20/09/2011 Newsnight


The latest on the debt crisis in Athens where students have taken to the streets to demonstrate after schools opened for the new term without text books. With by Jeremy Paxman.

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The IMF declares the global economy is entering a new dangerous phase,


just as Greece tries to grab at another �8 billion hand-out to


stumble on with. The global economic outlook today: grim.


In groz they are getting ready to implement yet another economic


shock, but with it draining away, can anything save this country from


default. They are burning their tax bills in


at then, if the fate of Greece is sealed, cannot the same be said for


the euro and our own economic experts.


Martin Wolf is here, along with a former Chancellor of the Exchequer,


former Chancellor of the Exchequer, and a City analyst.


Is Liberal Democrat enthusiasm the only thing standing between the


British Government and a fit of full on Europhobeia. If you keep


beating the anti-European drum, if you Labour over tax cuts for the


rich, you will put into peril the most crucial treatment of the


Government. The Energy Secretary will be here to bury the


misbegotten euro, or pos below praise it. The time was when


governing took place on paper and in triplicate. What happens when


politicians make decisions on smart phones. We poke the ant hill to see


what crawls out. What is the story about the


Government minister and the unofficial hidden e-mail system,


tell us how the secret world of Whitehall works today.


The grok Government tonight said they are getting close to a- the


Greek Government tonight said they are getting close to the package


for the bailout money. That won't put an end to the problems. If you


doubt how desperately serious maybe the consequences of this problem


for all of us, listen to the International Monetary Fund today.


It has slashed its growth forecast, and said if political leaders fail


to find way of sorting the mess in the eurozone, things could get much,


much worse. Is there a deal or what? There is


no deal. Greece has been 25 days worth of cash before it has to


switch the lights off here in the Acropolis, and sack the people who


look after that, and every other state employee in the country. So


no rush. We do, however, know some of the details of the deal. We are


seeing Greek national newspapers being briefed tonight. One of the


papers has 100,000 state workers to be sacked or moved to involuntary


holidays, and public sector wage cuts and generally more austerity.


I have been meeting people today, school students who have turned up


in their schools in September, no textbooks. I have been hearing the


police trade union claiming that police officers having to buy their


own armour, fill up their own patrol cars. All this before the


new round of austerity. Because the old austerity didn't work, and what


it means is things are going to get a lot tougher.


While the politicians dithered, the people were, once again, out on the


streets. Greek civil servants know they are hours away from a mass


redundancy programme, tens of thousands will be laid off, tens of


thousands more put on compulsory holidays on 60% pay. Once again,


Greece is at the centre of the storm, because past solutions have


not worked. Upped the terms of its first bailout, in May last year,


Greece was supposed to reduce its budget deficit to 7.6%, the latest


estimate is 8.5% and rising. Its debt is predicted to hit 189% of


GDP next year. As a result, IMF negotiators are holding back eight


billion euros of bailout money, and imposing strict, new austerity


measures. At the centre of the new deal is a two billion euro property


tax, this is what many people in Greece think of that tax.


The problem is, those who are bailing Greece out just don't


believe reforms will be enacted. The IMF yesterday called for a one-


off shock to the system. European partner, in effect, have


told you as a country, that they will standby you for as long as it


takes. Provided that Greece continues to pursue sound policies.


So this, in our view, really places the ball in your court. The ball is


in the Greek court, and implementation is of the essence.


But Greeks have had 18 months of this, there is a weariness on these


streets, and many economists and politicians believe the medicine of


tax rises and austerity is simply killing the patient.


When you have built within the people, the concrete people, the


very conviction that they are trying to impose measures that they


have just imagined out of thin air, the real situation will not conform.


Civil servants won't im pliment the measures, real people won't pay


their taxes, and the whole country, the whole economic system of the


country is going to gently flounder. This is pulling others towards the


danger zone, Italy saw their credit rating downgraded, and any Greek


default could signal a crisis in France, Belgium and Germany. The


global economy has entered a dangerous new phase. The recovery


has weakened considerably. Down sideways and increased sharply.


Strong policies are needed both to improve the outlock and to reduce


the risks. Globally the problems are mounting.


Fiscal crisis and recession feed off each other, the IMF today


revise its forecast down for the eurozone and the US and the UK.


Markets have become more sceptical about the ability of policy makers,


of Governments, to stablise their public debt. And tonight, on the


brink of yet another round of austerity, and protest, Athens is


the capital of the unknown. From what's known of the austerity


package, is it likely to work? depends what we mean by working.


There is a risk that Greece will default this week. That is why we


are having this meeting. If Greece defaults, that is bad news for the


world's banking system. But, I think it is likely there will be a


deal. It is effectively a game of chicken between the IMF and EU


negotiators and the Greek Government. We are down to the


detail. The detail is important, what the IMF needs, the EU, is to


go back to countries that provide the money for the bailout and say


this is not just going to work for now, but it will put Greece back on


a path that if not spectacularly brilliant, it is not disastrous,


and we won't be here again. It is in the balance whether they can do


that. They are scraping the bottom of the barrel by cutting the tax


ceiling from 8,000 euros to 4,000 though YuriGagarino50 roars, you


start paying tax at 4,000 though euros, it is stuff they can do now.


We have had 18 months of austerity now, and the economy is shrinking


faster, the tax take is collapsing. In part, because people are just


not making profits, not making money, but also, there is evasion,


there is revolt, there is refusal. What the IMF is asking the Greek


Government is to finally turn around to its own electoral base


and say, do you know what, the era is over, free education, free


health care, what's left of it, all the things we have stood for, are


gone. And they want it to be a kind of a political shock so that, as


the IMF guy put it, yesterday, the shock is felt and then we build


from there. They just don't feel there has been enough psychological


adjustment in Athens or the rest of Greece, as to what austerity really


means. The significance of this


downgrading of the IMF growth forecast? Well, I think the IMF


growth forecast for the USA, for the eurozone, for the UK, it means


that we're running out of steam on recovery. And we are now in the


territory of looking for policy action, not just here in Athens but


in Washington, London and Brussels. We can begin to expect some, we can


expect tomorrow the US Central Bank to signal the more - European bank


to have more money printed, quantitative easing as it is called.


We can see that more money will be borrowed on their behalf, with a


big policy debate, that all politicians, not just our's in


Britain and those in Greece have to grapple with, can there be more


stimulus, if the old stimulus didn't work, what price the next


stimulus. With us is the economic journalist, Martin Wolf, the former


Chancellor, Lord Lamont, and the markets analyst, Louis Cooper. Can


Greece be saved from defaulting on its debts? No, there is no chance


Greece won't default on the debt. Almost no-one believes anything


else. Do you also believe that Greece will default? It will


probably be put off until after 2013. They will find a package to


get them through. It is a default at the end? It has been a partial


default already. I think there will be a further default. I think it


would have been better if this had been recognised earlier. What do


you think? I think it's absolutely given. They can't pay back the


amount of debt they have. I would be quite so optimistic as 2013.


Credit Default Swap market is telling you that it's getting close.


So, you all agrow, Greece is going to default at some point if it


hasn't already done so. What is the consequence of that? It depends on


how it is done, is it with co- operation, with agreement,


essentially they have reached the end of the road. In that case it is


possible to default without leaving the euro. What would happen is


there would be a huge writedown of debt, halved at least, and an


agreement to recapitalise the banks, only the eurozone could do that,


and lickify the banks. If that weren't - liquify the banks, if


that weren't done they would have to have a new currency. Wouldn't


that destroy any credibility the euro would have? The opposite, if


the euro is going to work at all, some of us have always been very


sceptical, it includes the possibility, inherent in the model,


that Governments will default. Just like states can default in the


United States. The default is quite different from exit, though it can


lead to exit. Default seemed to me always a plausible outcome, Greece


is the case. I agree with that, I think if Greece left the euro,


which I think ought to happen in the long run, if that happened now


that would be, one thing is possibly a problem or disaster, the


other would be a cat it is a trophy. If that happened you would see a


huge increase in the debts particularly of French banks, all


detects to Greece. And ifth would be a very difficult problem to


manage. And it would be a very difficult problem to manage.


want them to stay? I think leaving with the market pressure would be


catastrophic, I think it is in the interests that they should stay in


for maybe a couple of years, and then you should have a


reconsideration of the whole structure of the euro. How does it


look in the markets? Ugly. The credit markets are getting to


Lehman level, they are creaking wildly. Most commentators and


journalists focus on equity markets, they don't know about the wholesale


funding markets. This is how banks fund themselves. At BGC it is what


we do a lot of. I had a long chat with the brokers at their desk, and


he said if you are a French bank with any exposure to Greece,


Ireland and Portugal, getting short-term funding is difficult. He


says you have to beg, borrow or steal. And banks have to, have to


balance their books at the end of the day. It is all very well


talking about big writedowns on Greece, but liquidity is far more


important. It is very tough out there.


What about the question, not of falling out of the euro, but being


chucked out of the euro? Legally it is impossible, there is nothing in


the treaty that allows it. The thing is you can't just leave the


euro, legally, you have to leave the European Union, and then you


have to ask to come back. I think in this case they wouldn't be


allowed back. But this was designed to be irrevocable. That is how it


is designed. So you would be creating a new treaty, you know how


that goes. The Dutch Finance Minister and Prime Minister have


proposed that there should be, in addition to fiscal measures that


there should actually be a mechanism created for the future


whereby countries that are not meeting their fiscal targets should


be able to be expelled. But this is something that they have just put


on the table. It is for the longer term. We need a new treaty. You are


going to need new treaties whatever happens. One of the great problems,


one of the reasons this thing is so dangerous, is that the stablisation


mechanism, the European fnction financial stability - Financial


Stability Facility, has to be radfied by all the 17 members of


the eurozone. Some countries - rad ratified by all the 17 members of


the eurozone. And the smallest party in the coalition in one


country is saying it won't vote for it. There are so many moving parts


in all of this, that even a small objection by a small country can


tip the thing over the cliff. There are so many possibilities for


miscalculation and error. At which point is it bad news for us? It is


already. The real danger, in my opinion, is they go on with half


measure after half measure, sticking plaster after sticking


plaster, you get a respite for a few weeks, then another crisis,


then another respite, and another crisis. This goes on and on, it is


sapping confidence in the most appalling way. Presumably it is


already having an effect, presumably from where you are in


the markets, the effect upon banks and the rest of it is something


that begins to feed through to other parts of the economy, is it?


Absolutely. There are many banks having trouble funding themselves


on a day-to-day basis. They can get money, but it is expensive, and


they are funding very short-term, three month, or six months money


that they used to get all the time. That has gone. And banks' long-term


funding where they issue bonds, we haven't seen big European banks


issue bonds since in June. Banks have big loan books, they have to


fund them. The banking system is getting close to crisis levels. It


is all very well talking about political will to sort the mess out,


but this takes months, years. quite agree. The markets don't wait


that long. We talk about politicians being behind the curve,


you are so far behind the curve you need to run very quick to catch up.


The European Central Bank is now going to be forced to do everything


it hates, among other things, it is going to have to finance the


Governments in trouble, including countries like Italy and Spain, it


is going to have to finance the banks, its balance sheet will have


to explode, and the Germans will absolutely loathe it. In addition,


as Christine Lagarde pointed out, they will have to find way of


putting capital in the banks to make them look stronger. The


European banking system, the big zest in the world is under enormous


stress. What happens to us? If they do manage this thing it creeks on


to a subsequent - creaks on to a subsequent crisis, the Germans will


hate all of this, they can leave, they have more of an option than


anybody else. But if they fix it goes on, if they don't fix it we


have a monstrous banking come sovereign crisis next door.


people start leaving the euro, they have to leave the European Union.


That is the end of the European Union then? I think it is true, if


the Germans decide that they cannot stand this, any more, and they do


decide to pull out, we are nowhere near that, but if they do, yes the


European Union, in my view is dead. This remakes political map of


Europe completely? This crisis is very serious. There is tremendous


tension in France, you have the older generation that this is the


crowning jewel, the creation of the euro and bringing in Germany and


anchoring it in Europe. Germany is fed up with the cost of it, opinion


is changing. Mrs Merkel is sitting there, waiting and hoping that some


consensus will emerge and it won't. Thank you very much. The crisis in


the euro casts a very long shadow indeed, which also falls across


those of us who choose not to be part of the project, bailing out


other European states who opted in has already cost us an arm and a


leg. There are other potential costs too, for example, the two


wings of our very unusual Government have quite different


instincts with some prominent Liberal Democrats having once seen


the euro as a passport to paradise, and prominent Conservatives getting


knows bleeds at the very mention of the - nosebleeds at the very


mention of the idea. When the coalition Government was formed


last year, the divisions between the Lib Dems and the Conservatives


on Europe weren't exactly a secret. The parties didn't settle their


differences, but decided to bury them in a Downing Street garden


instead. But now the crisis in the eurozone could become a crisis for


the coalition. If anyone inside Government thinks for one moment


that we can renegotiate our relationship with Europe that is


the end of the coalition, I am afraid. There will be a point where


the liberals and the Tories can't agree, then it collapses, it could


be the issue of Europe and the euro. Britain's relationship with the


rest of Europe has caused fissures in the political landscape, the SDP


was set up partly in response to Labour's policy to leave the then


European community. In the 190s John Major's Conservative


Government was riven with division over economic and monetary union.


These days the vast majority of Tory MPs are now sceptical towards


the EU. So today a Lib Dem cabinet minister warned some of his


Conservative colleagues not to turn the euro crisis into a political


drama. We will not, as Liberal Democrats in Government, weaken the


ties that deliver our national interest through Europe.


APPLAUSE And let that be a warning to the


Conservative right here, we need no Tea Party tendency in Britain.


APPLAUSE If you fail to compromise, if you


fail to seek the common ground that unites us, if you insist that only


you have the answers, if you keep beating the Antoinetteity European


drum. If you slave over tax cuts for the - anti-European drum, if


you slave over tax cuts for the rich, you will wreck the economy


because we are all in this together and we can't get out of it alone.


In truth there are far fewer divisions between coalition cabinet


ministers than between the two parties' backbenchers. In practice


David Cameron and Nick Clegg now accept the concept of a two-speed


Europe, where those nations inside the eurozone more closely align


their policies on tax and spending, putting it more bluntly, the


better-off countries on the continent would bail out the others,


in return for greater say over their economies.


The Treasury says contingency plans are being drawn up if the crisis


deepens. Unpessimistic scenarios a further recapitalisation of the


banks shunting ruled off. If Britain faces any of the cost of


the crisis, many people a political price should be exacted. The key


demand is we want powers back from the EU so we once against govern


ourselves in this country. In particular, the need to have a


referendum so that the people decide. And I think probably, I


mentioned 100 people, I think clearly there is a large number of


colleagues, I think really growing day by day, who are backing that


call for a referendum. Here at Lib Dem conference, a


former Treasury spokesman has decided to issue a stark warning to


any Conservative minister who is tempted to follow the lead of Euro-


sceptic backbenchers. Europe is obviously one of the real


fault line in the coalition, which is why in the coalition agreement


the only possible answer was a total stand still. We don't move


forward, we don't move back, that's the deal, that is what we are stick


to, and if anyone inside Government, and there have been some worrying


noises from William Hague, if anyone inside Government thinks


more one moment that we can renegotiate our relationship with


Europe, that, I'm afraid, is the end of the coalition, if that were


to happen. These blank cheques are on sale in


the Lib Dem shop, are you doing a roaring trade on those? We do a


very good trade trade on the cheques. The Liberal Democrats are


of course serious about deficit reduction, but as you have maerd


blank cheques are selling well. What the Conservative backbenchers


are suggesting is that the junior coalition parties have such a soft


spot for the EU they are willing to write as many of these as possible


to prop up the single currency. We have our Liberal Democrat cheque


here, you have been critical in the past about bolstering the eurozone,


how much do you think the British Government's liability should be,


how much should they pay? I will give you that back, I think we


should tear up this cheque, because we shouldn't pay any more money to


Europe. What we should be doing is making


sure that the euro collapses in a style and at a time that can


actually be managed, not in a crisis mode. At the moment we are


heading for the collapse of the euro in a crisis. But a former City


fund manager says that the eurozone shouldn't be allowed to collapse.


None the less, it may have to contract a little.


Greek bonds, Greek ten-year Government bonds are yielding 25%.


That says that everyone in the market knows that they have got to


default. Rather than having these ever-more frequent bailout packages,


just like letting a spend thrift increase their credit card limit,


we must get together and take a decision on Greece. More unites


than divides coalition ministers on how to handle the current crisis,


the pressure set to be applied from each party's rank and file for them


to move further apart. Joining us now from the Liberal


Democrat Conference in birmling ham is the energy - Birmingham, is the


Energy Secretary, Chris Huhne. On the question of the euro, do you


still subscribe to the view that you once held that the euro is


living up to the highest expectations of the economists who


advocated it, and Britain is missing out? Clearly not, Jeremy.


One thing I think is very clear, is that if you are like Greece, a


country that has falsified your national accounts, and in this case,


in order to get into the euro area, even if you were outside the euro


area, there would be a real day of reckoning. All that would happen if


the Greeks had their own currency, is that they would be facing a


Latin American-style hyperinflation, with a massive devaluation, that is


not an easy way out either. The reality is the problems that are


besetting Greece are ones which predated the euro area. It would


have been a huge mistake for us to join the euro was it? It was a huge


mistake for the Greeks to join knowing as they did their national


accounts were...I'm Asking whether it would have been a mistake for us


to join, and clearly it would, wouldn't it? Clearly, if you look


at the number of countries that have joined, there is a commitment


to making the euro work, which I think we would underestimate at our


peril. Up until now, right the way European Union history, from the


1950s onwards the British people have consistently underestimated


the political will on the European mainland to actually get these


problems together. Yes or no, should we have joined the euro as


you advocated, yes or no? question of joining the euro is


clearly not one for the UK. We are out of the euro and that issue is


settled. All I'm saying to you if we start wringing our hands.


trying to get a straight answer about whether you think it is a


good idea to join or not? You have had a very straight answer. We have


consistently underestimated the political will to the euro. That is


the answer to a different question, do you think it is a good idea to


join the euro, yes or no? The issue hasn't been a live one in British


politics for a long time. If we had joined the euro it might have been


a different beast. The key issue today is whether or not Greece


should have joined the euro, the answer to that is clearly no. If


they hadn't provided false figures to the European Commission in order


to get in, whatever the monetary system in Greece there would have


been a problem. You have made that point. Can I try something else out


on you. When you said today, that you do not want a Tea Party


tendency in Britain, were you referring to any members of the


cabinet, when you made that accusation? No, I'm talking about


what we are seeing on the Conservative right, a number of


cases. Who are they please? Well, you have just been quoting on your


own programme some backbenchers talking about trying to renegotiate


our existing treaty obligations within the European Union, this is,


afterall, the eurozone taking half of our exports. How many of them,


Bill Cash and a few friend? This is a significant number, and there are


people who are putting pressure on the Government to try to come to a


set of conclusions, which to my mind would be deeply against our


national interest. When we have a fundamental interest in the success


of the European Union, half of our exports go to the eurozone, these


are political choices, this is a geographical reality. We sell more


to Ireland alone, which is a member of the eurozone, than we do to


Brazil, India. We are familiar with the arguments, I'm trying it find


out? I'm not sure you are familiar with the arguments. You were


directing that at Bill Cash and a few like-minded souls on


backbenches, that is what it was directed at? We have had two


examples recently, where it seems to me there is an attempt to move


the centre of graeity in the Government away from the agreement


we made in the coalition deal, that was very clear about Europe, we


don't go forward but back either. If we are having people in the


Conservative Party saying we need to unpick our European


relationships, when they are so fundamental to our prosperity and


growth and export, that will be a problem for us in the Liberal


Democrats. You would agree with Lord Oakeshott, that it would be a


deal breaker, wouldn't it? Lord Oakeshott chooses his own words on


this. What I am saying is we have the basis of a compromise, which is


in the coalition agreement. We will not unpick that, we will respect


the coalition agreement. The point I will make in my speech is we have


achieved through the deficit reduction in Government. We have


got out of the economic danger zone affecting so many other countries


with bigger deficit than us. Let's talk about the deficit plan. There


is talk tonight of there being an additional �5 billion, some how


found, to be spent on capital investment in infrastructure


projects. Is that true? I have no, I don't recognise that figure at


all. I have absolutely no knowledge of that. It would be news to me.


you recognise any figure, is there a plan to free up billions of


pounds? No. There is no such plan? What there clearly is a desire


right the way across the Government to make sure we are putting forward


as creatively and imaginatively as we can, ideas to get growth going.


But the fundamental achievement, which we have made so far, which is


to get that deficit coming down, and to persuade the financial


markets, that we are a safe haven and not the sort of risk which they


have seen in Ireland, Portugal and Spain and Italy, and Greece. That's


fundamental. Because if our interest rates start rising like


their's, we will be in a double-dip recession, and we have saved the


country from that. We now need to build on that. Unlike them, they


are in the eurozone and we are not. Specifically on this question.


is not just the eurozone, as you have seen from the IMF forecast


there is a downgrade in the United States, and the failure of


compromise that I gave as an example in my speech was actually


in the United States. Where the failure to compromise between the


President and Congress actually has led to the downgrading of the


United States credit standing. I don't want to see us go through


that. Was there anything like this plan, �5 billion you say you don't


recognise, has anything like this been discussed in cabinet and


agreed upon? No. Nothing at all? Has anything like this been


discussed and agreed upon in the last couple of days, say?


Certainly not that I am aware of. This story is a fiction? We do that


r have a growth review process where we are attempting to come up


with pragmatic ways in which we can get the economy growing, and make


sure we are getting the jobs coming back, and getting back ob that path


to recovery. We have done the serious heavy lifting of reducing


the deficit and getting out of the danger zone, we have to move


forward to the positive agenda of stimulating growth and getting jobs


coming back. I don't recognise anything of the story you have


given to me. Thank you very much.


How much are we entitled to know about what goes on in Government?


Every party makes promises about not keeping things from the citizen,


and claims to believe in some form of open Government. Yet the


Financial Times has seen e-mails from a so-called special advisers,


they are the political cronies, politicians take into Government,


to keep them true to the faith, amid all those Godless civil


servants, which can be construed as showing something else all together.


We have spent most of the add - Michael Cockerell has spent most of


his adult life looking at how power works in this country. We asked him


what he made of it. Whitehall has its own secret world, for some


civil servants discretion is like the calcium in their bones. But


sometimes leaks reveals what has been going on inside Whitehall's


inner sanctum. A sensational story in today's Financial Times, alleged


that Michael Gove, the Education Secretary, and his senior political


advisers, were using a private e- mail system, which concealed


sensitive information from his own officials and from the public. When


the department was asked to produce these e-mails under a freedom of


information request, the department said it had no record of them.


think the question here is not whether it has once or it is a one-


off, it is whether or not there is a systematic avoidance of the


scrutiny that comes with freedom of information. The suggestion is that


Mr Gove and his advisers have established a parallel private


network, to the formal Government e-mail. If ministers decide to


short circuit official system that is allow decisions to be understood


and become accountable, then it will lead to bad Government. It


will trip ministers up and the Government up. It is very tempting


in the short-term, sometimes, to bypass systems and do things off


the record, private e-mail systems, blackberries, whatever, it is not


good Government. Decisions will be taken that aren't accountable or


properly understood. In its response to the allegations the


education department said its top Mandarin had seen the e-mail the FT


relied on. It said the e-mail concerned a political matter. As


Conservative spring conference and sent to party officials not civil


servants. The Financial Times story, which may or may not be known as


gofgate, shows dramatically how the way Whitehall works has changed


over the years. It contains many ingredients that are different from


the traditional Whitehall Mandarins. The rise of the span, the special


adviser. 30 years ago, a TV satire showed


how the efigures civil servants reacting to the intrusion of the


first Spad. This is my political adviser. Oh, yes of course.


Mr Weaser? Wiser. Of course. These are Labour's two top advisers,


with the power to give orders to civil servants, the super-SPADs


brought a new power. Do you know there has been a massive


irretrievable data loss, the last seven months worth of new immigrant


details have gone. During your time as a special


adviser, the thick of it was a satire which was satirising the way


special advisers work, do you recognise that? Not myself, but


there were certain people who liked life imitating art, or the other


way round, and modelled themselves on Malcolm Tucker. There weren't


that many of them. Mo of the special advisers I dealt with were


good people and highly motivated and wanted to contribute to


Government. There weren't that many of them, but a few? A few, not many.


Those were the ones that you usually hear about.


When David Cameron, a former SPAD himself came to power, he said he


was determined to run Whitehall in a pre-Blair way, he cut back


sharply on the number of unelected special advisers. But Cameron's own


chief SPAD, himself, became a hugely controversial figure. Andy


Coulson, the Number Ten press secretary, had the job of


secretarying Cameron to the tabloids. Coulson had resigned as


editor of the News of the World, while denying any involvement in


phone tapping by his journalists. But the affair continued to haunt


Coulson in Number Ten, though Cameron tried to stick by him.


Coulson resigned saying that when the spokesman needs a spokesman it


is time to go. Following a certificaties of gaffes, Cameron


decided to beef up the Downing Street machine by bringing in a


whole new raft of Blair-style special advisers.


Michael Gove had his own special adviser, who had been vetoed by


Coulson for being too leaky. Today's story about Gove and his


advisers, allegedly using an e-mail system to bypass civil servants,


comes itself from leaked e-mails. Tomorrow's Financial Times returns


to the attack, it claims that Gove ran his own private e-mail, called


the Mrs Blurt account, where he discussed policy matters, bypassing


civil servants. The department tonight told us that they and the


Cabinet Office are clear that private e-mail accounts do not fall


within the Freedom of Information Act and are not searchable by civil


servants, this is a Whitehall farce that will run and rup.


- run. The Liberal Democrats leave


Birmingham tomorrow, after their annual conference, to return to


their constituencies, and gloat about governing, or worey if they


will ever recover from it. Before they clambour aboard the train or


into their hybrid cars, their leader will tell them what a fine


job they are doing in making it possible for him to be deputy Prime


Minister, and what a great job he and his ministers are doing in


stopping the Conservatives eating babies for breakfast. We will have


the thrill of listening to Nick Clegg tomorrow.


What's got you going tomorrow? it show. I thought I was hiding it


well. The theme running through Nick Clegg's speech tomorrow will


be that his party in Government in coalition with the Conservatives


are doing the right things, not the easy things. To pick up on the


conversation with Chris Huhne about the �5 billion, there has been a


rumour all afternoon that will be announced tomorrow in Nick Clegg's


speech. I put it to one of Nick Clegg's advisers he emphatically


told me there will be no new capital spending announced tomorrow.


There will be a reiteration for the people in the hall to try to


reinvagueate - reinvague rate their achievements, things they have -


reinvigourate in their achievements, things they have done in Government.


In terms of going forward, it is going to be interesting to see


whether we pitches his message to the - he pitches the message


exclusively to the hall or beyond. It is a difficult job for any party


leader, particularly one in coalition with a party where a lot


of his members fundamentally disagree with them. Whoever said


you can't please all of the people all of the time might have been


thinking about the Liberal Democrat party.


There is no such thing as a typical Liberal Democrat. I'm a Lib Dem.


I'm a Liberal Democrat. I'm a Liberal Democrat. I'm a Lib Dem.


diversity can make this bunch a difficult party to lead. Leading


the Liberal Democrats can be like herding cats sometimes. But I think


if leaders are wise, they will realise they can get 80% of what


they want. It is when they try for 100% the trouble starts. Is Nick


Clegg trying for 100%?'S Going for 90%, he needs towards 80 and then


he will be fine. With the Liberal Democrats it is not that they have


a reason for Liberal Democrats, they have all reasons for not being


in other parties. The second thing to say about them, is the people


who turn up to conference aren't necessarily representative of


either the party as a whole, or still less, the people who vote


Liberal Democrat. Mark Littlewood knows all about the


different Lib Dem groups, when he was director of comouncations for


the party he had to live and - communications for the party, he


had to live and breathe these groups. The people addressed


tomorrow in the speech are left orientated. These are the guys


knocking on doors, delivering leaflet, collecting petitions,


usually to save the local hospital or whatever. A leftist bent. The


wider membership of the party, the many thousands of Liberal Democrat


members who aren't here, they tend to be a bit more market orientate.


They are not delivering leaflets or taking a week off work to come to


the conference. But when they are asked to vote in a members' ballot,


they make decisions that favour the orange book wing of the party. I'm


right in saying every Liberal Democrat leadership election has


always tended to elect the centre right rather than the centre


candidate. This is the health debate, where we


will find a huge concentration of the Social Democratic wing of the


party. Here, well they are kind of obsessed with, as they see it,


fragmentation and competition within public services.


Shirley Williams is very popular with this part of the party, she


was once a Labour minister, leaving there only when Labour, in her view,


became too left-wing. Like many Lib Dems though, she retains a left of


centre world view. If you were to do a straw poll in there, you would


get a large number of people saying this hasn't been fully considered


yet, there needs to be a lot more work on this, and we need to put it


off for a year and work out what to do? You would, and you would get


people saying start from scratch. The problem is because Mr Lansley,


who is a very energetic minister, has been campaigning for a long


time for the changes he wants to see. What we now have is a


situation where it is very difficult to go back. There is


There is a sense that there are people in the Liberal Democrats who


see things differently, who see localism and setting up local


autonomy as the way to save public services. Other people will say


that is leading to a postcode lottery of which we are not


comfortable? I don't find that to be the deepest division, there is


very little division on the concept of the NHS as a public service.


There is nom some division on where the power should lie. That has been


largely met by changes in the health bill. Pity poor Nick Clegg,


a line he puts in a speech that might get half the audience


cheering, and the other half throwing things. No wonder he has


to spend so much of his time trying to emulsify his dispr rate party.


- disparate party. Whether you consider yourself more of a Social


Democratic or classic liberal, whether you are here for Paddy


Ashdown or Shirley Williams. We will all, to one degree or another,


all of the above. We share the same interHans, we are cut from the same


cloth, we are Liberal Democrats. The diversity of the Liberal


Democrats has always been a strength for the party. It has been


Including the latest on the Greek debt crisis from Economics editor Paul Mason in Athens, where students have taken to the streets to demonstrate after schools opened for the new term without text books.

Presented by Jeremy Paxman.

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