05/03/2017 The Andrew Marr Show

Trump savages Obama for tapping his phone,

though so far, not a shred of evidence.

And who's Trump's new Middle East envoy?

According to one paper, it's Tony Blair.

And then, in Budget week, there's the small matter

And on the eve of his first Budget, the Chancellor Philip Hammond,

confronted by huge choices, joins me live.

His shadow, John McDonnell, is also here to talk tax,

spending and the big choices for the left.

And in his first public appearance since the Stoke

by-election drubbing, Ukip's leader, Paul Nuttall,

Here to play us out this morning, the star of bluegrass,

Alison Krauss - winner of 27 Grammy awards no less.

It is knowing I am not shackled by forgotten words

# And the ink stains... # Reviewing the papers this morning,

on a mini-break from irritating President Trump, the BBC's

North America editor, Jon Sopel. The New Statesman's deputy editor,

Helen Lewis, and Stephanie Flanders All that after the news,

read for us this The Chancellor has described

as "reckless" calls for him to increase spending in his first

Budget on Wednesday. Writing in the Sunday Times,

Philip Hammond said the economy had proven to be robust,

but there was still a need for discipline as the country

prepares for Brexit. ?500 million of additional funding

will be made available to help streamline training

for teenagers in England in industries such as engineering

and manufacturing. Philip Hammond will announce

the plan as part of the biggest shake up of further

education in 70 years. Here's our education

editor, Branwen Jeffreys. Employers say more high-level,

technical skills are needed, not just in manufacturing,

but across the world of work. In the Budget this week,

they will get a promise of support, extra money to back a shake-up

in technical education - the biggest seen in

England in a generation. 15 new routes into work

from training, all including maths, Employers say it is welcome

and should help more young people It is really, really

important that those providing these courses,

like colleges, are working closely with businesses in every local area

to make sure the courses put on match what jobs are available in

the local area because that is how young people will get the best

pathways into skilled work. The Chancellor is expected

to promise ?500 million a year by 2022-23 -

that is when 15 new technical But further education has seen a 7%

real terms cut per student Many colleges in England are facing

tough financial times and spending on technical education has not grown

as fast as in schools. The UK has fallen

behind other countries. The hope is more young people

with high-level skills. But there is a lot of catching up to

do at a time when being competitive The Prime Minister is facing growing

pressure to safeguard the rights of more than 3 million

EU citizens living and A cross-party committee of MPs has

called on Theresa May to clarify now whether the EU citizens will be

allowed to stay after Brexit, rather than first waiting

for the European Union to decide what will happen to British people

living on the continent. Barack Obama has denied accusations

by President Trump that he ordered phones at Trump Tower in New York

to be tapped during last In a series of messages on social

media, Donald Trump compared the alleged bugging to the Watergate

scandal. China's annual parliamentary session

has opened in Beijing, with the Communist Party leadership

setting out its priorities High on the agenda will be the state

of the Chinese economy, as well as major challenges

the country faces in A memorial is to be built close

to the beaches of the D-Day landings in northern France to honour

the thousands of British soldiers and sailors who died

during the operation in 1944. The Government has

donated ?20 million towards the cost of the monument,

which will be unveiled on the 75th Lots of Trump. He accuses Obama of a

new Watergate plot. The Chancellor wants to talk about T levels. A

rather unsettling picture, Donald Trump with his tie blowing up. ?60

billion Brexit fighting fund, lots to talk about. The Observer,

interesting story about a watchdog looking into claims, drilling down

into voters, information and privacy laws not being broken. Trump again

there, shouting. The Mail on Sunday, Tony Blair's secret White House

summit. Before the programme opened, we work phoned by his office to say

it was not true. -- we were phoned. Jon Sopel knows more about that.

Starting with the overall picture of the economy just before Philip

Hammond's first Budget and there is an impression yesterday and today in

the papers he has got 12 billion extra to spend, a giveaway budget of

some kind. The Treasury is keen to douse that impression. Dan Hodges in

the Mail on Sunday saying the Budget come up batting down the hatches. It

is not the first Brexit budget, it is the last three Brexit budget

Which? -- it is the last pre-Brexit-macro budget. We still

have a huge question mark about what happens to the economy as we see

what the UK will look like after it leaves the EU. The metaphor is not

that we will go into terrible times but the sky is a strange colour and

we are failing towards it so get the cleats tied up. I suspect Mr Hammond

would like a contrast between him and even George Osborne who was not

beyond spending the money that came his way when he got nice forecasts

and a year later coming back to it. Philip Hammond has been writing

himself in the papers. A couple he has done for the Sun and also for

the Sunday Times. Focusing on the T levels and on the fact that it is

not just about having room for manoeuvre in public finances, we

have problems with the economy, particularly low productivity growth

which has been at the heart of our economic problems long before the

Brexit vote and training and skills is one of the areas that keeps

coming back. It will be another Budget that promises to do something

about that. I think I would say I like the idea but I have been

sharing and inclusive growth commission of the last year for the

Royal Society of Arts, going around the country, taking evidence of what

could solve some of these problems, they agree on training and skills,

but it is not just about money, they say, we need more freedom to make it

right. It has to be delivered locally. We need a new relationship

between the centre and local, not just here, on social care, all of

those things. Helen Lewis, former boss of the Treasury, Sir Nicholas

MacPherson, he wades in with a U-turn on death taxes. It is really

interesting. I think it is fascinating because he has worked on

34 budgets and they have all have productivity and growth as the theme

and in all that time, the growth rate has remained unchanged. We take

our excitement where we can get it as political journalists. It tends

to move around but often the story of budgets is how little changes. It

is interesting. We have been talking about social care and the death tax,

those big deflation -- decisions are still being kicked down the road.

Those on the pension locks seem to be doing better. Everyone is as

having a hard time. We are all ageing, we cannot help it, big

problems for the Treasury. Labour's response. The interesting thing

about John McDonnell's writing, individual policies that are

popular, capping energy prices, the question is whether it adds up to a

package people like. Let us talk about President Trump, Jon. What a

storm. Extraordinary. It is hard to describe what it is like living in

the US at the moment where you wake up and you think, I wonder what he

has said now. Yesterday was an absolute classic. I thought it would

be interesting to contrast the way the British press are covering it,

Trump launches Twitter storm, Washington Post, Trump citing no

evidence that users Obama of Watergate. Unsubstantiated claim

Obama wiretapped. The Wall Street Journal owned by Rupert Murdoch. The

New York Times, no evidence... It seems even the American media think

they have to point out that, look, he has said the stuff, we will cover

him, he is the leader of the free world after all, but evidence, there

is none. He has called Obama sick, sad, bad, all the rest of it. Is

this purely an attempt to deflect from his own problems with Jeff

Sessions, the Attorney General, in trouble over Russian links. Then

they will forget what was going on before. Possibly. He has used that

to good effect in the past. But the problems come back to Russia and the

links. A lot of circumstantial evidence, absolutely no evidence of

any toward contacts, but it is so strange, the joke going around

Washington at the moment, the Russian ambassador is the most

boring man in the city. Because no one ever remembers meeting him! That

is one of the narratives. Why are there so many meetings with the

Russians and Jeff Sessions the Attorney General had two of them

that he completely forgot to mention when he was under oath at his

confirmation hearing? From the outside, somebody making that kind

of, quote, mistake under oath in front of Congress, they would be

out. To use the verb with currency this week, he has recused himself.

To use a Scottish phrase, his coat is hanging by a shopkeeper. I do not

think you can afford any more mishaps. Donald Trump is raging at

the world, raging in Florida at the leaks taking place that the

Washington Post newspaper managed to find about the Jeff Sessions meeting

with the ambassador, raging at his officials for how they are handling

it, at the media for how we are putting it, he is not a happy bunny.

You have been following this too, we have never had a president behave

like this. The Russia thing is a weak point. He is so far at odds

with everybody in his party, in Washington, and it is hard to

overestimate how is it Eric, how odd in the US context his support or

favourable comments about Russia are -- esoteric. His own party finds

hard to swallow it. The meetings keep coming back, you can see why it

riles him. What we have not talked about enough at London news Central

is the Northern Ireland elections because it has been a very important

shift in Northern Ireland politics. Sinn Fein up, the DUP down. It is a

huge omission, a big omission from the Brexit campaign. Northern

Ireland got so little coverage. We worked on an edition with Gordon

Brown and he said, I cannot believe this is not being discussed on the

mainland. The Stormont assembly has gone down, a contraption, but the

big story is the Unionists do not have a majority. Sinn Fein say, we

do not want to work with the DUP leader, Arlene Foster, the scandal

prompted the election. There is a possible 80 of another election in

three weeks, the possible deal of direct rule from Westminster. As

Adam Boulton says, all eyes on Scotland actually, Northern Ireland

might have a referendum. Interesting piece. He says in due course,

Northern Ireland might leave the union over this eventually and at

that point, if Scotland goes too, England faces a Celtic union of

Scotland and Ireland to the north and west, a completely different

kind of country. Absolutely unintended and segments of Brexit

might be that what you have to do is put in custom checks at ports on the

island of Ireland. Something that got almost no discussion has become

a huge critical issue. You mentioned the word Brexit, Stephanie,

interesting piece here in the Observer. We have a lot of things

building up but he makes a good point, we have ended up, Theresa

May, she was supposed to have a reputation for being cautious,

careful, Vicar's daughter, setting up quite a few gambles on the way

she has positioned herself. There is a gamble the economy will stay OK

and she does not need to have in election any time soon but the deal

will somehow be politically tolerable, when in fact, we might

have thought she would be lowering expectations around that deal,

telling people, this is going to be difficult, reminding... Theresa May

with a wild gambler's glint in her eye. We are not prepared for the

idea it could cost us money and it could be a risky strategy.

John, the other story of the day, Tony Blair, Donald Trump, peace

envoy... Donald Trump's son-in-law is meeting experts as they try to

formulate the Middle East policy that makes sense and you can watch

the way they have been trying to formulate the policy. The embassy

was going to move to Jerusalem, now it is not, and so it goes on. I'm

not in favour of a one state or two state solution, and Tony Blair who

was in Washington last week went in there and is a former head of the

quarter grew to probably talk to them about this is a good guy, this

is not so good, these are the people you should meet, but I don't think

there's any prospect of him having a role. Also from what I understand

his much more focused on trying to reinvigorate the centre ground and

the new foundation in setting up and the last thing I suspect he feels he

needs is to be seen holding hands with Donald Trump. I kind of think

probably there were meetings, I don't think the rest of it is true.

Helen, much on the Labour Party this week? It went quiet after the

by-election. The idea of the zombie Labour Party, it is staggering on

but it is not quite dead at the moment. It has come down to

succession which is as much a problem for the Jeremy Corbyn

sceptics as supporters. Nobody has an heir apparent animal. I'm told

they are spending a lot of time under the radar trying to Green new

successes, the Next Generation. The trouble is a lot of these people

came in in 2015 so they might be talented but they are very green.

The McDonnell amendment is coming up so you might remember from the

excitement of leadership elections past, 15% MPs need to nominate you

to get you onto the ballot, that are seen as another block from someone

getting on, they want to reduce it to 5% so that is the next battle to

come. The generation in the saddle in charge, thank you very much.

It's March and you're living in the British Isles.

If you need all the dots joined up, then here's Sarah Keith-Lucas

We have a real mixture of weather types out there, reflected in the

pictures from the weather watchers. In Scotland we have had a bit of

snow falling and we also have some heavy downpours of rain. Here are

the shower clouds in Wales captured in the morning. Certainly some

showers in the south-west of England and Wales too. The weather front

brings outbreaks of rain, slow to come across the north of Wales and

the Pennines, but further north it is an improving story across

Scotland and for Northern Ireland with showers easing away later in

the day. As we had through this evening and overnight most of the

showery rain clears away to the east saw more quiet and dry spell tonight

with temperatures dropping down to around to or three degrees, even in

the towns and cities, and mist and fog patches first thing on Monday.

On Monday initially we see rain across the south-west of England and

south Wales, but that clears away and then it is an improving day.

Drier and lighter winds compared to today. Still some scattered showers

and temperatures around 7 to 11 degrees.

Ukip's leader, Paul Nuttall, has been called the "Purple Pinocchio"

and he's been roundly derided on social media as a fantasist.

One of the party's biggest donors, Arron Banks says his leadership

is "weak" and the party is "thrashing around for a purpose".

It was a very bruising by-election for you, and you then went on

holiday. Where did you go? I disappeared somewhere in this

country. I wanted to get away, I was being hounded by the press, my

family were being hounded by the press as well. Frankly it was a

long, difficult campaign and I am back in the saddle mouth. That is

the main thing and Ukip will move forward. After all the things that

were said about you during that campaign did you ever think I might

step down as leader? I never thought I was the wrong guy, of course you

do have moments of doubt. It was a highly personal campaign. My family

were being hounded in a way that I think most politicians will never

have to go through. When you're 86-year-old grandmother gets a

camera shoved in her face, when your father is being followed to work,

your wider family are being harassed, it is difficult but it has

made me more determined because if it beats me then it beats Ukip and

Ukip has a great future as long as it stays in the picture. The thing

that was said about you again and again was simply that you were not

telling the truth about important parts of your life so can we go

through a few of those things? Yes. Why did you say you had lost someone

close to you at Hillsborough? I want to go back because there was

orchestrated smear campaign suggesting I wasn't at Hillsborough.

Can I put this on the record... Who was smearing you? There was an

orchestrated campaign done by a political party, I will leave it at

that. Was it the Labour Party? Yes, they suggested I wasn't at

Hillsborough, I have given evidence to Operation Resolve and I am

prepared to stand in a court of law. As for the close, personal friends

issue, it went on my website in 2011, I didn't put it there, my

press officer offered to resign, I refuse to accept it because it is my

responsibility. You accept responsibility? I didn't check but I

have apologised to the people that matter. I want to make another point

because people should get perspective on this, it's not as if

I've lied on weapons of mass destruction, taken us into an

illegal war. The way some of the media has portrayed this, it has

been unfair. When you are asked about Hillsborough afterwards you

said, I have lost someone who I know, come I ask who that was? No,

because as a family we all lost someone we knew, it was a horrendous

day, I was 12 and a half years of age, I have said everything I have

to say to Operation Resolve. Were you surprised when Ukip officials

walked out because of what you said? One of them said he walked out as a

result of what Arron Banks said, and I have his complete support, but I

am always sad when people leave Ukip, always, and I don't want

people to leave Ukip at the top or the bottom of the party. Was this

the same precipice who was responsible for saying you were a

professional footballer for Tranmere Rovers, which you weren't? I played

Tranmere Rovers from the age of 13 to 18. Not as professional. Yes, for

the youth team, it was the same press officer and it was a mistake.

Again, it was my website and I should have checked. Was she the

same person who was the over enthusiastic researcher who claimed

you had a Ph.D.? No, that is a lie. I have never claimed in my life that

I had a Ph.D. And I'm on record in interviews time and time again

saying I would like to finish my Ph.D., that came from a linked in

page that wasn't even mine. Again on your website you claimed credit for

being on the management board of Northwest training Council... No,

what happened was they offered me... You told the Guardian, your

spokesman said. At the time, they OK'd that press release, so

everything was factual and I don't know what's happened in the

meantime. They asked me verbally, they OK'd the press release in 2009,

I don't know what happened between then and now. So when people say you

are fantasist, and you have seen the stuff on social media, you are there

with the Beatles, on the moon, at the coronation... It has become a

joke and that means you have become a bit of a joke figure and I say

again, are you therefore really the person to lead a party that is

having a tough time at the moment? There is a narrative out there being

spun by media outlets that want to see Ukip destroyed. Of course I am

the right person to lead the party, I was the only person who could have

unified the party, and brought it together. What Ukip has got to do

now is it has got to hold its nerve. Politics will come back onto Ukip's

turf in the near future when the Government starts to backslide on

Article 50 and we have got to stay in the game. Arron Banks was your

main founder... No, he wasn't. This is another media lie. Just because

you tell a lie often enough, it doesn't make it the truth. He has

never been Ukip's major donor and I have a commitment of a consortium of

Ukip's biggest donors that we are financially secure going forward.

Because in the last quarter you had ?33,000 raised, and way behind

parties like the Lib Dems, which leads people to think maybe this is

the beginning of the end for Ukip. That wasn't on my watch, only one

month of that was on my watch, and would you give money to a party that

had altercations in Strasbourg and two leadership elections? If you

look at the next quarter there was a big improvement. When Arron Banks

compares the warning of Ukip to running a Squash club or a jumble

sale, what do you say to him? A lot of what he says, I tend to agree

with, OK? And I get on with him. Ukip needs to professionalise, but I

have only been in this role for 13 weeks, five of that spent fighting a

by-election, two was the Christmas period. Give me time to sort out

this mess. Trust me, politics will come back onto Ukip's turf and Ukip

will prosper in the future but only if people stop infighting and hold

their nerve. Sean Douglas Carswell remain as a Ukip MP? This is about

the knighthood issue, it will go to the national Executive so let's see

what happens. Do you personally think he should remain as a Ukip MP?

If it is proven that Douglas lobbied for Nigel to get a knighthood, and

let's not forget Nigel Farage deserves a knighthood or a peerage,

if it is proven that Douglas has done that I don't see a problem.

Paul Nuttall, not going anywhere. Thank you for talking to us.

If Labour is to recover from the Copeland by-election

defeat, the low poll ratings, the soft coup and the infighting,

the party must persuade voters it can be trusted on the economy.

John McDonnell, the Shadow Chancellor, who spent last week

looking over a cliff, joins me now.

What did you see at the bottom of the cliff? I saw it wasn't the way

to go and I think most people in the party saw that as well and we need

to unite and that's what's happening. Last week we were talking

to Patrick McLoughlin and I put to him the Resolution Foundation

figures for income distribution over the course of the rest of this

Parliament. The bottom 60% have a really tough time coming as things

are, what is the Labour Party's plan to help them. The latest prediction

is that people lose about ?1100. We are the only economy in Europe that

growing while wages are falling so it is clear what we have to do.

Firstly people need a pay rise. We believe there is a squeeze on living

standards and there should be a real living wage, that's ?10 per hour, we

also help they should be capping energy costs and bringing rail back

into public ownership which will help reduce fares but we also need

to address the difference between men and women. We still have a

gender pay gap in this country which is scandalous. All of those things

can come about if we have a fair taxation system. We can tackle tax

avoidance which is on an industrial scale in this country, and the tax

cuts to the rich and to the corporations and invest and grow our

economy. This is not rocket science, it is basic economics.

Something slightly strange is going on which is that your messages on

all of that and on the NHS and on social care are really popular but

the party is not popular and that is probably because people don't think

it adds up so can we go through some of the numbers and can I ask for the

definitive John McDonnell answer to how much the NHS now needs. The

independent estimates now on NHS and social care is between 8 and 12

billion. We believe the Government put aside as is reported 60 billion

increased tax receipts in January have contributed to this as well for

a crisis in case of Brexit. The crisis is here, now, in our social

care in the NHS. So you shouldn't repair for Brexit? We should, but

some of that money needs to deal with the crisis in social care.

The cuts for disabled people, you have attacked it as cruel.

Presumably you would replace that? What George Osborne did, when he was

reversed on PIP, he absorbed that money into the overall budget in

contingencies, we would expect the Government to do that as well. This

cut, remember what it is, 160,000 of the most disabled people in this

country, the courts have ruled against the Government, they have

got to address this issue. We cannot allow these people to suffer any

more. You also want to reverse the cuts to universal credit and

employment support allowance which your office suggests will cut you --

cost you ?40.5 billion. We would look at making sure we reverse the

tax cuts and a fairer system and we would be growing the economy as

well. We will be publishing in detail all of our tax proposals. The

overall principle about this is that we have got to have fairness in our

economy. That is why I am saying, the wealthy and others and

corporations should be publishing income tax returns. You said just

now the country needs a pay rise, public sector workers, you will and

the current freeze on public sector pay as you can end. How much are you

going to lift the cap? That would be part of the negotiations. Presumably

by inflation? We are looking to see what will come out of negotiations.

We want to make sure living standards are not eroded like they

are now. People get a pay rise, we have got at the moment 6 million

people living below the living way, 4 million children in poverty, two

thirds in families where people are at work. The wages are not coping

with what people's needs are. You think the pay rise should be pegged

to inflation? We believe it should make sure people are not losing out.

That means, yes, matching inflation, but there are areas where

negotiations will settle at pay rises that are fair. This example,

in the 1990s, I can remember campaigning, saying the directors of

FTSE 100 companies were earning 50 times the amount of the average

employee. We thought it was a scandal. It is now 180 times. Huge

inequalities to be addressed. I am going through the spending

commitments because you want to restore maintenance grants for the

poorest and bring back maintenance allowance for 18-year-olds. Another

4.5 billion. It is going to add up. Let us talk about how much is being

given to the corporations, billion. Where does that figure come from? If

you restored the... If you did not cut corporation tax, that is 7

billion. Between now and 2020, the reductions down to the levels the

Government want is 70 billion. Sorry, it is 7 billion. If you add

up the corporation tax cuts, the cuts to capital gains, the bank's

Levy, inheritance tax, it comes to 70 billion. If you look at what

Philip Hammond threatened, to go to a tax haven Britain, Irish levels of

corporation taxes, 120 billion. It cannot be acceptable. Let me ask you

about two other things. Scrapping tuition fees, Jeremy Corbyn talked

about it in his campaigns. Is it still on the cards? Yes, it is. A

big essence of this is if we start growing the economy again, start

investing in it, we will grow the economy and we will be able to

afford the public services we need. The problem at the moment, the

economy is not growing on the scale we want. The rewards of the growth

are not being distributed fairly. Cross your fingers and trust us, we

will grow the economy so fast we will be able to pay for these? Not

at all. We are saying we will have a fair taxation system, we will not

have giveaways to the rich. We will invest in the economy and on that

basis we will be able to afford the public services we need and we will

also be able to afford fair wages. It is basic economics. Sound common.

What was the soft coup? -- sound common-sense. A number of people

stirring in advance of the by-election. You were clearly

talking about more than Tony Blair and Peter Mandelson. Who are you

talking about? Peter Mandelson said, everyday I do something to undermine

Jeremy Corbyn. There must have been people on the end of that e-mail

chain. What is interesting, I think we have all looked over the edge on

Copland and we have decided we need to unite the party. I will be having

a cup of tea with Peter Mandelson. There will be some disagreements.

The most important thing we have is responsibility to the party and to

the country. Would you have a cup of tea with Tony Blair? Of course. I am

willing to talk to everybody. You are holding your hands out to

progress and that wing of the party? Of course. I will talk to Progress

at any stage. I was on a march yesterday with NHS workers, nurses,

doctors and Jeremy Corbyn and we were there to listen to people. On

social care, it is in crisis. The Government has cut 4.5 billion from

social care. Elderly people are not getting the care they need and they

are being treated on trolleys in hospitals and they cannot come out

because social care is not Bell. We have to unite the party to provide

an effective opposition. I think Tony Blair, Peter Mandelson, myself,

Jeremy Corbyn, we recognise the responsibility on our shoulders and

we will work together. All wings of the party looking towards next

generations of leaders. You have talked about various people.

Everyone is ruining people. How important is it a John McDonnell

amendment, to lower the threshold... You try to stand for leader but you

couldn't. Allowing more left-wing able to stand, how important is

that? John McDonnell will not stand for leadership again. I have

campaigned for lowering the threshold for years. But it is not

that significant for me because Jeremy Corbyn will lead us into the

next election. We are building up a succession for the long-term future

and we have great young talent coming through but they need more

experience before eventually succeeded. Jeremy will take us into

the next election. This amendment will be decided at conference but it

is not a big issue. What about the people on the other side of the

party who would like to go back to the original selection system? I

understand. Look, we have got a huge party now, half a million new

members, largest political party in Western Europe, our members do not

want to go back to a small group deciding the leader, they want a

democratic say. We are a democratic party in gauging people. People do

not want to go back to where decisions are made by a small elite

group. John McDonnell, future leader or not, come back again, thank you

for talking to us. Now for a look at what's coming up

straight after this programme. We will be asking if pornography

should be on the curriculum. Species doomed, climate change and, ever

rising population, does the Vatican need to accept contraception? See

you at 10am on BBC One. On Wednesday, Philip Hammond

will deliver the famous red box from Downing Street to Parliament

for his first Budget as Chancellor. Within a couple of weeks,

the Prime Minister will trigger Article 50 and begin Britain's exit

from the EU. And yes, the two

things are connected. Can I start by asking about the

reports you are going to do something big for training? I have

been around for many years and every Chancellor announces he will do

something about productivity and training and out there in the world,

nothing happens. Why will it be different this time? Two big

agendas, building an economy in the UK that works for everyone, making

sure everybody has a chance to achieve their potential, and the

other is, repairing Britain's economy for a local future after

Brexit. Both of those imply we need to do significantly more in training

and upscaling our young people so yes, it is a priority for me. In the

Autumn Statement, we focused on capital investment in

infrastructure. If you talk to anybody operating in the economy,

they will tell you the other thing we need to address is skills. It is

a high priority and I advise you to tune in on Wednesday to see what I

have to say. Are we going to be talking about T levels? The

important thing is we have got to establish genuine parity of esteem.

Some people will study A-levels and school -- at school and go on to

higher education and the academic route and others will take a

technical route. What we need to do in this country that others, the US,

Germany, have done years ago, we need to create a rigorous and clear

technical route and is well understood by young people and

employers as the academic route is. According to the papers, your

spending ?500 million on this, not a great deal of money, to perform a

huge revolution, transformation. Is it a big deal? As I know previous

chancellors will have said to you, I am not going to set out the

detail... They all tell me everything! I do acknowledge skills

is one of the big issues that the Government needs to address. Are you

concerned that, again, we are talking about briefing, economists,

people think you have plenty of money to spend, higher than expected

tax revenues, Philip Hammond has a fat lot of money in his wallet? It

is not money in the wallet because we are borrowing a huge amount. We

have over ?1.7 trillion worth of debt. We are spending over ?50

billion a year just on paying the interest on our debt. More than we

spend on defence and overseas aid together. This is not money in a

pot. What is being speculated on is whether we might not have borrowed

quite as much as was forecast. We will see the actual numbers on

Wednesday. If your bank increases your credit card limit, I do not

think you feel obliged to go out and spend every last penny immediately.

It depends on your temperament. I regard my job as Chancellor is

making sure the economy is resilient, we have got reserves in

the tank, so as we embark on the journey we will be taking over the

next couple of years, we are confident we have enough gas in the

tent to see us through the journey. That seems a sensible approach --

tank. Battening down the hatches, windfall money in the back pocket,

should you need it, and in terms of the scale of the preparation fund,

the Sunday Times is talking about ?60 billion, a lot of money, just in

case things go wrong in the Brexit period. Is that right? I do not

think it is about the Brexit period. Any Chancellor would be sensible to

try to make sure he has enough flexibility to manage the economy on

a day-to-day basis. As we go forward. What assumptions are you

making about the divorce payment, as a result of Brexit? We hear huge

figures from the continent, 60 billion, and here we have the House

of Lords and your own legal adviser saying, we do not need to pay these

people a penny? What is your feeling? My feeling is we are about

to enter into a negotiation and very often you will have noticed that

when you are about to start a negotiation with people, they set

out very large demands and very stock positions ahead of that.

Somewhere in the middle? -- Stark. It is a negotiating strategy in

Brussels. The Prime Minister has been very clear. We are a nation

that honours obligations and if we have any bills that need to be paid,

we will deal with them in the proper way. What sort of area of money are

you looking at in terms of preparing to pay bills to the EU? I will not

speculate. Other than to say, we are a nation that abides by

international obligations. We always have and always will. It is not just

about obligations under law, it is a negotiation, as you said, and if we

are going to get free access to the single market which we desperately

want, we might have to pay for that, that would be part of the deal, we

have the money, they have the market access. We will be leaving the

European Union, we will be out of the single market and we do not

expect to be making large payments in future, but we may choose to

participate in some programmes, areas of activity with our European

neighbours, and if we do so, we would expect to make a proper

contribution to those activities. Slightly strange position, clearly

the economy is doing better than a lot of people, including yourself,

thought it would be doing after the referendum, and yet, across the

public spending curve, people are screaming with pain at the moment.

Can I ask you in particular about social care which has become a

really big political problem, for the whole country, not just the

Government? Will you do something for social care and do we need to

think about it entirely differently? The economy is performing extremely

well, much better than many people projected that it would and it is

extremely good news, it gives the Prime Minister a very strong hand as

she goes into the Brexit negotiations. But we recognise our

public services are under pressure to deliver the efficiency agenda we

have set out and I recognise in particular that social care and

local authorities delivering social care are under some pressure. But it

is not just about money. We should remember there are many authorities

managing extremely well, many examples around the country of

extremely good working between the NHS and social care authorities.

Just 24 local authorities account for 50% of all the delayed

discharges from the NHS. It is about good practice as well as budgets.

Conservative councils are looking to put up council tax to meet the

social care obligations so is this not something as a country we need

to think again about how we fund? Because the country is getting

older, the social care bill will rise, and sticking plaster solutions

may not be enough. I think there is a case for taking a longer term view

of how we fund service that is intrinsically linked to the

demographic profile of the population and we know we are an

ageing society said the demands of social care for the elderly will get

greater in the future, and yes there is a very good case for taking a

strategic look at how we deal with this problem over the longer term.

Is that something you as a government can review? I think it's

a separate issue from dealing with the short-term disparities occurring

between areas that are coping very well at present and other areas

which are struggling. Can I ask about progressive politics, and

whether after this Budget has been delivered and the number crunchers

have poured all over it, they will say yet again it is a regressive

budget. You have seen the Resolution Foundation that shows people at the

bottom of the heap that are just about managing will have a really

tough time in terms of their incomes over the remaining years of this

Parliament. Firstly I don't recognise these numbers. Various

bodies publish various numbers which exclude certain things. What we look

at is the effect overall of tax, spending, benefits, targeted public

spending on different groups, and there are some huge... It has taken

all that information into account, the Resolution Foundation. With

respect, most don't take all these figures into account, for example

the IMF doesn't include all areas of taxation, or all areas of government

spending, but there are some very big steps about to happen as we go

in to 2017/ 18. We have a further step of increase in the personal

allowance which takes more people out of paying income tax, we have a

big programme of investment in childcare. By the time this

programme is rolled out the Government will be spending ?6

billion per year on free and tax free childcare for families across

Britain, that is a huge boost. The Resolution Foundation takes both of

those things into account when it shows people at the bottom of the

heap will get about 16% poorer during the course of this

Government, isn't John McDonnell right to say there needs to be a

national pay increase? With the greatest respect to John McDonnell

we delivered the national living wage, and anybody who is on the

national living wage over the last two years, by the time of the next

increase, ?7 50 in April, will be receiving ?1400 per year if they are

in full-time work more than they were burning two years ago so we

have seen people at the bottom of the income distribution, the bottom

fifth seeing the biggest increase in real wages in the last data that is

available. The other thing you could do is reverse the cuts to universal

credit. Iain Duncan Smith called for this and a lot of people think it is

something that is not fair to people who are working very hard and they

are yet being penalised by the Government quite hard. At the Autumn

Statement you will remember we did reduce the taper rate in universal

credit from 65% to 63%, and income boost for 3 million people on low

income, but there was always this challenge, if you have a generous

system of benefits for people as they move into work somehow you have

to taper those benefits away and getting that right is always a

challenge, but obviously it is something we will keep under review

in the future. Same sort of question about the cuts to the disabled, the

lack of increase for disability, a lot of people think it is

particularly cruel, the ?3.7 billion shift. This isn't a shift at all,

the Government was clear about the policy intention, a court has found

the policy, the legislation lacking in clarity, and what the DWP

Secretary of State has decided to do is legislate to be absolutely clear

about the original intention of Parliament but nobody will lose any

benefit here. There is nobody with a benefit who will lose it as a result

of this, but this was a large amount of money which is part of the

benefit reforms that we had already announced and we have said very

clearly we have no plans for further benefit reforms during this

Parliament. But in order to make that statement we do have to be

clear that we have to deliver the benefit reforms that have been

announced. You have talked a bit about Brexit, can I ask about

something you said in Germany about what might happen if we don't get a

deal, he talked about you want to remain in a recognisably European

style economy with European style taxation, but if we are forced to

take something different then we will become something different. We

could be forced to change or economic model, the British people

are not going to lie down and say too bad, we have been wounded. What

is the alternative economic model you are talking about? I'm very

clear that we want to do a deal with the European Union, we expect to do

a deal with the European Union that will allow us to continue trading

together and allow our economy to remain recognisably in the European

mainstream. The point I was making is that if there is anybody in the

European Union who thinks that if we don't do a deal with the European

Union, if we don't continue to work closely together written will simply

slink off as a wounded animal, that is not going to happen. The British

people have a great fighting spirit and we will forge new trade deals

around the world, we will build our business globally, we will go on

from strength to strength and we will do whatever we need to do to

make the British economy compared to to and make sure this country has a

great and successful future. When you say we will do whatever we need

to do, a lot of people read that as we will slash corporation tax, go to

a Singaporean style of economy. People can read what they like into

it, I'm not going to speculate on how the UK would respond to what I

don't expect to be the outcome, but we are going into a negotiation and

we expect to be able to achieve a comprehensive free trade deal with

our European Union partners, but they should know that the

alternative is not Britain slinking away into a corner. A lot of this is

about the tone of the negotiation, don't you believe the Government

would be wiser to accept what the Lords has done on the status of EU

nationals and allow that to be on the face of the bill? Because that's

the way you could get goodwill. We already have goodwill and we have

been clear with our European partners that we are willing to

settle this issue right up front in the negotiation. It isn't us that

has refused to deal with this matter reciprocally at an early stage, it

is other members of the European Union that didn't want to deal with

it separately. We are very clear, we want a deal on citizens and we want

a deal that is fair to EU citizens in the UK and British citizens in

Europe. How worried are you that Northern Ireland will break away

from the UK as a result of the elections and as a result of their

enthusiasm for staying inside the single market, like Scotland? The

union is extremely important to all of us but Northern Ireland in

particular benefit hugely from the union of the United Kingdom.

Northern Ireland has four times as much trade with the UK as it does

with the Republic of Ireland so the union is vitally important

economically, but it is much more than just an economic issue. This

union has made us strong and successful over many years and the

union of England, Scotland, Wales and Northern Ireland will go on

driving that strength and success in the future. Channel 4 News have done

sterling work in pursuing the Conservative Party about election

irregularities, do you think you will face by-elections as a result

of that? The party has acknowledged we made an administrative error in

the way some of the returns were made, in fact we drew that era to

the attention of the Electoral Commission and the due process has

to be followed through and we will cooperate fully with the Electoral

Commission. John McDonnell wants you to publish your tax return, will

you? No, just for the record might tax affairs are regular and

up-to-date but I think... David Cameron did it. This demonstration

politics isn't helping create a better atmosphere in British

politics and I know the Labour Party is now proposing a policy that

anybody earning over ?1 million, which I am certainly not, will have

to publish their tax returns, make them public. That is likely to drive

away talent and investors that Britain needs to create the global

future we are trying to build. Philip Hammond, thank you for

talking to us. Later this morning,

Andrew Neil will be talking to the Leader of the House

of Commons, David Lidington, about when Theresa May will be able

to trigger Brexit and examining a major report on Islamist

terrorism in the UK. That's the Sunday Politics

at 11 here on BBC One. For now, we leave you with the woman

who has to her name more Grammy Alison Krauss celebrated

for her musical collaborations with Robert Plant, and great

bluegrass albums with From her new album, Windy City,

this is that classic number, # It's knowing that your

door is always open # That makes me tend

to leave my sleeping bag # Rolled up and stashed

behind your couch # And the ink stains that

are dried upon some line # That keeps you ever

gentle on my mind # It's not clinging

to the rocks and ivy # Planted on their columns

now that bind me # Because they thought

we fit together walking # It's just knowing that the world

will not be cursing # Or forgiving when I walk along

some railroad track and find # That you're moving

on the backroads # And for hours you're

just gentle on my mind # Though the wheat fields

and the clothes lines # And the junkyards

and the highways come between us # And some other woman's

cryin' to her mother # I still might run in silence tears

of joy might stain my face # And the summer sun might

burn me 'til I'm blind # By the rivers flowing

gentle on my mind # You dip your cup of soup

back from a gurglin' # Cracklin' caldron

in some train yard # And your dirty hat pulled

low across your face # Through cupped hands

round the tin can # I pretend to hold

you to my breast and find # That you're waiting

from the backroads # Ever smilin' ever

gentle on my mind