20/02/2012 Newsnight


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

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Sometime tonight, the Greek financial crisis will be settled


and Europe will live happily ever after. Or so we're asked to believe.


But even if finance ministers do strike a deal to let Greece borrow


more money, are the people of the country willing to suffer for the


sake of foreign banks? And will they accept European commissars on


the ground dictating day to day policy as some in Northern Europe


want..We'll hear from a Greek cabinet minister. And how did


Greece get itself into this mess? Step forward Goldman Sachs, the


bank that helped to make the books look balanced. And the European


officials who like to say yes. wrote to deck Tate letter to


Eurostat. Six months later, we got a letter back, saying they veted


and we better shut up. Here the coalition wrangles of the budget s


the new tension in Government how far to penalise the wealthy to


protect the less wealthy. ambition is to end the period of


austerity in terms of the incomes of low and middle income families.


Our new political editor is here. That language from David Laws man


who was the first Chief Secretary to the Treasury in this Government,


and is still a big noise in the Lib Dems is illuminating because


austerity isn't something the Government likes to boast about.


And our borders. It is all right the Greek financial crisis will


soon be over, that's what officials close to the negotiations going on


in Brussels tonight say. Accept of course it won't be over, the Greeks


will merely have succeeded in borrowing billions more to try to


pay off billions they've already borrowed while the northern


Europeans who got to pay the bill will have got some conditions they


attached they believe they can sell to their people. The dux Finance


Minister, for example wants a team of commissars installed in Athens


to make sure the Greeks stick to the rules. First up Joe Lynam


Lent starts this week, followed by 40 days of abstinence and self-


denial. Forever many Greeks this week will trigger a decade of


economic stress and collapse in their living standards.


Their fate was sealed 2,000 piles away in Brussels, where eurozone


finance ministers arrived to get a special pleading from the Greek


Prime Minister himself. Lucas Papademos argued that Greece had


met all that was asked of his people, and was entitle today a


further 130 billion euros in loans and guarantees. His audience seemed


more responsive than they were a week ago.


TRANSLATION: Greece has made very important efforts but we need to


continue the work now and all parties need to provide their


contribution. The IMF is part of it and working on it.


It is the intention of nobody to have Greece outside the Euro area,


this would be a big solution for reason. It would be nonetheless but


situation for the Euro area. Then came the Dutch finance Prime


Minister pouring cold water. He wants to see the troika, based full


time in Athens, something which will make the southern Europeans


lived. I am, myself, I am in favour of a permanent troika, in Athens.


That's my personal position, yes. I think permanent - when you look at


the derailment in Greece, which has occurred several times now, it is


probably necessary that, some kind of permanent presence of the troika


in Athens, not every three months but on a permanent basis. I'm in


fave of it that. The comments is schism between the north and south


of Europe is real and won't be papered over by warm words. They


feel they've been misled by Greek politicians in the past so Cher'


exactly a stiff price from ordinary citizens. In a second bail out


worth 130 billion euros, Greece has cut tenses of jobs and public


sector pensions. Going forward, they agreed to have every key state


asset and get used to troika's hot breath over their shoulders, to see


they don't deviate. Is it workable? Austerity, won't work, and we've


been going down the path for the past few years. We've seen


depression level contractions in Greece, and without any economic


relief, that is some growth, I don't think you can expect a


country such as Greece, to itchment reforms, structural reforms that it


needs to do in order to become sustainable, a sustainable member


of the eurozone. With youth unemployment at 50% and


increasingly angry Greek youth could make any deal signed


unimplementable on the ground. we're moving into is a crisis of


democracy. Because the Euro as a currency is public good for the


citizens of the eurozone. But the decisions taken to the safety of


eurozone are taken by individual countries, and might impose,


undemocratic, and to a large extent unacceptable constraints on other


eurozone countries. This week the Greek Parliament is set to activate


a collective action clause, to force all bond holders to take a


compulsory hair cut or right down of 70%. The international swaps and


derivatives association will decide whether a Greek bail out is in fact


a messy default or an awe dor of to a Lehman Brothers moment.


Joe Lynam is with us in the studio now. Is there going to be a deal


tonight? They're talking, eight hours after they started. That


means they haven't got the deal they had hoped. They're going to be


talking about the monitoring I was referring to there, the


surveillance where the hot breath of the troika, the IMF and ECB will


be breatheing down on Greek officials and ministers so they


don't stray off the path. They're talking about the account in which


they will pay the money. It is like giving someone a �0 note with a


chain attached to it, because the Greeks won't have access to the


money, because the troika will be controlling that account. And even


at the end of all that, all they'll have succeeded in doing is


borrowing money against imminent rainy day, which will have to be


paid off at some point? Will have to be paid, all going for the Greek,


all going well they will get the debt down to 120GDP, that's


unsustainable by any measure, that's if the economy recovering.


It shrank by 7%, that's a depression not recession. For that


who happened, there needs to be private sector investment. The rich


people are squirrelling their money away out of the country, so the


private sector-led recovery, will be a tough one. Why has the mood


changed so much snx the mood from north to south has changed, the


Germans, and Dutch and Finns, to vote on the bail out deal, may not


approve it, saying, we have been lied to by Greek politicians, we


don't want to be lieed again, it is moly the triple-A rated countries


will put their money on the line. Thank you very much. Now the Greek


crisis is not an zept T has human causes. On the one side is the mess


Sianic on the political class, and the elass it can view of what


constitutes sound Government and good management of the economy. The


country's adited to borrowing. Yet, was commit after joining the Euro


to cutity debt. How is it to do so? It didn't. It turned instead to one


of the world's biggest investment banks, for help in getting around


the deficit rules. It was nick Nick Dunbar, author of "The Devil's


Derivatives", how Goldman Sachs did Greece a big favour. For the first


time, some of those who did the deal talk publicly.


The sales, it is a sexy story, between two singers, but the


European crisis is not the child of the sex we had.


With Goldman Sachs. Perhaps as an electorate we might have agreed


this is what we want to, it was nef we were nef consulted and we nef


knew. Greece is teetering on the brink. Poor man of the eurozone,


dependent on the EU for bail out loans, mistrusted by creditors and


poised to default. How did it bring itself to the edge and how did 2.8


billion euros of debt disappear in the wind? In 2003, I exposed


Greece's attempt with Goldman Sachs to conceal the size of its debt. At


that time the Greek authority say I was making something out of nothing.


So now I'm back in Athens, to understand how and why the deal was


done. What was the deal's cost to Greece, at a profit to Goldman and


why were EU watchdogs insistent they knew nothing until 2010? In


2001, in a wrestle how to qualify for Euro membership, the Government


argued how they could kick the habit of debt. Greece had to


promise to show directionability, the debt ratio had to go down every


year. With events like the 2004 Olympics coming up, that wouldn't


be easy. For the civil servants, an easier solution of at hand., why


not hide the borrowing instead? Among the banksers who flocked to


and theen, was head of fixed income sales at Goldman Sachs. In 2001,


she came to the table with one of the most important deals of her


career. She had found a way to give the Greeks what they were looking


for, a way of shrinking their debt that was legal and completely


secret. I'm going to meet the man tasked by the Government at the


time with getting Greece ago debt moving in the right direction. The


deal involves swaps, bets to hedge risks. He says from the start he


wasn't able to disclose the deal to the market. If you go to the open


market, as a secret agent trying to sell bonds, you make allowances


because you want to attract investors. When you do it is as a


bilateral deal, you don't make announcements about it. No-one did


it at that time. If you look around Europe, nobody announces the swaps


they did with every counter party. And that was the tradition.


swap that Goldman offered Greece would shrink the debt, use ago


foreign exchange transaction. In the same way you or I convert our


currency when we come back from holiday, international brotherers


convert the foreign bonds into domestic debt. Goldman used a


fictitious exchange rate to make the country's debt appear smaller.


In this way, 2.8 billion euros, suddenly disappeared, giving the


false impression that Greece was convergeing with the Maastricht


rules. The debt hadn't really disappeared. In reality, Goldman


had secretly lent Greece, 2.8 billion your euros as part of the


swap. In an attempt to paying it back with big interest interest


rate delts, there was further debt. A year after the Government


chaickds. The new Government revealed the spiralling costs of


the Goldman deal. TRANSLATION: The dretrimental swap


agreement, led to the debt. The swap agreement had a direct cost of


500 million euros, and indirect cost of one billion euros. The new


boss of Greece's public debt management agency, says the deal


ostensibly achieved what the previous Government set out to do.


They hid the debt, so they were in agreement, with requirement to be a


member of the eurozone, right. But the cost was huge. And when finally


they had to come out in the open and acknowledge this debt, this


debt ballooned. But big debt? big debt. A bad bet? In prospect


yes. Vul of the bets not working out,


the loan mushroomed to 5.1 billion, Goldman involved tweaks to ensure


the dice was loaded against Greece and in favour of Goldman who were


making millions from the deal. asked Goldman to eliminate this


feature that was not usual on the market. They refused to. I


recommended to write a letter high up to, get rid of this, without any


come pen says. But they were asked they couldn't do that, because the


traders were in position, and they may lose money. He sympathises with


the position his predecessor was in? He was riped off by Goldman. I


don't blame him. Because, he was scared and could not go to the


market and check, and was asked by the Government to do that.


might wonder how such a deal could be allowed, but it was legal.


Goldman wanted to be sure, it wouldn't get into trouble for


helping the Greek with such a bear- faced trick, so the company said it


spoke to the EU accounting agency about the deal, and provided


Newsnight, that discusses took place. We asked Eurostat but they


For many, questions remain. Why wasn't Eurostat looking out for


Greece in the interest of the Euro in the whole. The deal was well


known. How could Eurostat stay bliss flee unaware until 2010?


Greeks were trying to warn about the dodgy stat in their own


country? In 2005, we wrote a detailed letter to Eurostat, dobing


in your Government at the time. For, what they were doing in fiddling


the Greek's statistics. Three months later, we say they


investigated everything and it was above board, so we better shut up.


The billions oweed upped the Goldman swap is a small piece of


the 350 billion euros, that Greece owes today, only a fraction that


will ever be repaid. That 5.7 billion simpliess the sip tenseives


for Greeks to fiddle debt, and banks to cook up deals, and


Brussels institution toss look the other way. If, you put me back to


2001, would you do that again, I would say, no not because of the


economics behind it, probably design it a little bit differently,


if I knew that September 2011 would happen, but I would never do the


type of business because of the political handling and risks of


this deal afterwards. Newsnight approached Goldman Sachs but they


declined. In a statement they told In and thes today, the legacy of


Utopian financial experiment is unstable angry society, reeling


from four years of recession, with no end in sight. The Greeks, who


itchmented and analyseed these transactions, agree it was a toxic


import that played on the weakness,s a sub-prime in the US


bankers played on the weak necessarys. The Euro failed the


Greeks. Greece is poise today default on the debt and leave the


eurozone. Germany and EU institutions expressed outrage how


the Greeks cheated their way to disaster. That's hypocrisy. Back in


2003, the story of how legalised financial trickery was roting the


eurozone from the inside wasn't something the guardians of the Euro


want to hear, so they ignored it. It is tempting to ask, whether a


single currency, held together with such toxic glue is actually worth


saving. Well, joining us now from Athens, is Giorgos Papaconstantinou,


until the middle of last year, he was Greece as financial minister,


now he is minister for the environment. And also with us, is


John Redwood. Mr Giorgos Papaconstantinou, forgive me, I'm


so sorry, when you look at that inkoch tense, it is not surprising


the northern Europeans want to keep a very close eye on how you get


access to any further loans? I can see how the Goldman Sachs story is


sexy as your video says. But I don't think it is justice to what


is happening in Brussels tonight which is a bigger picture. A few


points, point number one, everybody was doing it. Every country in the


eurozone was using these kinds of tricks to reduce their debt back


then. The difference with Greece is when the rules changeed in 2008,


the same Finance Minister you had in the video, saying how terrible


it was, forgot to declare it with Eurostat. To pack maick it


absolutely clear, this was after the entry in the eurozone, so it


had no effect for the rules of us entering. And the debt of 160% of


GDP, those% the Goldman Sachs swap was about, is important but it is


not the story. The story is about overspending, and receiving less


than the taxes that were due to the state. Over years and years, this


is where we're at. We will come to tonight in a moment or two. First


on the Goldman Sachs story, you used to work in the banking world,


what do you make of it? I'm not surprised that Goldman Sachs went


off and came up with a clever scheme, which rewarded them as well,


because that was the brief they were given. An alleged 600 million


Euros. But the mainvilleens in the story are the sponsoring Government


that want to do this kind of thing and lost the money, and the


European authority who seem to connive at it. Nobody was saying it


was illegal, it was Legal Business, and they got the reduction of debt


for the period of time they want. What do you make the European


authority signed off on it? It is quite wrong, but we know, as we've


been hearing from Greece, a lot of countries, massageed or arrangeed


their figures to get in the Euro and some carried on doing so


afterwards to conform with the sensible rules. We know it was


because, most countries ignoreed the rules and got into the Euro,


when their figures was way out of order, that we have the crisis


we're now facing. There is a big question, these people ought to be


answering, why did they turn their backs on it, they must have known


what was going on, both the "euroland" people and the national


state Government have access to great financial and legal advice,


so it is difficult to believe they didn't know what Goldman Sachs was


doing. So they turned a blind eye. Mr Papaconstantinou, let talk about


tonight and what's going to happen. One more point on the previous


story. It is important to remember, the two countries that breached the


Maastricht criteria were France and Germany. When Eurostat asked for


audit powers to be able to know exactly what's going on in the


various countries, the cubs that did the not give them audit powers


from the large countries, against France and Germany. And yauro stat


only got audit powers after the Greeks statistical mess came to


light, after we came claep - the new Government at the time, what


the you in numbers were. This is a telling story, of the failings.


Everybody was up to no good in one form or another. Let's turn to


tonight, are you confident there will be a deal? I think there will


be a deal. My understanding is as we speak, the differences are


narrowing, it is a question of getting the projection of the debt


in 2020 to be around 120%, which the European council decided and


the assurance that is will make the finance ministers of the eurozone


members comfortable for the new package for Greece. It is an


important decision. Because it can turn the page for Greece. It can


stabilise the rest of the eurozone. And we can move forward. Do you


think it will turn the page as we've just heard? No I'm afraid it


won't. The great tragedy is we may get a deal tonight but it delays


making the necessary adjustments, the need to be made to give the


Greek economy some chance of recovery. We've had several years


of depression or recession, because they're locked into a system that


doesn't work for them and the wrong exchange rate. If they patch it, it


doesn't produce a miracle cure. Why would the second package work when


the first one didn't. If the Dutch have their way, there will be


representatives of the three main financial institutions involved, in


Athens, making sure that you do as you say you'll do. Will the Greeks


accept that? Well, let not make a big deal what is actually pretty


much common practice. The IMF has a resident office in France, they're


there all the time. So I don't think there's an issue in having a


permanent presence of the troika. If I could respond, the two ways to


go forward. One is to declare bankruptcy and leave the Euro. A


lot of people say that. Those who say it, seriously underestimate the


economic and social cost for the Greeks, the Greek economy, and the


repercussions on the rest of tkpwruerp Europe. The other way is


hard, go forward by the necessary austerity and structural reforms


that give the country a capacity to grow again. It is not an easy road


and there's no magic bullets. We need the first programme, because


the first one did not have enough time to get the job done. This is


the better of the two roads. What would happen if you left the Euro?


Well, last Sunday the Greek Parliament voted on the new


austerity package, by a large two- thirds majority. If it voted


against, then the eurozone would stop, the aid programme for Greece,


and then in the next morning you would have queues outside the banks,


people trying to send the money out of the country. By midday, would


you have to shut down the banking system, by the end of the day, you


couldn't buy medicines from abroad or fuel, oil and gas, and soon we


wouldn't pay pensions and salaries. That's what would happen. People


talk about the exit of the Euro, if they can be done in an automatic


way. That's not the way it works. If you are outside, you can think


about dedevalueing, you do the adjustments that are necessary to


stay within the eurozone in a competitive world. John Redwood who


do you think what would happen? you plan it, it wouldn't happen. 87


countries, have left single currency, since the Second World


War, you plan it, and on a given day, announce the day, and it


hasity powers to protectity banks and print the currency. You devalue


and establish a new market rate, and that cut your debt burden and


makes you competitive. From that moment, you have a chance of


recovery. Iceland did it, and Iceland are in a better position


than Greece that is old yerg on. Now, tonight, it's my pleasure to


introduce our new political editor, Allegra Stratton once a producer on


this programme and latterly of the Guardian, it is always about


finding diamonds in dunghills, but there have been few from Allegra.


Lib Dems want a significant policy to lift the rate of income tax. So


before that level, you wouldn't pay any income tax and they want to


bring that 2010. Tories liked that, so it baims a coalition pledge. Now


what we're hearing is the Lib Dems think this should be faster,


furious further. And we don't know what the Tories think, because they


think they're not going public how they will negotiate ahead of the


Budget. Today we're talking to David Laws why they want to go


further, faster, more furious, what I find is if it could be brought in


more quickly T would end austerity. I haven't talked to anyone that


thinks there's a silver bullet, for austerity and yet this is what the


Lib Dems want to that end. He is for many Conservatives, their


favourite Lib Dem. When David was in charge of Treasury and in charge


of spending cut, George Osborne said it was as if he was put on


earth to do the job that was asked of him. But now, in his first


television interview, since resigning from the cabinet, David


Laws stels George Osborne the time has come to begin answered to


austerity. We have to distinguish between the period of austerity for


public spending, and public services which is clearly going to


go on for a period of time, from the austerity we've seen for


household budgets. They've been falling since 2008. Now we've


completed most of the tax increases, now we're seeing inflation this


year, on a firm downward track, that gives us the opportunity, if


we can make these other reductions in taxation, by increasing the


income tax thresh holds, as Nick Clegg has suggested, that gives us


the opportunity of ending the austerity and household budgets and


allowing the Budget of most people, the household budgets of most


people, to start expanded from this year to next year. That would make


a big difference to the economy and millions of people, who have been


through one of the toughest periods in terms of household budgets in


living memory. Nick Clegg called for an increase in personal


allowances for low and middle earners, but now unone of the


advisers raced the stakes. By making the claim it would end


austerity, language used by the Opposition, David Laws is telling


the Chancellor there's an alternative. The big question


remains, how will they pay for it? Will they, for instance, rule out


cuts on low and middle income earners to fund the policy. In


terms of the party's principles, is it your bottom line now, that any


of this, income and thresh holds has to be funded from the well off,


it cannot be funded from taking of tax credits? We certainly don't


want to be see any measures that would fund the personal allowance


that would be regressive. It would be bizarre to take from low incomes,


to other people. You're ruling that out? Yes. Measures that would fund


the personal allowance by taking money off people on middle and low


incomes. The pensions of the most wealthy appear to be in their


sights? I suspect what the Government will look at is whether,


for the most of fluent, 5%, and 5% of people, across all the


allowances, in the system for people, we can make changes, that


take away some of the subs zis that are going to the top 1% or 5% delix,


and get to them where they're needed. Green faxes has been


floated, can you go for a green tax, when that might push up bills more?


There is a real issue in the short- term, about whether we would want


to add, for example, to petrol and energy bills at a time when oil


prices have spiraled higher and people's household budgets have


been squeezed. To add further to the green taxes with high energy


price sincere, something that would not be sensible to do in the short-


term. Let look at two alternative ideas being floated, the


Conservatives, are our old friend an anonymous sources, why not use


the money you are suggested that can be found, use with employers to


help with national insurance, so they hire more people? The agreed


priority on tax, if the coalition Government is to raise the personal


allowance to �10,000, that's what we agreed when the two party got


together. That takes precedence over all the other tax priority.


Are the libkems right? Could their policy unsqueeze the squeezed


middle? Our forecasts take thoo account policies that are announced


and middle income is to fall slightly in 2012, but it wouldn't


take much to reverse that, and have a small rise, like a give away in a


higher personal allowance. Are the Lib Dems, now, Britain's tax


cutting party? I think that we are. That will make Conservatives


bristle. Opinion on their side ranges the Chancellor should not


allow the Lib Dems to own the proposal. Then there is some that


propose different tax cuts. And others of a recent warning of the


down grade in credit rating, allowance no room for manoeuvre.


Conservatives are saying the lick democrat may get the increaseness


that Lib Dems, like David Laws are calling for, but there's irritation


in the manner if not not the substantial. Is They don't


understand why they went early, when David Cameron's loyal advisers,


met to discuss long-term strategy, they talked about whether the Lib


Dem bail earlier from Government. Do you understand why people are


irritated? What I would say as a strong supporter of the coalition,


you don't end up with a destructive prose, where both parties are


trying to block the proposals, so you independent up with a paralysis,


where the Government doesn't get things done. A constructive one


will make the coalition more sustainable because the two party


will feel happier. And it leads to a competition of ideas, which is


potentially good for the country. The Lib Dems have put down a marker


they think they can ease the squeeze for the less well off. They


want credit from the electorate for trying to do so, if it happens or


not. With many cut yet to take effect, the credibility of their


claim will be tested. Allegra is still here. I think I can see why


you journalists are exr excited about it, but for the public why is


it significant? Because, the general public, they know all three


political leaders talk about the squeezed middle. It is Ed Miliband


phrase, but the other two have jumped on the wagon. When for the


previous three years, no-one's talked about the squeezed middle,


like it is an easy thing that can go away. We knew they wanted it


from the Budget, but we didn't know what magic wand it would end up


being. Everybody I talked to over the past year or two years, when


you talked about the squeezed middle, for many out there, it is


not a theme, it is a way of life, I understand that. But in terms of


the political leaders, if they thought it was a way to solve it


like that, they would have done it. There's no doubt that David Laws is


speaking for the party here? don't doubt it. He is one of Nick


Clegg's closest advisers, he doesn't absolve from that label. He


is one of the most respected economic minds in not just the Lib


Dems but the Government. He is also a big, as he said in the package, a


big zel leb for the coalition, still. First, Daniel Finkelstein


and Steve Richards are here to shed more light on this. What do you


make of it? Well, two things, first, the Lib Dems, even the so-called,


orange book Lib Dems, like Nick Clegg and David Laws were always


pretty ardent, believers in redistribution through tax. I


remember before the election, they were more overt about their support


for redistribution, the Gordon Brown, who never used the word,


redistribution, didn't dare do so, even though policies did it.


They've been keen on the specific policy. Of course it was part of a


coalition agreement they would reach, to get people out on low pay


out of tax. It is more the manner in way they're promoting this


particular policy now, to make it absolutely clear, to the voters,


that come the Budget, this will have campaigned for something they


believed to be fair, and that they're determined to be associated


with, if, and when it is announced. Is George Osborne going to pay


attention? He will have to, and I think he will want to. Reducing tax


on people is what Conservatives believe and want to do, so


therefore, this doesn't cause a fundamental problem. This is one of


the glues in the amendment. I am less keen, because if you take


people out of tax, they become less responsible for what we spend


publicly. This proposal that David Laws goes out and tries to promote


the Lib Dems doing it, the problem is in ordertor people to take this


idea, they'll have to know who David Laws was and was a tax


allowance was. And few people know either of one of those things.


That's not cynical, that is what happens when you poll people. They


don't know what these things are. They will judge, whether they're


better off. It is interesting, isn't it the way in which language


is changing, attitudes are changing, too, about the rich and the tax.El


What's happened here, or is what happening? When there's no growth,


fairness becomes a bigger issue and people get scratchy about fairness


issues. Part is reflected in debate about tax, whether the well off is


taxed enough and other is reflected in other issues, welfare fraud,


emgration, these become emgration issue. It is a big change anding


from one. I read most days, since the financial crash the debate in


Britain and elsewhere, has moved to the right. Tax, in 199, Gordon


Brown and Tony Blair didn't dare say thinking about putting the top


rate of tax up. And now you have David Cameron and George Osborne


who would die to cut that top rate and all the focus is how you get


the low paid and pay less tax and as David Laws implied, get the


money from the wealthy as welfare reform. So the focus has changed


and to talk about redistribution in some shape or other, has become


legitimate. Under Blair and Brown, they didn't utter the words.


Because the economy was growing, and therefore people:. They were


scared to as well. Scared because they thought they would ruin the


thrust of growth. That remains a danger. If you increase tax burden


on earning up on the scale, and continues to earn your money that


way, you risk retarding growth and that's a risk the Government would


run, if it forever, redistributed tax. This is politics, following


social change is it? I think it is all created by the fact we've run


out of money. In a situation where you've run out of money, how you


distribute it, becomes scratchy and ditch. In the 1950s, the Labour


Party said it would find it difficult to redistribute it in a


situation where there wasn't any growth. He realises it becomes


scratchy. It go back to a few years, Blair and Brown loved to be


surrounded by bankers, they used them as a shield. Now no-one would


go near a banker, so there have been deep changes, in a very short


period of time. So, people can talk openly, about whether there should


be another tax on banker's bonuses. You are right to raise the issue of


growth. But clearly the space between the fairness in the tax


system, without jeopardising growth. The important sthing intensifies


fairness issues, also like welfare fraud politically, because it is


all about, people feeling other people, whoever they are, are


putting in, taking out when they haven't put in. When there's no


growth and people are feeling pinched that feeling intensifies,


not just people at the top end of the spectrum, but like the benefit


cap was a popular political measure, because it goes to the bottom area


as well. In the end, tax and spend, more than anything else, decides


electionness Britain. Thank you. Now it is stop short of saying


Britain's borders might have been more secure if they were guarded by


Homer Simpson and the dog, but only just. The inquiry into how border


controls was suspended, today, res vales a catalogue of ineptness, and


confusion at a political level. The Home Secretary's decided as a


sequence, to reorganise the whole thing.


It was a David Cameron promise, and priority. Real limit, proper


enforcement, real control over how many people come here and who they


are. But what's transpired is chaos, resignation of a senior civil


servant and blame and shame, tossed back and forth. It all invites


Mickey Mouse headlines. It turns out in four years, there's no


warnings index checks on EU nationals boarding Eurostar trains


from EuroDisney and ski resorts. That's about half a million


passengers unchecked. Passports we must note were looked at but the


extra security measures were too oven suspended forgotten about. The


fingerprint checks were suspended no fewer than 480 times in the last


15 months. The Home Secretary, who last year, blamed the Border


Agency's boss, leading him to quit, now appears to be blaming the


entire agency. The Vine Report reveals a border


force, that enforced checks without thing, new technologies but chose


not to use them. Led to managers that did not communicate with staff,


and excluded key information. she didn't say is alongside civil


servants her colleagues are accused of lacking clarity, failing to


communicate what the Government wanted officials to do. It singles


out Damian Green on suspending A former immigration adviser says


ministers couldn't have asked the right questions. There was


questions they should have been asking about what they were going


on at the border, they didn't take interest from an med, which claims


to be committed to sorting out. These are obvious questions?


Obvious questions like when are the checks spwg suspended, they were


supposed to be weekly reports, that they stopped getting and they


didn't ask why, there was questions like how many people are turned


away, those part of the information were not being given to them, but


they should have asked about them. The Home Secretary suggested all


the difficulties, dated back to the Labour Government, Labour accused


her of ducking responsibility. The watch index checks were


suspended zero times in 2007, sim times in 2009, 33 times, in 2010,


and 50 times in the first, nine months of 2011. So the clear


suggestion in this report is the lack of staff may have increased


the problems at the borders agencies in the last year, and


she's hidden that information in her statement to Parliament.


course, this is all too familiar for a department which, in another


context was famously said to be "unfit for purpose". Labour


introduced its immigration reforms, now Theresa May say nounsed she's


spliting the Border Agency in two. From the March 1, the UK brder


force will be split were UCBA and will become a separate operational


command with the own law enforcement, and accountability to


ministers. A big structural is a class yck tactic, there might be


good argument for it, for having a tightly focused boreer force, I


myself are sceptical about that. The failings identifyed in this


report are all about, everybody in the organisation being clear about,


what the policy is and how sincere applied. If you separate it into


different agencies, sometimes that gets harder. The other thing is


having a big organisation at a time, when the border force is going to


try with the Olympics, that's a real risk. Of course, risk is what


the Border Agency, is supposed to avert. It is a tall order, and so


far, no immigration controls imposed by any Government, have


matched up to all the bold promise toss tighten up. Well now before we


look at the papers, the Health Secretary, Andrew Lansley had a


bruising confrontation with a 75- year-old former trade union rep,


who tried to block his path, ahead of a meeting at the NHS reforms.


promise you, waiting times in the NHS has gone down. I've had enough


of you. I've had enough of you. very sorry. Go home and sit.


There's no privatisation. There are cuts, don't you dare lie to mefplt


Well, she made the front page of most of the newspapers in front,


that lady there. She's on the front that lady there. She's on the front


page of the times On the front page of the Guardian and the Independent.


And Allegra Stratton is still here. What's caught your eye on


tomorrow's papers. My former newspaper, they've done a poll and


showed the opinion poll lead, that the David Cameron and Conservatives


had post of the year, but lost that, because of the handling of the NHS.


This won't be a shock, they have lots of polling, some is public, it


shows they're lacking on the NHS handling area. The problem for them


is the because there's so many reforms is under way, they are


looking at least, worse options, you either shelf something, which


is not likely and create chaos, because you Sheffield performance


in process, and you shelfed something and create more chaos


because reform is under way. Even know the ka kakofy grows louder, it


won't budge them. It will continue. Well that's all from Newsnight


tonight. More tomorrow, until then Hello a much milder light tonight


compared to last night, thanks to a thick blanket of cloud. Eastern


areas will brighten up but will keep sunshine in the west.


We'll see breaks developing in the cloud, towards north-east. Sunny


spells possible across southern counties of England. If the sun


pops out, temperatures will pop up, up to 1 degrees.


South-west will stay cloudy and Wales. A dull damp start, rain


peters out. Brighter skies over north-east Wales. The eastern half


of Northern Ireland should brighten up, with sunny spells. It will stay


damp, in western parts of Scotland. But across the North-East here,


temperatures up to 11, and 1. Along the Murray Firth. We could reach 13


on Thursday, but it won't feel like that, because of a strong wind. The


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