12/09/2011 Newsnight


12/09/2011

In-depth investigation and analysis of the stories behind the day's headlines with Jeremy Paxman.


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Transcript


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As long as there isn't another crisis for eight years, and as long

:00:07.:00:11.

as the Government acts on the advice it has been given, British

:00:11.:00:15.

tax-payers shouldn't be stung into bailing out the banks again.

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In the bank vaults of Britain, they are getting ready for a lower

:00:19.:00:24.

profit world. But in the City do all the delays

:00:24.:00:27.

and complication buried in today's proposal for reforming banks, mean

:00:27.:00:31.

the party goes on for the bankers. The Government is here to argue

:00:31.:00:39.

that this is the real deal. This FBI agent tells us that the

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CIA's so-called enhanced interrogation of Al-Qaeda prisoner

:00:41.:00:46.

was waste of time. Not the official view. They prevented the violent

:00:46.:00:51.

deaths of thousands, perhaps hundreds of thousands of people.

:00:51.:00:54.

know that Dick Cheney is not saying the truth, because I was there.

:00:54.:00:57.

you are worrying about whether your child getting the attention they

:00:57.:01:07.
:01:07.:01:10.

need in the early years, relax, or maybe you shouldn't, too risky.

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It was a decisive moment in the history of attempts to get the

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taxpayer off the hook for the greed and stupidity of bankers, the

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Chancellor said today. He didn't use the words "greed" and

:01:22.:01:28.

"stupidity kgs ", that is not his - ", has not his style, we will see

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how disease yef he is when he acts on the recommendations the

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commission set up to look into the banks. It will be 2019 before the

:01:39.:01:44.

measures will be implement. - implemented. We better hope they

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remain sensible until then. It was the absence of this stuff

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that sank Liamman and Northern Rock, lack of capital, lack the liquid

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cash. The collapse of the credit system left banks that said they

:01:56.:01:59.

were solid, melting down. Today, the man they picked to design a new

:01:59.:02:05.

banking system laid out his plan. The ring-fence. Only ring-fenced

:02:05.:02:09.

banks would supply the core domestic retail banking services,

:02:09.:02:13.

taking deposits from ordinary individual, and small businesses,

:02:13.:02:19.

and extending overdrafts to them. Ring-fenced banks could not

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undertake trading, or markets business, or do derivatives. Banks

:02:24.:02:28.

will be split down the middle between stuff the UK packs pair is

:02:28.:02:32.

prepared to bail out, and - taxpayer is prepared to bail out

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and stuff it is not. For a company like Barclays, right in the firing

:02:35.:02:41.

line t might look like this. Outside the ring-fence dos its

:02:41.:02:45.

giant investment bank, the African banks, the private bank for rich

:02:45.:02:50.

people, and probably the credit card business. And that just leaves

:02:50.:02:53.

the �4.5 billion retail business inside the ring-fence, it is not

:02:53.:03:00.

much. The other big proposal is on how much capital banks have to hold.

:03:00.:03:08.

Modern banks don't actually keep much money in the bank itself. As a

:03:08.:03:11.

result of Vickers they will have to, not inch the actual vault, but that

:03:11.:03:15.

and pieces of paper you can turn into cash quickly. As a result of

:03:15.:03:20.

that they will make less profit. Before the crash, it was typical

:03:20.:03:25.

for UK banks' capital cushion to be under 4% of the money they lent out.

:03:25.:03:31.

Now, under new international rules, called Basel 3, they have to hold

:03:31.:03:35.

7%. For banks big enough to sink sink the economy, Vickers says that

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should be 10%. There is even more pain, on top of the 10% capital

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they have to hold there will be another 7-10% of loss-bearing bonds,

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making 20%. Those who speak for Britain's businesses don't like it.

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We are very concerned that we will be out of step with the rest of the

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EU, and potentially elsewhere in the world. Because what's being

:03:56.:04:00.

proposed today is certainly a higher requirement on UK banks than

:04:00.:04:04.

elsewhere, that will add a cost to doing business and banking in the

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UK. But there are risks involved. One is that the new rules damage

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competitiveness and profit, not just at the banks, but for the

:04:12.:04:16.

whole UK economy, because the banks are a big part of it. The other,

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which follows, is that the Treasury then loses money, as banks leg it

:04:20.:04:24.

somewhere else. Some bankers hoped this

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competitiveness issue might bring the committee itself to water down

:04:29.:04:34.

its conclusions. But, in vain. benefits of reducing the

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probability of crises of this nature, which a recurring

:04:37.:04:40.

phenomenon with the banking system we have, are absolutely

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overwhelming. So competitiveness is a tiny part of this. It is very,

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very important not to get hung up on this one aspects.

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So now it all comes down to politics. The commission said the

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proposals might harm some individual banks, but for the UK

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economy as a whole, the outcome would be neutral. And what the

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bankers wanted was for the politicians to say they will delay,

:05:03.:05:07.

they will pick and mix, and consult a bit more, and see what other

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countries do. But in the end, they did more than that. We support the

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commission's radical reforms, on ring-fencing and regulatory

:05:18.:05:21.

standards. And the Chancellor, who revealingly supports them in

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principle, we agree with the Business Secretary and support them

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in practice. We support these measures in principle and will put

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them into practice through the detailed legislation. You can't

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support all of this in practice, because it requires detailed

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legislation, which even John Vickers says is not part of this

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commission. So, let there be no doubt, we support the Banking

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Commission's report. We will legislate in this parliament.

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the deadline for implementation will be 2019. For many of the

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banks' critics, Vickers did not go far enough. Protestors staged a

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tableau right in the middle of the bankers' lunchtime, the message,

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they are zombies on taxpayer life support. Some banking experts want

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a straight forward split up between investment and retail. We feel the

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only sure way of making sure there is tho contagion between the

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essential parts of banks, and the speculative banking part is to

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split them up. It worked before, it worked in the US, it worked here

:06:26.:06:32.

when these activities were in different companies. These are

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untried proposals, there is a lot of opportunity to find holes in

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there, and why on earth does it need eight years to implement.

:06:39.:06:43.

it or not Vickers sets the agenda. The precision detail is yet to come,

:06:43.:06:48.

but Britain is set for the world's most radical shake-up of the banks.

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Paul is with us in the studio now, as is our political correspondent.

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If you had to pick winners and losers? One set of losers are

:06:58.:07:02.

people who said consistently Britain can't act before the rest

:07:02.:07:08.

of the world and Europe before regulating the banks. Most notably,

:07:08.:07:13.

algs stair Darling, Gordon Brown and Ed Balls, that is they said in

:07:13.:07:16.

their time in office. That section of the City of London who thought

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they would get Vickers to water down his own report. At the very

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last moment of the remit being set, they got inserted into the remit,

:07:26.:07:28.

it mustn't harm British competitiveness and the tax take

:07:28.:07:33.

for the Treasury. Vickers has said it won't. So take it away from

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there. I think as well, anybody who thinks that George Osborne is just

:07:36.:07:41.

in the pocket of that section of the City. He could have stood up

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today and said, very interesting, not proven, I will do a bunch of

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studies that delve into all this evidence, he didn't do this. He

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said, under pressure, we support the principle and we will enact it.

:07:52.:07:56.

David, there seemed to be quite a lot of cross-party agreement on it

:07:56.:07:59.

today? There absolutely was, that was one of the most striking things

:07:59.:08:02.

about today. In the last general election, if you wanted to get a

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cheer from a packed public meeting f we have such things any more in

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the UK, it would be to stay string up the bankers, put them in sacks

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and stick them in the Thames. We didn't get that today. A lot of the

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political weather is now talking about how to stop it again, which,

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of course, is the most important thing to happen. Retribution,

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however politically expedient and attractive for parties, is not

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going to get that job done. Indeed the Treasury, though, there is

:08:28.:08:33.

still a lot of jittery people about whether this can be implemented,

:08:33.:08:37.

even on this seven-year term, without doing the things Paul was

:08:37.:08:41.

talking about in his report, about frightening banks off and sending

:08:42.:08:44.

them offshore and taking a less big part in the British economy. What

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about the Liberal Democrats? That was another striking point about

:08:48.:08:52.

today, Vince Cable couldn't have been more supportive. The hymn

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sheets were handed round and Vince was singing with the best of them,

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it could have been conduct bid George Osborne. In the last few

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months he has been very notable with the hostile things he has been

:09:04.:09:07.

saying about bankers, particularly in interviews. None of that today.

:09:07.:09:09.

What will be particularly interesting is how Liberal

:09:09.:09:13.

Democrats not in the coalition, not in ministerial office react to this,

:09:14.:09:18.

that we won't see for the next few days. Particularly the Liberal

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Democrat Conference, the first political conference of the main

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conference season. Next week isn't it? Exactly.

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Joining us now is the Treasury minister, Mark Hoban, who is

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financial secretary to the Treasury, that is right isn't it.

:09:36.:09:39.

Are you going to implement all the recommendations in this report?

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What George Osborne set out today is we would bring in legislation by

:09:44.:09:48.

2015, and all the recommendations would be implemented by 2019.

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will implement all the recommendations? What he said is

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we're going to look at Sir John's report over the course of the next

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few months. It is a complex report, it is a very piece of analysis.

:09:58.:10:02.

There are some issues we need to work our way through, and we will

:10:02.:10:06.

produce our final response towards the end of this year. It is pretty,

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it is really, in essence, very simple, the separation of retail

:10:11.:10:14.

and investment banking operations and the requirement to hold more

:10:14.:10:19.

capital, both those things you will implement? Yes, George Osborne has

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been very clear. At the rate at which is said in the report?

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Absolutely. Because any argument that anyone makes to you about an

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effect upon competitiveness, or an effect upon taxation would be

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invalid, wouldn't it, because Professor Vickers has already said

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so? What we did when we set the terms of reference for John Vickers,

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was to be very clear about asking him to look at the impact on

:10:45.:10:48.

competitiveness on banks based here in the UK and the impact on taxes.

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What Sir John has done in his report, the commission's report, is

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to ensure that for the international activities of UK

:10:56.:11:02.

banks, like Barclays, RBS or HSBC, they will be capital levels set at

:11:02.:11:05.

international standards, but the capital levels for the ring-fenced

:11:05.:11:09.

domestic activities should be set at a higher level. This talk about

:11:09.:11:15.

a need to consult further in all the years up to 2015 and on to 2019,

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who do you want to consult with? is a hugely complex topic, we need

:11:21.:11:25.

to get it right. I don't think anybody would expect us to

:11:26.:11:30.

implement it overnight. You don't need to know anything else?

:11:30.:11:34.

need to know whether to implement it through regulation or

:11:34.:11:37.

legislation, how you define precisely what is domestic what is

:11:37.:11:40.

international business. Some of the complexties of banking need to be

:11:40.:11:43.

taken into account. We need to make sure we work through properly the

:11:43.:11:47.

costs and benefits of Sir John's work. It is interesting you mention

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regulation, you are a man who believes in less regulation, aren't

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you? We have set out, since the coalition Government was formed

:11:53.:12:00.

last year a very clear plan on how we regulate the banking sector.

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you personally believed there was too much regulation beforehand?

:12:03.:12:07.

have said we believe from the result of the crisis we need to

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make sure there is proper regulation in place. That is why we

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are transferring the safety of the banks to the PRA, taking action on

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consumer protection issues. There is a very clear direction of travel,

:12:19.:12:23.

when it comes to what we are going to do to tackle regulation and the

:12:23.:12:26.

banking sector. Less than a year before the banking crisis hit, you

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were saying we had to resist arguments for greater regulation?

:12:30.:12:35.

What we need to do is make sure we get the right regulation in place,

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and make sure we have regulation that needs to increase. You don't

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deny you said that? We saw what's happened during the banking crisis,

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we recognise that the regulations didn't work. You said

:12:49.:12:51.

authoritatively then there thank there was no need for greater

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regulation, you were wrong? We have accepted that. Is there any reason

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to believe you are any more likely to be right at this time? If you

:12:58.:13:02.

look at the lessons we have learned as a country from the financial

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crisis. If you look at the impact of the structure of the banking

:13:06.:13:10.

sector on the risk imposed on the British economy. Things should have

:13:10.:13:14.

been addressed a decade ago, they weren't. We have picked up the

:13:14.:13:19.

lessons and want to reimplement them through John Vickers work, and

:13:19.:13:22.

through the work happening internationally and the domestic

:13:22.:13:25.

reform programme. Do you want to join Ed Balls and the apology he

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made earlier today for the Government as failure last time

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round, there was a failure in opposition too? We can all hold our

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hand up to what happened prior to the financial crisis A number of

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people missed it. What we have done is tackle the issues. Nobody was

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prepared to address the structure of banking until we got into office.

:13:46.:13:49.

We have asked the questions about what does it mean to have a big

:13:49.:13:53.

banking sector in the UK what do we need to do to reform the regulatory

:13:53.:13:56.

system in the UK. Questions the previous Government weren't

:13:56.:14:01.

prepared to ask. With us now is Peter McNamara, the

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former head of corporate strategy at Lloyd's TSB, Will Hutton, who

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submitted his own sub miss to the John Vickers committee -

:14:13.:14:15.

submissions to the John Vickers committee.

:14:15.:14:19.

This should save banking, shouldn't it? Well, there is a very

:14:20.:14:23.

interesting position, middle of the road, that has been adopted. As we

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heard in the earlier piece, there were two choices behind the

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Government at one fundamental level, one was to completely separate the

:14:31.:14:36.

retail and investment banking wings. The other one was to do nothing but

:14:36.:14:39.

impose tougher regulatory hurdles in terms of capital requirements.

:14:39.:14:43.

What they have said is go for a middle role, build something we

:14:43.:14:49.

call a ring-fence around the retail piece, and what we will do is

:14:49.:14:54.

impose hire capital requirement - higher capital requirements. Do you

:14:54.:14:58.

think it will work? It is difficult to get all the detail around this.

:14:58.:15:02.

That is why it will take some years to implement. Will Hutton your

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knees are knocking already? Look, I disagree very strongly with that. I

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think, given where we are internationally, to ring-fence was

:15:13.:15:17.

probably as far as you could push it. This will be good for the

:15:17.:15:23.

economy at large, I don't agree that actually ring-fencing in of

:15:23.:15:27.

itself is going to damage recovery. What might damage recovery is if

:15:27.:15:31.

you actually push capital up too quickly, but there is no reason to

:15:31.:15:34.

do that. You get the legislation, you do the ring-fencing, the ring-

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fencing, I think, will create a part of the British banking system

:15:39.:15:42.

that will consecrate itself and devote itself to lending to British

:15:42.:15:46.

business and consumers, they will do that better than in the past,

:15:46.:15:50.

they will be less tempts to go into the Wild West of the casino banking,

:15:50.:15:55.

and then we can bring in higher capital as and when it is

:15:55.:15:58.

appropriate. If the capital regime was high now, I would be argue to

:15:58.:16:04.

go lower it. I'm hardly, you have to separate these two things out.

:16:04.:16:10.

Bringing capital in could be prematurely, ring-fencing in itself

:16:10.:16:14.

is not a problem. Do you fear, as some of your colleagues do, that

:16:14.:16:18.

this will make banking so safe, it will be very hard for banks to

:16:18.:16:23.

lend? I think it is a dodge. I think that this is completely

:16:23.:16:29.

beside the real issue facing the country. What is beside the real

:16:29.:16:33.

issue? That is how to grow the economy. That is what we should

:16:33.:16:37.

spend owl of our time focusing on. We shouldn't keep an eye on the

:16:37.:16:41.

banks at all? The important issue is how to get the economy growing

:16:41.:16:45.

again. If I had to make a choice, as a nation we can only choose one

:16:45.:16:48.

thing right now, strong banks or strong economy. It is clear we have

:16:49.:16:53.

to be, we know growing the economy is about growing SMEs, and

:16:53.:16:56.

therefore, particularly for the banks that we own, we should be

:16:56.:17:01.

holding them to the lending targets, which I don't, I'm extremely

:17:01.:17:04.

sceptical that the lending targets that everybody says are being met

:17:04.:17:10.

are being met. One of the reasons why they are not being met is banks

:17:10.:17:15.

can put the scarce capital they have got at the moment, behind any

:17:15.:17:18.

proposition anywhere in the world. Once you ring-fence and say that is

:17:18.:17:22.

the amount of money sitting behind British business lending they have

:17:22.:17:27.

to do it. They are not tempted. That is a hopeless...The Fact of

:17:27.:17:32.

the matter is this will never see the light of day, and we will get

:17:32.:17:38.

so wrapped up in the complexity, carving up this and that, and the

:17:38.:17:42.

economy seven years later will be no better off, and the SMEs won't

:17:42.:17:47.

have the capital they need to grow their business. In seven years time.

:17:47.:17:51.

Why not get the banks on here and question them on Newsnight whether

:17:51.:17:56.

or not they are lending to people. The reason we don't have bankers on

:17:56.:18:00.

the programme very often is they won't come on. There is a real

:18:00.:18:03.

question of banks making themselves accountable publicly? There is a

:18:03.:18:08.

lot of them, find ones that will. can tell you, most of our

:18:08.:18:12.

researchers spend much of the day on the phones to banks across the

:18:12.:18:15.

land, they put their heads down. That is the big problem with

:18:16.:18:20.

banking, and its advocates in this country. Bank something not the

:18:20.:18:24.

only industry, nor manufacturing, digital, content, IT, we have a

:18:24.:18:29.

whole wealth of expertise, and growing entrepeneurs, these

:18:29.:18:33.

businesses need lending. We need to feed them. The absolutely critical

:18:33.:18:37.

point at the moment in the economy is to kick start the private sector

:18:37.:18:41.

in a much bigger way than we have done. Without that we will suffer

:18:41.:18:45.

severe unemployment as the public sector contracts. One of the major

:18:45.:18:50.

concerns of doing that is to give enough incentive to the banks, and

:18:50.:18:55.

to entrepeneurs, to lend and create that employment. Frankly, dare I

:18:55.:18:58.

say it, if you have to choose, probably the balance is quite right,

:18:58.:19:03.

that you have to push the economy of the private sector harder and

:19:03.:19:07.

faster at the moment in the cycle, than we probably thought three

:19:07.:19:12.

years ago when the banking crisis developed. Now, if you are going to

:19:12.:19:17.

constrain that activity, you are facing both the disadvantage that

:19:17.:19:20.

you may lose some of the capital which is required and the lending

:19:20.:19:24.

required into that sector, and you won't get the growth without it.

:19:24.:19:31.

is just the Council of Despair. The idea that the choice between bank

:19:31.:19:37.

reform and growing the economy is completely false. It is a canar put

:19:37.:19:41.

up by most people who want to protect an indefensible business

:19:41.:19:45.

model. Bank assets in this country is four times the GDP, it is huge

:19:45.:19:48.

in relation to that. There is a permanent risk of another banking

:19:48.:19:52.

crisis we have to do something to make uer system safer. This is

:19:52.:19:57.

something on the table, which is feasible, which will not actually,

:19:57.:20:01.

ring-fencing will not damage flows of credit to the private sector.

:20:01.:20:05.

Financial services are a global industry, we can't regulate at

:20:05.:20:08.

national level. The simple fact of the matter is getting our economic

:20:08.:20:12.

house in order, should there be another cry sifs any sort, it will

:20:12.:20:17.

always come a different way - crisis of any sort will always come

:20:17.:20:21.

in a different way than the one before. Why not have national

:20:21.:20:24.

surplus, then we can stand whatever shock it comes the other way.

:20:24.:20:28.

is lots of ways to make the economy grow, quantitative easing, fiscal

:20:28.:20:32.

policy, building institutions that support entreprenurialism. You

:20:32.:20:37.

don't have to live with a chronically unsafe banking system.

:20:37.:20:41.

Ring-fencing in itself won't damage credit flows to the private sector.

:20:41.:20:45.

Inappropriate increases in capital too quickly might be, but my God,

:20:45.:20:49.

you have as much chance of that as pigs flying. We have heard from

:20:49.:20:53.

Mark Hoban, it will take until 2019 to do that. The simple fact is this

:20:53.:20:57.

will never come into effect. That is a strong statement, why say that.

:20:57.:21:03.

The split between retail banking and investment banking, I don't

:21:03.:21:07.

believe it will ever come into effect. The complexity and gran

:21:07.:21:11.

laterity will wrap itself into it, we will become focused on getting

:21:11.:21:21.
:21:21.:21:23.

the economy moving, let's drop it. Everyone is getting excited by the

:21:23.:21:26.

savings, and taking vast amounts of money from the taxpayer, you say

:21:26.:21:30.

the mechanism won't work? I don't believe it will come into effect.

:21:30.:21:36.

Is that a lack of will on to the banks or just generally? Listening

:21:36.:21:40.

to the level of complexity that needs to be decided, there will be

:21:40.:21:45.

years of deciding through that complexity. Meanwhile the point is,

:21:45.:21:49.

industries changing and evolving constantly and bypassing, as

:21:49.:21:52.

innovation always does to regulation. The minister is not

:21:52.:21:55.

taking part in this discussion, do you want to respond to that, will

:21:55.:21:58.

you make it happen? We have said very clearly we will legislate by

:21:59.:22:03.

2015 and the reforms will be in place by 2019. I disagree with Judy

:22:03.:22:08.

as point, strong banks or a small economy. We need strong banks to

:22:08.:22:11.

have a strong economy. These reforms will strengthen the banking

:22:11.:22:15.

system and make the economy stronger than in the past. Heretic

:22:15.:22:20.

point, this ring-fencing is not going to happen, she says? We will

:22:20.:22:27.

legislate by 2015, implemented by 2019. We have been crystal law -

:22:27.:22:31.

clear on it. George Osborne, Vince Cable, parliament is very clear,

:22:31.:22:37.

this is going to happen. Let's talk about one thing straight away,

:22:38.:22:41.

there is no co-relation between strengthening the bank and

:22:41.:22:45.

supporting industry. You can have very strong banks that don't lend.

:22:45.:22:50.

That is how you make them strong, reduce the risks and exposure to

:22:50.:22:54.

lending, they become strong. That is not helpful to the economy

:22:54.:22:58.

gearing up and the growth of the private sector. That growth has to

:22:58.:23:02.

be inserted into the retail piece. If you price that retail piece of

:23:03.:23:06.

the business, disadvantage at that stageously, against the other

:23:06.:23:13.

components of the - disadvantageously, against other

:23:13.:23:16.

components of the business. The most damming thing that could be

:23:16.:23:22.

done. People will lose jobs because of this. They won't grow. If you

:23:22.:23:26.

said ring-fenced, deposits have to remain in that. John Vickers made

:23:26.:23:29.

the point, that money will be available for lending to banking,

:23:29.:23:34.

because it is ring-fenced in the entity, rather than being used to

:23:34.:23:37.

support international activity. John Vickers made that point clear

:23:37.:23:42.

in his report. Let's look at that point, if you are lending money,

:23:42.:23:45.

longish term to either small businesses or people to die their

:23:45.:23:49.

houses, the borrowing of short-term money from deposit orators from

:23:49.:23:54.

savings and current accounts won't fund. That straight away d

:23:54.:23:56.

depositors, from savings and current accounts won't fund it.

:23:57.:24:00.

That straight away is the balance of short-term needs of customers

:24:00.:24:05.

against the long-term needs of the bank. Then you are starting to

:24:05.:24:10.

constuct derivative structures inside your bank, running contrary

:24:10.:24:15.

to the ring-fencing. If nothing was booming at this point in time.

:24:15.:24:19.

your proposal to do nothing, saying it is all so difficult and

:24:19.:24:22.

complicated, we can't act and make decisions and come to conclusion

:24:22.:24:27.

about this complexity, it has to stand, nothing must happen s that

:24:27.:24:33.

your point. Not at all. What is your point. At this point in the

:24:33.:24:36.

cycle, the UK growth and creation of employment is the paramount

:24:36.:24:40.

importance. The strength of banks is probably something that you

:24:40.:24:44.

can't wholly address with a complex piece of legislation, only within

:24:44.:24:49.

the UK. Because what type of crisis are hitting banks as we speak at

:24:49.:24:53.

the moment. In the rest of the European area. British banks may be

:24:53.:24:58.

safer as a result of this. Very quickly. Very quickly at the moment

:24:58.:25:02.

banks are hit by sovereign debt problems. Quite outside anything

:25:02.:25:07.

that is in this one. That is causing instability in Europe, and

:25:07.:25:10.

the InterBank markets which, we are forced to operate in, because all

:25:10.:25:13.

of this legislation applies around the European economic area. So you

:25:13.:25:17.

do nothing. Failing bank in the rest of Europe can be contagious to

:25:17.:25:20.

the UK. Thank you very much indeed.

:25:20.:25:23.

The terrorist attacks which occurred a decade ago yesterday,

:25:23.:25:27.

the single greatest outrage in modern history, could not have been

:25:27.:25:32.

prevented, and obliged the United States to use practices like

:25:32.:25:37.

waterboarding, because there was no alternative. Wrong, according to an

:25:37.:25:43.

FBI agent who worked at the heart of the operation against Al-Qaeda.

:25:43.:25:48.

Ali Soufan was present at the site where top Al-Qaeda suspects were

:25:48.:25:52.

tortured. He said former officials haven't told the truth about the

:25:52.:25:56.

effectiveness of practices like waterboarding, or whether 9/11

:25:56.:26:00.

itself could have been forestalled. He has given this only British

:26:00.:26:08.

interview to us. Stepping out of the shadows,

:26:08.:26:12.

appearing for the first time on camera, Ali Soufan, the former FBI

:26:12.:26:20.

agent, with an eyewitness account some people don't want him to tell.

:26:20.:26:24.

They are trying to stop me and others from telling the world what

:26:24.:26:32.

really happened over there. He believes huge mistakes were made,

:26:32.:26:39.

with devastating consequences. happened because we failed to

:26:39.:26:43.

prevent it from happening. We were looking for them overseas, they

:26:43.:26:49.

were here. People in our Government knew they were here.

:26:49.:26:55.

He was the interrogator who saw the CIA try to break a key terrorist

:26:55.:27:05.
:27:05.:27:11.

suspect, and fail. What happened here at Ground Zero

:27:11.:27:15.

has prompted a fierce debate. Could it have been prevented and did

:27:15.:27:19.

America go too far in trying to stop it happening again? Now, for

:27:19.:27:23.

the first time, we can hear from the man who interrogated some of

:27:24.:27:27.

Al-Qaeda's most important figures, who was on their trail before 9/11,

:27:27.:27:30.

and who was there when the gloves came off in the fight against

:27:30.:27:38.

terrorism. Ali Soufan joined the FBI's New

:27:38.:27:43.

York office in the mid-1990s. He had been assigned to the team

:27:43.:27:48.

gathering evidence against a new emerging threat. Born in Lebanon,

:27:48.:27:52.

Sofuan had emigrated to America as a teenager, he was one of the only

:27:52.:27:57.

Arabic speakers in the FBI, and was picked out by his boss to be

:27:57.:28:04.

deployed across the world, in pursuit of Al-Qaeda.

:28:04.:28:10.

This is a brick from the facility where Bin Laden got his official

:28:10.:28:16.

brief from shaik Mohammed on 9/11. Sofuan's search for answers about

:28:16.:28:22.

9/11 began the day after the attacks. He was in Yemen, where he

:28:22.:28:26.

had been investigating Al-Qaeda's womaning the previous year of a US

:28:26.:28:30.

warship - bombing the previous year of a US warship. He tried to

:28:30.:28:37.

unravel the spider's web of Al- Qaeda's network. On September 12th

:28:37.:28:41.

a CIA officer passed him an envelope. What was in there,

:28:41.:28:45.

shocked Sofuan, there were details of two of the 9/11 hijackers that

:28:45.:28:51.

the CIA had failed to pass on. think it was probably the worst

:28:51.:28:55.

feeling that I have ever experienced in my life. It is a

:28:55.:29:05.
:29:05.:29:05.

combination of frustration, anger, sadness, betrayal. I did not know

:29:05.:29:10.

how to react. The only thing I recall is I left the office, went

:29:10.:29:20.

across the hall to a bathroom, and I just threw up.

:29:20.:29:24.

The CIA folder included intelligence on meetings in Asia,

:29:24.:29:28.

involving people Sofuan was investigating, and the two men who

:29:28.:29:32.

were involved in 9/11. The CIA knew the two had entered the US months

:29:32.:29:37.

before the attacks. But despite repeated requests, it did not share

:29:37.:29:41.

all it knew with the FBI. What makes you so sure it would

:29:41.:29:45.

have made a difference? We were looking for them overseas, they

:29:45.:29:50.

were here. People in our Government knew they were here. We were not

:29:50.:29:57.

told. It still makes you angry? Absolutely. I will be angry until

:29:57.:30:04.

the day I die about this. I mean look how many people died. Look how

:30:04.:30:14.
:30:14.:30:17.

the world changed. Look how we Within months of 9/11, the Taliban

:30:17.:30:21.

and Al-Qaeda were ousted from Afghanistan. America began to round

:30:21.:30:29.

up hundreds of suspected terrorists. But the top Al-Qaeda leaders

:30:29.:30:36.

escaped, until in early 20002, President Bush made a dramatic

:30:36.:30:41.

announcement. We recently apprehended one of Al-Qaeda's top

:30:41.:30:51.
:30:51.:30:51.

leaders, a man named Abu Zebaida, he was spending one of the top

:30:51.:30:56.

operating officials of Al-Qaeda, plotting and planning murder. He's

:30:56.:31:06.
:31:06.:31:12.

not plotting and he's not planning He's under lock and key. We're

:31:12.:31:22.
:31:22.:31:23.

going to give him some company. That company included Ali Soufan.

:31:23.:31:29.

His expertise in interrogation and Al-Qaeda led him to be sent to the

:31:29.:31:34.

secret CIA site where he was held. Sofuan can still not disclose the

:31:34.:31:40.

location, although we believe it to be Thailand. He was definitely

:31:40.:31:48.

still in pain, and it was a major surgery. Sofuan found Zubada in bad

:31:48.:31:56.

shape, having been shot during his capture. Death is not an option a

:31:56.:32:00.

CIA cable set out. Sofuan set about trying to obtain his secrets, it

:32:00.:32:04.

didn't take long. We were getting actionable intelligence, this had

:32:04.:32:11.

the possibility of saving lives. This included the identity of the

:32:11.:32:15.

mastermind of 9/11. But even though Sofuan had got him to talk, some in

:32:15.:32:22.

Washington believed Zubada knew more. Abu Zubada was about to

:32:22.:32:29.

become the guinea pig for what the CIA called enhanced interrogation

:32:29.:32:33.

techniques. The idea was that the detainee has to look at the

:32:33.:32:38.

interrogator as if he's his God. He's the one who terms if his life

:32:38.:32:46.

is going to be better, or worse. He had a set of techniques at the time,

:32:46.:32:54.

these techniques were nudity, low level sleep depravation, up to 24

:32:54.:33:03.

hours, loud music and so forth. Sofuan, who lost friend on 9/11,

:33:03.:33:13.
:33:13.:33:17.

had practical, rather than moral objections. I will not lose sleep

:33:17.:33:21.

if a terrorist is nude, it won't work, it won't work on a top notch

:33:21.:33:27.

terrorist. My experience is you can watch way more flies with honey

:33:27.:33:34.

than vinegar. By now, Sofuan had interrogated

:33:34.:33:39.

many Al-Qaeda operatives, trained to resist torture. There is a

:33:39.:33:42.

different emotional button that you have to press to make them co-

:33:42.:33:47.

operate, sometimes it is family, sometimes it is ideologies, however,

:33:47.:33:51.

even when you think you are having very good relationships with them,

:33:51.:33:58.

in a split of a second you ask some questions. Now if you see me

:33:58.:34:04.

outside you will kill me, absolutely, they will tell you they

:34:04.:34:09.

will slaughter you like a sheep. The treatment of Zubada had

:34:09.:34:13.

intensified, Sofuan had enough? were seeing some stuff, if it

:34:13.:34:16.

happened in America, the person would be arrested. Absolutely, it

:34:16.:34:21.

is an abuse of a prisoner. He threatened to arrest the CIA

:34:21.:34:27.

contractor who was leading the interrogation. The FBI told him to

:34:27.:34:33.

come home. Zubada was then water boarded 83 times.

:34:33.:34:36.

interrogations were used on hardened terrorists after other

:34:36.:34:39.

efforts failed, they were legal, essential, justified, successful

:34:39.:34:43.

and the right thing to do. The intelligence officers who

:34:43.:34:47.

questioned the terrorists can be proud of the work, proud of the

:34:47.:34:50.

results, because they prevented the violent death of thousands, perhaps

:34:50.:34:57.

hundreds of thousands of people. Are you saying that Dick Cheney is

:34:57.:35:01.

lying? I know that Dick Cheney is not saying the truth, I was there.

:35:01.:35:07.

Everything the proponent of enhanced interrogation techniques

:35:07.:35:12.

claim that was obtained, because of enhanced interrogation techniques

:35:12.:35:19.

and waterboarding Zubada, we got when we were on the ground this,

:35:19.:35:22.

before enhanced interrogation techniques existed. Back in the US

:35:22.:35:26.

Sofuan went undercover, pretending to be a personal representative of

:35:26.:35:33.

Osama Bin Laden in America. It was to be his last assignment.

:35:33.:35:40.

Ali Soufan left the FBI frustrated, prevented, he felt, from doing his

:35:41.:35:50.

job. His attempts to tell his story now, and counter who he sees as a

:35:50.:35:58.

misguided narrative of 9/11 are also being met stubborn resistance.

:35:58.:36:05.

Sofuan has a book published today, the CIA demanded many cuts, it is

:36:05.:36:09.

an apart of a wider attempt to control the official version of

:36:09.:36:19.
:36:19.:36:19.

9/11 and the last ten years. People over there are reacting

:36:19.:36:28.

narrative, not national security information.

:36:28.:36:38.
:36:38.:36:38.

I always tell myself, hopefully time will heal. Ten years later, it

:36:38.:36:48.
:36:48.:36:54.

The CIA told us today that any suggestion the CIA purposely

:36:54.:36:58.

refused to share critical lead information on the 9/11 plot, with

:36:58.:37:02.

the FBI is baseless, and the suggestion that the Central

:37:02.:37:08.

Intelligence Agency has requested redactions on this publication,

:37:08.:37:17.

because it doesn't like the content is ridiculous. They refused to

:37:17.:37:20.

comment on the waterboarding allegations. If you want a child to

:37:20.:37:24.

get on you must focus on them intensely since they were born. The

:37:24.:37:28.

idea that you have to shape their development by the age of three is

:37:28.:37:32.

under attack. It is now being claimed that the fevered attentions

:37:32.:37:36.

of anxious parents may be unnecessary. The suggestion is, of

:37:36.:37:41.

course, a great comfort to every run ragged parent in the land. But

:37:41.:37:45.

is it true that benign neglect could be as helpful as eager

:37:45.:37:54.

intervention. Life's busy enough as a toddler,

:37:54.:37:59.

there is walking and talking to be mastered, and a crashing weight of

:37:59.:38:03.

parental ambition to be carried. For those short years at the start

:38:03.:38:08.

of life are said to be crucial for social and academic development.

:38:08.:38:12.

Studies by neuroscientists measuring activity in the brain,

:38:12.:38:16.

have provided the foundation for early years intervention by the

:38:16.:38:24.

state. The last Government pioneered this focus with

:38:24.:38:30.

initiatives including the Sure Start programme, and an early years

:38:30.:38:32.

curriculum. The coalition Government has

:38:32.:38:38.

continued to advocate an early years approach. On the cover of one

:38:38.:38:44.

proper was this photograph of two brains, suggesting there was no

:38:44.:38:47.

doubt how vital early intervention was. The report cited studies

:38:47.:38:52.

claiming that a child's development score at a mere 22 months, could

:38:52.:38:56.

serve as an accurate predictor of educational outcomes at 26 years.

:38:56.:39:01.

It also suggested that boys judged at the age of three as being "at

:39:02.:39:07.

risk" had two-and-a-half times as many criminal convictions at aged

:39:07.:39:13.

21 as those deemed "not at risk". But tomorrow, a conference at the

:39:13.:39:18.

University of Kent, will call into question the focus on this early

:39:18.:39:22.

years strategy. They want less Government intervention at this age,

:39:22.:39:26.

and suggest it is time parents calmed down about the importance of

:39:26.:39:33.

childhood. With us now is Lee director of

:39:33.:39:36.

parenting studies at the University of Kent, helping to organise that

:39:36.:39:40.

conference. And the psychologist, Oliver James, joins us from Oxford.

:39:40.:39:45.

Why do you think this emphasis on the first years wrong? It is a very

:39:45.:39:50.

old prejudice, that is the first thing to say, it is certainly

:39:51.:39:53.

predating anything that anybody says they have found out recently.

:39:53.:39:59.

It is at least 300 years old. I think what has gone on more

:39:59.:40:04.

recently, though. There is an increasingly moralistic dynamic to

:40:04.:40:09.

claims about the early years. So increasingly shrill claims are made

:40:09.:40:13.

if parents don't heed by what is said, then really terrible things

:40:13.:40:18.

will happen to their children. It is becoming increasingly politic

:40:18.:40:22.

sized. Neither side can demonstrate it is wrong? The claim about

:40:22.:40:29.

neuroscience is entirely wrong, there is no new neuroscience that

:40:29.:40:33.

tells us if parents don't do things with little children their brains

:40:33.:40:37.

will be shrunk. It is an unwarranted claim, it is better

:40:37.:40:43.

understood as neurononsense or neuromania, than any sense nl

:40:43.:40:50.

argument about anything. - Sensible argument. I don't know

:40:50.:40:53.

why we are discussing it on Newsnight, it is a completely

:40:53.:40:56.

accepted fact by people who have read the evidence, which DrLy low

:40:56.:41:03.

hasn't. The quality of care you have in - Dr Lee hasn't. The

:41:03.:41:08.

quality of care you have in your early years reflects your adult

:41:08.:41:12.

life. Particularly emotional development. If you look at page

:41:12.:41:16.

335 of my book, you will see 30 studies which show quite clearly

:41:16.:41:20.

and without question, that the earlier the damage is done, the

:41:20.:41:26.

earlier a child is maltreated, not loved, abused and neglected, the

:41:26.:41:30.

earlier it is neglected, the more likely it is to suffer all sorts of

:41:30.:41:35.

emotional problems in later life. Take, for example, a study of 800

:41:35.:41:41.

children, which showed that if there was maltreatment between 0-3,

:41:41.:41:46.

the outcomes were that much worse, if the maltreatment was between 3-6,

:41:46.:41:52.

or 6-9. Have you read any of these studies, Dr Lee, going on about the

:41:52.:41:55.

neuroscenes is completely irrelevant. Have you read the

:41:55.:42:02.

studies? I have read many of them, plenty say one thing and one the

:42:02.:42:05.

other. Name one study that doesn't, that contradicts the contention

:42:05.:42:12.

that the early years are more important. Can I say something.

:42:12.:42:17.

Name one study that contradicts Oliver James's assertion? There is

:42:17.:42:24.

plenty of studies, if he reads Jerome Kegan, can I say something

:42:24.:42:29.

or not, no, OK. My argument about this, and my perception of the

:42:30.:42:33.

research is it is like lots of areas of research, where there is

:42:33.:42:37.

plenty of different findings and we can have a perfectly reasonable

:42:37.:42:42.

debate. The thing that has happened in this area, which is why I say it

:42:42.:42:48.

has a moralistic dynamic, is certain people like Oliver James

:42:48.:42:52.

have become increasingly shrill in the way they are posing things.

:42:52.:42:56.

They want to turn research into a battering ram to convince parents

:42:56.:43:00.

to do what they think they should do. The research demonstrates one

:43:00.:43:04.

thing, surely it is his duty? doesn't demonstrate one thing.

:43:04.:43:08.

Studies are studies, and we have a debate about what studies say, that

:43:08.:43:13.

is a reasonable discussion to have. What isn't reasonable is to one-

:43:13.:43:18.

sidedly turn this into a crusade and to override the idea that

:43:18.:43:23.

parents have an entirely legitimate right and a legitimate interest in

:43:23.:43:26.

deciding for themselves about various aspects of how they conduct

:43:26.:43:30.

their family life. Like, for example, whether or not to put a

:43:30.:43:33.

child into daycare. Oliver James is currently on a crusade against

:43:33.:43:36.

mothers putting their children in daycare. He can say what he wants

:43:36.:43:39.

about studies, some studies say one thing, some say the other, I think

:43:39.:43:44.

in the normal run of family life, you should let parents decide what

:43:44.:43:49.

they think is best for themselves, let them relax about all of this,

:43:49.:43:53.

and do what makes sense in terms of work-life balance and conducting

:43:53.:43:56.

ordinary every day family life and getting things to fit together. It

:43:56.:44:00.

is just really got out of control and over the top. Would you be

:44:00.:44:04.

willing to let parents relax? Absolutely I'm all in favour of

:44:04.:44:09.

letting parents relax and let them do what they want to do, which

:44:09.:44:14.

survey after survey shows is look after their children and love them.

:44:14.:44:19.

Dr Lee has not read the survey, she hasn't read the studies. If you had

:44:19.:44:22.

read them you would know they clearly show that the early years

:44:22.:44:25.

are critical in setting the electrochemical thermostat for the

:44:25.:44:30.

rest of your life. That is why it should be the basis of Government

:44:30.:44:34.

policy. When Gordon Brown was trying to bail out the banks, he

:44:34.:44:38.

kept on saying we will do whatever it takes to save the banks. If only

:44:38.:44:42.

he had said we will do whatever it takes to enable parents to be able

:44:42.:44:46.

to look after their children, to be at home and look after their

:44:46.:44:51.

children? Can I finish. Parents are doing a fine job, we already have

:44:51.:44:54.

an early intervention culture by what ordinary parents are doing

:44:54.:44:59.

every day. The reason we do that is to allow all parents of under

:44:59.:45:02.

three-year-olds to have the national average wage, each family

:45:02.:45:06.

should have that. One or other parent, they could share that and

:45:06.:45:10.

always be at home. Or if they don't want to look after their children

:45:10.:45:15.

they can employ a nanny, this could be paid for by redistributing

:45:15.:45:19.

wealth or 1% of the British land mass is owned by the Ministry of

:45:19.:45:23.

Defence, why not sell some of that off. It is an interesting, unusual

:45:23.:45:29.

idea, but you have no objection to that in principle, do you? I think

:45:29.:45:34.

if...It Can't do any harm to have an intense focus on a child in its

:45:34.:45:38.

early years? It depends, there is plenty of other studies and plenty

:45:38.:45:43.

of research. Name one, name some studies, you keep saying, you

:45:43.:45:47.

obviously haven't read the literature you can't name them?

:45:47.:45:50.

talking about sociological studies which you haven't spent an awful

:45:50.:45:59.

lot of time looking at. Looking at mothers' experience of parenting.

:45:59.:46:02.

have read those studies, some of which were done at the University

:46:02.:46:06.

of Kent. I sense we are not going to get a meeting of minds. We are

:46:06.:46:09.

obviously not, it must be possible to have a reasonable discussion

:46:09.:46:13.

about this, it must be possible to recognise that every day experience

:46:13.:46:17.

of lots and lots of mothers and lots and lots of parents at the

:46:17.:46:21.

moment is far too anxious and worried actually what we need, I

:46:21.:46:26.

think, is a public discourse that recognises we don't have a

:46:26.:46:29.

phenomenal parenting deficit in this country, most parents are

:46:29.:46:34.

doing a great job, we should recognise that. Thank you both very

:46:34.:46:37.

much. The European Union voted today to enhance Cliff Richard's

:46:37.:46:43.

pension, they are extending the copyright on music performances

:46:43.:46:47.

from 50-70 years, all sorts of codgers benefit from royalties on

:46:47.:46:52.

things like this, here it is while we can still afford it.

:46:52.:46:55.

# You came into my heart # So tend early

:46:55.:47:02.

# With your burning love # That stings like a bee

:47:02.:47:08.

# Oh now that I surrender # So helplessly

:47:08.:47:13.

# Now you say you're gonna lead me # You're gonna leave me

:47:13.:47:23.
:47:23.:47:26.

# Baby Hello there, the winds will ease

:47:26.:47:31.

down only a little bit overnight tonight tomorrow will be another

:47:31.:47:35.

windy day. Heavy showers drifting across, the strong winds across

:47:35.:47:38.

southern areas, it stays wet in northern and western Scotland.

:47:38.:47:42.

Inbetween there will be good spells of sunshine. Still a blustery day

:47:42.:47:46.

across known England. A few heavy showers drifting across the

:47:46.:47:48.

Midlands towards East Anglia and the south-east. Especially during

:47:48.:47:52.

the early part of the afternoon. Most of the early showers in the

:47:52.:47:58.

south west will be in the morning, the afternoon promises to chase the

:47:58.:48:01.

showers away, the same goes for Wales. Wherever you are tomorrow it

:48:01.:48:05.

will still be windy, still feeling cool, the wind blowing a few

:48:05.:48:10.

showers into western parts of Wales. Much of Northern Ireland, rain

:48:10.:48:14.

arriving late in the day. Still arriving here across much of

:48:14.:48:17.

Scotland. The biggest issue across northern and western Scotland will

:48:17.:48:20.

be the rain. It continues to build up through the day. There will

:48:20.:48:24.

still be some during the course of Wednesday. There is the risk of

:48:24.:48:27.

some tkphrooding problems across the far north and west of Scotland

:48:27.:48:32.

as the rain continues to mount up. Elsewhere, further south, by

:48:32.:48:36.

Wednesday hopefully the winds will be lighter, and we will start to

:48:36.:48:40.

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