25/02/2013 Newsnight

He strongly denies all the He strongly denies all the

He strongly denies all the allegations against him. It is a

allegations against him. It is a allegations against him. It is a

allegations against him. It is a line you will hear a lot in the

line you will hear a lot in the line you will hear a lot in the

course of tonight's programme. This course of tonight's programme. This

course of tonight's programme. This evening we bring you, Berlusconi

evening we bring you, Berlusconi evening we bring you, Berlusconi

back from the brink. The Cardinal back from the brink. The Cardinal

back from the brink. The Cardinal back from the brink. The Cardinal

who quit. First up, crisis in the Clegg camp.

Clegg camp. Clegg camp.

The party President said today "we The party President said today "we

The party President said today "we The party President said today "we

screwed up", but who did and when? screwed up", but who did and when?

screwed up", but who did and when? screwed up", but who did and when?

The Lib Dem's deputy leader is to here explain.

here explain. here explain.

Feeling moody, our triple-A rate Feeling moody, our triple-A rate

something gone, what difference something gone, what difference

something gone, what difference does it make to Government's

does it make to Government's does it make to Government's

prospects. I know four different prospects. I know four different

leadership challenges putting leadership challenges putting

leadership challenges putting together, there is huge unrest in

together, there is huge unrest in together, there is huge unrest in

parliament. This is the enGeneva parliament. This is the enGeneva

parliament. This is the enGeneva revolution in Kenya seeking to

revolution in Kenya seeking to revolution in Kenya seeking to

light up the entire continent. light up the entire continent.

light up the entire continent. light up the entire continent.

Could this be the force of the Could this be the force of the

Could this be the force of the nature that electfies Africa in the

21st century. 21st century.

21st century. Good evening, "we screwed up", the

Good evening, "we screwed up", the Good evening, "we screwed up", the

Lib Dem President told the BBC Lib Dem President told the BBC

Lib Dem President told the BBC today. In words his leader, Nick

today. In words his leader, Nick today. In words his leader, Nick

today. In words his leader, Nick Clegg be may or may not have found

Clegg be may or may not have found particularly supportive. After

particularly supportive. After particularly supportive. After

women accused the former party women accused the former party

chief executive of inappropriate chief executive of inappropriate

chief executive of inappropriate behaviour. The questions why no-one

behaviour. The questions why no-one behaviour. The questions why no-one

reacted today what they were told reacted today what they were told

reacted today what they were told over a series of years. Scotland

over a series of years. Scotland over a series of years. Scotland

Yard tonight are looking at whether Yard tonight are looking at whether

Yard tonight are looking at whether or not any criminal activity took

or not any criminal activity took or not any criminal activity took

place. The Liberal Democrats have place. The Liberal Democrats have

place. The Liberal Democrats have launched not one but two inquiries,

launched not one but two inquiries, launched not one but two inquiries,

days before one of the most days before one of the most

seriously fought by-elections in seriously fought by-elections in

seriously fought by-elections in years. The timing couldn't be worse,

years. The timing couldn't be worse, years. The timing couldn't be worse,

Nick Clegg's party was strolling Nick Clegg's party was strolling

Nick Clegg's party was strolling towards victory in Eastleigh, now

towards victory in Eastleigh, now they are investigating allegations

they are investigating allegations they are investigating allegations

of sexual misconduct against a man of sexual misconduct against a man

of sexual misconduct against a man of sexual misconduct against a man

who was once part of their inner who was once part of their inner

who was once part of their inner who was once part of their inner

circle. We screwed this up, as a circle. We screwed this up, as a

circle. We screwed this up, as a party. There are individuals out

party. There are individuals out party. There are individuals out

party. There are individuals out there who we had a duty of care

there who we had a duty of care there who we had a duty of care

there who we had a duty of care towards who we did not fulfil that

towards who we did not fulfil that towards who we did not fulfil that

towards who we did not fulfil that duty of air to them. Lord Rennard,

duty of air to them. Lord Rennard, duty of air to them. Lord Rennard,

around whom the allegations centre, around whom the allegations centre,

strongly disputes the charpblgts, strongly disputes the charpblgts,

strongly disputes the charpblgts, strongly disputes the charpblgts,

and says not a -- charges, and says and says not a -- charges, and says

and says not a -- charges, and says not a single complaint of

not a single complaint of not a single complaint of

misconduct was made. And Friday he misconduct was made. And Friday he

misconduct was made. And Friday he said that he denied any allegation

said that he denied any allegation said that he denied any allegation

of improper touching. It was here of improper touching. It was here

of improper touching. It was here at the party's former headquarters

at the party's former headquarters at the party's former headquarters

that Lord Rennard masterminded the that Lord Rennard masterminded the

that Lord Rennard masterminded the string of by-election victories won

string of by-election victories won string of by-election victories won

string of by-election victories won by the Lib Dems over their decades

by the Lib Dems over their decades by the Lib Dems over their decades

in the wilderness. Senior figures in the wilderness. Senior figures

in the wilderness. Senior figures in the wilderness. Senior figures

who have worked with him for years who have worked with him for years

who have worked with him for years have reacted with shock at the

have reacted with shock at the allegations. But Newsnight has

allegations. But Newsnight has allegations. But Newsnight has

learned that one senior figure did learned that one senior figure did

try to take action. try to take action.

try to take action. Sources have told Newsnight that as

Sources have told Newsnight that as Sources have told Newsnight that as

Sources have told Newsnight that as a senior a figure as the then party

a senior a figure as the then party a senior a figure as the then party

President Ros Scott, learned there President Ros Scott, learned there

President Ros Scott, learned there was an issue with Lord Rennard's

was an issue with Lord Rennard's was an issue with Lord Rennard's

was an issue with Lord Rennard's conduct, and she did try to do

conduct, and she did try to do conduct, and she did try to do

something about it. What is not something about it. What is not

something about it. What is not known is whether Ros Scott was

known is whether Ros Scott was known is whether Ros Scott was

known is whether Ros Scott was listened to by the rest of her

listened to by the rest of her listened to by the rest of her

party. Last week Channel 4 News party. Last week Channel 4 News

broadcast specific allegations broadcast specific allegations

broadcast specific allegations against Lord Rennard. In 2003, a

against Lord Rennard. In 2003, a against Lord Rennard. In 2003, a

woman, a former adviser to Nick woman, a former adviser to Nick

woman, a former adviser to Nick woman, a former adviser to Nick

Clegg, said that he behaved in an Clegg, said that he behaved in an

inappropriate manner to him. inappropriate manner to him.

Alison Smith reported inappropriate Alison Smith reported inappropriate

Alison Smith reported inappropriate Alison Smith reported inappropriate

behaviour in 2007 to the then Chief behaviour in 2007 to the then Chief

behaviour in 2007 to the then Chief Whip, Paul Burstow, and the party

Whip, Paul Burstow, and the party Whip, Paul Burstow, and the party

spokeswoman for equality and women, spokeswoman for equality and women,

spokeswoman for equality and women, she, Alison Smith, said no action

she, Alison Smith, said no action she, Alison Smith, said no action

was taken. Following Channel 4 was taken. Following Channel 4

was taken. Following Channel 4 News's report, the Lib Dems said

News's report, the Lib Dems said News's report, the Lib Dems said

News's report, the Lib Dems said the first Nick Clegg knew of the

the first Nick Clegg knew of the allegation was after the

allegation was after the broadcaster contacted the party.

broadcaster contacted the party. broadcaster contacted the party.

Last night the Lib Dem leader Last night the Lib Dem leader

Last night the Lib Dem leader clarified that in 2008 Nick Clegg

clarified that in 2008 Nick Clegg clarified that in 2008 Nick Clegg

asked his then Chief of Staff, asked his then Chief of Staff,

asked his then Chief of Staff, Danny Alexander, to put indirect

Danny Alexander, to put indirect Danny Alexander, to put indirect

and non-specific concerns to Lord and non-specific concerns to Lord

and non-specific concerns to Lord Rennard. In 2010 the Telegraph

Rennard. In 2010 the Telegraph Rennard. In 2010 the Telegraph

contacted Nick Clegg's Chief of contacted Nick Clegg's Chief of

contacted Nick Clegg's Chief of Staff, Jonny Oates about five

Staff, Jonny Oates about five allegations against Lord Rennard,

allegations against Lord Rennard, allegations against Lord Rennard,

Oates denies Nick Clegg was made Oates denies Nick Clegg was made

Oates denies Nick Clegg was made aware of the allegations. This

aware of the allegations. This aware of the allegations. This

aware of the allegations. This morning the Lib Dem leader was on

morning the Lib Dem leader was on morning the Lib Dem leader was on

the defensive. Here at dawn at the defensive. Here at dawn at

the defensive. Here at dawn at Radio Solent. Until last week, no

Radio Solent. Until last week, no Radio Solent. Until last week, no

very specific allegations were put very specific allegations were put

very specific allegations were put very specific allegations were put

to me. We acted on general concerns to me. We acted on general concerns

to me. We acted on general concerns which had been expressed some time

which had been expressed some time which had been expressed some time

which had been expressed some time ago. But, of course, now that those

ago. But, of course, now that those ago. But, of course, now that those

general concerns have evolved into general concerns have evolved into

general concerns have evolved into specific allegations, we can act

specific allegations, we can act specific allegations, we can act

specific allegations, we can act and we will. Alison Smith was one

and we will. Alison Smith was one and we will. Alison Smith was one

of the women who made allegations of the women who made allegations

of the women who made allegations of the women who made allegations

to Channel 4 News. A former party to Channel 4 News. A former party

to Channel 4 News. A former party activist, she now teaches at Oxford

activist, she now teaches at Oxford activist, she now teaches at Oxford

University. What would she say to University. What would she say to

University. What would she say to students considering a life in

students considering a life in students considering a life in

politics. Just describe what you politics. Just describe what you

politics. Just describe what you politics. Just describe what you

think you would say to them right think you would say to them right

think you would say to them right now, if nothing was done about

now, if nothing was done about now, if nothing was done about

going into work in the Liberal going into work in the Liberal

going into work in the Liberal Democrats? First I would have to

Democrats? First I would have to Democrats? First I would have to

Democrats? First I would have to ask if they were sure, if nothing

ask if they were sure, if nothing ask if they were sure, if nothing

ask if they were sure, if nothing is done. I would have to actually

is done. I would have to actually is done. I would have to actually

is done. I would have to actually tell them exactly what I had come

tell them exactly what I had come tell them exactly what I had come

tell them exactly what I had come up against, and what other people I

up against, and what other people I up against, and what other people I

know came up against. But I'm know came up against. But I'm

know came up against. But I'm hoping something will be done. I

hoping something will be done. I hoping something will be done. I

think you can see very slowly think you can see very slowly

think you can see very slowly think you can see very slowly

things at the top of the party, things at the top of the party,

things at the top of the party, there is definitely things changing,

there is definitely things changing, there is definitely things changing,

there is some movement, I think there is some movement, I think

there is some movement, I think there. To fight a by-election,

there. To fight a by-election, there. To fight a by-election,

Rennard's insight was known as Rennard's insight was known as

pavement politics within pavement politics within

pavement politics within Westminster. Flood an area with a

Westminster. Flood an area with a Westminster. Flood an area with a

huge number of resources and huge number of resources and

huge number of resources and activists for a longer, or

activists for a longer, or activists for a longer, or

relentless period of time than your relentless period of time than your

relentless period of time than your opponents. It was very often

opponents. It was very often opponents. It was very often

successful. It would have a bitter successful. It would have a bitter

successful. It would have a bitter successful. It would have a bitter

sweet symmetry, if the man who for sweet symmetry, if the man who for

sweet symmetry, if the man who for sweet symmetry, if the man who for

so long was the Lib Dem's by- so long was the Lib Dem's by-

election brain, ended up election brain, ended up

overturning their by-election in overturning their by-election in

overturning their by-election in overturning their by-election in

the seat of eastly the Lib Dems had the seat of eastly the Lib Dems had

the seat of eastly the Lib Dems had the seat of eastly the Lib Dems had

been set to hold the seat, now both been set to hold the seat, now both

been set to hold the seat, now both been set to hold the seat, now both

sides agree it will be tighter. sides agree it will be tighter.

sides agree it will be tighter. is extremely difficult to say how

is extremely difficult to say how is extremely difficult to say how

crucially important he was, nobody crucially important he was, nobody

is ultimately irreplacable. But is ultimately irreplacable. But

certainly, the Liberal Democrats certainly, the Liberal Democrats

certainly, the Liberal Democrats would have wanted to retain Chris

would have wanted to retain Chris would have wanted to retain Chris

Rennard. He's respected, even if Rennard. He's respected, even if

Rennard. He's respected, even if he's not a household name, he's

he's not a household name, he's he's not a household name, he's

respected in the Westminster bubble respected in the Westminster bubble

respected in the Westminster bubble as one of the greatest campaigners

as one of the greatest campaigners as one of the greatest campaigners

of recent times. You don't kick of recent times. You don't kick

of recent times. You don't kick somebody like that out of the

somebody like that out of the Liberal Democrats without thinking

Liberal Democrats without thinking Liberal Democrats without thinking

Liberal Democrats without thinking about it long and very hard indeed.

about it long and very hard indeed. about it long and very hard indeed.

about it long and very hard indeed. Lord Rennard was not kicked out. He

Lord Rennard was not kicked out. He Lord Rennard was not kicked out. He

Lord Rennard was not kicked out. He left his role on account of ill-

left his role on account of ill- left his role on account of ill-

health. But those laying their health. But those laying their

health. But those laying their allegations say there is a wider

allegations say there is a wider problem within the Liberal

problem within the Liberal Democrats. This culture is

Democrats. This culture is Democrats. This culture is

absolutely intolerable. For a start, absolutely intolerable. For a start,

absolutely intolerable. For a start, absolutely intolerable. For a start,

it is going beyond the pat on the it is going beyond the pat on the

it is going beyond the pat on the it is going beyond the pat on the

it is going beyond the pat on the knee a lot of the time. Even if it

knee a lot of the time. Even if it knee a lot of the time. Even if it

knee a lot of the time. Even if it was just a pat on the knee, who

was just a pat on the knee, who was just a pat on the knee, who

gets to decide what's an acceptable gets to decide what's an acceptable

gets to decide what's an acceptable advance and what is not an

advance and what is not an acceptable advance. The power

acceptable advance. The power acceptable advance. The power

dynamics in these situations are dynamics in these situations are

dynamics in these situations are quite scary. The Liberal Democrats

quite scary. The Liberal Democrats quite scary. The Liberal Democrats

have a prowess for bagging by- have a prowess for bagging by-

have a prowess for bagging by- elections. And they claim it is

elections. And they claim it is elections. And they claim it is

their party that without fail their party that without fail

their party that without fail speaks up for the ignored. This

speaks up for the ignored. This speaks up for the ignored. This

week they are grappling to retain week they are grappling to retain

week they are grappling to retain week they are grappling to retain

both badges of honour. The Lib Dem both badges of honour. The Lib Dem

both badges of honour. The Lib Dem deputy leader, Simon Hughes, joins

deputy leader, Simon Hughes, joins deputy leader, Simon Hughes, joins

deputy leader, Simon Hughes, joins me now. Thank you very much for

me now. Thank you very much for me now. Thank you very much for

me now. Thank you very much for coming in Simon. I want to start

coming in Simon. I want to start coming in Simon. I want to start

with a report in the Telegraph with a report in the Telegraph

with a report in the Telegraph with a report in the Telegraph

tomorrow morning, it is from one of tomorrow morning, it is from one of

tomorrow morning, it is from one of your own councillors in Southwark,

your own councillors in Southwark, your own councillors in Southwark,

who made a complaint in 2008, who made a complaint in 2008,

allegations of improper behaviour allegations of improper behaviour

allegations of improper behaviour by Lord Rennard. Two months later,

by Lord Rennard. Two months later, by Lord Rennard. Two months later,

by Lord Rennard. Two months later, when she was pregnant, she was told

when she was pregnant, she was told when she was pregnant, she was told

her John was disappearing and she, her John was disappearing and she,

her John was disappearing and she, her John was disappearing and she,

as we understand, came to a setment, as we understand, came to a setment,

as we understand, came to a setment, including a silence clause. What do

including a silence clause. What do including a silence clause. What do

you -- a settlement, including a you -- a settlement, including a

you -- a settlement, including a silence clause. What do you

silence clause. What do you silence clause. What do you

understand of that? I have heard understand of that? I have heard

understand of that? I have heard understand of that? I have heard

nothing of it until what you have nothing of it until what you have

nothing of it until what you have nothing of it until what you have

just read to me. You have never just read to me. You have never

just read to me. You have never heard about somebody who was

heard about somebody who was heard about somebody who was

heard about somebody who was working for the Lib Dems, signing a

working for the Lib Dems, signing a working for the Lib Dems, signing a

silence clause to not repeat silence clause to not repeat

silence clause to not repeat allegations. This is news to you?

allegations. This is news to you? allegations. This is news to you?

allegations. This is news to you? This is news to me. This is from

This is news to me. This is from This is news to me. This is from

the Telegraph, this happened in the Telegraph, this happened in

the Telegraph, this happened in the Telegraph, this happened in

2008? That's news to me. I knew 2008? That's news to me. I knew

2008? That's news to me. I knew 2008? That's news to me. I knew

nothing about it at all. I served, nothing about it at all. I served,

nothing about it at all. I served, nothing about it at all. I served,

as you may remember, for four years as you may remember, for four years

as you may remember, for four years as you may remember, for four years

and a bit as party President, I can and a bit as party President, I can

and a bit as party President, I can and a bit as party President, I can

say, cat -- Party President, I can say, cat -- Party President, I can

say, cat -- Party President, I can say categorically that no formal or

say categorically that no formal or say categorically that no formal or

informal allegation, no rumour or informal allegation, no rumour or

informal allegation, no rumour or report reached me about the length

report reached me about the length report reached me about the length

report reached me about the length of those four, plus years, and I

of those four, plus years, and I of those four, plus years, and I

of those four, plus years, and I heard nothing that said this was an

heard nothing that said this was an heard nothing that said this was an

heard nothing that said this was an issue for an individual in the part.

issue for an individual in the part. issue for an individual in the part.

Tim Farron, the Lib Dem President Tim Farron, the Lib Dem President

Tim Farron, the Lib Dem President today said "we screwed up" who

today said "we screwed up" who today said "we screwed up" who

today said "we screwed up" who screwed up? I think that is an

screwed up? I think that is an screwed up? I think that is an

unfair conclusion to reach given we unfair conclusion to reach given we

have launched two investigations. have launched two investigations.

have launched two investigations. He's entitled to choose his own

He's entitled to choose his own language, but immediately the

language, but immediately the language, but immediately the

allegations were put to a allegations were put to a

allegations were put to a television channel and put to the

television channel and put to the television channel and put to the

television channel and put to the party. That was the first time I

party. That was the first time I party. That was the first time I

heard about them, and the first heard about them, and the first

heard about them, and the first time Nick Clegg heard about them.

time Nick Clegg heard about them. Immediately that happened two

Immediately that happened two inquiries were launched. An

inquiries were launched. An inquiries were launched. An

internal inquiry, which will have a internal inquiry, which will have a

internal inquiry, which will have a internal inquiry, which will have a

QC leading it. A very eminent QC QC leading it. A very eminent QC

looking at the allegations. looking at the allegations.

looking at the allegations. Listening to the complaints, and

Listening to the complaints, and Listening to the complaints, and

listening to the defendant. In a listening to the defendant. In a

second investigation, led second investigation, led

entirelyly independently for the entirelyly independently for the

entirelyly independently for the party, which is into our processes.

party, which is into our processes. party, which is into our processes.

What was he talking about "screwed What was he talking about "screwed

What was he talking about "screwed up", was he talking about party

up", was he talking about party up", was he talking about party

leadership, Nick Clegg in that? Who leadership, Nick Clegg in that? Who

leadership, Nick Clegg in that? Who screwed up? I heard the same

screwed up? I heard the same screwed up? I heard the same

interview as you did. He clearly interview as you did. He clearly

interview as you did. He clearly feels that an allegation made about

feels that an allegation made about feels that an allegation made about

feels that an allegation made about an event in 2003 before Nick Clegg

an event in 2003 before Nick Clegg an event in 2003 before Nick Clegg

was leader, before he was in was leader, before he was in

was leader, before he was in parliament, and other things, were

parliament, and other things, were parliament, and other things, were

parliament, and other things, were not picked up somewhere at the time.

not picked up somewhere at the time. not picked up somewhere at the time.

not picked up somewhere at the time. There has clearly been a history of

There has clearly been a history of There has clearly been a history of

a few episodes reported by people a few episodes reported by people

a few episodes reported by people like Alison Smith. I heard nothing

like Alison Smith. I heard nothing like Alison Smith. I heard nothing

like Alison Smith. I heard nothing about this until last week. If they

about this until last week. If they about this until last week. If they

were reported into the system, if were reported into the system, if

were reported into the system, if they were, and if they weren't

they were, and if they weren't they were, and if they weren't

dealt with then clearly something dealt with then clearly something

dealt with then clearly something dealt with then clearly something

went wrong. That is why you have an went wrong. That is why you have an

went wrong. That is why you have an went wrong. That is why you have an

inquiry and seek to get to the inquiry and seek to get to the

inquiry and seek to get to the inquiry and seek to get to the

bottom of it. I'm not going to pre- bottom of it. I'm not going to pre-

bottom of it. I'm not going to pre- bottom of it. I'm not going to pre-

empt it. We have just been through empt it. We have just been through

empt it. We have just been through the whole Leveson episode about

the whole Leveson episode about the whole Leveson episode about

whether press put names on the whether press put names on the

whether press put names on the whether press put names on the

front page and have a go and judge front page and have a go and judge

front page and have a go and judge front page and have a go and judge

and jury. We have a process, it is and jury. We have a process, it is

and jury. We have a process, it is only fair both to the complainants

only fair both to the complainants only fair both to the complainants

and the person complained about and the person complained about

and the person complained about that there is due process.

that there is due process. that there is due process.

that there is due process. haven't much time. I want to put to

haven't much time. I want to put to haven't much time. I want to put to

you a couple of things, Justin you a couple of things, Justin

you a couple of things, Justin you a couple of things, Justin

Jarod said this is not a Jimmy Jarod said this is not a Jimmy

Savile thing, touching someone's Savile thing, touching someone's

Savile thing, touching someone's knee overboard, pretty historic. Do

knee overboard, pretty historic. Do knee overboard, pretty historic. Do

knee overboard, pretty historic. Do you agree? I don't agree with that.

you agree? I don't agree with that. Nobody should behave

Nobody should behave inappropriately before their staff.

inappropriately before their staff. inappropriately before their staff.

inappropriately before their staff. One of your Lib Dem candidates has

One of your Lib Dem candidates has One of your Lib Dem candidates has

said that, is he representative of said that, is he representative of

said that, is he representative of the modern party? No he's not.

the modern party? No he's not. the modern party? No he's not.

Should he be a candidate? Should he be a candidate?

Should he be a candidate? separate issue. Possibly you think

separate issue. Possibly you think separate issue. Possibly you think

separate issue. Possibly you think he shouldn't if he says things like

he shouldn't if he says things like he shouldn't if he says things like

that? Employees in the party should that? Employees in the party should

that? Employees in the party should that? Employees in the party should

know they can go to work, senior know they can go to work, senior

know they can go to work, senior know they can go to work, senior

people in the party can deal with people in the party can deal with

people in the party can deal with senior officers in the party

senior officers in the party senior officers in the party

without any fear of inappropriate without any fear of inappropriate

behaviour either from their behaviour either from their

behaviour either from their employers or senior members of the

employers or senior members of the employers or senior members of the

public. That clearly is wrong. It public. That clearly is wrong. It

public. That clearly is wrong. It is unacceptable, in any walk of

is unacceptable, in any walk of is unacceptable, in any walk of

life, in any organisation, in this life, in any organisation, in this

life, in any organisation, in this life, in any organisation, in this

one, our party or any other party. one, our party or any other party.

one, our party or any other party. one, our party or any other party.

We are trying to get to the bottom, We are trying to get to the bottom,

We are trying to get to the bottom, We are trying to get to the bottom,

right now, of who knew and who right now, of who knew and who

right now, of who knew and who right now, of who knew and who

didn't know. Lax lax lax said last didn't know. Lax lax lax said last

didn't know. Lax lax lax said last night, he said -- Danny Alexander

night, he said -- Danny Alexander night, he said -- Danny Alexander

night, he said -- Danny Alexander said last night, he said he put the

said last night, he said he put the said last night, he said he put the

concerns to Chris Rennard at the concerns to Chris Rennard at the

concerns to Chris Rennard at the time, and warned him that such

time, and warned him that such behaviour was unacceptable. Now

behaviour was unacceptable. Now what behaviour was unacceptable,

what behaviour was unacceptable, what behaviour was unacceptable,

what was the behaviour that he what was the behaviour that he

what was the behaviour that he warned about there? Let's be clear

warned about there? Let's be clear warned about there? Let's be clear

warned about there? Let's be clear about this. It is no good having

about this. It is no good having about this. It is no good having

inquiries and seeking to prejudge inquiries and seeking to prejudge

inquiries and seeking to prejudge inquiries and seeking to prejudge

it and me trying to tell you things it and me trying to tell you things

it and me trying to tell you things it and me trying to tell you things

I don't know about, because I knew I don't know about, because I knew

I don't know about, because I knew I don't know about, because I knew

nothing. All the things that I know nothing. All the things that I know

nothing. All the things that I know appeared last week, one, that there

appeared last week, one, that there were specific allegations made

were specific allegations made recently, now being investigated.

recently, now being investigated. recently, now being investigated.

recently, now being investigated. And two, that five years ago a

And two, that five years ago a And two, that five years ago a

rumour or something like it reached rumour or something like it reached

rumour or something like it reached the leaders's office. He asked the

the leaders's office. He asked the the leaders's office. He asked the

-- leader's office, he asked the -- leader's office, he asked the

-- leader's office, he asked the -- leader's office, he asked the

Chief of Staff to speak to the Chief of Staff to speak to the

Chief of Staff to speak to the person about whom the rumour or

person about whom the rumour or person about whom the rumour or

allegation was made, not naming an allegation was made, not naming an

allegation was made, not naming an allegation was made, not naming an

and an event. He did that and was and an event. He did that and was

and an event. He did that and was and an event. He did that and was

told there was no truth in it as told there was no truth in it as

told there was no truth in it as far as I understand it.

far as I understand it. far as I understand it.

Telegraph put five allegations of Telegraph put five allegations of

incidents involving Chris Rennard. incidents involving Chris Rennard.

incidents involving Chris Rennard. incidents involving Chris Rennard.

We know that the story tomorrow is We know that the story tomorrow is

We know that the story tomorrow is We know that the story tomorrow is

just in the Telegraph and we must just in the Telegraph and we must

just in the Telegraph and we must just in the Telegraph and we must

say that. But we know that the say that. But we know that the

say that. But we know that the Chief Whip, the Equalities Minister,

Chief Whip, the Equalities Minister, Chief Whip, the Equalities Minister,

Clegg's Chief of Staff, the former Clegg's Chief of Staff, the former

Clegg's Chief of Staff, the former deputy Chief of Staff, the former

deputy Chief of Staff, the former deputy Chief of Staff, the former

Party President, from what we Party President, from what we

Party President, from what we understand today, all knew. It

understand today, all knew. It understand today, all knew. It

wasn't a secret? Emily, we are wasn't a secret? Emily, we are

wasn't a secret? Emily, we are having an investigation to discover

having an investigation to discover having an investigation to discover

who knew what. I'm telling you who knew what. I'm telling you

who knew what. I'm telling you face-to-face I knew none of these

face-to-face I knew none of these face-to-face I knew none of these

face-to-face I knew none of these things. Do you find that odd, that

things. Do you find that odd, that things. Do you find that odd, that

things. Do you find that odd, that you were the President at the time,

you were the President at the time, you were the President at the time,

you were the President at the time, and all those senior Lib Dems knew

and all those senior Lib Dems knew and all those senior Lib Dems knew

and nobody told you? Find it and nobody told you? Find it

and nobody told you? Find it strange if there was some regular

strange if there was some regular and substantive complaint made

and substantive complaint made and substantive complaint made

about the chief executive, because about the chief executive, because

about the chief executive, because the President on behalf of the

the President on behalf of the the President on behalf of the

party is the person that employs party is the person that employs

party is the person that employs the chief executive. I find that

the chief executive. I find that the chief executive. I find that

odd. I'm not discounting the odd. I'm not discounting the

odd. I'm not discounting the allegations made, but we have now

allegations made, but we have now allegations made, but we have now

allegations made, but we have now set up two processes, there is a

set up two processes, there is a set up two processes, there is a

whistle blowing process and a whistle blowing process and a

whistle blowing process and a process looking into the party's

process looking into the party's procedures and an independently-led

procedures and an independently-led procedures and an independently-led

procedures and an independently-led review. That must be the best way

review. That must be the best way review. That must be the best way

in everybody's interest. I hope in everybody's interest. I hope

in everybody's interest. I hope people will let that process take

people will let that process take its course. Thank you.

its course. Thank you. its course. Thank you.

its course. Thank you. When we had it, it was talked as

When we had it, it was talked as When we had it, it was talked as

the golden tailsman, now we have the golden tailsman, now we have

the golden tailsman, now we have the golden tailsman, now we have

lost the Government is doing it -- lost the Government is doing it --

lost the Government is doing it -- lost the Government is doing it --

lost the Government is doing it -- shrugging it off as if it is no big

shrugging it off as if it is no big shrugging it off as if it is no big

deal. What is the significance of deal. What is the significance of

deal. What is the significance of Britain's triple-A rating, on the

Britain's triple-A rating, on the Britain's triple-A rating, on the

right they are pushing to cut right they are pushing to cut

right they are pushing to cut faster, on the left they are

faster, on the left they are faster, on the left they are

pushing to cut less. Will the pushing to cut less. Will the

downgrade make any concrete downgrade make any concrete

difference to the Government's difference to the Government's

difference to the Government's policies. What will it mean for

policies. What will it mean for policies. What will it mean for

next month's budget. Our Economics next month's budget. Our Economics

Editor offers his thoughts. Editor offers his thoughts.

Editor offers his thoughts. Editor offers his thoughts.

We lived through an IMF bail out, a We lived through an IMF bail out, a

We lived through an IMF bail out, a "Winter of Discontent", a slump, a

"Winter of Discontent", a slump, a "Winter of Discontent", a slump, a

big bang, a Black Wednesday, a big bang, a Black Wednesday, a

big bang, a Black Wednesday, a dotcom crash, and the near collapse

dotcom crash, and the near collapse dotcom crash, and the near collapse

of the financial system. All while of the financial system. All while

remaining triple-A. George Osborne remaining triple-A. George Osborne

remaining triple-A. George Osborne remaining triple-A. George Osborne

said it would be a disaster if said it would be a disaster if

said it would be a disaster if Britain lost its triple-A credit

Britain lost its triple-A credit Britain lost its triple-A credit

rating, but today he shrugged it rating, but today he shrugged it

rating, but today he shrugged it off. The credit rating is an

off. The credit rating is an off. The credit rating is an

important benchmark for any country, important benchmark for any country,

but this Government's economic but this Government's economic

but this Government's economic but this Government's economic

policy is tested day in and day out policy is tested day in and day out

policy is tested day in and day out policy is tested day in and day out

in the markets. It is not been in the markets. It is not been

in the markets. It is not been found wanting today. For the

found wanting today. For the found wanting today. For the

opposition, it was a bit more opposition, it was a bit more

opposition, it was a bit more serious than that. The downgrading

serious than that. The downgrading serious than that. The downgrading

of Britain's credit rating is, in of Britain's credit rating is, in

of Britain's credit rating is, in this Chancellor's own words, a

this Chancellor's own words, a humiliation for this Government.

humiliation for this Government. humiliation for this Government.

humiliation for this Government. Let me remind the House what he

Let me remind the House what he Let me remind the House what he

promised at the general election. promised at the general election.

promised at the general election. He said the British people will

He said the British people will have transparent benchmarks against

have transparent benchmarks against have transparent benchmarks against

which they can judge the economic which they can judge the economic

which they can judge the economic success or failure of the next

success or failure of the next success or failure of the next

Government. Number one we will Government. Number one we will

safeguard Britain's credit rating. safeguard Britain's credit rating.

safeguard Britain's credit rating. The UK borrows money by issuing

The UK borrows money by issuing The UK borrows money by issuing

IOUs called bonds. These pay a IOUs called bonds. These pay a

IOUs called bonds. These pay a fixed interest rate, but they are

fixed interest rate, but they are fixed interest rate, but they are

fixed interest rate, but they are bought and sold on the market. That

bought and sold on the market. That bought and sold on the market. That

means if their price rise, the means if their price rise, the

means if their price rise, the effective interest rate, the yield,

effective interest rate, the yield, effective interest rate, the yield,

falls. And by last summer, this falls. And by last summer, this

falls. And by last summer, this falls. And by last summer, this

rate had fallen to its lowest ever. rate had fallen to its lowest ever.

rate had fallen to its lowest ever. rate had fallen to its lowest ever.

But now, it is edging up again. And But now, it is edging up again. And

But now, it is edging up again. And the downgrade was a recognition of

the downgrade was a recognition of the downgrade was a recognition of

what's driving that graph. Worries what's driving that graph. Worries

what's driving that graph. Worries about low growth and high

about low growth and high Government borrowing. What the

Government borrowing. What the Government borrowing. What the

gloomiest economists fear is a gloomiest economists fear is a

gloomiest economists fear is a spiral, like this. Bonds fall in

spiral, like this. Bonds fall in spiral, like this. Bonds fall in

spiral, like this. Bonds fall in value, banks, which hold a lot of

value, banks, which hold a lot of value, banks, which hold a lot of

bonds sudden lie have solvency bonds sudden lie have solvency

bonds sudden lie have solvency problems and the Government --

problems and the Government -- problems and the Government --

suddenly have solvency problems and suddenly have solvency problems and

suddenly have solvency problems and suddenly have solvency problems and

the Government has to prop them up. the Government has to prop them up.

the Government has to prop them up. the Government has to prop them up.

The Bank of England prints a lot The Bank of England prints a lot

The Bank of England prints a lot The Bank of England prints a lot

more money to keep the value afloat, more money to keep the value afloat,

more money to keep the value afloat, that depresses the value of the

that depresses the value of the that depresses the value of the

pound, which, in turn, means people pound, which, in turn, means people

pound, which, in turn, means people don't want so many British bonds,

don't want so many British bonds, don't want so many British bonds,

don't want so many British bonds, and the value of them falls again.

and the value of them falls again. and the value of them falls again.

and the value of them falls again. The UK banks are forced to hold

The UK banks are forced to hold The UK banks are forced to hold

large amounts of Government bonds large amounts of Government bonds

large amounts of Government bonds by regulation. That means if there

by regulation. That means if there by regulation. That means if there

were only fairly small falls in were only fairly small falls in

were only fairly small falls in Government bond prices the banks

Government bond prices the banks Government bond prices the banks

would take large losses. The Bank would take large losses. The Bank

would take large losses. The Bank of England estimates that UK banks

of England estimates that UK banks of England estimates that UK banks

are already �60 billion light. That are already �60 billion light. That

are already �60 billion light. That are already �60 billion light. That

is they hold too little capital, to is they hold too little capital, to

is they hold too little capital, to the tune of �60 billion. Further

the tune of �60 billion. Further the tune of �60 billion. Further

the tune of �60 billion. Further losses could tip them over the edge

losses could tip them over the edge losses could tip them over the edge

losses could tip them over the edge and we could see banks going under.

and we could see banks going under. and we could see banks going under.

George Osborne's problem, as he George Osborne's problem, as he

George Osborne's problem, as he tours British factories, is the

tours British factories, is the tours British factories, is the

growth he expected hasn't happened. growth he expected hasn't happened.

growth he expected hasn't happened. The Conservatives would like to cut

The Conservatives would like to cut The Conservatives would like to cut

taxes, but can't, because of the taxes, but can't, because of the

taxes, but can't, because of the taxes, but can't, because of the

need to get the deficit down. They need to get the deficit down. They

need to get the deficit down. They would like to shred employment law,

would like to shred employment law, would like to shred employment law,

would like to shred employment law, but the Lib Dems won't let them.

but the Lib Dems won't let them. but the Lib Dems won't let them.

And economists, once influential in And economists, once influential in

And economists, once influential in the design of deficit reduction,

the design of deficit reduction, the design of deficit reduction,

are starting to say things like...I are starting to say things like...I

are starting to say things like...I Think we are seeing disorientation

Think we are seeing disorientation Think we are seeing disorientation

Think we are seeing disorientation all over the place. The Bank of

all over the place. The Bank of all over the place. The Bank of

England is talking about money England is talking about money

England is talking about money printing at a time when inflation

printing at a time when inflation printing at a time when inflation

printing at a time when inflation is high. We are seeing in respect

is high. We are seeing in respect is high. We are seeing in respect

of the banking regulation, the of the banking regulation, the

of the banking regulation, the unwinding and delaying of many of

unwinding and delaying of many of unwinding and delaying of many of

the capital increases which they the capital increases which they

the capital increases which they the capital increases which they

proposed had to be coming in quite proposed had to be coming in quite

proposed had to be coming in quite quickly. At the Treasury we have

quickly. At the Treasury we have quickly. At the Treasury we have

seen that their tax cuts were seen that their tax cuts were

seen that their tax cuts were unwound in the last omnishambles

unwound in the last omnishambles unwound in the last omnishambles

unwound in the last omnishambles budget in 2012 they don't know how

budget in 2012 they don't know how budget in 2012 they don't know how

budget in 2012 they don't know how budget in 2012 they don't know how

to do -- what to do any more. It is to do -- what to do any more. It is

to do -- what to do any more. It is to do -- what to do any more. It is

policy panic all over the place. policy panic all over the place.

policy panic all over the place. until now arguments over growth

until now arguments over growth until now arguments over growth

strategy have divided the coalition strategy have divided the coalition

strategy have divided the coalition along party lines. Vincent Cable

along party lines. Vincent Cable along party lines. Vincent Cable

saying famously that we don't have saying famously that we don't have

saying famously that we don't have a growth strategy. Now with the

a growth strategy. Now with the a growth strategy. Now with the

a growth strategy. Now with the lost of the triple-A, it is the

lost of the triple-A, it is the Conservative Party itself looking

Conservative Party itself looking Conservative Party itself looking

Conservative Party itself looking divided. In the end when you look

divided. In the end when you look divided. In the end when you look

at the 2012 budget figure, three- at the 2012 budget figure, three-

at the 2012 budget figure, three- quarters of spending is education,

quarters of spending is education, quarters of spending is education,

health and welfare interest. We are health and welfare interest. We are

health and welfare interest. We are already taking on the debt bought

already taking on the debt bought already taking on the debt bought

already taking on the debt bought by the Bank of England, if we are

by the Bank of England, if we are by the Bank of England, if we are

seriously going to cut spending and seriously going to cut spending and

seriously going to cut spending and live within our means, eventually

live within our means, eventually welfare, health and education

welfare, health and education welfare, health and education

spending will have to be reduced. spending will have to be reduced.

spending will have to be reduced. Before the budget there is the

Before the budget there is the Eastleigh by-election. If the

Eastleigh by-election. If the Eastleigh by-election. If the

Conservatives lose that, on top of Conservatives lose that, on top of

the triple-A, those habitually the triple-A, those habitually

the triple-A, those habitually critical of the Chancellor see

critical of the Chancellor see critical of the Chancellor see

pressurising further. I know of at pressurising further. I know of at

least four separate leadership least four separate leadership

least four separate leadership challenges that have been putting

challenges that have been putting challenges that have been putting

together the funding. There is huge together the funding. There is huge

together the funding. There is huge degrees of unrest in parliament. On

degrees of unrest in parliament. On degrees of unrest in parliament. On

degrees of unrest in parliament. On the one hand the impact of losing

the one hand the impact of losing the triple-A has concentrated

the triple-A has concentrated conventional opinion. Conventional

conventional opinion. Conventional conventional opinion. Conventional

Tories think George Osborne hasn't Tories think George Osborne hasn't

Tories think George Osborne hasn't cut the public sector enough, we

cut the public sector enough, we cut the public sector enough, we

cut the public sector enough, we need to do far more and pump it

need to do far more and pump it need to do far more and pump it

into the private sector. But into the private sector. But

into the private sector. But thinking Tories are beginning to

thinking Tories are beginning to thinking Tories are beginning to

thinking Tories are beginning to wake up and realise that the old

wake up and realise that the old wake up and realise that the old

1980s diagnosis doesn't produce the 1980s diagnosis doesn't produce the

1980s diagnosis doesn't produce the right medicine. After today what's

right medicine. After today what's right medicine. After today what's

obvious is how little pressure the obvious is how little pressure the

obvious is how little pressure the Chancellor feels under from Labour,

Chancellor feels under from Labour, Chancellor feels under from Labour,

but how much pressure he feels but how much pressure he feels

but how much pressure he feels under from his own party. Because

under from his own party. Because under from his own party. Because

if austerity isn't working, it if austerity isn't working, it

if austerity isn't working, it either has to be toughened or

abandoned. abandoned.

abandoned. That's effectively what the ratings

That's effectively what the ratings That's effectively what the ratings

agencies are worried about. We have agencies are worried about. We have

agencies are worried about. We have the Exchequer secretary to the

the Exchequer secretary to the the Exchequer secretary to the

secretary. There is nothing like secretary. There is nothing like

secretary. There is nothing like being quoted back at yourself, is

being quoted back at yourself, is being quoted back at yourself, is

there. George Osborne then, the there. George Osborne then, the

humiliating possibility of Britain humiliating possibility of Britain

losing its international credit losing its international credit

losing its international credit losing its international credit

rating. Are we humiliated, or is he rating. Are we humiliated, or is he

rating. Are we humiliated, or is he wrong? It is disappointing.It was

wrong? It is disappointing.It was wrong? It is disappointing.It was

a key manifesto pledge? It is a key manifesto pledge? It is

a key manifesto pledge? It is disappointing we lost the triple-A

disappointing we lost the triple-A disappointing we lost the triple-A

disappointing we lost the triple-A rating. We have to bear in mind

rating. We have to bear in mind rating. We have to bear in mind

that the credit rating is an that the credit rating is an

important benchmark, but one important benchmark, but one

important benchmark, but one benchmark as to our international

benchmark as to our international credibility. Of greater

credibility. Of greater credibility. Of greater

significance is the fact that every significance is the fact that every

significance is the fact that every significance is the fact that every

day there is a price for our bond day there is a price for our bond

day there is a price for our bond yields and they remain very close

yields and they remain very close yields and they remain very close

yields and they remain very close to record lows It was a key pledge

to record lows It was a key pledge to record lows It was a key pledge

of our manifesto, we will safeguard of our manifesto, we will safeguard

of our manifesto, we will safeguard Britain's credit rating with a

Britain's credit rating with a Britain's credit rating with a

credible plan. That is broken? credible plan. That is broken?

credible plan. That is broken? credible plan. That is broken?

if you look. We have a credible if you look. We have a credible

if you look. We have a credible plan, and the fact that is

plan, and the fact that is international markets still

international markets still international markets still

international markets still consider the UK to have a credible

consider the UK to have a credible consider the UK to have a credible

consider the UK to have a credible plan. It is going to plan?This is

plan. It is going to plan?This is plan. It is going to plan?This is

a disappointment, we are not a disappointment, we are not

a disappointment, we are not dismissing it, it is an important

dismissing it, it is an important dismissing it, it is an important

benchmark. Clearly it is much benchmark. Clearly it is much

benchmark. Clearly it is much better to have a triple-A rating

better to have a triple-A rating better to have a triple-A rating

better to have a triple-A rating than not. What went wrong?If you

than not. What went wrong?If you than not. What went wrong?If you

look at the explanation that look at the explanation that

look at the explanation that Moody's have set out, their view

Moody's have set out, their view Moody's have set out, their view

Moody's have set out, their view that growth over the next few years

that growth over the next few years that growth over the next few years

will be sluggish, and in those will be sluggish, and in those

will be sluggish, and in those circumstances that's why they have

circumstances that's why they have circumstances that's why they have

said that. What's gone wrong?The said that. What's gone wrong?The

said that. What's gone wrong?The reason growth will be sluggish over

reason growth will be sluggish over reason growth will be sluggish over

reason growth will be sluggish over the next few years not because we

the next few years not because we the next few years not because we

have taken measures to deal with have taken measures to deal with

have taken measures to deal with the deficit. Moody's are clear that

the deficit. Moody's are clear that the deficit. Moody's are clear that

the deficit. Moody's are clear that but for the fact we have taken

but for the fact we have taken but for the fact we have taken

but for the fact we have taken those measures we would be in a

those measures we would be in a those measures we would be in a

those measures we would be in a worse situation. It is to do with

worse situation. It is to do with the international situation,

the international situation, eurozone crisis, commodity crisis.

eurozone crisis, commodity crisis. eurozone crisis, commodity crisis.

It wasn't your plan, the It wasn't your plan, the

It wasn't your plan, the Government's plan at all. The

Government's plan at all. The Government's plan has gone

Government's plan has gone Government's plan has gone

according to plan and nothing will according to plan and nothing will

change? The circumstances in which change? The circumstances in which

change? The circumstances in which change? The circumstances in which

we are in are clearly much worse we are in are clearly much worse

than what independent forecasters than what independent forecasters

than what independent forecasters than what independent forecasters

had predicted in 2010. That is why had predicted in 2010. That is why

had predicted in 2010. That is why had predicted in 2010. That is why

had predicted in 2010. That is why the likes of the UK, as well as the

the likes of the UK, as well as the the likes of the UK, as well as the

US and France, have lost their US and France, have lost their

US and France, have lost their triple-A status. Debt is going up.

triple-A status. Debt is going up. triple-A status. Debt is going up.

Not many people realise that. Debt Not many people realise that. Debt

Not many people realise that. Debt Not many people realise that. Debt

is going up, not set to peak until is going up, not set to peak until

is going up, not set to peak until 2018. When you inherit a record

2018. When you inherit a record 2018. When you inherit a record

deficit, debt was always going to deficit, debt was always going to

deficit, debt was always going to increase. What we have done is

increase. What we have done is increase. What we have done is

brought the deficit down. Which is brought the deficit down. Which is

brought the deficit down. Which is brought the deficit down. Which is

the year on year number. You are the year on year number. You are

the year on year number. You are getting double the debt, you are

getting double the debt, you are getting double the debt, you are

getting double the debt, you are doubling the debt, how can you say

doubling the debt, how can you say doubling the debt, how can you say

doubling the debt, how can you say that is a credible plan? Debt is

that is a credible plan? Debt is that is a credible plan? Debt is

the accumulation of deficits, if the accumulation of deficits, if

the accumulation of deficits, if you like, we inherited the largest

you like, we inherited the largest you like, we inherited the largest

you like, we inherited the largest deficit in our history, and we have

deficit in our history, and we have deficit in our history, and we have

deficit in our history, and we have reduced by 25% from the time that

reduced by 25% from the time that reduced by 25% from the time that

reduced by 25% from the time that we came into office. Now, we have

we came into office. Now, we have we came into office. Now, we have

done that by taking some difficult done that by taking some difficult

decisions. There is clearly decisions. There is clearly

decisions. There is clearly opposition to that. It is higher

opposition to that. It is higher opposition to that. It is higher

opposition to that. It is higher than last year. It is higher than

than last year. It is higher than than last year. It is higher than

last year? We don't have the last year? We don't have the

last year? We don't have the deficit numbers yet for this year.

deficit numbers yet for this year. deficit numbers yet for this year.

The last time the independent The last time the independent

The last time the independent Office of Budget Responsibility set

Office of Budget Responsibility set Office of Budget Responsibility set

Office of Budget Responsibility set out a comment it was lower. It is

out a comment it was lower. It is out a comment it was lower. It is

not going in the right direction, not going in the right direction,

not going in the right direction, not going in the right direction,

is it. What happens now? Is it is it. What happens now? Is it

is it. What happens now? Is it faster cuts? What is important, and

faster cuts? What is important, and faster cuts? What is important, and

faster cuts? What is important, and I'm not going to tell what you's in

I'm not going to tell what you's in I'm not going to tell what you's in

I'm not going to tell what you's in the budget in three weeks or so

the budget in three weeks or so the budget in three weeks or so

the budget in three weeks or so time. What is very important is the

time. What is very important is the Government doesn't abandon dealing

Government doesn't abandon dealing Government doesn't abandon dealing

with our deficit. We heard today, with our deficit. We heard today,

with our deficit. We heard today, with our deficit. We heard today,

in the House of Commons, Ed Balls in the House of Commons, Ed Balls

in the House of Commons, Ed Balls essentially make an argument, we

essentially make an argument, we essentially make an argument, we

shouldn't worry about it. I'm not shouldn't worry about it. I'm not

shouldn't worry about it. I'm not talking about Ed Balls I'm talking

talking about Ed Balls I'm talking talking about Ed Balls I'm talking

about you. It's really important about you. It's really important

about you. It's really important about you. It's really important

because we have a choice as a because we have a choice as a

because we have a choice as a because we have a choice as a

country. Do we try to deal with the country. Do we try to deal with the

country. Do we try to deal with the country. Do we try to deal with the

deficit? Do we try to get the deficit? Do we try to get the

deficit? Do we try to get the public finances back in order? Do

public finances back in order? Do public finances back in order? Do

public finances back in order? Do we try to deal with some of the

we try to deal with some of the we try to deal with some of the

long-term issues? Or do we ignore long-term issues? Or do we ignore

long-term issues? Or do we ignore long-term issues? Or do we ignore

it and say let's not borrow about it and say let's not borrow about

it and say let's not borrow about it and say let's not borrow about

it and borrow our way out. It is it and borrow our way out. It is

it and borrow our way out. It is the alternative, that is what Ed

the alternative, that is what Ed the alternative, that is what Ed

Balls is advocating. No going Balls is advocating. No going

Balls is advocating. No going faster and making greater tax cuts

faster and making greater tax cuts faster and making greater tax cuts

faster and making greater tax cuts faster and making greater tax cuts

s that on the cards now? A lot of s that on the cards now? A lot of

s that on the cards now? A lot of s that on the cards now? A lot of

your party would like to see that? your party would like to see that?

your party would like to see that? your party would like to see that?

I won't set out items in the budget I won't set out items in the budget

I won't set out items in the budget which will be announced in three

which will be announced in three which will be announced in three

weeks time. You must be considering weeks time. You must be considering

weeks time. You must be considering it, right? The important thing is

it, right? The important thing is it, right? The important thing is

it, right? The important thing is as a Government we focus on dealing

as a Government we focus on dealing as a Government we focus on dealing

with the public finances that we with the public finances that we

with the public finances that we with the public finances that we

stick to a plan. Are you stick to stick to a plan. Are you stick to

stick to a plan. Are you stick to stick to a plan. Are you stick to

go plan that has lost us the go plan that has lost us the

go plan that has lost us the triple-A rating. That is what

triple-A rating. That is what triple-A rating. That is what

people are trying to understand. Is people are trying to understand. Is

people are trying to understand. Is this the same plan you will

this the same plan you will this the same plan you will

continue with, which is losing us continue with, which is losing us

continue with, which is losing us what you called "credibility"?

what you called "credibility"? what you called "credibility"?

what you called "credibility"? moody as made very clear in their

moody as made very clear in their moody as made very clear in their

statement on Friday, if it wasn't statement on Friday, if it wasn't

statement on Friday, if it wasn't for the political will that this

for the political will that this Government is demonstrating, our

Government is demonstrating, our Government is demonstrating, our

determination to get to grips with determination to get to grips with

historically very, very high-def historically very, very high-def

historically very, very high-def sits, then the prospects for our,

sits, then the prospects for our, sits, then the prospects for our,

for our credit rating and our for our credit rating and our

market credibility, more market credibility, more

market credibility, more importantly, would be much worse.

importantly, would be much worse. importantly, would be much worse.

We would see interest rates rising, We would see interest rates rising,

We would see interest rates rising, We would see interest rates rising,

we would see that having an impact we would see that having an impact

on households with mortgages, on households with mortgages,

on households with mortgages, businesses seeking finance. That is

businesses seeking finance. That is businesses seeking finance. That is

businesses seeking finance. That is a risk that we are not prepared to

a risk that we are not prepared to a risk that we are not prepared to

a risk that we are not prepared to take. I'm afraid that is what would

take. I'm afraid that is what would take. I'm afraid that is what would

take. I'm afraid that is what would happen if we took the Ed Balls

happen if we took the Ed Balls happen if we took the Ed Balls

approach and said borrow. I'm not approach and said borrow. I'm not

approach and said borrow. I'm not talking about the Ed Balls approach,

talking about the Ed Balls approach, talking about the Ed Balls approach,

you have ignored my request. The you have ignored my request. The

you have ignored my request. The alternative which many in the party

alternative which many in the party alternative which many in the party

are saying, and maybe elsewhere, is are saying, and maybe elsewhere, is

are saying, and maybe elsewhere, is are saying, and maybe elsewhere, is

that you could be doing this much that you could be doing this much

that you could be doing this much quicker. If you could stop ring-

quicker. If you could stop ring- quicker. If you could stop ring-

fencing departments that you have fencing departments that you have

fencing departments that you have made a big thing about ring-fencing

made a big thing about ring-fencing made a big thing about ring-fencing

made a big thing about ring-fencing and saying, we are not going to see

and saying, we are not going to see and saying, we are not going to see

and saying, we are not going to see any growth, until we do that?

any growth, until we do that? any growth, until we do that?

have taken some difficult decisions have taken some difficult decisions

have taken some difficult decisions when it comes to public spending.

when it comes to public spending. Departments are seeing reductions

Departments are seeing reductions Departments are seeing reductions

Departments are seeing reductions Departments are seeing reductions

in a way that we have not seen in in a way that we have not seen in

in a way that we have not seen in this country since the 1920s. We

this country since the 1920s. We this country since the 1920s. We

have no choice but to make have no choice but to make

difficult decisions on public difficult decisions on public

difficult decisions on public difficult decisions on public

spending. It is right that we stick spending. It is right that we stick

spending. It is right that we stick spending. It is right that we stick

to that path. What I'm saying is to that path. What I'm saying is

to that path. What I'm saying is that we really cannot abandon

that we really cannot abandon that we really cannot abandon

focusing on our deficit, dealing focusing on our deficit, dealing

focusing on our deficit, dealing with the public finances and the

with the public finances and the with the public finances and the

with the public finances and the argument we heard in the House of

argument we heard in the House of argument we heard in the House of

argument we heard in the House of Commons today from Ed Balls is that

Commons today from Ed Balls is that Commons today from Ed Balls is that

Commons today from Ed Balls is that we abandon that. That would be a

huge mistake. huge mistake.

huge mistake. Thank you for coming in.

Thank you for coming in. Thank you for coming in.

Thank you for coming in. If you wanted to be really tabloid

If you wanted to be really tabloid If you wanted to be really tabloid

If you wanted to be really tabloid about the whole thing you could say

about the whole thing you could say about the whole thing you could say

the Italian elections have been Dom the Italian elections have been Dom

the Italian elections have been Dom the Italian elections have been Dom

it nad by a comedian and a it nad by a comedian and a

it nad by a comedian and a billionare accused of having under-

billionare accused of having under- billionare accused of having under-

billionare accused of having under- age sex with dancer. If you didn't

age sex with dancer. If you didn't age sex with dancer. If you didn't

age sex with dancer. If you didn't want to be tabloid it looks like

want to be tabloid it looks like want to be tabloid it looks like

that from some angles. Silvio that from some angles. Silvio

that from some angles. Silvio Berlusconi looks set to take the

Berlusconi looks set to take the Berlusconi looks set to take the

Upper House in the Senate elections, Upper House in the Senate elections,

Upper House in the Senate elections, Upper House in the Senate elections,

the lower house looks like it is the lower house looks like it is

the lower house looks like it is going to Pier Luigi Bersani. What

going to Pier Luigi Bersani. What going to Pier Luigi Bersani. What

going to Pier Luigi Bersani. What does it mean for Italy or the rest

does it mean for Italy or the rest does it mean for Italy or the rest

of Europe. We're in Rome tonight. of Europe. We're in Rome tonight.

of Europe. We're in Rome tonight. Take us through Italy first.

Take us through Italy first. Take us through Italy first.

Take us through Italy first. The last exit polls and all the

The last exit polls and all the The last exit polls and all the

votes counted show there is hardly votes counted show there is hardly

votes counted show there is hardly votes counted show there is hardly

a point in it between the centre a point in it between the centre

a point in it between the centre left and right between the lower

left and right between the lower left and right between the lower

house of parliament and the Upper house of parliament and the Upper

house of parliament and the Upper House of parliament. This is very

House of parliament. This is very House of parliament. This is very

worrying for the Italians and the worrying for the Italians and the

worrying for the Italians and the worrying for the Italians and the

eurozone as a whole. Italy is the eurozone as a whole. Italy is the

third-largest economy in the third-largest economy in the

third-largest economy in the eurozone, what matters here matters

eurozone, what matters here matters eurozone, what matters here matters

outside. Italy is in deep, deep outside. Italy is in deep, deep

outside. Italy is in deep, deep recession, the public debt is 120%

recession, the public debt is 120% recession, the public debt is 120%

of GDP. Italians and the of GDP. Italians and the

international financial markets international financial markets

international financial markets want reforms to improve the

want reforms to improve the want reforms to improve the

situation. If we have a hung situation. If we have a hung

situation. If we have a hung parliament here, or some kind of

parliament here, or some kind of fractious, uncomfortable coalition,

fractious, uncomfortable coalition, fractious, uncomfortable coalition,

that is unlikely to happen. There that is unlikely to happen. There

that is unlikely to happen. There is even talk here tonight of

is even talk here tonight of is even talk here tonight of

possible fresh elections before too possible fresh elections before too

possible fresh elections before too possible fresh elections before too

long. To the outside viewer it is a long. To the outside viewer it is a

long. To the outside viewer it is a bit like Dallas, isn't it? You

bit like Dallas, isn't it? You think Berlusconi's finished and

think Berlusconi's finished and think Berlusconi's finished and

think Berlusconi's finished and gone away, and then up he pops, and

gone away, and then up he pops, and gone away, and then up he pops, and

gone away, and then up he pops, and it looks like he has done it again.

it looks like he has done it again. it looks like he has done it again.

How? This really has been an How? This really has been an

How? This really has been an astonishing night for two men who

astonishing night for two men who astonishing night for two men who

really, not very long ago, were really, not very long ago, were

really, not very long ago, were dismissed by much of the Italian

dismissed by much of the Italian political establishment and

political establishment and political establishment and

international leaders as a joke. international leaders as a joke.

international leaders as a joke. You mentioned earlier the Italian

You mentioned earlier the Italian You mentioned earlier the Italian

comedian and the five-star movement, comedian and the five-star movement,

comedian and the five-star movement, comedian and the five-star movement,

he has managed to suck up protest he has managed to suck up protest

he has managed to suck up protest in Italy. People disgusted by the

in Italy. People disgusted by the in Italy. People disgusted by the

political status quo. He's now political status quo. He's now

political status quo. He's now political status quo. He's now

going to be able to pepper the going to be able to pepper the

going to be able to pepper the Upper and Lower House of the

Upper and Lower House of the Italian parliament with his

Italian parliament with his political novices. They include

political novices. They include housewives and the unemployed.

housewives and the unemployed. housewives and the unemployed.

housewives and the unemployed. There is no way of knowing how

There is no way of knowing how There is no way of knowing how

these people will act in parliament. these people will act in parliament.

these people will act in parliament. Italy's most famous modern day

Italy's most famous modern day politician, Silvio Berlusconi, back

politician, Silvio Berlusconi, back politician, Silvio Berlusconi, back

from the political dead. He was from the political dead. He was

booted uncermoniously out of booted uncermoniously out of

booted uncermoniously out of Government just 18 months ago. And

Government just 18 months ago. And Government just 18 months ago. And

opinion polls shows that most opinion polls shows that most

opinion polls shows that most opinion polls shows that most

Italians were happy to see him go, Italians were happy to see him go,

Italians were happy to see him go, what a comeback in the election

what a comeback in the election campaign, tirelessly appearing on

campaign, tirelessly appearing on campaign, tirelessly appearing on

campaign, tirelessly appearing on TV chat show after TV chat show.

TV chat show after TV chat show. TV chat show after TV chat show.

Not just on his "friendly "channel Not just on his "friendly "channel

Not just on his "friendly "channel Not just on his "friendly "channel

that is he owns as well. Repeating that is he owns as well. Repeating

that is he owns as well. Repeating again and again his economic

again and again his economic again and again his economic

message. His promise that he will message. His promise that he will

message. His promise that he will rid Italy of unpopular austerity

rid Italy of unpopular austerity rid Italy of unpopular austerity

taxes introduced over the last one- taxes introduced over the last one-

taxes introduced over the last one- and-a-half years by Mario Monti's

and-a-half years by Mario Monti's technocrat Government. And even,

technocrat Government. And even, technocrat Government. And even,

this is a real Berlusconi populist this is a real Berlusconi populist

this is a real Berlusconi populist touch, promising to pay back

touch, promising to pay back touch, promising to pay back

touch, promising to pay back Italians in cash for what they paid

Italians in cash for what they paid in those taxes already.

in those taxes already. in those taxes already.

Preposterous say his critics, but Preposterous say his critics, but

Preposterous say his critics, but clearly millions of Italians have

listened. listened.

listened. Name Britain's most senior Catholic

Name Britain's most senior Catholic Name Britain's most senior Catholic

by the Vatican, and something by the Vatican, and something

by the Vatican, and something rather less complimentry by a gay

rather less complimentry by a gay rather less complimentry by a gay

charity last year, Cardinal Keith charity last year, Cardinal Keith

O'Brien brought forward his O'Brien brought forward his

O'Brien brought forward his resignation today and said he

resignation today and said he wouldn't be representing this

wouldn't be representing this wouldn't be representing this

country at the papal conclave next country at the papal conclave next

country at the papal conclave next country at the papal conclave next

month. The speed of events has been month. The speed of events has been

month. The speed of events has been astonished. On Friday he said

astonished. On Friday he said marriage should be considered

marriage should be considered marriage should be considered

within the priesthood, at the within the priesthood, at the

within the priesthood, at the within the priesthood, at the

weekend he was the centre of sexual weekend he was the centre of sexual

weekend he was the centre of sexual allegations which he contests, by

allegations which he contests, by allegations which he contests, by

lunchtime he was gone today. What lunchtime he was gone today. What

lunchtime he was gone today. What lunchtime he was gone today. What

is going on in the Catholic Church? is going on in the Catholic Church?

is going on in the Catholic Church? Cardinal O'Brien was due to retire

Cardinal O'Brien was due to retire Cardinal O'Brien was due to retire

Cardinal O'Brien was due to retire when he turned 75 next month. His

when he turned 75 next month. His decision today leaves Britain

decision today leaves Britain decision today leaves Britain

without any vote in the imminent without any vote in the imminent

without any vote in the imminent conclave to choose Pope Benedict's

conclave to choose Pope Benedict's conclave to choose Pope Benedict's

successor. The Cardinal was accused successor. The Cardinal was accused

in yesterday's Observer of in yesterday's Observer of

inappropriate behaviour towards inappropriate behaviour towards

inappropriate behaviour towards inappropriate behaviour towards

four priests in the 1980s. He says four priests in the 1980s. He says

four priests in the 1980s. He says he contests the allegation, and is

he contests the allegation, and is he contests the allegation, and is

taking legal advice. He also used taking legal advice. He also used

his resignation statement to his resignation statement to

his resignation statement to apologise to all whom he had

apologise to all whom he had apologise to all whom he had

offended. Ordained as a priest in offended. Ordained as a priest in

offended. Ordained as a priest in 1965, Keith O'Brien was pro-

1965, Keith O'Brien was pro- 1965, Keith O'Brien was pro-

claimeded a Cardinal by Pope John claimeded a Cardinal by Pope John

claimeded a Cardinal by Pope John claimeded a Cardinal by Pope John

Paul II in 2003. He has been, at Paul II in 2003. He has been, at

Paul II in 2003. He has been, at times, a controversial figure, most

times, a controversial figure, most times, a controversial figure, most

recently with his opposition to the recently with his opposition to the

Scottish Government's plans to Scottish Government's plans to

legalise same-sex marriage. His legalise same-sex marriage. His

legalise same-sex marriage. His resignation statement said the Pope

resignation statement said the Pope resignation statement said the Pope

would appoint someone to govern the would appoint someone to govern the

would appoint someone to govern the would appoint someone to govern the

arch dieies in his place until his arch dieies in his place until his

arch dieies in his place until his arch dieies in his place until his

sublg -- -- diocese in his place, sublg -- -- diocese in his place,

sublg -- -- diocese in his place, until his successor was appointed.

until his successor was appointed. until his successor was appointed.

until his successor was appointed. We have with us our guest, a

We have with us our guest, a We have with us our guest, a

Catholic priest who writes for the Catholic Herald.

Catholic Herald. Catholic Herald.

Catholic Herald. What do you think happened here?

What do you think happened here? What do you think happened here?

think it's, the Vatican always think it's, the Vatican always

think it's, the Vatican always speaks in a rather elaborate code.

speaks in a rather elaborate code. speaks in a rather elaborate code.

He handed in his resignation, the He handed in his resignation, the

He handed in his resignation, the Pope requested him to resign.

Pope requested him to resign. Pope requested him to resign.

Pope actually asked him to resign? Pope actually asked him to resign?

Pope actually asked him to resign? Pope actually asked him to resign?

That is what we were told. When the That is what we were told. When the

That is what we were told. When the That is what we were told. When the

Pope asks you to resign, you don't Pope asks you to resign, you don't

Pope asks you to resign, you don't Pope asks you to resign, you don't

have a choice about that. The Pope have a choice about that. The Pope

have a choice about that. The Pope have a choice about that. The Pope

is a supreme power in the Catholic is a supreme power in the Catholic

is a supreme power in the Catholic is a supreme power in the Catholic

Church, when he speaks, you do what Church, when he speaks, you do what

Church, when he speaks, you do what he says. He was, effectively sacked.

he says. He was, effectively sacked. he says. He was, effectively sacked.

he says. He was, effectively sacked. Why? Who knows, you would have to

Why? Who knows, you would have to Why? Who knows, you would have to

Why? Who knows, you would have to ask the Pope that. Not me, one of

ask the Pope that. Not me, one of ask the Pope that. Not me, one of

the humble foot soldiers of the the humble foot soldiers of the

the humble foot soldiers of the Catholic Church. People make up

Catholic Church. People make up Catholic Church. People make up

Catholic Church. People make up their own mind about that. The Pope

their own mind about that. The Pope their own mind about that. The Pope

would have had his reasons for would have had his reasons for

would have had his reasons for sacking him. Are you suggesting it

sacking him. Are you suggesting it sacking him. Are you suggesting it

sacking him. Are you suggesting it was on the back of the allegations

was on the back of the allegations was on the back of the allegations

was on the back of the allegations was on the back of the allegations

at the weekend, or is it more to do at the weekend, or is it more to do

at the weekend, or is it more to do at the weekend, or is it more to do

with the dogma of what he thought with the dogma of what he thought

with the dogma of what he thought or believed? I think to understand

or believed? I think to understand or believed? I think to understand

what has happened here one would what has happened here one would

what has happened here one would what has happened here one would

have to go back to the only other have to go back to the only other

have to go back to the only other have to go back to the only other

time the Pope has done this. When time the Pope has done this. When

time the Pope has done this. When he condemned father Ma rien Golgado

he condemned father Ma rien Golgado he condemned father Ma rien Golgado

he condemned father Ma rien Golgado to a life of prayer and penance

to a life of prayer and penance to a life of prayer and penance

without due process. There is no without due process. There is no

without due process. There is no due process here, he uses this

due process here, he uses this due process here, he uses this

power very rarely, he decided very power very rarely, he decided very

power very rarely, he decided very swiftly to act. That is most

swiftly to act. That is most swiftly to act. That is most

unusual. It is very interesting. We unusual. It is very interesting. We

unusual. It is very interesting. We unusual. It is very interesting. We

are often being told we try to are often being told we try to