28/08/2014 Newsnight


28/08/2014

In-depth investigation and analysis of the stories behind the day's headlines with Kirsty Wark.


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Tonight more trouble for the Tories over Europe. David Cameron loses an

:00:00.:00:13.

MP to UKIP, forcing an unwelcome and dangerous by-election. I will ask

:00:14.:00:18.

the granddaddy of Tory Euro-rebles if Douglas Carswell has done the

:00:19.:00:21.

right thing. Douglas Carswell has gone from the party, the only party

:00:22.:00:27.

that can deliver a referendum, that is a retrogade step. Do you speak

:00:28.:00:33.

money? A world in which banks have haircuts. And some are zombies,

:00:34.:00:41.

where you avoid a bear market and dead cats bouncing. Also tonight:

:00:42.:00:51.

Where is my ice-cream? Sorry Ian. Ahhhh. You have got your own

:00:52.:00:55.

freezer. Someone has taken it out of the freezer and it is all melted. It

:00:56.:01:02.

was meltdown or was it baked Alaskagate. David Watters cruelly

:01:03.:01:09.

binned from Bake Off last night after his ice-cream was left out of

:01:10.:01:14.

the freezer. Tonight on Newsnight he resurrects his baking career.

:01:15.:01:23.

Good evening it wasn't exactly the kind of surprise to bring a smile to

:01:24.:01:28.

David Cameron's face, just as he was heading north to would Scotland --

:01:29.:01:34.

woo Scotland for the union, looking for good headlines, the Tory Douglas

:01:35.:01:38.

Carswell announced he was high tailing it to UKIP, and not that he

:01:39.:01:44.

would sit in the Commons until after the election, he's forcing a

:01:45.:01:49.

by-election in his seat where he turned a wafer thin majority into a

:01:50.:01:52.

safe Conservative seat. His gripe, that David Cameron is not serious

:01:53.:01:56.

enough about his plans to reform the European Union.

:01:57.:02:01.

No-one was quite sure what UKIP were up to this morning, until they

:02:02.:02:07.

caught sight of this MP. A Tory MP, that is, he was yesterday. I'm today

:02:08.:02:12.

leaving the Conservative Party and joining UKIP. (Cheering) The problem

:02:13.:02:19.

is that many of those at the top of the Conservative Party are simply

:02:20.:02:24.

not on our side. They aren't serious about the change that Britain so

:02:25.:02:29.

desperately needs. No-one cheered David Cameron's Bloomberg speech

:02:30.:02:34.

more loudly than me when he promised to negotiate a fundamentally

:02:35.:02:37.

different relationship with the EU, when he promised to put it to the

:02:38.:02:41.

people in 2017, in or out. But there has been no detail since. That is

:02:42.:02:45.

because there isn't any. They are not serious about it. They haven't

:02:46.:02:49.

thought it through. I also want to say I think what you have just done

:02:50.:02:53.

is without doubt the bravest, most honourable and noblist thing I have

:02:54.:02:59.

seen in British politics in my lifetime. So all eyes move to

:03:00.:03:04.

Carswell's constituency of clockeden to, where a bitter by-election will

:03:05.:03:07.

now be fought. This morning in Westminster we thought we might be

:03:08.:03:10.

seeing the beginnings of a purple plot, an orchestrated move by MPs to

:03:11.:03:15.

defect to UKIP, perhaps as many as one MP per week, going over to the

:03:16.:03:19.

party over the next month. In reality those MPs we know to be

:03:20.:03:22.

sympathetic to Douglas Carswell were to be found in their polo shirts and

:03:23.:03:26.

holiday shorts, hard leaved that they were prepared for this move --

:03:27.:03:31.

evidence that they were prepared for this move against David Cameron.

:03:32.:03:35.

Even so, this is hardly a coup but what happens here in clockeden to

:03:36.:03:40.

will matter in Westminster. The local Tory MP learned of Carswell's

:03:41.:03:44.

defection 20 seconds before the rest of u pitching him into a by-election

:03:45.:03:49.

against his one-time friend. We will put up a Conservative candidate and

:03:50.:03:55.

give him a good fight. How likely is it to be against someone with such

:03:56.:03:59.

satture in the area, he's so well known? He has been such a good

:04:00.:04:04.

constituency MP, but a lot of people will be very disappointed with him.

:04:05.:04:07.

I have already had people saying, you know, a turn coat is never a

:04:08.:04:13.

good thing. I will not criticise Douglas, I like him as a person and

:04:14.:04:17.

he's a friend, I'm only disappointed that he has done this. Clockeden to

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loves Carswell, at the last election he gained a 12,000-vote majority. In

:04:22.:04:30.

total over half of those who voted in the seat voted for him. Here is

:04:31.:04:36.

he COMPLANL how he galvanised clockeden to? We are doing it in

:04:37.:04:42.

buildings like this and wondering why we are haemorrhaging membership

:04:43.:04:48.

we are doing it 1950s style. He has been long denouncing some party

:04:49.:04:53.

issues. He has a following and the seat of Clacton itself ready to

:04:54.:04:57.

rebel? It is the most favourable seat for UKIP in the country. It is

:04:58.:05:01.

full of older, white, working-class pensioners who feel left behind

:05:02.:05:05.

economically, angry at Westminster, anxious over Europe, resentful

:05:06.:05:09.

towards immigration. So in effect Douglas Carswell was already sitting

:05:10.:05:14.

on the most UKIP-friendly seat in the entire country. I will still

:05:15.:05:19.

vote for the Tories. You wouldn't would you. Your daughter has gone

:05:20.:05:26.

UKIP. I can't help about that. What about you? Isn't UKIP for the

:05:27.:05:32.

independence from Europe. It is wanting Britain out of Europe? It

:05:33.:05:35.

wants Britain out of Europe, he wants Britain out of Europe, you are

:05:36.:05:39.

an old veteran, what are you talking about, you are causing a divide.

:05:40.:05:46.

Clacton peer won't be good for Tories Dragooned into fighting the

:05:47.:05:49.

by-election, and the Prime Minister might feel under pressure to tighten

:05:50.:05:52.

up his European referendum pledge. It used to be until recently that

:05:53.:05:56.

Douglas Carswell was supportive of David Cameron's European referendum

:05:57.:05:59.

pledge, but not any more. And now the party will have to fight tooth

:06:00.:06:04.

and claw to make sure it is not defeated on this most sensitive of

:06:05.:06:08.

issues. It is deeply regrettable when things happen like this and

:06:09.:06:11.

people behave in this way. But it is also, in my view,

:06:12.:06:15.

counter-productive. If you want a referendum on Britain's future in

:06:16.:06:19.

the EU, whether we should stay or go, the only way to get that is to

:06:20.:06:23.

have a Conservative Government. Tonight there is speculation of

:06:24.:06:27.

perhaps one more Tory defection to UKIP. But for now, in a by-election

:06:28.:06:31.

the Prime Minister today suggested will be moved sooner rather than

:06:32.:06:35.

later, Douglas Carswell is UKIP's best chance, a very good chance.

:06:36.:06:41.

A little earlier I spoke to a man who knows a thing or two about

:06:42.:06:44.

rebelling over Europe, cabinet minister, Iain Duncan Smith. I began

:06:45.:06:48.

by asking him whether he cared that Mr Carswell has left the Tory ranks

:06:49.:06:53.

for UKIP? I do, I think anybody in the Conservative Party would care

:06:54.:06:57.

that any MP elected on a Conservative manifesto decides to go

:06:58.:07:02.

and join another party. I know Douglas quite well really. He is

:07:03.:07:08.

that classic figure who is never really seeking front bench

:07:09.:07:11.

appointment but really agitates from the backbenches, it is a traditional

:07:12.:07:16.

historic place to be here. You would call it the grit in the oyster is

:07:17.:07:20.

really his role. I regret he's gone, you think he has made a big mistake,

:07:21.:07:25.

even by his own words. He welcomed David Cameron's commitment to a

:07:26.:07:30.

referendum on the EU, what has changed. Doesn't it show that you

:07:31.:07:33.

can't keep giving to the euro-sceptics because they are never

:07:34.:07:36.

satisfied? Not really, I think the problem is this is very much a

:07:37.:07:39.

Douglas Carswell moment, in other words he is very much an individual

:07:40.:07:43.

who would make this kind of decision. And I think I have no

:07:44.:07:47.

reason to... So you weren't surprised? We were all surprised but

:07:48.:07:51.

not necessarily surprised in a funny sort of way. Douglas Carswell has

:07:52.:07:55.

always been a little bit of a loner on the backbench, he makes his own

:07:56.:08:00.

decisions for himself. What I'm puzzled and perplexed about is to

:08:01.:08:03.

why all of a sudden he having gone into the summer break, apparently

:08:04.:08:06.

quite content, he suddenly decided he isn't. There is a perplexing

:08:07.:08:10.

moment to this. This is the wrong move to make. What does it say that

:08:11.:08:14.

David Cameron can't even persuade one of his own backbenchers that

:08:15.:08:18.

he's serious about European reform, why should the public believe him? I

:08:19.:08:22.

have to say that in the course of the next few weeks and months we

:08:23.:08:25.

will have to step up the gas and make sure the public understands

:08:26.:08:28.

this. The reality is that there is only one party that is promising

:08:29.:08:30.

that referendum. It is not a competition on this. We have to make

:08:31.:08:35.

sure we get this out there. The point I come back to again and again

:08:36.:08:38.

is the simple point, I trust the British people to make that

:08:39.:08:42.

decision, I will make my mind up enI see what the Prime Minister blings

:08:43.:08:47.

-- when I see what the Prime Minister brings back, and thenally

:08:48.:08:52.

make up my mind. Isn't Douglas Carswell's position very clear when

:08:53.:08:55.

you look at a commitment that you have made that net immigration will

:08:56.:08:59.

fall to under 100,000 before the next election and the new figures

:09:00.:09:05.

are an upward trajectory to 243,000, you are never going to make your

:09:06.:09:08.

target by the election? I still feel we will. But the key thing of course

:09:09.:09:13.

is the problem in terms of those not in the EU, we have reduced it

:09:14.:09:17.

dramatically. But you have a free movement of people in Europe and you

:09:18.:09:19.

can't do anything about that, and you will never take 143,000 off

:09:20.:09:24.

before next year? My point is that the European Union needs to

:09:25.:09:27.

understand and it will understand that this negotiation is serious.

:09:28.:09:30.

That if Britain doesn't get what it wants what will happen is the Prime

:09:31.:09:34.

Minister will come back and the British public will choose not to

:09:35.:09:40.

stay in. And he will campaign for a no vote in that case? He has to make

:09:41.:09:43.

his decision. When the Prime Minister comes back, this is the

:09:44.:09:46.

point that is really clear, when the Prime Minister comes back, having

:09:47.:09:50.

had that negotiation, he will have to decide himself what he campaigns

:09:51.:09:54.

for. Because he will decide whether or not he has brought back what he

:09:55.:09:57.

thinks is sufficient. The key thing is the British people will make that

:09:58.:10:00.

decision, that is the point. They will make it, not me. I will just be

:10:01.:10:04.

one vote and one voice, so will the Prime Minister. The truth is Douglas

:10:05.:10:08.

Carswell wanted that. Now he has got it. That is what I wanted, I wanted

:10:09.:10:12.

the British people to have a referendum, I have wanted it since I

:10:13.:10:17.

rebelled en mass tricked and I have got it under -- Maastricht, and I

:10:18.:10:20.

have got it under this Conservative Government and that is what we

:10:21.:10:24.

should hold on to. So ironic talking about Maastricht, you were the

:10:25.:10:29.

architect of exactly this kind of rebellion, you rebelled over and

:10:30.:10:34.

over and over. In fact you even. Indeed and rather proud of it. You

:10:35.:10:38.

voted with Labour 11 times. You were one in the cabinet that John Major

:10:39.:10:42.

called the "bastards" who were knifing him. Douglas Carswell has

:10:43.:10:46.

learned at the feet of the master. He's rebelling over Europe just as

:10:47.:10:50.

you did. Many people do, and my point here is that I feel very

:10:51.:10:53.

strongly and passionately about making sure that our relationship

:10:54.:10:56.

with Europe is the right one, I believe it isn't. Hold on, I have

:10:57.:11:00.

called for a referendum for many years now and we have now, this is

:11:01.:11:04.

the irony, this Prime Minister, David Cameron, has agreed if we get

:11:05.:11:09.

re-elected, if the public says, yes, we want a Conservative Government,

:11:10.:11:12.

he has agreed to grant that referendum. He will renegotiate and

:11:13.:11:16.

he will come back, if he can, with something that he says, if he thinks

:11:17.:11:20.

that is the case he wants to stay in with. I'm simply saying he has

:11:21.:11:23.

trusted the British people, like no other Prime Minister, has trusted

:11:24.:11:27.

the British people since Harold Wilson came back with a referendum.

:11:28.:11:30.

I'm simply saying this is what we wanted. Douglas Carswell wanted it

:11:31.:11:34.

and I'm impress bid the Prime Minister having done it. You were

:11:35.:11:40.

one of the ones that actually started the image of the party

:11:41.:11:43.

divided over Europe and that image has never changed. It has simply

:11:44.:11:50.

intensified. In a sense you rebelled endlessly over Maastricht and

:11:51.:11:53.

Carswell is not happy with the direction and feels he can make

:11:54.:11:57.

change and he's off to UKIP, it was the most honest thing to do wasn't

:11:58.:12:00.

it? No, the reason I rebelled against Maastricht is I believed it

:12:01.:12:03.

was going in the wrong direction, I believe I was right, not with

:12:04.:12:06.

standing anything else, the point here and the question is this,

:12:07.:12:10.

Douglas Carswell has gone from the party, the only party that can

:12:11.:12:14.

deliver a referendum, that is therefore a retrogade step. He won't

:12:15.:12:17.

trust the British people because he won't deliver it through UKIP. I

:12:18.:12:21.

want to deliver a referendum, that is why I trust the Prime Minister, a

:12:22.:12:24.

Conservative Government is the only Government to deliver a referendum

:12:25.:12:27.

after the next election. It is a simple question really. Thank you.

:12:28.:12:32.

I'm joined now to discuss the ramifications of Douglas Carswell's

:12:33.:12:37.

defection by the UKIP MEP Patrick O'Flynn and a pair of peer, Danny

:12:38.:12:41.

Finkelstein who advises William Hague, and the associate editor of

:12:42.:12:45.

the Times and Sally Morgan who worked for Tony Blair. How angry do

:12:46.:12:48.

you think that David Cameron will be by this defection and the time of

:12:49.:12:54.

it? I'm sure he won't be very happy, it is profoundly unhelpful. The

:12:55.:12:59.

Conservative strategy has to focus on the choice between Ed Miliband

:13:00.:13:03.

and David Cameron. It will give UKIP momentum in a period when the

:13:04.:13:06.

Conservative Party was hoping it wouldn't have momentum and it would

:13:07.:13:09.

be able to focus the battle on that choice. And now it will be robbed of

:13:10.:13:13.

that opportunity, certainly for a period, it is profoundly unhelpful.

:13:14.:13:18.

Let's look at the splash tomorrow morning on the Mail, Patrick

:13:19.:13:22.

O'Flynn, eight more Tories in UKIP talks and apparently a series of

:13:23.:13:28.

lunches? Did you know about these? I think Stuart Wheeler's lunches date

:13:29.:13:33.

back some time. I am' sure there are talking going on between UKIP and

:13:34.:13:35.

other political parties all the time. Is the Mail overplaying this

:13:36.:13:40.

or are there eight more Tories in UKIP talks? What I'm focussed on

:13:41.:13:45.

tonight is Douglas Carswell has made a magnificent gesture, I would say

:13:46.:13:49.

has made an irresistable pitch to his voters in Clacton, and it is

:13:50.:13:57.

UKIP at the collapsibility to help him deliver the victory he deserves.

:13:58.:14:01.

I'm focussing on the person with integrity coming over. Are there

:14:02.:14:06.

more Tories ready to make the leap, is this story actually wrong? I'm

:14:07.:14:09.

sure there are Conservative MPs who think about these things. I don't

:14:10.:14:16.

know whether or where the Daily Mail gets their figure of eight? When

:14:17.:14:21.

Allegra says there might be one more, is that on the right side of

:14:22.:14:26.

one more, eight more or how many more, is this a rolling programme? I

:14:27.:14:30.

don't have perfect information and no-one does. One can only imagine

:14:31.:14:33.

what is in the mind of Conservative MPs. Clearly Douglas Carswell did

:14:34.:14:38.

not find David Cameron's pitch convincing and there may well be

:14:39.:14:41.

other Conservative MPs in that position. Is this a flash in the

:14:42.:14:44.

pan. Is it just going to be Carswell or more? A lot depends. One does not

:14:45.:14:50.

make a summer? A lot depends on the result of the by-election, doesn't

:14:51.:14:54.

it. It is UKIP's profound responsibility to back Douglas

:14:55.:14:58.

Carswell in the magnificent step he has taken. You had candidate and you

:14:59.:15:03.

didn't do him the curtesy of telling him that Douglas Carswell was about

:15:04.:15:07.

to move, he's very angry and upset and will be taking you to task? Look

:15:08.:15:12.

the nature of these things has to be, there has to be a certain amount

:15:13.:15:16.

of secrecy around it. And one regrets that. But I can't think of

:15:17.:15:20.

any way around choreographic these things to the benefit of the party

:15:21.:15:26.

without a degree of secrecy. I have to say to Danny Finkelstein, we

:15:27.:15:30.

heard from Allegra there, there is a likelihood of an earlier rather than

:15:31.:15:33.

later by-election, which will be a problem for the conference season

:15:34.:15:37.

and everything else. If, as is likely, he would have a very good

:15:38.:15:47.

fight and by the looks of what we are saying Clacton is a UKIP area

:15:48.:15:53.

will it bring the others out? Not all areas are Clacton, and they

:15:54.:16:02.

don't all have Douglas Carswell's attitude. He's forcing other people

:16:03.:16:07.

to think could they win their constituency, he could win Clacton

:16:08.:16:13.

because of the constituency seat. He will have encouraged some people by

:16:14.:16:16.

what he has done, but because he has done it in the way he has done it,

:16:17.:16:21.

it will discourage them. He has a good chance of winning it. Clacton,

:16:22.:16:25.

this was a safe Labour seat in 2005, and here we have it, a constituency

:16:26.:16:30.

which has flipped. You have just given up on this one presumably? I

:16:31.:16:33.

don't think Labour has given up on any of these seats. But it is clear

:16:34.:16:38.

that there is a series of these seaside seats. It is isn't that it

:16:39.:16:42.

did flip back? It was a marginal, these are all marginal seats, they

:16:43.:16:47.

were Tory-Labour marginals right round the coast actually and they

:16:48.:16:50.

have similar characteristics. It was a Labour seat and you held it? We

:16:51.:16:56.

did hold it seats like Clacton. We won them in 1997. The reason I

:16:57.:17:00.

mention this of course because much like the Daily Mail story, Nigel

:17:01.:17:03.

Farage, he's talking to everybody clearly, he says he's talking to

:17:04.:17:06.

Labour MPs, is that beyond the bounds of possibility? I find that

:17:07.:17:11.

considerably less likely than Tory MPs. This is a serious blow for

:17:12.:17:16.

David Cameron this tonight. It is a serious blow. I don't think very

:17:17.:17:21.

likely for Labour MPs, there is a Labour element to it, the reason why

:17:22.:17:25.

Clacton is appealing to UKIP is because of its appeal to a certain

:17:26.:17:28.

part of Labour's base vote. That is the theory that these academics have

:17:29.:17:33.

advanced, it is compelling. It does kind of show that once you give one

:17:34.:17:36.

thing away they will come back for more, and in fact, you heard Iain

:17:37.:17:41.

Duncan Smith already moving there, saying we have to strengthen our

:17:42.:17:44.

resolve, we have to move on this, that is driving the agenda. I know

:17:45.:17:49.

all the concentration is on Europe, I actually think recall is a bigger

:17:50.:17:53.

issue for Douglas Carswell. So Douglas Carswell as well as being

:17:54.:17:57.

interested in Europe has a lot of theories, many very interesting

:17:58.:18:00.

about how politics works, you have had him on Newsnight doing. That I

:18:01.:18:03.

think that was very much in his mind actually, not just Europe. On Europe

:18:04.:18:07.

he can't really be saying David Cameron hasn't got a specific enough

:18:08.:18:11.

programme on negotiations because he's not in favour of remaining in

:18:12.:18:15.

the European Union. He said he doesn't trust David Cameron, and

:18:16.:18:20.

that is a real problem. And today every media outlet. According to

:18:21.:18:24.

Fraser Nelson, he tweeted that actually he had audio of Douglas

:18:25.:18:27.

Carswell being fulsome about David Cameron? And then you have a series,

:18:28.:18:35.

the media today is full of every euro-sceptic, that is the problem.

:18:36.:18:41.

You are a UK MEP, Douglas Carswell who has never particularly wanted

:18:42.:18:44.

glory is suddenly about to have glory as the first UKIP MP, that is

:18:45.:18:46.

a bit of glory, isn't it? To be glory as the first UKIP MP, that is

:18:47.:18:52.

first directly elected UKIP MP would be an historic breakthrough. I have

:18:53.:18:55.

had the benefit of some conversations with Douglas in recent

:18:56.:19:01.

days and I agree with Danny that the dilution almost to the point of

:19:02.:19:05.

extinction of right of recall was a major point for him of becoming

:19:06.:19:09.

disillusioned with the direction of the Tory leadership. So recently he

:19:10.:19:15.

was being very praising of David Cameron. This is simply something

:19:16.:19:18.

that was not on the agenda six months ago? Somebody I think has

:19:19.:19:23.

said something to him that makes him no longer trust Cameron. I think he

:19:24.:19:27.

has had conversations with certain people around David Cameron, which

:19:28.:19:33.

has led him to question the sincerity of the Cameron leadership

:19:34.:19:37.

of the Conservative Party. The timing in another way is very

:19:38.:19:40.

tricky, here is David Cameron in Scotland trying to absolutely make

:19:41.:19:44.

sure that he has the CBI dinner tonight, that he's promoting the no

:19:45.:19:48.

vote very heavily, and one of the issues, one of the fault lines is

:19:49.:19:52.

that people in Scotland by and large appear to be less euro-sceptic than

:19:53.:19:56.

anywhere else in the country. To think that actually we are going to

:19:57.:20:00.

see a series of MPs pushing the Conservatives even further in the

:20:01.:20:03.

direction of an exit door to Europe may have an impact on wavering

:20:04.:20:12.

voters? He will be thinking about the impact on the general election

:20:13.:20:15.

campaign primarily. It will have an effect? No individual political

:20:16.:20:20.

event has as much impact as it does on the day. But it will have some

:20:21.:20:24.

impact. Douglas Carswell is not immune, by the way, to political

:20:25.:20:28.

glory year, he's somebody who is very strong-headed and he has a lot

:20:29.:20:31.

of political ideas. One of the interesting things is how he shifts

:20:32.:20:35.

UKIP. It is quite an earthquake, you will have a potential member of

:20:36.:20:38.

parliament and a leader of the party, and actually the tone of

:20:39.:20:42.

Nigel Farage and Douglas Carswell, both intelligent and able people,

:20:43.:20:46.

but it is quite different and it was quite noticeable on Douglas's

:20:47.:20:50.

performance. I think it will be an interesting thing to watch UKIP. It

:20:51.:20:55.

might not have it all his own way? It will be interesting to watch UKIP

:20:56.:21:00.

as it tries to absorb Douglas, which the Conservative Party frankly found

:21:01.:21:03.

quite hard. Another one within the month then? I wouldn't put deadlines

:21:04.:21:10.

and time limits on it. My absolute focus is Douglas Carswell has done a

:21:11.:21:14.

magnificent thing and UKIP must now deliver him the result he deserves

:21:15.:21:18.

and help him do that. Thank you three.

:21:19.:21:24.

The UN Security Council is in an emergency session today discussing

:21:25.:21:28.

the crisis in Ukraine. But they are all in accord, Vladimir Putin is

:21:29.:21:31.

escalating the crisis in the country. NATO says 20,000 Russian

:21:32.:21:35.

troops are had he border in Ukraine and 1,000 inside. Russia denies the

:21:36.:21:39.

incursion claiming the soldiers in Ukraine are there in their own time

:21:40.:21:42.

and not part of the Russian military. According to Ukraine's

:21:43.:21:48.

President they helped the rebels capture a key coastal town. As often

:21:49.:21:52.

the question has to be what is in the Russian President's game and who

:21:53.:21:56.

is he trying to promote. This is the view of the Ukrainian Prime

:21:57.:22:04.

Minister. We can confirm that Russian military boots are on

:22:05.:22:10.

Ukrainian ground. Ukrainian forces are capable to tackle and to cope

:22:11.:22:15.

with the Russian-led guerrillas. But this is quite difficult for us to

:22:16.:22:22.

fight with Russia. Well, our diplomatic editor is here. What is

:22:23.:22:26.

the actual hard and fast evidence that Russian troops are operating

:22:27.:22:29.

inside Ukraine? Well, things have clearly changed a lot in the past

:22:30.:22:33.

week. NATO said this morning they thought more than 1,000 Russian army

:22:34.:22:37.

soldiers were in the south-east of Ukraine. I'm told there are

:22:38.:22:41.

classified assessments that put the figure considerably higher than that

:22:42.:22:45.

for battalion tactical groups, they are thought to be there in NATO

:22:46.:22:49.

which would come close Tory 5,000. One of the separatist leaders

:22:50.:22:54.

earlier this week, interestingly, talked about 3,000-4,000 Russians

:22:55.:22:58.

being there as toll tears to help out. As you said earlier Russia is

:22:59.:23:04.

not officially acknowledging this, NATO has producing satellite

:23:05.:23:08.

imagery, saying they have located units like a self-propelled

:23:09.:23:13.

artillery battery inside Ukraine. It is a gun line, not the sort of thing

:23:14.:23:17.

that separatist who hit the bottle could put together. It is a proper

:23:18.:23:20.

military formation. That is the message they are sending. The really

:23:21.:23:24.

interesting evidence is the human level. We saw a few days back

:23:25.:23:31.

Ukraine showing those paratroopers from a specific Russian army

:23:32.:23:35.

airborne regiment that they captured. We have heard about

:23:36.:23:39.

casualties going back to hospitals in St Petersburg, and burials in

:23:40.:23:44.

places. Also groups of mothers. This lady says her son is one of the

:23:45.:23:48.

captured soldiers. Getting organised, they are talking about

:23:49.:23:52.

400 soldiers killed or wounded. Now the fascinating thing here is that

:23:53.:24:02.

the percolation of the knowledge through the military, we haven't

:24:03.:24:05.

seen it before, it seems definite evidence that the units have gone in

:24:06.:24:11.

some or another. What is behind it? If we look at the last few weeks,

:24:12.:24:15.

the Ukrainian President has been pushing the antiterrorist operation,

:24:16.:24:18.

the offensive against the separatist. In some ways some would

:24:19.:24:22.

say he hasn't given enough emphasis to negotiation. He has tried to seek

:24:23.:24:26.

a military solution, there has been heavy fighting and considerable

:24:27.:24:30.

gains for the Ukrainian forces. If we look at a map we can see in

:24:31.:24:39.

particular the Donetsk pocket has been cut off and the Luhansk one

:24:40.:24:45.

squeezed. Many speculated that President Putin would not allow

:24:46.:24:49.

those pockets of separatist to fall. He has sent in troops, that is the

:24:50.:24:53.

belief in NATO, nah the south they have -- and in the south they have

:24:54.:24:59.

pushed towards Mariupol and some suspect they might open a corridor

:25:00.:25:08.

to Crimea. They have pushed towards Donetsk to reopen land communication

:25:09.:25:13.

with that enclave, and pushed down towards Luhansk. Is this what we are

:25:14.:25:17.

seeing here, an incursion, an invasion what is it? Is it just

:25:18.:25:21.

about semantics or does it matter very much what language is used?

:25:22.:25:25.

When you talk to people in NATO, there is absolutely no doubt that,

:25:26.:25:29.

pardon my language, one said to me tonight, it is a "bloody invasion",

:25:30.:25:34.

there is no word for it. But politicians are choosing their words

:25:35.:25:38.

so carefully. Even the President in Ukraine seemed reluctant to use that

:25:39.:25:42.

word. The Ukrainians might say if it is one and it is a war, why aren't

:25:43.:25:46.

we hitting Russia, because he knows what might come back in the other

:25:47.:25:48.

direction. And the American President too? Fascinatingly

:25:49.:25:51.

tonight, we heard President Obama would make a statement on Iraq,

:25:52.:25:55.

inevitably he would be asked about this, he would not use the word

:25:56.:25:59.

invasion. Russia is responsible for the violence in eastern Ukraine. The

:26:00.:26:04.

violence is encouraged by Russia, the separatist are trained by

:26:05.:26:09.

Russia. They are armed by Russia. They are funded by Russia. Russia

:26:10.:26:15.

has deliberately and repeatedly violated the sovereignty and

:26:16.:26:18.

territorial integrity of Ukraine. There are others using much more

:26:19.:26:23.

explicit language like the President of Lithuania today who called the

:26:24.:26:25.

Security Council session. They will have to put those delivering views

:26:26.:26:30.

together to thrash them out at the NATO summit next week and to find a

:26:31.:26:34.

response to this. I'm joined now by the Ukrainian

:26:35.:26:41.

ambassador to the UK. Good evening. What is this, is this an invasion of

:26:42.:26:46.

Ukraine, is it an incursion, what is it? It is definitely the Russian

:26:47.:26:52.

troops at the Ukrainian territory fighting against the regular

:26:53.:26:59.

Ukrainian army. It has its term. But it is not calling it an invasion?

:27:00.:27:04.

This is kind of an invasion. This is undeclared, shameful war, started by

:27:05.:27:16.

the Russian federation. Which is the a hybrid war. Once you start to use

:27:17.:27:22.

the word "invasion" it is loaded and demands a particular response, and

:27:23.:27:25.

maybe you might ask for a particular response from NATO? We are

:27:26.:27:30.

responding by our own, and we are seeking

:27:31.:27:31.

responding by our own, and we are for such a response. We are

:27:32.:27:42.

trying to have a specific Bartter inship with NATO and certain

:27:43.:27:47.

assistance to receive which we need now. We will come on that

:27:48.:27:52.

assistance, was it right for your President to say it had to be a

:27:53.:27:56.

military solution. You know no matter how hard Ukrainians fight,

:27:57.:28:02.

Russia is a superior fire power and Russia would Winter trees within

:28:03.:28:06.

Ukraine? We are not closing the door for diplomatic solution. It was the

:28:07.:28:12.

attempt to find one in Minsk and the Russians refused to do that. . Once

:28:13.:28:24.

you now have Russian prisoners and there are casualties and civilian

:28:25.:28:27.

casualties and a number of apparent deaths among the military, then

:28:28.:28:32.

there is an escalation. What do you actually want NATO to do? First of

:28:33.:28:39.

all, we would like the community to do, this is not just about Ukraine

:28:40.:28:42.

but security in the world. We need to stop the agressor by any possible

:28:43.:28:49.

means. It means the sanctions should be much harder, the co-operation

:28:50.:28:55.

with the agressor should be cut, especially at the military and

:28:56.:29:00.

technical field, especially in the most sensitive field of energy for

:29:01.:29:05.

Russia, for energy supply and the banking sectors. New technologies

:29:06.:29:10.

also. You know this is very difficult for particular countries

:29:11.:29:14.

in Europe who are, by necessity, doing a lot of business with Russia,

:29:15.:29:17.

though sanctions will only go so far? The Ukraine has the economy

:29:18.:29:25.

which was very interconnected with the Russian ones, and we cut all the

:29:26.:29:28.

ties and all the co-operation in this field. And I think that to lose

:29:29.:29:37.

certain profits for the western companies in western countries will

:29:38.:29:40.

be much better for the soldiers later on if the conflict will not

:29:41.:29:44.

stop at this stage. In the end if it is a diplomatic solution are you

:29:45.:29:50.

prepared to have a situation like Crimea but negotiate areas you might

:29:51.:29:54.

have to lose in the country? We have a certain red line which we could

:29:55.:29:59.

never cross and the loss of territory and the territorial

:30:00.:30:04.

disintegration of Ukraine is definitely the red line we cannot

:30:05.:30:10.

cross anyhow. Thank you. You may have heard about how the European

:30:11.:30:14.

Central Bank is holding back in quantitative easing but has launched

:30:15.:30:17.

a programme of targeted long-term refinancing operations which has

:30:18.:30:20.

helped to flatten European yield curves. Still with me? I'm not. Ever

:30:21.:30:26.

since the financial crisis we have been bombarded with impenetrable

:30:27.:30:31.

language to explain why things went so catastrophically wrong and what

:30:32.:30:35.

we need to do to fix it. Why can't the money people, economists and

:30:36.:30:39.

politicians speak plain English, even films entitled Margin Call and

:30:40.:30:43.

Arbitrage, in his new book How To Speak Money, Lanchester tries to

:30:44.:30:47.

decode the language. We will be talking to him and Baroness Patience

:30:48.:30:50.

Wheatcroft, first here is the Knowledge. One of humanity's most

:30:51.:31:08.

remarkable inventions is money. It is fundamental to modern society. So

:31:09.:31:13.

why is it that the language used to talk about money is so be a secure,

:31:14.:31:18.

so alien, that it seems to belong in a very different world to the one

:31:19.:31:24.

you actually inhabit. A world in which banks have "haircuts" and some

:31:25.:31:32.

are "zombies" where you better avoid a "bear" market and "dead cats

:31:33.:31:41.

bouncing". Where QE's effect isn't a crazy way to trample. And trading is

:31:42.:31:45.

done at high frequency and you better hope you don't get a margin

:31:46.:31:50.

call. And a big McIndex measures a country, and fat fingers make

:31:51.:31:53.

mistakes. You have to wonder whether this world has been constructed by

:31:54.:32:03.

the money world. To deliberately exclude us. We have all heard of

:32:04.:32:11.

hedged funds, but what do the Bond-style people have to do with

:32:12.:32:15.

hedge funds. The word "hedge" began its life as a term for setting

:32:16.:32:21.

limits to a bet, just as a hedge sets an area of land and demarcates

:32:22.:32:26.

it. You make a bet and on the same side you make a bet on the other

:32:27.:32:30.

side of the outcome, there by guarnteeing a profit whatever

:32:31.:32:34.

happens. You hope. The idea is you cannot lose. Any financial structure

:32:35.:32:41.

in which you can make a profit and a guaranteed profit not to lose money

:32:42.:32:47.

is going to have many ardent fans. But once adopted in the world of

:32:48.:32:51.

finance, this technique has become more sophisticated with hedge funds

:32:52.:32:55.

employing complex mathematical analysis to bet on prices going both

:32:56.:33:00.

up and down. There will always be a secret source of some kind, owned by

:33:01.:33:04.

the hedge fund, usually a complicated set of mathematical

:33:05.:33:10.

techniques. One such fund was set up by a man nicknamed "choc finger",

:33:11.:33:16.

his hedge fund specialised in chocolate, in the peak of his

:33:17.:33:20.

activities, his firm owned a remarkable 15% of the world's supply

:33:21.:33:26.

of cocoa. At one point the fund took physical delivery of 241,000

:33:27.:33:34.

metricen tonnes of beans, enough to give everybody in the world three

:33:35.:33:38.

bars of chocolate each. In 2012 the fund was thought to be valued

:33:39.:33:48.

between $200-$300 million. The price of cocoa spiked upwards in 2013

:33:49.:33:52.

because of the weather, good news for the hedge fund. Well at the end

:33:53.:34:00.

of 2013 the fund was sold for, guess what? Dollar 1. 90% of all hedge

:34:01.:34:11.

funds that have existed have closed or gone broke. A hedge is a physical

:34:12.:34:15.

ING this, it turned into a metaphor, then a technique, then the technique

:34:16.:34:19.

was adopted in the world of high finance and became more and more

:34:20.:34:24.

sophisticated and complicated, and finally turned into something that

:34:25.:34:28.

can't be understood by the ordinary reference of ordinary language. So

:34:29.:34:32.

why does it matter if this language is so baffling to us and we don't

:34:33.:34:38.

really understand it? Because incomprehension is a form of

:34:39.:34:42.

consent. It is true that over the last two decades economic growth has

:34:43.:34:48.

meant that the proportion of the planet's population living in

:34:49.:34:52.

absolute poverty has halved. That is an extraordinary achievement and

:34:53.:34:56.

unprecedented. It is also unprecedented that levels of

:34:57.:35:00.

inequality are rising everywhere, This country and globally. The gap

:35:01.:35:08.

between countries is narrowing but the gap inside the countries are

:35:09.:35:14.

growing eyeder. The EOCD in its predictions over the next five

:35:15.:35:17.

decades for the economy, it says countries in the developed world

:35:18.:35:22.

will rise by a further 30%, there is a widening chasam in our societies

:35:23.:35:25.

between the top and the bottom. We will be living in countries strictly

:35:26.:35:29.

divided between the rich and poor, winners and losers with nobody

:35:30.:35:33.

inbetween. If we want to stop that from happening we all need to join

:35:34.:35:36.

the economic conversation, the one that the rich and the powerful have

:35:37.:35:41.

among themselves and in private. We need to learn the language of money

:35:42.:35:45.

and fast. With me now is the author of that

:35:46.:35:50.

film, John Lanchester and Baroness Patience Wheatcroft former Editor in

:35:51.:35:56.

Chief he at the Wall Street Europe, and now a life peer and board member

:35:57.:36:00.

of Fiat. To answer your question you pose, is it deliberate, is the

:36:01.:36:06.

obfuscation deliberate? I don't think it matters, if you are talking

:36:07.:36:15.

about RMBS made into synthetic EBOs and then folded into something else.

:36:16.:36:18.

It doesn't matter if they are trying to bamboozle you or not, it matters

:36:19.:36:23.

that it is hard to follow in real time. Is bamboozling language?

:36:24.:36:28.

Sometimes. Having an understanding of the fact that hedge funds aren't

:36:29.:36:33.

always hedged or what CDOs are won't do anything to stop the inequalities

:36:34.:36:38.

in the world. It is far more basic, the need for financial literacy is

:36:39.:36:42.

far more about households looking after their own budget, not

:36:43.:36:47.

necessarily understanding the more complicated goings on. Something

:36:48.:36:50.

that is not complicated but something not as clear as John said

:36:51.:36:53.

is not clear. What is an investment bank? I think the term investment

:36:54.:37:00.

bank is a wonderful misnomer, it is a complete contradiction in terms.

:37:01.:37:04.

Again I don't think that really changes inequalities in the world.

:37:05.:37:07.

As I understand if you go to some advisory and say I think you should

:37:08.:37:10.

use this investment bank, I mean what should he say, use this

:37:11.:37:14.

gambling institution? But the point is that an individual wouldn't be in

:37:15.:37:18.

that position. And often terms that are used in common language do

:37:19.:37:23.

emerge in totally different forms. You know if you think about the word

:37:24.:37:28.

"gay" is no longer means what it used to mean. The term "investment

:37:29.:37:33.

bank" started off referring to a merchant bank and a merchant bank

:37:34.:37:36.

with a sensible institution that raised funds to help businesses

:37:37.:37:40.

grow. Surely the man and woman in the street should know. For example

:37:41.:37:48.

"naked shorting" what is that? Straight forwardly betting against,

:37:49.:37:51.

wanting something to go down and not hedging on it going up. An example

:37:52.:37:55.

of a term, I slightly disagree, I think the language does matter at a

:37:56.:37:59.

personal level. Quantitative easing, that sounds like a brand of

:38:00.:38:04.

laxative, I mean the term is totally opaque, it doesn't tell you what it

:38:05.:38:09.

is about. And QE? The equivalent of a third of British GDP is printed,

:38:10.:38:13.

effectively the Government has printed money without admitting it

:38:14.:38:16.

has printed money. That your children and grandchildren will be

:38:17.:38:19.

paying that debt off. If you have been caught up in the sub-prime

:38:20.:38:22.

mortgage, you should know what happened and what it is? If people

:38:23.:38:26.

want to understand that it doesn't take great deal of effort to do so.

:38:27.:38:30.

I actually don't think people are interested. That's major failing.

:38:31.:38:34.

They should be interested. Isn't that a contradiction, we have a

:38:35.:38:36.

responsibility to know what is going on but people aren't interested, how

:38:37.:38:39.

do you get them interested? I think you have to teach people when they

:38:40.:38:43.

are at school that they need to be interested. I think you need to

:38:44.:38:46.

actually keep doing things the way you do on Newsnight which is to make

:38:47.:38:50.

it very clear what you are talking about. I don't think the BBC uses

:38:51.:38:55.

boom boozeling language, it talks about the economy in very clears

:38:56.:38:58.

terms, but actually the majority of people don't want to know. Do you

:38:59.:39:02.

think the BBC is always clear in its language the way it discusses the

:39:03.:39:06.

economic language? Not just saying it because I'm here, I think they

:39:07.:39:09.

have done a brilliant job on this. The frame is often about the news

:39:10.:39:13.

and the stories sometimes take longer to follow, you don't always

:39:14.:39:17.

have enough time to explain the complicated things. You don't think

:39:18.:39:20.

there is an element of mystery that is attractive to people in the City,

:39:21.:39:24.

it goes back to the Masters of the Universe, they know anything we

:39:25.:39:29.

don't? You see it in the axe know him ins. -- Axe him ins. Give us an

:39:30.:39:43.

example? PIG S, for Portugal, Italy and Spain, that is derrogatory or

:39:44.:39:49.

other ones. Everything has its own acronym, it is a mystery to

:39:50.:39:53.

outsiders, I went on one board and spent a long time going through the

:39:54.:39:57.

glossary of terms so I could understand what the various acronyms

:39:58.:40:02.

meant. There was one that puzzled me that wasn't in the glossary, it was

:40:03.:40:07.

STP, I worked hard to try to figure out what STP could be, it was

:40:08.:40:14.

"short-term plan". The more worrisome thing is, do you think if

:40:15.:40:18.

people actually understood a lot of this terminology and they wouldn't

:40:19.:40:22.

be prepared to take any risking at all? It is a moot point. One of the

:40:23.:40:25.

brilliant things that happened in the financial services industry,

:40:26.:40:29.

there used to be this thing called debt that we were brought up to be

:40:30.:40:34.

scared of. The upper-classes didn't mind it but the lower and

:40:35.:40:38.

middle-classes were, they changed it to credit, and now we think it is

:40:39.:40:44.

great thing, and we have 572% of our GDP which is debt, because it is not

:40:45.:40:47.

debt it is credit. Thank you for being so clear. Thank you. Last

:40:48.:40:51.

night more than 8. 5 million people watched, many of them probably from

:40:52.:40:57.

behind their pinni serbses the Great British Bake Off in meltdown. It was

:40:58.:41:00.

a show-stopper, but not what anyone had expected. The challenge, baked

:41:01.:41:05.

Alaska, but David Watters was horrified to find out his ice-cream

:41:06.:41:10.

had been taken out of the freezer by another contestant, Diana Beard. 15

:41:11.:41:16.

minutes. Where is my ice-cream? It is here, sorry Ian. Ahhhhh. Well you

:41:17.:41:22.

have your own freezer. Someone has taken it out of the freezer and it

:41:23.:41:27.

is all melted. Why would you take the ice-cream out of the freezer.

:41:28.:41:34.

What's wrong? How is it looking? Look. It is soup. The only reason

:41:35.:41:40.

why it has stayed there is because I put the tin round to hold the

:41:41.:41:52.

caramel in. Let's think about how we will present that. That's not

:41:53.:41:59.

working. I have a serving suggestion. , no, no, no. You can't.

:42:00.:42:08.

Ian you have to present it. Look at it, how can you present it. He threw

:42:09.:42:26.

it in the bin. He didn't? Gutting, well now the BBC has said that

:42:27.:42:30.

Diane's subsequent departure from the show was nothing to do with the

:42:31.:42:34.

incident but due to illness, there was no way back for Ian. We have

:42:35.:42:39.

scooped him up, 8. 5 million people watched it. Have you any idea what

:42:40.:42:43.

the reaction would be? I knew it would be big, because it is a big

:42:44.:42:46.

thing that happened in the show. But it has gone nuts today, the reaction

:42:47.:42:50.

from the media is crazy. What has happened today? There has been a lot

:42:51.:42:54.

of comments on Twitter, I think it built up last night after the show.

:42:55.:42:57.

When you did that, that was in the heat of the kitchen. Do you regret

:42:58.:43:01.

that, were you angry? I was more frustrated and it was just the heat

:43:02.:43:04.

of the moment, and you are in the zone the last half hour of the show,

:43:05.:43:08.

and I think it is very tense. You had gone through all the thing, you

:43:09.:43:12.

naked your sponge and then you had your ice-cream in the freezer and

:43:13.:43:17.

Diane took your ice-cream out of the freezer, was it her freezer? A group

:43:18.:43:23.

of freezers we were all using. You had no idea it was dumped out of the

:43:24.:43:27.

freezer, Diane has subsequently left the show and that was nothing to do

:43:28.:43:30.

with that, she wasn't well. But the tension in these things is

:43:31.:43:35.

phenomenal? You have been in the tent yourself, the pressure in the

:43:36.:43:38.

tent is huge, it is very different from baking at home. I don't hold a

:43:39.:43:42.

grudge against Diane it was done in the heat of the moment. But your

:43:43.:43:46.

ice-cream was destroyed, but you couldn't put it back, they were

:43:47.:43:49.

saying you should have made a fist of it and stayed and popped the egg

:43:50.:43:53.

white on top and blow torched it? Tried to do something with with it.

:43:54.:43:58.

Did you flounce off? You say the state of it, it went. To try to get

:43:59.:44:02.

meringue on to that I didn't think it was doable. Are you a novice

:44:03.:44:13.

baker or a good one? I'm a keen baker, I don't know about a good

:44:14.:44:16.

one. You have brought something, what is this? This is the cake I

:44:17.:44:20.

baked for the first audition for the show. It must be good, can I have

:44:21.:44:26.

some? It is a courgette lemon and poppy seed cake. This was good

:44:27.:44:35.

enough to get Mary Berry excited, and if you had actually held your

:44:36.:44:38.

nerve you might have gone all the way with this? But you didn't

:44:39.:44:43.

unfortunately. What do you think about this the "bring Ian back"?

:44:44.:44:54.

Campaign. It has been crazy, it has built, it is nice to have the

:44:55.:44:57.

support. It is built up overnight. Do you think you might get brought

:44:58.:45:02.

back. You have to watch next week. Courgette, this is a lemon drizzle

:45:03.:45:05.

cake but you have put something special in it? It is greated

:45:06.:45:11.

courgettes, it is like a carrot cake it is moist, and poppy seeds for

:45:12.:45:15.

texture and ground almonds to keep it moist. It is a signature dish? It

:45:16.:45:20.

is. What do you think you are going to be doing, the day job going, you

:45:21.:45:23.

are a site manager on a building site, are they all behind you? They

:45:24.:45:28.

are all behind me, I have a lot of support. I get a lot of ribbing at

:45:29.:45:34.

work as well. They ares This is something for you -- this is

:45:35.:45:40.

something to put up, the Sun headline, it says this. You have

:45:41.:45:44.

spoken to her since? I spoke to her this morning. She's fine. Thank you

:45:45.:45:49.

very much indeed for coming on and congratulations for creating such a

:45:50.:45:54.

stir. The recipe for the courgette and lemon drizzle cake will be on

:45:55.:45:58.

the Newsnight website in time for the weekend and all the baking you

:45:59.:46:01.

will do. That's it for tonight, we leave you with pictures from the

:46:02.:46:06.

south coast today after scores of people descended on Folkestone beach

:46:07.:46:11.

to dig for gold after a German artist announced he buried 30 bars

:46:12.:46:17.

of gold worth ?10,000. It is part of an art festival that promotes public

:46:18.:46:22.

arts installations across the town. Good night.

:46:23.:47:06.

A mild but fairly breezy night tonight will be followed by a rather

:47:07.:47:11.

blustery day tomorrow, the winds particularly strong across Northern

:47:12.:47:14.

Ireland, Scotland and northern parts of England. Further south and east

:47:15.:47:18.

you go the better the chance of staying dry, but here too you will

:47:19.:47:21.

notice the breeze blowing through. But with these areas of rain coming

:47:22.:47:24.

along with the brisk

:47:25.:47:25.

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