25/11/2015 Newsnight


25/11/2015

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the Chancellor enjoys a bounty of better financial forecasts, and

:00:00.:00:07.

uses them to soften his cuts and talk the politics of the centre.

:00:08.:00:17.

We were elected as a one-nation Government.

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Today we deliver the Spending Review of a one-nation Government.

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This Government the mainstream representatives

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Much of the day's attention though was focused on the

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Shadow Chancellor's red face after waving Chairman Mao's red book.

:00:49.:00:54.

It's the new politics, man. It shah shaken things up.

:00:55.:01:05.

George Osborne's former right-hand man is with us to explain it all,

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and we'll hear from Labour and the Conservatives on where it leaves

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Also tonight, we hear from the youthful new Prime

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I have a tremendous amount of faith in citizens, that if I

:01:16.:01:20.

didn't have anything to say - it didn't matter how good

:01:21.:01:23.

my hair was - I wouldn't be sitting here right now talking to you.

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Remember Napoleon famously said he didn't want good generals,

:01:34.:01:38.

Well, George Osborne looks to be enjoying

:01:39.:01:43.

Because, there was one number that mattered in his Autumn Statement

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today, one figure that had nothing to do with him - it was ?27 billion.

:01:50.:01:54.

That was the good news in the forecasts,

:01:55.:01:58.

the underlying improvement over the five-year parliament

:01:59.:01:59.

?27 billion is about ?5.5 billion a year.

:02:00.:02:10.

Combine the effects of better tax receipts and lower debt interest and

:02:11.:02:20.

the OBR calculate means a ?27 billion improvement in our public

:02:21.:02:23.

finances in the forecast period compared to where they we were in

:02:24.:02:26.

the budget. Now, a lot of people missed that

:02:27.:02:26.

during the Chancellor's speech and were thus baffled for the remaining

:02:27.:02:29.

50 minutes as to how he could A spectacular U-turn on tax credits,

:02:30.:02:32.

no cuts to the Police, extra money for house building,

:02:33.:02:36.

roads and infrastructure. Plus some smaller gratuities

:02:37.:02:38.

for the Arts Council, UK Sport, the Commonwealth War Graves

:02:39.:02:40.

Commission, women's health But, if you've got

:02:41.:02:42.

an extra ?5 billion or ?6 billion to play with, everything's much easier

:02:43.:02:48.

than it was before. In fact, back in the July Budget

:02:49.:02:51.

things were already improving So a killer fact is that the actual

:02:52.:02:54.

cuts to day-to-day departmental spending that we are going to see

:02:55.:03:02.

are about a quarter of the ones that Don't dance a jig -

:03:03.:03:06.

the cuts still won't be easy. But not as difficult

:03:07.:03:10.

as tough-sounding Conservative What the OBR giveth,

:03:11.:03:14.

it can take away. The last Chancellor to enjoy

:03:15.:03:21.

improving forecasts was this one: We are not only providing the ?40

:03:22.:03:26.

billion extra we promised to health and education, but today I will

:03:27.:03:30.

announce more money and more capital investment in schools, hospitals,

:03:31.:03:32.

transport and fighting crime. In Gordon Brown's day,

:03:33.:03:42.

he actually made the forecasts. Today, they are independent,

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and I think they are independent. So the key question today is, where

:03:50.:03:52.

did the ?27 billion improvement come Here's our economics editor,

:03:53.:03:58.

Duncan Weldon. It might only be November but the

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Christmas lights are already up, and today the Chancellor got an early

:04:14.:04:18.

present in the form of a ?27 billion windfall over the next five years.

:04:19.:04:23.

The new forecast from the office of bubble responsibility show an

:04:24.:04:26.

unexpected improvement in the public finances. This graph shows changes

:04:27.:04:30.

to the borrowing forecasts since the budget in July. Above the line means

:04:31.:04:36.

higher borrowing and below it is lower borrowing. ?27 billion less

:04:37.:04:41.

borrowing across the Parliament, with especially big falls in the

:04:42.:04:45.

middle between 2017 and 2019. That gave the Chancellor the room for a

:04:46.:04:51.

net giveaway in almost every year and still meant that after this year

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borrowing is forecast to be lower in each year. Finding ?27 billion is

:04:56.:05:00.

going to give anyone a big sense of Christmas cheer. Especially when it

:05:01.:05:03.

helps dig you out of a tight political hole. Forecasts for the

:05:04.:05:07.

rest of the economy is broadly unchanged so. , where on earth has

:05:08.:05:11.

it come from? Some of it was from lower interest rates. But much of it

:05:12.:05:17.

was from a change in how the OBR model tax revenues. George Osborne

:05:18.:05:21.

certainly benefitted from two pieces of good news from the OBR today that

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I don't think many people were expected them to be that size. Tax

:05:27.:05:30.

receipts have come in better this year and the OBR thinks that is

:05:31.:05:33.

going to continue in the medium term. That boosts the forecast for

:05:34.:05:41.

revenues. But there were different modelling changes in VAT and

:05:42.:05:45.

national insurance contributions, which gave George Osborne a bit more

:05:46.:05:51.

room for manoeuvre. The timing might be fortuitous for the Chancellor but

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the OBR is widely regarded as impartial. We reviewed forecast

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methods all the time. There is an official process which happens once

:06:08.:06:12.

a year, and we look back on our errors and we decide how to change

:06:13.:06:17.

how we work. The Christmas bonus didn't just mean a cancelling of tax

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credit cuts but eased the pain in Whitehall. In the last budget huge

:06:24.:06:27.

cuts in departmental spending were pencilled in. A ?40 billion plus cut

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in four years and then a rise. What was called the roller poster. After

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the election the cuts were scaled back and today the unexpected

:06:43.:06:45.

windfall has been used to iron out even more of them. The roller

:06:46.:06:51.

coaster is now a gentler incline and the departmental cuts are a quarter

:06:52.:06:57.

of the size outlined 8 months ago. Today the OBR has acted as is about

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tota clause, but unlike Father Christmas they sometimes take

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presents away. In the past when they've given George Osborne bad

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news he's responded by pushing the date by which he wants to balance

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the books further away. Today when giving good news, rather than

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pulling that date back he's chosen to spend the windfall.

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pulling that date back he's chosen economists would call an

:07:23.:07:22.

asymmetrical economists would call an

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a politics fixed on deficit reduction might call not fixing the

:07:30.:07:31.

There was a big U-turn on roof

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credits. Is it as straightforward as a simple U-turn. It is a handbrake

:07:44.:07:47.

180 degree turn. They a simple U-turn. It is a handbrake

:07:48.:07:52.

cut tax credits. Those cuts have now a simple U-turn. It is a handbrake

:07:53.:07:54.

gone. In the July budget a simple U-turn. It is a handbrake

:07:55.:07:55.

Government said they were making a simple U-turn. It is a handbrake

:07:56.:07:58.

credit, the new welfare a simple U-turn. It is a handbrake

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what that means is a lot of the tax credit cuts have been reversed

:08:04.:08:06.

today, meaning people will have more money in two or three years. But by

:08:07.:08:10.

the end of the Parliament, because the universal credit cuts are in

:08:11.:08:13.

place, there'll be a substantial number of people losing a

:08:14.:08:18.

substantial amount of money. Right, so the other thing we need to talk

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about is this issue about the OBR and its independence. Because you

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and I know system of these people. and its independence. Because you

:08:27.:08:33.

What do you think, a lot of people are taking the line that it is so

:08:34.:08:37.

convenient for the Chancellor to have all of this before Christmas.

:08:38.:08:42.

On Twitter today that was the line, that

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On Twitter today that was the line, numbers for the Chancellor, and

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On Twitter today that was the line, are, but the

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On Twitter today that was the line, If you remember the huge fight

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before the election about cutting spending back to 1934 levels. That

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was a big tranche of good news

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in the forecast, but the Chancellor billion or so from buy-to-let

:09:11.:09:29.

investors. Extra taxes,

:09:30.:09:30.

and smaller spending cuts. Should we have predicted

:09:31.:09:32.

that back at the election? All in all, it makes the judgement

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about the politics more nuanced. Mr Osborne more centrist

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than he likes to posture. Let's look at the politics

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of it all, with Allegra. Today we got a

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Not just of what the state will look like but the career prospects of our

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current Chancellor. The most powerful man in Government has been

:09:53.:09:56.

in trouble since his emergency budget in July. How would he get out

:09:57.:10:01.

of this fix? I've listened to the concerns. I hear and understand

:10:02.:10:05.

them. And because I've been able to announce today an improvement in the

:10:06.:10:08.

public finances the, the simplest thing to do is not to phase these

:10:09.:10:16.

chains these changes in but to avoid them altogether. It took the Shadow

:10:17.:10:23.

Chancellor a while to claim victory. There is such a thing as the iron

:10:24.:10:29.

law, and the louder the cheers for the statement on the day, the

:10:30.:10:34.

greater the disappointment by the weekend when the analysis goes in.

:10:35.:10:40.

George Osborne today shelved the untra painful tax credit changes due

:10:41.:10:52.

in April. Everyone is being moved on to a less generous universal credit

:10:53.:10:56.

system. Watch the face of Labour's deputy leader on the right of your

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screen. To assist comrade Osborne in his dealings with his new-found

:11:03.:11:08.

comrades I've brought him Mao's little Red Book. Let me quote, Mr

:11:09.:11:13.

Speaker. THE SPEAKER: Order! I want to hear

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about the contents of the book! Today was a win for the opposition,

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except many in Labour's ranks feel dispirited right now. They know

:11:26.:11:29.

George Osborne only did what he did on tax credits because he doesn't

:11:30.:11:33.

feel threatened by Labour. Instead it was an exercise of clearing the

:11:34.:11:38.

decks for the Chancellor, so get rid of the tax credit problem to

:11:39.:11:43.

underscore that you are the party of workers, he hopes. Get rid of the

:11:44.:11:47.

the threat of risk to police forces, to show that you are the party of

:11:48.:11:52.

security, he hopes. Many don't expect Jeremy Corbyn do lead Labour

:11:53.:11:56.

into the next election, so today they were readying themselves for

:11:57.:12:02.

what comes next. But how did we get here? It was the prospect of another

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mauling by Tory rebels in the Commons that probably proved most

:12:09.:12:11.

deadly. Baroness Stroud was critical of the changes. In 2010, nine in 10

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people were in receipt of tax credits if they were working with

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families. The changes he made up to 2015 were to reduce that to six in

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ten. These changes only took it to five in ten. If you spoke to the

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average person on the street and said, who should the Government be

:12:32.:12:35.

supporting, they would say probably 50% of the population is quite

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generous. So he looks at it in macroterms and structural terms, but

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the changes today about human lives are about people, and about saying

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actually we and that losing money is really difficult. Are you surprised

:12:50.:12:54.

you won this debate? I'm delighted we won this debate. You must find

:12:55.:13:00.

yourself with real goals and targets and being quite disciplined to get

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these things delivered, but it is probably easy to forget perhaps what

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the real world is like out there. But the important thing is he's

:13:09.:13:13.

reeled, he's listened to us and changed it. . In the Conservative

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Party a lot of people voted for us the first time because they trusted

:13:18.:13:22.

us and perhaps hadn't before. We risked destroying that if we were

:13:23.:13:26.

all about financial responsibility, not thinking about people. We had to

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call time on that. It may be that Labour's right that the devil is in

:13:34.:13:39.

the detail and further scrutiny will see today's measures unravel, George

:13:40.:13:43.

Osborne taking people for fools, or just as after the omnishambles

:13:44.:13:48.

budget in the last Parliament the Chancellor really has learnt. In

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tarot I'm told the death card can often mean renewed life.

:13:54.:14:01.

The man who was joined at the hip to George Osborne

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until the election was Rupert Harrison, his chief of staff.

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He's left the Treasury now, but he's here in the studio.

:14:09.:14:13.

Good evening. Give us some insight. Back at election time, did you

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really expect to make the cuts that you were talking about then? I think

:14:23.:14:29.

we certainly thought it was doable. We came on a lot of shows, I didn't

:14:30.:14:35.

but George Osborne and other Conservative Ministers came on

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endless shows like annuity and were asked a lot of questions and we had

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answers. In the back of the minds of most people in the Conservative

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Party and indeed almost everybody in the commentariat at the time there

:14:50.:14:52.

was an unspoken assumption there would probably be a coalition and I

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think that coloured a lot of people's views. I don't think they

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put together plans that were unimplementable. There was maybe an

:15:02.:15:05.

expectation you might have been negotiating. At the back of people's

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minds was the mainstream expectation but we ation, put together a plan

:15:11.:15:15.

that was knowingly impossible. Conservative politicians came under

:15:16.:15:18.

a lot of pressure at that election from you and others on how difficult

:15:19.:15:23.

they were. A lot of us looked at it and said wow! That's eye wateringly

:15:24.:15:29.

difficult and the OBR said back to the Government of the 1930s. That

:15:30.:15:32.

was quite ferocious. Surprise, surprise you haven't thrived those

:15:33.:15:36.

cuts. Are you surprised? It is not me. Sorry, you wrote them at the

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time, but the cuts haven't been delivered.

:15:43.:15:47.

The economy is in a better place than people thought, and receipts

:15:48.:15:55.

are a bit better. It is unfair that politicians get a raw deal, and when

:15:56.:16:01.

things go worse than it expected, it is their fault. George Osborne had

:16:02.:16:05.

some money to play with today because of a stronger economy, a

:16:06.:16:10.

stronger economy he has been talking about for five years. As a

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Chancellor, you make your own luck. Explain to me why you had to put

:16:16.:16:20.

taxes up today. Taxes have gone up by around ?5.5 billion. You were not

:16:21.:16:26.

talking about that in the election campaign. The spending cuts were not

:16:27.:16:33.

as difficult as you thought, but you still... You keep saying, you! The

:16:34.:16:43.

big one today is the apprenticeships levy, which is a system designed to

:16:44.:16:48.

incentivise companies to provide apprenticeships. They get the money

:16:49.:16:53.

back if they do. In terms of taxes in general, the big picture, as a

:16:54.:16:59.

result of today, is that spending is coming down to around 36% of GDP,

:17:00.:17:07.

towards the lows of our lifetimes. Equally, tax receipts as a share of

:17:08.:17:13.

GDP, the amount of tax coming in, is in line with the average. It is

:17:14.:17:20.

rising. The details today, there was ?1 billion from stamp duty, there

:17:21.:17:25.

was a specific policy aimed more at the dynamics of the housing market

:17:26.:17:30.

than bringing in revenues, but you have a Chancellor who is taking

:17:31.:17:35.

difficult decisions, cutting spending, and most of that is being

:17:36.:17:41.

done by spending cuts. Before the election he was posturing as tougher

:17:42.:17:45.

than he really is - you would deny that? It is a strategy to posture

:17:46.:17:53.

that you would do more terrible things than you pretend. I think he

:17:54.:17:58.

wanted to mandate for those difficult decisions. He didn't know

:17:59.:18:04.

what those decisions would be. In 2010, the interesting thing about

:18:05.:18:09.

the UK compared to other countries who have struggled with deficit is

:18:10.:18:14.

that no one question the mandate that George Osborne and David

:18:15.:18:17.

Cameron had to cut spending, because they went into the election with

:18:18.:18:21.

quite a lot of honesty about what they were going to do. The lesson

:18:22.:18:26.

they drew from that was that it gave them the mandate to go on and do it.

:18:27.:18:30.

They were confident in the last election that the job wasn't done

:18:31.:18:37.

and they had to go on to do it. The relationship between the OBR and the

:18:38.:18:42.

Treasury... When did they tell you how much you have a year? It happens

:18:43.:18:49.

in phases. You get an initial forecast from them about six weeks

:18:50.:18:56.

to two months out. We learn to take that initial forecast with a pinch

:18:57.:19:01.

of salt. When you start putting together this Rubik 's cube... You

:19:02.:19:06.

get an update every couple of weeks. George Osborne would have

:19:07.:19:09.

known that things were looking better. We have been allowed to

:19:10.:19:14.

believe it was all much more serious than it was. He might have known

:19:15.:19:19.

with more certainty two weeks to go than six weeks to go. Thank you.

:19:20.:19:22.

Just because a Spending Review isn't as dripping in blood

:19:23.:19:25.

as you thought it would be doesn't mean it isn't still pretty brutal.

:19:26.:19:28.

Ironically, the areas in most pain at the moment are health

:19:29.:19:33.

With a bit of extra money, and a little financial trickery, health

:19:34.:19:36.

and social care looked like winners today - but that doesn't mean their

:19:37.:19:39.

problems are solved, as our policy editor, Chris Cook, explains.

:19:40.:19:44.

And in this Spending Review, people - our national health.

:19:45.:20:06.

Taking a step back, things are a little bit murkier than the

:20:07.:20:14.

For example, spending on NHS England has definitely risen

:20:15.:20:18.

by a sizeable amount, but there have been cuts to health services

:20:19.:20:21.

So, taken altogether, the health budget is rising, but the Chancellor

:20:22.:20:34.

has been a lot less generous than he would like to think. The Chancellor

:20:35.:20:43.

told us there would be ?5.5 billion of extra spending for the NHS last

:20:44.:20:50.

year. After information, that's 3.8 billion. Part of it is being covered

:20:51.:20:57.

by a ?1.5 billion cut to things which are not considered part of the

:20:58.:21:03.

NHS, but only really because of technicalities. There is a jet

:21:04.:21:07.

covering vaccination and training doctors that will drop by about 10%.

:21:08.:21:12.

There will be a sigh of relief from some people who were wondering

:21:13.:21:16.

whether they would be able to pay their staff next year. The NHS

:21:17.:21:21.

starts the next financial year already in deficit. When this was

:21:22.:21:25.

asked for, they did not envisage there would be a number of other

:21:26.:21:32.

things that have been announced, such as seven-day GP surgeries. It

:21:33.:21:38.

is very challenging. The amount of efficiency improvement going to be

:21:39.:21:42.

asked for is unprecedented. There is some question whether this is a

:21:43.:21:47.

doable task in the time available. The overall health budget will get

:21:48.:21:53.

an increase of less than 1% a year above inflation. Not a huge one. You

:21:54.:21:58.

cannot talk about the NHS without talking about social care, which is

:21:59.:22:03.

largely provided by local authorities. Today, there was

:22:04.:22:08.

discussion is about how problems in social care are feeding back into

:22:09.:22:12.

hospitals who cannot discharge patients anywhere that can look

:22:13.:22:16.

after them. How did social care do today? Those local authorities

:22:17.:22:22.

responsible for social care will be able to levy a social care pre-set

:22:23.:22:28.

of up to 2% on council tax. The money raised will have to be spent

:22:29.:22:33.

exclusively on adult social care, and for authorities who make full

:22:34.:22:39.

use of it, it will bring ?2 billion into the social care system. Local

:22:40.:22:44.

authorities will be able to access an extra ?1.5 billion by 2019-20. It

:22:45.:22:53.

is fine to give councils the freedom to put up their council tax a bit,

:22:54.:22:58.

but the councils who have the most need for social care are those which

:22:59.:23:03.

have the least revenue from raising council tax. Deprived areas will not

:23:04.:23:08.

do as well from this settlement, and there is nothing to address what I

:23:09.:23:12.

would see as the fundamental injustice. If you have cancer you

:23:13.:23:17.

are entitled to a lot of free, expensive health care. If you have

:23:18.:23:22.

dementia, all too often, you and your family are left to struggle

:23:23.:23:27.

with inadequate help. There is enough to keep social care and the

:23:28.:23:32.

NHS going for now, but there will be problems in some areas. Keeping

:23:33.:23:36.

within this budget for five years will be phenomenally difficult. With

:23:37.:23:44.

me now is Greg Hands and Seema Malhotra. Greg Hands, you heard that

:23:45.:23:51.

the long-term problems of health and social care are not really resolved.

:23:52.:23:56.

We had a Royal commission to decades ago, yet still, we are having to

:23:57.:24:00.

pump extra money in without a true solution being found. I disagree

:24:01.:24:07.

with that. We set out two things today. First, central government is

:24:08.:24:13.

going to put in an additional ?1.5 billion into social care from

:24:14.:24:17.

central budgets. Councils will be able to raise a 2% per annum

:24:18.:24:23.

precept, so long as it is spent on social care, to deliver that at

:24:24.:24:29.

local authority level. Does it fill the gap between need and cash? It

:24:30.:24:34.

will allow local authorities to increase the amount of money spent

:24:35.:24:39.

on social care in real terms. But the demand is increasing every year.

:24:40.:24:44.

Does it fill the gap between funding and demand? We are confident it

:24:45.:24:49.

offers a very good solution in terms of the amount of money we raise

:24:50.:24:53.

locally, the amount we put in century, a long-term solution on

:24:54.:24:59.

social care. Part of that, the police. When was it decided that

:25:00.:25:02.

there would be no cuts in the police budget? That decision was taken

:25:03.:25:08.

partly as a result of presentations we have had, partly as a result of

:25:09.:25:13.

the increased public finance figure is mentioned in your programme

:25:14.:25:19.

earlier, the ?27 billion improvement, which allowed us more

:25:20.:25:22.

room to do something which is the right things to do. But when

:25:23.:25:27.

exactly? Literally in the last couple of days? A lot of these

:25:28.:25:32.

things move around all the time when you are doing something like a

:25:33.:25:36.

Spending Review, with five years of government budgets in front of you,

:25:37.:25:41.

as well as an Autumn Statement, a lot of things move around all the

:25:42.:25:46.

time. Why was it necessary to raise taxes today? You had ?27 billion of

:25:47.:25:52.

good news, and you have had to raise taxes. Why? The two main items that

:25:53.:26:01.

you mention when you talk about taxes, firstly the apprenticeship

:26:02.:26:06.

levy, which isn't really a tax in a conventional sense, but it is an

:26:07.:26:10.

amount of money that businesses will have to pay into to provide

:26:11.:26:15.

apprenticeships and training for their own workforce. Secondly, in

:26:16.:26:20.

terms of stamp duty land tax on additional homes, and extra 3%

:26:21.:26:25.

surcharge on the rate of stamp duty paid, which is about revenue and

:26:26.:26:30.

sending a message to first-time buyers that we want to bias the

:26:31.:26:34.

system back towards first-time buyers in terms of what they can do

:26:35.:26:40.

in the housing market. Am I right that the taxes raised, for whatever

:26:41.:26:45.

motive, have helped the public finance systems to the tune of ?5.5

:26:46.:26:51.

billion? The taxes that have been raised have been helped by public

:26:52.:26:59.

finance. So there is a ?5 billion tax... We are funding the

:27:00.:27:06.

apprenticeships as well, because the cost of the apprenticeship will

:27:07.:27:12.

improve. The IFS said, be ready for taxes to ride -- to rise, on

:27:13.:27:19.

February the 4th. The IFS said it because the spending increasing

:27:20.:27:25.

didn't look possible. Amazingly, within a year of the election, we

:27:26.:27:29.

have had taxes rising and we haven't had the spending cuts that were

:27:30.:27:34.

promised. It is an extraordinary departure. I disagree with the

:27:35.:27:40.

premise of that question. There are spending cuts coming. Some are

:27:41.:27:44.

unprotected. We have delivered the tax lock, going into the general

:27:45.:27:49.

election which we will preserve over the course of the parliament, income

:27:50.:27:55.

tax, national insurance and DAT will not be raised during the course of

:27:56.:28:01.

the parliament. Seema Malhotra. Can you help me out? What is the Labour

:28:02.:28:08.

critique of the Autumn Statement? It is really disappointing to hear what

:28:09.:28:13.

Greg has been saying on the NHS and other matters. This was a smoke and

:28:14.:28:19.

mirrors Autumn Statement. What you saw and heard isn't necessarily what

:28:20.:28:23.

we are going to get. There was no big story about investment for the

:28:24.:28:29.

future, when we have seen infrastructure investment dropped.

:28:30.:28:34.

It dropped in the last Parliament from over 3% of GDP to 1.5%, and

:28:35.:28:42.

falling further. That was Alistair Darling's projected cuts. It was

:28:43.:28:49.

under George Osborne. Only 9% of infrastructure projects have

:28:50.:28:52.

started. Average earnings forecasts are set to go down over the next

:28:53.:28:58.

three years, as our productivity forecasts. We already have a 20

:28:59.:29:03.

point gap in our productivity between us and other G-7 nations. If

:29:04.:29:09.

I can mention about tax credits. What we saw today was in one way a

:29:10.:29:14.

U-turn, but it isn't all it seems. It has been an effective delay, and

:29:15.:29:21.

a disguise of those cuts, which will come forward in a another form in a

:29:22.:29:26.

few years' time, did the same families, through the Universal

:29:27.:29:32.

Credit. Tonight we heard from the Resolution Foundation, chaired by

:29:33.:29:36.

David Willetts, that 3 million families will see an average drop of

:29:37.:29:41.

?1000 in their household income by 2020. Can you confirm those

:29:42.:29:43.

figures? We haven't seen those figures yet.

:29:44.:29:54.

Our election pledge to deliver ?12 billion in welfare savings by the

:29:55.:29:58.

year 1920 will be delivered. You were elected having said you will

:29:59.:30:01.

not be cutting tax creditsment that's why George Osborne has seen a

:30:02.:30:05.

big knock to his trust and credibility. What you've tried to do

:30:06.:30:09.

is force this through Parliament through the back door. And now he

:30:10.:30:14.

said today is a U-turn. This is going to unravel, because it's been

:30:15.:30:19.

a delay. Greg Hands, you've done modelling of the effects on

:30:20.:30:23.

individual households of the tax credits and universal credit

:30:24.:30:28.

packages open to the Parliament. The Resolution Foundation think a single

:30:29.:30:34.

parent working part time with a child on the living wage will lose

:30:35.:30:40.

?1,000 by 2020. . I haven't seen the figures. But you must know the

:30:41.:30:48.

effects. We've made sure it is much better aligned with what we are

:30:49.:30:52.

doing with welfare and elsewhere this re this

:30:53.:30:58.

doing with welfare and elsewhere this re -- in the system. Don't

:30:59.:31:06.

forget the tax allowance which will rise... Sorry, that's been taken

:31:07.:31:11.

into account. You've done these figures, the you've modelled effects

:31:12.:31:15.

on households. Not you personally, the Treasury. Not me personally, but

:31:16.:31:20.

what I will say is we are delivering on that pledge to save ?12 billion

:31:21.:31:27.

of welfare and we've done a budget surplus, which is very important.

:31:28.:31:30.

Sounds like you haven't worked out what the effects are, but we can

:31:31.:31:36.

come back to that. Seema Malhotra, I heard your Shadow Chancellor say he

:31:37.:31:41.

opposed all the cuts but I also heard him criticise the Government

:31:42.:31:46.

for having cleared the deficit already. You can't have it both

:31:47.:31:50.

ways. George Osborne has failed on the targets he set himself. If you

:31:51.:31:54.

have a situation where you are continually failing on your

:31:55.:31:57.

financial or fiscal targets, you have to ask the question where you

:31:58.:32:02.

are held to account for that. When we lost the election in 2010, we

:32:03.:32:06.

still said it was possible to halve the deficit over five years. And we

:32:07.:32:10.

said you could do that by continuing to invest for the future as well as

:32:11.:32:15.

making cuts. What we've seen is that George Osborne has done that through

:32:16.:32:20.

a much more painful route, with a massive impact on the communitieses

:32:21.:32:24.

this country. We've seen a huge impact on affordable house building,

:32:25.:32:28.

which if you look at some of the detail in the OBR report shows even

:32:29.:32:33.

since July the impact that George Osborne's decisions are going to

:32:34.:32:37.

have on knocking back affordable housing is absolutely true. You can

:32:38.:32:42.

look at the graph yourself Greg. We are out of time. I do want to ask

:32:43.:32:47.

about the Red Book moment in Parliament. What did you think of it

:32:48.:32:52.

in the Well, John's going to make his own decisions on this. What was

:32:53.:32:56.

important was the point he was making. He was making a really

:32:57.:32:59.

important point about the lack of investment that George Osborne is

:33:00.:33:03.

making in Britain. You can look to have external investment... Do you

:33:04.:33:07.

think that's what people have taken away from it? I think a lot of it is

:33:08.:33:11.

actually, because there's a real concern about what is happening at

:33:12.:33:17.

the moment There's a real concern about what... Did you know he was

:33:18.:33:21.

going to do it? Look, he made his own decision on this. Come on, did

:33:22.:33:29.

you now... He made his own decision on this. I didn't know. But that the

:33:30.:33:35.

his choice. Have you read it? I've studied politics, I've read a lot.

:33:36.:33:41.

But my point is this. It is a really important point about how George

:33:42.:33:45.

Osborne is selling our assets on the cheap and not investing in the

:33:46.:33:48.

future in this country in our industry as he should be. Sorry, we

:33:49.:33:52.

do have to leave it there. Thank you both very much.

:33:53.:33:53.

We'll return to the Autumn Statement soon, but first - to Canada.

:33:54.:33:57.

Which has a dashing, youthful new prime minister.

:33:58.:33:59.

Justin Trudeau - son of Pierre, a Prime Minister back in the 70s.

:34:00.:34:05.

And to be brutal, the last Canadian Prime Minister whose name

:34:06.:34:07.

Justin's Liberal party was not meant to win the election,

:34:08.:34:12.

And his arrival at 24 Sussex - the Canadian equivalent of Number 10

:34:13.:34:17.

If scepticism with politics has been sweeping the west,

:34:18.:34:21.

he seems to have beaten the trend, and in a liberal kind of way.

:34:22.:34:24.

He's been in London today, to see the Queen and the PM, but

:34:25.:34:27.

I began by asking about his Government's approach to dealing

:34:28.:34:37.

with so-called Islamic State. We've decided that we're going to

:34:38.:34:40.

cease the actual bombing mission that Canada has

:34:41.:34:42.

so far been involved in, and shift We have consistently said that

:34:43.:34:45.

Canada has a strong role to play, obviously on a humanitarian and

:34:46.:34:54.

refugee side, as well as part of But we also know that Canada has

:34:55.:34:57.

a tremendous level of expertise, hard-won in Afghanistan over

:34:58.:35:03.

the past ten years, to help with training, to help local troops be

:35:04.:35:07.

more effective in the fight on the ground, and I think we're going to

:35:08.:35:10.

be stepping our involvement in that It was more a decision about Canada

:35:11.:35:13.

and whether it was able to add value There's a wide range of things that

:35:14.:35:22.

Canada can do, and certainly our Royal Canadian Air Force is

:35:23.:35:27.

outstanding in doing what it does, but I know that we have different

:35:28.:35:31.

ways that we can be possibly even more helpful to our friends

:35:32.:35:36.

and allies, and I've had this conversation a number of times

:35:37.:35:42.

with my fellow leaders, and they are reassured that Canada is continuing

:35:43.:35:45.

to be a strong and active partner And Paris has made no difference to

:35:46.:35:48.

your view in what Canada's role I think Paris has highlighted for us

:35:49.:35:53.

in a very personal way - myself being a French Canadian, I obviously

:35:54.:35:59.

feel a tremendous closeness to our French cousins, and continue to

:36:00.:36:05.

stand resolute in that Canada has Let's talk a little more generally

:36:06.:36:08.

about politics in the West. There's political scepticism

:36:09.:36:16.

in many, many countries, political disenchantment,

:36:17.:36:21.

antipathy towards the elites and I wonder what you think

:36:22.:36:24.

your election in Canada said And potentially

:36:25.:36:31.

about ways politicians can react to You have, over

:36:32.:36:35.

the past little while, seen the rise of the anti-politician, whether it

:36:36.:36:42.

was our own Rob Ford in Toronto who was very much an anti-politician,

:36:43.:36:48.

or Donald Trump, who makes a big I think that has,

:36:49.:36:52.

to a certain extent, run its course, just because people don't want the

:36:53.:37:01.

usual kinds of politicians, fine. They are also looking for people who

:37:02.:37:05.

are going to be serious about bringing people together,

:37:06.:37:08.

serving, and being upfront about the That's a very optimistic point

:37:09.:37:11.

of view. If anything, Donald Trump, contrary

:37:12.:37:14.

to what everybody expected, is We've seen this a few times, not

:37:15.:37:18.

just in our election, where polls showing that more divisive positions

:37:19.:37:41.

were very popular, but when you get right down to it, when citizens take

:37:42.:37:45.

a long hard look in the ballot box about actually voting

:37:46.:37:48.

against your neighbour, against In pluralistic societies

:37:49.:37:50.

like we have, it becomes very Or the fear of, you know,

:37:51.:37:53.

the shopkeeper you see down the street every day, or your

:37:54.:37:57.

colleague from two cubicles over. That dynamic is what is really

:37:58.:38:01.

a source of optimism for me. Lots has been written about your

:38:02.:38:06.

appearance, good looks, tattoo. Do you think they contributed

:38:07.:38:10.

to your success? You look like a fresher faced kind

:38:11.:38:14.

of politician to some of the others, It didn't really play all that

:38:15.:38:17.

much during the election campaign. In the beginning, there was a little

:38:18.:38:27.

bit more interest in appearance. The fact that I'm friendly and

:38:28.:38:33.

like people shouldn't count against me when I'm hoping to

:38:34.:38:38.

represent them on the world stage. In Australia there's been a real

:38:39.:38:45.

debate about whether the Queen should be head of state. It doesn't

:38:46.:38:51.

feel as though there's been that debate in Canada to the same degree,

:38:52.:38:56.

but you took the Queen's portrait down in one Government building. Why

:38:57.:39:02.

did you do that? There's been a long tradition of showcasing Canadian

:39:03.:39:06.

artists in our embassies around the world, as you've seen here at Canada

:39:07.:39:12.

House, so it was something that the previous Government did as a I think

:39:13.:39:18.

sign of disrespect towards the art commuters for which they had been

:39:19.:39:23.

famously accused. And I think rightly accused on many levels. It

:39:24.:39:27.

was more about restoring Canada's place and not meant at all as a

:39:28.:39:33.

disrespect to our Queen, who is still a, who still adorns many

:39:34.:39:38.

banknotes and others. You are right that there is not a huge appetite

:39:39.:39:43.

for that in Canada. There are far more pressing things and we are

:39:44.:39:45.

perfectly happy with our Queen of Canada. When you look at Canada

:39:46.:39:49.

today, it is interesting, because you are not the United States.

:39:50.:39:51.

Clearly different to the United States in a whole lot of respects,

:39:52.:39:57.

right? Do you feel Canada's closer to the UK, or to the United States?

:39:58.:40:03.

I think that the time of Canadians worried that there is no Canadian

:40:04.:40:09.

identity has passed. We have succeeded in creating an

:40:10.:40:13.

extraordinary country based on shared values and approach. And an

:40:14.:40:19.

optimism about the world that quite frankly leaves us a little less

:40:20.:40:31.

needily in terms y in terms offics term definitions. That's

:40:32.:40:34.

interesting. Obviously you are not going to join the United States...

:40:35.:40:41.

No, but if they wanted to join us as provinces we could talk about that.

:40:42.:40:45.

You are standing for new politics, a new generation, and of course your

:40:46.:40:49.

name is an old name in Canadian politics. Most people here will know

:40:50.:40:53.

that your father was Prime Minister. Let me be brutal. Does it embarrass

:40:54.:41:00.

you that you are part of Canada's first family dynasty? No, because

:41:01.:41:04.

I'm incredibly proud of my father, the values he stood for, the place

:41:05.:41:07.

he gave da on the world stage. The the values he stood for, the place

:41:08.:41:14.

he gave da on the world stage. -- he gave Canada on the world stage. Do

:41:15.:41:19.

you believe would be there if you hadn't been a Trudeau? I don't deny

:41:20.:41:24.

that doors opened up for me. The way I was raised was that I had to work

:41:25.:41:29.

two or three times as hard as anyone else would to walk through that door

:41:30.:41:33.

now that it was open. I think Canadians get that. There's a lot of

:41:34.:41:38.

people who shrugged and said, he has nothing but a name to go on, and

:41:39.:41:43.

found themselves slightly bewildered as I left them in the dust. Justin

:41:44.:41:49.

Trudeau, very nice to talk to you. A real pleasure. Thank you. Back to

:41:50.:41:54.

the Autumn Statement. Well, as much talked about today

:41:55.:41:55.

as the Chancellor's Autumn Statement was the Shadow

:41:56.:41:57.

Chancellor's response to it. John McDonnell's wielding

:41:58.:41:59.

of Chairman Mao's red book, It was a joke -

:42:00.:42:01.

and a courageous one. But who exactly were we meant

:42:02.:42:04.

to be laughing with, or at? Stephen Smith has been looking

:42:05.:42:07.

at the wisdom of Mao and why it hasn't played

:42:08.:42:10.

a bigger part in the proceedings A journey of a thousand miles begins

:42:11.:42:25.

with a single step, Mao is supposed to have said. But I don't think even

:42:26.:42:30.

he could have imagined we would end up here. To assist comrade os worn

:42:31.:42:36.

in his dealings with his new-found comrades I've brought him along

:42:37.:42:42.

Mao's little Red Book. Let me quote... Was it a joke? To the

:42:43.:42:47.

Conservatives and most of Fleet Street it was a gaffe, and like the

:42:48.:42:51.

Great Wall big enough to see from space. We must learn to do economic

:42:52.:42:58.

work from all who know how. No matter who they are. We must esteem

:42:59.:43:05.

them as teachers, learning from them respectfully and conscientiously,

:43:06.:43:08.

but not pretend to know what we do not know. I thought white come in

:43:09.:43:15.

handy for him. George Osborne could gorge himself on fortune cookies

:43:16.:43:20.

before he got this lucky again. So the Shadow Chancellor literal stood

:43:21.:43:26.

at the dispatch box and read out from Mao's little Red Book!

:43:27.:43:30.

LAUGHTER Look, it's his personal from Mao's little Red Book!

:43:31.:43:39.

CHEERING. What was Jock McDonnell thinking of? On the face of it all

:43:40.:43:44.

he did was make the Tory front bench weep with laughter and some of his

:43:45.:43:51.

own MPs just weep. He put the moist into Maoist. I wouldn't

:43:52.:44:00.

How did you feel? I saw the footage of it afterwards. I think I was

:44:01.:44:04.

talking to the BBC. What about when you saw it? I thought, that's a

:44:05.:44:06.

different way of doing things. The Conservatives were quick to

:44:07.:44:22.

more choice quotes. People say Chairman Mao is not a joke. He was

:44:23.:44:27.

responsible for about 20 million deaths in China. Of course, and I

:44:28.:44:32.

condemn all that. The point of doing it today was to get across the fact

:44:33.:44:36.

that what this government is doing is selling off our assets. This is

:44:37.:44:41.

selling off virtually the family furniture. After Mr MacDonald's

:44:42.:44:48.

performance, 1000 flowers bloomed, so to speak, on social media. -- Mr

:44:49.:44:59.

McDonnell's. He has tried to talk about conservative failures, but

:45:00.:45:04.

talked about his own failures. Marxism is still completely relevant

:45:05.:45:09.

as a form of historical analysis, but getting a little red book out!

:45:10.:45:15.

People have whatever fashion accessories they have, iPad or hover

:45:16.:45:22.

boards! It's different times. What would Bell himself have made of the

:45:23.:45:31.

Corbyn-McDonnell Project. -- Mao himself. It's too early to tell.

:45:32.:45:38.

Let's talk about Labour's day and himself. It's too early to tell.

:45:39.:45:44.

the conservative's day. Word does it leave George Osborne?

:45:45.:46:00.

In recovery. He had this extraordinary good fortune of

:46:01.:46:01.

increased tax receipts out of extraordinary good fortune of

:46:02.:46:05.

nowhere. He has two extraordinary good fortune of

:46:06.:46:08.

for their generosity. He has played his cards well. He has spent all

:46:09.:46:14.

that money on tax credits, as well as bedding out the NHS and the

:46:15.:46:20.

police. He has solved big headaches by a big stroke of fortune. The

:46:21.:46:26.

other stroke of fortune you just saw, John McDonnell. George Osborne,

:46:27.:46:33.

how does it change your view of him? He's very clever. He's very

:46:34.:46:40.

political. He's been very nifty. Instead of front loading the cuts,

:46:41.:46:45.

he has back loaded them. He's assuming he is not going to be

:46:46.:46:50.

Chancellor in the run-up to the next election. But he absolutely has not

:46:51.:46:54.

changed course. He has always said he would reduce the size of the

:46:55.:47:02.

state to 36% of GDP, smaller than it has ever been, permanently. Mrs

:47:03.:47:08.

Thatcher had a state of 46%. They are not being blown off course. It

:47:09.:47:13.

is happening a bit slower, but the same people will be hit in the same

:47:14.:47:19.

way. Just later. You would reject the hypothesis that George Osborne

:47:20.:47:24.

is trying to pull the Conservatives to the centre with infrastructure

:47:25.:47:28.

spending and more spending on the NHS. You still think he is ie

:47:29.:47:33.

geologically very right-wing? He has understood that his cuts were

:47:34.:47:37.

becoming very un-pop killer, and he needed to make political gestures.

:47:38.:47:46.

It will just about get the NHS through. It doesn't solve the

:47:47.:47:52.

problem, but he had to do this fix. Police would have been a disaster.

:47:53.:47:56.

If we have some sort of jihadist attack, what would it do to his

:47:57.:48:01.

political career if he cut the police? Do you think he is a

:48:02.:48:07.

pragmatic centrist, or ideologically right? Is it hard to tell? He is on

:48:08.:48:14.

the Move ideologically. He is a very clever politician, a chameleon. He

:48:15.:48:20.

has put himself banged on the centre now. He was accused by Ukip today of

:48:21.:48:27.

being a horrible Blairite for abandoning austerity. Several front

:48:28.:48:34.

pages of newspapers are screaming, what has happened to austerity? He

:48:35.:48:37.

has cleverly put himself on the mainstream. By varying the tax

:48:38.:48:43.

credits problem, he is re-engaging the one nation narrative. Everyone

:48:44.:48:51.

knows that those tax credit cuts are coming, just under Universal Credit

:48:52.:48:57.

is, and a bit later. The Sun takes the credit for campaigning against

:48:58.:49:02.

credit cuts. What is the son's take on universal credit? Will you take

:49:03.:49:12.

up the campaign against that? It took several months for all of us to

:49:13.:49:17.

get our heads round what he did with tax credits in the summer budget.

:49:18.:49:23.

Some of us on the living wage of going to be better off come the

:49:24.:49:29.

summer. No, because they lose it under tax credits. It is about your

:49:30.:49:34.

household income and how many children you've got. Universal

:49:35.:49:38.

Credit has always been so complicated that most Tory MPs have

:49:39.:49:41.

never understood it at all. Another fact put out today is that Britain

:49:42.:49:48.

will be spending more on overseas than on the Home Office by the end

:49:49.:49:53.

of this government. They fiddle what they are going to use the overseas

:49:54.:49:58.

aid budget on. They say, now we will use it on those failed states who

:49:59.:50:03.

are sending their migrants towards us. We are using it for our own

:50:04.:50:08.

purposes. We do have to finish on the Redbook moment. I am told the

:50:09.:50:17.

Chancellor has taken his copy of the Redbook back to his chambers and is

:50:18.:50:23.

planning on framing it. Tax credits, ring-fencing, we will not remember

:50:24.:50:29.

that in a few months' time. Today we will remember for one reason only,

:50:30.:50:36.

John MacDonald's little red book. What was it? Did he not have a clear

:50:37.:50:43.

critique? It is an impossible day. No Shadow Chancellor should be

:50:44.:50:48.

expected to reply on the same day to stuff they haven't seen before. But

:50:49.:50:53.

that was a terrible error, because it played into what people think of

:50:54.:50:58.

Corbyn and McDonnell anyway, that they have little red books in their

:50:59.:51:04.

pockets. The blood drained from all of the Labour MPs behind him. It was

:51:05.:51:10.

a blunder. All he had to do today was look credible. Thank you very

:51:11.:51:15.

much indeed. That is all we have time for. I will be back tomorrow.

:51:16.:51:18.

We will be talking about Syria.

:51:19.:51:20.

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