Conference Special Daily Politics


Conference Special

Andrew Neil and Jo Coburn with the latest political news from Westminster and Conservative Party conference in Birmingham, with ministers Philip Hammond and Patrick McLoughlin.


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Transcript


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Afternoon, folks. Welcome to this two-hour daily politics special on

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the Tory Party conference in Birmingham. We are on from now

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until one owe owe -- 1.00. We will bring you the Chancellor's

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address live and uninterrupted. George Osborne says he will make

:00:59.:01:02.

sure the rich pay their fair share as he prepares to cut welfare

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spending by another �10 billion after the election. Will there be a

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new tax on the rich? And exactly where will the welfare axe fall?

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David Cameron says he wants Britain to renegotiate its relationship

:01:13.:01:17.

with the rest of Europe and that fresh consent from the British

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people will be sought. But does the party think the Prime Minister

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should commit to a referendum now? We need a referendum on the euro as

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soon as possible but the key issue is it should be a proper referendum,

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in or out. We will be talking about that bungled rail franchise deal

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that's going to cost taxpayers tens of millions of pounds. The

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Transport Secretary, Patrick McLoughlin, joins us. We will be

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asking Philip Hammond if the Government has any hope of sticking

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to its plans for balancing the nation's books.

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All that's in the next two hours. With us for the duration Norman

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Fowler, a member of Margaret Thatcher's Cabinet back in the day,

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now a member of the House of Lords. Welcome. Thank you very much.

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start with George Osborne's speech. We are told he will be on his feet

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before noon but he's already been a busy boy this morning, setting the

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scene making it clear that he needs to find another �10 billion in

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savings from the welfare bill from the year 2015 onwards. This is what

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he had to say earlier. Conservative Party, the modern

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Conservative Party, is on the side of people who want to work hard and

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get on and we are very clear that dealing with these enormous debts

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this Government inherited has to be done fairly, that the rich have to

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pay the greatest share. But it's an illusion to think that you can

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leave in tact a very expensive welfare state where some people are

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better off, not in work, than going out and looking for work and that's

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precisely what we are tackling and people watching your programme this

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morning who are getting up, getting ready to go out to work, are angry

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at the fact that some of their taxes are going to support those

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who enjoy a lifestyle on benefits which, frankly, they wouldn't be

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able to enjoy in work. Mr Osborne going there for welfare

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t plays well in the focus groups in the opinion polls. This is a

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Chancellor that's got to rescue his credibility, hasn't he? One of the

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worst received Budgets in living memory and the Tories poll position

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has not recovered since. Inevitably that's the case, perhaps not

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inevitably, but it is the case and we have been going through a rough

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period for one reason or another. It's interesting what he is saying

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about welfare and the joint position of Iain Duncan Smith and

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the Chancellor on this. It's going to be very difficult. I used to be

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social security Secretary for six years. I went all through this with

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Nigel Lawson. The only thing one hopes is that it doesn't get in the

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way, it doesn't devalue the universal credit which is going to

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come in, which is a major reform. Treasury aren't particularly

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interested in social reform, they just want the money but this is

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rather important reform that's taking place and it would be a

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great shame if it got tarred by saying this is simply a money-

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cutting exercise, which it isn't. Although the Chancellor and Mr Iain

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Duncan Smith wrote a joint article this morning in The Mail, we know

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they've been at loggerheads. We know there's been a huge battle

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between the Treasury and Department of Work and Pensions over welfare.

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It's inevitable. Having done it with Nigel Lawson, I tell you it's

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absolutely inevitable. The Treasury want as much money as they can get

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out of the welfare budget and for many good reasons at times. But I

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think battles between the social security Secretary and the

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Chancellor, you should only be surprised if there aren't such

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battles. I had horrendous battles with Nigel Lawson. We took - major

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proposition off the cabinet table and postponed a whole meeting

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because Nigel in his usual way put in something like, could we have an

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extra �2 billion at 24 hours' notice. So these kind of battles

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inevitably take place. It's what happens after that. If anyone kind

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of comes along and says that's not the case that's rubbish. The other

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thing I think about welfare is this, we always talk about the young

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people and young people and certainly it's the case they must

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be encouraged into work. We should also remember that things have

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changed since skaf Beveridge's time. People are retired. We should look

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at that area. Politicians and Chancellors and Prime Ministers,

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don't much like looking at that. Good to have you here. Let's get a

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sense of the mood at conference and talk to to -- Polly Toynbee and

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Peter Oborne. What does David Cameron need to do this week.

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of all he has to unite his party. They're fractious here, the way

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parties are when they're not doing well. If you are falling in the

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polls, you see virtually no sign of being able to improve your position

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at the next election because no sitting Government has ever

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improved its position while in power. So they look as if they're

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destined to either coalition again, which they hate, or to failure. So,

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inevitably there is a lot of arguments going on. He needs to

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talk to his party, but of course he needs to talk to the people and

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needs to perspwaeud them -- persuade them he is the nice man

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they thought they had elected. Difficult in the face of these

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incredible cuts which run against any notion of compassion. OK, Peter,

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what about answering Ed Miliband last week who, broadly, consensus

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was he did a good job? Yes, I rather disagree with what Polly is

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saying there, I think David Cameron has to do more than unite his party.

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He has to stand up to his party. He has to say, look, let's go back to

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the decent, honest vision we brought into politics in 2010.

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Let's stand up for the coalition, stand up for the big society, let's

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say that - point out the real one nation party is David Cameron's

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Conservatives and not Ed Miliband's audacious attempt to grab the

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middle ground last week F he does what some people, most people may

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be want, and lurches off into the right, I think he will cause

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himself short-term gain but a lot of long-term trouble. On that issue,

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we have been talking about welfare cuts. Nothing new there. They're

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talking again about this ten billion savings and it's populist,

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would that help regain the credit ground or is that slipping to the

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right? Before answering that, can we point out Norman Fowler you had

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on earlier was was probably - many of the problems the welfare states

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faces today are down his total failure to grasp the issues. Thank

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you very much, Peter! Yes, you were useless, Norman. All right, let's

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concentrate on today. It is very odd, something has happened here

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which is that we had IDS, Iain Duncan Smith, at loggerheads with

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the Treasury and he has agreed, has he? I would like to see what they

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the cuts are. One thing Norman Fowler said I agreed with, he has

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to keep that universal credit and if he doesn't, this programme of

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welfare reforms is finished. presumes on that basis that Iain

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Duncan Smith has been persuaded that that measure of cuts can now

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be taken from the welfare budget but is it just rhetoric? Will they

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be found even if Iain Duncan Smith has agreed to it? I am sure that

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now he's agreed they will be found and I am sure that they've

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earmarked whatever they are. We have to remember is that the �18

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billion already cut is according to the institute for fiscal studies by

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almost any historical or international comparison the

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biggest cut anyone has made, another �10 billion? A lot of them

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haven't come in yet. Next April there is going to be when the

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disability cuts come in, when two thirds of families with disabled

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children lose their disability living allowance altogether. When

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large numbers of people lose their mobility, that means their mobility

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scooters are going to be repossessed. At the same time,

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council tax benefits o comes in for the first time, very like the poll

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tax, collecting small sums of money from large numbers of poor people

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who won't and can't pay. At that point popular opinion is going to

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turn around and they're going to say these cuts weren't a good idea

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after all. One of the other issues that's is in danger of splitting

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the Tory Party is the issue of Europe. David Cameron seems to have

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ruled out an in-out referendum, somehow that going down? I don't

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know actually. I haven't sort of sussed out what's going on. He

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would have been completely mad to give in to calls for a referendum.

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I think he needs one of the messages the Prime Minister must

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get across this week is that we have got a national economic crisis.

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We have got a really serious programme of Government reforms in

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education and welfare. You lurch off into some mad-Referendum at a

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time of massive distraction from politics on a domestic level, he

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would have lost the plot. What about palpable excitement of Boris

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Johnson's arrival? Well, you know, he's fun. He makes people laugh.

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They'll enjoy him. He will be preposterous and outrageous, I

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don't think he is much trouble to Cameron right now. He is not even

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in in parliament, let alone in the cabinet and I don't think this

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party is crazy crazy - he is standing in the wings looking

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rather glamorous, popular after the Olympics, as if he had run the

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Olympics, which he didn't. And he is an irritant but I don't think

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it's serious, it doesn't seem there is an important idea logical

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difference. They're cut from the same cloth. Do you agree or is

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there more worry and fear at the centre of the Number 10 operation

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about Boris Johnson's popularity? This is one of the great non-

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stories of our time, the Boris Johnson versus David Cameron story.

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The fact are he is not an MP. He is the Mayor of London. He won't

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become an MP until sometime after the Prime Minister steps down.

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Where I think there is a potential in this hypothetical scheme of this

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non-story, a potential issue is between saying Boris Johnson and

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George Osborne, which ever other leadership contender emerges after

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David Cameron. But this is one of the great fabrications, a space

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filler, it's no reality. Tpwu works well. Thank you both very much.

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We need to let Norman Fowler respond to that unprovoked and some

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may say unnecessary attack. He is repraising his performance on

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Newsnight. What would you like to say? I have always made it a rule

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in political life never to take the slightest bit of notice of Peter

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Oborne. It's a mutual love affair. What's the history to that, why did

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he decide to have a go at you at a position you held years ago?

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think it's all personal. It's really important! Absolutely no

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idea. The one point I would make about my period is that if the

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Government had taken my advice and taken my proposals back in the

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1980s and we had abolished the second pension, the second state

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pension and had a compulsory private pension, we would be in a

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much better public spending position today and that's why I am

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very anxious that when we come to the public spending and the welfare

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cuts now that we don't make the same mistake and we forget about

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the reform. OK, we won't put you and Peter together, or maybe we

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should! I think we will! It's time for our daily quiz and this weekend

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David Cameron has finally joined the micro-blogging site Twitter.

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But so far he is not following many other people, not tpoting me, yet.

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Why not? I have sent him a note. Shall I have a word with him?

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At the end of the show Norman Fowler will give us the kregt

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answer. -- correct answer. You have time to think about it! Do you know

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the right answer? Don't tell us. So, just over half an hour to the

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Chancellor's big speech. We can talk to Mr Osbourne's cabinet,

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Philip Hammond, the Defence Secretary. He's turned up on time

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today, unlike yesterday! I do occasionally, Andrew. It's not like

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you have police outriders to get you, oh, you do and you were still

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late. Never mind. I have only come from the hotel across the way.

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have people with blue lights getting you over there, too. Let's

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get down to business and follow up what I wanted to do yesterday. Mr

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Os Osbourne is making it clear, it was in the red book but he is

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talking openly about it, that he needs another �10 billion in in

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welfare cuts. Has he shared with cabinet colleagues any idea of how

:15:29.:15:39.
:15:39.:15:41.

$:STARTFEED. He and Iain Duncan Smith had extensive discussions

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about how they are going to take forward an an agenda which

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addresses the fairness question and the affordability question. Taking

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out another substantial chunk of cost from the welfare budget, costs

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that was pushed into that budget during the period of the Labour

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Government simply isn't affordable and doing it in a way that supports

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our fairness agenda. Addressing the questions that have been

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articulated this week about the fairness of people who are not in

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work, being able to afford and enjoy lifestyles that people who

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are in work frankly would struggle to afford.

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I understand that and that's the principle behind it, but that's not

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what I asked you. I asked you how is the �10 billion going to be make

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up? Do you have any inkling of where the cuts will come? Well, for

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example, we have already floated the question as to whether young

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people leaving school should be able to receive housing benefit

:16:39.:16:45.

before they have been in the workplace. Whether there should be

:16:45.:16:49.

a minimum age threshold for accessing housing benefit, trying

:16:49.:16:52.

to ensure that people who are out of work, with the support of

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benefits, enjoy a lifestyle no better, no more generous than

:16:56.:16:59.

people who go out to work and earn their living.

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But is this... It is one area that we will be looking at.

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But you are only looking at. Are you only floating ideas for the �10

:17:08.:17:11.

billion? Are we going to have a national debate about it or do you

:17:11.:17:15.

have any plans? The �10 billion is a clear figure.

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It won't be achieved until 2016/17. So there is time for Iain Duncan

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Smith as the Secretary of State responsible to work out proposals

:17:27.:17:31.

to consult as necessary, to introduce any legislation or

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regulations that are required to ensure that by the time we get to

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2016/17 we have taken out a further �10 billion.

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But hold on... Did it in a way that's consistent with our broader

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objectives of fairness and making sure that work work pays.

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The Chancellor told us these cuts have to start in 2015? 2015/16, the

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the �10 billion is the 16/17 Budget figure. It will build up through

:18:05.:18:13.

15/16 to �10 billion in 2016/17. So you have to start the cuts in

:18:13.:18:19.

2015/16 and they will Total �16 billion? No, �10 billion.

:18:19.:18:22.

In welfare, but he has to find savings of �16 billion? That's

:18:22.:18:26.

right. That's right. Where is the other �6 billion going to come

:18:26.:18:31.

from? The Chancellor made made very clear, the welfare figure that he

:18:31.:18:34.

has identified is based on the assumption that across the

:18:34.:18:41.

remainder of Government on average, departments continue the percentage

:18:41.:18:44.

rate of reduction in budget that they have had over this Spending

:18:45.:18:49.

Review period. It means extending the squeeze on departmental budgets

:18:49.:18:53.

by one further year into 15/16 and then delivering these welfare

:18:53.:18:58.

savings on top of that. The Chancellor and the Prime

:18:58.:19:02.

Minister have said that the rich are paying their fair share at the

:19:02.:19:05.

moment and should continue to pay their fair share, but does this

:19:05.:19:12.

mean that there will be new specific measures on the rich to

:19:12.:19:16.

pay more or they will just continue to pay what they pay?

:19:16.:19:21.

Well, let's be clear, first of all. The rich are paying a higher share

:19:21.:19:26.

of taxes in this country every year than they were in any year under

:19:26.:19:31.

the 13 years of a Labour Government and that's even after we've

:19:31.:19:35.

abolished the damaging 50 pence rate of tax. So the rich are paying

:19:35.:19:40.

a higher share and they will go on paying a higher share. That's

:19:40.:19:44.

because everybody else's salary has frozen. That's only because average

:19:44.:19:50.

earnings are static? No, I don't think so. It is because

:19:51.:19:54.

George Osborne introduced additional taxes which hit the rich.

:19:54.:19:58.

Over every Budget this chancellor has presented to Parliament, has

:19:58.:20:05.

increased the share of taxes paid by the rich. So will there be more

:20:05.:20:09.

measures? Well, let me just finish this point. This is the most

:20:09.:20:12.

important specific measure. It is about making sure that people on

:20:12.:20:16.

high incomes or people with high wealth pay the tax that they are

:20:16.:20:21.

supposed to pay. It is about clamping down on aggressive

:20:21.:20:26.

avoidance and evasion and we have made massive strides in that area

:20:26.:20:29.

where Labour over 13 years failed to do anything effective at all. So

:20:29.:20:34.

the rich are paying a higher share. Tax evasion and avoidance will

:20:34.:20:37.

continue to be clamped down on and that means the rich will go on

:20:38.:20:40.

paying a higher share of the total tax bill.

:20:40.:20:45.

Well, we know what he ruled out. He ruled out a mansion tax. He ruled

:20:45.:20:52.

out a wealth tax. He ruled out new council tax bands. So what is left

:20:52.:20:56.

if he wants to do something additional? There there be

:20:56.:21:02.

something additional or not or is it just the old chestnut of tax

:21:02.:21:06.

avoidance? It is not an old chestnut, by the way. We have

:21:06.:21:11.

brought in over the life of this Spending Review, we will have

:21:11.:21:14.

collected something like an additional �18 billion by clamping

:21:14.:21:19.

down on tax evasion and aggressive tax avoidance.

:21:19.:21:24.

By doing what governments are meant to do, collect tax? And what the

:21:25.:21:28.

last Government failed to do over 13 years so we are tackling that

:21:28.:21:32.

problem. We have grasped it and we are dealing with it. As far as

:21:32.:21:36.

additional and any additional or new taxes or changes in rates are

:21:36.:21:39.

concerned that is a matter for the Chancellor that he will announce in

:21:39.:21:43.

his Budget in the usual way. Do you accept that if he is to get

:21:43.:21:48.

the support of the Lib Dems for �10 billion in welfare cuts that he has

:21:48.:21:53.

to come up with something more more for taxing the better off? Yes or

:21:53.:21:59.

no? No, I think what the Lib Dems will want to see is a fair solution

:21:59.:22:05.

where they are assured that at each turn of the handle those most able

:22:05.:22:09.

to pay are contributing an appropriate share and that the

:22:09.:22:16.

rich... What will the next turn of handle be on the rich? You are

:22:16.:22:21.

going to take �10 billion away from the poor people in society. What's

:22:21.:22:25.

the next turn of handle for the rich in the society? We are going

:22:25.:22:29.

to remove costs that are no longer affordable that was put in there by

:22:29.:22:33.

the Labour Party who increased welfare spending by �75 billion a

:22:33.:22:38.

year. That was money the country never could afford... Mr Hammond

:22:38.:22:42.

you are not not answering my question. Could you please answer

:22:42.:22:45.

the question, it is only right? I can't speak for the Liberal

:22:45.:22:49.

Democrats, but I know that the Liberal Democrats regard as very

:22:49.:22:53.

important the continuing raising of the lower threshold four income tax.

:22:53.:22:59.

A measure which helps those who are working on relatively low incomes

:22:59.:23:02.

very significantly. I would expect the Liberal Democrats to want to be

:23:02.:23:06.

reassured that we're going to be able to continue to pursue that

:23:06.:23:09.

agenda as part of the chancellor's overall package.

:23:09.:23:17.

I know you have to go. I want to ask you major defence merger. You

:23:17.:23:22.

must have a huge interest in this. As it stand this is Monday morning,

:23:22.:23:25.

the decision has to be taken by Wednesday. Does it look to you as

:23:25.:23:29.

if this merger is going to go ahead or not? Well, the decision that has

:23:29.:23:33.

to be taken by Wednesday, by the company, is whether they feel they

:23:33.:23:37.

are close enough to getting agreement between the the

:23:37.:23:41.

shareholders on both sides, between the two companies, between the four

:23:41.:23:43.

governments including the US Government that are involved in

:23:43.:23:49.

signing off this deal. Whether they are close enough to make it worth

:23:49.:23:52.

asking the Stock Exchange to extend the deadline. I don't think there

:23:52.:23:57.

is any chance of getting the deal done by Wednesday, but the company

:23:57.:24:02.

will make the call tomorrow whether it wants to apply for an extension

:24:02.:24:07.

of Government. -- extension of of time.

:24:07.:24:11.

The French Government having 9% of the merged group. The German

:24:11.:24:14.

Government having 9%, but the British Government, the British

:24:14.:24:17.

people would have none. Is that your position?

:24:17.:24:21.

Well, it depends on the other protective arrangements put in

:24:21.:24:26.

place. We will want to make sure that British jobs, British

:24:26.:24:29.

interests, British defence interests... What's the the answer

:24:29.:24:35.

to my question, Mr Hammond? think it could be done with a

:24:35.:24:38.

reduced French Government stake. If the French Government is prepared

:24:38.:24:41.

to reduce its stake and dismantle arrangements which have given it

:24:41.:24:45.

the ability to control the company then with the addition of

:24:46.:24:49.

safeguards, and national security agreement for example, safeguards

:24:49.:24:52.

about where the business will be headquartered, what the composition

:24:52.:24:56.

of the board will be, we think it will be possible... So the French

:24:56.:25:00.

Government will have a stake in this new entity, but the British

:25:00.:25:04.

will not? Is that your your position? The French Government has

:25:04.:25:08.

a very large stake at the moment. Our position is that they will have

:25:08.:25:14.

to make a considerable reduction... But we won't take a stake, and the

:25:14.:25:19.

French will still have one. It is a simple question and it demands a

:25:19.:25:22.

simple answer for our biggest manufacturing company in this

:25:22.:25:25.

country. The French will continue to have a stake and the Germans, we

:25:25.:25:29.

won't. Is that the British position? As long as that stake

:25:30.:25:34.

does not give them effective control or an ability to interfere

:25:34.:25:38.

in the management of the company and that means it has to be below'

:25:38.:25:42.

certain level, putting them on a par with big institutional

:25:42.:25:47.

investors who will own significant single digit percentage stakes in

:25:47.:25:50.

the merged group. What we can't have is this business going forward

:25:50.:25:54.

with the French or the German State able to direct its activity. That

:25:54.:26:04.
:26:04.:26:05.

would not be acceptable. OK, Mr Hammond, thank you.

:26:05.:26:09.

What we have heard from the Defence Secretary, the British want the

:26:09.:26:14.

French, the French and the Germans have 15%, maybe more each at the

:26:14.:26:18.

moment and what he is saying, if they come down to 9%, we will

:26:18.:26:22.

accept that. So the French would have 9%, the Germans would have 9%,

:26:22.:26:25.

we would have none. Does that seem sensible to you?

:26:25.:26:29.

I thought what Philip was saying was actually sensible because what

:26:29.:26:34.

he is trying to say is, what he was saying effectively, was that we

:26:34.:26:40.

shouldn't get into a position where the French and indeed the German

:26:40.:26:43.

stake overwhelmed the company to the point that they had control.

:26:43.:26:47.

That's the point... Between them they would 18% and the British

:26:47.:26:51.

Government would have zero percent. That's my point? I understand the

:26:52.:26:54.

point you are making. All right.

:26:54.:26:58.

It wouldn't be a Tory Party conference if we didn't talk about

:26:58.:27:04.

Europe. So don't worry, we will! David Cameron has dangled the

:27:04.:27:07.

prospect of a referendum on Europe, but not now. The Prime Minister is

:27:07.:27:13.

out to appease Tory Euro-sceptics, but the delay of his words

:27:13.:27:18.

infuriates them. Adam has been doing his referendum with the Daily

:27:18.:27:21.

Politics Balls. Let's test the mood on this idea of

:27:21.:27:25.

a European referendum. Specifically the timing. Would delegates like to

:27:25.:27:29.

have one later as David Cameron has suggested or go ahead and get on

:27:29.:27:33.

with it now? We need to wait and see what happens in places like

:27:33.:27:38.

Greece, Italy, Ireland, and possibly Germany as well before we

:27:38.:27:44.

make any decisions really. We have had our first ball in the

:27:44.:27:50.

no box, but the lady who did it wanted to do it anonymously.

:27:50.:27:53.

want to see a different European Union not the sort we have got now,

:27:53.:27:59.

but is that enough to say we should be altogether? That's why it is the

:27:59.:28:02.

wrong time to ask it. It is not the best time to be

:28:02.:28:07.

worrying about who is in the EU. I am in a rush. It takes ten

:28:07.:28:14.

seconds. If it stops people people voting

:28:14.:28:21.

for UKI. We don't need the infighting and

:28:21.:28:26.

let's get on with running the country. Hi, Andrew, great show.

:28:26.:28:29.

REPORTER: Do you trust David Cameron to deliver a referendum

:28:29.:28:39.
:28:39.:28:40.

now? Not in the month ever Sundays! Would you like to vote? Du want to

:28:40.:28:43.

have it sooner than the Prime Minister Prime Minister sounds like

:28:43.:28:49.

he wants to have it? I think it has got to be in the fullness of time.

:28:49.:28:54.

How about that? Nice and vague. Oh, that's the no box.

:28:55.:29:04.
:29:05.:29:16.

When should the EU referendum be, I think we need a referendum on the

:29:16.:29:20.

EU as soon as possible, but the key issue is it should be a proper

:29:21.:29:24.

referendum, in or out. David Cameron wants it to be later,

:29:24.:29:27.

doesn't he? I am not sure what David Cameron wants. The position

:29:27.:29:32.

is developing, but I think sooner or later it will have to be in or

:29:32.:29:37.

out and I look forward to that. When would you like to have it?

:29:37.:29:39.

Today. This afternoon would be convenient.

:29:39.:29:44.

I found a red ball. How did that get in there? Secretary of State,

:29:44.:29:47.

would you like to do our Daily Politics survey? Do you remember

:29:47.:29:50.

the days when you were on the Daily Politics every day? I do pretty

:29:50.:29:54.

much, yeah. Good. Happy memories then. When

:29:54.:29:59.

shall we have the EU referendum, now or later? We have Not had the

:29:59.:30:02.

chance to vote for several years. Give us the chance now.

:30:02.:30:07.

In the end, it looks like a small majority have sided with David

:30:07.:30:10.

Cameron and feel now is not the time for an EU referendum, but it

:30:10.:30:20.
:30:20.:30:32.

Let's talk to Mark Reckless and Richard Ashworth. You want a

:30:32.:30:38.

referendum but David Cameron has ruled out an in-out referendum.

:30:38.:30:42.

want a referendum sooner than later and I think it's important that's a

:30:42.:30:45.

real referendum that gives people a choice as to whether they want to

:30:45.:30:50.

stay part of the EU and that's what I want to see. Sooner rather than

:30:50.:30:53.

later and a real referendum on EU membership. You are not going to

:30:53.:30:56.

get either of those, are you? David Cameron made it clear he doesn't

:30:56.:31:02.

want it on in-out and doesn't want it now. Well, I think it has to

:31:02.:31:06.

give people the opportunity choose whether or not we stay part of it.

:31:06.:31:10.

Whether the other side of that referendum is the status quo or

:31:10.:31:15.

something new with a eurozone or a few powers back, I think that

:31:15.:31:19.

question is open. But I don't think we can go to the next election

:31:19.:31:22.

saying we are going to try and persuade the other 26 countries to

:31:22.:31:26.

let srus a few powers back and by the way, if you vote Conservative

:31:26.:31:31.

we are going to take that as your consent to stay in the EU. So David

:31:31.:31:36.

Cameron's making a mistake by not offering a substancive referendum

:31:36.:31:41.

before 2015? Well, I don't think the policy is entirely clear at the

:31:41.:31:47.

moment. I think it is. If you listen to David Cameron, he said I

:31:47.:31:51.

think the trouble with the straight yes or no is we stand today is I am

:31:51.:31:55.

not happy with the status I do so I don't want to say yes to that but I

:31:55.:32:00.

don't think would be right to leave right now. No referendum on in-out

:32:00.:32:04.

and no referendum on sooner rather than later. As we go into the next

:32:04.:32:08.

election and the European election for Richard, we will hope to be

:32:08.:32:12.

clearer about what our policy is. I think, if David Cameron's able to

:32:12.:32:16.

go in there and try and get powers back, if we can say to the civil

:32:16.:32:20.

service by the way, the people are going to get a vote on whether we

:32:20.:32:25.

stay in on that base to say will be a inkrepb I have to try and get

:32:25.:32:27.

powers back. The key thing is ultimately the Conservative Party

:32:28.:32:32.

has to allow the people of Britain a choice as to whether we stay in

:32:32.:32:36.

the EU or we become an independent country again trading with Europe

:32:36.:32:39.

but governing ourselves. On that last point do you agree there has

:32:39.:32:45.

to be at some stage, preferably before 2015 a referendum on whether

:32:45.:32:49.

we stay in or leave? It's difficult to determine the timing of a

:32:49.:32:53.

referendum. Indeed the way that you will do it. The Prime Minister was

:32:53.:32:57.

exactly right when he said in November we have got some very

:32:57.:33:00.

critical negotiations about the seven-year budget. Shortly after

:33:00.:33:07.

that we have got the negotiations for the 17 eurozone countries to

:33:07.:33:11.

integrate more. Now, that's an opportunity for the United Kingdom

:33:11.:33:16.

to redefine our relationship. It would be wrong, therefore, for us

:33:16.:33:18.

to prejudice Britain's position going into those negotiations by

:33:18.:33:23.

having a very early referendum but more to the point, you wouldn't

:33:23.:33:28.

know what kind of Europe and who kind of relationship with Europe

:33:28.:33:31.

you are describing to the British people without having that

:33:31.:33:41.
:33:41.:33:42.

negotiation first. Not now... you advising David Cameron use his

:33:42.:33:48.

veto? I am certain he will, there are big issues the United Kingdom

:33:48.:33:54.

can't agree to, inkraoezing size of the budget, abolition of rebate, I

:33:54.:33:58.

am certain the veto will will be used if they come up. Are you

:33:58.:34:06.

saying no to an in-out referendum? It's not as easy as that. Why not?

:34:06.:34:10.

Because the Prime Minister now has the opportunity to redefine

:34:10.:34:13.

Britain's relationship with the European Union. Actually if you

:34:13.:34:17.

said to the people, do you want a trading relationship with a very

:34:17.:34:22.

important trading partner, which does not involve degracious,

:34:22.:34:26.

actually -- integration, gives us the opportunity to bring some

:34:26.:34:30.

powers back from Brussels. That's the position Wye like to be.

:34:30.:34:40.
:34:40.:34:42.

need to wait, we need to know what we are dealing with and what sort

:34:42.:34:44.

of Europe there's going to be before we have a referendum on what

:34:44.:34:48.

we don't know? I think it's a fair point that Europe is in a state of

:34:48.:34:50.

flux. The important thing for me is once we have had those negotiations

:34:50.:34:53.

that then the people get an opportunity to decide whether we

:34:53.:34:57.

want to stay in the EU on that basis or whether we prefer a

:34:57.:35:00.

relationship more like that of Switzerland where they sort of

:35:00.:35:03.

trade freely with the EU but they're not part of the

:35:03.:35:09.

institutions, they're only paying a small amount towards it. Their

:35:09.:35:12.

people can govern themselves. you like Britain to be like

:35:12.:35:17.

Switzerland? No, I wouldn't. Firstly, because Britain isn't like

:35:17.:35:20.

Switzerland, we are a bigger nation. We have a different kind of economy.

:35:20.:35:24.

We play a bigger part in the world. I would like to have far more say

:35:24.:35:27.

in Europe than Switzerland does, for example. I don't see the

:35:27.:35:31.

attraction of that. I don't see the attraction of a major manufacturing

:35:31.:35:35.

nation like Britain having to be like Norway or Switzerland, waiting

:35:35.:35:38.

to find out what the regulations are Brussels are imposing and then

:35:38.:35:42.

having to apply them all to the letter, to the word, without any

:35:42.:35:47.

say. Also, may I say, making every bit as big a contribution to the

:35:47.:35:52.

funding of the European Union as we do, as members. There you go, Mark

:35:52.:35:57.

Reckless. Well, I think the Norwegian and Swiss contributions

:35:57.:36:02.

are significantly smaller than ours, but... I am sorry, they're not.

:36:02.:36:06.

am sure we can look at the numbers after this. What I would like to

:36:06.:36:09.

say is in Switzerland, as in the United States or Japan, for

:36:09.:36:13.

instance, if you want to export to the EU you have to meet EU

:36:13.:36:17.

regulations on your exports to the EU. They don't have to apply all

:36:17.:36:20.

those EU regulations to their exports outside the EU and their

:36:20.:36:24.

own domestic economy. I just think economically we could be so much

:36:24.:36:29.

better off if we weren't paying �19 billion a year for the privilege of

:36:29.:36:35.

having 26 other countries make our laws for us. That is a gross cost,

:36:35.:36:38.

without the money that you get back, for example, to regional funding

:36:38.:36:44.

and to the common agricultural policy so the net cost is not

:36:44.:36:46.

anything like that. But the contribution per person is about

:36:46.:36:50.

the same as the contribution per person from Norway. Why else would

:36:50.:36:55.

the European Union allow somebody else to have a free ride if

:36:55.:36:58.

Britain's to have a free ride, then the poles and Germans or French

:36:58.:37:02.

would say we will have a free ride, too. Because they sell more to us

:37:02.:37:06.

than we do to them and they sell almost as much to Britain as to the

:37:06.:37:10.

United States and Japan together T would be highly unusual for people

:37:10.:37:14.

selling that much to want to cut off perhaps their most important

:37:14.:37:19.

partner. The critical point of that argument is it is 50% of our trade

:37:19.:37:23.

but to the whole of the European Union we are 11% of their trade. So

:37:23.:37:27.

you are hardly having an even debate. Fascinating though this is,

:37:27.:37:30.

about the economics of it, the politics is clearly demonstrated by

:37:30.:37:34.

the two of you, that the issue would split the party. Do you want

:37:34.:37:41.

that? Well, what we should do is just allow the people to decide on

:37:41.:37:44.

this absolutely crucial question for our country that no one under

:37:44.:37:50.

the age of 55 has had an opportunity to vote on. But your

:37:50.:37:54.

party doesn't agree on that. should agree to offer people that

:37:54.:37:58.

vote to allow the people to decide, and then allow anyone within our

:37:58.:38:03.

party and outside to make their own arguments as to which side they

:38:03.:38:08.

want to be on. Afterwards we come together just as these issues have

:38:08.:38:12.

been discussed in the past. Do you trust David Cameron? The real

:38:12.:38:17.

debate we should be having is that actually under the Labour Party,

:38:17.:38:21.

Labour signed us up to the Lisbon Treaty, Labour signed up to about

:38:21.:38:27.

100,000 pages of regulations. The British Conservative Party offers

:38:27.:38:32.

the British people the opportunity to redefine that relationship, get

:38:32.:38:36.

away from that regulation. That's where we are both joined together.

:38:36.:38:39.

My concern about Labour is what happens to the Conservative Party

:38:39.:38:43.

if they offer a referendum on the EU, whether we stay part of it

:38:43.:38:49.

before we do. Thank you. That's right. There is a risk they could

:38:49.:38:52.

outflank you on this issue. Thank you very much. Would you like a

:38:52.:38:57.

taste of the krfrpbs now? -- conference now? All right then.

:38:57.:39:00.

Don't say I am not good to you! Conservative Party members were

:39:00.:39:05.

treated to a speech from the leader of the Conservatives in Scotland,

:39:05.:39:07.

Ruth Davidson. She spoke about the importance of keeping the union

:39:07.:39:11.

together, as she would. Here is a flavour of her speech. Global

:39:11.:39:15.

security, international trade, a stable currency, low interest rates,

:39:15.:39:19.

the strongest social cultural and economic bonds with consistent

:39:19.:39:24.

welfare across the nation. These are all powerful examples of the UK

:39:24.:39:28.

in action. It is no coincidence that these are the very things that

:39:28.:39:32.

separatists want to assure Scottish voters will not disappear. If

:39:32.:39:35.

things are going to change in Scotland, the SNP seems to say,

:39:35.:39:41.

everything must stay the same. But things wouldn't stay the same.

:39:41.:39:43.

Scotland's relations with every nation and institution, in

:39:43.:39:49.

particular the EU, would be reset and have to start from scratch. We

:39:49.:39:52.

know that the campaign to keep our country together will be long and

:39:52.:39:55.

sometimes tough and we don't underestimate the challenge that we

:39:55.:40:02.

face but for all Alex Salmond's bluster, this is not a done deal.

:40:02.:40:08.

Polls today show that fewer than a third of Scots support independence,

:40:08.:40:11.

just 28%. And the more people see the SNP's offering, the less

:40:11.:40:15.

appealing it becomes. That's why the Scottish Government is spending

:40:15.:40:19.

hundreds of thousands of pounds in courts trying to keep information

:40:19.:40:23.

from the Scottish people. That's why they're refusing to publish the

:40:23.:40:27.

future costs of their free electoral bribes and that's why

:40:27.:40:31.

they're twisting and turning on fundamentals like the Queen, the

:40:31.:40:35.

current and membership of NATO. Indeed, in the parliament in

:40:35.:40:39.

Edinburgh every policy, every bill, every SNP act must fit in with

:40:39.:40:43.

their overall goal of bringing the United Kingdom as we know it to an

:40:43.:40:47.

end. And that's something which affects every one of us, not just

:40:47.:40:53.

Scots. Victory for the UK and the referendum must be emphatic. It

:40:53.:40:57.

can't be by an inch, it has to be by a mile to provide the stability

:40:57.:41:01.

essential for our continued prosperity. And that's where all of

:41:01.:41:07.

you can help. Ruth Davidson there. What is the tactic from the

:41:07.:41:12.

Conservative side in terms of the issue of Scottish independence,

:41:12.:41:22.
:41:22.:41:23.

We should put out the advantages of the union which are many. I

:41:23.:41:27.

remember John Major putting these clearly when he was Prime Minister.

:41:27.:41:30.

Shouldn't you allow the other pro- unionist parties, because of the

:41:30.:41:34.

level of unpopularity of the Tories in Scotland? No I don't think you

:41:34.:41:37.

can do that. You can't just withdraw from the political field.

:41:37.:41:42.

There was a time when we had more seats in Scotland than anybody else.

:41:42.:41:48.

But those times, I do concede, have long gone. But I think we should,

:41:48.:41:53.

the Conservative Party above all, should be arguing for the union and

:41:53.:41:57.

should be arguing, not in a strideent way but in a way that

:41:57.:42:00.

says new Scotland have got everything to gain from it as well

:42:00.:42:03.

as the rest of the United Kingdom. And briefly, just to continue the

:42:03.:42:08.

debate we were having about a referendum on membership of Europe

:42:08.:42:13.

or whatever can be agreed, the last point there by Mark Reckless that

:42:13.:42:17.

Labour could possibly outflank the Conservatives here by offering a

:42:17.:42:22.

referendum before, that's a real risk? I think, I mean, the other

:42:22.:42:26.

argument is we will be outflanked by UKIP. The Conservative Party

:42:26.:42:31.

just has to decide what they're going to do and I think that the

:42:31.:42:34.

real danger is, and you almost saw it with that discussion today, we

:42:35.:42:42.

get back to the old days and John Major's Government of two MPs on

:42:42.:42:47.

the green debating Europe. We don't want to go down that. If we should

:42:47.:42:51.

have learned anything from those years, it's that totally counter

:42:51.:42:54.

productive. It gives the impression we are a divided party. If we go to

:42:54.:42:59.

the election and went into the... Well, you are divided. To the 97

:42:59.:43:05.

election still arguing about this... How do you prevent it, do you offer

:43:05.:43:10.

that referendum and say so now? way do you it is you set out, or

:43:10.:43:14.

David Cameron sets out exactly what it is that he wants, which I think

:43:14.:43:19.

the most sensible thing to do would be to say look, we are going to

:43:19.:43:22.

negotiate, redefine the position and then we will put it to a

:43:22.:43:26.

referendum. As it happens, I am not against referendums. I was arguing

:43:26.:43:29.

for one a long time ago. But I do think that actually to have a

:43:29.:43:32.

referendum at this point with Europe in crisis would be

:43:32.:43:39.

absolutely crazy. So the big event of today is a few moments away.

:43:39.:43:42.

George Osborne's speech to the party conference is going to kick

:43:42.:43:46.

off in probably about five minutes, although they usually run late.

:43:46.:43:56.
:43:56.:44:00.

It's been a turbulent few months For the Chancellor after his budget

:44:00.:44:06.

sparked weeks of negative headlines. Who is the man behind the red box?

:44:06.:44:12.

We have been speaking to some of his colleagues past and present.

:44:12.:44:16.

He is the Chancellor who brought in spending cuts, the Conservative MP

:44:16.:44:19.

who is close toast the Prime Minister -- close toast the Prime

:44:20.:44:22.

Minister. A family man with a wife and two children but what kind of

:44:22.:44:26.

man is George Osborne? I worked with him and he was political

:44:26.:44:31.

Secretary to William Hague before he got into parliament in 2001. He

:44:31.:44:36.

was a bright guy, a loyal guy. Occasionally brash, because we all

:44:36.:44:41.

are in our late 20s, early 30s but he was clearly a guy who was going

:44:41.:44:45.

places and everybody knew it. George, whose first stphaeupl

:44:45.:44:48.

Gideon until he changed it as a teenager, became the youngest

:44:48.:44:52.

Conservative MP ever when he was elected after Martin Bell choose to

:44:52.:45:02.
:45:02.:45:14.

stand elsewhere. He rose up the Tory ranks quickly, becoming Shadow

:45:14.:45:16.

Chancellor in 2005. Claire Perry worked with him two years later and

:45:16.:45:19.

says he was the kinds of man who was always juggling work and family

:45:19.:45:22.

life. I used to see his diary and it would be crammed, take Liberty

:45:22.:45:25.

to school, go to Luke's play, look at the schools with him in the

:45:25.:45:28.

midst of the run on Northern Rock or whatever it was, he does try to

:45:28.:45:31.

be a good dad and father in the constraints that we all face of a

:45:31.:45:33.

busy working life. His wife, here with him at the Royal wedding, is

:45:33.:45:35.

the daughter of David Howell, a former cabinet Minister under

:45:35.:45:38.

Thatcher. Osbourne was privately schooled at St Paul's in London and

:45:38.:45:41.

went on to read modern history at Oxford where he was a member of the

:45:41.:45:51.
:45:51.:46:02.

He was a boy growing up in London. Cheered here ahead of his Mansion

:46:02.:46:07.

House speech, George Osborne has been booed by by crowds a the

:46:07.:46:13.

Olympics and he is aware of his unpopularity according to Nick Nigh.

:46:13.:46:18.

He used to work work with him. He knows what his strengths and his

:46:18.:46:21.

weaknesses are particularly the way he can come across sometimes in

:46:21.:46:25.

public, which is one of the reasons why he limits his appearances and

:46:25.:46:29.

he adopts what people call the submarine strategy of emerging when

:46:29.:46:33.

he has something to say and says it and goes quiet.

:46:34.:46:36.

A loyal friend and second in command to the Prime Minister,

:46:36.:46:39.

theirs is a different relationship to that of their predecessors.

:46:39.:46:43.

There is a large door between Number Ten and number 11 and it

:46:43.:46:51.

used to be lock and guarded by a policeman. Now, it is open. The

:46:51.:47:01.
:47:01.:47:04.

little Camerons are trotting in, there is an Osbourne family bud gee.

:47:04.:47:09.

For now George Osborne's plan is to get the economy growing and his

:47:09.:47:19.
:47:19.:47:19.

This is Nick Robinson at the conference in Birmingham. Nick,

:47:19.:47:24.

let's talk about the man for a minute. He produce add Budget whose

:47:24.:47:29.

aftermath was probably the worst received in living memory. It

:47:29.:47:33.

resulted in Tory polling falling and not recovered. His personal

:47:33.:47:37.

ratings falling and not recovered. There is a lot hanging for him,

:47:37.:47:41.

never mind the Government, in this speech?

:47:41.:47:45.

Not just on this speech, Andrew. But on what happens in eight weeks

:47:45.:47:49.

time. I think the way you should judge this speech is what it tells

:47:49.:47:54.

us about what will happen in eight weeks time. On 5th December, the

:47:54.:47:58.

Chancellor stands up and delivers what most viewers would regard as a

:47:58.:48:02.

Budget. It is called the autumn statement. It is one of the two big

:48:02.:48:06.

statements that happen in the year. That statement will unveil the

:48:06.:48:11.

official forecasts, no no longer written by by politicians, about

:48:11.:48:16.

whether he is on course to meet his borrowing targets. We know now, not

:48:16.:48:20.

what they are saying, but we know clearly they will say he is off

:48:20.:48:26.

course and therefore, what he says here will provide a framework for

:48:26.:48:32.

the script of what he will have to announce on 5th December. The the

:48:32.:48:38.

headlines will be, "Sticking to the course course" and that phrase he

:48:38.:48:42.

used when the Tories were in opposition in 2009, "We are still

:48:42.:48:47.

in it together.". The problem they face Nick, as you well know, and I

:48:47.:48:50.

heard you talk about it. They may say they are sticking to the court

:48:50.:48:56.

martial, but when -- sticking to the course, but when it comes to

:48:56.:48:59.

deficit reduction, they have they have been blown off course. That's

:48:59.:49:03.

the glue of the coalition. This is meant to be the purpose of the

:49:03.:49:07.

coalition? That's right. He cannot stand up

:49:07.:49:13.

today and say, "We are on course to deal with the debt or deal with the

:49:13.:49:17.

deficit." There is a figure you will hear every Tory spokesman use

:49:17.:49:20.

at every opportunity which is the deficit is 25% lower than when they

:49:20.:49:24.

took over. Of course, what they don't say is what you have riferd

:49:24.:49:27.

to is -- referred to in this financial year, in the first four

:49:28.:49:36.

or five months, borrowing up, not down, by 20%. As a result, debt is

:49:36.:49:39.

geght bigger, not -- getting bigger, not smaller. What will he do? What

:49:40.:49:44.

you have seen the Chancellor prepare for is to say, "Yes, come

:49:44.:49:48.

5th December, the Budget-style statement, I might have to rewrite

:49:48.:49:52.

the so-called fiscal rules. The rules that say to the financial

:49:52.:49:56.

community "this is what we are going to do about borrowing. But I

:49:56.:50:03.

don't have to recite my spending cuts -- rewrite by spending cuts."

:50:03.:50:07.

Our credibility comes from a willingness of a Government to cut

:50:07.:50:11.

spending and increase taxes, to carry on cutting spending and

:50:11.:50:15.

increasing taxes for much longer than they originally planned to do,

:50:15.:50:17.

way beyond the end of this Parliament, into the next one,

:50:18.:50:24.

after the next general election and to say that's where his credibility

:50:24.:50:28.

comes from, not the fact that the economy is off course.

:50:28.:50:33.

Nick, we are going to dip in and look at what our cameras can see in

:50:33.:50:43.
:50:43.:50:44.

the conference hall. That's the chap from the Olympics.

:50:44.:50:49.

The Government has to find �10 billion in cuts. It wants wants the

:50:49.:50:55.

rich to pay their fair share of taxes. But I am right in thinking

:50:55.:51:01.

we don't know hat welfare cuts - what the welfare cuts will amount

:51:01.:51:07.

to and I have not been able to find out if the rich are going to pay

:51:07.:51:11.

additional taxes or carry on paying what they are paying? I am told

:51:11.:51:18.

they will pay additionam additional taxes. You are at the beginning

:51:18.:51:22.

afcoalition negotiating process. We are unfamiliar with this. We think

:51:22.:51:26.

that ministers can wait for their speech and unveil what they are

:51:26.:51:29.

going to do even though they haven't managed to tell you how

:51:29.:51:33.

they are going to do it. If George Osborne wants to put taxes up on

:51:33.:51:37.

the rich, as he says he does, he has to get the scale, the type

:51:38.:51:41.

agreed with Nick Clegg. What he is doing in public is negotiating with

:51:41.:51:45.

Clegg saying, "You want a mansion tax. You are not getting one from

:51:45.:51:52.

the Conservatives. You want higher council tax bands from the rich?

:51:52.:51:57.

You are not going to get get them from the Conservatives." He wants

:51:57.:52:04.

to go and say, "I would be willing to consider this. He put up

:52:04.:52:09.

stoovrpd -- stamp duty. He has to do that. He will go to the Lib Dems

:52:09.:52:12.

and say, "Here is my starting position. �10 billion worth of

:52:12.:52:18.

welfare cuts. This is how I would do it, A, B, C, D and they would

:52:18.:52:25.

have to say, "We are not not doing this. You saw Nick Clegg say, "I

:52:25.:52:30.

would not sign up to a freeze on benefit rates." It is what the Tory

:52:30.:52:36.

wants to do, but Nick Clegg said no. But he left the door open to

:52:36.:52:40.

increasing the rate of benefits lower than the rate of inflation.

:52:40.:52:43.

You are seeing a public negotiation. One coalition partner with the

:52:43.:52:53.

other. How is Mr Osbourne's stock with the

:52:53.:52:57.

Tory faithful. Chancellors become unpopular, people like Nigel Lawson

:52:57.:53:01.

and Ken Clarke, they remain popular with their party faithful. Can the

:53:01.:53:10.

same be said of Mr Osbourne? No. For the reasons you said in in

:53:10.:53:15.

your opening session. They lost faith in a guy they knew was no

:53:15.:53:25.
:53:25.:53:25.

great public performer, but thought had a a bit of the magic Alastair

:53:25.:53:30.

Campbell dust. When he stands up in a few seconds time, he has to say,

:53:30.:53:34.

"Go back to basics. I was right in the past, I am right now.".

:53:34.:53:37.

Prime Minister joining the Chancellor in the hall. He is going

:53:37.:53:40.

to listen to his chancellor's speech. No surprise there. Lets

:53:40.:53:44.

hear the Chancellor of the Exchequer, George Osborne. Thank

:53:44.:53:54.
:53:54.:53:58.

you for delivering the Games and making Britain proud.

:53:58.:53:59.

APPLAUSE You are joining a strong team at

:53:59.:54:03.

the Treasury. Chief secretary Danny Alexander and our Conservative

:54:03.:54:11.

colleagues, Greg Clarke, David, James, Greg Hands, and David

:54:11.:54:14.

Merritt, thank you for the support that you give me and the great job

:54:14.:54:24.
:54:24.:54:40.

you are doing for our country. APPLAUSE

:54:40.:54:42.

Now, ladies and gentlemen, in 1972, when a Conservative Prime Minister,

:54:42.:54:45.

two years into office was faced with economic problems and over

:54:45.:54:47.

powerful unions, we buckled and we gave up. The result was higher

:54:47.:54:52.

inflation, more strikes, and the three day week. A decade later, in

:54:52.:54:56.

1981, when another Conservative Prime Minister and Conservative

:54:57.:55:01.

chancellor two years into office were faced with economic problems

:55:01.:55:07.

and powerful unions, we did not give up, but pressed on and

:55:07.:55:17.
:55:17.:55:24.

overcame. APPLAUSE

:55:24.:55:27.

Today, in the face of the great economic challenges of our age, we

:55:27.:55:37.
:55:37.:55:38.

here resolve, we will press on, we shall overcome.

:55:38.:55:40.

APPLAUSE We made a promise to the British

:55:40.:55:42.

people that we would repair our badly broken economy. That promise

:55:42.:55:48.

is being fulfilled. The deficit is down by a quarter. There are one

:55:48.:55:55.

million more private sector jobs. The economy is healing. That

:55:55.:56:00.

healing is taking longer than we hoped because the damage was

:56:00.:56:04.

greater than we feared. But let the message from this conference be

:56:04.:56:14.
:56:14.:56:33.

clear, we will finish the job that we have started.

:56:33.:56:35.

APPLAUSE And there is another promise we

:56:35.:56:38.

made - on the eve of the conference, on the eve of the election, I told

:56:38.:56:41.

this conference, "We are all in this together." It was more than a

:56:41.:56:43.

slogan. It spoke of our values and of our intent. That there would be

:56:44.:56:46.

sacrifices and cuts that would be tough to make, that everyone was

:56:46.:56:50.

going to have to play their part and that in return, we would build

:56:50.:56:58.

an economy that works for all. We took the risk. Few political

:56:58.:57:03.

parties anywhere in the world are prepared to take before an election.

:57:03.:57:09.

Quite simply we told the people the truth about the hard road ahead.

:57:09.:57:17.

Now some say we paid a price for that. But at this -- but of this I

:57:17.:57:23.

am sure, our country would have been all but ungovernable if we had

:57:23.:57:26.

not been straight with the public before asking them to cast their

:57:26.:57:36.
:57:36.:57:46.

vote. APPLAUSE

:57:46.:57:49.

So three years later my message remains the same - we're not going

:57:49.:57:52.

to get through this as a country if we set one group against another,

:57:52.:57:55.

if we divide, denounce and demonise. We need an effort from each and

:57:55.:57:57.

everyone, one nation working hard together. We are still all in this

:57:57.:58:07.
:58:07.:58:07.

together. APPLAUSE

:58:07.:58:10.

We know what the British people mean by fair. That those who put

:58:10.:58:16.

something in should get something out. That we support those who

:58:16.:58:22.

aspire so we can help those most in need. That the cost of paying off

:58:22.:58:29.

our debts cannot possibly be borne by one section of society alone.

:58:30.:58:39.
:58:40.:58:48.

Let's be clear, those with the most should contribute the most.

:58:48.:58:49.

APPLAUSE Each one, each one of my Budgets

:58:49.:58:52.

has increased taxes overall on the very richest. In every single year

:58:52.:58:54.

of this Parliament, the rich will pay a greater share of our nation's

:58:54.:59:04.
:59:04.:59:13.

tax revenues than in anyone of the 13 years that Labour were in office.

:59:13.:59:14.

APPLAUSE And we've achieved that while

:59:15.:59:17.

getting rid of a cripplingingly uncompetitive 50 pence rate that

:59:17.:59:27.
:59:27.:59:31.

raised no money and cost jobs. APPLAUSE

:59:31.:59:33.

It is a completely phoney conception of fairness that you

:59:33.:59:35.

stick with a tax rate, you know raises no money, that you know

:59:35.:59:38.

drives away jobs and investment. That you know weakens the economy

:59:38.:59:40.

just to say you have kicked the rich. The people who pay the price

:59:40.:59:43.

for that, are not the rich, but the poor looking for work and there is

:59:44.:59:53.
:59:54.:00:26.

It's wrong that it's possible for someone to be better off on

:00:26.:00:29.

benefits than they would be in work and we are right to change that,

:00:29.:00:39.
:00:39.:00:43.

too. APPLAUSE That's why I insisted on a cap on

:00:43.:00:47.

benefits so no family can earn more out of work than the average family

:00:47.:00:57.
:00:57.:01:01.

earns in work. And can you believe it? Labour voted against that. All

:01:01.:01:05.

that talk about something for something and they've learned

:01:05.:01:14.

nothing about anything. Where is the fairness? Where is the

:01:14.:01:18.

fairness we ask for the shift worker, leaving home in the dark

:01:18.:01:23.

hours of the early morning, who looks up at the closed blinds of

:01:23.:01:27.

their next door neighbour sleeving off a life on benefits? When we say

:01:27.:01:31.

we are all in this together, we speak for that worker. We speak for

:01:31.:01:37.

all those who want to work hard and get on. This is the mission of the

:01:37.:01:47.
:01:47.:01:52.

modern Conservative Party. We represent, not the factional

:01:52.:02:00.

interests of organised Labour, nor do we indulge in the lazy politics

:02:00.:02:04.

of envy. We leave it to other parties to mark people by their

:02:04.:02:09.

background, to divide, to try to reorder and pre-distribute society

:02:09.:02:16.

by the rules of their favourite sociology textbook. We modern

:02:16.:02:21.

Conservatives represent all those who aspire, all who work, save and

:02:21.:02:27.

hope, all who feel a responsibility to put in, and not just take out.

:02:27.:02:32.

Whether it's the owner of the corner shop, staying open until

:02:32.:02:38.

midnight to support their family. Or the teacher preferred to defy

:02:38.:02:43.

her union and stay late to take the after school club or the commuter

:02:43.:02:47.

who leaves home before the children are up, comes back long after

:02:47.:02:51.

they've gone to bed because they want a better life for them. Or the

:02:51.:02:55.

pensioner who saved all their life and doesn't want to spend it all as

:02:55.:02:59.

they want to pass something on to their children and grandchildren.

:02:59.:03:02.

Or the entrepreneur who doesn't cash out and pack up, but devotes

:03:02.:03:06.

their flair and energy to building the next success story. They are

:03:06.:03:11.

all part of one nation, one nation working together to get on. That is

:03:11.:03:15.

the nation we represent. These are the people I will serve as

:03:15.:03:25.
:03:25.:03:32.

Chancellor. APPLAUSE and by the way, that's what being a

:03:32.:03:39.

party of one nation is all about. It's about a whole programme for

:03:39.:03:45.

Government. It is rissable to believe you can become a party of

:03:45.:03:49.

one nation simply by repeating the words one nation over and over

:03:50.:03:55.

again. Of course we all know why he did it. The Labour leader wants to

:03:55.:03:59.

pretend he is moving to the centre, when all can see he is moving to

:03:59.:04:09.
:04:09.:04:11.

the left. But as it is revealed as an empty

:04:11.:04:15.

gesture, people will be more let down by the reality than they were

:04:15.:04:23.

attracted by the pretense. You can imagine Benjamin Disraeli's

:04:23.:04:27.

disappointment, moments after the joy of being told there really is

:04:27.:04:37.
:04:37.:04:42.

reincarnation, he discovers he's come back as Ed Miliband. To the

:04:42.:04:47.

people of Britain I say this, whoever you are, wherever you come

:04:47.:04:53.

from, if you're working for a better future, we are on your side.

:04:53.:04:58.

Ladies and gentlemen, I see this this Conservative Prime Minister,

:04:58.:05:03.

David Cameron, close-up. He is an outstanding Prime Minister of

:05:03.:05:13.
:05:13.:05:20.

judgment and integrity. APPLAUSE. But more than that, he is leading a

:05:20.:05:27.

Government of change, of profound long-lasting change. Beneath the

:05:27.:05:33.

sound and fury of the daily debate, a silent revolution is taking place.

:05:33.:05:38.

Some of the biggest issues in politics, so big people thought

:05:38.:05:44.

them too controversial to fix, we have been prepared to tackle. A

:05:44.:05:49.

state that had become too expensive to pay for. Public sector pensions

:05:49.:05:57.

we couldn't afford. People earning low incomes but still paying income

:05:57.:06:03.

tax. Businesses fleeing Britain because our taxes were too high. In

:06:03.:06:09.

welfare, policing, and education, services that were crying out for

:06:09.:06:14.

reform. Government that had become too centralised, the constant drip-

:06:14.:06:22.

drip of powers to Europe. When you are tackling all of these big

:06:22.:06:27.

issues, of course the mid-term politics are difficult. But I tell

:06:27.:06:31.

you this, I'd rather have these difficulties because we are

:06:31.:06:36.

tackling these big challenges, than wake up like Tony Blair did after a

:06:36.:06:46.
:06:46.:06:54.

decade in power and discover he Let us all, all of us, be proud

:06:54.:06:58.

that we're contributing to the most radical and reforming period of

:06:58.:07:04.

Government this country has seen for a generation. Yes, we've done

:07:04.:07:14.
:07:14.:07:16.

it in coalition. But we could have done none of it without a coalition.

:07:16.:07:22.

Here's a fact about our constitution that we all know, what

:07:22.:07:27.

David, you might call a magnet factor, you can't win the votes you

:07:27.:07:32.

need in parliament for each and everyone of these changes without a

:07:32.:07:38.

majority. And the Conservative Party at its best has always known

:07:38.:07:42.

its responsibility. We would rather confront the choices and dilemmas

:07:42.:07:52.

of Government, than bask in the blissful irrelevance of opposition.

:07:52.:08:01.

APPLAUSE Now, we face more hard choices this

:08:01.:08:06.

autumn. The truth is that the damage done by the debts and the

:08:06.:08:11.

banking crisis was worse than we feared. The rise in the world oil

:08:11.:08:16.

price has been larger than anyone forecast. Sadly, the predictions

:08:16.:08:20.

that you made, that I made, that almost everyone here made, about

:08:20.:08:26.

the euro, turned out to be all too true. This makes the job more

:08:26.:08:33.

difficult, but it doesn't make it any less urgent. Yes, we've cut the

:08:33.:08:39.

budget deficit by a quarter. But it tells you something about just how

:08:39.:08:43.

big it was that the deficit is still higher today than when a

:08:43.:08:50.

British Government went begging to the IMF in the 1970s. Now this

:08:50.:08:56.

Wednesday I am also going to a meeting of the IMF. Don't worry,

:08:56.:09:00.

because of the resolve of the British people, I go representing a

:09:00.:09:05.

country that is seen as part of the solution, not part of the problem.

:09:05.:09:12.

That is only because of the credibility our plans have earned.

:09:12.:09:18.

Now I know our plans have been criticised, but the critics don't

:09:18.:09:25.

seem to agree. Some say we're going too fast. We should be spending and

:09:25.:09:31.

borrowing even more. They're curious -- their cure kwrougs

:09:31.:09:37.

suggestion Kuerten kwrougs suggest -- in good times and bad, in boom

:09:37.:09:43.

and bust, their answer is always to spin and borrow more. And they

:09:43.:09:46.

think -- spend and borrow more. They think there is such a thing as

:09:46.:09:51.

a free lunch. They They think that extra borrowing could pay for

:09:51.:09:55.

spending or temporary tax cuts in an attempt to put money in the

:09:55.:10:00.

pockets of consumers. But the extra borrowing would come at the cost of

:10:00.:10:04.

higher interest rates and everyone would know that there will be

:10:04.:10:09.

higher taxes to pay for it coming down the track. The higher interest

:10:09.:10:13.

rates would pick the very pockets of the working people you are

:10:13.:10:18.

trying to help. And the fear of extra taxes would undermine their

:10:18.:10:25.

confidence. In other words, our critics would gamble everything.

:10:25.:10:28.

Our credibility, our financial stability, our low interest rates,

:10:28.:10:33.

the cost of our debt. They would risk everything on the dubious idea

:10:33.:10:37.

that a few billion more of spending would dramatically improve the

:10:37.:10:42.

fortunes of the trillion and a half pound British economy. I will not

:10:42.:10:52.
:10:52.:10:59.

take that risk with the British economy. In that 70-minute speech

:10:59.:11:03.

last week to the Labour conference, do you know how many times Ed

:11:03.:11:10.

Miliband mentioned the deficit? Not once. Not once. No mention of

:11:10.:11:16.

perhaps the most acute problem facing the country. People

:11:16.:11:21.

marvelled at Ed Miliband's feat of memory. And so did I. He spoke for

:11:21.:11:25.

over an hour about the problems of Britain and forgot to mention that

:11:25.:11:35.
:11:35.:11:37.

we had a Labour Government running He told us about his life story,

:11:37.:11:42.

but forgot to mention he spend a third of his life working for

:11:42.:11:46.

Gordon Brown. Maybe someone hit him over the head with a mobile phone?

:11:46.:11:50.

What was the biggest memory laps of all? He forgot to say the three

:11:50.:11:55.

things that the British people want to hear from the Labour Party -

:11:55.:12:05.
:12:05.:12:07.

we're sorry, we spent too much, we don't do it again. APPLAUSE

:12:07.:12:11.

Now he may be trying to forget, we're never going to let him.

:12:11.:12:21.
:12:21.:12:26.

Labour must now be trusted to run the country's public finances again.

:12:26.:12:31.

Now as well as those critics saying we're cutting too fast, there are

:12:31.:12:36.

those who say we're cutting too slow. Because some of those who say

:12:36.:12:41.

this are our friends on the debt issue, I want to address the point

:12:41.:12:46.

very carefully. I am the first to say we should have lower taxes and

:12:46.:12:49.

a smaller Government. And I am the Chancellor who is cutting the size

:12:50.:12:55.

of Government faster than anyone in modern times. We are reducing the

:12:55.:13:01.

size of Government from almost 50% of our national income, to just 40%

:13:01.:13:07.

in just five years. I just don't think it's realistic to cut a great

:13:07.:13:12.

deal faster than that. And as we reduce employment in the public

:13:12.:13:17.

sector, we have to do it at a pace that allows the private sector to

:13:17.:13:22.

fill the gap. We promised the British people we would protect

:13:22.:13:27.

decent public services as we dealt with the deficit and so we will. We

:13:27.:13:33.

have never argued that you stop what economists call the automatic

:13:33.:13:36.

stableisers from operating. The lower tax receipts and extra

:13:36.:13:42.

Government payments that follow, if, for example, the global economy

:13:42.:13:46.

turns down. Our public spending plans were designed to give us

:13:46.:13:51.

flexibility and credibility. The flexibility to respond to the

:13:51.:13:55.

economic conditions in the world around us. The credibility that

:13:55.:14:03.

each day earns for us record low interest rates in the world bond

:14:03.:14:08.

markets. Our detailed tax and spending plans have brought us

:14:08.:14:14.

stability, but they only cover the next two years. And we must now

:14:14.:14:20.

take some very serious decisions about what we do after that. Let me

:14:20.:14:27.

tell you about my approach to these decisions. Our published plans

:14:27.:14:34.

already require us to find �16 billion of further savings. As I

:14:34.:14:39.

have said, the broadest shoulders will continue to bear the greatest

:14:39.:14:44.

burden. But I am not prepared to contemplate things that make no

:14:44.:14:49.

economic sense, and destroy jobs. So we won't have some kind of

:14:49.:14:54.

temporary wealth tax, even Dennis Healey thought that was a bad idea.

:14:54.:14:58.

Our future lies as a country where wealth creation is not something to

:14:58.:15:04.

be penalised, but encouraged. And nor am I going to introduce a new

:15:04.:15:14.
:15:14.:15:19.

tax on people's homes. APPLAUSE. would be sold as a mansion tax but

:15:19.:15:23.

once the tax inspector has his foot in the door you would soon find

:15:23.:15:26.

most of the homes in the country labelled a mansion, homes people

:15:26.:15:31.

have worked hard to afford and already paid taxes on, it's not a

:15:31.:15:35.

mansion tax, it's a homes tax and this party of home ownership will

:15:35.:15:45.
:15:45.:15:57.

When it comes to the richest, the first place I will look is those

:15:57.:16:01.

who are not paying the taxes we expect them to pay today. We will

:16:01.:16:06.

continue our ruthless pursuit of tax evasion. We will make

:16:06.:16:11.

aggressive tax avoidance more and more uncomfortable. This is not

:16:11.:16:16.

idle rhetoric, thanks to our action, we are collecting �4 billion more

:16:16.:16:21.

every year from those who avoid or evade tax and we will take new

:16:21.:16:26.

measures to collect even more. The Conservatives are the party of low

:16:27.:16:36.
:16:37.:16:48.

taxes for the many, not the party of no taxes for the few.

:16:48.:16:50.

APPLAUSE If there are other ways to increase

:16:50.:16:52.

revenue from the very top without damaging the enterprise economy, we

:16:52.:16:54.

will look for them. But our country's problem is not that

:16:54.:16:57.

working people pay too little tax, it is that Government spends too

:16:57.:17:07.
:17:07.:17:10.

much of their money. APPLAUSE

:17:10.:17:13.

And I'm determined that once again the great bulk of savings must come

:17:13.:17:23.
:17:23.:17:25.

from cutting Government spending, not increasing taxes.

:17:25.:17:27.

APPLAUSE Now I have said before that 80% of

:17:27.:17:30.

our total effort to cut the deficit must come from reduced spending and

:17:30.:17:33.

that should remain the case. As we have shown in the last two years,

:17:33.:17:35.

it is possible to do that while improving our public services.

:17:35.:17:40.

Crime has fallen. Hospital waiting lists are down. School standards

:17:40.:17:45.

are higher. In Government, this party, this party is achieving

:17:45.:17:49.

something invaluable. We're destroying the left-wing myth that

:17:49.:17:52.

the success of a public service is measured only by how many pounds we

:17:52.:17:58.

spend on t not by whether it heals our sick our he had kates our our

:17:58.:18:02.

children or makes our streets safe. This is because we are doing it

:18:02.:18:07.

carefully and doing it right. And if we want to go on doing that and

:18:07.:18:13.

limit the cuts to departments, then we have to find greater savings in

:18:13.:18:19.

the welfare bill. �10 billion of welfare savings by the first full

:18:19.:18:25.

year of the next Parliament. Iain Duncan Smith and I are committed to

:18:25.:18:29.

finding these savings while delivering the most radical reforms

:18:29.:18:34.

of our welfare system for a generation with a Universal Credit

:18:34.:18:37.

so that work always pays because it is not just about the money. It

:18:37.:18:43.

comes back to fairness and to enterprise. Four how can we justify

:18:43.:18:47.

the incomes of those out of work rising faster than the incomes of

:18:47.:18:52.

those in work? How can we justify giving flats to young people who

:18:52.:18:56.

have never worked when working people twice their age are still

:18:56.:19:00.

living with their parents because they can't afford their first home?

:19:00.:19:10.
:19:10.:19:22.

How can we justify... APPLAUSE

:19:22.:19:25.

How can we justify a system where people in work have to consider the

:19:25.:19:27.

full financial costs of having another child while those out of

:19:27.:19:37.
:19:37.:19:46.

work don't? APPLAUSE

:19:46.:19:49.

And here is the broader point - how could a country, that wants to

:19:49.:19:51.

compete in the world economy possibly explain that it is cutting

:19:51.:19:53.

budgets on things like schools and science because it couldn't summon

:19:53.:19:56.

the political will to control welfare? For in this country, we

:19:56.:19:58.

face something even greater than recovery from recession and the

:19:58.:20:01.

problems of the past. We face the shock of the future. Something my

:20:01.:20:05.

great friend William Hague talked to us about yesterday and what a

:20:05.:20:15.
:20:15.:20:26.

brilliant Foreign Secretary he is. APPLAUSE

:20:26.:20:29.

William told us yesterday, I will tell you today, the economic crisis

:20:29.:20:31.

has accelerated a change that was already happening in our world.

:20:31.:20:33.

Prosperity and the power it brings is shifting to new corners of the

:20:33.:20:41.

globe to Asia, and the Americas and even now Africa. I'm proud of our

:20:41.:20:44.

commitment to international development, but the truth is that

:20:44.:20:48.

free enterprise is lifting hundreds of millions of people out of

:20:48.:20:51.

poverty, more quickly than all the Government aid programmes of the

:20:51.:20:57.

world put together. That's good news for them. And good news for us

:20:57.:21:03.

too. It creates vast new markets for British exports, but only if we

:21:03.:21:10.

rise to the challenge. Western democracies like ours is is being

:21:10.:21:15.

without without worked, kout competed, outsmarted by these new

:21:15.:21:18.

economies and the economy for countries like Britain is this -

:21:18.:21:26.

are we going to sink or swim? And the truth is some western western

:21:26.:21:31.

countries won't keep up. They won't make the the changes needed to

:21:31.:21:33.

welfare, education and tax. They will fall further and further

:21:33.:21:37.

behind. They will become poorer and poorer. I am determined that will

:21:37.:21:47.
:21:47.:21:53.

not be the Britain I leave to my children or you leave to yours.

:21:53.:21:55.

APPLAUSE And it need not be. If we go on

:21:55.:22:00.

making the fundamental, deep rooted changes needed so that our country

:22:00.:22:05.

can grow and compete and prosper. Delivering the further cuts to

:22:05.:22:11.

business tax that we have promised. Supporting Michael Fallon's

:22:11.:22:17.

deregulation plans, seeing through Michael Gove's school reforms and

:22:17.:22:21.

by the way those school reforms are the single most important long-term

:22:21.:22:31.
:22:31.:22:36.

economic investment this country can make.

:22:36.:22:37.

APPLAUSE Our entire economic policy is an

:22:37.:22:40.

enterprise policy. We will be the Government for people who aspire

:22:40.:22:45.

like the people who start a new business and who work in that

:22:45.:22:49.

business and want to own shares in it. Today, we are setting out

:22:49.:22:55.

proposals for a radical change to employment law. I want to thank

:22:55.:23:05.
:23:05.:23:08.

Adrian Bee croft for the work he has done in this area.

:23:08.:23:10.

APPLAUSE Now this idea is particularly

:23:10.:23:12.

suited to new businesses starting up and small and medium sized firms.

:23:12.:23:14.

It is a voluntary, three-way deal. You the company, give your

:23:15.:23:20.

employees shares in the business. You the employee, replace your old

:23:20.:23:25.

rights of unfair dismissal and dedone dancy with new rights of

:23:25.:23:28.

ownership. And what will the Government do? We will charge no

:23:29.:23:33.

capital gains tax at all on the profits you make on your shares.

:23:33.:23:43.
:23:43.:23:48.

Zero percent, capital gains tax for these new employee owners.

:23:48.:23:49.

APPLAUSE Get shares and become owners of the

:23:49.:23:52.

company you work for. Owners, workers and the taxmen all in it

:23:52.:24:02.
:24:02.:24:10.

together, workers of the world unite.

:24:10.:24:12.

APPLAUSE M I am a low tax, small Government

:24:12.:24:15.

xiv, but I never thought the State is without a role to play in the

:24:15.:24:16.

economy. We're Conservatives, not anarchists.

:24:16.:24:21.

We have never allowed uncontrolled capitalism free reign. It was these

:24:21.:24:24.

Labour politicians, not Conservatives, who let the banks

:24:24.:24:28.

run rampage because they didn't understand that to work for

:24:28.:24:33.

everyone, markets need rules. I am the Chancellor in a Government that

:24:33.:24:39.

has done more to reform finance and banking than any before it,

:24:39.:24:44.

commissioning and implementing the Vickers Report, ring-fencing the

:24:44.:24:47.

high street banks when Labour wouldn't. Putting the Bank of

:24:47.:24:52.

England back in charge and working with them to fund new lending. New

:24:52.:24:58.

creating a British business bank. And when we find those Backers

:24:58.:25:02.

involved in scandals like LIBOR, we are not going to give the money

:25:02.:25:05.

back to the banks as Labour did, we are giving the money instead to

:25:05.:25:09.

those who represent the very best values in our country, our veterans

:25:09.:25:19.
:25:19.:25:29.

and our injured soldiers. APPLAUSE

:25:29.:25:31.

Ladies and gentlemen, we're reforming banking so it serves our

:25:31.:25:33.

economy and supports families and businesses. That is part of our

:25:34.:25:37.

interprice strategy -- enterprise strategy. People ask how are we

:25:37.:25:41.

going to earn our way in the world? This is how -- with an enterprise

:25:41.:25:46.

strategy that safeguards low interest rates. With an enterprise

:25:46.:25:51.

strategy that reduces taxes on entrepreneurs and the low paid.

:25:51.:25:55.

With an enper price strategy that creates confidence that this

:25:55.:26:00.

country has a Government Government can pay its bills. We will pay our

:26:00.:26:02.

way through the skills and the talents of the British people.

:26:02.:26:05.

Ensuring our scientists, our engineers and our apprentices are

:26:05.:26:10.

the best in the the world. We will be activists, building

:26:10.:26:14.

infrastructure, roads and power plants and broadband, we will be

:26:14.:26:20.

activists for high-speed rail and air capacity, and cut through the

:26:20.:26:24.

delays and red tape, and where was there more red tape than in our

:26:24.:26:29.

planning laws and enterprise enterprise strategy, means

:26:29.:26:39.
:26:39.:26:41.

investing in renewable energy. We are today consulting on a generous

:26:41.:26:47.

new tax regime for shale gas so Britain is not left behind as gas

:26:48.:26:52.

prices tumble on the other side of the Atlantic.

:26:52.:26:55.

Our enterprise strategy is accepting Britain faces competition

:26:55.:27:01.

from all over the world and backing what we're good at. When I hear

:27:01.:27:04.

about Britain's global lead in aerospace, I want to extend it.

:27:04.:27:08.

When I see Britain's genius in animation, media and computing, I

:27:08.:27:14.

want to promote it. When I read of the new frontiers in synthetic

:27:14.:27:19.

biology and reagaintive medicine, I want us to pioneer them. Together,

:27:19.:27:22.

with some of our leading businesses and universities, we today announce

:27:22.:27:26.

�1 billion of new science investment in the areas where we

:27:26.:27:31.

lead the world. That is a modern industrial policy and I am its

:27:31.:27:41.
:27:41.:27:48.

champion. Let's get on with it. APPLAUSE

:27:48.:27:51.

And throughout, let's hold in mind who we do it for. That corner shop

:27:51.:27:57.

owner, that teacher, that commuter, that pensioner, that entrepreneur,

:27:57.:28:01.

that shift worker leaving their home in the early morning. They

:28:01.:28:08.

strive for a better life. We strive to help them. Ladies and gentlemen,

:28:08.:28:13.

I have shared with you today the challenges and the decisions I have

:28:13.:28:19.

to confront in the coming months. I asked for your support and your

:28:19.:28:25.

trust and your resolve as we go through these challenges together.

:28:25.:28:31.

We knew two years ago that the task we were taking on was a great one.

:28:31.:28:37.

It isn't too much to say that the future prosperity of our country,

:28:37.:28:42.

the future of a free enterprise system under law, even the

:28:42.:28:48.

stability of Europe is in question in a way it is not -- it has not

:28:48.:28:52.

been before in my lifetime. I cannot pledge to you simple answers

:28:52.:28:59.

or a quick solution. This year has shown we are a country confronted

:28:59.:29:03.

on all sides by great difficulties, but this year has also shown we

:29:03.:29:09.

live in a country of courage and creativity. A country that can can

:29:09.:29:14.

do incredible things and succeed when we pull together. We never

:29:14.:29:20.

forget that to be the Government of such a country is an honour and

:29:20.:29:24.

when we make the hard decisions, we do not make them alone because we

:29:24.:29:28.

have the British people at our side and together we can deliver.

:29:28.:29:38.
:29:38.:29:39.

Thank you very much. The Chancellor of the Exchequer

:29:39.:29:43.

finishes his annual address at the Conservative Party Conference. He

:29:43.:29:47.

said that the damage they inherited from the economy was much worse

:29:48.:29:54.

than they feared. This was why the austerity is going to last until

:29:54.:29:59.

2018. He blamed oil prices, the size of the deficit and the

:29:59.:30:03.

continued troubles in the eurozone. He claimed the deficit was higher

:30:03.:30:10.

now than when the IMF were brought in in 1976. No change, no U-turn

:30:10.:30:16.

kind of speech here. He did announce however a new change in a

:30:16.:30:21.

labour law which is that if you give up some of your employment

:30:21.:30:26.

rights then you will get shares in the company that you are with and

:30:26.:30:32.

you will get the shares with the capital gains tax free when you

:30:32.:30:40.

come to sell them. The shares maybe worth nothing, but there has been

:30:40.:30:43.

lots of proposals like this. It is the first time this has been linked

:30:43.:30:49.

to a change in employment law, that's probably the new thing there.

:30:49.:30:53.

A muted applause for Mr Osbourne, he didn't bring them on fire there

:30:53.:30:59.

and he is a man that has to establish his reputation with the

:30:59.:31:09.
:31:09.:31:16.

Vicky Young is saying the - - Lib Dems. There will be a joint

:31:16.:31:20.

spending plan agreed to this parliament. Mr Osbourne is talking

:31:20.:31:25.

about making cuts of �10 billion in welfare, ten is part of the 16,

:31:25.:31:30.

over two years. It's likely this will mean finding �6 billion in

:31:30.:31:34.

welfare cuts in the first year of 2016.

:31:34.:31:38.

The Lib Dems are still insisting that they will consider the welfare

:31:38.:31:45.

cuts only if the Conservatives agree to the the... That's an

:31:45.:31:48.

announcement through the BBC. We heard the Chancellor's speech. We

:31:48.:31:52.

are joined now by the shadow Treasury Minister, Chris Leslie and

:31:52.:31:57.

Norman Fowler, is still here. It's your party, what did you make of it,

:31:57.:32:01.

the speech? I thought it was a good speech. I mean, the fact is that

:32:01.:32:06.

what he was saying is we are going to press on. It's quite a difficult

:32:06.:32:11.

speech in that sense. You were right in your analysis that what he

:32:11.:32:15.

was saying was we are going to continue with the policies and

:32:15.:32:18.

therefore, it is a difficult speech as you well know in conference

:32:18.:32:23.

terms to make. I thought the very interesting phrase he used was that

:32:23.:32:30.

the economy is healing. I hadn't heard him use that phrase. It's the

:32:30.:32:34.

official buzzword. Mr Hammond used it in an interview for a Sunday

:32:34.:32:37.

paper. I think even Mr Osbourne used it in another interview.

:32:37.:32:41.

Healing is the new green shoots. Well, it's the new green shoots.

:32:41.:32:45.

It's a better phrase, incidentally than the green shoots. You can tell

:32:45.:32:51.

that to your friend Norman Lamont. I will! I think the issues, you

:32:51.:32:55.

know, we have already gone into the major issue about welfare, it's

:32:55.:33:00.

going to be difficult. And of course the fact of the matter is

:33:00.:33:05.

that we did inherit the most God awful mess from the last Labour

:33:05.:33:09.

Government. I think that is now well-established and I think what

:33:09.:33:13.

Labour have to do is saying, not so much having a bash here and bash

:33:13.:33:19.

there, but what actually would you cancel of the things that apart

:33:19.:33:22.

from 50p tax? We are going to go to Birmingham in a second to hear from

:33:23.:33:29.

our political editor, Nick Robinson. Before I do, Chris Leslie, there is

:33:29.:33:32.

a certain irony about the Chancellor talking about more cuts

:33:32.:33:35.

to come in later years, when we know the deficit in this financial

:33:35.:33:39.

year is rising, not falling. But if I could park that for a minute,

:33:39.:33:44.

because we have talked about it, we are agreed on that... I may need to

:33:44.:33:48.

come back to it. I wouldn't stop you. But will you now have to get

:33:48.:33:55.

involved in this argument over what cuts are going to be made in 2015-

:33:55.:34:01.

16 and 2016-17? Can you avoid saying anything about that. We are

:34:01.:34:04.

two and a half years away from that general election and the beginning

:34:04.:34:08.

of that spending period. The cuts have to be decided or spending

:34:08.:34:12.

plans before. The key thing is this, the reason we have benefits bills

:34:12.:34:17.

soaring so much is because we've got growth totally flat. We are in

:34:17.:34:21.

recession. To hear the Chancellor, you would think that all was rosy

:34:22.:34:26.

in the garden. He didn't mention unemployment, he didn't really

:34:26.:34:30.

confront that issue, as you have parked about borrowing actually

:34:30.:34:36.

quite significantly high, 22% higher this year. Surely what our

:34:36.:34:42.

task is now before 2015 is to focus on job creation. We can start to

:34:42.:34:48.

range in some of that welfare cost, start to boast revenues for the

:34:48.:34:53.

Exchequer. At no point did we hear anything new about job creation and

:34:53.:34:56.

growth. That's the frustrating thing that makes me and others

:34:56.:34:59.

angry outside. They look at this Chancellor and see a man in denial.

:34:59.:35:04.

This is a Chancellor who thinks we can go steady as she goes, no

:35:04.:35:07.

particular changes and we have a crisis of youth unemployment, a

:35:07.:35:10.

crisis of long-term unemployment and it's hitting us all in the

:35:10.:35:14.

pocket because of the welfare bill is soaring, directly as a result of

:35:14.:35:19.

the recession he's caused. Pause your thoughts. We are going to go

:35:19.:35:23.

back to Birmingham. Nick, it's hard to tell from here, you were there,

:35:23.:35:29.

for a man who has to restore his credibility, even popularity with

:35:29.:35:34.

his own party, never mind the wider country, it didn't seem much of a

:35:34.:35:38.

great ovation at the end. Did we get that wrong? No, there wasn't

:35:39.:35:43.

much of an ovation. He choose to walk straight off the stage,

:35:43.:35:46.

presumably knowing that he wasn't likely to get one. He did one

:35:46.:35:51.

simple thing, though, he did something to appeal to an older

:35:51.:35:55.

Conservative audience, most of them in there are, who remember the

:35:55.:36:00.

1980s, when Margaret Thatcher in 1981, two years into Government

:36:00.:36:06.

said, the lady's not for turning. He said, we will press on, we shall

:36:06.:36:10.

overcome. His message in a sense can be boiled down to that. I know

:36:10.:36:14.

it's not going to plan, I know in effect that in a few weeks' time in

:36:14.:36:18.

the autumn statement I may have to stand up and say borrowing is

:36:18.:36:22.

growing, the deficit is growing, debt is growing, but my message is,

:36:22.:36:26.

we plough on. We stick with the course because it is, in his view,

:36:26.:36:31.

the right course. By that autumn statement, though we should start

:36:31.:36:36.

calling it the winter statement, it is on December 5th, he has a

:36:36.:36:41.

strange idea of what autumn is. If we then have the third quarter

:36:41.:36:45.

growth figures, the growth, if there is any in the economy, for

:36:45.:36:51.

July, jug, September. -- July, August, September. If the figures

:36:51.:36:55.

disappoint that will be given what he said today that's a terrible

:36:55.:37:00.

backdrop to the winter statement? It is absolutely a terrible

:37:00.:37:03.

backdrop if it happens. Of course you heard Ministers talk rather

:37:04.:37:07.

carefully about how the economy is healing. They want to avoid using

:37:07.:37:12.

that language again that dates back a while, Norman Lamont in the 1990s

:37:12.:37:15.

talked about green shoots of recovery, got very badly damaged by

:37:15.:37:18.

claiming that too early. They want to avoid that so they're talking

:37:18.:37:22.

about the economy healing. Behind the scenes Minister after Minister

:37:22.:37:26.

says to me we think these growth figures aren't quite right. We

:37:26.:37:29.

think the employment figures look better than the growth figures. We

:37:29.:37:33.

think they're measuring something real, people in jobs. Whereas the

:37:33.:37:38.

so-called GDP figures are a kind of economist's estimate of what's

:37:38.:37:40.

happening in the economy. I don't think the figure will lead them to

:37:41.:37:45.

change their mind tpwu would make the political and economic backdrop

:37:45.:37:48.

harder. The crucial thing they're waiting for is not that figure, but

:37:48.:37:52.

the forecast of the Office of Budget Responsibility. That new

:37:53.:37:56.

office is tasked with a job of saying whether the Chancellor is or

:37:56.:38:02.

is not on course to meet his own fiscal targets. The targets for

:38:02.:38:05.

Government borrowing, in other words F they say he is off course

:38:05.:38:08.

and remember they don't simply say off or on course, they tend to give

:38:08.:38:13.

a percentage. He is this many percent likely to meet this or not

:38:13.:38:16.

to meet it. That will be the toughest thing for him to do. In a

:38:16.:38:21.

sense, he's told us a huge amount actually about the future. He's

:38:21.:38:27.

given us, not specific details but he's said come December 5th, I

:38:27.:38:31.

carry on as I have done up until now, wanting to cut spending by

:38:31.:38:35.

four times as much as raising taxes, but still willing to raise taxes a

:38:35.:38:39.

bit more, willing to cut welfare much more than cutting other

:38:39.:38:42.

spending, because he thinks it's economically right and politically

:38:42.:38:46.

popular. That he will do that on December 5th statement, and in a

:38:46.:38:49.

spending round that will probably follow in the following year in

:38:49.:38:54.

order to be announced as the spending cuts for 2015. So in a way

:38:54.:38:58.

it may feel like you have learned nothing, you have in one sense

:38:58.:39:06.

learned a huge amount. Thank you very much.

:39:06.:39:12.

We will be bringing you here on BBC2 live full coverage of this

:39:12.:39:15.

increasingly important statement, autumn statement, winter statement,

:39:15.:39:22.

I am going to rechristen it, on December 5th. Norman, a political

:39:22.:39:28.

question, how much misery can a Government continue to pile on a

:39:29.:39:32.

nation nation, as an election gets closer, before it's too late for

:39:32.:39:37.

people to think things are getting better? I think it's all down to

:39:37.:39:40.

public perception. I don't think there's any particular time that

:39:40.:39:43.

you can actually put on that. Obviously, by the time of the next

:39:43.:39:47.

election, as we come into the next election, I don't think the opinion

:39:47.:39:52.

polls matter quite so much. But by the time, 12 months, coming into

:39:52.:39:59.

the next election, I think the country have got to see that things

:39:59.:40:04.

are improving. I think before one just throws out Norman Lamont's

:40:04.:40:07.

statement about green shoots, one should remember that there were

:40:07.:40:15.

green shoots. That was the truth. You then went on to lose by the

:40:15.:40:20.

biggest defeat I think since Lord Liverpool. Even you weren't around

:40:20.:40:24.

that time. Not quite. It had nothing to do with that. The fact

:40:24.:40:28.

was, as is recognised, we actually at the end, this is the tragedy of

:40:28.:40:33.

that election, we had the strongest economy we had had for years, with

:40:33.:40:38.

Ken Clarke taking over from Lamont. OK, let's stick with now!

:40:38.:40:42.

The political difficulty I would suggest for Labour it seems from

:40:42.:40:47.

the polls that your leader is not robust -- the lead is not robust

:40:47.:40:50.

tphouf survive an outbreak of growth in the economy if it happens.

:40:50.:40:54.

In other words, a sense that things were getting better. I don't know

:40:55.:40:59.

about that. I think the public want to see a Government that's united

:40:59.:41:03.

and has a plan for actually moving the country forward, not just

:41:03.:41:07.

questions about reducing the deficit and dealing with debt but

:41:07.:41:10.

also where are we going as a society? This is the one nation

:41:10.:41:14.

Britain that Ed Miliband was talking about. But you can't have a

:41:14.:41:19.

Chancellor who is essentially a recession denier, who is basically

:41:19.:41:23.

saying no, well, our plans will continue to change as they set them

:41:23.:41:27.

out in 2010. Somebody who promised to balance the books, remember by

:41:27.:41:30.

2015 and now he can't do that because of all these soaring

:41:30.:41:35.

welfare bills that he's provoked. He is refusing to change course.

:41:35.:41:39.

It's so overwhelmingly necessary to stand up for those aspiring people,

:41:39.:41:43.

the Chancellor talked about people wanting to get on. What about all

:41:43.:41:47.

those people whose careers have been stunted? The 33,000 businesses

:41:47.:41:50.

that have gone bust since the general election? All those one

:41:50.:41:53.

million young unemployed, it's the youngest people actually in society

:41:53.:41:58.

who are really hurting most of all. That's why we have got to get a

:41:58.:42:02.

change of Government because we need an economic plan that can get

:42:02.:42:07.

us on the right... I apologise, I have to go to Birmingham. Thank you.

:42:07.:42:11.

You may want to stay and listen to this, we are going to talk to

:42:11.:42:18.

almost your opposite number. The economic Minister to the Treasury,

:42:18.:42:22.

Sajid Javid. Good afternoon to you. Can I ask you this, the Prime

:42:22.:42:28.

Minister spoke yesterday on the BBC saying that he was rebalancing the

:42:28.:42:35.

economy away from debt, not the deficit, rebalancing the economy

:42:35.:42:40.

away from debt. In that rebalancing, can you tell us by how much he's

:42:40.:42:46.

cut our debt? Well, you will know the first step to dealing with the

:42:46.:42:49.

national debt under the previous Government tripled, is to deal with

:42:49.:42:52.

the deficit. The deficit is the amount that we borrow each year

:42:52.:42:55.

that's added to the debt. So the important thing is that the deficit

:42:55.:42:59.

is falling, and the good news is that in the last two years the

:42:59.:43:04.

deficit is down by a quarter. have talked about how it's rising

:43:04.:43:08.

this year so far. I don't want to go that way. I want to stake with

:43:08.:43:15.

debt. -- I want want to stick with debt. The figures is you inherited

:43:16.:43:25.

a national debt of about 650 billion pounds. By 2015 it will be

:43:25.:43:28.

1.4 trillion. In other words, it will double under your watch. Could

:43:28.:43:33.

you explain to viewers how that's rebalancing the economy away from

:43:34.:43:38.

debt? You are doubling it. Well, actually first of all we inherited

:43:38.:43:43.

a national debt of about 920 billion, about 100 billion higher

:43:43.:43:47.

than the number you gave. When the previous Government came to power

:43:47.:43:51.

in 97 it was about 300 billion. First of all, it tripled and that's

:43:51.:43:54.

important because that shows the size of the mess that we have to

:43:54.:43:57.

deal with. Under this Government clearly the debt will continue to

:43:57.:44:01.

rise until the deficit is brought under control. I think as the

:44:01.:44:06.

Chancellor just said in his speech, that you can't turn around a

:44:06.:44:11.

deficit which is equal to 10% of GDP, the largest of any

:44:11.:44:14.

industrialised country overnight. It has to be a gradual process.

:44:14.:44:17.

That's what we have been doing. That's why we have cut it by a

:44:17.:44:21.

quarter. The Chancellor is right that we have got to continue with

:44:21.:44:25.

that strategy because the first step to lowering debt is to lower

:44:25.:44:28.

the deficit and that's what we need to do to build business confidence.

:44:28.:44:32.

You are quite right, the eventual debt was around 900 billion, it was

:44:33.:44:37.

about 650 billion before the efforts that were taken to stop the

:44:37.:44:40.

banking system collapsing and we went into recession. I take that.

:44:40.:44:46.

My point to you is that it's continuing to rise to reach 1.4

:44:46.:44:52.

trillion. I don't understand how that's a rebalancing this side of

:44:52.:44:56.

2015 but I will be happy to listen to an explanation. Could we now

:44:56.:45:02.

both admit because we know it to be true, that you will fail to hit

:45:02.:45:12.
:45:12.:45:18.

your target of reducing debt by We have a clear target. Because it

:45:18.:45:21.

is independent, unlike previous governments where epegsly under

:45:21.:45:24.

Gordon Brown he would just fiddle the numbers who suit whatever he

:45:24.:45:29.

wants to say, this Government can't do that. We set-up an independent

:45:29.:45:34.

vigorous process and we will have to see what they say in December.

:45:34.:45:39.

We come back to this phrase. I ask you again if you are adding, let's

:45:39.:45:43.

take your calculations, half a trillion more to the national debt,

:45:43.:45:47.

if as is clear to everybody including the Financial Times that

:45:47.:45:52.

you will fail to hit your debt target, I don't understand how you

:45:52.:45:58.

are making progress on rebalancing the economy away from debt?

:45:58.:46:03.

Let me explain that, Andrew. The deficit is the key part to getting

:46:03.:46:06.

the debt under control at the beginning. The deficit is the

:46:06.:46:12.

amount we add to the debt each year. The deficit was �159 billion when

:46:12.:46:19.

the Government came to to power it is down by a quarterment that will

:46:19.:46:25.

keep coming down. That's the objective for this Government.

:46:25.:46:29.

Clearly, you cannot get rid of a deficit of that size overnight. No

:46:29.:46:32.

one would recommend that. As the Chancellor just said, we have got

:46:32.:46:35.

to deal with this problem because we can see what happens to

:46:35.:46:38.

countries that don't have a credible plan, although it takes

:46:38.:46:42.

time, it is a credible plan, the financial markets understand that

:46:42.:46:46.

and that's key as we are having to sell bonds in the market and if we

:46:46.:46:56.
:46:56.:46:57.

Apology for the loss of subtitles for 53 seconds

:46:57.:47:50.

Are you predicting the deficit will be smaller this year than last year

:47:50.:47:55.

despite the figures of the first five months? Because we have an

:47:55.:48:00.

independent process of setting - coming up with numbers and setting

:48:00.:48:04.

predictions it's not my job. can't do that? What I will tell you

:48:04.:48:10.

is that I think you have Chris Leslie there, the independent IFS

:48:10.:48:15.

has said this year under Labour's plans the debt would be 200 billion

:48:15.:48:18.

higher than under this Government. Although it's taken us time to

:48:18.:48:21.

bring it under control, the point is that under Labour it would be

:48:21.:48:24.

far higher which means our economic challenge would continue for a lot

:48:24.:48:29.

longer. Let me put that point to Mr Leslie? This is a man and

:48:29.:48:32.

Government that don't understand what drives a deficit and drives

:48:32.:48:37.

the debt situation. Not a single mention there about the health of

:48:37.:48:41.

the economy, if you have a poorly economy, you are going to see your

:48:41.:48:49.

deficit... What about the point on the IMF forecast? There's been

:48:49.:48:54.

forecasts have been proven flakely before. They were saying...

:48:54.:49:00.

would be higher. Otherwise you macro economic stimulus is

:49:00.:49:09.

meaningless. What we have to do is have a focus on long-term deficit

:49:09.:49:16.

reduction. You have to stimulate the economy, get people back into

:49:16.:49:20.

work. The economy shapes the deficit. They don't understand that.

:49:20.:49:30.
:49:30.:49:37.

$:STARTFEED. They think the answer to a debt problem is more debt.

:49:37.:49:42.

The Chancellor maybe the main event in Birmingham today, but other

:49:42.:49:45.

Cabinet Ministers are getting a look in on the conference stage.

:49:45.:49:52.

This morning, the new Transport Secretary Patrick McLoughlin gave

:49:52.:50:00.

his speech. If I may, I would like to tell you

:50:00.:50:04.

moi my story -- you my story. I am the son of a miner. I am the

:50:04.:50:09.

grandson of a miner. I went to work in the Staffordshire coalfields up

:50:09.:50:17.

the road from here. Before I go on, I want to make one point clear - if

:50:17.:50:24.

you want to understand one nation, Mr Miliband, I'll show you one

:50:24.:50:34.
:50:34.:50:35.

nation. APPLAUSE

:50:35.:50:38.

He is He is standing at this podium. I am a one nation Tory and it is

:50:38.:50:40.

this party over the generations that has given people the

:50:40.:50:50.
:50:50.:51:08.

opportunity from whatever their background.

:51:08.:51:09.

APPLAUSE Now, some things have changed since

:51:09.:51:12.

I first went on the ground at the Upton colliery, in the year that

:51:12.:51:15.

Margaret Thatcher won her first general election, I put on a few

:51:15.:51:18.

pounds, well a few more than that! I put on a suit. My hair has gone a

:51:18.:51:21.

bit greyer, but one important thing has not changed and that is our job

:51:21.:51:26.

in Government today is exactly the same as it was all those years ago.

:51:26.:51:32.

To deal with our debts, to go for growth, and to get this country

:51:32.:51:38.

moving again. And as Transport Secretary, I will be doing my bit.

:51:38.:51:45.

I don't hide from the challenge. There will be setbacks as well as

:51:45.:51:51.

successes. Last week, when we hit one on the West Coast line I came

:51:51.:52:01.
:52:01.:52:02.

straight out and confronted it and we will put things right.

:52:02.:52:04.

APPLAUSE Well, that was Patrick McLoughlin

:52:04.:52:06.

on the conference stage and he joins us now from Birmingham.

:52:06.:52:10.

Welcome to the Daily Politics. Let's talk about the West Coast

:52:10.:52:14.

Main Line rail franchise, Philip Hammond said yesterday he would

:52:14.:52:18.

have checked the figures on a deal like this when he was Transport

:52:18.:52:25.

Secretary. Did just teen Greening check it? Ministers asked for

:52:25.:52:30.

robust reassurance. They were given that. The errors that were exposed

:52:30.:52:35.

last week which I made the announcement, came out late after a

:52:35.:52:40.

substantial getting ready for a legal case. As soon as I saw the

:52:40.:52:44.

legal advice, I made the announcement I made.

:52:44.:52:48.

Justine Greening didn't check the figures, she just took the advice

:52:48.:52:52.

given to her? No, it wasn't a Minister for Ministers to check

:52:52.:52:57.

that advice. The way in which ministers have to deal with these

:52:57.:53:00.

procurement measures, they are kept separate from the process and

:53:00.:53:04.

actually, if ministers did start to get involved in the process down

:53:04.:53:09.

the line, I think there would be acsays that somehow we were trying

:53:09.:53:12.

to influence the outcome. There has to be a completely impartial

:53:12.:53:16.

approach by ministers to the companies which are bidding and

:53:16.:53:21.

that's what Justine did. Is it fair to say that civil

:53:21.:53:23.

servants, the ones dealing with the figure that is you are talking

:53:23.:53:28.

about are to blame? Surely, as a minister, as a Secretary of State,

:53:28.:53:32.

you are responsible for what goes on in your department?

:53:32.:53:37.

Well, look, I set-up two inquiries. One to look at happened as far as

:53:37.:53:41.

the department is concerned and the other to look at the wider issues

:53:41.:53:45.

for franchising and I don't want to prejudge the outcome of those

:53:45.:53:51.

inquiries. This particular lesson, this issue I have been hit and the

:53:51.:53:55.

lessons I have got to learn from it and the lessons the Government has

:53:55.:54:00.

to learn are serious and a lot of money has been wasted and I deeply

:54:00.:54:07.

regret that and it is untenable. Are you happy to say that ministers

:54:07.:54:12.

must take some responsibility for that too? No, I want to see what

:54:12.:54:16.

the inquiry actually comes forward with. As I say, ministers do not

:54:16.:54:19.

get involved in the detailed process of of what happens with

:54:19.:54:22.

those bids. Let's look at the franchise system

:54:23.:54:27.

then. Does the system need to to change? Is it fundamentally flawed

:54:27.:54:30.

to expect companies companies bidding for the franchises to

:54:30.:54:35.

predict revenue revenue over a period of 15 years? Well, what I

:54:35.:54:42.

say, there are different lengths and they are not 15 years. OK, but

:54:42.:54:46.

it is a long period of time? let me deal with the point. Because

:54:46.:54:51.

that's what I set-up an inquiry. I don't want to prejudge what the

:54:51.:54:54.

inquiry will tell me. It would be silly to say, "I have set this

:54:54.:55:02.

inquiry up. By the way this is what I think what has gone wrong in this

:55:02.:55:06.

process process." That's what the inquiry is for. I asked a respected

:55:06.:55:11.

person from the rail to do the one on franchising and I I asked

:55:11.:55:14.

someone else to do another one on the department.

:55:14.:55:19.

What about asking Virgin to continue to run the line while you

:55:19.:55:24.

sort this out? There are, I will be making a statement next week to

:55:24.:55:28.

Parliament and I will be able to deal with this issue then.

:55:28.:55:32.

So you will detail whether Virgin will be continuing to run that

:55:32.:55:34.

line? I hope to be in the position to

:55:34.:55:39.

make a full stapelght next Monday to Parliament -- statement next

:55:40.:55:43.

Monday to Parliament and I hope to set out the position.

:55:43.:55:49.

The other is that State rail takes it over. When it comes to the to

:55:49.:55:59.
:55:59.:56:01.

the franchises being open again for bidders, why didn't you let

:56:01.:56:06.

directly operated bid for that too? The private sector has done a lot

:56:06.:56:09.

to increase passenger numbers. The rail industry in this country has

:56:09.:56:14.

been a success, because we have seen growth in rail travel like no

:56:14.:56:16.

other European country and that has been brought about having the

:56:16.:56:19.

private sector involved. You have the French and the Dutch

:56:19.:56:26.

State owned companies bidding for the franchises, why not have

:56:26.:56:34.

Directly Operated Rail? We want to get into the sector Directly

:56:34.:56:42.

Operated Rail. The Government underwrites it. While we have got

:56:42.:56:45.

Directly Operated Rail operate ago particular franchise because under

:56:45.:56:49.

the last Government the franchising system that they had failed.

:56:49.:56:52.

You would be happy for foreign State owned companies to run the

:56:52.:56:57.

line rather than our own? I would be happy to get good

:56:57.:57:02.

railway services in this country for the public to use. The taxpayer

:57:02.:57:06.

is putting a huge amount of money into the rail lines and what I have

:57:06.:57:12.

got to do, what my job is to do is to make sure the taxpayer gets a

:57:12.:57:15.

return for the investment it makes and we get good services too.

:57:15.:57:25.
:57:25.:57:29.

But why not open it up to our own state owned Directly Operated Rail?

:57:29.:57:33.

I would prefer to see private companies running it.

:57:33.:57:38.

Timetable for the inquiries. Can you tell how long they will last?

:57:38.:57:42.

The first inquiry should report to me by the 31st October. That is not

:57:42.:57:48.

far away. That's the departmental one. The Richard Brown inquiry, I

:57:48.:57:53.

asked him to report by the 31st December. They are on tight time

:57:53.:57:57.

scales. But I hope they will be able to to report in that time.

:57:57.:58:01.

On to rail fares. Now there has been discussion about rail fares

:58:01.:58:06.

being capped at 1% over inflation. It was going to be at 3% over

:58:06.:58:10.

inflation. What changed your mind? Well, we are looking, we are always

:58:10.:58:13.

looking at the best way we can help the consumer. And that's what

:58:13.:58:18.

changed our minds. We want to help the consumer. Those people as the

:58:18.:58:22.

Chancellor said today, the hard- pressed workers doing the right

:58:22.:58:26.

thing. The commuter and the long distance traveller too.

:58:26.:58:29.

Thank you very much. We have run out of time.

:58:29.:58:34.

Just to find out the answer to our quiz. Which famous name is David

:58:34.:58:43.

Cameron following on Twitter? Do we know what the answer is?

:58:43.:58:50.

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