09/01/2012 Newsnight


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


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


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


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


over the United Kingdom. We hear from our guests.


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


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


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


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


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


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


ponder that with two former White House insiders.


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


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


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


treaties. Good evening, there was a time way


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


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


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


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


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


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


the Scottish National Party leadership, the precise timing of


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


David Grossman on the state the union.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


Government of Scotland, was supposeded to kill off any appetite


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


strange happened, something that the Labour architects of devolution


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


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


outright majority in the Scottish Parliament elections last year,


eventhough the election rules were specifically designed to avoid any


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


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


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


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


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


stand on the verge of getting independence for Scotland. By


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


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


affairs, and may even drive more Scottish voters towards


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


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


option on any referendum ballotp paper. Called devolution max.


However, David Cameron is determined it should be a straight


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


this referendum, is the real battleground here.


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


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


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


suggest it is unlikely he would win an immediate referendum on


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


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


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


constitutional law? Although the Scottish Government can hold an


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


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


parliament is the only power in the land.


Tomorrow, the UK Government will offer to lend the Scottish


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


are met. The Scottish Government, I think,


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


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


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


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


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


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


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


There is nothing in this proposal attractive to the Scottish


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


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


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


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


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


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


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


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


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


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


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


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


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


parliament that has the power to decide the details of a


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


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


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


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


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


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


Westminster Government has sought to interfere in that today.


understand that tomorrow the Scottish Secretary, Michael Moore


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


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


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


to the Scottish Parliament, provideded any referendum is fair,


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


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


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


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


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


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


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


interfere and wrest control of the referendum from the Scottish


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


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


is for the Scottish people to ultimately decide the outcome of


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


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


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


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


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


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


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


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


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


politicians calling now for a referendum to happen more quickly


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


plokwo the referendum completely. The -- block the referendum


completely. The SNP won the election overwhelmingly, and we


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


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


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


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


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


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


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


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


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


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


rather handsomely. I think Westminster should respect the


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


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


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


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


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


undermine Scottish democracy. you quite pleased with this row?


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


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


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


backfired spectacularly on the UK Government, on the Tories in


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


The Government tomorrow had make a statement about the legal position


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


a wholly incomprehensible position, they havem campaigned for this to


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


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


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


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


elections on a manifesto for a referendum for independence. It


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


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


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


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


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


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


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


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


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


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


very difficult to understand why the Scottish national part, who


have supported independence and called repeatedly for an


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


figurehead leading the unionist case in Scotland, David Cameron,


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


dream doing better than your parents has taken a battering.


Recent studies suggest that moving up the economic scale is more


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


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


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


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


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


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


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


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


incalculable costs to America's psyche, deliverance arrived with


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


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


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


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


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


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


There is less demarcation between management and production line.


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


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


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


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


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


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


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


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


here. The Rennaissance in the American


motor industry carries several lessons, workers and management are


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


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


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


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


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


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


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


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


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


extra families have been blighteded by unemployment here in the last


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


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


nice prolonged spells of employment in manufacturing jobs, that were


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


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


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


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


our first case, please. Recent studies suggest the poorest


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


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


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


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


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


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


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


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


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


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


Your assistant suggested some people sent in toilet paper in to


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


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


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


which for the next 250 years encapsulated the American ideal.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


slow down the foreclosure process to give families more time to


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


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


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


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


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


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


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


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


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


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


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


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


and fear that is how it is going to stay.


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


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


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


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


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


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


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


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


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


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


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


It seems like we keep dodging bullets through the last three


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


thing we didn't want to have to sacrifice.


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


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


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


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


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


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


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


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


thousands of ordinary working Americans, the idea of social


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


we have a generation that thinks college education equals success,


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


downturn. Against that background we have seen reasonable figures


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


but they have been hugely concentrateded at the top of the


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


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


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


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


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


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


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


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


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


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


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


critical issue where the social inequality issue is at the centre


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


how to manage entitlement. significant is it that Bill Daley


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


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


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


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


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


of the ideas around inequality, wage stagnation, ideas you


associate less with the requests of the business community and more


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


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


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


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


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


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


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


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


Sarkozy announced his intention to press ahead with a financial


transactions tax. And Eddy Merckx appeared to reluctantly agree with


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


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


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


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


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


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


castigating Britain for its tactics during the eurozone crisis, and


moving ahead briskly with a tax on financial services.


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


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


scandalous and inadmissible deregulation of the financial


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


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


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


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


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


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


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


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


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


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


enthusiastic about President Sarkozy's plan. Chancellor Merckx


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


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


today, preferred to emphasise moving ahood with the wider fistle


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


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


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


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


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


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


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


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


the less likely of an implementation in the near future.


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


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


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


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


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


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


implementing a financial transfers tax. The Irish Government, within


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


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


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


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


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


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


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


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


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


colleagues, suggested the treaty opposed by the Prime Minister in


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


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


permanent two parallel treaties working separately from each other.


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


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


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


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


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


than most eurozone countries. countries which supposedly are the


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


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


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


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


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


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


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


shape the European debate in France's interest.


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


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


Conservative MP. Can you help us out what Nick Clegg


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


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


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


eventually become part of the general European Union treaties.


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


very limit treaty, concentrateded on the fiscal discipline necessary


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


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


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


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


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


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


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


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


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


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


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


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


it is recognising that, and the European countries need the


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


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


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


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


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


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


from our parliament to the European Parliament would come under a


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


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


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


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


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


is talking about. You are completely relaxed about the idea


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


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


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


for modest protections around the single market, which Graham talks


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


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


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


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


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


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


slightly different to the Liberal Democrats, effectively you would


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


NHS staff find basic skills to do the job.


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


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


# Snuk into the city # Strung out on lasers


# And slashed back blazers # Pulling all the waiters


# Talking about Munroe # Walking on know white


# Everything tastes nice # Call Jean genie


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


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


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


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


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


across southern areas loyalty and pleasanter for the outside. Across


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


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


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


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


dreary afternoon across parts of Northern Ireland, with thicker


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


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


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


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


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


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


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