05/01/2012 Newsnight

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