21/02/2012 Newsnight

The Government scheme to get young people into work is in trouble, one

after another, companies expecting to take part in the scheme have

pulled back, in the face of protests that work experience

amounts to slave labour. Is doing this kind of thing,

without proper pay, a way into regular work, or just the state

subsidising private enterprise. Would you do it if you were on

benefits? We will ask these three. The Greek Prime Minister pulls off

his bailout, but could a minority of banks and hedge funds still kill

it by refusing to co-operate, we will talk to their chief negotiator.

It is not inconceivable if too many go in that direction, the system

breaks down, we will not have a successful conclusion to this deal,

and then where will they be? This nursery is run for profit,

what is wrong with the idea of letting businesses run state

schools on the same basis? And it is probably the most international

city on earth, but do Londoners share anything beyond their streets.

Author, John Lanchester, is here to talk about his big new novel,

Capital. Last week they were delighted to be

part of a Government scheme which earned them money for taking on

young people on work experience, today, Tesco hurriedly changed its

position, from now on a young person taken on will be offered a

wage. By tonight numerous retailers had joined the retreat. The

Government scheme to get young people into a job is still alive,

but it is very battered. Those who oppose the device as sweated labour,

are said a cabinet minister today, job snobs. We report.

The bright lights of a bustling high street offer much, but not the

one thing Ben Perkins is looking for. He has had just one paid job

since he grad waited last year -- graduated last year. Christmas work

with HMV. He felt undermined when job seekers on the Government work

programme got taken on. And then as I found out, they said, this work

programme is happening, people are coming in who are unemployed, on

job seekers, come to do work, three people, like, that doesn't chime

with work experience which is the whole idea of this kind of

programme. The row began when Tesco placed an

ad for a night worker, and they would be paid their job see,

allowance, just �53 a week. The job was mistakenly described as

permanent, in fact it was part of the voluntary work experience

scheme. Plays.S of up to eight weeks, in return for benefits and

expenses. The outcry over the ad proves there

is such a thing as bad publicity afterall. Last week Tesco defended

the scheme, now they are offering to abandon it. In future people on

work plays.S can actually get paid for them, with the offer of a

guaranteed job if all goes well. Tesco are calling their about turn

a major confidence boost for young people wanting permanent work. The

Government is putting a brave face on things. I'm pleased when a

company expands what they do. If they do the work plays. Properly,

they will have experience. We get a better offer than we had before.

That is good news for unemployed young people. But there was no

escaping the sound of gears going into reverse, as more high street

names decide they too, like Waterstones and TK Maxx, will pull

out of the placements, Matalan has paused the programme, in the face

of what it calls, negative speculation, and Argos wants to

make sure no-one is disadvantaged working on the programme.

Sainsbury's has already opted out, but today it admitted it has had to

remind local branches of that fact, after some of them signed up free

recruits. This was after they had been approached by Jobcentre plus.

Meanwhile, other private sector providers are to be the subject of

an official complaint to the September for Work and Pensions, by

Oxfam. The charity firmly declined to take part in the work programme,

concerned that those who refused to join, or failed to complete a

placement, would lose benefits. someone refuses to participate or

needs to leave the scheme, their benefits can be stopped a minimum

of 13 weeks and potentially 26 weeks. This cessation of benefits

isn't compatible with Oxfam trying to overcome poverty. You had an

opportunity to help young people get work and you turned it down?

Absolutely not, it was nothing we could have accepted with the

cessation of benefits and putting people into destitution for a

minimum of 13 weeks, we Coventry consider that. With 700 --

couldn't consider that. With 700 stores, Oxfam has been unable to

prevent forced volunteering by the providers in the scheme. We would

like to ask providers to stop contacting our shops about schemes

with sanctions to benefits. You have a great voice. The Deputy

Prime Minister was at pains today to show the coalition is tackling

youth unemployment. Firms will be paid to take on 16 and 17-year-olds.

But more people are saying the emphasis of the work programme

should be on jobs that pay. The riots that ripped through Haringey

last summer, gave added urgency to the council's jobs fund, which will

be launched this spring. It is sped spending �2 -- spending �2 million,

directly subsidising people to create jobs. Young people need

high-quality, long-term sustained experience. That is why we have

been working with local and national employers based in the

borough, to make sure we can put in place the year-long schemes.

has moved back to his parents in Lincolnshire, and back on to

benefits, he's volunteering at a radio station, to use his media

degrees, but fears a double bind, as a jobseeker he may lose out to

those doing unpaid work experience. He may be compelled to take up an

official placement himself. With us now is the Conservative MP,

Harriett Baldwin, on the Work and Pensions select commit year, and

three people who have all experience of unemployment and

Government work schemes. Do you understand why some people

find these schemes offensive? have to understand where we came

from. In terms of the inheritance with a lot of young people out of

work. The situation used to be that if you were a young person, and you

were offered work experience, you had to come off benefits, I

actually think that is profoundly unfair and against social mobility,

because, in fact, a lot of prosperous parents can afford for

their parents to do work experience and lose those benefits. Where as

those who rely on the benefits needed to keep them when they got

the work experience. Do you understand my question that some

people find this offensive? understand. Do you understand why

people find it offensive? It is offensive that it has been

portrayed by a lot of people as being something that doesn't help

young people. You know, Jeremy, in an organisation like the BBC that

employs a lot of people on work experience. We have contradictory

experienced here, helps some and not others, but my question is, do

you understand why some people find it offensive that somebody can be

taken on, not be paid in a job that might at least be paid minimum wage,

and be paid by the state, and the employer is able to use unpaid

labour? Does the BBC offer work experience places for students.

doesn't bother you? It is widely used for short work placements.

These are very short work placements.

OK, all of you three have had experience of these schemes, of one

kind or another, it worked in your case, didn't it? Yes. Tell us what

happened? My experience of volunteering was, it is not

necessarily the scheme that is going out now, I wasn't forced into

it, I actually went out and applied for a scheme called V-Talent, I was

working for a year within youth services, that was something I was

passionate about. Throughout that course I was guided, I was helped,

I was given qualifications, I was given certificates, I was helped at

the end of it on getting a job. What was it about being on a course

like that, in that sort of environment, that changed things

for you? I think because it was something that I was passionate

about, and because it was voluntary, I think if you are forced into it,

I think it will be negative, I think it will have knock-on effects.

I think it will give you a negative view on the work environment itself.

I think if you're not passionate about work, why would you do it.

There should be more things voluntary for them to. Have you had

experience of one of these schemes? I have, it was a complete waste of

my time. Four weeks, well, if you get on to phase 2 job seeking,

which is the point where you are put into these schemes, then you

have four weeks, absolutely mandatory, you have no choice,

...Doesn't That get you into the habit, with the greatest of respect,

of getting out of bed and going to a place of work? With the greatest

of respect, I had eight years previous experience to this of

getting up and going to a job. shouldn't get mixed up Work Fair

and short periods of work experience for young people.

talking about both schemes, I did the short scheme and now on the 26

weeks one, both were ineptly handled. In what sense? Firstly

they are, anyone who is involved in it gets dragged off to do things

that, by force, basically. Secondly, they are administered badly.

think we're confusing two things here, the work experience that was

getting all the media attention today, is for young people who are

given short periods of experience, so that they can have something on

their CV to show to employers. are a young person, have you done

any of these schemes? Actually the work programme is a re-established

programme, it was run by a company called Caller UK previously, I was

on the flexible new deal, and I signed to the programme. In about

nine months of the programme, the company got liquid dated because

they failed mis-- liquidated, because they failed miserably to

get people employed. When you look at the current figures,

statistically now, it was 2.3 million to 6.3 million. Let's talk

about your experience, the argument, I think, if I paraphrase it

correctly, is that at the very least, although the precise

employment may be not exactly what you want, it at least gets you into

the habit of going to work, and, re-establish ago work habit?

didn't get me into the habit of going to work. It demote vaited me,

it took away my e-- demote vaited me, it took away me equal

opportunity of rights, you don't have the freedom to choose

something that would practically work. What was getting the media

attention today, was a voluntary scheme for young people to get work

experience. We are hearing about historical experiences of work

experience under the last Government, it wasn't working well

and was complicated. The new thing is a black box approach. If you

penalise someone who agrees to start the programme, by saying if

you don't carry on turning up in an efficient and satisfactory manner,

you will lose your benefits, that is coercion, isn't it? I think you

have to have turned down several jobs before that starts to happen

to you. That is not true. That is not true. I have sat in, with

people on the four-week scheme, I have seen people thrown off

placements. One for speaking too loud, and they had not been to

several interviews. These were all young people on the young people's

scheme. There was two separate young people's scheme that we

encountered. One of them was volumity, the work programme ones

that -- voluntary, the work programme ones that were there were

not voluntary, they were all mandatory, you had to turn up and

take part. It was part of the suppliers' contract with the

Department of Work and pension, that the person they sent to them

will be there for a four-week period, and will have a four-week

work placement. This is different from what we were talking about

with young people. It is a four- week work period, it is not

voluntary, anyone who says it is voluntary is lying. We looked at

the rules earlier and it clearly says it is voluntary?

Department of Work and Pensions sends you to a supplier, the

supplier has in the contract that they will send you for a mandatory,

not a voluntary, mandatory work placement. I think, to be fair, I

think we are confusing two different things here, we are

talking about the work programme that was put out to new contracts,

starting in June, the early indications on that are that about

28-30% of people are put into jobs, compared to about 1.2% at this

stage for the flexible new deal. would like to ask you, why you

think it is that it is an outrage that Governments and departments

acting on behalf of the taxpayer, who afterall has to fund benefits,

shouldn't expect people to do as they are asked and get a job?

I believe it is a complex situation, and what they are doing is to use

the lower percentage of the population who are unemployed, as a

scapegoat, because you still have these bankers getting big lump sums.

Bankers are irrelevant? It is relevant because, they are the ones

you should be penalising for this, not us. We didn't cause the

recession in the first place. So why should we be forced and imposed

a system to force somebody to do something voluntary, for 30 hours a

week, for four weeks consecutively, without a proper wage. I think it

is great that these employers are offering work experience to young

people. They are not, they are now saying, one after another, one big

recoginsable name after another, is saying, this is too embarrassing

for us to continue our connection with the scheme? That is very sad,

because it will mean, from now on it will be people who can afford to

subsidise their children to do work experience, it will hamper social

mobility in this country. So you assert, but if these companies

consider it to be an embarrassment to them, some sort of besmirching

of their name, it is failing? sad that a lot of people waving the

copies of the Socialist Worker have put paid to these companies

offering workers peerence to young people. It is important to get it

on your -- experience to young people. It is important to get it

on your CV early on in life. It is hard to know whether to laugh or

cry if you are a Greek, the other countries cobbled together an

agreement which will make sure the Greek Government get a shed load of

cash and the people will have to work for the foreseeable future.

How can Greece, which couldn't pay existing debts, will pay off an

additional 130 billion euros. A problem for another day.

They talked for 14 hours, which in itself highlighted the gulf between

what creditor countries such as Germany and Finland wanted, and

what the embattled Greeks wanted. In the end the 16 other eurozone

Governments agreed to lend 130 billion your yr roars and pay it

out in tranches over the next two years. Greeks wouldn't have to pay

back loans to banks worth 100 billion euros. In order to get it,

Greece has promised a programme of austerity, unseen in a western

democracy in a generation. Including mass privatisation of

ports, airports and some public utilities, on top of widespread job

and wage cuts. The lenders, who will oversee that, the IMF, the

European Central Bank and the EU, known as the troika, hailed this

morning's hard earned deal. Today's deal is a key remaining building

block of our comprehensive crisis, and with this agreement we have a

real chance to turn the corner and move from stablisation to boosting

sustainable growth and job creation. But the agreement depends crucially

on a number of key, and some might say, optimistic assumptions.

Firstly, that the cocktail of austerity, fresh loans and bank

haircuts, will bring Greek national debt, as a percentage of its annual

income, down from its current level of 160%, to an equally high 120%,

by the end of the decade. That assumes a fair wind at its back. A

leaked internal EU document says it is more likely that debt will be

129% by 2020, and worse, if Greece's run of bad luck continues,

the leaked debt sustainability report says that it may end up

owing exactly as much in eight years as it does today. Or 1.6-

times GDP. The bailout deal also assumes that

the private sector will grow enough to make up the shortfall from a

dramatically shrinking Government sector. That is a big ask, given

the massive capital flight that Greece has endured over the past

two years. We really don't know what might happen in eight years

time. It is very hard to project. Even the projections made in 2010

at the time of the first loan are very far from the reality we now

see. I would have thought it is quite difficult, particularly when

tax receipts are falling, VAT and other tax receipts are falling

quite sharply, it is very difficult to know that austerity would

deliver much of an improvement at all. The Greek Finance Minister,

Evangelos Venizelos, says today's deal means his country avoids a

nightmare scenario. It is true, they do get the bailout, and they

stay within the warm embrace of the eurozone. But with unemployment at

21%, GDP shrinking rapidly, and private wealth abandoning the

country, it is hard to think of any other description for the current

situation other than a nightmare scenario, that is before you drill

into the detail of today's deal. Like will the Greek populus accept

on the ground what their leaders have Bartered in Belgium. With

elections planned for late April, opinion polls suggest a big lurch

to the extreme parties. Who may want to tear up today's deal.

This second bailout also assumes that Greece's creditor banks accept

write-downs in the face value of their bonds of 53.5%. Something

that they themselves ruled out only last autumn. I think for Greece the

50% nominal reduction is, in my view, at the border line of what

could be reasonably viewed as voluntary. Any further dereduction

in -- reduction in value and losses would be put at non-voluntary.

begs the important question, how many of Greece's lenders will sign

up for the proposed haircut, which is looking like an all over blade

one. Greece said at least two- thirds of the creditors have to

sign up for the debt write-off to work. If they don't reach that

threshold, it might be Greece's banks, rather than the political

elite that will pull the plug on Greece.

To find out, earlier I spoke to the man at the forefront of the Greek

debt talks, the managing director of the Institute for International

Finance, Aaron Delahunty. I asked him, how much -- Charles Dallara, I

asked him how much of the 200 billion cuts in Greece he

represented? We represent under half of that, just under 100

billion euros. We have communication with an investor base

much larger. Our formal representation is just under 100

billion euros. Is this deal dependant on a certain level of

participation? Certainly it is. We have not judged, nor has the Greek

Government set a particular minimum threshold, but certainly I think we

all realise, that for this economic programme to work, and for the

cloud of debt burden to be sufficiently cleared off the Greek

horizon. That we will need very high participation in this deal, we

will work to achieve that. But you have no guarantee you will get a

very high level of participation, do you? No, no guarantee at all.

You do the best you can in designing these deals. We respect

the right that each investor, including the members of our own

steering committee, who have endorsed the basic perameters of

this deal, has the right to look at the documentation and value wait

the costs of the deal, and make their own judgment. We feel

confident once investors have sorted dlu the documentation, and

looked at the -- through the documentation and looked at the

perameters and benefits, that a large number of investors will come

in. What proportion of their loans will investors lose? They will lose

just over 50% of the nominal value of their current claims, in terms

of the net present value, the economic value of the loans, they

will lose north of the value of 70%. There is substantial loss embedded

in this deal, there is no use trying to hide that. It was

necessary, if we were to deal effectively, and determinately,

with the scale of debt burden, which Greece is simply unable to

cope with. By your own admission, you only represent about half of

the total debt exposure here. What is to stop someone like a hedge

fund or someone, who has bought Greek debt, trying to trigger the

insurance involved in a Credit Default Swap? There is nothing that

I'm aware of, Jeremy, that will definitively stop someone who wants

toe stake such action. There is no iron -- to take such action. There

is no iron-clad guarantee as we discussed earlier, that individual

investors might not contemplate counter-productive activity here.

They have the right, the legal rights, the market judgments to

make, but we are convinced that when you look at the total picture

here, that the overwhelming bulk of investors will consider this a

favourable transaction, which benefits not only the narrow

contours of the balance sheet, but the broader conure tours of the

market place, which is -- contour of the market place. If the

insurance system worked, they could recoup 100% of the money they lent

the Greeks, instead of something like 30%? It is not inconceivable,

if too many go in that direction, though, the system breaks down, we

will not have a successful conclusion of this deal. And then

where will they be. Judgment calls have to be made here. I'm

encouraged that the overwhelming bulk of investors we have been in

communication with, not just those we formally represent, but those

outside the formal umbrella of our Steering committee and investment

committee, with whom we have been discussing the broad strategy, see

the broader benefits of this. We will have to wait and see, of

course, it will be up to the Greeks working with their agents to go out

and mobilise support, but once we see the formal, final details of

the offer, we are also going to give support to this deal as best

we can. But Mr Dallara, of course European

Governments believe in saving the euro, it is the only game in town.

It is a political project. You are acting and talking as if these

financial institutions are some sort of charity? No, I just think -

- No, I just think that most of the CEOs that we work with, it is a

wide range of financial institutions. It includes state-

owned insurance firms, it includes prove detention insurance firms,

banks, hedge funds, Asset Management firms, not just head

quartered in Europe, but the US and elsewhere. The bulk of the CEOs

have a broud perspective of what is in the interest of -- broad

perspective and what is in the interest of their balance sheet and

investor base. That is why they do not consider it an issue of charity,

but an issue of looking at long- term cost and benefits.

The Education Secretary claimed today that the Government was

Marching towards the sound of gunfire, there speaks a scrappy

little Scot and reformed journalist. But the readiness to have a fight

with the educational establishment is yet to lead to the wholesale

reform of the schools system in England, which we were promised

when the Tories asked for our votes. The favourite wheeze of Free

Schools, set up independent of local authority control, has so far

yielded a grand total of 79 such establishments. Tomorrow the

organisation called David Cameron's favourite think-tank, will suggest

they could make more programme if the Government wasn't so allergic

to get -- progress, if the Government wasn't so allergic to

letting private companies get involved. Shrove Tuesday in central

London, not an unusual nursery, it is funded through a mix of public

and private money, and profits can be made. They are, in is over half

of our nurseries. These kids will grow up and go to schools less

unusual. Fully funded by the state, and unlike at nursery level, there

is no chance of companies that might make a profit getting

involved. Why do we left profits in caring for our tiniests, but not

further up. That is the question think-tank exchange is asking, they

think the Government's flagship policy, setting up Free Schools

outside state col could learn from this. This is the right thing to.

Do we urgently need more state schools in Britain, the Government

doesn't have money to spend, bringing in private money could

bring in expertise. Advocated point to Sweden, there, they say there is

a massive rise in children attending Free Schools, because

they were run by profit-making sectors. We could do this, we know

we could, because we have been doing it successfully, parents have

bought into it. The Cameron Government is in a hurry to deliver

policies before the next election. Free Schools are not working as

they would like. Many senior advisers think they should go the

whole way, bring in profit-making companies to Free Schools and allow

the policy to flourish. The politics of putting children's

learning in the hand of profit- making companies has a fraught his

treatment some in the Government pushed it but Lib Dems ruled it out.

It is probably dead. Here is why. In one poll in the National Union

of Teachers, an organisation against Free Schools. Parents were

Policy Exchange think they have come up with a compromise. We don't

have to choose between a traditional for-profit model, we

could have something in the middle, schools owned and run by the

teachers who work in them. We have a situation where a third of

children in some parts of the country are missing out on their

preferred school, as the number of children needing school places go

up in places like London increase, we will have a schools' places

crisis, unless we have new money from somewhere to bring into the

state sector to increase the numbers of places. Critics say it

is about ideology rather than basic education needs. There are clearly

issues in the school system that need reform and we need improvement.

But bringing in the private sector is not necessarily the way to do it.

We have plenty of robust national evidence which shows the best way

to improve schools is improve the quality of teaching, bring in

effective school leadership, provide clear accountability to

parent, there are plenty of ways of doing it which don't involve the

private sector. The The balance of evidence shows in Sweden that Free

Schools bring up standards, and in the US for-profit schools increase

standards. The support for Free Schools coming your way is not high.

The Conservatives believe by 2015 they may have as many as 500 Free

Schools, without the need for help. In their darker moments, when

Tories worry about their legacy, they reach for palatable ways to

implement their own agenda. As policy makers come up with things

to sell to the Liberal Democrats. With us now is Graham Stuart, chair

of the Commons Education Select Committee, and Mary Bousted,

general secretary of the general teachers union, the ATL. What can

the private sector do that the state can't? Two things Policy

Exchange identified, additional capital and a shortage of places,

and we want parental support we have to have surplus of places, and

additional expertise and innovation from the private sector. Those are

the two key benefit that is could come from allowing the profit

sector into education. Given that money is short, school places are

going to get short, it is an obvious solution, isn't it? Not at

all, the problem with the profit motive is schools could be set up

where they are not needed. In that case they will fail? Children are

not cans of beans, you don't want them in schools that fail, you want

regulation of quality. They will only fail because there are not

enough children? If there are no enough children, you don't have the

staff, or the curriculum. So it is a commercial misjudgment, not the

state's problem? It is the children's problem and the state's

money paying for schools to fail. Profit is for profit, schools

should be more pupils. Your objection is ideolgical? No based

on research evidence. There is no evidence whatsoever, that report

was wrong from the director of Policy Exchange, there is no

evidence that for-profit schools raise standards, they haven't done

so in America, they certainly haven't done so in Sweden. What do

you make that have? I think Mary's perhaps wrong on that issue, the

evidence is mixed. I think is the best you could say. The for-profit

sector it is not obvious that standards have been raised in

America and Sweden, we have probably got the largest sector of

for-profit schools there. They are not leading he Lee lights globally,

in terms of he had -- leading lights globally in terms of

education. If we look at the best countries in the world for their

education system, what you don't find in Korea or Singapore or

Finland is a big for-profit sector. On the other hand, if we can bring

in extra capital and do what Policy Exchange says, we can have a social

enterprise model, pilot it and see if the extra money and expertise

can raise standards, that is surely what it should be about. It

shouldn't be a right, left, ideolgical bat, between luddite

unions on the one side. Luddite unions, here we go again, it is odd

that if it is such an attractive model your own party hasn't

embraced it in Government? It is a coalition Government. Left to your

own devices you think they would? think there are many in the

Government who would be sympathetic to it. As I say, the evidence is

mixed, and Policy Exchange is suggesting a social enterprise

model where half the profits are retained by shareholders and the

other half reinvested in the schools. If the private sector

concentrates on schools serving the poorest, and must underprivileged

areas of the country, and they can bring improvement to those children

who need it most, surely, even people like Mary, who have a knee-

jeark opposition to anything to do with the private sector, could set

that asite, put the children first, instead of her own members'

interests for once. You have said yourself that there is no evidence

it would put the children first. Let's be clear there are real

dangers. Let's do pilots like Policy Exchange suggest. There are

real problems. Even the pilots are dangerous. Look in America with the

charter schools, $400 million for charter schools, what have they

found out, school management companies raking off between 5-18%

of the school's income. Lack of resources, kids being taught in

huts, kids not having books, children being charged $600 to

gratd wait. What they found in flour -- grat wait. What they found

in Florida is no real control. that was the true picture in Sweden

and America there would be wholesale desire to get rid of for-

profit. If you go to Sweden, historically socialist Sweden, is

there anybody in the political landscape who think you should get

rid of the for-profits, I don't think you are painting a fair

picture, let's have pilots, stop opposing all change just because it

proves for-profit. They don't think they should get rid of Free Schools

in Sweden, but they issued a report and investigation into how Free

Schools and the management company of Free Schools in Sweden are

cutting corners in order to make profit. He said we are finding they

don't have libraries, or school nurses, they don't have a rigorous

curriculum, they are letting the kids do what they want. Strange

they don't want to get rid of them. They want to regulate them better.

That is a different argument, we should pilot it, try to get the

framework right, we have to incentivise the right behaviour, if

we can target it at the children who are most often being let down

by the system now, it is surely something, across the divide, we

should all be able to join together on and see piloted. We will do that,

if you do something for us, stop local authorities being denied the

opportunity to run a school. They can't even bid to run a school.

Even if it is a parents-preferred choice, that good local authorities,

are not allowed to set up and run schools. There is no place planing,

these Free Schools, largely secondary schools, where we have an

explosion of Primary School places needed, there is no place planning,

there is no sensible way of managing and organising place

planing in the system at the moment. It is at tomorrowised, it is

fragmented, and the result will be, never mind the profit motive for

whatever else, children won't have school places, that is because

there is no way they can be controlled. You uniquely -- neatly

changed the subject to place planning. I have no thoits on that.

The man who is tired of London is tired of life, there is no London

all that life can afford. The old place has changed a bit since Dr

Johnson's testimonial, it has changed astonishingly, where it is

unrecoginsable in some places over the last few years. What is it that

making Londoners Londoners, they are as likely toe come from Poland

and Ecuador as Ealing. It seems more plugged into the rest of the

world than the rest of the country. The gap between rich and poor yawns.

A big fat London novel is how John Lanchester describes Capital, the

saga of the residents of Pepys Road, an ordinary street in south London.

The housing boom, that British obsession has made its residents

rich, because all of the houses in the road, as if by magic, were now

worth millions of pounds. The new residents, including a banker

waiting anxiously whether his bonus will top �1 million, it is not

strictly, to him, a bonus, but a vital necessity. But the novel

opens on the eve of the financial crisis. Enthusiastic reviewers have

seen the book as a post-crash state-of-the-nation novel, in which

Asian shopkeepers rub shoulders with Zimbabwean traffic wardens,

and Polish builders lust after Hungarian nannies. The last

locally-born resident dies mid-way through, while they are artist

grandson, basks in the attention of a trivial middle-class. What do

these people have in common, do they share anything beyond

capital's rather grubby air. The author of Capital, John Lanchester,

is with us now. From your novel we are not all in this together, are

we? I don't think we are, no. most striking characteristic of

Londoners portrayed in your novel is how at tomorrowised it is?

is my own view of London -- atomised it is. That is my own view

of London. I always think about when politicians talk about

community, people live in parallel solitude, they don't know the

people around them and they are on these parallel tracks that barely

brush up against each other. centres on one road, built for

people of relatively modest means, and because of the London profit

boom they have all got wealthy, there is the banker, Polish

builders, the Hungarian nannies, the Zimbabwean traffic warden, they

all lead very independent lives, do you get any sense of what it is

draws people to London. I once spent an afternoon in the pub, I

was locked out of the house, and there was a misunderstanding about

the keys. I got chatting to a Polish woman working as a nanny,

although she was a qualified teacher, she had a doctorate. She

talked about her reasons for being in London and reeled off these

things, and the expression became whist. And said there is also the

London dream. There was a striking sense, once people would have

talked like that about America. Now there is a sense that the UK in

general, London in particular is a place where people come to make

their fortunes. It seems, I don't know whether it

seems like this to you, it seems a city that is not really plugged

into the rest of Britain so much, as plugged into the world? I worry

about that aspect, the Manhattenisation of London. In the

way that Manhatten is the financial centre and is much more ethnically

diverse and regarded as a special case by the rest of the US. London

could go in that direction t might almost be an island floating of the

rest of the UK. Does it matter? might as inequality grows, not just

the 0.1%, but the 0.01% of those, with the wealth and privilege there

and the rest of the country struggling. I get a slight whiff of

that already. There are parts of the UK you go to and it feels like

1976. If we move apart from each other, that does matter.

There is in your portrait of this straight, there is no such thing as

what used to be called the host community, is there? No, I think

that's a thing you notice in London too. That a lot, it is like those

things when you used to see diagrams of the neutron bomb

radiating out, and leaving buildings intact, but killing all

the people. Money has done that to London, the people who used to live

in centre now live further out, the people who used to live in the

periphery have largely dispersed, it has changed the pexure of London

life. It has -- texture of London life. And in a factual way changed

the people who live here. What about changed moral codes? That is

an issue, one of the things that can happen in the modern world, if

you never go anywhere or do anything and stay in the same place

all your life, you still look out of the window and don't recognise

where you are. That can happen, the sleepiest, most rural parts of the

country, people have that experience. I think a big part of

it is that sense that the stories we tell each other, and the values

we have, are no longer shared. mention that the opportunity that

London seems in the minds of many people to offer to realise a dream,

it also offers sanctuary, doesn't it? That's true. I pine for a

simple letter day when we speak straight forwardly about refugees -

simpler day when we talk about refugees, and people noi talk about

asylum seekers and it is a contested -- now talk about asylum

seekers and it is a contested issue. It is about the places people want

to get away from and to, and the second catagory is a better thing

to be. Do you feel optimistic about the future about this

increatesingly heterogeneous, -- increasingly hettro genius

straining at the seems city. I was born in hoing Kong and brought up

in Germany, I'm from where else, the hettro genius -- hettro genius

is a strength. It will be a difficult few years for everyone in

the UK, but there is so much energy, talent, enterprise and appetite

here, I'm optimistic. That's all from Tuesday night tonight, nothing

so exciting as the political career of the former Prime Minister of

Belgium, Herman Van Rompuy, his time has President of the European

Union's council has been such a glittering success it is to be

extended for another couple of years, it seems no-one else wants

the job. What a man. # As I walk along the street

# With my naiyo in this case and frittes

# You can tell I'm as happy as can # It is a shame about the weather

# But we all live in harmony # It is great to be a Belgian

# I'm not English, French or Dutch # I'm not Polish, Italian ordainish

# I'm a Belgian, so thank you very Wettest conditions in western

Scotland and the Cumbrian fells during the day.

Surface water flooding, easing off across the North West later, patchy

mainly light drizzle, gusty winds possible. In East Anglia dry, but a

cooler day to come compared with today. Temperatures only around 9-

10, strengthening winds. After a reasonably dry start to the south

west, here the rain will develop widely, heaviest to be across

Snowdonia. In the Northern Ireland rain to be heavy all morning, light

in the afternoon. 12-13 possible in the westerly winds. Scotland 12-14

is likely. Damp across western areas, not as wet as the morning,

the north-east dryer and brighter. Changes into Thursday, not as wet

across parts of North West England, Scotland and Northern Ireland, but

the western coast jal hills damp and drizzley, same too across

England and Wales, Thursday set to be dry, brighter and that is going

to have a huge impact. Even with the outbreaks of rain across the