:00:09. > :00:12.So, onwards to sunlight and farewell to darkness and debt, led
:00:12. > :00:15.by our fearless guide, the Chancellor of the Exchequer, George
:00:15. > :00:20.Osborne. He claims his budget today charts a path back to prosperity.
:00:20. > :00:24.But is it a plan? Our political editor will be asking why the
:00:24. > :00:28.Chancellor appears to think you incentivise the rich, by giving
:00:28. > :00:32.them money, and incentivise the poor by taking it away, while our
:00:32. > :00:35.economics editor wonders whether the Chancellor is just making a lot
:00:35. > :00:40.of noise to compensate not much possibility of action. The Chief
:00:40. > :00:44.Secretary to the Treasury is here to tell us why he's happy to have
:00:44. > :00:47.George Osborne's speech written on his tomb stone, and his Labour
:00:47. > :00:51.shadow to tell him why he's a disgrace.
:00:51. > :00:55.The boss of the world's biggest advertising, we hope, is here to
:00:55. > :01:01.join a head of an investment fund that looks after �47 billion. The
:01:01. > :01:04.editors of the Times, the Financial Times and the London Evening
:01:05. > :01:14.Standard are here too. They have seen a few budgets between them, we
:01:15. > :01:19.
:01:19. > :01:28.convene our political panel to pass Maybe it was entable that this was
:01:28. > :01:32.a political -- inevitable this was was a budget for differences.
:01:32. > :01:37.The very rich are having their income tax cut, pensioners will pay
:01:37. > :01:42.more tax, everyone has their tax threshold raised and benefits will
:01:42. > :01:45.also be cut, the effect, a little indistinct. Let's hear what our
:01:45. > :01:50.economics and political editor hear about it.
:01:50. > :01:53.What is the stand out feature? What is the stand out feature?
:01:53. > :01:56.has got rid of the 50p rate. stand-up feature is whether they
:01:56. > :02:00.can prove the measures they are bringing in, heavy rates on stamp
:02:01. > :02:07.duty, closing all sorts of well taxes, whether they will bring in
:02:07. > :02:10.enough so at the next election 50p doesn't run and run as a big
:02:10. > :02:14.givaway. For you? The Business Secretary, Vince Cable,
:02:14. > :02:19.a few weeks ago, called on the Government to come up with some
:02:19. > :02:22.sort of coherent growth plan. Is this it? A lot of the measures
:02:22. > :02:30.in this budget are designed to stimulate growth, particularly the
:02:30. > :02:34.tax pleasures. But the overall impact is -- tax measures. But the
:02:34. > :02:37.overall impact is minimal, we will remember the roads, the planning
:02:37. > :02:41.the railways, they are long-term, not short-term.
:02:41. > :02:47.Let's first get a little more detail from David Grossman, who has
:02:47. > :02:50.had the pleasure of spending the day in what fell from Mr Osborne's
:02:50. > :02:53.lips. The only people at Westminster this
:02:53. > :02:57.morning who didn't know exactly what was in the budget, probably
:02:57. > :03:02.didn't much care, they were here for the history and the views. It
:03:02. > :03:05.was a shame, plenty would view today's budget as historic. There
:03:05. > :03:09.was certainly plenty to write home about. Not, of course, that anybody
:03:09. > :03:13.needed to write home, they could have simply read about it in this
:03:13. > :03:18.morning's papers. This budget, the subject of unprecedented pre-
:03:18. > :03:21.briefing. Why? It is simple, the budget was the result of protracted
:03:21. > :03:24.and difficult political negotiation between the coalition partners,
:03:24. > :03:31.each side wanted to make sure their success stories were reflected in
:03:32. > :03:35.the coverage. For once we were pretty sure what
:03:35. > :03:39.was in the Chancellor's red box. The Chancellor didn't want
:03:39. > :03:44.tomorrow's headlines for this budget to be "tax breaks for the
:03:44. > :03:47.rich". First he laid out extensive measures to cut tax dodging. Under
:03:47. > :03:51.the last Government it was the boast of some high earners that
:03:51. > :03:58.with the help of their accountants, they were paying less in tax than
:03:58. > :04:03.their lean cleaners. I regard tax evasion, and aggressive tax
:04:03. > :04:10.avoidance as morally repugnant. a start, stamp duty on expensive
:04:10. > :04:15.properties will go up from tonight .% on houses worth more than �2
:04:15. > :04:18.million. Not quite a mansion tax but close to it. There will also be
:04:18. > :04:22.a closing of the loophole where rich individuals can use a foreign
:04:22. > :04:28.company to buy a house, if they want to do this in the future, they
:04:28. > :04:32.will have to pay a stamp duty charge of 15%.
:04:32. > :04:37.Unlimited tax relief will go, in essence, in the future someone will
:04:37. > :04:43.only be able to offset 25% of their income. And, coming in, is a new
:04:43. > :04:47.general anti-tax avoidance rule. In short, tax dodges will have to be
:04:47. > :04:52.cleared with HMRC, in advance, who, might just close the loophole
:04:52. > :04:56.instead of allowing it. The Lib Dems looked pleased at all of this,
:04:56. > :05:01.they had insisted on these measures in return for cutting the 50p top
:05:01. > :05:05.rate of income tax for people earning above �150,000 a year. The
:05:05. > :05:10.Chancellor said it raised little, and sent the wrong message.
:05:10. > :05:17.raises, at most, a fraction of what we were told, and may raise nothing
:05:17. > :05:23.at all. So from April next year, the top rate of tax will be 45p.
:05:23. > :05:29.Mr Deputy Speaker, no Chancellor can justify a tax rate that damages
:05:29. > :05:34.our economy and raises next to nothing, it is as simple as that.
:05:34. > :05:39.Thanks to the other new taxes on the rich, I have announced today,
:05:39. > :05:43.we will be getting five-times more money each and every year from the
:05:43. > :05:47.wealthiest in our society. What about the people who aren't
:05:47. > :05:55.superwealthyo with offshore companies to complicate their tax
:05:55. > :06:00.affairs? Well, the big headline is the rise in the tax-free allowance
:06:00. > :06:04.to �9,205, creeping ever closer to the Lib Dem target of �10,000. On
:06:04. > :06:08.the child benefit problem, the cliff edge will be softened,
:06:08. > :06:15.instead of losing every penny of child benefit, for any household
:06:15. > :06:20.with a higher rate taxpayer in it, it will only kick in at �50,000,
:06:20. > :06:24.and tapered to �60,000 before disappearing all together. Overall
:06:24. > :06:27.this budget is fiscally neutral, the winners offset by the losers,
:06:28. > :06:33.the Chancellor says it is the right budget for the country. Together
:06:33. > :06:36.the British people will share in the effort, and share the rewards.
:06:36. > :06:46.This country borrowed its way into trouble, now we are going to earn
:06:46. > :06:49.our way out, I commend the budget to the House. The assessment for
:06:50. > :06:54.the Office of Budget Responsibility and the Treasury is the shift from
:06:54. > :06:58.50p to 45p won't have much of an impact on the nation's finances,
:06:58. > :07:02.that only covers the economics, the politics is far harder to call.
:07:02. > :07:06.George Osborne is taking a huge gamble. Quite simply, he's handed a
:07:06. > :07:10.massive dividing line to the opposition.
:07:10. > :07:15.Let's have some tax transparency, hands up in the cabinet if you will
:07:15. > :07:23.benefit from the income tax cut? Come on? And boy did the Labour
:07:23. > :07:28.leader milk it in the Commons today. All he's doing for ordinary
:07:29. > :07:33.families is giving with one hand and taking far more away with other.
:07:33. > :07:37.It is the millionaire's budget that squeezes the middle, wrong choices,
:07:37. > :07:41.wrong values, out-of-touch, same old Tories. And there was a similar
:07:41. > :07:45.analysis from other opposition parties. You would imagine that
:07:45. > :07:49.decision makers in Whitehall would have woken up to the fact that
:07:49. > :07:54.there is an independence referendum happening in Scotland in 2014, and
:07:54. > :07:58.not making a whole load of decision to make a "yes" result more likely,
:07:58. > :08:01.people in Scotland will be asking why are we putting up with it.
:08:01. > :08:05.Tories at Westminster may not have followed every aspect of the pre-
:08:05. > :08:09.budget briefing, but one measure was a surprise to everybody. In
:08:09. > :08:14.effect, the Chancellor is ending the more generous income tax-free
:08:14. > :08:17.allowance for pensioners, over time, bringing them into line with other
:08:17. > :08:21.tax-payers. Of course it is convenient to hide
:08:21. > :08:27.behind the idea that this is simplification. But, in fact, what
:08:27. > :08:33.it is is a tax increase for the middle group of pensioners. For
:08:33. > :08:37.those earning between around �10,500, and �24,000 a year, over
:08:37. > :08:42.the next year or two, they will face an extra �300 increase in
:08:42. > :08:46.their tax bill. Over the next few years, the total amount of tax
:08:46. > :08:52.taken from this group will be �3 billion.
:08:52. > :08:55.By a strange coincidence, today was the anniversary of another
:08:55. > :08:58.Conservative minister, abolishing another tax. Getting rid of the
:08:58. > :09:03.poll tax turned out to be a vote- winner for the party. Nobody thinks
:09:03. > :09:09.getting rid of the 50p tax rate will be anything like as popular.
:09:09. > :09:16.Our political editor is still here. This surprise that David mentioned
:09:16. > :09:21.there, how big an impact? Quite a big impact. It affects 4.5 million
:09:21. > :09:24.pensioners. It doesn't affect the poorist or the richest. They have
:09:24. > :09:29.already had their allowance -- poorest or the richest, they have
:09:29. > :09:32.already had their allowances shrunk. They do vote and mostly
:09:32. > :09:36.Conservative. It is one of the first things we have seen on the
:09:36. > :09:39.cohort. They don't change their votes very much? They don't and
:09:39. > :09:42.haven't been targeted up until now. We are all in this together is a
:09:42. > :09:47.phrase that is supposed to have died today, but this is a mini-
:09:47. > :09:51.example of it coming back. What do you reckon, is it fair?
:09:51. > :09:55.the entire budget fair? There is all sorts of complicated graphs at
:09:55. > :09:58.the back of the red book. If they manage to bring in the revenue they
:09:58. > :10:03.think they will have the new measure, the new stamp duty,
:10:03. > :10:07.various curbs on allowances, if they do, then they get the
:10:07. > :10:11.appearance, certainly, of a new fairness, a sense that this wealth
:10:11. > :10:13.tax has been brought in, where there were once rather useless
:10:13. > :10:19.income taxes that didn't bring in much in the first place. If you
:10:19. > :10:26.look further down, they are not doing very much at all for the
:10:26. > :10:31.absolute bottom dessiel, that group was hit by -- decile, they were hit
:10:31. > :10:34.by taxes. In the middle, as you go up, everybody has the change to the
:10:34. > :10:38.personal tax allowance, which the Lib Dems fought for so much, it is
:10:38. > :10:46.an odd thing, the middle doesn't look like it is actually that
:10:46. > :10:49.squeezed. In summerry, it is good politics, in in a couple of years
:10:49. > :10:52.time they can -- if in a couple of years time they can show they have
:10:53. > :11:01.brought in revenue from the changes to the wealth taxes. It is not
:11:01. > :11:04.clear at the moment. The Government don't like this idea of fair
:11:04. > :11:09.capital "f" fairness. Changes to welfare, changes to schooling, they
:11:09. > :11:13.are doing all sorts of other things that will help people that doesn't
:11:14. > :11:17.show up in static measures of deciles. Paul Mason, we will hear
:11:17. > :11:20.from him in a second, he was saying a second or two ago, he thought it
:11:20. > :11:29.was an unmemorable budget, but would be remembered for actually
:11:29. > :11:33.things that have not drawn any attention today. I think it is a
:11:33. > :11:35.big budget, they have gotten rid of the 50p rate that they were warned
:11:36. > :11:40.not to, they have gambled because they think the economics will stack
:11:40. > :11:43.up and we will see in a couple of years time. Let's hear from Paul
:11:43. > :11:48.Mason? Thank you from the outer darkness, tomorrow's headlines will
:11:48. > :11:51.be about who gets what, the winners and losers, the idea is the big
:11:51. > :11:55.picture hasn't changed much. It has, the Government is still on course
:11:55. > :11:59.to wipe out the deficit by 2017, the way they are going to do it has
:11:59. > :12:03.changed. Here is the graph showing the austerity plan, that is the mix
:12:03. > :12:06.of tax rises in red, and spending cuts in blue. Now if we compare
:12:06. > :12:12.this new plan with the plan published in the Autumn Statement,
:12:12. > :12:17.during the current parliament we are looking at �4 billion more in
:12:17. > :12:19.cuts, offset by �10 billion less in tax rise, overall there is �6
:12:19. > :12:24.billion less pain in the economy. After the election, in the last two
:12:24. > :12:29.years of the plan, the picture changes, these last two columns
:12:29. > :12:34.here include �16 billion more in cuts, and only �3 billion more
:12:34. > :12:38.pullback on the planned tax rises. That is a net of �13 billion extra
:12:38. > :12:41.austerity. It comes after the next election.
:12:42. > :12:46.George Osborne signalled today that �10 billion of those cuts would
:12:47. > :12:51.come from welfare. If we stick to the big picture,
:12:51. > :12:56.what is there about the Government's claim this is about
:12:56. > :13:00.growth. By 2014 the 22p corporation tax will put British corporation
:13:00. > :13:03.tax as the lowest in the developing countries. It has business leaders
:13:03. > :13:06.smiling as they picked their way through protests throughout
:13:06. > :13:12.parliament today. The impact is slight, business investment will go
:13:12. > :13:17.up 1%, and growth will rise a barely measurable 0.1%, as the
:13:17. > :13:20.result of these business tax cuts. You can look at this in two ways,
:13:20. > :13:25.first of all, how much spending power you are injecting into the
:13:25. > :13:29.economy and taking out. That is neutral, they are not doing much of
:13:29. > :13:33.that in the forecast when you take away the give aways, then there is
:13:33. > :13:36.the argument of making a difference to the long-term trend growth rate
:13:36. > :13:39.to the economy. Things like planning reform could have a
:13:39. > :13:45.significant impact over the longer term, but it is much too early to
:13:45. > :13:49.bank some of those gains in future. Finally it is official, taxing the
:13:49. > :13:54.rich is pointless. The Treasury, which thought the 50p tax rate
:13:54. > :14:04.would raise �3 billion, two years ago, now thinks not. Here is the
:14:04. > :14:19.
:14:19. > :14:24.If you add in more behaviour change because of tax breaks and cuts,
:14:24. > :14:27.there is �760 billion by cutting the tax rate. Confused? So are they,
:14:28. > :14:30.the economics are highly uncertain, some believe dubious, but the
:14:30. > :14:34.political battle lines are very clear indeed.
:14:34. > :14:39.The Chancellor sent out one of those irritating Spam e-mails
:14:39. > :14:43.tonight, boasting how the budget was, in his words, radical and
:14:43. > :14:47.reforming. We recall Gordon Brown and Nigel Lawson and various others
:14:47. > :14:51.saying much the same thing. To try to throw some light on it now, we
:14:51. > :14:57.are joined by the Chief Secretary to the Treasury, Danny Alexander,
:14:57. > :15:03.and his shadow, Rachel Rhys. What makes you so certain that rich
:15:03. > :15:08.people who avoid a 50p rate tax will pay a 45p rate of tax? We have
:15:08. > :15:13.had those costings independent low audited by Robert Chote, the
:15:13. > :15:17.independent Office for Budget Responsibility. A great deal of
:15:17. > :15:21.work has gone in to quantify those figures. As the package earlier
:15:21. > :15:24.said we wanted to replace a tax that wasn't working at that level,
:15:24. > :15:27.with additional taxes on the wealthiests, that will bring in
:15:27. > :15:33.five-times more from that group of people. That makes this budget a
:15:33. > :15:38.shift from the wealthy to millions of low and middle income earners
:15:38. > :15:42.benefiting from the largest increase ever in loans. You say you
:15:42. > :15:46.will bring in five-times the money, is that certain, it is not, it
:15:46. > :15:49.can't be? It is as certain as we can be. Is it as certain as your
:15:49. > :15:53.predictions as to what will be raised from the 50p rate of tax?
:15:53. > :15:56.didn't make predictions of what could be made from the 50p rate of
:15:56. > :15:59.tax. Your predecessor did? previous Government did. They
:15:59. > :16:03.didn't have an independent Office for Budget Responsibility checking
:16:03. > :16:07.up on those figures. When the Chancellor says it will raise five-
:16:07. > :16:10.times as much money, you don't know? What I do know is there is a
:16:10. > :16:13.vast amount of stamp duty avoidance going on in the system, for example,
:16:13. > :16:18.which no Government before has made an effort to crack down on. Where
:16:18. > :16:21.the changes we are making in terms of punitive rates of stamp duty. An
:16:21. > :16:25.annual charge on those people who try to squirrel their homes away in
:16:25. > :16:30.companies to avoid tax. Those are things much harder to avoid. What
:16:30. > :16:34.we know, because we are not just listening to the OBR, and to the
:16:34. > :16:40.Inland Revenue, but to the academic consensus too. These numbers are
:16:40. > :16:42.about right in this area. You don't know? You can't possibly know?
:16:42. > :16:47.makes me satisfied with the budget, is we are raising substantially
:16:47. > :16:51.more from the wealthy by this Packerage of measures. Labour said
:16:51. > :16:57.it would raise billions. They also said it was temporary, can you tell
:16:57. > :17:00.us the permanent rate of 45p, is it permanent or temporary? The rate of
:17:00. > :17:04.45p is like any other tax now. It is something that we have put in
:17:04. > :17:11.place, that is going to be part of the tax system for the foreseeable
:17:11. > :17:20.future. Of course course, every other tax is kept under review. It
:17:20. > :17:24.doesn't have the temporary status the 50p rate had. It is permanent
:17:24. > :17:29.but under review? Every tax is under review. The 45p rate is the
:17:29. > :17:33.decision we have made to reduce it to 45p, as part of a package to
:17:33. > :17:36.raise more overall from the wealthy, in order to help fund the big tax
:17:36. > :17:40.cuts for people on low and middle income.
:17:40. > :17:43.You expect the next election to have a 45p rate of tax? I can't
:17:43. > :17:48.make promises about what will be in the next three budgets. With what I
:17:48. > :17:51.think is the 45p rate is a sustainable rate. It puts us right
:17:51. > :17:56.in the mid-of what other European countries do at their top rate of
:17:56. > :18:02.tax. Can you help us on this question of pensioners. When the
:18:02. > :18:06.Chancellor said there will be no cash losers from this pension tax
:18:06. > :18:10.arrangement change, why did he leave out the rest of the statement,
:18:10. > :18:15.which is that 4.41 million people will be worse off in real terms,
:18:15. > :18:18.with an average loss of �83, and further and further? Well, it is
:18:18. > :18:23.absolutely true to say that there are no cash losers from this policy,
:18:23. > :18:28.it is a simplification of the system to try to make sure
:18:28. > :18:30.that...Hold On. 4.14 million people, older people, will be worse off?
:18:30. > :18:34.you look at the measures we are taking for pensioners, the largest-
:18:34. > :18:38.ever rise in the state pension today. Moving to a triple lock to
:18:38. > :18:42.protect the state pension, rating up much faster than the previous
:18:42. > :18:46.Government. In 2013/14, under Labour's uprating policies for
:18:46. > :18:50.pensions, people would have benefited to the tune of �66,
:18:50. > :18:58.that's the cost of the decision that we have made. We are doing
:18:58. > :19:03.more on uprating to the tune of �130. In net terms, in 2013/14,
:19:03. > :19:06.pensioners will be better off. is the case in the words of the
:19:07. > :19:09.HMRC briefing, that 4.41 million people will be worse off? It is
:19:09. > :19:13.absolutely right that those people who were connect ex-ing their
:19:13. > :19:17.allowance to rise will see it froze -- expecting their allowance to
:19:17. > :19:21.rise will see it frozen. How much will they raise from that? By the
:19:21. > :19:26.end of the period the costings and the documents show it rises to, by
:19:26. > :19:29.the end of the year, �250 billion. All of these changes will net you
:19:29. > :19:36.an improvement in the economic growth of this country, of how
:19:37. > :19:40.much? 0.12%? All of these measures are designed to support the economy.
:19:40. > :19:44.The big measure in this budget is a tax cut for people on low and
:19:44. > :19:51.middle incomes, that is money that will be spent in the British
:19:51. > :19:54.economy. As Paul Mason said, we are making significant supply side
:19:54. > :19:57.reforms, dealing with red tape. These are all things that will lift
:19:57. > :20:01.the growth potential of this country's economy over the next few
:20:01. > :20:07.years. By how much? I'm not going to put numbers on that. You have
:20:07. > :20:15.put numbers on everything else? Office of Budget Responsibility
:20:15. > :20:19.today says...0.1%? Says we will get 0.8%. Is that pathetic or New York
:20:19. > :20:22.llity? It is an -- nullity? It is an economic forecast of our growth.
:20:22. > :20:25.This country has been through the deepest financial crisis we have
:20:25. > :20:29.seen. Labour made a mess of the economy, with the crisis in the
:20:29. > :20:34.eurozone and so on. We have to make a lot of changes to the way the
:20:34. > :20:38.British economy works to get us back to prosperity. You have
:20:38. > :20:42.expressed great anxiety about getting rid of the 50p rate of tax,
:20:42. > :20:45.and replacing it with a 45p rate of tax, would you restore it? If it
:20:45. > :20:48.was a Labour budget today we wouldn't have got rid of that rate
:20:48. > :20:51.of tax. If there was an election tomorrow, we wouldn't be going
:20:51. > :20:55.ahead with this tax cut for the rich. If there was an election
:20:55. > :21:00.tomorrow, you would restore the 50p rate of tax? That is absolutely
:21:00. > :21:04.right, yeah. I suppose you will tell me, you won't write the
:21:04. > :21:07.manifesto for the next election now? We don't say we will do this
:21:07. > :21:15.or that with tax, we don't know what the economy will look like in
:21:16. > :21:20.three weeks time, let alone three years time. If there was an
:21:20. > :21:25.election going ahead we would have that rate there.
:21:25. > :21:30.Will this 45p rate of tax be as permanent as any other tax?
:21:30. > :21:33.wouldn't be cutting that tax, we would leave it at 50p. It will
:21:33. > :21:36.happen, because you are not in Government. When we come to the
:21:36. > :21:41.next election, there will be a 45p rate of tax, all things being
:21:41. > :21:44.equal? When it comes to the next election, in 2014, 2015, we will
:21:44. > :21:48.have to make a judgment. At the moment we don't know what the
:21:48. > :21:51.economy will look like. He can make the judgment, why not you?
:21:51. > :21:56.hasn't, he has said it will be in the next Liberal Democrat manifesto.
:21:56. > :22:01.He told us last time he was in here, they were promising all sorts of
:22:01. > :22:05.cuts at the next election? couldn't believe the last manifesto.
:22:05. > :22:07.I'm not sure I will promise any more, but what we set out today on
:22:07. > :22:12.the spending side is the same figures as in the out dumb
:22:12. > :22:17.statement last year, we still have to make further savings to do --
:22:17. > :22:23.Autumn Statement last year, we will still have to make stpurt further
:22:23. > :22:28.savings. -- further savings. There is more cuts envisaged than now?
:22:28. > :22:33.The figures today were on the same basis of the Autumn Statement.
:22:33. > :22:38.Theing has shifted? No, we are still aiming to balance the
:22:38. > :22:42.structural deficit, by 2016/17, the same as when you and I discussed it
:22:42. > :22:46.in November. You are still committing to go into the next
:22:46. > :22:51.election promising further cuts in Government spending? I'm also
:22:51. > :22:55.committed to a further Spending Review to work out how we work out
:22:55. > :22:58.the numbers deliberately set out. That is something that the Liberal
:22:58. > :23:02.Democrats will be committed to. What about the further �10 billion
:23:03. > :23:06.to be found in welfare spending? have not committed to a further �10
:23:06. > :23:11.billion in welfare. What the Chancellor was doing, rightly, is
:23:11. > :23:15.expose some of the trade-offs and make some spending decisions. The
:23:15. > :23:19.point being made is because of the rise in debt interest, because of
:23:19. > :23:22.the continued growth in the welfare budget, we will face some difficult
:23:22. > :23:28.choices, as a country when that time comes. We want to start that
:23:28. > :23:32.debate about what the right choices are. I thought George Osborne made
:23:32. > :23:36.an explicit statement today, that there will be a further �10 billion
:23:36. > :23:41.in wealth cuts? He said if we were to be sure that departmental cuts
:23:41. > :23:43.were the same as the last Spending Review, that is the amount of
:23:43. > :23:48.savings in annually managed expenditure, most welfare, that
:23:48. > :23:52.will be required. We haven't made that decision because we haven't
:23:52. > :23:58.conducted that spending decision. We would have a different balance
:23:58. > :24:02.to tax increases to spending cuts. We would reinstate the bank bonus
:24:02. > :24:06.tax, and use the money to fund job creation. We wouldn't have the same
:24:06. > :24:10.policy. Also, I think you need jobs and growth to get the economy back
:24:10. > :24:13.on track, what we have seen in the budget today, the Office for Budget
:24:13. > :24:17.Responsibility from said that all the measures that the Government
:24:17. > :24:20.have introduced won't make a blind bit of difference to their
:24:20. > :24:25.forecasts for unemployment and growth. You have to support the cut
:24:25. > :24:28.in corporation tax, don't you? think the best way to support
:24:28. > :24:31.businesses would be a national insurance holiday for all small
:24:32. > :24:36.businesses taking on new workers. Do you or do you not support the
:24:36. > :24:40.cut in corporation tax? That is not the right way to support business.
:24:40. > :24:43.Do you support or not? No, I think it would be better to have national
:24:43. > :24:47.insurance holiday. You are in favour of a higher rate of
:24:47. > :24:49.corporation tax? I think the right thing to do is cut national
:24:49. > :24:53.insurance, that would help small businesses, they are really
:24:53. > :24:57.struggling. The budget has to be about choices, and Labour will make
:24:57. > :25:01.difference choices but we wouldn't cut the 50p rate tax. You wouldn't
:25:01. > :25:05.cut the 50p tax, or the corporation tax? We wouldn't have cut
:25:05. > :25:08.corporation tax, we would have cut the national insurance holiday for
:25:08. > :25:16.all small businesses taking on new workers. We think that is the
:25:16. > :25:21.priority right now. Do you agree with the cham's statement that tax
:25:21. > :25:25.avoidance is -- the Chancellor's statement that tax avoidance is
:25:25. > :25:29.morally repugnant? I would. Would you say someone using their company
:25:29. > :25:34.to reduce their income tax liability was unfit for public
:25:34. > :25:38.office? If you look at Ken Livingstone, he is using a company
:25:38. > :25:41.to pay for people to work for him. I don't know if all the details of
:25:41. > :25:45.individuals' tax returns are there. Would you say it is tax avoidance?
:25:45. > :25:49.Not if you are using it to pay other people. Otherwise you would
:25:49. > :25:55.be taxed twice. I don't know the details of individuals' tax returns.
:25:55. > :25:59.But you do find it morally repugnant? Tax avoidance is wrong,
:25:59. > :26:03.I don't think people should avoid and evade tax. If you are going to
:26:03. > :26:07.cut down on loopholes in the tax system. That money should be used
:26:07. > :26:11.to support ordinary familiar hely not as this Government have done,
:26:11. > :26:14.get rid of the loopholes, but then give people a tax cut at the same
:26:15. > :26:18.time to compensate. I think if you are going to close tax loopholes,
:26:18. > :26:23.that is the right thing to do. You should use that money to give a
:26:23. > :26:27.break to ordinary working families, struggling right now, with stagnant
:26:27. > :26:33.wages and rising prices. If Labour had been doing the budget today, we
:26:33. > :26:39.would have had a reduction in VAT down to 17.5%, to support ordinary
:26:39. > :26:46.families, reinstated the cuts to working tax credit families.
:26:46. > :26:49.Vince Cable said if he was doing the budget he wouldn't have done
:26:49. > :26:55.this. Was it a Liberal Democrat budget in any case? Our top
:26:55. > :26:59.priority was a very big tax cut for people on low and middle incomes.
:26:59. > :27:04.We have delivered that, with the largest increase in the personal
:27:04. > :27:07.allowance, that is worth a lot of money to 21 basic rate tax-payers.
:27:07. > :27:10.There were two million people paying tax under Labour who are no
:27:10. > :27:15.longer paying tax. All the Conservatives saying it was there
:27:15. > :27:19.idea, they are lying? I wrote the Lib Dem election manifesto, the
:27:19. > :27:21.commitment. Great minds think alike, you would say in other
:27:22. > :27:26.circumstances? The commitment to reaching a 10,000 personal
:27:26. > :27:32.allowance was on the front page of our manifesto, and now in the front
:27:32. > :27:36.rank of Government policy delivering benefits to millions of
:27:36. > :27:41.people what I have learned tonight is Labour's policy is increase tax
:27:41. > :27:46.on business, spend more, borrow more, have more debt. It is a
:27:46. > :27:51.recipe for Labour repeating the disaster they committed last time
:27:51. > :27:56.in office. We are saying under your Government, a flatlining economy,
:27:56. > :27:59.unfloiplt rising month after month, I think -- unemployment rising
:27:59. > :28:04.month after month. Young people not working. Get those young people
:28:04. > :28:08.back to work, pay the taxes, not getting welfare payments, that
:28:08. > :28:11.would help reduce the deficit and get the economy growing. The Office
:28:11. > :28:20.for Budget Responsibility is saying that nothing in the budget today
:28:20. > :28:25.has changed their view on growth or unemployment, or on borrowing.
:28:25. > :28:29.At political moments like this, we open the cat at that koom where the
:28:29. > :28:37.political team are -- cat koom, where the political koom are still
:28:37. > :28:43.there. We are seeing if they are able for speech.
:28:43. > :28:53.Daniel Finkelstein, writing a column for the Times, Miranda Green
:28:53. > :28:57.
:28:57. > :29:02.worked for Lloyd George and Paddy Ashdown. And James puorn nel,.
:29:02. > :29:06.-- You said this was like Paul Daniels doing a magic act? People
:29:06. > :29:09.are always amazed somebody has to pay for the tax cut. That is what
:29:09. > :29:14.you will have. Of course, if you are going to have a large tax
:29:14. > :29:21.allowance rise, there will be a tax increase on someone, and it has
:29:21. > :29:24.turned out to be on the age-related lads. The whole thing is how you
:29:24. > :29:29.orchestrate that. Because the coalition has had this big
:29:29. > :29:33.discussion about every other aspect of the budget, that was the one bit
:29:33. > :29:40.of news. It got on the front page of the papers because of that.
:29:40. > :29:44.What do you think? I remember in the Liberal Democrats you used to
:29:44. > :29:52.struggle to get one line in the coverage the next day. The chamber
:29:52. > :29:55.would empty as the Lib Dem leader got up to respond to somebody
:29:55. > :29:59.else's budget. It is extraordinary the party being in Government and
:29:59. > :30:04.having this influence. Are you happy with the abolition of 50p
:30:04. > :30:07.rates of tax for wealthier people? Absolutely not, if it was a Lib Dem
:30:07. > :30:12.Government it wouldn't have happened. There are some big ones
:30:12. > :30:15.for the Lib Dems, as Danny said, what is interesting about this
:30:15. > :30:20.whole process, has been the public negotiation going on between the
:30:20. > :30:26.two sides. That has resulted in winning the argument on taking
:30:26. > :30:29.people on low and middle incomes out of tax. The politics of it.
:30:29. > :30:36.They claimed it was a Lib Dem budget? The politics are difficult,
:30:36. > :30:42.it is difficult to argue against the policy. Let's let James Purnell
:30:42. > :30:49.get a word in? It is the taxes, it may not be a mansion tax, but
:30:49. > :30:55.people with mansions will be taxed. What did you make of of it?
:30:55. > :30:59.reminded me how difficult fiscally neutral budgets are. You used to
:30:59. > :31:05.announce what you spend money on, Government do it every two years,
:31:05. > :31:09.and there is not much to a nouns. The 45p meant there was a risk to
:31:09. > :31:11.having something with not much news in it. He had to have an argument
:31:12. > :31:17.abouting something, and have a big issue about something. It has
:31:17. > :31:21.turned out to be the 45p, whether that turns out to be God or bad,
:31:21. > :31:26.politically, we will wait and see. It is politically risky? It is, but
:31:26. > :31:29.it is something. Politics abhors a vacuum. There were good things in
:31:29. > :31:35.the budget, things I wouldn't agree with, but they would be small
:31:35. > :31:39.without the 45p. It is interesting politic clo they have decided to go
:31:39. > :31:43.for it. I remember when -- politic clo they have decided to go for it.
:31:43. > :31:47.I remember serving under Tony Blair, he said his job was to look after
:31:47. > :31:51.the voters, he was thinking of the people who had got him there. It is
:31:51. > :31:56.not clear to me that David Cameron has been thinking about how to look
:31:56. > :32:01.after his voters in the budget today. His probably is he can't
:32:01. > :32:08.look after them, as everyone will be getting poorly, and growth being
:32:08. > :32:13.so low you have to be able to look at that. The policies I thought
:32:13. > :32:19.what was significant, is we reached a point now where sudden low it is
:32:19. > :32:23.going to happen the cuts, the fact there is low growth, the question
:32:23. > :32:27.is how you play it. This is a big risk, I would put it higher than
:32:27. > :32:35.you. It is a big risk. It will pay off if it produces growth. The OBR
:32:35. > :32:40.can't model that yet, but if there is a production of growth. Because
:32:40. > :32:45.there is relative low small things other than the 45p, his --
:32:45. > :32:52.relatively small things other than the 45p. Ed Milliband's line, it is
:32:52. > :32:57.the end of "it we are all in this together". He had a powerful
:32:57. > :33:01.argument, a good speech with good jokes. Before we analyse his
:33:01. > :33:05.performance, you were trying to make a point? Ed Milliband did have
:33:05. > :33:08.a God day, as did Ed Balls, it is not enough. If you look at the
:33:08. > :33:13.background to this, the opinion polls, people don't trust Labour on
:33:13. > :33:19.the economy. In a ens is, we have to see what happens from this, this
:33:19. > :33:22.Labour can turn themselves from people commentating gleefully on a
:33:22. > :33:26.potential mistake by George Osborne to a potential Government. There is
:33:26. > :33:31.no evidence of them doing that. one political problem he has is it
:33:31. > :33:36.is not a good policy to move from 45p to 50p. Politically I can see
:33:36. > :33:39.the argument against abolishing it, in policy terms a tax that raises
:33:39. > :33:44.virtually no money simply can't be justified. So the problem that Ed
:33:44. > :33:49.Milliband has got, is how to make the Labour Party not looks a though
:33:49. > :33:52.it is tokenistically anti-business for a policy that brings no money.
:33:52. > :33:56.The Tory gamble is bigger, that is his problem.
:33:56. > :34:00.What is the point you wanted to make? He had a really good day, he
:34:00. > :34:03.had an argument, it is really, really noisy, that speech. I don't
:34:03. > :34:07.think people get it from the TV. The Chancellor is always listened
:34:07. > :34:12.to carefully. Suddenly there is a wall of noise. I have sat there
:34:12. > :34:16.with nowhere near that many people in the chamber, and that first 10
:34:16. > :34:21.seconds is vital. He hit it really well, it is the end of "we're all
:34:21. > :34:27.in it together", he had good gimmicks, trying to get people to
:34:27. > :34:32.put their hand up, you feel like a banana to ignore them. The front
:34:32. > :34:37.bench ended up looking a little...As Far as the public is
:34:37. > :34:42.concerned urban nanas. The fact that he performs well in parliament
:34:42. > :34:47.is not here or there. This Downton Abbey thing. This is a
:34:47. > :34:51.weak point for the whole coalition, story and Lib Dem. What is this
:34:51. > :35:00.Downton Abbey thing? The idea they are not like ordinary people
:35:00. > :35:03.feeling the pain, cabinet. That is a vulnerable point. This is a Tory
:35:03. > :35:07.weakness that people think the Conservative Party is for well off
:35:07. > :35:10.people. If they will do this it has to work and produce growth. It is
:35:10. > :35:15.difficult to defend the policy of having a 50p tax rate when there is
:35:15. > :35:18.no money. I can see why they did it. It is certainly a political issue.
:35:18. > :35:24.Do you think, as Tory Prime Minister, Tony Blair would have
:35:24. > :35:34.done it? I think most people wanted him to be. Most time he would be.
:35:34. > :35:35.
:35:35. > :35:39.In 1997 he wouldn't have done it, and in 2006 he would have got it
:35:39. > :35:46.done. Grey-gate, they are calling it, a
:35:46. > :35:51.lot will be made of it in tomorrow's papers, is it damaging?
:35:51. > :35:55.I think inevitably, pensioners are very sure about what they gain and
:35:55. > :36:01.they will be militant about it. It is not taking cash sums from people,
:36:01. > :36:04.it is always worse, people are risk adverse, it is through fiscal drag,
:36:04. > :36:07.and inflation. They will get more money in other ways, it will be
:36:07. > :36:16.limited, but everybody will be losing in one way or another. This
:36:16. > :36:20.will make them more. You are grimacing? I think it will be
:36:20. > :36:25.unfavourable for them. You saw what happened when Gordon Brown was
:36:25. > :36:29.derisory about the state pension. They are militant, and they vote in
:36:29. > :36:33.marginal constituencies, it is not clever to irritate them. This used
:36:33. > :36:38.to be your thing? If you are sitting in the thresh you look at
:36:38. > :36:43.it and think, we have -- Treasury, and you look at all the money and
:36:43. > :36:46.you have protected the free TV, the problem is they have had all their
:36:46. > :36:52.goodies, and people didn't know about it in the budget. There is a
:36:52. > :36:57.bigger issue for Labour and the Tories, which is paradoxically, is
:36:57. > :37:00.the Tories need more seats in the north, and they haven't a clear
:37:00. > :37:04.story there. The Labour Party needs to get votes outside the public
:37:04. > :37:07.sector, they have a public sector story, but not the private sector
:37:07. > :37:10.stories. They have the wrong stories at the moment. What about
:37:10. > :37:15.the idea there is another �10 billion to be found in the welfare
:37:15. > :37:18.budget? I think it is much worse than that. The political class is
:37:18. > :37:22.slightly in denial that they have promised to end child poverty,
:37:22. > :37:27.increase aid, deal with emission, they have made all the promise and
:37:27. > :37:30.need to raise taxes more than they say they would do to avoid that.
:37:30. > :37:33.you think it is feasible? I think actually the country will either
:37:33. > :37:43.have to drop all those promises, all the things they have all voted
:37:43. > :37:45.
:37:45. > :37:50.for, all the parties. Or they will have to make much bigger cuts.
:37:50. > :37:53.Things like having the same role in defence around the world and
:37:53. > :37:57.welfare. Everyone is complaining, they are paying more, everyone will
:37:57. > :37:59.be paying more if we are going to have low growth and reduce the
:37:59. > :38:03.borrowing. That is just the mathematics. It is really
:38:03. > :38:06.interesting this idea that people will be told where their taxes are
:38:06. > :38:09.going, and how much precisely they are paying towards welfare, or
:38:09. > :38:13.defence, or whatever it is. That could change human behaviour,
:38:13. > :38:18.couldn't it? It will make clear to people how much tax they are paying.
:38:18. > :38:22.It will breakdown welfare, it will show you a lot of welfare is going
:38:22. > :38:25.to pensioners, it will also show for example things like aid doesn't
:38:25. > :38:30.cost much money. It will be cross cutting, it won't be as people
:38:30. > :38:34.think, it will make everyone be more anti-tax. I think it will be
:38:34. > :38:37.more subtle. It is good to flag up there needs to be a national debate
:38:37. > :38:41.about the future of welfare spending. It it is politically
:38:41. > :38:43.important to prepare the ground, so you have the support to do
:38:43. > :38:48.difficult things. With the pensioners they haven't prepared
:38:48. > :38:52.the ground, that is why it will hurt them.
:38:52. > :38:58.If we disregard important initiatives such as changes to the
:38:58. > :39:02.tax regime on Lucozade, and chicken, and caravans. The thrust of the
:39:02. > :39:09.budget is about allowing the economy to grow by helping business.
:39:09. > :39:12.Did it? If the top rate tax cut were to fail to reignite the flames
:39:12. > :39:18.of British entreprenurial, the Prime Minister turned up with a
:39:18. > :39:24.bevy alternative fuels. Corporation tax tumbled from 24p to 22p, with
:39:24. > :39:28.no pen fits for the banks. Small firms had the carrots of simplified
:39:28. > :39:34.tax daingled in front of them. George Osborne wants to let shops
:39:34. > :39:38.open all day on sunds during the Olympics. There was big pick -- on
:39:38. > :39:41.Sundays during the Olympics. There was an argument for new
:39:41. > :39:45.runways in the south-east. And backing for better rail services in
:39:45. > :39:51.the north. What will they find about to complain about now. Here
:39:51. > :39:57.to discuss the impact of today's budget on business, are Martin
:39:57. > :40:05.Sorrell, the boss of the world's biggest advertising agency. And
:40:05. > :40:09.Helena Morrisey of Newton Investment Managment. We offered to
:40:09. > :40:16.some of of the biggest unions to come on today, none wanted to do it.
:40:16. > :40:22.There are two alternative issues of looking at the 50p cut, begun is,
:40:22. > :40:27.it genuinely is something that will transform the country, eventually.
:40:27. > :40:34.What do you think? At the risk of sticking my head in the lion's
:40:34. > :40:39.mouth, I wouldn't do it. Indicating you might do it in a couple of
:40:39. > :40:45.years was electionly a better thing to do. It seems if you are trying
:40:45. > :40:52.to stimulate entree pent nuerism, things they did -- ent prepen you
:40:52. > :40:59.are inism, entrepeneuralism, those are more important issues than this.
:40:59. > :41:03.If you are going to stimulate entrepeneurs, taxation is the way
:41:03. > :41:08.to go. I'm glad he had the courage, and the headlines will be horrible
:41:08. > :41:12.for him tomorrow. I'm glad he did it, the point they made about the
:41:12. > :41:19.G20, the 50p is the highest top rate of tax. The total of the 20
:41:19. > :41:22.countries. It plaiks us uncompetitive. -- makes us
:41:22. > :41:30.uncompetitive. You move among these people, are they likely to make
:41:30. > :41:38.decisions on the basis of a 5p tax here and there. The fact we were at
:41:38. > :41:43.the top, it is a disincentive forepeople. Coming from Dublin, as
:41:43. > :41:47.we will do, on the basis they impli amounted CFC things they are
:41:47. > :41:51.talking about, those are more important about the income tax rate.
:41:51. > :41:56.People understand the needs for it, certainly from a political point of
:41:56. > :42:00.view, for the next couple of years. You decided to do that before the
:42:01. > :42:04.budget? Not before the budget. We were given indications that the CFC
:42:04. > :42:09.changes, mooted by the previous Government, wouldn't, and would not
:42:09. > :42:13.be there. This is a tax change? is the taxation of overseas profits,
:42:13. > :42:17.not the corporation tax rate, there is a lot of misings information.
:42:17. > :42:23.You do think corporation tax matters? Do I think it matters, yes
:42:23. > :42:26.I, I think it does. I'm bringing it down to 20% over a period of time,
:42:26. > :42:30.that will be very important. What do you think he missed a trick on
:42:30. > :42:38.what should he have put in the budget? There were some gaps. We
:42:38. > :42:42.are talking about pensioners and all of that. We do need 0.5%
:42:42. > :42:45.interest rates to be precise, we need something to encourage more
:42:45. > :42:50.saving and more investment by households. And I was disappointed
:42:50. > :42:55.they didn't even stpart. They had loads of consultations a-- start.
:42:55. > :42:59.They had loads of consultation, but nothing about childcare and
:42:59. > :43:03.investigating tax breaks, that would encourage more women back
:43:03. > :43:09.into the Labour force to get more talent out there. We can't afford
:43:09. > :43:13.it now? We can't. But I thought they could kick off a consultation.
:43:13. > :43:17.They are kicking off a lot of consultations, that would be an
:43:17. > :43:21.obvious one. Given the fact there was a neutral budget, and the
:43:21. > :43:25.Chancellor being fairly inventive. If you go through all the measure,
:43:25. > :43:30.infrastructure, investment measures, stimulating investment in small
:43:30. > :43:34.companies, tax simplification. Given the fact they had sill little
:43:34. > :43:39.wriggle room at this point in time. In the political and economic cycle
:43:39. > :43:45.I think he has done a good job. What has pushed him off track and
:43:45. > :43:55.will be a problem tomorrow. We see in the front pages of the papers,
:43:55. > :43:57.the called granny tax, and the 50p rate above the head. You could
:43:57. > :44:01.argue that pensioners and insipient pensioners are almost the only
:44:01. > :44:09.group in society that haven't had to pay something towards all of
:44:09. > :44:11.this. He said this is a budget for working people? I that is a
:44:11. > :44:17.problem? You apyre to think that old people
:44:17. > :44:21.were a bit too dim and con-- we were implying that old people were
:44:21. > :44:26.a bit dim to get hold of what you were doing. That seems to have been
:44:26. > :44:32.lost in the reporting so far. They haven't really covered that at all.
:44:32. > :44:37.That hasn't been covered. The granny tax is the only thing that
:44:37. > :44:42.wasn't leaked of significance. Apart from the stamp duty going to
:44:42. > :44:46.7%. It was a last-minute change. that significant? All this
:44:46. > :44:53.protection about what they will recoup from called avoidance.
:44:53. > :44:57.Thrafs all precated on -- that was all pri decated on people changing
:44:57. > :45:02.their behaviours. Somebody is buying a �2 million plus house,
:45:02. > :45:09.trying to close the deal tonight. had to confess we had exchanges
:45:09. > :45:14.contracts on houses, I was a bit worried is would affect us. In
:45:14. > :45:21.annexe A, I was the only person who read it, there is a transitional
:45:21. > :45:25.arrangement. I had one person ask me about that. We can't people out
:45:25. > :45:32.to avoid things. You have to find a house to buy. You can't pop to the
:45:32. > :45:37.shops for of the Is it a good idea? I think, we have seen other
:45:37. > :45:41.countries, several Scandinavian countries have most people renting
:45:41. > :45:46.and a frozen housing market, I don't think that is particularly
:45:46. > :45:48.encouraging of business and development. Just increasing wealth
:45:48. > :45:52.generally. Wasn't it rather depressing for both of you, as
:45:52. > :45:57.people who care about how the economy functions here, that the
:45:57. > :46:03.end result of all of these changes, big ones and little ones, is that
:46:03. > :46:06.there might be 0.1 of a per cent added to the growth figures? I did
:46:06. > :46:11.have difficulty in understanding why the growth rate would go from
:46:11. > :46:16.0.7 this year, to 2.1 next year. I think it will increase, but I'm not
:46:16. > :46:21.sure the gap will be as great. I think in mitigation, the coalition
:46:21. > :46:25.have tried to dole with spending issues and debt issues, we see the
:46:25. > :46:30.glimmer of a long-term cable. I hate to put myself in the same camp
:46:30. > :46:36.as Vince Cable, but I do think we do need a long-term plan, and I see
:46:36. > :46:41.glimmers of it in the Budget Day. In terms of enterprise, tax yaix
:46:41. > :46:46.simplification, investment, -- taxationismcation, investment, all
:46:46. > :46:50.these things he has touched on, or fundamentally, he has helped.
:46:50. > :46:54.Growth has to come from the household sector. He has targeted
:46:54. > :46:59.companies, and the points and the list you have given, is the right
:46:59. > :47:04.list. It will take a longer time. That is exactly right, the message
:47:04. > :47:09.that Timothy Geithner Sunday scored again, 24hoirs ago, this is a tough
:47:09. > :47:14.slog, it will take -- 24 hours, this is a tough slog, and will go
:47:14. > :47:21.on to the next election and beyond. Let's talk through the impact of
:47:21. > :47:25.this budget, with three figures we usually send out to do the tough
:47:25. > :47:31.stuff, taking cabinet ministers to lufrpbl. Three editors, not a
:47:31. > :47:36.single green eye shade between them. Brendan Barber, the eminence editor
:47:36. > :47:41.of the Thames, the first to speed, mandarin, Japanese French and
:47:41. > :47:45.Germany. And Jonathan Sandler, alum nigh of the Sevenoaks courier and
:47:45. > :47:55.now the London Evening Standard. The way to do this is to look at
:47:55. > :47:57.
:47:57. > :48:01.some front pages. The Times, you went with the 50p gambler.
:48:01. > :48:05.It is a bit old, isn't it? It is a story, this will be the story that
:48:05. > :48:11.dominated. I think our point clearly was that on the one hand
:48:11. > :48:15.this was Osborne's big bet, you could say it is a bet he made with
:48:15. > :48:20.small change, 50p. The truth is, it will be the thing that defines him
:48:20. > :48:24.and the Tories for a while yet. is a political gampbl or economic
:48:24. > :48:28.gamble? It is clearly both. A political gamble, they will stake
:48:28. > :48:34.their party's reputation and lose a bit of that compassionate
:48:34. > :48:39.Conservatism. The thing is can they send a signal to business, meaning
:48:39. > :48:44.from cutting to 50p 045p, there will be a return on investment.
:48:44. > :48:51.What do you think of the 50p, is it a gamble? I think he has already
:48:51. > :48:55.cleared it, pretty well. I'm maizeed he has got away with it,
:48:55. > :48:59.three months ago people were saying it was inconceivable, he has done
:48:59. > :49:05.it. He has everybody on side, he has an independent auditor to say
:49:05. > :49:10.it is the right thing to do. It schemes to me a skillful managing
:49:10. > :49:14.of expectations. Your peace processer, the Financial Times --
:49:14. > :49:22.paper, the Financial Times, I can't see the headline? We are working on
:49:22. > :49:27.it! What have you gone with here? Business budget faces backlash.
:49:27. > :49:30.What does that mean? How much of a gamble is this? The answer is the
:49:30. > :49:36.biggest gamble of all was taken at the beginning of the coalition
:49:36. > :49:42.Government, which was to embark on a really serious deficit reduction
:49:42. > :49:46.plan, which has led to very cheap bore lowing for this Government, --
:49:46. > :49:50.borrowing for this Government. It has given the Chancellor room to
:49:50. > :49:55.take a smaller political gamble on cutting the top rate of income tax.
:49:55. > :50:00.In a year's time. We wouldn't have supported this at this particular
:50:00. > :50:07.time, but we can see consistency, from the coalition, in cutting the
:50:07. > :50:11.top rate, and taking a large number of people, the working poor, out of
:50:11. > :50:18.this tax band. They have sent some important signals in corporation
:50:18. > :50:24.tax, reduction of corporation tax for companies a little along the
:50:24. > :50:28.lines of Ireland, which is doing a lot better than you might expect.
:50:28. > :50:37.Your paper, the London Evening Standard, you didn't use the word
:50:37. > :50:42."gamble", you used "gambit", you went on the child tax benefit.
:50:42. > :50:46.had been very heavily leaked, child benefit was something that was new
:50:46. > :50:50.to us. The fact that the threshold was higher. It was new, new, new.
:50:50. > :50:53.The other thing we have tried to get across in that headline, is
:50:54. > :51:00.that it is politically neutral. It is also, I think, interesting low,
:51:00. > :51:06.a very London centric budget -- interestingly, a London centric
:51:06. > :51:09.budget. Boris could have given it, it is pro-workers, and you get
:51:09. > :51:17.extra train carriages. The sort of budget Boris would like to give,
:51:17. > :51:22.that is another matter. We still have one or two other front pages.
:51:22. > :51:27.The Guardian Telegraph have gone with this regard attack upon
:51:27. > :51:33.pensions and peingers, and there is the front page of the Guardian,
:51:33. > :51:36.pensioners to fund tax cut. The Telegraph call it is a granny tax.
:51:36. > :51:43.How politically difficult do you think that is? Pretty difficult.
:51:43. > :51:47.Maybe on the scale of increasing or introducing the tuition fees, this
:51:47. > :51:52.is a very powerful lobby, one, by the way, which has been well
:51:52. > :51:56.protected in the first two years of this Government. They have got good
:51:56. > :52:00.index-linked pension increases, so, I'm afraid, it is their turn, we
:52:00. > :52:08.are all in it together, this is going to upset a few people. But it
:52:08. > :52:12.is true. The coalition Government could have sat on its hand and had
:52:12. > :52:16.a budget and done nothing. Actually it has made hard, tough political
:52:16. > :52:24.choices and taking on some lobbies, in order to get some movement, and
:52:24. > :52:28.in general, set a path towards lower taxes. We do have a young
:52:28. > :52:34.columnist writing tomorrow, who take as tough line on the
:52:34. > :52:39.pensioners. A shameless plug for your paper? It is the quit moaning
:52:39. > :52:41.granny, the baby boomers have had it easy, if you are young and
:52:41. > :52:45.saddled with the debts, they are complaining. There you see the
:52:45. > :52:51.front page of the Telegraph, read by lots of pensioners, you know,
:52:51. > :52:54.these people vote, unlike a lot of the young people who are make --
:52:55. > :53:00.making the point you appear to sympathise with? Where is the real
:53:00. > :53:04.big cost in this budget? It has come from raising the threshold up
:53:04. > :53:09.to �9,205. That cost �4 billion, you have to find it from somewhere.
:53:09. > :53:14.The one thingly say on the pensions point. What has happened -- the one
:53:14. > :53:18.thing I will say on the pensions point, is the money they had is
:53:18. > :53:24.taken away from them. It is painful for everyone, even if you are at
:53:24. > :53:31.the top end of the income scale, in theory your taxes will rise. Lower
:53:31. > :53:35.income people should see their taxes reduced. They have had to
:53:35. > :53:39.find �4 billion from it. We get so obsessed with the tinkering around
:53:39. > :53:43.the taxation we miss the two bigger stories. The economy is growing at
:53:43. > :53:46.0.8%. We have a fragile economy, that is driving everything
:53:46. > :53:53.happening, the big fight we will have will be around this �10
:53:53. > :53:56.billion in welfare cuts. I think if you think it this argument will be
:53:56. > :54:00.bloody, wait until the rest of the year. You need it look at the
:54:00. > :54:06.international environment here. Obviously if the world economy
:54:06. > :54:09.starts to get up, and pick up steam, there is better news out of America,
:54:09. > :54:15.growth will change all the budget calculation. You were putting Danny
:54:15. > :54:19.Alexander on the spot, and saying how can you, he can't prove it, but
:54:19. > :54:22.things will get better if the world economy gets better. No European
:54:22. > :54:27.Government could have delivered a budget like this. They have no room
:54:27. > :54:31.for manoeuvre, all they are doing is cutting, cutting, cutting. With
:54:31. > :54:35.just austerity, you won't get growth. This gives us a glimmer, a
:54:35. > :54:41.glimmer of hope. Setting a path for lower taxes in the future. Which we
:54:41. > :54:49.need in this country. You sound rather upbeat? I'm always prudently
:54:49. > :54:52.upbeat. With a purpose? I do think it is
:54:52. > :54:55.important it is very easy to second guess politicians. The coalition,
:54:55. > :54:58.just two years ago, people said if there is a hung parliament or
:54:58. > :55:02.coalition, interest rates will go through the ceiling, they won't be
:55:02. > :55:08.able to do anything. Actually, this Government has done something.
:55:08. > :55:11.is your sense of the public mood? One of the reasons why it was a
:55:11. > :55:16.good budget. I don't think the economy is in good shape, I think
:55:16. > :55:19.it is a good budget. It is the sense that we are a country that is
:55:19. > :55:24.drifting, we are essentially unable any more to make the weather, we
:55:24. > :55:28.are just going to have to live with it, live with what happens in
:55:28. > :55:32.Europe live with a long period of slow growth and austerity. At least
:55:32. > :55:36.this growth had ambition, it started saying we will deal with
:55:36. > :55:40.the scandal of stamp duty avoidance and take that on, and deal with the
:55:40. > :55:47.problems we have an airport problem in the south-east, we will say
:55:47. > :55:51.there is businesses that go. Things will have to happen in the economy
:55:51. > :55:58.that go beyond financial services in the south-east. What was your
:55:58. > :56:02.sense? I think raising the threshold for low paid workers,
:56:02. > :56:05.that was a good thing. That goes down well, the mood is very
:56:05. > :56:09.realistic, that is something that George Osborne has been skillful
:56:09. > :56:16.about, that people aren't expecting great things to happen, that they
:56:16. > :56:22.just think if we just keep ploughing on, maybe eventually
:56:22. > :56:25.there will be green shoots. It is easy to make fun of the
:56:25. > :56:29.Churchillian flourish of the Chancellor today, he he is's
:56:29. > :56:33.setting a course, some small steps -- he's setting the course, some
:56:33. > :56:37.small steps in the right direction in a difficult environment. That is
:56:37. > :56:47.all from Newsnight tonight, more from us tomorrow, until then good
:56:47. > :56:48.
:56:48. > :56:52.from us tomorrow, until then good night.
:56:52. > :56:56.A chilly night in store, clear skies, a touch of frost away from
:56:56. > :57:00.the major towns and city centres into the morning. For most sunshine
:57:00. > :57:06.overhead. A bit more cloud in the south west, one or two showers, a
:57:06. > :57:10.stiffening breeze, the cloud north of Scotland clears. 16 or 17, a