25/04/2012 Newsnight


25/04/2012

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

:00:12.:00:16.

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

:00:16.:00:19.

doesn't deliver growth. Paul Mason is here.

:00:19.:00:22.

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

:00:22.:00:25.

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

:00:25.:00:28.

Secretary to the Treasury, and the Shadow Chancellor.

:00:28.:00:32.

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

:00:32.:00:35.

mess. A crisis in the Government as the

:00:35.:00:38.

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

:00:38.:00:43.

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

:00:43.:00:47.

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

:00:47.:00:52.

today has brought him more time. Questions remain about whether

:00:52.:00:55.

Jeremy Hunt breached the Ministerial Code of Conduct.

:00:55.:01:00.

We will hear from his cabinet colleague, Andrew Mitchell.

:01:00.:01:04.

Rupert Murdoch under oath at the Leveson Inquiry lays into Gordon

:01:04.:01:11.

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

:01:11.:01:16.

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

:01:16.:01:21.

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

:01:21.:01:29.

the World, on how Murdoch wielded power over politicians.

:01:29.:01:33.

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

:01:33.:01:37.

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

:01:37.:01:39.

are officially there. The Prime Minister responded to the figures

:01:39.:01:43.

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

:01:43.:01:48.

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

:01:48.:01:50.

scratching your head. The undeniable fact is that George

:01:50.:01:53.

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

:01:53.:01:57.

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

:01:57.:02:01.

solution. With me first tonight is our

:02:01.:02:05.

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

:02:05.:02:10.

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

:02:10.:02:19.

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

:02:19.:02:24.

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

:02:24.:02:28.

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

:02:28.:02:30.

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

:02:30.:02:33.

cause, construction has fallen heavily, manufacturing has fallen,

:02:33.:02:37.

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

:02:38.:02:42.

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

:02:42.:02:45.

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

:02:45.:02:48.

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

:02:48.:02:52.

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

:02:52.:02:54.

grandparents lived through, there is the economic collapse, three

:02:54.:02:58.

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

:02:58.:03:02.

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

:03:02.:03:05.

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

:03:05.:03:09.

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

:03:09.:03:15.

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

:03:15.:03:18.

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

:03:19.:03:24.

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

:03:24.:03:28.

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

:03:28.:03:33.

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

:03:33.:03:38.

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

:03:38.:03:41.

The Government contributed in terms of spending, but the biggest

:03:41.:03:45.

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

:03:45.:03:49.

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

:03:49.:03:52.

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

:03:52.:03:56.

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

:03:56.:04:00.

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

:04:00.:04:04.

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

:04:04.:04:08.

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

:04:08.:04:11.

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

:04:11.:04:15.

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

:04:15.:04:18.

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

:04:18.:04:21.

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

:04:21.:04:25.

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

:04:25.:04:30.

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

:04:30.:04:34.

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

:04:34.:04:44.
:04:44.:04:45.

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

:04:45.:04:48.

back the economy. I think a Conservative person will come

:04:48.:04:52.

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

:04:52.:04:56.

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

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

:04:59.:05:03.

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

:05:03.:05:05.

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

:05:05.:05:09.

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

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

:05:14.:05:19.

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

:05:19.:05:23.

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

:05:23.:05:27.

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

:05:27.:05:34.

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

:05:34.:05:38.

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

:05:38.:05:42.

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

:05:42.:05:47.

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

:05:47.:05:53.

is not a serious commentator or international body who thinks the

:05:53.:05:57.

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

:05:57.:06:01.

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

:06:01.:06:04.

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

:06:04.:06:08.

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

:06:08.:06:12.

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

:06:12.:06:17.

presumably it is David Cameron apologising today? These are very

:06:17.:06:22.

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

:06:22.:06:27.

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

:06:27.:06:30.

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

:06:30.:06:34.

we have as a country, and the massively underregulated financial

:06:34.:06:38.

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

:06:38.:06:43.

restore the competitiveness of the UK economy, that supporting sectors

:06:43.:06:45.

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

:06:46.:06:51.

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

:06:51.:06:56.

sustainable austerity this country -- prosperity this country needs.

:06:56.:06:59.

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

:06:59.:07:04.

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

:07:04.:07:07.

Office for Budget Responsibility, they forecast very slow growth this

:07:07.:07:12.

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

:07:12.:07:19.

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

:07:19.:07:23.

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

:07:23.:07:27.

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

:07:27.:07:30.

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

:07:30.:07:33.

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

:07:33.:07:39.

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

:07:39.:07:43.

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

:07:43.:07:46.

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

:07:46.:07:51.

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

:07:51.:07:56.

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

:07:56.:07:58.

enormous budget deficit we inherited, that is securing the

:07:58.:08:05.

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

:08:05.:08:10.

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

:08:10.:08:14.

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

:08:14.:08:18.

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

:08:18.:08:23.

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

:08:23.:08:26.

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

:08:26.:08:29.

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

:08:29.:08:33.

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

:08:33.:08:38.

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

:08:38.:08:42.

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

:08:42.:08:45.

things we have set out. The investment in infrastructure,

:08:45.:08:48.

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

:08:48.:08:52.

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

:08:52.:08:55.

support for exports, the rebalancing of the economy, that

:08:55.:08:58.

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

:08:58.:09:04.

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

:09:04.:09:09.

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

:09:09.:09:13.

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

:09:13.:09:16.

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

:09:16.:09:21.

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

:09:21.:09:25.

listened to the British views of business and the Chamber of

:09:25.:09:28.

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

:09:28.:09:31.

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

:09:32.:09:35.

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

:09:35.:09:38.

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

:09:38.:09:44.

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

:09:45.:09:48.

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

:09:48.:09:50.

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

:09:50.:09:54.

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

:09:54.:09:57.

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

:09:57.:10:00.

having the largest number of apprenticeships this country has

:10:00.:10:04.

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

:10:04.:10:07.

wand to be waved overnight for politicians to deal with the

:10:07.:10:10.

biggest economic problems this country has seen for many decades,

:10:10.:10:13.

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

:10:13.:10:18.

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

:10:18.:10:22.

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

:10:22.:10:26.

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

:10:26.:10:30.

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

:10:30.:10:33.

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

:10:33.:10:37.

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

:10:37.:10:42.

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

:10:42.:10:45.

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

:10:45.:10:49.

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

:10:49.:10:52.

infrastructure, getting pension funds invested in infrastructure in

:10:52.:10:58.

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

:10:58.:11:01.

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

:11:01.:11:04.

plan system, we are making big changes to restore the

:11:04.:11:08.

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

:11:08.:11:12.

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

:11:12.:11:15.

Labour Government gave us the deepest recession this country has

:11:15.:11:19.

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

:11:19.:11:23.

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

:11:23.:11:29.

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

:11:29.:11:32.

recovery moving, we will get unemployment and borrowing down.

:11:32.:11:35.

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

:11:35.:11:38.

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

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

:11:41.:11:46.

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

:11:46.:11:51.

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

:11:51.:11:56.

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

:11:56.:12:00.

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

:12:00.:12:05.

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

:12:05.:12:09.

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

:12:09.:12:12.

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

:12:12.:12:16.

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

:12:16.:12:21.

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

:12:21.:12:26.

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

:12:26.:12:30.

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

:12:30.:12:34.

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

:12:34.:12:37.

Absolutely, I have said consistently for 18 months, there

:12:37.:12:41.

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

:12:41.:12:46.

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

:12:46.:12:51.

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

:12:51.:12:55.

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

:12:55.:12:58.

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

:12:58.:13:01.

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

:13:01.:13:05.

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

:13:05.:13:10.

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

:13:10.:13:13.

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

:13:13.:13:16.

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

:13:16.:13:23.

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

:13:23.:13:33.
:13:33.:13:38.

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

:13:38.:13:41.

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

:13:41.:13:45.

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

:13:45.:13:49.

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

:13:49.:13:53.

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

:13:53.:13:56.

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

:13:56.:14:00.

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

:14:00.:14:03.

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

:14:03.:14:09.

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

:14:09.:14:12.

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

:14:12.:14:17.

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

:14:17.:14:21.

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

:14:21.:14:26.

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

:14:26.:14:32.

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

:14:32.:14:36.

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

:14:36.:14:39.

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

:14:39.:14:43.

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

:14:43.:14:47.

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

:14:47.:14:51.

very much. Yesterday, from the Leveson Inquiry,

:14:51.:14:55.

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

:14:55.:15:00.

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

:15:00.:15:03.

for survival, with the Prime Minister expressing full confidence

:15:03.:15:09.

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

:15:09.:15:13.

News International, and pressure forced an emergency statement in

:15:13.:15:20.

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

:15:20.:15:24.

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

:15:24.:15:30.

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

:15:30.:15:35.

inadvertantly picked a fight with grannies, charities, conservatory

:15:35.:15:38.

owners, caravan owners, even churches, as quintessentially

:15:39.:15:42.

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

:15:42.:15:46.

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

:15:46.:15:50.

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

:15:50.:15:55.

of new events. Over Tuesday night and into the

:15:55.:15:57.

morning, the popular Culture Secretary had looked like he might

:15:57.:16:02.

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

:16:02.:16:08.

Inquiry. They suggested an improper intimacy surrounding his handling

:16:08.:16:13.

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

:16:13.:16:18.

Justice Leveson had intervened himself to urge caution with his

:16:18.:16:22.

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

:16:22.:16:27.

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

:16:27.:16:33.

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

:16:33.:16:39.

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

:16:39.:16:43.

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

:16:43.:16:48.

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

:16:48.:16:51.

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

:16:51.:16:56.

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

:16:56.:17:01.

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

:17:01.:17:06.

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

:17:06.:17:09.

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

:17:09.:17:12.

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

:17:12.:17:18.

Government. In case he has forgotten, that is his

:17:18.:17:20.

responsibility as the Prime Minister. Two days before the

:17:20.:17:25.

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

:17:25.:17:28.

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

:17:28.:17:33.

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

:17:33.:17:38.

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

:17:38.:17:42.

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

:17:42.:17:46.

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

:17:46.:17:52.

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

:17:52.:17:59.

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

:17:59.:18:01.

decisions was against what News Corporation wanted. The first

:18:01.:18:06.

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

:18:06.:18:10.

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

:18:10.:18:15.

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

:18:15.:18:19.

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

:18:19.:18:23.

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

:18:23.:18:26.

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

:18:26.:18:32.

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

:18:32.:18:36.

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

:18:36.:18:46.
:18:46.:18:47.

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

:18:47.:18:50.

the conversation with Frederic Michel, which we know contained a

:18:50.:18:54.

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

:18:54.:18:57.

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

:18:57.:19:01.

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

:19:01.:19:05.

invited to believe that either the relationship between the Secretary

:19:05.:19:08.

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

:19:08.:19:12.

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

:19:12.:19:16.

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

:19:16.:19:20.

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

:19:20.:19:24.

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

:19:24.:19:31.

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

:19:31.:19:35.

minister and special adviser relationship works, is the special

:19:35.:19:38.

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

:19:38.:19:43.

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

:19:43.:19:47.

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

:19:47.:19:51.

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

:19:51.:19:55.

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

:19:55.:20:00.

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

:20:00.:20:04.

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

:20:04.:20:06.

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

:20:06.:20:10.

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

:20:10.:20:13.

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

:20:13.:20:17.

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

:20:17.:20:21.

Inquiry much more political. Lord Justice Leveson will be pronounced

:20:21.:20:25.

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

:20:26.:20:29.

months of political testimony, before Lord Justice Leveson,

:20:29.:20:33.

politics, like our weather, will be unpredictable.

:20:33.:20:36.

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

:20:36.:20:40.

Mitchell. Andrew Mitchell, yesterday the

:20:41.:20:44.

Government said the permanent secretary had cleared Adam Smith to

:20:44.:20:48.

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

:20:48.:20:53.

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

:20:53.:21:01.

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

:21:01.:21:04.

the disclosure of contents of a parliamentary statement to News

:21:04.:21:06.

Corporation before that statement was released to MPs, was that

:21:06.:21:10.

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

:21:10.:21:14.

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

:21:14.:21:20.

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

:21:20.:21:24.

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

:21:24.:21:27.

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

:21:27.:21:32.

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

:21:32.:21:36.

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

:21:36.:21:39.

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

:21:39.:21:42.

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

:21:42.:21:46.

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

:21:46.:21:50.

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

:21:50.:21:56.

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

:21:56.:22:00.

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

:22:00.:22:04.

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

:22:04.:22:07.

Under the ministerial code, we are talking about the Conservatives

:22:07.:22:12.

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

:22:12.:22:18.

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

:22:18.:22:22.

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

:22:22.:22:26.

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

:22:26.:22:30.

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

:22:30.:22:33.

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

:22:33.:22:36.

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

:22:36.:22:40.

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

:22:40.:22:43.

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

:22:43.:22:47.

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

:22:47.:22:51.

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

:22:51.:22:55.

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

:22:55.:22:59.

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

:22:59.:23:02.

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

:23:02.:23:08.

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

:23:08.:23:12.

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

:23:12.:23:16.

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

:23:16.:23:20.

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

:23:20.:23:23.

that Jeremy Hunt can take responsibility for behaviour he did

:23:23.:23:27.

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

:23:27.:23:31.

this morning, is his special adviser resigned. This special

:23:31.:23:35.

adviser had a relationship, an inappropriate relationship, if we

:23:35.:23:41.

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

:23:41.:23:45.

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

:23:45.:23:48.

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

:23:48.:23:52.

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

:23:52.:23:56.

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

:23:56.:24:02.

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

:24:02.:24:06.

process approved by the permanent secretary, was because in these

:24:07.:24:09.

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

:24:10.:24:15.

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

:24:15.:24:19.

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

:24:19.:24:22.

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

:24:23.:24:30.

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

:24:30.:24:35.

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

:24:35.:24:39.

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

:24:39.:24:44.

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

:24:44.:24:48.

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

:24:48.:24:52.

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

:24:52.:24:55.

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

:24:55.:24:59.

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

:24:59.:25:04.

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

:25:04.:25:08.

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

:25:08.:25:11.

Leveson. Thank you very much.

:25:11.:25:14.

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

:25:14.:25:19.

special adviser, following the revelation of the inappropriate e-

:25:19.:25:23.

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

:25:23.:25:27.

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

:25:27.:25:31.

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

:25:31.:25:35.

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

:25:35.:25:38.

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

:25:38.:25:43.

a few scores, not least with Gordon Brown.

:25:43.:25:46.

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

:25:46.:25:50.

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

:25:50.:25:56.

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

:25:56.:26:02.

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

:26:02.:26:12.
:26:12.:26:12.

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

:26:12.:26:16.

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

:26:16.:26:22.

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

:26:22.:26:25.

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

:26:25.:26:28.

conversation. All politicians wanted his support, but time and

:26:28.:26:31.

again Mr Murdoch rejected any suggestion that he asked for

:26:31.:26:36.

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

:26:36.:26:43.

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

:26:43.:26:51.

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

:26:51.:26:53.

favourable treatment. What interested Mr Murdoch, he said,

:26:53.:26:58.

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

:26:58.:27:02.

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

:27:02.:27:07.

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

:27:07.:27:11.

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

:27:11.:27:16.

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

:27:16.:27:22.

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

:27:22.:27:25.

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

:27:26.:27:30.

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

:27:30.:27:33.

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

:27:34.:27:41.

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

:27:41.:27:44.

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

:27:44.:27:49.

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

:27:49.:27:54.

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

:27:54.:27:58.

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

:27:59.:28:04.

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

:28:04.:28:12.

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

:28:12.:28:15.

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

:28:15.:28:21.

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

:28:21.:28:25.

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

:28:25.:28:30.

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

:28:30.:28:34.

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

:28:34.:28:38.

the newspaper switched its support to the Conservatives. Mr Murdoch

:28:38.:28:47.

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

:28:47.:28:52.

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

:28:52.:28:56.

alternative but to make war on your company.

:28:57.:29:00.

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

:29:00.:29:06.

subject. How could Mr Brown have declared

:29:06.:29:11.

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

:29:11.:29:15.

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

:29:15.:29:19.

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

:29:19.:29:22.

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

:29:22.:29:28.

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

:29:28.:29:34.

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

:29:34.:29:39.

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

:29:39.:29:46.

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

:29:46.:29:49.

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

:29:49.:29:53.

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

:29:53.:29:57.

interested newspaper man, driven by political ideals, rather than

:29:57.:30:00.

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

:30:00.:30:08.

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

:30:08.:30:12.

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

:30:12.:30:16.

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

:30:17.:30:20.

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

:30:20.:30:25.

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

:30:25.:30:27.

hacking investigation, he cannot ask questions in relation to that

:30:27.:30:31.

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

:30:31.:30:35.

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

:30:35.:30:40.

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

:30:40.:30:47.

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

:30:47.:30:52.

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

:30:52.:30:58.

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

:30:58.:31:05.

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

:31:05.:31:09.

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

:31:09.:31:12.

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

:31:12.:31:18.

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

:31:18.:31:21.

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

:31:21.:31:27.

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

:31:27.:31:30.

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

:31:30.:31:35.

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

:31:35.:31:39.

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

:31:39.:31:45.

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

:31:45.:31:50.

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

:31:50.:31:53.

there, in particularly the phrasology of thank you for the

:31:53.:32:00.

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

:32:00.:32:04.

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

:32:04.:32:09.

Tell us how he calibrated his relationship with other politicians,

:32:09.:32:15.

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

:32:15.:32:19.

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

:32:19.:32:23.

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

:32:23.:32:28.

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

:32:28.:32:31.

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

:32:31.:32:36.

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

:32:36.:32:40.

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

:32:40.:32:44.

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

:32:44.:32:47.

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

:32:47.:32:51.

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

:32:51.:32:55.

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

:32:55.:33:00.

very clear he was pretty unimpressed, and the feeling was

:33:00.:33:04.

that there was disappointment about how little Cameron had impressed

:33:04.:33:09.

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

:33:09.:33:13.

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

:33:13.:33:21.

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

:33:21.:33:28.

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

:33:28.:33:31.

happening with News International, is this business has exploded over

:33:31.:33:37.

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

:33:37.:33:41.

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

:33:41.:33:45.

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

:33:45.:33:49.

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

:33:49.:33:55.

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

:33:55.:34:00.

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

:34:00.:34:04.

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

:34:04.:34:09.

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

:34:09.:34:14.

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

:34:14.:34:19.

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

:34:19.:34:24.

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

:34:24.:34:28.

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

:34:28.:34:33.

his incredible wealth, had a distinctive understanding of the

:34:33.:34:38.

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

:34:38.:34:42.

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

:34:42.:34:45.

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

:34:46.:34:50.

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

:34:50.:34:54.

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

:34:54.:34:57.

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

:34:57.:35:01.

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

:35:01.:35:05.

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

:35:05.:35:09.

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

:35:09.:35:15.

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

:35:15.:35:20.

change the relationship between politicians and media magnates.

:35:20.:35:25.

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

:35:25.:35:30.

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

:35:30.:35:33.

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

:35:33.:35:37.

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

:35:37.:35:41.

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

:35:41.:35:46.

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

:35:46.:35:54.

so humble, or is there some exorates from Rupert Murdoch

:35:54.:35:56.

tomorrow? I suspect he will have more to give.

:35:56.:35:59.

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

:35:59.:36:03.

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

:36:03.:36:07.

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

:36:07.:36:12.

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

:36:12.:36:22.
:36:22.:36:23.

the day there. Bridgend, home to the inventor of

:36:23.:36:26.

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

:36:27.:36:33.

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

:36:33.:36:38.

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

:36:38.:36:44.

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

:36:44.:36:48.

conveniently called Biotec, processes and packaging and

:36:48.:36:52.

clinical trials for the big pharmacological giants. The

:36:52.:36:55.

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

:36:55.:37:00.

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

:37:00.:37:04.

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

:37:04.:37:08.

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

:37:08.:37:12.

strong in terms of commercialisation, especially in

:37:12.:37:16.

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

:37:16.:37:21.

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

:37:21.:37:28.

pharmacists and Biotech nigss, because Bridgend is in the M4

:37:28.:37:33.

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

:37:33.:37:38.

universities and railways and broadband in the UK. These places

:37:38.:37:45.

can attract talent and capital. Further into the valleys that

:37:45.:37:54.

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

:37:54.:37:59.

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

:37:59.:38:06.

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

:38:06.:38:13.

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

:38:13.:38:17.

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

:38:17.:38:21.

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

:38:21.:38:26.

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

:38:26.:38:30.

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

:38:30.:38:34.

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

:38:34.:38:39.

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

:38:39.:38:45.

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

:38:45.:38:47.

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

:38:47.:38:53.

people around here and the hinterland, the steel factory has

:38:53.:38:58.

long since gone, and left unemployment, low educational

:38:59.:39:01.

attainment and low life expectancy. Given the opportunity of creating

:39:02.:39:07.

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

:39:07.:39:10.

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

:39:10.:39:17.

What sort of improvements in productivity can you investment in

:39:17.:39:20.

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

:39:20.:39:24.

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

:39:24.:39:28.

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

:39:28.:39:32.

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

:39:32.:39:37.

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

:39:37.:39:43.

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

:39:43.:39:46.

suggest the construction sector dragged the UK economy back into

:39:46.:39:49.

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

:39:49.:39:56.

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

:39:56.:40:00.

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

:40:00.:40:04.

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

:40:04.:40:07.

transport infrastructure, health and education, all starting to come

:40:07.:40:10.

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

:40:10.:40:14.

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

:40:14.:40:17.

of the UK economy, away from consumption, and towards

:40:17.:40:22.

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

:40:22.:40:26.

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

:40:26.:40:30.

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

:40:30.:40:34.

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

:40:34.:40:44.
:40:44.:40:44.

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

:40:44.:40:49.

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

:40:49.:40:54.

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

:40:54.:40:58.

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

:40:58.:41:02.

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

:41:02.:41:07.

have been looking at the construction numbers, and been

:41:07.:41:11.

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

:41:11.:41:14.

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

:41:14.:41:17.

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

:41:17.:41:21.

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

:41:21.:41:25.

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

:41:25.:41:30.

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

:41:30.:41:33.

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

:41:33.:41:38.

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

:41:38.:41:43.

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

:41:43.:41:46.

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

:41:46.:41:52.

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

:41:52.:41:56.

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

:41:56.:42:00.

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

:42:00.:42:05.

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

:42:05.:42:10.

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

:42:10.:42:18.

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

:42:18.:42:24.

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

:42:24.:42:31.

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

:42:31.:42:34.

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

:42:34.:42:38.

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

:42:38.:42:45.

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

:42:45.:42:48.

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

:42:48.:42:52.

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

:42:52.:42:55.

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

:42:55.:42:59.

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

:42:59.:43:05.

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

:43:05.:43:10.

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

:43:10.:43:16.

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

:43:16.:43:20.

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

:43:20.:43:23.

the same degree of economic hardship that we are being forced

:43:23.:43:27.

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

:43:27.:43:33.

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

:43:33.:43:37.

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

:43:37.:43:41.

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

:43:41.:43:48.

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

:43:48.:43:52.

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

:43:52.:43:57.

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

:43:57.:44:03.

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

:44:03.:44:06.

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

:44:06.:44:11.

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

:44:11.:44:14.

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

:44:14.:44:16.

industry, one of the first decisions the Government made in

:44:17.:44:22.

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

:44:22.:44:25.

building programme, building schools for the future. The

:44:25.:44:29.

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

:44:29.:44:32.

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

:44:32.:44:36.

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

:44:36.:44:42.

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

:44:42.:44:48.

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

:44:48.:44:53.

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

:44:53.:44:55.

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

:44:55.:45:00.

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

:45:00.:45:03.

the banks will continue to deleverage, and the public sector

:45:03.:45:07.

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

:45:07.:45:11.

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

:45:11.:45:15.

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

:45:15.:45:21.

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

:45:21.:45:26.

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

:45:26.:45:30.

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

:45:30.:45:34.

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

:45:34.:45:37.

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

:45:37.:45:41.

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

:45:41.:45:45.

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

:45:46.:45:49.

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

:45:49.:45:53.

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

:45:53.:45:57.

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

:45:57.:45:59.

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

:45:59.:46:03.

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

:46:03.:46:08.

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

:46:08.:46:14.

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

:46:14.:46:19.

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

:46:19.:46:23.

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

:46:23.:46:30.

economy strengthening. We heard from the CBI a positive

:46:30.:46:33.

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

:46:33.:46:37.

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

:46:37.:46:43.

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

:46:43.:46:48.

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

:46:48.:46:52.

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

:46:52.:46:56.

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

:46:56.:47:04.

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

:47:04.:47:08.

people have confidence anything will improve? Picking up on a

:47:08.:47:10.

couple of things. Current expenditure by the Government

:47:10.:47:16.

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

:47:16.:47:21.

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

:47:21.:47:24.

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

:47:24.:47:28.

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

:47:28.:47:33.

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

:47:33.:47:38.

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

:47:38.:47:42.

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

:47:42.:47:47.

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

:47:47.:47:52.

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

:47:52.:47:57.

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

:47:57.:48:02.

mire. Pushing unemployment up, damaging confidence, taking demand

:48:02.:48:08.

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

:48:08.:48:13.

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

:48:13.:48:18.

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

:48:18.:48:22.

sector? We need radical thinking about building a very different

:48:22.:48:26.

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

:48:26.:48:32.

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

:48:32.:48:35.

as an effective channel for investment into sustainable wealth

:48:35.:48:40.

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

:48:40.:48:47.

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

:48:47.:48:51.

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

:48:51.:48:56.

our ills? There is tremendous instability in our largest export

:48:56.:49:00.

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

:49:00.:49:06.

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

:49:06.:49:09.

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

:49:09.:49:12.

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

:49:12.:49:18.

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

:49:18.:49:24.

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

:49:24.:49:29.

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

:49:29.:49:35.

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

:49:35.:49:38.

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

:49:38.:49:43.

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

:49:43.:49:46.

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

:49:46.:49:50.

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

:49:50.:49:55.

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

:49:55.:49:58.

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

:49:58.:50:02.

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

:50:02.:50:08.

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

:50:08.:50:18.
:50:18.:50:34.

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

:50:34.:50:44.
:50:44.:51:10.

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

:51:10.:51:12.

evidence across northern Scotland and Northern Ireland during

:51:12.:51:15.

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

:51:15.:51:19.

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

:51:19.:51:24.

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

:51:24.:51:29.

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

:51:29.:51:33.

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

:51:33.:51:36.

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

:51:36.:51:40.

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

:51:40.:51:45.

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

:51:45.:51:49.

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

:51:49.:51:53.

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

:51:53.:51:57.

the brightness across western parts of Scotland. Elsewhere cloud and

:51:57.:52:00.

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

:52:00.:52:04.

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

:52:04.:52:08.

across northern England. Further north a mixture of sunshine and

:52:08.:52:14.

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