:00:15. > :00:22.Tonight is the most ambitious transport plan for decades to build
:00:22. > :00:25.a high speed rail link from London to the north of England running out
:00:25. > :00:29.of steam. HS2 will redraw the economy of a nation, according to
:00:29. > :00:34.the Department of Transport. Where are political and business figures
:00:34. > :00:39.and a former Rail Minister going cold on the idea. It is going to be
:00:39. > :00:42.with us for a very long time, do we really want to tell constituents
:00:42. > :00:47.and tax-payers that we are spending �50 billion of their money on a
:00:47. > :00:52.train line that really doesn't need to be built? His successor is here
:00:52. > :00:57.to tell us why it is worth �43 billion of your money. Also tonight,
:00:57. > :01:02.the promises we have made to an ageing society for mentions and
:01:02. > :01:05.healthcare, could propel us into a future of chronic economic problems.
:01:05. > :01:09.We will debate a gloomy forecast from the Office for Budget
:01:09. > :01:13.Responsibility. As the politicians pack their suntan cream and head
:01:13. > :01:21.for their no doubt well deserved holidays, Newsnight's political
:01:21. > :01:27.panel are here to give an end of term report.
:01:27. > :01:36.Summer in the city, Nile Rodgers on how to stay cool of five decades of
:01:36. > :01:41.getting dirty and down there. cheerful tunes were about the
:01:41. > :01:51.future we thought we would see, future we envisioned has never
:01:51. > :01:54.
:01:54. > :01:57.happened. Plans for one of the biggest leaps forward in British
:01:57. > :02:02.transport history is in trouble today. Today the Government
:02:02. > :02:08.launched its second consultation into the posts of high-speed 2. The
:02:08. > :02:12.costs have risen to a whopping �43 billion. The likes of Alitair
:02:12. > :02:18.Darling and Nigel Lawson, former Chancellors, are oply opposed. The
:02:18. > :02:22.new consultation wants to know about what the CBI, enthusiastic
:02:22. > :02:27.about the project, and Tom Harris think. But we have a report on the
:02:27. > :02:35.growing chorus of people with business, transport expierence who
:02:35. > :02:39.want the Government to think bin on HS2. There is one thing that is
:02:39. > :02:43.already high-speed about HS2, that is the speed the Government is
:02:43. > :02:48.pressing ahead with the plans, despite warnings to slow down. Lord
:02:48. > :02:50.Mandelson, a one-time supporter now says it could prove an expensive
:02:50. > :02:53.mistake. Former Labour Chancellor and Transport Secretary, Alitair
:02:53. > :02:57.Darling, says it will suck money out of the budget that would be
:02:57. > :03:02.better spent on other projects. Moon while Conservative former
:03:02. > :03:07.Chancellor, Lord Lawson calls it "madness", Boris Johnson says the
:03:07. > :03:13.cost will spiral to over �70 billion. Newsnight can reveal now
:03:13. > :03:16.that the latest Doubting Thomas is called Tom, Tom Harris, Rail
:03:16. > :03:21.Minister under Tony Blair and Gordon Brown. My own party is
:03:21. > :03:25.strongly in favour of it, I was until relatively recently. More and
:03:25. > :03:28.more are listening to those who say it might not be have a great idea.
:03:28. > :03:33.Austerity will be with us for a very long time, do we really want
:03:33. > :03:37.to tell constituents and tax-payers that we are spending �50 billion of
:03:37. > :03:42.their money on a train line that really doesn't need to be built and
:03:42. > :03:46.that money could be spent in any number of areas far more
:03:46. > :03:50.effectively? Some politicians have started reassessing their support
:03:50. > :03:54.for HS2 since the Government announced it was increasing the
:03:54. > :03:59.budget. The Transport Secretary says the bill is rising from �33
:03:59. > :04:02.billion to over �42 billion. Sow how did the senior civil servant
:04:02. > :04:07.here at the Department for Transport explain these higher
:04:07. > :04:11.costs? Well he said what we should remember is that the original
:04:11. > :04:21.estimate wasn't really so much an estimate it was more a...what was
:04:21. > :04:22.
:04:22. > :04:26.the phrase he used?:...a High level desk-based exercise. Yes, a high-
:04:26. > :04:32.level desk-based exercise. Which means what, perhaps Tom Harris
:04:32. > :04:37.could finish in? The plans for HS2 have been written on the back of a
:04:37. > :04:41.fag packet. The increase in costs, it came on top of a high-level
:04:41. > :04:44.desk-based mauling of the HS2 business plan by the National Audit
:04:44. > :04:48.Office. We will build a new network. The Government has been working on
:04:48. > :04:51.a new version of the business plan, incorporating some of the changes
:04:51. > :04:55.the National Audit Office wants to see. This won't be ready until the
:04:55. > :05:00.autumn, we will just have to wait. It is just I'm not very good at
:05:00. > :05:04.waiting, why can't we have a go, how hard can it be to update the
:05:04. > :05:14.benefit cost ratio for a �40 billion infrastructure project.
:05:14. > :05:22.
:05:22. > :05:26.We have commissioned a high-level pack particular table-based
:05:26. > :05:29.exercise from two transport economists, David Parish and Chris
:05:29. > :05:34.Castles, together they wrote a peer-reviewed study of the HS2
:05:34. > :05:38.business case back in 2011. So we will leave Chris and David updating
:05:38. > :05:40.their numbers. But first I think we should look at the changes that the
:05:40. > :05:44.National Audit Office has asked the Government to make to see what sort
:05:44. > :05:48.of thing they are going to be doing here. They are looking at the first
:05:48. > :05:52.phase of the project and at three specific areas, updating the
:05:53. > :05:57.forecast for how many people are likely to use HS2, the business
:05:57. > :06:00.case at the moment uses an out of date higher demand forecast.
:06:00. > :06:04.Updating the value of shorter journey times, at the moment the
:06:04. > :06:07.business case assumes that no-one works on a train and any time saved
:06:07. > :06:13.is used for productive work. And thirdly, including the recent
:06:13. > :06:17.budget increase. OK, so you have had time to put in those changes,
:06:17. > :06:21.what impact do you think the new numbers will make to the Government
:06:21. > :06:25.as business case? What will it do to the benefit cost ratio? If you
:06:25. > :06:29.take the reduced demand and the change of value of business time
:06:29. > :06:35.and the higher costs the impact is devastating. The benefit cost ratio
:06:35. > :06:43.comes down from 1.4 in the latest published Government report, in the
:06:43. > :06:48.range to 0.5-0.6. So for every pound we spend we get 60p of
:06:48. > :06:53.benefits back. Does it make it a good-value project? There are many
:06:53. > :06:57.projects that offer ratios of four or five, including alternatives to
:06:57. > :07:02.the HS2 that are proposed by the local authorities and also by the
:07:02. > :07:07.Government's own consultants. that would suggest that HS2 isn't
:07:07. > :07:12.value for money at all then? Not at all. You might think it is absurd
:07:12. > :07:16.to downgrade the business case for HS2 by that much, but, there is
:07:16. > :07:20.academic evidence to suggest this would only be par for the course. I
:07:20. > :07:28.have come here to the Siad Business Scohool in Oxford to meet one
:07:28. > :07:34.academic who has studied over 100 years of big infrastructure data.
:07:34. > :07:38.This professor says on average big infrastructure projects cost 50%
:07:38. > :07:43.more than planned and deliver half the cost benefits. The bad projects
:07:43. > :07:46.are much worse than that. The Channel Tunnel was 80% over on
:07:47. > :07:50.construction cost and 120% over on financing cost. They only made 20%
:07:50. > :07:55.of the passengers that they forecast in the first year, so much
:07:55. > :07:59.worse. Why is that, why do we get that double whammy of lower returns
:07:59. > :08:03.and higher costs? This is something we have studied in detail here at
:08:04. > :08:07.Oxford, we find two root causes. One is optimisim, people are
:08:07. > :08:11.generally optimistic, and that includes planners, the other is
:08:11. > :08:17.something we call strategic misrepresentation. We find actually
:08:17. > :08:20.in some instances decision-makers, politicians, policy makers, will
:08:20. > :08:24.deliberately underestimate the cost and overstatement the benefits and
:08:24. > :08:28.revenues in order to get their projects started. If a project
:08:28. > :08:33.looks good on paper it is easier to get approval for the project in
:08:33. > :08:37.parliament or whoever is aproving the project. And you know the old
:08:37. > :08:44.saying that it is easier to get forgiveness than permission. That
:08:44. > :08:47.seems to be sometimes the approach used in getting projects started.
:08:47. > :08:54.The final stop on the journey is to take some of the concerns to the
:08:54. > :09:00.people who are supposedly going to be building High-speed 2, that is
:09:00. > :09:08.HS2 Ltd, it sounds like a private sector company, there is a clue to
:09:08. > :09:18.who owns it in the building they are situated in. It is a Government
:09:18. > :09:19.
:09:19. > :09:22.office, and HS2Ltd is a subsidey of a Government. I don't think you
:09:22. > :09:26.should necessarily assume that the business case, the quantified
:09:26. > :09:33.benefit cost ratio will go down. Beyond that, of course, it is not
:09:33. > :09:37.just about the benefit cost ratio. First and foremost high-speed 2 is
:09:37. > :09:43.about providing additional capacity. The existing railway is
:09:43. > :09:47.increasingly full, Network Rail forecasts by 2020 the eastern
:09:47. > :09:51.Network Rail will be full. There is an overriding argument for
:09:51. > :09:54.providing capacity. Any competitive economy needs strong infrastructure.
:09:54. > :10:00.Today we have one of the busiest networks in Europe.
:10:00. > :10:05.This point is made in the HS2 promotional video, but the ANO says
:10:05. > :10:08.the Government needs to do more work in explaining why HS2 is the
:10:08. > :10:10.best solution. Are there other cheaper projects that might deliver
:10:10. > :10:15.as much or more capacity. For those politicians and business leaders
:10:15. > :10:18.who say we should pause and reconsider? There is an imperative
:10:18. > :10:22.to keep driving this forward. I think the other thing I would say
:10:22. > :10:26.about people who say we should pause, even the people who oppose
:10:26. > :10:29.this route, it is much better we get on and do it. They don't want
:10:29. > :10:33.continuing uncertainty. So there is a strong case. Can they get it
:10:33. > :10:38.right rather than go on and do it? We have got it right. Plenty of
:10:38. > :10:43.people don't think you have got it right? We haven't yet put out all
:10:43. > :10:48.the further work, we will in the autumn. That will show it will
:10:48. > :10:52.update the cost benefit ratio and present the wider case, which as
:10:52. > :10:57.represented work over the past year or so, which will look at both the
:10:57. > :11:01.capacity arguments and also the wider benefits and how HS2 can
:11:01. > :11:06.support both the national economy and also importantly how it will
:11:06. > :11:09.support the cities we connect. the political signals changing for
:11:10. > :11:14.HS2, some don't believe that three- party consensus in favour of the
:11:14. > :11:17.project will last much longer. There is something of of the grand
:11:17. > :11:20.project about this, aing willcy for politicians. Politicians love a
:11:20. > :11:24.legacy, we love building huge capital structures, that is not
:11:24. > :11:29.good enough. There has to be a business case, it has to be worth
:11:29. > :11:33.it. The Government began its consultation on the second phase of
:11:33. > :11:37.HS2 today. The Transport Secretary was in Manchester making the case
:11:37. > :11:43.in terms of jobs and apprenticeships. It is clear there
:11:43. > :11:48.are still plenty of people he has yet to convince. The Rail Minister,
:11:48. > :11:52.Simon Burns, came into the studio a little earlier. Why it that so many
:11:52. > :11:56.people with transport or business or Government experience are now
:11:56. > :12:00.running away from the HS2 project? I don't think that a lot of people
:12:00. > :12:05.are. There is considerable support, particularly if you look in the
:12:05. > :12:09.Midland, north of England amongst local authority leader, business
:12:10. > :12:16.groups, including the local CBIs and chambers of commerce.
:12:16. > :12:20.mentioned the CBI, the Director General of the CBI is one of them.
:12:20. > :12:24.He says questions need answering, �43 billion could be put to better
:12:24. > :12:29.use, and politicians have been dazzled by promises of speed. He
:12:29. > :12:32.makes it sound like another Concorde. He did qualify the
:12:32. > :12:36.comments and he said he was still enthusiastic about the project but
:12:36. > :12:40.he wanted to ensure the costs of building the railway did not run
:12:40. > :12:44.out of control. I have considerable sympathy and agreement with him on
:12:44. > :12:47.that. When you have lot Lord Mandelson, Tom Harris and Boris
:12:47. > :12:53.Johnson all agreeing that something is up here, Lord Lawson is another
:12:53. > :12:56.one, maybe, maybe they are right? don't think they are, for a reason,
:12:57. > :13:01.the critical thing is on the conventional railways we are
:13:01. > :13:05.running out of capacity. Between 2020 and 2024 on the West Coast
:13:05. > :13:10.Main Line, the major spine up the country towards Scotland we are
:13:10. > :13:12.expecting the capacity to become full. We have got to provide extra
:13:12. > :13:17.capacity. There could be cheaper ways of doing it? We have looked at
:13:17. > :13:20.it and some people have said, thinking it was a cheaper way, that
:13:20. > :13:26.we should just build another conventional line. The costs are
:13:26. > :13:29.slightly less, but not that less, you lose all the benefits that
:13:29. > :13:33.high-speed rail brings to this country. It is a project can he
:13:33. > :13:37.can't afford not to do. Our major competitors are all engaging in
:13:37. > :13:40.building or have high-speed railways. In that case does it not
:13:40. > :13:44.matter about the cost, it is so important we have to do it any way?
:13:45. > :13:52.I think it is important. But it has to be done within cost disciplines,
:13:52. > :13:56.and that is why we have been so determined with robust governance,
:13:56. > :14:00.robust economic plans to ensure that we keep to a very controlled
:14:00. > :14:05.budget. You say that, but how much is too much, the budget has just
:14:05. > :14:11.gone up another �8 billion to �43 billion, Boris Johnson saying it
:14:11. > :14:16.could cost �70 billion. The people on your own side say it could be
:14:16. > :14:19.�100 billion. Boris is Boris, you would expect people who are opposed
:14:19. > :14:23.to the project to exaggerate the costs because they are making a
:14:23. > :14:30.case and they are entitled to. much is too much? The fact is it is
:14:30. > :14:36.what we are going to spend which is to quote the figure you quote,
:14:36. > :14:40.�42.6 billion. Of that �14.4 billion is contingency, we are
:14:40. > :14:42.aiming to stick to those rigid budgets. You know the history of
:14:42. > :14:45.capital projects in this country has been exactly the opposite, that
:14:45. > :14:51.Governments of all stripes have said we will stick to it and it
:14:51. > :14:55.goes up and up and up? If you have discipline and you vigorously check
:14:55. > :15:00.on the effectiveness and the efficiencies of the building
:15:00. > :15:06.process you can cheap within budget and I will give you an example.
:15:06. > :15:10.billion, that too much? I will give you the example, the Olympics,
:15:10. > :15:12.everybody said that couldn't be built within the budget. They were
:15:12. > :15:16.because there was rigorous discipline to ensure the cost
:15:16. > :15:20.didn't go spiralling out of control. It did go up from the original
:15:20. > :15:23.budget. Let as move on to part of the business case, this is also
:15:23. > :15:30.questioned, the benefit cost ratio. We were told to put it in simple
:15:30. > :15:36.terms that we get �2.60 back for every �1 we put into it. Now it is
:15:36. > :15:39.revised down to �1.40, and it may be lower than that. We have people
:15:39. > :15:42.saying 0.5, in other words we would lose half the money we put in. The
:15:42. > :15:47.business case is very shaky? business case is now outdated
:15:47. > :15:55.because of the time it was done. At that point if you take the whole
:15:55. > :16:00.route, both phases, the BCR was between 1.4 and 2.5. This is the
:16:00. > :16:04.benefit cost ratio, the amount of money we would expect to get back?
:16:04. > :16:10.We are preparing at the moment an updated business case, available
:16:10. > :16:14.later in the year. Philip Hammond said if the BCR went less than 1.5
:16:14. > :16:17.he would put it under close scrutiny. Some people say it is
:16:17. > :16:20.certain to go less than 1.5. Where would you draw the line. Where
:16:20. > :16:26.would you say we have to have more benefits otherwise we are not going
:16:26. > :16:31.to proceed? What I would say is that with the extension of the
:16:31. > :16:37.Jubilee Line, which everyone recognises has been a tremendous
:16:37. > :16:41.benefit to travel in London. That BCR, I think, from memory was about
:16:41. > :16:45.0.4%. To use that parallel of the Jubilee Line, would you be content
:16:45. > :16:49.if the benefit cost ratio was 0.4 as it was with the Jubilee Line. In
:16:49. > :16:53.other words we got 40p back for every pound we put in. Although
:16:53. > :16:57.people would not be content, including Philip Hammond? I don't
:16:57. > :17:05.accept that is what the BCR will be, it is certainly not at the moment
:17:05. > :17:09.with HS2. We will wait until the publication of the next business
:17:09. > :17:13.impact studio later this year. I don't accept it will be 0.4%.
:17:13. > :17:19.there any figure on this that would make you give up this project?
:17:19. > :17:22.is the overriding importance, as I said before, it is capacity,
:17:22. > :17:26.helping solve the capacity problems on the conventional railway. The
:17:26. > :17:29.job creation and the regeneration that will flow from it,
:17:30. > :17:39.particularly in Birmingham and the Great Northern cities. Minister,
:17:40. > :17:40.
:17:40. > :17:45.thank you very much. In a moment. Hey, I'm Nile Rodgers and you are
:17:45. > :17:55.watching Newsnight, your late night funk jam! We talk to the man behind
:17:55. > :17:56.
:17:56. > :18:00.Chic. Now in ancient Greece poor old Sisyphus was punished by the
:18:00. > :18:06.gods, condemned to roll a massive rock to the top of the hill only to
:18:06. > :18:08.watch it roll down again, to repeat that for all of history. The Office
:18:08. > :18:11.of Budget Responsibility can't compete with the Gods, but if they
:18:11. > :18:14.are right about the unsustainable public finances we are all
:18:14. > :18:18.condemned like Sisyphus. In our case it could be years of austerity,
:18:18. > :18:21.because of the ageing population and strained healthcare system will
:18:21. > :18:25.still leave a massive hole in our finances, and more austerity to
:18:25. > :18:30.come as we try once more to roll the rock to the top of the mountain.
:18:30. > :18:32.Or is there a better way? Our political editor, Allegra Stratton
:18:32. > :18:37.has spent the day with the bar charts.
:18:37. > :18:40.We already know this clock of public debt races faster than some
:18:40. > :18:44.would like, we have been old it add naus yum. This Government's pitch
:18:44. > :18:48.is they are the ones trying to stop this clock, trying. In the next
:18:48. > :18:52.five years the aim is to reduce Britain's debt. What about the
:18:52. > :18:57.long-term? From an array of scary graphs, this is today's key one
:18:57. > :19:01.from the Government's Office for Budget Responsibility. Towed is
:19:01. > :19:04.their annual attempt at physical futurology. The recent debate has
:19:04. > :19:09.been about these bars, the Government has successfully, you
:19:09. > :19:12.can see, brought down the debt and the deficit, but after about 2020
:19:12. > :19:16.and that low point there things start to climb, that is because of
:19:16. > :19:21.two new pressures. Firstly the traditional sources of revenue
:19:21. > :19:25.begin to dry up, things like duties from tobacco and fuel. Also North
:19:25. > :19:32.Sea oil is going down. But then there are fresh demands of the
:19:32. > :19:35.state. We will be having more demands of the NHS, social care and
:19:35. > :19:39.pensions. That is why that line climbs rather alarmingly. As soon
:19:39. > :19:42.as we hit the 2020s we hit the cost of an ageing society, more money
:19:42. > :19:45.needs to be found for the NHS, social care and pensions. What we
:19:45. > :19:49.need to do then is have a big debate as a country about how we
:19:49. > :19:53.pay for that. You can either do it by cutting services, charging
:19:53. > :19:57.people for the services they use, or by putting up taxes. I actually
:19:57. > :20:00.think that the fairest way of doing it is to raise taxes. But of course
:20:00. > :20:03.we see from the political debate we are having about the NHS at the
:20:03. > :20:08.moment it is very difficult to have a grown-up sensible conversation
:20:08. > :20:12.about how we pay for these things. These two bars show how old our
:20:12. > :20:17.society is right now. And then it is broken down by age in 2062. In
:20:17. > :20:23.the future there are fewer people aged between 16-54, the big purple
:20:23. > :20:29.band. But there are many more 65- year-olds, and even more aged over
:20:30. > :20:35.85. Just with fewer working age people to support them. A toddler
:20:35. > :20:38.uses a lot of healthcare, a lot of education, but clearly pays in
:20:39. > :20:42.barely no income tax. When they graduate to working age of course
:20:42. > :20:46.the amount of income tax they pay in will go up massively, but they
:20:46. > :20:51.will actually be using relatively few public services in that time.
:20:51. > :20:56.Then when they retire they will be using the NHS, social care and an
:20:56. > :20:59.awful lot. But again it will be paying in not very much income tax.
:20:59. > :21:04.The OBR is saying that an older population will be a financially
:21:04. > :21:08.poorer one. And, decisions taken by this Government may have made it
:21:08. > :21:14.even more so. The called pension triple look means pensions will go
:21:14. > :21:20.up in line with the highest of inflation or earnings. That's more
:21:20. > :21:24.expensive. The OBR also suggests trouble ahead if the Government is
:21:24. > :21:28.successful in bringing down immigration. The yellow bar shows
:21:28. > :21:32.if it does bring it down to almost nothing, the working age population
:21:32. > :21:37.is much lower. The red bar shows with high immigration you end up
:21:37. > :21:40.with a greater working population to support the elderly. The Office
:21:41. > :21:46.for Budget Responsibility gives today's politicians a stark choice,
:21:46. > :21:51.they either have to cut an extra �19 billion from public services on
:21:51. > :21:55.top of everything we have already heard that will be cut, or they do
:21:55. > :21:58.it more slowly and over many more decades, but they do have to make
:21:58. > :22:04.that choice. The OBR says unless they do everything we have been
:22:04. > :22:10.through in this decade from 2010- 2020 will have been for nothing.
:22:10. > :22:14.The lesson is that George Osborne has got a long-term challenge. He
:22:14. > :22:22.stands for higher pensions spending, protection for health spending, now
:22:22. > :22:26.we hear no tax rises. The OBR tell us today that pensions, health are
:22:26. > :22:29.going to drive the public finances and make them unsustainable for
:22:29. > :22:32.decades to come and taxes will have to go up to record levels. He
:22:32. > :22:36.commissioned this report but the report is a big challenge to him.
:22:36. > :22:40.big challenge to the Chancellor but also to his successor, unless one
:22:40. > :22:47.of them gets lucky in a piece of megatechnology invented on their
:22:47. > :22:52.watch, bringing in fresh revenue for Britain. 50 years a very long
:22:52. > :23:02.time in politics, even longer if you don't like bar charts.
:23:02. > :23:05.We have an economic correspondent and Ann Pettifor. Long range
:23:05. > :23:13.economic forecast is like long range weather forecast, do you
:23:13. > :23:17.broadly accept the OBR is right on this? The man who runs the OBR is
:23:17. > :23:20.an honourable and brilliant man, when you are making forecasts for
:23:20. > :23:24.50 years the slight tiller assumption has massive effects. I
:23:24. > :23:28.would like the OBR to focus on what is happening in the last five years
:23:28. > :23:33.and what will happen in the next five years. Back in 2008 this
:23:33. > :23:37.country's national debt was about �580 billion, we are now above a
:23:37. > :23:41.trillion pound, by 2015 we are going to be at �1.6 trillion in our
:23:41. > :23:46.national debt. So, yes there are parts of the public sector that are
:23:46. > :23:50.suffering, nobody is denying that, but the macro picture is not one of
:23:50. > :23:54.austerity. The macro picture is a situation where over five years our
:23:54. > :23:58.national debt almost triples. This is the reality of the situation we
:23:58. > :24:02.face. With what does that mean for interest rates? What does that mean
:24:02. > :24:06.for tagsyaix going forward? There is not enough -- taxation going
:24:06. > :24:08.forward? There is not enough discussion among the political
:24:08. > :24:12.classes about the debt we are accumulating and have to service
:24:12. > :24:15.day in day out. The core of the argument appears to be ageing
:24:15. > :24:19.population with health problems we are all going to face in the future
:24:19. > :24:23.and the pension rises that it is unsustainable because we are not
:24:23. > :24:29.creating wealth fast enough to pay for it? This report is more about
:24:29. > :24:33.policies that are operating now, mainly austerity. Than it is about
:24:33. > :24:38.the future. It is using assumption based on austerity policies to talk
:24:38. > :24:42.about the future. And one of your contributors said the choices are
:24:42. > :24:49.to increase taxes or cut spending. There is a third choice, which is
:24:49. > :24:53.to increase income. This report doesn't really deal with that. The
:24:53. > :24:57.only way to increase income is to increase employment. The report
:24:57. > :25:01.doesn't include in assumptions what will happen to employment over this
:25:01. > :25:05.period. The fact is population will go up and baby-boomers like us will
:25:05. > :25:09.rot and die and then the next generation will come up. This is
:25:09. > :25:12.life. I don't know about the rotting and dying. Jo Hammer House
:25:12. > :25:16.of Horror. One of the interesting things about this report is the
:25:16. > :25:19.reflection on immigration. It says immigrants will make a more
:25:19. > :25:22.positive contribution to the UK public finances than natives, and I
:25:22. > :25:25.wonder if this raises the whole question of whether we should
:25:25. > :25:28.change our immigration policy, because it would be of economic
:25:28. > :25:34.benefit, which appears to be part of this report? Sure, I think the
:25:34. > :25:37.OBR would have been braver than it has been, had it focused more on
:25:37. > :25:41.the fiscal trajectory over the next three-to-four years. It has been
:25:41. > :25:45.brave in grasping the nettle of immigration. I personally think and
:25:46. > :25:50.the weight of economic evidence is behind me, that if you have more
:25:50. > :25:56.immigration you bring in immigrants from the shadow world of the
:25:56. > :25:58.untaxed economy, you bring them on to the books. If you celebrate
:25:58. > :26:02.economic migrants rather than ostracising economic migrants, that
:26:02. > :26:06.will do a lot to help this country grow its way out of the massive
:26:06. > :26:09.fiscal hole that it is in. Of course that means you need better
:26:09. > :26:15.infrastructure, it also means that politicians have to explain this to
:26:15. > :26:18.the body of voters. None of that will happen if we persevere in the
:26:18. > :26:22.current policies basically. Do you accept the point that immigrants,
:26:22. > :26:26.in the words of the report, would be "good for the long-term economic
:26:26. > :26:29.health of the country", because people coming in paying taxes
:26:29. > :26:33.wooing dob the services other people won't do? We are very lucky,
:26:33. > :26:37.in Italy the population is falling, here it is rising, we have a
:26:38. > :26:44.population rising which will be able to work and create income to
:26:44. > :26:50.finance the pensions of the future. Let's not beat about the bush here.
:26:50. > :26:54.This is about laying the ground for cutting universal provision and in
:26:54. > :26:58.particular attacking pension Do you think that is politically possible?
:26:58. > :27:02.Of course I think what, creating jobs and generating income to pay
:27:02. > :27:05.for pensions? It is entirely possible. It would make it immense
:27:05. > :27:09.low important. Cutting pensions?I don't think it is politically
:27:09. > :27:13.popular, but the logic of austerity is that you should go that way.
:27:13. > :27:16.of the things that this does is talk about some of the things we
:27:16. > :27:19.don't talk about in public debate, cutting pensions is one of them?
:27:19. > :27:24.Ann is right, of course, the population is growing, it will need
:27:24. > :27:28.to grow a lot faster if we are going to even hope to tackle our
:27:28. > :27:32.fiscal problems. But of course while the population is rising, the
:27:32. > :27:38.dependency ratio is really changing in a crushing way. At the moment
:27:38. > :27:43.about four people are in work for every pensioner, by 2030, 2030, not
:27:43. > :27:47.very long, it will be only two people in work for each pensioner.
:27:47. > :27:51.Right now we have 2.5 million people unemployed, we have 1.5
:27:51. > :27:55.million people who have been unemployed for a short time, young,
:27:55. > :28:00.educated, skilled who are hungry to work and we have policies which are
:28:00. > :28:05.denying them work which would generate income tax revenues to pay
:28:05. > :28:11.for these things. Not just now but into the future. The bank of
:28:11. > :28:17.international settlements the Central Bankers' think-tank if you
:28:17. > :28:21.like. Extremely robust organisation, they say by 2030 the UK's national
:28:21. > :28:26.debt on current projections. And on current policy. Maybe you can let
:28:26. > :28:30.me talk, you didn't let me last time I was on the show. Go on.The
:28:30. > :28:36.bank of international assessment says by 2030, a short long-term
:28:36. > :28:39.forecast will be our national debt will be about 300% of GDP, that's a
:28:39. > :28:42.massive number unless we take drastic action. We have now got a
:28:42. > :28:47.situation where politicians are just beginning to nibble at the
:28:47. > :28:50.edges of pension reforms. But their pension reforms are saving by
:28:50. > :28:55.nudging up the retirement age. These are scare stories. Hundreds
:28:55. > :28:57.of millions over 30 years. When the problem is one of hundreds of
:28:57. > :29:01.billions. They are economic scare stories in order to attack pensions
:29:01. > :29:05.and in order to attack a whole generation that have paid for their
:29:05. > :29:10.pensions. And in order to deprive an upcoming generation of work.
:29:10. > :29:13.will have to leave it there. Thank you both very much. Now what to put
:29:13. > :29:17.on cigarette packets? How much to charge for a can of beer, who is
:29:18. > :29:23.responsible for shocking failures in the health service and the role
:29:23. > :29:29.of lobyists and trade unions -- lobbyists and trade unions in
:29:29. > :29:33.politics. Particularly Lynton Crosby, the's adviser. This is only
:29:33. > :29:37.Wednesday. The politicians are off on hole day, although today's Prime
:29:37. > :29:42.Minister's Questions suggests the mood is not exactly mellow.
:29:42. > :29:48.reality that he cannot admit is against the advice of every major
:29:48. > :29:54.public health organisation he has caved in to big tobacco, that is
:29:54. > :29:57.the reality about this Prime Minister. And he knows it, it is
:29:57. > :30:03.Andy Coulson all over again. He's a Prime Minister that doesn't think
:30:03. > :30:06.the rules apply to him, dinners for donor, Andy Coulson and now big
:30:06. > :30:10.tobacco in Downing Street, he always stands up for the wrong
:30:10. > :30:14.people. The reason his leadership is in crisis is he can't talk about
:30:14. > :30:19.the big issues. We are getting to the end of a political session,
:30:19. > :30:23.when the deficit is down, unemployment is falling, crime is
:30:23. > :30:29.down, welfare is capped, Abu Qatada is back in Jordan, every day this
:30:29. > :30:34.country is getting stronger and every day he's getting weaker.
:30:34. > :30:38.now all this comes in a week in which one poll suggested that the
:30:38. > :30:44.Conservatives are now neck and neck with Labour, thanks to a
:30:44. > :30:48.significant drop in supporting UKIP. Here to talk about the flavour of
:30:48. > :30:51.politics to come is Newsnight's panel. Danny Finkelstein former
:30:51. > :30:56.Conservative adviser and columnist. Sally Morgan who worked for Tony
:30:56. > :30:59.Blair, and the Lib Dem peer, Lord Razzall was the past chair of the
:30:59. > :31:04.party campaigns and communication committee. First of all on the NHS,
:31:04. > :31:08.did anybody win that row? I think that when the salience of the NHS
:31:08. > :31:12.rises the Conservative Party loses out until it changes the long-term
:31:12. > :31:18.terms of trade on the NHS and it is a long way away from doing that.
:31:18. > :31:20.You can't avoid talking about the NHS, but this kind of row in the
:31:20. > :31:26.House of Commons will it change people's view of the Conservative
:31:26. > :31:29.Party in the NHS? No. It is a bit like Ed Miliband raises the unions,
:31:29. > :31:33.you raise the salience of something you lose. I'm not sure tactically
:31:33. > :31:38.it is good, but strategically in the long run you have to try to win
:31:38. > :31:41.the argument. The Conservatives are at least equal with Labour on the
:31:41. > :31:44.NHS. Where do you stand on this, the Prime Minister had a bit of
:31:44. > :31:49.wind in his sales he didn't have three months ago? People out there
:31:49. > :31:52.will hate it. It will just sound like people playing politics and
:31:52. > :31:54.scoring points around the NHS. I think it is really simple for
:31:55. > :31:59.politicians, they have got to remember that ultimately they have
:31:59. > :32:02.to deliver for patient and they have to keep completely focused on
:32:02. > :32:06.quality. They have to be completely focused on greater transparency,
:32:06. > :32:09.that allows patients to have power within the health service. And as
:32:09. > :32:12.soon as they seem like they are moving away from that focus and
:32:12. > :32:17.just getting into yaboo politics it is a failure. I think that the
:32:17. > :32:21.Tories have put it on the agenda and behaving like that is a real
:32:21. > :32:24.mistake. I thought the Prime Minister handled Staffs really well,
:32:24. > :32:30.it is such a dramatic shift from that approach. I think it is a
:32:30. > :32:36.little unsafe for them. Yaboo politics? The three of us are in
:32:36. > :32:41.danger of agreeing on this. I'm very much reminded of political
:32:41. > :32:47.history, go back to 1992, the war of Jennifer's ear, Labour tried to
:32:47. > :32:51.race that and it didn't resonate. Even Duncan Smith trying to talk
:32:52. > :32:56.about Rose Addis lying on a hospital bed. When politicians try
:32:57. > :33:03.to score points off the NHS they lose. Let's move to lobbying,
:33:03. > :33:07.Lynton Crosby and Unite. Did anyone make anything of that, or does it
:33:07. > :33:10.raise suspicions in voters' minds, politics is for other people, they
:33:10. > :33:14.are insiders? There has been a major player in the last few weeks
:33:14. > :33:17.and that is Ed Miliband's move on the unions. It creates a strategic
:33:17. > :33:21.opportunity for him and massive danger. The strategic opportunity
:33:21. > :33:24.is obvious you can show as a strong leader and distance Labour from
:33:24. > :33:28.unpopular vested interests. The danger is he gets half way into it
:33:28. > :33:33.and can't finish the job. Then he gets tangled up in something that
:33:33. > :33:37.he doesn't think is a U-turn but people watching think is a U-turn
:33:37. > :33:44.and then he looks weak. It is a strategic opening for him but also
:33:44. > :33:47.a big risk. I think that was a much bigger play than other issues about
:33:47. > :33:52.lobbying. Len McCluskey saying in tomorrow's Guardian this is a
:33:52. > :33:56.gamble that could bankrupt the party. That is what's at stake?
:33:57. > :34:04.Bizarrely I think the money is less of an issue than in the end whether
:34:04. > :34:09.or not Ed see it is through and wins. I'm afraid I agree with Danny.
:34:09. > :34:12.It must be the warm weather? think the position is this is
:34:12. > :34:17.potential lot biggest breakthrough for Ed, if he gets it right and
:34:17. > :34:23.sees it through. If he doesn't it will be a really significant thing
:34:23. > :34:29.for him. He might think he's seeing it through. Dam on grammar schools
:34:29. > :34:33.got into a row, and then about technical differences about
:34:33. > :34:36.Dominique Grieve was having grammar schools in Kent, and then there was
:34:36. > :34:41.the U-turn and it collapsed. Ed Miliband has to be careful
:34:41. > :34:44.technically or he will look like he U-turned. The Lynton Crosby thing,
:34:44. > :34:49.does it raise the question that Liberal Democrats have been banging
:34:49. > :34:53.on about years, public funding? This must get back on the agenda
:34:53. > :34:58.the issue of how political parties are funded. I mean we have banged
:34:58. > :35:02.on for ages and you might well say we would, wouldn't we, as a party.
:35:03. > :35:07.But how Labour is in the pocket of the trade unions because they are
:35:07. > :35:14.the paymasters, Tories are in the pockets of originally big business,
:35:14. > :35:17.now the City. The issue now is, is it really now the opportunity to
:35:17. > :35:20.reactivate the proposals for proper finance. It was the Tories who
:35:20. > :35:23.pulled out, everybody thinks it was Labour that pulled out, it was the
:35:23. > :35:29.Tories. These proposals are fine but they will bankrupt political
:35:29. > :35:34.parties. If they have a �5,000 or �10,000 limit on donation, everyone
:35:34. > :35:37.says we will have small donation, we all know really it is all about
:35:37. > :35:40.bankrupting, the Liberal Democrats are bankrupt already, they are
:35:40. > :35:44.perfectly happy with that. understand we are doing rather well,
:35:44. > :35:51.I'm no longer treasurer, but we are doing well. Lynton Crosby, was it
:35:51. > :35:55.unwise for him not to be forced to devest from business links. He
:35:55. > :35:59.shook the party up? You couldn't have Lynton Crosby and have him do
:35:59. > :36:02.that, he wouldn't do it on the terms. You had to choose to have
:36:02. > :36:05.Lynton Crosby and background noise or no Lynton Crosby. They have
:36:06. > :36:10.experienced Lynton Crosby before and they think he has integrity and
:36:10. > :36:13.he certainly has ability. They have decided to take the risk. He will
:36:13. > :36:16.get himself tangled up in stuff but it is below the radar. I don't
:36:16. > :36:19.agree with that, I think the problem with Lynton Crosby and the
:36:19. > :36:24.way it is positioned at the moment, it has a smell about it. That is
:36:24. > :36:32.not to say he has been in lobbying David Cameron, but if you take a
:36:32. > :36:42.position where we know Lynton Crosby says let's wipe away sue
:36:42. > :36:45.perv Louis issues, and one of those being public health, -- superfluous,
:36:45. > :36:48.and one being public health, I think that is somewhere the
:36:49. > :36:53.Conservatives don't need to be. is a cut-through issue, I would
:36:53. > :36:56.take a lot of persuading that people knew Lynton Crosby really
:36:56. > :36:58.was very widely or they were paying a lot of attention to these
:36:58. > :37:04.parliamentary debates. You are netting this off against the impact
:37:04. > :37:06.that he can make for you. You couldn't get him any other way.
:37:06. > :37:09.don't think Lynton Crosby will have significantly influenced the
:37:09. > :37:13.decision that was taken, and there is far too many people involved in
:37:13. > :37:19.it. What worries me about this is it brings the whole political
:37:19. > :37:24.process into disrepute, it is just yet another peg to people adding to
:37:24. > :37:27.all the other pegs that people have, that politics is corrupt, and
:37:27. > :37:30.politics isn't corrupt in this country but people are beginning to
:37:30. > :37:34.think they are. It is another thing. I don't think it will damage the
:37:34. > :37:40.Tory Party, it will damage all of us. It creates a smell. Just in the
:37:40. > :37:44.couple of minutes we have left, it is lovely weather, a great sporting
:37:44. > :37:49.summer are people going in a cheery mood or is it the next two years
:37:49. > :37:53.will be this, austerity election, the battlelines are obvious and
:37:53. > :37:55.pretty miserable? I think it will be a very tough political period. I
:37:56. > :38:00.think it is clear that the Conservatives are in a better
:38:00. > :38:03.position than they were a month ago. It would be foolish not to accept
:38:03. > :38:09.that. I think we are in a position where the general election is wide
:38:09. > :38:12.open. I think you could end up with either major party having a
:38:12. > :38:18.majority or hung parliament. Nobody could call that at the moment. I
:38:18. > :38:21.think we are going to have a lot of hand-to-hand combat. The real issue
:38:21. > :38:24.is whether the economy is showing green shoots and beginning to
:38:24. > :38:27.recover. If it is both of the coalition parties will start to
:38:27. > :38:31.improve their position in the opinion polls. If they are not we
:38:31. > :38:34.have a problem. And the other very big issue is whether Ed Miliband
:38:34. > :38:39.sees through the strategic opening he has made for himself or it
:38:39. > :38:41.become as big trap for him. Not just in terms of bankrupting the
:38:41. > :38:46.Labour Party, that is secondary, it is much more about weakness and
:38:46. > :38:52.strength for his leadership. It is perfect Barbie weather, but
:38:52. > :38:58.what is on the Newsnight summer playlist, drifting from our iPod
:38:58. > :39:04.dock, one artist has been on heavy rotation for decades, five of them,
:39:04. > :39:09.Nile Rodgers, hit maker to the stars, Bowie, Madonna and Daft Punk.
:39:09. > :39:16.Nile Rodgers has let his music do his talking but in a by star store
:39:16. > :39:22.in London he gave us tips on how to make hit records. He even had a go
:39:23. > :39:26.at the notoriously tricky Newsnight song book. In a guitar store down
:39:26. > :39:33.Tin Pan Alley in London's West End we are hanging with Nile Rodgers
:39:33. > :39:38.and bringing our own joint toe the jam. (Newsnight theme tune played)
:39:38. > :39:44.Hello, the Queen has entered the building! That is actually our
:39:44. > :39:49.theme music, it sound regular gall. What happens when a world famous
:39:49. > :39:59.hero meets the theme tune of an acclaimed late night...well show,
:39:59. > :40:00.
:40:00. > :40:06.basically. Let's go with that. The horn is it. It has been the summer
:40:06. > :40:11.of bling. Liberace is big at the box-office again. It was a shiny
:40:11. > :40:15.gold pot for Andy Murray, and at the festivals a storming turn by
:40:15. > :40:18.Chic and Nile Rodgers. # We're lost in music
:40:18. > :40:25.# Caught in a trap His career was born under a
:40:25. > :40:30.glitterball. # We're lost in music
:40:30. > :40:39.How does he come up with those tight, funky groofs, how tight are
:40:39. > :40:43.they? They are tighter than Mickey Rourke's forehead. The process of
:40:43. > :40:46.writing a song and a groove and hook is so much trial and error.
:40:46. > :40:50.All of the composers I know and respect we never get it right the
:40:50. > :40:55.first time around, it is only after you rewrite it and rewrite it and
:40:56. > :41:05.then there is that moment usually that a-ha moment when you go, I got
:41:06. > :41:09.
:41:09. > :41:15.# Let's dance # Put on your red shoes
:41:15. > :41:23.# And dance the blues Not bad, but how is Nile Rodgers's
:41:23. > :41:29.audition going for the Newsnight house band. (Newsnight theme plays
:41:29. > :41:35.) Is it in six-eight?It is mainly a piece for banjo! Anybody in the
:41:35. > :41:40.store know what this tune is. his long career Nile Rodgers has
:41:40. > :41:44.collaborateed with all sorts. Including the droids of Daft Punk
:41:44. > :41:51.on this year's monster hit. But how are people getting along in America
:41:51. > :41:55.today. In the aftermath of the fatal shooting of Trevyon Martin, a
:41:55. > :42:00.black youngster in Florida, are things better or others than when
:42:00. > :42:05.Rodgers was starting out? I think things are worse, I tell you why,
:42:05. > :42:08.because gone is the sense of optimisim. A Trevyon Martin type of
:42:08. > :42:13.case could have happened when I was a kid and the outcome would have
:42:13. > :42:17.been the same. The difference is when I was younger we believed that
:42:17. > :42:21.in 2013 things would be different. We were loaded with this optimisim
:42:21. > :42:25.which is what fuelled, that was the turbo charger in our music, that is
:42:25. > :42:31.what made us write these optimistic songs, we were writing about a
:42:31. > :42:36.future that we thought we would see. In fact, the future that we
:42:36. > :42:39.envisioned has never happened. It is pretty much the same. Despite a
:42:39. > :42:42.black man in the White House? That is something you might not have
:42:42. > :42:48.anticipated or maybe you did? certainly never anticipated that in
:42:48. > :42:52.a million years. I think that is probably worse, in a strange way,
:42:53. > :42:59.because of someone like that. Because I have never seen any
:42:59. > :43:03.President as disrespected as I see President Obama being disrespected.
:43:03. > :43:08.# I'm coming up # I want the world to know fl # Got
:43:09. > :43:12.to let it show When Nile Rodgers wrote this song
:43:12. > :43:18.for Diana Ross he was smuggling a gay anthem into the charts, a
:43:18. > :43:21.harder thing to do 30 years ago than today perhaps. What's his view
:43:21. > :43:26.of the gay marriage debate? almost don't understand how a
:43:26. > :43:33.person could be against gay marriage. Why would what someone
:43:34. > :43:39.else does bother you? You wouldn't even know. America is quite divided
:43:39. > :43:44.because things that don't really affect their lives they believe has
:43:44. > :43:49.some sort of moral effect or some sort of residual effect when it
:43:49. > :43:55.doesn't really. 1-2ahhh
:43:55. > :44:00.# Freak out # Le freak
:44:00. > :44:03.Much admired by rappers and artists, he has been sampled more than John
:44:03. > :44:07.Lewis curtains, he has come to terms with it, especially now they
:44:07. > :44:11.are paying him. That is just a big part of the music business. I will
:44:11. > :44:14.go work with producers and I will sit down with them and they will
:44:14. > :44:19.play tonnes of my samples right there in front of me. They don't
:44:19. > :44:26.think about it. I can't tell you. There is no self-respecting DJ that
:44:26. > :44:35.doesn't have the beginning of Le Freak as part of their samples
:44:35. > :44:42.library, every as an "ahhh". Newsnight theme) big finish? I'm in
:44:42. > :44:49.the ball park but not there. If you had this cold in Hyde part, you
:44:49. > :44:54.would have blown them away. You got to be kidding me. (plays the
:44:54. > :45:04.Newsnight theme) that can't be it. You got it. Wonderful Nile Rodgers,
:45:04. > :45:04.
:45:04. > :46:05.Apology for the loss of subtitles for 60 seconds
:46:05. > :46:15.let's have a look at tomorrow That's it for tonight, we are back
:46:15. > :46:44.
:46:44. > :46:49.Today more sunshine for Scotland and Northern Ireland and more heat.
:46:49. > :46:54.Further south perhaps our hot spots just a bit further west. For
:46:54. > :46:58.Northern Ireland some decent sunny spells, temperatures up into the
:46:58. > :47:02.mid-20s, similar figures are forecast across southern and
:47:02. > :47:05.eastern Scotland. Persistent low cloud and muark further north, the
:47:05. > :47:09.isolated chance of a shower through eastern Scotland through the
:47:09. > :47:12.afternoon into the evening. Sunny spells for northern England,
:47:12. > :47:17.sunshine across the Midlands into East Anglia and the south-east of
:47:17. > :47:21.England. Some of the temperatures, a couple of degrees down on the
:47:21. > :47:25.last few days, an Eastleigh breeze, we can see the highs more intense
:47:25. > :47:29.further west. A hotter day for Devon and Cornwall in South Wales,