16/10/2012 Newsnight


16/10/2012

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Over the last decade �3 billion worth of UK sales, for the last

:00:14.:00:18.

three years, not a bean in corporation tax. The coffee chain,

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Starbucks, isn't the only one in the firing line over their rogue

:00:22.:00:26.

tax rates, but they have done nothing illegal, so why should they

:00:26.:00:30.

pay any more? It is not fair, if they are not paying it in the UK,

:00:30.:00:33.

would they be able to operate their businesses in the UK if they were

:00:33.:00:37.

paying the right amounts. Would harder enforcement just send

:00:37.:00:45.

businesses elsewhere, or is the Government asleep on the job. The

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BBC has asked a former judge to investigate the practices of the

:00:50.:00:55.

BBC during Jimmy Savile's time there. And a report on the decision

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by Newsnight to drop a report on Savile's sex abuse. The Government

:01:00.:01:03.

will declare that thousands more schools in England aren't up to

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scratch, what should happen to them, should they be forced to become

:01:06.:01:10.

academies, or forced to be taken over by private firms. There are

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6,000 schools that are satisfactory, and satisfactory is not really what

:01:14.:01:18.

people think normally means as satisfactory, it is no longer good

:01:19.:01:22.

enough. The former head of David Cameron's Downing Street team is

:01:22.:01:27.

here to debate with the head of a head teaching union. As inflation

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rises faster than wage, meet the people coping with the squeeze by

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turning to discount supermarkets. You mean like my Pot Noodles, where

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they are four for �26789 That is a lot of Pot Noodle!

:01:41.:01:46.

The winner is: Bring Up The Bodies, by Hilary Mantel. We will hear from

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the Booker Prize winner, shortly, the first woman to win is twice.

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Good evening, named after a character in Moby Dick, Starbucks

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is the whale of the coffee world, very possibly the biggest coffee

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house company on the planet, in the midst of a rapid expansion

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programme in the UK, as drive-thru coffee becomes the next big thing.

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Do the people who hand over the �3.55, including VAT, for their

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large skinny mocha cappuccino, know that this company paid no

:02:25.:02:29.

corporation tax in the UK at all in the last three years. This after

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revelations about other giants and their corporation tax, including

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Google and Amazon. Here is a man who knows how to

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shave a few quid off his tax bill. Jimmy Carr, the renowned comedian

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and tax avoider, here promoting Starbucks extra-strong coffee,

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specifically for the British palate. Have a coffee. One suspect that is

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many people who can't avoid tax will be frothing at the mouth today.

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The world's most famous coffee chain told the UK tax man that it

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hadn't made a penny in profit over the past three years. Which is

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unusual for a company with a turnover of �1.2 billion, and

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without highly-paid staff, nor heavy capital investment to deduct.

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And while Starbucks concedes it has paid VAT and national insurance in

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full, company House records show it has only paid �8.6 million in total

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in corporation tax since 1998. That seems to clash with what Starbucks

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is telling its shareholders, though. Who were told in multiple

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conference calls that the UK business was highly profitable.

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They have lapped up the 130% spike in share values over the past three

:03:43.:03:53.
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years, despite a global recession. So how do they do it? All those

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Starbucks didn't -- although Starbucks didn't invent coffee t

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pays heavy patent fees to the headquarters T pays patent fees to

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the Netherlands, for specific use of coffee beans, it pays Swiss

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taxes which are lower for other services. Independent retailers

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like this may not like it, but Starbucks has a legal

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responsibility to minimise all its cost, that includes corporation tax.

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The company told Newsnight that all the tax apayers were up-to-date

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with HM revenue and custom, and indeed, it was audited as recently

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as two years ago. If you think Starbucks is the only US mult

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national minimising its corporate tax like this, think again. Only

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last year it emerged that Facebook had paid an effective corporation

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tax bill of one eighth of one periods of UK schools, by routeing

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its profits by low-tax Ireland, as does Ebay and and Amazon. If

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everyone appears to be avoiding tax, who is fuelly paying it? A study --

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actually paying it? A study from Oxford University found the larger

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amount of tax is paid by 1% of companies. The larger firms can

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avoid paying tax by moving losses to low tax countries and profits to

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low tax companies. 15% pay no UK tax on their UK operations at all.

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Do independent UK coffee owners begrudge Starbucks UK tax

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chicanery? Yes, it is not fair. If they operated the UK, could they

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afford to operate in the UK if the figures were the right amounts. It

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is the Government's money, they are operating in the UK, it is the

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Government's money, and there are people out there finding ways to

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get round the Government. The Government needs to find ways of

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simplifying the tax system, so you can't get away with these things F

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they want the money. If someone is taking all that money away from me,

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I would find a way to stop them doing it. Given how fickle

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consumers are, could Starbucks now face a mini-boy got. We are

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creating an unlevel playing field in the UK market here, where UK-

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based companies are losing out, suffering unfair competition from

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international companies not paying tax, and that is going to create a

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backlash, not just from consumers, I suspect. But very much from small

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business organisations, and small business itself, who will be

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turning around to MPs and saying, hang on, how have you created a tax

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system, that penalises me from trading in my own country, and

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which favours a foreign company. Starbucks is a by-word for frothy

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coffee all over the world, and has many friends in high place. But in

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a time of tax rises for most, and cutbacks for all, will those

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friends stay loyal? Especially if it becomes obvious that we are not

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all in this together. Joining me are Roy Hodgson, the

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chair of the Public Accounts Committee, and John Whiting, George

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Osborne's tax simplification Tsar. The thing is, they are doing

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absolutely nothing illegal, and moreover, Starbucks has a duty to

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their shareholders to pay as minimal amounts of tax as they can?

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That is true, but if you are an ordinary person, watching that film,

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Kirsty, and you pay your tax, unquestioningly, I think you will

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be really frustrated, and absolutely furious, that you find,

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yet another, global company, making big profits, and managing to avoid

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paying their fair share of tax. It is just not fair. You, John Whiting,

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are in charge of tax simplification, yet there is all sorts of different,

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myriad ways, that they actually manage to post a loss in Britain.

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Whatever it is, over �398 million worth of sales, last year. And not

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a meny of profit? It does raise a lot -- Not a penny of profit?

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does raise a lot of questions, I'm quite sure HMRC will be watching

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this programme, looking. If I could just interrupt a second, if they

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may be watching it, but it took a Reuters investigation to find it?

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That misthe point. The tax money is routine -- misses the point. The

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tax money is routinely checking companies, checking the cross-

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pricing referred to in the report. I know there are different branches

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of HMRC, isn't the problem, it is a lot easier for HMRC to go after the

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pensioner who has forgotten a couple of investments and goes over

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the threshold and get �90 off her, than the bigger companies? This is

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one of the great issues, that a challenge for HMRC is to show they

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are applying the tax law, evenly, equally, fairly to all. We all are

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supposed to pay tax, under the law, that's the core thing. HMRC, seem

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to find it very difficult to work this one out? There are three

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things I would look to the future, how to deal with the continuing

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problem with tax avoidance as well as tax evasion. The first thing I

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would say is we have to have better transparency, I have been arguing

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for some time, for example, with the FTSE top 100, public companies,

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there ought to be complete transparency by what HMRC think

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they should pay, and what they end up paying. Everybody hides behind

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taxpayer confidentiality. Can I say something about this particular

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company. This company filed accounts in companies House that

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said they were making a loss -- Companies House, that said they

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were making a loss and then told shareholders they were making 50%

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profit. Is this global capitalism, maybe you have to suck it up?

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think Companies House should be tougher in insisting that the

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filing of accounts are a true and honest reflection of what happened.

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That is the first thing, transparency, the second thing is

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simplification, I'm delighted John is doing that work. The problem is

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it has got so ruddy complex, people find ways around it, there is an

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army of very highly-paid barristers who do that. Isn't there an army

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behind you, that is what I want to know. We have tax lawyers, we have

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tax specialists, only hired to make sure that companies pay minimal tax,

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how many people have you got working on the tax simplification

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system? We have a staff effectively of slightly under six. Six?! It is

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doing certain projects, I have a lot of back-up with colleagues at

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the Chartered Institute of Tags taxation as well. Does George

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Osborne know you only have six? set us up, it is all credit to the

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Government in saying, we are an experiment, saying can we make a

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difference. There is a lot of credit to George Osborne and David

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Gauke, our sponsoring minister, for saying we do need to tackle

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simplification and make a difference. I wopbl make a

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difference in simplifying the whole sis -- won't make a difference in

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simplifying the whole system in the relative five minutes we have got.

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We can make a start. Maybe things like this show we need to get hold

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of it. Isn't there a danger that the companies are always ahead of

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what John Whiting is doing? That is the third thing, I think

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transparency, simplification, and the third thing, you have to have

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enough people in HMRC, actually who have the right and appropriate

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skills to take on the lawyers and the accountants, who make a lot of

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money. We need HMRC properly staffed. We need it to be open. At

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the moment we don't see it. Later in the programme we're going to

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have a film about what happens in a recession, and discount shop to go

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get the cheapest deal. I wonder, if we always see people with cups of

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coffee in their hand in the streets, I wonder with a number of these

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companies that the consume point of view makes a difference and you

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will see boycotts. If you had greater transparency, and people

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know Starbucks isn't paying its fair tax. It is legally paying fair

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tax? It is not paying fair tax, I'm not buying Starbucks, you think

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everyone should buy Costa. Last night, the Labour leader, Ed

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Miliband, called for a public inquiry into the allegations

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surrounding the late Jimmy Savile, the BBC, the NHS and other

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institutions. Today in the House of Commons, the Deputy Prime Minister,

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Nick Clegg, said there may be a case for one. Today, we also got

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more details on the two independent inquiries, the BBC has set up into

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the historic allegation, and in the decision on Newsnight to drop the

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investigation into Jimmy Savile last year Jim is here with more.

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The BBC first announced the two investigations at the tailend of

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last week. End to we are getting a lot more detail about both of them.

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Two separate inquiries, as you say, set up by the BBC the. --. The

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first one is Dame Janet Smith, best known for the Harold Shipman

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inquiry, she will look at the broader inquiry, looking at the

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culture of the corporation, the practices of the corporation, at

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the time when Jimmy Savile was employed there. It will also hear

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evidence, importantly, from people who say they were abused by Mr

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Savile on BBC premises. It won't start work straight away, it will

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delay the start of the inquiry until the police give it the go

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ahead, so it doesn't get in the way of a criminal investigation. That

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is the one that doesn't start until the police investigation is over,

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more immediately is the other investigation into Newsnight's

:13:40.:13:44.

handling of the story? This one will start straight away, with the

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utmost urgency, say the BBC. will be chaired by the former head

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of Sky News, Nick Pollard, a broader review than we thought. Its

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primary objective is to look at if there were any failings in the way

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that Newsnight report last year was handled. There was suggestion that

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is BBC representatives put pressure on Newsnight, because there were

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tribute programmes in the run-up to Christmas last year. In the broad

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look at issues, what is going to happen? Two key areas we weren't

:14:23.:14:26.

100% expecting. One was the BBC's handling of material in this

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investigation, that could have been passed on to the police and other

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relevant authorities, it isth will look into that. And whether the BBC

:14:35.:14:39.

should have broadcast the two tribute programmes. If the BBC

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executives knew Newsnight was in the process of putting an

:14:43.:14:46.

investigation into process on Jimmy Savile's actions. The Government

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has made big promises of getting rid of failing schools, a crucial

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part of the plan will be tougher to be tougher when it comes to rating

:14:56.:15:01.

schools' performance what do you do with problems schools. David

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Cameron's former Head of Policy has set set out in a report for Policy

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Exchange, his first since leaving Government, he says schools

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shouldn't be taken out of local authority control and made into

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academies, but turned over to not for profit firms.

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There used to be a time when schools to be "satisfactory", now

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you can get satisfaction, it is not very satisfactory. As the Stones

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didn't sing. As of January, a new regime for schools, has decreed

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enough isn't enough. Schools well regarded under the old regime are

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now no longer. The new inspection regime will mean

:15:46.:15:50.

that more schools will fail. Many hundreds of schools could fail. So

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what do you do with those schools? Until a year ago, this man was the

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Prime Minister's Head of Policy inside Number Ten. Now outside of

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Government, James O'Shaughnessy thinks the failure rate in schools

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will sore in -- soar in coming years, and his former colleagues

:16:09.:16:13.

haven't worked out how to deal with this. There are 6,000 schools that

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are satisfactory, and satisfactory is not really people think norm

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yeahly means satisfactory, satisfactory is no longer good

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enough. For the idea he has come up with, is schools should be turned

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around like this place, which 20 years could have been described as

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a sink school. This is now an academy, and part of a Shane. James

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O'Shaughnessy thinks more schools could be turned out like this. This

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is one of the Harris academies, a not for profit network of 19 across

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London, growing to 24 next year. This man was once the headmaster of

:16:46.:16:50.

one of the academies, then he was headmaster of three, that became a

:16:50.:16:54.

bit unwieldy, he's chief executive of the lot. Of the 19, 11 were

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found to be outstanding by Ofsted. There are 3,000 applications for

:16:59.:17:02.

the 180 places that line these corridors. I think that groups of

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schools, working together, collaborating, generating economies

:17:06.:17:10.

of scale, sharing good ideas, is a model that would work for the whole

:17:10.:17:14.

country. And the evidence is that groups of three or more schools

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working in a federation produce better results, more quickly, than

:17:17.:17:22.

schools working on their own. Collaboration, and pooling ideas

:17:22.:17:27.

and resources, is common sense, I think. The first thing we know is

:17:27.:17:30.

academies work, the academy programme has been around for ten

:17:30.:17:36.

years, there has been various academic research that shows it

:17:36.:17:39.

improves results. It doesn't turn around all schools, some problems

:17:39.:17:44.

are too deep. We have this new fep no mam number, academys chains,

:17:44.:17:48.

three or more schools, that look like they are better at improving

:17:48.:17:51.

standards than single academies, if turning into an academy doesn't

:17:51.:17:57.

work, you need to put those schools into successful academy chains.

:17:57.:18:01.

Finally there needs to be an option f that doesn't work, state hasn't

:18:01.:18:04.

worked, voluntary sector hasn't worked wrecks should look at the

:18:04.:18:08.

private sector and asking them to come in - worked, we should look to

:18:08.:18:12.

the private sector and ask them to come in on performance contracts

:18:12.:18:22.
:18:22.:18:26.

and asking them to turn the school At this last count 31% of Britain's

:18:26.:18:31.

secondary schools, that's 963 schools were graded "satisfactory",

:18:31.:18:36.

while they won't be retrospectively accused of failing, a repeat

:18:36.:18:38.

performance at their next inspection, would be considered a

:18:38.:18:42.

fail. There is, however, a fierce debate about whether academies do

:18:43.:18:49.

actually deliver better results. Bringing in a three-teir, cascading

:18:49.:18:55.

systems, which sees failing schools added to a chain or private

:18:56.:19:03.

provider, shows that as James O'Shaughnessy feels the academies

:19:03.:19:07.

can't deal with all problems. It is thought by some that it sets

:19:07.:19:11.

schools up to fail. This is a false story about schools. Some are doing,

:19:11.:19:15.

by and large very well, some schools need extra support, and

:19:15.:19:18.

some schools with children who are poor. The Government needs to do

:19:18.:19:21.

something about the poverty many children face. It isn't the case

:19:21.:19:24.

that our schools, by and large, are doing badly. They will not be

:19:25.:19:29.

improved by this profit-making firms taking them over. If we don't

:19:29.:19:32.

do something about it, you are telling thousands of schools, and

:19:33.:19:35.

more importantly the children in the schools, we think you are not

:19:35.:19:39.

good enough, but we don't have the wherewithal to do anything about it.

:19:39.:19:42.

That is a real world problem for those children. Politically that

:19:42.:19:47.

makes you look incompetent. Looking incompetent, in the years

:19:47.:19:52.

and months ahead of a general election. Will there be more

:19:53.:19:55.

failing schools will it mean this Government has failed.

:19:55.:19:59.

Author of that Policy Exchange report, James O'Shaughnessy is here,

:19:59.:20:02.

he was director of policy to David Cameron in Number Ten after the

:20:02.:20:09.

general election. Also Mary Bousted, the General Secretary of the the

:20:09.:20:13.

national head teachers union. More breaking news tonight?

:20:13.:20:18.

front page of the times says Michael Gove will rewrite the rules

:20:18.:20:22.

on A-level, we have done this story on the programme before. GCSEs are

:20:22.:20:25.

out, they are being refashioned, A- levels are also being refashioned.

:20:25.:20:29.

What is new about the story, we can say with more certainty what is

:20:29.:20:33.

going. We now know, it has confirmed this evening, that resits

:20:33.:20:37.

in January will go. Or rather moduals taken in January will go,

:20:37.:20:43.

resits will go. All resits? I think so. The Government is trying to put

:20:43.:20:47.

universities back in control of some kind of standards. And this,

:20:47.:20:51.

our story reflected, and this reflects, that universities don't

:20:51.:20:54.

feel this brings forward to them the calibre they would like. The

:20:54.:21:00.

particular emphasis of this means there will be an A-Bach, the

:21:01.:21:05.

Baccalaureate, the Times says it is the scrapping of A-levels, it is

:21:05.:21:09.

not, the A-level will remain, but the form of what you will sit. If

:21:09.:21:13.

you are a science student you will have to sit some arts, if you are

:21:13.:21:17.

an arts student you will have to do a lot of maths. We want to talk

:21:17.:21:22.

about the pressure in schools, this is going to presumably put massive

:21:22.:21:25.

pressure on schools. A better, clearer idea of putting

:21:25.:21:29.

universities back in charge, not endless resits? The problem with

:21:29.:21:33.

this is, if you do exam reform properly, you have to take time,

:21:33.:21:36.

get a political consensus and get schools on board. Our experience,

:21:36.:21:39.

what we are hearing from universities, is actually, they

:21:39.:21:45.

don't want to get that involved. They are not given the time. They

:21:45.:21:48.

want better exams and higher standards, but they don't want to

:21:48.:21:52.

get involved in the nitty gritty of A-levels and the syllabuses. So,

:21:52.:21:56.

you know, this is, yet another, very hurried announcement, released

:21:56.:22:00.

through the media, not take schools or teachers seriously. From your

:22:00.:22:05.

point of view? We will see the real concert. If it is getting rid of

:22:05.:22:09.

resits and modual, that means more rigour, that is a good thing,

:22:09.:22:12.

universities certainly need to have more input, that is how, they are

:22:13.:22:17.

the recipients, if you like, of A- level students, and breath is a

:22:17.:22:22.

good thing. The Bach breath is one of the downsides of A-levels is

:22:22.:22:31.

specialising too early. This is interesting tough stf. Let's turn

:22:31.:22:39.

to -- interesting stuff. You might debate about the schools failing,

:22:39.:22:43.

we have a radical education secretary, but you want to bring in

:22:43.:22:48.

for-profit for failing schools? problem has been described by the

:22:48.:22:53.

head of Ofsted, the school inspectorate, decribing 2,000

:22:53.:22:58.

schools out of 20,000 schools. is primary and secondary? Which are

:22:59.:23:03.

called satisfactory, it is rating. It is not just my view, he's a

:23:03.:23:07.

former excellent headteacher, it is a view of lots of people in the

:23:07.:23:11.

system. England is described as having a long tale of

:23:11.:23:15.

underachievement in the system, this is the base of mediocrity that

:23:15.:23:24.

we are facing. We are talking about a base of mediocrity, and 6,000

:23:24.:23:27.

failing schools, is that your experience? There are 6,000 schools

:23:27.:23:31.

that are satisfactory. They will not be satisfactory in the future?

:23:31.:23:37.

It depends on what they get in the Ofsted report, many may have

:23:37.:23:40.

improved greatly. That is a 6,000 figure plucked out of the air. Of

:23:40.:23:44.

those schools, the characteristic of a satisfactory school is the

:23:44.:23:48.

quality of teaching in children departments uneven, it is not that

:23:48.:23:52.

they are routinely failing students, it is the quality across the board

:23:52.:23:56.

is not high enough. It is not random figure, 6,000 schools are

:23:56.:23:59.

satisfactory at the moment, 3,000 have been satisfactory more than

:23:59.:24:03.

once, they are coasting schools, not going anywhere. The Ofsted

:24:03.:24:06.

regime has got tougher. So these schools are more likely to be

:24:06.:24:09.

falling into this kind of category. I think there is a real problem

:24:09.:24:13.

here that we need to address. Unless you accept the nature of

:24:13.:24:17.

that problem. Then you can't move forward on to solution. What you

:24:17.:24:23.

are saying, when schools become academies, that in itself doesn't

:24:23.:24:27.

solve the problem, you need chain of academies to create a culture.

:24:27.:24:31.

You are saying if the schools get the new requirement to improve,

:24:31.:24:36.

then actually, there should be no ifs or abouts about it, they are

:24:36.:24:41.

just put out -- buts about it, they are just put out for profit? These

:24:41.:24:44.

academies have been around for ten years, there is plenty of evidence

:24:44.:24:51.

they work, and better than average in improving standards, than other

:24:51.:24:59.

ways, leaving local authority control. I would suggest that these

:24:59.:25:03.

chain add academies to improve results, the results are patchy.

:25:03.:25:06.

Are there enough academies sponsor and chains, to take on board and

:25:06.:25:09.

turn around the thousands of schools that might be told they

:25:09.:25:12.

need to sort themselves out. I'm worried they won't be, we need to

:25:12.:25:18.

be open minded about who can come in and offer help. A for-profit

:25:18.:25:24.

company? There are huge problems, this is James's second go at for-

:25:24.:25:28.

profit in schools. Which was the first one? The Policy Exchange

:25:28.:25:33.

report earlier this year. That wasn't mine. This is the second go

:25:33.:25:38.

at for-profit. My first go! issue is this, the international

:25:38.:25:41.

evidence does not bear out that for-profit schools raise standards.

:25:41.:25:46.

It hasn't happened in the USA. And Sweden, it has plummeted down the

:25:46.:25:50.

interNational League table, and now there is a parliamentary inquiry

:25:50.:25:54.

into for-profit schools. What is the problem in Sweden? The problem

:25:54.:25:59.

with for-profit schools is money which should be spent on pupils is

:25:59.:26:06.

spent sweating the assets so shareholders get a profit. The

:26:06.:26:10.

Miami Herald, $4 million taxpayer dollars goes into for-profit

:26:10.:26:16.

schools, they found students taught in sheds and students charge today

:26:17.:26:21.

graduate. There is a broader point, which is, does the money go into

:26:21.:26:23.

the classroom? Here is an interesting fact N some local

:26:24.:26:27.

authorities a third of children with special educational needs,

:26:27.:26:30.

some of the most vulnerable children are taught in for-profit

:26:30.:26:33.

independent schools. That is something that is a feature of the

:26:33.:26:38.

system. About half of nursery care is delivered by a mixture of

:26:38.:26:42.

charityability and profit-making providers. Elsewhere in the

:26:42.:26:46.

education system, let alone public services. You are not talking about

:26:46.:26:49.

ten schools, you are talking, essentially, it seems to me, that

:26:49.:26:53.

you might be talking about 3,000 schools going out. Do you really

:26:53.:26:57.

think there is the expertise in the for-profit sector? It is a question

:26:57.:27:02.

of scale. To say, the percentage of special schools are very small,

:27:02.:27:05.

they are highly-specialised provision. You would accept some

:27:05.:27:09.

schools are failing children in the state system? Absolutely, there are

:27:09.:27:12.

some schools that need to improve. It is how you do it, you should

:27:12.:27:17.

focus on teaching, not on structures. There are, of course,

:27:17.:27:21.

some brilliant for-profit providers, it is crazy not to call on their

:27:21.:27:25.

help when we need them. A little earlier this evening, the winner of

:27:25.:27:28.

the 2012 Man Booker Prize was announced, Gavin is there, he spoke

:27:28.:27:33.

to Hilary Mantel moments after the announcement.

:27:33.:27:40.

I'm here now in the glild hall with the 2012 and 2009 winner of the Man

:27:40.:27:44.

Booker Prize, Hilary Mantel. Congratulations. To win once is

:27:44.:27:48.

pretty good, to win twice is pretty extraordinary? It is astonishing, I

:27:48.:27:52.

could not be more surprised. What did winning the first time do for

:27:52.:28:00.

you in your career, 2009, until now. It was a huge change in the way I

:28:00.:28:05.

think my fiction was perceived, and a huge change in the public

:28:05.:28:11.

perception of my books. I had a respectable critical press, always,

:28:11.:28:17.

I never had book sales. Wolf Hall bought me 30 foreign publishers.

:28:17.:28:23.

And just an astonishing explosion of interest in my work all together.

:28:23.:28:27.

With Bring Up The Bodies we have already had very gratifying sales,

:28:27.:28:36.

because it is obviously the middle book of a trilogy. It is difficult

:28:36.:28:41.

for me to predict now. I think I had had a good idea that it was a

:28:41.:28:48.

great turning point, when I won in 2009. And this, it is new country,

:28:48.:28:52.

we mains to be seen. Sir Peter Stothard, the chair of the judges

:28:52.:28:56.

said you were inventing the historical novel for the 21st

:28:56.:28:59.

century. One of the things that struck me was the technology of the

:28:59.:29:03.

1530s was very different, but the human relations are something that

:29:03.:29:07.

we are very familiar with. There is mean and nasty, and it speaks to us

:29:07.:29:10.

now, that is one of the reasons, it seems to me, that the book really

:29:10.:29:16.

strike as cord? Yes, it is about regime change, it is about the

:29:16.:29:22.

political process at its grittyist and bloodiest. I don't force

:29:22.:29:26.

contemporary resonances, but if people want to pick them up, that's

:29:26.:29:33.

fine. It's boo two of a trilogy, there is no pressure on -- book two

:29:33.:29:36.

of a trilogy, there is no pressure on the third book, have you begun

:29:36.:29:41.

it? I have begun, he can't say how far along I am, because my method

:29:41.:29:45.

of writing is not that systematic, it is more like making a collage

:29:45.:29:50.

than making a book. I will work on it intensely for the next year,

:29:50.:29:53.

this is my top priority now. As you can imagine. I know there is a

:29:53.:29:58.

great deal of pressure on a Booker winner to go here, and swan about

:29:58.:30:06.

in the world smiling at people. But my dearest wish now, it may not

:30:06.:30:13.

sound grateful to say so, but my dearest wish is to be back at my

:30:13.:30:16.

desk, I have so many ideas, I want to capture them and get to the end

:30:16.:30:20.

of the third book. I was going to ask you something along those lions,

:30:20.:30:23.

I was going to ask you, do you like this kind of stuff. It has been

:30:23.:30:27.

very good for you, it is lovely to be received so well. But you are a

:30:27.:30:30.

writer, and actually that is quite different, it is lonely and

:30:30.:30:35.

different from this? Well, the self who is here tonight, seems to have

:30:35.:30:40.

no real relation to the self who sits at my desk. Because, as I said

:30:41.:30:46.

earlier, when you sit at your desk, you just are a beginner, it is

:30:46.:30:51.

always the first day, prizes don't count, applause doesn't count. It

:30:51.:30:56.

is just you and the struggle with your material. To get out of it

:30:56.:31:04.

what you can. And to serve it, to give it the best view. I know this

:31:04.:31:09.

will all fall into perspective. It won't seem irrelevant, it will be

:31:09.:31:14.

ungrateful to say that. It will get to seem rather beside the point.

:31:14.:31:19.

Once I'm steeped in that world again. Well, thank you very much

:31:19.:31:23.

for talking to us, and congratulations again. Hilary

:31:23.:31:28.

Mantel, 2012 Man Booker Prize winner.

:31:28.:31:31.

For three years now, the average worker has been getting worse and

:31:31.:31:35.

worse off, with pay lagging behind the cost of living. This morning we

:31:35.:31:38.

learned that the official measure of inflation, the consumer prices

:31:38.:31:42.

index, fell in September to 2.2%. But it's still higher than the

:31:42.:31:46.

average increase in wages. Many economists, who think September was

:31:46.:31:49.

as low as inflation is likely to get for a while, with higher bills

:31:49.:31:53.

and food prices likely to push up again. With money buying less than

:31:53.:31:57.

it used to, how are people coping. We have been to south Yorkshire to

:31:57.:32:05.

find out. It's 7.00am, and staff are

:32:05.:32:11.

preparing for the latest chapter in one of the greatest retail success

:32:11.:32:15.

stories in the past five years, the rise and rise of the discount

:32:15.:32:18.

supermarket. Thank you very much for coming to the opening of our

:32:18.:32:23.

brand-new store, and our very first star in Barnsley.

:32:23.:32:29.

This is Britain's 600th Lidl, by 10.30am, this is how busy it is.

:32:29.:32:34.

This is how the people who turn up for the opening try to resist the

:32:34.:32:39.

pressure of the most sustained squeeze on living standards in 70

:32:39.:32:46.

years. Those turkeys are not bad, they are dearer than that anywhere

:32:46.:32:53.

else. Apple juice �3.50, that is a lot. 99p for the cheap version at

:32:54.:32:59.

Aldi. Some of them, give them a try. More than three quarters of us use

:32:59.:33:02.

discount supermarkets like this one. Who is coming here? What financial

:33:02.:33:06.

pressure are they under? And how are they dealing with it? We turned

:33:06.:33:11.

up in Barnsley and asked them. In the recession that began four years

:33:11.:33:16.

a the average person got better off, as fuel prices dropped and interest

:33:16.:33:19.

rates fell, that meant your take home pay would buy you more than

:33:19.:33:23.

ever before. Since then, the average take home pay, in real

:33:23.:33:29.

terms, has fallen. If you are in the low-to-middle income bracket,

:33:29.:33:32.

you are not better off than you were in 2001. That is why there is

:33:32.:33:36.

such a need for people to come to stores like this and try to save

:33:36.:33:46.
:33:46.:33:46.

every penny they can. Jane is what can only be described

:33:46.:33:52.

as a canny shopper. I like steak pies. They are not bad. We will

:33:52.:33:58.

have some of them. She needs to be, Jane knows exactly how much she has

:33:58.:34:02.

left after her mortgage and bills to spend on food, after years

:34:02.:34:10.

living on a part-time cleaner's wage, she has developed a talent.

:34:10.:34:20.
:34:20.:34:20.

Ready Brek, that is cheap, it is �2.95 in more sons, �2.80 in Asda,

:34:20.:34:27.

and �2.92 in Iceland. The hunt for bargains on her end, requires a

:34:27.:34:32.

sharp memory and relentless concentration. This milk is cheaper

:34:32.:34:40.

than Iceland, Morrisons, and Asda. This is how a globalised economy

:34:40.:34:44.

hits you, right in the shopping basket.

:34:44.:34:51.

That pork price on the shelves, reflects a 40% wholesale price in

:34:51.:34:57.

the price of meat since 2007. If you thought it's killing you, think

:34:57.:35:04.

about the pigs, this year's US poor maize crop meant the price in

:35:04.:35:10.

keeping pigs jumped, it led to a slaughter of pigs because farmers

:35:10.:35:15.

can't afford it keep them. Analysts predict a 30% increase next summer.

:35:15.:35:18.

Jane is slightly embarrassed to show us what happens when you are

:35:18.:35:23.

really keen on bargain. You mean like my Pot Noodles, where they are

:35:23.:35:31.

four for �2. That is a lot of Pot Noodles. They were 50p each rblgs

:35:31.:35:37.

usually �1.80 --, usually �1.80 for two. After two divorces and seven

:35:37.:35:42.

children, staying in the black is part of survival. What are the big

:35:42.:35:49.

financial pressures? My mortgage. �408.77, council tax, �14 a week,

:35:49.:35:54.

my electricity, with I pay �20 a week on, water is �500 a year.

:35:54.:36:00.

After you have paid all that, what are you left with? About �150 a

:36:00.:36:05.

month. Enough to have fun with? Because I have to buy food. So the

:36:05.:36:11.

food comes out of that. Yes. After the bills. When you pay for food

:36:11.:36:16.

how much do you have left? About �60. For the whole month. Yeah. But

:36:17.:36:22.

I don't drink, I don't smoke. you been on holiday recently?

:36:22.:36:25.

in 13 years. Can't afford it. haven't been on holiday. No, can't

:36:25.:36:30.

afford it. Inflation was far higher in the 70s

:36:30.:36:35.

and early 80, but back then, wages largely beat inflation, while

:36:35.:36:39.

pensioners fell behind, now it's the opposite. State pensions went

:36:39.:36:49.
:36:49.:36:50.

up by 5.2%, average wages by less than half that. 69p, that's quite

:36:50.:36:58.

cheap. -- 49p, that's cheap. If you are on

:36:59.:37:03.

the minimum wage like Dawn, you might envy pensioner, she works at

:37:03.:37:13.

a local shop, where her pay is going up 1.8%, or 11p an hour.

:37:13.:37:18.

Since 2009, the average household income has fallen in real terms by

:37:19.:37:24.

�2,400 a year, or �46 a week. Supermarkets protect their profits,

:37:24.:37:28.

typically making a margin of anything between 2p and 6p in the

:37:28.:37:33.

pound. How do discounters get their prices so low. We only offer the

:37:33.:37:37.

customer one type of sweet corn, we only produce one type of labelling,

:37:37.:37:41.

one can plant, one production run, also with the economies of the

:37:41.:37:44.

number of stores we have, it means we can really get economies of

:37:44.:37:48.

scale, without compromising on the quality. By having one type of

:37:48.:37:52.

sweet corn, rather than ten, you maximise your buying power and

:37:52.:37:57.

bring the price down. That is how we do it, nothing to do with the

:37:57.:38:00.

quality, but more on how to buy the product. By cutting the number of

:38:00.:38:06.

staff that have to handle the product, Lidl can cut its wage bill

:38:06.:38:09.

and the prices. The other way discounters drive down prices is by

:38:09.:38:15.

cutting out the cost of paying someone to unpack the goods and put

:38:15.:38:20.

them on the shelves, they go from the warehouse, on to the lorry, on

:38:20.:38:25.

to the pallet, and on to her, ready to sell. Have you noticed changes

:38:25.:38:29.

in the cost of living in recent times? Yeah I have. Noticed it the

:38:29.:38:33.

last couple of years. Everything seems to be going sky high. Access

:38:33.:38:37.

to cheap prieks at all supermarkets helps people in Dawn's position

:38:37.:38:40.

doing without. Even with a husband earning, the bills have been

:38:40.:38:44.

rocketing, and there is not much left for fun. Wefrpblgts don't go

:38:44.:38:51.

out often together. We might -- don't get out often together. We

:38:51.:38:55.

might get out once or twice a year. Sometimes we might go out for a

:38:55.:38:58.

couple of hours together on an afternoon. That is not often.

:38:58.:39:02.

much do you have coming in from the part-time work? Just over �140 a

:39:02.:39:09.

week. What does that have to cover? I buy most of our food. I pay TV

:39:09.:39:13.

license, and water. And then my husband he pays the rest of the

:39:13.:39:18.

bills. When I have been paid I sit down and sort it all out what I

:39:18.:39:24.

have to pay out. That is when I find out how much I have left.

:39:24.:39:31.

For now, Dawn's content with zumba twice a week as her quota of fun,

:39:31.:39:35.

her real wage might be falling, but with a son at home, she doesn't

:39:35.:39:39.

want full-time work, as if there was much.

:39:39.:39:43.

Barnsley used to rely for work on mining and manufacturing. Now, the

:39:43.:39:48.

big employers of the public sector, and an internet fashion company,

:39:48.:39:52.

and retailers, around 11% of people here are unemployed, three points

:39:52.:40:00.

above the national average. Two for �2.50 as well. They are

:40:00.:40:10.
:40:10.:40:16.

dearer, them pork chops, I think it is cheap Tory get them at Tescos.

:40:16.:40:20.

Michael and Becky Lewis are raising four children on benefits. Lately,

:40:20.:40:24.

they have been feeling the financial pinch. When we were

:40:24.:40:31.

shopping at Morrisons it was costing us �140, �150 a week. We

:40:31.:40:35.

couldn't give the kids anything nice like biscuit and things that

:40:35.:40:38.

kids like, the treats. We were having proper meals, but we were,

:40:38.:40:44.

we had to budget so, we couldn't get luxuries.

:40:44.:40:48.

Now I write a shopping list and work out what meals every day we

:40:48.:40:53.

will have. If we have pasta three or five times a week it is cheap,

:40:53.:41:00.

that is cheap. We have to know what we are spending and where we are.

:41:00.:41:03.

Becky has been diagnosed with obsessive compulsive disorder,

:41:03.:41:08.

something that robs her of sleep and keeps her on her feet all day.

:41:08.:41:12.

She jokes that in the supermarket it has itss. I have calculated it

:41:12.:41:19.

on my phone, because I'm that worried about overspending, we have

:41:19.:41:26.

three ways round and I have been putting things back.

:41:26.:41:32.

If a drought in the US forced up the price of maize, the floods here

:41:32.:41:39.

in Britain have forced up the price of spuds. Floods have forced

:41:39.:41:46.

importation of -- twice as much in the last few years. When you import

:41:46.:41:51.

you pay higher transport costs. Michael had worked for 20 years in

:41:51.:41:56.

a company when the financial crisis hit. He had been struggling with

:41:56.:41:59.

some of the work because he had been plaged by back injuries, and

:41:59.:42:03.

was selected for redundancy. couldn't do the work, some days I

:42:04.:42:08.

went to work I couldn't even bend over. We are ashamed we have to

:42:08.:42:13.

live on benefits. It just happens that we have been dealt a raw deal.

:42:13.:42:22.

I lost my house. I had a house for 13 years, we had everything. It is

:42:22.:42:26.

rubbish now, to what it used to be like. Can you hope it might, some

:42:26.:42:31.

day, get back to better? I hope things pick up, yeah.

:42:31.:42:35.

It is not only those on the lowest incomes who are under pressure to

:42:35.:42:39.

hunt down the cheapest groceries they can find. Lidl's car park has

:42:39.:42:43.

no shortage of some what pricey cars, and Aldi's sales have grown

:42:43.:42:49.

by a third in just a year. I was just having a look to see what was

:42:50.:42:59.
:43:00.:43:00.

on special, grapes, two for �3, that is all right.

:43:00.:43:04.

Julian Thomson wouldn't say he's exactly hard up, he has two house,

:43:04.:43:09.

one with the mortgage paid off, and thousands of pounds saved up, the

:43:09.:43:17.

fruit of more than � 20 -- of more than 20 years as a driving

:43:17.:43:21.

instructor. He's not getting any richer. In March Julian had to stop

:43:21.:43:29.

work and take ill-health retirement, his income dropped by �500 a month.

:43:29.:43:33.

Stkpwhro the worst financial pressure for Julian is paying --

:43:33.:43:35.

the worst financial pressure for Julian is paying for petrol.

:43:36.:43:39.

Remember when the Chancellor said he would put fuel in the tang of

:43:39.:43:43.

the British motorist, putting off the 3p rise in fuel duty until

:43:43.:43:47.

January. That will kick in quite soon now, meanwhile, the prices at

:43:47.:43:51.

the pumps are already higher than when the Chancellor made that

:43:51.:43:55.

announcement. You could hope that the global slowdown would mean

:43:55.:44:00.

reduced demand for fuel, and that would bring prices down. That is

:44:00.:44:05.

the economic theory, so far it is only a theory.

:44:05.:44:10.

Motorbikes were once Julian's life. These days he watches carefully

:44:10.:44:14.

while his son rides one. Trying not to think what happened to him in

:44:14.:44:19.

2002. Coming up to a round about to turn left at the round about, a

:44:19.:44:25.

lady in the car basically drove straight into me as if I wasn't

:44:25.:44:30.

there, and shunted me into the round about. That is where it

:44:30.:44:35.

pulled everything in my neck and back. I have always thought I could

:44:35.:44:39.

get myself, I could try to get myself better and everything else,

:44:39.:44:44.

and literally I have just got worse and worse and worse, as time has

:44:44.:44:49.

gone on. Did you want to stop work? I went back to work, I was off

:44:49.:44:53.

nearly six months in total from the accident. When the pain got too

:44:53.:44:57.

much and he was forced to retire, a Civil Service doctor told Julian he

:44:57.:45:00.

couldn't do any Civil Service job, yet now Government reforms mean

:45:00.:45:04.

that someone else in the Civil Service is telling him his

:45:04.:45:06.

Employment and Support Allowance will be stopped in February,

:45:06.:45:12.

because one day he might be able to work.

:45:12.:45:17.

My Employment Support Allowance rate will stop. How much is that

:45:17.:45:22.

worth? That is about �400 a month. Just cut off. Just stopped. Despite

:45:22.:45:27.

what happened to his dad, his son, Lewis, feels he doesn't have an

:45:27.:45:30.

alternative to riding a bike. Aren't you tempted to go for

:45:30.:45:34.

something safer, like a car, instead of a bike? I'm not tempted

:45:34.:45:38.

at all, because the insurance is much, much higher than on a bike.

:45:38.:45:43.

Also the petrol usage, the tax, the parking fees. How much would it

:45:44.:45:49.

cost to insure yourself with a car? It depends, it ranges from about �8

:45:49.:45:57.

though to you to �51,000 -- �8,000, to about �51,000 for some insurers

:45:57.:46:01.

to insure me. The Government reports to action it has taken to

:46:01.:46:04.

lift the pressure of the big squeeze on living standards, like

:46:04.:46:08.

raising the personal tax allowance, but so far those measures haven't

:46:08.:46:10.

brought economic growth. We have known about the squeeze on living

:46:10.:46:13.

standards for a while now. Measures have been taken to try to ease it.

:46:14.:46:17.

We have been hunting for bargains, the supermarkets have been bearing

:46:17.:46:22.

down on price, even the Government has been trying to lift people out

:46:22.:46:25.

of taxation, but the measures aren't always well targeted on the

:46:25.:46:30.

people who are getting squeezed the most. It is not really until global

:46:30.:46:34.

commodity prices start to come down, that the pressure on our living

:46:34.:46:41.

standards will start to lift. The economic storms blowing across

:46:41.:46:45.

from the eurozone crisis, and the rest of the world, should have had

:46:45.:46:48.

a silver lining, reduced demand for fuel and food, should bring the

:46:48.:46:54.

cost of living down, but that's yet to happen. Here in Lidl Britain, we

:46:54.:46:58.

now need our bargains like never before.

:46:58.:47:02.

That's all for tonight. I will be back tomorrow, hope you can join me

:47:02.:47:12.
:47:12.:47:35.

then. From all of us here, good It will turn into a pretty wet end

:47:35.:47:41.

to the night for most place. Heavy rain marching on a strong south-

:47:41.:47:44.

westerly wind. Arriving in Scotland in the morning, it will stay there.

:47:44.:47:48.

For the rest of us, things perking up nice low, in the middle of the

:47:49.:47:57.

afternoon. Sunshine, the odd shower, most of us dry. 14-16 degrees,

:47:57.:48:03.

breezy but windy towards most ars areas. The west coast of England

:48:03.:48:06.

and Wales could be battered by gusts up to 60 miles an hour.

:48:06.:48:09.

Warnings from both the Environment Agency and the Met Office, because

:48:09.:48:15.

we have high spring tides, the risk of coastal flooding, and with the

:48:15.:48:20.

grounds saturated trees could come down. After a wet night the rain

:48:20.:48:23.

could break up into showers. The hope of brightness, but not across

:48:23.:48:26.

the heart of Scotland. It looks like a cold and bleak afternoon

:48:26.:48:30.

here, and temperatures really held back by north-eastly wind. Looking

:48:30.:48:34.

further ahead into Thursday, across northern areas, a fairly mixed

:48:34.:48:38.

picture, still the threat of some showers, particularly for Scotland

:48:38.:48:41.

and Northern Ireland. Dry weather before rain threatens the south-

:48:41.:48:47.

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