:00:07. > :00:11.As long as there isn't another crisis for eight years, and as long
:00:11. > :00:15.as the Government acts on the advice it has been given, British
:00:15. > :00:19.tax-payers shouldn't be stung into bailing out the banks again.
:00:19. > :00:24.In the bank vaults of Britain, they are getting ready for a lower
:00:24. > :00:27.profit world. But in the City do all the delays
:00:27. > :00:31.and complication buried in today's proposal for reforming banks, mean
:00:31. > :00:39.the party goes on for the bankers. The Government is here to argue
:00:39. > :00:41.that this is the real deal. This FBI agent tells us that the
:00:41. > :00:46.CIA's so-called enhanced interrogation of Al-Qaeda prisoner
:00:46. > :00:51.was waste of time. Not the official view. They prevented the violent
:00:51. > :00:54.deaths of thousands, perhaps hundreds of thousands of people.
:00:54. > :00:57.know that Dick Cheney is not saying the truth, because I was there.
:00:57. > :01:07.you are worrying about whether your child getting the attention they
:01:07. > :01:10.
:01:10. > :01:14.need in the early years, relax, or maybe you shouldn't, too risky.
:01:14. > :01:17.It was a decisive moment in the history of attempts to get the
:01:17. > :01:22.taxpayer off the hook for the greed and stupidity of bankers, the
:01:22. > :01:28.Chancellor said today. He didn't use the words "greed" and
:01:28. > :01:32."stupidity kgs ", that is not his - ", has not his style, we will see
:01:32. > :01:38.how disease yef he is when he acts on the recommendations the
:01:39. > :01:44.commission set up to look into the banks. It will be 2019 before the
:01:44. > :01:47.measures will be implement. - implemented. We better hope they
:01:47. > :01:52.remain sensible until then. It was the absence of this stuff
:01:52. > :01:56.that sank Liamman and Northern Rock, lack of capital, lack the liquid
:01:56. > :01:59.cash. The collapse of the credit system left banks that said they
:01:59. > :02:05.were solid, melting down. Today, the man they picked to design a new
:02:05. > :02:09.banking system laid out his plan. The ring-fence. Only ring-fenced
:02:09. > :02:13.banks would supply the core domestic retail banking services,
:02:13. > :02:19.taking deposits from ordinary individual, and small businesses,
:02:19. > :02:24.and extending overdrafts to them. Ring-fenced banks could not
:02:24. > :02:28.undertake trading, or markets business, or do derivatives. Banks
:02:28. > :02:32.will be split down the middle between stuff the UK packs pair is
:02:32. > :02:35.prepared to bail out, and - taxpayer is prepared to bail out
:02:35. > :02:41.and stuff it is not. For a company like Barclays, right in the firing
:02:41. > :02:45.line t might look like this. Outside the ring-fence dos its
:02:45. > :02:50.giant investment bank, the African banks, the private bank for rich
:02:50. > :02:53.people, and probably the credit card business. And that just leaves
:02:53. > :03:00.the �4.5 billion retail business inside the ring-fence, it is not
:03:00. > :03:08.much. The other big proposal is on how much capital banks have to hold.
:03:08. > :03:11.Modern banks don't actually keep much money in the bank itself. As a
:03:11. > :03:15.result of Vickers they will have to, not inch the actual vault, but that
:03:15. > :03:20.and pieces of paper you can turn into cash quickly. As a result of
:03:20. > :03:25.that they will make less profit. Before the crash, it was typical
:03:25. > :03:31.for UK banks' capital cushion to be under 4% of the money they lent out.
:03:31. > :03:35.Now, under new international rules, called Basel 3, they have to hold
:03:35. > :03:39.7%. For banks big enough to sink sink the economy, Vickers says that
:03:39. > :03:45.should be 10%. There is even more pain, on top of the 10% capital
:03:45. > :03:49.they have to hold there will be another 7-10% of loss-bearing bonds,
:03:49. > :03:52.making 20%. Those who speak for Britain's businesses don't like it.
:03:52. > :03:56.We are very concerned that we will be out of step with the rest of the
:03:56. > :04:00.EU, and potentially elsewhere in the world. Because what's being
:04:00. > :04:04.proposed today is certainly a higher requirement on UK banks than
:04:04. > :04:08.elsewhere, that will add a cost to doing business and banking in the
:04:08. > :04:12.UK. But there are risks involved. One is that the new rules damage
:04:12. > :04:16.competitiveness and profit, not just at the banks, but for the
:04:16. > :04:20.whole UK economy, because the banks are a big part of it. The other,
:04:20. > :04:24.which follows, is that the Treasury then loses money, as banks leg it
:04:24. > :04:29.somewhere else. Some bankers hoped this
:04:29. > :04:34.competitiveness issue might bring the committee itself to water down
:04:34. > :04:37.its conclusions. But, in vain. benefits of reducing the
:04:37. > :04:40.probability of crises of this nature, which a recurring
:04:40. > :04:44.phenomenon with the banking system we have, are absolutely
:04:44. > :04:48.overwhelming. So competitiveness is a tiny part of this. It is very,
:04:48. > :04:52.very important not to get hung up on this one aspects.
:04:52. > :04:55.So now it all comes down to politics. The commission said the
:04:55. > :04:59.proposals might harm some individual banks, but for the UK
:04:59. > :05:03.economy as a whole, the outcome would be neutral. And what the
:05:03. > :05:07.bankers wanted was for the politicians to say they will delay,
:05:07. > :05:12.they will pick and mix, and consult a bit more, and see what other
:05:12. > :05:17.countries do. But in the end, they did more than that. We support the
:05:18. > :05:21.commission's radical reforms, on ring-fencing and regulatory
:05:21. > :05:24.standards. And the Chancellor, who revealingly supports them in
:05:24. > :05:27.principle, we agree with the Business Secretary and support them
:05:27. > :05:30.in practice. We support these measures in principle and will put
:05:30. > :05:34.them into practice through the detailed legislation. You can't
:05:34. > :05:37.support all of this in practice, because it requires detailed
:05:37. > :05:42.legislation, which even John Vickers says is not part of this
:05:42. > :05:46.commission. So, let there be no doubt, we support the Banking
:05:46. > :05:53.Commission's report. We will legislate in this parliament.
:05:54. > :05:59.the deadline for implementation will be 2019. For many of the
:05:59. > :06:04.banks' critics, Vickers did not go far enough. Protestors staged a
:06:04. > :06:09.tableau right in the middle of the bankers' lunchtime, the message,
:06:09. > :06:13.they are zombies on taxpayer life support. Some banking experts want
:06:13. > :06:18.a straight forward split up between investment and retail. We feel the
:06:18. > :06:21.only sure way of making sure there is tho contagion between the
:06:21. > :06:26.essential parts of banks, and the speculative banking part is to
:06:26. > :06:32.split them up. It worked before, it worked in the US, it worked here
:06:32. > :06:34.when these activities were in different companies. These are
:06:34. > :06:38.untried proposals, there is a lot of opportunity to find holes in
:06:39. > :06:43.there, and why on earth does it need eight years to implement.
:06:43. > :06:48.it or not Vickers sets the agenda. The precision detail is yet to come,
:06:48. > :06:54.but Britain is set for the world's most radical shake-up of the banks.
:06:54. > :06:58.Paul is with us in the studio now, as is our political correspondent.
:06:58. > :07:02.If you had to pick winners and losers? One set of losers are
:07:02. > :07:08.people who said consistently Britain can't act before the rest
:07:08. > :07:13.of the world and Europe before regulating the banks. Most notably,
:07:13. > :07:16.algs stair Darling, Gordon Brown and Ed Balls, that is they said in
:07:16. > :07:21.their time in office. That section of the City of London who thought
:07:21. > :07:26.they would get Vickers to water down his own report. At the very
:07:26. > :07:28.last moment of the remit being set, they got inserted into the remit,
:07:28. > :07:33.it mustn't harm British competitiveness and the tax take
:07:33. > :07:36.for the Treasury. Vickers has said it won't. So take it away from
:07:36. > :07:41.there. I think as well, anybody who thinks that George Osborne is just
:07:41. > :07:45.in the pocket of that section of the City. He could have stood up
:07:45. > :07:48.today and said, very interesting, not proven, I will do a bunch of
:07:48. > :07:52.studies that delve into all this evidence, he didn't do this. He
:07:52. > :07:56.said, under pressure, we support the principle and we will enact it.
:07:56. > :07:59.David, there seemed to be quite a lot of cross-party agreement on it
:07:59. > :08:02.today? There absolutely was, that was one of the most striking things
:08:02. > :08:05.about today. In the last general election, if you wanted to get a
:08:05. > :08:10.cheer from a packed public meeting f we have such things any more in
:08:10. > :08:14.the UK, it would be to stay string up the bankers, put them in sacks
:08:14. > :08:17.and stick them in the Thames. We didn't get that today. A lot of the
:08:17. > :08:22.political weather is now talking about how to stop it again, which,
:08:22. > :08:24.of course, is the most important thing to happen. Retribution,
:08:25. > :08:28.however politically expedient and attractive for parties, is not
:08:28. > :08:33.going to get that job done. Indeed the Treasury, though, there is
:08:33. > :08:37.still a lot of jittery people about whether this can be implemented,
:08:37. > :08:41.even on this seven-year term, without doing the things Paul was
:08:42. > :08:44.talking about in his report, about frightening banks off and sending
:08:44. > :08:48.them offshore and taking a less big part in the British economy. What
:08:48. > :08:52.about the Liberal Democrats? That was another striking point about
:08:52. > :08:56.today, Vince Cable couldn't have been more supportive. The hymn
:08:56. > :09:00.sheets were handed round and Vince was singing with the best of them,
:09:00. > :09:04.it could have been conduct bid George Osborne. In the last few
:09:04. > :09:07.months he has been very notable with the hostile things he has been
:09:07. > :09:09.saying about bankers, particularly in interviews. None of that today.
:09:09. > :09:13.What will be particularly interesting is how Liberal
:09:14. > :09:18.Democrats not in the coalition, not in ministerial office react to this,
:09:18. > :09:21.that we won't see for the next few days. Particularly the Liberal
:09:21. > :09:26.Democrat Conference, the first political conference of the main
:09:26. > :09:31.conference season. Next week isn't it? Exactly.
:09:31. > :09:35.Joining us now is the Treasury minister, Mark Hoban, who is
:09:36. > :09:39.financial secretary to the Treasury, that is right isn't it.
:09:39. > :09:44.Are you going to implement all the recommendations in this report?
:09:44. > :09:48.What George Osborne set out today is we would bring in legislation by
:09:48. > :09:52.2015, and all the recommendations would be implemented by 2019.
:09:52. > :09:55.will implement all the recommendations? What he said is
:09:55. > :09:58.we're going to look at Sir John's report over the course of the next
:09:58. > :10:02.few months. It is a complex report, it is a very piece of analysis.
:10:02. > :10:06.There are some issues we need to work our way through, and we will
:10:06. > :10:11.produce our final response towards the end of this year. It is pretty,
:10:11. > :10:14.it is really, in essence, very simple, the separation of retail
:10:14. > :10:19.and investment banking operations and the requirement to hold more
:10:19. > :10:23.capital, both those things you will implement? Yes, George Osborne has
:10:23. > :10:27.been very clear. At the rate at which is said in the report?
:10:27. > :10:32.Absolutely. Because any argument that anyone makes to you about an
:10:32. > :10:36.effect upon competitiveness, or an effect upon taxation would be
:10:37. > :10:40.invalid, wouldn't it, because Professor Vickers has already said
:10:40. > :10:45.so? What we did when we set the terms of reference for John Vickers,
:10:45. > :10:48.was to be very clear about asking him to look at the impact on
:10:48. > :10:52.competitiveness on banks based here in the UK and the impact on taxes.
:10:52. > :10:56.What Sir John has done in his report, the commission's report, is
:10:56. > :11:02.to ensure that for the international activities of UK
:11:02. > :11:05.banks, like Barclays, RBS or HSBC, they will be capital levels set at
:11:05. > :11:09.international standards, but the capital levels for the ring-fenced
:11:09. > :11:15.domestic activities should be set at a higher level. This talk about
:11:15. > :11:21.a need to consult further in all the years up to 2015 and on to 2019,
:11:21. > :11:25.who do you want to consult with? is a hugely complex topic, we need
:11:26. > :11:30.to get it right. I don't think anybody would expect us to
:11:30. > :11:34.implement it overnight. You don't need to know anything else?
:11:34. > :11:37.need to know whether to implement it through regulation or
:11:37. > :11:40.legislation, how you define precisely what is domestic what is
:11:40. > :11:43.international business. Some of the complexties of banking need to be
:11:43. > :11:47.taken into account. We need to make sure we work through properly the
:11:47. > :11:50.costs and benefits of Sir John's work. It is interesting you mention
:11:50. > :11:53.regulation, you are a man who believes in less regulation, aren't
:11:53. > :12:00.you? We have set out, since the coalition Government was formed
:12:00. > :12:03.last year a very clear plan on how we regulate the banking sector.
:12:03. > :12:07.you personally believed there was too much regulation beforehand?
:12:07. > :12:11.have said we believe from the result of the crisis we need to
:12:12. > :12:15.make sure there is proper regulation in place. That is why we
:12:16. > :12:19.are transferring the safety of the banks to the PRA, taking action on
:12:19. > :12:23.consumer protection issues. There is a very clear direction of travel,
:12:23. > :12:26.when it comes to what we are going to do to tackle regulation and the
:12:27. > :12:30.banking sector. Less than a year before the banking crisis hit, you
:12:30. > :12:35.were saying we had to resist arguments for greater regulation?
:12:35. > :12:38.What we need to do is make sure we get the right regulation in place,
:12:38. > :12:44.and make sure we have regulation that needs to increase. You don't
:12:44. > :12:49.deny you said that? We saw what's happened during the banking crisis,
:12:49. > :12:51.we recognise that the regulations didn't work. You said
:12:51. > :12:55.authoritatively then there thank there was no need for greater
:12:55. > :12:58.regulation, you were wrong? We have accepted that. Is there any reason
:12:58. > :13:02.to believe you are any more likely to be right at this time? If you
:13:02. > :13:06.look at the lessons we have learned as a country from the financial
:13:06. > :13:10.crisis. If you look at the impact of the structure of the banking
:13:10. > :13:14.sector on the risk imposed on the British economy. Things should have
:13:14. > :13:19.been addressed a decade ago, they weren't. We have picked up the
:13:19. > :13:22.lessons and want to reimplement them through John Vickers work, and
:13:22. > :13:25.through the work happening internationally and the domestic
:13:25. > :13:28.reform programme. Do you want to join Ed Balls and the apology he
:13:28. > :13:33.made earlier today for the Government as failure last time
:13:33. > :13:38.round, there was a failure in opposition too? We can all hold our
:13:38. > :13:43.hand up to what happened prior to the financial crisis A number of
:13:43. > :13:46.people missed it. What we have done is tackle the issues. Nobody was
:13:46. > :13:49.prepared to address the structure of banking until we got into office.
:13:49. > :13:53.We have asked the questions about what does it mean to have a big
:13:53. > :13:56.banking sector in the UK what do we need to do to reform the regulatory
:13:56. > :14:01.system in the UK. Questions the previous Government weren't
:14:01. > :14:07.prepared to ask. With us now is Peter McNamara, the
:14:07. > :14:13.former head of corporate strategy at Lloyd's TSB, Will Hutton, who
:14:13. > :14:15.submitted his own sub miss to the John Vickers committee -
:14:15. > :14:19.submissions to the John Vickers committee.
:14:20. > :14:23.This should save banking, shouldn't it? Well, there is a very
:14:23. > :14:28.interesting position, middle of the road, that has been adopted. As we
:14:28. > :14:31.heard in the earlier piece, there were two choices behind the
:14:31. > :14:36.Government at one fundamental level, one was to completely separate the
:14:36. > :14:39.retail and investment banking wings. The other one was to do nothing but
:14:39. > :14:43.impose tougher regulatory hurdles in terms of capital requirements.
:14:43. > :14:49.What they have said is go for a middle role, build something we
:14:49. > :14:54.call a ring-fence around the retail piece, and what we will do is
:14:54. > :14:58.impose hire capital requirement - higher capital requirements. Do you
:14:58. > :15:02.think it will work? It is difficult to get all the detail around this.
:15:02. > :15:09.That is why it will take some years to implement. Will Hutton your
:15:09. > :15:13.knees are knocking already? Look, I disagree very strongly with that. I
:15:13. > :15:17.think, given where we are internationally, to ring-fence was
:15:17. > :15:23.probably as far as you could push it. This will be good for the
:15:23. > :15:27.economy at large, I don't agree that actually ring-fencing in of
:15:27. > :15:31.itself is going to damage recovery. What might damage recovery is if
:15:31. > :15:34.you actually push capital up too quickly, but there is no reason to
:15:34. > :15:39.do that. You get the legislation, you do the ring-fencing, the ring-
:15:39. > :15:42.fencing, I think, will create a part of the British banking system
:15:42. > :15:46.that will consecrate itself and devote itself to lending to British
:15:46. > :15:50.business and consumers, they will do that better than in the past,
:15:50. > :15:55.they will be less tempts to go into the Wild West of the casino banking,
:15:55. > :15:58.and then we can bring in higher capital as and when it is
:15:58. > :16:04.appropriate. If the capital regime was high now, I would be argue to
:16:04. > :16:10.go lower it. I'm hardly, you have to separate these two things out.
:16:10. > :16:14.Bringing capital in could be prematurely, ring-fencing in itself
:16:14. > :16:18.is not a problem. Do you fear, as some of your colleagues do, that
:16:18. > :16:23.this will make banking so safe, it will be very hard for banks to
:16:23. > :16:29.lend? I think it is a dodge. I think that this is completely
:16:29. > :16:33.beside the real issue facing the country. What is beside the real
:16:33. > :16:37.issue? That is how to grow the economy. That is what we should
:16:37. > :16:41.spend owl of our time focusing on. We shouldn't keep an eye on the
:16:41. > :16:45.banks at all? The important issue is how to get the economy growing
:16:45. > :16:48.again. If I had to make a choice, as a nation we can only choose one
:16:49. > :16:53.thing right now, strong banks or strong economy. It is clear we have
:16:53. > :16:56.to be, we know growing the economy is about growing SMEs, and
:16:56. > :17:01.therefore, particularly for the banks that we own, we should be
:17:01. > :17:04.holding them to the lending targets, which I don't, I'm extremely
:17:04. > :17:10.sceptical that the lending targets that everybody says are being met
:17:10. > :17:15.are being met. One of the reasons why they are not being met is banks
:17:15. > :17:18.can put the scarce capital they have got at the moment, behind any
:17:18. > :17:22.proposition anywhere in the world. Once you ring-fence and say that is
:17:22. > :17:27.the amount of money sitting behind British business lending they have
:17:27. > :17:32.to do it. They are not tempted. That is a hopeless...The Fact of
:17:32. > :17:38.the matter is this will never see the light of day, and we will get
:17:38. > :17:42.so wrapped up in the complexity, carving up this and that, and the
:17:42. > :17:47.economy seven years later will be no better off, and the SMEs won't
:17:47. > :17:51.have the capital they need to grow their business. In seven years time.
:17:51. > :17:56.Why not get the banks on here and question them on Newsnight whether
:17:56. > :18:00.or not they are lending to people. The reason we don't have bankers on
:18:00. > :18:03.the programme very often is they won't come on. There is a real
:18:03. > :18:08.question of banks making themselves accountable publicly? There is a
:18:08. > :18:12.lot of them, find ones that will. can tell you, most of our
:18:12. > :18:15.researchers spend much of the day on the phones to banks across the
:18:16. > :18:20.land, they put their heads down. That is the big problem with
:18:20. > :18:24.banking, and its advocates in this country. Bank something not the
:18:24. > :18:29.only industry, nor manufacturing, digital, content, IT, we have a
:18:29. > :18:33.whole wealth of expertise, and growing entrepeneurs, these
:18:33. > :18:37.businesses need lending. We need to feed them. The absolutely critical
:18:37. > :18:41.point at the moment in the economy is to kick start the private sector
:18:41. > :18:45.in a much bigger way than we have done. Without that we will suffer
:18:45. > :18:50.severe unemployment as the public sector contracts. One of the major
:18:50. > :18:55.concerns of doing that is to give enough incentive to the banks, and
:18:55. > :18:58.to entrepeneurs, to lend and create that employment. Frankly, dare I
:18:58. > :19:03.say it, if you have to choose, probably the balance is quite right,
:19:03. > :19:07.that you have to push the economy of the private sector harder and
:19:07. > :19:12.faster at the moment in the cycle, than we probably thought three
:19:12. > :19:17.years ago when the banking crisis developed. Now, if you are going to
:19:17. > :19:20.constrain that activity, you are facing both the disadvantage that
:19:20. > :19:24.you may lose some of the capital which is required and the lending
:19:24. > :19:31.required into that sector, and you won't get the growth without it.
:19:31. > :19:37.is just the Council of Despair. The idea that the choice between bank
:19:37. > :19:41.reform and growing the economy is completely false. It is a canar put
:19:41. > :19:45.up by most people who want to protect an indefensible business
:19:45. > :19:48.model. Bank assets in this country is four times the GDP, it is huge
:19:48. > :19:52.in relation to that. There is a permanent risk of another banking
:19:52. > :19:57.crisis we have to do something to make uer system safer. This is
:19:57. > :20:01.something on the table, which is feasible, which will not actually,
:20:01. > :20:05.ring-fencing will not damage flows of credit to the private sector.
:20:05. > :20:08.Financial services are a global industry, we can't regulate at
:20:08. > :20:12.national level. The simple fact of the matter is getting our economic
:20:12. > :20:17.house in order, should there be another cry sifs any sort, it will
:20:17. > :20:21.always come a different way - crisis of any sort will always come
:20:21. > :20:24.in a different way than the one before. Why not have national
:20:24. > :20:28.surplus, then we can stand whatever shock it comes the other way.
:20:28. > :20:32.is lots of ways to make the economy grow, quantitative easing, fiscal
:20:32. > :20:37.policy, building institutions that support entreprenurialism. You
:20:37. > :20:41.don't have to live with a chronically unsafe banking system.
:20:41. > :20:45.Ring-fencing in itself won't damage credit flows to the private sector.
:20:45. > :20:49.Inappropriate increases in capital too quickly might be, but my God,
:20:49. > :20:53.you have as much chance of that as pigs flying. We have heard from
:20:53. > :20:57.Mark Hoban, it will take until 2019 to do that. The simple fact is this
:20:57. > :21:03.will never come into effect. That is a strong statement, why say that.
:21:03. > :21:07.The split between retail banking and investment banking, I don't
:21:07. > :21:11.believe it will ever come into effect. The complexity and gran
:21:11. > :21:21.laterity will wrap itself into it, we will become focused on getting
:21:21. > :21:23.
:21:23. > :21:26.the economy moving, let's drop it. Everyone is getting excited by the
:21:26. > :21:30.savings, and taking vast amounts of money from the taxpayer, you say
:21:30. > :21:36.the mechanism won't work? I don't believe it will come into effect.
:21:36. > :21:40.Is that a lack of will on to the banks or just generally? Listening
:21:40. > :21:45.to the level of complexity that needs to be decided, there will be
:21:45. > :21:49.years of deciding through that complexity. Meanwhile the point is,
:21:49. > :21:52.industries changing and evolving constantly and bypassing, as
:21:52. > :21:55.innovation always does to regulation. The minister is not
:21:55. > :21:58.taking part in this discussion, do you want to respond to that, will
:21:59. > :22:03.you make it happen? We have said very clearly we will legislate by
:22:03. > :22:08.2015 and the reforms will be in place by 2019. I disagree with Judy
:22:08. > :22:11.as point, strong banks or a small economy. We need strong banks to
:22:11. > :22:15.have a strong economy. These reforms will strengthen the banking
:22:15. > :22:20.system and make the economy stronger than in the past. Heretic
:22:20. > :22:27.point, this ring-fencing is not going to happen, she says? We will
:22:27. > :22:31.legislate by 2015, implemented by 2019. We have been crystal law -
:22:31. > :22:37.clear on it. George Osborne, Vince Cable, parliament is very clear,
:22:38. > :22:41.this is going to happen. Let's talk about one thing straight away,
:22:41. > :22:45.there is no co-relation between strengthening the bank and
:22:45. > :22:50.supporting industry. You can have very strong banks that don't lend.
:22:50. > :22:54.That is how you make them strong, reduce the risks and exposure to
:22:54. > :22:58.lending, they become strong. That is not helpful to the economy
:22:58. > :23:02.gearing up and the growth of the private sector. That growth has to
:23:03. > :23:06.be inserted into the retail piece. If you price that retail piece of
:23:06. > :23:13.the business, disadvantage at that stageously, against the other
:23:13. > :23:16.components of the - disadvantageously, against other
:23:16. > :23:22.components of the business. The most damming thing that could be
:23:22. > :23:26.done. People will lose jobs because of this. They won't grow. If you
:23:26. > :23:29.said ring-fenced, deposits have to remain in that. John Vickers made
:23:29. > :23:34.the point, that money will be available for lending to banking,
:23:34. > :23:37.because it is ring-fenced in the entity, rather than being used to
:23:37. > :23:42.support international activity. John Vickers made that point clear
:23:42. > :23:45.in his report. Let's look at that point, if you are lending money,
:23:45. > :23:49.longish term to either small businesses or people to die their
:23:49. > :23:54.houses, the borrowing of short-term money from deposit orators from
:23:54. > :23:56.savings and current accounts won't fund. That straight away d
:23:57. > :24:00.depositors, from savings and current accounts won't fund it.
:24:00. > :24:05.That straight away is the balance of short-term needs of customers
:24:05. > :24:10.against the long-term needs of the bank. Then you are starting to
:24:10. > :24:15.constuct derivative structures inside your bank, running contrary
:24:15. > :24:19.to the ring-fencing. If nothing was booming at this point in time.
:24:19. > :24:22.your proposal to do nothing, saying it is all so difficult and
:24:22. > :24:27.complicated, we can't act and make decisions and come to conclusion
:24:27. > :24:33.about this complexity, it has to stand, nothing must happen s that
:24:33. > :24:36.your point. Not at all. What is your point. At this point in the
:24:36. > :24:40.cycle, the UK growth and creation of employment is the paramount
:24:40. > :24:44.importance. The strength of banks is probably something that you
:24:44. > :24:49.can't wholly address with a complex piece of legislation, only within
:24:49. > :24:53.the UK. Because what type of crisis are hitting banks as we speak at
:24:53. > :24:58.the moment. In the rest of the European area. British banks may be
:24:58. > :25:02.safer as a result of this. Very quickly. Very quickly at the moment
:25:02. > :25:07.banks are hit by sovereign debt problems. Quite outside anything
:25:07. > :25:10.that is in this one. That is causing instability in Europe, and
:25:10. > :25:13.the InterBank markets which, we are forced to operate in, because all
:25:13. > :25:17.of this legislation applies around the European economic area. So you
:25:17. > :25:20.do nothing. Failing bank in the rest of Europe can be contagious to
:25:20. > :25:23.the UK. Thank you very much indeed.
:25:23. > :25:27.The terrorist attacks which occurred a decade ago yesterday,
:25:27. > :25:32.the single greatest outrage in modern history, could not have been
:25:32. > :25:37.prevented, and obliged the United States to use practices like
:25:37. > :25:43.waterboarding, because there was no alternative. Wrong, according to an
:25:43. > :25:48.FBI agent who worked at the heart of the operation against Al-Qaeda.
:25:48. > :25:52.Ali Soufan was present at the site where top Al-Qaeda suspects were
:25:52. > :25:56.tortured. He said former officials haven't told the truth about the
:25:56. > :26:00.effectiveness of practices like waterboarding, or whether 9/11
:26:00. > :26:08.itself could have been forestalled. He has given this only British
:26:08. > :26:12.interview to us. Stepping out of the shadows,
:26:12. > :26:20.appearing for the first time on camera, Ali Soufan, the former FBI
:26:20. > :26:24.agent, with an eyewitness account some people don't want him to tell.
:26:24. > :26:32.They are trying to stop me and others from telling the world what
:26:32. > :26:39.really happened over there. He believes huge mistakes were made,
:26:39. > :26:43.with devastating consequences. happened because we failed to
:26:43. > :26:49.prevent it from happening. We were looking for them overseas, they
:26:49. > :26:55.were here. People in our Government knew they were here.
:26:55. > :27:05.He was the interrogator who saw the CIA try to break a key terrorist
:27:05. > :27:11.
:27:11. > :27:15.suspect, and fail. What happened here at Ground Zero
:27:15. > :27:19.has prompted a fierce debate. Could it have been prevented and did
:27:19. > :27:23.America go too far in trying to stop it happening again? Now, for
:27:24. > :27:27.the first time, we can hear from the man who interrogated some of
:27:27. > :27:30.Al-Qaeda's most important figures, who was on their trail before 9/11,
:27:30. > :27:38.and who was there when the gloves came off in the fight against
:27:38. > :27:43.terrorism. Ali Soufan joined the FBI's New
:27:43. > :27:48.York office in the mid-1990s. He had been assigned to the team
:27:48. > :27:52.gathering evidence against a new emerging threat. Born in Lebanon,
:27:52. > :27:57.Sofuan had emigrated to America as a teenager, he was one of the only
:27:57. > :28:04.Arabic speakers in the FBI, and was picked out by his boss to be
:28:04. > :28:10.deployed across the world, in pursuit of Al-Qaeda.
:28:10. > :28:16.This is a brick from the facility where Bin Laden got his official
:28:16. > :28:22.brief from shaik Mohammed on 9/11. Sofuan's search for answers about
:28:22. > :28:26.9/11 began the day after the attacks. He was in Yemen, where he
:28:26. > :28:30.had been investigating Al-Qaeda's womaning the previous year of a US
:28:30. > :28:37.warship - bombing the previous year of a US warship. He tried to
:28:37. > :28:41.unravel the spider's web of Al- Qaeda's network. On September 12th
:28:41. > :28:45.a CIA officer passed him an envelope. What was in there,
:28:45. > :28:51.shocked Sofuan, there were details of two of the 9/11 hijackers that
:28:51. > :28:55.the CIA had failed to pass on. think it was probably the worst
:28:55. > :29:05.feeling that I have ever experienced in my life. It is a
:29:05. > :29:05.
:29:05. > :29:10.combination of frustration, anger, sadness, betrayal. I did not know
:29:10. > :29:20.how to react. The only thing I recall is I left the office, went
:29:20. > :29:24.across the hall to a bathroom, and I just threw up.
:29:24. > :29:28.The CIA folder included intelligence on meetings in Asia,
:29:28. > :29:32.involving people Sofuan was investigating, and the two men who
:29:32. > :29:37.were involved in 9/11. The CIA knew the two had entered the US months
:29:37. > :29:41.before the attacks. But despite repeated requests, it did not share
:29:41. > :29:45.all it knew with the FBI. What makes you so sure it would
:29:45. > :29:50.have made a difference? We were looking for them overseas, they
:29:50. > :29:57.were here. People in our Government knew they were here. We were not
:29:57. > :30:04.told. It still makes you angry? Absolutely. I will be angry until
:30:04. > :30:14.the day I die about this. I mean look how many people died. Look how
:30:14. > :30:17.
:30:17. > :30:21.the world changed. Look how we Within months of 9/11, the Taliban
:30:21. > :30:29.and Al-Qaeda were ousted from Afghanistan. America began to round
:30:29. > :30:36.up hundreds of suspected terrorists. But the top Al-Qaeda leaders
:30:36. > :30:41.escaped, until in early 20002, President Bush made a dramatic
:30:41. > :30:51.announcement. We recently apprehended one of Al-Qaeda's top
:30:51. > :30:51.
:30:51. > :30:56.leaders, a man named Abu Zebaida, he was spending one of the top
:30:56. > :31:06.operating officials of Al-Qaeda, plotting and planning murder. He's
:31:06. > :31:12.
:31:12. > :31:22.not plotting and he's not planning He's under lock and key. We're
:31:22. > :31:23.
:31:23. > :31:29.going to give him some company. That company included Ali Soufan.
:31:29. > :31:34.His expertise in interrogation and Al-Qaeda led him to be sent to the
:31:34. > :31:40.secret CIA site where he was held. Sofuan can still not disclose the
:31:40. > :31:48.location, although we believe it to be Thailand. He was definitely
:31:48. > :31:56.still in pain, and it was a major surgery. Sofuan found Zubada in bad
:31:56. > :32:00.shape, having been shot during his capture. Death is not an option a
:32:00. > :32:04.CIA cable set out. Sofuan set about trying to obtain his secrets, it
:32:04. > :32:11.didn't take long. We were getting actionable intelligence, this had
:32:11. > :32:15.the possibility of saving lives. This included the identity of the
:32:15. > :32:22.mastermind of 9/11. But even though Sofuan had got him to talk, some in
:32:22. > :32:29.Washington believed Zubada knew more. Abu Zubada was about to
:32:29. > :32:33.become the guinea pig for what the CIA called enhanced interrogation
:32:33. > :32:38.techniques. The idea was that the detainee has to look at the
:32:38. > :32:46.interrogator as if he's his God. He's the one who terms if his life
:32:46. > :32:54.is going to be better, or worse. He had a set of techniques at the time,
:32:54. > :33:03.these techniques were nudity, low level sleep depravation, up to 24
:33:03. > :33:13.hours, loud music and so forth. Sofuan, who lost friend on 9/11,
:33:13. > :33:17.
:33:17. > :33:21.had practical, rather than moral objections. I will not lose sleep
:33:21. > :33:27.if a terrorist is nude, it won't work, it won't work on a top notch
:33:27. > :33:34.terrorist. My experience is you can watch way more flies with honey
:33:34. > :33:39.than vinegar. By now, Sofuan had interrogated
:33:39. > :33:42.many Al-Qaeda operatives, trained to resist torture. There is a
:33:42. > :33:47.different emotional button that you have to press to make them co-
:33:47. > :33:51.operate, sometimes it is family, sometimes it is ideologies, however,
:33:51. > :33:58.even when you think you are having very good relationships with them,
:33:58. > :34:04.in a split of a second you ask some questions. Now if you see me
:34:04. > :34:09.outside you will kill me, absolutely, they will tell you they
:34:09. > :34:13.will slaughter you like a sheep. The treatment of Zubada had
:34:13. > :34:16.intensified, Sofuan had enough? were seeing some stuff, if it
:34:16. > :34:21.happened in America, the person would be arrested. Absolutely, it
:34:21. > :34:27.is an abuse of a prisoner. He threatened to arrest the CIA
:34:27. > :34:33.contractor who was leading the interrogation. The FBI told him to
:34:33. > :34:36.come home. Zubada was then water boarded 83 times.
:34:36. > :34:39.interrogations were used on hardened terrorists after other
:34:39. > :34:43.efforts failed, they were legal, essential, justified, successful
:34:43. > :34:47.and the right thing to do. The intelligence officers who
:34:47. > :34:50.questioned the terrorists can be proud of the work, proud of the
:34:50. > :34:57.results, because they prevented the violent death of thousands, perhaps
:34:57. > :35:01.hundreds of thousands of people. Are you saying that Dick Cheney is
:35:01. > :35:07.lying? I know that Dick Cheney is not saying the truth, I was there.
:35:07. > :35:12.Everything the proponent of enhanced interrogation techniques
:35:12. > :35:19.claim that was obtained, because of enhanced interrogation techniques
:35:19. > :35:22.and waterboarding Zubada, we got when we were on the ground this,
:35:22. > :35:26.before enhanced interrogation techniques existed. Back in the US
:35:26. > :35:33.Sofuan went undercover, pretending to be a personal representative of
:35:33. > :35:40.Osama Bin Laden in America. It was to be his last assignment.
:35:41. > :35:50.Ali Soufan left the FBI frustrated, prevented, he felt, from doing his
:35:50. > :35:58.job. His attempts to tell his story now, and counter who he sees as a
:35:58. > :36:05.misguided narrative of 9/11 are also being met stubborn resistance.
:36:05. > :36:09.Sofuan has a book published today, the CIA demanded many cuts, it is
:36:09. > :36:19.an apart of a wider attempt to control the official version of
:36:19. > :36:19.
:36:19. > :36:28.9/11 and the last ten years. People over there are reacting
:36:28. > :36:38.narrative, not national security information.
:36:38. > :36:38.
:36:38. > :36:48.I always tell myself, hopefully time will heal. Ten years later, it
:36:48. > :36:54.
:36:54. > :36:58.The CIA told us today that any suggestion the CIA purposely
:36:58. > :37:02.refused to share critical lead information on the 9/11 plot, with
:37:02. > :37:08.the FBI is baseless, and the suggestion that the Central
:37:08. > :37:17.Intelligence Agency has requested redactions on this publication,
:37:17. > :37:20.because it doesn't like the content is ridiculous. They refused to
:37:20. > :37:24.comment on the waterboarding allegations. If you want a child to
:37:24. > :37:28.get on you must focus on them intensely since they were born. The
:37:28. > :37:32.idea that you have to shape their development by the age of three is
:37:32. > :37:36.under attack. It is now being claimed that the fevered attentions
:37:36. > :37:41.of anxious parents may be unnecessary. The suggestion is, of
:37:41. > :37:45.course, a great comfort to every run ragged parent in the land. But
:37:45. > :37:54.is it true that benign neglect could be as helpful as eager
:37:54. > :37:59.intervention. Life's busy enough as a toddler,
:37:59. > :38:03.there is walking and talking to be mastered, and a crashing weight of
:38:03. > :38:08.parental ambition to be carried. For those short years at the start
:38:08. > :38:12.of life are said to be crucial for social and academic development.
:38:12. > :38:16.Studies by neuroscientists measuring activity in the brain,
:38:16. > :38:24.have provided the foundation for early years intervention by the
:38:24. > :38:30.state. The last Government pioneered this focus with
:38:30. > :38:32.initiatives including the Sure Start programme, and an early years
:38:32. > :38:38.curriculum. The coalition Government has
:38:38. > :38:44.continued to advocate an early years approach. On the cover of one
:38:44. > :38:47.proper was this photograph of two brains, suggesting there was no
:38:47. > :38:52.doubt how vital early intervention was. The report cited studies
:38:52. > :38:56.claiming that a child's development score at a mere 22 months, could
:38:56. > :39:01.serve as an accurate predictor of educational outcomes at 26 years.
:39:02. > :39:07.It also suggested that boys judged at the age of three as being "at
:39:07. > :39:13.risk" had two-and-a-half times as many criminal convictions at aged
:39:13. > :39:18.21 as those deemed "not at risk". But tomorrow, a conference at the
:39:18. > :39:22.University of Kent, will call into question the focus on this early
:39:22. > :39:26.years strategy. They want less Government intervention at this age,
:39:26. > :39:33.and suggest it is time parents calmed down about the importance of
:39:33. > :39:36.childhood. With us now is Lee director of
:39:36. > :39:40.parenting studies at the University of Kent, helping to organise that
:39:40. > :39:45.conference. And the psychologist, Oliver James, joins us from Oxford.
:39:45. > :39:50.Why do you think this emphasis on the first years wrong? It is a very
:39:51. > :39:53.old prejudice, that is the first thing to say, it is certainly
:39:53. > :39:59.predating anything that anybody says they have found out recently.
:39:59. > :40:04.It is at least 300 years old. I think what has gone on more
:40:04. > :40:09.recently, though. There is an increasingly moralistic dynamic to
:40:09. > :40:13.claims about the early years. So increasingly shrill claims are made
:40:13. > :40:18.if parents don't heed by what is said, then really terrible things
:40:18. > :40:22.will happen to their children. It is becoming increasingly politic
:40:22. > :40:29.sized. Neither side can demonstrate it is wrong? The claim about
:40:29. > :40:33.neuroscience is entirely wrong, there is no new neuroscience that
:40:33. > :40:37.tells us if parents don't do things with little children their brains
:40:37. > :40:43.will be shrunk. It is an unwarranted claim, it is better
:40:43. > :40:50.understood as neurononsense or neuromania, than any sense nl
:40:50. > :40:53.argument about anything. - Sensible argument. I don't know
:40:53. > :40:56.why we are discussing it on Newsnight, it is a completely
:40:56. > :41:03.accepted fact by people who have read the evidence, which DrLy low
:41:03. > :41:08.hasn't. The quality of care you have in - Dr Lee hasn't. The
:41:08. > :41:12.quality of care you have in your early years reflects your adult
:41:12. > :41:16.life. Particularly emotional development. If you look at page
:41:16. > :41:20.335 of my book, you will see 30 studies which show quite clearly
:41:20. > :41:26.and without question, that the earlier the damage is done, the
:41:26. > :41:30.earlier a child is maltreated, not loved, abused and neglected, the
:41:30. > :41:35.earlier it is neglected, the more likely it is to suffer all sorts of
:41:35. > :41:41.emotional problems in later life. Take, for example, a study of 800
:41:41. > :41:46.children, which showed that if there was maltreatment between 0-3,
:41:46. > :41:52.the outcomes were that much worse, if the maltreatment was between 3-6,
:41:52. > :41:55.or 6-9. Have you read any of these studies, Dr Lee, going on about the
:41:55. > :42:02.neuroscenes is completely irrelevant. Have you read the
:42:02. > :42:05.studies? I have read many of them, plenty say one thing and one the
:42:05. > :42:12.other. Name one study that doesn't, that contradicts the contention
:42:12. > :42:17.that the early years are more important. Can I say something.
:42:17. > :42:24.Name one study that contradicts Oliver James's assertion? There is
:42:24. > :42:29.plenty of studies, if he reads Jerome Kegan, can I say something
:42:30. > :42:33.or not, no, OK. My argument about this, and my perception of the
:42:33. > :42:37.research is it is like lots of areas of research, where there is
:42:37. > :42:42.plenty of different findings and we can have a perfectly reasonable
:42:42. > :42:48.debate. The thing that has happened in this area, which is why I say it
:42:48. > :42:52.has a moralistic dynamic, is certain people like Oliver James
:42:52. > :42:56.have become increasingly shrill in the way they are posing things.
:42:56. > :43:00.They want to turn research into a battering ram to convince parents
:43:00. > :43:04.to do what they think they should do. The research demonstrates one
:43:04. > :43:08.thing, surely it is his duty? doesn't demonstrate one thing.
:43:08. > :43:13.Studies are studies, and we have a debate about what studies say, that
:43:13. > :43:18.is a reasonable discussion to have. What isn't reasonable is to one-
:43:18. > :43:23.sidedly turn this into a crusade and to override the idea that
:43:23. > :43:26.parents have an entirely legitimate right and a legitimate interest in
:43:26. > :43:30.deciding for themselves about various aspects of how they conduct
:43:30. > :43:33.their family life. Like, for example, whether or not to put a
:43:33. > :43:36.child into daycare. Oliver James is currently on a crusade against
:43:36. > :43:39.mothers putting their children in daycare. He can say what he wants
:43:39. > :43:44.about studies, some studies say one thing, some say the other, I think
:43:44. > :43:49.in the normal run of family life, you should let parents decide what
:43:49. > :43:53.they think is best for themselves, let them relax about all of this,
:43:53. > :43:56.and do what makes sense in terms of work-life balance and conducting
:43:56. > :44:00.ordinary every day family life and getting things to fit together. It
:44:00. > :44:04.is just really got out of control and over the top. Would you be
:44:04. > :44:09.willing to let parents relax? Absolutely I'm all in favour of
:44:09. > :44:14.letting parents relax and let them do what they want to do, which
:44:14. > :44:19.survey after survey shows is look after their children and love them.
:44:19. > :44:22.Dr Lee has not read the survey, she hasn't read the studies. If you had
:44:22. > :44:25.read them you would know they clearly show that the early years
:44:25. > :44:30.are critical in setting the electrochemical thermostat for the
:44:30. > :44:34.rest of your life. That is why it should be the basis of Government
:44:34. > :44:38.policy. When Gordon Brown was trying to bail out the banks, he
:44:38. > :44:42.kept on saying we will do whatever it takes to save the banks. If only
:44:42. > :44:46.he had said we will do whatever it takes to enable parents to be able
:44:46. > :44:51.to look after their children, to be at home and look after their
:44:51. > :44:54.children? Can I finish. Parents are doing a fine job, we already have
:44:54. > :44:59.an early intervention culture by what ordinary parents are doing
:44:59. > :45:02.every day. The reason we do that is to allow all parents of under
:45:02. > :45:06.three-year-olds to have the national average wage, each family
:45:06. > :45:10.should have that. One or other parent, they could share that and
:45:10. > :45:15.always be at home. Or if they don't want to look after their children
:45:15. > :45:19.they can employ a nanny, this could be paid for by redistributing
:45:19. > :45:23.wealth or 1% of the British land mass is owned by the Ministry of
:45:23. > :45:29.Defence, why not sell some of that off. It is an interesting, unusual
:45:29. > :45:34.idea, but you have no objection to that in principle, do you? I think
:45:34. > :45:38.if...It Can't do any harm to have an intense focus on a child in its
:45:38. > :45:43.early years? It depends, there is plenty of other studies and plenty
:45:43. > :45:47.of research. Name one, name some studies, you keep saying, you
:45:47. > :45:50.obviously haven't read the literature you can't name them?
:45:50. > :45:59.talking about sociological studies which you haven't spent an awful
:45:59. > :46:02.lot of time looking at. Looking at mothers' experience of parenting.
:46:02. > :46:06.have read those studies, some of which were done at the University
:46:06. > :46:09.of Kent. I sense we are not going to get a meeting of minds. We are
:46:09. > :46:13.obviously not, it must be possible to have a reasonable discussion
:46:13. > :46:17.about this, it must be possible to recognise that every day experience
:46:17. > :46:21.of lots and lots of mothers and lots and lots of parents at the
:46:21. > :46:26.moment is far too anxious and worried actually what we need, I
:46:26. > :46:29.think, is a public discourse that recognises we don't have a
:46:29. > :46:34.phenomenal parenting deficit in this country, most parents are
:46:34. > :46:37.doing a great job, we should recognise that. Thank you both very
:46:37. > :46:43.much. The European Union voted today to enhance Cliff Richard's
:46:43. > :46:47.pension, they are extending the copyright on music performances
:46:47. > :46:52.from 50-70 years, all sorts of codgers benefit from royalties on
:46:52. > :46:55.things like this, here it is while we can still afford it.
:46:55. > :47:02.# You came into my heart # So tend early
:47:02. > :47:08.# With your burning love # That stings like a bee
:47:08. > :47:13.# Oh now that I surrender # So helplessly
:47:13. > :47:23.# Now you say you're gonna lead me # You're gonna leave me
:47:23. > :47:26.
:47:26. > :47:31.# Baby Hello there, the winds will ease
:47:31. > :47:35.down only a little bit overnight tonight tomorrow will be another
:47:35. > :47:38.windy day. Heavy showers drifting across, the strong winds across
:47:38. > :47:42.southern areas, it stays wet in northern and western Scotland.
:47:42. > :47:46.Inbetween there will be good spells of sunshine. Still a blustery day
:47:46. > :47:48.across known England. A few heavy showers drifting across the
:47:48. > :47:52.Midlands towards East Anglia and the south-east. Especially during
:47:52. > :47:58.the early part of the afternoon. Most of the early showers in the
:47:58. > :48:01.south west will be in the morning, the afternoon promises to chase the
:48:01. > :48:05.showers away, the same goes for Wales. Wherever you are tomorrow it
:48:05. > :48:10.will still be windy, still feeling cool, the wind blowing a few
:48:10. > :48:14.showers into western parts of Wales. Much of Northern Ireland, rain
:48:14. > :48:17.arriving late in the day. Still arriving here across much of
:48:17. > :48:20.Scotland. The biggest issue across northern and western Scotland will
:48:20. > :48:24.be the rain. It continues to build up through the day. There will
:48:24. > :48:27.still be some during the course of Wednesday. There is the risk of
:48:27. > :48:32.some tkphrooding problems across the far north and west of Scotland
:48:32. > :48:36.as the rain continues to mount up. Elsewhere, further south, by
:48:36. > :48:40.Wednesday hopefully the winds will be lighter, and we will start to