:00:00. > :00:09.Grenfell residents wonder whether this man, picked to run
:00:10. > :00:11.the inquiry into the fire, is going to run away
:00:12. > :00:18.From my brief meetings with residents of the tower
:00:19. > :00:21.and local people, it's quite clear that many of them will have evidence
:00:22. > :00:28.to give that will be of great value to the inquiry.
:00:29. > :00:31.The question is whether this is to be an inquiry into the fire,
:00:32. > :00:33.or into the dysfunctions of a society that allowed
:00:34. > :00:37.We'll ask what it will take for the inquiry to earn
:00:38. > :00:41.the confidence of those affected by it.
:00:42. > :00:44.Feeling like you haven't had a pay rise in a while?
:00:45. > :00:46.Can the chief economist at the Bank of England explain
:00:47. > :00:51.20 years ago he was waving goodbye to the British colony.
:00:52. > :00:54.Today, the last Governor of Hong Kong gives us his view
:00:55. > :00:57.on Xino-British diplomatic relations, and has this to say
:00:58. > :01:05.You should feel rather sad for him because he's been here several years
:01:06. > :01:08.and he doesn't know the difference between democracy and a wet haddock.
:01:09. > :01:11.Hard to believe but the iPhone is about to be ten years old.
:01:12. > :01:13.It's undeniably useful, but how do we really feel
:01:14. > :01:26.It's like a really narcissistic, clingy girlfriend who always wants
:01:27. > :01:34.my attention! Everybody thinks we need
:01:35. > :01:37.to learn the lessons And responsibility for drawing up
:01:38. > :01:42.the right lessons rests primarily on the shoulders of one man -
:01:43. > :01:45.Sir Martin Moore-Bick, a 70-year-old former commercial
:01:46. > :01:47.lawyer and Appeal Court judge. He went to the site of the fire
:01:48. > :01:50.today and met residents, But - and it's a big one -
:01:51. > :01:55.he then downplayed expectations of what his inquiry might cover
:01:56. > :02:02.and how quickly it could report. Now, I'm well aware
:02:03. > :02:06.that the residents and the local people want a much broader
:02:07. > :02:09.investigation and I can fully Whether my inquiry is the right
:02:10. > :02:16.way in which to achieve that I'm more doubtful,
:02:17. > :02:19.and I'll give that some thought and in due course
:02:20. > :02:22.make a recommendation, but there may be other ways
:02:23. > :02:25.in which that desire for an investigation can be
:02:26. > :02:28.satisfied otherwise than through Well, after the inadequacy
:02:29. > :02:35.of the early response to the fire, and the problems in the child abuse
:02:36. > :02:38.inquiry, it is going to be pretty important for this one
:02:39. > :02:41.to have the confidence of the survivors of the fire
:02:42. > :02:44.and the families of the deceased. And they do not merely want
:02:45. > :02:47.another review of cladding. They think they were ignored
:02:48. > :02:50.when they were warning of problems. For them, this is a case
:02:51. > :02:53.of the authorities on trial. For them, those authorities
:02:54. > :02:55.give the impression To make that point, tonight
:02:56. > :03:01.a meeting of the Cabinet of the Kensington and Chelsea Council
:03:02. > :03:04.collapsed in disarray, as the leader left with his colleagues
:03:05. > :03:13.after the press were allowed in. That was after having secured an
:03:14. > :03:18.injunction to watch proceedings. That was nothing whatsoever to do
:03:19. > :03:21.with the new inquiry Chair, but has Sir Martin Moore-Bick lost
:03:22. > :03:23.the confidence of With me now are residents
:03:24. > :03:27.of the estate of the Grenfell Tower And former Lord Chancellor
:03:28. > :03:41.Charlie Falconer. Welcome. I know you were in the
:03:42. > :03:48.meeting with the judge today. Yes, he held a few. I was in the first he
:03:49. > :03:52.held at 10am. What was your first impression? He's a nice guy but he
:03:53. > :03:58.didn't inspire any confidence, to be honest. I was a bit sceptical when
:03:59. > :04:02.his name was leaked in the press, in the media, last night. I was doing
:04:03. > :04:09.some research on him. The cases he was involved in did not inspire
:04:10. > :04:13.confidence in me either. But you met him and he knew he had a job to sell
:04:14. > :04:20.himself to you to some extent, I'm sure. What did he say that gave you
:04:21. > :04:24.reservation? For a start, he seems to already be saying that the terms
:04:25. > :04:28.of the inquiry would be extremely narrow, and yet supposedly they
:04:29. > :04:37.haven't been decided or solidified yet. So that gave us a big concern.
:04:38. > :04:40.His background gave me the concern. Insurance and commercial law. That
:04:41. > :04:46.doesn't inspire confidence in me at all. What other questions you feel
:04:47. > :04:52.an inquiry needs to look at that you feel might be brushed aside? Well,
:04:53. > :04:56.it seems this judge is giving us the impression it's going to be just
:04:57. > :05:02.about what started the fire and what caused it, but we want to know what
:05:03. > :05:05.led to it as well. So, you know, the circumstances, the political things
:05:06. > :05:12.that allowed the cladding to go on. The regulations. Not just the
:05:13. > :05:18.cladding but whose job it was to get it right? Absolutely. What is the
:05:19. > :05:24.fear here? Are people worried about a cover-up? Is that your fear? It's
:05:25. > :05:28.not just my fear, it's the fear of everyone. I'm not a conspiracy
:05:29. > :05:31.theorist but the way the authorities have been behaving since the
:05:32. > :05:35.beginning of this tragedy is appalling and it has appalled my
:05:36. > :05:39.neighbours. There was absolutely no response on the ground on the first
:05:40. > :05:42.night. The fire crews couldn't get to the location, they couldn't put
:05:43. > :05:48.out the fire because they didn't have the correct equipment. Some of
:05:49. > :05:51.them then ran into the fire block without -- the tower block without
:05:52. > :05:57.gas masks or helmets on because they were so keen to get up. It's a
:05:58. > :06:02.litany of failures and it's gone back several years. The gas pipes
:06:03. > :06:06.running up the building. We do feel there has been a managed decline.
:06:07. > :06:11.There was application for demolition of the tower in 2014 so we do feel
:06:12. > :06:17.they wanted us out anyway. All of that should be in the view of the
:06:18. > :06:23.inquiry. Yes. It seems they were negligent because they didn't want
:06:24. > :06:26.us there anyway. But they had renovated it? But that is because it
:06:27. > :06:33.was an eyesore for those in the area. Charlie Falconer, there is an
:06:34. > :06:35.enormous amount of suspicion. Trust is the most important thing. What
:06:36. > :06:40.was your reaction when the judge came out and said he was going to
:06:41. > :06:44.disappoint the residents with the scope of his inquiry? I'm worried
:06:45. > :06:47.about that and what these two are saying about the scope of the
:06:48. > :06:52.inquiry seems to me to be absolutely right. It can't be, to use your
:06:53. > :06:57.language, to just be a review of the cladding. It has to go right back to
:06:58. > :07:01.explain how we ended up both with some regulations that don't appear
:07:02. > :07:05.to be effective, and also even if the regulations were effective, and
:07:06. > :07:11.I don't know if they were all weren't, how will they enforced? If
:07:12. > :07:14.the terms of reference don't allow the legitimate questions that
:07:15. > :07:20.Thomasina has raised about the build up over time of the situation and
:07:21. > :07:23.then that Joe has raised about, how did the emergency services proved to
:07:24. > :07:30.be so ill-equipped to deal with the fire, then I would agree with both
:07:31. > :07:34.of them. The terms of reference have been set. And they are right in the
:07:35. > :07:39.way they are putting it. I thought the issue was about, you know, going
:07:40. > :07:44.right back into the political system, which the judge can't deal
:07:45. > :07:51.with, but both the areas these two are dealing with the right areas to
:07:52. > :07:55.focus on. I understand what Joe is saying about the insurance and
:07:56. > :07:59.commercial background. I don't know him personally but I've worked with
:08:00. > :08:03.him over 30 years. He is a man who will be able to deal with what will
:08:04. > :08:06.inevitably be a whole range of vested interests, like national
:08:07. > :08:11.government, the local authority, trying to make it as complicated as
:08:12. > :08:15.possible. You need somebody who is both sympathetic and gets the trust
:08:16. > :08:21.of the people but also is able to cut through it. This is the problem
:08:22. > :08:25.I'm facing. We've put out a statement to Theresa May to consult
:08:26. > :08:29.us with the appointment of the judge. She hasn't consulted us or
:08:30. > :08:34.responded to us and it looks like a foregone conclusion that she's done
:08:35. > :08:37.this. That is very interesting. What is the normal procedure? Is there
:08:38. > :08:42.some legal principle that you don't talk to victims in the picking of
:08:43. > :08:50.the judge? The normal principle, and with the judge in a court case, is
:08:51. > :08:55.that you can't negotiate with the parties, and this is not a court
:08:56. > :08:59.case but it is one where it is an inquiry with a judge appointed in
:09:00. > :09:03.effect by the Lord Chief Justice. Is there is a -- if there is a problem
:09:04. > :09:09.with the judge then he should be replaced but my own view, and you've
:09:10. > :09:11.got the broad scope right, and if that is not reflected in the terms
:09:12. > :09:20.of reference it would be a problem, but give Sir Martin Moore bit a
:09:21. > :09:27.chance. -- Sir Martin Moore-Bick. He said he didn't feel that those
:09:28. > :09:32.issues could be covered. Why was that going to inspire confidence? He
:09:33. > :09:36.didn't sell us to a single one of us. There were ten of us there. The
:09:37. > :09:41.more I found out, the less I am willing and able, and the nail in
:09:42. > :09:46.his coffin was his decision in the Westminster case, where he sent that
:09:47. > :09:49.poor family to Milton Keynes. Did you go in open-minded, though? You
:09:50. > :09:54.don't know what the legalities of that case were, so did you go in
:09:55. > :10:01.open-minded? I went in in the way anyone would go in. I had questions
:10:02. > :10:04.and I expected honest answers, and the answer is, I believe they were
:10:05. > :10:08.honest, but I don't believe they were satisfactory. I understand what
:10:09. > :10:13.you are saying. I ask you to give him a bit more of a chance. I
:10:14. > :10:17.understand you are suspicious... It's not only him who is the
:10:18. > :10:21.problem. It's Theresa May. She hasn't responded and it seems she's
:10:22. > :10:27.already decided, and that makes us believe that the terms of reference
:10:28. > :10:34.have already been decided as well. Taylor inquiry. It ensured
:10:35. > :10:37.loudspeakers were loud enough to be heard everywhere, very sensible
:10:38. > :10:42.conclusions on a technical standpoint. Did it lead to any
:10:43. > :10:47.prosecutions? It didn't. What does he need to do? He's got to get your
:10:48. > :10:51.confidence and that means listen to what you're saying. What I've heard
:10:52. > :10:54.tonight is reasonable about what the terms of reference should be, and
:10:55. > :10:58.then he's got to deliver quickly a good report that explains right from
:10:59. > :11:03.the beginning how this happened. Thank you, all of you.
:11:04. > :11:06.Well, think about joining the Government.
:11:07. > :11:08.As expected, it managed to get its Queen's Speech
:11:09. > :11:11.through the Commons today, but the margin was inevitably fine.
:11:12. > :11:15.The ayes to the right, 323, the noes to the left, 309.
:11:16. > :11:18.So the ayes have it, the ayes have it.
:11:19. > :11:31.A measure of how easily business can be disrupted.
:11:32. > :11:33.And for confirmation, there was the fact that
:11:34. > :11:36.to get the Queen's Speech through unscathed, the Government
:11:37. > :11:38.had to accept a proposal from Stella Creasy offering
:11:39. > :11:43.taxpayer-funded abortions in England for women from Northern Ireland.
:11:44. > :11:46.Backbench MPs suddenly have leverage and the Government suddenly has
:11:47. > :11:50.But today was also awkward for Labour, with several shadow
:11:51. > :11:54.ministers being sacked and one resigning.
:11:55. > :11:56.We're all struggling to get used to this new normal.
:11:57. > :12:04.Nick Watt watched the day at Westminster.
:12:05. > :12:10.Let's talk about Labour first, because we all thought it was rosy
:12:11. > :12:14.in the house of Labour at the moment! Yes, we thought the focus
:12:15. > :12:18.would be solely on Theresa May and then Jeremy Corbyn ended up sacking
:12:19. > :12:22.three of his frontbenchers. The reason for that was because they had
:12:23. > :12:27.defied the Labour leadership to table an amendment put forward by
:12:28. > :12:31.Chuka Umunna, which would have committed the UK to remaining in the
:12:32. > :12:38.single market and Customs union. This was roundly defeated by 101 to
:12:39. > :12:44.322 after Labour whips instructed their MPs to abstain. I've picked up
:12:45. > :12:47.quite a lot of anger amongst pro-European Labour MPs. They say
:12:48. > :12:51.this was a vanity vote by Chuka Umunna that handed a gift to
:12:52. > :12:56.Brexiteers, who stayed look at the heavy defeat. And these pro-European
:12:57. > :13:03.Labour MPs also say, why did he have to table this amendment when the
:13:04. > :13:05.official Labour one called on the government to negotiate the exact
:13:06. > :13:11.same benefit on the customs union and single market. But they are
:13:12. > :13:15.defiant, saying their tactics today were about putting pressure on the
:13:16. > :13:18.Labour leadership to go one step further and agree with them that the
:13:19. > :13:24.UK should remain in the customs union and single market. OK.
:13:25. > :13:28.Interesting day for Labour. What about the Tories? It was a pretty
:13:29. > :13:33.fine margin to get your Queen's Speech through. As you say, the
:13:34. > :13:37.Magic number for Theresa May is 14. That's the majority she had in the
:13:38. > :13:41.final vote that established and entrenched her government. That's
:13:42. > :13:46.what she got after her deal with the DUP. I spoke to one senior Tory who
:13:47. > :13:49.said to me, that's hardly a respectable majority but it is a
:13:50. > :13:53.workable one and the government can carry on. But the rapid move and
:13:54. > :13:57.announcement by the government that it would fund abortions in England
:13:58. > :14:03.for women from Northern Ireland illustrates a crucial point about
:14:04. > :14:08.this Government. If you can muster all the opposition parties and then
:14:09. > :14:12.persuade to seven Tory MPs to join you, then Theresa May has to act,
:14:13. > :14:15.and supporters of a so-called soft Brexit, they had a setback today but
:14:16. > :14:17.they hope that that point will eventually work in their favour.
:14:18. > :14:21.Thank you. The backdrop to all this is a sense
:14:22. > :14:24.of national frustration, That's perhaps why we're in hung
:14:25. > :14:28.parliament territory at all. And when we look at what makes
:14:29. > :14:30.people frustrated, it's perhaps the fact that living
:14:31. > :14:32.standards are stagnant. In short, Britain is tired
:14:33. > :14:35.of austerity and wants a pay rise. And that's not surprising given
:14:36. > :14:38.the long squeeze on wages that we've We'll hear what the Bank of England
:14:39. > :14:41.says about that shortly, but first our business editor
:14:42. > :14:57.Helen Thomas sets out what we know - Sometimes it feels like everything
:14:58. > :15:02.in the world of work is speeding up. The mantra is two more, and more
:15:03. > :15:15.quickly. But one thing is stuck on go slow. And that unfortunately is
:15:16. > :15:18.wages. The public sector pay cap is hitting recruitment and retention
:15:19. > :15:24.right across the public sector. It has been a week of political
:15:25. > :15:29.wrangling over whether the cap on public sector pay rises should be
:15:30. > :15:34.lifted but this is not just about the public sector, it is about the
:15:35. > :15:37.whole economy. He is real wage growth, pay rises adjusted for
:15:38. > :15:42.inflation, and slumped after the financial crisis. Very low inflation
:15:43. > :15:49.meant a better time around 2015. Then the vote to leave the EU,
:15:50. > :15:53.inflation rose sharply. Living standards are again in decline. But
:15:54. > :15:58.inflation isn't really the nub of this problem. The bigger puzzle is
:15:59. > :16:03.why workers and managing to push for a pay rise, despite very low levels
:16:04. > :16:08.of unemployment. Now economic theory would tell us that low unemployment
:16:09. > :16:14.puts workers in a stronger position. Employers find it hard to fill
:16:15. > :16:20.vacancies and yet UK unemployment is up 4.6%, the lowest level since the
:16:21. > :16:23.1970s. But wage growth is sluggish. In fact worse than sluggish.
:16:24. > :16:31.Recently it has been heading in the wrong direction. So why has this
:16:32. > :16:35.relationship broken down? The crisis spooked workers and their employers.
:16:36. > :16:40.Now Brexit is churning the corporate walkers. Roger Waters. If workers
:16:41. > :16:47.are reluctant to move jobs they miss out on one way to get a hefty rise.
:16:48. > :16:51.On one side you have the employers that also have the uncertainty of
:16:52. > :16:57.demand and of uncertain increases in costs, given the exchange rate,
:16:58. > :17:03.falling, that are likely to hold on to wage demands, and be a bit more
:17:04. > :17:11.careful. Next up the economic headache. Productivity growth has
:17:12. > :17:17.been nearly as disappointing as earnings. This is one measure output
:17:18. > :17:21.per hour worked. Expansion helps living standards for decades and
:17:22. > :17:29.then it flat lined and no one is entirely sure why. Everyone agrees
:17:30. > :17:31.that dismal pay and dismal productivity are linked but which
:17:32. > :17:37.causes the other? Well it is not that simple. Productivity is
:17:38. > :17:41.obviously key in the to how much we can pay ourselves, what the wages
:17:42. > :17:45.that people receive because in the end what we produce as a country
:17:46. > :17:49.determines how much we can pay ourselves. But the relationship
:17:50. > :17:52.between pay and productivity is more complicated and is sometimes to
:17:53. > :17:56.waste so sometimes when pay increases firms respond by investing
:17:57. > :18:00.in machines, and skinning their workforce and that leads to higher
:18:01. > :18:02.productivity. It's not just that higher productivity can lead to
:18:03. > :18:09.higher pay, it is not just that higher productivity can lead to
:18:10. > :18:13.higher pay, it is perhaps the changes mean that the headline
:18:14. > :18:20.unemployment rates does not really reflect what is going on. This is
:18:21. > :18:23.co-working. In this office freelancers and entrepreneurs can
:18:24. > :18:29.join up by the month, space to work with craft beer, yoga classes and
:18:30. > :18:35.events laid on. Self-employment has risen, nearly doubling its share of
:18:36. > :18:39.the workforce since 1980. But so has part-time working, temporary work
:18:40. > :18:45.and zero hours contracts. This includes the so-called gig economy,
:18:46. > :18:49.types of jobs which offer no guaranteed hours, little career
:18:50. > :18:54.progression or job security. It means an employer could offer more
:18:55. > :19:01.hours instead of a pay rise or a better contract. So what hope is
:19:02. > :19:05.there that wages get moving again? That is the question for the British
:19:06. > :19:08.market, and actually for the British economy and British families over
:19:09. > :19:11.the next few years. But some things we know for certain, wages are at
:19:12. > :19:15.the bottom of the Labour market because of a fast rising national
:19:16. > :19:19.minimum wage, those will go up significantly over the next few
:19:20. > :19:24.years. The big unknown is what happens to the top 80% of workers
:19:25. > :19:35.not affected by the minimum wage. Those people are currently
:19:36. > :19:39.seeing big squeeze is on their pay packets, what happens to them does
:19:40. > :19:41.depend on does Brexit scare firms or do they think that a big opportunity
:19:42. > :19:43.is there and they get their confidence back and the workers get
:19:44. > :19:46.their confidence back? Wage tension hasn't vanished, of course not but
:19:47. > :19:50.the lower unemployment gets without wages rising, the more likely that
:19:51. > :19:51.longer term tougher to fix factors are standing between British workers
:19:52. > :19:57.and their pay rise. Helen Thomas. Well, earlier today I sat down
:19:58. > :19:59.at the Bank of England with the chief economist there,
:20:00. > :20:01.Andy Haldane. He has been in the news lately,
:20:02. > :20:04.having given a speech that suggested he might vote for a rate
:20:05. > :20:06.rise later this year. He didn't want to say anything
:20:07. > :20:17.more about rates today, And why he thinks it's flat lined
:20:18. > :20:22.for the better part of a decade. What have been the drivers, there is
:20:23. > :20:29.no single factor but I would say among the most important has been
:20:30. > :20:35.the fact that at the same time as real take-home pay has flat lined,
:20:36. > :20:40.so to has the measured productive capacity of the economy. Typically,
:20:41. > :20:48.we expect that as that productive capacity grows over time, that gets
:20:49. > :20:52.mirrored in pay increases. So we are looking for one of, if not the
:20:53. > :20:59.biggest contributing cause, it is the accompanying flat-lining of not
:21:00. > :21:04.just the UK's but many of the economy is's productive capacity
:21:05. > :21:07.over ten years or so. It is extraordinary because we tend to
:21:08. > :21:12.think we get a little better at everything, people will ask if we
:21:13. > :21:17.have run out of innovation. This is not about stagnating in innovation,
:21:18. > :21:22.in the main. When we talk about, the rise of the robots, the fourth
:21:23. > :21:27.industrial Revolution, it is there. It is there, but only for a subset
:21:28. > :21:34.of terms. Only for that 1% of perhaps 5% of firms who are taking
:21:35. > :21:41.the productivity high road. The root cause of the stagnation in
:21:42. > :21:50.productivity and in pay is that long, lower tail of firms, they are
:21:51. > :21:55.taking the low productivity road. This is like 95%! A sizeable chunk,
:21:56. > :21:59.at least three quarters... And they just employing more cheap Labour,
:22:00. > :22:03.squeezing them Eberhard but not equipping it in the best ways or
:22:04. > :22:08.innovating or thinking of the things to do and new products to sell.
:22:09. > :22:13.Quite so. And they can't afford to pay more because they don't have
:22:14. > :22:16.more revenue. This long tail, and to be clear, it's not a crisis
:22:17. > :22:21.phenomenon, if you look at those companies, that long tail, they have
:22:22. > :22:25.been with us back-ups for a couple of decades. Every country on the
:22:26. > :22:30.planet has long tail firms, it just appears to be somewhat longer in the
:22:31. > :22:34.UK and elsewhere. And there are companies, as you say, that perhaps
:22:35. > :22:39.not investing sufficiently in the skills of workers, perhaps not
:22:40. > :22:49.investing sufficiently in machines and automation, so it's not the
:22:50. > :22:53.champions we need to worry about. It's the mediocre. There's a natural
:22:54. > :23:00.temptation to gravitate towards the new and the shiny, let's seize the
:23:01. > :23:02.next Tesla, Google, or Apple, and say, in terms of boosting the
:23:03. > :23:08.numbers you would probably get much more purchase out of incremental
:23:09. > :23:12.improvements from that long-tail of companies. Let's talk about public
:23:13. > :23:16.sector wages, there's a huge debate over public sector pay, it's been
:23:17. > :23:22.going up at 1% a year for the last five years or so. That does factor
:23:23. > :23:29.significantly into the deliberations when figuring out how great are
:23:30. > :23:35.underlying inflationary pressures in the economy. We have been repeatedly
:23:36. > :23:39.surprised about how weak pay growth has been, not just in the public
:23:40. > :23:45.sector but in the Private sector as well. And if anything, pay growth
:23:46. > :23:49.over the past 12 months has been falling rather than picking up,
:23:50. > :23:55.which has taken us and indeed the rest of the world somewhat by
:23:56. > :23:59.surprise, given that over that same period, jobs growth has remained
:24:00. > :24:05.very buoyant and unemployment has kept on falling. So this way is with
:24:06. > :24:10.us. Of course it is a factor that has contributed to rates in the UK
:24:11. > :24:16.remaining, they are currently at very low levels, and watching
:24:17. > :24:21.closely for any signs of pay bigging up. That is one of the key
:24:22. > :24:26.indicators we look at when judging that pay picking up. To be clear,
:24:27. > :24:31.public paint matters, it's not just the Private sector. I know that you
:24:32. > :24:35.don't particularly want to step on the interest rate landmine at this
:24:36. > :24:39.point. But it would be interesting for people to think about where they
:24:40. > :24:44.might be in five or ten years' time, if they are buying a house thinking
:24:45. > :24:50.about the long-term average on the bank website which goes back 300
:24:51. > :24:53.years is 5%. Does that constitute a guide to the long-term norm? What
:24:54. > :25:01.would you advise people to plan on, to think of rates of the sort of 5%
:25:02. > :25:07.level or the .5% level? You are right in pointing out that the rate
:25:08. > :25:13.is currently, and if you believe financial markets, prospectively set
:25:14. > :25:17.to remain pretty low for a long time. Not just the lowest in the
:25:18. > :25:21.last 300 years, probably the lowest in the last several thousand years,
:25:22. > :25:27.I would say. As and when rates begin to rise in the UK, they are likely
:25:28. > :25:32.to do so in a gradual way. And to a limited extent, by which we mean the
:25:33. > :25:38.numbers that may have been in people's heads, from the past, are
:25:39. > :25:43.probably on the high side relative to what we might expect in the
:25:44. > :25:47.future. Let me not but a number on that! Squeeze you on that. But
:25:48. > :26:00.Limited and gradual is the name of the game. I would squeeze you on
:26:01. > :26:03.that. Andrew Haldane, thank you very much -- I won't squeeze you on that.
:26:04. > :26:06.20 years ago, the British top brass in Hong Kong handed the keys
:26:07. > :26:09.of the province over to the Chinese and boarded the Royal
:26:10. > :26:11.Yacht Britannia to leave the colony behind.
:26:12. > :26:13.The exact anniversary is at 5pm our time tomorrow.
:26:14. > :26:16.The handover was - and is - a big deal for China,
:26:17. > :26:18.and President Xi Jinping is in Hong Kong to
:26:19. > :26:23.It's his first visit since becoming leader in 2012.
:26:24. > :26:27.Back then, when former president Hu Jintao visited
:26:28. > :26:29.for the 15-year celebrations, he was met with hundreds
:26:30. > :26:31.of thousands of protesters, marching against what they saw
:26:32. > :26:40.And there were mass protests again in 2014.
:26:41. > :26:44.The so-called umnbrella protests, with calls for more democracy
:26:45. > :26:51.and protests at the idea of China pre-screening candidates
:26:52. > :26:54.for elections for the post of Chief Executive of Hong Kong.
:26:55. > :26:59.Hong Kong never saw itself as just another Chinese city.
:27:00. > :27:03.In a 1984 agreement between China and Britain, China committed itself
:27:04. > :27:11.to the principle of "one country, two systems", granting
:27:12. > :27:13.the city its own legal system, limited democracy with multiple
:27:14. > :27:14.political parties, and rights like freedom
:27:15. > :27:18.But has China reneged on the letter, or at least
:27:19. > :27:23.Most notorious is the case of five booksellers who had
:27:24. > :27:26.allegedly sold banned books, and then went missing, apparently
:27:27. > :27:42.You may remember that the last British Governor of Hong Kong
:27:43. > :27:45.As Governor, he tried to plant some democratic seeds
:27:46. > :27:47.in the Hong Kong garden, hoping they'd grow
:27:48. > :27:51.He has a well-timed memoir out this week, so I went
:27:52. > :27:54.to meet him this afternoon, to talk about Hong Kong, China,
:27:55. > :27:56.and because he's a former chairman of the Tory Party,
:27:57. > :28:00.First, though, has China let the people of Hong Kong down
:28:01. > :28:06.Initially it did something which was sad but predictable.
:28:07. > :28:09.It choked off the sort of democratic developments which had been taking
:28:10. > :28:13.place and which were perfectly satisfactory because people
:28:14. > :28:19.More recently, particularly under President Xi Jinping,
:28:20. > :28:22.I think it parallels his crackdown on dissidents in mainland China.
:28:23. > :28:26.There's been a growing squeeze on Hong Kong's windpipe,
:28:27. > :28:29.attacks on the judiciary, attacks on the rule of law,
:28:30. > :28:33.abduction of people on the streets and a general atmosphere
:28:34. > :28:37.in which Beijing's Office in Hong Kong tries to
:28:38. > :28:44.The Chinese ambassador to the UK was on the radio this morning
:28:45. > :28:47.and was rebutting criticisms of the sort of anti-democratic
:28:48. > :28:50.nature of Hong Kong by talking about British democracy and in fact
:28:51. > :28:54.Should we laugh, should we think, should we ponder?
:28:55. > :28:56.Yes, you should feel rather sad for him because he's been
:28:57. > :28:58.here several years and he doesn't know the difference
:28:59. > :29:07.I shouldn't say that about ambassadors but he is.
:29:08. > :29:10.And I heard him this morning saying things
:29:11. > :29:15.which, were I Boris Johnson, I might describe as porkies.
:29:16. > :29:19.And beginning by asserting that what happens in Hong Kong
:29:20. > :29:24.is entirely a matter for the government of China,
:29:25. > :29:27.as though the joint declaration, the treaty between Britain
:29:28. > :29:31.and China, was simply a single declaration by the Chinese.
:29:32. > :29:36.It is actually a treaty lodged at the UN.
:29:37. > :29:40.Looking at politics in the UK today, it's hard to think of who you would
:29:41. > :29:43.really feel is your sort of beacon of leadership, and who you would
:29:44. > :29:55.We're partly in this mess because of two catastrophic
:29:56. > :30:00.decisions taken by Conservative Prime Ministers, and we sometimes
:30:01. > :30:04.kid ourselves that we're well governed.
:30:05. > :30:12.Internationally, nationalism, which is a denial of the importance
:30:13. > :30:16.these days of international co-operation, has been
:30:17. > :30:21.In America - Make America Great Again.
:30:22. > :30:32.In Europe, happily, Macron, Angela Merkel win the elections
:30:33. > :30:35.in Germany, the Dutch have done well in seeing off Geert Wilders,
:30:36. > :30:37.so in mainland Europe, it's gone pretty well.
:30:38. > :30:42.But we're left with the residues of English nationalism.
:30:43. > :30:45.Isn't it the case that the Tory Party is one party,
:30:46. > :30:49.I think both the main parties are two parties
:30:50. > :30:58.I think there's a moderate mainstream Conservative Party
:30:59. > :31:01.and an English nationalist right-wing party.
:31:02. > :31:04.It's a sort of Ukip-lite and a sort of economically liberal party,
:31:05. > :31:10.There's a party that believes in market economics and there's
:31:11. > :31:12.a party that believes in a market society, which is an
:31:13. > :31:18.In the Labour Party, you've got the Corbynistas,
:31:19. > :31:22.who have clearly been strengthened by the dire campaign
:31:23. > :31:25.that the Conservative Party fought in the election,
:31:26. > :31:29.which suddenly turned this sort of quite amiable guy
:31:30. > :31:37.with extraordinarily old-fashioned, out-of-date views into
:31:38. > :31:42.But let's talk more about your party, because it is
:31:43. > :31:46.I mean, would you basically favour a politics where we let these
:31:47. > :31:55.parties disentangle themselves into their component
:31:56. > :31:57.parts and you had, say, electoral reform, and then the voters...
:31:58. > :31:59.Like in France, actually - remember, the French had
:32:00. > :32:02.They could vote for populist right, left, centre.
:32:03. > :32:06.I think it's very difficult to know what it is about our party system
:32:07. > :32:10.Because the number of people who are active members of parties
:32:11. > :32:21.Well, until Corbyn came along, and now it's shot up.
:32:22. > :32:24.Yes, but with a particular age group - you have to notice
:32:25. > :32:27.the number of people under 40, 45, who are voting for Corbyn.
:32:28. > :32:29.But when I was chairman of the Conservative Party in 1990-92
:32:30. > :32:34.Today I should think it's 150,000 on a good night.
:32:35. > :32:39.The parties have been hollowed out in terms of mass membership,
:32:40. > :32:41.so most of them now have fewer members than the Royal Society
:32:42. > :32:49.They've been hollowed out in that sense, and yet they have more
:32:50. > :32:51.authority electing leaders, determining policies,
:32:52. > :32:54.You mean the members have had more authority?
:32:55. > :33:01.So I don't quite know where it goes from here.
:33:02. > :33:04.What I think remains undoubtedly the case is there is a majority
:33:05. > :33:09.in this country for, as it were, wets, to borrow
:33:10. > :33:18.I think there is a majority for welfare democracy,
:33:19. > :33:22.for market forces but not too much of them,
:33:23. > :33:25.for recognising that the state isn't an enemy but you don't give
:33:26. > :33:31.the state too much to do in terms of industrial management.
:33:32. > :33:35.I bet there's a majority among people like me now for seeing
:33:36. > :33:39.an increase in taxes for people like me, because I certainly don't
:33:40. > :33:44.want to see further rounds of cuts in public spending.
:33:45. > :33:47.And yet I recognise there's a real problem with the fiscal deficit,
:33:48. > :33:51.which I don't think you can just let go hang, as Mr Corbyn would suggest.
:33:52. > :33:54.One of the things that we're sometimes told,
:33:55. > :33:57.and I think in the end this is the biggest, most important
:33:58. > :34:00.question for the country over the next year, is there's really no
:34:01. > :34:04.There's a hard Brexit or there's no Brexit, but there's
:34:05. > :34:12.That either we reverse this vote, or we go along
:34:13. > :34:16.Because I'm interested in whether you would vote
:34:17. > :34:22.for the kind of Theresa May Brexit when it comes to the Lords.
:34:23. > :34:25.Well, I think at the end of the day, as bishops say, there will have
:34:26. > :34:32.to be a vote in Parliament about whatever terms emerge.
:34:33. > :34:37.And at that point, the electorate, given that I suspect by then
:34:38. > :34:40.the economy won't be looking too good, and the electorate will be
:34:41. > :34:43.able to see that you can't have the same relationship
:34:44. > :34:47.with Europe outside the European Union as you have
:34:48. > :34:52.So I think at that point there may be a significant shift
:34:53. > :34:56.in the public atmosphere, the public views on this.
:34:57. > :34:58.But I don't think you can go into these negotiations
:34:59. > :35:02.on the assumption that they'll turn out badly.
:35:03. > :35:06.I think Philip Hammond is right that we should be aiming now
:35:07. > :35:08.for a transitional period, for staying in as much
:35:09. > :35:13.of the single market and the Customs Union as possible.
:35:14. > :35:16.Both of those things were of course anathema to those who thought
:35:17. > :35:20.the big bloody bold thing to do was to head for the precipice
:35:21. > :35:23.and if we jumped off the precipice, there would be Dunlop mattresses
:35:24. > :35:29.Who would you like to see leading the Conservative Party?
:35:30. > :35:34.Well, if I suggested that, it would damn them immediately!
:35:35. > :35:38.I think Theresa May will lead the Conservative Party
:35:39. > :35:44.until the Conservative Party thinks that it can comfortably find
:35:45. > :35:46.a successor who won't plunge it into either an election
:35:47. > :35:55.I think that dancing on her grave, particularly by people who only
:35:56. > :35:57.the other day were saying that she was if not Teresa
:35:58. > :36:00.of Avila, certainly Theresa of Maidenhead,
:36:01. > :36:05.I think dancing on her grave is particularly unseemly.
:36:06. > :36:07.But in a world you know better than me,
:36:08. > :36:10.in the stock market, I don't
:36:11. > :36:18.think you'd regard her at the moment as a strong hold.
:36:19. > :36:20.I think she's there partly because anything else people
:36:21. > :36:34.Chris Patten talking to me earlier today. His book First Confession is
:36:35. > :36:36.available now. Did you know that sales of chewing
:36:37. > :36:40.gum have plummeted since the iPhone This is apparently because people
:36:41. > :36:43.queueing in supermarkets can now pass the time looking at their phone
:36:44. > :36:46.rather by making impulse purchases. That's just one effect unleashed
:36:47. > :36:49.on the world by Apple's bestseller. Others include selfies,
:36:50. > :36:51.the gig economy, and To that list critics might add
:36:52. > :36:54.shorter attention spans There's no doubt that the iPhone
:36:55. > :37:00.is an extraordinary piece of kit - even to those of us who clung
:37:01. > :37:03.to our Blackberries for some Stephen Smith, who personally
:37:04. > :37:16.nominates the trouser-press, When you think about your iPhone, it
:37:17. > :37:22.is probably the object that you use most in your life. It's the product
:37:23. > :37:27.you have with you all the time. The adverts suggest a mindfulness
:37:28. > :37:33.workshop and devotees hang on every word from the pristine Apple bunker,
:37:34. > :37:39.as if harkening to a guru. We want to make a much better phone.
:37:40. > :37:45.We thought we would create our own immaculate thought cloud about the
:37:46. > :37:48.iPhone. I think it's one of the most marvellous things that's ever been
:37:49. > :37:53.made. There's this wonderful old line about what talent is an talent
:37:54. > :37:58.is the ability to hit a target but then genius is able to see a target
:37:59. > :38:03.no one else has identified. I'm desperately trying not to hell the
:38:04. > :38:08.thing somewhere over there and smash it into 1000 pieces! It's like
:38:09. > :38:14.having the great library of Alexandria to hand. Imagine
:38:15. > :38:19.explaining something like that to my father's generation. He would be
:38:20. > :38:23.mystified! It's like a narcissistic really clingy girlfriend who always
:38:24. > :38:26.wants my attention! The vision behind the iPhone was so
:38:27. > :38:42.ground-breaking that few could quite believe it at first. A pod, a phone
:38:43. > :38:49.and Internet communicator. You getting it? People were talking
:38:50. > :38:52.about the integration of telephone technology and computer technology
:38:53. > :38:58.but they were thinking about vast, clunky equipment, and nobody had
:38:59. > :39:02.seen you could bring these two together into something you could
:39:03. > :39:08.actually put in your pocket. We have the iPhone and its various
:39:09. > :39:14.competitors to thank for the selfie. Posting pictures, seeking likes is
:39:15. > :39:21.surprisingly atavistic behaviour, says one writer. I think the
:39:22. > :39:25.surprising thing about social media is it's such ultramodern technology
:39:26. > :39:29.but it is tapping into very primeval, ancient circuits in the
:39:30. > :39:33.brain. We are a tribal species, a tribal animal, and one of the things
:39:34. > :39:36.that means is that we are constantly preoccupied with our status in the
:39:37. > :39:42.group. Just like the chimpanzees, one of our closest relatives, the
:39:43. > :39:49.state of the humans 's human is constantly in flux and we are
:39:50. > :39:53.constantly preoccupied. -- the state of human is constantly in flux. It
:39:54. > :39:58.is all very tribal. Young people are avid users of smartphones, of
:39:59. > :40:03.course. A new study says over a third of 15-year-olds are extreme
:40:04. > :40:08.Internet users who spent six hours a day online. It also found a clear
:40:09. > :40:13.association between longer periods spent on social media and mental
:40:14. > :40:16.health problems. I think that's a development of smartphones that's
:40:17. > :40:20.really interesting, in that people are able to have their phone in
:40:21. > :40:23.their pocket, looking at it in their bedroom, so their access to the
:40:24. > :40:28.Internet is in a much more private space than it used to so potentially
:40:29. > :40:31.parents will have used the technique of wandering past the screen to see
:40:32. > :40:35.what their child is looking at and if their child is on the phone in
:40:36. > :40:38.the playground or in their own room, the parent can't use that kind of
:40:39. > :40:43.technique any more, so it gives us new challenges as to how we get
:40:44. > :40:46.young people. But it isn't just the youngsters we need to look out for.
:40:47. > :40:52.Some mature iPhone users are struggling to. It always wants to
:40:53. > :40:59.help you. It is sitting there going, look, I could do this, I could do
:41:00. > :41:05.that. Why don't you get me to help? Look, I'm all shiny! No! Silence!
:41:06. > :41:17.Silence! See, whatever happened to silence? It's really good...
:41:18. > :41:21.Steven Smith on the iPhone. We have to go but a quick look at the front
:41:22. > :41:27.page of The Times. They have specific emails on Grenfell cladding
:41:28. > :41:31.looking at cutting costs before the renovation. A specific email, so I
:41:32. > :41:32.think people will follow that up tomorrow.
:41:33. > :41:35.Just before we go, I don't know if you heard that George Osborne
:41:36. > :41:37.announced today he's got yet another new job.
:41:38. > :41:39.He's going to be Professor of Economics at Manchester University
:41:40. > :41:42.in addition to being Editor of the Evening Standard,
:41:43. > :41:44.an advisor to a venture capitalist and after-dinner speaker for hire.
:41:45. > :41:46.In total we think he's now got six jobs!
:41:47. > :41:48.And we wondered what might come next.
:41:49. > :42:30.Friday should be a bit warmer with still a lot of cloud around with
:42:31. > :42:31.outbreaks of rain and