:00:00. > :00:15.They ignored him, they dismissed him and taked him, it didn't work . What
:00:16. > :00:21.will the established parties try next to stop the relentless rise of
:00:22. > :00:25.UKIP. Obama's Treasury Secretary said he had to bail out the bankers
:00:26. > :00:29.to save the world. He was the Sheriff and he tells us he was
:00:30. > :00:35.dealing with a bunch of cowboys. We had a wild west financial system.
:00:36. > :00:46.There were a lot of mistakes in oversight and risk management and a
:00:47. > :00:52.lot of imprudence, absolutely. She became the poster girl for a more
:00:53. > :00:57.modern, tolerant, inclusive Europe when she won Eurovision. Why are so
:00:58. > :01:02.many voters about to vote for parties that are none of the above.
:01:03. > :01:09.We will ask her tonight what she makes of that.
:01:10. > :01:16.Nigel Farage promised a political earthquake in the local and European
:01:17. > :01:22.elections, we won't know the euro results until Monday night. UKIP
:01:23. > :01:25.certainly caused enough tremors to shake the other parties. We have the
:01:26. > :01:29.headlines. Let me give you the big picture of
:01:30. > :01:33.what happened today, because this is arguably the day that England went
:01:34. > :01:37.into a four-party political system. If I go into the kind of councils
:01:38. > :01:40.that the stories were defending tonight and I update it with these
:01:41. > :01:48.results you can see what has happened. West Lancashire has gone
:01:49. > :01:55.into no overall control. Amber Valley will be a particular feather
:01:56. > :02:00.in the cap, tight low-fought at a Westminster parliamentary level. It
:02:01. > :02:04.is old mining country in Derbyshire. These are the councils Labour was
:02:05. > :02:08.defending, I will update you and show you what will happen, Great
:02:09. > :02:12.Yarmouth has gone into no overall control. This is why, UKIP picking
:02:13. > :02:17.up ten seats on the council here which snatched it out of Labour's
:02:18. > :02:21.hands. What about the Lib Dem, they have had a pretty rough night. If I
:02:22. > :02:25.update this they have lost a quarter of their councils tonight, just
:02:26. > :02:29.eight up. Kingston upon Thames has gone to their partners in
:02:30. > :02:33.Government, the Conservatives. Portsmouth has gone into no overall
:02:34. > :02:39.control. We don't have a button for UKIP because they haven't got a
:02:40. > :02:43.council, it is mathematically impossible for them to do it. If I
:02:44. > :02:46.compare the kind of places where they have been doing well tonight,
:02:47. > :02:51.they are pretty much all over the country. All over England, that is.
:02:52. > :02:54.In Portsmouth they were fighting the Lib Dems, they have gained six seats
:02:55. > :02:59.on the council there. In Rotherham they were fighting Labour, up ten
:03:00. > :03:03.seats there. They were fighting the Tories in Basildon and Essex, up 11
:03:04. > :03:08.seats there, an extraordinary night for this party who have really come
:03:09. > :03:12.of age. They call thselves the fox in the Westminster chickens. Let's
:03:13. > :03:16.see how long the fox lasts and where it goes now. The Tories didn't do
:03:17. > :03:21.well yesterday, but David Cameron's usual party critics have remained
:03:22. > :03:25.untypically silent. Labour didn't do at all badly and in London did much
:03:26. > :03:28.better than expected. But Ed Miliband's critics have been
:03:29. > :03:32.anything but silent. Maybe because there was a number of seats Labour
:03:33. > :03:36.has to win to form the next Government where its performance
:03:37. > :03:40.ranged from lacklustre to poor, and one common theme links the Tories
:03:41. > :03:43.and Labour was the disruptive influence UKIP had on their fortunes
:03:44. > :03:49.across England. We have been to the old Middle
:03:50. > :03:53.England railway town of Swindon, this report contains flash
:03:54. > :03:59.photography. Pushing, pulling, disrupting,
:04:00. > :04:05.contorting, changing the contours of the political map. UKIP hasn't won
:04:06. > :04:10.councils outright anywhere. But Mr Farrage is squeezing votes, almost
:04:11. > :04:16.everywhere. T conversations going on last night, one in Westminster going
:04:17. > :04:21.amongst the commentators and Tory MPs who still see it as the old
:04:22. > :04:25.left-right divide, and the other conversation was goes on in Swindon.
:04:26. > :04:33.The traditional conversation that UKIP only takes from the Tories was
:04:34. > :04:38.disproved here. But UKIP only takes from the Tories, right? Wrong, here
:04:39. > :04:42.in Swindon and dispondent Labour, whose leader in this town Ed
:04:43. > :04:51.Miliband forgot, failed to take the council. The kind they desperately
:04:52. > :04:57.need. We lost votes to UKIP in the target seats, and that's cost us. A
:04:58. > :05:00.depressing picture for Labour, because Swindon's the kind of seat
:05:01. > :05:04.that's tight when general elections come round, where, in a normal
:05:05. > :05:08.political cycle Ed Miliband should be well ahead. What do you think
:05:09. > :05:14.about Ed Miliband though, he came here earlier in the week? You are
:05:15. > :05:21.making a terrible face? Not great deal. He's not a leader. He's not a
:05:22. > :05:25.leader? Normally we vote Labour, he's not the best man for the job.
:05:26. > :05:29.He's not the best man for the job? They should have picked his brother.
:05:30. > :05:33.What did you vote yesterday? Conservative? Why? It is better the
:05:34. > :05:39.devil you know, you have to give people time to sort the country out.
:05:40. > :05:44.Yeah. If we keep swapping and changing you have to start from the
:05:45. > :05:48.beginning again. UKIP seem to be willing to tell the truth straight
:05:49. > :05:51.up. People had questions, especially Nigel Farage, he answered the
:05:52. > :05:54.questions in a way that makes you feel you are getting the answers you
:05:55. > :05:58.want, he's not lying to you. Labour only needed one net gain here to
:05:59. > :06:02.knock out the Tories, but with thousands of votes peeling away to
:06:03. > :06:08.UKIP it didn't happen. The party did gain seats around the country, but
:06:09. > :06:15.nothing like the number needed to look solidly and credibly like they
:06:16. > :06:20.might win next year. Labour did grab councils from the Tories in London
:06:21. > :06:26.and were top in some target seats. But a shaky national first place is
:06:27. > :06:29.not enough to top this. The strategists at the top of the party
:06:30. > :06:32.called it wrong, we should have taken the fight to UKIP from the
:06:33. > :06:36.beginning and we never did. We have not done as well as we should have
:06:37. > :06:40.done in both the presentation of our policies and the organisation. I
:06:41. > :06:45.lost count the number of people canvassing over the last, especially
:06:46. > :06:50.the last two or three days that said you will need a big kicking. Even
:06:51. > :06:54.hints from Labour's top table they were too late to catch on. People
:06:55. > :06:56.want tougher controls in immigration and reform in Europe, we have been
:06:57. > :07:02.making those arguments in this election. We have to do so more
:07:03. > :07:07.loudly over the next year. But for the leader, who has been in politics
:07:08. > :07:10.man and boy, it is nothing to do with him or his campaign, but
:07:11. > :07:15.something that has been brewing for years. I think in some parts of the
:07:16. > :07:19.country we have had discontent building up for decades about the
:07:20. > :07:23.way the country has been run, and about the way our economy works. And
:07:24. > :07:27.people feeling that the country just doesn't work for them. What you are
:07:28. > :07:32.seeing is some parts of the country is people turning to UKIP has an
:07:33. > :07:37.expression of that discontent. The prize for the saddest faces of these
:07:38. > :07:41.elections though must go to the Lib Dems. Wiped out in some cities,
:07:42. > :07:46.losing all their councillors in Manchester. The Greens taking their
:07:47. > :07:54.place as the official opposition in Liverpool. Losing overall more than
:07:55. > :07:59.a third of their grassroots base. But Nick Clegg also appears to
:08:00. > :08:02.believe it is not really mainstream politicians' fault. It is just that
:08:03. > :08:09.what they have done has made voters grumpy. I certainly accept that
:08:10. > :08:12.there is a very strong anti-politics mood around, by the way not only in
:08:13. > :08:15.our country but in many other parts of Europe as well. I think we will
:08:16. > :08:19.see that in the European elections in the days to come. Of course also
:08:20. > :08:23.being part of a Government that has had to take extraordinarily
:08:24. > :08:27.difficult and sometimes down right unpopular decisions over the past
:08:28. > :08:33.four years, to get the economy back on track. But here is the curious
:08:34. > :08:37.thing, no, not Nigel Farage having a beer and a fag, that seems to happen
:08:38. > :08:44.almost whenever there is a camera around. But today's numbers point to
:08:45. > :08:51.him having a smaller share of the national vote than at last year's
:08:52. > :08:56.council elections. But he's so emboldened by his gains in places
:08:57. > :09:03.like Essex, finally Farrage has vowed he will try his luck as an MP.
:09:04. > :09:09.I haven't done a lot, just bought a pint of beer, there we are! What
:09:10. > :09:14.won't be on offer to UKIP is a deal with those people he doesn't call
:09:15. > :09:17.Conservative. Governing parties normally take a hammering in local
:09:18. > :09:22.elections and David Cameron's party did lose councils, but the
:09:23. > :09:26.performance was lacklustre, not disastrous. Yet listen closely,
:09:27. > :09:31.there is no dismissing UKIP's support any more. Now he shares
:09:32. > :09:36.their pain. We have got to work harder and really deliver, on issues
:09:37. > :09:38.that are frustrating people and frustrating me like welfare reform
:09:39. > :09:42.and immigration and making sure people really benefit from this
:09:43. > :09:45.recovery. We will be working flat out to demonstrate that we do have
:09:46. > :09:54.the answers to help hard working people. But it is not clear those
:09:55. > :09:59.hard working people, or anyone else busy getting on with the day-to-day
:10:00. > :10:03.even wants to be persuaded. UKIP's performance is more a tremor than
:10:04. > :10:07.the promised earthquake, but in towns like Swindon they know they
:10:08. > :10:15.had a tangible effect. There is too much of this towing the party line.
:10:16. > :10:19.There is too much of being what they think is right rather than being
:10:20. > :10:23.right. We get being told we are wrong for saying what people think.
:10:24. > :10:27.Why wouldn't you, it is not racist or anything, it is what people
:10:28. > :10:31.think. UKIP hasn't won the election, but in a sense no-one really has,
:10:32. > :10:36.they have been pretty dismal for all the main parties. If anything is
:10:37. > :10:39.victorious it is perhaps the argument that the current crop of
:10:40. > :10:48.Westminster politicians doesn't connect let alone convince people in
:10:49. > :10:51.the rest of the country. Sunday's results of the European elections
:10:52. > :10:56.could see UKIP squeeze into first place. But voters are yet to answer
:10:57. > :11:07.if our politics are permanently bent out of shape. She looked like Mary
:11:08. > :11:14.Poppins and came straight back to the studio! How are the three main
:11:15. > :11:19.parties going to react to UKIP? All of their performances have gone
:11:20. > :11:23.pretty soggy, we need to keep it in perfective, the way their votes
:11:24. > :11:26.added up had a tangible effect in Swindon and others. The Lib Dems for
:11:27. > :11:30.them it is really a question of grin and bear it, they don't really have
:11:31. > :11:33.much choice. I think they are quite resolved on that. For the
:11:34. > :11:36.Conservatives, interestingly, the newer by-election is coming at us
:11:37. > :11:40.thick and fast, that is next week, although there are a couple of
:11:41. > :11:43.noises off tonight, broadly speaking their discipline seems to be
:11:44. > :11:46.holding. And David Cameron is already responding quite far in
:11:47. > :11:50.policy terms to the threat from UKIP, whether on welfare, tougher
:11:51. > :11:53.language on immigration or that referendum promise. What is
:11:54. > :11:56.happening, it is toughest, and we are seeing toughest already for
:11:57. > :12:01.Labour. Partly because some of the private anxieties about how to deal
:12:02. > :12:04.with UKIP, which have been there, have already spilt out into public.
:12:05. > :12:09.You heard Ed Balls clearly saying they have to be stronger on
:12:10. > :12:12.immigration, and Tessa Jowell, that very loyal Labour figure, and very
:12:13. > :12:16.well known said this afternoon that Ed Miliband was absolutely not on
:12:17. > :12:20.top of the bill from the checkout. A rather pointed remark at how he
:12:21. > :12:23.handled the campaign in the last few weeks. For Labour this is
:12:24. > :12:28.potentially a very dangerous moment. Ed Miliband is nowhere near the kind
:12:29. > :12:33.of comfortable level he needs to be at, above 35% in order really to be
:12:34. > :12:37.looking like somebody who could be walking through the steps of Number
:12:38. > :12:40.Ten next year. Let's discuss the state of the
:12:41. > :12:45.politics after these elections with Jeremy Hunt for the Conservatives,
:12:46. > :12:50.and Chuka Umunna for Labour. Welcome both of you let me come to you first
:12:51. > :12:53.Jeremy. The Tories haven't been quite scrutinised yet, let's look at
:12:54. > :12:58.the result, you need to increase your share of the vote from the 36%
:12:59. > :13:01.you got in 2010 to win in 2015, but you are falling back, your national
:13:02. > :13:05.share of the vote projected yesterday was under 30%, and there
:13:06. > :13:09.is only a year to go? Well actually I don't agree with that. Of course
:13:10. > :13:12.you are comparing it to what happened at the last election and
:13:13. > :13:15.since then we have had to take some very difficult decisions to deal
:13:16. > :13:19.with the deficit that we have inherited in many other areas. If
:13:20. > :13:23.you look at the recent trends, things have been moving much more in
:13:24. > :13:27.our direction. We got a higher share of the vote than a year ago. The
:13:28. > :13:31.polls have been closing. But you got a lower share of the vote than you
:13:32. > :13:34.got in 2010. To win the election next year you need a higher share
:13:35. > :13:38.you are going in the wrong direction? But this is what
:13:39. > :13:42.Conservative Governments do. We take difficult decisions at the start of
:13:43. > :13:45.a parliament, the decisions that are necessary in the long-term interests
:13:46. > :13:50.of the country. And those decisions are often not popular, but then as
:13:51. > :13:55.it gets closer to an election people start to see the fruits of those
:13:56. > :13:59.decisions. Why is it that gap has been closing. It is important, there
:14:00. > :14:03.is a lot of talk about the politics and strategyising, but we have one.
:14:04. > :14:08.Five million people who have jobs who didn't have jobs at the last
:14:09. > :14:11.election. They and their families are seeing their children going to
:14:12. > :14:13.academies and free schools, the standards are getting better, more
:14:14. > :14:16.doctors and nurses in the hospitals. The facts on the ground are
:14:17. > :14:19.changing, that is making it very difficult for Labour to put together
:14:20. > :14:24.their argument because they opposed so many of those changes. They may
:14:25. > :14:30.be changing but you only got 29% of the vote. Chuka Umunna, Labour's
:14:31. > :14:36.position, after four years of austerity, a flat-lining economy
:14:37. > :14:40.according to Ed Miliband, and you have only added two percentage
:14:41. > :14:45.points since 2010, the worst result in living memory? I thought we had a
:14:46. > :14:53.good set of results over the last 24 hours. 31%? Let me finish. On top of
:14:54. > :14:57.the councillors we had in 2010 we have 270-odd. Importantly we have
:14:58. > :15:03.got the biggest share of the vote in the areas boundaries to some of the
:15:04. > :15:06.key marginal seats, Carlyle, and in the south which importantly we need
:15:07. > :15:11.to be winning back support in, Ipswich, Hastings. You are only two
:15:12. > :15:15.percentage points ahead of the Tories, nationally. Of course we
:15:16. > :15:19.have to remember that most, many of the seats if you look at London, for
:15:20. > :15:23.example, that were contested yesterday were ones which were
:15:24. > :15:28.boosted by the turnout in 2010. These were kind of Labour areas. So
:15:29. > :15:32.you wouldn't expect to see quite the same performance in these seats. Let
:15:33. > :15:35.me say something that I think is very interesting about London.
:15:36. > :15:38.Because what Jeremy talked about is as people see the results on the
:15:39. > :15:43.ground. For example, growth. You will begin to see the pick-up in the
:15:44. > :15:46.Tory support. Now we know that 75% of the new jobs since 2010 have been
:15:47. > :15:49.created in London and the south-east. But you saw things in
:15:50. > :15:56.London, like, for example, the Tories losing their flagship
:15:57. > :15:59.council, Hammersmith and Fulham, the Prime Minister's favourite council
:16:00. > :16:04.falling to Labour. You have a London problem, you don't resonate with the
:16:05. > :16:09.young urban, and you don't resonate with ethnic minorities and you do
:16:10. > :16:12.badly in the capital? Let's look at London and the south-east, you have
:16:13. > :16:17.got southern seats, some of the less southern affluent areas that Labour
:16:18. > :16:21.need to win in like Thurrock, Gloucester and Worcester, where
:16:22. > :16:24.actually they did disappointingly badly. I asked you about the Tories
:16:25. > :16:29.in London not Labour in the south-east? Hammersmith and Fulham
:16:30. > :16:34.is a Labour-held seat, if Labour want to win the elections they need
:16:35. > :16:39.to win marginal seats, that is not what Hammersmith is. It is a bad
:16:40. > :16:43.example. Why are you doing badly in London? The truth is better doing
:16:44. > :16:48.better in London and better across the country. You are losing the
:16:49. > :16:52.affluent suburbs and the inner cities? Look at the areas that
:16:53. > :16:57.Labour need to win. They need to win councils like Plymouth, Swindon,
:16:58. > :17:01.they need to win places like Tamworth. What about Lancashire. It
:17:02. > :17:06.is not a geography lesson here, you can threw names at each other. There
:17:07. > :17:10.is a very important point, no opposition party has ever won a
:17:11. > :17:13.general election without being the biggest party in local Government.
:17:14. > :17:18.We are going to be the biggest party in local Government. That's fine.
:17:19. > :17:22.And we a growing in our support. History is not great lesson here, we
:17:23. > :17:27.are now a four-party system. You only have one seat in Scotland, no
:17:28. > :17:31.seats in the single major northern city and you are now losing out in
:17:32. > :17:35.the suburbs and the inner cities of the capital, you are not even a
:17:36. > :17:40.National Party any more? I totally disagree with that, look at Pendel
:17:41. > :17:45.in Lancashire and the key battle grounds of the Midlands, places like
:17:46. > :17:49.Tamworth. Birmingham edge basten to, Birmingham Northfield, where we won
:17:50. > :17:52.seats off Labour if there was a general election today. We are
:17:53. > :17:55.actually doing extremely well. It is very, very tough. We have to
:17:56. > :17:58.understand after the difficult decisions we have taken over the
:17:59. > :18:02.last three years that it is not going to be a popularity contest at
:18:03. > :18:06.this stage. But in the end, in the end, what the British people are
:18:07. > :18:10.looking for is substance. That is Moy point, it is very -- my point,
:18:11. > :18:14.it is very important the substance on the ground is a growing economy,
:18:15. > :18:20.better schools and hospitals. Let me put a point to you. Your cost of
:18:21. > :18:24.living Crisis Line, it isn't really working is it? It is not really
:18:25. > :18:32.cutting through, retail sales are soaring. Consumer confidence is at
:18:33. > :18:38.its highest level since 1978, if there was cost of living crisis none
:18:39. > :18:45.that have would be true? If you asked most people do they feel more
:18:46. > :18:49.well off or if they are not facing a squeeze. They are absolutely facing
:18:50. > :18:54.a squeeze on their living standards. There is parts of the country where
:18:55. > :18:58.there is an imbalanced recovery, 54% of GDP growth has come from London
:18:59. > :19:02.and the south-east. If you go to the south west and the north-east they
:19:03. > :19:05.don't recognise the picture. You can have the data argument, but if you
:19:06. > :19:08.look at the situations many people are facing they don't feel a hell of
:19:09. > :19:12.a lot better off now. Overall you wouldn't get the rise in retail
:19:13. > :19:16.sales if the whole country was in a cost of living crisis? The question
:19:17. > :19:21.is how do people feel, how is that translating. They are showing how
:19:22. > :19:26.they feel spending in the shots? The point is people are learning ?1,600
:19:27. > :19:34.less than in 2010. On election day it was revealed that net immigration
:19:35. > :19:38.last year rose by 50,000 to 212,000, you promised it would fall below
:19:39. > :19:43.100,000 by-election day. That is clearly not going to happen. Doesn't
:19:44. > :19:48.that broken promise by a mainstream party explain why UKIP are doing so
:19:49. > :19:51.well? We are frustrated it is taking so long to deal with the immigration
:19:52. > :19:57.level. We have it down a third from the peak levels in 2005. One of the
:19:58. > :20:00.reasons it is rising is we happen to be one of the most successful
:20:01. > :20:03.economies in the Europe and we're tracting people from other --
:20:04. > :20:07.attracting people from other European countries. We are dealing
:20:08. > :20:10.with the issues by making sure that people who should be paying for
:20:11. > :20:15.their NHS care are properly paying for it and making sure people can't
:20:16. > :20:21.claim benefits unfairly. It is important to say we recognise there
:20:22. > :20:25.is frustration that people feel. Teresa May is a successful and tough
:20:26. > :20:29.Home Secretary, I wouldn't want to bet against her delivering on
:20:30. > :20:32.targets. I would bet against her and bet with you it won't happen.
:20:33. > :20:36.The great financial crash of our age was six years ago, we are living
:20:37. > :20:41.with its conscupss. The banks got bailed out with public money, but
:20:42. > :20:46.millions of tax-payers were held below the water line.
:20:47. > :20:51.A New York bank regulator suddenly found it was his job to save the
:20:52. > :20:57.world. He has written a book called Stress Test, about it. He took the
:20:58. > :21:03.job as US Treasury Secretary, some what reluctantly, and saw the
:21:04. > :21:07.biggest banking bail out in history. He South Africans not just shaping
:21:08. > :21:12.economic policy and managing financial markets, he has an
:21:13. > :21:23.unparalleled understanding of the current economic crisis in all of
:21:24. > :21:32.its depth, complexity and urgency. Timothy Geigtner spent a year
:21:33. > :21:37.fighting crises, he earned a name as the "go-to man" in difficulties. The
:21:38. > :21:42.financial markets across the globe are in turmoil. He was head of the
:21:43. > :21:46.New York fed when the roof fell in six years ago, he was complicit in
:21:47. > :21:50.the decision not to bail out Lehman Brothers, which many have blamed for
:21:51. > :21:54.making the financial crisis worse. President Obama made him Treasury
:21:55. > :21:58.Secretary when he won the White House in 2008. By his own admission
:21:59. > :22:02.even he wasn't sure he was the right man to take the helm of an economy
:22:03. > :22:08.on the brink of a financial meltdown. Within weeks of taking the
:22:09. > :22:15.job he oversaw the second wave of bail outs, another $350 billion. He
:22:16. > :22:21.was criticised for being too close to Wall Street, and for going easy
:22:22. > :22:25.on the bankers, though he wasn't one himself. When he stood down last
:22:26. > :22:30.year, some gave him credit for saving the day. Others complained he
:22:31. > :22:34.bailed out the bankers who caused the crisis, while leaving as
:22:35. > :22:37.casualties ordinary householders under water and drowning. When I
:22:38. > :22:42.spoke to him in New York this afternoon, I asked him why nobody
:22:43. > :22:46.had ever been held culpable for the crash. There were a lot of causes
:22:47. > :22:51.for the crisis, a lot of regulatory failure, a lot of bad behaviour, a
:22:52. > :22:55.lot of predatory lending, some pretty badly designed rules. We had
:22:56. > :23:02.a kind of wild west financial system. You had a ring side seat at
:23:03. > :23:08.the wild west, why didn't you see it coming? I talked openly about what
:23:09. > :23:12.we saw and missed, I tried to point out during the years of the boom
:23:13. > :23:15.what we were seeing in the United States which was a set of
:23:16. > :23:19.vunerabilities, classic vunerabilities you see preceding
:23:20. > :23:23.financial crises. What happened in the United States is we had a system
:23:24. > :23:27.where finance outgrew the protections we put in place after
:23:28. > :23:32.the Great Depression. Alongside the banking system we had this diverse
:23:33. > :23:37.mix of shadow banks, non-banks, risky forms of finance that had no
:23:38. > :23:42.constraints on risk and no protection against runs and panic.
:23:43. > :23:45.That is what made the crises not so hard to anticipate, but so hard to
:23:46. > :23:51.pre-empt and manage when the panic started. You argue that the banks
:23:52. > :23:55.had to be bailed out to avoid a financial meltdown, I understand
:23:56. > :24:02.that. Once they had been bailed out, why were the bankers responsible not
:24:03. > :24:05.then held accountable? What we did in the United States it is a
:24:06. > :24:08.different strategy than adopted not just in the Great Depression but
:24:09. > :24:13.most countries around the world in the crisis. We forced a lot of
:24:14. > :24:16.restructuring in our system, and we recapitalised it very aggressively
:24:17. > :24:19.and dramatically, we thought that was the best way to make sure the
:24:20. > :24:24.economy will benefit from the oxygen you need to grow as you come out of
:24:25. > :24:27.this thing. Then we moved very quickly to put in place a
:24:28. > :24:32.dramatically reformed set of constraints on risk, much more
:24:33. > :24:39.modern and sophisticated and design set of risks, passed those
:24:40. > :24:42.remarkably quickly. And we tried to defend the foundation for a tougher
:24:43. > :24:46.enforcement response. Most people look at the scale of the enforcement
:24:47. > :24:50.response to date and it is now changing, and said they don't feel
:24:51. > :24:54.it was adequate given the level of pain. I understand it, that is in
:24:55. > :24:58.some ways a measure of the fact that we allowed a system to grow up
:24:59. > :25:04.without a well designed set of rules and we are trying to fix that. What
:25:05. > :25:08.would have been wrong with a bit of Old Testament vengence? Nothing,
:25:09. > :25:11.that is what prosecutors across the country have gone trying to do in
:25:12. > :25:15.their careful way. I tried to explain in the face of a panic, with
:25:16. > :25:20.the type of Great Depression like damage that was ahead of us at that
:25:21. > :25:24.point. You first have to make sure you land the plane safely so you
:25:25. > :25:29.protect many innocents from the risk of mass unemployment. You bailed out
:25:30. > :25:34.the bankers and the banks that caused the crash, but you refused to
:25:35. > :25:40.bail out the homeowners who were the casualties, why? That is a deep
:25:41. > :25:45.misperception. Think about what happens in financial panics. To
:25:46. > :25:50.protect people from the catastrophe of mass unemployment, huge loss of
:25:51. > :25:52.wealth, business failure, mass foreclosure, you have to do
:25:53. > :25:56.everything necessary, and this is the first obligation to prevent
:25:57. > :26:01.collapse of the financial system. It is like the power grid, if you let
:26:02. > :26:06.the lights go out nothing is possible. We did it not because we
:26:07. > :26:10.had any interest or desire to protect the banks from their
:26:11. > :26:14.mistakes, and we did have a lot of failure. As we learned from the
:26:15. > :26:21.Great Depression and the crises that Folaued, you first had to do that if
:26:22. > :26:26.you had any hope of reducing risk to victims. The US economy hasn't
:26:27. > :26:33.pepped up that much, it is still a pretty anaemic recovery? The thing
:26:34. > :26:36.about crises, after the trauma and the imbalances of the boom, as you
:26:37. > :26:41.come out of it, as you bring down debt, as people save more, as you
:26:42. > :26:46.work through the big overinvestment in housing, as you bring down
:26:47. > :26:51.leverage, that makes growth slower, it is inescapably, it is partly why
:26:52. > :26:57.you need to have a lot of sustained fiscal support as you come out of a
:26:58. > :27:08.crisis. We had two additional head winds, prep mature and -- pram prep
:27:09. > :27:13.mature, and we had a few shocks. The British economy is now growing
:27:14. > :27:17.faster than the American economy and creating a lot more jobs relative to
:27:18. > :27:20.the American economy, why do you think that is? Because of the
:27:21. > :27:24.strategy we adopted, we got our economy growing again very quickly,
:27:25. > :27:28.and if you look at the pace of growth in the United States and how
:27:29. > :27:38.far we have come relative to you know just say the peak before the
:27:39. > :27:41.crisis, we're actually far ahead of most of the other economies that got
:27:42. > :27:45.caught in the crisis. Again, you know, we are still living with a lot
:27:46. > :27:50.of challenges as a country. And it will take a sustained period of
:27:51. > :27:53.better policy outcomes from Washington to help make a difference
:27:54. > :27:58.on those things. I would take our challenges, I would prefer our
:27:59. > :28:02.challenges to those of most of the countries, most of the major
:28:03. > :28:09.economies in the world. Now, he's the rock star French economist whose
:28:10. > :28:13.book Capital In The 21st century became a best seller. Passionate
:28:14. > :28:19.politicians started to devise policies to tackle his thesis that
:28:20. > :28:23.capitalism inevitably led to ever greater inequalities, he has been
:28:24. > :28:26.tipped to win a Nobel Prize for his work. Tonight the statistical basis
:28:27. > :28:30.of what he wrote has been called into question by the Financial
:28:31. > :28:34.Times. Our economics correspondent is here. Do tell us more? I think
:28:35. > :28:44.this book in the last few weeks sort of became the economics equivalent
:28:45. > :28:50.of James Joyce's Uylesses, lots of people talking about it and not
:28:51. > :28:54.everyone reading it. The Financial Times writer has read it and gone
:28:55. > :28:57.back to the sores and asked a lot -- sources and asked a lot of
:28:58. > :29:05.questions. He thinks he has found a lot of biggerors in the book. Some
:29:06. > :29:10.of them are that Mr Picitty has copied sources over and got them
:29:11. > :29:15.wrong, that happens. Some of the errors look a lot more serious, this
:29:16. > :29:20.is the important thing to remember about his Capital in the 21 Century,
:29:21. > :29:24.it was call for a global tax and wealth. And the charitable
:29:25. > :29:31.interpretation is not everyone agreed with that. What most
:29:32. > :29:35.economists said the biggest achievement was assembling the data
:29:36. > :29:39.over three centuries. He claims that wealth inequality has been rising
:29:40. > :29:43.for the last few decades. He took the numbers for Sweden, France and
:29:44. > :29:46.the UK, add them all together and divide them by three, that is using
:29:47. > :29:52.a simple rather than a weighted average, that is something you get
:29:53. > :29:55.marked down for in a GCSE mas exam. That is a problem. What is more
:29:56. > :30:00.interesting for the political debate in Britain is what the FT and Chris
:30:01. > :30:06.Giles is saying about the UK economy. On Picketty's figures the
:30:07. > :30:10.top 10% have been taking more of national wealth since 1980s, it
:30:11. > :30:14.turns out he has used to do that tax records. They are numbers that
:30:15. > :30:19.specifically say they are not for that purpose. If you used office fo
:30:20. > :30:23.national statistics numbers you don't get that. Everyone will be
:30:24. > :30:27.pouring over the data it is out in the public, has he responded? Chris
:30:28. > :30:31.Giles has fired the starting begun and he has responded, he sent a
:30:32. > :30:36.letter to the FT, the stone of the letter is it is a bit defensive. In
:30:37. > :30:39.his defence, the only reason the FT can do that is he put all of that
:30:40. > :30:42.information in the public domain. If he was trying to hide something he
:30:43. > :30:46.has done it badly. What is interesting tonight is a change in
:30:47. > :30:50.tone. He's saying he wants to debate the numbers, there is lots of
:30:51. > :30:55.sources, let's have debate. That is very different from a few weeks ago
:30:56. > :31:00.which is you might agree with me or not but the numbers spook for
:31:01. > :31:04.themselves. As usual the contrary Brits had to be different and voted
:31:05. > :31:08.yesterday in the elections for the European Parliament, most of Europe
:31:09. > :31:11.doesn't vote until Sunday. There has been a euro-wide poll this month
:31:12. > :31:17.which results in a different result from the one likely to be unveiled
:31:18. > :31:28.on Sunday night. One outraged Russian politician even said "it's
:31:29. > :31:38.the end of Europe". This night is dedicated to everyone who believes
:31:39. > :31:48.in a future of peace and freedom. You know who you are. We are unity,
:31:49. > :31:52.and we are unstoppable. She joins me now, welcome. You got a great
:31:53. > :31:56.reception on the night that you won. But wouldn't it be true to say there
:31:57. > :32:02.are many social issues, Europe is quite deeply divided? Yeah, you know
:32:03. > :32:07.this night was a very special one, as you have seen in the little
:32:08. > :32:15.video. It is funny for me because Europe voted in such a tolerant way.
:32:16. > :32:19.For you? For me, and now it seems that a bit has changed. I think it
:32:20. > :32:23.was a big statement at the Eurovision night. But I think it
:32:24. > :32:27.just needs more than one statement. And there were some politician its,
:32:28. > :32:30.particularly in Russia and Turkey, they were very critical, even wrote
:32:31. > :32:34.about your victory, what did you make about that? First I really have
:32:35. > :32:41.to say this is a very big honour for me. Because they think that I'm that
:32:42. > :32:46.powerful to burst a whole coup, so thank you. I can understand that.
:32:47. > :32:54.Since you won and we saw on the night how the audience loved it, but
:32:55. > :33:00.have you been on the wrong end of abuse since, have people been nasty
:33:01. > :33:08.or tweeting or Facebooking? You know I'm used to that, from the first day
:33:09. > :33:13.of my career I had to fight against intolerance. You know most of the
:33:14. > :33:17.people got it now, they understood that this is not a joke, that I'm
:33:18. > :33:22.serious about what I think and say. But there are still people out there
:33:23. > :33:28.who have to change some minds. Are you winning? Well I hope so that we
:33:29. > :33:35.can win. You know I really believe in that we all can change something.
:33:36. > :33:38.So do you think that in some way the votes that you got, people were
:33:39. > :33:45.sending a political statement by voting for you? I think, you know at
:33:46. > :33:54.the end of the day it is a singing contest, so by all mbeliefs and what
:33:55. > :33:58.I said, if I had not that song I wouldn't have won. Besides that it
:33:59. > :34:03.was a political statement. Especially you see it in Russia, I'm
:34:04. > :34:08.number one on the iTunes charts. Even with a leadership that is not
:34:09. > :34:12.very tolerant? Yes. And that's a huge thing for me, actually. It just
:34:13. > :34:18.shows me that there are so many people out there believe in a future
:34:19. > :34:22.without discrimination. What about a political career, have you thought
:34:23. > :34:27.about that? Not really. I'm an artist, I speak out my beliefs, but
:34:28. > :34:32.I'm going to stick with singing. What are you going to do next? We're
:34:33. > :34:37.working on music, obviously, because this is the love of my life. But I
:34:38. > :34:40.will continue talking about my opinions. We are glad you came on
:34:41. > :34:46.and gave them to us tonight. Thank you. That is all we have time for, I
:34:47. > :34:53.will be back with the Sunday Politics 11.00 on BBC One. There
:34:54. > :34:54.will be a BBC Newsnight special on Sunday night, don't miss that, good
:34:55. > :34:58.night.