16/10/2012 Newsnight


Why Starbucks pays no corporation tax. The latest on Jimmy Savile and BBC. Privatising failing schools. The Booker prize winner. And who shops at Lidl?

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


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


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


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


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


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


paying the right amounts. Would harder enforcement just send


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


large skinny mocha cappuccino, know that this company paid no


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


revelations about other giants and their corporation tax, including


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


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


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


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


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


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


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


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


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


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


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


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


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


conference calls that the UK business was highly profitable.


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


years, despite a global recession. So how do they do it? All those


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


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


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


taxes which are lower for other services. Independent retailers


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


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


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


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


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


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


last year it emerged that Facebook had paid an effective corporation


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


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


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


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


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


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


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


Do independent UK coffee owners begrudge Starbucks UK tax


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


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


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


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


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


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


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


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


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


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


based companies are losing out, suffering unfair competition from


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


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


business organisations, and small business itself, who will be


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


tax money is routinely checking companies, checking the cross-


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


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


pensioner who has forgotten a couple of investments and goes over


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


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


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


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


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


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


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


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


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


there ought to be complete transparency by what HMRC think


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


taxpayer confidentiality. Can I say something about this particular


company. This company filed accounts in companies House that


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


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


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


think Companies House should be tougher in insisting that the


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


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


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


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


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


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


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


how many people have you got working on the tax simplification


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


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


the Chartered Institute of Tags taxation as well. Does George


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


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


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


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


simplification and make a difference. I wopbl make a


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


Miliband, called for a public inquiry into the allegations


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


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


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


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


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


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


The BBC first announced the two investigations at the tailend of


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


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


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


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


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


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


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


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


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


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


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


more immediately is the other investigation into Newsnight's


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


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


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


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


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


is BBC representatives put pressure on Newsnight, because there were


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


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


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


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


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


should have broadcast the two tribute programmes. If the BBC


executives knew Newsnight was in the process of putting an


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


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


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


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


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


Exchange, his first since leaving Government, he says schools


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


academies, but turned over to not for profit firms.


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


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


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


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


now no longer. The new inspection regime will mean


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


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


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


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


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


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


are satisfactory, and satisfactory is not really people think norm


yeahly means satisfactory, satisfactory is no longer good


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


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


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


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


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


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


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


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


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


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


schools, working together, collaborating, generating economies


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


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


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


schools working on their own. Collaboration, and pooling ideas


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


academies work, the academy programme has been around for ten


years, there has been various academic research that shows it


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


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


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


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


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


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


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


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


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


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


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


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


performance at their next inspection, would be considered a


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


makes you look incompetent. Looking incompetent, in the years


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


failing schools will it mean this Government has failed.


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


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


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


national head teachers union. More breaking news tonight?


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


pressure on schools. A better, clearer idea of putting


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


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


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


what we are hearing from universities, is actually, they


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


system. England is described as having a long tale of


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


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


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


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


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


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


those schools, the characteristic of a satisfactory school is the


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


turn around the thousands of schools that might be told they


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


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


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


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


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


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


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


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


interNational League table, and now there is a parliamentary inquiry


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


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


spent sweating the assets so shareholders get a profit. The


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


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


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


the classroom? Here is an interesting fact N some local


authorities a third of children with special educational needs,


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


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


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


charityability and profit-making providers. Elsewhere in the


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


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


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


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


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


they are highly-specialised provision. You would accept some


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


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


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


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


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


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


to Hilary Mantel moments after the announcement.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


said you were inventing the historical novel for the 21st


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


for talking to us, and congratulations again. Hilary


Mantel, 2012 Man Booker Prize winner.


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


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


learned that the official measure of inflation, the consumer prices


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


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


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


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


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


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


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


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


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


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


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


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


pressure of the most sustained squeeze on living standards in 70


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


sharp memory and relentless concentration. This milk is cheaper


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


hits you, right in the shopping basket.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


afford it. Inflation was far higher in the 70s


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


they have been feeling the financial pinch. When we were


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


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


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


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


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


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


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


Becky has been diagnosed with obsessive compulsive disorder,


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


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


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


three ways round and I have been putting things back.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


Stkpwhro the worst financial pressure for Julian is paying --


the worst financial pressure for Julian is paying for petrol.


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


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


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


the pumps are already higher than when the Chancellor made that


announcement. You could hope that the global slowdown would mean


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


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


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


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


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


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


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


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


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


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


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


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


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


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


that someone else in the Civil Service is telling him his


Employment and Support Allowance will be stopped in February,


because one day he might be able to work.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


standards will start to lift. The economic storms blowing across


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


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


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


now need our bargains like never before.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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