The Autumn Statement


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The Autumn Statement

Andrew Neil presents live coverage of George Osborne's Autumn Statement, with expert analysis from Nick Robinson, Stephanie Flanders and Robert Peston.


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The nation's eyes are on George Osborne today as the Chancellor

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unveiled his plans to get Britain's Good afternoon and welcome to this

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BBC special on the Chancellor's Autumn Statement, broadcasting live

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on BBC Two, the BBC News Channel and BBC Online. Forecasters tell us

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the British economy is already back in recession. Unemployment is

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rising, inflation high, living standards squeezed. Today a --

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tomorrow will be the one-day nationwide strike, perhaps the

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first of many. The eurozone crisis moves from the periphery to the

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very core, threatening to engulf the Continent and also Britain in a

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long and deep recession. Some have even spoken of a lost decade. It

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would be hard to imagine a grimmer backdrop for the Chancellor, as he

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prepares an Autumn Statement designed to cushion the downturn

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and knows the economy back to health. Earlier this year George

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Osborne talked privately about doing away with the Autumn

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Statement altogether. It is a measure of the gravity of the

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situation that in just a few minutes he will stand up in the

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Commons to unveil something close to a full-blown Budget, the second

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of the year. We will bring it to you live and uninterrupted from

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12:30pm, including expert analysis from Stephanie Flanders, Nick

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Robinson and Robert Paxton. And we will have reaction from Westminster,

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the City and across the country. am on College Green opposite

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Westminster, where we will be talking to all MPs about what the

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Chancellor could and should do. am on this busy trading floor in

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Canary Wharf, gauging the mood among investors as they eagerly

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await the Chancellor's Autumn Statement and what it means for

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business, the market and growth. And I am at Cammell Laird shipyard

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in Birkenhead, where I will be finding out what it means for

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business and industry on Merseyside The coalition has been in power for

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only 18 months and already they are admitting that sorting out the

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economy is proving much harder than they originally thought. Today will

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be the Chancellor's latest response to its growing difficulties. In the

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next few minutes we are expecting George Osborne to leave the

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Treasury, make his way to the House of Commons. We are told he was

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working on his speech late into the evening last night at Number 11,

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Downing Street, as you would expect, and that it will last for about 45

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minutes. Much of what we are about to here has been judiciously

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announced or already leaked. Rarely has a budget or Autumn Statement

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been so prematurely and intentionally and bailed. I suspect

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to create the impression that the Government is doing all that it can

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to tackle the dark clouds. The darkest cloud is the threat to

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economic growth, which could derail the deficit reduction strategy.

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Since the last Autumn Statement of 2010, the economy has weakened,

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which is why so much of what the Chancellor will say today will be

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about reigniting growth. With a coalition determined to stick to

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deficit targets and the eurozone threatening to scupper everybody's

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growth plans, it is not clear how much of the difference Mr Osborne

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can make. This morning the Deputy Prime Minister Nick Clegg and the

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leader of the Labour Party, Ed Miliband, well, they were at

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getting their messages across. This is what they had to say. We need to

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do absolutely everything we can to promote growth and support

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confidence in the economy at the time when self-evidently the

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economic circumstances in which we live have deteriorated compared to

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what we might have anticipated a year-and-a-half ago. And that is

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what we are doing. All we will see today will be a Chancellor

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announcing higher unemployment, lower growth and higher borrowing.

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The plans are hurting but they are not working. That is why he has to

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change course today, and accept that his plan has failed. And he

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has got to take action to get the economy moving. This is the age of

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the politics of debt and deficit. This is what dominates the economic

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exchanges between Government and opposition. There was a time when

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the coalition concentrated almost solely on his deficit reduction

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strategy. As growth faltered and opposition criticism began to bite,

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it has had to show that they are not just a one-trick pony. I

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suspect that is one of the reasons why they have been leaking like a

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sieve and we know so much already about what the Chancellor will say.

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The reason we know so much is simple, and that is because there

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will only be one headline tonight, which is the depth of a hole that

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Britain is in economically, and the depth of the pain that is still to

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be suffered by people, in addition to the spending cuts and tax rises

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that have already been announced. If you like, the good news, the

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measure designed to get growth going, has been dribbled out over

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the past week because the Chancellor knows that he simply

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cannot compete with the scale of, let's be honest, the awfulness of

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the economic news that we are going to get. Growth down, borrowing up,

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the size of the economic hole bigger, and therefore a series of

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measures, not just today but over the next months and indeed years,

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and crucially beyond the next election, needed to make people get

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less from the state, pay more to make the books balance. And worst

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of all politically for the Chancellor, having to meet the

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Prime Minister's words. He said the books would be balanced in five

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years and they will not be. A lot of what we are about to here will

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only be confirmation of what we already know, that Mr Osborne would

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not be Mr Osborne if he had not kept something juicy up his sleeve.

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He has been something of an early Father Christmas for first-time

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buyers, at rail travellers, construction workers ready for

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shovel-ready jobs, working mothers needing nursery care, young people

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needing a job. He has been trying to sweeten the bitter pill of the

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Autumn Statement. The latest economic forecast on growth, debt,

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and the deficit, from the Office for budget responsibility. I do not

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think there is any good news in any of that. I don't think there will

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be any good news. Cast your mind back to June, 2010. At the time, it

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seemed quite gloomy. We thought the coalition was talking about needing

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to come together, solving an emergency in public finances. That

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looks like the sunny uplands compared to the forecast we are

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looking at now. Going back then, the Independent Office for Budget

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Responsibility was expecting a return to growth, investment, as

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that the economy would be growing by 2.3% and next year by 2.8%. That

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would not actually be very high for a normal recovery, but we are not

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looking at a normal recovery and they had to reflect that in the

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Budget in March. Both of those went down to 1.7% for growth this year,

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and 2.5% for growth next year. But we know now that even those have

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turned out to be very optimistic. We do not know what the new figures

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will be but if you look at what the City is betting for growth, the

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average forecast is for growth this year of just 1% and next year, also

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just 1%. That many years into recovery. And then your forecasts

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are even gloomier than that. newer forecasts. Where does that

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leave a deficit reduction target? Well, not reducing it as fast as

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they wanted to. If you go back to 2010, the OBR thought that public

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sector net borrowing that you would peak at 155 billion. More than 10%

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of GDP and much more than we borrowed in any peacetime period.

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They said under George Osborne's plans that borrowing would fall to

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37 billion by the last year of the Parliament. We know that is going

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to go up because the growth forecasts have gone down. If you

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look at the City forecast, at the average of the forecasters surveyed

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by the Treasury itself, that number is expected to go up to close to a

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2 billion, 77 billion. That is an important number to remember as we

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go through. -- close to 80 billion. What was wrong with Labour's plans

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was that they were still going to be borrowing a 2 billion by the end

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of the Parliament, which was supposed to be a sign of their

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total lack of credibility. -- 80 billion. That gives a new meaning

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to divergence! We will be hearing more about investment in

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infrastructure projects, rails, roads, hospitals and maybe airports.

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The public and private sector is supposed to come up with the money.

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Will there be much of an immediate or short-term impact on growth?

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cannot have much of an immediate impact. Even though there is 5

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billion of spending all this Parliament on infrastructure that

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has been allocated for road projects and that kind of thing,

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you know that it takes a while to get these things going. And the

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weakness is right now. In the best case, we are talking once before

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people are hired, people start saying money in the economy. --

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months before people are hired. The majority of the money that will

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come from it will not come for years and years. 20 billion of it,

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provided by pension funds in theory, we do not know how that will in

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practice be delivered. Both sides had good intentions. Pension funds

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want to provide this money. But having observed pension funds in

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practice over many years, getting money out of them is not easy.

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most important audience for the Chancellor today is not you, me or

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the MPs in the Commons. It is the bond markets, the folks sat at home

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and abroad buy and sell our Government's debt. They have been

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prepared to accept very low yields and interest rates for British debt

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while the cost for other countries has gone through the roof. They

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will be worried that low or no growth could derail or delayed

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deficit reduction. Let's get a sense of what the markets are

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looking for. Maryam Moshiri is in Canary Wharf. The mood is one of

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great anticipation. The markets have been quite volatile in the

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last few months. They do not expect any handouts from the Chancellor

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whether or not he sticks to his fiscal rules, his austerity plans,

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with a plan for growth. In the last few months, we have seen gilt

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yields dropping down to 2.1%, a sign if ever one was needed that

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the markets are happy with what the Chancellor has filtered through

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over the last few days. What is the City looking for today? As you said,

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a lot of it has been leaked so that we know the Chancellor has plans

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for credit easing, to create opportunities for smaller companies

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to get access to credit. That has been leaked. Also the

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infrastructure spending, releasing money from pension funds for

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schools and hospitals and the infrastructure that the UK needs.

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Lots of it has been widely leaked. I imagine there will be some tricks

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up his sleeve to impress the market. We will have to wait and see what

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

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growth. Which is the most important to the City? Can both of them

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happen at the same time? That is the big question. There is pressure

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for the Government to try to stimulate growth. These are the

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measures that we will hear about today but it has to be within the

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confines of the deficit reduction plan. Going on in the background is

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the eurozone debt crisis and the Chancellor is very wary of the fact

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that the market will punish the gilt market if they move away from

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deficit reduction. He does not have much room for manoeuvre, does he?

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Certainly not. The markets will be watching this very closely indeed.

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Thank you very much indeed. It is clear from the mood in this City,

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that growth will be limited to a large degree, but they will have to

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work-out if the Chancellor has a plan to offset it.

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Thank you. We are also getting reactions from business men and

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women in Merseyside. Judith Moritz is at the Cammell Laird shipyard on

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the Mersey. If I had been speaking to you from

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here one decade ago, how different things would have looked, this

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place was in receivership. Now they have contracts here and plenty of

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work, not just in shipbuilding but wind farm production. They have

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diversified. This is a success story. I have brought some business

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people from around Merseyside with made who are waiting keenly to hear

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what the Chancellor has to say. We have the manager of a diesel

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engines company, the sea air of the Merseyside Maritime businesses, --

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and the manager of the Merseyside Maritime businesses. You have found

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it very difficult over the last few years, haven't you? Absolutely.

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Things have changed massively. In the last three years, there has

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been a dreadful decline. I have five staff that depend on me for

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:15:12.:15:12.

What do you want George Osborne to say? You want to hear about credit

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easing and help for small companies like yours? I would like him to

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help with small business rates. For me employing five staff, business

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rates in the centre of Liverpool are horrendous. That would make a

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massive difference to me. quipped to me off air that you

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stocked some of his family's wallpaper. We do. We would like

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limb to maybe come to the store and purchase a few rolls. But on a

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serious note you feel he's been out of touch? He should come to

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Liverpool and support our businesses. Jim Teasdale, you speak

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for many small businesses like Elaine's. Have they all been

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finding the same problems, tough can credit and with banks helping

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them out, that kind of thing is This has always been a mercantile

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and maritime city. I represent 1,700 businesses and we aspire to

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develop a world class cluster of businesses. We are dealing with

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tough times economically and within that we have some real success

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stories. Cammell Laird is just one example, where it is a dynamo for

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growth, for jobs and creation. And it is diversifying. Although things

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are tough at present, the prospects are excellent. We are looking

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forward to building our strengths to develop and further grow this

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successful cluster. So put it together, world class cluster,

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world class brand and we are working together for business

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growth. But is this about getting back to what we do best, and roots.

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We are talking about a proud history of manufacturing and export

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is. This about rebalancing that between import and export and

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getting goods out overseas? We are a trading nation. 95 % of our goods

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comes by sea. There'll always be an import-export imbalance but there's

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a move towards more property- centric activity. There's move

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towards a recognition that the north of England can be fed by a

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major estuary, a major port this this part of the world. And there

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is support for manufacturing and manufacturing and logistics in a

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broad sense. You work for a company with a global reach but you spoke

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to me about the problem you are seeing in the UK is one of skills

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shortages, isn't it? What I'm looking for is real confidence,

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real bravery making decisions to attract younger people into the

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industry, into engineering, and incentivising employers to do that.

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That's one of the key messages we hope to hear from George Osborne

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later today. Like here at Cammell Laird you want to see apprentices

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for the future. Exactly. The area I come from, in Stockport, we have

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good connections with the education system and the council. We need to

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roll that out nationally. Thank you all for your time. We'll have at

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Cammell Laird a selection of business people watching what

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George Osborne has to say. They have their individual needs and

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requirements. We hope to speak to you later and see what they've made

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of it. Thank you Judith and a special

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thanks to our guests in Merseyside. They are freezing up there on the

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windy Mersey in late November. The Chancellor hasn't quite left

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the Treasury yet. There is the door he is expected to come through.

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Remember, on Budget days he leaves from number 11 Downing Street, his

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residence, with his famous red box. But on Autumn Statement days he

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leaves from the Treasury itself. He's running out of time. He only

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has 12 minutes. He had better get a move on! Maybe he is refusing to

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come out, the news is so grim. Jon Sopel is outside Parliament today.

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Andrew, thank you. As you have been mentioning, the Autumn Statement

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was supposed to be a low-key affair with the Chancellor updating the

:19:16.:19:21.

House of Commons on the latest economic forecasts. We can see now

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George Osborne has finally braved it. He is not going to miss it,

:19:24.:19:28.

Andrew. He is going to get there on time to deliver his Autumn

:19:28.:19:34.

Statement. It is probably only a 400 yard drive. No police escort.

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He leaves the Treasury. I guess he's going to be outside the Palace

:19:38.:19:44.

of Westminster in a very short order. So instead, the task of

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today has changed rather from what he originally thought. He's going

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to update the Commons on the Office for Budget Responsibility forecast.

:19:54.:20:00.

But a combination of weak growth and the crisis in the eurozone have

:20:00.:20:07.

persuaded the Chancellor that today he has to pull out all the stops. A

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reminder of the events leading to today.

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Tonight at ten the spectre of a return to recession in Europe, as

:20:16.:20:25.

growth collapses. So they're going through a

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financial crisis that is scaring the world. We could run the risk of

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what some commentators are already calling a lost decade. TRANSLATION:

:20:41.:20:44.

Europe is in the middle of what may be its toughest hour since World

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War II. Lower growth, higher unemployment,

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the troubling state of the British economy.

:20:56.:21:01.

The crisis in the eurozone is having a chilling effect, not just

:21:01.:21:04.

on eurozone economies, not just on market confidence but on the

:21:04.:21:11.

British economy, too. Britain will stick to the deficit

:21:11.:21:17.

plan we have set out. It is the rock or stability upon which our

:21:17.:21:21.

recovery is built, and it has delivered record low interest rates.

:21:21.:21:31.
:21:31.:21:34.

Abandoning that plan would put What is happening in the economy

:21:35.:21:44.
:21:45.:21:46.

now is a very large squeeze on We are trying to recover from a

:21:46.:21:51.

deep and difficult recession. Yet growth is slow, not just in Britain

:21:51.:21:55.

but in France and Germany too. But we are, frankly, well behind where

:21:55.:22:05.
:22:05.:22:08.

And just as in Birkenhead I'm the only one wearing a coat. I've been

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joined by the former Conservative Chancellor, Nigel Lawson, the

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:22:22.:22:22.

former Labour City leader minor moor minor and by -- Labour City

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leader Paul Myners and by Paddy Ashdown.

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It is still first and foremost about reducing the deficit and

:22:33.:22:38.

eliminating the terrible inheritance of public sector and

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public finance profligacy which the previous administration left this

:22:42.:22:47.

Government. Unfortunately because of the world economic situation,

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particularly the eurozone fiasco, it is going to take longer. But it

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has to be done and it will be done. And that is the core. Of course,

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this these difficult times George Osborne will want to do what he can

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to boost confidence. Confidence is such a, you can't measure it but it

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is such an important ingredient. We'll see a number of measures

:23:08.:23:14.

directed at that as well. Lord Myners is this just clearing up the

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that Labour left behind? No, the economy was recovering strongly in

:23:20.:23:23.

the 12 months from the third quarter of 2009 before it dipped

:23:23.:23:27.

back into a recession. We're back in recession in major parts of the

:23:27.:23:31.

country already. This austerity programme was meant to create space

:23:31.:23:34.

for private sector investment, for unemployment to come down, for

:23:34.:23:38.

inflation to come down and for growth. Hate achieved none of those.

:23:38.:23:43.

Plan A has failed as a credible plan. What we are going to see

:23:43.:23:48.

today is an Autumn Statement which has now become an increasingly

:23:48.:23:52.

panicly Budget. Lord Ashdown, I would think you are rather more

:23:52.:23:56.

comfortable about the things we've been hearing about over the past

:23:56.:24:02.

few days, the capping of rail first, the infrastructure projects, help

:24:02.:24:09.

for people on the housing ladder. Then you know me well. You have to

:24:09.:24:17.

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

:24:17.:24:24.

is a larger debt to GDP ratio than Italy's debt, yet we enjoy interest

:24:24.:24:28.

rates that are lower than the Germans. Why? Because we are

:24:28.:24:31.

serious about cutting the deficit. The idea that Labour's proposition

:24:31.:24:35.

is having borrowed so much and got ourselves into so much trouble is

:24:35.:24:42.

we borrow more is unbelievable. If interest rates went up by just 0.5%

:24:42.:24:47.

because we started to borrow more, the consequence would be �4 billion

:24:47.:24:51.

it this year. Extra on our repayments. This is nonsense. You

:24:51.:24:55.

have to do what you can do within the strategy to get growth going

:24:55.:24:59.

and ease the burden but you cannot break the strategy. The proposition

:24:59.:25:03.

that the answer to too high a level of borrowing in Britain is to

:25:03.:25:08.

borrow more is unbelievable. Lord Lawson, you've wrestled at the

:25:08.:25:12.

Treasury, how much room for manoeuvre does George Osborne have,

:25:12.:25:17.

given that he has said these ambitious targets in terms of the

:25:17.:25:21.

deficit reduction? As Paddy said, provided he sticks to his guns he

:25:21.:25:25.

does have a certain amount of room for manoeuvre, because he has

:25:26.:25:30.

market credibility. If you forfeit market credibility you have no room

:25:30.:25:34.

for manoeuvre at all. If I may respond to one thing ta Paul Myners

:25:34.:25:40.

said, he said this was meant to be a cut-back in public sector and the

:25:40.:25:46.

private sector would move ahead. That will happen. I remember this

:25:46.:25:50.

very well. In the early '80s we had to do. This the problem was not as

:25:50.:25:57.

great but we still had a huge deficit which was too big. It took

:25:57.:26:01.

time before the private sector moved forward and unemployment came

:26:01.:26:05.

down. But it did. Did Labour spend too much in Government? Labour took

:26:06.:26:10.

the right actions with a global crisis to keep the economy growing.

:26:10.:26:14.

We saw a smaller in all in unemployment... That wasn't the

:26:14.:26:18.

question. We took the right action at the right time and we have a

:26:18.:26:22.

strategy for reducing the deficit over a reasonable period of time

:26:23.:26:28.

without damaging prospects for the economy. I'm not sure that answered

:26:28.:26:31.

my question. Thank you all for being with us. Andrew, back to you

:26:31.:26:35.

in the studio. Thank you Jon. American Airlines

:26:35.:26:39.

has filed for what's called Chapter 11 bankruptcy. It sounds serious,

:26:39.:26:44.

probably is, but it has happened before, in fact several times

:26:44.:26:49.

before, so I wouldn't completely panic, unless you are flying on

:26:49.:26:54.

American Airlines. Bonds hit 2.8% of a yield, down from the close

:26:55.:26:58.

last night. The markets are looking kindly on what they think the

:26:58.:27:03.

Chancellor is going to say so far. If you want to comment, you can do

:27:04.:27:09.

so on our website - bbc.co.uk/news click on Have Your Say. If you are

:27:09.:27:14.

tweeting the, use @bbceconomy. Ahead of the statement the

:27:14.:27:18.

Government's been keen to get the message out. Ministers are trying

:27:18.:27:23.

to promote growth. They've given us a battery of measures already.

:27:23.:27:27.

Everything George Osborne said he wouldn't do, a long list of

:27:27.:27:33.

proposals. Sounds like Gordon Brown! Exactly. We've had that �5

:27:33.:27:36.

billion that Robert Peston mentioned, over the next three

:27:36.:27:40.

years for infrastructure investment. They are hoping to get another �20

:27:40.:27:44.

billion from the private sector for those schemes. That's very much

:27:44.:27:49.

what you think is blue sky thinking at this point. There is that credit

:27:49.:27:53.

easing plan, hoping to underwrite, guarantee, up to �20 billion of

:27:53.:27:57.

loans to small businesses. We know that's been such arch issue. They

:27:57.:28:01.

are saying that could rise to �40 billion and give quite a reduction

:28:01.:28:05.

in the during costs for firms. For young people, such a big problem

:28:05.:28:10.

the rise in youth unemployment. There is going to be a �1 billion

:28:10.:28:14.

scheme, we are told. We've heard a lot about it except how it is going

:28:14.:28:24.

to be paid form. And we had details as long ago as a week ago they were

:28:24.:28:25.

talking about housing and �400 million to kick-start the housing

:28:25.:28:35.
:28:35.:28:36.

market to help people buy homes, and a mortgage indem nitty schemes.

:28:36.:28:42.

Lower rail fares, and a 3p rise in fuel duty that was suppose to do so

:28:42.:28:45.

happen in January. We are expecting that to be frozen or delayed. But

:28:45.:28:50.

remember all of this needs to be paid for. Either that or it is

:28:50.:28:55.

going to be off-balance sheet, it doesn't count against the during.

:28:55.:29:00.

Even if it is off the balance sheet, we will find it, Stephanie. Let's

:29:00.:29:06.

look into the Commons now. It is Foreign Office questions.

:29:06.:29:09.

Nick. What is interesting about the figures is that it means that the

:29:10.:29:14.

Chancellor will have to tell us of pain now, pain in the future, pain

:29:14.:29:19.

beyond the election, beyond anything we've heard in his

:29:19.:29:23.

previous Budget or Autumn Statements. He has to. He is saying

:29:23.:29:30.

he won't increase spending, gauz would be to abandon plan A. He has

:29:30.:29:36.

to say today who pays the bills for that. The banks might feel a bit

:29:36.:29:40.

more pain. We might hear tax credits are going to be held down.

:29:40.:29:45.

You always look for public sector workforce. We don't know what he is

:29:45.:29:53.

going to do on pay in future. And the big one, what about long term,

:29:53.:30:00.

the big pensions billing? Pain, pain, pain, and you can't even

:30:00.:30:05.

escape on American Airlines! Gordon Brown used to go through all these

:30:05.:30:11.

measures and the Tories used to despise it. The Tory critique of

:30:11.:30:15.

Gordon Brown was too much meddling around the edges, and there are a

:30:15.:30:20.

lot of micromeasures. All designed to improve the productive potential

:30:20.:30:25.

of the British economy. I suppose, underlying the micromeasures

:30:26.:30:30.

there's a very big and important point we have to grasp - the

:30:30.:30:35.

British economy was run in an unsustainable way for many years

:30:35.:30:40.

during the boom. We with consumed more than we earned. The big task

:30:40.:30:43.

for any Government is to encourage companies to invest more and to

:30:44.:30:48.

make them leaner and fitter so they sell more around the world and we

:30:48.:30:51.

close that deficit, which has been at the heart of all our problems.

:30:51.:30:56.

What will I be looking at is whether there is any sign of a

:30:56.:31:02.

rebalancing of the economy, to use that cliche, such that we are

:31:02.:31:07.

seeing more of a contribution in the medium term from companies

:31:07.:31:11.

exporting and investing more. It will be interesting what the Office

:31:11.:31:20.

for Budget Responsibility makes of We know that the borrowing will be

:31:20.:31:30.
:31:30.:31:30.

more than they originally thought, even more fun than Budget. -- even

:31:30.:31:34.

more than the Budget. The markets seem to be relatively relaxed.

:31:34.:31:38.

is difficult to read the markets... We have to go straight to the

:31:38.:31:46.

Commons now. Let me put squarely before House of

:31:46.:31:49.

Commons and the British public the economic situation facing our

:31:49.:31:54.

country. Much of Europe seems to be heading into recession caused by a

:31:54.:31:58.

chronic lack of confidence in the ability of countries to deal with

:31:58.:32:02.

their debts. We will do whatever it takes to protect Britain from this

:32:02.:32:09.

debt storm while doing all we can, all we can to build the foundations

:32:09.:32:14.

of future growth. Today we set out how we will do that by

:32:14.:32:18.

demonstrating that this country has the will to live within its means

:32:18.:32:24.

and keep interest rates low. By acting to stimulate the supply of

:32:24.:32:28.

money and credit, to make sure those low interest rates are passed

:32:28.:32:33.

on to families and businesses. By matching our determination on the

:32:34.:32:38.

deficit, with an active enterprise policy for business, and with

:32:38.:32:42.

lasting investment in our infrastructure and education, so

:32:42.:32:46.

that Britain can pay its way in the future. And at every opportunity,

:32:46.:32:52.

helping families with the cost of living. The central forecasts that

:32:52.:32:57.

we published today from the Independent Office for Budget

:32:57.:33:04.

Responsibility do not predict recession here in Britain. But they

:33:04.:33:07.

have done surprisingly revised down their short-term growth prospects

:33:07.:33:14.

for our country, for Europe and for the world. They expect GDP in

:33:14.:33:23.

Britain to grow this year by 0.9%, and by 0.7% next year. They then

:33:23.:33:33.
:33:33.:33:35.

forecast 2.1% gross in 2013, do 0.7% in 2014, -- 2.7% in 2014, and

:33:35.:33:41.

3% in 2015 and in 2016. They are clear that this central forecast

:33:41.:33:45.

assumes in their words that the euro area finds a way through the

:33:45.:33:49.

current crisis and that the policy makers eventually find a solution

:33:49.:33:54.

that delivers sovereign debt and sustainability. -- sovereign debt

:33:54.:33:58.

sustainability. If not, there could be a much worse outcome for Britain

:33:58.:34:03.

and I believe they are right. We hope this can be averted, but if

:34:03.:34:06.

the rest of Europe heads into recession it may be hard to avoid

:34:07.:34:11.

one here in the UK. We are now undertaking extensive contingency

:34:11.:34:17.

planning to deal with all potential outcomes of the euro crisis. Like

:34:17.:34:26.

the Bank of England and the OECD yesterday, instability is one of

:34:26.:34:30.

the central reasons for the reduction in the growth forecast. I

:34:30.:34:34.

want to thank Robert Chote, Stephen Nickell and Graham Parker and their

:34:34.:34:39.

team for the rigorous work that they have done. I think they are

:34:39.:34:43.

forecast today demonstrates beyond any doubt their independence. --

:34:43.:34:49.

therefore cast. But if we accept their numbers... This is an

:34:49.:34:54.

important point. If we accept their numbers we must also pay heed to

:34:54.:34:59.

their analysis. In addition to the eurozone crisis, the OBR gives two

:34:59.:35:04.

further reasons for the weaker forecast. First, what they call the

:35:05.:35:09.

external inflation shock, the result in their words of unexpected

:35:09.:35:15.

rises in energy prices and global agricultural commodity prices.

:35:15.:35:19.

Their analysis, independent, is that this explains the slowdown in

:35:19.:35:29.
:35:29.:35:30.

growth in Britain over the past 18 months. Second, the...

:35:30.:35:33.

statement by the Chancellor must be heard and he should not have to

:35:33.:35:41.

fight to be heard. The Chancellor. Second, Mr Speaker, the OBR today

:35:41.:35:49.

show new evidence that an even bigger component of the growth that

:35:49.:35:52.

preceded the crisis was an unsustainable boom, that the bust

:35:52.:35:55.

was deeper and had an even greater impact on our economy than was

:35:55.:36:00.

previously thought. And the result of this analysis is that the OBR

:36:00.:36:04.

has significantly reduced their assumptions about spare capacity in

:36:04.:36:08.

our economy and the trend rate of growth. This increases their

:36:08.:36:11.

estimate of the proportion of the deficit that is structural, in

:36:11.:36:15.

other words the part of the deficit that does not disappear even when

:36:15.:36:19.

the economy recovers. Our debt challenge is even greater than we

:36:19.:36:25.

thought because the boom was even bigger, the bust even deeper, and

:36:25.:36:32.

the effects will last even longer. Britain has had the highest

:36:32.:36:37.

structural budget deficit of any major economy in the world, and the

:36:37.:36:43.

highest deficit in the entire history of our country outside of

:36:43.:36:47.

war, and the last Government left it to this Government to sort that

:36:47.:36:56.

mess out. Now, Mr Speaker, this OBR analysis feeds directly through to

:36:56.:36:59.

borrowing numbers that are falling but not at the rate that had been

:36:59.:37:06.

forecast. In 2009-10, the last Government was borrowing �156

:37:06.:37:11.

billion per year. During the first year of this Government that fell

:37:11.:37:16.

to �137 billion. This year the OBR expect it to fall again to 127

:37:16.:37:24.

billion, then 120 billion next year, 100 billion in 2013, 79 billion in

:37:24.:37:34.
:37:34.:37:34.

2014, then 53 billion in 2015, and 24 billion a year by 2016-17.

:37:34.:37:38.

However, I can report that because of the lower market interest rates

:37:38.:37:42.

that we have secured for Britain, debt interest rates over the

:37:42.:37:50.

Parliament of forecast to be �22 billion less than predicted. -- are

:37:50.:37:56.

forecast. Given the economic events described by the Office for Budget

:37:56.:38:00.

Responsibility, what would have happened to borrowing without the

:38:00.:38:03.

action this Government has taken? The Treasury estimates that

:38:03.:38:12.

borrowing by 2014-50 would have been... The Chancellor's statement

:38:12.:38:15.

must be heard. There are strong passions on the subject and there

:38:16.:38:19.

will be plenty of time to people to come in on the back of the state

:38:19.:38:23.

that but it must be heard with a degree of courtesy. -- the

:38:23.:38:32.

statement. Borrowing by 2014-2015 it would have been running at over

:38:33.:38:36.

�100 billion per year more and Britain would have borrowed an

:38:36.:38:39.

additional �100 billion in total over the period. If we have pursued

:38:39.:38:45.

that path, we would now be in the centre of the sovereign debt storm.

:38:45.:38:49.

The crisis that we see unfolding in Europe has not undermined the case

:38:49.:38:53.

for the difficult decisions that we have taken. It has made that case

:38:53.:39:02.

stronger. We held our deficit reduction Budget on our terms last

:39:02.:39:05.

year, not on the market turns this year as so many have been forced to

:39:06.:39:15.
:39:16.:39:17.

do. On that Budget we set out a tough fiscal mandate that we would

:39:17.:39:24.

eliminate the debt problem. To be cautious, I said plans to meet

:39:24.:39:29.

these Budget rules one year early. That hetero has now disappeared. I

:39:29.:39:36.

am clear that our rules must be Ed tier two and I am taking action to

:39:36.:39:40.

make sure that they are. As a result, the OBR's central

:39:40.:39:44.

projection is that we will meet the fiscal mandate and the debt target.

:39:44.:39:48.

The current structural deficit is forecast to fall from 4.6% of GDP

:39:48.:39:53.

this year to a structural surplus of 0.5% in five years' time. The

:39:53.:39:59.

debt to GDP ratio, which is forecast to stand at 67% this year,

:39:59.:40:06.

is now set to peak at 68 -- 78% in 20 14th and be falling by the end

:40:06.:40:10.

of the Parliament. So borrowing is falling and that will come down. It

:40:10.:40:14.

is not happening as quickly as we would have wished because of damage

:40:14.:40:19.

to our economy by the ongoing financial crisis. But we are set to

:40:19.:40:25.

meet our budget rules and we will see Britain through the debt storm.

:40:25.:40:30.

Mr Speaker, there is a suggestion from some in this house that if you

:40:30.:40:35.

spend more, you will borrow less. This is something for nothing

:40:35.:40:41.

economics. The House should know the risks that we would be running.

:40:41.:40:45.

Last April, the absence of a credible deficit plan meant that

:40:45.:40:48.

our credit rating was on a negative outlook and our market interest

:40:48.:40:53.

rates were higher than Italy's. 18 months later we are the only major

:40:53.:41:02.

Western country which has had its credit rating improve. Italy is at

:41:02.:41:07.

7.2% and we are at less than 2.5%. Yesterday we were even borrowing

:41:07.:41:13.

money more cheaply than Germany. And those that would put all of

:41:13.:41:17.

that at risk by deliberately adding to our deficit must explain this.

:41:17.:41:21.

Just a 1% rise in our market interest rates would add �10

:41:21.:41:25.

billion to mortgage bills every year. 1% would mean the average

:41:25.:41:30.

family with a mortgage would have to pay �1,000 more. 1% would

:41:30.:41:35.

increase the cost of business loans by �7 billion. 1% would force

:41:35.:41:39.

taxpayers to find an extra �21 billion in debt interest payments,

:41:39.:41:44.

much of it going to our foreign creditors. In other words, 1%

:41:44.:41:47.

dwarfs any extra Government spending or tax cut funded by

:41:47.:41:53.

borrowing that people proposed today. That is the cost of just a

:41:53.:41:58.

1% rise. Italy's rates have gone up by 3% in the last year alone. We

:41:58.:42:02.

will not take this risk with the solvency of the British economy and

:42:02.:42:10.

British families. Mr Speaker, the current environment requires we

:42:10.:42:13.

take further action on debt to ensure that Britain continues to

:42:13.:42:18.

live within its means. This is what we propose to do. First, there is

:42:18.:42:22.

no need to adjust the overall totals set out in the spending

:42:22.:42:27.

review, had taken all together measures that I will set out today

:42:27.:42:30.

require no extra borrowing and require no extra savings across the

:42:30.:42:35.

spending period. Second, I am announcing significant savings and

:42:35.:42:38.

current spending to make the fiscal position more sustainable in the

:42:38.:42:43.

medium and long-term. In the short term, over the next three years, we

:42:43.:42:46.

will use the savings to fund capital investment in

:42:46.:42:52.

infrastructure, in regional growth and education, as well as help for

:42:52.:42:57.

young people to find work. Every �1 spent in this way will be paid for

:42:57.:43:02.

by �1 saved permanently. This includes savings from a further

:43:02.:43:09.

restraint on public sector pay. For some workforces, the two year pay

:43:09.:43:15.

freeze will come to an end next spring. For most during 2013. In

:43:15.:43:19.

the current circumstances the country cannot afford the 2% rise

:43:19.:43:23.

assumed by some Government department thereafter. Instead we

:43:23.:43:27.

will set public-sector pay awards at an average of 1% for each of the

:43:27.:43:32.

two years after the pay freeze ends. Many are helped by pay progression.

:43:33.:43:36.

The annual increases in salary great that many are entitled to

:43:36.:43:42.

when pay is frozen. -- salary grades. It is one of the reasons

:43:42.:43:45.

why a public sector pay has risen at twice the rate of private sector

:43:45.:43:50.

pay over the last four years. I accept that a 1% average rise is

:43:50.:43:53.

tough but it is also fair to those that were to pay the taxes that

:43:53.:44:02.

fund it. -- that work to pay. I am also announcing that we are asking

:44:02.:44:06.

the independent pay review bodies to consider how public sector pay

:44:06.:44:10.

can be made more responsive to local labour markets, and we will

:44:11.:44:16.

ask them to report back by July next year. This is a significant

:44:16.:44:19.

step towards creating a more balanced economy in the regions of

:44:19.:44:29.

our country, that does not squeeze out the private sector. Mr Speaker,

:44:29.:44:36.

departmental... Mr Speaker, departmental budgets will, with the

:44:37.:44:44.

exception of the NHS and the school budgets, where the money saved will

:44:44.:44:49.

be used to protect their budgets in real terms. This will save �1

:44:49.:44:54.

billion of spending by 2014-15. The deal we will offer on public sector

:44:54.:45:00.

pensions is also fair to both taxpayers and public servants. The

:45:00.:45:05.

reforms are based on the independent report of John Hutton,

:45:05.:45:15.
:45:15.:45:19.

He says it is hard to imagine a better deal than this. I would once

:45:19.:45:23.

again ask the unions why they are damaging our economy at a time like

:45:23.:45:29.

this and putting jobs at risk. Call off the strikes tomorrow, come back

:45:29.:45:33.

to the table, complete the negotiations and let's agree

:45:33.:45:37.

generous pensions that are affordable to the taxpayer.

:45:37.:45:44.

Mr Speaker, let me turn to other areas of public spending, starting

:45:44.:45:47.

with overseas aid. This Government will stick by the commitments it

:45:47.:45:52.

has made to the poorest people in the world by increasing our

:45:52.:45:55.

international development Budget. The whole House should be proud of

:45:55.:46:00.

the help our country is providing to eradicate disease, save lives

:46:00.:46:05.

and eds Kate children. But the spending plans of the Department

:46:05.:46:09.

for International Development meant that the UK was on course to exceed

:46:09.:46:15.

0.7% of national income in 2013. That I don't think can be justified.

:46:15.:46:20.

Adjusting those plans so we don't overshoot the target.

:46:20.:46:26.

Turning to welfare payments. The annual increase in the basic state

:46:26.:46:32.

pension is protected by the triple lock introduced by this Government.

:46:32.:46:38.

This guarantees a rise either in line with earnings, prices or 2.5%,

:46:38.:46:42.

whichever is greater. It means that the basic state pension will next

:46:43.:46:50.

April rise by �5.30 to �107.45, the largest ever cash rise in the basic

:46:50.:46:54.

state pension and a commitment of fairness to those that have worked

:46:54.:47:00.

hard all their lives. I wanted to make sure that poorer

:47:00.:47:03.

pensioners did not see a smaller rise in their income, so I can

:47:03.:47:09.

confirm today we will uprate the pension credit by �5.35 and pay for

:47:09.:47:13.

this with an increase in the threshold of the savings credit. I

:47:13.:47:19.

also want to protect those who are not able to work because of their

:47:19.:47:23.

disabilities and those who through no fault of their own have lost

:47:23.:47:28.

jobs. We will uprate working age benefits in line with September's

:47:28.:47:32.

CPI inflation number of 5.2%. This will be a significant boost to the

:47:32.:47:36.

incomes of the poorest, especially when inflation is forecast to be

:47:36.:47:42.

considerably less than that by next April. We will also uprate with

:47:42.:47:46.

prices the disability elements elements of tax credits and

:47:46.:47:51.

increase the child element to have Child Tax Credit by �135 in line

:47:51.:47:54.

with inflation. But we will not uprate the other elements of the

:47:54.:47:58.

working tax credit this coming year. Given the size to have outrating

:47:58.:48:03.

this year we will no longer go ahead with the additional �110 rise

:48:03.:48:08.

of the child element over and above inflation planned. By April 2012

:48:08.:48:12.

the Child Tax Credit will have increased by �390 sings the

:48:12.:48:16.

coalition came into power. The best way to support low income working

:48:16.:48:21.

people is to take them out of tax altogether.

:48:21.:48:25.

Our increases in the income tax personal allowance this year and

:48:25.:48:32.

next will do that for over 1 million people. Let me turn to

:48:32.:48:36.

future public spending Mr Speaker. Today am setting spends ture totals

:48:36.:48:42.

for the two years following the ends of the Spending Review period,

:48:42.:48:48.

2015 -16 and 2016-17. Total managed expenditure will fall during that

:48:48.:48:54.

period by 0.9% a year in real terms. The same rate as set out existing

:48:54.:48:58.

period toof Spending Review, with a baseline that exlose the additional

:48:58.:49:02.

investment in infrastructure also announced today. These are large

:49:02.:49:07.

savings and we will set out in future how resources will will be

:49:07.:49:12.

allocated between difficulty areas of Government. I am also announcing

:49:12.:49:16.

a measure to control spending not for today, next year or the next

:49:16.:49:20.

decade, but it directly addressing the long-term challenge British and

:49:20.:49:24.

so many other countries face with an ageing population. Our

:49:24.:49:27.

generation has been warned that the cost of providing decent state

:49:27.:49:31.

pensions are going to become mother and more unaffordable unless we

:49:31.:49:35.

take further action. Let us not leave it to our children to take

:49:35.:49:39.

emergency action to rescue the public finances. Let's think ahead

:49:39.:49:44.

and take responsible, sensible steps now. So starting in the year

:49:44.:49:50.

2026 we will increase the state pension age from 66 to 67, so we

:49:50.:49:55.

can go on paying a decent pension to people who are living longer.

:49:55.:50:00.

Australia, America and Germany have all taken similar steps. This will

:50:00.:50:04.

not affect anyone within 14 years of receiving their state pension

:50:04.:50:10.

today. By saving a staggering �59 billion it will mean a long term

:50:10.:50:14.

future for the basic state pension. We are showing a world sceptical

:50:14.:50:17.

that democratic western Government can take tough decisions that

:50:17.:50:23.

Britain will pay its way in the world.

:50:23.:50:29.

Now, Mr Speaker. That is the first thing. The Government can do in the

:50:29.:50:32.

current environment. Keep our interest rates low and protect our

:50:32.:50:38.

country from if worst of the debt storm. But we need to make sure

:50:38.:50:42.

that those low interest rates are available to families and

:50:42.:50:46.

businesses. It is monetary and credit policy which is, in a debt

:50:46.:50:51.

crisis, the principal and most powerful tool for stimulating

:50:51.:50:58.

demand. Last month the Bank of England's monetary policy committee

:50:58.:51:04.

increased quantitative easing. �275 billion. This will support demand

:51:04.:51:09.

across the commitment we must do more to help small businesss who

:51:09.:51:13.

can't get access to credit at an affordable price. We've extended

:51:13.:51:16.

the last Government's enterprise finance guarantee scheme. We are

:51:16.:51:23.

expanding it to businesses with annual turnovers of up to �44

:51:23.:51:29.

million. This scheme is by itself not nearly ambitious enough and

:51:29.:51:34.

never will within the constraints of state aid rules. The Government

:51:34.:51:37.

is announcing credit easing to help small businesses. We've set a

:51:37.:51:41.

ceiling of �40 billion. At the same time I've agreed with Mervyn King

:51:41.:51:47.

we will reduce by �40 billion the asset purchase facility the

:51:47.:51:51.

previous Government gave the bank to buy business loans. Only a small

:51:51.:51:55.

proportion of that facility was ever used. I'm publishing my

:51:55.:51:58.

exchange of letters with the Governor today. So we are launching

:51:58.:52:02.

our national loan guarantee scheme. It will work on the simple

:52:02.:52:05.

principle that we use the hard-won low interest rates that the

:52:05.:52:08.

Government can borrow at to reduce the interest rates that small

:52:08.:52:12.

businesses can borrow at. We are using the credibility we've end in

:52:13.:52:17.

the international markets to help our domestic economy. New loans and

:52:17.:52:22.

over drafts to business with a turnover of less than �50 million

:52:22.:52:25.

will be eligible to the scheme, so it is focused on smaller companies.

:52:25.:52:29.

We expect it will lead to reductions of 1 percentage point in

:52:29.:52:35.

the rate of interest charged to these companies. A business facing

:52:36.:52:41.

a 7% interest rate could see their rate reduced to 6%. We've developed

:52:41.:52:44.

with the Bank of England a mechanism to allocate funding to

:52:44.:52:47.

different banks based on how much they increase both net and gross

:52:47.:52:52.

lending to firms. And there'll be a clear audit trail to ensure the

:52:52.:52:55.

banks comply, for we will use the experience of the European

:52:55.:52:59.

investment banks loans for SMEs Fulham the UK to ensure it works.

:52:59.:53:02.

We are getting state aid approval so the national loan guarantee

:53:02.:53:07.

scheme will be up and running in the next few months. Initially �20

:53:07.:53:11.

billion of these guarantees will be available over the next two years.

:53:11.:53:13.

Alongside it we are launching a �1 billion business finance

:53:13.:53:17.

partnership. This is aimed at Britain's mid-sized companies, a

:53:17.:53:21.

crucial part of our economy, effected for too long and now

:53:21.:53:28.

identified by the CBI director- general and others as a source of

:53:28.:53:31.

growth. The Government will lend droll these businesses, in

:53:31.:53:37.

partnership with investment pension funds and insurance companies. It

:53:37.:53:40.

will give a new source of investment outside the banks. If

:53:40.:53:44.

the business partnership takes off I stand ready to increase its size.

:53:44.:53:50.

We will help Britain's small and medium-sized companies no.

:53:50.:53:54.

Government has attempted anything as ambitious as this before. We

:53:54.:53:58.

will not get every detail perfect first time round but we don't want

:53:58.:54:05.

to make an enmoif the Government. The important thing is the get

:54:05.:54:07.

Croat flowing to Britain's small businesses.

:54:07.:54:10.

Mr Speaker, the Government can use the low interest rates we've

:54:10.:54:15.

secured to help young families too. Who want to buy a home but can't

:54:15.:54:20.

afford the very large deposits the banks are demanding. We will use

:54:20.:54:25.

mortgage indemities to help 100,000 such families buy newly built homes.

:54:26.:54:30.

We will help construction firms that can't get bank finance with a

:54:31.:54:34.

�400 million fund that will kick- start projects which already have

:54:34.:54:38.

planning permission. And we are going to reinvigorate the right to

:54:38.:54:44.

buy. This was one of the greatest social policies of all time. It

:54:45.:54:48.

brought home ownership within the reach of millions of aspiring

:54:48.:54:51.

families. It was slowly and stealthily strangled by the last

:54:51.:54:55.

Government, as discounts were cut and cut again. We will bring it

:54:55.:55:02.

back to life. Families in social house willing be able to buy their

:55:02.:55:07.

own homes at a discounts of up to 50%. We will use the receipts build

:55:07.:55:12.

for every home purchase ads new additional affordable home as well.

:55:12.:55:16.

So new homes for families that need them. New home ownership for

:55:16.:55:21.

families who aspire to it. New jobs in the construction industry so we

:55:21.:55:26.

get Britain building. That's what our new right to buy will bring.

:55:26.:55:34.

Mr Speaker, in the years leading up to the crash, our economy became

:55:34.:55:38.

dangerously overdependent on the success of a poorly regulated City

:55:38.:55:44.

of London. Meanwhile, employment by business in a region like the West

:55:44.:55:49.

Midlands fell during this period. So by 2007 the previous Government

:55:49.:55:56.

was relying on finance for one in every �8 it raised in taxation.

:55:56.:56:00.

That left Britain completely exposed when the banks failed. I

:56:00.:56:05.

can confirm that the next month we will publish our response to the

:56:05.:56:09.

report we commissioned from John Vicers to protect taxpayers better.

:56:09.:56:15.

It is there Government's policy to ensure that we remain the home of

:56:15.:56:19.

global banks, that London is the world's pre-eminent financial

:56:19.:56:24.

centre. That is why we will not agree to the introduction of an EU

:56:24.:56:29.

financial transaction tax. It is not a tax on bankers. It's a

:56:29.:56:35.

tax on people's pensions. Instead, we have introduced a permanent bank

:56:35.:56:40.

levy so make sure the banks pay their fair share. I've always said

:56:40.:56:46.

we wish to raise �2.5 billion each and every year from this levy. To

:56:46.:56:52.

ensure we do that, I need to raise the rate to have levy to 0.088%.

:56:52.:56:58.

This will be effective from the 1st January next year. And we will also

:56:58.:57:03.

take action to stop some large firms using complex asset-backed

:57:03.:57:06.

pension funding arrangements to claim double the amount of tax

:57:06.:57:11.

relief that was intended. This will save the exalmost half a bill

:57:11.:57:15.

pounds a year. Mr Speaker, financial services will

:57:15.:57:20.

always be a very important industry for the UK. But we have to help

:57:20.:57:28.

other parts of the private sector grow. That means uncongested roads

:57:28.:57:31.

and railways for business to move products that cannot be reduced to

:57:31.:57:35.

a screen on a City trading floor. It means providing secure power

:57:35.:57:40.

sources at reasonable prices. It means creating superfast digital

:57:40.:57:45.

networks for companies across our country. These do not exist today.

:57:45.:57:49.

See what countries like China or Brazil are building and you will

:57:49.:57:52.

see why we risk falling behind the rest of the world. So we are

:57:52.:57:57.

publishing the national infrastructure plan today. For the

:57:57.:58:02.

first time, we are identifying over 500 infrastructure projects we want

:58:02.:58:06.

to see built over the next decade and beyond. Roads, railways,

:58:06.:58:10.

airport compassity, power stations, waste facilities, broadband

:58:10.:58:15.

networks, and we are mobilising the finance need to do so deliver them

:58:15.:58:20.

too. The savings I've announced in the current but the have enabled me

:58:20.:58:25.

today to fund pound for found �5 billion of additional public

:58:25.:58:29.

spending on infrastructure over the next three years. New spending by

:58:29.:58:32.

Network Rail guaranteed by the Government will bring �1 billion

:58:32.:58:36.

more. And we are committing a further �5 billion to future

:58:36.:58:40.

projects in the next spending period so that planning can start

:58:40.:58:46.

now. This is public money. By exploring guarantees and letting

:58:46.:58:50.

City mayors borrow against attach receipts we are looking at new ways

:58:50.:58:54.

to deploy it. We need to put to work the many billions of pounds

:58:54.:58:59.

that British people save in British pension funds and invest in British

:58:59.:59:03.

projects. You could call it British savings for British jobs, Mr

:59:03.:59:08.

Speaker. And the Government has goerbltded an agreement with two

:59:08.:59:14.

groups of -- negotiated an agreement to unlock �20 billion of

:59:14.:59:18.

private investment in modern infrastructure. We can today give

:59:18.:59:22.

the go-ahead to 35 new road and rail schemes that support economic

:59:22.:59:30.

development. In the North-West we will electify the TransPennine

:59:30.:59:33.

Express between Manchester and Leeds and work with Merseyside to

:59:33.:59:38.

turn the vision of the Atlantic gait away a reality Yorkshire and

:59:38.:59:42.

the Humber there'll be new stations and tram capacity. We will halve

:59:42.:59:47.

the tolls on the Humber Bridge. I want to pay tribute to the members

:59:47.:59:53.

for Beverley and brigand ghoul and other MPs who've campaigned for

:59:53.:59:59.

years. Under this Government it has. We are bringing forward investment

:59:59.:00:09.
:00:09.:00:12.

on the Tyne and Metro. In the South West, the Bristol link road and the

:00:12.:00:16.

A380 bypass will go ahead. For families across the South West,

:00:16.:00:20.

facing the highest water charges in Britain, the Government will pick

:00:20.:00:26.

up the household bills of all South West Water companies by �50 a year.

:00:26.:00:33.

In the East of England, we're going to make immediate improvements to

:00:33.:00:38.

the A14. In the South East, we will build a new railway link between

:00:38.:00:43.

Oxford, Milton Keynes and Bedford, to create 12,000 new jobs. We are

:00:43.:00:47.

going to stop on a crossing of the lower Thames, and we will explore

:00:47.:00:52.

all the options for maintaining the aviation hub status, with the

:00:52.:00:57.

exception of a third runway at Heathrow. In London, we will work

:00:57.:01:02.

with the Mayor for options on a new river crossing, and the extension

:01:02.:01:06.

of the Northern Line to Battersea, which could bring 25,000 jobs to

:01:06.:01:09.

the area. The devolved administrations will get their

:01:09.:01:13.

share. We are working with them to improve the links between our

:01:13.:01:19.

nations, such as the M four in South Wales and the overnight

:01:19.:01:24.

railway services North of the border. This is a huge commitment

:01:24.:01:34.
:01:34.:01:36.

to overhauling the infrastructure of our nation. And we will match it

:01:36.:01:40.

by overhauling the digital infrastructure, too. The Government

:01:40.:01:45.

is funding plans to bring super- fast broadband to 90% of homes and

:01:45.:01:49.

businesses across the country, and to extend mobile phone coverage to

:01:49.:01:54.

99% of families. This will help create a living, economically

:01:54.:01:58.

vibrant countryside. But our great cities are at the heart of our

:01:58.:02:02.

regional economies, and we will help bring super-fast broadband

:02:02.:02:06.

connections to 10 of them, including the capitals of all Four

:02:06.:02:11.

Nations. We will go ahead with the 22 enterprise zones already

:02:11.:02:17.

announced, plus two zones in the Humber and Lancashire announced

:02:17.:02:23.

today. Capital will be available to encourage manufacturing in

:02:23.:02:27.

Liverpool, Sheffield, the Tees Valley, the Humber and the Black

:02:27.:02:31.

Country. Those allowances will also be available to the north-eastern

:02:31.:02:38.

enterprise zone. And we will consider extending to create new

:02:38.:02:48.
:02:48.:02:53.

private sector jobs in the port of Mr Speaker, this Government's new

:02:53.:03:00.

regional growth fund for England has already allocated �1.4 billion

:03:00.:03:04.

to 169 projects around the country. For every �1 we are putting in, we

:03:04.:03:10.

are attracting �6 of private sector money alongside it. I am putting in

:03:10.:03:13.

a further �1 billion over the course of this Parliament into the

:03:13.:03:16.

regional growth fund for England with support for the devolved

:03:16.:03:19.

administrations as well. If we don't get the private sector to

:03:19.:03:23.

take a greater share of economic activity in the regions, then our

:03:23.:03:26.

economy will become more and more unbalanced, as it did over the last

:03:26.:03:30.

10 years. Governments should not assume that this will happen by

:03:30.:03:35.

itself. We should help businesses to grow and succeed and we can do

:03:35.:03:40.

that at a national level, too. For example, with our commitment to

:03:40.:03:43.

British science. At a time of difficult choices, we made hours

:03:43.:03:48.

last year when they committed to protecting the science budget. We

:03:48.:03:52.

are committing half a billion pounds for science projects, from

:03:52.:03:57.

Super Computing the satellite technology and health laboratories.

:03:57.:04:01.

We will encourage our small firms to export overseas for the first

:04:01.:04:06.

time. We are doubling to 50,000 the number of SMEs that we are helping

:04:06.:04:13.

and we are extending our support to British companies that are overseen

:04:13.:04:17.

by the German counterparts. We will make it easier for UK-based firms

:04:17.:04:24.

to compete for Government contracts. We will provide funding for smaller

:04:24.:04:29.

technology firms in Britain who find it difficult to turn their

:04:29.:04:33.

innovations into commercial success. And we have listened to the ideas

:04:33.:04:35.

from business groups about encouraging innovation in larger

:04:35.:04:40.

companies, and we will introduce a new above-the-line research and

:04:40.:04:47.

development tax credit in 2013 which will increase in visibility

:04:47.:04:52.

and generosity. And we will give help to our energy intensive

:04:52.:04:56.

industries. I have not shied away from supporting sensible steps to

:04:56.:05:01.

reduce this country's dependency on volatile oil prices and reduce our

:05:01.:05:05.

carbon emissions. While the Chancellor who funded the first

:05:05.:05:10.

ever Green Investment Bank. Our Green Deal will help people

:05:10.:05:15.

insulate their homes and cut their heating bills. But I am worried

:05:15.:05:18.

about the combined impact of the green policies adopted not just in

:05:18.:05:24.

Britain, but also by the European Union, on some of our energy heavy

:05:24.:05:28.

intensive industries. We will not save the planet by shutting down

:05:28.:05:34.

our steel mills and aluminium smelters and paper manufacturers.

:05:34.:05:39.

All we will be doing is exporting valuable jobs from this country. So

:05:39.:05:44.

we will help them with the costs of the EU trading scheme and the

:05:44.:05:48.

carbon price floor, increase their climate change levy relief, and

:05:48.:05:54.

reduce the impact of reforms on these businesses. This amounts to a

:05:54.:05:57.

�250 million package over the Parliament, and it will keep

:05:57.:06:03.

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

:06:03.:06:06.

all that we should not price British business out of the world

:06:06.:06:11.

economy. If we burden them up with endless social and environmental

:06:11.:06:16.

goals, however worthy in their own right, not only will we not achieve

:06:16.:06:20.

those goals, but the businesses will fail, jobs will be lost and

:06:20.:06:24.

our country will be poorer. Our planning reforms strike the right

:06:24.:06:31.

balance between protecting our countryside, while committing to

:06:31.:06:34.

economic development which creates jobs. We need to go further to

:06:34.:06:39.

avoid the lengthy delays of the current system, with the time limit

:06:39.:06:41.

on applications and responsibilities for statutory

:06:41.:06:48.

consultations. And we will make sure that the EU rules on things

:06:48.:06:51.

like Habitat are not placing ridiculous costs on British

:06:51.:06:57.

business. Planning laws need reform... Order. The house needs to

:06:57.:07:03.

calm down. One honourable member has probably shouted enough for one

:07:04.:07:13.
:07:14.:07:15.

day. The Chancellor of the Mr Speaker, planning laws need

:07:15.:07:22.

reforms, and so do the employment rules. We know that many firms are

:07:22.:07:30.

afraid to hire new staff because of the cost involved. We are doubling

:07:30.:07:34.

the period after which an employee can bring an unfair dismissal claim.

:07:34.:07:38.

We will call for evidence on further reforms to make it easier

:07:38.:07:43.

to hire people, including changing the cheapie regulations, reducing

:07:43.:07:48.

delay and uncertainty and a collective redundancy process, and

:07:48.:07:50.

introducing the idea of compensated though full dismissal for

:07:50.:07:56.

businesses with fewer than 10 employees. -- no fault dismissal.

:07:56.:08:01.

We will cut the burden of health and safety rules on small firms

:08:01.:08:04.

because we have a regard for the health and safety of the British

:08:04.:08:07.

economy. This Government has introduced flexible working

:08:07.:08:11.

practices. We are committed to fair rights for employees, but what

:08:11.:08:14.

about the right to get a job in the first place and the right to work

:08:14.:08:18.

all hours running a small business and not be sued out of existence by

:08:18.:08:28.
:08:28.:08:31.

the cost of unemployment tribunal? -- employment tribunal? It is no

:08:31.:08:36.

good comparing ourselves with other countries. The entire European

:08:36.:08:39.

Continent is pricing itself out of the world economy. The same is true

:08:39.:08:47.

on taxes on businesses. We have set as our ambition the goal of giving

:08:47.:08:52.

this country the most competitive tax regime in the G20. Our

:08:52.:08:56.

corporate tax rate has already fallen from 28% to 26% and I can

:08:56.:09:01.

confirm that it will fall next April the 25%. We are undertaking

:09:02.:09:07.

major simplification of the tax code for businesses, including

:09:07.:09:11.

consulting on ideas for merging the administration of income tax and

:09:11.:09:16.

national insurance. We are publishing next week rules on

:09:17.:09:19.

foreign profits so that multinationals stop leaving Britain

:09:19.:09:26.

and start coming here. And we will end low-value relief for goods from

:09:26.:09:29.

the Channel Islands which is used to undercut our High Street

:09:29.:09:34.

businesses. We will increase the generosity of the enterprise

:09:34.:09:37.

development scheme and we will extend it to help new start-up

:09:37.:09:41.

businesses get the investment that they need, because even at the best

:09:41.:09:45.

of times they can struggle to get finance. In the current conditions

:09:45.:09:50.

that struggle ends too often in failure. From April, 2012, anyone

:09:50.:09:54.

investing up to �120,000 in a qualifying you start a business

:09:54.:09:58.

will be eligible for income tax release of 50%, regardless of the

:09:58.:10:04.

rate at which they pay for tax. -- new start-up business. And for one

:10:04.:10:09.

year, we will waive tax on capital gains invested through the new

:10:09.:10:13.

scheme. We can afford this with a freeze on the capital gains tax

:10:13.:10:19.

threshold next year. I want to help small businesses that find the

:10:19.:10:22.

current conditions are tough. Business rates are

:10:22.:10:32.

disproportionately large part of fixed costs. In the Budget, I

:10:32.:10:35.

announced the rate relief holiday and today I am extending that until

:10:35.:10:41.

April, 2013. Over half a million small firms, including one third of

:10:41.:10:47.

all shops, will have reduced or no rate bills for the whole of the

:10:47.:10:52.

rest of the next financial year. And larger businesses will be

:10:52.:11:02.
:11:02.:11:02.

helped with the rise in business rates. I also want to help any

:11:03.:11:06.

business seeking to employed a young person who is out of work.

:11:06.:11:12.

The OBR forecasts that unemployment will rise by 8.1% this year to 8.7%

:11:12.:11:18.

next year, before falling to 6.2% by the end of the forecast. Youth

:11:18.:11:24.

unemployment has been rising for seven years and is now unacceptably

:11:24.:11:29.

high. It is little comfort that this problem is affecting all

:11:29.:11:33.

Western nations today. The problem is of course primarily a lack of

:11:34.:11:41.

jobs, but it is made worse by a lack of skills. Mr Speaker, too

:11:41.:11:46.

many children are leaving school after 11 years of compulsory

:11:46.:11:54.

education without the basics that they need for the world of work.

:11:54.:12:01.

Our new youth contract addresses both problems. With of of private

:12:01.:12:07.

sector work experience for every young person unemployed for three

:12:07.:12:14.

months, -- with the offer. We will pay for a job or apprenticeship

:12:14.:12:18.

after nine months in a private business. As the Deputy Prime

:12:18.:12:21.

Minister has said, this is a contract. Young people that do not

:12:21.:12:24.

engage with this offer will be considered for mandatory work

:12:24.:12:28.

activity. Those that drop out without good reason will lose their

:12:28.:12:32.

benefits. Are we really going to tackle the economic performance of

:12:32.:12:40.

this country and tackle the decade- long problems of productivity? Then

:12:40.:12:44.

we have to transform our school system, too, so children leave

:12:44.:12:49.

school prepared for the world of work. My honourable friend is doing

:12:49.:12:54.

more to make that happen than anybody that has had his job before.

:12:54.:12:59.

The last Government, Mr Speaker, took six years to create 200

:12:59.:13:08.

academies. He has created 1200 academies in just 18 months.

:13:08.:13:10.

Supporting his education reform as a central plank of my economic

:13:10.:13:19.

policy. I am providing an extra 1.2 billion as part of the additional

:13:19.:13:25.

investment in infrastructure to spend on our schools. Half of this

:13:25.:13:28.

will go to help local authorities with the greatest basic need for

:13:28.:13:33.

school places. The other 600 million will go to support my right

:13:33.:13:37.

honourable friend's reforms and will support 100 additional free

:13:37.:13:43.

schools. These schools will include new maths schools for 16 to 18

:13:43.:13:47.

year-olds, giving our most talented young mathematicians the chance to

:13:47.:13:53.

flourish. Like the university technical colleges, these maths

:13:53.:13:55.

free schools are exactly what Britain needs to match our

:13:55.:13:58.

competitors and produce more of the engineering and science graduates

:13:58.:14:03.

so important for our long-term economic success. And to ensure

:14:03.:14:07.

that children born into the poorest families have a real chance to

:14:07.:14:12.

become one of those graduates, we will take further steps to improve

:14:12.:14:16.

early education. Last year it was this coalition Government that not

:14:16.:14:21.

only expanded free nursery education for all three and four

:14:21.:14:24.

year olds, but also gave children from the poorest one-fifth of

:14:25.:14:27.

families then you write to 15 hours of free nursery care per week at

:14:28.:14:37.
:14:38.:14:43.

the age of two. -- a new right. Thousands of children from the most

:14:43.:14:46.

disadvantaged families will get the support in the early years.

:14:46.:14:50.

Education, early years learning, this is how you change the life

:14:50.:14:54.

chances of our least well off and generally live two children out of

:14:54.:14:58.

poverty. And that is how you build an economy ready to compete in the

:14:58.:15:08.
:15:08.:15:09.

world. -- genuinely lift children. People know how difficult things

:15:09.:15:15.

are, but where we can help with the rising cost of living, we will. I

:15:15.:15:18.

have announced another freeze in council tax to help millions of

:15:18.:15:28.
:15:28.:15:29.

Train fares are expensive and they are set to go up well above

:15:29.:15:33.

inflation to pay for the much- needed investment in the new rail

:15:33.:15:37.

and the new trains we need. But RPI plus 3% is too much. The Government

:15:37.:15:46.

will fund a reduction in the increase to RPI plus 1%. This will

:15:46.:15:52.

apply across National Rail- regulated fares, the London tubes

:15:52.:15:58.

and our buses. Mr Speaker, millions more use their cars to go to work

:15:58.:16:02.

and pick up their children from school. It is not a luxury for most

:16:02.:16:09.

people. It is a necessity. In the Budget, I cut fuel cuty by one

:16:09.:16:16.

penny. The plan was for fuel duty to be 3p higher in January and 5

:16:16.:16:21.

pence higher by August next year. That would be tough for working

:16:21.:16:26.

families. So despite all the constraints upon us we are able to

:16:26.:16:32.

cancel the increase in January. Taxes on pets roll will be a full

:16:32.:16:36.

10p lower than it would have been without our action in the Budget

:16:37.:16:43.

this autumn. Families will save �144 on filling

:16:43.:16:47.

up the average family car by the end of next year. In this tough

:16:47.:16:54.

time, we are helping where we can. Mr Speaker, all that we are doing

:16:54.:16:58.

today, sticking to our deficit plan to keep interest rates as low as

:16:58.:17:03.

possible, increasing the supply of credit to pass those low rates on

:17:03.:17:08.

the families and businesses. Rebalancing our economy with an

:17:08.:17:12.

active enterprise policy and new infrastructure. Help with the cost

:17:12.:17:16.

of living on fuel duty and rail fares. All this takes Britain in

:17:16.:17:23.

the right direction. It cannot... Mr Speaker, it cannot transform our

:17:23.:17:27.

economic situation overnight. People in this country understand

:17:27.:17:32.

the problems that Britain faces. They can watch the news any night

:17:32.:17:36.

of the week and see for themselves the crisis in the eurozone and the

:17:36.:17:42.

scale of the debt burden we carry. And people know, people know that

:17:42.:17:46.

the promises of quick fixings and more spending this country can't

:17:46.:17:51.

afford at times like this are like the promises of a quack doctor

:17:51.:17:56.

selling a miracle cure. We do not offer that today. What we offer is

:17:56.:18:00.

a Government that has a plan to deal with our nation's debts to

:18:00.:18:03.

keep interest rates low. A Government determined to support

:18:03.:18:08.

businesses and support jobs. A Government committed to take

:18:08.:18:12.

Britain safely through the storm. Leadership for tough times. That's

:18:12.:18:18.

what we offer and I commend this statement to the House.

:18:18.:18:23.

STUDIO: That was the Chancellor of the Exchequer of the Exchequer

:18:23.:18:31.

sitting down. We'll now hear from Ed Balls. Mr Speaker, let me start

:18:31.:18:37.

by thanking the Chancellor of the Exchequer... THE SPEAKER: Order. I

:18:37.:18:41.

ask the right honourable gentleman to resume his seat. I said very

:18:41.:18:45.

clearly that people shouldn't shout and yell at the Charlotte. He

:18:45.:18:50.

should be heard in respectful quiet, as the public would hope. The same

:18:50.:18:55.

goes for the reaction to the Shadow Chancellor. Let's try to operate at

:18:55.:19:01.

the level of events. Mr Ed Balls. Thank you Mr Speaker. Let me start

:19:01.:19:04.

by thanking the Chancellor of the Exchequer for advance notice of his

:19:04.:19:09.

statement. And the Office for Budget Responsibility for ensuring

:19:09.:19:13.

that the Chancellor is today setting out to this House the truth

:19:13.:19:18.

about the state of the British economy and the truly colossal

:19:18.:19:25.

failure of the Chancellor's plan. Mr Speaker, let us be clear what

:19:25.:19:29.

the OBR has told us today. The Chancellor couldn't quite bring

:19:29.:19:36.

himself to say it himself. Growth flat lining down this year, next

:19:36.:19:42.

year and the year after, unemployment rising, well over �100

:19:43.:19:48.

billion more during than the Chancellor planned a year ago. More

:19:49.:19:54.

during than the plan which the Chancellor inherited at the last

:19:54.:20:00.

general election, Mr Speaker. And as a result, his economic and

:20:00.:20:07.

fiscal strategy is in tatters. After 18 months in office, the

:20:07.:20:13.

verdict is in: plan A has failed and it has failed close ally, with

:20:13.:20:19.

prices rising, with unemployment soaring, families, pensioners and

:20:19.:20:23.

businesses already know it is hurting. And with billions more in

:20:23.:20:27.

borrowing to pay for rising unemployment, today we find out the

:20:27.:20:33.

truth. It is just not working. Mr Speaker, the Prime Minister likes

:20:33.:20:39.

to say you can't borrow your way out of a crisis. Can the Chancellor

:20:39.:20:47.

confirm that is exactly what he has been forced to do? Higher during to

:20:47.:20:50.

pay for the criess in growth and jobs in Britain, the higher

:20:50.:20:55.

unemployment and the higher benefits bill that his failing plan

:20:55.:20:59.

has delivered. Mr Speaker, the Chancellor's out of touch and

:20:59.:21:05.

complacence hubris of a year ago now seems such a distant memory.

:21:05.:21:10.

The Prime Minister boasted Britain was out of the danger zone. The

:21:10.:21:17.

Chancellor claimed the UK was a safe haven. But we though the truth.

:21:17.:21:25.

Cutting too far and too fast has backfired. And every one of the

:21:25.:21:28.

Chancellor's claims of a year ago have completely unravelled. Mr

:21:28.:21:31.

Speaker, it is not as if they weren't warned, including by their

:21:32.:21:38.

coalition colleagues. Before the election, we said, like every

:21:38.:21:42.

country after the global financial crisis, we had to get our deficit

:21:42.:21:47.

down. And that meant tough decisions on tax and spending cuts.

:21:47.:21:52.

The question is not if you do it but how you do it. Which is why we

:21:52.:21:57.

on this side of the House warned if you try and cut spending and raise

:21:57.:22:03.

taxes too far and too fast you risk choking off recovery, pushing up

:22:03.:22:07.

unemployment and borrowing. We said the Chancellor's plan was reckless.

:22:07.:22:12.

He was ripping out the foundations of the House leaving our economy

:22:12.:22:18.

not safe but badly exposed to the growing storm. Let me remind the

:22:19.:22:22.

Chancellor what the managing director of the International

:22:22.:22:27.

Monetary Fund warned this summer. She said slamming on the brakes too

:22:27.:22:32.

quickly will hurt the recovery and worsen job prospects. And what has

:22:33.:22:36.

happened? Consumer and business confidence has slumped in the last

:22:36.:22:41.

year. Our recovery was choked off over a year ago. Since last year,

:22:41.:22:47.

slower growth than any other G7 country, than Japan. And they had

:22:47.:22:51.

an earthquake, Mr Speaker. Unemployment at a 17-year high.

:22:51.:22:55.

Over 1 million young people out of work. And today the news that

:22:55.:23:00.

growth this year will in the be the 2.3% the Chancellor so confidently

:23:00.:23:06.

predicted in the June Budget this year, but just 0.9%. And growth

:23:06.:23:11.

lower next year than this year, Mr Speaker, and lower than forecast in

:23:11.:23:16.

the year after. The fourth time the OBR has downgraded his growth

:23:16.:23:24.

forecasts in just 18 months. Mr Speaker, now today we learn that

:23:24.:23:28.

even judged by the one objective this Chancellor set himself - to

:23:28.:23:33.

get the deficit down - he is failing. Because with lower growth

:23:33.:23:39.

and rising unemployment, pushing up the cost of failure, can the

:23:39.:23:46.

Chancellor confirm that compared to his Autumn Statement a year ago

:23:46.:23:53.

borrowing is now not set to be the 46th billion pounds more than they

:23:53.:23:58.

said it would be in March? Can he confirm, compared to his plans of a

:23:58.:24:05.

year ago he is now going to borrow a staggering �158 billion more in

:24:05.:24:13.

borrowing? Higher borrowing than he promised a year ago. �158 billion

:24:13.:24:19.

more in borrowing. And can he also confirm, despite the pain of the

:24:19.:24:24.

�40 billion of extra spending cuts and tax rises, the Chancellor

:24:24.:24:29.

boasted about a year ago, can he confirm that compared to the plan

:24:29.:24:33.

he inherited from the previous Government at the last election,

:24:33.:24:39.

and commitment is higher, can he confirm that he is going to be

:24:39.:24:43.

during more at the end of this Parliament than the balanced plan

:24:43.:24:47.

he inherited from the Labour Government, Mr Speaker? That's a

:24:47.:24:57.

fact. Mr Speaker, a year ago, the Prime Minister told the CBI in five

:24:57.:25:04.

years' time we will have balanced the books. Not some kind of dodgy

:25:04.:25:08.

rolling target but a clear commitment to eliminate the deficit

:25:08.:25:15.

by 2015. Can the Chancellor tell the House, will he meet his fiscal

:25:15.:25:21.

mandate to eliminate the structural deficit by 2015? Isn't the truth Mr

:25:21.:25:25.

Speaker, with unemployment up, and borrowing up, going further and

:25:25.:25:29.

faster has been utterly counter predictive and self defeating? It

:25:29.:25:34.

has backfired. We've had all of the pain and none of the gain, Mr

:25:34.:25:39.

Speaker. I have to say, these OBR forecasts show the Chancellor's

:25:39.:25:45.

entire economic and fiscal strategy is now in complete disarray. And

:25:45.:25:51.

yet all we get are excuses. Blaming anyone and anything, the Labour

:25:51.:25:55.

Government, the snow, the Royal Wedding, the Japanese earthquake,

:25:55.:26:04.

higher inflation, VAT, the eurozone, low-paid dinner ladies and teaching

:26:04.:26:09.

assistants. Anybody but himself, Mr Speaker. When it is the Chancellor

:26:09.:26:15.

that is to blame, it is his failing plan that has pushed up

:26:15.:26:18.

unemployment and pushed up borrowing. It is his reckless

:26:18.:26:25.

gamble that has made things worse in Britain, not better, Mr Speaker.

:26:25.:26:30.

Of course, if eurozone countries continue to fail to sort out their

:26:30.:26:35.

problems it will have an impact here. But Britain's economic

:26:35.:26:41.

recovery was choked off a year ago, before the euro crisis. Look at the

:26:41.:26:48.

OBR forecast. They've downgrade growth in Britain this year they've

:26:48.:26:52.

upgraded growth in the euro area. Out of 27 countries in the European

:26:52.:26:56.

Union only Greece, Portugal and Cyprus have grown more slowly than

:26:57.:27:01.

Britain in the last year. Very to say, Mr Speaker, it is not only not

:27:01.:27:05.

too late for the Chancellor to change course. The deepening euro

:27:05.:27:11.

crisis makes it even more important that he sees sense. But instead, he

:27:11.:27:14.

is still clinging to the fantasy that any change of course would

:27:14.:27:20.

make things worse. And he still complains to the illiterate fantasy

:27:20.:27:25.

that low, long-term interest rates in Britain are a sign of enhanced

:27:25.:27:30.

credibility and not as they were in Japan in the 1990s or America today

:27:30.:27:36.

a sign of stagnant growth in our economy. This summer the head of

:27:36.:27:42.

the IMF warned the Chancellor, growth... THE SPEAKER: However long

:27:42.:27:46.

it takes, the situation is very simple, the Shadow Chancellor will

:27:46.:27:50.

be heard. That's all there is to it. Thank you Mr Speaker, they don't

:27:50.:27:58.

like it, but in is the truth, Mr Speaker. This summer, they set up

:27:58.:28:01.

the OBR. Maybe they should listen to their forecasts Mr Speaker. This

:28:01.:28:07.

summer, the head of the IMF warned the Chancellor, growth is necessary

:28:07.:28:10.

for fiscal credibility. But the Chancellor says a change in his

:28:10.:28:15.

plans would lead to a loss of credibility, even as he is forced

:28:15.:28:19.

today to confirm that this growth and during targets are now wildly

:28:19.:28:24.

off track, Mr Speaker. Last month, the IMF advised the Government, and

:28:24.:28:30.

let me quote. If activity were to undershoot current expectations and

:28:30.:28:36.

risk aperiod of stagnation or contraction, countries that face

:28:36.:28:39.

history ically low yields, for example Germany and the UK, should

:28:39.:28:45.

also consider delaying some of their planned consolidation. Mr

:28:45.:28:49.

Speaker, with the world darkening and with today's news that in

:28:49.:28:52.

Britain we are set to see stag understand growth not just this

:28:52.:28:56.

year but next, let me ask the Chancellor. Isn't it now time for

:28:56.:29:01.

him to listen to the IMF? How much worse does it have to get? How many

:29:01.:29:04.

more young people have to lose their jobs? How many more

:29:04.:29:07.

businesses have to go bankrupt? How many more times does Select

:29:07.:29:13.

Committee to come here and downgrade his growth forecasts and

:29:13.:29:17.

upgrade his borrowing forecast. How many more billions in borrow doing

:29:17.:29:22.

we need to pale for failure before this Chancellor finally sees sense?

:29:22.:29:29.

Mr Speaker, these would be difficult times for any Chancellor.

:29:29.:29:36.

But our fear is that, once again, the Chancellor is making a

:29:36.:29:41.

catastrophic error of judgment. He is refusing to learn the lessons of

:29:41.:29:45.

history or economics. He is refusing to shift to a more

:29:45.:29:50.

balanced plan. He got it wrong 18 months ago. He is getting it wrong

:29:50.:29:55.

again today, Mr Speaker. Repeating the mistakes he made last year will

:29:55.:29:59.

only make things worse. Isn't it now time to listen to the IMF, to

:29:59.:30:04.

cut taxes, to have a slower pace of spending reduction. Isn't it time

:30:04.:30:07.

for him to change course before it is too late? What to we have

:30:07.:30:12.

instead, Mr Speaker, a cobbled together package of growth measures

:30:12.:30:17.

which he must know and which the OBR forecast confirms do not

:30:17.:30:21.

address the fundamental problem that his rapid reckless and

:30:21.:30:27.

deflationary plan is choking off recovery and pushing up during.

:30:27.:30:30.

Mr Speaker, we've been here before. This is the third emergency growth

:30:30.:30:34.

package in a year. The last thing our economy needs is yet another

:30:34.:30:44.
:30:44.:30:44.

Honourable members do not have to take my word for it. Let's look at

:30:44.:30:50.

the OBR's own forecast. Do they think the Chancellor's plans will

:30:50.:30:56.

boost growth? No. They have revised growth down for next year. And in

:30:56.:31:03.

the following year it down from 2.9% to 2.1%. Does the OBR think

:31:03.:31:08.

the Chancellor's plans will cut unemployment? Let me tell the House

:31:08.:31:15.

two things from the OBR forecast which the Chancellor decided not to

:31:15.:31:21.

tell us. Unemployment is not only higher next year than this year,

:31:21.:31:30.

but higher the year after as well. And employment is expected to fall

:31:30.:31:35.

by 100,000 next year, Mr Speaker. We were promised a game changing

:31:35.:31:39.

statement, a great plan that would secure recovery. Instead we have a

:31:39.:31:42.

plan for growth which leads to lower growth and higher

:31:42.:31:46.

unemployment, Mr plan. It is not game changing, it is just more of

:31:46.:31:54.

the same. He has announced a new youth jobs fund. But let me ask him

:31:55.:31:58.

why did he ever abolished the Future Jobs Fund in the first

:31:58.:32:04.

place? They abolished it in their first month in office. The new plan

:32:04.:32:09.

will not be up and running until the middle of next year. He claims

:32:09.:32:13.

to have increased the Bank levy. So why is the cutting taxes on banks

:32:13.:32:19.

this year compared to last year? Down from 3.5 billion last year to

:32:19.:32:22.

2.5 billion this year. Why doesn't he cut of the bonuses and do

:32:22.:32:28.

something proper about youth jobs? He has announced a sensible halt to

:32:29.:32:34.

the fuel duty rise. But can he confirm as a result of last

:32:34.:32:38.

January's VAT rise that motorists are paying three pence per litre

:32:38.:32:48.

more on petrol, Mr Speaker. He has relabel credit easing, but why did

:32:48.:32:52.

you wait so long and why did he put his faith in the Project Merlin

:32:52.:32:57.

deal which has patently failed and as the Bank of England confirms

:32:57.:33:02.

today has seen net business lending fall over the last year? And as for

:33:02.:33:06.

his equally belated decision to set up a new infrastructure fund, this

:33:06.:33:10.

from the same chance or that that abolished the building schools for

:33:10.:33:19.

the future programme. -- the same Chancellor. How much of this new

:33:19.:33:23.

investment has been pre-announced? How much will happen this year and

:33:23.:33:27.

next year? How much of it is actually pre-announced funding for

:33:27.:33:31.

the next spending review after the next general election? Can he

:33:31.:33:35.

confirm that this new of budget infrastructure fund will be subject

:33:35.:33:40.

to a National Audit Office value for money test to make sure that

:33:40.:33:45.

projects are not more expensive for the taxpayer than direct Government

:33:45.:33:51.

borrowing? He has also announced a rebate for energy intensive

:33:51.:33:53.

industries to correct the chaos caused by his botched carbon floor

:33:53.:34:02.

price. He has reinstated just 10% of his plan for housing. As we

:34:02.:34:07.

study the small print, despite all the bluster of the new measures,

:34:07.:34:10.

because this Chancellor is so determined not to break from his

:34:10.:34:14.

failing plan, is once again giving with one hand and taking with the

:34:14.:34:20.

other. How are these new growth measures being paid for by hitting

:34:20.:34:27.

families and savers, Mr Speaker? How much will has cut in tax

:34:27.:34:35.

credits cost a working family on average income? -- will his cut.

:34:35.:34:38.

And is the Chancellor still meeting the Prime Minister's pledged to

:34:38.:34:47.

deliver real term rises in NHS spending this Parliament? Is the

:34:47.:34:52.

Government still hitting women harder than men? Are they still

:34:52.:34:57.

increasing Child poverty and not reducing it? Living he has already

:34:57.:35:02.

cut childcare support by �1.5 billion, busy helping women that

:35:02.:35:10.

want to go to work or is the making it harder? -- is he helping? If we

:35:10.:35:15.

are all in it together, why is it always families, women and children

:35:16.:35:21.

are paying the price? It is clear that the Chancellor's plan is not

:35:21.:35:25.

working. The OBR knows it, the markets know it, the IMF knows it,

:35:26.:35:35.

we know it. So increasingly did the Chancellor's coalition colleagues.

:35:35.:35:42.

His arch-rival the Mayor of London certainly knows it. We know why the

:35:42.:35:46.

Chancellor cannot change course. We know why he cannot accept the IMF's

:35:46.:35:55.

advice. We all know why even as the euro crisis deepens, even as he is

:35:55.:36:01.

borrowing �158 billion more than he planned, this cider political

:36:01.:36:11.

Chancellor will not budge. -- so political. He knows that he has got

:36:11.:36:15.

the economic judgments of this Parliament catastrophically wrong.

:36:15.:36:19.

If after just 18 months, his plan is leading to falling growth,

:36:19.:36:25.

rising unemployment, and �158 billion more in borrowing, the

:36:25.:36:29.

country either needs a new Chancellor or any plan, a balanced

:36:30.:36:37.

and credible plan on jobs, growth and the deficit. We need a real

:36:37.:36:43.

plan for jobs, growth and deficit reduction. Labour's five point plan

:36:43.:36:47.

for jobs, growth and deficit reduction. I have to say, Mr

:36:47.:36:53.

Speaker, protecting our economy, businesses, jobs and family

:36:53.:36:57.

finances is more important than trying to protect a failed economic

:36:57.:37:02.

plant. For his sake, for his party's sake, and in the national

:37:02.:37:06.

interest, the Chancellor needs to change course and he needs to do so

:37:06.:37:13.

now. The Chancellor of the Exchequer.

:37:13.:37:18.

Ed Balls replying to the Chancellor. We are leaving the House of Commons

:37:18.:37:21.

now. If you would like to watch the Autumn Statement debate which now

:37:21.:37:26.

follows, you can do so by watching BBC Parliament or going to the

:37:26.:37:33.

Democracy Live website. Just before we continue with our Budget

:37:33.:37:37.

coverage, there have been dramatic events in Teheran. Dozens of young

:37:37.:37:42.

Iranian men have entered the British embassy building in the

:37:42.:37:45.

Iranian capital, throwing rocks, petrol bombs and burning documents

:37:45.:37:51.

looted from offices. According to Iranian news agencies, British

:37:51.:37:54.

staff are having to flee from the back of the embassy. We will keep

:37:55.:38:00.

you up to date with that as we go on. Back to the Autumn Statement.

:38:00.:38:05.

Was it an Autumn Statement or a miniature Budget? Was it a full-

:38:05.:38:09.

blown Budget? The second this year. It sounded like that, as he went

:38:09.:38:12.

through his announcements were lower growth and more borrowing

:38:12.:38:17.

than he had planned and more public spending cuts to come even after

:38:17.:38:22.

the next election. And also tide continued control of public sector

:38:22.:38:32.
:38:32.:38:33.

pay. -- tight, continued control. It was a very busy statement indeed.

:38:33.:38:39.

Economic growth, bringing down at the debt, and unemployment. He is

:38:39.:38:44.

saying that the economy will grow by less than 1%, 0.9%, this year.

:38:44.:38:49.

It will be even worse in 2012, 0.7. He said there would not be a

:38:49.:38:53.

recession but when growth is that low, it is not far off and for many

:38:53.:39:01.

it will feel like a recession. It begins to pick up, too 0.1% in 2013,

:39:01.:39:11.
:39:11.:39:12.

2.7% in 2014. -- do 0.1% in 2013. Normally growth is predicted to be

:39:12.:39:18.

about 3% in four years time, so do not take too much notice of that.

:39:18.:39:21.

He then taught about the part of the budget deficit which does not

:39:21.:39:26.

go away with economic growth, which has now increased. It will take

:39:26.:39:31.

longer to get that down. Let's move on now to what follows from that,

:39:31.:39:36.

the borrowing forecast as a result of lower growth. He is now going to

:39:36.:39:44.

borrow in this current financial year of �127 billion. That is about

:39:44.:39:48.

five more than he had anticipated in the next budget. Next year it

:39:48.:39:58.
:39:58.:40:00.

goes down but not by much. By 2014- 15 it is down to 79 billion. Even

:40:00.:40:06.

by 2015, these are new figures, 53 billion is still being borrowed. By

:40:06.:40:10.

my quick calculation, by this financial year and the financial

:40:10.:40:17.

year ending in 2016, the Chancellor will be borrowing �101 billion more

:40:17.:40:23.

than he had planned, even in the March Budget. The Government debt

:40:23.:40:31.

as a percentage of our GDP is expected to peak in 2014-15 at

:40:31.:40:37.

around 70%. That is the way the British Government measures it. Lot

:40:37.:40:41.

of announcements about infrastructure spending, as we had

:40:41.:40:45.

expected in this Autumn Statement Budget. The Chancellor confirmed

:40:45.:40:49.

there would be �5 billion of additional public spending on

:40:49.:40:52.

infrastructure over the next three years. He rattled off a host of

:40:52.:40:59.

things, new roads, the Trans Pennine railway, railway schemes,

:40:59.:41:03.

35 of which have been given the go- ahead. There would be �1.2 billion

:41:03.:41:07.

of additional public money for school building. This is not

:41:07.:41:11.

additional spending. He has found money from elsewhere in the

:41:11.:41:17.

Government's massive budget and moved it from current spending into

:41:17.:41:26.

infrastructure. There is also relief in terms of transport. The

:41:26.:41:28.

3p feel duty increase planned for January this coming year was

:41:28.:41:33.

cancelled. He has said that the increase will go ahead in August,

:41:33.:41:40.

2012, but he might change his mind in the March November -- March

:41:40.:41:50.
:41:50.:41:52.

Budget, I suppose. The RPR it will -- rail fares will go up but not by

:41:52.:41:58.

as much as was planned. He will also help small businesses and

:41:58.:42:06.

medium-sized ones. There will be a loan guarantee scheme to give more

:42:06.:42:09.

borrowings to the SME sector. He said he would raise that ceiling if

:42:09.:42:17.

there was a demand. There is a �1 billion business finance

:42:17.:42:21.

partnership for mid-sized companies. And he will continue the labour

:42:21.:42:24.

market deregulation, basically making it easier and cheaper to

:42:24.:42:29.

fire people. More on the business side. �1 billion extra for the

:42:29.:42:33.

regional growth fund. That only covers England, headed by Michael

:42:33.:42:37.

Heseltine. The business rate holiday is extended from October,

:42:37.:42:44.

2012, to April, 2013. That is relief for businesses. And tax

:42:44.:42:54.
:42:54.:42:55.

relief for investments in small start-up firms. If you put in

:42:55.:42:59.

100,000, it will only cost you 50,000, even if you do not pay tax

:42:59.:43:04.

at that higher rate. Housing is one of the main areas that the

:43:04.:43:09.

Chancellor hopes to get some great back into the economy. He has

:43:09.:43:12.

proposed �400 million to kick-start building projects that already have

:43:12.:43:16.

planning permission but have not started. 300,000 homes have

:43:16.:43:20.

planning permission but they are not being built and this is an

:43:20.:43:24.

attempt to get that going. There is also the mortgage guarantee scheme

:43:24.:43:27.

for first-time buyers, which will make it easier for first-time

:43:27.:43:33.

buyers to get a mortgage for that first leg up onto the property

:43:33.:43:38.

ladder. There will be increased discounts available under the

:43:38.:43:43.

right-to-buy scheme, introduced many years ago by Margaret Thatcher.

:43:43.:43:47.

How do you pay for all of that in the longer term? The Chancellor had

:43:47.:43:52.

some savings to announce, too. The rise in the state pension age has

:43:52.:44:01.

been brought forward to 2026. We will all have to work until 67. And

:44:01.:44:04.

the public sector going on strike tomorrow of course, tough news for

:44:04.:44:09.

them. They know their pay is frozen at the moment and it will only rise

:44:09.:44:16.

by 1% per year after the current pay freeze, which essentially

:44:16.:44:21.

knocks out collective bargaining in the public sector. And elements of

:44:21.:44:27.

the working tax credit will be frozen. That is not all that was in

:44:27.:44:30.

this statement, but it is what we have been able to glean as the main

:44:30.:44:38.

headlines. Nick Robinson, I don't know where to start! This is the

:44:38.:44:41.

statement that George Osborne never wanted to make, which he feared

:44:41.:44:45.

making. It is a statement which is not only totally grimmer for him

:44:45.:44:50.

because he may have to make another one in the March budget which could

:44:50.:44:56.

be even worse. It showed us there is pain today. Tax credits are

:44:56.:45:00.

frozen for many people. There is pain tomorrow. Public sector

:45:00.:45:04.

workers will see that once the pay freezes over in 2012, that they

:45:04.:45:08.

will move not to another freeze but a limit on the total public sector

:45:08.:45:17.

pay bill of 1%. And for anybody over the age of 52, -- under the

:45:17.:45:22.

age of 52, they will have to work until they are 67 to get the state

:45:22.:45:32.
:45:32.:45:36.

Ed Balls, of course, therefore had the territory to say effectively,

:45:36.:45:41.

"We told you so and you should change course." And yet he is going

:45:41.:45:45.

to borrow a lot more, which is what Ed Balls him to do in the first

:45:45.:45:51.

place. Indeed, as we said with Stephanie before the speech, there

:45:51.:45:56.

is almost a convergence between what Labour was demanding and what

:45:56.:46:01.

Mr Osborne has now been forced to do. There is on the outturn. What I

:46:01.:46:07.

mean by that is Ed Balls would say he wouldn't have started here, as

:46:07.:46:13.

he wouldn't have started to fast and borrowing would will lower.

:46:13.:46:18.

George Osborne would say if you had started where Ed Balls wanted there

:46:18.:46:23.

would have been higher interest rates. So yes they converge but

:46:23.:46:29.

from different routes. One fact for you, a striking one. The OBR,

:46:29.:46:34.

Office for Budget Responsibility, estimate the number of public

:46:34.:46:37.

sector job losses there'll be. The important thing is that the

:46:37.:46:43.

Government have now told us that the spending cuts will go on beyond

:46:43.:46:53.
:46:53.:46:55.

the election into 2015 16 - to 710,000. Before that they forecast

:46:55.:47:01.

around 400,000 going up to 2016. That's a cumulative total. And at a

:47:01.:47:06.

time when given the growth projections, it is not exactly

:47:06.:47:12.

clear the private sector is going to create another 750,000 jobs.

:47:12.:47:16.

That's the worry. The expectation is that they will, the private

:47:16.:47:21.

sector, take that in later years. But the really striking figure, the

:47:21.:47:25.

economic number, was the big down growth in economic growth to less

:47:25.:47:32.

than 1% for next year. Stephanie, what is striking to me, since the

:47:32.:47:37.

Government has made such a centre of its economic strategy the

:47:37.:47:40.

reduction every year in the amount it hat to borrow, it continues to

:47:40.:47:50.

reduce but it is going to borrow a lot more, by my calculations over

:47:50.:47:56.

�100 billion between this year and the end of 1015-16. Won't that

:47:56.:48:01.

ratle the bond markets a bit? going to be an interesting test

:48:01.:48:06.

isn't it? People were expecting to see higher borrowing numbers. It is

:48:06.:48:10.

interesting to remember that long debate we were all watching that a

:48:10.:48:13.

year-and-a-half ago, the debate over whether Labour's plans were

:48:13.:48:19.

going to command the confidence of the financial markets. The exhibit

:48:19.:48:24.

A from the Osborne side and from the Governor of the Bank of England

:48:24.:48:27.

is you couldn't be credible about reducing a deficit this large and

:48:27.:48:31.

still saying you are going to borrow in the region of �70 billion

:48:31.:48:36.

to �80 billion. The belief was you had to have promised to balance the

:48:36.:48:39.

books over the course of a Parliament, because you couldn't

:48:39.:48:45.

commit future Governments to doing that. The symbolism of that in the

:48:45.:48:48.

new borrowing forecasts quite significant. The world has changed.

:48:48.:48:51.

George Osborne says borrowing would have been even higher under Labour,

:48:51.:48:58.

and I suspect Ed Balls would say something different. And the debate

:48:58.:49:04.

is over whether growth would have been higher with a less austere

:49:04.:49:07.

policy. It is an interesting point about the bond market, because the

:49:07.:49:11.

US for example has the very bad borrowing figures and it is

:49:11.:49:15.

borrowing at a very low rate. It is finding it cheaper to borrow than

:49:15.:49:18.

the UK is. On the other hand if you look at countries borrowing less

:49:18.:49:21.

than news the eurozone, they are having a difficult time, because

:49:21.:49:23.

their governments are note considered to be credible. I

:49:23.:49:26.

suspect we'll hear more about the market reaction and whether or not

:49:26.:49:29.

the low rate of borrowing that the Government has, the low cost that

:49:29.:49:34.

it is paying for its borrowing, is a reflection of cost in the market

:49:34.:49:39.

or is it a reflection that we are not expected to grow very fast and

:49:39.:49:46.

these are worrying times for the global economy. Robert, we had �1

:49:46.:49:50.

billion here, �1 billion there. In a sense it was budget with the

:49:50.:49:56.

content of Gordon Brown and the delivery of Iain Duncan Smith.

:49:56.:50:01.

harsh, Andrew. It certainly did have a lot of the flavour of the

:50:01.:50:07.

Gordon Brown budgets and pre-Budget statements. George Osborne did say

:50:08.:50:11.

the Autumn Statement was just supposed to be a description of

:50:11.:50:16.

where the economy is going. But we've had loads of the

:50:16.:50:21.

microadjustments of the economy that he used to criticise Gordon

:50:21.:50:25.

Brown for doing every six months. This is very much a meddling mini

:50:25.:50:29.

Budget in that sense. It is important given that Gordon Brown

:50:29.:50:34.

and George Osborne set themselves targets, and therefore one should

:50:34.:50:38.

hold them to account. An interesting paragraph in the Office

:50:38.:50:41.

for Budget Responsibility's report. It says, in the absence of

:50:41.:50:44.

additional policy measure in this the 2011 Autumn Statement, we

:50:44.:50:49.

believe the Government would have had a less than 50% chance of

:50:49.:50:54.

achieving its debt targets. What does that mean? The OBR is saying

:50:55.:50:59.

that George Osborne has flunked the debt targets. It is as close as an

:50:59.:51:04.

organisation ever gets to saying that. It's a significant critique

:51:04.:51:10.

of his earlier Budget. Crucially what the OBR are saying is that

:51:10.:51:17.

unless he transferred from date spending -- day-to-day spending to

:51:17.:51:21.

capital infrastructure, he would have breached his own targets. One

:51:21.:51:26.

of those involves dealing with current spending. So switching from

:51:26.:51:30.

one heading to another heading made the difference of whether George

:51:30.:51:37.

Osborne had the human imiation of saying I missed my -- humiliation

:51:38.:51:42.

of saying, "I missed my target.". To be clear, in terms of this

:51:42.:51:47.

difficult judgment he has to make about whether or not to press ahead

:51:47.:51:54.

with deficit reduction, some trougling news out of America, --

:51:54.:51:58.

troubling news out of America. Fitch is reviewing whether to

:51:58.:52:03.

downgrade the US from AAA. The Chancellor will say look, if I

:52:03.:52:08.

weren't taking this tough action there's a risk we would lose our

:52:08.:52:13.

AAA and borrowing costs would go up significantly. We've been

:52:13.:52:16.

struggling to get hold of copies of the budget book. The numbers we

:52:16.:52:24.

need to compare is the �22 whole in interest he says he is saving by

:52:24.:52:28.

being austere with the increase in unemployment benefit payments.

:52:28.:52:32.

Politically that will be terribly important. Most people would say

:52:32.:52:41.

those are payments for failure. had a lot of these rail programmes,

:52:41.:52:46.

roads wide ened, and this phrase from America, shovel-ready. When

:52:46.:52:52.

you speak to business people is there such a thing as a shovel-

:52:52.:52:57.

ready job? It takes weeks and months from giving aproful for

:52:57.:53:04.

these things to happen in terms of people being employed and money go

:53:04.:53:11.

into the economy. Business leaders all take the view the best way, if

:53:11.:53:15.

the Government is going to do anything to stimulate growth, is

:53:15.:53:18.

indeed to spend on infrastructure. Within the business community and

:53:18.:53:21.

the City, if they are looking at measures to stimulate growth, what

:53:21.:53:24.

he is doing in terms of infrastructure will receive a

:53:24.:53:28.

degree of enthusiastic support. We'll be back to you three a lot

:53:28.:53:32.

more to talk about yet. We are on until 3 o'clock. We've got plenty

:53:32.:53:36.

to cover in what was a packed Autumn Statement. If you want to

:53:36.:53:42.

comment on the Chancellor's statement you can do so by going to

:53:42.:53:45.

bbc.co.uk/news and click on Have Your Say.

:53:45.:53:55.
:53:55.:53:57.

Or if you are tweeting, use the # - @bbceconomy Jon Sopel is outside

:53:57.:54:04.

Parliament. He is going to gather political reaction to this

:54:04.:54:09.

statement. I'm joined by Lord Ashdown, Alistair Darling, the

:54:09.:54:12.

former Chancellor and Michael Fallon of the Conservative Party.

:54:12.:54:19.

Michael Fallon, growth down, borrowing up. Retirement age going

:54:19.:54:24.

up and a public sector cap on pay. Is there anything to be cheerful

:54:24.:54:27.

about? Yes, I think what the Chancellor reassured us about was

:54:27.:54:31.

he is still sheltering Britain from this storm that's engulfing the

:54:31.:54:35.

rest of Europe, that he is doing his best to help families through

:54:35.:54:40.

it at a time of rising prices and we are still on course to meet our

:54:40.:54:46.

deficit reduction plan, just beyond the end of this Parliament we will

:54:46.:54:50.

have got rid of the structural deficit. But borrowing a huge

:54:50.:54:56.

amount of money. Everybody knows we had much higher inflation than was

:54:56.:55:02.

anticipated. There is the slowdown in the eurozone. But overall we are

:55:02.:55:07.

still going to meet our targets, our main date and get our deficit

:55:07.:55:11.

back under controlling. Which is what they inherited from you. Night

:55:11.:55:17.

looks like the struful deficits will disappear about the plan we

:55:17.:55:22.

planned -- structural deficits. The growth forecast that the Chancellor

:55:22.:55:26.

made in his budget in the summer of last year has completely fallen

:55:26.:55:30.

away. We are talking about growth now having died at the end of last

:55:30.:55:34.

year. It is going to flat line for another two or three years. There

:55:34.:55:37.

is not a shred of evidence to suggest why it is going to recover

:55:37.:55:40.

the year after. We are borrowing more, not less,s which is the one

:55:41.:55:45.

thing the Government said it was going to balance the books by 2015.

:55:45.:55:50.

Clearly it is not now. But isn't the reason for that nothing to do

:55:50.:55:54.

with this Government but is to do with the eurozone itself? All of

:55:54.:55:59.

this happened after the crisis became acute in this eurozone. The

:55:59.:56:05.

economy grew in 2009 until the autumn of 2010, then it stopped. Of

:56:05.:56:08.

course the eurozone crisis is going to make things very difficult for

:56:08.:56:12.

us. Many of us have been saying for months now that unless it is sorted

:56:12.:56:19.

out it really will have a very profound effect on us. But to blame

:56:19.:56:23.

everything on the last Government's spending when the Government

:56:23.:56:28.

supported that spending up until 2008 and on Europe is getting

:56:29.:56:32.

disingenuous. A judgment was made on George Osborne 12 months ago

:56:32.:56:34.

that. Judgment is way off course now. We are borrowing much more

:56:34.:56:38.

than they intended to, which is completely against everything he

:56:38.:56:41.

said only last summer. Paddy Ashdown, pick up on that. It is not

:56:41.:56:47.

true. We all know the euro crisis started much, much earlier. You

:56:47.:56:51.

asked what there was to be cheerful about. Thanks to Labour, we are now

:56:51.:56:57.

running a bigger debt as a percentage of GDP than the Italians.

:56:58.:57:01.

That's what the inheritance left behind. And we are paying interest

:57:01.:57:05.

rates lower than the Germans. Why? Because the country and the markets

:57:05.:57:08.

are convinced we are serious about cutting the deficit. Labour's

:57:08.:57:11.

answer to a crisis created by borrowing is to borrow even more.

:57:11.:57:18.

said that the Chancellor has had to borrow more than they thought he

:57:18.:57:24.

would But Labour's answer is to borrow even more. It is un sporable.

:57:24.:57:28.

If there is one thing the country should be grateful for is it

:57:28.:57:31.

doesn't have a Labour Government still in power which would be

:57:31.:57:41.
:57:41.:57:45.

damaging more -- borrowing more and damaging hospitals. ALL TALK AT

:57:45.:57:50.

ONCE Your party supported us until right up into the election. Unless

:57:50.:57:53.

you get growth you can't get the borrowing down. Did you welcome

:57:53.:57:57.

what was announced in terms of the infrastructure projects? Die, but

:57:57.:58:02.

with the proviso that many of these things were announced I think you

:58:02.:58:08.

will find by successive Governments. It takes a long time to get these

:58:08.:58:11.

going. I welcome them but the present Government will have to

:58:11.:58:15.

change the planning laws, or you won't see the new roads and the

:58:15.:58:18.

investment which is welcome. A word of caution. It is very frustrating

:58:18.:58:22.

but it takes a long time to see these things on the ground. We are

:58:22.:58:26.

changing the planning laws, but there was a huge package of

:58:26.:58:30.

infrastructure measures to bring forward spending, to help growth,

:58:30.:58:34.

on roads on railways, on school building with. All those things,

:58:34.:58:38.

which are good for construction, but also good for regions outside

:58:38.:58:41.

the South East. There was also a package of measures to help

:58:41.:58:45.

families through this era of rising prices from, for example freezing

:58:45.:58:50.

the council tax again, stopping the increase in fuel duty which he

:58:50.:58:54.

pence ild in year after year. And helping rate commuters, which is

:58:54.:58:59.

important here in London and the South East. There was good finger

:58:59.:59:08.

pointing there from Michael Fallon. ALL TALK AT ONCE Every Chancellor

:59:08.:59:13.

has to reach a judgment on fuel dutyy, on taxes and so on.

:59:13.:59:16.

Understandably George Osborne has said with the prices they are at

:59:16.:59:20.

the moment he wanted to do something there. You support it?

:59:20.:59:24.

course I support something that reduces the burden. If you look at

:59:24.:59:28.

the squeeze on tax credits, if you look at the squeeze on people's

:59:28.:59:30.

incomes I think most people watching this programme, most

:59:30.:59:33.

people reading the papers tomorrow morning, will find their incomes

:59:34.:59:37.

are going to continue to be squeezed with. Unemployment is

:59:37.:59:42.

likely to be up. Employment is likely to go down, according to the

:59:42.:59:45.

Office for Budget Responsibility. We are in for a grim time but it is

:59:45.:59:48.

exacerbated by the bad decisions taken by this Government at the

:59:48.:59:52.

start. Let me let the new Conservative

:59:52.:59:57.

speak. We supported their spending cuts but why don't they now support

:59:57.:00:03.

them? Here is the bottom line. support what I proposed. Hang on a

:00:03.:00:10.

second. For every �18 the coalition is cutting in public expenditure

:00:10.:00:14.

his plan is to cut �17. We understand the cuts that have to be

:00:14.:00:18.

made. Labour is in a position of self denial over their own Budget

:00:18.:00:23.

cutting. The differences that you parade are

:00:23.:00:29.

exaggerated. That there isn't a huge difference in policy. Oh, Jon,

:00:29.:00:33.

come on. If we risk by 0.5 a percentage point the interest rates

:00:33.:00:38.

we are now enjoying having to pay back the debt they left behind,

:00:38.:00:45.

kite cost you �5 billion, not the schools, hospitals and pensions but

:00:45.:00:55.
:00:55.:01:01.

Here's another big difference. They would increase the VAT, I'm not

:01:01.:01:06.

sure Alistair supports that. Let's ask him. There's lots of people,

:01:06.:01:11.

not just within the Labour Party, saying we need to boost demand,

:01:11.:01:14.

demand is suppressed at the moment. Everyone agrees that the deficit

:01:14.:01:19.

has to be brought down. I made that clear prior to the last election,

:01:19.:01:23.

I've never changed my view on that, but we've got to do it in a way

:01:23.:01:29.

that actually works. All I would say is George Osborne has had to

:01:29.:01:35.

sit down conceding that he's borrowing �150 billion more than

:01:35.:01:41.

what he said. You'd borrow even more. I have to call stumps. This

:01:41.:01:47.

argument will continue. Back to the studio. A couple of headlines as we

:01:47.:01:52.

go through this detailed paperwork. The UK Office for Budget

:01:52.:01:56.

Responsibility has raised its estimate of public sector job

:01:56.:02:03.

losses from 400,000 to 710,000. That's not far off a 100% increase

:02:03.:02:09.

in its estimate. That's a lot. And also UK net debt, this is what we

:02:09.:02:19.
:02:19.:02:20.

used to call the national debt, by 2015/16 will now be �1.47 billion -

:02:20.:02:30.
:02:30.:02:36.

sorry � 1 47 billion. Call it �1.5 trillion. That will be our national

:02:36.:02:41.

debt and that's 11 billion more, 8% more than the Chancellor forecast

:02:41.:02:47.

only back in March. That's a lot of debt. And a lot of an increase. Now,

:02:47.:02:51.

one of the Chancellor's key measures, of course, was that he

:02:51.:02:57.

would stay on course for deficit reduction. He wants to show the

:02:57.:03:02.

suspensionial money markets he's still sticking to plan A. But

:03:02.:03:08.

although borrowing continues to fall it is at a much slower rate

:03:08.:03:13.

and we're racking up debt. What does the City think of that. Back

:03:13.:03:17.

to Maryam. A bit of a muted response from the

:03:17.:03:21.

City. Largely to do with the fact that a lot of the measures were

:03:21.:03:28.

announced over the last few days. Let's look at the markets. That is

:03:28.:03:37.

what the FTSE has been doing. A little sell-off ones people started

:03:37.:03:43.

digesting the figures. Earlier today we saw a drop in guilts. A

:03:43.:03:46.

sign that the markets were convinced by the Chancellor's

:03:46.:03:52.

arguments. But now they have risen back up more to do with the high

:03:52.:03:59.

yields on Italian bonds. Let's bring in Louise Cooper from BCG

:03:59.:04:03.

partners. Are you happy with what the Chancellor had to say today?

:04:03.:04:09.

was always quite restricted on what he could announce today because

:04:09.:04:14.

he's in coalition with the liberal democrats, so politically he's

:04:14.:04:19.

constrained and financialcally he's constrained and we knew the figures

:04:19.:04:24.

would be downgrated and that means the situation is far worse. A lot

:04:24.:04:30.

of it was preannounced. There was a few extra bells and whistles in the

:04:30.:04:34.

statement but really it's not a huge surprise and you can see that

:04:34.:04:38.

by the financial reaction. And Jane, the important things you wanted to

:04:38.:04:43.

see was the Chancellor sticking to his austerity plans but coming up

:04:43.:04:48.

with fresh ideas for growth. Has he delivered? There were a few little

:04:48.:04:53.

bits and pieces with respect to consumption on the margin, but

:04:53.:04:57.

really this was about austerity as far as the City is concerned. And

:04:57.:05:01.

you can see that from the guilts market. But we need to put this in

:05:01.:05:05.

context and the context is out of the eurozone debt crisis and the

:05:05.:05:10.

Chancellor therefore needed to reassure the markets that he wasn't

:05:10.:05:18.

going to out step those austerity announcements he'd already

:05:18.:05:21.

announced and from the point of view of the international markets

:05:21.:05:25.

that really is the whole point. I suppose the muted reaction from

:05:25.:05:31.

the City has a lot to be said for it, but the City does realise that

:05:31.:05:36.

coming up in the coming weeks and months it is darkening prospects

:05:36.:05:39.

for both business and finance. And that is one thing they can take

:05:39.:05:46.

from today's statement. Thanks, we'll see how long it stays

:05:46.:05:56.

muted. You're watching the BBC's special coverage of George

:05:56.:06:01.

Osborne's Autumn Statement This is what he had to say. He forecast

:06:01.:06:11.
:06:11.:06:11.

growth of 0.9%. The Government expects to borrow �11 billion more

:06:11.:06:18.

over the next five years, taking total borrowing to not much shy of

:06:18.:06:21.

�1.5 trillion. Government debt as a percentage of

:06:21.:06:26.

our national wealth is reckoned to peak at 2014/156789

:06:26.:06:31.

Let's look at some of the costly bits of the statement to the

:06:31.:06:36.

Treasury. The duty fuel increase of 3p has been cancelled. That was due

:06:36.:06:44.

in January. There will be an additional �5 billion spending on

:06:44.:06:49.

infrastructure. That's searching down every sofa in Whitehall to see

:06:49.:06:54.

if there is any loose change. And tax relief for small start-up

:06:54.:06:58.

firms. The state pension age is going to

:06:58.:07:04.

go to 67, as it always was, now earlier, 2026. The public sector,

:07:04.:07:09.

which over a certain level of income is now enduring a pay freeze.

:07:09.:07:15.

When that's over, well, they can look forward to no more than 1%

:07:15.:07:19.

rise after the freeze is over. And there have been elements of the

:07:19.:07:24.

working tax credit has also been frozen. That's only part of what is

:07:24.:07:28.

in the Budget. I call it a Budget because, in a sense, it is pretty

:07:28.:07:35.

much a Budget. We've been joined by Danny Alexander, the Chief

:07:35.:07:40.

Secretary to the Treasury. Welcome. This forecast for growth of 0.7%

:07:40.:07:47.

next year, which is pretty much close to zero, does that include

:07:47.:07:51.

taking into account all the measures the Chancellor has

:07:51.:07:57.

announced today? Well, the observia forecast takes into account

:07:57.:08:00.

measures that relate to further spending cuts at the end of the

:08:00.:08:04.

period. What they're not able to take into account is the impact on

:08:04.:08:09.

growth of many of the supply reforms we're pushing through.

:08:09.:08:12.

That's something that economic forecasting can't reach. But it

:08:13.:08:15.

certainly takes into account the spending decisions that we've made

:08:15.:08:20.

and the impact. And you're right to say, of course, that is a much

:08:20.:08:26.

lower figure than was forecast previously. It reflects, as the OBR

:08:26.:08:30.

themselves say, the much tougher conditions faced in this country

:08:30.:08:34.

and in the eurozone but is in line very much with growth forecasts for

:08:34.:08:38.

France, Yemeni, Italy, the eurozone and other countries around the

:08:38.:08:42.

world. But even after all this search for measures to boost growth,

:08:42.:08:52.
:08:52.:08:53.

which be -- we began to hear after your party conference, after all

:08:53.:08:57.

these funds have been reallocated and all the assurance that this was

:08:57.:09:02.

a Government that believed in growth and getting the economy

:09:02.:09:07.

going, but taking all that into accounts the growth is a net effect

:09:07.:09:13.

of 0.7%. Many of the measures announced today, the credit easing,

:09:13.:09:16.

the investment in infrastructure and the youth jobs scheme, all

:09:16.:09:20.

these things, the effect will be felt not just next year but in

:09:20.:09:25.

future years as well. The effect of additional infrastructure spending

:09:25.:09:30.

will support the economy for a very long time to come. But you must be

:09:30.:09:34.

disappointed that that is all they're producing, surely? You were

:09:34.:09:40.

meant to deliver a Budget for growth and all we get is 0.7%, and

:09:40.:09:50.
:09:50.:09:50.

if we're lucky, a big if, 2% next year. You'll find a welcome for the

:09:50.:09:53.

investment in infrastructure and the finance packages and many other

:09:53.:09:56.

things there that will support growth, particularly in the medium-

:09:56.:10:02.

term. One of the things the OBR has done today, as well as telling us

:10:02.:10:07.

about the problems in the eurozone and the high commodity price,

:10:07.:10:12.

they've said that the economy as a whole is smaller and that's why

:10:12.:10:16.

these sorts of supply side reforms are important to lift the economy

:10:16.:10:20.

potential over the long-term. understand that, but whatever way

:10:20.:10:24.

you cut it and even after all that has been announced today, the blunt

:10:24.:10:29.

truth is that we are staring austerity in the face for the

:10:29.:10:32.

foreseeable future? It is definitely true that we are facing

:10:32.:10:36.

much slower growth. We're facing very tough conditions and we've

:10:36.:10:41.

made very clear today, by setting out our spending plans for the two

:10:41.:10:45.

years of the next Parliament, that, if you like, the pattern of

:10:45.:10:49.

spending reductions and fiscal consolidation we've seen in this

:10:49.:10:55.

Parliament will roll on for two years in order to mike sure we meet

:10:55.:10:59.

our objectives. It's austerity. Particularly if you're in the

:10:59.:11:04.

public sector. It's austerity? is further spending constraint. We

:11:04.:11:11.

haven't set out what mix of policies we'll use in 2050/16/17.

:11:11.:11:18.

But it is right to say this country will be facing further fiscal

:11:18.:11:21.

consolidation and austerity for two further years in order to make sure

:11:21.:11:25.

we deal with the enormous financial problems we face as a country. But

:11:25.:11:30.

it is important to say this is delivering real benefits to Britain

:11:30.:11:34.

in terms of the low interest rates and we're avoiding many of the

:11:34.:11:37.

problems people see on the television screens every single day

:11:37.:11:41.

from Italy and Spain and many of our other competitors. But when the

:11:41.:11:46.

Chancellor, your boss, told us last year, "Britain's economic row

:11:46.:11:51.

coverry is on track" that wasn't true? Was it? Well, one of the

:11:51.:11:56.

reasons, Andrew, why we set up in the first place the independent

:11:56.:12:01.

Office for Budget Responsibility was precisely because - hold on,

:12:01.:12:05.

let me answer the question, because we wanted those forecasts to be in

:12:05.:12:10.

independent hands rather than the hands of ministers. So you have the

:12:10.:12:15.

OBR's forecast of last June....He Said this in the Autumn Statement

:12:15.:12:20.

last year, just a year ago,, "Britain's economic recovery is now

:12:20.:12:26.

on track." And I simply ask you, that wasn't true, was it? There are

:12:26.:12:31.

big factors going on in the economy that are affecting our ability to

:12:31.:12:35.

grow. High commodity prices, oil prices have increased by 40% over

:12:35.:12:40.

the last year, that slows growth. Like wise the problems in the

:12:40.:12:45.

eurozone, in our major competitors, that is having both an effect on

:12:45.:12:50.

our growth potential but as the on yar say in their report, the

:12:50.:12:54.

eurozone countries still need to sort out those problems otherwise

:12:54.:13:00.

we won't get the growth this country needs. The on yar gives you

:13:00.:13:05.

a smoke screen. It's not a smoke screen because we have independent

:13:05.:13:09.

figures for the first time. I'm not saying the Chancellor lied last

:13:09.:13:16.

autumn I'm just saying he turned out, whether it was the on yar or

:13:16.:13:25.

Uncle Tom Cobbley. What I'm saying now is, is it true? What true?

:13:25.:13:30.

the British economy is on track? have a plan to make our economy

:13:30.:13:33.

stronger. This Autumn Statement was about two things, about protecting

:13:33.:13:38.

our country from the huge risks that have grown substantially from

:13:38.:13:42.

the other economies and making our economy stronger. We have the on

:13:42.:13:47.

yar's best efforts to work out growth forecast for the coming

:13:47.:13:51.

years and I accept those forecasts and they are much less, you're

:13:51.:13:55.

right to say than they forecast previously. But is the British

:13:55.:14:01.

economy on track for recovery now? The British economy is on track to

:14:01.:14:04.

deal with our deficit and grow in the future. So what we have is a

:14:04.:14:08.

forecast, which is very difficult this year, it's very difficult next

:14:08.:14:12.

year and growth picks up in the following year, so yes, we're on

:14:13.:14:18.

track to pick up in the following years. You've announced a lot on

:14:18.:14:24.

spending and shovel-ready jobs, and roads here and rail here, and all

:14:24.:14:34.
:14:34.:14:34.

the rest of it, are we all Dickensians now? I would not accuse

:14:34.:14:42.

you of that now. I would say what we recognise as a Government, both

:14:42.:14:47.

liberal democrats and Conservatives is one of the things that has eld

:14:47.:14:50.

us back in recent years is the quality of our infrastructure. We

:14:51.:14:55.

are 28th in the world. That is simply not good enough for a

:14:55.:15:00.

country like the yubgdz. That's why investment in road and rails is the

:15:00.:15:05.

sort of thing we need to be doing in this country. It's perfectly

:15:05.:15:11.

clear that you've brought into the argument a bit more job ceection

:15:11.:15:21.
:15:21.:15:26.

and infrastructure is valuable at stage. How confident are you?

:15:26.:15:30.

confident that the OBR forecast is the best estimate we have for what

:15:31.:15:37.

is happening to the economy next year. I can't sit here telling you

:15:37.:15:42.

we will definitely a void the eurozone circumstances, because

:15:42.:15:47.

there is so much uncertainty in the economy. But the OBR's forecast is

:15:47.:15:52.

the best estimate we have. And what I am certain of is the measures the

:15:52.:15:57.

Government has taken in terms of investing and getting the new-build

:15:57.:16:01.

housing sector going will help build the economy in the year to

:16:02.:16:09.

come. Nick. Lots of people will be worried about tax credits. Have you

:16:09.:16:16.

made an estimate of what it will cost in those circumstances?

:16:16.:16:20.

give a big inflation-linked increase to people out of work, but

:16:20.:16:25.

those people in work but struggling, you freeze their benefits? So we

:16:25.:16:32.

are spending overall, this coming year, �8.3 billion on the uprating

:16:32.:16:37.

of benefits this year. That is more than forecast when we originally

:16:37.:16:41.

made those decisions. We've focused on protecting the poorest people in

:16:41.:16:45.

the country, those on out of work benefits and children through the

:16:45.:16:53.

child tax credit. People on working tax credit will principally benefit

:16:53.:17:03.
:17:03.:17:04.

from this. This is an e-mail from a viewer Patricia says, "Why should

:17:04.:17:10.

people out of work be given a 5.2% pay rise? My husband works full

:17:10.:17:14.

time and he hasn't had a penny pay rise in four years." What do you

:17:14.:17:20.

say to her? I'd say benefits have always been uprated by inflation.

:17:21.:17:26.

That, almost every single year falls behind earnings, which is the

:17:26.:17:31.

other measure we could have used. We want to make sure that the

:17:31.:17:36.

lowest incomes, people who have lost their jobs and working hard to

:17:36.:17:43.

get back into work are protected through this. But if you were...but

:17:43.:17:48.

if you don't work you get 5%. people on the tax credit by and

:17:48.:17:55.

large will be recipients of other credits, 80% will be receiving

:17:55.:17:59.

child credits and housing benefits which are upgraded in the normal

:17:59.:18:03.

way. This seems to me to be the best way to control costs whilst

:18:03.:18:07.

having a group, yes, it's tough. I recognise it's a tough decision,

:18:07.:18:12.

but through other things we're doing we're also helping those

:18:12.:18:16.

people too. Can I ask about the fiscal rules and the importance of

:18:16.:18:20.

sticking to them. We've heard the Chancellor talking about touting

:18:20.:18:24.

the flexibility of the rules, but it is crucial for the markets to be

:18:24.:18:29.

seen to be meeting the rules. And the second rule is that debt has to

:18:29.:18:37.

fall as a share of GDP and the new forecasts show that happening, but

:18:37.:18:42.

it is minuscule it goes to 7.7% of GDP. The Chancellor himself said

:18:42.:18:46.

the forecasts will be worse if there is a recession in the

:18:46.:18:49.

eurozone. Many people think there is already a recession in the

:18:50.:18:54.

eurozone and he's behind the times. In six months's time, when he has

:18:54.:18:59.

to stand up with the Budget are you going to announce tough spending

:18:59.:19:04.

cuts? We do attach very great importance to sticking to the

:19:04.:19:07.

fiscal rules we've set out last you're quite right to say the debt

:19:07.:19:13.

target is to have debt falling by the year '50/16. What we've

:19:13.:19:23.
:19:23.:19:25.

announced today is tougher spending in the year '50/16 and '16/17 to

:19:25.:19:30.

make sure we get it under control. The goal for debt is a path, as you

:19:30.:19:36.

say, rather than a level. We need to get debt coming down. We have to

:19:36.:19:46.
:19:46.:19:47.

leave it there. We'll let you get back to preparing

:19:47.:19:51.

these contingency plans for the eurozone meltdown. Thank you.

:19:51.:19:54.

has the Chancellor's statement gone down with business people,

:19:54.:20:00.

particularly in Merseyside? That's where we are. Our reporter, Judith

:20:00.:20:06.

Moritz is at the Cammell Laird shipyard. Yes, I am. I have the

:20:06.:20:10.

protective glasses on because we're inside the apprentices' school here.

:20:10.:20:17.

Some are doing a bit of pipe welding. 85 apprentices on site and

:20:17.:20:23.

many more start. It is a successful story when it comes to-out

:20:23.:20:26.

employment here, the kind the Chancellor would hold up. But how

:20:26.:20:31.

did the announcements go down with business people from this region

:20:31.:20:41.
:20:41.:20:41.

and beyond. Natalie Hayward from a tea bar in Liverpool. And Max

:20:41.:20:46.

Steinberg. Natalie, we'll talk to you first of all. You own a pretty

:20:46.:20:51.

small business in Liverpool. Did the Chancellor say what you wanted

:20:51.:20:59.

to hear? I think there were a few positive things. We have to see

:20:59.:21:04.

whether businesses will have to jump through hoops to get credits

:21:04.:21:09.

that he's announced. Relaxing regulations in employment law and

:21:09.:21:14.

health and safety is obviously very good for an employer. And capping

:21:14.:21:20.

fuel prices ultimately benefits us all. So that was quite welcome as

:21:20.:21:25.

well. What about the extension on the business rates will that affect

:21:25.:21:29.

you personally? No, one of the things he does need to do is make

:21:29.:21:32.

that applicable to all businesses because I don't benefit from that

:21:32.:21:36.

at all in any way. I know it's obviously good for small businesses

:21:36.:21:42.

but it needs to be applied across the board in my opinion. Liverpool

:21:42.:21:47.

wants to attract investment to this area did you hear what you wanted

:21:47.:21:51.

to? You talk about small businesses, like Natalie's do you think the

:21:51.:21:55.

Chancellor said the right things? There were a lot of good things in

:21:55.:22:00.

the Budget, it turned out, in my view to be a mini Budget. In terms

:22:01.:22:06.

of small businesses, I think small businesses are still struggling to

:22:06.:22:11.

borrow money. And the talk is fine. What I need to see it is working on

:22:11.:22:16.

the ground. That small businesses can go to banks and barrow. It's

:22:16.:22:20.

the small and medium-sized enterprises that are going to

:22:20.:22:25.

provide the jobs in the future. I was delighted to hear about the

:22:25.:22:28.

infrastructure investment. That's good for Liverpool and the north-

:22:28.:22:35.

west. It fits into our plans to create an intrapresentairial

:22:35.:22:45.
:22:45.:22:48.

atmosphere in Liverpool. We'll be celebrate ing winning the

:22:48.:22:53.

enterprise prizes next year. But the economy is still extremely

:22:53.:22:58.

parlous and I think will we will be going through difficult times in

:22:58.:23:06.

the next few years. I think perhaps a year has gone by and we've missed

:23:06.:23:09.

an opportunity. We need to invest in this economy. The Government can

:23:09.:23:13.

help with that. Some of the money will be released now and some in a

:23:13.:23:19.

few years' time. I hope to build on what has been announced today and

:23:19.:23:22.

if we can create a better infrastructure in this country,

:23:22.:23:29.

it's good for UK plc. Steve, you run a road haulage

:23:29.:23:36.

company so presumably for you the fact that the 3p fuel duty has been

:23:36.:23:41.

dropped must be welcome? It's welcomed but I still don't think

:23:41.:23:49.

it's enough to stimulate the economy. If you look abroad, some

:23:49.:23:57.

fuel prices are still 20p to 50p cheaper than in the UK.

:23:57.:24:06.

We still need cuts on fuel. Thank you very much. To sum up. People

:24:06.:24:10.

here saying they heard some of what they wanted to, but not everything,

:24:10.:24:14.

but that's the thing, you can't please everybody all of the time.

:24:14.:24:21.

Well' be back here later in the programme to speak to more business

:24:21.:24:24.

people and see if they heard what they wanted to from the Autumn

:24:25.:24:28.

Statement. That's the view in Merseyside. Let's go back to the

:24:28.:24:32.

view in Westminster from Jon Sopel who is still outside Parliament.

:24:32.:24:38.

Thank you very much. I'm joined by the shadow chief secretary to the

:24:38.:24:42.

Treasury. The Government set the stage pretty much for what was

:24:42.:24:46.

coming. Was there anything that surprised you? I have to say, I was

:24:46.:24:52.

really surprised by the borrowing figures. To have to borrow an extra

:24:52.:24:57.

�158 billion to what was previously planned that's bad news and a sign

:24:57.:25:03.

of economic failure. Because the reason they're borrowing so much

:25:03.:25:07.

more is because unemployment is higher than expected and growth

:25:07.:25:10.

continues to flat line and inflation is higher as well. And we

:25:10.:25:15.

warned the Government 18 months ago if you cut too far and too fast you

:25:15.:25:18.

risk choking off the economic recovery and that's exactly what

:25:18.:25:24.

we're seeing because if you have more people out of work you are

:25:24.:25:29.

paying more in Belfast and more businesses failing. So you you're

:25:29.:25:34.

saying that the Government are now borrowing too much? Yes, you have

:25:34.:25:41.

to reduce the deficit but in a balanced way. But if they hadn't

:25:41.:25:47.

cut the borrowing would have been even higher? But if you have more

:25:47.:25:52.

people back at work you'll have more paying taxes. Yes, tax

:25:52.:25:56.

increases and spending cuts but but have to have jobs, because unless

:25:56.:26:00.

you have people in work paying taxes you're not going to reduce

:26:00.:26:04.

the deficit. And that's what we're seeing now, the cost of economic

:26:04.:26:09.

failure is more people out of work, but also higher Government

:26:09.:26:13.

borrowing and we've seen both of those today. But the world has

:26:13.:26:18.

changed in the past 18 months. There was not a euro crisis of the

:26:18.:26:22.

proportions we're seeing today? that's true but we also said don't

:26:22.:26:27.

rip out the foundations of the house. Because when a hurricane is

:26:27.:26:31.

brewing you're not in a position to with stand a storm and that's what

:26:31.:26:35.

we're seeing now because our economic recovery was choked off

:26:35.:26:39.

before the euro crisis. But also, unless you've got the jobs and the

:26:39.:26:43.

growth plan, then when a crisis does come along you're blown out of

:26:43.:26:47.

the water and that's what we're seeing now with the increases in

:26:47.:26:53.

borrowing, coupled with the increases in unemployment. It feels

:26:53.:26:59.

like a hurricane here just as you started talking about it. I'll talk

:26:59.:27:04.

about the sunshine next! Government's argument was that the

:27:04.:27:09.

reason it is having to do so much now is that you didn't repair the

:27:09.:27:13.

roof when the sun was shining, that there were all those years of

:27:13.:27:20.

plenty and Labour carried on spending like crazy. Up until 2008

:27:20.:27:25.

the Government and the liberal democrats were backing the

:27:25.:27:32.

Government's spending plans. It was Labour's choice in 2007 to increase

:27:32.:27:38.

our borrowing to avoid the home repossessions we saw in the early

:27:38.:27:42.

'90s. Yes, of course, now we need to start reducing that deficit but

:27:42.:27:47.

what the Government are finding is if you cut too far and too fast you

:27:47.:27:51.

choke off the economic recovery and as a result you can't bring down

:27:51.:27:56.

borrowing because you're paying more out on higher unemployment and

:27:56.:28:03.

less coming in in taxes because more businesses are failing.

:28:03.:28:07.

There were some announcements on investment in infrastructure, what

:28:07.:28:11.

did you think of that? There are a number of things today that are the

:28:11.:28:15.

right thing to do, but if you ask are they making any difference the

:28:15.:28:20.

OBR is the arbiter of that and the OBR have assessed the Government's

:28:20.:28:24.

plans and revised down their forecasts for this year, next year

:28:24.:28:29.

and the year after and revised upwards the unemployment. So I

:28:30.:28:33.

don't think they're doing enough to get the economy back on track to

:28:33.:28:38.

create the jobs we need. If they did have a comprehensive plan I

:28:38.:28:43.

believe we would get the economy moving again and the deficit down.

:28:43.:28:48.

But isn't that what they've done today? No, because you've just

:28:49.:28:55.

moved money to pay others. Rob be Peter to pay Paul.

:28:55.:28:59.

There's no new money for any of these initiatives. They're moving

:28:59.:29:04.

from one pot to another and as a result the OBR say that it's not

:29:04.:29:14.
:29:14.:29:30.

We have seen the eurozone crisis develop.

:29:30.:29:35.

What you see in the forecast is they revised up their forecast for

:29:35.:29:41.

growth in the eurozone this year. That tells us a lot about what the

:29:41.:29:51.
:29:51.:29:52.

Chancellor is doing here. So too are the Chancellor's

:29:52.:29:55.

decisions to cut so far and deep, which has choked off the economic

:29:55.:30:03.

recovery. If you had been in the recovery and you had been writing

:30:03.:30:07.

this Autumn Statement it would have been higher? We called for a cut in

:30:07.:30:13.

VAT and a tax on bankers' bonuses to fund 100,000 jobs. We have been

:30:13.:30:19.

clear we would want to reTuesday the deficit. Halving the deficit --

:30:19.:30:23.

reducing the deficit. Halving the deficit. That approach will ensure

:30:23.:30:27.

we have the growth in the jobs we need, while taking tough decisions

:30:27.:30:30.

to reduce the deficit. This Government tried to go further and

:30:31.:30:35.

faster and they have not succeeded. Though you have complained about

:30:35.:30:39.

the borrowing levels, if you had been writing this Autumn Statement

:30:39.:30:44.

borrowing would have been higher? That is a yes or a no? We would

:30:44.:30:49.

have reduced the deficit at a slower pace. We know you need

:30:49.:30:53.

growth and jobs if we reduce the deficit in a sustainable way. What

:30:54.:30:56.

we are finding is the Government are not able to reduce the deficit

:30:56.:31:02.

because they don't have a plan for growths and jobs. That is why it is

:31:02.:31:08.

coming in higher. Instead of paying for failure, paying out more in

:31:08.:31:11.

benefits, we would support businesses to get us through the

:31:11.:31:16.

economic turmoil, put us in a stronger position for jobs, growth

:31:16.:31:21.

and deficit reduction as well. Andrew, back to you in the studio.

:31:21.:31:26.

Thank you. It is 2.30pm, just gone. You are watching the special

:31:26.:31:30.

coverage of the Chancellor's Autumn Statement. Let's bring you up-to-

:31:30.:31:40.
:31:40.:31:46.

Danny Alexander told this programme he could not rule out a recession

:31:46.:31:56.
:31:56.:32:17.

Because of these dire economic forecasts, a lot of additional

:32:17.:32:22.

infrastructure spending, there will be �5 billion additional public

:32:22.:32:27.

spending on infrastructure. �5 billion, not a lot in a �1.5

:32:27.:32:37.
:32:37.:32:39.

As we have been told on this programme, these forecasts for

:32:39.:32:42.

growth, such as it is, already include this spending in the

:32:42.:32:48.

outcome. They won't make things any better.

:32:48.:32:54.

On pensions and benefits, the basic state pension will increase by

:32:54.:33:04.
:33:04.:33:15.

state pension will increase by D plenty of statements in this

:33:15.:33:19.

Budget. The banking levy will be increased

:33:19.:33:29.
:33:29.:33:32.

to maintain revenue at �2.5 billion. Almost �1 billion for this new

:33:32.:33:36.

Youth Contract, to tackle unemployment over the three years.

:33:36.:33:39.

Most involving work experience, not jobs.

:33:39.:33:49.
:33:49.:33:52.

D Now, we are joined by the director of the Institute for

:33:52.:33:54.

Fiscal Studies, Paul Johnson. Welcome to our special programme.

:33:54.:34:00.

One of the things which has not yet been commented on is we've seen a

:34:00.:34:06.

line of public spending cuts between last year, through to 2015

:34:06.:34:12.

and the Chancellor said, there's more coming in 2016 and '17. That

:34:12.:34:16.

is right. The consequence of the terrible growth numbers is that in

:34:16.:34:20.

order to meet his fiscal rules, he's going to have to do two more

:34:20.:34:24.

years of cuts, at essentially the same kind of level he is cutting

:34:24.:34:28.

over this Parliament. We said before five years of cuts of this

:34:28.:34:36.

scale are unprecedented. We will now get seven years of cuts in this

:34:37.:34:42.

scale. Two years of substantial public spending cuts. And one of

:34:42.:34:47.

the Chancellor's aims, that he made much of, was that he would get rid

:34:47.:34:50.

of the structural deficit, that bit of borrowing that doesn't go away

:34:50.:34:54.

even when the economy is growing. He had a target for it. We are

:34:54.:34:58.

going to borrow more than he originally thought. Is it clear now

:34:58.:35:06.

if and when the structural deaf silt does go away? Well, he's --

:35:06.:35:11.

structural deficit does go away? Well, he's only on target to reach

:35:12.:35:17.

it because he's had to do two years of extra cuts. Had he stuck to his

:35:17.:35:20.

previous spending plans he would have missed his target. So, he's

:35:20.:35:24.

had to cut more to meet that target? He's had to take another

:35:24.:35:27.

�15 billion away from public spending in the years after the

:35:27.:35:32.

next election. He has not told us how. He said in his forecast he is

:35:32.:35:38.

taking an extra �15 billion away. That is enough to say he will meet

:35:38.:35:44.

his targets. If he had not penciled that in the OBR would have said you

:35:44.:35:48.

will miss your targets. On the issue of debt, often mixed up with

:35:49.:35:54.

deficit, but it's the I kum lated deficit, the -- the accumulated

:35:54.:35:58.

deficit, the other target was there would be a date, he would add and

:35:58.:36:04.

add and add to debt, then it would become a smaller percentage of our

:36:04.:36:07.

overall national wealth. That was his other goal. What has happened

:36:07.:36:12.

there? Well, he has said he's going to meet that. Obviously the total

:36:12.:36:16.

level is going to reach a higher amount. This was always supposed to

:36:16.:36:21.

be a kind of... Always an odd target, to specify one year in

:36:21.:36:25.

which you are moving to a slightly smaller number. You can muck around

:36:25.:36:28.

with numbers to make that work. He said that will just about happen.

:36:28.:36:33.

That is a less important target than the one we were just

:36:33.:36:38.

describing. On the structural deficit? It means, as you said,

:36:38.:36:45.

there are �100 million or more of extra borrowing. On your analysis

:36:45.:36:49.

and looking at these figures, how do you think this slump compares

:36:49.:36:56.

with previous periods of economic difficulties in terms of people's

:36:56.:37:00.

living standards? It is extraordinary. Compared with what

:37:00.:37:06.

the Budget three or four years ago was expecting t economy will be 13%

:37:06.:37:11.

smaller in 2016. More than 3% smaller than we were thinking six

:37:11.:37:16.

months ago. It is a bit smaller than before the crash? It is still

:37:17.:37:20.

smaller. This is an extraordinary change. One of the consequences of

:37:20.:37:24.

this, this is in the Office for Budget Responsibility figures, is

:37:24.:37:30.

really big real earnings cuts wefplt knew there would be 1% -- we

:37:30.:37:34.

knew there would be 1%. They think 3% this year. And continued falls

:37:34.:37:39.

next year and the year after. People are poorer. A squeeze on

:37:39.:37:45.

living standards. People will be no better off in 2015 than they were

:37:45.:37:49.

in 2001. That is unprecedented. Before the

:37:49.:37:52.

eurozone started to cause problems, one of the reasons the economy did

:37:52.:37:56.

not grow as it was meant to was this squeeze on living standards,

:37:56.:38:01.

that people were not spending as much and tightening their belts.

:38:01.:38:05.

That continues. It is cause and effect, isn't it? If the economy is

:38:05.:38:09.

doing badly then earnings go up less. It means people have less to

:38:09.:38:13.

spend. We are stuck in that uncomfortable position, where we're

:38:13.:38:17.

not going to get a lot driven by growing consumption in the short

:38:17.:38:21.

run. People are still paying down accumulated debt. Not just the

:38:21.:38:24.

Government which has a lot of debt. It is the private sector as well.

:38:24.:38:29.

The thing that strikes me is the politics of this, because I would

:38:29.:38:33.

suggest, Nick, that what it means is whereas this coalition started

:38:33.:38:39.

life in 2010, thinking we'll do all the tough stuff first and the

:38:40.:38:43.

economic cycle will be in kilter, we will hit 2015 with the job done,

:38:44.:38:51.

we are off to the races. They are now totally out of kilter? That is

:38:51.:38:55.

right. It has huge implications. The Chancellor was counting on,

:38:55.:38:58.

just before the next election, saying job done, now we can give

:38:58.:39:02.

you some goodys to reward you in the form of tax cuts. The Liberal

:39:02.:39:06.

Democrats were counting on saying, job done, we no longer have to

:39:06.:39:11.

stick with this coalition, we can present ourselves to the electorate

:39:11.:39:14.

and give them a choice. There is an implication for the Labour Party as

:39:14.:39:18.

well. I suspect, in fact I predict that day after day you will now

:39:18.:39:22.

have George Osborne saying to Ed Balls, these figures, from the

:39:22.:39:27.

Office for Budget Responsibility say you have cuts when you come to

:39:27.:39:31.

power. What l you reverse these cuts and make borrowing worse? The

:39:31.:39:35.

pressure is on. The rules, in other words of the game, have

:39:35.:39:38.

dramatically changed. Even if the economy does not get much worse. If

:39:38.:39:42.

it did, it would change more. That really affects the dynamics of

:39:42.:39:47.

politics and what they say of each other and how they discuss what

:39:47.:39:51.

their plans are for the next election. Robert, when the official

:39:51.:39:58.

fosh cast is 0.7% -- forecast is 0.7%, we know it could be minus

:39:58.:40:03.

0.7% in reality or more - don't you get the feeling that we are on a

:40:03.:40:08.

knife-edge, and that if the wind blows strong from the eurozone, we

:40:08.:40:15.

are over that edge? There's a lot that could go wrong with even this

:40:15.:40:20.

pessimistic forecast. For example, next year the OBR expects a big

:40:20.:40:23.

rise in business investment. Business confidence is shot to

:40:23.:40:28.

pieces at the moment. There is a huge storm blowing in the eurozone.

:40:28.:40:35.

If it goes as badly wrong in the eurozone as many fear it will do,

:40:35.:40:39.

then frankly everything today will feel irrelevant. The size of the

:40:39.:40:44.

economic shot will knock these forecasts for six. The Office for

:40:44.:40:49.

Budget Responsibility does make it absolutely clear that, you know,

:40:49.:40:54.

there are huge risks. What would happen in Europe and the

:40:54.:41:01.

damage which could be done to the banking system. A final thought

:41:01.:41:07.

from you on this? Anything to cheer us up? Not a lot. It is worse than

:41:07.:41:10.

we expected. It is another two years of austerity. As Robert just

:41:10.:41:14.

said, the risks are mostly on the downside.

:41:14.:41:18.

In a way, what you are saying is this is as good as it gets, it

:41:18.:41:22.

could be worse? That is what the OBR are saying. That is what will

:41:22.:41:27.

happen if the eurozone does go up. You are tapping away there. She is

:41:27.:41:32.

sending her report to the IMF! To you have a final thought for us?

:41:32.:41:35.

will tear off because I want to hear what the Office for Budget

:41:35.:41:39.

Responsibility says about this structural change. I think, are you

:41:39.:41:43.

surprised Paul, just to see an independent body, that it has to be

:41:43.:41:48.

said, no-one elected, has had a fundamental impact on this report,

:41:48.:41:51.

it is one that George Osborne intended and many would say is a

:41:51.:41:56.

good thing. They are just as likely to be wrong as the Treasury. The

:41:56.:42:01.

fact they are not politicians, they can still be wrong. It allows

:42:01.:42:06.

politicians to hide behind it. goes both ways. They can blame the

:42:06.:42:11.

bad news on the OBR. They are also stuck with what the OBR has decided.

:42:11.:42:15.

It has decided to be pretty gloomy about what has happened to the

:42:15.:42:19.

economy. This feels like a good thing, actually for the way we run

:42:19.:42:23.

the British economy. These are credible numbers. They may be wrong,

:42:23.:42:27.

they probably will be wrong. Forecasters get it wrong. These are

:42:27.:42:31.

credible. Had we had the Chancellor saying my forecasts are more

:42:31.:42:35.

optimistic than this, then they would not have had that credibility.

:42:35.:42:38.

There's a nasty outcome, but it a east a good thing that the

:42:38.:42:41.

Chancellor is being held to -- it's a good thing that the Chancellor is

:42:41.:42:46.

being held to account. It helps George Osborne to say, not my fault,

:42:46.:42:51.

I am being told to do this. He will use that against Ed Balls. He feels

:42:51.:42:55.

the OBR might be wrong, the Treasury is wrong, he has been

:42:55.:42:59.

proved right on a series of things F he were in the Treasury in a few

:42:59.:43:03.

years' time, he will have a big decision. Will he say, I don't want

:43:03.:43:08.

this independent advise, because it is bad and misleading? Here's a

:43:08.:43:13.

word, he'll keep them. Let's go back to Merseyside to join Judith

:43:13.:43:19.

for more business reaction. Welcome back to the apprentices

:43:20.:43:23.

school here at Cammell Laird. This is a hive of activity. They are

:43:23.:43:31.

doing a bit of pipe welding today. 85 apprentices on site here. I have

:43:31.:43:37.

protective googles on. -- goggles on. We will find out what real

:43:37.:43:41.

employers have to say about the Autumn Statement. I have three

:43:41.:43:47.

joining me. Steve Potter, you are here with business interests which

:43:47.:43:51.

are many and varied. You are here as a solicitor. You advice on small

:43:51.:43:57.

and medium companies and also Nick Hugh, you run a car leasing company.

:43:57.:44:05.

If I can talk to you first. Your business interest ps vary from ship

:44:05.:44:10.

building to funeral burials. A lot of aspects to your business. Did

:44:10.:44:20.

you hear what you wanted to from George Osborne?

:44:20.:44:24.

I am sorry about that, we have lost the line to Merseyside there. When

:44:24.:44:29.

we get it back, we will go straight back up to get more business

:44:29.:44:39.
:44:39.:44:39.

reaction. We have, in one of our of the CBI, John Cridland and also

:44:39.:44:42.

the General Secretary of the TUC, Brendan Barber. Welcome to both of

:44:42.:44:46.

you. Mr Cridland, let me come to you first. You have a lot of what

:44:47.:44:49.

business wanted - more infrastructure spending and the

:44:49.:44:53.

rest of it. Are your members going to start investing at last? Yes, I

:44:53.:44:57.

think they will. It was grim economic news. If it is grim

:44:57.:45:01.

economic news we have get on with getting the country moving and

:45:01.:45:05.

getting the country working. There is a plan A plus here. The measures

:45:05.:45:12.

on roads, on digital, on energy, on unemployment. On helping with

:45:12.:45:14.

energy-intensive industries, helping mid-size businesses grow. I

:45:14.:45:17.

think they add up to a confidence- building package for the business

:45:17.:45:20.

community. So if businesses do invest and

:45:20.:45:25.

we'll have to wait and see, you are sitting on cash reserves of �900

:45:25.:45:29.

billion at the moment. If you start to put that into the economy, would

:45:29.:45:35.

we do better than the 0.7% growth which the OBR says is all we are in

:45:35.:45:45.
:45:45.:45:49.

I think it explains why the OBR were more optimistic about growth

:45:49.:45:54.

in 2013 it than they were. We have made a start today. I think it is

:45:54.:45:58.

the private sector that has the money to put to the public sector

:45:58.:46:01.

balance sheet to get things moving when the public sector can't and

:46:01.:46:05.

shouldn't be spending money but it does not have. Brendan Barber, it

:46:05.:46:10.

seems like a pretty grim time if you have a job in the public sector.

:46:10.:46:18.

You are going to lose more jobs, according to the OBR, from 400,000

:46:18.:46:23.

losses to 700,000. You have a pay freeze as well and after all of

:46:23.:46:28.

that you will be lucky to get a 1% rise, which is less than inflation.

:46:28.:46:32.

It is hard pounding. It certainly is. As to say, the prospects are

:46:33.:46:39.

looking particularly grim for their public sector. -- as you save. We

:46:39.:46:46.

were told this pain would be compensated for by private growth,

:46:46.:46:54.

but the forecast has turned to ashes. More heart pounding, as you

:46:54.:46:59.

say, and a massive squeeze on the living standards of the 6 million

:46:59.:47:02.

people working in the public services in particular. It is hard

:47:02.:47:07.

to see what you can do with the public sector. Of course, you can

:47:07.:47:10.

always make changes at the edges, but the fact is that there is a

:47:10.:47:14.

hard pounding for the public sector, even though the Government is about

:47:14.:47:18.

to borrow �111 billion more than it intended and more than Labour has

:47:18.:47:27.

been calling on them to do, and at the end of it all we will be

:47:27.:47:35.

indebted to the tune of 1.5 trillion pounds. These cuts that we

:47:35.:47:44.

were seeing, we were told it would lead to private sector growth which

:47:44.:47:49.

has simply not happened. We have been getting all the pain, with the

:47:49.:47:55.

jobs going, the pay freeze in the public sector, all the pain has

:47:55.:48:01.

been coming but the game has not. Surprise surprise. This is what

:48:01.:48:06.

happened in the 1930s. The lessons of history are clear. Austerity

:48:06.:48:11.

begets more austerity, not growth. In the 1930s we did not have a

:48:11.:48:18.

deficit of 10% of GDP. We already have an enormous Keynesian policy

:48:18.:48:23.

in place and it is not producing growth. But we haven't, have we? We

:48:23.:48:33.
:48:33.:48:34.

have had a policy of major cards. - - cuts and tax increases. What that

:48:34.:48:39.

has led to is an economy that is virtually flat lining. Unemployment

:48:39.:48:46.

is rising, set to rise even further, up with an even bigger squeeze on

:48:46.:48:50.

living standards stretching into the distance. This is not all the

:48:50.:48:54.

fault of the eurozone. Those problems do not help the situation

:48:54.:48:58.

and they add to the risk going forward but they are not the cause

:48:58.:49:03.

of the problems that we are enduring. One final thing. What did

:49:03.:49:07.

the Chancellor not to today that you would have liked to see? He was

:49:07.:49:12.

not able to wave a magic wand to solve the eurozone crisis. He did

:49:12.:49:16.

not expect that, did you? It is the main reason why growth has been

:49:16.:49:20.

disappointed and if we can get that storm cloud removed, we can get

:49:20.:49:25.

back on the trajectory to growth and jobs. On the shock news that

:49:25.:49:32.

the Chancellor did not have a magic wand, we leave it there. Back to

:49:32.:49:35.

Jon Sopel. Let's get some nationalist reaction

:49:35.:49:43.

from what we have heard today. I am joined by Jonathan Edwards and a

:49:43.:49:48.

spokesperson for the SNP. Were you happy with what we heard? It was a

:49:48.:49:56.

panic statement, a series of interventionist measures. They are

:49:56.:50:01.

recognising that the economy is the key problem. There was a capital

:50:01.:50:05.

reinvestment programme made up of 25 billion from pension funds and

:50:05.:50:11.

also public money. There was Government alone is losing out by

:50:11.:50:21.
:50:21.:50:23.

1.5 billion. What did you think of it? I agree with him. The growth

:50:23.:50:30.

forecast has dropped from 2.5% in 2012 to 0.7%. Much as the

:50:30.:50:34.

infrastructure investment is welcome, it will not come on stream

:50:34.:50:39.

until after 2012. It will not deal with the immediate problem. As far

:50:39.:50:49.
:50:49.:50:51.

as the Scottish Government is concerned, we do not know what the

:50:51.:50:54.

Revenue developments will be with the departmental budgets when they

:50:54.:51:00.

are announced. What about the impact of the public sector pay

:51:00.:51:05.

announcements? Pay is raising its ugly head again. Labour tried to

:51:05.:51:10.

introduce this when they were in power and it will have a massive

:51:10.:51:15.

impact on economies like Wales and Scotland. What do you think?

:51:15.:51:22.

Another two years of pay restraint after the current year. Plus the

:51:22.:51:26.

issues of regional pay, which could exacerbate the differences between

:51:26.:51:29.

the South East and other areas of the country, including Scotland,

:51:29.:51:34.

Wales and the North West of England. This is one of the BAFTAs ideas

:51:34.:51:43.

about the Chancellor has come out with so far. -- the most stupid

:51:43.:51:47.

ideas. The policy of the Scottish Government is to look at the euro

:51:47.:51:51.

when the time is right and by referendum of the people. In the

:51:51.:52:00.

Caribbean since we would stick to the pound sterling. If -- in the

:52:00.:52:05.

current instance. If Scotland was independent, we could make

:52:05.:52:10.

decisions that are important to the Scottish economy, rather than

:52:11.:52:15.

waiting for the Chancellor to make decisions. Thank you.

:52:15.:52:19.

How has George Osborne's statement gone down across the United

:52:19.:52:23.

Kingdom? Let's hear from the Northern Irish Economics Editor Jim

:52:23.:52:28.

Fitzpatrick. Anything in this for Northern Ireland? The bombshell is

:52:28.:52:32.

an announcement of a review into the possibility of regional public

:52:32.:52:37.

sector pay. There are 230,000 public sector workers in Northern

:52:37.:52:41.

Ireland and their average pay is currently about 40% more than the

:52:41.:52:45.

average pay in the private sector. You can imagine the starting point

:52:45.:52:48.

for negotiations if there is going to be a regional pay rates set in

:52:48.:52:53.

the public sector and the kind of cuts in pay that people could see.

:52:53.:52:57.

That is a huge issue for Northern Ireland and its economy. Elsewhere

:52:57.:53:00.

there were fears, because of the way the infrastructure projects

:53:00.:53:04.

were being primed with savings from other departments, that that might

:53:04.:53:12.

mean cuts at Stormont. In fact, they will receive �130 million

:53:12.:53:15.

extra from infrastructure spending and they will be up on departmental

:53:15.:53:19.

spending as well. Overall it is good for Northern Ireland. On

:53:19.:53:22.

credit easing for the banks, the situation here is complicated

:53:22.:53:26.

because the Irish Banks are a big factor in Northern Ireland as well.

:53:26.:53:30.

I understand from industry sources, but the detail has not been seen

:53:30.:53:33.

yet, that the major banks in Northern Ireland, UK and Irish

:53:33.:53:37.

banks, will be able to take part in that, which would also be good if

:53:37.:53:41.

they can continue to lend more to businesses. That's the view from

:53:41.:53:45.

Belfast. Let's get more reaction from people involved in business.

:53:45.:53:51.

We are back in Merseyside and we have got rid of the gremlins.

:53:51.:53:57.

Gremlins? I promise you that this was a real-life shipyard. It was a

:53:57.:54:05.

crane at a -- that took us off the air. It sailed in front of our

:54:05.:54:10.

satellite truck. I promised it was a working environment. We have some

:54:10.:54:14.

genuine working people here, taking time out of their businesses to

:54:14.:54:21.

talk about their response to the Autumn Statement. You represent an

:54:21.:54:26.

enormous company with lots of different interests. From retail,

:54:26.:54:31.

to burials, to shipping, what did you make of the state and today?

:54:31.:54:35.

There were lots of large numbers and large programmes announced.

:54:35.:54:38.

They are great initiative, supporting infrastructure and small

:54:38.:54:42.

businesses, with tax relief and things like that, supporting young

:54:42.:54:46.

people back into work. They are all good and what we are waiting for

:54:46.:54:52.

his more detail for those programmes to see how they will

:54:52.:54:56.

play out. We hope that will happen sooner rather than later. Growth

:54:56.:55:02.

will be more or less flat through next year, until 2013. We are

:55:02.:55:08.

seeing it good initiatives but we won some concrete plans. Because

:55:08.:55:18.
:55:18.:55:21.

your concrete is so diverse... -- Apologies for that. We have lost

:55:21.:55:24.

you again! It is really dangerous in that factory. I hope the crane

:55:25.:55:30.

has not fallen down. One thing that struck me, and I did not get a

:55:30.:55:37.

chance to ask Brendan Barder this and I wish I had, the day before

:55:37.:55:45.

the big strike, the Chancellor it - - has said there will only be a 1%

:55:45.:55:50.

pay rise after the pay freeze. I think the Government thinks it can

:55:50.:55:56.

fight with the unions and win. There will also be a review of

:55:56.:56:00.

regional pay rates. I did not notice that. This was thought of in

:56:00.:56:03.

the 80s and the 90s and every Chancellor has ducked it because it

:56:03.:56:09.

is so controversial. Certain public sector workers do incredibly well

:56:09.:56:12.

compared with private sector workers because they live in an

:56:12.:56:17.

area where wages are lower. But you try changing that! You tell a

:56:17.:56:20.

police officer in Newcastle, a civil servant in Belfast, that we

:56:21.:56:24.

are going to cut your pay because it is not fair in relation to other

:56:24.:56:30.

people in your area. That is hugely provocative. It suggests that the

:56:30.:56:34.

day before the strike, they know they have got a fight. Robert, by

:56:34.:56:40.

the end of this week, we may not be talking about the Autumn Statement.

:56:40.:56:44.

You may be on our screens telling us about the unravelling eurozone.

:56:44.:56:50.

I could be doing that this morning. -- this evening. Italy have record

:56:50.:56:58.

borrowing rates, almost 8%. Several billions of three-year loans.

:56:58.:57:02.

Borrowing for three years is not supposed to be risky. With Italy

:57:02.:57:07.

borrowing at 8%, the markets already closed for the enormous

:57:08.:57:13.

eurozone economy that is so important. The noises out of

:57:13.:57:17.

Brussels is that their plan to launch a big bazooka to help this,

:57:17.:57:22.

a bail-out fund, looks more like an air pistol. The size of his bail-

:57:22.:57:30.

out fund is shrinking. All of this could be close to a relevant. It

:57:30.:57:36.

may all go badly wrong in the eurozone. If it does, frankly, we

:57:36.:57:40.

will be into emergency plans to rescue our banks and most of what

:57:40.:57:44.

we have heard will feel like an interesting but irrelevant story.

:57:44.:57:48.

The one thing we did not find out is what the contingency plans are.

:57:48.:57:52.

I don't think they will be telling you. That is why I did not bother

:57:52.:57:58.

to ask! We have been incredibly gloomy throughout the programme.

:57:58.:58:02.

The Chancellor will say that we are not there yet, and that is the

:58:02.:58:07.

advantage, he will argue, of his policies. Ed Balls will say it is

:58:07.:58:11.

worse that it needed to be, but he will accept we are not in a

:58:11.:58:14.

situation of the eurozone countries. In many ways we have better

:58:14.:58:17.

prospects than the rest of the eurozone and we should not forget

:58:17.:58:21.

that. It has been a pleasure to have you with us on this rocky road.

:58:21.:58:25.

There is plenty more on the BBC News Channel throughout the day,

:58:25.:58:29.

including coverage of the OBR press conference at 3 o'clock, coming up

:58:29.:58:34.

now. There will be more on the latest public sector strikes

:58:34.:58:36.

There's no Daily Politics today but Andrew will still be here in the studio, as we present a three-hour show on the Autumn Statement - live on BBC2, BBC News Channel and BBC Online.

We will start at 1200, the Chancellor speaks at 1230 and then there will be a Labour response: we will take both speeches live and in full.

Andrew will then get analysis from BBC experts Nick Robinson, Stephanie Flanders and Robert Peston, before reaction from Westminster, the City and across the UK. We are on air till 3pm.

Andrew and Jo are back tomorrow for a usual 90-minute Wednesday with PMQs, reaction to the statement and coverage of union members taking part in nationwide industrial action.