02/05/2012 Newsnight


02/05/2012

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


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Over 2,000 senior figures in the public service are employed on

:00:11.:00:16.

deals that may allow them to pay less tax. This letter, leaked to

:00:16.:00:19.

Newsnight, makes plain the extent of special arrangements that

:00:19.:00:23.

trouble the Treasury. How do these deals get done? How

:00:24.:00:28.

much might it cost the taxpayer to end them?

:00:28.:00:31.

Virtually impossible he did it himself, but no indication of who

:00:31.:00:36.

else might have been involved, an inquest leaves the death of an MI6

:00:36.:00:41.

operative, an abiding mystery. The coroner today blamed the

:00:41.:00:44.

Intelligence Service and the police for mistakes that may have made

:00:44.:00:48.

this case harder to solve. And she said she believed it was an

:00:48.:00:51.

unlawful killing. The two men wrestling for the

:00:51.:00:55.

presidency of France slug it out this evening, we review their

:00:55.:00:59.

performances. A last flush of campaigning in the

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elections in Wales tomorrow. Although there are some obstacles

:01:04.:01:14.
:01:14.:01:17.

to overcome. See you on Thursday. That is if I'm awake, mind. In his

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budget statement the Chancellor described aggressive tax avoidance

:01:21.:01:25.

as morally repugnant, yet now we learn there are thousands of senior

:01:25.:01:28.

figures in the public sector, who knows maybe even in the Treasury,

:01:28.:01:32.

maybe even in George Osborne's office, working on arrangements

:01:32.:01:36.

which do not require them to pay tax at source. Newsnight as

:01:36.:01:40.

obtained the results of the inquiry, ordered after we revealed that the

:01:40.:01:46.

boss of Student Loans Company was on a similar deal.

:01:46.:01:52.

It is a letter to the Chancellor, George Osborne, from the Chief

:01:52.:01:56.

Treasury Secretary, Danny Alexander. It is marked "restricted", no

:01:56.:02:00.

wonder. It contains the information that over 2,000, highly-paid,

:02:00.:02:05.

senior public servants, are working off the payroll, avoiding tax.

:02:05.:02:10.

The tax arrangements of the head of the student lone company, Ed Lester,

:02:10.:02:15.

raised a stink earlier this year, when we revealed he was being paid

:02:15.:02:20.

by the Government through a private company, based on his home on the

:02:20.:02:25.

Thames t reduced his tax bill by the thousands. It seems over 2,000

:02:25.:02:30.

other public servants are doing the same. I am completely shocked. When

:02:30.:02:34.

Newsnight first broke this story, I thought it was a rogue individual.

:02:34.:02:39.

What we have now learned from this letter is it is endemic across the

:02:40.:02:42.

senior Civil Service. This is particularly important here,

:02:42.:02:47.

because what the public sector should be doing is leading by

:02:47.:02:51.

example. The Whitehall letter was first obtained by David Hencke was

:02:51.:02:58.

investigative website Xaro News, he says the thousands the Government

:02:58.:03:06.

has identified as "off-payroll" is larger. It it doesn't include the

:03:06.:03:11.

whole of the NHS or the academy schools and other places. It is far

:03:11.:03:15.

worse than 2000, you suspect? worse. And it is extraordinary that

:03:15.:03:19.

we have had a Government in for two years, and this has been going on,

:03:19.:03:22.

without ministers having the slightest clue, that this was

:03:22.:03:26.

happening. Election Alexander, who signed off

:03:26.:03:32.

on Ed Lester arrangements, suggests, in his leaked letter, he's shocked

:03:32.:03:40.

by the sheer scale of the "off- payroll deals" involving civil

:03:40.:03:44.

servants, that is people earning a certain amount of money. He wants

:03:44.:03:48.

board members and senior officers to be compelled to go on staff. He

:03:48.:03:52.

wants full details of income tax and national insurance for anyone

:03:52.:03:57.

engaged for more than six months and paid more than �220 a day, he

:03:57.:04:02.

wants it all brought in in three months. A Treasury adviser told me

:04:02.:04:06.

at least they are doing something, the last Government did nothing,

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after being questioned about the leak. This is a cabinet that has

:04:13.:04:17.

called excessive tax avoidance as morally repugnant. But they could

:04:17.:04:23.

be biting off more than they can chew looking at these payroll deals.

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Base cost is the national insurance that Government would have to find.

:04:27.:04:35.

On �58,200, that would bring in, per person, an additional �8 though

:04:35.:04:45.
:04:45.:04:46.

031, of cost, -- �8,031, and brings an extra cost in. That is only that

:04:46.:04:49.

amount, if they were earning more than that? If the earnings are

:04:49.:04:56.

greater, I would have expected the average to be between �75,000-

:04:56.:05:01.

�80,000 a year, with a number of that 2,000 earning well in excess

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of �100,000. What will the cost be in national insurance contributions

:05:06.:05:08.

overall? The cost in national insurance would be in the region of

:05:08.:05:12.

�30 million a year. On top of that there are pensions, holiday pay,

:05:12.:05:15.

and a variety of statutory employment rights. The danger is,

:05:15.:05:19.

if it is not handled carefully, recouping lost tax revenue could

:05:19.:05:22.

cost the country a fortune. Meanwhile, what's the position of

:05:22.:05:30.

the people whose job it is to chase down tax avoidance? I find it

:05:30.:05:33.

astonishing that the Revenue & Customs don't seem to have spotted

:05:33.:05:40.

this. Either they knew all about it, and like Ed Lester approved it all,

:05:40.:05:43.

or else they didn't seem to be doing their job very well. Because

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how have all these people, who may only have one major controlling job,

:05:48.:05:55.

managed to escape tax and national insurance. A story that began at Ed

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Lester's private company on the Thames, has dredged up thousands of

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tax avoidance deals in the Government. The Treasury Secretary

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believes he can change it all in three months. An ambitious man.

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Let's discuss this with the Conservative MP Richard Bacon, with

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Emma Boon of the Taxpayers' Alliance, and the General Secretary

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of the FDA, the trade union for top civil servants. 2,000, are you

:06:23.:06:29.

surprised it is so high? actually, when we last discussed it,

:06:29.:06:32.

I said it was wider than we expect. I think it is rife across the local

:06:32.:06:35.

Government and health service. health service isn't even included

:06:35.:06:40.

in these figures? Indeed it is not, but the letter today suggests the

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Health Secretary and the Education Secretary should take a close look

:06:42.:06:46.

in their areas, that is right. Goodness knows it may even be

:06:46.:06:50.

possible that one or two people are doing it in the BBC. Quite possible,

:06:50.:06:55.

I don't know who? I don't either. But there are people like Reed

:06:55.:06:59.

Consulting, and Henar, who are employing people who work for the

:06:59.:07:03.

BBC. There is a lot of it going on, I think it is wrong. Where people

:07:03.:07:07.

are public servants they should pay tax. Hang on a second, some of

:07:07.:07:13.

these people may be your members, is it legitimate? At senior levels,

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this should not be happening. If you are at a board level

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appointment, in the Civil Service, you should be fully employed by the

:07:19.:07:22.

department. In fact, I think most people R I think we will find that

:07:22.:07:27.

most of these 2,000 people are not in senior roles, many of them, in

:07:27.:07:33.

fact, will not be in the Civil Service, they will be in arm's

:07:33.:07:37.

length quangos or bodies, they will be technical consultants, IT and HR

:07:37.:07:40.

and other technical professions. That does happen in the wider

:07:40.:07:44.

economy, where you have short-term posts. What I found disturbing was

:07:44.:07:48.

the length of time some of these people had been in this kind of

:07:48.:07:53.

role, paid off the books. As you know, Ed Lester, this was a senior

:07:53.:07:57.

figure, he ran the Student Loan Company? I don't know if anybody

:07:57.:08:01.

will defend that, actually. Most is senior civil servants were pretty

:08:01.:08:05.

upset about it. Most people pay their taxes, and expect to, they

:08:05.:08:08.

think it is very unfair if colleagues are not being treated in

:08:08.:08:12.

exactly the same way. From a Taxpayers' Alliance point of view,

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this may actually be saving the taxpayer money? I don't think it is,

:08:17.:08:21.

though. We don't know? First of all, it is the sense of unfairness about

:08:21.:08:26.

it is an important fact. You can't look at this blindly from an

:08:26.:08:29.

economic perspective and say is this saving us money. The situation

:08:29.:08:33.

here, these people are claiming that they are consultants, these

:08:34.:08:38.

people n many cases, have been working for up to two years in the

:08:38.:08:43.

same post. 40% of them over two years? May have only had one client,

:08:43.:08:47.

being paid in this way, and not paying your tax through PAYE and

:08:47.:08:51.

having it deducted at source, and paying national insurance

:08:51.:08:54.

contributions, as you should, and sitting alongside people in the

:08:54.:08:57.

same office, doing a very similar role, who are paying a lot more tax

:08:57.:09:02.

than you are, is unfair, and secondly of all, these people claim

:09:02.:09:06.

they are consultants. They are clearly doing something that should

:09:06.:09:10.

be as a salaried role, they should pay through PAYE, like everybody

:09:10.:09:14.

else. We don't know precisely what they are doing, do we? We do need

:09:14.:09:18.

more details about that. What happens next? Two marks out of

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three, certainly one-and-a-half marks out of three for the Treasury

:09:22.:09:27.

part starting to dig into this and get to the Bart -- starting to dig

:09:27.:09:31.

into this and get to the bottom of it. It is all very well for an

:09:31.:09:35.

edict to come out of the Terek and I welcome it, today the equality

:09:36.:09:40.

and Human Rights Commission, I was told today agreed an existing 17

:09:40.:09:43.

interims to be continued for a further year. It is one thing for

:09:43.:09:46.

the Treasury to say something, but for it to actually happen on the

:09:46.:09:51.

ground is another. I would expect there are a lot of people in the

:09:51.:09:54.

administration who would like to continue in the old sweet way

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continuing for many years, it will big rigour and political drive from

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the top to deal with it. I hope George Osborne will go further,

:10:05.:10:08.

David Cameron is very concerned about this, he wrote me a letter

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saying that, they have to take this very, very seriously. You think

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there is a good chance that the Government will break contracts

:10:14.:10:20.

that it has legally entered into it? It is not easy to break

:10:20.:10:26.

contracts, it depending on what they say, you don't want to make

:10:26.:10:30.

lawyers rich. In the interim they should be able to break and get rid

:10:30.:10:35.

of with break clauses fairly easily. These people can't have it both

:10:35.:10:40.

ways, they can't be paid as interim staff and then claim the rights of

:10:40.:10:43.

people on the payroll, it is a different way of being employed.

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it is necessary to change the law, we changed the law in shopping

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hours for the Olympics and in the last few minutes of the last

:10:51.:10:54.

session in parliament. If they want a quick bill they can have one, I

:10:54.:11:01.

can get it through. We might be able to put on bells and whistles

:11:01.:11:05.

and get a bypass for my area as well. If you look at how long this

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has been going on, according to the letter 40% of these people have

:11:08.:11:12.

been on these kind of contracts for at least two years, going back to

:11:12.:11:15.

the previous Government as well. There are long-term issues here as

:11:15.:11:18.

well. For those people in senior roles, rather than the contractors,

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there is an issue about pay levels in the senior Civil Service, which

:11:22.:11:25.

often are below, this is being used as a way of getting round some of

:11:25.:11:29.

the pay levels. We need an intelligent debate about fair

:11:29.:11:32.

levels of pay in senior roles.S That the argument used to justify

:11:32.:11:36.

this sort of arrangement, that it is the only way to get people in

:11:36.:11:41.

from the private sector? I don't think it justifies that, I think it

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highlights that there is an issue about where we set pay levels.

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Public sector pay levels will never mirror the private sector, I don't

:11:50.:11:55.

think most people will say they should, you have to have an

:11:55.:11:58.

intelligent debate. Recently we have had a different approach to

:11:58.:12:02.

recruitment bans and freezes, we need to get round it. We need to be

:12:02.:12:05.

intelligent about it, you shouldn't be holding a senior management role

:12:05.:12:09.

and being paid in this way, it is unethical. If the consequence was

:12:09.:12:12.

you drove away talented people who said they wouldn't work here any mo,

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they will go back to the private sector or wherever they have come

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from, that would be bad from a tax- payers' point of view, wouldn't it?

:12:21.:12:23.

Nobody will say we will drive away talented people, there is a

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difference between want to go hire and retain staff at a senior level

:12:29.:12:33.

of the Civil Service, and want to go renumerate them well and pay a

:12:33.:12:38.

pension and retain them. And short- term contracts like an IT expert,

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for a short period of time in a specific project, paying them in a

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different way and they make their own tax arrangements, these are

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different things that shouldn't be confused. How is it that the Civil

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Service is still the fast stream, we take the brightest people into

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the Civil Service, but the career formation and the way the culture

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is structured as such, that 20 years later, they are not all, by

:13:01.:13:04.

any means n a position to take top management roles. They don't have

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the management skills to marshall the combination of people, money

:13:08.:13:12.

and time and technology in the way that any manager has to do to fill

:13:12.:13:16.

the top roles. That is why 40% of director-generals are coming from

:13:16.:13:20.

the outside. It is a good thing providing fresh blood. But at the

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bottom of the Civil Service, with the fast stream, there is still a

:13:25.:13:29.

big unresolved issue there in terms of career formation, it needs to be

:13:29.:13:33.

addressed. There are other issues around skills formation. Why isn't

:13:33.:13:37.

Government able to generate good IT people, for example. To be fair I

:13:37.:13:41.

don't think we have been very successful in some of the HR roles.

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We need to stand back and see what skills you need in central

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Government and the wider public sector over the next five to ten

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years. Generate the people with the skills and pay them in a way that

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keeps them and doesn't just leave them trained up and then rushing

:13:53.:13:58.

out into the private sector to get very much higher pay. For you the

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decisive thing is do these people have managerial responsibility as

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opposed to being a specialist? think that is important, if you are

:14:07.:14:10.

in a senior management role, board level or below that, there is no

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question these arrangements shouldn't operate. That should be

:14:13.:14:17.

the same in the arm's length bodies. The Ed Lester case, without the

:14:17.:14:21.

detail of that, highlighted an anomily, it was not right, it

:14:21.:14:24.

shouldn't have happened, it was clearly happening under the last

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Government, it is continuing under this Government, it shouldn't be

:14:26.:14:31.

the case. We also have to recognise on the short-term, technical

:14:31.:14:38.

specialists, this is an economy- wide issue. A coroner trying to

:14:38.:14:42.

decide how a brilliant young MI6 operative met his death has failed

:14:42.:14:46.

to come up with an answer. The best she could manage was a narrative

:14:46.:14:50.

verdict. How Gareth Williams ended up naked and dead inside a locked

:14:50.:14:54.

bag remains a mistreatment the inquest did disclose some unusual

:14:54.:14:58.

behaviour by the MI6 man, by one of the world's crack intelligence

:14:58.:15:01.

agencies and by the police. Someone else must have been involved. But

:15:01.:15:11.
:15:11.:15:12.

there is no answer as to who. Our diplomatic editor reports. Williams,

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a maths prodigy who joined GCHQ aged 21, with a degree and PhD

:15:19.:15:25.

under his belt. Fit, brilliant but complex, when sent on attachment to

:15:25.:15:30.

MI6, unhappy with work. Even after a week's hearings, his death is

:15:30.:15:40.
:15:40.:15:53.

little clearer. The coroner, Fiona Little comfort, then, for a family

:15:53.:15:59.

still morning its loss. Our grief is exacerbated by the failure of

:15:59.:16:04.

his employers at MI6 to take even the most basic inquiries as to his

:16:04.:16:08.

where abouts and welfare, which any reasonable employer would have

:16:08.:16:11.

taken. We are also extremely disappointed over the reluctance

:16:11.:16:16.

and failure of MI6 to make available relevant information.

:16:16.:16:25.

This was the scene at an MI6 flat in PIMCO in cough 2010. -- August

:16:25.:16:29.

2010 women's designer clothing lay carefully bagged, and arrayed on

:16:29.:16:34.

the bed. Mr Williams had spent more than �20,000 on his collection.

:16:34.:16:39.

There was a red wig too, and other personal collections. These

:16:39.:16:49.
:16:49.:16:55.

discoveries soon leaked out, the In the bathroom, his naked body lay

:16:55.:17:00.

in a zipped up waterproof sports bag. It had festered for eight days

:17:01.:17:08.

in the August heat, before it was finally found. But why had his MI6

:17:08.:17:12.

bosses allowed so much time to pass before getting the police involved.

:17:12.:17:17.

They apologised for that today, and insisted they would change their

:17:17.:17:21.

procedures. I think the delay that happened in reporting the fact that

:17:21.:17:24.

he was missing was highly unfortunate, it is very disturbing

:17:24.:17:28.

that it happened. To be fair to the Secret Intelligence Service, they

:17:28.:17:31.

themselves have acknowledged that was a serious fault. They have

:17:31.:17:34.

apologised for that. They are making sure that kind of thing

:17:34.:17:38.

can't happen again. I have no reason to believe it was systemic.

:17:38.:17:42.

But it certainly shouldn't have happened on that occasion.

:17:42.:17:47.

coroner's court saw evidence like this, an expert trying to zip

:17:47.:17:51.

himself into the bag and lock it. The witnesses felt it was virtually

:17:51.:17:57.

impossible to do that alone. Was he forced in, or was it consensual,

:17:57.:18:02.

maybe a sex game gone wrong. Forensic experts would have found

:18:02.:18:05.

that question easier to answer, if the body had been found after just

:18:05.:18:13.

a day or two. The body, particularly in a summer months and

:18:13.:18:18.

warm environment, starts to undergo changes after death quite rapidly,

:18:18.:18:24.

within a day or so. Particularly if the body is enclosed within another

:18:24.:18:29.

compartment, such as a suitcase, or a bag or something like that.

:18:29.:18:34.

Because there is no air currents there, and therefore, the botty

:18:34.:18:40.

will become discoloured. Marks such as bruises, scratches, that kind of

:18:40.:18:45.

thing, will not be visible. It also emerged this week, that MI6

:18:45.:18:50.

was in possession of computer flash drive, memory device, and a similar

:18:50.:18:53.

sports bag used by Mr Williams. The investigating detectives hadn't

:18:53.:18:59.

known about that. Because the specialist police liaising with MI6

:18:59.:19:03.

hadn't told them. The coroner was unhappy about it. But could the

:19:03.:19:08.

police have pushed harder? I think you do have quite a difficult

:19:08.:19:11.

procedural problem, that always applies in a democracy, where you

:19:11.:19:16.

have Secret Services, which by their nature handle information

:19:16.:19:20.

that simply cannot be brought into the public domain, without real

:19:20.:19:23.

damage to the national security interest. And a police inquiry, or

:19:23.:19:27.

the normal interests of justice. We are always grappling with how you

:19:27.:19:32.

create struck tour that is meet that requirement. Summing up today,

:19:32.:19:36.

the coroner avoided a specific verdict, and said much was still

:19:36.:19:46.
:19:46.:19:53.

unclear. Yet at the end of her At the end of her narrative, the

:19:53.:19:57.

coroner expressed her sympathies to Mr Williams family. And her voice

:19:57.:20:03.

faltered with emotion as she did so. In truth, of course, this inquest,

:20:03.:20:08.

because it has failed to answer so many key questions, will not give

:20:08.:20:12.

the former intelligence officer's family the closure they desire. It

:20:12.:20:17.

will also leave the way open for those who wish to spin conspiracy

:20:17.:20:22.

theories about his death. Outside the police were adamant their

:20:22.:20:26.

investigation goes on. And their appeal to someone who may have been

:20:26.:20:30.

with Gareth Williams that August night, revealed something about

:20:30.:20:35.

their assumptions of how he may have died. It's highly likely that

:20:35.:20:41.

a third party was involved in Gareth's death. I urge anyone who

:20:41.:20:46.

knows Gareth, who had contact with him, to search their conscience and

:20:46.:20:53.

come forward with any information about what happened that night, on

:20:53.:20:57.

the 16th of August 2010. The last hours of Gareth Williams and the

:20:57.:21:03.

events in his flat will continue to excite comment to the sorrow of his

:21:03.:21:06.

family. But investigators believe there could still be a good chance

:21:06.:21:11.

of solving the case, even if that takes years.

:21:11.:21:17.

Philip Davies is director of the Brunel Centre for Intelligence and

:21:17.:21:22.

Security Studies, Harry Ferguson is a former MI6 officer. This is

:21:22.:21:26.

highly embarrassing for MI6? coming on top of rendition and the

:21:26.:21:30.

Iraq war it is a series of incidents. The problem being, in

:21:30.:21:35.

large part, that MI6, or SIS, does not seem like a concerned employer,

:21:35.:21:40.

it took them a terribly long time to realise that he was gone. Then

:21:40.:21:44.

to snotify anybody, and then there is -- notify anybody, then there is

:21:44.:21:48.

all the other events afterwards? can see a couple of possible

:21:48.:21:52.

factors that might have been driving it. One of them might be

:21:52.:22:00.

that he was a GCHQ officer, on se connedment to SIS, the operations

:22:00.:22:04.

have been high because of Afghanistan, it is conceivable

:22:04.:22:10.

people might have thought he was yanked back to GCHQ, and waiting

:22:10.:22:14.

for a memo. If they thought he was doing something risky and

:22:14.:22:17.

inappropriate, they would have rather than make a report and a

:22:17.:22:22.

security vetting process, and ruin his career, they thought they would

:22:22.:22:27.

take it up with him informally. didn't turn up to a meeting?

:22:27.:22:31.

Sometimes people don't. What do you make of it? Somebody dropped the

:22:31.:22:36.

Bill ball. You wouldn't allow that kind of -- Somebody dropped the

:22:36.:22:40.

ball. You wouldn't allow that kind of thing happening in any

:22:41.:22:44.

organisation. He could have been kidnapped, extremist groups in this

:22:44.:22:48.

country could have decided to nab something, it is a big enough

:22:48.:22:57.

building, it is not the Cold War, but seven days is a long time. All

:22:57.:23:00.

organisations make mistakes, like managers make mistakes, it is clear

:23:00.:23:05.

from the inquest that no action was taken against line managers. That

:23:05.:23:09.

SIS didn't feel any action was necessary to correct this. That is

:23:09.:23:13.

worrying. What should they have done? They should have immediately

:23:13.:23:17.

sent someone around to the flat and found out where he was. I was on a

:23:17.:23:21.

radio programme earlier on, an old hand in the 1960s, he said in his

:23:21.:23:26.

day, if you were an hour late for work, somebody was out trying to

:23:26.:23:31.

find out where you were. Classic Cold War times, but even so. This

:23:31.:23:37.

was a guy on attachment from GCHQ, it is not as if he was a top secret,

:23:37.:23:44.

he was a spy? That was a guy so valuable he was to assist on SIS

:23:44.:23:50.

operations from GCHQ, he had knowledge through cryptography,

:23:50.:23:52.

extremely valuable. You have somebody not part of your

:23:52.:23:55.

organisation, you are responsible for them. It is like a guest in

:23:55.:23:59.

your family. If they go missing you should know. It is like looking

:23:59.:24:01.

after somebody else's child. It is very important. Because he worked

:24:01.:24:06.

in a small unit, and he's an outsider, they let this go. What do

:24:06.:24:10.

you imagine will be going through the mind of senior people in the

:24:10.:24:14.

Intelligence Service now? I would imagine there will be serious

:24:14.:24:18.

thinking about their own security protocols, revisiting vetting

:24:18.:24:23.

standards. They may be wondering if there were things to be picked up

:24:23.:24:27.

during his regular vetting top-ups. The other thing to keep in mind is

:24:27.:24:37.
:24:37.:24:40.

he's a GCHQ guy on se connedment to SIS, I conned -- se conneded to SIS,

:24:40.:24:44.

I wonder what the relations are like between the two groups, he was

:24:44.:24:49.

in their care. Are you not uncomfortable about the stuff about

:24:49.:24:52.

his private life that was leaked? We don't know enough about how or

:24:52.:24:56.

why it was leaked. I don't want to say more before I have formed any

:24:57.:24:59.

particular judgment about that. It was odd, but on the whole, the

:24:59.:25:04.

whole evidence trail, part of this problem has been handled relatively

:25:04.:25:07.

poorly. The say SIS handled material that should have been

:25:07.:25:11.

subject to chain of evidence standards. And the SO15 officer

:25:11.:25:15.

should have been more attentive to these things. It was suggested that

:25:15.:25:20.

the S015 guy was there as an intelligence liaison Counter

:25:20.:25:23.

terrorism policing and SIS operational activities. If you

:25:23.:25:27.

think people are doing CID chain of evidence responsibilities, that is

:25:27.:25:30.

a slightly different professional interest. And entirely different

:25:30.:25:36.

sort of policeman one might say? The police do seem to have acted

:25:36.:25:40.

oddly in this? It is very difficult for them. You are dealing with a

:25:40.:25:44.

secret organisation, you can't go in and use a search warrant, you

:25:44.:25:48.

can't question witnesses, you have to rely on what you told. Yvette

:25:48.:25:52.

Cooper said in the Intelligence Security Committee, the problem is

:25:52.:25:58.

you can't control what you are told, you are told by the people what you

:25:58.:26:01.

need to know about, that is the problem for the police, it is a

:26:01.:26:06.

closed world. A lot of the officers are star struck by the fact they

:26:06.:26:10.

are dealing with spooks for real, and don't push it hard enough when

:26:10.:26:14.

they are investigating. This is even a more peculiar quality about

:26:14.:26:20.

this, of course we had the police, mostly in the form of indoctrinated

:26:20.:26:26.

Special Branch practitioners, go into Vauxhall Cross, as part of the

:26:26.:26:30.

death of Princess Diana. They had effectively free run of the central

:26:30.:26:34.

registry. They were able to talk to the relevant officers and officials

:26:34.:26:38.

involved. They had, it had to be conducted inside the headquarters.

:26:38.:26:43.

The first point we said is that SIS has a precedent in being able to

:26:43.:26:48.

take another investigation to come in and handle it. Possibly the

:26:48.:26:50.

police are more familiar with how to do this now, than they would

:26:50.:26:55.

have been in the old days. In which case, it is even more bizarre, even

:26:55.:27:01.

more singular, that given you have got that legacy, that they handled

:27:01.:27:03.

the investigatory chain of evidence side of things so poorly in The

:27:04.:27:08.

Willy will case. It is more inconsistent with precedent. What

:27:08.:27:14.

about all the stuff about visits to websites, and women's dresses and

:27:14.:27:21.

all that sort of stuff. Are you surprised by that? Personally? Yes.

:27:21.:27:29.

But not in terms of the service. In the 1970s Morris Oldfield, who some

:27:29.:27:34.

believe was the basis for Smiley in the books, was found to be a

:27:34.:27:39.

homosexual in later life, despite being vetted numerous times. The

:27:39.:27:42.

new enhanced vetting process should put an end to this, you are

:27:42.:27:45.

supposed to be honest, and once you are honest you are not

:27:45.:27:48.

blackmailable. Not that he had these tendencies, if he did, but

:27:48.:27:53.

the fact he never received the pastoral support a lonely guy, away

:27:53.:27:57.

from home, should have received. He worked in a small unit, and from

:27:57.:28:02.

all the evidence given to the unit, he was left pretty much to his

:28:02.:28:05.

devices. That is a security breach waiting to happen, even if it is

:28:05.:28:09.

not a personal tragedy, as it is in this case. I agree with that. I

:28:09.:28:14.

will leave it with that. I agree with that entirely. Do you think we

:28:14.:28:18.

will ever get to the bottom of this? It is very, very rare that

:28:18.:28:22.

something remains a mystery indefinitely? It could be quite a

:28:22.:28:27.

long time before we do. If they have opened up new alternative

:28:27.:28:30.

routes for conducting the investigation, there is a decent

:28:30.:28:34.

chance they will come to the end of the trail. There is a non-zero

:28:34.:28:39.

possibility, I wouldn't rule it out rbgts but the trail may lead abroad

:28:39.:28:44.

--, but the trail may lead abroad, the third party may not be from the

:28:44.:28:47.

UK, there could be a foreign interest here. What is your feeling,

:28:47.:28:54.

will it ever be satisfactorily answered? No, SIS is a closed world,

:28:54.:28:56.

there is no mechanism for investigating fully. The

:28:56.:28:59.

intelligence committee was set up in the early days, they had an

:28:59.:29:03.

investigator, he was quickly disposed of. You will never be able,

:29:03.:29:08.

unless the right mechanisms are introduced, you will never get what

:29:08.:29:10.

was really happening there. With the question of whether or not

:29:10.:29:14.

there was someone involved, there was a failure of management and

:29:14.:29:17.

Pastoral support here. That is the real worry.

:29:17.:29:21.

In a moment we will have reaction to the French presidential debate

:29:21.:29:25.

that finish add few moments ago, a mere two-and-a-half hours after it

:29:25.:29:27.

started. While the people of France are

:29:27.:29:29.

preparing to choose their President, the people of Wales are readying

:29:29.:29:33.

themselves to pick new local authorities. The entire country,

:29:33.:29:37.

apart from Anglesey, which is caught in some space time

:29:37.:29:41.

discontinuum, and doesn't have elections until next year, gets to

:29:41.:29:44.

choose tomorrow. There will be a big troubling question for Wales,

:29:44.:29:47.

not answered by tomorrow's elections, sadly, is what on earth

:29:47.:29:52.

has gone wrong with education there. Since it got its own Government,

:29:52.:30:02.
:30:02.:30:11.

relative achievement has plummeted. On a sodden May Day in Caerphilly,

:30:11.:30:16.

even Tommy Cooper, the town's funnyiest son, is looking too grey

:30:16.:30:20.

to lift spirits. With the prospects of tomorrow's local elections it is

:30:20.:30:25.

hard to spot. But Caerphilly, fought over before, is again a key,

:30:25.:30:35.
:30:35.:30:37.

if not a lower key battleground. Labour is key to regain this

:30:37.:30:42.

council, in a valleys heartland, before four years of a Plaid Cymru

:30:42.:30:45.

administration. Keen enough to combat the rain and a certain lack

:30:45.:30:49.

of voter commitment. Thank you very much for your time. I'll be there.

:30:49.:30:56.

See you on Thursday. That's if I'm awake! Strictly local problems will

:30:56.:30:59.

help decide the election. So too will views on questions which

:31:00.:31:04.

affect all of Wales, such as schools. Education is an important

:31:04.:31:09.

issue in the campaign. Pupils' attainment level in Wales have

:31:09.:31:13.

fallen steadily since devolution, they are now lower than in England,

:31:13.:31:19.

Scotland or Northern Ireland. The question now, does Wales need more

:31:19.:31:22.

English-style reforms, testing, league tables, independence for

:31:22.:31:29.

schools, or should it preserve its own, more comprehensive approach?

:31:29.:31:33.

Tests of a sample number of Welsh 15-year-olds, under the

:31:33.:31:39.

international assessment, show a decline in reading ability between

:31:39.:31:49.
:31:49.:31:58.

The Welsh Education Minister said it was an unacceptable performance

:31:58.:32:02.

in overall attainment. These pupils show what can be achieved. Their

:32:02.:32:07.

school is one of the best in Wales. 85% here are from families classed

:32:08.:32:17.
:32:18.:32:18.

as deprived. Science, like all other objects, except English, is

:32:18.:32:23.

taught in Welsh. Only 2% of pupils in this school speak Welsh at home.

:32:23.:32:26.

But Welsh education, here and in other parts of Wales, is

:32:26.:32:34.

increasingly popular. Bileft-wing usualism itself promote

:32:34.:32:41.

-- biling ualism itself promotes cognitive thinking. They might read

:32:41.:32:44.

it in English and discuss it in Welsh, they have to understand the

:32:44.:32:47.

work to do that, it is not reproducing. Bringing all schools

:32:47.:32:53.

up to the standards of this school will take a lot of extra cash.

:32:53.:32:57.

Currently Wales spends �600 less a year on each pupil than England.

:32:57.:33:01.

Labour says it will reduce the shortfall by spending at least 1%

:33:01.:33:05.

more on education than the block grant the Welsh Government gets

:33:05.:33:10.

from Westminster. It will give schools more control over the money.

:33:10.:33:14.

It is about further investment going in, whether that is school

:33:14.:33:18.

buildings or going into initiatives such as the foundation phase, such

:33:18.:33:23.

as Flying Start, to look at their very young children and give that

:33:23.:33:27.

extra support, at that age, and continue in the investment. It is

:33:27.:33:33.

not a short-term fix, it is, over the long-term, and Welsh Labour are

:33:33.:33:40.

in there for the long-term. Labour is bringing in other reforms too,

:33:40.:33:44.

Wales abolished SATs tests and league tables, it is placing

:33:44.:33:51.

schools into bands, according to reviews. Plaid Cymru shared power

:33:51.:33:55.

with Labour until last year. There is several things we should be

:33:55.:33:58.

doing, not to introduce the free market happening in England. We

:33:58.:34:02.

were against academys, and banding that the Welsh Labour Government is

:34:02.:34:06.

doing, we need to concentrate more on core skills, that is the reading

:34:06.:34:10.

and writing skills, ensuring those are there and safely there.

:34:10.:34:16.

The Welsh Assembly in Cardiff Bay was set up to enable Wales to find

:34:16.:34:19.

distinctively Welsh solutions to Welsh problems. But in the fierce

:34:19.:34:23.

debates here, over education, some have questioned whether the country

:34:23.:34:28.

has now diverged too far in policy. Welsh Conservatives want schools

:34:28.:34:32.

all still council controlled, to be able to free themselves from the

:34:33.:34:37.

local authorities as they can in England. We have to look at what

:34:37.:34:41.

suits Wales. Where I am uncomfortable, is we will look at

:34:41.:34:45.

anything, anything, as long as it is not exactly the same as England.

:34:45.:34:51.

Because that, I think, is totally self-defeating. If we want to be

:34:51.:34:55.

the best of the best, we must look at the best of the best and

:34:56.:34:58.

implement that. Liberal Democrats talk more of working through local

:34:58.:35:02.

authorities. Our view is that there is a need to look at the inspection

:35:02.:35:06.

regime, and the quality of school leaders. And, perhaps, to have more

:35:06.:35:09.

robustle cha eing, the reality as far as local Government is

:35:09.:35:14.

concerned. Is that ultimately they are responsible for those school

:35:14.:35:17.

improvement services. Certainly there is a lot of work to be done.

:35:17.:35:21.

The decisions of the assembly and the Welsh Government wofpbt be

:35:21.:35:24.

directly affected by tomorrow -- won't be directly affected by

:35:24.:35:28.

tomorrow's elections, the vote will certainly reflect the changing

:35:28.:35:32.

political mood, in a country whose confidence in its ability to

:35:32.:35:35.

educate its young people, has now been severely shaken.

:35:35.:35:39.

The last big event of the fight for the presidency of France ended a

:35:39.:35:43.

few minutes ago. Nicolas Sarkozy and his socialist challenger,

:35:43.:35:47.

Francois Hollande, squared up on television for a knock them down,

:35:47.:35:51.

drag them out debate, which mattered more to Sarkozy than

:35:51.:35:55.

Hollande. Not a single poll has shown Sarkozy will hang on to the

:35:55.:35:58.

presidency. Hollande might have had a charisma bypass, but he offers

:35:58.:36:04.

France, and he says the rest of Europe, an alternative to austerity.

:36:04.:36:14.
:36:14.:36:18.

Who can forget thiser receiptically charged classic of French cinemas

:36:18.:36:24.

seen here on a lovingly curated print from the Newsnight vaults. On

:36:24.:36:31.

TV screens across France tonight, another red-hot tete-a-tete, not

:36:31.:36:38.

Belle De Jour this time, mais non, it is beau de jour, as France

:36:38.:36:42.

decides who will be her consort for the next five years. First to

:36:42.:36:50.

arrive for a televised debate, the French socialist, Francois Hollande,

:36:50.:36:57.

nicknamed flamy, because he's sweet and comforting, no bland and a bit

:36:57.:37:01.

wobbly. Then the incumbent, Nicolas Sarkozy, accompanied by his wife,

:37:01.:37:05.

the former model, Carla Bruni, who seemed to take her low-key

:37:05.:37:15.
:37:15.:37:16.

sartorial cue, from her husband. As a giant clock ensured equal time

:37:16.:37:18.

for interlocuteurs, Hollande accused Sarkozy of passing the buck

:37:19.:37:23.

for the country's problems. TRANSLATION: It is never your fault,

:37:23.:37:27.

5-10% of unemployment is not your fault either, it is the fault of

:37:27.:37:30.

the crisis. You are never responsible, are you. Watched by

:37:30.:37:33.

their pert, Prime Minister time hosts, the two men also traded

:37:33.:37:37.

views on the safety or otherwise of nuclear power, following the

:37:37.:37:42.

disaster in Japan. TRANSLATION: have the safest nuclear energy in

:37:42.:37:50.

the world, it is recognised as such, in Fukasima it was not the energy,

:37:50.:37:56.

it was the tsunami, as you know. As part of our commitment to

:37:57.:38:00.

covering the French elections, Newsnight has these exclusive

:38:00.:38:05.

pictures from inside a French restaurant in London tonight.

:38:06.:38:09.

Where supporters of Monsieur Sarkozy have been following the

:38:09.:38:15.

debate and emotions are running high. Back in the French capital,

:38:15.:38:20.

the exchanges were growing increasingly tense, and personal.

:38:20.:38:25.

TRANSLATION: You can't stop people to vote for me, no more than I can

:38:25.:38:30.

call for your, the people who support you to vote in your favour.

:38:30.:38:37.

But having said that, you wanted to be a victim of five years, France

:38:37.:38:42.

has been hurt, divided, has suffered. So many words have been

:38:42.:38:47.

said, not by some of your assistants, but by yourself. In

:38:47.:38:50.

that kind of debate. Please let me tell you.

:38:50.:38:54.

TRANSLATION: In that kind of debate, please, let me tell you, enough

:38:54.:38:58.

difficulties are a problem, enough things I have managed to do, others

:38:58.:39:04.

I have not succeeded to do. We don't need to add outrageous words

:39:04.:39:08.

and lies. The politicians also clashed over immigration, and

:39:08.:39:16.

France's cultural identity. Quite a warm-up for Sunday's decisive vote.

:39:16.:39:21.

Here now, different to the agenda, but simply divided, two candidates

:39:21.:39:24.

hoping to be the first member of the French National Assembly

:39:24.:39:27.

representing the seat of northern Europe. French people living

:39:28.:39:31.

everywhere from Iceland to Finland, since most of them live in west

:39:31.:39:35.

London, it is known as the constituency to most as south

:39:35.:39:42.

Kensington. What for you was the most exciting

:39:42.:39:46.

point of this debate? I think the first time Nicolas Sarkozy could

:39:46.:39:50.

ask the real questions to Francois Hollande. Until now he didn't want

:39:50.:39:54.

to answer any questions, he was complete low avoiding any debate.

:39:54.:39:58.

It was a good -- completely avoiding any debate. It was a good

:39:58.:40:03.

starting point to have finally a debate. You take a complete low

:40:03.:40:07.

contrary view, being of the opposite persuasion. What was the

:40:07.:40:12.

exciting moment in it? It was all in all to see that Mr Hollande has

:40:12.:40:17.

a very strong personality. He was both firm, stable, convincing,

:40:17.:40:22.

straight forward, where as Mr Sarkozy appeared as irrational,

:40:22.:40:28.

nervous, he was both patronising and appearing as a victim. That's

:40:28.:40:34.

not what we want as President. is Francois Hollande so dull, then,

:40:34.:40:39.

if he's so charasmatic in this debate? I think he has started his

:40:39.:40:44.

campaign one year ago, he has defined a programme, he's sticking

:40:44.:40:49.

to his line, sticking to his ideas. He has very convincing arguments,

:40:49.:40:52.

and he doesn't keep changing his mind just like Mr Sarkozy has been

:40:52.:40:56.

doing. There is also a chance he might be a bit nicer about Britain

:40:56.:41:01.

than Mr Sarkozy has been? I think Francois Hollande is changing his

:41:01.:41:06.

mind, he's proposing things which actually are not correct. Even the

:41:06.:41:11.

number he presented time were not correct. So how could you trust

:41:11.:41:16.

someone who doesn't know what he's talking about, and start to make

:41:16.:41:18.

announcements and criticising Nicolas Sarkozy who is trying to do

:41:19.:41:23.

his best to save France during the financial crisis. Interesting isn't

:41:23.:41:26.

it that most French people don't share your analysis, not a single

:41:27.:41:30.

poll showing Sarkozy will win? Today we had an extra point on the

:41:30.:41:35.

poll today. We can see the French people start. Not enough to still?

:41:35.:41:40.

We will see on Sunday. OK. I'm intrigued by the two of you, you

:41:40.:41:44.

are sitting in the studio in London, discussing French politics, about

:41:44.:41:49.

to face off against each other in a constituency which actually is not

:41:49.:41:53.

in France at all. This is a very, very odd state of affairs, isn't

:41:53.:41:57.

it? I don't know if it is odd, I think it is quite interesting and

:41:57.:42:02.

progressive, this idea that French citizens can live abroad, so they

:42:02.:42:06.

travel with their passport, and their right to vote. They keep this

:42:06.:42:10.

political link to their country. What do you think of this, don't

:42:10.:42:16.

you find it slightly bizarre? at all, for the last 30 years

:42:16.:42:22.

French people have been asking to have a representative for French

:42:22.:42:28.

people living abroad. I think it is a good step. One thing that is very

:42:28.:42:31.

important, Francois Hollande actually voted against it t the

:42:31.:42:37.

socialists are against it, so today it is very good. People are within

:42:37.:42:40.

their rights to move out of France, because they find the tax regime,

:42:40.:42:43.

for example, a bit burdensome, and still retain the right to choose

:42:43.:42:49.

the Government there? It is no question of leaving the country to

:42:49.:42:52.

avoid tax. For whatever reason they leave the country, some of them do

:42:52.:42:59.

leave for that reason, as you know? That is onlyers of the expats. For

:42:59.:43:04.

the 99 % of other French people living abroad, they represent

:43:04.:43:08.

France, and work in French companies, or bring their expertise.

:43:08.:43:13.

Also they come back to France. They have got another% pective of what

:43:13.:43:17.

is going on in France -- perspective of what is going on in

:43:17.:43:21.

France. Nicolas Sarkozy thinks the French people living abroad are

:43:21.:43:25.

very important. Given how we know that French public opinion has

:43:25.:43:29.

appeared to have divided thus far on the basis of the first round,

:43:29.:43:33.

18% going to the French National Front. Isn't it very odd to see a

:43:33.:43:39.

socialist candidate trying to get some of that vote? People who would

:43:39.:43:41.

otherwise vote National Front? Believe me, if you watched the

:43:41.:43:44.

debate this evening, you wouldn't think that Mr Hollande tried to

:43:45.:43:51.

attract any votes. What he said is that he would be fair and tough on

:43:51.:43:56.

security, just like the last socialist Government has been. But

:43:56.:44:01.

he hasn't followed the line of Mr Sarkozy, which has been in the last

:44:01.:44:09.

few weeks, talking about halal meat, swimming pools, women and men being

:44:09.:44:15.

divided in swimming pools. Things that are not real concerns for the

:44:15.:44:19.

French people. Your candidate, Mr Sarkozy, knows he needs to get some

:44:19.:44:22.

of this National Front folk doesn't he? There is no question of getting

:44:22.:44:27.

the vote of the National Front. It is a question of responding to 18%

:44:27.:44:31.

of the population, who has those questions. In the real world he has

:44:31.:44:35.

to get some of that vote in order to be in with a chance, right now

:44:35.:44:40.

it doesn't looks a if he has much of a chance? We will see on Sunday.

:44:40.:44:45.

In the real world, the Telegraph described the National Front as a

:44:45.:44:52.

racist party, that is what it is. Aren't you uncomfortable at the

:44:52.:44:56.

idea of trying to court that vote? A lot of people vote National Front,

:44:56.:45:01.

not because they were for Marine Le Pen, it is because they wanted to

:45:01.:45:06.

show they were not happy about some policies. They want some issues

:45:06.:45:11.

related to immigration, because it is a big problem in France. Until

:45:11.:45:16.

now, the immigration was only the issue of the National Front, and it

:45:16.:45:18.

is now 18% of the population complaining about it.

:45:18.:45:25.

We have to do something about it. Do you think when Monsieur Hollande

:45:25.:45:29.

says he's going to offer Europe another model for how to deal with

:45:29.:45:35.

this economic crisis, is he serious? I think he is. If he gets

:45:35.:45:40.

elected by over 20-25 million French people, I think he would

:45:40.:45:46.

benefit from a strong democratic legislative to put forward some new

:45:46.:45:52.

proposals. He doesn't necessarily want to ask 25 other states to

:45:52.:45:56.

forget about what they have agreed. He does claim there will be a

:45:56.:46:02.

model? Yes, but he says he agrees with fiscal responsibility, he

:46:02.:46:04.

thinks it is very important. He also reminded the French people

:46:04.:46:08.

tonight that the public debt has been doubled under the right-wing

:46:09.:46:14.

Government in France in the last ten years. So fiscal responsibility

:46:14.:46:20.

is not necessarily where he is...That Is not right, it is

:46:20.:46:30.

incorrect. It is incorrect. 250 billion were debts carried on since

:46:30.:46:35.

1974. Also 200,000 billion of debts also from the financial crisis, and

:46:35.:46:40.

all the other countries of Europe had it. So it is not that it is

:46:40.:46:43.

coming from the five years of Nicolas Sarkozy.

:46:43.:46:46.

Thank you very much. Tomorrow morning's front pages,

:46:46.:46:52.

some of them, the Guardian goes with the story of the SIS operative

:46:52.:46:59.

who was found dead in the suitcase, and the coroner unable to discern

:46:59.:47:09.
:47:09.:47:17.

That's all from Newsnight tonight, Kirsty is here tomorrow after the

:47:17.:47:27.
:47:27.:47:48.

polls close. Good evening, after a respite from

:47:48.:47:51.

the rain it returns tonight into the morning, across the Midland,

:47:52.:47:55.

southern England and Wales. Heavy downpours in places. Risks of

:47:55.:47:59.

further flooding in one or two spots. Brightening up in the south

:47:59.:48:06.

coast, north of the rainband a fine day. North West of England fine.

:48:06.:48:10.

Feeling cool under the rainband, it should continue to affect parts of

:48:10.:48:13.

the Midland, East Anglia into the afternoon. The southern most

:48:13.:48:14.

They will be rain in the counties, after a bit of rain in

:48:14.:48:21.

the morning, a largely dry day in store. Sunny spells possible, not

:48:21.:48:24.

especially warm, any sunshine and temperature also lift a little.

:48:24.:48:28.

Still remaining cloudy in Wales, further rain into the afternoon.

:48:28.:48:33.

North Wales staying largely dry and bright. You couldn't rule out a few

:48:33.:48:37.

spots of rain. For Northern Ireland there will be sunny spells to take

:48:37.:48:43.

us throughout the day. Western areas a fine day in store.

:48:43.:48:52.

Cloud gathering to the far north later on. Northerly winds really

:48:52.:48:54.

digging in, they will eventually get to southern parts of England

:48:54.:48:58.

and Wales, Friday could be a bit warmer for some of you, with dry

:48:58.:49:01.

conditions around for you for a time. Not completely dry, a few

:49:01.:49:04.

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