03/10/2016: Conservative Party Conference Daily Politics


03/10/2016: Conservative Party Conference

Andrew Neil is live from Conservative party conference in Birmingham as chancellor Phillip Hammond takes to the stage, he is joined by David Gauke and Matthew Hancock.


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Transcript


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Welcome to a sunny Birmingham where in half an hour

:00:07.:00:09.

the new Chancellor - Philip Hammond - will make his

:00:10.:00:11.

Why is he ditching George Osborne's budget deficit targets?

:00:12.:00:50.

Philip Hammond will tell the Conference that he's easing off

:00:51.:01:00.

the pace of deficit reduction and plans to borrow more to invest.

:01:01.:01:03.

But what's changed in the economy to justify this change

:01:04.:01:06.

The Chancellor will pledge ?3 billion of public money

:01:07.:01:11.

But is this all new money, how many new homes and will it be

:01:12.:01:17.

anywhere near enough to solve the housing crisis?

:01:18.:01:22.

"A country that works for everyone" that's the motto emblazoned all over

:01:23.:01:26.

the Conference centre here - but how can Theresa May's

:01:27.:01:29.

ambitious rhetoric on social justice be achieved?

:01:30.:01:34.

And they've been a little reluctant to come to me -

:01:35.:01:38.

so we sent our Adam out to hunt down the three Brexiteers.

:01:39.:01:43.

. John Fox, have you been told to keep a low profile? -- doctor Fox.

:01:44.:01:51.

It looks like a low profile to me! All that coming up

:01:52.:01:55.

in the next two hours in this Daily Politics

:01:56.:01:58.

Conference Special. Philip Hammond, the new Chancellor,

:01:59.:02:08.

will get to his feet in half an hour. We will bring you that live

:02:09.:02:12.

and uninterrupted. Here with me now though -

:02:13.:02:17.

two of the best political minds here to chew over the news

:02:18.:02:20.

from Conference so far. They have put large amounts of money

:02:21.:02:27.

in my bank account for me to say that! LAUGHTER

:02:28.:02:28.

The Guardian's Political Editor Anushka Asthana and the Times

:02:29.:02:30.

Yesterday we had the Brexit announcement yesterday, the Prime

:02:31.:02:38.

Minister is hoping that will go away today, but where are we now?

:02:39.:02:43.

Regarding Brexit. Theresa May is a very popular woman with the right of

:02:44.:02:49.

her party and if you read it today with the Daily Mail, this lady's not

:02:50.:02:54.

for turning. They did not take very long to mentioning her steel capped

:02:55.:02:59.

shoes, I notice. What did she actually say? She said immigration

:03:00.:03:04.

is going to be a priority, something we knew, she said the European court

:03:05.:03:10.

of justice will be, as well, but she let herself open after that, we

:03:11.:03:13.

don't really know what the Brexit deal is going to look like that we

:03:14.:03:18.

will be pushing for. We do know, even though they won't say it about

:03:19.:03:21.

when we add up everything that has been said, we will not fall under

:03:22.:03:27.

the jurisdiction of the ECJ and we want a free trade deal and we want

:03:28.:03:31.

the end of free movement. We are out of the single market in the sense of

:03:32.:03:36.

being a member, even though we will have access, but they know we can't

:03:37.:03:42.

stay in it. That is right. What she is doing something David Cameron

:03:43.:03:45.

didn't do when he was trying to renegotiate our relationship with

:03:46.:03:49.

the European Union, he never said if you don't give me a good deal on

:03:50.:03:53.

prepared to say to the British people we should leave. Theresa May

:03:54.:03:59.

is saying to, our European counterparts, if you don't give me

:04:00.:04:04.

anything, we are still going. She is saying she still going to deliver on

:04:05.:04:08.

her promise to control borders. What she is hoping the European leaders

:04:09.:04:11.

will give us is a better deal than some of the critics think at the

:04:12.:04:16.

moment. She is going to ask for the moment to begin with. I think she

:04:17.:04:21.

will still ask to be in the single market, despite not meeting any of

:04:22.:04:27.

the criteria -- ask for the moon. Is there any concern, when it comes to

:04:28.:04:35.

putting this repeal of the European community's act through Parliament

:04:36.:04:41.

that she will be in trouble? I don't think MPs in Parliament will vote

:04:42.:04:44.

against the idea of repealing the European Community 's act because

:04:45.:04:48.

everyone knows there has been a referendum and everyone knows what

:04:49.:04:52.

the outcome was. MPs will not be churlish not to say they will vote

:04:53.:04:55.

against that as an idea, but what this allows people to do is to amend

:04:56.:05:01.

the legislation as it goes to Parliament and maybe to cause a bit

:05:02.:05:06.

of trouble. This boat will only happen after Article 50 is

:05:07.:05:10.

triggered, Britain is already on the debate about -- this vote.

:05:11.:05:16.

Parliament will not in that vote be able to stop Brexit from happening,

:05:17.:05:19.

they would just be able to potentially amend its character.

:05:20.:05:26.

Very strong words from Theresa May, saying that MPs cannot have a vote

:05:27.:05:30.

on trigger 50. What about in the House of Lords? It is six to just

:05:31.:05:40.

one in favour of Remain. It is not off the agenda, there is plenty of

:05:41.:05:46.

pretext, if her agenda is being frustrated by anyone, you are right

:05:47.:05:50.

to highlight the House of Lords, but she can go to an election and said

:05:51.:05:55.

she wants a mandate to deliver her social and Brexit agenda. Lots

:05:56.:06:09.

of course the government is hoping we will stop talking about Brexit

:06:10.:06:14.

for the duration of this conference. So the Chancellor Philip Hammond has

:06:15.:06:21.

said that he'll ease off But what do Conference goers

:06:22.:06:23.

here think about progress We sent Adam out with

:06:24.:06:26.

his balls to find out. When George Osborne was Chancellor

:06:27.:06:34.

he was all about driving down the deficit and even getting the public

:06:35.:06:38.

finances into surplus but Philip Hammond seems less bothered, but

:06:39.:06:42.

what about people at the conference? Do they want to ease off with

:06:43.:06:48.

deficit reduction? Hang up the phone and do the mood box. One of the

:06:49.:06:54.

Brexit ministers will stop I will go for ease off because of Brexit.

:06:55.:07:01.

Before that I was crackdown. I think George Osborne did a good job, but

:07:02.:07:06.

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

:07:07.:07:13.

obsessed with cuts? Maybe. I'm going to stop you there, Andrea, would you

:07:14.:07:20.

like to have a go at The Daily Politics, would you like to have a

:07:21.:07:26.

go at The Daily Politics, would you like to have a go at The Daily

:07:27.:07:29.

Politics, would you like to have a go at The Daily Politics, would you

:07:30.:07:32.

like to have a go at The Daily Politics balls? Are you politely

:07:33.:07:35.

dismissing my balls? You cannot run a country on a deficit budget. We

:07:36.:07:43.

need to finish what we have started. I suppose you are allowed to read

:07:44.:07:46.

that now he has gone. You weren't allowed to read that last year.

:07:47.:07:54.

Thank you very much. Cracked on. Is there more that can be cut from the

:07:55.:08:02.

public finances? Yes. Such as? Some areas of the health service. You

:08:03.:08:08.

want to cut the NHS? No, but I want to cut the administrators. George

:08:09.:08:17.

Osborne has the edge, I think. Should we have a surplus for 2020?

:08:18.:08:24.

If we can, definitely. Don't abandon the target and keep going. Why are

:08:25.:08:30.

you watching that Boris Johnson speech when you could be doing The

:08:31.:08:37.

Daily Politics balls? Are ministers able to do this without Prime

:08:38.:08:42.

Minister real authority gritter Mark of course. -- primer ministerial

:08:43.:08:53.

authority? What does this mean? It is about the deficit reduction. We

:08:54.:09:01.

have got to crack on. It is time to ease off on the austerity, we have

:09:02.:09:06.

more important things on the table. Deficit reduction? Crack on. When do

:09:07.:09:14.

you want it gone by? As soon as possible. Philip Hammond, the party

:09:15.:09:20.

faithful have issued their instructions, many want you to get

:09:21.:09:24.

on with cracking on with getting it down. STUDIO: There we go. We do

:09:25.:09:34.

need to do our research the famous People's budget which led to a huge

:09:35.:09:39.

stand-off with the House of Lords, it was not Campbell Bannon, he died

:09:40.:09:45.

in 1905, it was Asquith who was the Liberal leader in 1909. But Campbell

:09:46.:09:51.

Bannon did put some of the changes in place. Asquith's famous words,

:09:52.:09:58.

what were they? Keep your eye on Paisley, that's the way the country

:09:59.:10:02.

will go, I'm not sure you can say that now. No. Philip Hammond has a

:10:03.:10:09.

difficult juggling act, he has to do a change in direction but he has got

:10:10.:10:13.

to give convincing reasons pick up the vat different, -- to give

:10:14.:10:23.

convincing reasons, and it can't be that different after what has gone

:10:24.:10:26.

on over six years. We are still spending too much on day-to-day

:10:27.:10:30.

expenses, current expenditure, but I would ease off on squeezing capital

:10:31.:10:34.

spending, with global borrowing rates so low it makes sense to

:10:35.:10:40.

borrow long-term to improve our roads and railways. Cabinet spending

:10:41.:10:47.

is down. Exactly. George Osborne was wearing his high viz jackets, but he

:10:48.:10:52.

cut capital spending and we weren't investing for the long term, but I

:10:53.:10:55.

think it is important that we change in the post Brexit world, many

:10:56.:10:59.

people on the left feel we have become the sweatshop of Europe,

:11:00.:11:03.

workers' rights will be thrown out of the window and we become a highly

:11:04.:11:09.

deregulated low tax, no rights workforce, but I think what we are

:11:10.:11:13.

seeing from Theresa May and Philip Hammond is a different vision, high

:11:14.:11:17.

infrastructure and high skills and high investment. Almost as though at

:11:18.:11:22.

the time we are leaving the European Union we are becoming more European

:11:23.:11:27.

and more Christian Democratic in how we construct our policy. Didn't Ed

:11:28.:11:37.

Balls want to borrow to invest? Quite similar to John McDonnell,

:11:38.:11:42.

there has been a continuation. He wanted to borrow for everything, not

:11:43.:11:44.

just investment, that is the difference. We talk about

:11:45.:11:48.

politicians wanting to have their cake and eat it, and I think Philip

:11:49.:11:52.

Hammond would have taken two balls and put them in both holes if he had

:11:53.:11:58.

done that. He will say they want to ease off, no more targets, but on

:11:59.:12:02.

the other hand he will say they will crack on with fiscal consolidation

:12:03.:12:08.

and this is about messaging, Philip Hammond did not think targets were

:12:09.:12:12.

good idea and I think we will see a change in tone from George Osborne's

:12:13.:12:17.

days. Not long to wait. Thank you for being with me this morning.

:12:18.:12:20.

So, the Chancellor Philip Hammond will be getting to his feet

:12:21.:12:23.

in the conference hall to deliver his set-piece speech

:12:24.:12:25.

So what do we know about what he's likely to say?

:12:26.:12:31.

There has been an overnight briefing.

:12:32.:12:33.

Mr Hammond, who as Foreign Secretary, was in favour of Remain,

:12:34.:12:36.

warned this morning of an economic "rollercoaster" as Britain

:12:37.:12:38.

He insisted the UK Economy is "very strong going into this period"

:12:39.:12:48.

but that there needed to be a "realistic expectation

:12:49.:12:54.

of the turbulence" once Article 50 is triggered which Theresa May said

:12:55.:12:57.

yesterday would happen by the end of March next year.

:12:58.:13:01.

In his speech today, the Chancellor will confirm

:13:02.:13:04.

that the government is abandoning his predecessor,

:13:05.:13:07.

George Osborne's, fiscal target to get the UK budget

:13:08.:13:10.

And that this new fiscal framework will be set out

:13:11.:13:18.

in the Autumn Statement in November for the "new circumstances

:13:19.:13:20.

Mr Hammond will also launch a ?3 billion Home Building Fund

:13:21.:13:25.

for England, to build 25,000 extra homes over the next four years

:13:26.:13:30.

and a further 200,000 houses in the longterm.

:13:31.:13:38.

The move has been seen as a signal that the Government will allow

:13:39.:13:45.

for greater borrowing to boost the economy if needed during the two

:13:46.:13:48.

years to 2019 that the UK will have to reach a deal with the EU.

:13:49.:13:57.

I've been joined by the minister for digital policy and ally

:13:58.:13:59.

of the former Chancellor George Osborne, Matt Hancock.

:14:00.:14:03.

Welcome back to the programme. Why is he abandoning George Osborne's

:14:04.:14:12.

targets? Clearly things have changed and the economy has changed and

:14:13.:14:15.

there was a vote for Brexit and this is a perfectly reasonable response

:14:16.:14:21.

to that. George Osborne said if we voted for Brexit there would have to

:14:22.:14:24.

be a punishment budget, what happened? Circumstances have changed

:14:25.:14:29.

and we have seen what has happened in the economy over the summer and

:14:30.:14:33.

the appropriate response, we have seen that in monetary policy, the

:14:34.:14:41.

cut in interest rates, and clearly given the uncertainty and the

:14:42.:14:43.

challenges, it is more difficult to get to that point. The punishment

:14:44.:14:50.

budget threat was wrong? I don't think it is worth going through the

:14:51.:14:54.

referendum. I think it is. You said all manner of things would happen,

:14:55.:14:58.

you said we would have a punishment budget if we left, but we haven't

:14:59.:15:02.

had a punishment budget, and the physical targets are going to be

:15:03.:15:05.

loosened if anything, so that was just plain wrong -- fiscal targets.

:15:06.:15:12.

What matters is how we respond to policy now. The report you told us

:15:13.:15:19.

in the past is unreliable, then it covers how we look at what you tell

:15:20.:15:26.

us in the present and future? It is only fair to admit that the

:15:27.:15:28.

punishment budget was a huge mistake and is unnecessary even though we

:15:29.:15:34.

voted to leave? What the Chancellor has set out in what we have heard

:15:35.:15:37.

about this morning, he was talking about this morning, how you respond

:15:38.:15:42.

to the circumstances now. Things have changed. On this point, there

:15:43.:15:48.

is an important question of how the economy responds given Brexit and

:15:49.:15:55.

there are signs that has not been as bad as the independent forecasters

:15:56.:15:58.

predicted and I think that is good news. What has changed?

:15:59.:16:05.

You say the fiscal targets have been changed because the economy's

:16:06.:16:11.

changed. In what way has the economy changed in the 100 days since we

:16:12.:16:15.

voted to leave? The forecasts are going back to where they were before

:16:16.:16:20.

June 23rd, so what's changed? Some of them have come off. There has

:16:21.:16:24.

been a rebound after that. I think that's good. The jobs numbers have

:16:25.:16:29.

been good. If you look at, for instance, the services sector. Rose

:16:30.:16:35.

in July? Fell very sharply in July then rose again. Back in August?

:16:36.:16:40.

You've got to look at what's actually happening in the economy

:16:41.:16:44.

and then you've got to set fiscal policy according to that. But before

:16:45.:16:49.

the referendum, the consensus forecast was that the economy would

:16:50.:16:54.

grow by around 2% this year. 100 days into the Brexit process, the

:16:55.:16:59.

consensus forecast is back at 2% so I ask you on the broad macro

:17:00.:17:03.

economic figures, what has changed to justify a change in the targets?

:17:04.:17:08.

The forecasts for next year are lower than they were before the

:17:09.:17:11.

vote. That is a change. And if you think about it, you've got to set

:17:12.:17:15.

fiscal policy according to what is expected to happen. So we'll receive

:17:16.:17:20.

the forecast from the Office for Budget Responsibility ahead of the

:17:21.:17:23.

Autumn Statement and that's what you've got to use as the basis.

:17:24.:17:27.

Look, when the circumstances change in economics, you then have to set

:17:28.:17:31.

your policy according to your best assessment of the circumstances.

:17:32.:17:36.

People making the forecasts that the economy will slow next year are the

:17:37.:17:40.

same people that made the forecasts that it would slow in the immediate

:17:41.:17:43.

aftermath of June 23rd, they were wrong. Well, according to the

:17:44.:17:48.

figures and surveys, there was a big dip in July. Now, there has been a

:17:49.:17:52.

rebound, but I think that's good news and now we've got to assess

:17:53.:17:57.

things, according to where we are. If you start to reassess the deficit

:17:58.:18:02.

figures, doesn't that mean all that six years of relentless emphasis on

:18:03.:18:06.

deficit reduction, in the end you were inflicting pain on the British

:18:07.:18:10.

people that wasn't necessary? No. I think that's completely wrong. The

:18:11.:18:13.

reason it's wrong is that the deficit is down by two thirds

:18:14.:18:22.

already. It was at a historic high. It was wholly unsustainable. It's

:18:23.:18:26.

still unsustainably high now, still needs to come down, but we always

:18:27.:18:30.

said the pace at which you bring that down should be set by economic

:18:31.:18:35.

circumstances and what is possible. The new Chancellor is making an

:18:36.:18:39.

assessment on the new economic figures, given the new facts, and

:18:40.:18:45.

then we'll set that out. So the deficit will continue to come down?

:18:46.:18:50.

I certainly hope so. Where else are you going to cut if you are going to

:18:51.:18:53.

increase spending on infrastructure investment? The deficit was already

:18:54.:19:00.

projected to fall because it's been coming down from 10% of GDP, down by

:19:01.:19:05.

two thirds, it was projected to go down further than that. I'm sure

:19:06.:19:08.

we'll get the full figures in the Autumn Statement. But what the

:19:09.:19:13.

Chancellor was saying today was that the pre-Brexit proposal to be able

:19:14.:19:21.

to read surplus is not going to be possible. He's been very clear that

:19:22.:19:25.

the deficit needs to come down. He's also going to spend more though. If

:19:26.:19:29.

you thought you had to get the deficit down because if you didn't

:19:30.:19:35.

you would pay a penalty in the bond markets but it turns out in this

:19:36.:19:39.

strange time of QE you don't pay a penalty? I put that the other way

:19:40.:19:43.

around. Because we have the clear commitment, political will and

:19:44.:19:48.

determination to get it down, that's why those bond rates have remained

:19:49.:19:52.

low or one of the reasons. Countries with far worse fiscal positions than

:19:53.:19:58.

us, far bigger percentage of their GDP into national debt, they are

:19:59.:20:02.

borrowing just as cheaply as we are? There were hardly any countries that

:20:03.:20:06.

had far worse fiscal positions than us. National debt is 135% of GDP.

:20:07.:20:12.

They borrowed a bit more expensively than us. There has been no penalty

:20:13.:20:19.

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

:20:20.:20:25.

Italy's deficit was smaller than us at the start of the process, it's

:20:26.:20:29.

now bigger. And they are borrowing cheaply? No. We had several years in

:20:30.:20:37.

which we had a potential crisis in the borrowing rate when the cost of

:20:38.:20:46.

its borrowing were much, much higher higher than us because we have got a

:20:47.:20:49.

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

:20:50.:20:55.

able to borrow more than planned, to borrow to invest, and we won't pay a

:20:56.:20:59.

penalty in the bond markets and we can still borrow just as cheaply as

:21:00.:21:07.

we have? Correct. Correct? That's not exactly how I put it. You have

:21:08.:21:12.

to have a sustainable fiscal position. The current level is still

:21:13.:21:16.

sustainable and it still needs to come down. Ed Balls campaigned on

:21:17.:21:25.

this in 2015, he wanted to borrow more to invest, that's what you want

:21:26.:21:28.

to do? There is a difference in two important ways. One is of scale, we

:21:29.:21:33.

haven't heard the full details from the Chancellor yet, I'm sure we'll

:21:34.:21:36.

cut to him in a minute, but the second is a determination. We have

:21:37.:21:40.

proved over and over again that we are willing to take the decisions

:21:41.:21:44.

necessary to make sure we have sustainable public finances. We have

:21:45.:21:50.

discussed this many times. I am absolutely clear in our

:21:51.:21:53.

determination to have sustainable public finances. This is Ed Balls

:21:54.:21:59.

light isn't it? No. No. You are going to borrow, he was going to

:22:00.:22:04.

borrow, he may have borrowed not quite as much. You deny that you

:22:05.:22:08.

could do that in the election campaign, you said we couldn't

:22:09.:22:12.

borrow more to invest? No. The distinction is, we have got the

:22:13.:22:15.

political will and plan to bring the deficit down. The Ed Balls plan? The

:22:16.:22:20.

plan according to Labour was not to get there at all. ?3 billion for new

:22:21.:22:26.

home-building, how much of that is new money? Well, you will see where

:22:27.:22:30.

the money comes from set out in detail in the Autumn Statement. But

:22:31.:22:36.

this is money that wasn't in the budget for house building before if

:22:37.:22:40.

that's what you mean. ?2 billion is being borrowed? Well, ultimately...

:22:41.:22:44.

Which you told us you couldn't do, borrow to build? No. This is about

:22:45.:22:49.

getting money into house building. By borrowing? It's one of the most

:22:50.:22:53.

important things we can do is getting house building... We know

:22:54.:22:57.

that, why didn't you do it before? We had a whole series of different

:22:58.:23:01.

policies in this area. Which have worked? We are going to take a

:23:02.:23:06.

slightly different approach, using public sector land. And using the

:23:07.:23:09.

public sector balance sheet to pay for it. When you take the measures

:23:10.:23:15.

together, I've seen figures, but how many new homes a year will this

:23:16.:23:20.

produce? The aim of these packages specifically is to get just over

:23:21.:23:25.

200,000 new homes. Per year? And over... We have also got to make

:23:26.:23:30.

sure that at the same time, the private sector house building gets

:23:31.:23:35.

going faster than it has been. This will be private sector housing won't

:23:36.:23:45.

it? Part of it is on public sector land and using the public and

:23:46.:23:50.

private balance sheets. Owned by land builders, that is incredibly

:23:51.:23:54.

important. So 200,000 houses a year? Just over in total. That is what

:23:55.:23:59.

David Cameron pledged when he became Prime Minister. What did he achieve?

:24:00.:24:04.

In terms of starts, the starts... Completions? What is the average

:24:05.:24:08.

completion rate under the Cameron years. Why don't you tell me?

:24:09.:24:14.

123,000. Exactly. That's the average over the six years. So nowhere near

:24:15.:24:19.

200,000? No. It was incredibly difficult at first because we were

:24:20.:24:22.

still in the throes of the great recession. Actually that figure came

:24:23.:24:27.

up and the fact that, of course, the starts figure improves before the

:24:28.:24:32.

completions figure by its nature and that figure had got up to pre-crash

:24:33.:24:38.

levels. Actually it hasn't. After six years of Conservative

:24:39.:24:41.

Government, how many houses did we complete in the last fiscal year? I

:24:42.:24:46.

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

:24:47.:24:53.

behind. Still the lowest completion figures since the 1920s. That's not

:24:54.:24:58.

actually right. Because what you've got to look at is how fast we have

:24:59.:25:05.

managed to get the starts in housing going because that's going to

:25:06.:25:07.

foreshadow completions in nine months or a year when the houses get

:25:08.:25:17.

done. The starts in the year to June 2016 for 144,000, which is actually

:25:18.:25:23.

lower than the 145,000 you managed to complete the previous year so the

:25:24.:25:28.

starts are not starting up. We should have an injection of more

:25:29.:25:32.

support to get more house-building and to bring more house builders on

:25:33.:25:35.

instead of just the big ones that we've got at the moment. I've got

:25:36.:25:40.

that, I understand that. Yes. But Gordon Brown made the same promises,

:25:41.:25:45.

Tony Blair made them, 200,000 houses a year, I mean the Blair Brown

:25:46.:25:48.

averages are better than yours but not great. Brown 136,000

:25:49.:25:54.

completions, Blair was 148,000 completions. No-one, politicians

:25:55.:25:59.

again and again tell me we'll get to 200,000, we never get it, we still

:26:00.:26:05.

get these incredibly historic low completions and I don't understand

:26:06.:26:08.

why what's being announced today is really going to make any difference

:26:09.:26:12.

to that? What I don't understand is this argument that because it's

:26:13.:26:15.

difficult we shouldn't try. Of course we should. Making sure that

:26:16.:26:20.

we get that level of house building up is important. There's a huge

:26:21.:26:24.

amount of work that's gone into it. And this is a slightly different

:26:25.:26:27.

approach because all of that approach that you talked about in

:26:28.:26:32.

the past was all based on trying to incentivise on the private side and

:26:33.:26:36.

then some local authority and Housing Association building. This

:26:37.:26:38.

is using the central Government balance sheet in a new way. Sure.

:26:39.:26:43.

Are you going to build a lot of new council houses? We have built far

:26:44.:26:47.

more... But they didn't build any. Are you going to build a lot of

:26:48.:26:52.

them? There is a combination of council houses, yes, also Housing

:26:53.:26:56.

Association and social housing and then houses, private sector houses

:26:57.:26:59.

for people to buy. It's good to have you back on. We

:27:00.:27:04.

have run out of time. When do you think you will return to frontline

:27:05.:27:08.

politics? Who? You. I'm having a whale of a time. That's different

:27:09.:27:12.

from frontline politics. I'm on the Daily Politics, Andrew. You're

:27:13.:27:16.

always on the Daily Politics! You're always on that. It was delightful to

:27:17.:27:20.

see you again, thank you Matt Hancock, who is the Minister for

:27:21.:27:25.

Digital policy these days! Whatever that means. Anyway, shall we have a

:27:26.:27:29.

look in the hall and see what is going on. The Transport Secretary

:27:30.:27:37.

Chris Grayling is making his speech. He's reconfirmed the Government's

:27:38.:27:42.

commitment to HS II and, given that we are in Birmingham, he's pledged

:27:43.:27:47.

?12 billion towards the transport component of the so-called Midlands

:27:48.:27:52.

Engine. ?12 billion, where's that come from? The north is the northern

:27:53.:27:57.

powerhouse, the Midlands has the Midlands engine. We'll have to see

:27:58.:28:01.

what Lincolnshire gets next or Cumberland! We shall see. Anyway, we

:28:02.:28:07.

are joined by Laura Kuenssberg, Paul Johnson of the IFS also. Welcome to

:28:08.:28:12.

you both. I don't know if you heard my interview with Matt Hancock

:28:13.:28:19.

there, but how much of this change in deficit reduction targets cast a

:28:20.:28:23.

shadow over all the previous emphasis on deficit reduction?

:28:24.:28:26.

Things have genuinely changed and, of course, the testify sit's come

:28:27.:28:32.

down by an awful lot -- deficit's come down. By the original plan it

:28:33.:28:36.

was meant to have gone now all together. That was down to the

:28:37.:28:40.

economy not going anywhere near as well as hoped. What's happening now

:28:41.:28:45.

is that we've got a huge amount of uncertainty over the economy over

:28:46.:28:50.

the next three or four years, but actually the next ten or 20 years,

:28:51.:28:56.

so to say that you are going to have a specific target given that

:28:57.:28:58.

uncertainty, it's appropriate to move away from that, as indeed

:28:59.:29:02.

George Osborne said he'd do. I'm sure we are still going to get some

:29:03.:29:06.

focus on concerns about the total level of deficit and debt. Exactly

:29:07.:29:11.

how that is couched, it remains to be seen. The amount of money from

:29:12.:29:17.

the Midlands Engine is ?12 million, not ?12 billion! Quite a difference.

:29:18.:29:25.

Sorry to have raised the hopes of the Birmingham people. Probably a

:29:26.:29:30.

heart attack in Manchester! Mr Hammond has a difficult balancing

:29:31.:29:33.

act, I suggest, Laura on two fronts today. He has to make a change in

:29:34.:29:39.

policy, a change in emphasis on fiscal stance from his predecessor,

:29:40.:29:45.

but at the same time, that is one thing, the other thing is he can't

:29:46.:29:49.

really tell us what he has in store until the Autumn Statement on

:29:50.:29:52.

November 23rd? Absolutely and he's constricted in that sense on both

:29:53.:29:56.

sides. In his nature, he's a very different kind of politician. Over

:29:57.:29:59.

the years we have gotten used to the Chancellor's speech being a huge

:30:00.:30:03.

event, the Chancellor had his own hat stuffed full of his own rabbits,

:30:04.:30:08.

he enjoyed revealing things with a flourish towards the end of the

:30:09.:30:11.

speech, rounded that too and in a sense George Osborne carried on that

:30:12.:30:14.

tradition, with the Chancellor having almost as big a day as the

:30:15.:30:20.

Prime Minister's speech. But he's not that kind of character, it's

:30:21.:30:25.

partly because he has to keep his goodies for the statement. The data

:30:26.:30:30.

about the post-referendum is only just starting to trickle in so they

:30:31.:30:33.

are not sure what position they'll be at the end of November. It's a

:30:34.:30:36.

measure of the fact this is a different Government. He's a

:30:37.:30:39.

different kind of politician, Theresa May is a different kind of

:30:40.:30:43.

politician, flash is out, if you like, but Philip Hammond is

:30:44.:30:46.

nonetheless very determined, as we have seen from this morning, to

:30:47.:30:50.

basically sketch out a different path. Targets are out, frameworks

:30:51.:30:55.

are in and politically, maybe not practically, but politically that is

:30:56.:30:56.

very different. Infrastructure spending is the new

:30:57.:31:08.

buzzword. Whereas infrastructure spending can improve the long-term

:31:09.:31:11.

supply side performance of the economy, in terms of Keynesian pump

:31:12.:31:16.

priming it doesn't have much of a speedy impact? That is broadly

:31:17.:31:22.

right, and the important thing about the infrastructure and improving the

:31:23.:31:27.

long-term economy, it is a long-term think governments can have a big

:31:28.:31:31.

effect on our productivity, but not next year, maybe in ten years,

:31:32.:31:35.

because these things take a while. In terms of pump priming, these

:31:36.:31:41.

projects take a long time to happen. If you look back at the last Labour

:31:42.:31:45.

government, every year they were missing by billions the amount they

:31:46.:31:48.

were hoping to spend on infrastructure, they just couldn't

:31:49.:31:51.

get the money out of the door, and we actually don't know, even if you

:31:52.:31:56.

wanted to pump prime, we don't know if this is the next couple of years

:31:57.:32:00.

when you want to pump prime or it is a longer-term thing when we actually

:32:01.:32:05.

come out of the European Union. Theresa May has been out this

:32:06.:32:10.

morning in Birmingham and was visiting a building site,

:32:11.:32:14.

politicians have a special like of building sites. The whole city is

:32:15.:32:19.

undergoing a massive renovation programme. Not wearing high

:32:20.:32:26.

visibility jackets, there, unlike the previous Chancellor. There she

:32:27.:32:37.

is. I'm told this is the new HSBC headquarters. The big bag coming to

:32:38.:32:45.

the Midlands. One of the interesting things, in the speech from savage

:32:46.:32:50.

avid and what will be undermined by Philip Hammond, something broader,

:32:51.:32:55.

ministers are on the one for policies which will be able to show

:32:56.:32:59.

a difference before the next general election -- on the hunt.

:33:00.:33:04.

Infrastructure promises have been scattered around like confetti in

:33:05.:33:07.

the last couple of years and everyone thinks it is a good idea,

:33:08.:33:11.

who doesn't think we should invest in the future of the country? The

:33:12.:33:16.

problem is it takes years to make a tangible difference in terms of jobs

:33:17.:33:20.

and a tangible difference in terms of the lines of voters, and

:33:21.:33:25.

ministers have a sense that they are not just looking for the right thing

:33:26.:33:28.

to do, but things they believe they can show progress on before the next

:33:29.:33:33.

general election. That is what is behind some of the announcements

:33:34.:33:39.

from Sajid Javid, they want to be able to do things they can show

:33:40.:33:47.

progress on, which is not easy. Mr Obama said they were shovel ready

:33:48.:33:51.

jobs, but then he had problems showing them. That is the

:33:52.:33:59.

difficulty. The Chancellor is being introduced, so I may interrupt you,

:34:00.:34:03.

but it seems you can widen the deficit and allow for slower deficit

:34:04.:34:06.

reduction and you pay no penalty in the bond markets which we would not

:34:07.:34:11.

have thought ten years ago. In large degree that is a reflection of the

:34:12.:34:14.

weakness of the world economy, people are looking for what they

:34:15.:34:24.

consider to be a relatively safe market, sovereign debt, despite the

:34:25.:34:27.

relatively high level of deficit, it still looks very safe relative to

:34:28.:34:32.

the uncertainties that surround the rest of the UK economy and the

:34:33.:34:37.

international, me. In terms of the change to go for investment in order

:34:38.:34:40.

to be able to spend cash which is not a change from the previous

:34:41.:34:45.

administration, even though George Osborne said he might go down this

:34:46.:34:49.

path. Philip Hammond and Theresa May have not woken up thinking, we are

:34:50.:34:52.

now going to be full throttle Keynesians, they are not huge

:34:53.:34:58.

converts to massive borrowings, to massive projects, and I understand

:34:59.:35:02.

it will be relatively small, ?2 billion borrowing for housing and

:35:03.:35:08.

equivalent amounts for other projects, and so this is a change,

:35:09.:35:13.

but this is not a 180 degrees flip for them to be pursuing a different

:35:14.:35:19.

economic philosophy. With housing committee to get the planning

:35:20.:35:24.

permissions, that can happen quickly, you can employ a lot of

:35:25.:35:28.

people and people have new houses and they buy a new kitchen -- with

:35:29.:35:33.

housing, you can get the planning permissions. It is what happened and

:35:34.:35:42.

helped the 1930s in this STUDIO: -- in this country. Planning

:35:43.:35:47.

permission is the problem. It is easing up little, no government has

:35:48.:35:50.

come anywhere near meeting the targets they have set themselves so

:35:51.:35:56.

there are constraints, but you can probably build housing more quickly

:35:57.:36:02.

than you can build a big New Road. Or a high-speed railway. It has a

:36:03.:36:07.

political problem for this party, because of the demand for more new

:36:08.:36:12.

homes which is greatest in the Tory Home Counties shires. Indeed. The

:36:13.:36:20.

new Communities Secretary Sajid Javid was addressing Tory

:36:21.:36:22.

councillors last but, maybe not reading them the riot act, but he is

:36:23.:36:28.

pretty determined to say to the foot shoulders and -- the soldiers, -- to

:36:29.:36:38.

the foot soldiers, he says they have got to be not as controlling and

:36:39.:36:43.

protective of the parts of the country that you represent. We have

:36:44.:36:46.

heard this on politicians before. Many times. You lose count of the

:36:47.:36:51.

number of times this has been said, but I suspect late in the year there

:36:52.:36:56.

might be more legislation, another housing white Paper, perhaps, that

:36:57.:36:59.

will go further in easing up planning restrictions. There has

:37:00.:37:06.

been a bit of change, but nowhere near enough if the government is to

:37:07.:37:13.

get anywhere near its target. They are way behind the target, this must

:37:14.:37:16.

be the longest introduction of the Chancellor of the Exchequer in

:37:17.:37:22.

living memory. The MP introducing him is still talking. Would it

:37:23.:37:28.

matter if in the Autumn Statement he doesn't set a date for a surplus?

:37:29.:37:32.

Would anyone care? Is it not more important that the markets CB

:37:33.:37:37.

deficit gets smaller and smaller, and the surplus was a kind of George

:37:38.:37:44.

Osborne conceit. -- see the deficit. I think you are right, given the

:37:45.:37:48.

uncertainty it would be a mistake to say we will get to surplus in 2020

:37:49.:37:55.

or 2023, but he can set out a path and an ambition and he can say that

:37:56.:38:01.

we will come as George Osborne did, we will aim in five years' time to

:38:02.:38:05.

be getting to surplus but if the economy changes we will adjust what

:38:06.:38:09.

we are trying to achieve and push it further out. Is the Prime Minister

:38:10.:38:14.

going to get away and stop talking about Brexit question what can they

:38:15.:38:21.

not help themselves? It will be interesting to see a Philip Hammond

:38:22.:38:23.

addresses it in any detail, but I don't think he will. It is

:38:24.:38:27.

overshadowing everything at this conference, no question. It was a

:38:28.:38:31.

cute political ploy for Theresa May to give a speech yesterday, a

:38:32.:38:36.

long-time aide Tory leader has done that on the first aid conference, --

:38:37.:38:43.

a long time since a Tory leader has done that on the first day of

:38:44.:38:47.

conference. Her plan was to get that out of the way, but that is all the

:38:48.:38:52.

chat. People are saying, did she really mean it yesterday when she

:38:53.:38:57.

said there would be a hard Brexit? Party leaders always say what they

:38:58.:39:02.

need at that moment. Of course they do. At last, here we go. Into the

:39:03.:39:09.

conference call for the Chancellor of the Exchequer, Philip Hammond, to

:39:10.:39:13.

give his first address to the Tory party faithful at the annual

:39:14.:39:15.

conference in his new position as Chancellor. This is Philip Hammond.

:39:16.:39:25.

Amanda, you held off a ferociously pincer movement in Cannock Chase

:39:26.:39:31.

annual result was one of the highlights of that result last May

:39:32.:39:34.

and we congratulate you on a fantastic achievement. APPLAUSE

:39:35.:39:43.

It is great to be back in Birmingham and a privilege to address this

:39:44.:39:46.

conference as Chancellor of the Exchequer. And I don't think I'm

:39:47.:39:52.

giving away any state secrets in admitting that I just might have

:39:53.:39:57.

hoped to have been a Treasury minister a bit earlier in my

:39:58.:40:03.

political career. In fact having been shadow chief secretary for

:40:04.:40:07.

three years until the 2010 general election, I rather suspect that that

:40:08.:40:13.

infamous note from Liam Byrne, you remember the one, dear Chief

:40:14.:40:19.

secretary, I'm afraid there's no money, I rather think that note was

:40:20.:40:27.

meant for me, but it went to David Laws, who published it, and is now

:40:28.:40:31.

trying to get it back. It became the shortest political suicide note in

:40:32.:40:37.

history, perhaps. Liam Byrne, your message to your successor was an

:40:38.:40:42.

admission of Labour's abject failure. APPLAUSE

:40:43.:40:52.

I will let you into a secret, my predecessor didn't leave me a note.

:40:53.:40:59.

But if he had this is what it would have said, dear Chancellor,

:41:00.:41:06.

employment is up, wages are rising, the deficit is down and income tax

:41:07.:41:11.

has been cut for tens images of people, that is the Conservative

:41:12.:41:14.

record, and that is the difference Conservative leader makes. APPLAUSE

:41:15.:41:29.

Anyway, I got to the Treasury in the end. I'm delighted to have such an

:41:30.:41:37.

excellent team supporting me. David Gauke as chief secretary, J Ellison

:41:38.:41:47.

as chief financial secretary, Simon Kirby, ably supported by Steve

:41:48.:41:54.

Barclay the Commons whips. Please give them a big round of applause.

:41:55.:41:56.

APPLAUSE I went down to the Bank of England

:41:57.:42:06.

last week to check on the gold reserves, what is left of them. You

:42:07.:42:11.

remember Gordon Brown sold half of them off at the bottom of the

:42:12.:42:18.

market, losing British taxpayers a staggering ?7 billion in the

:42:19.:42:21.

process, another example of Labour's failure. We last met in this hall

:42:22.:42:29.

two years ago on The Eagles the fight of our political lives -- two

:42:30.:42:37.

years ago on the eve of the fight. There was our Conservative vision of

:42:38.:42:45.

a future, with the economy moving forward, and Labour's offer with a

:42:46.:42:49.

vision of Britain going back to the old days of tax, spend, and waste.

:42:50.:42:55.

It is a credit to your hard work and the good sense of the British people

:42:56.:43:00.

that we won that fight and we should not forget the debt is party owes to

:43:01.:43:06.

the man who led us out of opposition and into coalition and then on to

:43:07.:43:08.

form the first Conservative government in 18 years. Our former

:43:09.:43:13.

leader and Prime Minister David Cameron. APPLAUSE

:43:14.:43:31.

But today, my friends, we meet on the eve of a different challenge. No

:43:32.:43:39.

less daunting and no less crucial to the future of our country. That vote

:43:40.:43:46.

on the 23rd of June, the first of its kind anywhere in Europe, was a

:43:47.:43:50.

defining moment, not just of this Parliament, but of this generation.

:43:51.:43:56.

The moment when the British people decided to change direction and map

:43:57.:44:01.

out a new path for our country's future. Whichever side of the

:44:02.:44:06.

arguing we were on we should not forget this, only one mainstream

:44:07.:44:11.

political party was prepared to give the British people their say and

:44:12.:44:17.

only one party delivered that referendum and only one party

:44:18.:44:23.

unhesitatingly accepted the result. This great party, the Conservative

:44:24.:44:24.

Party. APPLAUSE That result in June gave clear voice

:44:25.:44:41.

to a desire by the British people for an end to political union and

:44:42.:44:46.

the restoration of control. Control, that keyword. Control over the roles

:44:47.:44:53.

and regulations that govern their lives, control over who can live and

:44:54.:44:58.

work in their country, and control over how their money is spent. And I

:44:59.:45:04.

can reassure the British people of this, that message has been received

:45:05.:45:13.

loud and clear. No ifs and buts, no second referendum, we are leaving

:45:14.:45:14.

the European Union. APPLAUSE But it is equally clear to me that

:45:15.:45:28.

the British people did not vote on June 23rd to become poorer or less

:45:29.:45:36.

secure. So our task is clear. Repatriate our sovereignty, control

:45:37.:45:38.

our borders and seize the opportunities that the wider world

:45:39.:45:43.

has to offer. But do all of this while protecting our economy, our

:45:44.:45:47.

jobs and our living standards. Now, the message may be simple, but I can

:45:48.:45:52.

assure you, the process will be complex. Successful negotiation with

:45:53.:46:02.

the EU 27 will demand patience, experience, meticulous planning and

:46:03.:46:06.

steely resolution. And I know of no-one better equipped to guide us

:46:07.:46:09.

through these negotiations than our brilliant new Prime Minister,

:46:10.:46:14.

Theresa May! APPLAUSE.

:46:15.:46:29.

We should approach these negotiations with self-confidence.

:46:30.:46:35.

Our economy is the fifth largest in the world. Our nation is built upon

:46:36.:46:41.

a history of global trade. Our people are responsible for some of

:46:42.:46:46.

the most significant inventions and discoveries of history. So no-one

:46:47.:46:51.

should be in any doubt that we have the skills, the ingenuity and

:46:52.:46:55.

determination to make a success of Brexit. Starting from a position of

:46:56.:47:02.

strength. And thanks in no small part to the onningions of my

:47:03.:47:07.

predecessor, we enter these negotiations with an economy that is

:47:08.:47:14.

fundamentally robust. It's easy to forget, six years on, the scale of

:47:15.:47:20.

the legacy of Labour's great recession that we inherited in 2010.

:47:21.:47:24.

Turmoil in the markets, a banking system still reeling from the

:47:25.:47:30.

crisis, a deficit of more than 10% of GDP, the highest in our peacetime

:47:31.:47:36.

history, an economy on the brink. It was the decisions that George

:47:37.:47:40.

Osborne took in those early days that pulled us back from the

:47:41.:47:45.

precipice and set us on a course to recovery. The tough early choices...

:47:46.:47:47.

APPLAUSE. Those tough early choices and the

:47:48.:48:05.

doggedness in sticking with them delivered that intangible but

:48:06.:48:06.

indispensable commodity - credibility. Credibility in the

:48:07.:48:12.

markets that helped secure record low borrowing costs, incredibility

:48:13.:48:16.

with business, securing the investment that supported our

:48:17.:48:20.

recovery. And the results are clear for all of us to see. 2.7 million

:48:21.:48:27.

people more in work today under a Conservative Government than in 2010

:48:28.:48:31.

under Labour. Did we hear that achievement being

:48:32.:48:34.

Lauded in Liverpool last week? Of course not. Because Corbyn's Labour

:48:35.:48:42.

Party has abandoned the agenda of working people deserted the middle

:48:43.:48:46.

ground of British politics in favour of the socialist ideaology of the

:48:47.:48:52.

Metropolitan left-wing elite. Leaving us, the Conservatives, as

:48:53.:48:55.

the true party of British working people.

:48:56.:48:57.

APPLAUSE. Of course, for much of his time as

:48:58.:49:13.

Chancellor, George Osborne faced Ed Balls across the despatch box.

:49:14.:49:18.

Remember Ed Balls? I know you remember him from Saturday night,

:49:19.:49:22.

I'm asking if you remember him in his more minor role as Shadow

:49:23.:49:27.

Chancellor? ! By the way, you know Ed wasn't their first choice for

:49:28.:49:31.

Strictly, they were going to ask Corbyn to do it but then someone

:49:32.:49:37.

told them he had two left feet! LAUGHTER.

:49:38.:49:46.

I watched Ed on Saturday night. I don't want to sound like Craig Revel

:49:47.:49:53.

Horwood but I have to say, I think his charleston is probably better

:49:54.:49:57.

than his economic analysis. Because he told us back then that

:49:58.:50:02.

our policies would push the economy into recession, but he was wrong.

:50:03.:50:08.

Since 2010, Britain has grown faster than any other economy in the G7. He

:50:09.:50:13.

said, we would never replace lost public sector jobs with new private

:50:14.:50:19.

sector jobs, but we did. Not one for one, but seven for one.

:50:20.:50:23.

And that's not all. We got our deficit down by nearly two thirds,

:50:24.:50:28.

we cut the welfare bill, we have kept mortgage rates low protecting

:50:29.:50:31.

millions of homeowners through difficult times, we have cut income

:50:32.:50:35.

tax for 30 million people and taken four million low-paid workers out of

:50:36.:50:40.

income tax all together. I say, not bad for an economy that looked out

:50:41.:50:44.

for the count when we took it over in 2010 and a record of which this

:50:45.:50:49.

party can be justly proud. APPLAUSE.

:50:50.:51:01.

But we cannot rest on our laurels. We must look to the future, to the

:51:02.:51:09.

economic challenges ahead. Let's start with the immediate challenge.

:51:10.:51:14.

The markets have calmed since the reference dumb vote and many of the

:51:15.:51:19.

recent data have been better than expected.

:51:20.:51:25.

That is the underlying strength of our economy. But there is no room

:51:26.:51:32.

for complacency. Many businesses which trade with the EU are

:51:33.:51:38.

uncertain Tebbit a what lie -- about what lies ahead.

:51:39.:51:44.

About the deal that will be done, about the changes they'll have to

:51:45.:51:49.

make to adapt to the post-Brexit world and about what it will all

:51:50.:51:53.

mean for their employees, their company, their business model.

:51:54.:51:59.

I understand their concerns. Business, after all, hates

:52:00.:52:02.

uncertainty. But let me repeat the pledge of the

:52:03.:52:08.

Prime Minister yesterday. As we negotiate our exit from the EU and

:52:09.:52:13.

our future relationship with it, this Government will fight for the

:52:14.:52:18.

best possible deal for British business and British workers, the

:52:19.:52:23.

best possible access to European markets for our manufacturing and

:52:24.:52:28.

services industries and the best possible freedoms for our

:52:29.:52:33.

entrepreneurs and global exporters ensuring that Britain after Brexit

:52:34.:52:36.

will remain one of the best places in the world for a business to

:52:37.:52:41.

invest, to innovate and to grow. APPLAUSE.

:52:42.:52:53.

The independent Bank of England successfully cut interest rates to

:52:54.:52:57.

restore confidence in the wake of the vote. But as the economy

:52:58.:53:02.

responds over the coming months, fiscal policy may also have a role

:53:03.:53:06.

to play. So let me be clear. Throughout the

:53:07.:53:11.

negotiating process, we are ready to take whatever steps are necessary to

:53:12.:53:15.

protect this economy from turbulence. And when the process is

:53:16.:53:21.

over, we are ready to provide support to British businesses as

:53:22.:53:25.

they are just to -- they adjust to life outside the EU. Because Brexit

:53:26.:53:30.

does mean Brexit and we are going to make a success of it.

:53:31.:53:39.

In the meantime, I can offer some additional certainty to British

:53:40.:53:46.

business and other organisations bidding to receive EU funding while

:53:47.:53:51.

we are still a member. I've already guaranteed the funding for projects

:53:52.:53:54.

signed prior to this year's Autumn Statement. Today, I can go further.

:53:55.:54:01.

The Treasury will offer a guarantee to bidders whose projects meet UK

:54:02.:54:06.

priorities and value for money criteria, that if they secure

:54:07.:54:11.

multiyear EU funding before we exit, we will guarantee those payments

:54:12.:54:15.

after Britain has left the EU, protecting British jobs and

:54:16.:54:17.

businesses after Brexit. APPLAUSE.

:54:18.:54:28.

As Conservatives, we know, of course, that no-one owes us a

:54:29.:54:35.

living. But a country has to live within its means. A fundamental part

:54:36.:54:40.

of maintaining our global competitiveness is getting our

:54:41.:54:46.

public finances back in order. We should of course be proud of our

:54:47.:54:50.

achievements in fiscal consolidation, but the work we began

:54:51.:54:57.

in 2010 is not finished. The deficit remains unsustainable. And the

:54:58.:55:02.

decision to leave the EU has introduced new fiscal uncertainty.

:55:03.:55:08.

Last year, the Government borrowed ?1 in every ?10 we spent. And piling

:55:09.:55:15.

up debt for our children and our grandchildren is not only

:55:16.:55:22.

unsustainable, it's unfair. And more, it's downright unconservative.

:55:23.:55:27.

The British people elected us on a promise to restore fiscal discipline

:55:28.:55:30.

and that is exactly what we are going to do. But we will do it in a

:55:31.:55:37.

pragmatic way, in a way that reflects the new circumstances we

:55:38.:55:40.

face. The fiscal policies that George Osborne set out were the

:55:41.:55:45.

right ones for that time. But when times change, we must change with

:55:46.:55:48.

them. So we will no longer target a

:55:49.:55:52.

surplus at the end of this Parliament.

:55:53.:55:58.

But make no mistake, the task of fiscal consolidation must continue.

:55:59.:56:06.

It must happen within the context of a clear, credible fiscal framework

:56:07.:56:10.

that will control today's expenditure, deliver value for money

:56:11.:56:12.

and get Britain back living within our mens.

:56:13.:56:18.

At the Autumn Statement in November, I will set our our plan to deliver

:56:19.:56:24.

long-term fiscal sustainability while responding to the consequences

:56:25.:56:29.

of short-term uncertainty and recognising the need for investment

:56:30.:56:34.

to build an economy that works for everyone, a new plan for the new

:56:35.:56:40.

circumstances Britain faces. A Conservative Government

:56:41.:56:45.

demonstrating the flexibility, the common-sense and pragmatism that's

:56:46.:56:49.

made our party the most successful political party in British history.

:56:50.:57:02.

APPLAUSE. Now, contrast this balanced

:57:03.:57:06.

responsible approach with the shambles of Labour in Liverpool last

:57:07.:57:09.

week. In denial about their record in

:57:10.:57:15.

office, deluded about the state of the public finances today, not once

:57:16.:57:20.

did Jeremy Corbyn apologise for the mess that Labour left behind.

:57:21.:57:24.

On the contrary, his Shadow secretary says their mistake was not

:57:25.:57:29.

to have spent more. If you think their past record is bad, let's look

:57:30.:57:34.

at their plans for Britain's future. Corbyn's big idea is to spend an

:57:35.:57:43.

extra half a trillion pounds. That's 7,700 for every man, woman and child

:57:44.:57:47.

in the UK. I just hope he remembers when he

:57:48.:57:50.

goes to bed at night to water the magic money tree.

:57:51.:57:55.

Now look, we could speculate as to how Labour would pay for a spending

:57:56.:57:59.

splurge on this scale, but fortunately, we don't have to.

:58:00.:58:05.

Because we have the answer. From Labour's last Shadow Chancellor,

:58:06.:58:09.

Chris Lesley. This is what he said last week about how Labour would

:58:10.:58:15.

fund Corbyn's plan. You'd have to double income tax, you would have to

:58:16.:58:20.

double national insurance, you would have to double council tax and you

:58:21.:58:24.

would have to double VAT as well. So there we have it. From the mouth

:58:25.:58:30.

of one of their own. Labour condemned as totally unfit to govern

:58:31.:58:35.

this country. APPLAUSE.

:58:36.:58:46.

With nothing to offer the hard-working people of Britain, and,

:58:47.:58:53.

as always, it would be the poorest and the most vulnerable who would

:58:54.:58:58.

pay the biggest price. So, my friends, we in this party have a

:58:59.:59:05.

great and solemn responsibility because we alone carry the burden of

:59:06.:59:12.

ensuring that Labour can never again wreck the British economy. The

:59:13.:59:17.

Conservative commitment is to build a country and an economy that works

:59:18.:59:22.

for everyone, to raise our living standards and grow our national

:59:23.:59:25.

wealth. Not just for today, but for future

:59:26.:59:29.

generations too. We know how to do that, we

:59:30.:59:33.

Conservatives, we have proved it time and time again.

:59:34.:59:39.

Cleaning up Labour's mess. We'll do it by making the British

:59:40.:59:44.

economy the most outward looking, most dynamic, most competitive

:59:45.:59:48.

high-wage, high-skilled low-tax economy in the world.

:59:49.:59:53.

We do it by making sure that after our EI exit, we continue to attract

:59:54.:59:57.

the brightest and the best, the highest skilled and the most dynamic

:59:58.:00:02.

entrepreneurs, scientists, engineers and managers from around the world,

:00:03.:00:07.

building a strong and vibrant economy as the bedrock of our strong

:00:08.:00:13.

and vibrant society. A Conservative vision of the future of Britain. And

:00:14.:00:19.

I'll tell you this, it's a million miles away from the la-la land

:00:20.:00:23.

Labour was describing in Liverpool last week.

:00:24.:00:27.

To deliver that strong economy requires long-term sustainable

:00:28.:00:35.

growth. And long-term sustainable growth requires us to raise the

:00:36.:00:40.

national productivity. Before you switch off, I know productivity

:00:41.:00:44.

doesn't necessarily set political pulses racing but bear with me while

:00:45.:00:49.

I try to convince you that it should. How about this? You probably

:00:50.:00:54.

know that the national productivity is lower than that of the United

:00:55.:00:58.

States and Germany, and maybe you even feel resigned to that fact. But

:00:59.:01:05.

did you know that it is lower than France and Italy, as well. Had you

:01:06.:01:10.

made the connection about what that means in the real world, because

:01:11.:01:15.

what it means is that millions of British workers are working longer

:01:16.:01:19.

hours for lower pay than their counterparts in Europe and the

:01:20.:01:23.

United States and that has to change if we are going to build an economy

:01:24.:01:28.

that works for everyone. If we raised our productivity by just 1%,

:01:29.:01:39.

every year, within a decade we would add ?250 billion to the size of our

:01:40.:01:44.

economy, ?9,000 for every household in Britain. Productivity should set

:01:45.:01:54.

political pulses racing. It is a decades-old problems swept under the

:01:55.:01:59.

carpet for too long. But under this government we are going to put this

:02:00.:02:02.

in the spotlight, right at the forefront of our policy agenda and

:02:03.:02:06.

at the heart of our industrial strategy. We know where to start.

:02:07.:02:13.

Our productivity performance in this country is grossly uneven. Still too

:02:14.:02:18.

reliant on a few key sectors and still too focused on London and the

:02:19.:02:24.

south-east. The good news is, we know how to do productivity, parts

:02:25.:02:28.

of London have the highest productivity in Europe. The bad

:02:29.:02:35.

news, the productivity gap between the capital and the second, third

:02:36.:02:39.

and fourth cities is greater than in any other major economy in the

:02:40.:02:46.

world. And closing that gap will be key to Britain's future outside the

:02:47.:02:50.

EU. That is why we are doing regional devolution deals and why

:02:51.:02:55.

tackling those regional differences will be one of the key drivers for

:02:56.:02:59.

the industrial strategy that Greg Clark is developing now. And there

:03:00.:03:06.

is the skills challenge, we've made huge progress over the last six

:03:07.:03:10.

years, how many people in this room ten years ago would have believed

:03:11.:03:18.

that in every year since 2014, maths would be the most popular A-level

:03:19.:03:21.

subject in English schools? But it was. That is a tribute to

:03:22.:03:27.

Conservative education reforms. APPLAUSE

:03:28.:03:36.

Despite that progress, there is a huge gap between our skills base and

:03:37.:03:44.

that of our key competitors. It is holding people back from achieving

:03:45.:03:48.

their full potential and it is holding our nation back in the

:03:49.:03:54.

global race. And there's more. Our stock of public infrastructure bang

:03:55.:04:01.

which is near the bottom of the developed countries league table

:04:02.:04:06.

after decades of underinvestment -- languishes near the bottom. All of

:04:07.:04:12.

this must change to build an economy which works for everyone. We need to

:04:13.:04:18.

close that gap with careful targeted public investment in high-value

:04:19.:04:24.

infrastructure and encouragement of more private business investment in

:04:25.:04:28.

British enterprises. If we are going to see economic growth distributed

:04:29.:04:32.

more evenly across the regions and sectors of our economy, and more

:04:33.:04:37.

fairly between the generations, there's another big challenge that

:04:38.:04:42.

needs to be tackled. The on affordability of housing. Because

:04:43.:04:48.

despite the action we have taken, fewer and fewer young people are

:04:49.:04:52.

able to afford to get their foot on the first rung of the housing ladder

:04:53.:04:58.

and buy their own home. Quite simply we are not building enough new

:04:59.:05:01.

homes. This is a long-term challenge. But there are short-term

:05:02.:05:07.

measures we can take and the package that Sajid Javid announced earlier,

:05:08.:05:12.

?3 billion home-builders fund and the 2 billion is proud of new

:05:13.:05:18.

investment for construction on public land is a clear demonstration

:05:19.:05:20.

of this government's determination to tackle this challenge using

:05:21.:05:26.

everything at our disposal because making housing more affordable will

:05:27.:05:32.

be a vital part of building a country that works for everyone. And

:05:33.:05:37.

this government is determined that the dream of home ownership should

:05:38.:05:45.

be for the many and not for the few. Making sure that we have world-class

:05:46.:05:49.

infrastructure is vital to maintaining our competitiveness but

:05:50.:05:55.

it is a very long-term agenda. One that can be and often has been

:05:56.:05:59.

knocked off course by short-term political considerations. That is

:06:00.:06:04.

why we announce the national infrastructure commission, to define

:06:05.:06:09.

independently the nation's long-term infrastructure needs and to

:06:10.:06:13.

prioritise and plan and to test value for money and to make sure

:06:14.:06:17.

that every penny spent on infrastructure is properly targeted

:06:18.:06:25.

to deliver maximum benefit. And today I recommit to putting the

:06:26.:06:29.

commission at the very heart of our plans to renew and expand Britain's

:06:30.:06:33.

infrastructure, making sure that it is long-term economics and not

:06:34.:06:39.

short-term politics, that drives Britain's vital infrastructure

:06:40.:06:44.

investment. Part of Britain's productivity transformation will,

:06:45.:06:52.

from innovation. -- will come from. The new technologies which are right

:06:53.:06:59.

now making their way from university labs and facilities into early stage

:07:00.:07:01.

production, offer Britain a much bigger prize than incremental

:07:02.:07:07.

productivity improvements. Because at the cutting edge of many of these

:07:08.:07:13.

new technologies UK is becoming a world leader once again. Not just in

:07:14.:07:18.

the science but in the application of it. And in the innovation that

:07:19.:07:25.

follows. Over the last few years unnoticed by most of us,

:07:26.:07:29.

entrepreneurs and scientists from home and abroad have been turning

:07:30.:07:32.

Britain into a hub of tech innovation. Global businesses have

:07:33.:07:38.

followed, hungry for the inventions and innovations they are generating.

:07:39.:07:43.

Developing technologies that will change fundamentally the way we work

:07:44.:07:50.

and the way we live. Driverless cars, the internet of things,

:07:51.:07:55.

artificial intelligence, 3-D printing, Virtual reality, advanced

:07:56.:08:01.

robotics, I will be honest, I had no idea until a few weeks ago just how

:08:02.:08:07.

much I don't know. And I had even less idea how much I still wouldn't

:08:08.:08:13.

be able to understand even when clever people had explained it to

:08:14.:08:17.

me, but the truth is, this is the future, our future and our

:08:18.:08:23.

children's future. A whole new world that really would have sounded like

:08:24.:08:26.

science-fiction just a few years ago, but is now a reality taking

:08:27.:08:33.

shape in laboratories and incubators and factories across Britain, there

:08:34.:08:38.

is a once in a generation opportunity for Britain to cement

:08:39.:08:41.

its role as a leader in tech innovation. My ambition is clear, I

:08:42.:08:49.

want to see what is invented here developed here, I want to see what

:08:50.:08:53.

is developed here produced here, I want to see jobs and profits, and

:08:54.:08:59.

yes I want to see tax receipts here in Britain. APPLAUSE

:09:00.:09:09.

I want to see the fruit of British genius being harvested here in

:09:10.:09:17.

Britain as we move into a fourth Industrial Revolution, creating

:09:18.:09:23.

jobs, wealth, and success to future proof our economy post Brexit. We

:09:24.:09:27.

are well placed to do it. More competitive than ever. Up to seventh

:09:28.:09:32.

place in the world league table last year, from tenth the year before. We

:09:33.:09:38.

have world leading universities and research institutes, a trusted legal

:09:39.:09:43.

system and an advantageous time zone, the English-language, our

:09:44.:09:48.

secret and unfair advantage. And vibrant markets. A 20% we have one

:09:49.:09:53.

of the world's most competitive corporation tax rates and as it

:09:54.:10:00.

falls to 17% by the end of this Parliament it will be more

:10:01.:10:05.

attractive still. Of course this explosion of creativity and

:10:06.:10:07.

innovation that I've spoken about hasn't happened solely or even

:10:08.:10:11.

mainly because of government policy but it could easily be snuffed out

:10:12.:10:19.

by the wrong government policy. We must carefully maintained the

:10:20.:10:21.

conditions that have brought this activity to Britain in the first

:10:22.:10:26.

place. Including the ability to attract the brightest and best to

:10:27.:10:30.

work here in our high-tech industries. And where we see that

:10:31.:10:36.

there are government interventions that work we should be prepared to

:10:37.:10:42.

make them, so today I can announce another ?220 million of support to

:10:43.:10:47.

tech innovation spread across two initiatives. ?100 million to extend

:10:48.:10:57.

the biomedical fund which takes revolutionary science from the lab

:10:58.:11:01.

and delivers it to health care interventions and a further ?120

:11:02.:11:06.

billion to nurture the tech transfer offices which put universities and

:11:07.:11:10.

entrepreneurs together to get the science out of the lab and into the

:11:11.:11:16.

factory, that is a Conservative government investing in Britain's

:11:17.:11:16.

future. I've made my argument that we will

:11:17.:11:35.

not overcome Britain's productivity challenge unless we overcome the gap

:11:36.:11:42.

between cities and regions, but this is about politics, as well, because

:11:43.:11:47.

one of the key messages of the referendum campaign was that large

:11:48.:11:50.

parts of our country feel left behind. They see the country getting

:11:51.:11:55.

richer but they don't feel part of that success. A dangerous divide is

:11:56.:12:01.

opening up between those who believe they have a stake in the economy and

:12:02.:12:07.

those who don't. It is one of the central missions of this government

:12:08.:12:12.

to tackle that divide, to see the benefits of growth provided more

:12:13.:12:18.

equally across the regions and generations, and a key part of this

:12:19.:12:22.

agenda is harnessing the economic power of our cities. The Northern

:12:23.:12:28.

Powerhouse project takes a visionary approach, linking the great cities

:12:29.:12:32.

of the North into a coherent economic entity, an interconnected

:12:33.:12:42.

region that live as growth by making it easier and cheaper for and

:12:43.:12:44.

individuals to move goods come people and ideas. I want to pledge

:12:45.:12:52.

to you today that the Treasury under my leadership will continue to drive

:12:53.:12:55.

the Northern Powerhouse project, working in partnership with local

:12:56.:13:01.

leaders to see it deliver its potential for people in the North.

:13:02.:13:06.

But I also want to tell you that our ambition is not limited to the

:13:07.:13:11.

Northern Powerhouse. We want to create the conditions for success in

:13:12.:13:14.

the north, the South, and everywhere in between. There is nowhere more

:13:15.:13:19.

ripe to benefit from a similar approach than the Midlands. The

:13:20.:13:26.

Midlands engine with its hub in Birmingham powers 11.7 million lives

:13:27.:13:32.

generates ?220 billion for our economy and produces 18% of UK goods

:13:33.:13:39.

exports, more than a fifth of our total manufacturing output. In this

:13:40.:13:44.

great region there are 320,000 more people in work than there were in

:13:45.:13:50.

2010. But both productivity and economic growth have lagged behind

:13:51.:13:56.

the UK average. We have developed our long-term economic plan for the

:13:57.:14:01.

Midlands and is already delivering. But we can and we will do more. We

:14:02.:14:06.

are working with the West Midlands combined authority on a second

:14:07.:14:09.

devolution deal to include new powers on transport, criminal

:14:10.:14:15.

justice, data, planning and skills. With Andy Street, our fantastic

:14:16.:14:19.

mayoral candidate for the West Midlands, now in place, a great

:14:20.:14:25.

future is within the region's rasp, at the very released I can promise

:14:26.:14:29.

you this, this region will never be knowingly undersold -- grasp.

:14:30.:14:32.

APPLAUSE The Northern Powerhouse, the

:14:33.:14:47.

Midlands engine, two great projects that can be emulated across written.

:14:48.:14:53.

Indeed, I suspect the limiting factor might only be our ability to

:14:54.:14:57.

think of snappy titles for new regional projects -- across Britain.

:14:58.:15:02.

But be assured we have passed a tipping point in devolution in this

:15:03.:15:08.

country, a decisive and irreversible shift in the economic and political

:15:09.:15:12.

power balance. Britain's economy will be the better and the bigger

:15:13.:15:17.

for it. Conference, the British people have made a bold decision,

:15:18.:15:25.

and our party trusted them with the nation's future in a referendum. And

:15:26.:15:31.

now they trust us to deliver on their decision. We will not let them

:15:32.:15:38.

down. We are going to leave the European Union to repatriate our

:15:39.:15:42.

laws, to assert the supremacy of our courts, to control our borders, but

:15:43.:15:47.

we are not going to turn our backs on the nations of Europe. Let us

:15:48.:15:52.

resolve that as we leave their union, we will remain the best of

:15:53.:15:58.

neighbours but the closest of trade associates and the strongest of

:15:59.:16:02.

security partners. But our economic future must not be defined by Brexit

:16:03.:16:09.

alone. So as we tread that path, to becoming an independent sovereign

:16:10.:16:15.

country once again, and forge a new and exciting role for our nation in

:16:16.:16:23.

the world let us resolve to tackle the challenges at home with renewed

:16:24.:16:27.

vigour, dealing with the deficit, raising our productivity, the

:16:28.:16:31.

balancing our economy and rebuilding our infrastructure. And making sure

:16:32.:16:38.

that everyone in every part of our country can contribute and benefit

:16:39.:16:40.

from the growth that follows. Standing tall, attracting the best

:16:41.:16:56.

to deliver the vibrant successful economy that will mean when future

:16:57.:17:00.

generations look back on our decision in 2016, they'll see, not

:17:01.:17:05.

the end of an era, but the beginning of a new age. Not a country turning

:17:06.:17:15.

inward but a nation reaching out, decisively, confidently to grasp new

:17:16.:17:21.

opportunities, a bigger, better, greater Britain, truly a country

:17:22.:17:28.

that works for everyone. Thank you. APPLAUSE.

:17:29.:17:34.

STUDIO: The Chancellor Philip Hammond finishes his first key note

:17:35.:17:38.

address to the Tory Party Conference as Chancellor. It was a pretty long

:17:39.:17:44.

speech, short on anything new or any new announcements. Maybe he's saving

:17:45.:17:48.

them all up for the Autumn Statement on November 23rd. He boasted about

:17:49.:17:53.

the recovery that had occurred under this Government. He said the

:17:54.:17:57.

Conservatives were the true party of the British working people. He said

:17:58.:18:01.

a divide was opening up between those who were doing well out of the

:18:02.:18:05.

economy and those who weren't. It remains to be soon what is going to

:18:06.:18:09.

be done about that. He had a swipe at Ed Balls who, of course, is now

:18:10.:18:13.

more famous as a dancer than a Shadow Chancellor. He had a few

:18:14.:18:18.

things to say about fiscal policy. He confirmed what we already know,

:18:19.:18:23.

that they are no longer aiming for a surplus in the national budget by

:18:24.:18:27.

2020. Indeed, it could be that they'll drop the very idea of aiming

:18:28.:18:33.

for a surplus, but he did talk about fiscal sustainability which suggests

:18:34.:18:37.

he still hopes that the deficit over time will continue to come down. I

:18:38.:18:42.

guess it means the deficit never came down anything as quickly as Mr

:18:43.:18:45.

Osborne first told us it would in 2010. He then moved to a new more

:18:46.:18:52.

slower reduction for 2015 to 2020, now Mr Hammond I think is probably

:18:53.:18:55.

moving to stage three of deficit reduction which means it will be

:18:56.:19:00.

even slower than stage two under Mr Osborne. He did say that he was

:19:01.:19:05.

going to look to invest in various areas as well. He's already

:19:06.:19:08.

announced something on housing, which don't know yet what else, but

:19:09.:19:13.

he did say we had to do that. He spent some time on productivity and

:19:14.:19:17.

I suppose we'll think with an increase investment may address that

:19:18.:19:26.

poll. Paul Johnson from the Institute for Fiscal Studies, have I

:19:27.:19:30.

missed anything out? Nothing terribly new. We knew he wasn't

:19:31.:19:36.

going to aim for the surplus in 2020 and he's given us no sense of what

:19:37.:19:40.

the new fiscal rule will be. That doesn't surprise me, it will come in

:19:41.:19:44.

the Autumn Statement in November. He's dealing with uncertainty. He

:19:45.:19:49.

focussed on productivity, it's what underlies wage growth, he gave us

:19:50.:19:54.

some sums there, saying if you increase productivity 1% a year, you

:19:55.:19:57.

get hundreds of billions after ten years, absolutely true, the problem

:19:58.:20:01.

of course is how do you deliver that productivity. How does Government

:20:02.:20:05.

deliver it too? How indeed. He was right about some things. It does

:20:06.:20:10.

depend on skills, infrastructure and building and some things Governments

:20:11.:20:12.

have decided notlet to do in the past. We could have had a decision

:20:13.:20:16.

about a runway a lot quicker which would have been good for

:20:17.:20:19.

productivity. You can build extra roads but people don't like them.

:20:20.:20:23.

You can build extra houses on green fields but people don't like them.

:20:24.:20:27.

All these are good for productivity. So there are big decisions to take

:20:28.:20:30.

there. He said something interesting. He did focus and

:20:31.:20:35.

re-affirm George Osborne's commitment to devolution and to

:20:36.:20:40.

giving additional powers to local authorities and to regions. I think

:20:41.:20:44.

that was quite for me a big part of what he said. There is no, it would

:20:45.:20:49.

seem, going back from what I think we'll see over time as quite a big

:20:50.:20:52.

change in the way we run our economy and politics. Maybe if he really

:20:53.:20:55.

believeded in devolution he'd move the Treasury to Manchester? ! He

:20:56.:20:59.

would but... Then you would have a whole different view of the world.

:21:00.:21:03.

Parliament seems to be moving out of its building soon, they could move

:21:04.:21:09.

the whole that bang up there! In the broad sweep of things, we don't know

:21:10.:21:17.

how much he'll slow down, he's going to slow down the pace of deficit

:21:18.:21:25.

reduction? That is my guess. Let's remember, if the economy grows a bit

:21:26.:21:30.

less quickly than was hoped in March, even to he follows through

:21:31.:21:32.

exactly with George Osborne's spending cuts and so on on, we still

:21:33.:21:36.

won't get to a budget southern plus, so simply saying we are not going to

:21:37.:21:39.

get there doesn't tell us anything about the scale of any other change.

:21:40.:21:43.

There's clearly some indication of what looked like some really quite

:21:44.:21:46.

modest increases in spending on house building and so on which might

:21:47.:21:49.

help both in the short run and the long run, but I think we are going

:21:50.:21:55.

toff to wait until the Autumn Statement on November 20rd to find

:21:56.:22:00.

out more detail -- 23rd November. If I were him, I would still be waiting

:22:01.:22:03.

for more news on the economy over the next year to 18 months. To see

:22:04.:22:09.

which way it's going? Yes. Exactly. We don't know the course of the

:22:10.:22:13.

economy yet. We could forecast it going up and down and changing all

:22:14.:22:17.

the time. It's a little unfair to have a crack at Ed Balls, is it not,

:22:18.:22:21.

when his overall fiscal policy now sounds a little like Ed Balls? Well,

:22:22.:22:27.

the last Labour manifesto suggested aiming for what essentially would be

:22:28.:22:31.

a ?20 billion or ?30 billion deficit by the end of the Parliament because

:22:32.:22:35.

they would have been happy to borrow to invest. The Chancellor didn't say

:22:36.:22:39.

that is what he was aiming for, but he's certainly pushing in that kind

:22:40.:22:44.

of direction. Thanks for being with us. Pf pf

:22:45.:22:50.

Yesterday Pf pf was Brexit day here at Conference.

:22:51.:22:53.

We learned of course that Article 50 will be triggered before March next

:22:54.:22:57.

year, starting the formal two-year process of negotiations.

:22:58.:23:00.

And there'll be a vote in Parliament next spring confirming that Britain

:23:01.:23:05.

will leave at the end of that process, the Great Repeal Bill

:23:06.:23:08.

Adam was listening to the speeches and trying to get some

:23:09.:23:15.

answers from the ministers in charge of Brexit.

:23:16.:23:22.

Here is our Adam. APPLAUSE.

:23:23.:23:29.

. A speech from the Prime Minister on a Sunday at Tory conference! Most

:23:30.:23:33.

unusual. Must be something big like when she'll start the legal process

:23:34.:23:38.

of leaving the EU. Let me be absolutely clear. There'll

:23:39.:23:42.

be no unnecessary delays in invoking Article 50. We will invoke it when

:23:43.:23:46.

we are ready and we will be ready soon.

:23:47.:23:50.

We will invoke Article 50 no later than the end of March next year.

:23:51.:23:56.

APPLAUSE. And Brexit means Brexit which means

:23:57.:24:00.

what exactly? We voted to leave the European Union

:24:01.:24:04.

and become a fully independent sovereign country. We will do what

:24:05.:24:09.

independent sovereign countries do. We will decide for ourselves how we

:24:10.:24:14.

control immigration, and we'll be free to pass our own laws. But we

:24:15.:24:20.

will seek the best deal possible as we negotiate a new agreement with

:24:21.:24:22.

the European Union. APPLAUSE.

:24:23.:24:27.

Then there was the big we veal, the Great Repeal Bill. We'll soon put

:24:28.:24:33.

before Parliament a Great Repeal Bill which will remove from the

:24:34.:24:39.

statute bobbing once and for all the European Communities Act.

:24:40.:24:48.

This historic Bill which will be included in the next Queen's Speech

:24:49.:24:52.

will mean the 1972 Act, the legislation that gives direct effect

:24:53.:24:57.

to all EU law in Britain will no longer apply from the date upon

:24:58.:25:01.

which we formally leave the European Union. And its effect will be clear.

:25:02.:25:06.

What about the three Brexit ears, the trio of Government ministers who

:25:07.:25:10.

had to draw up the detailed plans for all of this? David Davis, the

:25:11.:25:15.

Brexit secretary, Liam Fox the international trade secretary and

:25:16.:25:18.

Boris Johnson, the Foreign Secretary. Rumour is they have been

:25:19.:25:21.

told to bite their tongues and not talk to the media much this week.

:25:22.:25:26.

We'll see. Dr Fox, are you keep ago

:25:27.:25:30.

low-profile, have you been told to? Does this look like a low-profile to

:25:31.:25:35.

you? Are you going to come on the programme? Not at the moment. Are

:25:36.:25:39.

you allowed to do interviews. People are saying you have been sat on and

:25:40.:25:42.

you are not allowed to talk to the media? Who, me? Quite fast there,

:25:43.:25:49.

David Davis! No proper interview bus two out of the three did give

:25:50.:25:54.

speeches as part of Brexit Sunday. I know some people suggest we should

:25:55.:25:59.

ignore the rules, tear up the treaties, I say that's not how

:26:00.:26:02.

Britain behaves. What kind of message would that send

:26:03.:26:07.

to the rest of the world? If we want to be treated with good will, we

:26:08.:26:14.

must act with good will. I think that vote on June 23rd, I

:26:15.:26:21.

think that was a vote for economic and political freedom and freedom

:26:22.:26:25.

for this country. APPLAUSE.

:26:26.:26:30.

And, at a packed fringe event, Liam Fox revealed he shed a tear on

:26:31.:26:33.

referendum night when he realised his side had won.

:26:34.:26:38.

That was Brexit Sunday, the Tories just hope this conference doesn't

:26:39.:26:42.

turn into Brexit Monday, Brexit Tuesday and Brexit Wednesday too.

:26:43.:26:47.

Our Adam reporting there. We are joined by our guests now.

:26:48.:27:05.

Dominic Grieve, we know when Article 50 will be triggered and we know the

:27:06.:27:10.

1972 Act, everything in that will be put on to the British stat due book.

:27:11.:27:14.

Are you happy with that approach? Putting the 72 Act on to the statute

:27:15.:27:20.

book, it's indispensable if we are leaving but it doesn't answer the

:27:21.:27:24.

question for business about what the relationship with the EU from

:27:25.:27:28.

outside will be thereafter. Bear in mind that the moment we put it in

:27:29.:27:33.

the statute book, after we leave, divergence will start to occur

:27:34.:27:37.

immediately. I think the key issue for business is, what will be the

:27:38.:27:41.

framework of our relations with the EU from outside of it which will

:27:42.:27:47.

enable them to carry on trading. So in a sense, the great Repeal Act is

:27:48.:27:52.

I think important, but it's not the central part of Brexit. When do we

:27:53.:27:59.

get to know, Bernard Jenkin, even a rough idea of what our relationship

:28:00.:28:03.

will be with the single market once we've left? If we have talks and

:28:04.:28:15.

reach constructive agreement, we'll tidy up all the things like

:28:16.:28:22.

agriculture, fishing data and mobile telephones and civil aviation, but

:28:23.:28:27.

hope will 'll also be an interim agreement to keep the tariffs at

:28:28.:28:33.

zero, to keep the services sector open on both sides, so that we have

:28:34.:28:37.

to time to develop a comprehensive economic partnership over a much

:28:38.:28:42.

longer period. The European Union's problem is two fold. First of all,

:28:43.:28:47.

they tend to take a very long time to develop trading relationships. I

:28:48.:28:51.

mean, how long has TTIP been doing and how long has it taken to do the

:28:52.:28:58.

that nayedian deal, six years, a very long time -- Canadian deal. It

:28:59.:29:02.

requires Norwich Union any morety and ratification by all member

:29:03.:29:18.

states. We can't -- unanimity. What do you say? I don't disagree about

:29:19.:29:23.

the sort of frustrations that we may encounter in the course of

:29:24.:29:27.

negotiating Brexit. But the bottom line is that we are in meshed

:29:28.:29:33.

economically with our European partners -- enmeshed. Unless we want

:29:34.:29:40.

a chaotic Brexit at the end of it, meaning we refer to a WTO

:29:41.:29:45.

membership, we are going to have to build structures which will fetter

:29:46.:29:49.

us to some extent. It doesn't matter how you do it that,'s how

:29:50.:29:51.

international relations are conducted. I always worry that

:29:52.:29:56.

there's an element of fantasy about Brexit, but somehow this wonderful

:29:57.:30:00.

moment comes, you have the Great Repeal Bill, the day comes when we

:30:01.:30:05.

leave and suddenly there is a brave new world, there isn't. It's a world

:30:06.:30:09.

of complex, commercial relationships underpinned by new treaties, just as

:30:10.:30:16.

we had old treaties, and whilst it's true the new treaties may not be

:30:17.:30:19.

Raing litted bay the European Court of Justice so we escape some of the

:30:20.:30:24.

mechanisms of the EU, actually it will be replaced by new apparatus,

:30:25.:30:28.

just as the international relations commercially with other states

:30:29.:30:30.

outied the EU is regulated at present. He doesn't seem to think

:30:31.:30:34.

it's worth a candle in other words? He was on the other side of the

:30:35.:30:39.

debate. The point is that we could have a much simpler and more

:30:40.:30:42.

straightforward relationship. The model might be the kind of

:30:43.:30:46.

relationship that Canada has with the United States. The United States

:30:47.:30:50.

Supreme Court doesn't make laws in Canada, the congress doesn't make

:30:51.:30:53.

laws in can dasmt It's a Free Trade Agreement. Is that what you would

:30:54.:30:56.

like? Yes, that is what we want. What is wrong with that? Nothing.

:30:57.:31:01.

But if you look at the reality of the Canadian US Free Trade Agreement

:31:02.:31:06.

because of the preponderance of economic power on one side of that

:31:07.:31:10.

equation, it's one which ultimately gets driven by the larger partner.

:31:11.:31:15.

You can't escape that. There is no pressure in Canada to come out. If

:31:16.:31:21.

anything, the pressure is in America to do it away.

:31:22.:31:26.

It is vital to their national interests, but when we voted to

:31:27.:31:33.

leave, I myself have never quite seen it as independent data --

:31:34.:31:38.

Independence Day, because it seems to me we live in an independent

:31:39.:31:44.

world, and what some people aspire to with Brexit is unlikely to be

:31:45.:31:47.

realised and so we have got the hard-headed and pragmatic about what

:31:48.:31:51.

we want to achieve and how we achieve it. We Road need to submit

:31:52.:31:59.

to the European court of justice as we do at the moment, that will give

:32:00.:32:05.

us our independence -- we won't need to submit. We will need to decide

:32:06.:32:13.

for ourselves. United Kingdom imports far more from the Europeans

:32:14.:32:19.

than we export and so they have a huge vested interest. Yes, we had

:32:20.:32:23.

that in the campaign, but from everything you say, you accept that

:32:24.:32:31.

if you don't want to be... You want to end freedom of movement. You are

:32:32.:32:38.

not going to be a member of the single market. That's impossible

:32:39.:32:45.

now? Yes, no doubt about it. You replace it with a free trade

:32:46.:32:49.

agreement? Yes, that might take some time. The interim arrangement might

:32:50.:32:54.

not be for me agreed, we might just say, until we have a agreement we

:32:55.:32:58.

will keep our tariffs at zero and keep our borders open for such and

:32:59.:33:06.

such. If we said we are open, you can carry on trading with us and

:33:07.:33:11.

selling your stuff tariff free, but then they say, no, we are going to

:33:12.:33:17.

put up tariffs, what is the European Union going to look like? It will

:33:18.:33:34.

destroy the British kind as to. -- car industry. It is perfectly

:33:35.:33:41.

reasonable that we are offsetting, if we are raising that revenue, we

:33:42.:33:49.

are spending on making this a very attractive country for investment.

:33:50.:33:55.

Subsidies? But subsidies. Increasing training grants, grants for research

:33:56.:34:00.

and element, many positive things we can do within the state aid rules.

:34:01.:34:05.

Our biggest individual export country is the United States, and we

:34:06.:34:07.

don't have a free-trade agreement with them. Our rules are already

:34:08.:34:15.

very enmeshed with Europe, could we not move quite quickly if there was

:34:16.:34:19.

goodwill on both sides to do a free-trade agreement? That is

:34:20.:34:23.

possible, and I would be very much in favour of trying to achieve it,

:34:24.:34:31.

but... You accept we can't be in the single market as a member? We could

:34:32.:34:38.

be if we are prepared to accept the restraints, but I understand it

:34:39.:34:42.

might be possible for us to negotiate a status for the United

:34:43.:34:44.

Kingdom which is somewhat different for other countries, all those

:34:45.:34:50.

things are possible. You can't be in the single market without being

:34:51.:34:57.

subject to the ECJ? You would be subject to what is in effect the

:34:58.:35:01.

younger brother of the ECJ and you would lose the influence in the

:35:02.:35:08.

formulation of the regulations. I'm a pragmatist, but the reality of

:35:09.:35:11.

trade and mutual interdependency is that you have to accept a framework

:35:12.:35:16.

of rules and if you don't the question is, what will the economic

:35:17.:35:22.

consequences be, and in my constituency I have companies there

:35:23.:35:27.

because they have access to the single market and if they don't have

:35:28.:35:30.

access to the single market they will move away. They will have

:35:31.:35:34.

access, but they don't know what terms, so why should any

:35:35.:35:39.

multinational at the moment, wondering where to expand next,

:35:40.:35:44.

bring their foreign investment to Britain until everything you have

:35:45.:35:48.

been talking about has been resolved? That is why there will be

:35:49.:35:55.

pressure not so much on hard and soft, but quick, and click means

:35:56.:35:59.

simple and simple means not getting involved in unanimity provisions, it

:36:00.:36:07.

means offering a unilateral deal to the EU, pending a longer-term deal,

:36:08.:36:13.

but it also means gives the few giving assurances to investors. We

:36:14.:36:20.

could call that the make the Chancellor Philip Hammond said

:36:21.:36:35.

he was hoping to break with austerity policies to an extent,

:36:36.:36:39.

from his predecessor, but by how much we don't know, we have got to

:36:40.:36:45.

wait for the Autumn Statement. The British people elected us on a

:36:46.:36:49.

promise to restore fiscal discipline and that is exactly what we are

:36:50.:36:53.

going to do. But we will do it in a pragmatic way. In a way which

:36:54.:36:57.

reflects the new circumstances we face. The fiscal policies George

:36:58.:37:02.

Osborne set out were the right ones for that time. But when times

:37:03.:37:08.

change, we must change with them. So we will no longer target a surplus

:37:09.:37:13.

at the end of this Parliament. But make no mistake the task of fiscal

:37:14.:37:24.

consolidation must continue. Right. That was the Chancellor and are now

:37:25.:37:31.

joined -- I'm now joined by David Gauke. The Chancellor boasted about

:37:32.:37:35.

the recovery that has happened under this government, but the fact is,

:37:36.:37:42.

GDP per capita has barely moved in the last six years. It is the case

:37:43.:37:49.

that of the G-7 countries GDP as a whole has grown fast in the UK than

:37:50.:37:54.

any other. Partly because of the amount of immigration that has taken

:37:55.:37:58.

place, that you have said you will stop. If you divide the GDB by the

:37:59.:38:04.

number of people in the country, compared to 2010, it has barely

:38:05.:38:11.

grown at all -- GDP. We inherited a difficult set of challenges in terms

:38:12.:38:15.

of the public finances and in terms of the after-shocks of the financial

:38:16.:38:21.

crisis and the Eurozone crisis which had a significant impact upon the

:38:22.:38:26.

us. Over that period we have seen a large creation of the number of jobs

:38:27.:38:37.

and GDP growth has been significant. But not per head. We were faced with

:38:38.:38:43.

problems of the year is own crisis in 2012 and the after effects of the

:38:44.:38:48.

financial shocks which meant funding for businesses was very difficult --

:38:49.:38:53.

the problems of the Eurozone crisis in 2012. UK has been growing

:38:54.:38:58.

strongly by any measure you want to look at. But not by GDP per head,

:38:59.:39:04.

that is my point. One of the reasons is that for most of the time you

:39:05.:39:09.

have been in power real wages have fallen, they have not grown, so

:39:10.:39:14.

people have been overall worse off in terms of the money they have

:39:15.:39:17.

raised in Germany and France, where real wages have risen. To some

:39:18.:39:27.

extent, if you are making a comparison with France and Germany,

:39:28.:39:32.

real wages in the context where we have seen a very substantial

:39:33.:39:34.

increase in the Labour force, which has not been the case in France and

:39:35.:39:38.

Germany in the same way, so there has been away in which there has

:39:39.:39:43.

been a trade-off between the two. It begs the question, what do we do

:39:44.:39:47.

about it? As Paul Johnson said, if you want to drive up real wages this

:39:48.:39:55.

is about driving up productivity and much of the speech today from Philip

:39:56.:39:58.

Hammond was about how we can improve productivity, that is a long-term

:39:59.:40:01.

challenge and we have taken steps over the last six years but there is

:40:02.:40:07.

more to do. So far with no impact. If you are looking at improving the

:40:08.:40:13.

skills base, that is something which isn't going to be a matter which is

:40:14.:40:20.

solved in three, four, five, even six years, that's a long-term

:40:21.:40:25.

project. If we are looking at encouraging more investment in the

:40:26.:40:29.

UK and our policies on corporation tax for example have attracted more

:40:30.:40:32.

investment to the UK, but the benefits of that investment is

:40:33.:40:34.

something you see over a long period of time. Because something is

:40:35.:40:40.

long-term, it doesn't mean that governments should not focus on it.

:40:41.:40:45.

You might expect to see glimmers of progress, but UK productivity per

:40:46.:40:50.

hour has not changed since 2007. It has not moved now in nine years. One

:40:51.:40:59.

of the particular factors, you have used 2007 as a base point, it is a

:41:00.:41:07.

reasonable point to make. The hit of the financial crisis on our

:41:08.:41:10.

productivity was very considerable and continues to be considerable.

:41:11.:41:15.

The question is, how do we improve our productivity which marked the

:41:16.:41:19.

focus on our infrastructure and skills and attracting investment to

:41:20.:41:24.

the UK, that has got to be the way forward. But you have slashed

:41:25.:41:33.

infrastructure spending. We inherited a reduction in

:41:34.:41:37.

infrastructure spending. Of course. But as a bit -- centage of GDP it in

:41:38.:41:46.

fact declined to little bit and compare to other countries it is

:41:47.:41:50.

rather small -- but as a percentage of GDP. If you look at government

:41:51.:41:56.

spending in infrastructure and along with PPP, the UK is comparator with

:41:57.:42:00.

other countries, but there is more we need to do to encourage private

:42:01.:42:03.

sector investment in infrastructure, but the reality is the government...

:42:04.:42:10.

If you look at transport, we have a set actual increase in the roads

:42:11.:42:13.

budget over the course of this Parliament, it will be increasing by

:42:14.:42:17.

three times over this period, we are investing more in the railways, for

:42:18.:42:23.

any time since Victorian times, and so we are increasing expenditure

:42:24.:42:28.

especially in that high-value infrastructure where there is good

:42:29.:42:32.

economic return. What the Chancellor made reference to today, his

:42:33.:42:36.

enthusiasm to look at ways in which we can do that consistent with a

:42:37.:42:40.

commitment to getting the public finances under control. How can you

:42:41.:42:45.

be the self-styled workers party win 6 million working people in this

:42:46.:42:48.

country are less than the living wage? We are in a position where we

:42:49.:42:54.

have created a lot of jobs in this country and we have brought in the

:42:55.:42:57.

national living wage and that is providing a significant pay rise to

:42:58.:43:05.

millions of people. We have cut taxes for the low paid and taken

:43:06.:43:10.

millions out of income tax. 6 million people earning less than the

:43:11.:43:15.

living wage, defined as ?9 15 in London and ?7 85 elsewhere in the

:43:16.:43:22.

UK. Not much money for people at this conference, but 6 million

:43:23.:43:26.

people earn less than that. That can't be right for a self-styled

:43:27.:43:31.

workers party. What you do about it? That is your job. I will answer it.

:43:32.:43:37.

You make sure those people pay less in tax and you make sure you have a

:43:38.:43:44.

higher national living wage then you would otherwise do, but I come back

:43:45.:43:50.

to this point, if we want to have a high wage, high skill economy, we

:43:51.:43:54.

have got to make sure we have the environment to improve our skills

:43:55.:43:59.

and our infrastructure, and it is very important, that we are a

:44:00.:44:02.

country which continues to create jobs. Our record in the last six

:44:03.:44:07.

years over job creation as a country is extremely strong by any

:44:08.:44:13.

standards, historical or international, and it is good that

:44:14.:44:17.

we are not a society that is played with mass unemployment. But again,

:44:18.:44:23.

you are the self-styled workers party, Philip Hammond said this and

:44:24.:44:28.

Theresa May said at yesterday, but UK workers in fact work longer hours

:44:29.:44:34.

for less pay than the other... The original EU 15, so what is the

:44:35.:44:41.

workers party doing about that? The reason why that is the case, as the

:44:42.:44:45.

Chancellor made clear, that is because our productivity levels are

:44:46.:44:49.

not as high as a number of our competitors. It comes back to this

:44:50.:44:56.

point, sometimes worthy... Philip made the point about it will not set

:44:57.:45:00.

the pulses racing, but how do we improve productivity as a nation.

:45:01.:45:04.

Which hasn't changed since you came to power. These are long-term

:45:05.:45:10.

challenges, but what we saw from the Chancellor, in a very serious and

:45:11.:45:14.

thoughtful speech, was outlining ways in which we can improve that

:45:15.:45:17.

productivity and how we can make long-term decisions to make sure

:45:18.:45:21.

that the UK's productivity increases and it is true that that we benefit

:45:22.:45:23.

people's wages. Abdeslam Ab For six years, or more

:45:24.:45:31.

than six years, in the run-up to the election, your party told us that

:45:32.:45:36.

the guiding light in its welfare reforms and its attitude to the

:45:37.:45:40.

economy would be to make work pay, that if you got a job, and if you

:45:41.:45:45.

did the right thing which Mr Osborne used to say all the time, it would

:45:46.:45:52.

pay to work. And yet six years after you'd been in power, 50% of Pellow

:45:53.:45:59.

citizens who're in poverty have at least one family member in work. So

:46:00.:46:04.

in what way has that made work pay? They are working and they live in

:46:05.:46:08.

poverty? Well, what we have seen is a significant increase in the number

:46:09.:46:13.

of jobs in this country. Something like 2.7 million more jobs. But they

:46:14.:46:17.

are still in poverty? In this economy, one of the reasons why we

:46:18.:46:27.

have had this, and it's undoubtedly a success, in the last six years,

:46:28.:46:32.

employment numbers are as high as they are. One of the reasons is

:46:33.:46:36.

because welfare reform has played a part. More people are essentially

:46:37.:46:39.

seeing that it's worthwhile for them working. Now, is there still more to

:46:40.:46:43.

do, of course there is. I'm acknowledging that. It's not just a

:46:44.:46:48.

case of more to do, relative poverty, which is still the official

:46:49.:46:53.

measure of this Government, relative poverty among those in work is at

:46:54.:47:00.

record levels. Record levels. How does that make you, the workers

:47:01.:47:04.

party? The workers party are going to revolt if you carry on like this?

:47:05.:47:10.

We are seeing a reduction in the number of workless households. I

:47:11.:47:14.

understand that. My point is in-work poverty, you said work would pay.

:47:15.:47:18.

Make work pay, get a job, do the right thing and you will prosper in

:47:19.:47:27.

a Tory Britain, whereas among those who are in work, poverty, is at

:47:28.:47:32.

record levels? What we are seeing is people who previously would have

:47:33.:47:36.

been workless are now in employment. That's got to be a good thing. Now,

:47:37.:47:41.

the next challenge, if you like, is how do we ensure those people who

:47:42.:47:45.

perhaps in a previous era would have been out of work, they are now in

:47:46.:47:49.

work but not earning sufficient. The next challenge is to ensure that

:47:50.:47:53.

those people go on and earn more. Again, I come back to, how do you do

:47:54.:47:57.

that? You can improve their living standards by taking them out of

:47:58.:48:00.

income tax which we have done in four million cases. These figures

:48:01.:48:05.

take that into account? You can help them by having a national living

:48:06.:48:11.

wage whereby they are better paid and we introduced that. Taken that

:48:12.:48:14.

into account? That will increase over the course of the Parliament.

:48:15.:48:18.

But fundamentally, what you can do is ensure that we have got more

:48:19.:48:22.

people who're highly skilled and that we have a society that is more

:48:23.:48:31.

productive and that increase in product Ity ends up benefitting

:48:32.:48:37.

People who're working, that is the point the Chancellor was making. I

:48:38.:48:41.

know you can't give us any more details because we have to wait for

:48:42.:48:44.

the Autumn Statement in November. But are we going to borrow more to

:48:45.:48:48.

invest? As a Jens principle? I would make

:48:49.:48:55.

two points about the Autumn Statement -- as a general principle.

:48:56.:48:58.

The acknowledgement because of the uncertainty of the Brexit votes,

:48:59.:49:02.

it's likely tax receipts will be lower than was previously projected,

:49:03.:49:08.

so that means that we are not in a position to meet our 2019-2020

:49:09.:49:12.

surplus. So the deficit reduction will continue to increase but at a

:49:13.:49:18.

slower pace. So it might not even continue to reduce? We'll see what

:49:19.:49:21.

the Office for Budget Responsibility determines and we await their

:49:22.:49:25.

numbers. So that's the first point. The second point is that we are in a

:49:26.:49:30.

set of circumstances where interest rates are very low. The way the

:49:31.:49:35.

markets have moved, we can borrow more cheaply than previously. If

:49:36.:49:39.

there is a case for high value infrastructure, and we have to be

:49:40.:49:45.

pretty tough about this, this is not about relaxing day-to-day spending

:49:46.:49:48.

but if there is a case for high value infrastructure that allows

:49:49.:49:51.

long-term productivity, then, as the Chancellor made clear, we'll be

:49:52.:49:54.

willing to look at that. Thank you very much for coming to speak to us

:49:55.:49:58.

after the Chancellor's speech. This Autumn Statement is on November 23rd

:49:59.:50:01.

and we'll bring it all to you here on the Daily Politics on BBC Two,

:50:02.:50:08.

probably from, about 11. 30-3 o'clock. Earlier, the Communities

:50:09.:50:15.

Secretary made his speech to conference so let's have a listen to

:50:16.:50:21.

some of what Sajid Javid had to say. 1.5 million households contain at

:50:22.:50:26.

least one adult who says he or she would love to buy or rent their own

:50:27.:50:30.

home but they have simply not been able to afford to do so. Harold

:50:31.:50:36.

Macmillan put it best more than 90 years ago. Housing is not a question

:50:37.:50:41.

of conservativism or socialism, he said, it's a question of humanity.

:50:42.:50:51.

Tackling this housing short fall isn't about political expediency.

:50:52.:50:56.

It's a moral duty. It's one that falls on all of us,

:50:57.:51:02.

not just in Parliament, but on businesses, if Local Government and

:51:03.:51:08.

in local communities. I'm not afraid to stand up here and say that this

:51:09.:51:14.

country has not built enough homes. We have to be honest about it.

:51:15.:51:22.

In the last year of full records, we managed to deliver more than 170,000

:51:23.:51:27.

additional properties across England. It's not a bad number, but

:51:28.:51:32.

it's far fewer than we need. We need to do much better.

:51:33.:51:38.

Everyone agrees that we need more homes. Too many of us object to them

:51:39.:51:46.

being next to us. We have got to change that attitude.

:51:47.:51:52.

So my message today is clear - it's time to get building.

:51:53.:52:00.

APPLAUSE. There was Sajid Javid announcing

:52:01.:52:03.

beefing up the housing programme and getting the numbers behind the

:52:04.:52:11.

current rate of completion about 138,000 in England.

:52:12.:52:16.

So the motto of the conference here is "a country that

:52:17.:52:18.

works for everyone", echoing Theresa's May's

:52:19.:52:20.

on Downing Street when she first became Prime Minister.

:52:21.:52:23.

We're joined now by the former universities

:52:24.:52:25.

He's now executive chair of the Resolution Foundation,

:52:26.:52:30.

a think tank which focuses on living standards.

:52:31.:52:32.

Plenty of rhetoric about being the workers' party and a country that

:52:33.:52:43.

works for everyone. But I think you heard my interview with David Gauke,

:52:44.:52:46.

there is a long way to go to turn that rhetoric into reality? There

:52:47.:52:51.

is. David was right to say that productivity is a key part of the

:52:52.:52:54.

challenge. But there is another part of the challenge which is what Sajid

:52:55.:52:58.

was talking about, the work resolution shows housing costs are

:52:59.:53:02.

one of the big pressures on living standards for people on low incomes.

:53:03.:53:07.

The increase in the housing cost, it looks to be the equivalent of about

:53:08.:53:12.

a 14p increase in income tax. If we can get more housing built and

:53:13.:53:15.

because there is an increase in supply, see over time the cost of

:53:16.:53:19.

housing starts falling, people will feel that as an improvement in their

:53:20.:53:23.

living standards, their wages will go further, the moment low income

:53:24.:53:27.

families have to put more of their wages into rents. Both in the

:53:28.:53:32.

private and public sector. Yes. And also, I was looking at the figures

:53:33.:53:35.

and because we failed to build enough houses to meet the demand,

:53:36.:53:42.

the Housing Benefit bill has gone through the roof because people on

:53:43.:53:45.

average incomes can't afford these rents so the state has to subsidise?

:53:46.:53:50.

Yes, you are absolutely right. It's a double hit? There are more people

:53:51.:53:54.

on means tested benefits and if people go from youth into middle age

:53:55.:53:58.

and are still renters, the long-term challenge is what if you have got

:53:59.:54:02.

many pensioners who aren't owner occupiers and millions of pensioners

:54:03.:54:05.

claiming Housing Benefit so it actually makes sense in terms of

:54:06.:54:09.

getting a long-term grip on public spending to make it easier for

:54:10.:54:12.

people to own their own homes. That's why I think what Sajid said

:54:13.:54:15.

today was absolutely the right thing. Shouldn't there be massive

:54:16.:54:19.

council house building programmes? It's interesting you should say

:54:20.:54:23.

that. When I look at what the Conservative Party did in the

:54:24.:54:31.

1950s... 300,000 houses a year, Harold Macmillan Housing Minister

:54:32.:54:36.

Yes, and he did private house building and public house building,

:54:37.:54:43.

a combination. With Sajid's statement today, private building is

:54:44.:54:47.

not on itself going to get us enough houses. Some will have to be public

:54:48.:54:53.

sector building. Here in Birmingham, they put up lots of prefabs in the

:54:54.:54:58.

50s, they needed to do something to house people and we need that. Not

:54:59.:55:03.

prefabs, I assume? There is a debate about whether we can make the cost

:55:04.:55:07.

of building houses lower, that is a different story but certainly we are

:55:08.:55:09.

seeing this Government focus on getting more houses built. One issue

:55:10.:55:14.

on the housing issue, and you are right, housing is such an issue on

:55:15.:55:18.

poverty and benefits and on people's ability to get on as well, but not

:55:19.:55:22.

only do we fail to provide enough houses for our people, even we we

:55:23.:55:27.

do, we build the smallest new homes in the European Union. 76 square

:55:28.:55:32.

metres is the average size. Even in Denmark it's 137, Holland, which is

:55:33.:55:40.

so crowded they have to reclaim the sea, 115 square metres, we treat

:55:41.:55:43.

people badly in the regard. That is because the price of land is so

:55:44.:55:47.

high. The big cost of the house is the cost of the land. When you have

:55:48.:55:51.

highly restrict i planning arrangements which mean the smaller

:55:52.:55:54.

areas you can build on, that pushes up the price. Sajid said an

:55:55.:55:59.

important thing today, he's focussing on more brown field

:56:00.:56:02.

building, high streets where you have had shots in the past, perhaps

:56:03.:56:07.

that's where you can in-fill with flats, houses, places we have not

:56:08.:56:10.

assumed we can build on before, we can build there. If I had a pound

:56:11.:56:16.

for every time politicians say they would build on brown field sites, I

:56:17.:56:23.

may well be able to build on the brown field site -- able to pay for

:56:24.:56:30.

the build myself! The Brown record was poor, this

:56:31.:56:34.

Government's record is actually in many ways so far worse than pretty

:56:35.:56:42.

poor, so look, most of the demand for new homes is biggest in those

:56:43.:56:47.

areas that are run by the Tories, by the people at this conference. Yes.

:56:48.:56:51.

And they don't want to zone their land for a lot more houses so you

:56:52.:56:55.

are looking at the problem, that's the fundamental problem? I would say

:56:56.:57:00.

that where we can do more is that the policy measures have tended to

:57:01.:57:06.

be on the demand side, helping couples with the cost. We have got

:57:07.:57:10.

to get more built. If you lack at what the Government is proposing,

:57:11.:57:13.

it's going to be easier to build on public sector land. There's going to

:57:14.:57:17.

be more liberalisation of the planning regime so you can build on

:57:18.:57:23.

areas that have had empty shots and things. We can shift focus to

:57:24.:57:26.

getting more built, not just helping people with the costs by extra

:57:27.:57:33.

allowances. You heard me talking to David Gauke about the number of

:57:34.:57:36.

people in jobs, they're very much the working poor. One thing that

:57:37.:57:40.

would help the working poor? Once you are in work, making it easier to

:57:41.:57:45.

move on and move up and using the apprenticeship levy to help people

:57:46.:57:49.

into training and devolving it to local towns and cities. So local

:57:50.:57:56.

skills? Yes. Shifting people off unemployment into work, sadly too

:57:57.:57:59.

often it's low-paid, the next thing is to help them move to better paid

:58:00.:58:03.

jobs. Are you enjoying being in the think-tank rather than being in the

:58:04.:58:07.

thick of it? Well, I was in think-tanks before I was at the

:58:08.:58:12.

Centre for Policy Studies. I'm enjoying write am and we are

:58:13.:58:16.

contributing to the debate. Thank you very much for joining us on the

:58:17.:58:20.

Daily Politics conference special. That's it from us in Birmingham

:58:21.:58:24.

after two hours of broadcasting. I'll be back with highlights from

:58:25.:58:28.

today's conference, including the Chancellor's speech on BBC Two this

:58:29.:58:32.

evening just after Newsnight, around 11. 15. We'll have more live

:58:33.:58:37.

coverage here from what is still a sunny Birmingham here at the

:58:38.:58:41.

Conservative Party conference, as they move on to their second day, or

:58:42.:58:45.

is it their third. I never know if we count Sundays these days, anyway,

:58:46.:58:50.

we'll be here tomorrow building up to the big speech by the Prime

:58:51.:58:52.

Minister which will close this conference on Wednesday morning.

:58:53.:58:54.

Until then, bye.

:58:55.:58:59.

Andrew Neil is live from Conservative party conference in Birmingham as chancellor Phillip Hammond takes to the stage. He is joined by chief secretary to the Treasury, David Gauke and culture minister Matthew Hancock to discuss the economy and Theresa May's plans for Brexit.


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