02/12/2011 Newsnight


Presenter Gavin Esler interviews the British Ambassador to Iran following this week's attacks on the Embassy in Tehran.

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Tonight, hard times, how might ten years of austerity change the face


of Britain. We have exclusive new research mapping whether where you


live will be hit hard or one of the towns best placed to withstand the


tough years ahead. Is the road to recover to be found in the


Chancellor's love of new infrastructure projects. Richard


Watson spends an interesting day on the A14. In my previous job I was


doing boardroom level presentations using power point, now I'm


delivering parcels, demeaning but an income. Will we pull together or


pull apart, a dismal decade or lasting reform. We will talk to the


author of Austerity Britain, and the Bishop of Durham.


Britain's ambassador to Iran, relives the moment when the embassy


was invaded. Diplomatic property ransacked and diplomatic ties


shattered. These are buildings of historic significance, not just for


Britain and the world, but Iranian history too. That doesn't seem to


have inhibited those who got into the building in vandalising the


portraits, tearing the portrait of Queen Vicoria, and cutting out the


head of Edward VII. Good evening, the mood from the


Bank of England, to the Treasury, to Ten Downing Street this week,


seemed to involve various novels from Mark Dixon, Bleak House, Hard


Times, but not as far as we know, Oliver Twist. We have had austerity


Britain before, despite ups and downs, not the sustained period of


economic misery this week's Autumn Statement forecast for as you you


will. We have been looking at a study exclusive to Newsnight, by


Experian, that reveals which areas will be hit hardest. How did they


find out which are the most vulnerable areas? They are looking


at the effect of the spending cuts and job cuts that flow from them.


This is the first analysis that has been done since the Autumn


Statement. It takes into account not only the austerity we already


knew about, but also the further austerity that came in with the


Autumn Statement. The big real term pay cut, and the 1% pay cap, twice


as many public sector workers nearly as we thought would lose


their job, 7 10,000 of them. It looks in England, looking at local


business, how they are doing, and also how vulnerable local people


are to a drop in income. Top, as you can see is red car and


Cleveland, second, Hartlepool and Middlesborough. Those three areas


are within ten tiles of each other. The pain is not very -- ten miles


of each other. The pain is not very If they are most vulnerable, there


are some areas less vulnerable? course they are, those aren't very


well spread either. If you look at They are the commuter belt.


Surrey, and St Albans, it also co- relates with the industries


involved. The most vulnerable industries at the moment, according


to Experian, are things like engineering and chemical, typically


concentrated in places like Teeside. Banking and shuerpbgs, in spite of


the crisis, not vulnerable, -- insurance, in spite of the crisis


not vulnerable, spread in the south of England. What about income


groups? In the next graphic we have a breakdown on how the effect of


austerity, how austerity will effect the different income groups.


It is not actually the poorest there who are affected worst.


Perhaps, partly because, for example, unemployment benefit is


going up by 5.2%, so are state pensions. Working Tax Credit. The


sorts of benefits that are relied on by the not quite the poorest,


but the next poorest, are being cut back. Obviously austerity will bite


there. Most of all, if you are working as a nurse, a teacher,


local Government worker or central Government, you are facing a real


terms pay cut. What this research really shows is if there is pain,


it is not very well spread. In fact, it is quite concentrated,


particularly in areas like Teeside. I'm joined by Ian Swales, the


Liberal Democrat MP for Redcar, the I can't remember considered, as we


have been talking about, as the most vulnerable to the years of


austerity ahead for all of us. How concerned are you to represent that


kind of area? I don't share the pessimism of this study. The


Government's determined to rebalance the economy towards the


manufacturing and the real economy, and we can already see in our area


the effects of that. I think the study is tending to rate sectors


like banking and insurance, and underrate the revival we will see


in manufacturing. The Government's determined to back that. No doubt.


If we came to Redcar, we would not recognise the study, we would see


the sunny uplands, we would not see an area most vulnerable to this, as


Experian says. You would not see the sunny upland, the area has real


problems, the Government recognises that, the Regional Growth Fun was


added to by a billion in the Autumn Statement this week. That helps


areas like Redcar. I have three enterprise zones in my constituency


alone. In this week's statement, they are now going to get 100%


capital allowances, because the Government's determined. This


Experian research was conducted after the Autumn Statement, it


doesn't seem as if the Autumn Statement has done anything at all,


except neglect kwhrief, for your constituents? It has done three


positive things, the Regional Growth Fun has been expanded, my


constituency has been doing very well out of that fund. There has


been help for energy-intensive industries. That is very important


to our area. Of course, as I said, enterprise zone, which are already


all over Teeside now, are getting 100% capital allowances, which will


enable people to invest. We can already see people investing, in


fact, it is interesting, just last night, a house builder came to


Redcar and said they were investing in the town because they could see


it bucking the trend and it could actually be an area of success. I


think the local picture is a bit different, partly because of the


backing from the Government. In an attempt to boost growth, the


Chancellor, George Osborne, this week, targeted various parts of the


country, with more Government spending on infrastructure projects,


things like roads and bridges. He talked about plans to improve the


A14 in East Anglia, is that the road to prosperity. We went to find


out. It has been very trickery over the


past four years, to keep myself fully employed. I have been


managing to do part-time work here and there, through agencies, and


I'm currently working as a courier. I'm probably, after my expenses,


I'm probably earning about �800 a month to clear. That's nowhere near


enough. 52-year-old former sales executive, Ian Miller, spends a lot


of time on the A14, delivering packages on a freelance basis.


Following redundancy, he's grateful for work. It is far from the days


of a salary man. I have never had this problem before. I have always


thought I would be in full-time employment. It is very difficult to


survive, really with food bills increasing all the time. The cost


of heating, of house, mortgage, every week we struggle. So the


Government has announced plans to spend millions here improving the


A14. But will this trickle down to affect the local economy. Britain


now faces at least two years of austerity. I spent the day around


here speaking to local people about their employment prospects.


The A14 corridor, Cambridge to Huntingdon and beyond, has been


identified by the Chancellor as a priority for investment. Part of a


Keynsian stab at the economy. Ian Miller lives bang in the middle in


the village of Swavesey. We accompanied him to his local car


wash, staffed up by eastern Europeans. There was no queue, the


owner said the 30-car-a-day business was in decline. I have


watched one car turn up, how is business? Business has gone down.


It is no good. There is no money, everybody no money, no money, no


money. People haven't the money to spend? No, nothing. Have you


noticed a big difference? Big, big difference this year, to last year.


A big difference. Employers say that freedom to hire


and fire is the key to surviving any downturn. These workers are


probably viewed as fully flexible. But one person's flexibility is


another's casualisation, and two years of austerity will further


rode the traditional view of employment. What do you think about


the political classes, if I can put it like that at the moment. Do they


offer any solutions to these problems? I can't see that at the


moment, no. Do you have any faith in any of the parts? -- parties? No,


I don't. They all team to be doing, singing from the same song sheet,


all the time. Nothing inspires me to think things will get better in


the short-term. Not everyone is suffering, though, those who can


squeeze the lemon harder stand to make cash. We ran into this man,


who specialises in equipment fitted to commercial vehicles, which


tracks employee performance. It is a good place to be at the moment.


Is that because business is keener to press down on costs? Absolutely,


operationally, fuel costs, vehicle insurance costs. I don't think if


you are able to prove that by spending money you can reduce money,


there is still good business to be done. Bonus? Absolutely, one that's


picking up the cost for a round the world trip that I'm embarking on


tomorrow morning for a month. Roughly how much? Just short of


�20,000. �20,000 in this tough economic time? It is one of the


businesses that doesn't seem to be adversely affected by the recession.


Back at Ian's village, we caught up with a family friend, who has


experienced redundancy himself. This skilled commercial welder and


former labour manager, mentors 700 apprentices and 450 until full-time


construction students. The A14 improvements will allow a new


housing development, which isn't too far from Cambridge to go ahead,


really to push this one on, it has been sitting in the back for about


four or five years now. The A14 will have that knock-on effect, get


this town or village started, employ local labour wrecks hope.


For many British workers, then, the immediate outNew Looks bleak, the


crucial question is -- the immediate outlook looks bleak. Or


will -- What will be the effect of years of austerity, how might is


reshape our lives. My guests are here to discuss this, we are joined


by the Bishop of Durham in our Newcastle studio. David how do you


think we will be affected and it might reshape our lives, facing


this austerity? I think we might be profoundly affected, our historical


parallel, both with the immediate post-car period, and the austerity


Britain period, more like the 1930s were like now, the shortage of


money, coming out a period of mass unemployment, I don't think we can


feed off historical experience for future projection. The nature of


British society has changed so fundamentally in the last half


century, I would be wary of that. One of the things that people look


at is to Greece and Italy and the failure of political elites and


lack of confidence in them, do you think that could happen here?


Probably not, no. I'm much more worried, frankly, about the


austerity that will be imposed by an unelected Government in Greece,


particularly, and in Italy as well, because there, the social


consequences seems to me to be really frighten. If you get real


social disruption, -- frightening, if you get real social disruption


and civil disorder because of that austerity, will the army suppress


it in the name of an unelected Government. You are getting into


dangerous territory. What about here, a Government of the left or


right, there was no, even in the 1930s, no appetite for the strong


man, they didn't do well? At least there is a sense here that the


political institutions have not been discredited, the democratic


process hasn't been lost, people may or may not have had their


confidence inspired by the Chancellor's list of road works


last week, but at least there is a sense that this is ameanable, it is


democratically accountable, you could, in theory, vote this


Government out, your confidence may not be inspire by the alternative


either. When it comes out of your reach as an electorate, that you


get the terrifying social consequences. From where you sit,


Bishop, do you see the possibility of unrest, or lack of social


cohesion, or a chance that we might reevaluate the last 20 or 30 years,


become less greedz greedy, less materialistic? That is only going


to happen if there is a real change of heart. The A14 is a long way


from here up in the north-east, your survey showed very clearly


this is the area that will be hit very much the hardest. I think the


trouble with austerity is that, what's a slight chill in Chelsea is


a pretty good Ice Age up here. There is a serious issue about


whether we act with solidarity and people working together or not. For


that to happen there has to be a very significant change of heart


and change of social attitudes. Also a reexamination of values.


much less sanguine than Janet, to be honest, about the necessary


future integrity of our democratic system and institutions, given the


disconnect we now have between people at large, and politics, and


the cynicism, and corrosive cynicism really. That was fine, as


it were, that was a healthy scepticism, if you like, when times


were good, when times get difficult? Where would that go, we


could turn off and be apathetic? Who knows n the 1930s, a terrible


shrufrp, mass unemployment, but social order -- slump, mass


unemployment, more social order was maintained, it was a cohesive


society, people knew their place and expectations were less. All


that has changed completely, plus we have this disconnect. Of course


it depends, wae simply don't know, and predictions haven't -- and we


simply don't know, predictions haven't been accurate, these


predictions may be the same way. don't necessarily have confidence


in the present governing class Oregan racial of politicians. I


have a lot of confidence that the - - Or generation of politicians. I


have a lot of confidence in the democratic process. You have no


danger of a populist ...What, populist what? Coup or movement.


Populisim is an inherent part of democracy, politicians competing


for votes in crass ways can be populisim, or responding to public


opinion, depending on your point of view. Let me bring in the bishop


again, you raise the prospect of whether we will effectively act as


a community or not, or we will be divided amongst ourselves, won't we


also, perhaps, look at some of the great institutions of the society


that we have built up since the war, the welfare state, the National


Health Service, and look at the lack of money, and maybe even those


things, which have almost been beyond criticism for many people,


will be looked at, and perhaps, suffer? The reality is, that it's


three years since the recession hit us, it is over three years, well


over three years now, we are effectively in a depression.


Economically, and in any classical definition. What we're seeing is


that these great institutions, which over the years, have served


us so well and continued it do so, with great dedication, simply are


struggling to find the capacity to do it in the future. That will mean


a lot more people taking part in the life of the community, in


looking to the common good. That's a very substantial change of


attitude. It sounds like the Big Society, doesn't it? Well, that I


really couldn't comment about, I think. The Big Society is something


that the church has known for a couple of hundred years at least.


OK, but moving beyond that, to this question of those great


institutions, we may find that Government is simply short of money


and has to be conservative, because they can't do things, they can't


afford it? I think it is possible there will be a re-thinking of the


welfare state, and of its functions and of its scope. I don't think


much will be inherently suspicion or antagonistic to the idea of the


welfare state or volunteerism, or the Big Society, as was so powerful


before the welfare state came along in the 1940s, complimenting each


other, I don't think that is necessary a problem. It came out of


austerity didn't it? Very much so. But, the fact is, that as we are


now structured, the welfare state has huge and own you are inous


responsibilities that are only -- ownerous responsibilities that are


increasing at the moment. It may be the Government may have to re-think


institutions. Welfare reform, the time has come, because it is


necessary to reform T I hope this Government, or whatever follows it


makes use of that opportunity, to think in a constructive way about


reforming it. The entitlement culture has pretty much reached the


point of no return. It will have to bring in volunteerism, we will have


to re-think the entire benefits question. You pointed out the


difference between Chelsea and the area where you are, that would be


even very differently, presumably where you sit? We mustn't talk


ourselves into a state of despair and sit like rabbits in the


headlights. There has to be a clear effort towards regeneration, that


covers areas like this. That's going to have to come from renewed


confidence in the corporate sector, which is the only one that has


significant funds at the moment. And also, by much greater


participation, and use of voluntary support, and the kind of Christian


commitment that comes from the church and from other bodies, which


has historically been one of the great underpinnings of our society,


and holds it together, is something that is becomes seen again as


essential. I think that's all true. One


dimension we haven't pointed out is the question of equity, equity of


pay and suffering, we are all in it together. At times it doesn't


really feel like that, and one can look at aspects of national life,


and some seem far more privileges than others. There have been


shocking figures recently to do with chief executive pay, the 49%


figure, the recent commission's findings over disparity in the last


30 years between normal pay and top pay. Some kind of action, I think,


needs to be taken, otherwise there will be resentment. I think that is


true, the action has to be taken on the part of people with personal


moral responsibility. It would be dangerous idea that the Government


should some how intervene in what individuals are paid, that would be


a dangerous road to go down. Britain's ambassador to Iran has


described to Newsnight the terrible moments when the embassy in Tehran


was invaded by a mob, personal effects were looted. Property


defaced or destroyed. The expulsions of Iranian diplomats,


that took place today, means relations which what is a pivitol


regional power, are at a low point. With me is the BBC Iranian


correspondent, now in London. First of all, remind us what happened?


Tuesday there were demonstration, demonstrators broke into two


different compounds in Tehran, the embassy, where the ambassador and


his staff were in a safe room, and the residential compound where non-


essential staff were sheltering. The protestors were from a


paramilitary volunteer force linked to Iran's Revolutionary Guard, that


reports directly to Iran's Supreme Leader. The feel anything Britain


is this was state-sponsored. What kicked it off? It was sparked in


the latest saga between the west and Iran's nuclear programme. In


November the IAA released a report into Iran's nuclear ambitions n


response Britain decided to cut ties with Iran's banks, that


angered Iran, Iran vote today downgrade ties with Britain. At the


same time an important anniversary was coming up, that of the


assassination of an important nuclear scientist in Iran, and they


say that Britain and Israel za did t they don't have diplomatic


relations with Israel, so anger focused on Britain. It is important


to point out where we are with the nuclear programme, Iran says it is


peaceful but continues to enrich uranium. It is a covert war going


on, a lot of mystery explosions, and talk of cyberwarfare. We


understand there was mazery explosion outside Tehran, 17


soldiers were killed, and one general, the founder of Iran's


missile programme, but the nature of a cyberwar, a covert war, is


nobody talks about it. But the British, in terms of this incident,


are convinced this was instigated by the regime, or they stood by


while it went on? Yes, one of the British points is what they saw at


their embassy, reflects the power struggle that is going on at the


moment in Iran, it is not between the Government and the opposition,


that happened in 2009, the defining conflict in 2011 is within the


conservative movement. On the one hand you have President Ahmadinejad,


he has the support of the working- class, he wants to get clerics out


of politics. On the other hand you have the Supreme Leader, he has the


clerics and the Revolutionary Guard. It was his people, Britain believes,


who went into that embassy. The ayo Tola doesn't travel, he hasn't left


Iran, Mahmoud Ahmadinejad likes to travel, the key point is this,


empty embassies suit the Ayotollay more.


The British ambassador has returned to the UK, and spoke to me at the


Foreign Office earlier. I asked him who was to blame? Iran is not the


sort of country where spontaneously a demonstration congregates and


attacks an embassy. That sort of thing only happens with the support


of the state. There were a number of reasons, with the benefit of


hindsight, it is very clear this was a state-supported activity. The


main organisation involved in holding the rally were the Basig h


students, they are a state organised but very widespread,


almost paramilitary force. They report to the IRGC, who report to


the Supreme Leader, so there is a chain of command that the students


fit into. That goes up to the top of the state. You took quite a lot


of pictures of the damage, immediately around you, you didn't


have much time, but you did photograph it. Perhaps you can


describe some of the things that were damaged. Some of it just looks


like vandalism? A lot of it was vandalism. I was very fortunate


that I was living in one of the great historic residences that the


British Government owns around the world. That doesn't seem to have


inhibited the people who got into the building in vandalising the


portraits, tearing the portraits of Queen Vicoria in two, and removing


the bottom half. Cutting out the head of Edward VII, removing the


picture of our present Queen, and doing willful damage to furniture


and writing graffiti on the walls and smashing up the room where is


they could. It felt like, you know, very spiteful, mindless vandalism.


It wasn't quite mindless. They also renofd anything electronic. --


removed anything electronic, mobile telephones, personal equipment,


computers, and anything that might give information about who you were


talking to, or what you were doing. They went after that very clearly.


Did it ever occur to you, that you might be taken hostage, as happened


to the Americans some 30 years ago? It would be untrue to say that


those thoughts don't go through your mind, of course, you hope


that's not going to happen. I would like to say something about the


northern compound. The experience of staff there was more difficult


than for us. The first aim is to get off the compound as quickly as


you can. Two of our staff managed that. But because the crowd came in


quickly, they blocked off the escape exits for the others. The


others of the staff went to their safe houses, and locked themselves


into what we call our "keeps" the idea is you stay safe for a limit


the amount of time, until the police can turn up and rescue you.


That doesn't work if the police have no intention of coming to


rescue you in the first place. One colleague had locked himself


properly in his keep, he had pressed a heavy safe against the


iron door, and a bed against the safe, and braced himself against


the bed, they came for him because they knew he was there. They are


banging on the doors, you can imagine, they are breaking the


windows and trying to bash the door in. He kept them out for 45 minutes,


at the end the door was broken around him, but the keep had done


his stuff. But there were no rescuers coming to help him. Do you


think you were, in a sense, collateral damage in a big power


struggle going on at the top of the regime? The invasion of the two


compounds was not unconnected with the resolution that was passed two


days earlier, to downgrade relations and expel me as the


ambassador. And the instigators of that resolution were the speaker of


the foreign affairs committee. Both those people have high ambitions,


as you know, one of the principals of the Islamic Revolution of Iran


is that you can do yourself a lot of good by bashing the Brits. They


both said after the resolution was passed to downgrade the


relationship, they said Britain, this is only the beginning. Key


Largo larg said that, and -- Ali Larijani said, that and the speaker


said mark the words, this is only the beginning. Is it your


assessment that there are, therefore, some people in power in


Iran, who would welcome a serious confrontation with the British,


Americans, Israelis, with whom ever, because that will solidify their


political position? I think there is an element in their thinking


that goes along those lines. There is a huge degree and risk of


miscalculation. I tried to say this when I was in Iran talking to the


Ministry of Foreign Affairs people, and to the Foreign Minister, that


they shouldn't underestimate the sense of determination of the west


to deal with Iran's nuclear ambitions. So I think they probably


didn't expect us to send home the Iranian Embassy from London. You


can, reading through the lines, you can see in the way they have


responded to that move, some remorse in having provoked it. I


think that might apply more generally too.


Thank you very much. That's all from Newsnight tonight, join Jeremy


for a major investigation to the causes of the summer riots, in


Presenter Gavin Esler interviews the British Ambassador to Iran following this week's attacks on the Embassy in Tehran.