The Autumn Statement

:00:11. > :00:21.The nation's eyes are on George Osborne today as the Chancellor

:00:21. > :00:42.

:00:42. > :00:47.unveiled his plans to get Britain's Good afternoon and welcome to this

:00:47. > :00:52.BBC special on the Chancellor's Autumn Statement, broadcasting live

:00:52. > :00:56.on BBC Two, the BBC News Channel and BBC Online. Forecasters tell us

:00:56. > :01:06.the British economy is already back in recession. Unemployment is

:01:06. > :01:10.rising, inflation high, living standards squeezed. Today a --

:01:10. > :01:14.tomorrow will be the one-day nationwide strike, perhaps the

:01:14. > :01:18.first of many. The eurozone crisis moves from the periphery to the

:01:18. > :01:22.very core, threatening to engulf the Continent and also Britain in a

:01:22. > :01:28.long and deep recession. Some have even spoken of a lost decade. It

:01:28. > :01:30.would be hard to imagine a grimmer backdrop for the Chancellor, as he

:01:30. > :01:34.prepares an Autumn Statement designed to cushion the downturn

:01:34. > :01:40.and knows the economy back to health. Earlier this year George

:01:40. > :01:43.Osborne talked privately about doing away with the Autumn

:01:43. > :01:47.Statement altogether. It is a measure of the gravity of the

:01:47. > :01:51.situation that in just a few minutes he will stand up in the

:01:51. > :01:58.Commons to unveil something close to a full-blown Budget, the second

:01:58. > :02:03.of the year. We will bring it to you live and uninterrupted from

:02:03. > :02:07.12:30pm, including expert analysis from Stephanie Flanders, Nick

:02:07. > :02:12.Robinson and Robert Paxton. And we will have reaction from Westminster,

:02:12. > :02:16.the City and across the country. am on College Green opposite

:02:16. > :02:20.Westminster, where we will be talking to all MPs about what the

:02:20. > :02:25.Chancellor could and should do. am on this busy trading floor in

:02:25. > :02:28.Canary Wharf, gauging the mood among investors as they eagerly

:02:28. > :02:34.await the Chancellor's Autumn Statement and what it means for

:02:34. > :02:38.business, the market and growth. And I am at Cammell Laird shipyard

:02:38. > :02:48.in Birkenhead, where I will be finding out what it means for

:02:48. > :02:49.

:02:49. > :02:52.business and industry on Merseyside The coalition has been in power for

:02:52. > :02:57.only 18 months and already they are admitting that sorting out the

:02:57. > :03:02.economy is proving much harder than they originally thought. Today will

:03:02. > :03:04.be the Chancellor's latest response to its growing difficulties. In the

:03:04. > :03:09.next few minutes we are expecting George Osborne to leave the

:03:09. > :03:12.Treasury, make his way to the House of Commons. We are told he was

:03:12. > :03:17.working on his speech late into the evening last night at Number 11,

:03:17. > :03:23.Downing Street, as you would expect, and that it will last for about 45

:03:23. > :03:27.minutes. Much of what we are about to here has been judiciously

:03:27. > :03:30.announced or already leaked. Rarely has a budget or Autumn Statement

:03:31. > :03:35.been so prematurely and intentionally and bailed. I suspect

:03:35. > :03:39.to create the impression that the Government is doing all that it can

:03:39. > :03:44.to tackle the dark clouds. The darkest cloud is the threat to

:03:44. > :03:47.economic growth, which could derail the deficit reduction strategy.

:03:47. > :03:51.Since the last Autumn Statement of 2010, the economy has weakened,

:03:51. > :03:55.which is why so much of what the Chancellor will say today will be

:03:55. > :03:59.about reigniting growth. With a coalition determined to stick to

:03:59. > :04:03.deficit targets and the eurozone threatening to scupper everybody's

:04:03. > :04:07.growth plans, it is not clear how much of the difference Mr Osborne

:04:07. > :04:12.can make. This morning the Deputy Prime Minister Nick Clegg and the

:04:12. > :04:16.leader of the Labour Party, Ed Miliband, well, they were at

:04:16. > :04:19.getting their messages across. This is what they had to say. We need to

:04:19. > :04:23.do absolutely everything we can to promote growth and support

:04:23. > :04:28.confidence in the economy at the time when self-evidently the

:04:28. > :04:32.economic circumstances in which we live have deteriorated compared to

:04:32. > :04:36.what we might have anticipated a year-and-a-half ago. And that is

:04:36. > :04:39.what we are doing. All we will see today will be a Chancellor

:04:39. > :04:43.announcing higher unemployment, lower growth and higher borrowing.

:04:43. > :04:47.The plans are hurting but they are not working. That is why he has to

:04:47. > :04:53.change course today, and accept that his plan has failed. And he

:04:53. > :04:57.has got to take action to get the economy moving. This is the age of

:04:57. > :05:01.the politics of debt and deficit. This is what dominates the economic

:05:01. > :05:05.exchanges between Government and opposition. There was a time when

:05:05. > :05:09.the coalition concentrated almost solely on his deficit reduction

:05:09. > :05:15.strategy. As growth faltered and opposition criticism began to bite,

:05:15. > :05:18.it has had to show that they are not just a one-trick pony. I

:05:18. > :05:22.suspect that is one of the reasons why they have been leaking like a

:05:22. > :05:26.sieve and we know so much already about what the Chancellor will say.

:05:26. > :05:30.The reason we know so much is simple, and that is because there

:05:30. > :05:34.will only be one headline tonight, which is the depth of a hole that

:05:34. > :05:37.Britain is in economically, and the depth of the pain that is still to

:05:37. > :05:42.be suffered by people, in addition to the spending cuts and tax rises

:05:42. > :05:46.that have already been announced. If you like, the good news, the

:05:46. > :05:49.measure designed to get growth going, has been dribbled out over

:05:49. > :05:52.the past week because the Chancellor knows that he simply

:05:52. > :05:58.cannot compete with the scale of, let's be honest, the awfulness of

:05:58. > :06:00.the economic news that we are going to get. Growth down, borrowing up,

:06:00. > :06:05.the size of the economic hole bigger, and therefore a series of

:06:05. > :06:11.measures, not just today but over the next months and indeed years,

:06:11. > :06:15.and crucially beyond the next election, needed to make people get

:06:16. > :06:21.less from the state, pay more to make the books balance. And worst

:06:21. > :06:23.of all politically for the Chancellor, having to meet the

:06:24. > :06:29.Prime Minister's words. He said the books would be balanced in five

:06:29. > :06:33.years and they will not be. A lot of what we are about to here will

:06:33. > :06:37.only be confirmation of what we already know, that Mr Osborne would

:06:37. > :06:40.not be Mr Osborne if he had not kept something juicy up his sleeve.

:06:40. > :06:46.He has been something of an early Father Christmas for first-time

:06:46. > :06:52.buyers, at rail travellers, construction workers ready for

:06:52. > :06:57.shovel-ready jobs, working mothers needing nursery care, young people

:06:57. > :07:02.needing a job. He has been trying to sweeten the bitter pill of the

:07:02. > :07:08.Autumn Statement. The latest economic forecast on growth, debt,

:07:08. > :07:14.and the deficit, from the Office for budget responsibility. I do not

:07:14. > :07:19.think there is any good news in any of that. I don't think there will

:07:19. > :07:23.be any good news. Cast your mind back to June, 2010. At the time, it

:07:23. > :07:28.seemed quite gloomy. We thought the coalition was talking about needing

:07:28. > :07:31.to come together, solving an emergency in public finances. That

:07:31. > :07:36.looks like the sunny uplands compared to the forecast we are

:07:36. > :07:42.looking at now. Going back then, the Independent Office for Budget

:07:42. > :07:47.Responsibility was expecting a return to growth, investment, as

:07:47. > :07:51.that the economy would be growing by 2.3% and next year by 2.8%. That

:07:51. > :07:55.would not actually be very high for a normal recovery, but we are not

:07:55. > :08:01.looking at a normal recovery and they had to reflect that in the

:08:01. > :08:05.Budget in March. Both of those went down to 1.7% for growth this year,

:08:05. > :08:09.and 2.5% for growth next year. But we know now that even those have

:08:09. > :08:13.turned out to be very optimistic. We do not know what the new figures

:08:13. > :08:18.will be but if you look at what the City is betting for growth, the

:08:18. > :08:23.average forecast is for growth this year of just 1% and next year, also

:08:23. > :08:30.just 1%. That many years into recovery. And then your forecasts

:08:30. > :08:33.are even gloomier than that. newer forecasts. Where does that

:08:33. > :08:39.leave a deficit reduction target? Well, not reducing it as fast as

:08:39. > :08:44.they wanted to. If you go back to 2010, the OBR thought that public

:08:44. > :08:51.sector net borrowing that you would peak at 155 billion. More than 10%

:08:51. > :08:56.of GDP and much more than we borrowed in any peacetime period.

:08:56. > :08:59.They said under George Osborne's plans that borrowing would fall to

:08:59. > :09:03.37 billion by the last year of the Parliament. We know that is going

:09:03. > :09:07.to go up because the growth forecasts have gone down. If you

:09:07. > :09:12.look at the City forecast, at the average of the forecasters surveyed

:09:12. > :09:17.by the Treasury itself, that number is expected to go up to close to a

:09:17. > :09:23.2 billion, 77 billion. That is an important number to remember as we

:09:23. > :09:26.go through. -- close to 80 billion. What was wrong with Labour's plans

:09:26. > :09:30.was that they were still going to be borrowing a 2 billion by the end

:09:30. > :09:37.of the Parliament, which was supposed to be a sign of their

:09:37. > :09:41.total lack of credibility. -- 80 billion. That gives a new meaning

:09:41. > :09:46.to divergence! We will be hearing more about investment in

:09:46. > :09:49.infrastructure projects, rails, roads, hospitals and maybe airports.

:09:49. > :09:54.The public and private sector is supposed to come up with the money.

:09:54. > :09:59.Will there be much of an immediate or short-term impact on growth?

:09:59. > :10:04.cannot have much of an immediate impact. Even though there is 5

:10:04. > :10:10.billion of spending all this Parliament on infrastructure that

:10:10. > :10:16.has been allocated for road projects and that kind of thing,

:10:16. > :10:19.you know that it takes a while to get these things going. And the

:10:19. > :10:27.weakness is right now. In the best case, we are talking once before

:10:27. > :10:33.people are hired, people start saying money in the economy. --

:10:33. > :10:37.months before people are hired. The majority of the money that will

:10:37. > :10:42.come from it will not come for years and years. 20 billion of it,

:10:42. > :10:46.provided by pension funds in theory, we do not know how that will in

:10:46. > :10:50.practice be delivered. Both sides had good intentions. Pension funds

:10:50. > :10:57.want to provide this money. But having observed pension funds in

:10:57. > :11:01.practice over many years, getting money out of them is not easy.

:11:01. > :11:06.most important audience for the Chancellor today is not you, me or

:11:06. > :11:15.the MPs in the Commons. It is the bond markets, the folks sat at home

:11:15. > :11:18.and abroad buy and sell our Government's debt. They have been

:11:18. > :11:22.prepared to accept very low yields and interest rates for British debt

:11:22. > :11:27.while the cost for other countries has gone through the roof. They

:11:27. > :11:30.will be worried that low or no growth could derail or delayed

:11:30. > :11:38.deficit reduction. Let's get a sense of what the markets are

:11:38. > :11:44.looking for. Maryam Moshiri is in Canary Wharf. The mood is one of

:11:44. > :11:47.great anticipation. The markets have been quite volatile in the

:11:47. > :11:55.last few months. They do not expect any handouts from the Chancellor

:11:55. > :12:01.whether or not he sticks to his fiscal rules, his austerity plans,

:12:01. > :12:05.with a plan for growth. In the last few months, we have seen gilt

:12:06. > :12:09.yields dropping down to 2.1%, a sign if ever one was needed that

:12:09. > :12:18.the markets are happy with what the Chancellor has filtered through

:12:18. > :12:22.over the last few days. What is the City looking for today? As you said,

:12:22. > :12:29.a lot of it has been leaked so that we know the Chancellor has plans

:12:29. > :12:33.for credit easing, to create opportunities for smaller companies

:12:33. > :12:41.to get access to credit. That has been leaked. Also the

:12:41. > :12:44.infrastructure spending, releasing money from pension funds for

:12:44. > :12:49.schools and hospitals and the infrastructure that the UK needs.

:12:49. > :12:53.Lots of it has been widely leaked. I imagine there will be some tricks

:12:53. > :12:59.up his sleeve to impress the market. We will have to wait and see what

:12:59. > :13:04.they will be at 12:30pm. Everybody is talking about the deficit and

:13:04. > :13:08.growth. Which is the most important to the City? Can both of them

:13:08. > :13:11.happen at the same time? That is the big question. There is pressure

:13:11. > :13:15.for the Government to try to stimulate growth. These are the

:13:15. > :13:19.measures that we will hear about today but it has to be within the

:13:19. > :13:22.confines of the deficit reduction plan. Going on in the background is

:13:22. > :13:29.the eurozone debt crisis and the Chancellor is very wary of the fact

:13:29. > :13:33.that the market will punish the gilt market if they move away from

:13:33. > :13:37.deficit reduction. He does not have much room for manoeuvre, does he?

:13:38. > :13:46.Certainly not. The markets will be watching this very closely indeed.

:13:46. > :13:51.Thank you very much indeed. It is clear from the mood in this City,

:13:51. > :13:55.that growth will be limited to a large degree, but they will have to

:13:55. > :13:59.work-out if the Chancellor has a plan to offset it.

:13:59. > :14:04.Thank you. We are also getting reactions from business men and

:14:04. > :14:08.women in Merseyside. Judith Moritz is at the Cammell Laird shipyard on

:14:08. > :14:12.the Mersey. If I had been speaking to you from

:14:12. > :14:19.here one decade ago, how different things would have looked, this

:14:19. > :14:23.place was in receivership. Now they have contracts here and plenty of

:14:23. > :14:27.work, not just in shipbuilding but wind farm production. They have

:14:27. > :14:33.diversified. This is a success story. I have brought some business

:14:33. > :14:37.people from around Merseyside with made who are waiting keenly to hear

:14:37. > :14:44.what the Chancellor has to say. We have the manager of a diesel

:14:44. > :14:49.engines company, the sea air of the Merseyside Maritime businesses, --

:14:49. > :14:53.and the manager of the Merseyside Maritime businesses. You have found

:14:53. > :14:57.it very difficult over the last few years, haven't you? Absolutely.

:14:57. > :15:02.Things have changed massively. In the last three years, there has

:15:02. > :15:12.been a dreadful decline. I have five staff that depend on me for

:15:12. > :15:12.

:15:12. > :15:17.What do you want George Osborne to say? You want to hear about credit

:15:17. > :15:21.easing and help for small companies like yours? I would like him to

:15:21. > :15:24.help with small business rates. For me employing five staff, business

:15:24. > :15:29.rates in the centre of Liverpool are horrendous. That would make a

:15:29. > :15:34.massive difference to me. quipped to me off air that you

:15:34. > :15:39.stocked some of his family's wallpaper. We do. We would like

:15:39. > :15:44.limb to maybe come to the store and purchase a few rolls. But on a

:15:44. > :15:49.serious note you feel he's been out of touch? He should come to

:15:50. > :15:54.Liverpool and support our businesses. Jim Teasdale, you speak

:15:54. > :15:58.for many small businesses like Elaine's. Have they all been

:15:58. > :16:03.finding the same problems, tough can credit and with banks helping

:16:03. > :16:08.them out, that kind of thing is This has always been a mercantile

:16:08. > :16:12.and maritime city. I represent 1,700 businesses and we aspire to

:16:12. > :16:16.develop a world class cluster of businesses. We are dealing with

:16:16. > :16:20.tough times economically and within that we have some real success

:16:20. > :16:24.stories. Cammell Laird is just one example, where it is a dynamo for

:16:24. > :16:31.growth, for jobs and creation. And it is diversifying. Although things

:16:31. > :16:35.are tough at present, the prospects are excellent. We are looking

:16:35. > :16:40.forward to building our strengths to develop and further grow this

:16:40. > :16:43.successful cluster. So put it together, world class cluster,

:16:43. > :16:48.world class brand and we are working together for business

:16:48. > :16:52.growth. But is this about getting back to what we do best, and roots.

:16:52. > :16:58.We are talking about a proud history of manufacturing and export

:16:58. > :17:03.is. This about rebalancing that between import and export and

:17:03. > :17:09.getting goods out overseas? We are a trading nation. 95 % of our goods

:17:09. > :17:13.comes by sea. There'll always be an import-export imbalance but there's

:17:13. > :17:17.a move towards more property- centric activity. There's move

:17:17. > :17:22.towards a recognition that the north of England can be fed by a

:17:22. > :17:28.major estuary, a major port this this part of the world. And there

:17:28. > :17:32.is support for manufacturing and manufacturing and logistics in a

:17:33. > :17:36.broad sense. You work for a company with a global reach but you spoke

:17:37. > :17:41.to me about the problem you are seeing in the UK is one of skills

:17:41. > :17:44.shortages, isn't it? What I'm looking for is real confidence,

:17:44. > :17:48.real bravery making decisions to attract younger people into the

:17:48. > :17:52.industry, into engineering, and incentivising employers to do that.

:17:52. > :17:57.That's one of the key messages we hope to hear from George Osborne

:17:57. > :18:03.later today. Like here at Cammell Laird you want to see apprentices

:18:03. > :18:06.for the future. Exactly. The area I come from, in Stockport, we have

:18:06. > :18:12.good connections with the education system and the council. We need to

:18:12. > :18:15.roll that out nationally. Thank you all for your time. We'll have at

:18:15. > :18:19.Cammell Laird a selection of business people watching what

:18:19. > :18:23.George Osborne has to say. They have their individual needs and

:18:23. > :18:27.requirements. We hope to speak to you later and see what they've made

:18:27. > :18:33.of it. Thank you Judith and a special

:18:33. > :18:38.thanks to our guests in Merseyside. They are freezing up there on the

:18:38. > :18:42.windy Mersey in late November. The Chancellor hasn't quite left

:18:42. > :18:47.the Treasury yet. There is the door he is expected to come through.

:18:47. > :18:53.Remember, on Budget days he leaves from number 11 Downing Street, his

:18:53. > :18:56.residence, with his famous red box. But on Autumn Statement days he

:18:57. > :19:03.leaves from the Treasury itself. He's running out of time. He only

:19:03. > :19:08.has 12 minutes. He had better get a move on! Maybe he is refusing to

:19:08. > :19:13.come out, the news is so grim. Jon Sopel is outside Parliament today.

:19:13. > :19:16.Andrew, thank you. As you have been mentioning, the Autumn Statement

:19:16. > :19:21.was supposed to be a low-key affair with the Chancellor updating the

:19:21. > :19:24.House of Commons on the latest economic forecasts. We can see now

:19:24. > :19:28.George Osborne has finally braved it. He is not going to miss it,

:19:28. > :19:34.Andrew. He is going to get there on time to deliver his Autumn

:19:34. > :19:38.Statement. It is probably only a 400 yard drive. No police escort.

:19:38. > :19:44.He leaves the Treasury. I guess he's going to be outside the Palace

:19:44. > :19:49.of Westminster in a very short order. So instead, the task of

:19:49. > :19:54.today has changed rather from what he originally thought. He's going

:19:54. > :20:00.to update the Commons on the Office for Budget Responsibility forecast.

:20:00. > :20:07.But a combination of weak growth and the crisis in the eurozone have

:20:07. > :20:12.persuaded the Chancellor that today he has to pull out all the stops. A

:20:12. > :20:16.reminder of the events leading to today.

:20:16. > :20:25.Tonight at ten the spectre of a return to recession in Europe, as

:20:25. > :20:35.growth collapses. So they're going through a

:20:35. > :20:41.financial crisis that is scaring the world. We could run the risk of

:20:41. > :20:44.what some commentators are already calling a lost decade. TRANSLATION:

:20:44. > :20:50.Europe is in the middle of what may be its toughest hour since World

:20:50. > :20:56.War II. Lower growth, higher unemployment,

:20:56. > :21:01.the troubling state of the British economy.

:21:01. > :21:04.The crisis in the eurozone is having a chilling effect, not just

:21:04. > :21:11.on eurozone economies, not just on market confidence but on the

:21:11. > :21:17.British economy, too. Britain will stick to the deficit

:21:17. > :21:21.plan we have set out. It is the rock or stability upon which our

:21:21. > :21:31.recovery is built, and it has delivered record low interest rates.

:21:31. > :21:34.

:21:35. > :21:44.Abandoning that plan would put What is happening in the economy

:21:45. > :21:46.

:21:46. > :21:51.now is a very large squeeze on We are trying to recover from a

:21:51. > :21:55.deep and difficult recession. Yet growth is slow, not just in Britain

:21:55. > :22:05.but in France and Germany too. But we are, frankly, well behind where

:22:05. > :22:08.

:22:08. > :22:12.And just as in Birkenhead I'm the only one wearing a coat. I've been

:22:12. > :22:22.joined by the former Conservative Chancellor, Nigel Lawson, the

:22:22. > :22:22.

:22:22. > :22:27.former Labour City leader minor moor minor and by -- Labour City

:22:27. > :22:33.leader Paul Myners and by Paddy Ashdown.

:22:33. > :22:38.It is still first and foremost about reducing the deficit and

:22:38. > :22:42.eliminating the terrible inheritance of public sector and

:22:42. > :22:47.public finance profligacy which the previous administration left this

:22:47. > :22:50.Government. Unfortunately because of the world economic situation,

:22:50. > :22:54.particularly the eurozone fiasco, it is going to take longer. But it

:22:54. > :22:58.has to be done and it will be done. And that is the core. Of course,

:22:59. > :23:04.this these difficult times George Osborne will want to do what he can

:23:04. > :23:08.to boost confidence. Confidence is such a, you can't measure it but it

:23:08. > :23:14.is such an important ingredient. We'll see a number of measures

:23:14. > :23:19.directed at that as well. Lord Myners is this just clearing up the

:23:20. > :23:23.that Labour left behind? No, the economy was recovering strongly in

:23:23. > :23:27.the 12 months from the third quarter of 2009 before it dipped

:23:27. > :23:31.back into a recession. We're back in recession in major parts of the

:23:31. > :23:34.country already. This austerity programme was meant to create space

:23:34. > :23:38.for private sector investment, for unemployment to come down, for

:23:38. > :23:43.inflation to come down and for growth. Hate achieved none of those.

:23:43. > :23:48.Plan A has failed as a credible plan. What we are going to see

:23:48. > :23:52.today is an Autumn Statement which has now become an increasingly

:23:52. > :23:56.panicly Budget. Lord Ashdown, I would think you are rather more

:23:56. > :24:02.comfortable about the things we've been hearing about over the past

:24:02. > :24:09.few days, the capping of rail first, the infrastructure projects, help

:24:09. > :24:17.for people on the housing ladder. Then you know me well. You have to

:24:17. > :24:24.cut the deficit. Labour left behind a debt of �963 billion. Now, that

:24:24. > :24:28.is a larger debt to GDP ratio than Italy's debt, yet we enjoy interest

:24:28. > :24:31.rates that are lower than the Germans. Why? Because we are

:24:31. > :24:35.serious about cutting the deficit. The idea that Labour's proposition

:24:35. > :24:42.is having borrowed so much and got ourselves into so much trouble is

:24:42. > :24:47.we borrow more is unbelievable. If interest rates went up by just 0.5%

:24:47. > :24:51.because we started to borrow more, the consequence would be �4 billion

:24:51. > :24:55.it this year. Extra on our repayments. This is nonsense. You

:24:55. > :24:59.have to do what you can do within the strategy to get growth going

:24:59. > :25:03.and ease the burden but you cannot break the strategy. The proposition

:25:03. > :25:08.that the answer to too high a level of borrowing in Britain is to

:25:08. > :25:12.borrow more is unbelievable. Lord Lawson, you've wrestled at the

:25:12. > :25:17.Treasury, how much room for manoeuvre does George Osborne have,

:25:17. > :25:21.given that he has said these ambitious targets in terms of the

:25:21. > :25:25.deficit reduction? As Paddy said, provided he sticks to his guns he

:25:26. > :25:30.does have a certain amount of room for manoeuvre, because he has

:25:30. > :25:34.market credibility. If you forfeit market credibility you have no room

:25:34. > :25:40.for manoeuvre at all. If I may respond to one thing ta Paul Myners

:25:40. > :25:46.said, he said this was meant to be a cut-back in public sector and the

:25:46. > :25:50.private sector would move ahead. That will happen. I remember this

:25:50. > :25:57.very well. In the early '80s we had to do. This the problem was not as

:25:57. > :26:01.great but we still had a huge deficit which was too big. It took

:26:01. > :26:05.time before the private sector moved forward and unemployment came

:26:06. > :26:10.down. But it did. Did Labour spend too much in Government? Labour took

:26:10. > :26:14.the right actions with a global crisis to keep the economy growing.

:26:14. > :26:18.We saw a smaller in all in unemployment... That wasn't the

:26:18. > :26:22.question. We took the right action at the right time and we have a

:26:23. > :26:28.strategy for reducing the deficit over a reasonable period of time

:26:28. > :26:31.without damaging prospects for the economy. I'm not sure that answered

:26:31. > :26:35.my question. Thank you all for being with us. Andrew, back to you

:26:35. > :26:39.in the studio. Thank you Jon. American Airlines

:26:39. > :26:44.has filed for what's called Chapter 11 bankruptcy. It sounds serious,

:26:44. > :26:49.probably is, but it has happened before, in fact several times

:26:49. > :26:54.before, so I wouldn't completely panic, unless you are flying on

:26:55. > :26:58.American Airlines. Bonds hit 2.8% of a yield, down from the close

:26:58. > :27:03.last night. The markets are looking kindly on what they think the

:27:04. > :27:09.Chancellor is going to say so far. If you want to comment, you can do

:27:09. > :27:14.so on our website - bbc.co.uk/news click on Have Your Say. If you are

:27:14. > :27:18.tweeting the, use @bbceconomy. Ahead of the statement the

:27:18. > :27:23.Government's been keen to get the message out. Ministers are trying

:27:23. > :27:27.to promote growth. They've given us a battery of measures already.

:27:27. > :27:33.Everything George Osborne said he wouldn't do, a long list of

:27:33. > :27:36.proposals. Sounds like Gordon Brown! Exactly. We've had that �5

:27:36. > :27:40.billion that Robert Peston mentioned, over the next three

:27:40. > :27:44.years for infrastructure investment. They are hoping to get another �20

:27:44. > :27:49.billion from the private sector for those schemes. That's very much

:27:49. > :27:53.what you think is blue sky thinking at this point. There is that credit

:27:53. > :27:57.easing plan, hoping to underwrite, guarantee, up to �20 billion of

:27:57. > :28:01.loans to small businesses. We know that's been such arch issue. They

:28:01. > :28:05.are saying that could rise to �40 billion and give quite a reduction

:28:05. > :28:10.in the during costs for firms. For young people, such a big problem

:28:10. > :28:14.the rise in youth unemployment. There is going to be a �1 billion

:28:14. > :28:24.scheme, we are told. We've heard a lot about it except how it is going

:28:24. > :28:25.to be paid form. And we had details as long ago as a week ago they were

:28:25. > :28:35.talking about housing and �400 million to kick-start the housing

:28:35. > :28:36.

:28:36. > :28:42.market to help people buy homes, and a mortgage indem nitty schemes.

:28:42. > :28:45.Lower rail fares, and a 3p rise in fuel duty that was suppose to do so

:28:45. > :28:50.happen in January. We are expecting that to be frozen or delayed. But

:28:50. > :28:55.remember all of this needs to be paid for. Either that or it is

:28:55. > :29:00.going to be off-balance sheet, it doesn't count against the during.

:29:00. > :29:06.Even if it is off the balance sheet, we will find it, Stephanie. Let's

:29:06. > :29:09.look into the Commons now. It is Foreign Office questions.

:29:10. > :29:14.Nick. What is interesting about the figures is that it means that the

:29:14. > :29:19.Chancellor will have to tell us of pain now, pain in the future, pain

:29:19. > :29:23.beyond the election, beyond anything we've heard in his

:29:23. > :29:30.previous Budget or Autumn Statements. He has to. He is saying

:29:30. > :29:36.he won't increase spending, gauz would be to abandon plan A. He has

:29:36. > :29:40.to say today who pays the bills for that. The banks might feel a bit

:29:40. > :29:45.more pain. We might hear tax credits are going to be held down.

:29:45. > :29:53.You always look for public sector workforce. We don't know what he is

:29:53. > :30:00.going to do on pay in future. And the big one, what about long term,

:30:00. > :30:05.the big pensions billing? Pain, pain, pain, and you can't even

:30:05. > :30:11.escape on American Airlines! Gordon Brown used to go through all these

:30:11. > :30:15.measures and the Tories used to despise it. The Tory critique of

:30:15. > :30:20.Gordon Brown was too much meddling around the edges, and there are a

:30:20. > :30:25.lot of micromeasures. All designed to improve the productive potential

:30:26. > :30:30.of the British economy. I suppose, underlying the micromeasures

:30:30. > :30:35.there's a very big and important point we have to grasp - the

:30:35. > :30:40.British economy was run in an unsustainable way for many years

:30:40. > :30:43.during the boom. We with consumed more than we earned. The big task

:30:44. > :30:48.for any Government is to encourage companies to invest more and to

:30:48. > :30:51.make them leaner and fitter so they sell more around the world and we

:30:51. > :30:56.close that deficit, which has been at the heart of all our problems.

:30:56. > :31:02.What will I be looking at is whether there is any sign of a

:31:02. > :31:07.rebalancing of the economy, to use that cliche, such that we are

:31:07. > :31:11.seeing more of a contribution in the medium term from companies

:31:11. > :31:20.exporting and investing more. It will be interesting what the Office

:31:20. > :31:30.for Budget Responsibility makes of We know that the borrowing will be

:31:30. > :31:30.

:31:30. > :31:34.more than they originally thought, even more fun than Budget. -- even

:31:34. > :31:38.more than the Budget. The markets seem to be relatively relaxed.

:31:38. > :31:46.is difficult to read the markets... We have to go straight to the

:31:46. > :31:49.Commons now. Let me put squarely before House of

:31:49. > :31:54.Commons and the British public the economic situation facing our

:31:54. > :31:58.country. Much of Europe seems to be heading into recession caused by a

:31:58. > :32:02.chronic lack of confidence in the ability of countries to deal with

:32:02. > :32:09.their debts. We will do whatever it takes to protect Britain from this

:32:09. > :32:14.debt storm while doing all we can, all we can to build the foundations

:32:14. > :32:18.of future growth. Today we set out how we will do that by

:32:18. > :32:24.demonstrating that this country has the will to live within its means

:32:24. > :32:28.and keep interest rates low. By acting to stimulate the supply of

:32:28. > :32:33.money and credit, to make sure those low interest rates are passed

:32:34. > :32:38.on to families and businesses. By matching our determination on the

:32:38. > :32:42.deficit, with an active enterprise policy for business, and with

:32:42. > :32:46.lasting investment in our infrastructure and education, so

:32:46. > :32:52.that Britain can pay its way in the future. And at every opportunity,

:32:52. > :32:57.helping families with the cost of living. The central forecasts that

:32:57. > :33:04.we published today from the Independent Office for Budget

:33:04. > :33:07.Responsibility do not predict recession here in Britain. But they

:33:07. > :33:14.have done surprisingly revised down their short-term growth prospects

:33:14. > :33:23.for our country, for Europe and for the world. They expect GDP in

:33:23. > :33:33.Britain to grow this year by 0.9%, and by 0.7% next year. They then

:33:33. > :33:35.

:33:35. > :33:41.forecast 2.1% gross in 2013, do 0.7% in 2014, -- 2.7% in 2014, and

:33:41. > :33:45.3% in 2015 and in 2016. They are clear that this central forecast

:33:45. > :33:49.assumes in their words that the euro area finds a way through the

:33:49. > :33:54.current crisis and that the policy makers eventually find a solution

:33:54. > :33:58.that delivers sovereign debt and sustainability. -- sovereign debt

:33:58. > :34:03.sustainability. If not, there could be a much worse outcome for Britain

:34:03. > :34:06.and I believe they are right. We hope this can be averted, but if

:34:07. > :34:11.the rest of Europe heads into recession it may be hard to avoid

:34:11. > :34:17.one here in the UK. We are now undertaking extensive contingency

:34:17. > :34:26.planning to deal with all potential outcomes of the euro crisis. Like

:34:26. > :34:30.the Bank of England and the OECD yesterday, instability is one of

:34:30. > :34:34.the central reasons for the reduction in the growth forecast. I

:34:34. > :34:39.want to thank Robert Chote, Stephen Nickell and Graham Parker and their

:34:39. > :34:43.team for the rigorous work that they have done. I think they are

:34:43. > :34:49.forecast today demonstrates beyond any doubt their independence. --

:34:49. > :34:54.therefore cast. But if we accept their numbers... This is an

:34:54. > :34:59.important point. If we accept their numbers we must also pay heed to

:34:59. > :35:04.their analysis. In addition to the eurozone crisis, the OBR gives two

:35:05. > :35:09.further reasons for the weaker forecast. First, what they call the

:35:09. > :35:15.external inflation shock, the result in their words of unexpected

:35:15. > :35:19.rises in energy prices and global agricultural commodity prices.

:35:19. > :35:29.Their analysis, independent, is that this explains the slowdown in

:35:29. > :35:30.

:35:30. > :35:33.growth in Britain over the past 18 months. Second, the...

:35:33. > :35:41.statement by the Chancellor must be heard and he should not have to

:35:41. > :35:49.fight to be heard. The Chancellor. Second, Mr Speaker, the OBR today

:35:49. > :35:52.show new evidence that an even bigger component of the growth that

:35:52. > :35:55.preceded the crisis was an unsustainable boom, that the bust

:35:55. > :36:00.was deeper and had an even greater impact on our economy than was

:36:00. > :36:04.previously thought. And the result of this analysis is that the OBR

:36:04. > :36:08.has significantly reduced their assumptions about spare capacity in

:36:08. > :36:11.our economy and the trend rate of growth. This increases their

:36:11. > :36:15.estimate of the proportion of the deficit that is structural, in

:36:15. > :36:19.other words the part of the deficit that does not disappear even when

:36:19. > :36:25.the economy recovers. Our debt challenge is even greater than we

:36:25. > :36:32.thought because the boom was even bigger, the bust even deeper, and

:36:32. > :36:37.the effects will last even longer. Britain has had the highest

:36:37. > :36:43.structural budget deficit of any major economy in the world, and the

:36:43. > :36:47.highest deficit in the entire history of our country outside of

:36:47. > :36:56.war, and the last Government left it to this Government to sort that

:36:56. > :36:59.mess out. Now, Mr Speaker, this OBR analysis feeds directly through to

:36:59. > :37:06.borrowing numbers that are falling but not at the rate that had been

:37:06. > :37:11.forecast. In 2009-10, the last Government was borrowing �156

:37:11. > :37:16.billion per year. During the first year of this Government that fell

:37:16. > :37:24.to �137 billion. This year the OBR expect it to fall again to 127

:37:24. > :37:34.billion, then 120 billion next year, 100 billion in 2013, 79 billion in

:37:34. > :37:34.

:37:34. > :37:38.2014, then 53 billion in 2015, and 24 billion a year by 2016-17.

:37:38. > :37:42.However, I can report that because of the lower market interest rates

:37:42. > :37:50.that we have secured for Britain, debt interest rates over the

:37:50. > :37:56.Parliament of forecast to be �22 billion less than predicted. -- are

:37:56. > :38:00.forecast. Given the economic events described by the Office for Budget

:38:00. > :38:03.Responsibility, what would have happened to borrowing without the

:38:03. > :38:12.action this Government has taken? The Treasury estimates that

:38:12. > :38:15.borrowing by 2014-50 would have been... The Chancellor's statement

:38:16. > :38:19.must be heard. There are strong passions on the subject and there

:38:19. > :38:23.will be plenty of time to people to come in on the back of the state

:38:23. > :38:32.that but it must be heard with a degree of courtesy. -- the

:38:33. > :38:36.statement. Borrowing by 2014-2015 it would have been running at over

:38:36. > :38:39.�100 billion per year more and Britain would have borrowed an

:38:39. > :38:45.additional �100 billion in total over the period. If we have pursued

:38:45. > :38:49.that path, we would now be in the centre of the sovereign debt storm.

:38:49. > :38:53.The crisis that we see unfolding in Europe has not undermined the case

:38:53. > :39:02.for the difficult decisions that we have taken. It has made that case

:39:02. > :39:05.stronger. We held our deficit reduction Budget on our terms last

:39:06. > :39:15.year, not on the market turns this year as so many have been forced to

:39:16. > :39:17.

:39:17. > :39:24.do. On that Budget we set out a tough fiscal mandate that we would

:39:24. > :39:29.eliminate the debt problem. To be cautious, I said plans to meet

:39:29. > :39:36.these Budget rules one year early. That hetero has now disappeared. I

:39:36. > :39:40.am clear that our rules must be Ed tier two and I am taking action to

:39:40. > :39:44.make sure that they are. As a result, the OBR's central

:39:44. > :39:48.projection is that we will meet the fiscal mandate and the debt target.

:39:48. > :39:53.The current structural deficit is forecast to fall from 4.6% of GDP

:39:53. > :39:59.this year to a structural surplus of 0.5% in five years' time. The

:39:59. > :40:06.debt to GDP ratio, which is forecast to stand at 67% this year,

:40:06. > :40:10.is now set to peak at 68 -- 78% in 20 14th and be falling by the end

:40:10. > :40:14.of the Parliament. So borrowing is falling and that will come down. It

:40:14. > :40:19.is not happening as quickly as we would have wished because of damage

:40:19. > :40:25.to our economy by the ongoing financial crisis. But we are set to

:40:25. > :40:30.meet our budget rules and we will see Britain through the debt storm.

:40:30. > :40:35.Mr Speaker, there is a suggestion from some in this house that if you

:40:35. > :40:41.spend more, you will borrow less. This is something for nothing

:40:41. > :40:45.economics. The House should know the risks that we would be running.

:40:45. > :40:48.Last April, the absence of a credible deficit plan meant that

:40:48. > :40:53.our credit rating was on a negative outlook and our market interest

:40:53. > :41:02.rates were higher than Italy's. 18 months later we are the only major

:41:02. > :41:07.Western country which has had its credit rating improve. Italy is at

:41:07. > :41:13.7.2% and we are at less than 2.5%. Yesterday we were even borrowing

:41:13. > :41:17.money more cheaply than Germany. And those that would put all of

:41:17. > :41:21.that at risk by deliberately adding to our deficit must explain this.

:41:21. > :41:25.Just a 1% rise in our market interest rates would add �10

:41:25. > :41:30.billion to mortgage bills every year. 1% would mean the average

:41:30. > :41:35.family with a mortgage would have to pay �1,000 more. 1% would

:41:35. > :41:39.increase the cost of business loans by �7 billion. 1% would force

:41:39. > :41:44.taxpayers to find an extra �21 billion in debt interest payments,

:41:44. > :41:47.much of it going to our foreign creditors. In other words, 1%

:41:47. > :41:53.dwarfs any extra Government spending or tax cut funded by

:41:53. > :41:58.borrowing that people proposed today. That is the cost of just a

:41:58. > :42:02.1% rise. Italy's rates have gone up by 3% in the last year alone. We

:42:02. > :42:10.will not take this risk with the solvency of the British economy and

:42:10. > :42:13.British families. Mr Speaker, the current environment requires we

:42:13. > :42:18.take further action on debt to ensure that Britain continues to

:42:18. > :42:22.live within its means. This is what we propose to do. First, there is

:42:22. > :42:27.no need to adjust the overall totals set out in the spending

:42:27. > :42:30.review, had taken all together measures that I will set out today

:42:30. > :42:35.require no extra borrowing and require no extra savings across the

:42:35. > :42:38.spending period. Second, I am announcing significant savings and

:42:38. > :42:43.current spending to make the fiscal position more sustainable in the

:42:43. > :42:46.medium and long-term. In the short term, over the next three years, we

:42:46. > :42:52.will use the savings to fund capital investment in

:42:52. > :42:57.infrastructure, in regional growth and education, as well as help for

:42:57. > :43:02.young people to find work. Every �1 spent in this way will be paid for

:43:02. > :43:09.by �1 saved permanently. This includes savings from a further

:43:09. > :43:15.restraint on public sector pay. For some workforces, the two year pay

:43:15. > :43:19.freeze will come to an end next spring. For most during 2013. In

:43:19. > :43:23.the current circumstances the country cannot afford the 2% rise

:43:23. > :43:27.assumed by some Government department thereafter. Instead we

:43:27. > :43:32.will set public-sector pay awards at an average of 1% for each of the

:43:33. > :43:36.two years after the pay freeze ends. Many are helped by pay progression.

:43:36. > :43:42.The annual increases in salary great that many are entitled to

:43:42. > :43:45.when pay is frozen. -- salary grades. It is one of the reasons

:43:45. > :43:50.why a public sector pay has risen at twice the rate of private sector

:43:50. > :43:53.pay over the last four years. I accept that a 1% average rise is

:43:53. > :44:02.tough but it is also fair to those that were to pay the taxes that

:44:02. > :44:06.fund it. -- that work to pay. I am also announcing that we are asking

:44:06. > :44:10.the independent pay review bodies to consider how public sector pay

:44:11. > :44:16.can be made more responsive to local labour markets, and we will

:44:16. > :44:19.ask them to report back by July next year. This is a significant

:44:19. > :44:29.step towards creating a more balanced economy in the regions of

:44:29. > :44:36.our country, that does not squeeze out the private sector. Mr Speaker,

:44:37. > :44:44.departmental... Mr Speaker, departmental budgets will, with the

:44:44. > :44:49.exception of the NHS and the school budgets, where the money saved will

:44:49. > :44:54.be used to protect their budgets in real terms. This will save �1

:44:54. > :45:00.billion of spending by 2014-15. The deal we will offer on public sector

:45:00. > :45:05.pensions is also fair to both taxpayers and public servants. The

:45:05. > :45:15.reforms are based on the independent report of John Hutton,

:45:15. > :45:19.

:45:19. > :45:23.He says it is hard to imagine a better deal than this. I would once

:45:23. > :45:29.again ask the unions why they are damaging our economy at a time like

:45:29. > :45:33.this and putting jobs at risk. Call off the strikes tomorrow, come back

:45:33. > :45:37.to the table, complete the negotiations and let's agree

:45:37. > :45:44.generous pensions that are affordable to the taxpayer.

:45:44. > :45:47.Mr Speaker, let me turn to other areas of public spending, starting

:45:47. > :45:52.with overseas aid. This Government will stick by the commitments it

:45:52. > :45:55.has made to the poorest people in the world by increasing our

:45:55. > :46:00.international development Budget. The whole House should be proud of

:46:00. > :46:05.the help our country is providing to eradicate disease, save lives

:46:05. > :46:09.and eds Kate children. But the spending plans of the Department

:46:09. > :46:15.for International Development meant that the UK was on course to exceed

:46:15. > :46:20.0.7% of national income in 2013. That I don't think can be justified.

:46:20. > :46:26.Adjusting those plans so we don't overshoot the target.

:46:26. > :46:32.Turning to welfare payments. The annual increase in the basic state

:46:32. > :46:38.pension is protected by the triple lock introduced by this Government.

:46:38. > :46:42.This guarantees a rise either in line with earnings, prices or 2.5%,

:46:43. > :46:50.whichever is greater. It means that the basic state pension will next

:46:50. > :46:54.April rise by �5.30 to �107.45, the largest ever cash rise in the basic

:46:54. > :47:00.state pension and a commitment of fairness to those that have worked

:47:00. > :47:03.hard all their lives. I wanted to make sure that poorer

:47:03. > :47:09.pensioners did not see a smaller rise in their income, so I can

:47:09. > :47:13.confirm today we will uprate the pension credit by �5.35 and pay for

:47:13. > :47:19.this with an increase in the threshold of the savings credit. I

:47:19. > :47:23.also want to protect those who are not able to work because of their

:47:23. > :47:28.disabilities and those who through no fault of their own have lost

:47:28. > :47:32.jobs. We will uprate working age benefits in line with September's

:47:32. > :47:36.CPI inflation number of 5.2%. This will be a significant boost to the

:47:36. > :47:42.incomes of the poorest, especially when inflation is forecast to be

:47:42. > :47:46.considerably less than that by next April. We will also uprate with

:47:46. > :47:51.prices the disability elements elements of tax credits and

:47:51. > :47:54.increase the child element to have Child Tax Credit by �135 in line

:47:54. > :47:58.with inflation. But we will not uprate the other elements of the

:47:58. > :48:03.working tax credit this coming year. Given the size to have outrating

:48:03. > :48:08.this year we will no longer go ahead with the additional �110 rise

:48:08. > :48:12.of the child element over and above inflation planned. By April 2012

:48:12. > :48:16.the Child Tax Credit will have increased by �390 sings the

:48:16. > :48:21.coalition came into power. The best way to support low income working

:48:21. > :48:25.people is to take them out of tax altogether.

:48:25. > :48:32.Our increases in the income tax personal allowance this year and

:48:32. > :48:36.next will do that for over 1 million people. Let me turn to

:48:36. > :48:42.future public spending Mr Speaker. Today am setting spends ture totals

:48:42. > :48:48.for the two years following the ends of the Spending Review period,

:48:48. > :48:54.2015 -16 and 2016-17. Total managed expenditure will fall during that

:48:54. > :48:58.period by 0.9% a year in real terms. The same rate as set out existing

:48:58. > :49:02.period toof Spending Review, with a baseline that exlose the additional

:49:02. > :49:07.investment in infrastructure also announced today. These are large

:49:07. > :49:12.savings and we will set out in future how resources will will be

:49:12. > :49:16.allocated between difficulty areas of Government. I am also announcing

:49:16. > :49:20.a measure to control spending not for today, next year or the next

:49:20. > :49:24.decade, but it directly addressing the long-term challenge British and

:49:24. > :49:27.so many other countries face with an ageing population. Our

:49:27. > :49:31.generation has been warned that the cost of providing decent state

:49:31. > :49:35.pensions are going to become mother and more unaffordable unless we

:49:35. > :49:39.take further action. Let us not leave it to our children to take

:49:39. > :49:44.emergency action to rescue the public finances. Let's think ahead

:49:44. > :49:50.and take responsible, sensible steps now. So starting in the year

:49:50. > :49:55.2026 we will increase the state pension age from 66 to 67, so we

:49:55. > :50:00.can go on paying a decent pension to people who are living longer.

:50:00. > :50:04.Australia, America and Germany have all taken similar steps. This will

:50:04. > :50:10.not affect anyone within 14 years of receiving their state pension

:50:10. > :50:14.today. By saving a staggering �59 billion it will mean a long term

:50:14. > :50:17.future for the basic state pension. We are showing a world sceptical

:50:17. > :50:23.that democratic western Government can take tough decisions that

:50:23. > :50:29.Britain will pay its way in the world.

:50:29. > :50:32.Now, Mr Speaker. That is the first thing. The Government can do in the

:50:32. > :50:38.current environment. Keep our interest rates low and protect our

:50:38. > :50:42.country from if worst of the debt storm. But we need to make sure

:50:42. > :50:46.that those low interest rates are available to families and

:50:46. > :50:51.businesses. It is monetary and credit policy which is, in a debt

:50:51. > :50:58.crisis, the principal and most powerful tool for stimulating

:50:58. > :51:04.demand. Last month the Bank of England's monetary policy committee

:51:04. > :51:09.increased quantitative easing. �275 billion. This will support demand

:51:09. > :51:13.across the commitment we must do more to help small businesss who

:51:13. > :51:16.can't get access to credit at an affordable price. We've extended

:51:16. > :51:23.the last Government's enterprise finance guarantee scheme. We are

:51:23. > :51:29.expanding it to businesses with annual turnovers of up to �44

:51:29. > :51:34.million. This scheme is by itself not nearly ambitious enough and

:51:34. > :51:37.never will within the constraints of state aid rules. The Government

:51:37. > :51:41.is announcing credit easing to help small businesses. We've set a

:51:41. > :51:47.ceiling of �40 billion. At the same time I've agreed with Mervyn King

:51:47. > :51:51.we will reduce by �40 billion the asset purchase facility the

:51:51. > :51:55.previous Government gave the bank to buy business loans. Only a small

:51:55. > :51:58.proportion of that facility was ever used. I'm publishing my

:51:58. > :52:02.exchange of letters with the Governor today. So we are launching

:52:02. > :52:05.our national loan guarantee scheme. It will work on the simple

:52:05. > :52:08.principle that we use the hard-won low interest rates that the

:52:08. > :52:12.Government can borrow at to reduce the interest rates that small

:52:13. > :52:17.businesses can borrow at. We are using the credibility we've end in

:52:17. > :52:22.the international markets to help our domestic economy. New loans and

:52:22. > :52:25.over drafts to business with a turnover of less than �50 million

:52:25. > :52:29.will be eligible to the scheme, so it is focused on smaller companies.

:52:29. > :52:35.We expect it will lead to reductions of 1 percentage point in

:52:36. > :52:41.the rate of interest charged to these companies. A business facing

:52:41. > :52:44.a 7% interest rate could see their rate reduced to 6%. We've developed

:52:44. > :52:47.with the Bank of England a mechanism to allocate funding to

:52:47. > :52:52.different banks based on how much they increase both net and gross

:52:52. > :52:55.lending to firms. And there'll be a clear audit trail to ensure the

:52:55. > :52:59.banks comply, for we will use the experience of the European

:52:59. > :53:02.investment banks loans for SMEs Fulham the UK to ensure it works.

:53:02. > :53:07.We are getting state aid approval so the national loan guarantee

:53:07. > :53:11.scheme will be up and running in the next few months. Initially �20

:53:11. > :53:13.billion of these guarantees will be available over the next two years.

:53:13. > :53:17.Alongside it we are launching a �1 billion business finance

:53:17. > :53:21.partnership. This is aimed at Britain's mid-sized companies, a

:53:21. > :53:28.crucial part of our economy, effected for too long and now

:53:28. > :53:31.identified by the CBI director- general and others as a source of

:53:31. > :53:37.growth. The Government will lend droll these businesses, in

:53:37. > :53:40.partnership with investment pension funds and insurance companies. It

:53:40. > :53:44.will give a new source of investment outside the banks. If

:53:44. > :53:50.the business partnership takes off I stand ready to increase its size.

:53:50. > :53:54.We will help Britain's small and medium-sized companies no.

:53:54. > :53:58.Government has attempted anything as ambitious as this before. We

:53:58. > :54:05.will not get every detail perfect first time round but we don't want

:54:05. > :54:07.to make an enmoif the Government. The important thing is the get

:54:07. > :54:10.Croat flowing to Britain's small businesses.

:54:10. > :54:15.Mr Speaker, the Government can use the low interest rates we've

:54:15. > :54:20.secured to help young families too. Who want to buy a home but can't

:54:20. > :54:25.afford the very large deposits the banks are demanding. We will use

:54:26. > :54:30.mortgage indemities to help 100,000 such families buy newly built homes.

:54:31. > :54:34.We will help construction firms that can't get bank finance with a

:54:34. > :54:38.�400 million fund that will kick- start projects which already have

:54:38. > :54:44.planning permission. And we are going to reinvigorate the right to

:54:45. > :54:48.buy. This was one of the greatest social policies of all time. It

:54:48. > :54:51.brought home ownership within the reach of millions of aspiring

:54:51. > :54:55.families. It was slowly and stealthily strangled by the last

:54:55. > :55:02.Government, as discounts were cut and cut again. We will bring it

:55:02. > :55:07.back to life. Families in social house willing be able to buy their

:55:07. > :55:12.own homes at a discounts of up to 50%. We will use the receipts build

:55:12. > :55:16.for every home purchase ads new additional affordable home as well.

:55:16. > :55:21.So new homes for families that need them. New home ownership for

:55:21. > :55:26.families who aspire to it. New jobs in the construction industry so we

:55:26. > :55:34.get Britain building. That's what our new right to buy will bring.

:55:34. > :55:38.Mr Speaker, in the years leading up to the crash, our economy became

:55:38. > :55:44.dangerously overdependent on the success of a poorly regulated City

:55:44. > :55:49.of London. Meanwhile, employment by business in a region like the West

:55:49. > :55:56.Midlands fell during this period. So by 2007 the previous Government

:55:56. > :56:00.was relying on finance for one in every �8 it raised in taxation.

:56:00. > :56:05.That left Britain completely exposed when the banks failed. I

:56:05. > :56:09.can confirm that the next month we will publish our response to the

:56:09. > :56:15.report we commissioned from John Vicers to protect taxpayers better.

:56:15. > :56:19.It is there Government's policy to ensure that we remain the home of

:56:19. > :56:24.global banks, that London is the world's pre-eminent financial

:56:24. > :56:29.centre. That is why we will not agree to the introduction of an EU

:56:29. > :56:35.financial transaction tax. It is not a tax on bankers. It's a

:56:35. > :56:40.tax on people's pensions. Instead, we have introduced a permanent bank

:56:40. > :56:46.levy so make sure the banks pay their fair share. I've always said

:56:46. > :56:52.we wish to raise �2.5 billion each and every year from this levy. To

:56:52. > :56:58.ensure we do that, I need to raise the rate to have levy to 0.088%.

:56:58. > :57:03.This will be effective from the 1st January next year. And we will also

:57:03. > :57:06.take action to stop some large firms using complex asset-backed

:57:06. > :57:11.pension funding arrangements to claim double the amount of tax

:57:11. > :57:15.relief that was intended. This will save the exalmost half a bill

:57:15. > :57:20.pounds a year. Mr Speaker, financial services will

:57:20. > :57:28.always be a very important industry for the UK. But we have to help

:57:28. > :57:31.other parts of the private sector grow. That means uncongested roads

:57:31. > :57:35.and railways for business to move products that cannot be reduced to

:57:35. > :57:40.a screen on a City trading floor. It means providing secure power

:57:40. > :57:45.sources at reasonable prices. It means creating superfast digital

:57:45. > :57:49.networks for companies across our country. These do not exist today.

:57:49. > :57:52.See what countries like China or Brazil are building and you will

:57:52. > :57:57.see why we risk falling behind the rest of the world. So we are

:57:57. > :58:02.publishing the national infrastructure plan today. For the

:58:02. > :58:06.first time, we are identifying over 500 infrastructure projects we want

:58:06. > :58:10.to see built over the next decade and beyond. Roads, railways,

:58:10. > :58:15.airport compassity, power stations, waste facilities, broadband

:58:15. > :58:20.networks, and we are mobilising the finance need to do so deliver them

:58:20. > :58:25.too. The savings I've announced in the current but the have enabled me

:58:25. > :58:29.today to fund pound for found �5 billion of additional public

:58:29. > :58:32.spending on infrastructure over the next three years. New spending by

:58:32. > :58:36.Network Rail guaranteed by the Government will bring �1 billion

:58:36. > :58:40.more. And we are committing a further �5 billion to future

:58:40. > :58:46.projects in the next spending period so that planning can start

:58:46. > :58:50.now. This is public money. By exploring guarantees and letting

:58:50. > :58:54.City mayors borrow against attach receipts we are looking at new ways

:58:54. > :58:59.to deploy it. We need to put to work the many billions of pounds

:58:59. > :59:03.that British people save in British pension funds and invest in British

:59:03. > :59:08.projects. You could call it British savings for British jobs, Mr

:59:08. > :59:14.Speaker. And the Government has goerbltded an agreement with two

:59:14. > :59:18.groups of -- negotiated an agreement to unlock �20 billion of

:59:18. > :59:22.private investment in modern infrastructure. We can today give

:59:22. > :59:30.the go-ahead to 35 new road and rail schemes that support economic

:59:30. > :59:33.development. In the North-West we will electify the TransPennine

:59:33. > :59:38.Express between Manchester and Leeds and work with Merseyside to

:59:38. > :59:42.turn the vision of the Atlantic gait away a reality Yorkshire and

:59:42. > :59:47.the Humber there'll be new stations and tram capacity. We will halve

:59:47. > :59:53.the tolls on the Humber Bridge. I want to pay tribute to the members

:59:53. > :59:59.for Beverley and brigand ghoul and other MPs who've campaigned for

:59:59. > :00:09.years. Under this Government it has. We are bringing forward investment

:00:09. > :00:12.

:00:12. > :00:16.on the Tyne and Metro. In the South West, the Bristol link road and the

:00:16. > :00:20.A380 bypass will go ahead. For families across the South West,

:00:20. > :00:26.facing the highest water charges in Britain, the Government will pick

:00:26. > :00:33.up the household bills of all South West Water companies by �50 a year.

:00:33. > :00:38.In the East of England, we're going to make immediate improvements to

:00:38. > :00:43.the A14. In the South East, we will build a new railway link between

:00:43. > :00:47.Oxford, Milton Keynes and Bedford, to create 12,000 new jobs. We are

:00:47. > :00:52.going to stop on a crossing of the lower Thames, and we will explore

:00:52. > :00:57.all the options for maintaining the aviation hub status, with the

:00:57. > :01:02.exception of a third runway at Heathrow. In London, we will work

:01:02. > :01:06.with the Mayor for options on a new river crossing, and the extension

:01:06. > :01:09.of the Northern Line to Battersea, which could bring 25,000 jobs to

:01:09. > :01:13.the area. The devolved administrations will get their

:01:13. > :01:19.share. We are working with them to improve the links between our

:01:19. > :01:24.nations, such as the M four in South Wales and the overnight

:01:24. > :01:34.railway services North of the border. This is a huge commitment

:01:34. > :01:36.

:01:36. > :01:40.to overhauling the infrastructure of our nation. And we will match it

:01:40. > :01:45.by overhauling the digital infrastructure, too. The Government

:01:45. > :01:49.is funding plans to bring super- fast broadband to 90% of homes and

:01:49. > :01:54.businesses across the country, and to extend mobile phone coverage to

:01:54. > :01:58.99% of families. This will help create a living, economically

:01:58. > :02:02.vibrant countryside. But our great cities are at the heart of our

:02:02. > :02:06.regional economies, and we will help bring super-fast broadband

:02:06. > :02:11.connections to 10 of them, including the capitals of all Four

:02:11. > :02:17.Nations. We will go ahead with the 22 enterprise zones already

:02:17. > :02:23.announced, plus two zones in the Humber and Lancashire announced

:02:23. > :02:27.today. Capital will be available to encourage manufacturing in

:02:27. > :02:31.Liverpool, Sheffield, the Tees Valley, the Humber and the Black

:02:31. > :02:38.Country. Those allowances will also be available to the north-eastern

:02:38. > :02:48.enterprise zone. And we will consider extending to create new

:02:48. > :02:53.

:02:53. > :03:00.private sector jobs in the port of Mr Speaker, this Government's new

:03:00. > :03:04.regional growth fund for England has already allocated �1.4 billion

:03:04. > :03:10.to 169 projects around the country. For every �1 we are putting in, we

:03:10. > :03:13.are attracting �6 of private sector money alongside it. I am putting in

:03:13. > :03:16.a further �1 billion over the course of this Parliament into the

:03:16. > :03:19.regional growth fund for England with support for the devolved

:03:19. > :03:23.administrations as well. If we don't get the private sector to

:03:23. > :03:26.take a greater share of economic activity in the regions, then our

:03:26. > :03:30.economy will become more and more unbalanced, as it did over the last

:03:30. > :03:35.10 years. Governments should not assume that this will happen by

:03:35. > :03:40.itself. We should help businesses to grow and succeed and we can do

:03:40. > :03:43.that at a national level, too. For example, with our commitment to

:03:43. > :03:48.British science. At a time of difficult choices, we made hours

:03:48. > :03:52.last year when they committed to protecting the science budget. We

:03:52. > :03:57.are committing half a billion pounds for science projects, from

:03:57. > :04:01.Super Computing the satellite technology and health laboratories.

:04:01. > :04:06.We will encourage our small firms to export overseas for the first

:04:06. > :04:13.time. We are doubling to 50,000 the number of SMEs that we are helping

:04:13. > :04:17.and we are extending our support to British companies that are overseen

:04:17. > :04:24.by the German counterparts. We will make it easier for UK-based firms

:04:24. > :04:29.to compete for Government contracts. We will provide funding for smaller

:04:29. > :04:33.technology firms in Britain who find it difficult to turn their

:04:33. > :04:35.innovations into commercial success. And we have listened to the ideas

:04:35. > :04:40.from business groups about encouraging innovation in larger

:04:40. > :04:47.companies, and we will introduce a new above-the-line research and

:04:47. > :04:52.development tax credit in 2013 which will increase in visibility

:04:52. > :04:56.and generosity. And we will give help to our energy intensive

:04:56. > :05:01.industries. I have not shied away from supporting sensible steps to

:05:01. > :05:05.reduce this country's dependency on volatile oil prices and reduce our

:05:05. > :05:10.carbon emissions. While the Chancellor who funded the first

:05:10. > :05:15.ever Green Investment Bank. Our Green Deal will help people

:05:15. > :05:18.insulate their homes and cut their heating bills. But I am worried

:05:18. > :05:24.about the combined impact of the green policies adopted not just in

:05:24. > :05:28.Britain, but also by the European Union, on some of our energy heavy

:05:28. > :05:34.intensive industries. We will not save the planet by shutting down

:05:34. > :05:39.our steel mills and aluminium smelters and paper manufacturers.

:05:39. > :05:44.All we will be doing is exporting valuable jobs from this country. So

:05:44. > :05:48.we will help them with the costs of the EU trading scheme and the

:05:48. > :05:54.carbon price floor, increase their climate change levy relief, and

:05:54. > :05:57.reduce the impact of reforms on these businesses. This amounts to a

:05:57. > :06:03.�250 million package over the Parliament, and it will keep

:06:03. > :06:06.industry and jobs here in Britain. Mr Speaker, it is a reminder to us

:06:06. > :06:11.all that we should not price British business out of the world

:06:11. > :06:16.economy. If we burden them up with endless social and environmental

:06:16. > :06:20.goals, however worthy in their own right, not only will we not achieve

:06:20. > :06:24.those goals, but the businesses will fail, jobs will be lost and

:06:24. > :06:31.our country will be poorer. Our planning reforms strike the right

:06:31. > :06:34.balance between protecting our countryside, while committing to

:06:34. > :06:39.economic development which creates jobs. We need to go further to

:06:39. > :06:41.avoid the lengthy delays of the current system, with the time limit

:06:41. > :06:48.on applications and responsibilities for statutory

:06:48. > :06:51.consultations. And we will make sure that the EU rules on things

:06:51. > :06:57.like Habitat are not placing ridiculous costs on British

:06:57. > :07:03.business. Planning laws need reform... Order. The house needs to

:07:04. > :07:13.calm down. One honourable member has probably shouted enough for one

:07:14. > :07:15.

:07:15. > :07:22.day. The Chancellor of the Mr Speaker, planning laws need

:07:22. > :07:30.reforms, and so do the employment rules. We know that many firms are

:07:30. > :07:34.afraid to hire new staff because of the cost involved. We are doubling

:07:34. > :07:38.the period after which an employee can bring an unfair dismissal claim.

:07:38. > :07:43.We will call for evidence on further reforms to make it easier

:07:43. > :07:48.to hire people, including changing the cheapie regulations, reducing

:07:48. > :07:50.delay and uncertainty and a collective redundancy process, and

:07:50. > :07:56.introducing the idea of compensated though full dismissal for

:07:56. > :08:01.businesses with fewer than 10 employees. -- no fault dismissal.

:08:01. > :08:04.We will cut the burden of health and safety rules on small firms

:08:04. > :08:07.because we have a regard for the health and safety of the British

:08:07. > :08:11.economy. This Government has introduced flexible working

:08:11. > :08:14.practices. We are committed to fair rights for employees, but what

:08:14. > :08:18.about the right to get a job in the first place and the right to work

:08:18. > :08:28.all hours running a small business and not be sued out of existence by

:08:28. > :08:31.

:08:31. > :08:36.the cost of unemployment tribunal? -- employment tribunal? It is no

:08:36. > :08:39.good comparing ourselves with other countries. The entire European

:08:39. > :08:47.Continent is pricing itself out of the world economy. The same is true

:08:47. > :08:52.on taxes on businesses. We have set as our ambition the goal of giving

:08:52. > :08:56.this country the most competitive tax regime in the G20. Our

:08:56. > :09:01.corporate tax rate has already fallen from 28% to 26% and I can

:09:02. > :09:07.confirm that it will fall next April the 25%. We are undertaking

:09:07. > :09:11.major simplification of the tax code for businesses, including

:09:11. > :09:16.consulting on ideas for merging the administration of income tax and

:09:17. > :09:19.national insurance. We are publishing next week rules on

:09:19. > :09:26.foreign profits so that multinationals stop leaving Britain

:09:26. > :09:29.and start coming here. And we will end low-value relief for goods from

:09:29. > :09:34.the Channel Islands which is used to undercut our High Street

:09:34. > :09:37.businesses. We will increase the generosity of the enterprise

:09:37. > :09:41.development scheme and we will extend it to help new start-up

:09:41. > :09:45.businesses get the investment that they need, because even at the best

:09:45. > :09:50.of times they can struggle to get finance. In the current conditions

:09:50. > :09:54.that struggle ends too often in failure. From April, 2012, anyone

:09:54. > :09:58.investing up to �120,000 in a qualifying you start a business

:09:58. > :10:04.will be eligible for income tax release of 50%, regardless of the

:10:04. > :10:09.rate at which they pay for tax. -- new start-up business. And for one

:10:09. > :10:13.year, we will waive tax on capital gains invested through the new

:10:13. > :10:19.scheme. We can afford this with a freeze on the capital gains tax

:10:19. > :10:22.threshold next year. I want to help small businesses that find the

:10:22. > :10:32.current conditions are tough. Business rates are

:10:32. > :10:35.disproportionately large part of fixed costs. In the Budget, I

:10:35. > :10:41.announced the rate relief holiday and today I am extending that until

:10:41. > :10:47.April, 2013. Over half a million small firms, including one third of

:10:47. > :10:52.all shops, will have reduced or no rate bills for the whole of the

:10:52. > :11:02.rest of the next financial year. And larger businesses will be

:11:02. > :11:02.

:11:03. > :11:06.helped with the rise in business rates. I also want to help any

:11:06. > :11:12.business seeking to employed a young person who is out of work.

:11:12. > :11:18.The OBR forecasts that unemployment will rise by 8.1% this year to 8.7%

:11:18. > :11:24.next year, before falling to 6.2% by the end of the forecast. Youth

:11:24. > :11:29.unemployment has been rising for seven years and is now unacceptably

:11:29. > :11:33.high. It is little comfort that this problem is affecting all

:11:34. > :11:41.Western nations today. The problem is of course primarily a lack of

:11:41. > :11:46.jobs, but it is made worse by a lack of skills. Mr Speaker, too

:11:46. > :11:54.many children are leaving school after 11 years of compulsory

:11:54. > :12:01.education without the basics that they need for the world of work.

:12:01. > :12:07.Our new youth contract addresses both problems. With of of private

:12:07. > :12:14.sector work experience for every young person unemployed for three

:12:14. > :12:18.months, -- with the offer. We will pay for a job or apprenticeship

:12:18. > :12:21.after nine months in a private business. As the Deputy Prime

:12:21. > :12:24.Minister has said, this is a contract. Young people that do not

:12:24. > :12:28.engage with this offer will be considered for mandatory work

:12:28. > :12:32.activity. Those that drop out without good reason will lose their

:12:32. > :12:40.benefits. Are we really going to tackle the economic performance of

:12:40. > :12:44.this country and tackle the decade- long problems of productivity? Then

:12:44. > :12:49.we have to transform our school system, too, so children leave

:12:49. > :12:54.school prepared for the world of work. My honourable friend is doing

:12:54. > :12:59.more to make that happen than anybody that has had his job before.

:12:59. > :13:08.The last Government, Mr Speaker, took six years to create 200

:13:08. > :13:10.academies. He has created 1200 academies in just 18 months.

:13:10. > :13:19.Supporting his education reform as a central plank of my economic

:13:19. > :13:25.policy. I am providing an extra 1.2 billion as part of the additional

:13:25. > :13:28.investment in infrastructure to spend on our schools. Half of this

:13:28. > :13:33.will go to help local authorities with the greatest basic need for

:13:33. > :13:37.school places. The other 600 million will go to support my right

:13:37. > :13:43.honourable friend's reforms and will support 100 additional free

:13:43. > :13:47.schools. These schools will include new maths schools for 16 to 18

:13:47. > :13:53.year-olds, giving our most talented young mathematicians the chance to

:13:53. > :13:55.flourish. Like the university technical colleges, these maths

:13:55. > :13:58.free schools are exactly what Britain needs to match our

:13:58. > :14:03.competitors and produce more of the engineering and science graduates

:14:03. > :14:07.so important for our long-term economic success. And to ensure

:14:07. > :14:12.that children born into the poorest families have a real chance to

:14:12. > :14:16.become one of those graduates, we will take further steps to improve

:14:16. > :14:21.early education. Last year it was this coalition Government that not

:14:21. > :14:24.only expanded free nursery education for all three and four

:14:25. > :14:27.year olds, but also gave children from the poorest one-fifth of

:14:28. > :14:37.families then you write to 15 hours of free nursery care per week at

:14:38. > :14:43.

:14:43. > :14:46.the age of two. -- a new right. Thousands of children from the most

:14:46. > :14:50.disadvantaged families will get the support in the early years.

:14:50. > :14:54.Education, early years learning, this is how you change the life

:14:54. > :14:58.chances of our least well off and generally live two children out of

:14:58. > :15:08.poverty. And that is how you build an economy ready to compete in the

:15:08. > :15:09.

:15:09. > :15:15.world. -- genuinely lift children. People know how difficult things

:15:15. > :15:18.are, but where we can help with the rising cost of living, we will. I

:15:18. > :15:28.have announced another freeze in council tax to help millions of

:15:28. > :15:29.

:15:29. > :15:33.Train fares are expensive and they are set to go up well above

:15:33. > :15:37.inflation to pay for the much- needed investment in the new rail

:15:37. > :15:46.and the new trains we need. But RPI plus 3% is too much. The Government

:15:46. > :15:52.will fund a reduction in the increase to RPI plus 1%. This will

:15:52. > :15:58.apply across National Rail- regulated fares, the London tubes

:15:58. > :16:02.and our buses. Mr Speaker, millions more use their cars to go to work

:16:02. > :16:09.and pick up their children from school. It is not a luxury for most

:16:09. > :16:16.people. It is a necessity. In the Budget, I cut fuel cuty by one

:16:16. > :16:21.penny. The plan was for fuel duty to be 3p higher in January and 5

:16:21. > :16:26.pence higher by August next year. That would be tough for working

:16:26. > :16:32.families. So despite all the constraints upon us we are able to

:16:32. > :16:36.cancel the increase in January. Taxes on pets roll will be a full

:16:37. > :16:43.10p lower than it would have been without our action in the Budget

:16:43. > :16:47.this autumn. Families will save �144 on filling

:16:47. > :16:54.up the average family car by the end of next year. In this tough

:16:54. > :16:58.time, we are helping where we can. Mr Speaker, all that we are doing

:16:58. > :17:03.today, sticking to our deficit plan to keep interest rates as low as

:17:03. > :17:08.possible, increasing the supply of credit to pass those low rates on

:17:08. > :17:12.the families and businesses. Rebalancing our economy with an

:17:12. > :17:16.active enterprise policy and new infrastructure. Help with the cost

:17:16. > :17:23.of living on fuel duty and rail fares. All this takes Britain in

:17:23. > :17:27.the right direction. It cannot... Mr Speaker, it cannot transform our

:17:27. > :17:32.economic situation overnight. People in this country understand

:17:32. > :17:36.the problems that Britain faces. They can watch the news any night

:17:36. > :17:42.of the week and see for themselves the crisis in the eurozone and the

:17:42. > :17:46.scale of the debt burden we carry. And people know, people know that

:17:46. > :17:51.the promises of quick fixings and more spending this country can't

:17:51. > :17:56.afford at times like this are like the promises of a quack doctor

:17:56. > :18:00.selling a miracle cure. We do not offer that today. What we offer is

:18:00. > :18:03.a Government that has a plan to deal with our nation's debts to

:18:03. > :18:08.keep interest rates low. A Government determined to support

:18:08. > :18:12.businesses and support jobs. A Government committed to take

:18:12. > :18:18.Britain safely through the storm. Leadership for tough times. That's

:18:18. > :18:23.what we offer and I commend this statement to the House.

:18:23. > :18:31.STUDIO: That was the Chancellor of the Exchequer of the Exchequer

:18:31. > :18:37.sitting down. We'll now hear from Ed Balls. Mr Speaker, let me start

:18:37. > :18:41.by thanking the Chancellor of the Exchequer... THE SPEAKER: Order. I

:18:41. > :18:45.ask the right honourable gentleman to resume his seat. I said very

:18:45. > :18:50.clearly that people shouldn't shout and yell at the Charlotte. He

:18:50. > :18:55.should be heard in respectful quiet, as the public would hope. The same

:18:55. > :19:01.goes for the reaction to the Shadow Chancellor. Let's try to operate at

:19:01. > :19:04.the level of events. Mr Ed Balls. Thank you Mr Speaker. Let me start

:19:04. > :19:09.by thanking the Chancellor of the Exchequer for advance notice of his

:19:09. > :19:13.statement. And the Office for Budget Responsibility for ensuring

:19:13. > :19:18.that the Chancellor is today setting out to this House the truth

:19:18. > :19:25.about the state of the British economy and the truly colossal

:19:25. > :19:29.failure of the Chancellor's plan. Mr Speaker, let us be clear what

:19:29. > :19:36.the OBR has told us today. The Chancellor couldn't quite bring

:19:36. > :19:42.himself to say it himself. Growth flat lining down this year, next

:19:43. > :19:48.year and the year after, unemployment rising, well over �100

:19:49. > :19:54.billion more during than the Chancellor planned a year ago. More

:19:54. > :20:00.during than the plan which the Chancellor inherited at the last

:20:00. > :20:07.general election, Mr Speaker. And as a result, his economic and

:20:07. > :20:13.fiscal strategy is in tatters. After 18 months in office, the

:20:13. > :20:19.verdict is in: plan A has failed and it has failed close ally, with

:20:19. > :20:23.prices rising, with unemployment soaring, families, pensioners and

:20:23. > :20:27.businesses already know it is hurting. And with billions more in

:20:27. > :20:33.borrowing to pay for rising unemployment, today we find out the

:20:33. > :20:39.truth. It is just not working. Mr Speaker, the Prime Minister likes

:20:39. > :20:47.to say you can't borrow your way out of a crisis. Can the Chancellor

:20:47. > :20:50.confirm that is exactly what he has been forced to do? Higher during to

:20:50. > :20:55.pay for the criess in growth and jobs in Britain, the higher

:20:55. > :20:59.unemployment and the higher benefits bill that his failing plan

:20:59. > :21:05.has delivered. Mr Speaker, the Chancellor's out of touch and

:21:05. > :21:10.complacence hubris of a year ago now seems such a distant memory.

:21:10. > :21:17.The Prime Minister boasted Britain was out of the danger zone. The

:21:17. > :21:25.Chancellor claimed the UK was a safe haven. But we though the truth.

:21:25. > :21:28.Cutting too far and too fast has backfired. And every one of the

:21:28. > :21:31.Chancellor's claims of a year ago have completely unravelled. Mr

:21:32. > :21:38.Speaker, it is not as if they weren't warned, including by their

:21:38. > :21:42.coalition colleagues. Before the election, we said, like every

:21:42. > :21:47.country after the global financial crisis, we had to get our deficit

:21:47. > :21:52.down. And that meant tough decisions on tax and spending cuts.

:21:52. > :21:57.The question is not if you do it but how you do it. Which is why we

:21:57. > :22:03.on this side of the House warned if you try and cut spending and raise

:22:03. > :22:07.taxes too far and too fast you risk choking off recovery, pushing up

:22:07. > :22:12.unemployment and borrowing. We said the Chancellor's plan was reckless.

:22:12. > :22:18.He was ripping out the foundations of the House leaving our economy

:22:19. > :22:22.not safe but badly exposed to the growing storm. Let me remind the

:22:22. > :22:27.Chancellor what the managing director of the International

:22:27. > :22:32.Monetary Fund warned this summer. She said slamming on the brakes too

:22:33. > :22:36.quickly will hurt the recovery and worsen job prospects. And what has

:22:36. > :22:41.happened? Consumer and business confidence has slumped in the last

:22:41. > :22:47.year. Our recovery was choked off over a year ago. Since last year,

:22:47. > :22:51.slower growth than any other G7 country, than Japan. And they had

:22:51. > :22:55.an earthquake, Mr Speaker. Unemployment at a 17-year high.

:22:55. > :23:00.Over 1 million young people out of work. And today the news that

:23:00. > :23:06.growth this year will in the be the 2.3% the Chancellor so confidently

:23:06. > :23:11.predicted in the June Budget this year, but just 0.9%. And growth

:23:11. > :23:16.lower next year than this year, Mr Speaker, and lower than forecast in

:23:16. > :23:24.the year after. The fourth time the OBR has downgraded his growth

:23:24. > :23:28.forecasts in just 18 months. Mr Speaker, now today we learn that

:23:28. > :23:33.even judged by the one objective this Chancellor set himself - to

:23:33. > :23:39.get the deficit down - he is failing. Because with lower growth

:23:39. > :23:46.and rising unemployment, pushing up the cost of failure, can the

:23:46. > :23:53.Chancellor confirm that compared to his Autumn Statement a year ago

:23:53. > :23:58.borrowing is now not set to be the 46th billion pounds more than they

:23:58. > :24:05.said it would be in March? Can he confirm, compared to his plans of a

:24:05. > :24:13.year ago he is now going to borrow a staggering �158 billion more in

:24:13. > :24:19.borrowing? Higher borrowing than he promised a year ago. �158 billion

:24:19. > :24:24.more in borrowing. And can he also confirm, despite the pain of the

:24:24. > :24:29.�40 billion of extra spending cuts and tax rises, the Chancellor

:24:29. > :24:33.boasted about a year ago, can he confirm that compared to the plan

:24:33. > :24:39.he inherited from the previous Government at the last election,

:24:39. > :24:43.and commitment is higher, can he confirm that he is going to be

:24:43. > :24:47.during more at the end of this Parliament than the balanced plan

:24:47. > :24:57.he inherited from the Labour Government, Mr Speaker? That's a

:24:57. > :25:04.fact. Mr Speaker, a year ago, the Prime Minister told the CBI in five

:25:04. > :25:08.years' time we will have balanced the books. Not some kind of dodgy

:25:08. > :25:15.rolling target but a clear commitment to eliminate the deficit

:25:15. > :25:21.by 2015. Can the Chancellor tell the House, will he meet his fiscal

:25:21. > :25:25.mandate to eliminate the structural deficit by 2015? Isn't the truth Mr

:25:25. > :25:29.Speaker, with unemployment up, and borrowing up, going further and

:25:29. > :25:34.faster has been utterly counter predictive and self defeating? It

:25:34. > :25:39.has backfired. We've had all of the pain and none of the gain, Mr

:25:39. > :25:45.Speaker. I have to say, these OBR forecasts show the Chancellor's

:25:45. > :25:51.entire economic and fiscal strategy is now in complete disarray. And

:25:51. > :25:55.yet all we get are excuses. Blaming anyone and anything, the Labour

:25:55. > :26:04.Government, the snow, the Royal Wedding, the Japanese earthquake,

:26:04. > :26:09.higher inflation, VAT, the eurozone, low-paid dinner ladies and teaching

:26:09. > :26:15.assistants. Anybody but himself, Mr Speaker. When it is the Chancellor

:26:15. > :26:18.that is to blame, it is his failing plan that has pushed up

:26:18. > :26:25.unemployment and pushed up borrowing. It is his reckless

:26:25. > :26:30.gamble that has made things worse in Britain, not better, Mr Speaker.

:26:30. > :26:35.Of course, if eurozone countries continue to fail to sort out their

:26:35. > :26:41.problems it will have an impact here. But Britain's economic

:26:41. > :26:48.recovery was choked off a year ago, before the euro crisis. Look at the

:26:48. > :26:52.OBR forecast. They've downgrade growth in Britain this year they've

:26:52. > :26:56.upgraded growth in the euro area. Out of 27 countries in the European

:26:57. > :27:01.Union only Greece, Portugal and Cyprus have grown more slowly than

:27:01. > :27:05.Britain in the last year. Very to say, Mr Speaker, it is not only not

:27:05. > :27:11.too late for the Chancellor to change course. The deepening euro

:27:11. > :27:14.crisis makes it even more important that he sees sense. But instead, he

:27:14. > :27:20.is still clinging to the fantasy that any change of course would

:27:20. > :27:25.make things worse. And he still complains to the illiterate fantasy

:27:25. > :27:30.that low, long-term interest rates in Britain are a sign of enhanced

:27:30. > :27:36.credibility and not as they were in Japan in the 1990s or America today

:27:36. > :27:42.a sign of stagnant growth in our economy. This summer the head of

:27:42. > :27:46.the IMF warned the Chancellor, growth... THE SPEAKER: However long

:27:46. > :27:50.it takes, the situation is very simple, the Shadow Chancellor will

:27:50. > :27:58.be heard. That's all there is to it. Thank you Mr Speaker, they don't

:27:58. > :28:01.like it, but in is the truth, Mr Speaker. This summer, they set up

:28:01. > :28:07.the OBR. Maybe they should listen to their forecasts Mr Speaker. This

:28:07. > :28:10.summer, the head of the IMF warned the Chancellor, growth is necessary

:28:10. > :28:15.for fiscal credibility. But the Chancellor says a change in his

:28:15. > :28:19.plans would lead to a loss of credibility, even as he is forced

:28:19. > :28:24.today to confirm that this growth and during targets are now wildly

:28:24. > :28:30.off track, Mr Speaker. Last month, the IMF advised the Government, and

:28:30. > :28:36.let me quote. If activity were to undershoot current expectations and

:28:36. > :28:39.risk aperiod of stagnation or contraction, countries that face

:28:39. > :28:45.history ically low yields, for example Germany and the UK, should

:28:45. > :28:49.also consider delaying some of their planned consolidation. Mr

:28:49. > :28:52.Speaker, with the world darkening and with today's news that in

:28:52. > :28:56.Britain we are set to see stag understand growth not just this

:28:56. > :29:01.year but next, let me ask the Chancellor. Isn't it now time for

:29:01. > :29:04.him to listen to the IMF? How much worse does it have to get? How many

:29:04. > :29:07.more young people have to lose their jobs? How many more

:29:07. > :29:13.businesses have to go bankrupt? How many more times does Select

:29:13. > :29:17.Committee to come here and downgrade his growth forecasts and

:29:17. > :29:22.upgrade his borrowing forecast. How many more billions in borrow doing

:29:22. > :29:29.we need to pale for failure before this Chancellor finally sees sense?

:29:29. > :29:36.Mr Speaker, these would be difficult times for any Chancellor.

:29:36. > :29:41.But our fear is that, once again, the Chancellor is making a

:29:41. > :29:45.catastrophic error of judgment. He is refusing to learn the lessons of

:29:45. > :29:50.history or economics. He is refusing to shift to a more

:29:50. > :29:55.balanced plan. He got it wrong 18 months ago. He is getting it wrong

:29:55. > :29:59.again today, Mr Speaker. Repeating the mistakes he made last year will

:29:59. > :30:04.only make things worse. Isn't it now time to listen to the IMF, to

:30:04. > :30:07.cut taxes, to have a slower pace of spending reduction. Isn't it time

:30:07. > :30:12.for him to change course before it is too late? What to we have

:30:12. > :30:17.instead, Mr Speaker, a cobbled together package of growth measures

:30:17. > :30:21.which he must know and which the OBR forecast confirms do not

:30:21. > :30:27.address the fundamental problem that his rapid reckless and

:30:27. > :30:30.deflationary plan is choking off recovery and pushing up during.

:30:30. > :30:34.Mr Speaker, we've been here before. This is the third emergency growth

:30:34. > :30:44.package in a year. The last thing our economy needs is yet another

:30:44. > :30:44.

:30:44. > :30:50.Honourable members do not have to take my word for it. Let's look at

:30:50. > :30:56.the OBR's own forecast. Do they think the Chancellor's plans will

:30:56. > :31:03.boost growth? No. They have revised growth down for next year. And in

:31:03. > :31:08.the following year it down from 2.9% to 2.1%. Does the OBR think

:31:08. > :31:15.the Chancellor's plans will cut unemployment? Let me tell the House

:31:15. > :31:21.two things from the OBR forecast which the Chancellor decided not to

:31:21. > :31:30.tell us. Unemployment is not only higher next year than this year,

:31:30. > :31:35.but higher the year after as well. And employment is expected to fall

:31:35. > :31:39.by 100,000 next year, Mr Speaker. We were promised a game changing

:31:39. > :31:42.statement, a great plan that would secure recovery. Instead we have a

:31:42. > :31:46.plan for growth which leads to lower growth and higher

:31:46. > :31:54.unemployment, Mr plan. It is not game changing, it is just more of

:31:55. > :31:58.the same. He has announced a new youth jobs fund. But let me ask him

:31:58. > :32:04.why did he ever abolished the Future Jobs Fund in the first

:32:04. > :32:09.place? They abolished it in their first month in office. The new plan

:32:09. > :32:13.will not be up and running until the middle of next year. He claims

:32:13. > :32:19.to have increased the Bank levy. So why is the cutting taxes on banks

:32:19. > :32:22.this year compared to last year? Down from 3.5 billion last year to

:32:22. > :32:28.2.5 billion this year. Why doesn't he cut of the bonuses and do

:32:29. > :32:34.something proper about youth jobs? He has announced a sensible halt to

:32:34. > :32:38.the fuel duty rise. But can he confirm as a result of last

:32:38. > :32:48.January's VAT rise that motorists are paying three pence per litre

:32:48. > :32:52.more on petrol, Mr Speaker. He has relabel credit easing, but why did

:32:52. > :32:57.you wait so long and why did he put his faith in the Project Merlin

:32:57. > :33:02.deal which has patently failed and as the Bank of England confirms

:33:02. > :33:06.today has seen net business lending fall over the last year? And as for

:33:06. > :33:10.his equally belated decision to set up a new infrastructure fund, this

:33:10. > :33:19.from the same chance or that that abolished the building schools for

:33:19. > :33:23.the future programme. -- the same Chancellor. How much of this new

:33:23. > :33:27.investment has been pre-announced? How much will happen this year and

:33:27. > :33:31.next year? How much of it is actually pre-announced funding for

:33:31. > :33:35.the next spending review after the next general election? Can he

:33:35. > :33:40.confirm that this new of budget infrastructure fund will be subject

:33:40. > :33:45.to a National Audit Office value for money test to make sure that

:33:45. > :33:51.projects are not more expensive for the taxpayer than direct Government

:33:51. > :33:53.borrowing? He has also announced a rebate for energy intensive

:33:53. > :34:02.industries to correct the chaos caused by his botched carbon floor

:34:02. > :34:07.price. He has reinstated just 10% of his plan for housing. As we

:34:07. > :34:10.study the small print, despite all the bluster of the new measures,

:34:10. > :34:14.because this Chancellor is so determined not to break from his

:34:14. > :34:20.failing plan, is once again giving with one hand and taking with the

:34:20. > :34:27.other. How are these new growth measures being paid for by hitting

:34:27. > :34:35.families and savers, Mr Speaker? How much will has cut in tax

:34:35. > :34:38.credits cost a working family on average income? -- will his cut.

:34:38. > :34:47.And is the Chancellor still meeting the Prime Minister's pledged to

:34:47. > :34:52.deliver real term rises in NHS spending this Parliament? Is the

:34:52. > :34:57.Government still hitting women harder than men? Are they still

:34:57. > :35:02.increasing Child poverty and not reducing it? Living he has already

:35:02. > :35:10.cut childcare support by �1.5 billion, busy helping women that

:35:10. > :35:15.want to go to work or is the making it harder? -- is he helping? If we

:35:16. > :35:21.are all in it together, why is it always families, women and children

:35:21. > :35:25.are paying the price? It is clear that the Chancellor's plan is not

:35:26. > :35:35.working. The OBR knows it, the markets know it, the IMF knows it,

:35:35. > :35:42.we know it. So increasingly did the Chancellor's coalition colleagues.

:35:42. > :35:46.His arch-rival the Mayor of London certainly knows it. We know why the

:35:46. > :35:55.Chancellor cannot change course. We know why he cannot accept the IMF's

:35:55. > :36:01.advice. We all know why even as the euro crisis deepens, even as he is

:36:01. > :36:11.borrowing �158 billion more than he planned, this cider political

:36:11. > :36:15.Chancellor will not budge. -- so political. He knows that he has got

:36:15. > :36:19.the economic judgments of this Parliament catastrophically wrong.

:36:19. > :36:25.If after just 18 months, his plan is leading to falling growth,

:36:25. > :36:29.rising unemployment, and �158 billion more in borrowing, the

:36:30. > :36:37.country either needs a new Chancellor or any plan, a balanced

:36:37. > :36:43.and credible plan on jobs, growth and the deficit. We need a real

:36:43. > :36:47.plan for jobs, growth and deficit reduction. Labour's five point plan

:36:47. > :36:53.for jobs, growth and deficit reduction. I have to say, Mr

:36:53. > :36:57.Speaker, protecting our economy, businesses, jobs and family

:36:57. > :37:02.finances is more important than trying to protect a failed economic

:37:02. > :37:06.plant. For his sake, for his party's sake, and in the national

:37:06. > :37:13.interest, the Chancellor needs to change course and he needs to do so

:37:13. > :37:18.now. The Chancellor of the Exchequer.

:37:18. > :37:21.Ed Balls replying to the Chancellor. We are leaving the House of Commons

:37:21. > :37:26.now. If you would like to watch the Autumn Statement debate which now

:37:26. > :37:33.follows, you can do so by watching BBC Parliament or going to the

:37:33. > :37:37.Democracy Live website. Just before we continue with our Budget

:37:37. > :37:42.coverage, there have been dramatic events in Teheran. Dozens of young

:37:42. > :37:45.Iranian men have entered the British embassy building in the

:37:45. > :37:51.Iranian capital, throwing rocks, petrol bombs and burning documents

:37:51. > :37:54.looted from offices. According to Iranian news agencies, British

:37:55. > :38:00.staff are having to flee from the back of the embassy. We will keep

:38:00. > :38:05.you up to date with that as we go on. Back to the Autumn Statement.

:38:05. > :38:09.Was it an Autumn Statement or a miniature Budget? Was it a full-

:38:09. > :38:12.blown Budget? The second this year. It sounded like that, as he went

:38:12. > :38:17.through his announcements were lower growth and more borrowing

:38:17. > :38:22.than he had planned and more public spending cuts to come even after

:38:22. > :38:32.the next election. And also tide continued control of public sector

:38:32. > :38:33.

:38:33. > :38:39.pay. -- tight, continued control. It was a very busy statement indeed.

:38:39. > :38:44.Economic growth, bringing down at the debt, and unemployment. He is

:38:44. > :38:49.saying that the economy will grow by less than 1%, 0.9%, this year.

:38:49. > :38:53.It will be even worse in 2012, 0.7. He said there would not be a

:38:53. > :39:01.recession but when growth is that low, it is not far off and for many

:39:01. > :39:11.it will feel like a recession. It begins to pick up, too 0.1% in 2013,

:39:11. > :39:12.

:39:12. > :39:18.2.7% in 2014. -- do 0.1% in 2013. Normally growth is predicted to be

:39:18. > :39:21.about 3% in four years time, so do not take too much notice of that.

:39:21. > :39:26.He then taught about the part of the budget deficit which does not

:39:26. > :39:31.go away with economic growth, which has now increased. It will take

:39:31. > :39:36.longer to get that down. Let's move on now to what follows from that,

:39:36. > :39:44.the borrowing forecast as a result of lower growth. He is now going to

:39:44. > :39:48.borrow in this current financial year of �127 billion. That is about

:39:48. > :39:58.five more than he had anticipated in the next budget. Next year it

:39:58. > :40:00.

:40:00. > :40:06.goes down but not by much. By 2014- 15 it is down to 79 billion. Even

:40:06. > :40:10.by 2015, these are new figures, 53 billion is still being borrowed. By

:40:10. > :40:17.my quick calculation, by this financial year and the financial

:40:17. > :40:23.year ending in 2016, the Chancellor will be borrowing �101 billion more

:40:23. > :40:31.than he had planned, even in the March Budget. The Government debt

:40:31. > :40:37.as a percentage of our GDP is expected to peak in 2014-15 at

:40:37. > :40:41.around 70%. That is the way the British Government measures it. Lot

:40:41. > :40:45.of announcements about infrastructure spending, as we had

:40:45. > :40:49.expected in this Autumn Statement Budget. The Chancellor confirmed

:40:49. > :40:52.there would be �5 billion of additional public spending on

:40:52. > :40:59.infrastructure over the next three years. He rattled off a host of

:40:59. > :41:03.things, new roads, the Trans Pennine railway, railway schemes,

:41:03. > :41:07.35 of which have been given the go- ahead. There would be �1.2 billion

:41:07. > :41:11.of additional public money for school building. This is not

:41:11. > :41:17.additional spending. He has found money from elsewhere in the

:41:17. > :41:26.Government's massive budget and moved it from current spending into

:41:26. > :41:28.infrastructure. There is also relief in terms of transport. The

:41:28. > :41:33.3p feel duty increase planned for January this coming year was

:41:33. > :41:40.cancelled. He has said that the increase will go ahead in August,

:41:40. > :41:50.2012, but he might change his mind in the March November -- March

:41:50. > :41:52.

:41:52. > :41:58.Budget, I suppose. The RPR it will -- rail fares will go up but not by

:41:58. > :42:06.as much as was planned. He will also help small businesses and

:42:06. > :42:09.medium-sized ones. There will be a loan guarantee scheme to give more

:42:09. > :42:17.borrowings to the SME sector. He said he would raise that ceiling if

:42:17. > :42:21.there was a demand. There is a �1 billion business finance

:42:21. > :42:24.partnership for mid-sized companies. And he will continue the labour

:42:24. > :42:29.market deregulation, basically making it easier and cheaper to

:42:29. > :42:33.fire people. More on the business side. �1 billion extra for the

:42:33. > :42:37.regional growth fund. That only covers England, headed by Michael

:42:37. > :42:44.Heseltine. The business rate holiday is extended from October,

:42:44. > :42:54.2012, to April, 2013. That is relief for businesses. And tax

:42:54. > :42:55.

:42:55. > :42:59.relief for investments in small start-up firms. If you put in

:42:59. > :43:04.100,000, it will only cost you 50,000, even if you do not pay tax

:43:04. > :43:09.at that higher rate. Housing is one of the main areas that the

:43:09. > :43:12.Chancellor hopes to get some great back into the economy. He has

:43:12. > :43:16.proposed �400 million to kick-start building projects that already have

:43:16. > :43:20.planning permission but have not started. 300,000 homes have

:43:20. > :43:24.planning permission but they are not being built and this is an

:43:24. > :43:27.attempt to get that going. There is also the mortgage guarantee scheme

:43:27. > :43:33.for first-time buyers, which will make it easier for first-time

:43:33. > :43:38.buyers to get a mortgage for that first leg up onto the property

:43:38. > :43:43.ladder. There will be increased discounts available under the

:43:43. > :43:47.right-to-buy scheme, introduced many years ago by Margaret Thatcher.

:43:47. > :43:52.How do you pay for all of that in the longer term? The Chancellor had

:43:52. > :44:01.some savings to announce, too. The rise in the state pension age has

:44:01. > :44:04.been brought forward to 2026. We will all have to work until 67. And

:44:04. > :44:09.the public sector going on strike tomorrow of course, tough news for

:44:09. > :44:16.them. They know their pay is frozen at the moment and it will only rise

:44:16. > :44:21.by 1% per year after the current pay freeze, which essentially

:44:21. > :44:27.knocks out collective bargaining in the public sector. And elements of

:44:27. > :44:30.the working tax credit will be frozen. That is not all that was in

:44:30. > :44:38.this statement, but it is what we have been able to glean as the main

:44:38. > :44:41.headlines. Nick Robinson, I don't know where to start! This is the

:44:41. > :44:45.statement that George Osborne never wanted to make, which he feared

:44:45. > :44:50.making. It is a statement which is not only totally grimmer for him

:44:50. > :44:56.because he may have to make another one in the March budget which could

:44:56. > :45:00.be even worse. It showed us there is pain today. Tax credits are

:45:00. > :45:04.frozen for many people. There is pain tomorrow. Public sector

:45:04. > :45:08.workers will see that once the pay freezes over in 2012, that they

:45:08. > :45:17.will move not to another freeze but a limit on the total public sector

:45:17. > :45:22.pay bill of 1%. And for anybody over the age of 52, -- under the

:45:22. > :45:32.age of 52, they will have to work until they are 67 to get the state

:45:32. > :45:36.

:45:36. > :45:41.Ed Balls, of course, therefore had the territory to say effectively,

:45:41. > :45:45."We told you so and you should change course." And yet he is going

:45:45. > :45:51.to borrow a lot more, which is what Ed Balls him to do in the first

:45:51. > :45:56.place. Indeed, as we said with Stephanie before the speech, there

:45:56. > :46:01.is almost a convergence between what Labour was demanding and what

:46:01. > :46:07.Mr Osborne has now been forced to do. There is on the outturn. What I

:46:07. > :46:13.mean by that is Ed Balls would say he wouldn't have started here, as

:46:13. > :46:18.he wouldn't have started to fast and borrowing would will lower.

:46:18. > :46:23.George Osborne would say if you had started where Ed Balls wanted there

:46:23. > :46:29.would have been higher interest rates. So yes they converge but

:46:29. > :46:34.from different routes. One fact for you, a striking one. The OBR,

:46:34. > :46:37.Office for Budget Responsibility, estimate the number of public

:46:37. > :46:43.sector job losses there'll be. The important thing is that the

:46:43. > :46:53.Government have now told us that the spending cuts will go on beyond

:46:53. > :46:55.

:46:55. > :47:01.the election into 2015 16 - to 710,000. Before that they forecast

:47:01. > :47:06.around 400,000 going up to 2016. That's a cumulative total. And at a

:47:06. > :47:12.time when given the growth projections, it is not exactly

:47:12. > :47:16.clear the private sector is going to create another 750,000 jobs.

:47:16. > :47:21.That's the worry. The expectation is that they will, the private

:47:21. > :47:25.sector, take that in later years. But the really striking figure, the

:47:25. > :47:32.economic number, was the big down growth in economic growth to less

:47:32. > :47:37.than 1% for next year. Stephanie, what is striking to me, since the

:47:37. > :47:40.Government has made such a centre of its economic strategy the

:47:40. > :47:50.reduction every year in the amount it hat to borrow, it continues to

:47:50. > :47:56.reduce but it is going to borrow a lot more, by my calculations over

:47:56. > :48:01.�100 billion between this year and the end of 1015-16. Won't that

:48:01. > :48:06.ratle the bond markets a bit? going to be an interesting test

:48:06. > :48:10.isn't it? People were expecting to see higher borrowing numbers. It is

:48:10. > :48:13.interesting to remember that long debate we were all watching that a

:48:13. > :48:19.year-and-a-half ago, the debate over whether Labour's plans were

:48:19. > :48:24.going to command the confidence of the financial markets. The exhibit

:48:24. > :48:27.A from the Osborne side and from the Governor of the Bank of England

:48:27. > :48:31.is you couldn't be credible about reducing a deficit this large and

:48:31. > :48:36.still saying you are going to borrow in the region of �70 billion

:48:36. > :48:39.to �80 billion. The belief was you had to have promised to balance the

:48:39. > :48:45.books over the course of a Parliament, because you couldn't

:48:45. > :48:48.commit future Governments to doing that. The symbolism of that in the

:48:48. > :48:51.new borrowing forecasts quite significant. The world has changed.

:48:51. > :48:58.George Osborne says borrowing would have been even higher under Labour,

:48:58. > :49:04.and I suspect Ed Balls would say something different. And the debate

:49:04. > :49:07.is over whether growth would have been higher with a less austere

:49:07. > :49:11.policy. It is an interesting point about the bond market, because the

:49:11. > :49:15.US for example has the very bad borrowing figures and it is

:49:15. > :49:18.borrowing at a very low rate. It is finding it cheaper to borrow than

:49:18. > :49:21.the UK is. On the other hand if you look at countries borrowing less

:49:21. > :49:23.than news the eurozone, they are having a difficult time, because

:49:23. > :49:26.their governments are note considered to be credible. I

:49:26. > :49:29.suspect we'll hear more about the market reaction and whether or not

:49:29. > :49:34.the low rate of borrowing that the Government has, the low cost that

:49:34. > :49:39.it is paying for its borrowing, is a reflection of cost in the market

:49:39. > :49:46.or is it a reflection that we are not expected to grow very fast and

:49:46. > :49:50.these are worrying times for the global economy. Robert, we had �1

:49:50. > :49:56.billion here, �1 billion there. In a sense it was budget with the

:49:56. > :50:01.content of Gordon Brown and the delivery of Iain Duncan Smith.

:50:01. > :50:07.harsh, Andrew. It certainly did have a lot of the flavour of the

:50:08. > :50:11.Gordon Brown budgets and pre-Budget statements. George Osborne did say

:50:11. > :50:16.the Autumn Statement was just supposed to be a description of

:50:16. > :50:21.where the economy is going. But we've had loads of the

:50:21. > :50:25.microadjustments of the economy that he used to criticise Gordon

:50:25. > :50:29.Brown for doing every six months. This is very much a meddling mini

:50:29. > :50:34.Budget in that sense. It is important given that Gordon Brown

:50:34. > :50:38.and George Osborne set themselves targets, and therefore one should

:50:38. > :50:41.hold them to account. An interesting paragraph in the Office

:50:41. > :50:44.for Budget Responsibility's report. It says, in the absence of

:50:44. > :50:49.additional policy measure in this the 2011 Autumn Statement, we

:50:49. > :50:54.believe the Government would have had a less than 50% chance of

:50:55. > :50:59.achieving its debt targets. What does that mean? The OBR is saying

:50:59. > :51:04.that George Osborne has flunked the debt targets. It is as close as an

:51:04. > :51:10.organisation ever gets to saying that. It's a significant critique

:51:10. > :51:17.of his earlier Budget. Crucially what the OBR are saying is that

:51:17. > :51:21.unless he transferred from date spending -- day-to-day spending to

:51:21. > :51:26.capital infrastructure, he would have breached his own targets. One

:51:26. > :51:30.of those involves dealing with current spending. So switching from

:51:30. > :51:37.one heading to another heading made the difference of whether George

:51:38. > :51:42.Osborne had the human imiation of saying I missed my -- humiliation

:51:42. > :51:47.of saying, "I missed my target.". To be clear, in terms of this

:51:47. > :51:54.difficult judgment he has to make about whether or not to press ahead

:51:54. > :51:58.with deficit reduction, some trougling news out of America, --

:51:58. > :52:03.troubling news out of America. Fitch is reviewing whether to

:52:03. > :52:08.downgrade the US from AAA. The Chancellor will say look, if I

:52:08. > :52:13.weren't taking this tough action there's a risk we would lose our

:52:13. > :52:16.AAA and borrowing costs would go up significantly. We've been

:52:16. > :52:24.struggling to get hold of copies of the budget book. The numbers we

:52:24. > :52:28.need to compare is the �22 whole in interest he says he is saving by

:52:28. > :52:32.being austere with the increase in unemployment benefit payments.

:52:32. > :52:41.Politically that will be terribly important. Most people would say

:52:41. > :52:46.those are payments for failure. had a lot of these rail programmes,

:52:46. > :52:52.roads wide ened, and this phrase from America, shovel-ready. When

:52:52. > :52:57.you speak to business people is there such a thing as a shovel-

:52:57. > :53:04.ready job? It takes weeks and months from giving aproful for

:53:04. > :53:11.these things to happen in terms of people being employed and money go

:53:11. > :53:15.into the economy. Business leaders all take the view the best way, if

:53:15. > :53:18.the Government is going to do anything to stimulate growth, is

:53:18. > :53:21.indeed to spend on infrastructure. Within the business community and

:53:21. > :53:24.the City, if they are looking at measures to stimulate growth, what

:53:24. > :53:28.he is doing in terms of infrastructure will receive a

:53:28. > :53:32.degree of enthusiastic support. We'll be back to you three a lot

:53:32. > :53:36.more to talk about yet. We are on until 3 o'clock. We've got plenty

:53:36. > :53:42.to cover in what was a packed Autumn Statement. If you want to

:53:42. > :53:45.comment on the Chancellor's statement you can do so by going to

:53:45. > :53:55.bbc.co.uk/news and click on Have Your Say.

:53:55. > :53:57.

:53:57. > :54:04.Or if you are tweeting, use the # - @bbceconomy Jon Sopel is outside

:54:04. > :54:09.Parliament. He is going to gather political reaction to this

:54:09. > :54:12.statement. I'm joined by Lord Ashdown, Alistair Darling, the

:54:12. > :54:19.former Chancellor and Michael Fallon of the Conservative Party.

:54:19. > :54:24.Michael Fallon, growth down, borrowing up. Retirement age going

:54:24. > :54:27.up and a public sector cap on pay. Is there anything to be cheerful

:54:27. > :54:31.about? Yes, I think what the Chancellor reassured us about was

:54:31. > :54:35.he is still sheltering Britain from this storm that's engulfing the

:54:35. > :54:40.rest of Europe, that he is doing his best to help families through

:54:40. > :54:46.it at a time of rising prices and we are still on course to meet our

:54:46. > :54:50.deficit reduction plan, just beyond the end of this Parliament we will

:54:50. > :54:56.have got rid of the structural deficit. But borrowing a huge

:54:56. > :55:02.amount of money. Everybody knows we had much higher inflation than was

:55:02. > :55:07.anticipated. There is the slowdown in the eurozone. But overall we are

:55:07. > :55:11.still going to meet our targets, our main date and get our deficit

:55:11. > :55:17.back under controlling. Which is what they inherited from you. Night

:55:17. > :55:22.looks like the struful deficits will disappear about the plan we

:55:22. > :55:26.planned -- structural deficits. The growth forecast that the Chancellor

:55:26. > :55:30.made in his budget in the summer of last year has completely fallen

:55:30. > :55:34.away. We are talking about growth now having died at the end of last

:55:34. > :55:37.year. It is going to flat line for another two or three years. There

:55:37. > :55:40.is not a shred of evidence to suggest why it is going to recover

:55:41. > :55:45.the year after. We are borrowing more, not less,s which is the one

:55:45. > :55:50.thing the Government said it was going to balance the books by 2015.

:55:50. > :55:54.Clearly it is not now. But isn't the reason for that nothing to do

:55:54. > :55:59.with this Government but is to do with the eurozone itself? All of

:55:59. > :56:05.this happened after the crisis became acute in this eurozone. The

:56:05. > :56:08.economy grew in 2009 until the autumn of 2010, then it stopped. Of

:56:08. > :56:12.course the eurozone crisis is going to make things very difficult for

:56:12. > :56:19.us. Many of us have been saying for months now that unless it is sorted

:56:19. > :56:23.out it really will have a very profound effect on us. But to blame

:56:23. > :56:28.everything on the last Government's spending when the Government

:56:29. > :56:32.supported that spending up until 2008 and on Europe is getting

:56:32. > :56:34.disingenuous. A judgment was made on George Osborne 12 months ago

:56:34. > :56:38.that. Judgment is way off course now. We are borrowing much more

:56:38. > :56:41.than they intended to, which is completely against everything he

:56:41. > :56:47.said only last summer. Paddy Ashdown, pick up on that. It is not

:56:47. > :56:51.true. We all know the euro crisis started much, much earlier. You

:56:51. > :56:57.asked what there was to be cheerful about. Thanks to Labour, we are now

:56:58. > :57:01.running a bigger debt as a percentage of GDP than the Italians.

:57:01. > :57:05.That's what the inheritance left behind. And we are paying interest

:57:05. > :57:08.rates lower than the Germans. Why? Because the country and the markets

:57:08. > :57:11.are convinced we are serious about cutting the deficit. Labour's

:57:11. > :57:18.answer to a crisis created by borrowing is to borrow even more.

:57:18. > :57:24.said that the Chancellor has had to borrow more than they thought he

:57:24. > :57:28.would But Labour's answer is to borrow even more. It is un sporable.

:57:28. > :57:31.If there is one thing the country should be grateful for is it

:57:31. > :57:41.doesn't have a Labour Government still in power which would be

:57:41. > :57:45.

:57:45. > :57:50.damaging more -- borrowing more and damaging hospitals. ALL TALK AT

:57:50. > :57:53.ONCE Your party supported us until right up into the election. Unless

:57:53. > :57:57.you get growth you can't get the borrowing down. Did you welcome

:57:57. > :58:02.what was announced in terms of the infrastructure projects? Die, but

:58:02. > :58:08.with the proviso that many of these things were announced I think you

:58:08. > :58:11.will find by successive Governments. It takes a long time to get these

:58:11. > :58:15.going. I welcome them but the present Government will have to

:58:15. > :58:18.change the planning laws, or you won't see the new roads and the

:58:18. > :58:22.investment which is welcome. A word of caution. It is very frustrating

:58:22. > :58:26.but it takes a long time to see these things on the ground. We are

:58:26. > :58:30.changing the planning laws, but there was a huge package of

:58:30. > :58:34.infrastructure measures to bring forward spending, to help growth,

:58:34. > :58:38.on roads on railways, on school building with. All those things,

:58:38. > :58:41.which are good for construction, but also good for regions outside

:58:41. > :58:45.the South East. There was also a package of measures to help

:58:45. > :58:50.families through this era of rising prices from, for example freezing

:58:50. > :58:54.the council tax again, stopping the increase in fuel duty which he

:58:54. > :58:59.pence ild in year after year. And helping rate commuters, which is

:58:59. > :59:08.important here in London and the South East. There was good finger

:59:08. > :59:13.pointing there from Michael Fallon. ALL TALK AT ONCE Every Chancellor

:59:13. > :59:16.has to reach a judgment on fuel dutyy, on taxes and so on.

:59:16. > :59:20.Understandably George Osborne has said with the prices they are at

:59:20. > :59:24.the moment he wanted to do something there. You support it?

:59:24. > :59:28.course I support something that reduces the burden. If you look at

:59:28. > :59:30.the squeeze on tax credits, if you look at the squeeze on people's

:59:30. > :59:33.incomes I think most people watching this programme, most

:59:34. > :59:37.people reading the papers tomorrow morning, will find their incomes

:59:37. > :59:42.are going to continue to be squeezed with. Unemployment is

:59:42. > :59:45.likely to be up. Employment is likely to go down, according to the

:59:45. > :59:48.Office for Budget Responsibility. We are in for a grim time but it is

:59:48. > :59:52.exacerbated by the bad decisions taken by this Government at the

:59:52. > :59:57.start. Let me let the new Conservative

:59:57. > :00:03.speak. We supported their spending cuts but why don't they now support

:00:03. > :00:10.them? Here is the bottom line. support what I proposed. Hang on a

:00:10. > :00:14.second. For every �18 the coalition is cutting in public expenditure

:00:14. > :00:18.his plan is to cut �17. We understand the cuts that have to be

:00:18. > :00:23.made. Labour is in a position of self denial over their own Budget

:00:23. > :00:29.cutting. The differences that you parade are

:00:29. > :00:33.exaggerated. That there isn't a huge difference in policy. Oh, Jon,

:00:33. > :00:38.come on. If we risk by 0.5 a percentage point the interest rates

:00:38. > :00:45.we are now enjoying having to pay back the debt they left behind,

:00:45. > :00:55.kite cost you �5 billion, not the schools, hospitals and pensions but

:00:55. > :01:01.

:01:01. > :01:06.Here's another big difference. They would increase the VAT, I'm not

:01:06. > :01:11.sure Alistair supports that. Let's ask him. There's lots of people,

:01:11. > :01:14.not just within the Labour Party, saying we need to boost demand,

:01:14. > :01:19.demand is suppressed at the moment. Everyone agrees that the deficit

:01:19. > :01:23.has to be brought down. I made that clear prior to the last election,

:01:23. > :01:29.I've never changed my view on that, but we've got to do it in a way

:01:29. > :01:35.that actually works. All I would say is George Osborne has had to

:01:35. > :01:41.sit down conceding that he's borrowing �150 billion more than

:01:41. > :01:47.what he said. You'd borrow even more. I have to call stumps. This

:01:47. > :01:52.argument will continue. Back to the studio. A couple of headlines as we

:01:52. > :01:56.go through this detailed paperwork. The UK Office for Budget

:01:56. > :02:03.Responsibility has raised its estimate of public sector job

:02:03. > :02:09.losses from 400,000 to 710,000. That's not far off a 100% increase

:02:09. > :02:19.in its estimate. That's a lot. And also UK net debt, this is what we

:02:19. > :02:20.

:02:20. > :02:30.used to call the national debt, by 2015/16 will now be �1.47 billion -

:02:30. > :02:36.

:02:36. > :02:41.sorry � 1 47 billion. Call it �1.5 trillion. That will be our national

:02:41. > :02:47.debt and that's 11 billion more, 8% more than the Chancellor forecast

:02:47. > :02:51.only back in March. That's a lot of debt. And a lot of an increase. Now,

:02:51. > :02:57.one of the Chancellor's key measures, of course, was that he

:02:57. > :03:02.would stay on course for deficit reduction. He wants to show the

:03:02. > :03:08.suspensionial money markets he's still sticking to plan A. But

:03:08. > :03:13.although borrowing continues to fall it is at a much slower rate

:03:13. > :03:17.and we're racking up debt. What does the City think of that. Back

:03:17. > :03:21.to Maryam. A bit of a muted response from the

:03:21. > :03:28.City. Largely to do with the fact that a lot of the measures were

:03:28. > :03:37.announced over the last few days. Let's look at the markets. That is

:03:37. > :03:43.what the FTSE has been doing. A little sell-off ones people started

:03:43. > :03:46.digesting the figures. Earlier today we saw a drop in guilts. A

:03:46. > :03:52.sign that the markets were convinced by the Chancellor's

:03:52. > :03:59.arguments. But now they have risen back up more to do with the high

:03:59. > :04:03.yields on Italian bonds. Let's bring in Louise Cooper from BCG

:04:03. > :04:09.partners. Are you happy with what the Chancellor had to say today?

:04:09. > :04:14.was always quite restricted on what he could announce today because

:04:14. > :04:19.he's in coalition with the liberal democrats, so politically he's

:04:19. > :04:24.constrained and financialcally he's constrained and we knew the figures

:04:24. > :04:30.would be downgrated and that means the situation is far worse. A lot

:04:30. > :04:34.of it was preannounced. There was a few extra bells and whistles in the

:04:34. > :04:38.statement but really it's not a huge surprise and you can see that

:04:38. > :04:43.by the financial reaction. And Jane, the important things you wanted to

:04:43. > :04:48.see was the Chancellor sticking to his austerity plans but coming up

:04:48. > :04:53.with fresh ideas for growth. Has he delivered? There were a few little

:04:53. > :04:57.bits and pieces with respect to consumption on the margin, but

:04:57. > :05:01.really this was about austerity as far as the City is concerned. And

:05:01. > :05:05.you can see that from the guilts market. But we need to put this in

:05:05. > :05:10.context and the context is out of the eurozone debt crisis and the

:05:10. > :05:18.Chancellor therefore needed to reassure the markets that he wasn't

:05:18. > :05:21.going to out step those austerity announcements he'd already

:05:21. > :05:25.announced and from the point of view of the international markets

:05:25. > :05:31.that really is the whole point. I suppose the muted reaction from

:05:31. > :05:36.the City has a lot to be said for it, but the City does realise that

:05:36. > :05:39.coming up in the coming weeks and months it is darkening prospects

:05:39. > :05:46.for both business and finance. And that is one thing they can take

:05:46. > :05:56.from today's statement. Thanks, we'll see how long it stays

:05:56. > :06:01.muted. You're watching the BBC's special coverage of George

:06:01. > :06:11.Osborne's Autumn Statement This is what he had to say. He forecast

:06:11. > :06:11.

:06:11. > :06:18.growth of 0.9%. The Government expects to borrow �11 billion more

:06:18. > :06:21.over the next five years, taking total borrowing to not much shy of

:06:21. > :06:26.�1.5 trillion. Government debt as a percentage of

:06:26. > :06:31.our national wealth is reckoned to peak at 2014/156789

:06:31. > :06:36.Let's look at some of the costly bits of the statement to the

:06:36. > :06:44.Treasury. The duty fuel increase of 3p has been cancelled. That was due

:06:44. > :06:49.in January. There will be an additional �5 billion spending on

:06:49. > :06:54.infrastructure. That's searching down every sofa in Whitehall to see

:06:54. > :06:58.if there is any loose change. And tax relief for small start-up

:06:58. > :07:04.firms. The state pension age is going to

:07:04. > :07:09.go to 67, as it always was, now earlier, 2026. The public sector,

:07:09. > :07:15.which over a certain level of income is now enduring a pay freeze.

:07:15. > :07:19.When that's over, well, they can look forward to no more than 1%

:07:19. > :07:24.rise after the freeze is over. And there have been elements of the

:07:24. > :07:28.working tax credit has also been frozen. That's only part of what is

:07:28. > :07:35.in the Budget. I call it a Budget because, in a sense, it is pretty

:07:35. > :07:40.much a Budget. We've been joined by Danny Alexander, the Chief

:07:40. > :07:47.Secretary to the Treasury. Welcome. This forecast for growth of 0.7%

:07:47. > :07:51.next year, which is pretty much close to zero, does that include

:07:51. > :07:57.taking into account all the measures the Chancellor has

:07:57. > :08:00.announced today? Well, the observia forecast takes into account

:08:00. > :08:04.measures that relate to further spending cuts at the end of the

:08:04. > :08:09.period. What they're not able to take into account is the impact on

:08:09. > :08:12.growth of many of the supply reforms we're pushing through.

:08:13. > :08:15.That's something that economic forecasting can't reach. But it

:08:15. > :08:20.certainly takes into account the spending decisions that we've made

:08:20. > :08:26.and the impact. And you're right to say, of course, that is a much

:08:26. > :08:30.lower figure than was forecast previously. It reflects, as the OBR

:08:30. > :08:34.themselves say, the much tougher conditions faced in this country

:08:34. > :08:38.and in the eurozone but is in line very much with growth forecasts for

:08:38. > :08:42.France, Yemeni, Italy, the eurozone and other countries around the

:08:42. > :08:52.world. But even after all this search for measures to boost growth,

:08:52. > :08:53.

:08:53. > :08:57.which be -- we began to hear after your party conference, after all

:08:57. > :09:02.these funds have been reallocated and all the assurance that this was

:09:02. > :09:07.a Government that believed in growth and getting the economy

:09:07. > :09:13.going, but taking all that into accounts the growth is a net effect

:09:13. > :09:16.of 0.7%. Many of the measures announced today, the credit easing,

:09:16. > :09:20.the investment in infrastructure and the youth jobs scheme, all

:09:20. > :09:25.these things, the effect will be felt not just next year but in

:09:25. > :09:30.future years as well. The effect of additional infrastructure spending

:09:30. > :09:34.will support the economy for a very long time to come. But you must be

:09:34. > :09:40.disappointed that that is all they're producing, surely? You were

:09:40. > :09:50.meant to deliver a Budget for growth and all we get is 0.7%, and

:09:50. > :09:50.

:09:50. > :09:53.if we're lucky, a big if, 2% next year. You'll find a welcome for the

:09:53. > :09:56.investment in infrastructure and the finance packages and many other

:09:56. > :10:02.things there that will support growth, particularly in the medium-

:10:02. > :10:07.term. One of the things the OBR has done today, as well as telling us

:10:07. > :10:12.about the problems in the eurozone and the high commodity price,

:10:12. > :10:16.they've said that the economy as a whole is smaller and that's why

:10:16. > :10:20.these sorts of supply side reforms are important to lift the economy

:10:20. > :10:24.potential over the long-term. understand that, but whatever way

:10:24. > :10:29.you cut it and even after all that has been announced today, the blunt

:10:29. > :10:32.truth is that we are staring austerity in the face for the

:10:32. > :10:36.foreseeable future? It is definitely true that we are facing

:10:36. > :10:41.much slower growth. We're facing very tough conditions and we've

:10:41. > :10:45.made very clear today, by setting out our spending plans for the two

:10:45. > :10:49.years of the next Parliament, that, if you like, the pattern of

:10:49. > :10:55.spending reductions and fiscal consolidation we've seen in this

:10:55. > :10:59.Parliament will roll on for two years in order to mike sure we meet

:10:59. > :11:04.our objectives. It's austerity. Particularly if you're in the

:11:04. > :11:11.public sector. It's austerity? is further spending constraint. We

:11:11. > :11:18.haven't set out what mix of policies we'll use in 2050/16/17.

:11:18. > :11:21.But it is right to say this country will be facing further fiscal

:11:21. > :11:25.consolidation and austerity for two further years in order to make sure

:11:25. > :11:30.we deal with the enormous financial problems we face as a country. But

:11:30. > :11:34.it is important to say this is delivering real benefits to Britain

:11:34. > :11:37.in terms of the low interest rates and we're avoiding many of the

:11:37. > :11:41.problems people see on the television screens every single day

:11:41. > :11:46.from Italy and Spain and many of our other competitors. But when the

:11:46. > :11:51.Chancellor, your boss, told us last year, "Britain's economic row

:11:51. > :11:56.coverry is on track" that wasn't true? Was it? Well, one of the

:11:56. > :12:01.reasons, Andrew, why we set up in the first place the independent

:12:01. > :12:05.Office for Budget Responsibility was precisely because - hold on,

:12:05. > :12:10.let me answer the question, because we wanted those forecasts to be in

:12:10. > :12:15.independent hands rather than the hands of ministers. So you have the

:12:15. > :12:20.OBR's forecast of last June....He Said this in the Autumn Statement

:12:20. > :12:26.last year, just a year ago,, "Britain's economic recovery is now

:12:26. > :12:31.on track." And I simply ask you, that wasn't true, was it? There are

:12:31. > :12:35.big factors going on in the economy that are affecting our ability to

:12:35. > :12:40.grow. High commodity prices, oil prices have increased by 40% over

:12:40. > :12:45.the last year, that slows growth. Like wise the problems in the

:12:45. > :12:50.eurozone, in our major competitors, that is having both an effect on

:12:50. > :12:54.our growth potential but as the on yar say in their report, the

:12:54. > :13:00.eurozone countries still need to sort out those problems otherwise

:13:00. > :13:05.we won't get the growth this country needs. The on yar gives you

:13:05. > :13:09.a smoke screen. It's not a smoke screen because we have independent

:13:09. > :13:16.figures for the first time. I'm not saying the Chancellor lied last

:13:16. > :13:25.autumn I'm just saying he turned out, whether it was the on yar or

:13:25. > :13:30.Uncle Tom Cobbley. What I'm saying now is, is it true? What true?

:13:30. > :13:33.the British economy is on track? have a plan to make our economy

:13:33. > :13:38.stronger. This Autumn Statement was about two things, about protecting

:13:38. > :13:42.our country from the huge risks that have grown substantially from

:13:42. > :13:47.the other economies and making our economy stronger. We have the on

:13:47. > :13:51.yar's best efforts to work out growth forecast for the coming

:13:51. > :13:55.years and I accept those forecasts and they are much less, you're

:13:55. > :14:01.right to say than they forecast previously. But is the British

:14:01. > :14:04.economy on track for recovery now? The British economy is on track to

:14:04. > :14:08.deal with our deficit and grow in the future. So what we have is a

:14:08. > :14:12.forecast, which is very difficult this year, it's very difficult next

:14:13. > :14:18.year and growth picks up in the following year, so yes, we're on

:14:18. > :14:24.track to pick up in the following years. You've announced a lot on

:14:24. > :14:34.spending and shovel-ready jobs, and roads here and rail here, and all

:14:34. > :14:34.

:14:34. > :14:42.the rest of it, are we all Dickensians now? I would not accuse

:14:42. > :14:47.you of that now. I would say what we recognise as a Government, both

:14:47. > :14:50.liberal democrats and Conservatives is one of the things that has eld

:14:51. > :14:55.us back in recent years is the quality of our infrastructure. We

:14:55. > :15:00.are 28th in the world. That is simply not good enough for a

:15:00. > :15:05.country like the yubgdz. That's why investment in road and rails is the

:15:05. > :15:11.sort of thing we need to be doing in this country. It's perfectly

:15:11. > :15:21.clear that you've brought into the argument a bit more job ceection

:15:21. > :15:26.

:15:26. > :15:30.and infrastructure is valuable at stage. How confident are you?

:15:31. > :15:37.confident that the OBR forecast is the best estimate we have for what

:15:37. > :15:42.is happening to the economy next year. I can't sit here telling you

:15:42. > :15:47.we will definitely a void the eurozone circumstances, because

:15:47. > :15:52.there is so much uncertainty in the economy. But the OBR's forecast is

:15:52. > :15:57.the best estimate we have. And what I am certain of is the measures the

:15:57. > :16:01.Government has taken in terms of investing and getting the new-build

:16:02. > :16:09.housing sector going will help build the economy in the year to

:16:09. > :16:16.come. Nick. Lots of people will be worried about tax credits. Have you

:16:16. > :16:20.made an estimate of what it will cost in those circumstances?

:16:20. > :16:25.give a big inflation-linked increase to people out of work, but

:16:25. > :16:32.those people in work but struggling, you freeze their benefits? So we

:16:32. > :16:37.are spending overall, this coming year, �8.3 billion on the uprating

:16:37. > :16:41.of benefits this year. That is more than forecast when we originally

:16:41. > :16:45.made those decisions. We've focused on protecting the poorest people in

:16:45. > :16:53.the country, those on out of work benefits and children through the

:16:53. > :17:03.child tax credit. People on working tax credit will principally benefit

:17:03. > :17:04.

:17:04. > :17:10.from this. This is an e-mail from a viewer Patricia says, "Why should

:17:10. > :17:14.people out of work be given a 5.2% pay rise? My husband works full

:17:14. > :17:20.time and he hasn't had a penny pay rise in four years." What do you

:17:21. > :17:26.say to her? I'd say benefits have always been uprated by inflation.

:17:26. > :17:31.That, almost every single year falls behind earnings, which is the

:17:31. > :17:36.other measure we could have used. We want to make sure that the

:17:36. > :17:43.lowest incomes, people who have lost their jobs and working hard to

:17:43. > :17:48.get back into work are protected through this. But if you were...but

:17:48. > :17:55.if you don't work you get 5%. people on the tax credit by and

:17:55. > :17:59.large will be recipients of other credits, 80% will be receiving

:17:59. > :18:03.child credits and housing benefits which are upgraded in the normal

:18:03. > :18:07.way. This seems to me to be the best way to control costs whilst

:18:07. > :18:12.having a group, yes, it's tough. I recognise it's a tough decision,

:18:12. > :18:16.but through other things we're doing we're also helping those

:18:16. > :18:20.people too. Can I ask about the fiscal rules and the importance of

:18:20. > :18:24.sticking to them. We've heard the Chancellor talking about touting

:18:24. > :18:29.the flexibility of the rules, but it is crucial for the markets to be

:18:29. > :18:37.seen to be meeting the rules. And the second rule is that debt has to

:18:37. > :18:42.fall as a share of GDP and the new forecasts show that happening, but

:18:42. > :18:46.it is minuscule it goes to 7.7% of GDP. The Chancellor himself said

:18:46. > :18:49.the forecasts will be worse if there is a recession in the

:18:50. > :18:54.eurozone. Many people think there is already a recession in the

:18:54. > :18:59.eurozone and he's behind the times. In six months's time, when he has

:18:59. > :19:04.to stand up with the Budget are you going to announce tough spending

:19:04. > :19:07.cuts? We do attach very great importance to sticking to the

:19:07. > :19:13.fiscal rules we've set out last you're quite right to say the debt

:19:13. > :19:23.target is to have debt falling by the year '50/16. What we've

:19:23. > :19:25.

:19:25. > :19:30.announced today is tougher spending in the year '50/16 and '16/17 to

:19:30. > :19:36.make sure we get it under control. The goal for debt is a path, as you

:19:36. > :19:46.say, rather than a level. We need to get debt coming down. We have to

:19:46. > :19:47.

:19:47. > :19:51.leave it there. We'll let you get back to preparing

:19:51. > :19:54.these contingency plans for the eurozone meltdown. Thank you.

:19:54. > :20:00.has the Chancellor's statement gone down with business people,

:20:00. > :20:06.particularly in Merseyside? That's where we are. Our reporter, Judith

:20:06. > :20:10.Moritz is at the Cammell Laird shipyard. Yes, I am. I have the

:20:10. > :20:17.protective glasses on because we're inside the apprentices' school here.

:20:17. > :20:23.Some are doing a bit of pipe welding. 85 apprentices on site and

:20:23. > :20:26.many more start. It is a successful story when it comes to-out

:20:26. > :20:31.employment here, the kind the Chancellor would hold up. But how

:20:31. > :20:41.did the announcements go down with business people from this region

:20:41. > :20:41.

:20:41. > :20:46.and beyond. Natalie Hayward from a tea bar in Liverpool. And Max

:20:46. > :20:51.Steinberg. Natalie, we'll talk to you first of all. You own a pretty

:20:51. > :20:59.small business in Liverpool. Did the Chancellor say what you wanted

:20:59. > :21:04.to hear? I think there were a few positive things. We have to see

:21:04. > :21:09.whether businesses will have to jump through hoops to get credits

:21:09. > :21:14.that he's announced. Relaxing regulations in employment law and

:21:14. > :21:20.health and safety is obviously very good for an employer. And capping

:21:20. > :21:25.fuel prices ultimately benefits us all. So that was quite welcome as

:21:25. > :21:29.well. What about the extension on the business rates will that affect

:21:29. > :21:32.you personally? No, one of the things he does need to do is make

:21:32. > :21:36.that applicable to all businesses because I don't benefit from that

:21:36. > :21:42.at all in any way. I know it's obviously good for small businesses

:21:42. > :21:47.but it needs to be applied across the board in my opinion. Liverpool

:21:47. > :21:51.wants to attract investment to this area did you hear what you wanted

:21:51. > :21:55.to? You talk about small businesses, like Natalie's do you think the

:21:55. > :22:00.Chancellor said the right things? There were a lot of good things in

:22:01. > :22:06.the Budget, it turned out, in my view to be a mini Budget. In terms

:22:06. > :22:11.of small businesses, I think small businesses are still struggling to

:22:11. > :22:16.borrow money. And the talk is fine. What I need to see it is working on

:22:16. > :22:20.the ground. That small businesses can go to banks and barrow. It's

:22:20. > :22:25.the small and medium-sized enterprises that are going to

:22:25. > :22:28.provide the jobs in the future. I was delighted to hear about the

:22:28. > :22:35.infrastructure investment. That's good for Liverpool and the north-

:22:35. > :22:45.west. It fits into our plans to create an intrapresentairial

:22:45. > :22:48.

:22:48. > :22:53.atmosphere in Liverpool. We'll be celebrate ing winning the

:22:53. > :22:58.enterprise prizes next year. But the economy is still extremely

:22:58. > :23:06.parlous and I think will we will be going through difficult times in

:23:06. > :23:09.the next few years. I think perhaps a year has gone by and we've missed

:23:09. > :23:13.an opportunity. We need to invest in this economy. The Government can

:23:13. > :23:19.help with that. Some of the money will be released now and some in a

:23:19. > :23:22.few years' time. I hope to build on what has been announced today and

:23:22. > :23:29.if we can create a better infrastructure in this country,

:23:29. > :23:36.it's good for UK plc. Steve, you run a road haulage

:23:36. > :23:41.company so presumably for you the fact that the 3p fuel duty has been

:23:41. > :23:49.dropped must be welcome? It's welcomed but I still don't think

:23:49. > :23:57.it's enough to stimulate the economy. If you look abroad, some

:23:57. > :24:06.fuel prices are still 20p to 50p cheaper than in the UK.

:24:06. > :24:10.We still need cuts on fuel. Thank you very much. To sum up. People

:24:10. > :24:14.here saying they heard some of what they wanted to, but not everything,

:24:14. > :24:21.but that's the thing, you can't please everybody all of the time.

:24:21. > :24:24.Well' be back here later in the programme to speak to more business

:24:25. > :24:28.people and see if they heard what they wanted to from the Autumn

:24:28. > :24:32.Statement. That's the view in Merseyside. Let's go back to the

:24:32. > :24:38.view in Westminster from Jon Sopel who is still outside Parliament.

:24:38. > :24:42.Thank you very much. I'm joined by the shadow chief secretary to the

:24:42. > :24:46.Treasury. The Government set the stage pretty much for what was

:24:46. > :24:52.coming. Was there anything that surprised you? I have to say, I was

:24:52. > :24:57.really surprised by the borrowing figures. To have to borrow an extra

:24:57. > :25:03.�158 billion to what was previously planned that's bad news and a sign

:25:03. > :25:07.of economic failure. Because the reason they're borrowing so much

:25:07. > :25:10.more is because unemployment is higher than expected and growth

:25:10. > :25:15.continues to flat line and inflation is higher as well. And we

:25:15. > :25:18.warned the Government 18 months ago if you cut too far and too fast you

:25:18. > :25:24.risk choking off the economic recovery and that's exactly what

:25:24. > :25:29.we're seeing because if you have more people out of work you are

:25:29. > :25:34.paying more in Belfast and more businesses failing. So you you're

:25:34. > :25:41.saying that the Government are now borrowing too much? Yes, you have

:25:41. > :25:47.to reduce the deficit but in a balanced way. But if they hadn't

:25:47. > :25:52.cut the borrowing would have been even higher? But if you have more

:25:52. > :25:56.people back at work you'll have more paying taxes. Yes, tax

:25:56. > :26:00.increases and spending cuts but but have to have jobs, because unless

:26:00. > :26:04.you have people in work paying taxes you're not going to reduce

:26:04. > :26:09.the deficit. And that's what we're seeing now, the cost of economic

:26:09. > :26:13.failure is more people out of work, but also higher Government

:26:13. > :26:18.borrowing and we've seen both of those today. But the world has

:26:18. > :26:22.changed in the past 18 months. There was not a euro crisis of the

:26:22. > :26:27.proportions we're seeing today? that's true but we also said don't

:26:27. > :26:31.rip out the foundations of the house. Because when a hurricane is

:26:31. > :26:35.brewing you're not in a position to with stand a storm and that's what

:26:35. > :26:39.we're seeing now because our economic recovery was choked off

:26:39. > :26:43.before the euro crisis. But also, unless you've got the jobs and the

:26:43. > :26:47.growth plan, then when a crisis does come along you're blown out of

:26:47. > :26:53.the water and that's what we're seeing now with the increases in

:26:53. > :26:59.borrowing, coupled with the increases in unemployment. It feels

:26:59. > :27:04.like a hurricane here just as you started talking about it. I'll talk

:27:04. > :27:09.about the sunshine next! Government's argument was that the

:27:09. > :27:13.reason it is having to do so much now is that you didn't repair the

:27:13. > :27:20.roof when the sun was shining, that there were all those years of

:27:20. > :27:25.plenty and Labour carried on spending like crazy. Up until 2008

:27:25. > :27:32.the Government and the liberal democrats were backing the

:27:32. > :27:38.Government's spending plans. It was Labour's choice in 2007 to increase

:27:38. > :27:42.our borrowing to avoid the home repossessions we saw in the early

:27:42. > :27:47.'90s. Yes, of course, now we need to start reducing that deficit but

:27:47. > :27:51.what the Government are finding is if you cut too far and too fast you

:27:51. > :27:56.choke off the economic recovery and as a result you can't bring down

:27:56. > :28:03.borrowing because you're paying more out on higher unemployment and

:28:03. > :28:07.less coming in in taxes because more businesses are failing.

:28:07. > :28:11.There were some announcements on investment in infrastructure, what

:28:11. > :28:15.did you think of that? There are a number of things today that are the

:28:15. > :28:20.right thing to do, but if you ask are they making any difference the

:28:20. > :28:24.OBR is the arbiter of that and the OBR have assessed the Government's

:28:24. > :28:29.plans and revised down their forecasts for this year, next year

:28:30. > :28:33.and the year after and revised upwards the unemployment. So I

:28:33. > :28:38.don't think they're doing enough to get the economy back on track to

:28:38. > :28:43.create the jobs we need. If they did have a comprehensive plan I

:28:43. > :28:48.believe we would get the economy moving again and the deficit down.

:28:49. > :28:55.But isn't that what they've done today? No, because you've just

:28:55. > :28:59.moved money to pay others. Rob be Peter to pay Paul.

:28:59. > :29:04.There's no new money for any of these initiatives. They're moving

:29:04. > :29:14.from one pot to another and as a result the OBR say that it's not

:29:14. > :29:30.

:29:30. > :29:35.We have seen the eurozone crisis develop.

:29:35. > :29:41.What you see in the forecast is they revised up their forecast for

:29:41. > :29:51.growth in the eurozone this year. That tells us a lot about what the

:29:51. > :29:52.

:29:52. > :29:55.Chancellor is doing here. So too are the Chancellor's

:29:55. > :30:03.decisions to cut so far and deep, which has choked off the economic

:30:03. > :30:07.recovery. If you had been in the recovery and you had been writing

:30:07. > :30:13.this Autumn Statement it would have been higher? We called for a cut in

:30:13. > :30:19.VAT and a tax on bankers' bonuses to fund 100,000 jobs. We have been

:30:19. > :30:23.clear we would want to reTuesday the deficit. Halving the deficit --

:30:23. > :30:27.reducing the deficit. Halving the deficit. That approach will ensure

:30:27. > :30:30.we have the growth in the jobs we need, while taking tough decisions

:30:31. > :30:35.to reduce the deficit. This Government tried to go further and

:30:35. > :30:39.faster and they have not succeeded. Though you have complained about

:30:39. > :30:44.the borrowing levels, if you had been writing this Autumn Statement

:30:44. > :30:49.borrowing would have been higher? That is a yes or a no? We would

:30:49. > :30:53.have reduced the deficit at a slower pace. We know you need

:30:54. > :30:56.growth and jobs if we reduce the deficit in a sustainable way. What

:30:56. > :31:02.we are finding is the Government are not able to reduce the deficit

:31:02. > :31:08.because they don't have a plan for growths and jobs. That is why it is

:31:08. > :31:11.coming in higher. Instead of paying for failure, paying out more in

:31:11. > :31:16.benefits, we would support businesses to get us through the

:31:16. > :31:21.economic turmoil, put us in a stronger position for jobs, growth

:31:21. > :31:26.and deficit reduction as well. Andrew, back to you in the studio.

:31:26. > :31:30.Thank you. It is 2.30pm, just gone. You are watching the special

:31:30. > :31:40.coverage of the Chancellor's Autumn Statement. Let's bring you up-to-

:31:40. > :31:46.

:31:46. > :31:56.Danny Alexander told this programme he could not rule out a recession

:31:56. > :32:17.

:32:17. > :32:22.Because of these dire economic forecasts, a lot of additional

:32:22. > :32:27.infrastructure spending, there will be �5 billion additional public

:32:27. > :32:37.spending on infrastructure. �5 billion, not a lot in a �1.5

:32:37. > :32:39.

:32:39. > :32:42.As we have been told on this programme, these forecasts for

:32:42. > :32:48.growth, such as it is, already include this spending in the

:32:48. > :32:54.outcome. They won't make things any better.

:32:54. > :33:04.On pensions and benefits, the basic state pension will increase by

:33:04. > :33:15.

:33:15. > :33:19.state pension will increase by D plenty of statements in this

:33:19. > :33:29.Budget. The banking levy will be increased

:33:29. > :33:32.

:33:32. > :33:36.to maintain revenue at �2.5 billion. Almost �1 billion for this new

:33:36. > :33:39.Youth Contract, to tackle unemployment over the three years.

:33:39. > :33:49.Most involving work experience, not jobs.

:33:49. > :33:52.

:33:52. > :33:54.D Now, we are joined by the director of the Institute for

:33:54. > :34:00.Fiscal Studies, Paul Johnson. Welcome to our special programme.

:34:00. > :34:06.One of the things which has not yet been commented on is we've seen a

:34:06. > :34:12.line of public spending cuts between last year, through to 2015

:34:12. > :34:16.and the Chancellor said, there's more coming in 2016 and '17. That

:34:16. > :34:20.is right. The consequence of the terrible growth numbers is that in

:34:20. > :34:24.order to meet his fiscal rules, he's going to have to do two more

:34:24. > :34:28.years of cuts, at essentially the same kind of level he is cutting

:34:28. > :34:36.over this Parliament. We said before five years of cuts of this

:34:37. > :34:42.scale are unprecedented. We will now get seven years of cuts in this

:34:42. > :34:47.scale. Two years of substantial public spending cuts. And one of

:34:47. > :34:50.the Chancellor's aims, that he made much of, was that he would get rid

:34:50. > :34:54.of the structural deficit, that bit of borrowing that doesn't go away

:34:54. > :34:58.even when the economy is growing. He had a target for it. We are

:34:58. > :35:06.going to borrow more than he originally thought. Is it clear now

:35:06. > :35:11.if and when the structural deaf silt does go away? Well, he's --

:35:12. > :35:17.structural deficit does go away? Well, he's only on target to reach

:35:17. > :35:20.it because he's had to do two years of extra cuts. Had he stuck to his

:35:20. > :35:24.previous spending plans he would have missed his target. So, he's

:35:24. > :35:27.had to cut more to meet that target? He's had to take another

:35:27. > :35:32.�15 billion away from public spending in the years after the

:35:32. > :35:38.next election. He has not told us how. He said in his forecast he is

:35:38. > :35:44.taking an extra �15 billion away. That is enough to say he will meet

:35:44. > :35:48.his targets. If he had not penciled that in the OBR would have said you

:35:49. > :35:54.will miss your targets. On the issue of debt, often mixed up with

:35:54. > :35:58.deficit, but it's the I kum lated deficit, the -- the accumulated

:35:58. > :36:04.deficit, the other target was there would be a date, he would add and

:36:04. > :36:07.add and add to debt, then it would become a smaller percentage of our

:36:07. > :36:12.overall national wealth. That was his other goal. What has happened

:36:12. > :36:16.there? Well, he has said he's going to meet that. Obviously the total

:36:16. > :36:21.level is going to reach a higher amount. This was always supposed to

:36:21. > :36:25.be a kind of... Always an odd target, to specify one year in

:36:25. > :36:28.which you are moving to a slightly smaller number. You can muck around

:36:28. > :36:33.with numbers to make that work. He said that will just about happen.

:36:33. > :36:38.That is a less important target than the one we were just

:36:38. > :36:45.describing. On the structural deficit? It means, as you said,

:36:45. > :36:49.there are �100 million or more of extra borrowing. On your analysis

:36:49. > :36:56.and looking at these figures, how do you think this slump compares

:36:56. > :37:00.with previous periods of economic difficulties in terms of people's

:37:00. > :37:06.living standards? It is extraordinary. Compared with what

:37:06. > :37:11.the Budget three or four years ago was expecting t economy will be 13%

:37:11. > :37:16.smaller in 2016. More than 3% smaller than we were thinking six

:37:17. > :37:20.months ago. It is a bit smaller than before the crash? It is still

:37:20. > :37:24.smaller. This is an extraordinary change. One of the consequences of

:37:24. > :37:30.this, this is in the Office for Budget Responsibility figures, is

:37:30. > :37:34.really big real earnings cuts wefplt knew there would be 1% -- we

:37:34. > :37:39.knew there would be 1%. They think 3% this year. And continued falls

:37:39. > :37:45.next year and the year after. People are poorer. A squeeze on

:37:45. > :37:49.living standards. People will be no better off in 2015 than they were

:37:49. > :37:52.in 2001. That is unprecedented. Before the

:37:52. > :37:56.eurozone started to cause problems, one of the reasons the economy did

:37:56. > :38:01.not grow as it was meant to was this squeeze on living standards,

:38:01. > :38:05.that people were not spending as much and tightening their belts.

:38:05. > :38:09.That continues. It is cause and effect, isn't it? If the economy is

:38:09. > :38:13.doing badly then earnings go up less. It means people have less to

:38:13. > :38:17.spend. We are stuck in that uncomfortable position, where we're

:38:17. > :38:21.not going to get a lot driven by growing consumption in the short

:38:21. > :38:24.run. People are still paying down accumulated debt. Not just the

:38:24. > :38:29.Government which has a lot of debt. It is the private sector as well.

:38:29. > :38:33.The thing that strikes me is the politics of this, because I would

:38:33. > :38:39.suggest, Nick, that what it means is whereas this coalition started

:38:40. > :38:43.life in 2010, thinking we'll do all the tough stuff first and the

:38:44. > :38:51.economic cycle will be in kilter, we will hit 2015 with the job done,

:38:51. > :38:55.we are off to the races. They are now totally out of kilter? That is

:38:55. > :38:58.right. It has huge implications. The Chancellor was counting on,

:38:58. > :39:02.just before the next election, saying job done, now we can give

:39:02. > :39:06.you some goodys to reward you in the form of tax cuts. The Liberal

:39:06. > :39:11.Democrats were counting on saying, job done, we no longer have to

:39:11. > :39:14.stick with this coalition, we can present ourselves to the electorate

:39:14. > :39:18.and give them a choice. There is an implication for the Labour Party as

:39:18. > :39:22.well. I suspect, in fact I predict that day after day you will now

:39:22. > :39:27.have George Osborne saying to Ed Balls, these figures, from the

:39:27. > :39:31.Office for Budget Responsibility say you have cuts when you come to

:39:31. > :39:35.power. What l you reverse these cuts and make borrowing worse? The

:39:35. > :39:38.pressure is on. The rules, in other words of the game, have

:39:38. > :39:42.dramatically changed. Even if the economy does not get much worse. If

:39:42. > :39:47.it did, it would change more. That really affects the dynamics of

:39:47. > :39:51.politics and what they say of each other and how they discuss what

:39:51. > :39:58.their plans are for the next election. Robert, when the official

:39:58. > :40:03.fosh cast is 0.7% -- forecast is 0.7%, we know it could be minus

:40:03. > :40:08.0.7% in reality or more - don't you get the feeling that we are on a

:40:08. > :40:15.knife-edge, and that if the wind blows strong from the eurozone, we

:40:15. > :40:20.are over that edge? There's a lot that could go wrong with even this

:40:20. > :40:23.pessimistic forecast. For example, next year the OBR expects a big

:40:23. > :40:28.rise in business investment. Business confidence is shot to

:40:28. > :40:35.pieces at the moment. There is a huge storm blowing in the eurozone.

:40:35. > :40:39.If it goes as badly wrong in the eurozone as many fear it will do,

:40:39. > :40:44.then frankly everything today will feel irrelevant. The size of the

:40:44. > :40:49.economic shot will knock these forecasts for six. The Office for

:40:49. > :40:54.Budget Responsibility does make it absolutely clear that, you know,

:40:54. > :41:01.there are huge risks. What would happen in Europe and the

:41:01. > :41:07.damage which could be done to the banking system. A final thought

:41:07. > :41:10.from you on this? Anything to cheer us up? Not a lot. It is worse than

:41:10. > :41:14.we expected. It is another two years of austerity. As Robert just

:41:14. > :41:18.said, the risks are mostly on the downside.

:41:18. > :41:22.In a way, what you are saying is this is as good as it gets, it

:41:22. > :41:27.could be worse? That is what the OBR are saying. That is what will

:41:27. > :41:32.happen if the eurozone does go up. You are tapping away there. She is

:41:32. > :41:35.sending her report to the IMF! To you have a final thought for us?

:41:35. > :41:39.will tear off because I want to hear what the Office for Budget

:41:39. > :41:43.Responsibility says about this structural change. I think, are you

:41:43. > :41:48.surprised Paul, just to see an independent body, that it has to be

:41:48. > :41:51.said, no-one elected, has had a fundamental impact on this report,

:41:51. > :41:56.it is one that George Osborne intended and many would say is a

:41:56. > :42:01.good thing. They are just as likely to be wrong as the Treasury. The

:42:01. > :42:06.fact they are not politicians, they can still be wrong. It allows

:42:06. > :42:11.politicians to hide behind it. goes both ways. They can blame the

:42:11. > :42:15.bad news on the OBR. They are also stuck with what the OBR has decided.

:42:15. > :42:19.It has decided to be pretty gloomy about what has happened to the

:42:19. > :42:23.economy. This feels like a good thing, actually for the way we run

:42:23. > :42:27.the British economy. These are credible numbers. They may be wrong,

:42:27. > :42:31.they probably will be wrong. Forecasters get it wrong. These are

:42:31. > :42:35.credible. Had we had the Chancellor saying my forecasts are more

:42:35. > :42:38.optimistic than this, then they would not have had that credibility.

:42:38. > :42:41.There's a nasty outcome, but it a east a good thing that the

:42:41. > :42:46.Chancellor is being held to -- it's a good thing that the Chancellor is

:42:46. > :42:51.being held to account. It helps George Osborne to say, not my fault,

:42:51. > :42:55.I am being told to do this. He will use that against Ed Balls. He feels

:42:55. > :42:59.the OBR might be wrong, the Treasury is wrong, he has been

:42:59. > :43:03.proved right on a series of things F he were in the Treasury in a few

:43:03. > :43:08.years' time, he will have a big decision. Will he say, I don't want

:43:08. > :43:13.this independent advise, because it is bad and misleading? Here's a

:43:13. > :43:19.word, he'll keep them. Let's go back to Merseyside to join Judith

:43:20. > :43:23.for more business reaction. Welcome back to the apprentices

:43:23. > :43:31.school here at Cammell Laird. This is a hive of activity. They are

:43:31. > :43:37.doing a bit of pipe welding today. 85 apprentices on site here. I have

:43:37. > :43:41.protective googles on. -- goggles on. We will find out what real

:43:41. > :43:47.employers have to say about the Autumn Statement. I have three

:43:47. > :43:51.joining me. Steve Potter, you are here with business interests which

:43:51. > :43:57.are many and varied. You are here as a solicitor. You advice on small

:43:57. > :44:05.and medium companies and also Nick Hugh, you run a car leasing company.

:44:05. > :44:10.If I can talk to you first. Your business interest ps vary from ship

:44:10. > :44:20.building to funeral burials. A lot of aspects to your business. Did

:44:20. > :44:24.you hear what you wanted to from George Osborne?

:44:24. > :44:29.I am sorry about that, we have lost the line to Merseyside there. When

:44:29. > :44:39.we get it back, we will go straight back up to get more business

:44:39. > :44:39.

:44:39. > :44:42.reaction. We have, in one of our of the CBI, John Cridland and also

:44:42. > :44:46.the General Secretary of the TUC, Brendan Barber. Welcome to both of

:44:47. > :44:49.you. Mr Cridland, let me come to you first. You have a lot of what

:44:49. > :44:53.business wanted - more infrastructure spending and the

:44:53. > :44:57.rest of it. Are your members going to start investing at last? Yes, I

:44:57. > :45:01.think they will. It was grim economic news. If it is grim

:45:01. > :45:05.economic news we have get on with getting the country moving and

:45:05. > :45:12.getting the country working. There is a plan A plus here. The measures

:45:12. > :45:14.on roads, on digital, on energy, on unemployment. On helping with

:45:14. > :45:17.energy-intensive industries, helping mid-size businesses grow. I

:45:17. > :45:20.think they add up to a confidence- building package for the business

:45:20. > :45:25.community. So if businesses do invest and

:45:25. > :45:29.we'll have to wait and see, you are sitting on cash reserves of �900

:45:29. > :45:35.billion at the moment. If you start to put that into the economy, would

:45:35. > :45:45.we do better than the 0.7% growth which the OBR says is all we are in

:45:45. > :45:49.

:45:49. > :45:54.I think it explains why the OBR were more optimistic about growth

:45:54. > :45:58.in 2013 it than they were. We have made a start today. I think it is

:45:58. > :46:01.the private sector that has the money to put to the public sector

:46:01. > :46:05.balance sheet to get things moving when the public sector can't and

:46:05. > :46:10.shouldn't be spending money but it does not have. Brendan Barber, it

:46:10. > :46:18.seems like a pretty grim time if you have a job in the public sector.

:46:18. > :46:23.You are going to lose more jobs, according to the OBR, from 400,000

:46:23. > :46:28.losses to 700,000. You have a pay freeze as well and after all of

:46:28. > :46:32.that you will be lucky to get a 1% rise, which is less than inflation.

:46:33. > :46:39.It is hard pounding. It certainly is. As to say, the prospects are

:46:39. > :46:46.looking particularly grim for their public sector. -- as you save. We

:46:46. > :46:54.were told this pain would be compensated for by private growth,

:46:54. > :46:59.but the forecast has turned to ashes. More heart pounding, as you

:46:59. > :47:02.say, and a massive squeeze on the living standards of the 6 million

:47:02. > :47:07.people working in the public services in particular. It is hard

:47:07. > :47:10.to see what you can do with the public sector. Of course, you can

:47:10. > :47:14.always make changes at the edges, but the fact is that there is a

:47:14. > :47:18.hard pounding for the public sector, even though the Government is about

:47:18. > :47:27.to borrow �111 billion more than it intended and more than Labour has

:47:27. > :47:35.been calling on them to do, and at the end of it all we will be

:47:35. > :47:44.indebted to the tune of 1.5 trillion pounds. These cuts that we

:47:44. > :47:49.were seeing, we were told it would lead to private sector growth which

:47:49. > :47:55.has simply not happened. We have been getting all the pain, with the

:47:55. > :48:01.jobs going, the pay freeze in the public sector, all the pain has

:48:01. > :48:06.been coming but the game has not. Surprise surprise. This is what

:48:06. > :48:11.happened in the 1930s. The lessons of history are clear. Austerity

:48:11. > :48:18.begets more austerity, not growth. In the 1930s we did not have a

:48:18. > :48:23.deficit of 10% of GDP. We already have an enormous Keynesian policy

:48:23. > :48:33.in place and it is not producing growth. But we haven't, have we? We

:48:33. > :48:34.

:48:34. > :48:39.have had a policy of major cards. - - cuts and tax increases. What that

:48:39. > :48:46.has led to is an economy that is virtually flat lining. Unemployment

:48:46. > :48:50.is rising, set to rise even further, up with an even bigger squeeze on

:48:50. > :48:54.living standards stretching into the distance. This is not all the

:48:54. > :48:58.fault of the eurozone. Those problems do not help the situation

:48:58. > :49:03.and they add to the risk going forward but they are not the cause

:49:03. > :49:07.of the problems that we are enduring. One final thing. What did

:49:07. > :49:12.the Chancellor not to today that you would have liked to see? He was

:49:12. > :49:16.not able to wave a magic wand to solve the eurozone crisis. He did

:49:16. > :49:20.not expect that, did you? It is the main reason why growth has been

:49:20. > :49:25.disappointed and if we can get that storm cloud removed, we can get

:49:25. > :49:32.back on the trajectory to growth and jobs. On the shock news that

:49:32. > :49:35.the Chancellor did not have a magic wand, we leave it there. Back to

:49:35. > :49:43.Jon Sopel. Let's get some nationalist reaction

:49:43. > :49:48.from what we have heard today. I am joined by Jonathan Edwards and a

:49:48. > :49:56.spokesperson for the SNP. Were you happy with what we heard? It was a

:49:56. > :50:01.panic statement, a series of interventionist measures. They are

:50:01. > :50:05.recognising that the economy is the key problem. There was a capital

:50:05. > :50:11.reinvestment programme made up of 25 billion from pension funds and

:50:11. > :50:21.also public money. There was Government alone is losing out by

:50:21. > :50:23.

:50:23. > :50:30.1.5 billion. What did you think of it? I agree with him. The growth

:50:30. > :50:34.forecast has dropped from 2.5% in 2012 to 0.7%. Much as the

:50:34. > :50:39.infrastructure investment is welcome, it will not come on stream

:50:39. > :50:49.until after 2012. It will not deal with the immediate problem. As far

:50:49. > :50:51.

:50:51. > :50:54.as the Scottish Government is concerned, we do not know what the

:50:54. > :51:00.Revenue developments will be with the departmental budgets when they

:51:00. > :51:05.are announced. What about the impact of the public sector pay

:51:05. > :51:10.announcements? Pay is raising its ugly head again. Labour tried to

:51:10. > :51:15.introduce this when they were in power and it will have a massive

:51:15. > :51:22.impact on economies like Wales and Scotland. What do you think?

:51:22. > :51:26.Another two years of pay restraint after the current year. Plus the

:51:26. > :51:29.issues of regional pay, which could exacerbate the differences between

:51:29. > :51:34.the South East and other areas of the country, including Scotland,

:51:34. > :51:43.Wales and the North West of England. This is one of the BAFTAs ideas

:51:43. > :51:47.about the Chancellor has come out with so far. -- the most stupid

:51:47. > :51:51.ideas. The policy of the Scottish Government is to look at the euro

:51:51. > :52:00.when the time is right and by referendum of the people. In the

:52:00. > :52:05.Caribbean since we would stick to the pound sterling. If -- in the

:52:05. > :52:10.current instance. If Scotland was independent, we could make

:52:11. > :52:15.decisions that are important to the Scottish economy, rather than

:52:15. > :52:19.waiting for the Chancellor to make decisions. Thank you.

:52:19. > :52:23.How has George Osborne's statement gone down across the United

:52:23. > :52:28.Kingdom? Let's hear from the Northern Irish Economics Editor Jim

:52:28. > :52:32.Fitzpatrick. Anything in this for Northern Ireland? The bombshell is

:52:32. > :52:37.an announcement of a review into the possibility of regional public

:52:37. > :52:41.sector pay. There are 230,000 public sector workers in Northern

:52:41. > :52:45.Ireland and their average pay is currently about 40% more than the

:52:45. > :52:48.average pay in the private sector. You can imagine the starting point

:52:48. > :52:53.for negotiations if there is going to be a regional pay rates set in

:52:53. > :52:57.the public sector and the kind of cuts in pay that people could see.

:52:57. > :53:00.That is a huge issue for Northern Ireland and its economy. Elsewhere

:53:00. > :53:04.there were fears, because of the way the infrastructure projects

:53:04. > :53:12.were being primed with savings from other departments, that that might

:53:12. > :53:15.mean cuts at Stormont. In fact, they will receive �130 million

:53:15. > :53:19.extra from infrastructure spending and they will be up on departmental

:53:19. > :53:22.spending as well. Overall it is good for Northern Ireland. On

:53:22. > :53:26.credit easing for the banks, the situation here is complicated

:53:26. > :53:30.because the Irish Banks are a big factor in Northern Ireland as well.

:53:30. > :53:33.I understand from industry sources, but the detail has not been seen

:53:33. > :53:37.yet, that the major banks in Northern Ireland, UK and Irish

:53:37. > :53:41.banks, will be able to take part in that, which would also be good if

:53:41. > :53:45.they can continue to lend more to businesses. That's the view from

:53:45. > :53:51.Belfast. Let's get more reaction from people involved in business.

:53:51. > :53:57.We are back in Merseyside and we have got rid of the gremlins.

:53:57. > :54:05.Gremlins? I promise you that this was a real-life shipyard. It was a

:54:05. > :54:10.crane at a -- that took us off the air. It sailed in front of our

:54:10. > :54:14.satellite truck. I promised it was a working environment. We have some

:54:14. > :54:21.genuine working people here, taking time out of their businesses to

:54:21. > :54:26.talk about their response to the Autumn Statement. You represent an

:54:26. > :54:31.enormous company with lots of different interests. From retail,

:54:31. > :54:35.to burials, to shipping, what did you make of the state and today?

:54:35. > :54:38.There were lots of large numbers and large programmes announced.

:54:38. > :54:42.They are great initiative, supporting infrastructure and small

:54:42. > :54:46.businesses, with tax relief and things like that, supporting young

:54:46. > :54:52.people back into work. They are all good and what we are waiting for

:54:52. > :54:56.his more detail for those programmes to see how they will

:54:56. > :55:02.play out. We hope that will happen sooner rather than later. Growth

:55:02. > :55:08.will be more or less flat through next year, until 2013. We are

:55:08. > :55:18.seeing it good initiatives but we won some concrete plans. Because

:55:18. > :55:21.

:55:21. > :55:24.your concrete is so diverse... -- Apologies for that. We have lost

:55:25. > :55:30.you again! It is really dangerous in that factory. I hope the crane

:55:30. > :55:37.has not fallen down. One thing that struck me, and I did not get a

:55:37. > :55:45.chance to ask Brendan Barder this and I wish I had, the day before

:55:45. > :55:50.the big strike, the Chancellor it - - has said there will only be a 1%

:55:50. > :55:56.pay rise after the pay freeze. I think the Government thinks it can

:55:56. > :56:00.fight with the unions and win. There will also be a review of

:56:00. > :56:03.regional pay rates. I did not notice that. This was thought of in

:56:03. > :56:09.the 80s and the 90s and every Chancellor has ducked it because it

:56:09. > :56:12.is so controversial. Certain public sector workers do incredibly well

:56:12. > :56:17.compared with private sector workers because they live in an

:56:17. > :56:20.area where wages are lower. But you try changing that! You tell a

:56:21. > :56:24.police officer in Newcastle, a civil servant in Belfast, that we

:56:24. > :56:30.are going to cut your pay because it is not fair in relation to other

:56:30. > :56:34.people in your area. That is hugely provocative. It suggests that the

:56:34. > :56:40.day before the strike, they know they have got a fight. Robert, by

:56:40. > :56:44.the end of this week, we may not be talking about the Autumn Statement.

:56:44. > :56:50.You may be on our screens telling us about the unravelling eurozone.

:56:50. > :56:58.I could be doing that this morning. -- this evening. Italy have record

:56:58. > :57:02.borrowing rates, almost 8%. Several billions of three-year loans.

:57:02. > :57:07.Borrowing for three years is not supposed to be risky. With Italy

:57:08. > :57:13.borrowing at 8%, the markets already closed for the enormous

:57:13. > :57:17.eurozone economy that is so important. The noises out of

:57:17. > :57:22.Brussels is that their plan to launch a big bazooka to help this,

:57:22. > :57:30.a bail-out fund, looks more like an air pistol. The size of his bail-

:57:30. > :57:36.out fund is shrinking. All of this could be close to a relevant. It

:57:36. > :57:40.may all go badly wrong in the eurozone. If it does, frankly, we

:57:40. > :57:44.will be into emergency plans to rescue our banks and most of what

:57:44. > :57:48.we have heard will feel like an interesting but irrelevant story.

:57:48. > :57:52.The one thing we did not find out is what the contingency plans are.

:57:52. > :57:58.I don't think they will be telling you. That is why I did not bother

:57:58. > :58:02.to ask! We have been incredibly gloomy throughout the programme.

:58:02. > :58:07.The Chancellor will say that we are not there yet, and that is the

:58:07. > :58:11.advantage, he will argue, of his policies. Ed Balls will say it is

:58:11. > :58:14.worse that it needed to be, but he will accept we are not in a

:58:14. > :58:17.situation of the eurozone countries. In many ways we have better

:58:17. > :58:21.prospects than the rest of the eurozone and we should not forget

:58:21. > :58:25.that. It has been a pleasure to have you with us on this rocky road.

:58:25. > :58:29.There is plenty more on the BBC News Channel throughout the day,

:58:29. > :58:34.including coverage of the OBR press conference at 3 o'clock, coming up

:58:34. > :58:36.now. There will be more on the latest public sector strikes