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


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


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


address live and uninterrupted. George Osborne says he will make


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


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


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


David Cameron says he wants Britain to renegotiate its relationship


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


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


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


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


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


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


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


asking Philip Hammond if the Government has any hope of sticking


to its plans for balancing the nation's books.


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


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


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


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


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


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


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


he had to say earlier. Conservative Party, the modern


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


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


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


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


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


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


precisely what we are tackling and people watching your programme this


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


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


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


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


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


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


worst received Budgets in living memory and the Tories poll position


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


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


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


about welfare and the joint position of Iain Duncan Smith and


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


think battles between the social security Secretary and the


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


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


proposition off the cabinet table and postponed a whole meeting


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


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


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


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


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


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


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


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


at that area. Politicians and Chancellors and Prime Ministers,


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


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


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


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


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


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


at the next election because no sitting Government has ever


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


welfare reforms is finished. presumes on that basis that Iain


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


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


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


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


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


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


almost any historical or international comparison the


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


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


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


children lose their disability living allowance altogether. When


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


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


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


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


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


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


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


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


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


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


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


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


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


We have got a really serious programme of Government reforms in


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


George Osborne, which ever other leadership contender emerges after


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


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


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


may say unnecessary attack. He is repraising his performance on


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


addresses the fairness question and the affordability question. Taking


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


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


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


our fairness agenda. Addressing the questions that have been


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


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


are in work frankly would struggle to afford.


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


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


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


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


people leaving school should be able to receive housing benefit


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


a minimum age threshold for accessing housing benefit, trying


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


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


people who go out to work and earn their living.


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


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


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


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


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


Smith as the Secretary of State responsible to work out proposals


to consult as necessary, to introduce any legislation or


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


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


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


objectives of fairness and making sure that work work pays.


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


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


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


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


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


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


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


has identified is based on the assumption that across the


remainder of Government on average, departments continue the percentage


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


Review period. It means extending the squeeze on departmental budgets


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


savings on top of that. The Chancellor and the Prime


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


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


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


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


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


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


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


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


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


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


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


George Osborne introduced additional taxes which hit the rich.


Over every Budget this chancellor has presented to Parliament, has


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


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


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


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


supposed to pay. It is about clamping down on aggressive


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


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


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


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


paying a higher share of the total tax bill.


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


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


if he wants to do something additional? There there be


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


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


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


collected something like an additional �18 billion by clamping


down on tax evasion and aggressive tax avoidance.


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


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


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


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


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


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


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


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


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


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


to pay are contributing an appropriate share and that the


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


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


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


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


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


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


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


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


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


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


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


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


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


agenda as part of the chancellor's overall package.


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


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


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


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


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


are close enough to getting agreement between the the


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


governments including the US Government that are involved in


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


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


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


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


of Government. -- extension of of time.


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


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


people would have none. Is that your position?


Well, it depends on the other protective arrangements put in


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


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


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


reduced French Government stake. If the French Government is prepared


to reduce its stake and dismantle arrangements which have given it


the ability to control the company then with the addition of


safeguards, and national security agreement for example, safeguards


about where the business will be headquartered, what the composition


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


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


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


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


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


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


simple answer for our biggest manufacturing company in this


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


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


does not give them effective control or an ability to interfere


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


certain level, putting them on a par with big institutional


investors who will own significant single digit percentage stakes in


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


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


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


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


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


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


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


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


I thought what Philip was saying was actually sensible because what


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


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


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


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


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


point you are making. All right.


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


seconds. If it stops people people voting


for UKI. We don't need the infighting and


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


REPORTER: Do you trust David Cameron to deliver a referendum


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


have it sooner than the Prime Minister Prime Minister sounds like


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


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


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


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


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


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


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


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


Today. This afternoon would be convenient.


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


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


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


much, yeah. Good. Happy memories then. When


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


powers back. The key thing is ultimately the Conservative Party


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


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


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


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


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


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


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


critical negotiations about the seven-year budget. Shortly after


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


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


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


to prejudice Britain's position going into those negotiations by


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


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


you are describing to the British people without having that


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


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


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


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


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


Because the Prime Minister now has the opportunity to redefine


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


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


important trading partner, which does not involve degracious,


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


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


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


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


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


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


that then the people get an opportunity to decide whether we


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


relationship more like that of Switzerland where they sort of


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


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


people can govern themselves. you like Britain to be like


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


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


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


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


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


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


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


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


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


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


Reckless. Well, I think the Norwegian and Swiss contributions


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


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


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


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


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


those EU regulations to their exports outside the EU and their


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


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


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


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


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


anything like that. But the contribution per person is about


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


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


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


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


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


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


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


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


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


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


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


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


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


this absolutely crucial question for our country that no one under


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


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


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


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


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


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


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


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


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


the British people the opportunity to redefine that relationship, get


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


My concern about Labour is what happens to the Conservative Party


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


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


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


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


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


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


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


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


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


the strongest social cultural and economic bonds with consistent


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


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


separatists want to assure Scottish voters will not disappear. If


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


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


Scotland's relations with every nation and institution, in


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


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


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


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


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


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


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


hundreds of thousands of pounds in courts trying to keep information


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


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


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


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


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


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


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


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


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


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


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


Conservative side in terms of the issue of Scottish independence,


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


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


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


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


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


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


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


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


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


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


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


debate we were having about a referendum on membership of Europe


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


Labour could possibly outflank the Conservatives here by offering a


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


referendum at this point with Europe in crisis would be


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


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


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


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


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


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


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


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


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


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


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


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


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


places and everybody knew it. George, whose first stphaeupl


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


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


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


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


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


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


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


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


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


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


the daughter of David Howell, a former cabinet Minister under


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


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


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


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


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


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


weaknesses are particularly the way he can come across sometimes in


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


he adopts what people call the submarine strategy of emerging when


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


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


theirs is a different relationship to that of their predecessors.


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


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


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


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


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


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


aftermath was probably the worst received in living memory. It


resulted in Tory polling falling and not recovered. His personal


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


never mind the Government, in this speech?


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


coalition? That's right. He cannot stand up


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


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


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


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


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


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


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


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


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


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


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


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


Our credibility comes from a willingness of a Government to cut


spending and increase taxes, to carry on cutting spending and


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


other. How is Mr Osbourne's stock with the


Tory faithful. Chancellors become unpopular, people like Nigel Lawson


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


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


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


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


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


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


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


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


hear the Chancellor of the Exchequer, George Osborne. Thank


you for delivering the Games and making Britain proud.


APPLAUSE You are joining a strong team at


the Treasury. Chief secretary Danny Alexander and our Conservative


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


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


you are doing for our country. APPLAUSE


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


two years into office was faced with economic problems and over


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


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


1981, when another Conservative Prime Minister and Conservative


chancellor two years into office were faced with economic problems


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


overcame. APPLAUSE


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


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


APPLAUSE We made a promise to the British


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


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


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


healing is taking longer than we hoped because the damage was


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


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


APPLAUSE And there is another promise we


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


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


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


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


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


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


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


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


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


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


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




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


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


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


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


together. APPLAUSE


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


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


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


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


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


APPLAUSE Each one, each one of my Budgets


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


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


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


APPLAUSE And we've achieved that while


getting rid of a cripplingingly uncompetitive 50 pence rate that


raised no money and cost jobs. APPLAUSE


It is a completely phoney conception of fairness that you


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


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


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


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


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


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


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


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


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


that talk about something for something and they've learned


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


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


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


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


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


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


modern Conservative Party. We represent, not the factional


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


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


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


by the rules of their favourite sociology textbook. We modern


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


the left. But as it is revealed as an empty


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


its responsibility. We would rather confront the choices and dilemmas


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


APPLAUSE Now, we face more hard choices this


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


higher interest rates and everyone would know that there will be


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


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


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


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


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


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


that a few billion more of spending would dramatically improve the


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


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


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


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


perhaps the most acute problem facing the country. People


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


have never argued that you stop what economists call the automatic


stableisers from operating. The lower tax receipts and extra


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


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


flexibility and credibility. The flexibility to respond to the


economic conditions in the world around us. The credibility that


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


markets. Our detailed tax and spending plans have brought us


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


When it comes to the richest, the first place I will look is those


who are not paying the taxes we expect them to pay today. We will


continue our ruthless pursuit of tax evasion. We will make


aggressive tax avoidance more and more uncomfortable. This is not


idle rhetoric, thanks to our action, we are collecting �4 billion more


every year from those who avoid or evade tax and we will take new


measures to collect even more. The Conservatives are the party of low


taxes for the many, not the party of no taxes for the few.


APPLAUSE If there are other ways to increase


revenue from the very top without damaging the enterprise economy, we


will look for them. But our country's problem is not that


working people pay too little tax, it is that Government spends too


much of their money. APPLAUSE


And I'm determined that once again the great bulk of savings must come


from cutting Government spending, not increasing taxes.


APPLAUSE Now I have said before that 80% of


our total effort to cut the deficit must come from reduced spending and


that should remain the case. As we have shown in the last two years,


it is possible to do that while improving our public services.


Crime has fallen. Hospital waiting lists are down. School standards


are higher. In Government, this party, this party is achieving


something invaluable. We're destroying the left-wing myth that


the success of a public service is measured only by how many pounds we


spend on t not by whether it heals our sick our he had kates our our


children or makes our streets safe. This is because we are doing it


carefully and doing it right. And if we want to go on doing that and


limit the cuts to departments, then we have to find greater savings in


the welfare bill. �10 billion of welfare savings by the first full


year of the next Parliament. Iain Duncan Smith and I are committed to


finding these savings while delivering the most radical reforms


of our welfare system for a generation with a Universal Credit


so that work always pays because it is not just about the money. It


comes back to fairness and to enterprise. Four how can we justify


the incomes of those out of work rising faster than the incomes of


those in work? How can we justify giving flats to young people who


have never worked when working people twice their age are still


living with their parents because they can't afford their first home?


How can we justify... APPLAUSE


How can we justify a system where people in work have to consider the


full financial costs of having another child while those out of


work don't? APPLAUSE


And here is the broader point - how could a country, that wants to


compete in the world economy possibly explain that it is cutting


budgets on things like schools and science because it couldn't summon


the political will to control welfare? For in this country, we


face something even greater than recovery from recession and the


problems of the past. We face the shock of the future. Something my


great friend William Hague talked to us about yesterday and what a


brilliant Foreign Secretary he is. APPLAUSE


William told us yesterday, I will tell you today, the economic crisis


has accelerated a change that was already happening in our world.


Prosperity and the power it brings is shifting to new corners of the


globe to Asia, and the Americas and even now Africa. I'm proud of our


commitment to international development, but the truth is that


free enterprise is lifting hundreds of millions of people out of


poverty, more quickly than all the Government aid programmes of the


world put together. That's good news for them. And good news for us


too. It creates vast new markets for British exports, but only if we


rise to the challenge. Western democracies like ours is is being


without without worked, kout competed, outsmarted by these new


economies and the economy for countries like Britain is this -


are we going to sink or swim? And the truth is some western western


countries won't keep up. They won't make the the changes needed to


welfare, education and tax. They will fall further and further


behind. They will become poorer and poorer. I am determined that will


not be the Britain I leave to my children or you leave to yours.


APPLAUSE And it need not be. If we go on


making the fundamental, deep rooted changes needed so that our country


can grow and compete and prosper. Delivering the further cuts to


business tax that we have promised. Supporting Michael Fallon's


deregulation plans, seeing through Michael Gove's school reforms and


by the way those school reforms are the single most important long-term


economic investment this country can make.


APPLAUSE Our entire economic policy is an


enterprise policy. We will be the Government for people who aspire


like the people who start a new business and who work in that


business and want to own shares in it. Today, we are setting out


proposals for a radical change to employment law. I want to thank


Adrian Bee croft for the work he has done in this area.


APPLAUSE Now this idea is particularly


suited to new businesses starting up and small and medium sized firms.


It is a voluntary, three-way deal. You the company, give your


employees shares in the business. You the employee, replace your old


rights of unfair dismissal and dedone dancy with new rights of


ownership. And what will the Government do? We will charge no


capital gains tax at all on the profits you make on your shares.


Zero percent, capital gains tax for these new employee owners.


APPLAUSE Get shares and become owners of the


company you work for. Owners, workers and the taxmen all in it


together, workers of the world unite.


APPLAUSE M I am a low tax, small Government


xiv, but I never thought the State is without a role to play in the


economy. We're Conservatives, not anarchists.


We have never allowed uncontrolled capitalism free reign. It was these


Labour politicians, not Conservatives, who let the banks


run rampage because they didn't understand that to work for


everyone, markets need rules. I am the Chancellor in a Government that


has done more to reform finance and banking than any before it,


commissioning and implementing the Vickers Report, ring-fencing the


high street banks when Labour wouldn't. Putting the Bank of


England back in charge and working with them to fund new lending. New


creating a British business bank. And when we find those Backers


involved in scandals like LIBOR, we are not going to give the money


back to the banks as Labour did, we are giving the money instead to


those who represent the very best values in our country, our veterans


and our injured soldiers. APPLAUSE


Ladies and gentlemen, we're reforming banking so it serves our


economy and supports families and businesses. That is part of our


interprice strategy -- enterprise strategy. People ask how are we


going to earn our way in the world? This is how -- with an enterprise


strategy that safeguards low interest rates. With an enterprise


strategy that reduces taxes on entrepreneurs and the low paid.


With an enper price strategy that creates confidence that this


country has a Government Government can pay its bills. We will pay our


way through the skills and the talents of the British people.


Ensuring our scientists, our engineers and our apprentices are


the best in the the world. We will be activists, building


infrastructure, roads and power plants and broadband, we will be


activists for high-speed rail and air capacity, and cut through the


delays and red tape, and where was there more red tape than in our


planning laws and enterprise enterprise strategy, means


investing in renewable energy. We are today consulting on a generous


new tax regime for shale gas so Britain is not left behind as gas


prices tumble on the other side of the Atlantic.


Our enterprise strategy is accepting Britain faces competition


from all over the world and backing what we're good at. When I hear


about Britain's global lead in aerospace, I want to extend it.


When I see Britain's genius in animation, media and computing, I


want to promote it. When I read of the new frontiers in synthetic


biology and reagaintive medicine, I want us to pioneer them. Together,


with some of our leading businesses and universities, we today announce


�1 billion of new science investment in the areas where we


lead the world. That is a modern industrial policy and I am its


champion. Let's get on with it. APPLAUSE


And throughout, let's hold in mind who we do it for. That corner shop


owner, that teacher, that commuter, that pensioner, that entrepreneur,


that shift worker leaving their home in the early morning. They


strive for a better life. We strive to help them. Ladies and gentlemen,


I have shared with you today the challenges and the decisions I have


to confront in the coming months. I asked for your support and your


trust and your resolve as we go through these challenges together.


We knew two years ago that the task we were taking on was a great one.


It isn't too much to say that the future prosperity of our country,


the future of a free enterprise system under law, even the


stability of Europe is in question in a way it is not -- it has not


been before in my lifetime. I cannot pledge to you simple answers


or a quick solution. This year has shown we are a country confronted


on all sides by great difficulties, but this year has also shown we


live in a country of courage and creativity. A country that can can


do incredible things and succeed when we pull together. We never


forget that to be the Government of such a country is an honour and


when we make the hard decisions, we do not make them alone because we


have the British people at our side and together we can deliver.


Thank you very much. The Chancellor of the Exchequer


finishes his annual address at the Conservative Party Conference. He


said that the damage they inherited from the economy was much worse


than they feared. This was why the austerity is going to last until


2018. He blamed oil prices, the size of the deficit and the


continued troubles in the eurozone. He claimed the deficit was higher


now than when the IMF were brought in in 1976. No change, no U-turn


kind of speech here. He did announce however a new change in a


labour law which is that if you give up some of your employment


rights then you will get shares in the company that you are with and


you will get the shares with the capital gains tax free when you


come to sell them. The shares maybe worth nothing, but there has been


lots of proposals like this. It is the first time this has been linked


to a change in employment law, that's probably the new thing there.


A muted applause for Mr Osbourne, he didn't bring them on fire there


and he is a man that has to establish his reputation with the


Vicky Young is saying the - - Lib Dems. There will be a joint


spending plan agreed to this parliament. Mr Osbourne is talking


about making cuts of �10 billion in welfare, ten is part of the 16,


over two years. It's likely this will mean finding �6 billion in


welfare cuts in the first year of 2016.


The Lib Dems are still insisting that they will consider the welfare


cuts only if the Conservatives agree to the the... That's an


announcement through the BBC. We heard the Chancellor's speech. We


are joined now by the shadow Treasury Minister, Chris Leslie and


Norman Fowler, is still here. It's your party, what did you make of it,


the speech? I thought it was a good speech. I mean, the fact is that


what he was saying is we are going to press on. It's quite a difficult


speech in that sense. You were right in your analysis that what he


was saying was we are going to continue with the policies and


therefore, it is a difficult speech as you well know in conference


terms to make. I thought the very interesting phrase he used was that


the economy is healing. I hadn't heard him use that phrase. It's the


official buzzword. Mr Hammond used it in an interview for a Sunday


paper. I think even Mr Osbourne used it in another interview.


Healing is the new green shoots. Well, it's the new green shoots.


It's a better phrase, incidentally than the green shoots. You can tell


that to your friend Norman Lamont. I will! I think the issues, you


know, we have already gone into the major issue about welfare, it's


going to be difficult. And of course the fact of the matter is


that we did inherit the most God awful mess from the last Labour


Government. I think that is now well-established and I think what


Labour have to do is saying, not so much having a bash here and bash


there, but what actually would you cancel of the things that apart


from 50p tax? We are going to go to Birmingham in a second to hear from


our political editor, Nick Robinson. Before I do, Chris Leslie, there is


a certain irony about the Chancellor talking about more cuts


to come in later years, when we know the deficit in this financial


year is rising, not falling. But if I could park that for a minute,


because we have talked about it, we are agreed on that... I may need to


come back to it. I wouldn't stop you. But will you now have to get


involved in this argument over what cuts are going to be made in 2015-


16 and 2016-17? Can you avoid saying anything about that. We are


two and a half years away from that general election and the beginning


of that spending period. The cuts have to be decided or spending


plans before. The key thing is this, the reason we have benefits bills


soaring so much is because we've got growth totally flat. We are in


recession. To hear the Chancellor, you would think that all was rosy


in the garden. He didn't mention unemployment, he didn't really


confront that issue, as you have parked about borrowing actually


quite significantly high, 22% higher this year. Surely what our


task is now before 2015 is to focus on job creation. We can start to


range in some of that welfare cost, start to boast revenues for the


Exchequer. At no point did we hear anything new about job creation and


growth. That's the frustrating thing that makes me and others


angry outside. They look at this Chancellor and see a man in denial.


This is a Chancellor who thinks we can go steady as she goes, no


particular changes and we have a crisis of youth unemployment, a


crisis of long-term unemployment and it's hitting us all in the


pocket because of the welfare bill is soaring, directly as a result of


the recession he's caused. Pause your thoughts. We are going to go


back to Birmingham. Nick, it's hard to tell from here, you were there,


for a man who has to restore his credibility, even popularity with


his own party, never mind the wider country, it didn't seem much of a


great ovation at the end. Did we get that wrong? No, there wasn't


much of an ovation. He choose to walk straight off the stage,


presumably knowing that he wasn't likely to get one. He did one


simple thing, though, he did something to appeal to an older


Conservative audience, most of them in there are, who remember the


1980s, when Margaret Thatcher in 1981, two years into Government


said, the lady's not for turning. He said, we will press on, we shall


overcome. His message in a sense can be boiled down to that. I know


it's not going to plan, I know in effect that in a few weeks' time in


the autumn statement I may have to stand up and say borrowing is


growing, the deficit is growing, debt is growing, but my message is,


we plough on. We stick with the course because it is, in his view,


the right course. By that autumn statement, though we should start


calling it the winter statement, it is on December 5th, he has a


strange idea of what autumn is. If we then have the third quarter


growth figures, the growth, if there is any in the economy, for


July, jug, September. -- July, August, September. If the figures


disappoint that will be given what he said today that's a terrible


backdrop to the winter statement? It is absolutely a terrible


backdrop if it happens. Of course you heard Ministers talk rather


carefully about how the economy is healing. They want to avoid using


that language again that dates back a while, Norman Lamont in the 1990s


talked about green shoots of recovery, got very badly damaged by


claiming that too early. They want to avoid that so they're talking


about the economy healing. Behind the scenes Minister after Minister


says to me we think these growth figures aren't quite right. We


think the employment figures look better than the growth figures. We


think they're measuring something real, people in jobs. Whereas the


so-called GDP figures are a kind of economist's estimate of what's


happening in the economy. I don't think the figure will lead them to


change their mind tpwu would make the political and economic backdrop


harder. The crucial thing they're waiting for is not that figure, but


the forecast of the Office of Budget Responsibility. That new


office is tasked with a job of saying whether the Chancellor is or


is not on course to meet his own fiscal targets. The targets for


Government borrowing, in other words F they say he is off course


and remember they don't simply say off or on course, they tend to give


a percentage. He is this many percent likely to meet this or not


to meet it. That will be the toughest thing for him to do. In a


sense, he's told us a huge amount actually about the future. He's


given us, not specific details but he's said come December 5th, I


carry on as I have done up until now, wanting to cut spending by


four times as much as raising taxes, but still willing to raise taxes a


bit more, willing to cut welfare much more than cutting other


spending, because he thinks it's economically right and politically


popular. That he will do that on December 5th statement, and in a


spending round that will probably follow in the following year in


order to be announced as the spending cuts for 2015. So in a way


it may feel like you have learned nothing, you have in one sense


learned a huge amount. Thank you very much.


We will be bringing you here on BBC2 live full coverage of this


increasingly important statement, autumn statement, winter statement,


I am going to rechristen it, on December 5th. Norman, a political


question, how much misery can a Government continue to pile on a


nation nation, as an election gets closer, before it's too late for


people to think things are getting better? I think it's all down to


public perception. I don't think there's any particular time that


you can actually put on that. Obviously, by the time of the next


election, as we come into the next election, I don't think the opinion


polls matter quite so much. But by the time, 12 months, coming into


the next election, I think the country have got to see that things


are improving. I think before one just throws out Norman Lamont's


statement about green shoots, one should remember that there were


green shoots. That was the truth. You then went on to lose by the


biggest defeat I think since Lord Liverpool. Even you weren't around


that time. Not quite. It had nothing to do with that. The fact


was, as is recognised, we actually at the end, this is the tragedy of


that election, we had the strongest economy we had had for years, with


Ken Clarke taking over from Lamont. OK, let's stick with now!


The political difficulty I would suggest for Labour it seems from


the polls that your leader is not robust -- the lead is not robust


tphouf survive an outbreak of growth in the economy if it happens.


In other words, a sense that things were getting better. I don't know


about that. I think the public want to see a Government that's united


and has a plan for actually moving the country forward, not just


questions about reducing the deficit and dealing with debt but


also where are we going as a society? This is the one nation


Britain that Ed Miliband was talking about. But you can't have a


Chancellor who is essentially a recession denier, who is basically


saying no, well, our plans will continue to change as they set them


out in 2010. Somebody who promised to balance the books, remember by


2015 and now he can't do that because of all these soaring


welfare bills that he's provoked. He is refusing to change course.


It's so overwhelmingly necessary to stand up for those aspiring people,


the Chancellor talked about people wanting to get on. What about all


those people whose careers have been stunted? The 33,000 businesses


that have gone bust since the general election? All those one


million young unemployed, it's the youngest people actually in society


who are really hurting most of all. That's why we have got to get a


change of Government because we need an economic plan that can get


us on the right... I apologise, I have to go to Birmingham. Thank you.


You may want to stay and listen to this, we are going to talk to


almost your opposite number. The economic Minister to the Treasury,


Sajid Javid. Good afternoon to you. Can I ask you this, the Prime


Minister spoke yesterday on the BBC saying that he was rebalancing the


economy away from debt, not the deficit, rebalancing the economy


away from debt. In that rebalancing, can you tell us by how much he's


cut our debt? Well, you will know the first step to dealing with the


national debt under the previous Government tripled, is to deal with


the deficit. The deficit is the amount that we borrow each year


that's added to the debt. So the important thing is that the deficit


is falling, and the good news is that in the last two years the


deficit is down by a quarter. have talked about how it's rising


this year so far. I don't want to go that way. I want to stake with


debt. -- I want want to stick with debt. The figures is you inherited


a national debt of about 650 billion pounds. By 2015 it will be


1.4 trillion. In other words, it will double under your watch. Could


you explain to viewers how that's rebalancing the economy away from


debt? You are doubling it. Well, actually first of all we inherited


a national debt of about 920 billion, about 100 billion higher


than the number you gave. When the previous Government came to power


in 97 it was about 300 billion. First of all, it tripled and that's


important because that shows the size of the mess that we have to


deal with. Under this Government clearly the debt will continue to


rise until the deficit is brought under control. I think as the


Chancellor just said in his speech, that you can't turn around a


deficit which is equal to 10% of GDP, the largest of any


industrialised country overnight. It has to be a gradual process.


That's what we have been doing. That's why we have cut it by a


quarter. The Chancellor is right that we have got to continue with


that strategy because the first step to lowering debt is to lower


the deficit and that's what we need to do to build business confidence.


You are quite right, the eventual debt was around 900 billion, it was


about 650 billion before the efforts that were taken to stop the


banking system collapsing and we went into recession. I take that.


My point to you is that it's continuing to rise to reach 1.4


trillion. I don't understand how that's a rebalancing this side of


2015 but I will be happy to listen to an explanation. Could we now


both admit because we know it to be true, that you will fail to hit


your target of reducing debt by We have a clear target. Because it


is independent, unlike previous governments where epegsly under


Gordon Brown he would just fiddle the numbers who suit whatever he


wants to say, this Government can't do that. We set-up an independent


vigorous process and we will have to see what they say in December.


We come back to this phrase. I ask you again if you are adding, let's


take your calculations, half a trillion more to the national debt,


if as is clear to everybody including the Financial Times that


you will fail to hit your debt target, I don't understand how you


are making progress on rebalancing the economy away from debt?


Let me explain that, Andrew. The deficit is the key part to getting


the debt under control at the beginning. The deficit is the


amount we add to the debt each year. The deficit was �159 billion when


the Government came to to power it is down by a quarterment that will


keep coming down. That's the objective for this Government.


Clearly, you cannot get rid of a deficit of that size overnight. No


one would recommend that. As the Chancellor just said, we have got


to deal with this problem because we can see what happens to


countries that don't have a credible plan, although it takes


time, it is a credible plan, the financial markets understand that


and that's key as we are having to sell bonds in the market and if we


Apology for the loss of subtitles for 53 seconds


Are you predicting the deficit will be smaller this year than last year


despite the figures of the first five months? Because we have an


independent process of setting - coming up with numbers and setting


predictions it's not my job. can't do that? What I will tell you


is that I think you have Chris Leslie there, the independent IFS


has said this year under Labour's plans the debt would be 200 billion


higher than under this Government. Although it's taken us time to


bring it under control, the point is that under Labour it would be


far higher which means our economic challenge would continue for a lot


longer. Let me put that point to Mr Leslie? This is a man and


Government that don't understand what drives a deficit and drives


the debt situation. Not a single mention there about the health of


the economy, if you have a poorly economy, you are going to see your


deficit... What about the point on the IMF forecast? There's been


forecasts have been proven flakely before. They were saying...


would be higher. Otherwise you macro economic stimulus is


meaningless. What we have to do is have a focus on long-term deficit


reduction. You have to stimulate the economy, get people back into


work. The economy shapes the deficit. They don't understand that.


$:STARTFEED. They think the answer to a debt problem is more debt.


The Chancellor maybe the main event in Birmingham today, but other


Cabinet Ministers are getting a look in on the conference stage.


This morning, the new Transport Secretary Patrick McLoughlin gave


his speech. If I may, I would like to tell you


moi my story -- you my story. I am the son of a miner. I am the


grandson of a miner. I went to work in the Staffordshire coalfields up


the road from here. Before I go on, I want to make one point clear - if


you want to understand one nation, Mr Miliband, I'll show you one


nation. APPLAUSE


He is He is standing at this podium. I am a one nation Tory and it is


this party over the generations that has given people the


opportunity from whatever their background.


APPLAUSE Now, some things have changed since


I first went on the ground at the Upton colliery, in the year that


Margaret Thatcher won her first general election, I put on a few


pounds, well a few more than that! I put on a suit. My hair has gone a


bit greyer, but one important thing has not changed and that is our job


in Government today is exactly the same as it was all those years ago.


To deal with our debts, to go for growth, and to get this country


moving again. And as Transport Secretary, I will be doing my bit.


I don't hide from the challenge. There will be setbacks as well as


successes. Last week, when we hit one on the West Coast line I came


straight out and confronted it and we will put things right.


APPLAUSE Well, that was Patrick McLoughlin


on the conference stage and he joins us now from Birmingham.


Welcome to the Daily Politics. Let's talk about the West Coast


Main Line rail franchise, Philip Hammond said yesterday he would


have checked the figures on a deal like this when he was Transport


Secretary. Did just teen Greening check it? Ministers asked for


robust reassurance. They were given that. The errors that were exposed


last week which I made the announcement, came out late after a


substantial getting ready for a legal case. As soon as I saw the


legal advice, I made the announcement I made.


Justine Greening didn't check the figures, she just took the advice


given to her? No, it wasn't a Minister for Ministers to check


that advice. The way in which ministers have to deal with these


procurement measures, they are kept separate from the process and


actually, if ministers did start to get involved in the process down


the line, I think there would be acsays that somehow we were trying


to influence the outcome. There has to be a completely impartial


approach by ministers to the companies which are bidding and


that's what Justine did. Is it fair to say that civil


servants, the ones dealing with the figure that is you are talking


about are to blame? Surely, as a minister, as a Secretary of State,


you are responsible for what goes on in your department?


Well, look, I set-up two inquiries. One to look at happened as far as


the department is concerned and the other to look at the wider issues


for franchising and I don't want to prejudge the outcome of those


inquiries. This particular lesson, this issue I have been hit and the


lessons I have got to learn from it and the lessons the Government has


to learn are serious and a lot of money has been wasted and I deeply


regret that and it is untenable. Are you happy to say that ministers


must take some responsibility for that too? No, I want to see what


the inquiry actually comes forward with. As I say, ministers do not


get involved in the detailed process of of what happens with


those bids. Let's look at the franchise system


then. Does the system need to to change? Is it fundamentally flawed


to expect companies companies bidding for the franchises to


predict revenue revenue over a period of 15 years? Well, what I


say, there are different lengths and they are not 15 years. OK, but


it is a long period of time? let me deal with the point. Because


that's what I set-up an inquiry. I don't want to prejudge what the


inquiry will tell me. It would be silly to say, "I have set this


inquiry up. By the way this is what I think what has gone wrong in this


process process." That's what the inquiry is for. I asked a respected


person from the rail to do the one on franchising and I I asked


someone else to do another one on the department.


What about asking Virgin to continue to run the line while you


sort this out? There are, I will be making a statement next week to


Parliament and I will be able to deal with this issue then.


So you will detail whether Virgin will be continuing to run that


line? I hope to be in the position to


make a full stapelght next Monday to Parliament -- statement next


Monday to Parliament and I hope to set out the position.


The other is that State rail takes it over. When it comes to the to


the franchises being open again for bidders, why didn't you let


directly operated bid for that too? The private sector has done a lot


to increase passenger numbers. The rail industry in this country has


been a success, because we have seen growth in rail travel like no


other European country and that has been brought about having the


private sector involved. You have the French and the Dutch


State owned companies bidding for the franchises, why not have


Directly Operated Rail? We want to get into the sector Directly


Operated Rail. The Government underwrites it. While we have got


Directly Operated Rail operate ago particular franchise because under


the last Government the franchising system that they had failed.


You would be happy for foreign State owned companies to run the


line rather than our own? I would be happy to get good


railway services in this country for the public to use. The taxpayer


is putting a huge amount of money into the rail lines and what I have


got to do, what my job is to do is to make sure the taxpayer gets a


return for the investment it makes and we get good services too.


But why not open it up to our own state owned Directly Operated Rail?


I would prefer to see private companies running it.


Timetable for the inquiries. Can you tell how long they will last?


The first inquiry should report to me by the 31st October. That is not


far away. That's the departmental one. The Richard Brown inquiry, I


asked him to report by the 31st December. They are on tight time


scales. But I hope they will be able to to report in that time.


On to rail fares. Now there has been discussion about rail fares


being capped at 1% over inflation. It was going to be at 3% over


inflation. What changed your mind? Well, we are looking, we are always


looking at the best way we can help the consumer. And that's what


changed our minds. We want to help the consumer. Those people as the


Chancellor said today, the hard- pressed workers doing the right


thing. The commuter and the long distance traveller too.


Thank you very much. We have run out of time.


Just to find out the answer to our quiz. Which famous name is David


Cameron following on Twitter? Do we know what the answer is?


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