09/01/2012 Newsnight


09/01/2012

Can Edinburgh trump London in the fight for the union? What happened to America's Dream? And will Europe's financial transaction tax work? With Gavin Esler.


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Transcript


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Tonight, the State of the Union. Will the question and timing of

:00:10.:00:14.

Scotland's vote on independence be decide, not in Edinburgh, but

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London. As the coalition tries to assert its authority over Salmondle

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in the opening salvos over a -- Alex Salmond in the opening salvos

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over the United Kingdom. We hear from our guests.

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Also tonight. Drop in and see us some time. Do that.

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The end of the American dream, as Republicans try to find someone to

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challenge Barack Obama, we report on how middle and lower income

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Americans just can't move up to better times. I don't think we have

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gotten a raise, cost of living went away for a while, this is still

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away. About eight years we have been about the same wage. We will

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ponder that with two former White House insiders.

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Is the Deputy Prime Minister sucking up to Europe, by suggesting

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that the treaty opposed by Britain will one day be agreed by all.

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believe that it should, over time, be folded into the existing EU

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treaties. Good evening, there was a time way

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back in the 1950s, within the Conservative Party had a majority

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in Scotland. Since the days of Margaret Thatcher, Tories across

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the border have been cherished for their rarity. David Cameron's

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attempt to point out any referendum on the independence of Scotland,

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requires the UK parliament to play a central role, may be legally

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correct, but it is politically fraught. Judging by the reaction of

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the Scottish National Party leadership, the precise timing of

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the referendum will be a political hot potato for years ahead. Here is

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David Grossman on the state the union.

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It was the persistence of a spider, we are told, that convinced Robert

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the Bruce, to ignore his repeated defeats and continue his fight

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against English rule. His reward, a famous Scottish victory at

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Bannockburn. Around the 700th anniversary of Bannockburn, in 2014,

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is, we are told,le Alex Salmond's preferred date for a referendum on

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Scottish independence. Why not straight away? Well, critics of the

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SNP would suggest it is a political move. Mr Salmond needs time to

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shift the debate his way. The real issue here is that Alex

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Salmond doesn't want to fight this referendum now. He's hoping that if

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he strings things out long enough, then he can get people to accept

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his argument. I think it is far better to decide this issue once

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and for all, decide if we are staying in the UK or not, and

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decide the future. David Cameron has a Scottish name and Scottish

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heritage. The motto of the clan Cameron translates as "let us

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unite", the union, it seems, is in his blood. So he's not about to let

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Alex Salmond, who, whilst we are on the subject, has less prestigious

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her at this stage, dictate the timing or form of any referendum.S

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Had very damaging for Scotland. All the time business is asking, --

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this is very damaging for Scotland. All the time business is asking, is

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Scotland going to be part of the UK, should I invest, companies are

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asking those questions. It is rational to put to the Scottish

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people, would it be better to have a for fair and decisive question

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put earlier. We will not dictate this. Scottish devolution, in 1999,

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where a new Scottish Parliament took over much, but not all of the

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Government of Scotland, was supposeded to kill off any appetite

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for independence forever, and with it the SNP. But something very

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strange happened, something that the Labour architects of devolution

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never predicted, the SNP became even more popular. I heard a

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rumour! I think we won the election. So popular that they won an

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outright majority in the Scottish Parliament elections last year,

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eventhough the election rules were specifically designed to avoid any

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party getting a majority. What Salmond has done is play a

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long game. He has been a gradualist about this, he always told his

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party if they were patient, if they played along with the Scottish

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Parliament, if they stood for seats in it, eventually, eventually, they

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would find a gap in the unionists armoury and win the majority and

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stand on the verge of getting independence for Scotland. By

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playing that long game, it has worked for Alex Salmond. David

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Cameron knows he will be portrayed as an English meddleler in Scottish

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affairs, and may even drive more Scottish voters towards

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independence, however, he feels he has few options, particularly if he

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wants to help frame this debate. Alex Salmond wants to have a third

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option on any referendum ballotp paper. Called devolution max.

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However, David Cameron is determined it should be a straight

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choice between in the union or out. And that, rather than the timing of

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this referendum, is the real battleground here.

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The third option, devo max, or independence light, as it is called,

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is an attempt by Alex Salmond to give himself a fallback position.

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If he fails on the independence position, and all the opinion polls

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suggest it is unlikely he would win an immediate referendum on

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independence, he has the third way. He can appoint greater powers

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accrued to the parliament in Scotland and say it is a further

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step along the way to full scale independence. How clear is the

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constitutional law? Although the Scottish Government can hold an

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advisory referendum on pretty much anything it wants, it doesn't have

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the constitutional power to hold a binding one. Here the Westminster

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parliament is the only power in the land.

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Tomorrow, the UK Government will offer to lend the Scottish

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Parliament that power, for a limited period, if its conditions

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are met. The Scottish Government, I think,

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will, largely ignore this proposal. They won't entirely ignore it, it

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is useful for them to suggest this is an example of wanton

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interference. They don't have to act on this. I can't see why they

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would be attracted to it. This proposal would limit the choices,

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they are keen to have more powers, something between independence and

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the status quo, on the ballot paper. They are keen the referendum should

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be held at the end of the term of the Scottish Parliament, not sooner.

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There is nothing in this proposal attractive to the Scottish

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Government that I could see. If you look at the fuss caused by David

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Cameron's announcedment yesterday. It has nothing to do with the

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merits of independence, or the merits of staying in the UK, it has

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everything to do with the fact that we are not going to be allowed to

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have a referendum if Alex Salmond has his way, until the time had his

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choosing, not Scotland's choosing, when he decides it is best for him.

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That, I think, most people would find difficult to accept. Try and

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try again, may have been the spider's lesson, but Alex Salmond

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knows has probably only one shot at independence. If he gets wrong,

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well, chances are, he won't get another spin.

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Just before we came on air I talk to Scotland's Deputy First Minister,

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Nicola Sturgeon. Deputy First Minister, do you accept that the

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legal position is, that under the 199 Scotland act, it it is the UK

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parliament that has the power to decide the details of a

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constitutional referendum, this is not interference, it is just the

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way the law is? There is no doubt about the ability of the Scottish

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Parliament to hold a consultative and advisory referendum. That's

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what the Scottish Government has proposed to do. We fought the

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election on a very clear plan of to have that kind of referendum in the

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second half of this parliament. And I think it is unfortunate that the

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Westminster Government has sought to interfere in that today.

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understand that tomorrow the Scottish Secretary, Michael Moore

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will say, anything you would arrange would be advisory, as you

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accept, it would be open to legal challenge, the powers with

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Westminster. To help you out, he will temporarily transfer the power

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to the Scottish Parliament, provideded any referendum is fair,

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decisive and clear, a simple once and for all yes, no, vote on ifpdz,

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and not a second vote on greater powers of devolution. I don't

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accept the basis of that parliament. What I will say is this, if the UK

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Government believes that could be the legal position, had let them

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transfer that power, but let them do it without seeking to attach

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conditions. Because it is the attempt to attach conditions that I

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think is some what giving the game away today. They are trying to

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interfere and wrest control of the referendum from the Scottish

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Government. It is for the Scottish Government to decide the timing of

:09:06.:09:10.

the referendum. It iser for the Scottish people to ultimate -- it

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is for the Scottish people to ultimately decide the outcome of

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the referendum. Isn't it a dream come through, they will transfer

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powers to you, you say you want a yes/no vote, you want a fair,

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decisive and clear result, why not say yes? It is always our

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preference to have a straight yes or no question. We are not the only

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people with an opinion on the matter. This is a body of opinion

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in Scotland that wants additional powers, and more economic powers,

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short of independence. We have never, rightly, ruled out having

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that option on the ballot pap. We are democrats, we want to give the

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people of Scotland the right to decide their own future. The

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politicians calling now for a referendum to happen more quickly

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are the same politician who is spent the last four years trying to

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plokwo the referendum completely. The -- block the referendum

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completely. The SNP won the election overwhelmingly, and we

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have a mandate and Westminster should respect that. You are going

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to reject the offer because you want a yes/no vote, you want that,

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you have just said so? That is our preference. We started to with the

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UK Government saying that they wanted to set a time scale against

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the time scale that the Scottish Government won the election on. We

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have ended the election with them appearing, although we don't know,

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to retreat from that position. There are all sorts of rumours

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about splits within the coalition. The UK Government is in complete

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disarray over this. In Scotland, by contrast, the position is clear, we

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set out a clear position in the election. We won that election

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rather handsomely. I think Westminster should respect the

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democratic wishes of the Scottish people. Just so we can move on, you

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reject this offer? Let's see what the UK Government has to say. But

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if they are trying it attach conditions to the right of the

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Scottish people to decide their own future, then I think most people in

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Scotland will look very dimly at a Tory-led Government trying to

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undermine Scottish democracy. you quite pleased with this row?

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do think there is a sense in which the war, a Tory-led Government that

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seeks to interfere in a decision rightly for the Scottish people,

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the more support for independence will continue to grow. It has

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backfired spectacularly on the UK Government, on the Tories in

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particular today. We have heard George Osborne is in charge of this,

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so clearly it is a Tory initiative. We hear the liberals are less than

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happy about it. They are in complete disarray. By contrast the

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position of the Scottish Government couldn't be clearer. Can you also

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be clear for those who don't follow it closely what independence would

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mean, for all the big things in life on these islands, in terms of

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the pound, the euro, the Queen and the army, have you thought that

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through? The SNP's position is keeping the Queen as head of state,

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and we will remain with sterling until such a time as it is right to

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go into the euro. Independent means the big decisions that affect day-

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to-day life get taken here in Scotland by people in Scotland, the

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people who care about them most. That is thes sense of independence

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in every independent country the world over, why not different in

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Scotland. Of course we want aed God, positive, co-operative relationship

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of equals with the other countries of these islands, but that

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relationship equals with the power of decision here in Scotland is the

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essence of independence. There used to be a joke that you

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could fit all the Scottish Conservative MPs into a taxi, now

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you can fit them all into one chair. Here he is, the Scottish Office

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minister. She was very clear, there, you can't get awhich with attaching

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conditions to what the people of Scotland should vote on, when she

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and her party have got a democratic mandate to run this referendum as

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they see fit? I find difficult to understand why Nicola Sturgeon

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doesn't want to see a legal, fair and decisive referendum in Scotland.

:13:08.:13:12.

The Government tomorrow had make a statement about the legal position

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in relation to who can hold a referendum. If you want to attach

:13:17.:13:23.

conditions to that? What we will try to set out a basis on which a

:13:23.:13:27.

referendum could be held that wouldn't be the basis of any legal

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challenge. I don't think anybody, particularly the Scottish national

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part, who say they support independence, has been their very

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raison d'etre, would be the subject of any legal challenge. I'm sure

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they want a fair referendum, one that is held under the normal best

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practice for referenda, and they want a decisive outcome in the UK.

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What they will not concede is you have the right to tell them what

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the question should be. There are some people in Scotland who think

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that stopping with powers short of independence would be fine, why

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can't you concede to that? Scotland has two Government, I know Nicola

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doesn't like to acknowledge that. We have a Government in Westminster,

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elected less than two years ago, by the people of Scotlandments one of

:14:17.:14:20.

Scotland's Governments. We have the Scottish National Party Government

:14:20.:14:25.

at hole road that deals with devolved issues -- Holyrood, that

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deals with devolved issues the it is wholly appropriate for the UK

:14:29.:14:32.

Government to set out its position in relation to the constitution.

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Have you back down, however, of setting date of 2013, she says

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there is splits in the coalition over this, and you are in complete

:14:40.:14:44.

disarray, you have backed down over the date? It is the SNP that is in

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a wholly incomprehensible position, they havem campaigned for this to

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be independence in Scott -- they have campaigned for independence to

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be in Scotland. There will be an opportunity for referendum in

:14:54.:15:01.

Scotland, not subject tole challenge, fair and decisive -- to

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challenge, fair and decisive. The SNP went into Scottish Parliament

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elections on a manifesto for a referendum for independence. It

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didn't have anything at all in the manifesto on timing. Over the

:15:16.:15:19.

weekend you said it you would like to have it in 2013, it won't happen

:15:19.:15:23.

then, you have backed down from that? We would like the referendum

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to take place as soon as possible. It is, as the Prime Minister said,

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causing uncertainty. It has become a complete pantomime, will he,

:15:31.:15:35.

won't he call it. It is causing a distraction in Scottish Parliaments,

:15:35.:15:39.

it is the only issue that is really being discussed since the Scottish

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elections, despite the fact that Scotland, like the rest the world,

:15:43.:15:47.

is facing the global economic crisis. It needs to be reof solved

:15:47.:15:52.

once and for all. It is very -- resolved once and for all. It is

:15:52.:15:55.

very difficult to understand why the Scottish national part, who

:15:55.:16:00.

have supported independence and called repeatedly for an

:16:00.:16:04.

independence referendum, now want to prevar Kate it. Who would be the

:16:04.:16:09.

figurehead leading the unionist case in Scotland, David Cameron,

:16:09.:16:12.

George Osborne, Gordon Brown, yourself, who will take on Alex

:16:12.:16:16.

Salmond and beat him? I thinkle all the party that support the UK, --

:16:16.:16:21.

think all the parties that support the UK and keeping the UK together

:16:21.:16:24.

will play a part in that programme. And they will respect the people of

:16:24.:16:27.

Scotland in that. It is their decision. Why have they been so

:16:27.:16:32.

useless so far. If the unionist case is so strong, why is nobody

:16:32.:16:38.

making it? I don't accept that the unionist parties haven't made their

:16:38.:16:46.

case. They haven't made it in the way the SNP do, they are a party

:16:46.:16:49.

bound in a policy breaking up the UK. It is clear from all the

:16:49.:16:53.

polling to date, that the majority people in Scotland support Scotland

:16:53.:16:56.

staying in Britain. They don't want Scotland pulled out of Britain,

:16:56.:17:00.

they have voted SNP in the elections last year, because they

:17:00.:17:04.

felt Alex Salmond was the best person to be First Minister, the

:17:04.:17:08.

SNP had a number of attractive policies to them. Would David

:17:08.:17:12.

Cameron be the best person to lead a campaign for the union in

:17:12.:17:15.

Scotland? David Cameron is the Prime Minister Scotland, he will

:17:15.:17:19.

have a significant part to play in the campaign to keep Scotland in

:17:19.:17:22.

Britain. Don't you worry this is exactly the trap that the SNP would

:17:22.:17:26.

like you to fall in to. You are the only Conservative MP at Westminster,

:17:26.:17:30.

for north of the boarder, if David Cameron were to play a major part

:17:30.:17:33.

in this campaign, it would backfire? Had I don't think that is

:17:33.:17:38.

the case at all. I think the issues, what we want to get on and discuss,

:17:38.:17:44.

is about Scotland's part in the UK. Not about process, which the SNP

:17:44.:17:48.

want to get us bogged down in. I think the people of Scotland

:17:48.:17:52.

recognise the benefits of being in the UK, and they will see all the

:17:52.:17:54.

unionists parties campaigning for Scotland to stay in the UK. And

:17:54.:18:00.

that will be the outcome of any referendum, when ever it is hell.

:18:00.:18:03.

There are big changes in the Obama White House tonight, as the

:18:03.:18:07.

President's Chief of Staff, Bill Daley, is being replaced. In the

:18:07.:18:10.

middle of Obama's re-election campaign, in which the economy is

:18:10.:18:13.

the central issue. For millions of ordinary Americans, the American

:18:13.:18:16.

dream doing better than your parents has taken a battering.

:18:16.:18:20.

Recent studies suggest that moving up the economic scale is more

:18:20.:18:23.

difficult in the United States nowadays than in Canada, or western

:18:24.:18:29.

Europe. We report from Ohio on what could be the make-or-break issue

:18:29.:18:33.

for the Obama presidency, in a make-or-break state for

:18:33.:18:42.

presidential candidates. This economy took a bit hit, if you

:18:42.:18:45.

have a bad illness or hit by a truck, it will take a while for you

:18:45.:18:48.

to mend. That is what has happened to our economy. It is taking a

:18:49.:18:54.

while to mend. Part of Obama's mending is the rebirth of the motor

:18:54.:19:00.

industry. GM and Chrysler were on their knees, bankrupt, with

:19:00.:19:06.

incalculable costs to America's psyche, deliverance arrived with

:19:06.:19:11.

$60 billion of tax-payers' cash. were dead as a company. We seized

:19:11.:19:14.

to exist, and eaten up by the competition, they of would have

:19:14.:19:19.

taken our market share. Again, because President Obama and his

:19:19.:19:22.

administration had faith in clies letter we existed today, we realise

:19:22.:19:28.

we have -- Chrysler, we exist today, and we realise we have a future

:19:28.:19:35.

ahead of us. At Chrysler's Ohio plant the future will be different.

:19:35.:19:39.

There is less demarcation between management and production line.

:19:39.:19:43.

Workers feel involved, no-one is getting rich. People know we have a

:19:43.:19:47.

new lease of life here, we have to do whatever it takes to keep this

:19:47.:19:51.

plant open. I don't think we have gotten a raise, cost of living went

:19:51.:19:55.

away, it is still away. About eight years we have been at the same wage

:19:55.:19:59.

right now. You are actually getting less in real terms? Correct,

:19:59.:20:04.

because of the economy, people are willing to do work for less money.

:20:04.:20:08.

We are all very grateful for our job right here. We know the

:20:08.:20:12.

unemployment rate is up through the roof, we are grateful to have a job

:20:12.:20:16.

here. The Rennaissance in the American

:20:16.:20:20.

motor industry carries several lessons, workers and management are

:20:20.:20:25.

united, they are all in this together, up to a point. Beyond the

:20:25.:20:28.

car plants, the old vision of America as a haven of social

:20:28.:20:33.

mobility, that has been shaken. Out there in Ohio and beyond, whole

:20:33.:20:37.

swathes of the American work force, the American middle-classes, have

:20:37.:20:42.

been hurting. And the question in this election year is, when and if

:20:42.:20:52.
:20:52.:20:52.

that pain is going to stop. Dayton Ohio has been decimated and worse.

:20:53.:21:00.

Since 2000, 15% of the people have left. The Ohio lawyer department a

:21:00.:21:05.

diary of the great depression in the 1930s, he could have been

:21:05.:21:15.
:21:15.:21:26.

Eight decades on and the story is repeated. It is reckoned 25,000

:21:26.:21:30.

extra families have been blighteded by unemployment here in the last

:21:30.:21:33.

four years. - blighted by unemployment here in the last four

:21:33.:21:40.

years. They were the ones that got clobbered, some of them had really

:21:40.:21:44.

nice prolonged spells of employment in manufacturing jobs, that were

:21:44.:21:50.

paying them a decent wage. I think the fall for those people was very

:21:50.:21:54.

dramatic, but there were other people, working-class people, no

:21:54.:22:02.

matter how hard you tried, you simply can't find work.

:22:02.:22:06.

unemployment rate is now at its lowest in three years. We must call

:22:06.:22:09.

our first case, please. Recent studies suggest the poorest

:22:09.:22:14.

Americans have less chance ofs caping poverty than do the poor of

:22:14.:22:20.

Europe. How do you wish to plead? Not guilty. I'm totally humiliated.

:22:21.:22:26.

The courts get the fall-out. This judge says those convict can't pay

:22:26.:22:31.

their fines. It creates a bad cycle, if you can't collect your fines and

:22:31.:22:36.

costs, you can't get that money over to the general fund, to pay

:22:36.:22:42.

the employees, it is a weird accounting process in Ohio. We are

:22:42.:22:48.

already pretty minimum salary any way. Most of the people that appear

:22:48.:22:53.

in my court make more money than my clerks make. Court sittings have

:22:53.:22:57.

been cut to save costs, at one point it nearly closeded because

:22:57.:23:04.

they couldn't afford paper. Public spirited Ohio people chipped in.

:23:04.:23:09.

Your assistant suggested some people sent in toilet paper in to

:23:09.:23:13.

help out? A few of my close friends. These are some of the defendants?

:23:13.:23:17.

I'm a bit of a joker any way, they figure they would use that

:23:17.:23:24.

opportunity to get back at me. In 1948 Hollywood made a film,

:23:24.:23:29.

which for the next 250 years encapsulated the American ideal.

:23:29.:23:39.
:23:39.:23:40.

Ska Mr Blandings builds his dream house. In a stunt63 perfect live-in

:23:40.:23:44.

replicas were createded across the country. Drop in and see us some

:23:44.:23:51.

time. This is that dream, made real, real estate, here in owe high heyo.

:23:51.:23:57.

Those post World War II days, of middle -- Ohio, those post World

:23:57.:24:02.

War II days of middle-class optimisim and security are all too

:24:02.:24:07.

distant. For many families in Ohio, it is a different story. In Dayton,

:24:07.:24:12.

agents for the Sheriff's office assess the value of properties

:24:12.:24:16.

repossessed. Foreclosed by the bank, because the mortgage isn't being

:24:16.:24:22.

paid. More than a million are taken over every year, each one a

:24:22.:24:27.

family's heartbreak. From the tumble down to the mansion,

:24:27.:24:33.

all are vulnerable. This is in a very good state. The this house was

:24:33.:24:37.

worth over a million dollars, now it is only half that. Everybody is

:24:37.:24:42.

losing money. I know that for a fact because I'm in the

:24:42.:24:49.

businessment I developed 1,060 farm into a golf course and residential

:24:49.:24:52.

community, even golf courses are struggling, golf is expensive.

:24:53.:24:58.

People can't afford to pay? That is exact low right. Obama wants to

:24:58.:25:02.

slow down the foreclosure process to give families more time to

:25:02.:25:05.

renegotiate, Republicans cannot to speed it up to liberate a stagnant

:25:05.:25:10.

market. What do the people in the frontline think? With so much

:25:10.:25:14.

unemployment in our area, people can't afford to buy houses. They

:25:15.:25:21.

can't go to the banks and get a loan. It is not a housing problem

:25:21.:25:24.

but employment? Particularly in our area. The idea of the bank working

:25:24.:25:27.

with the people, which President Obama wants to do is good, but the

:25:27.:25:35.

banks aren't doing it. It is a mess at the moment? It is a mess. It is.

:25:35.:25:40.

Look at the time, be smart, you have a two-point lead. An hour from

:25:40.:25:43.

Dayton, the Davies family watch their youngest shoot hoops. They

:25:43.:25:48.

have endured some troubled years. Bob, his brother, sister, brother-

:25:48.:25:52.

in-law and father-in-law all worked for GM, whose Dayton plant wasn't

:25:52.:25:56.

saved by the bailout. They have had little more than odd jobs since,

:25:56.:26:02.

and fear that is how it is going to stay.

:26:02.:26:05.

There is a big disparity between what I believe is the rich and the

:26:05.:26:10.

poor in this country now. Because the manufacturing jobs are not

:26:10.:26:15.

there any more. The good paying jobs that I haveen joyed in my life,

:26:15.:26:19.

my kids are never going to see in this country -- I have enjoyed in

:26:19.:26:22.

my life, my kids are never going to see in this country. You don't

:26:22.:26:26.

think it will come back? I don't think it will. The Daviess build

:26:26.:26:31.

their dream home on land that is in the family since the 1960s. Last

:26:31.:26:36.

week they put the lot, 16 acres, on the market. I was able to purchase

:26:36.:26:40.

it through working at GM, and get it back in the family and build our

:26:40.:26:44.

dream home. I would like to retire here, I would like to live here,

:26:44.:26:48.

for the rest of my days, we don't know with the economy the way it is.

:26:48.:26:52.

It seems like we keep dodging bullets through the last three

:26:52.:27:00.

years. We have been surviving. is a lot of prayer. This is the one

:27:00.:27:05.

thing we didn't want to have to sacrifice.

:27:05.:27:09.

Sacrifice was always part of the story Americans like to tell about

:27:09.:27:13.

themselves. While the politicians argue over big or small Government,

:27:13.:27:17.

or should taxes go up or down, the people whose votes they will seek

:27:17.:27:21.

come November, won't be fuelled. They know there is a lot that has

:27:21.:27:25.

gone from Ohio and elsewhere, and they fear much of it won't be

:27:25.:27:35.
:27:35.:27:36.

coming back. I'm joined now by my guests who

:27:36.:27:42.

used to work for George Bush, and the adviser to vice-president of

:27:42.:27:47.

President Bush, Joe Biden. Looking at the report, does that mean for

:27:47.:27:50.

thousands of ordinary working Americans, the idea of social

:27:50.:27:55.

mobility, that part of the dream, has just gone? That may be a

:27:55.:27:59.

slightly harsh interpretation, in the sense that there still is some

:27:59.:28:02.

degree of mobility. What I think is very much correct, and certainly

:28:02.:28:08.

came through the story, is just how much that mobility has been

:28:08.:28:14.

diminish. How it has been denigrate by years of hammering away at

:28:14.:28:18.

American cobs -- Denisovich any grated by years of -- den any

:28:18.:28:25.

grated by years of hammering away for years at American jobs. Middle-

:28:25.:28:29.

class incomes, middle-class wages have been stagnant for a long time.

:28:29.:28:33.

I wouldn't say mobility has gone to zero and the American dream has

:28:33.:28:36.

completely fizzled. I would say climbing up the rungs of the ladder

:28:36.:28:40.

is much harder than it used to be, and people know it. Do you agree

:28:40.:28:43.

broadly with that. There is study after study saying the United

:28:43.:28:48.

States is falling behind Canada and some parts of western Europe in

:28:48.:28:52.

terms of social mobility, it as real problem for both parties?

:28:52.:28:54.

are right to pick Ohio, that is where the presidential election

:28:54.:28:58.

will be decide. It is wrong to think there is no innovation and

:28:58.:29:03.

change going on. In the US we are seeing a remarkable amount of

:29:03.:29:06.

manufacturing come back from Asia to the Midwest. These stories are

:29:06.:29:11.

important. They are about the innovation and the change, the

:29:11.:29:19.

enprepen neural risk-taking, to pour -- entreprenurial ris-taking,

:29:19.:29:27.

to portray the Midwest as a basket case is not right. The better life

:29:27.:29:34.

is still part of the American dream. But a study last year suggested for

:29:34.:29:38.

the past 30 years the very rich have got rich, but middle Americans

:29:38.:29:42.

aren't making it? This is correct, we have a social dislocation issue.

:29:43.:29:46.

My personal view on this is it is not a function of Government

:29:47.:29:52.

failing to redistribute wealth. In fact, I think that, as a Republican

:29:52.:29:55.

that doesn't make sense to me. What does make sense is two thirds of

:29:56.:30:00.

the net new jobs in the US economy are created by firms that employ

:30:00.:30:05.

less than 30 people. Anything that gets in the way that entreprenurial

:30:05.:30:10.

ris-taking, will inhibit social mobility. Not only that, I think it

:30:10.:30:20.
:30:20.:30:20.

is important that we take class and shop class out of the school system,

:30:20.:30:24.

we have a generation that thinks college education equals success,

:30:24.:30:28.

and we have left a generation without skills to manage in a

:30:28.:30:31.

downturn. Against that background we have seen reasonable figures

:30:31.:30:33.

from the United States, unemployment is going down a bit,

:30:33.:30:39.

not as fast as you would hope. How fragile is all that, how is it

:30:39.:30:43.

feeding through to the people we are talking about? The US economy

:30:43.:30:48.

is moving slowly in the right direction. There is still a lot of

:30:48.:30:52.

fragility, it is not hard to imagine some of the problems out

:30:52.:30:57.

there throwing us off worse. We are climbing out of extremely deep hole.

:30:57.:31:02.

I probably don't nearly have as sunny a view of the manufacturing

:31:02.:31:06.

sector as we just heard. There is a point. There is some insourcing

:31:06.:31:10.

going on. The sector has added jobs in recent years. This is a sector

:31:10.:31:16.

that used to be 35% of employment in our hey day, it recently crossed

:31:16.:31:22.

10% going down. While there has been some improvement at the margin.

:31:22.:31:29.

A lot of the problem you got to in the inequality citation are from

:31:29.:31:33.

the study you quote. We have had technological gains, certainly

:31:33.:31:37.

there are folks in the economy who have done very well from those

:31:37.:31:41.

kinds advantages. But that is a very narrowly concentrated group.

:31:41.:31:45.

If you look at the incomes at the very top of the scale they have

:31:45.:31:51.

gone up, according to the study you have just mentioned, 280%, over the

:31:51.:31:57.

past three decades. The middle- class has gone up 30%, folks at the

:31:57.:32:01.

bottom have barely crept along. Some innovation and some gains, yes,

:32:01.:32:04.

but they have been hugely concentrateded at the top of the

:32:04.:32:07.

scale. That is not a controversial statement, it is widely accepted.

:32:07.:32:11.

How fragile do you think the American recovery is? People say

:32:11.:32:17.

one bit of good news is perhaps you are decoupled from the problems in

:32:17.:32:20.

Europe which is much worse, that is probably going into recession again,

:32:21.:32:26.

but the US not? And decoupled from Asia and China and its difficulties

:32:26.:32:29.

as well. Let's consider what is happening at the grass roots level.

:32:29.:32:39.
:32:39.:32:40.

Its not only manufacturing, land prices are booming, it is energy.

:32:40.:32:44.

President Obama will have a landslide then, it will work for

:32:44.:32:49.

him? Yes but not enough. Americans are saying the size of Government

:32:49.:32:53.

and the debt burden it carries has become too large. If it is a

:32:53.:32:57.

question of cutting expenditure the public wants to do that. The

:32:57.:33:02.

critical issue where the social inequality issue is at the centre

:33:02.:33:06.

is about entitlement. That is where the country is deeply split about

:33:06.:33:11.

how to manage entitlement. significant is it that Bill Daley

:33:11.:33:17.

has gone as Chief of Staff in the White House, is that a surprise?

:33:17.:33:22.

There may be some big dole, it always is the day it happens --

:33:22.:33:26.

deal, it is the day it happens. In relevance to our conversation, he

:33:26.:33:31.

is a guy who is more closely tied to the business community, the

:33:31.:33:35.

administration has been, I think, sounding more sympathetic tom some

:33:35.:33:39.

of the ideas around inequality, wage stagnation, ideas you

:33:39.:33:43.

associate less with the requests of the business community and more

:33:43.:33:47.

with more progressive side of the ledgeer. In the story we just heard,

:33:47.:33:51.

I didn't hear one person complain about entitlements or the size of

:33:51.:33:55.

Government. What people are talking about out there, that is the

:33:55.:33:58.

Washington debate, that is the inside debate. What people are

:33:58.:34:02.

talking about out in the real world are their pay cheques and their

:34:02.:34:10.

jobs. That has to be the focus there. Two big developments with

:34:10.:34:14.

implications over Britain's place in Europe took place today, one in

:34:14.:34:19.

Berlin and one in London. At a meeting in Germany, President

:34:19.:34:26.

Sarkozy announced his intention to press ahead with a financial

:34:26.:34:31.

transactions tax. And Eddy Merckx appeared to reluctantly agree with

:34:31.:34:35.

Mr Sarkozy. Here Nick Clegg said any treaty on fiscal union should

:34:35.:34:42.

be folded into existing EU rules, which means to some interpretors

:34:42.:34:47.

that Britain might accept a treaty, despite David Cameron's refusal

:34:47.:34:51.

last month. President Sarkozy's visit to the birth place of

:34:51.:34:54.

national icon, Joan of Arc, remind us he faces election in four months.

:34:55.:35:01.

Trailing in the polls, he has tried to rouse his vote, with patriotism,

:35:01.:35:05.

castigating Britain for its tactics during the eurozone crisis, and

:35:05.:35:09.

moving ahead briskly with a tax on financial services.

:35:09.:35:15.

TRANSLATION: I'm fully committed it a tax on financial transactions. If

:35:15.:35:18.

with find ourselves in this situation, it is because there were

:35:18.:35:22.

scandalous and inadmissible deregulation of the financial

:35:22.:35:27.

market. It is only Norma that those who -- normal that those who

:35:27.:35:31.

contributed to placing us and the rest of the world in this place

:35:31.:35:36.

over the last three years should pay some tax. If we do not lead by

:35:36.:35:39.

example, will not be implemented. Britain has entered the lists

:35:39.:35:43.

against France again, opposing the new tax. I would say to the other

:35:43.:35:47.

European leaders if you want to do what Britain has, we have a bank

:35:47.:35:52.

levy, so the banks contribute, and stamp duty on share dealings, you

:35:52.:35:55.

can do that. But the idea of a new European tax, when you won't have

:35:55.:35:59.

the tax put in place in other place, I don't think is sensible, and I

:36:00.:36:04.

will block it. If Britain is opposed, Germany isn't exactly

:36:04.:36:07.

enthusiastic about President Sarkozy's plan. Chancellor Merckx

:36:07.:36:12.

knows that implementing the Tobin, Robin Hood, or financial transfer

:36:12.:36:16.

tax, whatever you call it, will be very hard without unanimity. She,

:36:17.:36:21.

today, preferred to emphasise moving ahood with the wider fistle

:36:21.:36:25.

kalpakage, -- ahead, with the wider fiscal package, opposed by Britain.

:36:25.:36:29.

TRANSLATION: I personally think there is a way for a transaction

:36:29.:36:33.

tax in Europe, we don't have agreement at the moment, I will try

:36:33.:36:36.

to get it through for 27 member states. We need to consider this

:36:36.:36:40.

agreement, and need to give a proposal in order to have a

:36:40.:36:44.

transaction tax. We will further fight for that. In fact, the more

:36:44.:36:47.

you lock at the proposed tax, that has produceded so much politicle

:36:47.:36:53.

kal heat in recent weeks, the less -- political heat in recent week,

:36:53.:36:57.

the less likely of an implementation in the near future.

:36:57.:37:03.

The UK has an opt-out on new taxes, and French banks warn implementing

:37:03.:37:09.

it in their country alone could be disastrous. If there is a Financial

:37:09.:37:13.

Transaction Tax in the euro area, that would drive business, perhaps

:37:13.:37:18.

to London. The euro area would not be possible to rule that financial

:37:19.:37:22.

transactions have to be taken here. If it comes about the UK might

:37:23.:37:28.

actually win a little bit. There are so many practical obstacles to

:37:28.:37:32.

implementing a financial transfers tax. The Irish Government, within

:37:32.:37:36.

the eurozone, has warned that unless it is done globally, it

:37:36.:37:40.

could produce a capital flight from European banks. So why do

:37:40.:37:43.

politicians, particularly in had France, and the UK, keep talking

:37:43.:37:48.

about it right now? The answer seems to have everything to do with

:37:48.:37:53.

national political imperatives, and very little to do with the unity of

:37:53.:37:57.

action, that they have urged repeated low at European Summits.

:37:57.:38:02.

When it comes to the wider agenda of stablising the euro, normal

:38:02.:38:07.

politics resumed today, after the Christmas lull, in more ways than

:38:07.:38:12.

one. Britain's Deputy Prime Minister, hosting European liberal

:38:12.:38:15.

colleagues, suggested the treaty opposed by the Prime Minister in

:38:15.:38:19.

December, should, eventually be accepted. We believe that it should,

:38:19.:38:28.

over time, be folded into the existing EU treaty. You don't get a

:38:28.:38:31.

permanent two parallel treaties working separately from each other.

:38:31.:38:36.

We all see this as a temporary arrangement, rather than one which

:38:37.:38:39.

creates a permanent breach at the heart of the European Union.

:38:39.:38:44.

They said in Berlin today, that the package of measures proposed in

:38:44.:38:48.

that treaty, could be agreed by the 1th of March. But the discipline it

:38:48.:38:53.

calls for on Government budgets may be harder for France to manage,

:38:53.:38:59.

than most eurozone countries. countries which supposedly are the

:38:59.:39:08.

problem, are already fulfiling the conditions of the freety. The

:39:08.:39:15.

schedule to have already -- treaty. The schedule is to have already a

:39:15.:39:19.

fiscal issue in balance. The problem will be in France where

:39:19.:39:22.

there is no political consensus at all on this kind of policy.

:39:22.:39:25.

President Sarkozy, fighting hard for re-election, will only have to

:39:25.:39:32.

balance his budget, if he wins. In an attempt to repeat his success of

:39:32.:39:37.

2007, his populisim may test even Germany's patience, as he seeks to

:39:37.:39:42.

shape the European debate in France's interest.

:39:42.:39:46.

I'm joined by the Lib Dem MEP and President of the European Liberal

:39:46.:39:51.

Democrats, Sir Graham Watson, who co-hosted the event here. And the

:39:51.:39:55.

Conservative MP. Can you help us out what Nick Clegg

:39:55.:39:59.

meant by folding one treaty into another? This is nothing that is

:39:59.:40:02.

not new. In previous cases sometimes, a number of countries

:40:02.:40:06.

have gone ahead and done something as a small group, that has

:40:06.:40:09.

eventually become part of the general European Union treaties.

:40:09.:40:14.

The idea of this is, if we get it right, is that this should be a

:40:14.:40:19.

very limit treaty, concentrateded on the fiscal discipline necessary

:40:19.:40:23.

to -- concentrated on the fiscal discipline necessary for the euro

:40:23.:40:28.

to survive and rolled into the rest of Europe. What is the point of the

:40:28.:40:33.

veto, if you veto it and fold it into existing treaties, that sounds

:40:33.:40:37.

confusing? What the Prime Minister, when he vetoed it, did not want to

:40:37.:40:40.

see, and right loo, is other European countries going off and

:40:40.:40:44.

doing a whole raft of things currently done between 27, just

:40:44.:40:48.

between the 17 member countries of the eurozone. Now Nicolas Sarkozy

:40:48.:40:53.

wants this to be a rather wider treaty. He wants to take decisions

:40:53.:40:57.

about the European single market, things that Britain and other non-

:40:57.:41:01.

euro countries are involved in, within the framework of a new

:41:01.:41:05.

inter-governmental treaty. It does sound like accepting what we have

:41:05.:41:09.

already vetos? I don't think it is. -- Vote toed? I don't think it is,

:41:09.:41:13.

it is recognising that, and the European countries need the

:41:13.:41:17.

discipline of greater fiscal co- ordination for the euro to survive.

:41:17.:41:21.

But trying to limit the treaty to that. It is really what the Prime

:41:21.:41:25.

Minister was arguing for before last December. There is no point in

:41:25.:41:32.

having a veto, is there? I disagree. In fact, if we take a step back, we

:41:32.:41:37.

have already a referendum lock in the first 18 months of being in

:41:37.:41:40.

coalition Government, we have introduced that. Any more powers of

:41:40.:41:43.

from our parliament to the European Parliament would come under a

:41:43.:41:49.

referendum. So, if, at whatever stage, the proposals that were

:41:49.:41:54.

talked about today at the Lib Dem conference, then presume blie we

:41:54.:41:57.

would have to put that to the country -- presumably we would have

:41:57.:42:00.

to put that to the country. That put to one side, the safeguards the

:42:01.:42:03.

Prime Minister was looking for is exactly the sort of things Graham

:42:03.:42:07.

is talking about. You are completely relaxed about the idea

:42:07.:42:11.

of folding it into existing EU treaties and that wouldn't cause

:42:11.:42:16.

any great problems for you or your party? The coalition Government, in

:42:16.:42:20.

agreement, and the Prime Minister went to Europe to effectively ask

:42:20.:42:23.

for modest protections around the single market, which Graham talks

:42:23.:42:27.

about, around protecting financial services around the whole of Europe,

:42:27.:42:30.

not just to carve out for London. Those are still in place. That

:42:30.:42:33.

agreement between the two parties and coalition is still in place.

:42:33.:42:37.

What Nick Clegg was referring to, is financial fiscal consolidation,

:42:38.:42:42.

that will take place now, to save the euro zone, it is something that,

:42:42.:42:46.

in the future, can be looked at. What I would say, our position is

:42:46.:42:49.

slightly different to the Liberal Democrats, effectively you would

:42:49.:42:54.

have to have a referendum to move powers away from London. On the

:42:54.:42:57.

other issue, the Financial Transaction Tax, will that happen,

:42:57.:43:02.

the French, President Sarkozy is very keen on it, perhaps not the

:43:02.:43:05.

French banks. Eddy Merckx seems to be doing along with it. Will it

:43:05.:43:10.

happen and will have implications for us even if we don't sign up for

:43:10.:43:15.

it? It is highly unlikely top happen, two of the member states,

:43:15.:43:19.

the UK and Sweden oppose it strongly. It is the kind thing that

:43:19.:43:24.

can't happen without unanimity.S unlikely to happen, because all of

:43:24.:43:31.

Europe knows, from Sweden's position, who tried it ten years

:43:31.:43:36.

ago, your financial services move elsewhere if you do it. If every

:43:36.:43:40.

country in the world would introduce it, and you had global

:43:40.:43:45.

agreement, that would be something that would work, but that won't

:43:45.:43:52.

happen. Are you broadly on the same page with this, this is President

:43:52.:43:59.

Sarkozy's populist bid, he knows won't happen? If they want to

:43:59.:44:05.

introduce a bank tax they should introduce a banker Liffey. Bankers

:44:05.:44:12.

won't pay the financial -- levy, bankers won't pay the Financial

:44:12.:44:18.

Transaction Tax, the pension funds will be paying it. We want it

:44:18.:44:22.

release globally. There is a study that shows we will lose just under

:44:22.:44:27.

2% of GDP, half a million jobs will disappear. Those transactions would

:44:27.:44:33.

of move to Singapore, Hong Kong or New York. Is there a danger if we

:44:33.:44:38.

didn't accept it, if the eurozone went along with it, much trade

:44:38.:44:43.

would move outwards to London? London has an opt-out. If they want

:44:43.:44:46.

to go ahad he, that is fine. If the rest of them went ahe head, would

:44:46.:44:51.

that have an impact? It would help London. Right, OK, thank you very

:44:51.:45:00.

much. A quick look at the front pages. Thep Times has Thierry Henry

:45:00.:45:05.

on the front page. He scored a goal tonight, we can't afford to run it

:45:05.:45:15.
:45:15.:45:31.

tonight because we don't have the A damming report findings many of

:45:31.:45:33.

NHS staff find basic skills to do the job.

:45:33.:45:37.

That's all from Newsnight tonight, a daylight with this one, we will

:45:37.:45:42.

make an exception in this case. David Bowie was 65 yesterday. We

:45:42.:45:52.
:45:52.:46:03.

# Snuk into the city # Strung out on lasers

:46:03.:46:09.

# And slashed back blazers # Pulling all the waiters

:46:09.:46:15.

# Talking about Munroe # Walking on know white

:46:15.:46:25.
:46:25.:46:25.

# Everything tastes nice # Call Jean genie

:46:25.:46:32.

# Jean genie Colder at the end of the week, for

:46:32.:46:35.

the time being a mild story on Tuesday. Temperatures starting the

:46:35.:46:40.

day above freezing, a mild day. A lot of dry weather. The wet stuff

:46:40.:46:44.

across the north of Scotland. Mid- afternoon across the heart of

:46:44.:46:50.

England, predominantly dry. Some glimpses of wintry sunshine. Wind

:46:50.:46:54.

across southern areas loyalty and pleasanter for the outside. Across

:46:54.:46:59.

the south west, after a rather damp start things could cheer up with

:46:59.:47:02.

brightness to the east of the moors. Parts of South Wales too. Cheering

:47:02.:47:07.

up nicely through the afternoon. Further north it will stay cloudy

:47:07.:47:11.

with damage across Snowdonia, mist over the high grown. Damp and

:47:11.:47:14.

dreary afternoon across parts of Northern Ireland, with thicker

:47:14.:47:17.

cloud producing outbreaks of rain, particularly in the west. The

:47:17.:47:22.

really wet stuff will be across the far north of Scotland, blustery

:47:22.:47:29.

winds here. One more mild day, as we go into Wednesday, once more

:47:29.:47:32.

temperatures will be widely up into double figures north and south. The

:47:32.:47:37.

price we pay for that is aed good deal of cloud, limited -- a good

:47:37.:47:42.

deal of cloud, limited brightness. We can see a change at the end of

:47:42.:47:48.

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