00:00A lot of experts are saying this morning that this whole spending review was designed to
00:07take on the threat of reform UK, the threat that they are posing to the government. Tories
00:14seem to be an irrelevance to her. Sorry, Tories seem to be... I missed the end of the question,
00:21Stephen. An irrelevance? An irrelevance. No, not at all. We are in the official opposition,
00:29we are in there. I was the person up at the dispatch box holding Rachel Reeves to
00:33account yesterday. Amongst other recent things, of course, we have forced a U-turn
00:38on the winter fuel payment means testing that the government brought in. But
00:42overall, with this spending review, the question that needs to be asked is where
00:47is the money coming from? It is all very well to say you are spending all this
00:51cash left, right and centre. The answer is it is coming by way of far higher
00:55taxes, particularly on businesses, and that is destroying growth. It has also
00:59come by way of huge levels of additional borrowing, which has been inflationary,
01:05which has been interest rates have been higher for longer, our national debt
01:08growing, and the servicing costs of that debt because of the higher interest
01:12rates now running at £100 billion per year. That is twice what we spend on
01:17defence. And that is leaving us overall in a very fragile position with a lot of
01:22challenges ahead. And a lot of people worried now that we are going to be looking at
01:26potentially very significant further tax rises in the autumn. Can I ask your
01:31reaction to the GDP figures out this morning from April of this year. The economy
01:36shrunk by 0.3%. Now, I am sure we are talking to Rachel Reeves just after 9
01:40o'clock this morning. I am sure she is going to say that in part this is down to
01:44the White House, to Liberation Day, to Donald Trump's tariffs and the shock that
01:48came from that. Do you think this is down to the White House or is this down to
01:51Downing Street? Well, look, things internationally, of course, have an
01:57impact. But that is more the reason or all the more reason why you build a
02:02strong economy. And that 0.3% shrinkage in GDP is pretty shocking, but it is not
02:08entirely surprising. In terms of the fragility of our economy, of course, what
02:13the Chancellor does is builds in some fiscal headroom against her fiscal targets. Now, the
02:20headroom that she had at the time of the autumn budget last year, all of that
02:25disappeared and more because of her mismanagement of the economy. She rebuilt it in the spring
02:30statement, but most economists are saying that that headroom would have evaporated again come the
02:35autumn. So, you know, she has got big challenges, not just tariffs, maybe pressure to spend more on
02:41defence in the near future. The winter fuel payment U-turn has not been funded. That is
02:46over £1 billion. It is quite possible that the bond markets may react badly to all of this, which
02:52would put our borrowing costs up, which could have a very detrimental impact on the economy. But all of
02:57that means that in that kind of world, you have to build a strong economy with a good amount of fiscal
03:03headroom that you can maintain. And she has failed to do that and has already given us the evidence that she
03:09can't do that because she has blown it all in the past. There is an argument to say, though,
03:14isn't there, that if you want to have a growing economy, which they have told us from day one, that is
03:20what they want to do, lay the foundations they said in the first year, now they are on phase two,
03:26according to the Prime Minister, and an increase in capital spending is a way to do that, isn't it?
03:32Well, provided you can afford to do it, Stephen. But if you are engaged in ruinous levels of taxation,
03:41borrowing and spending, then you just end up with a very, very fragile economy in a rather dangerous
03:47situation. Look, what the government should have done when they came in is not load up taxes on
03:53businesses and destroy job creation and growth. They shouldn't have talked down the economy in the way
03:58that they did that extinguished the animal spirits. They should have focused far more on productivity.
04:04Do you remember they gave 14% to train drivers, 22% to junior doctors, not one requirement for any
04:10productivity gains for those actual increases. And they should have gripped the welfare budget.
04:16Now, we had made huge progress when we were in office. We saved £5 billion from the welfare budget,
04:23and that was scored by the Office of Budget Responsibility, and that would have seen 450,000
04:29fewer people going on to long-term sickness benefits. One of the first things this government
04:33did was to scrap that. They have got no plans for getting on top of the welfare bill. Now, if you do
04:38those things, don't be surprised if we are running out of money, which is what we are seeing, I'm afraid,
04:43with the economy at the moment. The government has agreed a post-Brexit deal over Gibraltar. What do you
04:49make of that deal? So we need to look at it in closer detail. What is absolutely vital is that
04:58sovereignty is not put in question when it comes to Gibraltar. We are hearing, and I am only just
05:05literally picking it up this morning a little bit, that there will be Spanish officials now involved
05:10in at the airport and so on and so forth. We nearly need to unpack this and understand what it means,
05:16but we will need to really look at the detail a little more closely. But sovereignty has to be
05:21maintained. The only other thing I would say is, of course, we have seen with the Chagos Islands what
05:25this government does when it starts to negotiate with other countries and where that can lead,
05:30which in that case was an absurd surrender and paying for the privilege of doing so.
05:36Well...
05:37then we will need to update some of the time.
05:41More evidence about international nations that are out of and of the moment.
05:46And they will need to take to work there at the moment.
05:48So those issues take place with other countries and the edge of the nation.
05:49And this is the issue of the situation.
05:51We have to update the world's interest toując our passions into the future.
05:51The election of the country has made available at the moment.
05:54So those are the people who are going to arrive at the moment.
05:56And this is how they are going to continue on the end.
05:58The election of the building is not going to move on that season um.
06:01We have to make the idea of the period.
06:02So this is the most important part with the project.
06:03So this is how we have to keep doing a lot of the question.
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