:00:12. > :00:16.When is a delay a defeat? It looks as if the reform of the banking
:00:16. > :00:21.system, which everyone so recently agreed was urgently necessary,
:00:21. > :00:25.isn't going to happen any time soon. So, economics editor, have the
:00:25. > :00:31.bankers won? Jeremy, there are ten- year-old boys who play football for
:00:31. > :00:36.England before any banking reforms are introduced at this rate. If the
:00:36. > :00:41.coalition can't corner the bankers any time soon, what about top tax
:00:42. > :00:48.payers. Getting the fabulously wealthy to shell out for just the
:00:48. > :00:52.right vintage royal Royce or Bentley has never been difficult,
:00:52. > :00:56.but paying taxes, not so much. That is the great battleground of
:00:56. > :01:00.British politics at the moment. We ask politicians from the three main
:01:00. > :01:04.parties how much tax we should all pay, and how it should be raised.
:01:04. > :01:09.Before he got the prime ministerial limo, David Cameron signalled he
:01:09. > :01:15.was a social liberal, but is he? What, for example, is he trying to
:01:15. > :01:21.do to the abortion laws. And we go deep under the Balkans, to see the
:01:21. > :01:31.finest cave wildlife in the world. Is the survival of extraordinary
:01:31. > :01:32.
:01:32. > :01:36.life forms put at risk by prospect of membership of the European Union.
:01:36. > :01:39.It will be a couple of weeks yet until we learn what fate is
:01:39. > :01:43.proposed for the banking system of this country. To the obvious
:01:43. > :01:48.irritation of people like the Business Secretary, Vince Cable,
:01:48. > :01:50.the bankers' advocate claim banking reform will derail the country's
:01:50. > :01:57.fragile recovery, and tonight the Government has indicated it has
:01:57. > :02:02.listened to them. Any ri forms won't take - reforms won't take
:02:02. > :02:05.effect any time this side of the election. Our economics editor is
:02:05. > :02:09.here. So just talk us through it?
:02:09. > :02:12.This morning it was all war, war between Vince Cable and George
:02:12. > :02:16.Osborne, the Liberal Democrats and the banks. You don't get headlines
:02:16. > :02:23.like this unless somebody has rung up a few newspaper editors and
:02:23. > :02:28.talked to them. The sub stafpbs Liberal Democrats want a faster
:02:28. > :02:36.pace - the substance was Liberal Democrats want faster pace than the
:02:36. > :02:40.Tories, and there was a split Quotes:
:02:40. > :02:45.You fast forward to this afternoon, and Vince Cable goes on camera, it
:02:45. > :02:50.is not so much war. There is no division, what I said to the Times
:02:50. > :02:53.this morning is that given all the financial volitility and
:02:53. > :02:58.instability that is in the world at the moment, it is all the more
:02:58. > :03:01.important that we have reform of the banking system. How we do that,
:03:01. > :03:07.we have got to await the final report of the Banking Commission,
:03:07. > :03:10.that is in a couple of weeks time, that will deal with the mechanisms
:03:10. > :03:14.and timing. Wonderful. What is the substance of
:03:14. > :03:19.the banking reform proposals? British banks are universal banks,
:03:19. > :03:23.they do investment, retail, business lending, high street
:03:23. > :03:28.lending, the point of the reform is to stop them blowing up, like three
:03:28. > :03:33.of them did so spectacularly in 2008. The idea behind the
:03:33. > :03:42.independent Banking Commission's proposal, is first of all, you
:03:42. > :03:45.cause them all to hold more capital, �10 for every �100 of risk. Then
:03:45. > :03:49.there is struck tue, the ring- fencing proposal amounts to this,
:03:49. > :03:52.banks that have investment arms, the risky bit, and the retail arm,
:03:52. > :03:56.with the savings from the high street, you force them to treat the
:03:56. > :04:00.retail bit as a separate bank. You give it enough money to survive if
:04:00. > :04:04.things all go wrong. The banks they say they can't do this, look at the
:04:04. > :04:07.economy, the economy is flatlining, more businesses are screaming out
:04:08. > :04:13.for credit, we can't seem to provide enough of it, some
:04:13. > :04:17.businesses are so busted they can't even have the credit were we to
:04:17. > :04:21.provide it. It has to be postponed, and some briefings, out of the
:04:21. > :04:25.banking sector, have mentioned this year, 2019, as the point at which
:04:25. > :04:31.he they would like it to come in. Some people in the banking sector,
:04:31. > :04:37.some experts in banking think this is a little bit is ingenious.
:04:37. > :04:40.banks are playing - Disingenious. The banks are playing a canny game,
:04:40. > :04:46.they know change is on the way and likely. It is in their interests to
:04:46. > :04:49.delay this change for as long as possible, to defer it for as long
:04:50. > :04:53.as possible, in the hope that in the end it will go away. There is a
:04:53. > :04:57.hope that they are under pressure at the moment to extend credit,
:04:57. > :05:00.clearly the economy is fragile, but I think there has to be a limit to
:05:00. > :05:03.this, you can't keep on pushing this out forever. If we are going
:05:03. > :05:08.to have meaningful banking reform it needs to happen in a reasonable
:05:08. > :05:11.time frame, in my opinion. politics of all of this?
:05:11. > :05:14.Banking Commission's proposal on ring-fencing is about the most
:05:15. > :05:18.timid one could imagine of all the things on the table. They got very
:05:18. > :05:21.annoyed when I and other journalists suggested they had been
:05:21. > :05:25.nobbled, they were saying everything is still on the table.
:05:25. > :05:30.The more radical proposals could still happen. Then, George Osborne
:05:30. > :05:33.pre-empted them, by accepting this least radical of all the proposals.
:05:33. > :05:37.And Vince Cable is known to want to go further. It is not just any old
:05:37. > :05:41.issue for Vince Cable, he has written a book about why they
:05:41. > :05:44.should go further and split the banks up. Those close to him have
:05:44. > :05:47.always thought, if he doesn't get something close to what he wants on
:05:47. > :05:51.this, he does begin to look a little bit like a hostage. This is
:05:51. > :05:56.his issue, if he doesn't get it, what is he there to do.
:05:56. > :06:01.To discuss if the bank reforms should be delayed for so long, I'm
:06:01. > :06:06.joined by the former Deputy Chairman at Barclays, and external
:06:06. > :06:09.director at the Bank of England, and also David Pitt-Watson, a fund
:06:09. > :06:18.manager, and maybe of the cross- party Banking Commission. A
:06:18. > :06:22.precursor to the Vickers Commission, which we so eagerly await. The
:06:22. > :06:25.banks argue it is risky without a delay, is it? Let's be clear about
:06:25. > :06:30.the problem we have here, where you have a universal bank, you have the
:06:30. > :06:36.retail bank that's lend to go businesses and taking our deposits,
:06:36. > :06:43.and you have what people call the casino banking. If the banks are
:06:43. > :06:47.too big to fail, the tax-payers are subsidising the casino banking. The
:06:47. > :06:50.aim of the ring-fencing is to stop people having to subsidise that
:06:50. > :06:54.casino banking. That seems to me to be entirely reasonable. There is a
:06:54. > :06:59.second reason that you want the ring-fencing, Jeremy, if people
:06:59. > :07:03.think they are in institutions that are too large to fail, they will
:07:03. > :07:07.keep lending and lending and lending, they will know they are
:07:07. > :07:10.bailed out because they are too large to fail, the markets don't
:07:10. > :07:15.work. Getting this implemented, it will take a little time, the notion
:07:15. > :07:20.it will take years and years and years, I can't see why that isness
:07:20. > :07:27.radio. You accept at some point - Necessary. You accept at some point
:07:27. > :07:30.there will be separation? No, I don't. I we need banks to be safe,
:07:30. > :07:33.but once you have the concept of "too big to fail", that doesn't
:07:33. > :07:39.come from the bankers, but politicians who don't want
:07:39. > :07:49.depositors to lose any money. Once you have the two big to fail
:07:49. > :07:49.
:07:49. > :07:53.principle, you have to have regulation to control what the
:07:53. > :07:57.bankers do. The trouble with regulation in trying to run a bank
:07:57. > :08:00.sensibly and prudently, is everybody behaves right up to the
:08:00. > :08:09.line of regulation. As soon as that happens then you get danger. So
:08:09. > :08:14.what I would do, is to try to go back to avoiding the totally too
:08:14. > :08:19.big to fail presence pel, and try to ensure, if - principle, and try
:08:19. > :08:24.to ensure, if bank failed, all creditors, including depositors,
:08:24. > :08:28.would lose 10% of their money, and that would put a great premium on
:08:28. > :08:32.running a bank safely, and that is what is needed, there would be
:08:32. > :08:35.reward for those running bank safely. What do you make of that
:08:35. > :08:39.argument? It is radical proposition, what is being suggested. I don't
:08:39. > :08:44.think most people put their money in bank thinking it could all go
:08:44. > :08:48.wrong and they will lose some of it. If we are putting money in bank it
:08:48. > :08:52.is sensible that money should be ring-fenced and looked after
:08:52. > :08:56.properly. But we need some how not to have the situation, and Martin
:08:56. > :08:59.would agree with this, where, for years and years and years, because
:08:59. > :09:04.of being too big to fail, that the investment banking activities of
:09:04. > :09:09.our large banks are effectively being subsidised, in no small
:09:09. > :09:12.measure, by the taxpayer, and I think Martin would agree with that.
:09:12. > :09:16.They didn't ask for that subsidy, that comes from a political
:09:16. > :09:22.decision not to let the banks fail. The banks that got us into this
:09:22. > :09:25.trouble, in 2007, were not universal banks, they were New York,
:09:25. > :09:30.Bradford & Bingley, and Lehman Brothers, none of which were
:09:30. > :09:36.universal banks. The universal banks were Barclays, HSBC, and
:09:37. > :09:43.Lloyd's before the merger, they did not get us into trouble. The Royal
:09:43. > :09:49.Bank of Scotland though? That was nothing to do with the problem of
:09:49. > :09:54.running universal banks, that was due to a series of absolutely
:09:54. > :10:00.insane acquisitions, which he had made, which made it totally unsound.
:10:00. > :10:07.It was not failure of a universal banking system. This is addressing
:10:07. > :10:11.a problem which isn't really there. If a universal bank is run sensibly,
:10:11. > :10:15.it isn't danger. What do you make of the argument that these
:10:15. > :10:19.proposals really only address banking institutions in this
:10:19. > :10:24.country, particularly in London, of course, and that they therefore, if
:10:24. > :10:28.implemented, put this country at a serious disadvantage as regards the
:10:28. > :10:33.rest of the world? Of course other countries have different model,
:10:33. > :10:38.much more draconian in the United States. A different but much more
:10:38. > :10:41.draconian measures in Switzerland, for example. As you said in your
:10:41. > :10:46.introduction, the ring-fencing, rather than the spliting of the
:10:46. > :10:50.investment bank and the retail bank, actually is one of the softer ways
:10:50. > :10:53.of achieving what it is we are trying to achieve, which is that
:10:53. > :10:57.tax-payers don't subsidise investment banking activities, and
:10:57. > :11:02.the investment banking activities are subject to the market. So other
:11:02. > :11:05.countries are doing this in slightly different ways. I don't
:11:06. > :11:09.think there will be a such exodus from London because of this.
:11:09. > :11:12.Frankly, if you were Angela Merkel, would you wish to subsidise an
:11:12. > :11:18.investment bank. Why are you shaking your head so much? It would
:11:18. > :11:21.be great disadvantage to London, it would make UK banks, UK-owned banks,
:11:21. > :11:25.much less competitive internationally, if we weren't
:11:25. > :11:32.allowed to have universal banks. you think the banking sector is too
:11:32. > :11:38.big in this country? I don't think it is too big if it is sensibly run.
:11:38. > :11:42.It is a bit of an "if" if you take the experience of the Royal Bank of
:11:42. > :11:46.Scotland? Not to me, my approach would make them sensibly run. I
:11:46. > :11:50.think Vince Cable has always been very anti-banks, and he has always
:11:50. > :11:54.thought that the banking system was far too big for the rest of the
:11:54. > :11:59.economy. A cure to that is to make the rest of the economy bigger.
:11:59. > :12:05.Actually the banking system, not only does it employ hundreds of
:12:05. > :12:09.thousands of people, which is very important, it also contributes an
:12:09. > :12:13.enormous amount of tax. Our banks are regarded as world leaders. So
:12:13. > :12:20.it is something which you throw away at your peril.
:12:20. > :12:26.I would agree with that. One point I think is funny, which is how we
:12:26. > :12:31.have managed to link the ring- fencing of the banks to growth in
:12:31. > :12:35.the economy. Because I can't see where there is an economic linkage
:12:35. > :12:39.there, the bit that lends to the economy, will still be within the
:12:39. > :12:43.ring-fence. It will still have a low-cost of capital. This shouldn't
:12:43. > :12:45.really make any difference to the growth in the economy. I don't
:12:45. > :12:49.quite understand why that argument has come from.
:12:49. > :12:54.Thank you both very much. The question of what to do with the
:12:54. > :12:58.banks has illuminated the divisions within the coalition. When it comes
:12:58. > :13:02.to managing the economy, Conservative and Liberal Democrats
:13:02. > :13:06.instincts are very often completely at odds, nowhere is that more
:13:06. > :13:11.starkly illustrated than when it comes to tax, who should pay it and
:13:11. > :13:16.how much. The flash point is the 50%, top rate of income tax for
:13:16. > :13:21.people earning more than �150,000 a year. It was brought in by the last
:13:21. > :13:26.Labour Government, the Liberal Democrats are fans, plenty of
:13:26. > :13:31.Tories think it is absurd and fairly unnecessary. As political
:13:31. > :13:36.slogans go at the moment, tax the rich is hard to beat. Rich is one
:13:36. > :13:40.of the maddeningly hard words to define, assuming you can decide who,
:13:40. > :13:45.the next big problem is how. Getting the fabulously wealthy to
:13:45. > :13:50.shell out for just the right vintage Rolls-Royce or Bentley, has
:13:50. > :13:53.never been too difficult, paying tax, not so much. How to make them
:13:53. > :13:57.pay more? Well that is one of the big battlegrounds of British
:13:57. > :14:03.politics right now. Before the last election, Labour
:14:04. > :14:08.set a tax trap, the Conservatives as obvious as a high-visibility
:14:08. > :14:13.jacket. Introducing a new 50p tax rate on incomes above �150,000, to
:14:13. > :14:18.kick in after the election. They were hoping that the Conservatives
:14:18. > :14:21.would promise to scrap it. So far the Conservatives, or the coalition,
:14:22. > :14:25.indeed, hasn't, but George Osborne, the Chancellor, desperately wants
:14:25. > :14:30.to. If only he could find the political cover.
:14:30. > :14:34.I think the only way they are going to resolve this is to swap the 50p
:14:34. > :14:40.tax with something that looks just as painful, equally as painful for
:14:40. > :14:42.the high earners, whether that is going to raise much money is
:14:42. > :14:46.debatable, I don't think this is about taxation about raising
:14:46. > :14:50.revenue, this is about taxation for political purposes not economic
:14:50. > :14:53.ones. Getting the mechanics of the tax system right, so the rich pay
:14:53. > :14:59.more, is notoriously difficult, people change their behaviour, and
:14:59. > :15:09.there are unintended consequences, for example, you could be the
:15:09. > :15:10.
:15:10. > :15:16.billionare owner of a �500,000 Bentley and not pay tax. If you
:15:16. > :15:26.were struggling to put a clapped out Ford on the road, that is �100
:15:26. > :15:36.
:15:36. > :15:46.The public is urging the Government to lower taxes. By bringing in
:15:46. > :15:52.
:15:52. > :15:55.Popular tax cuts would cost the Exchequer �15.5 billion. The
:15:55. > :15:59.Liberal Democrats in the coalition want to introduce a mansion tax to
:15:59. > :16:03.hit the rich where they live, by hitting them where they live, or at
:16:03. > :16:07.least live for a few weeks in the summer, most years.
:16:07. > :16:12.In some of the more prestigious locations in London, the properties
:16:12. > :16:17.are being bought by people not so much to live in, but as somewhere
:16:17. > :16:21.to keep their wealth. Safe during the troubled times. These are the
:16:21. > :16:25.biggest safety deposit boxes in the world.
:16:25. > :16:30.True, some of the pads here could set you back tens of millions of
:16:30. > :16:34.pounds, but look on the bright side w a good accountant, and the right
:16:34. > :16:41.status, the only tax you will have to pay on buying, owning or selling
:16:41. > :16:44.them is �26 a week in council tax. Whilst the community secretary,
:16:44. > :16:50.Eric Pickles, has called a mansion tax, a big mistake, other
:16:50. > :16:56.Conservatives think there might be something in the idea.
:16:56. > :16:59.supposedly have 5% stamp duty above �1 million for house, but all those
:16:59. > :17:04.houses are sold within company tax wrappers. Essentially the rich
:17:04. > :17:09.people buying and selling these are paying 0.5%, rather than 5%. We
:17:09. > :17:13.need to close that tax loophole. I would also like to see capital
:17:13. > :17:17.gains tax applied, to overseas residents, who are currently still
:17:17. > :17:22.exempt from that. Yes they should investment in business assets and
:17:22. > :17:24.create jobs, but when it is UK property, I don't see why we would
:17:24. > :17:29.want to encourage them pricing everyone else out of the market,
:17:29. > :17:35.not living in that property, then selling it and not paying any tax.
:17:35. > :17:38.Labour too has rather changed its tune. Remember how Peter Mandelson
:17:38. > :17:42.once famously declared himself intensely relaxed about people
:17:42. > :17:47.getting filthy rich. Well, listen to the current leader. My party
:17:47. > :17:54.must change. We were intensely relaxed about what happened at the
:17:54. > :17:57.top of society, I say no more. Some commentators say that now in
:17:57. > :18:00.all parties the political heart is overruling the economic head.
:18:00. > :18:03.are going through a period in Britain right now where people
:18:03. > :18:09.aren't asking how do we get the most money out of the rich, they
:18:09. > :18:12.are asking how can we be seen to hurt the rich. It is a very big
:18:12. > :18:16.question, I'm concerned this will lead us back to where they were in
:18:16. > :18:21.the 70 where is the very wealthy will do their business elsewhere.
:18:21. > :18:27.It might be the equivalent as the Rolling Stones leaving Britain, and
:18:27. > :18:31.Michael Caine not doing any films here. They are a few examples. What
:18:31. > :18:36.about the entrepeneur, the scientists, the artists, who came
:18:36. > :18:39.when we cut the top rate of tax, they may go now. In troubled
:18:39. > :18:44.economic times there aren't many votes in speaking up for the
:18:44. > :18:48.superrich. Everyone right now is competing to be the party of the
:18:48. > :18:52.underdog. Here to discuss this is the Conservative MP, John Redwood,
:18:52. > :18:59.Lord Newby, who speaks on Treasury issues for the Liberal Democrats,
:18:59. > :19:05.and the shadow Treasury minister, Chris Leslie. What is tax for, it
:19:05. > :19:10.is a force for good in itself and it pays the bills? It is to pay the
:19:10. > :19:14.bills for our large and expanding public sector. We have record
:19:14. > :19:19.spending every year under the coalition and as we did under
:19:19. > :19:23.Labour, we need to pay those pills. Can taxing be a force for good in
:19:23. > :19:26.itself? It is the price you pay for a civilised society, if you don't
:19:26. > :19:30.tax people and have public service what kind of society is that. You
:19:30. > :19:35.don't want to tax people to punish them, you want to tax people in a
:19:35. > :19:40.way that is seen as far as possible to be fair. I think you probably
:19:40. > :19:44.want to have as low tax as possible generally, but not at the expense
:19:44. > :19:48.of good quality public services. We have always taken the view we want
:19:48. > :19:52.progressive taxation, in other words, fairer taxation, where the
:19:52. > :19:56.wealthiest people pay the greatest share. That is really the principle.
:19:56. > :20:00.But ultimately you are coming together as a society, pooling
:20:00. > :20:04.revenues, money, and as a society, as a community, achieving more than
:20:04. > :20:10.you would achieve as individuals alone, with health insurance, for
:20:10. > :20:13.example, rather than an NHS. Let's take the specific question of the
:20:13. > :20:16.50p rate of tax, we don't know, and the Chancellor of the Exchequer
:20:16. > :20:21.doesn't know how much this tax is raising, and won't know for a while.
:20:21. > :20:27.It is said by many to be a Philing amount by comparison with the rest
:20:27. > :20:32.of the - Philing amount by comparison with the rest of the
:20:32. > :20:35.amounts. There is a dispute about that, HMRC are being asked to look
:20:35. > :20:45.again. The last time the Chancellor gave an answer in the House of
:20:45. > :20:47.
:20:47. > :20:53.Commons, it was �3 billion, it is not small sum at all. I think he
:20:53. > :20:58.has political motive. What I'm getting at is it a good thing?
:20:58. > :21:03.all want to tax the rich more to make a bigger contribution to the
:21:03. > :21:07.public sector. Because it is fairer the richest pay a bigger proportion.
:21:07. > :21:12.Fairness enters into it? Of course. What are the rates you optimise to
:21:12. > :21:16.get the biggest rates from the rich. When we cut it to 40% in the 1980s,
:21:16. > :21:20.after a period of high tax rates, the amount the rich paid shot up,
:21:20. > :21:25.both in absolute terms and as a proportion of the total. We don't
:21:25. > :21:29.want to go back to brain drain Britain of the 1970s which proved
:21:29. > :21:33.you were cutting off your nose to spite your face with the high rates.
:21:33. > :21:38.How do you encourage rich people to pay more tax? Nobody enjoys paying
:21:38. > :21:43.tax. Rich people will not pay tax. Warren Buffet, one of the richest
:21:43. > :21:47.men in the world said he wanted to pay more tax? I welcome that. Quite
:21:48. > :21:51.a number of his friends. Unfortunately he's not living here?
:21:51. > :21:55.He needs to just send a cheque in. One of the interesting questions is
:21:55. > :21:57.Warren Buffet thinks he should be paying more. A lot of French
:21:57. > :22:01.industrialists are saying they should be paying more. We have
:22:01. > :22:05.heard nobody in the UK suggesting that perhaps, given the
:22:05. > :22:10.difficulties we are in, at the top end of the income scale, that they
:22:10. > :22:15.might be paying more, it is an interesting thing. I think that tax,
:22:15. > :22:21.that the rich should be paying what seems to be a fair whack. The 50p
:22:21. > :22:26.rate, in my view, is completely justified as long as we have a
:22:26. > :22:30.fiscal crisis. We moved as a party, we moved off it, because we thought
:22:30. > :22:35.over the long-term, once people are paying over half their income in
:22:35. > :22:39.tax there are disincentives. Now we think they should be paying it.
:22:39. > :22:42.socially corrosive is it, as we saw in that report, there are very
:22:42. > :22:46.large numbers of extremely rich Russians and others, living
:22:46. > :22:49.particularly in the capital, and not making a great contribution, as
:22:50. > :22:54.far as we can see, apart from driving up property prices so other
:22:54. > :22:58.people can't afford to live there. How socially corrosive is that, how
:22:58. > :23:05.do you tax them? That is why we are in favour of the called mansion tax.
:23:05. > :23:10.Last year 60% of all houses sold in the UK that were valued at over �2
:23:10. > :23:16.million, were bought by foreigners, they are not even non--dom, they
:23:16. > :23:19.don't live here, they make no contribution. It is like a safety
:23:19. > :23:22.deposit box, it is a safe haven. Our view is they should be paying
:23:22. > :23:26.something for the privilege of owning property here. The reason
:23:27. > :23:35.they want it has to be paid for, in part, it is the security, it is the
:23:35. > :23:39.fact that it is a stable society. What would you think as a proposal?
:23:39. > :23:44.It is not a proposal I'm seeking, you have to be careful with capital
:23:44. > :23:48.gains tax. We have seen the increase in the rate to 28%, as a
:23:48. > :23:53.result the Treasury is forecasting a �500 million revenue loss
:23:53. > :23:58.compared with this year, that is the full year effect of the rate.
:23:58. > :24:02.That makes point, if you overdo the rate you tax the rich less. Most of
:24:02. > :24:08.the guys aren't paying any capital gains tax at all, should they?
:24:08. > :24:10.Obviously one needs to look at non- dom taxation in the round and make
:24:10. > :24:15.that calculation about how much contribution they do make.
:24:15. > :24:19.should be looked in to at least then? Of course they need to look
:24:19. > :24:22.at what contribution people are making. They are making no
:24:22. > :24:25.contribution? That is an assertion, I suspect you will find that
:24:25. > :24:29.foreign capital and foreign purchases coming to London is
:24:29. > :24:33.making a big contribution. London has been the outperforming economy
:24:33. > :24:36.in the Labour years and again under the coalition. It is something to
:24:36. > :24:40.do with the vibrancy and the money being brought into London. What
:24:40. > :24:47.would you do? What you have to do is make sure you have those fair
:24:47. > :24:50.principle that is you apply, at a time when - principles that you
:24:50. > :24:55.apply. At the time when George Osborne is increasing taxes on the
:24:55. > :25:01.poor, not just VAT, but big changes to housing benefit, cutting tax
:25:01. > :25:09.credits. To even talk about cutting this 50p rate on that richest 1
:25:09. > :25:13.bears in society does seem very perverse. This is the interesting
:25:13. > :25:16.point about which priority to tax cuts are there. Which taxes should
:25:16. > :25:20.be cut. You have said you are extremely doubtful about the 50p
:25:20. > :25:24.rate of tax? I think we are collected less revenue. I want to
:25:24. > :25:27.tax the rich more and poor less. I would agree with the Liberal
:25:27. > :25:31.Democrats about taking more people out of tax. What is the priority
:25:31. > :25:34.for tax that should be cut? I would take people out of income tax in
:25:34. > :25:37.the way the Government is doing. the key issue of the day is this
:25:37. > :25:42.flatlining economy we have got with no growth, you need to get some
:25:42. > :25:45.money into the pockets of ordinary people, which is why we have
:25:45. > :25:49.suggested a temporary VAT cut in order to kick start the recovery.
:25:49. > :25:56.It has already been killed off by a Spending Review that is going way
:25:56. > :25:58.too far and too fast. If we could do that and have a steadier pace of
:25:58. > :26:03.Spending Review changes, that probably would be the best way to
:26:03. > :26:08.get growth back in. If you get growth, you get revenue for the
:26:08. > :26:11.Exchequer, that is the best way. Cutting VAT at this point is hugely
:26:11. > :26:16.expensive, if you are doing anything, you should have a small
:26:16. > :26:20.number of targeted tax cuts, which would immediately stimulate growth.
:26:20. > :26:24.For example, the Government introduced a tax holiday on
:26:24. > :26:28.National Insurance, employees in start-up, it hasn't worked because
:26:28. > :26:32.not enough new companies have started. But existing companies,
:26:32. > :26:37.who want to take on more people, are worried about the cost of doing
:26:38. > :26:42.it, if you extended that holiday to existing small firms, you have a
:26:42. > :26:46.really good targeted way of increasing employment and
:26:46. > :26:52.consumption at the same time, rather than across the board, very,
:26:52. > :26:58.very expensive VAT cuts. Thank you all very much indeed.
:26:58. > :27:05.Last night we reported on who might in future advise women thinking of
:27:05. > :27:07.having an abortion. This was intended to be unbiased, but
:27:07. > :27:13.Newsnight found questions raised about how impartial soment of the
:27:13. > :27:18.organisations are. Is this a move away from the social liberalism of
:27:18. > :27:22.David Cameron's early days as Prime Minister, to a more morally sense
:27:22. > :27:25.rouse tone. The Government said it wanted to
:27:25. > :27:35.change the rules so clinics offering termination services are
:27:35. > :27:42.
:27:42. > :27:44.not also tasked with advising. But This is supposed to be an
:27:45. > :27:50.organisation giving independent advice. Today Care Confidential
:27:50. > :27:53.said the manual was no longer in use. But the very existence of this
:27:54. > :27:59.advice has raised questions about whether the Government is seeking
:27:59. > :28:09.to give a privileged position to a particular moral view. In response
:28:09. > :28:18.
:28:18. > :28:23.today, Number Ten appeared to But over recent months, senior
:28:23. > :28:28.Tories have seemed increasingly comfortable talking the language of
:28:28. > :28:32.morality. When the Archbishop of Canterbury attacked welfare
:28:32. > :28:37.policies, Iain Duncan Smith argued that there was a moral imperative
:28:37. > :28:45.to tackle worklessness. And following this month's riots, David
:28:45. > :28:49.Cameron spoke of "restoring a stronger sense of morality". Well
:28:49. > :28:54.tomorrow morning's Guardian is reporting that Number Ten is
:28:54. > :28:58.proposing to retreat from the proposals on the abortion law
:28:58. > :29:02.reform, but Downing Street is saying tonight that there are no
:29:02. > :29:06.such plans, we understand that Andrew Lansley is one of the people
:29:06. > :29:16.who has said he will vote against the proposal if it comes to a vote.
:29:16. > :29:19.
:29:19. > :29:24.With us now are my guests. What are we to make of this
:29:24. > :29:27.position on the abortion laws? think Number Ten is trying to
:29:28. > :29:31.distance itself from the Nadine Dorries amendment very, very fast.
:29:31. > :29:35.I think you will see sunnor people in the coalition come out in the
:29:35. > :29:38.next few days doing just that. Mr Cameron is comfortable to a
:29:38. > :29:41.point with moral language, you think you said in your package
:29:41. > :29:45.after the riots he spoke of the need to put morality back into
:29:45. > :29:50.public life, but a little bit of morality in public life goes a long
:29:50. > :29:55.way, in terms of its political impact. What you don't want to end
:29:55. > :29:58.up with is a big argument about abortion, he didn't intend to have
:29:58. > :30:02.that. It is a backbench amendment, it is interesting for those
:30:02. > :30:06.preoccupied by this, and motivates them strongly, but it is not
:30:06. > :30:10.something he would want to define the coalition in any way. What is
:30:10. > :30:13.your response to the u-turn reports? It looks like the
:30:13. > :30:17.Government was initially in favour of what is a liberal proposal to
:30:17. > :30:22.extend the number of organisation who is can provide counselling to
:30:23. > :30:27.women seeking abortions. When it looked like the proposal was about
:30:27. > :30:30.restricting choices to the so- called independent advisers and
:30:30. > :30:35.excluding the abortion providers from the pool of organisations who
:30:35. > :30:38.could deliver the advice, they backed off. I think what actually
:30:38. > :30:44.they believe in is quite a liberal proposal, which is to say there
:30:44. > :30:49.should be as many organisations providing advice as possible, that
:30:49. > :30:54.shouldn't be an exclufive list - exclusive list. You wouldn't call
:30:54. > :30:58.Nadine Dorries as a liberal on this? Her original frame was to
:30:58. > :31:02.widen the choice of organisations, that is quite liberal. Is it your
:31:02. > :31:08.reading, then, that this is an administration that is socially
:31:08. > :31:11.liberal? I think it is socially liberal. But social liberalism
:31:11. > :31:16.always comes to a point where people say we know what you are
:31:16. > :31:21.liberal about, and the big problem is what to do about it. That is
:31:21. > :31:24.where it gets awkward for David Cameron. He wants to be seen as
:31:24. > :31:28.socially caring, sometimes the things you need to do as socially
:31:28. > :31:33.caring come up against socially liberalism. In the autumn he will
:31:33. > :31:37.go on about care homes and wanting to have more children taken out of
:31:37. > :31:40.care and adopted or fostered. You have to make stringent decisions
:31:40. > :31:45.and some people disagree or take different views. Whether you call
:31:45. > :31:50.that socially liberal, he would call it socially responsible.
:31:50. > :31:55.he talks, as he talked after the riots about a sickness in our
:31:55. > :32:01.society, what side is he coming at that from? He's being Conservative
:32:01. > :32:07.there, he's recognising, firstly, the response to the riots was one
:32:07. > :32:11.of imposing law once more and asserting primacy of law and order.
:32:11. > :32:15.His analysis and the explanation of what is going wrong in society, it
:32:15. > :32:20.is historic for him, he has been talking since he became Tory Party
:32:20. > :32:22.leader in 2005 about the importance of restoring the social bond
:32:22. > :32:28.between communities and family and restoring a healthy society. I
:32:28. > :32:32.don't think that runs counter to a liberal world view, but it is one
:32:32. > :32:35.that requires a recognition of the importance of relationships,
:32:35. > :32:39.tradition, stability, and so on. There will be tensions, there are
:32:39. > :32:44.tensions within all of us. We all want to be free and determine our
:32:44. > :32:47.own fate and destiny and what we do with our bodies, in this question
:32:47. > :32:51.about abortion, on the other hand we want to belong and be part of
:32:51. > :32:54.something. We want to be part of a community that we can believe in.
:32:54. > :33:01.This tension is natural one in the human heart, and one that politics
:33:01. > :33:04.is all about resolving. Policy by policy. A lot of it is with people
:33:04. > :33:09.talking about the role of the state. They are taiching the state to what
:33:09. > :33:12.their own view is. If Mr Cameron is doing something that is seen to
:33:12. > :33:17.push back the state he can't be socially responsible. That is
:33:17. > :33:22.something he has to be clearer about. You can see's constantly at
:33:22. > :33:25.the moment being accused of not being a moderniser. If you look at
:33:25. > :33:29.the accusation it is modernising in the way of the Labour Party. Or
:33:29. > :33:36.taking a solution that relies on the state in some form. He has
:33:36. > :33:41.never really, despite many years, and work by people like us, he has
:33:41. > :33:46.never found the clear language to say the state can't be the provider
:33:46. > :33:51.of all solutions and it is better to have a lot of other providers to
:33:52. > :33:58.help with things. And then with the abortion row how quickly it is
:33:58. > :34:02.coming up questioning if he's an older moralising politician. It is
:34:02. > :34:06.difficult for him. It is a difficult thing to prevent? Anne is
:34:06. > :34:09.right, it is difficult to articulate a philosophy of freedom
:34:09. > :34:14.in the context of the social obligations we have and the Prime
:34:14. > :34:17.Minister believes in. There are two forms of modernisation, there is
:34:17. > :34:21.the modernisation Tony Blair epitomised, all about the fetish
:34:21. > :34:23.for the future, and liberty and individual freedom. And the
:34:23. > :34:27.modernisation I think David Cameron represents, which is recognising
:34:27. > :34:31.what has gone wrong with society, and the need to restore the social
:34:31. > :34:34.ponds and the relationships so key to social well being. That doesn't
:34:35. > :34:40.always require a socially liberal set of policies, it actually
:34:40. > :34:44.requires some fairly old fashioned policies, about family formation,
:34:44. > :34:48.encouraging couples to stay together. That hasn't happened and
:34:48. > :34:51.the coalition hasn't done. That Those who say it is an incredibly
:34:51. > :34:56.right-wing Government, are wrong. Conservative backbenchers think the
:34:56. > :34:59.Liberal Democrats tail is wagging the Tory dog in the Government and
:34:59. > :35:04.they have had to abandon their more socially Conservative instincts. If
:35:04. > :35:07.you look at what they believe in, they would like to see more of the
:35:07. > :35:11.policies n tax and benefits in particular, that sustain healthy
:35:11. > :35:15.families, and run something against the libertarianism that we saw in
:35:15. > :35:17.the last years of Labour. You are getting slightly into pick and mix
:35:17. > :35:22.here. The problem they have politically is sometimes, it is
:35:22. > :35:25.hard on any given issue to guess straight away which way they are
:35:25. > :35:31.going to move. You could say that is a good thing, they are thinking
:35:31. > :35:35.on their feet and being flexible. But we know that politics is about
:35:35. > :35:43.reckon ability and leadership, if you come back and then address the
:35:43. > :35:48.riots in that tone, and I think that was a tone that would be
:35:48. > :35:52.recognisably Conservative, but on the other hand you are saying you
:35:52. > :35:57.are socially liberal and looking at everything with an open-mind. He
:35:57. > :36:00.has to find clarity of tone in the conference season, I think the tone
:36:00. > :36:05.is incoherent rather than the policies. In a couple of years time
:36:05. > :36:09.Croatia will become the 28th member of the European Union. It is seen
:36:09. > :36:14.there as way of finally escaping the visceral subterranean politics
:36:14. > :36:17.of the Balkans. But for the real underground of the country, its
:36:17. > :36:21.literal underground, and specifically the astonishing
:36:21. > :36:26.variety of wildlife, membership of the EU is another proposition
:36:26. > :36:30.already. The EU has strict concerns for the variety. The amazing
:36:30. > :36:33.animals of the Balkan caves, the best cave wildlife in the world,
:36:33. > :36:43.ought to be protected. As we report, the prospect of joining the
:36:43. > :36:51.
:36:51. > :36:59.European Union might actually be endangering them.
:36:59. > :37:05.Welcome to the realm of the first Europeans. The last survivors of an
:37:05. > :37:08.earlier earth, who found refuge below.
:37:08. > :37:18.They have travelled a unique evolutionary journey, which
:37:18. > :37:23.scientists are only beginning to map. Look what we have found, it is
:37:23. > :37:28.a sponge. Jana Bedek and her team have just
:37:28. > :37:31.won an international award for revealing the secret life of caves.
:37:31. > :37:39.And championing the fact that when it comes to cave dwellers, Europe
:37:39. > :37:45.has the best. The other continents have their own
:37:45. > :37:49.animals, rich fauna within rainforest, Maureen ecosystems and
:37:49. > :37:54.so on, in this area of Europe we have cave fawn national cirriculum
:37:54. > :37:58.really important at world level. This is the only fresh water cave
:37:58. > :38:01.sponge in the world. Recent scientific advances have shown us
:38:01. > :38:06.just how important cave life is. It is very distinctive, there could be
:38:06. > :38:10.waeb of life in this cave that is completely different from one a
:38:10. > :38:17.kilometer or two down the road. And yet, just as we are realising how
:38:17. > :38:21.important cave life is, it comes under particular threat.
:38:21. > :38:25.These unusual entities cling to existence in a massive shard of
:38:25. > :38:29.limestone, which splits Croatia and parts of its Balkan neighbours.
:38:30. > :38:34.Over many millions of years, water has dissolved untold thousands of
:38:34. > :38:43.caves, tunnels and rivers. Here, the underworld is much more than a
:38:43. > :38:48.myth. But modern Croatia seems untroubled
:38:48. > :38:53.by what lies beneath. It they are emerging from a recent turbulent
:38:53. > :38:57.past, with an ardent desire to develop. Politically that means
:38:57. > :39:03.joining the European Union. Economically it means lots more
:39:03. > :39:07.roads, railways and power plants. The Government's view is that with
:39:07. > :39:13.40% of the country undershot by cave networks, these precious
:39:13. > :39:21.environments must give up some treasures. Some caves have been
:39:21. > :39:26.destroyed because of a need for building some very important
:39:26. > :39:30.national ij fra structure. Of course the - infrastructure. Of
:39:30. > :39:34.course in nature protection we have to think first of all to protect
:39:34. > :39:42.them. If some valuable caves have to go, for development, that's
:39:42. > :39:47.acceptable? Probably, yes. I can agree with that.
:39:47. > :39:57.Some have already gone. This is Ogulin, a small town, hiding a
:39:57. > :39:57.
:39:57. > :40:07.dirty secret. As you can see, unfortunately, in this cave people
:40:07. > :40:13.were dumping their rubbish for dozens of years. That's disgusting
:40:13. > :40:18.isn't it. Is this acceptable in the caves of Croatia? This is common.
:40:18. > :40:23.Almost near every settlement we have similar scenarios. It is just
:40:23. > :40:31.full of what society wants to forget. In some caves there are
:40:31. > :40:35.even unexploded bombs. The train takes Jana to her favourite
:40:35. > :40:42.underground stop, and the direction she would like to take with
:40:42. > :40:46.Croatia's caves. This is Postonja, just across the border into
:40:46. > :40:54.Slovenia. As a member of the EU, European law
:40:54. > :41:01.protects the species and plentiful tourists help pay the bill.
:41:01. > :41:04.Beautiful, and yet chilling. It feels totally alien. It is like a
:41:04. > :41:09.melting ice-cream, it looks soft but it is hard.
:41:09. > :41:15.These are the creatures who truly belong here. Without eyes or
:41:15. > :41:21.pigment, they are totally adapted to life without light. On top of
:41:21. > :41:29.the food chain, the cave salamander, presumed in the past to be a baby
:41:29. > :41:34.dragon. It was proved this animal could live up to 60, 70 years,
:41:34. > :41:44.perhaps even 100 years. 100 years old? It could be. Amazing. Where
:41:44. > :41:44.
:41:45. > :41:52.are we going now? We will go to a non-tourist part. We are now around
:41:52. > :41:59.two miles into the mountain. Unseen in the waters and on the walls all
:41:59. > :42:04.around us are ancient species. Over ten million years the climate of
:42:04. > :42:09.Europe swung wildly with ice sheets and deserts scouring life from the
:42:09. > :42:13.surface. Some animals retreated here. It was the shielded bunker
:42:13. > :42:19.for life. Surviving environmental Armageddon, down here, safe in the
:42:19. > :42:23.dark. Does that mean we have some of the oldest, in fact the oldest
:42:24. > :42:29.animals of Europe down here? believe we can say here that these
:42:29. > :42:34.cave animal, and we can prove with Monday elect later DNA that these
:42:34. > :42:37.animals are older, maybe the oldest lineage of animal that is survived
:42:37. > :42:43.on the European continent. They survived in these areas for some
:42:43. > :42:49.million years, it is not acceptable that they will be exbe ticket
:42:49. > :42:54.because of human activity. Extinct because of human activity.
:42:54. > :42:57.This is the latest threatening human activity, hydroelectricity,
:42:58. > :43:02.that floods caves and valleys alike. At least 20 schemes are planned
:43:02. > :43:06.across the country. It may yield low carbon power, but it is high
:43:06. > :43:11.impact on local wildlife. And down towards the eastern tip of the
:43:11. > :43:15.country, near Dubrovnik, is the latest battle front. Right
:43:15. > :43:19.underneath the border with Bosnia, and once a frontline in the Balkan
:43:19. > :43:24.war. It is a struggle even to reach the mouth of the cave. Not much
:43:24. > :43:31.further I'm told. But that hasn't put off engineers from planning to
:43:32. > :43:35.seal the cave network with a huge concrete barrier. This river is
:43:35. > :43:41.connected with subterranean passages, channels, with the
:43:41. > :43:45.entrance we are near. When we calculate all the species we have
:43:45. > :43:51.found in this cave, this cave is the richest with animals in
:43:51. > :43:55.Croatiania. They want to put 130ms of on Crete into the cave. That
:43:55. > :44:00.will completely destroyed all habitats. Croatia is expected to
:44:00. > :44:06.join the European Union in two years. And tighter environmental
:44:06. > :44:10.laws from then should help protect these animals. But Jana believes
:44:10. > :44:14.that membership deadline is hastening the current destruction
:44:14. > :44:18.deadline. They are rushing for all the permits needed, by the time we
:44:18. > :44:21.will be in the European Union it would not be possible to get them.
:44:21. > :44:26.Now is the only chance to get all the permits to have this power
:44:26. > :44:31.plant. The EU's representative in Zagreb
:44:32. > :44:37.is aware of the risk, but insists their vigilance protects habitats,
:44:37. > :44:43.even prior to membership. I am my impression is this country is
:44:43. > :44:46.preparing itself very well for implementing the regulatory
:44:46. > :44:51.framework of the European Union, and that is a process that does not
:44:51. > :44:54.happen overnight. You are sure, are you, that Croatia isn't getting its
:44:54. > :44:58.dirty work over now in the two or three years before they join?
:44:58. > :45:02.because in the meantime the officials of the European
:45:02. > :45:08.Commission will be very close in contact with the Croatian
:45:08. > :45:13.authorities. Keeping a close eye on them? Yes. Europe's surface life is
:45:13. > :45:19.well documented, but down here, we're just beginning. Jana finds at
:45:19. > :45:23.least one new species on every field trip, and has hundreds
:45:23. > :45:28.awaiting recognition. Fears remain this scientific resource will be
:45:28. > :45:31.lost in a rush to develop, and we will move straight from ignorance
:45:31. > :45:38.to elimination. Radio 4 listeners can hear,
:45:38. > :45:48.although not see, more of Croatia's environmental challenge in Costing
:45:48. > :46:05.
:46:05. > :46:08.That's all from Newsnight tonight. At sunset this evening the people
:46:08. > :46:12.of would the son basset in Wiltshire marked the end of the
:46:12. > :46:14.custom they have established in marking the return home of the
:46:14. > :46:24.bodies of service personnel killed in action abroad. Hundreds of
:46:24. > :46:57.
:46:57. > :47:01.Hello there. Most of us will have another dry day on through, and
:47:01. > :47:06.another fairly cloudy day. That said southern countryies of England
:47:06. > :47:15.and Wales should have lovely September sun yin, by the afternoon
:47:15. > :47:18.feeling warm in the country. A few breaks over Northern Ireland
:47:18. > :47:21.England. Over much of East Anglia expect cloud. The southern counties
:47:21. > :47:25.should brighten up, there should be good spells of sunshine. In the
:47:25. > :47:30.sunshine it will be warm. A breeze picking up across the south west,
:47:30. > :47:34.elsewhere in the sun it will feel pleasant, temperatures up to 21.
:47:34. > :47:38.Same goes for South Wales, sunny spells and a lot of cloud. Pretty
:47:38. > :47:43.grey too in Northern Ireland. Here every now and then we may get some
:47:43. > :47:47.breaks in the cloud, a hint of sunshine. Threatening rain over the
:47:47. > :47:51.Western Isles late in the day. The north-east of Scotland may see
:47:51. > :47:56.sunshine at times. Overall northern Britain will be cloudy, but dry on
:47:56. > :47:59.Thursday, that rain pushing into the Western Isles late on Thursday,
:47:59. > :48:04.it spreads widely across parts of the north on Friday, in the south
:48:04. > :48:09.most of England and Wales should be warmer with sunshine, temperatures
:48:09. > :48:12.should well reach the mid-20s in the capital. In the south sunny