't regret the gay marriage idea. The Cameron family are

furious about the suggestion that they don't like the Downing Street

cat. How much of this is true?. It is all true. I have to say whilst I

cat. How much of this is true?. It wouldn't accuse anyone of having

their pants on fire, there is a lot of smoldering going on. There is a

pattern here, when a journalist writes a book like this, which you

observed in the Diana and new Labour case, there is lots of

revelations and a pattern of denial. The memoirs come out and we realise

it was even worse than the original reports. I think all of those

stories are 100% true. How different would Government have

been if it hadn't been a coalition Government since the last election?

My point in the book is that coalition is a completely new form

of Government in the form that they are practising it. I think minority

Government would have just been a form of coalition forming every day.

It would have been untenable. So what you see here is a flawed riven,

conflict -splattered form of Government, but none the less,

something that has endured. Those are the two themes. This is a

Government that is both a disaster and huge triumph. How close to

collapse did it ever come? I think one of the things I say in the book

is that the conflict over the Lords last year was quoted to me by one

Number Ten aide as being our Cuba crisis. The point about that was

they lost touch with each other. Coalitions only work if each side

is very, very frank. At that point they weren't. Rachel Sylveter, the

feeling within the party about they weren't. Rachel Sylveter, the

coalition now? Which party? Within the Conservative Party? There is

this kind of mismatch, I think, between what the people at the top

feel and what both the tribes think. On both the Conservative side and

the Lib Dem side the activists and quite a lot of the MPs don't like

it. Particularly for the Tories. These MPs might have expected to be

ministers if there wasn't a coalition. But at the top,

particularly among the Conservative moderniser there is almost a

feeling that coalition is better than single-party Government. I

remember having a dinner with a cabinet minister, a year after the

coalition of formed, and publicly everything was absolutely falling

out over the AV referendum and this minister said to me, you know even

if we have a majority at the next election we should think about

going into coalition and inviting the Lib Dems into cabinet. I know

you have been busy with the book about Fred Goodwin and the banking

crisis you are close to a lot of the party, what is your sense of

feeling about the coalition with the Lib Dems? I can see why the

coalition is popular with those inside it and they are enjoying

power and wielding power. They are in politics to be in power. But

ultimately it has been calamitous for the Conservative Party. The

membership has halved under David Cameron's leadership and the

politics of coalition it has forced Cameron into positions which are

directly linked and related to that, to people leaving and going to UKIP.

It is forced hip, and tied his hands on Europe specifically, it

has forced him into the politics of gay marriage, and the Conservative

Party is now heading for having around 100,000 members. Its

activist base has been hollowed out, it has been a marvellous wheeze for

those running it but not for the party. Supposing there is any

similar result after the next election, there will be another

coalition, is there an appetite for it? At the apex there is, testify

infinitely, I think Cameron and Clegg have talked about it, I think

that Clegg, who is by no means representative of his whole party

would definitely favour a coalition with the Tories over one with Ed

Miliband. Whether it is possible is another question, to do it this

time Cameron would have to get, and he says this in the book, he would

have to get the permission of his party. I think Ian reflects a good

point, I'm not sure that they would go for it. On the other hand, how

else is he going to get, if he doesn't get a majority to the

position wants to be, which is to have a referendum on Europe,

continue with fiscal reform and so on. What is your sense about this?

I don't think they will allow him to have another coalition. I think,

he has been lead, we forget how long he has been leader of the Tory

Party. He has been leader this autumn for eight years. And at

eight years he still hasn't won his first general election, if he falls

short again I think he will be in quite serious trouble. I don't

think they will give him the license that they gave him in the

hours and days immediately after the last election. What's your

sense of another coalition? I think it has to be quite likely. I think

the last few years have changed the way in which all the parties have

had to think about coalition, hung parliaments, everyone before the

last election said it would be a total disaster. Matthew was saying

he thought it was more likely than a coalition between Clegg and Ed

Miliband, do you agree with that? It completely depends on the

numbers. I think there would be an issue whether the Labour Party

would agree to go into coalition with Clegg. I don't think they want

to. I suspect that the Labour Party has learned the lesson from

Cameron's experience with the Conservative Party and I think they

are determined to avoid a coalition, if possible. Certainly with Clegg.

Or even with someone he will. The Lib Dem is banging on about how it

has changed the nature of politics in Britain. Do you three get a

sense it has changed the nature of politics? I think it has, actually.

If you compare to a minority administration, compared to the way

John Major had to govern for those years, towards the end it was utter

chaos. Compared even to the Tony Blair and Gordon Brown falling outs

during new Labour. The coalition has been relatively stable, it has

worked, I would say. Politics is also becoming more plural. The

coalition is the product of a new politics, not the engine. You are

getting a situation where the two main parties are no longer as

dominant as they were. That is a statistical fact, you are getting

new parties like UKIP being taken seriously, added to that you have a

situation where people who are completely outside parliament, like

situation where people who are Boris Johnson, are very important

to the political landscapement we are talking about Boris Johnson,

he's not an MP. But politics are not the same as it was in the

Thatcher era. That is the really important learning from this

conference is, as much as it has been dominated by her speck tr it,

we are not in 19 -- specter. We are not in 1987. Jo I think this is not

with Thatcher but Reagan. The core mistake modernisers made ten, eight

years ago, they didn't behave like Reagan, and do what John Howard did,

Stephen Harper has done in Australia. In those countries where

the centre right wins, you begin by looking in your core support. And

then building out into floating voter land. The modernisers started

by essentially declaring war on their own base. They are reaping

what they sow here. UKIP are polling 10%, they won't get that in

what they sow here. UKIP are a general election, but if they get

6%, they only got 3% last year, that is two million votes. Carnage

for the Tories. All parties are a coalition, you can have the Tories

or Lib Dems or the modernisers or the traditionalists, a lot of

modernisers would prefer coalition with the Lib Dems. Those members

and activists that have left the Conservative Party, people are not

stupid. They have left because they realise they are not liked and the

leadership despises them. The trouble is if you tack too far to

get the UKIP people back you lose more people in the centre. Thank

you very much indeed. Back to Gavin in London.

Two animals are famous for jumping off cliffs, lemmings and the

gathering swine of the Bible. Tonight we have a third possible

contender, the United States Government. Admit night American

time the inability of Republicans in Congress to come to an agreement

with Democrats or the Obama administration may lead to the US

Government closing down. They are on the brink of the called fiscal

cliff. Our diplomatic editor is on the brink of the called fiscal

here with the details. How on earth did they get to this point? You

know how it is, Congress holds the purse strings. There is a situation

where you have a democratic majority in the Senate, the Upper

House, and the Republicans control The House I Live In of

representatives. They have managed to push it down the ood -- House of

Representatives, they have managed to push it down the road a few

times. The issue of healthcare reform is a totem, they want to

take it, and the Democrats don't want to let them. We are a few

hours away from crisis coming to fruition. The fiscal cliff and

earlier this evening President Obama weighed in. It does not have

to happen. All of this is entirely preventable if the House chooses to

do what the Senate has already done. That is the simple fact of funding

our Government and not making demands in the process. If it

happens at midnight American time, what are the consequences? Much of

federal Government, for the first time in 17 years will shut down. If

you are planning a holiday, don't count on being able to visit y

cemetery park, or the parks agencies will completely such down.

The post will keep going, the Armed Forces will stay on operations, but

not being paid for the time being. Throughout federal Government as a

whole, if you look across federal Government, the number of people

who will stop working from midnight, if this goes ahead is several

hundred thousand. There will still be some in key agencies carrying on,

but many of them not being paid at all. When you actually put the

economic effect of that into the current picture, that will have an

equivalent effect to cutting the US GDP by 0.15% per week. The lack of

that money going into the economy. The slowdown in federal activity,

it will have that effect. Week on week, if that continued, then it

would get to a more serious crisis, empty pockets, default, the US

would be unable to honour its bonds. That is the really serious thing

which if they were to push it that far could come further down the

road. Most people think the Republicans in the House will not

let it go that far. They would fear the political damage as much as

anyone else. We're joined now from Capitol Hill. Is it going to happen.

Are they going to push themselves off the fiscal cliff? I think it is,

there is only six hours to go now, and the House are meeting, they

will have a vote later on, on what the Senate has sent them back. They

have made it quite clear they still want the Republicans in the House,

they still want a link between funding the Government and doing

some sort of damage to Obamacare. The President has been

extraordinarily clear, he spoke within the last hour and he and the

Democrats are playing hard ball about this. For the reason that

Mark just set out. If they actually tampered with the debt limit. If

the Republicans tried to link that to other causes it would be very

dangerous indeed. They want to fight now on less dangerous ground.

It does look like it is heading for a shutdown. Jung Chang is best

known for Wild Swans, the story of three generations of women in her

family, and putting a human face on China.

Now in her latest book she has turned to a woman who had the most

formidable reputation, but perhaps more than any one individual helped

pull 19th century China towards the modern age. I spoke to Jung Chang

before we came on air. I'm curious, first of all, as to what it was

that attracted you to the subject of the Empress Dowager. She's

usually portrayed as some kind of monster? Monsters can be very good

subjects, Mao was a monster but good subject. He was my previous

subject. I first got interested in the Empress Dowager when

researching Wild Swans more than 20 years ago. She was the person who

banned the foot binding, crushing and binding women's feet to make

them tiny. My grandmother had bound feet, she lived in pain the rest of

her life. I was astonished that the Empress Dowager banned it. Then

when I was researching the biography of Mao, I was astonished

again how, by how many opportunities and freedom Mao had

in his youth and childhood under the Empress Dowager. He was a

peasant lad, but he could get scholarships and go abroad if he

wanted to. He could write for newspapers whatever he wanted to

write. He could travel around the country with girlfriends and

checking into hotels. All these freedom, I couldn't dream of when I

was growing up under Mao. One of the reasons we love looking at

historical biographers is what it also tell us about today and we see

continuity or differences between her and Mao and Mao growing up when

she ruled, effectively ruled China. What do you think of today's elites

and whether they are, they are obviously different people coming

from a different class. But do they seem super-rich and out-of-touch

perhaps with the lives of ordinary people in the way that people at

the top were in the days of the Empress Dowager? I think they were

not out-of-touch in the Empress Dowager's time, nor are they out-

of-touch with today's China. It is a matter of choice. People often

compare, people in China, right at the moment comparing the Chinese

regime today with the Empress Dowager's later years. I mean they

have many things in common. The door of China has been opened for

decades and there was considerable economic advance and prosperity.

And now people have political aspirations. So what do you do? Do

you go on and pursue political reforms, which is what the Empress

Dowager chose to do. Her last project was to turn China into a

constitutional monarchy with an elected parliament, with the

freedom of the press, the rule of law and the so on. And she rejected

the root of winding the clock -- the route of winding the clock back.

I wondered whether you feel, because you are not published in

China, you are not going to get this book published in China, are

you. Is that a real sadness for you about the failure to reform so that

your books, which are accepted around the world, could be accepted

where you are from? It is very sad. Of course I want very much to see

my books published in China. And this book I hope will be a slight

test to see whether the regime would be moving towards being more

entightn't. -- enlightened. But I'm translating the book into Chinese

at the moment. It will be published in Hong Kong and Taiwan. And copies

will go into China. Because Chinese tourists are going to Hong Kong and

Taiwan, they buy banned books is what they do. Many copies actually

of my books have gone into China. And given as present to other

people as well? Absolutely. On that happy note, Jung Chang, thank you

for coming in. That's all for tonight. Jeremy is

still in Manchester tomorrow, when the American video producer, Marina

Schiffein decided to complain about her working conditions, her manager

didn't take much in the. She created a hit YouTube video for him.

An interpretive dance set to Kanye West's song.