Conference Special Daily Politics


Conference Special

Andrew Neil is in Manchester for the Conservative Party's annual conference.


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Morning, Foulkes. Well come to this Daily Politics special live from

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the Conservative Party conference in Manchester, where ministers are

:00:30.:00:35.

in no mood to woo voters. David Cameron has already said sorry to

:00:35.:00:39.

half the population, although exactly what for isn't clear. This

:00:40.:00:44.

morning he courted the keep-fit brigade by jogging around

:00:44.:00:48.

Manchester, and has announced the return of a good old Thatcherite

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policy, the right to buy your council house. Decidedly retro feel

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here in Manchester today, and as always in these days, may the

:01:00.:01:05.

economy takes centre-stage. George Osborne is hoping that his speech

:01:05.:01:13.

will prove to the country that he is alive with ideas. He has already

:01:13.:01:19.

announced a freeze on council tax. We carry his speech live and

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uninterrupted - at least, we hope it is uninterrupted! We will be

:01:25.:01:29.

talking to the Employment Minister Chris Grayling. And is the party

:01:29.:01:39.
:01:39.:01:40.

divided over Europe? Is the Pope a Would you like to vote in our poll

:01:41.:01:50.

for Daily Politics. It is about Europe. I must admit, Liam Fox's

:01:50.:01:58.

bodyguard looks a bit scary, so I didn't want to push him too much.

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All that and much more coming up in the next 120 minutes of public

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service broadcasting at its finest. We have two of her Majesty's press

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corps finest. Matthew Parris and Steve Richards are here. Only one

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thing to talk about this morning, the Chancellor's speech. It is

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always a big moment, the Monday morning of the conference. I don't

:02:27.:02:31.

want to downplay the excitement of all the viewers tuning in. I have

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just done my best! But the reality is, although I am sure in a

:02:38.:02:42.

curiously Gordon Brown like way, he will have little surprises in the

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speech, he has made his decisions. He has made his decision that there

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will be no unaffordable tax cuts, and that there will be no spending

:02:52.:02:57.

increases beyond the odd sack of money he finds here and there. Seve

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

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this will be a holding operation. In terms of substance, the pre-

:03:08.:03:13.

Budget Report later in the year is a bigger moment. The mood he is

:03:13.:03:18.

going for his steadiness, reassurance, us -- the calm when

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storms are breaking out all over Europe. It is the one thing he has

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going for him. The Economist did say at the weekend in an overall

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critical piece was that his achievement was getting our over

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all get healed so low at a time of difficult market forces. He has to

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strike a difficult balance, our finances are potentially precarious,

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and therefore he cannot extra tax cuts of things, and yet he also

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wants to suggest that our position is not precarious because he is

:03:56.:04:01.

Chancellor, and it is a difficult line to walk. He keeps saying we

:04:01.:04:06.

have no money, we can't afford tax cuts, we will stick to our deficit

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reduction. But here and there, little bunny rabbits are being

:04:11.:04:18.

pulled out. Where does he get the money from? I don't know. He says

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some departments haven't spent as much as they planned, he was a bit

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of money. It reminded me of Gordon Brown's prudence with a purpose,

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but every now and then he found a bit more from curious places. He is

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doing that to get some headlines which are a bit more positive. They

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say that one of our political problems is mainly associated with

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cuts, so they are trying to get more positive headlines. But their

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associated with cuts because that is the big decision they made a

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year ago. They made a big call their despite warnings from some

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economists as well as people like Ed Balls that there would be no

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private sector scope to take over from the areas where they were

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cutting. That has proven to be right and ominous and worrying for

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them. But he is clearly not going to be starting to spend much more

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than the odd bauble here and there. I want to talk about the mood of

:05:17.:05:27.
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the delegates out there. This is As the Tories gather here in

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Manchester, there is a massive euro crisis looming across the Channel.

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Our own economy is flatlining, living standards are slumping. So

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what is the Prime Minister's response? To apologise to women, of

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course. To Mac female MPs in particular, for slights that are

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already largely forgotten. obviously said some things in the

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House of Commons that came out wrong and caused the wrong

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impression, and I deeply regret that. David Cameron has seen the

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polling showing that the Tories are losing some of the women's Road.

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But that is not what concerns the party faithful here. They are much

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more exercised about Europe. Many of them would like to come out of

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the EU altogether. Most certainly want a referendum on the matter.

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They hate their human -- the European inspired Human Rights Act

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and want to repatriate powers from Brussels to Britain. The party

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managers don't want talk about any of that. They know the government's

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ability to deliver his close to zero. This seems to be a growing

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feeling in the country that a referendum is needed, and they

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think it would be a good idea for us to have one. But we are in

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coalition with the Liberal Democrats and have to give some

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ground. It would give us a chance to say yes or no, in or out.

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think we need to maintain a close relationship with the the EU,

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because that is important. But I definitely think we mustn't go any

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further. What of other concerns about Europe, it is the economy

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that will dominate events at this conference. There will be no

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loosening of the diaphanous robe -- deficit reduction straitjacket, but

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ministers know that they need to be this a serious sounding about

:07:27.:07:32.

growth as the about cutting the public spending. From plans to

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build more houses to plans to change the labour laws. But none of

:07:39.:07:43.

this will add up to an extra fiscal stimulus, so whether it makes any

:07:43.:07:53.
:07:53.:07:59.

Steve Richards and Matthew Parris are still with me. Therein are

:07:59.:08:05.

relatively good mood out there. They are proud of the budget

:08:05.:08:10.

deficit reduction. They are an easy, though, there are not sure it will

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all come right. And with good cause. The context is an economy that is

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not growing enough, and uncertainty as to which lead -- levers to pull

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to get that growth again. And even if they pull the levers, will they

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get the growth because of what is happening in the eurozone? If I

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were David Cameron, I would be worried about Europe resurfacing as

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an issue, not because there isn't substance to that debate, but

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politics is partly about symbolism, and the reminder to voters of

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Europe during a period when the Tories were losing votes like there

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was no tomorrow I think would worry so-called modernisers. I don't

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sense an incipient of growing Tory rebellion. I sensed a lot of little

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explosions. There is no particular demand that the anti- Europeans are

:09:07.:09:10.

making except for a referendum which nobody expects will actually

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happen. See you have little bursts of applause at fringes and people

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saying things slightly out of order, but I do not censor big rebellion.

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Of course, they do feel vindicated. They became more and more Euro-

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sceptic, look at the eurozone, it is a mess, they will say. The

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problem is not really an economic one, because over all, the European

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debt is a fraction of America or even Britain. They have got to be

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careful of moving from claiming vindication to a sort of

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schadenfreude. The worries hanging over this conference are not about

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the government of a coalition of the politics, the worries about the

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economics. The one thing, if the Conservative Party thinks it is the

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voice of Middle England, and I say England advisedly, because it is

:10:06.:10:10.

not Middle Scotland or even Wales, it is Middle England that is

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hurting at the moment. It is the squeeze on living standards, the

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worse since the 1920s. Yes, and the worry for them is not because it is

:10:20.:10:24.

hurting at the moment. They always knew that the decisions they took

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early on were too great a severity, but there we go. In my view, they

:10:30.:10:37.

knew it would hurt now, but in their assumption, by year for, in

:10:37.:10:40.

the build-up to an election, Middle England will be starting to feel

:10:40.:10:45.

good again, and the worry is there is no indication that in the build-

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up to the election, Middle England will feel that. You make light,

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Andrew, and we all do, about apologising to England, but it is a

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serious worry for the Conservative Party, because they have

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traditionally always got better vote from women than from men. They

:11:04.:11:12.

are seriously worried that Cameron doesn't seem to be... My concern is

:11:12.:11:17.

more what he is apologising for than the apology itself. Just being

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a man! We are coming to the end of our time. The fundamental thing is

:11:24.:11:27.

where the coalition came into power, they thought they could get the

:11:27.:11:31.

economic cycle in sync with the political cycle, and all would be

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well by 2014, 2015. But that is now looking out of sync. Yes, I think

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they thought, like 79-83, or 83-87, people would be starting to look

:11:46.:11:50.

good, and they would get political reward for the tough decisions

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taken earlier on, and maybe they still will, but it is looking

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unlikely. A Conservative Party conference cover of Iain Duncan

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Smith, a slightly tepid ovation there. We will give you a flavour

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

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Tory conference. How can we not talk about Europe? The only way we

:12:17.:12:27.
:12:27.:12:29.

could do it is to send Adam out Oh, we don't have that. Adam is

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still looking for his balls. So let's see if Giles can do better.

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Let's talk while we try to find out about that about the state of the

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Conservative Party itself. The average Conservative Party member

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spends �722 coming to conferences. That is a lot of money. It is 80

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quid just to register, and they charge the media fortune,

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particularly if you are late. But the delegates have no formal say in

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what happens. And they don't get really to vote on anything. When

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did a conference ever change party policy? So why do they do it? Why

:13:09.:13:19.
:13:19.:13:22.

do they bother coming? He is Giles Far from the dizzying heights and

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those at the top of the party, down on ground level there are the grass

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roots. They are not an official body, not even a clearly definable

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group. But there are important, MEPs and MPs and the leadership

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ignore them at their peril. Why? Because the party couldn't operate

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without them. These are the ordinary people, the ordinary

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supporters, and they come in all sorts of species and varieties, but

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they don't have elected office. These are the people who are

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Conservatives because they feel it in their bones, not because they

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have got it from a think-tank document. A pound the pavements and

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knock on doors because they think it is the right thing to do, in

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almost every sense of the word. True, their power is as a

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collective rather than a group of individuals, but they are the

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guardians of core conservatism. And if they don't like a policy, it is

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not finished, it is not dead, but it may be difficult to sell,

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because these people apart from the candidates are largely the people

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who go on the doorstep doing the selling.

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Giles then tilted to the left and rolled down that hill! Someone who

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has never tilted to the left is Michael Fallon, the Conservative

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deputy chairman. Welcome back to the Daily Politics. The grassroots

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members get a raw deal, don't they? They pay a ton of money as they get

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no power. Conferences are expensive, but it is not right that they get

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no power. Ministers are here and listen to them, and they can come

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to the debates. That his influence, not power. When did a conference

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debate last change party policy? Party policies reflect what they

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are saying. You want to get out more, get round the fringe events

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and see the dialogue that is taking place. We do. But when did this

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conference ever change Tory party policy? I can remember for example

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on the poll tax, I can remember a party conference been told that we

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should in turn -- introduce it early in Scotland, and we did. That

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is what the Scots wanted, if you wanted -- if you recall. No, it is

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what the Scottish Conservatives wanted. 85, 86? May be earlier than

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that. Give me an example from recent history. I think that is

:15:48.:15:53.

probably more difficult, but it think it was clear that Iain Duncan

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Smith's leadership was coming to an end just before we had that change.

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From this poll by Conservative home, a survey of the Tory grassroots,

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the majority of these folk out there think the Lib Dems have too

:16:06.:16:10.

much influence on the coalition. Are they right? No, they are not

:16:10.:16:15.

right. The big thing is the Lib Dems are sticking with us on the

:16:15.:16:23.

dealing of the deficit. There are some niggles, but we are two

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different parties. A year ago, they were planning to merge the two

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parties, there was another coalition order, but that hasn't

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happened. David Cameron wasn't going to fight the referendum.

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always knew that was rubbish. these things were said a year ago.

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Although we are bound together in the bigger task of sorting out the

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public finances in getting the economy to grow. You need to listen

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to better people! Activists also want to see a firmer line ever

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repatriating powers from Europe. I put it to you that will not happen

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in this Parliament. That is because we didn't win the election outright.

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We can't do that, but we have done the next best thing, which is put a

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sovereignty lock so that any new powers being proposed, there has to

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

:17:17.:17:20.

hope for an outright majority at the next election and we will

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return to this issue of bringing more competent is back to

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Westminster. But just for the virtue of clarity, I understand

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that you would like to repatriate powers, too, and they would as well.

:17:31.:17:38.

But the arithmetic means you cannot. It is not an issue for the agenda

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That isn't practical at the moment given the shape of the coalition

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that I can tell you when it comes to the election... Is there in the

:17:54.:18:01.

European red-meat you can give them? It looks now there will be a

:18:01.:18:05.

new treaty to deal with the mess in the eurozone and there is an

:18:05.:18:09.

opportunity to deal with British, national interests?

:18:09.:18:15.

We would be told that that would be the opportunity to repatriate

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European powers. York irritating Lib Dem friends, as you call them,

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it won't let you do that. There may be an opportunity on the new treaty

:18:25.:18:30.

and there is also the budget renegotiation next year, another

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opportunity to make sure our budget contribution is not increased.

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There is an opportunity to stand up for British national interests and

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we will take it. Do you agree with the chairman of the Treasury Select

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Committee, Andrew Tyrie, a position you wanted, that the government's

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efforts on growth are incoherent and inconsistent? No. We are all

:18:55.:18:59.

impatient for faster growth. We want to see the economy grow. But

:18:59.:19:05.

the government has to balance these things, we are trying to rebalance

:19:05.:19:10.

the economy to make sure there is more emphasis on manufacturing and

:19:10.:19:15.

private spending. That is coherent. We have fiscal and monetary policy

:19:15.:19:20.

working together. Some of the things Andrew Tyrie has called for

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you were here announced this week, like changes in employment law.

:19:23.:19:29.

do we hear more of you, deputy chairman, than Baroness Warsi,

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chairman of your party? She was speaking yesterday! But why are you

:19:34.:19:38.

put more to represent the party than her when it comes to

:19:38.:19:43.

programmes like this? There are different programmes. You saw

:19:43.:19:47.

Baroness Warsi on Question Time, watched by a bigger audience than

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are watching us at the moment. little while ago. No. You are right.

:19:55.:20:00.

A If you want her next time, I will pass that on. We are grateful to

:20:00.:20:06.

get anybody. Would you like her job? No. She is doing a fine job.

:20:07.:20:12.

That is not what a lot of people have told me. She has only been

:20:12.:20:17.

appointed party chairman. No, for a year. That is a long time in

:20:17.:20:21.

politics, that is what Harold Wilson said. Would you not like to

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be chairman of your party? Baroness Warsi is the chairman. When you are

:20:28.:20:32.

a backbencher, when you were one without this title, you were

:20:32.:20:37.

independent-minded, sometimes a little rebellious. How do you like

:20:37.:20:42.

this, toeing the party line? Disagreeing with Andrew Tyrie, your

:20:42.:20:46.

colleague? I bet if you were chairman of the Select Committee,

:20:46.:20:51.

you would be saying the same. would not. He takes his own

:20:51.:20:59.

personal view about climate change, for example. The government policy

:20:59.:21:03.

is not incoherent. We have a very successful Chancellor taking the

:21:03.:21:08.

economy through difficult times and ensuring that it does grow. Thank

:21:08.:21:13.

you for being with us. We would like to see you again. Or the

:21:13.:21:18.

baroness. We are easy. We have found Adam. Which means I can say,

:21:18.:21:25.

should we be in or out of Europe? Let's see what he found out.

:21:25.:21:30.

We got a new conference, which means a new set of balls. We have

:21:30.:21:33.

got it true-blue question for delegates on the issue of Europe.

:21:33.:21:43.
:21:43.:21:43.

In or out? Very simple. Out. Why? We would save �48 million today.

:21:43.:21:51.

Let's state in Europe for now. I tend to agree. It should be

:21:51.:21:55.

economic and not political, so I say it in for now. I think we

:21:55.:22:01.

should be in but I think there should be a repatriation of powers.

:22:01.:22:08.

In or out? Not a second's hesitation. I felt that we are

:22:08.:22:11.

better off with the Commonwealth and looking after our own interests

:22:12.:22:15.

and we should go back to doing that in working with the rest of the

:22:15.:22:20.

world rather than Europe, which is dragging us down and taking our

:22:20.:22:24.

resources from where we need to spend them. The Norwegians just had

:22:24.:22:29.

one word for it. No! You must be relieved that beat inbox has got

:22:29.:22:34.

quite a lot of balls. Yes, I have seen more carefully controlled

:22:34.:22:39.

assessments than that but it is in our national interest. Thank you,

:22:39.:22:49.
:22:49.:22:55.

Why do you say in? Because I think it is important for social and

:22:55.:23:05.
:23:05.:23:10.

economic integration, but I do not Why did you do that? Because my

:23:10.:23:15.

father was Swiss, so he was European. I think we would be

:23:15.:23:19.

completely mad to come out of Europe. 200 years from now, we

:23:19.:23:25.

would be a banana republic on the edge of the Atlantic. If we had a

:23:25.:23:31.

referendum, which we have always wanted, we would vote out. Dr Fox.

:23:31.:23:37.

Would you like to vote in our poll? It is about Europe, one of your

:23:37.:23:43.

favourite topics! I must admit, Liam Fox's bodyguard looked a bit

:23:43.:23:49.

scary so I did not one to push him too much. Francis, would you like

:23:49.:23:58.

to grab one of our balls. Europe, in or out? He just laughed!

:23:58.:24:08.
:24:08.:24:15.

They are going like hot cakes. EU, Who put in?! No! Who put their ball

:24:15.:24:25.
:24:25.:24:29.

GROANING. You are the only one going in. What is that like?

:24:29.:24:33.

thought you were talking about belly buttons. That represents your

:24:33.:24:38.

party. It tells me nothing at all at this stage. Very early days in

:24:38.:24:44.

conference. The Prime Minister has set out our position very clearly

:24:44.:24:48.

on our relationship with Europe and he has it absolutely right. Let's

:24:48.:24:53.

see which side of the argument has one. The majority of people want

:24:53.:24:57.

Britain to leave the EU, which is interesting, because the leadership

:24:57.:25:02.

of the party would much prefer they put their balls in the inbox.

:25:02.:25:07.

Adam telling us to put our balls where our thoughts are which is

:25:07.:25:13.

usually what gets men into trouble in the first place! I am joined by

:25:13.:25:20.

Jon Gaunt, chief executive of the UK out of the EU. I am not even

:25:20.:25:26.

sure... It is not a title that rolls off the tongue. Our top team

:25:26.:25:30.

have been desperately ringing around this morning to find a pro-

:25:30.:25:36.

European Tory to take on Jon Gaunt. We failed miserably. The next task

:25:36.:25:40.

will be to find the person in the newsroom who does not have a

:25:40.:25:45.

hangover, because they do like a challenge. The balls showed a

:25:46.:25:52.

majority want out. But you know and I know you are not going to get it.

:25:52.:25:56.

What we are not given to get his it discussed at this conference. We

:25:56.:26:02.

are living in a parallel world, as your non-scientific poll proved. We

:26:02.:26:08.

have done a scientific poll, 2700 people, interviewed by YouGov, and

:26:08.:26:15.

74% of Tories want a referendum. If there was a referendum, 68% want

:26:15.:26:21.

out of Europe. But Mr Cameron says no, no, no, the country does not

:26:21.:26:27.

want out of the EU. If he is so confident about it, let's have the

:26:27.:26:34.

referendum! He will not because it would split his party asunder. Mr

:26:34.:26:37.

Cameron and Mr Osborne and Mr Hague and various others would all

:26:37.:26:42.

campaign to vote yes to stay in, whereas your polls suggest a lot of

:26:42.:26:46.

these grassroots would say no. Why would any political leader vote for

:26:47.:26:51.

that split? Because he is not just the leader of his party, he is the

:26:51.:26:54.

leader of this country and he is meant to follow what the people

:26:54.:27:02.

want. I am 50, anybody under 54 has not had a chance to vote on the EU.

:27:02.:27:07.

That is an affront to democracy. Give me three good reasons why we

:27:07.:27:11.

shouldn't have a referendum? Mr Cameron cannot find one. Your

:27:11.:27:17.

highly paid researchers, maybe not, I have to be careful...! They could

:27:17.:27:22.

not even get someone to come on to talk about it today. It is not

:27:22.:27:25.

their fault! I know, because the Conservative hierarchy will not

:27:25.:27:32.

talk about it! We had a referendums since 1975, we voted to stay in. We

:27:32.:27:38.

have been a member of NATO since 1949 which has the power to send us

:27:38.:27:42.

to war and we have never had a referendum on that! The referendum

:27:42.:27:46.

we had before was about common market and now it is a European

:27:46.:27:53.

superstate, the �48 million a day we pay to the EU. Why can't we have

:27:53.:27:59.

a grown-up discussion? We had won about alternative vote which people

:27:59.:28:03.

were not even bothered about. People are talking about this in

:28:03.:28:08.

the coffee shops, in the bars, if they still have a job. This is what

:28:08.:28:13.

people want to discuss. When you ask people what the most important

:28:13.:28:18.

issue facing the country is, Europe comes 10th! It is going up that

:28:18.:28:22.

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

:28:23.:28:28.

at the top at the moment but the EU affects everything! Immigration is

:28:28.:28:38.

there, border control, defence. We do talk about that in our poll.

:28:38.:28:42.

Between 80 and 90% won control of my net fisheries, borders and

:28:42.:28:50.

farming. -- want control of our fisheries, borders and farming.

:28:50.:28:56.

would accept the British public are broadly Euro-sceptic. Yes. 51%.

:28:56.:29:01.

they are not obsessed with the issue in the way you are. I am not

:29:01.:29:06.

obsessed about it. Really? I just want to have a referendum. What is

:29:06.:29:13.

wrong with that? Hang on. I bet your bottom dollar, Andrew, or the

:29:13.:29:19.

euro if you fancy, I bet if we had a referendum on the EU, there would

:29:19.:29:24.

be a bigger turnout than there was on alternative vote. Can you tell

:29:24.:29:27.

me again, give me one good reason why we should not have a

:29:27.:29:34.

referendum? Let me put this to you. Not only, rightly or wrongly, that

:29:34.:29:38.

is not for me to say, you are not going to get a referendum, and you

:29:38.:29:43.

just heard Michael Fallon, the deputy chairman of his party,

:29:43.:29:47.

saying they won't even be able to repatriate any powers from Brussels

:29:47.:29:52.

in this Parliament, so you are going nowhere. They will have this

:29:52.:29:57.

debate because of the 100,000 petition. It is smoke and mirrors.

:29:57.:30:01.

We have to keep the pressure up. The people of this country are

:30:01.:30:06.

demanding it and if we carry on with the pressure, we will get it.

:30:06.:30:09.

Mr Cameron once power more than anything else and he can keep on

:30:09.:30:13.

pretending for as long as he wants that most people want to stay in

:30:14.:30:18.

Europe, he can keep been deluded, but eventually his moment of truth

:30:18.:30:22.

will come and there will be a referendum in this country if the

:30:22.:30:27.

power of the people get together and start demanding yet, which is

:30:27.:30:31.

not a far right thing, it is about British people having the right to

:30:31.:30:36.

say whether or not we want to be in the United States of Europe.

:30:36.:30:39.

thought the person you were up against did rather well. Absolutely

:30:39.:30:49.
:30:49.:30:49.

brilliant! Couldn't you get a tub of lard? I will not go there!

:30:50.:30:57.

LAUGHTER. Iain Duncan-Smith, when he was head, head, the boss of the

:30:57.:31:01.

Tory party, he was not really that popular. As you heard Michael

:31:01.:31:05.

Fallon say, he was at a Conservative conference that he

:31:05.:31:10.

then realised that he was not going to be able to continue as leader.

:31:10.:31:15.

He has reinvented himself. He is the welfare reform man and he is

:31:15.:31:18.

something of a conference darling as a result because his reforms are

:31:18.:31:22.

very popular with the party, and with the country. He spoke to the

:31:22.:31:32.
:31:32.:31:33.

I assure you that, at a time when the British public are having to

:31:33.:31:37.

tighten their belts because of a difficult economy, and the European

:31:37.:31:41.

Commission comes knocking on my door to order me to open up the

:31:41.:31:46.

benefits system to benefit tourists and pay them benefits as and when

:31:46.:31:53.

they arrive regardless of whether they work, I have a very simple

:31:53.:32:03.
:32:03.:32:09.

answer to them. No, no, no. APPLAUSE because as we gather here

:32:09.:32:16.

in Manchester, all of us should be reminded that not far from these

:32:16.:32:21.

buildings we are in now were streets under siege just two months

:32:21.:32:30.

ago. We sought the best and the worst of Britain. At night, a

:32:30.:32:37.

violent minority, intent on crime. By morning, the majority, clearing

:32:38.:32:42.

up, helping each other in their communities and leading the fight

:32:42.:32:49.

back. There is no justification, they never can be, and they never

:32:49.:32:56.

will be, for what happened on those nights. And that is why it is right

:32:56.:33:04.

that punishment is decisive and swift. Yet beyond that, we should

:33:04.:33:09.

recognise there is a depressing and familiar context to what we saw.

:33:09.:33:15.

That is the steady rise of an underclass in Britain. A group too

:33:15.:33:20.

often characterised by chaos and dysfunction nullity, and governed

:33:20.:33:29.

by a perverse set of values. Yet these problems are not new. We have

:33:29.:33:33.

been reporting on them since I founded the Centre for Social

:33:33.:33:38.

Justice seven years ago. Every now and then they reappear. Just think

:33:38.:33:43.

of murdered Rees Jones, Gary Newlove and Baby Peter, kidnapped

:33:43.:33:49.

Shannon Matthews and tortured Fiona Pilkington. And many, many others,

:33:49.:33:55.

innocent victims of a broken, damaging culture. A culture that

:33:55.:34:01.

generates the growing pocket in each community of deprivation.

:34:01.:34:05.

Pockets in which social housing, once the support for families

:34:05.:34:11.

working hard to give their children a better start, has too often

:34:11.:34:14.

become a place for Inter generational worklessness,

:34:14.:34:24.

hopelessness and dependency. The riots serve as a reminder to us all

:34:24.:34:27.

about the deep and clear social problems that this government

:34:27.:34:35.

inherited when we came to power. Remember, before the recession

:34:35.:34:42.

began, we had over 4 million people stuck on out-of-work benefits. Many

:34:42.:34:46.

for a decade or more. We had one of the highest levels of unsecured

:34:46.:34:51.

personal debt in Western Europe. We had widespread family breakdown,

:34:51.:34:54.

one of the highest teenage pregnancy rates in the whole of

:34:54.:34:58.

western Europe. Poor parenting transmitting this functionality

:34:58.:35:06.

from one generation to the next. At the C S J, we found that half of

:35:06.:35:10.

all children born today will experience family breakdown by the

:35:10.:35:17.

age of 16. That is a shocking statistic. And too often, these

:35:17.:35:22.

children attended schools where their aspirations were suffocated

:35:22.:35:28.

within a culture of low expectations. Social mobility had

:35:28.:35:33.

virtually ground to a halt, and the section of society on the lowest

:35:33.:35:40.

incomes had become static and too often entrenched. Too many children

:35:40.:35:45.

born into such communities find that at best they remain in the

:35:45.:35:49.

same condition as their parents as they grow older. And at the same

:35:49.:35:55.

time, almost a fifth of all households are workless, and

:35:55.:36:02.

spending on working-age welfare rocketed by 50% before the

:36:02.:36:07.

recession. That is a remarkable statistic. We have found that over

:36:07.:36:13.

a million children have parents addicted to drugs or alcohol.

:36:13.:36:19.

Imagine. What hope for those children other than to become uses

:36:19.:36:26.

and abuses in their turn? And from there it is just a short walk to

:36:26.:36:31.

the revolving-door criminal justice system. With income quality at the

:36:31.:36:33.

worst for regeneration, the last government left us with a welfare

:36:33.:36:38.

system which treated symptoms not causes. And to each person in a

:36:38.:36:44.

sense it is said, you are financially better off out of work,

:36:44.:36:49.

you are better off if you play the system, and if you are bringing up

:36:49.:36:54.

children, you are better off apart. What kind of message was that to

:36:54.:37:04.
:37:04.:37:12.

Britain? Is it any wonder's...? APPLAUSE. Is it any wonder that we

:37:12.:37:19.

faced a break down of this sense of entitlement, and ending that is

:37:19.:37:23.

like turning a supertanker around, but we must and we will deliver

:37:23.:37:30.

that change. Last year when we came to conference, I and my colleagues

:37:30.:37:35.

promised we would tackle that problem head-on. First, as Chris

:37:35.:37:40.

said, we promised we would confront worklessness, and our benefits

:37:40.:37:44.

system that had been nurtured for far too long. Our work programme is

:37:44.:37:49.

now giving new skills to people from the jobs market. The voluntary

:37:49.:37:53.

and private sector are being engaged to play and pay only when

:37:53.:37:57.

they get people back to work, and as they help people sustain it by

:37:57.:38:03.

developing the work habit, they are delivering value for money. It is

:38:03.:38:08.

not just the case of the Big Society, but it is the case of the

:38:08.:38:13.

Big Society now getting people back to work, and major success, and

:38:13.:38:16.

ending the something or nothing culture, promise made, promise

:38:16.:38:25.

delivered. APPLAUSE.And second, we also

:38:25.:38:30.

promised to deal with problem of long-term sickness benefit. Too

:38:30.:38:35.

often abused as an excuse for being out of work. Our work capability

:38:35.:38:40.

assessment will review 1.5 million people on incapacity benefit, many

:38:40.:38:45.

who who had been written off and abandoned, and 115,000 have already

:38:45.:38:50.

been through this assessment. Those genuinely unable to work will

:38:50.:38:57.

always be supported, however those who can work will look for work and

:38:57.:39:01.

joined the work programme, and others who could work in the future

:39:01.:39:05.

will actually get the tailored support for once that they need,

:39:05.:39:10.

with more and more of those once parked on permanent out-of-work

:39:10.:39:15.

benefits seeking work or in work. Conference, that is a promise made

:39:15.:39:25.

and a promise delivered. APPLAUSE.As David Freud said

:39:25.:39:29.

earlier on, we promise to build the Universal Credit, the most radical

:39:29.:39:35.

change to benefit in regeneration. And the current system, and massive

:39:35.:39:38.

multiple benefits paid at varying rates, is open to widespread abuse.

:39:38.:39:43.

The result is a massive error and fraud, costing our country an

:39:43.:39:51.

almost unbelievable �5 billion wasted. Worst of all, some people

:39:51.:39:55.

lose up to 96p of every pound earned in work because of the way

:39:55.:40:00.

their benefits are withdrawn. Would anybody here in this hall work if

:40:00.:40:08.

they were having to pay 90 -- 96% in taxes? Especially if they could

:40:08.:40:14.

earn a living by doing nothing at all? No wonder people are tempted

:40:14.:40:19.

to sit at home. Universal Credit will ensure that you will always be

:40:19.:40:25.

better off in work that out of work, and it will mean tax crowd --

:40:25.:40:29.

taxpayers will get value for money. At last, a system of benefits that

:40:29.:40:35.

places work at the heart of that system. What a remarkable

:40:35.:40:45.
:40:45.:40:49.

turnaround, and that is what we Which is why, for those fit for

:40:49.:40:59.
:40:59.:41:00.

work, I have a very simple message. Work with us, to find and stay in

:41:00.:41:06.

employment, end you will get all the support that we can muster.

:41:06.:41:15.

However, failure to seek work, to take work, or to stay in work, and

:41:15.:41:20.

you will lose your benefits. This is our contract with the British

:41:20.:41:23.

people, to bring an end to the something for nothing culture, that

:41:23.:41:33.
:41:33.:41:35.

is a promise we made and a promise This brings me to one of the most

:41:35.:41:41.

important issues facing our country, the role of the family. This isn't

:41:41.:41:48.

about government into peeling off - - interfering or finger-wagging. It

:41:48.:41:52.

is about government recognising that stable two-parent families are

:41:53.:41:57.

vital for the creation of a strong society. It is about parents taking

:41:57.:42:02.

responsibility for their children, and we saw the results when that

:42:02.:42:06.

doesn't happen back in August. And it is about Government realising

:42:06.:42:11.

that we have to create a level playing field for the decisions

:42:11.:42:15.

people make about their families. This means reversing the biases

:42:15.:42:21.

against stability that we have seen build up too often in the system.

:42:21.:42:26.

Build up over recent years, including the damaging financial

:42:26.:42:34.

discouragement to couple formation. We also need to make sure that

:42:34.:42:38.

support is available when families need it most. That is why I intend

:42:38.:42:41.

our welfare reforms that we have already laid out, that they will

:42:41.:42:50.

make any impact are amongst families on the lowest incomes. And

:42:50.:42:55.

furthermore, remember, the Prime Minister has made it clear that in

:42:55.:43:00.

this Parliament, the Government will recognise marriage in the tax

:43:00.:43:10.

system. That is a promise. Iain Duncan Smith speaking to the

:43:10.:43:13.

Conservative Party conference earlier this morning. He just stuck

:43:13.:43:21.

his head into the BBC bubble and said good morning. With me is the

:43:21.:43:25.

employment minister Chris Grayling. The Prime Minister apologised to

:43:25.:43:30.

women yesterday, two in particular, about having said things in the

:43:30.:43:36.

Commons that he thought was badly phrased. Wouldn't it be better,

:43:36.:43:39.

make more sense, if he apologised to women for the fact that

:43:39.:43:45.

unemployment among women is now the highest since 1996? I think what

:43:45.:43:51.

women really want us to do is to set out ways to tackle that. 18

:43:51.:43:55.

months ago we inherited some of the most difficult economic and

:43:55.:43:58.

financial circumstances any government has ever taken over.

:43:58.:44:01.

What we have also had since then is the emergence of a eurozone

:44:01.:44:06.

financial crisis that nobody anticipated. There are huge

:44:06.:44:13.

economic storm clouds alive, and we are not immune to those. But why

:44:13.:44:18.

apologise for a backbencher remarked to Nadine Dorries, and not

:44:18.:44:21.

apologise to women who were suffering the highest unemployment

:44:21.:44:24.

since the last Tory government? Well, I would say that we are

:44:24.:44:29.

trying to sort that problem out. We are not going to apologise for the

:44:29.:44:34.

appalling record of the last government. It wasn't that high

:44:34.:44:40.

enable 2010. This has happened under you. What we have seen in the

:44:40.:44:43.

labour market over the last few months has been ups and downs. The

:44:43.:44:47.

last figures were a big step in the wrong direction, but the previous

:44:47.:44:51.

two were in the right direction. What we have had over the last 12

:44:51.:44:56.

months, in overall terms, we have had unemployment flatlining. And we

:44:56.:45:00.

have had an increase in the number of people in private sector

:45:00.:45:03.

employment. My concern now is to make sure that we pursue policies

:45:03.:45:07.

that will keep unemployment on a downward curve, even in difficult

:45:07.:45:17.
:45:17.:45:19.

Would it not make more sense to apologise to women for scrapping

:45:19.:45:24.

child benefit for those among the 40% tax bracket? It is not just

:45:24.:45:28.

women in the tax bracket who might lose their child benefit in a

:45:28.:45:32.

couple of years. All of us would rather not have come into

:45:32.:45:35.

government to take tough decisions like these and we regret having to

:45:35.:45:41.

take them but we are not the ones who created the biggest financial

:45:41.:45:45.

deficit in peacetime history. We are dealing with the mess created

:45:45.:45:49.

under the previous government in some of the most difficult economic

:45:49.:45:54.

circumstances in living memory. you are in no mood to apologise to

:45:54.:45:58.

women, shouldn't you apologise for the tax credit cards and higher

:45:58.:46:03.

child care costs which means it is left economic for women to find

:46:03.:46:10.

jobs? -- less economic. Whilst we have taken some child tax credits,

:46:10.:46:15.

we have increased it for those at the bottom of the scale. We know

:46:15.:46:19.

there are difficult decisions to take that will affect women and men

:46:19.:46:24.

alike but we are doing what we can to affect the poorest in society,

:46:24.:46:27.

either through targeted financial support or some of the measures we

:46:27.:46:34.

discussed this morning... Do you think it would be worth apologising

:46:34.:46:43.

to women for having more men from a single Oxford college then you have

:46:43.:46:49.

women in the Cabinet? When you have such a good influx of women MPs,

:46:49.:46:54.

many a suspect will become ministers in the years ahead...

:46:54.:46:58.

have fewer women in the Cabinet then you have men from one Oxford

:46:58.:47:03.

college. That is very much a regret that we do not have more women in

:47:03.:47:07.

the parliamentary party but we have taken a big step to rectify that.

:47:07.:47:12.

In the last election we had one of the biggest intake of women MPs we

:47:12.:47:17.

have ever had, many of them making a good impact on Parliament so what

:47:17.:47:21.

I would say is we recognise we have a problem and one of the things

:47:21.:47:27.

David Cameron did his dart to sort that out. When you see what happens

:47:27.:47:33.

to chart tax credits, female unemployment, child care costs, is

:47:33.:47:36.

there any wonder your party is playing badly among female voters -

:47:36.:47:45.

- child tax credit? It has been equal among men and women. Your

:47:45.:47:49.

party managers are talking about how they need to get the women's

:47:49.:47:54.

vote back. You know that. There is a problem. I would like to win at

:47:54.:48:00.

the votes of both men and women. understand that. We need policies

:48:00.:48:04.

to stabilise the economy, create sustained employment growth, and

:48:04.:48:10.

then we can start, as we rebuild our financial base, to target

:48:10.:48:15.

support in those parts of our societies. Iain Duncan-Smith spoke

:48:15.:48:21.

about tax breaks for marriage, for example. The Chancellor in your

:48:21.:48:25.

government and people like you keep on saying, we've got no money to do

:48:25.:48:29.

a fiscal stimulus, we can't break out of the deficit reduction

:48:29.:48:35.

package, and yet within the last seven days, the Chancellor has

:48:35.:48:40.

found �800 million to freeze council tax, �250 million to get

:48:40.:48:46.

councils to do weekly dustbin collections, �150 million to

:48:46.:48:52.

improve mobile phone coverage, �190 million on science projects. Where

:48:52.:48:57.

is the money from? We have set a clear downward track for the

:48:57.:49:01.

deficit but within the budgets we have got, we will try to do

:49:01.:49:04.

everything we can to release money and provide additional support.

:49:04.:49:11.

you have got extra money, would it not be better to try to spend it on

:49:11.:49:15.

efforts to improve job creation? Let's take the example of the money

:49:15.:49:21.

that is going to be used to keep council tax down. 800 million.

:49:21.:49:26.

effect is it will help people under pressure with cost of living rises,

:49:26.:49:32.

increased utility bills, food prices. But that is money that then

:49:32.:49:35.

goes back into the economy and helps create jobs because it is

:49:35.:49:40.

extra spending power. Although councils may have to find other

:49:40.:49:43.

ways of raising money to make up for their hit the services will

:49:44.:49:50.

take. You off freezing council tax at a time of 5% inflation -- you of

:49:50.:49:55.

freezing. I do not believe all councils have done everything they

:49:55.:49:59.

can so there is best value for money for taxpayers. There is

:49:59.:50:05.

plenty that can be done without damaging frontline services.

:50:05.:50:12.

have caused some controversy in the 2010 election campaign when you

:50:12.:50:14.

supported the Christian bed and breakfast owners who did not want

:50:14.:50:19.

to admit gay guests. It is now government policy to legalise same-

:50:19.:50:26.

sex marriage. Does that please you? I am very happy with that and with

:50:26.:50:30.

Civil Service partnerships. I voted for those changes and I will

:50:30.:50:34.

support them. Chris Grayling, thank you. The Chancellor's due on his

:50:35.:50:38.

feet in about 15 minutes. In a moment, we'll be hearing from the

:50:38.:50:41.

Director General of the CBI, John Cridland. But first let's take a

:50:41.:50:44.

look at the economic backdrop to his speech.

:50:44.:50:48.

David Cameron once promised that sunshine would win the day. The

:50:48.:50:51.

economic weather has since taken a turn for the worse though and

:50:51.:50:54.

forecasts for economic growth have become increasingly gloomy. Last

:50:54.:50:58.

month, the IMF cut its prediction for 2012 from 2.3 per cent to a

:50:58.:51:02.

chilly 1.6 per cent. And George's most urgent priority, deficit

:51:02.:51:06.

reduction, looks like it might be blown off course. Borrowing for

:51:06.:51:15.

August was the highest for 18 years. Over the weekend, the Chair of the

:51:15.:51:17.

Treasury Select Committee, the Conservative MP, Andrew Tyrie, also

:51:17.:51:20.

rained on George's parade, saying his piecemeal policies were in need

:51:20.:51:28.

of radical improvement. The outlook will continue to be blustery,

:51:28.:51:30.

yesterday 30,000 public sector workers protested on the streets

:51:30.:51:38.

here in Manchester. And a gigantic storm is brewing on the Continent.

:51:38.:51:44.

Currently over Athens, it is likely to spread in the next few weeks.

:51:44.:51:47.

The Chancellor is standing firm in the gale, insisting there can be no

:51:47.:51:50.

plan B but is the increasing talk of infrastructure investment

:51:50.:51:57.

represent a plan A plus? To discuss these matters are enjoyed by the

:51:57.:52:02.

director-general of the CBI, which represents businesses, particularly

:52:02.:52:07.

big businesses. Do you believe that these piecemeal measures will make

:52:07.:52:12.

much difference to economic growth was mad if we get the right set of

:52:12.:52:16.

announcements this autumn, with D- Day been 29th November when the

:52:16.:52:24.

Chancellor makes his Autumn Statement. -- with D-Day being 29th

:52:24.:52:30.

November. How much impact do you think the �800 million freeze on

:52:30.:52:39.

council tax, 200 million for weekly dustbin collections, the money for

:52:39.:52:43.

science projects... What is the impact for that? Most of it is

:52:43.:52:50.

facing the domestic consumer and the voter. I have a different

:52:50.:52:54.

shopping-list from the one we have had announced. Are you not

:52:54.:52:58.

impressed with the shopping list? They are not really my baby. Social

:52:59.:53:04.

housing, home-ownership has been an important objective. Will it do

:53:04.:53:08.

anything to improve growth? On its own we need a separate set of

:53:08.:53:13.

measures to boost first-time home ownership, to get roads and energy

:53:13.:53:16.

infrastructure built but the Chancellor will not stop with this

:53:16.:53:21.

list. What do you want him to announce? The big challenge is for

:53:21.:53:27.

government to use its purchasing power and its leverage in the

:53:27.:53:30.

market to get the private sector investing. The fact the government

:53:30.:53:35.

does not have a lot of money does not mean we cannot have Investment.

:53:35.:53:38.

Energy and transport will be primarily delivered by my

:53:38.:53:41.

membership, private sector companies, if government gives them

:53:41.:53:46.

permission to invest. What do you want them to do? On energy

:53:46.:53:52.

infrastructure, companies will only build a new wind turbines and power

:53:52.:53:55.

stations if the government sorts up the planning system. The government

:53:55.:54:00.

is trying but has not succeeded. Businesses will invest instead of

:54:00.:54:04.

the state in new roads and rail but they need longer rail franchises

:54:04.:54:08.

and they might need toning so they get an income stream to pay for the

:54:08.:54:12.

new roads. But none of that will make a blind bit of difference to

:54:12.:54:17.

the economy this year and next. That will take ages. These are

:54:17.:54:22.

long-term projects. It makes a huge difference to confidence. Business

:54:22.:54:26.

confidence is hanging by a thread. Signals by government that it wants

:54:27.:54:32.

investment will produce action in 2012 but it will change confidence

:54:32.:54:37.

this year. Why under a government that has got a grip on deficits,

:54:37.:54:41.

has put bond yields down, why should business confidence hang by

:54:41.:54:46.

a thread? Because of what is happening around the world. The not

:54:46.:54:50.

what the government is doing? No. The government cannot control what

:54:50.:54:55.

is happening around the world. is what business investment is

:54:55.:55:00.

stagnating. People do not have confidence about the eurozone. I am

:55:00.:55:04.

looking for the Chancellor to tell us what the road to recovery is for

:55:04.:55:09.

the eurozone. He cannot tell us that! He might as well say what it

:55:09.:55:13.

will be in Mars! He is in touch with international leaders and he

:55:13.:55:17.

knows what they are trying to do to resolve the crisis and that must be

:55:17.:55:22.

resolved to boost confidence. the real problem not what the

:55:22.:55:26.

government is or isn't doing, it lies with your members? Your

:55:26.:55:29.

members are sitting on billions and billions of pounds of cash and they

:55:29.:55:34.

are not investing in this country. They will only invest when they can

:55:34.:55:39.

get a return for their shareholders. If confidence is and there, nobody

:55:39.:55:43.

Spence, just like we consumers do not spend if we do not have

:55:43.:55:49.

confidence. -- nobody spends. the problem is the private sector

:55:49.:55:54.

is not investing? Absolutely, because of a global slowdown which

:55:54.:55:59.

has disappointed the growth we thought we would be enjoying.

:55:59.:56:05.

any prospect of improved growth in the next 18 months -- do you see?

:56:05.:56:09.

Even your own chief economist predictions are gloomy? When you

:56:09.:56:13.

have growth that is around 1%, for the ordinary citizen it does not

:56:13.:56:18.

feel like growth, but it is still a lot better than the economy

:56:18.:56:23.

contracting. In 2012 I think we will have growth of a similar order,

:56:23.:56:29.

if not a little bit better. Give me a figure. Something in the order of

:56:29.:56:36.

1.5% in the UK. That is just treading water. It is. But the

:56:36.:56:40.

Chancellor has got to recognise that the future for the economy is

:56:40.:56:46.

not the sort of growth we lived with up to 2007. It will be slower.

:56:46.:56:50.

If it is 1.5 and you come back to talk to me next year, there will be

:56:50.:56:54.

a lot more people unemployed. unemployment I think will write a

:56:55.:57:00.

little bit more but it shouldn't hit the sort of figures it would

:57:00.:57:05.

have done in previous downturns -- unemployment I think will rise. We

:57:05.:57:10.

have a more flexible labour market. We will here at this conference

:57:10.:57:14.

that new measures can keep the economy flexible. The Marks out of

:57:14.:57:20.

10 for the Chancellor? Deficit reduction, 10 out of 10. One growth,

:57:20.:57:24.

it is an emerging story and we are not at the end of the Thames. So

:57:24.:57:29.

overall, I think the government has done well. Out of 10? Seven out of

:57:29.:57:36.

10. You are a generous man. Thank you. I am glad we had longer to

:57:36.:57:40.

talk than we did at the Labour conference, when our deliberations

:57:40.:57:46.

were truncated. The Chancellor is not yet on his feet but the hall is

:57:46.:57:52.

filling up for him. But plenty of empty seats around and it is not

:57:52.:57:56.

that big. Let's hear what is going on at the moment. We will be

:57:56.:58:00.

speaking to Justine Greening later and she is currently taking the

:58:00.:58:10.
:58:10.:58:10.

stage. Let's have a listen.... Raising the issue of accountability,

:58:10.:58:15.

one of the great flaws of the regulatory regime that we inherited

:58:15.:58:19.

is that there was the lack of clarity as to where responsibility

:58:19.:58:25.

lies and unless you have got clarity on that, how can you have

:58:25.:58:30.

proper accountability? We had the situation of, who is in charge, the

:58:30.:58:36.

Bank of England, the FSA, the Treasury? That was not clear,

:58:36.:58:40.

particularly on spotting those systemic weaknesses in the system,

:58:40.:58:43.

there was nobody who had responsibility to deal with that

:58:43.:58:48.

and the reforms we have put in place address that issue...

:58:48.:58:54.

person speaking is their tax personality of the year! I am not

:58:54.:58:58.

sure if that means he has paid a lot of tax to get there or managed

:58:58.:59:05.

to avoid it. The Chancellor is due to address this conference, the

:59:05.:59:08.

second most important speech of the week. The Prime Minister on

:59:08.:59:12.

Wednesday afternoon. But it is a very important speech from George

:59:12.:59:21.

He will tell us... We are not quite sure. For the moment, we will hear

:59:22.:59:26.

from another great man. Not tax personality of the year but it is

:59:26.:59:30.

something I will aspire to! It's like being chartered accountant of

:59:30.:59:37.

the year! Probably not that much competition. Sorry... You can deal

:59:37.:59:43.

with the letters. I love you, chartered accountants. We have had

:59:43.:59:48.

lead to us a number of things. Big things like a freeze on council tax.

:59:48.:59:55.

It will things like 150 million quid for mobile phone masts. He we

:59:55.:00:01.

know the message. On the one hand, the plan ain't changing. He will

:00:01.:00:05.

say it again and again, the plan is the plan is the plan and we are

:00:05.:00:10.

sticking with it. His argument is, it would be a huge risk to make

:00:10.:00:14.

quite small changes to the plan. The risk being, an increase in

:00:14.:00:22.

interest rates and he will put a number on that, so if a 1% increase

:00:22.:00:27.

means �10 billion of costs for businesses... At the same time,

:00:27.:00:32.

that does not mean the government can't do anything, which is why we

:00:32.:00:36.

have this string of little measures. I think we will get a hint of not

:00:36.:00:40.

measures involving more spending but maybe a bit more on the

:00:40.:00:44.

regulation. It is about monetary activism. They have a slogan behind

:00:44.:00:51.

the scenes, and it will stay behind the scenes because it is not catchy.

:00:51.:00:54.

They are fiscal Conservatives in order to be Monetary activists.

:00:54.:00:58.

They are tough on tax in order to create the room for the Bank of

:00:58.:01:03.

England. That is a big hint that they want the Bank of England to

:01:03.:01:08.

extend quantitative easing when it meets on Thursday. We are also been

:01:09.:01:12.

pointed in the direction of a speech being given by Adam Posen

:01:12.:01:17.

from the Bank of England a while ago, which said isn't there more we

:01:17.:01:21.

can do, and one other big things he is looking at is how do you get

:01:21.:01:27.

lending go on to small and medium- sized businesses. His idea was a

:01:27.:01:32.

new bank. A state bank. I am told it is a good idea but takes a long

:01:32.:01:42.
:01:42.:01:44.

time and I think we may get hints The problem with the position way

:01:44.:01:48.

you say we will have fiscal conservatism, because we the

:01:48.:01:53.

government control that, to allow the Bank of England to have a loose

:01:53.:01:58.

monetary policy, is that you have no say over that. You are entirely

:01:58.:02:04.

dependent on the analysis of the bank to do it. You are, and there

:02:04.:02:10.

isn't much looser it can get. At cutting interest rates is not

:02:10.:02:15.

possible. Then we talk about quantitative easing, some people

:02:15.:02:18.

call it printing money, and there is a debate about whether it does

:02:18.:02:23.

the job, or whether it will stoke inflation. But the hints are that

:02:24.:02:27.

the bank is looking at that and could do it as soon as this

:02:27.:02:33.

Thursday. But there are a lot closer than you might think, in

:02:33.:02:40.

that yes, the bank is independent, but at all stages, George Osborne

:02:40.:02:45.

has effectively been quoting Mervyn King in saying that if we do this,

:02:45.:02:53.

it allows them to do that. Can they have an open conversation? Formally,

:02:53.:03:00.

constitutionally not. But you think they look at each other in a closed

:03:00.:03:05.

room and say, can we do this, read each other's minutes? Of course

:03:05.:03:10.

they do. When you look at these announcements that are coming in,

:03:10.:03:15.

there are pretty good for party conferences. Some of them are quite

:03:15.:03:19.

popular. But if you're looking at them from the outside, you would

:03:19.:03:25.

say, in the grand scheme of things, they don't matter. But in a sense,

:03:25.:03:28.

that is what is interesting. George Osborne could have felt under a

:03:28.:03:33.

great deal of pressure. Labour started to win an argument that it

:03:33.:03:37.

was growth of that mattered as much as the deficit, made an argument

:03:37.:03:41.

for cutting VAT to get the economy moving. You have parts of the

:03:41.:03:47.

business community, traditionally quite right wing, saying cut taxes

:03:47.:03:53.

quicker. Andrew Tyrie, the chairman of the Treasury Select Committee,

:03:53.:03:57.

said the government's growth strategy was incoherent. In the

:03:57.:04:02.

spate of that, you get a flurry of, we are doing this, that, the other.

:04:02.:04:06.

But you don't get a new plan, because the Chancellor's view is we

:04:06.:04:11.

don't need a new plan, and the risk of even appearing to look like

:04:11.:04:18.

you're looking at one is not worth it. So the die is cast. In terms of

:04:18.:04:21.

the personality of the Chancellor, how would you assess his standing

:04:22.:04:26.

among the Tory faithful? Extraordinarily high. When he came

:04:26.:04:30.

to this conference a couple of years ago, the muttering,

:04:30.:04:33.

particularly amongst the people who gave money to the Tory party,

:04:33.:04:38.

largely people from the city of London, was, abbot of a boy doing a

:04:38.:04:45.

man's job. Since he has got the job, he has won the praise of seeming

:04:45.:04:50.

comfortable in it, filling his suit. Peter Mandelson said the same thing

:04:51.:04:57.

quite recently. But the nervousness that a certain now is, my God, I

:04:57.:05:02.

hope he is right. Because if he is not, and we find that growth is

:05:02.:05:07.

flat next year, what does he do then? He will not have to revise

:05:07.:05:11.

his plan in November. He will undoubtedly having to say that he

:05:11.:05:16.

is borrowing more money than he plans. He will undoubtedly say that

:05:16.:05:21.

the plan allows for that. But if we get to the Budget in March, the

:05:21.:05:25.

following year's Autumn Statement, and the economy is flat, he will

:05:25.:05:29.

have to have a new plan. conference is getting to its feet

:05:29.:05:34.

because the Prime Minister has walked in to take his seat. This is

:05:34.:05:38.

in anticipation of the Chancellor's speech. Remarkable given the

:05:38.:05:42.

difficulties of going through what you and I catalogue as the

:05:43.:05:47.

Brown/Blair years. There is no sense that you would get more than

:05:47.:05:57.
:05:57.:05:58.

a playing card between Mr Brown has Mr -- Mr Osborne and Mr Carron.

:05:58.:06:02.

thing they did to avoid the Blair- Brown problem was to move George

:06:02.:06:06.

Osborne into Number 11 almost full time. You see him around Downing

:06:06.:06:12.

Street much more than you see them around the Treasury. He is much

:06:12.:06:17.

more in Downing Street. He has his office there. He has an office in

:06:17.:06:22.

the Treasury as well, but he starts his day in Downing Street and has

:06:22.:06:26.

his advisers there. He has another strategic meeting late in the

:06:26.:06:31.

afternoon. That is where he sees his home. Well, his home for the

:06:31.:06:34.

next half-hour is going to be the Conservative conference here in

:06:34.:06:38.

Manchester. The Chancellor is going up to the podium, taking the

:06:38.:06:43.

applause of the party faithful. He will now address the conference.

:06:43.:06:53.
:06:53.:06:54.

Here is the Chancellor of the Today all around a country, indeed,

:06:54.:07:01.

all round the world, people are anxious. Worried about their jobs,

:07:02.:07:11.

their families, how they are going to pay the bills. I come to you

:07:11.:07:14.

with words of resolve, determination, confidence and

:07:14.:07:21.

belief. Belief that the British people will overcome this challenge

:07:21.:07:29.

as we have overcome so many before. Together, we will ride out the

:07:29.:07:39.
:07:39.:07:39.

storm. I don't want any one to

:07:39.:07:46.

underestimate the gravity of the situation facing the world economy.

:07:46.:07:50.

But I also don't want anyone to think that the situation is

:07:50.:07:57.

hopeless, that there is nothing we can do. Yes, the difficulties are

:07:57.:08:03.

great. But we should be careful not to talk ourselves into something

:08:03.:08:09.

worse. And we should never take our eyes off the prize. A British

:08:09.:08:14.

economy freed from its debts, growing strongly, spreading

:08:14.:08:19.

prosperity to all our people, so we can fulfil that solemn promise to

:08:19.:08:25.

the next generation. We will leave the world a better place than we

:08:25.:08:35.
:08:35.:08:36.

found it. Our economic problems were not have

:08:36.:08:40.

visited on this country by some cruel act of God or blind force of

:08:40.:08:48.

nature. They were created by the mistakes of human beings and the

:08:48.:08:54.

endeavour of human beings can put them right. What were those

:08:54.:09:00.

mistakes? There were three of them. And they were all connected with

:09:00.:09:08.

each other. First, the last government borrowed too much money.

:09:08.:09:18.

They thought you could borrow without regard to ability to pay,

:09:18.:09:21.

spend without regard for value for money, all on the premise the boom

:09:22.:09:29.

would never end in bust. They saddled the country with the worst

:09:29.:09:34.

debt crisis in our history. What a catastrophic mistake. Let us make

:09:34.:09:44.
:09:44.:09:46.

sure it never happens again. Economic adviser to Gordon Brown. I

:09:46.:09:53.

am not sure I would put that on my CV if I was Ed Balls! It is like

:09:53.:10:03.
:10:03.:10:04.

personal trainer to Eric Pickles. Although I have to say, when it

:10:04.:10:10.

comes to chasing down council waste, no one runs faster than our Eric.

:10:10.:10:15.

The second mistake was made by banks who ran up staggering debts

:10:15.:10:20.

of their own. Buying financial instruments even they couldn't

:10:20.:10:25.

understand. The banks and those regulating them are believed that

:10:25.:10:29.

the bubble would never stop growing, that the markets will always self-

:10:29.:10:33.

correcting, that greed was always good, that their schemes would

:10:33.:10:38.

never collapse, that none of the debts would ever turn bad, and the

:10:38.:10:42.

message from this hall is clear. They let down their customers, they

:10:42.:10:46.

let down their shareholders and they let down this country.

:10:46.:10:56.
:10:56.:10:58.

And there was a third mistake. Our European neighbours plunged

:10:58.:11:03.

headlong into the euro without thinking through the consequences.

:11:03.:11:12.

How could they believe that countries like Germany and Greece

:11:12.:11:17.

could share the same currency when they had vastly different economies

:11:17.:11:22.

and no mechanism to adjust? For generations to come, for

:11:22.:11:27.

generations to come, people will say, thank God Britain didn't join

:11:27.:11:37.
:11:37.:11:43.

And let us recognise the foresight and the fortitude, the street

:11:43.:11:47.

stalls and the leaflets, the pavement pounding and the

:11:47.:11:51.

canvassing of the people in this hall today who campaigned to keep

:11:51.:12:01.
:12:01.:12:04.

And there is one man here today who precisely saw the consequences,

:12:04.:12:08.

warned of them, campaigned against them, put his reputation on the

:12:08.:12:13.

line to oppose them, was ridiculed for it, but who stuck to his cause

:12:13.:12:19.

and was proved right, my friend William Hague.

:12:19.:12:29.
:12:29.:12:40.

I have waited 10 years to say that! And it is thanks to the leadership

:12:40.:12:44.

of someone else here today that we have kept Britain out of the

:12:44.:12:48.

eurozone bail out of Greece, out of the permanent bail-out fund, our

:12:48.:12:51.

Prime Minister, the country's leader, David Cameron.

:12:51.:13:01.
:13:01.:13:04.

And this is also my opportunity to thank my Treasury team, Mark

:13:04.:13:08.

Holborn, Justine Greening, David Gore, who you have just been

:13:08.:13:14.

hearing from, Greg Hands and Danny Alexander, they are diligent and

:13:14.:13:24.
:13:24.:13:26.

dedicated in their service to our Tomorrow morning I will travel to a

:13:26.:13:31.

meeting of European finance ministers in Luxembourg. My

:13:31.:13:37.

objective is Clear - the eurozone's Financial Fund needs maximum

:13:37.:13:42.

firepower. The eurozone needs to strengthen its banks. And the

:13:43.:13:45.

eurozone needs to end all speculation, decide what they are

:13:45.:13:55.
:13:55.:13:57.

going to do with Greece and then Britain is not immune to all this

:13:57.:14:01.

instability. Indeed, the resolution of the eurozone debt crisis is the

:14:01.:14:05.

single biggest boost to confidence that could happen to the British

:14:05.:14:11.

economy this autumn. The time to resolve the crisis is now. They

:14:11.:14:15.

have got to get out and fix their roof even though it is already

:14:15.:14:25.
:14:25.:14:28.

A debt crisis in government, a debt crisis in the banks, a debt crisis

:14:28.:14:33.

in the euro. We in Britain are paying a high price for those

:14:33.:14:43.
:14:43.:14:44.

mistakes. The price of jobs lost, Korea has never started, hopes

:14:44.:14:51.

dimmed -- career never started. Our covenant is this, we will not stand

:14:51.:14:56.

by and let it happen. We will do anything, work with anything,

:14:56.:15:00.

overcome every obstacle in our path to jobs and prosperity so that

:15:00.:15:06.

together we will ride out the storm. Each day, people suggest to me

:15:06.:15:12.

different things we should be doing. Some say borrow more for more

:15:12.:15:18.

spending. Or they say, borrow more for temporary cut in tax. So you

:15:18.:15:25.

would have to put taxes up even more later. I am a believer in tax

:15:25.:15:33.

cuts, permanent tax cuts, paid for by sound public finances. Right now,

:15:33.:15:37.

a temporary tax cuts or more spending are two sides have exactly

:15:37.:15:43.

the same coin. A coin that has to be borrowed, more debt that has to

:15:43.:15:51.

be paid off. I know we are asking a lot from people. And I want them to

:15:51.:15:55.

know that when these arguments are put to me, I consider them

:15:55.:16:00.

carefully. Don't think I haven't thought hard about what more we

:16:00.:16:07.

could do, but I don't explore every single option. I do. But borrowing

:16:07.:16:17.
:16:17.:16:25.

too much is the cause of Britain's Let's say we added to the

:16:26.:16:31.

structural deficit with more borrowing. We would be gambling

:16:31.:16:35.

that priceless fiscal credibility that this government has turned

:16:35.:16:38.

with the international markets on the bet that borrowing a few

:16:38.:16:43.

billion pounds more would make all the difference. We would be

:16:43.:16:48.

hazarding of our precious low interest rates on a change of

:16:48.:16:53.

course that would put the rates up. In the full knowledge that any

:16:53.:16:57.

extra billions of pounds of public spending would be wiped out by

:16:57.:17:02.

billions of pounds more in high interest costs of families,

:17:02.:17:06.

businesses and taxpayers. We would be abandoning the deficit plan that

:17:06.:17:14.

has brought us the stability other nations grave for 5, 10, �20

:17:14.:17:18.

billion more -- of a nation's craves. This is on the illusion

:17:18.:17:23.

that such sums would transform the economy when we are already

:17:23.:17:28.

spending three trillion pounds over the next four years. We would be

:17:28.:17:33.

risking our nation's credit rating for a few billion pounds more. When

:17:33.:17:40.

that amount is dwarfed, dwarfed, by the scale and the power of the

:17:40.:17:44.

daily flows of money on international bond market, swirling

:17:44.:17:48.

around, ready to pick of the next country that lacks the will to deal

:17:48.:17:54.

with its debts. Conference, we will not take that risk. We are in a

:17:54.:18:04.
:18:04.:18:10.

debt crisis. You can't borrow your And incidentally, the fact that the

:18:10.:18:14.

world is in the grips of the debt crisis has not undermined that

:18:14.:18:20.

argument, it has made it stronger. For too long, Britain has been

:18:20.:18:25.

running away from its problems. We have to face up to them, we have to

:18:25.:18:31.

confront them, we must fix them. We must deal with our debts. Weekend

:18:31.:18:35.

and block the banking system. We will help businesses create new

:18:35.:18:40.

jobs. Here is howl. First we will help the Bank of England keep

:18:40.:18:47.

interest rates at record lows while the economy is weak. It is the most

:18:47.:18:52.

powerful stimulus that exists and nothing would be more fatal for an

:18:52.:18:57.

economy as indebted as ours then a sharp rise in interest rates. Look

:18:57.:19:03.

at our neighbours today. In Greece, market rates a 20%. In Portugal,

:19:03.:19:10.

they are more than 10%. In Spain and Italy, they are now over 5%.

:19:10.:19:15.

Our budget deficit is bigger than the lot of them. But in Britain,

:19:15.:19:22.

our market interest rates are 2.5% today. Fiscal credibility is not

:19:22.:19:27.

some abstract concept. It keeps families in their homes, firms in

:19:27.:19:33.

business, people in their jobs. A 1% rise in our interest rates today

:19:33.:19:39.

would add �10 billion to family mortgage bills alone at the worst

:19:39.:19:46.

possible time. We have a deficit plan that commands the confidence

:19:46.:19:51.

of world markets and has brought stability at home. It is a plan

:19:51.:19:57.

flexible enough to respond to good times and bad, a plan independently

:19:57.:20:02.

verified by our new Office for Budget Responsibility, backed by a

:20:02.:20:06.

government united in delivering it and a parliament that it has

:20:06.:20:10.

legislated for it. Very few countries can say that today. The

:20:10.:20:15.

fact that Britain can is thanks to the resolve of his party and we are

:20:15.:20:20.

generous enough to stay this. It is thanks to the resolve of the

:20:20.:20:24.

Liberal Democrats, too. Working as a coalition, together, in the

:20:24.:20:34.
:20:34.:20:37.

Keeping interest rates as low as possible for as long as possible is

:20:37.:20:42.

crucial for dealing with the debt crisis. It is the first part of our

:20:42.:20:47.

plan. But because banks are damaged, they won't lend at the current low

:20:48.:20:52.

rates. It is like putting your foot on the accelerator but because the

:20:52.:20:56.

transition mechanism isn't working properly, the car wheels don't

:20:56.:21:02.

respond. So this is the second part of our plan. We have got to get

:21:02.:21:07.

credit flowing in our economy. Credit means investments,

:21:07.:21:12.

Investment means jobs. We are making sure that the British banks

:21:12.:21:16.

are strong enough. Holding enough capital to cover loans in an

:21:16.:21:22.

emergency. We have expanded loan guarantees. We have struck a deal

:21:22.:21:26.

with the high-street lenders to increase lending to small

:21:26.:21:30.

businesses by 15% this year. But all of this may not be enough. Of

:21:30.:21:35.

course the Bank of England, at their own independent judgment --

:21:35.:21:40.

have their own independent judgment to make on quantitative easing. I

:21:40.:21:47.

have said before, I will follow my predecessor and his Treasury

:21:47.:21:51.

approval if asked. But there is more the government itself can do

:21:51.:21:56.

to encourage investment. David Cameron and I have always said we

:21:56.:22:01.

would be fiscal Conservatives and Monetary activists. Everyone knows

:22:01.:22:05.

that Britain's small firms are struggling to get credit and that

:22:05.:22:08.

banks are weak. So as part of my determination to get the economy

:22:08.:22:13.

moving, I have set the Treasury to work on ways to inject money

:22:13.:22:18.

directly into parts of the economy that need it such as small business.

:22:18.:22:23.

It is known as credit easing. It is another form of monetary activism.

:22:23.:22:28.

It is similar to the National Loan guarantee Scheme we talked about in

:22:28.:22:32.

opposition. It could help prevent another credit crunch, provide a

:22:32.:22:37.

real boost to British business, and overtime help solve that age-old

:22:37.:22:42.

problem in Britain. Not enough long-term investment in small

:22:42.:22:47.

businesses and enterprise. And if this party is anything it is the

:22:47.:22:57.
:22:57.:23:01.

party of Small Business & All this brings us to the question

:23:01.:23:05.

about the kind of economy we want to see and the kind of banking

:23:05.:23:10.

system we want to have. We all know what kind of banking system we

:23:10.:23:14.

don't want. Let's look at what happened at the Royal Bank of

:23:14.:23:19.

Scotland. A bank where one individual was so focused on his

:23:19.:23:24.

own success, his own self- aggrandisement, that he put at risk

:23:24.:23:30.

the likelihood of a 200,000 people -- of over 200,000 people who

:23:30.:23:35.

worked at the Bank, the 15 million people who entrusted the bank with

:23:35.:23:38.

their life savings, the 60 million taxpayers who had to bail out the

:23:38.:23:43.

bank. That is what I mean by irresponsibility in business and it

:23:43.:23:47.

is what I mean by irresponsibility in government, when they don't

:23:47.:23:52.

properly regulate banks, don't control public finances and leave

:23:52.:23:56.

our country exposed to the whims of the international money markets. So

:23:56.:24:01.

I ask Ed Miliband, you say you would not bring back Fred Goodwin

:24:01.:24:05.

to run our banking system, so why on earth will you bring back Ed

:24:05.:24:15.
:24:15.:24:18.

Balls to run our economy? There of business practices that

:24:18.:24:24.

are irresponsible -- there are business practices. We will deal

:24:24.:24:28.

with them with a regulatory system that works but Labour's latest

:24:28.:24:33.

policy, that there should be two newly created tax rates, is frankly

:24:33.:24:40.

ridiculous. One for producers, one for predators, one for companies a

:24:40.:24:43.

Labour Chancellor likes, one for companies a Labour chancellor

:24:43.:24:48.

doesn't like. Imagine a Labour chancellor sitting in Number 11

:24:48.:24:51.

every morning with a copy of the Financial Times in one hand and the

:24:51.:24:56.

Guardian in the other, weighing up corporate Britain on some home-made

:24:56.:25:03.

scales of justice. What are completely unworkable idea! -- What

:25:03.:25:07.

a completely unworkable idea! I think it is the moment that Labour,

:25:07.:25:15.

as an opposition, ceased to be either a producer or a predator.

:25:15.:25:19.

And there was a time when Labour's seemed briefly to realise that to

:25:20.:25:25.

win elections it has to accommodate itself to their real-world, stop

:25:25.:25:29.

being anti-business, make peace with Middle Britain. Not now. It is

:25:29.:25:37.

over. Once they cheat Tony Blair, now they boo him. -- once they

:25:37.:25:41.

cheered for Tony Blair. I fought three elections against Tony Blair

:25:41.:25:45.

and an know the damage he did to our country but they were not just

:25:45.:25:49.

booing him, they were booing the millions of voters who once turned

:25:49.:25:53.

to Labour because they thought Labour had changed. They were

:25:53.:25:55.

booing the business people who thought Labour wanted to work with

:25:56.:25:58.

them. They were booing all those people who thought Labour had

:25:59.:26:03.

finally woken up to the modern world. But to all of those people

:26:03.:26:07.

who heard that, you realise they were aimed at them, for all those

:26:07.:26:12.

people who want a strong society and a strong economy, to those

:26:12.:26:16.

people abandoned by Labour today I say the Conservative Party will be

:26:16.:26:26.
:26:26.:26:33.

So we are repairing the damage of a major responsibility. Ending the

:26:33.:26:37.

something for nothing society that flourished during it. Reforming

:26:37.:26:42.

welfare, yes, so that those who work get more than those who refuse

:26:42.:26:49.

to. But also introducing the first ever permanent bank tax. The first

:26:49.:26:55.

ever higher levy far long-stay in non-doms, the first ever treaty

:26:55.:26:59.

with Switzerland to get back tax owed to this country. I want people

:26:59.:27:05.

to be successful, to create wealth and jobs, to get the most out of

:27:05.:27:09.

society and to put something back. But I'll tell you what this

:27:09.:27:13.

Conservative Chancellor says to rich people who invade their taxes:

:27:13.:27:20.

We will fine you and we will find your money. -- we will fine you.

:27:20.:27:27.

The days of getting away with it are absolutely over. Just as tough

:27:27.:27:37.
:27:37.:27:38.

on tax-evasion as benefit fraud. We are all in this together. And that

:27:38.:27:43.

includes the banking sector. Yes, we want Britain to remain number

:27:43.:27:48.

one, the No. 1, International Centre for finance. Employee in

:27:48.:27:53.

thousands of people across this country. Driving at business to

:27:53.:27:57.

Hong Kong and New York and Zurich, it would be completely self-

:27:57.:28:03.

defeating. I understand the anger people feel about what happened. I

:28:03.:28:08.

share it. But ramping up the populist rhetoric is not going to

:28:08.:28:11.

stop banks failing. We have got to do their real work to ensure that

:28:11.:28:16.

Britain's largest industry is no longer the British taxpayer's

:28:16.:28:21.

largest risk. That is why we are abolishing Labour's failed

:28:21.:28:25.

tripartite system and putting the Bank of England back in charge of

:28:25.:28:28.

monitoring debt, a responsibility that should never have been taken

:28:28.:28:38.
:28:38.:28:39.

It is why we have committed to the principles in the vicar's report we

:28:39.:28:45.

commissioned, to ring-fence our high-street branches, to protect

:28:45.:28:52.

them from the risky trading floor activities. We changed our party so

:28:52.:28:55.

we can tackle the banks without fear, so we can speak truth to

:28:55.:29:01.

power and wealth, and so that society and economy that we build

:29:01.:29:08.

works for everyone. Reforming finance, keeping interest rates low,

:29:08.:29:12.

getting credit to small businesses, helping fix the eurozone crisis.

:29:12.:29:18.

These are all essential for growth and that would be ambition enough

:29:18.:29:23.

for most governments. But they are not enough for us. We have to help

:29:23.:29:30.

businesses create tomorrow's jobs. My children are eight and ten years

:29:30.:29:34.

old. I don't want them to read about how China has just built the

:29:34.:29:39.

world's most advanced aircraft, how India is leading the globe in

:29:39.:29:43.

computer design, and have to say to my children, that used to be

:29:43.:29:47.

Britain. I want Britain to be the home of the greatest scientists,

:29:47.:29:52.

the greatest engineers, the greatest businesses. A land of

:29:52.:29:58.

innovators. And we can be! The sacrifices we make, that is what

:29:58.:30:06.

they are for. The determination I show, that is what drives me.

:30:06.:30:14.

Tomorrow's world is being shaped here in Manchester. Manchester. The

:30:14.:30:19.

first city of the Industrial Revolution. The city were the first

:30:19.:30:24.

computer was built. Where Rutherford split the atom and the

:30:24.:30:25.

Miliband brothers split the Labour Party.

:30:25.:30:35.
:30:35.:30:42.

Manchester, home to the two brilliant scientists I met this

:30:42.:30:48.

morning who have just been awarded the Nobel Prize for Physics. Their

:30:48.:30:53.

prize was for the discovery of a substance that is the strongest,

:30:53.:31:00.

finished, best conductive material known to science, to be used from

:31:00.:31:04.

everything to aircraft wings to microchips. The inventors could

:31:04.:31:08.

have gone anywhere in the world to conduct their research, but they

:31:08.:31:16.

chose the University of Manchester. And now countries like Singapore,

:31:16.:31:23.

Korea, America, are trying to lure them overseas, but they want to

:31:23.:31:26.

stay here in Britain. They think it is the best country in the world

:31:26.:31:31.

for them and their work. We have already protected the science

:31:31.:31:35.

budget, and today I confirm that on top of that we will fund a national

:31:35.:31:40.

research programme that will take this Nobel prize-winning discovery

:31:40.:31:45.

from the British laboratory to the British factory floor.

:31:45.:31:55.
:31:55.:32:02.

And we are going to her front the forefront of computing, to give the

:32:02.:32:07.

best computers to our designers and engineers. The letters stop

:32:07.:32:12.

thinking that the only growth that can take place happens in one

:32:12.:32:20.

corner of the industry. We have got to get Britain making things again.

:32:20.:32:25.

I have never believed that Government should just stand on the

:32:25.:32:29.

sidelines, that it had no role to play in fostering enterprise and

:32:29.:32:34.

creating jobs. I will intervene where the market doesn't work and

:32:34.:32:39.

set it free where it does. We have been doing a huge amount in the

:32:39.:32:44.

past 16 months to make Britain open for business. We are cutting

:32:44.:32:48.

business taxes to one of the lowest rates in the developed world. We

:32:49.:32:53.

are cutting income tax bills for over 20 million people and taking

:32:53.:32:59.

over a million of the lowest paid out of tax altogether. At a time of

:32:59.:33:01.

deficit-reduction, we are increasing capital spending on

:33:01.:33:06.

roads and railways. We are creating a super-fast broadband network. We

:33:07.:33:10.

are reforming our planning laws so that they work for our economy and

:33:10.:33:19.

our countryside. We are a foreign - - we are reforming the tax system

:33:19.:33:23.

so that multinational companies come to Britain instead of leaving.

:33:23.:33:28.

We are freezing rates and cutting taxes for small businesses. Don't

:33:28.:33:33.

tell me this Government isn't going for growth. And that is not it. We

:33:33.:33:39.

are today extending mobile phone coverage up to 6 million people.

:33:39.:33:42.

The New Right to Buy and housing plans David Cameron announced

:33:42.:33:48.

yesterday will build 200,000 new houses, create 400,000 new jobs. We

:33:48.:33:51.

are launching new enterprise zones and helping unemployed people get

:33:51.:33:57.

jobs through our work programme, helping them start businesses with

:33:57.:34:02.

our Enterprise Allowance. We are transforming education, and we are

:34:02.:34:05.

reforming public sector pensions so they are generous to public

:34:05.:34:10.

servants and also fair to tax payers.

:34:10.:34:20.
:34:20.:34:23.

And let me say this to the unions. To go on strike at a time like this

:34:23.:34:27.

when you are being offered pensions far more generous than other people

:34:27.:34:33.

could ever afford will hit growth, cost jobs, it is totally

:34:33.:34:43.
:34:43.:34:51.

irresponsible. We have made all these changes in

:34:51.:34:58.

the space of just 16 months. But it is not enough, and I know that. We

:34:58.:35:03.

need to do more. We need to make it easier for businesses to hire

:35:03.:35:09.

people. I know it is important to respect employment rights. It is

:35:09.:35:16.

the heritage of our party. 136 years ago, it was a Conservative

:35:16.:35:20.

politician under a Conservative government who introduced the

:35:20.:35:27.

Chimney sweeper's act and brought an end to children becoming sweeps.

:35:27.:35:31.

Unlike today, in their long battle, our predecessors did not always

:35:31.:35:37.

have the good fortune of being supported by the Liberals. But we

:35:37.:35:42.

also respect the right of the unemployed to get a job and not be

:35:42.:35:47.

priced out of the labour market. And we respect the right over those

:35:47.:35:51.

who have spent their whole lives are building up a business not to

:35:51.:35:56.

see that achievement destroyed by a vexatious appeal to an employment

:35:56.:36:01.

tribunal. So we are now going to make it much less risky for

:36:01.:36:05.

businesses to hire people. We will double to two years the amount of

:36:05.:36:08.

time you can employ someone before the risk of an unfair dismissal

:36:08.:36:18.
:36:18.:36:21.

And I can tell you today, we are going to introduce for the first

:36:21.:36:26.

time ever a fee for taking a case to a tribunal that litigants only

:36:26.:36:36.
:36:36.:36:46.

We are ending the one-way bet We know that a decade of

:36:46.:36:51.

environmental laws and regulations are piling costs on the energy

:36:51.:36:58.

bills of households and companies. Yes, climate change is a man-made

:36:58.:37:01.

disaster. Yes, we need international agreement to stop it.

:37:01.:37:06.

Yes, we must have investment in green energy, and that is why I

:37:06.:37:11.

gave the go-ahead to the world's first green investment bank. But

:37:11.:37:16.

Britain makes up less than 2% of the world's carbon emissions, to

:37:16.:37:21.

China and America's 40%. We are not going to save the planet by putting

:37:21.:37:25.

our country out of business. So let's at the very least resolve

:37:25.:37:30.

that will cut our carbon emissions no slower, but also no faster than

:37:30.:37:34.

our fellow countries in Europe. That is what I have insisted on in

:37:34.:37:42.

the recent carbon budget. And there is one more thing I can tell you.

:37:42.:37:46.

We have had to make difficult decisions about public spending,

:37:46.:37:50.

careful choices about what to protect, so by relentlessly

:37:50.:37:54.

eliminating waste we could afford to protect funding for Conservative

:37:54.:38:01.

rarities like the NHS and schools. -- Conservative priorities. Two

:38:01.:38:05.

years ago I stood here and said we would cut the cost of central

:38:05.:38:11.

bureaucracy by one-third. Some were sceptical. But we are doing it, and

:38:11.:38:16.

we are ahead of plan. I can tell you that next year we will again

:38:16.:38:26.
:38:26.:38:29.

freeze the council tax. When so many bills are going up,

:38:29.:38:34.

council tax can be the one Bill that doesn't. That is help for

:38:34.:38:41.

families, so together we ride out that storm. Resolve, determination,

:38:41.:38:48.

confidence and belief. Resolve that we will deal with our debts,

:38:48.:38:54.

reshape our state to live within our means. Determination that we

:38:54.:38:59.

will see through our policy, keep interest rates low and get credit

:38:59.:39:03.

flowing. Confidence that there are things we can do and measures we

:39:03.:39:11.

will take to get the economy moving again and create jobs. And belief.

:39:11.:39:17.

We do all this because we believe. We do all this because we believe

:39:17.:39:22.

that our country's best days lie ahead of it. We do all this because

:39:22.:39:27.

we are optimistic for the future. We do all this because we know that

:39:27.:39:32.

the sacrifice is our country makes will not be made in vain, that the

:39:32.:39:37.

difficult choices we have made will not have been made for nothing. We

:39:37.:39:42.

do all this for a better Britain and a stronger economy, to which

:39:42.:39:48.

everyone can contribute, from which everyone will gain, an economy that

:39:48.:39:52.

works for all. I don't pretend to you that these are not difficult

:39:52.:39:56.

days, and that there are not difficult days ahead, but together

:39:56.:40:00.

we will ride out the storm, and together we will move into the

:40:00.:40:04.

calmer, brighter sees beyond. Thank you.

:40:04.:40:13.

The Chancellor of the Exchequer finishes his speech to the

:40:13.:40:19.

Conservative Party conference at 2011 to a standing ovation. He said

:40:19.:40:22.

that the biggest thing that would spur growth in Britain was not

:40:22.:40:24.

anything that the British government would do, but the

:40:24.:40:28.

resolution of the euro-zone debt crisis, and he had some suggestions

:40:28.:40:32.

as to how they might do that. He wasn't changing from his fiscal

:40:32.:40:39.

deficit was up -- deficit reduction policy, he said to do that would

:40:39.:40:43.

gamble with credibility. That standing ovation ended almost as

:40:43.:40:48.

quickly as it started. They are all rushing out now for lunch. He said

:40:48.:40:52.

any stimulus would be wiped out by a rise in interest rate and you

:40:52.:40:56.

cannot borrow your way out of date, which is exactly what Jim Callaghan

:40:56.:41:01.

was Prime Minister told a conference in 1976 in the midst of

:41:01.:41:07.

that financial crisis. He talked about the need for more credit

:41:07.:41:13.

easing and monetary activism. What he meant by that other than Q E

:41:13.:41:18.

still isn't that clear. He did a bit of Labour bashing, which

:41:18.:41:22.

probably means the Prime Minister went, and said that the public

:41:22.:41:25.

sector unions if they went on strike would be totally

:41:25.:41:29.

irresponsible. In a moment I would be talking to Justine Greening, but

:41:29.:41:34.

let's hear from a Labour spokesman who is in Westminster. Mr Leslie,

:41:34.:41:38.

give me your overall reaction to the Chancellor's remarks. The first

:41:38.:41:42.

thing is how staggering it is that the Chancellor gave so little

:41:42.:41:48.

attention to the growth problem that is in the economy. He has seen

:41:48.:41:51.

now a flatlining economy for the past nine months, despite the fact

:41:51.:41:55.

that we were coming out of difficulties, recovering quite well

:41:55.:41:59.

just after the election. And yet his speech really seemed incredibly

:41:59.:42:05.

complacent and quite frankly out of touch. He was out of touch with the

:42:05.:42:12.

reality of costs ordinary people face and the difficulty of business.

:42:12.:42:16.

There was no plan for growth, we had suggested a number of plans he

:42:17.:42:21.

could take, and he didn't pick up on any of them. There are other

:42:21.:42:25.

organisations clamouring for action on growth, and it is not there from

:42:25.:42:29.

George Osborne. This guy is completely out of touch. What do

:42:29.:42:32.

you say to his point that other economic commentators have made too,

:42:32.:42:35.

that if you add to the deficit with a fiscal stimulus, increase the

:42:35.:42:41.

amount of money on top of the huge amount we are already borrowing,

:42:41.:42:46.

you will wipe out any game because of higher interest rates. The bond

:42:46.:42:49.

market are also wanting to see an economy that has revenues and

:42:49.:42:53.

money's coming in through the Exchequer, and the way to do that

:42:53.:42:56.

is to grow and to prosper, insurer the Chancellor has to understand

:42:56.:42:59.

that without economic growth, you're never going to solve the

:42:59.:43:05.

deficit. It is almost beyond belief that he is not listening to those

:43:05.:43:11.

organisations saying that. The IMF have been saying it, the CBI, the

:43:11.:43:13.

Federation for small businesses, even conservative backbenchers are

:43:13.:43:19.

saying that they doubt his credibility on growth. He has got

:43:19.:43:27.

to change his tune very rapidly. you think there is no correlation

:43:28.:43:31.

between... We are paying German levels of deals on our bombs at the

:43:31.:43:34.

moment because the market are saying we have a credible deficit

:43:34.:43:38.

reduction plan. If you look at Spain, Portugal, Italy, Plan, they

:43:38.:43:43.

don't believe that and they are paying massive yield on their bonds.

:43:43.:43:46.

Do you think there is no connection? It is as much to do

:43:46.:43:49.

with the fact that we are not in the eurozone, we have a central

:43:49.:43:53.

bank that can control monetary policy. I don't think if you talk

:43:53.:43:56.

to many players in the city, they think it is because of George

:43:56.:44:04.

Osborne's policy alone. What he has got to start delivering fairly soon

:44:04.:44:08.

be some real growth back into the economy. Otherwise the deficit will

:44:08.:44:15.

continue to be great. He shows no sign of realising that fundamental

:44:15.:44:21.

economic fact. Let me ask you a couple of specifics. Would Labour

:44:21.:44:30.

freeze the council tax in 201213? - - in 2012/13? We thought that they

:44:31.:44:35.

were going to do this all along. It was something they pre-announced

:44:35.:44:40.

three years ago. I am asking what you would do. What you have to

:44:40.:44:43.

recognise with council tax is that you might be able to stop it going

:44:43.:44:48.

up, but you certainly can't cut it. What we would do is to focus on VAT,

:44:48.:44:55.

a temporary cut in VAT. So you wouldn't freeze council tax? There

:44:55.:44:58.

are other mechanisms, for instant national insurance help for small

:44:58.:45:02.

businesses. George Osborne might be saying that council tax is frozen

:45:02.:45:07.

for one year only, but what about the fees and charges? People no

:45:07.:45:11.

councils have a habit of piling on parking charges, charges for pest

:45:11.:45:15.

control, cremations, all sorts of things. Councils will raise revenue

:45:15.:45:19.

from other ways. And that is what happens, people know they will have

:45:19.:45:24.

to pay more, just as they pay more in inflation, gas and electricity.

:45:24.:45:29.

People are really hurting out there. I will take that as a No, you

:45:29.:45:33.

wouldn't freeze council tax. Are you in favour of weekly been

:45:33.:45:38.

collections? I think a lot of people would like them. What about

:45:38.:45:43.

Labour? A lot of councils support this up and down the country. But

:45:43.:45:49.

what is curious is that Eric Pickles is finding �250 million,

:45:49.:45:52.

and very centralising policy that he personally was to see so much

:45:52.:45:55.

for localism, but he is not explaining where the money is

:45:55.:45:58.

coming from. What we need is money going into the economy, getting

:45:58.:46:07.

Final question, it is quite specific. The Chancellor said

:46:08.:46:11.

steady as she goes, no change in the deficit reduction, no

:46:11.:46:17.

additional stimulus. Quantify for us, what is the total size that the

:46:17.:46:23.

Labour Party believes the stimulus should be? We set out a package of

:46:23.:46:28.

five different suggestions. Just give me a figure. I don't have the

:46:28.:46:36.

precise figure because there is a complex set of changes. For example,

:46:36.:46:40.

National Insurance support for small businesses. You don't really

:46:40.:46:44.

know precisely how many small businesses will take up that offer.

:46:44.:46:49.

You must have a ballpark figure. would have to be a lot more

:46:49.:46:53.

accurate than the figures the Government put out. They set aside

:46:54.:46:58.

a billion pounds for new businesses and only a small... I did not ask

:46:58.:47:02.

you about the government. I asked you about Labour policy. If you

:47:02.:47:06.

can't give me a figure for your stimulus, maybe next time we meet

:47:06.:47:16.

you can give me a cigar? I cannot write a budget for you here. We

:47:16.:47:21.

will have a tough fiscal policy and it is important people realise that.

:47:21.:47:27.

Thank you Mr Leslie. I am joined now by Nick Robinson. What was

:47:27.:47:32.

interesting was the tone. He left the stage very soon afterwards. It

:47:32.:47:39.

was very low key. Why was there so little applause? Because he is a

:47:39.:47:43.

fiscal Conservative, he is quite popular there. I think there was

:47:43.:47:48.

almost a conscious effort by him to be low key and not very political,

:47:48.:47:52.

and to appear that way. I think their aim is to say, we are running

:47:52.:47:56.

the country and haven't got time for that party stuff. Of course

:47:56.:48:01.

there was a massive party claimed at the heart of it, that it would

:48:01.:48:05.

be dangerous to change the plan, that you could not have any

:48:05.:48:10.

flexibility in either direction. The most significant announcement

:48:11.:48:15.

was the idea of so-called credit easing, although we have no detail

:48:15.:48:19.

on that. Can the Government find a wait to get money to small

:48:19.:48:25.

businesses who are not getting it from the banks. Adam Posen was

:48:25.:48:29.

someone from the Bank of England and the Monetary Policy Committee

:48:29.:48:34.

who had argued that there should be a special new state bank. My

:48:34.:48:37.

understanding is that the government is interested in that

:48:37.:48:40.

idea but worried it will take too long to set up so what they are

:48:40.:48:44.

looking at now is whether it is possible for government to

:48:44.:48:49.

underwrite Rhones -- loans to businesses in other ways, they

:48:49.:48:52.

could offer guarantees to banks giving loans to small businesses

:48:52.:48:56.

for example, but in economic terms that is likely to be the most

:48:56.:49:01.

important announcement. The Justine Greening, treasury minister, has

:49:01.:49:09.

joined us. What does credit easing mean? Effectively it means

:49:09.:49:15.

channelling more money through to SMEs, who are finding it much

:49:15.:49:20.

harder than big companies to access the capital to invest in their

:49:20.:49:24.

businesses. I understand the problem. What is the policy

:49:24.:49:29.

mechanism? Nick has explained... want you to explain. He is a

:49:29.:49:38.

journalist, you are the minister. We can issue bonds, for example, we

:49:38.:49:42.

can also effectively purchased private sector assets... What do

:49:42.:49:47.

you mean, issue bonds? At the moment in the States there is a

:49:47.:49:51.

very vibrant market in this area where you see not just big

:49:51.:49:55.

companies who are able to sell bonds into the market and have them

:49:55.:49:59.

trading in a secondary market, that does not happen so much in the UK,

:49:59.:50:03.

so we want to go beyond simply the quantitative easing that the Bank

:50:03.:50:08.

of England is doing but to have some of that more targeted perhaps

:50:08.:50:13.

so we are looking at a variety... know that. Give me a policy that

:50:13.:50:18.

follows this principle. We will be setting those out over the coming

:50:18.:50:26.

months. You must have some options. Absolutely! We can even actively

:50:26.:50:33.

put bonds out there ourselves, we can underwrite other debts that

:50:33.:50:38.

companies... There is a variety of different ways we can do this.

:50:38.:50:43.

is very interesting. So the government, obviously they already

:50:43.:50:47.

issues a lot of bonds, they are mainly being bought by the Bank of

:50:47.:50:51.

England, printing money, but the government would issue more bonds,

:50:51.:50:56.

so it would add to government borrowing... No. The assets you

:50:56.:50:59.

would be purchasing are liquid so therefore it would not be part of

:50:59.:51:06.

debt. A but you are still borrowing to produce money. No. The

:51:06.:51:12.

government is already issuing giltss... What would you do with

:51:12.:51:18.

the bonds to help small businesses? For the moment, government already

:51:18.:51:22.

issues gilts. Part of that funding would then be more channel banned

:51:22.:51:25.

it is able to be at the moment through to the small and medium-

:51:25.:51:31.

size companies -- more channelled than it is able to be. If you are

:51:31.:51:35.

one of the SMEs in the UK, you probably have to go to a high-

:51:35.:51:39.

street bank to do more borrowing. What we are saying is we want to

:51:39.:51:43.

create some new channels by which small and medium companies can go

:51:43.:51:50.

more to the market to be able to access liquidity. So would you or

:51:50.:51:54.

would you not be issuing more bonds to do this? Would you be borrowing

:51:54.:52:00.

more to do it? No. We would be purchasing bonds. One of the

:52:00.:52:07.

options... Say the government would buy bonds? No. You just said that.

:52:07.:52:11.

I said we would be looking at a number of different ways in which

:52:11.:52:16.

to make sure we can better get financed route... I accept the

:52:16.:52:19.

principle and it is a very important one and the reason I am

:52:19.:52:23.

going on it is because Mr Osborne has said there is no leeway on

:52:23.:52:28.

fiscal policy, I am sitting to the deficit reduction plan. But he

:52:28.:52:33.

talked about monetary activism and credit easing. We know one of the

:52:33.:52:39.

ways of doing that is printing more money. Let's park that. You think

:52:39.:52:43.

you have created conditions that can allow the bank to do that if it

:52:43.:52:47.

so wishes and the implication I get is you would like the bank to do

:52:47.:52:51.

that. What I am trying to work out is what else does it mean and in

:52:52.:52:56.

what way it would you act to help small businesses get money? As I

:52:56.:53:01.

have been saying it can take the form of underwriting, providing

:53:01.:53:06.

guarantees in a way that we don't do at the moment. So if I was a

:53:06.:53:10.

small business and I wanted to borrow money from the Bank, you

:53:10.:53:18.

would guarantee that Det? That is one of the options that we have got.

:53:18.:53:24.

Would that be uncovered debt or would you ask for something to

:53:24.:53:30.

cover the guarantee? Would I have to put something up? My House?

:53:30.:53:34.

are getting something in return in relation to what it is secured on

:53:34.:53:37.

but it is a liquid assets and therefore it would not be part of

:53:37.:53:41.

our debt and the other part of this is about creating a longer term

:53:41.:53:46.

secondary market. If you are a big company in the UK, you can already

:53:46.:53:51.

issued bonds. The point is important... The big companies do

:53:51.:53:57.

not have to issue bonds because they are sitting on a pile of cash.

:53:57.:54:00.

That is not the issue. The director-general of the CBI has sat

:54:00.:54:04.

in the studio and admitted that companies are awash with money but

:54:04.:54:09.

they are not investing. What I am trying to get to, I will stop

:54:09.:54:15.

interrupting you, is how credit easing in your mind will help small

:54:15.:54:18.

businesses and what you intend to do. It will mean they do not have

:54:18.:54:24.

to rely on high street banks. what will they do? Underwriting,

:54:25.:54:29.

providing guarantees, getting out there and making sure we work with

:54:29.:54:32.

the Bank of England to see some of the quantitative easing going

:54:32.:54:38.

directly to businesses, and those plans are being worked on over the

:54:38.:54:43.

coming weeks. George will make more of a statement in November. It is

:54:43.:54:47.

good news for businesses because at the moment, if you are a big

:54:47.:54:51.

company, you can trade your debts in the secondary market. That is

:54:51.:54:57.

not possible for SMEs. What we are doing is creating in the long term,

:54:57.:55:01.

and this is the point I wanted to make, the kind of market we see

:55:01.:55:06.

operating in places like the USA. The London Stock Exchange does have

:55:06.:55:10.

a very small market at the moment and we want to look at what we can

:55:10.:55:15.

do to create that market into a bigger one. Are you telling me that

:55:15.:55:20.

if the government guarantees small business borrowing, you will not be

:55:20.:55:25.

adding to the government's debt obligations? Yes. In the nature of

:55:25.:55:29.

the assets, they will be liquid and therefore, as a result, they will

:55:29.:55:34.

not be going on the balance sheet. So why did you criticised the

:55:34.:55:37.

previous Labour government for not putting PFI on the balance sheet?

:55:37.:55:43.

Because that was a different form of non-liquid commitment, which

:55:43.:55:48.

governments cannot get out of. have you not then put PFI onto the

:55:48.:55:56.

balance sheet? In fact, we are looking at producing something

:55:56.:56:00.

which is going to show these PFI liabilities on the balance sheet

:56:00.:56:03.

and you will be aware as well that one of the first things the OBR did

:56:03.:56:09.

was look at the overall position of UK finances, including debt and the

:56:09.:56:14.

balance sheets side of finances, which included PFI and public

:56:14.:56:18.

sector pensions, which is another thing the Chancellor talked about.

:56:18.:56:25.

Mick Coburn what did you make about the overall policy -- Nick

:56:25.:56:32.

Robinson,? A lot of people will be wondering what this credit easing

:56:32.:56:38.

means. I don't think round the water cooler there will be lively

:56:38.:56:42.

conversations about it but that is what he has decided to do. George

:56:43.:56:46.

Osborne is saying to the public, if I did what some people tell me to

:56:46.:56:51.

do, which is borrow more money, your interest rates will go up,

:56:51.:56:56.

therefore you are forced into this conversation. We do not have the

:56:56.:57:01.

figures all the mechanism for this credit easing and until we do we

:57:01.:57:04.

cannot judge what difference it will make but in essence, he has

:57:04.:57:08.

said to the country, I am not judging but don't assume that that

:57:08.:57:12.

means I am doing nothing. That is fine until growth figures come in

:57:12.:57:20.

that contradict that. If he gets another set of growth figures,

:57:20.:57:24.

revised down, you will have more pressure on the Chancellor to

:57:24.:57:29.

abandon his current plan and to do more. Pressure from the right and

:57:29.:57:33.

the business community, pressure from some in the Liberal Democrats

:57:33.:57:37.

and certainly the Labour Party to spend more, including on a

:57:37.:57:42.

temporary tax cut, said in a sense this is not resolved anything today.

:57:42.:57:48.

He has said, I stick to my plan, let's hope it works. If I am a

:57:48.:57:52.

small business meant and I want to borrow �3 million for the

:57:52.:57:54.

government to expand my business and the government says, we will

:57:54.:58:00.

guarantee that. We you demand collateral? -- if I am a small

:58:00.:58:04.

businessman. The over the coming months, we will work out the

:58:04.:58:09.

precise route by which... So you don't know yet? We are

:58:09.:58:13.

developing this as a proposal. have been involved in this for

:58:13.:58:17.

months. We have made the announcement. We would take the

:58:17.:58:21.

time to make sure we get it right. Come back when you have worked it

:58:21.:58:28.

out. Let me finish with a pub quiz. Who said in January 2009 "printing

:58:28.:58:31.

money is the last resort of desperate governments when all

:58:31.:58:36.

other policies have failed"? think I know. George Osborne, the

:58:36.:58:43.

Chancellor. It was indeed. You have won the quiz. So you are desperate

:58:43.:58:48.

by this definition? I don't agree at all. I think George set out

:58:48.:58:52.

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