16/07/2017 The Andrew Marr Show

Good morning, if the government is to deliver a decent exit from the

year, and talks start again tomorrow morning, the first thing it has to

do is stick together. Precious little sign of that this morning,

Sunday papers brimming with the most poisonous cabinet briefings and

feuds since the referendum result. In the cross hairs of the worst of

the sniping, the Chancellor. So I am pleased that Philip Hammond,

Chancellor of the Exchequer, joins us this morning to talk politics,

public sector pay, and Brexit. If the Tories go on for much longer

like this we may see this man in number 11, John McDonnell, wouldn't

that mean higher taxes and even more debt? And we will be joined by the

great conductor Daniel Barenboim, on his love of the Proms and how he is

keeping alive the memory of Jacqueline du Pre. She had something

absolutely unique, as if music spoke to her. You could say that I love

her, and I do. And since we are feeling classical, there will be

some Mozart, as well, reviewing the news, I'm joined the former Labour

adviser and stand-up comedian, Ayesha Hazarika, former Tory

minister Iain Duncan Smith and refereeing the both of them, Jane

Moore. The Home Secretary, Amber Rudd,

has said those found guilty of acid attacks should "feel

the full force of the law", after last week's series

of attacks in London. There were more than four-hundred

assaults involving corrosive substances in England and Wales

in the six months to April, according to the latest

official figures. The Home Office also wants to work

with retailers to restrict British politics is at a "dangerous

moment" because of the abuse and intimidation of MPs,

according to the Chairman of the Committee on

Standards in Public Life. Lord Bew told BBC Radio 4's

The Westminster Hour that new laws may be necessary to protect

politicians and ensure that people are not put off entering

a career in elected office. The Turkish President has addressed

two huge rallies overnight, in which more than 250

people were killed. Mr Erdogan has seen

significant gains in his presidential powers

since the coup was defeated. Thousands of suspected supporters

of the plot have since been arrested and the president has now backed

the death penalty for coup plotters. The development of Artificial

Intelligence has become the greatest according to the technology

entrepreneur Elon Musk. who co-founded the car company

Tesla, made the comments

at a gathering of US lawmakers. He warned politicians should start

realising the threat posed by machines taking

over their human creators. Later today, Doctor Who fans

will find out who will emerge from the Tardis as the thirteenth

Time Lord. It's followed endless

speculation about who will The big reveal will take place

after the Wimbledon men's singles The next news on BBC One is at

12.15. The main story in the Sunday Times,

the Chancellor says the public sector is overpaid, he described

public sector workers as overpaid, we will ask about that.

The former head of the civil service, Gus O'Donnell, warning

Theresa May, the Prime Minister, of chaos over X it, partly because of

the rows I was discussing early on. The mail on Sunday French lot to

wreck the heart of London. -- chaos over Brexit.

are Ayesha Hazarika, Jane Moore and Iain Duncan Smith.

Three men with revolvers all pointed at each other. This is a very big

story by Tim Shipman, Spectator summer party, on Thursday night, I'm

afraid there was more drama in it than on Love Island, there really

was, less love, more press echo -- more prosecco, this is

extraordinary, Tim Shipman wrote a book called All That War and it

looks like that has broken out. Theresa May is now in a leadership

contest, people briefing against David Davis and Boris Johnson, but

the person most in the firing line is the Chancellor Philip Hammond,

you have on your show today. People leaking against him about cabinet.

-- All Out War. In specific terms, to moments in cabinet last week,

where he allegedly said something that went straight to the press. He

said two things, he thought public sector pay workers were overpaid,

and that for some reason, women could not drive trains... He denies

this. This week we have had a rather unseemly row in the Conservative

Party about the use of the N-word and once again they are showing

themselves to be out of touch. He says this is untrue, that this has

been overhyped, but political editor Tim Shipman took to Twitter and

said, he is getting this is the bait and from people, this is one of the

most bizarrely entertaining weeks I have had as a political editor,

seething rivalry. -- getting this the bait. Things are bad for Theresa

May, I'm sorry to do this, but things are so bad that in the

Telegraph there is a story saying that this is reminiscent of Iain

Duncan Smith! -- getting this verbatim. That is how bad things

are. You went through a very torrid time, you know what it is like. The

honest point, I know this makes a great cover, but there is a great

divide in the Conservative Party on another level, some of them in the

cabinet and the rest of the backbenchers, because it is quite

interesting, a lot of the new generation have come in and are

seething me furious with what this is representing at the moment. Their

view is, they want Theresa May to get through the Brexit stuff, and

she has already set at some point she will step down, their view, none

of the above, at some point, maybe some the else will step through.

Generational question, these people may be too old. Some of the people I

see them running around the place, it is reminiscent of the same people

running around when I was the leader. For once, shut up, for gods

sake, let everybody get on with the of governing. There will not be a

leadership election, I can promise you that, because there is no mood

in the Conservative Party in parliament for a leadership

election, they know what the problem is, unusual thing happening at the

moment, it's called Brexit, it has a timetable, you cannot afford it to

be broken into by a Conservative leadership election, we have to get

through that, first and foremost, there is a chance to do their jobs.

As an ardent Brexiteer, do you look at this stuff and say, this kind of

cabinet dispute could wreck our chances of a good deal? Certainly

doesn't help but the classic summer stuff, getting through this, get

through conference, get forward. My general view is, all of this stuff

does nobody any good, and everybody a bit of harm. We have lots of stuff

we may want to talk about with regard to Labour policies, in the

meantime... I don't think that we can just take for granted that there

will not be a leadership contest. You may like to see one... We would

all like to see one! I think there's so much briefing going wrong, can

these men be restrained from their ambition? The backbenchers, I

categorically tell you right now, there is no support for this to take

place, honestly, I have been through this, I have seen it before, you

know when there is a groundswell rumbling. You thought you would

survive conference, you were gone... In the middle of all of this, can I

just date, political journalists, people working behind the scenes and

at the front of politics get very excited about this kind of story but

meanwhile the British public, who voted for Brexit, in numbers

unprecedented in British political history, biggest vote ever, are

going: why the hell are they not getting on with it? It is like a

group of car dealers... Gus O'Donnell, in the Observer, he talks

about, the former cabinet secretary, of course, he is writing about this

and the job that his successor, Jeremy Hayward faces. The National

Audit Office, has waded in to say, this is like falling apart of a

chocolate orange. All these pieces... And suddenly, somebody

needs to come in and say, here is the foil, we need to stick together.

It is ridiculous. Saying that David Davis would have been better suited,

cordon aiding policy from the Cabinet Office, rather than having a

ministerial post on Brexit. He's pretty much there, that is where his

office stands. Coming back to the simple point I make, as a

backbencher, I promise you, right now, it is not... They are getting

some pretty strong messages at the moment. Photograph of John Landsman,

founder of momentum, I was at university within, I keep warmly and

Cordelia inviting him onto the show full there he is, looking quite

tough. This is a relatively rare interview with him, about momentum.

Quite interesting, this story, underneath some of the other stuff

going on, there is a real issue, about the way in which, in a sense,

some of this politics has shifted, the arrival of momentum, the

election was a debate about growing violence... Conservative MPs are

worried about the nature and the way in which the campaigning starts but

also Labour MPs, I know a lot of Labour MPs, who feel deeply

threatened by him to get them out and do nothing else but target

people who they don't think our supporters of Jeremy Corbyn. This

will grow, this story, it is a party that at some stage has got to

confront the idea of a party within a party. I wish he was here the sofa

to defend himself, momentum are the people who helped mobilise half a

million young voters, they helped Jeremy Corbyn, extraordinary

political phenomenon. My personal view is it is the growth of a party

in a party and what is interesting here, talking about taking control

of leadership elections, nominations, who should become MPs,

all of this is a real push for power, which is quite interesting.

Where is the Labour Party in this? Anybody in politics, anyone,

particularly women, particularly somebody from a BAME background,

there is a lot of abuse going around, I get as much abuse from the

right as I do from the left, and it is incumbent on all political

leaders to make a stand on this, and say, abuse against anybody is not

acceptable. I think there are guidelines going to the Labour NEC

to look at this. It is easy to demonise momentum. But... Jeremy

Corbyn did create an incredible amount of enthusiasm at the general

election, he led with ideas, he did mobilise young people who don't

normally come out to vote. It is not all malign, some of it is positive,

some of it is about people being energised. Your seat, once a Tory

stronghold, is now a marginal. Let's move on. I think there is a party

within every party, in the Conservative, there are hardline

Eurosceptic backbenchers who have been a party within a party for

decades. This is an organised movement, it is

nothing like that in the Conservative. A more traditional

party within a party, this is interesting, in the mail on Sunday,

about France trying to Nick the financial heart of the City of

London and plonk it in Paris. Leaked memo from Jeremy Brown, former Lib

Dem MP, envoy now for the city, he says, the French are going to play

hardball on Brexit, they do not want a soft Brexit, they see the

opportunity, London is the top city at the moment for financial services

and they think Paris could steal that away and they feel quite, you

know, quite motivated to do this. They want the maximum amount of

chaos. Is this a story? I'm surprised people think this is a

story, we did this six months ago. When we are told... When we are told

Brexit will be straightforward and simple, Walling on from what Jane

was saying about the Gus O'Donnell story, what we have to realise, we

do not have all the power in these negotiations, the EU will have to

make a decision about yes, trade is very valuable, but they will want to

make an example of us to show to other countries. We do not have the

power when we go forward with a war in cabinet, cabinet looking so weak.

Coming back to the story, you could have written this story two years

ago. What has been going on, France has been endlessly trying to attack

the City of London and take business away, this is not new. And by the

way... We are running out of time, we'll move on to a couple more

stories. 6 million, you have to learn, to learn a million. That is

the thing. The big story in London, the acid attack. I have a horrible

feeling it will get more widespread. Amber Rudd has written in the Sunday

Times: Of course it is another thing to

deal with, with everything else we have got going on, because these

kids, I think because they think stop and search now I can't

harmonise, they are using sports drinks bottles and this is now their

weapon of choice so it is horrendous. They were attacking

delivery drivers, stealing their motorbikes and then carrying out

more attacks. Speaking of bad stuff happening, nowhere is worse on the

planet now than Mosul. As an ex-soldier I can tell you the worst

thing you ever have to do is fight in a city in a built-up environment

because the devastation, the end -- the violence... People start to lose

track of human rights issues and you are seeing it, almost the reaction

from many who occupied it is little or no sense that people they capture

now should be dealt with in any humane way. I don't say this is

going on with any tacit approval but it's almost be expected. The

devastation is astonishing. What it'll say, and there's a story about

this in the papers, that the whole idea of ISIS doesn't exist because

they had amassed army to go, they only moved into Iraq because the

Sunni Muslims decided they had been so oppressed by the existing

government that they all turned to Isil. How does Iraq govern itself

after this if all we see is factionalised anger? Good question.

Everyone on the edges of the seat wondering who will be the next

Doctor Who. It is so exciting and they will announce it after

Wimbledon, which makes you think maybe it will be Roger Federer!

There's lots of speculation that it might be a woman and I would love to

see that because women can drive cars and trains, they can definitely

be Doctor Who as well. But isn't Doctor Who traditionally a man? I

don't understand why it has to be a woman. Doctor Who is a shape

shifter, it could be a woman. We have run out of time. Oh, no! I have

to confess, I got up this morning, put on the wrong pair of trousers!

Good luck for your gig. Will the roof on centre

court be open? I'm joined from Wimbledon this

morning by Sarah Keith-Lucas. The roof is open at the moment over

Centre court, we have some sunshine out there. There is rain in the

forecast later in the day so we could see the roof closing at some

point. Across the country it is a north-south split to the weather. In

many southern parts we will see quite a lot of cloud, the chance of

a few spots of rain but certainly sunny spells further north. There

will be that thick cloud in the south bringing drizzle. In the

south-west of England this morning we have low cloud, it is drizzly and

damp. Sunny spells across the south-east where it is fine and dry.

Moving north across the country, in the Midlands there could be a slight

spots of rain, but further north, much of northern England, Scotland

and Northern Ireland it is a fine day ahead. Just the odd light shower

across parts of Scotland where it will be quite breezy too. Lighter

winds through the course of the day and would keep the

sunshine in the north, cloudy skies sinking south into the London region

by about four o'clock in the afternoon where we have a chance of

a light shower or two. Into the evening hours, the cloud in the

south drifts away so we have clear and dry weather for much of the

country overnight. Some rain for Scotland, and temperatures holding

out to around 12 - 14 degrees. Tomorrow starts off on the dry and

bright note, and the weather is set fair with light winds, a bit breezy

for the north of Scotland, but it will be warming up with temperatures

reaching 26 degrees in the south, 20 degrees in parts of Northern Ireland

and Scotland. Another warm day on Tuesday but watch out for heavy

thundery showers in the south. Andrew.

Sounds very much like July. Now a look at what's coming up

straight after this programme. Is it time to re-wild the British

countryside? And priests won't need ropes... Are we dressing down too

much? Join us at ten o'clock. So, as we've heard, one of the big

stories of the morning There are millions of people

who presumably hope that if Labour doesn make it into power anytime

soon, their pay packets will go up. Labour also has questions

to answer, and I'm joined by the Shadow Chancellor John

McDonnell. Can I ask you first of all, if you

are public sector worker and you are watching this programme, what can

you expect from a Labour government? We will end the pericarp. We have

set aside 4 billion by the end of the Parliament on annual basis to

allow that to happen. We have looked at forecast about how he will rise

and it will certainly match inflation, and some review bodies,

because it will be set by review bodies, I think will try to

compensate some of the losses over the last seven years. Again, we are

very clear, unlike the Government which has set a cap the review

bodies have to follow, it will be up to the review bodies to make

recommendations that we will adhere to. You will write letters to the

review body setting overall recommendations, don't you think

public sector workers deserve a little bit more than inflation,

actually pay rise? I do but that will be up to the review bodies.

What I won't be doing is writing to the review bodies as this Government

have done and say you can review the paper but only go up by 1% which

effectively means a pay cut. So you would raise public sector pay. What

we don't know these would erase it so it is in line with private sector

pay by and large? These review bodies will have to look at these

factors, what's happening in the private sector and the economy

overall, and come up with their judgment about what they think is

best. What we cannot do is set in an envelope which is unreal in relation

to what people are learning. The real question is how much you will

give these people because if you are going to match private sector pay,

that rises to about 9 billion a year and that's money that is not

budgeted for in your manifesto. Are you prepared to spend money beyond

the manifesto? The figures of these, the Government said a pay cut would

save them 5 billion so they think the cost of overcoming that a cap is

1.2 billion a year. Some of that multinational insurance payments

paid back to government as well. We will make sure people get a fair pay

rise, they won't get a pay cut as a result of inflation. One of the

issues we have got now... All I'm saying is that is extra money beyond

what you have budgeted for. We have taken the OBR figures on pay rises.

To be clear, to match inflation cost 4 billion, but... We have looked at

the OBR's predictions on pay rises in the future. The issue for us is

how do we make sure people get proper pay because at the moment we

cannot retain staff. We assess that if public pay setting is delegated

to the review bodies by the Labour Party, you suggest the bodies would

be likely to increase public sector pay in line with private sector pay

and our analysis implies that additional 9.2 billion a year they

save for the higher cost... The IFF have come out with that figure and

what we have said to them is actually we are following the OBR,

the Government does own body that recommends to the Government what it

should be. However on the IFA is -- IFS figures, they haven't accounted

for the tax that will come back. We have pitched hours at 4 billion

based upon the Office for Budget Responsibility. But that doesn't

allow for a pay rise. Yes it does, the OBR figures are based on their

prediction of wages rising. You will have seen Angela Rayner sitting in

that chair last week and she was talking about Jeremy Corbyn's

promised at the electorate a few days before the election he was

looking at wiping out historic debt accumulated by students and she said

that would cost around 100 billion. Is that the figure you recognise?

Yes, it is a lot of money, the system is imploding. Half the

student debt we now know will not be paid back so the system itself is

falling apart. We will be inviting people to come and advise us and we

tried to do that using economists from across the piece... But you

will try to pay off the historic debt? We will look at what we can

do. It sounded like a promise at the time, that's the problem. Jeremy

said we recognise people are coming out of college now with debts of

?50,000. They cannot even think of getting a property so we have to

tackle that but the system has got to be tackled anyway because it is

falling apart. A very simple question, for students who have

accumulated debt in this country, would a future Labour government

help them out by at least dealing with some of that? We are going to

try to. It's a real ambition of hours. I'm not going to promise

something we cannot deliver. What Jeremy said is we will try and

tackle this issue and one of the reasons we have got to tackle it is

because the system itself is collapsing. The reason I'm asking...

Andrew Adonis wrote last week saying the system has got to be scrapped as

it's not working, the person who created it. This felt like a

promise, it was made in the new musical express, read by huge

numbers of young people, and younger voters thought it was a promise but

it sounds like a vague aspiration. What we said in manifesto about

scrapping tuition fees, we will do that. If we can help with the debt

we certainly will, and we have said clearly because the system is

collapsing, whoever is in Government has got to tackle this. Can I go

back to this issue low pay? Please do. I was at Barts Hospital

yesterday with the cleaners who are now on strike a cost they asked for

30p an hour extra and they were refused it. One of the cleaners gave

me a payslip, this is a payslip copy. This woman, full-time worker,

earns ?297 a week. At the moment median rent is ?350. Ask Philip

Hammond if he can live on that. If I can I will. Let me return to the

question of overall Labour spending. The IFS has said Labour would spend

at record levels in peace time, the tax burden would increase to its

highest level since 1949. That's why a lot of people looked to you and

Jeremy Corbyn and flinched. Where is that tax for falling? 97% of people

will not have any increase in income tax or VAT or national insurance. We

are asking two groups to pay more, the top 5% of earners but also the

corporations. The corporations have had their taxes cut by this

Government on a scale we have never seen before in history and as result

of that we are not getting business investment. They are sitting the

billions of pounds of income not invested. We believe the richest and

the corporations should pay a bit more. The resolution foundation

report this week said after the recession ten years ago, 1%, the

richest in our country now, have recovered. The 99% are still

suffering. One of the figures was 42%, so nearly half the people in

this country cannot afford a holiday this year, that is scandalous. Let

me ask about corporations -- corporation tax. Do you believe

leaving the customs union would be disastrous for British business? I

believe we have to try and maintain the benefits of the customs union

and that's one of the issues we have got to negotiate. Does that mean

staying inside or leaving? Keep all the options open. We are

concentrating on the objectives rather than the structures and that

seems to have a resonance across Europe at the moment. What about the

transitional arrangements because a lot of businesses want to

effectively stay inside the EU for maybe five years ahead so they can

plan for the exit. Most of the businesses I have been talking to

say they need at least a two year transitional period. Everyone

realises that has to be a transitional period, that is what we

are pressing the Government on. When it comes to what happens in the

House of Commons, you want the Conservatives to collapse and have a

general election soon but there is no necessary sign of that. They

could carry on for five years so inside the House of Commons you can

exercise some pressure as the opposition party. Do you use that to

get a different kind of Brexit? we have got, Conservative cabinet

fighting like rats in a sack, Europeans want to know what the

direction is, what is the negotiating position. There is a

different negotiating position virtually every day coming out of

this government's cabinet, it is falling apart, in the interests of

the country, my view is they should stand down and let us form a

government so we can negotiate Brexit in the interests of this

country, protecting jobs and the economy. If they don't do that in

the House of Commons, we will try to get a majority of MPs to vote for a

sensible Brexit stop what do you saying that the people killed in

Grenfell Tower were killed by political murder. Now I do not, I

was extremely angry, I am a west London MP, this site is not far,

political decisions were made which resulted in the deaths of these

people was a scandal. Murder means a political decision, and intentional

killing. There is a long history in this country of the concept of

social murder, where decisions are made with no regard for the

consequences of that, and as a result of that, it will have

suffered. That is what I think. Do you regard it as murder? I believe

that social murder occurred in this instance and people should be held

accountable. Who are the murders? A lot of political decisions over the

years have not addressed the housing problems we have had, cutting back

on local government, cutting back 11,000 firefighters, jobs cut as

well, even investment in aerial ladders and things like that in our

country. The politicians who sanctioned the cuts are murderers. I

believe they have to be held to account, I remain angry at how may

people have lost their lives as a result of political decisions made

over the years. To be clear, these decisions happened under Labour and

Tory governments, over the years, over the years. I set up the Fire

Brigades union is Parliamentary group back in 2004 I raised the

issue of sprinklers, all through the last seven years in particular I

have been going along with ministers on behalf of the FT you saying, stop

cutting jobs, stop undermining national standards, and nobly was

listening. -- FBU. Strong word to use, but murder is is how you regard

it? I do not move back from what I said, and I remain angry at the loss

of life that has taken place not far from my constituency. John

McDonnell, thank you for talking with us.

Daniel Barenboim has long been a towering

A revered conductor and pianist as well as an ardent advocate of how

music can bridge divides, even between Israel and Palestine.

Remarkably, he's a citizen of both places.

His return to the Proms is a real highlight of this season,

a programme that includes Elgar, Sibelius and a new

When we met, Barenboim told me why he's loved the Proms ever

since he and his late wife, cellist Jacqueline Du Pre,

used to queue up for tickets in 1960's London.

The Proms have a unique atmosphere, there's nowhere in the world...

And the extraordinary thing is I lived in England for many years

in the past, and I'm very much aware that programmes at the Proms

are wonderfully varied, and really don't shy away

from contemporary music and all types of music.

It's not the public that goes to the festival during the winter.

-- It's not the public that goes to the Festival Hall during the winter.

I've always asked myself, what do these people,

these 5,000 who have come daily to the Proms and listen so

attentively and are so enthusiastic, what they do for music the rest

Now you're doing another concert later in the year

at the Royal Festival Hall for a rather sad reason.

It's 30 years since Jacqueline du Pre died, and you're doing

a concert raising money for multiple sclerosis.

Can you just tell us a little bit about the reasons

Jacqueline suffered from multiple sclerosis for 18 years

And I was therefore in very close contact

with the cruelty of this illness,

because it is an illness that affects everything

The illness itself is as much a mystery today as it was then.

There's over 100,000 in Great Britain that suffer from MS

and it's absolutely imperative that money is raised for the research.

Otherwise it will be at a standstill.

And can you remember when you first saw something

She had lost the feeling on certain parts of her body,

and at first we didn't pay much attention to it but it got more

She was still able to play for another two years, but then it

affected her hands and she had to stop playing

She picked up the bow and she didn't know whether they weighed 50 grams

or 50 kilos and therefore she was unable to.

She was your beloved wife, she was also an extraordinary

can you explain to people watching why she was such a beloved

You would think I say this because I loved her, and I still do,

but I think quite objectively, musically speaking, she had

something absolutely unique, as if music spoke to her in a way,

in indirect way as it doesn't normally.

With her it was something absolutely directly put in front of her.

A piece of music she didn't know that she had never

played and never heard, and somehow the essence

of the piece, the essence of the piece came out.

One final question if I may, I think you're one of the only

people in the world who has both Israeli and Palestinian citizenship.

You want to take your Berlin orchestra to Iran,

they have called you an agent of Zionism,

and so you are attacked in Israel for being anti-Israeli

and you are attacked in Iran for being a Zionist!

And in Palestine for being a Zionist.

You are getting it from all sides, what keeps you going?

I think that the whole project and therefore I myself too

am admired in Israel and hated in Israel.

Admired in Palestine and criticised in Palestine too.

So something must be right of what I do!

Maestro, it's been a privilege talking to you, thank you very much.

And he's conducting the Berlin Staatskapelle

I should just say that tickets are now on sale for that benefit

It will take place in October at the Royal Festival Hall,

on the 30th anniversary of Jacqueline DuPre's death.

Talking of people who are getting it from all sides...!

According to repeated, if anonymous Cabinet sources overnight,

the Chancellor offended some of his own colleagues at this week's

political cabinet meeting by saying that public sector

there's a lot of Cabinet-level malice in today's papers,

but I'm now joined by the man himself to clear it up.

Did you say it? I'm not going to talk about what was said and what

was not said, it's easy to take something out of context, public

sector pay raised ahead of private sector pay after the crash in

2008/9, taking public sector pay before pension contributions, that

gap is now closed, public and private sector pay on average around

same level, when you take into account the very generous

contributions that public sector employers to pay in for the generous

pensions, they are still 10% ahead... I don't for a moment, I

don't for a moment tonight there are areas in the public service where

recruitment and retention is becoming an issue, that there are

areas of the country where public sector wages and private sector

wages are getting out of kilter in the other direction. We have to look

at these things and discuss them. It is important we discuss them on the

basis of the facts, not rhetoric from the Labour Party or the trade

unions. Your own department denied Virgin eyes you used the word

overpaid, do you think public sector workers are in general overpaid?

This is a relative question, this is about the relationship between

public and private sector pay, and it is a simple fact, independent

figures show this, public sector workers on average are paid about

10% more than private sector workers. You think relative to

private sector workers, are they overpaid? Well to two private sector

workers, they are paid a 10% premium, this includes pension

contribution, you cannot eat your pension, you cannot feed your kids

with the pension contribution, so I understand that and all the issues

that other sector think of that cleaner described by John McDonnell,

weekly payslip, ?297 is what she takes home, do you think that is

overpaid? Of course it is not, it is very hard... John McDonnell needs to

remember it was a Conservative government that introduced the

national living wage and also should know that the only way that we can

sustainably increase... Low pay is not just an issue in the public

sector, it is an issue in the private sector. The only way that we

can address that, the only way that we can address the high wage economy

we want to have sustainably is to increase productivity, to get our

public finances into good order, there is not a short cut. So you

think in relative terms, public sector workers are overpaid and when

you write letters to the pay review bodies in due course, it will be

more tough messages, those people watching who are public sector

workers should expect more austerity, more of the pay gap,

going backwards in terms of actual pay. The policy on public sector pay

has not changed, we have sought to be fair to public sector workers but

also fair... Seven you freeze. Not a freeze... -- a seven-year freeze.

Seven years pay restraint but also let's be clear about this, teachers

in 2015/16 at a 3.3% pay increase, NHS staff last year over half of

them had a pay increase averaging just over 3%, it is not the same

picture across the board. But look, our position is that we have to be

there to public sector workers and look at recruitment and retention

problems and be fair to taxpayers and try to protect jobs in the

public sector, those are the bits of the equation we had to juggle. We do

keep this under constant review and the fact is well-known, the cabinet

has been discussing this issue, then is a clear signal that we understand

the concern, both of public sector workers and the wider public. Most

people watching this interview will conclude that you said they were

overpaid. I have told you, I am not going to tell you what comes out of

a private cabinet meeting and they should not have leaked that, cabinet

meetings are supposed to be a private space in which we have a

serious discussion. I am the Chancellor, you would expect me to

put in discussion about private sector pay in the context of the

fiscal and economic situation that we face. Others who represent

spending departments, implying large numbers of public sector workers

will bring their experience and their realities to the table, that

is how we have a discussion and reach a decision. This morning they

have gone for you publicly, all over the newspapers, are you angry about

that? I don't know who said what, my colleague David leading to appeared

on your show last week was probable is spot on the money when he said we

are in the middle of the silly summer season, it may have been... I

was not there, but lots of parties going on, lots of tittle tattle,

lots of gossip, summer recess coming up, the government... The

government... I do think, on many fronts, it would be helpful if my

colleagues, all of us, focused on the job in hand. This government, as

Iain Duncan Smith said, is facing a ticking clock over Brexit

negotiations. David Davis will be going tomorrow to Brussels to start

the next round of the gauche durations. We have a crucial job to

do here -- negotiations. Which protects jobs, prosperity and

British businesses. That is why we should be focusing upon. They are

after you in particular. Can I ask, you said that trains are so easy to

drive today that even women can do it. Have you said that? Did the

Prime Minister say, I am going to take your shovel away from you? I'm

not going to get into what was or was not said in a cabinet meeting. I

have two daughters in their early 20s, I don't think like that and

would not make a remark like that. I would say it is a disgrace the 95%

of train drivers are men. There is no reason why that workforce

shouldn't be more gender balanced except that the unions control the

recruitment and training process, and in the context of a discussion

about industrial relations on the railways, I think it is very

important to focus on that control that the unions have over the

training process. So why are people going for you in the papers? Is

there a fight for the leadership of the Conservative Party under way? I

certainly hope not. If there is, I am no part of it. I think my

colleagues should focus on the job we have been elected to do. This

Government will be a stable government because people understand

that there is a crucial job that needs to be done. They will support

us while we get on with that job but they won't indulge us if we start

turning our attentions elsewhere. If you want my opinion some of the

noises generated by people who are not happy with the agenda that I

have over the last few weeks tried to advance of ensuring that we

achieve a Brexit which is focused on protecting our economy, protecting

our jobs, and making sure we can have continued rising living

standards in the future. So these are hard-core Brexiteers who want a

hard and fast Brexit attacking you for that reason? You will have to

ask Tim Shipman and Jane Forsyth who it is. Can I turn to the economy and

ask about the recent OBR report which was quite worrying to a lot of

people. It said the economy is in a poor condition. This was a report

that we asked the OBR to produce bringing us into line with IMF

guidance, to look at our position and tell us where the future risks

are in our economy and I think it's a very good exercise and I very much

appreciate the reports they have produced. What it warms is that the

levels of debt that we have in this country on the level of deficit we

are still running means that we would be vulnerable to any future

shock -- warns. So we can't borrow more? That is simply the point. We

wouldn't have capacity for government to intervene and protect

the economy as it did in 2008/9 because our level of deficit is too

high. Can I continue asking about Brexit in particular because there's

report again in the papers about Paris not surprisingly trying to

steal trade from the City of London. There are reports of a sharp fall in

levels of investment particularly in the car industry, you are getting

all of these businessmen coming to you, with reports on your table, are

you worried about the state of the economy has begun through the Brexit

negotiations? I think it is absolutely clear that businesses

where they can hold off are doing so and you can understand why. They are

waiting for more clarity about what the future relationship with Europe

will look like and the way to get the economy moving, the way to

restore business confidence and then consumer confidence, is to give as

much clarity as possible as early as possible. Which is why I have been

talking over the last four or five weeks about the importance of a

transitional arrangement and I believe the great majority of my

colleagues now recognise that that is the right and sensible way to go,

both in the UK and the European Union. And this could go on for

three or four years, a transitional arrangement? That's what business

ones. In my view it needs to be a defined period, we have got to do

this in a way that meet the concerns and requirements of people who want

a softer version of Brexit and those who campaigned hard to leave the

European Union. I think most people are willing to accept a transition

so long as it is of limited duration in order to avoid... But this would

be over a number of years during which in effect we would still be

members of the European market, we would still be paying in and be

under the ECJ. We would leave the single market when we left the

European Union on the 29th of March 20 19. That is fixed. How long

should a transition period be? That's a technical question, it

depends how long we need to put in place new customs systems, new

migration systems. These things cannot be magic up overnight. Have

you any idea how long we are talking about? I think we will be talking a

couple of years. But we do know for sure is that Michel Barnier and the

European team desperately want to sort out the money before anything

else happens. You are the man in charge of the money. Have you

budgeted for an exit fee for the EU? We don't have a sum of money

specifically for that purpose but our current public finances include

our contributions to the European Union and what the OBR has done if

you read its last report looking forward is assumed that, although

those monies might be used for different purposes on domestic

programmes, and continuing to contribute perhaps to some European

programmes, broadly speaking the amount of money will remain the

same. So they haven't budgeted a bonus for leaving the European Union

but nor have they budgeted cost. Do you accept because there was a

statement in the House of Lords that appeared to suggest this, that we

have ongoing obligations to the EU which are financial which we must

settle early in the negotiating period? We are discussing that

question this week in Brussels with the European Union and what we have

said repeatedly is that we are country that always honours its

obligations as we expect others to honour their obligations towards us,

and if there is any amount that is due when it's been properly

quantified and audited, of course we will deal it. So shouldn't just go

whistle for it then? If you are referring to the comment from Boris

Johnson earlier in the week, he was speaking specifically about this

fanciful 100 billion figure that has been bandied about. That is a

ridiculous figure. Is 40 billion a ridiculous figure? I'm not going to

get into a process of talking about specific figures when David Davis is

about to open a negotiation in Brussels tomorrow, that would

totally undermine his position. Is it possible for this Government to

negotiate a proper Brexit when the Cabinet is so divided over the

issue? This is a media line. I would say people are going for you that

they don't like the kind of Brexit you want. The Cabinet is coming

closer together on issues like transition for example. Five weeks

ago the idea of a transition period was quite a new concept, now you

would find that pretty much everyone around the Cabinet table accepts

there will be some kind of transition. We are into a real

process now with the start of negotiations and I think you will

find the Cabinet rallying around a position that maximises our leverage

and gets the best possible deal for Britain. Is it almost as simple as

if you and David Davis can agree... We are looking to get the best

possible deal for Britain and we both know that continued growth in

the economy is actually the measure by which people will judge their

political leaders. They can talk about a lot of other things but in

the end it will be about whether they see their incomes rising, their

standard of living rising, their jobs being secure and that is our

objective and certainly we try to work together to agree on these

things. In 2010 you warned Labour government could rise the national

debt to ?1.5 trillion. What it now? It is 1.7 trillion as you know. You

have done worse, that's a big failure. There were choices about

how fast we wanted to do deficit reduction, how much we wanted to

impose on the economy to do that. We could have done it more quickly as

some countries in the European Union have done at the price of soaring

unemployment. And we have a weaker economy now. We chose to protect

jobs as a priority and we have done brilliantly well. One final

question, you will have heard John McDonnell suggesting people who died

in Grenfell Tower whether victims of political murder, how do you

respond? That's a disgraceful suggestion. There is absolutely not

a shred of evidence to support that. It was a terrible tragedy but of

course we must wait for the outcome of the public inquiry to understand

what happened and learn the lessons from it and we will learn lessons.

Philip Hammond, thank you very much indeed.

Coming up later this morning Andrew Neil will be talking

about Brexit and lots more with the international

trade secretary Liam Fox, and he'll be joined

by Shadow Business Secretary Rebecca Long-Bailey.

That's the Sunday Politics at 11 here on BBC One.

Join us next week for our last show before we take a summer break.

I'll be talking to the Hollywood star, Ethan Hawke.

For now, here to play us out I'm delighted to welcome the flautist

Lisa Friend and the Brodsky Quartet, performing the first movement

For all the latest political news and debate,

tune in to the Sunday Politics at 11,

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