Browse content similar to 25/03/2014. Check below for episodes and series from the same categories and more!
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Tonight Paul Flowers, the Methodist minister w left the Co-operative | :00:07. | :00:15. | |
Bank in disgrace, talks exclusively about his downfall and hits back at | :00:16. | :00:23. | |
tabloid tormenters. I find the Mail on Sunday and its sudden dough | :00:24. | :00:28. | |
fascist far right tendencies that make Vladimir Putin look like a | :00:29. | :00:32. | |
bleeding heart liberal, utterly abhorrent. And he reveals the way | :00:33. | :00:40. | |
Government ministers leaned on the bank to make decisions they judged | :00:41. | :00:45. | |
to be commercially unwise. And there was pressure, certainly from Mark | :00:46. | :00:50. | |
Hobon, and I know that originated with the Chancellor himself. | :00:51. | :00:55. | |
Also tonight is the right to pass on wealth the entitlement of everyone, | :00:56. | :00:59. | |
or the root of personal and social unhappiness? | :01:00. | :01:22. | |
The latest Al-Qaeda battlefield. There are probably some people in | :01:23. | :01:27. | |
Britain who have never heard of the Reverend Paul Flowers, the Methodist | :01:28. | :01:31. | |
minister who became the chairman of the Co-operative Bank, and exited | :01:32. | :01:36. | |
after an inept performance in front of the Parliamentary Committee who | :01:37. | :01:39. | |
were trying to find out how the bank went belly up. Then he was filmed | :01:40. | :01:47. | |
talking about his drug habit. He was nicknamed the Crystal Methodist and | :01:48. | :01:52. | |
the caravan moved on. But the supposedly ethical bank has been | :01:53. | :01:56. | |
left broken and demoralised. He hasn't spoken publicly about what | :01:57. | :02:01. | |
happened, until now. But before that we have this report. SGLA double | :02:02. | :02:08. | |
downfall, the minister who preached ethics, the bank meant to make | :02:09. | :02:11. | |
ethical decisions, both brought to their knees by a domination of | :02:12. | :02:18. | |
ambition and weakness. In the end leaving a bank that appeared out of | :02:19. | :02:22. | |
control. And a chairman whose understanding of the business was | :02:23. | :02:36. | |
just helplessly wrongy wrong. Give us an idea of the total asset value | :02:37. | :02:41. | |
of the bank? Just over ?3 billion. I'm talking about the assets. I'm | :02:42. | :02:46. | |
talking about the assets, on the balance sheet I was looking at the | :02:47. | :02:50. | |
balance sheets recently. You are offering me ?3 billion and I'm | :02:51. | :02:55. | |
telling you your annual accounts show it at ?47 billion. Indeed they | :02:56. | :03:00. | |
did, forgive me. Paul Flowers suggested that the assets were a | :03:01. | :03:06. | |
tenth of the size they were. But Flower, Labour supporter, was not | :03:07. | :03:09. | |
the only one out of his depth. The ethical bank had gone empire build | :03:10. | :03:13. | |
anything way it couldn't sustain. As well as building itself a smart new | :03:14. | :03:20. | |
headquarters, the Co-Op gobbled up Britannia Building Society, riddled | :03:21. | :03:24. | |
with property debt. Then with Flower as chair, made an audacious bid for | :03:25. | :03:32. | |
650 branches of Lloyd's. There was all scepticism in the City about | :03:33. | :03:36. | |
whether it could work, but with tacit approval from Westminster, the | :03:37. | :03:42. | |
Co-Op's ambition far outweighed its ability to cope. Underneath a | :03:43. | :03:48. | |
beautifully crafted image of the bank like no other, regulators | :03:49. | :03:51. | |
crawling through the undergrowth found a black hole in the books of | :03:52. | :03:56. | |
more than a billion. They became very big, very quickly, by buying | :03:57. | :04:03. | |
Britannia and then by being very ambitious to buy branches from | :04:04. | :04:08. | |
Lloyd's. That is a very short period of time for a small bank and | :04:09. | :04:12. | |
inexperienced bank like Co-Op. Any other business with lots of | :04:13. | :04:18. | |
experience in acquisitions would find it difficult to integrate those | :04:19. | :04:23. | |
businesses successfully. Although the Reverend had boasted Co-Op P had | :04:24. | :04:33. | |
staled -- had sailed through the financial crisis. It would be not | :04:34. | :04:39. | |
good for someone from the Co-Op bank to be smug, that is not my nature. | :04:40. | :04:44. | |
The loans went back and the Lloyd's deal collapsed, quickly the Reverend | :04:45. | :04:47. | |
was out. There was further to fall. The minister was caught newspaper a | :04:48. | :04:52. | |
drug and sex scandal. Caught unwares by the Mail on Sunday. Behaviour he | :04:53. | :04:57. | |
described as "stupid" and "wrong". Police searching his house | :04:58. | :05:04. | |
investigating his conduct. Reverend Flower, as is, s as well as a | :05:05. | :05:14. | |
collapsing bank hurt members. A bank founded in the 19th century, | :05:15. | :05:19. | |
with the intention of looking after our morals as well as our | :05:20. | :05:24. | |
hard-earned money. This bit of the co-operative movement is having its | :05:25. | :05:30. | |
own cataclysmic moment where it has to think about what it is about. It | :05:31. | :05:33. | |
might be something very different in terms of the public view of it. The | :05:34. | :05:36. | |
Co-Op was meant to be different? It was, and it was different. I do | :05:37. | :05:42. | |
think it was different. It made two or three errors all at the same | :05:43. | :05:47. | |
time. But this has been a terrible episode for a movement with a | :05:48. | :05:52. | |
history that's been worth preserving in stone. Neither its Victorian | :05:53. | :05:57. | |
founders nor many of the movement's current members would have approved | :05:58. | :06:00. | |
of the Reverend's exploits, how did he find himself at the top of a | :06:01. | :06:03. | |
rapid low expanding bank in the first place. Well this flimsy three | :06:04. | :06:08. | |
pages a record of his approval interview with the regulators. In it | :06:09. | :06:13. | |
he asks for the fullest, possible training, but promises to ask | :06:14. | :06:17. | |
forensic and tart questions. The regulators themselves though will | :06:18. | :06:22. | |
now surely wish they had asked for forensic questions of him. Reverend | :06:23. | :06:29. | |
Flowers has been followed out of Co-Op's door by the man brought in | :06:30. | :06:40. | |
to save the group. Euan Sutherland announced it was ungovernable. | :06:41. | :06:46. | |
Yesterday the bank had to write off another ?400 million to pay for | :06:47. | :06:52. | |
other mistakes of the past. Yet it is Reverend Flowers, more than | :06:53. | :06:56. | |
anyone else, whose faults came into focus. The bank and his error's | :06:57. | :07:02. | |
rewriting history of this proud ethical know. Movement few wanted to | :07:03. | :07:06. | |
write. Earlier today I went to man chest Tory meet Paul Flowers. What | :07:07. | :07:13. | |
has the last year been like? Interesting! TRANSMIT | :07:14. | :07:36. | |
I resigned from the bank, and it was a joy as it was on my birthday and | :07:37. | :07:40. | |
there were a few months that have been hellish. Because I knew I | :07:41. | :07:44. | |
particularly needed to find some professional support for the issues | :07:45. | :07:50. | |
that I was facing, I actually booked myself into a very well known | :07:51. | :07:57. | |
hospital for four weeks from the end of November until Christmas Eve. I | :07:58. | :08:02. | |
underwent what was called their addictions treatment programme for | :08:03. | :08:11. | |
the 28 days that I was there. I found that both cathartic and | :08:12. | :08:18. | |
traumatic. But it actually helped me to look at, not so much the | :08:19. | :08:23. | |
superficial issues of the addictions themselves, but the more deep-seated | :08:24. | :08:31. | |
reasons why people resort to any sort of addiction. And for me that | :08:32. | :08:37. | |
was I think life-changing and I continued to go there every week for | :08:38. | :08:42. | |
therapy. Can we go back then to the question of the chairmanship of the | :08:43. | :08:47. | |
bank. Yeah. What was it that made you think you were qualified to run | :08:48. | :08:53. | |
a bank? I didn't and it wasn't my job to make a judgment about whether | :08:54. | :08:58. | |
I was qualified, others made a judgment that I was the right and | :08:59. | :09:03. | |
appropriate person to be the chair at that particular time. There was | :09:04. | :09:08. | |
panel, which interviewed four of us, who were candidates for the job. I | :09:09. | :09:13. | |
was the unanimous choice of that panel. I was then the unanimous | :09:14. | :09:19. | |
choice of the bank board. I was then the unanimous choice of the group | :09:20. | :09:23. | |
board. And I then went again to the FSA for a further interview to see | :09:24. | :09:28. | |
whether they thought I was fit to be chair of that bank board. I was | :09:29. | :09:35. | |
prepared for this by a very hellish mock interview. A bit like you at | :09:36. | :09:39. | |
your worst really if I might be so bold. And they took me to hell and | :09:40. | :09:46. | |
back in terms of questions. But the FSA had a really wonderful | :09:47. | :09:51. | |
conversation about philosophy and ethics and issues that were around | :09:52. | :09:58. | |
and their panel approved me. It is not for me to make a judgment about | :09:59. | :10:03. | |
whether I was qualified, a range of other people at the time said I was. | :10:04. | :10:08. | |
You weren't a banker? No, but I wasn't put in as banker. I was put | :10:09. | :10:13. | |
in as operator, a representative of the Co-Op Group, and I had a job in | :10:14. | :10:19. | |
terms of governance Did you know the extent of the problem after the | :10:20. | :10:22. | |
merger with the Britannia Building Society? Nobody did, forgive me. | :10:23. | :10:31. | |
Hindsight is a wonderful science, if can I be so bold. We took over the | :10:32. | :10:39. | |
Britannia effectively in 2008. There was a merger. But effectively it was | :10:40. | :10:48. | |
takeover. I inherited that when I became the chair in 2010. At the | :10:49. | :10:57. | |
time of the takeover of Britannia I recall and still have the documents | :10:58. | :11:02. | |
at home, there were three separate pieces of due diligence, done by | :11:03. | :11:09. | |
accountany firms, KPMG for us and fancy merchant bankers who Mr Paid | :11:10. | :11:15. | |
paid vast amounts of money to do it. All said it was a good deal. All | :11:16. | :11:18. | |
pointed up dish use with the corporate lending book, but that | :11:19. | :11:25. | |
lending book could be addressed by what are called fair value | :11:26. | :11:28. | |
adjustments in the accounts. That is precisely what we did. And we did it | :11:29. | :11:42. | |
in thorough consultation with the FSA at the timecisely what we did. | :11:43. | :11:45. | |
And we did it in thorough consultation with the FSA at the | :11:46. | :11:46. | |
time. They didn't pick it up and neither | :11:47. | :11:49. | |
did the FSA at the time. How much pressure did you come under with the | :11:50. | :11:53. | |
Lloyd's issue? Specifically from the present Government, mainly from | :11:54. | :11:58. | |
Conservatives. They wanted a deal. Remember that the Government was, | :11:59. | :12:03. | |
still is, the major shareholder of that bank. Because of the structural | :12:04. | :12:08. | |
support that it had needed back in 2008. Clearly they wanted a deal | :12:09. | :12:14. | |
which would help them in terms of public finances. They actually said | :12:15. | :12:20. | |
that they were keen on this Co-Op becoming a much more significant | :12:21. | :12:25. | |
player with more scale. We would have had about seven or eight per | :12:26. | :12:30. | |
cent of the market if this had gone through. And there was pressure | :12:31. | :12:38. | |
certainly from mark Holbon and I know that originated higher up with | :12:39. | :12:43. | |
the Chancellor himself. What form did this pressure take? Regular | :12:44. | :12:48. | |
calls and regular checks to see whether or not they were progressing | :12:49. | :12:52. | |
well. And I mean two or three times a week calls from the junior | :12:53. | :13:01. | |
minister. They wanted a deal and they wanted us to do it. They might | :13:02. | :13:05. | |
say no now, but I know that's what they wanted. That was the pressure | :13:06. | :13:08. | |
they were applying. You are painting yourself as an | :13:09. | :13:12. | |
innocent abroad? I'm not innocent. I take full responsibility for the | :13:13. | :13:17. | |
decision that is we took. And indeed I resigned because I believe it was | :13:18. | :13:22. | |
right for the chair of the board to take responsibility, although all | :13:23. | :13:27. | |
the decisions taken were not by me personally but by the board as a | :13:28. | :13:33. | |
whole. But resignation was an admission of inadequacy wasn't it? | :13:34. | :13:37. | |
No, it was an admission that things had gone wrong. And as the person in | :13:38. | :13:43. | |
the chair, I should take responsibility for it. How is it | :13:44. | :13:47. | |
then, if you were cognisant of what was going on and you weren't an | :13:48. | :13:51. | |
innocent aBROSHGSD how could you possibly appear before -- abroad, | :13:52. | :13:56. | |
how could you possibly get the assets of the bank out by a margin | :13:57. | :14:02. | |
of ?40 40 billion. Ill-prepared and not ready for all the questions and | :14:03. | :14:10. | |
in particular put off a tad by the aggression of some of the members of | :14:11. | :14:14. | |
that committee and the clear attempts that some of them were | :14:15. | :14:19. | |
making, not to ask sensible or rational questions, but to try to | :14:20. | :14:24. | |
trip me up and in particular to engage in political points scoring. | :14:25. | :14:29. | |
Even so, to say the assets of the bank you say ?3 billion and they | :14:30. | :14:34. | |
were ?47 billion? Forgive me, I was wrong, badly wrong. Do you think | :14:35. | :14:38. | |
something has happened in the world of banking, which has made it a | :14:39. | :14:42. | |
different sort of business to the sort of business, you did once do a | :14:43. | :14:46. | |
banking exam years and years and years ago? 40 plus years ago. But | :14:47. | :14:53. | |
banking was a different kind of beast in those days wasn't it? I | :14:54. | :15:00. | |
think it was a good profession. I think it was largely led by people | :15:01. | :15:06. | |
of honour and decency. Is it no longer? There are people within it | :15:07. | :15:15. | |
who are people who are honourable and decent. Sadly there are also a | :15:16. | :15:19. | |
number of others who are not. And who I think are there for whole and | :15:20. | :15:26. | |
whole range of reasons, some of which are to do with their own avari | :15:27. | :15:37. | |
correction and their own green -- avarice and their own greed, that is | :15:38. | :15:42. | |
very sad. There is another story today about bonus payments in a | :15:43. | :15:47. | |
bank. Yet here you are, chairman of a bank belonging to a different set | :15:48. | :15:52. | |
of ideals? Sub-scale. Not big enough? Not big enough at all. So | :15:53. | :15:57. | |
lots of our efforts as well were designed to try to improve the | :15:58. | :16:05. | |
ability of the bank to be able to run an efficient organisation of | :16:06. | :16:09. | |
sufficient scale. So you are saying it is impossible in this country to | :16:10. | :16:16. | |
run a successful... You are being too dogmatic, you are looking at | :16:17. | :16:20. | |
either a white or black picture and not seeing the complexity of the | :16:21. | :16:24. | |
grey in the middle. It is not impossible. We confronted a whole | :16:25. | :16:31. | |
raft of problems, I believe it could still be possible. And you failed? | :16:32. | :16:35. | |
Yeah, we failed so far. But we are still there. And we didn't actually | :16:36. | :16:41. | |
have to take any Government money at any stage. Unlike some of the other | :16:42. | :16:47. | |
banks I have to remind you. Given your background, given the ideals of | :16:48. | :16:56. | |
the organisation, personally that must have had a tremendous impact on | :16:57. | :17:03. | |
you? With respect my role was not to worry about the personal impact upon | :17:04. | :17:09. | |
me, I'm there in a representative capacity to try to do a job with a | :17:10. | :17:13. | |
range of other people. You are the embodiment of the values of the bank | :17:14. | :17:17. | |
as chairman aren't you? I'm one of them, I hope I'm not the only one. I | :17:18. | :17:21. | |
hope the organisation as a whole, and I believe it had done, embodied | :17:22. | :17:27. | |
those values. And staff at the time before all this crisis occurred from | :17:28. | :17:34. | |
were extraordinarily happy to work with and for us. Have they been in | :17:35. | :17:41. | |
touch with you any of them? One or two but they have been politely told | :17:42. | :17:47. | |
by more senior people not to be in ch. One or two of the braver souls | :17:48. | :17:52. | |
have been in touch. You have been cast into the outer darkness I | :17:53. | :18:04. | |
suppose? I believe even in Dant, he's Inferno there is a chance of | :18:05. | :18:08. | |
release. You have fallen like Lucifer? Where do you find Lucifer | :18:09. | :18:15. | |
in the Bible Mr Paxman! Then comes of course all the horrible stuff for | :18:16. | :18:20. | |
you when you are outed for drugs and rent boys and all that stuff. Had | :18:21. | :18:28. | |
you been doing drugs while chairman of the bank? Forgive me saying so I | :18:29. | :18:33. | |
think you are aware that there are still some issues to be inquired | :18:34. | :18:40. | |
into by the police and that is a question that I think has to remain | :18:41. | :18:45. | |
at the moment unanswered. But will in due course be answered. But it is | :18:46. | :18:51. | |
subject to the police investigation. Let me put it another way, were you | :18:52. | :18:57. | |
involved in drugs, doing drugs, before you became chairman of the | :18:58. | :19:08. | |
bank? No. But that doesn't answer the earlier question. It doesn't. | :19:09. | :19:12. | |
And I cannot answer it for the moment. I understand re understand. | :19:13. | :19:19. | |
But -- I understand, it does tell us something. When you saw what the | :19:20. | :19:23. | |
Mail on Sunday printed about you, what did you think? The Mail on | :19:24. | :19:31. | |
Sunday, its sister paper have printed a lot of things about me. I | :19:32. | :19:43. | |
remember dear old Michael Foot once decribing the Mail Group as the | :19:44. | :19:51. | |
"forgers' gazette". I find the Mail on Sunday and its pseudofascist far | :19:52. | :20:01. | |
right tendencies which, make Vladimir Putin look like a bleeding | :20:02. | :20:05. | |
heart liberal utterly abhorrent. The reality is that a considerable | :20:06. | :20:11. | |
amount of what the Mail on Sunday has printed has been pure and utter | :20:12. | :20:16. | |
fiction. Why don't you sue them then? Forgive me, suing a newspaper | :20:17. | :20:28. | |
is a rich person's game. Even if I am right as I know I am, and I know | :20:29. | :20:34. | |
that they are wrong, I would much rather just treat the whole thing | :20:35. | :20:38. | |
with the utter contempt that it deserves for it. But there were | :20:39. | :20:42. | |
stories that were printed that were true? Indeed they were. They | :20:43. | :20:48. | |
concerned drugs? And with respect those are still the issues which the | :20:49. | :20:52. | |
police are investigating. Given your religious background, do you think | :20:53. | :20:57. | |
you have sinned? Forgive me it is always much more complex than that, | :20:58. | :21:03. | |
of course I have. And I am in company in every other human being | :21:04. | :21:11. | |
for having my frailties and some of my fragility exposed. Most people | :21:12. | :21:16. | |
get through life without that ever coming into the public domain. I am | :21:17. | :21:22. | |
no better and no worse, it seems to me, than any number of other people. | :21:23. | :21:30. | |
But of course I have sinned in that old fashioned term, which I would | :21:31. | :21:35. | |
rarely use, I have to say. But I'm like everybody else, I'm frail. You | :21:36. | :21:40. | |
know what people think, they think Flower flowers, -- Paul Flowers, | :21:41. | :21:49. | |
Methodist minister how does he end up with rent boys and drugs, a | :21:50. | :21:54. | |
Methodist minister? They have not had to live in my skin or bothered | :21:55. | :22:00. | |
to inquire about other pressures upon my life. I would not wish to | :22:01. | :22:04. | |
talk with them about them because they clearly hold me in complete | :22:05. | :22:08. | |
contempt. Do you want to talk about these other pressures in your life? | :22:09. | :22:16. | |
I can do so very briefly. Yeah sure? At the time when things were getting | :22:17. | :22:22. | |
pretty hairy at the bank I had been caring for my mother at home, who | :22:23. | :22:27. | |
was dying, with everything else that was going on and I was weary and | :22:28. | :22:35. | |
stressed. Not least at seeing somebody who I loved die in front of | :22:36. | :22:43. | |
me. And it took a long time. But I would not want to use that as an | :22:44. | :22:47. | |
excuse, it simply happens to be part of the reality that I was facing and | :22:48. | :22:55. | |
which is common to lots of people, most of us have to juggle with a | :22:56. | :23:00. | |
whole raft of different pressures and stresses. It just so happens | :23:01. | :23:06. | |
that I had two or three that all came at the same time. But most of | :23:07. | :23:09. | |
us don't resort to drugs and rent boys? How do you know? What do you | :23:10. | :23:13. | |
most regret about this whole experience? Not taking more advice | :23:14. | :23:31. | |
when I should have done at certain points during several years. And I | :23:32. | :23:40. | |
think in some ways and this probably will sound a tad bitter, but I think | :23:41. | :23:45. | |
in some ways I had been set up to fail in certain areas. Because of | :23:46. | :23:51. | |
the structures of the co-operative and the way in which they encourage | :23:52. | :23:55. | |
democrats within the organisation to move into particular roles. And then | :23:56. | :24:01. | |
to be, frank, they suck you dry and pit you out at the end of it. No-one | :24:02. | :24:08. | |
at the Co-Op has contacted me at all in any way since I left at the end | :24:09. | :24:17. | |
of May. Thank you. Thank you. Our chief correspondent is here. What | :24:18. | :24:20. | |
have we learned from this? I think in a sense we just witnessed the | :24:21. | :24:26. | |
human downfall that went alongside the story of the politician's | :24:27. | :24:31. | |
favourite, the Co-Op bank, the great hope of the banking zest sector | :24:32. | :24:34. | |
turning into a basket case. There are three salient points, one is | :24:35. | :24:40. | |
just how convinced he was now that the Treasury was pushing the deal | :24:41. | :24:44. | |
for the Co-Op to buy more than 600 branches of Lloyds Bank. He talks | :24:45. | :24:49. | |
about Treasury ministers phoning up two and three times a week to see | :24:50. | :24:54. | |
how it was getting on, and making it clear that the Chancellor was behind | :24:55. | :25:03. | |
that. Not much of a surprise, we learned how much he hates the Mail | :25:04. | :25:06. | |
on Sunday, and they have asked to speak to him and he has declined. It | :25:07. | :25:11. | |
is embarrassing for the Government. It is tricky for the Treasury, this | :25:12. | :25:15. | |
accusation that they were the hands trying to push this deal with | :25:16. | :25:18. | |
Lloyd's that was ultimately doomed forward has been made before, it is | :25:19. | :25:21. | |
worth saying that's a pretty different version of events to what | :25:22. | :25:25. | |
Paul Flowers has given in front of MPs before. For their part the | :25:26. | :25:28. | |
Treasury has always denied there was any kind of political interference | :25:29. | :25:32. | |
and of course Paul Flowers is somebody who is very much associated | :25:33. | :25:36. | |
with the Labour movement, it is worth rembering also that the | :25:37. | :25:39. | |
Lloyd's chief executive and chairman on the record have said it was a | :25:40. | :25:43. | |
commercial decision. That said, during that deal myself and many | :25:44. | :25:47. | |
other journalists were hearing time and again from people in the City | :25:48. | :25:52. | |
who were sceptical, not just about whether it was the right decision, | :25:53. | :25:56. | |
but also whether it was feasible. This does again remind people of the | :25:57. | :26:01. | |
awkwardness, that the Treasury was tacitly backing a horse that many | :26:02. | :26:07. | |
thought was a dodgy old nag. In the meantime the Co-Op remain as basket | :26:08. | :26:13. | |
case? Yesterday they had to write off another ?400 million. They have | :26:14. | :26:18. | |
had a turbulent few weeks and an active chief executive in charge of | :26:19. | :26:21. | |
the group. They are trying to plough on. It is worth saying they have | :26:22. | :26:25. | |
managed to stagger on without having to take a bail out from the | :26:26. | :26:28. | |
taxpayer. They found another way of doing that by getting investment | :26:29. | :26:32. | |
from the hedge funds. They are certainly not in a position now | :26:33. | :26:36. | |
where they are free and clear of all the mistakes of the past. They are | :26:37. | :26:39. | |
braced for a series of their own investigations into what went wrong. | :26:40. | :26:42. | |
And tonight they are pretty reluctant to getting into talking | :26:43. | :26:47. | |
about exactly what Flower has suggested. They are working very | :26:48. | :26:51. | |
hard to try to get this done. They are trying to make big changes to | :26:52. | :26:54. | |
the group to be able to survive into the future and they are going to | :26:55. | :26:58. | |
have more very difficult headlines, not just about Reverend Flower and | :26:59. | :27:02. | |
his exploits while he was there but perhaps about some people who are | :27:03. | :27:05. | |
still actually at the group themselves. They may prove difficult | :27:06. | :27:11. | |
to shrug off in the coming weeks. It is a long way from a commitment, but | :27:12. | :27:14. | |
the Prime Minister says he would really like to raise the point at | :27:15. | :27:18. | |
which the Government confiscates money people might otherwise have | :27:19. | :27:23. | |
passed on to their children when they die. Hang on, you might say, he | :27:24. | :27:27. | |
has promised that before, and indeed he has. But he says his plans to | :27:28. | :27:31. | |
raise the threshold for what used to be called death duties have been | :27:32. | :27:35. | |
wrecked by being in partnership with the Liberal Democrats. It points up | :27:36. | :27:39. | |
the fact that this is a more politically and morally charged tax | :27:40. | :27:48. | |
than most. Once upon a time there was a large happy family, a bit like | :27:49. | :27:52. | |
the Walton, they lived in a big house and always said good night to | :27:53. | :27:56. | |
each other. When the elderly couple died, the whole family wept, then | :27:57. | :28:01. | |
they had to sell the house to pay death duties and they wept a bit | :28:02. | :28:06. | |
more. Hardly what you might call a fairytale ending. A long, long time | :28:07. | :28:12. | |
ago, back in 2007, the man who would be Chancellor promised to change all | :28:13. | :28:16. | |
that. The next Conservative Government will raise the | :28:17. | :28:20. | |
inheritance tax threshold to ?1 million. LINEBREAK | :28:21. | :28:27. | |
It was electoral Viagra, a speech that sealed him as the ultimate | :28:28. | :28:33. | |
politician, a game-changer in many ways, forcing Gordon Brown to stop | :28:34. | :28:42. | |
in his tracks and his call fors an early -- for an early election and | :28:43. | :28:46. | |
forcing them to re-think their inheritance tax policy. They decided | :28:47. | :28:53. | |
to create a tax-free limit of estates up to ?650,000 in marriages. | :28:54. | :28:58. | |
Then disaster struck in the form of the financial crisis the Tory policy | :28:59. | :29:01. | |
flew out the window and the coalition agreement with the Lib | :29:02. | :29:05. | |
Dems ensured it never flew back in. The Lib Dems aren't the only ones | :29:06. | :29:09. | |
against it. Many see inheritance tax as fair way to ensure the wealth of | :29:10. | :29:15. | |
the nation doesn't just subside in a few dynasties. All civilisations | :29:16. | :29:20. | |
going back to Rome and through fuedal Europe have had some kind of | :29:21. | :29:30. | |
system where society shares in wealth being transferred from rich | :29:31. | :29:33. | |
fathers and mothers to their offspring. Why? Because the | :29:34. | :29:36. | |
offspring did nothing to deserve the wealth, so we should share in their | :29:37. | :29:43. | |
good luck. And if you don't do that societies OKsify. But there teams -- | :29:44. | :29:50. | |
OKsify. There seems to be new life in it, with UKIP looking for their | :29:51. | :29:55. | |
grey votes they broach the same ground. Would I like to go further? | :29:56. | :30:00. | |
Yes I would. I believe people should able to pass money down through the | :30:01. | :30:03. | |
generations and pass things on to the children. The ambition is still. | :30:04. | :30:07. | |
There I would like to go further. It is better than it was, but it didn't | :30:08. | :30:10. | |
make it into the coalition agreement, it is something to | :30:11. | :30:21. | |
address in the manifesto. Something You wonder at the new figure, under | :30:22. | :30:28. | |
?1 million might not be so tempting. Tories are promising expensive | :30:29. | :30:34. | |
things without showing how they will pay for them. Those who came to | :30:35. | :30:38. | |
power on the stark shores of austerity, this upland is sending | :30:39. | :30:41. | |
out a very different message of how much cash there is to spend now. | :30:42. | :30:45. | |
What has happened since 2010 is there is no increase even in line | :30:46. | :30:50. | |
with inflation of the inheritance tax threshold to bring more people | :30:51. | :30:54. | |
in. Rather than increasing the threshold significantly, it has | :30:55. | :30:59. | |
actually been cut relative to price inflation. You might ask whether the | :31:00. | :31:02. | |
need to raise the flesh hold now is a signal of how badly the Government | :31:03. | :31:06. | |
has failed on its own housing policy. Last week the Office for | :31:07. | :31:11. | |
Budget Responsibility predicted that because of rising house prices one | :31:12. | :31:15. | |
in every ten people will become liable to pay inheritance tax over | :31:16. | :31:19. | |
the next five years if it stayed at the current rate. That number is | :31:20. | :31:24. | |
currently one in 20. This street in a posh part of London illustrates | :31:25. | :31:29. | |
the fiscal drag dilemma rather well. It is not just the mansions that are | :31:30. | :31:34. | |
liable for inheritance tax, no it is something far more modest house | :31:35. | :31:43. | |
boat, just short of ?800,000. And don't think this is just a London | :31:44. | :31:47. | |
bubble. House price rises have created a massive fiscal drag all | :31:48. | :31:54. | |
over the country. Areas around Manchester or Leeds where change | :31:55. | :31:58. | |
will be keenly felt. Look closely you will see many story archals | :31:59. | :32:05. | |
right there. So far it is all fantasy, no commitment, just | :32:06. | :32:09. | |
expressions of Tory hope. Do you see this as the perfect ending or a | :32:10. | :32:15. | |
rather grim fairytale. That will depend quite bluntly on whether you | :32:16. | :32:20. | |
think kids deserve their parents' wealth. Mone is an entrepeneur and | :32:21. | :32:27. | |
founder of the lingerie line Ultimo. Peter Buffett is a musician, fill | :32:28. | :32:35. | |
lentist and son of the -- philanthropist and son of Warren | :32:36. | :32:39. | |
Buffett. He joins us from his home in the states. When this happens you | :32:40. | :32:46. | |
will be dead, why do you care? Because Jeremy I work really hard | :32:47. | :32:50. | |
every single day. Like a lot of people for my children and for my | :32:51. | :32:54. | |
children's future. I want them to have that little nest there for | :32:55. | :33:02. | |
their future and for their children and I don't see why I, others, | :33:03. | :33:08. | |
should work extremely hard, pay your tax and then when you die it is a | :33:09. | :33:15. | |
double what happens OKKy and you have to pay it again, it should be | :33:16. | :33:23. | |
stopped completely. Even if passing money on perpetuates social | :33:24. | :33:26. | |
division, you don't worry about that? I should decide what to do | :33:27. | :33:41. | |
with my money and whether I want to give it to charity. The Government | :33:42. | :33:44. | |
shouldn't tax me again when I have already paid. It is unfair and I | :33:45. | :33:47. | |
think you know there is a lot more people that have to pay inheritance | :33:48. | :33:52. | |
tax now because house prices are rising. You pay on your whole | :33:53. | :33:56. | |
estate, so there is a lot more people that have to pay that tax and | :33:57. | :34:01. | |
I have heard some horror stories, where you know someone has lived in | :34:02. | :34:06. | |
the family home for 20, 25 years and they have to actually move out of | :34:07. | :34:10. | |
their family home to pay the tax. That is completely and utterly | :34:11. | :34:14. | |
unfair. They will be dead? They have had to pay it because they have | :34:15. | :34:19. | |
inherited the house and the estate. They need to pay the tax bill and | :34:20. | :34:22. | |
they have to sell the house to move out. Let me bring in Peter Buffett, | :34:23. | :34:28. | |
your father famously supports the inter-Hans tax? That's correct -- | :34:29. | :34:35. | |
inheritance tax? That's correct. Do you share that view? I do, my only | :34:36. | :34:40. | |
question would be where the tax is going. That is my personal | :34:41. | :34:43. | |
frustration, if it is going to better public schools and | :34:44. | :34:48. | |
infrastructure that is great. So we might all agree that a Government | :34:49. | :34:54. | |
getting taxes that are doing good things with it is better than | :34:55. | :35:04. | |
shovelling it into a Bonn dog hole. -- boon dog hole. That is the | :35:05. | :35:07. | |
problem with Governments everywhere, this principle that everybody should | :35:08. | :35:12. | |
start off more or less equal is one you subscribe to? Absolutely. Part | :35:13. | :35:16. | |
of that comes down to the question of how much is enough. That is where | :35:17. | :35:21. | |
I definitely agree with my father and have experienced it myself. In | :35:22. | :35:25. | |
what way are you better for not having a great inheritance to look | :35:26. | :35:34. | |
forward to? I could sum it up in phrase, I believe self-respect comes | :35:35. | :35:39. | |
from earning its own reward. So I'm very proud of the life I built | :35:40. | :35:44. | |
myself. I think if I lived off my father's wealth or do in the future, | :35:45. | :35:48. | |
I'm going to frankly wonder if I could have done it myself. Michelle | :35:49. | :35:52. | |
Mone, do you worry about your children ever getting out of bed if | :35:53. | :35:55. | |
they inherit a vast amount of money from you? You know Jeremy I bring my | :35:56. | :36:02. | |
children up with that hard-working, want to succeed background. I just | :36:03. | :36:07. | |
think that you know there is people out there that work extremely hard | :36:08. | :36:11. | |
and it is up to them what they want to do with their money, once they | :36:12. | :36:15. | |
have paid the tax. If you want to give it to charity, if they want to | :36:16. | :36:19. | |
give it to their children. But for me, my will is my kids don't | :36:20. | :36:23. | |
suddenly get all the cash, my kids get it in stages in life. Hopefully | :36:24. | :36:27. | |
they won't get it until they are really old and I will live forever. | :36:28. | :36:32. | |
If they do not get it through any effort of their own? That's what I | :36:33. | :36:37. | |
want to do. I want to work hard in order to make my children's future a | :36:38. | :36:40. | |
bit easier, and in order that they have got that little nest there, | :36:41. | :36:44. | |
they are protected there. I think that's what most parents want to. Do | :36:45. | :36:48. | |
I have three children, I'm a single parent and I don't want my kids | :36:49. | :36:53. | |
struggling, but I don't want them being spoiled as well. I also want | :36:54. | :36:57. | |
to give to charity, but it should be the people's right to do what they | :36:58. | :37:01. | |
want to do with their money once they pay the tax on T I don't want | :37:02. | :37:09. | |
the Government dewhat to do -- deciding what to do with my money | :37:10. | :37:13. | |
once I'm dead. The same amount of money being taxed twice, you tern | :37:14. | :37:17. | |
you pay income tax on t and other taxes no doubt. Then you die and | :37:18. | :37:26. | |
your tax is again on it? To me and I am no tax export, trust me. I'm an | :37:27. | :37:33. | |
expert of being a child of a really rich guy. But you are taxed as you | :37:34. | :37:39. | |
are making it as it is you know flowing somewhere and then if you | :37:40. | :37:48. | |
have held on to it, and basically hoarded it, they are you are taxed | :37:49. | :37:52. | |
because essentially, and this would be my dad as view that you are | :37:53. | :37:56. | |
allowed to make all that money because the system, the structure, | :37:57. | :38:00. | |
the laws, all the rules of whatever world you were making that money in | :38:01. | :38:04. | |
allowed you to do it. There are places in the world where you can | :38:05. | :38:07. | |
make a lot of money and you don't see a dime for all sorts of reasons. | :38:08. | :38:14. | |
It makes sense essentially to say to the system that allowed you to amass | :38:15. | :38:18. | |
a fortune to say, OK, here is some of that back, thatch. It doesn't | :38:19. | :38:24. | |
mean my kids -- thank you very much. It doesn't mean my kids won't get | :38:25. | :38:29. | |
some. But some of it is a payback to the system that allowed you to get | :38:30. | :38:33. | |
it in the first place. A lot of people want to provide and make | :38:34. | :38:37. | |
their children's lives a lot better when they are not. There for example | :38:38. | :38:43. | |
getting them through university. The worst case scenario happens, | :38:44. | :38:47. | |
sometimes they pay the tax on the state they can't afford to go to | :38:48. | :38:50. | |
university, they can't afford to live the life that other people with | :38:51. | :38:57. | |
lots of money do. That has changed today because it has been raised | :38:58. | :39:07. | |
from ?325,000 to a million. Or possibly will be. House prices are | :39:08. | :39:11. | |
rising which means a lot more people will have to inheritance tax, it is | :39:12. | :39:19. | |
unfair and should be abolished. Isn't it the case, on your 19th | :39:20. | :39:23. | |
birthday you inherited a whole lot of stock to the tune of millions and | :39:24. | :39:28. | |
millions of dollars? It became that. When I got it it was actually | :39:29. | :39:37. | |
$90,000, $250,000 today. No and lot of money, no question. It was | :39:38. | :39:45. | |
$90,000 when I turned 1, it allowed me to invest in myself, build my | :39:46. | :39:50. | |
business and did what I did. You have invalidated your own argument? | :39:51. | :39:55. | |
Not at all, my first statement is how much is enough. I'm not saying | :39:56. | :39:59. | |
inheritance is entirely wrong. I'm saying huge amounts of inheritance | :40:00. | :40:05. | |
can be very damaging. I think a little inheritance can be valuable | :40:06. | :40:09. | |
what Michelle said in terms of doing it in stages is a great idea. | :40:10. | :40:17. | |
Where you do you think of when you hear the words "war on terror. | :40:18. | :40:25. | |
Afghanistan, if not Texas. The new front is in Africa, it is | :40:26. | :40:29. | |
underreported because the fight against the murderous bigots is done | :40:30. | :40:35. | |
by African Union troops. Around the town in Somalia they are wage ago | :40:36. | :40:40. | |
campaign against Islamist forces controlling more territory than any | :40:41. | :40:43. | |
other Al-Qaeda affiliate in the world. The BBC's international | :40:44. | :40:49. | |
development correspondent is the only foreign correspondent | :40:50. | :40:59. | |
accompanying the African troops. Soldiers from Uganda head for battle | :41:00. | :41:04. | |
against radical Islamist rebels in Somalia. Africa is the new frontline | :41:05. | :41:17. | |
in the war against Al-Qaeda. Bruted force is being used against Islamist | :41:18. | :41:24. | |
insurgents, not only here in Somalia but the west African nations too. | :41:25. | :41:38. | |
West African nations too. The soldiers going through the fight | :41:39. | :41:43. | |
face a fierce some opponent, Al-Shabab. Somali Government troops | :41:44. | :41:52. | |
are involved too. They are tough fighters but they sometimes lack | :41:53. | :41:57. | |
discipline and are always short of equipment. Without the Ugandans, the | :41:58. | :42:10. | |
Somali army wouldn't stand a chance. If so much | :42:11. | :42:17. | |
Map of the Somali troopsers don't look like they can stay and fight, | :42:18. | :42:23. | |
they can. They are part of a force in Somalia paid for by the west to | :42:24. | :42:30. | |
do a job western Governments won't. As the armoured column approaches | :42:31. | :42:39. | |
the town, Al-Shabab are ready. The soldiers I'm with know what's | :42:40. | :42:49. | |
coming. We are close to the town and there appears to be a firefight | :42:50. | :42:53. | |
happening about 100ms in front of us. Another African Union vehicle in | :42:54. | :42:58. | |
front of us and they appear to be engaging across the bank where the | :42:59. | :43:04. | |
town is. There is some fire coming back in this direction. Some of it | :43:05. | :43:22. | |
was coming in this direction. Shoot straight and kill the enemy! Bullets | :43:23. | :43:44. | |
rain on the Ugandans. Fighting vehicles are caught in the traffic | :43:45. | :43:53. | |
jam from hell. This is the main shopping street in the town. Look | :43:54. | :44:20. | |
what's happened to it now? An Al-Shabab side board, "the Koran is | :44:21. | :44:28. | |
the only path". I'm here under the mosque, OK. He's going to start | :44:29. | :44:40. | |
asking for ammunitions now, any vehicle moving between you and you | :44:41. | :44:47. | |
fast, shoot. Get your speed bigger. After fighting his way into town the | :44:48. | :44:53. | |
general took control. What I'm sure is I have adequate man power, 1500 | :44:54. | :44:59. | |
soldiers on the ground and they won't do it to us they won't. The | :45:00. | :45:07. | |
battle has taken its toll. But civilians suffer more. This woman's | :45:08. | :45:12. | |
family was hit by a mortar round. She's the only surviving member. The | :45:13. | :45:18. | |
take on the town was only part of a -- the attack on the town was only | :45:19. | :45:23. | |
part of the offensive across the area where 3 million people live, | :45:24. | :45:28. | |
expect more civilian casualties and more refugees. Somalia has been at | :45:29. | :45:38. | |
war for decades, the human cost to that is incalculable. The governor | :45:39. | :45:50. | |
of the region thanked the Ugandans for coming. I put it to him that it | :45:51. | :45:56. | |
was Somalia's deep plan and private traditions was needed to shore it | :45:57. | :46:00. | |
up. You are saying that sides in Somalia have foreign support? More | :46:01. | :46:06. | |
than us. Al-Shabab, there are fighters who are going to teach you | :46:07. | :46:11. | |
know our youngest how to make suicide. How to make EID. This is | :46:12. | :46:19. | |
from these fighters here. That is the tragedy of Somalia, | :46:20. | :46:26. | |
foreign troops dig in, foreign Jihadists battle against them. The | :46:27. | :46:32. | |
Ugandans have made a significant advance by reaching Corleoli, but | :46:33. | :46:38. | |
they don't control the down. Very soon the annual rains will come and | :46:39. | :46:43. | |
the big MPs of war will be dogged down. Then Al-Shabab will retoot to | :46:44. | :46:55. | |
fight although in a distant and often what seems un-Govable country. | :46:56. | :47:02. | |
All the -- ungovernable country. All the men in the office have been | :47:03. | :47:06. | |
preparing, with the quote that Michael Gove is a not very secret | :47:07. | :47:14. | |
fan of our music of choice, fab-hop. In case it has passed you by, here | :47:15. | :47:21. | |
is live, uncut and wild, its leading exponent, Mr Bean the gentleman | :47:22. | :47:28. | |
rhymer. -- Mr B gentleman rhymer. | :47:29. | :47:33. | |
Hip, hop, hip, hop, you don't stop. # Walking to the bang jan rhythm | :47:34. | :47:39. | |
walking to the beat. # You wake up late for school and | :47:40. | :47:52. | |
you don't want to go You ask your ma please and she still | :47:53. | :47:56. | |
says no. You miss two classes and no homework | :47:57. | :48:04. | |
But your teacher thinks he's class You got a fight | :48:05. | :48:11. | |
On Newsnight to party. You got to fight, for your right to | :48:12. | :48:21. | |
party # That's p-a-r-t-y. | :48:22. | :48:29. | |
Cold winds coming in from the North Sea will be a big feature of the | :48:30. | :48:38. | |
weather over the next few days. A lot of cloud across the east during | :48:39. | :48:43. | |
Wednesday, with outbreaks of rain. In the west fair few showers in | :48:44. | :48:48. | |
Northern Ireland, at least there will be sunny spells developing. | :48:49. | :48:49. | |
Quite | :48:50. | :48:50. |