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special on the Chancellor's latest Spending Review. George Osborne laid


out the coalition spending plans back in 2010, and they took us to


April 2015, just before the next election. By which time the


government's annual deficit was supposed to have been almost


eliminated. But slower economic growth than first predicted means it


isn't quite working out like that. The government says it will still be


borrowing billions in the financial year 2015 to 2016, and that even to


meet its revised deficit reduction plans, they will have to find


another 11.5 billion in cuts for that financial year. Hence today's


statement. With a general election in May 2015, the Chancellor may not


be in the Treasury to implement what he's about to announce. Labour has


said if it wins the election, it will reluctantly stick with Mr


Osborne's overall spending totals. But it could tinker with where the


Chancellor's axe falls. The Chancellor is about to leave the


Treasury. That is our live shot there. It's only a short drive from


the Treasury across Parliament Square to the House of Commons.


There's no waving of the budget box, as there is on budget day here. It's


a bit more workmanlike when it comes to a Spending Review. There's been


months of argy-bargy between the Treasury and Cabinet ministers over


what is to be cut. The most recalcitrant even formed what became


known as the National union of ministers, to fight Treasury


demands. The remaining differences were resolved at the weekend. Now


the Chancellor comes to the Commons to tell us what has been decided. We


will have live coverage of his speech and labour's response. The


Chancellor gets to his feet and about an hours time. At noon, we


will have Prime Minister 's questions. To guide us throughout,


we have the BBC's finest in the studio. They paid me to say that!


Plus reaction from beyond Westminster. I'm outside Parliament,


talking to politicians of all stripes, getting their reaction to


today's Spending Review and assessing how it will affect the


political landscape. I'm in bustling Bury market in Lancashire, where you


can buy just about anything. From gorgeous flowers to the famous black


pudding. The Chancellor announces how he is going to cut another �11.5


billion in spending in a few years time. I'll be talking to taxpayers


here to find out what they think about his plans. And I will have


your e-mails, texts and tweets come and explain what the Chancellor's


announcements mean for you. And I'm in our virtual Treasury courtyard,


looking at where the cuts might fall and which areas the Chancellor might


spare in this �11.5 billion spending squeeze. With me in the studio is


Nick Robinson and our business editor, Robert Preston. Let's hear


just what the Labour leader, Ed Miliband, had to say as he left his


house this morning. Before that, let's get our live pictures of the


Chancellor leaving. A BBC employee shouting at him there! He's getting


into his vehicle with Danny Alexander, the Chief Secretary.


Danny Alexander, the man who had to do the detailed negotiations while


the Chancellor looked after the overall situation. It's a nice,


sunny day. The car is coming out, as it heads through Parliament Square


and to the House of Commons. This is a very political Chancellor, so we


can expect a lot of politics among the number crunching that has been


going on. And a number of little surprises perhaps for the Labour


Party will stop maybe just designed to see how Labour reacts. Even the


Chancellor has to stop for the buses. I think one of these is one


of the new Boris buses, that the Mayor of London said he would bring


back. We will leave the Chancellor in the traffic jam. I don't think he


will be late. Before we go to our experts in the studio, let's hear


what Ed Miliband said in the run-up to this Spending Review this


morning. This government has failed, and it's failed so badly that if


Labour wins the next election, it will be extremely tough. And it is


only responsible for us to promised to reverse cuts if we know exactly


where the money is coming from. That is what the British people would


expect from us, as a responsible opposition seeking to be in


government. But we are also saying that invest now in the things that


matter, the things that will get our economy going, construction workers


back to work, that would be good for growth and make the choices down the


road less painful. Ed Miliband doesn't get to reply and unlike the


Budget, it will be the Shadow Chancellor providing -- applying to


the Chancellor's statements. Why is the Chancellor doing this? 2015 to


2016 is a long way away and he might not even be in power. Indeed, and


these are cuts that were not meant to happen, that he didn't foresee


happening, that he hoped would never happen. The first answer to your


question is simply because the economy has not performed as the


hoped and plan for it to do. And therefore the age of austerity, as


George Osborne called it, has had to be extended by two yours. Instead of


doing deeper cuts for a year, announced it just before the


election. It's largely for political reasons. He believed that the voters


and the media would pose the question to Labour, the question


that he saw Ed Miliband trying to address there. What would you do if


you were in government? That is the really deep political reason that we


are getting it today. As you suggested, there will be a lot of


politics in this speech, designed to say, this is what we do. If we get


back into government either on our own or with the Liberal Democrats,


keep asking Ed Balls what he'd do. Hasn't Labour shot its box already


by beginning the repositioning, implying, Ed Balls has said on


various programmes, look, we will reluctantly accept the current


spending plans for 2015 to 2016. We may tinker with how we do it but the


overall envelope, all right, that is how we will come to power. There


were a couple of speeches given by Ed Miliband and Ed Balls. It is


clear the spending totals day-to-day, departmental, they will


stick to it. Why do I emphasised those words? Because Labour are


still saying that if they were in power now, they would borrow more


than the government. But they are saying they wouldn't borrow more to


reduce the level of cuts needed to run various Whitehall departments.


They are saying they would borrow more to invest in infrastructure and


building things. Ed Balls has set up to �10 billion more. He doesn't want


to put a figure on what that might be in two years time because he


says, perfectly reasonably, we don't know what state the economy will be


in then. But he's leaving it open. I'm sure George Osborne will bang on


about this, that Labour would indeed spend more and borrow more. But


Labour have made it clearer, there will not be money to reverse the


sorts of cuts we are hearing today unless they can find a little bit


more from one budget to subsidise another, or they announce a tax


rise. As we've said, this is just a one-year Spending Review. The


Chancellor is looking for �11.5 billion of departmental savings. So


where will these cuts be made? It is in the Treasury, just across from


the Houses of Parliament, the ministers have been making the big


decisions, officials have been crunching the numbers there. At the


heart of that building lies the circular courtyard. We built, no


expense spared, our own virtual courtyard, where Stephanie Flanders


has been doing some of her own number crunching.


Treasury here may be virtual but the numbers are all too real. Today's


statements about tax year 2015 to 2016. The government spending for


that year is forecast to be �745 billion. But we are only talking


about one part of that bill, the 314 billion that Whitehall departments


get for day-to-day spending on things like schools, transport and


the police. So where are the Chancellor's cuts going to come


from? Let's start with what their budgets look like next year, April


2014. You can see the big spenders are health and education, ranging


down to foreign aid and the Home Office. So what might happen to


these budgets in 2015, the year covered by today's review? If the


Chancellor's savings were spread evenly across all these departments,


every minister would be facing an extra 2.3% cut after inflation. But


we know that won't happen because the government has again promised to


ring fence and protect spending for several departments. So the health


budget is protected will stop spending on that won't fall and


could show a small rise in real terms. And the education budget will


only fall a bit, because most of its budget, but money it spends on


schools in England, has been ring-fenced. Foreign aid spending,


that will go up. The government has promised it will grow as fast as the


economy. But savings fairly evenly on all the other unprotected


departments, you can see they'd all be looking at a real terms cut of


6.1%. That is on top of the 20% or more they've already found in saving


since 2010. But the cuts weren't spread that ease -- evenly in the


last Spending Review. The Chancellor follows the same pattern as before,


we can expect defence to come off relatively lightly, and another big


squeeze the local government, the Home Office and transport. They will


have then seen their budget cut by a third in real terms since 2010. But


of course, what is missing from this picture is something we've heard a


lot about recently. Welfare. In 2015, spending on benefits and tax


credit is expected to be �220 billion, and nearly a third of


spending. Many in his party would like the Chancellor to find more


savings there, but it's not on the agenda today.


The Spending Review was a very British event, but it takes place in


an international context. We had a real banking scare in China last


week, it sent tremors around the world. We've heard the US Federal


Reserve saying it's going to begin to withdraw the money that it's been


printing, that is pushing up bond yields. And we've got yet another


gigantic financial scandal in Italy. The backdrop is not great.


Know, the international picture isn't pretty at the moment. We had


probably the most powerful player in the international markets, Ben


Bonallack, the chairman of the Federal Reserve, talking out loud


about ending mass of money creation, quantitative easing, that


the US Federal Reserve has been engaging in to prop up the US


economy. Investors didn't like what they heard. The price of US Treasury


bonds, US government debt fell. That in effect put up the interest rate


which the US government pays to borrow. The US government's interest


rate is, in a way, the interest rate benchmark for the whole world. If


the price that the US government has to pay to borrow goes up, so, too,


does the price we have to pay. that has been happening.


example, the price of British government debt has fallen and


therefore the implied interest rate that the British government has to


pay to go up has fallen really quite steeply. It raises the prospect not


only of his interest bill going up at a time when he hasn't got a lot


of money to spend, but of things that are worse than that. We had an


interesting document published by the Bank of England which raised the


possibility that because of the fall in all this debt which is held by


the banks, there could be quite big losses for the banks and it's now


conducting an investigation to find out if the price of that debt would


continue to fall in a sharp way, how damaging would that be for our


banking system, as it comes out of the last crisis and is attempting to


strengthen itself? In China, we know that they have a problem with


potentially really big, bad debts from a mass of lending spree that


took place over the last few years. The financial backdrop to this very


British event is unsettling. Indeed. This Spending Review could be taking


place at a time when we are now at the beginning of the end of the


cheap money that has been flooding into most Western economies. Along


with that comes low interest rates. Today's programme, we will be


getting reaction to the Chancellor's statement in Bury


market. We are waiting to find out where the Chancellor's knife will


fall on spending in a few years' time. I'm joined by a councillor


from the Local Government Association. Councils have had their


budgets cut quite significantly over the past few years. Can they take


another 10%? Councils have lost 20% of their budget. The Prime Minister


says that local government is the most efficient of the public sector


but a further 10% cut in our budget will mean a loss of essential


services that people rely on to have a good quality of life, libraries,


museums, Children's Centres and sports centres.


There could be a loss of services that matter a lot to local people.


The Government says you could downup services more etch feckively. What


do you say to that -- effectively? We need Government to remove the


ringfencing or spending around health and education, remove


bureaucracy and red tape and get out the way so local councils can work


together with health and education to join up local services and make


them much more efficient, protect jobs and local services that people


rely on. Thank you very much Mr Khan. That's the council view here


in Bury market. The council is very involved in the running of this


market which boasts something like nine million visitors a year, that's


a lot of people. There are over 370 stalls and, as you look around here,


it's buzzing. But is the picture that rosy for local businesses?


Well, let's catch up with Bill Thompson who is standing by the hog


roast stand. I understand that will be going at 2 o'clock. Is it good


for business here at the moment? Well, obviously market day in Bury


is always very busy. The Federation of Market businesses would like to


see more done. We have wrote to Chancellor to ask how things will be


financed. We have been advocating for many years to get away from the


big high street banks to give alternatives to small businesses who


can grow businesses. Without small businesses growing, the country


isn't going to rebirth itself. structure would you like to see to


help businesses in the region? brink banking, the road and rail


network -- the British banking. The HS 2 has been looked at. The road


network needs looking at and the Broadband issue in rural areas


because there are very few businesses because there is no


access to the Internet and Broadband.


Phil Thompson, thank you very much. We also want to hear what you think.


Our viewers. Who best to gauge reaction but from our expert, good


morning to you from BBC Money Box live? People can contact us at


Twitter, they can e-mail us at haveyoursay and the text is 61124.


Many suggestions for cuts coming in. Sue from Twickenham says why does


the Government persist in ringfencing overseas aid at the


expense of Britain. HS2 another popular target and Trident, people


want to get rid of that. My favourite, Paul, I said what should


you cut and he said treasury biscuits! I wonder how much would be


raised if they managed to cut out the biscuit budget. They spend �3


million a year on biscuits in Whitehall we are told. That's a lot


of biscuits. What do we already know? There is speculation that


Winter Fuel Payments to UK pensioners living overseas may be


cut if they live in warmer countries. Some can claim it even in


the tropics. Public sector pay, could be further cuts in that which


would be very bad news for the public sector workers watching and


possibly an overall cap on welfare payments, so even if people can


claim benefits, ultimately the Government will say no more than a


certain amount. A difficult thing to do, but there 'll probably be a


consultation on that. Paul, thank you very much. Keep contacting us


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


minutes. Back to you, Andrew. Thanks, Jo Co. Bring us back a jumbo


chicken, never mind the biscuits. �7 quid! I'll grab one. Lunch sorted


for tomorrow! A quick reminder that you can get


the latest on the spending review on the BBC website. You can find the


link to the live page at www.bbc.co.uk/economy. You will find


in-depth coverage there and, if you are out and about today, you can


still follow all the latest developments and BBC analysis with


BBC correspondents on Twitter. Go to BBC News and subscribe to the


spending review Twitter list. It's free. Go on, do it!


If you are just joining us, you are watching our special coverage of the


spending review coming live from Westminster here in the heart of


London. Let's join Matthew am Ralls wall loo outside the House of


Commons. Thank you very much. We haven't heard the words green shoots


from the Chancellor, but he's said the economy is of of intensive care.


What is the real picture? We have pulled together some of the key


indicators of recent weeks to get a better idea of how the economy is


Apology for the loss of subtitles for 81 seconds


That's the economic backdrop. Let's discuss the politics of this. With


me here is Harriet Baldwin, Cathy Jamieson and Stephen Williams. Thank


you all for being here with me. Harriet Baldwin first of all, the


very fact that we are having this spending review, is it an admission


of failure. In 2010, George Osborne said we'd be finished by 2015?


what we are doing is healing an economy that was in a difficult


state with a big budget deficit and what we have encountered is problems


in the eurozone which have slowed things down and so yes, I would


agree, the economy has not been as strong as we'd have liked it over


the last couple of years. The signs, as you say saw, is that we are going


from the rescue phase into a more sustainable recovery and I hope what


we'll hear today from the Chancellor is more initiatives that will back


that. Isn't the truth that you have been blown off course because you


are good at cutting Government spending in departments, but growth


has alluded you, you have a one-legged strategy? Job growth has


been very strong, so there are more people working today than ever in UK


history. We have had 1. 3 million jobs that have been created in the


private sectorment so I think that's an important part of examining how


the economy's done. We have to see a higher rate of growth. You saw the


figures out there? The survey data suggests those are more positive in


terms of the forward looking numbers, but the survey data in


terms to have outlook and the positive Septemberment amongst some


of the sectors, which are very important, are significant, and I


hope the Chancellor will back it with more infrastructure spending.


Cathy Jamieson, we have heard your leader accept that the �11. 5


billion, that spending cut envelope will be the starting point if you


win the election. You have opposed for three years every cut. Now you


have thrown in the towel and the Government's right on the deficit,


aren't they? The aren we are having the spending review is that the


Chancellor's got it wrong on the strategy, he hasn't achieved the


growth figures he promised or cut the deficit and he's borrowing more


than planned. As a responsible opposition, looking to be in


Government, what we have said is that we will have to accept the


overall spending envelope for the first year, but we'd not have done


what the Chancellor's done up to now and we'd make different choices.


What are the different choices? You have been talking about Universal


benefits. Are they going to go? have mentioned particularly the


issue about the onetering fuel allowances for the wealthiest of


pension pensioners. What about bus passes, free TV licences? We have


heard Ed Balls and Ed Miliband indicate those are not on the


agenda. The important point for the figures was that it showed that


manufacturing... Why not if you are talking about fairness? It's about


the cost involved in doing that, for one thing, but also bus passes, you


know, enables people to get around, it helps people with mobility and so


on. To go back to the figures, manufacturing and construction


sectors are not performing performing as well as we'd have


thought. Some unemployment figures show that it's beginning to work?


The sales figures showed improvements in manufacturing and


that's why we need structure. accept that for the ordinary family


out there watch, Stephen, things could not be tougher in terms of the


disposable income? Lowest living standards for a decade? It's a very


difficult time for the people out there. We have to make sure all the


cuts we are making, which are necessary, are cushioning for the


poorest in society and the richest will bear the brunt of the tax rises


and changes. We have got a Conservative Chancellor, a Lib Dem


can Chief Secretary, Lib Dem Business Secretary working together


to try and get growth going in the economy. But a huge part of the


budget is cuts. Why have you opposed cuts? Sweeping changes have been


made. We need time for the changes to bed down and what we, as the


Liberal Democrats have said, we don't want to ask for more from the


poorest in society until we have taken more off the rich. That's why


we are in favour of the mansion tax. We can't get agreement with


coalition partners on that issue, so we have agreed to park welfare


reform and tax rises on the rich and that will be an issue on the next


general election. In one sentence, more cuts to come? All the


projections, �23 or �24 billion for more savings in 2016, 2017, tax


rises, isn't that the reality of what we'll face? We have tried to


make sure we have given a tax cut to people in work by raising the


personal threshold. 2015-16, the year we are talking about this year,


we are looking a at a deficit of still �80 billion so it will be


spending control for some time to come I think.


There we have to leave it. Thank you all very much. From here, back to


you in the studio. It's coming up to midday here on BBC


Two and the BBC News Channel. In a moment, we'll cross live to the


House of Commons for Prime Minister's Questions after which the


Chancellor will get to his feet straight after the Prime Minister,


to deliver the spending review. Beautiful shot there of the Palace


of Westminster in what is a reasonable summers' day. Not many in


London so far, but this is a decent one. Stephanie Flanders joins us to


make up the BBC's three newsbling tiers assembling round the table on


occasions like this. If he's looking for another �11 billion of cuts,


Stephanie, does this mean he's assuming that even by 2015, there


won't be much of a recovery? You are quite right that all of the numbers


we are talking about today and all of the numbers the Chancellor's had


to work from in thinking whether or not we needed to have further


austerity are all based on what the office of budget responsibility


thinks is going to happen to the economy. They started off, when he


was writing his first plans in 2010, with a fairly pessimistic view of


what the recovery would be like. They knew it might not be a normal


recovery because we had a massive financial crisis. It turned out that


that obviously things were much worse. They now have - the reason


why we are looking at this cuts - they now have what many say would be


a gloomy view, not just about what's happened in the last few years be,


buzz what the economy is capable of. That's what makes the structural


hole in the budget that he's trying to fill so large. We might have


temporary borrowing if we had slow growth, it doesn't have to be


permanent, buts the Office for Budget Responsibility decided it was


permanent which is why we are here frankly. It's quite possible, when


you look at the forecasts now for 2015, even though it's only the


office of budget responsibility expecting us to going back to what


we thought would have been a normal trend growth rate in 2015, which is


seven or eight years after the crisis began. In the past, we have


had forecasts revised up. You might have to do more of course. The


directions of changes have gone in a negative direction, but it could be


better or could turn out to be better.


We got this picture, I think it was the Treasury released it last night,


Nick, I want you to tell us about this. What is the political


significance of this picture? half eaten burger, chips and diet


coke, the an austerity dinner at the Treasury. Politicians in action,


real guys, by the way, not out of touch is what Tweeting foe toes


allow you to say. Are we allowed to film or do interviews? No, but we


get these specially crafted, carefully produced images of what


spin doctors would like us to think politicians' lives are like. Having


been in that office under several Chancellors, there often is old


pizza boxes as the officials and the spim doctors and ministers sit


around a table until very late at Chancellor, you know. What can we


say? Do you know what kind of burger it was? You have not managed to find


that out? I resign on the spot!What is business going to be looking for?


I think business will broadly take the view that this isn't much of a


event for them. If he didn't deliver the cuts and therefore the outlook


Apology for the loss of subtitles for 81 seconds


for the deficit was worst... interest rates low. Perhaps the


for the deficit was worst... going to interrupt you admit that


Secretary said "work will begin immediately on 261 projects under


the priority school building programme. " Can the Prime Minister


tell the House how many have begun? What I can tell him is that


infrastructure spending under this Government has been higher than it


was under Labour and we have around �14 billion reserved for capital


spending on our schools. We have had to clear up the appalling mess left


by the Building Schools for the Future programme. The answer is that


261 schools were promised. Only one has started. Now perhaps you can


explain why. We've had to recover from the appalling mess of the


Building Schools for the Future programme. That is the mess that we


inherited, as well as a record deficit. But it is this government,


as the Chancellor will announce in a minute, that are providing half a


million extra school places. I don't think he knew the answer to that


one. In October 2011, he said he wanted to bring forward, I quote,


every single infrastructure project that is in the pipeline. So out of


576 projects set out, how many have been completed? Our annual


infrastructure investment is �33 billion a year. That is four billion


more every year than ever achieved under Labour. Now let me give him


the figures for road schemes. We are investing more in major road schemes


in each of the first... Order. The answer from the Prime Minister must


be heard. Questions to him, from which ever side of the House, must


be heard. It is very clear and simple. It is called democracy.


You cannot build a nuclear power station overnight. By the way, they


had 13 years, they didn't build a single one. Let me give him the


figures. This government, on rail, is electrifying more than 300 miles


of railway routes. Perhaps he could tell us how many were electrified


under Labour, how many? Nine miles. That is the Labour record that this


government is recovering from. new hospitals under a Labour


government. 3700 schools rebuilt under a Labour government. 3500 new


children's Centre all under a Labour government. He's got no answer so


let me tell him the answer again. The answer is seven out of 576, and


five of them were started under the last Labour government. He said it


takes a long time to complete these projects. I thought he might say


that. 80% of them haven't even been started, despite the promises of two


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


another one. Last year, the government said new buying guarantee


scheme would help 100,000 people buy a new home. How many has it helped


so far? It has helped thousands of people and been welcomed by the


entire industry. He talks about what was built under a Labour


government, we saw the results. A PFI scheme that we are still paying


the debt on. We saw the results at 11% of GDP budget deficit that this


government will cut in half. That is the proof of what we are doing. We


all know that the one question he has two answer is will he now admit


he wants to put borrowing up, will you admit it? Every time I come to


prime ministers questions, I ask a question and he doesn't and other


question, he just asks me one. The only fact this House needs to know


about borrowing is that contrary to the promised the Chancellor made in


his Autumn statement, it went up last year. That is the truth. Let me


Apology for the loss of subtitles for 81 seconds


answer the question he didn't know the answer to. He have to say that


is why half the country think he is from the Muppets. Will you admit


borrowing would go up under Labour? Borrowing was up last year. We said


we are all in it together, but living standards are falling. He


promised to get Britain building, they haven't. All you need to know


about this Chancellor's Spending Review is that British people are


paying the price for their failure. Mr Speaker, let us remember what the


leader of the opposition said at the time of the last Spending Review. He


told us unemployment would go up, it's gone down. He told us crime


would go up, it's gone down. He told us volunteering would go down, it's


gone up. He told us that poorer students wouldn't go to university,


the percentage as has gone up. We told us our immigration policy


wouldn't work, but we've cut immigration by a third. As ever,


wrong about the economy, wrong about everything, never trusted by the


British people. Thank you, Mr Speaker. Today, the government


publishes the spending round for 2015 to 2016. Can the Prime Minister


confirm that it rejects the representations to borrow less by


borrowing more, as proposed by the party opposite? My honourable friend


makes a very good point. On Saturday, the leader of the Labour


Party told us there would be iron discipline on spending. On Sunday,


the Shadow Chancellor was asked five times on the television and admits


that, yes, borrowing would go up. They want to borrow less by


borrowing more. They want to spend less by spending more. They want to


cut welfare by spending more on welfare. No wonder it's not just


people at Wimbledon saying new balls, please! Order. Order. Order.


In congratulating the honourable gentleman on his birthday, I called


Mr David Winick. Is the Prime Minister aware how shocking it was


that the police apparently spent more time investigating the parents


and friends of Stephen Lawrence than the racist murder itself, which took


place in 1993? Is the Home Secretary, when she meets Mrs


Lawrence, is she going to apologise for what occurred, and is it really


right for the police to investigate itself? I think the honourable


gentleman makes an extremely serious point. The Lawrence family have


suffered appallingly. They lost their son. There was the failure to


investigate properly for year after year. Now they hear these


allegations that the police were trying to undermine them rather than


help them. The Home Secretary set out in the House on Monday these two


enquiries, independent enquiries already under way. She has met again


with Mark Ellison to see this morning, to make sure his enquiry


will cover the allegations that were made overnight about the bugging by


the police of a friend of Stephen Lawrence. But nothing is off the


table. If more needs to be done, if further investigations or enquiries


need to be held, they will be held. This is not an acceptable situation


and we must get to the bottom of it. My back to see constituency is


attracting a large amount of inward investment for major infrastructure


projects from around the world. Does the Prime Minister agree with me


that one of the ways in which we are restoring the UK's credibility


overseas is by dealing with our debts and showing how we fund public


spending properly? Battersea Power Station, which for all those years


under Labour stood there completely empty and unused, the redevelopment


is going to be starting this year. Because under this government we


take infrastructure seriously, we get investors to come into our


country and beget project started. Unlike the wasted years under


Labour. Never Battersea, what about Bassetlaw? In its last six years,


the Labour government delivered �225 million worth of major


infrastructure projects. Can the Prime Minister confirm that under


his three years there has been zero delivery of such projects, the row


starts of such projects, and when will the Prime Minister stopped


faffing around and get the new flyover and the new Selby Park


School, guaranteed by the last government, started in my


constituency? The last government made a lot of guarantees, they wrote


a lot of checks but they couldn't deliver. They left us with this


enormous deficit. Let me give him the figures. Our spending on capital


spending is higher than what Labour planned. The annual infrastructure


investment is �33 billion. That is �4 billion higher than they achieved


even in the boom years. That is what happened. They had an unaffordable


boom, a painful bust and it is this government that is delivering the


recovery. The Prime Minister knows Ipswich well. He knows it has some


of the poorest wards in the country. He will know that two of those wards


were promised schools by the previous government. They didn't


deliver them in 13 years. I've just been to the topping out ceremony of


one of them delivered by this government. When it comes to


promises for the least advantaged people in our community, they are


very good at promising. We deliver. My honourable friend is right. They


don't like hearing the evidence of the new schools being built by this


government in difficult times. Also, when we talk about the East of


England, of course, year after year there were calls for improvements to


the motorway. Never delivered, delivered by this government.


staging of the G8 proved that Northern Ireland is open to the


world for business. Now we need the business of the world to come to


Northern Ireland. Can the Prime Minister give us an outline of what


he will do in conjunction with the American administration and the


Northern Ireland executive to deliver a very successful inward


investment conference in October, to deliver thousands of much-needed


private-sector jobs. I'm looking forward to coming to Northern


Ireland for the vital investment conference. I think what we will be


able to demonstrate is not only the success of the G8 and the great


advertisement that was for Northern Ireland, but the coming together of


the UK Government and the Northern Irish assembly, with the plans for


economic development, and also for breaking down the barriers within


Northern Ireland between different communities. I think that shared


future agenda is not just important for the future of society in


Northern Ireland, it's also important for the future of our


economy. . What reassurance can the Prime Minister give the women in


Afghanistan that the Government will continue efforts to make sure that


there is no return to the threats to women that they've seen in


Afghanistan in the past? My right honourable friend makes an


important point and we should continue to support the Afghan


constitution which gives important guarantees in this regard. I spoke


yesterday to President Karzai, including about this issue of the


Afghan constitution and how important it is. We have making a


major investment by supporting the forces and the programme to help


secure these sorts of advances in Afghanistan that we all want to see.


Thank you, Mr Speaker. Further to the question that the Prime Minister


failed to answer last week, can he confirm that he's never had a


conversation with Lynton Crosby about alcohol pricing or cigarettes?


The question is not, has he been lobbied, the question is, has he had


that conversation? As I said last week, I've never been lobbied by


Lynton Crosby about anything, but the difference between me and


frankly every member of the party opposite is, I can also put my hand


on my heart and say I've never been lobbied by Trade Union after Trade


Union making donation after donation, fixing Parliamentary


selection after Parliamentary selection. That is the real problem


in British politics and it's time we Thank you, Mr Speaker. With Armed


Forces Day... THE SPEAKER: It's a very important


matter! Mr Berry must be heard. Mr Berry?


Thank you, Mr Speaker. With Armed Forces Day in mind this weekend,


would my right honourable friend join me in supporting a campaign


being brought about in Rossendale and Darwin being supported by local


newspapers encouraging local residents to pack boxes to those


serving in Afghanistan. We hope to have packed 500 by the weekend.


congratulate my right honourable friend and for everyone taking part


in this excellent initiative, I think actually these boxes - I've


seen them not only being packed here in Britain but also unloaded in


Afghanistan - I can see the huge pleasure and support Thai give to


our troops in Afghanistan. I also think we should continue to use the


money that's been raised in fines from irresponsible bankers over the


club lib inquiry continue to use that money to invest in the Armed


Forces covenant. Under this Government, we are making real


progress in delivering that help and support to Armed Forces and their


families and their communities. Thank you, Mr Speaker. In October


2010, the Prime Minister told the Conservative party Conference in


five years e' time, we'll have balanced the books. That promise is


going to be broken, isn't it, Prime Minister?


We have cut the deficit by a third, we'll cut it further by the next


election, but frankly, coming to this House, complaining about


borrowing, when you've got plans to put it up, is a pretty odd political


strategy. That's the question he's got to ask his frontbench - why, if


borrowing is a problem, is the Labour policy to put it up? Thank


you, Mr Speaker. In 2008, Labour buried three reports


warning of a fear of culture in the NHS and inspections. Now we find the


CQC has buried concerns over baby deaths. Will the Prime Minister


support a root and branch review of the sinister culture of cover-up in


our NHS over the last decade? First of all, can I commend my right


honourable friend nor campaign she's fighting for, openness and


transparency and clarity in our NHS. She does make an important point,


which is, there was a culture under the last Government of not revealing


problems in the NHS. The former Health Secretary is shaking his


head, but frankly, this is what the former Head of The CQC, Baroness


Young, appointed by the last Government said. I know they don't


want to hear it but francsly they are going to have to because it's


important to understand the culture that went wrong under Labour. "There


was huge Government pressure because the Government hated the idea that a


regulator would criticise it by didn't of criticising one of the


hospitals or one of the service ofs it was responsible for. " That's


what Barbara young said. She said "we were under more pressure when


the right honourable gentleman became a minister under the


politics. " There was a culture problem under Labour and the sooner


they admit it, the better. We now know from the latest ONS


figures that borrowing did rise last year and the Prime Minister will


recall that the Chancellor of the Exchequer of two years ago said, we


have asked the British people for all that is needed, there's no need


to ask for more. Today, why is he asking for more?


We have to have a Spending Review to cover the year 2016-16 which wasn't


covered by previous Spending Reviews. We have got the deficit


down by a third. It is hard, painful and difficult work, but frankly, we


are clearing up the mess left when he was a minister in the last


Government -- 2015-2016. Thank you, Mr Speaker.


16-18-year-olds can receive free school meals in schools, academies,


free schools and university keckical colleges but not in sixth form


colleges and in further education colleges like those in my


constituency. Will the Prime Minister act now to end this clear


injustice left by the party opposite?


I am happy to look at this issue. School meals are very much in the


news this week because it's a week when we should be promoting healthy


eating in schools. We have to this very carefully about how best to use


the education budget to get money directly to schools for all our


children. I think the Prime Minister will


agree with me that the OECD figures this morning, the report, shows the


gravity of youth unemployment in our country, and can we please, at this


late stage in this Government, have a determination to stop unemployment


up to the age of 25 as they do in the Netherlands, why can't we


deliver that for young people in our country? I absolutely agree that


youth unemployment is a scourge. There is good news in the fact that


unemployment has been coming down, and youth unemployment has been


coming down, but where he's absolutely right is that it


shouldn't be the case that we have youth unemployment at 55% in Spain


and yet under 8% in Holland and we need to make sure here in the UK


that we are performing alongside Holland and Germany and the


countries with the lowest rates of youth unemployment. We do that by


having a flexible Labour market, helping businesses invest and locate


here. As we stand today, this untri, employment is growing faster here


than it is in any other G7 country, including Germany. So we are doing


the right thing, but we need to focus more on young people.


I have the Prime Minister's helpful recent letter to me underlining in


his own hand that housing development does not trump the green


belt. I gave this letter to Martin Pike, the planning inspector


reviewing Reigate and I regret to report that he upheld the principal


that green fields in the green belt couldn't be identified for


development against the wishes of local people. Will he now direct


amendment of the national planning policy framework to better protect


green fields in the green belt from unwanted development?


What I say to my right honourable friend and I remember underlining


that part of the letser is the rules about green belt haven't changed. A


local authority can only change the green belt by taking something out


and putting something back in in consultation with local people. I


know he's having that discussion with his local authority. I'm


convinced that we can get the balance right between viement


protection on the one hand and the need for more housing on the other.


This afternoon, I shall vote enthusiastically for the high speed


preparation Bill. But, can the Prime Minister explain why he's instructed


his officials and ministers to oppose the extension of the


trans-European network north of London which will mean that it would


stay in the European Union, that High Speed Two and other transport


links to the north of England will not be eligible for funding?


Obviously we'll look at all the ways we can increase the funding


available for high speed rail, but, as he said, it's very important, not


only to achieve the high speed rail between London and Birmingham, but


to build the next stages as well. Thank you, Mr Speaker. The Prime


Minister knows how hard the structure MPs have worked to get a


direct train service from London to Shrewsbury. Virgin want to implement


that direct service in December. Unfortunately, Network Rail are


trying to prevent that from happening. We were the only county


town in England without a direct train service to London. Will he


ensure this blockage is resolved? I'm happy to say that the Transport


Secretary will meet with him to discuss this issue. In terms of the


answer, I gave a moment ago on high speed rail, we have to recognise


that there is a lot of congestion on the existing rail lines and high


speed rail will help free up services so we can have more direct


connections, particularly to important town towns like


Shrewsbury. The Department for Business prop


proses to abolish the protection for the name Sheffield that guarantees


to quality of our manufacturered goodslet -- proposed. The MoD


proposes to move the headquarters of our Territorial Army regiment out of


the City. What has this Government got against the businesses and


people of Sheffield? First of all, on the issue of the -


Sheffield is a fantastic city, a very important part of Brun's


industrial base and aisle proud of the fact that through the Regional


Growth Fund and other schemes, we are investing in the future of


Sheffield - on the issue of the reserves, we are putting more money


into the reserves, an extra �1. 5 billion to make sure we can get the


reserves up to the level of strength needed for force 2020. On the other


issue, I'm reliably informed that she should have some confidence.


Military bands are important, not only to Her Majesty's Armed Forces,


but also the civilian population. The last Labour Government cut the


number of Army bands by a quarter. In this Armed Forces week, will the


Prime Minister give assurances that will will be no further cuts in the


Army bands? The assurance I can give to my right


honourable friend, as the Chancellor will say in a minute, yes of course


we've had to make difficult fir sills in the Ministry of Defence,


but there 'll be no further reductions in the size of our Army,


Nay very or Air Force and we'll continue with an equipment programme


that I think is second to none in terms of the capabilities we'll be


giving our brave, arm ed sfs services -- armed services


personnel. Mr Speaker, you will recall that it


was over a year ago, and you will probably know the exact date, when


the Prime Minister announced internal inquiry to be held by the


lustrously named Lord Gold, into the cash for access scandal in which


major Conservative Party donors were richly, if not Royally entertained


at Downing Street and Chequers. When does the Prime Minister plan to


produce the results and publish the result of this inquiry?


I'm very happy to set out for him all of the things that Lord Gold


recommended and all the steps that we'll be taking. But as we do so,


perhaps he could impose on his frontbench on the issue of donations


and he can ask them when they are going to pay back the taxes that


they managed to dodge from their donor? Thank you, Mr Speaker. School


dinners are a vitally important thing ensuring children eat


healthily and in helping tackle childhood obesity. Would my right


honourable friend the Prime Minister join me in welcoming the launch of


national school meals week taking place in the Jubilee Room this


afternoon? I certainly join my right honourable friend. It's a very


important cause because we have several problems over the years with


school meals, they are not being attractive enough for young people


wanting to take them on, and also, having problems with obesity as


well. Getting this right, which is something that has been happening


over recent years, is extremely important. I speak as someone with


two children who enjoy their school meals and I want the school to go on


winning the battle for school meal, rather than having to do the packed


lunch. The revelation that the Metropolitan


Police may have withheld evidence from the Macpherson Inquiry, as


quite rightly been met with public derision, but the Prime Minister's


answer earlier on didn't go far enough. There's the public that are


not satisfied with the police investigating the police, nor will


an inquiry that's held in secret, no matter how eminent the QC satisfies


public opinion, is will he give undertakings to hold a public


inquiry with the power to summon people and hear evidence under oath?


I rule nothing out. The two enquiries under way, one is Mark


Anderson QC, who played a very major role in prosecuting some of those


responsible, who met with the Home Secretary today. We need to make


sure that they have all the powers and everything they need. As I said


clearly, if we need to go further to get to the truth, we will. As the


spending round is published, will the Prime Minister assure the House


that HMRC will be given the resources to clamp down on tax


avoidance, like the �700,000 avoided by the party opposite? My honourable


friend makes a very good point. I'm going to mention this at every Prime


Minister 's questions. It is a great pleasure to get this in again. They


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


about time they realised what hypocrites they are and paid up the


money. With over 400,000 house building plots with planning


permission remaining an built on in this country, does the Prime


Minister agree with me that we should now put pressure on companies


to start building and creating jobs, rather than just the blue


waiting for their profits to increase? I agree with the


honourable weight -- honourable lady, that we need to do more to


encourage businesses to build on the plots they already have. That's why


we've -- we've taken unprecedented steps that are making available


the beginning of the year. Would he steps that are making available


mortgages to young people. All The Cancer Drugs Fund has saved many


lives. It has made available drugs to over 30,000 people. It has been


expanded to include some treatments as well as drugs. I want to see this


as a record we build on and in no way put at risk. Last week the Prime


Minister said that people on these benches had forgotten about the


bedroom tax. I can assure him that my constituents certainly haven't.


In my city last week, only 20 31 bedroomed homes were available for


let. Of those, four of them had over 200 applicants. When is the Prime


Minister going to admit that this is not the best way of reducing the


housing benefit bill? The point I'd make is we are removing the spare


room subsidy because it's right to be fair between people in private


rented accommodation and people in socially rented accommodation. But


this, in a way, is the perfect thing for the Spending Review we are about


to hear about. Labour have told us they are now going to be responsible


about spending, they will accept the cuts that have been made. We hear


week after week, backbencher after backbencher, frontbencher at


frontbenchers, complaining about the difficult decisions we've had to


take and promising to reverse them. That is why they have no credibility


immediately be on his feet and deliver the Spending Review. George


Osborne. This coalition came into office with a commitment to address


with firmness and resolve, one of the biggest economic crises of the


post-war era. And the action we have taken, together with the British


people, has brought the deficit down by a third, helped a record number


of people into work and taken our economy back from the brink of


bankruptcy. And it allows us to say that while recovery from such a deep


recession can never be straightforward, Britain is moving


out of intensive care and from rescue to recovery. Today we


announce the latest action to secure the recovery. We act on the half of


every tax payer and every future taxpayer who once high quality


public services at a price our country can afford. We act on behalf


of everyone who knows that Britain has got to live within its means.


And we have applied three principles to the spending round I set out


today. Reform, to get more from every pound we spend. Growth, to


give Brittany education, enterprise and economic infrastructure it needs


to win the global race. -- to give Britain. And fairness, making sure


we are all in it together, ensuring those with the broadest shoulders


bare the largest burden. And making sure the unfairness of the something


for nothing culture in our welfare system is changed. We've always


understood that the greatest unfairness was loading debts onto


our children that our generation didn't have the courage to tackle


ourselves. We've always believed, against much opposition, that it is


possible to get better public services at lower cost. That you can


cut bureaucracy and boost enterprise by taking burdens off the back of


business. In the face of all the evidence, the opposition to these


ideas has collapsed into incoherence. We've always believed


that the deficit mattered, that we needed to take tough decisions to


deal with our debts. And the opposition to that has collapsed


into incoherence, too. I announced the next stage of our economic plan


to turn Britain around. Mr Speaker, let me start with the overall


picture on spending. In its last year in office, the previous


government was borrowing �1 in every �4 that it spent. It was a record


for a British government in peace time and a calamitous risk with our


economic stability. As the note we saw again this week from the


outgoing chief secretary put it, I'm afraid there is no money. So we


acted immediately. Three years ago, we set out plans to make savings and


to reduce our borrowing. Instead of the �157 billion the last government


was borrowing, this year we are set to borrow �108 billion. That is �49


billion less in borrowing. That is virtually the entire education


budget. So we made real progress putting right what went badly wrong.


But while we've been acting, the challengers from abroad have grown,


the eurozone in crisis, rising oil prices, the damage from our own


banking crisis, worse than anyone feared. And the truth is, Mr


Speaker, we have to deal with the world as it is, not as we would wish


it to be. So this country has to continue to make savings will stop I


can report to the House that the biggest single saving we made in


government is the �6 billion a year left we are paying to service our


debts than the previous government budgeted for. There that number in


mind when you hear the opposition complaining about cuts. The deficit


has come down by a third, yet at over 7% it remains far too high, so


we must continue to take action. Not just because it's wrong to go on


adding depth to our children's soldiers, but we know because of the


global turbulence of the last few years that the economic risks are


real and the recovery has to be sustained. If we abandon our deficit


plan, Britain would be back in intensive care. So the figures today


show that until 2017 to 2018, total managed expenditure, in other


words, the total amount of government spending, will continue


to fall in real terms at the same average rate is falling today. The


task before us today is to spell out what that means four 2015 to 2015.


Total managed expenditure will be �745 billion. To put that huge sum


into context, consider this. If government spending had been allowed


to rise through this Parliament at the average rates of the last three


decades, that total would have been �120 billion higher. This government


has taken... Order, order. You must not have to shout to be heard.


Members know that I will always accommodate the interests of


backbenchers on both sides in scrutinising these matters


intensively. But the Chancellor and in due course the Shadow Chancellor


must be properly and fairly heard. This government has taken


unprecedented steps to achieve this expenditure control. But now we need


to find �11.5 billion of further savings. I want to pay a personal


tribute to my right honourable friend, the chief secretary, for the


huge effort he has put into helping deliver them. Finding savings on


this scale has not been easy. These are difficult decisions that will


affect people in our country. But there never was an easy way to bring


spending under control. Reform, growth and fairness are the


principles. Let me take teaching term and start with reform, and the


obligation we all have in this House to ensure we have more for every


pound we spend of taxpayers' money. With the help of my right honourable


friend the Minister for the Cabinet Office, we have been combing through


Whitehall -- tall, renegotiating contracts and reducing the size of


government. Cutting money the previous government was spending on


marketing and consultants, reforming government IT and negotiating hard


on behalf of the taxpayer has already saved almost �5 billion. In


this spending round we find a further �5 billion of efficiency


savings. That is nearly half of the total savings we need to achieve. We


are reforming pay in the public sector. We are holding down pay


awards. Public sector pay rises will be limited to an average of up to 1%


for 2015 to 2016. But the biggest reform we make an pay is too


automatic progression pay. This is the practice whereby many employees


not only get a pay rise every year, but also automatically move up a pay


grades every single year regardless of performance. Some public sector


employees see annual pay rises of 7%. Progression pay can I best be


described as antiquated. At worst, it's deeply unfair to other parts of


the public sector who don't get it. And to the private sector who have


to pay for it. So we will end automatic progression pay in the


civil service by 2015 to 2016. We are working to remove automatic pay


rises simply for time served in our schools, NHS, prisons and police.


The armed forces will be excluded from these reforms. Keeping pay


awards down and ending automatic progression pay means that for every


pound we have to save in central administration, we can better


limited job losses. I don't want to disguise from the House that there


will be further reductions in the number of people working in the


public sector. The old BR has forecast that the total number of


people working for the government will fall by a further 144000 x 2015


to 2016. I know that for those affected this is difficult. That is


the consequence of the country spending far beyond its means. When


I presented the spending round three years ago, I said then that around


half a million posts in the public sector were forecast to have to go.


That is indeed what has happened. We are saving �2 billion ago with a


civil service now smaller than at any time since the war. But I also


said three years ago that I was confident that job creation in the


private sector would more than make up for the losses. That prediction


created more controversy than almost anything else at the time. This is


what the opposition said. The Shadow Chancellor called it a complete


fantasy. Instead, every job loss that the public sector has had has


been offset by three new jobs in the private sector. In the last year,


five new jobs have been created for The Treasury will lead by example.


Our resource budget will be reduced by 10%. The Cabinet Office will also


see its resource budget reduced by 10%. But within that we will


continue to fund support for social action, including the National


citizens service, 90,000 places will be available for young adults in the


citizens service next, rising to 150000 x 2016. It's a fantastic


programme that teaches young people about their responsibilities as well


as their rights, and we are expanding it. Local government will


He has agreed to a further 10% saving in his resource budget. But


we are committing to over �3 billion of capital investment in affordable


housing. We will extend the troubled families programme to reach 400,000


more vulnerable families who need extra support. We are proving that


you can save money and create more progressive government. That is the


right priority. Here is another priority - helping families with the


cost-of-living. Because we know times are tough, we have helped keep


mortgage rates low, increase the personal allowance, cut fuel duty


and we have frozen the council tax. That council tax freeze is due to


come to an end next April, and I don't want that to happen. So I can


tell you today, that because of the savings we've made, we can help


families with their bills, we will fund councils to freeze council tax


for the next two years. That's nearly �100 off the average council


tax bill for families, bringing the savings to �600 over this


Parliament. It demonstrates our commitment to all those who want to


work hard and to get on. There's one more thing we can do to


help the cost-of-living in one part of the country. Those in the


south-west face exceptionally high water bills. Nothing was done until


we came to office. Now we've cut the water bills by �50 a household every


year until 2015. My right honourable friend, the member for Camborne and


Redruth and many others, have campaigned to extend that rebate


beyond 2015 and I'm happy to confirm today that we'll do that. Taking


money out of the cost of Government and putting it into the pockets of


families is what we mean by reform. Local government has already taken


difficult decisions to reduce staff numbers, share services and make


savings, and I want to pay tribute to mayor rim Coppull for all he's


done in showing how this can be achieved. We were told by the scare


mongerers that savings in local government could decimate local


services. Instead, public satisfaction with local council


services have gone up. That is because with our reforms,


communities have more control over their own destiny, that's because we


have devolved power and responsibility to manage budgets


locally. That's because we have let councils benefit from the tax


receipts that come when the local economy grows.let today we give more


freedom, including greater flexibility among assets and have


greater emergency services. I want to thank the honourable member for


Bourne moth East for services in this area which has helped us. We


are embarking on major reforms to the way we spend locally through the


single local growth fund that Lord Heseltine proposed. This will be �2


billion a year, that's at least �10 billion over the next Parliament and


that is a sum the Local Enterprise Partnerships can bid for, details to


be set out tomorrow. Our philosophy is simple - trust people to make


their own decisions and they'll urgely make better decisions. But in


return for the freedoms, we have to ask local government for the kind of


sacrifices central Government is making. The local government and


resource budget will be reduced by 10% in 2015-16, but when all the


changes affecting local government I will set out are taken into account,


including local income and other central government funding, local


government spending reduces by around 2%. I set out today the block


grants to the devolved administrations. Because we have


prioritised health and schools in England, this feeds through the


Barnet formula to resource savings of around 2% in Scotland, Wales and


Northern Ireland. The Scottish resource budget will be


set at 25. 7 billion pounds and Scotland will benefit from new


capital borrowing powers of almost �300 million. Being part of the


United Kingdom means Scotland will see its capital spending power


increase by almost 13% in real terms in 2015-16. It's rightly for the


Scottish Parliament to decide how best to use that. That is devolution


within a united kings Dom delivering. Delivering to Scotland.


The Welsh budget will be �13. 6 billion and we'll shortly publish


our response on further devolution of taxation and borrowing. When we


do so, Well be able to say more about the plans to improve the M4 in


South Wales that my right honourable friend for the Vale of Glamorgan and


others have been campaigning for. The Northern Ireland resource budget


will be �9. 6 billion and we have agreed to provide an additional �31


million in 2015 to help the Police Service of Northern Ireland tackle


terrorism. Those police officers do an incredibly brave job on our


behalf and we salute them. Separately, we'll make 10% savings


to the Scotland, Wales and Northern Ireland officerings.


Mr Speaker, we believe that the cultural heritage of our nations are


not just an economic asset but have an intrinsic value too. When times


are tough, they too must make a contribution to the savings this


country requires. The Department for Culture, media and sport, will make


savings of 7% in its resource budget, elite sports will be


protected while the funding of community sports, arts and museums,


will be reduced by just 5%. But because we recognise the value of


our great galleries and museums and English Heritage, we are giving them


much greater freedom from state control which they have long called


for, applying our reforming pri across across-the-board, empowering


those on the front line who know best what the Director of The


British Museum calls good news in a tough economic climate. While we are


at it, we'll make sure that the site of the Battle of Waterloo is


restored in time for the 200th anniversary, to commemorate those


who died there and to celebrate a great victory of coalition forces


and very discredited former regime armed forces in the world and we


intend to keep it that way. The first line of national defence


is sound public finances and a balanced defence budget. My right


honourable friend, the Defence Secretary, is helping deliver both.


He and his predecessor, my right honourable friend for North Somerset


have filled the �38 billion black hole they inherited in the finances


of the Ministry of Defence. We continue to ensure we get maximum


value for money from what will remain. 2% of our GDP, one of the


largest defence budgets in the world. The defence resource budget


will be maintained in cash terms of �24 billion, the equipment budget


will be �14 billion and will grow by 1% in real terms thereafter. We'll


further reduce the civilian workforce and allowances,


renegotiate more of the hopeless PFI contracts signed in the last decade


and overhaul the way we buy equipment. My right honourable


friend, thement be, has rightly been clear throughout that he's not


prepared to see a reduction in Britain's military capabilities.


This spending round not only protects the capabilities, but


enhances them, with the latest technologies. We will not cut the


number of soldiers, sailors or airmen. We need them to defend our


country. We'll give them the best kit to do their job. The new


aircraft carriers, submarines, stealth fighters, destroyers and


state-of-the-art armoured vehicles. We also make a major commitment to


invest in cyber, the new frontier of defence, and a priority for this


government. We will look after the families


who've lost their loved ones and those who've been injured protecting


us lock after the wars are over. We previously committed to the military


to five years, today easy will commit to fund the Armed Forces


covenant permanently and we'll do this from the money we have


collected from the LIBOR fines, those who represented the very worst


values will support those who represent the very best of British


values. Our veterans will not be forgotten.


The Intelligence Services are on the frontline too.


Often heroically, these they protect us. We'll protect them in return


with a 3. 4% increase in their combined resource budget. The


Foreign Office is the public face of diplomacy and my right honourable


friend, the member for Richmond, is quite simply the best Foreign


Secretary we've had in a generation. He too has demonstrated how we can


make our taxpayers money go further, while making savings in his budget


he's managed to expand our network of embassies in the emerging world


and focus his diplomats on Brun's commercial interests. There 'll be


further savings in that budget of 8% in 20 #15rks but my right honourable


friend is still committing to strengthen our embassy network in


high growth markets from Shanghai to Abuja -- 2015. The Foreign Office


protects our values abroad. The Home Office protects our values here in


Britain. Police reform is a model of what we can achieve across


Government. Police forces are more accountable to the public with


modern working practices, the latest equipment and democratic oversight.


All on a... Yes, she is the best Home Secretary!


And a hell of a lot better than the onings that went -- ones that went


before! And what was the prediction from the benches opposite? They


said, crime would rise. What has happened instead? Crime has fallen


by more than 10%. Thanks to the hard work of the police officers up and


down this country, crime is at its lowest for 13 years. What was the


prediction in we heard from the benches opposite about the borders.


They said the cuts would mean we were not going to be able to control


immigration. What has happened instead? Net immigration is down by


more than a third. This Home Secretary is demonstrating


that responsibility budgets and reform can deliver better services


for the public. In 2015, she will work with a resource budget of �let.


9 billion, a saving of 6% -- 9. 9 billion.


There will be savings in the department, some visa fees will go


up, but protecting Britain from the terrorist threat remains top


priority, so I can confirm the police counter-terrorism budget will


not be cut at all. For the police to do their job, they need a criminal


justice system that works a lot better. A case of common assault can


take 200 days to pass through the courts, involves five separate sets


of case papers and is generated on three different computer systems. In


some prisons, the cost of keeping a prisoner is �40,000 a year. In


others, it's one third of that. The cost of legal aid per head is double


the European average. My right honourable friend the Lord


Chancellor is reforming all of these things and by doing that, he'll make


savings of 10% in his departmental budget.


He'll do that while offering for the first time Probation Services for


those who've served short sentences to help end the revolving door of


crime and reoffending. Mr Speaker, it's an example of the


reform we are bringing across government and every step of the


way, every penny saved, every programme reformed, every


entitlement reduced, every difficult choice taken, has been opposed by


vested interests and those who got Britain into this mess in the first


place. We will not let up. I will not let


that happen. The reform will continue.


Now, Mr Speaker, government spending does not alone create sustainable


growth. Enterprise does.


The job of the state is to provide the schools, the science, the


transport links and the reliable energy that enable business to grow.


Britain was once the place where the future was invented from the railway


to the jet engine to the worldwide web. We can be that country again


and today we set out how to get there, a huge amount of innovation


and discovery still goes on. Successive governments of all


colours have put short-term pressures over the long-term needs


and refused to commit capital spending plans that match the


horizons of a modern economy. Today, we change that.


We commit now to �50 billion of capital investment in 2015 from


roads to railways, bridges to Broadband, science to schools, it


will amount to over �300 million of capital spending guaranteed to the


end of this decade. Today we raise our national game. This means that


Britain will spend on average more as a percentage of its national


income on capital investment in this decade, despite the fact money is


tight, than in the previous decade when government spending was being


will be set out. With specific plans for more than �100 billion of


infrastructure projects. But this is what it means for departments. The


Department for Transport will make a 9% saving in its day-to-day resource


spending, bearing down on the running costs of Transport for


London and on Reagan Administration. It will rise to �9.5 billion, the


largest rise of any part of government. And we will repeat that


commitment for every year to 2020. We are already massively expanding


investment on major road schemes, but we will do more. So we are


announcing the largest programme of investment in our roads for over


half a century. We've already expanded our investment in the


railways, but we will do more. So we are committing to the largest


investment in our railways since the Victorian age. And with the


legislation before this House today, we should give the green light to


HS2, a huge boost to the north of England and a transformation of the


economic geography of this country. Here in London, we are digging


Crossrail, the largest urban infrastructure project in Europe.


But we will do more. Looking now at the case for Crossrail 2, linking


London from north to south. And we are going to give the mayor almost


�9 billion of capital spending and additional financing power to the


end of this decade. He's a lot better than Ken Livingstone, that's


for sure! Mr Speaker, investing in our economic infrastructure also


means investing in energy. So we will provide the certainty investors


are crying out for in Western countries. This country is already


spending more on renewables than ever before. Now we will provide


future strike prices for low carbon. We are restarting our civil


nuclear programme, when other countries are unable to continue


theirs. Our exploitation of gas and the North Sea are second to none.


Now we make the tax and planning changes that will put Britain at the


forefront of exploiting shale gas. We will provide our country with the


energy of the future at a price that we can afford. And, taken together,


this should support over �100 billion of private sector investment


in energy. The Department for energy and climate will do this while


reducing -- dissing its budget by 8%. The Department of rural affairs


will see a 10% reduction. But we will set out plans for a major


commitment to nuclear defences for the rest of this decade.


Prioritising long-term capital through day-to-day cost savings are


exactly the tough choices that Britain should be making. It is not


enough to have roads and power stations and flood defences. These


are just the physical infrastructure you need to compete in a


21st-century. We need the intellectual capital, too. This


country needs to invent and pioneer and export around the world. That


means backing the Department for business that helps us to do this.


It means taking tough decisions about what we should support. My


right honourable friend has agreed to a reduction of 6% in the cost of


the department. That means we are making savings to student


maintenance, keeping grants but not increasing them, and the cost of the


central department will also be cut further. But this means that within


this reduced budget, we can put more money into apprenticeships and


continue with the dramatic increase in support we provided to exporters.


And we're not going to shift medical training and research out of this


department, because they are working well where they are. In this


department, too, we can shift from day-to-day spending to a huge 9%


increase in capital investment will stop this includes a huge investment


in science. Scientific discovery is first and foremost an expression of


the relentless new research to learn more about our world, but it's also


an enormous strength for a modern economy. From synthetic biology to


graph scene, written is very good at it and we are going to keep it that


way. I am committing today to maintain the resource budget for


science at �4.6 billion, to increase the capital budget for science in


real terms to �1.1 billion and to maintain that a real increase to the


end of this decade. Investment in science is an investment in our


future. So, yes, from the next generation of jet engines to


cutting-edge supercomputers, we say keep inventing, keep delivering,


this country will back you all the way. But when you've got


infrastructure and you've got science, you still need the educated


workforce to make it happen. And because of our ongoing reforms to


our universities, they are now better funded than before. People


will remember that the reforms to higher education were bitterly


contested in this House. We remember the scaremongering about fees, the


claims that they would destroy social mobility, put off students


from poorer communities applying, and what has happened since? The


highest proportion of students from the most deprived neighbourhoods


applying to university 's ever. And we should all welcome that. But


there's no greater long-term investment a country can make than


in the education and skills of children. Because of the tough


decisions we've taken elsewhere, we've been able to invest in


education and accelerate school reform. When we took office, our


country's education system was falling behind other parts of the


world. Now thanks to the brilliant programme of reform by my right


honourable friend the Education Secretary and the schools Minister,


we are once again leading the way. We've applied our reform principles


here, to. Turning the majority of secondary schools into academies. In


this spending round, this momentum for reform will grow. So the


education Department's overall budget will increase to �53 billion,


and school spending will be protected in real terms, fulfilling


the pledge we made at this Parliament for all offers


Parliament. And we will transfer power and money from town halls and


central bureaucracy to schools, so that more of this money for


education is spent on education. While grants to councils and


spending on central agencies are reduced, the cash going to schools


will go up. I can announce today that school spending will be


allocated in a fairer way than ever before. School funding across the


country is not equally distributed. But distribution on a historical


basis does not have a logical reason. The result is that some


schools get much more than others in the same circumstances will stop it


is an affair and we are going to put it right. Many MPs from all sides of


this House have campaigned for it. My honourable friend for Worcester


has been a particular champion in this Parliament. Now the lowest


funded Local Authorities in this country will at last receive an


increase in their per-pupil funding, as we introduce a national


funding formula to ensure that no child in any part of our country is


to ensure that no child in any part of our country is disseminated


against. And we will consult on all the details until we get this


historic reform right. The pupil premium we've introduced also makes


sure we are fair to children from low-income backgrounds. It will be


protected in real terms, so every poor child will have more cash spent


on their future than ever before. The capital budget will be set at


�4.6 billion in 2015 to 2016, with over �21 billion of investment over


the next Parliament. We will tackle the backlog of maintenance in


existing schools. And we will invest in new school places. We will fund


20 new studio schools, 20 new university technical colleges, those


are outstanding new vocational institutions. Free schools are


giving parents the opportunity to aspire to a better education for


their children. The opposition have said they want no more of these


schools. We can't allow that attack an aspiration to happen. Instead, we


must accelerate the programme and bring more hope to children. That is


why I can announce that we will fund an unprecedented increase in the


number of free schools. We will provide for 180 great new free


schools. The schools budget protected, fairer funding across the


nation, the pupil premium extended to more students ever before and a


transformation in the preschool programme. We will not make our


children pay for the mistakes of the past. We will give them every chance


for the future, because that is the single best investment that Britain


can make. Our education... Is also consistent with the third and final


principle of this spending round. Fairness. It's not possible to


reduce a deficit of this size without asking all sections of the


population to play their part. But those with the broadest shoulders


should bear the greatest burden. And the Treasury distribution analysis


shows that the top fifth of the population lose the most after this


spending round. And the independent Institute for Fiscal Studies are


unequivocal that the richest 10% have paid the most. In every year of


this Parliament, the rich will pay a greater proportion of income tax


revenues than in any one of the 13 years under the last Labour


government. So when it comes to Her Majesty's Revenue & Customs, despite


the fact that this department will see a 5% reduction in its resource


budget, we are committed to extra resources to tackle tax evasion. The


result is we expect to raise over �1 billion more in tax revenues from


those who try and avoid to pay their fair share. Fairness also means


refusing to balance the budget on the backs of the world 's poorest. I


know that not everyone believes we should fulfil our commitment to


spend .7% of our national income on development. But I do, and I'm proud


to support a government that is in the first of our history to meet our


pledge and meet it not only this year but next year and vigour after.


Of course, oversees the parliament is about more than just this budget,


and we comply with internationally policed rules. But that budget is


the lion 's share and it will be set at �11.1 billion in 2015 to 2016.


Even in these tough times, the decisions we make mean we keep to


our commitments. And that includes our commitment to the National


Health Service, an institution which is the very embodiment of fairness


in our society. The NHS is much more than the government's priority, it


is the People's priority. When we came to office, the health budget


was �96 billion. In 2015 to 2016, it will be �110 billion. And capital


spending will rise to �4.7 billion. New medical treatments and an ageing


population means the demand for NHS services is rising. So we've not


spared in also demanding reform and valuable money in this service. This


will not insulated the health service from top choices, there are


already 7000 fewer managers. The NHS will continue to make efficiency


savings. But these savings will enable new investment in mental


health and the funding for new treatments for cancers, like


prostate and breast cancer. Let me respond directly to the breast


Cancer research campaign that so many have taken part in. We will


continue to back the charity research support fund and look into


making it easier for these organisations to benefit from gift


aid. Many older people do not just use the NHS, they also use the


social care system. If we are honest, they often fall between the


cracks of the two Systems, being pushed from pillar to post and not


getting the care they should. And not getting the care they should.


Non-others here would want that for our parents or grandparents, and in


a compassionate society no one should endure it. It's a failure


that also cost us billions of pounds and Britain can do better. In the


2010 Spending Review, we said that the NHS would make available around


�1 billion a year to support the health needs of people in social


care. It worked and saved hundreds of millions in the process. Last


year, these improvements meant almost 50,000 fewer bed days were


lost to the NHS. So today I can announce that I will be bringing


together a significant chunk of the health and social care budgets. I


want to make sure everyone gets a properly joined up service, where


they won't have to worry about services coming from the NHS or the


local council. Let's stop the tragedy of people being dropped in


A&E on a Friday night to spend the weekend in hospital because we can't


look after them properly and -- in social care. By 2015 to 2016, over


�3 billion will be spent on services that are commissioned jointly and


seamlessly by the local NHS and local councils working together. It


is a huge and historic commitment of resources to social care. It ties to


real reform on the ground. To help end the scandal of older people


trapped in hospitals because they cannot get a social care bed. This


will help relieve pressures on accident and emergency. It will help


local government deliver on its obligations. And it save will the


NHS at least �8 billion. Integrated health and social care. No longer a


vague aspiration but a concrete reality, transforming the way we


look after people who need care most.


So, Mr Speaker, these are the three principles of the spending round,


reform, growth and fairness. And nowhere could these principles be


more clearly applied than in our approach to welfare.


Two groups of people need to be satisfied with our welfare system,


those who need it who're old, vulnerable, disabled or have lost


their job, and who we, as a compassionate society, want to


support. And there's a second group. The people who pay for this welfare


system, who go out to work, who pay their taxes and expect it to be fair


on them too. So we have taken huge steps to reform welfare. Changinger


working age benefits with Universal credit so that work always pays,


removing child benefit from the better off, capping benefits so no


family out of work gets more than the average family gets in work. The


steps we have taken will save �18 billion a year and every single one


of them was opposed by the welfare party opposite. Now we propose to do


three further welfare reforms. First, as I said in the budget, we


are going to introduce a new welfare cap to control the overall costs of


the benefit bill. We have already capped the benefits


of individuals and now we cap the system as a whole. Under that system


we inherited, welfare spending was put into a daft glory called


annually managed expenditure, but the problem was, it wasn't managed


at all. The cost of welfare went up by a staggering 50% even before the


crash -- category. The welfare cap will stop that happening again. The


cap will be set each year of the budget for four years. It will apply


from April 2015, it will we flect forecast inflation but it will be


set in cash terms. In future, when a Government looks to breach the cap,


because it's failling to control welfare, the OBR will issue a public


warning and the government will be forced to take action to cut welfare


costs or publicly breach the cap and explain that to Parliament.


We'll exclude a small number of the most cyclical benefits that directly


rise or fall within the um employed to have the stabiliser, Housing


Benefit, disability benefits and pensioner benefits and Tax Credits


will all be included, but the state pension will not be.


Mr Speaker, I've heard representations that we should


include the basic state pension in the welfare camp. That would mean


that a future government could offset a rise in working age


benefits by cutting the pensions of older people. E.-be- penalises those


who've worked hard all their lives, cutting pensions to pay for working


age benefits is a choice this government is certainly not prepared


to make, it's unfair, we won't do it and we reject those represent


stations completely. The new welfare cap is proof that


Britain is serious about living within its means, controlling


spending, protecting the taxpayer, fundamentally fair. Today, we are


introducing a limit on the nation's credit card.


The principles enshrined in the cap apply to our second reform today.


We will actually ensure that we'll stop the cost of paying the Winter


Fuel Payments made no those who live abroad, rising in a way that no-one


ever intended. EU law now says that people living in the European


economic area can claim Winter Fuel Payments from us even if they didn't


get them before they left the UK. Paying out even more money to people


from all nationalities who may have worked in this country years ago but


no longer live here is not a fair use of the nation's cash.


So from the autumn of 2015, we'll link the Winter Fuel Payment to a


temperature test. People in hot countries will no longer get it. It


is after all a payment for winter fuel.


Mr Speaker, the third welfare reform I announce today is about making


sure we do everything to help people get into work.


My right honourable friend, the Work and Pensions Secretary, has changed


the national debate about welfare and he has comprehensively won the


argument. He has committed to finding a


further 9. 5% savings in the department's running costs. That


will require a difficult drive for efficiency and a hard assessment of


underperforming programmes. But welfare reform is about much more


than saving money. Vital though that is. It's about reducing dependency


and changing people's lives for the better. I'm determined to go further


to reduce worklessness with all its social consequences. Where is the


fairness in condemning people to a life on benefits because the system


won't hope them get back into work. So today, we are introducing upfront


work search. We are going to make sure people


turn up with a CV, register for online job search and start looking


for work and only they think -- then will they get their benefits. Thanks


to this government, lone parents who're out of work can get free


childcare for all their three and four-year-olds so it's reasonable to


ask they prepare to return to work. There are further changes we


announce today. Half of all jobseekers need more help looking


for work, so we'll require them to come to the Jobcentre every week,


rather than once a fortnight. We are going to give people more time with


Jobcentre advisers and proper progress reviews every three months.


We are going to introduce a new seven-day wait before people can


claim their benefits. Those first few days should be spent looking for


work, not looking to sign on. We are doing these things because we


know they help people stay off benefits and help those on benefits


get back into work faster. Here is a further change. From now


on, if claimants don't speak English, they'll have to attend


language courses until they do. This is a reasonable requirement in this


country. It will help people to find work, but if you are not prepared to


learn English, your benefits will be cut.


Taken together, this new contract with people on benefits will save


over �350 million a year and all that money will enable us to afford


extra support to help people get into work. Help to work, incentives


to work and an expectation that people should do everything they can


to find work. That's fair for people out of work and it's fair for those


in work who pay for them. Together, these reforms bring the total


additional welfare savings in 2015 up to �4 billion. Mr Speaker, step


by step, this reforming government is making sure that Britain lives


within its means. The decisions we take today are not


easy and these are difficult time times, but with this statement, we


make more progress towards an economy that prospers, a state we


can afford, a deficit coming down and a Britain on the rise. I commend


this economic plan to the country. The Chancellor finishes his spending


recue. He spoke for about 50 minutes. We'll now hear immediately


from the Shadow Chancellor, Ed Balls.


The Chancellor spoke for over 50 minutes. He spoke for over 50


minutes, but not once did he mention the real reason for this Spending


Review today. His comprehensive failure on living standards rose and


the deficit too. Prices rising faster than wages, families worse


off, long-term unemployment up, welfare spending soaring, the


economy flatlining, the slowest recovery for over 100 years and the


result of this failure for all the budget boasts, borrowed last year,


not up but down, Mr Speaker, not balancing the books as he promised,


but in 2015, a deficit of �96 billion.


More brothering to pay for his economic failure. That is why this


Chancellor has been forced to come to the House today to make more cuts


to our Public Services. So, Mr Speaker, let me ask the


Chancellor, does he recall what he said to this House two years ago? He


said we have already asked the British people for what is needed


and we do not need to ask for more. We do not need to ask for more.


Isn't his economic failure the reason why he's back here asking for


more today? More cuts to the police, more cuts


to our defence budgets, more cuts to our local services. This out of


touch Chancellor has failed on living standards, growth and the


deficit and families and businesses are paying the price for his


failure. Of course, Mr Speaker, it wasn't


supposed to turn out like this. Let me ask the Chancellor, does he


remember what he told the House three years ago in its first budget


and Spending Review? He said the economy would grow by


But it's growing by just 1%. He pledged to get the banks lending,


but bank lending is down month on month on month.


He made the number one test of his economic credibility keeping the


triple-A credit rating, but on his watch we've been downgraded not once


but twice, Mr Speaker. He promised living standards would


rise. But they are falling year on year on year. He said we are all in


this together, but then he gave a huge tax cut to millionaires, Mr


Speaker. He promised to balance the books and that promise is in


tatters. Failed tests, broken promises. His friends call him


George, the President calls him Jeffrey, but to everyone else, he's


just Bungle, Mr Speaker. I can see even Zippy on the


frontbench can't stop smiling, Mr Speaker.


Calm down, Zippy, calm down! And did we get an admission that his plan


has worked? That Britain needs to change course?


Did he get the plan B for growth and jobs that we and the International


Monetary Fund have called for? Mr Speaker, it doesn't have to be this


way. Instead of planning cuts in 2015, two years ahead, surely the


Chancellor should be taking bold action now to boost growth this year


and next. Investment that would get our


economy growing, get the tax revenues coming in, more revenues


which would mean our police, Armed Forces and Public Services would not


face such deep cuts in 2015. Let me ask the Chancellor, why didn't he


listen to the International Monetary Fund and bring forward �10 billion


in infrastructure investment this year?


With house building at the lowest level since the 20s, why isn't he


building 400,000 more affordable homes this year and next?


Mr Speaker, if the Chancellor continues with his failing economic


plan, it will be for the Next Labour Government to turn the economy


around, to take the tough decision to get the deficit down in a fair


way, Mr Speaker. I have to say, I have to say to the Chancellor, there


is no point boasting about infrastructure investment in five or


seven years' time. We need action now, Mr Speaker.


I have to say to him, he ought to brief the Prime Minister better for


Prime Minister's Questions because three years after the infrastructure


plan was launched, out of 576 projects announced, just seven


completed. Over 80% not even started, just one school, Mr


Speaker. The first three months of this year, infrastructure investment


down by 50%. On infrastructure, we need bold


action now, not just more empty promises for the future.


As for the idea this spending are eview's going to strengthen our


economy for the long-term, let me ask him, where is the proper British


investment bank? Where is the 2030 decarbonisation target which the


energy companies say they need to be able to invest for the future?


is the power to break up the banks if there's not reform which the


Parliamentary Commissioners call for? I have to say, whatever


happened to the Heseltine plans, much heralded, �49 billion single


pot growth fund for the regions, �2 billion, it's pathetic, Mr Speaker.


Isn't this the truth. Instead of action to boost growth and long-term


investment, all we got today is more of the same from a failing


Chancellor and more of the same on social security and welfare spending


too. We have plenty of tough talk and devisive rhetoric from the


Chancellor and the Prime Minister, but on their watch, the benefits


bill is soaring. Social security is up �21 billion compared to their


plans. Mr Speaker, we have called Chancellor tried to set a cap in


2010 on social security spending. He has overspent his cap by �21


billion. If he really wants to get the bills of social security down,


why not get young people and the unemployed back to work? With a


compulsory jobs guaranteed paid for by tax on bank bonuses. Why not get


our housing benefit bill down by tackling high rents and the shortage


of affordable homes? Why not stop paying the winter allowance to the


richest 5% of pensioners? And why not make work pay, with a mansion


packs dash-macro/10p tax band, instead of huge tax cuts for


millionaires? The Chancellor is making the wrong choices on growth


and social security. He is making the wrong choices on departmental


spending as well. Let me ask him, when thousands of front-line police


officers are being cut why is he spending more on police


commissioners than the old police authorities? Why is he spending �3


billion on a reckless NHS reorganisation that the public


doesn't support? Why is he funding new free schools in areas with


enough school places, while parents in other areas can't get their


children into a local school? We will study his departmental spending


plan for 2015 to 2016. There's a lot of detail he didn't provide for the


House. We look forward to seeing whether he is going to confirm the


continuation of three national museum entry. -- free national


museum entry. But the country needs to know the detail. Will this


Spending Review mean fewer police officers in 2015 to 2016, on top of


the 15,000 we are losing in this Parliament? Will it mean fewer


nurses in 2015, on top of the 4000 we've lost so far? Will it mean


fewer sure start children's centres on top of the 500 already closed?


And will he continue to impose deeper cuts on local authorities in


areas with the greatest need when already in this Parliament the ten


most deprived local authorities are losing six times the spending per


head of the ten least deprived areas? People want to know the


answers to these questions, and they should be in no doubt that the scale


of the extra cuts the Chancellor has announced today to our police,


defence and services are the direct result of his abject failure to get


the economy to grow. The Chancellor is failing on living standards, they


are falling. He has failed on both, it's flatlining. He is failing on


the deficit, and all we got was more of the same. No plan to turn the


economy around, no hope for the future and Britain's families and


our public services are paying the now. If you want to continue


watching proceedings there, you can do so by switching over to BBC


Parliament, or by going to the democracy live website. Let's take a


look at the main points from the statement. It lasted for about 50


minutes, longer than some had predicted. The Chancellor did


confirm that he needed �11.5 billion worth of spending cuts in 2015 to


2016 to hit its deficit target. He told us total government spending


would be 745 billion. That is no change from what he told us in


March. Here are the departmental cuts. Here is how the axe fell. The


Home Office took a 6% cut, business a 6% cut, work and pensions leading


the pack at 9.5%. Energy, 8%. Environment and justice both taking


a 10% cut. Culture, which is always lobbied by those in the


entertainment and arts business has got a 7% cut. The foreign office


added 8% cut. The Treasury, to coin a phrase, we are all in this


together, even the Treasury had to volunteer a 10% cut. The communities


Department took a 10% cut as well, which local government will feel the


impact on that. On defence, which has come out of this review rather


well. The defence resource budget is frozen in cash terms at �24 billion.


frozen in cash terms at �24 billion. That is simply a small cut in real


frozen in cash terms at �24 billion. That is The equipment budget of 14


billion would be 14,000,000,020 16, then it would rise by 1% a year. The


Chancellor went out of his way to say there will be no cuts in


front-line personnel. But there have been in previous statements, there


have been substantial cuts in front-line personnel. If you are in


the military, no more, says the Chancellor. The education budget,


that is going to increase to 53 billion by 2015 to 2016. There will


be a new national funding formula for school spending. The Chancellor


said the current one wasn't fair. He wants to put some petrol into the


free schools movement. He will find funding for 180 new free schools in


2015. Here we come to the infrastructure now, which was a lot.


50 billion on capital investment in 2015. That sounds a lot, but he's


using a gross figure. Those figures tend to be down on net public-sector


investment. The 50 billion is a little misleading there. He says as


a result of increasing capital and then dashed back spending every


year, there effectively 300 billion guaranteed total spending throughout


this decade. It seems to me they are saying they will have invested 300


billion over the ten years of the decade ending in 2020. Projects


worth �100 billion are going to be announced tomorrow. The Chancellor


wanting to top up his infrastructure plans to counter some of the cuts


he's had to make in departmental spending. NSAIDs. Let's have a look.


The Chancellor announced a new welfare cup from April 2015, just a


month before the next election. However, it excludes a number of


things, those benefits that changes with business, unemployment


benefits, jobless allowance. And a massive welfare budget area, state


pensions are also excluded. Winter fuel payments will be removed from


British expats who live in hot countries. Though I guess that will


partly depend on where they live in these particular hot countries.


There will also be a new seven-day wait before claiming benefits. Major


announcements on public sector pay. Public sector pay rises will be


capped at 1% in 2015 to 2016. That is probably not a surprise. But and


this was billed in the run-up, the automatic progression of pay in the


civil service, whereby you get a pay rise simply for staying on for


another year, that'll be abolished in 2015 to 2016. No more automatic


pay rises. The Chancellor also announced his intention to remove


this particular automatic progression on pay rises from the


NHS, schools and police. The civil service get it from 2015. On other


spending, the Chancellor announced funding for two further years of a


council tax freeze, from April 2014. There's been a breeze in play for a


couple of years, it's part of the idea of trying to do something about


the squeeze on living standards. There are a number of reports about


what would happen to the intelligence services. Those who


said the budget would be increased, they turned out to be right. It's


gone up by 3.4%. The health budget, which was 96 billion when the


coalition came to power, will be 110 billion by 2015 to 2016. �14 billion


rise in the health budget over the lifetime of this government. Health


2015. 2015 was a date when the current spending plans ran out. But


it became clear the more the Chancellor spoke, he really had his


eye on the key marker in 2015, the date of the general election. The


longer it went on, the more political it became. He announced


there would be a welfare cap, a cap on overall welfare spending, not


including the state pension, which would come in, when? On the eve of


that general election. Clearly designed to be something the


Conservatives and possibly the coalition in agreement will be able


to deploy just before a general election, able to say to Labour,


would you match it? A further squeeze on welfare for the jobless.


A weight of seven days in terms of the signing on time between losing


your job and being able to get your benefits. Also promised that if you


couldn't speak English, you would be forced to have English-language


courses or you would lose that benefit, together with the more


predictable promises of protection for health spending, school


spending, a boost for the intelligence services, a boost for


social care. All of those seemed to be designed to put the best possible


political gloss on some pretty gloomy economic news. The obvious


and final point to make is this. We get these very big numbers for


squeezes in government departments, 10% environment, justice, Cabinet


Office, Scotland, Wales, Northern Ireland, 8% in departments like


climate change the foreign office. What we haven't yet got is what does


that mean for jobs lost, pay squeezed, programmes cancelled? It


deliberate. We only get the headlines. Is it possible, is it


clear who are the winners and losers in this spending round? Some of the


winners we can see quite clearly. Defence does seem to be a bit of a


winner. In its resource budgets, it's only been cut by just under 2%


in real terms. That will mean overall, since 2010, it will be


looking at about 10% real cut. When you look at environment, energy, a


lot of local government, all of those have been cut, going into


this, over 20%, now looking at 30 and in some cases even 40%.


Transport investment is a big winner. But it's worth saying that


the resource budget for transport has actually been cut. Some people


have been reminding me that that includes road maintenance and some


of the things you might think of as investment. The filling in holes is


not in the capital budget. That is quite crucial. Communities


definitely looks like another big loser. Also on their investment,


that's been cut quite a lot. On the basis of this, relative to


expectations, I'd say the NHS was a bit of a loser will stop there's no


real cut in NHS spending. But if you look at the year-on-year growth for


that year, it's 0.1%, the barest amount. Most people in the NHS will


be not feeling very protected at all. Given that inflation in health


is huge. Much higher than the average level of inflation. There


was this puzzle that the headline cut to local councils, get the


speech said in effect its 2%. I've been treated by the communities


secretary. He is claiming that the extra money that councils will get,


more money to schools and more money in the spot for social care, means


that the effective cut the local councils is much less than 10%. I


can imagine a lot of councillors will dispute that, but that is the


claim. They can't all not be cut. is true they are putting more money


into the hands of local government, so it makes it harder to judge these


things. On the paid progression thing, that is quite significant.


What we've seen in the last few years is a much greater than


expected loss of jobs in the public sector, which has been offset by


growth in private sector jobs. But the pay bill and paper head in the


public sector has not been... It's grown much faster than they


expected, even despite that pay freeze. There has been a feeling


that these increments, these progressions that people get


automatically, have played quite a big part in that. The police will


say they haven't been employing these progressions. You would have


thought he would have realised that originally. What do we make of this


huge emphasis on infrastructure spending? We've been here before.


It's been rather overdone. He made this great play in his speech,


spending 50 billion will stop it rather implies that it is a rise. If


you look at the figures that they've just put out, there is no rise. He


was actually planning to spend �50.4 billion in 2014 to 2015. He is


planning to spend �50.4 billion in 2015 to 2016. It is flat. It's the


gross figure. Actually, in that important period it is flat. �50.4


billion is a rise on where it is right now. It is a rise on what


we've seen so far this Parliament. The fact that he has maintained it


will be seen by some as OK. But what he implied which was that there was


a great increase in that period, is simply not borne out by the


figures. And there are some very interesting details, in terms of


what's happening. For example, there is a very big drop from 4.8 billion


to 3.1 billion, that's a drop of 35.6% capital spending within the


community 's budget. Some of that is presumably things like libraries,


sports facilities... Real buildings that affect people 's lives. There


are bits of the capital budgets that people will lament because they are


being squeezed. 57 drop in a year in media, culture


and sport, in a year capital budget. It's a small capital budget.


it's an indication of where you can cut in places. They are always very


articulate. All right. Where are we going next? We are going to go to


get reaction from experts Jo Co in Bury. It's lunch time here in Bury


market and we are all digesting what the Chancellor has announced in his


Spending Review. Let's chew over some of the headline figures with


Robert Oxley from the Taxpayers' Alliance. Good afternoon. One of the


big headline figures was the �50 billion in capital investment in


infrastructure. That sounded like a big number to me? The worry is that


we have seen too often the capital investment is a white elephant,


�2,000 on every family's shoulders, which isn't going to deliver any of


the benefits the Chancellor is promising. The other part of the


investment could be offshore wind leading to higher energy bills to


families already struggling. What about the announcement of cuts to


Government departments? Most we were expecting, but ranging from 6-10%,


apart from the protected departments of health, international aid and


education? He took �11. 5 billion off the department and is still


ringfencing international aid. There is �120 billion of waste to actually


get out of Government waste so more could be done. We have seen the Sa


L'ami slicing and not the radical cuts. How would you sum it up?He's


done well on public sector pay, but there's still a lot more work to do


if he's to ease the pressure on those paying a huge amount of tax.


Thank you very much. Robert mentioned public sector pay. The


Chancellor spoke about having to have Public Services that we can


afford and that there could be further cuts to bureaucracy. Let's


talk about that with my next guest, Catt vint Nelson from unitnison. Did


you agree that more cuts could be made to bureaucracy in Public


Services in order to keep in tune with austerity -- Tevan Nelson from


unison? I think the reality is that there's no easy cuts to be made any


more in Local Government in particular. Putting aside the


theatrer in Parliament today, I think we have to keep some


proportion about what's been announced. There is a statement of


intent. They will take basically on the next general election. Our main


concern is that this sets the scene for austerity to continue beyond


2015 when the initial commitment of the Government was for it to end


that year. Labour has said we are signed up to the spending plans as


our starting point if we win the next election so everybody is in on


this? We hope Labour think again about that because it gives the


public no choice when the general election comes around. If both


parties are signed up to the cuts up to perhaps 2020, it gives little


real alternative to the voters and we hope Labour think again about


embracing the spending cuts. Public sector pay, he wants to end


automatic rises? It's not viable. He announced this in March in the


budget, we have seen no proposals since and it portrays absolute


ignorance about development in Public Services workers like nurses


and social work workers, they are linked to training and development,


what is the alternative if they are removed. All right, Kevan Nelson,


thank you very much. That's the view from unions and Taxpayers' Alliance.


We heard what the Chancellor had to say in a Spending Review that he


didn't have to do. He could have waited until next year but perhaps


for political reasons he did it now. Let's find out what people thought


about what the Chancellor had to say. Hell lop again sitting in the


sunshine, good sport you have got here, Paul Lewis. What have people


been saying? The -- hello. The reactions have been swift. Thes


Chancellor said if you lost your job, you would have to wait seven


days before you claim. At the moment, the three days, it will be


another four, people are saying seven days with no money in torture


says Barbara and another comment along similar lines, why should


anyone have to wait seven days. That's causing prove sill. There's


also the question of cutting the pay -- controversy. Cutting automatic


pay rises for the Civil Service, I had an e-mail saying, is this legal,


surely it's a contractual right and I think the Chancellor made it clear


he'd have to renegotiate the contracts that hundreds of thousands


of civil servants are on which enables them to have the regular


rises. The other change, scrapping Winter Fuel Payments for people


living abroad. Now, some people get those in the tropics, in French


colonies. The Chancellor's said that will save �30 million a year, and


from the winter of 2015, no no UK peckser which has a temperature


higher than the UK will be able to claim. No more detail than that, but


it will be a difficult one I think. -- pensioner. We may not be in the


tropics, but it's certainly heating up here in Bury. Back to you,


Andrew. We are heating up among the ex-pats


watching this programme too who'll no doubt be pointing out that in


winter, it's a lot colder in Paris than it is in Nice. Political


reaction to the Chancellor's speech now and we can join Matthew


Amroliwala. The Chancellor was on his feet for a


little over 45 minutes. Let's get the thoughts of my political guests.


Printy poo pel forthe Conservative, Lord Oakeshott for the Liberal


Democrats. -- Pritti Patel. Do you acknowledge the cuts will cause


problems? I'm afraid we are looking actually at the way to say to the


country, we are in a state with the finances if. The Chancellor spoke


about growth and investment and investment in education and capital


spending as well, so that's thinking about the future while we manage the


challenges we have and reform Government, deal with the


inefficiencies on the wasting Government spending while looking to


reform welfare and bring gator fairness. I'll come to some of the


issue in in a moment, but do you acknowledge the pain? They'll be


difficult outcomes of course, that's ine tab, but it's about Government


making difficult choices in terms of Government spending and also future


projections when it comes to expenditure as If you can't get


growth going, you will struggle... If you look at the way the economy


is developing, it is growing marginaling Liverpool any, but we


have had positive indicators, there's been over 1. 3 million


private sector jobs in this country which have come on since 2010, so if


this is the way forward, and it really is, we can't talk down the


economy and say cuts will automatically lead to a negative


situation in the country. We are seeing capical investment by the


government and private sector growth and that should be welcomed. Up to a


few weeks ago, you might well have opposed the cuts, this is now your


starting point for Labour if they win the election, both the Prime


Minister and the Chancellor taunted your party today, saying your whole


economic position has collapsed, it has, hasn't it? Well, the big


difference is, how do you get growth in the economy and where is the


infrastructure going to be and when's it going to start? The


Chancellor wants the infrastructure to be virtually all in London and he


reiterated that today. But it isn't starting. Ayous the country, we are


not seeing the major infrastructure problems that will get people back


to work and get the economy growing again -- across the country. This


economy isn't growing and the Chancellor's done nothing today to


make it grow. There's more money for schools, counter-terrorism, council


tax will be frozen for another two years, all of which I suppose you


would support. You support the idea of ending automatic pay rises in the


public sector? What the Government's been doing is


using inflationary 1970s approaches in order to try and cut the deficit.


It isn't working. It isn't working because there isn't the growth


there. The answer to the question though, do you support the notion of


stopping automatic pay rises for public sector workers? You can't


simply say one system and brutally alter it will work, as the problem


is, how do you keep good people in there, for example, in the police?


It's a simplistic slogan and I think the practicality of it is far more


complex than the Chancellor's making out. Labour's position now is all


about priorities, different priorities, same spending envelope


but different priorities, you are also talking about borrowing more.


How does that fit in coherently? I don't understand? The wrong kind of


cuts, the wrong things being cut, but as well, infrastructure. You


rebuild the economy by getting the big capital schemes going, in other


words building things. That is not happening and the Government failed


to start from the promises. How much would you borrow? Enough to get the


major infrastructure. But what is enough? If you were in Government,


what extra amount would you need to borrow? All we'd need to do this


year is make the commitments happen to stimulate the economy. This


Government, even on existing plans, has failed to get more than 7% of


those projects going. That's the big problem. They are not delivering.


terms of the basic cuts that we have had announced today, are they in the


right areas? Are they fair? You have had two straight questions and two


dodgy answers from my colleagues here. I asked you... Are they in the


right areas? We have done our best to stop them being too painful. For


example, Vince Cable has fought very hard and has got the lowest cuts of


any unprotected department, as it's called, to protect spending for


growth, Education and Skills. We also managed to fight off a very


nasty attack by the Tories. Are they fair? It's not a dodgy answer - we


are doing our best to keep them fair. We'd rather they were not


necessary and I agree with John Mann that because economic growth's been


disappointing after a good start, we are in more pain than we should be.


The key thing is the announcements tomorrow, it's about capital


spending and getting house building growing. We have wasted �20 billion


a year on house building because Labour and Conservatives sold off


too many council houses. Interesting what Nick Clegg was saying yelled


about the help-to-buy scheme and showing his frustration saying the


gap between announcements and delivery. If you asking businesses


out there, that's their frustration as well, they hear things in this


building... Irishes If I decide to do something, it happens next week.


It's slow in Government getting house building going and the problem


with the so far, the things that were announced - indeed I talked to


you six monthings ago about it - is that they are only affecting house


mortgages but not building. We have had hundreds of billions of pounds


waiting to come in from pension funds if we can really free up


councils to build up Housing Associations to borrow, we can


really get that going. 100,000 more houses a year, half a million more


jobs and half a million people off benefit. There we have to leave it.


Thanks to all of you. Andrew, back to you. More from you later.


Let's pick up on the point about house building that was in Matthew's


discussion there, Robert. I didn't hear the Chancellor say much about


housing at all, yet there's always talk that what we need, as in the


1930s, is to get a house building boom going to help get us out of


slow growth into recovery? They've got a policy for trying to stimulate


the housing market. They have two forms of guarantees to help those


who haven't got deposits, and they are claiming that one of those Gar


tee schemes is stimulating private sector house building.


But there are those who argue, including the opposition, that they


ought to be doing more with public money to build social housing and we


heard nothing about that. In fact, the implication of the figures is


that there is no increase in that particular budget. It was quite odd


that you will see in Prime Minister's Question Time before that


that the Prime Minister looked rather on the defensive about all of


that, claiming that there were thousands of houses being built but


not able to provide any stats. The reason they can't provide them is


that it's because it's not a priority of theirs. The communities


department which, in days gone by, helped to fund house building


through the local authorities, that's's a budget that's been...


said they were one of the big losers. The capital budget had


already been cut by 74% in real terms and it's got more than a third


cut in real terms in this year for this Spending Review. Now, for the


2015 year, that is. What happened rightly or wrongly, George Osborne


looked at the system for providing affordable housing or social housing


in the UK when he came in and said this doesn't work and lots of


experts said the same. A lot of the cut in capital investment that came


in that year, they decided they would take out of the traditional


social housing programmes. One thing the crickets say is, that's all very


well, but the replacement for that which was being planned using the


private sector, trying to make all these things more efficient, have


more signalling, that's taken a long time to come on stream and they


threw up the planning system which has been influx. All these things


have added uncertainty to the housing industry and made it harder,


not easier to build homes. I think that's another reason why he's


defensive. Still a lot of questions about how


the spending cut will fall. Let's get the overall package and City


reaction to the review to what it means for interest rates, bond


prices, the size of the deficit and how much the Government will


continue to borrow? How is City going to react. Louise Cooper joins


us. What do you think the reaction We've had some disappointing US


first-quarter GDP numbers out just half an hour ago. So at the moment,


markets are focusing far more on that disappointing GDP data than


anything in the Spending Review. can understand what is taking the


markets' attention, which is the rising bond yields. The beginning of


the end of the United States of the printing of money. It's not just the


beginning of the end in the states. What we've seen in the last couple


of months is very volatile money markets. These are short-term


interest rates. You've seen a big increase in both Spanish and Italian


three-month borrowing costs, where the Italian and Spanish governments


borrow for three months. Those rates have shot up. All of the other money


markets, you've seen the same thing there. In the UK, we're now seeing


money markets predict a rise in base rates in the next nine to 12


months. Most people have not cottoned onto this. Big change, the


end of cheap money approaching. It is the beginning of the end, it's


not about to stop now, but that is what financial markets are telling


us. I don't think that's really been picked up by the media. Know, though


we did begin this programme by pointing out that the eve of cheap


money was coming to an end. But we are not the whole media, I take that


point, just the better part of it! still hear questions. If we don't


get growth? Actually, the UK, I think the risk is we get much better


growth. That we have a surge in growth. That is what everybody is


missing at the moment. That is the real risk for the UK economy, is it


recovers too quickly. For folks watching, a rise in interest rates


makes them worry about their mortgage payments. It also makes a


number of small businesses worry. They are servicing debt. If they


face bigger interest bills, some of them could be in trouble, the


so-called zombie companies. But the other big implications is the


government is still going to continue to borrow a shed load of


money for the foreseeable future, and its borrowing costs are now


going to rise. Tenure borrowing costs have already risen about one


percentage point. #10 year. They are still at incredibly low levels,


about 2.6%. But the interest bill on this incredibly low borrowing cost


is still �50 billion a year and rising. We cannot afford borrowing


costs to go up that far, all much more than here. That is the problem.


We have so much debt, borrowing costs are already large. If


borrowing costs go up further, that could be really quite damaging.


is... Let's bring you an update of some of the key points in the


statement today. Here are the main measures. Departmental cuts of �11.5


billion. A new welfare cap from April 2015, a month before the


election, but the welfare cap with a few holes in it as well a big one,


pensions is not included. Seven-day waiting for new benefit claims. And


an end to automatic pay rises in the public sector. That is on top of the


freezing public sector pay that we've had for some time. Some other


main measures in an attempt to keep down... To keep living standards


under control, to make sure they don't go up even more than they


have, funding of two further years of the council tax freeze from April


2014. That is almost becoming a permanent part of the British system


these days. The defence resource budget maintained at 24 billion. Mr


Hammond will be reasonably pleased. So will be Education Secretary,


because he is going to get funding for 180 new free schools. These are


some of the main measures. It was quite a long statement for a


Spending Review for one year. If it had been for the usual three years,


we'd probably have still been listening to him! We are joined by


money and low interest rates is now coming to an end? It's far too early


to say that. One of the key drivers of the government's policy, the


tough action on public spending that we continue to take, measures to


deal with the deficit, is precisely to maintain the confidence and


credibility of this country in the financial markets, to keep our


borrowing costs as low as possible. But they are already rising.


still have some of the lowest borrowing costs of any country in


the world. In terms of what is going on in the financial markets are


driving that news from the US and so on, I will happily discuss it with


Louise in more detail. What we are doing is maintaining this country's


fiscal credibility to get away from the situation where interest rates


were tracking countries like Spain and Italy, when we came in, to being


amongst the lowest in the world. rate at which the government


borrowed has already risen almost a full percentage point already. Do


you accept, if this trend continues and almost every expert thinks it


will, that in future, when you come to borrow these billions, if you are


planning to borrow billions upon billions more, that your borrowing


costs will now rise and could rise quite substantially? Is the case


that if interest rates get higher and stay higher, that that has a


fiscal cost to the government. The point I'm making to you is one of


the key objectives from the very start of this coalition government,


in terms of clearing up the economic mess that Labour left, is to


maintain this country's fiscal credibility and keep our interest


rates as low as they can be. But do you accept they are going to rise?


What I accept it was if the rise was permanent, that has a cost. I agree


with that statement. Let me come onto this infrastructure spending,


of which the Chancellor is making so much, implying there's a whole new


you were of infrastructure spending coming out. In the March Budget, I


would use the gross figure, you announced infrastructure spending of


50.4 billion in 2015 to 2016. The Chancellor has announced


infrastructure spending in the same year of 50.4 billion. No change.


Tomorrow I will be setting out in a separate Parliamentary statement the


details of our infrastructure 's plans, what we are spending the


money on over a longer... But you will not be changing the overall


total. I will not. In the March budget we added an extra �3 billion


to our capital spending in 2015 to 2016 and for the rest of the


parliament. What we are setting out today and tomorrow is how we spend


that extra money. The envelope for the spending round, both for current


and capital spending, was set at the Budget by promising to take


additional tough decisions on short-term current spending. We are


able to set aside long-term... the Spending Review today, this has


not added any extra money to investment, is that correct? That's


correct. We are allocating the budgets that we set out in the in


March. If you are so keen on infrastructure and investment, why


did you cut it so much in the first couple of years? We inherited plans


for very deep cuts in capital spending. Since we came into office,


we've added money to those plans. We added in the spending round in 2010.


We've added at every fiscal event since then, as we were able to find


ways of making more savings and current spending, we are reinvesting


some of that money invaluable capital spending. What we can't do


is say that we will borrow ever more for this. Instead, we have to make


difficult choices on current spending in order to afford the


capital investment that this country needs. In essence, what you did was


cut capital spending when you could have borrowed to pay for it when


borrowing costs work at an historic low. You are now going to increase


capital spending to borrow more at a time when borrowing costs are


returning to a higher normal level. You got it the wrong way round,


didn't you I don't think we did. We inherited plans for even deeper


cuts. You didn't have to implement them. As I was just explaining,


we've added money to those things. By setting up longer-term plans, we


can get more projects for the money we have. We have delivered the


Olympic project. We are changing the way that infrastructure is delivered


within government, to make it more effective and commercially


realistic, and to get more value for the capital investment of the spend.


You have accepted the principle that capital spending does more for both


short and long-term growth prospects than current spending. And that is


manifest in the priorities you've set out today. If you look at an


organisation like the IMF, they would say that one of the reasons


why the British economy slowed down so sharply was indeed those capital


spending cuts. Given that the consensus is you should be doing it,


including your own view, why don't you bring the capital spending


forward? I'm waiting for the question to end! We accept that


capital spending is good for the economy, but not all capital


spending is the same. What we have done in government, we did this in


2010 and we've done it again, is to look at the projects around


government, to assess them on the basis of what has the best impact on


the economy and put our money on those things. In this current four


year period, we are spending more on transport and investment in this


country than our predecessors bit dashed back predecessors did. More


on our road network, rail networks, broadband infrastructure. Why not


housing? In the autumn of 2010 you announced the national


infrastructure plan, 550 projects. How many have been completed?


have been completed. I'd how many? Let me answer the question. Many of


those headings are programmes that contain many different projects


underneath them. You talk about the Highways Agency maintenance


programme. That is something that needs to go on for a long time


because it has been left over the years with a massive backlog in


maintenance. There are dozens of projects in that heading which have


been completed. White many dashed back How many have been completed?


The Labour Party left us with... The idea you can build a nuclear power


station is... That sun and Sally. You still haven't even started


building a nuclear power station. The infrastructure platform, meant


to raise 20 billion pension money. How much have you raised? It has


been set up by the pensions industry themselves. They've raised the


initial billion pounds of investment. �20 billion is over a


multi-year period. I think this is a real success story because, for the


first time, we've created a way for small, UK pension fronts to invest


directly in UK infrastructure. They would say to you that we've made


good progress. How much of that 20 billion has been invested? I don't


think they've made any investments yet. You announced the UK guarantee


scheme, which was to encourage money to come in from the private sector,


guaranteed by the government's balance sheet. How many projects


have you signed off under that? projects have been signed off. The


Battersea developer and and the Drax power station refurbishment. A


further 20 to 30 projects have been prequalified. I will have more to


say about that tomorrow in my statement. Turning to welfare, why


is it fair, particularly for your party, to say to somebody who's just


lost their job and maybe on very low wages and have no reliable source of


income, you will have to wait seven days until what you get the dole,


instead of three days, is that just targeting people who haven't got


much money? You currently have a three-day period in the system.


France, Sweden, Germany and other countries around the world have


seven-day waiting periods or even longer. We wanted to reinvest money


in making our job centres and our job search requirements from


job-seekers even more effective. The work that the DWP has done has shown


that there are things that we can invest money in that make it more


likely that people get off benefit and into work more quickly. You want


the job seekers to pay for an improved service. Both in our fiscal


consolidation, where the wealthiest pay the most towards deficit


reduction. Also, the wealthiest in this country are paying a greater


share of income tax than they ever have done before. The best thing for


someone who has just left their job is to find another job. We need the


systems to be in place to make that as intensive, and strong supportive


framework as possible. Meeting a similar timescale to that of other


countries is a perfectly reasonable way of ensuring that all that money


is reinvested in getting more people off benefits and into work. I


support this. Stephanie On the distributional point and whether the


cuts and changes in public service spending have been evenly spread,


your own chart suggests that the bottom fifth of people are going to


lose 3. 9% of their net income as a result of all this changes since


120, 4% for the top fifth. Do you accept the top fifth are paying as


much of a share of the net income as the bottom, a difference of 0. 1%?


They'll pay more as a share of a much larger income. People might


think they are paying a lot more and they are paying a tiny amount which


they can more easily afford? If I may answer the question. They'll pay


more in cash terms, they are paying more as a share of the income and


benefits in kind that they receive from Public Services. Of course,


many of the savings that are described in the tables are


efficiently savings in the delivery of Public Services so the public


service outcomes many people are receiving and Public Services are


consumed much more by people on lower incomes and rightly so, the


quality of the services is being maintained because we are reforming


them and making them more efficient. Some efficiency savings still show


up. You talk about the cash terms. When you look at the effect of the


changes in Tax Credits and benefits, it's interesting to meal that


actually it's not just as a share of income, but in cash terms, the


bottom fifth are losing out more from the changes to benefits in Tax


Credits. That makes it sound like the changes have been very skewed


towards the bottom? We publish a fiscal events table showing the


impact of changes to Tax Credits, welfare changes and taxation. Of


course, the wealthiest in the land by and large don't consume benefits


expenditure. We have taken away child Ben from it from that group.


There are other reforms we could make in that area, instead we have


put up taxes. The wealthiest 10% are paying the greatest by far. We are


running out of time usmt what is the point of a welfare cap which is full


of holes? The The idea is to bring more expenditure within a framework


of control. Excludeing pensions? When we started, there was Correct?


Let me explain. Annual managed expenditure. There was a controlled


framework for pensions. The best way to control costs was in the state


pension system. We put in place a control work for environmental


levies, spending under an annually managed eexpenditure. Today we are


announcing a welfare cap which will control the costs of other parts of


the benefits system. Doesn't include jobseeker's allowance? And also the


benefits passport. How much of the welfare budget does the cap cover?


About �100 billion of the �200 billion. So it's not a cap, it's


like a baseball cap and somebody's taken half of it out? We have


already put in a different framework in the Pensions Bill and in the


legislation I put through on public service pensions, there is a cost


cap. Politically important decision for you, that cap is due to come in


just before a general election. Do you think that 'll be a coalition


agreed cap or is it possible that a Conservative Chancellor wants a


lower cap than you do and you choose at that stage not to support it?


Well, I put the cap in place for the first time for April 15 in the


previous years' budget. That's something we'll need to agree as a


coalition. We all agree that having a control mechanism which forces the


Chancellor to account to Parliament, either for decisions taken to bring


welfare down or to explain why that action hasn't been taken, is a


sensible reform to ensure spending isn't just able to rise without


accountability year on year. Very quickly, almost everybody says that


the big problem facing rich Western countries, including the UK is the


rise in age related expenditure whether it's pensions or health.


These are two areas which you are to an extent ringfencing and


protecting. Aren't you taking a very is short-term political view and


again putting the British economy at risk? No-one who's looked at the


decisions we have made on the state pension age in the last few years


and overtime increasing it has said we are not taking tough decisions in


that year. The biggest single reform in the spending round statement


today was about the integration of health and social care. That's about


ensuring that as our population ages and people have more care needs,


that our services are better eight able to immediate the needs in an


effective way, rather than causing more people to become a burden on


the NHS when they could be burdens on the homes. If it's easier to get


efficiency savings, why don't you just cut now? Ewe are making savings


now. Well well ahead of the programme we set out in the 2010...


Why do you need to do �11. 5 billion in 2015? It's appropriate and right


to carry on doing this in a measured way. We are taking the country from


repair to renewal in a steady way and we'll continue to do that.


Thank you for coming over from the Commons. We have been to the North


to Jo in Bury and let eats head south now to the beautiful town of


Winchester. Robert Hall is there. Andrew, in a county which has saved


�130 million over the last couple of years, 10% cuts will make more


difficult decisions very, very likely. Cuts to transport, perhaps


to community facilities, to the cash available to those who need it most.


Let's talk about that with Martin able radio rams who campaigns for


rural transport and the Deputy Leader of Hampshire Council. Are we


talking about a transport system in crisis, not just here but in the UK?


We think we are and we are still going through the finer points but


we have found that a 10% cut to local authority budgets is going to


mean further cuts to buses and we'd say to the Chancellor that enough is


enough, there's been a lot of cuts and people are suffering as a


result, especially in rural areas. Young people are finding it really


difficult to access job, education, training, older people rely on buses


as a lifeline to independence and well-being. Unemployed people need


buses to access job opportunities and get to job interviews. We have


now heard that the signing on benefit has been cut to seven days,


so people are going to have to sign on after seven days, which will add


more pressures to bus services and we'll say enough is enough.


balancing act between community facilities like the library and


those people who need your help most, it's another difficult few


months ahead isn't it? Yes, it is. When we took over bus subsidies from


the district councils, we put more money into those for the very


reasons that have already been said. We were conscious of the needs of


the young and the needs of elderly. But you are absolutely right. It's


not going to be an easy few years ahead, but we are planning for it


because we started early in looking at the previous series of cuts. And


what our golden rule is, is the last thing we want to pot is the


frontline. We want to find other ways of ensuring we maintain our


frontline services by forming partnerships with the Health


Service, with the police for common facilities and with other public


departments. At the same time, we want to increase the amount of


income that the county earns from the services it provides outside the


county. A good example of that, on July 1st, we formally take over


education on the Isle of Wight and we believe that will be a benefit to


the Isle of Wight and to Hampshire. Martin, very briefly because we have


to stop in a minute, but it's going to be about partnerships isn't it,


groups like you just keeping on? is about working together. We are


also quite concerned about the big announcements on infrastructure


spending that the Chancellor announced a huge road building


programme, for example, and that money could be better spent on


filling in potholes, improving roads, for bus users, cyclists and


the public as a whole. We have got to stop. A very business programme.


Thank you both very much indeed. From the lovely city of Winchester,


Andrew, back to you. Thank you very much. The sun is


shining there. Let's get some more political reaction from Matthew.


I'm joined by Stuart from the SNP and a member of the Plaid Cymru.


What did you think about what you heard? Awful. This Chancellor


doesn't learn from history or his own mistakes. He's trying to cut his


way to growth and it will fail this time like last time. I agree. The


IMF are telling him, you must spend far more on infrastructure and do it


quickly and he's ignoring them. It's a bad situation to be in. Labour


said they'll use it as a starting point in 2015 if they were to win.


Is that a position that you accept from your parties? No, it's not. It


appears now that all the London-based parties are austerity


parties. The only choice it seems to me in Wales is ourselves and our


friends in Scotland. We can think creatively of saving money without


sacking people. Seems to be the way to do it is to hit the public sector


as hard as you can with the least respect you can muster if you think


you are going to come out of it. It's not going to work. What is the


magic formula? �100 billion savings, do away with Trident, �25 billion in


the first year, transaction tax will bring in �20 billion per annum and


do away with the obvious tax avoidance loopholes that exist, a


further �25 to �32 billion without sacking a single person. Stewart, in


terms of the priorities we have heard, has the Chancellor in these


difficult times made the right choices do you think in where he's


decided to come? He's made difficult choices. The things he's ringfenced


and these are political choices. We have to understand that there are


more revenue cuts across all departments, including in skoonled


Wales. The capital expenditure which has been talked about certain isly


in Scotland isn't real capital expenditure, it's loans and funny


money financial transactions at a time when we need direct capital


investment to kick start the economy. He is not delivering what


he needed to deliver. A final point to you both. We were hearing about


the welfare cap that will come in just before the election. He was


talking about stopping the automatic pay rises for the public sector


perhaps. What do you think of those ideas? I think what they tell us is


the welfare cap, this Government have a ratio of 4-1 in terms of cuts


to tax rises. He's balancing the books on the back of the poor and


nothing he's said today will change that. I think it's pushing the


envelope. Labour have signed up to all of this. Labour are in favour of


great austerity. This is pushing the envelope to see whether they can


Labour to rise to this particular bait.


Thank you very much gentlemen. More from here later. Back to you,


Andrew. We can now talk to our Northern Ireland Business Editor,


Jimmy Fitzpatrick in Belfast. Not quite as exciting as a G8 meeting in


Northern Ireland, but what are you making of it? Yeah, I mean I suppose


the anticipation was great for G8 and in terms of this, a certain


amount of nervousness, but because health and education are such big


parts of the Northern Ireland budget, it was never going to be a


huge impact. In fact, Northern Ireland has emerged relatively


unscathed, cuts of about 2% in 2015-16, still �9. 6 billion going


to Northern Ireland departments to spend. We are a public sector


dominated economy, so what is going to be the issue to look at? I think


it's going to be the ending of automatic progression pay. That will


mean tens of thousand us of civil servants could see an end to the


automatic increases which they've enjoyed even during austerity and a


period when pay freezes have been in place, in terms of the numbers, we


are talking about 28% of workers paid directly out of the public


purse. Anything up to 20,000 -- 200,000 people affected. Extra money


for the police because of national security issues and extra money for


the Northern Ireland Executive. Northern Ireland emerged relatively


unscathed. Pf Thank you very much. We are going to


talk about the pay progression issue in a moment, starting with the civil


servants. Before that, back to Jo Co in Bury with Paul Lewis.


It's a glorious day here. Paul Lewis is enjoying his cappuccino. Now, we


have heard the Chancellor saying what he said. In terms of cutting


though, what did the viewers say? They are disappointed that he


committed himself to the high speed rail and to overseas aid. Many


people still want those to be cut. On public sector pay, Mick has


e-mailed to say he works toer a local authority, he was dismissed


and re-employed on lower pay already and Karen came to me at this table,


she works for the NHS, her job's been outsource and she says she's


had a 47% pay cut already. Right. So people already


experiencing some of the things the Chancellor's been talking about.


What about changes to lone parents? I found out that what is going to


happen with them, already they have to apply for a job, they have to


become jobseekers as soon as their youngest child is five and now, when


the youngest child is three, they are going to have to start preparing


for work. That may mean learning English in some cases which he said


everyone will have to do to get the allowance.


Gingerbread said the DWP is saving �420 million on efficiency savings,


how can they implement these new things. Winter Fuel Payment, to be


taken away from people in warmer countries - Glynis is in Spain and


says she already has to wear her dressing gown in the winter because


it's cold. Must be in the mountains! How will she manage without it?


She's not happy. One of the other announcements which we'd already


heard and certainly talked about was a welfare cap that would be


announced ever are I Yahoo!er in the budget from 2015. Let's get reaction


on that from Karen Dyson from the Sainsbury in Manchester. What will


be the impact on your clients -- Citizens Advice Barrow? We are not


entirely sure how it will be put into practice, but if it means no


those who claim benefits are no going to have the same rights as


those who claim earlier in the year, that's a source of concern for us.


What about local authorities? We were talking to a councillor, they


said they have had big cuts already, further, again, we have serious


concerns there won't be the infrastructure there to support the


welfare reform successfully. Thank you. You can grab a coffee. One of


the other announcements that the Chancellor claimed has been a


success is that for every public sector job lost it has been offset


by three new private sector jobs. Let's talk about that with John


Holden, from a Manchester think tank. Has that been the case in the


Northwest? Greater Manchester has certainly played its part in


achieving strong private sector jobs growth. The priority is ensuring


that growth continues. That's why we were pleased today to see the


announcements about an additional investment in infrastructure,


particularly the announcement around HS2 and making that happen, because


that is crucial to the increase in the government's capital spend on


science. There were some disappointments in the announcement


around the local growth fund. From the report by Michael Heseltine, we


thought that might be as big a �70 billion but it's only going to be �2


billion. But for replaced by Greater Manchester, that could be a lot


extra a year that could contribute to local growth and jobs. Nice to


see the sun shining there. It's time now to say goodbye to viewers in


Scotland. Let's bring you up to date with some of the key points in the


statement. As widely expected, the Chancellor is cutting �8.5 billion


from departmental budgets in the 2015 to 2016 budget. Among the


casualties of that, though not one casualties of that, though not one


of the big ones, defence resource budget is frozen at 24 billion,


which means a small cut in real terms. The health budget will rise


to 110 billion, but it's not rising by very much in real terms. And the


education budget, mainly on the schools side, will rise 53 billion.


There will be a new welfare cap from April 2015. Though, as we were


discussing, there are a few holes in that cap, there's a big one called


pensions. He told us it will only cover about 50% of the welfare


budget. State pension is excluded. Seven-day waiting for unemployment


benefits. Remarkably, that's meant to save about �230 million. And the


winter fuel payments will be removed from expats in hot countries. I


guess if you are an expat in Ireland, you will be all right. On a


public sector pay front, that pay cap has been at 1% for quite a


while. It's days capped at 1% rises. This is a big announcement


that the Chancellor made, the automatic progression pay in the


civil service will be abolished. No more rises just full length of


service or because you've completed another year. That will now go. The


Chancellor indicated that he wants to remove these automatic pay rises


in the NHS, schools and police. But director of the Institute for Fiscal


Studies. What have you found out that we haven't yet had a chance to


find out ourselves? Not a lot. There wasn't a lot we found out that we


didn't know several hours ago. It has been confirmed that this year,


despite anything else, a huge reduction in a whole series of areas


of public service spending, on top of what have been a range of big


reductions. Some of the things you've been talking about were very


well trailed, the pay changes pretty much the same as what he said at the


Budget. The changes, the introduction of the welfare cap, he


said there was going to be one of those. We've got a bit more detail


now but not a great deal more. I think we will hear more in the


Autumn statement and we might even get a number about next March. Nine


months to work out how they are going to do that. There must be


something hidden in the small print. I'm sure there is but I haven't


found it. He did make something of a new national funding formula for


schools. We found that a little hard to understand what it meant. Except


it was thought the current formula was unfair. It's a potentially big


change which will have a significant effect on individual schools up and


down the country. The idea will be to have a single formula which will


translate central government money into the money each school gets.


It's based on a sort of a formula, sort of history, what local


authorities do differently between themselves. So it is the case, as


the Chancellor said, that similar schools can end up with very


different amounts of money. But inevitably, when you make a


perfectly rational reform like this, there will be winners and losers.


That will be politically difficult, if, technically, it's the right


thing to do. George Osborne praise a Tory backbencher who he said had


campaigned for this. Yes.Looking at the speeches he has given in the


past on this, he claimed that schools in Worcestershire, he says


some of them are in areas which are among some of the 5% most deprived


in the country, are getting per pupil, more than �700 less than


neighbouring schools in Birmingham. That doesn't sound right, but that


means some school in Birmingham is now going to face a cut in order


that a school in neighbouring Worcestershire can get theirs.


are not talking about a change in the total amount of money going to


schools, that continues to be ring-fenced. But it is the case that


because partly of the vagaries of history and partly because different


authorities allocated differently according to the characteristics of


their schools, similar schools get really very different amounts.


are the expert on all things fiscal. We've also been talking about the


rise in the government's borrowing costs. This may have been imported


from a bit of Bond mayhem in the States. The fact is that bond yields


have risen, which means it costs more for government to borrow. How


much could that throw the government's projections of course,


how much more might it has to end up cutting if these interest rates


continue to rise? If they were to rise significantly, this makes a big


difference. The level of outstanding debt continues to rise and rise


fast. It's heading for �1.5 trillion. For all the talk of the


deficit falling, the total amount of debt on which we are paying interest


continues to rise pretty fast. The level of interest that we are


currently paying is one of the big reasons why what the Chancellor


referred to as annually managed expenditure continues to rise. It is


not significantly created by welfare spending on the biggest change is


the increase in debt interest. Plus the public services. The rise in


interest rates would affect existing debt, that's already been gone away


in the greedy yield. It's when the government has to issue new debt.


It's not just completely new debt. You don't need to be an accountant


to work out that 4% of 1.5 trillion is a lot more than 2%. It's about


double, I reckon! It's a lot of money, that's the point. Even a


smallish rise in interest rates can result in a big increase in the


deficit. In terms of rolling over existing borrowing, it's about 150


billion a year. If you are borrowing at 4% on 150 billion rather than 2%,


that's a lot of money. The pay progression was one of the big


announcements. My understanding is that when the implemented the freeze


and then the 1% rise, they couldn't work out why it was that public


sector pay continue to rise, it was supposed to be frozen. Then it


dawned on them that there were so many categories where there was an


automatic pay rise every year, in addition to that which had been


agreed by collective-bargaining. So he's now, I assume, brought that in


to stop it. That's quite a of what's been going on. Despite the public


sector freeze and now the 1% increase is, actually, the public


sector pay bill, earnings of the public sector, have still been going


up a bit faster than in the private sector. That mostly reflects that


they in the private sector has been doing very badly. There is still


quite a lot of progression building to the public sector. And we are


still getting to the end of the transition period from some of the


big reforms from the last government. As I understand, the


changes announced today re-announced, because he said


something very similar in the Budget. He will be looking to


increasingly move every central Whitehall department to a situation


where there is no progression pay. There are already some where that is


the case. Then he will take on other bits of the public sector. He didn't


put a time limit on sorting that out. Is it still the case that


despite these extra cuts of 11.5 billion for 2015 to 2016, the


current 2016 to 2017 and 2018, to get the deficit reduction plan


continuing as currently rejected, whoever is in power has got to find


another 23 billion? That the numbers in the Budget Redbook. That is what


the Chancellor set out as a way of getting to something adjusted. It


will still be a very big deficit, even after those big cuts. That is


what he has set out. That means this level of cuts again in the coming


years, unless whoever is the next Chancellor said, well, there's got


to be more taxes or we borrow some more. A lot of people have raised


the possibility that you could have higher taxes to pay for this instead


of more spending cuts. But there is another possibility, which is the


Office for Budget Responsibility decides, as it did in 2011, that the


economy is going to look very different in the next few years and


that structural hole is smaller than they think. On historical record,


that is perfectly possible. In either direction, the numbers could


change a lot. Reason we've had some of the big changes over the last


couple of years has been because the economy has done worse than expected


and the obi are has changed its mind quite significantly about what will


happen in the future. Even these bad figures are based on the assumption


that the economy bounces back big time in the next few years. On the


welfare cup, how meaningful do you think it will be, given that it


looks like it will only cover about half of welfare spending? Cole the


basic state pension is a very large chunk of welfare spending. If you


get rid of that, it's a very large chunk of everything that isn't basic


and additional pensions. The meaningfulness of it will come out


whether it makes a difference to how the government actually goes about


that spending. Do you think this is sensible? It's quite a technocratic


change. It's something that the Treasury and the DWP could do now if


they wanted to. They could say, it looks as though spending on housing


fell as if they wanted to. They could say, it looks as though


spending on housing fell at a fit or disability allowance is rising, we


will take it under control. They are providing themselves with an


external impetus to do. I know we've got to let you go and we've got to


move on, forget whether it's a structural deficit or just the


normal bog-standard deficit. We are adding to the deficit, the national


debt every year for the foreseeable future. When now do we start paying


back this national debt of around 1.5 trillion? It starts falling as a


proportion of national income not until about 2017, two years after


the Chancellor wanted it to. One of the fiscal rules was the debt starts


falling as a proportion of national income in 2015. It will be at least


2017 and possibly later until that happens. Let's go back to Matthew on


College Green. With me is Kevin Maguire, from the


mirror, and Anne McElvoy, from the Economist. What will you be writing?


It's clearly a failure by George Osborne. He wasn't supposed to be


still in austerity. He's borrowed billions extra over the period.


These cuts, once you look behind those headline figures, there were


some pretty mean moves. Look what he's doing with the unemployed. You


lose your job and you will not be able to claim jobseeker's allowance


for a week, no matter how long you've paid national insurance


Contributions Bill �72. Every time your contract of two months or so


finishes, you will not be able to claim an employment. I do not see


where the fairness is in that policy. I think he has found himself


in a difficult position. He can't defend Plan A, we are not out of the


austerity that we would be out of. But on his side he does have quite a


lot of interesting indicators. The eurozone looks like it's in a worse


state than we are. All right, you can pick around who has given to or


who has been taken away from in this review, but you can't get away from


the big picture which will determine the argument in the next election.


And that is, are we gradually getting better or worse compared to


other countries? In terms of the choices he's made, is he right?


have a different view to Kevan on that, but there was still money to


be taken out of the department. It's interesting, despite a lot of fuss,


you didn't hear a massive cry of resistance. David Cameron at Prime


Minister's Questions taunted Ed Miliband, he said on the deficit, on


immigration and welfare, he was on the wrong side of the argument, the


wrong side of public opinion. We have seen a shift there from Labour.


They are signed up to this now? are always on the wrong side in was


fare. We saw with Tax Credits where Labour voted against them, I think


they won the argument with the public. But they signed up to the


cuts? Quite right that Ed Miliband has blurred some red lines that


should be thicker and clearer between him and the Chancellor and


David Cameron. Clearly, Cameron was setting a lot of traps for Labour on


things like would you restore that weeks' unemployment pay that will be


taken from people who'll lose their job, what about public service


wages, public servants do real jobs, a three-year freeze, your pay is


going up less than inflation. need to have this? It was there to


signal a behavioural change. There is another view that you need the


behavioural nudges built into policy that you could possibly get to get


people to go to work and stay at work. The childrening you have just


described is not very good for people and it's not very good in


terms of... Decisions do you think were put off until after the next


election. We were just hearing from the IFS and the projected cuts to


come. Duping the big and bold decisions, they've just not been


honest. Two things about that, on welfare,


we have moved along. -- do you think the big and bold decisions. The


Labour Party's moved towards the idea of a cut and that is a really


big change. We have made progress on that in this Parliament. After the


next election, it depend on the public finances. What you call the


bold, it will hurt them most. He's postponed those until after the next


election. The only way to get out of this mess is economic growth and


that's the one thing George Osborne hasn't got because he's strangled it


at birth. Thank you very much for those early


thoughts and pointers. Andrew, back to you.


More political reaction now from Tim Acre of the UK Independence Party.


What do you make of it all -- Tim Aker? Interesting that your viewers


are again spending �32 billion on high High Speed Two and 11. 5


billion on foreign aid. We are building HS2 in Britain, that's not


abroad? The foreign aid's obviously going abroad, but the High Speed


Two, a trainline from London to Birmingham, look, it's a budget


that's very political and it's going to come in, conveniently enough,


during the next election campaign. The national debt is growing.


many high speed rail lines did the UKIP call for at the last general


election? Upgrading existing lines. It calls for two high speed rail


lines? No, we looked at this and the manifesto called for high speed


rail. Upgrading existing lines. The problem with High Speed Two is it's


completely uneconomical and the people don't want it. That was shown


in the county council elections where the route that high speed goes


through, it could do very well. to like the idea of compulsory


English language lessons? I don't like the idea of the taxpayer having


to pay for it. If you want to come and live and work here, it would be


nice if you spoke English beforehand. Indeed. Thank you very


much. That's the UKIP reaction. We are joined by the Shadow Chancellor,


Ed Balls, who you saw performing in the House. He's now arrived here.


You may change the composition of the �11. 5 billion of the cuts for


15-16, but I do take it you will accept that as the envelope for


spending in 15-16? I have to say, the disappointing thing is, he


didn't do anything to get growth moving and tax revenues coming in


this year and next year, no increase in capital spending, no house


building. In 15-16, they are cutting in real terms cam tap spending. My


argument today was, if there was actual growth to get the economy


moving, then we'd be able to do less deep cuts for police and defence in


2016 -- capital spending. If George Osborne carries on with a failing


plan, we'd have to do that. It felt like failing deck chairs. Not the


Titanic though, the analogy usually used? I switched it half way


through, did you notice? The Titanic was fine when it left Belfast! Do


you oppose any cuts announced today? The problem when you read the


documentation is that there's not a huge amount of detail in there. I


asked the Chancellor questions about policing and nursing. Sure. Do you


oppose any of the cuts announced for 2015-16? It will me an exampleI'm


asking you. That's how it works? terms of detail... I'm happy to...


In terms of the overall numbers of 15-16, I think the cuts are deeper


than they need to be, but they are failing on the economy and the


deficit's going to be �96 billion. I don't want to see the scale of cuts


but this is what we are going to have to deal with and work from.


Within the totals, it's such a thin document, we have almost no detail


but the individual cuts. Is it still your plan? The


Government's capital spending hasn't changed from the announcement in the


Budget, the just about �50 billion in 2015-16, gross, net, a lot less


than that after depreciation. Would bit your sgention to borrow more to


have more infrastructure investment in 2015-16? I'm not going to make


that decision and that commitment at this stage two years ahead. What we


said is for 2015-16, if we come into Government, we'll work from and


inherit the current spending plans. On capital spending, they should be


spending �10 billion more this year and next to boost house building and


capital. We are worried that it's a 1. 7% real terms cut, 35% cut in


Local Government budget, so therefore there is a case if the


economy is still weak, and we need to build more homes to get the


Housing Benefit bill down, there else a case for doing more. I said


that on Sunday. You are not making a commitment on that yet? No.All


right. The Government's excluded the basic state pension from the welfare


cap. Would you? It's quite confusing what they've done over the last few


weeks on this, because two weeks ago when I came on your programme, they


were going to exclude all pension spending from the cap. You've incan


colluded that in the cap when I interviewed you? Yes.So you would


include it this en? I said we'd look at all social security and welfare


spending because we should try to control all of it. If the Government


despies to have a small welfare cap, but not the basic pension, that


would be fine by us because we've said we'll stick with the triple


lock alongside George Osborne anyway. If you are talking a 20, 30,


40-year view of social security spending which I thought we were


debating because it makes sense to plan these things long-term, of


course you can't then, from a long-term view and cap, you can't


then exclude pension spending which is actually about today's working


age population. The Chancellor said exactly the same thing as me on


Sunday, so a long-term plan, of course you have to look at all


long-term spending, a short-term cap within the next Parliament, if the


Chancellor can excuse the basic state pension because he's intending


to have to triple lock, fine by us. I see. All right. Still not clear


where you are including pensions in the cap or not? I explained if there


is a short-term cap, which I think is what he's saying and he's


sticking with the triple lock, we'll stick to that on the basic pension,


so whether pensions are in or out is irinvestigate rant.


-- irrelevant. I understand.


When you look at what's happened to the cost of borrowing, just in the


past month or so, and you look at events in the United States and in


China, do you accept that if you get to power, when it comes to extra


borrowing, it's going to cost you to lot more to borrow than it has in


the last couple of years and the rising cost of borrowing will


inhibit your ability to promise to borrow more? It depends on the what


the long-term bond yield rises are telling you. If this is about the


economies returning to normality, to growth with low in inflation but


with more nor that will interest rates... That inhibits your ability


to... Well it will increase the cost, clearly. However, what's gone


on in financial markets is equity markets that are falling, worries


from Turkey to Indonesia, Brazil, the China slowdown alongside the


withdrawal of QE, the danger is in China and maybe more widely, we may


see actually the credit crunch continuing and that may be there's


some nervousness about investors about where economies are going.


That may make it more important to have growth. The Chancellor's being


very complacent in the British economy. This has been billed as a


big event. As the IFS has pointed out, if the Government is to hit it


own target of reducing debt as a share of GDP by 2018, so not getting


the debt down to 2018, we are going to have to have many more years of


these sorts of cuts. Do you agree that 2018 is an appropriate year to


start getting debt down? I'm fearful about coming back, with


Spending Review, Spending Review, that the debt is higher than we


thought and we'll go back to more cuts which goes back to my point,


don't shift the deck chairs, get the growth moving. We have only got two


minutes. Quick question, Nick, and then Stephanie? Chancellor said he'd


get rid of pay progression in the Public Services with Labour,


Chancellor says people should work seven days before they get the dole,


or the GSA, would Labour back it? need to look at the detail


obviously. On the welfare, English language for incoming migrants


definitely. I think for the seven day, we have it three days at the


moment, seven days, is it going to be a blank check? If it saves money


and works, fine, in terms of paid progression, we have to look at


this. Is it going to save money? I don't know the answer, but we'll


study it. Anything you like in the review? Any caught your fancy?


honest, I found it incredibly depressing. The economy's flatlined,


the deficit's high and the Chancellor has a chance to come and


say I'll get the economy moving and he wanted to talk capital and did


nothing for the next three years, zero. What a missed opportunity. I


find it very, very gloomy. I fear for what is going to be the future


of Public Services and the state of our country for our children.


that raising of the spirits note, we'll leave it there. Ed Balls,


thank you very much. That's all for viewers on BBC Two. There's


continued coverage of today's Spending Review over on the BBC News


Channel. I'll be back with Jo Co with the Daily Politics at 11


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