14/02/2012 Newsnight


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

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The average punter in the UK thinks unless you're making some


nanotechnology Stealth bomber you shouldn't be making it in the UK.


Whilst there is potential with a seriously high end in engineering


and manufacturing, don't underestimate what's possible with


something as simple as a bike that we make and there really is


potential for many businesses to be exporting more of their products.


In many ways this bicycle company is a poster boy for the Government


to rebalance the economy towards manufacturing and exporting. The


problem is, though, that that transition is proving quite painful


for some. That's especially true for many households that are


spending a lot more for day-to-day items but whose incomes have been


flat lining. That's a pay cut in real terms and the worst fall in


living standards in decades, so today's inflation statistics will


be welcomed by many of them. They show that prices are still rising,


but now at 3.6% - that's still almost twice the 2% target but


considerably smaller than last year which peaked in October at 5.2%.


There are clubs where people try to keet their budgeting down to �50 a


week... But there was some relief in Watford where the Prime Minister


was visiting Mum's Net's archrivals, Net Mums. Inflation is coming down.


That's good news because inflation is the most important issue to


families. Moody's placing England in negative


outlook - Moody's said it was a downgrading of the UK economy and


its ruling coalition. Moody's achieved a terrific double today of


apparently pleasing both the Government and the opposition,


which I doubt was what they intended in either case. I'm amazed


that the politicians take this so seriously, and have as a policy


objective maintaining particular rating, which is something they


cannot possibly control. The rating agencies at the moment are somewhat


following the market I think rather little market reaction. You've got


rating agencies taking different views on different countries as


well, so I really think that this should be downgraded in importance.


Nonetheless, there is considerable evidence that Britain may have


dodged an economic bullet. The services sector, which accounts for


almost three-quarters of the entire economy is expanding quite well.


Exports are also up. Only yesterday the CBI painted a much more benign


picture than it had only three I think we're at a furning point. I


think the economy is it a bit stagnant at the moment. That's what


the recent quarterly growth figures show, but when you've been


declining you need a period of stability before you can start


rising again. So the fact that many of the surveys are looking more


positive, the fact that the housing market has stopped declining seems


to be also at this kind of turn around, indicates to me that


probably the next few quarters will look better than the last few.


That assumes that the eurozone crisis abates. Even tonight, that


was not assured as eurozone finance ministers still said they needed


more eassurance from Greece. Back here, we await the quarterly


pronouncements of the Bank of England in topbl's inflation report.


That could signal that Britain is a few centimetres to being on the


right economic track. Even if that means a decade of wobblably Japan-


like rough. With me are the Treasury minister, David Gauke and


the Shadow Chief Secretary, Chris Leslie Once the strip out the VAT


question, it is true that real incomes are still shrinking?


fact is we are going through a difficult period. There's no doubt


about it and the Government are doing what they can to help. That


why we prevented rises in fuel duty, which would have happened next


month. And some freezes. But people are still worse off. It has to be


said that the fall from 5.2% to 6% is moving in the right direction.


The Bank of England is saying that inflation will be down at the 2%


target by the end of the year, so that is an improvement, but we


recognise it is better. If this is good news, I would hate to think


what bad news was. The spin we're getting is that prices are falling


and people are better off. And in terms of council tax and fuel,


those costs are still extremely high. 3.6%, the cost of living


increase is nearly twice what the Chancellor himself is setting. And


certainly twice what wage increases are. So real families and


households up and down the country are finding it very difficult to


make ends meet. We accept, and indeed one of the difficulties the


economy has faced over the last 12 months has been high commodity


prices. The independent Office for Budget Responsibility highlighted


that one of the reasons why growth last year was disappointing was


because of high commodity prices. We accept that, it is difficult.


But within the constraints we have, we have taken out fuel duty and


council tax. Moody's now is interesting, we heard it dismissed


there. Some people say you can forget about it. The trouble is the


Chancellor has gone on and on about this triple rating. How strong he


is because he's managed to secure this, and now this must be a


serious defeat, mifpbt it? No, if you look at what Moody's have said,


they've praised what the Government is doing, but their concern is


there going to be the political will to follow through, and will


there be a fiscal grading. And in those circumstances, will it


continue? But the this has to be a set back? The fact is the analysis


of the credit rating agencies, as would appear to be the markets


generally is we have to have a credible plan to get the deficit


down and the likes of the IMF are saying we have a credible plan to


get the deficit down and in those circumstances, we have low interest


rates which is a huge help to businesses and households.


there is no comfort for you, is there? I don't think anybody can


take comfort in the fact that they're saying that the prospects


for growth are weak and weakening. When you think we've been flat


lining for a year, that is pretty scary. But they're talking about


any further fiscal deterioration. If the Government were controlling


borrowing, you could give them credit, but unfortunately it's more


than last year. And one of the tests that the Chancellor set for


himself on growth, well we know a year ago, they had a big plan for


growth in their budget. That hasn't been a success, private sector jobs


were supposed to fill the vacancy, we got the unemployment figures, a


17-year high. And when you start to look at the relyons on the credit


ratings, and even the agencies are abandoning the Government, so the


Chancellor is on negative outlook here. By your own standards?


big question the country faces is how do we deal with the deficit.


You can take our approach that you have to get it down and you have to


have credit rating. Or you take the approach that Chris's party has


which is keep on borrowing more, it's not a problem and we'll deal


with it in the future and what Moody's have highlighted is that is


a very, very dangerous thing. growth is crucial to reducing the


debt. But you won't do that by borrowing more. If you cut the


Future Jobs Fund and refuse to put a bonus tax on the bankers to get


the 100,000 youth jobs created, no wopbtd we've got no consumer


confidence and growth is slipping' way. How much of this is really in


your hands? The European finance ministers meeting is not going to


take place tomorrow, for various reasons, something to do with


paperwork in Greece. But you're not fully in control of your own


destiny, are you? There are international factors that play


into the economy and that is why growth has been lower than


predicted. It's nothing to do with deficit reduction, it's to do with


commodity prices, it's twood the euro prices. But it must be


disappointing that the finance ministers can't get it tomorrow to


meet? It is, because it is necessary for the euro countries to


address it. That's where the responsibility lies. It is


disappointing. But what can we do? What can we control? We can control


the fact that we have a credible fiscal plan and we set out plans


that are praised by the credit agencies. It's not working. That we


ensure we keep interest rates low. If we give that up, as Chris argues


then I'm afraid we will face a very difficult future. Thank you very


much. We've ask three economists to join us and give us their


assessment and bring with them their favourite statistic at the


moment on the British economy. They are Julie Meyer, founder and CEO


are a nadyee Capital; Stephanie Blankenberg, lecturer at SOAS and


Megan Green from Roubini Global Economics. Now, what have you


brought with you? This is one of the few indicators that have


started looking up in December and January and that's the purchasing


managers' index. It made me more positive about the UK economy and


made me think we may actually avoid a technical recession. But many


people won't have heard of it, why is it important? You'll notice


there is a line as 50 and anything above 50 shows an expansion in


industry. In 2009, for example, we had a massive contraction. And


we've just got above the 50 line. So that's an improvement. Is this a


reason to become bullish on the UK market, absolutely not, but it may


mean the UK will start to avoid a recession. Stephanie, you've been


saying the Chancellor should have a plan B. What have you picked for


us? I've picked consumer confidence. Which should appear. That's clear.


It's going down. I think it is rather clear, unfortunately. So I'm


more interested in the cause rather than the effect. In the end,


production will go up or down, depending on what people can sell.


What does consumer confidence measure? Does it measure the way we


think things are going to go? measures people's ordinary economic


factors, it measures unemployment and loss of income and overall


perceptions of where the economy is going. Julie, you're an


entrepreneur, what have you picked for us? Nesta have done some


research on 6% of all UK firms. So we're trying to find 20% growth or


more. 6% create more than 50% of all net new jobs. So we're


concerned about net new jobs and creating the industries of the


future so we need to pay attention to the vital 6% of the high-growth


countries. For instance, yet, Monti -- Monitorise gave their figures


and they're growing. We need thousands of companies. But is that


underpinned by the fact that banks are prepared to lend or not lend.


That's where it all comes from? is much more important than lending


because Monitise got where it is because of exceptional


entrepreneurs. How can we get more? Small companies subsidise big


companies. Big companies can get out of paying tax and restructure.


Small companies are stuck here. If we really believe that the 50%


drive the 6% net new jobs, these guys should be paying extremely low


taxes. One of the things that most politicians agree with is where is


the growth going to come from? How do you get there? The UK is trying


to stage its recovery from shifting demand to export and that's where


the UK is extremely exposed because 40% of exports are going to the


eurozone and that's embroiled in a crisis. So that's a risk for the UK


economy. Where do you see growth coming from? I would see it coming


through a long-term industrial policy for this economy. The UK for


many decades is vulnerable on the side of its external trade and


exports and, certainly, as Megan is saying, right now in terms of what


is happening in the eurozone. The only long-term view out is a


substantial industrial policy that will help precisely in my view the


small and mem-sized enterprises, but go beyond it to some extent.


The world is not top down any more, it's bottom up. The good news is


that the businesses are being set up and are taking off like wildfire.


You can dictate tax policy, that's one thing we can control. And we


should, if we believe the 6%, we should be making sure that these


companies exist in a frinctionless surface. But who is right about


cutting too far and too fast, where do you come down on that? It's a


fine line to walk. I always thought that the UK's package should mean


it bit much later so you have a chance for an economic recovery


before they bite. But, as I said, I think we'll avoid a recession, so I


don't think it's been catastrophic. So on balance, too far, too fast?


That's right. What do you think? think it was wrong from the start.


There clearly was a recession because of systemic failure of the


private financial sector. So you're saying austerity leads to austerity.


It leads to be poverty of most people. I think there is a mis


conception that jobs created in the private sector and the public


sector are equal. You can only afford 4% of GDP. But this is a


luxury we can't afford. So I may want to go shopping at Harrods but


I can't afford it, it's not autsyert, it's called living within


your means -- it's not austerity it's called living within your


means. And what about living with the euro? It's not good for the UK.


I don't think it will enraffle now, it think it start next year. Which


could give Britain a window to work on. The longer we can buy time on


the euro, the better it is for the UK. But there was good news from


the United States, January employment figures, things are


looking up? Correct, preSicily because they have not adopted


austerity policies. I think the Government is a necessity when


you're in trouble, because the private sector failed. Where did


the housing crisis come from? This came from Clinton in the mid-1990s,


Government policy changing and saying every American should own a


home. It was Government intervention in the mortgage


industry that drove that boubl. not going into that, but this is


entirely incorrect. We're continuing with our reports one


year after the Arab Spring, tonight with Bahrain. It has not gone away.


Protesters, largely from the Shia population have continued to show


defiance and anger against the Sunni elite. In an attempt to calm


the protests, a former member of Scotland Yard, John Yeates has been


called in. Mainly clashes in the tiny kingome


of Bahrain. Every night people go out on the streets calling for


freedom and for the down fall of the dictators in Bahrain.


majority Shia are calling for change in a Sunni rule. Growing


sectarian tensions here have the potential to plunge the country and


the region into unprecedented violence. Driving through the


wealthy heart of Manama, the capital, there are few signs of


unrest. It is easy to miss the deep divisions in the society. But in


the year I've been away, this country has been torn apart. It's


exactly a year to the day since the Arab Spring. Within days there was


a bloody response in the capital. The square was cleared but


protesters returned. Under intense pressure to stop the revelation,


the King brought in the troops. But he appointed a panel of


international human rights experts. The head's report galged systematic


torture and excessive use of force and the sacking of thousands of


workers. Almost all the victims were Shia.


And this is why the Government is keen to reassure its allies.


Formula One is massive here. Because of the unrest, last year's


race was cancelled. 29 Shia employees at Formula One were


sacked. This man who runs the Formula One


here says mistakes were made here but it is time for the country to


move on. These charges were dropped and His Majesty ordered them to be


taken back. We opened our arms with full confidence and we welcomed


them all back and they are back. But the trades union movement,


parolling here outside the Ministry of Labour, disputes the account


given by the Formula One chiefs. It says five were not invited back and


they were not the only sackings. 3,000 workers lost their jobs.


still have more than 1,000 workers dismissed and suspended. All


workers, both in private and public sector should be reinstated without


any kind of condition and a dignified reinstatement.


The country's security forces were heavily criticised in the report


but the police are keen to give us their of the story. We were invited


to follow an elite unit. They have thrown the gas.


police took us to several villages where they encountered makeshift


roadblocks and angry young demonstrators. Five police officers


and nearly 60 civilians have died since the upridesings began. 12 of


the deaths have been attributed to the heavy and inappropriate use of


tear gas.. How can we beat them? We just have our shields and the gas


and we have flash bangs, that's all what we have here. But this woman


in a Shia village tells a different story. This is fire, all the house


will be full of gases. She said her mother died after the police threw


tear gas into the home of her mother, which she shared with two


other families. She was lying here and we tried to cover this area so


no smoke would come inside, but no use of this. She already passed


away. The police told me if it happened it was an accident. They


would not deliberately fire tear gas into a house. Deliberate or


otherwise, this incident and others like it have scarred relations


between the police and the people. Pictures are all that Amina has


left of her 18-year-old son, Mahammed. He was arrested on 25


January. A few hours later he was dead. The police say he died of


natural causes. His family say it was because he was beaten,


something that the police strongly object, but there was no


independent autopsy. TRANSLATION: told them I would wait for my son


to take him home because he was tired. And the police said they


would take him to the hospital. I said I would take him to the


hospital, why would you want to take him to the hospital, I'm his


mother. He said it is not possible. We would take him to the police


hospital and he just told me to go home. I was not expecting it to end


in his death, that my son could buy. I've been brought in to add vuz viz


the king king. In a surprise career move, John Yeates arrived in


Bahrain last month to help reform the police. I think the Government


have made excellent progress here in terms of doing some things


immediately, but the other issues will take time and you cannot


expect wholesale reform to take place in a matter of weeks. Some of


this stuff, human rights training for 20,000 police officers is an


immense undertaking. I've spoken to people who have told me that this


has happened in the last couple of weeks, they've been pick the up and


taken to -- picked up and taken to unofficial sites, or not officially


recognised, beaten, tortured, they say and I can tell you the sites


exactly. Bahrain youth hostel. Municipal buildings, and the racing


club. This is happening, they tell me now. So it's present. You're


lobbying those things to me now and if those things have happened,


there is a proper procedure where they need to make their complaints


and it will be addressed and investigated. There's an awful lot,


I'm not doubting what you just said, but there is an awful lot of


mischief on these social media sites. On a plot of ground that the


protesters call Freedom Square, the crowd are demanding that the King


step down. The leaders of the main Shia opposition party urge


restraint. Many wonder if they can contain the


anger. But to understand the depth of that anger, you need to leave


behind the glittering towers of Manama and head into poor Shia


villages. Communities like Sitra. It's known


among activists as the isles of murderers, because many who died in


the uprising have come from here. If you want to understand the deep


divisions that exist in this country, you come to a place like


this. This is a poor Shia community, the streets are strewn with rubbish,


the walls are plastered with anti- Government slogans. This one says,


"Down with King hopld." Zainab's father was jailed for campaigning.


What is sectarian about Bahrain is the Government that is trying to


divide and conquer. This revolution is demanding Democrat see and


freedom for everyone. But the Government is saying, "Sit down and


talk to us" why not? We have done that before, but these are


dictators and every time they make promises and break them and we're


still suffering from sitting down and talking with them in 2001. And


the people want to see change. Friday prayers, the country's most


senior cleric calls for a peaceful protest. But his sermons are


ratcheting up the tension. "Our souls and blood we sacrifice for


you" they chant. Bahraini Shia are seen as the enemy.


Falconio is condemned as a country that will turn the country over to


Iraq. We're just Bahrainis. We want reforms in Bahrain. We want reforms,


but we want the Government to change. We want to live in peace.


America is anxious, Bahrain is a strategic defence partner. Unrest


here would be a serious threat. United States has considered


Bahrain an important ally. This is a region where we have real


security concerns. That relationship needs to go forward in


a constructive and a positive way. But we also want a stable society


here and one where people are functioning freely in the society.


I spoke to the country's Justice Minister and asked if the two sides


in this conflict can be reconciled? His Majesty already said that the


doors are open. Now there are lots of work going on to bring people


together. And it is unfortunate, really, why these positive gestures


that have always been dissimulated since the beginning of the problem


and calls for dialogue have been boycotted and there is even


provocation that amounts to a crime of incitement to violence. As night


falls, the daily ritual of protest and violence in the villages starts


up all over again. The police say they've taken on board the


criticisms levelled at them. In one year on, as the anger builds, time


is running out for this tiny country sitting on a dangerous


sectarian fault line. Tomorrow night, Sue Lloyd Roberts continues


our series looking back on the Arab espionage, looking at female


genital mutilation in Egypt. Take me to prison if you want to. Take


me any where, but I will continue to circumcise girls. I want the


money. All that tomorrow. Now, the British way of life, indeed that of


all of Europe is threatened by militant secularisation. This is


similar to the anti-lipblious fervour from Stalin and Hitler and


other tote tall tarrian leaders. These are the views of Baroness


Warsi in a trip to Rome. Baroness Warsi is one of Britain's best-


known Muslims. But has she got a point. Our sovereign lady the Queen.


With the Monarch at the head of the church as Defender of the Faith,


Bishops in the House of Lords put the Church in Parliament too. But


some see the proimp of secular values, with Christian hoteliers


forced to take gay guests, and the wearing of symbols at work. And


this prompt ed this from Baroness Warsi tonight. My fear is that


we're so afraid of going backwards in history to the days when


religion was imposed on people by despotic regimes that we have got


to the stage where aggressive sack larynx is being introduced by


stealth. Politicians are often reluctant to do God when in office.


David Cameron, however, has expressed views by chime with


Baroness Warsi's. It's easier for people to believe and practice


other faiths when Britain has faith in its Chris ant. Three-quarters of


Christians believe religion should not influence public policy and


half believe there should be no state religion. So, beyond pomp and


nostalgia is Christianity in Britain really in deep trouble.


With me is Professor Richard Dawkins, Bishop Michael Nazir-Ali.


And Ruth Gledhill. Do you think the Baroness has a point when she talks


about people about like you, who are militant secularists? I think


that's a bit strong, second yarists include many religious people. Many


of the great secularists have been religious all they wanted to do was


keep religion out of politics. That religion people are free to


practice in their own way, but not impose is on other people. The


Founding Fathers of the United States founded it in secularism,


because they were mindful of the tyre niece they fled from.


that's interesting, because religion is stronger in the United


States, because they were founded, it's nothing to do with militant


secularism. No, we must distinguish between the Church in state and the


Jew dayeo Christianism in the state. I whole tenor of public life in the


US is governed by the Jew dayeo Christian..So Do you think the


Baroness is broadly right? Yes, because if you start with the Magna


Carta and The Bill of Rights and the end of slavery and the former


nursing profession. These are all explicitly Christian inspired


movements that have given us the kind of life we have today.


really don't think these good things that the Bishop has


mentioned are Christian inspired. The slave trade? Of course, in


historical times everybody was religious so there's no question


about it. That's not the point. The point is, it explicitly involves


God. The Magna Carta is based on a Christian view of God. Ruth?


think militant everything is increasing. And when I started


writing about religion for the Times in 1989 everybody predicted


it would be a dying subject and past the millennium it would die.


But here we are talking about it. And we're seeing a consequence of


the growing battle between the atheism, the new atheist, as we


call people like Richard Dawkins and the religious leaders of today


and everyone is fighting their corner with more and more


aggression. One of the interesting things about the Baroness is that


she talked about her daughter in Rome and she sent her daughter to a


Roman Catholic convent and in a way, people such as Richard Dawkins have


provided a service to the faith in that they've brought them together


in battle against the atheists. So they've created a new horm knee.


But why is the Church not raising this? I have been for several years.


I'm very pleased that the Baroness has used the words and many of the


sentences I've written about in national papers and indeed on your


programme so I welcome what she is saying. But if you feel you're


sidelined, the Queen and thousands of church schools, what is marginal


about that? What is it you would like that you're not getting?


it is the paraphernalia, as it were of establishment does not actually


mean that Christian faith is at the centre. I'm not asking for a


privileged place for the Church, I think what is most important is the


Jew dayeo Christian religion in legislation for instance, when it


is about the human person or, indeed, policy making. But recently,


didn't a judge say our law was nothing to do with Jew dayeo


Christianism. But I thought they were judges of the Crown? Let all


the Bishops resign from the House of Lords if the Church is not


asking for privileges. That's up to them. My point is that the Jew


dayeo Christian religion in the Bible is extremely important today


for policy. But it is true with things like abortion and stem cell


research that the Jew dayeo Christianism does form a lot of


that debate. Absolutely and that's one of the problems. The survey


that my foundation has brought out this very day, the people who tick


the Christian box in the census, we did it the very week after the


census took place. People who recorded themselves as Christian


and we found out that not only has the number of Christians dropped


since the previous census, but those who still counted themselves


as Christians no longer believed in lots and lots of things that the


religion is supposed to and in particular, things like abortion,


things like assisted euthanasia for the terminally ill. They very, very


strongly support, in the opposition to their professed Christianity.


Ticking the Christian box, in other words many people are normally


Christian but it doesn't mean very much? I think that's always been


the case in Britain. Christianity is a very broad Church and people


have often taken the core beliefs, but not all the doctrine of the


Bible. Very few people are fundamentalists, as sometimes in


the things you've done, you think all people who call themselves


Christians are fundamentalist, whereas they're not and as your own


survey pointed out, 64% didn't even believe in God, who called


themselves Christians. That's exactly the point because we've


found that the people who call themselves Christians, 40% said,


"Oh, by Christian means I try to be a good person." But there's nothing


wrong with that. Of course not. But if you accept that those people are


to be labelled Christian just because they want to be a good


person. But define themselves as that. Let me finish. If you accept


that people who call themselves Christian on such Nablus grounds as


that, that's thrutly fine but what you cannot then do is hijack these


people and say "these are Christians therefore we Bishops and


priests can count these people as though they voted for us in


implementing policy." You cannot have it both ways. But I'm amazed


at what your survey shows. 44% of people believe that Jesus Christ is


the Son of God and the saviour offer the world. 62% believe in


heaven. These are your figures. What kind of commonality are you


talking about. But those are percentages of the people who said


they were Christian. Which is 70% or something. If our survey is


right it has dropped to 54%. will see. A look at tomorrow


morning's front pages. The Guardian says the new NHS Bill could harm


patient care. And the Times says MPs talk lands


visit. They will inspect British defences and the Greece rescue


package is in doubt. And the Independent has a report on hunger.


And the Dalely Mail has cheap booze to be outlawed. This week is the


50th anniversary of the first shoot'em up game space wars,


created by four students at MIT. It Good evening. It stays cloudy and


breezy overnight and tomorrow will be little changed. We'll see


brightness develop through the day, the best of the brighter skies to


the south-east and northern England. The coasts of Cumbria, Lancashire


and Merseyside and Yorkshire it may remain grey and there will an


threat of drizzle in the breeze throughout. But most of the country


will remain dry but again, closer to the coasts of Cornwall and


western and north parts of Wales the westerly breeze will feed in


some light rain and drizzle. The best of the brightness in Northern


Ireland with be in Omar and Down. The Western Isles will hold on to


the cloudy conditions throughout. Wednesday into Thursday and we


start to see changes across Northern Ireland and Scotland.


Thicker cloud will bring outbreaks of rain. But England and Wales will


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