05/01/2012 Newsnight


With Emily Maitlis. As economic bears point to cracks in the economy, Jim O'Neill of Goldman Sachs puts the case for the bulls. Justin Rowlatt sees the booming economy in Brazil.

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Bulls and bears, BRIC and PIIGS, the world struggles to find


communal solutions, will 2012 be everyone for himself.


The word that scared everyone last year was "contagion", this year add


"protectionism". Bun BRIC country, Brazil, has already turned itself


into a powerhouse of agriculture and mining, now it is spending a


fortune building its own oil industry. We are talking about $127


billion US dollars, this means $2,000 dollars persecond, 24 hours


day. We will ask Jim O'Neill who coined the BRIC phrase, and ask if


the world is getting closer together or further apart.


Also tonight, after the protests, the PM and his deputy seem to be


racing to crackdown on tax avoidance, will anything change?


Made to feel like a right tweet, Diane Abbott and the sentence that


landed her in hot water. Was it racist or a storm in a tea cup. We


will ask our guests if she was right?


Good evening, if you are looking for calm markets you generally have


to focus on the one that is are shut. The new year has opened as


turbulently as the last one ended. Focus is on Hungary, which has seen


demonstrations and bond yields through the roof. There are


concerns that 2012 could be the year when protectionist sentiment


take as grip. With a second slowdown happening all over the


world, is a communal solution really possible. Will it soon be


every country for itself. Our economics editor, Paul Mason, is


here. Talk us through Hungary? year ended on the theme of national


parliaments versus the euro, the whole question of democracy, with


the imposition of two technocratic Governments in Italy and Greece.


This year it has begun with the same issue somewhere else. Hundred


gary two years ago was close - Hungary two years ago was close to


being bust and had to be bailed out by the IMF. It now has a right-wing


nationalist Government,ed headed by this man, he and his two thirds


majority in parliament have pushed through a whole number of


constitutional amendment and changes in Hungary, which the IMF


and the European Union think are really quite dangerous. They


threaten the financial stability and democracy itself. So, a stand-


off has taken place over the question over whether it gets any


more money, patently needs. This is the effect of the stand-off. This


is Hungary's borrowing costs. Bubbling along to 7% and just after


Christmas it has gone to 10.5% today. That is a sign that people


believe there is a crisis coming in Hungary, and they believe the


Hungarian Government is quit the prepared to stand up to the IMF and


the EU in a way that the Greeks and the Italians weren't.


It may end quite badly, we will know in the next few days, how will


end. The banks must be incredibly


worried. It All comes against the bigger sovereign debt crisis


background. There is good news, the worldle central banks have been


pumping money into Europe, the European Central Bank has been


buying the bonds of striken countries, Italyed today, Greece et


cetera. But -- Italy today, Greece, et cetera. The bad news is, what


are the banks doing with the money being pumped in. Take a look at


this graph. This is the amount of money depos the every night in the


European equiff leent -- deposited every night in the European


equivalent of a mattress, the safest place, where no harm can


come to it. It has gone from not much to a staggering 44 4 billion


overnight. Take a look at that, it moves in waves every month. If that


were the sea, if those were wave ace proching you, you would say


everybody whon't -- approaching you, you can say everybody who can't


swim get out of the way. A crunch in Europeing in Europe in the next


few weeks. The question Government, economists and the public are


asking, what happens when we come to the cathartic moment in Europe.


The background is people looking for national exit routes from this


crisis. Hungary itself deciding the national parliament will trump the


IMF. Another big country on the edge of Europe, that threw its toys


out of the pram, that is our's, over the question of the European


treaty. We have Canada, walking away from the Kyoto Treaty,


essentially on economic grounds, we have the USA and China, sparring


with each other over trade. We have got now the question of the breaks,


the -- the BRICs, as this crisis goes on, they are exporting their


way out of it. Brazil, only this week, stunning trade figures,


stunningly good for them, and stunningly good negative for


everybody who trades with them. That is the issue I think will


overhang 2012. As Paul was saying, the hope for


growth in the world economy was meant to be those BRIC countries,


Brazil, Russia, India and China. Some critics think it should stand


for "ed bloody ridiculous investment concept", we will


discuss with a bond trader and economist the issue. First Justin


Rowlatt has been to Brazil to see how their economy came to boom and


whether it can last. Brazilia, Brazil's remarkable


capital city, was built as a statement of intent. Enshrined in


cool calm concrete Brazil's ambition to become a dynamic modern


nation. But the economic boom in which this city was born, turned to


bust. And the prosperous modern future that Brasilia was designed


to embody remain tantalisingly out of reach. And then, the starked


modernism of this place seemed to give truth to the old joke about


Brazil, that Brazil is the country of tomorrow, and always will be.


Brazil's tomorrow seems finally to have arrived. The country has been


booming, and the seeds of its new success were zone quite literally,


out in the country's vast interior. We are producing the silos here.


Pedro is an economist turned agricultural businessman, who runs


one of the largest farming enterprise, not just in Brazil, but


the world. Brazil has the capacity to feed


everyone in the world. Everyone in the world. A modest ambition?


Because Brazil leads the world in soya? Second in produce. First in


could have he fee, first in sugar cane. First in orange juice. First


in cocoa. Beef? You are not just the bread bast ket, but the grocery


store of the world. He has good reason to feel cocky,


40 years ago Brazil was a net importer of food, and much of the


country was considered unfit for farming. Now it is an agricultural


superpower. The key to this transformation, something very


unfashionable, state planning. Brazil -- TRANSLATION: Brazil's


secret is not something that happened overnight, it is the


result of planning. It began 40 years ago when Brazil's Government


createded a state enterprise in BRAPA.


This man has been dub the King of Soya, because of his dominance of


this key Brazilian export. He's in politics now, an influential


senator, which, say insiders, presidential ambitions.


TRANSLATION: That state organisation was born with the


mission of sending abroad hundreds of technicians, men and women, to


be trained in universities in the United States, in Britain, and


other places. They returned with a large body of scientific knowledge,


and from that base, we in Brazil, began to develop our own systems of


tropical agricultureure. Government planning may have create --


culture. Government planning may have createded the tropical miracle,


but it doesn't sustain it. Brazilian farms prosper without


virtually any subsidy. They didn't put in place the bricks from


agriculture alone. It has vast reserves of iron ore and countless


other minerals. Recently discovered huge oil reserves too, and is


spending record amounts to get the stuff out. We are talking about a


programme that is $224.7 billion US dollars over the next 20 years,


this is $,000 per second, every 24 hours a day. Of investment? Yes.


The real game changer for Brazil is the prices it has been getting for


all the commodities it has in such abundance. They have been at


historic highs for the last decade, thanks to the huge demand createded


by the rapid industrialisation of fellow BRICs, China and India.


We know that the infrastructure...Charles Tang is a


Chinese-born Brazilian, and the lynch pin between much co-operation


between Brazil and China? The two economies are complimentry, Brazil


needs capital to grow its economy and create jobs. China needs the


strategic resources for a sustained growth and to feed its people.


Countries such as Brazil can provide that.


This vision of harmonious economies neatly complimenting each other


doesn't quite hold. In the past year growth has slowed to just 3.5%.


Half the average for the last decade, and half of what China and


India achieved last year. One reason is what Brazilians call


the "costo Brazil", the hidden costs of doing business here. They


cite unyielding bureaucracy and state distortion, but top of the


list is infrastructure. This is the main high road, the state at the


very heart of Brazil's agricultural bonanza, it is a single highway,


millions of tonnes of soya, beef, maize, are shipped down this road


every single year. Locals say that during harvest time, this becomes


one slow traffic jam. Hundreds and hundreds of kilometres long.


But complaint about the roads pale into incision beside the other


Brazilian bug bear, the currency. Brazil's success exporting


commodities has push the value of the currency through the roof. That


is hitting the country's manufacturers. TRANSLATION:


we're not careful China will eat us up. Then there will be India as


well. The Brazilian Government needs to watch out for this. By all


means sit around the table with the BRICs and negotiate, but know how


far to go, at which point to step in and come to the defence of


Brazilian industry. So there arele challenges ahad he, but Brazil has


weathered the current financial gloom far better than most


developed economies. It is now a creditor, not a debtor nation, the


country that once depended on IMF loans, now lends money to the IMF.


While the vision of modernity that inspired Oscar Nimirye, the


architect of Brasilia, there is no question that Brazil, with its


trillion dollar a year economy, is now very much a modern nation.


Let's take some those thoughts to Jim O'Neill, and our other guests.


Great to have you all here, thank you very much.


BRICs, that phrase coined by you a decade or more ago. When you look


at the kind of success of they have had. Want to say Europe should be


trying to emulate what they are doing, without declaring economic


war, can it? I think you should try to do what is right for Europe.


There is certain things going on with each of the BRIC countries,


which is impossible for other countries to replicate, in


particular two, all four of them have a lot more people than


anywhere in Europe. You can't just magically create people. Secondly,


importantly, and shouldn't be lost by any of your viewers, all of


these countries are coming from a much lower base of wealth. And are


at various stages of development. So the growth statistics look


bigger any way. As big as they are getting they are not anywhere near


as wealthy as we are yet, including Brazil, the wealthiest of the four.


They were thought to be the countries that save the world


economy, they can't shoulder that, can they? I don't know about save,


but they are the countries that are driving the world economy. As I'm


sure we will get into in a second, the decade we are now in, the world,


the true world, not a jaundiced western view of it, will probably


grow by more than 4% on average, because of these countries. But it


is not what many western people think, because they see it purely


from the world in which the west being the premier driver of the


world, is the only think thing that should really be the status quo.


There is the issue people have to get their heads around.


When you look at the BRICs do you think that is the only driver now,


realistically of the world? What people have been exciteded about


BRICs, as Jim as said, the number people, number one, but Russia and


China have appalling demographic, the demo of graphic dividend in


China turns negative from 2015. The second point about base of


cheapness, everything in China has been done on the base of cheapness,


low wage costs, increasing now, companies have to of move further


unland. No paying any social welfare, net net, no heed paid to


the massive solution, most of the standing water is polluted and so


on. What he comists would call negative comebgts d economists


would call negative effects coming down. It is not whether China will


have a hard landing, it it is one. In 2009 I had a trip to Beijing and


was alarmed to what is happening. You see me frowning. Jimmy's story


about the BRIC, and I would broaden it, you have another axe nim that


you use, the N11, the - acronym that you use, the N11, the poorer


countries are catching up. That is the secular story of our generation.


You are right, if you look five or ten years ahead, that is where the


global growth will come from. We are in ageing societies here, we


have really big problems in the western world, we have huge debt


overhanging us, we won't grow very fast. If you look at a shorter time


frame, this year, for example, we will see less than a boost from


these economies than we have in the past couple of years. They bounce


back very quickly from the financial crys, they have been


booming, they are closing -- crisis, they have been booming, China and


Brazil have been slowing. The biggest question is what happens in


Europe, maybe we can get into that. The second biggest, equal second,


is how fast and how far China going to slow. If China has a hard


landing f its growth rate really slows, that hits other emerging


economies. Brazil, big exporter. First of all, we all talk about in


idiotic simplicity, China is not landing at all. It is still going


to be travelling. But, you know. Will its growth rates be sustained?


And by the end of this year, it will either have much weaker growth,


or a big weaker growth. I would argue that China has deliberately


decide to try to slow the he economy down.P much of the things


which many of the China bears worry about, they forget that it has been


orchestrated, in particular a turn around in property price, has been


orchestrated by Chinese policy makers. It is really done because


their cha eing last year, contrary to --le challenge last year,


contrary to your intro, was rising inflation, not the problems we sit


around worrying about in Europe. Once they get inflation back down,


they will not timing policy, and if need be, they will support the


economy. That depends on them fine tuning as perfectly as they have in


the past. In 2008/09 they did it brilliantly. The world economy


slumps, the Chinese do a huge stimulus and the economy keeps


roaring. Because we know so little of what goes on in the


administration, we have this assumption they are totally in


control of what their economy is doing? That is complete fallacy,


even talking to people off the record in Beijing, working for the


larger state-owned enterprise, they will say, if you like, it is not a


scalpel, but a large heavy hammer to hit the economy to get it moving.


Presub time crisis you have 50% of the bank loans off balance sheet.


You have 26 million empty parliaments. I know that --


parliamentary partys, I know China bulls -- apartments, I know China


bulls say it won't matter. But the cost of apartments are high, and


the economy is slowing. There was large parts of China had a have yet


to urbanise, the problems which Gillian alludes to, are the ones


where most people travel to, and the ones that are most developed.


At the high end their property markets things have got out of


kilter, that is why they have been deliberately trying to turn it


round. If need be. For the whole national economy, they will


accelerate already existing plans to stimulate fresh building of


properties in parts of China that most of us don't even know how to


spell. So this kind of view is relevant in a cyclical sense, in


some previously, highly excitable parts of the property market. To


simply translate that as a nationwide thing. You need to go


back and visit more. I want to get on to one of the


points that Paul Mason was raising, we have basically had decades of


globalisation. It seems like the only wayer for the world to talk to


each other and the economy to move. It is. Are we moving towards a more


protectionist model, there are some countries that have protect


themselves quite well, insulated themselves against the downturn, by


their protxist measures? I'm struck by, -- Protectionist measures?


struck by, I come from the Economist, we constantly worry


about protectionist all the time.S striking in its absence over the


past few years. If you thought in the wake of the financial crisis,


in 2008, we were terrified there would be a wave of protectionist


pressure, it didn't happen. This year will be a tough year for the


world economy. It will grow more slowly, depending on how badly


things go in Europe, could be nasty. I don't see it yetment I see spats


here and there. If you join up the dots, Paul has given us ten


examples in the last year. Paul could have done that for you three


years ago. It was a very popular view on the aftermath of the 08


severity, that was the end of globalisation. It is not even close


to it. I would argue, in the aftermath of 08, people thought the


Governments had all the solutions, and all that is happening is the


debt has been passed from the private sector to Government sector.


Now that is going bad. Now it is an accident of history that 2012 sees


so many changes andle challenges to Government around the world, China,


Russia, US, frapbts, the list goes on. The temptation of protectionism


goes ever higher. I wo agree with both of you to argue from a ration


-- I would agree with bolt of you to argue from the ration -- both of


you to argue from the rational point of view of an economist.


Tomorrow will be a a figures list of employment and unemployment


picture in the US T will show in the US that the picture is


improving. The whole push for protectionism in the US is losing


the impetuous. You remain very bullish? I worry about the European


thing. We will talk about about this. We saw Paul's crest of waves


on the graphic. Is it possible that crisis won't hit? Won't hit where?


Europe? Europe is already being hit, what we have talked about so far,


is whether that is, or on the edge of, or what is implicit, that is


going to, by definition. Will it hang together? Drag down the rest


the world. The most interesting news in the past few weeks about


Europe is that Europe's biggest economy, Germany, itself, seems to


be reasonably coping with it. Which I myself am surprise with about. I


thought Germany would be weaker than it is. I think the p best case


scenario is Europe has a short, Europe has a short and sharp resgs.


I don't see why it should be short, I don't think see growth in Italy


or Spain, they have massive austerity feeding on bank


contraction. That is the best case scenario, the worst is the eurozone


falls apart with a real cat it is a trough he fee. I think it will have


a real -- catastrophy, I think it will have a real effect on the rest


of the world. Everyone is framing the question, how to keep the


eurozone together in its current guise, I don't think Germany is


plated in gold, the Germany constitution court ruling shows a


lack of economic clout and political will. Also the frame, can


we hold the eurozone together, it is such a disaster, that perhaps


taking it apart now will save a greater disaster down the line.


Prime Minister has signalled he wants to crack down on large


companies and their Francy corporate lawyers who endlessly


reduce their tax bills. He seems to be in a competition with his deputy,


Nick Clegg, in rhetoric on tax avoidance, which unlike tax evasion


is legal. What will a crackdown look like, and will it do anything.


Here is a guide to avoid tax. Navigating the maze of British tax


legislation to advantage, exploiting every loophole is what


legal tax avoidance is all about. Tackling those greedy capitalists


who minimise their bills is a populist campaign. Something must


be done, said the Prime Minister, addressing hard-pushed leaders of


smaller and medium-sized businesses today. We need a tougher approach.


One of the things we will look at this year is whether there should


be a more general anti-avoidance power, that HMRC can use,


particularly on very wealthy individuals and on the bigger


companies, to make sure they pay their fair share.


No less keen to talk tough was the Deputy Prime Minister, speaking on


Radio 4 this morning. He sees an attack on corporate greed as a


defining issuer for the Liberal Democrats. Millions of people, and


these are millions of people who I feel Liberal Democrats and politics


are for, who pay by the rules, who pay their tax, who work hard, to


aspire to do the right thing for themselves and their families, who


are angered when they feel there is a wealthy elite, or big business,


who pay an army of accountants to get out of paying their fair share


of tax. How do companies avoid paying tax, these are the five most


popular ways, they can decide the location the transactions take


place. Ireland has an attractively low rate of corporation tax. Then


there is the timing of payment. Deferring it for a period allows


you to bank the interest. The identity of who is doing it is


important. Some multinationals shift debt on to UK-based companies,


and recording big profits in countries where taxes are lower.


The type of transaction can be changed, capital gains tax is lower


than income tax. Finally it is possible to obscure the way the


information is disclose. Many offshore tax havens have rules much


less stringent than the UK. I say cutback, you say fightback.


London October 2010, protestors gather outside a Vodaphone shop,


complaining about what they say is an unpaid tax bill of billions. The


company says it has never owed that sum. But the dispute over revenue


has cost millions over nine years. This attrition of war ended last


year, when the company agreed to pay �1.25 billion in a final


settlement. Tax avoidance is not working within the law. Listen to


the description. It is avoiding. You getting round the law. What


these people -- companies do is find ways to get around the UK law


and trade it off with the law of other countries. They trade of off


different accounting systems between the UK and other countries.


They are really trying to get round the law. It is legal, no-one is


disputing that. But it is unethical. Parliament has been critical of


Vodaphone, but the firm says it has been unfairly ma lined. Here at the


Treasury Select Committee, another bigp company was under fire over


the -- another big company was under fire over the amount of tax


paid over to the revenue. We paid �2 billion in tax to HMRC, over the


last six years we have paid �12.5 billion. Of that �2 billion, what


percentage was non-payroll taxes?Off The periodsages. Most


that could be the payroll tax paid by employees, in terms of corporate


tax we don't know. That is the payment from Barclays to HMRC.


Barclays later wrote to the committee confirming it paid just


�113 million corporation tax in 209. That low figure was blamed on UK


losses. Newsnight asked the amount of UK corporation tax paid in other


years, the firm said it never gives out these figures. Many of the


small and medium sized businesss in this country, struggling in the


current economic climate, do not have access to the army of tax


experts. Wr talking about big rich companies? We are. But what does


that mean we do, do we kind of give up and walk away from the piste,


and give up trying to ensure people make a fair contribution, or do we


do absolutely everything we can to ensure that we clampdown on the


loopholes. But for that to happen, the revenue


must be firing on all cylinders, there is precious little sign of


that. The top man, Dave Hartnett left recently after negotiating a


series of controversial tax settlements with powerful firms.


Cosy deals, according to MPs. And the service is facing severe cuts.


You you have a real problem, it is a real dilemma in that over the


last few years a lot of their experience in this area has just


gone. And for the revenue to try and recruit and get people in place,


who are capable of dealing with matters where it is large


corporates, who have good solid advisers, it is hard to imagine


that it is going to be an easy one for the revenue to win.


In reality, then, it is easy to talk tough about tackling loopholes,


but those with money have access to elite, legal and financial advice.


Victory in court is not assured, and naming a and shaming is tricky,


because allegations will be denied. In the short-term, then, this


becomes an ethical, rather than a legal debate.


With me now, representatives of the two parties in coalition, the Lib


Dem deputy leader, Simon Hughes, a the Conservativep MP, Jesse Norman.


This was always a central tenet of theed Liberal Democrat position on


tax, wasn't it. How successful, truly, do you think you have been


in pushing had to the top of the agenda, in the coalition


Government? Firstly, happy new year, the answer is we have, the argument


has been won. Across the coalition. Before the last general election,


we had proposals that suggest that there should be a general anti-


avoidance provision. There was a commitment in our fest toe, the


coalition agreement he spe -- manifesto, the coalition agreement


specifically made a commitment to it with the proposal West came


forward with. From Danny Alexander there was a speech talking about


action happening. In the first speech it was the Government


spending a billion to get in �7 billion, the extra that was avoided.


The feeble 5,000 top earners that Labour targeteded, we were going to


look at the top 350,000 top earners, driven by �2.5 million a year.


were forced to look at this because of pressure on you from the Liberal


Democrats? I wouldn't think that is right at all. What has happened is


actually there has been an argument, a discussion has been had within


the coalition, and I think the Chancellor's actually leading it as


much as anyone, actually. If you lock at the decisions he has made


in terms of cracking down on this crony capitalism. He has had a non-


dom tarrif. That was his idea, we have had a bank levy out of that.


It is interesting the two sides have come together, and the


Chancellor has commissioned this new review on anti-abuse. That is


what we are coming up now. In that report, the quote that it is


concluded to be introducing a broad spectrum anti-avoidance rule would


not be beneficial for the UK tax system. He says there is a real


risk of undermining business being table to carry out sensible


business. Of this thrown it Alawites together? They haven't


done that. They are saying there are two kinds of things to separate,


legitimate, proper, tax planning, from abnormal and abusing tax


evasion and avoidance. That is what they are targeting. Not evasion, we


are talking anti-avoidance. What is an Antwiity avoidance rule? -- an


anti-avoidance rule? It is an anti- abuse regulation. What that


regulation is looking at is all the grey areas in which the tax law is


being manipulated in favour of companies with rich lawyers, as


described, and being pushed from legitimate avoidance into evasion.


What is fascinating about the review, there is a lot of


consultation withm sol of the key industrial and other groups around


it. -- some of the key industrial and other groups around it. And it


has the provisions in the back of it which we can discuss. Can you


understand what it involves, Nick Clegg says the report shows it is


feasible? Let me put it to you clearly and hopefully to viewers as


well. Most common law jurisdictions, Australia and Hong Kong have such a


provision. It changes the way we would do tax arrangements and


collection, are from the old system which is you would try to avoid it,


the that was the presumption. Ever year the Finance Bill would close a


loophole somebody had found. To putting in place provision that is


say, we are asueing, we the state, through the tax collectors, are


assuming it is wrong it avoid tax. An anti-avoidance rule would not be


beneficial for the UK tax system, that is what it says? Please let me


explain. The proposition that was reject there was a general


provision across all taxes, because, for some taxes that wouldn't be


clever.S an incentive for people who investment in ISAs, he was


clear that you take sectors, corporation tax, capital gains tax,


income tax, petroleum tax, and you have provision that is make sure


you don't avoid those liabilities. Corporation tax, he gave the


example. Would net �2.1 billion. Are you convince that this will be


adapt and you will see anti-tax avoidance rules implemented?


answer is yes. I accept that the Tories have signed up to the common


agenda. That is very positive. And I am very clear that where as at


the moment we miss �7 in �100 that we should collect, Liberal


Democrats will be more successful. That was their argument before.


will be more successful in this parliament, with Tory partners n


dealing with tax avoidance than any other Government sow far in British


history. It is very -- So far in British history. This is about


perception, the IMF said basically the Tory-led Government cuts would


make the poorest families suffer most. This is about trying to say


we're all in this together, isn't that what it is about? The truth of


it is, that the anti-tax avoidance measure that is have been taken now


are ones in which the Tories have been leading, just as much as the


Liberal Democrats. There is no suggestion that George Osborne, a


man who introduceded the idea of a non-dom tarrif, before becoming --


introduced the idea of non-dom tarrif before becoming Chancellor


would not be on board with this. The same on the tax levy and the


other elements to combat the Crowny capitalism Judge the outcome in


five years. Many people have fallen foul of


Twitter, Diane Abbott, Labour's shadow Health Minister, is the


latest. She wrote "white people love playing divide and rule".


Today she ale poll guise, after an apparent dressing -- apologiseded


after an apparent dressing down from Ed Milliband.


After a week where two were jailed for the murder of Stephen Lawrence,


issues of race have never been far from the sent. She spent most her


life on the backbenches, but Diane Abbott has built the profile of a


political A-Lister. Apparently glued to the TV sofas.


The straight talking she has brought tom campaigns against


racism and poverty, has, once again, caused a mighty storm, sent raging


by a little tweet. A freelance journalists, had tweet in reference


There was a furious reaction on- line, and off it in Westminster.


think what Diane Abbott said was just stupid and crass


generalisation. He she should explain and apologise for what she


said. Let as call it the 140 character defence. Diane Abbott use


to claim her remarks were taken out of context. A thesis on 19th


century European Colonialism, far too great for the truncated medium


she had had chosen. There will continue to be


discussion about it. But certainly, from the Labour Party's point view,


her position is secure, as the shadow health minister. And she has


ale poll guiseed for causing offence. Which should be --


apologised for causing offence, that should be enough. Do you know


from Ed Milliband her position is secure? I hope her position is


secure. Ed Milliband becomes the latest Labour leader to call Miss


Abbott to orderment she stood against him for the leadship,


coming last. During the contest she made much of being the outsider,


opposed to the Iraq war, and apart from the Blair-Brown cliques. Some


her issues with senior colleagues from personal, she criticiseded


Tony Blair and Harriet Harmen for sending children to selective


schools, then she sent her own son to a fee-paying school. The double


standard led to a bust-up on her own TV programme. You said "West


Indian mums will go to the wall for their children", so black mothers


love their children more than white. Andrew, we have just had one of the


most important budgets in a generation, I have said everything


I will say about where I send my son to school. No understand the


quote. Supposing Michael had said "white mums will go to the wall for


their children". Andrew I have nothing more to say. So Britain's


first black womanp MP found herself accuse of -- woman MP found herself


abused of racism. This was her description of the coalition


leaders a month ago. One of the things about this new leadership.


This new leadership is how post meritocratic it is, two posh white


boys from the home counties. spent her adult life in the


spotlight, people already know exactly what they think of Diane


Abbott, this flare up tells us not much about her. But the reaction to


it reveals plenty about the ever- sensitive issues of race relations


in this country. This, afterall, is the week in


which two white men were jailed for the murder, 18 years ago, of the


black teenager Stephen Lawrence. It was but a partial settlement of the


case. Other suspects remain free. But the trial has revived some of


the intercommunity tensions felt at the time.


It appears to me there is a bit of a backlash, and it is something we


have seen before, we have seen it when the racial relations acts was


publish as well. It seems we get a very entrenched views coming across


and people going too far in enforcing race relations act and


now white communities won't be supported.Le This burn us alive.


The feeling of unfair abandonment by white working-class communities,


was identified in a report about race relations for Bradford City


Council, shortly before riots broke out there in 2001.


Over a period of time, there has been a neglect of those who are


poor and white in our urban areas, and rural areas. And I think


because we haven't given sufficient attention to that, there is an


inclination for resentment to build, and for people to be resentleful of


initiatives aimed at -- resentful of initiatives aimed at dealing


with black communities. The fast flowing nature of Twitter ensures


the spark caused by Diane Abbott's comments will fade. In its wake,


this week especially, the tough questions about how we all live


together and treat each other, will not be so lightly set aside.


With me now the broadcaster and civil rights activist Darcus Howe,


and the director of British further, a new think-tank. Was Diane Abbott


right to apologise? I got about ten phone calls from friends, activists,


non-activists, and all them black, they said what is she apologising


with about? That is what surpriseded me. Who is she ale poll


guiseing to? Miliband is nowhere and doesn't have the experience of


organising working people as Diane Abbott. You don't think she should


have apologised? I don't know for what, I will meet her and she will


explain it to me. She said divide and rule is part the strategy of


political whites, and I tell you how it happens the to this.


didn't say political whites? Whites, she will say they like their own


type of black. You understand that? I think she's right, I'm glad she


has apologised, it is crass and offensive, it was a crude


stereotype white people. She didn't mean to that, I'm sure as she said,


stereotype all white people, as that was the natural reading of it,


she should withdraw. She said it was out context, I think it is


worse in context. She was talking to a black journalist who made a


cogent point. This issue of community leaders I have some


problems with that, who is representing who, who he decides it.


It it is a policing of debate within black communities about


black communities that says you can't say that in public, that is


divide and rule, you are plauge into a white agenda -- playing into


a white agenda. Of course not All Black people think the same as


everything, that is because, you were campaigning against racism


before the -- I was born, the games you played before were more diverse,


we should welcome the process as well as seeing it is not complete.


I like when somebody tells me something nice about myselfment


you turn it around, if it was a white MP and they made a sweeping


generalisation about black people, they would almost certainly be out


of a job? Why if it was a white person, no white person ever said


it. If they say it, I have to wait and see it who says it where and


why and when the you can't just say if it was a white person. It it is


not logical. I find that Diane Abbott, at this time, is crucial,


at the time when Doreen Lawrence and they and us have won that


campaign, Diane is itching to speak, but she has to...It Sound like you


are excusing what was bluntly a stupid thing to friend? She is my


comrade and French, I would have said the same thing. I would have


told Miliband to go to hell. Do you think this is basically a storm in


a tea cup, on a fairly slow news day, with somebody who has had form


before? It is a question of think before you tweet. I love twittwiter


to bits, it is not the place to have nuanced discussions. The


outrage goes tooer far asle well, apologise, withdraw, move on and


have -- as well, apologise, withdraw, and move on and have a


serious discussion. The big serious issues we have seen with Stephen


Lawrence. We are having a shouting match where people are outraged.


Let's have a conversation. We saw in the report there was talk about


the sense of poor, white isolation as being one of the reasons,


possibly in the backlash from the Lawrence laorn conviction, do you


buy that this week? -- Stephen Lawrence conviction this week, do


you buy that this week? There is a problem, but the real problem is


you don't have to choose. You can either deal with the racism


affecting the black community or the exchugs of the white community,


we want fair communities. You were probably the first person


to say a multiculturalism where white people have no role except as


oppressors won't get us to good society. Nobody heard me say that,


Diane came into the Labour Party under black sections because the


Labour Party couldn't have black MPs. They fought and campaigned,


she became, on that issue alonement the black community, for the first


time in human history in this country could rely on someone who


knew them, where they came from, who didn't have to go...What Do you


make of the reaction, the response to her tweet, do you think this is


a febrile of Twitter? It will go away. What concerns me Diane is in


a Shadow Cabinet with people who are very inferior to her


politically, she is minister of public health, and they go out and


speak about blacks, and she has to sit there, waiting to listen, to


what the rest of them have to say, which amounts to nothing.


I have to leave it there. Just before we go. Let me take you


through the front pages of thep papers.


The picture of Marylin Monroe, which I will show you later, the


which I will show you later, the The American photo journalist died


at the age of 99. This is a reminder of some of her most iconic


Good news. The worst of the storms dying down now. Much lighter winds


to end the week, it will be a pleasant start to the day, a bit


chilly. Sunshine becoming more confined to


the eastern half. Further west cloudier with outbreaks of rain.


Mid-afternoon across parts of the Midlands, brightness hanging on.


Cloudy, not spoiling things. In the south-east a fine day.


Temperatures struggling up to seven or eight. Cloudier across parts of


South-West England, the odd spot rain in the breeze. For walls as


well. After a bright start will tend to cloud over with dampness 0


toen the day. The wind, as I say, nothing like -- to end the day. The


wind nothing like we have seen. In Northern Ireland we will see


outbreaks of rain turning up, wet across the western Highlands and


island. To the east some dry and brighter weather will hang on for a


good part of the day. Further ahead into the weekend. Some hours across


the North West. But the emphasis on bright and breezeyo conditions


through this weekend. Both -- breezy conditions through the


weekend. The winds not as strong. One or two showers around, many


places having a fine weekend, plenty of sunshine from time to


time the The picture on Saturday, a chilly start to the day. The


With Emily Maitlis. As economic bears point to cracks in the economy, Jim O'Neill of Goldman Sachs puts the case for the bulls. Justin Rowlatt sees the booming economy in Brazil.

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