03/10/2016: Conservative Party Conference

:00:07. > :00:09.Welcome to a sunny Birmingham where in half an hour

:00:10. > :00:11.the new Chancellor - Philip Hammond - will make his

:00:12. > :00:50.Why is he ditching George Osborne's budget deficit targets?

:00:51. > :01:00.Philip Hammond will tell the Conference that he's easing off

:01:01. > :01:03.the pace of deficit reduction and plans to borrow more to invest.

:01:04. > :01:06.But what's changed in the economy to justify this change

:01:07. > :01:11.The Chancellor will pledge ?3 billion of public money

:01:12. > :01:17.But is this all new money, how many new homes and will it be

:01:18. > :01:22.anywhere near enough to solve the housing crisis?

:01:23. > :01:26."A country that works for everyone" that's the motto emblazoned all over

:01:27. > :01:29.the Conference centre here - but how can Theresa May's

:01:30. > :01:34.ambitious rhetoric on social justice be achieved?

:01:35. > :01:38.And they've been a little reluctant to come to me -

:01:39. > :01:43.so we sent our Adam out to hunt down the three Brexiteers.

:01:44. > :01:51.. John Fox, have you been told to keep a low profile? -- doctor Fox.

:01:52. > :01:55.It looks like a low profile to me! All that coming up

:01:56. > :01:58.in the next two hours in this Daily Politics

:01:59. > :02:08.Conference Special. Philip Hammond, the new Chancellor,

:02:09. > :02:12.will get to his feet in half an hour. We will bring you that live

:02:13. > :02:17.and uninterrupted. Here with me now though -

:02:18. > :02:20.two of the best political minds here to chew over the news

:02:21. > :02:27.from Conference so far. They have put large amounts of money

:02:28. > :02:28.in my bank account for me to say that! LAUGHTER

:02:29. > :02:30.The Guardian's Political Editor Anushka Asthana and the Times

:02:31. > :02:38.Yesterday we had the Brexit announcement yesterday, the Prime

:02:39. > :02:43.Minister is hoping that will go away today, but where are we now?

:02:44. > :02:49.Regarding Brexit. Theresa May is a very popular woman with the right of

:02:50. > :02:54.her party and if you read it today with the Daily Mail, this lady's not

:02:55. > :02:59.for turning. They did not take very long to mentioning her steel capped

:03:00. > :03:04.shoes, I notice. What did she actually say? She said immigration

:03:05. > :03:10.is going to be a priority, something we knew, she said the European court

:03:11. > :03:13.of justice will be, as well, but she let herself open after that, we

:03:14. > :03:18.don't really know what the Brexit deal is going to look like that we

:03:19. > :03:21.will be pushing for. We do know, even though they won't say it about

:03:22. > :03:27.when we add up everything that has been said, we will not fall under

:03:28. > :03:31.the jurisdiction of the ECJ and we want a free trade deal and we want

:03:32. > :03:36.the end of free movement. We are out of the single market in the sense of

:03:37. > :03:42.being a member, even though we will have access, but they know we can't

:03:43. > :03:45.stay in it. That is right. What she is doing something David Cameron

:03:46. > :03:49.didn't do when he was trying to renegotiate our relationship with

:03:50. > :03:53.the European Union, he never said if you don't give me a good deal on

:03:54. > :03:59.prepared to say to the British people we should leave. Theresa May

:04:00. > :04:04.is saying to, our European counterparts, if you don't give me

:04:05. > :04:08.anything, we are still going. She is saying she still going to deliver on

:04:09. > :04:11.her promise to control borders. What she is hoping the European leaders

:04:12. > :04:16.will give us is a better deal than some of the critics think at the

:04:17. > :04:21.moment. She is going to ask for the moment to begin with. I think she

:04:22. > :04:27.will still ask to be in the single market, despite not meeting any of

:04:28. > :04:35.the criteria -- ask for the moon. Is there any concern, when it comes to

:04:36. > :04:41.putting this repeal of the European community's act through Parliament

:04:42. > :04:44.that she will be in trouble? I don't think MPs in Parliament will vote

:04:45. > :04:48.against the idea of repealing the European Community 's act because

:04:49. > :04:52.everyone knows there has been a referendum and everyone knows what

:04:53. > :04:55.the outcome was. MPs will not be churlish not to say they will vote

:04:56. > :05:01.against that as an idea, but what this allows people to do is to amend

:05:02. > :05:06.the legislation as it goes to Parliament and maybe to cause a bit

:05:07. > :05:10.of trouble. This boat will only happen after Article 50 is

:05:11. > :05:16.triggered, Britain is already on the debate about -- this vote.

:05:17. > :05:19.Parliament will not in that vote be able to stop Brexit from happening,

:05:20. > :05:26.they would just be able to potentially amend its character.

:05:27. > :05:30.Very strong words from Theresa May, saying that MPs cannot have a vote

:05:31. > :05:40.on trigger 50. What about in the House of Lords? It is six to just

:05:41. > :05:46.one in favour of Remain. It is not off the agenda, there is plenty of

:05:47. > :05:50.pretext, if her agenda is being frustrated by anyone, you are right

:05:51. > :05:55.to highlight the House of Lords, but she can go to an election and said

:05:56. > :06:09.she wants a mandate to deliver her social and Brexit agenda. Lots

:06:10. > :06:14.of course the government is hoping we will stop talking about Brexit

:06:15. > :06:21.for the duration of this conference. So the Chancellor Philip Hammond has

:06:22. > :06:23.said that he'll ease off But what do Conference goers

:06:24. > :06:26.here think about progress We sent Adam out with

:06:27. > :06:34.his balls to find out. When George Osborne was Chancellor

:06:35. > :06:38.he was all about driving down the deficit and even getting the public

:06:39. > :06:42.finances into surplus but Philip Hammond seems less bothered, but

:06:43. > :06:48.what about people at the conference? Do they want to ease off with

:06:49. > :06:54.deficit reduction? Hang up the phone and do the mood box. One of the

:06:55. > :07:01.Brexit ministers will stop I will go for ease off because of Brexit.

:07:02. > :07:06.Before that I was crackdown. I think George Osborne did a good job, but

:07:07. > :07:13.many people look at him and they don't like him. Was he a bit

:07:14. > :07:20.obsessed with cuts? Maybe. I'm going to stop you there, Andrea, would you

:07:21. > :07:26.like to have a go at The Daily Politics, would you like to have a

:07:27. > :07:29.go at The Daily Politics, would you like to have a go at The Daily

:07:30. > :07:32.Politics, would you like to have a go at The Daily Politics, would you

:07:33. > :07:35.like to have a go at The Daily Politics balls? Are you politely

:07:36. > :07:43.dismissing my balls? You cannot run a country on a deficit budget. We

:07:44. > :07:46.need to finish what we have started. I suppose you are allowed to read

:07:47. > :07:54.that now he has gone. You weren't allowed to read that last year.

:07:55. > :08:02.Thank you very much. Cracked on. Is there more that can be cut from the

:08:03. > :08:08.public finances? Yes. Such as? Some areas of the health service. You

:08:09. > :08:17.want to cut the NHS? No, but I want to cut the administrators. George

:08:18. > :08:24.Osborne has the edge, I think. Should we have a surplus for 2020?

:08:25. > :08:30.If we can, definitely. Don't abandon the target and keep going. Why are

:08:31. > :08:37.you watching that Boris Johnson speech when you could be doing The

:08:38. > :08:42.Daily Politics balls? Are ministers able to do this without Prime

:08:43. > :08:53.Minister real authority gritter Mark of course. -- primer ministerial

:08:54. > :09:01.authority? What does this mean? It is about the deficit reduction. We

:09:02. > :09:06.have got to crack on. It is time to ease off on the austerity, we have

:09:07. > :09:14.more important things on the table. Deficit reduction? Crack on. When do

:09:15. > :09:20.you want it gone by? As soon as possible. Philip Hammond, the party

:09:21. > :09:24.faithful have issued their instructions, many want you to get

:09:25. > :09:34.on with cracking on with getting it down. STUDIO: There we go. We do

:09:35. > :09:39.need to do our research the famous People's budget which led to a huge

:09:40. > :09:45.stand-off with the House of Lords, it was not Campbell Bannon, he died

:09:46. > :09:51.in 1905, it was Asquith who was the Liberal leader in 1909. But Campbell

:09:52. > :09:58.Bannon did put some of the changes in place. Asquith's famous words,

:09:59. > :10:02.what were they? Keep your eye on Paisley, that's the way the country

:10:03. > :10:09.will go, I'm not sure you can say that now. No. Philip Hammond has a

:10:10. > :10:13.difficult juggling act, he has to do a change in direction but he has got

:10:14. > :10:23.to give convincing reasons pick up the vat different, -- to give

:10:24. > :10:26.convincing reasons, and it can't be that different after what has gone

:10:27. > :10:30.on over six years. We are still spending too much on day-to-day

:10:31. > :10:34.expenses, current expenditure, but I would ease off on squeezing capital

:10:35. > :10:40.spending, with global borrowing rates so low it makes sense to

:10:41. > :10:47.borrow long-term to improve our roads and railways. Cabinet spending

:10:48. > :10:52.is down. Exactly. George Osborne was wearing his high viz jackets, but he

:10:53. > :10:55.cut capital spending and we weren't investing for the long term, but I

:10:56. > :10:59.think it is important that we change in the post Brexit world, many

:11:00. > :11:03.people on the left feel we have become the sweatshop of Europe,

:11:04. > :11:09.workers' rights will be thrown out of the window and we become a highly

:11:10. > :11:13.deregulated low tax, no rights workforce, but I think what we are

:11:14. > :11:17.seeing from Theresa May and Philip Hammond is a different vision, high

:11:18. > :11:22.infrastructure and high skills and high investment. Almost as though at

:11:23. > :11:27.the time we are leaving the European Union we are becoming more European

:11:28. > :11:37.and more Christian Democratic in how we construct our policy. Didn't Ed

:11:38. > :11:42.Balls want to borrow to invest? Quite similar to John McDonnell,

:11:43. > :11:44.there has been a continuation. He wanted to borrow for everything, not

:11:45. > :11:48.just investment, that is the difference. We talk about

:11:49. > :11:52.politicians wanting to have their cake and eat it, and I think Philip

:11:53. > :11:58.Hammond would have taken two balls and put them in both holes if he had

:11:59. > :12:02.done that. He will say they want to ease off, no more targets, but on

:12:03. > :12:08.the other hand he will say they will crack on with fiscal consolidation

:12:09. > :12:12.and this is about messaging, Philip Hammond did not think targets were

:12:13. > :12:17.good idea and I think we will see a change in tone from George Osborne's

:12:18. > :12:20.days. Not long to wait. Thank you for being with me this morning.

:12:21. > :12:23.So, the Chancellor Philip Hammond will be getting to his feet

:12:24. > :12:25.in the conference hall to deliver his set-piece speech

:12:26. > :12:31.So what do we know about what he's likely to say?

:12:32. > :12:33.There has been an overnight briefing.

:12:34. > :12:36.Mr Hammond, who as Foreign Secretary, was in favour of Remain,

:12:37. > :12:38.warned this morning of an economic "rollercoaster" as Britain

:12:39. > :12:48.He insisted the UK Economy is "very strong going into this period"

:12:49. > :12:54.but that there needed to be a "realistic expectation

:12:55. > :12:57.of the turbulence" once Article 50 is triggered which Theresa May said

:12:58. > :13:01.yesterday would happen by the end of March next year.

:13:02. > :13:04.In his speech today, the Chancellor will confirm

:13:05. > :13:07.that the government is abandoning his predecessor,

:13:08. > :13:10.George Osborne's, fiscal target to get the UK budget

:13:11. > :13:18.And that this new fiscal framework will be set out

:13:19. > :13:20.in the Autumn Statement in November for the "new circumstances

:13:21. > :13:25.Mr Hammond will also launch a ?3 billion Home Building Fund

:13:26. > :13:30.for England, to build 25,000 extra homes over the next four years

:13:31. > :13:38.and a further 200,000 houses in the longterm.

:13:39. > :13:45.The move has been seen as a signal that the Government will allow

:13:46. > :13:48.for greater borrowing to boost the economy if needed during the two

:13:49. > :13:57.years to 2019 that the UK will have to reach a deal with the EU.

:13:58. > :13:59.I've been joined by the minister for digital policy and ally

:14:00. > :14:03.of the former Chancellor George Osborne, Matt Hancock.

:14:04. > :14:12.Welcome back to the programme. Why is he abandoning George Osborne's

:14:13. > :14:15.targets? Clearly things have changed and the economy has changed and

:14:16. > :14:21.there was a vote for Brexit and this is a perfectly reasonable response

:14:22. > :14:24.to that. George Osborne said if we voted for Brexit there would have to

:14:25. > :14:29.be a punishment budget, what happened? Circumstances have changed

:14:30. > :14:33.and we have seen what has happened in the economy over the summer and

:14:34. > :14:41.the appropriate response, we have seen that in monetary policy, the

:14:42. > :14:43.cut in interest rates, and clearly given the uncertainty and the

:14:44. > :14:50.challenges, it is more difficult to get to that point. The punishment

:14:51. > :14:54.budget threat was wrong? I don't think it is worth going through the

:14:55. > :14:58.referendum. I think it is. You said all manner of things would happen,

:14:59. > :15:02.you said we would have a punishment budget if we left, but we haven't

:15:03. > :15:05.had a punishment budget, and the physical targets are going to be

:15:06. > :15:12.loosened if anything, so that was just plain wrong -- fiscal targets.

:15:13. > :15:19.What matters is how we respond to policy now. The report you told us

:15:20. > :15:26.in the past is unreliable, then it covers how we look at what you tell

:15:27. > :15:28.us in the present and future? It is only fair to admit that the

:15:29. > :15:34.punishment budget was a huge mistake and is unnecessary even though we

:15:35. > :15:37.voted to leave? What the Chancellor has set out in what we have heard

:15:38. > :15:42.about this morning, he was talking about this morning, how you respond

:15:43. > :15:48.to the circumstances now. Things have changed. On this point, there

:15:49. > :15:55.is an important question of how the economy responds given Brexit and

:15:56. > :15:58.there are signs that has not been as bad as the independent forecasters

:15:59. > :16:05.predicted and I think that is good news. What has changed?

:16:06. > :16:11.You say the fiscal targets have been changed because the economy's

:16:12. > :16:15.changed. In what way has the economy changed in the 100 days since we

:16:16. > :16:20.voted to leave? The forecasts are going back to where they were before

:16:21. > :16:24.June 23rd, so what's changed? Some of them have come off. There has

:16:25. > :16:29.been a rebound after that. I think that's good. The jobs numbers have

:16:30. > :16:35.been good. If you look at, for instance, the services sector. Rose

:16:36. > :16:40.in July? Fell very sharply in July then rose again. Back in August?

:16:41. > :16:44.You've got to look at what's actually happening in the economy

:16:45. > :16:49.and then you've got to set fiscal policy according to that. But before

:16:50. > :16:54.the referendum, the consensus forecast was that the economy would

:16:55. > :16:59.grow by around 2% this year. 100 days into the Brexit process, the

:17:00. > :17:03.consensus forecast is back at 2% so I ask you on the broad macro

:17:04. > :17:08.economic figures, what has changed to justify a change in the targets?

:17:09. > :17:11.The forecasts for next year are lower than they were before the

:17:12. > :17:15.vote. That is a change. And if you think about it, you've got to set

:17:16. > :17:20.fiscal policy according to what is expected to happen. So we'll receive

:17:21. > :17:23.the forecast from the Office for Budget Responsibility ahead of the

:17:24. > :17:27.Autumn Statement and that's what you've got to use as the basis.

:17:28. > :17:31.Look, when the circumstances change in economics, you then have to set

:17:32. > :17:36.your policy according to your best assessment of the circumstances.

:17:37. > :17:40.People making the forecasts that the economy will slow next year are the

:17:41. > :17:43.same people that made the forecasts that it would slow in the immediate

:17:44. > :17:48.aftermath of June 23rd, they were wrong. Well, according to the

:17:49. > :17:52.figures and surveys, there was a big dip in July. Now, there has been a

:17:53. > :17:57.rebound, but I think that's good news and now we've got to assess

:17:58. > :18:02.things, according to where we are. If you start to reassess the deficit

:18:03. > :18:06.figures, doesn't that mean all that six years of relentless emphasis on

:18:07. > :18:10.deficit reduction, in the end you were inflicting pain on the British

:18:11. > :18:13.people that wasn't necessary? No. I think that's completely wrong. The

:18:14. > :18:22.reason it's wrong is that the deficit is down by two thirds

:18:23. > :18:26.already. It was at a historic high. It was wholly unsustainable. It's

:18:27. > :18:30.still unsustainably high now, still needs to come down, but we always

:18:31. > :18:35.said the pace at which you bring that down should be set by economic

:18:36. > :18:39.circumstances and what is possible. The new Chancellor is making an

:18:40. > :18:45.assessment on the new economic figures, given the new facts, and

:18:46. > :18:50.then we'll set that out. So the deficit will continue to come down?

:18:51. > :18:53.I certainly hope so. Where else are you going to cut if you are going to

:18:54. > :19:00.increase spending on infrastructure investment? The deficit was already

:19:01. > :19:05.projected to fall because it's been coming down from 10% of GDP, down by

:19:06. > :19:08.two thirds, it was projected to go down further than that. I'm sure

:19:09. > :19:13.we'll get the full figures in the Autumn Statement. But what the

:19:14. > :19:21.Chancellor was saying today was that the pre-Brexit proposal to be able

:19:22. > :19:25.to read surplus is not going to be possible. He's been very clear that

:19:26. > :19:29.the deficit needs to come down. He's also going to spend more though. If

:19:30. > :19:35.you thought you had to get the deficit down because if you didn't

:19:36. > :19:39.you would pay a penalty in the bond markets but it turns out in this

:19:40. > :19:43.strange time of QE you don't pay a penalty? I put that the other way

:19:44. > :19:48.around. Because we have the clear commitment, political will and

:19:49. > :19:52.determination to get it down, that's why those bond rates have remained

:19:53. > :19:58.low or one of the reasons. Countries with far worse fiscal positions than

:19:59. > :20:02.us, far bigger percentage of their GDP into national debt, they are

:20:03. > :20:06.borrowing just as cheaply as we are? There were hardly any countries that

:20:07. > :20:12.had far worse fiscal positions than us. National debt is 135% of GDP.

:20:13. > :20:19.They borrowed a bit more expensively than us. There has been no penalty

:20:20. > :20:25.for those who've had more expensive fiscal policies? That's not true.

:20:26. > :20:29.Italy's deficit was smaller than us at the start of the process, it's

:20:30. > :20:37.now bigger. And they are borrowing cheaply? No. We had several years in

:20:38. > :20:46.which we had a potential crisis in the borrowing rate when the cost of

:20:47. > :20:49.its borrowing were much, much higher higher than us because we have got a

:20:50. > :20:55.plan and they didn't. The fact is, you are now telling us that we'll be

:20:56. > :20:59.able to borrow more than planned, to borrow to invest, and we won't pay a

:21:00. > :21:07.penalty in the bond markets and we can still borrow just as cheaply as

:21:08. > :21:12.we have? Correct. Correct? That's not exactly how I put it. You have

:21:13. > :21:16.to have a sustainable fiscal position. The current level is still

:21:17. > :21:25.sustainable and it still needs to come down. Ed Balls campaigned on

:21:26. > :21:28.this in 2015, he wanted to borrow more to invest, that's what you want

:21:29. > :21:33.to do? There is a difference in two important ways. One is of scale, we

:21:34. > :21:36.haven't heard the full details from the Chancellor yet, I'm sure we'll

:21:37. > :21:40.cut to him in a minute, but the second is a determination. We have

:21:41. > :21:44.proved over and over again that we are willing to take the decisions

:21:45. > :21:50.necessary to make sure we have sustainable public finances. We have

:21:51. > :21:53.discussed this many times. I am absolutely clear in our

:21:54. > :21:59.determination to have sustainable public finances. This is Ed Balls

:22:00. > :22:04.light isn't it? No. No. You are going to borrow, he was going to

:22:05. > :22:08.borrow, he may have borrowed not quite as much. You deny that you

:22:09. > :22:12.could do that in the election campaign, you said we couldn't

:22:13. > :22:15.borrow more to invest? No. The distinction is, we have got the

:22:16. > :22:20.political will and plan to bring the deficit down. The Ed Balls plan? The

:22:21. > :22:26.plan according to Labour was not to get there at all. ?3 billion for new

:22:27. > :22:30.home-building, how much of that is new money? Well, you will see where

:22:31. > :22:36.the money comes from set out in detail in the Autumn Statement. But

:22:37. > :22:40.this is money that wasn't in the budget for house building before if

:22:41. > :22:44.that's what you mean. ?2 billion is being borrowed? Well, ultimately...

:22:45. > :22:49.Which you told us you couldn't do, borrow to build? No. This is about

:22:50. > :22:53.getting money into house building. By borrowing? It's one of the most

:22:54. > :22:57.important things we can do is getting house building... We know

:22:58. > :23:01.that, why didn't you do it before? We had a whole series of different

:23:02. > :23:06.policies in this area. Which have worked? We are going to take a

:23:07. > :23:09.slightly different approach, using public sector land. And using the

:23:10. > :23:15.public sector balance sheet to pay for it. When you take the measures

:23:16. > :23:20.together, I've seen figures, but how many new homes a year will this

:23:21. > :23:25.produce? The aim of these packages specifically is to get just over

:23:26. > :23:30.200,000 new homes. Per year? And over... We have also got to make

:23:31. > :23:35.sure that at the same time, the private sector house building gets

:23:36. > :23:45.going faster than it has been. This will be private sector housing won't

:23:46. > :23:50.it? Part of it is on public sector land and using the public and

:23:51. > :23:54.private balance sheets. Owned by land builders, that is incredibly

:23:55. > :23:59.important. So 200,000 houses a year? Just over in total. That is what

:24:00. > :24:04.David Cameron pledged when he became Prime Minister. What did he achieve?

:24:05. > :24:08.In terms of starts, the starts... Completions? What is the average

:24:09. > :24:14.completion rate under the Cameron years. Why don't you tell me?

:24:15. > :24:19.123,000. Exactly. That's the average over the six years. So nowhere near

:24:20. > :24:22.200,000? No. It was incredibly difficult at first because we were

:24:23. > :24:27.still in the throes of the great recession. Actually that figure came

:24:28. > :24:32.up and the fact that, of course, the starts figure improves before the

:24:33. > :24:38.completions figure by its nature and that figure had got up to pre-crash

:24:39. > :24:41.levels. Actually it hasn't. After six years of Conservative

:24:42. > :24:46.Government, how many houses did we complete in the last fiscal year? I

:24:47. > :24:53.haven't got that figure in my head. 145,000. Right so it's gone up. Way

:24:54. > :24:58.behind. Still the lowest completion figures since the 1920s. That's not

:24:59. > :25:05.actually right. Because what you've got to look at is how fast we have

:25:06. > :25:07.managed to get the starts in housing going because that's going to

:25:08. > :25:17.foreshadow completions in nine months or a year when the houses get

:25:18. > :25:23.done. The starts in the year to June 2016 for 144,000, which is actually

:25:24. > :25:28.lower than the 145,000 you managed to complete the previous year so the

:25:29. > :25:32.starts are not starting up. We should have an injection of more

:25:33. > :25:35.support to get more house-building and to bring more house builders on

:25:36. > :25:40.instead of just the big ones that we've got at the moment. I've got

:25:41. > :25:45.that, I understand that. Yes. But Gordon Brown made the same promises,

:25:46. > :25:48.Tony Blair made them, 200,000 houses a year, I mean the Blair Brown

:25:49. > :25:54.averages are better than yours but not great. Brown 136,000

:25:55. > :25:59.completions, Blair was 148,000 completions. No-one, politicians

:26:00. > :26:05.again and again tell me we'll get to 200,000, we never get it, we still

:26:06. > :26:08.get these incredibly historic low completions and I don't understand

:26:09. > :26:12.why what's being announced today is really going to make any difference

:26:13. > :26:15.to that? What I don't understand is this argument that because it's

:26:16. > :26:20.difficult we shouldn't try. Of course we should. Making sure that

:26:21. > :26:24.we get that level of house building up is important. There's a huge

:26:25. > :26:27.amount of work that's gone into it. And this is a slightly different

:26:28. > :26:32.approach because all of that approach that you talked about in

:26:33. > :26:36.the past was all based on trying to incentivise on the private side and

:26:37. > :26:38.then some local authority and Housing Association building. This

:26:39. > :26:43.is using the central Government balance sheet in a new way. Sure.

:26:44. > :26:47.Are you going to build a lot of new council houses? We have built far

:26:48. > :26:52.more... But they didn't build any. Are you going to build a lot of

:26:53. > :26:56.them? There is a combination of council houses, yes, also Housing

:26:57. > :26:59.Association and social housing and then houses, private sector houses

:27:00. > :27:04.for people to buy. It's good to have you back on. We

:27:05. > :27:08.have run out of time. When do you think you will return to frontline

:27:09. > :27:12.politics? Who? You. I'm having a whale of a time. That's different

:27:13. > :27:16.from frontline politics. I'm on the Daily Politics, Andrew. You're

:27:17. > :27:20.always on the Daily Politics! You're always on that. It was delightful to

:27:21. > :27:25.see you again, thank you Matt Hancock, who is the Minister for

:27:26. > :27:29.Digital policy these days! Whatever that means. Anyway, shall we have a

:27:30. > :27:37.look in the hall and see what is going on. The Transport Secretary

:27:38. > :27:42.Chris Grayling is making his speech. He's reconfirmed the Government's

:27:43. > :27:47.commitment to HS II and, given that we are in Birmingham, he's pledged

:27:48. > :27:52.?12 billion towards the transport component of the so-called Midlands

:27:53. > :27:57.Engine. ?12 billion, where's that come from? The north is the northern

:27:58. > :28:01.powerhouse, the Midlands has the Midlands engine. We'll have to see

:28:02. > :28:07.what Lincolnshire gets next or Cumberland! We shall see. Anyway, we

:28:08. > :28:12.are joined by Laura Kuenssberg, Paul Johnson of the IFS also. Welcome to

:28:13. > :28:19.you both. I don't know if you heard my interview with Matt Hancock

:28:20. > :28:23.there, but how much of this change in deficit reduction targets cast a

:28:24. > :28:26.shadow over all the previous emphasis on deficit reduction?

:28:27. > :28:32.Things have genuinely changed and, of course, the testify sit's come

:28:33. > :28:36.down by an awful lot -- deficit's come down. By the original plan it

:28:37. > :28:40.was meant to have gone now all together. That was down to the

:28:41. > :28:45.economy not going anywhere near as well as hoped. What's happening now

:28:46. > :28:50.is that we've got a huge amount of uncertainty over the economy over

:28:51. > :28:56.the next three or four years, but actually the next ten or 20 years,

:28:57. > :28:58.so to say that you are going to have a specific target given that

:28:59. > :29:02.uncertainty, it's appropriate to move away from that, as indeed

:29:03. > :29:06.George Osborne said he'd do. I'm sure we are still going to get some

:29:07. > :29:11.focus on concerns about the total level of deficit and debt. Exactly

:29:12. > :29:17.how that is couched, it remains to be seen. The amount of money from

:29:18. > :29:25.the Midlands Engine is ?12 million, not ?12 billion! Quite a difference.

:29:26. > :29:30.Sorry to have raised the hopes of the Birmingham people. Probably a

:29:31. > :29:33.heart attack in Manchester! Mr Hammond has a difficult balancing

:29:34. > :29:39.act, I suggest, Laura on two fronts today. He has to make a change in

:29:40. > :29:45.policy, a change in emphasis on fiscal stance from his predecessor,

:29:46. > :29:49.but at the same time, that is one thing, the other thing is he can't

:29:50. > :29:52.really tell us what he has in store until the Autumn Statement on

:29:53. > :29:56.November 23rd? Absolutely and he's constricted in that sense on both

:29:57. > :29:59.sides. In his nature, he's a very different kind of politician. Over

:30:00. > :30:03.the years we have gotten used to the Chancellor's speech being a huge

:30:04. > :30:08.event, the Chancellor had his own hat stuffed full of his own rabbits,

:30:09. > :30:11.he enjoyed revealing things with a flourish towards the end of the

:30:12. > :30:14.speech, rounded that too and in a sense George Osborne carried on that

:30:15. > :30:20.tradition, with the Chancellor having almost as big a day as the

:30:21. > :30:25.Prime Minister's speech. But he's not that kind of character, it's

:30:26. > :30:30.partly because he has to keep his goodies for the statement. The data

:30:31. > :30:33.about the post-referendum is only just starting to trickle in so they

:30:34. > :30:36.are not sure what position they'll be at the end of November. It's a

:30:37. > :30:39.measure of the fact this is a different Government. He's a

:30:40. > :30:43.different kind of politician, Theresa May is a different kind of

:30:44. > :30:46.politician, flash is out, if you like, but Philip Hammond is

:30:47. > :30:50.nonetheless very determined, as we have seen from this morning, to

:30:51. > :30:55.basically sketch out a different path. Targets are out, frameworks

:30:56. > :30:56.are in and politically, maybe not practically, but politically that is

:30:57. > :31:08.very different. Infrastructure spending is the new

:31:09. > :31:11.buzzword. Whereas infrastructure spending can improve the long-term

:31:12. > :31:16.supply side performance of the economy, in terms of Keynesian pump

:31:17. > :31:22.priming it doesn't have much of a speedy impact? That is broadly

:31:23. > :31:27.right, and the important thing about the infrastructure and improving the

:31:28. > :31:31.long-term economy, it is a long-term think governments can have a big

:31:32. > :31:35.effect on our productivity, but not next year, maybe in ten years,

:31:36. > :31:41.because these things take a while. In terms of pump priming, these

:31:42. > :31:45.projects take a long time to happen. If you look back at the last Labour

:31:46. > :31:48.government, every year they were missing by billions the amount they

:31:49. > :31:51.were hoping to spend on infrastructure, they just couldn't

:31:52. > :31:56.get the money out of the door, and we actually don't know, even if you

:31:57. > :32:00.wanted to pump prime, we don't know if this is the next couple of years

:32:01. > :32:05.when you want to pump prime or it is a longer-term thing when we actually

:32:06. > :32:10.come out of the European Union. Theresa May has been out this

:32:11. > :32:14.morning in Birmingham and was visiting a building site,

:32:15. > :32:19.politicians have a special like of building sites. The whole city is

:32:20. > :32:26.undergoing a massive renovation programme. Not wearing high

:32:27. > :32:37.visibility jackets, there, unlike the previous Chancellor. There she

:32:38. > :32:45.is. I'm told this is the new HSBC headquarters. The big bag coming to

:32:46. > :32:50.the Midlands. One of the interesting things, in the speech from savage

:32:51. > :32:55.avid and what will be undermined by Philip Hammond, something broader,

:32:56. > :32:59.ministers are on the one for policies which will be able to show

:33:00. > :33:04.a difference before the next general election -- on the hunt.

:33:05. > :33:07.Infrastructure promises have been scattered around like confetti in

:33:08. > :33:11.the last couple of years and everyone thinks it is a good idea,

:33:12. > :33:16.who doesn't think we should invest in the future of the country? The

:33:17. > :33:20.problem is it takes years to make a tangible difference in terms of jobs

:33:21. > :33:25.and a tangible difference in terms of the lines of voters, and

:33:26. > :33:28.ministers have a sense that they are not just looking for the right thing

:33:29. > :33:33.to do, but things they believe they can show progress on before the next

:33:34. > :33:39.general election. That is what is behind some of the announcements

:33:40. > :33:47.from Sajid Javid, they want to be able to do things they can show

:33:48. > :33:51.progress on, which is not easy. Mr Obama said they were shovel ready

:33:52. > :33:59.jobs, but then he had problems showing them. That is the

:34:00. > :34:03.difficulty. The Chancellor is being introduced, so I may interrupt you,

:34:04. > :34:06.but it seems you can widen the deficit and allow for slower deficit

:34:07. > :34:11.reduction and you pay no penalty in the bond markets which we would not

:34:12. > :34:14.have thought ten years ago. In large degree that is a reflection of the

:34:15. > :34:24.weakness of the world economy, people are looking for what they

:34:25. > :34:27.consider to be a relatively safe market, sovereign debt, despite the

:34:28. > :34:32.relatively high level of deficit, it still looks very safe relative to

:34:33. > :34:37.the uncertainties that surround the rest of the UK economy and the

:34:38. > :34:40.international, me. In terms of the change to go for investment in order

:34:41. > :34:45.to be able to spend cash which is not a change from the previous

:34:46. > :34:49.administration, even though George Osborne said he might go down this

:34:50. > :34:52.path. Philip Hammond and Theresa May have not woken up thinking, we are

:34:53. > :34:58.now going to be full throttle Keynesians, they are not huge

:34:59. > :35:02.converts to massive borrowings, to massive projects, and I understand

:35:03. > :35:08.it will be relatively small, ?2 billion borrowing for housing and

:35:09. > :35:13.equivalent amounts for other projects, and so this is a change,

:35:14. > :35:19.but this is not a 180 degrees flip for them to be pursuing a different

:35:20. > :35:24.economic philosophy. With housing committee to get the planning

:35:25. > :35:28.permissions, that can happen quickly, you can employ a lot of

:35:29. > :35:33.people and people have new houses and they buy a new kitchen -- with

:35:34. > :35:42.housing, you can get the planning permissions. It is what happened and

:35:43. > :35:47.helped the 1930s in this STUDIO: -- in this country. Planning

:35:48. > :35:50.permission is the problem. It is easing up little, no government has

:35:51. > :35:56.come anywhere near meeting the targets they have set themselves so

:35:57. > :36:02.there are constraints, but you can probably build housing more quickly

:36:03. > :36:07.than you can build a big New Road. Or a high-speed railway. It has a

:36:08. > :36:12.political problem for this party, because of the demand for more new

:36:13. > :36:20.homes which is greatest in the Tory Home Counties shires. Indeed. The

:36:21. > :36:22.new Communities Secretary Sajid Javid was addressing Tory

:36:23. > :36:28.councillors last but, maybe not reading them the riot act, but he is

:36:29. > :36:38.pretty determined to say to the foot shoulders and -- the soldiers, -- to

:36:39. > :36:43.the foot soldiers, he says they have got to be not as controlling and

:36:44. > :36:46.protective of the parts of the country that you represent. We have

:36:47. > :36:51.heard this on politicians before. Many times. You lose count of the

:36:52. > :36:56.number of times this has been said, but I suspect late in the year there

:36:57. > :36:59.might be more legislation, another housing white Paper, perhaps, that

:37:00. > :37:06.will go further in easing up planning restrictions. There has

:37:07. > :37:13.been a bit of change, but nowhere near enough if the government is to

:37:14. > :37:16.get anywhere near its target. They are way behind the target, this must

:37:17. > :37:22.be the longest introduction of the Chancellor of the Exchequer in

:37:23. > :37:28.living memory. The MP introducing him is still talking. Would it

:37:29. > :37:32.matter if in the Autumn Statement he doesn't set a date for a surplus?

:37:33. > :37:37.Would anyone care? Is it not more important that the markets CB

:37:38. > :37:44.deficit gets smaller and smaller, and the surplus was a kind of George

:37:45. > :37:48.Osborne conceit. -- see the deficit. I think you are right, given the

:37:49. > :37:55.uncertainty it would be a mistake to say we will get to surplus in 2020

:37:56. > :38:01.or 2023, but he can set out a path and an ambition and he can say that

:38:02. > :38:05.we will come as George Osborne did, we will aim in five years' time to

:38:06. > :38:09.be getting to surplus but if the economy changes we will adjust what

:38:10. > :38:14.we are trying to achieve and push it further out. Is the Prime Minister

:38:15. > :38:21.going to get away and stop talking about Brexit question what can they

:38:22. > :38:23.not help themselves? It will be interesting to see a Philip Hammond

:38:24. > :38:27.addresses it in any detail, but I don't think he will. It is

:38:28. > :38:31.overshadowing everything at this conference, no question. It was a

:38:32. > :38:36.cute political ploy for Theresa May to give a speech yesterday, a

:38:37. > :38:43.long-time aide Tory leader has done that on the first aid conference, --

:38:44. > :38:47.a long time since a Tory leader has done that on the first day of

:38:48. > :38:52.conference. Her plan was to get that out of the way, but that is all the

:38:53. > :38:57.chat. People are saying, did she really mean it yesterday when she

:38:58. > :39:02.said there would be a hard Brexit? Party leaders always say what they

:39:03. > :39:09.need at that moment. Of course they do. At last, here we go. Into the

:39:10. > :39:13.conference call for the Chancellor of the Exchequer, Philip Hammond, to

:39:14. > :39:15.give his first address to the Tory party faithful at the annual

:39:16. > :39:25.conference in his new position as Chancellor. This is Philip Hammond.

:39:26. > :39:31.Amanda, you held off a ferociously pincer movement in Cannock Chase

:39:32. > :39:34.annual result was one of the highlights of that result last May

:39:35. > :39:43.and we congratulate you on a fantastic achievement. APPLAUSE

:39:44. > :39:46.It is great to be back in Birmingham and a privilege to address this

:39:47. > :39:52.conference as Chancellor of the Exchequer. And I don't think I'm

:39:53. > :39:57.giving away any state secrets in admitting that I just might have

:39:58. > :40:03.hoped to have been a Treasury minister a bit earlier in my

:40:04. > :40:07.political career. In fact having been shadow chief secretary for

:40:08. > :40:13.three years until the 2010 general election, I rather suspect that that

:40:14. > :40:19.infamous note from Liam Byrne, you remember the one, dear Chief

:40:20. > :40:27.secretary, I'm afraid there's no money, I rather think that note was

:40:28. > :40:31.meant for me, but it went to David Laws, who published it, and is now

:40:32. > :40:37.trying to get it back. It became the shortest political suicide note in

:40:38. > :40:42.history, perhaps. Liam Byrne, your message to your successor was an

:40:43. > :40:52.admission of Labour's abject failure. APPLAUSE

:40:53. > :40:59.I will let you into a secret, my predecessor didn't leave me a note.

:41:00. > :41:06.But if he had this is what it would have said, dear Chancellor,

:41:07. > :41:11.employment is up, wages are rising, the deficit is down and income tax

:41:12. > :41:14.has been cut for tens images of people, that is the Conservative

:41:15. > :41:29.record, and that is the difference Conservative leader makes. APPLAUSE

:41:30. > :41:37.Anyway, I got to the Treasury in the end. I'm delighted to have such an

:41:38. > :41:47.excellent team supporting me. David Gauke as chief secretary, J Ellison

:41:48. > :41:54.as chief financial secretary, Simon Kirby, ably supported by Steve

:41:55. > :41:56.Barclay the Commons whips. Please give them a big round of applause.

:41:57. > :42:06.APPLAUSE I went down to the Bank of England

:42:07. > :42:11.last week to check on the gold reserves, what is left of them. You

:42:12. > :42:18.remember Gordon Brown sold half of them off at the bottom of the

:42:19. > :42:21.market, losing British taxpayers a staggering ?7 billion in the

:42:22. > :42:29.process, another example of Labour's failure. We last met in this hall

:42:30. > :42:37.two years ago on The Eagles the fight of our political lives -- two

:42:38. > :42:45.years ago on the eve of the fight. There was our Conservative vision of

:42:46. > :42:49.a future, with the economy moving forward, and Labour's offer with a

:42:50. > :42:55.vision of Britain going back to the old days of tax, spend, and waste.

:42:56. > :43:00.It is a credit to your hard work and the good sense of the British people

:43:01. > :43:06.that we won that fight and we should not forget the debt is party owes to

:43:07. > :43:08.the man who led us out of opposition and into coalition and then on to

:43:09. > :43:13.form the first Conservative government in 18 years. Our former

:43:14. > :43:31.leader and Prime Minister David Cameron. APPLAUSE

:43:32. > :43:39.But today, my friends, we meet on the eve of a different challenge. No

:43:40. > :43:46.less daunting and no less crucial to the future of our country. That vote

:43:47. > :43:50.on the 23rd of June, the first of its kind anywhere in Europe, was a

:43:51. > :43:56.defining moment, not just of this Parliament, but of this generation.

:43:57. > :44:01.The moment when the British people decided to change direction and map

:44:02. > :44:06.out a new path for our country's future. Whichever side of the

:44:07. > :44:11.arguing we were on we should not forget this, only one mainstream

:44:12. > :44:17.political party was prepared to give the British people their say and

:44:18. > :44:23.only one party delivered that referendum and only one party

:44:24. > :44:24.unhesitatingly accepted the result. This great party, the Conservative

:44:25. > :44:41.Party. APPLAUSE That result in June gave clear voice

:44:42. > :44:46.to a desire by the British people for an end to political union and

:44:47. > :44:53.the restoration of control. Control, that keyword. Control over the roles

:44:54. > :44:58.and regulations that govern their lives, control over who can live and

:44:59. > :45:04.work in their country, and control over how their money is spent. And I

:45:05. > :45:13.can reassure the British people of this, that message has been received

:45:14. > :45:14.loud and clear. No ifs and buts, no second referendum, we are leaving

:45:15. > :45:28.the European Union. APPLAUSE But it is equally clear to me that

:45:29. > :45:36.the British people did not vote on June 23rd to become poorer or less

:45:37. > :45:38.secure. So our task is clear. Repatriate our sovereignty, control

:45:39. > :45:43.our borders and seize the opportunities that the wider world

:45:44. > :45:47.has to offer. But do all of this while protecting our economy, our

:45:48. > :45:52.jobs and our living standards. Now, the message may be simple, but I can

:45:53. > :46:02.assure you, the process will be complex. Successful negotiation with

:46:03. > :46:06.the EU 27 will demand patience, experience, meticulous planning and

:46:07. > :46:09.steely resolution. And I know of no-one better equipped to guide us

:46:10. > :46:14.through these negotiations than our brilliant new Prime Minister,

:46:15. > :46:29.Theresa May! APPLAUSE.

:46:30. > :46:35.We should approach these negotiations with self-confidence.

:46:36. > :46:41.Our economy is the fifth largest in the world. Our nation is built upon

:46:42. > :46:46.a history of global trade. Our people are responsible for some of

:46:47. > :46:51.the most significant inventions and discoveries of history. So no-one

:46:52. > :46:55.should be in any doubt that we have the skills, the ingenuity and

:46:56. > :47:02.determination to make a success of Brexit. Starting from a position of

:47:03. > :47:07.strength. And thanks in no small part to the onningions of my

:47:08. > :47:14.predecessor, we enter these negotiations with an economy that is

:47:15. > :47:20.fundamentally robust. It's easy to forget, six years on, the scale of

:47:21. > :47:24.the legacy of Labour's great recession that we inherited in 2010.

:47:25. > :47:30.Turmoil in the markets, a banking system still reeling from the

:47:31. > :47:36.crisis, a deficit of more than 10% of GDP, the highest in our peacetime

:47:37. > :47:40.history, an economy on the brink. It was the decisions that George

:47:41. > :47:45.Osborne took in those early days that pulled us back from the

:47:46. > :47:47.precipice and set us on a course to recovery. The tough early choices...

:47:48. > :48:05.APPLAUSE. Those tough early choices and the

:48:06. > :48:06.doggedness in sticking with them delivered that intangible but

:48:07. > :48:12.indispensable commodity - credibility. Credibility in the

:48:13. > :48:16.markets that helped secure record low borrowing costs, incredibility

:48:17. > :48:20.with business, securing the investment that supported our

:48:21. > :48:27.recovery. And the results are clear for all of us to see. 2.7 million

:48:28. > :48:31.people more in work today under a Conservative Government than in 2010

:48:32. > :48:34.under Labour. Did we hear that achievement being

:48:35. > :48:42.Lauded in Liverpool last week? Of course not. Because Corbyn's Labour

:48:43. > :48:46.Party has abandoned the agenda of working people deserted the middle

:48:47. > :48:52.ground of British politics in favour of the socialist ideaology of the

:48:53. > :48:55.Metropolitan left-wing elite. Leaving us, the Conservatives, as

:48:56. > :48:57.the true party of British working people.

:48:58. > :49:13.APPLAUSE. Of course, for much of his time as

:49:14. > :49:18.Chancellor, George Osborne faced Ed Balls across the despatch box.

:49:19. > :49:22.Remember Ed Balls? I know you remember him from Saturday night,

:49:23. > :49:27.I'm asking if you remember him in his more minor role as Shadow

:49:28. > :49:31.Chancellor? ! By the way, you know Ed wasn't their first choice for

:49:32. > :49:37.Strictly, they were going to ask Corbyn to do it but then someone

:49:38. > :49:46.told them he had two left feet! LAUGHTER.

:49:47. > :49:53.I watched Ed on Saturday night. I don't want to sound like Craig Revel

:49:54. > :49:57.Horwood but I have to say, I think his charleston is probably better

:49:58. > :50:02.than his economic analysis. Because he told us back then that

:50:03. > :50:08.our policies would push the economy into recession, but he was wrong.

:50:09. > :50:13.Since 2010, Britain has grown faster than any other economy in the G7. He

:50:14. > :50:19.said, we would never replace lost public sector jobs with new private

:50:20. > :50:23.sector jobs, but we did. Not one for one, but seven for one.

:50:24. > :50:28.And that's not all. We got our deficit down by nearly two thirds,

:50:29. > :50:31.we cut the welfare bill, we have kept mortgage rates low protecting

:50:32. > :50:35.millions of homeowners through difficult times, we have cut income

:50:36. > :50:40.tax for 30 million people and taken four million low-paid workers out of

:50:41. > :50:44.income tax all together. I say, not bad for an economy that looked out

:50:45. > :50:49.for the count when we took it over in 2010 and a record of which this

:50:50. > :51:01.party can be justly proud. APPLAUSE.

:51:02. > :51:09.But we cannot rest on our laurels. We must look to the future, to the

:51:10. > :51:14.economic challenges ahead. Let's start with the immediate challenge.

:51:15. > :51:19.The markets have calmed since the reference dumb vote and many of the

:51:20. > :51:25.recent data have been better than expected.

:51:26. > :51:32.That is the underlying strength of our economy. But there is no room

:51:33. > :51:38.for complacency. Many businesses which trade with the EU are

:51:39. > :51:44.uncertain Tebbit a what lie -- about what lies ahead.

:51:45. > :51:49.About the deal that will be done, about the changes they'll have to

:51:50. > :51:53.make to adapt to the post-Brexit world and about what it will all

:51:54. > :51:59.mean for their employees, their company, their business model.

:52:00. > :52:02.I understand their concerns. Business, after all, hates

:52:03. > :52:08.uncertainty. But let me repeat the pledge of the

:52:09. > :52:13.Prime Minister yesterday. As we negotiate our exit from the EU and

:52:14. > :52:18.our future relationship with it, this Government will fight for the

:52:19. > :52:23.best possible deal for British business and British workers, the

:52:24. > :52:28.best possible access to European markets for our manufacturing and

:52:29. > :52:33.services industries and the best possible freedoms for our

:52:34. > :52:36.entrepreneurs and global exporters ensuring that Britain after Brexit

:52:37. > :52:41.will remain one of the best places in the world for a business to

:52:42. > :52:53.invest, to innovate and to grow. APPLAUSE.

:52:54. > :52:57.The independent Bank of England successfully cut interest rates to

:52:58. > :53:02.restore confidence in the wake of the vote. But as the economy

:53:03. > :53:06.responds over the coming months, fiscal policy may also have a role

:53:07. > :53:11.to play. So let me be clear. Throughout the

:53:12. > :53:15.negotiating process, we are ready to take whatever steps are necessary to

:53:16. > :53:21.protect this economy from turbulence. And when the process is

:53:22. > :53:25.over, we are ready to provide support to British businesses as

:53:26. > :53:30.they are just to -- they adjust to life outside the EU. Because Brexit

:53:31. > :53:39.does mean Brexit and we are going to make a success of it.

:53:40. > :53:46.In the meantime, I can offer some additional certainty to British

:53:47. > :53:51.business and other organisations bidding to receive EU funding while

:53:52. > :53:54.we are still a member. I've already guaranteed the funding for projects

:53:55. > :54:01.signed prior to this year's Autumn Statement. Today, I can go further.

:54:02. > :54:06.The Treasury will offer a guarantee to bidders whose projects meet UK

:54:07. > :54:11.priorities and value for money criteria, that if they secure

:54:12. > :54:15.multiyear EU funding before we exit, we will guarantee those payments

:54:16. > :54:17.after Britain has left the EU, protecting British jobs and

:54:18. > :54:28.businesses after Brexit. APPLAUSE.

:54:29. > :54:35.As Conservatives, we know, of course, that no-one owes us a

:54:36. > :54:40.living. But a country has to live within its means. A fundamental part

:54:41. > :54:46.of maintaining our global competitiveness is getting our

:54:47. > :54:50.public finances back in order. We should of course be proud of our

:54:51. > :54:57.achievements in fiscal consolidation, but the work we began

:54:58. > :55:02.in 2010 is not finished. The deficit remains unsustainable. And the

:55:03. > :55:08.decision to leave the EU has introduced new fiscal uncertainty.

:55:09. > :55:15.Last year, the Government borrowed ?1 in every ?10 we spent. And piling

:55:16. > :55:22.up debt for our children and our grandchildren is not only

:55:23. > :55:27.unsustainable, it's unfair. And more, it's downright unconservative.

:55:28. > :55:30.The British people elected us on a promise to restore fiscal discipline

:55:31. > :55:37.and that is exactly what we are going to do. But we will do it in a

:55:38. > :55:40.pragmatic way, in a way that reflects the new circumstances we

:55:41. > :55:45.face. The fiscal policies that George Osborne set out were the

:55:46. > :55:48.right ones for that time. But when times change, we must change with

:55:49. > :55:52.them. So we will no longer target a

:55:53. > :55:58.surplus at the end of this Parliament.

:55:59. > :56:06.But make no mistake, the task of fiscal consolidation must continue.

:56:07. > :56:10.It must happen within the context of a clear, credible fiscal framework

:56:11. > :56:12.that will control today's expenditure, deliver value for money

:56:13. > :56:18.and get Britain back living within our mens.

:56:19. > :56:24.At the Autumn Statement in November, I will set our our plan to deliver

:56:25. > :56:29.long-term fiscal sustainability while responding to the consequences

:56:30. > :56:34.of short-term uncertainty and recognising the need for investment

:56:35. > :56:40.to build an economy that works for everyone, a new plan for the new

:56:41. > :56:45.circumstances Britain faces. A Conservative Government

:56:46. > :56:49.demonstrating the flexibility, the common-sense and pragmatism that's

:56:50. > :57:02.made our party the most successful political party in British history.

:57:03. > :57:06.APPLAUSE. Now, contrast this balanced

:57:07. > :57:09.responsible approach with the shambles of Labour in Liverpool last

:57:10. > :57:15.week. In denial about their record in

:57:16. > :57:20.office, deluded about the state of the public finances today, not once

:57:21. > :57:24.did Jeremy Corbyn apologise for the mess that Labour left behind.

:57:25. > :57:29.On the contrary, his Shadow secretary says their mistake was not

:57:30. > :57:34.to have spent more. If you think their past record is bad, let's look

:57:35. > :57:43.at their plans for Britain's future. Corbyn's big idea is to spend an

:57:44. > :57:47.extra half a trillion pounds. That's 7,700 for every man, woman and child

:57:48. > :57:50.in the UK. I just hope he remembers when he

:57:51. > :57:55.goes to bed at night to water the magic money tree.

:57:56. > :57:59.Now look, we could speculate as to how Labour would pay for a spending

:58:00. > :58:05.splurge on this scale, but fortunately, we don't have to.

:58:06. > :58:09.Because we have the answer. From Labour's last Shadow Chancellor,

:58:10. > :58:15.Chris Lesley. This is what he said last week about how Labour would

:58:16. > :58:20.fund Corbyn's plan. You'd have to double income tax, you would have to

:58:21. > :58:24.double national insurance, you would have to double council tax and you

:58:25. > :58:30.would have to double VAT as well. So there we have it. From the mouth

:58:31. > :58:35.of one of their own. Labour condemned as totally unfit to govern

:58:36. > :58:46.this country. APPLAUSE.

:58:47. > :58:53.With nothing to offer the hard-working people of Britain, and,

:58:54. > :58:58.as always, it would be the poorest and the most vulnerable who would

:58:59. > :59:05.pay the biggest price. So, my friends, we in this party have a

:59:06. > :59:12.great and solemn responsibility because we alone carry the burden of

:59:13. > :59:17.ensuring that Labour can never again wreck the British economy. The

:59:18. > :59:22.Conservative commitment is to build a country and an economy that works

:59:23. > :59:25.for everyone, to raise our living standards and grow our national

:59:26. > :59:29.wealth. Not just for today, but for future

:59:30. > :59:33.generations too. We know how to do that, we

:59:34. > :59:39.Conservatives, we have proved it time and time again.

:59:40. > :59:44.Cleaning up Labour's mess. We'll do it by making the British

:59:45. > :59:48.economy the most outward looking, most dynamic, most competitive

:59:49. > :59:53.high-wage, high-skilled low-tax economy in the world.

:59:54. > :59:57.We do it by making sure that after our EI exit, we continue to attract

:59:58. > :00:02.the brightest and the best, the highest skilled and the most dynamic

:00:03. > :00:07.entrepreneurs, scientists, engineers and managers from around the world,

:00:08. > :00:13.building a strong and vibrant economy as the bedrock of our strong

:00:14. > :00:19.and vibrant society. A Conservative vision of the future of Britain. And

:00:20. > :00:23.I'll tell you this, it's a million miles away from the la-la land

:00:24. > :00:27.Labour was describing in Liverpool last week.

:00:28. > :00:35.To deliver that strong economy requires long-term sustainable

:00:36. > :00:40.growth. And long-term sustainable growth requires us to raise the

:00:41. > :00:44.national productivity. Before you switch off, I know productivity

:00:45. > :00:49.doesn't necessarily set political pulses racing but bear with me while

:00:50. > :00:54.I try to convince you that it should. How about this? You probably

:00:55. > :00:58.know that the national productivity is lower than that of the United

:00:59. > :01:05.States and Germany, and maybe you even feel resigned to that fact. But

:01:06. > :01:10.did you know that it is lower than France and Italy, as well. Had you

:01:11. > :01:15.made the connection about what that means in the real world, because

:01:16. > :01:19.what it means is that millions of British workers are working longer

:01:20. > :01:23.hours for lower pay than their counterparts in Europe and the

:01:24. > :01:28.United States and that has to change if we are going to build an economy

:01:29. > :01:39.that works for everyone. If we raised our productivity by just 1%,

:01:40. > :01:44.every year, within a decade we would add ?250 billion to the size of our

:01:45. > :01:54.economy, ?9,000 for every household in Britain. Productivity should set

:01:55. > :01:59.political pulses racing. It is a decades-old problems swept under the

:02:00. > :02:02.carpet for too long. But under this government we are going to put this

:02:03. > :02:06.in the spotlight, right at the forefront of our policy agenda and

:02:07. > :02:13.at the heart of our industrial strategy. We know where to start.

:02:14. > :02:18.Our productivity performance in this country is grossly uneven. Still too

:02:19. > :02:24.reliant on a few key sectors and still too focused on London and the

:02:25. > :02:28.south-east. The good news is, we know how to do productivity, parts

:02:29. > :02:35.of London have the highest productivity in Europe. The bad

:02:36. > :02:39.news, the productivity gap between the capital and the second, third

:02:40. > :02:46.and fourth cities is greater than in any other major economy in the

:02:47. > :02:50.world. And closing that gap will be key to Britain's future outside the

:02:51. > :02:55.EU. That is why we are doing regional devolution deals and why

:02:56. > :02:59.tackling those regional differences will be one of the key drivers for

:03:00. > :03:06.the industrial strategy that Greg Clark is developing now. And there

:03:07. > :03:10.is the skills challenge, we've made huge progress over the last six

:03:11. > :03:18.years, how many people in this room ten years ago would have believed

:03:19. > :03:21.that in every year since 2014, maths would be the most popular A-level

:03:22. > :03:27.subject in English schools? But it was. That is a tribute to

:03:28. > :03:36.Conservative education reforms. APPLAUSE

:03:37. > :03:44.Despite that progress, there is a huge gap between our skills base and

:03:45. > :03:48.that of our key competitors. It is holding people back from achieving

:03:49. > :03:54.their full potential and it is holding our nation back in the

:03:55. > :04:01.global race. And there's more. Our stock of public infrastructure bang

:04:02. > :04:06.which is near the bottom of the developed countries league table

:04:07. > :04:12.after decades of underinvestment -- languishes near the bottom. All of

:04:13. > :04:18.this must change to build an economy which works for everyone. We need to

:04:19. > :04:24.close that gap with careful targeted public investment in high-value

:04:25. > :04:28.infrastructure and encouragement of more private business investment in

:04:29. > :04:32.British enterprises. If we are going to see economic growth distributed

:04:33. > :04:37.more evenly across the regions and sectors of our economy, and more

:04:38. > :04:42.fairly between the generations, there's another big challenge that

:04:43. > :04:48.needs to be tackled. The on affordability of housing. Because

:04:49. > :04:52.despite the action we have taken, fewer and fewer young people are

:04:53. > :04:58.able to afford to get their foot on the first rung of the housing ladder

:04:59. > :05:01.and buy their own home. Quite simply we are not building enough new

:05:02. > :05:07.homes. This is a long-term challenge. But there are short-term

:05:08. > :05:12.measures we can take and the package that Sajid Javid announced earlier,

:05:13. > :05:18.?3 billion home-builders fund and the 2 billion is proud of new

:05:19. > :05:20.investment for construction on public land is a clear demonstration

:05:21. > :05:26.of this government's determination to tackle this challenge using

:05:27. > :05:32.everything at our disposal because making housing more affordable will

:05:33. > :05:37.be a vital part of building a country that works for everyone. And

:05:38. > :05:45.this government is determined that the dream of home ownership should

:05:46. > :05:49.be for the many and not for the few. Making sure that we have world-class

:05:50. > :05:55.infrastructure is vital to maintaining our competitiveness but

:05:56. > :05:59.it is a very long-term agenda. One that can be and often has been

:06:00. > :06:04.knocked off course by short-term political considerations. That is

:06:05. > :06:09.why we announce the national infrastructure commission, to define

:06:10. > :06:13.independently the nation's long-term infrastructure needs and to

:06:14. > :06:17.prioritise and plan and to test value for money and to make sure

:06:18. > :06:25.that every penny spent on infrastructure is properly targeted

:06:26. > :06:29.to deliver maximum benefit. And today I recommit to putting the

:06:30. > :06:33.commission at the very heart of our plans to renew and expand Britain's

:06:34. > :06:39.infrastructure, making sure that it is long-term economics and not

:06:40. > :06:44.short-term politics, that drives Britain's vital infrastructure

:06:45. > :06:52.investment. Part of Britain's productivity transformation will,

:06:53. > :06:59.from innovation. -- will come from. The new technologies which are right

:07:00. > :07:01.now making their way from university labs and facilities into early stage

:07:02. > :07:07.production, offer Britain a much bigger prize than incremental

:07:08. > :07:13.productivity improvements. Because at the cutting edge of many of these

:07:14. > :07:18.new technologies UK is becoming a world leader once again. Not just in

:07:19. > :07:25.the science but in the application of it. And in the innovation that

:07:26. > :07:29.follows. Over the last few years unnoticed by most of us,

:07:30. > :07:32.entrepreneurs and scientists from home and abroad have been turning

:07:33. > :07:38.Britain into a hub of tech innovation. Global businesses have

:07:39. > :07:43.followed, hungry for the inventions and innovations they are generating.

:07:44. > :07:50.Developing technologies that will change fundamentally the way we work

:07:51. > :07:55.and the way we live. Driverless cars, the internet of things,

:07:56. > :08:01.artificial intelligence, 3-D printing, Virtual reality, advanced

:08:02. > :08:07.robotics, I will be honest, I had no idea until a few weeks ago just how

:08:08. > :08:13.much I don't know. And I had even less idea how much I still wouldn't

:08:14. > :08:17.be able to understand even when clever people had explained it to

:08:18. > :08:23.me, but the truth is, this is the future, our future and our

:08:24. > :08:26.children's future. A whole new world that really would have sounded like

:08:27. > :08:33.science-fiction just a few years ago, but is now a reality taking

:08:34. > :08:38.shape in laboratories and incubators and factories across Britain, there

:08:39. > :08:41.is a once in a generation opportunity for Britain to cement

:08:42. > :08:49.its role as a leader in tech innovation. My ambition is clear, I

:08:50. > :08:53.want to see what is invented here developed here, I want to see what

:08:54. > :08:59.is developed here produced here, I want to see jobs and profits, and

:09:00. > :09:09.yes I want to see tax receipts here in Britain. APPLAUSE

:09:10. > :09:17.I want to see the fruit of British genius being harvested here in

:09:18. > :09:23.Britain as we move into a fourth Industrial Revolution, creating

:09:24. > :09:27.jobs, wealth, and success to future proof our economy post Brexit. We

:09:28. > :09:32.are well placed to do it. More competitive than ever. Up to seventh

:09:33. > :09:38.place in the world league table last year, from tenth the year before. We

:09:39. > :09:43.have world leading universities and research institutes, a trusted legal

:09:44. > :09:48.system and an advantageous time zone, the English-language, our

:09:49. > :09:53.secret and unfair advantage. And vibrant markets. A 20% we have one

:09:54. > :10:00.of the world's most competitive corporation tax rates and as it

:10:01. > :10:05.falls to 17% by the end of this Parliament it will be more

:10:06. > :10:07.attractive still. Of course this explosion of creativity and

:10:08. > :10:11.innovation that I've spoken about hasn't happened solely or even

:10:12. > :10:19.mainly because of government policy but it could easily be snuffed out

:10:20. > :10:21.by the wrong government policy. We must carefully maintained the

:10:22. > :10:26.conditions that have brought this activity to Britain in the first

:10:27. > :10:30.place. Including the ability to attract the brightest and best to

:10:31. > :10:36.work here in our high-tech industries. And where we see that

:10:37. > :10:42.there are government interventions that work we should be prepared to

:10:43. > :10:47.make them, so today I can announce another ?220 million of support to

:10:48. > :10:57.tech innovation spread across two initiatives. ?100 million to extend

:10:58. > :11:01.the biomedical fund which takes revolutionary science from the lab

:11:02. > :11:06.and delivers it to health care interventions and a further ?120

:11:07. > :11:10.billion to nurture the tech transfer offices which put universities and

:11:11. > :11:16.entrepreneurs together to get the science out of the lab and into the

:11:17. > :11:16.factory, that is a Conservative government investing in Britain's

:11:17. > :11:35.future. I've made my argument that we will

:11:36. > :11:42.not overcome Britain's productivity challenge unless we overcome the gap

:11:43. > :11:47.between cities and regions, but this is about politics, as well, because

:11:48. > :11:50.one of the key messages of the referendum campaign was that large

:11:51. > :11:55.parts of our country feel left behind. They see the country getting

:11:56. > :12:01.richer but they don't feel part of that success. A dangerous divide is

:12:02. > :12:07.opening up between those who believe they have a stake in the economy and

:12:08. > :12:12.those who don't. It is one of the central missions of this government

:12:13. > :12:18.to tackle that divide, to see the benefits of growth provided more

:12:19. > :12:22.equally across the regions and generations, and a key part of this

:12:23. > :12:28.agenda is harnessing the economic power of our cities. The Northern

:12:29. > :12:32.Powerhouse project takes a visionary approach, linking the great cities

:12:33. > :12:42.of the North into a coherent economic entity, an interconnected

:12:43. > :12:44.region that live as growth by making it easier and cheaper for and

:12:45. > :12:52.individuals to move goods come people and ideas. I want to pledge

:12:53. > :12:55.to you today that the Treasury under my leadership will continue to drive

:12:56. > :13:01.the Northern Powerhouse project, working in partnership with local

:13:02. > :13:06.leaders to see it deliver its potential for people in the North.

:13:07. > :13:11.But I also want to tell you that our ambition is not limited to the

:13:12. > :13:14.Northern Powerhouse. We want to create the conditions for success in

:13:15. > :13:19.the north, the South, and everywhere in between. There is nowhere more

:13:20. > :13:26.ripe to benefit from a similar approach than the Midlands. The

:13:27. > :13:32.Midlands engine with its hub in Birmingham powers 11.7 million lives

:13:33. > :13:39.generates ?220 billion for our economy and produces 18% of UK goods

:13:40. > :13:44.exports, more than a fifth of our total manufacturing output. In this

:13:45. > :13:50.great region there are 320,000 more people in work than there were in

:13:51. > :13:56.2010. But both productivity and economic growth have lagged behind

:13:57. > :14:01.the UK average. We have developed our long-term economic plan for the

:14:02. > :14:06.Midlands and is already delivering. But we can and we will do more. We

:14:07. > :14:09.are working with the West Midlands combined authority on a second

:14:10. > :14:15.devolution deal to include new powers on transport, criminal

:14:16. > :14:19.justice, data, planning and skills. With Andy Street, our fantastic

:14:20. > :14:25.mayoral candidate for the West Midlands, now in place, a great

:14:26. > :14:29.future is within the region's rasp, at the very released I can promise

:14:30. > :14:32.you this, this region will never be knowingly undersold -- grasp.

:14:33. > :14:47.APPLAUSE The Northern Powerhouse, the

:14:48. > :14:53.Midlands engine, two great projects that can be emulated across written.

:14:54. > :14:57.Indeed, I suspect the limiting factor might only be our ability to

:14:58. > :15:02.think of snappy titles for new regional projects -- across Britain.

:15:03. > :15:08.But be assured we have passed a tipping point in devolution in this

:15:09. > :15:12.country, a decisive and irreversible shift in the economic and political

:15:13. > :15:17.power balance. Britain's economy will be the better and the bigger

:15:18. > :15:25.for it. Conference, the British people have made a bold decision,

:15:26. > :15:31.and our party trusted them with the nation's future in a referendum. And

:15:32. > :15:38.now they trust us to deliver on their decision. We will not let them

:15:39. > :15:42.down. We are going to leave the European Union to repatriate our

:15:43. > :15:47.laws, to assert the supremacy of our courts, to control our borders, but

:15:48. > :15:52.we are not going to turn our backs on the nations of Europe. Let us

:15:53. > :15:58.resolve that as we leave their union, we will remain the best of

:15:59. > :16:02.neighbours but the closest of trade associates and the strongest of

:16:03. > :16:09.security partners. But our economic future must not be defined by Brexit

:16:10. > :16:15.alone. So as we tread that path, to becoming an independent sovereign

:16:16. > :16:23.country once again, and forge a new and exciting role for our nation in

:16:24. > :16:27.the world let us resolve to tackle the challenges at home with renewed

:16:28. > :16:31.vigour, dealing with the deficit, raising our productivity, the

:16:32. > :16:38.balancing our economy and rebuilding our infrastructure. And making sure

:16:39. > :16:40.that everyone in every part of our country can contribute and benefit

:16:41. > :16:56.from the growth that follows. Standing tall, attracting the best

:16:57. > :17:00.to deliver the vibrant successful economy that will mean when future

:17:01. > :17:05.generations look back on our decision in 2016, they'll see, not

:17:06. > :17:15.the end of an era, but the beginning of a new age. Not a country turning

:17:16. > :17:21.inward but a nation reaching out, decisively, confidently to grasp new

:17:22. > :17:28.opportunities, a bigger, better, greater Britain, truly a country

:17:29. > :17:34.that works for everyone. Thank you. APPLAUSE.

:17:35. > :17:38.STUDIO: The Chancellor Philip Hammond finishes his first key note

:17:39. > :17:44.address to the Tory Party Conference as Chancellor. It was a pretty long

:17:45. > :17:48.speech, short on anything new or any new announcements. Maybe he's saving

:17:49. > :17:53.them all up for the Autumn Statement on November 23rd. He boasted about

:17:54. > :17:57.the recovery that had occurred under this Government. He said the

:17:58. > :18:01.Conservatives were the true party of the British working people. He said

:18:02. > :18:05.a divide was opening up between those who were doing well out of the

:18:06. > :18:09.economy and those who weren't. It remains to be soon what is going to

:18:10. > :18:13.be done about that. He had a swipe at Ed Balls who, of course, is now

:18:14. > :18:18.more famous as a dancer than a Shadow Chancellor. He had a few

:18:19. > :18:23.things to say about fiscal policy. He confirmed what we already know,

:18:24. > :18:27.that they are no longer aiming for a surplus in the national budget by

:18:28. > :18:33.2020. Indeed, it could be that they'll drop the very idea of aiming

:18:34. > :18:37.for a surplus, but he did talk about fiscal sustainability which suggests

:18:38. > :18:42.he still hopes that the deficit over time will continue to come down. I

:18:43. > :18:45.guess it means the deficit never came down anything as quickly as Mr

:18:46. > :18:52.Osborne first told us it would in 2010. He then moved to a new more

:18:53. > :18:55.slower reduction for 2015 to 2020, now Mr Hammond I think is probably

:18:56. > :19:00.moving to stage three of deficit reduction which means it will be

:19:01. > :19:05.even slower than stage two under Mr Osborne. He did say that he was

:19:06. > :19:08.going to look to invest in various areas as well. He's already

:19:09. > :19:13.announced something on housing, which don't know yet what else, but

:19:14. > :19:17.he did say we had to do that. He spent some time on productivity and

:19:18. > :19:26.I suppose we'll think with an increase investment may address that

:19:27. > :19:30.poll. Paul Johnson from the Institute for Fiscal Studies, have I

:19:31. > :19:36.missed anything out? Nothing terribly new. We knew he wasn't

:19:37. > :19:40.going to aim for the surplus in 2020 and he's given us no sense of what

:19:41. > :19:44.the new fiscal rule will be. That doesn't surprise me, it will come in

:19:45. > :19:49.the Autumn Statement in November. He's dealing with uncertainty. He

:19:50. > :19:54.focussed on productivity, it's what underlies wage growth, he gave us

:19:55. > :19:57.some sums there, saying if you increase productivity 1% a year, you

:19:58. > :20:01.get hundreds of billions after ten years, absolutely true, the problem

:20:02. > :20:05.of course is how do you deliver that productivity. How does Government

:20:06. > :20:10.deliver it too? How indeed. He was right about some things. It does

:20:11. > :20:12.depend on skills, infrastructure and building and some things Governments

:20:13. > :20:16.have decided notlet to do in the past. We could have had a decision

:20:17. > :20:19.about a runway a lot quicker which would have been good for

:20:20. > :20:23.productivity. You can build extra roads but people don't like them.

:20:24. > :20:27.You can build extra houses on green fields but people don't like them.

:20:28. > :20:30.All these are good for productivity. So there are big decisions to take

:20:31. > :20:35.there. He said something interesting. He did focus and

:20:36. > :20:40.re-affirm George Osborne's commitment to devolution and to

:20:41. > :20:44.giving additional powers to local authorities and to regions. I think

:20:45. > :20:49.that was quite for me a big part of what he said. There is no, it would

:20:50. > :20:52.seem, going back from what I think we'll see over time as quite a big

:20:53. > :20:55.change in the way we run our economy and politics. Maybe if he really

:20:56. > :20:59.believeded in devolution he'd move the Treasury to Manchester? ! He

:21:00. > :21:03.would but... Then you would have a whole different view of the world.

:21:04. > :21:09.Parliament seems to be moving out of its building soon, they could move

:21:10. > :21:17.the whole that bang up there! In the broad sweep of things, we don't know

:21:18. > :21:25.how much he'll slow down, he's going to slow down the pace of deficit

:21:26. > :21:30.reduction? That is my guess. Let's remember, if the economy grows a bit

:21:31. > :21:32.less quickly than was hoped in March, even to he follows through

:21:33. > :21:36.exactly with George Osborne's spending cuts and so on on, we still

:21:37. > :21:39.won't get to a budget southern plus, so simply saying we are not going to

:21:40. > :21:43.get there doesn't tell us anything about the scale of any other change.

:21:44. > :21:46.There's clearly some indication of what looked like some really quite

:21:47. > :21:49.modest increases in spending on house building and so on which might

:21:50. > :21:55.help both in the short run and the long run, but I think we are going

:21:56. > :22:00.toff to wait until the Autumn Statement on November 20rd to find

:22:01. > :22:03.out more detail -- 23rd November. If I were him, I would still be waiting

:22:04. > :22:09.for more news on the economy over the next year to 18 months. To see

:22:10. > :22:13.which way it's going? Yes. Exactly. We don't know the course of the

:22:14. > :22:17.economy yet. We could forecast it going up and down and changing all

:22:18. > :22:21.the time. It's a little unfair to have a crack at Ed Balls, is it not,

:22:22. > :22:27.when his overall fiscal policy now sounds a little like Ed Balls? Well,

:22:28. > :22:31.the last Labour manifesto suggested aiming for what essentially would be

:22:32. > :22:35.a ?20 billion or ?30 billion deficit by the end of the Parliament because

:22:36. > :22:39.they would have been happy to borrow to invest. The Chancellor didn't say

:22:40. > :22:44.that is what he was aiming for, but he's certainly pushing in that kind

:22:45. > :22:50.of direction. Thanks for being with us. Pf pf

:22:51. > :22:53.Yesterday Pf pf was Brexit day here at Conference.

:22:54. > :22:57.We learned of course that Article 50 will be triggered before March next

:22:58. > :23:00.year, starting the formal two-year process of negotiations.

:23:01. > :23:05.And there'll be a vote in Parliament next spring confirming that Britain

:23:06. > :23:08.will leave at the end of that process, the Great Repeal Bill

:23:09. > :23:15.Adam was listening to the speeches and trying to get some

:23:16. > :23:22.answers from the ministers in charge of Brexit.

:23:23. > :23:29.Here is our Adam. APPLAUSE.

:23:30. > :23:33.. A speech from the Prime Minister on a Sunday at Tory conference! Most

:23:34. > :23:38.unusual. Must be something big like when she'll start the legal process

:23:39. > :23:42.of leaving the EU. Let me be absolutely clear. There'll

:23:43. > :23:46.be no unnecessary delays in invoking Article 50. We will invoke it when

:23:47. > :23:50.we are ready and we will be ready soon.

:23:51. > :23:56.We will invoke Article 50 no later than the end of March next year.

:23:57. > :24:00.APPLAUSE. And Brexit means Brexit which means

:24:01. > :24:04.what exactly? We voted to leave the European Union

:24:05. > :24:09.and become a fully independent sovereign country. We will do what

:24:10. > :24:14.independent sovereign countries do. We will decide for ourselves how we

:24:15. > :24:20.control immigration, and we'll be free to pass our own laws. But we

:24:21. > :24:22.will seek the best deal possible as we negotiate a new agreement with

:24:23. > :24:27.the European Union. APPLAUSE.

:24:28. > :24:33.Then there was the big we veal, the Great Repeal Bill. We'll soon put

:24:34. > :24:39.before Parliament a Great Repeal Bill which will remove from the

:24:40. > :24:48.statute bobbing once and for all the European Communities Act.

:24:49. > :24:52.This historic Bill which will be included in the next Queen's Speech

:24:53. > :24:57.will mean the 1972 Act, the legislation that gives direct effect

:24:58. > :25:01.to all EU law in Britain will no longer apply from the date upon

:25:02. > :25:06.which we formally leave the European Union. And its effect will be clear.

:25:07. > :25:10.What about the three Brexit ears, the trio of Government ministers who

:25:11. > :25:15.had to draw up the detailed plans for all of this? David Davis, the

:25:16. > :25:18.Brexit secretary, Liam Fox the international trade secretary and

:25:19. > :25:21.Boris Johnson, the Foreign Secretary. Rumour is they have been

:25:22. > :25:26.told to bite their tongues and not talk to the media much this week.

:25:27. > :25:30.We'll see. Dr Fox, are you keep ago

:25:31. > :25:35.low-profile, have you been told to? Does this look like a low-profile to

:25:36. > :25:39.you? Are you going to come on the programme? Not at the moment. Are

:25:40. > :25:42.you allowed to do interviews. People are saying you have been sat on and

:25:43. > :25:49.you are not allowed to talk to the media? Who, me? Quite fast there,

:25:50. > :25:54.David Davis! No proper interview bus two out of the three did give

:25:55. > :25:59.speeches as part of Brexit Sunday. I know some people suggest we should

:26:00. > :26:02.ignore the rules, tear up the treaties, I say that's not how

:26:03. > :26:07.Britain behaves. What kind of message would that send

:26:08. > :26:14.to the rest of the world? If we want to be treated with good will, we

:26:15. > :26:21.must act with good will. I think that vote on June 23rd, I

:26:22. > :26:25.think that was a vote for economic and political freedom and freedom

:26:26. > :26:30.for this country. APPLAUSE.

:26:31. > :26:33.And, at a packed fringe event, Liam Fox revealed he shed a tear on

:26:34. > :26:38.referendum night when he realised his side had won.

:26:39. > :26:42.That was Brexit Sunday, the Tories just hope this conference doesn't

:26:43. > :26:47.turn into Brexit Monday, Brexit Tuesday and Brexit Wednesday too.

:26:48. > :27:05.Our Adam reporting there. We are joined by our guests now.

:27:06. > :27:10.Dominic Grieve, we know when Article 50 will be triggered and we know the

:27:11. > :27:14.1972 Act, everything in that will be put on to the British stat due book.

:27:15. > :27:20.Are you happy with that approach? Putting the 72 Act on to the statute

:27:21. > :27:24.book, it's indispensable if we are leaving but it doesn't answer the

:27:25. > :27:28.question for business about what the relationship with the EU from

:27:29. > :27:33.outside will be thereafter. Bear in mind that the moment we put it in

:27:34. > :27:37.the statute book, after we leave, divergence will start to occur

:27:38. > :27:41.immediately. I think the key issue for business is, what will be the

:27:42. > :27:47.framework of our relations with the EU from outside of it which will

:27:48. > :27:52.enable them to carry on trading. So in a sense, the great Repeal Act is

:27:53. > :27:59.I think important, but it's not the central part of Brexit. When do we

:28:00. > :28:03.get to know, Bernard Jenkin, even a rough idea of what our relationship

:28:04. > :28:15.will be with the single market once we've left? If we have talks and

:28:16. > :28:22.reach constructive agreement, we'll tidy up all the things like

:28:23. > :28:27.agriculture, fishing data and mobile telephones and civil aviation, but

:28:28. > :28:33.hope will 'll also be an interim agreement to keep the tariffs at

:28:34. > :28:37.zero, to keep the services sector open on both sides, so that we have

:28:38. > :28:42.to time to develop a comprehensive economic partnership over a much

:28:43. > :28:47.longer period. The European Union's problem is two fold. First of all,

:28:48. > :28:51.they tend to take a very long time to develop trading relationships. I

:28:52. > :28:58.mean, how long has TTIP been doing and how long has it taken to do the

:28:59. > :29:02.that nayedian deal, six years, a very long time -- Canadian deal. It

:29:03. > :29:18.requires Norwich Union any morety and ratification by all member

:29:19. > :29:23.states. We can't -- unanimity. What do you say? I don't disagree about

:29:24. > :29:27.the sort of frustrations that we may encounter in the course of

:29:28. > :29:33.negotiating Brexit. But the bottom line is that we are in meshed

:29:34. > :29:40.economically with our European partners -- enmeshed. Unless we want

:29:41. > :29:45.a chaotic Brexit at the end of it, meaning we refer to a WTO

:29:46. > :29:49.membership, we are going to have to build structures which will fetter

:29:50. > :29:51.us to some extent. It doesn't matter how you do it that,'s how

:29:52. > :29:56.international relations are conducted. I always worry that

:29:57. > :30:00.there's an element of fantasy about Brexit, but somehow this wonderful

:30:01. > :30:05.moment comes, you have the Great Repeal Bill, the day comes when we

:30:06. > :30:09.leave and suddenly there is a brave new world, there isn't. It's a world

:30:10. > :30:16.of complex, commercial relationships underpinned by new treaties, just as

:30:17. > :30:19.we had old treaties, and whilst it's true the new treaties may not be

:30:20. > :30:24.Raing litted bay the European Court of Justice so we escape some of the

:30:25. > :30:28.mechanisms of the EU, actually it will be replaced by new apparatus,

:30:29. > :30:30.just as the international relations commercially with other states

:30:31. > :30:34.outied the EU is regulated at present. He doesn't seem to think

:30:35. > :30:39.it's worth a candle in other words? He was on the other side of the

:30:40. > :30:42.debate. The point is that we could have a much simpler and more

:30:43. > :30:46.straightforward relationship. The model might be the kind of

:30:47. > :30:50.relationship that Canada has with the United States. The United States

:30:51. > :30:53.Supreme Court doesn't make laws in Canada, the congress doesn't make

:30:54. > :30:56.laws in can dasmt It's a Free Trade Agreement. Is that what you would

:30:57. > :31:01.like? Yes, that is what we want. What is wrong with that? Nothing.

:31:02. > :31:06.But if you look at the reality of the Canadian US Free Trade Agreement

:31:07. > :31:10.because of the preponderance of economic power on one side of that

:31:11. > :31:15.equation, it's one which ultimately gets driven by the larger partner.

:31:16. > :31:21.You can't escape that. There is no pressure in Canada to come out. If

:31:22. > :31:26.anything, the pressure is in America to do it away.

:31:27. > :31:33.It is vital to their national interests, but when we voted to

:31:34. > :31:38.leave, I myself have never quite seen it as independent data --

:31:39. > :31:44.Independence Day, because it seems to me we live in an independent

:31:45. > :31:47.world, and what some people aspire to with Brexit is unlikely to be

:31:48. > :31:51.realised and so we have got the hard-headed and pragmatic about what

:31:52. > :31:59.we want to achieve and how we achieve it. We Road need to submit

:32:00. > :32:05.to the European court of justice as we do at the moment, that will give

:32:06. > :32:13.us our independence -- we won't need to submit. We will need to decide

:32:14. > :32:19.for ourselves. United Kingdom imports far more from the Europeans

:32:20. > :32:23.than we export and so they have a huge vested interest. Yes, we had

:32:24. > :32:31.that in the campaign, but from everything you say, you accept that

:32:32. > :32:38.if you don't want to be... You want to end freedom of movement. You are

:32:39. > :32:45.not going to be a member of the single market. That's impossible

:32:46. > :32:49.now? Yes, no doubt about it. You replace it with a free trade

:32:50. > :32:54.agreement? Yes, that might take some time. The interim arrangement might

:32:55. > :32:58.not be for me agreed, we might just say, until we have a agreement we

:32:59. > :33:06.will keep our tariffs at zero and keep our borders open for such and

:33:07. > :33:11.such. If we said we are open, you can carry on trading with us and

:33:12. > :33:17.selling your stuff tariff free, but then they say, no, we are going to

:33:18. > :33:34.put up tariffs, what is the European Union going to look like? It will

:33:35. > :33:41.destroy the British kind as to. -- car industry. It is perfectly

:33:42. > :33:49.reasonable that we are offsetting, if we are raising that revenue, we

:33:50. > :33:55.are spending on making this a very attractive country for investment.

:33:56. > :34:00.Subsidies? But subsidies. Increasing training grants, grants for research

:34:01. > :34:05.and element, many positive things we can do within the state aid rules.

:34:06. > :34:07.Our biggest individual export country is the United States, and we

:34:08. > :34:15.don't have a free-trade agreement with them. Our rules are already

:34:16. > :34:19.very enmeshed with Europe, could we not move quite quickly if there was

:34:20. > :34:23.goodwill on both sides to do a free-trade agreement? That is

:34:24. > :34:31.possible, and I would be very much in favour of trying to achieve it,

:34:32. > :34:38.but... You accept we can't be in the single market as a member? We could

:34:39. > :34:42.be if we are prepared to accept the restraints, but I understand it

:34:43. > :34:44.might be possible for us to negotiate a status for the United

:34:45. > :34:50.Kingdom which is somewhat different for other countries, all those

:34:51. > :34:57.things are possible. You can't be in the single market without being

:34:58. > :35:01.subject to the ECJ? You would be subject to what is in effect the

:35:02. > :35:08.younger brother of the ECJ and you would lose the influence in the

:35:09. > :35:11.formulation of the regulations. I'm a pragmatist, but the reality of

:35:12. > :35:16.trade and mutual interdependency is that you have to accept a framework

:35:17. > :35:22.of rules and if you don't the question is, what will the economic

:35:23. > :35:27.consequences be, and in my constituency I have companies there

:35:28. > :35:30.because they have access to the single market and if they don't have

:35:31. > :35:34.access to the single market they will move away. They will have

:35:35. > :35:39.access, but they don't know what terms, so why should any

:35:40. > :35:44.multinational at the moment, wondering where to expand next,

:35:45. > :35:48.bring their foreign investment to Britain until everything you have

:35:49. > :35:55.been talking about has been resolved? That is why there will be

:35:56. > :35:59.pressure not so much on hard and soft, but quick, and click means

:36:00. > :36:07.simple and simple means not getting involved in unanimity provisions, it

:36:08. > :36:13.means offering a unilateral deal to the EU, pending a longer-term deal,

:36:14. > :36:20.but it also means gives the few giving assurances to investors. We

:36:21. > :36:35.could call that the make the Chancellor Philip Hammond said

:36:36. > :36:39.he was hoping to break with austerity policies to an extent,

:36:40. > :36:45.from his predecessor, but by how much we don't know, we have got to

:36:46. > :36:49.wait for the Autumn Statement. The British people elected us on a

:36:50. > :36:53.promise to restore fiscal discipline and that is exactly what we are

:36:54. > :36:57.going to do. But we will do it in a pragmatic way. In a way which

:36:58. > :37:02.reflects the new circumstances we face. The fiscal policies George

:37:03. > :37:08.Osborne set out were the right ones for that time. But when times

:37:09. > :37:13.change, we must change with them. So we will no longer target a surplus

:37:14. > :37:24.at the end of this Parliament. But make no mistake the task of fiscal

:37:25. > :37:31.consolidation must continue. Right. That was the Chancellor and are now

:37:32. > :37:35.joined -- I'm now joined by David Gauke. The Chancellor boasted about

:37:36. > :37:42.the recovery that has happened under this government, but the fact is,

:37:43. > :37:49.GDP per capita has barely moved in the last six years. It is the case

:37:50. > :37:54.that of the G-7 countries GDP as a whole has grown fast in the UK than

:37:55. > :37:58.any other. Partly because of the amount of immigration that has taken

:37:59. > :38:04.place, that you have said you will stop. If you divide the GDB by the

:38:05. > :38:11.number of people in the country, compared to 2010, it has barely

:38:12. > :38:15.grown at all -- GDP. We inherited a difficult set of challenges in terms

:38:16. > :38:21.of the public finances and in terms of the after-shocks of the financial

:38:22. > :38:26.crisis and the Eurozone crisis which had a significant impact upon the

:38:27. > :38:37.us. Over that period we have seen a large creation of the number of jobs

:38:38. > :38:43.and GDP growth has been significant. But not per head. We were faced with

:38:44. > :38:48.problems of the year is own crisis in 2012 and the after effects of the

:38:49. > :38:53.financial shocks which meant funding for businesses was very difficult --

:38:54. > :38:58.the problems of the Eurozone crisis in 2012. UK has been growing

:38:59. > :39:04.strongly by any measure you want to look at. But not by GDP per head,

:39:05. > :39:09.that is my point. One of the reasons is that for most of the time you

:39:10. > :39:14.have been in power real wages have fallen, they have not grown, so

:39:15. > :39:17.people have been overall worse off in terms of the money they have

:39:18. > :39:27.raised in Germany and France, where real wages have risen. To some

:39:28. > :39:32.extent, if you are making a comparison with France and Germany,

:39:33. > :39:34.real wages in the context where we have seen a very substantial

:39:35. > :39:38.increase in the Labour force, which has not been the case in France and

:39:39. > :39:43.Germany in the same way, so there has been away in which there has

:39:44. > :39:47.been a trade-off between the two. It begs the question, what do we do

:39:48. > :39:55.about it? As Paul Johnson said, if you want to drive up real wages this

:39:56. > :39:58.is about driving up productivity and much of the speech today from Philip

:39:59. > :40:01.Hammond was about how we can improve productivity, that is a long-term

:40:02. > :40:07.challenge and we have taken steps over the last six years but there is

:40:08. > :40:13.more to do. So far with no impact. If you are looking at improving the

:40:14. > :40:20.skills base, that is something which isn't going to be a matter which is

:40:21. > :40:25.solved in three, four, five, even six years, that's a long-term

:40:26. > :40:29.project. If we are looking at encouraging more investment in the

:40:30. > :40:32.UK and our policies on corporation tax for example have attracted more

:40:33. > :40:34.investment to the UK, but the benefits of that investment is

:40:35. > :40:40.something you see over a long period of time. Because something is

:40:41. > :40:45.long-term, it doesn't mean that governments should not focus on it.

:40:46. > :40:50.You might expect to see glimmers of progress, but UK productivity per

:40:51. > :40:59.hour has not changed since 2007. It has not moved now in nine years. One

:41:00. > :41:07.of the particular factors, you have used 2007 as a base point, it is a

:41:08. > :41:10.reasonable point to make. The hit of the financial crisis on our

:41:11. > :41:15.productivity was very considerable and continues to be considerable.

:41:16. > :41:19.The question is, how do we improve our productivity which marked the

:41:20. > :41:24.focus on our infrastructure and skills and attracting investment to

:41:25. > :41:33.the UK, that has got to be the way forward. But you have slashed

:41:34. > :41:37.infrastructure spending. We inherited a reduction in

:41:38. > :41:46.infrastructure spending. Of course. But as a bit -- centage of GDP it in

:41:47. > :41:50.fact declined to little bit and compare to other countries it is

:41:51. > :41:56.rather small -- but as a percentage of GDP. If you look at government

:41:57. > :42:00.spending in infrastructure and along with PPP, the UK is comparator with

:42:01. > :42:03.other countries, but there is more we need to do to encourage private

:42:04. > :42:10.sector investment in infrastructure, but the reality is the government...

:42:11. > :42:13.If you look at transport, we have a set actual increase in the roads

:42:14. > :42:17.budget over the course of this Parliament, it will be increasing by

:42:18. > :42:23.three times over this period, we are investing more in the railways, for

:42:24. > :42:28.any time since Victorian times, and so we are increasing expenditure

:42:29. > :42:32.especially in that high-value infrastructure where there is good

:42:33. > :42:36.economic return. What the Chancellor made reference to today, his

:42:37. > :42:40.enthusiasm to look at ways in which we can do that consistent with a

:42:41. > :42:45.commitment to getting the public finances under control. How can you

:42:46. > :42:48.be the self-styled workers party win 6 million working people in this

:42:49. > :42:54.country are less than the living wage? We are in a position where we

:42:55. > :42:57.have created a lot of jobs in this country and we have brought in the

:42:58. > :43:05.national living wage and that is providing a significant pay rise to

:43:06. > :43:10.millions of people. We have cut taxes for the low paid and taken

:43:11. > :43:15.millions out of income tax. 6 million people earning less than the

:43:16. > :43:22.living wage, defined as ?9 15 in London and ?7 85 elsewhere in the

:43:23. > :43:26.UK. Not much money for people at this conference, but 6 million

:43:27. > :43:31.people earn less than that. That can't be right for a self-styled

:43:32. > :43:37.workers party. What you do about it? That is your job. I will answer it.

:43:38. > :43:44.You make sure those people pay less in tax and you make sure you have a

:43:45. > :43:50.higher national living wage then you would otherwise do, but I come back

:43:51. > :43:54.to this point, if we want to have a high wage, high skill economy, we

:43:55. > :43:59.have got to make sure we have the environment to improve our skills

:44:00. > :44:02.and our infrastructure, and it is very important, that we are a

:44:03. > :44:07.country which continues to create jobs. Our record in the last six

:44:08. > :44:13.years over job creation as a country is extremely strong by any

:44:14. > :44:17.standards, historical or international, and it is good that

:44:18. > :44:23.we are not a society that is played with mass unemployment. But again,

:44:24. > :44:28.you are the self-styled workers party, Philip Hammond said this and

:44:29. > :44:34.Theresa May said at yesterday, but UK workers in fact work longer hours

:44:35. > :44:41.for less pay than the other... The original EU 15, so what is the

:44:42. > :44:45.workers party doing about that? The reason why that is the case, as the

:44:46. > :44:49.Chancellor made clear, that is because our productivity levels are

:44:50. > :44:56.not as high as a number of our competitors. It comes back to this

:44:57. > :45:00.point, sometimes worthy... Philip made the point about it will not set

:45:01. > :45:04.the pulses racing, but how do we improve productivity as a nation.

:45:05. > :45:10.Which hasn't changed since you came to power. These are long-term

:45:11. > :45:14.challenges, but what we saw from the Chancellor, in a very serious and

:45:15. > :45:17.thoughtful speech, was outlining ways in which we can improve that

:45:18. > :45:21.productivity and how we can make long-term decisions to make sure

:45:22. > :45:23.that the UK's productivity increases and it is true that that we benefit

:45:24. > :45:31.people's wages. Abdeslam Ab For six years, or more

:45:32. > :45:36.than six years, in the run-up to the election, your party told us that

:45:37. > :45:40.the guiding light in its welfare reforms and its attitude to the

:45:41. > :45:45.economy would be to make work pay, that if you got a job, and if you

:45:46. > :45:52.did the right thing which Mr Osborne used to say all the time, it would

:45:53. > :45:59.pay to work. And yet six years after you'd been in power, 50% of Pellow

:46:00. > :46:04.citizens who're in poverty have at least one family member in work. So

:46:05. > :46:08.in what way has that made work pay? They are working and they live in

:46:09. > :46:13.poverty? Well, what we have seen is a significant increase in the number

:46:14. > :46:17.of jobs in this country. Something like 2.7 million more jobs. But they

:46:18. > :46:27.are still in poverty? In this economy, one of the reasons why we

:46:28. > :46:32.have had this, and it's undoubtedly a success, in the last six years,

:46:33. > :46:36.employment numbers are as high as they are. One of the reasons is

:46:37. > :46:39.because welfare reform has played a part. More people are essentially

:46:40. > :46:43.seeing that it's worthwhile for them working. Now, is there still more to

:46:44. > :46:48.do, of course there is. I'm acknowledging that. It's not just a

:46:49. > :46:53.case of more to do, relative poverty, which is still the official

:46:54. > :47:00.measure of this Government, relative poverty among those in work is at

:47:01. > :47:04.record levels. Record levels. How does that make you, the workers

:47:05. > :47:10.party? The workers party are going to revolt if you carry on like this?

:47:11. > :47:14.We are seeing a reduction in the number of workless households. I

:47:15. > :47:18.understand that. My point is in-work poverty, you said work would pay.

:47:19. > :47:27.Make work pay, get a job, do the right thing and you will prosper in

:47:28. > :47:32.a Tory Britain, whereas among those who are in work, poverty, is at

:47:33. > :47:36.record levels? What we are seeing is people who previously would have

:47:37. > :47:41.been workless are now in employment. That's got to be a good thing. Now,

:47:42. > :47:45.the next challenge, if you like, is how do we ensure those people who

:47:46. > :47:49.perhaps in a previous era would have been out of work, they are now in

:47:50. > :47:53.work but not earning sufficient. The next challenge is to ensure that

:47:54. > :47:57.those people go on and earn more. Again, I come back to, how do you do

:47:58. > :48:00.that? You can improve their living standards by taking them out of

:48:01. > :48:05.income tax which we have done in four million cases. These figures

:48:06. > :48:11.take that into account? You can help them by having a national living

:48:12. > :48:14.wage whereby they are better paid and we introduced that. Taken that

:48:15. > :48:18.into account? That will increase over the course of the Parliament.

:48:19. > :48:22.But fundamentally, what you can do is ensure that we have got more

:48:23. > :48:31.people who're highly skilled and that we have a society that is more

:48:32. > :48:37.productive and that increase in product Ity ends up benefitting

:48:38. > :48:41.People who're working, that is the point the Chancellor was making. I

:48:42. > :48:44.know you can't give us any more details because we have to wait for

:48:45. > :48:48.the Autumn Statement in November. But are we going to borrow more to

:48:49. > :48:55.invest? As a Jens principle? I would make

:48:56. > :48:58.two points about the Autumn Statement -- as a general principle.

:48:59. > :49:02.The acknowledgement because of the uncertainty of the Brexit votes,

:49:03. > :49:08.it's likely tax receipts will be lower than was previously projected,

:49:09. > :49:12.so that means that we are not in a position to meet our 2019-2020

:49:13. > :49:18.surplus. So the deficit reduction will continue to increase but at a

:49:19. > :49:21.slower pace. So it might not even continue to reduce? We'll see what

:49:22. > :49:25.the Office for Budget Responsibility determines and we await their

:49:26. > :49:30.numbers. So that's the first point. The second point is that we are in a

:49:31. > :49:35.set of circumstances where interest rates are very low. The way the

:49:36. > :49:39.markets have moved, we can borrow more cheaply than previously. If

:49:40. > :49:45.there is a case for high value infrastructure, and we have to be

:49:46. > :49:48.pretty tough about this, this is not about relaxing day-to-day spending

:49:49. > :49:51.but if there is a case for high value infrastructure that allows

:49:52. > :49:54.long-term productivity, then, as the Chancellor made clear, we'll be

:49:55. > :49:58.willing to look at that. Thank you very much for coming to speak to us

:49:59. > :50:01.after the Chancellor's speech. This Autumn Statement is on November 23rd

:50:02. > :50:08.and we'll bring it all to you here on the Daily Politics on BBC Two,

:50:09. > :50:15.probably from, about 11. 30-3 o'clock. Earlier, the Communities

:50:16. > :50:21.Secretary made his speech to conference so let's have a listen to

:50:22. > :50:26.some of what Sajid Javid had to say. 1.5 million households contain at

:50:27. > :50:30.least one adult who says he or she would love to buy or rent their own

:50:31. > :50:36.home but they have simply not been able to afford to do so. Harold

:50:37. > :50:41.Macmillan put it best more than 90 years ago. Housing is not a question

:50:42. > :50:51.of conservativism or socialism, he said, it's a question of humanity.

:50:52. > :50:56.Tackling this housing short fall isn't about political expediency.

:50:57. > :51:02.It's a moral duty. It's one that falls on all of us,

:51:03. > :51:08.not just in Parliament, but on businesses, if Local Government and

:51:09. > :51:14.in local communities. I'm not afraid to stand up here and say that this

:51:15. > :51:22.country has not built enough homes. We have to be honest about it.

:51:23. > :51:27.In the last year of full records, we managed to deliver more than 170,000

:51:28. > :51:32.additional properties across England. It's not a bad number, but

:51:33. > :51:38.it's far fewer than we need. We need to do much better.

:51:39. > :51:46.Everyone agrees that we need more homes. Too many of us object to them

:51:47. > :51:52.being next to us. We have got to change that attitude.

:51:53. > :52:00.So my message today is clear - it's time to get building.

:52:01. > :52:03.APPLAUSE. There was Sajid Javid announcing

:52:04. > :52:11.beefing up the housing programme and getting the numbers behind the

:52:12. > :52:16.current rate of completion about 138,000 in England.

:52:17. > :52:18.So the motto of the conference here is "a country that

:52:19. > :52:20.works for everyone", echoing Theresa's May's

:52:21. > :52:23.on Downing Street when she first became Prime Minister.

:52:24. > :52:25.We're joined now by the former universities

:52:26. > :52:30.He's now executive chair of the Resolution Foundation,

:52:31. > :52:32.a think tank which focuses on living standards.

:52:33. > :52:43.Plenty of rhetoric about being the workers' party and a country that

:52:44. > :52:46.works for everyone. But I think you heard my interview with David Gauke,

:52:47. > :52:51.there is a long way to go to turn that rhetoric into reality? There

:52:52. > :52:54.is. David was right to say that productivity is a key part of the

:52:55. > :52:58.challenge. But there is another part of the challenge which is what Sajid

:52:59. > :53:02.was talking about, the work resolution shows housing costs are

:53:03. > :53:07.one of the big pressures on living standards for people on low incomes.

:53:08. > :53:12.The increase in the housing cost, it looks to be the equivalent of about

:53:13. > :53:15.a 14p increase in income tax. If we can get more housing built and

:53:16. > :53:19.because there is an increase in supply, see over time the cost of

:53:20. > :53:23.housing starts falling, people will feel that as an improvement in their

:53:24. > :53:27.living standards, their wages will go further, the moment low income

:53:28. > :53:32.families have to put more of their wages into rents. Both in the

:53:33. > :53:35.private and public sector. Yes. And also, I was looking at the figures

:53:36. > :53:42.and because we failed to build enough houses to meet the demand,

:53:43. > :53:45.the Housing Benefit bill has gone through the roof because people on

:53:46. > :53:50.average incomes can't afford these rents so the state has to subsidise?

:53:51. > :53:54.Yes, you are absolutely right. It's a double hit? There are more people

:53:55. > :53:58.on means tested benefits and if people go from youth into middle age

:53:59. > :54:02.and are still renters, the long-term challenge is what if you have got

:54:03. > :54:05.many pensioners who aren't owner occupiers and millions of pensioners

:54:06. > :54:09.claiming Housing Benefit so it actually makes sense in terms of

:54:10. > :54:12.getting a long-term grip on public spending to make it easier for

:54:13. > :54:15.people to own their own homes. That's why I think what Sajid said

:54:16. > :54:19.today was absolutely the right thing. Shouldn't there be massive

:54:20. > :54:23.council house building programmes? It's interesting you should say

:54:24. > :54:31.that. When I look at what the Conservative Party did in the

:54:32. > :54:36.1950s... 300,000 houses a year, Harold Macmillan Housing Minister

:54:37. > :54:43.Yes, and he did private house building and public house building,

:54:44. > :54:47.a combination. With Sajid's statement today, private building is

:54:48. > :54:53.not on itself going to get us enough houses. Some will have to be public

:54:54. > :54:58.sector building. Here in Birmingham, they put up lots of prefabs in the

:54:59. > :55:03.50s, they needed to do something to house people and we need that. Not

:55:04. > :55:07.prefabs, I assume? There is a debate about whether we can make the cost

:55:08. > :55:09.of building houses lower, that is a different story but certainly we are

:55:10. > :55:14.seeing this Government focus on getting more houses built. One issue

:55:15. > :55:18.on the housing issue, and you are right, housing is such an issue on

:55:19. > :55:22.poverty and benefits and on people's ability to get on as well, but not

:55:23. > :55:27.only do we fail to provide enough houses for our people, even we we

:55:28. > :55:32.do, we build the smallest new homes in the European Union. 76 square

:55:33. > :55:40.metres is the average size. Even in Denmark it's 137, Holland, which is

:55:41. > :55:43.so crowded they have to reclaim the sea, 115 square metres, we treat

:55:44. > :55:47.people badly in the regard. That is because the price of land is so

:55:48. > :55:51.high. The big cost of the house is the cost of the land. When you have

:55:52. > :55:54.highly restrict i planning arrangements which mean the smaller

:55:55. > :55:59.areas you can build on, that pushes up the price. Sajid said an

:56:00. > :56:02.important thing today, he's focussing on more brown field

:56:03. > :56:07.building, high streets where you have had shots in the past, perhaps

:56:08. > :56:10.that's where you can in-fill with flats, houses, places we have not

:56:11. > :56:16.assumed we can build on before, we can build there. If I had a pound

:56:17. > :56:23.for every time politicians say they would build on brown field sites, I

:56:24. > :56:30.may well be able to build on the brown field site -- able to pay for

:56:31. > :56:34.the build myself! The Brown record was poor, this

:56:35. > :56:42.Government's record is actually in many ways so far worse than pretty

:56:43. > :56:47.poor, so look, most of the demand for new homes is biggest in those

:56:48. > :56:51.areas that are run by the Tories, by the people at this conference. Yes.

:56:52. > :56:55.And they don't want to zone their land for a lot more houses so you

:56:56. > :57:00.are looking at the problem, that's the fundamental problem? I would say

:57:01. > :57:06.that where we can do more is that the policy measures have tended to

:57:07. > :57:10.be on the demand side, helping couples with the cost. We have got

:57:11. > :57:13.to get more built. If you lack at what the Government is proposing,

:57:14. > :57:17.it's going to be easier to build on public sector land. There's going to

:57:18. > :57:23.be more liberalisation of the planning regime so you can build on

:57:24. > :57:26.areas that have had empty shots and things. We can shift focus to

:57:27. > :57:33.getting more built, not just helping people with the costs by extra

:57:34. > :57:36.allowances. You heard me talking to David Gauke about the number of

:57:37. > :57:40.people in jobs, they're very much the working poor. One thing that

:57:41. > :57:45.would help the working poor? Once you are in work, making it easier to

:57:46. > :57:49.move on and move up and using the apprenticeship levy to help people

:57:50. > :57:56.into training and devolving it to local towns and cities. So local

:57:57. > :57:59.skills? Yes. Shifting people off unemployment into work, sadly too

:58:00. > :58:03.often it's low-paid, the next thing is to help them move to better paid

:58:04. > :58:07.jobs. Are you enjoying being in the think-tank rather than being in the

:58:08. > :58:12.thick of it? Well, I was in think-tanks before I was at the

:58:13. > :58:16.Centre for Policy Studies. I'm enjoying write am and we are

:58:17. > :58:20.contributing to the debate. Thank you very much for joining us on the

:58:21. > :58:24.Daily Politics conference special. That's it from us in Birmingham

:58:25. > :58:28.after two hours of broadcasting. I'll be back with highlights from

:58:29. > :58:32.today's conference, including the Chancellor's speech on BBC Two this

:58:33. > :58:37.evening just after Newsnight, around 11. 15. We'll have more live

:58:38. > :58:41.coverage here from what is still a sunny Birmingham here at the

:58:42. > :58:45.Conservative Party conference, as they move on to their second day, or

:58:46. > :58:50.is it their third. I never know if we count Sundays these days, anyway,

:58:51. > :58:52.we'll be here tomorrow building up to the big speech by the Prime

:58:53. > :58:54.Minister which will close this conference on Wednesday morning.

:58:55. > :58:59.Until then, bye.