10/03/2016 Newsnight


In-depth investigation and analysis of the stories behind the day's headlines with Kirsty Wark. Can Osborne balance the books? Plus Saudi arms sales and scientists for Brexit.

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European Central Bank pulls out all the stops to turn around the


Eurozone, how is Britain placed? If our economy falters, how


well-equipped is the Chancellor to meet his own debt targets? With the


UK budget due next week, we will be asking just how the economy is


bearing up. Becky Watts, the Bristol teenager, murdered by her own


stepbrother. Tonight, we speak to her father in the first interview


since his harrowing memoir. Do you still want him dead? If they were


going to hang him, I would pull the lever so no one else would have to


carry that guilt. The government is under increasing pressure over arms


sales to Saudi Arabia. British weapons being used to kill civilians


in Yemen and is the British government breaking the law? And the


60 year mystery of the missing France is broken -- Wickham nude


solved and seen for the first time on British television. Good evening.


The European Central Bank sent a clear signal today


that it is somewhat perturbed by the failure of the Eurozone


to deliver growth, and in an attempt to spark it, cut all three


of its interest rates, setting a lending rate to zero


interest, and droppping the deposit rate further into


The ECB also annouced a bond-buying spree,


All this is in turn likely to play into George Osborne's Budget


calculations next Wednesday with UK economic growth hardly


Here's our Policy Editor Chris Cook whose had his calculator out.


How much room is there in George Osborne's red box?


The bad news for the Chancellor is that economists


expect he's not going to have a lot of space for rabbits.


Indeed, today, the European Central Bank launched a massive


package of measures, because the European economy,


our trading doorstep, is in serious trouble.


The Chancellor himself issued some warnings,


The economy is smaller than we thought, in Britain.


We also know that global risks are growing and


Britain is not immune to those things.


George Osborne sought to trap the Labour Party by setting


The idea was to show up their profligacy


to contrast with his iron Chancellorship.


The slight problem is he may be caught in his own trap.


For example, the first of those fiscal rules stated that in each


year of this Parliament, the size of our national debt should


grow more slowly than the size of our economy.


Put another way, the national debt, measured as a share of GDP,


should fall in each year of this Parliament.


Now, looking at this graph of national debt as a share of GDP,


you can see how, as the financial crisis hit, our national


It shoots up, doubling from under 40%


Mr Osborne's plan is that in the years ahead, we will start


chiselling away at that, by having our economy


This man was a forecaster at the Office for Budget


He was a senior economist who worked out the Chancellor's room


for manoeuvre and he is still quite close to the spreadsheets.


The government is quite likely to miss its fiscal rules.


The reason is, it only ever had a very small margin, anyway.


What it needed was for debt to rise less


It looks like there is bad news on both fronts.


It looks like there is a little more borrowing and GDP growth to be quite


That small margin of falling in the debt ratio is looking


George Osborne's second fiscal rule state


that in the year 2019-2020, the state should take more in taxes


In short, it should run a fiscal surplus.


That is a surprisingly rare event in fiscal history.


His problem is, though, that the single-most important


determinate of whether he will make that target is economic growth.


That is something which isn't going his way.


Developments since the Autumn Statement probably moved slightly


The bad news has probably been slightly larger


That means he may be facing either a smaller surplus in 2019 Ball


That means he may be facing either a smaller surplus in 2019 or perhaps


having the package of measures in the budget that he would


Economic modellers would disagree on how far we can expect


economic activity to fall short to how far the Chancellor must move.


We are going into 2016 with what looks like


The good news for the Chancellor is that some of that will be made up


by lower interest rates with the Bank of England


That means the cost of borrowing is lower and the Government


It could roughly offset borrowing this year.


But looking ahead, things don't look quite so good.


The economy is likely to grow bit more


slowly, fewer tax receipts flowing around for the Chancellor to spend.


That could leave another ?5,000,000- ?10 billion black hole in the public


He may feel he needs to correct that.


It's important to also consider the shadow of the European


Remember, first of all, that the Chancellor would


like you to vote for the In Campaign and that he won't want you to be


irritated with him in the next few months.


That might make him less radical than he


Remember, also, that the Chancellor will have less


support from his backbenchers, half of whom would like him to lose


the European referendum, than he otherwise might.


Both of these things hint that he might be more timid


in this budget than he otherwise might be.


The Chancellor's fiscal mandate requires him to have a surplus


in 2019-2020, obviously we are only now in the budget of 2016.


There are another five fiscal statements between now


and when he has to achieve his surplus target.


It could be that bigger, more controversial decisions or more


significant tax increases or spending cuts get deferred


until after the referendum on membership of the EU.


In short, the Chancellor may well break a fiscal


rule this year, but he has crashed through targets before.


In the long term, though, that red box could get


What's the most important thing we can take away from it?


The thing to dwell on is just how big they went today, they didn't


just increase the size of their cue the programme. They attempt to get


liquidity cash into the banks, they did not just increase it in size but


scope. Did they move into buying corporate bonds? So that people who


are not helped in the traditional monetary transmission mechanism can


be helped another way. It is worth dwelling on the fact that they will


effectively be paying banks to lend out of money. They are ready pulling


all the levers they can find. This is a bank in Frankfurt, this is not


an institutionally rebellious place. That is how bad things are in


Europe, they are really worried about them in Munich continent.


Thank you. Joining me now from Paris


is Stephanie Flanders, JP Morgan Asset Management's chief


market strategist for Britain and Europe and here in the studio


Allister Heath deputy editor Good evening, we will talk of next


week's budget in a moment. Stephanie, what do you make of the


ECB move? Back to growth in Britain and America. Europe still in a slump


and ECB steadfast refusal to do anything over the last eight years.


It was behind the curve for quite a long time and ironically it is


ending up having to innovate and go further than either the UK or the US


had to do. Part of what happened today was they had to respond to


these people who had been saying in the markets in the last few months


that we ran out of things Central banks can do, we have seen the bank


of Japan cut interest rates into negative territory and that didn't


seem to have a positive effect on confidence. Can the ECB do anything


about the fact that inflation is heading lower in Europe and growth


is not very strong? They had to show they can do lots of different things


while also bringing in lots of technical ways that I won't get into


to avoid the downsides of those negative rates. Chris mentioned you


have an odd situation where they will pay banks to borrow from them.


It shows how weird and dysfunctional we have got in terms of central bank


policy. One of the other thing is responding to was the forecast


looking worse. They are not expecting inflation to be more than


0.1% at the end of this year. They will not get anywhere near their


targets. They had to act. They are reaching their limits of what the


central bank can do. If this is the limit, it has come pretty quickly


after having done pretty well nothing. Is monetary policy enough?


I do think so. I am worried about the fact that 80 years after the


start of the financial crisis, the great recession, central banks are


still having to do that, pump cash into the economy, cut interest rates


to zero. It is worrying. It is not just about central banks,


governments need to deregulate and kick-start the European economies. A


big structural change? They need to tear up the old European model which


still hasn't changed. Countries like Italy are stuck in this 15 year long


slump. Countries like France need to do much more than what they are


currently doing. We need far more deregulation and market-based


reforms and more incentives into the system from which we can create an


innovate. But not borrowing? No. The solution is not borrowing more.


Stephanie, what about government spending more on infrastructure?


Germany, for example, Germany holds onto its money tightly. Interesting


because you have some parts of the Eurozone probably don't have much


scope to borrow a lot more but if you took the Eurozone as a country


on average, you would say that fiscal policy was a bit tight given


how weak the economy is. It is partly a reflection of the


constraints on the Eurozone that they can't impose a kind of optimal


Eurozone fiscal policy. We can only look to individual countries. Marry


a drag it, the president of the European Central Bank signalled he


wanted more policies. Let's turn to the budget next week. It is almost a


phoney budget, have you ever imagined anything like it? It will


be incredibly weird. This is the kind of budget where chances ought


to be taking drastic action, making radical reform is not necessarily


popular. But in fact, I can't see the Chancellor doing any of that. He


is stuck because growth has slowed. I still think the UK economy is


growing, we are not in recession or about to tip into recession but we


are growing less quickly than he had hoped for. Fewer tax receipts, quite


a few problems in the years ahead. What does he have to do? Not much he


can sell, worries about fuel duty. Warriors from his backbenchers. He


is not going to reform pensions. I think that is good. He could pick up


taxes but that is dangerous -- put up taxes. That is dangerous right


now. He needs more growth. You don't get more growth by increasing taxes.


As Chris was pointing out, Stephanie, it is this obsession


about targets, getting rid of the deficit, making sure debt as a


percentage of GDP not falls over the long-term but every year, what is


the point of sticking to this? Particular target for having the


debt ratio fall over the next few years does seem, to a lot of people,


when it was announced, pretty arbitrary. Also, subject to pretty


big forecasting errors, which we may see next week. It also encourages


him to do fancy techniques just at the last minute that properly don't


make much economic sense just to meet that rule. It rather goes


against what he said when he introduced these things that he did


not want to go back to the Gordon Brown creative approach to fiscal


rules. He wanted to have simple things that could be easily measured


and understood. You feel like we may actually get quite a lot of fancy


engineering to make sure he means what is a bit of a silly and


arbitrary rule. I do think it is silly or arbitrary, the Chancellor


is right to want to balance the budget in a few years' time. He is


right for tighter fiscal policy but the problem is he has not gone far


enough and it is not working. The deficit will be too high and that


will be a problem because the Chancellor's legacy is meant to be


about fixing the public finances. He needs to do that, he needs to do


more. Thank you both very much indeed.


The murder of your child is unimaginable, but when that


murder is committed by your wife's son, whom you have helped to raise


and called your son, the layers of trauma are never ending.


In Bristol, on 19th February last year, 16-year-old Becky Watts


was killed and then subsequently dismembered by her 28-year-old


stepbrother Nathan Matthews, aided by his 21-year-old partner,


Becky's father Darren was, and still is married to Nathan's mother Anji.


They have been together for more than 15 years.


Nathan Matthews admitted manslaughter, but not murder,


has never apologised and, locked away


for 33 years, he has never fully explained


While Nathan and Shauna sat at Darren and Anji's house


with other relatives and friends, waiting for news of Becky,


she was, in fact, dead in the boot of his car, outside.


Now, Darren Galsworthy has written a book in which he writes


about the guilt he feels at not seeing the signs that


in his family unit, something was going badly wrong.


I spoke to him today in his first television interview


She had a wicked sense of humour. You and Anji were putting your


family together as many families are now?


It was quite strange how it came about, actually.


Regardless of how me and Becky's mother was getting on,


I would have them at least three nights a week, every week.


When things started to go a bit pear shaped...


How did your relationship with Nathan develop?


He didn't want anyone interfering with him and his mother.


The stage where you and Anji got together, Nathan was 12,


Becky was two, suddenly Anji wasn't all his?


How did he respond towards the other children?


Just went straight up into the bedroom.


When he was 19, he came to the house with girls and a car,


I thought it was one of his many pranks.


He had these young girls, they didn't look any more than 12.


I said, "what are you doing Nathan, I don't want them to get past


the gate, let alone get into the house.


Take them back to wherever you found them".


whether it is the parents or whatever.


Do you wish now that you had gone further with that?


Do you think, looking back on that, there were warning signals?


In hindsight, there was a lot of what


I have been beating myself up for over a year now.


What happened when she became anorexic?


It was a really difficult period for us.


Sometimes she could not even get up the stairs,


How was Nathan's attitude towards her anorexia?


When she said, to you I think, Dad, you would not be able to protect me


Yes, she did say I was an old fogey and I wouldn't be physically able


to stop him and all that sort of thing.


Do you think now she was trying to tell you something?


When Becky told you something, she told you something.


There was no second-guessing or anything like that.


If she told to something, you were told.


In 2008, when Nathan was 21, he brought


Shauna home, she was, I gather was only 15?


Yeah, he tried telling me she was 19.


I said, "I wasn't born yesterday, son.


I am not having someone like that in this house."


Don't forget, we fought hard to get our kids out of care.


We were not only fighting my ex, we were


It sounds like at that stage your relationship


with Nathan had become quite difficult?


He pushed me beyond what I considered to be a prank.


But he was in the house because his mother was Anji?


When it became clear that she was missing and people were coming to


your house, Nathan and Shauna were also in the house with you?


But when, I think it was the family liaison officer,


said to you there were questions, you were disbelieving, weren't you?


Nine times out of ten it is someone they know.


And now it turned out that Nathan and Shauna were in the house and in


Yes, 12 feet away from where I was sat, her body was in the back


And so they ordered a Chinese takeaway?


In the book you say that in court you heard the counsel say that two


years earlier Becky had told a friend that Nathan had described


in graphic detail how he planned to kill her.


Yes, that was the first we heard of it, in the court.


I think what I am struggling to understand is,


it would have been terrifying, because he apparently


told her several times in graphic detail...


Yeah, I didn't understand why she didn't come to us.


You and Anji are parents to both the murdered and the murderer.


Do you think ever of Nathan now as your son?


"People often ask me how I feel about Nathan after what he did.


Of course, I still love him, he is my son.


When you're a mother, you cannot ignore that unconditional


love for your children, no matter what they do."


How do you deal with Anji's continuing love for Nathan?


It is a bit of a sore subject for me.


I understand that unconditional love for an infant is fine,


but not when they have turned into a monster.


I just can't get my head around that.


If it was Danny who was the monster, I would have real problems showing


I would find that very difficult after something


I would, if they were going to hang him, I would pull the lever,


so no one else would have to carry that guilt.


Since Saudi Arabia entered the conflict in Yemen a year ago


with air strikes, there have been repeated calls for Britain


to stop selling weapons, including jets and precision bombs,


to the Saudis until allegations of war crimes


The UN estimates that some 2,800 civilians have been killed.


Newsnight has learned that lawyers for Campaign Against The Arms Trade


have now begun legal proceedings against


the Department for Business, Innovation and Skills.


Gabriel Gatehouse is here with the details.


Gabriel, you have followed this story and broken this story on many


occasions in different ways. What are they calling for? Lead a rate of


the government back in November about the sale of arms to Yemen.


They have now begun formal legal proceedings. They are seeking a


judicial review for the Department for Business, Innovation and Skills'


decision to license and export arms to Saudi Arabia. The UK arms


exporting criteria safe arms must not be exported if there is a clear


risk that the equipment might be used in violation of international


humanitarian law. The lawyers say there is a wealth of building up


evidence of that from UN panels of experts who talk about widespread


systematic attacks was Williams, schools, hospitals, other


organisations like Human Rights Watch, and our own reporting from a


bottling plant which was struck in Yemen last year. A judge will rule


on whether the UK is breaking its own laws essentially, and if it


decides that, the lawyers will ask for a prohibition order to prevent


them from selling weapons while the secretary of state reviews this. The


lawyers say the UK has failed to call for an investigation. That is


not quite true. This is what Philip Hammond said Newsnight in November.


The Saudis deny that there have been any breaches of international


Obviously, that denial alone is not enough.


We need to see proper investigations.


Now, Philip Hammond has not repeated that assertion in that way since.


The Saudis have since launched an investigation, but the critics will


say you cannot really investigate yourself on these matters. But


Parliament is acting now? Yes, another thing that is happening, the


Commons committee on arms export control has launched an enquiry into


the use of British arms in Yemen. They will be asking for submissions


from all sides. They will be getting the kinds of arguments that we have


heard, that we see the lawyers talking about,


Human Rights Watch etc. They will also be hearing from the other side,


the fact that Saudi Arabia is considered an integral part of


security policy, and of course, arms sales to Saudi Arabia. Saudi Arabia


is Britain's biggest customer for arms sales, ?2.8 billion in sales


since the war in Yemen began. The fact is those sales are


significantly up since that happened. What is the government


saying now? The government says it will not comment on ongoing legal


action. It says it supports the work of the committee, it has one of the


most robust arms-control regimes in the world. The government is


satisfied that existing licences for Saudi Arabia are compliant with the


UK licensing criteria. We will see a judge rule on it now. Thank you.


When the arguments for remaining or leaving the EU are laid out over


the coming weeks who will you trust?


Today, Stephen Hawking led 150 Royal Society scientists


In a letter to the Times they argued that leaving could be a disaster


for science, pointing to the recruitment of researchers


We are, the scientists said, "a net receiver of brains,"


and they went on, "We take more than ?2 billion more


in research funds than we give to other EU members."


But that claim was disputed by the grouping


Scientists For Britain who insist we put far more in than we take out.


Joining me now is Angus Dalgleish, professor of Oncology


at St George's Hospital in London, and Khuloud Al-Jamal,


Associate Professor of Nanomedicine at King's College London.


Angus Dalgleish brings Britain is better out of the EU and Khuloud


Al-Jamal things Britain is better remaining in the EU. First of all,


Professor Dalglish, scientists within the EU greatly increase the


level of EU science as a whole, isn't that true? I cannot do is


agree with that, they probably do bet you do not need to be in the


European Union for that to be the case. What has been suggested is


scientists have always been involved in international cooperation, Seo


membership of the EU per se is not what drives International


cooperation? I think it enriches it in a way, because we have reached a


state where we have science without Borders, we can send our students


over there, we can receive students and this is something which cannot


always be counted financially. The amount of intellectual input we have


into science cannot be substituted or the same if we are out of the EU.


If it was a case of leave, not remain, those borders would be back


up again? Identical we with that at all. The first thing I would like to


say is leading the EU is not about leaving science. It has been


misconstrued by the scientists thinking the EU is just a vehicle


for science and funding. It is a political union organisation, and it


is over and above that, and we do not need to be in that political


organisation in order to do science. I would just like to challenge the


fact that has been bandied about and was repeated by the scientists in


the letter, that we get slightly more back than we put in. I am not


going to dispute that, and that is an competitive grants, absolutely.


It's convenient lever gets there is an infrastructure fund where we only


get 2 billion back out of 54 billion. If you add it up we put far


more in than we out. I wonder if you would agree that because of our


close relationship with the EU, sometimes it would be perhaps easier


to seek an alliance with scientists there, because of the rules which


govern and funding, rather than take a risk of going further which might


deliver slightly better outcomes or maybe not, but we tend to stay


within the boundary because it is easier?


There has been a 50% increase in what we produce if we do research on


an EU level compared with locally. The amount of impact we get is much


higher. We would like to strive as being outstanding, not only within


the EU level, but globally. We may lose this if we are out of the EU


because there might not be the same interest as now of people coming to


the EU. That has to be part of the scaremongering, if we leave the EU


it will be a disaster and funding will disappear. It is our own


funding to start off with. If we left the EU, we should be


responsible for our own funding. We are one of the largest trading block


in the wild and we have a lead science for years. What about


trialling? -- in the world. Does the EU help trialling? Different rules


in and out of the EU. Clinical trials? I became a victim of the


clinical trial directive. I would have been going on oblivious, like a


lot of other people to the European Union if it hadn't stopped and


interfered with my treatment of making bespoke vaccines for my


patients. I was suddenly told that when the European directive came in


I would be breaking it and I would no longer be allowed to do it. I had


become a criminal over night for doing what I was doing. What was it


you were doing? I was making vaccines, taking blood from


patients' arms, putting the blood, but in it in a machine and getting


the presenting cells and making a vaccine of the patients blood and


injecting it back in. They determined that the laboratories we


were doing it in no longer met Hague pharmaceutical conditions. -- no


longer met big. We were stopped. It was utterly ridiculous. A big rule


for big pharmacological companies. Do you think there could be


reformed? This is one view of one particular type of research. If we


are looking at the different research, we are looking at


attracting top scientists. I was suggesting perhaps that he is a top


scientist and he was restricted in what he was doing. As a supporter of


the EU, can you see there needs to be change? There can be some


discussions about the regulation and why this has been banded. The


solution is not coming out of the EU but may be looking at other ways of


solving the problem. Thank you. Cash in the Attic,


going, going, gone. It's the reason Antiques Roadshow


fans queue to have their heirlooms valued, the off-chance that they've


had a fortune under their noses, Something similar could be


about to happen in the rarefied world of fine art, as a pair


of works by a little-known Irish painter,


Tony O'Malley, go on sale They could fetch a respectable


five-figure sum, but hidden in their frames is another,


unseen work, by one of the 20th century's greatest artists,


who set a world record Stephen Smith unravels


the 60-year-old mystery of a missing As the art historian Rod Stewart


said, every picture tells a story. But sometimes second, secret story.


Take these two rather fine paintings by the late Irish Tony O'Malley on


sale for up to ?30,000, the pair, at Christies in London. What if a


reckless late night news show was to have them taken to a private room


and taken from their frames like a pair of oysters? What Dolly lustrous


pearl might we find, concealed? Very excited. Such a fascinating story,


really. He is such an extraordinary artist. He was an extraordinary man.


And here it is. On second thoughts, we mustn't get ahead of ourselves.


We need to make a flying visit to post-war London, the seedy Soho of


afternoon drinking dens and Francis Bacon, one of our greatest artists.


He liked to paint on the onside of a canvas, the primed side. -- wrong


side. His trip, Lucien Freud became the most expensive study at auction


when it went for ?90 million. At one point in his career at Cornwall,


Bacon fell out with a partner and went off in a strop, abandoning a


work in progress. As you were. Seen here for the first time is that


picture. Figure. Unfinished nude by Francis Bacon. Bacon left Saint I've


is in a bit of a hurry, he left the board behind -- Saint Ides.


He was renting a studio from the sculptor William Redgrave and his


wife. It was his wife who gave Omar Ali a large board to paint on. He


cut it in half. -- Tony O'Malley. These two separate boards are more


consistent with the dimensions he would work on. Does it make your


innards shrivel slightly to see this handwriting across a Bacon? Given


what he goes for, now? It adds to the story. It is such an interesting


story. The Tom Ali on the front is just as much part of the intrigue as


the Bacon on the back. The owner of the bottom half got in touch with


the owner of the top half. This is the first time these two works would


have ever been shown to the public. One of Bacon's friends and drinking


buddies was Michael Pappy at who met him as a young man in Soho. He later


became his biographer. It is a very strange sketch. But, I suppose, it


might be a portrait of the man he was living with at that time. I see


it almost like a sort of carnival figure. Like a Venice Carnival when


they had those sort of masks with the big noses. If you and I were to


go through the bins at the French house and turn up all of the old


beer mats, would we find Bacon Bru on the back? He avoided doing little


doodles. He restricted what he let out. He only wanted to let out the


pictures he really approved of. And the sketches he would have destroyed


but he was also careless. It is on record that he went and bought


something for a considerable amount of money at auction in order to


destroy it, one of his own works. He was a ruthless self editor. The


newly revealed canvas isn't being billed as a Bacon but offered as the


two Tom O'Malley's on the other side. Why? As an unfinished work it


is very hard to know what people would be willing to spend on it. If


someone was interested in the Bacon on the reverse, who knows what


people would pay for that? That is the joy of auction, we will find out


on the day. Are there still Bacons hidden somewhere? Are there still


traces of this extraordinary artist that have yet to surface? Good point


to leave it on. Verse that spans 12 centuries


is included in a new anthology of Poems That Make Grown Women Cry,


a companion volume to Amnesty International's best selling


Poems That Make Grown Men Cry. We leave you with Vanessa Redgrave


reading from her choice, Wildred Owen's poem


"Strange Meeting". It seemed that out of battle


I escaped Down some profound dull


tunnel long since scooped Through granites which


titanic wars had groined. Yet all so there encumbered sleepers


groaned, Too fast in thought


or death to be bestirred. Then as I probed them,


one sprang up, and stared, With piteous recognition


in fixed eyes, Lifting distressed


hands, as if to bless. And by his smile,


I knew that sullen hall. By his dead smile,


I knew we stood in Hell. "I am the enemy you


killed, my friend. I knew you in this dark:


for sol you frowned I knew you in this dark:


for so you frowned Yesterday through me


as you jabbed and killed. I parried; but my hands


were loath and cold.


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