20/03/2014 Daily Politics


20/03/2014

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Afternoon, folks. Welcome to the Daily Politics.

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The Chancellor must have enjoyed his breakfast this morning. Most of

:00:43.:00:46.

today's front pages seem to have broadly welcomed his Budget. That

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hasn't happened before! So what have we learned? Well, we'll get a new

:00:50.:00:55.

pound coin. Very nice it is, too. A bit retro. But most radically, the

:00:56.:00:58.

pensions industry will undergo its biggest reform for a generation.

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There was good news for savers and a penny off a pint. That will always

:01:02.:01:05.

get a cheer. George Osborne was keen to stress that he was rebuilding

:01:06.:01:08.

Britain's economy. We're growing faster than Germany, faster than

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Japan, faster than the US, he told us. But household wealth's not

:01:12.:01:14.

expected to return to pre-crisis levels for another three years.

:01:15.:01:20.

Labour, though, weren't so impressed. Not surprisingly. In

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interviews this morning, Ed Balls accused the Chancellor of gambling

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with people's cash and doing nothing for the young, the poor or the

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jobless. We'll have all the analysis.

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And we'll be hearing about the rock'n'roll lifestyle of

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Parliament's only rock band. Have you ever trashed hotel room? I

:01:39.:01:47.

rearranged the towels. Can you imagine those two!

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MPs used to trash hotel rooms, but now they just put them on expensive

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will stop -- expenses. All that in the next hour. And with us for

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today's programme, a panel of the very best. Economic Secretary to the

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Treasury, Nicky Morgan. Shadow Chief Secretary to the Treasury, Chris

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Leslie. And Liberal Democrat Treasury spokesman Ian Swales.

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Treasury related people. Welcome to you all. Now without further ado,

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let's crack on with yesterday's Budget. George Osborne and his

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shadow were doing the breakfast rounds this morning. Let's hear

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first what the Chancellor had to say.

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At the heart of the budget is a long-term economic plan to make sure

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this country is investing in the future and creating jobs for the

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people you are asking about. And here I am on a building site in

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Nuneaton. Barratt homes are going to be creating 3000 jobs. There are

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people being employed on this site who didn't have work before. There

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are apprentices. That is what this is all about. I want to help people

:03:01.:03:05.

who have saved hard, and are also want help people get into work so

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that they can provide for their family and have economic security.

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The good news for Britain is that things are getting better, but they

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are warning that the job is done. He needed a big picture up behind

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him! And now let's hear from his shadow.

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If George Osborne was being sensible and wise and long-term, he would

:03:28.:03:29.

have done something about the cost of living crisis which is hitting

:03:30.:03:32.

working people, people who can't afford to save, whose wages are not

:03:33.:03:37.

rising while prices go up and up. He had stunned nothing to help that or

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youth jobs or build affordable homes. What they did do is cut tax

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on bingo, took a penny off a pint of beer. You have to drink 100 pints of

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beer to save the pound! And an advert says we have done things to

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help working people with the kind of things they enjoy. It was so

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patronising. I can't leave the Chancellor. Did he really signed

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this advert off? What was the best bit of the budget

:04:10.:04:19.

for you, Chris Leslie? Some of the U-turns were quite welcome, such as

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the carbon floor price, which was essentially a tax the Chancellor

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introduced, and has reined back on. But it is the missed opportunities,

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as Ed Balls were saying, in terms of cost of living pressures. You would

:04:32.:04:35.

have thought that that would feature in the budget, but in the 120 pages

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of the document, it didn't even get mentioned once. And what we need to

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get this recovery through is to make sure it benefits the vast majority

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of people and not just the wealthiest few at the top, and that

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sense that the Government and the Chancellor understands that was

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blown out of the water when in particular Grant Shapps decided to

:04:57.:05:00.

patronise people with his view about what work you people really want. We

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will come onto that and the detail of cost of living issues. In terms

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of first impressions, what was the most important bit for you? For me

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and my constituents, another rise in the personal tax allowance, the

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number one Liberal Democrat policy from the last election. We have

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delivered on the ?10,000 threshold we promised, and we have another

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?500 coming through this Budget. That helps 42,000 people in my

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constituency who are basic rate taxpayers who will have more money.

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We keep hearing from Labour talk of what is happening to wages, but of

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course, if you take less tax off people, they have more money in

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their hand, and the real term increases the people in minimum wage

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through the tax cut will stop what about you, Nicky? We are proud to

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have brought certain policies in. The pension bond, we recognise that

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interest rates have been low which is great for people with mortgages,

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but people living on an income for their savings have told us that has

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been difficult. So having the bond so that people can get higher rates

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of interest is very important. And in general, the reforms to pensions

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that we saw, as well. It has been welcomed in many of the newspapers.

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What you could say when you look at the Budget and the proposals and you

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go through some of the policies that have been announced, in a way, you

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targeted a group in society, pensioners, when that is the only

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group in society whose wages have gone up over the last five years

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compared to every other group. We help them more than young people? We

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have helped young people in previous Budgets. I understand the programme

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is looking today at yesterday's announcements. But on Tuesday we

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talked about childcare. We also previously talked about the use

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contract, the National employer contribution break for employing

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people under the age of 21. So it is right that we should listen, and we

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recognise that there are things we can do to help this group. The core

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vote. It is not just about the core vote. We have done things in

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previous statements. New The reform of pensions was at the

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centrepiece of yesterday's Budget, although as the Chancellor spoke,

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Westminster hacks and MPs alike were quickly looking up the word annuity

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on their search engines. So what are the reforms? Well, the requirement

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to buy an annuity has ended, removing tax restrictions on pension

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pots. The increase in total pension savings people can take as a lump

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sum has been upped to ?30,000. Taxable withdrawls from pension pots

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will be charged at normal income tax rates.

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And the Chancellor has also created a new Pensioner Bond for the

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over-65s, which they tell us will be offering "market-leading rates".

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Well, they will be offering 4% on a three-year bond, which is higher

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than market rates at the moment. All of that took the City by suprise,

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with ?5 billion wiped off the value of the five biggest annuity

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providers. Though not many were shedding tears, I can tell you. We

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can speak now to the Telegraph's economics commentator, Liam

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Halligan. Does it matter that these pension

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companies have taken a thumping? I don't think it does. They are

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diversifying companies. They have been in the annuity market for quite

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a few years which has been on its knees for a few years, not least to

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quantitative easing and related low interest rates. In real terms,

:09:06.:09:12.

negative real interest rates because of inflation. So we have already had

:09:13.:09:18.

five or six years of pensions being forced to take annuities and being

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locked into a lower annual income for the rest of their lives. These

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reforms won't help them, and there are hundreds of thousands of them.

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But as far as Aviva and LNG are concerned, it doesn't matter. You

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don't have to take an annuity in America, and they still have these

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companies. There will be a huge lobby to change these reforms as

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they go through Parliament from the pension industry, but if they do go

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through as they are, what will be the consequences for the pensions

:09:54.:09:59.

business? I think you will obviously get a lot more competition in the

:10:00.:10:10.

annuity market, and you will get people annuitising later. This is

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typical of Mr Osborne, targeting the older voter, people 50 plus with

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money locked in a pension but determined not to pay the 55p tax

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rate. But now they can take lump sums up the basic rate of income

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tax. It is also a concern that while the Treasury thinks it is being very

:10:35.:10:38.

clever with this, and it is in some senses, if pensions are available to

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tax now, which they will be to a degree under these measures, which

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is why the Chancellor's pencilling in hundreds of millions of pounds

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from these measures on the revenue envelope, that money won't of course

:10:54.:10:59.

be available to tax later. But later is well beyond the Chancellor's

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political horizon. He will be either in Number ten then or retired in

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industry. He will be long gone from both. It is up to 2030. Are we

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seeing you tonight on This Week? Apparently, yes. The thought police

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have got their ducks in a row, to mix metaphors. I am gracing your

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screen with a take on Ukraine and Russia. A double whammy! I didn't

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know the thought police had any ducks. Anyway. Joining us now from

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Salford is Paul Lewis from BBC Radio 4's Money Box. He is the world's

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living expert on these things. Have we just seen in effect the death of

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the annuity business? I don't think we have seen its death, but I think

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it will diminish. In America, it is not compulsory, and only 10% of

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people purchase an annuity. But I am sure that the industry will meet as

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we speak to find other ways of taking money off people. Don't

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forget that if you don't buy an annuity, what you do with the

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money? You probably keep it invested and draw bits out of it as you see

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fit. It is called drawdown, and a lot of people do that anyway if they

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have a big pension pot. Now that will be extended to people who have

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a smaller pension pot, and it can be quite an expensive business. Other

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people may just take the whole lot out. The first 25% will be tax-free,

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and after that, they have to pay income tax on the other 75%, so that

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will be quite a drain on it, but they could go on world cruise. And

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as the price of shares of pension companies for, probably the shares

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of cruise liners go through the roof! Given that we have this choice

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now, a choice that people 50 plus will be able to start thinking

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about, and it doesn't affect pensioners because they are already

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locked in, but why would you now take out an annuity? Because it is a

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guarantee. It says, however long you live, we will give you this much per

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year. It may not be very much, but it is guaranteed. If you are very

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prudent, and you put your pension pot in an Isa investment, and you

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think, I will live until an 85, I need this income, so I will take it

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out each year and hope it grows, when it is all gone at 85 and you

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carry on living, by the time you are 95 or 100, you may well find you

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have run out of money. You have been prudent or make sensible choices,

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but unless we all plan to live to 120, we will run out of money. Yes.

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But we got a letter from somebody who said that they have a pension

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pot of ?400,000, that is a lot of money, much bigger than the average

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pension pot. And they went for an annuity. It gave them ?12,000 per

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year. Why would you go for that? Because it is guaranteed. Peanut!

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That sounds to be index-linked. It may seem peanuts to you, but to a

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lot of people... That is not the issue. It seems peanuts if you have

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saved hard all your life document out ?400,000, that is what I'm

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saying. ?12,000 a year for many pensioners would seem a lot of

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money, but that is not my point. The point is right, that you get a very

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small proportion of it every year, because we are living longer, and

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insurance companies are profitable. If you had ?40,000, it would be

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?1200 per year, and it makes you realise what the index-linked state

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pension of seven or ?8,000 per year is worth. If you are annuitising

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that, it is worth ?250,000. So it is difficult to have enough, but if you

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had that and you started taking money out of it and you did live

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until you are 85 you took more than that ?12,000 index-linked each year.

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Stick with us because we're going to talk to the politicians so we'll

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need you to correct them! Did we mean to destroy the pension

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companies? That's not what we've done. They just lost 5 billion! It

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was a surprise and we managed to get the whole policy a surprise. People

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hadn't expected it. I think Ed Balls has welcomed it this morning and has

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said it was... Has he welcomed it? We want more flexible to a pension

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fund annuities and we've got to reform these ancient instruments. We

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would have personally like to some action on the charges, the fees and

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charges that the companies put in place. But are you in favour of this

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new freedom pensioners will have? In the proviso that we've got

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protection for pensioners. Paul was talking about some of this. We have

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actuaries, these individuals in the pension companies who make an

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estimate about your longevity and think about your ability to get a

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steady amount of income. Now if we're not doing that, everybody is

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going to have to individually make an estimate about their life span.

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We've got to make sure people get proper ad twice about this. --

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proper advice. People will get that. In general, are you in favour of

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this? Are you going to vote for this? I've got to be convinced that

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there's enough protection and advice for people making very big decisions

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about a possible third of their life and their income. Forgive me my

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cynicism - I know you'll be surprised that I have a slight

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scepticism - but as the Chancellor doing this for the right reasons? He

:17:19.:17:24.

happens to be getting a lot of taxes from these pensioners early on.

:17:25.:17:28.

Perhaps it's because he's got a big black hole. What hole is this? You

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left a big black hole! I'm a little bit sceptical. Have the Lib Dems

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gone along with this? Absolutely. Professor Steve Webb is one of those

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rare people, a minister and a Lib Dem who absolutely knows his brief.

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He's caused a revolution in pensions. He bores for Britain on

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pensions! He has done a terrific job on this. One of the things that has

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not been reported well is the detail of the red book does have

:18:04.:18:07.

safeguards. You will not be able to draw all your pension pots out and

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blow it and binge it. You will need certain minimum income levels. The

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government actuary is still going to restrict the amount you can take

:18:17.:18:23.

out. Are they going to give actuarial advice? Free, impartial,

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face-to-face advice. It has to be actuarial. You don't just want that

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to aerial advice but pension and vice. Do you see my point about the

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life span people will have? Last night, we had a Labour adviser

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saying "we, as a party, don't trust people to spend their money" . Now

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you're saying you don't trust people to know that the advice is good for

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them. Paul Lewis made a very good point which is that annuities are

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insurance policy. People say that if they die at 69 they will lose all

:19:05.:19:08.

the money. They are not really losing it. The people who lived to

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90 are getting that money. People will need to look more closely at

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the issue of insurance if they keep their money in their own hands. When

:19:18.:19:22.

you look at what the Tories have done by stealth, and out of the

:19:23.:19:28.

blue, to take ?5 billion off the pension companies at a stroke, in

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your wildest dreams you couldn't do that to the energy companies! Nobody

:19:33.:19:39.

wants to, I think, make policy which has a volatile and disruptive effect

:19:40.:19:43.

in that way. I think what you have to do is enter into these reforms

:19:44.:19:47.

with your eyes open and make sure that if you are making changes, big

:19:48.:19:52.

changes affecting people's income over a long period, you're doing it

:19:53.:19:56.

with the right reasons - so it's not just about short-term tax grabs -

:19:57.:20:00.

and with protections for the public. Those are our concerns. But here's

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the point which I don't think has been widely grassed. If, as a result

:20:07.:20:10.

of saying that annuities are no longer going to be compulsory,

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pension companies lose a ?5 billion on their value, that can only show

:20:17.:20:21.

that they were taking economic rents that they didn't deserve. I think a

:20:22.:20:27.

lot of people have been ripped off. But reforming annuities is a really

:20:28.:20:31.

big step. I think it's important for us as an opposition to ask these

:20:32.:20:35.

questions, not just take it at face value because we know they've got

:20:36.:20:40.

form. Why didn't you do it? When we were in power annuity levels were a

:20:41.:20:45.

lot higher. They've changed quite a lot. The banking crisis changed

:20:46.:20:50.

everything. Let's be honest about the politics of this. This is a

:20:51.:20:57.

burning arrow fired from the Tories straight to the heart of UKIP.

:20:58.:21:02.

That's the politics of it. I can honestly tell you that UKIP is not a

:21:03.:21:09.

part of the budget making process. When I dined with a cabinet minister

:21:10.:21:13.

last night, he said that was exactly what it was designed to do. Was he

:21:14.:21:18.

not being honest? I don't know who you were speaking to. Of course you

:21:19.:21:23.

don't and you wouldn't want me to break a confidence if I dined with

:21:24.:21:30.

you. But he was quite explicit about this - that you are losing

:21:31.:21:38.

50-year-old males and over to UKIP. He described them as grumpy old men

:21:39.:21:42.

and this is designed to get them back. Any Chancellor looks at

:21:43.:21:48.

different people and what they are asking for. On Tuesday we had

:21:49.:21:51.

childcare announcements. We've had pension reform. We've previously

:21:52.:21:57.

been looking at businesses. Paul, any card you'd like to mark there?

:21:58.:22:03.

Correct them where they were wrong? Ian Swales wasn't correct to say you

:22:04.:22:06.

won't be able to take it all out. You will from next April. From March

:22:07.:22:11.

the 27th of their will be still some restrictions but far fewer than

:22:12.:22:15.

now. But from next April, it will be complete open house. You can do what

:22:16.:22:20.

you like. The government has said everyone will have a legal right to

:22:21.:22:23.

face-to-face advice. What isn't clear is how they will get that.

:22:24.:22:27.

Some of the pension schemes will have to offer it but people who look

:22:28.:22:32.

after their own pension, the voluntary sector might provide it.

:22:33.:22:35.

It will be a problem to get good face-to-face advice to help people

:22:36.:22:37.

with those difficult decisions about how much they should take out of

:22:38.:22:41.

their fund and cutting down on the charges that will be made. Sounds

:22:42.:22:45.

like it will keep you in a job, Paul! Thanks for joining us and

:22:46.:22:53.

keeping us straight on the matter. So, what other headlines did the

:22:54.:22:55.

Chancellor make? As predicted widely, the personal allowance

:22:56.:22:58.

threshold will rise to ?10,500. The threshold for the 40p income tax

:22:59.:23:02.

band is to rise from ?41,450 to ?41,865 next month and by a further

:23:03.:23:10.

1% to ?42,285 next year. The Chancellor took a penny off a pint

:23:11.:23:17.

and he froze duty on Scotch whisky. Always popular! He's also chopped

:23:18.:23:21.

the tax rate for bingo halls from 20% to just 10%. And conscientious

:23:22.:23:25.

savers can now put up to ?15,000 into their individual savings

:23:26.:23:36.

accounts tax free! Nicky Morgan, what did you do to tackle Labour's

:23:37.:23:41.

cost of living crisis? Raising the personal allowance is the biggest

:23:42.:23:44.

thing we can do to help families and people working hard to keep more of

:23:45.:23:48.

their own money. We've taken action on fuel duty. It was confirmed

:23:49.:23:51.

yesterday that the planned rise for September is not going to go ahead.

:23:52.:23:56.

On Tuesday we had a very important childcare announcements so there are

:23:57.:23:59.

lots of things that we are doing. But I'm not going to say the last

:24:00.:24:02.

couple of years haven't been very tough households. We recognise they

:24:03.:24:08.

have been. That was recognised yesterday in the budget. We said the

:24:09.:24:12.

job isn't done yet but we can see the momentum building. The recovery

:24:13.:24:16.

is there and it's important we stay on the current path to build that

:24:17.:24:21.

recovery. And it's who it actually benefits. Real wages have been

:24:22.:24:25.

dropping consistently since 2010, the longest period of falls since at

:24:26.:24:30.

least 1964, under both your governments. Real wages started to

:24:31.:24:34.

fall before that in the financial crisis. They did but they have had

:24:35.:24:40.

now the longest period of falls. Real wages have fallen by 2.2%

:24:41.:24:45.

annually since 2010 when you came into power. I'm not saying people

:24:46.:24:50.

haven't had it very tough. As a result of the recession that was

:24:51.:24:55.

left behind, the big black hole, and we've had external shocks like the

:24:56.:25:01.

eurozone crisis, it has taken time to build confidence. The employment

:25:02.:25:04.

figures yesterday were very good news and we're looking at how we can

:25:05.:25:08.

help with the personal allowance, childcare, free school meals,

:25:09.:25:13.

council tax, fuel duty. My constituent tell me these things are

:25:14.:25:16.

making a difference to the money they have in their pocket. What do

:25:17.:25:20.

you say to the charge that it's too little, too late? We had to get in

:25:21.:25:25.

and sort out the problems we had before. We can only do these things

:25:26.:25:28.

because of the long-term economic plan we have in place to build the

:25:29.:25:32.

recovery. The largest fall in real wage growth amongst the G7. What are

:25:33.:25:37.

you doing worse than every body else? We were in a worse financial

:25:38.:25:43.

position. The last government crashed the car. The Chancellor

:25:44.:25:45.

brought about not fixing the roof while the sun was shining. The bail

:25:46.:25:50.

out meant that because we'd been consistently spending so many years

:25:51.:25:52.

more than we bring in in taxes, there wasn't the money to develop

:25:53.:25:58.

banks so it's hit everybody. Every household is ?3000 worse off as a

:25:59.:26:03.

result of Labour's recession. Well, they've shot sure Fox, stolen your

:26:04.:26:07.

thunder. There were measures to deal with cost of living issues and at

:26:08.:26:12.

some point this year, wages will go ahead of prices and that is going to

:26:13.:26:16.

completely dampen your cost of living crisis that you keep accusing

:26:17.:26:20.

the government of. Let's hope that eventually earnings to surpass the

:26:21.:26:24.

level of prices because we have had such an unprecedented period of the

:26:25.:26:29.

pound in people's pocket, no matter what new shape it will be,

:26:30.:26:33.

diminishing in value and in the amount it can purchase. The

:26:34.:26:39.

criticism that we have of the budget is almost conspicuous by its

:26:40.:26:43.

absence. There weren't the significant changes that we need to

:26:44.:26:46.

help people with the cost of living crisis, the now well-known cost of

:26:47.:26:51.

living crisis. There were the childcare policies. Which won't come

:26:52.:26:55.

in until autumn 2015. We could have had help now, particularly if we'd

:26:56.:26:59.

taken some of the money that should be collected from the bank levy and

:27:00.:27:03.

taken it into childcare. There is a difference. They like to throw a bit

:27:04.:27:08.

of dust in this very clear policy. We could take ?800 million from the

:27:09.:27:13.

bank levy which should have been collected properly and hasn't been,

:27:14.:27:18.

and put it into increasing childcare hours for three and four-year-olds.

:27:19.:27:24.

That would help with parents getting part-time work and training and that

:27:25.:27:27.

isn't happening. They've taken 15 billion from families with children.

:27:28.:27:31.

We don't hear about the child benefit changes and tax credit cuts.

:27:32.:27:35.

They are not going to give anything back until the next Parliament. 85%

:27:36.:27:40.

of people who receive child benefit are still doing so. The issue is...

:27:41.:27:48.

Actually, it's going to be raised. But the issue with the opposition's

:27:49.:27:52.

childcare policy, not least about the funding, is also about the fact

:27:53.:27:56.

that we want a simple, flexible scheme so that parents are able to

:27:57.:27:59.

choose the right childcare. If you say you have to have a certain

:28:00.:28:02.

number of hours a week, that doesn't suit everybody. Let's have a look,

:28:03.:28:09.

though, at the type of recovery, as Labour always call it, and the

:28:10.:28:13.

rebalancing of the economy. Ian Swales, do you think it has been

:28:14.:28:17.

rebalanced enough or do you think there is still too much focus, as

:28:18.:28:21.

Vince Cable often warns everybody, about consumer spending, which is

:28:22.:28:27.

up? Since last year the property market is improving but is not a

:28:28.:28:30.

pre-crash levels, apart from in London. Do you fit we're moving that

:28:31.:28:36.

are exactly the same position as we were pre-crash? No, I don't. I think

:28:37.:28:42.

the rebalancing is taking place. We can see it. There was lots of

:28:43.:28:45.

rebalancing that needed doing when Labour left office, one of which was

:28:46.:28:50.

between financial services and manufacturing. There were lots of

:28:51.:28:54.

measures yesterday about manufacturing, around capital

:28:55.:28:58.

finances and energy costs, particularly the type of area I

:28:59.:29:01.

represent the north-east. These are the kind of things we need to be

:29:02.:29:05.

doing. We need to rebalance from north to south and that job has in

:29:06.:29:12.

no way been done yet. Do you accept there is a big divide between North

:29:13.:29:14.

and South and even within that huge regional differences? You say there

:29:15.:29:19.

has been a focus on manufacturing. What level is it at paired to

:29:20.:29:26.

pre-crash? It's up. No, it's down from pre-crash but it's up since

:29:27.:29:32.

2010. 9% down. From a low bar it is improving but is still way below

:29:33.:29:37.

pre-crash levels and we are in 2014. But the trade figures were very

:29:38.:29:41.

disappointing just over a week ago. Where is this rebalancing of the

:29:42.:29:46.

economy? I represent a constituency in the north-east which has a net

:29:47.:29:50.

positive trade balance. The north-east Chamber of Commerce

:29:51.:29:54.

welcomed the budget, saying it had prospects for growth. If you look

:29:55.:30:00.

around this country, for example on house prices, nobody in my

:30:01.:30:03.

constituency would recognise the worries about the housing bubble. It

:30:04.:30:09.

doesn't exist. Nicky Morgan, household gross debt to income at

:30:10.:30:14.

its peak in 2007-8 and the prediction is that it's going to be

:30:15.:30:20.

at similar levels by 2018-19. That's household gross debt to income. It's

:30:21.:30:25.

going to be as high, so it's predicted, by 2018-19, and by then

:30:26.:30:30.

interest rates will probably have gone up by about 3%. You need to

:30:31.:30:37.

look at what the debt is. It's about building a culture of saving. We

:30:38.:30:40.

need households and people to do more of that. The OBR forecast shows

:30:41.:30:46.

the savings rate going from 7% to just over 3%. People are saving and

:30:47.:30:54.

we'd like to see them doing more. Steve White according to OBR

:30:55.:30:59.

forecast made after you'd may be changes, the savings forecast shows

:31:00.:31:05.

it fallen by 15%. That's why the announcements were about helping

:31:06.:31:09.

people to do more. You know how it works. The OBR makes these forecasts

:31:10.:31:13.

after you've told them what you're going to do. The savings

:31:14.:31:19.

announcements that we made yesterday one thing but people 's confidence

:31:20.:31:23.

that they have taken action to tackle their debt.

:31:24.:31:35.

Let's have a look at this poster that appeared earlier today. " to

:31:36.:31:41.

help hard-working people do more of the things they enjoy. ".

:31:42.:31:48.

The Budget was about a lot more than this. But would you have referred to

:31:49.:32:01.

working people as "they" ? I wouldn't have put that, but it was

:32:02.:32:06.

only a part of the Budget, and there were plenty more parts of the

:32:07.:32:10.

Budget. She is very loyal to Grant Shapps is, but it was very

:32:11.:32:13.

patronising, this notion that you patch working people on the head.

:32:14.:32:19.

The government is so out of touch with the struggle that people are

:32:20.:32:22.

having, the difficulties to make ends meet. We end up with an economy

:32:23.:32:27.

that is Carragher fired by food banks and zero hours culture. --

:32:28.:32:35.

characterised by food banks. It is patronising. I regard myself as part

:32:36.:32:41.

of the community I represent. It is not "they", we are all in it

:32:42.:32:49.

together. A couple of policies were very popular yesterday. That this is

:32:50.:32:54.

the one that Grant Shapps told everyone to tweet. There was a whole

:32:55.:33:00.

list of things that we told everyone to tweet. It is because Tories don't

:33:01.:33:07.

drink beer or play bingo, isn't it? That is not true. When we last at a

:33:08.:33:16.

bingo hall? The point is, yesterday's Budget was to draw

:33:17.:33:22.

attention to a couple of key policies, and that is what Labour

:33:23.:33:28.

can't get past. Screwed up by your party's propaganda division. The

:33:29.:33:33.

reaction from here is typical. The Budget response speech didn't

:33:34.:33:42.

respond to the Budget. There was no action to deal with the pressures

:33:43.:33:45.

people are facing, and the telling thing was the way in which you

:33:46.:33:49.

character rise working people, because you don't understand the

:33:50.:33:53.

pressures that people are facing. That's what it told, it told a story

:33:54.:33:58.

about you. What else to "they" like? It is "we", and we have a lot

:33:59.:34:12.

of issues that we all face together. Will you tell Grant Shapps that? He

:34:13.:34:17.

doesn't understand it. I don't think they will be going for a beer. Maybe

:34:18.:34:23.

a long walk off a short pier. And only one will return. Now, the

:34:24.:34:33.

economy. George Osborne said yesterday that Britain was enjoying

:34:34.:34:36.

the fastest economic growth in the advanced world. He could hardly take

:34:37.:34:40.

the smile off his face as he said it. So let's take a quick look at

:34:41.:34:43.

the figures. According to the oh BR, the economy will grow this year at

:34:44.:34:47.

2.7%. It's expected to grow 2.3% in 2015. 2.6% in 2016. Steady at 2.6%

:34:48.:35:00.

in 2017. And 2.5% in 2018. Forget everything I just said that, because

:35:01.:35:05.

they have no idea how it is going to grow in 2018, this is just a

:35:06.:35:08.

complete the series! Public borrowing stands at ?108 billion

:35:09.:35:11.

this year, but it's expected to fall over the next five years to a ?5

:35:12.:35:20.

billion surplus in 2018/19. Supposed to be a surplus this year, but it is

:35:21.:35:25.

now been moved to then. But Britain's debt mountain will end up

:35:26.:35:28.

being smaller than previously thought, peaking at 78% of GDP in

:35:29.:35:30.

2015, 7% less than forecast. Why have you presided over the worst

:35:31.:35:43.

recovery of any major economy? Because we had the biggest recession

:35:44.:35:46.

in 100 years where are economy shrank by over 7%. But the sub-prime

:35:47.:35:53.

crisis started in America. Japan has had a huge banking crisis as well.

:35:54.:35:56.

Why have we performed worse than them? Because we had a big

:35:57.:36:02.

recession, the eurozone crisis, other emerging markets. So did the

:36:03.:36:07.

French and the Germans. Why was hours worse? Because of all of those

:36:08.:36:12.

factors and the need to get some structural things that we needed to

:36:13.:36:16.

get right in our economy to build our way through, dealing with public

:36:17.:36:21.

spending, dealing with things like the welfare bill that had been going

:36:22.:36:28.

up and up, and also about consumer confidence and business confidence,

:36:29.:36:33.

and that takes time. We can see that coming back now. But the whole

:36:34.:36:41.

purpose of this coalition has been bid to reduce the deficit. The

:36:42.:36:50.

deficit made by Labour, is the Tory mantra. So why are we still, two

:36:51.:36:56.

years from now, having the worst fiscal deficit of any Western

:36:57.:37:03.

economy? It is down by a third now and is forecast to be halved,

:37:04.:37:06.

because we have had this big recession to deal with. We have not

:37:07.:37:14.

had a worse recession than Ireland, we have not had a worse recession

:37:15.:37:20.

than Greece, which has lost 25% of its GDP. We have not had a worse

:37:21.:37:24.

recession than Portugal. We have not had a worse recession than Spain,

:37:25.:37:28.

which is an even bigger property boom than we have. Yet our fiscal

:37:29.:37:32.

deficit will remain bigger than all of these countries. There is also

:37:33.:37:38.

the fact that other things, public spending needed to come under

:37:39.:37:46.

control. Greece had massive public spending, too. They haven't got it

:37:47.:37:51.

under control. But their fiscal deficit in 2050 will be smaller than

:37:52.:37:58.

ours. We're bringing the spending under control. The welfare benefit

:37:59.:38:01.

had got out of control as far as taxpayers were concerned, all of

:38:02.:38:05.

those things have combined... And you still can't do better than the

:38:06.:38:10.

Greeks? We are well on course to halve the deficit by next year, and

:38:11.:38:15.

to have a small surplus by 2018. These things take time, and I think

:38:16.:38:21.

people respect that. Why did Ed Miliband not mention a single

:38:22.:38:24.

measure in the Budget yesterday in his response? I'm not sure that is

:38:25.:38:30.

quite true. Don't all gang up on him! That's my job. I think the

:38:31.:38:36.

measures that he mentioned were the effect on the public. What Budget

:38:37.:38:43.

measure did he comment on in his response to the Budget? We can go

:38:44.:38:47.

through his speech in great detail... Just give me one. You were

:38:48.:38:54.

there. You must have listened to it. I was actually giving my own

:38:55.:38:58.

reaction. Tell me one measure that he commented on four or against? I

:38:59.:39:03.

think he was making a point about the lack of measures in the Budget

:39:04.:39:07.

to deal with the cost of living pressures that people were facing.

:39:08.:39:12.

He could've written that weeks ago. He probably did. You are reacting to

:39:13.:39:19.

the Chancellor's speech. The normal convention is that a Minister makes

:39:20.:39:23.

a statement. There is an hour or two of notice to the opposition

:39:24.:39:29.

spokesman. Redacted in a certain way for market sensibility. But it is an

:39:30.:39:37.

important thing people need to know. As a leader of the opposition or any

:39:38.:39:41.

shadow Minister, you have to react to the context in which the speeches

:39:42.:39:45.

are given, and I can tell you something for the Op the more that

:39:46.:39:47.

we look at the Budget, the more obvious it is the measures that are

:39:48.:39:56.

conspicuous by their absence. That he didn't mention either! But since

:39:57.:40:02.

he didn't mention any measure, can you tell us today what was announced

:40:03.:40:06.

in the Budget that you will vote against? I think there was some good

:40:07.:40:12.

things in the Budget. There were a few U-turns. We haven't got the

:40:13.:40:17.

finance bill yet. So you don't know yet. We are in favour of a welfare

:40:18.:40:24.

cut, and we believe that your reckless spending in terms of... To

:40:25.:40:29.

go back to your question about recovery. Our biggest question was

:40:30.:40:35.

how unbalanced our economy was. Under the previous government,

:40:36.:40:38.

manufacturing went from 22% to 11% of the economy. We're having to

:40:39.:40:44.

recover from a low base. The alternative measures that have been

:40:45.:40:48.

suggested have even now started complaining about tax rises, 24 tax

:40:49.:40:52.

rises. I don't know which ones they particularly don't like. But they

:40:53.:40:57.

are complaining about both spending cuts and tax rises. It is always two

:40:58.:41:05.

government spokespeople. The personal allowance, you say we give

:41:06.:41:08.

a little with one hand and take off with the other, that is far greater.

:41:09.:41:15.

Council tax, fuel duty... You never mention VAT. People are ?891 worse

:41:16.:41:24.

off on average. There was a total lack of detail in Ed Miliband's

:41:25.:41:29.

response. But you published 24 tax rises that you claim have come...

:41:30.:41:37.

And we can't undo the maul. Will you reverse any of them? In 2015, the

:41:38.:41:47.

years the general election, we will look at them then. Say you cannot

:41:48.:41:52.

say that you will reverse any of them? I cannot promise to reverse

:41:53.:41:59.

any thing that we cannot afford. We think there are ways of funding the

:42:00.:42:04.

bedroom tax and its abolition. Stamp duty reserve tax the rich investment

:42:05.:42:09.

managers shouldn't be the priority that they are cutting in April. We

:42:10.:42:13.

think instead it is important to help people with the bedroom tax.

:42:14.:42:18.

Why did you not include the bedroom tax among the 24 tax rises? We

:42:19.:42:23.

could've done. We didn't include tax credits. If you want an even greater

:42:24.:42:29.

list... That is because you know it is not a tax. For a lot of people it

:42:30.:42:37.

is. So why didn't you include it? This is the main thing you have been

:42:38.:42:41.

campaigning for, to get rid of what you call the bedroom tax. Yet on a

:42:42.:42:46.

list of 24 tax rises, you don't include the biggest one that you

:42:47.:42:52.

have talked most about? Why? I am happy to call it 25 tax rises if you

:42:53.:42:59.

really want. Why has it taken new 24 hours to do that? If you want a

:43:00.:43:03.

compendium, it is a much bigger list. Why didn't you put the most

:43:04.:43:15.

important one? There are many of them. This is the one that you say

:43:16.:43:19.

you want to reverse. You have just said you can't reverse the other 24,

:43:20.:43:24.

yet the one that you can reverse is the one that you didn't include.

:43:25.:43:29.

Why? We needed to set out for people that there were a number of changes

:43:30.:43:32.

to their taxes, and we needed to put beyond doubt the fact that this is

:43:33.:43:37.

an approach that typically comes from the Chancellor. He will

:43:38.:43:41.

sprinkle around a few goodies, a change in your personal allowance,

:43:42.:43:45.

but the context is that people's taxes elsewhere have been going up.

:43:46.:43:50.

If you want me to call it 25 tax rises, I am happy to do that, but

:43:51.:43:54.

the point is it is unfair. We have run out of time. Policy has been

:43:55.:44:01.

made yet again on the Daily Politics as! You heard it here first. And now

:44:02.:44:09.

for something completely different. We're going to mark an anniversary

:44:10.:44:16.

of true national significance. No, not Andrew's birthday, but ten years

:44:17.:44:20.

since Parliament got its own rock band. They're called MP4, and they

:44:21.:44:22.

regularly bring their signature brand of dad rock to events at

:44:23.:44:25.

Westminster. Adam's been auditioning to be their roadie.

:44:26.:44:28.

It is Budget night, and boring politicians are talking about

:44:29.:44:32.

pensions stuff, but not here. This is MP4, the only parliamentary rock

:44:33.:44:33.

group in the entire world. # Keep on running. They let us into

:44:34.:44:47.

the sound check ahead of their gig to mark ten years on stage. On

:44:48.:44:53.

guitar, Labour's Kevin Brennan. On drums, the Conservative Greg Knight

:44:54.:44:58.

and on keyboards, Pete Wishart of the SNP, who has been on an actual

:44:59.:45:02.

band that played in stadiums and everything! But just how rock 'n'

:45:03.:45:08.

roll are these guys? I want to ask about rock cliches. Do you have

:45:09.:45:14.

groupies? Yes, but we don't tell the media about them. Have you ever

:45:15.:45:20.

trashed a hotel room? I rearranged the towels are slightly. There are

:45:21.:45:27.

violent rows between two members of the group, usually the two Labour

:45:28.:45:32.

members! Kevin was in favour of Gordon Brown and I was in favour of

:45:33.:45:38.

Tony Blair! MP4 I'll regulars on the Westminster social scene. This cake

:45:39.:45:43.

was last week at the Parliamentary variety show. -- are regulars. The

:45:44.:45:50.

band have raised ?1 million for good causes over the last decade, they

:45:51.:45:55.

reckon. And yes, there is an album - probably not available in a record

:45:56.:46:00.

shop near you. Pete Wishart has come from a

:46:01.:46:04.

recording studio and he joins us now. How did you all get together?

:46:05.:46:09.

It's ten years and I think Andrew was at our first gig. I was from the

:46:10.:46:19.

music industry and there was an all-party music group put together

:46:20.:46:24.

and I wanted to get debate going. I met Ian and we started about the

:46:25.:46:27.

prospect of putting together a parliamentary rock band. We said we

:46:28.:46:32.

would never find a drummer to only find Greg Knight eavesdropping on

:46:33.:46:35.

our conversation and he asked if we were talking about a drummer and

:46:36.:46:39.

offered his services. We were quite happy being MP3 at that point and

:46:40.:46:43.

then Kevin Brennan decided to gate-crash the party with his guitar

:46:44.:46:47.

and from Bennet been MP4 so we've risen to the steady heights of

:46:48.:46:53.

competence! -- from then it's been. You didn't have to audition, then? I

:46:54.:46:58.

don't think there was a great talent -based audition from! Any hidden

:46:59.:47:05.

talents here? No, but I think Ed Balls is trying his best to get in!

:47:06.:47:10.

MP4 performed one New Year on the terrace and they had a guest, David

:47:11.:47:16.

Morris the MP4 Morecambe. He's a genuine session guitarist so there

:47:17.:47:21.

is a reserve in place! Maybe your fame could spread further than the

:47:22.:47:27.

Westminster terraces. You could be in Pienaar spaceman grow 650. -- you

:47:28.:47:38.

could be MP650. We've raised quite a lot of money for Macmillan Cancer

:47:39.:47:43.

Support. We've made a lot of great friends in the ten years.

:47:44.:47:47.

Camaraderie urges in bands and developed and we are very

:47:48.:47:51.

supportive. Not like the Rolling Stones, then!

:47:52.:47:56.

You haven't split up and come back together? No, I think this will be

:47:57.:48:01.

the line-up until our last days. When is your next gig? Believe it or

:48:02.:48:06.

not, the Speaker has kindly agreed to allow us to do a show in

:48:07.:48:13.

Speaker's House to celebrate ten years. We also have a gig where we

:48:14.:48:20.

sail up and down the Thames. Do you think John Bercow would allow you to

:48:21.:48:24.

play a gig in the chamber? I think that would be ruled out. How many

:48:25.:48:36.

copies has your album sold? Three. Still available on all good download

:48:37.:48:40.

sites! Have you noticed something about the band? In what way? It's

:48:41.:48:48.

cross-party but there are no Lib Dems. I'm not sure we have any Lib

:48:49.:48:54.

Dem musicians. You have a few fiddlers! Very good! He did turn up

:48:55.:49:02.

with his mouth organ once but we had to let him down gently! But it isn't

:49:03.:49:09.

a policy that they're barred? Is a Liberal Democrat came forward with

:49:10.:49:14.

is a pre-musical talent he would be admit it at media early! Have you

:49:15.:49:20.

heard them play? I haven't but I hope they manage to stay together.

:49:21.:49:29.

Maybe if you win at the Brits! We are waiting for the best

:49:30.:49:32.

parliamentary rock group category to emerge! Would have been nice to have

:49:33.:49:37.

you play them all out because we now say goodbye to the three of you

:49:38.:49:45.

guests. Enjoy. Back to the budget, a day of high

:49:46.:49:49.

drama in the Westminster village calendar. Apart from the general

:49:50.:49:51.

election, it's probably as good as it gets. Let's take a look back.

:49:52.:49:59.

If you are a maker, a doer or a saver, this budget is for you.

:50:00.:50:21.

CHEERING If you like the Budget, we need to

:50:22.:50:24.

put the question. All the prime minister needs to do is nod his head

:50:25.:50:28.

if he's going to rule out cutting the 45p tax. There was almost no

:50:29.:50:34.

mention of young people in the statement at all. A very, very

:50:35.:50:42.

sensible Budget. I'm joined now by one man who things budgets are a

:50:43.:50:46.

waste of time, trying to do us out of a job! He's Danny Finklestein.

:50:47.:50:51.

He's a Tory peer and terribly grand. And one man who thinks they're not,

:50:52.:50:57.

Steve Richards. He's not a peer - yet - but is quite grand. I think we

:50:58.:51:07.

have now got four fiscal events in a two-year period and I'd like one.

:51:08.:51:13.

The best type of Chancellor creates a framework for the economy, a

:51:14.:51:17.

framework for taxation, has a sense of direction and doesn't want to

:51:18.:51:20.

keep on moving taxes up and down to manage the news media. But the way

:51:21.:51:26.

the fiscal calendar is organised, it encourages people to do something

:51:27.:51:29.

that means that television programmes have got something

:51:30.:51:33.

exciting to say about them. And what's wrong with that? I can

:51:34.:51:37.

understand why the media, including myself and the Chancellor, will have

:51:38.:51:41.

a vested interest in having all these events but I don't think it

:51:42.:51:45.

makes for good policy because the better policy is long-term strategic

:51:46.:51:52.

policy. I accept that you get silly policies and I think it's worth the

:51:53.:51:56.

silly policies because in my view, politics is now an art form and one

:51:57.:51:59.

might as well and break the artistry. In other words, we need

:52:00.:52:03.

these events, partly to hold people to account, partly to explore what

:52:04.:52:07.

they're up to, partly to explore what they are. And without these

:52:08.:52:12.

events, we wouldn't get that, so it's a wholly artificial device, the

:52:13.:52:16.

Budget, the party conference speech, all the annual rituals we have, the

:52:17.:52:20.

Autumn Statement which is, in effect, a second Budget. We get the

:52:21.:52:26.

silly policies but it's worth it because it gives us an excuse to

:52:27.:52:30.

explore what they're about. And take stock. And take stock. And without

:52:31.:52:35.

them, we wouldn't have these pauses in the general frenzy of political

:52:36.:52:40.

life. I think and argue that have to start with silly policies being

:52:41.:52:43.

worth the price is arguing against itself. What makes you think you

:52:44.:52:49.

wouldn't still get silly policies? I think the few occasions you have

:52:50.:52:53.

where politicians are expected, as a matter of ritual, to turn up with

:52:54.:52:58.

something exciting to say, the better policy would be... Let's take

:52:59.:53:02.

a beer policy. It sensible to create a long-term framework for the

:53:03.:53:06.

taxation of alcohol. It isn't sensible to have a framework in

:53:07.:53:09.

which people are courage to move the attacks up and down to create

:53:10.:53:12.

newspaper headlines. But if you don't do that, you don't get any

:53:13.:53:25.

headlines. -- to move here tax. You end up with posters like the one Mr

:53:26.:53:30.

Schatz has released. It tells us about what the person who came up

:53:31.:53:35.

with it thinks. -- that Grant Shapps has released. It's taken the lid off

:53:36.:53:44.

something? It tells us about a thought process. I feel like the

:53:45.:53:48.

Leader of the Opposition. I've got nothing interesting to say about it.

:53:49.:53:54.

I can't understand what everyone has got so excited about. In a way, it

:53:55.:53:59.

makes my case, which is that it's a silly political row about the words

:54:00.:54:15.

people use. All the letter set. It's digitally made now! In terms of

:54:16.:54:20.

policy, you get the silly things about beer but in terms of the

:54:21.:54:26.

pensions announcement, I saw some people say they think it will

:54:27.:54:30.

implode but I think probably, after the so called on the shambles

:54:31.:54:44.

Budget, this, I assume will be rock solid. -- omnishambles Budget. We've

:54:45.:54:50.

had the Mayor of London, it on the poster. Let's have a look. Who are

:54:51.:55:01.

"vague"? I haven't seen it. -- who are "they" ? It seems to be

:55:02.:55:08.

celebrating the fact that we are cutting the tax on bingo and beer

:55:09.:55:13.

and that is the right thing to do. Are they via Tony and is? -- the

:55:14.:55:21.

people who went to Eton? I think it is the right thing to do. I didn't

:55:22.:55:26.

write the blooming thing. It's trying to get across the message

:55:27.:55:33.

that it is the Budget for everybody. What's he supposed to say? May be

:55:34.:55:41.

what he thinks! Well, it's a little bit of paper with a few words on

:55:42.:55:51.

it. Naturally, this kind of conversation in which the consensus

:55:52.:55:54.

is that it was silly is an opportunity for somebody who isn't a

:55:55.:55:58.

Conservative to say it is a silly poster. Maybe for other people, and

:55:59.:56:05.

just not for me - it didn't strike me as that interesting. You don't

:56:06.:56:11.

think it tells us something? I do. And so does the Budget speech. On

:56:12.:56:17.

the whole, it would be a very tedious exercise but if you look

:56:18.:56:20.

back at Budget speeches, much more than Queens speeches, it tells us a

:56:21.:56:28.

lot about the economic policy, of a future intent, context. I do think

:56:29.:56:35.

they force people - in this case chancellors - to think about who

:56:36.:56:38.

they are and what they are about and they tell us things. It's the same

:56:39.:56:41.

with the leaders' conference speeches. I spoke to one of the

:56:42.:56:46.

leaders before there's last September and October and I asked if

:56:47.:56:49.

they were fed up about the amount of time they spend on it and they said

:56:50.:56:53.

it made them focus and concentrate the mind. Let's forget the poster

:56:54.:56:59.

and come onto the substance or, more particularly, both of you give me

:57:00.:57:04.

your view about where this leaves our politics up to the election,

:57:05.:57:11.

after this budget? I don't think the Budget will have altered this but we

:57:12.:57:14.

are in for a period where we have this debate between the living

:57:15.:57:19.

standards rising versus whether growth is rising. People will know

:57:20.:57:22.

the country is doing well and then wonder whether they themselves are

:57:23.:57:26.

doing well. If they feel they are not they may well say that the Tory

:57:27.:57:29.

brand values are that they don't help people like them and that's why

:57:30.:57:33.

they are not being held. There is a great boon - we got things right,

:57:34.:57:38.

the economy is going the right direction. And the danger which is

:57:39.:57:42.

the party being seen not to help people. Where it is clever is that

:57:43.:57:47.

there will now be a new focus on savers which hasn't really been

:57:48.:57:51.

around in our daily reflections on politics and economics throughout

:57:52.:57:53.

this whole period. That will change I think and that is quite a big

:57:54.:58:01.

twist. Other than that, I think it will have little impact on the wider

:58:02.:58:05.

political mood in the short-term. I'll be surprised if polls show a

:58:06.:58:10.

sudden huge Tory lead. And in the build-up, there were clearly a

:58:11.:58:13.

series of traps for Labour and the one they haven't yet resolved is

:58:14.:58:17.

whether they support his tax and spend plans or his spending targets

:58:18.:58:21.

for the next parliament and that will be a big call on their part.

:58:22.:58:25.

Unlike the welfare cap, my guess is that they won't stop That's a debate

:58:26.:58:31.

to come. That will shape the politics of the election. That's it

:58:32.:58:44.

for today. The News At One is starting over on BBC One now. I'll

:58:45.:58:48.

be on BBC One tonight with Ranulph Fiennes, Kevin Maguire, Miranda

:58:49.:58:50.

Green, Diane Abbott and Michael Portillo on This Week at 11:35pm.

:58:51.:58:54.

And I will be back here at noon tomorrow with all the big political

:58:55.:58:57.

stories of the day. What are you doing? What am I doing here? !

:58:58.:59:00.

You're a glutton for punishment! Goodbye.

:59:01.:59:01.

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