Conference Special

:00:10. > :00:15.The start of the Tory conference in Birmingham has been battered with

:00:16. > :00:19.defection and scandal. Can George Osborne steady the ship? There is

:00:20. > :00:56.talk of tax cuts and economic growth.

:00:57. > :01:01.Welcome to the Daily Politics live from the Conservative Party

:01:02. > :01:06.conference in Birmingham. If we cannot beat that shower of an

:01:07. > :01:10.opposition we don't deserve to be in politics, so said David Cameron last

:01:11. > :01:15.night. But after the worst start to a Tory conference in recent memory

:01:16. > :01:19.it is looking harder than it did, especially with Michael Ashcroft

:01:20. > :01:24.helpfully producing polls saying Ed Miliband is going to win big-time.

:01:25. > :01:30.Over to this man, George Osborne, who not the first time is expected

:01:31. > :01:33.to produce a political fix for his party's predicaments. We will bring

:01:34. > :01:41.you his speech live and uninterrupted. Could this woman win

:01:42. > :01:44.this affected Tory voters in Scotland? We will be speaking to the

:01:45. > :01:50.Tory heroine of the Better Together campaign, Ruth Davidson. Who would

:01:51. > :01:57.the Tories rather jump into bed with, Ukip or the Liberal Democrats?

:01:58. > :02:02.I just happen to like Nigel Farage. I have shared beers with him. It

:02:03. > :02:09.does not mean I share the same politics. All that in the next two

:02:10. > :02:15.hours of public sector broadcasting at its cheapest. It is George

:02:16. > :02:19.Osborne's big day at conference, he will be addressing the party

:02:20. > :02:23.faithful just before midday. He will announce plans to abolish a death

:02:24. > :02:26.tax on pension pots to allow hundreds of thousands of elderly

:02:27. > :02:30.people to leave their money to their loved ones after they died. It is a

:02:31. > :02:39.measure designed to appeal to court Tory voters, to get those back

:02:40. > :02:47.tempted by UKIP. Will it work? We have Kevin Maguire from the Daily

:02:48. > :02:53.Mirror. How difficult will it be for this conference to get over the

:02:54. > :03:00.terrible start at the weekend? It's interesting, going round the bars

:03:01. > :03:07.last night, they pay us a terrible salary and force us to drink... It

:03:08. > :03:11.has had the opposite effect as the first defection, it has had a

:03:12. > :03:17.unifying experience, Douglas Carswell was a loss to the Tory

:03:18. > :03:25.party, Mark Reckless was seen as a loner, an oddball, they are unifying

:03:26. > :03:31.around this perfidious act, yet it seems to be a rallying call. And the

:03:32. > :03:37.Chancellor will be getting focus away from these things and onto the

:03:38. > :03:41.economy. Yes, they have more credibility on that than Labour.

:03:42. > :03:47.They are on the traditional Tory ground of offering tax cuts and

:03:48. > :03:54.bashing benefit claimants. I think only UKIP, the Tories think they can

:03:55. > :03:58.beat Mark Reckless. He has a 10,000 majority, has not got the personal

:03:59. > :04:02.appeal of Douglas Carswell. They think if they can beat him there

:04:03. > :04:08.they will halt the UKIP bandwagon. We mentioned Ashcroft's survey,

:04:09. > :04:13.showing that what ever happened last week, it was very flat for Labour,

:04:14. > :04:20.it looked like he might have taken another stumble towards Downing

:04:21. > :04:23.Street. UKIP is the ghost at the feast. It hangs over everything they

:04:24. > :04:31.do, every hope they have of winning the election, every right-wing Tory

:04:32. > :04:35.MP, they look at and wonder who will be next to defect. They are asking

:04:36. > :04:44.the wrong questions. UKIP is a monumental protest against business

:04:45. > :04:51.as usual. It is anti-Westminster, it is anti-politics. Expect to see

:04:52. > :04:57.quite a lot from George Osborne. One that we have not been told about?

:04:58. > :05:04.Some sort of massive totemic benefits cut, it will be a typical

:05:05. > :05:09.George Osborne move, challenging Labour to match his austerity

:05:10. > :05:15.measures. What was the public interest defence in your paper in

:05:16. > :05:19.trapping Brooks Newmark? If you have a minister charged with getting more

:05:20. > :05:22.women into politics but seems to have more interest in getting them

:05:23. > :05:29.into bed, there is huge public interest. There is no criminality,

:05:30. > :05:32.no wrongdoing, massive stupidity, where is the wrongdoing or the

:05:33. > :05:37.criminality? There is a huge question of judgement, when you have

:05:38. > :05:42.a 56-year-old father of five sending lewd pictures to someone he believes

:05:43. > :05:49.is a 21-year-old young woman, trying to meet her at the Tory conference.

:05:50. > :05:57.That is stupidity, if it was a matter of judgement we would not

:05:58. > :06:00.have the ministers in the Cabinet. You went on a fishing expedition.

:06:01. > :06:06.You did not have reasons to believe he was up to something stupid, you

:06:07. > :06:12.just went on a fishing expedition. The journalist says he did not, he

:06:13. > :06:20.had word that about have a dozen Tory MPs were using social media to

:06:21. > :06:26.meet people in an inappropriate way, so he went to investigate. You only

:06:27. > :06:31.tried to entrap Tory MPs. Why? That is where he had his information. I

:06:32. > :06:36.remember bringing John Prescott when he was Deputy Prime Minister about

:06:37. > :06:41.his affair with a civil servant. That was an affair, this was social

:06:42. > :06:44.media. Why were only Tory MPs targeted in this fishing

:06:45. > :06:51.expedition? His information was these Tory MPs, there were questions

:06:52. > :06:55.to be asked. It turned out he was wrong on all the others except

:06:56. > :07:01.Brooks Newmark? The newspapers studied his evidence, that he had

:07:02. > :07:07.evidence to mount this fishing expedition? They went through it

:07:08. > :07:11.very carefully over the week. It has been reported to the new press

:07:12. > :07:15.regulator, which will look at it. I would like all the evidence to be

:07:16. > :07:19.published so you can see all the e-mail trails, then you can make

:07:20. > :07:22.your own judgement, we can all judge at their when everything is in the

:07:23. > :07:29.public eye. You know that entrapment is only justifiable if there is a

:07:30. > :07:33.serious public interest at stake. People might regard this as stupid,

:07:34. > :07:38.they do not regard it as a serious public interest. Andrew, I dispute

:07:39. > :07:43.that. If I thought a minister, unmarried father of five in a

:07:44. > :07:49.responsible position was chasing young women like this, I would think

:07:50. > :07:58.that is a matter of public interest. Does this go on in the Daily Mirror

:07:59. > :08:05.newsroom? Or the BBC? Or at the Sun newspaper, which was awash with

:08:06. > :08:10.drugs and infidelity. For the record, I was never in that

:08:11. > :08:15.newsroom. Will you take a high moral position on this? If you want to

:08:16. > :08:19.take some shifts we can fit you in. You cannot afford me. We are not

:08:20. > :08:24.trying to sound too morally high because I'm sure Mike paper has

:08:25. > :08:28.committed moral mistakes. We turned down the story. It was offered to us

:08:29. > :08:34.then the mail on Sunday, they turned it down as well. The new press

:08:35. > :08:39.regulator, the bar is a little bit higher. We need to be careful of

:08:40. > :08:45.entrapment. In our judgement, and I'm not saying this is right... Let

:08:46. > :08:51.me get this right, the Daily Mirror is using stories that the Sun

:08:52. > :08:56.newspaper and the mail on Sunday turned down? We do not have a

:08:57. > :09:01.problem with the problems the Sun newspaper does have, which is why I

:09:02. > :09:07.believe they did not go near the story. We went over this with

:09:08. > :09:12.lawyers for a week. There will be a ruling, I will come back and discuss

:09:13. > :09:17.it with you happily. Maybe you could get your editor to come. That would

:09:18. > :09:22.be interesting. I am rather lower in the food chain than you are. As

:09:23. > :09:29.usual it turns out the media is more interested in the conference. Two

:09:30. > :09:39.MPs have defected to UKIP, Douglas Carswell and Mark reckless. -- ten

:09:40. > :09:48.Mac. Dan Hannan has not yet defected. He joins us from the

:09:49. > :09:54.Westminster studio. Welcome to this programme. You were not just

:09:55. > :10:00.colleagues, you were a close personal friend. You must have known

:10:01. > :10:03.one of them was jumping ship. Yes, they are friends of mine. It is

:10:04. > :10:07.difficult for me. I think they've made a mistake. I'm not going to

:10:08. > :10:12.disown my friendship. They have acted on principle. Nobody does this

:10:13. > :10:17.kind of thing lightly. They wrestled with the decision for a long time,

:10:18. > :10:20.turning your back on relationships you have built up is not something

:10:21. > :10:23.you do frivolously and they have done it after a lot of

:10:24. > :10:27.soul-searching. You must have known that one or the other was going to

:10:28. > :10:32.jump ship. I'm not going to get into what we discussed before. So they

:10:33. > :10:43.did consult you? I've just answered that. All right, then I take it they

:10:44. > :10:48.did. You say you will not defect, but Mark Reckless said he would not

:10:49. > :10:56.defect either. How do we know you're not fibbing? I am not fibbing. I've

:10:57. > :11:00.explained at length, there are possible parties of government, one

:11:01. > :11:03.will give a referendum, the other will not only cancel that referendum

:11:04. > :11:08.but we'll do it what it did last time, it will void our Treasury, and

:11:09. > :11:12.employment will rise, the deficit will rise again, we will cancel the

:11:13. > :11:19.welfare reforms and education reforms. It is a terrible pity,

:11:20. > :11:23.there are good patriotic people voting UKIP and conservative, and

:11:24. > :11:27.even though combined they mark out half the electorate, because of that

:11:28. > :11:33.split, it looks as though Ed Miliband on the current polling will

:11:34. > :11:42.be Prime Minister with 35% of public support. Let's get a straight

:11:43. > :11:47.guarantee from you. You will guarantee this morning that you will

:11:48. > :12:00.not effect to UKIP this side of polling day May 2015? Yes. Why not?

:12:01. > :12:07.I just explained why. Had the Conservative Party not offered

:12:08. > :12:12.referendum, I would have found it difficult to fight the last European

:12:13. > :12:17.elections as a conservative, but David Cameron has made that its

:12:18. > :12:20.policy. The issue that animates me and a lot of people in the

:12:21. > :12:25.Conservative Party is being able to be a free, independent country,

:12:26. > :12:29.trading with Europe at embracing wider opportunities of other

:12:30. > :12:33.continents. It seems to be the only way to settle that issue, with a

:12:34. > :12:38.national referendum. The tragedy would be if we don't get that

:12:39. > :12:42.referendum because of UKIP, from the best of intentions, they become the

:12:43. > :12:47.agency that prevents us getting that referendum because the vote is split

:12:48. > :12:55.and Labour and Lib Dem candidates form a majority with a derisory

:12:56. > :12:59.share of the vote. But Mark Reckless and Douglas Carswell claim this

:13:00. > :13:08.referendum is preordained to deliver a yes vote, even if it is small

:13:09. > :13:13.changes, he will come to the British people and say he has renegotiated.

:13:14. > :13:18.I agree with that analysis but I have a much higher opinion of my

:13:19. > :13:22.fellow countrymen than to think they will fall for the same trick Harold

:13:23. > :13:28.Wilson pooled in 1975. Ultimately, it will not be any of us who decides

:13:29. > :13:34.this, it will be the British people as a whole. It is already pretty

:13:35. > :13:39.clear that what we will end up with is something very close to the

:13:40. > :13:43.existing terms, we've had 40 years to get used to the European Union of

:13:44. > :13:46.which we are members, the question we will face is whether we remain

:13:47. > :13:53.part of it, they will not be any significant change, we will still be

:13:54. > :13:58.in many of the same policies, but are we happy to be part of that

:13:59. > :14:05.united Europe, the only trade bloc in the world that his shrinking, or

:14:06. > :14:08.are we going to raise our eyes to more distant horizons and embrace

:14:09. > :14:17.the opportunities that come to us as a global nation? That is clearly why

:14:18. > :14:24.you will vote against this, if we get a referendum. Can I just be

:14:25. > :14:30.clear, you think even if only marginal changes are made to our

:14:31. > :14:34.status within the European Union, Mr Cameron and the Tory establishment

:14:35. > :14:38.will campaign to keep us in the European Union? That's a question

:14:39. > :14:47.you'd have to put to the Prime Minister, but my working assumption

:14:48. > :14:50.is that he and I will be on opposite sides because even if his stated

:14:51. > :14:54.objectives were met there would not be any fundamental change in Irish

:14:55. > :14:59.and with the European Union, we would still be in the common

:15:00. > :15:05.external tariff, part of the common diplomatic corps, the justice and

:15:06. > :15:11.common home affairs policy, we would still have European citizenship. It

:15:12. > :15:16.is a pity. He does have the opportunity and he may pull

:15:17. > :15:17.something out of the hat, he has the opportunity to go for a

:15:18. > :15:23.substantially different relationship, something closer to

:15:24. > :15:27.what other countries do, being inside the free market but outside

:15:28. > :15:33.the political union. That is plainly on offer, it is a deal enjoyed by

:15:34. > :15:36.other countries at the moment, and it is indicated that it would be

:15:37. > :15:40.available. For whatever reason, it does not seem to be something they

:15:41. > :15:50.are interested in going for. That's a question to put to them.

:15:51. > :15:53.An Thank you for turning up in Westminster today. Good to speak to

:15:54. > :15:58.you. Which, if you hadn't noticed,

:15:59. > :16:02.is still in tact, Yesterday afternoon it was the hot

:16:03. > :16:06.topic of debate here in Birmingham with key addresses from the

:16:07. > :16:08.Conservative Leader in Scotland, and new party heroine, Ruth Davidson,

:16:09. > :16:11.and the Leader of the House of Commons, William Hague,

:16:12. > :16:24.who delivered his final speech to We must reshape our union, so that

:16:25. > :16:28.each of its nations is comfortable in its own clothes. For Scotland,

:16:29. > :16:34.that means having a Parliament that finally had to look tax payers in

:16:35. > :16:36.the eye. Right now, the First Minister of Scotland have a block

:16:37. > :16:42.grant transferred from Westminster. Their only concern is how to spend

:16:43. > :16:45.it. This has allowed a nationalist Government to spend seven years

:16:46. > :16:48.telling the people of Scotland that everything good in the country is

:16:49. > :16:53.down to them for spending money on it and everything bad is

:16:54. > :16:57.Westminster's fault for not handing over enough. I want a a Scottish

:16:58. > :17:01.Parliament that is in charge of raising more of the money it spends.

:17:02. > :17:05.I want the working people of Scotland to know when they look at

:17:06. > :17:11.their pay check the right-hand column is going direct to Holyrood.

:17:12. > :17:19.A more direct link to what is raised in Scotland is what is spent. Less

:17:20. > :17:23.reliance on a block Brant and a more physically reliable policy. And when

:17:24. > :17:26.that happens and people see their tax sent directly to Scotland, they

:17:27. > :17:31.will hold future First Ministers to account. No more free passes. No

:17:32. > :17:35.more false promises, no more excuses and no more cries of - only with the

:17:36. > :17:41.powers of independence. It is time for the way decisions are

:17:42. > :17:47.made to be fair to all, including the voters of England. And my

:17:48. > :17:51.long-standing view is that when Parliament makes decisions affecting

:17:52. > :17:55.only the people of England, or only the people of England and Wales,

:17:56. > :17:57.then those decisions should be made only by the MPs elected to represent

:17:58. > :18:07.them. APPLAUSE

:18:08. > :18:15.If the representatives of Scotland are well able to decide many of

:18:16. > :18:18.their own laws, as they surely are, then when we representatives of

:18:19. > :18:23.Yorkshire, Kent or Norfolk are gathered together, we have the

:18:24. > :18:28.ability and right to do so as well. The Prime Minister has asked me to

:18:29. > :18:32.Chair the committee of the Cabinet to address, at last, this question.

:18:33. > :18:38.We have begun our work and we're open to the views of all. But we are

:18:39. > :18:44.not open to attempts to evade and dodge this issue for years to come.

:18:45. > :18:48.If no agreement can be reached, then each party must present its

:18:49. > :18:53.proposals to the electorate. So we will argue our case with the other

:18:54. > :18:56.parties, but in the absence of agreement, we will relish taking our

:18:57. > :19:03.case to the country. APPLAUSE

:19:04. > :19:07.And we are joined now by Ruth Davidson, the leaders of the

:19:08. > :19:10.Conservatives in Scotland. Welcome to the daily iks Mr. You are

:19:11. > :19:16.generally regarded as having had a good referendum. How are you going

:19:17. > :19:19.to translate that into more Tory needs more of the border? Where the

:19:20. > :19:23.Conservatives took the looed in the Better Together campaign and it was

:19:24. > :19:29.cross party. We took the lead in places like Angus, and pertshire.

:19:30. > :19:32.Used to be Tory territory. And places in Aberdeenshire and Scottish

:19:33. > :19:37.borders, we have really good opportunities there. If you look at

:19:38. > :19:43.the sort of voting intentions, about 170,000 people that voted SNP at the

:19:44. > :19:47.last Scottish election, voted no. They are the people we want to go

:19:48. > :19:51.after. How many seats are targeting with a hope of winning? We are going

:19:52. > :19:57.to target a number of seats. I'm not going it tell you that number. Why?

:19:58. > :20:02.Because I bear the scars of 2010, because somebody said it was we were

:20:03. > :20:06.well-placed in 12 seats and we got slaughtered in 11 of them. You don't

:20:07. > :20:10.want to repeat that. At conference they did that, as well. I will not

:20:11. > :20:15.do the same. Are you confident enough that, when we wake up, those

:20:16. > :20:19.of us who have been up all night probably and we see the results in

:20:20. > :20:25.Scotland that you will have more Tory MPs in Scotland than pandas?

:20:26. > :20:31.Certainly I hope so, to put that joke to bed. You'd only need three

:20:32. > :20:36.Our great strength in Scotland, our great weakness, our vote is spread

:20:37. > :20:42.evenly. Ourselves, the Liberals and SNP got between 400,000 and 500,000.

:20:43. > :20:49.We got 413,000. The Liberal Democrats got 465. We got one seat,

:20:50. > :20:52.they got 11. It is about being able to build-our campaigning ables and

:20:53. > :20:56.our levels of support in pockets in the way they have done. --

:20:57. > :21:00.campaigning ability. What is the strategy? Will you fight

:21:01. > :21:03.on a specifically Scottish manifesto in the election? Well, the Scottish

:21:04. > :21:08.electorate is incredibly sophisticated. Which is why you see

:21:09. > :21:12.so much tactical voting. People understand what they are voting for

:21:13. > :21:15.in different elections. You just need to look at the referendum when

:21:16. > :21:18.you see the participation levels and the level of understag standing in

:21:19. > :21:22.politics. People know Westminster is in charge of the economy, foreign

:21:23. > :21:25.affairs, and the Armed Forces, it is in charge of taxation, all of these

:21:26. > :21:30.areas, so we will be talking about that. It is not in charge of - in

:21:31. > :21:35.Scotland - health, or education or huge swathes of transport. So, you

:21:36. > :21:40.will just fire on the London manifesto? No, we will explain what

:21:41. > :21:44.we are doing in Scotland. For us, a general election in 2015 and

:21:45. > :21:47.Scottish election in 2016, you kind of have to have in part, your

:21:48. > :21:50.manifestos ready for both. I'm still not sure what is going to change

:21:51. > :21:54.things. You came out of the referendum well. We understand that,

:21:55. > :21:58.but, you know, you lost every seat in Westminster in 1997. Your share

:21:59. > :22:03.of the vote has not really changed very much since then. What is going

:22:04. > :22:08.to change it anyhow that will be a step change, so that -- to change it

:22:09. > :22:13.now, that will be a step change so the Tories matter Lord Ashcroft did

:22:14. > :22:16.a poll across Scotland and found that people don't vote Tory in

:22:17. > :22:21.Scotland because they think you can never elect any Tories. So they look

:22:22. > :22:26.for an anti-Labour vote. That has often found its home in the Liberal

:22:27. > :22:30.Democrat party or in the SNP. If you vote SNP you know you are voting for

:22:31. > :22:35.another referendum. Lots of people that moved to them won't vote SNP

:22:36. > :22:40.again. And the Liberal party have had a collapse, polling in the low

:22:41. > :22:45.single figures. Are you going to win some Liberal seats? I hope so.

:22:46. > :22:50.Where? Again, I bear the scars of 2010. You hope to pick up seats in

:22:51. > :22:53.the north-east of Scotland, a mixture of Liberal Democrat and SNP

:22:54. > :22:58.territory. There is a lot of lapsed Tory voters up there. That must be

:22:59. > :23:03.parting of your taergting? It looks like you are writing my strategy for

:23:04. > :23:07.me. Thank you very much. No I'm not. You may win even fewer seats than

:23:08. > :23:10.you have if I was doing it. What does more power for the Scottish

:23:11. > :23:14.Parliament look like, as far as you are concerned? I want to sort out

:23:15. > :23:18.the problem that we have had in the Scottish Parliament which is that it

:23:19. > :23:21.has the power to spend lots of money but no power to raise money T

:23:22. > :23:26.doesn't have to look tax payers in the eye. Every Scottish election is

:23:27. > :23:29.a spending competition. And it is not very good for the people of

:23:30. > :23:32.Scotland. It is not right that people who are making decisions

:23:33. > :23:38.don't have to look tax payers in the eye. What do you want? For example,

:23:39. > :23:44.I want to see the wholesale devolution of income tax. All income

:23:45. > :23:48.tax? We want starting grid to be the same, so bar the personal allowance.

:23:49. > :23:53.The Strathclyde report. Exactly. You want a chunk of that to be sent

:23:54. > :23:58.north? We looked at that and we would quite like to have had as a

:23:59. > :24:02.federal field tax. You want a trunk sent north. We would like to empower

:24:03. > :24:05.businesses, lots of businesses involved in manufacturer or retail.

:24:06. > :24:09.They make their money off of selling things. And if there is an incentive

:24:10. > :24:12.for the Government in Scotland to make it easier for people in

:24:13. > :24:16.Scotland it make and sell things, I think they should do it. This is

:24:17. > :24:20.fascinating. It is not that long ago that you promised a line in the sand

:24:21. > :24:23.against any more powers for the Scottish Parliament. What happened?

:24:24. > :24:28.It was years ago and I don't know if you have noticed. But there has been

:24:29. > :24:31.a massive debate in Scotland about exactly the constitutional powers

:24:32. > :24:35.the people of Scotland want to have. You were wrong? My view has changed

:24:36. > :24:39.and for incredibly good reasons. Because the Scottish nationalists

:24:40. > :24:42.have done so well and they looked at one stage as if they were going to

:24:43. > :24:46.win the referendum. Isn't the civil message for Scotland - if you want

:24:47. > :24:48.more powers for a Scottish Parliament, you vote Scottish

:24:49. > :24:54.Nationalists and then the rest of you all run after them? Well, more

:24:55. > :25:00.powers isn't a consolation prize for the SNP. It isn't a coming second or

:25:01. > :25:04.the gold fish you get if you miss at the funfair. This is about securing

:25:05. > :25:08.the UK. Nations need to be comfortable in themselves. The way

:25:09. > :25:12.to ensure it is to vote nationalists. You used to be against

:25:13. > :25:24.more powers. Labour is very iffy about what powers they will give.

:25:25. > :25:29.The one way to ensure Mr Samaras -- Mr Salmond's phrase - we hold your

:25:30. > :25:33.feet to the fire - is to vote nationalist. There have been changes

:25:34. > :25:38.to devolution since it came in. Even with Donald Dewar, he was never

:25:39. > :25:41.going to get something right first time. So we have developed

:25:42. > :25:46.devolution. The people who have stood outside that have been the

:25:47. > :25:51.SNP. We voted, the Sovereign will of the Scottish people, in 1997. Do you

:25:52. > :25:55.want a Parliament, yes or no, tax-raising powers. I voted for it.

:25:56. > :25:59.The only people that handed the power back was the SNP. They hand

:26:00. > :26:05.powers back. They wouldn't take part in a commission, they boycotted it

:26:06. > :26:10.for the Scotland act. They have never been interested in making

:26:11. > :26:14.devolution work. Your Prime Minister has also enshrined the Barnett form

:26:15. > :26:17.Formula which gives a disproportionate amount of money to

:26:18. > :26:21.Scotland. What do you say to the Welsh Tories who get a fraction of

:26:22. > :26:25.what Scotland gets, from the Tories here to the poorest regions of

:26:26. > :26:29.England. Why does Scotland get this money and they don't? We have

:26:30. > :26:34.regional demographic differences but if you have the wholesale devolution

:26:35. > :26:38.of income tax that offers the grant. There is a de-Tubbing method where

:26:39. > :26:44.the SNP are on board. You top slice part of the grant. That will come

:26:45. > :26:47.away. And you fill up with direct income taxation. The rest of the

:26:48. > :26:51.Barnett Formula will still be overpaid to Scotland? The rest of

:26:52. > :26:53.the block grant is made up of the Barnett Formula. But that means that

:26:54. > :26:56.Barnett becomes less important because it makes up a lesser

:26:57. > :26:59.proportion of the money directly coming from Scotland. It is more

:27:00. > :27:02.about fiscal responsibility and something as a centre-right

:27:03. > :27:07.politician, I'm fully in favour of. You are now from a country with

:27:08. > :27:10.three of the main parties led by women And also the speaker of the

:27:11. > :27:15.House. In a part of Britain that used to be famous for its misogyny

:27:16. > :27:19.Well, what can I say, women are doing it for themselves up there? #

:27:20. > :27:23.So what is the mood of conference? Do they lurrrve UKIP

:27:24. > :27:25.and hate their coaltion partners, Only one man has

:27:26. > :27:28.the balls to find out. Ask any Conservative at this

:27:29. > :27:34.conference what they want after And if they don't get it,

:27:35. > :27:40.then some of them would prefer to be But if they had to choose,

:27:41. > :27:43.if they had to do a deal with another party, who would

:27:44. > :27:49.they prefer, the Lib Dems or UKIP? I think it is social liberalism,

:27:50. > :27:55.at the end of the UKIP are Their policies are just

:27:56. > :27:58.not right for Britain. I think after five years we

:27:59. > :28:01.can trust the Lib Dems. Yes, they have let us down

:28:02. > :28:03.on a few things, like the boundary changes, but

:28:04. > :28:07.but we know we can work with them. With UKIP, you have

:28:08. > :28:10.a party where we have the red UKIP, and then you have the former

:28:11. > :28:12.libertarian UKIP party, so it'll be too much of a mixed bag and too much

:28:13. > :28:15.confusion within Government. There was a very definite

:28:16. > :28:29.choice there, why is that? I feel UKIP is closer to us,

:28:30. > :28:32.obviously both being two centre I feel we share similar similarities

:28:33. > :28:35.of distrusting the European Union. What's really interesting,

:28:36. > :28:37.of course there is a binary choice, UKIP or the Lib Dems, is the number

:28:38. > :28:41.of people who go - oh, no, I don't want to answer that one and

:28:42. > :28:44.go scurrying back up through there. It's going to have to be the

:28:45. > :28:48.Lib Dems, I'm afraid. Very definite because I think UKIP

:28:49. > :28:58.are not credible. I think a lot

:28:59. > :29:01.of their people are dodgy. It just doesn't feel

:29:02. > :29:03.comfortable to me. I consider myself to be a right-wing

:29:04. > :29:06.Conservative but I'm pro-Europe and I'd rather dive naked into a barrel

:29:07. > :29:11.of wasps than do a deal with either. I don't particularly know what

:29:12. > :29:14.the UKIP party believe in, so, no, I wouldn't want to do

:29:15. > :29:16.a deal with UKIP. You are thinking about it now,

:29:17. > :29:18.aren't you? No,

:29:19. > :29:20.I just happen to like Nigel Farage. Doesn't mean I share

:29:21. > :29:23.the same politics. He's good bloke but he has

:29:24. > :29:25.different politics to me. I would prefer the UKIP party but I

:29:26. > :29:38.don't like UKIP either. We have a lot more in common with

:29:39. > :29:40.UKIP than Liberal Democrats. We as a party have got quite

:29:41. > :29:46.a lot done in this Parliament with Are you suggesting that with

:29:47. > :29:51.the UKIP coalition they wouldn't be quite such a pushover,

:29:52. > :29:53.as a smaller party? I think joining UKIP would be

:29:54. > :29:58.a backward step. There are so many problems here

:29:59. > :30:01.with both of those parties. You know that,

:30:02. > :30:03.that's why you have asked me that I think they are slightly easier to

:30:04. > :30:16.control than UKIP, if they come in and I don't think

:30:17. > :30:20.UKIP will get a decent number Now, I've got to say that's

:30:21. > :30:24.a little surprising because I was told in Doncaster last

:30:25. > :30:27.week by UKIP - they would say that wouldn't they - that if I asked this

:30:28. > :30:30.question they would walk it. Well they haven't,

:30:31. > :30:32.that's either because the sort of Tory that likes UKIP isn't here,

:30:33. > :30:36.or they are wrong and this big win for the Liberal Democrats, well,

:30:37. > :30:38.about one-third of the people who say they are closer to us,

:30:39. > :30:41.they are more Cameroon-type Tory. Two-thirds

:30:42. > :31:07.of that is better the devil you I am joined by the leader of

:31:08. > :31:12.Portsmouth City Council and Bromley Council. I know that you want a

:31:13. > :31:19.majority, if you don't get one, who would you prefer to be equal lotion

:31:20. > :31:24.-- in coalition with? I am focused on achieving a majority government.

:31:25. > :31:26.I think we need to give consideration to running a minority

:31:27. > :31:32.government, possibly going back to the country. It has been hugely

:31:33. > :31:35.frustrating being in college and with the Liberal Democrats. They

:31:36. > :31:38.speak about fairness and yet one of the things they blocked was the

:31:39. > :31:44.Rowntree commission change, which has meant inequality throughout the

:31:45. > :31:51.UK. UKIP are an unknown quantity. I think it's very difficult... Who

:31:52. > :31:59.knows? I'm optimistic. Should David Cameron have done that in 2010,

:32:00. > :32:04.formed a minority administration? I don't think so, we have achieved

:32:05. > :32:09.some amazing things. You think it was right to form coalition then but

:32:10. > :32:12.not next time? If he had formed a minority government he would have

:32:13. > :32:17.had to go back to the country very quickly, egos he would not have got

:32:18. > :32:21.things through. There have been some real successes, in particular, the

:32:22. > :32:26.way the deficit has been reduced hugely? Actually, it has not been

:32:27. > :32:33.reduced hugely. What do you think? If you end up with another hung

:32:34. > :32:42.parliament, is it UKIP or the Lib Dems? That would be them doing a

:32:43. > :32:51.deal, they did not put me on. If we did, it would be UKIP, because Nigel

:32:52. > :32:54.has a point. What is his point? The fact is we are where we are because

:32:55. > :32:59.of Ed Miliband and the Labour Government previously cocking up not

:33:00. > :33:01.only the economy but also immigration and a whole range of

:33:02. > :33:09.issues that brought us to this place. Why don't we take that as

:33:10. > :33:12.read. What is Nigel's point? Over the period of the last Labour

:33:13. > :33:16.government we have had 4 million people coming into this country,

:33:17. > :33:21.that is a population increase of over 4 million. When you have that

:33:22. > :33:29.sort of increase it has a knock-on effect on services, planning. Is

:33:30. > :33:40.Nigel's point immigration? It is part of it. You don't say he has got

:33:41. > :33:46.points, you said... Nigel, you may have a point. That single point is

:33:47. > :33:50.about immigration? It is not framed right, it is about population.

:33:51. > :33:54.People feel the effect of population growth, not the same as immigration.

:33:55. > :34:01.So he's got a point but an obscure point? He is concentrating on the

:34:02. > :34:05.wrong issue. I fundamentally disagree with this, I don't see how

:34:06. > :34:10.you can take seriously a party not yet in Parliament with one policy,

:34:11. > :34:14.pulling out of Europe. Nigel Farage says he will spend more on defence

:34:15. > :34:18.by pulling out of Europe, spend more on the NHS by pulling out of Europe.

:34:19. > :34:24.His ansa to everything is pulling out of Europe. I want to renegotiate

:34:25. > :34:30.our terms with Europe, not out at any cost. If Mr Cameron succeeds in

:34:31. > :34:36.bringing a lot of power back would you vote to stay in? It would depend

:34:37. > :34:40.on the trading agreements, if we would not be hammered by tax,

:34:41. > :34:43.absolutely. If we could not negotiate that point then I would

:34:44. > :34:48.vote no because that would be detrimental to the economy. Do you

:34:49. > :34:56.think the man with a point and Mr Cameron could work together? You

:34:57. > :34:59.mentioned Lord Ashcroft's thing, and UKIP are pulling higher than the

:35:00. > :35:04.Liberal Democrats. There are more UKIP voters out there. That is

:35:05. > :35:09.interesting but has nothing to do with the question I has to queue. Do

:35:10. > :35:15.you think David Cameron and Nigel Farage could work together? I do

:35:16. > :35:19.not. I think David Cameron is big enough to work with anyone, he has

:35:20. > :35:25.worked with the Liberal Democrats, so if he can work with them... Is

:35:26. > :35:30.the answer yes? And are you in the same party? Yes, we agree are lots

:35:31. > :35:35.of things, we don't want to see a Labour government. Why don't you

:35:36. > :35:39.think they could work together? I think David Cameron is a qualified

:35:40. > :35:43.enough politician to go alone, he does not need propped up by somebody

:35:44. > :35:46.who does not even have one MP in Parliament, only has one policy, and

:35:47. > :35:53.that is being out of Europe at any cost. Your government has lamentably

:35:54. > :35:57.failed to hit immigration targets, do you want to remind me what the

:35:58. > :36:04.figures work? If we compare to where we were... There is almost no

:36:05. > :36:07.difference from five years ago. You promised less than 100,000, there

:36:08. > :36:13.has been 200,000. That is only if you take the figures surely as they

:36:14. > :36:21.are in terms of net immigration. That is the figures you set! You are

:36:22. > :36:25.comparing the figures to pre-Conservative Government, but if

:36:26. > :36:28.we had not brought in the changes we brought in, they would be much

:36:29. > :36:33.higher, so there has been real success. You and I both know that

:36:34. > :36:38.was not the promise. Well, we have achieved a lot. I had aspiring

:36:39. > :36:45.Labour politicians and they work very on message, it is nice to have

:36:46. > :36:49.ones that are not on message. It has made my day. I don't think it has

:36:50. > :36:56.done your career is much good but it has brightened up the programme.

:36:57. > :36:59.Whilst we have been on air, Sajid Javid has been addressing the

:37:00. > :37:04.conference. His speech covered the expansion of broadband. To reason,

:37:05. > :37:10.the strength of the British film-making industry, the music

:37:11. > :37:16.industry, arts funding, he made even -- he may be even mentioned the BBC.

:37:17. > :37:20.It is true that we have had to take some difficult decisions and cut

:37:21. > :37:23.taxpayer funding, but because of our national lottery reforms we have

:37:24. > :37:30.protected most budgets, so don't let anybody tell you that conservatives

:37:31. > :37:36.don't care about culture. We do, but we just want to make sure that your

:37:37. > :37:43.money is spent carefully. It's the same with the BBC. We froze the

:37:44. > :37:49.licence fee in 2010. I continue to challenge them to do more with

:37:50. > :37:56.less, because spending public money is a privilege, not a right. I ask

:37:57. > :38:01.myself also, can it be right that somebody goes to prison for not

:38:02. > :38:12.paying their licence fee? That is why I am reviewing this issue. In

:38:13. > :38:16.all of these areas... In all of these areas, there is more to do,

:38:17. > :38:22.but to do it, we need to get re-elected.

:38:23. > :38:31.In seven months, our country faces a choice, a choice between economic

:38:32. > :38:36.security with the Conservatives or a return to high spending and higher

:38:37. > :38:40.taxes with Labour, a choice between a Conservative Party that respects

:38:41. > :38:44.and rewards hard work or a Labour Party that encourages a culture of

:38:45. > :38:49.dependency. A choice between a Prime Minister and Chancellor who have

:38:50. > :38:52.repaired the economy and given it into the fast lane or handing back

:38:53. > :38:58.the keys to the team that crashed the car. We need the country to make

:38:59. > :39:03.the right choice, to choose jobs, to choose growth, to choose ambition,

:39:04. > :39:06.to choose opportunity, and to choose David Cameron as Prime Minister of a

:39:07. > :39:36.majority Conservative Government. That was Sajid Javid. He joins us

:39:37. > :39:42.now. Welcome. Did the Sunday Mirror entrapped Brooks Newmark? I am very

:39:43. > :39:45.sad about it. He was a good friend of mine. I think he made the right

:39:46. > :39:51.decision to leave office. The question of whether it is entrapment

:39:52. > :39:55.is one that I cannot answer. You either minister of media, you can a

:39:56. > :40:02.view. It is precisely because I am the Minister responsible for media

:40:03. > :40:08.policy that I think it is irresponsible to pass verdict. It is

:40:09. > :40:15.possible Brooks Newmark might take legal action and if that happens it

:40:16. > :40:19.would be the view of the courts. Can you discern any public interest in

:40:20. > :40:22.what was done? I cannot comment on this, if he decides to take legal

:40:23. > :40:27.action that is something I don't want to prejudice in any way,

:40:28. > :40:33.especially given my role being responsible for policy. Do you

:40:34. > :40:37.welcome a referral of this case to the new independent press standards

:40:38. > :40:40.organisation? That's up to the organisation, I understand there

:40:41. > :40:44.have been requests for referral. Would you welcome that? The

:40:45. > :40:47.organisation is there for people to make referrals and if that has been

:40:48. > :40:53.made then if the organisation wants to look at it they should. Would you

:40:54. > :40:56.welcome it? It is an independent organisation. You don't have a view

:40:57. > :41:01.as the minister responsible for media? I don't want to have

:41:02. > :41:05.involvement in this. Is there any point in being responsible for the

:41:06. > :41:10.media if you cannot comment? Yes, there is, but when something goes

:41:11. > :41:16.before the courts. Anything could go in front of the courts and then you

:41:17. > :41:20.could not comment on anything. This is something where there are strong

:41:21. > :41:24.rumours today that this may go in front of the court and I should not

:41:25. > :41:29.prejudice that. Coming on to the economy, why is progress on cutting

:41:30. > :41:36.the deficit so slow? Let's look at what the oh BR said about it, the

:41:37. > :41:41.original targets were set by the oh BR. They had hoped it would be

:41:42. > :41:45.stronger. If you look at their analysis it was the Euro crisis, the

:41:46. > :41:51.commodity crisis, other problems around the world, with the emerging

:41:52. > :41:54.markets and growth falling there. That may explain why you've not done

:41:55. > :42:01.it as quickly as you might have wanted to but in 2010 you said you

:42:02. > :42:08.would get rid of the deficit by 25th -- 2015. By 2015, if you're lucky,

:42:09. > :42:17.you will only be 40% of the way there. 60% to be done. Why so slow?

:42:18. > :42:22.Judge me by the deficit, said George Osborne, judge me by cutting the

:42:23. > :42:27.deficit. Look at the process made, -- progress made, we had down by a

:42:28. > :42:32.third. We keep making progress. I don't think anybody thought you can

:42:33. > :42:39.turn down a deficit that is the biggest in the Second World War

:42:40. > :42:46.overnight. It's going to take time. Why are you making progress when

:42:47. > :42:51.borrowing has risen? What I do is look at financial year by financial

:42:52. > :42:53.year. It is rising. I'm confident that the deficit will keep falling,

:42:54. > :43:00.judge that when we get the latest set of numbers. Why has it been

:43:01. > :43:05.rising? There is always a seasonality to borrowing figures, so

:43:06. > :43:10.what matters most is the actual year. I'm confident we will keep

:43:11. > :43:15.cutting the deficit. Even based on the projections, by the end of this

:43:16. > :43:19.financial year the deficit will still be around ?95 billion, it is

:43:20. > :43:29.still very big but we made huge progress. Why have you made less

:43:30. > :43:35.progress in cutting the deficit than the United States, Italy, Germany,

:43:36. > :43:42.Greece, Spain? Why have you done less well than even those countries?

:43:43. > :43:47.For two reasons, we had the deepest recession in almost 100 years. You

:43:48. > :43:52.did not have a deeper recession than Greece or Spain. As you know, they

:43:53. > :43:56.have other issues around their currency, the problems that has

:43:57. > :44:00.caused, we did not join the euro and that will not happen under a

:44:01. > :44:04.Conservative government ever. But we had a deeper recession, the deepest

:44:05. > :44:09.and 100 years in this country. Why were they able to cut the deficit

:44:10. > :44:14.more quickly than you? Our deficit was the largest of any major

:44:15. > :44:23.industrialised economy, 10% of GDP, on hundred Greece had more than

:44:24. > :44:26.that, America was almost that. We also had -- Greece also had a major

:44:27. > :44:33.currency crisis. That makes it even worse! I put it to you the reason

:44:34. > :44:37.you have not cut the deficit is income tax receipts are barely

:44:38. > :44:40.rising and income tax receipts are not rising because ordinary people

:44:41. > :44:44.in this country are going through a huge squeeze on their wages, they

:44:45. > :44:50.are falling in real terms, not paying the tax you thought, able are

:44:51. > :44:54.suffering. That is the reason. I don't accept that. Plenty of people

:44:55. > :44:59.are still facing significant charges every day. Our plan is to see what

:45:00. > :45:05.we can do more than we've already done to keep on with that plan. Back

:45:06. > :45:08.to income tax, you raised that issue, income tax receipts are not

:45:09. > :45:13.rising because the income tax cuts we have introduced, the increase in

:45:14. > :45:19.the personal allowance means lower paid people have all seen tax cuts,

:45:20. > :45:23.the average tax cut is much higher. We have taken people out of tax

:45:24. > :45:29.altogether. I'm proud of that. You might say that is a reason. Even

:45:30. > :45:37.after that tax cut, real take-home pay is falling, it is down 5%. We

:45:38. > :45:45.are heading no 410 year freeze -- we are heading for a ten year freeze.

:45:46. > :45:52.Are you proud of that? Now I am not. We have the fastest-growing economy

:45:53. > :45:59.in the world. I how much have -- I how much have average wages risen?

:46:00. > :46:02.When you've had the deepest recession in 100 years, a

:46:03. > :46:09.contraction in GDP of more than 6%, people will feel your. -- people

:46:10. > :46:18.will feel badly. How much have wages risen? We have had difficulty... It

:46:19. > :46:25.depends what class of wage... I am talking about average wages. They

:46:26. > :46:29.have risen by 0.1% so far. 0.1% after four years of Conservative led

:46:30. > :46:35.government. In real terms, people's wages are still down. I might have

:46:36. > :46:40.average wages risen for people who have found a job? 2 million jobs

:46:41. > :46:44.have been created. Sure, they've got a job. Those jobs would not have

:46:45. > :46:51.been created if we had not done this to the economy. Plenty people are

:46:52. > :46:54.working zero hours... If you want to investigate that, part-time jobs are

:46:55. > :47:00.now more higher than they have been in the past but the number of people

:47:01. > :47:02.on 0-hour contracts is less than 1%, we have more people employed than

:47:03. > :47:07.ever before, more women employed than ever before and I'm proud of

:47:08. > :47:10.that. But people are suffering. There are real wages are being

:47:11. > :47:16.squeezed and it looks like on the current projections we have, the

:47:17. > :47:19.report out this morning, there is going to be no relief for people on

:47:20. > :47:24.average wages for the foreseeable future. The most important thing is

:47:25. > :47:28.that we have a growing economy that creates jobs. We've got a plan for

:47:29. > :47:32.that, it requires difficult decisions, but that will be put at

:47:33. > :47:36.risk if we abandon this plan. That is Labour's policy, remember, you

:47:37. > :47:42.had a conference last week with a leader who did not mention the

:47:43. > :47:45.deficit, he forgot that. If he cannot deal with the deficit we

:47:46. > :47:49.cannot have a brilliant NHS, create jobs...

:47:50. > :48:02.I understand that's the line. It is more than a life. It is reality.

:48:03. > :48:07.Do you know the lowest 10% is just down ?300. ?300 lower in real terms,

:48:08. > :48:11.despite your growing economy. People on low wages are not seeing

:48:12. > :48:14.any benefit from this recovery. If you work full-time you have seen

:48:15. > :48:18.your income tax bill cut by two-thirds if you are on the

:48:19. > :48:21.national minimum wage. If you work full time. That's something, despite

:48:22. > :48:25.all the challenges that we have had, that shows we are doing what we can

:48:26. > :48:32.o to help people in difficult circumstances. The figures I have

:48:33. > :48:37.given you are after tax. They take that tax cut into account. Ethen

:48:38. > :48:41.their real take home pay is lower than it was in 2008. This recovery

:48:42. > :48:45.is not reaching the people who matter most It is reaching people in

:48:46. > :48:49.terms of helping the economy grope and creating jobs. You ask anyone

:48:50. > :48:56.out there - do they want to see a growing economy for them and their

:48:57. > :48:59.children and make sure they wrant to create jobs, and growing faster than

:49:00. > :49:04.any other nation. Did you say anything about the BBC this morning?

:49:05. > :49:06.I did. Good things? All good. I hope you continue after this interview.

:49:07. > :49:11.Thank you. Well, it's about 10 minutes before

:49:12. > :49:22.George Osborne gets to his feet. Everyone hopes is hoping it'll turn

:49:23. > :49:26.around the mood of the conference. Let's see if conference fever is

:49:27. > :49:29.over way. Let's go to Giles. What would you like to hear from the

:49:30. > :49:32.Chancellor? That he is still on course for rescuing the country from

:49:33. > :49:37.the damage done by the last Labour Government. I think I want to hear

:49:38. > :49:42.that he has plans to sustain that programme, so that over the coming

:49:43. > :49:46.hearse, all the people in this country will be a lot better off.

:49:47. > :49:52.Well, I want him to reinforce how incredibly well we have done in

:49:53. > :50:00.getting the deficit down. Too many people just sort of are getting

:50:01. > :50:03.ridiculous headlines. I don't think that the country understwhands an

:50:04. > :50:10.incredible job he has done. Steady the ship. Stay on course for what we

:50:11. > :50:13.are doing. Ton cut where we need to and provide a stronger economy for

:50:14. > :50:19.the future which is what he has been doing for the last four years and

:50:20. > :50:22.and I'm sure that's his tension for the next five years if we get

:50:23. > :50:27.another Government Conservative. Does the death tax cut help? Does it

:50:28. > :50:32.grab people? I think so. It has been uttered around before and I think

:50:33. > :50:35.UKIP have been trying it claim it as their own. I think it is really

:50:36. > :50:39.good. What are you expecting? The same as before. Securing what we

:50:40. > :50:43.have been doing for the past four years and working towards the

:50:44. > :50:45.long-term plan. Given this difficult climate at the moment. It is

:50:46. > :50:49.difficult coming into the election, does he need to do something a

:50:50. > :50:52.little more than just the same as before, or is that the point? I

:50:53. > :50:55.think that's the point. The point is, the whole message of the

:50:56. > :50:58.conference seems to be - look, it is working, stick to the plan, move

:50:59. > :51:05.forward. When you go into an election and he makes a speech like

:51:06. > :51:08.that, does he need to give a sort of particularly good one, or are you

:51:09. > :51:12.looking for steady the ship? Steady the ship. That's the word. Make sure

:51:13. > :51:17.we are steady and going on. Tax cuts. I think he is doing a good

:51:18. > :51:21.job. I think he has actually stuck to the course. Stuck to the plan.

:51:22. > :51:23.And it's actually paid off. You know, it is having that

:51:24. > :51:27.determination of spirit and that belief in what he is doing and I

:51:28. > :51:33.think he's got that. Is he a good speaker? I think he is. You see him

:51:34. > :51:37.on the news and just doing a bit to camera, maybe not as good but in a

:51:38. > :51:41.hall like that, he really gets people going. He has that passion.

:51:42. > :51:43.Well, the Chancellor, George Osborne, is about five mintues

:51:44. > :51:49.Let's have a word with the BBC's Political Editor, Nick Robinson.

:51:50. > :51:55.We understand the warm-up man for the Chancellor is Digby Jones? I

:51:56. > :52:02.don't know if you have heard anything about this. Has he come out

:52:03. > :52:06.as a Tory now? There he is, standing before the conference? He could be

:52:07. > :52:10.pretty Tory-minded. I wasn't aware he was coming here but remember,

:52:11. > :52:15.though he was a minister in Gordon Brown's Government and you might

:52:16. > :52:19.have thought a Labour peer, he never took the Labour whip, so, he said,

:52:20. > :52:23.yes, as a leading businessman and Director-General of the CBI I'm

:52:24. > :52:27.happy to help the Government drum up trade but I'm in the a Labour man N

:52:28. > :52:30.increasing weeks, as you say, he has been critical. He likes to think of

:52:31. > :52:31.himself, Digby Jones as Mr Birmingham. Here we

:52:32. > :52:35.himself, Digby Jones as Mr Birmingham. It is his roots and it

:52:36. > :52:40.might be for that reason. All right, the Chancellor. A lot hanging on

:52:41. > :52:44.that. The conference needs him to turn this around, get away from

:52:45. > :52:47.defections and online sex scandals and back to the economy, which the

:52:48. > :52:51.Tories will put centre stage at the election campaign. Back to the

:52:52. > :52:55.economy, back to what they hope will be n Gordon Brown's famous phrase -

:52:56. > :52:58.the dividing lines with the other side. So, I expect George Osborne to

:52:59. > :53:02.announce a significant cut in welfare spending. They have already

:53:03. > :53:07.been signalling this, haven't they, as a couple of days have gone on,

:53:08. > :53:11.didn't get much coverage because of the talks of defection but their

:53:12. > :53:14.first announcement is they would stop single young people under-21

:53:15. > :53:19.being able it claim housing benefit. They said the money they saved would

:53:20. > :53:23.be spent on apprenticeships. The Chancellor this morning on the radio

:53:24. > :53:26.and elsewhere in interviews signalled he wanted to curb welfare

:53:27. > :53:31.spending. They have always had a hole to fill, the Tories. They say

:53:32. > :53:34.they need to save about another ?12 billion in welfare spending in the

:53:35. > :53:39.next Parliament before the deficit is eliminated. Physical that happens

:53:40. > :53:42.on time, it hasn't up until now -- if that happens on time. It would be

:53:43. > :53:47.midway through the next Parliament, 2018. He, I suspect, will want to

:53:48. > :53:51.put a downpayment on how he will meet some of that ?12 billion and in

:53:52. > :53:55.effect say it the Labour Party - here is what I will do, will you

:53:56. > :53:59.match it? If not, what will you do? This will be a change not between

:54:00. > :54:03.now and the election but an indication of - look, this will be

:54:04. > :54:07.in our manifesto, Mr Osborne will say - if you want this, you will

:54:08. > :54:11.have to vote for us. Remember his next financial statement is the

:54:12. > :54:15.Autumn Statement. It is increasingly in the winter. It is in December

:54:16. > :54:17.this year. But it is called the Autumn Statement. That's when he

:54:18. > :54:20.sets out the plans. There is no suggestion that the Liberal

:54:21. > :54:24.Democrats, the coalition party will be willing to sign up to new welfare

:54:25. > :54:30.cuts. But this is a waive him saying - this is what I would do if I was

:54:31. > :54:33.on my own, with a majority Tory Government. This is what he would

:54:34. > :54:38.claim he would do and Labour can't match. How worried are they about

:54:39. > :54:41.UKIP and more defections? Of course they are worried. One of the reasons

:54:42. > :54:44.they are worried is they simply cannot know the answer to the

:54:45. > :54:51.question. Any sensible person wants to ask... Well, a, they are fibbing,

:54:52. > :54:56.b, people may not know, c, people may be think being it but waiting to

:54:57. > :55:00.see. In other words, if you are the sort of person who might defect as a

:55:01. > :55:06.Tory MP to UKIP, one thing you might want to do, presumably you are not

:55:07. > :55:12.you haved not made up your mind and waiting for the moment of maximum

:55:13. > :55:16.damage like Mr Reckless, you might be waiting to see how the

:55:17. > :55:21.by-elections G the significant thing is the Tories, behind the scenes

:55:22. > :55:25.scenes are ect effectively writing off the by-election next week, they

:55:26. > :55:29.think UKIP will win it. Pretty extraordinary. In a safe Tory seat.

:55:30. > :55:35.That they'll lose to u kitsch they are putting their energies into the

:55:36. > :55:44.-- to UKIP. They are putting their energies into the Rochester and st.

:55:45. > :55:50.Stroud seat. They they may be thinking - I want it save my skin.

:55:51. > :55:55.They are saying, oh, no, it isn't, it is the way to lose your career.

:55:56. > :56:02.If all their eggs are going into the Rochester basket, and for the

:56:03. > :56:07.reasons you have written off Clacton, if they lose Rochester, it

:56:08. > :56:11.is Krakatoa. Yes and people who are thinking - I quite like being in the

:56:12. > :56:16.House of Commons, how do I survive? Maybe I have to switch party. A sign

:56:17. > :56:21.of the anger here, you saw this phrase used by the party Chairman.

:56:22. > :56:24.He has lied and lied and lied rvings David Cameron was touring the

:56:25. > :56:28.parties that take place, late at night there is a reception for the

:56:29. > :56:34.West Midlands and the North of England and this party and that. I

:56:35. > :56:38.saw one speech, in which a really fired up David Cameron said - I vow

:56:39. > :56:47.to get that seat back to the Tories. I bumped into someone who heard him

:56:48. > :56:55.speaking half an hour later and he said quo, "Mark Reckless got his fat

:56:56. > :57:02.arson the benches of the -- cars on the benches of the House of Commons,

:57:03. > :57:07.because of the Tories hard work." And there is a different approach to

:57:08. > :57:14.Douglas Carswell and Mark Reckless? Very simple, they loathe him.

:57:15. > :57:17.Carswell was seen as a slightly eccentric, character. Mark Reckless

:57:18. > :57:22.has been loathed. He has been loathed at university. Like Gordon

:57:23. > :57:34.Brown and Robin Cook. Who was at university? Oxford University with

:57:35. > :57:40.Mark Reckless? George Osborne. Were they in the Bullingdon Club? He He

:57:41. > :57:44.went to a posh public schoofrnlts I don't think he would have been

:57:45. > :57:49.invited. Why do they loathe him? They think he is pious. They think

:57:50. > :57:54.he takes himself much more seriously than they do him and, of course,

:57:55. > :57:59.loathes them back. I mean, part of the roots of this - you always have

:58:00. > :58:06.to look at the roots of this. I once joked I would write a book called

:58:07. > :58:14.how the small snub made history. Mark Reckless tried a rebellion for

:58:15. > :58:18.David Cameron to cut EU budget. When it was cut, Cameron said publicly -

:58:19. > :58:24.your rebellion made no difference, I would have done it anyway. Not the

:58:25. > :58:29.greatest way to keep onside. He is not great at party backbench

:58:30. > :58:33.management. There is a dismissiveness. If you are Mark

:58:34. > :58:38.Reckless, you are - I'm quite a guy, you know, you don't much like that.

:58:39. > :58:41.There is another by-election in a Labour-held seat in Manchester, just

:58:42. > :58:45.north of Manchester. Is there any possibility that UKIP could win that

:58:46. > :58:47.one? Well, certain lay be possibility which, in itself is

:58:48. > :58:52.quite extraordinary. I have not yet had a chance to go and visit the

:58:53. > :58:58.seat. People who have say they think there is a chance. Saving said that,

:58:59. > :59:02.the guys I read and respect and who study UKIP think it is not quite

:59:03. > :59:06.going to happen. He they think UKIP could do well but they don't see

:59:07. > :59:12.them winning the seat. The big thing about Clacton, the at the think they

:59:13. > :59:17.will win, is you have a popular local people, who had a direct male

:59:18. > :59:22.strategy of knowing, by name, a huge percentage of his own electorate who

:59:23. > :59:25.he kept in touch with and asked of their opinions and conveniently all

:59:26. > :59:28.that data, I suspect has gone with him, to UKIP. Now the Chancellor's

:59:29. > :59:33.speech and the Prime Minister's speech at lunch time on late

:59:34. > :59:40.Wednesday morning, they are always planned in tandem. Do we have any

:59:41. > :59:44.idea how they've divvied up the announcements or the overall tone of

:59:45. > :59:47.the speeches? I think the answer to that, but I don't know for certain,

:59:48. > :59:51.is that David Cameron doesn't have announcements. . He tends to do

:59:52. > :59:55.theme, argument and wrap the whole event together. If you think about

:59:56. > :59:57.it, we cannot think of a big announcement since the announcement

:59:58. > :00:02.that he would pursue gay marriage some years ago. Given how well that

:00:03. > :00:06.went down with the Conservative Party, you might think is not an

:00:07. > :00:09.ideal precedent for making an announcement nobody knows about. It

:00:10. > :00:14.is much more likely that the meat comes in this Osborne spee. The meat

:00:15. > :00:18.of a downpayment for welfar cuts, an attempt to put the deficit back on

:00:19. > :00:23.the agenda, to essentially try to claim the Tories are the serious

:00:24. > :00:26.party, the party making difficult choices where Labour they will claim

:00:27. > :00:30.was avoiding the choices, didn't want to talk about the deficit. That

:00:31. > :00:33.will be the efforts, I think of George Osborne and David Cameron, in

:00:34. > :00:38.a way, has it use the fact he has still - despite the fact he is not

:00:39. > :00:41.popular here - he is more popular with the public than his party. And

:00:42. > :00:46.he, I think will try and turn it into a leadership choice. It is me

:00:47. > :00:51.or it is him in number ten. Which means that the Tory election

:00:52. > :00:54.strategy, to be brutal about it, will be built around the economy and

:00:55. > :00:58.Mr Miliband. They are the two issues that the Tories will make the

:00:59. > :01:05.election. We always mock the slogans. Where is it - Securing a

:01:06. > :01:12.Better Future. There is it is. There is an enormous amount of work by

:01:13. > :01:15.market researchers and ad men goes into these apparently banal. They

:01:16. > :01:20.work on that? You might think - what the hell does that mean? I will tell

:01:21. > :01:25.you what they think it means. They think it means the electorate have

:01:26. > :01:28.bought the fact that they have "A long term economic plan." The

:01:29. > :01:32.electorate are suspicious of their motives and they have a feeling that

:01:33. > :01:37.the long-term economic plan is either about the poor or helping

:01:38. > :01:42.their mates. Or it is about getting them re-elected part of the effort

:01:43. > :01:46.is - no, you get help with pension and help with kids getting an

:01:47. > :01:52.apprenticeship. They know the public is worried about security hence the

:01:53. > :01:56.word "securing" and they are worried about the future, in the sense of,

:01:57. > :02:00.will life be worse for my children and grandchildren than it is for me.

:02:01. > :02:04.Every speech has been put through the prism of how do you say to

:02:05. > :02:09.people, it is not just a deficit plan, it is something for central

:02:10. > :02:13.and how do you show it helps ordinary people's children and

:02:14. > :02:18.grandchildren. Of Whether it gets through is another question. Well

:02:19. > :02:22.Digby Jones is still speaking to the conference. They are now run being

:02:23. > :02:27.16 minutes late. Always a mistake, I think to give Digby too much room.

:02:28. > :02:38.He likes to make long speeches. The Chancellor getting warmed up here.

:02:39. > :02:42.Lord Ashcroft, former Tory party treasurer, always helpful to the

:02:43. > :02:47.party leadership with his polls. They are not good reading for the

:02:48. > :02:54.Tories, they see them losing out in a whole raft of marginal seats. I

:02:55. > :03:00.depressed by that, or do they shrug off the polls? -- are they

:03:01. > :03:03.depressed. They do not shrug them off, but it is like being in a race

:03:04. > :03:07.where you can see the guy in front of you, you have a pretty shrewd

:03:08. > :03:14.sense that he cannot go any faster. Their view of Labour is, at their

:03:15. > :03:20.conference they may now progress -- they made little progress, there was

:03:21. > :03:24.no bounce, Ed Miliband did not and to questions about his economic

:03:25. > :03:27.credibility. They think they've got the opponent in their sights. The

:03:28. > :03:32.difficulty they have got is two problems. On the one hand they are

:03:33. > :03:37.bleeding support to Ukip, their traditional supporters from 2010. On

:03:38. > :03:42.the other hand, Labour are holding onto people who voted Liberal

:03:43. > :03:47.Democrat in the past, and maybe because of the Iraq war, because

:03:48. > :03:50.they thought Labour had forgotten the importance of Civil Liberties,

:03:51. > :03:55.they have managed to get 6% of them back. If Ed Miliband can hold onto

:03:56. > :04:02.those ex-Liberal Democrat and if the Tories cannot read Jane the Ukip --

:04:03. > :04:09.cannot regain the Ukip voters, they will lose. They are trying to take

:04:10. > :04:14.the 28% that voted for Gordon Brown and add-on 6% of disaffected Lib

:04:15. > :04:20.Dems. That is exactly right. That is why there is tension for the Tories.

:04:21. > :04:26.Some on the Tory Right say, for God sake, harden up your promise on

:04:27. > :04:31.Europe, say that you would vote against it if you don't get the deal

:04:32. > :04:35.you want, spell out the negotiating strategy, explain how you would curb

:04:36. > :04:40.immigration, that is one group here at the conference, another says, we

:04:41. > :04:44.need to get the people who have gone over to Labour, that is much more

:04:45. > :04:49.traditional appeal, speak about homeownership, apprenticeships, tax

:04:50. > :04:57.cuts for pensioners. The bread and butter, nuts and bolts issues that

:04:58. > :05:02.might make people think this austerity has been worthwhile. Digby

:05:03. > :05:07.Jones has finished. He is getting a standing ovation for his work. Now

:05:08. > :05:14.we can see George Osborne taking the stage. Two stone lighter than when

:05:15. > :05:19.he last spoke to the conference thanks to going on a diet and a new

:05:20. > :05:25.haircut. Modelled on the Julius Caesar look. Let's see if he gives

:05:26. > :05:32.an emperor's speech. Thank you for that typically robust worming

:05:33. > :05:38.welcome. -- Birmingham. Gathered in this whole other representatives of

:05:39. > :05:44.Britain's great party of progress, the party of enterprise and

:05:45. > :05:51.discovery, of liberty and the law. Of the wide open seas and global

:05:52. > :06:04.free trade. We meet to lay out our case before the nation and to ask it

:06:05. > :06:09.to choose the future, not the past. In broad Street, just around the

:06:10. > :06:14.corner from this conference, stands the statue of the golden boys, the

:06:15. > :06:20.three great British pioneers, Matthew Boulton, William Murdoch,

:06:21. > :06:25.James Watt, studying intently their plans for the new steam engine. It's

:06:26. > :06:30.an image that captures a golden age for our country. When the spirit of

:06:31. > :06:34.invention was alive, when the marriage of business and science

:06:35. > :06:38.made everything possible. A time when we faced the future with

:06:39. > :06:48.confidence and were not afraid of the big and sewers to the big

:06:49. > :06:51.questions. -- big answers. I want to be that Britain. Let's raise the

:06:52. > :06:53.ambition of the nation so that everyone has a chance to succeed.

:06:54. > :07:06.APPLAUSE.. I believe it is personally --

:07:07. > :07:11.perfectly possible for Britain to be the most prosperous major country on

:07:12. > :07:16.earth. The most prosperous, the most dynamic, the most creative, but only

:07:17. > :07:19.if this generation provide the big answers to the big questions, only

:07:20. > :07:27.if we choose the future, not the past. For anyone who doubts this is

:07:28. > :07:35.possible, just think about what we've done together, these last four

:07:36. > :07:39.years. Four years ago our economy was in crisis, our country on the

:07:40. > :07:44.floor. We did what we Britons do best when we are being counted out,

:07:45. > :07:50.we picked ourselves up, we sorted ourselves out and we got back in the

:07:51. > :07:55.fight. We set out our long-term economic plan and worked through it.

:07:56. > :08:02.And then two years ago in this Jerry Hall, when the clamour -- in this

:08:03. > :08:08.very hall, when the clamour from our opponents was loudest, they insisted

:08:09. > :08:13.we abandoned the plan, we held our nerve and recommitted ourselves to

:08:14. > :08:19.the course we had set. Today I can report this to you, written is the

:08:20. > :08:24.fastest growing, most job-creating, most deficit reducing of any major

:08:25. > :08:39.advanced economy on earth. Britain, we did this together.

:08:40. > :08:47.We made a choice. To leave behind a past of spending beyond our means,

:08:48. > :08:55.borrowing from our children, we chose the future, not the past.

:08:56. > :09:01.We've come this far. The deficit falling, investment rising, record

:09:02. > :09:05.numbers of new firms, business growth, faster in the North than

:09:06. > :09:09.anywhere else. Long-term unemployment down. Youth

:09:10. > :09:20.unemployment down. The fastest fall in unemployment on record, the

:09:21. > :09:27.long-term economic plan is working. APPLAUSE.

:09:28. > :09:37.These are the statistics. Behind each number is a person. In fact,

:09:38. > :09:41.millions of people. Because of what we've done together, they have a

:09:42. > :09:45.job. Because of what we've done together, they run their own

:09:46. > :09:48.business. Because of what we've done together, they are providing for

:09:49. > :09:55.themselves and their families. Everybody in this file should be

:09:56. > :10:01.proud of that. -- in this hall. I don't stand here marvelling at how

:10:02. > :10:06.much we have done. On the contrary, I am humbled by how much more we

:10:07. > :10:10.have to do. The debt that needs reducing, the small businesses that

:10:11. > :10:14.need supporting, the jobless that need employing, the infrastructure

:10:15. > :10:18.that needs building, the better future for Britain that needs

:10:19. > :10:21.securing, we resolve we will finish the job that we have started.

:10:22. > :10:37.APPLAUSE. We know that beyond the confines of

:10:38. > :10:45.all these party conferences, Britain still faces huge economic risks. At

:10:46. > :10:50.home, though we have brought it down, there remains a large budget

:10:51. > :10:54.deficit and our national debt is dangerously high. Abroad, the

:10:55. > :11:01.biggest markets in the Eurozone are not growing. Anybody who thinks

:11:02. > :11:03.Britain can ease up should look across the Channel, look to the

:11:04. > :11:14.countries who thought they were out of crisis, used up -- eased up and

:11:15. > :11:18.is no risk returning to crisis. Then there is the wider world. The

:11:19. > :11:29.borders with Russia are aflame. A terrible virus sweeping through West

:11:30. > :11:35.Africa. We are engaged in a struggle against barbaric Islamic extremism.

:11:36. > :11:39.Our forces are risking their lives to protect our freedom. Let us

:11:40. > :11:52.together salute their courage. APPLAUSE.

:11:53. > :11:59.Any and all of these events have an impact not just on our

:12:00. > :12:04.national-security but on our economic security. These are big

:12:05. > :12:11.questions. They are not the only ones we face. We are also living

:12:12. > :12:17.through an economic upheaval as big as the Industrial Revolution. Every

:12:18. > :12:22.single day, new technologies, new countries, new economies are shaking

:12:23. > :12:30.up the established way of doing things. It's extraordinarily

:12:31. > :12:35.exciting, and we, as conservatives, applaud the power it places in the

:12:36. > :12:38.hands of citizens. It has never been easier for thousands to start their

:12:39. > :12:43.own business in Britain and reach the whole world. But a single

:12:44. > :12:49.application can appear overnight and disrupt an entire industry, so it

:12:50. > :12:55.can be exciting yes, but unsettling as well. This technology brings

:12:56. > :13:01.intense competition that spells rapid decline for any sector or any

:13:02. > :13:09.country that feels to keep up. These are big questions that require big

:13:10. > :13:12.cancers and it is -- big answers and it is our job to provide them and

:13:13. > :13:20.the next Conservative government will.

:13:21. > :13:31.That's what our party has always done, apply our values and ideas to

:13:32. > :13:36.the challenges of the age and March of this country towards progress.

:13:37. > :13:42.That's what we will do again. Labour cannot do that. Did you see that

:13:43. > :13:48.speech last week? Ed Miliband made a pitch for office that was so

:13:49. > :13:54.forgettable, he forgot it himself. APPLAUSE.

:13:55. > :14:03.I have to tell you, in all seriousness, forgetting to talk

:14:04. > :14:08.about the deficit is not just some hapless mistake of an accident prone

:14:09. > :14:09.politician, it is completely and totally a disqualification for the

:14:10. > :14:29.high office he seeks. The economy may mean nothing to

:14:30. > :14:34.Labour, but it means everything to the people of Britain. It means our

:14:35. > :14:38.security and whether we pay our bills and provide for families and

:14:39. > :14:46.have rewarding jobs and enjoy decent retirements. Do you know what? There

:14:47. > :14:50.is a fashionable claim made these days, I claim that the link between

:14:51. > :14:57.the prosperity of the national economy and people who live in that

:14:58. > :15:04.economy has been broken. -- a claim. I want to take that head-on. It is a

:15:05. > :15:09.dangerous fallacy. At the millions of people who lost their jobs, whose

:15:10. > :15:13.incomes were cut, aspiration is destroyed by Labour's great

:15:14. > :15:17.recession, Ascot them whether they think the link between their lives

:15:18. > :15:22.and the lives of the economy was there. -- ask them. They will tell

:15:23. > :15:26.you from bitter experience they have paid a heavy price for that. Ask the

:15:27. > :15:31.people who have bought a home because we created the conditions

:15:32. > :15:39.for builders to build and they will say that it is the economy that

:15:40. > :15:47.builds houses. Ask the millions each stage who rely on the NHS, last week

:15:48. > :15:54.you heard Thomas is built on sand. -- each day. You cannot have a

:15:55. > :15:55.properly funded National Health Service unless you have a properly

:15:56. > :16:10.run economy. APPLAUSE Put another way - it's only

:16:11. > :16:14.because we were willing to take difficult decisions on spending in

:16:15. > :16:19.other departments that we are able to increase the NHS budget every

:16:20. > :16:25.year of this Parliament. So, don't let anyone in this party concede the

:16:26. > :16:33.NHS to Labour. They would ruin our NHS. The real party of the NHS is in

:16:34. > :16:46.the hall today. APPLAUSE The idea that you can raise

:16:47. > :16:50.living standards, funds the brilliant NHS we want, or provide

:16:51. > :16:55.for our national security, without a plan to fix the economy, is a

:16:56. > :17:04.nonsense. It is the economy that creates jobs. It's the economy that

:17:05. > :17:08.pays for hospitals. The economy that puts food on the table. And we are

:17:09. > :17:14.the only party in Britain with a plan to fix the economy. That is the

:17:15. > :17:18.leadership. We have offered the country these five years in office

:17:19. > :17:23.and this is the leadership we should offer for the next five years. True

:17:24. > :17:26.leadership. Leadership that is working. The leadership offered by

:17:27. > :17:37.our Prime Minister, David Cameron. APPLAUSE

:17:38. > :17:44.And Britain faces some big choices. Choices about whether or not we are

:17:45. > :17:47.going to live within our means or let rising debts threaten our

:17:48. > :17:52.economy again. Choices about whether we are going to win business and

:17:53. > :17:56.investment or drive it away. Choice abouts whether we are going to

:17:57. > :17:59.tackle -- choices about whether we are going to tackle youth

:18:00. > :18:03.unemployment and poor standards in our schools or let down a

:18:04. > :18:07.generation. Choices about building the infrastructure our future

:18:08. > :18:11.economy needs or letting it decay. Choices about whether we are going

:18:12. > :18:15.to trust hard-working tax payers to make their own decisions about their

:18:16. > :18:21.lives and their communities, or take control away from them. The past or

:18:22. > :18:30.the future, that is the choice Britain faces. And we, in this hall,

:18:31. > :18:43.have no doubt - we will choose the future. Now, we face some immediate

:18:44. > :18:48.choices. About protecting Britain's hard-won economic stability. Earlier

:18:49. > :18:53.this mornings just before I came on, you heard from Paul Bunnion. He gave

:18:54. > :18:57.us a powerful testimony of what economic security looks like in real

:18:58. > :19:08.life and what happens when you lose it. And he knows because seven years

:19:09. > :19:16.ago he was working in a branch of Northern Rock in Newcastle. He

:19:17. > :19:20.watched the people queueing desperate to withdraw from the bank.

:19:21. > :19:43.He saw Britain on the brink. He says we must never go back and so do

:19:44. > :19:49.with. We have to have the security of knowing our banks are face, so

:19:50. > :19:54.they are safe from the riskier trading floors. The security of

:19:55. > :20:02.making sure our housing market doesn't bring down our financial

:20:03. > :20:06.system. I'm giving the Bank of England extra powers to curb

:20:07. > :20:10.property booms and of giving mortgages to people who can't afford

:20:11. > :20:14.to repay them. We also need the securing of knowing Britain can pay

:20:15. > :20:18.its way. The Budget deficit is approaching half of what it was when

:20:19. > :20:22.we came to office. But it is still far too high. So we will see through

:20:23. > :20:26.our plan to eliminate it. And then to ensure our country is never in

:20:27. > :20:32.this position again, we must run surpluses in the good years. And

:20:33. > :20:36.when I say "surpluses", I mean the Government raising more than it

:20:37. > :20:42.spends. Now Labour claim they will balance the books. But the

:20:43. > :20:47.independent experts tell you the truth - their plans would mean they

:20:48. > :20:55.would borrow ?28 billion more each year. Running an overall surplus is

:20:56. > :21:00.the only sure way of getting our dangerously high national debt down.

:21:01. > :21:04.And let the message go out from this conference, after what they have put

:21:05. > :21:07.the country through, we will fix the roof when the sun is shining.

:21:08. > :21:27.APPLAUSE And that presents me with a choice.

:21:28. > :21:30.Indeed, it presents all politicians with a choice. We can either pretend

:21:31. > :21:35.to the British people, before the election, that this can be done with

:21:36. > :21:40.hardly any cuts - that's what we saw last week. Or we can level with

:21:41. > :21:44.people now and tell them the kind of difficult decisions that are still

:21:45. > :21:50.required to fix the economy. I have done this job for almost five years.

:21:51. > :21:53.And I can tell you - it's only because we've levelled with people

:21:54. > :22:01.that we have been able to take them with us on the journey our country

:22:02. > :22:09.has had to take. Here are the facts: The latest Treasury estimate is that

:22:10. > :22:13.to eliminate the deficit requires a further ?25 billion of permanent

:22:14. > :22:19.public expenditure savings or new taxes. And I tell you in all canned

:22:20. > :22:24.o, that the -- candour, that the option of taxing your way out of the

:22:25. > :22:25.deficit no longer exists, if it ever did.

:22:26. > :22:36.APPLAUSE In a modern global economy, where

:22:37. > :22:41.people can move their investment from one country to another at the

:22:42. > :22:44.touch of a button and companies can relocate jobs overnight, the

:22:45. > :22:53.economics of high taxation are the economics of the past. And we chose

:22:54. > :22:57.the future -- and we choose the future. The problem for a modern

:22:58. > :23:05.country like Britain is not that it taxes too much, it is that it spends

:23:06. > :23:10.too much. -- taxes too little, spends too much. And as for the

:23:11. > :23:14.heart of what we offer - and the proposals that Labour present to the

:23:15. > :23:18.country - for higher taxes on incomes, taxes on business, taxes on

:23:19. > :23:23.savings, on investments, on financial, pensions homes and on

:23:24. > :23:29.jobs, will be an economic disaster for every person in the United

:23:30. > :23:34.Kingdom. And by the way, when Scotland is rightly given greater

:23:35. > :23:44.control of its taxes, I suspect the people of Scotland will choose to

:23:45. > :23:51.put them down, not up. APPLAUSE And let me be clear, we

:23:52. > :23:55.will honour, in full, our commitments to Scotland and we are

:23:56. > :24:00.also absolutely clear that as Scots get more control over their taxes,

:24:01. > :24:04.it is right that Northern Ireland, Wales and England should get more

:24:05. > :24:05.control over their taxes and their laws, too.

:24:06. > :24:22.APPLAUSE I'm not going to pretend that

:24:23. > :24:27.finding ?25 billion of spending savings will be easy. But nor is it

:24:28. > :24:36.impossible. We have already found ?100 billion of savings in this

:24:37. > :24:39.Parliament. We have shown what can be done if you have discipline and

:24:40. > :24:45.grit. In every election I have thought - Conservatives are argued -

:24:46. > :24:48.you can have better public services without borrowing and spending more.

:24:49. > :24:52.But it is about making Government more efficient and effective and

:24:53. > :24:56.Labour have argued you cannot. I believe that the record of this

:24:57. > :25:00.Government has settled this argument for good. Labour were wrong and we

:25:01. > :25:18.were right. APPLAUSE Theresa May has reduced the

:25:19. > :25:24.Home Office budget by almost 20%. But crime is down. Michael are Gove

:25:25. > :25:33.and Niki Morgan have cut education Boyer crasscy in half but school

:25:34. > :25:42.standards are up. And please thank me in in thanking our Treasury team

:25:43. > :25:50.who have helped us attain this. APPLAUSE

:25:51. > :25:59.I can see Rob liked that bit of the speech.

:26:00. > :26:03.So, to eliminate the deficit and finish the job, we will rere dues

:26:04. > :26:07.Whitehall spending by at least the same rate for the first time two

:26:08. > :26:11.years of the next Parliament as we have done through this Parliament.

:26:12. > :26:17.That will save at least ?13 billion. We will go on restraining public

:26:18. > :26:26.sector pay and there will have to be less welfare spending, too.

:26:27. > :26:30.APPLAUSE Now, welfare spending makes up one-third of the entire

:26:31. > :26:37.Government budget. We are going to live in a country where the elderly

:26:38. > :26:40.have dignity in retirement and the vulnerable and people with

:26:41. > :26:46.disabilities are protected. But we can't afford to live in one, where

:26:47. > :26:56.we spend ?100 billion in welfare payments for people of working age.

:26:57. > :27:00.?100 billion. And we have such debts and even with the reforming

:27:01. > :27:03.decisions that Iain Duncan Smith and I have taken, benefits have risen

:27:04. > :27:07.more than earnings since Labour's great recession. That is not

:27:08. > :27:13.sustainable for any nation and it is not fair, either. So, I can tell you

:27:14. > :27:18.this today - working age benefits in Britain will have to be frozen for

:27:19. > :27:24.two years. This is the choice Britain needs to take to protect our

:27:25. > :27:29.economic stability and to secure a better future. The fairest way to

:27:30. > :27:33.reduce welfare bills is to make sure that benefits are not rising faster

:27:34. > :27:33.than the wages of the tax payers who are paying for them.

:27:34. > :27:49.APPLAUSE We will provide a welfare system

:27:50. > :27:52.that is fair to those who need it and fair to those who pay for it,

:27:53. > :28:01.too. APPLAUSE This freeze in working age

:28:02. > :28:07.benefits saves the country over ?3 billion. It's a serious contribution

:28:08. > :28:11.to reducing the deficit. Pensioner benefits and disability

:28:12. > :28:16.benefits will be excluded. And to those in work, I say this - where is

:28:17. > :28:23.the sense in taxing you more, only for you to be given some of your own

:28:24. > :28:27.money back, in welfare? The best way to support people's incomes is to

:28:28. > :28:31.make sure that those out of work get a job and those in work pay less

:28:32. > :28:40.tax. APPLAUSE

:28:41. > :28:51.And that is why I am the Chancellor, in budget after budget, who is

:28:52. > :28:54.increasing the tax-free personal allowance to ??10,500, meaning

:28:55. > :28:59.working people on low and middle incomes keep up to ?800 more of

:29:00. > :29:03.their hard-earned money. It is why we have cut taxes for savers, for

:29:04. > :29:07.home-owners, for small businesses, self-employed. Cut taxes for

:29:08. > :29:12.everyone who I pas their council tax or fills up their car. And that is

:29:13. > :29:16.why we have cut jobs taxes and increased work incentives and as a

:29:17. > :29:20.result there are almost 2 million more in work. That is the choice

:29:21. > :29:26.that we have made. APPLAUSE

:29:27. > :29:34.And the good news is that youth unemployment has fallen sharply. The

:29:35. > :29:38.sad news is that there are still too many young people who have fallen

:29:39. > :29:46.into a culture of welfare dependency and a life on the dole. It is a scar

:29:47. > :29:51.on our society. It is a tragic waste of human talent and we can end it in

:29:52. > :29:55.the next Parliament. So let this party of progress make another

:29:56. > :29:56.choice. Let's abolish long-term youth unemployment altogether.

:29:57. > :30:13.APPLAUSE So here is how we will do it - we'll

:30:14. > :30:18.replace Jobseeker's Allowance, reform housing benefit and take the

:30:19. > :30:21.benefit cap we have introduced down to ?23,000, because families out of

:30:22. > :30:32.work should not get more than the average family in work.

:30:33. > :30:39.APPLAUSE And all of these savings, all of

:30:40. > :30:41.these savings will be used to fund 3 million new apprenticeships. 3

:30:42. > :30:46.million more chances for a better life. So we help our citizens get

:30:47. > :30:50.jobs, instead of more immigration from abroad. We have a choice

:30:51. > :30:56.between paying our young people for a life on the dole, or giving them

:30:57. > :30:59.the keys of opportunity and be in no doubt which side this party is on,

:31:00. > :31:21.we choose their future. This country must pay its debts,

:31:22. > :31:29.pull up its young people. It must be the place where business invests and

:31:30. > :31:34.businesses thrive. I thought Digby Jones spoke well about this. It is

:31:35. > :31:38.not by accident that more than 2 million private sector jobs have

:31:39. > :31:44.been created under this government. It is the deliberate policy of this

:31:45. > :31:49.government to support job creators. And yet, for the first time in my

:31:50. > :31:54.adult life, we have a Labour Party that is positively anti-business. It

:31:55. > :32:01.came through in every sentence Ed Miliband remembered. The bits we

:32:02. > :32:09.wished he'd forgotten. By the general election, we will have

:32:10. > :32:15.delivered on a promise I made to you in my first speech as Chancellor in

:32:16. > :32:18.Birmingham. Britain will have the lowest, most competitive business

:32:19. > :32:27.taxes of any large country in the world. APPLAUSE.

:32:28. > :32:37.Unbelievably, Labour want to reverse this. This is their policy, to be

:32:38. > :32:40.firm against firms. Their business to be against business. As if they

:32:41. > :32:44.forgotten that people work in businesses and their wages come from

:32:45. > :32:51.firms. We instead are proud to be the party of firms and businesses,

:32:52. > :32:55.of income and jobs, and livelihoods. When we choose to be on the side of

:32:56. > :33:07.enterprise we are choosing to be on the side of the British people.

:33:08. > :33:16.This party of progress is the party of free markets and their markets.

:33:17. > :33:21.How dare the Labour Party attempt to give lessons on fairness? Who is the

:33:22. > :33:26.party restoring the real value of the minimum wage? Who is the party

:33:27. > :33:31.tackling abuse of 0-hour contracts? Who is the party capping payday

:33:32. > :33:35.loans, not 13 years of Labour, they were too busy capping each other. It

:33:36. > :33:37.is ask, the Conservative Party who understands markets must be fair if

:33:38. > :33:54.they are to be free. -- it is us. It is this pro-business conservative

:33:55. > :33:58.Chancellor who says to some of the biggest technology companies in the

:33:59. > :34:03.world this today. You are welcome here in Britain with open arms. You

:34:04. > :34:08.have the advantages of our skilled population to work for you, what

:34:09. > :34:13.band connections to deliver your services and our NHS to keep

:34:14. > :34:17.employees healthy. -- broadband. They are advantages that must be

:34:18. > :34:23.paid for. Whilst we offer some of the lowest business taxes in the

:34:24. > :34:26.world, we expect those taxes to be paid, not avoided, and some

:34:27. > :34:32.technology companies go to extraordinary lengths to pay little

:34:33. > :34:36.or no tax here. If you abuse the tax system then you abused the trust of

:34:37. > :34:41.the British people, and my message to these companies is clear, we will

:34:42. > :34:46.put a stop to it, low taxes but low taxes that are paid. Part of our

:34:47. > :35:03.effort to reduce the deficit. Our choice is that we are all in

:35:04. > :35:10.this together. It was this government that started the global

:35:11. > :35:14.work on changing international tax rules. This autumn we will lead the

:35:15. > :35:23.world in implementing those changes here in Britain. The future for

:35:24. > :35:26.Britain is to be a low tax country where people play by the rules. The

:35:27. > :35:32.future for Britain is to be a pro-business country. We also have

:35:33. > :35:37.to build for that future. Big decisions on infrastructure have

:35:38. > :35:46.always been controversial and always will be. The railways were bitterly

:35:47. > :35:50.opposed in the 19th century. The motorways were opposed in the 20th

:35:51. > :35:55.century. Let's face it. Even today, this country has spent 40 years

:35:56. > :36:00.failing to take a decision about building a new runway in the

:36:01. > :36:04.south-east of England. There are always 100 reasons to stick with the

:36:05. > :36:10.past but we need to choose the future. We should ask ourselves what

:36:11. > :36:14.the golden boys in that statue outside this hall would have done.

:36:15. > :36:22.What choices would those great Britons have made? Would they have

:36:23. > :36:26.said, our trains may be packed, roads congested, transport system

:36:27. > :36:32.cannot cope, but we will not build any more new roads railways? Would

:36:33. > :36:36.they have said, we mind for called the Underground and explored for oil

:36:37. > :36:39.in the sea but we should leave the extraordinary shale gas reserves

:36:40. > :36:46.untouched beneath our feet? They would not. Would they have said the

:36:47. > :36:50.country that had built the first nuclear power station should not

:36:51. > :36:53.build any more? They would not. Would they have said, it is OK if

:36:54. > :37:01.our children cannot afford houses so long as we can? They would not.

:37:02. > :37:05.Would they, who were part of an age of Enlightenment, that discovered

:37:06. > :37:09.the vaccine for smallpox, have said we are not going to have any

:37:10. > :37:12.research into genetic medicines and crops that will save countless lives

:37:13. > :37:17.in the future? They would not. We must choose the future. We will tap

:37:18. > :37:23.the shale gas, commission nuclear power, guarantee energy for the

:37:24. > :37:31.future. We will build the High Speed Rail Bill, decide where to put our

:37:32. > :37:35.runway, and support the Next Generation with starter homes in a

:37:36. > :37:39.permanent Help To Buy. We must learn from the past, not be the past.

:37:40. > :37:40.Decide or decline, that is the choice and we must choose the

:37:41. > :37:56.future. You know what? This future cannot

:37:57. > :38:01.just be about prosperity for one corner of her country. I grew up in

:38:02. > :38:07.London, I'm full of wonder at the way it has become a global capital,

:38:08. > :38:11.attracting the young, the ambitious, the talented from across the world.

:38:12. > :38:17.That's a huge strength for the whole of Britain. But I'm also the first

:38:18. > :38:22.Chancellor for almost 40 years to represent a constituency in the

:38:23. > :38:25.North of England and I can see the risk that our capital city will

:38:26. > :38:31.dominate. It's not healthy for our country or our economy. The answer

:38:32. > :38:38.is not to pool down or hold back our greatest global asset, that would be

:38:39. > :38:41.crazy. The answer is to build up the rest of the country, create a

:38:42. > :38:47.northern powerhouse of the cities across the Pennines, correct up the

:38:48. > :38:51.south-west, put the Midlands at the centre of the great manufacturing

:38:52. > :38:54.revival. People know that the disparities between different parts

:38:55. > :39:01.of our countries have grown up over many decades, under governments of

:39:02. > :39:06.all colours. Treat people as adults, not pretend we can reverse something

:39:07. > :39:12.like this overnight. Equally, let's not give up, say that it cannot be

:39:13. > :39:15.done, look at what Michael Heseltine achieved at the docks of Liverpool

:39:16. > :39:23.and London. This party of progress knows what it takes to create

:39:24. > :39:29.flourishing economies. Top universities, strong leadership that

:39:30. > :39:33.comes with powerful elected members of cities. These are the ingredients

:39:34. > :39:36.of the northern powerhouse. That is how we deliver prosperity and

:39:37. > :39:42.security for families across the nation and it is one of my driving

:39:43. > :39:47.missions to do everything I can. Let us choose today to make reducing the

:39:48. > :39:49.gap between North and South one of the central ambitions of the next

:39:50. > :40:07.Conservative government. APPLAUSE. There is one final choice we should

:40:08. > :40:12.make. A choice this party of progress always makes. That is to

:40:13. > :40:17.trust people with their own money. That is why in my budget this year I

:40:18. > :40:20.applied that philosophy with far reaching new freedoms in the way

:40:21. > :40:32.people can access their pensions. These freedoms are based on the

:40:33. > :40:38.simple idea that people know better how to spend their money than

:40:39. > :40:41.governments do. This party that gave people the right to buy their own

:40:42. > :40:49.home is the party that is giving people ownership of their own

:40:50. > :40:54.pension as well. APPLAUSE. But I want to go further. There are still

:40:55. > :40:57.rules that say you cannot pass on to the next generation any of your

:40:58. > :41:06.pension pot when you die without paying a punitive 55% tax on it. I

:41:07. > :41:08.could choose to cut this tax rate. Instead, I'd choose to abolish it

:41:09. > :41:27.altogether. APPLAUSE. People who have worked and saved all

:41:28. > :41:31.their lives will be able to pass on their hard earned pensions to the

:41:32. > :41:46.families tax free, effective from today. APPLAUSE.

:41:47. > :41:52.The children and grandchildren and others who benefit will get the same

:41:53. > :41:57.tax treatment on this income as any other, but only when they choose to

:41:58. > :42:03.drive down. Freedom for people's pensions, a pension tax abolished,

:42:04. > :42:07.passing on your pension tax-free. Put into place and delivered by

:42:08. > :42:19.conservatives in government right now. APPLAUSE.

:42:20. > :42:28.We are eight months away from one of the most important general elections

:42:29. > :42:32.in a generation. We can face it with confidence, because we go to the

:42:33. > :42:39.people as the party of progress. For five years Britain has pursued a

:42:40. > :42:42.clear economic policy, whilst all over Europe there has been in crisis

:42:43. > :42:48.and uncertainty. Britain has been the land turning the storm. Now we

:42:49. > :42:55.seek a new mandate as the party of jobs and security and a strong Prime

:42:56. > :42:59.Minister against the party of higher taxes, more debt and Ed Miliband. We

:43:00. > :43:04.are going to offer political resolve and economic competence, a confident

:43:05. > :43:07.future for Britain as the most prosperous country in the world. We

:43:08. > :43:13.are going to say to the British people, choose jobs, choose

:43:14. > :43:19.enterprise, choose security, choose prosperity, choose investment,

:43:20. > :43:20.choose fairness, choose freedom, choose David Cameron, choose the

:43:21. > :43:49.Conservatives, choose the future. The Chancellor spoke for longer than

:43:50. > :43:52.we'd been told. Almost 40 minutes. He is taking the applause of the

:43:53. > :43:57.conference now. The inevitable standing ovation. He began by

:43:58. > :44:02.telling the conference how good the British economy was but he did say

:44:03. > :44:08.there would have to be another 25 billion in public spending cuts in

:44:09. > :44:14.the next Parliament. That is to get a surplus. He ruled out increases in

:44:15. > :44:21.taxes and instead he went for cuts in public spending. He promises that

:44:22. > :44:27.there will be a freeze on all working age benefits for two years

:44:28. > :44:33.in the next Parliament, starting in 2016, hoping to save ?3 billion per

:44:34. > :44:38.year. He also promised some tougher taxes on companies that have not

:44:39. > :44:47.been paying their fair whack. An upbeat speech from the Chancellor,

:44:48. > :44:51.who will be hoping this conference is back on the economy. What did you

:44:52. > :44:55.make of it? There are two announcements at the heart of it,

:44:56. > :45:02.one was on benefits and the other was the Google tax. On benefits,

:45:03. > :45:05.this is the third stage of the clamp-down for benefits of working

:45:06. > :45:10.age people. What a first it was change the operating, so benefits

:45:11. > :45:18.were not rated with the retail prices index, but the consumer Price

:45:19. > :45:26.index which is lower. Second stage was in 2012 when they said they

:45:27. > :45:33.would not be in line with inflation at all. It meant a cut. Now he says

:45:34. > :45:37.if he is re-elected, the Tories would freeze working age benefits,

:45:38. > :45:42.let's be clear what those are, job-seeker's allowance, income

:45:43. > :45:45.support, child tax credit, working tax credit, employment support

:45:46. > :45:50.allowance, which goes to those deemed capable of work, not those

:45:51. > :45:54.incapable of work, and the element of housing benefit known as local

:45:55. > :45:59.housing allowance. It does not mean freezing benefits for pensioners.

:46:00. > :46:03.Child benefit is frozen. It does not mean, we are told, are freeze for

:46:04. > :46:14.people who are disabled. A dramatic move. One of the Liberal

:46:15. > :46:18.Democrats refused to go along with, both in 2010 and 2012. Let's be

:46:19. > :46:22.honest, it is designed to do two things - one, save a lot of money

:46:23. > :46:27.quickly. ?3 billion is a significant sum to saved but designed to put his

:46:28. > :46:31.opponents on the spot and say - here is my downpayment on the Bev sit.

:46:32. > :46:35.What's yours? Stick with us, we'll speak to Matthew Hancock, Tory

:46:36. > :46:39.minister in a minute to go through some of the Chancellor's reactions.

:46:40. > :46:41.Well, what did Labour make of the Chancellor's speech?

:46:42. > :46:44.Joining me now is the Shadow Treasury Minister, Chris Leslie,

:46:45. > :46:50.Welcome to the Daily Politics. Do you support Mr Osborne's changes on

:46:51. > :46:57.pensions, that he has called, the pension death tax? Well, this is, of

:46:58. > :47:02.course, the 55% rate that George Osborne himself introduced, yes, in

:47:03. > :47:07.July 2010. We raised our concerns back then, in some of the

:47:08. > :47:10.legislative discussions about it and questionied about whether people

:47:11. > :47:14.were being over-taxed. But I think it is good to simplify some of these

:47:15. > :47:20.mention rules but, it is interesting, isn't it, that he

:47:21. > :47:25.didn't U-turn also on the granny tax, the so-called granny tax,

:47:26. > :47:29.remember when he abolished the aged allowance which took a lot more from

:47:30. > :47:35.pensioners. Just to clarify, Labour will support the end of the 55% on

:47:36. > :47:39.pensions? Yes. We said at the time that it was a George Osborne

:47:40. > :47:44.invention in the first place. It is funny, isn't it, how, after an

:47:45. > :47:48.election George Osborne raises some of the taxes but before you get to

:47:49. > :47:51.the next election, he would like to give you the impression he is taking

:47:52. > :47:57.them away. All right. I get the point. What about the freeze on

:47:58. > :48:01.working age benefits which Nick, as I think you heard outlined, what

:48:02. > :48:05.benefits it covers from 2016. Will Labour support a freeze on these

:48:06. > :48:09.benefits? Well, I just heard the list. I think there is a bit of

:48:10. > :48:12.confusion on that. I will look at the detail. Don't forget at our

:48:13. > :48:16.conference last week we said that tough decisions are going to have to

:48:17. > :48:23.be taken on public spending, so, for example, on child benefit we have

:48:24. > :48:30.said not just for 15/16 but for 2016/17, a 1% cap on child benefit

:48:31. > :48:32.but there is being something a bit depressing, the choice George

:48:33. > :48:37.Osborne is making. He said nothing about the squeeze on real earnings

:48:38. > :48:42.and the wages that people have had over this last few years and what

:48:43. > :48:46.his choice is, is to take ?3 billion from those who are of working age,

:48:47. > :48:52.rather than the ?3 billion that he has given away in the tax cuts to

:48:53. > :48:58.the very wealthiest 1% through a millionaire's tax cut, earnings over

:48:59. > :49:01.?150,000. All I say is that that is a very interesting choice from the

:49:02. > :49:05.Chancellor which says all we need to know about how he stands up, always

:49:06. > :49:09.for the very wealthiest few rather than for the vast majority in this

:49:10. > :49:14.country. I think a lot of people who are out there working, day by day,

:49:15. > :49:18.thinking about tax credits, think being maternity pay, for example,

:49:19. > :49:22.all these other things will be saying - hang on, you talk that we

:49:23. > :49:25.are all in this together but what about those at the very top? What

:49:26. > :49:28.about the mansion tax and some of those people who can afford to pay

:49:29. > :49:35.more and contribute more? All right. OK. I take that point, Mr Leslie.

:49:36. > :49:39.So, why are you even considering supporting the freeze?. Because we

:49:40. > :49:42.are going to have to make tough decisions. There is none point in us

:49:43. > :49:46.getting elected and telling people that everything can be wonderful. We

:49:47. > :49:49.are going to have a deficit in this country that has been left behind.

:49:50. > :49:53.Because this is a Chancellor who promised he would get rid of it by

:49:54. > :49:56.now and of course, he hasn't done. In fact, deficit reduction as you

:49:57. > :50:00.know - because you know the figures -- has been a thing of the past for

:50:01. > :50:03.the last couple of years. Deficit is rising, borrowing is up in the most

:50:04. > :50:07.recent figures. The thing about George Osborne is he just doesn't

:50:08. > :50:12.get it, some of the drivers of higher welfare cost, the drivers of

:50:13. > :50:15.the rising deficit are housing becoming unaffordable because of the

:50:16. > :50:20.lack of housing supply and will he pay that is indome across our

:50:21. > :50:24.country. It requires the tax credit subsidies. Nothing in his speech

:50:25. > :50:28.about that. The very sense in which he is trying to divide the country

:50:29. > :50:34.between the wealthiest and the rest and this is' bus they are a divided

:50:35. > :50:38.party. Party. -- and that's bus they are a divided party. We can see if

:50:39. > :50:41.he can persuade his own Conservative Members of Parliament about it. All

:50:42. > :50:44.right, is there anything the Chancellor announced this morning

:50:45. > :50:48.that you will oppose? I will look at the detail. Parliament isn't

:50:49. > :50:52.sitting. You know, I have my concerns about the general direction

:50:53. > :50:56.of travel of where he is going. I think there is a lot of omission

:50:57. > :51:00.here. It is the choices he is making. He always wants to raise

:51:01. > :51:04.taxes and have cuts that hit those in work, but he does nothing for

:51:05. > :51:09.those in the world that he inhabits, who are doing quite well right now.

:51:10. > :51:14.In fact, in the sort of wealthiest 1%, share share of income noe this

:51:15. > :51:18.country has grown, whereas 90-odd % of the rest of the country, their

:51:19. > :51:22.share has fallen. It is that trickledown economics, he has said

:51:23. > :51:26.today, that he wants to stick with. All right, Chris Leslie, thank you

:51:27. > :51:29.for joining us from London. Just a quick recap. The surprise

:51:30. > :51:34.announcements in the Chancellor's speech was a freeze on certain

:51:35. > :51:38.working-age benefits which he says will save ?3 billion a year which

:51:39. > :51:42.will go towards cutting the deficit which will still be about ?95

:51:43. > :51:45.billion or more by the end of this Parliament. Proposed freeze will

:51:46. > :51:48.come into effect if the Conservatives are re-elected. It

:51:49. > :51:53.won't start until 2016, the first full year of a new Government. Let's

:51:54. > :51:56.look at the detail. The benefits freeze would include Jobseeker's

:51:57. > :52:01.Allowance, income support and Employment Support Allowance. It

:52:02. > :52:09.also expends to child and working tax credits.

:52:10. > :52:13.And, to child benefit as well. But, the Chancellor will exclude

:52:14. > :52:15.pensions, disability benefits as well as maternity and paternity pay.

:52:16. > :52:20.pensions, disability benefits as well as maternity and paternity pay.

:52:21. > :52:24.So, there we have it. A proposal which will no doubt be in the next

:52:25. > :52:28.Conservative manifesto. We are joined by the business minister,

:52:29. > :52:33.Matthew Hancock. Can we establish, from the start, that a freeze on

:52:34. > :52:37.benefits n real terms, is a cut? -- in real terms? Well, it depends on

:52:38. > :52:41.the future rate of inflation but it is a freeze in cash terms we are

:52:42. > :52:45.talking about. So benefits will be cut by whatever the rate of

:52:46. > :52:51.inflation is, in real terms? Well, it depends how you measure it, of

:52:52. > :52:54.course. Well, it is by the CPI? That's the general measure of

:52:55. > :53:00.inflation and we are talking here about a cash freeze in the amount of

:53:01. > :53:03.benefits because we think that is the fairest way to tackle the

:53:04. > :53:11.overspending on welfare that's grown up over the last few decades. By

:53:12. > :53:18.what measure is it fair, when the average wages of most ordinary

:53:19. > :53:23.workers are falling in real terms, that you now say, not only will your

:53:24. > :53:27.wages fall in real terms but any benefits that you get will now fall

:53:28. > :53:31.in real terms. Well, to support people who are nor work and to make

:53:32. > :53:35.sure that work pays, we are cutting taxes and income tax, focussed on

:53:36. > :53:42.the lowest paid. And I thought that the Chancellor was very clear in his

:53:43. > :53:45.speech, the best way to help people who are working, to keep more money

:53:46. > :53:50.in their pockets, is to make sure they don't pay as much in tax. What

:53:51. > :53:54.is the point of taking it away in tax and recycling it, in terms of

:53:55. > :53:59.benefit? That's a very straightforward principle. But the

:54:00. > :54:03.take-home pay of average and below average earners is falling, even

:54:04. > :54:07.after your tax cuts. Take-home pay is falling, in real terms and now

:54:08. > :54:11.their benefits will fall, in real terms. So it is a double whammy for

:54:12. > :54:16.ordinary workers, isn't it? Their real wages are falling and real

:54:17. > :54:19.benefits will fall? No, the measures of real wages after tax are

:54:20. > :54:24.positive. No, they are not actually. Well, they are on the measures that

:54:25. > :54:29.- and we can go into the statistics, but the big picture point is this -

:54:30. > :54:33.we have to deal with the deficit. As you saw, Labour have no plans and

:54:34. > :54:37.they don't know what to think of this. They were rather muddled on

:54:38. > :54:42.whether they would attack this or support it. Stay with the Toriesment

:54:43. > :54:46.We have a big task to do as a country, which is to make sure we

:54:47. > :54:49.work through this plan, which is clearly working. We have never

:54:50. > :54:53.argued it was going to be easy to put... Why are you putting all the

:54:54. > :54:57.burden on toll average and below average. To correct you... We are

:54:58. > :55:00.also talking about making sure companies pay their fair share. I

:55:01. > :55:09.have to give you the figures. Real take-home pay for the bottom 10% of

:55:10. > :55:14.earners was ?7,361 in '08. It is now around ?7,000. It has fallen. Real

:55:15. > :55:20.take-home pay and you are now going to cut real benefits. If you are

:55:21. > :55:23.taking that measure, from the great recession and as the Chancellor said

:55:24. > :55:28.in his speech - there is a very strong link between having a

:55:29. > :55:33.recession as a country and people's pay, and absolutely because of the

:55:34. > :55:38.recession, undoubtedly, on average, pay has fallen. We all know that. Do

:55:39. > :55:43.you know why? Because when there is a recession the economy shrinks and

:55:44. > :55:49.the economy is nothing more than the accumulation of the financial income

:55:50. > :55:54.of everybody in it. But if the real take-home pay of people on average

:55:55. > :55:59.and below average earnings are falling, why are you hitting them

:56:00. > :56:06.with a benefits cut. You have muddled it up. Why are you hitting

:56:07. > :56:10.them with a benefits cut You are it has fallen. It is falling, and we

:56:11. > :56:15.had Labour's great recession and boy are we not going to let them forget

:56:16. > :56:19.T we are turning than around. It is not easy. The best thing we can do

:56:20. > :56:24.to support people on low pay is cut their income tax. If you have a

:56:25. > :56:29.two-earner couple with a family on ?13,000 each per year, you will lose

:56:30. > :56:34.around ?400 because of this, but you will gain over ?1,100 because of the

:56:35. > :56:40.tax measures that we have taken and that means that you are overall

:56:41. > :56:44.better off. OK Now that is the sort of change we are making but it is

:56:45. > :56:48.part of a broader picture which is that you have to get control of the

:56:49. > :56:51.nation's finances if we are going to have a stronger and more secure

:56:52. > :56:55.future. And that is the big picture. But let's just... When the economy

:56:56. > :57:02.runs into the sand, everybody gets hit by this. And what is Labour

:57:03. > :57:05.offering... But people hit by it most of all are people on average

:57:06. > :57:10.incomes and below. Meanwhile you have cut the top tax rate for the

:57:11. > :57:14.rich. Now you are going to give this huge middle class benefit for people

:57:15. > :57:17.with big pensions, you are abolishing the 55% tax.

:57:18. > :57:21.Overwhelmingly of benefit to the middle class as you freeze benefits

:57:22. > :57:26.for the working poor. That's in the true, actually. Not only are the

:57:27. > :57:32.most well-paid paying the highest proportion of the tax take than they

:57:33. > :57:37.have in recent times, but, also, the change to pensions is about making

:57:38. > :57:42.sure that it pays to save. So why did you introduce the 55% tax rate

:57:43. > :57:46.in 2011? Well, on many people it was 85% before that and we brought it

:57:47. > :57:51.down. It was 35% and you increased the to 55% for most people. If it

:57:52. > :57:57.was right to do it then, why is it wrong now? It was 85% for some and

:57:58. > :58:02.35% for some. We simplified it to 55% and now we have got rid of it

:58:03. > :58:07.altogether. You are getting rid of something you Z No, we are taking

:58:08. > :58:12.the next ste. We cut it from 85% to 55%. It was mainly 35% for some, you

:58:13. > :58:17.increased it to 55%. There is no mainly about it. Final thoughts. You

:58:18. > :58:22.have been putting to Mr Hancock undoubtedly what Labour would say.

:58:23. > :58:26.Chris Leslie hinted at it but didn't go all the way - which is you are

:58:27. > :58:30.taking money from the working age poor. When we talk to benefits, some

:58:31. > :58:34.goes to people out of work, a lot goes to people in work. They'll say

:58:35. > :58:38.that's unfair. Others will say - we have had a squeeze on our earn, of

:58:39. > :58:42.course, benefits have to be squeezed to.

:58:43. > :58:48.Thank you both very much. I will be here at 11.30am tomorrow with all

:58:49. > :58:52.the big stories and we'll have Boris Johnson's speech to conference.

:58:53. > :58:57.Obviously not interest in that and we'll be speaking to the Foreign

:58:58. > :59:09.Secretary. For now, from Birmingham, goodbye.

:59:10. > :59:13.Saxon hoard. Basically, the Holy Grail of treasure-hunting.

:59:14. > :59:17.is the Holy Grail of treasure-hunting.