23/05/2014 Newsnight


The latest on the local elections, an interview with ex-US treasury secretary Tim Geithner, Conchita Wurst live and did Thomas Piketty get his data wrong?

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They ignored him, they dismissed him and taked him, it didn't work . What


will the established parties try next to stop the relentless rise of


UKIP. Obama's Treasury Secretary said he had to bail out the bankers


to save the world. He was the Sheriff and he tells us he was


dealing with a bunch of cowboys. We had a wild west financial system.


There were a lot of mistakes in oversight and risk management and a


lot of imprudence, absolutely. She became the poster girl for a more


modern, tolerant, inclusive Europe when she won Eurovision. Why are so


many voters about to vote for parties that are none of the above.


We will ask her tonight what she makes of that.


Nigel Farage promised a political earthquake in the local and European


elections, we won't know the euro results until Monday night. UKIP


certainly caused enough tremors to shake the other parties. We have the


headlines. Let me give you the big picture of


what happened today, because this is arguably the day that England went


into a four-party political system. If I go into the kind of councils


that the stories were defending tonight and I update it with these


results you can see what has happened. West Lancashire has gone


into no overall control. Amber Valley will be a particular feather


in the cap, tight low-fought at a Westminster parliamentary level. It


is old mining country in Derbyshire. These are the councils Labour was


defending, I will update you and show you what will happen, Great


Yarmouth has gone into no overall control. This is why, UKIP picking


up ten seats on the council here which snatched it out of Labour's


hands. What about the Lib Dem, they have had a pretty rough night. If I


update this they have lost a quarter of their councils tonight, just


eight up. Kingston upon Thames has gone to their partners in


Government, the Conservatives. Portsmouth has gone into no overall


control. We don't have a button for UKIP because they haven't got a


council, it is mathematically impossible for them to do it. If I


compare the kind of places where they have been doing well tonight,


they are pretty much all over the country. All over England, that is.


In Portsmouth they were fighting the Lib Dems, they have gained six seats


on the council there. In Rotherham they were fighting Labour, up ten


seats there. They were fighting the Tories in Basildon and Essex, up 11


seats there, an extraordinary night for this party who have really come


of age. They call thselves the fox in the Westminster chickens. Let's


see how long the fox lasts and where it goes now. The Tories didn't do


well yesterday, but David Cameron's usual party critics have remained


untypically silent. Labour didn't do at all badly and in London did much


better than expected. But Ed Miliband's critics have been


anything but silent. Maybe because there was a number of seats Labour


has to win to form the next Government where its performance


ranged from lacklustre to poor, and one common theme links the Tories


and Labour was the disruptive influence UKIP had on their fortunes


across England. We have been to the old Middle


England railway town of Swindon, this report contains flash


photography. Pushing, pulling, disrupting,


contorting, changing the contours of the political map. UKIP hasn't won


councils outright anywhere. But Mr Farrage is squeezing votes, almost


everywhere. T conversations going on last night, one in Westminster going


amongst the commentators and Tory MPs who still see it as the old


left-right divide, and the other conversation was goes on in Swindon.


The traditional conversation that UKIP only takes from the Tories was


disproved here. But UKIP only takes from the Tories, right? Wrong, here


in Swindon and dispondent Labour, whose leader in this town Ed


Miliband forgot, failed to take the council. The kind they desperately


need. We lost votes to UKIP in the target seats, and that's cost us. A


depressing picture for Labour, because Swindon's the kind of seat


that's tight when general elections come round, where, in a normal


political cycle Ed Miliband should be well ahead. What do you think


about Ed Miliband though, he came here earlier in the week? You are


making a terrible face? Not great deal. He's not a leader. He's not a


leader? Normally we vote Labour, he's not the best man for the job.


He's not the best man for the job? They should have picked his brother.


What did you vote yesterday? Conservative? Why? It is better the


devil you know, you have to give people time to sort the country out.


Yeah. If we keep swapping and changing you have to start from the


beginning again. UKIP seem to be willing to tell the truth straight


up. People had questions, especially Nigel Farage, he answered the


questions in a way that makes you feel you are getting the answers you


want, he's not lying to you. Labour only needed one net gain here to


knock out the Tories, but with thousands of votes peeling away to


UKIP it didn't happen. The party did gain seats around the country, but


nothing like the number needed to look solidly and credibly like they


might win next year. Labour did grab councils from the Tories in London


and were top in some target seats. But a shaky national first place is


not enough to top this. The strategists at the top of the party


called it wrong, we should have taken the fight to UKIP from the


beginning and we never did. We have not done as well as we should have


done in both the presentation of our policies and the organisation. I


lost count the number of people canvassing over the last, especially


the last two or three days that said you will need a big kicking. Even


hints from Labour's top table they were too late to catch on. People


want tougher controls in immigration and reform in Europe, we have been


making those arguments in this election. We have to do so more


loudly over the next year. But for the leader, who has been in politics


man and boy, it is nothing to do with him or his campaign, but


something that has been brewing for years. I think in some parts of the


country we have had discontent building up for decades about the


way the country has been run, and about the way our economy works. And


people feeling that the country just doesn't work for them. What you are


seeing is some parts of the country is people turning to UKIP has an


expression of that discontent. The prize for the saddest faces of these


elections though must go to the Lib Dems. Wiped out in some cities,


losing all their councillors in Manchester. The Greens taking their


place as the official opposition in Liverpool. Losing overall more than


a third of their grassroots base. But Nick Clegg also appears to


believe it is not really mainstream politicians' fault. It is just that


what they have done has made voters grumpy. I certainly accept that


there is a very strong anti-politics mood around, by the way not only in


our country but in many other parts of Europe as well. I think we will


see that in the European elections in the days to come. Of course also


being part of a Government that has had to take extraordinarily


difficult and sometimes down right unpopular decisions over the past


four years, to get the economy back on track. But here is the curious


thing, no, not Nigel Farage having a beer and a fag, that seems to happen


almost whenever there is a camera around. But today's numbers point to


him having a smaller share of the national vote than at last year's


council elections. But he's so emboldened by his gains in places


like Essex, finally Farrage has vowed he will try his luck as an MP.


I haven't done a lot, just bought a pint of beer, there we are! What


won't be on offer to UKIP is a deal with those people he doesn't call


Conservative. Governing parties normally take a hammering in local


elections and David Cameron's party did lose councils, but the


performance was lacklustre, not disastrous. Yet listen closely,


there is no dismissing UKIP's support any more. Now he shares


their pain. We have got to work harder and really deliver, on issues


that are frustrating people and frustrating me like welfare reform


and immigration and making sure people really benefit from this


recovery. We will be working flat out to demonstrate that we do have


the answers to help hard working people. But it is not clear those


hard working people, or anyone else busy getting on with the day-to-day


even wants to be persuaded. UKIP's performance is more a tremor than


the promised earthquake, but in towns like Swindon they know they


had a tangible effect. There is too much of this towing the party line.


There is too much of being what they think is right rather than being


right. We get being told we are wrong for saying what people think.


Why wouldn't you, it is not racist or anything, it is what people


think. UKIP hasn't won the election, but in a sense no-one really has,


they have been pretty dismal for all the main parties. If anything is


victorious it is perhaps the argument that the current crop of


Westminster politicians doesn't connect let alone convince people in


the rest of the country. Sunday's results of the European elections


could see UKIP squeeze into first place. But voters are yet to answer


if our politics are permanently bent out of shape. She looked like Mary


Poppins and came straight back to the studio! How are the three main


parties going to react to UKIP? All of their performances have gone


pretty soggy, we need to keep it in perfective, the way their votes


added up had a tangible effect in Swindon and others. The Lib Dems for


them it is really a question of grin and bear it, they don't really have


much choice. I think they are quite resolved on that. For the


Conservatives, interestingly, the newer by-election is coming at us


thick and fast, that is next week, although there are a couple of


noises off tonight, broadly speaking their discipline seems to be


holding. And David Cameron is already responding quite far in


policy terms to the threat from UKIP, whether on welfare, tougher


language on immigration or that referendum promise. What is


happening, it is toughest, and we are seeing toughest already for


Labour. Partly because some of the private anxieties about how to deal


with UKIP, which have been there, have already spilt out into public.


You heard Ed Balls clearly saying they have to be stronger on


immigration, and Tessa Jowell, that very loyal Labour figure, and very


well known said this afternoon that Ed Miliband was absolutely not on


top of the bill from the checkout. A rather pointed remark at how he


handled the campaign in the last few weeks. For Labour this is


potentially a very dangerous moment. Ed Miliband is nowhere near the kind


of comfortable level he needs to be at, above 35% in order really to be


looking like somebody who could be walking through the steps of Number


Ten next year. Let's discuss the state of the


politics after these elections with Jeremy Hunt for the Conservatives,


and Chuka Umunna for Labour. Welcome both of you let me come to you first


Jeremy. The Tories haven't been quite scrutinised yet, let's look at


the result, you need to increase your share of the vote from the 36%


you got in 2010 to win in 2015, but you are falling back, your national


share of the vote projected yesterday was under 30%, and there


is only a year to go? Well actually I don't agree with that. Of course


you are comparing it to what happened at the last election and


since then we have had to take some very difficult decisions to deal


with the deficit that we have inherited in many other areas. If


you look at the recent trends, things have been moving much more in


our direction. We got a higher share of the vote than a year ago. The


polls have been closing. But you got a lower share of the vote than you


got in 2010. To win the election next year you need a higher share


you are going in the wrong direction? But this is what


Conservative Governments do. We take difficult decisions at the start of


a parliament, the decisions that are necessary in the long-term interests


of the country. And those decisions are often not popular, but then as


it gets closer to an election people start to see the fruits of those


decisions. Why is it that gap has been closing. It is important, there


is a lot of talk about the politics and strategyising, but we have one.


Five million people who have jobs who didn't have jobs at the last


election. They and their families are seeing their children going to


academies and free schools, the standards are getting better, more


doctors and nurses in the hospitals. The facts on the ground are


changing, that is making it very difficult for Labour to put together


their argument because they opposed so many of those changes. They may


be changing but you only got 29% of the vote. Chuka Umunna, Labour's


position, after four years of austerity, a flat-lining economy


according to Ed Miliband, and you have only added two percentage


points since 2010, the worst result in living memory? I thought we had a


good set of results over the last 24 hours. 31%? Let me finish. On top of


the councillors we had in 2010 we have 270-odd. Importantly we have


got the biggest share of the vote in the areas boundaries to some of the


key marginal seats, Carlyle, and in the south which importantly we need


to be winning back support in, Ipswich, Hastings. You are only two


percentage points ahead of the Tories, nationally. Of course we


have to remember that most, many of the seats if you look at London, for


example, that were contested yesterday were ones which were


boosted by the turnout in 2010. These were kind of Labour areas. So


you wouldn't expect to see quite the same performance in these seats. Let


me say something that I think is very interesting about London.


Because what Jeremy talked about is as people see the results on the


ground. For example, growth. You will begin to see the pick-up in the


Tory support. Now we know that 75% of the new jobs since 2010 have been


created in London and the south-east. But you saw things in


London, like, for example, the Tories losing their flagship


council, Hammersmith and Fulham, the Prime Minister's favourite council


falling to Labour. You have a London problem, you don't resonate with the


young urban, and you don't resonate with ethnic minorities and you do


badly in the capital? Let's look at London and the south-east, you have


got southern seats, some of the less southern affluent areas that Labour


need to win in like Thurrock, Gloucester and Worcester, where


actually they did disappointingly badly. I asked you about the Tories


in London not Labour in the south-east? Hammersmith and Fulham


is a Labour-held seat, if Labour want to win the elections they need


to win marginal seats, that is not what Hammersmith is. It is a bad


example. Why are you doing badly in London? The truth is better doing


better in London and better across the country. You are losing the


affluent suburbs and the inner cities? Look at the areas that


Labour need to win. They need to win councils like Plymouth, Swindon,


they need to win places like Tamworth. What about Lancashire. It


is not a geography lesson here, you can threw names at each other. There


is a very important point, no opposition party has ever won a


general election without being the biggest party in local Government.


We are going to be the biggest party in local Government. That's fine.


And we a growing in our support. History is not great lesson here, we


are now a four-party system. You only have one seat in Scotland, no


seats in the single major northern city and you are now losing out in


the suburbs and the inner cities of the capital, you are not even a


National Party any more? I totally disagree with that, look at Pendel


in Lancashire and the key battle grounds of the Midlands, places like


Tamworth. Birmingham edge basten to, Birmingham Northfield, where we won


seats off Labour if there was a general election today. We are


actually doing extremely well. It is very, very tough. We have to


understand after the difficult decisions we have taken over the


last three years that it is not going to be a popularity contest at


this stage. But in the end, in the end, what the British people are


looking for is substance. That is Moy point, it is very -- my point,


it is very important the substance on the ground is a growing economy,


better schools and hospitals. Let me put a point to you. Your cost of


living Crisis Line, it isn't really working is it? It is not really


cutting through, retail sales are soaring. Consumer confidence is at


its highest level since 1978, if there was cost of living crisis none


that have would be true? If you asked most people do they feel more


well off or if they are not facing a squeeze. They are absolutely facing


a squeeze on their living standards. There is parts of the country where


there is an imbalanced recovery, 54% of GDP growth has come from London


and the south-east. If you go to the south west and the north-east they


don't recognise the picture. You can have the data argument, but if you


look at the situations many people are facing they don't feel a hell of


a lot better off now. Overall you wouldn't get the rise in retail


sales if the whole country was in a cost of living crisis? The question


is how do people feel, how is that translating. They are showing how


they feel spending in the shots? The point is people are learning ?1,600


less than in 2010. On election day it was revealed that net immigration


last year rose by 50,000 to 212,000, you promised it would fall below


100,000 by-election day. That is clearly not going to happen. Doesn't


that broken promise by a mainstream party explain why UKIP are doing so


well? We are frustrated it is taking so long to deal with the immigration


level. We have it down a third from the peak levels in 2005. One of the


reasons it is rising is we happen to be one of the most successful


economies in the Europe and we're tracting people from other --


attracting people from other European countries. We are dealing


with the issues by making sure that people who should be paying for


their NHS care are properly paying for it and making sure people can't


claim benefits unfairly. It is important to say we recognise there


is frustration that people feel. Teresa May is a successful and tough


Home Secretary, I wouldn't want to bet against her delivering on


targets. I would bet against her and bet with you it won't happen.


The great financial crash of our age was six years ago, we are living


with its conscupss. The banks got bailed out with public money, but


millions of tax-payers were held below the water line.


A New York bank regulator suddenly found it was his job to save the


world. He has written a book called Stress Test, about it. He took the


job as US Treasury Secretary, some what reluctantly, and saw the


biggest banking bail out in history. He South Africans not just shaping


economic policy and managing financial markets, he has an


unparalleled understanding of the current economic crisis in all of


its depth, complexity and urgency. Timothy Geigtner spent a year


fighting crises, he earned a name as the "go-to man" in difficulties. The


financial markets across the globe are in turmoil. He was head of the


New York fed when the roof fell in six years ago, he was complicit in


the decision not to bail out Lehman Brothers, which many have blamed for


making the financial crisis worse. President Obama made him Treasury


Secretary when he won the White House in 2008. By his own admission


even he wasn't sure he was the right man to take the helm of an economy


on the brink of a financial meltdown. Within weeks of taking the


job he oversaw the second wave of bail outs, another $350 billion. He


was criticised for being too close to Wall Street, and for going easy


on the bankers, though he wasn't one himself. When he stood down last


year, some gave him credit for saving the day. Others complained he


bailed out the bankers who caused the crisis, while leaving as


casualties ordinary householders under water and drowning. When I


spoke to him in New York this afternoon, I asked him why nobody


had ever been held culpable for the crash. There were a lot of causes


for the crisis, a lot of regulatory failure, a lot of bad behaviour, a


lot of predatory lending, some pretty badly designed rules. We had


a kind of wild west financial system. You had a ring side seat at


the wild west, why didn't you see it coming? I talked openly about what


we saw and missed, I tried to point out during the years of the boom


what we were seeing in the United States which was a set of


vunerabilities, classic vunerabilities you see preceding


financial crises. What happened in the United States is we had a system


where finance outgrew the protections we put in place after


the Great Depression. Alongside the banking system we had this diverse


mix of shadow banks, non-banks, risky forms of finance that had no


constraints on risk and no protection against runs and panic.


That is what made the crises not so hard to anticipate, but so hard to


pre-empt and manage when the panic started. You argue that the banks


had to be bailed out to avoid a financial meltdown, I understand


that. Once they had been bailed out, why were the bankers responsible not


then held accountable? What we did in the United States it is a


different strategy than adopted not just in the Great Depression but


most countries around the world in the crisis. We forced a lot of


restructuring in our system, and we recapitalised it very aggressively


and dramatically, we thought that was the best way to make sure the


economy will benefit from the oxygen you need to grow as you come out of


this thing. Then we moved very quickly to put in place a


dramatically reformed set of constraints on risk, much more


modern and sophisticated and design set of risks, passed those


remarkably quickly. And we tried to defend the foundation for a tougher


enforcement response. Most people look at the scale of the enforcement


response to date and it is now changing, and said they don't feel


it was adequate given the level of pain. I understand it, that is in


some ways a measure of the fact that we allowed a system to grow up


without a well designed set of rules and we are trying to fix that. What


would have been wrong with a bit of Old Testament vengence? Nothing,


that is what prosecutors across the country have gone trying to do in


their careful way. I tried to explain in the face of a panic, with


the type of Great Depression like damage that was ahead of us at that


point. You first have to make sure you land the plane safely so you


protect many innocents from the risk of mass unemployment. You bailed out


the bankers and the banks that caused the crash, but you refused to


bail out the homeowners who were the casualties, why? That is a deep


misperception. Think about what happens in financial panics. To


protect people from the catastrophe of mass unemployment, huge loss of


wealth, business failure, mass foreclosure, you have to do


everything necessary, and this is the first obligation to prevent


collapse of the financial system. It is like the power grid, if you let


the lights go out nothing is possible. We did it not because we


had any interest or desire to protect the banks from their


mistakes, and we did have a lot of failure. As we learned from the


Great Depression and the crises that Folaued, you first had to do that if


you had any hope of reducing risk to victims. The US economy hasn't


pepped up that much, it is still a pretty anaemic recovery? The thing


about crises, after the trauma and the imbalances of the boom, as you


come out of it, as you bring down debt, as people save more, as you


work through the big overinvestment in housing, as you bring down


leverage, that makes growth slower, it is inescapably, it is partly why


you need to have a lot of sustained fiscal support as you come out of a


crisis. We had two additional head winds, prep mature and -- pram prep


mature, and we had a few shocks. The British economy is now growing


faster than the American economy and creating a lot more jobs relative to


the American economy, why do you think that is? Because of the


strategy we adopted, we got our economy growing again very quickly,


and if you look at the pace of growth in the United States and how


far we have come relative to you know just say the peak before the


crisis, we're actually far ahead of most of the other economies that got


caught in the crisis. Again, you know, we are still living with a lot


of challenges as a country. And it will take a sustained period of


better policy outcomes from Washington to help make a difference


on those things. I would take our challenges, I would prefer our


challenges to those of most of the countries, most of the major


economies in the world. Now, he's the rock star French economist whose


book Capital In The 21st century became a best seller. Passionate


politicians started to devise policies to tackle his thesis that


capitalism inevitably led to ever greater inequalities, he has been


tipped to win a Nobel Prize for his work. Tonight the statistical basis


of what he wrote has been called into question by the Financial


Times. Our economics correspondent is here. Do tell us more? I think


this book in the last few weeks sort of became the economics equivalent


of James Joyce's Uylesses, lots of people talking about it and not


everyone reading it. The Financial Times writer has read it and gone


back to the sores and asked a lot -- sources and asked a lot of


questions. He thinks he has found a lot of biggerors in the book. Some


of them are that Mr Picitty has copied sources over and got them


wrong, that happens. Some of the errors look a lot more serious, this


is the important thing to remember about his Capital in the 21 Century,


it was call for a global tax and wealth. And the charitable


interpretation is not everyone agreed with that. What most


economists said the biggest achievement was assembling the data


over three centuries. He claims that wealth inequality has been rising


for the last few decades. He took the numbers for Sweden, France and


the UK, add them all together and divide them by three, that is using


a simple rather than a weighted average, that is something you get


marked down for in a GCSE mas exam. That is a problem. What is more


interesting for the political debate in Britain is what the FT and Chris


Giles is saying about the UK economy. On Picketty's figures the


top 10% have been taking more of national wealth since 1980s, it


turns out he has used to do that tax records. They are numbers that


specifically say they are not for that purpose. If you used office fo


national statistics numbers you don't get that. Everyone will be


pouring over the data it is out in the public, has he responded? Chris


Giles has fired the starting begun and he has responded, he sent a


letter to the FT, the stone of the letter is it is a bit defensive. In


his defence, the only reason the FT can do that is he put all of that


information in the public domain. If he was trying to hide something he


has done it badly. What is interesting tonight is a change in


tone. He's saying he wants to debate the numbers, there is lots of


sources, let's have debate. That is very different from a few weeks ago


which is you might agree with me or not but the numbers spook for


themselves. As usual the contrary Brits had to be different and voted


yesterday in the elections for the European Parliament, most of Europe


doesn't vote until Sunday. There has been a euro-wide poll this month


which results in a different result from the one likely to be unveiled


on Sunday night. One outraged Russian politician even said "it's


the end of Europe". This night is dedicated to everyone who believes


in a future of peace and freedom. You know who you are. We are unity,


and we are unstoppable. She joins me now, welcome. You got a great


reception on the night that you won. But wouldn't it be true to say there


are many social issues, Europe is quite deeply divided? Yeah, you know


this night was a very special one, as you have seen in the little


video. It is funny for me because Europe voted in such a tolerant way.


For you? For me, and now it seems that a bit has changed. I think it


was a big statement at the Eurovision night. But I think it


just needs more than one statement. And there were some politician its,


particularly in Russia and Turkey, they were very critical, even wrote


about your victory, what did you make about that? First I really have


to say this is a very big honour for me. Because they think that I'm that


powerful to burst a whole coup, so thank you. I can understand that.


Since you won and we saw on the night how the audience loved it, but


have you been on the wrong end of abuse since, have people been nasty


or tweeting or Facebooking? You know I'm used to that, from the first day


of my career I had to fight against intolerance. You know most of the


people got it now, they understood that this is not a joke, that I'm


serious about what I think and say. But there are still people out there


who have to change some minds. Are you winning? Well I hope so that we


can win. You know I really believe in that we all can change something.


So do you think that in some way the votes that you got, people were


sending a political statement by voting for you? I think, you know at


the end of the day it is a singing contest, so by all mbeliefs and what


I said, if I had not that song I wouldn't have won. Besides that it


was a political statement. Especially you see it in Russia, I'm


number one on the iTunes charts. Even with a leadership that is not


very tolerant? Yes. And that's a huge thing for me, actually. It just


shows me that there are so many people out there believe in a future


without discrimination. What about a political career, have you thought


about that? Not really. I'm an artist, I speak out my beliefs, but


I'm going to stick with singing. What are you going to do next? We're


working on music, obviously, because this is the love of my life. But I


will continue talking about my opinions. We are glad you came on


and gave them to us tonight. Thank you. That is all we have time for, I


will be back with the Sunday Politics 11.00 on BBC One. There


will be a BBC Newsnight special on Sunday night, don't miss that, good




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