10/03/2016 Newsnight

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.