05/03/2014 Newsnight


05/03/2014

The stories behind the day's headlines, including BBC Three going online, stop and search reforms, foreign exchange market manipulation and drones that get people online.


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Transcript


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inception, BBC Three is going off air. Will it be missed from our

:00:07.:00:10.

televisions? And what happens to home-grown comedy now? They're

:00:11.:00:18.

mouthing worse things than that in some places. We speak to presenters

:00:19.:00:21.

and writers, critics and defenders of the channel.

:00:22.:00:24.

Newsnight learns exclusive details of Theresa May's letter to her

:00:25.:00:27.

cabinet colleagues. She asked for stop and search reforms back in

:00:28.:00:34.

December. What's taking so long? The Met says stop and search is

:00:35.:00:37.

changing, and wants the rest of the country to catch up. But there's

:00:38.:00:41.

still mistrust on the streets. We're out on the beat.

:00:42.:00:44.

And trying to connect the world by drone? The next step of global

:00:45.:00:46.

domination for the internet giants. Good evening. Either your office has

:00:47.:01:00.

been reverberating tonight with quotes from Gavin and Stacey, Don't

:01:01.:01:03.

Tell The Bride, The Mighty Boosh and The Call Centre, or else you don't

:01:04.:01:07.

have a clue what I'm on about - which could hold the key to the

:01:08.:01:11.

problem. The BBC has decided to axe the digital tv channel BBC Three and

:01:12.:01:14.

put it solely on iPlayer. The channel, which has promoted

:01:15.:01:17.

home-grown comedy and attracted a much younger average audience, may

:01:18.:01:21.

be the first victim of a push by the Director-General for the corporation

:01:22.:01:24.

to focus on what it does best. Comedians who've made their names on

:01:25.:01:27.

BBC Three have launched a campaign to try and save it. Tonight we ask

:01:28.:01:31.

whether the move is inevitable, and how much money it would really save.

:01:32.:01:43.

Here's Steve Hewlett. No but, yeah, this what happened... Can we go to

:01:44.:01:58.

euro Disney. What's this? Your dad. What's occurring. What's occurring

:01:59.:02:02.

indeed. Having spent ten years getting its started and fighting off

:02:03.:02:07.

legion call, not least from its own former senior executives for it to

:02:08.:02:12.

be closed, the BBC is about to announce that BBC Three, hope of

:02:13.:02:16.

Little Britain, Gavin and Stacey and the rest is for the chap. It will

:02:17.:02:21.

seize to be a broadcast TV channel but will live on, online.

:02:22.:02:28.

For the BBC this is a big statement. Director-General Tony Hall said it

:02:29.:02:31.

was time for tough choices, and here is the first of them. The message to

:02:32.:02:36.

the Government is clear. One senior executive told me it was meant as a

:02:37.:02:42.

wake upical call. Keep cutting the licence fee in real terms and

:02:43.:02:47.

license payers, your voters really won't like it, and this is just the

:02:48.:02:50.

start. We have had news here at the

:02:51.:02:55.

station. Remember the public reaction to BBC 6 Music, a station

:02:56.:03:00.

never more popular than when the BBC threatened to shut it. Plans

:03:01.:03:04.

ultimately abandoned in the face of a licence payer revolt. In a

:03:05.:03:08.

nutshell, and the BBC knows this, there is little public appetite for

:03:09.:03:15.

cuts to be BBC services. So, why BBC Three? Why not BBC Four?

:03:16.:03:22.

If you are to choose between three and four, you clearly choose BBC

:03:23.:03:25.

Three because that is where the audience is going, it is moving

:03:26.:03:31.

online and iPlayer. When BBC Three has done advance screenings of

:03:32.:03:35.

programmes through the iPlayer they have good audiences on the back of

:03:36.:03:42.

it. So BBC Three did attract the younger audiences that auntie

:03:43.:03:47.

craved, albeit with the help of Eastenders repeat and maybe it is

:03:48.:03:51.

well placed to take them with it on line. But how will it be remembered

:03:52.:03:56.

by the crickets and those of us not in the tar debt demographic. Me and

:03:57.:04:05.

my big breasts, I am ginning jer, snog, marry and avoid which ran for

:04:06.:04:10.

five year, these are the programmes that gave the channel the bad name

:04:11.:04:16.

and made it a convenient whipping boy today. As any channel controller

:04:17.:04:20.

knows you have to sandwich the public service stuff, even on the

:04:21.:04:24.

BBC, between programmes that are going to attract mainly because of

:04:25.:04:27.

stupid titles. But back to the sharp end. The BBC

:04:28.:04:33.

still needs to find another ?450 million of cuts, or savings,

:04:34.:04:41.

annually by 2017. So how much money might the BBC save by moving BBC

:04:42.:04:47.

Three online only? Well, there is the rub. Stacy... My God. The big

:04:48.:04:56.

money, some ?90 million, is in BBC Three's content budget.

:04:57.:04:59.

But if you cut much of that, which is after all spent on things that

:05:00.:05:05.

lie since payers appreciate, like programme, while at the same time

:05:06.:05:10.

admitting, that the BBC is spending shed loads on corporate

:05:11.:05:13.

inefficiency, too many manager, too many people, and all of that, which

:05:14.:05:19.

license payers definitely do not appreciate, you can quite easily end

:05:20.:05:24.

up in a bad place. Do you know your flies are open?

:05:25.:05:29.

Even people who were never especially keen on BBC Three... Let

:05:30.:05:35.

me give you a list of distinctive programmes. Help me, I am infested

:05:36.:05:41.

Not to mention Government and politicians for whom the original

:05:42.:05:46.

message was meant might start to wonder what indeed is occurring.

:05:47.:05:53.

Steve Hewlett there, we me Ash Attala, producer of The Office,

:05:54.:05:59.

probably best known for that. Tessa Jowell the cormer Culture Secretary

:06:00.:06:05.

and David Elstein who launched who launched Channel 5ful we saw some of

:06:06.:06:10.

the programmes there and the titles, are the grabbiest bit of what BBC

:06:11.:06:13.

Three did. Give us a sense of what made it so vital? I think today the

:06:14.:06:20.

BBC, who I am a friend of have had a bad day at the office, today they

:06:21.:06:25.

have cut their link to the future, so BBC Three is the main plank at

:06:26.:06:29.

which the BBC connect with their on television with the youth audiences

:06:30.:06:33.

and today, it feels like a 60-year-old man in a golf jumper who

:06:34.:06:38.

has walked into a good night club and turned the music off so he can

:06:39.:06:45.

hear classical music. I am embarrassed. Surprised. It has been

:06:46.:06:49.

fast. They would say he hasn't turned the music off, he has put it

:06:50.:06:56.

on iPlayer. Will the next generation go to iPlayer? . It sends out a

:06:57.:07:01.

message that the youth message should be shoved on line. We are all

:07:02.:07:05.

online, the statistic, they don't even bear it out, a BBC Three

:07:06.:07:10.

audiences watches linear television. It is a slightly middle-aged older

:07:11.:07:15.

man's perception that kids are similarly on line. They like to

:07:16.:07:19.

watch TV in in the way we do. You had doubts about it from the start,

:07:20.:07:24.

but this seems to sort of throw it into a rather stark light, that you

:07:25.:07:29.

know, we have given up on it. Well, I think you know, I take very

:07:30.:07:35.

seriously what Ash has said, and when I was Secretary of State, and I

:07:36.:07:43.

was asked to approve two new channels in 2002, BBC Four, which

:07:44.:07:48.

has been very successful, BBC Three, I turned back the first submission

:07:49.:07:54.

for BBC Three, because I thought it was insubstantial, implausible and

:07:55.:07:57.

wouldn't add anything to the BBC. However, the then Director General,

:07:58.:08:02.

and chairman of the Governors were passionate for all the reasons that

:08:03.:08:07.

Ash is giving about the importance of there being a BBC channel, that

:08:08.:08:14.

appealed to 16-34-year-olds. It is a wide demographic. And it got there?

:08:15.:08:20.

They took it away, they reworked it, it came back it was a better

:08:21.:08:24.

proposal, and on that basis, I approved it. And I think the

:08:25.:08:30.

important question is the one which Ash has put, which is does this mean

:08:31.:08:37.

that the BBC is giving up on mainstream connection, with

:08:38.:08:42.

16-34-year-olds. David, I imagine that image of the middle aged man in

:08:43.:08:47.

the golf jumper will have BBC executives reaching for the sink at

:08:48.:08:53.

this point. The irony is stronger, because all the savings that might

:08:54.:08:57.

be made out of BBC Three will have to be applied to filling the hole in

:08:58.:09:02.

the BBC pension fund so it is BBC pensioners who will benefit from

:09:03.:09:05.

these cuts more than anybody else. But look, the truth of the matter is

:09:06.:09:13.

this, the BBC is in financial fix. The coalition cut 16% of its

:09:14.:09:19.

spending power in October 2010, and the pigeons are coming home to

:09:20.:09:24.

roost. Something has to go. They tried slicing, everything gets worse

:09:25.:09:30.

and Tony Hall announced last week I am going to make a big cut, we

:09:31.:09:36.

assumed it was morning BBC Two and four, it is... Why do you think it

:09:37.:09:42.

wasn't two and four? The simple reason is economics. It is just that

:09:43.:09:48.

of the BBC channels, this is the least effective in converting cash

:09:49.:09:52.

into viewer ship. It is basic as that. You have said it is

:09:53.:09:57.

patronising to think a whole youth audience will go to iPlayer, do you

:09:58.:10:01.

think this is a temporary grave then before it gets axed completely or do

:10:02.:10:06.

you think iPlayer could come into its own? Look, iPlayer is brilliant

:10:07.:10:13.

but it is inexplicable they have chosen to act BBC Three as oppose to

:10:14.:10:19.

Four. A service like the BBC has to look, they need to serve everyone. I

:10:20.:10:27.

know they need to make cuts. A BBC Four audience can migrate to BBC

:10:28.:10:32.

Two. A BBC One audience serves the whole family. A BBC Three have

:10:33.:10:36.

nowhere else to go on BBC television, they have been today

:10:37.:10:40.

marriage prized and something that is worse, BBC has got whiter, older,

:10:41.:10:45.

and more middle class, because it is the BBC Three audience that is the

:10:46.:10:48.

most diverse of all the BBC channels. I guess the problem always

:10:49.:10:55.

was that it felt like it was on commercial territory, there were all

:10:56.:11:00.

the Fours that could do that. The MTVs. Exactly, this is I suppose one

:11:01.:11:07.

of the ways in which the decision is made easier, but we knew that, I

:11:08.:11:13.

knew that when I gave approval to the channel. It was a crowded market

:11:14.:11:18.

place, there are other channels, but the important thing about this, was

:11:19.:11:24.

that this is the BBC serving this population of young people. I am

:11:25.:11:27.

trying to get a sense from you, when you signed it off and you were clear

:11:28.:11:32.

you didn't like the first proposal, did you sign it off thinking "This

:11:33.:11:42.

is doomed"? No, I didn't, because I was persuaded by the by Greg Dyke

:11:43.:11:49.

and it is a compelling case, that the BBC are a great institution,

:11:50.:11:54.

national institution, has got to keep on kind of replacing, you know,

:11:55.:12:00.

the people, the license fee payers who die, and extend its reach to

:12:01.:12:06.

much younger people. I do accuse -- actually, and this is a slightly

:12:07.:12:11.

off-piste point on this, I think the BBC has sometimes got to say to the

:12:12.:12:16.

Government, this is the license fee payer's money, it is not part of

:12:17.:12:20.

your spending round, it comes from a different source. They pay ?145...

:12:21.:12:24.

What should they have done with things now? Are you saying there

:12:25.:12:29.

shouldn't have been a decision taken today is? You say it is a compelling

:12:30.:12:36.

argument -- argument. I think wait and see, whether the audiences do

:12:37.:12:41.

migrate, these young people do migrate, to iPlayer. It is too late,

:12:42.:12:51.

if they don't. I am not saying defend BBC Three at all costs, what

:12:52.:12:57.

I am saying is that you have to find another way, if the BBC wants to

:12:58.:13:01.

continue to appeal to younger people, of doing that, or give up on

:13:02.:13:06.

that cause all together and that would be a Piti. What a strange

:13:07.:13:09.

thing to give up on young people, what a strange thing to marginalise

:13:10.:13:14.

young people, of all the channel, what a weird message to say to the

:13:15.:13:19.

license fee payers of tomorrow there is no television channel aimed at

:13:20.:13:26.

you. There is plenty aimed at them. E 4 is much more efficient and it is

:13:27.:13:32.

publicly owned. We we are going to spend public money on reaching 16-34

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we would be better off spending it there. Can you save this money by

:13:37.:13:41.

putting it on iPlayer? Of course not. Putting any of the 8 85 million

:13:42.:13:52.

budget is going to be more ineeffective than the current

:13:53.:13:57.

situation. The correct answer is, inject more of this investment in

:13:58.:14:01.

programmes that appeal to young people in BBC One. It's a general

:14:02.:14:06.

list channel. Long before BBC Three and four were thought of the BBC was

:14:07.:14:10.

brilliant at delivering comedies that appealed to all ages. Do you

:14:11.:14:17.

think it will go? What is important is candour about responsibility for

:14:18.:14:21.

that group of license fee payer, and I mean, as far as I am concerned, I

:14:22.:14:27.

don't feel wedded to the continued existence of BBC Three, I do feel

:14:28.:14:32.

wedded to the BBC believing it has a responsibility for those younger

:14:33.:14:37.

people, and not simply saying welling, we will close down BBC

:14:38.:14:40.

Three and whether or not you know, young people go to iPlayer is not a

:14:41.:14:50.

matter of concern to us. You have to have another plan. The BBC trust

:14:51.:14:56.

will adjudicate on this. But I do not see that they can veto it unless

:14:57.:15:01.

they have a better way of saving the money. That is their problem,

:15:02.:15:07.

shortage of cash. Downing Street has denied

:15:08.:15:09.

suppressing a report suggesting that immigration has had less of an

:15:10.:15:12.

effect on British jobs than first thought. Number ten say it isn't

:15:13.:15:16.

finished yet, but hinted it would be published imminently. Labour and the

:15:17.:15:19.

Liberal Democrats are calling for it to be released now and senior

:15:20.:15:22.

members of the Government have given their reaction. Let's hear what the

:15:23.:15:25.

Deputy Prime Minister Nick Clegg said today. On the immigration

:15:26.:15:32.

report, this is not a report that has percolated its way up to my

:15:33.:15:38.

desk. The Prime Minister and I haven't even read it yet. It hasn't

:15:39.:15:42.

been submitted to us yet. But when it's ready, of course it will be

:15:43.:15:46.

published, of course it will be published. It's really important

:15:47.:15:48.

that the debate on immigration is based on facts. Our policy editor,

:15:49.:15:55.

Chris Cook, who broke the story, is here. So what do you make of that?

:15:56.:16:04.

That clip shows how things have moved on in the past 24 hours. Last

:16:05.:16:12.

night we revealed this piece of research showing that immigration

:16:13.:16:16.

had less of an impact on jobs than had previously been claimed. That

:16:17.:16:24.

report had been buried by Downing Street who would not release it. And

:16:25.:16:30.

then this morning we heard... Last night we were told that it was just

:16:31.:16:35.

an internal report. This morning we were told it was not finished. This

:16:36.:16:40.

afternoon we were told we would get it within the next week. That clip

:16:41.:16:45.

of Nick Clegg shows that complete turnaround. Reading between the

:16:46.:16:51.

lines, how big a deal is this for the government? It is quite bad for

:16:52.:16:55.

Theresa May. She has liked to use the impact on unemployment as a

:16:56.:17:05.

justification for reducing the amount. It is quite bad for Downing

:17:06.:17:08.

Street who are now forced to release it. But it is quite good for the Lib

:17:09.:17:15.

Dems. There are pretty relaxed about immigration was the Conservatives

:17:16.:17:24.

are generally not. This is a bit of ammunition inside the Coalition and

:17:25.:17:28.

pretty helpful for Nick Clegg himself. He has the debate coming up

:17:29.:17:33.

with Nigel Farage. So it will give him some ammunition. Newsnight has

:17:34.:17:41.

learned that Theresa May wrote to Cabinet colleagues three months ago

:17:42.:17:44.

seeking approval for her reforms to stop and search. She outlined the

:17:45.:17:49.

desired to change the laws around these controversial police powers

:17:50.:17:54.

and had the backing of the Lib Dems. Downing Street has said the PM

:17:55.:17:58.

accepts reforms need to take place, but some senior Conservatives

:17:59.:18:00.

believe that changes are being held up by regressive attitudes in number

:18:01.:18:13.

ten. Here's Laura Kuennssburg. This happened more than a million times

:18:14.:18:18.

on our streets last year, often to people doing nothing wrong, all too

:18:19.:18:22.

often to young black men. Stopped... Search... Pockets turned

:18:23.:18:33.

out, questions asked. Were you hear the other day? Even socks and shoes

:18:34.:18:39.

checked for weapons. How many times have you been stopped in total,

:18:40.:18:47.

ever? Over 100. At least. Why do you keep getting stopped? I do not know.

:18:48.:18:54.

It is a black neighbourhood. Do you think it is as simple as that? They

:18:55.:19:01.

think everyone is a drug dealer. Do they ever have good reason to stop

:19:02.:19:08.

you? Sometimes. But stop and search does not work very well. A majority

:19:09.:19:12.

of forces do not know how to use the powers properly. Fewer than one in

:19:13.:19:18.

ten league two arrests. Many more lead to resentment. There he is, he

:19:19.:19:25.

is going to stop us. It becomes mutual, it is like Tom and Jerry.

:19:26.:19:36.

Police always chasing people? Always trying to chase people. No surprise

:19:37.:19:39.

there is a strong argument for change. The Met is already doing it

:19:40.:19:43.

on their own. Your searches but raced on more information. More

:19:44.:19:47.

arrests and crucially, fewer complaints. The Home Secretary has

:19:48.:19:52.

made no secret of her desire to redraft the rules. She promised

:19:53.:19:56.

change months ago will stop now we have learned just how far her plans

:19:57.:20:01.

have progressed. She asked a Cabinet colleague to rubber-stamp the

:20:02.:20:06.

proposals in December. It is clear the Home Secretary is ready to

:20:07.:20:09.

reform. On the 4th of December she wrote, this letter home affairs

:20:10.:20:14.

committee clearance for a package of measures which I intend to announce.

:20:15.:20:19.

I would be grateful for responses by the 12th of December. She argued for

:20:20.:20:25.

changing section 60 powers were police can stop and search without

:20:26.:20:30.

permission. She said I intend to amend section 60 so the test for the

:20:31.:20:36.

powers used is necessary rather than expedient to prevent incidents

:20:37.:20:39.

involving serious violence and to raise the level of authorisation to

:20:40.:20:42.

a senior officer who must reasonably believe that violence will take

:20:43.:20:46.

based as opposed to May. Expect this to reduce significantly the number

:20:47.:20:50.

of stop and search is under section 60. The Met is changing its methods.

:20:51.:20:56.

We are in this alley because there were reports of crack being sold and

:20:57.:21:00.

burglaries. To have trust needs to be changed. The Met knows it, the

:21:01.:21:06.

Home Office believes that, the Lib Dems and Labour agree. One minister

:21:07.:21:14.

told me we have to get on with this. So what is the problem? One senior

:21:15.:21:20.

Conservative described to me of aggressive attitude in number ten.

:21:21.:21:24.

Officials tell us the prime Minister accepts the need for change. The

:21:25.:21:27.

important thing is to get a policy right, they believe, rather than

:21:28.:21:31.

rush. But sources believe there is a lack of will. But if David Cameron

:21:32.:21:36.

or listening to his own former adviser on youth crime, he would

:21:37.:21:43.

hear that it has to happen. In urban communities it will be dangerous

:21:44.:21:51.

because I think it breeds criminals. They will be rewarded for stopping

:21:52.:21:58.

stop and search. People feel the forces that be do not represent them

:21:59.:22:04.

and this would be a message in the right direction. By the The Home

:22:05.:22:10.

Office would the police argued for anything like scrapping the powers

:22:11.:22:15.

altogether. In parts of our cities stop and search, use well, can get

:22:16.:22:19.

weapons and drugs off the street. The powers that help keep people

:22:20.:22:24.

safe. But in the same urban areas like Brixton in south London, who is

:22:25.:22:29.

not just historical anger at Radley focused stop and search but fresh

:22:30.:22:33.

mistrust among teenagers today. It is just another day. This is what

:22:34.:22:40.

the police do, go around harassing, stop and searching. It is about

:22:41.:22:49.

being street smart. I was stopped when I was 11 years old. I have not

:22:50.:22:55.

been stopped since but it was not a pleasant experience. Since then I

:22:56.:22:59.

have despised them more and more. For me they are like criminals in

:23:00.:23:04.

fancy dress. They have got a mob mentality. There were seven officers

:23:05.:23:09.

who stopped me. When they are by themselves they look a bit nervous

:23:10.:23:13.

but when there are a lot of them they are comfortable. These two

:23:14.:23:27.

chaps... The Shadow Home Secretary has had cross-party talks to push

:23:28.:23:33.

the matter forward. The Home Secretary has made up her mind in

:23:34.:23:37.

favour of reform that has not yet got her way. But more important

:23:38.:23:43.

perhaps, the hold-up seems to hurt on the streets. Often in places

:23:44.:23:45.

where relationships between the police and the public need the most

:23:46.:23:57.

to heal. Last night my colleague Kirsty Wark recorded this interview

:23:58.:24:00.

with the Met Commissioner Bernard Hogan Howe. Stop and search are

:24:01.:24:07.

worried that do not have a good connotation for the police. If you

:24:08.:24:11.

look over the years at what has happened, you had section 44 of the

:24:12.:24:18.

terrorism act after 9/11. And more recently section 60. And they lead

:24:19.:24:28.

to random stop and search. For many black people in London that has been

:24:29.:24:33.

their experience with the police. And that has created distrust

:24:34.:24:37.

between communities and the police. Yes because there has been some

:24:38.:24:41.

disproportionality with the number of people stopped. I arrived in

:24:42.:24:48.

2011. We had a public enquiry into what had happened with the riots.

:24:49.:24:52.

But I thought it was important to understand the genetic factors. Many

:24:53.:24:56.

people I talk to referred back to stop and search. If you look at

:24:57.:25:02.

statistics, there is something there I thought we needed to look at. So

:25:03.:25:09.

you took unilateral action? The public were asking me to do

:25:10.:25:13.

something. The Met knew something needed to change and I thought it

:25:14.:25:17.

was possible to do less stop and search and be more effective. We had

:25:18.:25:20.

to maintain community support. search and be more effective. We had

:25:21.:25:29.

the arrest rate is still too low search and be more effective. We had

:25:30.:25:30.

the arrest rate is still too low for comfort throughout the country

:25:31.:25:30.

according to Theresa May. It could be better. Over the past two years

:25:31.:25:36.

we reduced stop and search by one third and doubles the number of

:25:37.:25:43.

arrests to almost 20%. We were just the number of complaints now by

:25:44.:25:46.

almost half and reduced the disproportionality. In black and

:25:47.:25:55.

nonblack? Yes, but at the same time we would just stop and search and

:25:56.:26:02.

also reduced violent. You have reduced under section 16 way you can

:26:03.:26:08.

target a particular area without necessarily much suspicion. Could

:26:09.:26:15.

you were just that by 100%? We reduced it around 92% under section

:26:16.:26:23.

60. What was happening was that borough commanders were under

:26:24.:26:29.

pressure. The automatic response was to put in a section 60 stop and

:26:30.:26:36.

search. But the more the where are the less affected the police where.

:26:37.:26:42.

So we took it down to around one. You still have situations where

:26:43.:26:47.

there is evidence of a young boy, he was 11 and was stopped and searched.

:26:48.:26:54.

Because he had an expensive rail ticket. That can circulate through

:26:55.:26:57.

the community and leave your problems. It is not perfect. When we

:26:58.:27:07.

make a mistake, then we do leave a bad imprint on that child, that

:27:08.:27:12.

family. So it is important to get it right. But I think it is an

:27:13.:27:16.

important power that is really effective when used wisely.

:27:17.:27:21.

Effectively a generation has been lost to you in terms of trust. It is

:27:22.:27:30.

always important to keep trying. It has not always been used wisely in

:27:31.:27:33.

the past. It is impossible that it is possible to keep it and use it

:27:34.:27:41.

wisely. I was entirely open-minded. All the public we spoke to have said

:27:42.:27:46.

keep it, but target the right people and when you do it, do it with

:27:47.:27:50.

respect. But for that message of trust, it is not just about what

:27:51.:27:54.

happens in London at the general atmosphere. Do you want to see new

:27:55.:28:00.

legislation for England and Wales? One thing I would do if I have the

:28:01.:28:07.

power, around those section 60 stop searches, limited by time and

:28:08.:28:11.

geography. I would advertise the more in the areas where the operate.

:28:12.:28:22.

People who live in that area might think their property value would be

:28:23.:28:26.

effective. But I would advertise them better. It is something that is

:28:27.:28:32.

being considered. There has been a big consultation exercise. The Home

:28:33.:28:38.

Office has plans, we understand. Why are they not been implemented? We're

:28:39.:28:42.

waiting to hear what those plans will be. And of course if there is

:28:43.:28:47.

something to learn we will learn from it. The biggest thing is this

:28:48.:28:56.

is the first time the Metropolitan police have listened to concerns and

:28:57.:29:01.

done something about it. That is a big allegation about previous

:29:02.:29:06.

incumbents in your job. I'm not trying to have a go at my bid

:29:07.:29:13.

assessors. Genuinely. But it is time to make a change. It is fair to say

:29:14.:29:16.

that in the past there have been arguments about stop and search. I

:29:17.:29:21.

have said I want to do something about it. What are relations like

:29:22.:29:29.

with the critical establishment? I think they're pretty good. We always

:29:30.:29:34.

have issues that we can debate and argue about. But on the whole it is

:29:35.:29:41.

a good relationship. Would Downing Street do well to listen to the Home

:29:42.:29:46.

Office wants top and search? I will leave it to them to have their

:29:47.:29:50.

debate. I will not get involved. We found a way we believe to improve

:29:51.:29:55.

what we are doing. They will have two decide what they want to do

:29:56.:30:01.

next. It is possible to do less and to get better.

:30:02.:30:05.

Mark Carney will face questions next week about what the Bank of England

:30:06.:30:08.

knew about alleged wrongdoing in foreign exchange markets. The bank

:30:09.:30:11.

has suspended one member of staff, and stepped up an investigation into

:30:12.:30:14.

whether or not its offficials knew about market manipulation long

:30:15.:30:17.

before they acted to stop it. As Andy Verity has discovered, the Bank

:30:18.:30:20.

was discussing the potential for market manupiation with foreign

:30:21.:30:21.

exchange traders as early as 2006. Regulators have said allegation of

:30:22.:30:34.

foreign exchange manipulation are every bit as bad as the LIBOR rate

:30:35.:30:39.

fixing scandal that cost banks billions in fines but now the Bank

:30:40.:30:43.

of England is at the heart of it. At the centre of the allegations a

:30:44.:30:50.

chatrooms, you might use them for gossip but in the city they were

:30:51.:30:54.

allegedly used by traders to swap information on what their clients

:30:55.:30:59.

were buying and selling, ahead of a crucial 4pm deadline when prices

:31:00.:31:02.

were set. If one trader revealed their client

:31:03.:31:06.

was about to buy a large amount of dollars at four, other trader es

:31:07.:31:13.

could be buy them before then. That could drive the prices up. The Bank

:31:14.:31:17.

of England's been investigating whether its First Ladies were told

:31:18.:31:20.

trade es were sharing client information like that, and even

:31:21.:31:25.

whether it condoned it. Today it suspended an official and stepped us

:31:26.:31:28.

investigations into what officials knew.

:31:29.:31:34.

The allegation is that the Bank of England itself was engaged in

:31:35.:31:39.

conversations with leading traders, about the possibility of

:31:40.:31:42.

manipulation of foreign exchange markets, which go back for some

:31:43.:31:46.

year, that is tremendously serious, if there was any knowledge or

:31:47.:31:49.

tolerance of something like this happening, and action wasn't taken.

:31:50.:31:53.

How embarrassing this is for the Bank of England will depend on what

:31:54.:31:57.

happened in a 15 minute converisation here, at BNP par bar,

:31:58.:32:04.

where Bank of England officials met leading foreign currency traders to

:32:05.:32:09.

discuss what was and wasn't proper on the foreign exchange markets.

:32:10.:32:13.

We have seen the official Benjamins of that meeting on the 23rd April

:32:14.:32:25.

2012. Under item six it says: -- minutes. One of the currency traders

:32:26.:32:31.

reportedly took notes, saying at that point the bank was told trader

:32:32.:32:35.

were sharing client information. The bank told the traders it wasn't

:32:36.:32:41.

improper. . You investigating this, what is going on? Yes, the Bank of

:32:42.:32:47.

England does not condone any form of market manipulation in any any

:32:48.:32:53.

contact whatsoever. Today, further Benjamins showed traders raiseded

:32:54.:32:58.

evidence of wefd the Bank of England way back in 2006, yes it was only

:32:59.:33:03.

last October, seven years later that the bank's sister regulator started

:33:04.:33:09.

investigating foreign exchange manipulation. If the bank of England

:33:10.:33:12.

is subsequently found at the end of the review to have known about the

:33:13.:33:18.

activities, which the FSA is investigating it may lead to legal

:33:19.:33:23.

actions, it will be very embarrassing for the bank to have

:33:24.:33:28.

been made wear of those issues some time ago and not to have raised the

:33:29.:33:33.

issues with those banks and other regulators and taken it further.

:33:34.:33:38.

Swapping information on include orders in internet chatrooms is

:33:39.:33:42.

clearly against the rules, and 20 traders have been suspend or fired.

:33:43.:33:48.

But it won't be so easy for regulators to levy fines on the

:33:49.:33:52.

banks if it turns out the bank of England knew all about it. Well, let

:33:53.:33:57.

us talk more about this with Dr Pippa Malmgren, a former economic

:33:58.:34:01.

adviser to George Bush who works in asset management. Thank you for

:34:02.:34:06.

coming in. Clarify for us this whole question of whether something is

:34:07.:34:10.

proper or improper, it sound like the rules have been changed. They

:34:11.:34:14.

are very fluid in the sense that practises that were considered

:34:15.:34:18.

perfectly normal, five or six years ago, now in retrospect don't look so

:34:19.:34:23.

good, in the aftermath of the financial crisis, and I think part

:34:24.:34:27.

of the reason, the regulators like the bank of England were having

:34:28.:34:31.

conversations with people in the market, was to understand how the

:34:32.:34:36.

markets were operating, which is not to say they thought it was

:34:37.:34:41.

inappropriate, or improper, and I think it is still unclear what was

:34:42.:34:46.

improper and what was just normal business practise. Because this has

:34:47.:34:53.

been below the radar, why is -- has it been kept so quiet for so long? I

:34:54.:34:57.

look at it a different way, I think what with are seeing is a systematic

:34:58.:35:03.

effort by policy maker, politicians, to squeeze financial services to

:35:04.:35:09.

find examples of crossing the line and wrongdoing, it started with the

:35:10.:35:12.

LIBOR investigation, that was a success. When you say they are

:35:13.:35:16.

squeezing, you don't think this is inappropriate to go and... I think

:35:17.:35:20.

it is a normal response to a financial crisis that was so severe,

:35:21.:35:25.

it required public funds to bail the institutions out. So in the

:35:26.:35:28.

aftermath of that they are now looking at each business line and

:35:29.:35:33.

trying to discern what practises are occurring and are they appropriate,

:35:34.:35:38.

so as I went through LIBOR, achieved some really substantial fine, then

:35:39.:35:42.

they turned into new areas and now we are talking about foreign

:35:43.:35:45.

exchange and options. We are talking about the bank of England. We have

:35:46.:35:50.

seen it with LIBOR and the commercial banks and the bank of

:35:51.:35:53.

England has said it is auditing staff, and all the rest of it, but

:35:54.:36:00.

if this goes back as Andy suggested, to 2006, and it didn't act as

:36:01.:36:05.

quickly as it could, that is highly embarrassing,isn't it? It is an

:36:06.:36:09.

issue. This question of what was the appropriate stance for the

:36:10.:36:15.

regulator, today their actions in 2006 look different than in 2006.

:36:16.:36:20.

But they are also taking on more regulatory powers. Indeed.

:36:21.:36:24.

Absolutely. So I think, look, let us understand the issue at hand. Every

:36:25.:36:30.

day at 4.00, all of the clients in the foreign exchange market, which

:36:31.:36:35.

every day is roughly four to five trillion dollars a day, there was

:36:36.:36:39.

one moment in time where there was a clear fixed price. That is when most

:36:40.:36:42.

of the clients wanted to trap act, so they would have certainty --

:36:43.:36:47.

transact. They wanted the fixing, so the allegation is not that the

:36:48.:36:52.

fixing shouldn't happen, it is what information was exchanged about

:36:53.:36:55.

clients in the process of arriving at the fixed price, and how much

:36:56.:37:00.

involvement was there by regulators in that process. It is very similar

:37:01.:37:05.

to LIBOR, in that way, then, is there a direct comparison to be made

:37:06.:37:10.

between the scandal? I do think there is, but in the same way that

:37:11.:37:15.

LIBOR systemically pushed the interest rate lower, I with was

:37:16.:37:19.

beneficial to the public and the customer, this maybe true in this

:37:20.:37:23.

case as well, that is not the point. The point is that regulators are

:37:24.:37:29.

looking for examples of transgression, and finding ways of

:37:30.:37:34.

stop the financial markets from engaging in business practises that

:37:35.:37:39.

today make us uncomfortable. Instead of writing a new rule it happens in

:37:40.:37:41.

the course of investigation. When you start looking you find all kinds

:37:42.:37:45.

of other things you weren't looking for. If we are are at the beginning

:37:46.:37:50.

of this investigation, how far do you think this could spread? I think

:37:51.:37:53.

it is going to be quite widespread. Again, because it is not just

:37:54.:37:57.

foreign exchange it is option, which is the business of taking bets on

:37:58.:38:04.

possible future outcomes -- options. Eif I were a poll -- if I were a

:38:05.:38:09.

politician and I was a regulator looking to fine, I would say this is

:38:10.:38:13.

richer territory for success and scoring points. You think it is

:38:14.:38:18.

about trying to find fines? I think there is a strand of that, for sure,

:38:19.:38:25.

but I also think that we could find there were examples of crossing a

:38:26.:38:29.

line, but I also think that what was normal business practise at the time

:38:30.:38:34.

definitely is not acceptable today, and there will be -- they will be

:38:35.:38:38.

judged in retrospect. Very interesting to hear. Thank you.

:38:39.:38:42.

Mark Zuckerberg once told me he wanted to turn Facebook into a

:38:43.:38:45.

global utility, to connect parts of the world that other providers

:38:46.:38:47.

couldn't reach. Now we have a hint at how Facebook

:38:48.:38:51.

might do this - through high altitude pilotless drones that can

:38:52.:38:54.

stay aloft for five years at a time. They're not the only ones. Google

:38:55.:38:59.

have been working on a similar venture, Project Loon, using high

:39:00.:39:02.

altitude weather balloons. Here's our technology editor, David

:39:03.:39:03.

Grossman. While we may have become blase about

:39:04.:39:16.

our online lives, this animation shows that for most of humanity the

:39:17.:39:22.

internet has yet to arrive. Like modern missionaries, the text

:39:23.:39:25.

emperors are looking to spread the wonders of their work to

:39:26.:39:27.

unconnected. When I was getting started with

:39:28.:39:31.

Facebook I could build it because I had access to the internet and a few

:39:32.:39:36.

basic tool, that gave me what I needed to build this for the world.

:39:37.:39:42.

While broadband internet penetration in developed countries is

:39:43.:39:45.

three-quarters of the population in India is it 13%, Africa, 20%, south

:39:46.:39:52.

and east Asia 21% and 45% in Latin America.

:39:53.:39:57.

What is more, the method by which Europe and North America managed to

:39:58.:40:01.

role out broadband simply isn't open to much of the world. -- roll When

:40:02.:40:05.

you are looking at companies like BT they are able to rely on the

:40:06.:40:10.

existing infrastructure that was developed for telephony. In Africa

:40:11.:40:16.

these networks were nerve built, so we have seen very low fixed

:40:17.:40:20.

broadband. Last summer, Mark Zuckerberg, the co-founder of

:40:21.:40:28.

Facebook launched internet.org.uk. What we didn't know, was how he was

:40:29.:40:35.

planning to do it. Now, however, credible press reports suggest

:40:36.:40:39.

Facebook is planning to spend $60 million on a company that makes high

:40:40.:40:45.

altitude pilotless drones that would act like low level satellites. They

:40:46.:40:53.

would fly at over 65,000 feet, above regulated airspace and with solar

:40:54.:41:02.

rechargeable batteries say aloft forify years at a time. I would need

:41:03.:41:11.

thousands though. I can only applaud the initiative, however, I don't

:41:12.:41:16.

think it is going to solve all the problems of Africa, or any other

:41:17.:41:21.

region the world. I believe that there are other solutions that we

:41:22.:41:27.

are currently working on, that are bearing fruit, and that I believe

:41:28.:41:35.

will have bigger impact. Facebook's not the only text joint working on

:41:36.:41:38.

this problem. One, two, three.

:41:39.:41:44.

Google has Project Loon, instead of pilotless drones it would use high

:41:45.:41:49.

altitude weather balloons, when I was there in January I spoke to the

:41:50.:41:54.

architect of Project Loon. I propose something and I can't tell you what

:41:55.:41:58.

this is because we might do it. I proposed an idea I was passionate

:41:59.:42:02.

ant. I thought I have it. They say you know what, this is a good idea

:42:03.:42:07.

but the problem is, most of people who can benefit from this won't

:42:08.:42:10.

because they don't have connectivity. I was like, you are

:42:11.:42:16.

right, I don't know how I could have overlooked that. It is a hard

:42:17.:42:20.

problem. How do I solve that? And many years prior to this I had this

:42:21.:42:25.

crazy idea about you know, using balloons for connectivity, and I

:42:26.:42:31.

thought, well, you know, I don't know why this won't work. Let me go

:42:32.:42:34.

back to that idea. So how big a bump would connecting

:42:35.:42:38.

up the unconnected give? According to a study increasing internet

:42:39.:42:44.

penetration to European levels would be worth $450 per person to Africa

:42:45.:42:50.

as well as 44 million extra jobs. According to the same study it could

:42:51.:42:56.

save one million live, including 130,000 children, but it also makes

:42:57.:43:00.

good business sense for the text companies. Ultimately both companies

:43:01.:43:04.

make money from internet ewe San, whether that is social media or

:43:05.:43:08.

search and advertising or video advertising, so they are both

:43:09.:43:11.

interested in building the scale of internet users in the future so they

:43:12.:43:19.

can basically sell advertising, and generate revenues from the consumers

:43:20.:43:24.

in these market, you are currently untapped. So, the scramble for

:43:25.:43:29.

Africa and other parts of the globe is on once more, this time not under

:43:30.:43:34.

the flags of the European power, but under the logos of the text giants.

:43:35.:43:39.

If this works it could represent the biggest single economic advance ever

:43:40.:43:46.

for the developing world. Let us take you through the

:43:47.:43:50.

front-pages before we go. The independent has Chris Cook's story

:43:51.:43:54.

on front. The impact of immigrants of British workers negligible. Very

:43:55.:44:02.

little evidence of overseas workers taking jobs from Britons.

:44:03.:44:12.

The Financial Times has the foreign exchange scandal. Scandal hits the

:44:13.:44:19.

bank of England. It has on its fifth birthday quantitative easing looks

:44:20.:44:24.

to future. The most extraordinary experiment in the bank's history.

:44:25.:44:31.

Middle class is blamed for migration in the Daily Telegraph, and halve

:44:32.:44:34.

your sugar intake say health experts. While British women have

:44:35.:44:39.

been crowned the Queens of leisure, and the Guardian has BBC Three Gavin

:44:40.:44:44.

and Stacey with Tony Hall's plans to move it on to iPlayer. There was

:44:45.:44:52.

major England football team news today. No, not a World Cup warm-up

:44:53.:44:56.

win over Denmark, but the recording of the official song for this

:44:57.:44:59.

summer's tournament in Brazil. A cover of the Take That hit, Greatest

:45:00.:45:03.

Day. Tthe recording features former England players including Gary

:45:04.:45:05.

Lineker, Peter Shilton and Michael Owen. In the absence of a sneak

:45:06.:45:08.

preview, we're left with no alternative but to dig up the 1990

:45:09.:45:23.

version instead. Oh well. Goodnight. # You can be slow or fast. # There's

:45:24.:45:42.

only one way to beat them. # What you are looking at is the master

:45:43.:46:12.

plan. # Playing for England! We

:46:13.:46:14.

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