:00:07. > :00:15.Tonight Paul Flowers, the Methodist minister w left the Co-operative
:00:16. > :00:23.Bank in disgrace, talks exclusively about his downfall and hits back at
:00:24. > :00:28.tabloid tormenters. I find the Mail on Sunday and its sudden dough
:00:29. > :00:32.fascist far right tendencies that make Vladimir Putin look like a
:00:33. > :00:40.bleeding heart liberal, utterly abhorrent. And he reveals the way
:00:41. > :00:45.Government ministers leaned on the bank to make decisions they judged
:00:46. > :00:50.to be commercially unwise. And there was pressure, certainly from Mark
:00:51. > :00:55.Hobon, and I know that originated with the Chancellor himself.
:00:56. > :00:59.Also tonight is the right to pass on wealth the entitlement of everyone,
:01:00. > :01:22.or the root of personal and social unhappiness?
:01:23. > :01:27.The latest Al-Qaeda battlefield. There are probably some people in
:01:28. > :01:31.Britain who have never heard of the Reverend Paul Flowers, the Methodist
:01:32. > :01:36.minister who became the chairman of the Co-operative Bank, and exited
:01:37. > :01:39.after an inept performance in front of the Parliamentary Committee who
:01:40. > :01:47.were trying to find out how the bank went belly up. Then he was filmed
:01:48. > :01:52.talking about his drug habit. He was nicknamed the Crystal Methodist and
:01:53. > :01:56.the caravan moved on. But the supposedly ethical bank has been
:01:57. > :02:01.left broken and demoralised. He hasn't spoken publicly about what
:02:02. > :02:08.happened, until now. But before that we have this report. SGLA double
:02:09. > :02:11.downfall, the minister who preached ethics, the bank meant to make
:02:12. > :02:18.ethical decisions, both brought to their knees by a domination of
:02:19. > :02:22.ambition and weakness. In the end leaving a bank that appeared out of
:02:23. > :02:36.control. And a chairman whose understanding of the business was
:02:37. > :02:41.just helplessly wrongy wrong. Give us an idea of the total asset value
:02:42. > :02:46.of the bank? Just over ?3 billion. I'm talking about the assets. I'm
:02:47. > :02:50.talking about the assets, on the balance sheet I was looking at the
:02:51. > :02:55.balance sheets recently. You are offering me ?3 billion and I'm
:02:56. > :03:00.telling you your annual accounts show it at ?47 billion. Indeed they
:03:01. > :03:06.did, forgive me. Paul Flowers suggested that the assets were a
:03:07. > :03:09.tenth of the size they were. But Flower, Labour supporter, was not
:03:10. > :03:13.the only one out of his depth. The ethical bank had gone empire build
:03:14. > :03:20.anything way it couldn't sustain. As well as building itself a smart new
:03:21. > :03:24.headquarters, the Co-Op gobbled up Britannia Building Society, riddled
:03:25. > :03:32.with property debt. Then with Flower as chair, made an audacious bid for
:03:33. > :03:36.650 branches of Lloyd's. There was all scepticism in the City about
:03:37. > :03:42.whether it could work, but with tacit approval from Westminster, the
:03:43. > :03:48.Co-Op's ambition far outweighed its ability to cope. Underneath a
:03:49. > :03:51.beautifully crafted image of the bank like no other, regulators
:03:52. > :03:56.crawling through the undergrowth found a black hole in the books of
:03:57. > :04:03.more than a billion. They became very big, very quickly, by buying
:04:04. > :04:08.Britannia and then by being very ambitious to buy branches from
:04:09. > :04:12.Lloyd's. That is a very short period of time for a small bank and
:04:13. > :04:18.inexperienced bank like Co-Op. Any other business with lots of
:04:19. > :04:23.experience in acquisitions would find it difficult to integrate those
:04:24. > :04:33.businesses successfully. Although the Reverend had boasted Co-Op P had
:04:34. > :04:39.staled -- had sailed through the financial crisis. It would be not
:04:40. > :04:44.good for someone from the Co-Op bank to be smug, that is not my nature.
:04:45. > :04:47.The loans went back and the Lloyd's deal collapsed, quickly the Reverend
:04:48. > :04:52.was out. There was further to fall. The minister was caught newspaper a
:04:53. > :04:57.drug and sex scandal. Caught unwares by the Mail on Sunday. Behaviour he
:04:58. > :05:04.described as "stupid" and "wrong". Police searching his house
:05:05. > :05:14.investigating his conduct. Reverend Flower, as is, s as well as a
:05:15. > :05:19.collapsing bank hurt members. A bank founded in the 19th century,
:05:20. > :05:24.with the intention of looking after our morals as well as our
:05:25. > :05:30.hard-earned money. This bit of the co-operative movement is having its
:05:31. > :05:33.own cataclysmic moment where it has to think about what it is about. It
:05:34. > :05:36.might be something very different in terms of the public view of it. The
:05:37. > :05:42.Co-Op was meant to be different? It was, and it was different. I do
:05:43. > :05:47.think it was different. It made two or three errors all at the same
:05:48. > :05:52.time. But this has been a terrible episode for a movement with a
:05:53. > :05:57.history that's been worth preserving in stone. Neither its Victorian
:05:58. > :06:00.founders nor many of the movement's current members would have approved
:06:01. > :06:03.of the Reverend's exploits, how did he find himself at the top of a
:06:04. > :06:08.rapid low expanding bank in the first place. Well this flimsy three
:06:09. > :06:13.pages a record of his approval interview with the regulators. In it
:06:14. > :06:17.he asks for the fullest, possible training, but promises to ask
:06:18. > :06:22.forensic and tart questions. The regulators themselves though will
:06:23. > :06:29.now surely wish they had asked for forensic questions of him. Reverend
:06:30. > :06:40.Flowers has been followed out of Co-Op's door by the man brought in
:06:41. > :06:46.to save the group. Euan Sutherland announced it was ungovernable.
:06:47. > :06:52.Yesterday the bank had to write off another ?400 million to pay for
:06:53. > :06:56.other mistakes of the past. Yet it is Reverend Flowers, more than
:06:57. > :07:02.anyone else, whose faults came into focus. The bank and his error's
:07:03. > :07:06.rewriting history of this proud ethical know. Movement few wanted to
:07:07. > :07:13.write. Earlier today I went to man chest Tory meet Paul Flowers. What
:07:14. > :07:36.has the last year been like? Interesting! TRANSMIT
:07:37. > :07:40.I resigned from the bank, and it was a joy as it was on my birthday and
:07:41. > :07:44.there were a few months that have been hellish. Because I knew I
:07:45. > :07:50.particularly needed to find some professional support for the issues
:07:51. > :07:57.that I was facing, I actually booked myself into a very well known
:07:58. > :08:02.hospital for four weeks from the end of November until Christmas Eve. I
:08:03. > :08:11.underwent what was called their addictions treatment programme for
:08:12. > :08:18.the 28 days that I was there. I found that both cathartic and
:08:19. > :08:23.traumatic. But it actually helped me to look at, not so much the
:08:24. > :08:31.superficial issues of the addictions themselves, but the more deep-seated
:08:32. > :08:37.reasons why people resort to any sort of addiction. And for me that
:08:38. > :08:42.was I think life-changing and I continued to go there every week for
:08:43. > :08:47.therapy. Can we go back then to the question of the chairmanship of the
:08:48. > :08:53.bank. Yeah. What was it that made you think you were qualified to run
:08:54. > :08:58.a bank? I didn't and it wasn't my job to make a judgment about whether
:08:59. > :09:03.I was qualified, others made a judgment that I was the right and
:09:04. > :09:08.appropriate person to be the chair at that particular time. There was
:09:09. > :09:13.panel, which interviewed four of us, who were candidates for the job. I
:09:14. > :09:19.was the unanimous choice of that panel. I was then the unanimous
:09:20. > :09:23.choice of the bank board. I was then the unanimous choice of the group
:09:24. > :09:28.board. And I then went again to the FSA for a further interview to see
:09:29. > :09:35.whether they thought I was fit to be chair of that bank board. I was
:09:36. > :09:39.prepared for this by a very hellish mock interview. A bit like you at
:09:40. > :09:46.your worst really if I might be so bold. And they took me to hell and
:09:47. > :09:51.back in terms of questions. But the FSA had a really wonderful
:09:52. > :09:58.conversation about philosophy and ethics and issues that were around
:09:59. > :10:03.and their panel approved me. It is not for me to make a judgment about
:10:04. > :10:08.whether I was qualified, a range of other people at the time said I was.
:10:09. > :10:13.You weren't a banker? No, but I wasn't put in as banker. I was put
:10:14. > :10:19.in as operator, a representative of the Co-Op Group, and I had a job in
:10:20. > :10:22.terms of governance Did you know the extent of the problem after the
:10:23. > :10:31.merger with the Britannia Building Society? Nobody did, forgive me.
:10:32. > :10:39.Hindsight is a wonderful science, if can I be so bold. We took over the
:10:40. > :10:48.Britannia effectively in 2008. There was a merger. But effectively it was
:10:49. > :10:57.takeover. I inherited that when I became the chair in 2010. At the
:10:58. > :11:02.time of the takeover of Britannia I recall and still have the documents
:11:03. > :11:09.at home, there were three separate pieces of due diligence, done by
:11:10. > :11:15.accountany firms, KPMG for us and fancy merchant bankers who Mr Paid
:11:16. > :11:18.paid vast amounts of money to do it. All said it was a good deal. All
:11:19. > :11:25.pointed up dish use with the corporate lending book, but that
:11:26. > :11:28.lending book could be addressed by what are called fair value
:11:29. > :11:42.adjustments in the accounts. That is precisely what we did. And we did it
:11:43. > :11:45.in thorough consultation with the FSA at the timecisely what we did.
:11:46. > :11:46.And we did it in thorough consultation with the FSA at the
:11:47. > :11:49.time. They didn't pick it up and neither
:11:50. > :11:53.did the FSA at the time. How much pressure did you come under with the
:11:54. > :11:58.Lloyd's issue? Specifically from the present Government, mainly from
:11:59. > :12:03.Conservatives. They wanted a deal. Remember that the Government was,
:12:04. > :12:08.still is, the major shareholder of that bank. Because of the structural
:12:09. > :12:14.support that it had needed back in 2008. Clearly they wanted a deal
:12:15. > :12:20.which would help them in terms of public finances. They actually said
:12:21. > :12:25.that they were keen on this Co-Op becoming a much more significant
:12:26. > :12:30.player with more scale. We would have had about seven or eight per
:12:31. > :12:38.cent of the market if this had gone through. And there was pressure
:12:39. > :12:43.certainly from mark Holbon and I know that originated higher up with
:12:44. > :12:48.the Chancellor himself. What form did this pressure take? Regular
:12:49. > :12:52.calls and regular checks to see whether or not they were progressing
:12:53. > :13:01.well. And I mean two or three times a week calls from the junior
:13:02. > :13:05.minister. They wanted a deal and they wanted us to do it. They might
:13:06. > :13:08.say no now, but I know that's what they wanted. That was the pressure
:13:09. > :13:12.they were applying. You are painting yourself as an
:13:13. > :13:17.innocent abroad? I'm not innocent. I take full responsibility for the
:13:18. > :13:22.decision that is we took. And indeed I resigned because I believe it was
:13:23. > :13:27.right for the chair of the board to take responsibility, although all
:13:28. > :13:33.the decisions taken were not by me personally but by the board as a
:13:34. > :13:37.whole. But resignation was an admission of inadequacy wasn't it?
:13:38. > :13:43.No, it was an admission that things had gone wrong. And as the person in
:13:44. > :13:47.the chair, I should take responsibility for it. How is it
:13:48. > :13:51.then, if you were cognisant of what was going on and you weren't an
:13:52. > :13:56.innocent aBROSHGSD how could you possibly appear before -- abroad,
:13:57. > :14:02.how could you possibly get the assets of the bank out by a margin
:14:03. > :14:10.of ?40 40 billion. Ill-prepared and not ready for all the questions and
:14:11. > :14:14.in particular put off a tad by the aggression of some of the members of
:14:15. > :14:19.that committee and the clear attempts that some of them were
:14:20. > :14:24.making, not to ask sensible or rational questions, but to try to
:14:25. > :14:29.trip me up and in particular to engage in political points scoring.
:14:30. > :14:34.Even so, to say the assets of the bank you say ?3 billion and they
:14:35. > :14:38.were ?47 billion? Forgive me, I was wrong, badly wrong. Do you think
:14:39. > :14:42.something has happened in the world of banking, which has made it a
:14:43. > :14:46.different sort of business to the sort of business, you did once do a
:14:47. > :14:53.banking exam years and years and years ago? 40 plus years ago. But
:14:54. > :15:00.banking was a different kind of beast in those days wasn't it? I
:15:01. > :15:06.think it was a good profession. I think it was largely led by people
:15:07. > :15:15.of honour and decency. Is it no longer? There are people within it
:15:16. > :15:19.who are people who are honourable and decent. Sadly there are also a
:15:20. > :15:26.number of others who are not. And who I think are there for whole and
:15:27. > :15:37.whole range of reasons, some of which are to do with their own avari
:15:38. > :15:42.correction and their own green -- avarice and their own greed, that is
:15:43. > :15:47.very sad. There is another story today about bonus payments in a
:15:48. > :15:52.bank. Yet here you are, chairman of a bank belonging to a different set
:15:53. > :15:57.of ideals? Sub-scale. Not big enough? Not big enough at all. So
:15:58. > :16:05.lots of our efforts as well were designed to try to improve the
:16:06. > :16:09.ability of the bank to be able to run an efficient organisation of
:16:10. > :16:16.sufficient scale. So you are saying it is impossible in this country to
:16:17. > :16:20.run a successful... You are being too dogmatic, you are looking at
:16:21. > :16:24.either a white or black picture and not seeing the complexity of the
:16:25. > :16:31.grey in the middle. It is not impossible. We confronted a whole
:16:32. > :16:35.raft of problems, I believe it could still be possible. And you failed?
:16:36. > :16:41.Yeah, we failed so far. But we are still there. And we didn't actually
:16:42. > :16:47.have to take any Government money at any stage. Unlike some of the other
:16:48. > :16:56.banks I have to remind you. Given your background, given the ideals of
:16:57. > :17:03.the organisation, personally that must have had a tremendous impact on
:17:04. > :17:09.you? With respect my role was not to worry about the personal impact upon
:17:10. > :17:13.me, I'm there in a representative capacity to try to do a job with a
:17:14. > :17:17.range of other people. You are the embodiment of the values of the bank
:17:18. > :17:21.as chairman aren't you? I'm one of them, I hope I'm not the only one. I
:17:22. > :17:27.hope the organisation as a whole, and I believe it had done, embodied
:17:28. > :17:34.those values. And staff at the time before all this crisis occurred from
:17:35. > :17:41.were extraordinarily happy to work with and for us. Have they been in
:17:42. > :17:47.touch with you any of them? One or two but they have been politely told
:17:48. > :17:52.by more senior people not to be in ch. One or two of the braver souls
:17:53. > :18:04.have been in touch. You have been cast into the outer darkness I
:18:05. > :18:08.suppose? I believe even in Dant, he's Inferno there is a chance of
:18:09. > :18:15.release. You have fallen like Lucifer? Where do you find Lucifer
:18:16. > :18:20.in the Bible Mr Paxman! Then comes of course all the horrible stuff for
:18:21. > :18:28.you when you are outed for drugs and rent boys and all that stuff. Had
:18:29. > :18:33.you been doing drugs while chairman of the bank? Forgive me saying so I
:18:34. > :18:40.think you are aware that there are still some issues to be inquired
:18:41. > :18:45.into by the police and that is a question that I think has to remain
:18:46. > :18:51.at the moment unanswered. But will in due course be answered. But it is
:18:52. > :18:57.subject to the police investigation. Let me put it another way, were you
:18:58. > :19:08.involved in drugs, doing drugs, before you became chairman of the
:19:09. > :19:12.bank? No. But that doesn't answer the earlier question. It doesn't.
:19:13. > :19:19.And I cannot answer it for the moment. I understand re understand.
:19:20. > :19:23.But -- I understand, it does tell us something. When you saw what the
:19:24. > :19:31.Mail on Sunday printed about you, what did you think? The Mail on
:19:32. > :19:43.Sunday, its sister paper have printed a lot of things about me. I
:19:44. > :19:51.remember dear old Michael Foot once decribing the Mail Group as the
:19:52. > :20:01."forgers' gazette". I find the Mail on Sunday and its pseudofascist far
:20:02. > :20:05.right tendencies which, make Vladimir Putin look like a bleeding
:20:06. > :20:11.heart liberal utterly abhorrent. The reality is that a considerable
:20:12. > :20:16.amount of what the Mail on Sunday has printed has been pure and utter
:20:17. > :20:28.fiction. Why don't you sue them then? Forgive me, suing a newspaper
:20:29. > :20:34.is a rich person's game. Even if I am right as I know I am, and I know
:20:35. > :20:38.that they are wrong, I would much rather just treat the whole thing
:20:39. > :20:42.with the utter contempt that it deserves for it. But there were
:20:43. > :20:48.stories that were printed that were true? Indeed they were. They
:20:49. > :20:52.concerned drugs? And with respect those are still the issues which the
:20:53. > :20:57.police are investigating. Given your religious background, do you think
:20:58. > :21:03.you have sinned? Forgive me it is always much more complex than that,
:21:04. > :21:11.of course I have. And I am in company in every other human being
:21:12. > :21:16.for having my frailties and some of my fragility exposed. Most people
:21:17. > :21:22.get through life without that ever coming into the public domain. I am
:21:23. > :21:30.no better and no worse, it seems to me, than any number of other people.
:21:31. > :21:35.But of course I have sinned in that old fashioned term, which I would
:21:36. > :21:40.rarely use, I have to say. But I'm like everybody else, I'm frail. You
:21:41. > :21:49.know what people think, they think Flower flowers, -- Paul Flowers,
:21:50. > :21:54.Methodist minister how does he end up with rent boys and drugs, a
:21:55. > :22:00.Methodist minister? They have not had to live in my skin or bothered
:22:01. > :22:04.to inquire about other pressures upon my life. I would not wish to
:22:05. > :22:08.talk with them about them because they clearly hold me in complete
:22:09. > :22:16.contempt. Do you want to talk about these other pressures in your life?
:22:17. > :22:22.I can do so very briefly. Yeah sure? At the time when things were getting
:22:23. > :22:27.pretty hairy at the bank I had been caring for my mother at home, who
:22:28. > :22:35.was dying, with everything else that was going on and I was weary and
:22:36. > :22:43.stressed. Not least at seeing somebody who I loved die in front of
:22:44. > :22:47.me. And it took a long time. But I would not want to use that as an
:22:48. > :22:55.excuse, it simply happens to be part of the reality that I was facing and
:22:56. > :23:00.which is common to lots of people, most of us have to juggle with a
:23:01. > :23:06.whole raft of different pressures and stresses. It just so happens
:23:07. > :23:09.that I had two or three that all came at the same time. But most of
:23:10. > :23:13.us don't resort to drugs and rent boys? How do you know? What do you
:23:14. > :23:31.most regret about this whole experience? Not taking more advice
:23:32. > :23:40.when I should have done at certain points during several years. And I
:23:41. > :23:45.think in some ways and this probably will sound a tad bitter, but I think
:23:46. > :23:51.in some ways I had been set up to fail in certain areas. Because of
:23:52. > :23:55.the structures of the co-operative and the way in which they encourage
:23:56. > :24:01.democrats within the organisation to move into particular roles. And then
:24:02. > :24:08.to be, frank, they suck you dry and pit you out at the end of it. No-one
:24:09. > :24:17.at the Co-Op has contacted me at all in any way since I left at the end
:24:18. > :24:20.of May. Thank you. Thank you. Our chief correspondent is here. What
:24:21. > :24:26.have we learned from this? I think in a sense we just witnessed the
:24:27. > :24:31.human downfall that went alongside the story of the politician's
:24:32. > :24:34.favourite, the Co-Op bank, the great hope of the banking zest sector
:24:35. > :24:40.turning into a basket case. There are three salient points, one is
:24:41. > :24:44.just how convinced he was now that the Treasury was pushing the deal
:24:45. > :24:49.for the Co-Op to buy more than 600 branches of Lloyds Bank. He talks
:24:50. > :24:54.about Treasury ministers phoning up two and three times a week to see
:24:55. > :25:03.how it was getting on, and making it clear that the Chancellor was behind
:25:04. > :25:06.that. Not much of a surprise, we learned how much he hates the Mail
:25:07. > :25:11.on Sunday, and they have asked to speak to him and he has declined. It
:25:12. > :25:15.is embarrassing for the Government. It is tricky for the Treasury, this
:25:16. > :25:18.accusation that they were the hands trying to push this deal with
:25:19. > :25:21.Lloyd's that was ultimately doomed forward has been made before, it is
:25:22. > :25:25.worth saying that's a pretty different version of events to what
:25:26. > :25:28.Paul Flowers has given in front of MPs before. For their part the
:25:29. > :25:32.Treasury has always denied there was any kind of political interference
:25:33. > :25:36.and of course Paul Flowers is somebody who is very much associated
:25:37. > :25:39.with the Labour movement, it is worth rembering also that the
:25:40. > :25:43.Lloyd's chief executive and chairman on the record have said it was a
:25:44. > :25:47.commercial decision. That said, during that deal myself and many
:25:48. > :25:52.other journalists were hearing time and again from people in the City
:25:53. > :25:56.who were sceptical, not just about whether it was the right decision,
:25:57. > :26:01.but also whether it was feasible. This does again remind people of the
:26:02. > :26:07.awkwardness, that the Treasury was tacitly backing a horse that many
:26:08. > :26:13.thought was a dodgy old nag. In the meantime the Co-Op remain as basket
:26:14. > :26:18.case? Yesterday they had to write off another ?400 million. They have
:26:19. > :26:21.had a turbulent few weeks and an active chief executive in charge of
:26:22. > :26:25.the group. They are trying to plough on. It is worth saying they have
:26:26. > :26:28.managed to stagger on without having to take a bail out from the
:26:29. > :26:32.taxpayer. They found another way of doing that by getting investment
:26:33. > :26:36.from the hedge funds. They are certainly not in a position now
:26:37. > :26:39.where they are free and clear of all the mistakes of the past. They are
:26:40. > :26:42.braced for a series of their own investigations into what went wrong.
:26:43. > :26:47.And tonight they are pretty reluctant to getting into talking
:26:48. > :26:51.about exactly what Flower has suggested. They are working very
:26:52. > :26:54.hard to try to get this done. They are trying to make big changes to
:26:55. > :26:58.the group to be able to survive into the future and they are going to
:26:59. > :27:02.have more very difficult headlines, not just about Reverend Flower and
:27:03. > :27:05.his exploits while he was there but perhaps about some people who are
:27:06. > :27:11.still actually at the group themselves. They may prove difficult
:27:12. > :27:14.to shrug off in the coming weeks. It is a long way from a commitment, but
:27:15. > :27:18.the Prime Minister says he would really like to raise the point at
:27:19. > :27:23.which the Government confiscates money people might otherwise have
:27:24. > :27:27.passed on to their children when they die. Hang on, you might say, he
:27:28. > :27:31.has promised that before, and indeed he has. But he says his plans to
:27:32. > :27:35.raise the threshold for what used to be called death duties have been
:27:36. > :27:39.wrecked by being in partnership with the Liberal Democrats. It points up
:27:40. > :27:48.the fact that this is a more politically and morally charged tax
:27:49. > :27:52.than most. Once upon a time there was a large happy family, a bit like
:27:53. > :27:56.the Walton, they lived in a big house and always said good night to
:27:57. > :28:01.each other. When the elderly couple died, the whole family wept, then
:28:02. > :28:06.they had to sell the house to pay death duties and they wept a bit
:28:07. > :28:12.more. Hardly what you might call a fairytale ending. A long, long time
:28:13. > :28:16.ago, back in 2007, the man who would be Chancellor promised to change all
:28:17. > :28:20.that. The next Conservative Government will raise the
:28:21. > :28:27.inheritance tax threshold to ?1 million. LINEBREAK
:28:28. > :28:33.It was electoral Viagra, a speech that sealed him as the ultimate
:28:34. > :28:42.politician, a game-changer in many ways, forcing Gordon Brown to stop
:28:43. > :28:46.in his tracks and his call fors an early -- for an early election and
:28:47. > :28:53.forcing them to re-think their inheritance tax policy. They decided
:28:54. > :28:58.to create a tax-free limit of estates up to ?650,000 in marriages.
:28:59. > :29:01.Then disaster struck in the form of the financial crisis the Tory policy
:29:02. > :29:05.flew out the window and the coalition agreement with the Lib
:29:06. > :29:09.Dems ensured it never flew back in. The Lib Dems aren't the only ones
:29:10. > :29:15.against it. Many see inheritance tax as fair way to ensure the wealth of
:29:16. > :29:20.the nation doesn't just subside in a few dynasties. All civilisations
:29:21. > :29:30.going back to Rome and through fuedal Europe have had some kind of
:29:31. > :29:33.system where society shares in wealth being transferred from rich
:29:34. > :29:36.fathers and mothers to their offspring. Why? Because the
:29:37. > :29:43.offspring did nothing to deserve the wealth, so we should share in their
:29:44. > :29:50.good luck. And if you don't do that societies OKsify. But there teams --
:29:51. > :29:55.OKsify. There seems to be new life in it, with UKIP looking for their
:29:56. > :30:00.grey votes they broach the same ground. Would I like to go further?
:30:01. > :30:03.Yes I would. I believe people should able to pass money down through the
:30:04. > :30:07.generations and pass things on to the children. The ambition is still.
:30:08. > :30:10.There I would like to go further. It is better than it was, but it didn't
:30:11. > :30:21.make it into the coalition agreement, it is something to
:30:22. > :30:28.address in the manifesto. Something You wonder at the new figure, under
:30:29. > :30:34.?1 million might not be so tempting. Tories are promising expensive
:30:35. > :30:38.things without showing how they will pay for them. Those who came to
:30:39. > :30:41.power on the stark shores of austerity, this upland is sending
:30:42. > :30:45.out a very different message of how much cash there is to spend now.
:30:46. > :30:50.What has happened since 2010 is there is no increase even in line
:30:51. > :30:54.with inflation of the inheritance tax threshold to bring more people
:30:55. > :30:59.in. Rather than increasing the threshold significantly, it has
:31:00. > :31:02.actually been cut relative to price inflation. You might ask whether the
:31:03. > :31:06.need to raise the flesh hold now is a signal of how badly the Government
:31:07. > :31:11.has failed on its own housing policy. Last week the Office for
:31:12. > :31:15.Budget Responsibility predicted that because of rising house prices one
:31:16. > :31:19.in every ten people will become liable to pay inheritance tax over
:31:20. > :31:24.the next five years if it stayed at the current rate. That number is
:31:25. > :31:29.currently one in 20. This street in a posh part of London illustrates
:31:30. > :31:34.the fiscal drag dilemma rather well. It is not just the mansions that are
:31:35. > :31:43.liable for inheritance tax, no it is something far more modest house
:31:44. > :31:47.boat, just short of ?800,000. And don't think this is just a London
:31:48. > :31:54.bubble. House price rises have created a massive fiscal drag all
:31:55. > :31:58.over the country. Areas around Manchester or Leeds where change
:31:59. > :32:05.will be keenly felt. Look closely you will see many story archals
:32:06. > :32:09.right there. So far it is all fantasy, no commitment, just
:32:10. > :32:15.expressions of Tory hope. Do you see this as the perfect ending or a
:32:16. > :32:20.rather grim fairytale. That will depend quite bluntly on whether you
:32:21. > :32:27.think kids deserve their parents' wealth. Mone is an entrepeneur and
:32:28. > :32:35.founder of the lingerie line Ultimo. Peter Buffett is a musician, fill
:32:36. > :32:39.lentist and son of the -- philanthropist and son of Warren
:32:40. > :32:46.Buffett. He joins us from his home in the states. When this happens you
:32:47. > :32:50.will be dead, why do you care? Because Jeremy I work really hard
:32:51. > :32:54.every single day. Like a lot of people for my children and for my
:32:55. > :33:02.children's future. I want them to have that little nest there for
:33:03. > :33:08.their future and for their children and I don't see why I, others,
:33:09. > :33:15.should work extremely hard, pay your tax and then when you die it is a
:33:16. > :33:23.double what happens OKKy and you have to pay it again, it should be
:33:24. > :33:26.stopped completely. Even if passing money on perpetuates social
:33:27. > :33:41.division, you don't worry about that? I should decide what to do
:33:42. > :33:44.with my money and whether I want to give it to charity. The Government
:33:45. > :33:47.shouldn't tax me again when I have already paid. It is unfair and I
:33:48. > :33:52.think you know there is a lot more people that have to pay inheritance
:33:53. > :33:56.tax now because house prices are rising. You pay on your whole
:33:57. > :34:01.estate, so there is a lot more people that have to pay that tax and
:34:02. > :34:06.I have heard some horror stories, where you know someone has lived in
:34:07. > :34:10.the family home for 20, 25 years and they have to actually move out of
:34:11. > :34:14.their family home to pay the tax. That is completely and utterly
:34:15. > :34:19.unfair. They will be dead? They have had to pay it because they have
:34:20. > :34:22.inherited the house and the estate. They need to pay the tax bill and
:34:23. > :34:28.they have to sell the house to move out. Let me bring in Peter Buffett,
:34:29. > :34:35.your father famously supports the inter-Hans tax? That's correct --
:34:36. > :34:40.inheritance tax? That's correct. Do you share that view? I do, my only
:34:41. > :34:43.question would be where the tax is going. That is my personal
:34:44. > :34:48.frustration, if it is going to better public schools and
:34:49. > :34:54.infrastructure that is great. So we might all agree that a Government
:34:55. > :35:04.getting taxes that are doing good things with it is better than
:35:05. > :35:07.shovelling it into a Bonn dog hole. -- boon dog hole. That is the
:35:08. > :35:12.problem with Governments everywhere, this principle that everybody should
:35:13. > :35:16.start off more or less equal is one you subscribe to? Absolutely. Part
:35:17. > :35:21.of that comes down to the question of how much is enough. That is where
:35:22. > :35:25.I definitely agree with my father and have experienced it myself. In
:35:26. > :35:34.what way are you better for not having a great inheritance to look
:35:35. > :35:39.forward to? I could sum it up in phrase, I believe self-respect comes
:35:40. > :35:44.from earning its own reward. So I'm very proud of the life I built
:35:45. > :35:48.myself. I think if I lived off my father's wealth or do in the future,
:35:49. > :35:52.I'm going to frankly wonder if I could have done it myself. Michelle
:35:53. > :35:55.Mone, do you worry about your children ever getting out of bed if
:35:56. > :36:02.they inherit a vast amount of money from you? You know Jeremy I bring my
:36:03. > :36:07.children up with that hard-working, want to succeed background. I just
:36:08. > :36:11.think that you know there is people out there that work extremely hard
:36:12. > :36:15.and it is up to them what they want to do with their money, once they
:36:16. > :36:19.have paid the tax. If you want to give it to charity, if they want to
:36:20. > :36:23.give it to their children. But for me, my will is my kids don't
:36:24. > :36:27.suddenly get all the cash, my kids get it in stages in life. Hopefully
:36:28. > :36:32.they won't get it until they are really old and I will live forever.
:36:33. > :36:37.If they do not get it through any effort of their own? That's what I
:36:38. > :36:40.want to do. I want to work hard in order to make my children's future a
:36:41. > :36:44.bit easier, and in order that they have got that little nest there,
:36:45. > :36:48.they are protected there. I think that's what most parents want to. Do
:36:49. > :36:53.I have three children, I'm a single parent and I don't want my kids
:36:54. > :36:57.struggling, but I don't want them being spoiled as well. I also want
:36:58. > :37:01.to give to charity, but it should be the people's right to do what they
:37:02. > :37:09.want to do with their money once they pay the tax on T I don't want
:37:10. > :37:13.the Government dewhat to do -- deciding what to do with my money
:37:14. > :37:17.once I'm dead. The same amount of money being taxed twice, you tern
:37:18. > :37:26.you pay income tax on t and other taxes no doubt. Then you die and
:37:27. > :37:33.your tax is again on it? To me and I am no tax export, trust me. I'm an
:37:34. > :37:39.expert of being a child of a really rich guy. But you are taxed as you
:37:40. > :37:48.are making it as it is you know flowing somewhere and then if you
:37:49. > :37:52.have held on to it, and basically hoarded it, they are you are taxed
:37:53. > :37:56.because essentially, and this would be my dad as view that you are
:37:57. > :38:00.allowed to make all that money because the system, the structure,
:38:01. > :38:04.the laws, all the rules of whatever world you were making that money in
:38:05. > :38:07.allowed you to do it. There are places in the world where you can
:38:08. > :38:14.make a lot of money and you don't see a dime for all sorts of reasons.
:38:15. > :38:18.It makes sense essentially to say to the system that allowed you to amass
:38:19. > :38:24.a fortune to say, OK, here is some of that back, thatch. It doesn't
:38:25. > :38:29.mean my kids -- thank you very much. It doesn't mean my kids won't get
:38:30. > :38:33.some. But some of it is a payback to the system that allowed you to get
:38:34. > :38:37.it in the first place. A lot of people want to provide and make
:38:38. > :38:43.their children's lives a lot better when they are not. There for example
:38:44. > :38:47.getting them through university. The worst case scenario happens,
:38:48. > :38:50.sometimes they pay the tax on the state they can't afford to go to
:38:51. > :38:57.university, they can't afford to live the life that other people with
:38:58. > :39:07.lots of money do. That has changed today because it has been raised
:39:08. > :39:11.from ?325,000 to a million. Or possibly will be. House prices are
:39:12. > :39:19.rising which means a lot more people will have to inheritance tax, it is
:39:20. > :39:23.unfair and should be abolished. Isn't it the case, on your 19th
:39:24. > :39:28.birthday you inherited a whole lot of stock to the tune of millions and
:39:29. > :39:37.millions of dollars? It became that. When I got it it was actually
:39:38. > :39:45.$90,000, $250,000 today. No and lot of money, no question. It was
:39:46. > :39:50.$90,000 when I turned 1, it allowed me to invest in myself, build my
:39:51. > :39:55.business and did what I did. You have invalidated your own argument?
:39:56. > :39:59.Not at all, my first statement is how much is enough. I'm not saying
:40:00. > :40:05.inheritance is entirely wrong. I'm saying huge amounts of inheritance
:40:06. > :40:09.can be very damaging. I think a little inheritance can be valuable
:40:10. > :40:17.what Michelle said in terms of doing it in stages is a great idea.
:40:18. > :40:25.Where you do you think of when you hear the words "war on terror.
:40:26. > :40:29.Afghanistan, if not Texas. The new front is in Africa, it is
:40:30. > :40:35.underreported because the fight against the murderous bigots is done
:40:36. > :40:40.by African Union troops. Around the town in Somalia they are wage ago
:40:41. > :40:43.campaign against Islamist forces controlling more territory than any
:40:44. > :40:49.other Al-Qaeda affiliate in the world. The BBC's international
:40:50. > :40:59.development correspondent is the only foreign correspondent
:41:00. > :41:04.accompanying the African troops. Soldiers from Uganda head for battle
:41:05. > :41:17.against radical Islamist rebels in Somalia. Africa is the new frontline
:41:18. > :41:24.in the war against Al-Qaeda. Bruted force is being used against Islamist
:41:25. > :41:38.insurgents, not only here in Somalia but the west African nations too.
:41:39. > :41:43.West African nations too. The soldiers going through the fight
:41:44. > :41:52.face a fierce some opponent, Al-Shabab. Somali Government troops
:41:53. > :41:57.are involved too. They are tough fighters but they sometimes lack
:41:58. > :42:10.discipline and are always short of equipment. Without the Ugandans, the
:42:11. > :42:17.Somali army wouldn't stand a chance. If so much
:42:18. > :42:23.Map of the Somali troopsers don't look like they can stay and fight,
:42:24. > :42:30.they can. They are part of a force in Somalia paid for by the west to
:42:31. > :42:39.do a job western Governments won't. As the armoured column approaches
:42:40. > :42:49.the town, Al-Shabab are ready. The soldiers I'm with know what's
:42:50. > :42:53.coming. We are close to the town and there appears to be a firefight
:42:54. > :42:58.happening about 100ms in front of us. Another African Union vehicle in
:42:59. > :43:04.front of us and they appear to be engaging across the bank where the
:43:05. > :43:22.town is. There is some fire coming back in this direction. Some of it
:43:23. > :43:44.was coming in this direction. Shoot straight and kill the enemy! Bullets
:43:45. > :43:53.rain on the Ugandans. Fighting vehicles are caught in the traffic
:43:54. > :44:20.jam from hell. This is the main shopping street in the town. Look
:44:21. > :44:28.what's happened to it now? An Al-Shabab side board, "the Koran is
:44:29. > :44:40.the only path". I'm here under the mosque, OK. He's going to start
:44:41. > :44:47.asking for ammunitions now, any vehicle moving between you and you
:44:48. > :44:53.fast, shoot. Get your speed bigger. After fighting his way into town the
:44:54. > :44:59.general took control. What I'm sure is I have adequate man power, 1500
:45:00. > :45:07.soldiers on the ground and they won't do it to us they won't. The
:45:08. > :45:12.battle has taken its toll. But civilians suffer more. This woman's
:45:13. > :45:18.family was hit by a mortar round. She's the only surviving member. The
:45:19. > :45:23.take on the town was only part of a -- the attack on the town was only
:45:24. > :45:28.part of the offensive across the area where 3 million people live,
:45:29. > :45:38.expect more civilian casualties and more refugees. Somalia has been at
:45:39. > :45:50.war for decades, the human cost to that is incalculable. The governor
:45:51. > :45:56.of the region thanked the Ugandans for coming. I put it to him that it
:45:57. > :46:00.was Somalia's deep plan and private traditions was needed to shore it
:46:01. > :46:06.up. You are saying that sides in Somalia have foreign support? More
:46:07. > :46:11.than us. Al-Shabab, there are fighters who are going to teach you
:46:12. > :46:19.know our youngest how to make suicide. How to make EID. This is
:46:20. > :46:26.from these fighters here. That is the tragedy of Somalia,
:46:27. > :46:32.foreign troops dig in, foreign Jihadists battle against them. The
:46:33. > :46:38.Ugandans have made a significant advance by reaching Corleoli, but
:46:39. > :46:43.they don't control the down. Very soon the annual rains will come and
:46:44. > :46:55.the big MPs of war will be dogged down. Then Al-Shabab will retoot to
:46:56. > :47:02.fight although in a distant and often what seems un-Govable country.
:47:03. > :47:06.All the -- ungovernable country. All the men in the office have been
:47:07. > :47:14.preparing, with the quote that Michael Gove is a not very secret
:47:15. > :47:21.fan of our music of choice, fab-hop. In case it has passed you by, here
:47:22. > :47:28.is live, uncut and wild, its leading exponent, Mr Bean the gentleman
:47:29. > :47:33.rhymer. -- Mr B gentleman rhymer.
:47:34. > :47:39.Hip, hop, hip, hop, you don't stop. # Walking to the bang jan rhythm
:47:40. > :47:52.walking to the beat. # You wake up late for school and
:47:53. > :47:56.you don't want to go You ask your ma please and she still
:47:57. > :48:04.says no. You miss two classes and no homework
:48:05. > :48:11.But your teacher thinks he's class You got a fight
:48:12. > :48:21.On Newsnight to party. You got to fight, for your right to
:48:22. > :48:29.party # That's p-a-r-t-y.
:48:30. > :48:38.Cold winds coming in from the North Sea will be a big feature of the
:48:39. > :48:43.weather over the next few days. A lot of cloud across the east during
:48:44. > :48:48.Wednesday, with outbreaks of rain. In the west fair few showers in
:48:49. > :48:49.Northern Ireland, at least there will be sunny spells developing.
:48:50. > :48:50.Quite