:00:07. > :00:12.Remember when they told us a growing economy would lift us out
:00:12. > :00:16.of trouble? Of course it would, but tomorrow we're expected to learn
:00:16. > :00:20.that is definitely not what we have got. Instead we have lots of
:00:20. > :00:23.predictions of, if not tomorrow, one of these days.
:00:23. > :00:28.As the Chancellor prepares his autumn offensive, Paul Mason, the
:00:28. > :00:32.man who takes the con out of economics, goes to find out why the
:00:32. > :00:36.infamous engine of growth has stalled. What we are looking at is
:00:36. > :00:40.a completely new problem, that is, how do you come back from a
:00:40. > :00:43.situation where you have been going quite fast down the wrong road for
:00:43. > :00:45.35 years. What ought the chancellor
:00:45. > :00:50.Chancellor of the Exchequer to be doing.
:00:50. > :00:54.Also tonight, we talk to the most powerful soldier in the world about
:00:54. > :00:58.Afghanistan, Iran and whether the US military he commands can defeat
:00:58. > :01:02.the Taliban. They will never be destroyed, that is another dock
:01:02. > :01:06.trainal term that means they go away, the Taliban are part of the
:01:06. > :01:10.fabric of that part of the world, and they have have to be dealt with.
:01:10. > :01:13.In Egypt they are sealing the ballot boxes after their first free
:01:13. > :01:16.elections, at least that is what they hope they are. What is the
:01:16. > :01:19.reality? TRANSLATION: They say no matter we vote or not, the
:01:19. > :01:29.parliament won't form the Government or control it, what use
:01:29. > :01:31.
:01:31. > :01:33.is voting? Once upon a time, 1947, to be
:01:33. > :01:37.precise, the Chancellor of the Exchequer resigned his post because
:01:37. > :01:41.he told a journalist what was going ob in his budget. Politicians still,
:01:41. > :01:44.quaintly, expect us to believe that statements about the national
:01:44. > :01:48.economy are disclosed first, to parliament. It is complete rubbish.
:01:48. > :01:52.Over the past few days there has been a steady stream of leaks of
:01:52. > :01:58.things that will be announced in tomorrow's Autumn Statement. To
:01:58. > :02:00.show how hard the Government is trying to save us all from penuiry.
:02:00. > :02:08.Could it be that tomorrow the Chancellor will have to tell us
:02:08. > :02:13.bleakly that the propbs pects are extremely grim. -- prospect are
:02:13. > :02:18.extremely grim, even David Grossman, a mankind to animals has his doubts.
:02:18. > :02:23.Not everyone can pull off this look, the Chancellor thinks it can send a
:02:23. > :02:29.message, a message so simple even a four-year-old can understand.
:02:29. > :02:35.Time to get busy # To get building and fixing
:02:35. > :02:38.Nice and happy, that's great. Osbourne is so keen to be
:02:38. > :02:42.photographed near holes in the ground recently, because he wants
:02:42. > :02:44.to show the Government is not just about cutting but building.
:02:45. > :02:47.Investing in Britain's economic future is the priority for this
:02:47. > :02:51.Government. We are finding the resources in difficult times, to
:02:51. > :02:55.build the roads and railways, here we are talking about an extension
:02:55. > :02:58.of the tube line that could create 25,000 jobs on the site. We are
:02:58. > :03:01.doing these things, because Britain has to get away from the quick-fix,
:03:01. > :03:05.debt solutions, that got us into this mess. We have to weather the
:03:05. > :03:10.current economic storm, but we have to lay the foundations for a
:03:10. > :03:14.stronger economic future. Today the Chancellor was announcing a �30
:03:14. > :03:20.billion infrastructure fund. �20 billion is supposed to come from,
:03:20. > :03:24.as yet unnamed, private sources. �5 billion is Government money, but
:03:24. > :03:29.won't be spent until after 2015, leaving �5 billion of Government
:03:29. > :03:32.funding now. But it is to be paid for from savings elsewhere. We will
:03:32. > :03:38.found out tomorrow whether the independent forecasters think any
:03:38. > :03:42.of this will work. My fear is they will show growth down, unemployment
:03:42. > :03:46.up, borrowing tens of billions higher, because George Osborne's
:03:46. > :03:50.plan hasn't worked. He said cutting faster would be good for growth and
:03:50. > :03:53.jobs, it has ended up in higher borrowing and failure. One reason
:03:53. > :03:58.the Government may have been so keen to crack out so many growth
:03:58. > :04:01.announcements, ahead of tomorrow's Autumn Statement. Last week it was
:04:01. > :04:06.housing and youth jobs. Is because ministers know that if they held
:04:06. > :04:11.everything back until tomorrow, well, it would probably all get
:04:11. > :04:16.rather overshadowed by the updated forecasts coming from the office of
:04:16. > :04:22.budget responsibility. Ministers are not expecting good news from
:04:22. > :04:29.them. The OBR stom tomorrow, it is expected, will confirm what
:04:29. > :04:33.everybody is expecting, is that George Osborne will not meet his
:04:33. > :04:36.target by the end of the parliament for growth? David Cameron has said
:04:36. > :04:41.it will be more difficult to deal with the problems this Government
:04:41. > :04:44.inherited from Labour, because of the head winds we face from the
:04:44. > :04:49.crisis of confidence in the eurozone. But I'm sure we will see
:04:49. > :04:53.tomorrow the measures that are necessary to make sure we both bear
:04:53. > :04:57.down on our debts, and ensure we have the investment in
:04:57. > :05:01.infrastructure and future jobs, to make sure we can get out of the
:05:01. > :05:07.hole we are in. There was a kind of dress rehearsal for bad news today,
:05:07. > :05:09.in the shape of an updated OECD forecast. The headlines from this
:05:09. > :05:14.are pretty sobering. Negative growth for the first two quarters
:05:14. > :05:19.of next year. That is the technical definition of a recession, or in
:05:19. > :05:23.this case, a double-dip recession. Growth next year says the OECD,
:05:23. > :05:28.will be 0.5%, that is a huge downgrade from their previous
:05:28. > :05:35.assessment of 1.8%. And, says the organisation, unemployment is
:05:35. > :05:42.expected to hit 9.1% in the UK, by 2013. That means an extra 400,000
:05:42. > :05:47.people will be out of work. Whilst Labour is understandably keen to
:05:47. > :05:51.pin the blame on the Government. Nowhere, in fact, does the OECD say
:05:52. > :05:55.it is Government policies that are at fault in the reduced growth
:05:55. > :05:59.prospects. Actually it says being seen to be getting a grip of the
:05:59. > :06:06.deficit has actually given Britain more room to cushion the slowdown.
:06:06. > :06:09.In any case, it seems that because of poor growth, the coalition isn't
:06:09. > :06:15.reducing the deficit as fast as it planned. The Government is going to
:06:15. > :06:20.reduce the deficit, slower than actually you advocated, how can
:06:20. > :06:24.that be the problem that is causing low growth? Because the Government
:06:24. > :06:29.decided a year-and-a-half ago to cut very deeply public spending,
:06:29. > :06:33.and to increase taxes. That is what has choked off growth over the last
:06:33. > :06:37.year-and-a-half. In the last year the UK economy has grown by 0.5%,
:06:37. > :06:40.lower than all the other countries in the G7, apart from Japan, we
:06:40. > :06:44.know they have had a huge earthquake. The choices the
:06:44. > :06:49.Government made over a year ago are what has resulted in borrowing
:06:49. > :06:52.coming in higher than forecast. David Cameron was out doing his own
:06:52. > :06:57.growth photo opportunity today, hoping, no doubt, for headlines
:06:57. > :07:00.about being on the right track, or something like that. Tomorrow's
:07:00. > :07:04.assessment by the Office for Budget Responsibility is likely, though,
:07:04. > :07:08.to be problematic. What the Prime Minister is trying to do is to
:07:08. > :07:13.convince people that given where he started from, no other set of
:07:13. > :07:18.policies would have delivered a better result. Our economics editor,
:07:18. > :07:22.Paul Mason, is here in the studio. Put this in context for us will
:07:22. > :07:27.you? Tomorrow comes amid a shrew of really bad economic news. That OECD
:07:27. > :07:30.prediction for the UK, of another recession, a second recession,
:07:31. > :07:33.might be one of the worst predictions or the most pessimistic,
:07:33. > :07:40.it is probably because they have had longer time and more data, they
:07:40. > :07:44.have had a chance to see what is happening in the eurozone.
:07:44. > :07:51.Mervyn King said there are signs in the eurozone. The rest of the
:07:51. > :07:56.markets have been talking two weeks. It is there, anecdotally the end of
:07:56. > :08:02.the mortgage market, you see mortgages pulled, cross-border
:08:02. > :08:09.mortages and deals all times coming in 2007 that were the trigger in
:08:09. > :08:12.2007 and the trigger for a big crunch. The Government and tomorrow
:08:12. > :08:16.was all supposed to be about the long-term strategy, and now the
:08:16. > :08:21.question is how long can you go on with the famous plan A, of course,
:08:21. > :08:26.deficit reduction, about �111 billion, taken out of state pending,
:08:26. > :08:30.was supposed to be bridgeed by loose monetary policy, until the
:08:30. > :08:35.economy got there, to that he will dor rad dough of sustainable growth
:08:35. > :08:38.based on manufacturing, the question now is will it ever get
:08:38. > :08:42.there, and in what circumstances. And this is what the Chancellor has
:08:42. > :08:51.to explain to people in parliament tomorrow. What exactly is the plan
:08:51. > :08:57.if the eurozone goes belly up, and if continued, desire for parts of
:08:57. > :09:00.the economy never makes it. With us is the former UK finance secretary,
:09:00. > :09:02.Lord Myners, and the deputy chairman of the Conservative Party,
:09:02. > :09:07.Michael Fallon. These initiatives that have been just leaking out
:09:07. > :09:11.over the last few days, why is it taking 18 months to get around to
:09:11. > :09:15.them? They haven't just been leaking out. Things like credit
:09:15. > :09:20.easing was announced at the last party conference. The spending
:09:20. > :09:25.stuff today? On infrastructure? roads and railways and the like?
:09:25. > :09:28.is because we have stuck to plan A that we are able now to accelerate
:09:28. > :09:32.some infrastructure spending. Why has it taken 18 months to get
:09:32. > :09:36.around to it? We have now discovered that some departments
:09:36. > :09:40.are underspending, and we are able to bring that spending forward and
:09:40. > :09:45.move it into infrastructure and get the economy growing again. You must
:09:46. > :09:49.be chuffed, aren't you? shouldn't say no things-to-things
:09:49. > :09:54.that could be good for stimulating the economy. But the economy as a
:09:55. > :09:58.consequence of this Government's policy last been pushed back
:09:58. > :10:01.towards recession, and that is -- has been pushed back towards
:10:01. > :10:05.recession. The Conservatives have misunderstood it, they have it
:10:05. > :10:10.round the wrong way. They are arguing the deficit is damaging
:10:10. > :10:14.growth, at the moment it is the absence of growth that is inflating
:10:14. > :10:18.the deficit. Hang on a moment. Lord Myners should hang his head in
:10:18. > :10:22.shame, he's one of the Treasury ministers that left us this deficit,
:10:22. > :10:26.that we are now having to tackle. The EOCD today said growth is
:10:26. > :10:30.slower because of the problems in the eurozone, that Paul has
:10:30. > :10:35.identified. Of course growth is much slower, but they also said
:10:35. > :10:38.that the fiscal plan we have got has bolstered credibility and needs
:10:38. > :10:42.to continue, despite the worsening outlook. The plan A is there, and
:10:42. > :10:49.we are sticking to the plan. At the same time doing what we can to
:10:49. > :10:54.accelerate growth and help families through this. Michael, the fact is
:10:55. > :10:58.the economy in the 12 months of the final quarter of 2009 grew at 2.6%.
:10:58. > :11:02.Since then it hasn't grown at all. Over the last 12 months only
:11:02. > :11:07.Portugal, Greece and Cyprus, have achieved lower rates of growth than
:11:07. > :11:12.the UK. The problems started well before the eurocrisis, and it is
:11:12. > :11:16.the policies of your Government, which are creating this absence of
:11:16. > :11:20.growth. This is rewriting history, from somebody who served in the
:11:20. > :11:24.Treasury at the time. Those countries may well abide
:11:24. > :11:28.differently, we had a worse deficit from these countries, which you
:11:28. > :11:32.yourself left us. The eurozone crisis didn't start this year. The
:11:32. > :11:35.crisis started in Greece well back at the beginning of 2010. In fact,
:11:36. > :11:40.under the last Labour Government. This has been a very, very slow
:11:40. > :11:43.build up in the eurozone. Is that their fault too? No, it is building
:11:44. > :11:47.up for a year-and-a-half, you can't just say the eurozone is going
:11:47. > :11:50.wrong on our watch. This has been building up for a couple of years
:11:50. > :11:54.in the eurozone. We have had to inherit the consequences of it.
:11:54. > :12:01.What you are going to hear tomorrow, we will try to accelerate growth,
:12:01. > :12:06.spending on infrastructure, and help for motorists and rail
:12:06. > :12:10.commuters. We're hearing �5 billion on infrastructure in the course of
:12:10. > :12:13.this parliament? That is going to bring in �20 billion of private
:12:13. > :12:16.investment as well through getting the pension funds involved for the
:12:16. > :12:20.first time in this country, getting them investing. Have you guarantee
:12:20. > :12:23.from the pension funds of the Chinese and others? No, the point
:12:23. > :12:26.is to bring in the British pension fund, it has not been done before.
:12:26. > :12:31.You have done that before? We have signed a guarantee with the pension
:12:31. > :12:36.funds to get the money in there. Guaranteed is it? The �5 billion
:12:36. > :12:40.will lock in another �20 billion on top. Guaranteed? It is an agreement
:12:40. > :12:44.to do it. You know it is not a guarantee in terms of fixed
:12:44. > :12:48.commitments because there are projects and pricing of projects,
:12:48. > :12:51.toll agreements payment agreements, there is an agreement in principle
:12:51. > :12:55.to look favourably, there isn't a guarantee. You don't think it is a
:12:55. > :13:03.good thing? It is a good thing. Suppose it is �5 billion over the
:13:03. > :13:10.rest of the parliament? It is �30, �5 now, and �5 in the next and �20
:13:10. > :13:18.of private. We are spending much more, but it is �5 billion to start
:13:18. > :13:22.with. Spread over four years? an accelerated spinding. --
:13:22. > :13:25.Spending. How many people are going to go out. The Government cut
:13:25. > :13:29.spending by �50 billion earlier this year. How many people will go
:13:29. > :13:34.out and spend money on extra mince pies or whatever it is, because
:13:34. > :13:39.they have heard the A14 will be widened? If you use the A14 as a
:13:39. > :13:44.business, you certainly need it widened f you want that road to
:13:44. > :13:48.Norwich dualed, you will be cheering at the news today. There
:13:48. > :13:52.are agreements not just for roads, but rail, and more school building.
:13:52. > :13:56.Why are you shaking your head? is improving our infrastructure,
:13:56. > :14:00.isn't that important. Improving infrastructure is something we
:14:00. > :14:04.agree about, we have been arguing in favour of for over 12 months. As
:14:04. > :14:08.Jeremy said, it took you a long time to finally realise you need to
:14:08. > :14:13.do something about it, and reverse the massive cuts that you announced
:14:13. > :14:16.in the last budget. You reduced Government capital expenditure by
:14:16. > :14:20.�50 billion. This �5 billion that you will spend over the remainder
:14:20. > :14:24.of the parliament, is less than the cuts you have already introduced in
:14:24. > :14:28.the current year. Which is similar to the cuts you would have had to
:14:28. > :14:31.make? Jeremy, we have had lots of good news leaked over the last
:14:31. > :14:35.three or four days, tomorrow we will get the hard news about how
:14:35. > :14:43.grim the economic outlook is. Sounds if you are relishing it?
:14:43. > :14:46.at all. Very much I am in despair the Government is doing nothing
:14:46. > :14:50.about it. You think we are going to have a recession? Yes, the major
:14:50. > :14:53.parts of the country is already in the recession. It is the south-east
:14:53. > :14:58.that is buoyant. The remainder of the country has been in recession
:14:58. > :15:01.for at least three months, probably six. You were already planning to
:15:01. > :15:07.cut capital expenditure, that was in Alistair Darling's budget, but
:15:07. > :15:15.the fact is we are spending over 50% of GDP, only the second time
:15:15. > :15:17.since the war have we done that. You are in charge now That is why
:15:17. > :15:21.we have to bring spending under control. It is only because it is
:15:21. > :15:26.under control we are able to bring forward some good spending on the
:15:26. > :15:29.infrastructure and to help motorists and rail users. Continue
:15:29. > :15:33.this outside. Beneath everything else the rot undermining our
:15:33. > :15:37.economy is all about our collective and individual habit of living on
:15:37. > :15:40.tick. In turn, that is about the fact in the last several decades we
:15:40. > :15:43.have allowed and encourage things we used to make here to be
:15:43. > :15:47.manufactured abroad. David Cameron promised he would rebalance the
:15:47. > :15:52.economy, so that more of our income came again from making things. So,
:15:52. > :15:55.economics editor, how is he doing? We don't know. Hopefully the OBR
:15:55. > :16:02.tomorrow, their projections will tell us. We know what their plan
:16:02. > :16:05.was. The plan was in years time, that whole -- hole in growth, left
:16:05. > :16:10.by reducing state spending, would be completely replaced by exports.
:16:10. > :16:14.Britain has been a net importer for the last decade, really going into
:16:14. > :16:17.exPortland. We would also be a much more heavily focused manufacturing
:16:17. > :16:21.and business investment economy. The whole shape of the economy was
:16:21. > :16:23.supposed to change. I have decided to go to the North West, which is
:16:23. > :16:27.still our biggest manufacturing base and see what they are already
:16:27. > :16:31.doing, what you could do, and what it would take to really change the
:16:31. > :16:41.shape of that economy, so that ultimately you flip the UK towards
:16:41. > :16:48.where the coalition wants it to be. The old drivers of growth are over.
:16:48. > :16:58.The economy has to reBelfast. -- reBelfast.
:16:58. > :17:09.
:17:09. > :17:13.Reindustrialised, boost growth, but it is easier said than done. The
:17:13. > :17:15.north-east is the biggest manufacturing sector in England,
:17:15. > :17:21.scattered with industries that have failed. But running through the
:17:21. > :17:25.middle of it, a giant clue about how to kick start industrial growth.
:17:25. > :17:34.The Bridgwater canal, built by an Earl, 250 years ago, when there was
:17:34. > :17:37.nothing else here. When he built this canal, Bridgwater unleashed a
:17:37. > :17:42.complex process of industrialisation. Here, where a
:17:42. > :17:48.brook runs underneath it, he built an early cotton mill, I'm standing
:17:48. > :17:52.on the ruins of it. Even in the 20th century it made sense to build
:17:52. > :17:57.a newer, bigger factory where the skills and expertise already
:17:57. > :18:07.existed. How would you do that now? What is
:18:07. > :18:09.
:18:09. > :18:15.the equivalent of the canal today? What is the new cotton.
:18:15. > :18:19.Fraf even if is a single layer -- graphene is a single layer of
:18:19. > :18:24.graphite, it is more productive than copper, thermal properties
:18:24. > :18:33.that exceed any other material we know about. At Manchester
:18:33. > :18:42.University, they won a nobody bell prize for their work on graphene.
:18:42. > :18:46.In this job the lab is doing is to commercialise it. The Government
:18:47. > :18:55.has thrown �50 million of it. Following the noble prize interest
:18:55. > :18:58.we got lots of interest through the press. It wasn't until the
:18:58. > :19:03.Government made the announcement that we saucerous interest for
:19:03. > :19:06.established companies to work for us. Companies then said this stuff
:19:06. > :19:10.here, now we know the British Government likes it, we like it
:19:11. > :19:15.too? It is a compelling case, and you know, having that message from
:19:15. > :19:19.central Government was very persuasive in their mind for co--
:19:19. > :19:24.locating here with us, and sharing the responsibility. So graphene
:19:24. > :19:29.proves two things. One, Brits are still very good at geeky science,
:19:29. > :19:33.two, picking winners, Government- backing for individual companies,
:19:33. > :19:39.technologies and sectors is back. The problem is, everybody else in
:19:39. > :19:43.the world is doing it. Graphene alone won't turn around the North
:19:43. > :19:46.West's economy, or Britain's, any time soon.
:19:46. > :19:50.The decline of manufacturing has left its mark. Here in the North
:19:50. > :19:56.West, and in much of the country outside London, low paid jobs, low
:19:56. > :20:00.GDP per head, fractured communities. Some think eventhough we want to
:20:00. > :20:06.leave this old model behind, it is going to be hard.
:20:06. > :20:10.Britain has a serious structural problem. The structural problems
:20:10. > :20:15.put simply, is we have retreated from tradable goods and
:20:16. > :20:21.manufacturing, and lost 4.5 million jobs. Good jobs in manufacturing.
:20:21. > :20:24.And piled up a huge trade deficit that sucks demand out of the
:20:24. > :20:29.economy. This school of economists, based
:20:29. > :20:32.here at Manchester University, wants Government to move towards
:20:32. > :20:40.highly-targeted support for individual economic sectors.
:20:40. > :20:44.short answer is there isn't one technically correct quick-fix. I
:20:44. > :20:49.think instead you have to think of the long, slow slog of building the
:20:49. > :20:55.sectors, which have been run down in the last 30 years, and building
:20:55. > :20:58.the networks and clusters of activity, instead of worshiping
:20:58. > :21:03.generic enterprise and individual firms as successive Governments
:21:03. > :21:08.have. This is what it looks like when it
:21:08. > :21:15.works. Eden Biodesign, in Liverpool, started with �50,000 ten years ago,
:21:15. > :21:18.now it is a multimillion pound business, with a work force of 125.
:21:18. > :21:22.They research and make biomedicines, they have seen Government
:21:22. > :21:25.initiatives come and go. Most recently Government funding for
:21:25. > :21:29.their biotech cluster group has gone. Where there are good strong
:21:29. > :21:33.clusters, it is focusing, and supporting and consistency of
:21:33. > :21:40.funding rather than a slug of capital, a banner headline and then
:21:40. > :21:50.a disapassion of that activity. Con-- dispassion of that activity.
:21:50. > :21:54.Consistency is very important. that happened in the past? Clearly,
:21:54. > :22:00.there was Government funding that enabled the cluster to grow in the
:22:00. > :22:04.south west. The Koreans would throw huge amounts of money at it? Yes,
:22:04. > :22:09.we don't. Eden represents another British problem, access to capital,
:22:09. > :22:13.they were recently acquired by US drug giant, Watson, but the venture
:22:13. > :22:18.capital to grow the firm also came from America. British investors at
:22:18. > :22:22.the time, recoiled from the word "manufacturing". The longer you
:22:22. > :22:25.talk to the bosses who could deliver the rebalancing the
:22:25. > :22:29.Government wants, the more you realise nothing they want is rocket
:22:29. > :22:34.science, they want more consistency, tax breaks to compete with other
:22:34. > :22:37.countries, less short-termism. It seems to me, it is people, at
:22:38. > :22:41.Manchester University they are trying to be a world centre of
:22:41. > :22:45.advanced research, and applied science. But, brain power can go
:22:45. > :22:49.anywhere in the world it wants to. And the problem in Britain is,
:22:49. > :22:54.incredibly, given the unemployment rate, we are actually short of the
:22:54. > :22:58.skills we need. We have actually got a massive skills shortage at
:22:58. > :23:04.the moment. We are probably short of about 200 engineers across the
:23:04. > :23:12.company, across the UK. Probably 100 of those in the North West.
:23:12. > :23:16.Morris, on the banks of the machine -- Morson, they design nuclear
:23:16. > :23:19.reactors and other things, they stress test them virtually, right
:23:19. > :23:24.down to the individual screw. The company is successful and growing,
:23:24. > :23:28.they want Government to do what other countries do, put tax-payers'
:23:28. > :23:34.money into high-skilled training. We see a lot of graduates every day,
:23:34. > :23:39.working in taxies, and shops, they have engineering degrees. And yet
:23:39. > :23:45.we have skills shortages. We have several partners in Europe and
:23:45. > :23:50.Germany, France and Spain. I see quite a different approach from
:23:50. > :23:56.their Governments. In terms of supporting graduate raining, and
:23:56. > :24:02.actual funding of training. So the Governments will pay to bridge that
:24:02. > :24:05.gap between college and the work place? Yes. Whether it is on skills,
:24:05. > :24:11.investment or research, rebalancing Britain all comes down to whether
:24:11. > :24:13.the state can find a new role. It is worth rembering, this, the
:24:13. > :24:18.first-ever piece of industrial infrastructure, was built, by act
:24:18. > :24:22.of parliament, and never made a profit.
:24:22. > :24:25.When it comes to reindustrialising Britain, a lot will depend on what
:24:25. > :24:29.happens in the rest of the world. Because, when they built this,
:24:29. > :24:34.Britain was the dominant power. We could do what we liked. By the time
:24:34. > :24:39.they built the factory behind me, in the Edwardian period, it was
:24:39. > :24:46.already a world of cut-throat competition between states. As this
:24:46. > :24:49.crisis drags on, it is again. 200 years ago the canals of
:24:49. > :24:52.Lancashire pointed British manufactured goods, like a guided
:24:52. > :25:00.weapon into the world economy. Today, again, there is huge
:25:00. > :25:05.investment going in, to the mercy and to the ship canal -- Mersey and
:25:05. > :25:10.the ship canal. The canals date back to the Industrial Revolution,
:25:10. > :25:14.we are taking the old assets and modernising them and making them
:25:14. > :25:19.applicable to the modern economy. We are aim to go spend �500 million
:25:19. > :25:27.over the next few years, creating a new river terminal in the river
:25:27. > :25:30.Mersey, and creating mu -- new buildings down the canal banks.
:25:30. > :25:34.Itly allow us to be more efficient into the northern half of the
:25:34. > :25:40.country. It creates thousands of new jobs, that will kick start the
:25:40. > :25:44.economy. But the fact remains, if things stay the way they are,
:25:44. > :25:48.Liverpool's Newport facilities will see more imports an exports. The
:25:48. > :25:51.true measure of success will be to reverse the flow of trade. That is
:25:51. > :25:55.not just an idle dream. Virtually the whole of the Government's
:25:55. > :26:00.growth and budget plans rest on reindustrialising Britain.
:26:00. > :26:06.What to look for now is if anybody in politics has a practical clue of
:26:06. > :26:10.how it will be achieved. Britain isn't, of course, the only
:26:10. > :26:14.country to have a hole where it ought to have a budget. Pre-
:26:14. > :26:21.eminently there is the world's one remaining superpower. The military,
:26:21. > :26:25.which enables America to stride the world like a kollos SAS, faces huge
:26:25. > :26:28.cuts in its budget, which, if extended, the US Defence Secretary
:26:28. > :26:34.said could turn the country into a paper tiger. Could this be the
:26:34. > :26:37.beginning of the end of an unprecedented global dominance. I
:26:37. > :26:47.will be talking to the new chairman of the Joint Chiefs of Staff, the
:26:47. > :26:49.
:26:49. > :26:55.most powerful military man in the world. First we have this. It is an
:26:55. > :26:58.unenviable job, tackling wars, while a country takes an axe to its
:26:58. > :27:02.military budget. Since September, General Martin Dempsey, has had the
:27:03. > :27:09.top US forces job. A globe-trotting mission, thwarting enemies, and
:27:09. > :27:14.trying not to let down friends. But his prese dessor, rather unhelpful
:27:14. > :27:17.-- predecessor, rather unhelpfully said, America's budget deficit is
:27:17. > :27:20.America's biggest threat, that hardly helps the new man protect
:27:20. > :27:23.his money. Whether or not he was right, the problem with the
:27:23. > :27:27.formation from the defence department's point of view, the
:27:27. > :27:31.only thing the defence department can do to address that threat is to
:27:31. > :27:35.cut its own budget. That happened and now General Dempsey is saying
:27:35. > :27:40.we can't afford to cut it any further, without imposing other
:27:40. > :27:45.national security problems on ourselves. We are now cutting into
:27:45. > :27:53.bone, and muscle. We are having to make tough choices about America's
:27:53. > :27:58.role in the world. The Pentagon spends $700 billion
:27:58. > :28:02.per year, and is already facing $400 billion in cuts over the next
:28:02. > :28:05.eight years. The federal budget crisis means the team sent to run
:28:05. > :28:09.the military this summer is now being threatened with the same
:28:09. > :28:17.again, or even more, prompting the Defence Secretary to raise the
:28:17. > :28:22.specter of a hollow military. a ship without sailors, it is a
:28:22. > :28:28.brigade without bullets, it is an air wing without enough trained
:28:28. > :28:32.pilots. It is a paper tiger. press has started in August of
:28:32. > :28:35.10...This New threat to the Pentagon arises because of the
:28:35. > :28:39.gridlock in Congress over the budget deficit. Many Republicans
:28:39. > :28:44.say the military must be sparred, and Democrats, that they must share
:28:44. > :28:48.the pain. But the point is, that the consensus that funded President
:28:49. > :28:54.Bush's wars has gone, and threats to defence spending are now part of
:28:54. > :29:00.the negotiating process. We have a good chance of actually getting the
:29:00. > :29:04.big package, the big definite reduction in 2012, for two or three
:29:04. > :29:13.reasons. First, the knives that I mentioned that were over our heads,
:29:13. > :29:17.the Bush tax cuts expire in 2013, sequestation goes into effect then.
:29:17. > :29:21.As we get closer and closer the pressure on both parties to come
:29:21. > :29:25.together in the middle, provided we don't remove one of those knives,
:29:25. > :29:29.like taking defence off the table, is going to be stronger and
:29:29. > :29:34.stronger. So, if the bugetry pressures are
:29:34. > :29:38.intense, what about their consequences in the wider world. In
:29:38. > :29:44.Iraq, the imminent final US withdrawal has been blamed, in part,
:29:44. > :29:50.by some critics, on a desire to trade security for money. Meanwhile,
:29:50. > :29:54.in Afghanistan and Pakistan, plans to accelerate the drawdown there
:29:54. > :29:57.have increased tensions with local politicians, who were playing to
:29:57. > :30:03.anti-American public opinion. When there is a mistake, on the
:30:03. > :30:11.scale of Saturday's bombing of a Pakistani border post, killing 24
:30:11. > :30:16.of their soldiers, the damage to US interests is even greater.
:30:16. > :30:22.Not only I, the whole nation condemns it. Whatever has happened,
:30:22. > :30:27.we don't and never expected it would happen. While Pakistan has
:30:27. > :30:31.cut NATO supplies, and co-operation, before, and then quietly reversed
:30:31. > :30:35.the decision, some in the Pentagon are coming to the conclusion that
:30:35. > :30:39.they and President Karzai's gofpl, want to make America's --
:30:39. > :30:47.Government, want to make America's exit as undignified as possible.
:30:47. > :30:52.The US remains the world's most mill tearly powerful nation by a --
:30:52. > :30:58.militarily powerful nation by a long way. It is thought that a
:30:58. > :31:02.country like Iran might underestimate America's weakness or
:31:02. > :31:08.unwillingness to intervene. Hallmark of the last 20 years the
:31:08. > :31:13.US military capacity to inject a sizeable UK force anywhere in the
:31:13. > :31:17.globe. If we implement the cuts being contemplated, that capacity
:31:17. > :31:21.would be put in jeopardy. That has a profound effect on American grand
:31:21. > :31:27.strategy. We wouldn't be able to afford the grand strategy that we
:31:27. > :31:36.have had for the last two decades. The US remains the world's most
:31:36. > :31:42.militarily powerful nation by a long Martin. The financial crash
:31:42. > :31:46.and cuts provide dangers, that Iran might underestimate America's
:31:46. > :31:51.weakness or unwillingness to intervene. The top serviceman took
:31:51. > :31:55.time at a flux, the scale of cuts that will emerge from congressional
:31:55. > :31:59.budget arrangements isn't clear. The salient thing is the post-9/11
:31:59. > :32:05.consensus about funding the military is over, and America's
:32:05. > :32:07.politicians are no longer in step. I spoke to General Martin Dempsey,
:32:07. > :32:10.chairman of the Joint Chiefs of Staff, down at the Ministry of
:32:10. > :32:15.Defence here in London, earlier this evening.
:32:15. > :32:19.What has it been like to take over the military at a time when it is
:32:19. > :32:24.in decline? I'm not in decline. We are not in decline. You know.
:32:24. > :32:29.big was the army when you joined it? Yeah. It is a lot smaller now
:32:29. > :32:32.than it was? You know the incline or decline is not a function of
:32:32. > :32:40.size but capability. I would suggest to you that over the last
:32:40. > :32:45.ten years we have learned a lot. We have adapted our formations. We
:32:45. > :32:49.tend to faced a verse rees that don't mass against us but decentral
:32:49. > :32:55.-- adversaries that don't mass against us but decentralise, we
:32:55. > :32:59.have had to adapt. When it is said the security of your country is in
:32:59. > :33:04.peril because of budget cuts, they are wrong? They are correct. But
:33:04. > :33:09.they have also said the initial budget cut of $450 billion plus,
:33:09. > :33:13.they have used the phrase "hard but managable", even before I became
:33:13. > :33:16.chairman they said that. I agree with that characterisation.
:33:16. > :33:21.Anything more will not be managable? It will be harder and
:33:21. > :33:25.reach the point of becoming unmanagable. Could you fight two
:33:25. > :33:29.wars simultaneously? We can, we will never be a military that can
:33:29. > :33:35.only do one thing at a time. Despite the fact that your army
:33:35. > :33:44.will be smaller than it has been since 1940, the Navy will be the
:33:44. > :33:47.smallest it has been since 1914. You are reading the language of
:33:47. > :33:51.sequestation. I'm reading the language of Leon Panetta? He's
:33:51. > :33:56.using that language and finding the job over the next five years.
:33:56. > :33:59.we talk about Pakistan, how long could the mission in Afghanistan
:33:59. > :34:04.continue if the Pakistanies shut the supply routes through their
:34:04. > :34:09.country? The Pakistani decision, made, first let me say, since you
:34:09. > :34:15.brought up Pakistan. I really would like to explain that this is just a
:34:15. > :34:19.tragedy for all of us. In particular a tragedy for the 4
:34:19. > :34:23.Pakistani soldiers their families. My -- 24 Pakistani soldiers and
:34:23. > :34:27.their families. My immediate reaction was to pick up the phone
:34:28. > :34:32.for their phone, a man I have known for 24 years. This will make it
:34:32. > :34:37.difficult, we will find a way to sustain our effort in Afghanistan,
:34:37. > :34:41.even if the Pakistanis make the unfortunate decision of closing the
:34:41. > :34:45.locks. This sort of action, in which you say, two dozen Pakistani
:34:45. > :34:52.soldiers lost Tony Blair lives. Is that the consequence of ignorance
:34:52. > :34:59.or ineptness? Well, I chuckle because that is a pretty stark
:34:59. > :35:03.choice. It is, it is one or the other? I wouldn't say so. Ineptness
:35:03. > :35:08.and incompetence. Irregular nor rapbs? You could see incompetence,
:35:08. > :35:12.they would be synonymous. You have been to Afghanistan and walked the
:35:12. > :35:20.hills. You know that although we have become extraordinary as a
:35:20. > :35:25.military, as being precise and accomplishes, and get the outcome
:35:25. > :35:29.we seek. This is still warfare, it breeds fog and friction and
:35:29. > :35:32.complexity. I don't know what happened in the hills of the
:35:32. > :35:35.province on the border between Afghanistan and Pakistan. We will
:35:35. > :35:42.find out. Looking at the broader picture in Afghanistan, do you
:35:42. > :35:52.think it was a tactical mistake to put 2014 as a finish date?
:35:52. > :35:53.
:35:53. > :36:00.increased the risk. But there is a school of report that if you put a
:36:00. > :36:05.timeline in place your enemies wait it out. My personal military
:36:05. > :36:09.judgment is there have been times in my career where a milestone has
:36:09. > :36:15.pulled me along. Done correctly, that is what we are trying to do,
:36:15. > :36:19.is the milestone has that effect. It pulls us along, focuses our
:36:19. > :36:24.energise and transition, and deliver the outcome we promised as
:36:24. > :36:31.an alliance at Lisbon. The Taliban won't be defeated by 2014? I think
:36:31. > :36:37.they can be defeated. Militarily the word "defeat" means you render
:36:37. > :36:40.incapable the enemy of impoetsing itself. We would say over--
:36:40. > :36:42.imposing itself. We would say overthrowing the Government of
:36:42. > :36:46.Pakistan would be that. They will never be destroyed, which means
:36:46. > :36:50.they will never go away. The Taliban are part of the fabric of
:36:50. > :36:55.that part of the world and will have to be dealt with. They will
:36:55. > :36:58.still be there in 2014? Sure, those that are he can consielable, could
:36:58. > :37:04.be reconciled, those not, could be the enemies of the Afghan state,
:37:04. > :37:09.they will be in support of the Afghans to do that. Can we ask
:37:09. > :37:18.briefly about Iran, if Iran were to have deployable nuclear weapons,
:37:18. > :37:22.how serious a matter would that be? We have said we wouldn't allow Iran
:37:23. > :37:26.to be a nuclear power. If you were tasked to destroy nuclear
:37:26. > :37:33.capability that Iran might possess or be on the brink of po tesing,
:37:33. > :37:38.could you do that? I won't speak -- Possessing, could you do that?
:37:38. > :37:41.won't speak about our capability. Our policy is economics and
:37:41. > :37:45.diplomacy. We have conscious low stated we won't take military
:37:45. > :37:52.options off the table either. Implicit in that is the belief you
:37:52. > :37:56.could do it if you had to? As we are asked what options we can
:37:56. > :38:00.provide to our authorities, we, of course, lay those out, both in
:38:00. > :38:03.terms of their capability and the risk associated with them. I'm not
:38:03. > :38:08.prepared to talk about that publicly.
:38:08. > :38:11.General,thank you. A very large number of Egyptians
:38:11. > :38:17.tund out today at the start of elections there. -- turned out
:38:17. > :38:20.today at the start of elections there. It is a fiendishly
:38:20. > :38:27.complicated system that would baffle voters in our system. They
:38:27. > :38:33.turned out in lines a mile long. Amid the queues and hopefulness and
:38:33. > :38:39.inked fingers, much remains unresolved, and much of whether the
:38:39. > :38:46.military will ever give up power. Revolutions don't always move fast.
:38:46. > :38:50.Today at this women-only polling station in south Cairo, as at
:38:50. > :38:54.others across Egypt, they shuffled towards democracy. A two-hour wait
:38:54. > :38:58.to vote here. Most found it thrilling. I feel so excited about
:38:58. > :39:02.it, it is my first time to go for elections. For the first time we
:39:02. > :39:06.have to choose someone who will represent our choice in the
:39:06. > :39:10.parliaments, and I think that is very important. Before that we
:39:10. > :39:16.didn't have any choice for anything. I'm shocked that we can do, and
:39:17. > :39:23.think like that. I didn't expect it. Not in a thousand years.
:39:23. > :39:30.I didn't expect to go an election in my lifetime. Some people say
:39:30. > :39:37.these elections will make no difference? OK. It won't make any
:39:37. > :39:42.difference. But it changed me. It changed me.
:39:42. > :39:46.I can feel it, down deep in me. Me I am changed.
:39:46. > :39:50.Last week these elections were overshadowed by the violence on
:39:50. > :39:56.Tahrir Square. And worries about the continuing role of the army in
:39:56. > :40:00.politics. But now the days Day has come, it is the sheer exhileration
:40:00. > :40:06.of voting that counts most for many Egyptians, they Israel yois as the
:40:06. > :40:14.future of their country is decide - - realise that as the future of
:40:14. > :40:18.their country is decided there is plenty to play for. 150 candidates
:40:18. > :40:22.in this multimember constituency to be elected according to a
:40:22. > :40:26.bewilderingly complex system. It has been made deliberately complex,
:40:26. > :40:30.by Egypt's ruling generals, who won't want voters to give a clear
:40:30. > :40:34.answer, and intend, many believe, to stay in charge, despite this
:40:34. > :40:38.year's revolution. TRANSLATION: It is great to have
:40:38. > :40:41.elections. But they say no matter what weather we vote or not, the
:40:41. > :40:45.parliament won't form the Government, or control it. The
:40:45. > :40:49.Military Council said that. So what use is voting? We don't want a
:40:49. > :40:55.parliament like in Mubarak's time. But hire, away from Tahrir Square,
:40:55. > :40:58.the -- here, away from Tahrir Square, the military has its
:40:58. > :41:03.defenders too? TRANSLATION: We need the army to control the situation,
:41:03. > :41:07.who else can run Egypt but the army. If they can hand over power to the
:41:07. > :41:11.civilian Government in a peaceful way, the army will go back to the
:41:11. > :41:14.barracks. Even this stalwart of the square, standing as an independent
:41:14. > :41:19.on the revolutionary credentials, is happy for the vote to go ahead.
:41:19. > :41:23.While the army is still in power. Isn't that a bit of a climb-down?
:41:23. > :41:27.We need to put pressure on the Military Council from parliament
:41:27. > :41:32.and the electorate at the same time. We have to pursue all and every
:41:32. > :41:37.option. Auk med has a problem, in a -- Ahmed has a problem, in a
:41:37. > :41:46.country where a third of candidate's are illiterate, each
:41:46. > :41:51.candidate has a symbol, a camera, a bank, but Ahmed's logo has been
:41:51. > :41:56.messed up on the ballot paper. People think mine is a bus not a
:41:56. > :42:02.microbus. It says "one of the people from Tahrir Square". Funnily
:42:02. > :42:05.enough when I met him at the start of his campaign, he was also having
:42:05. > :42:11.problems. Ernest revolutionaries like him are power on the square
:42:11. > :42:16.but not the street. I had some of my banners here, you can see it was
:42:16. > :42:21.taiched to the banners, it was ripped off. -- attached to the
:42:21. > :42:27.banners, it was ripped off. I posted 20 seven metre banners
:42:27. > :42:31.yesterday, only five remain. They were shredded by another contestant
:42:32. > :42:35.or another competitor shreds them. But this time they have completely
:42:35. > :42:40.disappeared, it is very strange. It didn't take 24 hours. The police
:42:40. > :42:47.weren't very interested. Ahmed was already at a disadvantage. With not
:42:47. > :42:54.much more than �10,000 to spend on his whole campaign.
:42:54. > :43:01.This is another candidate with plenty of cash has been going down
:43:01. > :43:06.the back constituency lanes. This is an oil tycoon that used to
:43:06. > :43:10.belong to Mubarak's banned party. Consequently, his symbol is the
:43:10. > :43:16.tank. To revolutionaries he's a dangerous remnant of the old regime.
:43:16. > :43:24.He has done a lot to help poor people like these, even in
:43:24. > :43:28.revolutionary times they can't live by principle alone. TRANSLATION: Be
:43:28. > :43:34.I want someone who help us where they k I want someone to mend
:43:34. > :43:38.things and provide food. I would vote for this.
:43:38. > :43:42.TRANSLATION: There are no sewers in this area, eventhough we have been
:43:42. > :43:47.living here for 14 years. A contractor came to put them in, he
:43:47. > :43:51.took the money and left. Nobody does anything about it now.
:43:51. > :43:56.Before I leave this constituency, I wanted to meet a young man called
:43:56. > :44:04.Ali, whom I last saw in January. At the funeral of a friend of his.
:44:04. > :44:08.Shot by police in the revolution. The dead of the 17-year-old and
:44:08. > :44:15.main others helped bring Egypt to today's historic elections. What
:44:15. > :44:19.did it bring his own family, or the struggling neighbourhood.
:44:19. > :44:22.TRANSLATION: Since the revolution, nothing has changed. There has been
:44:22. > :44:25.no compensation for the martyrs, we are hoping after the elections they
:44:25. > :44:32.will do something about it. Everything is the same as before,
:44:32. > :44:37.except for one thing, unemployment has got even worse.
:44:37. > :44:41.These people want subjectings now citizens, -- once subjects now
:44:41. > :44:48.citizens, know the first few months of the parliament they are electing
:44:48. > :44:53.will be dominated with rouse over the constitutions, the army versus
:44:53. > :44:57.civilians, civilians versus the secular.
:44:57. > :45:07.It won't bring more daily bread, that is what most thought they were
:45:07. > :45:26.
:45:27. > :45:33.That's all tonight. The death was announced today of the film
:45:33. > :45:41.director, Ken Russell, the one-time enfrant terrible was 84. We folk --
:45:41. > :45:46.enfant terrible, was 84, we spoke to Martin Scorsese today. Having
:45:46. > :45:50.seen Women In Love and The Devils, and the production design is strong
:45:50. > :45:55.stuff. He wasn't afraid of anything. He said what he had to say and did
:45:55. > :46:03.it. But, what I really felt really should be seen again, particularly
:46:03. > :46:12.in America, are the black and white films he made at the BBC.
:46:12. > :46:17.Omnibus, Dealius? Yes and Sabalius and the other one on Isodora Duncan.
:46:17. > :46:23.They were amazing and revelations. Who are we to disagree with Martin
:46:23. > :46:27.Scorsese. I want you to write down a new opening to our our people, I
:46:27. > :46:32.don't like that title, call it Song Of Summer. I want you to imagine we
:46:32. > :46:35.are sitting on the cliffs in the heather looking out over the sea.
:46:35. > :46:41.The sustained chord in the high strings suggests the clear sky and
:46:41. > :46:48.the stillness and calmness of the scene. Now then, seven four in a
:46:48. > :46:58.bar, four plus three, divided strings, chord of D major, A, D, F
:46:58. > :46:59.
:46:59. > :47:04.sharp, the lowest note the A strings on the violass.
:47:04. > :47:06.-- violas. Heavy rain and squally winds
:47:06. > :47:09.driving across the country. Amber driving across the country. Amber
:47:09. > :47:12.warning from the Met Office. It dries up in the morning, across
:47:12. > :47:16.Northern Ireland. Wet weather sweeping into England and Wales, it
:47:16. > :47:22.doesn't reach the eastern side of England until late in the day.
:47:22. > :47:27.Heavy rain arriving on to the Pennines by 3.00pm. Largely dry.
:47:27. > :47:31.Windy, the strongest winds with the rain. They will be heavy and
:47:31. > :47:39.squally too. The winds dying down eventually across the south west of
:47:39. > :47:42.England and Wales. As the more persistent rain clears it may turn
:47:42. > :47:46.wintry in Snowdonia. A wet start in Northern Ireland, but clearing
:47:46. > :47:51.later on in the morning, sunshine in the afternoon, but showers. It
:47:51. > :47:56.doesn't half feel qolder and colder in Scotland as well -- colder and
:47:56. > :48:00.colder in Scotland as well. It will be a very wet morning across
:48:00. > :48:06.Scotland and Northern Ireland. We will see showers gathering here
:48:06. > :48:10.again on Wednesday. Further south, the band of rain sweeping eastwards
:48:10. > :48:14.during Tuesday, squally rain, heavy rain, potentially damaging and