The £10 Billion Wasted On Covid PPE

Summary

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Newscast — "The £10 Billion Wasted On Covid PPE"

BBC News | Episode Date: July 14, 2026

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Episode Overview

This episode of Newscast, hosted by Adam Fleming and featuring BBC health reporter Jim Reed and political editor Chris Mason, takes a deep dive into the latest findings from the UK public Covid inquiry — specifically the inquiry's fifth report, which investigates the enormous cost and systemic failures in procuring Personal Protective Equipment (PPE) during the early months of the Covid pandemic. The discussion unpacks how nearly £10 billion of taxpayers’ money was wasted, details procedural failures (including the controversial "VIP lane"), and examines both the political fallout and lingering questions about frontline worker safety.

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Key Discussion Points & Insights

1. The Covid PPE Inquiry Report — Major Findings

• Summary of Losses:

  • £10 billion of taxpayers' money wasted on unused or unusable PPE
    • "The headline that everyone's jumping on is, is the cost... almost 10 billion pounds of taxpayers money Wasted, she [Baroness Hallett] said..." – Jim Reed (02:07)
  • Total PPE and pandemic supply spending: £42 billion
  • Perspective:
    • Equivalent to building 10 new NHS hospitals
    • UK’s annual defense budget for context: £68 billion

• Nature of Waste:

  • Two main issues:
    1. Massive over-purchasing ("bought too much of the stuff").
    2. Quality failures—PPE either not up to NHS standards or the type required ("masks for England didn't work... gowns weren't up to scratch," etc.).
    • "They bought stuff that in the end they didn't particularly end up using or need. ...One deal, 122 million pounds for gowns. They all were not up to scratch, they couldn't be used in the nhs." – Jim Reed (04:50)

• Stockpile Inadequacies:

  • Pandemic stockpile designed for 15 weeks lasted at best 4-6 weeks and much of it was unusable.
    • "Only a third of the masks in England in that stockpile were usable..." – Jim Reed (14:37)

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2. Planning Failures and Panic Buying

• Lack of Adequate Planning:

  • The stockpile was set up around flu-pandemic assumptions, unfit for Covid's demands.
  • "The right plans, she [Baroness Hallett] argues, were just not in place." – Jim Reed (02:55)
  • National and international competition for PPE created chaotic, high-pressure buying.
    • "The whole world was desperate to get hold of this stuff at the same time..." (03:21)

• Critical Example:

  • Foreign Office failed to move quickly on a weekend deal for Chinese testing kits — by Monday, the US had bought out the entire stock.

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3. The "VIP Lane" Controversy

• What Was It?

  • A fast-track system for PPE offers connected to MPs, ministers, House of Lords — unique to England.
    • "If you were... connected to a minister, but also to an mp, a civil servant, a member of the House of Lords, you could essentially get your offer prioritized." – Jim Reed (06:09)

• Findings:

  • No evidence of cronyism or corruption in final contracts, but the report calls the system "inherently biased".
    • "She said it wasn't intended, but it was inherently biased towards those with connections to government. ...It heightened the risk of abuse, it undermined public trust... and it should not ever be repeated." – Jim Reed quoting Baroness Hallett (07:12)
    • "So yeah, it wasn't corruption, it wasn't cronyism, but it was a bad thing to have done in retrospect, is what she's saying." – Adam Fleming (07:26)

• Origin:

  • The VIP lane appears to have evolved informally from a public “call to arms”; Matt Hancock called on anyone with PPE to help, which overwhelmed the system.
    • "There was so much to kind of get through that they had to find a way of sorting through the chaff to get to the decent offers, which is why you ended up with a system like this." – Jim Reed (09:36)

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4. Ongoing Investigations and Redacted Evidence

• PPE Medpro & Michelle Mone:
  • Inquiry section into PPE Medpro (company linked to Michelle Mone) withheld from public pending completion of National Crime Agency investigation.
    • "I can't talk to you about it at all. ...A whole section chapter, I think it's 5A of this report is entire blank and redacted..." – Jim Reed (10:58)

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5. Impact on Healthcare Workers

• Risk to Staff:

  • Report fell short of explicitly stating causality, but Baroness Hallett said poor PPE decisions "put [NHS and care staff] at risk."
    • "She did say that both NHS staff and care home staff... were put at risk by poor PPE decisions." – Jim Reed (12:38; further explanation at 13:26)
  • The speed and quality of PPE procurement left staff "poorly protected."

• Focus:

  • This module focused on logistics and supply chains rather than health outcomes—other modules have examined direct effects on frontline staff.

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6. Lessons and Recommendations

• Stockpile Management:

  • Ministers overestimated UK preparedness; much of the vital stock was either unusable or in short supply.
    • "Ministers were probably sitting there thinking, ...We can get the army involved to distribute it... Which should last us for 15 weeks. ...Only a third of the masks... were usable." – Jim Reed (13:57, 14:37)

• Public Trust & Perception:

  • The perception of unfairness and VIP access, regardless of intent, undermined confidence in government during crisis.
    • "The main point was how it was perceived by the public and the confidence, therefore, that the government's actions... took a hit because of this kind of thing." – Jim Reed (15:58)

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Notable Quotes & Moments

• On Waste:

  • "Almost 10 billion pounds of taxpayers money Wasted, she said... you can build a new NHS hospital for about a billion. So it's an awful lot of money." – Jim Reed (02:07)

• On Panic Purchasing:

  • "The US have bought all the testing kits… what, like every testing kit? Yep, every testing kit in China." – Jim Reed, retelling inquiry anecdote (03:21)

• On Public Trust:

  • "It heightened the risk of abuse, it undermined public trust in the UK government itself and it should not ever be repeated." – Baroness Hallett (quoted by Jim Reed, 07:12)

• On Ministerial Response:

  • "Mistakes were made, honest mistakes. I take full responsibility for that. But he [Michael Gove] describes the allegations of corruption as nonsense." – Jim Reed (07:51)

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Key Timestamps

• 00:03–01:11
  Introduction; Adam Fleming and overview of episode’s focus on PPE inquiry.

• 01:45–06:09
  Breakdown of the report’s key findings, scale of waste, and initial context—Jim Reed's expert summary.

• 06:09–09:55
  Exploration of VIP lane, public trust, and Baroness Hallett’s findings on cronyism/corruption.

• 09:55–12:07
  Discussion of PPE Medpro controversy and ongoing legal constraints.

• 12:07–13:44
  Impact of supply failures on NHS/care staff safety, and how the report phrases (but doesn’t explicitly quantify) those risks.

• 13:44–16:53
  Review of stockpile failings, planning culture in government, and public perception of fairness.

• 17:02–17:31
  Upcoming modules: care homes and child/education impact previews.

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Additional Notes

• The Report in Context:
  This is the halfway point (module 5 of 10) for the UK’s Covid inquiry, with more in-depth reports to come.
• Broader Themes:
  Persistent issues of government procurement, public sector readiness, and the difficulty of crisis governance under global pressure.
• Tone:
  Conversational, occasionally sardonic, highlighting both understatement in official reports and real-world frustration.

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Summary for Listeners

If you missed the episode, you’ll come away understanding:

• The UK wasted nearly £10 billion on surplus or unusable PPE.
• Systemic planning failures and ineffective stockpile management left staff at risk and forced frenzied, sometimes irrational procurement.
• England operated a controversial VIP lane that gave politically connected suppliers fast-track access, which undermined public trust though was not deemed legally corrupt.
• The PPE Medpro scandal remains unresolved and is being investigated.
• Concrete recommendations are made for better preparedness and procurement systems.
• The fallout from these procurement scandals continues to shape political discourse and public confidence in government crisis response.

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End of Summary

Transcript

[Jim Reed]

This BBC podcast is supported by ads outside the uk.

[Adam Fleming]

Hello. We're going to start with a little experiment. I'm going to give you a moment to think about one of the big news stories that you remember from the COVID pandemic. So, not what was happening to all of us or you or your family or the lockdowns and being miserable. A news story. Were you thinking about the supply of PPE personal protective equipment? Because for me, that's one of the big running stories that I really remember from early on in the pandemic. And today we're revisiting it because the UK's official Covid inquiry, led by Baroness Hallett, has reported on its module looking into the supply and the purchase at great cost of ppe. So that's one of the things we're going to talk about on this episode

[Katrina Perry]

of Newscast, Newscast, Newscast from the BBC.

[Adam Fleming]

I will resign as leader of the Labour Party.

[Katrina Perry]

And what will you do?

[Jim Reed]

Stare at humanity's next great voyage begins.

[Adam Fleming]

You know, I like my buses. I'll come on to them.

[Jim Reed]

It's supposed to be me as a doctor.

[Adam Fleming]

Ooh la la.

[Katrina Perry]

Thinking about it like a panter helped. Do we play music now or what do we do?

[Adam Fleming]

Hello, it's Adam in the newscast studio. And shortly we'll be talking about the situation in the Strait of Hormuz. But first of all, we're going to look at the latest reports from the UK Covid inquiry. They've been releasing them every couple of months with a particular focus for each one. And the one that came out today, courtesy of the inquiry chair, Baroness how the ballot was about the supply of PPE personal protective equipment. And she's got some quite strong words about how that went. And the person who's been following it ever since the inquiry started is the BBC's health reporter, Jim Reed, who is here. Hi, Jim.

[Jim Reed]

Hi, Adam.

[Adam Fleming]

Here we are again.

[Jim Reed]

Again, the fifth time.

[Adam Fleming]

Well, I was gonna say. Which module is this? Module number five.

[Jim Reed]

Number five out of ten. Halfway through.

[Chris Mason]

Whoa.

[Adam Fleming]

So, quite a milestone then, for the. The COVID inquiry. So this one is about a subject that everyone remember, will remember from the pandemic, which was the supply of personal protective equipment. Where do you want to start? With what Baroness Hallett has found.

[Jim Reed]

I mean, the. The headline that everyone's jumping on is, is the cost. And weirdly, we. We knew to a certain extent some of these numbers anyway, but I think there's a power in hearing them repeated by the chair of. Of the public inquiry. So almost 10 billion pounds of taxpayers money Wasted, she said, that's obviously a fair bit of money. When you take into account everything that was spent on ppe, on those lateral flow tests we're all using at ventilators. The bill comes to. To 42 billion pounds. And to put that into some sort of perspective, the core defense budget for the UK is about 68 billion. You can build a new NHS hospital for about a billion. So it's an awful lot of money.

[Adam Fleming]

So it's kind of 10 hospitals worth, at least.

[Jim Reed]

Yeah, wasted.

[Adam Fleming]

And when she says wasted, wasted in what? What ways?

[Jim Reed]

So in two main ways. One is, in the end, they just bought too much of the stuff. And you can see how this happened because. And this goes back to planning. We always talk about planning. The right plans, she argues, were just not in place. We had something called the pandemic stockpile. Now, this is actually in a giant warehouse in Merseyside, and it was set up for a flu pandemic and it was meant to get us through at least 15 weeks of a pandemic. And then, you know, the idea is you replenish it as it goes along. It got us through at best, maybe a month. So well short of what we needed to do. Plus, the stuff they had in this pandemic stockpile wasn't up to scratch. So the masks for England didn't work. Some of the masks for Scotland, they didn't have the right respirator masks that doctors and nurses needed. So there was that. And then there was this incredible bit, Adam. They talk about this hundred days from sort of February through to sort of early summer 2020, when they were just desperate to get hold of this stuff. And the problem was the whole world was desperate to get hold of this stuff at the same time. So there's a really good example they give. They gave in the evidence where at one point, this is actually a bit later, but to do with testing kits, where the. The Foreign Office in Beijing were getting in touch with their counterparts in London and saying, look, we can buy all these testing kits, but you need to do the deal over the weekend. And they delayed doing the deal. They went back on Monday morning and they went, the US have bought all the testing kits. And they went, what, like every testing kit? Yep, every testing kit in China. And that's the kind of thing they were dealing with at the time. You remember those. Those pictures of, like, planes landing, people

[Adam Fleming]

haggling on the Runway? Yeah, yeah. And as usual, with lots of the conclusions of this inquiry, it boils down to, as you were suggesting there, there not being a proper plan, so that people hadn't thought through what some of the challenges were going to be. They hadn't tested that plan to see if it would survive contact with the real world. And we ended up with this.

[Jim Reed]

Yeah. I mean, they say, and they do make the point that it's better to pub to purchase in that situation too much PPE in a pandemic than too little. You know, you kind of want to make sure that you can get this stuff through to the front line. But this is, you know, in the great words of a sort of understated language they use in these reports, it would clearly have been better if supply had been calibrated more closely with demand. What they mean there is they just panic is maybe too strong a word, and they didn't use that word in the report. But there was just a situation when they were desperately competing for this stuff and they were willing to spend whatever it took to replenish supplies and they bought stuff that in the end they didn't particularly end up using or need. Whether it was gowns that weren't the right. You know, they did 122 million pound deal, one deal, 122 million pounds for gowns. They all were not up to scratch, they couldn't be used in the nhs. So that was part of it. And the other part of it was just buying too much stuff and having this glut which they ended up either burning, sending to landfill or having to donate to, to charities and so on.

[Adam Fleming]

And one of the things that became infamous during that period was the so called VIP lane, where basically people who had contacts with MPs or government ministers or members of the House of Lords sort of went to the, went to the top of the email inbox if they were offering to help. And Baroness Hallett and her team say quite a lot about this.

[Jim Reed]

Yes, I would say this is probably one of the most controversial policies of the whole pandemic. And it's worth pointing out, and they say this in the report, that no other country other than England had this in the world. So Scotland, Wales, Northern Ireland didn't go on there and they looked to see if any other country had a comparable system. They did not. So what was happening was that if you were not just connected to a minister, but also to an mp, a civil servant, a member of the House of Lords, you could essentially get your offer prioritized and potentially fast tracked. And you've got to remember this was at a time when speed of doing these deals was really key. So Actually getting it fast tracked was a huge advantage for some of, some of these companies. Now, Hallett does say that she could not identify cronyism or corruption on the part of ministers and officials when these deals were finally awarded in the final contracts. But she does say it created this unfairness. She puts it within, within the government system. She said it wasn't intended, but it was inherently biased towards those with connections to government. And this is quite a strong quote. She says it heightened the risk of abuse, it undermined public trust in the UK government itself and it should not ever be repeated.

[Adam Fleming]

And so, yeah, it wasn't corruption, it wasn't cronyism, but it was a bad thing to have done in retrospect, is what she's saying.

[Jim Reed]

Yeah, exactly. And Michael Gove actually has been, has been tweeting about this in the last, in the last couple of hours or so. Someone made the point on, I think it was a Sky News tweet that he was responding to and he said actually it wasn't cronyism or corruption. Dame Heather Hallett found no evidence of that on the part of ministers or officials. But he does say mistakes were made, honest mistakes. I take full responsibility of that. But he describes the allegations of corruption as nonsense. Now, I think other people, campaigners and so on, would have take a different view on that. You know, it depends what your definition of corruption is. She did come back though, and say that she could find no evidence of that, at least in the final contracts that came through.

[Adam Fleming]

And I was just doing a quick control F on the report there for the phrase Dunkirk spirit, because I thought that was an interesting bit because I remember when ministers were saying, and I suppose it was the opposite of the VIP lane, it was saying, if you have a company that you think you could help deliver some ppe, let us know. And that seemed like quite a kind of public spirited crowdsourcy thing to do. There's a section in the inquiry talking about how actually it ended up being a total nightmare for the civil servants because they were getting, they got 3,000 offers in the first week and then they were getting 300 new offers from people every 24 hours. And they were basically just deluged. And so few of those offers turned into actual contracts for providing stuff. So it seemed like a good idea at the time. Let's get everyone to help. All hands on deck. But actually it ended up just being a massive bad idea.

[Jim Reed]

I mean, this is the thing, because this VIP lane, they couldn't really. There's a slight suggestion in the report but they couldn't really work out where it had come from. There wasn't a piece of paper that said, let's create this VIP lane. It was exactly as you say. I think Matt Hancock, when he was Health Secretary, I think it was in one of his briefings when he was at the podium, gave what was called a call to arms. So it was like, come, come and give us your ppe. Provide your ppe. And of course, that did generate some very, I'd imagine, very big, reputable offers. It also meant that anyone that was kind of literally knitting, knitting kind of aprons for people, and so I've got good volunteers help.

[Adam Fleming]

Yeah.

[Jim Reed]

And that created this situation. There was so much to kind of get through that they had to find a way of sorting through the chaff to get to the decent offers, which is why you ended up with a system like this. But you could make the argument that, you know, every country in the world was, to a certain extent, under similar pressures, but the England in particular was the only place, apparently, where this went on.

[Adam Fleming]

Now, there's a section of this report that's kind of missing or is going to come out at a later date, because it refers to PPE MedPro, which was the company that was associated with Michelle Mone, formerly Baroness Mone, and her husband, Doug Barrowman, which is currently being investigated by the National Crime Agency. Why is. Why is it. Why is that not in here?

[Jim Reed]

Well, I've got to talk to you about the background to this. So this was about this time, well, actually February, March last year, when they were taking evidence for this bit of the report, and we were told that this section or this bit of evidence about PPE medpro, which is the company, would have to be held behind closed doors. So in the end, they got five journalists in, myself and four others from the national newspapers, and we did get to. To watch all this evidence. It was three, I can tell you it was. It was three officials involved in some of these procurement decisions from the Department of Health. But we were under reporting restrictions and we still are, so we cannot.

[Adam Fleming]

Almost like reporting a trial, the judge says, you can't put this information.

[Jim Reed]

It's exactly what it was like. I think it's a slightly different bit of the law they're using, but essentially it was an order from Baroness Hallett saying, you can't talk about this. So, yes, I've got all my notes from, from that day, but I can't talk to you about it at all. And there's a whole section chapter, I think it's 5A of this report is entire blank and redacted out because they cannot. They cannot go into this while there is this ongoing investigation from the National Crime Agency, which is still being pursued at the moment. Now, at the time, Baroness Moem was particularly critical of them doing this. She called for this to. To not take place at all, but it did go ahead anyway. And what they're saying is they will eventually publish this evidence, but only after the conclusion of every possible criminal proceeding that might happen. So not necessarily a trial. And we should point out that Baroness Mo and Mr. Barryman both say that they did no wrong. There was no wrongdoing going on here, and no one's been charged at the moment in relation to PPE MedPro. But, yeah, they say that no evidence can come out until the end of any possible criminal trial, which could include any appeal. So we could be, like, talking years, Adam, further down the line.

[Adam Fleming]

Yeah. And what does the inquiry say about linking the lack of PPE and the chaos and the waste with the safety of healthcare workers?

[Jim Reed]

It was more vocal than I thought it would be on that. But you had to sort of read between the lines of the.

[Adam Fleming]

That's why I'm asking you, because I read a lot of it and I'm still not clear what. What Baroness Hallett thinks about that. Like, did. Did. Did doctors and nurses get ill or maybe even die because they were having to use bin bags instead of propaganda in the.

[Jim Reed]

So what happens is they publish the report and then Baroness Hallett speaks for. I think it's roughly 15 minutes. And in that speech, she. Did you use the word at risk? It was, again, you had to sort of read between the lines slightly. But she did say that both NHS staff and care home staff as well, and the people they were caring for work were put at risk by poor PPE decisions. And she went on to talk about those decisions. So I think you can kind of draw the line there as well. So I do. I do think that. That. That is her view. The reason why she hasn't gone into it, I think, is so much detail is because there was an earlier phase of the inquiry which looked specifically at the impact on health staff, and there they went into a lot of detail about the types of masks that people were given, whether they were correct or not.

[Adam Fleming]

So this was that this was more a report about logistics and supply chains and provision rather than the people in the nhs.

[Jim Reed]

It was. But she does say that the staff, as a result, were poorly protected because of some of these decisions that were made in Particular the speed of getting some of this material, PPE masks, gowns and so on out to the front line, which much slower than it needed to be. And see, she certainly suggests that could put people at risk.

[Adam Fleming]

Right. I know this is a huge report. It's months and months of evidence. A lot of your life. Is there anything else we haven't covered yet that we've missed out in this? I feel those are the, Those are the main headlines. I just. I just want to make sure we've done it justice. All your hard work.

[Jim Reed]

Yeah, I think so. I mean, the one thing that I, I think is quite interesting is, is this. And she makes recommendations about this, is this PPE stockpile, because that. It goes back to. We talked about this before, the planning for a pandemic. I think ministers were probably sitting there thinking, you know, we've. We've got this one covered. We've got this huge stockpile up in Merseyside. We've got. We can get the. The army involved to distribute it around the country, which should last us for 15 weeks. That should get us through to the summer, probably through the pandemic, you know, kind of really tapping themselves, you know, passing well, because there was a lot

[Adam Fleming]

of that around the whole pandemic preparedness, wasn't it? Ministers say, even now we were told by officials, by external bodies, by international bodies that we'd done a good job to get ready.

[Jim Reed]

I mean, some of the figures. Adam, only a third of the masks in England in that stockpile were usable. And what Haller is saying is, you know, with the usual sort of like, you know, caveat language, we need to get better at doing this next time because we cannot be in a situation where, you know, they were running out of masks by the end of March, 24 weeks, maybe five, six, if you're being generous, into a pandemic, a stockpile that was meant to last, you know, best part three, four months. So that was, I think, a key mistake that was. That was made here and another reason why we need to improve for next time.

[Adam Fleming]

Just thinking back to what you said about the VIP lane and how no one can work out how it came into being. And I'm just thinking back to an episode of Newscast we did a few months ago. It was actually a little miniseries about the Home Office and why is it so difficult to make a success of running the Home Office? And one of the things that I remember from those episodes was just the sheer amount of correspondence Home Secretaries and ministers get from mps about their own constituents or things that mps are particularly interested in. And so I just wonder if it was part of that culture that we have at Westminster, where mps do have quite a direct line into ministers in a way that to outsiders might seem a little bit cozy or weird. And I wonder if the VIP lane just came from that sort of culture.

[Jim Reed]

I think I meant, I don't be overly charitable to the government in charge at the time, but when you read the reports, I don't think the creation of that lane she's suggesting for a second was anything to do. You know, there wasn't some nefarious kind of plot to create it and enrich people. But in a way, in a way that's not the main point. The main point was how it was perceived by the public and the confidence, therefore, that the government's actions and MPs actions, minister's actions, took a hit because of this kind of thing. And I do think it's one of those things when we talk about the. When I talk to people at the pandemic now, people, you know, in a way a lot of people want to forget, don't they? We all do. But when you bring up ppe, that is a subject that VIP lane is one that, that comes back again and again. I think it played into, you know, the Johnson government and all these accus accusations around party gates and so on, that almost formed the background to some of that.

[Adam Fleming]

Interesting. So this was the halfway point, at least in terms of the reports from the different modules. So there's five more to go. What, what's the next one?

[Jim Reed]

So we've got one on which will be really interesting actually, on the care home sector, which is due in the autumn, and one also on the impact on children in particularly the, the education system. So I think both of those will be interesting, fascinating for their own kind of reasons. And then we go forward to talk about the economy and the, the wider impact on society as way left to go. But I think the bulk of kind of the actual direct impact on health, I think has now pretty much been covered.

[Adam Fleming]

And talking of covering health and big health stories that affect a lot of people, have you been doing the explosive diarrhea epidemic in America?

[Jim Reed]

I mean, my wife was talking to me about that the other day saying, saying how horrific it looks, but yeah, I don't like that it's caused by a microscopic worm parasite. I really don't personally like the idea of this very much, but.

[Adam Fleming]

And you've been doing the COVID inquiry today, so you've had a good reason to not Cover explosive diarrhea.

[Jim Reed]

Yeah, I await, I await the job of being sent out to cover explosive diarrhea over the coming weeks, should it come across the side of the Atlantic.

[Adam Fleming]

Jim, thank you very much.

[Jim Reed]

Cheers, Adam. Thank you.

[Adam Fleming]

Now there's more proof that the ceasefire deal between the US and Iran is not really working. There have been Iranian attacks on ships in the Strait of Hormuz and US assets stationed in the Gulf in other countries. And the US has also hit back at Iran to reduce their ability to attack commercial shipping in the Strait of Hormuz. This has had some knock on consequences for the world economy and for the UK economy, which will be the subject of a big speech tonight by the UK Chancellor, Rachel Reeves, who's doing her annual dates with the city at Mansion House. So let's try and draw all these strands together because here in the studio to help me out is the BBC's business editor, Simon. Jack. Hi, Simon.

[Simon Jack]

Hello, Adam.

[Adam Fleming]

Now, you're going to the Chancellor's Mansion House speech tonight. Why are you not in your black tie and tails already?

[Simon Jack]

Well, it's, it's business attire only.

[Adam Fleming]

Oh, okay.

[Simon Jack]

Which is a good job because I've been told the air conditioning is not working.

[Adam Fleming]

Okay.

[Simon Jack]

So this is a hundred year old building sweltering in the city with 800 people of the great and good from the financial district to go and listen to what is probably almost certainly the Chancellor's swan song. So that looks like a fantastic, you know, fantastically enticing prospect.

[Adam Fleming]

Yeah. Well, thank you for stopping off here on the way. And also joining us from Washington D.C. is Katrina Perry. Hi, Katrina.

[Katrina Perry]

Hi, Adam, how are you? Hi, Simon.

[Simon Jack]

Hello there.

[Adam Fleming]

So, Katrina, just bring us up to date with this exchange of fire between the US and Iran overnight.

[Katrina Perry]

Yeah, exactly. So last night the US carried out its third consecutive night of strikes on Iran, again saying it was doing so in retaliation for strikes on some commercial ships in the Strait of Hormuz. Iran then retaliated, hitting back on US military bases and installations in neighboring countries, uae, Kuwait and Bahrain, as it's been hitting for the last few nights in retaliation there. So things very much in an escalatory place while those strikes were ongoing. The President was in the Oval Office doing something else. But he took a few questions from reporters and said that the US would continue to hit Iran, as he said, very hard. He was very critical of the people that his team have been negotiating with in Iran, but he did say that he felt a deal was still possible. However, he repeated what he had kind of posted on Truth Social during the day, which was that the US Was going to be in control of the Strait of Hormuz, that it was its guardian was the word he used, and that he was going to impose this 20% tax essentially on all cargo ships coming through the Strait of Hormuz. I can tell you just at this exact moment, the President has just posted on Truth Social to say that he's going to actually replace that 20%, as he calls it now. I'm just going to read it out because he's literally just posted at this minute, he says, I have decided to replace the 20% United States reimbursement fee, this is what he was calling it, with trade and investment deals that the various Gulf states will be making into the United States. Those investments will be massive in capitals, but at the same time extraordinarily good for them and their future. As everyone is aware of, we have the largest dollar investment into the United States of any country in history. But these new investments will make that number even bigger. We'll see factories, plants and equipment pour into the United States at historic level, creating additional millions of high paying American jobs. America is winning again, he says, winning like never before. The days of Iran killing hundreds of thousands of people, including 52,000 protesters, are over. And most importantly, Iran will never have a nuclear weapon. He says, thank you for your attention to this matter. So a lot of words in there, but not a whole pile of detail really in terms of, you know, how do you replace what he was going to put in place, that 20% fee, with suddenly countries instead being required to make investments into the US and create jobs and build factories. Seems like there's a bit of a disconnect there. All of this hasn't come into force yet, of course. It's due to come into effect at what will be 9pm in the UK later on. So many, many hours for a potential wriggle room between now and then.

[Simon Jack]

Simon, I could just tell you that in response to that, oil prices have fallen a bit because people were obviously concerned about a 20% toll in the Strait of Hormon moves. 20% of oil and gas goes through there. So once again we have this kind of bouncing around of oil. You know, when at the height of the conflict, for example, Brent crude was like at nearly $120 a barrel, it then fell back to 70. Even below 70, when it looked like it was all going to be smoothed out, it jumped again over the last three days to 85. It's been bouncing around in a very wide Range. But those comments that Katrina just told us about have seen it fall again because it looks like as people expect and as they've come to expect with Donald Trump, he says one thing and then slightly, you know, dilutes it. And you rather amorphous announcement about investment deals seems to the rest of the world a lot better than 20% toll on every ship going through the Strait of Hormuz.

[Adam Fleming]

Yeah, I just always remember that time a few months ago, Simon, you and I were talking about the price of a barrel of oil. And I said rhetorically, why should I care? Because I don't have a car and I'm not an oil trader. And you said, yep. Do you eat food?

[Simon Jack]

Yes.

[Adam Fleming]

It's just a really good reminder of why that price trickles down to all.

[Simon Jack]

It's incredibly pervasive. It gets into the price of just about envisage even stuff that doesn't have oil extracts or products in it, like fertilizer, sulfur, et cetera, et cetera. Just getting stuff to your local supermarket requires gasoline if you're in the US Oil. And remember, Trump is very aware that he's got midterm elections coming up, and the US motorists, both domestic and business wise, in their trucks, are incredibly oil price sensitive.

[Adam Fleming]

And also Katrina, I can just see what might have happened overnight is that Trump makes this threat of putting a 20% toll charge on top of 20% of the world's oil. That's a big stick. But then I can imagine lots of his Gulf allies looking at their economies and the consequences of that and saying, actually, why don't we give you a nice carrot instead? We'll do some trade deals and promise some inward investment to the U.S. yeah,

[Katrina Perry]

I think that was definitely playing in here. But also I was speaking to a few people in the U.S. military in the Navy overnight, and they were saying what the President was proposing. You know, before we get into the sort of international law question about taxes and tolls on shipping like that, which is a big one, they were saying militarily or practically, it would be incredibly difficult to actually enforce what he was talking about doing. You know, the other part of that 20% was this full blockade on Iranian ports that, according to military experts, is, you know, relatively straightforward and something that could be done and of course, was in force at the beginning of this whole conflict. But when you're trying to put a toll in place, and you know, what people were notionally paying for, of course, was safe passage through the Strait of Hormuz, these military folks telling me that's almost impossible to guarantee at this point because of what's coming at them from Iran, they said. And mostly at this point that is now drones and what they described to me as fairly cheap to make artillery but plentiful and quite difficult to defend against while you're trying to make sure there are no casualties and that those ships aren't impacted in any way. So I think there may have been a bit of a kind of realization of, you know, what we're proposing here practically is actually quite difficult as well as just grossly unpalatable to so many people, as you say there.

[Adam Fleming]

And Simon, as we've learned, the appetite for risk amongst the international shipping world is very low. So they do not want to be transiting to the Strait of Hormuz if there's drones and ammunition going in both directions.

[Simon Jack]

No, I mean on a number of levels. One is the obviously the safety and well being of their crews, which most of the shipping lines are not prepared to compromise. And secondly, there's the business of insurance premiums as well. Obviously the more the activity, the more hostility you've got in those straits, the higher those insurance premiums get. So it just cost laden on cost and as we said, it's pervasive. And what we've seen is government borrowing costs have been going up around the world as a result of this, including the US particularly in the uk, which has seen more reliant on the price of all more sensitive to oil and gas movements. And that's pushed for example, the benchmark 10 year borrowing cost, what the UK government can borrow for 10 years above 5% for a bit today. That of course is an extra headache for our incoming Prime Minister because their more expensive borrowing is the more it adds to the debt interest bill which is already at £100 billion plus a year.

[Adam Fleming]

And also I'm just thinking back a few months ago when, when Darren Jones, the Chief Secretary to the Prime Minister, was on Laura Kay's Sunday show and he said, look, even if there is peace in the Gulf, there'll be eight months of economic disruption afterwards. And I sort of took that as almost like a thing to put in my calendar. But you realize that's a very naive way of looking at it because this, this ceasefire process has been much bumpier and backwards and forwards that. And that sort of calculation assumes.

[Simon Jack]

Yeah, I actually think that was an overestimate a little bit in terms of how long it would take. And I think we saw that when we saw the emergence of a kind of deal here and we saw prices go from 100 down to 70 and below. People are always looking forward. And if they genuinely believe that there's a cessation of hostilities, then oil prices, natural gas prices can snap back pretty quickly. Obviously that takes some time to work through the snake of global supply chains, but people take confidence from that. But at the moment, you know, they've. It feels like there's been a bit of, you know, the opposite of crying wolf here. It's been crying, crying sheep. And the sheep never arrives.

[Adam Fleming]

Yeah. Strange that phrase never caught on.

[Simon Jack]

I've just invented it. I'm regretting it already.

[Adam Fleming]

Yes, we're straight into Wikipedia.

[Katrina Perry]

Copyright, copyright.

[Adam Fleming]

But Katrina, I wonder, though, if this just shows maybe there was a bit of suspension of disbelief when Donald Trump and the Iranians did that initial ceasefire deal. And actually once we all started reading it and looking at it, it was like, oh, yeah, this deal is very vague and quite woolly and the kind of more long term settlement will be really what matters between these two countries.

[Katrina Perry]

Absolutely. And, you know, that's what a lot of experts said at the time, particularly talking to some of the people who were involved in the Obama deal, the JCPOA Joint Comprehensive Plan of Action, saying this language is incredibly vague and you can't, you know, this is essentially a contract. That's what peace deals are. Right. And you wouldn't do a commercial contract, you wouldn't buy a house, buy a car, whatever, without going over the fine print, measuring every single word, making sure all sides knew what every word and every phrase and every sentence meant. And, you know, expert negotiators looking at that Memorandum of Understanding immediately kind of got out the highlighter and said, fake bit, fake bit, fake bit. And nobody had tremendous faith in it from the outset. It's been rocky since the beginning. I mean, how many times have we used the word fragile about that ceasefire? And essentially it's over now with this many nights of exchanging of fire. President Trump has notified the Congress here that he has officially restarted military action in Iran. So that essentially renders us null and void from this point of view here in the US as well. And, you know, it's began life as a question over squashing and removing Iran's nuclear capabilities. And it's now become very focused on this powerful weapon, if you like, that didn't even exist before the beginning of the war, which was the Strait of Hormuz. Now there's a time frame on that largely, you know, we've already seen countries and companies trying to find workarounds to not come through The Strait of Hormuz, that will take some time. So there is kind of a clock on how powerful that weapon is for Iran. But right now, that's what everything seems to be centered on, including from the President and the administration here. And we're hearing less about the nuclear capabilities and more about the strait.

[Adam Fleming]

But Simon, the fact that the Strait of Hormuz is sort of open, sort of closed, sometimes a war zone, sometimes not, is probably just something that the world economy is going to have to adjust to for the rest of time now, isn't it?

[Simon Jack]

Well, and we've seen actually the UAE, United Arab Emirates, just over in the last 24 hours, announced plans to develop a new port, a new way of getting oil, their oil in and out of the Gulf by placing a new port, you know, this side, if you like, the, you know, the, the, you know, the safe side of the Strait of Hormuz. Now that will cost tens of billions to build. But I think at some point people have realized, you know, the economies of so many of these countries rely on that strait. They can't afford to have be held hostage on that for their long term economic capabilities. So I would expect to be other initiatives like that, new pipelines, new ports, new whatever, people saying, you know what, I don't care what it costs, we can't be going through this for the rest of the time.

[Adam Fleming]

Katrina, how is it looking politically, domestically for Donald Trump? Simon mentioned the midterms, which are in November. So actually getting, getting quite close. Really?

[Katrina Perry]

Yeah. Here from a political context, those midterms, those elections in November are very close. You know, when this war began back in February, we were saying, how long is the road before people start getting very anxious about how much it's costing to fill up their cars, heat their homes, et cetera, et cetera. That is now really pinching President Trump. This has been an unpopular war from the outset. Poll after poll has shown the American people do not support him. There might be some support for the idea of making sure that Iran never has a nuclear weapon. But in terms of how it's being handled, how the President is sort of prolonging things, people feel that he's dealing with it quite badly and poorly. And each poll that comes out is lower and lower support. You speak to Republicans who are on the campaign trail or their strategists, and they will say, we can't outrun this. There isn't enough road between now and the midterm elections and to the point Simon was making earlier about how long it will take for markets and prices to recover. That's way past November at this point. Even if everything was resolved tomorrow, which is highly, highly unlikely. So the President is in trouble over that economic price, his cost of living, his commitment, as we've talked about so many times, to not get the US involved in forever wars, to not be involved in things in other countries. This is now turning into months and months and months. The President last night again saying, oh well, we were in Vietnam for 19 years, we've only been a few months here, will also send shockwaves through Republicans kind of, oh my gosh, don't talk about this in terms of years. But the fact of the matter is the talks are essentially going nowhere. That's what the President has said and what others have said as well. And you know, there's nothing clearly on the table, there's no clear way out of the this and they have to focus on diplomacy. But that's had limited gain to date.

[Adam Fleming]

Simon, I started off by joking about you going to Mansion House where you're going to be sweltering with the Chancellor tonight. Do you want to say anything about the British economy?

[Simon Jack]

Well, look, you know, it's interesting. This will be probably the Chancellor's last address to the great and the good of the financial, of, of the City of London. And there are two different feelings about this as she approaches what is likely to be a swan song. One is, is she got a bit unlucky. If you go back to the first quarter of this year, growth was pretty good. Interest rates are on their way down. Inflation was in the right trajectory. Business and consumer sentiment was actually beginning to pick up.

[Adam Fleming]

Things were going oh yeah, we're turning the corner. Was the government turning the corner?

[Simon Jack]

And there was some evidence that that was true. Then of course you get February 28th, this kicks off and that's what I would call a stagflation bomb. It stagnates growth, it raises inflation, it raises government borrowing costs. Everyone starts seeing higher prices of the pumps in the US in the UK elsewh filter through down to everything. And so whatever progress and any feel good factor that was creeping into the UK economy got extinguished by that. And now some people would say she's a bit unlucky about that. Other people say that she's the author of her own downfall in a way because she was complicit with the Prime Minister, Keir Starmer, in the fact that she talked about very being very pro business on the way in. Her first thing was to raise taxes very heavily on business and the One thing people find unforgivable that I speak to is that she also said she was very unhelpfully downbeat about the economic outlook and tried to sort of say things are going to get worse before they're going to get better and that, you know, animal spirits, confidence, quite an important commodity in business terms. They can't forgive her for that. So she think they're not going to let her off the hook for that.

[Chris Mason]

Yeah.

[Adam Fleming]

And it sort of reminds me a bit of the strait of horror movies in that you could have this quite sketchy deal between the US and Iran and all the diplomats and the foreign affairs experts are going, this isn't, is this necessarily worth the paper it's written on on. But for the economy and business, it's enough. It's enough to give them some confidence

[Simon Jack]

to believe that tomorrow might not be that much worse than today.

[Adam Fleming]

Yeah. So whereas a government then coming in and then talking everything down can have the opposite effect.

[Simon Jack]

I mean, I should say her, her repost to that would be, well, that's before I got in and I found that the finances were much worse than I thought. You know, she would call it a 22 billion pound black hole. Unfunded promises by the previous government and therefore I had to shift. But people could have said you could have done it in a way which gave us a bit more hope. And you as I helpfully downbeat and that, that, that they do blame her for.

[Adam Fleming]

Simon, enjoy your dinner.

[Simon Jack]

Thank you so much. Can't wait.

[Adam Fleming]

And Katrina, enjoy any snacks or anything that you'll be having in the next few hours.

[Katrina Perry]

Thank you. And you.

[Asma Khalid]

Summer smells like salt in the air and warm sand. Restore your sense of place with PUR's new summer fragrance collection, Transportive Clean Sense. @pura.com when you hear the phrase made

[Jim Reed]

in China, what do you think? I'm Tristan Redman.

[Asma Khalid]

And I'm Asma Khalid. And together we host the Global Story podcast from the BBC. And today on our show we look at the origins and evolution of Made in China because it actually wasn't inevitable.

[Katrina Perry]

What we're talking about is the world's largest communist nation. Is that the beating heart of the capitalist system?

[Jim Reed]

For more, listen to the global story on BBC.com or wherever you get your podcasts.

[Adam Fleming]

And finally, we've got some great entries for supporter reporter as the World cup hurtles to its conclusion. Although people are more concerned about the semi final than the actual final at the moment. So we've got a message from Sandra who says, I'm A Ghanaian living in the UK and was supporting Ghana vociferously, much to my child's embarrassment until our exit. I've now transferred my loyalties to England and have everything crossed for Wednesday. Happy to be your supporter reporter from Ghana, if still needed. Well, Sandra, we do still need you and you are now our supporter reporter from Ghana. We had loads of messages saying, how come you've not found a supporter reporter from France? I'm not quite sure why our high tech algorithm left us in that situation, but here we are nonetheless. And we've plumped for this email from from Michael, although we could have chosen loads of great ones, but Michael was a very good one. He says, I'm amazed nobody's put their hand up for France yet. I hope I'm not too late. I live near Cognac and divide my time between England and France. Whether in France or England, I religiously listen to newscast every evening before I go to bed. I even sometimes listen to americast a la Le Bleus, especially tonight, says Michael. And just to be clear, we did not pick that Michael's email just because he says he listens to newscast religious. And we've had a message from a dad in the northwest saying, hello, could I please nominate my two sons as your Colombian representatives? Arthur is age seven and Julian is aged five, although English school friends and family have always called him Jude. Both brothers are British Colombians by virtue of their beautiful mammy Marcella, who is from Colombia. The both always forcibly listen to your podcast while on the school run. And our keen World cup followers, they are especially fans of namesake Jude Bellingham. A quick shout out will make their week and have them listen more keenly in future. Well, anonymous dad, I'm happy to have done the shout out and even happier that we've got two under 10 Colombian supporter reporters. Enjoy watching the other Jude in action on Wednesday night. Right, thank you very much for all your messages. Here is the roll call of country where we're still seeking supporter reporters. Algeria, Bosnia and Herzegovina, Cape Verde, Democratic Republic of Congo, Cote d', Ivoire, Turkey and Uruguay. So if you come from any of those nations or you're there now or you have a link, let us know newscastbc.co.uk or WhatsApp us on 033-01-2394 and you could be one of our last few supporter reporters. And that's it for this episode of Newscast. Thank you very much for listening. We'll be back with another one very soon.

[Jim Reed]

Bye bye.

[Katrina Perry]

Newscast, Newscast from the BBC from one

[Chris Mason]

Newscaster to another thank you so much for making it to the end of this episode. You clearly do, in the words of Chris Mason, ooze stamina. Can I also gently encourage you to subscribe to our subscribers on BBC Sounds? Tell everyone you know and don't forget, you can email us [e-mail] or if you're that way inclined, send us a WhatsApp on [phone] be assured, I promise we listen to everyone.

[Asma Khalid]

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