18/10/2011 Newsnight


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If we told you five years ago that inflation would hit a 19-year high,


the Bank of England would respond by printing still more money, all


to the cheers of a Conservative Chancellor, you would either say we


had gone mad or the world had. But that's where we are. The Government


doesn't care about you if you have saved or done the right thing. It


has, when push comes to shove, it will take the money away from you,


and give it to other people who they decide needs it more. The man


from the Treasury is here to defend himself. In the tented city in the


heart of the City, the talk is of a long drawn-out occupation.


Camping on concrete is the new form of global protest. What do these


protestors want? The fame Micker, Michael Moore,


joins us from New York, to - film maker, Michael Moore, joins us from


New York to tell us what Occupy Wall Street is all about.


Gus O'Donnell, stands in judgment on Liam Fox and finds him wanting.


The Israelis swap 1,000 prisoners for a single one of their soldiers.


What does the arithmetic tell us? After a slap-up dinner, the Booker


Prize is announced. Julian Barnes for The Sense Of An Ending. We will


be talking to Julian Barnes. Any money you have, any debts you


have are worth quite a bit less than they were a year ago. The


latest inflation figures show it is running at 5.2%, way ahead of the


rate at which wages are rising. As a result? Misery. The Bank of


England's job, by the way, is still formally to keep inflation at 2%.


Our economics editor, Paul Mason, is here. These are pretty bad


figures? 5.2% CPI inflation is the highest for 20 years. We will see


in main the detailed impact it is having on real people's life. For


now, let's just consider the political problems it creates. They


are two fold, first of all, it is helping, this level of inflation is


helping to push the recovery off track. Mervyn King, the governor of


the Bank of England, admitted today in a speech that it is off track.


It is taking spending power out of the economy, at a rate, which I


don't think the Government or George Osborne, understood would


happen when they set out a year ago on the austerity plan. Problem


number one, it is hampering the recovery. Problem number two,


closer to home for the politicians, is it is hitting the middle-classes.


If you consider 5.2% CPI means pensions and benefit also go up


next year by 5.2%, wages are rising at about 2%, for those in


employment. Transport costs, 12%, energy costs 18%. Now Mervyn King


says, in the long-term, it will probably fall back, and our real


worry is we get a collapse in the economy, not a rip roaring


inflationary problem. But whoever invented the term "squeezed middle",


it is skweegs the middle. We have been - squeezing the middle. We


have been looking at where the inflation is coming from and who is


affected most. Included in the basket of goods


used to measure CPI inflation, is daily cup of frothy coffee. Even


though the cost of our skinny mugochino is going up, we are


trying to stay calm and hang on to our little treats. Coffee is not


the only thing going up. Energy prices have risen 18.3%, after the


big three raised gas and electricity prices three times this


year. Anyone commuting to work on anything other than two legs will


have noticed the rising cost of doing so. Transport is up nearly


13%. Supermarket shoppers will tell you that the bill at the till is up,


6% according to the ONS. While all these things have been going up,


average earnings haven't kept pace, they are up by only 1.8% over the


past year. I think there is a real issue about


the fact that real disposable incomes are being reduced, first


because of tax increases and then because of the price increases we


are seeing now. Which means the take-home pay is considerably


reduced. What can people do about it? They will not spend as much.


They could dip into savings and carry on spending, they are all


worried about the debt and they are trying to repay debt, as we know,


over the last couple of years. Of course, if they are not going to go


out and spend, and instead they save. There is a serious issue


about what happens in terms of the impact on the retail sector and


loads of other sectors relying on the consumer going out and spending.


There is a school of thought that high inflation is tolerated by


policy makers like central banks and Governments, because it is the


only way of distributing debt reduction evenly throughout the


economy, without the political pain of raising taxes or cutting


spending. So now that we have high inflation, who the real winners are


and losers? The main winners are those who owe


money. Inflation erodes away debt. So mortgage holders and big debtors


benefit, especially if interest rates are at a record low. And


because the Government has a massive debt mountain, it gains too.


Of the losers, today's RPI inflation, as opposed to CPI, came


in at 5.6%, that means retailers will have to pay 5.6% higher


business rates from next year. But the biggest losers from high


inflation, will doubtless be savers and pensioners. Although the state


pension will rise a bit faster next year, their savings, usually a


bigger sum, will be eroded away by the same amount. Ironically, as


well as being a winner, the Government is also a looser, as it


has - loser, as it has to pay the higher benefits. I would advise the


current Government not to ignore the needs of pensioners. And to


take their suffering seriously. Older people, older generations,


not just those already retired, but now increasingly those coming up


for retirement, are in deep trouble. And through no fault of their own.


Most of them have saved, tried to look after themselves, have been


prudent, and everyone else is seeing that what's happened is,


despite the fact that they have done all that, they are not doing


well. The message seems to be, the Government doesn't care about you


if you save, the Government doesn't care about you if you have done the


right thing. But is today's high inflation figure as bad as the


headline numbers suggest? If you look at the official measure of


inflation. CPI - If you look at the official


measure of inflation, CPI, it is up and twice its target since the


start of the year. If you strip out indirect taxes such as the rise in


VAT and excise duties, the resulting inflation rate, known by


the boffins as CPIY, has been much closer to the target 2% over the


past two years. And the rate at which average wages have been


rising is also much lower than the headline CPI rate. When inflation


is largely imported, it is much more volatile and much less easy to


predict, than when it is dependant on domestic factors. When it is


domestic wages you can make a pretty good guess at inflation and


how high it will be. With commodity prices they go all over the place.


In these circumstances anyone who thinks they are certain about what


is going to happen is probably telling you a lie. There is a not


so cheery economic barometer, called the "misery index", linking


inflation with unemployment. It says for every 1% rise in


unemployment, it equals a 1.7% rise in inflation. It basically says


people tolerate inflation a lot better than unemployment. The


problem is, they are both going up. As inflation - has inflation peaked


for now? Probably. That is what most economists think. The economy


may have to chug along for a bit longer in these straitened times,


until the wind blows in our favour. Here now to discuss today's figures


are the Treasury minister, David Gauke, and The Shadow Line dough


chief Secretary to the Treasury, Rachel Reeves. Are you going to sit


there and say there is nothing the Government can do about it?


recognise inflation is high and having an effect on people's living


standards, that is why we have reduced fuel duty, and petrol is 6p


a litre cheaper than it was. It is why we are freezing the council tax


and increased the personal allowance ahead of inflation. It is


a difficult time. We don't deny that. We have limited room for


manoeuvre because of the state of the public finances. You have done


what you can, and you have failed to get it very good? It is a


difficult time. We accept that, but the fact is, we have public


finances in a mess, we have inherited that, we are trying to


get our way out of that. We don't have a lot of money to throw at the


problem. If it is true, as everybody says, that much of the


driver of this is higher energy costs and higher food costs, there


isn't really that much they can do about it? Well, we have now the


highest inflation rate in Europe, apart from Estonia, so there are


particular things going on here in Britain, it is not just imported


inflation from overseas. It is little relief for pensioners and


families right now to think that inflation may come down in the


future, when they are struggling right now with rising food prices


and energy bills. There are things that the Government can do, for


example, Mervyn King has said, that the main drivers of inflation,


right now, are the VAT increases and the increases in energy prices.


Labour have suggested a reduction temporarily in VAT to help families


and pensioners, �450 extra for an average family. If Mervyn King says


he expects the rate of inflation drops next year, what is the point


of a temporary cut in VAT now? know thainflaigs has overshot both


the Bank of England's - that inflation has overshot both the


economists and Bank of England's forecasts over the last few months.


But if you cut it it is immediate money into people's pockets. There


are many people and pensioners struggling to make ends meet, and a


cut in VAT will make a big difference. You have a feeling a


different analysis, - uch a different analysis to the Bank of


England, you don't think inflation will drop next year? I hope it will,


but for families suffering now. disagree with Mervyn King? No, I'm


saying for families right now struggling with rising prices and


many of us turning our heating on this week, energy prices going up,


and pensioners feeling the squeeze as the winter nights draw in. A


temporary relief and a cut in VAT can do that. You expect a drop in


inflation next year? That is what the Bank of England predicts and


most commentators, the IOF and the FOCD, they think so. What is the


guess in the Treasury l it drop next year or not? The position the


independent office of budget responsibility has taken, is


broadly in line with the Bank of England. So, yes, there is an


expectation that inflation will drop next year. On the specific


point of benefits, linked to the rate of inflation in this set of


figures, that would mean if inflation drops next year that


those on benefits will get some sort of gain from the fact that it


is pegged to this number. There is talk of you trying to peg it to


some other date maybe in the new year or some sort of average, are


you going to do that? The September number, which is what we have today,


is the number which is used. will stick to that? That is the


policy. You are sticking to it? That is the policy, it remains the


policy. You will stick to it? the policy, and that's where it is.


Do you think it is fair to working people? Well, I think it is a


difficult time all round. We don't deny that. That wasn't my question,


is it fair? I think we don't want to, we heard in the report talk


about the impact of pensions. Pensions are hit by inflation, we


don't want that to happen. We need to look in the surround. We don't


want to try to get the deficit down on the backs of the poorests.


is going to happen. You have told us twice, it is the the policy. The


benefits will go up at the time that inflation goes down? Let's see


when we are nearer the time as far as where inflation is going to be.


We do want to protect pensioners who have seen inflation go up.


you think that is fair to working people? Let's have a look at the


circumstances at the time. You can have a view on whether it is fair


or not, without waiting for the circumstances at the time?


depend what happens with various trends as far as inflation is


concerned. The important thing is that we have, and I just want to


come back to something that Rachel was saying, the idea that we can


just cut VAT and that would be just a win-win, we have to bear in mind,


if we lack credibility in our fiscal plans, what you would see is


interest rates going up. We have one of the lowest interest rates in


Europe. As a consequence, that has a squeeze on mortgage s. What you


see at the moment is the Government borrowing �46 billion more over


this Parliament, because the cuts that we are seeing are resulting in


higher unemployment and lower growth. The Institute of Fiscal


Studies have said today that the increase in inflation will mean


�1.8 billion extra this year on benefits payouts. It is clear the


Government's policy isn't working at the moment in bringing down the


budget deficit. There is a slowdown in every country you look at. The


Americans had a fiscal stimulus and a lot of money thrown at it, their


growth is lower than our's. There is a slowdown across the world,


there is a crisis in the eurozone, that is damaging confidence


everywhere. In the past nine months the British economy hasn't grown at


all. The only economy to have grown more slowly is Japan, hit by an


earthquake. The only countries in the economy growing less slowly are


Greece and Portugal. There is something about the economic policy


being pursued here that is hitting growth and jobs and pushing up


inflation at the same time? We can play the game of choosing a


particular period, and if one looks over six months the answers are


different. The fact is, there is a slowdown across the eurozone, in


the UK and the US. And the Government's policy hasn't changed


at all to changing global circumstances.


Many of the drones pouring in and out of the City of London this


morning and evening had to survive the scorn of protesters, camped out


in front of St Paul's. They are part of a movement, it would be


wrong to call it an organisation, which began with the campaign to


occupy Wall Street in New York, it has spread to other cities, where


citizens have found their lives poorer by the greed of bankers and


their friends. What, apart from venting anger, are they trying to


It did not start with Wall Street. All this year protestors have been


occupying squares, in Cairo, in Athens, and in Spain. The whole


world is watching! But the Wall Street occupation, and the


associated protests, have now given birth to a worldwide movement. The


protestors claim to be the 9%, as opposed to the 1% who - 99%, as


opposed to the 1%, who they say own most of America's wealth.


It is this that struck a chord with the environmental groups, the trade


unions have backed it and politicians noticed it.


protestors are giving voice to a more broad based frustration about


how our financial system works. In London, since Saturday,


protestors have been camped outside St Paul's Cathedral. They include


students, environmentalists, the guy fauks masks warn by the Hacker


Group, anonymous. The days are filled with meetings and


discussions, the aspirations, huge. Why are they here? Because they


feel powerless, politicians are ignoring their demand, people here


no know the cuts aren't necessary, they know the banks gambled and


lost in �850 billion pumped into the banks, it is unfair for us, the


general population to be paying that money back by losing our


services, our jobs, by losing our welfare benefits. People here know


it is wrong. What is new about the movement here and across the world,


is its intention lack of connection with mainstream politics. Faced


with this global occupation movement, what the mainstream media


and politicians tend to ask is what do they want from us? For many


people here, that is the wrong question, many of the protestors


think they are here to create something completely alternative,


and separate from the political processes they think have failed.


There is a cry sifs political representation. People have seen -


crisis of political representation. People have seen time and time


again that their needs and interests are not being represented


at the level of state. And to the contrary, the austerity measures


being pushed through are harming them and taking away their


livelihoods. Therefore, that is what the crisis of political


representation is. They have seen the interests being offended and


pursued at the level of state are those of a minority with access to


wealth and power. If people want to show by silent clapping if they


agree. To the uninitiated the methods look strange, and some


worry the counter culture is too weird to involve the majority of


problem. The other thing is, as the nights get cold, how long do you


stay and how do you know you have won. Joining us now from New York,


the film maker and author, Michael Moore. Michael Moore, how


significant do you think these protests are? I think they are


quite significant. I think this is something that is certainly


spreading all over the United States. There are new occupy


movements beginning in towns and cities every day. Now it has spread


across the world. It has really touched a nerve. What your


correspondent said about, that it may seem weird, because you have a


lot of young people there, in the park. It is only weird in the sense


that all movements for justice begin with people who are not, who


are willing to be out there on the edge a bit. Somebody in the


feminist movement burned their first bra and that shocked


everybody, and everybody thought that was weird and crazy, then we


had a feminist movement, and things got a bit better. That's how things


go. When women wanted the right to vote, 100 or so years ago, talk


about being weird. They were completely ostracised, everybody


who starts a movement is talked about in this way, this is how they


are being talked about now. It is much, much larger. In the campaign


for woman's sufferage, the methods and tactics, the objective was to


get votes for women. It is unclear, in this case what the objective is,


what it would take to get the campaign called off. Do you


understand what it is for? Yes, I do. It is, there are a whole bunch


of reasons that lead back to the greed of an economic system that is


built around n this case, in our country, around Wall Street. People


are fed up. We have 50 million people in the United States that


have no health care. 50 million. We have millions who have lost their


homes, due to foreclosure. We have 46.2 million living in poverty.


That is at least 13-18 million kids every night going to bed


malnourished. People, millions of people have been abused by the


system and they have had it. I think it is enough. Remember, we


are in the first 32 days of this movement. It is enough that people


have just gotten up off the sofa and gotten involved. It is enough


that people have pushed through their despair to say, you know what,


I'm not going to sit by and do nothing. First you have to get up


and move. That is what people have done, we are in the first phase now.


This will grow into something with various political demands to up end


this system that has caused so much pain for so many people. You say up


end this system, is the objective to reform capitalism or end it?


depends on who you ask. As far as I'm concerned it needs to be ended.


It is an evil, evil system. I'm talking about 21st century


capitalism. I don't want a lecture about what Adam Smith intended or


whatever. I'm talking about a system now that is set up so that


the richest 1% get 40% of the pie. A system where the richest 400


Americans have more wealth than 150 Americans combined. What do you


want to replace it with? Well, it is not about replacing it with


something, or going back. Here is what is confuse, especially some


people in the media, - confusing, especially some people in the media,


they are thinking why aren't they joining in the political system


that has always been done? But it hasn't worked. They are not


interested in pass ago bill in the Senate or a Congressman saying the


right things to them. You have told us this will end up with political


change. How will you get political change if not by political action?


We will have to see what happens, right. You are watching the birth


of a massive worldwide movement against the banks, against Wall


Street, against the City. People literally have had it, they will


not take it any more. And things are going to happen. We just don't


know it now because we are really in the actual birth of this


movement. So, what do you imagine will


replace capitalism at the end of all this, if the movement is


successful? I think what people would like is a democratic economic


system. If we say we live in democracies, we should have


economic systems where the people have a say in how they are set up


and run. The pay should be divided fairly amongst the citizens, and


those who have more are taxed more, so that they have to pull what is


their fair share of the weight. That is ultimately what people


would hope. You know, when I was a kid, people really weren't mad at


rich people, because the rich people built the factories and it


was kind of like, OK, they gave my dad a job, now we get to have a


house and car, and the kids get to go to college. That is all gone now.


There was never really enough for the rich, they had to keep, they


wanted more and more. Enough is the dirtiest word in capitalism. We


need an economic system that is fair, just and democratic, that is


not what capitalism is now. I'm afraid this isn't just me saying


this, the people have had it. They want something new, and maybe


something new will have to be invented out of this.


What would it take to persuade you that it was not necessary to have


this campaign any longer? You mean what would need to happen to stop


me occupying Wall Street? Yes. of a number of things. A fair tax


rate so that the rich pay their fair taxes. Bring back the controls


and regulations on Wall Street, so they won't be able to do what they


did in 2008 and before that again. There is a whole bunch of specifics


that I would be happy to see happen. But ultimately, I don't think that,


we have a political system where essentially now our candidates can


legally be bought by billionares, money has to be completely removed


from our political system. There is a declaration, if you go on-line to


the Occupy Wall Street, there is a declaration that the general


assembly voted on down there. You can see 19 or 20 different points


that people are concerned about. It is not that people haven't


expressed these concerns. It is just that it is not like the old


way, where it is let's get somebody elected President, let's get that


bill passed in Congress. We are way beyond that now. We are not into


fixing or reforming or tweaking. This is simply has to end. The way


of doing business, as we know t has to come to an end.


It is only nine and a bit pages long what it lacks in length it


makes up for in strength. The Cabinet Secretary's report into the


relationship which led to fox folk fox's ris nation last Friday, as


Defence Secretary, is pret - Liam Fox's resignation last Friday as


Defence Secretary is pretty straight forward. He was told of


the risks to the relationship and he chose to ignore the warning. We


watched the birth of today's report. Waiting for the judgment of God, in


Whitehall, God denotes the initials of Gus O'Donnell, the head of the


Civil Service. As close to an ominousent being as any mere mortal


could be. It is him sitting on in wise consideration of the since of


Liam Fox. He took his time, and some began to doubt his existence,


some wondered if Oliver Letwin had put the report in bin. When it


finally came it was not handed down on tablets of stone but it is clear


cut. This report by Gus O'Donnell is so cit calf Liam Fox, - cil


critical of Liam Fox, if he had not resigned when he did he would have


to know. We knew plenty about the case. Liam Fox's former flatmate,


Adam Werritty, met him on 22 occasions in the MoD building and


17 overseas. Sometimes the President of Sri Lanka was present


and others. Adam Werritty was funded by rich donors keen to voice


their policy concerns. At least one donor, Jon Moulton, suggested that


Liam Fox himself solicited these donations. When Dr Liam Fox


resigned last Friday, it was because he knew today's report was


critical of his conduct. The report concludes that security had been


compromised. Not national security, but the disclosure outside MoD of


diary details about future visits overseas posed a degree of security


risk, not only to Dr Fox, but also the accompanying official party.


Sir Gus goes on to condemn Liam Fox's frequent meetings with


foreign dignitaries and contacts with Werritty present and no civil


servant. This, says Sir Gus, should not have been allowed to happen.


The report concludes that the contact damaged the proper conduct


of Government business. Dr Fox's close and visible association with


Mr Werritty in the UK and overseas, he says, and the latter's use of


misleading business cards, has fuelled a general impression that


Mr Werritty spoke on behalf of the UK Government. The risks of Dr


Fox's association with Mr Werritty were raised with Dr Fox by both his


private office and the permanent secretary. Dr Fox took action in


respect to the business cards, but clearly made a judgment that his


contact with Mr Werritty should continue. It is obviously a serious


situation where a minister of his experience did breach the


Ministerial Code. And also, put the security of other ministers and


officials at possible risk, because Adam Werritty had access to his


diary. We have had the official report, the minister has already


resigned, surely an end to the matter? Possibly not. For a start,


this afternoon the speaker, the Commons Speaker gave a powerful


hint he's minded to go with Labour's question of an urgent


matter request tomorrow. Labour suggesting this goes beyond


one minister and one so-called advisor? David Cameron said last


week he would answer all unanswered questions, clearly it hasn't. In


terms of the relationships that Mr Werritty and Dr Fox had with


funders, and also organisations such as Atlantic scam bridge, which


also involved at - Atlantic Bridge, which involved at least four


serving ministers. Tomorrow there will be a Government statement on


the report in the Commons. It won't be the Prime Minister making it.


But the leader of the Commons, Sir Tony Young. There are questions


about other ministers, and whether this network of contacts around


this organisation, Atlantic Bridge, raises any more questions about


undue influence on ministers. Are you clear in your mind that there


hasn't been that? One of the recommendations in the report is


the moment you become a minister, in addition to declaring that your


financial interests, you should declare the sort of friendships and


acquaintances mentioned in the report. Anyone with an interest in


policy and contacts revealed to the permanent secretary. If we


implement that recommendation, and the Prime Minister has said he's


minded to, that will address the particular issue you have just


talked about. On a question of process, is it right you will be


talking about this tomorrow in the Commons, if there is an urgent


question? The Prime Minister has asked me to make a statement giving


their response to this particular report. As leader of the House I


have a broad range of responsibility, the Prime Minister


has asked me to discharge this one. This is putting your broad range of


responsibility at its broadest? Liam Fox dismissed two of the


serious allegations against him, that he made money, or jeopardised


national security in his relationship with Werritty. God is


expecting to be receive with heads slightly bowed, but many don't


believe this is the end of the matter.


My guests are with me now. This is damming report, and yet


last week you were all defending Liam Fox? He resigned, because he


knew he had broken the Ministerial Code. You were defending him up to


that point I don't think people were defending him to that point.


What people were saying about Liam Fox was that he had done a very


good job as the Defence Secretary. He had clearly made very serious


errors of judgment, and then the next question to be asked, which is


what the report was all about, was had he broken the Ministerial Code.


He knew he obviously had, he paid the ultimate price for making


serious errors of judgment. No financial impriority, no threat to


national security, that is important as well. This isn't an


end to the matter as far as you and your colleagues seem to think?


report would have been unsurviveable if Liam Fox was still


in a job. He jumped before he was pushed. He acted honourably?


doesn't touch pont issue of money or the issue - touch upon the issue


of money, and which other people met Dr Fox. Two members of the


Government, two defence ministers met Mr Werritty. We can understand


why Liam Fox let Mr Werritty, because he's his flatmate and best


man. What bu what are other ministers doing meeting a shadowy


figure, it is perplexing. What do you think? I don't think it is


finished. Were I advising the Prime Minister, I would say you need


further processes here. Perhaps Gus O'Donnell should be asked to


broaden his inquiry with a different remit. Because there is


the question of ministers, to which reference has already been made,


and also there is this general question about access. One of the


things which I believe is we ought to have a register of lobbyists.


But, of course, Mr Werritty wasn't a lobbyist, and therefore would not


have appeared on that register. We need a different system, which


allows both transparency and scrutiny. The Liberal Democrats are


calling for the extension of Gus O'Donnell's investigation? I am.


You are a Lib Dem? You were leader once? You are not an insignificant


voice, I would imagine? That is kind of you to say. But if I may


coin a phrase, I'm not an advisor to the Prime Minister. It is not


your formal policy? It was our policy in the general election.


is in the coalition agreement that we will have this register of


lobbyists. He make as good point. It is taking a long time to get to?


The transparency last been put into place, ministers have to give


details of their expenses and foreign trips, and meetings they


have. All of these things, which was not introduced by the last


Government. There is a transparency that has come into it. Mr Werritty


was on no-one's books, not a lobbyist or registered in any way


whatsoever. David Cameron said sunlight is the best deterpblgent.


Let light shine on these issues to clear these things up. The public


are being kept in the dark, this is a ten-page report, very superficial,


we need to look wider at the issue of money and ministers. Who gave


money to Mr Werritty and his networks, what did they get in


return, we need that answer. language is typical economics Civil


Service, but actually it is a very powerful report, it is not a


superficial report. Everyone says it is very strong. If you don't


mind, hang on. What does it tell us about the nature of this Government,


and that it can find itself in this sort of mess. It reveals something,


does it not, about the nature of coalitions? I don't think that's


the case, they reveal something about the way in which Liam Fox


fulfilled his responsibility. Nobody had the faintest idea of


what was going on? I think they did. That is one of the points in the


document, is there had been conversation, there had been


concerns, and he had not taken advice. The Permanent Secretary in


his department did. No-one did anything about it? Can I ask either


of you. He did do something about it, he resigned, we keep for


getting that. After the event. any other minister know about any


of this. I don't know the answer to that. I think your question, to try,


if I may say, to make political capital out of this, is really not


acceptable. Let me just finish. an opposition politician, what do


you expect? It is about the honourable point he makes. To ask


about Werritty, you ask questions about him. But it is not the job of


Gus O'Donnell and the Prime Minister and anybody else to ask


the questions of someone who has no locus. You would rather a broader


inquiry Not particularly. I genuinely believe. That everything


that needs to be found out has been found out? The things he has done


wrongly, in his position, as defence secretary, has been


examined in that report. No impropriety and he has resigned.


How can you do that, he's a private citizen. How do we know who else he


has seen? He may have been a private figure but he's a public


figure now. It is not a difficult question. The Prime Minister


confused about how Government does these things. The Prime Minister


should ask all of his ministers did you meet Mr Werritty and why. And


publish that list tonight. Werritty is publishing his own list.


That is the parliamentary protest, anybody ask questions of any


minister. We will be back on this tomorrow.


Extraordinary scenes in Israel and Gaza today as one Israeli corporal


and many hundreds of Palestinian prisoners returned home. That one


captured 19-year-old can generate such commotion, speaks volumes


about Israel's attitude to its citizens, a massive military


operation against Gaza failed to find him. The winners in all of


this are obviously Mr Shalit, the many Palestinians released, Hamas


and Egypt, which acted as broker in the deal. The losers, that slightly


more complicated. The return of Gilad Shalit required


a political journey. And for this young soldier, that odyssey took


five years. Shrunken and pale from his ordeal,


the young man fell at last into the arms of his father, who had


campaigned, tirelessly for this day. Gaza, meanwhile, the first buses


carrying freed prisoners were rolling in. Many heading for family


reunions too. The city had turned out to celebrate, 200,000 at the


main rally, and to give the men a hero's welcome. We thank God for


this big party, and we thank the parties here, Hamas and all the


other parties, for what they did and do. We feel very happy.


But if the political benefits of this to Hamas and the Israelis were


so apparent today, why the years of machinations, why so long.


My involvement in this has been since the third day after the


kidnapping, five-and-a-half years ago, almost when someone from Hamas


called me and said, gerb shone is being bombed, the electricity is


off and we have to do something. From that moment three days after


the kidnapping in June 2006, I have been trying to bring people


together behind channels to pass on messages. I believe this could have


been done a long time ago. Serpblgt Shalit was seized nine months after


his arm - Sergeant Shalit was seized nine months after his army


unit had pulled out of Gaza. In the summer of 2007 Hamas took control


of Gaza. There was encouragement across the world to boycott the


Islamic movement. With Hamas taking over Gaza, it was harder for Israel


to have intelligence there. Israel had no idea where Gilad Shalit was.


Thomas Merton, as Prime Minister, he was so - Ehud Olmert, he was so


concerned with the moves made in Gaza, he wasn't willing to go in


for a long time and try to get him out militarily, or make a deal for


him that would result in hundreds of terrorists being released.


So were they trying to get him out? With political will lacking, little


energy was put into finding them. Rather with rockets falling on


Israel, Gaza was pounded, and indeed, invaded early in 200,


making meaningful negotiation impossible. But the release of a


video of Shalit, several months later, and campaigning by his


father, started to change the political equation in Israel. 18


months of negotiation and haggling ensued, so the question is, why


now? Israeli negotiators say that Hamas, at last, was ready to reduce


its demands, and that's what finally brought the two sides to


agreement. On July 14th we worked out a document that talked about


finality, the closing of the agreement, we talked about the


principle that Israel would select from a list of 30, between 25 to 30


of the most difficult names, something the Germans called the


VIP category, and the Palestinians agreed most of them would be


deported forever. By its choreographing of today's


celebrations, Hamas has sought to derive maximum political wealth.


TRANSLATION: I swear to you, that hiding Gilad Shalit inside Gaza is


something we are proud of today. The Palestinian military mind has


defeated the Israeli mind that is supported by all the Secret


Services and intelligence apparatus and means.


Inevitably there are many asking what next? Does the ability of


Hamas and the Israelis to agree on this open the way for positive


change? Or will it just prompt more hostage taking?


As he travelled through Egypt this morning, Gilad Shalit expressed


this hope? TRANSLATION: I hope this deal would help the conclusion of a


peace between the Israelis and the Palestinians.


I hope that co-operation links between the two sides will be


consolidated. There may now be further steps to ease the Gaza


blockade, perhaps creating a more normal life there, and in


surrounding Israeli towns. Today's deal, could also improve the


atmosphere for the resumption of some kind of peace talks.


But as to a meaningful peace process, that's still a long way


off. In the warriors he' reception given to the detainees today, there


are the unmistakable signs of two people still locked into an


intractable conflict. It is posh bingo, the phrase


doesn't spring to mind, but Julian Barnes did it. The Booker Prize has


come out, this time there is a row about whether it is infiltrated by


books people might want to win. The winner gets �50,000 and a boost to


sales. The six finalist, publishers, agents and hangers on, have been


troughing at Guildhall tonight. Gavin is with him. Here in the


Guildhall I'm joined by the 2012 winner of the Man Booker Prize,


Julian Barnes. It has been a long time coming? This is the fourth


time I have been shortlisted, I know the ins and outs of not


winning it, now I know the winning of it. You once said this was posh


bingo, I know the judges are now impecable, is it still true?


point I was making is the book has a tendency to drive people it


touches mad. Writers are more susceptible than others, it does


drive judges and some publishers mad. The way to protect against


this is treat it as posh bingo unless and until you win, then it


is the decision of the wisest judges in the literary world. That


is what I maintain at least for the next 24 hours. On that point, there


has been a bit of a fuss this year about the question of readability


and literary merit, as if they are sometimes mutually exclusive, which


they aren't, what are your thoughts? It is a false argument


and people are going mad on both sides. Jane Austen, what is she if


not readable, Dickens incredibly, in the modern age, Graham Geem, pen


Nell lop pee Fitzgerald. All good righters - PenelopeFitzgerald. All


good writers are readable, or you go to fin begin's Wake and it is


unreadable. This prize may drive people mad,


but does it change you, given where you are in your career, you have


this track record of amazing books in the past as well. Does it change


you or is it not that important? won't change me in terms of what I


write, or how I view the novel and the world. But I hope that it will


bring new readers to me. There will be people who think they will have


a go at that, and then if they like they will discover there are quite


a few more books in the bookshop. That is what I hope for out of it.


And of course, it is very nice to receive a large cheque from the Man


Booker Prize. The book, The Sense Of An Ending,


which I enjoyed immensely. I found it on many levels and will read it


again, it is very short and very subtle. I wonder did you spend a


long time on it or not. Is a short book a quick write or not? It was a


clear, I don't know if you call that quick. Do you call it quick?


It is funny, my previous shortlisting was for something that


was 450-pages, I wrote that in 12 months. You could say this is a


more leisurely 12 months. I think 12 months for 150-page book is


about right. I tend to have a sense when I'm starting a book of how


long it would take. When I started my first novel it took seven years


to write. He I was bored with it by the time I finished it. As you


learn how to write you get a sense of how much time you will be alive


in your head with it. So I think I have got that, I have got that


licked now. Just a final thought, again on the


book. I find it whistful in places, and in one or two places - whistful


in place and in one or two places laugh out loud? That is great, a


start. Humour is part of your writing? Yes, and being funny is


often a good way of being serious. Congratulations to Julian Barnes,


the winner of the Man Booker Prize. Tomorrow morning's front pages, now


the Financial Times, Mervyn King's speech saying the recovery has gone


a bit off track. Also the lead in the Telegraph, above a picture of a


gorgeous, alleged pouting Russian That's all from Newsnight tonight,


at the end of a day in which the financial BMOF Goldman Sachs said


instead of its usual guzzling, it declared a loss already. It was


Rolling Stone magazine that described the firm as a great squid


wrapped around the world. This is what the vampire squid does in


trouble. The vampire quid from hell. Disturb it, and it only retreats a


little distance. Luminous bacteria shine from pockets on its arms, to


confuse predators, a bite there would leave the head unscathed. The


threat diminishes and the vampire It is cold out there, isn't it. It


will stay cold as we go through tomorrow. Showers tomorrow, showers


in different places compared to today, they will drip down into


southern parts of the UK. One or two sharp ones. Further north, for


northern England and the Midland, dryer and brighter. But chilly,


wherever you are. Temperatures struggling for double figures.


Sharp showers across the south-east as we end the day. Hail mixed in.


Most of the South-West will end the day on the dry and bright notes.


One or two showers left behind across the north and west of Wales.


Not as frequent or heavy as they would have been earlier on in the


day. The breeze will keep the temperatures down. 10 degrees will


be typical. Northern Ireland will have much more sunshine than in the


last couple of days. Things settling down, that is the case for


most of Scotland, wintry showers continuing across the high ground.


Looking further ahead into Thursday, a change in the weather for the


more north western parts of the country. Clouding over with rains


for western parts of Scotland and Northern Ireland. The wind picking


up too. Further south and east, things settling down for a time.


After a frosty start on Thursday, plenty of sunshine, and the wind


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