Autumn Statement

:00:11. > :00:15.In just one hour's time, Chancellor George Osborne will deliver his

:00:15. > :00:19.long awaited Autumn Statement. We are in for more spending cuts, a

:00:19. > :00:29.squeeze on benefits and pension tax allowances, and more years of

:00:29. > :00:50.

:00:50. > :00:52.austerity, stretching all the way Good morning. Welcome to this Daily

:00:52. > :00:56.Politics Special on the Chancellor's Autumn Statement,

:00:56. > :01:01.broadcast live on BBC Two, the BBC News Channel and BBC Online. A year

:01:01. > :01:05.ago George Osborne had to admit defeat. Contrary to the original

:01:05. > :01:09.plan in his first Budget of June 2010, he was no longer able to

:01:09. > :01:12.eliminate the fiscal deficit within five years. In that game-changing

:01:12. > :01:18.Autumn Statement of 2011 we were told that austerity would continue

:01:18. > :01:21.for at least two more years to 2016/17. Today he will tell us what

:01:21. > :01:26.that extra austerity will look like in terms of tax increases and

:01:26. > :01:29.further spending cuts. We might discover that, even with the extra

:01:29. > :01:32.hard pounding, the Chancellor is still not able to meet his original

:01:32. > :01:41.fiscal rules on debt and deficit. And that even seven years of

:01:41. > :01:46.austerity won't be the end of it. The Chancellor is about to leave

:01:46. > :01:48.the Treasury for the short drive over to the House of Commons.

:01:48. > :01:58.Unlike Budget Days, there's no appearance outside Number 11 with

:01:58. > :01:59.

:01:59. > :02:01.the Treasury team for the Autumn Statement. But what he tells us

:02:01. > :02:03.today is the result of lengthy discussions and negotiations with

:02:03. > :02:07.his Lib Dem Treasury colleague, Chief Secretary Danny Alexander,

:02:07. > :02:09.and with the other two members of the Coalition Quad which sites at

:02:09. > :02:19.the top of this Coalition government, David Cameron and Nick

:02:19. > :02:20.

:02:20. > :02:23.Clegg. We'll have live coverage of the speech and Labour's response

:02:23. > :02:26.the moment the Chancellor gets to his feet at 12.30pm. Before that,

:02:26. > :02:30.at noon, we'll have Prime Minister's Questions. And to guide

:02:30. > :02:38.us throughout, we have the BBC's finest here in the studio. Plus

:02:38. > :02:42.reaction from Westminster and I'm outside Parliament talking to

:02:42. > :02:47.politicians of all shades, getting their reaction to today's mini-

:02:47. > :02:50.budget, and assessing the impact on the political landscape.

:02:50. > :02:54.I'm in Stoke-on-Trent at the Wedgwood factory, where I'll be

:02:54. > :02:58.joined by businesses from across Staffordshire and by Paul Lewis

:02:58. > :03:01.from BBC Radio 4's Moneybox programme. I'll be answering your

:03:01. > :03:09.questions and explaining what today's announcement means for your

:03:09. > :03:13.budget. I mean Canary Wharf at the heart banking and finance. I'll be

:03:13. > :03:23.speaking to market what has to find out the city's reaction to the

:03:23. > :03:24.

:03:24. > :03:29.Comprehensive coverage and the best analysis - what else would you

:03:29. > :03:35.expect from the BBC? With me is Nick Robinson, our economics editor,

:03:35. > :03:40.Stephanie Flanders, our business editor, Robert Peston. A veritable

:03:40. > :03:50.posse of BBC editors all in one room. The insurance policy will be

:03:50. > :03:51.

:03:51. > :03:56.enormous! A hat-trick of BBC editors. The Budget in March was

:03:56. > :03:59.not Mr Osborne's finest hour. He needs to do better that this autumn

:03:59. > :04:03.statement that he hasn't got a lot of good news to give us. That is an

:04:03. > :04:07.understatement. Imagine if you'd said to George Osborne in the run-

:04:07. > :04:11.up to that general election, which he believed he'd win and the

:04:11. > :04:16.Conservatives would win outright, in two years' time you will get

:04:16. > :04:20.your chance as Chancellor. He was a debt is not boring, it is going up.

:04:20. > :04:24.Debt will not fall in accordance with your target, you won't meet it.

:04:24. > :04:28.The deficit will not be cleared and the budget will not be balanced in

:04:28. > :04:32.five years, not even seven, it will eventually, you hope, if the

:04:32. > :04:36.forecasts are right, the balanced in eight. Imagine it in that same

:04:36. > :04:41.statement you were to tell him a few years ago, you will get your

:04:41. > :04:46.feet, not on budget day, but on the Autumn Statement when you don't

:04:46. > :04:48.normally do them, and you will announce more tax rises, benefit

:04:48. > :04:52.cuts and cuts to departmental budgets. He would have shaken his

:04:52. > :04:56.head in disbelief and say, I would have been driven out of town. That

:04:56. > :05:03.is what you will get, though, from George Osborne today. Austerity for

:05:03. > :05:06.longer, targets missed, taxes up, spending squeezed. Ed Balls, the

:05:06. > :05:11.Shadow Chancellor, must think Christmas has come early. Yes, he

:05:11. > :05:14.will say, I told you so, it shouldn't have been like this. But,

:05:14. > :05:18.this is the fascinating and surprising politics, everything

:05:18. > :05:25.I've described should have made George Osborne in 2009 go, it's all

:05:25. > :05:29.over, and Ed Balls open the political champagne. And yet

:05:29. > :05:32.somehow George Osborne has managed to pull off the trip so far are

:05:32. > :05:36.always saying to the country, look, it might not be going to plan but

:05:36. > :05:39.let's stick to the plan because it would be a mistake to turn back.

:05:39. > :05:44.And saying to Ed Balls, forget all that stuff you said in the past,

:05:44. > :05:47.what matters is what you are saying about the future. If the Chancellor

:05:48. > :05:51.can politically pull off that trick today, stick to the course, will

:05:51. > :05:55.Labour match our well-fed cuts, that is a bit rich politically for

:05:55. > :06:00.the Coalition. If Ed Balls can say conclusively, you were wrong, I

:06:00. > :06:04.said you were wrong, you didn't need to be wrong, Labour starts to

:06:04. > :06:08.get some traction on the issue. This Chancellor came to office two-

:06:08. > :06:14.and-a-half years ago thinking that the economy would be growing by

:06:14. > :06:20.almost 3% this year. But it looks like it is barely growing at all in

:06:20. > :06:25.2012. That has stymied his deficit- reduction plans. I've got the

:06:25. > :06:28.gritty numbers to go with the analysis. You are right, he made

:06:28. > :06:32.this kind of a calculated gamble when he came into office in 2010,

:06:32. > :06:35.that the private sector would grow fast enough in this period for him

:06:35. > :06:40.to be able to balance the books in a single parliament. It just hasn't

:06:40. > :06:43.worked out that way. If you look at what has happened to quarterly

:06:43. > :06:47.growth since 2010, you can see there was a kind of recovery

:06:47. > :06:51.happening when he took office. But as we move into 2011, it never

:06:51. > :06:57.really got momentum. It was one step forward, one step back

:06:57. > :07:01.throughout that year. As the going to 2012, we can see the period at

:07:01. > :07:07.the beginning of this year when we officially went back into recession,

:07:07. > :07:11.the so-called double-dip. You know it is formally a recession when it

:07:11. > :07:15.drops bought two quarters in a road. A lot of people think that last

:07:15. > :07:18.quarter in the spring and early summer of declining economy

:07:18. > :07:22.actually was more due to be Jubilee extra bank holiday, which made

:07:22. > :07:26.those figures look particularly bad and made the next set of figures

:07:26. > :07:30.look rather good for George Osborne. We have this very good 1% growth

:07:30. > :07:33.figure for the three months to September. But I don't think anyone

:07:33. > :07:36.thinks that growth is going to continue at anything like that

:07:36. > :07:46.weight. The Governor of the Bank of England has warned the economy

:07:46. > :07:47.

:07:47. > :07:52.might even shrink again in the last few months of this year. Triple dip.

:07:52. > :07:54.That's the growth figures, it looks miserable. What have been the

:07:54. > :07:59.consequences for the core of his economic strategy, which is to cut

:07:59. > :08:03.the amount we borrow every year? Two things have made his life

:08:04. > :08:06.difficult. It is not just the slow growth, it's the fact that the

:08:06. > :08:10.Office for budget Responsibility, which he set up and now does the

:08:10. > :08:14.forecasts, has decided that a lot of the growth we didn't get we are

:08:14. > :08:17.never going to get. It was a permanent hit to our economy. That

:08:17. > :08:21.has made things harder for him because it's made the whole that

:08:21. > :08:25.much bigger in the public finances. These are the forecasts for the

:08:25. > :08:30.deficit, the measure of the deficit he wanted to get rid off when he

:08:30. > :08:33.was writing his first Budget win 2010. The OBR told him this was

:08:33. > :08:38.what borrowing was going to look like if he did the austerity. He

:08:38. > :08:41.would bring it back into balance well before the next election,

:08:41. > :08:48.within four years, though his rules set five years. Job done before the

:08:48. > :08:51.election. That looked nice at the time. But a year ago there was that

:08:51. > :08:54.massive autumn statement, the important moment when the OBR

:08:54. > :08:58.decided that we weren't going to get back a lot of this growth, it

:08:58. > :09:02.had a much gloomier picture of the underlying deficit. By the time we

:09:02. > :09:05.got to April this year, the last figures we had in the budget, this

:09:05. > :09:09.is what the deficit picture was looking like. It meant he just

:09:09. > :09:13.wouldn't be able to bring that back into the black by 2015. It was

:09:13. > :09:17.going to be an extra two years of austerity. Will be hearing more

:09:17. > :09:21.today about how those extra cuts might be divided across the welfare

:09:21. > :09:26.budget, tax increases for the rich. But we will also be listening for

:09:26. > :09:30.what happened to that next year? Is he going to have to push the

:09:30. > :09:33.austerity into 2017 because the figures are showing him that that

:09:33. > :09:37.measure of borrowing is not going to have disappeared by then? The

:09:37. > :09:40.crucial thing is it may also show that his measure of borrowing, his

:09:40. > :09:45.structural hole, is bigger now that he thought it was when he first

:09:46. > :09:49.came into office. He might not be in power by then. It's a long time

:09:49. > :09:52.after the election. Robert, business keeps on saying, if you

:09:52. > :09:56.want growth, you've got to do more to help business. Would he do more

:09:56. > :10:03.today? One of the big themes of this government has been cutting

:10:03. > :10:08.corporation tax. It's the one area, he's been trying to cut the tax

:10:08. > :10:15.burden. I'd be very surprised if we don't hear him talk a bit more

:10:15. > :10:20.about what he's doing a to help business in that sense. The other

:10:20. > :10:26.thing which is massively important is this. It's the sustainability of

:10:26. > :10:31.the government debt. The government has set great store by its triple-A

:10:31. > :10:34.credit rating. It has spent a lot of time boasting over the last

:10:34. > :10:38.couple of years that we are one of the few developed economies left

:10:38. > :10:44.with a triple-A. Do macro of the credit rating agencies are warning

:10:44. > :10:49.that we could lose that triple-A. It's one of the things I'm going to

:10:49. > :10:54.be thinking about Haagh. Whether or not what he says today will make

:10:54. > :10:57.that inevitable. If it does happen, if we do lose the trouble away, I

:10:57. > :11:01.think that is a political problem. It's a humiliation for the

:11:01. > :11:05.government. I, on the other hand, think that most investors have

:11:05. > :11:09.broadly written off the UK's triple-A. Whether in practice it

:11:09. > :11:13.will do much to the economy, I doubt in the sense that it is

:11:13. > :11:18.unlikely that simply a notch down on that rating will make it

:11:18. > :11:22.massively more expensive for the government to borrow. But as a

:11:22. > :11:27.political event, that would be very bad. The French and Americans have

:11:27. > :11:31.got away with the reduction. That political would-be hugely

:11:31. > :11:35.embarrassing. Yes, it will be interesting to see what he does to

:11:35. > :11:38.try and persuade the markets and credit agencies. He can't say we

:11:38. > :11:43.are meeting the targets. The one thing he could say is, you think

:11:43. > :11:48.this Coalition government can't take tough decisions. Boy, we can!

:11:48. > :11:51.He tries to do some eye-watering things in order to say, Look, we've

:11:51. > :11:56.got the result, which we might not have the results but we've got the

:11:56. > :12:00.result. But to much extent it's out of his hand. The reason that the

:12:00. > :12:04.credit agencies have put us under review for downgrade is because

:12:04. > :12:08.growth has not materialised in the UK. That makes it terribly

:12:08. > :12:12.difficult for him to generate a tax revenues he needs. He will not be

:12:12. > :12:17.able to magic up additional growth in the next year or two. For those

:12:17. > :12:21.reasons, that credit rating, in the view of most investors, is gone.

:12:21. > :12:25.are at the heart of the Westminster village. But throughout today's

:12:25. > :12:33.programme we will be getting reaction from business people in

:12:33. > :12:37.Yes, they've been making Wedgwood pots here in Stoke-on-Trent since

:12:37. > :12:41.the 17 hundreds. But three years ago, but Potter's wheels almost

:12:41. > :12:45.stopped turning for good when the company went bust. They were bought

:12:45. > :12:48.out by a New York venture capitalist firm and they merged

:12:49. > :12:52.with Royal Doulton and water would crystal. To talk about the

:12:52. > :12:57.company's Biteback is Wedgwood's chief financial officer, Anthony

:12:57. > :13:02.Jones, and from the construction Centre, Julie White, from a

:13:02. > :13:06.concrete cutting company. How hard was it to get Wedgwood back on its

:13:06. > :13:10.feet? A there is no doubt these are incredibly challenging times but

:13:10. > :13:14.I'm pleased that both our company and industry are fighting back. At

:13:14. > :13:18.Wedgwood, we are delighted that in the last three years, since

:13:18. > :13:21.successfully emerging from administration, we returned to

:13:21. > :13:26.profitability in our second year and delivered sales growth.

:13:26. > :13:31.have you done it? Two things. We repositioned and re-energised the

:13:31. > :13:35.brand. We turned it from a traditional table top brand into a

:13:35. > :13:39.luxury lifestyle brand in the wider home category. As important, we

:13:39. > :13:42.focused on improving every aspect of our business. We've done that to

:13:42. > :13:45.an operation of excellence programme. It has overhauled our

:13:45. > :13:49.supply chain and all of our business processes to build a

:13:49. > :13:53.strong foundation upon which we could grow. At UCATT staff and made

:13:53. > :13:56.it a more streamlined operation? we've focused on business processes

:13:56. > :14:00.and making us more efficient. We are still at the same level of

:14:00. > :14:04.staff we were at three years ago. We've started growing in the last

:14:04. > :14:10.year. Julie, for you on the business you are in, what is

:14:10. > :14:13.holding back growth? With being a specialist contractor in the

:14:13. > :14:17.construction industry, we need the government to be pushing

:14:17. > :14:21.infrastructure. We need to see something. What sort of projects

:14:21. > :14:26.would really help you? They keep talking about HS2 and an airport in

:14:26. > :14:29.the Thames Valley, but White now we need to have already sides to get

:14:29. > :14:34.going. We can start moving the economy are very quick at a

:14:34. > :14:38.construction sector like no other sector. How difficult has it been

:14:38. > :14:41.over the last 18 months? It really is tough. We are in a flat market.

:14:41. > :14:46.They say we are coming out of recession but construction is so

:14:46. > :14:50.flat right now. But we've been getting more of a market share.

:14:50. > :14:55.We've been striking up a bigger jobs with a lot of the bigger

:14:55. > :14:58.contractors. We've been bringing on more apprentices. We have grown.

:14:58. > :15:08.Julie is concerned about in the structure projects here. You are

:15:08. > :15:10.

:15:10. > :15:15.What do you want George Osborne to do for you to break into that

:15:15. > :15:19.market? Anything that will enable us as exporters to be more

:15:19. > :15:22.competitive in what is a very challenging market place. Whilst we

:15:22. > :15:27.also welcome the recent focus on stimulating large infrastructure

:15:27. > :15:30.projects, and we are delighted to secure a �5 million grant as part

:15:31. > :15:35.of the regional growth fund, what we really need is a real package of

:15:35. > :15:40.fundamental measures to address the cost equations for UK manufacturers,

:15:40. > :15:47.essentially to make those more competitive. A couple of issues

:15:47. > :15:50.that impact on us, energy, apprenticeships, as an energy

:15:51. > :15:54.intensive manufacturer we urgently need energy market reform to create

:15:54. > :15:59.that competitive framework that doesn't penalise our industry. Over

:15:59. > :16:03.15% of our cost is represented by energy. We have suffered two

:16:03. > :16:07.consecutive 20% price increases in the last few years. With all of

:16:07. > :16:13.those kilns, you need the costs to come down. What about you? What is

:16:13. > :16:20.the biggest cost you could do with George Osborne addressing?

:16:20. > :16:24.actually ran a lot of fleets with vehicles so fuel. That would help

:16:24. > :16:28.everybody across the board. Also, helping us find the right funding

:16:28. > :16:32.for what we can achieve. Government has said there is money

:16:32. > :16:37.across the country that you can go to your local region and get. Have

:16:37. > :16:42.you managed to do that? It is hard over there. They keep talking about

:16:42. > :16:46.business bank, regional growth funding, I don't care where I get

:16:46. > :16:54.my funding from, I just need help finding it. If I am going to grow

:16:54. > :16:59.my company and employ people, I need help. Have you actually

:16:59. > :17:03.applied for it? Yes, regional growth fund. They said we were too

:17:03. > :17:07.good for it. We had to put in for more money than we needed, which

:17:07. > :17:11.made us more of a risk, and they gave it to us. So you applied for

:17:11. > :17:17.more and got more? Yes, but when we applied for the amount we needed,

:17:17. > :17:20.they said we could do it ourselves. What about finance and cashflow?

:17:20. > :17:25.Cashflow is also incredibly important to us. We were also

:17:25. > :17:28.successful in the last round of the regional growth fund. It leverage

:17:28. > :17:33.is Investment with public sector money, so we are also putting a lot

:17:33. > :17:37.of investment in on our side of the equation as well. What we need are

:17:37. > :17:46.the fundamental measures to address competitiveness in UK manufacturing.

:17:46. > :17:50.We will be here talking to Thank you. Good to hear the voices

:17:50. > :17:53.of industry. They are often very different from the way it seems in

:17:53. > :17:56.Westminster when politicians announce things. Maybe it doesn't

:17:56. > :18:00.quite happen on the ground? We will come back to that later in the

:18:00. > :18:07.programme. I am told that the Chancellor has left the Treasury.

:18:07. > :18:10.Let's see if we can see him. There is the Chancellor, coming out of

:18:10. > :18:15.one of several entrances to the Treasury. It is a huge building

:18:15. > :18:20.around a corner from where we are. There he is with Danny Alexander,

:18:20. > :18:25.the Lib Dem Chief Secretary to the Treasury, the man that the

:18:25. > :18:28.Chancellor regards as both an ally and somebody has to negotiate with.

:18:28. > :18:31.Mr Alexander is there to represent the Lib Dems. There has been debate,

:18:31. > :18:35.if the Chancellor wants more cuts on welfare, what is he going to do

:18:35. > :18:39.to make life a little bit more difficult for the rich? It's not a

:18:39. > :18:43.long drive, he will be there in a few minutes. Some would say he

:18:43. > :18:48.could have walked! Interesting, he didn't walk out of

:18:49. > :18:53.the front door, nobody can shout at him! No limousine, not the usual

:18:53. > :18:59.sleek saloon car. More functional security car. It is all trivial,

:18:59. > :19:04.but somebody has thought about it. A car for an austerity statement?

:19:04. > :19:09.He could have walked! Save the money, keep emissions down. You can

:19:10. > :19:17.get the latest on the Autumn Statement on the BBC website. You

:19:17. > :19:21.You will find in-depth coverage and discover what the measures mean for

:19:21. > :19:24.you. As well as sending your comments and questions through the

:19:24. > :19:31.BBC website, you can also take part in the conversation by following

:19:31. > :19:36.the debate on Twitter. All of our correspondents and experts will be

:19:36. > :19:40.using the hashtag that is on your screen now. You can keep tabs on

:19:40. > :19:44.their comments and insights and add your own. We get to read them as

:19:45. > :19:49.well. As Robert was saying, this government is able to borrow

:19:49. > :19:53.cheaply because the markets regard its fiscal deficit reduction plan

:19:53. > :19:57.as credible. But what would happen if it ceases to do so? It will be

:19:57. > :20:03.the city and the financial markets that will decide. Let's go to

:20:03. > :20:07.Susannah Streeter in Canary Wharf. I am at BGC Partners. It is a very

:20:07. > :20:11.busy morning. It has been very volatile markets of late, not

:20:11. > :20:16.simply due to the European debt crisis but also concerns about UK

:20:16. > :20:20.PLC, the lack of growth. Will the Chancellor come up with some new

:20:20. > :20:23.policies today or will he just put a bit of a shine on some old ones?

:20:23. > :20:28.Well, that is the question many traders will be wanting some

:20:28. > :20:35.answers too, particularly as today we have had very disappointing data

:20:35. > :20:38.coming out about the UK economy, a fall in factory orders, new orders

:20:38. > :20:44.since December 2010. Let's talk to Mike Ingram, market analyst at BGC

:20:44. > :20:48.Partners. There are concerns, particularly with the latest data

:20:48. > :20:51.coming out, about the health of the UK economy? Absolutely, very

:20:51. > :20:57.disappointing data. We are expecting there is going to be an

:20:57. > :21:01.acceleration in the service sector. But it fell further towards the

:21:01. > :21:08.danger zone. If you look at the chart, you can see that this is the

:21:08. > :21:12.50% mark that separates growth from contraction. 52%, just about

:21:12. > :21:20.keeping about her. That is the real focus, what is going to happen with

:21:20. > :21:23.growth? Robert Curtis is from HSBC. What is your focus going to be when

:21:23. > :21:27.you are listening to the statement a little bit later? What will you

:21:27. > :21:31.be interested in? I will be looking at the growth forecasts. They are

:21:31. > :21:36.so important. As we have just heard, the purchasing managers' data was

:21:36. > :21:42.very poor. Growth going forward, we know that they will revise it down,

:21:42. > :21:47.this year and next year. But will they get back to trend growth? 2.3%

:21:47. > :21:51.by 2015? Or will it go about that? If it doesn't, finances look a bit

:21:51. > :21:56.dicey. If it doesn't look like it is credible, the rating agencies

:21:56. > :22:01.might get involved. There might be a downgrade of UK plc. More from

:22:01. > :22:04.you're a little bit later. You can see the real tricky balancing act

:22:05. > :22:10.that the Chancellor has. All eyes are going to be on the bond markets,

:22:10. > :22:13.up what will happen to the UK government debt? Will be yields

:22:13. > :22:23.rise and have become more expensive for UK PLC to borrow? We will have

:22:23. > :22:28.If you have just joined us on BBC Two and the BBC News Channel, you

:22:28. > :22:37.are watching special coverage of the Autumn Statement at Westminster.

:22:37. > :22:41.Thanks very much. Since the Budget in March, we have been back into

:22:41. > :22:48.recession. We saw the figures for the last quarter getting us back on

:22:48. > :22:52.track. It has been a bumpy ride for the Chancellor and a very fragile

:22:52. > :22:59.recovery. What will he say to try to keep that going? We will discuss

:22:59. > :23:09.that with politicians from all main parties shortly. First, let's

:23:09. > :23:14.

:23:14. > :23:18.remind ourselves of the global Look at us in the streets, look at

:23:18. > :23:24.us fighting. Look at the situation. Those measures are ruining our

:23:24. > :23:27.lives. We cannot go on this way, like Greece, Italy and Spain. All

:23:27. > :23:35.of these cuts are bringing more unemployment, more and more

:23:35. > :23:45.unemployment and worse conditions. They ECB is ready to do what ever

:23:45. > :24:07.

:24:07. > :24:17.We cannot just cut our way to prosperity. If we are serious about

:24:17. > :24:17.

:24:17. > :25:01.Apology for the loss of subtitles for 43 seconds

:25:01. > :25:05.reducing the deficit, we have to There it is, the toughest of

:25:05. > :25:10.economic backdrops. Let's speak to my guests, Conservative MP Claire

:25:10. > :25:14.Perry is here. Lisa Nandy is also with us for Labour, along with

:25:14. > :25:18.Liberal Democrat Pierre Matthew Hoh shot. Let's chew the fat. Claire

:25:18. > :25:23.Perry, first of all, in terms of the politics of this, doesn't it

:25:23. > :25:28.boiled down to one word for George Osborne, credibility? I think it

:25:28. > :25:32.does. I think what it boils down to his credibility of economic policy

:25:32. > :25:37.which, against the backdrop you have just shown of enormous global

:25:38. > :25:41.instability, is delivering growth. It has delivered more than 1

:25:41. > :25:44.million private sector jobs since the election. It is delivering

:25:44. > :25:49.falling unemployment and low interest rates. It has cut

:25:49. > :25:51.government deficit by a quarter since the election. I think we are

:25:51. > :25:58.there to hear a discussion of credibility and confirmation that

:25:58. > :26:03.it is working. But the credibility issue, after the last Budget,

:26:03. > :26:06.forecasts being slashed, a double- dip recession, a lot of the

:26:07. > :26:11.Chancellor's reputation is at stake? That's right, and we have to

:26:11. > :26:15.go back to the facts, against this backdrop of global instability, the

:26:15. > :26:19.headwind of decline in Europe, is the British economy in a better

:26:19. > :26:23.place? The answer is yes, we are growing sustainably... You say that,

:26:23. > :26:30.but he's going to announce that the austerity of programme is extended

:26:30. > :26:33.again, it became 2015, 2017, then 2018. That's a tough message?

:26:33. > :26:37.Things continue to be tough, but the answer is not what the shadow

:26:37. > :26:40.chancellor will call for, more borrowing. You do not borrow your

:26:40. > :26:43.way out of a borrowing crisis. We know that the Labour Party wants to

:26:43. > :26:48.cut the deficit, they have failed to say what they will cut. Until we

:26:48. > :26:52.hear that, they will have no credibility today. Lisa Nandy, the

:26:52. > :26:56.Government says to turn back now would be a disaster. You heard that

:26:56. > :27:00.the deficit has been cut by a quarter, 1 million private sector

:27:00. > :27:02.jobs. There is progress there? don't think anybody listening to

:27:02. > :27:06.this programme around the country would recognise the picture that

:27:06. > :27:11.she paints. We have people, particularly on low and middle

:27:11. > :27:14.incomes, suffering real pain. We have the weakest growth in the G7

:27:14. > :27:19.outside of Italy. This plan simply isn't working. The Chancellor has

:27:19. > :27:24.been forced to borrow more because he cannot get the economy moving.

:27:24. > :27:27.Even on his own terms, I think we are going to hear it has failed.

:27:27. > :27:29.The global downturn, the euro crisis, the meltdown, any

:27:29. > :27:34.projections you would have had would also have been blown off

:27:34. > :27:39.course? It is why we said two things very early, firstly that you

:27:39. > :27:43.do not cut the deficit this fast. If you cut the public sector, you

:27:43. > :27:47.also put the private sector very hard and stifled growth. It is also

:27:47. > :27:50.why we have consistently called for investment. A new school buildings,

:27:50. > :27:54.one of the first things that his government did was cancel the

:27:54. > :27:59.school building programme. That would have got people off benefits

:27:59. > :28:06.and into work, benefits go down, taxing take goes up and the economy

:28:06. > :28:08.gets moving again. We are halfway through the parliament, is the

:28:08. > :28:15.basic economic Strategy Working? You are part of this coalition

:28:15. > :28:20.government. Only one word matters and it is growth. Both parties came

:28:20. > :28:23.together to clear up the problems and get the deficit down. The

:28:23. > :28:27.economy did start growing and the deficit did start going down. Now

:28:27. > :28:31.we are going backwards again. The deficit is going up, growth has

:28:31. > :28:35.stopped. All around the country, in my day job, outside London, we are

:28:36. > :28:41.definitely still in recession. We have got to do more. Then a two

:28:41. > :28:45.black holes in the economy. The banks are not lending. That is the

:28:45. > :28:49.economy that has to happen, we have to get the bank's lending. Also, we

:28:49. > :28:54.need to get houses being built. Back to you in the studio.

:28:54. > :28:57.It is coming up to midday on BBC Two and the BBC News Channel. In a

:28:57. > :29:01.moment we will be crossing live to the Commons chamber for Prime

:29:01. > :29:05.Minister's Questions. If you're just joining us, let's remind

:29:05. > :29:08.ourselves of some of the things we are expecting any Autumn Statement.

:29:08. > :29:14.We learned yesterday that current government spending would be cut

:29:14. > :29:18.even further in 2013 and 2014, by 1% and 2%. That is meant to release

:29:18. > :29:24.�5 billion to pay for capital projects, investment, including, we

:29:24. > :29:28.are told, 100 new schools. We think they would approve as many as 30

:29:28. > :29:31.new gas power stations. It is seen by some as a source of cleaner and

:29:32. > :29:35.cheaper energy for the future. You might also want to look at deep

:29:35. > :29:39.tax-breaks and planning consent for shale gas. We expect welfare to

:29:39. > :29:44.take a hit, yet again. He could freeze more benefits, preventing

:29:44. > :29:47.them from rising in line with inflation, or he could cap them in

:29:47. > :29:51.a move that might be the compromise he had to make with the Lib Dems.

:29:52. > :29:56.He also want to show that the well- off are sharing the pain. He is

:29:56. > :30:05.widely expected to cut the amount that people contribute to their

:30:05. > :30:10.pensions. The amount they can put in three tax free is 30,000 at the

:30:10. > :30:14.moment. He might cut back. There will also beat potentially a cut

:30:14. > :30:20.down on tax avoidance. What would a Budget be without a crackdown on

:30:20. > :30:24.tax avoidance? We are told that could raise as much as �10 billion.

:30:24. > :30:28.Finally, his only piece of Christmas cheer, if it is even that,

:30:29. > :30:38.he is expected to cancel the 3p rise in fuel duty planned for

:30:39. > :30:43.

:30:43. > :30:47.The latest poll had the Tories at 30 %, Labour at 44 %. A 14 point

:30:47. > :30:51.lead. The Tories at their worst bar once since they formed the

:30:51. > :30:56.Coalition government. Absolutely. What he said about the budget, what

:30:56. > :31:00.became known as the omnishambles, it absolutely led to that change in

:31:00. > :31:05.the opinion polls. It changed to produce a drop in George Osborne's

:31:05. > :31:09.ratings. Part of what he is trying to do, as well as the important

:31:09. > :31:14.economics, is get the politics right again, of at least looking

:31:14. > :31:17.like he's in charge, looking like there is a competent Chancellor,

:31:18. > :31:22.even if it is a Chancellor that people don't agree with. So when he

:31:22. > :31:27.looks as though he is actually running the Treasury, not just

:31:27. > :31:34.running around. The OBR will downgrade nearly all the forecasts.

:31:34. > :31:38.Will there be any forecasts that are good news? They Mel -- they may

:31:38. > :31:41.well be looking at the employment figures, because that has performed

:31:41. > :31:46.in the last couple of years. There's been a lot of jobs created

:31:46. > :31:50.in the private sector, and net increase of about 700,000. Little

:31:50. > :31:57.bits of good news but hard to find. Let's cross straight over to Prime

:31:57. > :32:00.Minister's Questions in the House I'm sure the whole House will want

:32:00. > :32:03.to congratulate the Duke and Duchess of Cambridge on the

:32:03. > :32:06.wonderful news they are expecting their first child. This is the

:32:06. > :32:11.perfect piece of news to end what has been an extraordinary Jubilee

:32:11. > :32:14.year. Turning to Afghanistan, the threat to global security from the

:32:14. > :32:20.Al-Qaeda presence in Afghanistan has been significantly reduced.

:32:20. > :32:23.This is in large part the result of the brave work of UK, I SADF and

:32:23. > :32:26.Afghan armed forces. We remain committed to Afghanistan for the

:32:26. > :32:30.long term and will continue to support the development of the

:32:30. > :32:34.Afghan national security forces after at 2014, through continued

:32:34. > :32:39.funding and involvement in training. Our continued contribution to

:32:39. > :32:43.Labour and the political process will underpin a state that is

:32:43. > :32:49.capable of policing its own lands. It is by this Papac Al-Qaeda would,

:32:49. > :32:54.I believe, be unable to re- establish itself in Afghanistan.

:32:54. > :33:00.The Taliban have been told when most of our troops will be leaving.

:33:00. > :33:06.They need to be told what sanctions to expect if they help out Cader to

:33:06. > :33:11.return. What would those sanctions be and would an Allied regional

:33:11. > :33:15.strategic base serve to make them credible? I think the most

:33:15. > :33:20.important sanction for everyone to bear in mind is the fact that the

:33:20. > :33:23.Afghan national security forces are already at a level of 335,000, and

:33:23. > :33:27.are increasingly capable and increasingly able to police and

:33:27. > :33:31.secure their own country. But of course we will continue to be

:33:31. > :33:34.involved, not least through the Officer Training Academy we will

:33:34. > :33:38.establish. The Americans will have a strong relationship, as we will

:33:38. > :33:42.have come up with the government of Afghanistan. We will want to help

:33:42. > :33:50.them in all the ways we can, to make sure that Afghan never again

:33:50. > :33:54.becomes a haven of international terror. Question number two, Mr

:33:54. > :34:03.Speaker. This morning I had meetings with ministerial

:34:03. > :34:08.colleagues and others. In addition to duties in this House... You

:34:08. > :34:14.would have thought I'd got used to it by now! In addition to my duties

:34:14. > :34:20.in his house, I shall have further meetings later today. I visited my

:34:20. > :34:25.critically ill constituents in hospital last week. There were only

:34:25. > :34:32.two nurses on a ward of 30 very ill patients. She has asked me to ask

:34:32. > :34:36.the Prime Minister why he has cut the number of nurses. The number of

:34:36. > :34:42.clinical staff in our NHS since this government came to power has

:34:42. > :34:45.gone up. The number of managers is significantly down. But as my right

:34:45. > :34:50.honourable friend the Health Secretary said, we are not in the

:34:50. > :34:54.slightest bit complacent. There are parts of our NHS where standards of

:34:54. > :34:58.care and standards of nursing are not acceptable. That is why we are

:34:58. > :35:04.introducing things like the friends and family test, to make sure that

:35:04. > :35:08.all hospitals, to the highest standards of the best. Following

:35:08. > :35:12.the publication of the Leveson report last week, does my right

:35:12. > :35:18.honourable friend agree that what we need is a strong, independent

:35:18. > :35:23.regulator, preferably without statutory underpinning? I think it

:35:23. > :35:25.is a moment when we should try and maximise the amount of consensus

:35:25. > :35:30.that they raised in this House and in the country about what is

:35:30. > :35:35.required. I think everyone agrees we need strong, independent

:35:35. > :35:39.regulation along the lines Leveson suggests. Everyone agrees we need

:35:39. > :35:43.million-pound fines. Everyone agrees prominent apologies,

:35:43. > :35:46.independently handled complaints. This is vital. I've been encouraged

:35:46. > :35:51.by the meetings I've had with editors of national newspapers that

:35:51. > :35:54.they will put in place that compliant regulation. I wish to

:35:54. > :35:59.continue the cross-party talks and make sure we can deliver a

:36:00. > :36:05.regulatory system which this House, this country but, above all, the

:36:05. > :36:07.victims can be proud. Let me join the Prime Minister in

:36:08. > :36:11.congratulating the Duke and Duchess of Cambridge on their very happy

:36:11. > :36:17.news. They have the best wishes not just of his house but of the whole

:36:17. > :36:20.country. The Conservative Party manifesto published in 20th April

:36:20. > :36:25.10 said, I quote, we will increase health spending in real terms every

:36:25. > :36:32.year. At the head of the statistics Authority says clearly and

:36:32. > :36:38.unequivocally that hasn't happened. What is today's excuse? This

:36:38. > :36:44.government is putting �12.6 billion extra into the NHS. Let me quote in

:36:44. > :36:51.the figures directly from the head of the Office of National

:36:51. > :36:57.Statistics. In real terms, spending in 2010 was 104.2 billion in real

:36:57. > :37:04.terms. In 2011, it was 104.3 billion. That is a real-terms

:37:04. > :37:10.increase. There will be further real-terms increases in 2012, 2013,

:37:10. > :37:13.2014, whereas there would be cuts under Labour. Let me just say to

:37:13. > :37:21.the Prime Minister that even by his standards that was the most

:37:21. > :37:25.slippery answer that could possibly happen. It is unbelievable. He has

:37:26. > :37:29.come to this House 26 times since he became Prime Minister and

:37:29. > :37:36.boasted about how he is increasing health spending every year of this

:37:36. > :37:42.Parliament. He has failed to meet the promise. It's not an argument

:37:42. > :37:46.between me and him. We have a ruling from the chair of the

:37:46. > :37:49.independent UK statistics authority who says it hasn't happened, and I

:37:49. > :37:53.should be grateful if the Department of Health could clarify

:37:53. > :37:59.the statements made. Instead of his usual bluster, why doesn't he just

:37:59. > :38:03.correct the record? It's a very simple point. The spending figures

:38:03. > :38:07.for 2010 were set by the last Labour government. Those are the

:38:07. > :38:11.figures we inherited. All the right honourable gentleman is doing is

:38:11. > :38:16.proving that his government was planning for an NHS cut. And we

:38:16. > :38:20.have taken that figure in 2010. We have increased it in 2011 and we

:38:20. > :38:24.will increase it again in every year of this Parliament. People

:38:24. > :38:30.don't have to look at manifestos for a contrast. They can look at

:38:30. > :38:35.what Labour is doing in Wales. The Labour Party is in charge in Wales

:38:35. > :38:39.and they have cut the NHS in Wales by 8%. As a result, waiting times

:38:39. > :38:47.are up, waiting lists are down, quality is down. That is what you

:38:47. > :38:50.get with Labour and the NHS. knows the reality, which is that he

:38:50. > :38:55.made a promise, there's no point in him shaking his head and getting

:38:55. > :39:00.annoyed, he made a promise that he would keep the NHS budget rising in

:39:00. > :39:05.real terms every year of the parliament. Labour's plan that we

:39:05. > :39:09.set out at the election was to increase the health budget in 2010

:39:09. > :39:14.to 2011, and he cut the budget. He knows the reality. Let me give him

:39:14. > :39:17.one more opportunity. He made a solemn promise to the British

:39:17. > :39:23.people for year-on-year increases in the health budget including in

:39:23. > :39:27.2010 to 2011. He failed to meet the promise. Why don't you just admit

:39:27. > :39:32.it? I don't know that I need to remind the right honourable

:39:32. > :39:35.gentleman be general election was after the 2010 year had begun. This

:39:35. > :39:39.was Labour's plan. What we have done is increasing every year. If

:39:39. > :39:43.he doesn't believe that, perhaps he'd listen to the Labour health

:39:43. > :39:46.secretary who gave an interview in the New Statesman when he said this

:39:46. > :39:51.about the Tories. They are not ring-fencing it, they are

:39:51. > :39:55.increasing it. Cameron has been saying it every week in the Commons.

:39:55. > :40:02.Oh, the Shadow Health Secretary wants to spend less on health and

:40:02. > :40:07.us. Question, which is true, isn't it? Yes, it's true. That's my point.

:40:07. > :40:17.Confirmed. It is official. Labour want to cut our NHS. It would never

:40:17. > :40:23.

:40:23. > :40:27.be safe with them again. No, the reality is... My right honourable

:40:27. > :40:32.friend left a rising health budget and this Prime Minister could do it.

:40:32. > :40:42.That is the reality. Let me try him on another fact which I'm sure

:40:42. > :40:46.he'll be able to give to the House. Can you tell us how big an income

:40:46. > :40:51.tax could he is giving next April to people earning over �1 million a

:40:51. > :40:57.year, as a result of the reduction in the top rate of tax? I'm not

:40:57. > :41:03.surprised he wants to get of Health... That was the biggest own-

:41:03. > :41:08.goal I think I've ever seen. On the issue of the top rate of tax, when

:41:08. > :41:13.his government put the top rate of tax up to 50p, what it actually

:41:14. > :41:18.meant was many fewer millionaires paid that operate. As a result, the

:41:18. > :41:22.tax take suffered by �7 billion. I would remind him that under this

:41:22. > :41:28.government the top rate of tax will be high in every year than any year

:41:28. > :41:36.it was when he was working in the Treasury. I will give him the

:41:36. > :41:46.answers. Next April, everyone earning over �1 million will have a

:41:46. > :41:53.tax cut of �107,000 a year. It is no good the Deputy Prime Minister

:41:53. > :41:59.shouting from a central position, he went along with it! The party of

:41:59. > :42:03.Lloyd George. He went along with it. He hasn't kept his promise on all

:42:03. > :42:08.being in it together. Let's ask him about his central promise. Two

:42:08. > :42:14.years ago he said that by 2015, I quote, we will have balanced the

:42:14. > :42:17.books. Can he explain why he is so badly failing to keep that promise?

:42:17. > :42:22.Let me give him the figures on the top rate of tax because it is

:42:22. > :42:28.important. In 2009-2010 there were 16,000 people earning more than 1

:42:28. > :42:36.million, with a tax liability of 13 billion. When the rate went up in

:42:36. > :42:42.2011, this plummeted to 6000 people. So therefore, because of his

:42:42. > :42:47.election gambit 50p, it cost the country �7 billion. When it is he

:42:47. > :42:53.going to realise setting tax rates is about raising money not about

:42:53. > :42:58.punishing success? That's what we need to understand. In terms of the

:42:58. > :43:04.deficit, we have cut the budget deficit by 20 % -- 25 %. They'll be

:43:04. > :43:09.getting an of -- update on progress in a minute. But how can you deal

:43:09. > :43:19.with a borrowing problem by pledging to borrow more? Let's just

:43:19. > :43:23.be clear about his answer on 50 P. The answer to the problem of tax

:43:23. > :43:32.avoidance is to give the people doing it a tax cut. That is the

:43:32. > :43:36.answer he gave up. Give them a big giveaway. The reality of Prime

:43:36. > :43:41.Minister couldn't get away from, the deficit is going up not down on

:43:41. > :43:46.his watch. We all remember the posters, with his airbrushed face

:43:46. > :43:53.saving, I'll cut the deficit not the NHS. The facts speak for

:43:53. > :43:57.themselves. He has cut the NHS and he is not cutting the deficit.

:43:57. > :44:04.is 100 % wrong. We are increasing spending on the NHS and cutting the

:44:04. > :44:08.deficit. We have cut the deficit by 25 %. They Iraq 1 million more

:44:08. > :44:12.private sector jobs. Businesses are starting up at a higher rate than

:44:12. > :44:14.at any time in our history. This economy is on the right track. We

:44:14. > :44:18.are equipping Britain for the global race. Unlike the party

:44:18. > :44:21.opposite, we are on the side of people who work hard and want to do

:44:21. > :44:25.the right thing. And what is his answer? More borrowing, more

:44:25. > :44:34.spending, more of the things that got us into the mess in the first

:44:34. > :44:37.place. Mr Speaker, three years ago the NHS spent �500 million on

:44:37. > :44:43.Tamiflu without having seen all the data on effectiveness or safety.

:44:43. > :44:46.Given that far from being an isolated case, it is normal for the

:44:46. > :44:50.drugs industry to have almost complete control over the evidence

:44:50. > :44:54.based upon which crucial decisions are made, will the Prime Minister

:44:54. > :45:02.ask them to make available the full clinical reports on Tamiflu, so

:45:02. > :45:05.that doctors, patients and My honourable friend has excellent

:45:05. > :45:09.work on behalf of the taxpayer through the very good questions and

:45:09. > :45:12.work that he does. He raises the issue not only because of the cost

:45:12. > :45:16.to the taxpayer, but also because of possible overstatement of

:45:16. > :45:19.benefits to patients. There does need to be more transparency in

:45:19. > :45:24.clinical trials data. We are committed to making sure that

:45:24. > :45:27.happens. The European Medicines Agency's work is supported on this.

:45:27. > :45:34.From next year there will be a legal requirement to publish

:45:34. > :45:38.reports from clinical trials. week, we learned that, despite

:45:38. > :45:44.assurances and exhaustive checks that were taking place, that the UK

:45:44. > :45:50.border agency made minimal checks to trace 124,000 asylum seekers and

:45:50. > :45:54.migrants with 150 boxes left unopened. Does this not show that

:45:54. > :46:00.the 20% cuts to the Border Agency has put at risk our efforts to

:46:00. > :46:03.secure our borders? First of all, I think this is a week to recognise

:46:03. > :46:08.the fact that we said we would cut immigration and net immigration is

:46:08. > :46:17.down by 25% under this government. I want us to do far better in terms

:46:17. > :46:21.of chasing down illegal overstayers and illegal migrants. Good work is

:46:21. > :46:25.being done there, also involving private sector organisations

:46:25. > :46:29.finding these people. Yes, we had to make reductions in the Border

:46:29. > :46:32.Agency budget, as we did because all budgets. But he should have

:46:33. > :46:36.noticed that government is about, these days, getting more for less.

:46:36. > :46:40.The Prime Minister will be aware that Portsmouth has been the home

:46:40. > :46:44.of the Royal Navy and a working dockyard for over 500 years. Given

:46:44. > :46:47.that the Business Secretary appears to have prejudged a study into the

:46:47. > :46:52.future of shipbuilding, what reassurance can the Prime Minister

:46:52. > :46:57.give me and 1500 shipbuilders that Portsmouth will remain integral to

:46:57. > :47:05.the Bill Bernard export of warships and to the base port of our Future

:47:05. > :47:09.The right honourable lady quite rightly speaks up for Portsmouth,

:47:09. > :47:12.which is and will continue to be an excellent home for the Royal Navy.

:47:12. > :47:16.Whatever decision is taken on the future of shipbuilding, the Navy

:47:16. > :47:22.will remain a major employer in the city, not least once the new

:47:22. > :47:26.carriers arrived in a few months' time. I am sure she will also

:47:26. > :47:33.welcome the announced enterprise zone on the Peninsula, which could

:47:33. > :47:37.create 1200 jobs. In June 2010, the Prime Minister said that, despite

:47:37. > :47:42.the Government's deficit reduction plan, he would ensure that there

:47:42. > :47:46.was, and I quote, no increase in child poverty. Does he still

:47:46. > :47:53.standby that assurance? The we are doing everything we can to tackle

:47:53. > :47:57.child poverty and child poverty, on some estimates, has come down. The

:47:57. > :48:02.point we specifically did is that we increased the element of the

:48:02. > :48:06.child tax credit that goes to the poorest families. In the wake of

:48:06. > :48:08.the criminal convictions of the staff who repeatedly abused people

:48:08. > :48:13.living at Winterbourne View Hospital, is it not time that those

:48:13. > :48:17.who take the fees, are employed a staff and supervise those staff are

:48:17. > :48:21.themselves held to account with a new offence of corporate neglect?

:48:21. > :48:25.Well, I listened very carefully to the point my right honourable

:48:25. > :48:30.friend makes. There have been some appalling incidents of completely

:48:30. > :48:34.unacceptable levels of care. People in those organisations are fully

:48:34. > :48:38.subject to the law, as they should be. If the law has been broken,

:48:38. > :48:45.that proper consequences should follow. Mr Speaker, one of the

:48:45. > :48:50.greatest issues in my area, in my constituency, and all of the United

:48:50. > :48:53.Kingdom, is the price of electricity. Could the Prime

:48:53. > :48:57.Minister tell the House what action he is taking to mitigate spiralling

:48:57. > :49:01.costs, especially in Northern Ireland? For consumers, we have

:49:01. > :49:04.announced our plans to make sure that companies put people on the

:49:04. > :49:07.lowest tariff, which I think is warmly welcomed across the House

:49:08. > :49:11.and the country. In terms of business, where there is an issue

:49:11. > :49:15.with energy-intensive industries, the Government has announced an

:49:15. > :49:19.intention to exempt those industries from the cost of

:49:19. > :49:23.differences and a reform. That is subject to consultation, but I

:49:23. > :49:26.think it shows that the Government is working hard to help those

:49:26. > :49:31.industries and make sure that they continue to compete and succeed in

:49:31. > :49:34.Britain. The whole house does indeed join with the Prime Minister

:49:34. > :49:39.and congratulating the Duke and Duchess of Cambridge on their

:49:39. > :49:43.excellent good news. Will the Prime Minister please confirm to the

:49:43. > :49:48.House that the Commonwealth has, at last, after many of us have been

:49:48. > :49:53.asking for this for years, at last agreed to change the rules on royal

:49:53. > :49:59.succession? Will the Prime Minister undertake to bring before the House

:49:59. > :50:02.a bill very soon so that if this baby is a girl she can follow in

:50:02. > :50:09.the footsteps of her much-loved great-grandmother and become our

:50:09. > :50:13.Queen? I am very grateful to my Honourable Friend for her question.

:50:13. > :50:16.I think I can answer positively on all the points that she made. At

:50:16. > :50:20.the Perth Commonwealth conference I chaired a meeting of the Prime

:50:20. > :50:23.Ministers of all of the different realms. We agreed we and should

:50:23. > :50:27.bring forward legislation to deal with this issue. All of the realms

:50:28. > :50:32.have agreed to do this. We will be introducing legislation into this

:50:32. > :50:36.house very shortly. It will write down in law what we agreed in 2011,

:50:36. > :50:41.that if the Duke and Duchess of Cambridge's first child is a girl,

:50:41. > :50:45.she can one day be Allah Queen. That is the key point. It's

:50:45. > :50:50.important to explain that the changes will apply to a child born

:50:50. > :50:53.after that date of the announcement last year, even if the bird is

:50:53. > :50:57.before the legislation is passed. I hope it will not take long,

:50:57. > :51:04.certainly not nine months, but just in case there would not be a

:51:04. > :51:14.I welcome the Government commitment to increase efforts to tackle tax

:51:14. > :51:15.

:51:15. > :51:21.avoidance. Starbucks has now caved in to public pressure and announced

:51:21. > :51:28.that it will review the tax arrangements in the UK. Clearly,

:51:28. > :51:35.naming and shaming works. Surely it is time to stop companies engaged

:51:35. > :51:39.in tax-avoidance from hiding behind taxpayer confidentiality? Will the

:51:39. > :51:44.Prime Minister now committed to publishing the names of those

:51:44. > :51:51.companies found by HMRC to have avoided paying their fair share of

:51:51. > :51:58.I very much welcome the right honourable lady's initiative on

:51:58. > :52:04.this and what her committee is looking at. I thank her for their

:52:04. > :52:08.warm words of support. We have recovered revenues from large

:52:08. > :52:14.businesses in the last six years, including �4 billion in the last

:52:14. > :52:17.four years from these transfer requiring systems alone, one of the

:52:17. > :52:20.issues covered in such detail in the press. I am committed to doing

:52:20. > :52:24.all we can to look at the options to make sure that companies pay

:52:24. > :52:28.taxes properly. I agree with what she said about public and even some

:52:28. > :52:33.political pressure. On some occasions, I myself have made one

:52:33. > :52:36.or two remarks that were seen as controversial. I think it's

:52:37. > :52:40.important that people feel they meet their responsibilities and pay

:52:40. > :52:46.their taxes. Will my right honourable friend do everything he

:52:46. > :52:52.can to ensure that education, health and social services work

:52:52. > :52:55.together to jointly commission services that will make sure that

:52:55. > :53:01.the much welcome reforms in the children and families bill will be

:53:01. > :53:05.workable on the ground? Honourable Friend makes a very

:53:05. > :53:07.important point. We need to get away from the idea of government or

:53:07. > :53:11.local government operating in silos with different budgets and

:53:11. > :53:14.different apartments not working together. I know that representing

:53:14. > :53:19.Swindon, as he does, Swindon Borough Council has to get huge

:53:19. > :53:24.steps in bringing agencies together and working in the area of problem

:53:24. > :53:28.families. I commend them for the work that they do. Whatever

:53:28. > :53:33.announcements the Chancellor makes on pension tax relief in 30

:53:33. > :53:37.minutes' time, is it not a fact that when this government came to

:53:37. > :53:42.power its changes to pension tax relief gave a tax cut of �1.6

:53:42. > :53:47.billion to people earning more than �150,000? I see the Chancellor has

:53:47. > :53:51.to give the Prime Minister his crib sheet. I'm afraid the Honourable

:53:51. > :53:56.Lady is wrong. We inherited a plan to raise �4 billion from the

:53:56. > :53:59.wealthiest people in terms of taxes. We raised about �4 billion. My

:53:59. > :54:04.right honourable friend will be making further announcement in a

:54:05. > :54:09.moment. The north-east of Scotland makes a major contribution to the

:54:09. > :54:12.UK economy through the offshore oil and gas industry. Will the Prime

:54:12. > :54:16.Minister commit himself to maximising investment in that

:54:16. > :54:21.industry so that we get the maximum number of jobs, energy security and

:54:21. > :54:26.taxation for the future of this country? My honourable friend quite

:54:26. > :54:30.rightly speaks are for the North Sea industry and for everyone who

:54:30. > :54:33.works in it in Scotland. I have been incredibly impressed, when I

:54:33. > :54:37.visited Aberdeen, to see the health and wealth generated by that

:54:37. > :54:41.industry. What we have done on decommissioning and new field

:54:41. > :54:44.allowances, I think, has helped brings uncertainty. We should keep

:54:44. > :54:47.working on that to make sure that we recover as much oil and gas from

:54:47. > :54:56.the North Sea as possible and make the most of this precious natural

:54:56. > :55:01.asset. 7000 fewer nurses, longer waits in accident and emergency,

:55:01. > :55:05.hospitals, according to Dr Foster, told to bursting. The Prime

:55:05. > :55:10.Minister is cutting the NHS while the deficit rises. Will he put that

:55:10. > :55:16.on his posters for the next generation? -- election? I think he

:55:16. > :55:23.was describing the situation in Wales, when Labour had put in place

:55:23. > :55:26.an 8% cut. Let me tell him what is happening in the NHS in England. We

:55:26. > :55:32.have 1350 extra clinical staff. We have taken down the number of

:55:32. > :55:35.managers by 6700. Mixed-sex accommodation is right down. The

:55:35. > :55:39.Cancer Drugs Fund is making sure many more people get access to

:55:39. > :55:43.those drugs. Waiting times are down, the number of people waiting a long

:55:43. > :55:46.time is down. The number of people waiting longer than 52 weeks to

:55:46. > :55:50.start treatment is at its lowest level since records began. He

:55:50. > :55:57.should be supporting his government for its health policy and telling

:55:57. > :56:00.his front bench to stop cutting the NHS. Does my right honourable

:56:00. > :56:06.Friend recall receiving a visit at number 10 from the pupils of market

:56:06. > :56:13.feel special school, whose school had become nicknamed shared city,

:56:13. > :56:18.there were so many demountables on aside? Does he share my delight

:56:18. > :56:22.that the County Council has assigned funds to build a new

:56:22. > :56:27.school, and may I thank him for his support on that campaign? I am

:56:27. > :56:30.grateful to my Honourable Friend for his question. I am a big

:56:30. > :56:33.supporter of Britain's schools. I think they provide a vital service

:56:33. > :56:37.for parents and children with special needs. Sometimes quite

:56:37. > :56:40.acute needs. I am proud of the fact that his government has invested in

:56:40. > :56:47.special schools and they are doing such a good job, including in his

:56:47. > :56:51.constituency. Following the Government's new funding formulas

:56:51. > :56:56.for universities this year, student numbers drop to, or student

:56:56. > :57:02.admissions dropped, by over 50,000. My own local university,

:57:02. > :57:07.Wolverhampton, despite meeting its targets, suffered a drop in

:57:07. > :57:11.allocation and has been told that there will be another cut next year.

:57:11. > :57:15.What guarantees can the Prime Minister gave that universities

:57:15. > :57:20.such as Wolverhampton will not suffer year on year reduction in

:57:20. > :57:23.student numbers as a result of this new formula? The whole point is

:57:23. > :57:27.that his government took difficult decisions to make sure that we

:57:27. > :57:30.could maintain the numbers of people going to our universities.

:57:30. > :57:35.Really, the question goes right back to the party opposite. If you

:57:35. > :57:38.don't support a proper system of student contributions, how on a

:57:38. > :57:43.earth are you going to pay for universities? We have set out our

:57:43. > :57:46.plans. They are actually working well. You don't start paying that

:57:46. > :57:51.money until you in �21,000. You don't start paying back in full

:57:51. > :57:57.until you are paying �35,000. We have a method for making sure we

:57:57. > :58:00.invest in universities, the party opposite hasn't got a clue. Niaomi

:58:00. > :58:03.House's Children's Hospice, which serves my constituency, receives

:58:03. > :58:07.just 10% of funding from the Department of Health. That is

:58:07. > :58:13.different from adult hospices, which receive rather more. This is

:58:13. > :58:15.especially difficult, as they have to pay for all of their

:58:15. > :58:19.prescriptions as private institutions. Will the Prime

:58:19. > :58:25.Minister look again at the reasons for the different treatment of

:58:25. > :58:29.children and adult hospices and meet with me and the hospice's

:58:29. > :58:34.professor to discuss the different funding levels? I'm happy to

:58:34. > :58:38.discuss the issue with my honourable friend. For many years,

:58:38. > :58:42.my family used Day Hospice in Oxford that got no state support at

:58:42. > :58:45.all. What this government has done is continue with the �10 billion

:58:45. > :58:50.annually to support children's hospices. This year, we have added

:58:50. > :58:54.an extra �720,000. What we want to put in place and what we are

:58:54. > :59:00.discussing with the providers of both adult and children's hospices

:59:00. > :59:04.is a system for eight per patient funding system that would be for

:59:04. > :59:08.all hospices. I think that would bring better logic and consistency

:59:08. > :59:14.for how we support this essential part of our health service and, I

:59:14. > :59:18.would argue, our Big Society. the Prime Minister aware that Abbas

:59:18. > :59:23.and turned over �3.3 billion in the UK this year, paid not a single

:59:23. > :59:27.penny in corporation tax, but at the same time were rewarded with a

:59:27. > :59:30.�10 million grant from the SNP's Scottish government? Doesn't this

:59:30. > :59:34.demonstrate that both our Prime Minister and First Minister stand

:59:34. > :59:38.up for the wrong people? When will this government move away from

:59:38. > :59:48.punishing the poorest in society and focus on those that abide and

:59:48. > :59:50.

:59:50. > :59:54.We want these large multinational companies to pay proper taxes here

:59:54. > :59:58.in the UK. We believe that you do that by having low tax rates, and

:59:58. > :00:02.by making sure they declare their income properly. That's why it on

:00:02. > :00:07.this specific issue of transfer payments, where some companies have

:00:07. > :00:10.been pursuing rather strange practices to pretend that their

:00:10. > :00:14.revenues aren't delivered here in the UK and run down their tax bills.

:00:14. > :00:24.In the last four years we've recovered �4 billion in tax revenue

:00:24. > :00:24.

:00:24. > :00:26.in this way. The HMRC knows there is very much more we can do.

:00:26. > :00:29.Residents in Southwark council were very excited when the Energy Bill

:00:29. > :00:33.was published last week, because it now gives a potential green light

:00:33. > :00:37.to the building of Sizewell C nuclear power station, with many

:00:37. > :00:41.jobs. Will the Prime Minister commit to continuing to invest in

:00:41. > :00:47.apprenticeships and skills training, so that Suffolk people can get the

:00:47. > :00:50.jobs that are created? She is right. The entry of the Energy Bill to

:00:50. > :00:54.Parliament means we can get out there and sell to all of the energy

:00:54. > :00:59.companies the very clear and stable framework that the UK has for

:00:59. > :01:03.offshore wind, nuclear, renewables and Pugaca. I think it's a very

:01:03. > :01:06.positive development. There's a huge amount of potential, pent-up

:01:06. > :01:09.investment. We need to make sure that that results in British jobs

:01:09. > :01:13.and apprenticeships and the government is fully committed to

:01:13. > :01:16.making that happen. The Prime Minister obviously believes that

:01:16. > :01:20.within the Leveson report there lurks something which is bonkers.

:01:20. > :01:23.Given that, how would the Prime Minister characterise the views of

:01:23. > :01:27.his Planning Minister, who has just said that over the coming months

:01:27. > :01:32.and years, tens of thousands of new homes will have to be built on

:01:32. > :01:36.greenfield sites? The point I make about, let me deal with the

:01:36. > :01:40.planning minister first, yes, we should build on brownfield land,

:01:40. > :01:42.yes, we should try and deal with the problem of empty homes. But we

:01:42. > :01:47.do have to have a frank conversation about the need to

:01:47. > :01:51.build more flats and houses, so we don't have the current situation we

:01:51. > :01:54.have where if you don't have the help from the Bank of mum and dad,

:01:54. > :01:58.people are in their mid-thirties before buying their first home. I

:01:58. > :02:02.don't think that is acceptable. All credit to the Planning Minister for

:02:02. > :02:05.trying to fix this problem. On the issue of the Leveson report, I

:02:05. > :02:08.think there is a wide degree of agreement about what a new

:02:08. > :02:12.regulatory system ought to look like. It is set out there in black

:02:12. > :02:18.and white. We need to challenge the press to introduce it. If they

:02:18. > :02:21.don't then we would have to take further action. With more men in

:02:21. > :02:27.work than ever before, with more women in work than ever before,

:02:27. > :02:31.with a deficit cut by 25 % and interest rates at historic lows,

:02:31. > :02:39.does my right honourable friend not agree with me that the opposition

:02:39. > :02:43.Danby, code for more debt, would jeopardise all those achievements?

:02:43. > :02:47.-- Plan B. We are making progress. Of course it is tough when there

:02:47. > :02:51.are so many economic head wins against us. But a million more

:02:51. > :02:55.private sector jobs, the deficit down by 25 %, a record number of

:02:55. > :03:05.businesses started up last year. Plan B stands for bankruptcy. That

:03:05. > :03:07.

:03:07. > :03:11.is what Labour would give us. universal health care system free

:03:11. > :03:16.at the point of delivery is what the overwhelming majority of the

:03:16. > :03:22.British people want. Something which I remained firmly committed

:03:22. > :03:28.to. However, there are increasing complaints about nurses who failed

:03:28. > :03:33.to show care and compassion to their patients. What exactly will

:03:33. > :03:36.the Prime Minister do about that? The honourable lady speaks for the

:03:36. > :03:40.whole house and the whole country in raising this issue. I know how

:03:40. > :03:45.painful it must have been with what she has witnessed in her own life

:03:46. > :03:48.and with her own family. I am, as she is, a massive fan of our

:03:48. > :03:52.National Health Service, an enormous fan of the factor is free

:03:52. > :03:55.at the point of use, that you don't produce a credit card when you go

:03:55. > :04:00.to hospital or start my own family has had extraordinary care through

:04:00. > :04:03.our NHS. But we don't do our NHS or nurses any favours if we don't. Out

:04:03. > :04:09.there are some very real problems in parts of our health and care

:04:09. > :04:12.systems. As a constituency MP, I see quite a few letters from people,

:04:12. > :04:16.particularly elder -- elderly people and their relatives, who are

:04:16. > :04:20.not getting the sort of care that is appropriate. I set up a forum

:04:20. > :04:24.that I have attended myself to discuss with nurses and nurse

:04:24. > :04:29.leaders these issues. There is no magic wand, but some simple steps

:04:29. > :04:32.like asking every hospital to carry out a friends and family test.

:04:32. > :04:36.Asking the patients and staff, would you be happy for your family

:04:36. > :04:42.or friends to be treated in this hospital? That can make a real

:04:42. > :04:45.difference. The idea that four elderly patients and this should be

:04:45. > :04:48.there by your bedside once an hour, checking that UCATT water,

:04:48. > :04:52.something to eat, you haven't got bedsores and are properly looked

:04:52. > :04:57.after. We shouldn't have to dictate these things. I think a proper

:04:57. > :05:02.conversation with our nurses, who are angels by the vast degree, can

:05:02. > :05:12.get this sort it out for all our relatives. Order. Statement, the

:05:12. > :05:15.

:05:15. > :05:21.Mr Speaker, it has taken time but the British economy is healing.

:05:21. > :05:28.After the biggest financial crash of our lifetimes, people know that

:05:28. > :05:33.we face deep-seated problems at home and abroad. At home we live

:05:33. > :05:39.with the decade of debt and the failure to equip Britain to compete

:05:39. > :05:45.in the modern world. And we face a multitude of problems from abroad.

:05:45. > :05:50.The US fiscal Cliff, the slowing growth in China. Above all, the

:05:50. > :05:55.eurozone are now in recession. People know that there are no quick

:05:55. > :05:59.fixes to these problems are. But they want to know that we're making

:05:59. > :06:05.progress. The message from today's Autumn Statement is that we are

:06:05. > :06:13.making progress. It is a hard road but we are getting there. Britain

:06:13. > :06:18.is on the right track. Can I ask the Chancellor to resume his seat?

:06:18. > :06:23.Let's be clear, each side should be heard with courtesy. A house does

:06:23. > :06:27.well enough by now that I will afford a very full opportunity for

:06:27. > :06:32.questioning of the Chancellor. But the more interruption, the greater

:06:32. > :06:36.the noise, the longer the session will take, and that cannot be right.

:06:36. > :06:41.I appeal to members pleased to give the Chancellor a courteous hearing,

:06:41. > :06:44.as indeed if it becomes necessary I will appeal to government

:06:44. > :06:54.backbenchers to afford a fair hearing to the Shadow Chancellor.

:06:54. > :06:54.

:06:54. > :06:59.That is how it should be. The Britain is on the right track.

:06:59. > :07:05.Turning back now would be a disaster. We have much more to do.

:07:05. > :07:12.The deficit has fallen by a quarter in just two years. And today's

:07:12. > :07:15.figures show it is forecast to continue to fall. Exports of goods

:07:15. > :07:21.to the major emerging economies, which were pitifully low, have

:07:21. > :07:28.doubled since 2009. Since this Coalition government came to office,

:07:28. > :07:32.1.2 million new jobs have been created in the private sector. In a

:07:32. > :07:37.world economy where bond investors are fleeing countries they regard

:07:37. > :07:43.as whisky, Investment is flowing into UK gilts, instead of flying

:07:43. > :07:47.from them. We have to keep it that way. Two years ago, Britain was in

:07:47. > :07:50.no danger zone. Now we are seen as one of the safe havens, able to

:07:50. > :07:59.borrow money at lower interest rates than at any time in our

:07:59. > :08:04.history. And today's forecast shows a �33 billion saving on the debt

:08:04. > :08:10.interest payments it was predicted we would have to pay two years ago.

:08:10. > :08:13.That is as much as the entire defence budget. Which is why in

:08:13. > :08:18.this autumn statement we show that his Coalition government is

:08:18. > :08:22.confronting the country's problems instead of ducking them. Today, we

:08:22. > :08:28.reaffirm our commitment to reducing the deficit, setting out the

:08:28. > :08:35.details of our spending plans for 2015-2016, and rolling forward an

:08:35. > :08:38.outline framework into 2017-2018. We show our determination to do

:08:38. > :08:43.this fairly, with further savings from bureaucracy, from the benefits

:08:43. > :08:46.bill and from the better off. We go one the equipping Britain to

:08:46. > :08:53.succeed in the global race by switching from current spending to

:08:53. > :08:56.Capital Investment in science, roads and education. We offer a new

:08:56. > :09:00.support for business and enterprise, so that they can create the jobs we

:09:00. > :09:07.need. In everything we do, we will show today we are on the side of

:09:07. > :09:12.those who want to work hard and get on. The Office for budget

:09:12. > :09:16.Responsibility has today produced its latest economic forecast. It is

:09:16. > :09:21.a measure of the constitutional achievement that it is taken for

:09:21. > :09:23.granted there are countries -- that Arab countries forecasters now

:09:24. > :09:29.produced independently of the Treasury, free from the political

:09:29. > :09:33.interference of the past. I want to thank Robert Chote, his fellow

:09:33. > :09:38.members of the Budget Responsibility Committee and all

:09:38. > :09:42.their staff at the OBR for their rigorous approach. One of the

:09:42. > :09:45.advantages of the creation of the OBR is that not only do we get

:09:45. > :09:52.independent forecasts, we also get an independent explanation of why

:09:52. > :09:56.the forecasts are as they are. If, for example, lower growth was the

:09:56. > :10:00.result of the Government's fiscal policy, they would say so. But they

:10:00. > :10:09.do not. They say the economy has performed less strongly than

:10:09. > :10:13.expected. They forecast growth this year of minus 0.1 %. These are

:10:13. > :10:17.their words, the weaker than expected growth can be more than

:10:17. > :10:21.accounted for by over-optimism regarding net trade. Because the

:10:21. > :10:26.OBR has previously assumed that the eurozone would begin to recover in

:10:26. > :10:31.the second half of this year. Instead, it has continued to

:10:31. > :10:36.contract. That has hit our exports to these markets and the net trade

:10:36. > :10:41.numbers. The eurozone crisis has also, the OBR say, spilled over

:10:41. > :10:44.into tighter credit conditions and elevated UK bank funding costs. And

:10:44. > :10:49.in their words, these problems will constrain growth for several years

:10:49. > :10:56.to come. There are domestic problems, too, that they referred

:10:56. > :11:01.to. In the report today, the contraction in 2008-2009 is now

:11:01. > :11:08.assessed to be deeper than previously thought, with GDP

:11:08. > :11:14.shrinking by a staggering 6.3 %. A lot just a shock to our economy

:11:14. > :11:17.since the Second World War. -- the largest shock. The aftermath of

:11:17. > :11:21.this shock continues to weigh on the productivity of the UK economy,

:11:21. > :11:25.with credit rationing and impaired financial markets potentially

:11:25. > :11:29.impeding the expansion of successful firms. They say the GDP

:11:29. > :11:33.growth is now expected to be lower in every year of the forecast

:11:33. > :11:37.period, as credit conditions take longer to normalise and global

:11:37. > :11:43.growth remains, in their words, weaker than previously expected. As

:11:43. > :11:53.a result, the OBR forecast that the economy will grow by 1.2 % next

:11:53. > :11:54.

:11:54. > :11:58.year, then 2% in 2014, 2.3 % in 2015, 2.7 % in 2016 and 2.8 % in

:11:58. > :12:03.2017. So the economy is recovering and it is recovering more quickly

:12:03. > :12:08.than many of our neighbours. The IMF estimates that the UK next year

:12:08. > :12:13.will grow more strongly than either France or Germany. Are credible

:12:13. > :12:18.fiscal policy allows for supported monetary policy. With the Bank of

:12:18. > :12:21.England we are directly addressing the problems of tight credit

:12:21. > :12:26.through the �70 billion funding for lending scheme. In the OBR's view

:12:26. > :12:32.today, this has reduced UK bank funding costs, lower interest rates

:12:32. > :12:35.in the real economy and will add to the level of real GDP. One area

:12:35. > :12:40.where the British economy has done much better than forecast is in

:12:40. > :12:47.creating jobs. Since early 2010, the private sector has created 1.2

:12:47. > :12:53.million new jobs, 600,000 more than was predicted. Youth unemployment

:12:53. > :12:57.has been falling. Instead of peaking at 8.7 %, the OBR now

:12:57. > :13:03.expect unemployment to peak at 8.3 %. This at a time when the

:13:03. > :13:08.unemployment rate in Spain is 26 %, in France it is almost 11 % and

:13:08. > :13:13.across the whole eurozone it is almost 12 %. Employment, already at

:13:13. > :13:17.a record high, is set to go on rising each year of the forecast.

:13:17. > :13:21.Everyone jobless in the public sector, two new jobs are expected

:13:22. > :13:26.to be created in the private sector. Britain now has a greater

:13:26. > :13:33.proportion of its people in work than either the eurozone or the

:13:33. > :13:36.United States of America. More jobs means that the impact of the weaker

:13:36. > :13:41.than forecast GDP on the public finances has been less than some

:13:41. > :13:48.might have expected. They have been three developments that have each

:13:48. > :13:51.had a significant one-off impact on the public finances. In the report

:13:51. > :13:55.today we publish clearly and transparently the impact of all

:13:55. > :13:59.three. First, there is the transfer of the Royal Mail pension fund to

:13:59. > :14:03.the public sector as part of its privatisation. This produces a one-

:14:03. > :14:08.off reduction in the deficit of �28 billion this year, but it adds to

:14:08. > :14:11.the deficit in the years after. Second, the previous government had

:14:11. > :14:16.classified Bradford & Bingley and Northern Rock Asset Management as

:14:16. > :14:21.off-balance sheet. Today it is brought on balance sheet, in line

:14:21. > :14:25.with the judgment of the Office for National Statistics. This adds

:14:25. > :14:30.around �70 billion to our national debt and reminds us of the price

:14:30. > :14:38.the country is still paying for the failures of the past. Third, the

:14:38. > :14:42.government has decided, with the agreement of the Bank of England,

:14:42. > :14:47.to transfer excess cash held in the asset purchase facility to the

:14:47. > :14:51.Exchequer. This is sensible cash management. It is in line with the

:14:51. > :14:56.approach of the Bank of Japan and the US Federal Reserve. I welcome

:14:56. > :14:59.the OBR's verdict that this is, in their words, more transparent than

:14:59. > :15:03.the previous approach. I want to make sure its impact on the figures

:15:03. > :15:09.is also completely transparent, so we have today publish the forecast

:15:09. > :15:15.for the public finances with and without the impact of the HPF

:15:15. > :15:19.decision. When we came to office, the deficit stood at 11.2 % - the

:15:19. > :15:22.highest in our peacetime history. It was forecast to be the largest

:15:22. > :15:28.of any major economy in the world. In the last two years the deficit

:15:28. > :15:33.has fallen by a quarter. Today's figures show that with or without

:15:33. > :15:39.the coupons, the deficit is forecast to fall this year as well.

:15:39. > :15:45.And cash borrowing is forecast to fall, too. Last year the deficit

:15:45. > :15:49.was 7.9 %. This year, with the coupons, it is forecast to be 6.9 %,

:15:49. > :15:53.but that excludes the impact of the Royal Mail pension assets. It is

:15:53. > :16:00.falling and will continue to fall each and every year to 6.1 % next

:16:00. > :16:10.year, 5.2 % the year after, for 0.2 % in 2015 to 2016, then 2.6 %

:16:10. > :16:11.

:16:11. > :16:16.before reaching 1.6 % in 2017-2018. In 2009-2010, the country was

:16:16. > :16:23.borrowing �159 billion. This year we are borrowing �108 billion. That

:16:23. > :16:29.is forecast to fall to 99 billion next year, 88 billion a year after

:16:29. > :16:32.then 73 billion in 2015 to 2016 and 49,000,000,030 1 billion in the two

:16:32. > :16:38.years after that. These are the central forecasts published by the

:16:38. > :16:45.Op Art, with the asset purchase facility cash transfer included.

:16:45. > :16:50.When the transfer is excluded. The deficit also false. From 7.9 % last

:16:50. > :17:00.year to 7.7 % this year, then 6.9 % next year, and also in every single

:17:00. > :17:02.

:17:02. > :17:07.year after that. Cash borrowing There are those who have been

:17:07. > :17:11.saying that the deficit was going up this year. Indeed, I think I

:17:11. > :17:15.heard it in Prime Minister's questions, but anyway you present

:17:15. > :17:20.the figures, this is not what the forecasts show today from the OBR.

:17:20. > :17:25.They say that the deficit is coming down. Coming down this year and

:17:25. > :17:29.every year of this Parliament. Yes, the deficit is still far too high

:17:29. > :17:36.for comfort. We cannot relax our efforts to make our economy safe.

:17:36. > :17:42.But Britain is heading in the right direction. The road is hard, but we

:17:42. > :17:46.are making progress. Mr Speaker, unlike the previous Government's

:17:46. > :17:50.golden rule, the regime means that the Chancellor is no longer judge

:17:50. > :17:55.and jury of their own fiscal rules and the OBR have assessed thus

:17:55. > :17:59.against those rules. First, the fiscal mandate. This is the

:17:59. > :18:03.commitment that we will balance the adjusted current budget over the

:18:03. > :18:07.coming five years. I can tell the House that the OBR have assessed we

:18:07. > :18:15.are in their words, on course, to meet our fiscal mandate. In other

:18:15. > :18:22.words, we have a better-than-50% chance of -- a better than 50%

:18:22. > :18:26.chance of relimb nating our -- eliminating our deficit. This is

:18:26. > :18:30.true with or without the transfer of coupons, so we'll meet the

:18:31. > :18:34.mandate, but the OBR assessed in their central forecast that we do

:18:34. > :18:39.not meet the supplementary objective that aims to have debt

:18:39. > :18:46.falling by 2015/16. The point at which debt starts to fall has been

:18:46. > :18:56.delayed by one year. The OBR's central forecast is that net debt

:18:56. > :18:59.

:18:59. > :19:07.will be 7 7.4% this year and 79% in 2014/15 and lower before falling to

:19:07. > :19:11.79.2% in 2016/17. And 77.3% in 2017/18. In short, the tougher

:19:11. > :19:14.economic conditions mean that while our deficit is forecast to go on

:19:14. > :19:21.falling, instead of taking three years to get our debt falling, it's

:19:21. > :19:26.going to take four. Mr Speaker, confronted with this news, some say

:19:26. > :19:32.we should abandon our deficit plan and try to borrow more. They think

:19:32. > :19:35.by borrowing more we can borrow less. That would risk higher

:19:35. > :19:39.interest rates, more debt interest payments and a complete loss of

:19:39. > :19:43.Britain's fiscal credibility. We are not taking that road to ruin.

:19:43. > :19:49.Now, then there are those who say that despite all that has happened

:19:49. > :19:53.in the world this year, we should cut even more now to hit the debt

:19:53. > :19:58.target. That would require �17 billion of extra cuts a year, and

:19:58. > :20:03.let me explain why I've decided not to take this course. We have always

:20:03. > :20:07.argued we should let the automatic stabilisers work and we have not

:20:07. > :20:10.argued we should chase down a cyclical or temporary deterioration

:20:11. > :20:15.in the economy, particularly one which our own independent body says

:20:15. > :20:20.is largely driven by problems abroad. That's also the judgment of

:20:20. > :20:23.the IMF, the OECD and the Governor of the Bank of England. Our mim is

:20:24. > :20:28.to reduce the -- aim is to reduce the structural deficit. The

:20:28. > :20:32.permanent hole that won't be repaired as the economy recovers

:20:32. > :20:37.and we are. We have cut the structural deficit by 3% in the

:20:37. > :20:43.last two years, more than any other G7 country and it is set to go on

:20:43. > :20:46.being cut at a similar rate in the years ahead. This lower deficit is

:20:46. > :20:51.delivered by our public spending plans and we are going to stick

:20:51. > :20:55.with those plans. Overall, we are not going faster or slower with

:20:55. > :20:59.those plans, but the measures I'll announce in this Autumn Statement

:21:00. > :21:05.are fiscally neutral across this Parliament. There is no net rise in

:21:05. > :21:09.taxes today. Any taxes increased are offset by taxes cut. Mr Speaker,

:21:09. > :21:12.in last year's Autumn Statement we committed the Government to

:21:12. > :21:18.maintain the same pace of consolidation for two further years

:21:18. > :21:23.beyond the end of the current spending review, in 2015 and

:21:23. > :21:30.2016/17. In this year's Autumn Statement we extend the

:21:30. > :21:35.consolidation for one further year into 2017/18. The OBR projects that

:21:35. > :21:45.as a result the share of national income spent by the State will fall

:21:45. > :21:45.

:21:45. > :21:49.from almost 48% of GDP in 2009/2010 to 39.5% by 2017/18. The document

:21:49. > :21:54.shows total managed expenditure will continue to fall and will now

:21:54. > :22:00.be 4.6 billion lower in 2017/18 than if it had been held flat in

:22:00. > :22:03.real terms. No decision to cut spending is ever easy, but those

:22:03. > :22:11.who object must explain whether instead they would have higher

:22:11. > :22:15.taxes or higher borrowing or both. I also provide further details of

:22:15. > :22:20.the done colation plans for -- consolidation plans for the last

:22:20. > :22:25.year of this Parliament. I said two years ago that the correct balance

:22:25. > :22:30.between spending and tax should be 80/20. I can confirm that by the

:22:30. > :22:35.end of 2015, the decisions we announce today mean we will almost

:22:35. > :22:40.exactly deliver on that mix. Total spending will fall in that final

:22:40. > :22:44.year of this Parliament at the same rate as through the current

:22:44. > :22:51.spending review. I can confirm today that the overall envelope for

:22:51. > :23:01.total mefrpgd expenditure will be set at -- managed expenditure will

:23:01. > :23:04.be set at �749 billion. The detail of departmental spending plans for

:23:04. > :23:09.2015/16 will be set at a spending review, which will be announced

:23:09. > :23:13.during the first half of next year. What we do today is to take steps

:23:13. > :23:18.now to help deliver the plans and to go on reducing the deficit in a

:23:18. > :23:21.way that is fair. This Government has shown that it is possible to

:23:21. > :23:29.restore sanity to the public finances while improving the

:23:29. > :23:35.quality of our public services. Crime has fallen. Hospital waiting

:23:35. > :23:38.lists are down. School standards are up. And this is with a Civil

:23:38. > :23:45.Service that is today smaller than at any time since the Second World

:23:45. > :23:50.War. We are today publishing the reports we commissioned from the

:23:50. > :23:55.Pay Review Body on market-facing pay. We commit to implement the

:23:55. > :23:58.reports. This means continuing with national pay arrangements in the

:23:59. > :24:04.NHS and Prison Service and we will not make changes to the Civil

:24:04. > :24:09.Service arrangements either. But the school teachers' review body

:24:09. > :24:14.does recommend much greater freedom to individual schools to set pay in

:24:14. > :24:20.line with performance. My right honourable friend, the Education

:24:20. > :24:25.Secretary, will set out how this will be implemented. Through the

:24:25. > :24:28.efforts of individual departments and with the support from the

:24:28. > :24:33.Minister in the Cabinet Office we have generated savings in Whitehall,

:24:33. > :24:38.but we believe there is room to do more. If all departments reduce

:24:38. > :24:41.spending on administration in line with the best-performing

:24:41. > :24:47.departments like education, then another �1 billion could be saved.

:24:47. > :24:50.If all departments made greater provision of digital services,

:24:50. > :24:56.rationalised their property estates as some have done, then a further

:24:56. > :25:00.�1 billion could be saved. Today, we are reducing departmental

:25:00. > :25:04.resource budgets by 1% next year and 2% the year after. We'll

:25:04. > :25:10.continue to seek efficiency savings in the NHS, in our schools, but

:25:10. > :25:13.that money will be recycled to protect spending in these priority

:25:13. > :25:18.areas. Local government budgets are already being held down next year

:25:18. > :25:21.to deliver the freeze in council tax, so we will not seek the

:25:22. > :25:28.further 1% saving next year, but we will look for the 2% saving the

:25:28. > :25:32.year after. While the MoD is included in the measures, they'll

:25:32. > :25:36.be given flexibility on their multi-year budget to ensure this

:25:36. > :25:39.will not lead to reductions in military man power or the core

:25:39. > :25:43.defence equipment programme over the Parliament. A mark of our

:25:43. > :25:48.values as a society, is our commitment to the world's poorest.

:25:48. > :25:52.We made a promise as a country to spend 0.7% of our gross national

:25:52. > :25:55.income on international development and I'm proud to be part of the

:25:55. > :26:02.first British government in history which will honour that commitment

:26:02. > :26:07.and honour it as promised next year. We will not, however, spend more

:26:07. > :26:12.than 0.7%, so as we did last year, we'll adjust the budget to reflect

:26:12. > :26:15.the latest economic forecasts. In the medium-term, these savings

:26:15. > :26:20.across Whitehall will help departments maintain the right

:26:20. > :26:25.route for the years that follow Spending Review and help us to pay

:26:25. > :26:27.off the deficit in the future. In the short-term, I'm switching the

:26:28. > :26:33.current savings into capital, all the money saved in the first two

:26:33. > :26:39.years will be reinvested as part of a �5 billion capital investment in

:26:39. > :26:42.the infrastructure of our country. So despite Mr Speaker, the fiscal

:26:42. > :26:46.challenges we face, public investment as a share of GDP will

:26:46. > :26:53.be higher on average in that Parliament than it was under the

:26:53. > :26:57.last Labour government. It is exactly what a government equipping

:26:57. > :27:02.Britain to compete in the modern global economy should be doing. We

:27:02. > :27:07.are committing an extra �1 billion to roads, including four major new

:27:07. > :27:11.schemes to upgrade key sections of the A1, bringing the route from

:27:11. > :27:16.London to Newcastle up to motorway standard. Linking the A5 with the

:27:16. > :27:20.M1, and the A30 in Cornwall and upgrading the M25, which will

:27:20. > :27:25.support the biggest port development in Europe and I pay

:27:25. > :27:29.tribute to my friend for Thurrock for her campaigning. We have

:27:29. > :27:32.already set out plans this autumn for a huge investment in rail and

:27:32. > :27:37.my right honourable friend the Transport Secretary will set out in

:27:37. > :27:42.the new year plans to take high speed II to the north-west and West

:27:42. > :27:44.Yorkshire. I can today confirm a �1 billion loan and a guarantee to

:27:44. > :27:48.extend the Northern Line to Battersea Power Station and support

:27:48. > :27:54.a new development on a similar scale to the Olympic Park. We are

:27:54. > :27:58.confirming funding and reforms to assist the construction of up to

:27:58. > :28:01.120,000 new homes and delivering on flood defence schemes in more

:28:01. > :28:10.cities. On top of broadband expansion for our countryside and

:28:10. > :28:19.larger cities, we are funding ult fast broadband in 12 smallers

:28:19. > :28:24.cities -- ultra fast broadband in 12 smaller cities. In addition to a

:28:24. > :28:29.third of one billion for British science, we are today announcing

:28:29. > :28:34.�600 million more for the UK's scientific research infrastructure

:28:34. > :28:38.and since improving our education system is the best investment in a

:28:38. > :28:43.competitive economy, I'm committing �270 million to fund improvements

:28:43. > :28:53.in further education colleges and �1 million to expand good schools

:28:53. > :28:55.

:28:55. > :28:58.and build 100 new free schools and academies. -- �1 billion. Scotland,

:28:58. > :29:02.Wales and Northern Ireland will get their share of further capital

:29:02. > :29:06.spending put at their disposal of their devolved administrations. On

:29:06. > :29:10.top of that �5 billion of new capital spending in infrastructure

:29:10. > :29:14.and support for business, we are ready to provide guarantees for up

:29:15. > :29:18.to �40 billion more. Today, I can announce that projects worth �10

:29:18. > :29:22.billion have already prequalified. We are offering �10 billion worth

:29:23. > :29:24.of guarantees for housing too. Our country's pension funds will launch

:29:24. > :29:29.their any independent infrastructure investment platforms

:29:29. > :29:37.next year as well. We have today published full details of the

:29:37. > :29:42.replacement for the discredited PFI since we can all see now that the

:29:42. > :29:45.public sector was sharing the risk and we'll ensure we also share in

:29:45. > :29:50.the reward. I commend my honourable friend for Hereford for his work in

:29:50. > :29:53.this area. Taken together, this is a revolution in the sources of

:29:53. > :29:57.finance for upgrading Britain's infrastructure and equipping

:29:57. > :30:01.Britain to win in the global race. Annual average infrastructure

:30:01. > :30:08.investment, which was �29 billion under the last Labour government,

:30:08. > :30:15.is now �33 billion. Savings from Whitehall are not enough by

:30:15. > :30:18.themselves to talkle our debt. We need toen -- to tackle our debt. We

:30:18. > :30:22.need to find other ways. Those with the most should contribute the most

:30:22. > :30:25.and they will, but fairness is also about being fair to the person who

:30:25. > :30:35.leaves home every morning to go out to work and sees their neighbour

:30:35. > :30:42.

:30:42. > :30:46.still asleep living a life on Let me start with tax. The vast

:30:46. > :30:50.majority of people, which will otherwise, pay their taxes and make

:30:50. > :30:52.their contribution. But there are still too many who illegally evade

:30:53. > :30:56.their taxes or use aggressive tax avoidance in order not to pay their

:30:56. > :31:02.fair share. This government has taken more action against these

:31:02. > :31:07.people than any before it. Prosecutions for tax evasion are up

:31:07. > :31:11.80 %. We will collect �7 billion more a year in tax that is due that

:31:11. > :31:15.the last government. We are increasing by around 2500 the

:31:15. > :31:19.number of tax inspectors going after the raiders and of August.

:31:19. > :31:23.Next year, we will introduce the first ever General ante abuse role,

:31:24. > :31:27.something that never happened in 13 years before we came to office.

:31:27. > :31:31.Next year, for the first time in our history, money will be flowing

:31:31. > :31:36.from bank accounts in Switzerland to Britain instead of the other way

:31:36. > :31:40.round. Because of the treaty we've signed, we expect to receive �5

:31:41. > :31:46.billion over the next six years from the undisclosed Swiss bank

:31:46. > :31:52.accounts of UK residents. It is the largest tax evasion settlement in

:31:52. > :31:55.British history. We are taking further steps today. Hundreds of

:31:55. > :32:00.millions of pounds of tax loopholes are being closed with immediate

:32:00. > :32:05.effect. We are investigating a abusive use of partnerships. HMRC

:32:05. > :32:10.will not have its budget cut over the next two years, and like other

:32:10. > :32:14.departments. Instead, we will spend �77 million more on fighting tax

:32:14. > :32:17.avoidance, and not just for wealthy individuals. We want the most

:32:17. > :32:22.competitive corporate tax system of any major economy in the world, but

:32:22. > :32:25.we expect those corporate taxes to be paid. So today we are confirming

:32:25. > :32:29.we will put more resources into ensuring multinational companies

:32:29. > :32:34.pay their proper share of taxes. We are leading the international

:32:34. > :32:38.efforts to prevent artificial transfers of profits to tax havens

:32:38. > :32:42.with Germany at now France. We have asked the OECD to take this work

:32:42. > :32:47.forward. We all make it an important priority of our G8

:32:47. > :32:50.presidency next year. In total, we expect the action we announced

:32:50. > :32:54.today will increase the amount of money collected from tax evasion

:32:54. > :32:58.and avoidance by a further �2 billion a year. Fair and necessary

:32:58. > :33:03.as this is, it is not enough by itself to close the deficit. We

:33:03. > :33:08.need to ask more from... Punitive tax rates do nothing to raise money

:33:08. > :33:11.and simply discourage enterprise and investment in Britain. Other

:33:11. > :33:15.countries on our doorstep of trying that approach and are paying the

:33:15. > :33:19.price. We are not going to make that mistake. HMRC data reveals

:33:20. > :33:25.that in the first year of the 50 % tax rate, tax revenues from the

:33:25. > :33:29.rich fell by �7 billion. The number of people declaring incomes of over

:33:29. > :33:34.�1 million fell by half. A tax raid on the rich that raises almost no

:33:34. > :33:38.money is a tax Con. We are going to have a top rate of tax that

:33:38. > :33:44.supports enterprise and we are going to raise more money from the

:33:44. > :33:48.bridge. Here is a simple fact. The richest will pay a greater share of

:33:48. > :33:54.income tax revenues in every single year of his Coalition government

:33:54. > :34:00.than in any one of the 13 years of the last Labour government. But we

:34:00. > :34:10.need to make sure the deficit reduction remains fair. We need to

:34:10. > :34:13.raise more. We've already... Raised stamp duty on multi-million-pound

:34:13. > :34:18.homes and next week publish the legislation to stop the richest

:34:18. > :34:22.avoiding stamp duty. But we won't introduce a new tax on property.

:34:22. > :34:27.This would require a revaluation of hundreds of thousands of homes. In

:34:27. > :34:30.my view it would be intrusive, expensive to Levy, raised a little

:34:30. > :34:35.and the temptation for future Chancellors to bring ever more

:34:35. > :34:42.homes into its net would be irresistible, so we are not having

:34:42. > :34:49.a new homes tax. We have already reduced the amount of tax relief we

:34:49. > :34:55.give to the very largest pension pots. From 2014-15, I will further

:34:55. > :35:00.reduce the lifetime allowance from �1.5 million to �1.25 million, and

:35:00. > :35:03.reduce the annual allowance from �50,000 to �40,000. This will

:35:03. > :35:09.reduce the cost of tax relief to the public purse by an extra

:35:09. > :35:13.billion pounds a year by 2016-17. 98 % of people currently

:35:13. > :35:19.approaching retirement have a pension pot worth less than 1.25

:35:19. > :35:22.million. Indeed, the medium pot for such people is just �55,000. 99 %

:35:22. > :35:28.of pension savers make annual contributions to their pensions of

:35:28. > :35:32.less than �40,000. The average contribution to a pension is just

:35:32. > :35:38.�6,000 a year. I know these tax measures will not be welcomed by

:35:38. > :35:42.all. Ways to reduce the deficit never are. But we must demonstrate

:35:42. > :35:52.that we are all in this together and when you look for savings, I

:35:52. > :35:52.

:35:52. > :35:57.think it's fair to look at the tax relief we give to the top 1%. I

:35:57. > :36:02.want to help the great majority of savers. That is why we are

:36:02. > :36:08.introducing a generous, new, single t a pension, so that people know it

:36:08. > :36:13.always pays to save. That is why I will upgrade next April the up for

:36:13. > :36:21.all eyes are limited to �11,520. We will consult on allowing investment

:36:21. > :36:28.in SME equity markets, to be held directly and stocks and shared --

:36:28. > :36:31.shares icesave macros. I've also encouraged the -- listened to

:36:31. > :36:37.pensioners about draw down limits. The government will raise the cat

:36:37. > :36:41.brought down limit from 100 % to 120 %, giving pensioners that these

:36:41. > :36:45.arrangements the option of increasing their incomes. It is

:36:46. > :36:49.also fair to look at the way we up rate benefits and some tax

:36:50. > :36:54.threshold. The basic state pension has this year gone up by the

:36:54. > :36:59.largest cash amount in its history. Next year, thanks to our triple

:36:59. > :37:04.lock, I confirm it will rise by 2.5 %, higher than either earnings or

:37:04. > :37:08.inflation. That takes the level of the basic state pension to �110.15

:37:08. > :37:13.a week. When it comes to working age welfare, we've already made

:37:13. > :37:18.substantial reforms. �18 billion a year has been cut from the welfare

:37:18. > :37:21.bill. Benefits of being capped for the first time. So families out of

:37:21. > :37:28.work will not get more than the average family gets for being in

:37:28. > :37:32.work. We have increased efforts to fight welfare fraud. Today the

:37:32. > :37:36.announced further measures and cheques to save over �1 billion in

:37:36. > :37:42.the next four years, by reducing fraud, error and debt in the tax

:37:42. > :37:44.credit system. Next year, my right honourable friend the work and

:37:44. > :37:49.pensions Secretary will introduce the new Universal credit, so that

:37:49. > :37:53.it always pays to work. And today we set the key parameters, such as

:37:54. > :37:56.the levels of earnings disregards. But we have to acknowledge that

:37:56. > :38:01.over the last five years, those on out-of-work benefits have seen

:38:01. > :38:04.their incomes rise twice as fast as those in work. With pay restraint

:38:04. > :38:09.in businesses and government, average earnings have risen by

:38:09. > :38:14.around 10 % since 2007. Out-of-work benefits have gone up by around 20

:38:14. > :38:19.%. That is not fair to working people who pay the taxes that fund

:38:19. > :38:24.them. Those working in the public services who have seen their basic

:38:24. > :38:28.pay frozen will now see it rise by an average of 1%. A similar

:38:28. > :38:31.approach of a 1% rise should apply to those in receipt of benefits.

:38:31. > :38:37.That is fair and will ensure that we have a welfare system that

:38:37. > :38:40.Britain can afford. We will support the vulnerable, so carer's benefit

:38:40. > :38:45.and disability benefits, including disability element of tax credits,

:38:45. > :38:48.will be increased in line with inflation. We are extending support

:38:48. > :38:52.for mortgage interest for two more years. But most working-age

:38:52. > :38:56.benefits, including jobseeker's Allowance, employment and support

:38:56. > :39:02.allowance and income support will be operated by 1% for the next

:39:02. > :39:06.three years. We were also up rate elements of the child tax credit

:39:06. > :39:11.and the working tax credits by 1% for the next three years. Although

:39:11. > :39:15.previously planned freezers will go ahead. Local housing allowance

:39:15. > :39:19.rates that are essential component of housing benefit will be rated in

:39:19. > :39:24.line with the existing policy next April. Then we will cap increases

:39:24. > :39:27.of 1% in the two years after that. For this measure, 30 % of the

:39:28. > :39:31.savings will be used to exempt from the new cap. Those areas that the

:39:31. > :39:38.highest rent increases. The earnings disregard for Universal

:39:38. > :39:46.credit will also be up rated by 1% for two years from 20th April 14.

:39:46. > :39:51.Child benefit is currently frozen. It, too, will rise by 1% but to --

:39:51. > :39:57.for two years from April, 2014. Doing this means people get more

:39:57. > :40:01.cash for less than the rate of inflation. Taken together, we will

:40:01. > :40:08.save �3.7 billion in 2015-16, and deliver a permanent savings each

:40:08. > :40:11.and every year from our country's welfare bill. To bring all these

:40:11. > :40:16.decisions and many benefits for many years together, we will

:40:16. > :40:20.introduce into Parliament primary legislation, the welfare up rating

:40:20. > :40:30.Bill, and I hope it can then support from both sides of the

:40:30. > :40:32.

:40:32. > :40:38.We will apply a similar approach to the upper rating of some of our tax

:40:38. > :40:46.thresholds, as we have to welfare. The higher rate threshold will be

:40:46. > :40:54.increased by 1% in the tax year's 2014-15, and 2015-16. So the income

:40:54. > :41:00.at which people start paying the 40 % rate will go up from �41,450, to

:41:00. > :41:05.afford �1,865, then to �42,285. I want to be completely clear with

:41:05. > :41:08.people. This is an increase, in fact, it's the first cash increase

:41:08. > :41:13.in the higher rate threshold in this Parliament, but it's not an

:41:13. > :41:18.increase in line with inflation. So it raises �1 billion of revenue by

:41:18. > :41:23.2015-16. Again, there are no easy ways to reduce the deficit. But

:41:23. > :41:26.from year to year, no one would pay a penny more in income tax. In the

:41:26. > :41:32.same way the capital gains tax annual exempt amount will be

:41:32. > :41:37.increased by 1% up at the same period, reaching �11,100. The

:41:37. > :41:44.inheritance tax nil band rate, which has been frozen since 2009 at

:41:44. > :41:47.�325,000, will be increased by 1% to �329,000. Taken with the welfare

:41:47. > :41:52.up rating decisions, this is a fairer approach to paying off

:41:52. > :41:56.Britain's debts. But dealing with those debts is only one part of

:41:56. > :42:01.making Britain fit to compete in the global race. Countries like

:42:01. > :42:05.ours are risk being outsmarted, outwork and out competed by new,

:42:05. > :42:09.emerging economies. We asked Michael Heseltine to report on how

:42:09. > :42:13.to make the government work better for business and enterprise. It's

:42:13. > :42:17.fair to say that his answer has captured the imagination of all

:42:17. > :42:21.political parties. We will respond formally in the spring. But here is

:42:21. > :42:24.what we will do now. First, government spending should be

:42:24. > :42:29.aligned with the priorities of the local business community. We will

:42:29. > :42:33.provide new money to support local enterprise partnerships. From April,

:42:33. > :42:37.2015, the government will place more of the funding that currently

:42:37. > :42:42.goes to local transport, housing, skills and getting people back to

:42:42. > :42:46.work into a single pot that can be bid for. Details will be set out in

:42:46. > :42:49.the Spending Review. Before then, we are putting more money into the

:42:49. > :42:53.Regional Growth Fund, which is helping businesses create half a

:42:53. > :42:57.million new jobs. Second, as Lord Heseltine also recommends, we are

:42:57. > :43:01.going to support industries and technologies where Britain has a

:43:01. > :43:04.clear advantage. With the Business Secretary's support, we will extend

:43:05. > :43:09.our global lead on aerospace and support the supply chains of

:43:09. > :43:13.Advanced Manufacturing. We are also taking big steps today to support

:43:13. > :43:18.British companies to export to new, emerging markets in Asia, Africa

:43:18. > :43:23.and the Americas. I am increasing the funding for UK t i by over 25 %

:43:23. > :43:26.a year, so that it can help small firms build the capacity of

:43:26. > :43:29.overseas British Chambers and maintain our country's position as

:43:30. > :43:35.the number one destination in Europe for foreign investment. We

:43:35. > :43:39.are launching a new �1.5 billion export finance facility to support

:43:39. > :43:44.the purchase of British exports. Third, we are addressing the credit

:43:44. > :43:48.problems for companies. We are creating a new business bank. Today

:43:48. > :43:51.we confirmed we are providing it with �1 billion of extra capital,

:43:51. > :43:56.which will leave her in private lending to help small and medium-

:43:56. > :44:02.sized firms and bring together existing schemes. Fourth, we are

:44:02. > :44:06.going to cut business taxes still further. The temporary doubling of

:44:06. > :44:10.the small business rate relief scheme helps over 500,000 small

:44:10. > :44:15.firms, or with a 350,000 firms pay no rates at all. The last

:44:15. > :44:21.government were going to ended in 20th September 11. We've already

:44:21. > :44:26.extended to next April. Today I extended to buy a further year to

:44:26. > :44:29.April, 2014. We also confirmed today the tax relief for our

:44:29. > :44:32.employer -- employee shareholders scheme. The Energy Bill provides

:44:32. > :44:35.certainty and support for billions of pounds of investment in

:44:35. > :44:41.renewable energy. Today we publish our gas strategy, to ensure we make

:44:41. > :44:44.the best use of lower cost gas power, including new sources of gas

:44:44. > :44:47.and that the land. We are consulting a new tax incentives for

:44:47. > :44:51.shale gas and announcing the creation of a single office so that

:44:51. > :44:55.regulation is safe but simple. We don't want British families and

:44:55. > :45:02.businesses to be left behind as gas prices tumble on the other side of

:45:02. > :45:06.the Atlantic. We are going to help our construction industry, too. The

:45:06. > :45:12.last government abolished empty property relief. As excellent work

:45:12. > :45:17.done by my honourable friends show, this has blighted development in

:45:17. > :45:20.our towns and cities. The proposal from my colleagues that we create a

:45:20. > :45:26.long grace period before new be completed buildings have to pay him

:45:26. > :45:30.to property rates is a sensible one. We will introduce it next October.

:45:30. > :45:36.The previous government also plans to increase the small companies tax

:45:36. > :45:41.rate to 22 %. We have cut it to 20 %. But I'd like to help small and

:45:41. > :45:46.medium-sized firms more. I want to thank my honourable friends for

:45:46. > :45:49.Burnley and Pendle for their thoughts in this area. Starting on

:45:49. > :45:54.1st January, and for the next two years, I am therefore going to

:45:54. > :46:02.increase by tenfold the annual investment allowance in plant and

:46:02. > :46:08.machinery. Instead of �25,000 worth of investment being eligible for

:46:08. > :46:12.100 % relief, �250,000 of investment will now qualify. This

:46:12. > :46:19.capital allowance will cover the total annual investment undertaken

:46:19. > :46:23.by 99 % of all the business in Britain. It is a huge boost to all

:46:23. > :46:32.those who run a business, who aspire to grow, expand and create

:46:32. > :46:38.I also want Britain to have the most competitive business tax

:46:38. > :46:44.regime of any major economy in the world. I have already cut the main

:46:44. > :46:47.rate of corporation tax from 28% to 24% and it's set to fall further to

:46:47. > :46:51.22%. This has helped British companies and frankly left other

:46:51. > :46:55.countries scrambling to keep up. They will have to try harder for I

:46:55. > :47:04.am today cutting the main rate of corporation tax again by a further

:47:04. > :47:08.1%. In America, the rate is 40%. In France, it is 33%. In Germany, it

:47:08. > :47:14.is 29%. From April 2014, the corporation tax rate in Britain

:47:14. > :47:18.will stand at 21%. This is the lowest rate of any major western

:47:18. > :47:25.economy. It is an advert for our country that says, "Come here,

:47:25. > :47:29.invest here, create jobs here. Britain is open for business." Mr

:47:29. > :47:33.Speaker, we will not pass the benefit of this reduced rate on to

:47:34. > :47:40.banks and to ensure we meet our revenue commitments, the bank levy

:47:40. > :47:45.rate will be increased to 0.130% next year. Making banks contribute

:47:45. > :47:50.more is part of our major reforms to the banking system. We also have

:47:50. > :47:54.to be on the side of those who want to work hard and get on. I know how

:47:54. > :47:58.difficult many families have found the cost of living. In dealing with

:47:58. > :48:04.the deficit, we have had to save money, but whenever we have been

:48:04. > :48:07.able to help, we have. We have helped councils freeze council tax

:48:07. > :48:13.for two years running. And we are helping them to freeze it again

:48:13. > :48:17.next year. We have put a cap on rail fare rises for the next two

:48:17. > :48:21.years, so commuters are not punished for travelling to work and

:48:21. > :48:25.we are forcing energy companies to move families on to the lowest

:48:25. > :48:29.tariffs for bills. And we have helped motorists with the cost of

:48:29. > :48:34.petrol. We have cancelled the last Government's escalator and I'm

:48:34. > :48:37.moving inflation-only rises to September. Fuel is 10 pence per

:48:37. > :48:45.litre cheaper than it would have been if we had stuck to Labour's

:48:46. > :48:49.tax plans. I want to keep it that way. As I note to my colleagues,

:48:49. > :48:55.like my honourable friend to Harlow. There is a rise planned for this

:48:55. > :49:01.January. Now, some have suggested that we delay that three pence rise

:49:02. > :49:05.until April. I disagree. I suggest we can is tell altogether. There

:49:05. > :49:08.will be no three pence fuel tax rise this January. That is real

:49:08. > :49:18.help, with the cost of living for families and they fill up their

:49:18. > :49:23.

:49:23. > :49:28.cars across the country. And it will help everyone. We will have

:49:28. > :49:33.had no increases for two-and-a-half years. In fact, they've been cut.

:49:33. > :49:38.We have helped working people by increasing the they can earn before

:49:38. > :49:46.paying tax. When this Government came to office the personal tax

:49:46. > :49:50.allowance was �6 account 274. It will rise to �9,205. 24 million

:49:50. > :49:54.taxpayers have seen their income tax cut. Two million of the lowest-

:49:54. > :50:00.paid have been taken out of tax altogether. And because of the

:50:00. > :50:05.difficult decisions we have taken today, we can go even further. From

:50:05. > :50:11.next April the personal allowance will rise by �235. That means a

:50:11. > :50:21.total increase next year of �1,335. The highest cash increase ever.

:50:21. > :50:26.People will be able to earn �9,440 before paying any income tax at all.

:50:26. > :50:32.This is a direct boost to the incomes of people working hard to

:50:32. > :50:36.provide for their families. It's �47 extra in cash next year. In

:50:36. > :50:42.total �267 cash increase next year. People working full-time on the

:50:42. > :50:52.minute numb wage will have seen their bill cut in half -- minute

:50:52. > :50:53.

:50:53. > :51:01.numb wage will have seen their -- minimum wage will have seen their

:51:01. > :51:05.tax rate cut in half. In real terms a typical higher-rate taxpayer will

:51:05. > :51:10.be better off next year and no worse off in total by the year

:51:10. > :51:15.after. Mr Speaker, today, we have helped working people. But I do not

:51:15. > :51:19.want to distract from the tough, economic situation we face in the

:51:19. > :51:23.world. The public know there are no miracle cures, just the hard work

:51:23. > :51:29.of dealing with our deficit and ensuring Britain wins the global

:51:29. > :51:34.race. That work is under way. The deficit is down. Borrowing is down.

:51:34. > :51:37.Jobs are being created. It is a hard road, but we are making

:51:37. > :51:47.progress. And everything we do, we are helping those who want to work

:51:47. > :51:50.

:51:51. > :51:58.hard and get on. Thank you. Chancellor sits down. We'll hear

:51:58. > :52:01.now from the Shadow Chancellor, Ed Balls. We can see and people can

:52:01. > :52:10.feel in the country, the true scale of this Government's economic

:52:10. > :52:13.failure. Our economy this year is contracting. The Chancellor has

:52:13. > :52:21.confirmed Government borrowing is revised up this year, next year and

:52:21. > :52:31.every year. The national deficit is not rising - is rising, it's not

:52:31. > :52:32.

:52:32. > :52:35.falling. I'll say it again, our economy is contracting this year.

:52:35. > :52:40.Government borrowing and the deficit is revised up this year,

:52:40. > :52:47.next year and every year and the national debt is rising. It is not

:52:47. > :52:51.falling. It is people already struggling to make ends meet,

:52:51. > :52:58.middle and lower-income families and pensioners who are paying the

:52:58. > :53:01.price, while millionaires get a tax cut, a �3 billion welfare hand out

:53:01. > :53:05.to the people who need it -- handout to the people who need it

:53:06. > :53:15.least. Let me spell out the full facts to the House. They should

:53:16. > :53:17.

:53:17. > :53:23.listen. They might learn something, Mr Speaker! In June 2010 the Office

:53:23. > :53:27.for Budget Responsibility forecast our economy to grow by 2.8% this

:53:27. > :53:33.year. In March of this year, they said there would still be growth,

:53:33. > :53:37.but revised it down to just 0.8%. Today, we have learned the

:53:37. > :53:40.Chancellor has not even managed that. Growth has not only been

:53:40. > :53:44.downgraded yet again, but he's confirmed, following the double-dip

:53:44. > :53:51.recession, that our economy is now forecast to actually contract

:53:51. > :53:56.inside this year. That's by 0.1%. Let me remind the House what the

:53:56. > :53:59.Chancellor promised over two years ago in the June Budget. He said,

:53:59. > :54:05."We have the provided the foundations for economic recovery

:54:05. > :54:09.in all parts of our nation." He said, "We have set the course for a

:54:09. > :54:14.balanced budget and falling national debt by the end of this

:54:14. > :54:19.Parliament." He said, "The richest paying the most, the most

:54:19. > :54:23.vulnerable protected." That was the promise, Mr Speaker. But far from

:54:23. > :54:32.securing our recovery, our economy has flat-lined since Spending

:54:32. > :54:39.Review in 2010. Over the last two years, the Chancellor was expecting

:54:39. > :54:46.4.6% growth. He's actually achieved 0.6% growth. Compared to 1.7 in

:54:46. > :54:53.France, to 3.6 in Germany and to 4.1% in America, falling behind in

:54:53. > :54:56.the global race, Mr Speaker! What we learn today is that growth has

:54:56. > :55:02.been downgraded this year, next year, the year after, the year

:55:02. > :55:06.after and the year after that too. The longest double-dip recession

:55:06. > :55:14.since the Second World War now followed by the slowest recovery in

:55:14. > :55:18.the last 100 years. The result of this stagnation, rising

:55:18. > :55:23.unemployment, long-term damage to our economy, falling behind now as

:55:23. > :55:28.other countries move ahead, is that the Chancellor's fiscal strategy

:55:28. > :55:32.has been completely derailed. The defining purpose of the Government,

:55:32. > :55:38.the cornerstone of the coalition, the one test they set themselves to

:55:38. > :55:45.balance the books and get the debt falling by 2015 is now in tatters.

:55:45. > :55:51.What we have learnt today is that borrowing has -- is that Government

:55:51. > :55:57.borrowing has been revised up this year, next year and the year after

:55:57. > :56:03.that. We now know that compared to the Chancellor's forecast two years

:56:03. > :56:10.ago borrowing is now forecast to be well above the �150 billion of

:56:10. > :56:18.extra borrowing that he was forecasting in March. And they

:56:18. > :56:24.should listen to this - the Chancellor has confirmed that the

:56:24. > :56:34.Prime Minister's pledge to balance the books in 2015 is not met in

:56:34. > :56:39.2015. It's not met in 1016 and it's not met in 2017 either. -- 2016 and

:56:39. > :56:43.it's not met in 2017 either. The fact is there's pour borrowing, Mr

:56:43. > :56:49.Speaker. We will look in detail when we get the figures, because it

:56:49. > :56:52.was very disappointing. The Chancellor failed to give us the

:56:52. > :56:57.cash figures adjusted for borrowing this year, next year and the year

:56:57. > :57:01.after. The unusual thing is that just a few weeks ago the

:57:01. > :57:05.independent forecasters were saying that borrowing would be �6 billion

:57:05. > :57:09.higher this year. We will examine the detail of those figures to see

:57:09. > :57:18.whether there has been any dodgy dealing. We will find out in the

:57:18. > :57:21.coming hours. I don't know. I don't know, because I've not seen the

:57:21. > :57:26.figures, but what I do know is there's more borrowing this year

:57:26. > :57:30.and next year and pour borrowing the year after and the result of

:57:30. > :57:34.that -- more borrowing the year after and the result is that the

:57:34. > :57:41.OBR now shows more borrowing and higher deficits means higher

:57:41. > :57:45.national debt, Mr Speaker. The national debt - the Prime Minister

:57:45. > :57:49.should listen to this. It might be rather shocking to find out. The

:57:49. > :57:53.national debt will be higher at the end of this Parliament than the

:57:53. > :57:57.level inherited. It's going to be higher at the end of this

:57:57. > :58:03.Parliament than forecasted in the plans he inherited and it's no

:58:03. > :58:10.longer falling as a per centage of GDP in 2015. It's rising in 2015

:58:10. > :58:14.and it's rising again in 2016 too, breaking the fiscal rule for

:58:14. > :58:24.falling debt upon which this Chancellor said his entire

:58:24. > :58:31.credibility depended. In last year's Budget, the Chancellor said,

:58:31. > :58:40."Our deficit reduction plan is on course. We will not waiver." On

:58:40. > :58:49.course? Not waivering? He's not waivering, he's drowning. Now, the

:58:49. > :58:53.Chancellor is trying to claim his failure on growth and his failure

:58:53. > :59:01.on borrowing and the debt breaking his own fiscal rule, he's trying to

:59:02. > :59:11.claim it's not his fault. That no- one could have foreseen it. What

:59:11. > :59:19.nonsense, Mr Speaker. Because, he was warned that a tough medium-term

:59:19. > :59:22.plan to cut the deficit, tax rises, spending cuts, could only work if

:59:22. > :59:27.the Government first put in place a plan for jobs and growth. He was

:59:27. > :59:30.warned it was a huge gamble to go too far, too fast and rely on

:59:30. > :59:35.exports to bail him out. He was warned there was a hurricane

:59:35. > :59:39.brewing in the eurozone and that was not the time to rip out the

:59:39. > :59:43.fundations of the house built here in Britain. Once again, the

:59:43. > :59:48.Chancellor is trying to blame high oil prices and the eurozone crisis

:59:48. > :59:56.for negative growth this year. But it affected all countries, Mr

:59:56. > :00:02.Speaker. It affected all countries. Why, over the last -- THE SPEAKER:

:00:02. > :00:07.Members must calm themselves. Mr Biles, I thought you were normally

:00:07. > :00:15.a model of restraint and civility. Good heavens man, I don't know

:00:15. > :00:25.what's come over you. Calm yourself. Take a pill if necessary. Keep calm.

:00:25. > :00:27.

:00:27. > :00:31.They don't like it, do they? They don't like it at all. Once again,

:00:31. > :00:37.the Chancellor is trying to blame high oil prices and the euros and

:00:37. > :00:42.crazes. Let me ask him why, over the past two years, has Britain

:00:43. > :00:48.grown by just one 10th of the growth rates of the G20 countries?

:00:48. > :00:53.And why is growth here in Britain even slower than in the eurozone?

:00:53. > :00:58.Mr Speaker, it is not the rest of the world's fault, it is his

:00:58. > :01:02.policies that have failed. He claims that rising VAT, alongside

:01:02. > :01:07.accelerated spending cuts, would boost confidence, secure Recovery

:01:07. > :01:11.and get the deficit down. But they depress confidence, choked off the

:01:12. > :01:17.recovery and borrowing has been revised up. Let me ask the

:01:17. > :01:22.Chancellor whatever happened to his Treasury view, his Theory of

:01:22. > :01:26.expansionary fiscal contraction? It it is the economy which has

:01:26. > :01:31.contracted and the borrowing and the debt that have expanded. That

:01:31. > :01:35.is the truth. I have to say, when the latest figures show that

:01:35. > :01:41.business confidence is falling, when the world economy is slowing,

:01:41. > :01:46.when the eurozone is in such chronic difficulty, that on current

:01:46. > :01:49.plans the fiscal straitjacket tightens further next year, it is

:01:49. > :01:52.simply reckless and deeply irresponsible of this Chancellor to

:01:53. > :02:01.plough on with a fiscal plan that we all know is failing under the

:02:01. > :02:06.terms he said. That is the trip. -- truth. What a wasted opportunity

:02:06. > :02:12.this was. Can he confirm that the OBR looked at the figures he

:02:12. > :02:18.announced today, their verdict has been revised down this year, next

:02:18. > :02:25.year and the year after. Let me congratulate the Chancellor for

:02:25. > :02:29.taking our advice and stopping January's fuel duty rise. Even

:02:29. > :02:39.though they all voted against it just a month ago, they all voted

:02:39. > :02:45.

:02:45. > :02:50.against it... We welcome the U-turn on defence, in part, the U-turn on

:02:50. > :02:56.bargaining in the NHS, the U-turn on capital allowances. After

:02:56. > :02:59.churches, charities, pasties, skips, fuel and caravans, I think you

:02:59. > :03:06.turning is catching on. Whatever happened to the plans for the

:03:06. > :03:10.Business Investment Bank? As for the announcement on infrastructure

:03:10. > :03:14.spending, the extra money for schools is just a fraction of the

:03:14. > :03:19.cats and cancellations of the Building Schools for the Future.

:03:19. > :03:23.We've been here before. A year ago, the Prime Minister boasted of a

:03:24. > :03:31.national infrastructure plan. 12 months on, not a single road scheme

:03:31. > :03:36.has started. Why can't he see that he won't get the deficit down

:03:36. > :03:41.without a plan for jobs and growth? Why is he not using the 4G money to

:03:41. > :03:45.get homes built? Why is he not giving a national insurance holiday

:03:45. > :03:50.for small firms? Why not a temporary tax cut for families?

:03:50. > :03:53.Even though mayor was supporting that. Why is he not repeating the

:03:53. > :03:58.bank bonus tax? The Chancellor says he cannot do this because it would

:03:58. > :04:03.lead to higher borrowing. Even his political attacks are backfiring.

:04:03. > :04:10.This Chancellor's failed plan has given us more welfare spending,

:04:10. > :04:16.higher borrowing and more debt. That is the truth. He has failed on

:04:16. > :04:20.growth and the deficit. What is his answer? More of the same. Let me

:04:21. > :04:25.remind the Chancellor what he told the House in the Budget of 2011. He

:04:25. > :04:32.said, we have already asked the British people for what is needed

:04:32. > :04:38.and we do not need to ask for more. 18 months on, the Chancellor has

:04:38. > :04:45.come back for more. Whom does he think should pay? Not the 80,000

:04:45. > :04:48.millionaires, said to get over �100,000 each in April. I have to

:04:48. > :04:52.say to the Liberal Democrats, whatever happened to the mansion

:04:52. > :04:54.tax? Don't they realise, even with these changes in personal allowance,

:04:54. > :05:00.the other things they have supported me is that the average

:05:00. > :05:05.family, with children, or �20,000, is worse off, Mr Speaker. That is

:05:05. > :05:09.before the VAT rise. The Chancellor claims that his decision to

:05:09. > :05:14.restrict pension tax relief will make the system fair at the top.

:05:14. > :05:18.Can he confirm the �1 billion he is raising is less than the �1.6

:05:18. > :05:24.billion that he gave back in pension tax relief in June 2010?

:05:24. > :05:27.And it is just a fraction of the top rate tax cut. A �3 billion top

:05:27. > :05:31.rate tax cut, while at the same time the Chancellor is cutting tax

:05:31. > :05:36.credits for working families, cutting child benefit for middle

:05:36. > :05:42.income families, raising taxes on pensioners in April and cutting

:05:42. > :05:47.benefits for the unemployed. Mr Speaker, we do need to reform and

:05:47. > :05:53.modernise our welfare state and reduce its costs. Those who work,

:05:53. > :06:02.those who can work should work, no IFS or buts. We support a benefit

:06:02. > :06:06.cap, done fairly, with a higher level in London. Let us be clear,

:06:06. > :06:08.the Chancellor claimed he would cut the welfare bill. But higher

:06:08. > :06:13.inflation and long-term unemployment means that the

:06:13. > :06:20.benefits bill is forecast to be billions high up in this Parliament

:06:20. > :06:24.than the Chancellor boasted. Let me help him, Mr Speaker. Welfare to

:06:24. > :06:31.work. The clue is in the domain. You cannot have a successful

:06:31. > :06:35.welfare-to-work programme, without work. We know that the work

:06:35. > :06:42.programme has just totally failed, with only two people in 100

:06:42. > :06:44.actually going into permanent jobs. Mr Speaker, we should be requiring

:06:44. > :06:51.every young and long-term unemployed person to take a job and

:06:51. > :06:56.making sure that there is one there. Let me ask the Chancellor about an

:06:56. > :07:01.nervous, one of the thousands cut from the NHS in the last two years,

:07:01. > :07:05.now struggling to find a new job. - - a nurse. For that nurse, he has

:07:05. > :07:11.announced he is cutting hair jobseeker's allowance for the next

:07:11. > :07:18.three years. How can that be fair when he is cutting the top rate of

:07:18. > :07:24.tax? How can that be fair when someone earning �228,000 a year

:07:24. > :07:32.will get a top rate tax cut of �75 a week in April, which is more than

:07:32. > :07:38.the �71 that she gets to live on? I have to say, what we learned today,

:07:38. > :07:44.he is not just hitting those looking for work. The majority of

:07:44. > :07:49.people who lose from his cuts to tax credits are people in work.

:07:49. > :07:54.Millions of families, striving hard to do with the right thing. What

:07:54. > :07:59.kind of government believes that you can only make low-paid, working

:07:59. > :08:02.people work harder by cutting the tax credits, but you only make

:08:02. > :08:08.millionaires work harder by cutting their taxes? I'll tell you,

:08:09. > :08:12.certainly not a one-nation government. They must really

:08:12. > :08:16.believe that if you cut taxes at the top, the wealth will trickle

:08:16. > :08:20.down. Let me remind the House what the Chancellor said to the

:08:20. > :08:27.Conservative Party conference in October 2009. He said, we could not

:08:27. > :08:32.even think, we could not even think of abolishing the 50 pence rate on

:08:32. > :08:36.the rich while, at the same time, I am asking many of our public sector

:08:36. > :08:40.workers to accept a pay freeze to protect their jobs. The

:08:40. > :08:45.Chancellor's words. He said, I think we can all agree that would

:08:45. > :08:53.be grossly unfair. What has changed? What has changed? Nothing

:08:53. > :08:56.has changed. It was all Akon and the mask slipped. We now know that

:08:56. > :09:01.this Chancellor cannot say that we are all in this together without a

:09:02. > :09:06.smirk on his face. They wanted us to think there were compassionate

:09:06. > :09:10.Conservatives. Now we find out by are the same old Conservatives and

:09:10. > :09:16.the Liberal Democrats have gone along with all of it, yet again.

:09:16. > :09:19.May I say, Mr Speaker, what a pity. What a pity not to see the

:09:19. > :09:26.honourable member for Mid Bedfordshire in her place. Back

:09:26. > :09:30.from off the jungle. She may not have succeeded in talking to the

:09:30. > :09:33.nation on many things, but she did speak to the nation when she called

:09:33. > :09:41.the Prime Minister and the Chancellor two arrogant posh boys

:09:41. > :09:49.who do not know the price of milk. Mr Speaker, no wonder this Prime

:09:49. > :09:53.Minister keeps on losing his temper. His worst nightmare is coming true.

:09:53. > :10:00.Not snakes and spiders in the jungle, but their fiscal role

:10:00. > :10:04.broken, they economic credibility in tatters, exposed now as

:10:04. > :10:12.incompetent and unfair. Yes, Mr Speaker, he is the Chancellor,

:10:12. > :10:17.can't somebody getting out of here? -- get him out of here. Borrowing

:10:17. > :10:25.revised up, fiscal rules broken. On every target they set themselves,

:10:25. > :10:28.failing, failing, failing. Cutting the NHS and not the deficit. Over

:10:29. > :10:33.�212 billion more borrowing than a promise two years ago. Cutting

:10:33. > :10:43.taxes for the rich, while struggling families and pensioners

:10:43. > :10:47.

:10:47. > :10:51.pay the price. Unfair, incompetent We leave the House of Commons now.

:10:51. > :10:55.If you want to continue watching the Autumn Statement debate and

:10:55. > :11:05.question and answer, you can switch-over to BBC Parliament or go

:11:05. > :11:05.

:11:06. > :11:09.Now, Ed Balls took 20 minutes to reply to the Chancellor's 50 minute

:11:09. > :11:14.Autumn Statement. It was a dense, complicated statement by the

:11:14. > :11:18.Chancellor. Particularly some redefinition of how the deficit is

:11:18. > :11:22.calculated to or complicated factors on how much borrowing the

:11:22. > :11:25.Government is doing. We will try, as we go through the documents, we

:11:25. > :11:29.are already wading through them at the moment and this is just a small

:11:29. > :11:34.part of them, let's take a look at the main points as we understand

:11:34. > :11:37.them at the moment. We start with economic growth. The OBR, the

:11:37. > :11:41.Office For Budget Responsibility, an independent forecasters set up

:11:41. > :11:45.by Mr Osborne, is predicting there will be a small contraction in the

:11:45. > :11:49.economy this year of 0.1%. I understand within that forecast it

:11:49. > :11:53.expects the economy to actually go back into negative territory in the

:11:53. > :11:56.4th quarter of this year. That will be politically very dangerous for

:11:56. > :12:01.the Government, because it will mean that three out of the four

:12:01. > :12:09.quarters of this year would have been in negative territory. Very,

:12:09. > :12:15.very slow growth in 2013 of 1.2%, getting up to 2% in 2014, 2.3 in

:12:15. > :12:23.2015 and almost 3% in 2017. Take the final years with a pinch of

:12:23. > :12:26.salt, it really doesn't mean very much. It is this year, 2013 and

:12:26. > :12:28.then 2014 that matters. As a consequence of this growth, the

:12:28. > :12:33.Government has to decide how much it needs to borrow to finance

:12:33. > :12:37.spending, given that it does not tax enough to be able to meet all

:12:37. > :12:41.of its spending plans. Here is where it gets complicated. We need

:12:41. > :12:45.to look at the somewhat more carefully. The Government is now

:12:45. > :12:49.saying that in this financial year borrowing will be 108 billion. This

:12:49. > :12:53.is because of a number of changes that have been made. If you do not

:12:54. > :12:58.make these changes, we think it still comes in at about 120 billion,

:12:58. > :13:01.which is what the target was. It complicates the debate because both

:13:01. > :13:04.the Labour Party and independent observers were saying that

:13:04. > :13:07.borrowing was going to rise this year, compared to last year and be

:13:07. > :13:12.higher than the target. The way the Chancellor is presenting these

:13:12. > :13:21.figures, it actually falls in this year, against last year. It

:13:21. > :13:25.continues to fall in 2013 and 2014. It's down to 88 billion by 14/15. I

:13:25. > :13:29.have other figures here, car filleting them a different way,

:13:29. > :13:35.which suggest that the Government will still be borrowing 56 billion

:13:35. > :13:38.by 2017 and 2018. We need to unravel that, it's been made very

:13:38. > :13:42.complicated. Let's look at whether this means the Government has met

:13:42. > :13:49.its targets. The Government says that it is on course to meet its

:13:49. > :13:53.fiscal mandate. But it has missed the debt target, the accumulated

:13:53. > :13:57.deficit over all of the years that we as a nation have borrowed

:13:57. > :14:04.through our government as a share of GDP. It will not fall, as the

:14:04. > :14:11.Chancellor predicted. It will not fall in 2014 or 2015, indeed it

:14:11. > :14:16.will not fall until 2016/17. On tax and spending, this is where the

:14:16. > :14:21.austerity gets extended. Fiscal consolidation will be extended to

:14:21. > :14:26.2017/18. That is a fancy way of saying that the cuts continue. Not

:14:26. > :14:31.for five years, as originally planned, not for seven as it

:14:31. > :14:34.changed to, but for eight years. Departmental budgets, widely leaked,

:14:34. > :14:40.this is what the Whitehall departments themselves spend. That

:14:40. > :14:43.will be reduced by 1% next year, another 2% the year after that. It

:14:43. > :14:49.releases money that the Government tends to spend on public investment.

:14:49. > :14:53.A slight surprise, not entirely unexpected, corporation tax, the

:14:53. > :14:57.tax companies pay on profits, or should pay on their profits, is now

:14:57. > :15:04.cut to 21% in 20th April 14. The Chancellor has made a number of

:15:04. > :15:12.cats. Indeed, our corporation tax, that will be as low as it gets

:15:13. > :15:22.among the major corporations of the world. I think the OECD has a floor

:15:23. > :15:30.

:15:30. > :15:34.Given that inflation is likely to be more than 1%, at the moment it's

:15:34. > :15:38.around 3, this means in real terms these benefits will fall. But it

:15:38. > :15:43.doesn't affect the state pension. The state pension will continue to

:15:43. > :15:47.rise roughly in line with inflation. Also, disability and care benefits

:15:47. > :15:51.will also be upgraded in line with inflation. That's a big chunk out

:15:51. > :15:59.of future increases in working-age welfare benefits, the Chancellor

:15:59. > :16:04.has taken back. Now personal taxes. Personal income tax - the allowance

:16:04. > :16:08.will rise by �235. This is the amount that you're allowed to earn

:16:08. > :16:14.before you pay any tax at all. That will take place in April. It brings

:16:14. > :16:20.it to around �9,440 that you'll be allowed to earn before you start to

:16:20. > :16:30.pay the 20% tax. He's also putting up a little bit, 1%, the higher

:16:30. > :16:34.rate. That's not the 45 or the 50, but the 40%. That's up by 1%. Still

:16:34. > :16:38.less than the rate of inflation. If you're on that, you'll get a real

:16:38. > :16:42.rise in taxes. The higher rate, which was widely thought to be

:16:42. > :16:48.capped is now capped at 40,000. He also said too that the size of the

:16:48. > :16:53.pension pot cue go for he's reducing from 1.5 million to 1.25

:16:53. > :16:56.million. It won't affect that many, but some. Now, fuel and energy.

:16:56. > :17:00.This is where for a brief moment we could say that the Chancellor

:17:00. > :17:05.turned into Santa. It was belief. Blink and you might have missed it.

:17:05. > :17:12.He announced not only would the three pence rise in fuel duty be

:17:12. > :17:18.cancelled in January. Not only postponed, but there are no plans

:17:18. > :17:22.for a rise in the foreseeable future. He's announcing separately

:17:22. > :17:28.a shale gas strategy. An attempt to get it out of the ground in Britain

:17:28. > :17:38.like in the United States. He want to talk about tax incentives and a

:17:38. > :17:43.new quango for this is the Office for Unconventional Gas. It would

:17:43. > :17:48.have been simpler to call it the Office For Shale. There's a lot on

:17:48. > :17:52.infrastructure spending here. has managed to find �5 billion by

:17:52. > :17:55.cutting some current spending. Most Civil Servants will be laid off.

:17:55. > :18:00.He's got �5 billion for extra capital investment in various

:18:00. > :18:07.infrastructure, including some new roads and he says 100 new schools.

:18:07. > :18:10.�1 billion to go on that, new schools and academies. That is a

:18:10. > :18:14.summary of what the Chancellor has summary of what the Chancellor has

:18:14. > :18:20.suggested so far let us see if we can just unpick this. Stephanie, I

:18:20. > :18:23.come to you first. Have you managed, putting you on the spot, because

:18:23. > :18:26.it's complicated, I saw three ways in which you can calculate the

:18:26. > :18:29.deficit depending on what you include. Can you enlighten? We know

:18:29. > :18:33.two things, which is sort of interesting. One, that he's

:18:33. > :18:37.claiming that all the figures that he gave us are sort of independent

:18:37. > :18:40.of the one-off factors that we knew about, that is the transfer of the

:18:40. > :18:44.pension fund and the Royal Mail and the effect of this sort of switch

:18:44. > :18:48.of the money that the Bank of England has been making on QE, so

:18:48. > :18:52.we know in a sense that he's not being creative on that score. What

:18:52. > :18:55.we are not so clear about is how borrowing is falling this year,

:18:55. > :18:59.despite all of the expectations that it would rise and what is

:18:59. > :19:03.particularly interesting to me, when you look at the figures - I

:19:03. > :19:09.always say don't just look at the overall borrowing, but look at his

:19:09. > :19:14.measure, the structural deficit, the hole he wanted to fill.

:19:14. > :19:18.Everyone was expecting that on the basis of what we know about what

:19:18. > :19:21.the office calculates these things, everyone was expecting that to go

:19:21. > :19:25.up with this new forecast. It's down. What the interesting

:19:25. > :19:30.implication of that is, is that they seem to be saying that the

:19:30. > :19:33.growth we have lost this year maybe won't be lost permanently and

:19:33. > :19:36.that's had a positive effect on all the future figures, so the point

:19:36. > :19:40.where he doesn't need the extra year of austerity that he announced

:19:40. > :19:44.today in order to meet that rule. That's what is strange. At the

:19:44. > :19:49.moment this mosture looks like it will come into surplus the same

:19:49. > :19:54.time we thought on the last figures, which is 2016/17. There's possibly

:19:54. > :19:58.room for that year to be taken back, if you are thinking about making

:19:58. > :20:03.plans for an election. He doesn't need that austerity on these

:20:03. > :20:07.figures to meet his targets for deficit. Of course, we had that

:20:07. > :20:10.admission that the debt stock was not going to fall in 2015. That

:20:10. > :20:14.moment will be deferred another year and who knows what will happen

:20:14. > :20:18.after that? The details of why borrowing is still falling I'm

:20:18. > :20:23.afraid I'm still trying to get to the bottom of it. I don't blame it.

:20:23. > :20:30.The risk for the Chancellor is he's been too clever by half. The

:20:30. > :20:35.brightest people in the country will pour them and these people are

:20:35. > :20:38.in this room. I just sail in behind them. They will pour over them. In

:20:38. > :20:44.the City and in the think-tanks and the Labour Party and it may not

:20:44. > :20:47.being as simple. We know it's not as simple as it seems. It could

:20:47. > :20:53.unravel. Remember, borrowing figures are essentially a forecast

:20:53. > :20:56.and the question of whether they exactly go up or go down is

:20:56. > :21:01.politically psychologically, hugely important to the Chancellor, and

:21:01. > :21:05.threw Ed Balls off his stride, it seems, but nickically a bit this

:21:05. > :21:09.and that way is not what matters. The big picture remains. The

:21:09. > :21:12.Chancellor said, "I told you I would get debt down by the end of

:21:12. > :21:17.this Parliament before the election. I'm not going to do so. I told you

:21:17. > :21:24.I would get the deficit sorted. The books balanced by the election. I'm

:21:24. > :21:29.not going to do that. It will take another three years from the

:21:29. > :21:32.original target." The core message remains bad, but it is intriguing,

:21:32. > :21:37.Andrew, that despite all that, he looked confident, the Shadow

:21:37. > :21:42.Chancellor was totally thrown off his side by the jeers of the other

:21:42. > :21:47.side. The question is is that political calculation right? At its

:21:47. > :21:50.core is this - George Osborne thinks that if the country believes

:21:50. > :21:53.borrowing's the problem, the deficit hawks, whether they are

:21:53. > :21:56.missing their own targets or not, are the people the country will

:21:56. > :22:00.turn to. They won't turn to the Labour Party, who don't think

:22:00. > :22:04.borrowing's the primary problem, but they think growth is the route

:22:04. > :22:08.to get borrowing down. That's what he's banking on. Labour were

:22:08. > :22:13.banking on today saying, "If you are even failing your own targets,

:22:13. > :22:19.if you are even failing in your own terms, surely the country will then

:22:19. > :22:26.say they've tried that and let's try something else?" Robert? What

:22:26. > :22:33.is striking to me is that the big, in a sense, economic event in the

:22:33. > :22:39.numbers is the 3.5 billion proceeds from selling the 3G spectrum. Sorry

:22:39. > :22:46.4G. I must get the technology right on this. That is essentially the

:22:46. > :22:54.sale of the airwaves to produce even faster smartphones and all

:22:54. > :23:00.that. What's he done? Broadly, that pays for the deficit reduction, or

:23:00. > :23:06.the debt reduction that he gets one year later. Indeed, the deficit

:23:06. > :23:12.reduction. If you strip that out, he would have had to have made much,

:23:12. > :23:18.much bigger cuts to public spending or put up taxes rather more. What

:23:18. > :23:23.is quite interesting is if you look at the so-called total policy

:23:23. > :23:27.decisions that the net effect of what he's done is, because the

:23:27. > :23:30.money comes in, in this year, it looks like there's a tightening,

:23:30. > :23:34.but in all the subsequent years he's more than spending what he's

:23:34. > :23:39.getting in. Actually, the net effect in subsequent years of what

:23:39. > :23:43.he's doing is to try to stimulate the economy. The interesting

:23:43. > :23:48.question is whether or not that will have the effect of getting

:23:48. > :23:51.growth going in the run-up to the general election. He's saying a

:23:51. > :23:57.one-off lump will be spent in subsequent years and he hopes that

:23:58. > :24:02.will generate growth as we get to 2015. The funny thing about this

:24:02. > :24:05.3.5 billion that if we are not for the proceeds, which they are

:24:05. > :24:09.putting in for this year, even though they haven't had the

:24:09. > :24:13.auctions for the 4G spectrum, but borrowing - he's putting it in the

:24:13. > :24:17.book - so borrowing would have risen maybe by a couple of billion

:24:17. > :24:21.had he not put that for this year. However, as Robert says, he's

:24:21. > :24:27.spending it in the next few years, which is what the Labour Party has

:24:27. > :24:31.told him he should do, spending those on investment and growth.

:24:31. > :24:36.Briefly, Labour had a huge windfall when it sold the last set

:24:36. > :24:43.technologies, 3G and actually Labour used it to reduce the debt.

:24:43. > :24:50.It didn't spend the proceeds, so it's quite interesting. The sun is

:24:50. > :24:56.shining now! It is. The growth figures are interesting. The

:24:56. > :25:01.country will decline by a small amount according to the OBR. It

:25:01. > :25:11.says 1.2%. He doesn't know that. It could easily - it's within a margin

:25:11. > :25:13.

:25:13. > :25:19.of error that we could have another year of no growth. In a sense the

:25:19. > :25:24.politics is based on forecasts from a bunch of guys who are independent,

:25:24. > :25:29.but all their forecasts have been wrong. Every single year since the

:25:29. > :25:33.election and what's more they are exueming bouncing back in

:25:33. > :25:37.investment and they're -- assuming bouncing back in investments and

:25:37. > :25:39.they're wrong. We are not talking about taking the temperature

:25:39. > :25:44.outside, but we are talking about whether the forecasts suggest you

:25:44. > :25:48.might be on course. Now, may economically may not be terribly

:25:48. > :25:52.important, but politically it gives vital ballast to George Osborne

:25:52. > :25:58.when he has a good bit of news, which for him is this figure. But

:25:58. > :26:01.it also gives a ball loss to his opponents when by the forecasts he

:26:01. > :26:04.getting it wrong on the deficit and debt. They've been changing their

:26:04. > :26:09.view of the economy. They were initially felt to be in the first

:26:09. > :26:13.couple of years they were felt to be quite optimistic about the

:26:13. > :26:17.supply capacity of the economy. This crucial thing. Then last year

:26:17. > :26:21.they very radically downgraded their estimates and increased them

:26:21. > :26:23.again and they are much more optimistic than six months ago. I

:26:23. > :26:28.don't think any economists had say anything had happened to justify

:26:28. > :26:31.that change, but it's had a huge impact on the numbers. If the OBR's

:26:31. > :26:36.right the Chancellor will not be in for a good year, because the

:26:36. > :26:42.economy will go into decline. That's what the OBR is forecasting.

:26:42. > :26:48.Back to Jo who is in the Potteries. Thank you. George Osborne may have

:26:48. > :26:53.been limited on his spending power, but no expense is being spared here

:26:53. > :26:57.at the Wedgwood factory as 22 carat-gold paste is being applied

:26:57. > :26:59.to the plates. We'll find out whether businesses in the area are

:26:59. > :27:04.feeling flush after hearing that Autumn Statement from the

:27:04. > :27:12.Chancellor. I'm joined by three guests. Karen from the Federation

:27:12. > :27:16.of Small Businesses, Mike from an estate agent and a member from the

:27:16. > :27:20.CAB. We heard at the beginning that the economy is haling. Does it feel

:27:20. > :27:23.like that on the -- healing. Does it feel like that for you on the

:27:23. > :27:26.front line? I don't think is does. One of the biggest disappointments

:27:26. > :27:30.that we have seen today is not being able to see any move forward

:27:30. > :27:33.on the small business bank and actually the access to finance

:27:33. > :27:38.issues. It's very, very difficult for small businesses in particular

:27:38. > :27:45.to access affordable, reasonable finance. Even with the funding and

:27:45. > :27:50.lending scheme in place, why aren't they giving out the money? Well,

:27:50. > :27:54.people go to the banks, but they've restricted the criteria and they've

:27:54. > :27:57.made it very difficult to finance. The one billion was announced in

:27:57. > :28:00.the Liberal Democrats' conference earlier this year. That has been no

:28:00. > :28:04.surprise. The surprise is there's been no move forward on the issues

:28:04. > :28:07.that were discussed earlier this year. You are disappointed? Yes.

:28:07. > :28:11.When it comes to housing and planning, the Government has said

:28:11. > :28:16.time and again that that must be the drive for the economy. What is

:28:16. > :28:18.actually stopping big building projects going ahead? Is it really

:28:18. > :28:21.planning? It's part of it, but it's most encouraging that the

:28:21. > :28:25.Government have said there's a clear focus on economic

:28:25. > :28:29.regeneration in the planning system. That's being embraced by most local

:28:29. > :28:34.authorities, but clearly it has to work through the system. One of the

:28:34. > :28:37.big issues relates to smaller and medium-sized companies having the

:28:37. > :28:42.right sort of finance available to allow them to invest in new plant

:28:42. > :28:46.and machinery and property and we would welcome the new capital land

:28:47. > :28:53.regime announced today. That will help. That will allow businesses to

:28:53. > :28:58.invest up to �250,000 with 100% tax relief? Yes. Will some of your

:28:58. > :29:03.projects start? It will help. It's part of an overall package that

:29:03. > :29:05.needs to help generate more economic regeneration. Right. In

:29:05. > :29:08.terms of fairness, we hear the Chancellor saying that time and

:29:08. > :29:13.again that we are all in this together. How did you think it came

:29:13. > :29:19.across to the sort of people you are talking to on a daily basey at

:29:19. > :29:23.the CAB? I think we misunderstand the terms, "people on benefits." We

:29:23. > :29:27.equate it to people out of work, but the vast majority are actually

:29:27. > :29:30.in work if they're not of pension age. The growing poverty in this

:29:30. > :29:34.country is the poverty of people in work. We are seeing people who own

:29:34. > :29:39.their own homes using food banks. I would urge the Government to think

:29:39. > :29:44.about protecting those on the lowest incomes in work by raising

:29:44. > :29:48.the tariff that applies to benefits. Thank you to you all. We'll

:29:48. > :29:52.probably speak to you in a bit. We want your reaction and I'm joined

:29:52. > :30:02.now by Paul Lewis from BBC Radio 4's Money Box programme. Give us

:30:02. > :30:03.

:30:03. > :30:07.your headlines from what you got The interesting bit was the

:30:07. > :30:13.increasing how much we can end without paying tax. We can actually

:30:13. > :30:17.not pay any tax on an income up to �9,440. Slightly worse news for

:30:17. > :30:22.those on higher incomes. The rate at which you pay higher rate tax is

:30:22. > :30:27.coming down to �41,450. They will get some of the benefit of that,

:30:27. > :30:30.but not all. On the business front, as you have been discussing, a rise

:30:30. > :30:34.in capital allowances so that businesses can invest and unlock

:30:34. > :30:38.the cash they have. It's very good news for businesses and people that

:30:38. > :30:41.are self-employed. One of the things that got a big cheer when I

:30:41. > :30:46.was sitting with the businesses was the cancellation of that three

:30:46. > :30:51.pence duty on fuel? It has be postponed twice. To this Bonett a

:30:51. > :30:58.third time would seem a bit silly. It's not just 3p, it is 3p and a

:30:58. > :31:07.bit, plus about E. It's more like 3.6, maybe even 4p. That will not

:31:07. > :31:11.happen again. It's good news for motorists and businesses, because

:31:11. > :31:17.that's a big part of expenditure. You want people to e-mail with

:31:17. > :31:20.questions? Could you read some of them that you have had? Yes, the

:31:20. > :31:24.other big thing was the cut in the increase in welfare benefits from

:31:25. > :31:29.April. This is jobseeker's allowance, but also employment and

:31:29. > :31:36.support alliance, which often is seen as a disability benefit. Now

:31:36. > :31:40.that is going to be raised by only 1%. Derek says, my wages have been

:31:40. > :31:45.frozen for five years, why should I pay for increases for those in

:31:45. > :31:50.welfare? He will be glad it is only a 1% rise. Michael in Londonderry

:31:50. > :31:54.says that in my city, every new job is hard fought for with thousands

:31:54. > :32:00.of applicants. Lots of people have no choice but to live on benefits.

:32:00. > :32:05.That cut, or at least not raising it with inflation, is going to save

:32:05. > :32:10.�1.5 billion per year by 2014/15. The fairness agenda is something

:32:10. > :32:14.that George Osborne has focused on a lot? Fairness between people in

:32:14. > :32:24.work and people out of work, that is how he sees it. More comments,

:32:24. > :32:28.

:32:28. > :32:32.please. E-mail, Twitter or send us We will be Backworth more business

:32:32. > :32:36.reaction and more e-mails. -- back with.

:32:36. > :32:40.We have been discussing the economic picture before we went to

:32:40. > :32:45.join Jo. Before we get political reaction, a couple of things that

:32:45. > :32:50.affect all of us as individuals. If you are paying income tax, there is

:32:50. > :32:54.a small tax cut for you. The level at which you start to pay income

:32:54. > :32:59.tax has been increased by a couple of hundred pounds. If you are on

:32:59. > :33:03.benefits, working benefits, you are in for a 1% rise, not very much and

:33:03. > :33:08.lower than the rate of inflation. Although it is a 1% rise, in real

:33:09. > :33:12.terms, with rising prices, it probably means a cut. If you are a

:33:12. > :33:17.higher in a, fewer pension perks, including the amount of money you

:33:17. > :33:21.can put in tax free to your pension pot. Broadly, you are in a flat-

:33:21. > :33:26.lining economy. It's going to go down a bit this year, says the OBR,

:33:26. > :33:31.and only at a bit next year. Both within margins of error. Basically,

:33:31. > :33:36.the economy is just going along the bottom. If you are a motorist or in

:33:36. > :33:41.a haulage business, there will be no fuel duty rise. The price of

:33:41. > :33:45.petrol, as far as tax is concerned, will stay the same. A few things

:33:45. > :33:49.that affect you beyond the macro- economic picture and all of us as

:33:49. > :33:54.individuals. Let's go back to Matthew on the famous College Green

:33:54. > :33:58.outside the House of Commons. Let's discuss what we have heard

:33:58. > :34:03.with a former Chancellor and a former party leader, Sir Mingus

:34:03. > :34:07.Campbell. Lord Lawson is also with me. We were hoping that Alastair

:34:07. > :34:11.Darling it was going to join us. Perhaps he will in the coming

:34:11. > :34:21.minutes'. First of all, a snapshot of what you heard? It was like a

:34:21. > :34:22.

:34:22. > :34:25.budgie, wasn't it? -- Budget. The important thing is that he did the

:34:25. > :34:29.right thing in terms of sticking to the budget deficit reduction plan,

:34:29. > :34:33.sticking firmly to Plan A. That was the most important thing he has

:34:33. > :34:37.done. He has had to take some uncomfortable positions in order to

:34:37. > :34:44.do it, but it is the right thing to do. One other thing that I was glad

:34:44. > :34:48.about, the go-ahead for gas in the UK. That is terribly important. One

:34:48. > :34:57.piece of good news that we have at the present time. Your headline

:34:57. > :35:00.thoughts? Very much like a Budget. As Nigel Lawson says, he has three

:35:01. > :35:05.confirmed the commitment to plan a. The deficit and debt is not coming

:35:05. > :35:10.down as fast as we like, but it is coming down. To say that we are not

:35:10. > :35:13.going to implement the proposed increase in petrol tax for January,

:35:14. > :35:17.we are going to help small businesses and we are going to

:35:17. > :35:23.reduce corporation tax by 1%, these are things that cheer it up the

:35:23. > :35:27.people sitting behind them. In contrast to some of the faces on

:35:27. > :35:30.the opposition side. He said he was sticking to Plan A and you were

:35:30. > :35:37.glad about that, but the bottom line is that austerity stretches

:35:37. > :35:41.even further, not just to 2017, but on to 2018? Sadly, that is a

:35:41. > :35:47.combination of the very difficult world we live in, notably the

:35:47. > :35:56.eurozone crisis which has plunged the European Continent into

:35:56. > :35:59.recession and disarray. But there are other problems as well. And

:35:59. > :36:03.there is the terrible inheritance of the deficit, which is coming

:36:03. > :36:07.down. We are making progress and the projections, not his

:36:07. > :36:11.projections but the Independent Office of Budget Responsibility,

:36:11. > :36:15.are for steady growth over the coming years. But the misery is

:36:15. > :36:19.extended. Do you not think that part of the equation for that, you

:36:20. > :36:25.talk about what is happening in the global economy, the eurozone, what

:36:25. > :36:30.about the basic economic policy, that the cuts were simply too fast?

:36:30. > :36:33.We are going ahead, the cut were not too fast at all. If you want to

:36:33. > :36:37.do anything more to make more progress on the economy, you don't

:36:37. > :36:43.want to do it by abandoning the budget deficit reduction plan. What

:36:43. > :36:46.you want to do is to get banks' lending again. That is the key,

:36:46. > :36:50.particularly to small and medium- size businesses. I hope that he is

:36:50. > :36:54.working on that. This is not a budgetary measure, but I hope that

:36:54. > :36:58.something would be coming forward on that front. You may not have

:36:58. > :37:03.seen it, but part of the way through that statement we saw Nick

:37:03. > :37:08.Clegg sitting behind the statement, shaking his head when George

:37:08. > :37:11.Osborne went through the reasons why he was not going to have a new

:37:11. > :37:19.band of council tax for very rich homes. That is not something I have

:37:19. > :37:25.seen before. It is no secret that there was a division of opinion on

:37:25. > :37:29.the decision... Whether it is a larger tax will not, the joint

:37:29. > :37:35.decision was not to proceed. But what came out was that the economy

:37:35. > :37:41.shrank by 6.3% in 2007. That was the inheritance. A much more

:37:41. > :37:44.serious inheritance than was anticipated. Another quick thought

:37:44. > :37:48.from you, how comfortable like you to see benefits raised by only 1%

:37:48. > :37:54.for some of the poorest people in society? Are you comfortable with

:37:54. > :37:57.that? I wish it was possible to raise them by much more. But all

:37:57. > :38:02.public sector employees have been confined to an increase of 1%.

:38:02. > :38:06.final question to you, Lord Lawson, on growth. We saw those figures

:38:06. > :38:09.downgraded in the years ahead. Do you think there's enough of what

:38:09. > :38:11.you heard, we heard from the British Chamber of Commerce,

:38:11. > :38:16.talking about the blizzard of announcements, they said many of

:38:16. > :38:21.those ended up being pie-in-the-sky. They want is to be tangible and now.

:38:21. > :38:24.That has to go beyond rhetoric, to delivery? Well, look, if you could

:38:24. > :38:29.just press a button and deliver growth, any Chancellor would do

:38:29. > :38:35.that. But it's not like that. You have to be patient. The projections

:38:35. > :38:39.from the Independent Office of Budget Responsibility are that we

:38:39. > :38:43.will be steadily growing over coming years. I think we are on the

:38:43. > :38:50.right track. Thanks very much for your time. More from me in a little

:38:50. > :38:54.We and are joined by the Chief Secretary to the Treasury, Danny

:38:54. > :38:59.Alexander. Welcome to this Daily Politics special. The economy is

:38:59. > :39:02.going to decline this year. It will decline in the 4th quarter, it will

:39:02. > :39:06.barely rise at all next year. If you are on benefits, you will have

:39:06. > :39:11.a real cut in the big standards. If you work in the public sector, you

:39:11. > :39:15.will have a real cut as well. These are bad times? The these are tough

:39:15. > :39:19.times for the country, absolutely right. This is an Autumn Statement

:39:19. > :39:23.about the world as it is, not a world as we might have hoped it

:39:23. > :39:28.would be when we started in office. What we are taking today is

:39:28. > :39:32.decisions that recognise the fact that the period of fiscal restraint

:39:32. > :39:35.has to carry on for longer. Those who have the most are contributing

:39:35. > :39:40.the most of the next phase of deficit-reduction. We are using

:39:40. > :39:44.some of the revenues we generate from that in the earlier years to

:39:44. > :39:47.support the economy, create jobs, cut taxes in the short term for

:39:47. > :39:53.businesses so they can get on with Investment. Crucially, through

:39:53. > :39:56.reducing fuel duty and increasing the personal allowance, something

:39:56. > :39:58.Liberal Democrats a campaign for for a long time, that we get more

:39:58. > :40:02.money into the pockets of people that are working hard and

:40:02. > :40:05.struggling to make ends meet. you are on benefits, your real

:40:05. > :40:09.living standards will fall. If you work for the public sector, your

:40:09. > :40:12.living standards will fall. It will serve it in Whitehall, you have a

:40:12. > :40:16.pretty good chance of losing your job. Maybe not the poorest in

:40:16. > :40:20.society, but some of those on ordinary incomes are suffering a

:40:20. > :40:23.lot more than most. That is absolutely right. In fact, there is

:40:23. > :40:25.an important piece of information in the Autumn Statement itself

:40:25. > :40:30.which shows that since the financial crisis the incomes of

:40:30. > :40:34.people in work have increased by about 10%. The income of people on

:40:34. > :40:40.benefits over the same period had increased by 20%. In that context,

:40:40. > :40:45.say to people, yes, you will get a raised this year and they year

:40:45. > :40:50.Wrafter, but it will be under inflation, on top of decisions that

:40:50. > :40:54.make the wealthy pay more tax, on top of clampdowns on tax avoidance,

:40:54. > :40:59.it is part of a package to answer the question of how we sort out the

:40:59. > :41:03.country's finances. We inherited a mess from the previous government,

:41:03. > :41:06.and if we fail to sort that out the problems will be much worse.

:41:06. > :41:11.have made the issue of borrowing so complicated now that none of us can

:41:11. > :41:15.follow it properly. I am sure that the is intentional. But we have

:41:15. > :41:19.managed to unravel... Not in the least. The Office of Budget

:41:19. > :41:22.Responsibility presented the figures very clearly, with or

:41:22. > :41:29.without the transfer of the coupons and the asset purchase facilities,

:41:29. > :41:35.with and without... This OBR is to your government what the iron dome

:41:35. > :41:39.is for Israel! You hide under everything from it. Can I make a

:41:39. > :41:43.serious point? We have created the OBR as an independent body so that

:41:43. > :41:48.we do not, as politicians, have a chance to skew the figures. We have

:41:48. > :41:52.an independent body which tells us, as they see it, how the economy is.

:41:52. > :41:58.I'm prepared to accept their numbers and the analysis behind it.

:41:58. > :42:02.If you take off the distortions and one-offs, the Royal Mail, the banks,

:42:02. > :42:06.taking back the money that you have paid as a government to the Bank of

:42:06. > :42:09.England in interest, you take that back and put it on your own books,

:42:09. > :42:14.in this current year your borrowing will be 120 billion. Just a little

:42:14. > :42:19.bit upon what you said in March. But the way you present it, it is a

:42:19. > :42:24.huge fall? The borrowing is falling on any of the measures that the OBR

:42:24. > :42:27.presented. In their report, though analysts will see that it has been

:42:28. > :42:32.presented with and without all of these factors are so that it is

:42:32. > :42:34.transparently available. The OBR, the central forecast, it is that

:42:34. > :42:38.borrowing will fall this year compared to last year. It will fall

:42:38. > :42:42.next year, the year after. I am quite happy to admit that the

:42:42. > :42:45.borrowing is not falling as fast as we wanted where we started out.

:42:45. > :42:49.Because they say the economy is in a worse situation because of what

:42:49. > :42:54.is going on in the year rose and... It's not falling at all this year,

:42:54. > :42:59.if you strip out the factors. Last year you borrowed 120 billion. This

:42:59. > :43:03.year, your borrowing 120 billion. It is the same. So your borrowing

:43:03. > :43:07.is not falling? When you strip out the Asset Purchase Facility and so

:43:07. > :43:12.on, I think it is falling by �1.5 billion this year, compared to last.

:43:12. > :43:19.You put a lot of emphasis on infrastructure programmes in this

:43:19. > :43:23.budget. Since you came to power, you have announced 18 new major

:43:23. > :43:26.road schemes. How many have started? I don't know the precise

:43:26. > :43:35.answer of the top of my head. I know quite a few have started. I

:43:35. > :43:38.was down in Bristol, seeing the M 5, I was down in Torbay seeing the

:43:38. > :43:41.bypass being built. Yes, some of these were under way before you

:43:41. > :43:45.came to power. These are things that we have announced as a

:43:45. > :43:49.government. Well, our evidence is that almost no major new road

:43:49. > :43:56.schemes have started. I don't agree with that. In the last Autumn

:43:56. > :44:00.Statement, you said that you would leverage 21 billion of new private

:44:00. > :44:04.sector investment into public- sector investment. How much have

:44:04. > :44:07.you leverage? Well, we have a national infrastructure plan,

:44:07. > :44:14.dinners or an update published today which sets out in detail...

:44:15. > :44:19.How much? Let me just finish the answer. Once we have announced in

:44:19. > :44:28.the last few months the new infrastructure projects, pension

:44:29. > :44:31.funds have put �2 billion into the pensions infrastructure platform.

:44:31. > :44:40.We announce today an extra �5 billion of government money.

:44:40. > :44:43.Actually, the Government investment into its infrastructure is a

:44:43. > :44:47.greater share of the economy than it was in Labour's time in office.

:44:48. > :44:51.That might be CRU, an interesting answer, but he doesn't answer the

:44:51. > :45:00.question I asked. Of the �21 billion new private sector

:45:00. > :45:06.investment... Are I don't know the It is when the money hits the

:45:06. > :45:10.ground that people want to know. Our understanding is that of the 21

:45:10. > :45:14.billion, so far you only have a commitment for 700 million. And

:45:14. > :45:18.it's not been spent? I have no idea what those figures refer to, I

:45:19. > :45:23.would happily look at them after the show. Of the �5 billion you

:45:23. > :45:31.have added on to this, is it true that only 700 million of that will

:45:31. > :45:35.be spent in the current financial It will almost be spent starting

:45:35. > :45:40.next April and the April after. We have an investment programme in new

:45:40. > :45:44.college building and new school building, in some new road schemes

:45:44. > :45:48.and maintenance, which is crucially important to communities all around

:45:48. > :45:52.the country. These are schemes that can get under way to create jobs

:45:52. > :45:55.and we crucially raise the quality of infrastructure. Dueshing the

:45:55. > :45:59.last Government's time in office we -- during the last Government's

:45:59. > :46:04.time in office we fell in the league tables in infrastructure.

:46:04. > :46:07.That's why we are increasing the amount of money in infrastructure.

:46:07. > :46:12.Why is house building falling? You are always talking about that and

:46:12. > :46:15.the way of getting growth into the economy. Because of lack of demand

:46:15. > :46:21.for mortgages and because of the problems in the banking system that

:46:21. > :46:24.we're trying to address through the scheme. So people can get mortgages

:46:24. > :46:28.easier. It's falling for a whole range. Will it continue to fall?

:46:28. > :46:34.I'm not sure what the OBR forecasts on that. I'm not going to offer a

:46:34. > :46:37.forecast. You should have a hotline to them, so you know what to say.

:46:37. > :46:42.Government investment in house building is increasing. Part of the

:46:42. > :46:47.package announced to is new money to unblock sites and to bring in

:46:47. > :46:49.tens of thousands of more housing starts over the next two years, so

:46:49. > :46:54.part of house building that is supported by the Government will

:46:54. > :46:58.see a big increase over the next few years. The Chancellor announced

:46:58. > :47:02.some tough and deep spending cuts today, but as I understand it,

:47:02. > :47:07.there's another �10 billion of cuts for you to find in the spending

:47:07. > :47:11.round that you'll be doing? That's right. In the first half of next

:47:11. > :47:14.year I'll be carrying out a public spending round to find an extra �10

:47:14. > :47:18.billion of savings from unpected departments to maintain the

:47:18. > :47:22.protections that were put in place through the Parliament in terms of

:47:22. > :47:25.increasing health spending and school spending and meeting our

:47:25. > :47:31.overseas aid commitment. I'll be sitting down over the next few

:47:31. > :47:34.months to work out where they can be found. People might see the pain

:47:34. > :47:39.today, taxes up and spending down and think that's bad, but it's far

:47:39. > :47:43.from it. There are a lot of other cuts may be programmes not just

:47:43. > :47:49.bureaucrats. Perhaps squeezes on working people's benefits not just

:47:49. > :47:53.the unemployed still to come? are. We have to fill out all the

:47:53. > :47:56.details of what Government will spend on what. It's in a year when

:47:56. > :48:00.this Government will be in power for the first two weeks and we have

:48:00. > :48:04.to do it, oh that means asking questions of departments. I'm

:48:04. > :48:06.committed to making sure in doing that we focus on protecting

:48:06. > :48:10.spending that is good for the economy and that supports economic

:48:10. > :48:18.growth, but you are quite right, there will be a lot more tough

:48:18. > :48:25.choices down the track. If the Government has set enormous store

:48:25. > :48:30.by the AAA credit rating, most nan lists expect you to lose that in

:48:30. > :48:33.the first few months of the year, because of the deterioration in

:48:33. > :48:39.growth, which has been confirmed today and the worsening in

:48:39. > :48:44.borrowing, which has been confirmed today. How serious an embarrassment

:48:44. > :48:48.to you will that be if you lose AAA? Thear not the be all and end

:48:48. > :48:52.all. What matters -- they are not the be all and end all. What

:48:52. > :48:56.matters to me is we have a fiscal plan to ensure the markets can have

:48:56. > :48:59.confidence in us. This is a country that can pay its way in the world

:48:59. > :49:04.because we can keep our interest rates as low as they are. One of

:49:04. > :49:09.the things today is information about what the impact would be of a

:49:09. > :49:13.rise in interest rates. 1% in mortgages would cost �12 billion a

:49:14. > :49:15.year, and that's why we place heavy emphasis on maintaining the

:49:15. > :49:21.credibility. You would distance yourself from the Prime Minister

:49:21. > :49:25.and Chancellor who boasted about that AAA? I wouldn't at all, but

:49:25. > :49:28.what lies behind that is not an obsession with ratings, but making

:49:28. > :49:32.sure that the country continues to have a strong and credible fiscal

:49:32. > :49:36.policy, which we maintained very strongly and sticking to the road

:49:36. > :49:40.we started out on, through the decisions in the statement today.

:49:40. > :49:44.If the economy fails to recover in the way that you hope, do you think

:49:44. > :49:48.that the Liberal Democrats and the Tories can hold together in terms

:49:48. > :49:53.of the future path of economic policy I've absolutely no doubt

:49:54. > :49:56.that we will, because we have set out on this task together and it is

:49:56. > :50:00.what caused the coalition to be formed to sort out the country's

:50:00. > :50:03.problems to clean up the mess that Labour left. Yes, it is taking

:50:03. > :50:06.longer and because of the problems in the eurozone and around the

:50:06. > :50:10.world, growth is slower than we would have hoped for, but we're on

:50:10. > :50:13.the right road and making progress and I think that the best thing for

:50:13. > :50:17.this country, speaks as a Liberal Democrat and I'm sure George would

:50:17. > :50:22.say as a Conservative, is to stick to the road. Before you go, you do

:50:22. > :50:25.have to rush, I'm told, is that right? I'm happy to answer some

:50:25. > :50:32.more questions. I can't think of anything more important than being

:50:32. > :50:34.on The Daily Politics. I always enjoy this. Stephanie can ask a few

:50:34. > :50:40.questions. Did you get enough out of the Tories for this? You are

:50:40. > :50:44.going to have to put up with real cuts in welfare payments and

:50:44. > :50:49.continued freezes in public-sector pay effectively. You didn't get a

:50:49. > :50:53.mansion tax or higher council tax bands. All you've got is the

:50:53. > :50:57.inability of well-off people to put more into their pension funds than

:50:57. > :51:00.they would have done. There's not much there? The most important

:51:00. > :51:03.things about the details in the statement today is it's balanced.

:51:03. > :51:08.It's asking as much from the wealthy in terms of tax increases

:51:08. > :51:13.as much as it is asking from the welfare rates that we talked about

:51:13. > :51:16.earlier and re-investing money back into helping people on middle and

:51:16. > :51:21.lower incomes, to a further increase in the tax allowances. You

:51:21. > :51:25.know the number one policy in the 2010 manifesto that I wrote, was to

:51:25. > :51:28.lift the income tax threshold to �10,000. We are only a short hop

:51:28. > :51:31.away. As a result, from next April, working people will have an extra

:51:31. > :51:35.�50 a month in their pockets, thanks to the decisions the

:51:35. > :51:40.Government has made in delivering that policy. It's a balanced

:51:40. > :51:43.package, but most importantly, it's a package that keeps the country on

:51:43. > :51:47.the right track economically. was interesting to me that the

:51:47. > :51:50.Chancellor didn't mention his target measure of borrowing in the

:51:50. > :51:55.speech and of course, spectical as I am, I thought maybe that means

:51:55. > :51:58.that the story's not very good, but it's interesting to me that

:51:58. > :52:05.actually the story is better than it was even six months ago and much

:52:05. > :52:08.better than anyone expected the OBR to give. It hasn't actually meant -

:52:08. > :52:12.I'm a bit surprised if you are balancing your target measure of

:52:12. > :52:15.the deficit in the same year that you were before, in 2016/17, why do

:52:15. > :52:19.you need the extra year of austerity in 2017? Is that

:52:19. > :52:25.something that will be taken away before the election? No, it's a

:52:25. > :52:29.good yes. -- question. It goes back to what Andrew was talking about.

:52:29. > :52:33.The OBR said and George said that we meet the fiscal mandate over the

:52:33. > :52:37.five-year period. With the asset purchase facility coupons, as you

:52:37. > :52:40.were saying, it's in 16/17 and without it it takes another year

:52:40. > :52:42.and it's right for us to plan on the basis that we are going to need

:52:43. > :52:46.to continue to take further difficult decisions, particularly

:52:46. > :52:52.to ensure that we hit the target and also to ensure that we get the

:52:52. > :52:57.debt falling, because in the end we are going to be spending �60

:52:57. > :53:04.billion by debt interest repayments and we need to make sure it comes

:53:04. > :53:06.down. The savings on the benefits, those that you are making that are

:53:06. > :53:11.quite significant the year after next, are most of those coming from

:53:11. > :53:19.people who are out of work or from the change in the uprating of all

:53:19. > :53:23.the people who are in work, but who get working tax credits? It's a 1%

:53:23. > :53:27.uprating policy across the policy. Most of the savings won't be from

:53:27. > :53:30.the people behind the blinds and the scroungers that the Chancellor

:53:30. > :53:34.talks about? It comes from both groups. I would also say to you

:53:34. > :53:37.that the people in work will be the most substantial beneficiaries of

:53:37. > :53:41.the increase in the income tax personal allowance. Those people

:53:41. > :53:48.will be gaining significantly in terms of paying less tax, albeit

:53:48. > :53:52.that the benefits and tax credits they receive will go up by less.

:53:52. > :53:57.Nick, just one question on that. You said that the amount gotten

:53:58. > :54:03.from the rich, as it were, is the same from the poor. I get this as

:54:03. > :54:07.3.5 billion is raised from curbing benefits. But the only tax rise I

:54:07. > :54:13.can see on individuals, as against on banks for example, as against

:54:13. > :54:19.tax avoidance and so on, actually someone says, "I will now pay more

:54:19. > :54:24.tax." That is that pensions tax relief which raises much, much less

:54:24. > :54:29.than 3.5 billion? The pensions measure raises around �1 billion a

:54:29. > :54:36.year. Not uprating the higher rate, which affects not the wealthy, but

:54:36. > :54:39.the better off, it raises another �1 billion. In 15/16 we get another

:54:39. > :54:43.�1 billion from the yield from the Swiss deal, which is money that is

:54:43. > :54:47.hidden overseas by wealthy people in the country who thought they

:54:47. > :54:52.would get away without paying tax. They may saying getting money out

:54:52. > :54:56.of us that has been hidden is not in any sense equalised by taking

:54:56. > :55:00.money away from people who depending on welfare. It's your job

:55:00. > :55:04.anyway. Getting this money if from people who thought they could hide

:55:04. > :55:10.their money from the British tax system is a very, very good thing.

:55:10. > :55:13.It's a one-off. It is spread over a number of years. We also have a

:55:13. > :55:18.number of avoidance policies which don't feature on the score card at

:55:18. > :55:23.this time, about the extra investment we are putting into HMRC

:55:23. > :55:29.which will raise a further �2 billion by the end of the

:55:29. > :55:32.Parliament. There is a lot going on to make sure that everyone pays

:55:32. > :55:36.their way. If you look at the distribution analysis you will see

:55:36. > :55:42.all that set out in some detail. Thank you very much for giving us

:55:42. > :55:46.more time than you were allocated. Though not more than you deserved.

:55:46. > :55:55.I'm glad you went to see the by pass being built because it was

:55:55. > :56:00.first proposed more than 50 years ago. INAUDIBLE. As I said that, I

:56:00. > :56:05.just thought that's what he's going to say! We'll just see houpbgz it

:56:05. > :56:08.takes you to finish -- how long it takes you to finish. Back to

:56:08. > :56:12.Matthew on The Green. Thank you. We heard from the Conservatives and

:56:12. > :56:15.the Liberal Democrats. We'll hear from Labour and speak to Chris

:56:15. > :56:20.Leslie, Shadow Treasury Minister. Thank you very much for being here.

:56:20. > :56:27.What did you make of what you heard from the Chancellor? I think the

:56:27. > :56:31.difficulties that we have seen in terms of the economy in 2012 have

:56:31. > :56:34.caused real problems with borrowing and with debt. We have seen more

:56:34. > :56:38.revised borrowing figures getting worse and worse and we have seen

:56:38. > :56:42.the debt figures looking very, very bad indeed. It turns out, and we

:56:42. > :56:47.have had a chance in the last 30 minutes to look through the details

:56:47. > :56:52.of it, that the Chancellor can only claim that his borrowing figures

:56:52. > :56:56.look reasonably better because he's pencilled in the proceeds from the

:56:56. > :56:59.sale of the 4G spectrum auction, even though the proceeds for that

:56:59. > :57:04.haven't yet been realised. There are some questions now about the

:57:04. > :57:11.way in which the Chancellor is presenting the borrowing statistics,

:57:11. > :57:15.putting into the public finances 3. 5 billion of revenue which have not

:57:15. > :57:18.materialised. Targets aside, but most people's daily lives are the

:57:18. > :57:23.most important thing, petrol, that was good news, wasn't it? We were

:57:23. > :57:27.calling for a freeze in that. Of course, it's gone up by three pence

:57:28. > :57:32.because of the VAT increases. Don't forget, anybody filling their tank

:57:32. > :57:35.won't be seeing prices coming down, but they won't be going up at fast.

:57:35. > :57:40.Of course it's welcome. When we voted on it, the Government voted

:57:40. > :57:44.against that, so I'm not sure they won't make that announcement then.

:57:44. > :57:48.Schools and science and transports - �5 billion? We'll see where they

:57:48. > :57:52.are getting the money from. There is the issue of giving to Peter and

:57:52. > :57:55.taking from Paul. They took �3 billion out of the schools'

:57:55. > :58:00.infrastructure budget when they were elected. Putting one billion

:58:00. > :58:05.back if doesn't make up that gap. All the things that potentially

:58:05. > :58:07.people will welcome, you respond to in a Qual tide way. Where would you

:58:07. > :58:12.get opinion from? There isn't mathying money out there? I think

:58:12. > :58:17.what you have to do is look at the priorities. We wouldn't give �3

:58:17. > :58:21.billion away to the wealthiest in society, the millionaires who will

:58:21. > :58:24.get a tax cut in April and spend �3 billion reorganising the National

:58:24. > :58:28.Health Service. There has to be pay restraint, but there are other

:58:28. > :58:33.choices. We should have a reduction in the EU budget, but the key thing

:58:33. > :58:36.we have to come back to is growth. Unless you recognise that a healthy

:58:36. > :58:40.economy drives the health of public finances you'll never solve this

:58:40. > :58:45.and we have seen the Chancellor yet again kicking the can further down

:58:45. > :58:49.the road, and not dealing with the fundamental issues and breaking his

:58:49. > :58:52.promise to balance the books by 2015. We heard the Chancellor

:58:52. > :58:57.challenge you and others. He said people who don't want to cut

:58:57. > :59:01.spending they have to raise the taxes or the debt or both and

:59:01. > :59:04.that's your exclusion to spend more? I think there are key

:59:04. > :59:08.critical developments that need to be made now to stimulate growth and

:59:08. > :59:13.get confidence back. If we can continue, as the Chancellor himself

:59:13. > :59:17.had to admit, having a shrinking economy, so the economy actually

:59:17. > :59:21.gets smaller in 2012, then there's no wonder the public finances

:59:21. > :59:23.continue to deteriorate. How many more years will very to say to the

:59:23. > :59:26.Chancellor focus on growth and think about the health of the

:59:26. > :59:36.economy and the public finance issues will flow from that? Thank

:59:36. > :59:37.

:59:37. > :59:42.you very much. Andrew, back to you. We are not the only people in this

:59:42. > :59:49.town doing some number cinching. They're doing it in the Sit --

:59:49. > :59:58.crunching. They're doing it in the City. Over now to Susannah Streeter

:59:58. > :00:02.in the City. There's a sense of relief following the Chancellor's

:00:02. > :00:09.statement. Relief that the UK is still on that path to austerity.

:00:09. > :00:14.There were concerns that the bond market could plummet really, but in

:00:14. > :00:20.fact gilts, UK Government debts have risen, which many say is good

:00:20. > :00:30.news for future borrowing for UK plc, but there's not been much

:00:30. > :00:32.

:00:32. > :00:37.Let's talk to Mike Ingram, a market watcher. Tell me what you took from

:00:37. > :00:41.the statement, as far as trying to restore growth in UK PLC? Given the

:00:41. > :00:45.very limited room for manoeuvre that George Osborne had, and we all

:00:45. > :00:49.know that the numbers are extremely tight, I think he did a reasonably

:00:49. > :00:54.good job. He stuck to the principle of trying to read direct revenues,

:00:54. > :00:57.expenditure, away from current expenditure, away from overhead,

:00:57. > :01:01.into capital expenditure, spending that might see some sort of return

:01:01. > :01:06.in terms of developing businesses and support for the all-important

:01:06. > :01:11.SMEs. There was that announcement as well, a big increase in relief

:01:11. > :01:14.for capital expenditure. How much will that impact the small-to-

:01:14. > :01:19.medium businesses that are the lifeblood of the economy? I think

:01:19. > :01:26.it to be very significant indeed. As George Osborne pointed out, that

:01:26. > :01:36.includes 90% of corporates in the UK. Having his 100% tax relief,

:01:36. > :01:36.

:01:36. > :01:39.from 25,000, up to 250,000, its a big boost. We heard about that �5

:01:39. > :01:44.billion fund for capital expenditure round things like new

:01:44. > :01:49.homes, for example, what impact will that have on growth in the

:01:49. > :01:53.long term? Andrew Smith is chief economist at KPMG. What to do take

:01:53. > :01:59.on the statement? Did you think there was anything that would help

:01:59. > :02:03.the economy return to growth and health? There are bits and pieces.

:02:03. > :02:07.The Chancellor has been tried to combine deficit-reduction with

:02:07. > :02:11.economic recovery. He's not actually getting much of either, as

:02:11. > :02:16.he had to admit. He tended by low growth and, on the other side, by

:02:16. > :02:19.his fiscal rules. There will be a small alleviation, but at the end

:02:19. > :02:26.of the day we are looking at a multi year fiscal contraction,

:02:26. > :02:30.which is going on to 2080 now. Thank you very much. More from you

:02:30. > :02:35.a little bit later. You can see it is still a very tough tightrope

:02:35. > :02:45.that the Chancellor is walking. So far, from the city, a cautious

:02:45. > :02:46.

:02:46. > :02:49.You are watching live coverage and analysis of the Chancellor's Autumn

:02:49. > :02:52.Statement on BBC Two and the BBC News Channel. If you have just

:02:52. > :02:55.joined us, let's bring you have to date with a couple of the key

:02:55. > :03:01.points from George Osborne's statement. Let's begin with the

:03:01. > :03:06.forecast, not his forecast, but the forecast of the Independent Office

:03:06. > :03:11.for Budget Responsibility. It is now saying the economy will shrink,

:03:11. > :03:15.not by much, but certainly no signs of growth. Nothing like the third

:03:16. > :03:20.quarter, where we had growth of about 1%. Next year, not much

:03:20. > :03:25.better. The Government is on course to get its structural deficit down.

:03:25. > :03:29.But it is taking longer to do that. It's not on course to get net debt,

:03:29. > :03:33.the accumulation of all of the deficits that we'd have racked up

:03:33. > :03:39.over the years, called the national debt, that is not going to fall as

:03:39. > :03:43.a share of our national wealth until some time after 2016. That's

:03:43. > :03:52.a target that the Chancellor didn't make. What about taxes? Any joy

:03:52. > :03:56.there? Income tax, the personal allowance rises to 900 and --

:03:56. > :04:01.�9,440. You don't start paying tax until you ironing that amount of

:04:01. > :04:11.money. For those on higher incomes, the 40% tax threshold is rising by

:04:11. > :04:14.1% in both 2014/15 and 2015/16. In real terms, you will be paying more.

:04:14. > :04:23.If you run a business, corporation tax is down, the Chancellor has

:04:23. > :04:27.made many cuts to corporation tax. Other measures, if you are wrong

:04:27. > :04:32.working-age benefits, such as jobseeker's allowance, your

:04:32. > :04:39.increases over the next three years will be capped at 1%. Again, that

:04:39. > :04:43.is less than the rate of inflation. However, if you are a motorist, the

:04:43. > :04:47.three pence rise in fuel duty is coming through in January, it has

:04:47. > :04:51.not just been postponed, it has been scrapped altogether says the

:04:51. > :04:55.Chancellor. If you are a civil servant working in Whitehall,

:04:55. > :05:01.departmental budgets are going to be cut by 1% next year and another

:05:01. > :05:04.2% the year after that. That on top of the 17% cuts already laid down

:05:04. > :05:10.in previous Chancellor statements and budgets. It is likely,

:05:11. > :05:14.therefore, to mean some redundancies.

:05:14. > :05:19.Let's get some more political reaction and talk to Angus

:05:19. > :05:26.Robertson for the SNP and Elfyn Llwyd from Plaid Cymru. They are in

:05:26. > :05:30.the Central Lobby. Angus Robertson, or public spending, more public

:05:30. > :05:38.investment, Scotland will get its share, what are you going to spend

:05:38. > :05:41.it on? First off, it's important to note that the growth forecasts are

:05:41. > :05:46.as problematic as they are. It's a problem in Scotland and Wales, the

:05:46. > :05:50.whole of the airship kingdom. It's a real cause for concern. -- United

:05:51. > :05:54.Kingdom. Capital projects coming on line, those are shove already

:05:54. > :06:01.projects that the Scottish government have had ready to start

:06:01. > :06:04.immediately. About half of those projects will be returned to

:06:04. > :06:09.Scotland. I'm not sure if you have reported that North Sea oil

:06:10. > :06:13.receipts will contribute �10 billion in the next financial year.

:06:13. > :06:18.Scotland is contributing significantly to the UK. You would

:06:18. > :06:23.not expect me to overlook the comparison that we would be able to

:06:23. > :06:27.make far better decisions in Scotland around the budget, given

:06:27. > :06:32.that Scotland is in a better budgetary situation than the UK.

:06:32. > :06:34.That is the great advantage of an independent vote in 2014, when we

:06:35. > :06:39.can secured the decision-making powers of Scotland to make them

:06:39. > :06:44.closer to home, rather than having a Tory government we did not elect

:06:44. > :06:49.making bad decisions. I expected you to get to that point, in spite

:06:49. > :06:52.of my question being about something else! The Government, or

:06:52. > :06:56.the Prime Minister in Prime Minister's Questions, pointed out

:06:56. > :07:00.that the money in the health service in Wales is being cut. Will

:07:00. > :07:03.you have a chance to increase that with money coming your way from the

:07:03. > :07:07.overall spending settlement? depends what the Labour government

:07:07. > :07:10.decide to do. Their priorities clearly are not in the area of

:07:10. > :07:14.health, which she would have thought would have been a priority.

:07:14. > :07:17.That is the first point. We have campaigned for a long time for

:07:17. > :07:23.borrowing powers for borrowing powers for the Welsh government.

:07:23. > :07:26.That has been welcomed by the Silk Commission. No mention of it today,

:07:26. > :07:30.but we need those powers to kick- start the economy and make sure

:07:30. > :07:35.that capital projects within health, with their many public service, are

:07:35. > :07:39.brought forwards. Clearly, they are not at the moment. I'm disappointed

:07:39. > :07:44.with the general thrust of today's announcements. As Angus said, his

:07:44. > :07:49.figures, are they dependable? I'm not sure if they are. In 2010, he

:07:49. > :07:55.was talking of a growth rate of 2.8%. This year we are talking

:07:55. > :07:59.about 0.1%. In fact, his 5 billion towards closing the gap, as it were,

:07:59. > :08:06.is going to be negligible in terms of effect, according to the IFS.

:08:06. > :08:10.Ernst and Young say that in order to increase GDP by 0.5% per annum,

:08:10. > :08:15.you actually need �14 billion per annum invested. It is really going

:08:15. > :08:19.to be negligible. It is more austerity. Incidentally, hitting

:08:19. > :08:24.the ball, the easy targets. I don't know if people realise, it's clever

:08:24. > :08:28.sleight of hand. -- hitting the poor. Benefits were going to go up

:08:28. > :08:34.by RPI, then they were switched to CPI, now it is in accordance with

:08:34. > :08:38.average wages, lower again. I think that is awful. It shows that the

:08:39. > :08:42.Tory party are still the nasty party, here they are at work.

:08:42. > :08:45.they're not even going to be going up in line with wages, less than

:08:45. > :08:49.that. Time now to say goodbye to viewers

:08:49. > :08:55.in Scotland. Goodbye. They are going to join Andrew Kerr for

:08:55. > :09:00.politics Scotland. We can now talk to Alan Moreton

:09:00. > :09:04.Island business editor Jim Fitzpatrick, outside Stormont. --

:09:04. > :09:08.Alan Northern Ireland business editor. How is it going down there?

:09:08. > :09:15.Cringing the figures, it looks like Northern Ireland is actually a win

:09:15. > :09:21.out of this one. The public spending is the economy in Northern

:09:21. > :09:24.Ireland. It accounts for 70% of our economy. We rely on �10.5 billion

:09:24. > :09:29.from Westminster to keep this place ticking over, that is the amount we

:09:29. > :09:31.take, as opposed to what we get back. How it turns out to date is

:09:31. > :09:37.that we will see an increase of capital spending over the next

:09:37. > :09:46.couple of years of �131 million. We will see a decrease in resource

:09:46. > :09:50.spending of �32 million. Pretty much a gain of almost �100 million

:09:50. > :09:54.for Stormont to spend on infrastructure. That will, of

:09:54. > :10:02.course, be welcomed. Something else that has been sneaked in, which

:10:02. > :10:07.might be of interest of those that followed the energy industry. The

:10:07. > :10:14.carbon floor tax, Northern Ireland is going to be exempt from that.

:10:14. > :10:16.The argument is that we are an island, it would put generators in

:10:16. > :10:26.Northern Ireland and it's an advantage compared to the republic.

:10:26. > :10:31.That has been sneaked in and it Just looking at the growth figures,

:10:31. > :10:38.the OBR, the official growth forecast of just over 1%, 1.2% for

:10:38. > :10:44.next year, up to 2% for 2014. Just two point out that the OBR is still

:10:44. > :10:47.more optimistic on growth than the average of independent forecasters.

:10:47. > :10:52.They don't even think the economy is going to grow by as much as the

:10:52. > :10:59.OBR. As we were saying, the record of the OBR has been that it has

:10:59. > :11:02.been far too optimistic. I wouldn't bet the bank on these forecasts. Jo

:11:02. > :11:07.is with Paul Lewis in Stoke-on- Trent.

:11:07. > :11:13.Yes, George Osborne, the Chancellor, has painted a pretty tough picture

:11:13. > :11:17.with more gloomy times ahead. As far as he is concerned, he's got to

:11:17. > :11:21.try to find and generate that elusive problem of more growth in

:11:21. > :11:27.the economy. Let's talk to Paul Lewis from BBC Radio Four's

:11:27. > :11:30.Moneybox programme. Was there anything in a statement that said

:11:30. > :11:35.you are that this will generate growth? The big thing was the

:11:35. > :11:40.increase in capital allowances for businesses. You can spend �25,000

:11:40. > :11:44.and write it off in the first year. It's going to be �250,000, a

:11:44. > :11:48.tenfold increase. The businesses I have spoken to say it is a very

:11:48. > :11:52.good thing. They can spend money, it will boost the economy and they

:11:52. > :11:56.can get full tax relief. Do you think it will be enough? Big

:11:56. > :11:59.corporations are sitting on, they admit, quite a lot of cash they

:11:59. > :12:03.don't want to invest? I think it will help smaller businesses more

:12:03. > :12:07.than big ones. What big business needs is the feeling that if they

:12:07. > :12:11.start investing the economy is going to grow. As we have seen, the

:12:11. > :12:15.Chancellor says it has actually shrunk for the whole of 2012.

:12:15. > :12:20.really that optimistic in terms of what people can expect? What have

:12:20. > :12:23.people been sending you e-mails about? Edward in Oxford is in

:12:23. > :12:28.business and he said he would have liked a national insurance holiday

:12:28. > :12:34.so he could take on new staff about the expense of national insurance.

:12:34. > :12:42.That hasn't happened. We certainly have people liking to cut... Sorry,

:12:42. > :12:47.not the cut, they're not been a rise in fuel duty. That's gone

:12:47. > :12:51.altogether. That's important for people in rural areas. Also for

:12:51. > :12:55.businesses that rely on fuel. Everything we have in our homes has

:12:55. > :12:59.been delivered by road somewhere. That is a big saving and could help

:12:59. > :13:05.business a lot. On the personal side, a rise in tax allowance in

:13:05. > :13:09.April from what we were expecting by another remand, �9,440 before we

:13:09. > :13:14.pay tax. That will put a bit of cheer back in people who face pay

:13:14. > :13:17.cuts and pay freezes. Let's get local reaction and talk

:13:17. > :13:23.to our guests who come from across the region. I am joined by Barry

:13:23. > :13:33.Proctor, who runs a haulage company. Julie White owns a concrete cutting

:13:33. > :13:34.

:13:34. > :13:40.company. Mike Benniston is a pub landlord. That 3p rise in fuel duty

:13:40. > :13:44.not happening, will that have an effect? It really pleased, I would

:13:44. > :13:50.like to thank the lobbying from fair pay on fuel. Also welcome news

:13:50. > :13:54.is the Investment allowance. Will you take advantage, or other

:13:54. > :13:58.companies? We will take advantage, yes. What about the state of the

:13:58. > :14:02.construction industry? That's my biggest concern. We are heavily

:14:02. > :14:06.involved in the construction industry. My major customer

:14:06. > :14:11.operates nine Brickworks in the UK. At this moment there is not a

:14:11. > :14:15.single works producing a brick. Any improvement in house building would

:14:15. > :14:19.be very welcome. There was nothing in the Autumn Statement that would

:14:19. > :14:23.inspire you to think that would happen? A little bit, but not much.

:14:23. > :14:26.What is your biggest concern? the infrastructure. They have been

:14:27. > :14:30.talking about it, I think it is �33 billion they are talking about

:14:30. > :14:37.comedy at the structure they are putting into roads, housing and

:14:37. > :14:41.schools. But nothing is happening. We really need a push. We need to

:14:41. > :14:48.actually get the sites ready and going. It takes six months, nearly,

:14:48. > :14:50.to tender and then get to start. When the Chancellor says we are

:14:50. > :14:54.releasing this money to go to capital investment and

:14:54. > :14:58.infrastructure, we are talking about at least another six months?

:14:58. > :15:05.Even from now to them. So we need more time. The other thing is no

:15:05. > :15:11.apprentices. They didn't mention anything at apprentices. We have

:15:11. > :15:15.companies like Wedgwood, why can't we get a national insurance holiday

:15:15. > :15:20.for every employee we hired? It would be great for small businesses

:15:20. > :15:24.and young people. For you and your business, I presume the idea of

:15:24. > :15:29.what they call fiscal consolidation, more austerity until 2018, what

:15:29. > :15:35.will that do to your spending power of your customers? It will give

:15:35. > :15:45.them less money in an industry that is already depreciating on an

:15:45. > :15:47.

:15:47. > :15:52.average of about 12 pubs week now closing. The thought of a third --

:15:52. > :15:56.further five years of less money in people's pockets, it has an adverse

:15:56. > :16:06.effect on our business because people have not got the money in

:16:06. > :16:08.

:16:08. > :16:12.their pockets. If they have got the We have to diversify. From our

:16:12. > :16:17.original business, we are diversifying in different ways. We

:16:17. > :16:21.have put in planning permission to open a village shop, as part of a

:16:21. > :16:26.community-based project. So, our original business is developing

:16:26. > :16:31.into other areas. In terms of diversification, have you had to

:16:31. > :16:36.lay any one-off? Not yet, but at the moment, I have got a third of

:16:37. > :16:41.my fleet doing traction only. Coming up to Christmas, the food

:16:41. > :16:45.chain gets very busy, so we have got a third of the fleet doing

:16:45. > :16:48.traction, delivering to supermarkets and things like that.

:16:48. > :16:53.We are hoping that in January, things will pick up, and we will

:16:53. > :16:57.have them back on the bricks. There needs to be an awful improvement in

:16:57. > :17:01.house building. I do not understand, with the amount of money we are

:17:01. > :17:05.paying out at the moment in housing benefit, but we are not building

:17:05. > :17:11.more houses for these people, rather than lining the pockets of

:17:11. > :17:15.very wealthy landlords. As far as staff are concerned, the Chancellor

:17:15. > :17:21.said that employment has been a better picture than had been

:17:21. > :17:26.thought - do you agree with that, or are people doing Les hours, is

:17:26. > :17:32.that how you have managed to keep hold of people? Well, we have

:17:32. > :17:38.diversified. I have bought a company, and we have started two

:17:38. > :17:43.new technologies, within the area of cutting. But it is tough. Thank

:17:43. > :17:53.you very much to all of you. We will be coming back to the Wedgwood

:17:53. > :17:55.

:17:55. > :17:57.factory in the next hour or so. We are joined now by Paul Johnson,

:17:57. > :18:02.from the Institute for Fiscal Studies, something of a default

:18:02. > :18:10.think tank at moments like this! We went into this with the following

:18:10. > :18:19.deficit figures - we had a deficit of �121 billion in 2011 / 12. We

:18:19. > :18:24.were then forecast �120 billion for this current year, then �90 billion

:18:24. > :18:29.in 2013, and �75 billion in 2014/15, so it was going down, but not

:18:29. > :18:32.dramatically. What has happened? The good news is that the budget

:18:32. > :18:36.deficit this year does not look like it will be any worse than it

:18:36. > :18:40.was forecast to be back in March. That is partly because the

:18:40. > :18:43.Government is expecting departments to underspend, partly because tax

:18:43. > :18:48.revenues are holding up reasonably well, and partly because they are

:18:48. > :18:53.getting some extra money from selling 4G licences. Going forward,

:18:53. > :18:57.it looks rather worse. Three or four years out, it looks like the

:18:57. > :19:02.deficit will be �30 billion or so more. That is a big problem. What

:19:02. > :19:06.is causing that? Lack of economic growth, that is all. It is much

:19:06. > :19:15.lower than it was expected to become a back in March. Lower

:19:15. > :19:22.growth, higher borrowing. That is it. Never mind the forecasts, the

:19:22. > :19:26.borrowing for the first seven months of this financial year, 2012

:19:26. > :19:29./ 13, is more than the last financial year, leading many people

:19:29. > :19:33.to predict that borrowing this year would be substantially higher than

:19:33. > :19:38.last year - what happened to that? Just one week ago, we were

:19:38. > :19:43.expecting that borrowing would be more this year than last. I did not

:19:43. > :19:49.want to mention that it was you! Three things seem to have happened.

:19:49. > :19:54.First of all, the Office for Budget Responsibility is being relatively

:19:55. > :19:59.optimistic for tax receipts. Secondly, department will spending

:19:59. > :20:04.seems to be coming in even lower than had been expected. Secondly --

:20:04. > :20:09.thirdly, there is this one off �3.5 billion, from the 4G auction. So,

:20:09. > :20:13.he has got three things which are going towards making that number.

:20:13. > :20:19.But in some of the figures I have seen, this year's deficit was going

:20:19. > :20:25.to be about the same as last year's, and you still think that is where

:20:26. > :20:31.we are? He is saying the deficit will be �108 billion this year?! Is

:20:31. > :20:37.that jiggery-pokery? We have all sorts of different numbers. That is

:20:37. > :20:41.why he has confused us to! The one he quoted, the �108 billion, I

:20:42. > :20:46.think included the transfer of money from the Bank of England. The

:20:46. > :20:49.comparable number is �120 billion. Essentially he is saying that

:20:49. > :20:58.borrowing this year will be near as damn it the same as last year.

:20:58. > :21:03.it is not really deficit-reduction? It is certainly not much of one.

:21:03. > :21:05.is interesting that it does seem to make quite a big difference to the

:21:05. > :21:11.structural picture. I was very optimistic initially looking at

:21:11. > :21:18.these figures, but then I realised there wasn't yet another * But I

:21:18. > :21:26.should have followed, to get another shot, -- to yet another

:21:26. > :21:30.chart, to take account of these transfers from the Bank of England.

:21:31. > :21:36.Is it right, is it actually a long- term improvement, that the

:21:36. > :21:40.Chancellor has actually been help - - helped by the Bank of England's

:21:40. > :21:44.decision to buy all of this debt to help the economy? Well, if it has

:21:44. > :21:49.had a good effect on the economy, which it was intended to do, then

:21:49. > :21:52.it will have that effect. It has made it cheaper to borrow was well.

:21:52. > :21:56.He is getting the interest back that he was given to the Bank of

:21:56. > :22:01.England. The overall story is of a structural deficit which is bigger

:22:01. > :22:06.than was inspected in March, so there is some help, but it is not

:22:07. > :22:11.taking us out of a hole. Can you just explain to people watching

:22:11. > :22:17.this programme, who have to pay their credit card bills and balance

:22:17. > :22:21.their accounts every week and every month, a system whereby the

:22:21. > :22:26.Treasury cells and are set to the Bank of England, called gilts, and

:22:26. > :22:30.it pays interest on that, and that interest goes into the Bank of

:22:30. > :22:35.England's balance sheet as income, and then, after a while, the

:22:35. > :22:41.Treasury says, give us that income back, we wanted on our balance

:22:41. > :22:45.sheet! If any individual did that, you would end up in jail? It is a

:22:45. > :22:50.strange but of accounting, but it does not change anything real..

:22:51. > :22:54.is using it to change the figures are! Unfortunately in his speech he

:22:54. > :22:58.used figures which included those numbers. But in the main

:22:58. > :23:02.documentation, you can see the numbers without that. It is not

:23:02. > :23:09.changing anything. We are still going through. Do not go away. We

:23:09. > :23:13.have got a lot more to ask you. I must try the idea of paying

:23:13. > :23:20.interest and then asking for it back with my own bank account!

:23:20. > :23:24.Stefani, thanks for being with us. I have got to go to the Office for

:23:24. > :23:28.Budget Responsibility, to see how they explain it all. You will be

:23:28. > :23:32.there all night! Let's see what some members of Her Majesty's press

:23:32. > :23:40.have got to say about this. We can go back to Matthew, on College

:23:40. > :23:45.green. I am sure he will be able to do a Leveson-compliant interview!

:23:45. > :23:48.Yes, we have got Polly Toynbee, from The Guardian, as well as

:23:48. > :23:52.journalists from the Economist macro and from the Evening Standard.

:23:52. > :23:57.What have you made of it? It is very grim, worse than we might have

:23:57. > :24:04.thought. All the forecasts turn out to have been wrong, yet again. Time

:24:04. > :24:09.and time again, the OBR seems to get it spectacularly wrong. Away

:24:09. > :24:15.the pain has been shared has been yet again singularly unfair. Four

:24:15. > :24:19.times more taken from the poorest tenth than from the richest.

:24:19. > :24:24.think he was trying to do two things with this statement. First

:24:24. > :24:29.of all, he has been trying to get a quality of suffering theme going,

:24:29. > :24:33.so you will find the tax thresholds have changed, so that over the next

:24:33. > :24:38.three years, if you were any more, you will certainly be contributing

:24:38. > :24:42.more. I think what he is trying to do, squeezing benefits at the other

:24:42. > :24:48.end, he wants people to have every possible reason to going to work.

:24:48. > :24:55.So yes, it is tough, on that account. In terms of real lives,

:24:55. > :25:00.what he wants to do is to say, I am going to be easing off on petrol,

:25:00. > :25:03.but at the same time, it is hard, targets are not being met at the

:25:03. > :25:08.moment, and it would not be the first government where targets have

:25:08. > :25:12.been missed. You mentioned fairness - George Osborne said he was

:25:12. > :25:17.targeting bureaucracy, benefits, the well-off. He thought that was

:25:17. > :25:20.fair - you think not? He makes a very unfair distinction between the

:25:20. > :25:25.strikers and the skivers, between people on benefits and people in

:25:25. > :25:28.work. The truth is, he is cutting tax credits, and three-quarters of

:25:28. > :25:31.people on tax credits are in work. The idea that you can make a

:25:31. > :25:36.distinction between people on benefits and people in work is

:25:36. > :25:39.utterly wrong, and he knows it, and most people know it. Tax credits

:25:39. > :25:43.are very important to ordinary, working families, and yet he blurs

:25:43. > :25:48.the edges of that, by talking about people who are still asleep in the

:25:48. > :25:52.morning. Most of the people out of work desperately want to find jobs.

:25:52. > :25:54.Most of the people whose benefits have been cut are in work,

:25:54. > :25:58.enclosing their housing benefits. Most of the people going on to

:25:58. > :26:02.housing benefit are in work. terms of the political argument,

:26:02. > :26:07.one question raised was, could George Osborne convince people that

:26:07. > :26:10.this was the only strategy, however painful? Do you think he managed to

:26:10. > :26:14.convince people? He will not convince people who thought from

:26:14. > :26:20.the beginning that this was the wrong tactic, and that we should

:26:20. > :26:24.simply borrow more and continue with fiscal indiscipline. They were

:26:24. > :26:29.never going to be convinced. But in terms of austerity, I would say

:26:29. > :26:35.that the wavering voters broadly feel this is necessary. They wish

:26:35. > :26:40.that things were better, but they will have had to concede that it

:26:40. > :26:43.has been harder than he had said at the outset. The polls are beginning

:26:43. > :26:48.to switch, interestingly. Many more people are saying they think we

:26:48. > :26:54.have had enough cuts, compared with the number saying that what counts

:26:54. > :27:02.is the deficit only. If only he had borrowed in order to invest, but

:27:02. > :27:12.borrowing is going up anyway. We have an economy which is shrinking

:27:12. > :27:12.

:27:12. > :29:01.Apology for the loss of subtitles for 43 seconds

:29:01. > :29:11.On BBC Two we have Paul Johnson still with us. One of the issues we

:29:11. > :29:12.

:29:12. > :29:18.were talking about is the impact of the 1% rise in benefits for a

:29:18. > :29:22.three-year period has quite big distributional impact, doesn't it?

:29:22. > :29:28.Those dependent on benefits, those on the lowest incomes, not

:29:28. > :29:34.pensioners, and this is not affecting pensioners, only goes on

:29:34. > :29:41.working age, they will seek their real incomes fall by just over 1% a

:29:42. > :29:45.year. But it is worth saying that over the last two or three years,

:29:45. > :29:50.earnings have been increasing a lot slower than benefits. You could

:29:50. > :29:54.argue that this is partially reversing a situation in which

:29:54. > :30:03.those dependent on benefits have been doing better than those

:30:03. > :30:05.dependent on innings. Robert? of what will determine things like

:30:06. > :30:11.if these allegedly more cautious deficit assumptions are going to be

:30:11. > :30:15.hit in years to come, will we keep our credit rating and the rest of

:30:15. > :30:21.it, is what happens to growth. If you look at the OBR forecast of

:30:21. > :30:25.growth, it is expecting something of a recovery next year. If you

:30:25. > :30:28.drill down bits of it, you can take for granted they are going to be

:30:28. > :30:32.negative. For the first time, general government consumption is

:30:32. > :30:35.going to fall. Government investment is going to continue to

:30:35. > :30:41.be squeezed. You can assume that these negative things are going to

:30:41. > :30:47.happen. Then they say that we do expect consumer spending to bounce

:30:47. > :30:51.quite a lot, up 0.9%, business investment to go up 0.9%. A

:30:51. > :30:57.positive contribution from trade. In recent years, all of that has

:30:57. > :30:59.disappointed. There are pretty good reasons to be cautious, I think, in

:30:59. > :31:05.assuming we are going to get that kind of private sector recovery

:31:05. > :31:11.next year. Do you think that this growth forecast is credible? It's

:31:11. > :31:15.probably as credible as you can get. So it's not credible!? It's not

:31:15. > :31:19.massively out of line with other forecasts. In its a little more

:31:19. > :31:25.optimistic. It is less optimistic than last year. There is clearly a

:31:25. > :31:30.risk that it will yet again have to be taken down in a year's time.

:31:30. > :31:35.Let's put this in context. We have now had former careers of the worst

:31:35. > :31:41.growth we have ever had, certainly since the 1920s. There is a very

:31:41. > :31:45.real sense in what the OBR is suggesting, and do the forecasts,

:31:45. > :31:50.it is unbelievably pessimistic given how bad things have been,

:31:50. > :31:54.assuming that we have not lost very large swathes of the economy, at

:31:54. > :31:58.some point we will move back. The problem that everybody has got his

:31:58. > :32:03.when it starts to turn around. was looking at that distributional

:32:03. > :32:09.figure, that the Labour Party are drawing people's attention to, the

:32:09. > :32:15.charts produced by the Treasury to show who gains from these measures.

:32:15. > :32:18.Anybody in the bottom half of society loses, people just above

:32:18. > :32:24.the halfway mark gain a little, presumably from the personal tax

:32:24. > :32:30.allowance and fuel duty. Then the richest 10% take quite a big hit.

:32:30. > :32:36.In other words, it is sometimes misleading when you say that the

:32:36. > :32:40.rich suffer, the poor suffer, there are quite a lot of people just

:32:40. > :32:50.below the middle who suffer more than those just above the middle.

:32:50. > :32:59.It's interesting what we mean by the rich. We usually mean somebody

:32:59. > :33:04.slightly richer than us! If you are in the proper sense -- top 10%, it

:33:04. > :33:07.might not feel like the super rich. What you have got is a set of

:33:08. > :33:12.measures, the fuel duty, the personal allowance, that will help

:33:12. > :33:19.those in the upper middle. Those dependent on benefits might be

:33:19. > :33:23.losing as a result of the changes. Just as those who are earners have

:33:23. > :33:27.lost because their earnings are falling. When you strip out the

:33:27. > :33:32.extra things that have been put in, the Royal Mail, the Bank of England

:33:32. > :33:36.giving back its interest to the Treasury, financial intervention

:33:36. > :33:42.transfers, I'm not quite sure what that is, but strip that out as well,

:33:42. > :33:49.is the deficit... It falls, but it doesn't seem to be falling that

:33:49. > :33:54.fast. It's still going to be 60 billion in the 2016/17. Has he had