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The start of the Tory conference in Birmingham has been battered with


defection and scandal. Can George Osborne steady the ship? There is


talk of tax cuts and economic growth.


Welcome to the Daily Politics live from the Conservative Party


conference in Birmingham. If we cannot beat that shower of an


opposition we don't deserve to be in politics, so said David Cameron last


night. But after the worst start to a Tory conference in recent memory


it is looking harder than it did, especially with Michael Ashcroft


helpfully producing polls saying Ed Miliband is going to win big-time.


Over to this man, George Osborne, who not the first time is expected


to produce a political fix for his party's predicaments. We will bring


you his speech live and uninterrupted. Could this woman win


this affected Tory voters in Scotland? We will be speaking to the


Tory heroine of the Better Together campaign, Ruth Davidson. Who would


the Tories rather jump into bed with, Ukip or the Liberal Democrats?


I just happen to like Nigel Farage. I have shared beers with him. It


does not mean I share the same politics. All that in the next two


hours of public sector broadcasting at its cheapest. It is George


Osborne's big day at conference, he will be addressing the party


faithful just before midday. He will announce plans to abolish a death


tax on pension pots to allow hundreds of thousands of elderly


people to leave their money to their loved ones after they died. It is a


measure designed to appeal to court Tory voters, to get those back


tempted by UKIP. Will it work? We have Kevin Maguire from the Daily


Mirror. How difficult will it be for this conference to get over the


terrible start at the weekend? It's interesting, going round the bars


last night, they pay us a terrible salary and force us to drink... It


has had the opposite effect as the first defection, it has had a


unifying experience, Douglas Carswell was a loss to the Tory


party, Mark Reckless was seen as a loner, an oddball, they are unifying


around this perfidious act, yet it seems to be a rallying call. And the


Chancellor will be getting focus away from these things and onto the


economy. Yes, they have more credibility on that than Labour.


They are on the traditional Tory ground of offering tax cuts and


bashing benefit claimants. I think only UKIP, the Tories think they can


beat Mark Reckless. He has a 10,000 majority, has not got the personal


appeal of Douglas Carswell. They think if they can beat him there


they will halt the UKIP bandwagon. We mentioned Ashcroft's survey,


showing that what ever happened last week, it was very flat for Labour,


it looked like he might have taken another stumble towards Downing


Street. UKIP is the ghost at the feast. It hangs over everything they


do, every hope they have of winning the election, every right-wing Tory


MP, they look at and wonder who will be next to defect. They are asking


the wrong questions. UKIP is a monumental protest against business


as usual. It is anti-Westminster, it is anti-politics. Expect to see


quite a lot from George Osborne. One that we have not been told about?


Some sort of massive totemic benefits cut, it will be a typical


George Osborne move, challenging Labour to match his austerity


measures. What was the public interest defence in your paper in


trapping Brooks Newmark? If you have a minister charged with getting more


women into politics but seems to have more interest in getting them


into bed, there is huge public interest. There is no criminality,


no wrongdoing, massive stupidity, where is the wrongdoing or the


criminality? There is a huge question of judgement, when you have


a 56-year-old father of five sending lewd pictures to someone he believes


is a 21-year-old young woman, trying to meet her at the Tory conference.


That is stupidity, if it was a matter of judgement we would not


have the ministers in the Cabinet. You went on a fishing expedition.


You did not have reasons to believe he was up to something stupid, you


just went on a fishing expedition. The journalist says he did not, he


had word that about have a dozen Tory MPs were using social media to


meet people in an inappropriate way, so he went to investigate. You only


tried to entrap Tory MPs. Why? That is where he had his information. I


remember bringing John Prescott when he was Deputy Prime Minister about


his affair with a civil servant. That was an affair, this was social


media. Why were only Tory MPs targeted in this fishing


expedition? His information was these Tory MPs, there were questions


to be asked. It turned out he was wrong on all the others except


Brooks Newmark? The newspapers studied his evidence, that he had


evidence to mount this fishing expedition? They went through it


very carefully over the week. It has been reported to the new press


regulator, which will look at it. I would like all the evidence to be


published so you can see all the e-mail trails, then you can make


your own judgement, we can all judge at their when everything is in the


public eye. You know that entrapment is only justifiable if there is a


serious public interest at stake. People might regard this as stupid,


they do not regard it as a serious public interest. Andrew, I dispute


that. If I thought a minister, unmarried father of five in a


responsible position was chasing young women like this, I would think


that is a matter of public interest. Does this go on in the Daily Mirror


newsroom? Or the BBC? Or at the Sun newspaper, which was awash with


drugs and infidelity. For the record, I was never in that


newsroom. Will you take a high moral position on this? If you want to


take some shifts we can fit you in. You cannot afford me. We are not


trying to sound too morally high because I'm sure Mike paper has


committed moral mistakes. We turned down the story. It was offered to us


then the mail on Sunday, they turned it down as well. The new press


regulator, the bar is a little bit higher. We need to be careful of


entrapment. In our judgement, and I'm not saying this is right... Let


me get this right, the Daily Mirror is using stories that the Sun


newspaper and the mail on Sunday turned down? We do not have a


problem with the problems the Sun newspaper does have, which is why I


believe they did not go near the story. We went over this with


lawyers for a week. There will be a ruling, I will come back and discuss


it with you happily. Maybe you could get your editor to come. That would


be interesting. I am rather lower in the food chain than you are. As


usual it turns out the media is more interested in the conference. Two


MPs have defected to UKIP, Douglas Carswell and Mark reckless. -- ten


Mac. Dan Hannan has not yet defected. He joins us from the


Westminster studio. Welcome to this programme. You were not just


colleagues, you were a close personal friend. You must have known


one of them was jumping ship. Yes, they are friends of mine. It is


difficult for me. I think they've made a mistake. I'm not going to


disown my friendship. They have acted on principle. Nobody does this


kind of thing lightly. They wrestled with the decision for a long time,


turning your back on relationships you have built up is not something


you do frivolously and they have done it after a lot of


soul-searching. You must have known that one or the other was going to


jump ship. I'm not going to get into what we discussed before. So they


did consult you? I've just answered that. All right, then I take it they


did. You say you will not defect, but Mark Reckless said he would not


defect either. How do we know you're not fibbing? I am not fibbing. I've


explained at length, there are possible parties of government, one


will give a referendum, the other will not only cancel that referendum


but we'll do it what it did last time, it will void our Treasury, and


employment will rise, the deficit will rise again, we will cancel the


welfare reforms and education reforms. It is a terrible pity,


there are good patriotic people voting UKIP and conservative, and


even though combined they mark out half the electorate, because of that


split, it looks as though Ed Miliband on the current polling will


be Prime Minister with 35% of public support. Let's get a straight


guarantee from you. You will guarantee this morning that you will


not effect to UKIP this side of polling day May 2015? Yes. Why not?


I just explained why. Had the Conservative Party not offered


referendum, I would have found it difficult to fight the last European


elections as a conservative, but David Cameron has made that its


policy. The issue that animates me and a lot of people in the


Conservative Party is being able to be a free, independent country,


trading with Europe at embracing wider opportunities of other


continents. It seems to be the only way to settle that issue, with a


national referendum. The tragedy would be if we don't get that


referendum because of UKIP, from the best of intentions, they become the


agency that prevents us getting that referendum because the vote is split


and Labour and Lib Dem candidates form a majority with a derisory


share of the vote. But Mark Reckless and Douglas Carswell claim this


referendum is preordained to deliver a yes vote, even if it is small


changes, he will come to the British people and say he has renegotiated.


I agree with that analysis but I have a much higher opinion of my


fellow countrymen than to think they will fall for the same trick Harold


Wilson pooled in 1975. Ultimately, it will not be any of us who decides


this, it will be the British people as a whole. It is already pretty


clear that what we will end up with is something very close to the


existing terms, we've had 40 years to get used to the European Union of


which we are members, the question we will face is whether we remain


part of it, they will not be any significant change, we will still be


in many of the same policies, but are we happy to be part of that


united Europe, the only trade bloc in the world that his shrinking, or


are we going to raise our eyes to more distant horizons and embrace


the opportunities that come to us as a global nation? That is clearly why


you will vote against this, if we get a referendum. Can I just be


clear, you think even if only marginal changes are made to our


status within the European Union, Mr Cameron and the Tory establishment


will campaign to keep us in the European Union? That's a question


you'd have to put to the Prime Minister, but my working assumption


is that he and I will be on opposite sides because even if his stated


objectives were met there would not be any fundamental change in Irish


and with the European Union, we would still be in the common


external tariff, part of the common diplomatic corps, the justice and


common home affairs policy, we would still have European citizenship. It


is a pity. He does have the opportunity and he may pull


something out of the hat, he has the opportunity to go for a


substantially different relationship, something closer to


what other countries do, being inside the free market but outside


the political union. That is plainly on offer, it is a deal enjoyed by


other countries at the moment, and it is indicated that it would be


available. For whatever reason, it does not seem to be something they


are interested in going for. That's a question to put to them.


An Thank you for turning up in Westminster today. Good to speak to


you. Which, if you hadn't noticed,


is still in tact, Yesterday afternoon it was the hot


topic of debate here in Birmingham with key addresses from the


Conservative Leader in Scotland, and new party heroine, Ruth Davidson,


and the Leader of the House of Commons, William Hague,


who delivered his final speech to We must reshape our union, so that


each of its nations is comfortable in its own clothes. For Scotland,


that means having a Parliament that finally had to look tax payers in


the eye. Right now, the First Minister of Scotland have a block


grant transferred from Westminster. Their only concern is how to spend


it. This has allowed a nationalist Government to spend seven years


telling the people of Scotland that everything good in the country is


down to them for spending money on it and everything bad is


Westminster's fault for not handing over enough. I want a a Scottish


Parliament that is in charge of raising more of the money it spends.


I want the working people of Scotland to know when they look at


their pay check the right-hand column is going direct to Holyrood.


A more direct link to what is raised in Scotland is what is spent. Less


reliance on a block Brant and a more physically reliable policy. And when


that happens and people see their tax sent directly to Scotland, they


will hold future First Ministers to account. No more free passes. No


more false promises, no more excuses and no more cries of - only with the


powers of independence. It is time for the way decisions are


made to be fair to all, including the voters of England. And my


long-standing view is that when Parliament makes decisions affecting


only the people of England, or only the people of England and Wales,


then those decisions should be made only by the MPs elected to represent




If the representatives of Scotland are well able to decide many of


their own laws, as they surely are, then when we representatives of


Yorkshire, Kent or Norfolk are gathered together, we have the


ability and right to do so as well. The Prime Minister has asked me to


Chair the committee of the Cabinet to address, at last, this question.


We have begun our work and we're open to the views of all. But we are


not open to attempts to evade and dodge this issue for years to come.


If no agreement can be reached, then each party must present its


proposals to the electorate. So we will argue our case with the other


parties, but in the absence of agreement, we will relish taking our


case to the country. APPLAUSE


And we are joined now by Ruth Davidson, the leaders of the


Conservatives in Scotland. Welcome to the daily iks Mr. You are


generally regarded as having had a good referendum. How are you going


to translate that into more Tory needs more of the border? Where the


Conservatives took the looed in the Better Together campaign and it was


cross party. We took the lead in places like Angus, and pertshire.


Used to be Tory territory. And places in Aberdeenshire and Scottish


borders, we have really good opportunities there. If you look at


the sort of voting intentions, about 170,000 people that voted SNP at the


last Scottish election, voted no. They are the people we want to go


after. How many seats are targeting with a hope of winning? We are going


to target a number of seats. I'm not going it tell you that number. Why?


Because I bear the scars of 2010, because somebody said it was we were


well-placed in 12 seats and we got slaughtered in 11 of them. You don't


want to repeat that. At conference they did that, as well. I will not


do the same. Are you confident enough that, when we wake up, those


of us who have been up all night probably and we see the results in


Scotland that you will have more Tory MPs in Scotland than pandas?


Certainly I hope so, to put that joke to bed. You'd only need three


Our great strength in Scotland, our great weakness, our vote is spread


evenly. Ourselves, the Liberals and SNP got between 400,000 and 500,000.


We got 413,000. The Liberal Democrats got 465. We got one seat,


they got 11. It is about being able to build-our campaigning ables and


our levels of support in pockets in the way they have done. --


campaigning ability. What is the strategy? Will you fight


on a specifically Scottish manifesto in the election? Well, the Scottish


electorate is incredibly sophisticated. Which is why you see


so much tactical voting. People understand what they are voting for


in different elections. You just need to look at the referendum when


you see the participation levels and the level of understag standing in


politics. People know Westminster is in charge of the economy, foreign


affairs, and the Armed Forces, it is in charge of taxation, all of these


areas, so we will be talking about that. It is not in charge of - in


Scotland - health, or education or huge swathes of transport. So, you


will just fire on the London manifesto? No, we will explain what


we are doing in Scotland. For us, a general election in 2015 and


Scottish election in 2016, you kind of have to have in part, your


manifestos ready for both. I'm still not sure what is going to change


things. You came out of the referendum well. We understand that,


but, you know, you lost every seat in Westminster in 1997. Your share


of the vote has not really changed very much since then. What is going


to change it anyhow that will be a step change, so that -- to change it


now, that will be a step change so the Tories matter Lord Ashcroft did


a poll across Scotland and found that people don't vote Tory in


Scotland because they think you can never elect any Tories. So they look


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


Democrat party or in the SNP. If you vote SNP you know you are voting for


another referendum. Lots of people that moved to them won't vote SNP


again. And the Liberal party have had a collapse, polling in the low


single figures. Are you going to win some Liberal seats? I hope so.


Where? Again, I bear the scars of 2010. You hope to pick up seats in


the north-east of Scotland, a mixture of Liberal Democrat and SNP


territory. There is a lot of lapsed Tory voters up there. That must be


parting of your taergting? It looks like you are writing my strategy for


me. Thank you very much. No I'm not. You may win even fewer seats than


you have if I was doing it. What does more power for the Scottish


Parliament look like, as far as you are concerned? I want to sort out


the problem that we have had in the Scottish Parliament which is that it


has the power to spend lots of money but no power to raise money T


doesn't have to look tax payers in the eye. Every Scottish election is


a spending competition. And it is not very good for the people of


Scotland. It is not right that people who are making decisions


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


I want to see the wholesale devolution of income tax. All income


tax? We want starting grid to be the same, so bar the personal allowance.


The Strathclyde report. Exactly. You want a chunk of that to be sent


north? We looked at that and we would quite like to have had as a


federal field tax. You want a trunk sent north. We would like to empower


businesses, lots of businesses involved in manufacturer or retail.


They make their money off of selling things. And if there is an incentive


for the Government in Scotland to make it easier for people in


Scotland it make and sell things, I think they should do it. This is


fascinating. It is not that long ago that you promised a line in the sand


against any more powers for the Scottish Parliament. What happened?


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


a massive debate in Scotland about exactly the constitutional powers


the people of Scotland want to have. You were wrong? My view has changed


and for incredibly good reasons. Because the Scottish nationalists


have done so well and they looked at one stage as if they were going to


win the referendum. Isn't the civil message for Scotland - if you want


more powers for a Scottish Parliament, you vote Scottish


Nationalists and then the rest of you all run after them? Well, more


powers isn't a consolation prize for the SNP. It isn't a coming second or


the gold fish you get if you miss at the funfair. This is about securing


the UK. Nations need to be comfortable in themselves. The way


to ensure it is to vote nationalists. You used to be against


more powers. Labour is very iffy about what powers they will give.


The one way to ensure Mr Samaras -- Mr Salmond's phrase - we hold your


feet to the fire - is to vote nationalist. There have been changes


to devolution since it came in. Even with Donald Dewar, he was never


going to get something right first time. So we have developed


devolution. The people who have stood outside that have been the


SNP. We voted, the Sovereign will of the Scottish people, in 1997. Do you


want a Parliament, yes or no, tax-raising powers. I voted for it.


The only people that handed the power back was the SNP. They hand


powers back. They wouldn't take part in a commission, they boycotted it


for the Scotland act. They have never been interested in making


devolution work. Your Prime Minister has also enshrined the Barnett form


Formula which gives a disproportionate amount of money to


Scotland. What do you say to the Welsh Tories who get a fraction of


what Scotland gets, from the Tories here to the poorest regions of


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


regional demographic differences but if you have the wholesale devolution


of income tax that offers the grant. There is a de-Tubbing method where


the SNP are on board. You top slice part of the grant. That will come


away. And you fill up with direct income taxation. The rest of the


Barnett Formula will still be overpaid to Scotland? The rest of


the block grant is made up of the Barnett Formula. But that means that


Barnett becomes less important because it makes up a lesser


proportion of the money directly coming from Scotland. It is more


about fiscal responsibility and something as a centre-right


politician, I'm fully in favour of. You are now from a country with


three of the main parties led by women And also the speaker of the


House. In a part of Britain that used to be famous for its misogyny


Well, what can I say, women are doing it for themselves up there? #


So what is the mood of conference? Do they lurrrve UKIP


and hate their coaltion partners, Only one man has


the balls to find out. Ask any Conservative at this


conference what they want after And if they don't get it,


then some of them would prefer to be But if they had to choose,


if they had to do a deal with another party, who would


they prefer, the Lib Dems or UKIP? I think it is social liberalism,


at the end of the UKIP are Their policies are just


not right for Britain. I think after five years we


can trust the Lib Dems. Yes, they have let us down


on a few things, like the boundary changes, but


but we know we can work with them. With UKIP, you have


a party where we have the red UKIP, and then you have the former


libertarian UKIP party, so it'll be too much of a mixed bag and too much


confusion within Government. There was a very definite


choice there, why is that? I feel UKIP is closer to us,


obviously both being two centre I feel we share similar similarities


of distrusting the European Union. What's really interesting,


of course there is a binary choice, UKIP or the Lib Dems, is the number


of people who go - oh, no, I don't want to answer that one and


go scurrying back up through there. It's going to have to be the


Lib Dems, I'm afraid. Very definite because I think UKIP


are not credible. I think a lot


of their people are dodgy. It just doesn't feel


comfortable to me. I consider myself to be a right-wing


Conservative but I'm pro-Europe and I'd rather dive naked into a barrel


of wasps than do a deal with either. I don't particularly know what


the UKIP party believe in, so, no, I wouldn't want to do


a deal with UKIP. You are thinking about it now,


aren't you? No,


I just happen to like Nigel Farage. Doesn't mean I share


the same politics. He's good bloke but he has


different politics to me. I would prefer the UKIP party but I


don't like UKIP either. We have a lot more in common with


UKIP than Liberal Democrats. We as a party have got quite


a lot done in this Parliament with Are you suggesting that with


the UKIP coalition they wouldn't be quite such a pushover,


as a smaller party? I think joining UKIP would be


a backward step. There are so many problems here


with both of those parties. You know that,


that's why you have asked me that I think they are slightly easier to


control than UKIP, if they come in and I don't think


UKIP will get a decent number Now, I've got to say that's


a little surprising because I was told in Doncaster last


week by UKIP - they would say that wouldn't they - that if I asked this


question they would walk it. Well they haven't,


that's either because the sort of Tory that likes UKIP isn't here,


or they are wrong and this big win for the Liberal Democrats, well,


about one-third of the people who say they are closer to us,


they are more Cameroon-type Tory. Two-thirds


of that is better the devil you I am joined by the leader of


Portsmouth City Council and Bromley Council. I know that you want a


majority, if you don't get one, who would you prefer to be equal lotion


-- in coalition with? I am focused on achieving a majority government.


I think we need to give consideration to running a minority


government, possibly going back to the country. It has been hugely


frustrating being in college and with the Liberal Democrats. They


speak about fairness and yet one of the things they blocked was the


Rowntree commission change, which has meant inequality throughout the


UK. UKIP are an unknown quantity. I think it's very difficult... Who


knows? I'm optimistic. Should David Cameron have done that in 2010,


formed a minority administration? I don't think so, we have achieved


some amazing things. You think it was right to form coalition then but


not next time? If he had formed a minority government he would have


had to go back to the country very quickly, egos he would not have got


things through. There have been some real successes, in particular, the


way the deficit has been reduced hugely? Actually, it has not been


reduced hugely. What do you think? If you end up with another hung


parliament, is it UKIP or the Lib Dems? That would be them doing a


deal, they did not put me on. If we did, it would be UKIP, because Nigel


has a point. What is his point? The fact is we are where we are because


of Ed Miliband and the Labour Government previously cocking up not


only the economy but also immigration and a whole range of


issues that brought us to this place. Why don't we take that as


read. What is Nigel's point? Over the period of the last Labour


government we have had 4 million people coming into this country,


that is a population increase of over 4 million. When you have that


sort of increase it has a knock-on effect on services, planning. Is


Nigel's point immigration? It is part of it. You don't say he has got


points, you said... Nigel, you may have a point. That single point is


about immigration? It is not framed right, it is about population.


People feel the effect of population growth, not the same as immigration.


So he's got a point but an obscure point? He is concentrating on the


wrong issue. I fundamentally disagree with this, I don't see how


you can take seriously a party not yet in Parliament with one policy,


pulling out of Europe. Nigel Farage says he will spend more on defence


by pulling out of Europe, spend more on the NHS by pulling out of Europe.


His ansa to everything is pulling out of Europe. I want to renegotiate


our terms with Europe, not out at any cost. If Mr Cameron succeeds in


bringing a lot of power back would you vote to stay in? It would depend


on the trading agreements, if we would not be hammered by tax,


absolutely. If we could not negotiate that point then I would


vote no because that would be detrimental to the economy. Do you


think the man with a point and Mr Cameron could work together? You


mentioned Lord Ashcroft's thing, and UKIP are pulling higher than the


Liberal Democrats. There are more UKIP voters out there. That is


interesting but has nothing to do with the question I has to queue. Do


you think David Cameron and Nigel Farage could work together? I do


not. I think David Cameron is big enough to work with anyone, he has


worked with the Liberal Democrats, so if he can work with them... Is


the answer yes? And are you in the same party? Yes, we agree are lots


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


think they could work together? I think David Cameron is a qualified


enough politician to go alone, he does not need propped up by somebody


who does not even have one MP in Parliament, only has one policy, and


that is being out of Europe at any cost. Your government has lamentably


failed to hit immigration targets, do you want to remind me what the


figures work? If we compare to where we were... There is almost no


difference from five years ago. You promised less than 100,000, there


has been 200,000. That is only if you take the figures surely as they


are in terms of net immigration. That is the figures you set! You are


comparing the figures to pre-Conservative Government, but if


we had not brought in the changes we brought in, they would be much


higher, so there has been real success. You and I both know that


was not the promise. Well, we have achieved a lot. I had aspiring


Labour politicians and they work very on message, it is nice to have


ones that are not on message. It has made my day. I don't think it has


done your career is much good but it has brightened up the programme.


Whilst we have been on air, Sajid Javid has been addressing the


conference. His speech covered the expansion of broadband. To reason,


the strength of the British film-making industry, the music


industry, arts funding, he made even -- he may be even mentioned the BBC.


It is true that we have had to take some difficult decisions and cut


taxpayer funding, but because of our national lottery reforms we have


protected most budgets, so don't let anybody tell you that conservatives


don't care about culture. We do, but we just want to make sure that your


money is spent carefully. It's the same with the BBC. We froze the


licence fee in 2010. I continue to challenge them to do more with


less, because spending public money is a privilege, not a right. I ask


myself also, can it be right that somebody goes to prison for not


paying their licence fee? That is why I am reviewing this issue. In


all of these areas... In all of these areas, there is more to do,


but to do it, we need to get re-elected.


In seven months, our country faces a choice, a choice between economic


security with the Conservatives or a return to high spending and higher


taxes with Labour, a choice between a Conservative Party that respects


and rewards hard work or a Labour Party that encourages a culture of


dependency. A choice between a Prime Minister and Chancellor who have


repaired the economy and given it into the fast lane or handing back


the keys to the team that crashed the car. We need the country to make


the right choice, to choose jobs, to choose growth, to choose ambition,


to choose opportunity, and to choose David Cameron as Prime Minister of a


majority Conservative Government. That was Sajid Javid. He joins us


now. Welcome. Did the Sunday Mirror entrapped Brooks Newmark? I am very


sad about it. He was a good friend of mine. I think he made the right


decision to leave office. The question of whether it is entrapment


is one that I cannot answer. You either minister of media, you can a


view. It is precisely because I am the Minister responsible for media


policy that I think it is irresponsible to pass verdict. It is


possible Brooks Newmark might take legal action and if that happens it


would be the view of the courts. Can you discern any public interest in


what was done? I cannot comment on this, if he decides to take legal


action that is something I don't want to prejudice in any way,


especially given my role being responsible for policy. Do you


welcome a referral of this case to the new independent press standards


organisation? That's up to the organisation, I understand there


have been requests for referral. Would you welcome that? The


organisation is there for people to make referrals and if that has been


made then if the organisation wants to look at it they should. Would you


welcome it? It is an independent organisation. You don't have a view


as the minister responsible for media? I don't want to have


involvement in this. Is there any point in being responsible for the


media if you cannot comment? Yes, there is, but when something goes


before the courts. Anything could go in front of the courts and then you


could not comment on anything. This is something where there are strong


rumours today that this may go in front of the court and I should not


prejudice that. Coming on to the economy, why is progress on cutting


the deficit so slow? Let's look at what the oh BR said about it, the


original targets were set by the oh BR. They had hoped it would be


stronger. If you look at their analysis it was the Euro crisis, the


commodity crisis, other problems around the world, with the emerging


markets and growth falling there. That may explain why you've not done


it as quickly as you might have wanted to but in 2010 you said you


would get rid of the deficit by 25th -- 2015. By 2015, if you're lucky,


you will only be 40% of the way there. 60% to be done. Why so slow?


Judge me by the deficit, said George Osborne, judge me by cutting the


deficit. Look at the process made, -- progress made, we had down by a


third. We keep making progress. I don't think anybody thought you can


turn down a deficit that is the biggest in the Second World War


overnight. It's going to take time. Why are you making progress when


borrowing has risen? What I do is look at financial year by financial


year. It is rising. I'm confident that the deficit will keep falling,


judge that when we get the latest set of numbers. Why has it been


rising? There is always a seasonality to borrowing figures, so


what matters most is the actual year. I'm confident we will keep


cutting the deficit. Even based on the projections, by the end of this


financial year the deficit will still be around ?95 billion, it is


still very big but we made huge progress. Why have you made less


progress in cutting the deficit than the United States, Italy, Germany,


Greece, Spain? Why have you done less well than even those countries?


For two reasons, we had the deepest recession in almost 100 years. You


did not have a deeper recession than Greece or Spain. As you know, they


have other issues around their currency, the problems that has


caused, we did not join the euro and that will not happen under a


Conservative government ever. But we had a deeper recession, the deepest


and 100 years in this country. Why were they able to cut the deficit


more quickly than you? Our deficit was the largest of any major


industrialised economy, 10% of GDP, on hundred Greece had more than


that, America was almost that. We also had -- Greece also had a major


currency crisis. That makes it even worse! I put it to you the reason


you have not cut the deficit is income tax receipts are barely


rising and income tax receipts are not rising because ordinary people


in this country are going through a huge squeeze on their wages, they


are falling in real terms, not paying the tax you thought, able are


suffering. That is the reason. I don't accept that. Plenty of people


are still facing significant charges every day. Our plan is to see what


we can do more than we've already done to keep on with that plan. Back


to income tax, you raised that issue, income tax receipts are not


rising because the income tax cuts we have introduced, the increase in


the personal allowance means lower paid people have all seen tax cuts,


the average tax cut is much higher. We have taken people out of tax


altogether. I'm proud of that. You might say that is a reason. Even


after that tax cut, real take-home pay is falling, it is down 5%. We


are heading no 410 year freeze -- we are heading for a ten year freeze.


Are you proud of that? Now I am not. We have the fastest-growing economy


in the world. I how much have -- I how much have average wages risen?


When you've had the deepest recession in 100 years, a


contraction in GDP of more than 6%, people will feel your. -- people


will feel badly. How much have wages risen? We have had difficulty... It


depends what class of wage... I am talking about average wages. They


have risen by 0.1% so far. 0.1% after four years of Conservative led


government. In real terms, people's wages are still down. I might have


average wages risen for people who have found a job? 2 million jobs


have been created. Sure, they've got a job. Those jobs would not have


been created if we had not done this to the economy. Plenty people are


working zero hours... If you want to investigate that, part-time jobs are


now more higher than they have been in the past but the number of people


on 0-hour contracts is less than 1%, we have more people employed than


ever before, more women employed than ever before and I'm proud of


that. But people are suffering. There are real wages are being


squeezed and it looks like on the current projections we have, the


report out this morning, there is going to be no relief for people on


average wages for the foreseeable future. The most important thing is


that we have a growing economy that creates jobs. We've got a plan for


that, it requires difficult decisions, but that will be put at


risk if we abandon this plan. That is Labour's policy, remember, you


had a conference last week with a leader who did not mention the


deficit, he forgot that. If he cannot deal with the deficit we


cannot have a brilliant NHS, create jobs...


I understand that's the line. It is more than a life. It is reality.


Do you know the lowest 10% is just down ?300. ?300 lower in real terms,


despite your growing economy. People on low wages are not seeing


any benefit from this recovery. If you work full-time you have seen


your income tax bill cut by two-thirds if you are on the


national minimum wage. If you work full time. That's something, despite


all the challenges that we have had, that shows we are doing what we can


o to help people in difficult circumstances. The figures I have


given you are after tax. They take that tax cut into account. Ethen


their real take home pay is lower than it was in 2008. This recovery


is not reaching the people who matter most It is reaching people in


terms of helping the economy grope and creating jobs. You ask anyone


out there - do they want to see a growing economy for them and their


children and make sure they wrant to create jobs, and growing faster than


any other nation. Did you say anything about the BBC this morning?


I did. Good things? All good. I hope you continue after this interview.


Thank you. Well, it's about 10 minutes before


George Osborne gets to his feet. Everyone hopes is hoping it'll turn


around the mood of the conference. Let's see if conference fever is


over way. Let's go to Giles. What would you like to hear from the


Chancellor? That he is still on course for rescuing the country from


the damage done by the last Labour Government. I think I want to hear


that he has plans to sustain that programme, so that over the coming


hearse, all the people in this country will be a lot better off.


Well, I want him to reinforce how incredibly well we have done in


getting the deficit down. Too many people just sort of are getting


ridiculous headlines. I don't think that the country understwhands an


incredible job he has done. Steady the ship. Stay on course for what we


are doing. Ton cut where we need to and provide a stronger economy for


the future which is what he has been doing for the last four years and


and I'm sure that's his tension for the next five years if we get


another Government Conservative. Does the death tax cut help? Does it


grab people? I think so. It has been uttered around before and I think


UKIP have been trying it claim it as their own. I think it is really


good. What are you expecting? The same as before. Securing what we


have been doing for the past four years and working towards the


long-term plan. Given this difficult climate at the moment. It is


difficult coming into the election, does he need to do something a


little more than just the same as before, or is that the point? I


think that's the point. The point is, the whole message of the


conference seems to be - look, it is working, stick to the plan, move


forward. When you go into an election and he makes a speech like


that, does he need to give a sort of particularly good one, or are you


looking for steady the ship? Steady the ship. That's the word. Make sure


we are steady and going on. Tax cuts. I think he is doing a good


job. I think he has actually stuck to the course. Stuck to the plan.


And it's actually paid off. You know, it is having that


determination of spirit and that belief in what he is doing and I


think he's got that. Is he a good speaker? I think he is. You see him


on the news and just doing a bit to camera, maybe not as good but in a


hall like that, he really gets people going. He has that passion.


Well, the Chancellor, George Osborne, is about five mintues


Let's have a word with the BBC's Political Editor, Nick Robinson.


We understand the warm-up man for the Chancellor is Digby Jones? I


don't know if you have heard anything about this. Has he come out


as a Tory now? There he is, standing before the conference? He could be


pretty Tory-minded. I wasn't aware he was coming here but remember,


though he was a minister in Gordon Brown's Government and you might


have thought a Labour peer, he never took the Labour whip, so, he said,


yes, as a leading businessman and Director-General of the CBI I'm


happy to help the Government drum up trade but I'm in the a Labour man N


increasing weeks, as you say, he has been critical. He likes to think of


himself, Digby Jones as Mr Birmingham. Here we


himself, Digby Jones as Mr Birmingham. It is his roots and it


might be for that reason. All right, the Chancellor. A lot hanging on


that. The conference needs him to turn this around, get away from


defections and online sex scandals and back to the economy, which the


Tories will put centre stage at the election campaign. Back to the


economy, back to what they hope will be n Gordon Brown's famous phrase -


the dividing lines with the other side. So, I expect George Osborne to


announce a significant cut in welfare spending. They have already


been signalling this, haven't they, as a couple of days have gone on,


didn't get much coverage because of the talks of defection but their


first announcement is they would stop single young people under-21


being able it claim housing benefit. They said the money they saved would


be spent on apprenticeships. The Chancellor this morning on the radio


and elsewhere in interviews signalled he wanted to curb welfare


spending. They have always had a hole to fill, the Tories. They say


they need to save about another ?12 billion in welfare spending in the


next Parliament before the deficit is eliminated. Physical that happens


on time, it hasn't up until now -- if that happens on time. It would be


midway through the next Parliament, 2018. He, I suspect, will want to


put a downpayment on how he will meet some of that ?12 billion and in


effect say it the Labour Party - here is what I will do, will you


match it? If not, what will you do? This will be a change not between


now and the election but an indication of - look, this will be


in our manifesto, Mr Osborne will say - if you want this, you will


have to vote for us. Remember his next financial statement is the


Autumn Statement. It is increasingly in the winter. It is in December


this year. But it is called the Autumn Statement. That's when he


sets out the plans. There is no suggestion that the Liberal


Democrats, the coalition party will be willing to sign up to new welfare


cuts. But this is a waive him saying - this is what I would do if I was


on my own, with a majority Tory Government. This is what he would


claim he would do and Labour can't match. How worried are they about


UKIP and more defections? Of course they are worried. One of the reasons


they are worried is they simply cannot know the answer to the


question. Any sensible person wants to ask... Well, a, they are fibbing,


b, people may not know, c, people may be think being it but waiting to


see. In other words, if you are the sort of person who might defect as a


Tory MP to UKIP, one thing you might want to do, presumably you are not


you haved not made up your mind and waiting for the moment of maximum


damage like Mr Reckless, you might be waiting to see how the


by-elections G the significant thing is the Tories, behind the scenes


scenes are ect effectively writing off the by-election next week, they


think UKIP will win it. Pretty extraordinary. In a safe Tory seat.


That they'll lose to u kitsch they are putting their energies into the


-- to UKIP. They are putting their energies into the Rochester and st.


Stroud seat. They they may be thinking - I want it save my skin.


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


If all their eggs are going into the Rochester basket, and for the


reasons you have written off Clacton, if they lose Rochester, it


is Krakatoa. Yes and people who are thinking - I quite like being in the


House of Commons, how do I survive? Maybe I have to switch party. A sign


of the anger here, you saw this phrase used by the party Chairman.


He has lied and lied and lied rvings David Cameron was touring the


parties that take place, late at night there is a reception for the


West Midlands and the North of England and this party and that. I


saw one speech, in which a really fired up David Cameron said - I vow


to get that seat back to the Tories. I bumped into someone who heard him


speaking half an hour later and he said quo, "Mark Reckless got his fat


arson the benches of the -- cars on the benches of the House of Commons,


because of the Tories hard work." And there is a different approach to


Douglas Carswell and Mark Reckless? Very simple, they loathe him.


Carswell was seen as a slightly eccentric, character. Mark Reckless


has been loathed. He has been loathed at university. Like Gordon


Brown and Robin Cook. Who was at university? Oxford University with


Mark Reckless? George Osborne. Were they in the Bullingdon Club? He He


went to a posh public schoofrnlts I don't think he would have been


invited. Why do they loathe him? They think he is pious. They think


he takes himself much more seriously than they do him and, of course,


loathes them back. I mean, part of the roots of this - you always have


to look at the roots of this. I once joked I would write a book called


how the small snub made history. Mark Reckless tried a rebellion for


David Cameron to cut EU budget. When it was cut, Cameron said publicly -


your rebellion made no difference, I would have done it anyway. Not the


greatest way to keep onside. He is not great at party backbench


management. There is a dismissiveness. If you are Mark


Reckless, you are - I'm quite a guy, you know, you don't much like that.


There is another by-election in a Labour-held seat in Manchester, just


north of Manchester. Is there any possibility that UKIP could win that


one? Well, certain lay be possibility which, in itself is


quite extraordinary. I have not yet had a chance to go and visit the


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


the guys I read and respect and who study UKIP think it is not quite


going to happen. He they think UKIP could do well but they don't see


them winning the seat. The big thing about Clacton, the at the think they


will win, is you have a popular local people, who had a direct male


strategy of knowing, by name, a huge percentage of his own electorate who


he kept in touch with and asked of their opinions and conveniently all


that data, I suspect has gone with him, to UKIP. Now the Chancellor's


speech and the Prime Minister's speech at lunch time on late


Wednesday morning, they are always planned in tandem. Do we have any


idea how they've divvied up the announcements or the overall tone of


the speeches? I think the answer to that, but I don't know for certain,


is that David Cameron doesn't have announcements. . He tends to do


theme, argument and wrap the whole event together. If you think about


it, we cannot think of a big announcement since the announcement


that he would pursue gay marriage some years ago. Given how well that


went down with the Conservative Party, you might think is not an


ideal precedent for making an announcement nobody knows about. It


is much more likely that the meat comes in this Osborne spee. The meat


of a downpayment for welfar cuts, an attempt to put the deficit back on


the agenda, to essentially try to claim the Tories are the serious


party, the party making difficult choices where Labour they will claim


was avoiding the choices, didn't want to talk about the deficit. That


will be the efforts, I think of George Osborne and David Cameron, in


a way, has it use the fact he has still - despite the fact he is not


popular here - he is more popular with the public than his party. And


he, I think will try and turn it into a leadership choice. It is me


or it is him in number ten. Which means that the Tory election


strategy, to be brutal about it, will be built around the economy and


Mr Miliband. They are the two issues that the Tories will make the


election. We always mock the slogans. Where is it - Securing a


Better Future. There is it is. There is an enormous amount of work by


market researchers and ad men goes into these apparently banal. They


work on that? You might think - what the hell does that mean? I will tell


you what they think it means. They think it means the electorate have


bought the fact that they have "A long term economic plan." The


electorate are suspicious of their motives and they have a feeling that


the long-term economic plan is either about the poor or helping


their mates. Or it is about getting them re-elected part of the effort


is - no, you get help with pension and help with kids getting an


apprenticeship. They know the public is worried about security hence the


word "securing" and they are worried about the future, in the sense of,


will life be worse for my children and grandchildren than it is for me.


Every speech has been put through the prism of how do you say to


people, it is not just a deficit plan, it is something for central


and how do you show it helps ordinary people's children and


grandchildren. Of Whether it gets through is another question. Well


Digby Jones is still speaking to the conference. They are now run being


16 minutes late. Always a mistake, I think to give Digby too much room.


He likes to make long speeches. The Chancellor getting warmed up here.


Lord Ashcroft, former Tory party treasurer, always helpful to the


party leadership with his polls. They are not good reading for the


Tories, they see them losing out in a whole raft of marginal seats. I


depressed by that, or do they shrug off the polls? -- are they


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


where you can see the guy in front of you, you have a pretty shrewd


sense that he cannot go any faster. Their view of Labour is, at their


conference they may now progress -- they made little progress, there was


no bounce, Ed Miliband did not and to questions about his economic


credibility. They think they've got the opponent in their sights. The


difficulty they have got is two problems. On the one hand they are


bleeding support to Ukip, their traditional supporters from 2010. On


the other hand, Labour are holding onto people who voted Liberal


Democrat in the past, and maybe because of the Iraq war, because


they thought Labour had forgotten the importance of Civil Liberties,


they have managed to get 6% of them back. If Ed Miliband can hold onto


those ex-Liberal Democrat and if the Tories cannot read Jane the Ukip --


cannot regain the Ukip voters, they will lose. They are trying to take


the 28% that voted for Gordon Brown and add-on 6% of disaffected Lib


Dems. That is exactly right. That is why there is tension for the Tories.


Some on the Tory Right say, for God sake, harden up your promise on


Europe, say that you would vote against it if you don't get the deal


you want, spell out the negotiating strategy, explain how you would curb


immigration, that is one group here at the conference, another says, we


need to get the people who have gone over to Labour, that is much more


traditional appeal, speak about homeownership, apprenticeships, tax


cuts for pensioners. The bread and butter, nuts and bolts issues that


might make people think this austerity has been worthwhile. Digby


Jones has finished. He is getting a standing ovation for his work. Now


we can see George Osborne taking the stage. Two stone lighter than when


he last spoke to the conference thanks to going on a diet and a new


haircut. Modelled on the Julius Caesar look. Let's see if he gives


an emperor's speech. Thank you for that typically robust worming


welcome. -- Birmingham. Gathered in this whole other representatives of


Britain's great party of progress, the party of enterprise and


discovery, of liberty and the law. Of the wide open seas and global


free trade. We meet to lay out our case before the nation and to ask it


to choose the future, not the past. In broad Street, just around the


corner from this conference, stands the statue of the golden boys, the


three great British pioneers, Matthew Boulton, William Murdoch,


James Watt, studying intently their plans for the new steam engine. It's


an image that captures a golden age for our country. When the spirit of


invention was alive, when the marriage of business and science


made everything possible. A time when we faced the future with


confidence and were not afraid of the big and sewers to the big


questions. -- big answers. I want to be that Britain. Let's raise the


ambition of the nation so that everyone has a chance to succeed.


APPLAUSE.. I believe it is personally --


perfectly possible for Britain to be the most prosperous major country on


earth. The most prosperous, the most dynamic, the most creative, but only


if this generation provide the big answers to the big questions, only


if we choose the future, not the past. For anyone who doubts this is


possible, just think about what we've done together, these last four


years. Four years ago our economy was in crisis, our country on the


floor. We did what we Britons do best when we are being counted out,


we picked ourselves up, we sorted ourselves out and we got back in the


fight. We set out our long-term economic plan and worked through it.


And then two years ago in this Jerry Hall, when the clamour -- in this


very hall, when the clamour from our opponents was loudest, they insisted


we abandoned the plan, we held our nerve and recommitted ourselves to


the course we had set. Today I can report this to you, written is the


fastest growing, most job-creating, most deficit reducing of any major


advanced economy on earth. Britain, we did this together.


We made a choice. To leave behind a past of spending beyond our means,


borrowing from our children, we chose the future, not the past.


We've come this far. The deficit falling, investment rising, record


numbers of new firms, business growth, faster in the North than


anywhere else. Long-term unemployment down. Youth


unemployment down. The fastest fall in unemployment on record, the


long-term economic plan is working. APPLAUSE.


These are the statistics. Behind each number is a person. In fact,


millions of people. Because of what we've done together, they have a


job. Because of what we've done together, they run their own


business. Because of what we've done together, they are providing for


themselves and their families. Everybody in this file should be


proud of that. -- in this hall. I don't stand here marvelling at how


much we have done. On the contrary, I am humbled by how much more we


have to do. The debt that needs reducing, the small businesses that


need supporting, the jobless that need employing, the infrastructure


that needs building, the better future for Britain that needs


securing, we resolve we will finish the job that we have started.


APPLAUSE. We know that beyond the confines of


all these party conferences, Britain still faces huge economic risks. At


home, though we have brought it down, there remains a large budget


deficit and our national debt is dangerously high. Abroad, the


biggest markets in the Eurozone are not growing. Anybody who thinks


Britain can ease up should look across the Channel, look to the


countries who thought they were out of crisis, used up -- eased up and


is no risk returning to crisis. Then there is the wider world. The


borders with Russia are aflame. A terrible virus sweeping through West


Africa. We are engaged in a struggle against barbaric Islamic extremism.


Our forces are risking their lives to protect our freedom. Let us


together salute their courage. APPLAUSE.


Any and all of these events have an impact not just on our


national-security but on our economic security. These are big


questions. They are not the only ones we face. We are also living


through an economic upheaval as big as the Industrial Revolution. Every


single day, new technologies, new countries, new economies are shaking


up the established way of doing things. It's extraordinarily


exciting, and we, as conservatives, applaud the power it places in the


hands of citizens. It has never been easier for thousands to start their


own business in Britain and reach the whole world. But a single


application can appear overnight and disrupt an entire industry, so it


can be exciting yes, but unsettling as well. This technology brings


intense competition that spells rapid decline for any sector or any


country that feels to keep up. These are big questions that require big


cancers and it is -- big answers and it is our job to provide them and


the next Conservative government will.


That's what our party has always done, apply our values and ideas to


the challenges of the age and March of this country towards progress.


That's what we will do again. Labour cannot do that. Did you see that


speech last week? Ed Miliband made a pitch for office that was so


forgettable, he forgot it himself. APPLAUSE.


I have to tell you, in all seriousness, forgetting to talk


about the deficit is not just some hapless mistake of an accident prone


politician, it is completely and totally a disqualification for the


high office he seeks. The economy may mean nothing to


Labour, but it means everything to the people of Britain. It means our


security and whether we pay our bills and provide for families and


have rewarding jobs and enjoy decent retirements. Do you know what? There


is a fashionable claim made these days, I claim that the link between


the prosperity of the national economy and people who live in that


economy has been broken. -- a claim. I want to take that head-on. It is a


dangerous fallacy. At the millions of people who lost their jobs, whose


incomes were cut, aspiration is destroyed by Labour's great


recession, Ascot them whether they think the link between their lives


and the lives of the economy was there. -- ask them. They will tell


you from bitter experience they have paid a heavy price for that. Ask the


people who have bought a home because we created the conditions


for builders to build and they will say that it is the economy that


builds houses. Ask the millions each stage who rely on the NHS, last week


you heard Thomas is built on sand. -- each day. You cannot have a


properly funded National Health Service unless you have a properly


run economy. APPLAUSE Put another way - it's only


because we were willing to take difficult decisions on spending in


other departments that we are able to increase the NHS budget every


year of this Parliament. So, don't let anyone in this party concede the


NHS to Labour. They would ruin our NHS. The real party of the NHS is in


the hall today. APPLAUSE The idea that you can raise


living standards, funds the brilliant NHS we want, or provide


for our national security, without a plan to fix the economy, is a


nonsense. It is the economy that creates jobs. It's the economy that


pays for hospitals. The economy that puts food on the table. And we are


the only party in Britain with a plan to fix the economy. That is the


leadership. We have offered the country these five years in office


and this is the leadership we should offer for the next five years. True


leadership. Leadership that is working. The leadership offered by


our Prime Minister, David Cameron. APPLAUSE


And Britain faces some big choices. Choices about whether or not we are


going to live within our means or let rising debts threaten our


economy again. Choices about whether we are going to win business and


investment or drive it away. Choice abouts whether we are going to


tackle -- choices about whether we are going to tackle youth


unemployment and poor standards in our schools or let down a


generation. Choices about building the infrastructure our future


economy needs or letting it decay. Choices about whether we are going


to trust hard-working tax payers to make their own decisions about their


lives and their communities, or take control away from them. The past or


the future, that is the choice Britain faces. And we, in this hall,


have no doubt - we will choose the future. Now, we face some immediate


choices. About protecting Britain's hard-won economic stability. Earlier


this mornings just before I came on, you heard from Paul Bunnion. He gave


us a powerful testimony of what economic security looks like in real


life and what happens when you lose it. And he knows because seven years


ago he was working in a branch of Northern Rock in Newcastle. He


watched the people queueing desperate to withdraw from the bank.


He saw Britain on the brink. He says we must never go back and so do


with. We have to have the security of knowing our banks are face, so


they are safe from the riskier trading floors. The security of


making sure our housing market doesn't bring down our financial


system. I'm giving the Bank of England extra powers to curb


property booms and of giving mortgages to people who can't afford


to repay them. We also need the securing of knowing Britain can pay


its way. The Budget deficit is approaching half of what it was when


we came to office. But it is still far too high. So we will see through


our plan to eliminate it. And then to ensure our country is never in


this position again, we must run surpluses in the good years. And


when I say "surpluses", I mean the Government raising more than it


spends. Now Labour claim they will balance the books. But the


independent experts tell you the truth - their plans would mean they


would borrow ?28 billion more each year. Running an overall surplus is


the only sure way of getting our dangerously high national debt down.


And let the message go out from this conference, after what they have put


the country through, we will fix the roof when the sun is shining.


APPLAUSE And that presents me with a choice.


Indeed, it presents all politicians with a choice. We can either pretend


to the British people, before the election, that this can be done with


hardly any cuts - that's what we saw last week. Or we can level with


people now and tell them the kind of difficult decisions that are still


required to fix the economy. I have done this job for almost five years.


And I can tell you - it's only because we've levelled with people


that we have been able to take them with us on the journey our country


has had to take. Here are the facts: The latest Treasury estimate is that


to eliminate the deficit requires a further ?25 billion of permanent


public expenditure savings or new taxes. And I tell you in all canned


o, that the -- candour, that the option of taxing your way out of the


deficit no longer exists, if it ever did.


APPLAUSE In a modern global economy, where


people can move their investment from one country to another at the


touch of a button and companies can relocate jobs overnight, the


economics of high taxation are the economics of the past. And we chose


the future -- and we choose the future. The problem for a modern


country like Britain is not that it taxes too much, it is that it spends


too much. -- taxes too little, spends too much. And as for the


heart of what we offer - and the proposals that Labour present to the


country - for higher taxes on incomes, taxes on business, taxes on


savings, on investments, on financial, pensions homes and on


jobs, will be an economic disaster for every person in the United


Kingdom. And by the way, when Scotland is rightly given greater


control of its taxes, I suspect the people of Scotland will choose to


put them down, not up. APPLAUSE And let me be clear, we


will honour, in full, our commitments to Scotland and we are


also absolutely clear that as Scots get more control over their taxes,


it is right that Northern Ireland, Wales and England should get more


control over their taxes and their laws, too.


APPLAUSE I'm not going to pretend that


finding ?25 billion of spending savings will be easy. But nor is it


impossible. We have already found ?100 billion of savings in this


Parliament. We have shown what can be done if you have discipline and


grit. In every election I have thought - Conservatives are argued -


you can have better public services without borrowing and spending more.


But it is about making Government more efficient and effective and


Labour have argued you cannot. I believe that the record of this


Government has settled this argument for good. Labour were wrong and we


were right. APPLAUSE Theresa May has reduced the


Home Office budget by almost 20%. But crime is down. Michael are Gove


and Niki Morgan have cut education Boyer crasscy in half but school


standards are up. And please thank me in in thanking our Treasury team


who have helped us attain this. APPLAUSE


I can see Rob liked that bit of the speech.


So, to eliminate the deficit and finish the job, we will rere dues


Whitehall spending by at least the same rate for the first time two


years of the next Parliament as we have done through this Parliament.


That will save at least ?13 billion. We will go on restraining public


sector pay and there will have to be less welfare spending, too.


APPLAUSE Now, welfare spending makes up one-third of the entire


Government budget. We are going to live in a country where the elderly


have dignity in retirement and the vulnerable and people with


disabilities are protected. But we can't afford to live in one, where


we spend ?100 billion in welfare payments for people of working age.


?100 billion. And we have such debts and even with the reforming


decisions that Iain Duncan Smith and I have taken, benefits have risen


more than earnings since Labour's great recession. That is not


sustainable for any nation and it is not fair, either. So, I can tell you


this today - working age benefits in Britain will have to be frozen for


two years. This is the choice Britain needs to take to protect our


economic stability and to secure a better future. The fairest way to


reduce welfare bills is to make sure that benefits are not rising faster


than the wages of the tax payers who are paying for them.


APPLAUSE We will provide a welfare system


that is fair to those who need it and fair to those who pay for it,


too. APPLAUSE This freeze in working age


benefits saves the country over ?3 billion. It's a serious contribution


to reducing the deficit. Pensioner benefits and disability


benefits will be excluded. And to those in work, I say this - where is


the sense in taxing you more, only for you to be given some of your own


money back, in welfare? The best way to support people's incomes is to


make sure that those out of work get a job and those in work pay less




And that is why I am the Chancellor, in budget after budget, who is


increasing the tax-free personal allowance to ??10,500, meaning


working people on low and middle incomes keep up to ?800 more of


their hard-earned money. It is why we have cut taxes for savers, for


home-owners, for small businesses, self-employed. Cut taxes for


everyone who I pas their council tax or fills up their car. And that is


why we have cut jobs taxes and increased work incentives and as a


result there are almost 2 million more in work. That is the choice


that we have made. APPLAUSE


And the good news is that youth unemployment has fallen sharply. The


sad news is that there are still too many young people who have fallen


into a culture of welfare dependency and a life on the dole. It is a scar


on our society. It is a tragic waste of human talent and we can end it in


the next Parliament. So let this party of progress make another


choice. Let's abolish long-term youth unemployment altogether.


APPLAUSE So here is how we will do it - we'll


replace Jobseeker's Allowance, reform housing benefit and take the


benefit cap we have introduced down to ?23,000, because families out of


work should not get more than the average family in work.


APPLAUSE And all of these savings, all of


these savings will be used to fund 3 million new apprenticeships. 3


million more chances for a better life. So we help our citizens get


jobs, instead of more immigration from abroad. We have a choice


between paying our young people for a life on the dole, or giving them


the keys of opportunity and be in no doubt which side this party is on,


we choose their future. This country must pay its debts,


pull up its young people. It must be the place where business invests and


businesses thrive. I thought Digby Jones spoke well about this. It is


not by accident that more than 2 million private sector jobs have


been created under this government. It is the deliberate policy of this


government to support job creators. And yet, for the first time in my


adult life, we have a Labour Party that is positively anti-business. It


came through in every sentence Ed Miliband remembered. The bits we


wished he'd forgotten. By the general election, we will have


delivered on a promise I made to you in my first speech as Chancellor in


Birmingham. Britain will have the lowest, most competitive business


taxes of any large country in the world. APPLAUSE.


Unbelievably, Labour want to reverse this. This is their policy, to be


firm against firms. Their business to be against business. As if they


forgotten that people work in businesses and their wages come from


firms. We instead are proud to be the party of firms and businesses,


of income and jobs, and livelihoods. When we choose to be on the side of


enterprise we are choosing to be on the side of the British people.


This party of progress is the party of free markets and their markets.


How dare the Labour Party attempt to give lessons on fairness? Who is the


party restoring the real value of the minimum wage? Who is the party


tackling abuse of 0-hour contracts? Who is the party capping payday


loans, not 13 years of Labour, they were too busy capping each other. It


is ask, the Conservative Party who understands markets must be fair if


they are to be free. -- it is us. It is this pro-business conservative


Chancellor who says to some of the biggest technology companies in the


world this today. You are welcome here in Britain with open arms. You


have the advantages of our skilled population to work for you, what


band connections to deliver your services and our NHS to keep


employees healthy. -- broadband. They are advantages that must be


paid for. Whilst we offer some of the lowest business taxes in the


world, we expect those taxes to be paid, not avoided, and some


technology companies go to extraordinary lengths to pay little


or no tax here. If you abuse the tax system then you abused the trust of


the British people, and my message to these companies is clear, we will


put a stop to it, low taxes but low taxes that are paid. Part of our


effort to reduce the deficit. Our choice is that we are all in


this together. It was this government that started the global


work on changing international tax rules. This autumn we will lead the


world in implementing those changes here in Britain. The future for


Britain is to be a low tax country where people play by the rules. The


future for Britain is to be a pro-business country. We also have


to build for that future. Big decisions on infrastructure have


always been controversial and always will be. The railways were bitterly


opposed in the 19th century. The motorways were opposed in the 20th


century. Let's face it. Even today, this country has spent 40 years


failing to take a decision about building a new runway in the


south-east of England. There are always 100 reasons to stick with the


past but we need to choose the future. We should ask ourselves what


the golden boys in that statue outside this hall would have done.


What choices would those great Britons have made? Would they have


said, our trains may be packed, roads congested, transport system


cannot cope, but we will not build any more new roads railways? Would


they have said, we mind for called the Underground and explored for oil


in the sea but we should leave the extraordinary shale gas reserves


untouched beneath our feet? They would not. Would they have said the


country that had built the first nuclear power station should not


build any more? They would not. Would they have said, it is OK if


our children cannot afford houses so long as we can? They would not.


Would they, who were part of an age of Enlightenment, that discovered


the vaccine for smallpox, have said we are not going to have any


research into genetic medicines and crops that will save countless lives


in the future? They would not. We must choose the future. We will tap


the shale gas, commission nuclear power, guarantee energy for the


future. We will build the High Speed Rail Bill, decide where to put our


runway, and support the Next Generation with starter homes in a


permanent Help To Buy. We must learn from the past, not be the past.


Decide or decline, that is the choice and we must choose the


future. You know what? This future cannot


just be about prosperity for one corner of her country. I grew up in


London, I'm full of wonder at the way it has become a global capital,


attracting the young, the ambitious, the talented from across the world.


That's a huge strength for the whole of Britain. But I'm also the first


Chancellor for almost 40 years to represent a constituency in the


North of England and I can see the risk that our capital city will


dominate. It's not healthy for our country or our economy. The answer


is not to pool down or hold back our greatest global asset, that would be


crazy. The answer is to build up the rest of the country, create a


northern powerhouse of the cities across the Pennines, correct up the


south-west, put the Midlands at the centre of the great manufacturing


revival. People know that the disparities between different parts


of our countries have grown up over many decades, under governments of


all colours. Treat people as adults, not pretend we can reverse something


like this overnight. Equally, let's not give up, say that it cannot be


done, look at what Michael Heseltine achieved at the docks of Liverpool


and London. This party of progress knows what it takes to create


flourishing economies. Top universities, strong leadership that


comes with powerful elected members of cities. These are the ingredients


of the northern powerhouse. That is how we deliver prosperity and


security for families across the nation and it is one of my driving


missions to do everything I can. Let us choose today to make reducing the


gap between North and South one of the central ambitions of the next


Conservative government. APPLAUSE. There is one final choice we should


make. A choice this party of progress always makes. That is to


trust people with their own money. That is why in my budget this year I


applied that philosophy with far reaching new freedoms in the way


people can access their pensions. These freedoms are based on the


simple idea that people know better how to spend their money than


governments do. This party that gave people the right to buy their own


home is the party that is giving people ownership of their own


pension as well. APPLAUSE. But I want to go further. There are still


rules that say you cannot pass on to the next generation any of your


pension pot when you die without paying a punitive 55% tax on it. I


could choose to cut this tax rate. Instead, I'd choose to abolish it


altogether. APPLAUSE. People who have worked and saved all


their lives will be able to pass on their hard earned pensions to the


families tax free, effective from today. APPLAUSE.


The children and grandchildren and others who benefit will get the same


tax treatment on this income as any other, but only when they choose to


drive down. Freedom for people's pensions, a pension tax abolished,


passing on your pension tax-free. Put into place and delivered by


conservatives in government right now. APPLAUSE.


We are eight months away from one of the most important general elections


in a generation. We can face it with confidence, because we go to the


people as the party of progress. For five years Britain has pursued a


clear economic policy, whilst all over Europe there has been in crisis


and uncertainty. Britain has been the land turning the storm. Now we


seek a new mandate as the party of jobs and security and a strong Prime


Minister against the party of higher taxes, more debt and Ed Miliband. We


are going to offer political resolve and economic competence, a confident


future for Britain as the most prosperous country in the world. We


are going to say to the British people, choose jobs, choose


enterprise, choose security, choose prosperity, choose investment,


choose fairness, choose freedom, choose David Cameron, choose the


Conservatives, choose the future. The Chancellor spoke for longer than


we'd been told. Almost 40 minutes. He is taking the applause of the


conference now. The inevitable standing ovation. He began by


telling the conference how good the British economy was but he did say


there would have to be another 25 billion in public spending cuts in


the next Parliament. That is to get a surplus. He ruled out increases in


taxes and instead he went for cuts in public spending. He promises that


there will be a freeze on all working age benefits for two years


in the next Parliament, starting in 2016, hoping to save ?3 billion per


year. He also promised some tougher taxes on companies that have not


been paying their fair whack. An upbeat speech from the Chancellor,


who will be hoping this conference is back on the economy. What did you


make of it? There are two announcements at the heart of it,


one was on benefits and the other was the Google tax. On benefits,


this is the third stage of the clamp-down for benefits of working


age people. What a first it was change the operating, so benefits


were not rated with the retail prices index, but the consumer Price


index which is lower. Second stage was in 2012 when they said they


would not be in line with inflation at all. It meant a cut. Now he says


if he is re-elected, the Tories would freeze working age benefits,


let's be clear what those are, job-seeker's allowance, income


support, child tax credit, working tax credit, employment support


allowance, which goes to those deemed capable of work, not those


incapable of work, and the element of housing benefit known as local


housing allowance. It does not mean freezing benefits for pensioners.


Child benefit is frozen. It does not mean, we are told, are freeze for


people who are disabled. A dramatic move. One of the Liberal


Democrats refused to go along with, both in 2010 and 2012. Let's be


honest, it is designed to do two things - one, save a lot of money


quickly. ?3 billion is a significant sum to saved but designed to put his


opponents on the spot and say - here is my downpayment on the Bev sit.


What's yours? Stick with us, we'll speak to Matthew Hancock, Tory


minister in a minute to go through some of the Chancellor's reactions.


Well, what did Labour make of the Chancellor's speech?


Joining me now is the Shadow Treasury Minister, Chris Leslie,


Welcome to the Daily Politics. Do you support Mr Osborne's changes on


pensions, that he has called, the pension death tax? Well, this is, of


course, the 55% rate that George Osborne himself introduced, yes, in


July 2010. We raised our concerns back then, in some of the


legislative discussions about it and questionied about whether people


were being over-taxed. But I think it is good to simplify some of these


mention rules but, it is interesting, isn't it, that he


didn't U-turn also on the granny tax, the so-called granny tax,


remember when he abolished the aged allowance which took a lot more from


pensioners. Just to clarify, Labour will support the end of the 55% on


pensions? Yes. We said at the time that it was a George Osborne


invention in the first place. It is funny, isn't it, how, after an


election George Osborne raises some of the taxes but before you get to


the next election, he would like to give you the impression he is taking


them away. All right. I get the point. What about the freeze on


working age benefits which Nick, as I think you heard outlined, what


benefits it covers from 2016. Will Labour support a freeze on these


benefits? Well, I just heard the list. I think there is a bit of


confusion on that. I will look at the detail. Don't forget at our


conference last week we said that tough decisions are going to have to


be taken on public spending, so, for example, on child benefit we have


said not just for 15/16 but for 2016/17, a 1% cap on child benefit


but there is being something a bit depressing, the choice George


Osborne is making. He said nothing about the squeeze on real earnings


and the wages that people have had over this last few years and what


his choice is, is to take ?3 billion from those who are of working age,


rather than the ?3 billion that he has given away in the tax cuts to


the very wealthiest 1% through a millionaire's tax cut, earnings over


?150,000. All I say is that that is a very interesting choice from the


Chancellor which says all we need to know about how he stands up, always


for the very wealthiest few rather than for the vast majority in this


country. I think a lot of people who are out there working, day by day,


thinking about tax credits, think being maternity pay, for example,


all these other things will be saying - hang on, you talk that we


are all in this together but what about those at the very top? What


about the mansion tax and some of those people who can afford to pay


more and contribute more? All right. OK. I take that point, Mr Leslie.


So, why are you even considering supporting the freeze?. Because we


are going to have to make tough decisions. There is none point in us


getting elected and telling people that everything can be wonderful. We


are going to have a deficit in this country that has been left behind.


Because this is a Chancellor who promised he would get rid of it by


now and of course, he hasn't done. In fact, deficit reduction as you


know - because you know the figures -- has been a thing of the past for


the last couple of years. Deficit is rising, borrowing is up in the most


recent figures. The thing about George Osborne is he just doesn't


get it, some of the drivers of higher welfare cost, the drivers of


the rising deficit are housing becoming unaffordable because of the


lack of housing supply and will he pay that is indome across our


country. It requires the tax credit subsidies. Nothing in his speech


about that. The very sense in which he is trying to divide the country


between the wealthiest and the rest and this is' bus they are a divided


party. Party. -- and that's bus they are a divided party. We can see if


he can persuade his own Conservative Members of Parliament about it. All


right, is there anything the Chancellor announced this morning


that you will oppose? I will look at the detail. Parliament isn't


sitting. You know, I have my concerns about the general direction


of travel of where he is going. I think there is a lot of omission


here. It is the choices he is making. He always wants to raise


taxes and have cuts that hit those in work, but he does nothing for


those in the world that he inhabits, who are doing quite well right now.


In fact, in the sort of wealthiest 1%, share share of income noe this


country has grown, whereas 90-odd % of the rest of the country, their


share has fallen. It is that trickledown economics, he has said


today, that he wants to stick with. All right, Chris Leslie, thank you


for joining us from London. Just a quick recap. The surprise


announcements in the Chancellor's speech was a freeze on certain


working-age benefits which he says will save ?3 billion a year which


will go towards cutting the deficit which will still be about ?95


billion or more by the end of this Parliament. Proposed freeze will


come into effect if the Conservatives are re-elected. It


won't start until 2016, the first full year of a new Government. Let's


look at the detail. The benefits freeze would include Jobseeker's


Allowance, income support and Employment Support Allowance. It


also expends to child and working tax credits.


And, to child benefit as well. But, the Chancellor will exclude


pensions, disability benefits as well as maternity and paternity pay.


pensions, disability benefits as well as maternity and paternity pay.


So, there we have it. A proposal which will no doubt be in the next


Conservative manifesto. We are joined by the business minister,


Matthew Hancock. Can we establish, from the start, that a freeze on


benefits n real terms, is a cut? -- in real terms? Well, it depends on


the future rate of inflation but it is a freeze in cash terms we are


talking about. So benefits will be cut by whatever the rate of


inflation is, in real terms? Well, it depends how you measure it, of


course. Well, it is by the CPI? That's the general measure of


inflation and we are talking here about a cash freeze in the amount of


benefits because we think that is the fairest way to tackle the


overspending on welfare that's grown up over the last few decades. By


what measure is it fair, when the average wages of most ordinary


workers are falling in real terms, that you now say, not only will your


wages fall in real terms but any benefits that you get will now fall


in real terms. Well, to support people who are nor work and to make


sure that work pays, we are cutting taxes and income tax, focussed on


the lowest paid. And I thought that the Chancellor was very clear in his


speech, the best way to help people who are working, to keep more money


in their pockets, is to make sure they don't pay as much in tax. What


is the point of taking it away in tax and recycling it, in terms of


benefit? That's a very straightforward principle. But the


take-home pay of average and below average earners is falling, even


after your tax cuts. Take-home pay is falling, in real terms and now


their benefits will fall, in real terms. So it is a double whammy for


ordinary workers, isn't it? Their real wages are falling and real


benefits will fall? No, the measures of real wages after tax are


positive. No, they are not actually. Well, they are on the measures that


- and we can go into the statistics, but the big picture point is this -


we have to deal with the deficit. As you saw, Labour have no plans and


they don't know what to think of this. They were rather muddled on


whether they would attack this or support it. Stay with the Toriesment


We have a big task to do as a country, which is to make sure we


work through this plan, which is clearly working. We have never


argued it was going to be easy to put... Why are you putting all the


burden on toll average and below average. To correct you... We are


also talking about making sure companies pay their fair share. I


have to give you the figures. Real take-home pay for the bottom 10% of


earners was ?7,361 in '08. It is now around ?7,000. It has fallen. Real


take-home pay and you are now going to cut real benefits. If you are


taking that measure, from the great recession and as the Chancellor said


in his speech - there is a very strong link between having a


recession as a country and people's pay, and absolutely because of the


recession, undoubtedly, on average, pay has fallen. We all know that. Do


you know why? Because when there is a recession the economy shrinks and


the economy is nothing more than the accumulation of the financial income


of everybody in it. But if the real take-home pay of people on average


and below average earnings are falling, why are you hitting them


with a benefits cut. You have muddled it up. Why are you hitting


them with a benefits cut You are it has fallen. It is falling, and we


had Labour's great recession and boy are we not going to let them forget


T we are turning than around. It is not easy. The best thing we can do


to support people on low pay is cut their income tax. If you have a


two-earner couple with a family on ?13,000 each per year, you will lose


around ?400 because of this, but you will gain over ?1,100 because of the


tax measures that we have taken and that means that you are overall


better off. OK Now that is the sort of change we are making but it is


part of a broader picture which is that you have to get control of the


nation's finances if we are going to have a stronger and more secure


future. And that is the big picture. But let's just... When the economy


runs into the sand, everybody gets hit by this. And what is Labour


offering... But people hit by it most of all are people on average


incomes and below. Meanwhile you have cut the top tax rate for the


rich. Now you are going to give this huge middle class benefit for people


with big pensions, you are abolishing the 55% tax.


Overwhelmingly of benefit to the middle class as you freeze benefits


for the working poor. That's in the true, actually. Not only are the


most well-paid paying the highest proportion of the tax take than they


have in recent times, but, also, the change to pensions is about making


sure that it pays to save. So why did you introduce the 55% tax rate


in 2011? Well, on many people it was 85% before that and we brought it


down. It was 35% and you increased the to 55% for most people. If it


was right to do it then, why is it wrong now? It was 85% for some and


35% for some. We simplified it to 55% and now we have got rid of it


altogether. You are getting rid of something you Z No, we are taking


the next ste. We cut it from 85% to 55%. It was mainly 35% for some, you


increased it to 55%. There is no mainly about it. Final thoughts. You


have been putting to Mr Hancock undoubtedly what Labour would say.


Chris Leslie hinted at it but didn't go all the way - which is you are


taking money from the working age poor. When we talk to benefits, some


goes to people out of work, a lot goes to people in work. They'll say


that's unfair. Others will say - we have had a squeeze on our earn, of


course, benefits have to be squeezed to.


Thank you both very much. I will be here at 11.30am tomorrow with all


the big stories and we'll have Boris Johnson's speech to conference.


Obviously not interest in that and we'll be speaking to the Foreign


Secretary. For now, from Birmingham, goodbye.


Saxon hoard. Basically, the Holy Grail of treasure-hunting.


is the Holy Grail of treasure-hunting.


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