13/03/2018 Daily Politics

Hello and welcome to

the Daily Politics.

The Prime Minister points the finger

of blame at Russia for the nerve

agent attack in Salisbury and gives

Moscow a deadline of midnight

tonight to explain itself.

President Putin, BBC News.

Is Russia behind the poisoning

of Sergey Skripal?

TRANSLATION:

We are busy

with agriculture here to create

the conditions for people's lives.

And you talk to me

about some tragedies.

First work out what actually

happened there and then

we will talk about it.

Vladimir Putin brushes

off accusations of involvement.

Meanwhile the British ambassador

in Moscow is summoned

to the Russian Foreign Ministry

as the diplomatic row escalates.

After nearly eight years of tax

rises and public spending

squeezes, we test the public

mood about austerity.

Has it been worth the effort?

I think there's been far too many

cuts to public services, there's

been cuts in this borough

specifically to local services such

as closing parks in the evening and

things like that.

Well, that debate forms the backdrop

to the Chancellor's first ever

Spring Statement, when he'll update

us about the state of the economy.

We'll have all the

action live at 12:30.

All that in the next

hour and a half.

Yes, a full 90 minutes today

to allow us to cover

the Chancellor's statement live

as well as all the reaction.

And with me throughout

are the Shadow Treasury

Minister Annaliese Dodds

and the Cabinet Office

minister Oliver Dowden.

Welcome to you both.

First today, the British Government

has given Moscow until midnight

tonight to explain why

a Russian-made nerve agent was used

in the poison attack in Salisbury.

The Prime Minister says

it is "highly likely" Russia

was responsible for the attack

against the former Russian double

agent Sergei Skripal

and his daughter, Yulia.

A short while ago a meeting

of the Government's emergency

committee Cobra began,

chaired by the Home Secretary

to discuss the response.

The Prime Minister made a statement

in the Commons yesterday

and was followed by the Labour

leader, Jeremy Corbyn.

It was an indiscriminate

and reckless act against

the United Kingdom, putting

the lives of innocent

civilians at risk.

And we will not tolerate such

a brazen attempt to murder innocent

civilians on our soil.

The events in Salisbury on the 4th

of March have appalled the country,

and need thorough investigation.

The local community and public

services involved need reassurance

and the resources necessary.

The action the Government takes once

the facts are clear,

needs to be both decisive

and proportionate and focussed

on reducing conflicts and tensions

rather than increasing them.

Since the Prime Minister's

statement, the diplomatic row

between London and

Moscow has escalated.

Our Diplomatic Correspondent James

Landale can bring us up to speed.

What has the Russian response been

so far, bearing in mind the clock is

ticking?

So far the Russians have

once again denied any involvement in

events in Salisbury and specifically

the Russian Foreign Minister survey

line -- Sergey Lavrov says they want

more information. They say the

British government has not provided

them with any material, the alleged

nerve agent used in the attack, they

also save the British government is

not following the usual protocols

under what's called the office for

the prevention of chemical weapons,

which is a convention we are and the

Russians are signed up to. They say

there are certain procedures and

timelines which the British are not

following. So a fairly predictable

response so far.

In terms of the

response from our allies, there has

been broad support for Theresa May,

particularly from Rex Tillerson in

the United States, but what does

that mean in practice?

There have

been warm words of support, yes from

Rex Tillerson and other world

leaders, President Macron spoke to

the Prime Minister yesterday. I have

to say, there is certainly a gap

between the views of Rex Tillerson,

the State Department and the White

House. The White House is insisting

that whilst they support the British

and condemn what happened in

Salisbury, they have been more

reluctant to blame the Russians

where is Rex Tillerson has accepted

the British analysis. The question

is, is there anything practical that

the British can get in an

international forum that in anyway

puts meaningful pressure on the

Kremlin? At the moment we are

getting words of support. In the

long run is there any hard-core

diplomacy across the piece, whether

EU, Nato, anywhere, that the British

can get enough of an alliance

together to put pressure on the

Kremlin?

That then begs the question

of some debate about what we should

do with regard to the World Cup is

being held in Russia. Tell us more

about some of the suggestions around

that.

Boris Johnson has been

speaking this morning and refusing

to go into the detail of what the

British government may or may not do

tomorrow if they don't get a

satisfactory response from the

Russians. My own view is the

government will be reluctant to

organise any kind of formal,

official sporting boycott of the

World Cup. I think we will get some

officials not going but they know

that will be a hard ass to get other

countries in joining them in not

sending footballers there. We are

more likely to seek domestic focused

reaction, potentially the expulsion

of Russian diplomats and new

measures to crack down on wealthy

Russians living in London, and more

pressure on the international stage

as well.

Thank you.

I'm joined now by Peter

Ricketts, the first

National Security Adviser

during the coalition Government,

and now a crossbench peer

in the House Of Lords.

Welcome to the programme. Let's

return to what Theresa May said

initially in her statement yesterday

to the house, she said it was highly

likely Russia was responsible for

the poisoning of Sergei Skripal, and

it was either a direct attack by the

Russian government or they had

somehow lost control of this nerve

agent. Does that give the Russians

get out?

Not really I don't think,

because this is military grade nerve

agent. It should be kept in the

highest conditions of security so it

is offering them a choice between

saying incompetence or deeply

implicated in the attack.

What did

you make of the statement and the

tone?

It was very good, serious,

clear and measured and gave the

Russians an opportunity to come back

with any comments they wanted to

make. The problem will be, assuming

the Russians don't come back with

anything which is most likely,

producing a package of measures

which lives up to the expectations

created by the gravity of the

situation on her statement.

It is

extremely serious what's happened,

using a chemical weapon on the

streets of Britain and Russia being

likely to be responsible. What could

match that rhetoric in your mind?

The sort of thing is James Landale

was talking about will be on the

list, expulsions, security crowd in

the Russian Embassy, I would hope

not the ambassador because we need

him to be passing messages to

Moscow. Going after the money, the

idea of powers to seize money from

people who have committed human

rights abuses, that would be

powerful but not a game changer.

I've suggested there should be more

activity with our Nato partners. A

chemical attack is something Nato

should be interested in.

Not saying

an attack on one is an attack on us

all.

But putting it on the agenda.

There is a summit coming up. We

should be having made to think

differently about Russia, perhaps

changing the dispositions of forces

in Eastern Europe. That is a longer

term thing but quite a potent area

to be looking at.

But would any of

those things? Because to some extent

we have done that in the past,

sanctions, you could argue the

cupboard is bare in terms of what

Britain alone can do. Will any of

that have an impact on Putin's

thinking?

The only thing that will

have an impact is things that hurt

the Russians' reputation or possibly

serious financial measures that

really begin to bite. Realistically

we are not going to change Russian

minds about a pattern of behaviour

that goes back over decades but we

have to show them to do this with

impunity, that there will be costs

and that's why we need to do this in

an international setting with as

much solidarity as possible.

That

solidarity that James Landale was

also talking about, what would that

mean in practical terms? What would

our allies, you mentioned Nato, what

would they really be prepared to do

to show that solidarity?

I rather

agree with James that we will set

ourselves up for failure if we go

after a boycott of the World Cup

because I don't think people will

want to withdraw their teams unless

things get very much worse. I think

the financial side because there's a

lot of Russian money in London

obviously, but also other European

capitals, and the US have already

taken some Draconian measures. If

there can be more practical

follow-up on seizure of assets of

people we have serious doubts about,

that could be something. But it will

be difficult. The Russian regime are

hard to influence but we have to do

our best in as wide company as

possible.

Oliver Dowden, let's talk

about those powers because Jeremy

Corbyn

Corbyn criticised yesterday. Was it

a mistake to block the amendments?

A

lot of the proposals in there have

already been implemented through the

Proceeds of Crime Act, we brought

forward an amendment enabling us to

seize proceeds when they are

seize proceeds when they are related

to that. The Foreign Office has made

it clear we will look at this. There

are issues over whether the

amendment works but I don't think

there's a real division over it.

So

what is the problem, Annaliese

Dodds?

I saw the government stopping

the debate after 25 minutes because

they thought they might lose a vote

over having these sanctions. They

are named after the person who was

imprisoned and tortured in Russia

when he was acting for a US

businessman. They are designed to

target those sanctions at abuses of

human rights on a grand scale. We

tried to get that provision in

through the bill. The government

shut down debate on it which meant

we couldn't look at other

amendments.

Do you think, despite

your reservations, that should be

something the government should

support?

With the Proceeds of Crime

Act we had the powers to go after

these gross human rights violations.

Further measures need to be taken.

At report stage, which is when the

house will vote on this, we will be

looking out seeing if it's necessary

to bring forward further measures.

Let's look at the cyber options, a

cyber counterattack. Would it be

effective?

I don't know exactly what

they have in mind. I'm sure the UK

has some powerful assets in that

area. I am sceptical that an

offensive cyber attack against the

Russians is going to work and might

not produce an immediate and even

harder punch back. I wonder whether

it would be more effective to do

more calling out of manipulative

Russian efforts in our media, in our

politics. In France we saw during

President macro's presidential

campaign the Russians tried this

manipulative stuff in France and he

called them out -- President Macron.

It is hard to do that kind of

manipulation in the full transparent

glare of publicity so that will be

more effective in my mind.

We will

talk about Russia today in a moment,

but this cyber counterattack, what

would that involve?

There is a

process for this, which the Prime

Minister set out yesterday. We have

these two potential scenarios, the

Russians doing it directly or they

have lost control. We make a

judgment on that tomorrow and then

the Prime Minister will bring

forward a range of

measures if it's the case Russia is

involved. I don't think it's helpful

to start speculating in detail on

those but we have already discussed

lots of things, for example going

after Russians linked to the Kremlin

travelling.

Would you block wealthy

Russians coming to London who have

strong links to Vladimir Putin?

Let's allow the Prime Minister to

come up with the options tomorrow.

So that would be an option?

It's a

decision for the Prime Minister but

nothing is off the table.

There was

an issue about party politics

yesterday, Annaliese Dodds, Jeremy

Corbyn raised the issue of donations

to the Conservative Party by

citizens of Russian origin. Was it

the right moment to make that party

political statement, just after the

Prime Minister had made and

obviously set these serious words

about our national security?

We need more transparency. We need

to know what is going on in terms of

influence being applied across the

political system in our media and

the financial issues. Having more

transparency is positive. It was

right to mention it. People may not

like it but we must be more open

about these issues.

Was that an appropriate moment when

talking about national security,

rather than saying we stand

shoulder-to-shoulder with our Prime

Minister?

Jeremy Corbyn did express support

for the investigation, he said we

should not move to a situation

quickly where we have an escalation,

we need to be proportionate and

thoughtful. And I would agree we

shouldn't jump to conclusions,

Jeremy said that.

I would say, in terms of being

proportionate, of course, but this

is a significant escalation, where a

nerve agent is used on the streets

of a town in England and a police

officer has fallen victim. That

necessitates a serious response.

Absolutely. I also think we need to

be careful if we have measures, if

there is found to have been that

kind of involvement, if we have

measures targeting a population,

those can be offered a great way for

that population to end up hating our

country. But proportionate targeted

measures like those sanctions,

against money-laundering, financial

sanctions, we can be in a better

place than something interpreted as

an attack on all of the Russian

people.

Now, if pre-statement

briefings are to be believed,

today's economic figures will signal

the beginning of

the end of austerity.

The Chancellor, Philip Hammond,

says we're not out of the woods yet,

but there's light at the end

of the tunnel.

So, has austerity been worth it?

Our reporter Greg Dawson has taken

the moodbox to Bexleyheath

in South East London.

Philip Hammond made it clear at the

weekend he does not think the era of

austerity is over, he is worried

about debt levels. Even this most

cautious of toddlers says he can see

the light. Our mood box question is,

was austerity worth it?

From my

perspective, the Government is doing

a good job. It has been working.

Definitely.

I don't think any of it has worked.

The whole country is in meltdown.

Between the boxes. I would say yes.

We don't have a between option.

We don't have a between option.

No.

I just think they are always making

mistakes and telling us we are going

to get over it and we haven't.

They are saying... I'm on TV! We

seem to be better off now. But I

don't know if it is true because the

pound is an worth as much as it used

to be.

-- is not worth.

You said people don't want to talk

about economic policy. Let's head

off to the market.

Definitely not. Far too many cuts to

public services, cuts in this

borough to local services such as

closing parks in the evenings.

No, no. Because public service as

had been cut and everyone is feeling

the pinch. -- services have been

cut.

Will you stop -- swap some oranges

for a plastic ball, what think?

Yes.

For years the Government has been

selling the message all those tough

the natural positions would

eventually be worth it to balance

the books but the people of Bexley

Heath are not buying it.

It may be unscientific but the

message was clear from the people of

Bexleyheath, there is real weariness

with austerity.

Of course there is weariness after

seven years but it has been worth

it. Let us look at employment, 3

million jobs created giving

security. Secondly, we are living

within our means, we have reduced

the deficit. And debt is falling as

a proportion of GDP. How much?

Continuing to fall for the first

time in many years. The economy is

growing, over eight years. Our

balanced approach between reducing

the deficit and investing in public

services has been worth it.

We will

talk about debt but let us take

employment. You cannot say the

employment figures haven't been

healthy for the last few years and

there has been economic growth even

if it hasn't been as much as

expected.

Particularly on growth we

have been falling behind many

countries and in 2017 growth was at

its slowest since 2012. Slower

growth than expected which has been

a problem. Employment, nobody will

say having more people in enjoyment

is a bad thing. Worryingly,

different to other countries, we

have much more people going into

insecure employment. 1 billion

people on zero-hours contracts.

Large numbers who in theory are self

employed but it is disguised. A big

problem. Record numbers are in work

but in poverty.

There is a myth

these 3 million jobs created are low

skilled, they are not, three

quarters are high skilled. A myth

that they are part-time, over 75% of

full-time. In terms of zero hours,

we have legislated to ban exclusive

zero-hours contracts.

What you

cannot dispute is the fact more

people who are in work are now

ending up in poverty. Record numbers

of children in working families but

in poverty. A reflection of the

nature of the Plymouth market.

And

the squeeze on wages which

continues.

-- the employment market.

The latest figures are more

promising with wage growth. First of

all, we have introduced a national

living wage worth £2000 a year to

the lowest paid, and cut taxes, some

working full-time on the minimum

wage will no longer pay tax at all.

We will return to the issue of debt.

Earlier this month,

you might have seen one

former Prime Minister,

David Cameron, and his former

Chancellor, George Osborne, hailing

the fact that the UK had finally

eliminated its deficit

on day-to-day spending.

Austerity, they tweeted,

was "the right thing to do".

But what about the debt?

Here's our Ellie, to explain

the state of the nation's finances.

The deficit is the difference

between the amount the Government

spends and how much it receives

in taxes and other income.

When the Government spends

more than it takes in,

it borrows and that borrowing

is added to the overall debt pile.

The UK's debt is estimated to be

just under £1.8 trillion at the end

of this financial year.

To give you some idea,

that's a lot of zeros on the end.

I mean, that could buy you nearly

a third of all the houses

in the whole of the UK,

around 4,000 da Vinci masterpieces,

or if football's your

thing, 8,955 Neymars.

It is something the Chancellor has

been thinking about, too.

Take it away, Phil.

We need to get our debt lower.

I think most people in this country

would be horrified to be reminded

that we have £65,000 worth of public

debt for every household

in this country.

We're agreed, it's a lot of money.

It doesn't mean much

until you measure it

against the country's GDP,

the size of the country's economy.

In the last normal year before

the financial crisis,

debt was 41.1% of our GDP.

That's ballooned since then

to what they think is a peak

this year of 86.5%.

Now that matters because the UK has

to pay interest on the debt,

currently about 2% of GDP,

so it's quite a lot of cash.

But the experts don't get worried

until that number reaches about 12%

at which point they say a government

is likely to default on its debt.

We're not quite there yet.

Now bear in mind, as long

as there is a deficit,

debt will continue to rise in cash

terms because the Government

will carry on needing to borrow.

Britain's current spending deficit

is believed to have been eliminated

which is why the Government thinks

debt is slowly coming

down as a share of GDP.

Phew.

Got that?

In a few moments we will cross to

the House Of Commons and Philip

Hammond with the Spring Statement.

We will cover it in full.

Well, I'm joined now by Paul

Johnson, director of the Institute

For Fiscal Studies,

and our political editor

Laura Kuenssberg.

David Cameron and George Osborne

were celebrating the fact they said

the day-to-day guest on current

spending had been eliminated. The

focus is on the debt, is it coming

down in any meaningful way?

We are not sure the day-to-day

deficit is eliminated, we will have

to see the numbers.

The debt is pretty steady, it has

stopped writing, around 85% of

national income which is pretty

high, not as high as some other G-7

countries but twice as high

pre-crisis. My guess is we will see

it coming to a plateau over three

years.

It has stopped going up.

In terms of

what Philip Hammond will say, what

do you think despite the fact he

doesn't want this to be a set piece,

will be the headline?

We will struggle with the headline

in terms of policy announcements.

Unless the Treasury have done the

most remarkable job at keeping their

cards close to their chest, there

won't be big policy announcements.

The headlines will be about the

forecasts. The borrowing will be

down relative to where we thought it

was in autumn, a long way down this

year relative to work the budget a

year ago was suggesting.

How much? Last budget, last March,

58 billion of borrowing, it might be

down to the low 40s. Where will it

be in three years? If I had to

guess, not much lower than we

thought.

With that head room and

perhaps higher tax receipts that

have been expected, how much

pressure is there on the Chancellor

to turn on the taps in terms of

spending?

A lot of pressure not just from the

opposition but his own bench, on the

health service, defence, on local

councils, people are queueing up in

the Conservative Party to say to

him, with the progress made,

frankly, we have been telling voters

for eight years this is worth it and

there will be at some point

something better, let us show them

the sunshine. But Philip Hammond is

one person in the Cabinet, and they

don't all think like this, who

thinks it would be wrong to do that,

although the day-to-day deficit is

pretty much gone, in his view, we

may have paid off the overdraft but

we have a hefty mortgage which had

to come first. People will be

looking for clues that when we get

to autumn, the next couple of years,

it is their any political space to

make any hint?

We will come on to

the long-term indications.

To come back to this extra cash he

might have, would it be wise to bank

that will spend it?

He won't spend it today it would be

surprising. It is difficult to think

about extra cash. Relative to a few

months ago, all relative to what

George Osbourne was thinking a

couple of years ago. There is still

the same set of constraints and

choices. What Philip Hammond will

believe is as these numbers go up

and down, that doesn't change

anything underlying. He believes

they shouldn't be spending that

extra money but the choice today is

essentially the same as six months

ago.

The politics for the

Conservatives, if you keep saying

there is light at the end of the

tunnel, voters may turn to the

Labour Party.

Light at the end of

the tunnel, there may be a change in

the other direction. You are right.

The political dynamics have changed.

Between 2010 and 2015, this was the

central message of the Conservative

Party, we are the only ones you can

trust to sort out this mess. We saw

in the general election, people

thought, we have had enough. There

are plenty inside the Conservative

Party who worry unless there is a

change of tone about what to do with

tax payers's money, at the next

election, it will be a lost cause.

There is a generational tension,

further down the ranks, ministers,

they are frustrated that number 11

has appeared to be immovable on

this. As we reported, there is an

acceptance around the Cabinet table

money at Italy for the NHS will have

to be found in greater amounts.

Should Philip Hammond send a strong

signal that looking forward your

party and government will commit

more money to the NHS?

We have

already committed more money.

But

I'm asking more money.

We have three

objectives. Firstly we must keep

debt falling. The reason is the

economy has been growing for eight

years. Are we seriously saying we

will allow debt to rise. But within

that we have scope for additional

spending and tax cuts. In April

there is a further increase in the

personal allowance, and more scope

for spending which is why we have

increased spending on the NHS, a

billion more year on defence and

more for education.

The National

Audit Office report has said funding

per person in terms of the NHS, once

adjusted for age, will fall by 0.3%

in 2019/20. Is that acceptable?

We

are spending more.

You have been

saved by Philip Hammond, we can

cross to the House of Commons where

the Chancellor will stand up and

make his spring statement.

The UK

was the only major economy to make

hundreds of tax and spending changes

twice a year and major international

organisations and UK professional

bodies alike have been pressing for

change. In 2016 I took the decision

to move to a single fiscal event in

the autumn giving greater certainty

to families and businesses ahead of

the new financial year and allowing

more time for stakeholder and

Parliamentary engagement on

potential fiscal changes. Today's

statement will update the house on

the economic and fiscal position,

report progress on announcement made

in the budget last year and launch

further consultations ahead of

budget 2080. I won't be producing a

red book today, Mr Speaker, but of

course I cannot speak for the right

honourable gentleman...

honourable gentleman... Mr Speaker,

I am pleased to report today on a UK

economy that has grown in every year

since 2010. An economy which on the

Conservative leadership now has a

manufacturing sector is enjoying its

longest unbroken run of growth for

50 years. An economy which has added

3 million jobs and seen every single

region of the UK with higher

unemployment and lower unemployment

than in 2010, seen the wages of the

lowest paid up by almost 7% above

inflation since April 2015, and

income inequality lower than at any

time under the last Labour

government. Solid progress towards

building an economy that works for

everyone. Mr Speaker, I reject the

party opposite's doom and gloom

about the state of the nation. Every

Wednesday, we have to listen to the

Leader of the Opposition

relentlessly talking Britain down,

and every year since 2010 we have

had to listen to the right

honourable member predict a

recession, mum of which have

actually happened. So Mr Speaker, if

there are any Eeyores in the

chamber, they are over there.

Meanwhile I am at my positively most

Tigger-like as I contemplate a

country that faces a future with

unique strengths. Our language is

the global language of business, our

legal system is the jurisdiction of

choice for commerce. We host the

world's most global city. Our

companies are in the vanguard of the

technological revolution, while our

world-class universities are

delivering the breakthrough

discoveries and inventions that are

powering it. British culture and

talent reaches huge audiences across

the globe and our tech sector is

attracting skills and capital from

the four corners of the earth with a

new tech business being founded

somewhere in the UK every hour,

producing world-class products

including apps like transfer wise,

city mapper. Today the OBR delivers

its second report of the fiscal year

2017/18 and I thank Robert and his

team for their work. It forecasts

more jobs, rising real wages,

declining inflation, falling

deficit, and a shrinking debt. The

economy grew by 1.7% in 2017

compared to 1.5% forecast at the

budget and be OBR have revised up

their forecast for 2018 from 1.4% to

1.5%. Forecast growth is unchanged

at 1.3% in 2019 and 20 before

picking up to 1.4% in 21 and 1.5% in

22. That is the OBR's forecast, but

forecast are there to be beaten. As

a nation we did it in 2017 and we

should make it our business to do so

again. Our remarkable jobs story is

set to continue with the OBR

forecasting more jobs in every year

of this Parliament and over 500,000

more people enjoying the security of

a regular pay packet by 2022. The

OBR expects inflation, currently

above target at 3%, to fall back to

target over the next 12 months,

meaning real wage growth is expected

to be positive from the first

quarter of 2018/19 and to increase

steadily thereafter. I reported in

the autumn that borrowing was due to

fall in every year of the forecast

and debt to fall as a share of the

GD eight from 2018/ 19 -- as a share

of the GDP. Borrowing is now

forecast to be £45.2 billion this

year, 4.7 billion lower than

forecast in November. 108 billion

lower than in 2010, which

coincidentally is almost exactly the

total cost of the additional

spending pledges made by the party

opposite since the general election

in June last year. It has taken them

just nine months to work up a plan

to squander the fruits of eight

years' hard work of the British

people. As a percentage of GDP,

borrowing is forecast to be 2.2% in

17/18, falling to 1.8% in 18/ 1.6%

in 19/20, then 1.3%, 1.1%, finally

0.9% in 2022/23, which means we will

run a surplus borrowing only for

capital investment. We are forecast

to meet our secretary adjusted

borrowing target in 2021 with £15.4

billion of head room to spare,

broadly as forecast at the budget.

The more favourable outlook for

borrowing means the debt forecast is

nearly 1% lower than in November,

peaking at 85.6% of GDP in 17/18 and

then falling to 85.5% in 18/19, then

finally to 77.9% in 22/ 23. The

first sustained fall in debt in 17

years. A turning point in this

nation's recovery from the financial

crisis of a decade ago. Light at the

end of the tunnel. Another step on

the road to rebuilding the public

finances, decimated by the party

opposite.

opposite. Mr Speaker, one that they

would again placed at risk because

under the policies of the party

opposite, our debt would not fall

over the next five years, it would

rise by over £350 billion to more

than 100% of our GDP, undermining

our recovery, threatening investment

in British jobs, and wasting

billions of pounds more on debt

interest. There is indeed light at

the end of the tunnel, but we have

got to make absolutely sure that it

isn't the Shadow Chancellor's train

hurtling out of control in the other

direction towards Labour's next

economic train wreck. This to

Speaker, in autumn 2016, I changed

the fiscal rules to give us more

flexibility to adopt a balanced

approach to repairing the public

finances, reducing debt not for some

ideological reasons but to secure

our economy... But to secure our

economy against future shocks.

Because, Mr Speaker, we on this side

are not so naive to think we have

abolished the economic cycle.

Because we want to see taxpayers'

money funding our schools and

hospitals, not wasted on debt

interest and because we want to give

the next generation of fair chance.

But Mr Speaker, I do not agree with

those who argue that every available

penny must be used to reduce the

deficit, and nor do I agree with the

fiscal fantasists opposite who argue

every available penny should be

spent immediately. We will continue

to deliver a balanced approach,

balancing debt reduction against the

need for investment in Britain's

future, support a hard-working

families through lower taxes, and

our commitment to our public

services. Judge me by my record, Mr

Speaker. Judge me... Judge me by my

record. We will see, Mr Speaker, if

they have done their homework, they

might be surprised. Since Autumn

Statement 2016 I have committed...

Support for our public services.

With almost £9 billion extra for our

NHS and our social care system, £4

billion going into the NHS in

2018/19 alone. As I promised that

the autumn budget, more to come if,

as I hope, management and unions

reach an agreement on a pay

modernisation deal for our nation's

nurses, who have worked tirelessly

since the autumn in very challenging

circumstances to provide the NHS

care that we all value so highly.

£2.2 billion more on education and

skills, and £31 billion going to

fund infrastructure, RND and housing

through the National productivity

investment fund, taking public

investment in our schools, hospitals

and infrastructure in this

Parliament to its highest sustained

level in 40 years. And at the same

time, Mr Speaker, we have cut taxes

for 31 million working people by

raising the personal allowance again

in line with our manifesto

commitment, taking more than 4

million people out of tax altogether

since 2010. Freezing fuel duty for

an eighth successive year, taking

the saving for a typical car driver

to £850 compared to Labour's plans,

and raising the national living wage

to £7 83 from next month, giving the

lowest paid in our society a

well-deserved pay rise of over £2000

for a full-time worker since 2015.

Since becoming Chancellor, I have

provided an extra £11 billion of

funding for 2018/ 19th to help with

short-term public spending pressures

and to invest in Britain's future.

In the longer term, I can confirm

that at this year's budget, I will

set an overall pass for public

spending for 2020 and beyond with a

detailed spending review to take

place in 2019 to allocate funding

between departments. That is how

responsible people budget. First you

work out what you can afford, then

you decide what your priorities are,

then you allocate between them. And

if, in the autumn, the public

finances continue to reflect the

improvements that today's report is

hinting at, then with accordance

with our Ballon d'Or -- balanced

approach and using flexibility, I

would have capacity to enable

further increases in public spending

and investment in the years ahead.

While continuing to drive value for

money to ensure not a single penny

of precious taxpayers' money is

wasted. A balanced approach, getting

our debt down, supporting public

services, investing in our nation's

future, keeping taxes low, building

a Britain fit for the future and an

economy that works for everyone.

There is much still to do. Since

autumn 2016 we have set out our plan

to back the enterprise and ambition

of British business and the hard

work of the British people. A plan

to unleash our creators and

innovators, inventors and

discoverers.

We choose to champion those who

create the jobs and wealth on which

our prosperity and public services

both depend, not to demonise them.

The Shadow Chancellor is open about

his ideological desire to undermine

the market economy which has driven

and increase in our living standards

over 50 years. We on this side

reject his approach out right.

The market economy embraces talent

and creates opportunity, provides

jobs for millions, and tax revenues

that underpin our public services.

We will go on supporting British

businesses. We are reducing business

rates by over £10 billion, we

committed the autumn budget to move

to trial any evaluations from 2022.

I am pleased to announce we will

bring forward the next revaluation

and moved to triannual reviews from

that date. We will launch a call for

evidence to understand how best we

can help the least productive

businesses to learn from and catch

up with the most productive. And on

how we can eliminate the continuing

scourge of late payments. Because we

are the party of small business and

the champions of the entrepreneur.

Since the budget, we have made

substantial progress in negotiations

with the European Union to deliver a

Brexit that supports British jobs,

businesses and prosperity. And I

look forward, I don't know what the

honourable gentleman does, to

another important step forward at

the European Council next week.

But we will continue to prepare for

all eventualities and today the

Chief Secretary is publishing the

departmental allocations of over

£1.5 billion of Brexit preparation

funding the 20 18th which I

announced at the autumn budget.

Our modern industrial stretchy sets

out our plan to keep Britain at the

forefront of new technologies with

the biggest increase in public are

indeed spending the decades, much of

this new technology depends on

high-speed broadband and today I can

make the first allocations of the

£190 million local full fibre

challenge fund announced in autumn,

and confirm £25 million for the

first five G test-beds.

As our economy changes, we must

ensure people have the skills they

need to seize the opportunities

ahead so we have committed over £500

billion a year, to the most

ambitious post -- reforms in years

and £50 million will be available

from next month to help employees

prepare for the roll-out. Last week,

the Education Secretary and I

chaired the first meeting of the

National retraining partnership

between the Government, the TUC and

CBI. I can reassure you there was no

beer, no sandwiches, but there was a

clear and shared commitment to

training to prepare the British

people for a better future ahead.

Next month our £29 million

construction skills fund will open

for bids to find up to 20

construction skills villages around

the country.

We are committed as a Government to

delivering 3 million apprenticeship

starts by 2020 with the support of

business through the apprenticeship

levy but we recognise the challenges

the new system presents to some

small businesses looking to employ

an apprentice. So I can announce the

Education Secretary will release up

to £80 billion of funding to support

those small businesses in engaging

an apprentice.

We publish a consultation on

improving the way the tax system

supports self-funded training by

employees and self-employed. We

understand more about the economic

payback from investing in our

infrastructure than we do about

investing in our people, so I have

asked for the ONS to develop a more

sophisticated measure of human

capital so future investment can be

better targeted.

We are undertaking the largest

road-building programme since the

1970s. As Transport Secretary I gave

the green light to fund the new

bridge across the River Mersey in

2011 and I was delighted to see it

opened last year.

The largest infrastructure project

in Europe, Crossrail, is due to open

in nine months.

We are making progress on our plans

to deliver the Cambridge Milton

Keynes Oxford corridor, devolving

powers to elected mayors across the

northern powerhouse, in negotiations

for city deals with sterling,

borderlands, North Wales, mid Wales

and Belfast. Today, we invite

proposals from cities across England

for the £840 million fund I

announced to deliver on their local

transport priorities as part of our

plans to spread growth and

opportunity to all parts of this

United Kingdom.

At the heart of our plan for

building an economy that works for

everyone is our commitment to tackle

the challenges in our housing

market, with an investment programme

of £44 billion to raise housing

supply up to 300,000 a year by the

mid 20 20s.

We are working currently, the

Housing Minister is working with 44

authorities who have bid into the

£4.1 billion housing infrastructure

fund to unlock homes in areas of

high demand. We are considering

cutting deals with authorities who

have agreed to deliver above their

local need. I can announce we have

agreed a deal with the West Midlands

who have committed to deliver

250,000 homes by 2030 facilitated by

£100 million grant. My right

honourable friend the Housing

Minister will make further

announcements on the housing

infrastructure fund.

We will more than double the size of

the housing growth partnership with

Lloyds Banking Group up to £200

million providing additional finance

the small builders. London will

receive an additional £1.7 billion

to deliver a further 26,000

affordable homes including homes for

social rent, taking total affordable

housing delivery in London to over

116,000 by the end of 22 -- 2122.

The member for West Dorset has

outlined his initial findings on the

gap between planning permission is

granted and housing completions in a

letter which I have placed in the

library of the House and I look

forward to his full report.

I am delighted to inform the House

and estimated 60,000 first-time

buyers have already benefited from

the stamp duty relief that I

announced at the autumn budget.

I remind the House the party

opposite voted against it.

In the autumn, we published a paper

on taxing large digital businesses

in the global economy and today we

follow up with a publication that

explores potential solutions. I look

forward to discussing this with G20

finance ministers at the weekend.

We also published a call for

evidence on how online platforms can

help their users to pay the right

amount of tax and we will consult on

a new VAT collection mechanism for

online sales to ensure the VAT that

consumers pay actually reaches the

Treasury. We will call for evidence

on how to encourage cashless and

digital payments while ensuring cash

remains available to those who need

it.

This Government is determined our

generation should leave the natural

environment in a better state than

we found it and improve the quality

of the air that we breathe. So we

will publish a call for evidence on

whether the use of non-agricultural

red diesel tax relief contributes to

poor air quality in urban areas.

Following our successful

intervention to incentivise clean

taxes, we will help the great

British white van driver go green

with a consultation on reduced rates

for the keenest fans and follow up

on the vital issue of plastic

littering and the threat to our

oceans with a call for evidence to

support us in delivering on our vow

to tackle this context issue.

It will look at the whole supply

chain the single use plastics,

alternative materials, reusable

options and recycling opportunities,

at how the tax system can help drive

the technological progress and

behavioural change we need, not as a

way of raising revenue but to change

behaviour and encourage innovation.

We will commit to investing to

develop new greener products and

processes,

processes, funded from the revenues

that are raised. As a down payment,

we will award £20 million now from

existing departmental budgets to

businesses and universities to

stimulate new thinking and rapid

solutions in this area during the

call for evidence.

We are delivering on our plan with a

balanced approach, restoring the

public finances, investing in our

economy and public services, raising

productivity through our modern

industrial strategy, building the

home is our people need, tackling

the environmental challenges that

threaten our future, and breaking

technological change, seizing the

opportunities ahead, as we build our

vision of a country that works for

everyone. An economy where

prosperity and opportunity are in

breach of all, wherever they live,

whatever their gender, colour, creed

or background, where talent and hard

work alone determines success. A

beacon of enterprise and innovation.

An outward looking, free trading

nation.

One that is confident our best days

like ahead of us.

A force for good in the world.

A country we can all be proud to

pass on to our children and I

commend this statement to the House.

John McDonnell.

Let me first...

STUDIO:

The Chancellor.

We need to

break the strawberry news Donald

Trump has sacked his century of

state Rex Tillerson -- the

extraordinary news. Let us hear what

John McDonnell had to say.

Hasn't he listened to the doctors,

nurses, teachers, police officers,

carers and even his own councillors,

they are telling him they cannot

wait for the next budget, telling

him to act now. For eight years they

have been ignored by this Government

and today they have been ignored

again.

The Chancellor has proclaimed there

is light at the end of the tunnel.

This shows how cut off from the real

world he is.

Last year, growth in our economy was

among the lowest in the G7. The

slowest since 2012. The OBR

predicted we will scrape along the

bottom for future years. Wages are

lower now in real terms than they

were in 9010.

And they are still falling.

According to the Resolution

Foundation the changes to benefits

due to come in next month will leave

11 million families worse off. As

always, the harshest cuts fall on

disabled people.

The gap in productivity between this

country and the rest of the G7 is

almost the

Investment by this government in

real terms is nearly 18 billion

below its 2010 level. This is a

government that cut research and

development

development funding by 1 billion in

real terms. Business investment

stagnated in the last quarter of

2017 and despite all of the

promises, the government continues

to fail to address regional

imbalances in investment. London

will receive five times more

transport investment than the north.

This is a government that

single-handedly destroyed the solar

industry, 12,000 jobs lost as a

result of subsidy cuts. The

Chancellor talks about the fourth

industrial revolution but Britain

has the lowest... The Chancellor

talks about the fourth Industrial

Revolution but Britain has the

lowest rate of industrial robot use

in the OECD. The government has

bought 75 million into its

artificial intelligence programme,

less than a tenth of what the US is

spending. The Chancellor has made...

The Tory bully boys can shout all

they want.

There will be a full opportunity for

people to contribute but the right

honourable gentleman must be heard.

John McDonnell.

They can shout all

they want and make their snide

remarks. People out there know the

crisis in our community. The

Chancellor has made great play this

week of reaching a turning point in

reducing the deficit and the debt.

It's a bit rich coming from a party

that has bought 700 billion on the

national debt over the last eight

years. And it is worth remembering

this is a party that promised us

that the deficit would be eliminated

completely by 2015 /2016 and

bizarrely his predecessor, now

ensconced in the Evening Standard or

is it Blackrock, the number of jobs

he now has, his predecessor has been

tweeting about achieving three years

late deficit target that he

abandoned himself. The reality is

his Chancellor and his predecessor

have not tackled the deficit. What

they have done is shifted it onto

the public services and his

colleagues are responsible for. He

has shifted it onto the shoulders of

NHS managers, doctors and nurses

throughout the country. NHS Trust

will end this financial year 1

billion in deficit. Doctors and

nurses are struggling, being asked

to do more and more while there is

100,000 NHS posts going unfilled.

Does the Chancellor really believe

the NHS can wait another eight

months for the life-saving money it

needs? How many people have to die

waiting in an ambulance before he

acts? He has mentioned the pay offer

to the NHS -- we are expecting

shortly, that was forced upon him by

the Labour Party and trade unionists

campaigning against the pay cut.

Taking away a day's holiday from

those dedicated staff is

mean-spirited, and I ask him now,

will he dropped this miserly act?

The Chancellor has also shifted the

deficit the Secretary of State for

Education and headteachers, with the

first per capita cut in schools

funding since 1990s. Today, the

government is even trying to deprive

1 million children of a decent

school dinner. So I am asking the

Chancellor, and I am asking every

Conservative MP, if...

Order! The

House must calm down, there will be

plenty of opportunity for

questioning from members in all

parts of the House but the right

honourable gentleman must be heard.

John McDonnell.

So I am asking and

appealing to Tory MPs today. If they

are serious about ending austerity,

to vote with us this afternoon to

give those children the free school

meal they are entitled to. The

Chancellor has shifted the deficit

onto Home and Justice Secretary.

Crime is rising, yet he has cut the

number of police officers by 21,500,

the number of firefighters by 8500,

and our prisons and probation

service are in dangerous crisis. In

shifting the deficit onto the

shoulders of the Secretary of State

for Communities and Local

Government, in reality he is shifted

the burden onto local councillors.

Yes, Labour, Lib Dem and

Conservative councillors alike. I

raised again the stark reality of

what this means that the most

vulnerable children in our society.

There's been a 40% cut in early

intervention to support families,

the result is the highest number of

children taken into care since the

1980s. Children's charities are

saying this - this crisis could turn

into a catastrophe without further

funding. Also last year 400 women

seeking refuge were turned away

because there were no places

available for them in refuges. There

are now nearly 5000 of our fellow

citizens sleeping rough on our

streets, more than double what there

was in 2010. Tragically, one of our

homeless citizens died only feet

away from the entrance to

Parliament. He mentioned additional

housing funding, the announcement

for London today is not a new

announcement, it's already been

announced. Any new funding is

welcome, but it represents a cut in

London's budget compared to money

Labour allocated Intel

Labour allocated Intel -- in 2010.

Conservative councils are going

bust, many will be forced to put up

council tax. Councils are running

out of reserve as the National Audit

Office explained. So I asked the

Chancellor, will will he listen to

Conservative council leaders? Like

his own in Surrey who said, "We are

facing the most difficult financial

crisis in our history. The

government cannot stand idly by

while Rome burns"

government cannot stand idly by

while Rome burns". I ask him, how

many more children have to come into

care? How many more councils have to

go bust and run out of reserves

before he wakes up to the crisis and

acts? The statement today could have

been a genuine turning point but it

is depressingly another missed

opportunity. People know now that

austerity was a political choice,

not an economic necessity. The

Conservatives chose to cut taxes for

the super rich, the corporations and

the bankers, and it was paid for by

the rest of us in society. They even

cut the levy on bankers. We were

never all in this together as they

claimed, never. They cut investment

at the very time we should have been

developing the skills and

infrastructure needed to raise

productivity, and grasp the

technological revolution with both

hands. And when they had a

responsibility to meet the challenge

of Brexit, we have a Chancellor who

this weekend admitted he hasn't even

modelled the government's options.

Today we have the indefensible

spectacle of a Chancellor

congratulating himself on marginally

improved economic forecasts, while

he refuses to lift a finger as

councils go bust, the NHS and social

care in crisis, school budgets cut,

homelessness doubles and wages

falling. This isn't a government

preparing our country for the

future, it is a government setting

us up to fail.

Chancellor of the

Exchequer.

Exchequer.

The Shadow Chancellor

John McDonnell ending his ten-minute

response, quite an emotional speech

in his response to Philip Hammond

but before we do the analysis on

that spring statement and Labour's

reply, if you remember in the middle

of it I brought you the fairly

extraordinary news is that President

Trump had sacked his Secretary of

State, Rex Tillerson. James Landale,

why is this critically important to

Britain?

This matters because Rex

Tillerson hard in the last 24 hours

offered his support for Britain's

position against Russia. There have

been concerns that the British were

not getting similar noises from the

White House itself but Rex Tillerson

had spoken to Boris Johnson and had

accepted Boris Johnson's analysis

that there was Russian involvement

in the Salisbury attack and that Rex

Tillerson had responded accordingly

with the statement he put out.

However he is now out of office,

he's been replaced by the former

head of the CIA. What is crucial is

the timing of the sacking. If Rex

Tillerson was sacked in the last 24

hours, there is the question was he

sacked in part because of the

strength of his criticism of Russia,

criticism the White House was not

prepared to make itself. However, if

Rex Tillerson was informed of his

dismissal last Friday, then actually

the suggestion is that he has been

dismissed for longer term

differences of opinion with

President Trump, namely particularly

I think the attitude the US has been

taking to North Korea but also the

long-standing personal differences,

the allegations Rex Tillerson has

always denied that he once called Mr

Trump a moron.

I'm going to come

back to you in a moment because we

might as well tell viewers about the

strength of the statement from Rex

Tillerson, the now former Secretary

of State, in terms of condemning

Russia last night. He said:

Taking your point about the timing

of his sacking, in terms of it might

have been around longer term

disagreements, that is still going

to be very important in terms of

what Britain can expect from its

allies if it takes retaliatory

action against Russia.

It is hugely

important that whatever action the

British Government takes, some of it

expected to be announced tomorrow,

that it has some kind of

international support. At the moment

Boris Johnson, the Prime Minister

and others are ringing around to get

as much support as they can but most

of that at the moment is supportive

noises, condemnation of the attack,

but one or two countries are being

cautious before blaming Russia

specifically. They are keeping their

powder dry on that. The United

States is supposed to be one of

Britain's closest allies. If there

is turbulence and uncertainty within

the White House or the State

Department, that is going to make it

harder for the British Government to

get that sort of international

solidarity.

Because there is a

difference and certainly was a

difference in tone in the way

President Trump and the White House

responded, of course they condemned

the attack but it will raise further

questions about Donald Trump and his

administration's relationship with

Russia.

Exactly, and that is the

question, why is the White House at

the moment being so cautious? They

will have the same intelligence

assessments the British Government

has over the Russian involvement in

the Salisbury events. They will have

that information, they will be able

to make their judgment, but as of

now the White House is still

refusing to formally criticise

Russia with the same strength the

British Government is.

Looking

ahead, what is going to happen? We

have the deadline of midnight

tonight and what we know will happen

in terms of choreography and the

British response?

Tomorrow there

will be another meeting of the

Security Council and if there is no

response from Russia, the Prime

Minister will update the House

tomorrow afternoon with a statement

setting out what she believes should

happen now. I understand the

reaction from the British Government

tomorrow will be more domestic

focused, in other words the

unilateral actions the British

Government can make by itself.

Potentially the expulsion of

diplomats, the crackdown on wealthy

Russians with property and money in

the UK, travel bans, financial

sanctions, things like that, maybe

even forcing them to take their

children out of British public

schools, and targeting of the

Russian media. Those kind of things.

All of the international stuff, any

action on sanctions will be much

longer term because those things

take a long time to get in place.

Also it will take a lot of

diplomacy. This diplomacy over the

next weeks and months will be the

big test of the government's slogan

for its foreign policy called Global

Britain.

Rex Tillerson a former secretary of

the outcome has been sacked will

stop let us speak to Johnny Mercer

outside the Houses of Parliament.

What is your reaction to the news

Rex Tillerson has gone?

Given his strong support of Britain

in his statement, it is concerning,

we need to make -- we need to work

out if he made that after he was

sacked.

He has long protracted this

narrative on national security,

talked about a special relationship

with written. His reaction to what

has happened and the Prime Minister,

is still being waited for. It will

be interesting to see what he does.

It is a very clear moment for him to

decide which side he is on.

And what about the test for Theresa

May and her leadership?

I have said things about her

leadership in the past, yesterday,

she was in her prime. The country

needs that resilience of a strong

leadership. The contrast between her

and Jeremy Corbyn was extraordinary.

We need to work out what we are

going to do. Actions speak louder

than words. The whole political

spectrum need to come together and

make it clear to Russia this is not

acceptable.

How do you do that? In our earlier

discussion, beyond asking Nato for

support which it has said, beyond

the rhetoric, what are you expecting

Nato to do, is this an attack on one

or all?

Those discussions will have to be

had at national security level.

There are various levers they can

pull around sanctions, there are

many options. I note the Prime

Minister will come forward with a

strong one and we need to support

her. People like Putin, Assad, the

only respect one thing when you

stand up for what you believe in and

I look forward to Theresa May doing

that.

Thank you very much. We are going to

talk about and analyse that Spring

Statement. This announcement from

the United States has overshadowed

the Spring Statement and response

from Labour.

Listening to that, since the

announcement regarding Rex

Tillerson, how much more difficult

will it be for Theresa May to match

action to her rhetoric?

More difficult even more. Rex

Tillerson was seen as a sensible

bridge for the Trump administration.

Number ten pointing to constructive

concessions he had with the Foreign

Secretary, his views on what had

happened, his identification of

Russia being the likely marauders in

this affair was a positive for the

Government. Whatever the Government

can do, whether it is expelling

diplomats, the natural movements in

and out of London, they know they

can't do anything dramatic that has

huge minute without international

cooperation and if there is in a

friend at the top of the American

Government willing to act in

concert, that makes that job much

more difficult, no question. Theresa

May's strengthened language has set

the bar high. She has set

expectation which will be difficult

to meet in the House.

This could be to do with longer term

disagreements between Rex Tillerson

and President Trump particularly

since we are hearing coming out of

Washington Donald Trump wanted to

change his team ahead of that

high-stakes meeting between himself

and Kim Jong-un.

Indeed. It is not

surprising in the big picture that

Tillerson is out.

There have been some tensions. There

were doubts about him when he was

appointed, did he have links to

Russia himself that gay people cause

for concern? -- that gave people.

The timing whether deliberate or not

if we are to believe early

suggestions, may have made things

difficult for the British Government

and has complicated what was already

a very tricky picture for the Prime

Minister.

We know there is a deadline of

midnight tonight for a Russian

response. A further Russian

response. Let us return to our

discussion with our guests about the

Spring Statement. Kemal Ahmed,

welcome. A slightly different Daily

Politics. On the Spring Statement,

thinking back to Philip Hammond,

that it would be a low-key affair,

no big measures announced. It was

longer in length but did it have any

more substance?

I thought it was very political,

attacking the Labour Party, saying

why they were the party that were

good for Britain. What was

interesting was the Office for

Budget Responsibility the official

economic watchdog, it's upgrade for

this year was very modest. It

downgraded its forecast for 2021.

The big signal from the Spring

Statement today is what a difficult

hand economic league Philip Hammond

says, the trend growth of the

economy is well below the 2% average

this country was used to. That

raises very big questions about the

funding of public services,

borrowing targets, can the

Government bring down the stock of

debt. Although Philip Hammond opened

the door a crack to possible

spending increases in the autumn

budget, what the OBR has revealed is

how difficult that is. One good news

was the OBR's strong signal it

believes in will fall down to 2% by

the end of the year. Philip Hammond

felt confident enough to say the

real income squeeze which is how

people experience the economy, would

reverse in the first quarter of next

year.

Because wages are rising at

2.6%.

2.6%.

Reversing the real income

squeeze people are suffering. That

would be an economic boost, consumer

spending is going down, the biggest

driver of economic growth.

Did he

really have any basis for being

Tigger like as he put it, when

growth is basically anaemic to Mark

and he can point to very small

adjustments. Doesn't that underline

the weakness in the argument

austerity has worked for everyone?

It has worked for everyone because

it has created jobs, given a

strongly growing economy. It is not.

You have to look across the entire

period, sixth 2010, our economy has

grown much longer than Italy,

France, Germany. These forecasts

change but the overall path is the

right one which is we have cut the

deficit, the debt is starting to

fall and we have scope for more

spending for public services, in

relation to the NHS and education.

But he has made announcements on

public services. He said he would

set an overall path. That is not the

same as announcing spending because

the economy is doing very well.

He

has set out a pathway, a balanced

approach which means we continue to

keep the debt falling because we

must prepare for a future shock, but

ensure we have money to spend, and

cut taxes. We are increasing the

personal allowance again. The

message I took was lordly we are on

the same track we set out in the

budget in autumn but have made

progress broadly.

On wages, the

announcement he believes inflation

will come back down to around 2%,

that would be good news because

wages would be at breaking

inflation.

It would be good to see a

change. We have had the longest

squeeze on wages since Napoleonic

chines -- times. But what we did not

hear him say is when you put our

country in perspective with other

nations, we are the only economy

that has been growing where wages

have not been growing as well. You

will not see that comparison from

the Government, comparing investment

levels either because they are

lower, or productivity levels

because they are lower. Those

fundamentals need to be sorted out

will stop we didn't talk about

productivity.

What is the picture?

It seemed to be improving a little.

From a very low base.

We have a huge

problem with the financial crisis

when it fell down to 0.2% increase

per quarter. There have been six

months of better numbers but the OBR

has looked at that. The amount of

productivity affects how much growth

we get, it is the way we produce

wealth. The OBR has said there may

be some good news but this is a

volatile figure. It looked through

that, the trend over a decade is

still very poor.

The politics, the

response was quite emotional from

John McDonnell, a crisis in our

communities, calling on Tory MPs who

are sceptical about the lack of

spending in public services, to join

Labour ranks.

The interesting thing

about that statement was how

marginal the actual economic changes

were. There was a dynamic light at

the end of the tunnel, but that is

not what the numbers that out. What

we know has changed is the political

dynamics. The Chancellor is not

willing to acknowledge that yet. He

did set -- send out a signal for the

longer term but it seems he is not

clear yet to pick a side in what

will be a battle inside the Tory