25/04/2012 Newsnight


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

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Tonight, this is the UK's first double-dip recession since the


1970s, so why is the Government sticking to a growth plan that


doesn't deliver growth. Paul Mason is here.


There has been no growth for a year, but the real problem is where will


it come from in the long-term. We will be speaking to the Chief


Secretary to the Treasury, and the Shadow Chancellor.


And we will discuss exactly how we might be able to get out of this


mess. A crisis in the Government as the


Culture Secretary, Jeremy Hunt, denies claims he smoothed the path


for News Corporation to take over BSkyB, our political editor is here.


He has lasted 24 hours so far, the resignation of his special adviser


today has brought him more time. Questions remain about whether


Jeremy Hunt breached the Ministerial Code of Conduct.


We will hear from his cabinet colleague, Andrew Mitchell.


Rupert Murdoch under oath at the Leveson Inquiry lays into Gordon


Brown. He said, your company has made, declared war on my Government.


And we had no alternative but to make war on your company.


Here in the studio, Neil Wallis, the former deputy editor of News of


the World, on how Murdoch wielded power over politicians.


Good evening, it's the incredible shrinking economy, and as a


recession is defined as two three- monthly periods of contraction, we


are officially there. The Prime Minister responded to the figures


by saying that he neither sought to excuse them, nor to explain them


away. But isn't that akin to slugging your shoulders and


scratching your head. The undeniable fact is that George


Osborne's plan for growth isn't working, and if confidence in the


economy, and the Government, is part of the problem, what is the


solution. With me first tonight is our


Economics Editor and our political editor. First of all, the


Government tried horde to avoid this, how did they -- tried hard to


avoid this, how did they get into this mess? A 0.2% shrinkage 0.2


billion pounds is not a disaster, but it is a headline disaster. If


you are telling people the plan is for rapid growth, and you have a


growth plan. What is evident from today's figures is there is no-one


cause, construction has fallen heavily, manufacturing has fallen,


private services have fallen. The only thing that grew was Government,


for a quarter. But then, when you look at the longer term, it is the


question of what the double-dip tells you about the kind of


recovery we are having. What it tells you is we are not having one.


Have a look at what happened in the 1930s, the famous depression our


grandparents lived through, there is the economic collapse, three


years of pretty horrible pain, and then a recovery in the fourth year.


That's the depression of the 30s, they red line shows what is


happening now, equally strong collapse, a bit of a clawback, and


look, we are not coming back. That is the problem. Worse, in global


conditions it is hard to see how we come back. You have given us an


idea of the few of the causes it might be what do you think it is?


There is an combination -- a combination, banks that don't lend,


consumers that don't borrow, the cuts, tax rises, and Europe, it is


in its third quarter of recession. That absolutely does impact on the


UK, it is a major export market. it fair to blame the Government?


The Government contributed in terms of spending, but the biggest


problem for the Government is, the story was that cut the state, and


there will be a transition to rapid, export-led growth, it is not


happening. The growth isn't happening, but if you then focus on


the policy, you would say, OK, has the Government done enough, given


that was the way out. Has it done enough to help British businesses


rebalance towards external sources of growth, China, India, Singapore,


Brazil. If you read a letter by Vince Cable, published in January,


leaked in January, saying we haven't much of a clue, we have


wasted two years, that is where you would focus the policy. As the


right-wing will tell you, the austerity really hasn't even


started yet. Lots of cuts to come. How woreed he


hady is the Government, -- worried is the Government? My understanding


is neither side of the coalition, including the Vince Cable side,


neither think it is Plan B time. I think we are probably going to


enter into a pressure of Plan A+, let's shirk off more things holding


back the economy. I think a Conservative person will come


forward saying what we are doing is trying to drive with the brakes on


and we need to let go. What is key about the political moment with the


two negative quarters is this, can you have a series of people at the


top of Government who look out-of- touch, as long as they are managing


and delivering the things they want to, people accept what they are


doing. They don't care if they don't look like them. The moment


they don't appear to be competent, in the words of one pollster, they


said you can be heartless but not hopeless. That is why this is a big


worry for Downing Street. It is extremely high stakes, as


ideolgical debate and battle as it can get. Prime Minister's Questions


today was a fascinating example of the debate. Why doesn't he admit it,


it is his catastrophic economic policy, and plan for austerity,


cutting foo far and foo fast that is landing us back in recession --


too far and too fast that is landing us back in recession.


is not a serious commentator or international body who thinks the


plans -- these things happened in the last 24 months. The Chief


Secretary to the Treasury, Danny Alexander is here n a moment I will


speak to the Shadow Chancellor, Ed Balls. Danny Alexander, first of


all, last year David Cameron called on Ed Miliband to apologise for


talking down the economy, and talking of a double-dip recession,


presumably it is David Cameron apologising today? These are very


disappointing figures. So should he apologise? Look, we have major


challenges in this country, our economy has been in intensive care


since 2008, we have to deal with the deficit and financial problems


we have as a country, and the massively underregulated financial


sector, that fell into the crisis and credit crunch we saw. And


restore the competitiveness of the UK economy, that supporting sectors


neglected for many years under Labour's time in office. Those are


big challenges for our country. It is very tough to get back to the


sustainable austerity this country -- prosperity this country needs.


Have you any idea how long this recession might last, people are


desperate for answers? If you look at the most recent forecasts on the


Office for Budget Responsibility, they forecast very slow growth this


year, they forecast growth picking up in the years to come, but, of


course. They got the forecast wrong for this quarterer, didn't they?


face -- quarter? We heard from the OBR last year that the scale of the


damage done to the UK economy through the credit crunch and the


investigation, of much, much greater than previously thought. We


are seeing high inflation and high commodity prices too there is a lot


of head winds we are running into. The OBR saying it is over in a year,


the problem is you talk it up too much and it doesn't deliver, or you


don't talk it up and people feel a complete lack of confidence in what


your Government is doing, you are between a rock and a hard place?


The most important thing to do is stick to the plans to deal with the


enormous budget deficit we inherited, that is securing the


lower interest rates in this country. Hold on. The austerity


package was dependant on a growth forecast of 2.6% in November 2010,


that is what George Osborne worked on. We haven't had growth of 2.6


since. No wonder people are really worried about your ability to


calibrate what you should be doing in terms of cuts? The definite


reduction package was based on the clear and present danger to the UK


economy, when we came into office, we had the largest budgets deficit


in this country since the 1940s, worries about Britain's ability to


pay its way in the worpld. That is something we had to deal with for


economic growth in the country: so too is delivering many of the


things we have set out. The investment in infrastructure,


greater than Labour had planned during their time in office. The


reform of the planning system make as difference to business, the


support for exports, the rebalancing of the economy, that


became so feck cussed on financial services in the City of -- focused


on financial services in the City of London. Look at manufacturing,


and construction, dropping by 0.3%, this is an issue, if you want any


growth you have to get those sectors back on their feet again,


they are domestic. A lot of the problem is they are hanging on to


capital, they are not investing because they don't trust you.


listened to the British views of business and the Chamber of


Commerce, they are saying stick to the plans you set out. What about


Vince Cable saying you have a recipe for deficit but not growth?


The British business community is telling us those things, and it


backs our plans to invest in infrastructure, and it backs the


plans for business to help people to invest. It tells us to...Do


agree with your colleague, do you agree with your colleague? Let me


answer the question. I think we have set out a clear plan for


growth. It is not working? I'm sure in many areas there is more we can


do. We are investing more in the nation's infrastructure, we are


having the largest number of apprenticeships this country has


ever seen to raise the skills of the country. If there was a magic


wand to be waved overnight for politicians to deal with the


biggest economic problems this country has seen for many decades,


of course we would do. That the fact is, the deepest recession we


have had for very many decades, the worst financial crisis for many


decades. Idea this can be dealt with in the blink of the eye which


the opposition seems to suggest is not true. It is not a blink of an


eye, isn't it? There has been no growth for a year, yet there is no


question of revising anything, indeed you want to cut further, and


we must remember, of course, that the deficit reduction target is


offbeam as well, that will be a much longer problem than you


anticipated? In the Autumn Statement last year, in the budget


this year, we set out new plans for further investment in


infrastructure, getting pension funds invested in infrastructure in


this country. In the budget just passed, we set out further cuts to


co-operation tax, welcomed by business, we have reforms to the


plan system, we are making big changes to restore the


competitiveness of the UK economy. Ed Balls, the problem is, no matter


how bad it is, people don't trust you to fix it, because the last


Labour Government gave us the deepest recession this country has


ever had? In the end people listen to what you say, and they judge you


on results, and a year-and-a-half ago, David Cameron and George


Osborne said we have got a plan and it will work, we will get the


recovery moving, we will get unemployment and borrowing down.


Today it is clear, the plan has failed, we are back in recession,


and all we get from Danny is more of the same. Businesses and


families hearing that, thinking it is not working, we are just going


to carry on, it is a pity Danny wouldn't debate with me today. That


is pathetic, we need plans for jobs and growth, he needs to admit the


austerity is not working. We need to get the economy going, he has to


admit we were right to say going too far and too fast, this


austerity is not working. If Danny Alexander is insistent this plan


won't change, what is your plan, that will have to change, people


don't trust you, and your record proves you didn't handle the


economy very well? How arrogant and out-of-touch can you be to say when


you demonstrate it your plan is not working, we will just carry on,


people will be dismayed. It is not working, austerity, in Italy or


Spain, in America, a more balanced plan, a jobs plan, their economy is


growing. You want more stimulus? need plan for jobs and growth.


Absolutely, I have said consistently for 18 months, there


should be a plan for jobs and growth. A year-and-a-half ago,


Danny Alexander, George Osborne and David Cameron said we don't need it,


our plan will work. Their plan has failed, cat grorically, they can't


blame anyone -- categorically, they can't blame anyone else, it was


made by Cameron and Osbourne and they need to do something about it.


There are more cuts in the pipeline, Danny Alexander announced this week


that he would be looking for a further 5% from additional


departments which would reach �16.3 savings, Ed Miliband said if there


was an election tomorrow, he would reinstate the 50p tax band. If


there was an election tomorrow, in the light of the recession, would


you recertificates the cuts? Right now, -- reverse the cuts? Right now


we would go to a more balanced plan, cut VAT, we we have different cuts.


What different departmental cuts would you make? We set out spending


cuts and tax rises, a more balanced plan. They said they would go


faster, they said it would work, and it has failed. The economy is


in recession, borrowing is �150 billion higher, we need plan for


jobs and growth right now. But the rest of the cuts in the pipeline


for the Government putting forward, the rest of the cuts in different


departments, you would keep, you wouldn't reverse those? I can't


tell you where we will be at 2015. Ed Miliband was happy to tell us


what he would do if there was an election today? I can't tell you


other than the fact we will be clearing up George Osborne. Now,


today, Ed Balls, it is not hypothetical, if you were to take


over tomorrow, what would you do? five-point plan for jobs and growth,


we would move to a steadier pace of definite reduction, we would copy


America not the eurozone. We had a more balanced plan, George Osborne


said he would cut faster, and he's borrowing more than our plan,


because of his failure. If the economy is failing, if the plan is


failing, it is arrogant to plough on, it is out-of-touch. Thank you


very much. Yesterday, from the Leveson Inquiry,


came the revelations about the Culture Secretary, Jeremy Hunt, and


his links with Rupert Murdoch's BSkyB. Cue the ministerial fight


for survival, with the Prime Minister expressing full confidence


in him. His confession over the candid e-mail sent by an adviser to


News International, and pressure forced an emergency statement in


the House. An hour or so his aide, Adam Smith, had resigned for "going


too far". Is everything cleared up? Oh no.


Government has felt it to be the cruelest month, their budget had


inadvertantly picked a fight with grannies, charities, conservatory


owners, caravan owners, even churches, as quintessentially


British as the pouring rain. But Downing Street insisted it was


temporary, and knew better events would arrive, resetting the course.


New events have come along, many of them, they are not the right sort


of new events. Over Tuesday night and into the


morning, the popular Culture Secretary had looked like he might


be drowned by a dossier of e-mails that had emerged at the Leveson


Inquiry. They suggested an improper intimacy surrounding his handling


of the Murdoch bid to take over BSkyB. By the next morning, Lord


Justice Leveson had intervened himself to urge caution with his


inquiry's evidence. I'm acutely aware from considerable experience,


that documents such as these cannot always be taken at face value.


Things moved fast this morning, within moments of the bad GDP


figures coming out, Adam Smith, Jeremy Hunt's adviser had resigned,


and there was an urgent statement in the House of Commons. By the end


of the morning, there would be admissions of seeing Swan Lake.


Grabbing a swift chat with Jeremy Hunt at the ballet was one of the


bogus claims made. Jeremy Hunt's team said. He saw Swan Lake all


right, just five days later. Inaccurate details there may be,


the leader of the opposition said, but there were also plenty of


accurate ones. Lord Justice Leveson is responsible for a lot of things,


but he's not responsible for the integrity of the Prime Minister's


Government. In case he has forgotten, that is his


responsibility as the Prime Minister. Two days before the


statement to the House, on the 25th of January, the Culture Secretary's


office was not only including with News Corporation, to provide them


with information in advance, they were hatching a plan to ensure, and


I quote, "it would be game over for the opposition to the bid". Does


the Prime Minister really believe that is how a judge and his


advisers are supposed to act? Later, in his statement, Jeremy


Hunt sought to show he had been so scruplous, as to even snub News


Corporation. I took four decisions in this process, each of those


decisions was against what News Corporation wanted. The first


decision that I took, well no, if you're making a very serious


allegation, that I was supporting this bid and not acting quasi-


judicially, you do at least have to listen to the evidence of what


happened. It would be a question from an MP on his own side that


would prove most tricky. The only thing I think affects parliament is


the allegation from the honourable lady opposite, that a statement to


parliament was leaked in advance. There are allegations in an e-mail


that did not happen, I'm not able to come to the House today and say


what the truth was, or otherwise, of the comoun Kay of the account of


the conversation with Frederic Michel, which we know contained a


number of exaggerations, that is why we have Lord Leveson looking


into the whole matter. Now the question is whether the resignation


of a special adviser can really be the end of it. The House is being


invited to believe that either the relationship between the Secretary


of State and Adam Smith was to dysfuntional that the Secretary of


State was unaware of the extent and nature of the communication between


Adam Smith and News Corporation, or, that it was a good relationship, in


which case, the Secretary of State must, as the code of Connelly duct


says, take full responsibility. special adviser has resigned, but


does it cauterise the wound. Many people think the way a cabinet


minister and special adviser relationship works, is the special


adviser knows before the minister has thought it, what he's thinking,


and the special adviser in the room is as good as the minister there,


otherwise why is it a good use of another person's time. Adam Smith


resigning is flying in the face of how many people think the system


works. Tonight, shadow Culture Secretary, Harriet Haman, has


written to the Prime Minister, asking for Jeremy Hunt to be


disciplined for breaking the Code of Conduct. This asks a minister to


take responsibility for his special adviser. In order to get through


the last 24 hours, the Government have escalated the importance of


Jeremy Hunt's appearance in front of Lord Leveson. They may have


bought the minister more time, but it does now make the Leveson


Inquiry much more political. Lord Justice Leveson will be pronounced


on a cabinet minister's career. Ahead there is as much of two


months of political testimony, before Lord Justice Leveson,


politics, like our weather, will be unpredictable.


Earlier tonight I spoke to Jeremy Hunt's cabinet colleague, Andrew


Mitchell. Andrew Mitchell, yesterday the


Government said the permanent secretary had cleared Adam Smith to


speak to News Corporation, today Adam Smith resigned what did he do


that was wrong? He said himself that he had exceeded his brief, and


he resigned. That was the right thing to do. Was it, do you think,


the disclosure of contents of a parliamentary statement to News


Corporation before that statement was released to MPs, was that


something he did wrong? We must be clear about what the evidence is.


We will be clear about what the evidence is, when Jeremy Hunt gives


his evidence to Lord Leveson. was clear from the e-mails?


absolutely clear is the special adviser -- what is absolutely clear


is the special adviser was the point man and that was agreed with


the permanent secretary. If there was a disclosure, as is clear in


the e-mails, of contents of parliamentary statement to News


Corporation before MPs, that is a breach of the minutes tearal code,


and as such, Jeremy Hunt would have to resign, wouldn't he? First of


all, that is not clear. We need to have a much more detailed, and hear


both sides of the case, in respect of the e-mails and everything else.


Secondly, there have been special advisers who have had to revise,


resign before, and they haven't taken their boss with them, for


example Damian McBride resigned, I don't remember Gordon Brown going.


Under the ministerial code, we are talking about the Conservatives


here, the coalition here, under the ministerial code, ministers must


take responsibility for the actions of the special advisers, if Jeremy


Hunt was to act honourably, under the ministerial code, he would


resign? I don't agree either that it is the ministerial code that has


become broken. All these things will be dealt with by the Leveson


Inquiry. It is right and proper, particularly in Britain, that we


hear both side of the case. That is why Jeremy Hunt asked his evidence


to be brought forward, and Lord Leveson has agreed it should be.


The Home Secretary, Theresa May, made it quite clear on the question


of the dates, for the Abu Qatada appeal, if any of her officials


made a mistake, it was her responsibility. She said clearly it


is her responsibility. Surely that should be the line of every member


of the cabinet. I don't believe that a cabinet minister can be


responsible for every single action. So she's wrong. That their special


adviser takes. So she's wrong? had the President of Stephen Byers


and Gordon Brown on exactly that point. You take the precedent of


Gordon Brown for another party as your defence, as the human shield?


I don't think it is remotely possible or practical to suggest


that Jeremy Hunt can take responsibility for behaviour he did


not know about when he did know about it and discovered about it


this morning, is his special adviser resigned. This special


adviser had a relationship, an inappropriate relationship, if we


are to believe the e-mails, with News Corporation. There was no such


conversation taking place with any of the opposition group, to the


News Corp takeover. There was no special adviser, there was no lines


of communication like that. That in itself is simply wrong, it is black


and white, it is wrong. I don't agree, the whole reason why the


special adviser was appointed to act as a link with News Corp, in a


process approved by the permanent secretary, was because in these


circumstances, it is right that there should be some contact. He


was the appointed piorn to carry it out. There is nothing -- person to


carry that out. There is nothing exceptional in that. Jeremy Hunt


took parliament through the four decisions he did make, today,


acting in his quasi-judicial role, none of them related today News


Corp. Just to be clear, in your view, it is perfectly acceptable,


for News Corp to have a special relationship with a special adviser,


but not for the opposition, who did not want the News Corp takeover to


have a relationship with a special adviser? There were links with many


people. There was a process called for that took evidence in huge


numbers from those who did not want the process to proceed. But the


point which I'm making is the special adviser exceeded his brief,


that is why he has resigned. But I think the matter end there until we


hear from the inquiry and from Jeremy Hunt's evidence to Lord


Leveson. Thank you very much.


After the bombshell detonated by the resignation of Jeremy Hunt's


special adviser, following the revelation of the inappropriate e-


mails, it was the turn of the News Corp boss, the world's most


powerful media mogul, to take the oath and say more than we have ever


heard from Rupert Murdoch, in his 80 years. He was derped to do two


things, to skwhrund play his influence in the political -- to


underplay his influence in the politic skal sphere, and to settle


a few scores, not least with Gordon Brown.


Only the Queen has had more facetime with more prime ministers.


Over more than 40 years, a parade of politicians has presented


themselves for Murdoch approval, hoping for an endorsement, a fair


wind, that, Mr Murdoch told the inquiry today, is the game. A game


he clearly relishes. I enjoy meeting them. It is our leaders.


Some impress me more than others. Into that catagory falls Mrs


Thatcher, he's still an admirer. Let's say John Major, who despite


many meetings, Mr Murdoch can't recall a single word of


conversation. All politicians wanted his support, but time and


again Mr Murdoch rejected any suggestion that he asked for


commercial favours in return. want to put it to bed once and for


all, that is a complete myth. is the myth, Mr Murdoch. That I


used the influence of the Sun, or the supposed political power to get


favourable treatment. What interested Mr Murdoch, he said,


were the issues, like the euro, a whole evening spent debating this


with Tony Blair, who was in favour, Mr Murdoch, dead set against. Tony


Blair worked hard for the Sun's endorsement in 1977, but, again,


the question, what was the price? in ten years of his power there,


never asked Mr Blair for anything. Nor indeed did I receive any


favours. If you want to check that, you should call him. Mr Murdoch


admitted stewarding the Sun's editoral line, other papers had


more freedom, but, he said, he loved papers and discussing stories


with journalists. I'm a curious person, who is interested in the


great issues of the day. I'm not good at holding my tongue.


As former Sun editor, Kelvin MacKenzie found out, Mr Murdoch


said he didn't much like the paper's famous verdict on the 1992


election, and communicated his displeasure. My son, who is here


today, and was apparently beside me, said I did indeed give him a hell


of a bollocking. That is very frank, Mr Murdoch. But


the point may be this, that you would not want it to appear that


newspapers did have this influence over voters, because that might be


said to be anti-democratic. I think using "democratic" is too strong a


word. I thought it was tasteless and wrong for us. It was wrong, in


fact, we don't have that sort of power. What the Sun gives, the Sun


can take away. As Gordon Brown found out in September 2009, when


the newspaper switched its support to the Conservatives. Mr Murdoch


says Gordon Brown phoned him and made a quiet threat. He said, well,


your company has, declared war on my Government, and, we have no


alternative but to make war on your company.


I said I'm sorry about that Gordon, thank you for calling, end of


subject. How could Mr Brown have declared


war on your company? I don't know, I don't think he was in a very


balanced state of mind. Mr Brown has tonight issued a statement


denying that any such conversation took place. And what of the man


whom the Sun transferred his support to, David Cameron, well


it's too early, says Mr Murdoch, to decide if he is a lightweight. He


does dimly remember Mr Cameron interrupting a holiday in 2008, to


fly out to the Murdoch yacht in Santorini. Perhaps, he said, Mr


Cameron wanted to impress him. Someone who has impressed is Alex


Salmond. I don't know Mr Salmond well, he as an amusing guy, and I


enjoy his company. On his own account, Mr Murdoch is merely an


interested newspaper man, driven by political ideals, rather than


commercial advantage. If, through the years, the politicians have


overestimated his power, well, it's not his fault, is it? What exactly


was Rupert Murdoch's relationship with the political elite, and what


influence did he exert. Watching his former boss at the Leveson


Inquiry was Neil Wallis, the former deputy editor and executive editor


of the News of the World. He's on police bail as part of the phone


hacking investigation, he cannot ask questions in relation to that


investigation. He joins me now. What did you make of Rupert


Murdoch's demeanor today, he seemed to be playing himself down a bit?


He was certainly doing that. It wasn't the Rupert Murdoch that I


was expecting. I don't think anybody was. He played a cuddly,


"what me?" role today. It wasn't a Rupert Murdoch that I particularly


recognise. It was good acting? I think he brought himself into a


role. In a sense, you might say, News Corp is going down and taking


politicians with them. We will talk broadly about his attitude to


politics, on the question of Gordon Brown, that was a direct hit,


wasn't it? Deadly, I thought. I mean, I had heard that story well


over a year ago. It surfaced somewhere about three month ago, I


think. But that story is extremely well known. And partly it came out.


Gordon Brown has denied tonight that was a Conservatives. So I


gathered. Partly the reason it was told, was because of Mr Murdoch's


genuine upset that he has fallen out with a guy whom he genuinely


admired a lot. Interestingly, at that moment, was that a flash of


the role hard-nosed Rupert Murdoch making that attack? What I saw


there, in particularly the phrasology of thank you for the


call, I thought what you -- phraseyology, of thank you for the


call, and it was like, if that is business, we will fight like that.


Tell us how he calibrated his relationship with other politicians,


everybody was flocking, Tony Blair, David Cameron? In the introduction,


you said Rupert Murdoch wielded his power, he didn't need to wield his


power. In my experience, I have worked for him for about 20 years,


ten years of that at a senior level. Politicians crawled over broken


glass to see Rupert Murdoch. Rupert Murdoch didn't have to ring them,


they were lining up round the block. How do you judge the relationship,


for example, with someone like David Cameron? Well, Mr Murdoch was


never that impressed by David Cameron. I remember being at a


dinner in which, this was while he was still in the opposition, and


they had met at the understand gaigs of somebody else who was at


the table -- instigation of somebody else at the table. It was


very clear he was pretty unimpressed, and the feeling was


that there was disappointment about how little Cameron had impressed


him. So, moving on to his own role, his close role, would you say, with


his papers. He said that really, if you want his view, you can read it


in the Sun editoral. Was he pretty closely involved? In my time,


particularly at the Sun, enormously. One of the issues, in my view,


happening with News International, is this business has exploded over


the years, and he has less involvement with the papers. My


experience is more Rupert, better papers. Where the Sun is concerned,


that is absolutely true. The Sun is the thing he really loves, he loves


the Times as well. He loses millions on it. He's telling the


truth when he says, if you want to know what Rupert thinks, read the


Sun leaders. There was talk of him being the master of the universe,


he was deciding the papers' editoral line? It didn't really


work like that. If you go and work for the Sun, you know what you are


getting into. This is a populist, hard-hitting, right of centre,


newspaper. Now what I did think was interesting today, I understood why


he used the word "independent", Rupert was not party political. The


best way to describe him was he was a populus, he was a man, despite


his incredible wealth, had a distinctive understanding of the


common man. Under him, people like yourself felt you could get to any


politician or chief police officers, it was the Murdoch calling card?


think working for the Sun, or working for the News of the World,


which, of course, was owned by Mr Murdoch. But the truth is, these


were small papers, the Sun was virtually broke, less than a


million selling. He took it over, his genius for mass communication,


meant it was something you could not ignore. The interesting thing


is, we will all be watching with baited breath, because he's back


tomorrow. Will we get a sense tomorrow, do you think, of hoi


Leveson himself, even change -- the whole question of Leveson might


change the relationship between politicians and media magnates.


whole question of Leveson in where the press is going, I think there


is always something called Leveson's Law, I think that is


already damaging the effectiveness of the press. It is damaging. You


think it is for ill rather than good? Yes, I think politicians are


terrified now to talk to people they are desperate to speak to.


Just before we finish, should we be looking out for slightly more ever


so humble, or is there some exorates from Rupert Murdoch


tomorrow? I suspect he will have more to give.


Back to the recession and the news that the UK has hit a double-dip


would not have come so much as a surprise to the people of South


Wales, where unemployment is up to 25% in some part. There the green


shoots of recovery have been rarer than hen's teeth. Joe Lynam spent


the day there. Bridgend, home to the inventor of


X-raying, supersonic travel and Richard Burton, is doing better


than the rest of the Wales. However this industrial estate has lots of


empty space. Sony moved out, it used to make TVs. Future growth


might come from making Biotechling to or life sciences. This company,


conveniently called Biotec, processes and packaging and


clinical trials for the big pharmacological giants. The


Government wants to see more like them. It is one of the areas that


will drive the economy forward in Wales. The Welsh Government have


recently released �100 million funding into that sector. Wales has


been strong in terms of research and innovation, probably not too


strong in terms of commercialisation, especially in


the Biotech sector, in terms of getting the product from research


and Government to market. If you can get a decent supply of


pharmacists and Biotech nigss, because Bridgend is in the M4


corridor, stretching from Swansea to Newport. It has the best roads,


universities and railways and broadband in the UK. These places


can attract talent and capital. Further into the valleys that


attractiveness withers. Blaun a new gent has unemployment of 25%. PMB,


the plastics manufacturer can't compete with wage rises in line


with inflation. One of our guys came to work and said I come to


stay sane, the wages compete with benefits. We awarded a 2% pay rise


this year. The answers I got back from staff is inflation is running


higher than that, the gas bills are through the roof, and we can't


afford rates and to live. We have always been in a recession. That is


the feeling you get from talking to people around the area. There has


been signs or messages that we might be coming out of it, or just


about coming out of it. But we have always been in it. On the ground


this shrinking has continued? 30 years ago this was home to one


of the largest steel factories in Britain, employing most of the


people around here and the hinterland, the steel factory has


long since gone, and left unemployment, low educational


attainment and low life expectancy. Given the opportunity of creating


the type of jobs that they had three decades ago, and it has


passed, local authorities here are in the business of managing decline.


What sort of improvements in productivity can you investment in


to enable to have jobs elsewhere in Wales. At the moment it takes an


hour to get from Cardiff to here. If I was living in the south-east,


there would be a fast journey from here to the centre that would take


20 minutes, we have to investment in that sort of -- invest in that


sort of thing to manage decline, so people might not live in places but


might not live in those places. GDP numbers are out, it seems to


suggest the construction sector dragged the UK economy back into


recession, how does that play nationally, and more legally here


in Wales? I think the construction sector has reined back in, there


has been a significant reduction in going forward. You can look at that


in terms of the impact of the public sector cuts, in terms of


transport infrastructure, health and education, all starting to come


back again. At the moment the private sector is not going forward


in that area. Wales should be well placed to benefit from rebalancing


of the UK economy, away from consumption, and towards


manufacturing, in reality, though, its best hope is to create high-


value, low-intensity jobs, like Biotec, but talent and remoteness


don't always go together. With me to explain how we got into


this mess and how we should get out of it, is Martin Bashir, the


general secretary of the trades union -- Brendan Barber, a venture


capitalist John molten to, chairman of Better Capital. Let's get


ourselves out of had this mess in the next few minutes. First of all,


your analysis of why the growth predirections were wrong, Kate?


growth comes that came out today were a bid odd. A lot of people


have been looking at the construction numbers, and been


puzzled, the service sector, the big disappointment, you look at


retail sales, they have been strong. You look at the other surveys, and


they have been strong. I don't think that is the point. I don't


think today's numbers are the point. The real point is, we don't seem to


be getting back any time soon to the kind of sustained growth rate


that deliver the things that people really care about, which is grot


growth in -- growth in jobs and real incomes, that is more


important than the figures going up or down today. It suggests that the


austerity package, as one might put it, simply isn't working?


certainly isn't. You can't say the economy is thriving, it certainly


is not. The question is, what do you do about it, do you put


financial stimulus in, or as was said earlier, a senior Tory coming


out and saying we have to go at it, harder and faster? One of the big


causes of low growth, that won't go away, is the size of the public


sector. The economy is 48% public sector. And basically, in the last


few years we have gone from 37 to 48, every per cent takes away 0.12


per cent of the growth in the economy. 48 take away 37, 11,


multiply it up. Something like 1.5% comes off growth rate. We won't


grow quickly until we cut the public sector. If we have no growth,


the only way to cut the public sector, is harder austerity, with


all the pain that gives. That's short-term pain, long-term gain.


Are you prepared for short-term pain in the public sector for long-


term gain? We are seeing a lot of pain in the public and private


sector. In terms of the squeeze on the public sector, the forecast is


now for over 700,000 jobs to be taken out of the public sector,


over this next forecast period. This strategy isn't delivering, it


is demonstrably not delivering. We see now the double-dip recession


that we forecast and many people scoffed. A year or so back, when we


said it was a real possibility. And other countries are not enduring


the same degree of economic hardship that we are being forced


to go through. Some eurozone countries are? Some are. Waugh bu


what about John Molton. What about the United States. There is a lot


more pain after the next election there? They have recovered all the


loss to the economy over the recession period, their economy is


1% bigger than pre-recession. We are still over 4% smaller. What do


you make of the point that putting aside the fact that these are real


people, 600,000 people, but if you don't radically reduce your public


sector, we won't get back to growth? I think this is a totally


false prospectus. We are seeing huge cuts in public spending, those


cuts are not only hitting the public sector and public services,


they are hitting the private sector hard too. You take the construction


industry, one of the first decisions the Government made in


their first budget, was to cut billions out of the schools'


building programme, building schools for the future. The


consequences of that decision are now being seen in the state of our


construction industry. Isn't it a problem, although it was said that


you have to cut back the public sector, the problem is, that


requires, I assume what you mean, the private sector to take up the


slack and grow? In due course. can't be that, we are seeing


shrubishness in the private sector and they are reluctant to take up


the slack? That is hardly surprising, they are looking into a


few years, this is true, there is no point getting around it, that


the banks will continue to deleverage, and the public sector


will shrink, that buys a lot from the private sector. They are


interrelated, you can't talk to one without the other. We have seen


energy prices rising, and we have a eurozone situation bringing great


risks. Against that background will be invest for growth. Some will,


they are getting good at investing in good parts of the world. Not


every company can switch. I'm not as pessimistic as some of the other


people today. When you talk about the fact that companies won't


invest for growth, it is not necessarily that they don't have


the money to invest, it is just they are holding it in a pot, what


good is that? It is good for two things. If you invest and there is


no demand there, you have grown it away. Why would you do that. The


second thing is companies have just been through, as we all have, a


period of shock, a company is made up of people. When people have been


through shock, they are more cautious. Companies feel that they


would like to have a big irbalance sheet, because they are worried


that the next shot, pos below triggered by the eurozone, is down


the line. It is not surprising. are more confident that than either


Brendan Barber or John Molton? feel more confident, I thought the


numbers were odd today. We have seen some signs of things in the


economy strengthening. We heard from the CBI a positive


manufacturing survey, provided energy price don't go up we will


see real income growth at some point this year. Companies will


invest because they need to replace their investment, these are the old


ways of optimisim. I'm not talking about growth rushing back to trend,


but let's not sit here and say it is all doom and gloom. For ordinary


people in the street, the problem is, if the Government hangs its hat


and policies on figures, that then turn out to be strange, why should


people have confidence anything will improve? Picking up on a


couple of things. Current expenditure by the Government


hasn't been cut. It goes up steadily across the forecast. The


Government bet on growth to get the economy back to equality of income


and expenditure. Without growth we carry on running the deficit, we


carry on stacking up the debt. The debt is large. At some stage people


will run out of credibility, and our currency and our gilts, then we


have the mother and father of crises, that is a risk that gets


larger by the day. We are still at the early stages of these cuts. The


IFS have pointed out, so far we have had 6% of the planned cuts. In


other words, for every pound cut we have had so far, there are �16 yet


to come. And all that is dragging the economy further down into the


mire. Pushing unemployment up, damaging confidence, taking demand


out of the economy, it is a road to nowhere. Do you believe that the


public sector should be taking some of the pain? It has been taking a


huge amount of the pain. We need to...Radical Thinking on the public


sector? We need radical thinking about building a very different


kind of economy, based on different values. We need major changes in


the way our banking and financial system operates, it is not acting


as an effective channel for investment into sustainable wealth


generation. We need much less reliance on the financial sector,


as the great engine of growth. We need serious attention to


industrial issues. Is it wrong to blame other European countries for


our ills? There is tremendous instability in our largest export


market. It is affecting confidence and GDP directly. Europe is hurting


that I wa, Europe is hurting other ways. We are restricting our


economy with excess regulation, which is is a European effect.


don't really buy this view that all that has to happen is the


Government gets out of the way. Then things will improve. To be


fair I didn't quite say that. you said the public certificator


should be cut more quick low and there be less ringlation. You


implied d quickly and there be less regulation. You implied less


Government in those respects. I don't agree, Governments have a big


role in the economy and keeping growth going. I have no sympathy


with the view that by sticking very hard to the targets that the


Government is taking quite a risk. I don't agree, by the way, they


have hung their hat on the growth forecast, neither the Government or


the banks hang their hat on growth forecasts, they are not worth the


paper they are printed on. Just tomorrow morning's front pages,


beginning with the Telegraph. It goes on Cameron's five secret


That's all tonight, I will be back tomorrow. From all of us here, a


More heavy rain and strong winds, the cold winds particularly in


evidence across northern Scotland and Northern Ireland during


Thursday. A brisk wind across the south-east, it means here the


showers will zip through to bring some sunny spells, in central areas


the winds are lighter, that means the downpours that develop, they


will develop widely, some places in the north-east getting a soaking.


There will be some sunshine lifting the temperatures into the teens.


The showers across the south west of England will once again contain


hail and thunder, as they will across Wales. Here, with relatively


light winds, those downpours could last for some time. The wind are


brisk across Northern Ireland, a chilly wind here too. Some dryer


and brighter spells, a cloudy day with outbreaks of rain. The best of


the brightness across western parts of Scotland. Elsewhere cloud and


outbreaks of rain, particularly close to the North Sea. It will


feel cold with temperatures into single figures. More cloud and rain


across northern England. Further north a mixture of sunshine and


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