14/07/2016 Newsnight


14/07/2016

Reshuffle fever in Westminster, will new faces mean new policies and what will happen to the sacked ministers? Plus the world reacts to Boris Johnson as foreign secretary.


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A new-look government, a new-look Whitehall,

:00:00.:00:00.

a new message but many familiar faces, the same money troubles

:00:07.:00:09.

Should we expect a decisive, radical, reforming government,

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or one that's going to get stuck with Brexit?

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Our priority will be to send out a very strong and clear message that

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Britain will remain a very attractive place to invest,

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to create jobs, to do business, and we will take whatever steps

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we need to take to make sure that remains the case.

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But at the French embassy tonight, the Foreign Secretary

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was already experiencing life on the outside.

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We'll look at what to expect from the new administration.

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And what did Theresa May say to George Osborne as she let him go?

:00:57.:00:59.

Our political editor has found out and it wasn't pretty.

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And refugees' experiences told on BBC2.

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So, has Europe managed to sort out its response?

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For six years, Theresa May has been quietly sitting in the Cabinet.

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She's avoided the plotting, mostly, and has presumably been

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making private judgements about all her colleagues

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Today, she's had the chance to form a government

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of her own and her colleagues at last find out what she's been

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Bad news for some, as they were dropped.

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Good news for others, with fresh faces given a big

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It nets out as a hugely different government.

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We've become used to remarkably few personnel changes

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over the last six years, so this is a shock to

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And a bigger change than last year, when the coalition ended and the Lib

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Here's our political editor Nick Watt.

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Before we go into what it all means, just this extraordinary story

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tonight that you have managed to get hold of about Theresa May and George

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Osborne? Reds Downing Street were pretty clear yesterday that Rita Mae

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had sacked George Osborne, he didn't resign and I've learned to like they

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had a very frosty meaning -- meeting at Downing Street yesterday in which

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trees may make pointed remarks to the outgoing Chancellor. She said he

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had overpromised and under delivered and took issue with his surplus

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target and said that has given them a nightmare, he could never deliver

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it and perhaps it was a bit of a stunt as people said, to catch the

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Labour Party. I understand to reason may was repeating what she had said

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in a speech in Birmingham the day before where she had rear --

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reiterated her pledge to been the surplus target and she said George

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Osborne had not done enough to challenge deep economic reform and

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she was going to do it. The reverberations from the sackings and

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appointments are rebounding around Westminster still. We thought we

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would take a look at how the new Prime Minister has gone about

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forming her government. Not since Harold Macmillan's night

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of the Long knives in 1962 have we so much ministerial blood flow along

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Downing Street. Theresa May has reordered an entire government as

:03:32.:03:36.

she responds to the twin instructions from the electorate.

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Tate Britain out of the EU and change the ways of the governing

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elite. As you waded through the blood, it was clear that the new

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Prime Minister had three aims in mind. Number one, deliver Brexit

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with a Nixon in China approach. Theresa May's appointment of a trio

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of Brexiteer is to take charge of Britain's exit from the EU fulfils

:04:02.:04:05.

her pledge to ensure the referendum winners run this process. Allies who

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say that only arch Eurosceptics have a hope of success are drawing

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parallels with the way in week the hardline Richard Nixon delivered a

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breakthrough in US relations with China. The Prime Minister might also

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be trying to create some space should the negotiations turn out to

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be slightly more talent in. What the Prime Minister has done is said,

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"OK, you have done the heavy lifting intellectually about this. Deliver

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it for me in government". I think that because they are trusted,

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deeply trusted by all Conservatives, both in parliament and in the

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grassroots, to be true to their beliefs on that, that they are

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actually in the best place to make the deals and perhaps the slight

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compromises you have two, to deliver Brexit and deliver it for the

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benefit of the British people. Number two, rewiring Whitehall. Not

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since the era of Tony Blair, who loved to abolish and set up

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government departments, have we seen such people Whitehall. For example,

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the business, innovation and skills department is renamed, and its

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headquarters houses some of the new bees. There is pain and delight in

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equal measure as the very un-Thatcherite industrial strategy

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makes a return and climate change is nowhere to be seen on the nameplate.

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Number three, social reform in the spirit of Joe Chamberlain. In her

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first statement outside number ten, the new Prime Minister delivered an

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unmistakable message of change by making clear that she would tackle

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burning injustices. This thinking owes much to her new Joint Chiefs of

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Staff, Nick Timothy, who is the biographer of the great social

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reformer, Joseph Chamberlain. Being from Stratford-upon-Avon, close to

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Birmingham, with Joseph Chamberlain and his sons as well, I think that

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is something of a role model to us all, the ability to devolve power

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but also, to champion our cities and be a real champion for those on

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National Living Wage, those hard-working families that I think

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she keeps going back to. Theresa May will finalise her new government

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over the coming days as she turns to the lower ministerial ranks. The

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blood-letting is not yet over. Nick Watt, there.

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While we've all been banging on about Europe

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for the last six months, ordinary life has rumbled

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on, but quite a number of domestic problems have been

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The Theresa in-tray is piled high with things to be resolved.

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Some prime ministers have the option of staying vague and drifting

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Theresa May won't have that luxury. Her decisions will be made in high

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definition. Theresa May's permission may well be remembered for good or

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ill by how well the Brexit negotiations go. But on domestic

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policy, she's not inheriting a blank piece of paper.

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There are three important areas I would pick out and keep an eye on

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Secondly, the roll-out of universal credit.

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Secondly, the roll-out Thirdly, the NHS.

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This economist explains how these issues have been

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-- made more, get it by the effects of the vote on Brexit. The exchange

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rate has fallen and the cost of importing things is going to be

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higher. That will push up on inflation.

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It will leave less money spare for people to spend

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The second thing that's going to happen is GDP

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growth is likely to slow and hiring decisions

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potentially wage growth will be a little slower too.

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Both of these things are actually quite bad for

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the public finances because we need people to spend so that we can tax

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This is a graph showing what markets expected

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coming years before the Brexit vote, and this is after.

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You can see more than a few years out that they are

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look at the very left of the graph.

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Inflation is now expected to be sharply higher.

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This expert from a think tank on living standards

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explains how this might be a problem for Damian Green, the new Work and

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We've got wages growing at a pretty modest rate

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We've also got a benefit freeze, which means benefits aren't going

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anywhere, it's only working-age benefits over the next few years.

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So relatively modest levels of inflation mean that for both

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workers and those relying on benefits, in

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work and out of work, their living standards

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are likely to start to

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flat-line again, or even maybe fall over the next few years.

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One important issue that will affect this is the roll-out of the troubled

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It was intended by this point to be helping 6 million people.

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This plan to reform a range of working-age

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Even before Brexit came along the Government was facing a

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On the one hand, if it was able to implement

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meant actually many working-age households would be losing out

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We are about to start entering the territory

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of postcode lottery, where

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identical families in different parts of the country would have

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different outcomes depending on whether they are on the old system

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But if it doesn't work, then that is a hit to

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the Treasury, because by moving from the old system

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Treasury stands to save somewhere in the region of ?4 billion or so.

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This analyst from the Nuffield Trust, a

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health think tank, exclusively reveals to Newsnight her maths

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suggest trouble ahead for Jeremy Hunt, who

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NHS hospitals are really under a lot of pressure at the moment.

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We know they are already missing a lot of their targets

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And at the same time they have an underlying financial

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That means it's costing them ?3.5 billion more to

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treat the patients that they have coming in than they are actually

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Look at emergency departments, where 95% of

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attendances should be dealt with in four hours.

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We met that target for bits of 2014, we flirted with it in

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2015, but in 2016 we've been miles away.

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So how big a task is it for the NHS to get back into budget for 2020?

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First of all, hospitals will need to cut their costs every year by 3%.

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Over recent years they've only managed to cut them by 2%

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and the government's own efficiency review has found that 2% really

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So hospitals are going to have to exceed that for the next three

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In addition to that we are going to need to see a slowing in the rate

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In recent years, the NHS does 3% more work a year.

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We think we are going to need to see that slow down to around 2%.

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There are schemes that cut NHS demand relatively painlessly,

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for example, by putting doctors inside care homes.

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That could mean some people get treated before their minor

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But there are also other ways of cutting NHS

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For example, we could just stop keeping up with some

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All of those things would suppress demand

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But would an electorate that has just voted, it thinks, for more

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The problem is that it's the painful stuff that's certain to save money

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short-term, and the hospital overshoot could reach

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Brexit is not Theresa May's only problem.

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A little memo therefore the new Prime Minister.

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Before we digest all that, Chris is here with one small legacy

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a letter from the PM's office released on the web.

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It's all about the severance pay of special advisors.

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It's a bit different to everything we have been talking about but

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explain. So there's a process in white or called ministerial

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direction. When civil servants think they are being asked to do something

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they shouldn't be doing, for value for money grounds come usually, they

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say to a minister, "We will do this but you have to put in writing you

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have asked us to do it". David Cameron has asked the Cabinet Office

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to pay extra severance pay to his own special advisers because he

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feels sorry they have lost their jobs in a sudden shock over the last

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month. So we don't know how this is going to be debated but the cost is

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going to be, special advisers, who have got around ?750,000 in total...

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About ten of them. Now they are going to get about ?1 million. It is

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distributed unevenly, five figure sums for a Sahm, and four figures

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for others, months of plays the issue. So they get a few months and

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he wants them to get some extra months because it's been a rush?

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Exactly and if you are as it servant who has perhaps the these civil

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service redundancy scheme strewn down all been made redundant and

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watched the Prime Minister saying, "That's very unfair, what these poor

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chaps I know are getting", and intervening personally, this might

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rankle a little. Thank you for joining us.

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So, that's the old government's last gesture.

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With me now are Jill Rutter from the Institute for Government,

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Philippa Stroud, a former Conservative adviser who now sits

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in the House of Lords, and Phil Collins who writes

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So much to talk about them if you are not too depressed by listening

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to Chris' previous peace. On white or, how big a radical reform of

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white or have we seen? We are just adjusting it now. Two things have

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been. Theresa May by Brexit. One issue, we said she would have a

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secretary of state for Brexit and she's created that, seem to have

:14:16.:14:18.

gone for the option of creating a new Brexit ministry. If I'd been

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Cabinet Secretary, I'm not sure I would have advised that straightaway

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but she's gone for that. She is beefing up international trade with

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this new department with Liam Fox but we always had a rather odd thing

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which was a non-ministerial apartment doing trade which had a

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minister. That may be a growth of that with some people moving into

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that. She has done some things she did not have to do. She has created

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this new business, energy and industrial strategy department and

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in doing so, abolished the EC, which was created by Gordon Brown for Ed

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Miliband in 2008 and also moved skills which is one of the footballs

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of Whitehall back to education and given it universities, too. Does

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this distract people? Is it now they are going to spend six months

:15:05.:15:07.

thinking about where their desk is rather than getting or can it be

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done very smoothly? The departments affected will be distracted. It

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takes some time to get going when you do things. You have got all

:15:17.:15:19.

those bread-and-butter issues like where you are going to base people,

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what you are going to pay them, things like that to sort out.

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Generally our advice has been to think very carefully before you do

:15:28.:15:30.

machinery of government changes and generally don't do them. There's

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usually a better option. David Cameron took that advice, that was

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one of the great things about his administration. You only want to do

:15:39.:15:41.

it if you think there a long-term benefit.

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Brexit potentially demands that. Phil Collins, how impressed are you

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buy the ability of the new team to carry through Theresa May's

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objectives? Well, on the threshold of Downing

:15:57.:15:58.

Street Theresa May gave what I thought was a really impressive

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speech, full of huge ambitions for improving the life chances of the

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least well off, and that's incredibly difficult to do. Let's

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pretend you weren't having to extricate Great Britain from the

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European Union at the same time, the ambitions she set out are immense

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and I worry about the candidates into microwaves forced up 22 people

:16:17.:16:20.

in the Cabinet, slight second and third 11 feel about it, the other

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thing linked to that is if you take out George Osborne, for good or ill,

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he did some big things, pension liberalisation, Northern Powerhouse

:16:30.:16:32.

and Living Wage Commission Michael Gove on education and in the early

:16:33.:16:37.

days justice on prisons, they have energy and passion for reform and I

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wonder if that energy will exist in the existing cabinet. Are you

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worried about that, Philippa? I think Michael is a huge loss to the

:16:46.:16:48.

government, personally. I would love to have seen him have a place. But

:16:49.:16:54.

actually, I really like what she has done with the Department for

:16:55.:16:58.

Education. Adding in universities, but also skills and apprenticeships,

:16:59.:17:02.

and giving it to someone like Justine Greening, who is deeply

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committed to social mobility for sub I've spoken to Justine over this one

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numerous times. Do you think she's going to be strong? She needs to be

:17:11.:17:15.

tough and be nice to the ones she needs to be nice to. She won't beat

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up people but she is focused. Social mode is what she wants to do. It's

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what she has actually wanted to do for the last few years. She's come

:17:25.:17:27.

into this department really well thought through, and she has

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literally, from cradle all the way up through university and onto the

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skills agenda and the apprenticeship agenda, that is a social reformer's

:17:36.:17:40.

dream package in all honesty. We wanted skills agenda at the DWP to

:17:41.:17:44.

go with employment, but for her to have it there as well is fantastic.

:17:45.:17:48.

All of that is good and I don't doubt the fine intentions, but it's

:17:49.:17:52.

incredible hard to do. It's very hard to do in a time of plenty,

:17:53.:17:56.

during the Blair government it was found difficult to make progress on

:17:57.:17:59.

this and there was plenty of money sloshing around. When you have very

:18:00.:18:02.

little money it's even more difficult. It's going to be very

:18:03.:18:06.

hard, they are hostages to fortune in Theresa May's speech they are

:18:07.:18:11.

huge. And you have a question of the European Union. I think she's been

:18:12.:18:16.

quite clever on that. She said... Can I put you over there? I will put

:18:17.:18:22.

you over there. Do you think a government can do more than one

:18:23.:18:26.

thing at once? This is quite a big thing, leaving the European Union.

:18:27.:18:29.

Can it deliver this whole reform agenda, industrial strategy,

:18:30.:18:33.

quality, corporate governance, all of that and leave the European

:18:34.:18:38.

Union? Or can a government only chew gum or walk, it can't do both at the

:18:39.:18:45.

same time? Governments do lots of things, there is business as usual

:18:46.:18:49.

as well as reform. The key restraint is the political capital the Prime

:18:50.:18:52.

Minister has to deploy. When the question is, how much will she have

:18:53.:18:56.

to deploy sorting out Europe, lots of this will be done ahead of a

:18:57.:19:01.

mid-level, final deals are only done a head of government level. She has

:19:02.:19:05.

somebody to do the heavy lifting. David Davis will do the heavy

:19:06.:19:08.

lifting, whether he does it in the way she wants it done is critical,

:19:09.:19:18.

whether -- that will be critical whether they bash heads together. As

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she put the people in who she knows shares her agenda so she doesn't

:19:25.:19:27.

have to do so much? I think that is where you see the bandwidth now. Are

:19:28.:19:32.

you worried you won't get it all done? There is just a lot of stuff.

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One moment, the comment about No 10 and big hitters, that's important.

:19:38.:19:40.

One of the things she has done is cleared out of No 10 of all of its

:19:41.:19:45.

special advisers, hence Chris's comments about special advisers.

:19:46.:19:48.

Always a terrible mistake to do that, all of that memory and people

:19:49.:19:54.

who know what you are doing on. It gives her the chance to bring in

:19:55.:19:57.

people who are aligned with her agenda and genuinely want to do some

:19:58.:20:02.

of the reform. They will take a year to learn. You asked me if I'm

:20:03.:20:06.

worried, that I'm pleased about Justine and about Sajid Javid going

:20:07.:20:11.

on at ACOG, really focused on building houses. That is one of the

:20:12.:20:17.

things we absolutely need I think Liz Truss's appointment at Min of

:20:18.:20:22.

Justice is important too. Michael was focused on the academisation of

:20:23.:20:25.

prisons and you have somebody who has a strong education background.

:20:26.:20:30.

If she chooses to she could come in and improve things. -- DCLG. If you

:20:31.:20:35.

want to do lots of things on the domestic and social agenda isn't the

:20:36.:20:38.

rule that you need money? The one thing she will not have, surely, is

:20:39.:20:41.

oodles of money. They haven't got loads of money but that's not to say

:20:42.:20:45.

you can't do things. Lots of prison reforms don't need lots of money so

:20:46.:20:49.

if Liz Truss picks up the bat on from Michael Gove, which she might,

:20:50.:20:52.

she is a reformer herself, there are things that can be done and there

:20:53.:20:56.

are plans. There is lots on welfare that can save money if you look at

:20:57.:21:00.

it. You cannot necessarily use money as an excuse because you haven't got

:21:01.:21:04.

any. But it worries me. I think leaving the European Union is

:21:05.:21:07.

several things at once, that's not just one thing, that is lots of

:21:08.:21:11.

things. If the Government can do that in the next few years before

:21:12.:21:14.

the election and nothing else it will already have been quite

:21:15.:21:17.

successful. So I'm not sure it can even manage that, let alone these

:21:18.:21:22.

other things. It partly depends on her style of government as well,

:21:23.:21:25.

which we don't know yet. David Cameron was always very good at

:21:26.:21:28.

almost being a chairman and letting his Secretary of State get on. She

:21:29.:21:34.

is a good manager, people say. If she can achieve the chairmanship

:21:35.:21:39.

role and work with her secretaries of state, she has the ability to

:21:40.:21:44.

implement social reform. One of the things she doesn't have so many of

:21:45.:21:48.

his civil servants, some people think that helps things move more

:21:49.:21:51.

smoothly but Brexit will absorb a lot of the civil service's time and

:21:52.:21:56.

effort, just mapping where Europe matters to us. We've been there for

:21:57.:21:59.

40 years, it's a really big exercise. Quite a lot of these other

:22:00.:22:04.

reforms require civil servants to do them. If the brightest and the best

:22:05.:22:08.

are being creamed into the Brexit ministry it's going to reduce the

:22:09.:22:12.

capacity of quite a lot of other places. It will be interesting to

:22:13.:22:15.

see whether she goes slow on the pace of cuts to the civil service.

:22:16.:22:19.

Thank you very much indeed, let's hope she is not watching and getting

:22:20.:22:21.

depressed about the job she has got! Brexit Britain has certainly been

:22:22.:22:23.

enjoying 15 minutes of fame, the world looking upon us

:22:24.:22:25.

with a variety of reactions. Here's a little clip of the news

:22:26.:22:28.

of his Cabinet appointment being given to a US State Department

:22:29.:22:32.

spokesman last night. He is paid to diplomatically

:22:33.:22:34.

suppress any inappropriate reflex. And his replacement

:22:35.:22:37.

as Foreign Secretary has just been For our European colleagues,

:22:38.:22:39.

the British situation raises all sorts of questions -

:22:40.:22:51.

not always very welcome ones. And now they find themselves working

:22:52.:22:54.

with a Foreign Secretary who has, over the years, treated

:22:55.:22:57.

the EU with derision. A little earlier, I spoke

:22:58.:22:59.

to the Lithuanian foreign What does he think of

:23:00.:23:01.

Boris Johnson's past indiscretions, and will they make it difficult

:23:02.:23:10.

to take him or British Frankly it depends how he will

:23:11.:23:13.

present this stuff, or what has efforts to remedy what was

:23:14.:23:17.

done. The German Foreign Minister,

:23:18.:23:25.

Frank-Walter Steinmeier, called some of the things he said in the

:23:26.:23:31.

referendum campaign irresponsible And it is true that Boris Johnson

:23:32.:23:33.

has been a critic of Does that make it harder to work

:23:34.:23:37.

with him, do you think? Many things I disagree

:23:38.:23:43.

with what he said, But this was the campaign

:23:44.:23:46.

in the UK and now So now he has to prove

:23:47.:23:51.

everything that was said by him, by all of those Brexit leaders,

:23:52.:23:57.

this is just his task. There has been one issue

:23:58.:23:59.

which has been the There are many Lithuanians,

:24:00.:24:04.

as you know, living in the UK. And uncertainty over

:24:05.:24:13.

their status for How quickly do you think

:24:14.:24:17.

we can sort that one out? I don't think days or weeks,

:24:18.:24:22.

probably not. But this is a very

:24:23.:24:24.

important part of the It's not only with regard

:24:25.:24:27.

to Lithuanians, or Poles or other EU citizens

:24:28.:24:30.

who live in the UK. But also, let me

:24:31.:24:32.

mention UK citizens who So we have to negotiate

:24:33.:24:34.

decently, and also smoothly, in order to make sure

:24:35.:24:41.

that they should feel more certain. Just on Article 50, I wondered

:24:42.:24:48.

whether you would be happy to talk to the British before

:24:49.:24:51.

Article 50 is invoked. I know the official position is that

:24:52.:24:53.

talks start when we talks before that, do you

:24:54.:24:56.

think? Frankly, we need to know

:24:57.:24:59.

what the UK wants to do. Because, to depart

:25:00.:25:06.

the European Union there could be various options, frankly speaking,

:25:07.:25:09.

and different models. And we need to know

:25:10.:25:12.

what we would like to have as a Single Market, mobility

:25:13.:25:15.

freedoms, other aspects, it could be the Norwegian

:25:16.:25:24.

model, the Swiss model, So, first of all we

:25:25.:25:26.

have to know what we are going to negotiate and then

:25:27.:25:31.

we will see the positions. Obviously Britain leaving

:25:32.:25:34.

is going to leave a big hole We put in 10 billion

:25:35.:25:43.

euros or more into the European budget net

:25:44.:25:47.

of what we take out. I just wonder whether you have

:25:48.:25:50.

started thinking about what is going to fill that hole that that

:25:51.:25:53.

leaves the European Union. This hole will not be

:25:54.:25:56.

filled, definitely. Because the UK is leaving,

:25:57.:26:06.

and this is also a small hole in our hearts, frankly speaking,

:26:07.:26:09.

because we need the UK and we feel And that means that we really have

:26:10.:26:12.

to define the future, given the interests first of all,

:26:13.:26:21.

and I believe, I'm convinced as close as possible ties with EU,

:26:22.:26:23.

which has to do with trade, services So it is too early to say

:26:24.:26:28.

what kind of hole in the budget will be,

:26:29.:26:34.

because it depends I'm hearing your

:26:35.:26:36.

message very clearly. Linas Linkevicius, thank you very

:26:37.:26:39.

much for talking to us. Thanks.

:26:40.:26:42.

Thanks. Before we move on and we are getting

:26:43.:26:50.

news of a serious event in France, it is Bastille day there, there is

:26:51.:26:55.

an incident in Nice and it looks serious, it seems that a truck has

:26:56.:27:01.

gone into a crowd of people. Reuters are quoting the local prefect who

:27:02.:27:06.

says 30 people are dead, social media video shows people running,

:27:07.:27:11.

which you can see, in panic following the incident. A journalist

:27:12.:27:19.

with the local Nice newspaper reported there was lots of blood and

:27:20.:27:23.

lots of injured. We don't know exactly what it is, people talked

:27:24.:27:26.

about it as an attack of some kind, we have social media pictures. Some

:27:27.:27:33.

reports, and again all of this is very early days, some reports talked

:27:34.:27:44.

of shots being fired by police. This is a tragic story coming from France

:27:45.:27:48.

on Bastille Day, a holiday in France. We will try and bring you

:27:49.:27:53.

more on that as we get it. In the meantime let's return to our

:27:54.:27:55.

previous items. One change we will have

:27:56.:27:57.

to acclimatise ourselves to is that we'll be seeing less of George

:27:58.:28:00.

Osborne. Six years in the Treasury,

:28:01.:28:02.

and a turbulent six years at that. We heard earlier about the difficult

:28:03.:28:11.

conversation he had with Theresa May when she sacked him.

:28:12.:28:15.

David Grossman looks back at his tenure.

:28:16.:28:19.

So the hi-vis Chancellor fades, for now at least,

:28:20.:28:22.

from the political scene, hanging up his fluorescent

:28:23.:28:27.

But we can at least see what Mr Osborne has

:28:28.:28:31.

built and compare it to the plans he submitted

:28:32.:28:33.

The primary task that George Osborne set for himself was eliminating

:28:34.:28:39.

Here was the planned reduction from his first budget.

:28:40.:28:44.

But this is what he actually achieved, still a long way to go.

:28:45.:28:52.

Indeed, after the Brexit referendum, both Mr Osborne

:28:53.:28:54.

and the soon-to-be-new Prime Minister abandoned

:28:55.:28:57.

The reason for the failure to get the deficit down as much as he hoped

:28:58.:29:05.

isn't because he tried to implement tax rises, or benefit cuts,

:29:06.:29:07.

or public service cuts and they didn't happen.

:29:08.:29:09.

The measures he announced did happen.

:29:10.:29:11.

It's because the economy didn't grow as strongly as he thought

:29:12.:29:14.

and that meant that tax revenues kept disappointing.

:29:15.:29:18.

But, and it's a big but, Mr Osborne gets credit from many

:29:19.:29:21.

economists for absorbing the political embarrassment

:29:22.:29:22.

of repeatedly missing his targets rather than reducing government

:29:23.:29:24.

spending even further to try to meet them.

:29:25.:29:31.

I think the biggest criticism to me on the macro side is that

:29:32.:29:35.

all the adjustment in the fiscal position was on spending.

:29:36.:29:37.

He slashed spending dramatically and I think that's one

:29:38.:29:40.

of the reasons we see so many unhappy people.

:29:41.:29:42.

Local government spending, for example, has really

:29:43.:29:43.

And that's a very controversial Chancellor.

:29:44.:29:50.

And that's a very controversial judgement.

:29:51.:29:51.

George Osborne's second objective was under the extremely broad

:29:52.:29:53.

For a start, this meant moving the country away from a reliance

:29:54.:30:02.

on the financial sector that left us so exposed after the crash,

:30:03.:30:05.

Obviously one of the big tenets was this march of the makers

:30:06.:30:10.

and to have more rebalancing towards manufacturing.

:30:11.:30:13.

And I think actually the makers would like to see a bit more spring

:30:14.:30:16.

in their step than they have at the moment.

:30:17.:30:19.

I think they still see quite a lot of challenges ahead.

:30:20.:30:23.

But I think where you can see some things the Chancellor did do

:30:24.:30:26.

to help manufacturing was a real focus on research

:30:27.:30:28.

Rebalancing the economy also meant reducing the ratio of household debt

:30:29.:30:34.

But this proved impossible in an era of ultra-low interest rates

:30:35.:30:40.

which discouraged saving and encouraged borrowing.

:30:41.:30:48.

Households are choosing to spend a lot relative to their incomes,

:30:49.:30:53.

so the household saving ratio is at a very low level

:30:54.:30:55.

And the amount of borrowing, how we finance this borrowing, well,

:30:56.:30:59.

the amount of borrowing we do from overseas is at extremely high

:31:00.:31:02.

So we are a country in which the household sector

:31:03.:31:05.

is borrowing a lot of money, the Government is still borrowing

:31:06.:31:08.

a lot, not as much as it did, and that borrowing is being financed

:31:09.:31:11.

The third objective we could measure Mr Osborne against is his ambition

:31:12.:31:17.

to spread growth beyond London and the south-east of England.

:31:18.:31:19.

As a Cheshire MP, the Chancellor championed the so-called

:31:20.:31:21.

This was partly about infrastructure but partly about political

:31:22.:31:25.

I think it has but I think there's a lot more to be done.

:31:26.:31:33.

I think what he did was highlight some of the issues and to start

:31:34.:31:37.

in train some of the devolution of powers and give more power

:31:38.:31:41.

But I think what people would say is we need to see more connections

:31:42.:31:47.

between Sheffield, Manchester, Leeds, some of our northern cities

:31:48.:31:50.

but also in the Midlands, between Nottingham and Leicester.

:31:51.:31:55.

I think focusing on the transport infrastructure between some

:31:56.:31:57.

of the UK's bigger cities undoubtedly needs to be the focus

:31:58.:31:59.

We've got a dual economy, London and the south-east,

:32:00.:32:05.

a few other metropolitan areas, are dominant.

:32:06.:32:09.

Much of the country isn't really doing very well and again, that has

:32:10.:32:14.

In a strange ironical way, maybe Brexit will do that

:32:15.:32:20.

Indeed, like his friend David Cameron, perhaps Mr Osborne's

:32:21.:32:24.

entire time in office will come to be defined

:32:25.:32:26.

If Brexit does result in economic calamity, as he warned, well,

:32:27.:32:34.

Mr Osborne will get blamed for letting it happen.

:32:35.:32:36.

If on the other hand, Brexit is a roaring success,

:32:37.:32:39.

he will get none of the credit, having argued

:32:40.:32:41.

David Grossman die on George Osborne. We can't bring you more on

:32:42.:32:56.

that ghastly episode in Nice. -- David Grossman there. They're ready

:32:57.:33:02.

to be quite a few dead when a lorry went into a Bastille Day festivity

:33:03.:33:06.

in the city of Nice. We will try to bring you more at the end of the

:33:07.:33:07.

programme. You might have seen

:33:08.:33:09.

Exodus on BBC2 this week. Three nights, three one-hour

:33:10.:33:11.

programmes, with real-life testimony of refugees, telling the stories

:33:12.:33:13.

of their journeys into Europe. I survived Isis, I survived

:33:14.:33:24.

beheadings, I survived Assad. I was almost killed

:33:25.:33:27.

for a stupid idea Well, the programmes

:33:28.:33:44.

aroused quite a reaction. They are still on the

:33:45.:33:48.

iPlayer, of course. There have been times when Europe

:33:49.:33:51.

can collectively excuse its messy response to the refugee

:33:52.:33:58.

and migrant crisis by saying were unexpected and unmanageable

:33:59.:34:05.

in the short term. That excuse obviously wears thin

:34:06.:34:21.

as time passes. Joining me now in the studio

:34:22.:34:22.

is former International Development And from Brussels, the Director of

:34:23.:34:25.

Migration Policy Institute Europe, We have not spoken about this for

:34:26.:34:32.

very long because we've been in the middle of a referendum campaign but

:34:33.:34:35.

how have things changed in the last six months, particularly from the

:34:36.:34:36.

journeys that were documented in that series? I think what you saw in

:34:37.:34:39.

the TV programme was fairly harrowing but fluid generally --

:34:40.:34:42.

Jenny, where people were finding their passage from Turkey, through

:34:43.:34:45.

degrees and then upwards through the Western Balkans into various

:34:46.:34:49.

locations in Europe. The key change that has occurred in the European

:34:50.:34:51.

Union, one of the reasons why the refugee crisis has not been so much

:34:52.:34:55.

in headlines in the last three months is the instigation of a deal

:34:56.:34:59.

with Turkey to try to stem the flow from Turkey degrees and then the

:35:00.:35:03.

closure of the borders across the Western Balkans route. What we see

:35:04.:35:09.

now is a far more sedentary process. Those people who had already made it

:35:10.:35:12.

to Greece but have not been able to move further through across Europe

:35:13.:35:17.

are now kept in sometimes poor reception conditions in Greece

:35:18.:35:20.

itself. A number of people who have arrived from Turkey and managed to

:35:21.:35:23.

make it across, despite the deal over the last three or four months,

:35:24.:35:31.

hiding themselves on the islands and in substantially different

:35:32.:35:32.

conditions than the islands were used to dealing with before March

:35:33.:35:37.

this year. Things have slowed down. And people are sort of stock. Very

:35:38.:35:42.

briefly in terms of the numbers leaving, the places from where most

:35:43.:35:45.

came, has that number fallen dramatically? So the numbers

:35:46.:35:50.

arriving on the Greek islands have fallen dramatically and that is a

:35:51.:35:53.

combination of the message that the borders are closed now to Europe,

:35:54.:35:56.

that you will not move on from Greece but also, the proactive

:35:57.:36:01.

actions of the Turkish coast guard and the Turkish government itself,

:36:02.:36:05.

preventing departures degrees. On that sort of singular benchmark of

:36:06.:36:10.

the EU- Turkey deal, it has been successful in reducing numbers but

:36:11.:36:13.

that does not necessarily reduce the numbers of people who have been

:36:14.:36:17.

displaced, whether from Syria, Iraq or other countries. It does not

:36:18.:36:21.

resolve the underlying problems of a large number of people displaced in

:36:22.:36:24.

the region of Syria. Andrew Mitchell, it is months now since the

:36:25.:36:27.

peak of the migrant and refugee crisis. As Europe improved its

:36:28.:36:32.

performance, quite apart from blocking people out, the conditions

:36:33.:36:38.

in which they are in, has that been satisfactorily resolved? It is a

:36:39.:36:41.

massive failure on almost every count. First, it is a failure to

:36:42.:36:47.

look after the 4.5 - 5 million people displaced within Syria, where

:36:48.:36:51.

we argued for safe havens. That was the right policy and should have

:36:52.:36:54.

been implemented. We have failed from Europe to look after

:36:55.:36:58.

effectively the huge number of people who have gone into Lebanon on

:36:59.:37:05.

and Jordan and indeed, into Turkey, where the camps and accommodation is

:37:06.:37:08.

extremely good. We have failed them and failed to educate their

:37:09.:37:11.

children. We have failed to give them hope because of course, all

:37:12.:37:14.

these migrants and refugees, they don't want to recreate Syria in

:37:15.:37:19.

Europe. They want to go back to the areas from which they have been

:37:20.:37:22.

driven off under gunfire and then moving further afield, when you get

:37:23.:37:25.

to Europe, people who do put themselves into the hands of the

:37:26.:37:30.

modern-day equivalent of the slave trader, in a leaky boat, in the hope

:37:31.:37:33.

of reaching a more prosperous sure, they should be properly looked after

:37:34.:37:37.

when they arrive on the European coastline, properly processed. But

:37:38.:37:40.

the aim of the policy should not be to bring them into Europe. It should

:37:41.:37:43.

be to get them back when you have dealt with the crisis. Justin Pugh

:37:44.:37:48.

Manitou into, you would have thought Europe could muster the money to

:37:49.:37:52.

build decent camps and have them properly fed and reasonably sanitary

:37:53.:38:00.

conditions. Is that what they have in Greece at the moment? Well, it's

:38:01.:38:02.

better but still reliant on doctors going out from Britain, for example.

:38:03.:38:05.

The European Union has not got its act together properly. But you are

:38:06.:38:11.

right in what you say, there should have been European money, UN money,

:38:12.:38:14.

International money to make sure that these people were kept safe,

:38:15.:38:19.

got medicine, got properly fed and sheltered and in none of those three

:38:20.:38:23.

areas which I have sketched out, the areas through which they go, has

:38:24.:38:28.

that happened. Elisabeth, of course, there have been two different

:38:29.:38:31.

approaches, one is helping the ball once they arrived and the other is

:38:32.:38:35.

helping Beadle out there which has been very much the British garden

:38:36.:38:37.

at's approach. They said they would rather not encourage people to come

:38:38.:38:41.

to Europe but help them near the camps in Lebanon on Paul Jordan. How

:38:42.:38:48.

is that working out? -- Lebanon or Jordan. The European picture may not

:38:49.:38:51.

be great but how is that working out? I think the ambition is

:38:52.:38:55.

admirable in terms of thinking about how to do protection in regional

:38:56.:39:00.

origin, in part because some of the most vulnerable people don't have

:39:01.:39:02.

the opportunity to move or undertake, or are capable of

:39:03.:39:05.

undertaking these dangerous journeys. One of the big challenges,

:39:06.:39:09.

however, is whether you are just doing support in the short term,

:39:10.:39:13.

food, shelter, making sure people are staying alive, against trying to

:39:14.:39:18.

create new opportunities for people in the regional origin which is a

:39:19.:39:22.

lot harder. That is exacerbated by the fact that there is a funding

:39:23.:39:26.

shortfall, despite the investments made by the UK Government and other

:39:27.:39:29.

governments, there is a persistent funding shortfall into the multiple

:39:30.:39:36.

billions in nature. That means that when people have become refugees,

:39:37.:39:39.

they tend to be refugees for long periods of time and they don't find

:39:40.:39:42.

themselves by doing opportunities in the region of origin because there

:39:43.:39:46.

is no support beyond perhaps even food and shelter and not even in

:39:47.:39:50.

some cases. So we have to ask the question, if that is the policy, how

:39:51.:39:55.

much money will we have two invest to achieve that? Alongside two other

:39:56.:39:59.

issues... I'm going to have to stop you because we have a breaking story

:40:00.:40:02.

and I have to go to it. Thank you for joining us. The situation in

:40:03.:40:10.

Nice is ongoing. This is what the witness, Colin, just told the BBC

:40:11.:40:15.

News Channel. I'm in the port in Nice. We were basically sitting just

:40:16.:40:22.

in front of the old town in Nice and saw several hundred people running

:40:23.:40:30.

towards us, looking panic stricken. We tried to ask a few of them what

:40:31.:40:34.

the hell was going on, and finally got one who said, "You need to go,

:40:35.:40:39.

the police have told us to run". So we thought, OK, we all move did the

:40:40.:40:45.

same direction as the crowds. -- moved in the same direction. At the

:40:46.:40:49.

base of the hill where the castle is in Nice, the police came running and

:40:50.:40:57.

said, "Run now". It is clearly a very bad situation in Nice. You can

:40:58.:41:01.

get more on the BBC News Channel. That is all we have time for the

:41:02.:41:05.

night. We will bring you more on that story tomorrow, and you can

:41:06.:41:08.

follow developments online as well. Until tomorrow, good night.

:41:09.:41:19.

A lot of dry weather through this weekend and there will be some

:41:20.:41:26.

complications. The complications on Friday will be courtesy of this

:41:27.:41:27.

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