28/06/2016 Newsnight


28/06/2016

In-depth investigation and analysis of the stories behind the day's headlines. Evan Davis has the latest on the attacks at Ataturk Airport, and Brexit aftershocks for Labour.


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Transcript


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Explosions and gunfire attack at the international

:00:00.:00:07.

At least ten people are dead after two suspects blew themselves up.

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The attack occurred at about 8 o'clock our time.

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Also tonight, turmoil in the Labour Party.

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We'll hear from two Labour MPs, one on each side of the Corbyn divide.

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And Lord Heseltine on the Conservative's leadership

:00:33.:00:34.

contest and our relationship with the EU.

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And Emily gets the reaction to Brexit, of Marine Le Pen -

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Well, it was earlier this evening that news started coming

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through of explosions at the Ataturk International Airport in Istanbul.

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It's the main airport in the city, the third busiest in Europe.

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Explosions and gunfire were heard, the location of the attack

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was outside the security checkpoint to the international terminal; this

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is one of those airports with security at the entrance,

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as well as at departures to the airside terminals.

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The latest we have heard is the airport is being evacuated, although

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there are still people inside the terminal. You can see here video put

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onto social media, about an hour ago, travellers hiding inside the

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airport shortly after the explosion. The Governor of Istanbul has, I

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believe, confirmed in the last few moments have been 28 fatalities and

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many, many more injured. Reports on the ground say a suicide bomber was

:01:58.:02:02.

rugby tackled to the ground by a police officer, and there were three

:02:03.:02:07.

separate explosions. No group has yet claimed responsibility for the

:02:08.:02:08.

attack. Planes in the air are being allowed

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to Lambert flight are not taking off from the airport. Earlier we heard

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from Turkey correspondent, who was grounded on a plane at the airport,

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unable to disembark. I landed this evening about an Aaron half ago on

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Flight from nice. We are not allowed to disembark because of what is

:02:32.:02:36.

happening inside the airport. -- about half an hour ago. Around the

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international terminal area, one possibly in the car park as well. We

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understand one of the attackers opened fire with a Kalashnikov

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before blowing himself up with a suicide belt. We understand there

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are reports one of them was wrestled to the ground by police officers. We

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are not being told when we can leave the aircraft. For the time being

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there has been no claim of responsibility, but as James said,

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Turkey has been caught in a terrible grip of a spiral of violence. Some

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on Kurdish militants, including a mortar attack in Istanbul's second

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airport back in December that was claimed by Kurdish militants. I have

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to say, I have lived here for two years and I have often thought

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coming into this airport it is a potentially vulnerable place, and an

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attack could take place here, because cars are not searched very

:03:36.:03:40.

often coming into the airport area. That said, as you come into the

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terminal building, there are extreme sheens and scammers, so anyone

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coming in even before the check in desk. The attackers tonight seem to

:03:49.:03:53.

have breached the perimeter of the Apple, have got in towards the

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terminal building and there they have set off their attacks with

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tragic consequences stop by Mark Lowen there.

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Istanbul is two hours ahead of us, it's late there now.

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There will of course be updates on the News Channel

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Now - it's Brexit Day 5, and in both Westminster and Brussels,

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The British people voted in favour of exit, why are you here?

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We now offer a beacon of hope to Democrats across the rest

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Lots to talk about, but we start with Labour.

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What happens in a political party when the leader loses the confidence

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of three-quarters of the party's MPs, but refuses to step aside?

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Until the 1980s, it was the MPs who chose the leader

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in the main parties, so the MPs got their way.

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But now, grass roots party members have the ultimate say,

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and they can disagree with the MPs, and in Labour, Jeremy Corbyn

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is pinning his hopes on that activist power.

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It really is two sides fighting over a political party,

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Neither side seems willing to backdown.

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Our political editor Nick Watt reports.

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Tonight a historic Labour stand-off shows no sign of abating, the battle

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for soul and survival of the Labour Party is in full flow.

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Earlier today Jeremy Corbyn invited television cameras in, to show off

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his new Shadow Cabinet to the world. It was eight had awkward. -- a bit

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awkward. Within hours Labour MPs were taking part in the confidence

:06:16.:06:19.

vote, more than three quarters withdrew their support. A mere 40

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supported their leader, prompting one to say that Jeremy Corbyn had at

:06:25.:06:28.

least improved on the 36 and nominated him last year. He was

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defiant. Jeremy Corbyn supporters rushed out

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of Parliament to put their mark on the result. They said that unless he

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stands down, the politics of Corbyn and his supporters could threaten

:07:01.:07:04.

the very existence of the Labour Party. This is what we saw with the

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air strikes. Jeremy's responses to turn to the mob and an MPs and they

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are is all their fault. I think he needs to understand MPs are elected

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by their constituents, they got between 20-30,000 roads in their

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constituency. That is a huge mandate. We have to represent those

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people. -- votes in their constituency. They are the people we

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go to, they are the people we listen to, but what I would also say is

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Jeremy does have a huge mandate, but if you think 170 MPs who have all

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been voted for by 30, 40,000 people, that is a big mandate as well. We

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have a duty, I have a duty to my constituents first, my party second

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and then to my leader. I would love for that to be in synergy but at the

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moment it's not. The atmosphere is so gloomy there is

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even talk of a split in the Labour Party, reviving memories of the

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breakaway gang of Watt 1981. I asked one party veteran if history could

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repeat itself. It's good, it could. The reality is, if he stays and he

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wins... I mean, there has to be a real effort made to stop that.

:08:21.:08:24.

Friends of Jeremy Corbyn say they sense weakness in their opponents

:08:25.:08:29.

because they have not followed official Labour Party Rawls, which

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stipulate a leader can only be challenged if 51 MPs support a rival

:08:35.:08:37.

candidate. The message from the Corbyn camp tonight is, bring on the

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fight. Jeremy Corbyn supporters feel so strongly because they believe the

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battle goes to the heart of where power should lie in the Labour

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Party. They say ultimate authority must rest with thousands of Labour

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members and not a few hundred MPs. It is actually Labour Party members

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who spend their time knocking on doors, speaking to people in their

:09:03.:09:06.

communities, trying to build the Labour vote, the labour movement and

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trying to build an organisation. It is them who are closest to the

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voters, not the MPs. The MPs are incredibly out of touch, I think.

:09:16.:09:19.

That is why we have seen the shocks politics, nobody knows what has is

:09:20.:09:23.

going on. That is why we have seen the rise of the SNP, Brexit.

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Research published today shows Jeremy Corbyn enjoys strong support

:09:29.:09:34.

among party members. When asked if Corbyn should automatically be on a

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future leadership ballot, 77 cents of Labour Party members agreed. A

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figure which goes up to 89% among those who joined after the general

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election last year. 59% of Labour Party members said they would vote

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for Corbyn if he was challenged by another MP, compared with 80% among

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late joiners. Labour grappled with its future on a

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typical English mid-summer 's day, but there was a very un-British feel

:10:04.:10:09.

of revolution in the air, as Westminster comes to terms with the

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after-shocks of last week's referendum earthquake.

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It was all smiles when the then Shadow Cabinet but on a show of

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unity during the referendum campaign, but tonight they are

:10:23.:10:27.

trying to agree on a unity candidate to challenge Jeremy Corbyn. The

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names in the frame are Tom Watson, Angela Eagle and Owen Smith.

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Joining me now is Barry Gardner. This isn't sustainable, is it? I

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think people will find it incredible that at a time when the pound has

:10:57.:11:02.

dropped to 35 year low, when there is a 12% cut in the value of

:11:03.:11:06.

annuities for pensioners and when the Prime Minister has been forced

:11:07.:11:11.

to resign because he called a referendum and then didn't win it.

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We know how bad it is, what is the answer? It is incredible, the public

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will think how could it be, at that moment, when the government most

:11:23.:11:27.

needed to be held to account, that the Labour Party, instead of

:11:28.:11:30.

thinking about the country, thought more about its own internal

:11:31.:11:35.

leadership 's bat and turned in on itself. Maybe they felt Jeremy

:11:36.:11:39.

Corbyn wasn't the man to point out all the things you've just been

:11:40.:11:42.

pointing out, that almost anybody else could be doing it more

:11:43.:11:46.

effectively. Isn't that a fair critique? If he isn't the man, he

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isn't the man? I don't think it is a fair critique. I think this was

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always the plot waiting for its opportunity. There may be an

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election soon and that put a bit of urgency into it. That is exactly why

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those who want to get rid of Jeremy should go by the party rule and put

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up a candidate... They will. That is the democratic way. The way they

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tried to do it was to get people to resign. Now, all those mass

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resignations, the effect of that would have been nobody at the

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dispatch box against the government ministers. People will have looked

:12:28.:12:31.

at the House of Commons unthought, where has the Labour Party gone? Why

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have they aggregated their responsibility to hold this

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government to account? I think about 100 MPs on the payroll, the Shadow

:12:43.:12:46.

ministerial team, it is a lot, we saw the picture. If the leader of

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the party cannot assemble a shadow ministerial team because there are

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not MPs to work with him, would that for you be a cause for him to say,

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OK, the game is up? There is only one way to change the leader and

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it's the way our party has set out, and that is that the candidate to

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come forward, supported by 50 MPs and then go to the party. We do not

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own this party is members of Parliament. Just on the resignation

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issue, you resigned on Sunday. Did you coordinate the timing of your

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resignation with anybody else, so that there was this trip grip on the

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hour, every hour, and ministerial resignation? I did not coordinate

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the timing. I resigned after I had a chance to talk to John McDonnell and

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explain my reasons for stepping down. Is it coincidence there has

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been this stream of regular resignations that do appear to be

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designed to maximise the news value of the resignations and elongate the

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process? I wish this hadn't happened. Is it coincidence that

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happened? There was a turning point, and the turning point was the

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sacking of Hilary Benn. To do that in the middle of the night, and in

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that way, I believed was not right. The truth is Jeremy was likely to

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face a vote of no-confidence it became clearer he would lose that

:14:15.:14:17.

vote of no-confidence. I don't believe that was right for him to go

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through and I don't believe it was right for the party. For all his

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qualities, Jeremy is not the leader we need to take us forward.

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Tomorrow we expect Angela Eagle or Tom Watson to put themselves forward

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as a challenger and it will be difficult for them to get 50 behind

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them. I do not know who it will be. You must have been involved in

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discussions. It comes down to this fundamental. That we have an

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unelectable leader. If we lose the elections then the price of our

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failure is paid by the working people of this country and their

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families who do not have a government to stand up for them. I

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believe we need a Labour leader who can lead us to be a credible

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opposition look like a government in waiting and reach out to the voters

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we have lost. The problem for you, as we see from the opinion poll

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potentially the members will put Jeremy Corbyn back as leader. What

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are your choices at that stage come and take me through the menu of

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options. I understand that and also understand the dilemma Jeremy faces

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because he does believe he has a responsibility to those members who

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elected him but we have a bigger responsibility to our country. I

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hope he will still do the right thing, there is still time for him

:15:44.:15:47.

to resign with dignity. If he does not do that, there is an option,

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called the nuclear option, effectively you say is the

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Parliamentary party, you are collecting Angela Eagle as your

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leader in the House of Commons. We are taking this one day at a time,

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this is unprecedented in the history of our party. I do not think we want

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to see this getting any worse. It is affecting mood and morale and it is

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deeply distressing in the party and for staff. We want this to end. At

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some point there must be a separation and the Parliamentary

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party would save for our purposes, so and so is in. We have not got to

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that point, we have a responsibility to be an effect of opposition. We

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need a fresh start and a change of leader. The two of you are not here

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to argue against it either, but could you teach reflect how on earth

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Labour will get out of this because you are essentially playing a game

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of chicken and you're going to destroy your party, one of you have

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got to give in, Jeremy Corbyn has got to go with the Parliamentary

:16:58.:17:02.

party gives him or you destroy the party in the next election. No one

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thinks you could win with a leader who does not have the confidence of

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the MPs. The biggest issue is the confidence of people in the Labour

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Party. I had a message today from a floating voter who said if Jeremy

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Corbyn does not stand aside with that result, it will undermine

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everything the Labour Party says or doors. Your solution then is Jeremy

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Corbyn yields to you. His solution would be that you yield to him. I do

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not see this as my giving in, we have been colleagues for many years.

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The issue is do you follow the process that the party collectively

:17:53.:17:56.

agreed or do you try to do a back door manoeuvre to undermine the

:17:57.:18:03.

elected leader. As I say the party does not belong to us. What is your

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solution when the bulk of the elected representatives, those who

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have been elected by people outside the party, said we do not like the

:18:14.:18:18.

guy who is leading the party. Do you go into an election with them saying

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they do not like the leader, that will not work? You have got to trust

:18:22.:18:27.

the electorate but we have, which is the entire membership of the party

:18:28.:18:29.

including Members of Parliament, who have the power to nominate

:18:30.:18:36.

candidates. To trust the party to arrive at the right decision. And

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the last word? I still say this is about as being an effective

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opposition and looking like the government in waiting. The rules of

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the rules. In a sense the rules have been followed. If he is fit, ...

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This is about the spirit as well as the rules. And if you have a leader

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that has lost the confidence of the party then that sends out a message

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to the country. I think Jeromy can play a leading role in the party in

:19:10.:19:14.

a different way. I think we now desperately need a fresh start. But

:19:15.:19:19.

he will not effectively rally behind the leader even if he is elected by

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the Constitution? I do not know why Jeromy would want to go through

:19:25.:19:28.

this. It will not be the same as the readership election before, it will

:19:29.:19:32.

be bruising and distressing. Jeromy never had the confidence of the

:19:33.:19:35.

majority of the Parliamentary Labour Party. When he was nominated he

:19:36.:19:43.

scraped 36 nominations. They tried to make it work and is now think it

:19:44.:19:46.

does not work. Many of our colleagues work hard. My point is he

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has never had the confidence of the vast majority of Labour MPs. I did

:19:54.:19:56.

not vote for him, I did not nominate him. But the party shows in its

:19:57.:20:04.

wisdom, it chose him as his leader and we must work with that and then

:20:05.:20:08.

use the rules of the party has set to change the leader if we do not

:20:09.:20:12.

like it. We have got to leave it there.

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Meanwhile the real drama is still surely the European one -

:20:15.:20:16.

What kind of deal we'll strike with the EU.

:20:17.:20:20.

The action moved to Brussels today, with the European Council meeting

:20:21.:20:23.

for the first time since Thursday and the Parliament debating Brexit.

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It is hard to know from the chorus of diverse voices out

:20:27.:20:29.

there which ones really matter, which ones are noises off,

:20:30.:20:32.

Our diplomatic editor Mark Urban is in Brussels.

:20:33.:20:52.

The long simmering antagonism from train Brussels and British

:20:53.:21:01.

Euroscepticism erupted like a summer storm today, finally. The man whose

:21:02.:21:06.

political life had led to this moment, savouring his hour of

:21:07.:21:11.

triumph. I said I wanted to lead a campaign to get the UK to leave the

:21:12.:21:16.

European Union. You all laughed at me. Well I have to say you are not

:21:17.:21:23.

laughing now. The manner of victory too much for some. Argent

:21:24.:21:29.

federalists denounced the man and his campaign. It is the way it

:21:30.:21:34.

succeeded, the absolute negative campaign. The posters of Nigel

:21:35.:21:42.

Farage showing refugees like Nancy for the gander. Jean-Claude Juncker

:21:43.:21:50.

joined in. I'm really surprised you're here. You were fighting for

:21:51.:21:56.

the exit, the British people voted in favour of exit, why are you here?

:21:57.:22:05.

Extraordinary as the scenes where, the European Parliament is not

:22:06.:22:11.

controlling the pace of the UK exit. That is a matter for Europe's

:22:12.:22:16.

leaders and it was the arrival of David Cameron presumably for the

:22:17.:22:18.

last time that heralded the main event of the day. Even at this

:22:19.:22:24.

moment of high dramatic drama, there are people trying to slow down the

:22:25.:22:29.

pace. Most obviously and importantly the Germans, who seem increasingly

:22:30.:22:33.

open about their motive. The worst thing that can happen is Brexit and

:22:34.:22:37.

it remains the worst thing. Now after the referendum which is not

:22:38.:22:43.

legally binding, I think there is no sense, really no sense in urging the

:22:44.:22:50.

British to accomplish what is considered by all of us to be the

:22:51.:22:54.

worst outcome we can think of. Needing both trying to close off any

:22:55.:23:02.

way negotiation or other British verification, President Francois

:23:03.:23:06.

Hollande. I regret this choice but want to respect it. I cannot imagine

:23:07.:23:11.

a British Government not respecting the choice of their own people. It

:23:12.:23:18.

is a difficult situation. Luxembourg reminded the UK that EU membership

:23:19.:23:23.

was a binary choice. The government decided now with the referendum to

:23:24.:23:29.

get divorced. When not on Facebook is not obligated, it is not one step

:23:30.:23:36.

in and one step back. And the Belgians added to the chorus. We

:23:37.:23:42.

cannot accept that it should be a double game, that despite the

:23:43.:23:44.

referendum there should be anyway opened to block the European project

:23:45.:23:51.

for months and months. Listen to those in no hurry. Ireland. The

:23:52.:23:57.

party will let the new Prime Minister and he will then decide

:23:58.:24:02.

what the viewers. They may need some short time you cannot have a drift

:24:03.:24:07.

into uncertainty. And then the Estonians suggesting that talking

:24:08.:24:11.

was not over yet. The possible future talks with the UK should not

:24:12.:24:17.

be carried on in the spirit of revenge. That has to be clear. The

:24:18.:24:23.

UK remains an important player for us economically and politically and

:24:24.:24:33.

security wise. And what would Lithuania say if the UK never

:24:34.:24:42.

invoked Article 50? Welcome back. You can delay Article 50 but does it

:24:43.:24:48.

really get you anywhere? The assumption seems to be it could

:24:49.:24:52.

create an opportunity for the UK to think again. Superficially at least

:24:53.:24:55.

the government here or accept the result of the referendum and with it

:24:56.:25:00.

that the UK is on its way out of the EU. And yet despite the fact that

:25:01.:25:04.

just today they have said they do not want any kind of informal

:25:05.:25:10.

negotiations before UK formally says it is going, some kind of talks on

:25:11.:25:19.

the margins must be a possibility. Tonight intriguingly we heard David

:25:20.:25:23.

Cameron had told fellow leaders he would have to do something about

:25:24.:25:26.

freedom of movement. Negotiating, no. Maybe laying down a marker for

:25:27.:25:32.

his successor. And their message to him, well here is one German

:25:33.:25:39.

version. We think how this story goes on, you think there is a

:25:40.:25:46.

chance, a potential, for making it better than it seems now in what

:25:47.:25:51.

Europeans can do to rescue the relationship. Britain ends this day

:25:52.:26:00.

still heading for the exit but the debate is ongoing about whether

:26:01.:26:02.

anything can or should be done to stop that.

:26:03.:26:08.

I have come from the Minister 's news conference and little comfort

:26:09.:26:15.

for those who think that perhaps the UK might change its mind. He said

:26:16.:26:18.

the result of the referendum will be carried through. And he referred to

:26:19.:26:25.

himself repeatedly as a Democrat. He also gave a fascinating insight into

:26:26.:26:28.

what lies ahead. He talked about the kind of advice he would give his

:26:29.:26:33.

successor. It is clear in his mind these credible choices between

:26:34.:26:37.

different models have got to be made before the UK invokes Article 50.

:26:38.:26:42.

That suggests many more months of thought will need to be given to

:26:43.:26:46.

this during which time of course all kinds of economic and political

:26:47.:26:52.

events might intervene. Thank you very much.

:26:53.:26:54.

Well, suddenly the Tory party's leadership election -

:26:55.:26:55.

the one that picks our Prime Minister - looks like the most

:26:56.:26:58.

sedate of the various dramas surrounding us.

:26:59.:27:00.

Candidates must declare by Thursday at noon,

:27:01.:27:03.

the winner will be selected by the 9th September, a week later

:27:04.:27:06.

And there's a lot of talk of a possible election soon after.

:27:07.:27:12.

Keep the Thursdays on or after October 13th free,

:27:13.:27:15.

cos we haven't had enough chance to vote lately.

:27:16.:27:17.

What news from the leadership campaigns? We have the first

:27:18.:27:29.

contender out of the blocks tomorrow, Stephen Crabb, recently

:27:30.:27:33.

appointed Work and Pensions Secretary who will form a dream

:27:34.:27:37.

ticket with Business Secretary Sajid Javad and they will say they are of

:27:38.:27:41.

a new generation and from a different background. Stephen Crabb.

:27:42.:27:47.

By a single parent and once had to protect his mother from his violent

:27:48.:27:51.

father. Then on Thursday the big beasts, Boris Johnson and Theresa

:27:52.:27:55.

May. MPs have until the end of the summer recess to whittle down to

:27:56.:28:01.

two. Boris Johnson are confident, they reported tonight he has around

:28:02.:28:06.

100 Conservative MPs supporting him. The Sun newspaper also reports the

:28:07.:28:09.

stand-off between Ross Johnson and Theresa May but generally it is

:28:10.:28:13.

quite a good-natured contest. During the referendum campaign you remember

:28:14.:28:19.

Amber Rudd, the climate and Energy Secretary, said to Boris Johnson I

:28:20.:28:22.

would not trust you to drive me home at night and was Johnson said to

:28:23.:28:27.

her, can I drive you home! It looks like on paper Boris Johnson is the

:28:28.:28:32.

front runner and Theresa May is in second place. But the lesson I have

:28:33.:28:36.

learned from covering Tory leadership campaigns is never make

:28:37.:28:41.

predictions. And Lord Heseltine will be able to say that the front runner

:28:42.:28:46.

rarely wins. One grandee to date set that not since 1955 and Sir Anthony

:28:47.:28:51.

Eden has the front runner in the winner. Thank you, Lord Heseltine.

:28:52.:29:00.

He has had a few battles himself. Are you going to tell us who you are

:29:01.:29:04.

supporting? I'm not because to me that is not the fundamental issue we

:29:05.:29:09.

are dealing with. We have a constitutional crisis of the scale

:29:10.:29:15.

that has never existed in my life. The real trauma is that every day

:29:16.:29:21.

that goes past in the boardrooms of the world and of course this

:29:22.:29:25.

country, decisions are being delayed. And they will go on being

:29:26.:29:32.

delayed until there is a clarity about the economic future of

:29:33.:29:37.

Britain. I'm appalled that the idea that we will take months to get to a

:29:38.:29:42.

position where we can decide how to proceed and then years for we come

:29:43.:29:47.

to a conclusion. And the damage that that will do in terms of lost

:29:48.:29:52.

investment and avoided decisions is incalculable.

:29:53.:29:57.

You would say speed this process up so we get Prime Minister soon? It

:29:58.:30:04.

took five days when you were competing with John Major post

:30:05.:30:11.

Margaret Thatcher. We are now in a position of 12 weeks or something,

:30:12.:30:16.

ten weeks or something? 12 weeks before we have a Prime Minister but

:30:17.:30:20.

there is no need for the negotiations to wait, because the

:30:21.:30:26.

negotiations will be the same. Will they? Of course. The store has been

:30:27.:30:36.

set out by the Europeans. There will be no negotiations until you have

:30:37.:30:45.

triggered clause 50. What is happening, the British people have

:30:46.:30:51.

been sold a deceitful pup. We were told by the Brexit campaign that it

:30:52.:30:54.

would be OK, because the Europeans are desperate to keep us in, so we

:30:55.:30:59.

will have a conversation and get a sensible arrangement. The truth is,

:31:00.:31:04.

the Europeans have said, on your bike. You took the trouble to make

:31:05.:31:07.

this decision, we're not negotiating. And every day that

:31:08.:31:14.

passes, the uncertainty profiles. This is why you want us to see

:31:15.:31:19.

exactly what out looks like and then have a second referendum, which

:31:20.:31:24.

chooses between in or out again? I want something just a little

:31:25.:31:27.

different but fundamentally so. I want to put Boris Johnson and his

:31:28.:31:31.

colleagues in charge of the negotiations. He doesn't need to be

:31:32.:31:35.

the Prime Minister or the leader of the Conservative Party to do that.

:31:36.:31:40.

But he got us into this mess, on a range of platitudes about how

:31:41.:31:44.

glorious the alternative future would be. Let him show us what that

:31:45.:31:50.

future is. My own view, it has to be shown, is it will be totally

:31:51.:31:54.

unattractive to the majority of members of Parliament. And so how do

:31:55.:32:00.

you carry out the will of the people in this referendum, which I believe

:32:01.:32:04.

you should? The only way is to negotiate so the members of the

:32:05.:32:08.

House of Commons, where sovereignty lies, can come to a judgment about

:32:09.:32:12.

whether they would vote for it. My view is they won't, but they must be

:32:13.:32:16.

given the chance. And when it comes to it, there are only two ways to do

:32:17.:32:21.

that. One is to have a general election, the second is to have

:32:22.:32:27.

another referendum. And overturn the first one? Thank you very much, Lord

:32:28.:32:31.

Heseltine. The next French presidential could

:32:32.:32:51.

see Marine le Pen as one of the last two on the ballot. She has been

:32:52.:32:55.

given her party something of a makeover, softening the tone whilst

:32:56.:32:58.

keeping the line of the hardline message, framed by her father, the

:32:59.:33:06.

party founder. Emily went to meet her yesterday.

:33:07.:40:06.

Emily talking to Marine le Pen who of the state doesn't like Hillary

:40:07.:40:09.

Clinton. Financial markets had

:40:10.:40:10.

a referendum jolt last week, The pound and the FTSE both had

:40:11.:40:12.

a good day today, recovering some But while shares and currencies do

:40:13.:40:17.

provide an instant guide to the latest jumps in sentiment,

:40:18.:40:20.

there is a real economy underneath Let's ponder on some

:40:21.:40:23.

of the economic effects - I am joined by Anthony Jenkins and

:40:24.:40:41.

Julia Tet. Bank shares pummelled more than most, down by about 30%,

:40:42.:40:47.

what is going on? Banks hate uncertainty. They are basically a

:40:48.:40:52.

leverage play on the state of the economy, people think the economy

:40:53.:40:54.

will be weaker and with the prospect of lower interest rates for longer

:40:55.:40:59.

that affect banks. Banks have been under pressure for many months and

:41:00.:41:03.

years. If you look at the decline in bank stocks, because of global

:41:04.:41:08.

economy. This is another problem that. A big problem. What about

:41:09.:41:13.

passport in? People say you might lose your passport operate through

:41:14.:41:17.

the single market. Obviously they can operate still, it's just a bit

:41:18.:41:20.

more of a burden. How much per problem will that be, if they lose

:41:21.:41:26.

the passport? It is key to our participation in financial services

:41:27.:41:30.

across Europe. Remember, the European banks also passport into

:41:31.:41:34.

the UK, so there is a reciprocity here. But like with many things in

:41:35.:41:36.

this debate, it's going to be in the

:41:37.:41:50.

detail of the negotiations. What you think about the banks? Banks have

:41:51.:41:53.

been very badly damaged, clearly. It is partly because of the extreme

:41:54.:41:55.

uncertainty and also the people have been ignoring the degree to which

:41:56.:41:57.

expectations have collapsed in the last few days, not just in the UK

:41:58.:42:00.

but globally and that is hurting insurance companies as well. There

:42:01.:42:02.

is another important point here. If you look at US banks and see how

:42:03.:42:05.

they are performing relative to European ones, there is a huge

:42:06.:42:10.

transatlantic split opening up. I am based in New York normally fuzzed up

:42:11.:42:13.

when I spoke to New York financiers are couple of days ago, as far as

:42:14.:42:18.

they are concerned, this has sealed the victory of the American banking

:42:19.:42:23.

sector on the global stage may think European banks are in the dust. Is

:42:24.:42:28.

that that assessment? I think there are lots of reasons why people might

:42:29.:42:33.

think that, typically the size of the US economy, six times the size

:42:34.:42:36.

of the UK. When you're trying to support a banking system which is

:42:37.:42:40.

big, it is more difficult in a small economy. I think there are a lot of

:42:41.:42:44.

pressures on the bank and we will probably see a fragmentation in

:42:45.:42:48.

Europe, and more regional and local focus. Far as the Americans are

:42:49.:42:53.

concerned, what has happened with Brexit is a complete self-inflicted

:42:54.:42:58.

wound on an extraordinary scale. Most Americans I know are absolutely

:42:59.:43:06.

shocked. Absolutely. Weather is banks, the economy or anything else,

:43:07.:43:11.

this is regarded as very big. Let's be clear about potential for

:43:12.:43:17.

short-term financial can take contagious. You worried about the

:43:18.:43:22.

next six months and getting for it, Anthony? What matters for banks in

:43:23.:43:25.

the system is do you have enough liquidity? The Bank of England has

:43:26.:43:28.

been clear they will provide liquidity. Do you know you're

:43:29.:43:31.

trading positions, do you have them under control and are you hedging

:43:32.:43:35.

them appropriately? Are we keeping your clients and on people onside

:43:36.:43:38.

estimate this is massively disruptive when you go through these

:43:39.:43:43.

changes. That is the short-term agenda is the bank CEOs. I think

:43:44.:43:47.

they are doing a pretty good job in partnership with the authorities.

:43:48.:43:50.

We'll earned a lot from 2008 and learned some lessons. Are you

:43:51.:43:55.

worried? I am going to be optimistic and they won good lesson of the last

:43:56.:43:59.

few days as the financial system as a whole has weathered it pretty

:44:00.:44:04.

well. Frankly, regulators and bankers have been to boot camp and

:44:05.:44:07.

back in terms of risk management, because of all the things as

:44:08.:44:11.

happened since 2008. They can do this. The big issue is the medium to

:44:12.:44:16.

long term, the economic impact. Low interest rates, which are terrible

:44:17.:44:19.

for pensioners, savers and insurance companies, that can be very

:44:20.:44:23.

damaging. What really frightens people right now is the prospect of

:44:24.:44:29.

years of soggy growth. Can I suggest something... This is an optimistic

:44:30.:44:33.

scenario. For years the success of the city, Anthony, has kept Sterling

:44:34.:44:37.

very high and has made lots of other industries in part of the country

:44:38.:44:43.

very uncompetitive, very difficult for Middlesbroughs to compete

:44:44.:44:45.

internationally, when it is stuck with a city pushing up the exchange

:44:46.:44:49.

rate. What this appears to have done is knocked the exchange rate down.

:44:50.:44:53.

Maybe if that is a permanent effect we will have a rebalancing? One of

:44:54.:45:01.

the things Thursday showed us was this massive fracture in our

:45:02.:45:04.

society, which is not good. If this can be a catalyst for a rebalancing

:45:05.:45:08.

of the economy... My own view, and I have been quite open on this, the

:45:09.:45:12.

financial sector itself is going to contract over the coming years all

:45:13.:45:16.

sorts of reasons, technology among them, so it will inevitably become

:45:17.:45:20.

smaller. We will have to seize this, difficult though it is, the

:45:21.:45:24.

uncertainty has to be removed. We have to seize this opportunity now

:45:25.:45:28.

to build the future of Britain. Can I jump in and say if you look at the

:45:29.:45:33.

Financial Times, tomorrow's paper or what is on the website, you will see

:45:34.:45:38.

stories like the fact Vodafone is thinking of moving its headquarters

:45:39.:45:41.

out of the UK. Virgin has cancelled deals. You see so many indications,

:45:42.:45:46.

it's not just the financial sector that has had a heart attack and is

:45:47.:45:50.

now basically freezing investment or preparing to move, it's other

:45:51.:45:55.

companies as well. I would love to see the UK economy rebalanced,

:45:56.:45:58.

desperately love to see it, but what I fear is we are going to see a

:45:59.:46:01.

re-balance all down to a lower level and that is a tragedy. Thank you

:46:02.:46:06.

both very much. That is all we have time for, such a busy week. I will

:46:07.:46:09.

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