:00:00. > :00:13.Tonight more trouble for the Tories over Europe. David Cameron loses an
:00:14. > :00:18.MP to UKIP, forcing an unwelcome and dangerous by-election. I will ask
:00:19. > :00:21.the granddaddy of Tory Euro-rebles if Douglas Carswell has done the
:00:22. > :00:27.right thing. Douglas Carswell has gone from the party, the only party
:00:28. > :00:33.that can deliver a referendum, that is a retrogade step. Do you speak
:00:34. > :00:41.money? A world in which banks have haircuts. And some are zombies,
:00:42. > :00:51.where you avoid a bear market and dead cats bouncing. Also tonight:
:00:52. > :00:55.Where is my ice-cream? Sorry Ian. Ahhhh. You have got your own
:00:56. > :01:02.freezer. Someone has taken it out of the freezer and it is all melted. It
:01:03. > :01:09.was meltdown or was it baked Alaskagate. David Watters cruelly
:01:10. > :01:14.binned from Bake Off last night after his ice-cream was left out of
:01:15. > :01:23.the freezer. Tonight on Newsnight he resurrects his baking career.
:01:24. > :01:28.Good evening it wasn't exactly the kind of surprise to bring a smile to
:01:29. > :01:34.David Cameron's face, just as he was heading north to would Scotland --
:01:35. > :01:38.woo Scotland for the union, looking for good headlines, the Tory Douglas
:01:39. > :01:44.Carswell announced he was high tailing it to UKIP, and not that he
:01:45. > :01:49.would sit in the Commons until after the election, he's forcing a
:01:50. > :01:52.by-election in his seat where he turned a wafer thin majority into a
:01:53. > :01:56.safe Conservative seat. His gripe, that David Cameron is not serious
:01:57. > :02:01.enough about his plans to reform the European Union.
:02:02. > :02:07.No-one was quite sure what UKIP were up to this morning, until they
:02:08. > :02:12.caught sight of this MP. A Tory MP, that is, he was yesterday. I'm today
:02:13. > :02:19.leaving the Conservative Party and joining UKIP. (Cheering) The problem
:02:20. > :02:24.is that many of those at the top of the Conservative Party are simply
:02:25. > :02:29.not on our side. They aren't serious about the change that Britain so
:02:30. > :02:34.desperately needs. No-one cheered David Cameron's Bloomberg speech
:02:35. > :02:37.more loudly than me when he promised to negotiate a fundamentally
:02:38. > :02:41.different relationship with the EU, when he promised to put it to the
:02:42. > :02:45.people in 2017, in or out. But there has been no detail since. That is
:02:46. > :02:49.because there isn't any. They are not serious about it. They haven't
:02:50. > :02:53.thought it through. I also want to say I think what you have just done
:02:54. > :02:59.is without doubt the bravest, most honourable and noblist thing I have
:03:00. > :03:04.seen in British politics in my lifetime. So all eyes move to
:03:05. > :03:07.Carswell's constituency of clockeden to, where a bitter by-election will
:03:08. > :03:10.now be fought. This morning in Westminster we thought we might be
:03:11. > :03:15.seeing the beginnings of a purple plot, an orchestrated move by MPs to
:03:16. > :03:19.defect to UKIP, perhaps as many as one MP per week, going over to the
:03:20. > :03:22.party over the next month. In reality those MPs we know to be
:03:23. > :03:26.sympathetic to Douglas Carswell were to be found in their polo shirts and
:03:27. > :03:31.holiday shorts, hard leaved that they were prepared for this move --
:03:32. > :03:35.evidence that they were prepared for this move against David Cameron.
:03:36. > :03:40.Even so, this is hardly a coup but what happens here in clockeden to
:03:41. > :03:44.will matter in Westminster. The local Tory MP learned of Carswell's
:03:45. > :03:49.defection 20 seconds before the rest of u pitching him into a by-election
:03:50. > :03:55.against his one-time friend. We will put up a Conservative candidate and
:03:56. > :03:59.give him a good fight. How likely is it to be against someone with such
:04:00. > :04:04.satture in the area, he's so well known? He has been such a good
:04:05. > :04:07.constituency MP, but a lot of people will be very disappointed with him.
:04:08. > :04:13.I have already had people saying, you know, a turn coat is never a
:04:14. > :04:17.good thing. I will not criticise Douglas, I like him as a person and
:04:18. > :04:21.he's a friend, I'm only disappointed that he has done this. Clockeden to
:04:22. > :04:30.loves Carswell, at the last election he gained a 12,000-vote majority. In
:04:31. > :04:36.total over half of those who voted in the seat voted for him. Here is
:04:37. > :04:42.he COMPLANL how he galvanised clockeden to? We are doing it in
:04:43. > :04:48.buildings like this and wondering why we are haemorrhaging membership
:04:49. > :04:53.we are doing it 1950s style. He has been long denouncing some party
:04:54. > :04:57.issues. He has a following and the seat of Clacton itself ready to
:04:58. > :05:01.rebel? It is the most favourable seat for UKIP in the country. It is
:05:02. > :05:05.full of older, white, working-class pensioners who feel left behind
:05:06. > :05:09.economically, angry at Westminster, anxious over Europe, resentful
:05:10. > :05:14.towards immigration. So in effect Douglas Carswell was already sitting
:05:15. > :05:19.on the most UKIP-friendly seat in the entire country. I will still
:05:20. > :05:26.vote for the Tories. You wouldn't would you. Your daughter has gone
:05:27. > :05:32.UKIP. I can't help about that. What about you? Isn't UKIP for the
:05:33. > :05:35.independence from Europe. It is wanting Britain out of Europe? It
:05:36. > :05:39.wants Britain out of Europe, he wants Britain out of Europe, you are
:05:40. > :05:46.an old veteran, what are you talking about, you are causing a divide.
:05:47. > :05:49.Clacton peer won't be good for Tories Dragooned into fighting the
:05:50. > :05:52.by-election, and the Prime Minister might feel under pressure to tighten
:05:53. > :05:56.up his European referendum pledge. It used to be until recently that
:05:57. > :05:59.Douglas Carswell was supportive of David Cameron's European referendum
:06:00. > :06:04.pledge, but not any more. And now the party will have to fight tooth
:06:05. > :06:08.and claw to make sure it is not defeated on this most sensitive of
:06:09. > :06:11.issues. It is deeply regrettable when things happen like this and
:06:12. > :06:15.people behave in this way. But it is also, in my view,
:06:16. > :06:19.counter-productive. If you want a referendum on Britain's future in
:06:20. > :06:23.the EU, whether we should stay or go, the only way to get that is to
:06:24. > :06:27.have a Conservative Government. Tonight there is speculation of
:06:28. > :06:31.perhaps one more Tory defection to UKIP. But for now, in a by-election
:06:32. > :06:35.the Prime Minister today suggested will be moved sooner rather than
:06:36. > :06:41.later, Douglas Carswell is UKIP's best chance, a very good chance.
:06:42. > :06:44.A little earlier I spoke to a man who knows a thing or two about
:06:45. > :06:48.rebelling over Europe, cabinet minister, Iain Duncan Smith. I began
:06:49. > :06:53.by asking him whether he cared that Mr Carswell has left the Tory ranks
:06:54. > :06:57.for UKIP? I do, I think anybody in the Conservative Party would care
:06:58. > :07:02.that any MP elected on a Conservative manifesto decides to go
:07:03. > :07:08.and join another party. I know Douglas quite well really. He is
:07:09. > :07:11.that classic figure who is never really seeking front bench
:07:12. > :07:16.appointment but really agitates from the backbenches, it is a traditional
:07:17. > :07:20.historic place to be here. You would call it the grit in the oyster is
:07:21. > :07:25.really his role. I regret he's gone, you think he has made a big mistake,
:07:26. > :07:30.even by his own words. He welcomed David Cameron's commitment to a
:07:31. > :07:33.referendum on the EU, what has changed. Doesn't it show that you
:07:34. > :07:36.can't keep giving to the euro-sceptics because they are never
:07:37. > :07:39.satisfied? Not really, I think the problem is this is very much a
:07:40. > :07:43.Douglas Carswell moment, in other words he is very much an individual
:07:44. > :07:47.who would make this kind of decision. And I think I have no
:07:48. > :07:51.reason to... So you weren't surprised? We were all surprised but
:07:52. > :07:55.not necessarily surprised in a funny sort of way. Douglas Carswell has
:07:56. > :08:00.always been a little bit of a loner on the backbench, he makes his own
:08:01. > :08:03.decisions for himself. What I'm puzzled and perplexed about is to
:08:04. > :08:06.why all of a sudden he having gone into the summer break, apparently
:08:07. > :08:10.quite content, he suddenly decided he isn't. There is a perplexing
:08:11. > :08:14.moment to this. This is the wrong move to make. What does it say that
:08:15. > :08:18.David Cameron can't even persuade one of his own backbenchers that
:08:19. > :08:22.he's serious about European reform, why should the public believe him? I
:08:23. > :08:25.have to say that in the course of the next few weeks and months we
:08:26. > :08:28.will have to step up the gas and make sure the public understands
:08:29. > :08:30.this. The reality is that there is only one party that is promising
:08:31. > :08:35.that referendum. It is not a competition on this. We have to make
:08:36. > :08:38.sure we get this out there. The point I come back to again and again
:08:39. > :08:42.is the simple point, I trust the British people to make that
:08:43. > :08:47.decision, I will make my mind up enI see what the Prime Minister blings
:08:48. > :08:52.-- when I see what the Prime Minister brings back, and thenally
:08:53. > :08:55.make up my mind. Isn't Douglas Carswell's position very clear when
:08:56. > :08:59.you look at a commitment that you have made that net immigration will
:09:00. > :09:05.fall to under 100,000 before the next election and the new figures
:09:06. > :09:08.are an upward trajectory to 243,000, you are never going to make your
:09:09. > :09:13.target by the election? I still feel we will. But the key thing of course
:09:14. > :09:17.is the problem in terms of those not in the EU, we have reduced it
:09:18. > :09:19.dramatically. But you have a free movement of people in Europe and you
:09:20. > :09:24.can't do anything about that, and you will never take 143,000 off
:09:25. > :09:27.before next year? My point is that the European Union needs to
:09:28. > :09:30.understand and it will understand that this negotiation is serious.
:09:31. > :09:34.That if Britain doesn't get what it wants what will happen is the Prime
:09:35. > :09:40.Minister will come back and the British public will choose not to
:09:41. > :09:43.stay in. And he will campaign for a no vote in that case? He has to make
:09:44. > :09:46.his decision. When the Prime Minister comes back, this is the
:09:47. > :09:50.point that is really clear, when the Prime Minister comes back, having
:09:51. > :09:54.had that negotiation, he will have to decide himself what he campaigns
:09:55. > :09:57.for. Because he will decide whether or not he has brought back what he
:09:58. > :10:00.thinks is sufficient. The key thing is the British people will make that
:10:01. > :10:04.decision, that is the point. They will make it, not me. I will just be
:10:05. > :10:08.one vote and one voice, so will the Prime Minister. The truth is Douglas
:10:09. > :10:12.Carswell wanted that. Now he has got it. That is what I wanted, I wanted
:10:13. > :10:17.the British people to have a referendum, I have wanted it since I
:10:18. > :10:20.rebelled en mass tricked and I have got it under -- Maastricht, and I
:10:21. > :10:24.have got it under this Conservative Government and that is what we
:10:25. > :10:29.should hold on to. So ironic talking about Maastricht, you were the
:10:30. > :10:34.architect of exactly this kind of rebellion, you rebelled over and
:10:35. > :10:38.over and over. In fact you even. Indeed and rather proud of it. You
:10:39. > :10:42.voted with Labour 11 times. You were one in the cabinet that John Major
:10:43. > :10:46.called the "bastards" who were knifing him. Douglas Carswell has
:10:47. > :10:50.learned at the feet of the master. He's rebelling over Europe just as
:10:51. > :10:53.you did. Many people do, and my point here is that I feel very
:10:54. > :10:56.strongly and passionately about making sure that our relationship
:10:57. > :11:00.with Europe is the right one, I believe it isn't. Hold on, I have
:11:01. > :11:04.called for a referendum for many years now and we have now, this is
:11:05. > :11:09.the irony, this Prime Minister, David Cameron, has agreed if we get
:11:10. > :11:12.re-elected, if the public says, yes, we want a Conservative Government,
:11:13. > :11:16.he has agreed to grant that referendum. He will renegotiate and
:11:17. > :11:20.he will come back, if he can, with something that he says, if he thinks
:11:21. > :11:23.that is the case he wants to stay in with. I'm simply saying he has
:11:24. > :11:27.trusted the British people, like no other Prime Minister, has trusted
:11:28. > :11:30.the British people since Harold Wilson came back with a referendum.
:11:31. > :11:34.I'm simply saying this is what we wanted. Douglas Carswell wanted it
:11:35. > :11:40.and I'm impress bid the Prime Minister having done it. You were
:11:41. > :11:43.one of the ones that actually started the image of the party
:11:44. > :11:50.divided over Europe and that image has never changed. It has simply
:11:51. > :11:53.intensified. In a sense you rebelled endlessly over Maastricht and
:11:54. > :11:57.Carswell is not happy with the direction and feels he can make
:11:58. > :12:00.change and he's off to UKIP, it was the most honest thing to do wasn't
:12:01. > :12:03.it? No, the reason I rebelled against Maastricht is I believed it
:12:04. > :12:06.was going in the wrong direction, I believe I was right, not with
:12:07. > :12:10.standing anything else, the point here and the question is this,
:12:11. > :12:14.Douglas Carswell has gone from the party, the only party that can
:12:15. > :12:17.deliver a referendum, that is therefore a retrogade step. He won't
:12:18. > :12:21.trust the British people because he won't deliver it through UKIP. I
:12:22. > :12:24.want to deliver a referendum, that is why I trust the Prime Minister, a
:12:25. > :12:27.Conservative Government is the only Government to deliver a referendum
:12:28. > :12:32.after the next election. It is a simple question really. Thank you.
:12:33. > :12:37.I'm joined now to discuss the ramifications of Douglas Carswell's
:12:38. > :12:41.defection by the UKIP MEP Patrick O'Flynn and a pair of peer, Danny
:12:42. > :12:45.Finkelstein who advises William Hague, and the associate editor of
:12:46. > :12:48.the Times and Sally Morgan who worked for Tony Blair. How angry do
:12:49. > :12:54.you think that David Cameron will be by this defection and the time of
:12:55. > :12:59.it? I'm sure he won't be very happy, it is profoundly unhelpful. The
:13:00. > :13:03.Conservative strategy has to focus on the choice between Ed Miliband
:13:04. > :13:06.and David Cameron. It will give UKIP momentum in a period when the
:13:07. > :13:09.Conservative Party was hoping it wouldn't have momentum and it would
:13:10. > :13:13.be able to focus the battle on that choice. And now it will be robbed of
:13:14. > :13:18.that opportunity, certainly for a period, it is profoundly unhelpful.
:13:19. > :13:22.Let's look at the splash tomorrow morning on the Mail, Patrick
:13:23. > :13:28.O'Flynn, eight more Tories in UKIP talks and apparently a series of
:13:29. > :13:33.lunches? Did you know about these? I think Stuart Wheeler's lunches date
:13:34. > :13:35.back some time. I am' sure there are talking going on between UKIP and
:13:36. > :13:40.other political parties all the time. Is the Mail overplaying this
:13:41. > :13:45.or are there eight more Tories in UKIP talks? What I'm focussed on
:13:46. > :13:49.tonight is Douglas Carswell has made a magnificent gesture, I would say
:13:50. > :13:57.has made an irresistable pitch to his voters in Clacton, and it is
:13:58. > :14:01.UKIP at the collapsibility to help him deliver the victory he deserves.
:14:02. > :14:06.I'm focussing on the person with integrity coming over. Are there
:14:07. > :14:09.more Tories ready to make the leap, is this story actually wrong? I'm
:14:10. > :14:16.sure there are Conservative MPs who think about these things. I don't
:14:17. > :14:21.know whether or where the Daily Mail gets their figure of eight? When
:14:22. > :14:26.Allegra says there might be one more, is that on the right side of
:14:27. > :14:30.one more, eight more or how many more, is this a rolling programme? I
:14:31. > :14:33.don't have perfect information and no-one does. One can only imagine
:14:34. > :14:38.what is in the mind of Conservative MPs. Clearly Douglas Carswell did
:14:39. > :14:41.not find David Cameron's pitch convincing and there may well be
:14:42. > :14:44.other Conservative MPs in that position. Is this a flash in the
:14:45. > :14:50.pan. Is it just going to be Carswell or more? A lot depends. One does not
:14:51. > :14:54.make a summer? A lot depends on the result of the by-election, doesn't
:14:55. > :14:58.it. It is UKIP's profound responsibility to back Douglas
:14:59. > :15:03.Carswell in the magnificent step he has taken. You had candidate and you
:15:04. > :15:07.didn't do him the curtesy of telling him that Douglas Carswell was about
:15:08. > :15:12.to move, he's very angry and upset and will be taking you to task? Look
:15:13. > :15:16.the nature of these things has to be, there has to be a certain amount
:15:17. > :15:20.of secrecy around it. And one regrets that. But I can't think of
:15:21. > :15:26.any way around choreographic these things to the benefit of the party
:15:27. > :15:30.without a degree of secrecy. I have to say to Danny Finkelstein, we
:15:31. > :15:33.heard from Allegra there, there is a likelihood of an earlier rather than
:15:34. > :15:37.later by-election, which will be a problem for the conference season
:15:38. > :15:47.and everything else. If, as is likely, he would have a very good
:15:48. > :15:53.fight and by the looks of what we are saying Clacton is a UKIP area
:15:54. > :16:02.will it bring the others out? Not all areas are Clacton, and they
:16:03. > :16:07.don't all have Douglas Carswell's attitude. He's forcing other people
:16:08. > :16:13.to think could they win their constituency, he could win Clacton
:16:14. > :16:16.because of the constituency seat. He will have encouraged some people by
:16:17. > :16:21.what he has done, but because he has done it in the way he has done it,
:16:22. > :16:25.it will discourage them. He has a good chance of winning it. Clacton,
:16:26. > :16:30.this was a safe Labour seat in 2005, and here we have it, a constituency
:16:31. > :16:33.which has flipped. You have just given up on this one presumably? I
:16:34. > :16:38.don't think Labour has given up on any of these seats. But it is clear
:16:39. > :16:42.that there is a series of these seaside seats. It is isn't that it
:16:43. > :16:47.did flip back? It was a marginal, these are all marginal seats, they
:16:48. > :16:50.were Tory-Labour marginals right round the coast actually and they
:16:51. > :16:56.have similar characteristics. It was a Labour seat and you held it? We
:16:57. > :17:00.did hold it seats like Clacton. We won them in 1997. The reason I
:17:01. > :17:03.mention this of course because much like the Daily Mail story, Nigel
:17:04. > :17:06.Farage, he's talking to everybody clearly, he says he's talking to
:17:07. > :17:11.Labour MPs, is that beyond the bounds of possibility? I find that
:17:12. > :17:16.considerably less likely than Tory MPs. This is a serious blow for
:17:17. > :17:21.David Cameron this tonight. It is a serious blow. I don't think very
:17:22. > :17:25.likely for Labour MPs, there is a Labour element to it, the reason why
:17:26. > :17:28.Clacton is appealing to UKIP is because of its appeal to a certain
:17:29. > :17:33.part of Labour's base vote. That is the theory that these academics have
:17:34. > :17:36.advanced, it is compelling. It does kind of show that once you give one
:17:37. > :17:41.thing away they will come back for more, and in fact, you heard Iain
:17:42. > :17:44.Duncan Smith already moving there, saying we have to strengthen our
:17:45. > :17:49.resolve, we have to move on this, that is driving the agenda. I know
:17:50. > :17:53.all the concentration is on Europe, I actually think recall is a bigger
:17:54. > :17:57.issue for Douglas Carswell. So Douglas Carswell as well as being
:17:58. > :18:00.interested in Europe has a lot of theories, many very interesting
:18:01. > :18:03.about how politics works, you have had him on Newsnight doing. That I
:18:04. > :18:07.think that was very much in his mind actually, not just Europe. On Europe
:18:08. > :18:11.he can't really be saying David Cameron hasn't got a specific enough
:18:12. > :18:15.programme on negotiations because he's not in favour of remaining in
:18:16. > :18:20.the European Union. He said he doesn't trust David Cameron, and
:18:21. > :18:24.that is a real problem. And today every media outlet. According to
:18:25. > :18:27.Fraser Nelson, he tweeted that actually he had audio of Douglas
:18:28. > :18:35.Carswell being fulsome about David Cameron? And then you have a series,
:18:36. > :18:41.the media today is full of every euro-sceptic, that is the problem.
:18:42. > :18:44.You are a UK MEP, Douglas Carswell who has never particularly wanted
:18:45. > :18:46.glory is suddenly about to have glory as the first UKIP MP, that is
:18:47. > :18:52.a bit of glory, isn't it? To be glory as the first UKIP MP, that is
:18:53. > :18:55.first directly elected UKIP MP would be an historic breakthrough. I have
:18:56. > :19:01.had the benefit of some conversations with Douglas in recent
:19:02. > :19:05.days and I agree with Danny that the dilution almost to the point of
:19:06. > :19:09.extinction of right of recall was a major point for him of becoming
:19:10. > :19:15.disillusioned with the direction of the Tory leadership. So recently he
:19:16. > :19:18.was being very praising of David Cameron. This is simply something
:19:19. > :19:23.that was not on the agenda six months ago? Somebody I think has
:19:24. > :19:27.said something to him that makes him no longer trust Cameron. I think he
:19:28. > :19:33.has had conversations with certain people around David Cameron, which
:19:34. > :19:37.has led him to question the sincerity of the Cameron leadership
:19:38. > :19:40.of the Conservative Party. The timing in another way is very
:19:41. > :19:44.tricky, here is David Cameron in Scotland trying to absolutely make
:19:45. > :19:48.sure that he has the CBI dinner tonight, that he's promoting the no
:19:49. > :19:52.vote very heavily, and one of the issues, one of the fault lines is
:19:53. > :19:56.that people in Scotland by and large appear to be less euro-sceptic than
:19:57. > :20:00.anywhere else in the country. To think that actually we are going to
:20:01. > :20:03.see a series of MPs pushing the Conservatives even further in the
:20:04. > :20:12.direction of an exit door to Europe may have an impact on wavering
:20:13. > :20:15.voters? He will be thinking about the impact on the general election
:20:16. > :20:20.campaign primarily. It will have an effect? No individual political
:20:21. > :20:24.event has as much impact as it does on the day. But it will have some
:20:25. > :20:28.impact. Douglas Carswell is not immune, by the way, to political
:20:29. > :20:31.glory year, he's somebody who is very strong-headed and he has a lot
:20:32. > :20:35.of political ideas. One of the interesting things is how he shifts
:20:36. > :20:38.UKIP. It is quite an earthquake, you will have a potential member of
:20:39. > :20:42.parliament and a leader of the party, and actually the tone of
:20:43. > :20:46.Nigel Farage and Douglas Carswell, both intelligent and able people,
:20:47. > :20:50.but it is quite different and it was quite noticeable on Douglas's
:20:51. > :20:55.performance. I think it will be an interesting thing to watch UKIP. It
:20:56. > :21:00.might not have it all his own way? It will be interesting to watch UKIP
:21:01. > :21:03.as it tries to absorb Douglas, which the Conservative Party frankly found
:21:04. > :21:10.quite hard. Another one within the month then? I wouldn't put deadlines
:21:11. > :21:14.and time limits on it. My absolute focus is Douglas Carswell has done a
:21:15. > :21:18.magnificent thing and UKIP must now deliver him the result he deserves
:21:19. > :21:24.and help him do that. Thank you three.
:21:25. > :21:28.The UN Security Council is in an emergency session today discussing
:21:29. > :21:31.the crisis in Ukraine. But they are all in accord, Vladimir Putin is
:21:32. > :21:35.escalating the crisis in the country. NATO says 20,000 Russian
:21:36. > :21:39.troops are had he border in Ukraine and 1,000 inside. Russia denies the
:21:40. > :21:42.incursion claiming the soldiers in Ukraine are there in their own time
:21:43. > :21:48.and not part of the Russian military. According to Ukraine's
:21:49. > :21:52.President they helped the rebels capture a key coastal town. As often
:21:53. > :21:56.the question has to be what is in the Russian President's game and who
:21:57. > :22:04.is he trying to promote. This is the view of the Ukrainian Prime
:22:05. > :22:10.Minister. We can confirm that Russian military boots are on
:22:11. > :22:15.Ukrainian ground. Ukrainian forces are capable to tackle and to cope
:22:16. > :22:22.with the Russian-led guerrillas. But this is quite difficult for us to
:22:23. > :22:26.fight with Russia. Well, our diplomatic editor is here. What is
:22:27. > :22:29.the actual hard and fast evidence that Russian troops are operating
:22:30. > :22:33.inside Ukraine? Well, things have clearly changed a lot in the past
:22:34. > :22:37.week. NATO said this morning they thought more than 1,000 Russian army
:22:38. > :22:41.soldiers were in the south-east of Ukraine. I'm told there are
:22:42. > :22:45.classified assessments that put the figure considerably higher than that
:22:46. > :22:49.for battalion tactical groups, they are thought to be there in NATO
:22:50. > :22:54.which would come close Tory 5,000. One of the separatist leaders
:22:55. > :22:58.earlier this week, interestingly, talked about 3,000-4,000 Russians
:22:59. > :23:04.being there as toll tears to help out. As you said earlier Russia is
:23:05. > :23:08.not officially acknowledging this, NATO has producing satellite
:23:09. > :23:13.imagery, saying they have located units like a self-propelled
:23:14. > :23:17.artillery battery inside Ukraine. It is a gun line, not the sort of thing
:23:18. > :23:20.that separatist who hit the bottle could put together. It is a proper
:23:21. > :23:24.military formation. That is the message they are sending. The really
:23:25. > :23:31.interesting evidence is the human level. We saw a few days back
:23:32. > :23:35.Ukraine showing those paratroopers from a specific Russian army
:23:36. > :23:39.airborne regiment that they captured. We have heard about
:23:40. > :23:44.casualties going back to hospitals in St Petersburg, and burials in
:23:45. > :23:48.places. Also groups of mothers. This lady says her son is one of the
:23:49. > :23:52.captured soldiers. Getting organised, they are talking about
:23:53. > :24:02.400 soldiers killed or wounded. Now the fascinating thing here is that
:24:03. > :24:05.the percolation of the knowledge through the military, we haven't
:24:06. > :24:11.seen it before, it seems definite evidence that the units have gone in
:24:12. > :24:15.some or another. What is behind it? If we look at the last few weeks,
:24:16. > :24:18.the Ukrainian President has been pushing the antiterrorist operation,
:24:19. > :24:22.the offensive against the separatist. In some ways some would
:24:23. > :24:26.say he hasn't given enough emphasis to negotiation. He has tried to seek
:24:27. > :24:30.a military solution, there has been heavy fighting and considerable
:24:31. > :24:39.gains for the Ukrainian forces. If we look at a map we can see in
:24:40. > :24:45.particular the Donetsk pocket has been cut off and the Luhansk one
:24:46. > :24:49.squeezed. Many speculated that President Putin would not allow
:24:50. > :24:53.those pockets of separatist to fall. He has sent in troops, that is the
:24:54. > :24:59.belief in NATO, nah the south they have -- and in the south they have
:25:00. > :25:08.pushed towards Mariupol and some suspect they might open a corridor
:25:09. > :25:13.to Crimea. They have pushed towards Donetsk to reopen land communication
:25:14. > :25:17.with that enclave, and pushed down towards Luhansk. Is this what we are
:25:18. > :25:21.seeing here, an incursion, an invasion what is it? Is it just
:25:22. > :25:25.about semantics or does it matter very much what language is used?
:25:26. > :25:29.When you talk to people in NATO, there is absolutely no doubt that,
:25:30. > :25:34.pardon my language, one said to me tonight, it is a "bloody invasion",
:25:35. > :25:38.there is no word for it. But politicians are choosing their words
:25:39. > :25:42.so carefully. Even the President in Ukraine seemed reluctant to use that
:25:43. > :25:46.word. The Ukrainians might say if it is one and it is a war, why aren't
:25:47. > :25:48.we hitting Russia, because he knows what might come back in the other
:25:49. > :25:51.direction. And the American President too? Fascinatingly
:25:52. > :25:55.tonight, we heard President Obama would make a statement on Iraq,
:25:56. > :25:59.inevitably he would be asked about this, he would not use the word
:26:00. > :26:04.invasion. Russia is responsible for the violence in eastern Ukraine. The
:26:05. > :26:09.violence is encouraged by Russia, the separatist are trained by
:26:10. > :26:15.Russia. They are armed by Russia. They are funded by Russia. Russia
:26:16. > :26:18.has deliberately and repeatedly violated the sovereignty and
:26:19. > :26:23.territorial integrity of Ukraine. There are others using much more
:26:24. > :26:25.explicit language like the President of Lithuania today who called the
:26:26. > :26:30.Security Council session. They will have to put those delivering views
:26:31. > :26:34.together to thrash them out at the NATO summit next week and to find a
:26:35. > :26:41.response to this. I'm joined now by the Ukrainian
:26:42. > :26:46.ambassador to the UK. Good evening. What is this, is this an invasion of
:26:47. > :26:52.Ukraine, is it an incursion, what is it? It is definitely the Russian
:26:53. > :26:59.troops at the Ukrainian territory fighting against the regular
:27:00. > :27:04.Ukrainian army. It has its term. But it is not calling it an invasion?
:27:05. > :27:16.This is kind of an invasion. This is undeclared, shameful war, started by
:27:17. > :27:22.the Russian federation. Which is the a hybrid war. Once you start to use
:27:23. > :27:25.the word "invasion" it is loaded and demands a particular response, and
:27:26. > :27:30.maybe you might ask for a particular response from NATO? We are
:27:31. > :27:31.responding by our own, and we are seeking
:27:32. > :27:42.responding by our own, and we are for such a response. We are
:27:43. > :27:47.trying to have a specific Bartter inship with NATO and certain
:27:48. > :27:52.assistance to receive which we need now. We will come on that
:27:53. > :27:56.assistance, was it right for your President to say it had to be a
:27:57. > :28:02.military solution. You know no matter how hard Ukrainians fight,
:28:03. > :28:06.Russia is a superior fire power and Russia would Winter trees within
:28:07. > :28:12.Ukraine? We are not closing the door for diplomatic solution. It was the
:28:13. > :28:24.attempt to find one in Minsk and the Russians refused to do that. . Once
:28:25. > :28:27.you now have Russian prisoners and there are casualties and civilian
:28:28. > :28:32.casualties and a number of apparent deaths among the military, then
:28:33. > :28:39.there is an escalation. What do you actually want NATO to do? First of
:28:40. > :28:42.all, we would like the community to do, this is not just about Ukraine
:28:43. > :28:49.but security in the world. We need to stop the agressor by any possible
:28:50. > :28:55.means. It means the sanctions should be much harder, the co-operation
:28:56. > :29:00.with the agressor should be cut, especially at the military and
:29:01. > :29:05.technical field, especially in the most sensitive field of energy for
:29:06. > :29:10.Russia, for energy supply and the banking sectors. New technologies
:29:11. > :29:14.also. You know this is very difficult for particular countries
:29:15. > :29:17.in Europe who are, by necessity, doing a lot of business with Russia,
:29:18. > :29:25.though sanctions will only go so far? The Ukraine has the economy
:29:26. > :29:28.which was very interconnected with the Russian ones, and we cut all the
:29:29. > :29:37.ties and all the co-operation in this field. And I think that to lose
:29:38. > :29:40.certain profits for the western companies in western countries will
:29:41. > :29:44.be much better for the soldiers later on if the conflict will not
:29:45. > :29:50.stop at this stage. In the end if it is a diplomatic solution are you
:29:51. > :29:54.prepared to have a situation like Crimea but negotiate areas you might
:29:55. > :29:59.have to lose in the country? We have a certain red line which we could
:30:00. > :30:04.never cross and the loss of territory and the territorial
:30:05. > :30:10.disintegration of Ukraine is definitely the red line we cannot
:30:11. > :30:14.cross anyhow. Thank you. You may have heard about how the European
:30:15. > :30:17.Central Bank is holding back in quantitative easing but has launched
:30:18. > :30:20.a programme of targeted long-term refinancing operations which has
:30:21. > :30:26.helped to flatten European yield curves. Still with me? I'm not. Ever
:30:27. > :30:31.since the financial crisis we have been bombarded with impenetrable
:30:32. > :30:35.language to explain why things went so catastrophically wrong and what
:30:36. > :30:39.we need to do to fix it. Why can't the money people, economists and
:30:40. > :30:43.politicians speak plain English, even films entitled Margin Call and
:30:44. > :30:47.Arbitrage, in his new book How To Speak Money, Lanchester tries to
:30:48. > :30:50.decode the language. We will be talking to him and Baroness Patience
:30:51. > :31:08.Wheatcroft, first here is the Knowledge. One of humanity's most
:31:09. > :31:13.remarkable inventions is money. It is fundamental to modern society. So
:31:14. > :31:18.why is it that the language used to talk about money is so be a secure,
:31:19. > :31:24.so alien, that it seems to belong in a very different world to the one
:31:25. > :31:32.you actually inhabit. A world in which banks have "haircuts" and some
:31:33. > :31:41.are "zombies" where you better avoid a "bear" market and "dead cats
:31:42. > :31:45.bouncing". Where QE's effect isn't a crazy way to trample. And trading is
:31:46. > :31:50.done at high frequency and you better hope you don't get a margin
:31:51. > :31:53.call. And a big McIndex measures a country, and fat fingers make
:31:54. > :32:03.mistakes. You have to wonder whether this world has been constructed by
:32:04. > :32:11.the money world. To deliberately exclude us. We have all heard of
:32:12. > :32:15.hedged funds, but what do the Bond-style people have to do with
:32:16. > :32:21.hedge funds. The word "hedge" began its life as a term for setting
:32:22. > :32:26.limits to a bet, just as a hedge sets an area of land and demarcates
:32:27. > :32:30.it. You make a bet and on the same side you make a bet on the other
:32:31. > :32:34.side of the outcome, there by guarnteeing a profit whatever
:32:35. > :32:41.happens. You hope. The idea is you cannot lose. Any financial structure
:32:42. > :32:47.in which you can make a profit and a guaranteed profit not to lose money
:32:48. > :32:51.is going to have many ardent fans. But once adopted in the world of
:32:52. > :32:55.finance, this technique has become more sophisticated with hedge funds
:32:56. > :33:00.employing complex mathematical analysis to bet on prices going both
:33:01. > :33:04.up and down. There will always be a secret source of some kind, owned by
:33:05. > :33:10.the hedge fund, usually a complicated set of mathematical
:33:11. > :33:16.techniques. One such fund was set up by a man nicknamed "choc finger",
:33:17. > :33:20.his hedge fund specialised in chocolate, in the peak of his
:33:21. > :33:26.activities, his firm owned a remarkable 15% of the world's supply
:33:27. > :33:34.of cocoa. At one point the fund took physical delivery of 241,000
:33:35. > :33:38.metricen tonnes of beans, enough to give everybody in the world three
:33:39. > :33:48.bars of chocolate each. In 2012 the fund was thought to be valued
:33:49. > :33:52.between $200-$300 million. The price of cocoa spiked upwards in 2013
:33:53. > :34:00.because of the weather, good news for the hedge fund. Well at the end
:34:01. > :34:11.of 2013 the fund was sold for, guess what? Dollar 1. 90% of all hedge
:34:12. > :34:15.funds that have existed have closed or gone broke. A hedge is a physical
:34:16. > :34:19.ING this, it turned into a metaphor, then a technique, then the technique
:34:20. > :34:24.was adopted in the world of high finance and became more and more
:34:25. > :34:28.sophisticated and complicated, and finally turned into something that
:34:29. > :34:32.can't be understood by the ordinary reference of ordinary language. So
:34:33. > :34:38.why does it matter if this language is so baffling to us and we don't
:34:39. > :34:42.really understand it? Because incomprehension is a form of
:34:43. > :34:48.consent. It is true that over the last two decades economic growth has
:34:49. > :34:52.meant that the proportion of the planet's population living in
:34:53. > :34:56.absolute poverty has halved. That is an extraordinary achievement and
:34:57. > :35:00.unprecedented. It is also unprecedented that levels of
:35:01. > :35:08.inequality are rising everywhere, This country and globally. The gap
:35:09. > :35:14.between countries is narrowing but the gap inside the countries are
:35:15. > :35:17.growing eyeder. The EOCD in its predictions over the next five
:35:18. > :35:22.decades for the economy, it says countries in the developed world
:35:23. > :35:25.will rise by a further 30%, there is a widening chasam in our societies
:35:26. > :35:29.between the top and the bottom. We will be living in countries strictly
:35:30. > :35:33.divided between the rich and poor, winners and losers with nobody
:35:34. > :35:36.inbetween. If we want to stop that from happening we all need to join
:35:37. > :35:41.the economic conversation, the one that the rich and the powerful have
:35:42. > :35:45.among themselves and in private. We need to learn the language of money
:35:46. > :35:50.and fast. With me now is the author of that
:35:51. > :35:56.film, John Lanchester and Baroness Patience Wheatcroft former Editor in
:35:57. > :36:00.Chief he at the Wall Street Europe, and now a life peer and board member
:36:01. > :36:06.of Fiat. To answer your question you pose, is it deliberate, is the
:36:07. > :36:15.obfuscation deliberate? I don't think it matters, if you are talking
:36:16. > :36:18.about RMBS made into synthetic EBOs and then folded into something else.
:36:19. > :36:23.It doesn't matter if they are trying to bamboozle you or not, it matters
:36:24. > :36:28.that it is hard to follow in real time. Is bamboozling language?
:36:29. > :36:33.Sometimes. Having an understanding of the fact that hedge funds aren't
:36:34. > :36:38.always hedged or what CDOs are won't do anything to stop the inequalities
:36:39. > :36:42.in the world. It is far more basic, the need for financial literacy is
:36:43. > :36:47.far more about households looking after their own budget, not
:36:48. > :36:50.necessarily understanding the more complicated goings on. Something
:36:51. > :36:53.that is not complicated but something not as clear as John said
:36:54. > :37:00.is not clear. What is an investment bank? I think the term investment
:37:01. > :37:04.bank is a wonderful misnomer, it is a complete contradiction in terms.
:37:05. > :37:07.Again I don't think that really changes inequalities in the world.
:37:08. > :37:10.As I understand if you go to some advisory and say I think you should
:37:11. > :37:14.use this investment bank, I mean what should he say, use this
:37:15. > :37:18.gambling institution? But the point is that an individual wouldn't be in
:37:19. > :37:23.that position. And often terms that are used in common language do
:37:24. > :37:28.emerge in totally different forms. You know if you think about the word
:37:29. > :37:33."gay" is no longer means what it used to mean. The term "investment
:37:34. > :37:36.bank" started off referring to a merchant bank and a merchant bank
:37:37. > :37:40.with a sensible institution that raised funds to help businesses
:37:41. > :37:48.grow. Surely the man and woman in the street should know. For example
:37:49. > :37:51."naked shorting" what is that? Straight forwardly betting against,
:37:52. > :37:55.wanting something to go down and not hedging on it going up. An example
:37:56. > :37:59.of a term, I slightly disagree, I think the language does matter at a
:38:00. > :38:04.personal level. Quantitative easing, that sounds like a brand of
:38:05. > :38:09.laxative, I mean the term is totally opaque, it doesn't tell you what it
:38:10. > :38:13.is about. And QE? The equivalent of a third of British GDP is printed,
:38:14. > :38:16.effectively the Government has printed money without admitting it
:38:17. > :38:19.has printed money. That your children and grandchildren will be
:38:20. > :38:22.paying that debt off. If you have been caught up in the sub-prime
:38:23. > :38:26.mortgage, you should know what happened and what it is? If people
:38:27. > :38:30.want to understand that it doesn't take great deal of effort to do so.
:38:31. > :38:34.I actually don't think people are interested. That's major failing.
:38:35. > :38:36.They should be interested. Isn't that a contradiction, we have a
:38:37. > :38:39.responsibility to know what is going on but people aren't interested, how
:38:40. > :38:43.do you get them interested? I think you have to teach people when they
:38:44. > :38:46.are at school that they need to be interested. I think you need to
:38:47. > :38:50.actually keep doing things the way you do on Newsnight which is to make
:38:51. > :38:55.it very clear what you are talking about. I don't think the BBC uses
:38:56. > :38:58.boom boozeling language, it talks about the economy in very clears
:38:59. > :39:02.terms, but actually the majority of people don't want to know. Do you
:39:03. > :39:06.think the BBC is always clear in its language the way it discusses the
:39:07. > :39:09.economic language? Not just saying it because I'm here, I think they
:39:10. > :39:13.have done a brilliant job on this. The frame is often about the news
:39:14. > :39:17.and the stories sometimes take longer to follow, you don't always
:39:18. > :39:20.have enough time to explain the complicated things. You don't think
:39:21. > :39:24.there is an element of mystery that is attractive to people in the City,
:39:25. > :39:29.it goes back to the Masters of the Universe, they know anything we
:39:30. > :39:43.don't? You see it in the axe know him ins. -- Axe him ins. Give us an
:39:44. > :39:49.example? PIG S, for Portugal, Italy and Spain, that is derrogatory or
:39:50. > :39:53.other ones. Everything has its own acronym, it is a mystery to
:39:54. > :39:57.outsiders, I went on one board and spent a long time going through the
:39:58. > :40:02.glossary of terms so I could understand what the various acronyms
:40:03. > :40:07.meant. There was one that puzzled me that wasn't in the glossary, it was
:40:08. > :40:14.STP, I worked hard to try to figure out what STP could be, it was
:40:15. > :40:18."short-term plan". The more worrisome thing is, do you think if
:40:19. > :40:22.people actually understood a lot of this terminology and they wouldn't
:40:23. > :40:25.be prepared to take any risking at all? It is a moot point. One of the
:40:26. > :40:29.brilliant things that happened in the financial services industry,
:40:30. > :40:34.there used to be this thing called debt that we were brought up to be
:40:35. > :40:38.scared of. The upper-classes didn't mind it but the lower and
:40:39. > :40:44.middle-classes were, they changed it to credit, and now we think it is
:40:45. > :40:47.great thing, and we have 572% of our GDP which is debt, because it is not
:40:48. > :40:51.debt it is credit. Thank you for being so clear. Thank you. Last
:40:52. > :40:57.night more than 8. 5 million people watched, many of them probably from
:40:58. > :41:00.behind their pinni serbses the Great British Bake Off in meltdown. It was
:41:01. > :41:05.a show-stopper, but not what anyone had expected. The challenge, baked
:41:06. > :41:10.Alaska, but David Watters was horrified to find out his ice-cream
:41:11. > :41:16.had been taken out of the freezer by another contestant, Diana Beard. 15
:41:17. > :41:22.minutes. Where is my ice-cream? It is here, sorry Ian. Ahhhhh. Well you
:41:23. > :41:27.have your own freezer. Someone has taken it out of the freezer and it
:41:28. > :41:34.is all melted. Why would you take the ice-cream out of the freezer.
:41:35. > :41:40.What's wrong? How is it looking? Look. It is soup. The only reason
:41:41. > :41:52.why it has stayed there is because I put the tin round to hold the
:41:53. > :41:59.caramel in. Let's think about how we will present that. That's not
:42:00. > :42:08.working. I have a serving suggestion. , no, no, no. You can't.
:42:09. > :42:26.Ian you have to present it. Look at it, how can you present it. He threw
:42:27. > :42:30.it in the bin. He didn't? Gutting, well now the BBC has said that
:42:31. > :42:34.Diane's subsequent departure from the show was nothing to do with the
:42:35. > :42:39.incident but due to illness, there was no way back for Ian. We have
:42:40. > :42:43.scooped him up, 8. 5 million people watched it. Have you any idea what
:42:44. > :42:46.the reaction would be? I knew it would be big, because it is a big
:42:47. > :42:50.thing that happened in the show. But it has gone nuts today, the reaction
:42:51. > :42:54.from the media is crazy. What has happened today? There has been a lot
:42:55. > :42:57.of comments on Twitter, I think it built up last night after the show.
:42:58. > :43:01.When you did that, that was in the heat of the kitchen. Do you regret
:43:02. > :43:04.that, were you angry? I was more frustrated and it was just the heat
:43:05. > :43:08.of the moment, and you are in the zone the last half hour of the show,
:43:09. > :43:12.and I think it is very tense. You had gone through all the thing, you
:43:13. > :43:17.naked your sponge and then you had your ice-cream in the freezer and
:43:18. > :43:23.Diane took your ice-cream out of the freezer, was it her freezer? A group
:43:24. > :43:27.of freezers we were all using. You had no idea it was dumped out of the
:43:28. > :43:30.freezer, Diane has subsequently left the show and that was nothing to do
:43:31. > :43:35.with that, she wasn't well. But the tension in these things is
:43:36. > :43:38.phenomenal? You have been in the tent yourself, the pressure in the
:43:39. > :43:42.tent is huge, it is very different from baking at home. I don't hold a
:43:43. > :43:46.grudge against Diane it was done in the heat of the moment. But your
:43:47. > :43:49.ice-cream was destroyed, but you couldn't put it back, they were
:43:50. > :43:53.saying you should have made a fist of it and stayed and popped the egg
:43:54. > :43:58.white on top and blow torched it? Tried to do something with with it.
:43:59. > :44:02.Did you flounce off? You say the state of it, it went. To try to get
:44:03. > :44:13.meringue on to that I didn't think it was doable. Are you a novice
:44:14. > :44:16.baker or a good one? I'm a keen baker, I don't know about a good
:44:17. > :44:20.one. You have brought something, what is this? This is the cake I
:44:21. > :44:26.baked for the first audition for the show. It must be good, can I have
:44:27. > :44:35.some? It is a courgette lemon and poppy seed cake. This was good
:44:36. > :44:38.enough to get Mary Berry excited, and if you had actually held your
:44:39. > :44:43.nerve you might have gone all the way with this? But you didn't
:44:44. > :44:54.unfortunately. What do you think about this the "bring Ian back"?
:44:55. > :44:57.Campaign. It has been crazy, it has built, it is nice to have the
:44:58. > :45:02.support. It is built up overnight. Do you think you might get brought
:45:03. > :45:05.back. You have to watch next week. Courgette, this is a lemon drizzle
:45:06. > :45:11.cake but you have put something special in it? It is greated
:45:12. > :45:15.courgettes, it is like a carrot cake it is moist, and poppy seeds for
:45:16. > :45:20.texture and ground almonds to keep it moist. It is a signature dish? It
:45:21. > :45:23.is. What do you think you are going to be doing, the day job going, you
:45:24. > :45:28.are a site manager on a building site, are they all behind you? They
:45:29. > :45:34.are all behind me, I have a lot of support. I get a lot of ribbing at
:45:35. > :45:40.work as well. They ares This is something for you -- this is
:45:41. > :45:44.something to put up, the Sun headline, it says this. You have
:45:45. > :45:49.spoken to her since? I spoke to her this morning. She's fine. Thank you
:45:50. > :45:54.very much indeed for coming on and congratulations for creating such a
:45:55. > :45:58.stir. The recipe for the courgette and lemon drizzle cake will be on
:45:59. > :46:01.the Newsnight website in time for the weekend and all the baking you
:46:02. > :46:06.will do. That's it for tonight, we leave you with pictures from the
:46:07. > :46:11.south coast today after scores of people descended on Folkestone beach
:46:12. > :46:17.to dig for gold after a German artist announced he buried 30 bars
:46:18. > :46:22.of gold worth ?10,000. It is part of an art festival that promotes public
:46:23. > :47:06.arts installations across the town. Good night.
:47:07. > :47:11.A mild but fairly breezy night tonight will be followed by a rather
:47:12. > :47:14.blustery day tomorrow, the winds particularly strong across Northern
:47:15. > :47:18.Ireland, Scotland and northern parts of England. Further south and east
:47:19. > :47:21.you go the better the chance of staying dry, but here too you will
:47:22. > :47:24.notice the breeze blowing through. But with these areas of rain coming
:47:25. > :47:25.along with the brisk