23/01/2012 Newsnight


23/01/2012

In-depth investigation and analysis of the stories behind the day's headlines with Jeremy Paxman.


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Transcript


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The Government gets a poke in the eye from a bishop's crook.

:00:08.:00:12.

How come the Government can decide that this woman should have her

:00:12.:00:16.

benefits capped, but not this banker's pay? The Business

:00:16.:00:21.

Secretary declines to tell what he thinks is fair pay package for a

:00:21.:00:24.

banker. By what right does an unelected

:00:24.:00:29.

bishop frustrate the will of Government?

:00:29.:00:33.

Beijing's Forbidden City is forbidden no longer. But the

:00:33.:00:38.

country remains an enigma to the west. Increasingly prosperous and

:00:38.:00:43.

increasingly confident. What does it want in the world. We have asked

:00:43.:00:47.

citizens there. Who does the 21st century belong

:00:47.:00:51.

to? Most people say it is China. wonder what the Chinese ambassador

:00:51.:00:59.

to Britain will have to say about that.

:00:59.:01:03.

It has been a while since you could honestly call the Church of England

:01:03.:01:07.

the Tory Party at prayer. The bishops in the House of Lords

:01:07.:01:10.

certainly don't merit the title tonight. They led the defeat of

:01:10.:01:15.

Government plans to cap the amount of money people can claim on

:01:15.:01:17.

benefits. Earlier the Business Secretary had been dragged before

:01:17.:01:21.

the Commons to lay out his plans to curtail the amount of money being

:01:21.:01:24.

paid to senior business people. Significantly, no figures were

:01:24.:01:29.

mentioned in that plan. Claptrap and dribble were a couple

:01:29.:01:33.

of the more printable words used by some of Vincent Cable's

:01:33.:01:36.

Conservative comments in Government, to describe his ideas. Both issues

:01:36.:01:41.

touch a public nerve. The political challenge is to stay on the right

:01:41.:01:45.

side of the argument. Before we talk, David Grossman reports.

:01:45.:01:50.

1234 this is game of strategy and tactics. Involving castles, only

:01:50.:01:55.

affordable, we are told, for the very rich, or those on overgenerous

:01:55.:02:00.

welfare benefits. Involving bishops, speaking out, against the

:02:00.:02:05.

Government. Lib Dem knights, or at least Lords, speaking out against

:02:05.:02:12.

the bishops, and not to forget the pawns faced being moved out of more

:02:12.:02:15.

expensive accommodation. The Prime Minister was turning the tables on

:02:15.:02:18.

Asda employees in Leeds today. He was trying to sell them something.

:02:18.:02:23.

On offer he had the Government's plans to reform benefits. No

:02:23.:02:27.

household, he says, should get more than �26,000 a year. That is

:02:27.:02:34.

equivalent to a salary of �35,000. Many people in this audience here

:02:34.:02:39.

who are not earning �35,000, are you happy that your taxes are going

:02:39.:02:43.

towards families where no-one is working and they are earning over

:02:43.:02:47.

�26,000 in benefits. Is that fair? No, I don't think it is fair either,

:02:47.:02:54.

that is why it is right to have, thank you for that! How much money

:02:54.:03:01.

is at stake here. The Government says it would make savings of �290

:03:01.:03:11.
:03:11.:03:11.

million in 2013/14 by introducing the cap. It will affect 67,000, who,

:03:11.:03:17.

on average, will lose �83 a week. The Government is achieving two

:03:17.:03:22.

things, they are hitting those with high levels of housing costs, and

:03:22.:03:24.

taking money away from families with very large numbers of children.

:03:24.:03:28.

If you think either one of those is the problem, maybe you would have

:03:28.:03:32.

been better limiting housing benefit payments or limiting the

:03:32.:03:38.

amount you give for fifth or subsequent children. Given this, it

:03:38.:03:43.

is not exactly clear who is the target. This is a sharper political

:03:43.:03:46.

message? It is clear when you are saying, �26,000 a year, that is all

:03:46.:03:51.

you can get. If you say we will reduce the child supplement for the

:03:51.:03:55.

fourth child is Working Tax Credit, that is less salient. Tonight,

:03:55.:03:58.

though, the Government were defeated in the House of Lords, an

:03:59.:04:04.

amendment led by the bishops. The cap, they said, should not include

:04:04.:04:10.

child benefit. It is important that those people who are already in

:04:10.:04:18.

difficulties, because their benefit has been capped, do not also face

:04:18.:04:24.

having their child benefit removed. It is a very simple amendment. It

:04:24.:04:28.

preserves child benefit as a universal benefit. Ministers have

:04:28.:04:31.

let it be known they are not actually that bothered about

:04:31.:04:35.

today's defeat in the Lords. They promise to overturn it in the

:04:35.:04:39.

Commons and, in any case, I think they have rather successfully

:04:39.:04:42.

managed to manoeuvre Labour on to the wrong side of public opinion.

:04:42.:04:47.

However, this is really only half a political message. So much for the

:04:47.:04:50.

economic pawns getting something for nothing on benefits.

:04:50.:04:55.

What about the economic kings making all the money, squeezing the

:04:55.:05:05.
:05:05.:05:09.

middle, the other side. A report today looks at all those

:05:09.:05:15.

in the middle, one all the parties are trying to target. The report

:05:15.:05:19.

says those in the middle have become more and more squeezed over

:05:19.:05:23.

the years, and spend 40% on essentials, 15% on housing costs,

:05:23.:05:31.

13% on food and drink, and 13% on transport. If you look at how the

:05:31.:05:36.

costs have changed, the middle has got more squeezed. Household fuel

:05:36.:05:44.

has gone up 110% from 2000 to 2010. Council tax, over the same period,

:05:44.:05:49.

up 67%. Gavin Kelly, of the Resolution Foundation, says all

:05:49.:05:52.

parties are struggling to know how to help this group. For so many of

:05:52.:05:55.

these people, to help them through the tax and benefit system, would

:05:55.:05:58.

you need a lot of cash. You would have to find the cash from

:05:58.:06:02.

somewhere else be clear where it is coming from, it won't be flowing

:06:02.:06:06.

into the Treasury coffers through higher economic growth at the

:06:06.:06:10.

moment. It takes to you the politics of distribution and hard

:06:10.:06:13.

choices, that is not what any political leader wants to talk

:06:13.:06:17.

about now. What about top pay? Today the Business Secretary gave

:06:17.:06:24.

the Commons details of his plans to curb excessive pay. Business and

:06:24.:06:28.

investors recognise there is a disconnect between top pay and

:06:28.:06:34.

company performance, and that something must be done. His recipe,

:06:34.:06:37.

more transparency, combined with more shareholder power, didn't

:06:37.:06:44.

exactly go down too well with all of his coalition partners.

:06:44.:06:49.

liberal, left-wing claptrap he has announced today, which even Labour

:06:49.:06:52.

didn't do in 13 years. He has some how got through the coalition, in

:06:52.:06:56.

the hope of a good headline, it has doing done nothing to increase

:06:56.:07:00.

growth or employment in this country. This is a long political

:07:00.:07:04.

game, the Government hasn't come up yet with a winning move. But

:07:04.:07:08.

believes it has the right strategy. Assuming, of course, the bishops

:07:08.:07:12.

don't get in the way. Earlier this evening I went to the

:07:12.:07:18.

Department of Business to talk to Mr McCabe. What does it say -- Mr

:07:18.:07:22.

Cable. What does it say that this Government is prepared to tax

:07:22.:07:27.

people's benefits, but not willing to set a level for senior bankers'

:07:27.:07:33.

pay? We are dealing with pay, both for bankers' and executives

:07:33.:07:36.

generally. I was introducing a statement today on the wider issue

:07:36.:07:42.

of the pay of senior executives. That has got out of control. That

:07:42.:07:47.

is way in excess of performance and workers' pay. We have introduced a

:07:47.:07:53.

set of measures, more clarity, and paorncy, votes for pension funds

:07:53.:07:58.

and shareholders, and other rules that will change the culture.

:07:58.:08:02.

is the appropriate ratio to senior executives' pay to average pay in

:08:02.:08:07.

the country? It is not for me to define ratio. Why not? The reason

:08:07.:08:12.

why not is that what's right and what's sensible varies in almost

:08:12.:08:16.

every company. If you take two examples, retail company, employing

:08:16.:08:20.

unkilled workers, you will have a big ratio. If you have another

:08:20.:08:25.

company, outsorsd, all of its unkilled work -- outsourced, all of

:08:25.:08:31.

its unskilled work to India, it has a good ratio. What is the ratio?

:08:32.:08:36.

What is a good ratio, you have used the term? It is for the owners of

:08:36.:08:39.

the companies to decide when they see it alongside a lot of other

:08:39.:08:43.

information, which we will require them to publish. You don't have a

:08:43.:08:48.

view? I would have a view about a particular company, if I had shares

:08:49.:08:52.

in it. Which is why we are giving shareholders the responsibility of

:08:52.:08:55.

deciding how their companies are actually being run. These changes

:08:55.:09:00.

you have announced today will not, by themselves, cut a single

:09:00.:09:04.

bankers' bonus, will they? Not in themselves, it will require the

:09:04.:09:07.

shareholders of the banks to act on the information that will be out

:09:07.:09:12.

there, and to vote on it. Yet you are willing to cut the benefits of

:09:12.:09:18.

67,000 people in this country by an average of �4,000 a year? The issue

:09:18.:09:22.

of benefits and executive pay are different issues, and need to be

:09:22.:09:26.

tackled in a different way. Done by the same Government, on the same

:09:26.:09:30.

day? The thing they have in common is the issue of fairness and

:09:30.:09:35.

inequality. But the way we deal with major inequalties of income in

:09:35.:09:38.

society is through taxation measures. Executive pay, which is

:09:38.:09:43.

what I'm dealing with, is one corner of a much bigger problem.

:09:43.:09:49.

you think Steven Hester should get a bonus of estimated over �1

:09:49.:09:54.

million? What I have said and what the Prime Minister and other senior

:09:54.:10:03.

ministers have said is he and other senior executives in the RBS,

:10:03.:10:06.

predominantly publicly-owned, to exercise restraint over their

:10:06.:10:09.

bonuses. They haven't come to a decision yet, the board. We are

:10:09.:10:12.

making it clear they have to look at the wider context, that people

:10:12.:10:15.

are suffering hardship and we expect restraint from them. What,

:10:15.:10:19.

do you think will be appropriate? Let's get nearer the time when they

:10:19.:10:23.

come up with their proposals, and the Government, as a predominant

:10:23.:10:27.

shareholder can react to them. We haven't had them. The tax-payers

:10:27.:10:35.

own this company? They do. You are our representative? Absolutely,

:10:35.:10:42.

there are good reasons for exercising restraint. You said

:10:42.:10:46.

putting in a restraint on executive pay was above your pay grade, whose

:10:46.:10:50.

pay grade is it? From the top of the Government down we have

:10:50.:10:54.

expressed a view that we expect restraint on pavement I don't

:10:54.:10:58.

personally have direct responsibility for RBS. -- on pay.

:10:58.:11:02.

I don't personally have direct responsibility for RBS, but along

:11:02.:11:06.

with the Prime Minister and the Chancellor expect restraint. So it

:11:06.:11:09.

is within the Prime Minister's pay grade? Absolutely. So the Prime

:11:09.:11:14.

Minister can express a view on what Steven Hester should get, but you

:11:14.:11:18.

can't? He has already expressed a view. I was trying to be jockular

:11:18.:11:24.

in a somber occasion. Are you willing to intervene to stop

:11:24.:11:27.

something you disapprove of? never back ward in expressing a

:11:27.:11:31.

view in Government and outside. I have made it very clear, some of my

:11:31.:11:36.

colleagues have made it clear, we expect restraint. We are already

:11:36.:11:41.

seeing it. The bonuses are much reduced from what we have seen S

:11:41.:11:44.

The tax-payers are the major shareholders, whittering on outside

:11:44.:11:48.

won't get us anywhere? Government will express a view. The

:11:48.:11:54.

other aspect of the management of RBS, as you know, the structure set

:11:54.:11:58.

up kept the company, the bank, at arm's length from Government.

:11:58.:12:03.

you know what the slogan is above your reception desk downstairs?

:12:03.:12:07.

we talking about the department for growth. In this building, it is

:12:07.:12:12.

"ripping up red tape", it says that in big letters in a red poster

:12:12.:12:17.

above your reception. All you have done today is create more red tape?

:12:17.:12:19.

This is something we have pursued in consultation with the business

:12:19.:12:24.

community and the investors. The measures which we are proposing,

:12:24.:12:27.

they consider to be something that is necessary, and they are happy to

:12:27.:12:32.

work with. This is additional red tape, isn't it? There is sensible

:12:33.:12:37.

regulation, which has been brought in. There is nothing inherently

:12:37.:12:39.

wrong with regulation, we need it to protect consumers, the

:12:39.:12:43.

environment and the work force. Where it is a problem is when it

:12:43.:12:46.

becomes very bureaucratic. final point, also on this question

:12:46.:12:52.

of fairness, what's happened to the mansion tax? It's under active

:12:52.:12:55.

discussion. Is it going to happen? I can't tell you that. I know it is

:12:55.:13:01.

a good idea, I have advocated it, my party has advocated it. It is

:13:01.:13:04.

very fair, economically efficient, and contribute to Government

:13:04.:13:08.

revenues. It is a debate going on. You have not won it yet? No, no.

:13:08.:13:13.

But I always argue my case, and my party colleagues do too. Vincent

:13:13.:13:18.

Cable, thank you. With us now is Liam Byrne, the

:13:18.:13:21.

Labour Work and Pensions spokesman, and in a minute the Bishop of

:13:21.:13:29.

Leicester and Margo James MP. Liam Byrne, most of the peers who

:13:29.:13:33.

voted down this cap tonight were Labour peers. Is the party in

:13:33.:13:38.

favour of the cap on benefits or not? Yes, we are. So these Labour

:13:38.:13:43.

peers were, out of control or what? No, we think the bill is so badly

:13:43.:13:46.

thought through, that there is a real risk that this policy, which

:13:46.:13:53.

is a good idea, in principle, will backfire and dump council tax

:13:53.:13:56.

payers with a new bill for homelessness. We want a few more

:13:56.:14:02.

safeguards written in, before coming fully behind it.

:14:02.:14:05.

expressed your support for the principle by voting against it?

:14:05.:14:10.

principle of the bill was not voted on today. Labour put down Anne

:14:10.:14:19.

mendment which said hang on, let's not -- an amendment which said hang

:14:19.:14:25.

on, let's not put it through like that. Somebody has to pay for the

:14:25.:14:28.

bill, and that person is the council tax pair, we don't want

:14:28.:14:34.

that to happen. You think �26,000 a year in benefits may be too low a

:14:34.:14:38.

cap? We think it is a good place to start. You have just voted against

:14:38.:14:43.

it? What we did is put down an amendment which said, before the

:14:43.:14:47.

cap kicks in, local authorities have to make an assessment if the

:14:47.:14:51.

family will be made homeless, somebody has to pick up the tab for.

:14:51.:14:55.

That the figures we released today will show housing benefit going up

:14:55.:14:58.

over this parliament by �4 billion. That is driven by the Government's

:14:58.:15:02.

failure to get people into work. Isn't this why your party is

:15:02.:15:05.

suffering a credibility problem with the public, you say you

:15:05.:15:08.

support things in principle, but when it comes to anything difficult

:15:08.:15:12.

in prakti, you don't know what to do? We are very -- practice, you

:15:12.:15:17.

don't know what to do? We are very clear on this. The Tories want to

:15:17.:15:21.

pay party politics, and say it is a black and white issue, it isn't. It

:15:21.:15:26.

is a complicated bit of legislation, with good idea at its heart, we

:15:26.:15:30.

don't want the good idea to backfire, creating a whopping great

:15:30.:15:34.

bill for homelessness, that the good hard honest taxpayer has to

:15:34.:15:37.

clean up. When it goes through, it is a will when it comes back to the

:15:37.:15:40.

House of Commons, where the Government has a healthy majority,

:15:40.:15:44.

when it goes through, and it becomes law, an in coming Labour

:15:44.:15:47.

Government would reverse it, would they? No, we would look at the

:15:47.:15:51.

impact on homelessness, that is the risk we want to guard against.

:15:51.:15:54.

would find out what you were talking about after someone had the

:15:54.:15:58.

courage to make the decision? what we're saying is we think it is

:15:58.:16:02.

foolish to proceed with a bill that your own Secretary of State for

:16:02.:16:04.

Local Government has said...You Have just said you don't know what

:16:04.:16:07.

the impact will be? In three years time when a Labour Government has

:16:07.:16:11.

been elected we will know the impact, and what kind of mess in

:16:11.:16:14.

terms of the homelessness bill we have to clear up. You might reverse

:16:14.:16:18.

it or not? If the worst happens, which is what we fear. We think

:16:18.:16:21.

there will be a big spike in homelessness, we think that will

:16:21.:16:24.

put families, and children, out of their homes, and we think that is

:16:24.:16:28.

going to present a big new bill for council tax payers. You would then

:16:28.:16:31.

reverse it? We think the Government can see this coming. They are

:16:31.:16:35.

playing politics with it a bit, we are saying don't play politics with

:16:35.:16:40.

this, think it through, put in the right safeguards now. Do you think

:16:40.:16:45.

the general public understands your position? We have to work hard to

:16:45.:16:48.

explain it. Look, I don't make any apology for thinking through the

:16:48.:16:52.

policy, rather than plunging ahead blindly. I think that is what we

:16:52.:16:58.

are paid to go to work to do. with us, we have the Bishop of

:16:58.:17:03.

Leicester here and Margo James, Conservative MP. Now bishop what is

:17:03.:17:07.

it that gives you the right to obstruct a policy that clearly

:17:07.:17:09.

seems to have terrific public support? The bishops have the same

:17:09.:17:14.

right to speak and vote in the House of Lords as any other peer.

:17:14.:17:18.

Indeed I think we have more than a right, we have a duty to speak

:17:18.:17:23.

there. Particularly if, arising from situations in our own diocese,

:17:23.:17:26.

we see there is something of an injustice being committed,

:17:26.:17:30.

particularly to the children of the poorest families. Has it occurred

:17:30.:17:34.

to you, if you want to frame laws, you might perhaps go to the

:17:34.:17:38.

inconvience of getting elected? That is a debate about whether the

:17:38.:17:43.

whole House of Lords should be reformed, and a fully elected House.

:17:43.:17:48.

There is a draft bill, no doubt it will come before House in due

:17:48.:17:52.

course, as it has the parliament functions as it has for 700 years

:17:52.:17:58.

with bishops in it. With what authority do you obstruct the will

:17:58.:18:02.

of Government on a policy that as tremendous public support?

:18:02.:18:05.

amendment carried was carried by a majority of 20, which required 250

:18:05.:18:11.

peers to vote. There were five bishops, 245 other peers. This was

:18:11.:18:17.

not something just concocted by the bishops. Or create bid the bishops.

:18:17.:18:21.

But the bishops sponsored the amendment because we saw it as a

:18:22.:18:25.

matter of profound social justice. What do you think of what's

:18:25.:18:30.

happened? I disagree in the Lords in passing this amendment. I think

:18:30.:18:34.

the Government has wisely set the cap at average earnings, so let's

:18:34.:18:38.

not forget there is a huge number of people who are going out to work

:18:38.:18:42.

every day and earning less than this proposed capped amount.

:18:42.:18:46.

Do you know how many children will, for whatever reason, as a

:18:46.:18:50.

consequence of this, have to leave the family home, move house, in

:18:50.:18:55.

some respect? I don't think many people have to move house.

:18:55.:19:00.

don't know, do you? In the vast majority of areas. Do you know

:19:00.:19:04.

bishop? I think we have every reason to suppose a Signum. It may

:19:04.:19:10.

be thousands, ten -- a significant number. It may be thousands, tens

:19:10.:19:15.

of thousands who can't continue living where they are. The majority

:19:15.:19:18.

parts of the country have enough affordable accommodation in the

:19:18.:19:28.
:19:28.:19:30.

private and social housing sectors, to accommodate most people. In the

:19:30.:19:33.

sad case where someone has to move, that is not something the ordinary

:19:33.:19:39.

working family is immune from. In a family where both or one partner is

:19:39.:19:42.

working, sometimes, when conditions get difficult, people have to move

:19:42.:19:46.

house. They have to make choices, all we're saying is that those

:19:46.:19:49.

choices should not be just the preserve of people who are working.

:19:49.:19:54.

They have to make choices. People who are earning have to make choice

:19:54.:19:59.

about where to live what they can afford to do. Don't forget this cap

:19:59.:20:04.

is set at average earnings. point about the amendment is people

:20:04.:20:07.

who are earning have the right to have child benefit. If you lose

:20:07.:20:11.

your job, under these proposal, you are quite likely to have your

:20:11.:20:15.

benefits capped and to lose your child benefit as well. That seems

:20:15.:20:18.

to penalise the children of the poorest families. What do you say

:20:18.:20:22.

to the people in your diocese, who are working hard, and who are

:20:22.:20:25.

earning less than people are getting on benefits, what do you

:20:25.:20:29.

say to them? I say to them, and I have this conversation with a

:20:29.:20:33.

number of them. People who are in work, and who might fall out of

:20:33.:20:37.

work, through no fault of their own, have every reason to suppose that

:20:38.:20:41.

at that point the state will support them to a minimum standard

:20:41.:20:47.

were they can at least keep their children housed and at school and

:20:47.:20:51.

in their networks. At the moment a very significant number of families,

:20:51.:20:55.

through absolutely no fault of their own. There was a great deal

:20:55.:21:01.

of talk in today's debate about incentivising people back to work.

:21:01.:21:04.

With three million unemployed you can't do that for everyone. We have

:21:04.:21:08.

to support people through this very difficult period. No-one would

:21:08.:21:10.

disagree with having to support people when they lose their job.

:21:10.:21:14.

That is what the welfare state is for. That is why the cap has been

:21:14.:21:18.

set as high as it has been, on average earnings. If you don't have

:21:18.:21:23.

children, there is no way you would have benefits anything like to the

:21:23.:21:28.

tune of �26,000 a year, the cap is bearing in mind that a lot of

:21:28.:21:31.

people do have children. You are entirely comfortable with the

:21:31.:21:35.

position your party has taken, where you can be specific about

:21:35.:21:38.

pounds and pence when it comes to people on benefits, because you

:21:38.:21:44.

refuse to be specific when it comes to bankers' bonuss? They are two

:21:45.:21:48.

different things. We are taxing banks, the bank levy has brought in

:21:48.:21:53.

more than the last bank bonus tax did. As you have seen from McCabe's

:21:53.:21:56.

announcement today, there is a lot of -- Vincent Cable's announcement

:21:56.:22:02.

today there is a lot of pressure on bankers' bonus, they are 40% in the

:22:02.:22:07.

last two years. The majority of those working for state-controlled

:22:07.:22:10.

banks are having their bonuses capped at �2,000. That is a lot

:22:10.:22:14.

less than it used to be. Not the investment bank, that is not true,

:22:14.:22:21.

of course, is it? �2,000 at RBS is the standard. I think it is

:22:21.:22:23.

absolutely clear that the inequalties in our society are

:22:23.:22:27.

widening all the time. Some of the poorest families are being

:22:27.:22:31.

extremely hard hit, while they see the people at the other end of the

:22:31.:22:35.

scale, getting richer and richer, faster and faster. The effect on

:22:35.:22:38.

the general well being of our society is extremely damaging.

:22:38.:22:42.

Thank you all very much indeed. For the Chinese community across

:22:42.:22:47.

the world, today is the beginning of the new year festival, so the

:22:47.:22:51.

rabbit gives way to the dragon. Dragon years are considered

:22:51.:22:54.

exciting and unpredictable. Given the state of things in the world,

:22:54.:22:58.

this might be one of the rare occasions when primitive

:22:58.:23:03.

superstition matches reality. Nowhere is better place today face

:23:03.:23:06.

challenges than the People's Republic of China. Where over a

:23:06.:23:08.

billion people live under a communist Government in a country

:23:08.:23:12.

that grows richer every day. It poses enormous challenges for the

:23:12.:23:18.

rest of the world. I have just been there.

:23:18.:23:22.

In 1793, Britain sent an official trade mission to Beijing. It didn't

:23:22.:23:30.

go well. Britain was emerging as the

:23:30.:23:35.

greatest power on earth. Inconveniently, inside the

:23:35.:23:39.

Forbidden City, the Chinese Emperor was under the impression that was

:23:39.:23:46.

his role. The leader of the trade delegation,

:23:47.:23:52.

George Viscount McCartney, was keen to open up a massive New Market for

:23:52.:23:59.

British manufacturing. -- new market for British manufacturing.

:23:59.:24:05.

When he got there he brought forward Wedgwood pottery,

:24:05.:24:09.

Birmingham metalware, the finest of instruments and a minature

:24:09.:24:15.

planetarium. The Emperor was splendidly

:24:15.:24:19.

dismissive. He looked at the cream of European science and

:24:19.:24:27.

manufacturing, and he said, we have no need of things ingenious or

:24:27.:24:31.

mechanical. China had everything if could possibly -- it could possibly

:24:31.:24:37.

want, the trade mission was a disaster.

:24:37.:24:41.

The Emperor may have been secure in his palace, but soon Britain could

:24:41.:24:47.

afford simply to ignore the old boy. When the Chinese tried to stop

:24:47.:24:52.

British merchants, the Royal Navy sent in gun boats. At the end of

:24:52.:24:56.

the conflict, Britain could trade where she liked. Hong Kong was

:24:56.:25:00.

her's, and the Chinese were embarked on what they called their

:25:00.:25:07.

century of humiliation. There is a fourth opium war in 1880,

:25:07.:25:14.

the second one in 1860 and after that it is the collapse of the last

:25:14.:25:19.

Chinese dynasty. As Britain rose, China fell. Liu Jing is trying to

:25:19.:25:26.

tell his country's past in comic book form. So you could say the

:25:26.:25:31.

experience China had with western powers, especially Britain, in the

:25:31.:25:36.

19th century, is very unpleasant. The hardest thing for a European to

:25:36.:25:44.

appreciate is how very long the perspective is. Rise and fall. A

:25:44.:25:49.

history of dynastic cycles that last thousands of years.

:25:49.:25:54.

Periods of war and foreign invasion brought to an end by strong

:25:54.:26:03.

Government. Whose policies sow the seeds of their own destruction.

:26:03.:26:06.

Dynasties collapse, and the whole process starts again. So where are

:26:06.:26:15.

we now? There is a very strong central Government. There's an

:26:15.:26:19.

overall stability in society. People's living standards are

:26:19.:26:27.

improving. There is the development that is very fast. So this is,

:26:27.:26:37.
:26:37.:26:47.

according to the history point of Chinese people really never have

:26:47.:26:52.

had it so good. The gospel according to the Party is at the

:26:52.:26:56.

end of a century of humiliation, was the achievement of Chairman Mao

:26:56.:27:04.

moo and the communists. -- but and the communist, but fear

:27:04.:27:08.

of dynastic collapse is hard to shake.

:27:08.:27:14.

The old summer palace of the Chinese Emperor's, took generations

:27:14.:27:18.

to construct. Then, in this supposed earthly paradise, a

:27:19.:27:24.

Chinese Emperor had the temerity to seize and torture two British

:27:24.:27:30.

envoys. If you ask the average British citizen what Britain did in

:27:30.:27:37.

China, 150 years ago, but the chances are he or she couldn't tell

:27:37.:27:43.

you. In fact, what Britain and France did was this. They took the

:27:43.:27:46.

Emperor's summer palace and they destroyed it. They destroyed it

:27:46.:27:52.

because the Emperor wouldn't agree to the demands of western kalalism.

:27:52.:27:58.

The British may have -- capitalism, the British may have forgotten that,

:27:58.:28:02.

but the Chinese haven't. The generation who will forge the

:28:02.:28:08.

historically aware society, are in no doubt about the story the ruins

:28:08.:28:14.

tell. Do you remember this as humiliation? Yes. For give but not

:28:14.:28:18.

forget. China is become -- forgive but not forget, China is becoming a

:28:18.:28:23.

very strong economy. In the west they fear that China will bully

:28:23.:28:28.

them. We Chinese don't think so. you think China will become a

:28:28.:28:36.

superpower? In the future, in the 21st century. Probably. I think,

:28:36.:28:41.

yeah. As a Chinese, I would like to see it. You would like to see China

:28:41.:28:46.

as a superpower? That means more responsibility, more influence on

:28:46.:28:50.

this world. It doesn't mean more military threat to this world.

:28:50.:28:56.

All this destruction was done in the 19th century, the 19th century

:28:56.:29:00.

really was the century of the European imperial powers, the

:29:00.:29:05.

British, mainly, but also the French. Who does the 21st century

:29:06.:29:11.

belong to, do you think? For most people they say it is China's.

:29:11.:29:18.

China can make the rise continue for another 15-20 years, and China

:29:18.:29:21.

will inevitably become another superpower, because of the size of

:29:21.:29:26.

its population. But the fear of chaos in this enormous country is

:29:26.:29:30.

ever present. Even university professors believe the antedote is

:29:30.:29:36.

firm Government. Which means the question of world status is a

:29:36.:29:41.

political one. It is really decided by the Chinese Government, or the

:29:41.:29:46.

Chinese political leadership. If the Chinese leadership can provide

:29:46.:29:50.

a strong and creative leadership, for this country, and then this

:29:50.:29:55.

country will move in that direction. If the political leadership is a

:29:55.:29:59.

weak and directs the country in the wrong direction t may collapse at

:29:59.:30:06.

any time. And where does this leave Britain? In the garden shed,

:30:06.:30:11.

according to this animation. This seems to be how the Chinese see us

:30:11.:30:17.

now. It hasn't gone quite to plan, the scheme was for the

:30:17.:30:21.

manufacturing to be outsourced to the world's most populist nation,

:30:21.:30:27.

while the clever, creative stuff, stayed in Europe. Not any more.

:30:27.:30:32.

Britain likes to call itself the design capital of the world. Well,

:30:32.:30:36.

get this, even the animations for the London Olympics are made in

:30:36.:30:43.

China. The young people here don't see themselves as labourers, they

:30:43.:30:49.

have set their sights on the clever, creative stuff done in Europe and

:30:49.:30:54.

North America. This is not how complacent, western Governments saw

:30:54.:30:58.

things developing. And history shows that economic gain is

:30:58.:31:02.

generally the forerunner of political and military power.

:31:02.:31:09.

My view is that when China gets the military capability, larger than

:31:09.:31:13.

the US, the leadership will inevitably fall on China's shoulder,

:31:13.:31:22.

no matter if they like it or not. Increasingly, the lucky ones in

:31:22.:31:29.

China's megacities, live a life of unequivocal modernity.

:31:29.:31:33.

The ambitions are grand, that China becomes a global centre, not just

:31:33.:31:40.

for commerce and design, but for power and influence.

:31:40.:31:45.

But can you have the freedom to create without the freedom to

:31:45.:31:55.
:31:55.:31:55.

think? My internet access only limited to the website which the

:31:55.:32:01.

Chinese Government allows me to visit. In the cultural revolution,

:32:01.:32:06.

Mao Yushi, was sent to be reeducated in the countryside and

:32:06.:32:12.

almost starved to death. Mr Mao shares the same name as the great

:32:12.:32:17.

leader. But Mr Mao has been named as a party menace, his offence? He

:32:17.:32:22.

has written a book criticising the cult of Chairman Mao. If people

:32:22.:32:28.

cannot even challenge history, can China really challenge the west? Do

:32:28.:32:35.

you think that China will become a superpower in the sense that the

:32:35.:32:39.

United States or the Soviet Union, as was, were superpowers? I don't

:32:39.:32:49.
:32:49.:32:53.

think so. China doesn't provide any hope, any hope for the ordinary

:32:53.:33:00.

people in the world. Nobody would migrate to China. People want to

:33:00.:33:08.

migrate to yuen Europe or Canada or Australia or the United States.

:33:08.:33:12.

It doesn't have any attraction. So I don't think China can be a

:33:12.:33:22.
:33:22.:33:23.

This current dynasty looks likely to remain unchallenged, as long as

:33:23.:33:28.

it continues to provide a level of comfort, unimaginable to China's

:33:28.:33:33.

ancestors. For ordinary Chinese, the country's

:33:33.:33:37.

international status is a lot less important than the prosperity

:33:37.:33:44.

brought by this strange marriage of communism and capitalism.

:33:44.:33:47.

There truly never has been a time in Chinese history, when the

:33:47.:33:52.

country has got so much richer, so quickly. The industry of the world

:33:52.:33:58.

has come calling, and this time, it's been allowed in. The world has

:33:58.:34:03.

yet to see what China expects in return for its labour. But expect

:34:03.:34:13.
:34:13.:34:15.

something it certainly will. Viscount McCartney's trade mission

:34:15.:34:19.

scuttled away from Beijing with what dignity it could. Claiming

:34:19.:34:22.

there wasn't a single proper lavatory in the entire company.

:34:22.:34:27.

That sort of abuse won't work any longer, and nor will military

:34:27.:34:30.

adventurism. It is maybe time for the rest of the world to learn

:34:30.:34:35.

something about the cycles of Chinese history.

:34:35.:34:38.

Tomorrow night in another film I will be exploring what it is like

:34:38.:34:42.

to live under a Government which allows people to get filthy rich,

:34:42.:34:45.

but denies them the chance to change their system of Government.

:34:45.:34:50.

But before that, our diplomatic editor and economics editor are

:34:50.:34:54.

both here. First off, the amount of trade that the rest of the world

:34:54.:34:58.

does with China, how big are the figures? There are two challenges

:34:58.:35:01.

that face China, one is trade, the other one is the balance of what

:35:01.:35:05.

drives its own economy. Let's have a look at the famous trade

:35:05.:35:09.

imbalance. This is in manufactured goods, Chinese trade in balance

:35:09.:35:15.

with the USA takes off when they join the WTO, $150 billion a year,

:35:16.:35:19.

falls back in the recession. This drives the demand for the Chinese

:35:19.:35:22.

currency to be freed up so Chinese goods can become dearer and

:35:22.:35:26.

Americans can get their jobs back. But it is complicated, let's

:35:26.:35:29.

animate the second line. This is China's trade balance with the rest

:35:29.:35:33.

of the world, excluding America. So that includes Japan and the

:35:33.:35:37.

European Union, it is not so bad. This is because, in part, China

:35:37.:35:45.

itself is a massive importer. The actual complexity of this. It is an

:35:45.:35:48.

America-China thing, we should remember that, more than China

:35:48.:35:52.

versus the rest of the world. Now let's look at the internal balance.

:35:52.:35:57.

This line shows the proportion of the chine naes economy that is

:35:57.:36:00.

driven which investment -- Chinese economy that is driven, which

:36:00.:36:04.

investment in housing, railways, by the Government, prie. Investment T

:36:04.:36:09.

has approached 50% in the anti- crisis period, the fiscal stimulus,

:36:09.:36:12.

their response to the crisis was to boost railway building and road

:36:12.:36:17.

building. Let's have a look at consumption. This is Government and

:36:17.:36:23.

private consum. As you see it has - - consumption. As you can see it

:36:23.:36:26.

has fallen. China wants to boost its private consumption, so people

:36:26.:36:31.

you saw in the film can start buying holidays and cars and

:36:31.:36:34.

financial products. They agree they have to do it. Along the way, the

:36:34.:36:39.

question, who gets what? Do the Chinese workers on �70 a month,

:36:39.:36:42.

eventually get a kind of wage that makes western workers able to

:36:42.:36:47.

compete with them. Mark, are we seeing this

:36:47.:36:51.

translating into national, political power? Yes, there is a

:36:51.:36:55.

tremendous raft of issues where western countries want to co-

:36:55.:36:58.

operate fruitfully with China, particularly in the UN Security

:36:58.:37:02.

Council, where China is one of the five permanent members, veto powers.

:37:02.:37:07.

So on a whole raft of issues, from should sanctions on Iran be

:37:07.:37:10.

extended, through to what do we do about Syria. All these things are

:37:11.:37:20.

vietia. You talked about the cycles of history, the current party is

:37:20.:37:24.

still among the view that Mao espoused, great power politics.

:37:24.:37:28.

They rejected that, they saw themselves as leaders of the Non-

:37:28.:37:34.

Aligned Movement against the packs- American piece. China has stood in

:37:34.:37:38.

the way of votes on military action. The fascinating thing will be as

:37:38.:37:43.

they develop more of a sense of themselves in a great power in the

:37:43.:37:47.

coming years, whether they are moving away from being against

:37:47.:37:50.

packs-America, to creating their own vision.

:37:50.:37:53.

Have we any clues to that? Some people would say, in the region,

:37:53.:37:56.

that they are rather concerned. They look for example at some of

:37:56.:37:59.

the trappings of great power status that China is beginning to acquire.

:37:59.:38:03.

Some of them harmless enough. The space programme. Scientific

:38:03.:38:08.

progress, all of that kind of thing who could object to that. The

:38:08.:38:14.

substantial increases in military spending do cause more concern. The

:38:14.:38:18.

fact in recent months China's aircraft carrier has been at sea.

:38:18.:38:22.

We can see some of the satellite images. This was a carrier the

:38:22.:38:25.

Russians couldn't afford to finish that China bought and is now

:38:25.:38:29.

commissioning. Some regional powers are worried about this. They are

:38:29.:38:35.

thinking will China be exacting a more nationalist influence in terms

:38:35.:38:39.

of China minorities and in the specific region. The Chinese

:38:39.:38:43.

Government insists it is a taking a more full part in international

:38:43.:38:46.

affairs, contributing to UN peacekeeping and that kind of thing.

:38:46.:38:50.

But are some of these trappings of great power status going to be put

:38:50.:38:58.

to more traditional, almost nationalistic objectives. If you

:38:58.:39:06.

would be happy for a lifetime, grow flowers. The man attending to

:39:06.:39:11.

Chino-British flowers is the Chinese Ambassador, he's with us

:39:11.:39:16.

now. Happy new year. Let's try to define

:39:16.:39:22.

the terms, are you a communist? we think China is the ruling party,

:39:22.:39:28.

the ruling party is the communist party, but the communist party only

:39:28.:39:32.

constitutes, and now we have 17 million party members. But you have

:39:32.:39:37.

to remember that China is a country with 1.3 billion in its population.

:39:37.:39:41.

I don't think you can call China a communist party, a communist

:39:41.:39:51.

country. Are you a communist? as you would not call the UK a

:39:51.:39:55.

Conservative country. You could call it capitalist country?

:39:55.:40:04.

could say China a socialist country, with a Chinese characteristics.

:40:04.:40:07.

That is a difference. Talking to young people in particular in

:40:07.:40:12.

Beijing, I very strongly got the impression that they were pretty

:40:12.:40:15.

optimistic about China's international role. They saw this

:40:15.:40:19.

as a century which was developing very much in a way that was going

:40:19.:40:23.

to make China a much more significant force in the world. Do

:40:23.:40:30.

you think that? China will certainly contribute its part for

:40:30.:40:33.

maintaining peace, prosperity of the world. But we do not see China

:40:33.:40:40.

as a superpower. I would characterise China as the largest

:40:40.:40:45.

developing country, which increasing international influence

:40:45.:40:50.

and responsibility. But people look at what China does on the Security

:40:50.:40:54.

Council, for example, over the question of, for example, you

:40:54.:40:58.

opposed sanctions on Syria, sanctions on Iran, and they wonder,

:40:58.:41:04.

you know, what you are trying to achieve? That's not correct

:41:04.:41:08.

impression. In fact, China voted four times with other members of

:41:08.:41:18.

the Security Council, on the issue of Iran. China is strongly opposed

:41:18.:41:21.

to the Iranian nuclear programme. On the other hand, we believe

:41:21.:41:28.

diplomatic and peaceful solutions are the most beneficial solutions

:41:28.:41:34.

to the problem. It is in the interests of maintaining peace and

:41:34.:41:39.

stability in the region. But do you accept that Iran is a potential

:41:39.:41:46.

threat to world peace, a nuclear- armed Iran? I would say Iran with a

:41:46.:41:50.

nuclear weapon is not in the peace, not in the interests of peace and

:41:50.:41:55.

stability in the region. That is why China makes it very clear, from

:41:55.:41:59.

day one, that we are strongly opposed to nuclear weapons

:41:59.:42:08.

programme of Iran. That has been reaffirmed by the Chinese premier

:42:08.:42:13.

in his recent visit. Why not impose sanctions then? There is already

:42:13.:42:17.

sanctions in place, we don't think sanctions for the sake of sanctions

:42:17.:42:23.

serve the purpose. We also encouraged diplomatic negotiations,

:42:23.:42:28.

to engage Iran for a peaceful settlement. Do you think China has

:42:28.:42:36.

a moral role in the world? I think China has a role to play in terms

:42:36.:42:41.

of a voice for our opinions for a more peaceful, harmonious world.

:42:41.:42:45.

What are you trying to promote, the United States, for example, says it

:42:45.:42:51.

promotes, and will go to war, to promote democracy. What are you

:42:51.:42:55.

trying to promote? We are promoting a harmonious world. We believe the

:42:55.:42:59.

world will be more peaceful, prosperous, if all countries

:42:59.:43:06.

respect each other, rather than to immos their own ideas and systems

:43:06.:43:11.

on to others. Which believe mutual respect -- impose their own ideas

:43:11.:43:16.

and systems on to others. We believe mutual respect and

:43:16.:43:20.

accommodating, and mutual work for a common good and security are in

:43:20.:43:23.

the interests of peace and stability of the world. We are

:43:24.:43:28.

strongly opposed to any military sanctions. Military solutions.

:43:28.:43:32.

What about economic power, China sits on this mountain of thrillions

:43:32.:43:38.

of dollars worth of foreign exchange, what is that for? What's

:43:38.:43:44.

that for. You know China is still relatively a poor country. Though

:43:44.:43:51.

China now is number two in terms of GDP, after only the United States

:43:51.:44:01.
:44:01.:44:04.

now. But per cap at that GDP, China is still behind 100 countries.

:44:04.:44:09.

There is several hundred billion living in the countryside. There is

:44:09.:44:16.

still 155 million people living on under $1 US a day. This is a huge

:44:16.:44:20.

poverty line. There is an enormous responsibility for the Chinese

:44:20.:44:23.

Government to improve the livelihoods of those parts of the

:44:23.:44:27.

population of China. Let as talk a little bit about the difficult

:44:27.:44:33.

matter of human rights. Now Leymah Gbowee, the well known artist, says

:44:33.:44:39.

-- Mr Wei Wei, the well known artist, says without free speech

:44:39.:44:43.

you are living in barbaric world. Do you understand what he's

:44:43.:44:47.

getting? I think he has the freedom to express his view, otherwise how

:44:47.:44:55.

could you get his opinion on this. He has been in prison, of course?

:44:55.:45:04.

He has been under investigations for his evading of tax, destroying

:45:04.:45:10.

his accounting books. In any country this is, you know, if you

:45:10.:45:14.

are in a country that is ruled by law, you have to respect, you have

:45:14.:45:20.

to abide by the law. Nobody in the country ruled by law should be

:45:20.:45:26.

above the law, or outside the law. Even this called well known artist,

:45:26.:45:33.

he has to abide by the law. When he violated Chinese law, he should be

:45:33.:45:36.

punished. There is no doubt about that. Even in Britain. He should be

:45:36.:45:42.

free to say what he likes, shouldn't sne I think so. Otherwise

:45:42.:45:47.

--? I think so. Otherwise how can you know his opinions on this issue,

:45:47.:45:51.

if he's forbidden for voicing his opinions. Mr Ambassador, thank you

:45:51.:45:56.

very much. Well now, that's it for now if you

:45:56.:46:01.

are among our more northerly viewers, you may want to look out

:46:01.:46:05.

the window for the glimpse of Northern Lights, they were seen as

:46:05.:46:09.

far south of Yorkshire last night. We will leave you with some

:46:09.:46:19.
:46:19.:46:21.

# People think style # Rules our life

:46:21.:46:27.

# Some people think otherwise # Where did you go

:46:27.:46:33.

# On that big black night # Did you take the coast road

:46:33.:46:38.

# Back through your life # She's the sand

:46:38.:46:41.

# The moon the stars # That shine a light

:46:41.:46:45.

# And say # And say

:46:45.:46:48.

# They will do all right for me. Pretty cold outside overnight

:46:49.:46:52.

tonight. As wet weather arrives, we will see snow for the morning.

:46:52.:46:55.

Across the hills of southern Scotland into northern England.

:46:55.:46:59.

Even at lower levels there could be snow, possibly as far south as

:46:59.:47:02.

Lincolnshire and East Anglia. It shouldn't last long, but it will be

:47:02.:47:07.

a cold grey day across the east. Temperatures 3-4. Miserable across

:47:07.:47:11.

much of East Anglia and the south- east. Expect dull, cold and wet

:47:11.:47:15.

conditions to last well into the afternoon. It is a bit milder

:47:15.:47:18.

further west, temperatures reaching double figures, it is still grey. A

:47:18.:47:21.

lot of mist around the coast sitting over the hills and the

:47:21.:47:24.

moors, dull, damp, drizzley conditions persisting on the west

:47:24.:47:28.

coast of Wales throughout the day. It is milder here, it is for

:47:28.:47:32.

Northern Ireland, 10-11 Celsius, but a grey, dismal day. The west

:47:32.:47:37.

coast of Scotland also grey and damp, in the east there could, for

:47:37.:47:40.

a time be snow flurries. The weather will get milder for all

:47:40.:47:44.

places, even the east, by the time we get to Wednesday. It is still

:47:44.:47:47.

looking pretty grey. Cloud around, further outbreaks of rain on

:47:47.:47:49.

Wednesday, particularly across Scotland and Northern Ireland. The

:47:49.:47:53.

rain will slowly creep into parts of England and Wales. Much of

:47:53.:47:57.

England and Wales, dry on Wednesday, but still dull. However, on

:47:57.:48:01.

Wednesday, eastern areas will see much higher temperatures,

:48:01.:48:05.

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