:00:13. > :00:18.Tonight, is Spain too big to fail? Its leaders say their banks need
:00:18. > :00:22.help from Europe, they won't accept more austerity in return. Who will
:00:22. > :00:25.blink first? Meanwhile on the ground, the crisis
:00:26. > :00:30.intensifies, Paul Mason is just back from Seville, some are taking
:00:30. > :00:33.matters into their own hands, occupying houses and land. Did any
:00:33. > :00:38.of you ever think you would be living in a squat? No. TRANSLATION:
:00:38. > :00:42.We are here to fight or a roof, a roof over our heads, this is my
:00:42. > :00:46.house now, nobody can throw me out, let's see them try. We will get the
:00:46. > :00:52.Spanish Government view s and hearing from the head of the Berlin
:00:52. > :00:59.stock exchange. What if the answer to save the euro looks like this,
:00:59. > :01:03.will more integration choose Britain to be in or out of Europe.
:01:03. > :01:07.The row over unpaid security stewards, we speak to the company
:01:07. > :01:13.who provided them, an isolated incident, or something rotten in
:01:13. > :01:23.the Government's Work Programme. How was the Jubilee reported abroad,
:01:23. > :01:26.
:01:27. > :01:30.from ten sea to Taiwan. Good evening, Spain's banks need
:01:30. > :01:33.more money from Europe, that is not in doubt. How much and by the
:01:33. > :01:37.method which it happens is far from decided. The Spanish Government is
:01:37. > :01:43.reluctant to accept a bail out for fear of the political reprecussions,
:01:43. > :01:46.and the pain of even more austerity. Efiguress in Brussels, Berlin and
:01:46. > :01:51.Madrid tonight are pouring over their options. Can a special case
:01:51. > :01:55.be made for Spain, direct help for its banks with few conditions. With
:01:55. > :01:59.the stand-off going on, how close are we to a wider banking collapse.
:01:59. > :02:03.Paul Mason is here. What sort of plans are being mooted in Spain
:02:03. > :02:07.tonight? A big turn around, 48 hours ago it was, we don't need a
:02:07. > :02:14.bail out, our banks are fine. Now it is, please can we have a bail
:02:14. > :02:17.out, and give it to us unconditionally or Europe gets it.
:02:17. > :02:22.How much? 40 billion, more economists think, some think 400
:02:22. > :02:26.billion. The point is, they want the money without the attached
:02:26. > :02:29.austerity that Greece, Ireland and Portugal got made to. Do the
:02:29. > :02:33.Financial Times, usually well informed out of Brussels, thinks
:02:33. > :02:38.and reports that what is on offer now is that the Europeans are going
:02:38. > :02:41.to give Spain quite a bit of money, unconditionally, at a state level,
:02:41. > :02:45.that is it gets given straight to the banks, and the reason is s
:02:46. > :02:49.because they have done so much austerity that they can have it
:02:49. > :02:54.safely. So the Europeans are prepared to say what the markets
:02:54. > :03:00.are not prepared to believe. As you say, Greece in particular is
:03:00. > :03:05.watching this carefully. If Spain gets this money, with no strings
:03:05. > :03:10.attached, will that be a game- changer? Massively. For two reasons,
:03:10. > :03:14.first of all, Spain is on the verge of losing its ability to borrow.
:03:14. > :03:17.The markets look at it and say your public finances are not sustainable.
:03:17. > :03:21.They look at the autonomous regions, not making the cuts required. Then
:03:21. > :03:24.you look at Greece, Greek voters are right now trying to weigh up a
:03:24. > :03:29.gamble, one party is telling them if you don't vote for austerity, we
:03:29. > :03:32.will get kicked out of the euro, disaster, the left is saying, no,
:03:32. > :03:36.the Germans will blink, and the Germans will come back to the table
:03:36. > :03:42.if you vote for us. What will it look like in Greece if, over the
:03:42. > :03:48.next 48, 72 hours, they do blink. Big stakes here, for the entire
:03:48. > :03:53.euro zone. Paul has spent the weekend amongst
:03:53. > :03:56.Spaniards on the streeds Andalucia, struggling with the economic crisis
:03:56. > :04:06.-- streets of Andalucia, struggling with the economic crisis. This is
:04:06. > :04:06.
:04:06. > :04:15.his film. In the province of Andalucia, the
:04:15. > :04:21.posh do weddings in style. And so do the protestors, here enacting
:04:21. > :04:26.the marriage of a corrupt state to failing bank.
:04:26. > :04:32.Protestors banging pots and pans, are becoming common now, an echo of
:04:32. > :04:37.the revolt in Argentina, ten years ago, when it went burst.
:04:37. > :04:43.They try to keep it light, but, as the crisis hits, there is simmering
:04:43. > :04:51.anger. Many people are losing their homes,
:04:51. > :04:56.people with children and it is now on the streets, living on charity.
:04:56. > :05:00.Spain's economy is in recession. Many of its banks need a bail out
:05:00. > :05:04.fast. One in four adults is unemployed. Spain has become the
:05:04. > :05:11.test case for the European mantra of austerity.
:05:11. > :05:15.The irony is, Spain's banking crisis is solvable, although with
:05:15. > :05:19.large amounts of money. The problem is with the real economy, it is
:05:19. > :05:25.shrinks fast, and theory dictates that people's wages and benefits
:05:25. > :05:31.have to shrink as well. How low can it go, with any market in Spain,
:05:31. > :05:41.most things are all right one or two euros.
:05:41. > :05:47.
:05:47. > :05:53.This block of luxury flats was empty for three years. The owner
:05:53. > :05:57.has gone bankrupt. Now it has been occupied by people's whose own
:05:57. > :06:02.homes were repossessed. These women were among the first to move in.
:06:02. > :06:09.They are not habitual rebels. Did any of you ever think that you
:06:09. > :06:16.would be living in a squat? TRANSLATION: At first, the truth is,
:06:16. > :06:20.I was frightened. Because I didn't know what could happen.
:06:20. > :06:25.TRANSLATION: We're here to fight for a roof, a roof over our heads.
:06:25. > :06:29.This is my house now, nobody can throw me out. Let's see them try.
:06:29. > :06:34.The way it is going in this country, things are going to end badly. We
:06:34. > :06:41.will be biting chunks out of each other, just for a bit of meat.
:06:41. > :06:46.Everywhere you go in Spain there's a small savings bank, a Caja, now
:06:46. > :06:52.many of them are bust. One bank alone, Bankia, needs 24 billion
:06:52. > :06:57.euros to stay afloat. Spain wants the EU to give tax-payers' money
:06:57. > :07:01.directly to these banks, so their bad debts don't get transferred on
:07:01. > :07:04.to the Government's books. On the face of it, what could be simple
:07:04. > :07:08.letter, you bail out the Spanish banks direct, with EU money,
:07:08. > :07:14.bypassing the Government, avoiding the need for austerity, and
:07:15. > :07:24.firewalling Spain from Greece. What's the problem? That's the
:07:24. > :07:28.problem. This is unfinished skyscraper was built by one bank,
:07:28. > :07:33.sold to another, and is now owned by a third. Many in Seville see it
:07:33. > :07:42.as a giant folly, for, as those who have covered the story know, the
:07:42. > :07:50.Cajas were politically controlled. The Cajas were banks who used
:07:51. > :07:58.regular economic rules, but with a political background. So, it's like
:07:58. > :08:03.getting politicians to grow your money. That is a CAJA? And when
:08:03. > :08:09.they need to be bailed out by 24 billion euros, where are the
:08:09. > :08:15.politicians? They are in the same place. Do people recognise this?
:08:15. > :08:23.And maybe they should be answering some questions in parliament, and
:08:23. > :08:28.maybe on trial. Europe goes pump 100 billion euros of tax-payers'
:08:28. > :08:38.money into these banks t leaves the political apppointees who created
:08:38. > :08:43.
:08:43. > :08:49.the mess unscathed, often with multimillion pay-offs. Andalucia's
:08:49. > :08:52.land is rich. But decades under General Franco left it
:08:52. > :08:55.underdeveloped, with EU membership came infrastructure. It is a region
:08:55. > :09:03.where the state is the biggest employier, and the state is cutting
:09:03. > :09:08.back. This farm had been abandoned to lie
:09:08. > :09:12.fallow, now it too has been occupied by members of the Land
:09:12. > :09:15.Workers' Union, and their supporters.
:09:15. > :09:18.TRANSLATION: The crisis happened because the majority of people who
:09:18. > :09:22.worked in the countryside left to go and work in the construction
:09:22. > :09:26.boom. Only a few of us stayed behind. They brought in migrant
:09:26. > :09:30.labour, and machinery to help with the crops. Then the property boom
:09:30. > :09:34.collapsed, and all those people who left wanted to come back to the
:09:34. > :09:38.land. They are trying to run it as an organic farm, this is as much a
:09:38. > :09:41.political gesture as an economic one. Land occupations were the
:09:41. > :09:46.scene of some of the bloodiest events in the civil war in the
:09:46. > :09:50.1930s. TRANSLATION: I believe it will all
:09:50. > :09:56.end with occupations, farplgs, parliamentary partys and factories,
:09:56. > :09:59.there is no other -- apartments -- farms, apartments, factories, there
:09:59. > :10:09.is no other way. We have to go out on the streets, fill the city
:10:09. > :10:14.
:10:14. > :10:20.centres and occupy the land. Nobody will give us anything.
:10:20. > :10:25.For now, what's holding Spain together is the strong social bonds,
:10:25. > :10:30.family, religion, tradition, the welfare system, the minimum wage.
:10:30. > :10:35.The statue depicts Our Lady of Hope, for many of these young people,
:10:35. > :10:40.hope is all they have got. 51% of Spaniards under the age of 24 are
:10:40. > :10:46.unemployed. TRANSLATION: We're following the
:10:46. > :10:50.wrong path. The problem isn't public deficit, it is unemployment.
:10:50. > :10:55.The more we strangle public spending, the more we damage our
:10:55. > :11:01.chances of recovery. We need to recover confidence, and increase
:11:01. > :11:11.consumption. It is a vicious circle. What we need is a system like the
:11:11. > :11:15.
:11:15. > :11:20.New Deal. We are condemning Spain to a lost decade, like Japan had.
:11:20. > :11:24.For now, the sun is free, and so is lunch, if you can catch it. But
:11:24. > :11:28.this is a wasted generation. It is beginning to dawn on them things
:11:28. > :11:31.could get worse before they could get better. A combined banking and
:11:31. > :11:36.sovereign debt crisis for Spain would, even though, be cheaper than
:11:37. > :11:41.Greece to solve. But bigger than Lehman Brothers, if they failed to
:11:41. > :11:51.solve it. That is where Spanish people are scared.
:11:51. > :11:55.
:11:55. > :12:02.What they are scared of, above all, is that the delicate social balance
:12:02. > :12:06.they had will suddenly come to an end. Joining me now from Madrid is
:12:06. > :12:10.Jose Maria Beneyto, a spokesman for foreign affairs in the parliament.
:12:10. > :12:17.Joining me from Berlin, Artur Fischer, chief executive of the
:12:17. > :12:21.Berlin stock exchange. In the studio I'm joined by the director
:12:21. > :12:25.of the Global Economic Governance Program in Oxford. First of all,
:12:25. > :12:30.Jose Maria Beneyto, Spain is in crisis you do need money now. How
:12:30. > :12:38.much money do you think you need, and are you prepared to accept any
:12:38. > :12:42.conditions attached to that money? Well, the first question is whether
:12:42. > :12:49.indeed Spain needs money and touch. This is very difficult to know at
:12:49. > :12:54.this stage. What has emerged is the need to get money for the
:12:54. > :13:01.capitalisation of Bankia. This is the real problem right now. And
:13:01. > :13:05.this was unexpected. Because it is a new story which came in the last
:13:05. > :13:08.weeks. This is a real problem now. Anything else at the moment is a
:13:08. > :13:15.bit of a speculation. Would you accept any conditions attached to
:13:15. > :13:23.any money coming to Bankia, particularly? That's not for me to
:13:23. > :13:27.decide on that. The reason I ask, the reason I ask Mr Beneyto is
:13:27. > :13:31.because Bankia was severely mishandled, politicians were also
:13:31. > :13:37.involved in the problems of Bankia, and European tax-payers wonder why
:13:37. > :13:42.on earth they should give money to a failed bank, when it is throwing
:13:42. > :13:47.good money after bad? Well, banks have been having troubles all
:13:47. > :13:54.around Europe. You know, this is not the only case, in Spain. If you
:13:54. > :13:58.look into the banks in Germany, the problems there were even much
:13:58. > :14:03.higher, and there were banks managed by politicians. In many
:14:03. > :14:09.other places in Europe, in France or Italy, this is not something new.
:14:09. > :14:14.So the issue here is not whether Bankia was particularly bad low
:14:14. > :14:18.mismanaged, it is an issue whether -- badly mismanaged, it is an issue
:14:18. > :14:22.whether or not we should have a common system in Europe for banking
:14:22. > :14:27.rescue. This is the real problem at the moment. Artur Fischer, from
:14:27. > :14:34.your point of view, will Germany blink first and allow money to go
:14:34. > :14:37.to Spain to help it out of its crisis? I believe it is the first
:14:37. > :14:45.test will be on Thursday, when Spain will ask the market, I
:14:45. > :14:51.believe, for another ten billion. Hopefully Spain will be able to get
:14:51. > :14:55.that money in the markets below 7% .% obviously is a barrier. If that
:14:55. > :15:00.doesn't happen, then things might accelerate quite swiftly. In that
:15:00. > :15:04.case, I believe Germany will play by the rules, which means we have a
:15:04. > :15:09.rescue fund, money will be lent only to a Government, not to banks.
:15:09. > :15:16.However, I believe also that in Spain we have a completely
:15:16. > :15:22.different problem. -- to Greece. The Spanish Government is saying it
:15:22. > :15:26.doesn't a bail out, the idea is the banks to be recapitalised, you
:15:26. > :15:30.don't think that will happen? simple, if Spain has to pay more
:15:30. > :15:34.than 7% there will be no other choice. Obviously if it is higher
:15:34. > :15:37.than 7%, then you need to take a loan out to pay the interest,
:15:37. > :15:41.nobody would do that. Do you think it is possible that Spain would
:15:41. > :15:46.have a bail out without conditions attached, the Financial Times is
:15:46. > :15:49.talking about a possible bail out without the kind of austerity
:15:50. > :15:54.measures that applied, for example, to Greece? I think there is a
:15:54. > :15:58.middle ground here. I believe from what I hear that the German
:15:58. > :16:02.Government understands that the Spanish Government has done a lot
:16:02. > :16:06.of things absolutely correctly and riot, and they have started the
:16:06. > :16:10.special measures to cut down costs some time ago. Therefore, again, as
:16:10. > :16:14.I said earlier, the situation in Spain is quite different. However,
:16:14. > :16:18.the banks need to be restructured, that is something which has to be
:16:18. > :16:21.put in place. Let's come do you now on this.
:16:21. > :16:24.Two different things here, of course, there is the short-term
:16:24. > :16:27.problem with Bankia, there is also the possibility of a bail out,
:16:27. > :16:31.without conditions attached, that would be a big moment, wouldn't it,
:16:31. > :16:36.it would be a game-changer? would be, at the moment we are what
:16:36. > :16:39.we are seeing is a very dangerous brinkmanship, it is a three-way
:16:39. > :16:42.brinkmanship, the European Central Bank is sick of the European
:16:42. > :16:46.leaders not making decisive moves. So the European Central Bank has
:16:46. > :16:52.said we are going to stop doing pain relief for Europe, and force
:16:52. > :16:55.the politicians to do something decisive. The eurozone politicians,
:16:55. > :17:00.playing brinkmanship with Spain, they want to force Spain to accept
:17:00. > :17:06.conditionality in return for a loan. Artur Fischer has said it has done
:17:06. > :17:11.a lot towards this already, it sounds as if there will be an
:17:11. > :17:15.accord? What Spain knows that is that Germany cannot afford to let
:17:15. > :17:21.Spain go. Spain knows if there is any moment to negotiate without
:17:21. > :17:25.conditions now is the moment. will blink first? Germany? We will
:17:25. > :17:28.see a slightly political fudge, we will see probably a loan from the
:17:28. > :17:32.European rescue fund, with some light conditionality, which some
:17:32. > :17:35.how the Spanish Government finds acceptable. What we won't see is a
:17:35. > :17:40.solution to the underlying problem. Which is that both the Government
:17:40. > :17:45.and the banks are broke. So they are all playing with fire?
:17:45. > :17:52.They are. Jose Maria Beneyto what do you make of that analysis?
:17:52. > :17:57.I think is that Spain needs time. The crisis has been not just a
:17:57. > :18:02.Spanish crisis, it is a crisis around Europe. If Spain fails, the
:18:02. > :18:05.consequences will be very, very relevant for the rest of the
:18:05. > :18:11.European countries, including Germany. Do you believe that if
:18:11. > :18:16.Spain does fail, the whole eurozone fails? What I think is that we are
:18:16. > :18:20.very clearly on the same boat, as we were from the very beginning in
:18:20. > :18:27.the monetary union. So things have happened as they have happened, the
:18:27. > :18:30.Spanish Government has made very strong efforts, it has done all the
:18:30. > :18:36.homeworks, it is probably the country in the world which has done
:18:36. > :18:41.the most reforms in the least time, concerning the size of Spain. We
:18:41. > :18:49.have done the labour reform, we have done a cap on the expenses of
:18:49. > :18:52.the autonomous communities. Sorry to interrupt you, I would say two
:18:52. > :18:57.of the semi-autonomous regions were meant to cut their spending last
:18:57. > :19:03.year and they increased their spending? No, what they did, they
:19:03. > :19:08.didn't increase their spending, what happened was that when the
:19:09. > :19:13.accounts were made public, there was more deficit than expected from
:19:13. > :19:19.last year. The revenues had been less. So it is the entire problem,
:19:19. > :19:25.it is a dynamic situation, and if you don't find a solution, then, of
:19:25. > :19:29.course, your revenues will be less and less. Artur Fischer, what about
:19:29. > :19:32.this point, though, that if the special measures are given to Spain,
:19:32. > :19:39.it could possibly affect the outcome of the Greek elections.
:19:39. > :19:43.Because the left in Greece will say, hang on in there, we don't need to
:19:43. > :19:50.accept these austerity measures, because Germany will blink. Angela
:19:50. > :19:58.Merkel will blink, and we will be OK? Actually, there is a potential
:19:58. > :20:01.that could happen. But I believe in crease, the vote will be whatever -
:20:01. > :20:04.- increase, the vote will be whatever it will be, either Greece
:20:04. > :20:07.will vote for the austerity measures or they will not be
:20:07. > :20:14.provide with any other money, in that casek they will most likely
:20:14. > :20:16.have to leave the euro. In Spain it is different, the Spain yards are a
:20:16. > :20:20.proud people, the Government has promised to see through this crisis
:20:20. > :20:25.on their own, and the Government has been in for half a year. It
:20:25. > :20:32.looks like they can't, and for that reason I believe the first step is
:20:32. > :20:37.that Spain asks the fund to release money, and then the next step to
:20:37. > :20:41.accept some, probably very light measures, which are imposed. Very
:20:41. > :20:51.briefly? There is one positive point that has emerged today, which
:20:51. > :20:52.
:20:52. > :20:55.is the idea that the Europeans collectise all the excess debt to
:20:55. > :21:05.take the Government off burdens and leave them better able to sort out
:21:05. > :21:05.
:21:05. > :21:10.their banking systems, without that we are in a dangerous space.
:21:10. > :21:15.have had reports in from activists saying scores of people have been
:21:15. > :21:22.killed in a village in Hama province, hard to verify, the
:21:22. > :21:29.killings come less than two weeks after news of a massacre in Houla,
:21:29. > :21:35.over 100 people were killed, over half of them children. Activist
:21:35. > :21:39.groups are saying between 78 and 87 people were killed in this village,
:21:39. > :21:43.either shot at close range or stabbed to death, or hacked to
:21:43. > :21:46.death by shabiha, that is the Government militia, which has been
:21:46. > :21:53.widely blamed, certain lie by activists and much of the outside
:21:53. > :21:58.world for the killings and Houla. We obviously can't confirm these
:21:58. > :22:03.report, nor is there any video on the Internet to back it up. But
:22:03. > :22:07.these same groups were the first to come out with the news about Houla,
:22:07. > :22:11.which UN observers, the following day, coroborate. We will be waiting
:22:11. > :22:16.to see obviously whether the observers go there tomorrow, and
:22:16. > :22:21.confirm these kind of figures. It sounds like Houla on a slightly
:22:21. > :22:24.lesser scale. As many as 87 if not more. Is there any other reaction
:22:25. > :22:29.tonight? The Government is giving its view, which is now coming out
:22:29. > :22:34.in flashes on the Syrian state TV screen. Saying that Government
:22:34. > :22:38.forces in response to pleas from local people, intervened to attack
:22:38. > :22:41.what they are calling a nest of terrorists in that village, they
:22:41. > :22:46.clashed and killed a number of these called terrorists, seized
:22:46. > :22:49.guns and so on. And that, in the process, they came, they say,
:22:49. > :22:53.across the bodies of two women and a number of children, bound hand
:22:53. > :22:58.and foot, who the coroner, according to this official version,
:22:58. > :23:02.said had been killed at 10.00am, yesterday, or today, rather, in
:23:02. > :23:04.other words when the called terrorists were still there. In
:23:04. > :23:07.other words the Government is blaming terrorist armed groups or
:23:07. > :23:11.the rebel fighters for this massacre, as the Government itself
:23:11. > :23:15.is calling it. And linking it to the impending meeting of the
:23:15. > :23:20.Security Council tomorrow. Which will be addressed by Kofi Annan, as
:23:20. > :23:26.everybody looks for a way out of this horrible drama. Thank you very
:23:26. > :23:29.much for joining us. Back to Europe now, Britain may be
:23:29. > :23:34.outside the eurozone, probably relieved to be a second teir player
:23:34. > :23:38.in this crisis. But tomorrow afternoon David Cameron will be
:23:38. > :23:41.sitting face-to-face, toe-to-toe with Angela Merkel with a following
:23:41. > :23:46.wind from Barack Obama, more or Liz telling the German Chancellor to
:23:46. > :23:51.come up with a plan to solve the eurocrisis and deliver long-term
:23:51. > :23:54.future for the single currency, perhaps in the form of stronger
:23:54. > :24:01.integration. The moment could welcome when Britain has to decide,
:24:01. > :24:05.once and for all, Europe, in or out. Here is David Grossman.
:24:05. > :24:10.For a whole extra long weekend it was almost as if the EU didn't
:24:10. > :24:14.exist. For four rather soggy days we were back in the Britain that
:24:14. > :24:19.George VI pass today his daughter. The British show no great desire to
:24:19. > :24:24.fly the EU flag at the best of times, this weekend, forget it. But,
:24:24. > :24:28.as the parade routes return to normal, so does politics. For the
:24:28. > :24:32.politicians, business as usual on the eurocrisis, is, well, trying to
:24:32. > :24:35.keep their options open for as long as possible. In a comparatively
:24:35. > :24:41.short period we could be looking at one end, the complete break up of
:24:41. > :24:45.the entire European project, or, at the other end, a new, vast
:24:45. > :24:48.superstate. However, whilst a certain amount of ambiguity suits
:24:48. > :24:54.our leaders, increasingly backbenchers are looking for
:24:54. > :24:58.clarity and precision. The Conservative backbencher,
:24:58. > :25:01.Douglas Carswell has won a place in the parliamentary ballot to
:25:01. > :25:05.introduce a piece of legislation, and consulted the public as to what
:25:05. > :25:09.law they would like. The overwhelming winner, he says, exit
:25:09. > :25:13.from the EU. So far we have seen almost no leadership at all. We
:25:13. > :25:16.have seen all the old certainties and cliches of the past 40 years
:25:16. > :25:22.recycled, different ministers, they wear different colour rosettes on
:25:22. > :25:26.election day, but no new thinking. I mean this really should concern
:25:26. > :25:31.us. Events are changing fast in Europe, and yet we're getting the
:25:31. > :25:35.same sold out of date platitudes and cliches recycled as if they
:25:35. > :25:39.will see us through, they will not. The Prime Minister is in Norway
:25:39. > :25:43.tonight, on his way to a meeting with the German Chancellor tomorrow.
:25:43. > :25:48.Last night there was a phone call with the American President. The
:25:48. > :25:51.subject under discussion, of course, the eurozone. I did have a
:25:51. > :25:56.conversation with President Obama yesterday, he very decently held
:25:56. > :26:02.off the phone call until after the red arrows had finished going over
:26:02. > :26:07.bucking hall palace, only just. We do -- Buckingham Palace, only just.
:26:07. > :26:10.We do share some similar views, as I said, there is the urgent action
:26:10. > :26:14.to deal with the financial crisis in Europe. We have seen interest
:26:14. > :26:18.rates rise so high that it is causing real problems for countries.
:26:18. > :26:22.That is why you need a conclusive resolution of the Greek issue. You
:26:22. > :26:26.need the firewalls, you need the bank recapitalisations, all those
:26:26. > :26:30.things have to be done. But that is only about stablisation, we then
:26:30. > :26:34.need to make sure we have long-term growth plans.
:26:34. > :26:38.For some in his party, Norway was a good place for David Cameron to go
:26:38. > :26:43.and see for himself. It provides, they think, a good blueprint of
:26:43. > :26:49.where Britain could go. Trading with Europe, but outside the EU.
:26:49. > :26:56.Norway is in the European Economic Area, alongside Iceland and
:26:56. > :27:01.Liechtenstien. According to one academic, this middle way utopia is
:27:01. > :27:08.a losery. There is a gap in the model between formal serenity and
:27:08. > :27:11.actual dependance on Brussels on the other side. You could say in
:27:12. > :27:15.the places and Britain for those considering it, even outside the
:27:15. > :27:18.European Union, you can't be outside the European integration
:27:18. > :27:24.processes, that is something you have to participate in if you don't
:27:24. > :27:28.want to be totally isolated. Sonar way is really participating in
:27:28. > :27:32.European integration, although we have kept some formal serenity.
:27:32. > :27:36.Others, though, think a better example of Britain's post-crisis
:27:36. > :27:42.relationship with the EU is not looking north to nor way, but south
:27:42. > :27:45.to Switzerland. The Swiss are in the European free trade association.
:27:45. > :27:50.I think a Swiss-type relationship with the European Union very much
:27:50. > :27:53.has to be on the cards. One of the reasons why the Swiss are
:27:53. > :27:58.prospering is because by being outside the European Union, not
:27:58. > :28:02.only do they have free trade with the European Union, but they arery
:28:02. > :28:05.to -- free to trade with the rest of the world, and it is outside the
:28:05. > :28:08.world there is growing, it is countries outside the European
:28:08. > :28:11.Union that are growing fast. If we can find a way of trading freely
:28:11. > :28:17.with the European Union, being free to trade with the rest of the world,
:28:17. > :28:21.we will be on to a winner. The big problem, right now, is, of
:28:21. > :28:24.course, is that no-one can predict what will happen with the EU and
:28:24. > :28:31.the eurozone, and Britain's relationship with both. The only
:28:31. > :28:36.scenario we can perhaps safely discount is this one.
:28:36. > :28:42.Daniel Hannan is a Conservative MEP, who supports a UK exit from the EU,
:28:42. > :28:46.and Menzies Campbell, leader of the Liberal Democrats, who have always
:28:46. > :28:52.enthusiastically usual guiseed the EU benefits. Menzies Campbell
:28:52. > :28:57.tomorrow morning in the Times, David Owen planned to offer a vote
:28:57. > :29:01.on EU to Britain. Do you think a vote on EU membership is inevitable
:29:01. > :29:04.now? I don't think it would be the time to call it now at the moment.
:29:04. > :29:14.People's views would inevitably be covered by what has happened in the
:29:14. > :29:17.
:29:17. > :29:20.most recent past. You have to remember for the past 40 years we
:29:20. > :29:24.have participated in the biggest single market in the world, 50% of
:29:24. > :29:26.our exports go to the European Union. It is said that three-and-a-
:29:26. > :29:30.half million jobs in this country depend upon the European Union.
:29:30. > :29:34.More to the point, perhaps, since the end of the Second World War,
:29:34. > :29:38.the European Union's been an important component in the
:29:38. > :29:42.maintenance, not just of economic opportunity, but of political
:29:42. > :29:46.stability. Against that background, then, a referendum on Europe, in my
:29:46. > :29:51.view, is something which those of us who support Europe should not be
:29:51. > :29:55.afraid of. Because I believe in an argument of the kind I have
:29:55. > :29:58.described, that the view would prevail that Britain should remain
:29:58. > :30:02.within the European Union. We would have a clearer picture, Daniel
:30:02. > :30:10.Hannan. Can you sketch out, from your point of view, how it would
:30:10. > :30:14.work, if Britain left Europe? may on the referendum, it is a bit
:30:14. > :30:17.much to say it is the wrong time. It is always the wrong time, we
:30:17. > :30:20.used to be told it was the wrong time because Europe wasn't an issue,
:30:20. > :30:24.now we are told it is the wrong time because Europe is an issue.
:30:24. > :30:27.Let the people decide. How would it work? You could do worse than
:30:27. > :30:31.looking at the two examples you cited in your film there, Norway
:30:31. > :30:34.and Switzerland. They are in the European free market, but outside
:30:34. > :30:37.the common agricultural policy, and the common fisheries policy. They
:30:37. > :30:42.pay only a token contribution to the EU budget. They control their
:30:42. > :30:45.own borders and human rights issues. In Switzerland it is completely
:30:45. > :30:53.different, Switzerland doesn't regard itself as being a force in
:30:53. > :30:55.the world, the UK does? It is the absolute rule of this, when you are
:30:55. > :30:57.discussing aspects of their relationship with the European
:30:57. > :31:01.Union, you are always told a separate thing about the country.
:31:01. > :31:06.You asked me about what would be the motdle for us -- model for us,
:31:06. > :31:10.the key thing is both Norway and Switzerland export substantially
:31:10. > :31:14.more per capita to the European Union than we do. They sell more in
:31:14. > :31:18.percentage terms from outside than we do from the inside. Which is
:31:18. > :31:23.what makes a nonsense of the claim about three-and-a-half million jobs.
:31:23. > :31:28.My job depends on it, and a couple of other eurocrats and others.
:31:28. > :31:33.would lose your job? Free to trade with the rest of the world, outside
:31:33. > :31:38.the euro. Let's put that to Mr Campbell, what you were talking
:31:38. > :31:41.about, jobs depending on it, Daniel Hannan's point is more jobs would
:31:41. > :31:45.be cailted and there would be greater -- created and there would
:31:45. > :31:49.be greater flexibility to trade outside the European Union? We are
:31:49. > :31:52.free to trade with north and south America, which explains why the
:31:52. > :31:58.British Government for example, hold on, let me finish. Let him
:31:58. > :32:02.finish. In the last few months has been exercising very strong
:32:02. > :32:05.diplomatic activity, in relation, for example, to Brazil. We are not
:32:05. > :32:10.prevented from trading with other parts of the world. But the
:32:10. > :32:15.European Union does allow us access to a single market, with freedom of
:32:15. > :32:19.capital, freedom of persons and freedom of services. Let's move
:32:19. > :32:22.this on politically. They are not bound by the common external tarrif.
:32:22. > :32:27.There is no doubt, is there not, that Barack Obama look at Britain
:32:27. > :32:31.as being part of a European bloc, we are more powerful because we are
:32:31. > :32:35.part of that bloc? At the risk of stating the obvious, you are more
:32:35. > :32:39.influential in the world if you have your own foreign policy rather
:32:39. > :32:43.than contracting it out to Baroness Ashton and the EU diplomatic
:32:43. > :32:46.service. To make the most obvious point, when we joined the European
:32:46. > :32:50.Union, we thought there would be a trade off of economics versus
:32:50. > :32:54.politics. Yes, we would lose a bit of sovereignity, and democratic
:32:54. > :32:58.self-rule, that was a bad thing, on the other hand we would be, we
:32:58. > :33:01.thought, gaining access to this vast, growing market. It doesn't
:33:02. > :33:04.look that way today. The European Union is dwindling as a percentage
:33:04. > :33:11.of the world. It was 38% of the world economy in western Europe
:33:11. > :33:14.when we joined, it is now 25%, it will be 15% in 2020. We crazely,
:33:14. > :33:19.while shackling ourselves into the European Union, turned our backs on
:33:19. > :33:29.the developing markets and the Commonwealth and wider anglo-sphere,
:33:29. > :33:31.
:33:31. > :33:37.which is where the growth is. idea that by walking out we would
:33:37. > :33:41.some how, overnight, achieve something infinately better, simply
:33:41. > :33:44.isn't supported other than anything other than speculation, we have the
:33:44. > :33:48.opportunity to trade elsewhere in the world. We also, through the
:33:48. > :33:54.European Union, have the capacity to protect ourselves, when we are
:33:54. > :33:58.the subject of the kind of thing, happened not all that long ago in
:33:58. > :34:01.this country, when the Americans used restrictions against cashmere
:34:01. > :34:06.exports in Scotland to boost their claim that there should be a
:34:06. > :34:09.different policy in relation to bananas. We couldn't write of the
:34:09. > :34:13.rules in the single market, that would be a problem for us, we would
:34:13. > :34:17.be excluded? Our exporters would have to meet EU standards when
:34:17. > :34:21.selling to the EU, just as they meet Japanese standards selling to
:34:21. > :34:25.jappafpblt I come back to the point, Norway and Switzerland sell more to
:34:25. > :34:29.the EU, Norway two-and-a-half times as much per head as we do, and
:34:29. > :34:35.Norway four-and-a-half times. They are in splus plus, we are in --
:34:35. > :34:40.surplus, we are in deficit. We have run a cumulative trade surplus with
:34:40. > :34:44.every continent in the world, except Europe. Are we really to
:34:44. > :34:49.believe that four million Norwegians, seven million Swiss,
:34:49. > :34:53.relying on trade agreements, furnishing their people with the
:34:53. > :34:58.highest standards in Europe, wouldn't be able to survive running
:34:58. > :35:01.its own affairs in its own interest is the United Kingdom.
:35:01. > :35:04.The Diamond Jubilee wasn't a picnic for everybody, thousands worked
:35:04. > :35:08.hard stewarding the whole affair, keeping audiences safe, happy and
:35:08. > :35:13.in the right place. Now Lord Prescott is has been leading the
:35:13. > :35:16.cause for a stewards inquiry, after it emerged that unemployed people
:35:16. > :35:19.from Bristol, Bath and Plymouth, were bused to London, and left
:35:19. > :35:25.under London Bridge to spend the early hours of the morning, and
:35:25. > :35:29.paid nothing for their stewarding efforts. It was, according to the
:35:29. > :35:32.Government's work programme, work experience, for others it was
:35:32. > :35:38.nothing but a horrible experience. 700 boats, a million people lining
:35:38. > :35:43.the Thames. Thousands of street parties across
:35:43. > :35:48.the UK. It was a very British Jubilee, in very British weather.
:35:48. > :35:53.But, as the long weekend came to a soggy close, we began to learn more
:35:53. > :35:57.about the treatment of security staff working behind the scenes.
:35:58. > :36:01.In the early hours of Sunday morning, coachs from Bristol, Bath
:36:01. > :36:05.and Plymouth, arrived here at London Bridge, full of, mainly
:36:05. > :36:09.young people, ready to carry out a day's work, as trainee stewards.
:36:10. > :36:12.Many were here as part of the Government's work experience
:36:12. > :36:18.programme, knowing they wouldn't get paid, but hoping for something
:36:18. > :36:21.permanent in the future. Some of those coaches arrived at
:36:21. > :36:24.3.00am, earlier than expected. Workers were told they should get
:36:24. > :36:30.some rest for a few hours under the bridge, before starting a full
:36:30. > :36:35.shift in the rain. If I do that there is jobs that I can do, paid,
:36:35. > :36:39.come off of benefits, I have been on benefits for a little while now.
:36:39. > :36:42.I'm getting fed up of being one of these people that cannot get a job.
:36:42. > :36:47.There is no jobs out there, not really, you know, it is hard to
:36:47. > :36:52.come across a job, and I thought, well, this job seems really good, I
:36:52. > :36:55.got offered the job, I took it. I think they took advantage of people.
:36:55. > :37:00.The stewards were taken on as part of the Government's Work Programme,
:37:00. > :37:04.they were directly employed by a firm called Close Protection UK,
:37:04. > :37:09.which Newsnight has learned, has also won two separate contracts to
:37:10. > :37:14.supply security staff for the Olympic site. The company's
:37:14. > :37:18.contracted and gets paid to take these people on, was it paid to
:37:18. > :37:21.take unpaid labour? Secondly, they have an obligation to make sure
:37:21. > :37:25.they look to the social welfare of the people that they are involved
:37:25. > :37:29.in. They totally failed in. That they looks a if they are in breach
:37:29. > :37:33.of their contract. This isn't just about, you know, a few volunteers
:37:33. > :37:38.going together and hoping for a job, clearly they were. This company is
:37:38. > :37:42.being paid, and has abused its position n my view. Close
:37:42. > :37:52.Protection UK has apologised for what it says is a small number of
:37:52. > :38:01.
:38:01. > :38:05.staff who complained. In a This case raises more questions
:38:05. > :38:09.about the Government's welfare-to- work policies, one of the scheme's
:38:09. > :38:13.largest private contractors A4e, is currently the subject of two police
:38:13. > :38:16.investigations over allegations of fraud. And the Government was
:38:16. > :38:22.forced to change a related work experience scheme earlier this year,
:38:22. > :38:27.after more protests over the use of free Labour. In this separate case,
:38:27. > :38:30.described as an isolated incident by the Government, the charity
:38:30. > :38:34.Tomorrow's People, placed the Jubilee workers with Close
:38:34. > :38:38.Protection UK, the organisation, run by the Conservative peer,
:38:38. > :38:42.Baroness Scott, is being paid �3 million this year for Government
:38:42. > :38:46.work. There is a lot riding on this for the Government, it launched the
:38:46. > :38:50.flagship work programme a year ago this -- Work Programme, a year ago
:38:50. > :38:54.this week. The promise, to help more than two million people into a
:38:54. > :38:58.job by 2016. It will be the unemployment statistics that decide
:38:58. > :39:04.the success or failure of that policy. If those numbers start to
:39:04. > :39:08.fall, those allegations of exploitation, could be quickly
:39:08. > :39:13.forgotten. I'm joined from Liverpool by Baroness Scott, who is
:39:13. > :39:20.the CEO of Tomorrow's People. Baroness Scott, what due diligence
:39:20. > :39:26.did your company do before you sent these unemployed people to work
:39:26. > :39:29.with CPT? Well, our relationship with CP UK, has been going on now
:39:29. > :39:35.for six months. We have placed people with them, locally, in the
:39:35. > :39:38.Plymouth, Bristol and Bath area. All our experience of them is they
:39:38. > :39:42.have honoured every obligation to look after them, and have a duty of
:39:42. > :39:48.care, and provide them with good training. This was a distance they
:39:48. > :39:52.had to come from Bath and Plymouth. Was due diligence done by Close
:39:52. > :39:59.Protection UK about bringing these unemployed people to London, making
:39:59. > :40:02.sure their four-day work experience, including the overnight, was
:40:02. > :40:06.properly managed, and their welfare was properly looked after? If you
:40:06. > :40:10.will allow me to finish, all our experience gave us confidence that
:40:10. > :40:14.the preparations they had made for the trip to London, and the
:40:14. > :40:19.experience would be met in the same way as it had been locally. And
:40:19. > :40:24.what happened was...You Didn't do due diligence on this particular
:40:25. > :40:28.trip? We did due diligence on CPUK and we had every confidence that
:40:28. > :40:32.the arrangements in place were in the best interests of our clients.
:40:32. > :40:36.You said the experience over the last six month, I didn't ask that,
:40:36. > :40:42.I asked what due diligence you did on their preparedness to actually
:40:42. > :40:47.prepare for this trip to London, by these people, on buses? All the
:40:47. > :40:51.information we received and saw from CPUK was that the same level
:40:51. > :40:56.of care and duty of care to our clients on this trip would be the
:40:56. > :41:00.same as those locally. You saw the paperwork? My staff were in liaise
:41:01. > :41:06.on with them. As I understand it, all the due diligence and the duty
:41:06. > :41:10.of care, we had every confidence. The thing is that Tomorrow's People
:41:10. > :41:15.as a charity and provides people for the Work Programme, and it gets
:41:15. > :41:19.�3 million, and there is one person on �100,000 and eight people on
:41:19. > :41:23.�50,000 a year, and when you look at what happened to unemployed
:41:23. > :41:27.people w no power in this situation, who desperately want jobs, it could
:41:27. > :41:31.be seen as ripe for exploitation, it could be seen that way? No, it
:41:31. > :41:35.depends on how you want to look at this. At the end of the day, let me
:41:35. > :41:39.be clear, what happened when the coach dropped these people off,
:41:39. > :41:44.earlier than they should have done, and didn't allow them to stay on
:41:44. > :41:48.the coach was unacceptable. CPUK have issued an unreserved apology,
:41:49. > :41:53.we do the same. What we have to do is be really careful, work
:41:53. > :41:58.experience is a vital element in an unemployed person's journey towards
:41:58. > :42:02.getting to work. And we have got to be really careful. We do not give
:42:02. > :42:06.the impression that work experience is not valuable and it is
:42:06. > :42:10.exploitation. What this does appear to look like, is that it was sloppy
:42:10. > :42:14.and it didn't really matter, and what I was wondering was, in the
:42:14. > :42:17.light of what has happened, have you changed your relationship with
:42:17. > :42:22.CPUK, and are you going to make sure that something like this could
:42:22. > :42:25.never, ever happen again? The first thing we have done is we have spent
:42:25. > :42:30.our time speaking to every client who was involved in the work
:42:30. > :42:34.experience in London, to make sure they are OK, and to get their
:42:34. > :42:38.feedback. That's involved our staff doing that. We are now looking at
:42:38. > :42:43.our elements of the experience, and of all the arrangements in place,
:42:43. > :42:50.and I can tell you that we will not allow this to happen again in the
:42:50. > :42:53.way that it did. But, let me tell you also, that having spent,
:42:53. > :42:56.Tomorrow's People, 30 years, really understanding what it is like for
:42:56. > :43:00.unemployed people, we have been told by the majority of clients
:43:00. > :43:04.that were on this experience, that notwithstanding the situation that
:43:04. > :43:08.happened that shouldn't have done, they would be livid if this
:43:08. > :43:15.prevents them, or spoils the opportunities that CPUK are going
:43:15. > :43:20.to present them with the Olympics. Thank you very much.
:43:20. > :43:27.The weekend Diamond Jubilee coverage of the River Thames pagent
:43:27. > :43:32.on television attract 717 million people in the UK. How was it
:43:32. > :43:35.reported elsewhere in the world. We have been trawling the tapes and
:43:35. > :43:38.will go over at the Newsnight Jubilee Desk.
:43:38. > :43:43.Thank you, you know what, conditions are terrible here, but
:43:43. > :43:47.we are not going to let the weather dampen our enthusiasm. If I had a
:43:47. > :43:54.�1 for every time I heard that last weekend, I would be richer than the
:43:54. > :43:57.man with the kaing gull concession on the South Bank -- kag ol
:43:57. > :44:01.concession on the South Bank. I have been up four straight nights
:44:01. > :44:05.covering the Jubilee. What have others made of the party thrown by
:44:05. > :44:14.Great Britain. It was a magnificent spectacle, you could almost see
:44:14. > :44:21.through the inside of a car wash, that is England in juend. When an
:44:21. > :44:26.oskes tra starts up, first Charles -- orchestra starts up, Prince
:44:26. > :44:30.Charles takes up his sword, and then Camilla takes a lead, then the
:44:30. > :44:34.family dances. They are not dancing, they are shivering. From New
:44:34. > :44:40.Zealand, home of rugby players and Shaggy shepherds, a complaint about
:44:40. > :44:43.the British weather. Dozens of rowers in the Queen's
:44:43. > :44:47.Diamond Jubilee pagent, including a New Zealander, caught hypothermia
:44:47. > :44:52.during the seven hours they were on the Thames. Organisers had been
:44:52. > :44:57.worried the choppy tide might be a safety risk for the Kiwi crew, it
:44:57. > :45:03.was the cold conditions that caused trouble in the end. And Moscow got
:45:03. > :45:10.right behind the spectacle, talking about Britain's "pompus
:45:10. > :45:14.festivities", oh those Russians. It's brilliant to be British, and
:45:14. > :45:18.with 60 years of Her Majesty on the throne, there is no better time to
:45:18. > :45:22.fly the flag and mark the occasion with a huge celebration. That is if
:45:22. > :45:26.you can forget about the job cuts, slashed wages, petrol hikes and
:45:26. > :45:32.rising education costs, in fact, unless you are among the Royal
:45:32. > :45:39.Courts, you might be finding it hard to get festive.
:45:39. > :45:48.Not to be outdone, Italian television hired Lord Sugar for
:45:48. > :45:55.their coverage! The Queen's Diamond Jubilee celebrations got off to a
:45:55. > :46:01.wet and windy start in London at the weekend. Looks like a trip to
:46:01. > :46:05.the tower,or Taiwanese TV, less say Her Majesty is more. Which of us
:46:05. > :46:09.will easily forget that extraordinary concert at Buckingham
:46:09. > :46:14.Palace, that said, there have been some complaints about the BBC's
:46:14. > :46:18.coverage, its tone, the level of knowledge. We have the little royal
:46:18. > :46:22.teabags here. They are just chilling out. This is one of the
:46:22. > :46:28.more unusual things. If you have eaten too much you can vomit into a
:46:28. > :46:34.Jubilee sick bag. How lovely is that! National Theatre, the Royal
:46:34. > :46:39.Festival Hall, we have some Semaphore on the Royal Festival
:46:39. > :46:44.Hall. You can understand that, can't you? I haven't got a clue.
:46:44. > :46:49.More than ten million viewers watched the river pagent. There
:46:49. > :46:52.have been over 2,000 complaints to the BBC. But director-general, Mark
:46:52. > :47:00.Thomson, said he was very proud of the coverage. That's just about all
:47:00. > :47:07.from Newsnight tonight, before we go, the science fiction and fantasy
:47:07. > :47:14.writer died tonight. We leave you with classics from Fahrenheit 451.