Spending Review

:00:58. > :01:03.special on the Chancellor's latest Spending Review. George Osborne laid

:01:03. > :01:07.out the coalition spending plans back in 2010, and they took us to

:01:07. > :01:10.April 2015, just before the next election. By which time the

:01:10. > :01:14.government's annual deficit was supposed to have been almost

:01:14. > :01:17.eliminated. But slower economic growth than first predicted means it

:01:17. > :01:27.isn't quite working out like that. The government says it will still be

:01:27. > :01:30.

:01:30. > :01:32.borrowing billions in the financial year 2015 to 2016, and that even to

:01:32. > :01:34.meet its revised deficit reduction plans, they will have to find

:01:34. > :01:37.another 11.5 billion in cuts for that financial year. Hence today's

:01:37. > :01:39.statement. With a general election in May 2015, the Chancellor may not

:01:39. > :01:43.be in the Treasury to implement what he's about to announce. Labour has

:01:43. > :01:49.said if it wins the election, it will reluctantly stick with Mr

:01:49. > :01:51.Osborne's overall spending totals. But it could tinker with where the

:01:51. > :01:57.Chancellor's axe falls. The Chancellor is about to leave the

:01:57. > :02:00.Treasury. That is our live shot there. It's only a short drive from

:02:00. > :02:04.the Treasury across Parliament Square to the House of Commons.

:02:04. > :02:09.There's no waving of the budget box, as there is on budget day here. It's

:02:09. > :02:12.a bit more workmanlike when it comes to a Spending Review. There's been

:02:12. > :02:18.months of argy-bargy between the Treasury and Cabinet ministers over

:02:18. > :02:22.what is to be cut. The most recalcitrant even formed what became

:02:22. > :02:27.known as the National union of ministers, to fight Treasury

:02:27. > :02:34.demands. The remaining differences were resolved at the weekend. Now

:02:34. > :02:39.the Chancellor comes to the Commons to tell us what has been decided. We

:02:39. > :02:42.will have live coverage of his speech and labour's response. The

:02:42. > :02:47.Chancellor gets to his feet and about an hours time. At noon, we

:02:47. > :02:52.will have Prime Minister 's questions. To guide us throughout,

:02:53. > :02:57.we have the BBC's finest in the studio. They paid me to say that!

:02:57. > :03:01.Plus reaction from beyond Westminster. I'm outside Parliament,

:03:01. > :03:04.talking to politicians of all stripes, getting their reaction to

:03:04. > :03:11.today's Spending Review and assessing how it will affect the

:03:11. > :03:15.political landscape. I'm in bustling Bury market in Lancashire, where you

:03:15. > :03:20.can buy just about anything. From gorgeous flowers to the famous black

:03:20. > :03:24.pudding. The Chancellor announces how he is going to cut another �11.5

:03:24. > :03:29.billion in spending in a few years time. I'll be talking to taxpayers

:03:30. > :03:33.here to find out what they think about his plans. And I will have

:03:33. > :03:38.your e-mails, texts and tweets come and explain what the Chancellor's

:03:38. > :03:42.announcements mean for you. And I'm in our virtual Treasury courtyard,

:03:42. > :03:52.looking at where the cuts might fall and which areas the Chancellor might

:03:52. > :03:57.

:03:57. > :04:03.spare in this �11.5 billion spending squeeze. With me in the studio is

:04:03. > :04:08.Nick Robinson and our business editor, Robert Preston. Let's hear

:04:08. > :04:14.just what the Labour leader, Ed Miliband, had to say as he left his

:04:14. > :04:24.house this morning. Before that, let's get our live pictures of the

:04:24. > :04:25.

:04:25. > :04:28.Chancellor leaving. A BBC employee shouting at him there! He's getting

:04:28. > :04:33.into his vehicle with Danny Alexander, the Chief Secretary.

:04:33. > :04:41.Danny Alexander, the man who had to do the detailed negotiations while

:04:41. > :04:47.the Chancellor looked after the overall situation. It's a nice,

:04:47. > :04:53.sunny day. The car is coming out, as it heads through Parliament Square

:04:53. > :04:56.and to the House of Commons. This is a very political Chancellor, so we

:04:56. > :05:03.can expect a lot of politics among the number crunching that has been

:05:03. > :05:09.going on. And a number of little surprises perhaps for the Labour

:05:09. > :05:16.Party will stop maybe just designed to see how Labour reacts. Even the

:05:16. > :05:20.Chancellor has to stop for the buses. I think one of these is one

:05:20. > :05:24.of the new Boris buses, that the Mayor of London said he would bring

:05:24. > :05:33.back. We will leave the Chancellor in the traffic jam. I don't think he

:05:33. > :05:36.will be late. Before we go to our experts in the studio, let's hear

:05:36. > :05:42.what Ed Miliband said in the run-up to this Spending Review this

:05:42. > :05:47.morning. This government has failed, and it's failed so badly that if

:05:47. > :05:50.Labour wins the next election, it will be extremely tough. And it is

:05:50. > :05:54.only responsible for us to promised to reverse cuts if we know exactly

:05:54. > :05:57.where the money is coming from. That is what the British people would

:05:57. > :06:01.expect from us, as a responsible opposition seeking to be in

:06:01. > :06:08.government. But we are also saying that invest now in the things that

:06:08. > :06:13.matter, the things that will get our economy going, construction workers

:06:13. > :06:18.back to work, that would be good for growth and make the choices down the

:06:18. > :06:22.road less painful. Ed Miliband doesn't get to reply and unlike the

:06:23. > :06:28.Budget, it will be the Shadow Chancellor providing -- applying to

:06:28. > :06:33.the Chancellor's statements. Why is the Chancellor doing this? 2015 to

:06:33. > :06:37.2016 is a long way away and he might not even be in power. Indeed, and

:06:37. > :06:41.these are cuts that were not meant to happen, that he didn't foresee

:06:41. > :06:45.happening, that he hoped would never happen. The first answer to your

:06:45. > :06:48.question is simply because the economy has not performed as the

:06:49. > :06:54.hoped and plan for it to do. And therefore the age of austerity, as

:06:54. > :07:04.George Osborne called it, has had to be extended by two yours. Instead of

:07:04. > :07:12.

:07:12. > :07:14.doing deeper cuts for a year, announced it just before the

:07:14. > :07:16.election. It's largely for political reasons. He believed that the voters

:07:16. > :07:19.and the media would pose the question to Labour, the question

:07:19. > :07:22.that he saw Ed Miliband trying to address there. What would you do if

:07:22. > :07:26.you were in government? That is the really deep political reason that we

:07:26. > :07:32.are getting it today. As you suggested, there will be a lot of

:07:32. > :07:36.politics in this speech, designed to say, this is what we do. If we get

:07:36. > :07:41.back into government either on our own or with the Liberal Democrats,

:07:41. > :07:44.keep asking Ed Balls what he'd do. Hasn't Labour shot its box already

:07:44. > :07:48.by beginning the repositioning, implying, Ed Balls has said on

:07:48. > :07:54.various programmes, look, we will reluctantly accept the current

:07:54. > :07:58.spending plans for 2015 to 2016. We may tinker with how we do it but the

:07:58. > :08:03.overall envelope, all right, that is how we will come to power. There

:08:03. > :08:08.were a couple of speeches given by Ed Miliband and Ed Balls. It is

:08:08. > :08:13.clear the spending totals day-to-day, departmental, they will

:08:13. > :08:18.stick to it. Why do I emphasised those words? Because Labour are

:08:18. > :08:21.still saying that if they were in power now, they would borrow more

:08:21. > :08:26.than the government. But they are saying they wouldn't borrow more to

:08:26. > :08:30.reduce the level of cuts needed to run various Whitehall departments.

:08:30. > :08:34.They are saying they would borrow more to invest in infrastructure and

:08:34. > :08:44.building things. Ed Balls has set up to �10 billion more. He doesn't want

:08:44. > :08:47.

:08:47. > :08:49.to put a figure on what that might be in two years time because he

:08:49. > :08:52.says, perfectly reasonably, we don't know what state the economy will be

:08:52. > :08:54.in then. But he's leaving it open. I'm sure George Osborne will bang on

:08:54. > :08:57.about this, that Labour would indeed spend more and borrow more. But

:08:57. > :09:00.Labour have made it clearer, there will not be money to reverse the

:09:00. > :09:02.sorts of cuts we are hearing today unless they can find a little bit

:09:02. > :09:07.more from one budget to subsidise another, or they announce a tax

:09:07. > :09:11.rise. As we've said, this is just a one-year Spending Review. The

:09:11. > :09:15.Chancellor is looking for �11.5 billion of departmental savings. So

:09:15. > :09:19.where will these cuts be made? It is in the Treasury, just across from

:09:19. > :09:22.the Houses of Parliament, the ministers have been making the big

:09:22. > :09:28.decisions, officials have been crunching the numbers there. At the

:09:28. > :09:31.heart of that building lies the circular courtyard. We built, no

:09:31. > :09:38.expense spared, our own virtual courtyard, where Stephanie Flanders

:09:38. > :09:42.has been doing some of her own number crunching.

:09:42. > :09:48.Treasury here may be virtual but the numbers are all too real. Today's

:09:48. > :09:53.statements about tax year 2015 to 2016. The government spending for

:09:54. > :09:58.that year is forecast to be �745 billion. But we are only talking

:09:58. > :10:01.about one part of that bill, the 314 billion that Whitehall departments

:10:01. > :10:06.get for day-to-day spending on things like schools, transport and

:10:06. > :10:10.the police. So where are the Chancellor's cuts going to come

:10:10. > :10:16.from? Let's start with what their budgets look like next year, April

:10:16. > :10:19.2014. You can see the big spenders are health and education, ranging

:10:19. > :10:25.down to foreign aid and the Home Office. So what might happen to

:10:25. > :10:28.these budgets in 2015, the year covered by today's review? If the

:10:29. > :10:34.Chancellor's savings were spread evenly across all these departments,

:10:34. > :10:37.every minister would be facing an extra 2.3% cut after inflation. But

:10:37. > :10:42.we know that won't happen because the government has again promised to

:10:42. > :10:46.ring fence and protect spending for several departments. So the health

:10:46. > :10:50.budget is protected will stop spending on that won't fall and

:10:50. > :10:54.could show a small rise in real terms. And the education budget will

:10:54. > :10:59.only fall a bit, because most of its budget, but money it spends on

:10:59. > :11:03.schools in England, has been ring-fenced. Foreign aid spending,

:11:03. > :11:08.that will go up. The government has promised it will grow as fast as the

:11:08. > :11:12.economy. But savings fairly evenly on all the other unprotected

:11:12. > :11:17.departments, you can see they'd all be looking at a real terms cut of

:11:17. > :11:22.6.1%. That is on top of the 20% or more they've already found in saving

:11:22. > :11:25.since 2010. But the cuts weren't spread that ease -- evenly in the

:11:25. > :11:30.last Spending Review. The Chancellor follows the same pattern as before,

:11:30. > :11:34.we can expect defence to come off relatively lightly, and another big

:11:34. > :11:39.squeeze the local government, the Home Office and transport. They will

:11:40. > :11:43.have then seen their budget cut by a third in real terms since 2010. But

:11:43. > :11:49.of course, what is missing from this picture is something we've heard a

:11:49. > :11:56.lot about recently. Welfare. In 2015, spending on benefits and tax

:11:56. > :11:59.credit is expected to be �220 billion, and nearly a third of

:11:59. > :12:05.spending. Many in his party would like the Chancellor to find more

:12:05. > :12:10.savings there, but it's not on the agenda today.

:12:10. > :12:14.The Spending Review was a very British event, but it takes place in

:12:14. > :12:18.an international context. We had a real banking scare in China last

:12:18. > :12:22.week, it sent tremors around the world. We've heard the US Federal

:12:22. > :12:27.Reserve saying it's going to begin to withdraw the money that it's been

:12:27. > :12:31.printing, that is pushing up bond yields. And we've got yet another

:12:31. > :12:37.gigantic financial scandal in Italy. The backdrop is not great.

:12:37. > :12:40.Know, the international picture isn't pretty at the moment. We had

:12:41. > :12:46.probably the most powerful player in the international markets, Ben

:12:46. > :12:51.Bonallack, the chairman of the Federal Reserve, talking out loud

:12:51. > :12:56.about ending mass of money creation, quantitative easing, that

:12:56. > :13:01.the US Federal Reserve has been engaging in to prop up the US

:13:01. > :13:06.economy. Investors didn't like what they heard. The price of US Treasury

:13:06. > :13:11.bonds, US government debt fell. That in effect put up the interest rate

:13:11. > :13:16.which the US government pays to borrow. The US government's interest

:13:16. > :13:20.rate is, in a way, the interest rate benchmark for the whole world. If

:13:20. > :13:26.the price that the US government has to pay to borrow goes up, so, too,

:13:26. > :13:30.does the price we have to pay. that has been happening.

:13:30. > :13:33.example, the price of British government debt has fallen and

:13:33. > :13:40.therefore the implied interest rate that the British government has to

:13:40. > :13:44.pay to go up has fallen really quite steeply. It raises the prospect not

:13:44. > :13:50.only of his interest bill going up at a time when he hasn't got a lot

:13:50. > :13:53.of money to spend, but of things that are worse than that. We had an

:13:53. > :13:57.interesting document published by the Bank of England which raised the

:13:57. > :14:02.possibility that because of the fall in all this debt which is held by

:14:02. > :14:06.the banks, there could be quite big losses for the banks and it's now

:14:06. > :14:10.conducting an investigation to find out if the price of that debt would

:14:10. > :14:18.continue to fall in a sharp way, how damaging would that be for our

:14:18. > :14:23.banking system, as it comes out of the last crisis and is attempting to

:14:23. > :14:27.strengthen itself? In China, we know that they have a problem with

:14:27. > :14:33.potentially really big, bad debts from a mass of lending spree that

:14:33. > :14:38.took place over the last few years. The financial backdrop to this very

:14:38. > :14:41.British event is unsettling. Indeed. This Spending Review could be taking

:14:41. > :14:47.place at a time when we are now at the beginning of the end of the

:14:47. > :14:50.cheap money that has been flooding into most Western economies. Along

:14:50. > :14:52.with that comes low interest rates. Today's programme, we will be

:14:52. > :15:02.getting reaction to the Chancellor's statement in Bury

:15:02. > :15:04.

:15:04. > :15:09.market. We are waiting to find out where the Chancellor's knife will

:15:09. > :15:12.fall on spending in a few years' time. I'm joined by a councillor

:15:12. > :15:16.from the Local Government Association. Councils have had their

:15:16. > :15:21.budgets cut quite significantly over the past few years. Can they take

:15:21. > :15:25.another 10%? Councils have lost 20% of their budget. The Prime Minister

:15:25. > :15:29.says that local government is the most efficient of the public sector

:15:29. > :15:36.but a further 10% cut in our budget will mean a loss of essential

:15:36. > :15:40.services that people rely on to have a good quality of life, libraries,

:15:40. > :15:45.museums, Children's Centres and sports centres.

:15:45. > :15:48.There could be a loss of services that matter a lot to local people.

:15:48. > :15:54.The Government says you could downup services more etch feckively. What

:15:54. > :15:58.do you say to that -- effectively? We need Government to remove the

:15:58. > :16:02.ringfencing or spending around health and education, remove

:16:02. > :16:06.bureaucracy and red tape and get out the way so local councils can work

:16:06. > :16:10.together with health and education to join up local services and make

:16:10. > :16:13.them much more efficient, protect jobs and local services that people

:16:13. > :16:17.rely on. Thank you very much Mr Khan. That's the council view here

:16:17. > :16:21.in Bury market. The council is very involved in the running of this

:16:21. > :16:27.market which boasts something like nine million visitors a year, that's

:16:27. > :16:30.a lot of people. There are over 370 stalls and, as you look around here,

:16:30. > :16:35.it's buzzing. But is the picture that rosy for local businesses?

:16:35. > :16:40.Well, let's catch up with Bill Thompson who is standing by the hog

:16:40. > :16:46.roast stand. I understand that will be going at 2 o'clock. Is it good

:16:46. > :16:51.for business here at the moment? Well, obviously market day in Bury

:16:51. > :16:58.is always very busy. The Federation of Market businesses would like to

:16:58. > :17:02.see more done. We have wrote to Chancellor to ask how things will be

:17:02. > :17:07.financed. We have been advocating for many years to get away from the

:17:07. > :17:10.big high street banks to give alternatives to small businesses who

:17:10. > :17:14.can grow businesses. Without small businesses growing, the country

:17:14. > :17:19.isn't going to rebirth itself. structure would you like to see to

:17:19. > :17:24.help businesses in the region? brink banking, the road and rail

:17:24. > :17:28.network -- the British banking. The HS 2 has been looked at. The road

:17:29. > :17:31.network needs looking at and the Broadband issue in rural areas

:17:31. > :17:34.because there are very few businesses because there is no

:17:34. > :17:37.access to the Internet and Broadband.

:17:37. > :17:45.Phil Thompson, thank you very much. We also want to hear what you think.

:17:45. > :17:51.Our viewers. Who best to gauge reaction but from our expert, good

:17:51. > :17:58.morning to you from BBC Money Box live? People can contact us at

:17:58. > :18:03.Twitter, they can e-mail us at haveyoursay and the text is 61124.

:18:03. > :18:08.Many suggestions for cuts coming in. Sue from Twickenham says why does

:18:08. > :18:14.the Government persist in ringfencing overseas aid at the

:18:14. > :18:19.expense of Britain. HS2 another popular target and Trident, people

:18:19. > :18:24.want to get rid of that. My favourite, Paul, I said what should

:18:24. > :18:29.you cut and he said treasury biscuits! I wonder how much would be

:18:29. > :18:33.raised if they managed to cut out the biscuit budget. They spend �3

:18:33. > :18:38.million a year on biscuits in Whitehall we are told. That's a lot

:18:38. > :18:41.of biscuits. What do we already know? There is speculation that

:18:41. > :18:45.Winter Fuel Payments to UK pensioners living overseas may be

:18:45. > :18:49.cut if they live in warmer countries. Some can claim it even in

:18:49. > :18:53.the tropics. Public sector pay, could be further cuts in that which

:18:53. > :18:58.would be very bad news for the public sector workers watching and

:18:58. > :19:01.possibly an overall cap on welfare payments, so even if people can

:19:01. > :19:05.claim benefits, ultimately the Government will say no more than a

:19:05. > :19:09.certain amount. A difficult thing to do, but there 'll probably be a

:19:09. > :19:12.consultation on that. Paul, thank you very much. Keep contacting us

:19:12. > :19:19.over the next hour or so. We'll hear from the Chancellor in about 45

:19:19. > :19:25.minutes. Back to you, Andrew. Thanks, Jo Co. Bring us back a jumbo

:19:25. > :19:29.chicken, never mind the biscuits. �7 quid! I'll grab one. Lunch sorted

:19:29. > :19:32.for tomorrow! A quick reminder that you can get

:19:32. > :19:37.the latest on the spending review on the BBC website. You can find the

:19:37. > :19:40.link to the live page at www.bbc.co.uk/economy. You will find

:19:40. > :19:46.in-depth coverage there and, if you are out and about today, you can

:19:46. > :19:52.still follow all the latest developments and BBC analysis with

:19:52. > :19:57.BBC correspondents on Twitter. Go to BBC News and subscribe to the

:19:57. > :20:01.spending review Twitter list. It's free. Go on, do it!

:20:01. > :20:04.If you are just joining us, you are watching our special coverage of the

:20:04. > :20:10.spending review coming live from Westminster here in the heart of

:20:10. > :20:16.London. Let's join Matthew am Ralls wall loo outside the House of

:20:16. > :20:21.Commons. Thank you very much. We haven't heard the words green shoots

:20:21. > :20:25.from the Chancellor, but he's said the economy is of of intensive care.

:20:25. > :20:28.What is the real picture? We have pulled together some of the key

:20:28. > :20:38.indicators of recent weeks to get a better idea of how the economy is

:20:38. > :20:38.

:20:38. > :21:59.Apology for the loss of subtitles for 81 seconds

:21:59. > :22:04.That's the economic backdrop. Let's discuss the politics of this. With

:22:04. > :22:08.me here is Harriet Baldwin, Cathy Jamieson and Stephen Williams. Thank

:22:08. > :22:12.you all for being here with me. Harriet Baldwin first of all, the

:22:12. > :22:17.very fact that we are having this spending review, is it an admission

:22:17. > :22:20.of failure. In 2010, George Osborne said we'd be finished by 2015?

:22:20. > :22:24.what we are doing is healing an economy that was in a difficult

:22:24. > :22:28.state with a big budget deficit and what we have encountered is problems

:22:28. > :22:31.in the eurozone which have slowed things down and so yes, I would

:22:31. > :22:35.agree, the economy has not been as strong as we'd have liked it over

:22:36. > :22:39.the last couple of years. The signs, as you say saw, is that we are going

:22:39. > :22:42.from the rescue phase into a more sustainable recovery and I hope what

:22:42. > :22:46.we'll hear today from the Chancellor is more initiatives that will back

:22:46. > :22:50.that. Isn't the truth that you have been blown off course because you

:22:50. > :22:54.are good at cutting Government spending in departments, but growth

:22:54. > :22:58.has alluded you, you have a one-legged strategy? Job growth has

:22:58. > :23:02.been very strong, so there are more people working today than ever in UK

:23:02. > :23:06.history. We have had 1. 3 million jobs that have been created in the

:23:06. > :23:10.private sectorment so I think that's an important part of examining how

:23:10. > :23:16.the economy's done. We have to see a higher rate of growth. You saw the

:23:16. > :23:19.figures out there? The survey data suggests those are more positive in

:23:19. > :23:24.terms of the forward looking numbers, but the survey data in

:23:24. > :23:27.terms to have outlook and the positive Septemberment amongst some

:23:27. > :23:32.of the sectors, which are very important, are significant, and I

:23:32. > :23:36.hope the Chancellor will back it with more infrastructure spending.

:23:36. > :23:39.Cathy Jamieson, we have heard your leader accept that the �11. 5

:23:39. > :23:43.billion, that spending cut envelope will be the starting point if you

:23:43. > :23:46.win the election. You have opposed for three years every cut. Now you

:23:46. > :23:51.have thrown in the towel and the Government's right on the deficit,

:23:51. > :23:54.aren't they? The aren we are having the spending review is that the

:23:54. > :23:58.Chancellor's got it wrong on the strategy, he hasn't achieved the

:23:58. > :24:01.growth figures he promised or cut the deficit and he's borrowing more

:24:01. > :24:05.than planned. As a responsible opposition, looking to be in

:24:05. > :24:08.Government, what we have said is that we will have to accept the

:24:08. > :24:12.overall spending envelope for the first year, but we'd not have done

:24:13. > :24:16.what the Chancellor's done up to now and we'd make different choices.

:24:16. > :24:20.What are the different choices? You have been talking about Universal

:24:20. > :24:24.benefits. Are they going to go? have mentioned particularly the

:24:24. > :24:30.issue about the onetering fuel allowances for the wealthiest of

:24:30. > :24:34.pension pensioners. What about bus passes, free TV licences? We have

:24:34. > :24:37.heard Ed Balls and Ed Miliband indicate those are not on the

:24:37. > :24:42.agenda. The important point for the figures was that it showed that

:24:42. > :24:48.manufacturing... Why not if you are talking about fairness? It's about

:24:48. > :24:52.the cost involved in doing that, for one thing, but also bus passes, you

:24:52. > :24:56.know, enables people to get around, it helps people with mobility and so

:24:56. > :25:01.on. To go back to the figures, manufacturing and construction

:25:01. > :25:06.sectors are not performing performing as well as we'd have

:25:06. > :25:11.thought. Some unemployment figures show that it's beginning to work?

:25:11. > :25:16.The sales figures showed improvements in manufacturing and

:25:16. > :25:21.that's why we need structure. accept that for the ordinary family

:25:21. > :25:27.out there watch, Stephen, things could not be tougher in terms of the

:25:27. > :25:31.disposable income? Lowest living standards for a decade? It's a very

:25:31. > :25:36.difficult time for the people out there. We have to make sure all the

:25:36. > :25:40.cuts we are making, which are necessary, are cushioning for the

:25:40. > :25:44.poorest in society and the richest will bear the brunt of the tax rises

:25:44. > :25:46.and changes. We have got a Conservative Chancellor, a Lib Dem

:25:46. > :25:55.can Chief Secretary, Lib Dem Business Secretary working together

:25:55. > :26:00.to try and get growth going in the economy. But a huge part of the

:26:00. > :26:04.budget is cuts. Why have you opposed cuts? Sweeping changes have been

:26:04. > :26:07.made. We need time for the changes to bed down and what we, as the

:26:07. > :26:11.Liberal Democrats have said, we don't want to ask for more from the

:26:11. > :26:15.poorest in society until we have taken more off the rich. That's why

:26:15. > :26:19.we are in favour of the mansion tax. We can't get agreement with

:26:19. > :26:23.coalition partners on that issue, so we have agreed to park welfare

:26:23. > :26:29.reform and tax rises on the rich and that will be an issue on the next

:26:29. > :26:37.general election. In one sentence, more cuts to come? All the

:26:37. > :26:41.projections, �23 or �24 billion for more savings in 2016, 2017, tax

:26:41. > :26:45.rises, isn't that the reality of what we'll face? We have tried to

:26:45. > :26:49.make sure we have given a tax cut to people in work by raising the

:26:49. > :26:54.personal threshold. 2015-16, the year we are talking about this year,

:26:54. > :26:56.we are looking a at a deficit of still �80 billion so it will be

:26:56. > :27:00.spending control for some time to come I think.

:27:00. > :27:05.There we have to leave it. Thank you all very much. From here, back to

:27:05. > :27:10.you in the studio. It's coming up to midday here on BBC

:27:10. > :27:13.Two and the BBC News Channel. In a moment, we'll cross live to the

:27:13. > :27:15.House of Commons for Prime Minister's Questions after which the

:27:15. > :27:20.Chancellor will get to his feet straight after the Prime Minister,

:27:20. > :27:23.to deliver the spending review. Beautiful shot there of the Palace

:27:23. > :27:28.of Westminster in what is a reasonable summers' day. Not many in

:27:28. > :27:34.London so far, but this is a decent one. Stephanie Flanders joins us to

:27:34. > :27:38.make up the BBC's three newsbling tiers assembling round the table on

:27:38. > :27:42.occasions like this. If he's looking for another �11 billion of cuts,

:27:42. > :27:46.Stephanie, does this mean he's assuming that even by 2015, there

:27:46. > :27:50.won't be much of a recovery? You are quite right that all of the numbers

:27:50. > :27:53.we are talking about today and all of the numbers the Chancellor's had

:27:53. > :27:56.to work from in thinking whether or not we needed to have further

:27:56. > :28:00.austerity are all based on what the office of budget responsibility

:28:00. > :28:04.thinks is going to happen to the economy. They started off, when he

:28:04. > :28:08.was writing his first plans in 2010, with a fairly pessimistic view of

:28:08. > :28:12.what the recovery would be like. They knew it might not be a normal

:28:12. > :28:15.recovery because we had a massive financial crisis. It turned out that

:28:15. > :28:20.that obviously things were much worse. They now have - the reason

:28:20. > :28:25.why we are looking at this cuts - they now have what many say would be

:28:25. > :28:28.a gloomy view, not just about what's happened in the last few years be,

:28:28. > :28:33.buzz what the economy is capable of. That's what makes the structural

:28:33. > :28:37.hole in the budget that he's trying to fill so large. We might have

:28:37. > :28:40.temporary borrowing if we had slow growth, it doesn't have to be

:28:40. > :28:42.permanent, buts the Office for Budget Responsibility decided it was

:28:42. > :28:47.permanent which is why we are here frankly. It's quite possible, when

:28:47. > :28:51.you look at the forecasts now for 2015, even though it's only the

:28:51. > :28:58.office of budget responsibility expecting us to going back to what

:28:58. > :29:05.we thought would have been a normal trend growth rate in 2015, which is

:29:05. > :29:12.seven or eight years after the crisis began. In the past, we have

:29:12. > :29:16.had forecasts revised up. You might have to do more of course. The

:29:16. > :29:19.directions of changes have gone in a negative direction, but it could be

:29:19. > :29:23.better or could turn out to be better.

:29:23. > :29:28.We got this picture, I think it was the Treasury released it last night,

:29:28. > :29:33.Nick, I want you to tell us about this. What is the political

:29:33. > :29:38.significance of this picture? half eaten burger, chips and diet

:29:38. > :29:42.coke, the an austerity dinner at the Treasury. Politicians in action,

:29:42. > :29:48.real guys, by the way, not out of touch is what Tweeting foe toes

:29:48. > :29:51.allow you to say. Are we allowed to film or do interviews? No, but we

:29:52. > :29:55.get these specially crafted, carefully produced images of what

:29:55. > :30:01.spin doctors would like us to think politicians' lives are like. Having

:30:01. > :30:05.been in that office under several Chancellors, there often is old

:30:05. > :30:15.pizza boxes as the officials and the spim doctors and ministers sit

:30:15. > :30:20.

:30:20. > :30:30.around a table until very late at Chancellor, you know. What can we

:30:30. > :30:31.

:30:31. > :30:38.say? Do you know what kind of burger it was? You have not managed to find

:30:38. > :30:42.that out? I resign on the spot!What is business going to be looking for?

:30:42. > :30:45.I think business will broadly take the view that this isn't much of a

:30:45. > :30:55.event for them. If he didn't deliver the cuts and therefore the outlook

:30:55. > :30:55.

:30:55. > :31:42.Apology for the loss of subtitles for 81 seconds

:31:43. > :31:44.for the deficit was worst... interest rates low. Perhaps the

:31:44. > :31:54.for the deficit was worst... going to interrupt you admit that

:31:54. > :32:07.

:32:07. > :32:11.Secretary said "work will begin immediately on 261 projects under

:32:11. > :32:17.the priority school building programme. " Can the Prime Minister

:32:17. > :32:19.tell the House how many have begun? What I can tell him is that

:32:19. > :32:23.infrastructure spending under this Government has been higher than it

:32:23. > :32:28.was under Labour and we have around �14 billion reserved for capital

:32:28. > :32:38.spending on our schools. We have had to clear up the appalling mess left

:32:38. > :32:43.

:32:43. > :32:49.by the Building Schools for the Future programme. The answer is that

:32:49. > :32:57.261 schools were promised. Only one has started. Now perhaps you can

:32:57. > :32:59.explain why. We've had to recover from the appalling mess of the

:32:59. > :33:05.Building Schools for the Future programme. That is the mess that we

:33:05. > :33:08.inherited, as well as a record deficit. But it is this government,

:33:08. > :33:14.as the Chancellor will announce in a minute, that are providing half a

:33:14. > :33:22.million extra school places. I don't think he knew the answer to that

:33:22. > :33:28.one. In October 2011, he said he wanted to bring forward, I quote,

:33:28. > :33:37.every single infrastructure project that is in the pipeline. So out of

:33:37. > :33:43.576 projects set out, how many have been completed? Our annual

:33:43. > :33:47.infrastructure investment is �33 billion a year. That is four billion

:33:47. > :33:52.more every year than ever achieved under Labour. Now let me give him

:33:52. > :33:57.the figures for road schemes. We are investing more in major road schemes

:33:57. > :34:04.in each of the first... Order. The answer from the Prime Minister must

:34:04. > :34:14.be heard. Questions to him, from which ever side of the House, must

:34:14. > :34:21.be heard. It is very clear and simple. It is called democracy.

:34:21. > :34:26.You cannot build a nuclear power station overnight. By the way, they

:34:26. > :34:32.had 13 years, they didn't build a single one. Let me give him the

:34:32. > :34:36.figures. This government, on rail, is electrifying more than 300 miles

:34:36. > :34:44.of railway routes. Perhaps he could tell us how many were electrified

:34:44. > :34:52.under Labour, how many? Nine miles. That is the Labour record that this

:34:52. > :34:59.government is recovering from. new hospitals under a Labour

:34:59. > :35:05.government. 3700 schools rebuilt under a Labour government. 3500 new

:35:05. > :35:12.children's Centre all under a Labour government. He's got no answer so

:35:12. > :35:16.let me tell him the answer again. The answer is seven out of 576, and

:35:16. > :35:20.five of them were started under the last Labour government. He said it

:35:20. > :35:26.takes a long time to complete these projects. I thought he might say

:35:26. > :35:31.that. 80% of them haven't even been started, despite the promises of two

:35:31. > :35:35.years ago. More promises, no delivery. Let's see if he can answer

:35:35. > :35:41.another one. Last year, the government said new buying guarantee

:35:41. > :35:46.scheme would help 100,000 people buy a new home. How many has it helped

:35:46. > :35:50.so far? It has helped thousands of people and been welcomed by the

:35:50. > :35:54.entire industry. He talks about what was built under a Labour

:35:54. > :36:01.government, we saw the results. A PFI scheme that we are still paying

:36:01. > :36:06.the debt on. We saw the results at 11% of GDP budget deficit that this

:36:06. > :36:12.government will cut in half. That is the proof of what we are doing. We

:36:12. > :36:18.all know that the one question he has two answer is will he now admit

:36:18. > :36:22.he wants to put borrowing up, will you admit it? Every time I come to

:36:22. > :36:28.prime ministers questions, I ask a question and he doesn't and other

:36:28. > :36:33.question, he just asks me one. The only fact this House needs to know

:36:33. > :36:38.about borrowing is that contrary to the promised the Chancellor made in

:36:38. > :36:48.his Autumn statement, it went up last year. That is the truth. Let me

:36:48. > :36:48.

:36:48. > :37:50.Apology for the loss of subtitles for 81 seconds

:37:50. > :38:00.answer the question he didn't know the answer to. He have to say that

:38:00. > :38:00.

:38:00. > :38:10.is why half the country think he is from the Muppets. Will you admit

:38:10. > :38:18.

:38:18. > :38:23.borrowing would go up under Labour? Borrowing was up last year. We said

:38:24. > :38:29.we are all in it together, but living standards are falling. He

:38:29. > :38:32.promised to get Britain building, they haven't. All you need to know

:38:32. > :38:42.about this Chancellor's Spending Review is that British people are

:38:42. > :38:42.

:38:42. > :38:47.paying the price for their failure. Mr Speaker, let us remember what the

:38:47. > :38:51.leader of the opposition said at the time of the last Spending Review. He

:38:51. > :38:55.told us unemployment would go up, it's gone down. He told us crime

:38:55. > :38:59.would go up, it's gone down. He told us volunteering would go down, it's

:38:59. > :39:03.gone up. He told us that poorer students wouldn't go to university,

:39:03. > :39:07.the percentage as has gone up. We told us our immigration policy

:39:07. > :39:12.wouldn't work, but we've cut immigration by a third. As ever,

:39:12. > :39:22.wrong about the economy, wrong about everything, never trusted by the

:39:22. > :39:22.

:39:22. > :39:27.British people. Thank you, Mr Speaker. Today, the government

:39:27. > :39:31.publishes the spending round for 2015 to 2016. Can the Prime Minister

:39:31. > :39:35.confirm that it rejects the representations to borrow less by

:39:35. > :39:39.borrowing more, as proposed by the party opposite? My honourable friend

:39:39. > :39:43.makes a very good point. On Saturday, the leader of the Labour

:39:43. > :39:48.Party told us there would be iron discipline on spending. On Sunday,

:39:48. > :39:52.the Shadow Chancellor was asked five times on the television and admits

:39:52. > :39:56.that, yes, borrowing would go up. They want to borrow less by

:39:56. > :40:01.borrowing more. They want to spend less by spending more. They want to

:40:01. > :40:11.cut welfare by spending more on welfare. No wonder it's not just

:40:11. > :40:20.

:40:20. > :40:29.people at Wimbledon saying new balls, please! Order. Order. Order.

:40:29. > :40:39.In congratulating the honourable gentleman on his birthday, I called

:40:39. > :40:43.

:40:43. > :40:46.Mr David Winick. Is the Prime Minister aware how shocking it was

:40:46. > :40:53.that the police apparently spent more time investigating the parents

:40:53. > :40:57.and friends of Stephen Lawrence than the racist murder itself, which took

:40:58. > :41:03.place in 1993? Is the Home Secretary, when she meets Mrs

:41:03. > :41:07.Lawrence, is she going to apologise for what occurred, and is it really

:41:07. > :41:12.right for the police to investigate itself? I think the honourable

:41:12. > :41:16.gentleman makes an extremely serious point. The Lawrence family have

:41:17. > :41:20.suffered appallingly. They lost their son. There was the failure to

:41:20. > :41:23.investigate properly for year after year. Now they hear these

:41:23. > :41:29.allegations that the police were trying to undermine them rather than

:41:29. > :41:34.help them. The Home Secretary set out in the House on Monday these two

:41:34. > :41:39.enquiries, independent enquiries already under way. She has met again

:41:39. > :41:43.with Mark Ellison to see this morning, to make sure his enquiry

:41:43. > :41:48.will cover the allegations that were made overnight about the bugging by

:41:48. > :41:53.the police of a friend of Stephen Lawrence. But nothing is off the

:41:53. > :41:57.table. If more needs to be done, if further investigations or enquiries

:41:57. > :42:05.need to be held, they will be held. This is not an acceptable situation

:42:05. > :42:09.and we must get to the bottom of it. My back to see constituency is

:42:09. > :42:12.attracting a large amount of inward investment for major infrastructure

:42:12. > :42:16.projects from around the world. Does the Prime Minister agree with me

:42:16. > :42:20.that one of the ways in which we are restoring the UK's credibility

:42:20. > :42:27.overseas is by dealing with our debts and showing how we fund public

:42:27. > :42:31.spending properly? Battersea Power Station, which for all those years

:42:31. > :42:35.under Labour stood there completely empty and unused, the redevelopment

:42:35. > :42:40.is going to be starting this year. Because under this government we

:42:40. > :42:43.take infrastructure seriously, we get investors to come into our

:42:43. > :42:51.country and beget project started. Unlike the wasted years under

:42:51. > :42:54.Labour. Never Battersea, what about Bassetlaw? In its last six years,

:42:54. > :42:58.the Labour government delivered �225 million worth of major

:42:58. > :43:03.infrastructure projects. Can the Prime Minister confirm that under

:43:03. > :43:08.his three years there has been zero delivery of such projects, the row

:43:08. > :43:13.starts of such projects, and when will the Prime Minister stopped

:43:13. > :43:17.faffing around and get the new flyover and the new Selby Park

:43:18. > :43:23.School, guaranteed by the last government, started in my

:43:23. > :43:28.constituency? The last government made a lot of guarantees, they wrote

:43:28. > :43:34.a lot of checks but they couldn't deliver. They left us with this

:43:34. > :43:38.enormous deficit. Let me give him the figures. Our spending on capital

:43:38. > :43:42.spending is higher than what Labour planned. The annual infrastructure

:43:42. > :43:46.investment is �33 billion. That is �4 billion higher than they achieved

:43:46. > :43:51.even in the boom years. That is what happened. They had an unaffordable

:43:51. > :43:59.boom, a painful bust and it is this government that is delivering the

:43:59. > :44:04.recovery. The Prime Minister knows Ipswich well. He knows it has some

:44:04. > :44:08.of the poorest wards in the country. He will know that two of those wards

:44:08. > :44:12.were promised schools by the previous government. They didn't

:44:12. > :44:18.deliver them in 13 years. I've just been to the topping out ceremony of

:44:18. > :44:24.one of them delivered by this government. When it comes to

:44:24. > :44:29.promises for the least advantaged people in our community, they are

:44:29. > :44:34.very good at promising. We deliver. My honourable friend is right. They

:44:34. > :44:40.don't like hearing the evidence of the new schools being built by this

:44:40. > :44:46.government in difficult times. Also, when we talk about the East of

:44:46. > :44:51.England, of course, year after year there were calls for improvements to

:44:51. > :44:54.the motorway. Never delivered, delivered by this government.

:44:54. > :44:59.staging of the G8 proved that Northern Ireland is open to the

:44:59. > :45:04.world for business. Now we need the business of the world to come to

:45:04. > :45:08.Northern Ireland. Can the Prime Minister give us an outline of what

:45:08. > :45:11.he will do in conjunction with the American administration and the

:45:11. > :45:15.Northern Ireland executive to deliver a very successful inward

:45:15. > :45:19.investment conference in October, to deliver thousands of much-needed

:45:19. > :45:22.private-sector jobs. I'm looking forward to coming to Northern

:45:22. > :45:28.Ireland for the vital investment conference. I think what we will be

:45:28. > :45:32.able to demonstrate is not only the success of the G8 and the great

:45:32. > :45:36.advertisement that was for Northern Ireland, but the coming together of

:45:36. > :45:41.the UK Government and the Northern Irish assembly, with the plans for

:45:41. > :45:45.economic development, and also for breaking down the barriers within

:45:45. > :45:48.Northern Ireland between different communities. I think that shared

:45:48. > :45:50.future agenda is not just important for the future of society in

:45:50. > :46:00.Northern Ireland, it's also important for the future of our

:46:00. > :46:01.

:46:01. > :46:03.economy. . What reassurance can the Prime Minister give the women in

:46:03. > :46:07.Afghanistan that the Government will continue efforts to make sure that

:46:07. > :46:11.there is no return to the threats to women that they've seen in

:46:11. > :46:14.Afghanistan in the past? My right honourable friend makes an

:46:14. > :46:18.important point and we should continue to support the Afghan

:46:18. > :46:24.constitution which gives important guarantees in this regard. I spoke

:46:24. > :46:28.yesterday to President Karzai, including about this issue of the

:46:28. > :46:36.Afghan constitution and how important it is. We have making a

:46:36. > :46:40.major investment by supporting the forces and the programme to help

:46:40. > :46:43.secure these sorts of advances in Afghanistan that we all want to see.

:46:43. > :46:48.Thank you, Mr Speaker. Further to the question that the Prime Minister

:46:48. > :46:52.failed to answer last week, can he confirm that he's never had a

:46:52. > :46:56.conversation with Lynton Crosby about alcohol pricing or cigarettes?

:46:56. > :47:01.The question is not, has he been lobbied, the question is, has he had

:47:01. > :47:04.that conversation? As I said last week, I've never been lobbied by

:47:04. > :47:08.Lynton Crosby about anything, but the difference between me and

:47:08. > :47:12.frankly every member of the party opposite is, I can also put my hand

:47:12. > :47:16.on my heart and say I've never been lobbied by Trade Union after Trade

:47:16. > :47:19.Union making donation after donation, fixing Parliamentary

:47:19. > :47:29.selection after Parliamentary selection. That is the real problem

:47:29. > :47:33.

:47:33. > :47:35.in British politics and it's time we Thank you, Mr Speaker. With Armed

:47:35. > :47:39.Forces Day... THE SPEAKER: It's a very important

:47:39. > :47:44.matter! Mr Berry must be heard. Mr Berry?

:47:44. > :47:48.Thank you, Mr Speaker. With Armed Forces Day in mind this weekend,

:47:48. > :47:56.would my right honourable friend join me in supporting a campaign

:47:56. > :48:01.being brought about in Rossendale and Darwin being supported by local

:48:01. > :48:06.newspapers encouraging local residents to pack boxes to those

:48:06. > :48:08.serving in Afghanistan. We hope to have packed 500 by the weekend.

:48:08. > :48:13.congratulate my right honourable friend and for everyone taking part

:48:13. > :48:17.in this excellent initiative, I think actually these boxes - I've

:48:17. > :48:20.seen them not only being packed here in Britain but also unloaded in

:48:20. > :48:25.Afghanistan - I can see the huge pleasure and support Thai give to

:48:25. > :48:29.our troops in Afghanistan. I also think we should continue to use the

:48:29. > :48:33.money that's been raised in fines from irresponsible bankers over the

:48:33. > :48:36.club lib inquiry continue to use that money to invest in the Armed

:48:36. > :48:39.Forces covenant. Under this Government, we are making real

:48:39. > :48:43.progress in delivering that help and support to Armed Forces and their

:48:43. > :48:48.families and their communities. Thank you, Mr Speaker. In October

:48:48. > :48:51.2010, the Prime Minister told the Conservative party Conference in

:48:51. > :48:55.five years e' time, we'll have balanced the books. That promise is

:48:55. > :48:59.going to be broken, isn't it, Prime Minister?

:48:59. > :49:03.We have cut the deficit by a third, we'll cut it further by the next

:49:03. > :49:07.election, but frankly, coming to this House, complaining about

:49:07. > :49:13.borrowing, when you've got plans to put it up, is a pretty odd political

:49:13. > :49:18.strategy. That's the question he's got to ask his frontbench - why, if

:49:18. > :49:24.borrowing is a problem, is the Labour policy to put it up? Thank

:49:24. > :49:30.you, Mr Speaker. In 2008, Labour buried three reports

:49:30. > :49:34.warning of a fear of culture in the NHS and inspections. Now we find the

:49:34. > :49:40.CQC has buried concerns over baby deaths. Will the Prime Minister

:49:40. > :49:46.support a root and branch review of the sinister culture of cover-up in

:49:46. > :49:50.our NHS over the last decade? First of all, can I commend my right

:49:50. > :49:54.honourable friend nor campaign she's fighting for, openness and

:49:54. > :49:58.transparency and clarity in our NHS. She does make an important point,

:49:58. > :50:02.which is, there was a culture under the last Government of not revealing

:50:02. > :50:09.problems in the NHS. The former Health Secretary is shaking his

:50:09. > :50:14.head, but frankly, this is what the former Head of The CQC, Baroness

:50:14. > :50:17.Young, appointed by the last Government said. I know they don't

:50:18. > :50:22.want to hear it but francsly they are going to have to because it's

:50:22. > :50:25.important to understand the culture that went wrong under Labour. "There

:50:25. > :50:29.was huge Government pressure because the Government hated the idea that a

:50:29. > :50:33.regulator would criticise it by didn't of criticising one of the

:50:33. > :50:37.hospitals or one of the service ofs it was responsible for. " That's

:50:37. > :50:40.what Barbara young said. She said "we were under more pressure when

:50:40. > :50:43.the right honourable gentleman became a minister under the

:50:43. > :50:52.politics. " There was a culture problem under Labour and the sooner

:50:52. > :50:56.they admit it, the better. We now know from the latest ONS

:50:56. > :51:00.figures that borrowing did rise last year and the Prime Minister will

:51:00. > :51:04.recall that the Chancellor of the Exchequer of two years ago said, we

:51:04. > :51:08.have asked the British people for all that is needed, there's no need

:51:08. > :51:14.to ask for more. Today, why is he asking for more?

:51:14. > :51:17.We have to have a Spending Review to cover the year 2016-16 which wasn't

:51:17. > :51:21.covered by previous Spending Reviews. We have got the deficit

:51:21. > :51:25.down by a third. It is hard, painful and difficult work, but frankly, we

:51:25. > :51:31.are clearing up the mess left when he was a minister in the last

:51:31. > :51:34.Government -- 2015-2016. Thank you, Mr Speaker.

:51:34. > :51:39.16-18-year-olds can receive free school meals in schools, academies,

:51:39. > :51:42.free schools and university keckical colleges but not in sixth form

:51:42. > :51:45.colleges and in further education colleges like those in my

:51:46. > :51:51.constituency. Will the Prime Minister act now to end this clear

:51:51. > :51:55.injustice left by the party opposite?

:51:55. > :51:59.I am happy to look at this issue. School meals are very much in the

:51:59. > :52:04.news this week because it's a week when we should be promoting healthy

:52:04. > :52:07.eating in schools. We have to this very carefully about how best to use

:52:07. > :52:17.the education budget to get money directly to schools for all our

:52:17. > :52:17.

:52:18. > :52:23.children. I think the Prime Minister will

:52:23. > :52:27.agree with me that the OECD figures this morning, the report, shows the

:52:27. > :52:32.gravity of youth unemployment in our country, and can we please, at this

:52:32. > :52:36.late stage in this Government, have a determination to stop unemployment

:52:36. > :52:41.up to the age of 25 as they do in the Netherlands, why can't we

:52:41. > :52:45.deliver that for young people in our country? I absolutely agree that

:52:45. > :52:48.youth unemployment is a scourge. There is good news in the fact that

:52:48. > :52:51.unemployment has been coming down, and youth unemployment has been

:52:51. > :52:56.coming down, but where he's absolutely right is that it

:52:56. > :53:00.shouldn't be the case that we have youth unemployment at 55% in Spain

:53:00. > :53:04.and yet under 8% in Holland and we need to make sure here in the UK

:53:04. > :53:09.that we are performing alongside Holland and Germany and the

:53:09. > :53:13.countries with the lowest rates of youth unemployment. We do that by

:53:13. > :53:17.having a flexible Labour market, helping businesses invest and locate

:53:17. > :53:21.here. As we stand today, this untri, employment is growing faster here

:53:21. > :53:27.than it is in any other G7 country, including Germany. So we are doing

:53:27. > :53:31.the right thing, but we need to focus more on young people.

:53:31. > :53:35.I have the Prime Minister's helpful recent letter to me underlining in

:53:35. > :53:41.his own hand that housing development does not trump the green

:53:41. > :53:45.belt. I gave this letter to Martin Pike, the planning inspector

:53:45. > :53:48.reviewing Reigate and I regret to report that he upheld the principal

:53:48. > :53:53.that green fields in the green belt couldn't be identified for

:53:53. > :53:57.development against the wishes of local people. Will he now direct

:53:57. > :54:01.amendment of the national planning policy framework to better protect

:54:01. > :54:04.green fields in the green belt from unwanted development?

:54:04. > :54:08.What I say to my right honourable friend and I remember underlining

:54:08. > :54:12.that part of the letser is the rules about green belt haven't changed. A

:54:12. > :54:15.local authority can only change the green belt by taking something out

:54:15. > :54:21.and putting something back in in consultation with local people. I

:54:21. > :54:24.know he's having that discussion with his local authority. I'm

:54:24. > :54:29.convinced that we can get the balance right between viement

:54:29. > :54:33.protection on the one hand and the need for more housing on the other.

:54:33. > :54:38.This afternoon, I shall vote enthusiastically for the high speed

:54:38. > :54:45.preparation Bill. But, can the Prime Minister explain why he's instructed

:54:45. > :54:48.his officials and ministers to oppose the extension of the

:54:48. > :54:52.trans-European network north of London which will mean that it would

:54:52. > :54:55.stay in the European Union, that High Speed Two and other transport

:54:55. > :54:59.links to the north of England will not be eligible for funding?

:54:59. > :55:03.Obviously we'll look at all the ways we can increase the funding

:55:04. > :55:07.available for high speed rail, but, as he said, it's very important, not

:55:07. > :55:12.only to achieve the high speed rail between London and Birmingham, but

:55:12. > :55:17.to build the next stages as well. Thank you, Mr Speaker. The Prime

:55:17. > :55:20.Minister knows how hard the structure MPs have worked to get a

:55:20. > :55:24.direct train service from London to Shrewsbury. Virgin want to implement

:55:24. > :55:27.that direct service in December. Unfortunately, Network Rail are

:55:27. > :55:31.trying to prevent that from happening. We were the only county

:55:31. > :55:37.town in England without a direct train service to London. Will he

:55:37. > :55:43.ensure this blockage is resolved? I'm happy to say that the Transport

:55:43. > :55:46.Secretary will meet with him to discuss this issue. In terms of the

:55:46. > :55:50.answer, I gave a moment ago on high speed rail, we have to recognise

:55:50. > :55:55.that there is a lot of congestion on the existing rail lines and high

:55:55. > :55:59.speed rail will help free up services so we can have more direct

:55:59. > :56:03.connections, particularly to important town towns like

:56:03. > :56:07.Shrewsbury. The Department for Business prop

:56:07. > :56:13.proses to abolish the protection for the name Sheffield that guarantees

:56:13. > :56:17.to quality of our manufacturered goodslet -- proposed. The MoD

:56:17. > :56:20.proposes to move the headquarters of our Territorial Army regiment out of

:56:20. > :56:25.the City. What has this Government got against the businesses and

:56:25. > :56:31.people of Sheffield? First of all, on the issue of the -

:56:31. > :56:34.Sheffield is a fantastic city, a very important part of Brun's

:56:35. > :56:37.industrial base and aisle proud of the fact that through the Regional

:56:37. > :56:41.Growth Fund and other schemes, we are investing in the future of

:56:41. > :56:45.Sheffield - on the issue of the reserves, we are putting more money

:56:45. > :56:50.into the reserves, an extra �1. 5 billion to make sure we can get the

:56:50. > :56:57.reserves up to the level of strength needed for force 2020. On the other

:56:57. > :57:01.issue, I'm reliably informed that she should have some confidence.

:57:01. > :57:05.Military bands are important, not only to Her Majesty's Armed Forces,

:57:05. > :57:10.but also the civilian population. The last Labour Government cut the

:57:10. > :57:13.number of Army bands by a quarter. In this Armed Forces week, will the

:57:13. > :57:17.Prime Minister give assurances that will will be no further cuts in the

:57:17. > :57:20.Army bands? The assurance I can give to my right

:57:20. > :57:23.honourable friend, as the Chancellor will say in a minute, yes of course

:57:23. > :57:28.we've had to make difficult fir sills in the Ministry of Defence,

:57:28. > :57:32.but there 'll be no further reductions in the size of our Army,

:57:32. > :57:36.Nay very or Air Force and we'll continue with an equipment programme

:57:36. > :57:41.that I think is second to none in terms of the capabilities we'll be

:57:41. > :57:48.giving our brave, arm ed sfs services -- armed services

:57:48. > :57:53.personnel. Mr Speaker, you will recall that it

:57:54. > :57:57.was over a year ago, and you will probably know the exact date, when

:57:57. > :58:02.the Prime Minister announced internal inquiry to be held by the

:58:02. > :58:07.lustrously named Lord Gold, into the cash for access scandal in which

:58:07. > :58:11.major Conservative Party donors were richly, if not Royally entertained

:58:11. > :58:14.at Downing Street and Chequers. When does the Prime Minister plan to

:58:15. > :58:19.produce the results and publish the result of this inquiry?

:58:19. > :58:24.I'm very happy to set out for him all of the things that Lord Gold

:58:24. > :58:27.recommended and all the steps that we'll be taking. But as we do so,

:58:27. > :58:31.perhaps he could impose on his frontbench on the issue of donations

:58:31. > :58:37.and he can ask them when they are going to pay back the taxes that

:58:37. > :58:42.they managed to dodge from their donor? Thank you, Mr Speaker. School

:58:42. > :58:46.dinners are a vitally important thing ensuring children eat

:58:46. > :58:50.healthily and in helping tackle childhood obesity. Would my right

:58:50. > :58:55.honourable friend the Prime Minister join me in welcoming the launch of

:58:56. > :58:59.national school meals week taking place in the Jubilee Room this

:58:59. > :59:02.afternoon? I certainly join my right honourable friend. It's a very

:59:02. > :59:05.important cause because we have several problems over the years with

:59:05. > :59:08.school meals, they are not being attractive enough for young people

:59:08. > :59:12.wanting to take them on, and also, having problems with obesity as

:59:12. > :59:15.well. Getting this right, which is something that has been happening

:59:15. > :59:20.over recent years, is extremely important. I speak as someone with

:59:20. > :59:24.two children who enjoy their school meals and I want the school to go on

:59:24. > :59:28.winning the battle for school meal, rather than having to do the packed

:59:28. > :59:32.lunch. The revelation that the Metropolitan

:59:32. > :59:36.Police may have withheld evidence from the Macpherson Inquiry, as

:59:36. > :59:41.quite rightly been met with public derision, but the Prime Minister's

:59:41. > :59:43.answer earlier on didn't go far enough. There's the public that are

:59:44. > :59:49.not satisfied with the police investigating the police, nor will

:59:49. > :59:53.an inquiry that's held in secret, no matter how eminent the QC satisfies

:59:53. > :00:02.public opinion, is will he give undertakings to hold a public

:00:02. > :00:08.inquiry with the power to summon people and hear evidence under oath?

:00:08. > :00:13.I rule nothing out. The two enquiries under way, one is Mark

:00:13. > :00:17.Anderson QC, who played a very major role in prosecuting some of those

:00:18. > :00:22.responsible, who met with the Home Secretary today. We need to make

:00:22. > :00:30.sure that they have all the powers and everything they need. As I said

:00:30. > :00:34.clearly, if we need to go further to get to the truth, we will. As the

:00:34. > :00:38.spending round is published, will the Prime Minister assure the House

:00:38. > :00:44.that HMRC will be given the resources to clamp down on tax

:00:44. > :00:49.avoidance, like the �700,000 avoided by the party opposite? My honourable

:00:49. > :00:55.friend makes a very good point. I'm going to mention this at every Prime

:00:55. > :01:01.Minister 's questions. It is a great pleasure to get this in again. They

:01:01. > :01:04.owe �700,000 of tax. That could be going to schools and hospitals. It's

:01:04. > :01:12.about time they realised what hypocrites they are and paid up the

:01:12. > :01:16.money. With over 400,000 house building plots with planning

:01:16. > :01:20.permission remaining an built on in this country, does the Prime

:01:20. > :01:24.Minister agree with me that we should now put pressure on companies

:01:24. > :01:27.to start building and creating jobs, rather than just the blue

:01:27. > :01:32.waiting for their profits to increase? I agree with the

:01:32. > :01:36.honourable weight -- honourable lady, that we need to do more to

:01:36. > :01:40.encourage businesses to build on the plots they already have. That's why

:01:40. > :01:50.we've -- we've taken unprecedented steps that are making available

:01:50. > :02:16.

:02:16. > :02:17.the beginning of the year. Would he steps that are making available

:02:17. > :02:22.mortgages to young people. All The Cancer Drugs Fund has saved many

:02:22. > :02:26.lives. It has made available drugs to over 30,000 people. It has been

:02:26. > :02:33.expanded to include some treatments as well as drugs. I want to see this

:02:33. > :02:36.as a record we build on and in no way put at risk. Last week the Prime

:02:36. > :02:40.Minister said that people on these benches had forgotten about the

:02:40. > :02:46.bedroom tax. I can assure him that my constituents certainly haven't.

:02:46. > :02:56.In my city last week, only 20 31 bedroomed homes were available for

:02:56. > :02:56.

:02:56. > :03:01.let. Of those, four of them had over 200 applicants. When is the Prime

:03:01. > :03:07.Minister going to admit that this is not the best way of reducing the

:03:07. > :03:10.housing benefit bill? The point I'd make is we are removing the spare

:03:10. > :03:13.room subsidy because it's right to be fair between people in private

:03:13. > :03:19.rented accommodation and people in socially rented accommodation. But

:03:19. > :03:22.this, in a way, is the perfect thing for the Spending Review we are about

:03:22. > :03:25.to hear about. Labour have told us they are now going to be responsible

:03:25. > :03:31.about spending, they will accept the cuts that have been made. We hear

:03:31. > :03:34.week after week, backbencher after backbencher, frontbencher at

:03:34. > :03:37.frontbenchers, complaining about the difficult decisions we've had to

:03:37. > :03:47.take and promising to reverse them. That is why they have no credibility

:03:47. > :03:52.

:03:52. > :03:57.immediately be on his feet and deliver the Spending Review. George

:03:57. > :04:02.Osborne. This coalition came into office with a commitment to address

:04:02. > :04:07.with firmness and resolve, one of the biggest economic crises of the

:04:07. > :04:12.post-war era. And the action we have taken, together with the British

:04:12. > :04:16.people, has brought the deficit down by a third, helped a record number

:04:16. > :04:24.of people into work and taken our economy back from the brink of

:04:24. > :04:27.bankruptcy. And it allows us to say that while recovery from such a deep

:04:27. > :04:33.recession can never be straightforward, Britain is moving

:04:33. > :04:38.out of intensive care and from rescue to recovery. Today we

:04:38. > :04:42.announce the latest action to secure the recovery. We act on the half of

:04:42. > :04:48.every tax payer and every future taxpayer who once high quality

:04:48. > :04:53.public services at a price our country can afford. We act on behalf

:04:53. > :04:59.of everyone who knows that Britain has got to live within its means.

:04:59. > :05:05.And we have applied three principles to the spending round I set out

:05:05. > :05:09.today. Reform, to get more from every pound we spend. Growth, to

:05:09. > :05:15.give Brittany education, enterprise and economic infrastructure it needs

:05:15. > :05:20.to win the global race. -- to give Britain. And fairness, making sure

:05:20. > :05:26.we are all in it together, ensuring those with the broadest shoulders

:05:26. > :05:32.bare the largest burden. And making sure the unfairness of the something

:05:32. > :05:36.for nothing culture in our welfare system is changed. We've always

:05:36. > :05:39.understood that the greatest unfairness was loading debts onto

:05:39. > :05:46.our children that our generation didn't have the courage to tackle

:05:46. > :05:50.ourselves. We've always believed, against much opposition, that it is

:05:50. > :05:56.possible to get better public services at lower cost. That you can

:05:56. > :06:00.cut bureaucracy and boost enterprise by taking burdens off the back of

:06:00. > :06:05.business. In the face of all the evidence, the opposition to these

:06:05. > :06:09.ideas has collapsed into incoherence. We've always believed

:06:09. > :06:13.that the deficit mattered, that we needed to take tough decisions to

:06:13. > :06:19.deal with our debts. And the opposition to that has collapsed

:06:19. > :06:24.into incoherence, too. I announced the next stage of our economic plan

:06:24. > :06:28.to turn Britain around. Mr Speaker, let me start with the overall

:06:28. > :06:35.picture on spending. In its last year in office, the previous

:06:35. > :06:39.government was borrowing �1 in every �4 that it spent. It was a record

:06:39. > :06:44.for a British government in peace time and a calamitous risk with our

:06:44. > :06:50.economic stability. As the note we saw again this week from the

:06:50. > :06:57.outgoing chief secretary put it, I'm afraid there is no money. So we

:06:57. > :07:02.acted immediately. Three years ago, we set out plans to make savings and

:07:03. > :07:08.to reduce our borrowing. Instead of the �157 billion the last government

:07:08. > :07:13.was borrowing, this year we are set to borrow �108 billion. That is �49

:07:13. > :07:20.billion less in borrowing. That is virtually the entire education

:07:20. > :07:25.budget. So we made real progress putting right what went badly wrong.

:07:25. > :07:30.But while we've been acting, the challengers from abroad have grown,

:07:30. > :07:35.the eurozone in crisis, rising oil prices, the damage from our own

:07:35. > :07:40.banking crisis, worse than anyone feared. And the truth is, Mr

:07:40. > :07:45.Speaker, we have to deal with the world as it is, not as we would wish

:07:45. > :07:49.it to be. So this country has to continue to make savings will stop I

:07:49. > :07:53.can report to the House that the biggest single saving we made in

:07:53. > :07:58.government is the �6 billion a year left we are paying to service our

:07:58. > :08:04.debts than the previous government budgeted for. There that number in

:08:04. > :08:10.mind when you hear the opposition complaining about cuts. The deficit

:08:10. > :08:14.has come down by a third, yet at over 7% it remains far too high, so

:08:14. > :08:20.we must continue to take action. Not just because it's wrong to go on

:08:20. > :08:25.adding depth to our children's soldiers, but we know because of the

:08:25. > :08:31.global turbulence of the last few years that the economic risks are

:08:31. > :08:37.real and the recovery has to be sustained. If we abandon our deficit

:08:37. > :08:42.plan, Britain would be back in intensive care. So the figures today

:08:42. > :08:44.show that until 2017 to 2018, total managed expenditure, in other

:08:44. > :08:50.words, the total amount of government spending, will continue

:08:50. > :08:56.to fall in real terms at the same average rate is falling today. The

:08:56. > :09:01.task before us today is to spell out what that means four 2015 to 2015.

:09:01. > :09:05.Total managed expenditure will be �745 billion. To put that huge sum

:09:05. > :09:09.into context, consider this. If government spending had been allowed

:09:09. > :09:14.to rise through this Parliament at the average rates of the last three

:09:14. > :09:21.decades, that total would have been �120 billion higher. This government

:09:22. > :09:26.has taken... Order, order. You must not have to shout to be heard.

:09:26. > :09:30.Members know that I will always accommodate the interests of

:09:30. > :09:34.backbenchers on both sides in scrutinising these matters

:09:34. > :09:42.intensively. But the Chancellor and in due course the Shadow Chancellor

:09:42. > :09:47.must be properly and fairly heard. This government has taken

:09:47. > :09:53.unprecedented steps to achieve this expenditure control. But now we need

:09:53. > :09:57.to find �11.5 billion of further savings. I want to pay a personal

:09:57. > :10:02.tribute to my right honourable friend, the chief secretary, for the

:10:02. > :10:06.huge effort he has put into helping deliver them. Finding savings on

:10:06. > :10:11.this scale has not been easy. These are difficult decisions that will

:10:11. > :10:16.affect people in our country. But there never was an easy way to bring

:10:16. > :10:20.spending under control. Reform, growth and fairness are the

:10:20. > :10:26.principles. Let me take teaching term and start with reform, and the

:10:26. > :10:30.obligation we all have in this House to ensure we have more for every

:10:31. > :10:35.pound we spend of taxpayers' money. With the help of my right honourable

:10:35. > :10:39.friend the Minister for the Cabinet Office, we have been combing through

:10:39. > :10:42.Whitehall -- tall, renegotiating contracts and reducing the size of

:10:42. > :10:46.government. Cutting money the previous government was spending on

:10:46. > :10:52.marketing and consultants, reforming government IT and negotiating hard

:10:52. > :10:57.on behalf of the taxpayer has already saved almost �5 billion. In

:10:57. > :11:01.this spending round we find a further �5 billion of efficiency

:11:01. > :11:06.savings. That is nearly half of the total savings we need to achieve. We

:11:06. > :11:13.are reforming pay in the public sector. We are holding down pay

:11:13. > :11:17.awards. Public sector pay rises will be limited to an average of up to 1%

:11:17. > :11:24.for 2015 to 2016. But the biggest reform we make an pay is too

:11:24. > :11:28.automatic progression pay. This is the practice whereby many employees

:11:28. > :11:34.not only get a pay rise every year, but also automatically move up a pay

:11:34. > :11:38.grades every single year regardless of performance. Some public sector

:11:38. > :11:43.employees see annual pay rises of 7%. Progression pay can I best be

:11:43. > :11:47.described as antiquated. At worst, it's deeply unfair to other parts of

:11:47. > :11:55.the public sector who don't get it. And to the private sector who have

:11:55. > :12:00.to pay for it. So we will end automatic progression pay in the

:12:00. > :12:07.civil service by 2015 to 2016. We are working to remove automatic pay

:12:07. > :12:10.rises simply for time served in our schools, NHS, prisons and police.

:12:10. > :12:13.The armed forces will be excluded from these reforms. Keeping pay

:12:13. > :12:17.awards down and ending automatic progression pay means that for every

:12:17. > :12:22.pound we have to save in central administration, we can better

:12:22. > :12:26.limited job losses. I don't want to disguise from the House that there

:12:26. > :12:29.will be further reductions in the number of people working in the

:12:29. > :12:36.public sector. The old BR has forecast that the total number of

:12:36. > :12:39.people working for the government will fall by a further 144000 x 2015

:12:39. > :12:44.to 2016. I know that for those affected this is difficult. That is

:12:44. > :12:49.the consequence of the country spending far beyond its means. When

:12:49. > :12:54.I presented the spending round three years ago, I said then that around

:12:54. > :12:59.half a million posts in the public sector were forecast to have to go.

:12:59. > :13:05.That is indeed what has happened. We are saving �2 billion ago with a

:13:05. > :13:08.civil service now smaller than at any time since the war. But I also

:13:08. > :13:14.said three years ago that I was confident that job creation in the

:13:14. > :13:18.private sector would more than make up for the losses. That prediction

:13:18. > :13:22.created more controversy than almost anything else at the time. This is

:13:22. > :13:27.what the opposition said. The Shadow Chancellor called it a complete

:13:27. > :13:33.fantasy. Instead, every job loss that the public sector has had has

:13:33. > :13:43.been offset by three new jobs in the private sector. In the last year,

:13:43. > :14:06.

:14:06. > :14:13.five new jobs have been created for The Treasury will lead by example.

:14:13. > :14:18.Our resource budget will be reduced by 10%. The Cabinet Office will also

:14:18. > :14:22.see its resource budget reduced by 10%. But within that we will

:14:22. > :14:27.continue to fund support for social action, including the National

:14:27. > :14:32.citizens service, 90,000 places will be available for young adults in the

:14:32. > :14:36.citizens service next, rising to 150000 x 2016. It's a fantastic

:14:36. > :14:46.programme that teaches young people about their responsibilities as well

:14:46. > :15:00.

:15:00. > :15:05.as their rights, and we are expanding it. Local government will

:15:05. > :15:09.He has agreed to a further 10% saving in his resource budget. But

:15:09. > :15:14.we are committing to over �3 billion of capital investment in affordable

:15:14. > :15:17.housing. We will extend the troubled families programme to reach 400,000

:15:18. > :15:22.more vulnerable families who need extra support. We are proving that

:15:22. > :15:32.you can save money and create more progressive government. That is the

:15:32. > :15:33.

:15:33. > :15:36.right priority. Here is another priority - helping families with the

:15:36. > :15:39.cost-of-living. Because we know times are tough, we have helped keep

:15:39. > :15:43.mortgage rates low, increase the personal allowance, cut fuel duty

:15:43. > :15:48.and we have frozen the council tax. That council tax freeze is due to

:15:48. > :15:51.come to an end next April, and I don't want that to happen. So I can

:15:51. > :15:56.tell you today, that because of the savings we've made, we can help

:15:56. > :16:04.families with their bills, we will fund councils to freeze council tax

:16:04. > :16:09.for the next two years. That's nearly �100 off the average council

:16:09. > :16:13.tax bill for families, bringing the savings to �600 over this

:16:13. > :16:21.Parliament. It demonstrates our commitment to all those who want to

:16:21. > :16:26.work hard and to get on. There's one more thing we can do to

:16:27. > :16:30.help the cost-of-living in one part of the country. Those in the

:16:30. > :16:35.south-west face exceptionally high water bills. Nothing was done until

:16:35. > :16:39.we came to office. Now we've cut the water bills by �50 a household every

:16:39. > :16:44.year until 2015. My right honourable friend, the member for Camborne and

:16:44. > :16:50.Redruth and many others, have campaigned to extend that rebate

:16:50. > :16:54.beyond 2015 and I'm happy to confirm today that we'll do that. Taking

:16:54. > :17:00.money out of the cost of Government and putting it into the pockets of

:17:00. > :17:03.families is what we mean by reform. Local government has already taken

:17:03. > :17:09.difficult decisions to reduce staff numbers, share services and make

:17:09. > :17:13.savings, and I want to pay tribute to mayor rim Coppull for all he's

:17:13. > :17:16.done in showing how this can be achieved. We were told by the scare

:17:16. > :17:23.mongerers that savings in local government could decimate local

:17:23. > :17:29.services. Instead, public satisfaction with local council

:17:29. > :17:34.services have gone up. That is because with our reforms,

:17:34. > :17:36.communities have more control over their own destiny, that's because we

:17:36. > :17:41.have devolved power and responsibility to manage budgets

:17:41. > :17:49.locally. That's because we have let councils benefit from the tax

:17:49. > :17:54.receipts that come when the local economy grows.let today we give more

:17:54. > :17:58.freedom, including greater flexibility among assets and have

:17:58. > :18:03.greater emergency services. I want to thank the honourable member for

:18:03. > :18:07.Bourne moth East for services in this area which has helped us. We

:18:07. > :18:11.are embarking on major reforms to the way we spend locally through the

:18:11. > :18:16.single local growth fund that Lord Heseltine proposed. This will be �2

:18:16. > :18:21.billion a year, that's at least �10 billion over the next Parliament and

:18:21. > :18:27.that is a sum the Local Enterprise Partnerships can bid for, details to

:18:27. > :18:30.be set out tomorrow. Our philosophy is simple - trust people to make

:18:30. > :18:35.their own decisions and they'll urgely make better decisions. But in

:18:35. > :18:38.return for the freedoms, we have to ask local government for the kind of

:18:38. > :18:44.sacrifices central Government is making. The local government and

:18:44. > :18:48.resource budget will be reduced by 10% in 2015-16, but when all the

:18:48. > :18:51.changes affecting local government I will set out are taken into account,

:18:51. > :18:55.including local income and other central government funding, local

:18:55. > :19:00.government spending reduces by around 2%. I set out today the block

:19:00. > :19:05.grants to the devolved administrations. Because we have

:19:05. > :19:08.prioritised health and schools in England, this feeds through the

:19:08. > :19:12.Barnet formula to resource savings of around 2% in Scotland, Wales and

:19:12. > :19:16.Northern Ireland. The Scottish resource budget will be

:19:16. > :19:21.set at 25. 7 billion pounds and Scotland will benefit from new

:19:21. > :19:26.capital borrowing powers of almost �300 million. Being part of the

:19:26. > :19:30.United Kingdom means Scotland will see its capital spending power

:19:30. > :19:35.increase by almost 13% in real terms in 2015-16. It's rightly for the

:19:35. > :19:42.Scottish Parliament to decide how best to use that. That is devolution

:19:42. > :19:49.within a united kings Dom delivering. Delivering to Scotland.

:19:49. > :19:53.The Welsh budget will be �13. 6 billion and we'll shortly publish

:19:53. > :19:59.our response on further devolution of taxation and borrowing. When we

:19:59. > :20:02.do so, Well be able to say more about the plans to improve the M4 in

:20:02. > :20:05.South Wales that my right honourable friend for the Vale of Glamorgan and

:20:05. > :20:12.others have been campaigning for. The Northern Ireland resource budget

:20:12. > :20:17.will be �9. 6 billion and we have agreed to provide an additional �31

:20:17. > :20:21.million in 2015 to help the Police Service of Northern Ireland tackle

:20:21. > :20:25.terrorism. Those police officers do an incredibly brave job on our

:20:25. > :20:30.behalf and we salute them. Separately, we'll make 10% savings

:20:30. > :20:34.to the Scotland, Wales and Northern Ireland officerings.

:20:34. > :20:39.Mr Speaker, we believe that the cultural heritage of our nations are

:20:39. > :20:42.not just an economic asset but have an intrinsic value too. When times

:20:42. > :20:46.are tough, they too must make a contribution to the savings this

:20:46. > :20:50.country requires. The Department for Culture, media and sport, will make

:20:50. > :20:55.savings of 7% in its resource budget, elite sports will be

:20:55. > :21:01.protected while the funding of community sports, arts and museums,

:21:01. > :21:05.will be reduced by just 5%. But because we recognise the value of

:21:05. > :21:08.our great galleries and museums and English Heritage, we are giving them

:21:08. > :21:13.much greater freedom from state control which they have long called

:21:13. > :21:18.for, applying our reforming pri across across-the-board, empowering

:21:18. > :21:22.those on the front line who know best what the Director of The

:21:22. > :21:26.British Museum calls good news in a tough economic climate. While we are

:21:26. > :21:32.at it, we'll make sure that the site of the Battle of Waterloo is

:21:32. > :21:38.restored in time for the 200th anniversary, to commemorate those

:21:38. > :21:48.who died there and to celebrate a great victory of coalition forces

:21:48. > :21:57.

:21:57. > :22:02.and very discredited former regime armed forces in the world and we

:22:02. > :22:07.intend to keep it that way. The first line of national defence

:22:07. > :22:10.is sound public finances and a balanced defence budget. My right

:22:10. > :22:14.honourable friend, the Defence Secretary, is helping deliver both.

:22:14. > :22:20.He and his predecessor, my right honourable friend for North Somerset

:22:20. > :22:25.have filled the �38 billion black hole they inherited in the finances

:22:25. > :22:30.of the Ministry of Defence. We continue to ensure we get maximum

:22:30. > :22:34.value for money from what will remain. 2% of our GDP, one of the

:22:34. > :22:39.largest defence budgets in the world. The defence resource budget

:22:39. > :22:44.will be maintained in cash terms of �24 billion, the equipment budget

:22:44. > :22:48.will be �14 billion and will grow by 1% in real terms thereafter. We'll

:22:48. > :22:52.further reduce the civilian workforce and allowances,

:22:52. > :22:56.renegotiate more of the hopeless PFI contracts signed in the last decade

:22:56. > :23:00.and overhaul the way we buy equipment. My right honourable

:23:00. > :23:05.friend, thement be, has rightly been clear throughout that he's not

:23:05. > :23:08.prepared to see a reduction in Britain's military capabilities.

:23:08. > :23:13.This spending round not only protects the capabilities, but

:23:13. > :23:17.enhances them, with the latest technologies. We will not cut the

:23:17. > :23:23.number of soldiers, sailors or airmen. We need them to defend our

:23:23. > :23:27.country. We'll give them the best kit to do their job. The new

:23:27. > :23:32.aircraft carriers, submarines, stealth fighters, destroyers and

:23:32. > :23:35.state-of-the-art armoured vehicles. We also make a major commitment to

:23:35. > :23:41.invest in cyber, the new frontier of defence, and a priority for this

:23:41. > :23:44.government. We will look after the families

:23:44. > :23:50.who've lost their loved ones and those who've been injured protecting

:23:51. > :23:54.us lock after the wars are over. We previously committed to the military

:23:54. > :23:57.to five years, today easy will commit to fund the Armed Forces

:23:57. > :24:02.covenant permanently and we'll do this from the money we have

:24:02. > :24:05.collected from the LIBOR fines, those who represented the very worst

:24:06. > :24:11.values will support those who represent the very best of British

:24:11. > :24:16.values. Our veterans will not be forgotten.

:24:16. > :24:23.The Intelligence Services are on the frontline too.

:24:23. > :24:27.Often heroically, these they protect us. We'll protect them in return

:24:27. > :24:31.with a 3. 4% increase in their combined resource budget. The

:24:31. > :24:34.Foreign Office is the public face of diplomacy and my right honourable

:24:34. > :24:43.friend, the member for Richmond, is quite simply the best Foreign

:24:43. > :24:48.Secretary we've had in a generation. He too has demonstrated how we can

:24:48. > :24:53.make our taxpayers money go further, while making savings in his budget

:24:53. > :24:56.he's managed to expand our network of embassies in the emerging world

:24:56. > :25:01.and focus his diplomats on Brun's commercial interests. There 'll be

:25:01. > :25:04.further savings in that budget of 8% in 20 #15rks but my right honourable

:25:04. > :25:10.friend is still committing to strengthen our embassy network in

:25:10. > :25:15.high growth markets from Shanghai to Abuja -- 2015. The Foreign Office

:25:15. > :25:20.protects our values abroad. The Home Office protects our values here in

:25:20. > :25:27.Britain. Police reform is a model of what we can achieve across

:25:27. > :25:32.Government. Police forces are more accountable to the public with

:25:32. > :25:42.modern working practices, the latest equipment and democratic oversight.

:25:42. > :25:43.

:25:43. > :25:49.All on a... Yes, she is the best Home Secretary!

:25:49. > :25:58.And a hell of a lot better than the onings that went -- ones that went

:25:58. > :26:02.before! And what was the prediction from the benches opposite? They

:26:02. > :26:09.said, crime would rise. What has happened instead? Crime has fallen

:26:09. > :26:15.by more than 10%. Thanks to the hard work of the police officers up and

:26:15. > :26:19.down this country, crime is at its lowest for 13 years. What was the

:26:19. > :26:24.prediction in we heard from the benches opposite about the borders.

:26:24. > :26:27.They said the cuts would mean we were not going to be able to control

:26:27. > :26:34.immigration. What has happened instead? Net immigration is down by

:26:34. > :26:37.more than a third. This Home Secretary is demonstrating

:26:37. > :26:43.that responsibility budgets and reform can deliver better services

:26:44. > :26:50.for the public. In 2015, she will work with a resource budget of �let.

:26:50. > :26:56.9 billion, a saving of 6% -- 9. 9 billion.

:26:56. > :27:00.There will be savings in the department, some visa fees will go

:27:00. > :27:03.up, but protecting Britain from the terrorist threat remains top

:27:03. > :27:07.priority, so I can confirm the police counter-terrorism budget will

:27:07. > :27:13.not be cut at all. For the police to do their job, they need a criminal

:27:13. > :27:18.justice system that works a lot better. A case of common assault can

:27:18. > :27:22.take 200 days to pass through the courts, involves five separate sets

:27:22. > :27:27.of case papers and is generated on three different computer systems. In

:27:27. > :27:31.some prisons, the cost of keeping a prisoner is �40,000 a year. In

:27:31. > :27:34.others, it's one third of that. The cost of legal aid per head is double

:27:34. > :27:39.the European average. My right honourable friend the Lord

:27:39. > :27:43.Chancellor is reforming all of these things and by doing that, he'll make

:27:43. > :27:47.savings of 10% in his departmental budget.

:27:47. > :27:51.He'll do that while offering for the first time Probation Services for

:27:51. > :27:57.those who've served short sentences to help end the revolving door of

:27:57. > :28:00.crime and reoffending. Mr Speaker, it's an example of the

:28:00. > :28:06.reform we are bringing across government and every step of the

:28:06. > :28:10.way, every penny saved, every programme reformed, every

:28:10. > :28:13.entitlement reduced, every difficult choice taken, has been opposed by

:28:13. > :28:17.vested interests and those who got Britain into this mess in the first

:28:17. > :28:21.place. We will not let up. I will not let

:28:21. > :28:26.that happen. The reform will continue.

:28:26. > :28:30.Now, Mr Speaker, government spending does not alone create sustainable

:28:30. > :28:35.growth. Enterprise does.

:28:35. > :28:40.The job of the state is to provide the schools, the science, the

:28:40. > :28:43.transport links and the reliable energy that enable business to grow.

:28:43. > :28:48.Britain was once the place where the future was invented from the railway

:28:48. > :28:53.to the jet engine to the worldwide web. We can be that country again

:28:53. > :28:58.and today we set out how to get there, a huge amount of innovation

:28:58. > :29:02.and discovery still goes on. Successive governments of all

:29:02. > :29:05.colours have put short-term pressures over the long-term needs

:29:05. > :29:09.and refused to commit capital spending plans that match the

:29:09. > :29:15.horizons of a modern economy. Today, we change that.

:29:15. > :29:19.We commit now to �50 billion of capital investment in 2015 from

:29:19. > :29:25.roads to railways, bridges to Broadband, science to schools, it

:29:25. > :29:31.will amount to over �300 million of capital spending guaranteed to the

:29:32. > :29:36.end of this decade. Today we raise our national game. This means that

:29:37. > :29:41.Britain will spend on average more as a percentage of its national

:29:41. > :29:46.income on capital investment in this decade, despite the fact money is

:29:46. > :29:56.tight, than in the previous decade when government spending was being

:29:56. > :30:02.

:30:02. > :30:06.will be set out. With specific plans for more than �100 billion of

:30:06. > :30:10.infrastructure projects. But this is what it means for departments. The

:30:10. > :30:14.Department for Transport will make a 9% saving in its day-to-day resource

:30:14. > :30:20.spending, bearing down on the running costs of Transport for

:30:20. > :30:23.London and on Reagan Administration. It will rise to �9.5 billion, the

:30:23. > :30:29.largest rise of any part of government. And we will repeat that

:30:29. > :30:33.commitment for every year to 2020. We are already massively expanding

:30:33. > :30:37.investment on major road schemes, but we will do more. So we are

:30:38. > :30:41.announcing the largest programme of investment in our roads for over

:30:41. > :30:45.half a century. We've already expanded our investment in the

:30:45. > :30:51.railways, but we will do more. So we are committing to the largest

:30:51. > :30:53.investment in our railways since the Victorian age. And with the

:30:53. > :30:59.legislation before this House today, we should give the green light to

:30:59. > :31:04.HS2, a huge boost to the north of England and a transformation of the

:31:04. > :31:08.economic geography of this country. Here in London, we are digging

:31:08. > :31:13.Crossrail, the largest urban infrastructure project in Europe.

:31:13. > :31:17.But we will do more. Looking now at the case for Crossrail 2, linking

:31:17. > :31:21.London from north to south. And we are going to give the mayor almost

:31:21. > :31:26.�9 billion of capital spending and additional financing power to the

:31:26. > :31:36.end of this decade. He's a lot better than Ken Livingstone, that's

:31:36. > :31:36.

:31:36. > :31:42.for sure! Mr Speaker, investing in our economic infrastructure also

:31:42. > :31:46.means investing in energy. So we will provide the certainty investors

:31:46. > :31:50.are crying out for in Western countries. This country is already

:31:50. > :31:54.spending more on renewables than ever before. Now we will provide

:31:54. > :31:58.future strike prices for low carbon. We are restarting our civil

:31:58. > :32:06.nuclear programme, when other countries are unable to continue

:32:06. > :32:11.theirs. Our exploitation of gas and the North Sea are second to none.

:32:11. > :32:15.Now we make the tax and planning changes that will put Britain at the

:32:15. > :32:20.forefront of exploiting shale gas. We will provide our country with the

:32:20. > :32:24.energy of the future at a price that we can afford. And, taken together,

:32:24. > :32:28.this should support over �100 billion of private sector investment

:32:28. > :32:33.in energy. The Department for energy and climate will do this while

:32:33. > :32:38.reducing -- dissing its budget by 8%. The Department of rural affairs

:32:38. > :32:43.will see a 10% reduction. But we will set out plans for a major

:32:43. > :32:47.commitment to nuclear defences for the rest of this decade.

:32:47. > :32:52.Prioritising long-term capital through day-to-day cost savings are

:32:52. > :32:56.exactly the tough choices that Britain should be making. It is not

:32:56. > :33:00.enough to have roads and power stations and flood defences. These

:33:00. > :33:03.are just the physical infrastructure you need to compete in a

:33:03. > :33:08.21st-century. We need the intellectual capital, too. This

:33:08. > :33:13.country needs to invent and pioneer and export around the world. That

:33:13. > :33:17.means backing the Department for business that helps us to do this.

:33:17. > :33:21.It means taking tough decisions about what we should support. My

:33:21. > :33:24.right honourable friend has agreed to a reduction of 6% in the cost of

:33:24. > :33:29.the department. That means we are making savings to student

:33:29. > :33:33.maintenance, keeping grants but not increasing them, and the cost of the

:33:33. > :33:38.central department will also be cut further. But this means that within

:33:38. > :33:43.this reduced budget, we can put more money into apprenticeships and

:33:43. > :33:47.continue with the dramatic increase in support we provided to exporters.

:33:47. > :33:52.And we're not going to shift medical training and research out of this

:33:52. > :33:57.department, because they are working well where they are. In this

:33:57. > :34:02.department, too, we can shift from day-to-day spending to a huge 9%

:34:02. > :34:05.increase in capital investment will stop this includes a huge investment

:34:05. > :34:10.in science. Scientific discovery is first and foremost an expression of

:34:10. > :34:14.the relentless new research to learn more about our world, but it's also

:34:14. > :34:18.an enormous strength for a modern economy. From synthetic biology to

:34:18. > :34:22.graph scene, written is very good at it and we are going to keep it that

:34:22. > :34:27.way. I am committing today to maintain the resource budget for

:34:27. > :34:32.science at �4.6 billion, to increase the capital budget for science in

:34:32. > :34:37.real terms to �1.1 billion and to maintain that a real increase to the

:34:37. > :34:42.end of this decade. Investment in science is an investment in our

:34:42. > :34:45.future. So, yes, from the next generation of jet engines to

:34:45. > :34:50.cutting-edge supercomputers, we say keep inventing, keep delivering,

:34:50. > :34:53.this country will back you all the way. But when you've got

:34:53. > :34:58.infrastructure and you've got science, you still need the educated

:34:58. > :35:04.workforce to make it happen. And because of our ongoing reforms to

:35:04. > :35:10.our universities, they are now better funded than before. People

:35:10. > :35:16.will remember that the reforms to higher education were bitterly

:35:16. > :35:21.contested in this House. We remember the scaremongering about fees, the

:35:21. > :35:26.claims that they would destroy social mobility, put off students

:35:26. > :35:29.from poorer communities applying, and what has happened since? The

:35:29. > :35:39.highest proportion of students from the most deprived neighbourhoods

:35:39. > :35:42.applying to university 's ever. And we should all welcome that. But

:35:42. > :35:46.there's no greater long-term investment a country can make than

:35:46. > :35:50.in the education and skills of children. Because of the tough

:35:50. > :35:54.decisions we've taken elsewhere, we've been able to invest in

:35:54. > :35:57.education and accelerate school reform. When we took office, our

:35:57. > :36:02.country's education system was falling behind other parts of the

:36:02. > :36:06.world. Now thanks to the brilliant programme of reform by my right

:36:07. > :36:13.honourable friend the Education Secretary and the schools Minister,

:36:13. > :36:23.we are once again leading the way. We've applied our reform principles

:36:23. > :36:23.

:36:23. > :36:28.here, to. Turning the majority of secondary schools into academies. In

:36:28. > :36:33.this spending round, this momentum for reform will grow. So the

:36:33. > :36:38.education Department's overall budget will increase to �53 billion,

:36:38. > :36:41.and school spending will be protected in real terms, fulfilling

:36:41. > :36:47.the pledge we made at this Parliament for all offers

:36:48. > :36:52.Parliament. And we will transfer power and money from town halls and

:36:52. > :36:56.central bureaucracy to schools, so that more of this money for

:36:56. > :37:00.education is spent on education. While grants to councils and

:37:00. > :37:05.spending on central agencies are reduced, the cash going to schools

:37:05. > :37:11.will go up. I can announce today that school spending will be

:37:11. > :37:16.allocated in a fairer way than ever before. School funding across the

:37:17. > :37:21.country is not equally distributed. But distribution on a historical

:37:21. > :37:25.basis does not have a logical reason. The result is that some

:37:25. > :37:32.schools get much more than others in the same circumstances will stop it

:37:32. > :37:37.is an affair and we are going to put it right. Many MPs from all sides of

:37:37. > :37:41.this House have campaigned for it. My honourable friend for Worcester

:37:41. > :37:45.has been a particular champion in this Parliament. Now the lowest

:37:45. > :37:50.funded Local Authorities in this country will at last receive an

:37:50. > :37:54.increase in their per-pupil funding, as we introduce a national

:37:54. > :37:57.funding formula to ensure that no child in any part of our country is

:37:57. > :38:01.to ensure that no child in any part of our country is disseminated

:38:01. > :38:05.against. And we will consult on all the details until we get this

:38:05. > :38:08.historic reform right. The pupil premium we've introduced also makes

:38:09. > :38:14.sure we are fair to children from low-income backgrounds. It will be

:38:14. > :38:21.protected in real terms, so every poor child will have more cash spent

:38:21. > :38:26.on their future than ever before. The capital budget will be set at

:38:26. > :38:30.�4.6 billion in 2015 to 2016, with over �21 billion of investment over

:38:30. > :38:36.the next Parliament. We will tackle the backlog of maintenance in

:38:36. > :38:42.existing schools. And we will invest in new school places. We will fund

:38:42. > :38:46.20 new studio schools, 20 new university technical colleges, those

:38:46. > :38:50.are outstanding new vocational institutions. Free schools are

:38:50. > :38:55.giving parents the opportunity to aspire to a better education for

:38:56. > :39:02.their children. The opposition have said they want no more of these

:39:02. > :39:06.schools. We can't allow that attack an aspiration to happen. Instead, we

:39:06. > :39:11.must accelerate the programme and bring more hope to children. That is

:39:11. > :39:16.why I can announce that we will fund an unprecedented increase in the

:39:16. > :39:22.number of free schools. We will provide for 180 great new free

:39:22. > :39:27.schools. The schools budget protected, fairer funding across the

:39:27. > :39:31.nation, the pupil premium extended to more students ever before and a

:39:32. > :39:36.transformation in the preschool programme. We will not make our

:39:36. > :39:39.children pay for the mistakes of the past. We will give them every chance

:39:39. > :39:48.for the future, because that is the single best investment that Britain

:39:48. > :39:52.can make. Our education... Is also consistent with the third and final

:39:52. > :39:55.principle of this spending round. Fairness. It's not possible to

:39:55. > :39:58.reduce a deficit of this size without asking all sections of the

:39:58. > :40:04.population to play their part. But those with the broadest shoulders

:40:04. > :40:08.should bear the greatest burden. And the Treasury distribution analysis

:40:08. > :40:13.shows that the top fifth of the population lose the most after this

:40:13. > :40:18.spending round. And the independent Institute for Fiscal Studies are

:40:18. > :40:22.unequivocal that the richest 10% have paid the most. In every year of

:40:22. > :40:26.this Parliament, the rich will pay a greater proportion of income tax

:40:26. > :40:35.revenues than in any one of the 13 years under the last Labour

:40:35. > :40:40.government. So when it comes to Her Majesty's Revenue & Customs, despite

:40:40. > :40:45.the fact that this department will see a 5% reduction in its resource

:40:45. > :40:50.budget, we are committed to extra resources to tackle tax evasion. The

:40:50. > :40:56.result is we expect to raise over �1 billion more in tax revenues from

:40:57. > :41:02.those who try and avoid to pay their fair share. Fairness also means

:41:02. > :41:06.refusing to balance the budget on the backs of the world 's poorest. I

:41:06. > :41:11.know that not everyone believes we should fulfil our commitment to

:41:11. > :41:17.spend .7% of our national income on development. But I do, and I'm proud

:41:17. > :41:22.to support a government that is in the first of our history to meet our

:41:22. > :41:27.pledge and meet it not only this year but next year and vigour after.

:41:27. > :41:30.Of course, oversees the parliament is about more than just this budget,

:41:30. > :41:37.and we comply with internationally policed rules. But that budget is

:41:37. > :41:42.the lion 's share and it will be set at �11.1 billion in 2015 to 2016.

:41:42. > :41:47.Even in these tough times, the decisions we make mean we keep to

:41:47. > :41:51.our commitments. And that includes our commitment to the National

:41:51. > :41:57.Health Service, an institution which is the very embodiment of fairness

:41:57. > :42:03.in our society. The NHS is much more than the government's priority, it

:42:03. > :42:08.is the People's priority. When we came to office, the health budget

:42:08. > :42:14.was �96 billion. In 2015 to 2016, it will be �110 billion. And capital

:42:14. > :42:21.spending will rise to �4.7 billion. New medical treatments and an ageing

:42:21. > :42:26.population means the demand for NHS services is rising. So we've not

:42:26. > :42:32.spared in also demanding reform and valuable money in this service. This

:42:32. > :42:36.will not insulated the health service from top choices, there are

:42:36. > :42:40.already 7000 fewer managers. The NHS will continue to make efficiency

:42:41. > :42:45.savings. But these savings will enable new investment in mental

:42:45. > :42:50.health and the funding for new treatments for cancers, like

:42:50. > :42:54.prostate and breast cancer. Let me respond directly to the breast

:42:54. > :42:59.Cancer research campaign that so many have taken part in. We will

:42:59. > :43:02.continue to back the charity research support fund and look into

:43:02. > :43:08.making it easier for these organisations to benefit from gift

:43:08. > :43:13.aid. Many older people do not just use the NHS, they also use the

:43:13. > :43:17.social care system. If we are honest, they often fall between the

:43:17. > :43:19.cracks of the two Systems, being pushed from pillar to post and not

:43:19. > :43:25.getting the care they should. And not getting the care they should.

:43:25. > :43:29.Non-others here would want that for our parents or grandparents, and in

:43:29. > :43:35.a compassionate society no one should endure it. It's a failure

:43:35. > :43:39.that also cost us billions of pounds and Britain can do better. In the

:43:39. > :43:43.2010 Spending Review, we said that the NHS would make available around

:43:43. > :43:46.�1 billion a year to support the health needs of people in social

:43:46. > :43:48.care. It worked and saved hundreds of millions in the process. Last

:43:49. > :43:53.year, these improvements meant almost 50,000 fewer bed days were

:43:53. > :43:58.lost to the NHS. So today I can announce that I will be bringing

:43:58. > :44:01.together a significant chunk of the health and social care budgets. I

:44:01. > :44:06.want to make sure everyone gets a properly joined up service, where

:44:06. > :44:09.they won't have to worry about services coming from the NHS or the

:44:09. > :44:12.local council. Let's stop the tragedy of people being dropped in

:44:12. > :44:17.A&E on a Friday night to spend the weekend in hospital because we can't

:44:17. > :44:21.look after them properly and -- in social care. By 2015 to 2016, over

:44:21. > :44:25.�3 billion will be spent on services that are commissioned jointly and

:44:25. > :44:28.seamlessly by the local NHS and local councils working together. It

:44:29. > :44:33.is a huge and historic commitment of resources to social care. It ties to

:44:33. > :44:37.real reform on the ground. To help end the scandal of older people

:44:37. > :44:40.trapped in hospitals because they cannot get a social care bed. This

:44:40. > :44:44.will help relieve pressures on accident and emergency. It will help

:44:44. > :44:48.local government deliver on its obligations. And it save will the

:44:48. > :44:51.NHS at least �8 billion. Integrated health and social care. No longer a

:44:51. > :44:58.vague aspiration but a concrete reality, transforming the way we

:44:58. > :45:02.look after people who need care most.

:45:02. > :45:07.So, Mr Speaker, these are the three principles of the spending round,

:45:07. > :45:10.reform, growth and fairness. And nowhere could these principles be

:45:10. > :45:14.more clearly applied than in our approach to welfare.

:45:14. > :45:18.Two groups of people need to be satisfied with our welfare system,

:45:18. > :45:22.those who need it who're old, vulnerable, disabled or have lost

:45:22. > :45:26.their job, and who we, as a compassionate society, want to

:45:26. > :45:31.support. And there's a second group. The people who pay for this welfare

:45:31. > :45:37.system, who go out to work, who pay their taxes and expect it to be fair

:45:37. > :45:41.on them too. So we have taken huge steps to reform welfare. Changinger

:45:41. > :45:47.working age benefits with Universal credit so that work always pays,

:45:47. > :45:57.removing child benefit from the better off, capping benefits so no

:45:57. > :46:00.family out of work gets more than the average family gets in work. The

:46:00. > :46:10.steps we have taken will save �18 billion a year and every single one

:46:10. > :46:13.of them was opposed by the welfare party opposite. Now we propose to do

:46:13. > :46:17.three further welfare reforms. First, as I said in the budget, we

:46:17. > :46:22.are going to introduce a new welfare cap to control the overall costs of

:46:22. > :46:26.the benefit bill. We have already capped the benefits

:46:26. > :46:30.of individuals and now we cap the system as a whole. Under that system

:46:30. > :46:32.we inherited, welfare spending was put into a daft glory called

:46:33. > :46:40.annually managed expenditure, but the problem was, it wasn't managed

:46:40. > :46:44.at all. The cost of welfare went up by a staggering 50% even before the

:46:44. > :46:48.crash -- category. The welfare cap will stop that happening again. The

:46:48. > :46:52.cap will be set each year of the budget for four years. It will apply

:46:52. > :47:00.from April 2015, it will we flect forecast inflation but it will be

:47:00. > :47:03.set in cash terms. In future, when a Government looks to breach the cap,

:47:04. > :47:08.because it's failling to control welfare, the OBR will issue a public

:47:08. > :47:13.warning and the government will be forced to take action to cut welfare

:47:13. > :47:17.costs or publicly breach the cap and explain that to Parliament.

:47:17. > :47:24.We'll exclude a small number of the most cyclical benefits that directly

:47:24. > :47:27.rise or fall within the um employed to have the stabiliser, Housing

:47:27. > :47:36.Benefit, disability benefits and pensioner benefits and Tax Credits

:47:36. > :47:38.will all be included, but the state pension will not be.

:47:38. > :47:42.Mr Speaker, I've heard representations that we should

:47:42. > :47:46.include the basic state pension in the welfare camp. That would mean

:47:46. > :47:51.that a future government could offset a rise in working age

:47:51. > :47:56.benefits by cutting the pensions of older people. E.-be- penalises those

:47:56. > :48:00.who've worked hard all their lives, cutting pensions to pay for working

:48:00. > :48:06.age benefits is a choice this government is certainly not prepared

:48:06. > :48:12.to make, it's unfair, we won't do it and we reject those represent

:48:12. > :48:15.stations completely. The new welfare cap is proof that

:48:15. > :48:20.Britain is serious about living within its means, controlling

:48:20. > :48:25.spending, protecting the taxpayer, fundamentally fair. Today, we are

:48:25. > :48:30.introducing a limit on the nation's credit card.

:48:30. > :48:34.The principles enshrined in the cap apply to our second reform today.

:48:34. > :48:39.We will actually ensure that we'll stop the cost of paying the Winter

:48:39. > :48:44.Fuel Payments made no those who live abroad, rising in a way that no-one

:48:44. > :48:48.ever intended. EU law now says that people living in the European

:48:48. > :48:53.economic area can claim Winter Fuel Payments from us even if they didn't

:48:53. > :48:57.get them before they left the UK. Paying out even more money to people

:48:57. > :49:02.from all nationalities who may have worked in this country years ago but

:49:02. > :49:07.no longer live here is not a fair use of the nation's cash.

:49:07. > :49:12.So from the autumn of 2015, we'll link the Winter Fuel Payment to a

:49:12. > :49:19.temperature test. People in hot countries will no longer get it. It

:49:19. > :49:25.is after all a payment for winter fuel.

:49:25. > :49:30.Mr Speaker, the third welfare reform I announce today is about making

:49:30. > :49:34.sure we do everything to help people get into work.

:49:34. > :49:39.My right honourable friend, the Work and Pensions Secretary, has changed

:49:39. > :49:46.the national debate about welfare and he has comprehensively won the

:49:46. > :49:49.argument. He has committed to finding a

:49:49. > :49:54.further 9. 5% savings in the department's running costs. That

:49:54. > :49:58.will require a difficult drive for efficiency and a hard assessment of

:49:58. > :50:03.underperforming programmes. But welfare reform is about much more

:50:03. > :50:09.than saving money. Vital though that is. It's about reducing dependency

:50:09. > :50:13.and changing people's lives for the better. I'm determined to go further

:50:13. > :50:16.to reduce worklessness with all its social consequences. Where is the

:50:16. > :50:22.fairness in condemning people to a life on benefits because the system

:50:22. > :50:26.won't hope them get back into work. So today, we are introducing upfront

:50:26. > :50:30.work search. We are going to make sure people

:50:30. > :50:36.turn up with a CV, register for online job search and start looking

:50:36. > :50:41.for work and only they think -- then will they get their benefits. Thanks

:50:41. > :50:47.to this government, lone parents who're out of work can get free

:50:47. > :50:51.childcare for all their three and four-year-olds so it's reasonable to

:50:51. > :50:55.ask they prepare to return to work. There are further changes we

:50:55. > :51:00.announce today. Half of all jobseekers need more help looking

:51:00. > :51:08.for work, so we'll require them to come to the Jobcentre every week,

:51:08. > :51:12.rather than once a fortnight. We are going to give people more time with

:51:12. > :51:17.Jobcentre advisers and proper progress reviews every three months.

:51:17. > :51:21.We are going to introduce a new seven-day wait before people can

:51:21. > :51:26.claim their benefits. Those first few days should be spent looking for

:51:26. > :51:30.work, not looking to sign on. We are doing these things because we

:51:30. > :51:37.know they help people stay off benefits and help those on benefits

:51:37. > :51:42.get back into work faster. Here is a further change. From now

:51:42. > :51:47.on, if claimants don't speak English, they'll have to attend

:51:47. > :51:51.language courses until they do. This is a reasonable requirement in this

:51:51. > :51:57.country. It will help people to find work, but if you are not prepared to

:51:57. > :52:01.learn English, your benefits will be cut.

:52:01. > :52:06.Taken together, this new contract with people on benefits will save

:52:07. > :52:12.over �350 million a year and all that money will enable us to afford

:52:12. > :52:16.extra support to help people get into work. Help to work, incentives

:52:16. > :52:21.to work and an expectation that people should do everything they can

:52:21. > :52:27.to find work. That's fair for people out of work and it's fair for those

:52:27. > :52:34.in work who pay for them. Together, these reforms bring the total

:52:34. > :52:39.additional welfare savings in 2015 up to �4 billion. Mr Speaker, step

:52:39. > :52:44.by step, this reforming government is making sure that Britain lives

:52:44. > :52:48.within its means. The decisions we take today are not

:52:48. > :52:53.easy and these are difficult time times, but with this statement, we

:52:53. > :52:58.make more progress towards an economy that prospers, a state we

:52:58. > :53:07.can afford, a deficit coming down and a Britain on the rise. I commend

:53:07. > :53:10.this economic plan to the country. The Chancellor finishes his spending

:53:10. > :53:13.recue. He spoke for about 50 minutes. We'll now hear immediately

:53:13. > :53:18.from the Shadow Chancellor, Ed Balls.

:53:18. > :53:23.The Chancellor spoke for over 50 minutes. He spoke for over 50

:53:23. > :53:31.minutes, but not once did he mention the real reason for this Spending

:53:31. > :53:36.Review today. His comprehensive failure on living standards rose and

:53:36. > :53:42.the deficit too. Prices rising faster than wages, families worse

:53:42. > :53:47.off, long-term unemployment up, welfare spending soaring, the

:53:47. > :53:54.economy flatlining, the slowest recovery for over 100 years and the

:53:54. > :53:59.result of this failure for all the budget boasts, borrowed last year,

:53:59. > :54:05.not up but down, Mr Speaker, not balancing the books as he promised,

:54:05. > :54:11.but in 2015, a deficit of �96 billion.

:54:11. > :54:15.More brothering to pay for his economic failure. That is why this

:54:15. > :54:19.Chancellor has been forced to come to the House today to make more cuts

:54:19. > :54:25.to our Public Services. So, Mr Speaker, let me ask the

:54:25. > :54:29.Chancellor, does he recall what he said to this House two years ago? He

:54:29. > :54:36.said we have already asked the British people for what is needed

:54:36. > :54:40.and we do not need to ask for more. We do not need to ask for more.

:54:40. > :54:45.Isn't his economic failure the reason why he's back here asking for

:54:45. > :54:51.more today? More cuts to the police, more cuts

:54:51. > :54:55.to our defence budgets, more cuts to our local services. This out of

:54:55. > :54:59.touch Chancellor has failed on living standards, growth and the

:54:59. > :55:03.deficit and families and businesses are paying the price for his

:55:03. > :55:09.failure. Of course, Mr Speaker, it wasn't

:55:09. > :55:14.supposed to turn out like this. Let me ask the Chancellor, does he

:55:14. > :55:19.remember what he told the House three years ago in its first budget

:55:19. > :55:26.and Spending Review? He said the economy would grow by

:55:26. > :55:29.But it's growing by just 1%. He pledged to get the banks lending,

:55:29. > :55:35.but bank lending is down month on month on month.

:55:35. > :55:39.He made the number one test of his economic credibility keeping the

:55:39. > :55:44.triple-A credit rating, but on his watch we've been downgraded not once

:55:44. > :55:49.but twice, Mr Speaker. He promised living standards would

:55:49. > :55:55.rise. But they are falling year on year on year. He said we are all in

:55:55. > :55:59.this together, but then he gave a huge tax cut to millionaires, Mr

:55:59. > :56:05.Speaker. He promised to balance the books and that promise is in

:56:05. > :56:13.tatters. Failed tests, broken promises. His friends call him

:56:13. > :56:23.George, the President calls him Jeffrey, but to everyone else, he's

:56:23. > :56:29.

:56:29. > :56:33.just Bungle, Mr Speaker. I can see even Zippy on the

:56:33. > :56:39.frontbench can't stop smiling, Mr Speaker.

:56:39. > :56:43.Calm down, Zippy, calm down! And did we get an admission that his plan

:56:43. > :56:48.has worked? That Britain needs to change course?

:56:48. > :56:53.Did he get the plan B for growth and jobs that we and the International

:56:53. > :57:00.Monetary Fund have called for? Mr Speaker, it doesn't have to be this

:57:00. > :57:04.way. Instead of planning cuts in 2015, two years ahead, surely the

:57:04. > :57:08.Chancellor should be taking bold action now to boost growth this year

:57:08. > :57:13.and next. Investment that would get our

:57:13. > :57:18.economy growing, get the tax revenues coming in, more revenues

:57:18. > :57:24.which would mean our police, Armed Forces and Public Services would not

:57:24. > :57:30.face such deep cuts in 2015. Let me ask the Chancellor, why didn't he

:57:30. > :57:33.listen to the International Monetary Fund and bring forward �10 billion

:57:33. > :57:38.in infrastructure investment this year?

:57:38. > :57:42.With house building at the lowest level since the 20s, why isn't he

:57:42. > :57:47.building 400,000 more affordable homes this year and next?

:57:47. > :57:52.Mr Speaker, if the Chancellor continues with his failing economic

:57:52. > :57:57.plan, it will be for the Next Labour Government to turn the economy

:57:57. > :58:04.around, to take the tough decision to get the deficit down in a fair

:58:04. > :58:09.way, Mr Speaker. I have to say, I have to say to the Chancellor, there

:58:09. > :58:13.is no point boasting about infrastructure investment in five or

:58:13. > :58:19.seven years' time. We need action now, Mr Speaker.

:58:19. > :58:22.I have to say to him, he ought to brief the Prime Minister better for

:58:22. > :58:29.Prime Minister's Questions because three years after the infrastructure

:58:29. > :58:35.plan was launched, out of 576 projects announced, just seven

:58:35. > :58:41.completed. Over 80% not even started, just one school, Mr

:58:41. > :58:46.Speaker. The first three months of this year, infrastructure investment

:58:46. > :58:50.down by 50%. On infrastructure, we need bold

:58:50. > :58:53.action now, not just more empty promises for the future.

:58:53. > :59:01.As for the idea this spending are eview's going to strengthen our

:59:01. > :59:06.economy for the long-term, let me ask him, where is the proper British

:59:06. > :59:10.investment bank? Where is the 2030 decarbonisation target which the

:59:11. > :59:15.energy companies say they need to be able to invest for the future?

:59:15. > :59:18.is the power to break up the banks if there's not reform which the

:59:18. > :59:25.Parliamentary Commissioners call for? I have to say, whatever

:59:25. > :59:30.happened to the Heseltine plans, much heralded, �49 billion single

:59:30. > :59:35.pot growth fund for the regions, �2 billion, it's pathetic, Mr Speaker.

:59:35. > :59:40.Isn't this the truth. Instead of action to boost growth and long-term

:59:40. > :59:45.investment, all we got today is more of the same from a failing

:59:45. > :59:51.Chancellor and more of the same on social security and welfare spending

:59:52. > :59:55.too. We have plenty of tough talk and devisive rhetoric from the

:59:55. > :00:03.Chancellor and the Prime Minister, but on their watch, the benefits

:00:03. > :00:13.bill is soaring. Social security is up �21 billion compared to their

:00:13. > :00:25.

:00:25. > :00:29.plans. Mr Speaker, we have called Chancellor tried to set a cap in

:00:29. > :00:35.2010 on social security spending. He has overspent his cap by �21

:00:35. > :00:41.billion. If he really wants to get the bills of social security down,

:00:41. > :00:45.why not get young people and the unemployed back to work? With a

:00:45. > :00:50.compulsory jobs guaranteed paid for by tax on bank bonuses. Why not get

:00:50. > :00:56.our housing benefit bill down by tackling high rents and the shortage

:00:56. > :01:04.of affordable homes? Why not stop paying the winter allowance to the

:01:04. > :01:08.richest 5% of pensioners? And why not make work pay, with a mansion

:01:08. > :01:14.packs dash-macro/10p tax band, instead of huge tax cuts for

:01:14. > :01:18.millionaires? The Chancellor is making the wrong choices on growth

:01:18. > :01:23.and social security. He is making the wrong choices on departmental

:01:23. > :01:29.spending as well. Let me ask him, when thousands of front-line police

:01:29. > :01:37.officers are being cut why is he spending more on police

:01:37. > :01:40.commissioners than the old police authorities? Why is he spending �3

:01:40. > :01:46.billion on a reckless NHS reorganisation that the public

:01:46. > :01:49.doesn't support? Why is he funding new free schools in areas with

:01:49. > :01:55.enough school places, while parents in other areas can't get their

:01:55. > :02:02.children into a local school? We will study his departmental spending

:02:02. > :02:05.plan for 2015 to 2016. There's a lot of detail he didn't provide for the

:02:05. > :02:10.House. We look forward to seeing whether he is going to confirm the

:02:10. > :02:16.continuation of three national museum entry. -- free national

:02:16. > :02:26.museum entry. But the country needs to know the detail. Will this

:02:26. > :02:29.Spending Review mean fewer police officers in 2015 to 2016, on top of

:02:29. > :02:37.the 15,000 we are losing in this Parliament? Will it mean fewer

:02:37. > :02:42.nurses in 2015, on top of the 4000 we've lost so far? Will it mean

:02:42. > :02:49.fewer sure start children's centres on top of the 500 already closed?

:02:49. > :02:56.And will he continue to impose deeper cuts on local authorities in

:02:56. > :03:00.areas with the greatest need when already in this Parliament the ten

:03:00. > :03:06.most deprived local authorities are losing six times the spending per

:03:06. > :03:10.head of the ten least deprived areas? People want to know the

:03:11. > :03:17.answers to these questions, and they should be in no doubt that the scale

:03:17. > :03:20.of the extra cuts the Chancellor has announced today to our police,

:03:20. > :03:27.defence and services are the direct result of his abject failure to get

:03:27. > :03:30.the economy to grow. The Chancellor is failing on living standards, they

:03:30. > :03:35.are falling. He has failed on both, it's flatlining. He is failing on

:03:35. > :03:41.the deficit, and all we got was more of the same. No plan to turn the

:03:41. > :03:51.economy around, no hope for the future and Britain's families and

:03:51. > :03:57.

:03:57. > :04:02.our public services are paying the now. If you want to continue

:04:02. > :04:07.watching proceedings there, you can do so by switching over to BBC

:04:07. > :04:12.Parliament, or by going to the democracy live website. Let's take a

:04:12. > :04:16.look at the main points from the statement. It lasted for about 50

:04:16. > :04:22.minutes, longer than some had predicted. The Chancellor did

:04:22. > :04:28.confirm that he needed �11.5 billion worth of spending cuts in 2015 to

:04:28. > :04:32.2016 to hit its deficit target. He told us total government spending

:04:32. > :04:38.would be 745 billion. That is no change from what he told us in

:04:38. > :04:44.March. Here are the departmental cuts. Here is how the axe fell. The

:04:44. > :04:51.Home Office took a 6% cut, business a 6% cut, work and pensions leading

:04:51. > :04:57.the pack at 9.5%. Energy, 8%. Environment and justice both taking

:04:57. > :05:01.a 10% cut. Culture, which is always lobbied by those in the

:05:01. > :05:07.entertainment and arts business has got a 7% cut. The foreign office

:05:07. > :05:12.added 8% cut. The Treasury, to coin a phrase, we are all in this

:05:12. > :05:17.together, even the Treasury had to volunteer a 10% cut. The communities

:05:17. > :05:22.Department took a 10% cut as well, which local government will feel the

:05:22. > :05:27.impact on that. On defence, which has come out of this review rather

:05:27. > :05:29.well. The defence resource budget is frozen in cash terms at �24 billion.

:05:29. > :05:32.frozen in cash terms at �24 billion. That is simply a small cut in real

:05:32. > :05:38.frozen in cash terms at �24 billion. That is The equipment budget of 14

:05:38. > :05:44.billion would be 14,000,000,020 16, then it would rise by 1% a year. The

:05:44. > :05:47.Chancellor went out of his way to say there will be no cuts in

:05:47. > :05:50.front-line personnel. But there have been in previous statements, there

:05:50. > :05:55.have been substantial cuts in front-line personnel. If you are in

:05:55. > :05:59.the military, no more, says the Chancellor. The education budget,

:05:59. > :06:04.that is going to increase to 53 billion by 2015 to 2016. There will

:06:04. > :06:09.be a new national funding formula for school spending. The Chancellor

:06:09. > :06:14.said the current one wasn't fair. He wants to put some petrol into the

:06:14. > :06:18.free schools movement. He will find funding for 180 new free schools in

:06:18. > :06:22.2015. Here we come to the infrastructure now, which was a lot.

:06:22. > :06:29.50 billion on capital investment in 2015. That sounds a lot, but he's

:06:29. > :06:33.using a gross figure. Those figures tend to be down on net public-sector

:06:33. > :06:38.investment. The 50 billion is a little misleading there. He says as

:06:38. > :06:42.a result of increasing capital and then dashed back spending every

:06:42. > :06:47.year, there effectively 300 billion guaranteed total spending throughout

:06:47. > :06:51.this decade. It seems to me they are saying they will have invested 300

:06:51. > :06:56.billion over the ten years of the decade ending in 2020. Projects

:06:56. > :07:00.worth �100 billion are going to be announced tomorrow. The Chancellor

:07:00. > :07:04.wanting to top up his infrastructure plans to counter some of the cuts

:07:04. > :07:10.he's had to make in departmental spending. NSAIDs. Let's have a look.

:07:10. > :07:16.The Chancellor announced a new welfare cup from April 2015, just a

:07:16. > :07:21.month before the next election. However, it excludes a number of

:07:21. > :07:27.things, those benefits that changes with business, unemployment

:07:27. > :07:31.benefits, jobless allowance. And a massive welfare budget area, state

:07:31. > :07:35.pensions are also excluded. Winter fuel payments will be removed from

:07:35. > :07:40.British expats who live in hot countries. Though I guess that will

:07:40. > :07:46.partly depend on where they live in these particular hot countries.

:07:46. > :07:50.There will also be a new seven-day wait before claiming benefits. Major

:07:50. > :07:56.announcements on public sector pay. Public sector pay rises will be

:07:56. > :08:00.capped at 1% in 2015 to 2016. That is probably not a surprise. But and

:08:00. > :08:03.this was billed in the run-up, the automatic progression of pay in the

:08:04. > :08:10.civil service, whereby you get a pay rise simply for staying on for

:08:10. > :08:14.another year, that'll be abolished in 2015 to 2016. No more automatic

:08:14. > :08:18.pay rises. The Chancellor also announced his intention to remove

:08:18. > :08:26.this particular automatic progression on pay rises from the

:08:26. > :08:31.NHS, schools and police. The civil service get it from 2015. On other

:08:31. > :08:35.spending, the Chancellor announced funding for two further years of a

:08:35. > :08:38.council tax freeze, from April 2014. There's been a breeze in play for a

:08:38. > :08:43.couple of years, it's part of the idea of trying to do something about

:08:43. > :08:47.the squeeze on living standards. There are a number of reports about

:08:47. > :08:50.what would happen to the intelligence services. Those who

:08:50. > :08:56.said the budget would be increased, they turned out to be right. It's

:08:56. > :09:06.gone up by 3.4%. The health budget, which was 96 billion when the

:09:06. > :09:06.

:09:06. > :09:12.coalition came to power, will be 110 billion by 2015 to 2016. �14 billion

:09:12. > :09:22.rise in the health budget over the lifetime of this government. Health

:09:22. > :09:26.

:09:26. > :09:30.2015. 2015 was a date when the current spending plans ran out. But

:09:30. > :09:34.it became clear the more the Chancellor spoke, he really had his

:09:34. > :09:37.eye on the key marker in 2015, the date of the general election. The

:09:37. > :09:42.longer it went on, the more political it became. He announced

:09:42. > :09:47.there would be a welfare cap, a cap on overall welfare spending, not

:09:47. > :09:51.including the state pension, which would come in, when? On the eve of

:09:51. > :09:53.that general election. Clearly designed to be something the

:09:53. > :09:58.Conservatives and possibly the coalition in agreement will be able

:09:58. > :10:02.to deploy just before a general election, able to say to Labour,

:10:02. > :10:06.would you match it? A further squeeze on welfare for the jobless.

:10:06. > :10:10.A weight of seven days in terms of the signing on time between losing

:10:10. > :10:14.your job and being able to get your benefits. Also promised that if you

:10:14. > :10:17.couldn't speak English, you would be forced to have English-language

:10:17. > :10:21.courses or you would lose that benefit, together with the more

:10:21. > :10:25.predictable promises of protection for health spending, school

:10:25. > :10:30.spending, a boost for the intelligence services, a boost for

:10:30. > :10:33.social care. All of those seemed to be designed to put the best possible

:10:33. > :10:39.political gloss on some pretty gloomy economic news. The obvious

:10:39. > :10:42.and final point to make is this. We get these very big numbers for

:10:42. > :10:47.squeezes in government departments, 10% environment, justice, Cabinet

:10:47. > :10:51.Office, Scotland, Wales, Northern Ireland, 8% in departments like

:10:51. > :10:55.climate change the foreign office. What we haven't yet got is what does

:10:55. > :11:03.that mean for jobs lost, pay squeezed, programmes cancelled? It

:11:03. > :11:08.deliberate. We only get the headlines. Is it possible, is it

:11:08. > :11:13.clear who are the winners and losers in this spending round? Some of the

:11:13. > :11:20.winners we can see quite clearly. Defence does seem to be a bit of a

:11:20. > :11:25.winner. In its resource budgets, it's only been cut by just under 2%

:11:25. > :11:31.in real terms. That will mean overall, since 2010, it will be

:11:31. > :11:35.looking at about 10% real cut. When you look at environment, energy, a

:11:35. > :11:40.lot of local government, all of those have been cut, going into

:11:40. > :11:44.this, over 20%, now looking at 30 and in some cases even 40%.

:11:44. > :11:48.Transport investment is a big winner. But it's worth saying that

:11:48. > :11:52.the resource budget for transport has actually been cut. Some people

:11:52. > :11:57.have been reminding me that that includes road maintenance and some

:11:57. > :12:03.of the things you might think of as investment. The filling in holes is

:12:03. > :12:09.not in the capital budget. That is quite crucial. Communities

:12:09. > :12:13.definitely looks like another big loser. Also on their investment,

:12:14. > :12:18.that's been cut quite a lot. On the basis of this, relative to

:12:18. > :12:23.expectations, I'd say the NHS was a bit of a loser will stop there's no

:12:23. > :12:29.real cut in NHS spending. But if you look at the year-on-year growth for

:12:29. > :12:34.that year, it's 0.1%, the barest amount. Most people in the NHS will

:12:34. > :12:40.be not feeling very protected at all. Given that inflation in health

:12:40. > :12:44.is huge. Much higher than the average level of inflation. There

:12:44. > :12:48.was this puzzle that the headline cut to local councils, get the

:12:48. > :12:52.speech said in effect its 2%. I've been treated by the communities

:12:52. > :12:57.secretary. He is claiming that the extra money that councils will get,

:12:57. > :13:00.more money to schools and more money in the spot for social care, means

:13:00. > :13:04.that the effective cut the local councils is much less than 10%. I

:13:04. > :13:11.can imagine a lot of councillors will dispute that, but that is the

:13:11. > :13:16.claim. They can't all not be cut. is true they are putting more money

:13:16. > :13:19.into the hands of local government, so it makes it harder to judge these

:13:19. > :13:22.things. On the paid progression thing, that is quite significant.

:13:22. > :13:27.What we've seen in the last few years is a much greater than

:13:27. > :13:31.expected loss of jobs in the public sector, which has been offset by

:13:31. > :13:35.growth in private sector jobs. But the pay bill and paper head in the

:13:35. > :13:39.public sector has not been... It's grown much faster than they

:13:39. > :13:42.expected, even despite that pay freeze. There has been a feeling

:13:42. > :13:45.that these increments, these progressions that people get

:13:45. > :13:49.automatically, have played quite a big part in that. The police will

:13:49. > :13:54.say they haven't been employing these progressions. You would have

:13:54. > :14:01.thought he would have realised that originally. What do we make of this

:14:01. > :14:07.huge emphasis on infrastructure spending? We've been here before.

:14:07. > :14:12.It's been rather overdone. He made this great play in his speech,

:14:12. > :14:17.spending 50 billion will stop it rather implies that it is a rise. If

:14:18. > :14:25.you look at the figures that they've just put out, there is no rise. He

:14:25. > :14:31.was actually planning to spend �50.4 billion in 2014 to 2015. He is

:14:31. > :14:41.planning to spend �50.4 billion in 2015 to 2016. It is flat. It's the

:14:41. > :14:41.

:14:41. > :14:46.gross figure. Actually, in that important period it is flat. �50.4

:14:46. > :14:52.billion is a rise on where it is right now. It is a rise on what

:14:52. > :14:57.we've seen so far this Parliament. The fact that he has maintained it

:14:57. > :15:03.will be seen by some as OK. But what he implied which was that there was

:15:03. > :15:07.a great increase in that period, is simply not borne out by the

:15:07. > :15:13.figures. And there are some very interesting details, in terms of

:15:13. > :15:19.what's happening. For example, there is a very big drop from 4.8 billion

:15:19. > :15:23.to 3.1 billion, that's a drop of 35.6% capital spending within the

:15:23. > :15:32.community 's budget. Some of that is presumably things like libraries,

:15:32. > :15:36.sports facilities... Real buildings that affect people 's lives. There

:15:36. > :15:46.are bits of the capital budgets that people will lament because they are

:15:46. > :15:48.

:15:48. > :15:53.being squeezed. 57 drop in a year in media, culture

:15:53. > :15:59.and sport, in a year capital budget. It's a small capital budget.

:16:00. > :16:08.it's an indication of where you can cut in places. They are always very

:16:08. > :16:18.articulate. All right. Where are we going next? We are going to go to

:16:18. > :16:20.

:16:20. > :16:25.get reaction from experts Jo Co in Bury. It's lunch time here in Bury

:16:25. > :16:28.market and we are all digesting what the Chancellor has announced in his

:16:28. > :16:33.Spending Review. Let's chew over some of the headline figures with

:16:33. > :16:36.Robert Oxley from the Taxpayers' Alliance. Good afternoon. One of the

:16:36. > :16:42.big headline figures was the �50 billion in capital investment in

:16:42. > :16:48.infrastructure. That sounded like a big number to me? The worry is that

:16:48. > :16:52.we have seen too often the capital investment is a white elephant,

:16:52. > :16:56.�2,000 on every family's shoulders, which isn't going to deliver any of

:16:56. > :16:59.the benefits the Chancellor is promising. The other part of the

:17:00. > :17:04.investment could be offshore wind leading to higher energy bills to

:17:04. > :17:09.families already struggling. What about the announcement of cuts to

:17:09. > :17:13.Government departments? Most we were expecting, but ranging from 6-10%,

:17:13. > :17:18.apart from the protected departments of health, international aid and

:17:18. > :17:23.education? He took �11. 5 billion off the department and is still

:17:23. > :17:28.ringfencing international aid. There is �120 billion of waste to actually

:17:28. > :17:34.get out of Government waste so more could be done. We have seen the Sa

:17:34. > :17:39.L'ami slicing and not the radical cuts. How would you sum it up?He's

:17:39. > :17:45.done well on public sector pay, but there's still a lot more work to do

:17:45. > :17:50.if he's to ease the pressure on those paying a huge amount of tax.

:17:51. > :17:54.Thank you very much. Robert mentioned public sector pay. The

:17:54. > :17:57.Chancellor spoke about having to have Public Services that we can

:17:57. > :18:03.afford and that there could be further cuts to bureaucracy. Let's

:18:03. > :18:08.talk about that with my next guest, Catt vint Nelson from unitnison. Did

:18:08. > :18:17.you agree that more cuts could be made to bureaucracy in Public

:18:17. > :18:22.Services in order to keep in tune with austerity -- Tevan Nelson from

:18:22. > :18:25.unison? I think the reality is that there's no easy cuts to be made any

:18:25. > :18:27.more in Local Government in particular. Putting aside the

:18:27. > :18:30.theatrer in Parliament today, I think we have to keep some

:18:30. > :18:36.proportion about what's been announced. There is a statement of

:18:36. > :18:40.intent. They will take basically on the next general election. Our main

:18:40. > :18:42.concern is that this sets the scene for austerity to continue beyond

:18:43. > :18:47.2015 when the initial commitment of the Government was for it to end

:18:47. > :18:50.that year. Labour has said we are signed up to the spending plans as

:18:50. > :18:54.our starting point if we win the next election so everybody is in on

:18:54. > :18:57.this? We hope Labour think again about that because it gives the

:18:57. > :19:02.public no choice when the general election comes around. If both

:19:02. > :19:07.parties are signed up to the cuts up to perhaps 2020, it gives little

:19:07. > :19:11.real alternative to the voters and we hope Labour think again about

:19:11. > :19:14.embracing the spending cuts. Public sector pay, he wants to end

:19:14. > :19:20.automatic rises? It's not viable. He announced this in March in the

:19:20. > :19:23.budget, we have seen no proposals since and it portrays absolute

:19:23. > :19:26.ignorance about development in Public Services workers like nurses

:19:26. > :19:31.and social work workers, they are linked to training and development,

:19:31. > :19:36.what is the alternative if they are removed. All right, Kevan Nelson,

:19:36. > :19:40.thank you very much. That's the view from unions and Taxpayers' Alliance.

:19:40. > :19:44.We heard what the Chancellor had to say in a Spending Review that he

:19:44. > :19:48.didn't have to do. He could have waited until next year but perhaps

:19:48. > :19:52.for political reasons he did it now. Let's find out what people thought

:19:52. > :19:55.about what the Chancellor had to say. Hell lop again sitting in the

:19:55. > :20:01.sunshine, good sport you have got here, Paul Lewis. What have people

:20:01. > :20:05.been saying? The -- hello. The reactions have been swift. Thes

:20:05. > :20:08.Chancellor said if you lost your job, you would have to wait seven

:20:08. > :20:13.days before you claim. At the moment, the three days, it will be

:20:13. > :20:17.another four, people are saying seven days with no money in torture

:20:17. > :20:20.says Barbara and another comment along similar lines, why should

:20:20. > :20:26.anyone have to wait seven days. That's causing prove sill. There's

:20:26. > :20:30.also the question of cutting the pay -- controversy. Cutting automatic

:20:30. > :20:33.pay rises for the Civil Service, I had an e-mail saying, is this legal,

:20:33. > :20:37.surely it's a contractual right and I think the Chancellor made it clear

:20:37. > :20:40.he'd have to renegotiate the contracts that hundreds of thousands

:20:40. > :20:44.of civil servants are on which enables them to have the regular

:20:44. > :20:51.rises. The other change, scrapping Winter Fuel Payments for people

:20:51. > :20:55.living abroad. Now, some people get those in the tropics, in French

:20:55. > :21:03.colonies. The Chancellor's said that will save �30 million a year, and

:21:03. > :21:06.from the winter of 2015, no no UK peckser which has a temperature

:21:06. > :21:12.higher than the UK will be able to claim. No more detail than that, but

:21:12. > :21:15.it will be a difficult one I think. -- pensioner. We may not be in the

:21:15. > :21:18.tropics, but it's certainly heating up here in Bury. Back to you,

:21:18. > :21:21.Andrew. We are heating up among the ex-pats

:21:21. > :21:26.watching this programme too who'll no doubt be pointing out that in

:21:26. > :21:32.winter, it's a lot colder in Paris than it is in Nice. Political

:21:32. > :21:36.reaction to the Chancellor's speech now and we can join Matthew

:21:36. > :21:42.Amroliwala. The Chancellor was on his feet for a

:21:42. > :21:46.little over 45 minutes. Let's get the thoughts of my political guests.

:21:46. > :21:56.Printy poo pel forthe Conservative, Lord Oakeshott for the Liberal

:21:56. > :21:57.

:21:57. > :22:02.Democrats. -- Pritti Patel. Do you acknowledge the cuts will cause

:22:02. > :22:08.problems? I'm afraid we are looking actually at the way to say to the

:22:08. > :22:12.country, we are in a state with the finances if. The Chancellor spoke

:22:12. > :22:16.about growth and investment and investment in education and capital

:22:16. > :22:21.spending as well, so that's thinking about the future while we manage the

:22:21. > :22:24.challenges we have and reform Government, deal with the

:22:24. > :22:31.inefficiencies on the wasting Government spending while looking to

:22:31. > :22:35.reform welfare and bring gator fairness. I'll come to some of the

:22:35. > :22:38.issue in in a moment, but do you acknowledge the pain? They'll be

:22:38. > :22:42.difficult outcomes of course, that's ine tab, but it's about Government

:22:42. > :22:52.making difficult choices in terms of Government spending and also future

:22:52. > :22:54.

:22:54. > :22:58.projections when it comes to expenditure as If you can't get

:22:58. > :23:02.growth going, you will struggle... If you look at the way the economy

:23:02. > :23:06.is developing, it is growing marginaling Liverpool any, but we

:23:06. > :23:10.have had positive indicators, there's been over 1. 3 million

:23:10. > :23:13.private sector jobs in this country which have come on since 2010, so if

:23:13. > :23:16.this is the way forward, and it really is, we can't talk down the

:23:16. > :23:21.economy and say cuts will automatically lead to a negative

:23:21. > :23:26.situation in the country. We are seeing capical investment by the

:23:26. > :23:30.government and private sector growth and that should be welcomed. Up to a

:23:30. > :23:32.few weeks ago, you might well have opposed the cuts, this is now your

:23:32. > :23:37.starting point for Labour if they win the election, both the Prime

:23:37. > :23:41.Minister and the Chancellor taunted your party today, saying your whole

:23:41. > :23:45.economic position has collapsed, it has, hasn't it? Well, the big

:23:45. > :23:48.difference is, how do you get growth in the economy and where is the

:23:48. > :23:53.infrastructure going to be and when's it going to start? The

:23:53. > :23:58.Chancellor wants the infrastructure to be virtually all in London and he

:23:58. > :24:01.reiterated that today. But it isn't starting. Ayous the country, we are

:24:01. > :24:06.not seeing the major infrastructure problems that will get people back

:24:06. > :24:09.to work and get the economy growing again -- across the country. This

:24:09. > :24:14.economy isn't growing and the Chancellor's done nothing today to

:24:14. > :24:18.make it grow. There's more money for schools, counter-terrorism, council

:24:18. > :24:24.tax will be frozen for another two years, all of which I suppose you

:24:24. > :24:29.would support. You support the idea of ending automatic pay rises in the

:24:29. > :24:34.public sector? What the Government's been doing is

:24:34. > :24:37.using inflationary 1970s approaches in order to try and cut the deficit.

:24:37. > :24:41.It isn't working. It isn't working because there isn't the growth

:24:41. > :24:45.there. The answer to the question though, do you support the notion of

:24:45. > :24:49.stopping automatic pay rises for public sector workers? You can't

:24:49. > :24:53.simply say one system and brutally alter it will work, as the problem

:24:53. > :24:57.is, how do you keep good people in there, for example, in the police?

:24:57. > :25:02.It's a simplistic slogan and I think the practicality of it is far more

:25:02. > :25:06.complex than the Chancellor's making out. Labour's position now is all

:25:06. > :25:09.about priorities, different priorities, same spending envelope

:25:09. > :25:15.but different priorities, you are also talking about borrowing more.

:25:15. > :25:20.How does that fit in coherently? I don't understand? The wrong kind of

:25:20. > :25:24.cuts, the wrong things being cut, but as well, infrastructure. You

:25:24. > :25:28.rebuild the economy by getting the big capital schemes going, in other

:25:28. > :25:34.words building things. That is not happening and the Government failed

:25:34. > :25:38.to start from the promises. How much would you borrow? Enough to get the

:25:38. > :25:43.major infrastructure. But what is enough? If you were in Government,

:25:43. > :25:46.what extra amount would you need to borrow? All we'd need to do this

:25:47. > :25:51.year is make the commitments happen to stimulate the economy. This

:25:51. > :25:59.Government, even on existing plans, has failed to get more than 7% of

:25:59. > :26:03.those projects going. That's the big problem. They are not delivering.

:26:03. > :26:09.terms of the basic cuts that we have had announced today, are they in the

:26:09. > :26:19.right areas? Are they fair? You have had two straight questions and two

:26:19. > :26:19.

:26:19. > :26:23.dodgy answers from my colleagues here. I asked you... Are they in the

:26:23. > :26:28.right areas? We have done our best to stop them being too painful. For

:26:28. > :26:32.example, Vince Cable has fought very hard and has got the lowest cuts of

:26:32. > :26:36.any unprotected department, as it's called, to protect spending for

:26:36. > :26:42.growth, Education and Skills. We also managed to fight off a very

:26:42. > :26:45.nasty attack by the Tories. Are they fair? It's not a dodgy answer - we

:26:45. > :26:49.are doing our best to keep them fair. We'd rather they were not

:26:49. > :26:52.necessary and I agree with John Mann that because economic growth's been

:26:52. > :26:56.disappointing after a good start, we are in more pain than we should be.

:26:56. > :27:00.The key thing is the announcements tomorrow, it's about capital

:27:00. > :27:03.spending and getting house building growing. We have wasted �20 billion

:27:04. > :27:08.a year on house building because Labour and Conservatives sold off

:27:08. > :27:14.too many council houses. Interesting what Nick Clegg was saying yelled

:27:14. > :27:18.about the help-to-buy scheme and showing his frustration saying the

:27:18. > :27:22.gap between announcements and delivery. If you asking businesses

:27:22. > :27:28.out there, that's their frustration as well, they hear things in this

:27:28. > :27:32.building... Irishes If I decide to do something, it happens next week.

:27:32. > :27:37.It's slow in Government getting house building going and the problem

:27:38. > :27:41.with the so far, the things that were announced - indeed I talked to

:27:41. > :27:45.you six monthings ago about it - is that they are only affecting house

:27:45. > :27:48.mortgages but not building. We have had hundreds of billions of pounds

:27:48. > :27:51.waiting to come in from pension funds if we can really free up

:27:51. > :27:55.councils to build up Housing Associations to borrow, we can

:27:55. > :27:59.really get that going. 100,000 more houses a year, half a million more

:27:59. > :28:03.jobs and half a million people off benefit. There we have to leave it.

:28:03. > :28:08.Thanks to all of you. Andrew, back to you. More from you later.

:28:08. > :28:11.Let's pick up on the point about house building that was in Matthew's

:28:11. > :28:15.discussion there, Robert. I didn't hear the Chancellor say much about

:28:15. > :28:20.housing at all, yet there's always talk that what we need, as in the

:28:20. > :28:24.1930s, is to get a house building boom going to help get us out of

:28:24. > :28:31.slow growth into recovery? They've got a policy for trying to stimulate

:28:31. > :28:36.the housing market. They have two forms of guarantees to help those

:28:36. > :28:42.who haven't got deposits, and they are claiming that one of those Gar

:28:42. > :28:44.tee schemes is stimulating private sector house building.

:28:44. > :28:49.But there are those who argue, including the opposition, that they

:28:49. > :28:52.ought to be doing more with public money to build social housing and we

:28:52. > :29:00.heard nothing about that. In fact, the implication of the figures is

:29:00. > :29:02.that there is no increase in that particular budget. It was quite odd

:29:02. > :29:05.that you will see in Prime Minister's Question Time before that

:29:05. > :29:08.that the Prime Minister looked rather on the defensive about all of

:29:08. > :29:13.that, claiming that there were thousands of houses being built but

:29:13. > :29:16.not able to provide any stats. The reason they can't provide them is

:29:16. > :29:20.that it's because it's not a priority of theirs. The communities

:29:20. > :29:25.department which, in days gone by, helped to fund house building

:29:25. > :29:28.through the local authorities, that's's a budget that's been...

:29:28. > :29:33.said they were one of the big losers. The capital budget had

:29:33. > :29:38.already been cut by 74% in real terms and it's got more than a third

:29:38. > :29:42.cut in real terms in this year for this Spending Review. Now, for the

:29:42. > :29:46.2015 year, that is. What happened rightly or wrongly, George Osborne

:29:46. > :29:51.looked at the system for providing affordable housing or social housing

:29:51. > :29:56.in the UK when he came in and said this doesn't work and lots of

:29:56. > :30:00.experts said the same. A lot of the cut in capital investment that came

:30:00. > :30:04.in that year, they decided they would take out of the traditional

:30:04. > :30:08.social housing programmes. One thing the crickets say is, that's all very

:30:08. > :30:11.well, but the replacement for that which was being planned using the

:30:11. > :30:14.private sector, trying to make all these things more efficient, have

:30:14. > :30:18.more signalling, that's taken a long time to come on stream and they

:30:18. > :30:21.threw up the planning system which has been influx. All these things

:30:21. > :30:25.have added uncertainty to the housing industry and made it harder,

:30:25. > :30:29.not easier to build homes. I think that's another reason why he's

:30:29. > :30:33.defensive. Still a lot of questions about how

:30:33. > :30:36.the spending cut will fall. Let's get the overall package and City

:30:36. > :30:40.reaction to the review to what it means for interest rates, bond

:30:40. > :30:44.prices, the size of the deficit and how much the Government will

:30:44. > :30:54.continue to borrow? How is City going to react. Louise Cooper joins

:30:54. > :30:59.

:30:59. > :31:05.us. What do you think the reaction We've had some disappointing US

:31:06. > :31:11.first-quarter GDP numbers out just half an hour ago. So at the moment,

:31:11. > :31:16.markets are focusing far more on that disappointing GDP data than

:31:16. > :31:21.anything in the Spending Review. can understand what is taking the

:31:21. > :31:25.markets' attention, which is the rising bond yields. The beginning of

:31:25. > :31:30.the end of the United States of the printing of money. It's not just the

:31:30. > :31:34.beginning of the end in the states. What we've seen in the last couple

:31:34. > :31:39.of months is very volatile money markets. These are short-term

:31:39. > :31:42.interest rates. You've seen a big increase in both Spanish and Italian

:31:42. > :31:46.three-month borrowing costs, where the Italian and Spanish governments

:31:47. > :31:51.borrow for three months. Those rates have shot up. All of the other money

:31:51. > :31:55.markets, you've seen the same thing there. In the UK, we're now seeing

:31:55. > :31:59.money markets predict a rise in base rates in the next nine to 12

:31:59. > :32:04.months. Most people have not cottoned onto this. Big change, the

:32:04. > :32:08.end of cheap money approaching. It is the beginning of the end, it's

:32:08. > :32:12.not about to stop now, but that is what financial markets are telling

:32:12. > :32:16.us. I don't think that's really been picked up by the media. Know, though

:32:16. > :32:21.we did begin this programme by pointing out that the eve of cheap

:32:21. > :32:27.money was coming to an end. But we are not the whole media, I take that

:32:27. > :32:32.point, just the better part of it! still hear questions. If we don't

:32:32. > :32:37.get growth? Actually, the UK, I think the risk is we get much better

:32:37. > :32:42.growth. That we have a surge in growth. That is what everybody is

:32:42. > :32:45.missing at the moment. That is the real risk for the UK economy, is it

:32:45. > :32:50.recovers too quickly. For folks watching, a rise in interest rates

:32:50. > :32:53.makes them worry about their mortgage payments. It also makes a

:32:53. > :32:56.number of small businesses worry. They are servicing debt. If they

:32:56. > :33:01.face bigger interest bills, some of them could be in trouble, the

:33:02. > :33:05.so-called zombie companies. But the other big implications is the

:33:05. > :33:10.government is still going to continue to borrow a shed load of

:33:10. > :33:15.money for the foreseeable future, and its borrowing costs are now

:33:15. > :33:22.going to rise. Tenure borrowing costs have already risen about one

:33:22. > :33:27.percentage point. #10 year. They are still at incredibly low levels,

:33:27. > :33:33.about 2.6%. But the interest bill on this incredibly low borrowing cost

:33:33. > :33:40.is still �50 billion a year and rising. We cannot afford borrowing

:33:40. > :33:44.costs to go up that far, all much more than here. That is the problem.

:33:44. > :33:54.We have so much debt, borrowing costs are already large. If

:33:54. > :33:57.

:33:57. > :34:01.borrowing costs go up further, that could be really quite damaging.

:34:01. > :34:06.is... Let's bring you an update of some of the key points in the

:34:06. > :34:13.statement today. Here are the main measures. Departmental cuts of �11.5

:34:13. > :34:17.billion. A new welfare cap from April 2015, a month before the

:34:18. > :34:22.election, but the welfare cap with a few holes in it as well a big one,

:34:22. > :34:27.pensions is not included. Seven-day waiting for new benefit claims. And

:34:27. > :34:30.an end to automatic pay rises in the public sector. That is on top of the

:34:30. > :34:38.freezing public sector pay that we've had for some time. Some other

:34:38. > :34:42.main measures in an attempt to keep down... To keep living standards

:34:42. > :34:45.under control, to make sure they don't go up even more than they

:34:45. > :34:49.have, funding of two further years of the council tax freeze from April

:34:49. > :34:56.2014. That is almost becoming a permanent part of the British system

:34:56. > :35:01.these days. The defence resource budget maintained at 24 billion. Mr

:35:01. > :35:07.Hammond will be reasonably pleased. So will be Education Secretary,

:35:07. > :35:12.because he is going to get funding for 180 new free schools. These are

:35:12. > :35:16.some of the main measures. It was quite a long statement for a

:35:16. > :35:20.Spending Review for one year. If it had been for the usual three years,

:35:20. > :35:30.we'd probably have still been listening to him! We are joined by

:35:30. > :35:34.

:35:34. > :35:39.money and low interest rates is now coming to an end? It's far too early

:35:39. > :35:42.to say that. One of the key drivers of the government's policy, the

:35:42. > :35:46.tough action on public spending that we continue to take, measures to

:35:46. > :35:49.deal with the deficit, is precisely to maintain the confidence and

:35:49. > :35:54.credibility of this country in the financial markets, to keep our

:35:54. > :35:58.borrowing costs as low as possible. But they are already rising.

:35:58. > :36:07.still have some of the lowest borrowing costs of any country in

:36:07. > :36:11.the world. In terms of what is going on in the financial markets are

:36:11. > :36:18.driving that news from the US and so on, I will happily discuss it with

:36:18. > :36:23.Louise in more detail. What we are doing is maintaining this country's

:36:23. > :36:28.fiscal credibility to get away from the situation where interest rates

:36:28. > :36:33.were tracking countries like Spain and Italy, when we came in, to being

:36:33. > :36:37.amongst the lowest in the world. rate at which the government

:36:37. > :36:41.borrowed has already risen almost a full percentage point already. Do

:36:41. > :36:47.you accept, if this trend continues and almost every expert thinks it

:36:47. > :36:51.will, that in future, when you come to borrow these billions, if you are

:36:51. > :36:57.planning to borrow billions upon billions more, that your borrowing

:36:57. > :37:07.costs will now rise and could rise quite substantially? Is the case

:37:07. > :37:10.

:37:10. > :37:13.that if interest rates get higher and stay higher, that that has a

:37:13. > :37:15.fiscal cost to the government. The point I'm making to you is one of

:37:15. > :37:17.the key objectives from the very start of this coalition government,

:37:17. > :37:19.in terms of clearing up the economic mess that Labour left, is to

:37:19. > :37:24.maintain this country's fiscal credibility and keep our interest

:37:24. > :37:30.rates as low as they can be. But do you accept they are going to rise?

:37:30. > :37:33.What I accept it was if the rise was permanent, that has a cost. I agree

:37:33. > :37:39.with that statement. Let me come onto this infrastructure spending,

:37:39. > :37:45.of which the Chancellor is making so much, implying there's a whole new

:37:45. > :37:50.you were of infrastructure spending coming out. In the March Budget, I

:37:50. > :37:53.would use the gross figure, you announced infrastructure spending of

:37:53. > :37:57.50.4 billion in 2015 to 2016. The Chancellor has announced

:37:57. > :38:01.infrastructure spending in the same year of 50.4 billion. No change.

:38:01. > :38:05.Tomorrow I will be setting out in a separate Parliamentary statement the

:38:05. > :38:11.details of our infrastructure 's plans, what we are spending the

:38:11. > :38:17.money on over a longer... But you will not be changing the overall

:38:17. > :38:23.total. I will not. In the March budget we added an extra �3 billion

:38:23. > :38:27.to our capital spending in 2015 to 2016 and for the rest of the

:38:27. > :38:31.parliament. What we are setting out today and tomorrow is how we spend

:38:31. > :38:36.that extra money. The envelope for the spending round, both for current

:38:36. > :38:39.and capital spending, was set at the Budget by promising to take

:38:39. > :38:46.additional tough decisions on short-term current spending. We are

:38:46. > :38:51.able to set aside long-term... the Spending Review today, this has

:38:51. > :38:54.not added any extra money to investment, is that correct? That's

:38:54. > :38:58.correct. We are allocating the budgets that we set out in the in

:38:58. > :39:03.March. If you are so keen on infrastructure and investment, why

:39:03. > :39:07.did you cut it so much in the first couple of years? We inherited plans

:39:07. > :39:13.for very deep cuts in capital spending. Since we came into office,

:39:13. > :39:17.we've added money to those plans. We added in the spending round in 2010.

:39:17. > :39:19.We've added at every fiscal event since then, as we were able to find

:39:19. > :39:23.ways of making more savings and current spending, we are reinvesting

:39:23. > :39:28.some of that money invaluable capital spending. What we can't do

:39:28. > :39:31.is say that we will borrow ever more for this. Instead, we have to make

:39:31. > :39:35.difficult choices on current spending in order to afford the

:39:35. > :39:38.capital investment that this country needs. In essence, what you did was

:39:38. > :39:43.cut capital spending when you could have borrowed to pay for it when

:39:43. > :39:46.borrowing costs work at an historic low. You are now going to increase

:39:46. > :39:49.capital spending to borrow more at a time when borrowing costs are

:39:49. > :39:53.returning to a higher normal level. You got it the wrong way round,

:39:53. > :39:58.didn't you I don't think we did. We inherited plans for even deeper

:39:58. > :40:01.cuts. You didn't have to implement them. As I was just explaining,

:40:01. > :40:06.we've added money to those things. By setting up longer-term plans, we

:40:06. > :40:08.can get more projects for the money we have. We have delivered the

:40:08. > :40:11.Olympic project. We are changing the way that infrastructure is delivered

:40:11. > :40:17.within government, to make it more effective and commercially

:40:17. > :40:21.realistic, and to get more value for the capital investment of the spend.

:40:21. > :40:28.You have accepted the principle that capital spending does more for both

:40:28. > :40:32.short and long-term growth prospects than current spending. And that is

:40:32. > :40:38.manifest in the priorities you've set out today. If you look at an

:40:38. > :40:42.organisation like the IMF, they would say that one of the reasons

:40:42. > :40:47.why the British economy slowed down so sharply was indeed those capital

:40:47. > :40:50.spending cuts. Given that the consensus is you should be doing it,

:40:50. > :41:00.including your own view, why don't you bring the capital spending

:41:00. > :41:00.

:41:00. > :41:04.forward? I'm waiting for the question to end! We accept that

:41:04. > :41:08.capital spending is good for the economy, but not all capital

:41:09. > :41:12.spending is the same. What we have done in government, we did this in

:41:12. > :41:15.2010 and we've done it again, is to look at the projects around

:41:15. > :41:20.government, to assess them on the basis of what has the best impact on

:41:20. > :41:23.the economy and put our money on those things. In this current four

:41:23. > :41:26.year period, we are spending more on transport and investment in this

:41:26. > :41:33.country than our predecessors bit dashed back predecessors did. More

:41:33. > :41:37.on our road network, rail networks, broadband infrastructure. Why not

:41:37. > :41:42.housing? In the autumn of 2010 you announced the national

:41:42. > :41:49.infrastructure plan, 550 projects. How many have been completed?

:41:49. > :41:52.have been completed. I'd how many? Let me answer the question. Many of

:41:52. > :41:55.those headings are programmes that contain many different projects

:41:55. > :41:59.underneath them. You talk about the Highways Agency maintenance

:41:59. > :42:02.programme. That is something that needs to go on for a long time

:42:02. > :42:06.because it has been left over the years with a massive backlog in

:42:06. > :42:15.maintenance. There are dozens of projects in that heading which have

:42:15. > :42:21.been completed. White many dashed back How many have been completed?

:42:21. > :42:27.The Labour Party left us with... The idea you can build a nuclear power

:42:27. > :42:32.station is... That sun and Sally. You still haven't even started

:42:32. > :42:38.building a nuclear power station. The infrastructure platform, meant

:42:38. > :42:42.to raise 20 billion pension money. How much have you raised? It has

:42:42. > :42:45.been set up by the pensions industry themselves. They've raised the

:42:45. > :42:52.initial billion pounds of investment. �20 billion is over a

:42:52. > :42:57.multi-year period. I think this is a real success story because, for the

:42:57. > :43:01.first time, we've created a way for small, UK pension fronts to invest

:43:01. > :43:07.directly in UK infrastructure. They would say to you that we've made

:43:07. > :43:14.good progress. How much of that 20 billion has been invested? I don't

:43:14. > :43:19.think they've made any investments yet. You announced the UK guarantee

:43:19. > :43:22.scheme, which was to encourage money to come in from the private sector,

:43:22. > :43:28.guaranteed by the government's balance sheet. How many projects

:43:28. > :43:32.have you signed off under that? projects have been signed off. The

:43:32. > :43:36.Battersea developer and and the Drax power station refurbishment. A

:43:36. > :43:41.further 20 to 30 projects have been prequalified. I will have more to

:43:41. > :43:45.say about that tomorrow in my statement. Turning to welfare, why

:43:45. > :43:49.is it fair, particularly for your party, to say to somebody who's just

:43:49. > :43:54.lost their job and maybe on very low wages and have no reliable source of

:43:54. > :43:58.income, you will have to wait seven days until what you get the dole,

:43:58. > :44:02.instead of three days, is that just targeting people who haven't got

:44:02. > :44:06.much money? You currently have a three-day period in the system.

:44:06. > :44:09.France, Sweden, Germany and other countries around the world have

:44:09. > :44:15.seven-day waiting periods or even longer. We wanted to reinvest money

:44:15. > :44:19.in making our job centres and our job search requirements from

:44:19. > :44:23.job-seekers even more effective. The work that the DWP has done has shown

:44:23. > :44:27.that there are things that we can invest money in that make it more

:44:27. > :44:34.likely that people get off benefit and into work more quickly. You want

:44:34. > :44:38.the job seekers to pay for an improved service. Both in our fiscal

:44:38. > :44:42.consolidation, where the wealthiest pay the most towards deficit

:44:42. > :44:46.reduction. Also, the wealthiest in this country are paying a greater

:44:46. > :44:49.share of income tax than they ever have done before. The best thing for

:44:49. > :44:53.someone who has just left their job is to find another job. We need the

:44:53. > :44:58.systems to be in place to make that as intensive, and strong supportive

:44:58. > :45:01.framework as possible. Meeting a similar timescale to that of other

:45:01. > :45:04.countries is a perfectly reasonable way of ensuring that all that money

:45:04. > :45:14.is reinvested in getting more people off benefits and into work. I

:45:14. > :45:14.

:45:14. > :45:18.support this. Stephanie On the distributional point and whether the

:45:18. > :45:23.cuts and changes in public service spending have been evenly spread,

:45:23. > :45:28.your own chart suggests that the bottom fifth of people are going to

:45:28. > :45:33.lose 3. 9% of their net income as a result of all this changes since

:45:33. > :45:39.120, 4% for the top fifth. Do you accept the top fifth are paying as

:45:39. > :45:43.much of a share of the net income as the bottom, a difference of 0. 1%?

:45:43. > :45:47.They'll pay more as a share of a much larger income. People might

:45:47. > :45:51.think they are paying a lot more and they are paying a tiny amount which

:45:51. > :45:55.they can more easily afford? If I may answer the question. They'll pay

:45:55. > :45:57.more in cash terms, they are paying more as a share of the income and

:45:57. > :46:03.benefits in kind that they receive from Public Services. Of course,

:46:03. > :46:07.many of the savings that are described in the tables are

:46:07. > :46:09.efficiently savings in the delivery of Public Services so the public

:46:09. > :46:12.service outcomes many people are receiving and Public Services are

:46:13. > :46:16.consumed much more by people on lower incomes and rightly so, the

:46:16. > :46:20.quality of the services is being maintained because we are reforming

:46:20. > :46:25.them and making them more efficient. Some efficiency savings still show

:46:25. > :46:28.up. You talk about the cash terms. When you look at the effect of the

:46:28. > :46:32.changes in Tax Credits and benefits, it's interesting to meal that

:46:32. > :46:37.actually it's not just as a share of income, but in cash terms, the

:46:37. > :46:41.bottom fifth are losing out more from the changes to benefits in Tax

:46:41. > :46:45.Credits. That makes it sound like the changes have been very skewed

:46:45. > :46:49.towards the bottom? We publish a fiscal events table showing the

:46:49. > :46:53.impact of changes to Tax Credits, welfare changes and taxation. Of

:46:53. > :46:59.course, the wealthiest in the land by and large don't consume benefits

:46:59. > :47:02.expenditure. We have taken away child Ben from it from that group.

:47:02. > :47:08.There are other reforms we could make in that area, instead we have

:47:08. > :47:11.put up taxes. The wealthiest 10% are paying the greatest by far. We are

:47:11. > :47:17.running out of time usmt what is the point of a welfare cap which is full

:47:17. > :47:24.of holes? The The idea is to bring more expenditure within a framework

:47:24. > :47:32.of control. Excludeing pensions? When we started, there was Correct?

:47:32. > :47:40.Let me explain. Annual managed expenditure. There was a controlled

:47:40. > :47:44.framework for pensions. The best way to control costs was in the state

:47:44. > :47:50.pension system. We put in place a control work for environmental

:47:50. > :47:54.levies, spending under an annually managed eexpenditure. Today we are

:47:54. > :48:00.announcing a welfare cap which will control the costs of other parts of

:48:00. > :48:05.the benefits system. Doesn't include jobseeker's allowance? And also the

:48:05. > :48:10.benefits passport. How much of the welfare budget does the cap cover?

:48:10. > :48:14.About �100 billion of the �200 billion. So it's not a cap, it's

:48:14. > :48:18.like a baseball cap and somebody's taken half of it out? We have

:48:18. > :48:21.already put in a different framework in the Pensions Bill and in the

:48:21. > :48:31.legislation I put through on public service pensions, there is a cost

:48:31. > :48:31.

:48:32. > :48:35.cap. Politically important decision for you, that cap is due to come in

:48:35. > :48:38.just before a general election. Do you think that 'll be a coalition

:48:38. > :48:43.agreed cap or is it possible that a Conservative Chancellor wants a

:48:43. > :48:49.lower cap than you do and you choose at that stage not to support it?

:48:49. > :48:52.Well, I put the cap in place for the first time for April 15 in the

:48:52. > :48:56.previous years' budget. That's something we'll need to agree as a

:48:57. > :49:01.coalition. We all agree that having a control mechanism which forces the

:49:01. > :49:08.Chancellor to account to Parliament, either for decisions taken to bring

:49:08. > :49:13.welfare down or to explain why that action hasn't been taken, is a

:49:13. > :49:18.sensible reform to ensure spending isn't just able to rise without

:49:18. > :49:24.accountability year on year. Very quickly, almost everybody says that

:49:24. > :49:28.the big problem facing rich Western countries, including the UK is the

:49:28. > :49:32.rise in age related expenditure whether it's pensions or health.

:49:32. > :49:35.These are two areas which you are to an extent ringfencing and

:49:36. > :49:40.protecting. Aren't you taking a very is short-term political view and

:49:40. > :49:44.again putting the British economy at risk? No-one who's looked at the

:49:45. > :49:48.decisions we have made on the state pension age in the last few years

:49:48. > :49:51.and overtime increasing it has said we are not taking tough decisions in

:49:51. > :49:55.that year. The biggest single reform in the spending round statement

:49:55. > :49:58.today was about the integration of health and social care. That's about

:49:59. > :50:02.ensuring that as our population ages and people have more care needs,

:50:02. > :50:07.that our services are better eight able to immediate the needs in an

:50:07. > :50:13.effective way, rather than causing more people to become a burden on

:50:13. > :50:18.the NHS when they could be burdens on the homes. If it's easier to get

:50:18. > :50:23.efficiency savings, why don't you just cut now? Ewe are making savings

:50:23. > :50:28.now. Well well ahead of the programme we set out in the 2010...

:50:28. > :50:36.Why do you need to do �11. 5 billion in 2015? It's appropriate and right

:50:36. > :50:39.to carry on doing this in a measured way. We are taking the country from

:50:39. > :50:45.repair to renewal in a steady way and we'll continue to do that.

:50:45. > :50:50.Thank you for coming over from the Commons. We have been to the North

:50:50. > :50:54.to Jo in Bury and let eats head south now to the beautiful town of

:50:54. > :50:59.Winchester. Robert Hall is there. Andrew, in a county which has saved

:50:59. > :51:03.�130 million over the last couple of years, 10% cuts will make more

:51:03. > :51:07.difficult decisions very, very likely. Cuts to transport, perhaps

:51:07. > :51:11.to community facilities, to the cash available to those who need it most.

:51:11. > :51:16.Let's talk about that with Martin able radio rams who campaigns for

:51:16. > :51:21.rural transport and the Deputy Leader of Hampshire Council. Are we

:51:21. > :51:24.talking about a transport system in crisis, not just here but in the UK?

:51:24. > :51:27.We think we are and we are still going through the finer points but

:51:27. > :51:31.we have found that a 10% cut to local authority budgets is going to

:51:31. > :51:36.mean further cuts to buses and we'd say to the Chancellor that enough is

:51:36. > :51:41.enough, there's been a lot of cuts and people are suffering as a

:51:41. > :51:45.result, especially in rural areas. Young people are finding it really

:51:45. > :51:50.difficult to access job, education, training, older people rely on buses

:51:50. > :51:54.as a lifeline to independence and well-being. Unemployed people need

:51:54. > :52:01.buses to access job opportunities and get to job interviews. We have

:52:01. > :52:05.now heard that the signing on benefit has been cut to seven days,

:52:05. > :52:10.so people are going to have to sign on after seven days, which will add

:52:10. > :52:13.more pressures to bus services and we'll say enough is enough.

:52:13. > :52:17.balancing act between community facilities like the library and

:52:17. > :52:23.those people who need your help most, it's another difficult few

:52:23. > :52:26.months ahead isn't it? Yes, it is. When we took over bus subsidies from

:52:26. > :52:29.the district councils, we put more money into those for the very

:52:29. > :52:33.reasons that have already been said. We were conscious of the needs of

:52:33. > :52:37.the young and the needs of elderly. But you are absolutely right. It's

:52:37. > :52:42.not going to be an easy few years ahead, but we are planning for it

:52:42. > :52:46.because we started early in looking at the previous series of cuts. And

:52:46. > :52:50.what our golden rule is, is the last thing we want to pot is the

:52:50. > :52:53.frontline. We want to find other ways of ensuring we maintain our

:52:53. > :52:57.frontline services by forming partnerships with the Health

:52:57. > :53:01.Service, with the police for common facilities and with other public

:53:01. > :53:05.departments. At the same time, we want to increase the amount of

:53:05. > :53:12.income that the county earns from the services it provides outside the

:53:12. > :53:15.county. A good example of that, on July 1st, we formally take over

:53:15. > :53:18.education on the Isle of Wight and we believe that will be a benefit to

:53:18. > :53:22.the Isle of Wight and to Hampshire. Martin, very briefly because we have

:53:22. > :53:28.to stop in a minute, but it's going to be about partnerships isn't it,

:53:28. > :53:31.groups like you just keeping on? is about working together. We are

:53:31. > :53:37.also quite concerned about the big announcements on infrastructure

:53:37. > :53:40.spending that the Chancellor announced a huge road building

:53:40. > :53:45.programme, for example, and that money could be better spent on

:53:45. > :53:49.filling in potholes, improving roads, for bus users, cyclists and

:53:49. > :53:52.the public as a whole. We have got to stop. A very business programme.

:53:53. > :53:57.Thank you both very much indeed. From the lovely city of Winchester,

:53:57. > :54:03.Andrew, back to you. Thank you very much. The sun is

:54:03. > :54:11.shining there. Let's get some more political reaction from Matthew.

:54:11. > :54:15.I'm joined by Stuart from the SNP and a member of the Plaid Cymru.

:54:15. > :54:19.What did you think about what you heard? Awful. This Chancellor

:54:19. > :54:24.doesn't learn from history or his own mistakes. He's trying to cut his

:54:24. > :54:28.way to growth and it will fail this time like last time. I agree. The

:54:28. > :54:33.IMF are telling him, you must spend far more on infrastructure and do it

:54:33. > :54:37.quickly and he's ignoring them. It's a bad situation to be in. Labour

:54:37. > :54:41.said they'll use it as a starting point in 2015 if they were to win.

:54:41. > :54:45.Is that a position that you accept from your parties? No, it's not. It

:54:45. > :54:50.appears now that all the London-based parties are austerity

:54:50. > :54:53.parties. The only choice it seems to me in Wales is ourselves and our

:54:53. > :54:56.friends in Scotland. We can think creatively of saving money without

:54:56. > :55:00.sacking people. Seems to be the way to do it is to hit the public sector

:55:00. > :55:04.as hard as you can with the least respect you can muster if you think

:55:04. > :55:10.you are going to come out of it. It's not going to work. What is the

:55:10. > :55:16.magic formula? �100 billion savings, do away with Trident, �25 billion in

:55:16. > :55:21.the first year, transaction tax will bring in �20 billion per annum and

:55:21. > :55:25.do away with the obvious tax avoidance loopholes that exist, a

:55:25. > :55:29.further �25 to �32 billion without sacking a single person. Stewart, in

:55:29. > :55:32.terms of the priorities we have heard, has the Chancellor in these

:55:32. > :55:38.difficult times made the right choices do you think in where he's

:55:39. > :55:44.decided to come? He's made difficult choices. The things he's ringfenced

:55:44. > :55:47.and these are political choices. We have to understand that there are

:55:47. > :55:52.more revenue cuts across all departments, including in skoonled

:55:52. > :55:57.Wales. The capital expenditure which has been talked about certain isly

:55:57. > :56:00.in Scotland isn't real capital expenditure, it's loans and funny

:56:00. > :56:03.money financial transactions at a time when we need direct capital

:56:03. > :56:06.investment to kick start the economy. He is not delivering what

:56:06. > :56:10.he needed to deliver. A final point to you both. We were hearing about

:56:10. > :56:14.the welfare cap that will come in just before the election. He was

:56:14. > :56:20.talking about stopping the automatic pay rises for the public sector

:56:20. > :56:25.perhaps. What do you think of those ideas? I think what they tell us is

:56:25. > :56:29.the welfare cap, this Government have a ratio of 4-1 in terms of cuts

:56:29. > :56:33.to tax rises. He's balancing the books on the back of the poor and

:56:33. > :56:39.nothing he's said today will change that. I think it's pushing the

:56:39. > :56:42.envelope. Labour have signed up to all of this. Labour are in favour of

:56:42. > :56:45.great austerity. This is pushing the envelope to see whether they can

:56:45. > :56:50.Labour to rise to this particular bait.

:56:50. > :56:54.Thank you very much gentlemen. More from here later. Back to you,

:56:54. > :56:58.Andrew. We can now talk to our Northern Ireland Business Editor,

:56:58. > :57:02.Jimmy Fitzpatrick in Belfast. Not quite as exciting as a G8 meeting in

:57:02. > :57:07.Northern Ireland, but what are you making of it? Yeah, I mean I suppose

:57:07. > :57:10.the anticipation was great for G8 and in terms of this, a certain

:57:10. > :57:13.amount of nervousness, but because health and education are such big

:57:13. > :57:18.parts of the Northern Ireland budget, it was never going to be a

:57:18. > :57:23.huge impact. In fact, Northern Ireland has emerged relatively

:57:24. > :57:27.unscathed, cuts of about 2% in 2015-16, still �9. 6 billion going

:57:27. > :57:31.to Northern Ireland departments to spend. We are a public sector

:57:31. > :57:38.dominated economy, so what is going to be the issue to look at? I think

:57:38. > :57:42.it's going to be the ending of automatic progression pay. That will

:57:43. > :57:46.mean tens of thousand us of civil servants could see an end to the

:57:46. > :57:52.automatic increases which they've enjoyed even during austerity and a

:57:52. > :57:56.period when pay freezes have been in place, in terms of the numbers, we

:57:56. > :58:02.are talking about 28% of workers paid directly out of the public

:58:02. > :58:07.purse. Anything up to 20,000 -- 200,000 people affected. Extra money

:58:07. > :58:11.for the police because of national security issues and extra money for

:58:11. > :58:18.the Northern Ireland Executive. Northern Ireland emerged relatively

:58:18. > :58:24.unscathed. Pf Thank you very much. We are going to

:58:24. > :58:33.talk about the pay progression issue in a moment, starting with the civil

:58:33. > :58:37.servants. Before that, back to Jo Co in Bury with Paul Lewis.

:58:37. > :58:44.It's a glorious day here. Paul Lewis is enjoying his cappuccino. Now, we

:58:44. > :58:47.have heard the Chancellor saying what he said. In terms of cutting

:58:47. > :58:50.though, what did the viewers say? They are disappointed that he

:58:50. > :58:56.committed himself to the high speed rail and to overseas aid. Many

:58:56. > :59:00.people still want those to be cut. On public sector pay, Mick has

:59:00. > :59:04.e-mailed to say he works toer a local authority, he was dismissed

:59:04. > :59:09.and re-employed on lower pay already and Karen came to me at this table,

:59:09. > :59:13.she works for the NHS, her job's been outsource and she says she's

:59:13. > :59:17.had a 47% pay cut already. Right. So people already

:59:17. > :59:22.experiencing some of the things the Chancellor's been talking about.

:59:22. > :59:26.What about changes to lone parents? I found out that what is going to

:59:26. > :59:29.happen with them, already they have to apply for a job, they have to

:59:29. > :59:33.become jobseekers as soon as their youngest child is five and now, when

:59:33. > :59:38.the youngest child is three, they are going to have to start preparing

:59:38. > :59:47.for work. That may mean learning English in some cases which he said

:59:47. > :59:52.everyone will have to do to get the allowance.

:59:52. > :59:57.Gingerbread said the DWP is saving �420 million on efficiency savings,

:59:57. > :00:01.how can they implement these new things. Winter Fuel Payment, to be

:00:01. > :00:05.taken away from people in warmer countries - Glynis is in Spain and

:00:05. > :00:08.says she already has to wear her dressing gown in the winter because

:00:08. > :00:12.it's cold. Must be in the mountains! How will she manage without it?

:00:12. > :00:16.She's not happy. One of the other announcements which we'd already

:00:16. > :00:20.heard and certainly talked about was a welfare cap that would be

:00:20. > :00:27.announced ever are I Yahoo!er in the budget from 2015. Let's get reaction

:00:27. > :00:32.on that from Karen Dyson from the Sainsbury in Manchester. What will

:00:32. > :00:36.be the impact on your clients -- Citizens Advice Barrow? We are not

:00:36. > :00:41.entirely sure how it will be put into practice, but if it means no

:00:41. > :00:44.those who claim benefits are no going to have the same rights as

:00:44. > :00:48.those who claim earlier in the year, that's a source of concern for us.

:00:48. > :00:58.What about local authorities? We were talking to a councillor, they

:00:58. > :01:05.

:01:05. > :01:10.said they have had big cuts already, further, again, we have serious

:01:10. > :01:14.concerns there won't be the infrastructure there to support the

:01:14. > :01:19.welfare reform successfully. Thank you. You can grab a coffee. One of

:01:19. > :01:23.the other announcements that the Chancellor claimed has been a

:01:23. > :01:26.success is that for every public sector job lost it has been offset

:01:26. > :01:31.by three new private sector jobs. Let's talk about that with John

:01:31. > :01:34.Holden, from a Manchester think tank. Has that been the case in the

:01:34. > :01:39.Northwest? Greater Manchester has certainly played its part in

:01:39. > :01:42.achieving strong private sector jobs growth. The priority is ensuring

:01:42. > :01:46.that growth continues. That's why we were pleased today to see the

:01:46. > :01:50.announcements about an additional investment in infrastructure,

:01:50. > :02:00.particularly the announcement around HS2 and making that happen, because

:02:00. > :02:10.

:02:10. > :02:12.that is crucial to the increase in the government's capital spend on

:02:12. > :02:14.science. There were some disappointments in the announcement

:02:14. > :02:17.around the local growth fund. From the report by Michael Heseltine, we

:02:17. > :02:20.thought that might be as big a �70 billion but it's only going to be �2

:02:20. > :02:22.billion. But for replaced by Greater Manchester, that could be a lot

:02:22. > :02:26.extra a year that could contribute to local growth and jobs. Nice to

:02:26. > :02:34.see the sun shining there. It's time now to say goodbye to viewers in

:02:34. > :02:42.Scotland. Let's bring you up to date with some of the key points in the

:02:42. > :02:48.statement. As widely expected, the Chancellor is cutting �8.5 billion

:02:48. > :02:54.from departmental budgets in the 2015 to 2016 budget. Among the

:02:54. > :02:56.casualties of that, though not one casualties of that, though not one

:02:56. > :03:01.of the big ones, defence resource budget is frozen at 24 billion,

:03:01. > :03:06.which means a small cut in real terms. The health budget will rise

:03:06. > :03:10.to 110 billion, but it's not rising by very much in real terms. And the

:03:10. > :03:19.education budget, mainly on the schools side, will rise 53 billion.

:03:19. > :03:24.There will be a new welfare cap from April 2015. Though, as we were

:03:24. > :03:29.discussing, there are a few holes in that cap, there's a big one called

:03:29. > :03:33.pensions. He told us it will only cover about 50% of the welfare

:03:33. > :03:40.budget. State pension is excluded. Seven-day waiting for unemployment

:03:40. > :03:44.benefits. Remarkably, that's meant to save about �230 million. And the

:03:44. > :03:51.winter fuel payments will be removed from expats in hot countries. I

:03:51. > :03:55.guess if you are an expat in Ireland, you will be all right. On a

:03:55. > :04:00.public sector pay front, that pay cap has been at 1% for quite a

:04:00. > :04:03.while. It's days capped at 1% rises. This is a big announcement

:04:03. > :04:08.that the Chancellor made, the automatic progression pay in the

:04:08. > :04:12.civil service will be abolished. No more rises just full length of

:04:13. > :04:17.service or because you've completed another year. That will now go. The

:04:17. > :04:27.Chancellor indicated that he wants to remove these automatic pay rises

:04:27. > :04:30.

:04:30. > :04:37.in the NHS, schools and police. But director of the Institute for Fiscal

:04:37. > :04:43.Studies. What have you found out that we haven't yet had a chance to

:04:43. > :04:49.find out ourselves? Not a lot. There wasn't a lot we found out that we

:04:49. > :04:53.didn't know several hours ago. It has been confirmed that this year,

:04:53. > :04:56.despite anything else, a huge reduction in a whole series of areas

:04:56. > :05:00.of public service spending, on top of what have been a range of big

:05:00. > :05:05.reductions. Some of the things you've been talking about were very

:05:05. > :05:09.well trailed, the pay changes pretty much the same as what he said at the

:05:09. > :05:13.Budget. The changes, the introduction of the welfare cap, he

:05:13. > :05:18.said there was going to be one of those. We've got a bit more detail

:05:18. > :05:22.now but not a great deal more. I think we will hear more in the

:05:22. > :05:26.Autumn statement and we might even get a number about next March. Nine

:05:26. > :05:31.months to work out how they are going to do that. There must be

:05:31. > :05:34.something hidden in the small print. I'm sure there is but I haven't

:05:34. > :05:41.found it. He did make something of a new national funding formula for

:05:41. > :05:45.schools. We found that a little hard to understand what it meant. Except

:05:45. > :05:49.it was thought the current formula was unfair. It's a potentially big

:05:49. > :05:54.change which will have a significant effect on individual schools up and

:05:54. > :05:59.down the country. The idea will be to have a single formula which will

:05:59. > :06:04.translate central government money into the money each school gets.

:06:04. > :06:08.It's based on a sort of a formula, sort of history, what local

:06:08. > :06:13.authorities do differently between themselves. So it is the case, as

:06:13. > :06:16.the Chancellor said, that similar schools can end up with very

:06:16. > :06:20.different amounts of money. But inevitably, when you make a

:06:20. > :06:25.perfectly rational reform like this, there will be winners and losers.

:06:25. > :06:31.That will be politically difficult, if, technically, it's the right

:06:31. > :06:37.thing to do. George Osborne praise a Tory backbencher who he said had

:06:37. > :06:42.campaigned for this. Yes.Looking at the speeches he has given in the

:06:42. > :06:48.past on this, he claimed that schools in Worcestershire, he says

:06:48. > :06:54.some of them are in areas which are among some of the 5% most deprived

:06:54. > :06:57.in the country, are getting per pupil, more than �700 less than

:06:57. > :07:02.neighbouring schools in Birmingham. That doesn't sound right, but that

:07:02. > :07:07.means some school in Birmingham is now going to face a cut in order

:07:07. > :07:13.that a school in neighbouring Worcestershire can get theirs.

:07:13. > :07:18.are not talking about a change in the total amount of money going to

:07:18. > :07:23.schools, that continues to be ring-fenced. But it is the case that

:07:23. > :07:26.because partly of the vagaries of history and partly because different

:07:26. > :07:32.authorities allocated differently according to the characteristics of

:07:32. > :07:36.their schools, similar schools get really very different amounts.

:07:36. > :07:41.are the expert on all things fiscal. We've also been talking about the

:07:41. > :07:45.rise in the government's borrowing costs. This may have been imported

:07:45. > :07:49.from a bit of Bond mayhem in the States. The fact is that bond yields

:07:49. > :07:52.have risen, which means it costs more for government to borrow. How

:07:52. > :07:57.much could that throw the government's projections of course,

:07:57. > :08:02.how much more might it has to end up cutting if these interest rates

:08:02. > :08:05.continue to rise? If they were to rise significantly, this makes a big

:08:05. > :08:13.difference. The level of outstanding debt continues to rise and rise

:08:13. > :08:16.fast. It's heading for �1.5 trillion. For all the talk of the

:08:16. > :08:18.deficit falling, the total amount of debt on which we are paying interest

:08:18. > :08:21.continues to rise pretty fast. The level of interest that we are

:08:21. > :08:26.currently paying is one of the big reasons why what the Chancellor

:08:26. > :08:30.referred to as annually managed expenditure continues to rise. It is

:08:30. > :08:35.not significantly created by welfare spending on the biggest change is

:08:35. > :08:42.the increase in debt interest. Plus the public services. The rise in

:08:42. > :08:46.interest rates would affect existing debt, that's already been gone away

:08:46. > :08:53.in the greedy yield. It's when the government has to issue new debt.

:08:54. > :09:03.It's not just completely new debt. You don't need to be an accountant

:09:03. > :09:09.to work out that 4% of 1.5 trillion is a lot more than 2%. It's about

:09:09. > :09:13.double, I reckon! It's a lot of money, that's the point. Even a

:09:13. > :09:20.smallish rise in interest rates can result in a big increase in the

:09:20. > :09:26.deficit. In terms of rolling over existing borrowing, it's about 150

:09:26. > :09:32.billion a year. If you are borrowing at 4% on 150 billion rather than 2%,

:09:32. > :09:36.that's a lot of money. The pay progression was one of the big

:09:36. > :09:42.announcements. My understanding is that when the implemented the freeze

:09:42. > :09:46.and then the 1% rise, they couldn't work out why it was that public

:09:46. > :09:52.sector pay continue to rise, it was supposed to be frozen. Then it

:09:52. > :09:56.dawned on them that there were so many categories where there was an

:09:56. > :10:02.automatic pay rise every year, in addition to that which had been

:10:02. > :10:07.agreed by collective-bargaining. So he's now, I assume, brought that in

:10:07. > :10:12.to stop it. That's quite a of what's been going on. Despite the public

:10:12. > :10:16.sector freeze and now the 1% increase is, actually, the public

:10:16. > :10:20.sector pay bill, earnings of the public sector, have still been going

:10:20. > :10:25.up a bit faster than in the private sector. That mostly reflects that

:10:25. > :10:29.they in the private sector has been doing very badly. There is still

:10:29. > :10:32.quite a lot of progression building to the public sector. And we are

:10:32. > :10:35.still getting to the end of the transition period from some of the

:10:35. > :10:38.big reforms from the last government. As I understand, the

:10:38. > :10:41.changes announced today re-announced, because he said

:10:41. > :10:43.something very similar in the Budget. He will be looking to

:10:43. > :10:47.increasingly move every central Whitehall department to a situation

:10:47. > :10:51.where there is no progression pay. There are already some where that is

:10:51. > :10:57.the case. Then he will take on other bits of the public sector. He didn't

:10:57. > :11:04.put a time limit on sorting that out. Is it still the case that

:11:05. > :11:11.despite these extra cuts of 11.5 billion for 2015 to 2016, the

:11:11. > :11:15.current 2016 to 2017 and 2018, to get the deficit reduction plan

:11:15. > :11:20.continuing as currently rejected, whoever is in power has got to find

:11:21. > :11:25.another 23 billion? That the numbers in the Budget Redbook. That is what

:11:25. > :11:31.the Chancellor set out as a way of getting to something adjusted. It

:11:31. > :11:37.will still be a very big deficit, even after those big cuts. That is

:11:37. > :11:41.what he has set out. That means this level of cuts again in the coming

:11:41. > :11:48.years, unless whoever is the next Chancellor said, well, there's got

:11:48. > :11:51.to be more taxes or we borrow some more. A lot of people have raised

:11:51. > :11:55.the possibility that you could have higher taxes to pay for this instead

:11:55. > :11:58.of more spending cuts. But there is another possibility, which is the

:11:58. > :12:02.Office for Budget Responsibility decides, as it did in 2011, that the

:12:02. > :12:06.economy is going to look very different in the next few years and

:12:06. > :12:09.that structural hole is smaller than they think. On historical record,

:12:09. > :12:15.that is perfectly possible. In either direction, the numbers could

:12:15. > :12:19.change a lot. Reason we've had some of the big changes over the last

:12:19. > :12:23.couple of years has been because the economy has done worse than expected

:12:23. > :12:30.and the obi are has changed its mind quite significantly about what will

:12:30. > :12:35.happen in the future. Even these bad figures are based on the assumption

:12:35. > :12:39.that the economy bounces back big time in the next few years. On the

:12:39. > :12:43.welfare cup, how meaningful do you think it will be, given that it

:12:43. > :12:48.looks like it will only cover about half of welfare spending? Cole the

:12:48. > :12:54.basic state pension is a very large chunk of welfare spending. If you

:12:54. > :12:58.get rid of that, it's a very large chunk of everything that isn't basic

:12:58. > :13:01.and additional pensions. The meaningfulness of it will come out

:13:01. > :13:11.whether it makes a difference to how the government actually goes about

:13:11. > :13:11.

:13:11. > :13:17.that spending. Do you think this is sensible? It's quite a technocratic

:13:17. > :13:22.change. It's something that the Treasury and the DWP could do now if

:13:22. > :13:25.they wanted to. They could say, it looks as though spending on housing

:13:25. > :13:27.fell as if they wanted to. They could say, it looks as though

:13:27. > :13:32.spending on housing fell at a fit or disability allowance is rising, we

:13:32. > :13:39.will take it under control. They are providing themselves with an

:13:39. > :13:43.external impetus to do. I know we've got to let you go and we've got to

:13:43. > :13:47.move on, forget whether it's a structural deficit or just the

:13:47. > :13:51.normal bog-standard deficit. We are adding to the deficit, the national

:13:51. > :13:56.debt every year for the foreseeable future. When now do we start paying

:13:57. > :14:01.back this national debt of around 1.5 trillion? It starts falling as a

:14:01. > :14:07.proportion of national income not until about 2017, two years after

:14:07. > :14:13.the Chancellor wanted it to. One of the fiscal rules was the debt starts

:14:13. > :14:17.falling as a proportion of national income in 2015. It will be at least

:14:17. > :14:27.2017 and possibly later until that happens. Let's go back to Matthew on

:14:27. > :14:27.

:14:27. > :14:34.College Green. With me is Kevin Maguire, from the

:14:34. > :14:38.mirror, and Anne McElvoy, from the Economist. What will you be writing?

:14:38. > :14:42.It's clearly a failure by George Osborne. He wasn't supposed to be

:14:42. > :14:46.still in austerity. He's borrowed billions extra over the period.

:14:46. > :14:49.These cuts, once you look behind those headline figures, there were

:14:49. > :14:53.some pretty mean moves. Look what he's doing with the unemployed. You

:14:53. > :14:57.lose your job and you will not be able to claim jobseeker's allowance

:14:57. > :15:01.for a week, no matter how long you've paid national insurance

:15:02. > :15:07.Contributions Bill �72. Every time your contract of two months or so

:15:07. > :15:10.finishes, you will not be able to claim an employment. I do not see

:15:10. > :15:13.where the fairness is in that policy. I think he has found himself

:15:13. > :15:20.in a difficult position. He can't defend Plan A, we are not out of the

:15:20. > :15:24.austerity that we would be out of. But on his side he does have quite a

:15:24. > :15:28.lot of interesting indicators. The eurozone looks like it's in a worse

:15:28. > :15:33.state than we are. All right, you can pick around who has given to or

:15:33. > :15:37.who has been taken away from in this review, but you can't get away from

:15:37. > :15:40.the big picture which will determine the argument in the next election.

:15:40. > :15:49.And that is, are we gradually getting better or worse compared to

:15:49. > :15:53.other countries? In terms of the choices he's made, is he right?

:15:53. > :15:56.have a different view to Kevan on that, but there was still money to

:15:56. > :16:02.be taken out of the department. It's interesting, despite a lot of fuss,

:16:02. > :16:05.you didn't hear a massive cry of resistance. David Cameron at Prime

:16:05. > :16:07.Minister's Questions taunted Ed Miliband, he said on the deficit, on

:16:07. > :16:12.immigration and welfare, he was on the wrong side of the argument, the

:16:12. > :16:16.wrong side of public opinion. We have seen a shift there from Labour.

:16:17. > :16:21.They are signed up to this now? are always on the wrong side in was

:16:21. > :16:28.fare. We saw with Tax Credits where Labour voted against them, I think

:16:28. > :16:33.they won the argument with the public. But they signed up to the

:16:33. > :16:37.cuts? Quite right that Ed Miliband has blurred some red lines that

:16:37. > :16:41.should be thicker and clearer between him and the Chancellor and

:16:41. > :16:46.David Cameron. Clearly, Cameron was setting a lot of traps for Labour on

:16:46. > :16:51.things like would you restore that weeks' unemployment pay that will be

:16:51. > :16:57.taken from people who'll lose their job, what about public service

:16:57. > :17:07.wages, public servants do real jobs, a three-year freeze, your pay is

:17:07. > :17:08.

:17:08. > :17:12.going up less than inflation. need to have this? It was there to

:17:12. > :17:15.signal a behavioural change. There is another view that you need the

:17:15. > :17:20.behavioural nudges built into policy that you could possibly get to get

:17:20. > :17:25.people to go to work and stay at work. The childrening you have just

:17:25. > :17:31.described is not very good for people and it's not very good in

:17:31. > :17:35.terms of... Decisions do you think were put off until after the next

:17:35. > :17:39.election. We were just hearing from the IFS and the projected cuts to

:17:39. > :17:42.come. Duping the big and bold decisions, they've just not been

:17:42. > :17:48.honest. Two things about that, on welfare,

:17:48. > :17:51.we have moved along. -- do you think the big and bold decisions. The

:17:51. > :17:54.Labour Party's moved towards the idea of a cut and that is a really

:17:55. > :18:00.big change. We have made progress on that in this Parliament. After the

:18:00. > :18:04.next election, it depend on the public finances. What you call the

:18:04. > :18:08.bold, it will hurt them most. He's postponed those until after the next

:18:08. > :18:11.election. The only way to get out of this mess is economic growth and

:18:11. > :18:14.that's the one thing George Osborne hasn't got because he's strangled it

:18:14. > :18:18.at birth. Thank you very much for those early

:18:19. > :18:24.thoughts and pointers. Andrew, back to you.

:18:24. > :18:31.More political reaction now from Tim Acre of the UK Independence Party.

:18:31. > :18:37.What do you make of it all -- Tim Aker? Interesting that your viewers

:18:37. > :18:47.are again spending �32 billion on high High Speed Two and 11. 5

:18:47. > :18:48.

:18:48. > :18:53.billion on foreign aid. We are building HS2 in Britain, that's not

:18:53. > :18:57.abroad? The foreign aid's obviously going abroad, but the High Speed

:18:57. > :19:01.Two, a trainline from London to Birmingham, look, it's a budget

:19:01. > :19:05.that's very political and it's going to come in, conveniently enough,

:19:05. > :19:09.during the next election campaign. The national debt is growing.

:19:09. > :19:14.many high speed rail lines did the UKIP call for at the last general

:19:14. > :19:18.election? Upgrading existing lines. It calls for two high speed rail

:19:18. > :19:24.lines? No, we looked at this and the manifesto called for high speed

:19:24. > :19:27.rail. Upgrading existing lines. The problem with High Speed Two is it's

:19:27. > :19:31.completely uneconomical and the people don't want it. That was shown

:19:31. > :19:35.in the county council elections where the route that high speed goes

:19:35. > :19:38.through, it could do very well. to like the idea of compulsory

:19:38. > :19:43.English language lessons? I don't like the idea of the taxpayer having

:19:43. > :19:46.to pay for it. If you want to come and live and work here, it would be

:19:46. > :19:50.nice if you spoke English beforehand. Indeed. Thank you very

:19:50. > :19:55.much. That's the UKIP reaction. We are joined by the Shadow Chancellor,

:19:55. > :20:02.Ed Balls, who you saw performing in the House. He's now arrived here.

:20:02. > :20:06.You may change the composition of the �11. 5 billion of the cuts for

:20:07. > :20:16.15-16, but I do take it you will accept that as the envelope for

:20:17. > :20:21.

:20:21. > :20:25.spending in 15-16? I have to say, the disappointing thing is, he

:20:25. > :20:29.didn't do anything to get growth moving and tax revenues coming in

:20:29. > :20:34.this year and next year, no increase in capital spending, no house

:20:34. > :20:38.building. In 15-16, they are cutting in real terms cam tap spending. My

:20:38. > :20:45.argument today was, if there was actual growth to get the economy

:20:45. > :20:49.moving, then we'd be able to do less deep cuts for police and defence in

:20:49. > :20:58.2016 -- capital spending. If George Osborne carries on with a failing

:20:58. > :21:01.plan, we'd have to do that. It felt like failing deck chairs. Not the

:21:01. > :21:07.Titanic though, the analogy usually used? I switched it half way

:21:07. > :21:12.through, did you notice? The Titanic was fine when it left Belfast! Do

:21:12. > :21:17.you oppose any cuts announced today? The problem when you read the

:21:17. > :21:22.documentation is that there's not a huge amount of detail in there. I

:21:22. > :21:28.asked the Chancellor questions about policing and nursing. Sure. Do you

:21:28. > :21:34.oppose any of the cuts announced for 2015-16? It will me an exampleI'm

:21:34. > :21:39.asking you. That's how it works? terms of detail... I'm happy to...

:21:39. > :21:42.In terms of the overall numbers of 15-16, I think the cuts are deeper

:21:42. > :21:46.than they need to be, but they are failing on the economy and the

:21:46. > :21:50.deficit's going to be �96 billion. I don't want to see the scale of cuts

:21:50. > :21:54.but this is what we are going to have to deal with and work from.

:21:54. > :22:03.Within the totals, it's such a thin document, we have almost no detail

:22:03. > :22:07.but the individual cuts. Is it still your plan? The

:22:07. > :22:15.Government's capital spending hasn't changed from the announcement in the

:22:15. > :22:21.Budget, the just about �50 billion in 2015-16, gross, net, a lot less

:22:21. > :22:27.than that after depreciation. Would bit your sgention to borrow more to

:22:27. > :22:31.have more infrastructure investment in 2015-16? I'm not going to make

:22:31. > :22:38.that decision and that commitment at this stage two years ahead. What we

:22:38. > :22:43.said is for 2015-16, if we come into Government, we'll work from and

:22:43. > :22:48.inherit the current spending plans. On capital spending, they should be

:22:48. > :22:55.spending �10 billion more this year and next to boost house building and

:22:55. > :22:58.capital. We are worried that it's a 1. 7% real terms cut, 35% cut in

:22:58. > :23:01.Local Government budget, so therefore there is a case if the

:23:01. > :23:05.economy is still weak, and we need to build more homes to get the

:23:05. > :23:09.Housing Benefit bill down, there else a case for doing more. I said

:23:09. > :23:13.that on Sunday. You are not making a commitment on that yet? No.All

:23:13. > :23:18.right. The Government's excluded the basic state pension from the welfare

:23:18. > :23:21.cap. Would you? It's quite confusing what they've done over the last few

:23:21. > :23:26.weeks on this, because two weeks ago when I came on your programme, they

:23:26. > :23:29.were going to exclude all pension spending from the cap. You've incan

:23:29. > :23:35.colluded that in the cap when I interviewed you? Yes.So you would

:23:35. > :23:40.include it this en? I said we'd look at all social security and welfare

:23:40. > :23:43.spending because we should try to control all of it. If the Government

:23:43. > :23:47.despies to have a small welfare cap, but not the basic pension, that

:23:47. > :23:52.would be fine by us because we've said we'll stick with the triple

:23:52. > :23:55.lock alongside George Osborne anyway. If you are talking a 20, 30,

:23:55. > :23:58.40-year view of social security spending which I thought we were

:23:58. > :24:03.debating because it makes sense to plan these things long-term, of

:24:03. > :24:07.course you can't then, from a long-term view and cap, you can't

:24:07. > :24:10.then exclude pension spending which is actually about today's working

:24:10. > :24:14.age population. The Chancellor said exactly the same thing as me on

:24:14. > :24:17.Sunday, so a long-term plan, of course you have to look at all

:24:17. > :24:20.long-term spending, a short-term cap within the next Parliament, if the

:24:20. > :24:26.Chancellor can excuse the basic state pension because he's intending

:24:26. > :24:30.to have to triple lock, fine by us. I see. All right. Still not clear

:24:30. > :24:33.where you are including pensions in the cap or not? I explained if there

:24:33. > :24:37.is a short-term cap, which I think is what he's saying and he's

:24:37. > :24:44.sticking with the triple lock, we'll stick to that on the basic pension,

:24:44. > :24:49.so whether pensions are in or out is irinvestigate rant.

:24:49. > :24:53.-- irrelevant. I understand.

:24:53. > :24:58.When you look at what's happened to the cost of borrowing, just in the

:24:58. > :25:03.past month or so, and you look at events in the United States and in

:25:04. > :25:08.China, do you accept that if you get to power, when it comes to extra

:25:08. > :25:12.borrowing, it's going to cost you to lot more to borrow than it has in

:25:12. > :25:17.the last couple of years and the rising cost of borrowing will

:25:17. > :25:20.inhibit your ability to promise to borrow more? It depends on the what

:25:20. > :25:26.the long-term bond yield rises are telling you. If this is about the

:25:26. > :25:31.economies returning to normality, to growth with low in inflation but

:25:31. > :25:37.with more nor that will interest rates... That inhibits your ability

:25:37. > :25:42.to... Well it will increase the cost, clearly. However, what's gone

:25:42. > :25:46.on in financial markets is equity markets that are falling, worries

:25:46. > :25:50.from Turkey to Indonesia, Brazil, the China slowdown alongside the

:25:50. > :25:57.withdrawal of QE, the danger is in China and maybe more widely, we may

:25:57. > :26:01.see actually the credit crunch continuing and that may be there's

:26:01. > :26:07.some nervousness about investors about where economies are going.

:26:07. > :26:10.That may make it more important to have growth. The Chancellor's being

:26:10. > :26:17.very complacent in the British economy. This has been billed as a

:26:17. > :26:22.big event. As the IFS has pointed out, if the Government is to hit it

:26:22. > :26:28.own target of reducing debt as a share of GDP by 2018, so not getting

:26:28. > :26:35.the debt down to 2018, we are going to have to have many more years of

:26:35. > :26:45.these sorts of cuts. Do you agree that 2018 is an appropriate year to

:26:45. > :26:46.

:26:46. > :26:49.start getting debt down? I'm fearful about coming back, with

:26:49. > :26:54.Spending Review, Spending Review, that the debt is higher than we

:26:54. > :27:00.thought and we'll go back to more cuts which goes back to my point,

:27:00. > :27:05.don't shift the deck chairs, get the growth moving. We have only got two

:27:05. > :27:08.minutes. Quick question, Nick, and then Stephanie? Chancellor said he'd

:27:08. > :27:11.get rid of pay progression in the Public Services with Labour,

:27:11. > :27:16.Chancellor says people should work seven days before they get the dole,

:27:16. > :27:21.or the GSA, would Labour back it? need to look at the detail

:27:21. > :27:25.obviously. On the welfare, English language for incoming migrants

:27:25. > :27:30.definitely. I think for the seven day, we have it three days at the

:27:30. > :27:35.moment, seven days, is it going to be a blank check? If it saves money

:27:35. > :27:40.and works, fine, in terms of paid progression, we have to look at

:27:40. > :27:46.this. Is it going to save money? I don't know the answer, but we'll

:27:46. > :27:53.study it. Anything you like in the review? Any caught your fancy?

:27:53. > :27:56.honest, I found it incredibly depressing. The economy's flatlined,

:27:56. > :28:00.the deficit's high and the Chancellor has a chance to come and

:28:00. > :28:04.say I'll get the economy moving and he wanted to talk capital and did

:28:04. > :28:10.nothing for the next three years, zero. What a missed opportunity. I

:28:10. > :28:13.find it very, very gloomy. I fear for what is going to be the future

:28:13. > :28:17.of Public Services and the state of our country for our children.

:28:17. > :28:20.that raising of the spirits note, we'll leave it there. Ed Balls,

:28:20. > :28:24.thank you very much. That's all for viewers on BBC Two. There's

:28:24. > :28:28.continued coverage of today's Spending Review over on the BBC News

:28:28. > :28:31.Channel. I'll be back with Jo Co with the Daily Politics at 11