07/12/2011 Newsnight


07/12/2011

Jeremy Paxman looks at David Cameron's problems over Europe, contingency planning for the collapse of the euro and news from CERN about the mysterious Higgs Boson.


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For a currency we're not even members of, the euro is turning out

:00:08.:00:12.

to have a powerful sway in British politics. As European leaders

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discuss yet another treaty change, significant numbers of Conservative

:00:15.:00:20.

MPs are demanding to know just what David Cameron is going to do to

:00:20.:00:24.

stand up for Britain. There is no sign it is causing

:00:24.:00:27.

Angela Merkel and Nicolas Sarkozy sleepless nights, they say they can

:00:27.:00:34.

keep the euro alive. But what if they are wrong. We roll the dice on

:00:34.:00:38.

eurogeddon with two money men and a politician. How do you handle the

:00:38.:00:43.

collapse of a currency. If we get into a situation of slightly more

:00:43.:00:46.

doom what would you tell politicians to say? Don't say

:00:46.:00:50.

anything unless you have to. Seriously, if you start saying we

:00:50.:00:54.

have stress tested all the banks and we think there is an 87% they

:00:54.:00:59.

are all fine! We will ask two leading economists if the leaders

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of Europe will find an answer to avoid such clamty. It is the

:01:03.:01:09.

particle that has eluded scientists for 30 years or more. Newsnight

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learns next Tuesday physicists will announce they have found the first

:01:14.:01:24.
:01:24.:01:28.

signs of the Higgs boson particle. Why do people less and less think

:01:28.:01:31.

that public debt is the responsibility of the state.

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One after another they stood up and asked questions, one after another

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they got little or no answer, certainly little or no detail. The

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Prime Minister got the benefit of the doubt for now, as the depth of

:01:43.:01:48.

anxiety in his party about Europe was made plain toness the House of

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Commons today. We have learned most of the details of the Merkel-

:01:53.:01:59.

Sarkozy plan to save the euro, but we don't know if Britain can

:01:59.:02:05.

participate in the new treaty they have a greed to save the euro.

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Our economics editor is here. You have seen the letter, haven't you?

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It is stun to go see history, and the future history of Europe

:02:13.:02:17.

written down in black and white, eventhough it doesn't contain much

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more than what was announced on Monday. There was a slight

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political Higgs boson in this letter, in the form of a term, that

:02:26.:02:30.

the stability and growth union, we now think we are building. The

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letter just spells out what they have said, they will try a treaty

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change with all 27, 17 if they have to. There will be punishment for

:02:39.:02:42.

states who break the rules and break the 3% limits on deficits.

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Then it talks about the core, the euro core doing all these things,

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convergance on economic policy, financial regulation, Labour

:02:54.:03:04.
:03:04.:03:06.

markets, corporate tax, and financial transaction tax. The cap

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stone is the stability and growth union. I have been asking old hands

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and said what is it? The stability and growth pact is for the 27, it

:03:15.:03:19.

is about balancing your books and growing, we are a member of that.

:03:19.:03:24.

But a union based on it is quite weird. And it has made me think

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there are three things going on. There is this 17 project, that is

:03:28.:03:32.

there, they have had it before, Britain won't be in it. There is

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the 27 project they have said they are trying to do. When you start

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hearing the thing in the middle called a union, that is where I

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think, the letter hadn't been published at the time when the MPs

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had begun laying down their questions, where the questions do

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really become acute, what is it? What is the stability and growth

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union? Presumably it is the inner core

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isn't it? No the inner core is the eurogroup. What is it? It is

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difficult to tell. One slightly helps it is a mistranslation, it

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really means somebody else. I don't know!

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The eurosummit presents itself as an opportunity irresistable for

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euro-sceptics, time to shout loud and proud for repatriation of

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powers and a rush to referendum. The greatest champion they found

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today was the Mayor of London, Boris Johnson. We watched events

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unfold. As everybody knows they are

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gentleness themselves, unless you get on the wrong side of them.

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Perhaps this is why British politicians find this breed so

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irresistable, that and the association with Churchill. Peter

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Mandelson, who knows something about PR, enlisted a bulldog for

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new Labour's cause. And today, a Conservative MP, famous at

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Westminster, both for hipets and loyalty to you know who, urged her

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successor to channel his inner canine at the Brussels summit.

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the Prime Minister do Britain proud on Friday, and show some bulldog

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spirit in Brussels? I can guarantee to Moy honourable

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friend that is exactly what I will -- my honourable friend, that is

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exactly what I will do. The British national interest means to resolve

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the crisis in the eurozone, freezing the British economy, and

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freezing economies right across Europe. Resolving the crisis is

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about jobs and growth and business and investment right here in the UK.

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That is not quite the bulldog spirit many of his backbenchers are

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hoping for. They want him to go further, not just hold the line but

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growl and bear his teeth, a difference -- bare his teeth, a

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difference Ed Milliband was keen to exploit. He was telling his

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backbenchers that the opportunity of treaty change, would mean in the

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future, the repatriation of powers. That was his position of six weeks

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ago, today he writes an article in the Times, a 1,000-word article,

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not one mention of the phrase "repatriation of powers", why does

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the Prime Minister think it is in the national interest to tell his

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backbenchers one thing to quell a rebellion on Europe, and tell his

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European partners another. Labour leader knows some on the

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Tory benchers are not convinced Mr Cameron has a clear negotiating

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position. Something Conservative commentators are now drawing

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attention to. In the light of what's happened in the past, when

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prime ministers have talked tough in Britain, and then gone to

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negotiate in Brussels, do you think Conservative politicians are

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prepared to trust the Prime Minister at this stage? Absolutely

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not. Actually I think there is quite a lot in Ed Milliband's

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criticism that there is a tendency to say one thing to backbenchers,

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and to hope, to be able to, when it comes to it, to say something

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different to European leaders. I think the more times that happens,

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the greater the danger that the parliamentary party and the

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Conservative Party in general switches decisively into the whole

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"get out of the EU" camp. One of the party's big beasts is talking

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tougher still, by using the "r" word. It is absolutely clear to me,

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that if there is a new treaty at 27, if there is a new EU treaty that

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creates a kind of fiscal union, within the 27 countries, or within

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the eurozone, then we would have absolutely no choice, either to

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veto it, or put it to a Reverend DUP. The London ofgs of the --

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Referendum. The London office was once the Conservative Party office,

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there could be a similar takeover in Europe, with the 17 fiscally

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joined and marginalising countries like Britain on the outside. Some

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have said the British Government is rudderless at the moment, and

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unprepared for what is coming next, and despite the bulldog rhetoric

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from Mr Cameron, his bark will turn out to be worse than his bite.

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In an interview to be published tomorrow, the cabinet minister,

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Owen Paterson, warns that fiscal union would create a new block.

:08:10.:08:20.
:08:20.:08:25.

Asked if that should trigger a -- British referendum, he replied :

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As Mr Paterson's parliamentary aide has been telling me tonight, Tories

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see this summit as a unique opportunity, they don't want the

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Prime Minister to miss it. reality is, that in order to have a

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new treaty there has to be unanimity amongst the 27, that is

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the opportunity which has presented itself today, which may never

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present itself again. We have to use the opportunity, where we could

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say no, to extract from our partners the things we want to

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protect British interests, jobs and prosperity. I'm sure that's on the

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Prime Minister's mind. Your boss, Owen Paterson, was a rebel at the

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time of Maastricht, unhappy with the Conservative's position. Does

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he regard this as a resigning matter potentially? I don't think

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anyone's in the position of resigning or anything. We are

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talking about backing the Prime Minister as he goes to the summit,

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to try to get powers back for Britain and out of the eurozone,

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and which they have inflicted on themselves by not obeying their own

:09:22.:09:27.

rules. Tonight euro-sceptic Tories joined forces with a meeting to

:09:27.:09:31.

agree their tactic, securing a deal in Brussels will be hard enough,

:09:31.:09:35.

selling it at Westminster could be even tougher. With us now to

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discuss David Cameron's dilemma are Sir Malcolm Rifkind, John Major's

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Foreign Secretary in the 1990s, and remembers all too well the party's

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battles over Europe, and Nadine Dorries, an MP who doesn't yet bear

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those scars. Do you firstly believe that David Cameron will go to the

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meeting and defend British interests? To an extent. Do you

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want the euro to survive? I think it is time for the euro to

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dismantled in an orderly way. the member states of the euro to

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decide they didn't agree with you, they wanted it to survive and came

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to some arrangement between themselves about co-ordinating tax

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and the like, that would be all right, or not? Then it's time for a

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referendum. On that third point, which seems a quite likely outcome,

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if the Merkel-Sarkozy letter is put into effect, it would change the

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game, wouldn't it? Not in a sense that is being implied. Let's be

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very straight forward as to where we are. Europe is in an incredibly

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fragile state. If the European Summit collapses on Friday, because

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of a lack and inability to reach agreement, that is very serious,

:10:53.:11:01.

not just for the eurozone countries, for Britain as well. Now that means

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that the tough approach required by David Cameron is perfectly

:11:04.:11:07.

reasonable if he concentrates on issues relevant to the crisis, such

:11:07.:11:11.

as the potential threat to the City of London. If he make that is a

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condition for his consent, then he's entitled to be as tough as

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required. But if we were to have debates and discussions on fli,

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about whether we should re-- Friday, about whether we should repatriate

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the Common Fisheries Policy or the Working Time Directive or things of

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that kind, the rest of the world would be aghast if the European

:11:32.:11:38.

economy was veering towards problems. I think Malcolm is

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falling victim to making outrageous claims. All we need to do to defend

:11:42.:11:47.

the City from the transaction tax is to say no. All this flim flam

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about the Prime Minister going to defend, he will come back on Friday

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waving a flag with prosperity of our time on it, defending the City.

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This will be the story that comes back. That is a good thing isn't it,

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if he has done that? There is no saving to be done, we will say no,

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we won't have the transaction tax. If he does that he's looking after

:12:10.:12:14.

British interests by his own lights? He can do that in 30

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seconds. The big issue that needs to be debated is whether or not

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there will be a eurozone a block of 17 countries, if there are, and

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that is what is decided and we are part of the 27 of the outer ring,

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then that, inner union, will affect our economy, and that will be bad

:12:30.:12:36.

for us, that's what we want him to defend. We want him to defend us

:12:36.:12:40.

from that happening. So stop the 17? There is only one outcome for

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us. If the 17 have a union, and let's admit, two other countries

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have already been taken over by technocrats. We need that

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referendum. The British people have no say on this. I'm so sorry,

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Malcolm Rifkind can speak for himself. There is a fundamental gap

:12:59.:13:05.

with the real world in what we are being told. The reality is that no-

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one country, whether it is the UK or any other country, can simply

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dictate to all the rest, even the Germans can't do that, they have to

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get agreement from their allies. The idea that David Cameron goes to

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a summit and says he's going to veto the summit, this agreement,

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and everybody else wishes to go forward, regardless of the

:13:23.:13:25.

implications for the European economy, regardless for the

:13:25.:13:28.

reactions of the markets, including our interest rates, as well as

:13:28.:13:31.

those in other countries, unless you give me concessions on matters

:13:31.:13:36.

that are not relevant to this immediate European crisis. We all

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know perfectly well that if there is to be a repatriation of powers,

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that will be a lengthy negotiation, even if it was successful. I was

:13:44.:13:48.

Margaret Thatcher's Europe minister, it didn't come much tougher than

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Margaret Thatcher. When she went into a negotiation, she never made

:13:52.:13:56.

unrealistic demands, she never said she insisted on this, regardless of

:13:56.:13:59.

the consequences for the British economy, never mind your own

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economies. What she said was, she identified what was deliverable,

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and what's deliverable on Friday is agreement on dropping this

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ridiculous transaction tax, what is deliverable on Friday is an

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understanding that there are other issues, important to the UK, which

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may need to be considered. Angela Merkel has already quoted that she

:14:23.:14:26.

will being will to give constructive consideration to the

:14:26.:14:31.

kien of changes on the -- kind the changes on the employment directive

:14:31.:14:34.

David Cameron has been raising. You have to be negotiating in a

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sensible, practical way, not saying you demand this or that, regardless

:14:38.:14:42.

of the consequences, that is not the real world we live in. When you

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have already made the statement that if there is to be any further

:14:45.:14:50.

loss of sovereign power, or power, to Europe, then we will have a

:14:50.:14:54.

treaty, or a treaty. That is the law. We will have a referendum, we

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are now in that position. If there is a block of 17 countries in a

:14:58.:15:03.

union, that will impact on us, and on our economy. It will bring about

:15:03.:15:08.

changes to our economy, and therefore, we have to have a

:15:08.:15:13.

referendum. People out there in 1973 voted for a Common Market.

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They didn't vote to be part of a two-tier eurozone, where 17

:15:17.:15:20.

countries in effect become one country, we are on the outer ring.

:15:20.:15:25.

They didn't vote for that. The act you and I voted for, and is now the

:15:25.:15:30.

law of the land, says if the United Kingdom Government proposes to

:15:30.:15:34.

surrender or transfer sovereignty to Europe, in any new area, there

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must be a referendum. That is not what is being proposed on Friday.

:15:38.:15:42.

If those countries are in the eurozone, which are only 17 of the

:15:42.:15:48.

27, if they wish to transfer more of their power to Brussels, that is

:15:48.:15:52.

their business. The change of power been the European Union is

:15:52.:15:55.

something people should surely be allowed vote on? I'm not saying

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they are not important issues, I'm saying the obligation to have a

:15:58.:16:03.

referendum, is not when there is any kind of any change in Europe,

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it is when there is a surrender or a desire to surrender sovereignty

:16:09.:16:13.

by a British Government. This is a new situation, the 17 countries

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becoming one union is very knew. New. They are already one country.

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What is being proposed is very different. This hasn't been on the

:16:25.:16:28.

table before. It is going through at a speed that people can't

:16:28.:16:32.

understand what is happening. Even the use of the word "sovereign", my

:16:32.:16:36.

constituents ask what does it mean, when it is explain it is the

:16:36.:16:40.

transfer of our powers for someone else to be making our policies and

:16:40.:16:43.

dictating to us. They don't like the sound of that. This is all

:16:43.:16:46.

moving very fast, we need to acknowledge what people want and

:16:46.:16:50.

give them the referendum. It is very important for people like

:16:50.:16:56.

yourself not to mislead the public, and imply something. For give me,

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let me -- Forgive me, let me finish the sentence, and not imply that

:17:02.:17:05.

transferring British sovereignty is in practice that, that is not a

:17:05.:17:09.

proper way to try to take the debate forward. We will know in a

:17:09.:17:17.

cop of -- couple of days, and the euro may collapse any way. The make

:17:17.:17:21.

or break meeting will roll into other meetings. Confidence is all,

:17:21.:17:25.

supposing the joint strategy of Merkel-Sarkozy fails, what then?

:17:25.:17:29.

There are emergency plans being laid in the UK and the EU, but they

:17:29.:17:35.

are secret. We asked Paul Mason to try to war game a eurogeddon

:17:35.:17:38.

scenario. Here at the Treasury, though they hope tomorrow's summit

:17:38.:17:42.

will be a success, they are planning for all eventualities,

:17:42.:17:47.

including a euro break-up. Most people are oblivious, and results

:17:47.:17:53.

will remain behind closed doors. are undertaking extensive

:17:53.:17:57.

contingency planning to dial with all potentially outcomes of the

:17:57.:18:02.

euro crisis. To show what might be happening behind closed doors, we

:18:02.:18:07.

have assembled three people whose real life roles might have involved

:18:07.:18:13.

them in this kind of contingency planning. Kitty Ussher was a

:18:13.:18:17.

Treasury minister under Gordon Brown, Sir Martin Jacomb sat on the

:18:17.:18:21.

board of the Bank of England, Jon Moulton is a prominent investor. In

:18:21.:18:26.

this room, I will ask them, in real time, to confront one of the

:18:26.:18:30.

scenarios Britain might face. Good morning everybody and welcome.

:18:30.:18:39.

Thank you for coming. There have been some events. The sin flairyo

:18:39.:18:44.

begins with a Greek -- the scenario begins with a Greek default and an

:18:44.:18:50.

exit from the euro, not a catastrophy for Britain but

:18:50.:18:53.

bringing fears. There is now a 90% chance of a Greek default before

:18:54.:18:58.

the end of January, in an hour's time the PM and the cabinet

:18:58.:19:03.

secretary walk through that door, we have to come up with a response.

:19:04.:19:08.

I think the first duty of the British Government, and the Bank of

:19:08.:19:14.

England, and the other regulators, including the FSA, is to make sure

:19:14.:19:18.

they safeguard the British banking system. Because without that

:19:18.:19:23.

everything fall ace part. completely agree with that. If we

:19:23.:19:30.

think that Greece is very likely to default, questionable -- question

:19:30.:19:34.

is how much exposure do we have to Greek debt, that will be worthless.

:19:34.:19:37.

It is all about the financial system and the knock-on effect,

:19:37.:19:42.

Greeks failing to pay their debts, meaning that Cypriot banks fail,

:19:42.:19:46.

German banks fail, French banks fail, and then all of a sudden you

:19:46.:19:51.

have massive exposure from the UK to a relatively small event and a

:19:51.:19:57.

country that is less than 3% of the European GDP.

:19:57.:20:03.

What do we do, in the next 30 days. If the main focus is banking, what

:20:03.:20:08.

practically do you do? There needs to be a new stress test regime for

:20:08.:20:14.

all the major financial institutions. Their books need to

:20:15.:20:20.

be put through the wringer in the light of the new environment. The

:20:20.:20:23.

worst possible case scenario needs to be modelled to see if they can

:20:23.:20:27.

remain trading. The problem is most of them will fail that test. So if

:20:27.:20:33.

it is done properly. So the only thing the Government can do is

:20:33.:20:37.

promise absolutely, we will do whatever we have to do to print

:20:37.:20:40.

money, chuck money in all directions, support everything.

:20:40.:20:46.

Because there will be no practical alternative. But, in the end, our

:20:46.:20:49.

trouble shooters were clear about the action Government will have to

:20:49.:20:58.

take. We have no choice, we have to bail out the systemically important

:20:58.:21:01.

banks. That is true, but two of our British banks are already

:21:01.:21:05.

nationalised, RBS, Lloyd's and Barclays is perfectly well

:21:05.:21:09.

capitalised. I don't think there is a risk of that, provided nobody

:21:09.:21:19.

makes a big of -- as big a mess of it. It is different from 2008

:21:19.:21:23.

because there is advanced discussions about how to pay for

:21:23.:21:27.

bailouts. There are living wills for institutions to work out how to

:21:27.:21:31.

have a structured dissolution, we know we can allow banks to fail if

:21:31.:21:37.

we need to. Is anybody prepared to allow a UK bank to fail at this

:21:37.:21:40.

jubgture? You can't allow a bank that is systemically important to

:21:40.:21:45.

fail. You can certainly allow it to go into a situation where there are

:21:45.:21:50.

living wills taking effect, and all the shareholders lose all their

:21:50.:21:53.

money. We are looking at a situation where losses beyond the

:21:53.:22:01.

equity are all too conceivable. That is really very difficult.

:22:01.:22:04.

Wiping out the shareholders won't be enough and the banks won't be

:22:04.:22:10.

able to repay their debt in full. That means the banks will need

:22:10.:22:16.

support to keep systemically banks going. What do we tell the British

:22:16.:22:20.

public about who is first in the queue about losing their money?

:22:20.:22:22.

don't think we tell the British public anything. I'm pointing out

:22:23.:22:26.

that you a former minister, you don't tell them anything? Not at

:22:26.:22:30.

this stage, unless you want a run on a bank. I don't think we are

:22:30.:22:35.

near that kind of danger. But the contingency planning should have

:22:35.:22:38.

one thing, first and foremost, at the top of the list, that is the

:22:38.:22:43.

ability of businesses to operate their normal banking mechanisms and

:22:43.:22:46.

consumers to have access to their cash. That is the most important

:22:46.:22:49.

thing. You have to prepare them for something, it is almost

:22:49.:22:54.

inconceivable event we are talking about, won't lead to the

:22:54.:22:58.

deleverageing further of banks, banks getting smaller, less credit

:22:58.:23:03.

into the economy, and a weaker economy.

:23:03.:23:09.

At this point, in the scenario, the IMF and OECD warn that British

:23:09.:23:14.

growth will be lower, Britain's budget, already tightened last week,

:23:14.:23:21.

would then need tightening some more. Other fiscal trajebgt trees

:23:21.:23:28.

for a Greek exit and dire situation economically. Would we have to say

:23:28.:23:33.

to the Chancellor, you need some kient of Plan B, even if it is only

:23:34.:23:43.
:23:44.:23:53.

Plan A+ plus, even if he has to tighten it even more. I would say

:23:53.:24:01.

that taxes were easing, in so far as it would affect effective

:24:01.:24:07.

business, that mean any of those retired or on benefits, we shall

:24:07.:24:10.

continue to:. The Government will have no money, no money coming from

:24:10.:24:13.

exports, consumers haven't any money, business has some money, but

:24:13.:24:17.

they are too frightened to invest it, given what is going on. The

:24:17.:24:20.

only option the Government has is to create markets to give business

:24:20.:24:25.

the confidence to invest, that is the only way we will getting a gate

:24:25.:24:31.

demand, growth into the economy, given that -- aggregate demand,

:24:31.:24:35.

growth in the economy. Very hard to say we shouldn't be pushing

:24:35.:24:40.

everything we can to make productive industry activity to

:24:40.:24:43.

return to the UK in volume. They are saying, hold on a minute,

:24:43.:24:48.

what you told us in November, it is worse than that, and you have never

:24:48.:24:52.

touched the NHS, you have two aircraft carriers you seem to want

:24:52.:24:56.

to build despite the fact you will never use them. Who will tell the

:24:56.:24:59.

PM that the NHS will have to be, do we have to think about that?

:24:59.:25:04.

Somebody will have to. contingency planners were by now at

:25:04.:25:07.

the political heart of darkness, this was the mildest of the

:25:07.:25:14.

scenarios we had come up with. Worse, we made the crisis using the

:25:14.:25:20.

roll of the dice, and the more impotent they felt. The list of

:25:20.:25:24.

scenarios is bigger than in the last 20 years, we could go this way,

:25:24.:25:27.

that way, the euro could fail, high interest rates, low interest rates.

:25:27.:25:31.

It is terribly difficult, I think we really want a Government that

:25:31.:25:34.

looks down at all possiblities. Thinks about them all, tries to

:25:34.:25:41.

respond. They will probably fail, but they have to at least try.

:25:41.:25:45.

All the Prime Minister and cabinet secretary are on their way. By the

:25:45.:25:48.

end the solutions for the worst case were not much different than

:25:48.:25:53.

for the mildest. Save the banks, take hard fiscal choices and let

:25:53.:25:58.

others worry about saving the euro. How likely is that sort of

:25:58.:26:02.

situation to come to pass? And what can, or should be done to prevent

:26:02.:26:09.

it? These two may be able to shed some light, We have the chief

:26:09.:26:12.

economics commentator of the Financial Times, spending ten years

:26:13.:26:18.

as a senior economist at the Central Bank. Ian Bremmer is

:26:18.:26:21.

President of Eurasia Group. Apparently there is a lot of this

:26:21.:26:25.

modelling going on, what sort of thing are they planning for?

:26:25.:26:28.

suspect that they are not really planning for these sorts of

:26:28.:26:32.

disasters. They might be planning for a Greek exit. But in the

:26:32.:26:36.

eurozone, I think they are planning for the thing to continue. What

:26:36.:26:41.

they are trying to do is set up a situation in which the European

:26:41.:26:44.

Central Bank engages really seriously. There have been some

:26:44.:26:47.

indications in the last week that is what will happen. They think

:26:47.:26:50.

they will get through with it. Is that right? That is a very good

:26:50.:26:54.

question. I don't think they are planning, seriously, for a break up.

:26:54.:26:57.

We will come to the point of whether it will work or not in a

:26:57.:27:03.

second or two, but the companies you advise, they are presumably

:27:03.:27:08.

strategyising things, through modelling -- strategy guiseing

:27:08.:27:11.

things through, modelling things. They are getting a lot of questions

:27:11.:27:18.

about what is the likelihood of a eurozone break-up. It is thinkable,

:27:18.:27:23.

but thinkable, a war between Israel and Iran is thinkable, that doesn't

:27:23.:27:28.

mean we think it is a likely scenario. The euro breaking up

:27:28.:27:33.

doesn't seem likely for the time frame these folks are considering.

:27:34.:27:39.

Time frame? Over a year. Muddle through is the most likely outcome,

:27:39.:27:44.

especially moving towards a fiscal pact on Friday. That was a model of

:27:44.:27:49.

a Greek default rather than the whole of the euro breaking up. What

:27:49.:27:53.

is your prognosis, one year, do you want to raise him another year or

:27:53.:27:59.

two? I think that they have the resources and almost certainly the

:27:59.:28:02.

will. They have the resources because they have a Central Bank

:28:02.:28:06.

that will create money that people will hold. There is no doubt people

:28:06.:28:11.

will hold the euro. If the European Central Bank is brought in to

:28:11.:28:16.

purchase and intervene in the debt markets, the public debt of most of

:28:16.:28:19.

these countries rolls over slowly, it will continue to pay high

:28:19.:28:24.

interest rates for a long time. As long as the political process and

:28:24.:28:26.

the affected countries are reasonably stable, they can keep

:28:26.:28:31.

the things going for quite a while. The thought it will all end

:28:31.:28:34.

tomorrow strikes me as wildly implausible. He says not worrying

:28:34.:28:39.

about it for a year or so? I would say longer than that. I'm not

:28:39.:28:44.

worried about break up for a year or so. A default by a country is

:28:44.:28:48.

possible in that period, d doesn't lead to break up. We have to be

:28:48.:28:51.

clear that there is a tremendous investment here, in Britain we tend

:28:51.:28:55.

to assume it will all be over much too easily. I think that is right.

:28:56.:29:01.

I also think the willingness of the Germans to ultimately backstop the

:29:01.:29:04.

eurozone is very different from the willingness of the Germans to say

:29:04.:29:09.

they will do that, and the ECB should be the lender of last resort,

:29:09.:29:14.

taiinging away all moral hazarz. When you are playing -- taking away

:29:14.:29:22.

all the moral hazarz. I understand that Merkel has not said let's do

:29:22.:29:32.
:29:32.:29:32.

eurobonds. She has said let as not do them now. There is enormous

:29:32.:29:37.

support for the continent of Europe. What about the letter that Merkel

:29:37.:29:42.

and Sarkozy have sent to Mr Van Rompuy, there are various tactics

:29:42.:29:45.

in there, applying to the 17 members of the eurozone. Do they

:29:45.:29:49.

strike you as coherent and likely to work or feasible? I think they

:29:50.:29:53.

are sufficiently coherent to work for the time being. What we are

:29:53.:29:58.

doing is we are buying ourselves more capacity to muddle through.

:29:58.:30:03.

The most important point is on Monday the ECB will feel they can

:30:03.:30:06.

turn the taps on to a greater degree. That is what the markets

:30:06.:30:12.

are looking for. They want to see what the ECB can do next week, they

:30:12.:30:16.

will not provide the bazooka, but they can provide more time. They

:30:16.:30:19.

are doing enough to probably make it survive, we can't give a precise

:30:19.:30:24.

date, of when that will fail, but, they are not beginning to do enough

:30:24.:30:31.

to make it work well. The question is can you keep currency union

:30:31.:30:34.

together, for very long, nobody knows what the period will be, if

:30:34.:30:38.

significant numbers of players feel it is not really working for us. I

:30:38.:30:42.

think it is very, very likely there will be a situation that a lot of

:30:42.:30:46.

countries will feel that. The problem with acting on that is

:30:46.:30:49.

leaving is also an absolute disaster. What you have in the real

:30:49.:30:54.

nightmare to me, in fact, the most likely nightmare, is you have a

:30:54.:30:57.

eurozone that just really doesn't work very well. In all sorts of

:30:57.:31:01.

ways it really doesn't work very well. It doesn't grow, the

:31:01.:31:06.

adjustments don't work, and some countries in permanent recession,

:31:06.:31:10.

but they don't have the nerve to leave. It is a very miserable

:31:10.:31:15.

marriages, and they can go on for a very long time. The Greeks are

:31:15.:31:24.

taking pain, and 7% of Greeks -- 78% of Greeks are in support for

:31:25.:31:30.

the euro. There is no massive support among the peripheral

:31:30.:31:33.

countries taking massive economic strain to move away from the

:31:33.:31:38.

eurozone. It seems a prerequisite with

:31:38.:31:47.

keeping the patient on the life support, never find taking it for a

:31:47.:31:52.

walk, that democracy is suspended? The question is how much democracy

:31:52.:31:55.

did you give up. I believe part of the problem in the eurozone is not

:31:56.:31:59.

the lack of fiscal union it is the lack of a children's table. When I

:31:59.:32:03.

was a kid growing up, you didn't give me sharp untensils because the

:32:03.:32:07.

family pet would have been damaged, over time that changes. In Europe

:32:07.:32:10.

that hasn't been the case, there will be a symmetry in the

:32:11.:32:15.

fundamentals of the union whatever we do. Is it ever going to work

:32:15.:32:20.

really well? Probably not, there are gigantic problems inherent in

:32:20.:32:24.

putting these countries together. They have incredible

:32:24.:32:26.

competitiveness problems which they will find difficult to resolve.

:32:26.:32:30.

Obvious low they find Governments imposed upon them they haven't

:32:30.:32:32.

chosen. They didn't like the democratic Governments they had

:32:33.:32:37.

before. As Ian said, once you went into the currency union you gave up

:32:37.:32:40.

an awful lot of sovereignty, they are discovering they are losing

:32:40.:32:45.

more and more. Can such a structure operate, yes, is it democratic in

:32:45.:32:49.

the way we think about it, not in my view, that is why I'm happy we

:32:49.:32:52.

are not part of it. You can take your hand out from

:32:52.:32:57.

country the back of the sofa, a respected scientist at the CERN

:32:57.:33:01.

particle physics laboratory has told Newsnight, exclusively, that

:33:01.:33:06.

he expects to see the first glimpse of the Higgs boson next week, when

:33:06.:33:09.

they reveal their latest data. They have spent 30 or so years and

:33:09.:33:13.

countless millions looking for this missing piece of the jigsaw in our

:33:13.:33:18.

understanding of particle physics. The famous boson is named after

:33:18.:33:23.

Peter Higgs, an Edinburgh University physicists who first

:33:23.:33:28.

proposed its existence in the 1960s. Our science editor has the story.

:33:28.:33:31.

Tremenduously exciting? I spent the day at CERN yesterday, there is a

:33:31.:33:37.

real sense of excitement, a buzz in the cannot teens there. There are

:33:37.:33:41.

are you -- canteens there. There are rumours on the Internet. This

:33:41.:33:47.

is all because there is an announcement next Tuesday, the

:33:47.:33:51.

press have been invited long, and two separate teams who have been

:33:51.:33:55.

looking for the Higgs boson will present their data. Finding Higgs

:33:55.:34:01.

boson has been described as the Holy Grail of physics. If it exists

:34:01.:34:04.

it helps us understand the standard model. It will be the crucial

:34:04.:34:13.

missing piece in the jigsaw of the standard model. That is the process

:34:13.:34:16.

physicists understand the way particles fit together. Without the

:34:16.:34:20.

Higgs, this standard model doesn't make sense. The two teams of

:34:20.:34:23.

scientists are going to be reporting, independent of each

:34:23.:34:27.

other, using different detectors. Now, officially, these two teams

:34:27.:34:33.

don't talk to each other, they are sworn to secrecy, all the are you

:34:33.:34:40.

mores are of a possible sighting of the -- are are you mores are the

:34:40.:34:43.

possible sighting of the Higgs boson. The teams are focusing in,

:34:43.:34:47.

ruled out ranges of mass, where they have seen no sign of the Higgs.

:34:47.:34:52.

What does the Higgs look like? Women come on to that. I asked the

:34:52.:34:57.

former head -- We will come on to. That I asked the former head of

:34:57.:35:03.

theoretical physics at CERN how close does he think we are of

:35:03.:35:07.

seeing boson? I think we will get the first glimpse, the experiments

:35:07.:35:12.

have looked high and low for this missing piece, it could be that it

:35:12.:35:15.

weighs several hundred times the proton mass, that seems unlikely.

:35:15.:35:19.

There is a whole interimmediate range where we know it cannot be.

:35:19.:35:23.

Then there is a low mass range, which is actually where we expect

:35:23.:35:28.

it to be, it seems maybe there is some hints emerging there. That is

:35:28.:35:32.

what we will learn on Tuesday. lot of stuff about seems, he's not

:35:32.:35:36.

saying they have found this thing, is he? It is not definitive yet.

:35:37.:35:41.

They can't claim to have found the Higgs boson, that is because there

:35:41.:35:45.

isn't enough experimental data from the Clydeer to claim what is called

:35:45.:35:53.

a discovery. It will be a significant milestone. What is this

:35:53.:35:59.

thing? It is notoriously difficult to define. We asked Peter Higgs to

:35:59.:36:09.

tell us how it worked. This is the best he could do. Waves in this

:36:09.:36:13.

qant fee that oscillates up and down -- quantity that oslails up

:36:13.:36:23.

and down the trofs. That caused a lot of giggles. Professor John

:36:23.:36:29.

Ellis does a pretty good job. standard model is a bunch of

:36:29.:36:33.

building bricks, blocks like the electron, that is a thing that goes

:36:33.:36:40.

around at tomorrows, the Quarks are things that make up -- atoms, the

:36:40.:36:50.

Quarks are things that make up the atoms. The whole thing would fall

:36:50.:36:55.

down if we can't have a cap stone, sitting there, in the middle there,

:36:55.:36:59.

that cap stone tells us which particles have mass, which don't,

:36:59.:37:04.

that cap stone, which makes a whole standard model hang together, that

:37:04.:37:14.
:37:14.:37:14.

is the Higgs boson. I do hope they recognise it when they find it.

:37:14.:37:19.

will hear more next week if they see hints of the Higgs boson.

:37:19.:37:23.

are becoming an increasingly self- reliant, some would say hard-nosed

:37:23.:37:28.

society. The latest attempt to see what the British public feel about

:37:28.:37:32.

the world they live in, is more of us feel unemployment benefits are

:37:32.:37:37.

too high, and the proportion who think taxes should rise to improve

:37:37.:37:41.

public services has halved. The Prime Minister really took the

:37:41.:37:45.

findings that he has his finger on the pulse, claiming people want to

:37:45.:37:48.

end the something for nothing society. Steve Smith, so interested

:37:48.:37:55.

in the Big Society, we have dubbed him Citizen Smith has more.

:37:55.:37:59.

Previously, have you seen our Citizen Smith feature before? No,

:37:59.:38:05.

in that case it is a much-loved and award-friendly segment, about David

:38:05.:38:15.
:38:15.:38:27.

Cameron's Big Society at the grass roots.

:38:28.:38:32.

Ahmed Kabba, originally from Sierra Leone, but has lived here for 20

:38:32.:38:36.

years, was one of the Guinea pigs on the first community organiser

:38:36.:38:40.

course this autumn. He was learning how to recruit his neighbours to

:38:40.:38:44.

get things done in their community. Which happens to be the challenging

:38:44.:38:51.

Inner London postcode of Peckham. The PM himself called in at Ahmed's

:38:51.:39:01.
:39:01.:39:06.

local cafe, to see how he was We couldn't think of a better idea,

:39:06.:39:13.

so we rewound the same scenario. Ahmed was so keen on recruiting he

:39:13.:39:20.

had a go with me. Show me what you do? Hello, how are you. How are you

:39:21.:39:27.

doing? So-so. Do you live local? I'm a community organiser. What is

:39:27.:39:31.

that? It is reaching out to the local community and asking specific

:39:31.:39:35.

questions, about your vision. you get a sense from people,

:39:35.:39:40.

perhaps the ones who are working here, that they resent people who

:39:40.:39:45.

are on benefits? Is there any sense of that, as in this survey or not?

:39:45.:39:49.

I haven't had anything like that in terms of people on benefit, or what

:39:49.:39:54.

people are doing down the street. The concern they will have is not

:39:54.:39:57.

about individuals, it is about collective community, in terms of

:39:57.:40:01.

anything that is happening around them that they don't like, or they

:40:01.:40:05.

would like to see improved. But others see things differently,

:40:05.:40:09.

more than half of us think that unemployment benefit is too

:40:09.:40:15.

generous. Rewind back to 1983, and just over a third of us did.

:40:15.:40:20.

Only 31% support tax rises to pay for health and education. It used

:40:20.:40:24.

to be 63%. People increasingly are looking to

:40:24.:40:30.

others to be more self-reliant, and look less to Government to solve

:40:30.:40:33.

problems. Whilst they are still concerned about the gap between

:40:33.:40:38.

rich and poor, everybody thinks the gap is too wide. They think

:40:38.:40:43.

unemployment benefits are too high and discourage people from finding

:40:43.:40:47.

work. And there is no appetite from Government to do more

:40:47.:40:51.

redistribution of wealth from rich to power. On Twitter David Cameron

:40:51.:40:56.

said people were making it clear they had enough of the something

:40:56.:41:01.

for nothing culture. Not everyone thinks it is good for Government?

:41:01.:41:07.

It is good for Cameron's talk about benefits being too much and the

:41:07.:41:10.

state support, I don't think it is useful for people want to go

:41:10.:41:16.

collaberate, it speaks to a society where people are circling their

:41:16.:41:18.

wagons and thinking about themselves and their families,

:41:18.:41:21.

rather than cleaning up the local graveyard. Good for him in the

:41:21.:41:26.

short-term, but in the long-term not so good. Unfortunately this is

:41:26.:41:31.

hardly the first time in living memory that Britain has been in a

:41:31.:41:35.

recession. What you are seeing is a similar hardening of public

:41:35.:41:38.

attitudes towards people on benefits, towards the size of the

:41:38.:41:45.

state, generally. That happened in the late 1970s, when Labour was

:41:45.:41:49.

seen simply as being profligate. That comes in at the end of the

:41:49.:41:52.

Social Democratic periods, it reflects what was going on two or

:41:52.:41:59.

three years ago more than what's happening now. Stkph Ahmed Kabba

:41:59.:42:03.

and others -- Ahmed Kabba and others are fired up by community

:42:03.:42:08.

organisers, but the problem is the Big Society, might not be as big

:42:08.:42:13.

hearted as people wish. Two local MPs are with me now,

:42:13.:42:17.

Margaret Hodge, and Jesse Norman, who has published books about

:42:17.:42:22.

compassionate Conservatism and the Big Society. What do you think has

:42:22.:42:28.

happened? This was a snapshot, it was, July 2010 when Jesse and I had

:42:28.:42:33.

been out on the stomp. At that point we were coming out of the

:42:33.:42:37.

previous recession, people were feeling very insecure. You are

:42:37.:42:41.

looking cynically at me. We know roughly when it was taken, what

:42:41.:42:45.

does it tell us about what has happened? At that time people were

:42:45.:42:54.

feeling insecure. They were feeling angry. Therefore you come in on

:42:54.:43:00.

yourself in that sort of an environment. You tend to think

:43:00.:43:04.

other people are getting everything, I'm not getting enough myself. That

:43:04.:43:07.

was an attitude at that time. I think the contributor who talked

:43:07.:43:13.

about the end of the Labour Government, when things were better,

:43:13.:43:16.

you know the investment in schools had gone up, the investment in

:43:16.:43:23.

hospitals had gone up. I think it was a different era, at a snapshot.

:43:23.:43:28.

What is your analysis? My analysis is people were looking ahead and

:43:28.:43:33.

looking at a long dark tunnel of economic stagnation. It is hardly

:43:33.:43:37.

better since? No. They found an awful lot of money spent over the

:43:37.:43:41.

past few years had been wasted, and they thought maybe Government is

:43:41.:43:44.

not doing the job it should be doing and we need to look for

:43:44.:43:49.

alternatives. That is why there is a turning away from retis tribbuegs

:43:49.:43:54.

and on to community. Let's -- Redistribution to the community.

:43:54.:43:58.

Let's not let into party politics. There may be other things, it may

:43:58.:44:02.

be a matter of politics or economics, it may be that society

:44:02.:44:07.

has in some way matured into a different sort of being, to the

:44:07.:44:12.

sort of people, perhaps we are slightly older than you, but people

:44:12.:44:16.

we grew up with? The attitudes towards benefits have changed. They

:44:16.:44:22.

started to change, when Labour came in we started saying work is the

:44:22.:44:26.

root out of poverty. We started creating that different settlement

:44:26.:44:30.

out of welfare state from where we were in the post-war era. We

:44:30.:44:35.

shouldn't be surprised of that. To inject a fact into this,

:44:35.:44:43.

unemployment benefit, in the 1970s was about 12.5% of national average

:44:43.:44:48.

male earnings. Now it is 7% of average national male earnings. It

:44:48.:44:52.

has got less generous, that doesn't mean the attitude is less there,

:44:52.:44:58.

and there are few people who ought to be working who presently are

:44:58.:45:00.

working. Do you get a sense we are less kind to one another, this

:45:01.:45:05.

slogan your leader had, I'm not being party political here, "we are

:45:05.:45:10.

all in it together", people feel it less now? I don't think so. I think

:45:10.:45:15.

they look around, it is a matter of politics, looking at the past,

:45:15.:45:20.

looking at the future. It is culture also, they can see crony

:45:21.:45:25.

capitalism that has sprung up. People who have been taking very

:45:25.:45:30.

hygiene fits in some case s which they didn't seem to be deserving.

:45:30.:45:36.

You are getting a recalibration of values. I don't think people are

:45:36.:45:38.

becoming celebration, but they are taking the compassion they have and

:45:39.:45:43.

focusing on the community, and not trusting the state to do things it

:45:43.:45:47.

can't do. Does Britain feel like that to you? It is a more

:45:47.:45:51.

compassionate and caring place than it was? It does, oddly, it is a

:45:51.:45:57.

country looking hard at the sources of what actually matter in people's

:45:57.:46:01.

lives, and coming to the conclusion that it is not just about money but

:46:01.:46:04.

linkage and community. I think it is about insecurity, people's

:46:04.:46:08.

living standards going down and they turn in on themselves, that is

:46:08.:46:13.

what's happening. On the role of the state and public expenditure,

:46:13.:46:17.

the concept is one that people recoil from, but the reality is one

:46:17.:46:22.

they like. For example, in that survey, they like the NHS, they

:46:22.:46:27.

were happy with it. People want a copper at the end of their street.

:46:27.:46:30.

People want youth facilities in their communities, and they want

:46:30.:46:34.

the parks well looked after. There is a complicated set of attitudes

:46:34.:46:42.

going on here. If you were to take a snapshot in a year's time about

:46:42.:46:47.

attitudes today. You have high unemployment, and they will change

:46:47.:46:49.

again. We will only engage with what we have, is Britain a better

:46:49.:46:54.

place than it was, do you think? Britain a place in terms of the

:46:54.:47:04.
:47:04.:47:04.

public space? Yes. If you think about into 1997, you think we had

:47:04.:47:08.

outside toil lets in schools, we don't have that now. We did have

:47:08.:47:18.
:47:18.:47:18.

hospitals falling apart. We don't have that now. You are asking does

:47:19.:47:22.

Britain feel like a place where values are cherished. It doesn't

:47:22.:47:25.

feel like that, but it is recognising the problem and moving

:47:25.:47:29.

in the right direction. I don't know what that means? People are

:47:29.:47:35.

realising. I have to stop you there, apparently we have run out of time.

:47:35.:47:39.

That is all from Newsnight tonight, if only we had more time we could

:47:39.:47:49.
:47:49.:47:50.

depress and worry you further. We can't. Good night.

:47:50.:47:54.

Some pretty wild weather on its way through tomorrow. It starts off

:47:54.:47:58.

snowy across many northern parts of Scotland. That will turn back to

:47:58.:48:02.

rain before severe gales keep in later on in the day. Heavy rain

:48:02.:48:06.

sweeping across the country, out of Scotland and noerm, into England

:48:06.:48:11.

and Wales. For parts of the Midlands it will turn wet, the band

:48:11.:48:18.

of rain sweeping through will last all day. Ahead of that, cloudy with

:48:18.:48:23.

dribs and drabs, mild, but tempered by the strength of the wind. Wet

:48:23.:48:26.

weather sweeping into south western parts of England later on in the

:48:26.:48:31.

afternoon. It clears through Wales, behind that things will brighten up

:48:31.:48:35.

with sunshine tofl developing across northern parts of Wales. For

:48:35.:48:38.

Northern Ireland sunshine but very strong winds, potentially damaging

:48:38.:48:42.

gusts along the north coast. Scotland where we are most

:48:42.:48:47.

concerned, gusts of up to 80 miles an hour or more. There could be

:48:47.:48:51.

damage construction or power outages, a red warning in force. We

:48:51.:48:56.

are highly confident that there will be some significant damage and

:48:56.:49:00.

disruption from this weather event. Looking further ahead into Friday,

:49:00.:49:06.

Jeremy Paxman looks at David Cameron's problems over Europe, contingency planning for the collapse of the euro, news from CERN about the mysterious Higgs Boson, and a hardening of British social attitudes.


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