12/07/2012 Newsnight


12/07/2012

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


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The first London Olympic fiasco. With a fortnight to the games, a

:00:15.:00:20.

private security firm confesses they can't cope. G4S has let the

:00:20.:00:26.

country down, and we have literally had to send in the troops. We will

:00:26.:00:31.

ask the expert what has gone wrong, and we will reveal that the company

:00:31.:00:34.

in question has struggled to manage sporting events in the past.

:00:34.:00:38.

have asked for a living wage in the public sector. As you know, I think

:00:38.:00:42.

this is a good and attractive idea. Good intentions in opposition, but

:00:42.:00:48.

now he's in power, we will discuss his dirty laundry in public, as the

:00:48.:00:51.

people who clean up after ministers are still asking for a living wage.

:00:51.:00:55.

Please, I need a help from them, I need more money from them. Do you

:00:55.:00:58.

think they can afford it? Why not, yes.

:00:58.:01:03.

And have a century after one of the most dramatic nights in British

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politics, Michael Cockerell considers the parallels for the

:01:05.:01:10.

Prime Minister, and the pasty tax. The older people get their pleasure,

:01:10.:01:14.

and I think we should get our pleasures. Do you reckon you are

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being got at? Yes. What about you, ice-cream a half penury more?

:01:20.:01:30.
:01:30.:01:34.

think it is a dire bloody liberty. It can be disconcerting when you

:01:34.:01:38.

see someone you don't expect. A word of warning, if you are lucky

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enough to have a ticket for the Olympics, you might have your bag

:01:44.:01:49.

search, or your Pepsi confis fated, not by a security guard but a

:01:49.:01:53.

battle scarred squaddy. For the feel Olympic organisers and the

:01:54.:02:01.

Home Office that is not all good, then.

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It's supposed to be the nation's great global games, but it is being

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protected by a private security firm now accused of letting Britain

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down. And Newsnight has found that G4S has a track record of being

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accused of falling short at show piece events. This morning's papers

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were full of what was termed the farce of needing the army to bail

:02:23.:02:28.

out the Olympics. In the Commons, Labour used their now familiar line

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for Government failure. This really look like another huge Home Office

:02:34.:02:37.

shambles. On Monday, the Home Secretary was asked specifically

:02:37.:02:42.

about recruitment at G4S, and she said that the Home Office had put

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in place a number of assurance processes to insure there is robust

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security planning, we have been testing our plans authorisely and

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are confident that our partners will -- thoroughly, and and are

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confident in our partners, so confident two days later they

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called in the troops. Theresa May said it was no shambles, but

:03:08.:03:14.

acknowledged that the troubles from G4S had only just emerged.

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received assurances from G4S until recently the gap in the numbers was

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only crystalised yesterday. We have, as I said in my statement,

:03:22.:03:25.

monitoring, taking place throughout the process of this contract, and

:03:25.:03:29.

we have, obviously, been testing and challenging the assurances that

:03:29.:03:34.

we have been receiving from G4S. week after chopping a great lump

:03:34.:03:37.

off the military, the Government calls on a great chunk of the

:03:37.:03:42.

military to save the day. One former army officer, now chairman

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of an all-party security committee, told us, it had been obvious for

:03:47.:03:51.

week, G4S wasn't up to the job. What I was concerned about was

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there were a large number of people, there was a raw material, if that

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is the right word to use, who were qualified to do the work, plane of

:03:59.:04:02.

whom were already vetted, but -- many of whom were already vetted,

:04:02.:04:05.

but the money offered was not enough to bring them forward in

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numbers. First point. Secondly, there seemed to be overweaning

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bureaucracy from the company to get the people signed up. So what you

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are saying, from what we have heard, is G4S have bitten off more than

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they can chew? I think they have got ambition mixed up with ability.

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All day we have heard from people who bear that out. This man was

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interviewed six months ago and been on a week's security course, but

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still, no word. I'm sitting here, ready to go, ready to be a security

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guard, and they are saying they don't have enough staff. They

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haven't got the accreditation, I have asked them again and again,

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please can I have a job, just get me the piece of patcher work and I

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can do it, I'm -- paperwork, and I can do it. I'm ready to go. This is

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an embarrassment for a company that bills itself as the world's largest

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security firm. This is not the first time G4S has been ayes cuesed

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of serious shortcomings around big sporting events. There was last

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year's Wimbledon. Security is usually guaranteed by the low-key

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presence of military personnel. But the entrance in and out of

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Wimbledon is handled by G4S. It is this that gave rise to serious

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criticism and an internal investigation by G4S after last

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year's tournament. G4S confirmed the complaints had been included in

:05:29.:05:39.
:05:39.:05:45.

So the military already heavily involved in bolstering security,

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are now effectively shoring up the whole operation. Patrick Mercer

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says it is a bitter pill. I have to say, that if you want a force,

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where when you snap your fingers that it jumps to it and does the

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job properly and capably, then you have to have enough men inside the

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force to do it. My old regiment, for instance, has just been told

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that they wopbtd be getting their - - won't be getting their post-

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Afghanistan leave, and most men are coming to do Olympic security with

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their P45 in their back pockets, because a battalion from that

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regiment will be cut. That isn't good for morale. Two weeks from

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tomorrow the games begin, there is great stress that security won't be

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compromised. The chairman and chief executive of G4S, with hundreds of

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millions of Government contracts, will be summoned to the Commons

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next week to explain what has gone wrong.

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We asked to speak to G4S, to LOCOG, to the Home Office and the Ministry

:06:49.:06:53.

of Defence about the last-minute changes, no-one of made available.

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We asked if they could send a soldier, and they hung up! Let's

:06:58.:07:08.
:07:08.:07:08.

ask for Tessa Jowell, Lord Carlyle, the former head of the army, we

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hope soon will join us. Is there not an argument for saying, there

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may have been a problem, it has been sorted, let's get on with the

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games? We should say that, and we enjoy the games. The fact it has

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been sorted is no thanks to G4S, or robust contractual arrangements.

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All the work that people like Dame Tessa have done to prepare what

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will be a wonderful Olympic Games, are beginning to be affected by

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this kind of criticism. I hope those who are guilty of the

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failings will be called to account. This morning I heard on Radio 4

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countless e-mails being read out, from people who are actually

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employed by G4S, who are not being told where to go, or what to do.

:07:54.:08:00.

That is totally unacceptable. Thank heavens for the British services.

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Tessa Jowell, would you buy a used car from G4S? They certainly

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haven't emergeded from this well. I think that what happened --

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emergeded from this well. What happened is they went into a sort

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of denial, not admitting to the scale of difficulty they were

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having. In the scheduling of the people that they were recruiting,

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hence these no-shows at a number of the venues. Have you heard whispers,

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is it behind the scenes chatter? But I do think that, you know, all

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these e-mails, and I think we have all been getting them today, from

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people who have signed up to be considered as volunteers with G4S,

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they should all be looked at. And in a way, what is needed now is a

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very quick audit of G4S's performance and capability. I

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absolutely agree with Lord Carlyle that the right thing is to bring

:09:00.:09:04.

the army in, the soldiers in. I was out at the Olympic Park today. They

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were being deployed around the place. Conducting themselves in a

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very dignified and effective manner. I am not concerned that the games

:09:13.:09:18.

won't be safe and secure. I think that we will get to that at the

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opening ceremony, in two weeks time, by a route that we wouldn't have

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wished. With this hiatus with G4S. This audit you are talking about,

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what form should that take, how quickly should it happen and to

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what end? At this stage it has to be very speedy. I think it is worth

:09:38.:09:42.

getting a measure of the degree to which these claims about the poor

:09:42.:09:47.

performance of G4S, by people who have been writing into media

:09:47.:09:51.

outlets, and Members of Parliament and so forth, are tested against

:09:51.:09:56.

the G4S systems. That can be done quickly now. But obviously, there

:09:56.:10:01.

has to be a proper postmortem. I think that will have to be after

:10:01.:10:05.

the games. My main concern now is that the solution is put in place.

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I think the Government have come forward with that proposaled today.

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We support that, and I think that puts -- proposal today, we support

:10:14.:10:17.

that and I think that puts an end to it.

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It seems yesterday and today a lot of people involved in the periphery,

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the underlings works for G4S knew about the problems. The people

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organising the games and the Home Office had no idea? Yes, of course

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it is a matter of concern the fact that the company have been called

:10:36.:10:40.

to a Select Committee next week will begin to provide answers to

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those questions. At this point, at an Olympic Games, it is the most

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complex and demanding logistical exercise in peacetime. And the

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focus has to be knitting together, every single part of that complex

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operation. That is why the Government's decision today is

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right. I think we do need to know from LOCOG why they put so many

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eggs in one basket. G4S are far from the only large security firm

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in this country, there is a real question about the tendering

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arrangements that were followed here. I hope the public are not

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going to be made to pay for these mistakes. General Lord Dannett can

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join us, could this have happened if the army was organising the

:11:25.:11:28.

games from the start? That is a very broad question. It is worth

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going back, if you have a moment to 2005, when London was first awarded

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the games. I was the Commander-in- Chief, the land commander at the

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time, we asked very politely of the Government what our role would be

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in the games. We were told pretty unequivocally this would be a

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civilian-run games and the military involvement would be pretty small.

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As I have heard a comment made, about the biggest logistical demand

:11:53.:11:57.

placed on a nation for a very long time. We have some experience in

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doing that. So, it is unhelpful, Dame Tess was right to say let's

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leave it until after the games to have a bit of an inquiry. The

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important thing is to make sure we have a safe and successful games to

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celebrate and be part of. The Armed Forces are hugely committed to it,

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now 3,000 more are committeded, so be it. A bit disa-- are committed,

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so be it. A bit disappointing for those who thought they were on

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holiday, never mind, they will get on with it, we will make the games

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very good. There are issues. I think the size of the task was

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understatemented, and maybe it could have been -- underestimated,

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and maybe it could have been done differently. That is for after the

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games. Let's put our backs into the game, and the soldiers and airmen

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will do that. We are looking forward to it. Who do you blame for

:12:54.:13:00.

this problem? I'm not in the blame game F I'm absolutely honest, look

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-- if I'm absolutely honest, looks at the games in Canada and

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Australia, the games have always relied heavily on the military. It

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would have been fairly obvious this would have come about at some stage.

:13:12.:13:15.

It probably would have been better if it had come about sooner rather

:13:15.:13:21.

than later. I can fully understand the desire to make these friendly

:13:21.:13:26.

games, civilian-led games, with a soft face on it. 2005 was well

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before the crash of 2008, all before a lot of things that have

:13:30.:13:34.

happened. But, we are where we are now. And all I would say is, given

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that we have got large number of soldiers, sailors and marines

:13:38.:13:42.

involved in the games, I'm going to go as a punt Tory one evening in

:13:42.:13:48.

the Olympic Park, as I'm -- punter to one evening in the park, as I'm

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sure many people will be. When you see the soldier, airmen and marines

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checking your bags, remember some of them could have been on leave,

:13:55.:13:59.

say thank you to them for contributing to make this thing a

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great success, which it will be. Thank you for dressing so smartly

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for the programme and thank you. Tessa Jowell, it is not just this,

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I hate to be gloomy here, and it is important to look ahead

:14:11.:14:15.

optimistically to the games, but we have problems on the M4, one of the

:14:15.:14:19.

main routes that athletes will be taking into London. That won't

:14:19.:14:24.

reopen until Monday at the earliest. Reuben to go get thely bee geebies

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about this? If you are involved with a project of this scale of

:14:30.:14:37.

complexties you have that every day, you hope by having the heebeeje,

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bies, and living in a state of preoccupied concern about it, you

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get things right. The most important thing is to stay on top

:14:45.:14:51.

of the detail. We are way beyond broad-brush ambition. What I hope

:14:51.:14:56.

is in Downing Street there are regular meetings, pulling together

:14:56.:15:00.

the contribution of the 19 Government departments, that those

:15:00.:15:04.

meetings are held regularly and with discipline. Could be bra

:15:04.:15:08.

should be meeting now -- Cobra should be meet now. In order to

:15:08.:15:14.

address these kinds of issues, when they arise, to foresee those that

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may emerge over the next few day. I guarantee there will be more

:15:19.:15:26.

problems. Thank you very much. Think of it as Mrs Overall meets

:15:26.:15:29.

Yes Minister. Last night across Whitehall, those two worlds

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collided, in a most discreet way, that Sir Humphrey might approve of.

:15:33.:15:37.

The people who clean for nine secretaries of state, clean the

:15:37.:15:40.

ministerial desks, as usual, and then left behind a letter, asking

:15:40.:15:47.

for more pay. When the Government's maxim is make work pay, are the

:15:47.:15:51.

salaries of these night shift workers too low to make it so.

:15:51.:16:01.
:16:01.:16:03.

Allegra Stratton investigates. It's a brave employee who asks

:16:03.:16:06.

someone for a pay rise. It is even braver when that someone is a

:16:06.:16:10.

Secretary of State. On Wednesday, across the sprawling

:16:10.:16:14.

complex of Whitehall, the people who clean for nine secretaries of

:16:14.:16:19.

state spruced up their ministers' desks and left behind a letter. A

:16:19.:16:24.

letter asking for something called the living wage. At �8.30 it

:16:24.:16:27.

recognises that life in London is dear. The politicians are not

:16:27.:16:32.

obliged to pay this, but increasingly employers are doing it,

:16:32.:16:36.

KPMG, aviva, the Mayor of London, and Whitehall's neighbour,

:16:36.:16:46.
:16:46.:16:47.

parliament. Irene is about to deposit a letter, this time on the

:16:47.:16:50.

Chancellor's desk. He will get it tomorrow morning, definitely.

:16:50.:16:54.

are confident? Yes. How are you feeling about this? So good.

:16:54.:16:58.

has been talked through it by the campaigner she works with from

:16:58.:17:02.

London Citizens. It talks about some of the pressures you are under

:17:02.:17:08.

in your job, how you were supposed to get a bonus, but if you turn up

:17:08.:17:13.

late they cut it off. Irene is talking there about the wage paid

:17:13.:17:17.

by her boss, the Treasury's cleaning contractor, they believe

:17:17.:17:26.

it is generous, �7.80 an hour, pumped up to �8.30 with an

:17:26.:17:29.

attendance allowance. She doesn't agree with that. Irene looks after

:17:29.:17:37.

her mother, has five kids and nine grandchildren, she does two shifts,

:17:37.:17:43.

one in Guy's Hosptial starting at 7.00 and another at night in

:17:43.:17:49.

parliament. Letter in hand, she's heading into work. This Portuguese

:17:49.:17:53.

ainggol lan father of two, has just handed in his letter, and is

:17:53.:17:59.

heading home to his ten-year-old. I'm doing everything cleaning-wise,

:17:59.:18:09.
:18:09.:18:10.

carpets, rubbish, dusting. Everything enside. It is not fair

:18:10.:18:16.

to pay me �6.95, because I work so hard. He begins his day at 5.00am

:18:16.:18:21.

in the Cabinet Office, where he cleans the Deputy Prime Minister's

:18:21.:18:26.

rooms and also another minister's, that of Reggie Maudling. He then

:18:26.:18:31.

turns in an extra -- Francis Maude, he puts in an extra shift at the

:18:31.:18:34.

weekend in Downing Street, he's paid less than the national minimum

:18:34.:18:38.

wage. It is dusk on Wednesday, and over the last 24 hours letters have

:18:38.:18:42.

been placed on the decks of secretaries of state across

:18:42.:18:46.

Whitehall, -- desks of secretaries of state, across Whitehall. The

:18:46.:18:51.

Government's key welfare reform is being in work will play, now those

:18:51.:18:55.

who -- pay, now those cleaning for the secretaries of state say it

:18:55.:19:00.

does pay, but not enough. Irene confirms the deed is done. You put

:19:00.:19:05.

the letter in? Yes I did. Did you get any grief? No. It is sitting

:19:05.:19:10.

there, ready for him in the morning. Yes. What did your friend or

:19:10.:19:14.

colleagues say? They are cool, everybody is happy.

:19:14.:19:21.

It might seem part of a campaign hopelessly out of place in an page

:19:21.:19:25.

of austerity, Irene and seven fellow letter leavers and countless

:19:25.:19:28.

other cleaners, among the six million people on salaries less

:19:28.:19:31.

than the minimum wage, believe they are pushing at an open-door.

:19:31.:19:35.

have asked for a living wage in the public sector. As you know, I think

:19:35.:19:40.

this is a good and attractive idea. Government, afterall, is the

:19:40.:19:45.

biggest employer in the country, where it leads others will follow,

:19:45.:19:49.

and fairness could begin to be hard wired into the pay scales up and

:19:49.:19:54.

down the country. It was Boris Johnson who implemented the living

:19:54.:19:57.

wage, throughout the Greater London Authority. That was David Cameron

:19:57.:20:02.

during the 2010 general election. Since, Whitehall has made little

:20:02.:20:06.

progress. Irene's department, the Treasury, has made the most stren

:20:06.:20:09.

strenuous attempt, though she doesn't believe -- strenuous

:20:09.:20:12.

attempt, though she doesn't believe it is enough. In April this year,

:20:13.:20:18.

64 cleaners put a letter on the desk of the Work and Pensions

:20:18.:20:25.

Secretary, over an hourly rate 3p over the minimum. Afterwards he

:20:25.:20:35.
:20:35.:20:44.

told others that he was sympathetic, Despite Duncan Smith's recent

:20:44.:20:48.

commitment the Government would find a solution, a Government

:20:48.:20:58.
:20:58.:21:15.

find a solution, a Government With all letters deposited,

:21:15.:21:18.

campaigners assembled to hand out flyers to civil servants, they

:21:18.:21:22.

gathered in the building, where before the 2010 election, David

:21:22.:21:26.

Cameron raised the question of a -- the prospect of a living wage. Two

:21:26.:21:31.

years later it remain as tussle that pits Boris Johnson and Duncan

:21:31.:21:37.

Smith against others in the party. In the meantime it is cheek by jowl

:21:37.:21:41.

with the policy makers, the cleaners at the corridors of power.

:21:41.:21:51.
:21:51.:21:51.

Let's talk more about the living wage with our guests now.

:21:51.:21:56.

What would you say to Irene and others in that report who want a

:21:56.:22:00.

living wage? Everybody wants a living wage. Clearly, and I'm all

:22:00.:22:05.

in favour of employees going to their employers and asking for

:22:05.:22:08.

higher salaries. Turning you were and saying I think I'm more

:22:08.:22:12.

productive than you're paying me for, put my salary up. Of course

:22:12.:22:16.

that should apply between cleaning staff and skaegts, it applies right

:22:16.:22:21.

across the economy. I don't find -- skaegts, it applies right across

:22:21.:22:29.

the economy. I don't find the herp "living wage" helpful. You would

:22:29.:22:33.

earn more than the living wage? in the top 5% of earners, much more

:22:33.:22:38.

than the living wage. Let as say my wife was earning �5,000 a year,

:22:38.:22:42.

that would be technically below the living wage, but added to my income.

:22:42.:22:47.

There are horses for courses. Bringing up a family on a cleaner's

:22:47.:22:51.

wage, that is very difficult. If it is an add-on to partner earning a

:22:51.:22:55.

decent sum of money, it less important that is a living wage.

:22:55.:22:59.

you have a cleaning job and no family, and visa versa? I wouldn't

:22:59.:23:03.

say that. That is what you mean? That is absolutely not what I mean.

:23:03.:23:06.

I think people need to make their own decisions with their own

:23:06.:23:09.

finances. I think it is perfectly reasonable for cleaning staff and

:23:09.:23:14.

all other staff in the country to lobby their employers for higher

:23:15.:23:20.

increases. My slight concern is here that we seem to have taxpayer-

:23:20.:23:26.

funded campaign, looking at take pair funded cleaning staff, talking

:23:26.:23:29.

to taxpayer funded politicians about their overall salary. No

:23:29.:23:33.

wonder as a taxpayer I face a higher tax bill. What do you say to

:23:34.:23:38.

the argument that which heard put forward in the statement in the

:23:38.:23:43.

report, that a living wage could take people out of work? Before I

:23:43.:23:47.

start, can I just pay tribute to the hard working cleaners who

:23:47.:23:51.

appeared in that video. These are mums and dad who is have two and

:23:51.:23:56.

sometimes three jobs. The step they took to leave the letters on the

:23:56.:24:00.

desks today, these are voices not always heard. They are out for a

:24:00.:24:04.

living wage, and I believe their struggle is possible. In response

:24:04.:24:08.

to the comment from the Cabinet Office, we are not arguing for a

:24:08.:24:10.

change to the statutory minimum wage. We are arguing that employers

:24:10.:24:16.

who want to do the right thing, like the mayor, Aviva and KPMG, can

:24:16.:24:19.

do better than the minimum, and make sure people don't have to work

:24:19.:24:23.

two and three jobs and can look after their families. What about

:24:23.:24:28.

employers who cannot can I Ford the living wage? Our plan is not, that

:24:28.:24:32.

we are approaching the Government. Oh Government can afford it? They

:24:32.:24:36.

can for two reasons, it is a comparatively smaller budget, there

:24:36.:24:40.

are 2,000 cleaners white happen. But moving to the living wage saves

:24:40.:24:43.

money on tax-payers for tax credits, when the private sector companies

:24:43.:24:46.

move to the living wage, they are taking some of the responsibility

:24:46.:24:50.

for low pay away from the taxpayer, and moving the burden back on to

:24:50.:24:53.

the employer. We are saving in the long run?

:24:53.:24:57.

are not saving money in the long run. My concern here sfpbt so much

:24:57.:25:02.

for the people in the work force. - - isn't so much for those people in

:25:02.:25:06.

the work force. There are those just scratching a living. My

:25:06.:25:11.

concern is for b the people who can't enter -- those people who

:25:11.:25:14.

can't enter the work force, they are priced out of the market. That

:25:14.:25:21.

is my concern. If we are going to have a situation where cleaners in

:25:21.:25:26.

Whitehall are paid �8 plus an hour, at the expense of the tax-payers,

:25:26.:25:30.

when private businesses, like the one I run, could afford nowhere

:25:30.:25:33.

near that. I'm afraid we are pricing people out of the labour

:25:33.:25:36.

market. That is why we have a million people unemployed in it

:25:36.:25:40.

country. We are not getting them the first step on the ladder.

:25:40.:25:47.

are not forcing any business to pay the minimum wage. It is a voluntary

:25:47.:25:51.

idea. David Cameron says it is an idea whose time has come and Boris

:25:51.:25:58.

Johnson is putting it across the capital. These are massive

:25:58.:26:01.

companies. If David Cameron in that clip said, where the Government

:26:01.:26:05.

lead, others will follow. If the Government lead and pay the living

:26:05.:26:09.

wage, more private sector employ ys will go to living wage, and the

:26:09.:26:13.

taxpayer would save money and Kleiners more in their pockets.

:26:13.:26:18.

would -- Cleaners more in their pockets. You would do away with the

:26:18.:26:22.

minimum wage wouldn't you, how low is too low? It is difficult to say.

:26:22.:26:26.

Difficult for embarrassing? last people I want to judge are

:26:26.:26:30.

politician, they almost certainly get thisth wrong, they set the

:26:30.:26:33.

minimum wage. If an employer wants to pay �1 an hour and somebody

:26:33.:26:37.

wants to work for that, is that all right? Yes, people do voluntary

:26:37.:26:43.

work, is that all right? A lot of people work in Oxfam shops for zero

:26:43.:26:49.

pounds an hour, are we banning that. Is voluntary work OK? At the

:26:49.:26:52.

present rate you are crowding out small businesses from taking the

:26:52.:26:59.

lead. The Met Office is wary of forecasting more than a fortnight

:26:59.:27:04.

ahead, astrologers might predict a year with some degree of certainty.

:27:04.:27:07.

You have to admire the people at the Office for Budget

:27:07.:27:09.

Responsibility, who stepped forward today with figures for the state of

:27:09.:27:15.

the British economy, 50 years from now. You will find in their report

:27:15.:27:21.

the predicted budget deficit for 2051, 52, will they ever be

:27:21.:27:31.
:27:31.:27:34.

realised. What lies just grond beyond visible. One of the jobs of

:27:34.:27:40.

the -- beyond visible, one of the jobs of the office for budget

:27:40.:27:46.

responsibility is to keep a look out for long-term trends.

:27:46.:27:50.

Troiing to gaze far into the distant future -- trying to gaze

:27:50.:27:54.

into the far distant future is always difficult, just ask the Met

:27:54.:27:58.

Office. The OBR have a difficult job, they can only factor in known

:27:58.:28:02.

unknowns, everything else, well it is not in the model. Even so, there

:28:02.:28:08.

is plenty there to worry us. For a start, the population is

:28:08.:28:14.

ageing. Over 65s currently make up 17% of the population. In 50 years

:28:14.:28:19.

time they will be 26%. That means health spending, state pension

:28:19.:28:26.

costs, and social care costs are all heading north.

:28:26.:28:36.
:28:36.:28:40.

These figures show that the reform that is we made, the very

:28:40.:28:44.

controversial reforms we made to public service pension, are not

:28:44.:28:47.

just delivering continued good quality pension force public sector

:28:47.:28:51.

workers, but benefit to the taxpayer, reducing the cost to the

:28:51.:28:56.

taxpayer by 40% over the next few years, that is worth �440 billion

:28:56.:29:03.

worth of savings over the 50 years. These predictions are far beyond

:29:03.:29:07.

the event horizon of normal politics. But Labour says it is

:29:07.:29:11.

never too soon to get on the right track. People look at the

:29:11.:29:14.

statistics and say in this financial quarter, does it matter

:29:14.:29:19.

that you have shrunk an economy by 0.4%, but cumulatively, if those

:29:19.:29:24.

add up, and we end up with the double-dip recession going on for a

:29:25.:29:28.

long period. That is a serious hit to the capacity as a economy to

:29:28.:29:32.

afford those decent services. The Chancellor has to wake up and

:29:32.:29:36.

realise, unless he does something now about jobs and growth, we will

:29:36.:29:38.

lose out as a society as a whole in the long-term.

:29:38.:29:43.

The other side of the balance sheet is pretty worrying too in as much

:29:43.:29:45.

as you can get worried about something that may or may not

:29:46.:29:50.

happen in half a century's time. Not only is spending set to rise,

:29:50.:29:56.

the OBR predicts that tax revenues will slide. For a start, transport

:29:56.:30:01.

taxes will fall, as cars become more fuel efficient. And North Sea

:30:01.:30:08.

oil revenues will dwindle. Total revenues will be down 2% by 2061.

:30:08.:30:15.

That loaves a fiscal gap of �66 billion. Does that mean more cuts

:30:15.:30:25.

even now? No, the report should not be taken to apply to the

:30:25.:30:27.

substantial fiscal consolidation in the pipeline should be made bigger.

:30:27.:30:31.

The question for the politicians is where should that money come from,

:30:31.:30:35.

over the long-term? If you look back over the last 50 years or so,

:30:35.:30:38.

what you see is some of the at the same time things you might see

:30:38.:30:42.

again over 50 years. The cost of health has risen a great deal.

:30:42.:30:46.

Interesting to look at what has paid for that? We have cut spending

:30:46.:30:52.

on defence very dramatically. We have cut spending on housing

:30:52.:30:55.

dramatically, and support for industry almost down to nothing.

:30:56.:30:59.

Those budgets don't exist any more, that is the interesting challenge

:30:59.:31:03.

for what we do in the future. We have kind of chopped all the

:31:03.:31:06.

budgets which have been used to fund social security and health.

:31:06.:31:12.

What budgets will we chop next? The prediction business is a tough

:31:12.:31:15.

gig. Who would have thought, for example, that a group of musicians

:31:15.:31:19.

who played their first performance 50 years ago tonight would still be

:31:19.:31:23.

around today. What will life be back in 2061.

:31:23.:31:29.

Let's leave the last word on the dangers of forecasting to Keith.

:31:29.:31:36.

I'm lucky to be here, man. It is amazing. Earlier I spoke to the

:31:36.:31:40.

chairman of the Office of Budget Responsibility, Robert Chote. How

:31:40.:31:45.

confident are you about your forecasting? Needless to say, over

:31:45.:31:50.

a 50-year horizon, there are colossal uncertainties around lots

:31:50.:31:54.

of these projections. It is difficult, but it is not to throw

:31:54.:31:58.

up our hands and say not to do it at all. Rather than with weather

:31:58.:32:01.

forecasting, the challenge is knowing whether it will be hotter

:32:01.:32:05.

today than in ten days time, it is difficult to ask the question over

:32:05.:32:09.

50 years. Both difficult but for different reasons. For 50 years

:32:09.:32:14.

forecasting, we might ask an astrologer for that, might we?

:32:15.:32:18.

There are different drivers in the changes in public finances over

:32:18.:32:21.

that time arising and worrying about where they will go in five

:32:21.:32:28.

years. For things like the movement of demographic bulge, flu the age-

:32:28.:32:33.

distribution of the -- through the age-distribution of the population.

:32:33.:32:37.

It is worth thinking about the potential implications of that,

:32:37.:32:40.

even if there are huge uncertainties about where we will

:32:40.:32:44.

be in five months or years time. you look at the short-term, two

:32:44.:32:49.

years ago you were predicting growth of 2% plus in 2012 we are

:32:49.:32:54.

nowhere near that. The growth predictions were wrong in 2010 in

:32:54.:32:59.

October, you were overoptimistic about rebalancing the economy to

:32:59.:33:04.

exports, and overmisting on the out put gap. It is no wonder the people

:33:04.:33:10.

on the Treasury Select Committee were asking what the point of the

:33:10.:33:15.

OBR is? You are always in the situation where people because they

:33:15.:33:20.

didn't work out the last time, will then challenge you. That is the job

:33:20.:33:23.

we are tasked with, if the Government trying to set policies

:33:23.:33:29.

that have a lagged effect on how the policies and public achanges

:33:29.:33:33.

will perform. You have to take that judging as best you can where

:33:33.:33:37.

things will go in the future. One of the additional things is you are

:33:37.:33:40.

not even confident about where things have been in the past.

:33:40.:33:44.

are back to the astrology question, aren't we. What do you think when

:33:44.:33:52.

you get the forecast wrong? I think you look at them and say what do we

:33:52.:33:56.

learn from why this is gone wrong. Do you get better at it? You get

:33:56.:34:04.

better at understanding why things have changed. Do you know what your

:34:04.:34:09.

hit rate is? We have only been in existence for a couple of years.

:34:09.:34:15.

The errors on our forecasts for the public finances are lail smaller

:34:15.:34:20.

than the errors when done by somebody else. I wouldn't rest an

:34:20.:34:25.

enormous amount on that. You need to judge these things over a longer

:34:25.:34:29.

time arising. As you have emphasiseded you are marvellously

:34:29.:34:31.

independent from Government, but David Ruffley questioning you last

:34:31.:34:36.

year, complaining that you got the forecast wrong, said this was

:34:36.:34:40.

serious, as the Chancellor's reputation is riding on how good

:34:40.:34:43.

your forecasting is. Are you conscious of that, and do you

:34:43.:34:46.

believe it is true? I think the Chancellor, if he's sensible, is

:34:46.:34:51.

going to say. If he's sensible? Chancellor will sensibly look at

:34:51.:34:55.

the forecasts and say this is the best view they have. But we know

:34:55.:35:02.

that forecasts are uncertain. is your thinking on if now? That is

:35:02.:35:08.

outside our remit in terms of where we are doing forecasting for this.

:35:08.:35:13.

You can do a forecast for Newsnight, a Robert Chote forecast? I could do,

:35:13.:35:17.

but I'm not going to. I think we have to watch and see

:35:17.:35:23.

how this is going to evolve by the time we do our next short-to-medium

:35:23.:35:28.

term forecast, which will accompany the Chancellor's Autumn Statement.

:35:28.:35:33.

He as an Aquarius by the way, they are unpredictable, apparently.

:35:33.:35:36.

The good news for David Cameron, is he isn't the first Conservative

:35:36.:35:40.

Prime Minister to find himself in a bit of an economic pacemakerle. The

:35:40.:35:46.

bad news for today's -- pickle. The bad news for today's cabinet, is

:35:46.:35:51.

were David Cameron to follow one of his hero, ministers would be out of

:35:51.:36:01.

the job. Harold Macmillan took an axe to seven of his cabinet, in the

:36:01.:36:07.

now famous Night of the Long Knives. This is Michael's take on what we

:36:07.:36:12.

can learn from the events of 1962. The political scene in July, 50

:36:12.:36:16.

years ago, has a familiar look today. Harold Macmillan, the Eton

:36:16.:36:20.

and Oxford-educateded Prime Minister, like his modern-day

:36:20.:36:25.

counterpart, was accused of presiding over a dysfuntional

:36:25.:36:30.

Government that performed a series of U-turns. Both men's troubles

:36:30.:36:33.

begun earlier in the year in a controversial budget that had

:36:33.:36:39.

brought in a tax on unpopular snacks. When was the last time you

:36:39.:36:47.

bought a pasty in Greggs. pastygate 2012, children's sweets

:36:47.:36:54.

and ice-creamgate, 1962? What does it mean, it is threatening the ice-

:36:54.:36:57.

cream? It is not fair the older people get their pleasure, we

:36:57.:37:03.

should get our pleasures. reckon you are being got at? Yes.

:37:03.:37:10.

What but, ice-cream, a half penny more? I think it is a dire bloody

:37:10.:37:14.

liberty. Harold Macmillan decided something dramatic had to be done

:37:14.:37:19.

to restore his Government's fortunes. Exactly 50 years ago,

:37:19.:37:26.

this building, Admiralty House, was the setting for the Night of the

:37:26.:37:30.

Long Knives. On Friday, in July, 196 it r 2, the Prime Minister

:37:30.:37:33.

sacked a third of his cabinet, clulding the Chancellor of the

:37:33.:37:37.

Exchequer, in an unprecedented act -- including the Chancellor of the

:37:37.:37:41.

Exchequer, in an unprecedented act of political butchery. I have

:37:41.:37:45.

always been fascinated by the story, tonight I will be drawing own the

:37:45.:37:50.

film I made some years back, when I talk to some of the key figures

:37:50.:37:53.

from that notorious night. Very few of whom are still alive. I have

:37:54.:37:57.

come to Admiralty House, which was the home of the Prime Minister,

:37:57.:38:01.

because Number Ten was being rebuilt. To reassess the drama and

:38:01.:38:06.

join the lessons fored today the Prime Minister, the fan of Harold

:38:06.:38:16.
:38:16.:38:20.

Macmillan. The Orpington by- election, where the liberal won the

:38:20.:38:25.

solid Tory seat, was the first of the body blows for Macmillan, they

:38:25.:38:28.

had introduced austerity policies to revive the economy, but they ran

:38:28.:38:33.

into the rocks. Macmillan, previously known as Super Mac,

:38:33.:38:38.

feared for his own political survival. One of his most serious

:38:38.:38:41.

colleagues, Lord Hailsham, left Admiralty House, after delivering a

:38:41.:38:46.

blunt message to the Prime Minister. I did feel very strongly that he

:38:46.:38:49.

was losing his grip a bit on public opinion and the party in general.

:38:50.:38:56.

People were, all of us were, extremely concerned about the

:38:57.:38:59.

continued failure of Government poll iscy in one field after

:38:59.:39:03.

another. -- policy in one field after

:39:03.:39:07.

another. We brought Harold Macmillan's grandson, Lord Stockton,

:39:07.:39:12.

back to Admiralty House, where as a youngman he had seen -- young man

:39:12.:39:17.

he had seen how his father faced up to the sea of trouble, that began

:39:17.:39:21.

with the ice-cream tax? grandfather didn't eat any of those

:39:21.:39:24.

things. But he became very conscious, because all of his

:39:24.:39:32.

grandchildren complained like mad. Particularly my cousin Anne, rather

:39:32.:39:37.

fond of an ice-cream or two. I think he was conscious, if you like,

:39:37.:39:41.

his, up till then, his magical grasp on the thing, had begun to

:39:41.:39:49.

slip. He was losing his grip, in a sense. We were obviously in for a

:39:49.:39:54.

reshuffle. To give the Government a fresh look, Macmillan decided to

:39:54.:39:57.

start his reshuffle, by getting rid of his Chancellor, Selwyn Lloyd.

:39:58.:40:02.

The two men had long been the closest of political allies. Indeed

:40:02.:40:06.

Macmillan who had his own country house, had let Selwyn Lloyd live at

:40:06.:40:11.

Chequers with his dogs. The young Jonathan Aitken, later notorious,

:40:11.:40:16.

was a firsthand witness to the Night of the Long Knives, as the

:40:16.:40:19.

work experience special adviser to Selwyn Lloyd. The only reason I

:40:19.:40:26.

ended up with such an interesting job was pure nepotisim. Selwyn

:40:26.:40:30.

Lloyd was my Godfather. He loved Chequers, he was there virtually

:40:30.:40:38.

every weekend, thanks to Macmillan's generosity. He took his

:40:39.:40:44.

dog, a great feature of Chequers weekends. Selwyn Lloyd was

:40:44.:40:49.

blissfully ignorant of Macmillan's intention to replace him in a big

:40:49.:40:53.

cabinet shake-up. Which he planned with his deputy, Rab Butler, his

:40:53.:40:58.

long time rival. The essence of a reshuffle is surprise, but Butler

:40:58.:41:02.

leaked the plans to the Mail. And Macmillan became convinced it was a

:41:03.:41:09.

plot to unseat him, by Butler. grandfather didn't ever trust Rab

:41:09.:41:14.

Butler, he was always a bit suspicious of him. Rab was someone

:41:14.:41:17.

who liked to play both sides of the fence, if he could. He certainly

:41:17.:41:21.

wouldn't have gone into my grandfather in this room or any

:41:21.:41:28.

other room, and said, Harold, the game has come for you to go.

:41:28.:41:33.

Last night he lost control of his party. Macmillan was facing a rob

:41:33.:41:39.

blem familiar with Cameron today, party dis-- problem familiar with

:41:39.:41:42.

Cameron today, party disloyalty. There were call from MPs for the

:41:42.:41:45.

Prime Minister to reassert his political authority over his

:41:45.:41:51.

cabinet. After the Mail leak, Macmillan felt he had to move fast

:41:51.:41:56.

and implemented the reshuffle quick low, otherwise he would look weak.

:41:56.:42:01.

Selwyn Lloyd was summoned to Admiralty House to be told he had

:42:01.:42:07.

had become an unperson? The picture I got was a very upset Macmillan, a

:42:07.:42:11.

rather more upset Macmillan than Selwyn Lloyd, though obviously he

:42:11.:42:15.

was very upset at losing his job. And the whole thing being a kind of

:42:16.:42:21.

rather botched affair. Grandfather was an actor, a supreme actor n

:42:21.:42:26.

many ways. He probably would have genuinely shed a tear for what he

:42:26.:42:34.

was doing for an old friend that he admired in many ways.

:42:34.:42:42.

There would have been a lot of aspects to those tears. I didn't

:42:42.:42:49.

want to upset and replace him. I thought that in the thing we were

:42:49.:42:52.

moving into, the thing I might call the new economic situation, which

:42:52.:42:57.

we have been discussing. We wanted a less tired mind.

:42:57.:43:02.

I felt he was not creative any more. I think he said he thought I was

:43:02.:43:06.

tired out. I personally didn't feel at all tired. I thought things were

:43:06.:43:11.

going rather well. After Macmillan had forced the Chancellor to walk

:43:11.:43:17.

the plank, a further six cabinet ministers met a watery end at

:43:17.:43:25.

Admiralty House. The heads of the ex-ministers were soon removed from

:43:25.:43:29.

Madame Tussauds. Macmillan said it was him who felt the pain? It was

:43:29.:43:33.

the heart burning of these changes, comes from the man who has to make

:43:33.:43:37.

them. It is not your favourite moment, being resented by the

:43:37.:43:43.

victim, who is not deeply resented by those who would help to take his

:43:43.:43:49.

place. A week after the Night of the Long Knives, Macmillan went

:43:49.:43:53.

from Admiralty *House to an away day with the captain of Chequers,

:43:53.:43:58.

where Selwyn Lloyd had left his black Labrador to be looked after

:43:58.:44:06.

the staff. When the members stood for an informal photo they were

:44:06.:44:14.

left with a dog with an a name. started sniffing around the

:44:14.:44:18.

trousers and whining, everybody started to feel embarrassed as this

:44:18.:44:24.

dog was so obviously unhappy at his missing master. Macmillan effected

:44:24.:44:29.

to ignore the dog, but for the Prime Minister, whom the sat

:44:29.:44:36.

teirists had Chrisened "superMacbeth". Macmillan never

:44:36.:44:44.

recovered his political authority. 50 years on, the latest Tory Prime

:44:44.:44:48.

Minister is contemplating his reshuffle with the Government in

:44:48.:44:54.

turmoil. The key lesson to draw from the events at Admiralty House,

:44:54.:44:58.

the more you are going to knife in a single night, the more the public

:44:58.:45:08.
:45:08.:45:37.

Before we go, the BBC Wormed *Service made his final -- BBC

:45:37.:45:42.

World Service its final broadcast today. The corridors empty and the

:45:42.:45:46.

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