Conference Special

:00:26. > :00:30.Morning, Foulkes. Well come to this Daily Politics special live from

:00:30. > :00:35.the Conservative Party conference in Manchester, where ministers are

:00:35. > :00:39.in no mood to woo voters. David Cameron has already said sorry to

:00:40. > :00:44.half the population, although exactly what for isn't clear. This

:00:44. > :00:48.morning he courted the keep-fit brigade by jogging around

:00:48. > :00:53.Manchester, and has announced the return of a good old Thatcherite

:00:53. > :01:00.policy, the right to buy your council house. Decidedly retro feel

:01:00. > :01:05.here in Manchester today, and as always in these days, may the

:01:05. > :01:13.economy takes centre-stage. George Osborne is hoping that his speech

:01:13. > :01:19.will prove to the country that he is alive with ideas. He has already

:01:19. > :01:25.announced a freeze on council tax. We carry his speech live and

:01:25. > :01:29.uninterrupted - at least, we hope it is uninterrupted! We will be

:01:29. > :01:39.talking to the Employment Minister Chris Grayling. And is the party

:01:39. > :01:40.

:01:41. > :01:50.divided over Europe? Is the Pope a Would you like to vote in our poll

:01:50. > :01:58.for Daily Politics. It is about Europe. I must admit, Liam Fox's

:01:58. > :02:05.bodyguard looks a bit scary, so I didn't want to push him too much.

:02:05. > :02:11.All that and much more coming up in the next 120 minutes of public

:02:11. > :02:19.service broadcasting at its finest. We have two of her Majesty's press

:02:19. > :02:23.corps finest. Matthew Parris and Steve Richards are here. Only one

:02:23. > :02:27.thing to talk about this morning, the Chancellor's speech. It is

:02:27. > :02:31.always a big moment, the Monday morning of the conference. I don't

:02:31. > :02:38.want to downplay the excitement of all the viewers tuning in. I have

:02:38. > :02:42.just done my best! But the reality is, although I am sure in a

:02:42. > :02:47.curiously Gordon Brown like way, he will have little surprises in the

:02:47. > :02:52.speech, he has made his decisions. He has made his decision that there

:02:52. > :02:57.will be no unaffordable tax cuts, and that there will be no spending

:02:57. > :03:03.increases beyond the odd sack of money he finds here and there. Seve

:03:03. > :03:08.hasn't got much to spend, because his side won't pull a lever. So

:03:08. > :03:13.this will be a holding operation. In terms of substance, the pre-

:03:13. > :03:18.Budget Report later in the year is a bigger moment. The mood he is

:03:18. > :03:25.going for his steadiness, reassurance, us -- the calm when

:03:25. > :03:31.storms are breaking out all over Europe. It is the one thing he has

:03:31. > :03:36.going for him. The Economist did say at the weekend in an overall

:03:36. > :03:42.critical piece was that his achievement was getting our over

:03:42. > :03:48.all get healed so low at a time of difficult market forces. He has to

:03:48. > :03:52.strike a difficult balance, our finances are potentially precarious,

:03:52. > :03:56.and therefore he cannot extra tax cuts of things, and yet he also

:03:56. > :04:01.wants to suggest that our position is not precarious because he is

:04:01. > :04:06.Chancellor, and it is a difficult line to walk. He keeps saying we

:04:06. > :04:11.have no money, we can't afford tax cuts, we will stick to our deficit

:04:11. > :04:18.reduction. But here and there, little bunny rabbits are being

:04:19. > :04:22.pulled out. Where does he get the money from? I don't know. He says

:04:22. > :04:28.some departments haven't spent as much as they planned, he was a bit

:04:28. > :04:34.of money. It reminded me of Gordon Brown's prudence with a purpose,

:04:34. > :04:40.but every now and then he found a bit more from curious places. He is

:04:40. > :04:43.doing that to get some headlines which are a bit more positive. They

:04:43. > :04:48.say that one of our political problems is mainly associated with

:04:48. > :04:51.cuts, so they are trying to get more positive headlines. But their

:04:51. > :04:57.associated with cuts because that is the big decision they made a

:04:57. > :05:01.year ago. They made a big call their despite warnings from some

:05:01. > :05:04.economists as well as people like Ed Balls that there would be no

:05:04. > :05:09.private sector scope to take over from the areas where they were

:05:09. > :05:13.cutting. That has proven to be right and ominous and worrying for

:05:13. > :05:17.them. But he is clearly not going to be starting to spend much more

:05:17. > :05:27.than the odd bauble here and there. I want to talk about the mood of

:05:27. > :05:32.

:05:32. > :05:36.the delegates out there. This is As the Tories gather here in

:05:36. > :05:41.Manchester, there is a massive euro crisis looming across the Channel.

:05:41. > :05:45.Our own economy is flatlining, living standards are slumping. So

:05:45. > :05:50.what is the Prime Minister's response? To apologise to women, of

:05:50. > :05:56.course. To Mac female MPs in particular, for slights that are

:05:56. > :05:59.already largely forgotten. obviously said some things in the

:05:59. > :06:03.House of Commons that came out wrong and caused the wrong

:06:03. > :06:07.impression, and I deeply regret that. David Cameron has seen the

:06:07. > :06:12.polling showing that the Tories are losing some of the women's Road.

:06:12. > :06:16.But that is not what concerns the party faithful here. They are much

:06:16. > :06:22.more exercised about Europe. Many of them would like to come out of

:06:22. > :06:29.the EU altogether. Most certainly want a referendum on the matter.

:06:29. > :06:31.They hate their human -- the European inspired Human Rights Act

:06:32. > :06:36.and want to repatriate powers from Brussels to Britain. The party

:06:36. > :06:41.managers don't want talk about any of that. They know the government's

:06:41. > :06:43.ability to deliver his close to zero. This seems to be a growing

:06:43. > :06:48.feeling in the country that a referendum is needed, and they

:06:48. > :06:51.think it would be a good idea for us to have one. But we are in

:06:51. > :06:57.coalition with the Liberal Democrats and have to give some

:06:57. > :07:01.ground. It would give us a chance to say yes or no, in or out.

:07:01. > :07:04.think we need to maintain a close relationship with the the EU,

:07:04. > :07:10.because that is important. But I definitely think we mustn't go any

:07:10. > :07:14.further. What of other concerns about Europe, it is the economy

:07:14. > :07:23.that will dominate events at this conference. There will be no

:07:23. > :07:27.loosening of the diaphanous robe -- deficit reduction straitjacket, but

:07:27. > :07:32.ministers know that they need to be this a serious sounding about

:07:32. > :07:39.growth as the about cutting the public spending. From plans to

:07:39. > :07:43.build more houses to plans to change the labour laws. But none of

:07:43. > :07:53.this will add up to an extra fiscal stimulus, so whether it makes any

:07:53. > :07:59.

:07:59. > :08:05.Steve Richards and Matthew Parris are still with me. Therein are

:08:05. > :08:10.relatively good mood out there. They are proud of the budget

:08:10. > :08:15.deficit reduction. They are an easy, though, there are not sure it will

:08:15. > :08:20.all come right. And with good cause. The context is an economy that is

:08:20. > :08:25.not growing enough, and uncertainty as to which lead -- levers to pull

:08:25. > :08:30.to get that growth again. And even if they pull the levers, will they

:08:30. > :08:34.get the growth because of what is happening in the eurozone? If I

:08:34. > :08:38.were David Cameron, I would be worried about Europe resurfacing as

:08:38. > :08:42.an issue, not because there isn't substance to that debate, but

:08:43. > :08:45.politics is partly about symbolism, and the reminder to voters of

:08:45. > :08:54.Europe during a period when the Tories were losing votes like there

:08:54. > :09:00.was no tomorrow I think would worry so-called modernisers. I don't

:09:00. > :09:07.sense an incipient of growing Tory rebellion. I sensed a lot of little

:09:07. > :09:10.explosions. There is no particular demand that the anti- Europeans are

:09:10. > :09:14.making except for a referendum which nobody expects will actually

:09:14. > :09:18.happen. See you have little bursts of applause at fringes and people

:09:18. > :09:23.saying things slightly out of order, but I do not censor big rebellion.

:09:23. > :09:28.Of course, they do feel vindicated. They became more and more Euro-

:09:29. > :09:35.sceptic, look at the eurozone, it is a mess, they will say. The

:09:35. > :09:40.problem is not really an economic one, because over all, the European

:09:40. > :09:45.debt is a fraction of America or even Britain. They have got to be

:09:45. > :09:52.careful of moving from claiming vindication to a sort of

:09:52. > :09:55.schadenfreude. The worries hanging over this conference are not about

:09:56. > :10:02.the government of a coalition of the politics, the worries about the

:10:03. > :10:06.economics. The one thing, if the Conservative Party thinks it is the

:10:06. > :10:10.voice of Middle England, and I say England advisedly, because it is

:10:10. > :10:15.not Middle Scotland or even Wales, it is Middle England that is

:10:15. > :10:20.hurting at the moment. It is the squeeze on living standards, the

:10:20. > :10:24.worse since the 1920s. Yes, and the worry for them is not because it is

:10:24. > :10:30.hurting at the moment. They always knew that the decisions they took

:10:30. > :10:37.early on were too great a severity, but there we go. In my view, they

:10:37. > :10:40.knew it would hurt now, but in their assumption, by year for, in

:10:40. > :10:45.the build-up to an election, Middle England will be starting to feel

:10:45. > :10:49.good again, and the worry is there is no indication that in the build-

:10:50. > :10:54.up to the election, Middle England will feel that. You make light,

:10:54. > :10:59.Andrew, and we all do, about apologising to England, but it is a

:10:59. > :11:04.serious worry for the Conservative Party, because they have

:11:04. > :11:12.traditionally always got better vote from women than from men. They

:11:12. > :11:17.are seriously worried that Cameron doesn't seem to be... My concern is

:11:17. > :11:24.more what he is apologising for than the apology itself. Just being

:11:24. > :11:27.a man! We are coming to the end of our time. The fundamental thing is

:11:27. > :11:31.where the coalition came into power, they thought they could get the

:11:31. > :11:39.economic cycle in sync with the political cycle, and all would be

:11:39. > :11:46.well by 2014, 2015. But that is now looking out of sync. Yes, I think

:11:46. > :11:50.they thought, like 79-83, or 83-87, people would be starting to look

:11:50. > :11:53.good, and they would get political reward for the tough decisions

:11:54. > :12:00.taken earlier on, and maybe they still will, but it is looking

:12:00. > :12:06.unlikely. A Conservative Party conference cover of Iain Duncan

:12:06. > :12:13.Smith, a slightly tepid ovation there. We will give you a flavour

:12:13. > :12:17.of what he had to say later. Now, should we be in or out? It is a

:12:17. > :12:27.Tory conference. How can we not talk about Europe? The only way we

:12:27. > :12:29.

:12:29. > :12:36.could do it is to send Adam out Oh, we don't have that. Adam is

:12:36. > :12:40.still looking for his balls. So let's see if Giles can do better.

:12:40. > :12:47.Let's talk while we try to find out about that about the state of the

:12:48. > :12:52.Conservative Party itself. The average Conservative Party member

:12:52. > :12:55.spends �722 coming to conferences. That is a lot of money. It is 80

:12:55. > :13:00.quid just to register, and they charge the media fortune,

:13:00. > :13:06.particularly if you are late. But the delegates have no formal say in

:13:06. > :13:09.what happens. And they don't get really to vote on anything. When

:13:09. > :13:19.did a conference ever change party policy? So why do they do it? Why

:13:19. > :13:22.

:13:22. > :13:26.do they bother coming? He is Giles Far from the dizzying heights and

:13:26. > :13:30.those at the top of the party, down on ground level there are the grass

:13:30. > :13:34.roots. They are not an official body, not even a clearly definable

:13:34. > :13:39.group. But there are important, MEPs and MPs and the leadership

:13:40. > :13:44.ignore them at their peril. Why? Because the party couldn't operate

:13:44. > :13:47.without them. These are the ordinary people, the ordinary

:13:47. > :13:52.supporters, and they come in all sorts of species and varieties, but

:13:52. > :13:55.they don't have elected office. These are the people who are

:13:55. > :13:59.Conservatives because they feel it in their bones, not because they

:14:00. > :14:03.have got it from a think-tank document. A pound the pavements and

:14:03. > :14:08.knock on doors because they think it is the right thing to do, in

:14:08. > :14:11.almost every sense of the word. True, their power is as a

:14:11. > :14:15.collective rather than a group of individuals, but they are the

:14:15. > :14:18.guardians of core conservatism. And if they don't like a policy, it is

:14:18. > :14:22.not finished, it is not dead, but it may be difficult to sell,

:14:22. > :14:28.because these people apart from the candidates are largely the people

:14:28. > :14:31.who go on the doorstep doing the selling.

:14:31. > :14:36.Giles then tilted to the left and rolled down that hill! Someone who

:14:36. > :14:40.has never tilted to the left is Michael Fallon, the Conservative

:14:40. > :14:45.deputy chairman. Welcome back to the Daily Politics. The grassroots

:14:45. > :14:50.members get a raw deal, don't they? They pay a ton of money as they get

:14:50. > :14:53.no power. Conferences are expensive, but it is not right that they get

:14:53. > :14:58.no power. Ministers are here and listen to them, and they can come

:14:58. > :15:07.to the debates. That his influence, not power. When did a conference

:15:07. > :15:13.debate last change party policy? Party policies reflect what they

:15:13. > :15:17.are saying. You want to get out more, get round the fringe events

:15:17. > :15:22.and see the dialogue that is taking place. We do. But when did this

:15:22. > :15:26.conference ever change Tory party policy? I can remember for example

:15:26. > :15:31.on the poll tax, I can remember a party conference been told that we

:15:31. > :15:37.should in turn -- introduce it early in Scotland, and we did. That

:15:38. > :15:44.is what the Scots wanted, if you wanted -- if you recall. No, it is

:15:44. > :15:48.what the Scottish Conservatives wanted. 85, 86? May be earlier than

:15:48. > :15:53.that. Give me an example from recent history. I think that is

:15:53. > :15:59.probably more difficult, but it think it was clear that Iain Duncan

:15:59. > :16:02.Smith's leadership was coming to an end just before we had that change.

:16:02. > :16:06.From this poll by Conservative home, a survey of the Tory grassroots,

:16:06. > :16:10.the majority of these folk out there think the Lib Dems have too

:16:10. > :16:15.much influence on the coalition. Are they right? No, they are not

:16:15. > :16:23.right. The big thing is the Lib Dems are sticking with us on the

:16:23. > :16:29.dealing of the deficit. There are some niggles, but we are two

:16:29. > :16:32.different parties. A year ago, they were planning to merge the two

:16:32. > :16:36.parties, there was another coalition order, but that hasn't

:16:36. > :16:41.happened. David Cameron wasn't going to fight the referendum.

:16:41. > :16:44.always knew that was rubbish. these things were said a year ago.

:16:44. > :16:49.Although we are bound together in the bigger task of sorting out the

:16:49. > :16:53.public finances in getting the economy to grow. You need to listen

:16:53. > :16:58.to better people! Activists also want to see a firmer line ever

:16:58. > :17:03.repatriating powers from Europe. I put it to you that will not happen

:17:03. > :17:08.in this Parliament. That is because we didn't win the election outright.

:17:08. > :17:11.We can't do that, but we have done the next best thing, which is put a

:17:11. > :17:17.sovereignty lock so that any new powers being proposed, there has to

:17:17. > :17:20.be a referendum here. That is now law, it is on the statute book. We

:17:20. > :17:23.hope for an outright majority at the next election and we will

:17:23. > :17:26.return to this issue of bringing more competent is back to

:17:26. > :17:31.Westminster. But just for the virtue of clarity, I understand

:17:31. > :17:38.that you would like to repatriate powers, too, and they would as well.

:17:38. > :17:48.But the arithmetic means you cannot. It is not an issue for the agenda

:17:48. > :17:54.That isn't practical at the moment given the shape of the coalition

:17:54. > :18:01.that I can tell you when it comes to the election... Is there in the

:18:01. > :18:05.European red-meat you can give them? It looks now there will be a

:18:05. > :18:09.new treaty to deal with the mess in the eurozone and there is an

:18:09. > :18:15.opportunity to deal with British, national interests?

:18:15. > :18:20.We would be told that that would be the opportunity to repatriate

:18:20. > :18:25.European powers. York irritating Lib Dem friends, as you call them,

:18:25. > :18:30.it won't let you do that. There may be an opportunity on the new treaty

:18:30. > :18:35.and there is also the budget renegotiation next year, another

:18:35. > :18:39.opportunity to make sure our budget contribution is not increased.

:18:39. > :18:44.There is an opportunity to stand up for British national interests and

:18:44. > :18:49.we will take it. Do you agree with the chairman of the Treasury Select

:18:49. > :18:55.Committee, Andrew Tyrie, a position you wanted, that the government's

:18:55. > :18:59.efforts on growth are incoherent and inconsistent? No. We are all

:18:59. > :19:05.impatient for faster growth. We want to see the economy grow. But

:19:05. > :19:10.the government has to balance these things, we are trying to rebalance

:19:10. > :19:15.the economy to make sure there is more emphasis on manufacturing and

:19:15. > :19:20.private spending. That is coherent. We have fiscal and monetary policy

:19:20. > :19:23.working together. Some of the things Andrew Tyrie has called for

:19:23. > :19:29.you were here announced this week, like changes in employment law.

:19:29. > :19:34.do we hear more of you, deputy chairman, than Baroness Warsi,

:19:34. > :19:38.chairman of your party? She was speaking yesterday! But why are you

:19:38. > :19:43.put more to represent the party than her when it comes to

:19:43. > :19:47.programmes like this? There are different programmes. You saw

:19:47. > :19:55.Baroness Warsi on Question Time, watched by a bigger audience than

:19:55. > :20:00.are watching us at the moment. little while ago. No. You are right.

:20:00. > :20:06.A If you want her next time, I will pass that on. We are grateful to

:20:07. > :20:12.get anybody. Would you like her job? No. She is doing a fine job.

:20:12. > :20:17.That is not what a lot of people have told me. She has only been

:20:17. > :20:21.appointed party chairman. No, for a year. That is a long time in

:20:21. > :20:28.politics, that is what Harold Wilson said. Would you not like to

:20:28. > :20:32.be chairman of your party? Baroness Warsi is the chairman. When you are

:20:32. > :20:37.a backbencher, when you were one without this title, you were

:20:37. > :20:42.independent-minded, sometimes a little rebellious. How do you like

:20:42. > :20:46.this, toeing the party line? Disagreeing with Andrew Tyrie, your

:20:46. > :20:51.colleague? I bet if you were chairman of the Select Committee,

:20:51. > :20:59.you would be saying the same. would not. He takes his own

:20:59. > :21:03.personal view about climate change, for example. The government policy

:21:03. > :21:08.is not incoherent. We have a very successful Chancellor taking the

:21:08. > :21:13.economy through difficult times and ensuring that it does grow. Thank

:21:13. > :21:18.you for being with us. We would like to see you again. Or the

:21:18. > :21:25.baroness. We are easy. We have found Adam. Which means I can say,

:21:25. > :21:30.should we be in or out of Europe? Let's see what he found out.

:21:30. > :21:33.We got a new conference, which means a new set of balls. We have

:21:33. > :21:43.got it true-blue question for delegates on the issue of Europe.

:21:43. > :21:43.

:21:43. > :21:51.In or out? Very simple. Out. Why? We would save �48 million today.

:21:51. > :21:55.Let's state in Europe for now. I tend to agree. It should be

:21:55. > :22:01.economic and not political, so I say it in for now. I think we

:22:01. > :22:08.should be in but I think there should be a repatriation of powers.

:22:08. > :22:11.In or out? Not a second's hesitation. I felt that we are

:22:12. > :22:15.better off with the Commonwealth and looking after our own interests

:22:15. > :22:20.and we should go back to doing that in working with the rest of the

:22:20. > :22:24.world rather than Europe, which is dragging us down and taking our

:22:24. > :22:29.resources from where we need to spend them. The Norwegians just had

:22:29. > :22:34.one word for it. No! You must be relieved that beat inbox has got

:22:34. > :22:39.quite a lot of balls. Yes, I have seen more carefully controlled

:22:39. > :22:49.assessments than that but it is in our national interest. Thank you,

:22:49. > :22:55.

:22:55. > :23:05.Why do you say in? Because I think it is important for social and

:23:05. > :23:10.

:23:10. > :23:15.economic integration, but I do not Why did you do that? Because my

:23:15. > :23:19.father was Swiss, so he was European. I think we would be

:23:19. > :23:25.completely mad to come out of Europe. 200 years from now, we

:23:25. > :23:31.would be a banana republic on the edge of the Atlantic. If we had a

:23:31. > :23:37.referendum, which we have always wanted, we would vote out. Dr Fox.

:23:37. > :23:43.Would you like to vote in our poll? It is about Europe, one of your

:23:43. > :23:49.favourite topics! I must admit, Liam Fox's bodyguard looked a bit

:23:49. > :23:58.scary so I did not one to push him too much. Francis, would you like

:23:58. > :24:08.to grab one of our balls. Europe, in or out? He just laughed!

:24:08. > :24:15.

:24:15. > :24:25.They are going like hot cakes. EU, Who put in?! No! Who put their ball

:24:25. > :24:29.

:24:29. > :24:33.GROANING. You are the only one going in. What is that like?

:24:33. > :24:38.thought you were talking about belly buttons. That represents your

:24:38. > :24:44.party. It tells me nothing at all at this stage. Very early days in

:24:44. > :24:48.conference. The Prime Minister has set out our position very clearly

:24:48. > :24:53.on our relationship with Europe and he has it absolutely right. Let's

:24:53. > :24:57.see which side of the argument has one. The majority of people want

:24:57. > :25:02.Britain to leave the EU, which is interesting, because the leadership

:25:02. > :25:07.of the party would much prefer they put their balls in the inbox.

:25:07. > :25:13.Adam telling us to put our balls where our thoughts are which is

:25:13. > :25:20.usually what gets men into trouble in the first place! I am joined by

:25:20. > :25:26.Jon Gaunt, chief executive of the UK out of the EU. I am not even

:25:26. > :25:30.sure... It is not a title that rolls off the tongue. Our top team

:25:30. > :25:36.have been desperately ringing around this morning to find a pro-

:25:36. > :25:40.European Tory to take on Jon Gaunt. We failed miserably. The next task

:25:40. > :25:45.will be to find the person in the newsroom who does not have a

:25:46. > :25:52.hangover, because they do like a challenge. The balls showed a

:25:52. > :25:56.majority want out. But you know and I know you are not going to get it.

:25:56. > :26:02.What we are not given to get his it discussed at this conference. We

:26:02. > :26:08.are living in a parallel world, as your non-scientific poll proved. We

:26:08. > :26:15.have done a scientific poll, 2700 people, interviewed by YouGov, and

:26:15. > :26:21.74% of Tories want a referendum. If there was a referendum, 68% want

:26:21. > :26:27.out of Europe. But Mr Cameron says no, no, no, the country does not

:26:27. > :26:34.want out of the EU. If he is so confident about it, let's have the

:26:34. > :26:37.referendum! He will not because it would split his party asunder. Mr

:26:37. > :26:42.Cameron and Mr Osborne and Mr Hague and various others would all

:26:42. > :26:46.campaign to vote yes to stay in, whereas your polls suggest a lot of

:26:47. > :26:51.these grassroots would say no. Why would any political leader vote for

:26:51. > :26:54.that split? Because he is not just the leader of his party, he is the

:26:54. > :27:02.leader of this country and he is meant to follow what the people

:27:02. > :27:07.want. I am 50, anybody under 54 has not had a chance to vote on the EU.

:27:07. > :27:11.That is an affront to democracy. Give me three good reasons why we

:27:11. > :27:17.shouldn't have a referendum? Mr Cameron cannot find one. Your

:27:17. > :27:22.highly paid researchers, maybe not, I have to be careful...! They could

:27:22. > :27:25.not even get someone to come on to talk about it today. It is not

:27:25. > :27:32.their fault! I know, because the Conservative hierarchy will not

:27:32. > :27:38.talk about it! We had a referendums since 1975, we voted to stay in. We

:27:38. > :27:42.have been a member of NATO since 1949 which has the power to send us

:27:42. > :27:46.to war and we have never had a referendum on that! The referendum

:27:46. > :27:53.we had before was about common market and now it is a European

:27:53. > :27:59.superstate, the �48 million a day we pay to the EU. Why can't we have

:27:59. > :28:03.a grown-up discussion? We had won about alternative vote which people

:28:03. > :28:08.were not even bothered about. People are talking about this in

:28:08. > :28:13.the coffee shops, in the bars, if they still have a job. This is what

:28:13. > :28:18.people want to discuss. When you ask people what the most important

:28:18. > :28:22.issue facing the country is, Europe comes 10th! It is going up that

:28:23. > :28:28.table all the time. It is still 10th! Of course the economy will be

:28:28. > :28:38.at the top at the moment but the EU affects everything! Immigration is

:28:38. > :28:42.there, border control, defence. We do talk about that in our poll.

:28:42. > :28:50.Between 80 and 90% won control of my net fisheries, borders and

:28:50. > :28:56.farming. -- want control of our fisheries, borders and farming.

:28:56. > :29:01.would accept the British public are broadly Euro-sceptic. Yes. 51%.

:29:01. > :29:06.they are not obsessed with the issue in the way you are. I am not

:29:06. > :29:13.obsessed about it. Really? I just want to have a referendum. What is

:29:13. > :29:19.wrong with that? Hang on. I bet your bottom dollar, Andrew, or the

:29:19. > :29:24.euro if you fancy, I bet if we had a referendum on the EU, there would

:29:24. > :29:27.be a bigger turnout than there was on alternative vote. Can you tell

:29:27. > :29:34.me again, give me one good reason why we should not have a

:29:34. > :29:38.referendum? Let me put this to you. Not only, rightly or wrongly, that

:29:38. > :29:43.is not for me to say, you are not going to get a referendum, and you

:29:43. > :29:47.just heard Michael Fallon, the deputy chairman of his party,

:29:47. > :29:52.saying they won't even be able to repatriate any powers from Brussels

:29:52. > :29:57.in this Parliament, so you are going nowhere. They will have this

:29:57. > :30:01.debate because of the 100,000 petition. It is smoke and mirrors.

:30:01. > :30:06.We have to keep the pressure up. The people of this country are

:30:06. > :30:09.demanding it and if we carry on with the pressure, we will get it.

:30:09. > :30:13.Mr Cameron once power more than anything else and he can keep on

:30:14. > :30:18.pretending for as long as he wants that most people want to stay in

:30:18. > :30:22.Europe, he can keep been deluded, but eventually his moment of truth

:30:22. > :30:27.will come and there will be a referendum in this country if the

:30:27. > :30:31.power of the people get together and start demanding yet, which is

:30:31. > :30:36.not a far right thing, it is about British people having the right to

:30:36. > :30:39.say whether or not we want to be in the United States of Europe.

:30:39. > :30:49.thought the person you were up against did rather well. Absolutely

:30:49. > :30:49.

:30:50. > :30:57.brilliant! Couldn't you get a tub of lard? I will not go there!

:30:57. > :31:01.LAUGHTER. Iain Duncan-Smith, when he was head, head, the boss of the

:31:01. > :31:05.Tory party, he was not really that popular. As you heard Michael

:31:05. > :31:10.Fallon say, he was at a Conservative conference that he

:31:10. > :31:15.then realised that he was not going to be able to continue as leader.

:31:15. > :31:18.He has reinvented himself. He is the welfare reform man and he is

:31:18. > :31:22.something of a conference darling as a result because his reforms are

:31:22. > :31:32.very popular with the party, and with the country. He spoke to the

:31:32. > :31:33.

:31:33. > :31:37.I assure you that, at a time when the British public are having to

:31:37. > :31:41.tighten their belts because of a difficult economy, and the European

:31:41. > :31:46.Commission comes knocking on my door to order me to open up the

:31:46. > :31:53.benefits system to benefit tourists and pay them benefits as and when

:31:53. > :32:03.they arrive regardless of whether they work, I have a very simple

:32:03. > :32:09.

:32:09. > :32:16.answer to them. No, no, no. APPLAUSE because as we gather here

:32:16. > :32:21.in Manchester, all of us should be reminded that not far from these

:32:21. > :32:30.buildings we are in now were streets under siege just two months

:32:30. > :32:37.ago. We sought the best and the worst of Britain. At night, a

:32:38. > :32:42.violent minority, intent on crime. By morning, the majority, clearing

:32:42. > :32:49.up, helping each other in their communities and leading the fight

:32:49. > :32:56.back. There is no justification, they never can be, and they never

:32:56. > :33:04.will be, for what happened on those nights. And that is why it is right

:33:04. > :33:09.that punishment is decisive and swift. Yet beyond that, we should

:33:09. > :33:15.recognise there is a depressing and familiar context to what we saw.

:33:15. > :33:20.That is the steady rise of an underclass in Britain. A group too

:33:20. > :33:29.often characterised by chaos and dysfunction nullity, and governed

:33:29. > :33:33.by a perverse set of values. Yet these problems are not new. We have

:33:33. > :33:38.been reporting on them since I founded the Centre for Social

:33:38. > :33:43.Justice seven years ago. Every now and then they reappear. Just think

:33:43. > :33:49.of murdered Rees Jones, Gary Newlove and Baby Peter, kidnapped

:33:49. > :33:55.Shannon Matthews and tortured Fiona Pilkington. And many, many others,

:33:55. > :34:01.innocent victims of a broken, damaging culture. A culture that

:34:01. > :34:05.generates the growing pocket in each community of deprivation.

:34:05. > :34:11.Pockets in which social housing, once the support for families

:34:11. > :34:14.working hard to give their children a better start, has too often

:34:14. > :34:24.become a place for Inter generational worklessness,

:34:24. > :34:27.hopelessness and dependency. The riots serve as a reminder to us all

:34:27. > :34:35.about the deep and clear social problems that this government

:34:35. > :34:42.inherited when we came to power. Remember, before the recession

:34:42. > :34:46.began, we had over 4 million people stuck on out-of-work benefits. Many

:34:46. > :34:51.for a decade or more. We had one of the highest levels of unsecured

:34:51. > :34:54.personal debt in Western Europe. We had widespread family breakdown,

:34:54. > :34:58.one of the highest teenage pregnancy rates in the whole of

:34:58. > :35:06.western Europe. Poor parenting transmitting this functionality

:35:06. > :35:10.from one generation to the next. At the C S J, we found that half of

:35:10. > :35:17.all children born today will experience family breakdown by the

:35:17. > :35:22.age of 16. That is a shocking statistic. And too often, these

:35:22. > :35:28.children attended schools where their aspirations were suffocated

:35:28. > :35:33.within a culture of low expectations. Social mobility had

:35:33. > :35:40.virtually ground to a halt, and the section of society on the lowest

:35:40. > :35:45.incomes had become static and too often entrenched. Too many children

:35:45. > :35:49.born into such communities find that at best they remain in the

:35:49. > :35:55.same condition as their parents as they grow older. And at the same

:35:55. > :36:02.time, almost a fifth of all households are workless, and

:36:02. > :36:07.spending on working-age welfare rocketed by 50% before the

:36:07. > :36:13.recession. That is a remarkable statistic. We have found that over

:36:13. > :36:19.a million children have parents addicted to drugs or alcohol.

:36:19. > :36:26.Imagine. What hope for those children other than to become uses

:36:26. > :36:31.and abuses in their turn? And from there it is just a short walk to

:36:31. > :36:33.the revolving-door criminal justice system. With income quality at the

:36:33. > :36:38.worst for regeneration, the last government left us with a welfare

:36:38. > :36:44.system which treated symptoms not causes. And to each person in a

:36:44. > :36:49.sense it is said, you are financially better off out of work,

:36:49. > :36:54.you are better off if you play the system, and if you are bringing up

:36:54. > :37:04.children, you are better off apart. What kind of message was that to

:37:04. > :37:12.

:37:12. > :37:19.Britain? Is it any wonder's...? APPLAUSE. Is it any wonder that we

:37:19. > :37:23.faced a break down of this sense of entitlement, and ending that is

:37:23. > :37:30.like turning a supertanker around, but we must and we will deliver

:37:30. > :37:35.that change. Last year when we came to conference, I and my colleagues

:37:35. > :37:40.promised we would tackle that problem head-on. First, as Chris

:37:40. > :37:44.said, we promised we would confront worklessness, and our benefits

:37:44. > :37:49.system that had been nurtured for far too long. Our work programme is

:37:49. > :37:53.now giving new skills to people from the jobs market. The voluntary

:37:53. > :37:57.and private sector are being engaged to play and pay only when

:37:57. > :38:03.they get people back to work, and as they help people sustain it by

:38:03. > :38:08.developing the work habit, they are delivering value for money. It is

:38:08. > :38:13.not just the case of the Big Society, but it is the case of the

:38:13. > :38:16.Big Society now getting people back to work, and major success, and

:38:16. > :38:25.ending the something or nothing culture, promise made, promise

:38:25. > :38:30.delivered. APPLAUSE.And second, we also

:38:30. > :38:35.promised to deal with problem of long-term sickness benefit. Too

:38:35. > :38:40.often abused as an excuse for being out of work. Our work capability

:38:40. > :38:45.assessment will review 1.5 million people on incapacity benefit, many

:38:45. > :38:50.who who had been written off and abandoned, and 115,000 have already

:38:50. > :38:57.been through this assessment. Those genuinely unable to work will

:38:57. > :39:01.always be supported, however those who can work will look for work and

:39:01. > :39:05.joined the work programme, and others who could work in the future

:39:05. > :39:10.will actually get the tailored support for once that they need,

:39:10. > :39:15.with more and more of those once parked on permanent out-of-work

:39:15. > :39:25.benefits seeking work or in work. Conference, that is a promise made

:39:25. > :39:29.and a promise delivered. APPLAUSE.As David Freud said

:39:29. > :39:35.earlier on, we promise to build the Universal Credit, the most radical

:39:35. > :39:38.change to benefit in regeneration. And the current system, and massive

:39:38. > :39:43.multiple benefits paid at varying rates, is open to widespread abuse.

:39:43. > :39:51.The result is a massive error and fraud, costing our country an

:39:51. > :39:55.almost unbelievable �5 billion wasted. Worst of all, some people

:39:55. > :40:00.lose up to 96p of every pound earned in work because of the way

:40:00. > :40:08.their benefits are withdrawn. Would anybody here in this hall work if

:40:08. > :40:14.they were having to pay 90 -- 96% in taxes? Especially if they could

:40:14. > :40:19.earn a living by doing nothing at all? No wonder people are tempted

:40:19. > :40:25.to sit at home. Universal Credit will ensure that you will always be

:40:25. > :40:29.better off in work that out of work, and it will mean tax crowd --

:40:29. > :40:35.taxpayers will get value for money. At last, a system of benefits that

:40:35. > :40:45.places work at the heart of that system. What a remarkable

:40:45. > :40:49.

:40:49. > :40:59.turnaround, and that is what we Which is why, for those fit for

:40:59. > :41:00.

:41:00. > :41:06.work, I have a very simple message. Work with us, to find and stay in

:41:06. > :41:15.employment, end you will get all the support that we can muster.

:41:15. > :41:20.However, failure to seek work, to take work, or to stay in work, and

:41:20. > :41:23.you will lose your benefits. This is our contract with the British

:41:23. > :41:33.people, to bring an end to the something for nothing culture, that

:41:33. > :41:35.

:41:35. > :41:41.is a promise we made and a promise This brings me to one of the most

:41:41. > :41:48.important issues facing our country, the role of the family. This isn't

:41:48. > :41:52.about government into peeling off - - interfering or finger-wagging. It

:41:53. > :41:57.is about government recognising that stable two-parent families are

:41:57. > :42:02.vital for the creation of a strong society. It is about parents taking

:42:02. > :42:06.responsibility for their children, and we saw the results when that

:42:06. > :42:11.doesn't happen back in August. And it is about Government realising

:42:11. > :42:15.that we have to create a level playing field for the decisions

:42:15. > :42:21.people make about their families. This means reversing the biases

:42:21. > :42:26.against stability that we have seen build up too often in the system.

:42:26. > :42:34.Build up over recent years, including the damaging financial

:42:34. > :42:38.discouragement to couple formation. We also need to make sure that

:42:38. > :42:41.support is available when families need it most. That is why I intend

:42:41. > :42:50.our welfare reforms that we have already laid out, that they will

:42:50. > :42:55.make any impact are amongst families on the lowest incomes. And

:42:55. > :43:00.furthermore, remember, the Prime Minister has made it clear that in

:43:00. > :43:10.this Parliament, the Government will recognise marriage in the tax

:43:10. > :43:13.system. That is a promise. Iain Duncan Smith speaking to the

:43:13. > :43:21.Conservative Party conference earlier this morning. He just stuck

:43:21. > :43:25.his head into the BBC bubble and said good morning. With me is the

:43:25. > :43:30.employment minister Chris Grayling. The Prime Minister apologised to

:43:30. > :43:36.women yesterday, two in particular, about having said things in the

:43:36. > :43:39.Commons that he thought was badly phrased. Wouldn't it be better,

:43:39. > :43:45.make more sense, if he apologised to women for the fact that

:43:45. > :43:51.unemployment among women is now the highest since 1996? I think what

:43:51. > :43:55.women really want us to do is to set out ways to tackle that. 18

:43:55. > :43:58.months ago we inherited some of the most difficult economic and

:43:58. > :44:01.financial circumstances any government has ever taken over.

:44:01. > :44:06.What we have also had since then is the emergence of a eurozone

:44:06. > :44:13.financial crisis that nobody anticipated. There are huge

:44:13. > :44:18.economic storm clouds alive, and we are not immune to those. But why

:44:18. > :44:21.apologise for a backbencher remarked to Nadine Dorries, and not

:44:21. > :44:24.apologise to women who were suffering the highest unemployment

:44:24. > :44:29.since the last Tory government? Well, I would say that we are

:44:29. > :44:34.trying to sort that problem out. We are not going to apologise for the

:44:34. > :44:40.appalling record of the last government. It wasn't that high

:44:40. > :44:43.enable 2010. This has happened under you. What we have seen in the

:44:43. > :44:47.labour market over the last few months has been ups and downs. The

:44:47. > :44:51.last figures were a big step in the wrong direction, but the previous

:44:51. > :44:56.two were in the right direction. What we have had over the last 12

:44:56. > :45:00.months, in overall terms, we have had unemployment flatlining. And we

:45:00. > :45:03.have had an increase in the number of people in private sector

:45:03. > :45:07.employment. My concern now is to make sure that we pursue policies

:45:07. > :45:17.that will keep unemployment on a downward curve, even in difficult

:45:17. > :45:19.

:45:19. > :45:24.Would it not make more sense to apologise to women for scrapping

:45:24. > :45:28.child benefit for those among the 40% tax bracket? It is not just

:45:28. > :45:32.women in the tax bracket who might lose their child benefit in a

:45:32. > :45:35.couple of years. All of us would rather not have come into

:45:35. > :45:41.government to take tough decisions like these and we regret having to

:45:41. > :45:45.take them but we are not the ones who created the biggest financial

:45:45. > :45:49.deficit in peacetime history. We are dealing with the mess created

:45:49. > :45:54.under the previous government in some of the most difficult economic

:45:54. > :45:58.circumstances in living memory. you are in no mood to apologise to

:45:58. > :46:03.women, shouldn't you apologise for the tax credit cards and higher

:46:03. > :46:10.child care costs which means it is left economic for women to find

:46:10. > :46:15.jobs? -- less economic. Whilst we have taken some child tax credits,

:46:15. > :46:19.we have increased it for those at the bottom of the scale. We know

:46:19. > :46:24.there are difficult decisions to take that will affect women and men

:46:24. > :46:27.alike but we are doing what we can to affect the poorest in society,

:46:27. > :46:34.either through targeted financial support or some of the measures we

:46:34. > :46:43.discussed this morning... Do you think it would be worth apologising

:46:43. > :46:49.to women for having more men from a single Oxford college then you have

:46:49. > :46:54.women in the Cabinet? When you have such a good influx of women MPs,

:46:54. > :46:58.many a suspect will become ministers in the years ahead...

:46:58. > :47:03.have fewer women in the Cabinet then you have men from one Oxford

:47:03. > :47:07.college. That is very much a regret that we do not have more women in

:47:07. > :47:12.the parliamentary party but we have taken a big step to rectify that.

:47:12. > :47:17.In the last election we had one of the biggest intake of women MPs we

:47:17. > :47:21.have ever had, many of them making a good impact on Parliament so what

:47:21. > :47:27.I would say is we recognise we have a problem and one of the things

:47:27. > :47:33.David Cameron did his dart to sort that out. When you see what happens

:47:33. > :47:36.to chart tax credits, female unemployment, child care costs, is

:47:36. > :47:45.there any wonder your party is playing badly among female voters -

:47:45. > :47:49.- child tax credit? It has been equal among men and women. Your

:47:49. > :47:54.party managers are talking about how they need to get the women's

:47:54. > :48:00.vote back. You know that. There is a problem. I would like to win at

:48:00. > :48:04.the votes of both men and women. understand that. We need policies

:48:04. > :48:10.to stabilise the economy, create sustained employment growth, and

:48:10. > :48:15.then we can start, as we rebuild our financial base, to target

:48:15. > :48:21.support in those parts of our societies. Iain Duncan-Smith spoke

:48:21. > :48:25.about tax breaks for marriage, for example. The Chancellor in your

:48:25. > :48:29.government and people like you keep on saying, we've got no money to do

:48:29. > :48:35.a fiscal stimulus, we can't break out of the deficit reduction

:48:35. > :48:40.package, and yet within the last seven days, the Chancellor has

:48:40. > :48:46.found �800 million to freeze council tax, �250 million to get

:48:46. > :48:52.councils to do weekly dustbin collections, �150 million to

:48:52. > :48:57.improve mobile phone coverage, �190 million on science projects. Where

:48:57. > :49:01.is the money from? We have set a clear downward track for the

:49:01. > :49:04.deficit but within the budgets we have got, we will try to do

:49:04. > :49:11.everything we can to release money and provide additional support.

:49:11. > :49:15.you have got extra money, would it not be better to try to spend it on

:49:15. > :49:21.efforts to improve job creation? Let's take the example of the money

:49:21. > :49:26.that is going to be used to keep council tax down. 800 million.

:49:26. > :49:32.effect is it will help people under pressure with cost of living rises,

:49:32. > :49:35.increased utility bills, food prices. But that is money that then

:49:35. > :49:40.goes back into the economy and helps create jobs because it is

:49:40. > :49:43.extra spending power. Although councils may have to find other

:49:44. > :49:50.ways of raising money to make up for their hit the services will

:49:50. > :49:55.take. You off freezing council tax at a time of 5% inflation -- you of

:49:55. > :49:59.freezing. I do not believe all councils have done everything they

:49:59. > :50:05.can so there is best value for money for taxpayers. There is

:50:05. > :50:12.plenty that can be done without damaging frontline services.

:50:12. > :50:14.have caused some controversy in the 2010 election campaign when you

:50:14. > :50:19.supported the Christian bed and breakfast owners who did not want

:50:19. > :50:26.to admit gay guests. It is now government policy to legalise same-

:50:26. > :50:30.sex marriage. Does that please you? I am very happy with that and with

:50:30. > :50:34.Civil Service partnerships. I voted for those changes and I will

:50:35. > :50:38.support them. Chris Grayling, thank you. The Chancellor's due on his

:50:38. > :50:41.feet in about 15 minutes. In a moment, we'll be hearing from the

:50:41. > :50:44.Director General of the CBI, John Cridland. But first let's take a

:50:44. > :50:48.look at the economic backdrop to his speech.

:50:48. > :50:51.David Cameron once promised that sunshine would win the day. The

:50:51. > :50:54.economic weather has since taken a turn for the worse though and

:50:54. > :50:58.forecasts for economic growth have become increasingly gloomy. Last

:50:58. > :51:02.month, the IMF cut its prediction for 2012 from 2.3 per cent to a

:51:02. > :51:06.chilly 1.6 per cent. And George's most urgent priority, deficit

:51:06. > :51:15.reduction, looks like it might be blown off course. Borrowing for

:51:15. > :51:17.August was the highest for 18 years. Over the weekend, the Chair of the

:51:17. > :51:20.Treasury Select Committee, the Conservative MP, Andrew Tyrie, also

:51:20. > :51:28.rained on George's parade, saying his piecemeal policies were in need

:51:28. > :51:30.of radical improvement. The outlook will continue to be blustery,

:51:30. > :51:38.yesterday 30,000 public sector workers protested on the streets

:51:38. > :51:44.here in Manchester. And a gigantic storm is brewing on the Continent.

:51:44. > :51:47.Currently over Athens, it is likely to spread in the next few weeks.

:51:47. > :51:50.The Chancellor is standing firm in the gale, insisting there can be no

:51:50. > :51:57.plan B but is the increasing talk of infrastructure investment

:51:57. > :52:02.represent a plan A plus? To discuss these matters are enjoyed by the

:52:02. > :52:07.director-general of the CBI, which represents businesses, particularly

:52:07. > :52:12.big businesses. Do you believe that these piecemeal measures will make

:52:12. > :52:16.much difference to economic growth was mad if we get the right set of

:52:16. > :52:24.announcements this autumn, with D- Day been 29th November when the

:52:24. > :52:30.Chancellor makes his Autumn Statement. -- with D-Day being 29th

:52:30. > :52:39.November. How much impact do you think the �800 million freeze on

:52:39. > :52:43.council tax, 200 million for weekly dustbin collections, the money for

:52:43. > :52:50.science projects... What is the impact for that? Most of it is

:52:50. > :52:54.facing the domestic consumer and the voter. I have a different

:52:54. > :52:58.shopping-list from the one we have had announced. Are you not

:52:59. > :53:04.impressed with the shopping list? They are not really my baby. Social

:53:04. > :53:08.housing, home-ownership has been an important objective. Will it do

:53:08. > :53:13.anything to improve growth? On its own we need a separate set of

:53:13. > :53:16.measures to boost first-time home ownership, to get roads and energy

:53:16. > :53:21.infrastructure built but the Chancellor will not stop with this

:53:21. > :53:27.list. What do you want him to announce? The big challenge is for

:53:27. > :53:30.government to use its purchasing power and its leverage in the

:53:30. > :53:35.market to get the private sector investing. The fact the government

:53:35. > :53:38.does not have a lot of money does not mean we cannot have Investment.

:53:38. > :53:41.Energy and transport will be primarily delivered by my

:53:41. > :53:46.membership, private sector companies, if government gives them

:53:46. > :53:52.permission to invest. What do you want them to do? On energy

:53:52. > :53:55.infrastructure, companies will only build a new wind turbines and power

:53:55. > :54:00.stations if the government sorts up the planning system. The government

:54:00. > :54:04.is trying but has not succeeded. Businesses will invest instead of

:54:04. > :54:08.the state in new roads and rail but they need longer rail franchises

:54:08. > :54:12.and they might need toning so they get an income stream to pay for the

:54:12. > :54:17.new roads. But none of that will make a blind bit of difference to

:54:17. > :54:22.the economy this year and next. That will take ages. These are

:54:22. > :54:26.long-term projects. It makes a huge difference to confidence. Business

:54:27. > :54:32.confidence is hanging by a thread. Signals by government that it wants

:54:32. > :54:37.investment will produce action in 2012 but it will change confidence

:54:37. > :54:41.this year. Why under a government that has got a grip on deficits,

:54:41. > :54:46.has put bond yields down, why should business confidence hang by

:54:46. > :54:50.a thread? Because of what is happening around the world. The not

:54:50. > :54:55.what the government is doing? No. The government cannot control what

:54:55. > :55:00.is happening around the world. is what business investment is

:55:00. > :55:04.stagnating. People do not have confidence about the eurozone. I am

:55:04. > :55:09.looking for the Chancellor to tell us what the road to recovery is for

:55:09. > :55:13.the eurozone. He cannot tell us that! He might as well say what it

:55:13. > :55:17.will be in Mars! He is in touch with international leaders and he

:55:17. > :55:22.knows what they are trying to do to resolve the crisis and that must be

:55:22. > :55:26.resolved to boost confidence. the real problem not what the

:55:26. > :55:29.government is or isn't doing, it lies with your members? Your

:55:29. > :55:34.members are sitting on billions and billions of pounds of cash and they

:55:34. > :55:39.are not investing in this country. They will only invest when they can

:55:39. > :55:43.get a return for their shareholders. If confidence is and there, nobody

:55:43. > :55:49.Spence, just like we consumers do not spend if we do not have

:55:49. > :55:54.confidence. -- nobody spends. the problem is the private sector

:55:54. > :55:59.is not investing? Absolutely, because of a global slowdown which

:55:59. > :56:05.has disappointed the growth we thought we would be enjoying.

:56:05. > :56:09.any prospect of improved growth in the next 18 months -- do you see?

:56:09. > :56:13.Even your own chief economist predictions are gloomy? When you

:56:13. > :56:18.have growth that is around 1%, for the ordinary citizen it does not

:56:18. > :56:23.feel like growth, but it is still a lot better than the economy

:56:23. > :56:29.contracting. In 2012 I think we will have growth of a similar order,

:56:29. > :56:36.if not a little bit better. Give me a figure. Something in the order of

:56:36. > :56:40.1.5% in the UK. That is just treading water. It is. But the

:56:40. > :56:46.Chancellor has got to recognise that the future for the economy is

:56:46. > :56:50.not the sort of growth we lived with up to 2007. It will be slower.

:56:50. > :56:54.If it is 1.5 and you come back to talk to me next year, there will be

:56:55. > :57:00.a lot more people unemployed. unemployment I think will write a

:57:00. > :57:05.little bit more but it shouldn't hit the sort of figures it would

:57:05. > :57:10.have done in previous downturns -- unemployment I think will rise. We

:57:10. > :57:14.have a more flexible labour market. We will here at this conference

:57:14. > :57:20.that new measures can keep the economy flexible. The Marks out of

:57:20. > :57:24.10 for the Chancellor? Deficit reduction, 10 out of 10. One growth,

:57:24. > :57:29.it is an emerging story and we are not at the end of the Thames. So

:57:29. > :57:36.overall, I think the government has done well. Out of 10? Seven out of

:57:36. > :57:40.10. You are a generous man. Thank you. I am glad we had longer to

:57:40. > :57:46.talk than we did at the Labour conference, when our deliberations

:57:46. > :57:52.were truncated. The Chancellor is not yet on his feet but the hall is

:57:52. > :57:56.filling up for him. But plenty of empty seats around and it is not

:57:56. > :58:00.that big. Let's hear what is going on at the moment. We will be

:58:00. > :58:10.speaking to Justine Greening later and she is currently taking the

:58:10. > :58:10.

:58:10. > :58:15.stage. Let's have a listen.... Raising the issue of accountability,

:58:15. > :58:19.one of the great flaws of the regulatory regime that we inherited

:58:19. > :58:25.is that there was the lack of clarity as to where responsibility

:58:25. > :58:30.lies and unless you have got clarity on that, how can you have

:58:30. > :58:36.proper accountability? We had the situation of, who is in charge, the

:58:36. > :58:40.Bank of England, the FSA, the Treasury? That was not clear,

:58:40. > :58:43.particularly on spotting those systemic weaknesses in the system,

:58:43. > :58:48.there was nobody who had responsibility to deal with that

:58:48. > :58:54.and the reforms we have put in place address that issue...

:58:54. > :58:58.person speaking is their tax personality of the year! I am not

:58:58. > :59:05.sure if that means he has paid a lot of tax to get there or managed

:59:05. > :59:08.to avoid it. The Chancellor is due to address this conference, the

:59:08. > :59:12.second most important speech of the week. The Prime Minister on

:59:12. > :59:21.Wednesday afternoon. But it is a very important speech from George

:59:22. > :59:26.He will tell us... We are not quite sure. For the moment, we will hear

:59:26. > :59:30.from another great man. Not tax personality of the year but it is

:59:30. > :59:37.something I will aspire to! It's like being chartered accountant of

:59:37. > :59:43.the year! Probably not that much competition. Sorry... You can deal

:59:43. > :59:48.with the letters. I love you, chartered accountants. We have had

:59:48. > :59:55.lead to us a number of things. Big things like a freeze on council tax.

:59:55. > :00:01.It will things like 150 million quid for mobile phone masts. He we

:00:01. > :00:05.know the message. On the one hand, the plan ain't changing. He will

:00:05. > :00:10.say it again and again, the plan is the plan is the plan and we are

:00:10. > :00:14.sticking with it. His argument is, it would be a huge risk to make

:00:14. > :00:22.quite small changes to the plan. The risk being, an increase in

:00:22. > :00:27.interest rates and he will put a number on that, so if a 1% increase

:00:27. > :00:32.means �10 billion of costs for businesses... At the same time,

:00:32. > :00:36.that does not mean the government can't do anything, which is why we

:00:36. > :00:40.have this string of little measures. I think we will get a hint of not

:00:40. > :00:44.measures involving more spending but maybe a bit more on the

:00:44. > :00:51.regulation. It is about monetary activism. They have a slogan behind

:00:51. > :00:54.the scenes, and it will stay behind the scenes because it is not catchy.

:00:54. > :00:58.They are fiscal Conservatives in order to be Monetary activists.

:00:58. > :01:03.They are tough on tax in order to create the room for the Bank of

:01:03. > :01:08.England. That is a big hint that they want the Bank of England to

:01:09. > :01:12.extend quantitative easing when it meets on Thursday. We are also been

:01:12. > :01:17.pointed in the direction of a speech being given by Adam Posen

:01:17. > :01:21.from the Bank of England a while ago, which said isn't there more we

:01:21. > :01:27.can do, and one other big things he is looking at is how do you get

:01:27. > :01:32.lending go on to small and medium- sized businesses. His idea was a

:01:32. > :01:42.new bank. A state bank. I am told it is a good idea but takes a long

:01:42. > :01:44.

:01:44. > :01:48.time and I think we may get hints The problem with the position way

:01:48. > :01:53.you say we will have fiscal conservatism, because we the

:01:53. > :01:58.government control that, to allow the Bank of England to have a loose

:01:58. > :02:04.monetary policy, is that you have no say over that. You are entirely

:02:04. > :02:10.dependent on the analysis of the bank to do it. You are, and there

:02:10. > :02:15.isn't much looser it can get. At cutting interest rates is not

:02:15. > :02:18.possible. Then we talk about quantitative easing, some people

:02:18. > :02:23.call it printing money, and there is a debate about whether it does

:02:24. > :02:27.the job, or whether it will stoke inflation. But the hints are that

:02:27. > :02:33.the bank is looking at that and could do it as soon as this

:02:33. > :02:40.Thursday. But there are a lot closer than you might think, in

:02:40. > :02:45.that yes, the bank is independent, but at all stages, George Osborne

:02:45. > :02:53.has effectively been quoting Mervyn King in saying that if we do this,

:02:53. > :03:00.it allows them to do that. Can they have an open conversation? Formally,

:03:00. > :03:05.constitutionally not. But you think they look at each other in a closed

:03:05. > :03:10.room and say, can we do this, read each other's minutes? Of course

:03:10. > :03:15.they do. When you look at these announcements that are coming in,

:03:15. > :03:19.there are pretty good for party conferences. Some of them are quite

:03:19. > :03:25.popular. But if you're looking at them from the outside, you would

:03:25. > :03:28.say, in the grand scheme of things, they don't matter. But in a sense,

:03:28. > :03:33.that is what is interesting. George Osborne could have felt under a

:03:33. > :03:37.great deal of pressure. Labour started to win an argument that it

:03:37. > :03:41.was growth of that mattered as much as the deficit, made an argument

:03:41. > :03:47.for cutting VAT to get the economy moving. You have parts of the

:03:47. > :03:53.business community, traditionally quite right wing, saying cut taxes

:03:53. > :03:57.quicker. Andrew Tyrie, the chairman of the Treasury Select Committee,

:03:57. > :04:02.said the government's growth strategy was incoherent. In the

:04:02. > :04:06.spate of that, you get a flurry of, we are doing this, that, the other.

:04:06. > :04:11.But you don't get a new plan, because the Chancellor's view is we

:04:11. > :04:18.don't need a new plan, and the risk of even appearing to look like

:04:18. > :04:21.you're looking at one is not worth it. So the die is cast. In terms of

:04:22. > :04:26.the personality of the Chancellor, how would you assess his standing

:04:26. > :04:30.among the Tory faithful? Extraordinarily high. When he came

:04:30. > :04:33.to this conference a couple of years ago, the muttering,

:04:33. > :04:38.particularly amongst the people who gave money to the Tory party,

:04:38. > :04:45.largely people from the city of London, was, abbot of a boy doing a

:04:45. > :04:50.man's job. Since he has got the job, he has won the praise of seeming

:04:51. > :04:57.comfortable in it, filling his suit. Peter Mandelson said the same thing

:04:57. > :05:02.quite recently. But the nervousness that a certain now is, my God, I

:05:02. > :05:07.hope he is right. Because if he is not, and we find that growth is

:05:07. > :05:11.flat next year, what does he do then? He will not have to revise

:05:11. > :05:16.his plan in November. He will undoubtedly having to say that he

:05:16. > :05:21.is borrowing more money than he plans. He will undoubtedly say that

:05:21. > :05:25.the plan allows for that. But if we get to the Budget in March, the

:05:25. > :05:29.following year's Autumn Statement, and the economy is flat, he will

:05:29. > :05:34.have to have a new plan. conference is getting to its feet

:05:34. > :05:38.because the Prime Minister has walked in to take his seat. This is

:05:38. > :05:42.in anticipation of the Chancellor's speech. Remarkable given the

:05:43. > :05:47.difficulties of going through what you and I catalogue as the

:05:47. > :05:57.Brown/Blair years. There is no sense that you would get more than

:05:57. > :05:58.

:05:58. > :06:02.a playing card between Mr Brown has Mr -- Mr Osborne and Mr Carron.

:06:02. > :06:06.thing they did to avoid the Blair- Brown problem was to move George

:06:06. > :06:12.Osborne into Number 11 almost full time. You see him around Downing

:06:12. > :06:17.Street much more than you see them around the Treasury. He is much

:06:17. > :06:22.more in Downing Street. He has his office there. He has an office in

:06:22. > :06:26.the Treasury as well, but he starts his day in Downing Street and has

:06:26. > :06:31.his advisers there. He has another strategic meeting late in the

:06:31. > :06:34.afternoon. That is where he sees his home. Well, his home for the

:06:34. > :06:38.next half-hour is going to be the Conservative conference here in

:06:38. > :06:43.Manchester. The Chancellor is going up to the podium, taking the

:06:43. > :06:53.applause of the party faithful. He will now address the conference.

:06:53. > :06:54.

:06:54. > :07:01.Here is the Chancellor of the Today all around a country, indeed,

:07:02. > :07:11.all round the world, people are anxious. Worried about their jobs,

:07:11. > :07:14.their families, how they are going to pay the bills. I come to you

:07:14. > :07:21.with words of resolve, determination, confidence and

:07:21. > :07:29.belief. Belief that the British people will overcome this challenge

:07:29. > :07:39.as we have overcome so many before. Together, we will ride out the

:07:39. > :07:39.

:07:39. > :07:46.storm. I don't want any one to

:07:46. > :07:50.underestimate the gravity of the situation facing the world economy.

:07:50. > :07:57.But I also don't want anyone to think that the situation is

:07:57. > :08:03.hopeless, that there is nothing we can do. Yes, the difficulties are

:08:03. > :08:09.great. But we should be careful not to talk ourselves into something

:08:09. > :08:14.worse. And we should never take our eyes off the prize. A British

:08:14. > :08:19.economy freed from its debts, growing strongly, spreading

:08:19. > :08:25.prosperity to all our people, so we can fulfil that solemn promise to

:08:25. > :08:35.the next generation. We will leave the world a better place than we

:08:35. > :08:36.

:08:36. > :08:40.found it. Our economic problems were not have

:08:40. > :08:48.visited on this country by some cruel act of God or blind force of

:08:48. > :08:54.nature. They were created by the mistakes of human beings and the

:08:54. > :09:00.endeavour of human beings can put them right. What were those

:09:00. > :09:08.mistakes? There were three of them. And they were all connected with

:09:08. > :09:18.each other. First, the last government borrowed too much money.

:09:18. > :09:21.They thought you could borrow without regard to ability to pay,

:09:22. > :09:29.spend without regard for value for money, all on the premise the boom

:09:29. > :09:34.would never end in bust. They saddled the country with the worst

:09:34. > :09:44.debt crisis in our history. What a catastrophic mistake. Let us make

:09:44. > :09:46.

:09:46. > :09:53.sure it never happens again. Economic adviser to Gordon Brown. I

:09:53. > :10:03.am not sure I would put that on my CV if I was Ed Balls! It is like

:10:03. > :10:04.

:10:04. > :10:10.personal trainer to Eric Pickles. Although I have to say, when it

:10:10. > :10:15.comes to chasing down council waste, no one runs faster than our Eric.

:10:15. > :10:20.The second mistake was made by banks who ran up staggering debts

:10:20. > :10:25.of their own. Buying financial instruments even they couldn't

:10:25. > :10:29.understand. The banks and those regulating them are believed that

:10:29. > :10:33.the bubble would never stop growing, that the markets will always self-

:10:33. > :10:38.correcting, that greed was always good, that their schemes would

:10:38. > :10:42.never collapse, that none of the debts would ever turn bad, and the

:10:42. > :10:46.message from this hall is clear. They let down their customers, they

:10:46. > :10:56.let down their shareholders and they let down this country.

:10:56. > :10:58.

:10:58. > :11:03.And there was a third mistake. Our European neighbours plunged

:11:03. > :11:12.headlong into the euro without thinking through the consequences.

:11:12. > :11:17.How could they believe that countries like Germany and Greece

:11:17. > :11:22.could share the same currency when they had vastly different economies

:11:22. > :11:27.and no mechanism to adjust? For generations to come, for

:11:27. > :11:37.generations to come, people will say, thank God Britain didn't join

:11:37. > :11:43.

:11:43. > :11:47.And let us recognise the foresight and the fortitude, the street

:11:47. > :11:51.stalls and the leaflets, the pavement pounding and the

:11:51. > :12:01.canvassing of the people in this hall today who campaigned to keep

:12:01. > :12:04.

:12:04. > :12:08.And there is one man here today who precisely saw the consequences,

:12:08. > :12:13.warned of them, campaigned against them, put his reputation on the

:12:13. > :12:19.line to oppose them, was ridiculed for it, but who stuck to his cause

:12:19. > :12:29.and was proved right, my friend William Hague.

:12:29. > :12:40.

:12:40. > :12:44.I have waited 10 years to say that! And it is thanks to the leadership

:12:44. > :12:48.of someone else here today that we have kept Britain out of the

:12:48. > :12:51.eurozone bail out of Greece, out of the permanent bail-out fund, our

:12:51. > :13:01.Prime Minister, the country's leader, David Cameron.

:13:01. > :13:04.

:13:04. > :13:08.And this is also my opportunity to thank my Treasury team, Mark

:13:08. > :13:14.Holborn, Justine Greening, David Gore, who you have just been

:13:14. > :13:24.hearing from, Greg Hands and Danny Alexander, they are diligent and

:13:24. > :13:26.

:13:26. > :13:31.dedicated in their service to our Tomorrow morning I will travel to a

:13:31. > :13:37.meeting of European finance ministers in Luxembourg. My

:13:37. > :13:42.objective is Clear - the eurozone's Financial Fund needs maximum

:13:43. > :13:45.firepower. The eurozone needs to strengthen its banks. And the

:13:45. > :13:55.eurozone needs to end all speculation, decide what they are

:13:55. > :13:57.

:13:57. > :14:01.going to do with Greece and then Britain is not immune to all this

:14:01. > :14:05.instability. Indeed, the resolution of the eurozone debt crisis is the

:14:05. > :14:11.single biggest boost to confidence that could happen to the British

:14:11. > :14:15.economy this autumn. The time to resolve the crisis is now. They

:14:15. > :14:25.have got to get out and fix their roof even though it is already

:14:25. > :14:28.

:14:28. > :14:33.A debt crisis in government, a debt crisis in the banks, a debt crisis

:14:33. > :14:43.in the euro. We in Britain are paying a high price for those

:14:43. > :14:44.

:14:44. > :14:51.mistakes. The price of jobs lost, Korea has never started, hopes

:14:51. > :14:56.dimmed -- career never started. Our covenant is this, we will not stand

:14:56. > :15:00.by and let it happen. We will do anything, work with anything,

:15:00. > :15:06.overcome every obstacle in our path to jobs and prosperity so that

:15:06. > :15:12.together we will ride out the storm. Each day, people suggest to me

:15:12. > :15:18.different things we should be doing. Some say borrow more for more

:15:18. > :15:25.spending. Or they say, borrow more for temporary cut in tax. So you

:15:25. > :15:33.would have to put taxes up even more later. I am a believer in tax

:15:33. > :15:37.cuts, permanent tax cuts, paid for by sound public finances. Right now,

:15:37. > :15:43.a temporary tax cuts or more spending are two sides have exactly

:15:43. > :15:51.the same coin. A coin that has to be borrowed, more debt that has to

:15:51. > :15:55.be paid off. I know we are asking a lot from people. And I want them to

:15:55. > :16:00.know that when these arguments are put to me, I consider them

:16:00. > :16:07.carefully. Don't think I haven't thought hard about what more we

:16:07. > :16:17.could do, but I don't explore every single option. I do. But borrowing

:16:17. > :16:25.

:16:26. > :16:31.too much is the cause of Britain's Let's say we added to the

:16:31. > :16:35.structural deficit with more borrowing. We would be gambling

:16:35. > :16:38.that priceless fiscal credibility that this government has turned

:16:38. > :16:43.with the international markets on the bet that borrowing a few

:16:43. > :16:48.billion pounds more would make all the difference. We would be

:16:48. > :16:53.hazarding of our precious low interest rates on a change of

:16:53. > :16:57.course that would put the rates up. In the full knowledge that any

:16:57. > :17:02.extra billions of pounds of public spending would be wiped out by

:17:02. > :17:06.billions of pounds more in high interest costs of families,

:17:06. > :17:14.businesses and taxpayers. We would be abandoning the deficit plan that

:17:14. > :17:18.has brought us the stability other nations grave for 5, 10, �20

:17:18. > :17:23.billion more -- of a nation's craves. This is on the illusion

:17:23. > :17:28.that such sums would transform the economy when we are already

:17:28. > :17:33.spending three trillion pounds over the next four years. We would be

:17:33. > :17:40.risking our nation's credit rating for a few billion pounds more. When

:17:40. > :17:44.that amount is dwarfed, dwarfed, by the scale and the power of the

:17:44. > :17:48.daily flows of money on international bond market, swirling

:17:48. > :17:54.around, ready to pick of the next country that lacks the will to deal

:17:54. > :18:04.with its debts. Conference, we will not take that risk. We are in a

:18:04. > :18:10.

:18:10. > :18:14.debt crisis. You can't borrow your And incidentally, the fact that the

:18:14. > :18:20.world is in the grips of the debt crisis has not undermined that

:18:20. > :18:25.argument, it has made it stronger. For too long, Britain has been

:18:25. > :18:31.running away from its problems. We have to face up to them, we have to

:18:31. > :18:35.confront them, we must fix them. We must deal with our debts. Weekend

:18:35. > :18:40.and block the banking system. We will help businesses create new

:18:40. > :18:47.jobs. Here is howl. First we will help the Bank of England keep

:18:47. > :18:52.interest rates at record lows while the economy is weak. It is the most

:18:52. > :18:57.powerful stimulus that exists and nothing would be more fatal for an

:18:57. > :19:03.economy as indebted as ours then a sharp rise in interest rates. Look

:19:03. > :19:10.at our neighbours today. In Greece, market rates a 20%. In Portugal,

:19:10. > :19:15.they are more than 10%. In Spain and Italy, they are now over 5%.

:19:15. > :19:22.Our budget deficit is bigger than the lot of them. But in Britain,

:19:22. > :19:27.our market interest rates are 2.5% today. Fiscal credibility is not

:19:27. > :19:33.some abstract concept. It keeps families in their homes, firms in

:19:33. > :19:39.business, people in their jobs. A 1% rise in our interest rates today

:19:39. > :19:46.would add �10 billion to family mortgage bills alone at the worst

:19:46. > :19:51.possible time. We have a deficit plan that commands the confidence

:19:51. > :19:57.of world markets and has brought stability at home. It is a plan

:19:57. > :20:02.flexible enough to respond to good times and bad, a plan independently

:20:02. > :20:06.verified by our new Office for Budget Responsibility, backed by a

:20:06. > :20:10.government united in delivering it and a parliament that it has

:20:10. > :20:15.legislated for it. Very few countries can say that today. The

:20:15. > :20:20.fact that Britain can is thanks to the resolve of his party and we are

:20:20. > :20:24.generous enough to stay this. It is thanks to the resolve of the

:20:24. > :20:34.Liberal Democrats, too. Working as a coalition, together, in the

:20:34. > :20:37.

:20:37. > :20:42.Keeping interest rates as low as possible for as long as possible is

:20:42. > :20:47.crucial for dealing with the debt crisis. It is the first part of our

:20:48. > :20:52.plan. But because banks are damaged, they won't lend at the current low

:20:52. > :20:56.rates. It is like putting your foot on the accelerator but because the

:20:56. > :21:02.transition mechanism isn't working properly, the car wheels don't

:21:02. > :21:07.respond. So this is the second part of our plan. We have got to get

:21:07. > :21:12.credit flowing in our economy. Credit means investments,

:21:12. > :21:16.Investment means jobs. We are making sure that the British banks

:21:16. > :21:22.are strong enough. Holding enough capital to cover loans in an

:21:22. > :21:26.emergency. We have expanded loan guarantees. We have struck a deal

:21:26. > :21:30.with the high-street lenders to increase lending to small

:21:30. > :21:35.businesses by 15% this year. But all of this may not be enough. Of

:21:35. > :21:40.course the Bank of England, at their own independent judgment --

:21:40. > :21:47.have their own independent judgment to make on quantitative easing. I

:21:47. > :21:51.have said before, I will follow my predecessor and his Treasury

:21:51. > :21:56.approval if asked. But there is more the government itself can do

:21:56. > :22:01.to encourage investment. David Cameron and I have always said we

:22:01. > :22:05.would be fiscal Conservatives and Monetary activists. Everyone knows

:22:05. > :22:08.that Britain's small firms are struggling to get credit and that

:22:08. > :22:13.banks are weak. So as part of my determination to get the economy

:22:13. > :22:18.moving, I have set the Treasury to work on ways to inject money

:22:18. > :22:23.directly into parts of the economy that need it such as small business.

:22:23. > :22:28.It is known as credit easing. It is another form of monetary activism.

:22:28. > :22:32.It is similar to the National Loan guarantee Scheme we talked about in

:22:32. > :22:37.opposition. It could help prevent another credit crunch, provide a

:22:37. > :22:42.real boost to British business, and overtime help solve that age-old

:22:42. > :22:47.problem in Britain. Not enough long-term investment in small

:22:47. > :22:57.businesses and enterprise. And if this party is anything it is the

:22:57. > :23:01.

:23:01. > :23:05.party of Small Business & All this brings us to the question

:23:05. > :23:10.about the kind of economy we want to see and the kind of banking

:23:10. > :23:14.system we want to have. We all know what kind of banking system we

:23:14. > :23:19.don't want. Let's look at what happened at the Royal Bank of

:23:19. > :23:24.Scotland. A bank where one individual was so focused on his

:23:24. > :23:30.own success, his own self- aggrandisement, that he put at risk

:23:30. > :23:35.the likelihood of a 200,000 people -- of over 200,000 people who

:23:35. > :23:38.worked at the Bank, the 15 million people who entrusted the bank with

:23:38. > :23:43.their life savings, the 60 million taxpayers who had to bail out the

:23:43. > :23:47.bank. That is what I mean by irresponsibility in business and it

:23:47. > :23:52.is what I mean by irresponsibility in government, when they don't

:23:52. > :23:56.properly regulate banks, don't control public finances and leave

:23:56. > :24:01.our country exposed to the whims of the international money markets. So

:24:01. > :24:05.I ask Ed Miliband, you say you would not bring back Fred Goodwin

:24:05. > :24:15.to run our banking system, so why on earth will you bring back Ed

:24:15. > :24:18.

:24:18. > :24:24.Balls to run our economy? There of business practices that

:24:24. > :24:28.are irresponsible -- there are business practices. We will deal

:24:28. > :24:33.with them with a regulatory system that works but Labour's latest

:24:33. > :24:40.policy, that there should be two newly created tax rates, is frankly

:24:40. > :24:43.ridiculous. One for producers, one for predators, one for companies a

:24:43. > :24:48.Labour Chancellor likes, one for companies a Labour chancellor

:24:48. > :24:51.doesn't like. Imagine a Labour chancellor sitting in Number 11

:24:51. > :24:56.every morning with a copy of the Financial Times in one hand and the

:24:56. > :25:03.Guardian in the other, weighing up corporate Britain on some home-made

:25:03. > :25:07.scales of justice. What are completely unworkable idea! -- What

:25:07. > :25:15.a completely unworkable idea! I think it is the moment that Labour,

:25:15. > :25:19.as an opposition, ceased to be either a producer or a predator.

:25:20. > :25:25.And there was a time when Labour's seemed briefly to realise that to

:25:25. > :25:29.win elections it has to accommodate itself to their real-world, stop

:25:29. > :25:37.being anti-business, make peace with Middle Britain. Not now. It is

:25:37. > :25:41.over. Once they cheat Tony Blair, now they boo him. -- once they

:25:41. > :25:45.cheered for Tony Blair. I fought three elections against Tony Blair

:25:45. > :25:49.and an know the damage he did to our country but they were not just

:25:49. > :25:53.booing him, they were booing the millions of voters who once turned

:25:53. > :25:55.to Labour because they thought Labour had changed. They were

:25:56. > :25:58.booing the business people who thought Labour wanted to work with

:25:59. > :26:03.them. They were booing all those people who thought Labour had

:26:03. > :26:07.finally woken up to the modern world. But to all of those people

:26:07. > :26:12.who heard that, you realise they were aimed at them, for all those

:26:12. > :26:16.people who want a strong society and a strong economy, to those

:26:16. > :26:26.people abandoned by Labour today I say the Conservative Party will be

:26:26. > :26:33.

:26:33. > :26:37.So we are repairing the damage of a major responsibility. Ending the

:26:37. > :26:42.something for nothing society that flourished during it. Reforming

:26:42. > :26:49.welfare, yes, so that those who work get more than those who refuse

:26:49. > :26:55.to. But also introducing the first ever permanent bank tax. The first

:26:55. > :26:59.ever higher levy far long-stay in non-doms, the first ever treaty

:26:59. > :27:05.with Switzerland to get back tax owed to this country. I want people

:27:05. > :27:09.to be successful, to create wealth and jobs, to get the most out of

:27:09. > :27:13.society and to put something back. But I'll tell you what this

:27:13. > :27:20.Conservative Chancellor says to rich people who invade their taxes:

:27:20. > :27:27.We will fine you and we will find your money. -- we will fine you.

:27:27. > :27:37.The days of getting away with it are absolutely over. Just as tough

:27:37. > :27:38.

:27:38. > :27:43.on tax-evasion as benefit fraud. We are all in this together. And that

:27:43. > :27:48.includes the banking sector. Yes, we want Britain to remain number

:27:48. > :27:53.one, the No. 1, International Centre for finance. Employee in

:27:53. > :27:57.thousands of people across this country. Driving at business to

:27:57. > :28:03.Hong Kong and New York and Zurich, it would be completely self-

:28:03. > :28:08.defeating. I understand the anger people feel about what happened. I

:28:08. > :28:11.share it. But ramping up the populist rhetoric is not going to

:28:11. > :28:16.stop banks failing. We have got to do their real work to ensure that

:28:16. > :28:21.Britain's largest industry is no longer the British taxpayer's

:28:21. > :28:25.largest risk. That is why we are abolishing Labour's failed

:28:25. > :28:28.tripartite system and putting the Bank of England back in charge of

:28:28. > :28:38.monitoring debt, a responsibility that should never have been taken

:28:38. > :28:39.

:28:39. > :28:45.It is why we have committed to the principles in the vicar's report we

:28:45. > :28:52.commissioned, to ring-fence our high-street branches, to protect

:28:52. > :28:55.them from the risky trading floor activities. We changed our party so

:28:55. > :29:01.we can tackle the banks without fear, so we can speak truth to

:29:01. > :29:08.power and wealth, and so that society and economy that we build

:29:08. > :29:12.works for everyone. Reforming finance, keeping interest rates low,

:29:12. > :29:18.getting credit to small businesses, helping fix the eurozone crisis.

:29:18. > :29:23.These are all essential for growth and that would be ambition enough

:29:23. > :29:30.for most governments. But they are not enough for us. We have to help

:29:30. > :29:34.businesses create tomorrow's jobs. My children are eight and ten years

:29:34. > :29:39.old. I don't want them to read about how China has just built the

:29:39. > :29:43.world's most advanced aircraft, how India is leading the globe in

:29:43. > :29:47.computer design, and have to say to my children, that used to be

:29:47. > :29:52.Britain. I want Britain to be the home of the greatest scientists,

:29:52. > :29:58.the greatest engineers, the greatest businesses. A land of

:29:58. > :30:06.innovators. And we can be! The sacrifices we make, that is what

:30:06. > :30:14.they are for. The determination I show, that is what drives me.

:30:14. > :30:19.Tomorrow's world is being shaped here in Manchester. Manchester. The

:30:19. > :30:24.first city of the Industrial Revolution. The city were the first

:30:24. > :30:25.computer was built. Where Rutherford split the atom and the

:30:25. > :30:35.Miliband brothers split the Labour Party.

:30:35. > :30:42.

:30:42. > :30:48.Manchester, home to the two brilliant scientists I met this

:30:48. > :30:53.morning who have just been awarded the Nobel Prize for Physics. Their

:30:53. > :31:00.prize was for the discovery of a substance that is the strongest,

:31:00. > :31:04.finished, best conductive material known to science, to be used from

:31:04. > :31:08.everything to aircraft wings to microchips. The inventors could

:31:08. > :31:16.have gone anywhere in the world to conduct their research, but they

:31:16. > :31:23.chose the University of Manchester. And now countries like Singapore,

:31:23. > :31:26.Korea, America, are trying to lure them overseas, but they want to

:31:26. > :31:31.stay here in Britain. They think it is the best country in the world

:31:31. > :31:35.for them and their work. We have already protected the science

:31:35. > :31:40.budget, and today I confirm that on top of that we will fund a national

:31:40. > :31:45.research programme that will take this Nobel prize-winning discovery

:31:45. > :31:55.from the British laboratory to the British factory floor.

:31:55. > :32:02.

:32:02. > :32:07.And we are going to her front the forefront of computing, to give the

:32:07. > :32:12.best computers to our designers and engineers. The letters stop

:32:12. > :32:20.thinking that the only growth that can take place happens in one

:32:20. > :32:25.corner of the industry. We have got to get Britain making things again.

:32:25. > :32:29.I have never believed that Government should just stand on the

:32:29. > :32:34.sidelines, that it had no role to play in fostering enterprise and

:32:34. > :32:39.creating jobs. I will intervene where the market doesn't work and

:32:39. > :32:44.set it free where it does. We have been doing a huge amount in the

:32:44. > :32:48.past 16 months to make Britain open for business. We are cutting

:32:49. > :32:53.business taxes to one of the lowest rates in the developed world. We

:32:53. > :32:59.are cutting income tax bills for over 20 million people and taking

:32:59. > :33:01.over a million of the lowest paid out of tax altogether. At a time of

:33:01. > :33:06.deficit-reduction, we are increasing capital spending on

:33:07. > :33:10.roads and railways. We are creating a super-fast broadband network. We

:33:10. > :33:19.are reforming our planning laws so that they work for our economy and

:33:19. > :33:23.our countryside. We are a foreign - - we are reforming the tax system

:33:23. > :33:28.so that multinational companies come to Britain instead of leaving.

:33:28. > :33:33.We are freezing rates and cutting taxes for small businesses. Don't

:33:33. > :33:39.tell me this Government isn't going for growth. And that is not it. We

:33:39. > :33:42.are today extending mobile phone coverage up to 6 million people.

:33:42. > :33:48.The New Right to Buy and housing plans David Cameron announced

:33:48. > :33:51.yesterday will build 200,000 new houses, create 400,000 new jobs. We

:33:51. > :33:57.are launching new enterprise zones and helping unemployed people get

:33:57. > :34:02.jobs through our work programme, helping them start businesses with

:34:02. > :34:05.our Enterprise Allowance. We are transforming education, and we are

:34:05. > :34:10.reforming public sector pensions so they are generous to public

:34:10. > :34:20.servants and also fair to tax payers.

:34:20. > :34:23.

:34:23. > :34:27.And let me say this to the unions. To go on strike at a time like this

:34:27. > :34:33.when you are being offered pensions far more generous than other people

:34:33. > :34:43.could ever afford will hit growth, cost jobs, it is totally

:34:43. > :34:51.

:34:51. > :34:58.irresponsible. We have made all these changes in

:34:58. > :35:03.the space of just 16 months. But it is not enough, and I know that. We

:35:03. > :35:09.need to do more. We need to make it easier for businesses to hire

:35:09. > :35:16.people. I know it is important to respect employment rights. It is

:35:16. > :35:20.the heritage of our party. 136 years ago, it was a Conservative

:35:20. > :35:27.politician under a Conservative government who introduced the

:35:27. > :35:31.Chimney sweeper's act and brought an end to children becoming sweeps.

:35:31. > :35:37.Unlike today, in their long battle, our predecessors did not always

:35:37. > :35:42.have the good fortune of being supported by the Liberals. But we

:35:42. > :35:47.also respect the right of the unemployed to get a job and not be

:35:47. > :35:51.priced out of the labour market. And we respect the right over those

:35:51. > :35:56.who have spent their whole lives are building up a business not to

:35:56. > :36:01.see that achievement destroyed by a vexatious appeal to an employment

:36:01. > :36:05.tribunal. So we are now going to make it much less risky for

:36:05. > :36:08.businesses to hire people. We will double to two years the amount of

:36:08. > :36:18.time you can employ someone before the risk of an unfair dismissal

:36:18. > :36:21.

:36:21. > :36:26.And I can tell you today, we are going to introduce for the first

:36:26. > :36:36.time ever a fee for taking a case to a tribunal that litigants only

:36:36. > :36:46.

:36:46. > :36:51.We are ending the one-way bet We know that a decade of

:36:51. > :36:58.environmental laws and regulations are piling costs on the energy

:36:58. > :37:01.bills of households and companies. Yes, climate change is a man-made

:37:01. > :37:06.disaster. Yes, we need international agreement to stop it.

:37:06. > :37:11.Yes, we must have investment in green energy, and that is why I

:37:11. > :37:16.gave the go-ahead to the world's first green investment bank. But

:37:16. > :37:21.Britain makes up less than 2% of the world's carbon emissions, to

:37:21. > :37:25.China and America's 40%. We are not going to save the planet by putting

:37:25. > :37:30.our country out of business. So let's at the very least resolve

:37:30. > :37:34.that will cut our carbon emissions no slower, but also no faster than

:37:34. > :37:42.our fellow countries in Europe. That is what I have insisted on in

:37:42. > :37:46.the recent carbon budget. And there is one more thing I can tell you.

:37:46. > :37:50.We have had to make difficult decisions about public spending,

:37:50. > :37:54.careful choices about what to protect, so by relentlessly

:37:54. > :38:01.eliminating waste we could afford to protect funding for Conservative

:38:01. > :38:05.rarities like the NHS and schools. -- Conservative priorities. Two

:38:05. > :38:11.years ago I stood here and said we would cut the cost of central

:38:11. > :38:16.bureaucracy by one-third. Some were sceptical. But we are doing it, and

:38:16. > :38:26.we are ahead of plan. I can tell you that next year we will again

:38:26. > :38:29.

:38:29. > :38:34.freeze the council tax. When so many bills are going up,

:38:34. > :38:41.council tax can be the one Bill that doesn't. That is help for

:38:41. > :38:48.families, so together we ride out that storm. Resolve, determination,

:38:48. > :38:54.confidence and belief. Resolve that we will deal with our debts,

:38:54. > :38:59.reshape our state to live within our means. Determination that we

:38:59. > :39:03.will see through our policy, keep interest rates low and get credit

:39:03. > :39:11.flowing. Confidence that there are things we can do and measures we

:39:11. > :39:17.will take to get the economy moving again and create jobs. And belief.

:39:17. > :39:22.We do all this because we believe. We do all this because we believe

:39:22. > :39:27.that our country's best days lie ahead of it. We do all this because

:39:27. > :39:32.we are optimistic for the future. We do all this because we know that

:39:32. > :39:37.the sacrifice is our country makes will not be made in vain, that the

:39:37. > :39:42.difficult choices we have made will not have been made for nothing. We

:39:42. > :39:48.do all this for a better Britain and a stronger economy, to which

:39:48. > :39:52.everyone can contribute, from which everyone will gain, an economy that

:39:52. > :39:56.works for all. I don't pretend to you that these are not difficult

:39:56. > :40:00.days, and that there are not difficult days ahead, but together

:40:00. > :40:04.we will ride out the storm, and together we will move into the

:40:04. > :40:13.calmer, brighter sees beyond. Thank you.

:40:13. > :40:19.The Chancellor of the Exchequer finishes his speech to the

:40:19. > :40:22.Conservative Party conference at 2011 to a standing ovation. He said

:40:22. > :40:24.that the biggest thing that would spur growth in Britain was not

:40:24. > :40:28.anything that the British government would do, but the

:40:28. > :40:32.resolution of the euro-zone debt crisis, and he had some suggestions

:40:32. > :40:39.as to how they might do that. He wasn't changing from his fiscal

:40:39. > :40:43.deficit was up -- deficit reduction policy, he said to do that would

:40:43. > :40:48.gamble with credibility. That standing ovation ended almost as

:40:48. > :40:52.quickly as it started. They are all rushing out now for lunch. He said

:40:52. > :40:56.any stimulus would be wiped out by a rise in interest rate and you

:40:56. > :41:01.cannot borrow your way out of date, which is exactly what Jim Callaghan

:41:01. > :41:07.was Prime Minister told a conference in 1976 in the midst of

:41:07. > :41:13.that financial crisis. He talked about the need for more credit

:41:13. > :41:18.easing and monetary activism. What he meant by that other than Q E

:41:18. > :41:22.still isn't that clear. He did a bit of Labour bashing, which

:41:22. > :41:25.probably means the Prime Minister went, and said that the public

:41:25. > :41:29.sector unions if they went on strike would be totally

:41:29. > :41:34.irresponsible. In a moment I would be talking to Justine Greening, but

:41:34. > :41:38.let's hear from a Labour spokesman who is in Westminster. Mr Leslie,

:41:38. > :41:42.give me your overall reaction to the Chancellor's remarks. The first

:41:42. > :41:48.thing is how staggering it is that the Chancellor gave so little

:41:48. > :41:51.attention to the growth problem that is in the economy. He has seen

:41:51. > :41:55.now a flatlining economy for the past nine months, despite the fact

:41:55. > :41:59.that we were coming out of difficulties, recovering quite well

:41:59. > :42:05.just after the election. And yet his speech really seemed incredibly

:42:05. > :42:12.complacent and quite frankly out of touch. He was out of touch with the

:42:12. > :42:16.reality of costs ordinary people face and the difficulty of business.

:42:17. > :42:21.There was no plan for growth, we had suggested a number of plans he

:42:21. > :42:25.could take, and he didn't pick up on any of them. There are other

:42:25. > :42:29.organisations clamouring for action on growth, and it is not there from

:42:29. > :42:32.George Osborne. This guy is completely out of touch. What do

:42:32. > :42:35.you say to his point that other economic commentators have made too,

:42:35. > :42:41.that if you add to the deficit with a fiscal stimulus, increase the

:42:41. > :42:46.amount of money on top of the huge amount we are already borrowing,

:42:46. > :42:49.you will wipe out any game because of higher interest rates. The bond

:42:49. > :42:53.market are also wanting to see an economy that has revenues and

:42:53. > :42:56.money's coming in through the Exchequer, and the way to do that

:42:56. > :42:59.is to grow and to prosper, insurer the Chancellor has to understand

:42:59. > :43:05.that without economic growth, you're never going to solve the

:43:05. > :43:11.deficit. It is almost beyond belief that he is not listening to those

:43:11. > :43:13.organisations saying that. The IMF have been saying it, the CBI, the

:43:13. > :43:19.Federation for small businesses, even conservative backbenchers are

:43:19. > :43:27.saying that they doubt his credibility on growth. He has got

:43:28. > :43:31.to change his tune very rapidly. you think there is no correlation

:43:31. > :43:34.between... We are paying German levels of deals on our bombs at the

:43:34. > :43:38.moment because the market are saying we have a credible deficit

:43:38. > :43:43.reduction plan. If you look at Spain, Portugal, Italy, Plan, they

:43:43. > :43:46.don't believe that and they are paying massive yield on their bonds.

:43:46. > :43:49.Do you think there is no connection? It is as much to do

:43:49. > :43:53.with the fact that we are not in the eurozone, we have a central

:43:53. > :43:56.bank that can control monetary policy. I don't think if you talk

:43:56. > :44:04.to many players in the city, they think it is because of George

:44:04. > :44:08.Osborne's policy alone. What he has got to start delivering fairly soon

:44:08. > :44:15.be some real growth back into the economy. Otherwise the deficit will

:44:15. > :44:21.continue to be great. He shows no sign of realising that fundamental

:44:21. > :44:30.economic fact. Let me ask you a couple of specifics. Would Labour

:44:31. > :44:35.freeze the council tax in 201213? - - in 2012/13? We thought that they

:44:35. > :44:40.were going to do this all along. It was something they pre-announced

:44:40. > :44:43.three years ago. I am asking what you would do. What you have to

:44:43. > :44:48.recognise with council tax is that you might be able to stop it going

:44:48. > :44:55.up, but you certainly can't cut it. What we would do is to focus on VAT,

:44:55. > :44:58.a temporary cut in VAT. So you wouldn't freeze council tax? There

:44:58. > :45:02.are other mechanisms, for instant national insurance help for small

:45:02. > :45:07.businesses. George Osborne might be saying that council tax is frozen

:45:07. > :45:11.for one year only, but what about the fees and charges? People no

:45:11. > :45:15.councils have a habit of piling on parking charges, charges for pest

:45:15. > :45:19.control, cremations, all sorts of things. Councils will raise revenue

:45:19. > :45:24.from other ways. And that is what happens, people know they will have

:45:24. > :45:29.to pay more, just as they pay more in inflation, gas and electricity.

:45:29. > :45:33.People are really hurting out there. I will take that as a No, you

:45:33. > :45:38.wouldn't freeze council tax. Are you in favour of weekly been

:45:38. > :45:43.collections? I think a lot of people would like them. What about

:45:43. > :45:49.Labour? A lot of councils support this up and down the country. But

:45:49. > :45:52.what is curious is that Eric Pickles is finding �250 million,

:45:52. > :45:55.and very centralising policy that he personally was to see so much

:45:55. > :45:58.for localism, but he is not explaining where the money is

:45:58. > :46:07.coming from. What we need is money going into the economy, getting

:46:08. > :46:11.Final question, it is quite specific. The Chancellor said

:46:11. > :46:17.steady as she goes, no change in the deficit reduction, no

:46:17. > :46:23.additional stimulus. Quantify for us, what is the total size that the

:46:23. > :46:28.Labour Party believes the stimulus should be? We set out a package of

:46:28. > :46:36.five different suggestions. Just give me a figure. I don't have the

:46:36. > :46:40.precise figure because there is a complex set of changes. For example,

:46:40. > :46:44.National Insurance support for small businesses. You don't really

:46:44. > :46:49.know precisely how many small businesses will take up that offer.

:46:49. > :46:53.You must have a ballpark figure. would have to be a lot more

:46:54. > :46:58.accurate than the figures the Government put out. They set aside

:46:58. > :47:02.a billion pounds for new businesses and only a small... I did not ask

:47:02. > :47:06.you about the government. I asked you about Labour policy. If you

:47:06. > :47:16.can't give me a figure for your stimulus, maybe next time we meet

:47:16. > :47:21.you can give me a cigar? I cannot write a budget for you here. We

:47:21. > :47:27.will have a tough fiscal policy and it is important people realise that.

:47:27. > :47:32.Thank you Mr Leslie. I am joined now by Nick Robinson. What was

:47:32. > :47:39.interesting was the tone. He left the stage very soon afterwards. It

:47:39. > :47:43.was very low key. Why was there so little applause? Because he is a

:47:43. > :47:48.fiscal Conservative, he is quite popular there. I think there was

:47:48. > :47:52.almost a conscious effort by him to be low key and not very political,

:47:52. > :47:56.and to appear that way. I think their aim is to say, we are running

:47:56. > :48:01.the country and haven't got time for that party stuff. Of course

:48:01. > :48:05.there was a massive party claimed at the heart of it, that it would

:48:05. > :48:10.be dangerous to change the plan, that you could not have any

:48:11. > :48:15.flexibility in either direction. The most significant announcement

:48:15. > :48:19.was the idea of so-called credit easing, although we have no detail

:48:19. > :48:25.on that. Can the Government find a wait to get money to small

:48:25. > :48:29.businesses who are not getting it from the banks. Adam Posen was

:48:29. > :48:34.someone from the Bank of England and the Monetary Policy Committee

:48:34. > :48:37.who had argued that there should be a special new state bank. My

:48:37. > :48:40.understanding is that the government is interested in that

:48:40. > :48:44.idea but worried it will take too long to set up so what they are

:48:44. > :48:49.looking at now is whether it is possible for government to

:48:49. > :48:52.underwrite Rhones -- loans to businesses in other ways, they

:48:52. > :48:56.could offer guarantees to banks giving loans to small businesses

:48:56. > :49:01.for example, but in economic terms that is likely to be the most

:49:01. > :49:09.important announcement. The Justine Greening, treasury minister, has

:49:09. > :49:15.joined us. What does credit easing mean? Effectively it means

:49:15. > :49:20.channelling more money through to SMEs, who are finding it much

:49:20. > :49:24.harder than big companies to access the capital to invest in their

:49:24. > :49:29.businesses. I understand the problem. What is the policy

:49:29. > :49:38.mechanism? Nick has explained... want you to explain. He is a

:49:38. > :49:42.journalist, you are the minister. We can issue bonds, for example, we

:49:42. > :49:47.can also effectively purchased private sector assets... What do

:49:47. > :49:51.you mean, issue bonds? At the moment in the States there is a

:49:51. > :49:55.very vibrant market in this area where you see not just big

:49:55. > :49:59.companies who are able to sell bonds into the market and have them

:49:59. > :50:03.trading in a secondary market, that does not happen so much in the UK,

:50:03. > :50:08.so we want to go beyond simply the quantitative easing that the Bank

:50:08. > :50:13.of England is doing but to have some of that more targeted perhaps

:50:13. > :50:18.so we are looking at a variety... know that. Give me a policy that

:50:18. > :50:26.follows this principle. We will be setting those out over the coming

:50:26. > :50:33.months. You must have some options. Absolutely! We can even actively

:50:33. > :50:38.put bonds out there ourselves, we can underwrite other debts that

:50:38. > :50:43.companies... There is a variety of different ways we can do this.

:50:43. > :50:47.is very interesting. So the government, obviously they already

:50:47. > :50:51.issues a lot of bonds, they are mainly being bought by the Bank of

:50:51. > :50:56.England, printing money, but the government would issue more bonds,

:50:56. > :50:59.so it would add to government borrowing... No. The assets you

:50:59. > :51:06.would be purchasing are liquid so therefore it would not be part of

:51:06. > :51:12.debt. A but you are still borrowing to produce money. No. The

:51:12. > :51:18.government is already issuing giltss... What would you do with

:51:18. > :51:22.the bonds to help small businesses? For the moment, government already

:51:22. > :51:25.issues gilts. Part of that funding would then be more channel banned

:51:25. > :51:31.it is able to be at the moment through to the small and medium-

:51:31. > :51:35.size companies -- more channelled than it is able to be. If you are

:51:35. > :51:39.one of the SMEs in the UK, you probably have to go to a high-

:51:39. > :51:43.street bank to do more borrowing. What we are saying is we want to

:51:43. > :51:50.create some new channels by which small and medium companies can go

:51:50. > :51:54.more to the market to be able to access liquidity. So would you or

:51:54. > :52:00.would you not be issuing more bonds to do this? Would you be borrowing

:52:00. > :52:07.more to do it? No. We would be purchasing bonds. One of the

:52:07. > :52:11.options... Say the government would buy bonds? No. You just said that.

:52:11. > :52:16.I said we would be looking at a number of different ways in which

:52:16. > :52:19.to make sure we can better get financed route... I accept the

:52:19. > :52:23.principle and it is a very important one and the reason I am

:52:23. > :52:28.going on it is because Mr Osborne has said there is no leeway on

:52:28. > :52:33.fiscal policy, I am sitting to the deficit reduction plan. But he

:52:33. > :52:39.talked about monetary activism and credit easing. We know one of the

:52:39. > :52:43.ways of doing that is printing more money. Let's park that. You think

:52:43. > :52:47.you have created conditions that can allow the bank to do that if it

:52:47. > :52:51.so wishes and the implication I get is you would like the bank to do

:52:52. > :52:56.that. What I am trying to work out is what else does it mean and in

:52:56. > :53:01.what way it would you act to help small businesses get money? As I

:53:01. > :53:06.have been saying it can take the form of underwriting, providing

:53:06. > :53:10.guarantees in a way that we don't do at the moment. So if I was a

:53:10. > :53:18.small business and I wanted to borrow money from the Bank, you

:53:18. > :53:24.would guarantee that Det? That is one of the options that we have got.

:53:24. > :53:30.Would that be uncovered debt or would you ask for something to

:53:30. > :53:34.cover the guarantee? Would I have to put something up? My House?

:53:34. > :53:37.are getting something in return in relation to what it is secured on

:53:37. > :53:41.but it is a liquid assets and therefore it would not be part of

:53:41. > :53:46.our debt and the other part of this is about creating a longer term

:53:46. > :53:51.secondary market. If you are a big company in the UK, you can already

:53:51. > :53:57.issued bonds. The point is important... The big companies do

:53:57. > :54:00.not have to issue bonds because they are sitting on a pile of cash.

:54:00. > :54:04.That is not the issue. The director-general of the CBI has sat

:54:04. > :54:09.in the studio and admitted that companies are awash with money but

:54:09. > :54:15.they are not investing. What I am trying to get to, I will stop

:54:15. > :54:18.interrupting you, is how credit easing in your mind will help small

:54:18. > :54:24.businesses and what you intend to do. It will mean they do not have

:54:25. > :54:29.to rely on high street banks. what will they do? Underwriting,

:54:29. > :54:32.providing guarantees, getting out there and making sure we work with

:54:32. > :54:38.the Bank of England to see some of the quantitative easing going

:54:38. > :54:43.directly to businesses, and those plans are being worked on over the

:54:43. > :54:47.coming weeks. George will make more of a statement in November. It is

:54:47. > :54:51.good news for businesses because at the moment, if you are a big

:54:51. > :54:57.company, you can trade your debts in the secondary market. That is

:54:57. > :55:01.not possible for SMEs. What we are doing is creating in the long term,

:55:01. > :55:06.and this is the point I wanted to make, the kind of market we see

:55:06. > :55:10.operating in places like the USA. The London Stock Exchange does have

:55:10. > :55:15.a very small market at the moment and we want to look at what we can

:55:15. > :55:20.do to create that market into a bigger one. Are you telling me that

:55:20. > :55:25.if the government guarantees small business borrowing, you will not be

:55:25. > :55:29.adding to the government's debt obligations? Yes. In the nature of

:55:29. > :55:34.the assets, they will be liquid and therefore, as a result, they will

:55:34. > :55:37.not be going on the balance sheet. So why did you criticised the

:55:37. > :55:43.previous Labour government for not putting PFI on the balance sheet?

:55:43. > :55:48.Because that was a different form of non-liquid commitment, which

:55:48. > :55:56.governments cannot get out of. have you not then put PFI onto the

:55:56. > :56:00.balance sheet? In fact, we are looking at producing something

:56:00. > :56:03.which is going to show these PFI liabilities on the balance sheet

:56:03. > :56:09.and you will be aware as well that one of the first things the OBR did

:56:09. > :56:14.was look at the overall position of UK finances, including debt and the

:56:14. > :56:18.balance sheets side of finances, which included PFI and public

:56:18. > :56:25.sector pensions, which is another thing the Chancellor talked about.

:56:25. > :56:32.Mick Coburn what did you make about the overall policy -- Nick

:56:32. > :56:38.Robinson,? A lot of people will be wondering what this credit easing

:56:38. > :56:42.means. I don't think round the water cooler there will be lively

:56:43. > :56:46.conversations about it but that is what he has decided to do. George

:56:46. > :56:51.Osborne is saying to the public, if I did what some people tell me to

:56:51. > :56:56.do, which is borrow more money, your interest rates will go up,

:56:56. > :57:01.therefore you are forced into this conversation. We do not have the

:57:01. > :57:04.figures all the mechanism for this credit easing and until we do we

:57:04. > :57:08.cannot judge what difference it will make but in essence, he has

:57:08. > :57:12.said to the country, I am not judging but don't assume that that

:57:12. > :57:20.means I am doing nothing. That is fine until growth figures come in

:57:20. > :57:24.that contradict that. If he gets another set of growth figures,

:57:24. > :57:29.revised down, you will have more pressure on the Chancellor to

:57:29. > :57:33.abandon his current plan and to do more. Pressure from the right and

:57:33. > :57:37.the business community, pressure from some in the Liberal Democrats

:57:37. > :57:42.and certainly the Labour Party to spend more, including on a

:57:42. > :57:48.temporary tax cut, said in a sense this is not resolved anything today.

:57:48. > :57:52.He has said, I stick to my plan, let's hope it works. If I am a

:57:52. > :57:54.small business meant and I want to borrow �3 million for the

:57:54. > :58:00.government to expand my business and the government says, we will

:58:00. > :58:04.guarantee that. We you demand collateral? -- if I am a small

:58:04. > :58:09.businessman. The over the coming months, we will work out the

:58:09. > :58:13.precise route by which... So you don't know yet? We are

:58:13. > :58:17.developing this as a proposal. have been involved in this for

:58:17. > :58:21.months. We have made the announcement. We would take the

:58:21. > :58:28.time to make sure we get it right. Come back when you have worked it

:58:28. > :58:31.out. Let me finish with a pub quiz. Who said in January 2009 "printing

:58:31. > :58:36.money is the last resort of desperate governments when all

:58:36. > :58:43.other policies have failed"? think I know. George Osborne, the

:58:43. > :58:48.Chancellor. It was indeed. You have won the quiz. So you are desperate

:58:48. > :58:52.by this definition? I don't agree at all. I think George set out