21/03/2012 Newsnight


21/03/2012

Budget 2012 analysis and reaction. Jeremy Paxman is joined by politicians, business leaders and journalists.


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Transcript


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So, onwards to sunlight and farewell to darkness and debt, led

:00:09.:00:12.

by our fearless guide, the Chancellor of the Exchequer, George

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Osborne. He claims his budget today charts a path back to prosperity.

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But is it a plan? Our political editor will be asking why the

:00:20.:00:24.

Chancellor appears to think you incentivise the rich, by giving

:00:24.:00:28.

them money, and incentivise the poor by taking it away, while our

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economics editor wonders whether the Chancellor is just making a lot

:00:32.:00:35.

of noise to compensate not much possibility of action. The Chief

:00:35.:00:40.

Secretary to the Treasury is here to tell us why he's happy to have

:00:40.:00:44.

George Osborne's speech written on his tomb stone, and his Labour

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shadow to tell him why he's a disgrace.

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The boss of the world's biggest advertising, we hope, is here to

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join a head of an investment fund that looks after �47 billion. The

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editors of the Times, the Financial Times and the London Evening

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Standard are here too. They have seen a few budgets between them, we

:01:05.:01:14.
:01:15.:01:19.

convene our political panel to pass Maybe it was entable that this was

:01:19.:01:28.

a political -- inevitable this was was a budget for differences.

:01:28.:01:32.

The very rich are having their income tax cut, pensioners will pay

:01:32.:01:37.

more tax, everyone has their tax threshold raised and benefits will

:01:37.:01:42.

also be cut, the effect, a little indistinct. Let's hear what our

:01:42.:01:45.

economics and political editor hear about it.

:01:45.:01:50.

What is the stand out feature? What is the stand out feature?

:01:50.:01:53.

has got rid of the 50p rate. stand-up feature is whether they

:01:53.:01:56.

can prove the measures they are bringing in, heavy rates on stamp

:01:56.:02:00.

duty, closing all sorts of well taxes, whether they will bring in

:02:01.:02:07.

enough so at the next election 50p doesn't run and run as a big

:02:07.:02:10.

givaway. For you? The Business Secretary, Vince Cable,

:02:10.:02:14.

a few weeks ago, called on the Government to come up with some

:02:14.:02:19.

sort of coherent growth plan. Is this it? A lot of the measures

:02:19.:02:22.

in this budget are designed to stimulate growth, particularly the

:02:22.:02:30.

tax pleasures. But the overall impact is -- tax measures. But the

:02:30.:02:34.

overall impact is minimal, we will remember the roads, the planning

:02:34.:02:37.

the railways, they are long-term, not short-term.

:02:37.:02:41.

Let's first get a little more detail from David Grossman, who has

:02:41.:02:47.

had the pleasure of spending the day in what fell from Mr Osborne's

:02:47.:02:50.

lips. The only people at Westminster this

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morning who didn't know exactly what was in the budget, probably

:02:53.:02:57.

didn't much care, they were here for the history and the views. It

:02:57.:03:02.

was a shame, plenty would view today's budget as historic. There

:03:02.:03:05.

was certainly plenty to write home about. Not, of course, that anybody

:03:05.:03:09.

needed to write home, they could have simply read about it in this

:03:09.:03:13.

morning's papers. This budget, the subject of unprecedented pre-

:03:13.:03:18.

briefing. Why? It is simple, the budget was the result of protracted

:03:18.:03:21.

and difficult political negotiation between the coalition partners,

:03:21.:03:24.

each side wanted to make sure their success stories were reflected in

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the coverage. For once we were pretty sure what

:03:32.:03:35.

was in the Chancellor's red box. The Chancellor didn't want

:03:35.:03:39.

tomorrow's headlines for this budget to be "tax breaks for the

:03:39.:03:44.

rich". First he laid out extensive measures to cut tax dodging. Under

:03:44.:03:47.

the last Government it was the boast of some high earners that

:03:47.:03:51.

with the help of their accountants, they were paying less in tax than

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their lean cleaners. I regard tax evasion, and aggressive tax

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avoidance as morally repugnant. a start, stamp duty on expensive

:04:03.:04:10.

properties will go up from tonight .% on houses worth more than �2

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million. Not quite a mansion tax but close to it. There will also be

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a closing of the loophole where rich individuals can use a foreign

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company to buy a house, if they want to do this in the future, they

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will have to pay a stamp duty charge of 15%.

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Unlimited tax relief will go, in essence, in the future someone will

:04:32.:04:37.

only be able to offset 25% of their income. And, coming in, is a new

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general anti-tax avoidance rule. In short, tax dodges will have to be

:04:43.:04:47.

cleared with HMRC, in advance, who, might just close the loophole

:04:47.:04:52.

instead of allowing it. The Lib Dems looked pleased at all of this,

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they had insisted on these measures in return for cutting the 50p top

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rate of income tax for people earning above �150,000 a year. The

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Chancellor said it raised little, and sent the wrong message.

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raises, at most, a fraction of what we were told, and may raise nothing

:05:10.:05:17.

at all. So from April next year, the top rate of tax will be 45p.

:05:17.:05:23.

Mr Deputy Speaker, no Chancellor can justify a tax rate that damages

:05:23.:05:29.

our economy and raises next to nothing, it is as simple as that.

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Thanks to the other new taxes on the rich, I have announced today,

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we will be getting five-times more money each and every year from the

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wealthiest in our society. What about the people who aren't

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superwealthyo with offshore companies to complicate their tax

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affairs? Well, the big headline is the rise in the tax-free allowance

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to �9,205, creeping ever closer to the Lib Dem target of �10,000. On

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the child benefit problem, the cliff edge will be softened,

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instead of losing every penny of child benefit, for any household

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with a higher rate taxpayer in it, it will only kick in at �50,000,

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and tapered to �60,000 before disappearing all together. Overall

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this budget is fiscally neutral, the winners offset by the losers,

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the Chancellor says it is the right budget for the country. Together

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the British people will share in the effort, and share the rewards.

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This country borrowed its way into trouble, now we are going to earn

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our way out, I commend the budget to the House. The assessment for

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the Office of Budget Responsibility and the Treasury is the shift from

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50p to 45p won't have much of an impact on the nation's finances,

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that only covers the economics, the politics is far harder to call.

:06:58.:07:02.

George Osborne is taking a huge gamble. Quite simply, he's handed a

:07:02.:07:06.

massive dividing line to the opposition.

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Let's have some tax transparency, hands up in the cabinet if you will

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benefit from the income tax cut? Come on? And boy did the Labour

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leader milk it in the Commons today. All he's doing for ordinary

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families is giving with one hand and taking far more away with other.

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It is the millionaire's budget that squeezes the middle, wrong choices,

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wrong values, out-of-touch, same old Tories. And there was a similar

:07:37.:07:41.

analysis from other opposition parties. You would imagine that

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decision makers in Whitehall would have woken up to the fact that

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there is an independence referendum happening in Scotland in 2014, and

:07:49.:07:54.

not making a whole load of decision to make a "yes" result more likely,

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people in Scotland will be asking why are we putting up with it.

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Tories at Westminster may not have followed every aspect of the pre-

:08:01.:08:05.

budget briefing, but one measure was a surprise to everybody. In

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effect, the Chancellor is ending the more generous income tax-free

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allowance for pensioners, over time, bringing them into line with other

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tax-payers. Of course it is convenient to hide

:08:17.:08:21.

behind the idea that this is simplification. But, in fact, what

:08:21.:08:27.

it is is a tax increase for the middle group of pensioners. For

:08:27.:08:33.

those earning between around �10,500, and �24,000 a year, over

:08:33.:08:37.

the next year or two, they will face an extra �300 increase in

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their tax bill. Over the next few years, the total amount of tax

:08:42.:08:46.

taken from this group will be �3 billion.

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By a strange coincidence, today was the anniversary of another

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Conservative minister, abolishing another tax. Getting rid of the

:08:55.:08:58.

poll tax turned out to be a vote- winner for the party. Nobody thinks

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getting rid of the 50p tax rate will be anything like as popular.

:09:03.:09:09.

Our political editor is still here. This surprise that David mentioned

:09:09.:09:16.

there, how big an impact? Quite a big impact. It affects 4.5 million

:09:16.:09:21.

pensioners. It doesn't affect the poorist or the richest. They have

:09:21.:09:24.

already had their allowance -- poorest or the richest, they have

:09:24.:09:29.

already had their allowances shrunk. They do vote and mostly

:09:29.:09:32.

Conservative. It is one of the first things we have seen on the

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cohort. They don't change their votes very much? They don't and

:09:36.:09:39.

haven't been targeted up until now. We are all in this together is a

:09:39.:09:42.

phrase that is supposed to have died today, but this is a mini-

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example of it coming back. What do you reckon, is it fair?

:09:47.:09:51.

the entire budget fair? There is all sorts of complicated graphs at

:09:51.:09:55.

the back of the red book. If they manage to bring in the revenue they

:09:55.:09:58.

think they will have the new measure, the new stamp duty,

:09:58.:10:03.

various curbs on allowances, if they do, then they get the

:10:03.:10:07.

appearance, certainly, of a new fairness, a sense that this wealth

:10:07.:10:11.

tax has been brought in, where there were once rather useless

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income taxes that didn't bring in much in the first place. If you

:10:13.:10:19.

look further down, they are not doing very much at all for the

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absolute bottom dessiel, that group was hit by -- decile, they were hit

:10:26.:10:31.

by taxes. In the middle, as you go up, everybody has the change to the

:10:31.:10:34.

personal tax allowance, which the Lib Dems fought for so much, it is

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an odd thing, the middle doesn't look like it is actually that

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squeezed. In summerry, it is good politics, in in a couple of years

:10:46.:10:49.

time they can -- if in a couple of years time they can show they have

:10:49.:10:52.

brought in revenue from the changes to the wealth taxes. It is not

:10:53.:11:01.

clear at the moment. The Government don't like this idea of fair

:11:01.:11:04.

capital "f" fairness. Changes to welfare, changes to schooling, they

:11:04.:11:09.

are doing all sorts of other things that will help people that doesn't

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show up in static measures of deciles. Paul Mason, we will hear

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from him in a second, he was saying a second or two ago, he thought it

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was an unmemorable budget, but would be remembered for actually

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things that have not drawn any attention today. I think it is a

:11:29.:11:33.

big budget, they have gotten rid of the 50p rate that they were warned

:11:33.:11:35.

not to, they have gambled because they think the economics will stack

:11:36.:11:40.

up and we will see in a couple of years time. Let's hear from Paul

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Mason? Thank you from the outer darkness, tomorrow's headlines will

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be about who gets what, the winners and losers, the idea is the big

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picture hasn't changed much. It has, the Government is still on course

:11:51.:11:55.

to wipe out the deficit by 2017, the way they are going to do it has

:11:55.:11:59.

changed. Here is the graph showing the austerity plan, that is the mix

:11:59.:12:03.

of tax rises in red, and spending cuts in blue. Now if we compare

:12:03.:12:06.

this new plan with the plan published in the Autumn Statement,

:12:06.:12:12.

during the current parliament we are looking at �4 billion more in

:12:12.:12:17.

cuts, offset by �10 billion less in tax rise, overall there is �6

:12:17.:12:19.

billion less pain in the economy. After the election, in the last two

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years of the plan, the picture changes, these last two columns

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here include �16 billion more in cuts, and only �3 billion more

:12:29.:12:34.

pullback on the planned tax rises. That is a net of �13 billion extra

:12:34.:12:38.

austerity. It comes after the next election.

:12:38.:12:41.

George Osborne signalled today that �10 billion of those cuts would

:12:42.:12:46.

come from welfare. If we stick to the big picture,

:12:47.:12:51.

what is there about the Government's claim this is about

:12:51.:12:56.

growth. By 2014 the 22p corporation tax will put British corporation

:12:56.:13:00.

tax as the lowest in the developing countries. It has business leaders

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smiling as they picked their way through protests throughout

:13:03.:13:06.

parliament today. The impact is slight, business investment will go

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up 1%, and growth will rise a barely measurable 0.1%, as the

:13:12.:13:17.

result of these business tax cuts. You can look at this in two ways,

:13:17.:13:20.

first of all, how much spending power you are injecting into the

:13:20.:13:25.

economy and taking out. That is neutral, they are not doing much of

:13:25.:13:29.

that in the forecast when you take away the give aways, then there is

:13:29.:13:33.

the argument of making a difference to the long-term trend growth rate

:13:33.:13:36.

to the economy. Things like planning reform could have a

:13:36.:13:39.

significant impact over the longer term, but it is much too early to

:13:39.:13:45.

bank some of those gains in future. Finally it is official, taxing the

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rich is pointless. The Treasury, which thought the 50p tax rate

:13:49.:13:54.

would raise �3 billion, two years ago, now thinks not. Here is the

:13:54.:14:04.
:14:04.:14:19.

If you add in more behaviour change because of tax breaks and cuts,

:14:19.:14:24.

there is �760 billion by cutting the tax rate. Confused? So are they,

:14:24.:14:27.

the economics are highly uncertain, some believe dubious, but the

:14:28.:14:30.

political battle lines are very clear indeed.

:14:30.:14:34.

The Chancellor sent out one of those irritating Spam e-mails

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tonight, boasting how the budget was, in his words, radical and

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reforming. We recall Gordon Brown and Nigel Lawson and various others

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saying much the same thing. To try to throw some light on it now, we

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are joined by the Chief Secretary to the Treasury, Danny Alexander,

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and his shadow, Rachel Rhys. What makes you so certain that rich

:14:57.:15:03.

people who avoid a 50p rate tax will pay a 45p rate of tax? We have

:15:03.:15:08.

had those costings independent low audited by Robert Chote, the

:15:08.:15:13.

independent Office for Budget Responsibility. A great deal of

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work has gone in to quantify those figures. As the package earlier

:15:17.:15:21.

said we wanted to replace a tax that wasn't working at that level,

:15:21.:15:24.

with additional taxes on the wealthiests, that will bring in

:15:24.:15:27.

five-times more from that group of people. That makes this budget a

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shift from the wealthy to millions of low and middle income earners

:15:33.:15:38.

benefiting from the largest increase ever in loans. You say you

:15:38.:15:42.

will bring in five-times the money, is that certain, it is not, it

:15:42.:15:46.

can't be? It is as certain as we can be. Is it as certain as your

:15:46.:15:49.

predictions as to what will be raised from the 50p rate of tax?

:15:49.:15:53.

didn't make predictions of what could be made from the 50p rate of

:15:53.:15:56.

tax. Your predecessor did? previous Government did. They

:15:56.:15:59.

didn't have an independent Office for Budget Responsibility checking

:15:59.:16:03.

up on those figures. When the Chancellor says it will raise five-

:16:03.:16:07.

times as much money, you don't know? What I do know is there is a

:16:07.:16:10.

vast amount of stamp duty avoidance going on in the system, for example,

:16:10.:16:13.

which no Government before has made an effort to crack down on. Where

:16:13.:16:18.

the changes we are making in terms of punitive rates of stamp duty. An

:16:18.:16:21.

annual charge on those people who try to squirrel their homes away in

:16:21.:16:25.

companies to avoid tax. Those are things much harder to avoid. What

:16:25.:16:30.

we know, because we are not just listening to the OBR, and to the

:16:30.:16:34.

Inland Revenue, but to the academic consensus too. These numbers are

:16:34.:16:40.

about right in this area. You don't know? You can't possibly know?

:16:40.:16:42.

makes me satisfied with the budget, is we are raising substantially

:16:42.:16:47.

more from the wealthy by this Packerage of measures. Labour said

:16:47.:16:51.

it would raise billions. They also said it was temporary, can you tell

:16:51.:16:57.

us the permanent rate of 45p, is it permanent or temporary? The rate of

:16:57.:17:00.

45p is like any other tax now. It is something that we have put in

:17:00.:17:04.

place, that is going to be part of the tax system for the foreseeable

:17:04.:17:11.

future. Of course course, every other tax is kept under review. It

:17:11.:17:20.

doesn't have the temporary status the 50p rate had. It is permanent

:17:20.:17:24.

but under review? Every tax is under review. The 45p rate is the

:17:24.:17:29.

decision we have made to reduce it to 45p, as part of a package to

:17:29.:17:33.

raise more overall from the wealthy, in order to help fund the big tax

:17:33.:17:36.

cuts for people on low and middle income.

:17:36.:17:40.

You expect the next election to have a 45p rate of tax? I can't

:17:40.:17:43.

make promises about what will be in the next three budgets. With what I

:17:43.:17:48.

think is the 45p rate is a sustainable rate. It puts us right

:17:48.:17:51.

in the mid-of what other European countries do at their top rate of

:17:51.:17:56.

tax. Can you help us on this question of pensioners. When the

:17:56.:18:02.

Chancellor said there will be no cash losers from this pension tax

:18:02.:18:06.

arrangement change, why did he leave out the rest of the statement,

:18:06.:18:10.

which is that 4.41 million people will be worse off in real terms,

:18:10.:18:15.

with an average loss of �83, and further and further? Well, it is

:18:15.:18:18.

absolutely true to say that there are no cash losers from this policy,

:18:18.:18:23.

it is a simplification of the system to try to make sure

:18:23.:18:28.

that...Hold On. 4.14 million people, older people, will be worse off?

:18:28.:18:30.

you look at the measures we are taking for pensioners, the largest-

:18:30.:18:34.

ever rise in the state pension today. Moving to a triple lock to

:18:34.:18:38.

protect the state pension, rating up much faster than the previous

:18:38.:18:42.

Government. In 2013/14, under Labour's uprating policies for

:18:42.:18:46.

pensions, people would have benefited to the tune of �66,

:18:46.:18:50.

that's the cost of the decision that we have made. We are doing

:18:50.:18:58.

more on uprating to the tune of �130. In net terms, in 2013/14,

:18:58.:19:03.

pensioners will be better off. is the case in the words of the

:19:03.:19:06.

HMRC briefing, that 4.41 million people will be worse off? It is

:19:07.:19:09.

absolutely right that those people who were connect ex-ing their

:19:09.:19:13.

allowance to rise will see it froze -- expecting their allowance to

:19:13.:19:17.

rise will see it frozen. How much will they raise from that? By the

:19:17.:19:21.

end of the period the costings and the documents show it rises to, by

:19:21.:19:26.

the end of the year, �250 billion. All of these changes will net you

:19:26.:19:29.

an improvement in the economic growth of this country, of how

:19:29.:19:36.

much? 0.12%? All of these measures are designed to support the economy.

:19:37.:19:40.

The big measure in this budget is a tax cut for people on low and

:19:40.:19:44.

middle incomes, that is money that will be spent in the British

:19:44.:19:51.

economy. As Paul Mason said, we are making significant supply side

:19:51.:19:54.

reforms, dealing with red tape. These are all things that will lift

:19:54.:19:57.

the growth potential of this country's economy over the next few

:19:57.:20:01.

years. By how much? I'm not going to put numbers on that. You have

:20:01.:20:07.

put numbers on everything else? Office of Budget Responsibility

:20:07.:20:15.

today says...0.1%? Says we will get 0.8%. Is that pathetic or New York

:20:15.:20:19.

llity? It is an -- nullity? It is an economic forecast of our growth.

:20:19.:20:22.

This country has been through the deepest financial crisis we have

:20:22.:20:25.

seen. Labour made a mess of the economy, with the crisis in the

:20:25.:20:29.

eurozone and so on. We have to make a lot of changes to the way the

:20:29.:20:34.

British economy works to get us back to prosperity. You have

:20:34.:20:38.

expressed great anxiety about getting rid of the 50p rate of tax,

:20:38.:20:42.

and replacing it with a 45p rate of tax, would you restore it? If it

:20:42.:20:45.

was a Labour budget today we wouldn't have got rid of that rate

:20:45.:20:48.

of tax. If there was an election tomorrow, we wouldn't be going

:20:48.:20:51.

ahead with this tax cut for the rich. If there was an election

:20:51.:20:55.

tomorrow, you would restore the 50p rate of tax? That is absolutely

:20:55.:21:00.

right, yeah. I suppose you will tell me, you won't write the

:21:00.:21:04.

manifesto for the next election now? We don't say we will do this

:21:04.:21:07.

or that with tax, we don't know what the economy will look like in

:21:07.:21:15.

three weeks time, let alone three years time. If there was an

:21:16.:21:20.

election going ahead we would have that rate there.

:21:20.:21:25.

Will this 45p rate of tax be as permanent as any other tax?

:21:25.:21:30.

wouldn't be cutting that tax, we would leave it at 50p. It will

:21:30.:21:33.

happen, because you are not in Government. When we come to the

:21:33.:21:36.

next election, there will be a 45p rate of tax, all things being

:21:36.:21:41.

equal? When it comes to the next election, in 2014, 2015, we will

:21:41.:21:44.

have to make a judgment. At the moment we don't know what the

:21:44.:21:48.

economy will look like. He can make the judgment, why not you?

:21:48.:21:51.

hasn't, he has said it will be in the next Liberal Democrat manifesto.

:21:51.:21:56.

He told us last time he was in here, they were promising all sorts of

:21:56.:22:01.

cuts at the next election? couldn't believe the last manifesto.

:22:01.:22:05.

I'm not sure I will promise any more, but what we set out today on

:22:05.:22:07.

the spending side is the same figures as in the out dumb

:22:07.:22:12.

statement last year, we still have to make further savings to do --

:22:12.:22:17.

Autumn Statement last year, we will still have to make stpurt further

:22:17.:22:23.

savings. -- further savings. There is more cuts envisaged than now?

:22:23.:22:28.

The figures today were on the same basis of the Autumn Statement.

:22:28.:22:33.

Theing has shifted? No, we are still aiming to balance the

:22:33.:22:38.

structural deficit, by 2016/17, the same as when you and I discussed it

:22:38.:22:42.

in November. You are still committing to go into the next

:22:42.:22:46.

election promising further cuts in Government spending? I'm also

:22:46.:22:51.

committed to a further Spending Review to work out how we work out

:22:51.:22:55.

the numbers deliberately set out. That is something that the Liberal

:22:55.:22:58.

Democrats will be committed to. What about the further �10 billion

:22:58.:23:02.

to be found in welfare spending? have not committed to a further �10

:23:03.:23:06.

billion in welfare. What the Chancellor was doing, rightly, is

:23:06.:23:11.

expose some of the trade-offs and make some spending decisions. The

:23:11.:23:15.

point being made is because of the rise in debt interest, because of

:23:15.:23:19.

the continued growth in the welfare budget, we will face some difficult

:23:19.:23:22.

choices, as a country when that time comes. We want to start that

:23:22.:23:28.

debate about what the right choices are. I thought George Osborne made

:23:28.:23:32.

an explicit statement today, that there will be a further �10 billion

:23:32.:23:36.

in wealth cuts? He said if we were to be sure that departmental cuts

:23:36.:23:41.

were the same as the last Spending Review, that is the amount of

:23:41.:23:43.

savings in annually managed expenditure, most welfare, that

:23:43.:23:48.

will be required. We haven't made that decision because we haven't

:23:48.:23:52.

conducted that spending decision. We would have a different balance

:23:52.:23:58.

to tax increases to spending cuts. We would reinstate the bank bonus

:23:58.:24:02.

tax, and use the money to fund job creation. We wouldn't have the same

:24:02.:24:06.

policy. Also, I think you need jobs and growth to get the economy back

:24:06.:24:10.

on track, what we have seen in the budget today, the Office for Budget

:24:10.:24:13.

Responsibility from said that all the measures that the Government

:24:13.:24:17.

have introduced won't make a blind bit of difference to their

:24:17.:24:20.

forecasts for unemployment and growth. You have to support the cut

:24:20.:24:25.

in corporation tax, don't you? think the best way to support

:24:25.:24:28.

businesses would be a national insurance holiday for all small

:24:28.:24:31.

businesses taking on new workers. Do you or do you not support the

:24:32.:24:36.

cut in corporation tax? That is not the right way to support business.

:24:36.:24:40.

Do you support or not? No, I think it would be better to have national

:24:40.:24:43.

insurance holiday. You are in favour of a higher rate of

:24:43.:24:47.

corporation tax? I think the right thing to do is cut national

:24:47.:24:49.

insurance, that would help small businesses, they are really

:24:49.:24:53.

struggling. The budget has to be about choices, and Labour will make

:24:53.:24:57.

difference choices but we wouldn't cut the 50p rate tax. You wouldn't

:24:57.:25:01.

cut the 50p tax, or the corporation tax? We wouldn't have cut

:25:01.:25:05.

corporation tax, we would have cut the national insurance holiday for

:25:05.:25:08.

all small businesses taking on new workers. We think that is the

:25:08.:25:16.

priority right now. Do you agree with the cham's statement that tax

:25:16.:25:21.

avoidance is -- the Chancellor's statement that tax avoidance is

:25:21.:25:25.

morally repugnant? I would. Would you say someone using their company

:25:25.:25:29.

to reduce their income tax liability was unfit for public

:25:29.:25:34.

office? If you look at Ken Livingstone, he is using a company

:25:34.:25:38.

to pay for people to work for him. I don't know if all the details of

:25:38.:25:41.

individuals' tax returns are there. Would you say it is tax avoidance?

:25:41.:25:45.

Not if you are using it to pay other people. Otherwise you would

:25:45.:25:49.

be taxed twice. I don't know the details of individuals' tax returns.

:25:49.:25:55.

But you do find it morally repugnant? Tax avoidance is wrong,

:25:55.:25:59.

I don't think people should avoid and evade tax. If you are going to

:25:59.:26:03.

cut down on loopholes in the tax system. That money should be used

:26:03.:26:07.

to support ordinary familiar hely not as this Government have done,

:26:07.:26:11.

get rid of the loopholes, but then give people a tax cut at the same

:26:11.:26:14.

time to compensate. I think if you are going to close tax loopholes,

:26:15.:26:18.

that is the right thing to do. You should use that money to give a

:26:18.:26:23.

break to ordinary working families, struggling right now, with stagnant

:26:23.:26:27.

wages and rising prices. If Labour had been doing the budget today, we

:26:27.:26:33.

would have had a reduction in VAT down to 17.5%, to support ordinary

:26:33.:26:39.

families, reinstated the cuts to working tax credit families.

:26:39.:26:46.

Vince Cable said if he was doing the budget he wouldn't have done

:26:46.:26:49.

this. Was it a Liberal Democrat budget in any case? Our top

:26:49.:26:55.

priority was a very big tax cut for people on low and middle incomes.

:26:55.:26:59.

We have delivered that, with the largest increase in the personal

:26:59.:27:04.

allowance, that is worth a lot of money to 21 basic rate tax-payers.

:27:04.:27:07.

There were two million people paying tax under Labour who are no

:27:07.:27:10.

longer paying tax. All the Conservatives saying it was there

:27:10.:27:15.

idea, they are lying? I wrote the Lib Dem election manifesto, the

:27:15.:27:19.

commitment. Great minds think alike, you would say in other

:27:19.:27:21.

circumstances? The commitment to reaching a 10,000 personal

:27:22.:27:26.

allowance was on the front page of our manifesto, and now in the front

:27:26.:27:32.

rank of Government policy delivering benefits to millions of

:27:32.:27:36.

people what I have learned tonight is Labour's policy is increase tax

:27:36.:27:41.

on business, spend more, borrow more, have more debt. It is a

:27:41.:27:46.

recipe for Labour repeating the disaster they committed last time

:27:46.:27:51.

in office. We are saying under your Government, a flatlining economy,

:27:51.:27:56.

unfloiplt rising month after month, I think -- unemployment rising

:27:56.:27:59.

month after month. Young people not working. Get those young people

:27:59.:28:04.

back to work, pay the taxes, not getting welfare payments, that

:28:04.:28:08.

would help reduce the deficit and get the economy growing. The Office

:28:08.:28:11.

for Budget Responsibility is saying that nothing in the budget today

:28:11.:28:20.

has changed their view on growth or unemployment, or on borrowing.

:28:20.:28:25.

At political moments like this, we open the cat at that koom where the

:28:25.:28:29.

political team are -- cat koom, where the political koom are still

:28:29.:28:37.

there. We are seeing if they are able for speech.

:28:37.:28:43.

Daniel Finkelstein, writing a column for the Times, Miranda Green

:28:43.:28:53.
:28:53.:28:57.

worked for Lloyd George and Paddy Ashdown. And James puorn nel,.

:28:57.:29:02.

-- You said this was like Paul Daniels doing a magic act? People

:29:02.:29:06.

are always amazed somebody has to pay for the tax cut. That is what

:29:06.:29:09.

you will have. Of course, if you are going to have a large tax

:29:09.:29:14.

allowance rise, there will be a tax increase on someone, and it has

:29:14.:29:21.

turned out to be on the age-related lads. The whole thing is how you

:29:21.:29:24.

orchestrate that. Because the coalition has had this big

:29:24.:29:29.

discussion about every other aspect of the budget, that was the one bit

:29:29.:29:33.

of news. It got on the front page of the papers because of that.

:29:33.:29:40.

What do you think? I remember in the Liberal Democrats you used to

:29:40.:29:44.

struggle to get one line in the coverage the next day. The chamber

:29:44.:29:52.

would empty as the Lib Dem leader got up to respond to somebody

:29:52.:29:55.

else's budget. It is extraordinary the party being in Government and

:29:55.:29:59.

having this influence. Are you happy with the abolition of 50p

:29:59.:30:04.

rates of tax for wealthier people? Absolutely not, if it was a Lib Dem

:30:04.:30:07.

Government it wouldn't have happened. There are some big ones

:30:07.:30:12.

for the Lib Dems, as Danny said, what is interesting about this

:30:12.:30:15.

whole process, has been the public negotiation going on between the

:30:15.:30:20.

two sides. That has resulted in winning the argument on taking

:30:20.:30:26.

people on low and middle incomes out of tax. The politics of it.

:30:26.:30:29.

They claimed it was a Lib Dem budget? The politics are difficult,

:30:29.:30:36.

it is difficult to argue against the policy. Let's let James Purnell

:30:36.:30:42.

get a word in? It is the taxes, it may not be a mansion tax, but

:30:42.:30:49.

people with mansions will be taxed. What did you make of of it?

:30:49.:30:55.

reminded me how difficult fiscally neutral budgets are. You used to

:30:55.:30:59.

announce what you spend money on, Government do it every two years,

:30:59.:31:05.

and there is not much to a nouns. The 45p meant there was a risk to

:31:05.:31:09.

having something with not much news in it. He had to have an argument

:31:09.:31:11.

abouting something, and have a big issue about something. It has

:31:12.:31:17.

turned out to be the 45p, whether that turns out to be God or bad,

:31:17.:31:21.

politically, we will wait and see. It is politically risky? It is, but

:31:21.:31:26.

it is something. Politics abhors a vacuum. There were good things in

:31:26.:31:29.

the budget, things I wouldn't agree with, but they would be small

:31:29.:31:35.

without the 45p. It is interesting politic clo they have decided to go

:31:35.:31:39.

for it. I remember when -- politic clo they have decided to go for it.

:31:39.:31:43.

I remember serving under Tony Blair, he said his job was to look after

:31:43.:31:47.

the voters, he was thinking of the people who had got him there. It is

:31:47.:31:51.

not clear to me that David Cameron has been thinking about how to look

:31:51.:31:56.

after his voters in the budget today. His probably is he can't

:31:56.:32:01.

look after them, as everyone will be getting poorly, and growth being

:32:01.:32:08.

so low you have to be able to look at that. The policies I thought

:32:08.:32:13.

what was significant, is we reached a point now where sudden low it is

:32:13.:32:19.

going to happen the cuts, the fact there is low growth, the question

:32:19.:32:23.

is how you play it. This is a big risk, I would put it higher than

:32:23.:32:27.

you. It is a big risk. It will pay off if it produces growth. The OBR

:32:27.:32:35.

can't model that yet, but if there is a production of growth. Because

:32:35.:32:40.

there is relative low small things other than the 45p, his --

:32:40.:32:45.

relatively small things other than the 45p. Ed Milliband's line, it is

:32:45.:32:52.

the end of "it we are all in this together". He had a powerful

:32:52.:32:57.

argument, a good speech with good jokes. Before we analyse his

:32:57.:33:01.

performance, you were trying to make a point? Ed Milliband did have

:33:01.:33:05.

a God day, as did Ed Balls, it is not enough. If you look at the

:33:05.:33:08.

background to this, the opinion polls, people don't trust Labour on

:33:08.:33:13.

the economy. In a ens is, we have to see what happens from this, this

:33:13.:33:19.

Labour can turn themselves from people commentating gleefully on a

:33:19.:33:22.

potential mistake by George Osborne to a potential Government. There is

:33:22.:33:26.

no evidence of them doing that. one political problem he has is it

:33:26.:33:31.

is not a good policy to move from 45p to 50p. Politically I can see

:33:31.:33:36.

the argument against abolishing it, in policy terms a tax that raises

:33:36.:33:39.

virtually no money simply can't be justified. So the problem that Ed

:33:39.:33:44.

Milliband has got, is how to make the Labour Party not looks a though

:33:44.:33:49.

it is tokenistically anti-business for a policy that brings no money.

:33:49.:33:52.

The Tory gamble is bigger, that is his problem.

:33:52.:33:56.

What is the point you wanted to make? He had a really good day, he

:33:56.:34:00.

had an argument, it is really, really noisy, that speech. I don't

:34:00.:34:03.

think people get it from the TV. The Chancellor is always listened

:34:03.:34:07.

to carefully. Suddenly there is a wall of noise. I have sat there

:34:07.:34:12.

with nowhere near that many people in the chamber, and that first 10

:34:12.:34:16.

seconds is vital. He hit it really well, it is the end of "we're all

:34:16.:34:21.

in it together", he had good gimmicks, trying to get people to

:34:21.:34:27.

put their hand up, you feel like a banana to ignore them. The front

:34:27.:34:32.

bench ended up looking a little...As Far as the public is

:34:32.:34:37.

concerned urban nanas. The fact that he performs well in parliament

:34:37.:34:42.

is not here or there. This Downton Abbey thing. This is a

:34:42.:34:47.

weak point for the whole coalition, story and Lib Dem. What is this

:34:47.:34:51.

Downton Abbey thing? The idea they are not like ordinary people

:34:51.:35:00.

feeling the pain, cabinet. That is a vulnerable point. This is a Tory

:35:00.:35:03.

weakness that people think the Conservative Party is for well off

:35:03.:35:07.

people. If they will do this it has to work and produce growth. It is

:35:07.:35:10.

difficult to defend the policy of having a 50p tax rate when there is

:35:10.:35:15.

no money. I can see why they did it. It is certainly a political issue.

:35:15.:35:18.

Do you think, as Tory Prime Minister, Tony Blair would have

:35:18.:35:24.

done it? I think most people wanted him to be. Most time he would be.

:35:24.:35:34.
:35:34.:35:35.

In 1997 he wouldn't have done it, and in 2006 he would have got it

:35:35.:35:39.

done. Grey-gate, they are calling it, a

:35:39.:35:46.

lot will be made of it in tomorrow's papers, is it damaging?

:35:46.:35:51.

I think inevitably, pensioners are very sure about what they gain and

:35:51.:35:55.

they will be militant about it. It is not taking cash sums from people,

:35:55.:36:01.

it is always worse, people are risk adverse, it is through fiscal drag,

:36:01.:36:04.

and inflation. They will get more money in other ways, it will be

:36:04.:36:07.

limited, but everybody will be losing in one way or another. This

:36:07.:36:16.

will make them more. You are grimacing? I think it will be

:36:16.:36:20.

unfavourable for them. You saw what happened when Gordon Brown was

:36:20.:36:25.

derisory about the state pension. They are militant, and they vote in

:36:25.:36:29.

marginal constituencies, it is not clever to irritate them. This used

:36:29.:36:33.

to be your thing? If you are sitting in the thresh you look at

:36:33.:36:38.

it and think, we have -- Treasury, and you look at all the money and

:36:38.:36:43.

you have protected the free TV, the problem is they have had all their

:36:43.:36:46.

goodies, and people didn't know about it in the budget. There is a

:36:46.:36:52.

bigger issue for Labour and the Tories, which is paradoxically, is

:36:52.:36:57.

the Tories need more seats in the north, and they haven't a clear

:36:57.:37:00.

story there. The Labour Party needs to get votes outside the public

:37:00.:37:04.

sector, they have a public sector story, but not the private sector

:37:04.:37:07.

stories. They have the wrong stories at the moment. What about

:37:07.:37:10.

the idea there is another �10 billion to be found in the welfare

:37:10.:37:15.

budget? I think it is much worse than that. The political class is

:37:15.:37:18.

slightly in denial that they have promised to end child poverty,

:37:18.:37:22.

increase aid, deal with emission, they have made all the promise and

:37:22.:37:27.

need to raise taxes more than they say they would do to avoid that.

:37:27.:37:30.

you think it is feasible? I think actually the country will either

:37:30.:37:33.

have to drop all those promises, all the things they have all voted

:37:33.:37:43.
:37:43.:37:45.

for, all the parties. Or they will have to make much bigger cuts.

:37:45.:37:50.

Things like having the same role in defence around the world and

:37:50.:37:53.

welfare. Everyone is complaining, they are paying more, everyone will

:37:53.:37:57.

be paying more if we are going to have low growth and reduce the

:37:57.:37:59.

borrowing. That is just the mathematics. It is really

:37:59.:38:03.

interesting this idea that people will be told where their taxes are

:38:03.:38:06.

going, and how much precisely they are paying towards welfare, or

:38:06.:38:09.

defence, or whatever it is. That could change human behaviour,

:38:09.:38:13.

couldn't it? It will make clear to people how much tax they are paying.

:38:13.:38:18.

It will breakdown welfare, it will show you a lot of welfare is going

:38:18.:38:22.

to pensioners, it will also show for example things like aid doesn't

:38:22.:38:25.

cost much money. It will be cross cutting, it won't be as people

:38:25.:38:30.

think, it will make everyone be more anti-tax. I think it will be

:38:30.:38:34.

more subtle. It is good to flag up there needs to be a national debate

:38:34.:38:37.

about the future of welfare spending. It it is politically

:38:37.:38:41.

important to prepare the ground, so you have the support to do

:38:41.:38:43.

difficult things. With the pensioners they haven't prepared

:38:43.:38:48.

the ground, that is why it will hurt them.

:38:48.:38:52.

If we disregard important initiatives such as changes to the

:38:52.:38:58.

tax regime on Lucozade, and chicken, and caravans. The thrust of the

:38:58.:39:02.

budget is about allowing the economy to grow by helping business.

:39:02.:39:09.

Did it? If the top rate tax cut were to fail to reignite the flames

:39:09.:39:12.

of British entreprenurial, the Prime Minister turned up with a

:39:12.:39:18.

bevy alternative fuels. Corporation tax tumbled from 24p to 22p, with

:39:18.:39:24.

no pen fits for the banks. Small firms had the carrots of simplified

:39:24.:39:28.

tax daingled in front of them. George Osborne wants to let shops

:39:28.:39:34.

open all day on sunds during the Olympics. There was big pick -- on

:39:34.:39:38.

Sundays during the Olympics. There was an argument for new

:39:38.:39:41.

runways in the south-east. And backing for better rail services in

:39:41.:39:45.

the north. What will they find about to complain about now. Here

:39:45.:39:51.

to discuss the impact of today's budget on business, are Martin

:39:51.:39:57.

Sorrell, the boss of the world's biggest advertising agency. And

:39:57.:40:05.

Helena Morrisey of Newton Investment Managment. We offered to

:40:05.:40:09.

some of of the biggest unions to come on today, none wanted to do it.

:40:09.:40:16.

There are two alternative issues of looking at the 50p cut, begun is,

:40:16.:40:22.

it genuinely is something that will transform the country, eventually.

:40:22.:40:27.

What do you think? At the risk of sticking my head in the lion's

:40:27.:40:34.

mouth, I wouldn't do it. Indicating you might do it in a couple of

:40:34.:40:39.

years was electionly a better thing to do. It seems if you are trying

:40:39.:40:45.

to stimulate entree pent nuerism, things they did -- ent prepen you

:40:45.:40:52.

are inism, entrepeneuralism, those are more important issues than this.

:40:52.:40:59.

If you are going to stimulate entrepeneurs, taxation is the way

:40:59.:41:03.

to go. I'm glad he had the courage, and the headlines will be horrible

:41:03.:41:08.

for him tomorrow. I'm glad he did it, the point they made about the

:41:08.:41:12.

G20, the 50p is the highest top rate of tax. The total of the 20

:41:12.:41:19.

countries. It plaiks us uncompetitive. -- makes us

:41:19.:41:22.

uncompetitive. You move among these people, are they likely to make

:41:22.:41:30.

decisions on the basis of a 5p tax here and there. The fact we were at

:41:30.:41:38.

the top, it is a disincentive forepeople. Coming from Dublin, as

:41:38.:41:43.

we will do, on the basis they impli amounted CFC things they are

:41:43.:41:47.

talking about, those are more important about the income tax rate.

:41:47.:41:51.

People understand the needs for it, certainly from a political point of

:41:51.:41:56.

view, for the next couple of years. You decided to do that before the

:41:56.:42:00.

budget? Not before the budget. We were given indications that the CFC

:42:01.:42:04.

changes, mooted by the previous Government, wouldn't, and would not

:42:04.:42:09.

be there. This is a tax change? is the taxation of overseas profits,

:42:09.:42:13.

not the corporation tax rate, there is a lot of misings information.

:42:13.:42:17.

You do think corporation tax matters? Do I think it matters, yes

:42:17.:42:23.

I, I think it does. I'm bringing it down to 20% over a period of time,

:42:23.:42:26.

that will be very important. What do you think he missed a trick on

:42:26.:42:30.

what should he have put in the budget? There were some gaps. We

:42:30.:42:38.

are talking about pensioners and all of that. We do need 0.5%

:42:38.:42:42.

interest rates to be precise, we need something to encourage more

:42:42.:42:45.

saving and more investment by households. And I was disappointed

:42:45.:42:50.

they didn't even stpart. They had loads of consultations a-- start.

:42:50.:42:55.

They had loads of consultation, but nothing about childcare and

:42:55.:42:59.

investigating tax breaks, that would encourage more women back

:42:59.:43:03.

into the Labour force to get more talent out there. We can't afford

:43:03.:43:09.

it now? We can't. But I thought they could kick off a consultation.

:43:09.:43:13.

They are kicking off a lot of consultations, that would be an

:43:13.:43:17.

obvious one. Given the fact there was a neutral budget, and the

:43:17.:43:21.

Chancellor being fairly inventive. If you go through all the measure,

:43:21.:43:25.

infrastructure, investment measures, stimulating investment in small

:43:25.:43:30.

companies, tax simplification. Given the fact they had sill little

:43:30.:43:34.

wriggle room at this point in time. In the political and economic cycle

:43:34.:43:39.

I think he has done a good job. What has pushed him off track and

:43:39.:43:45.

will be a problem tomorrow. We see in the front pages of the papers,

:43:45.:43:55.

the called granny tax, and the 50p rate above the head. You could

:43:55.:43:57.

argue that pensioners and insipient pensioners are almost the only

:43:57.:44:01.

group in society that haven't had to pay something towards all of

:44:01.:44:09.

this. He said this is a budget for working people? I that is a

:44:09.:44:11.

problem? You apyre to think that old people

:44:11.:44:17.

were a bit too dim and con-- we were implying that old people were

:44:17.:44:21.

a bit dim to get hold of what you were doing. That seems to have been

:44:21.:44:26.

lost in the reporting so far. They haven't really covered that at all.

:44:26.:44:32.

That hasn't been covered. The granny tax is the only thing that

:44:32.:44:37.

wasn't leaked of significance. Apart from the stamp duty going to

:44:37.:44:42.

7%. It was a last-minute change. that significant? All this

:44:42.:44:46.

protection about what they will recoup from called avoidance.

:44:46.:44:53.

Thrafs all precated on -- that was all pri decated on people changing

:44:53.:44:57.

their behaviours. Somebody is buying a �2 million plus house,

:44:57.:45:02.

trying to close the deal tonight. had to confess we had exchanges

:45:02.:45:09.

contracts on houses, I was a bit worried is would affect us. In

:45:09.:45:14.

annexe A, I was the only person who read it, there is a transitional

:45:14.:45:21.

arrangement. I had one person ask me about that. We can't people out

:45:21.:45:25.

to avoid things. You have to find a house to buy. You can't pop to the

:45:25.:45:32.

shops for of the Is it a good idea? I think, we have seen other

:45:32.:45:37.

countries, several Scandinavian countries have most people renting

:45:37.:45:41.

and a frozen housing market, I don't think that is particularly

:45:41.:45:46.

encouraging of business and development. Just increasing wealth

:45:46.:45:48.

generally. Wasn't it rather depressing for both of you, as

:45:48.:45:52.

people who care about how the economy functions here, that the

:45:52.:45:57.

end result of all of these changes, big ones and little ones, is that

:45:57.:46:03.

there might be 0.1 of a per cent added to the growth figures? I did

:46:03.:46:06.

have difficulty in understanding why the growth rate would go from

:46:06.:46:11.

0.7 this year, to 2.1 next year. I think it will increase, but I'm not

:46:11.:46:16.

sure the gap will be as great. I think in mitigation, the coalition

:46:16.:46:21.

have tried to dole with spending issues and debt issues, we see the

:46:21.:46:25.

glimmer of a long-term cable. I hate to put myself in the same camp

:46:25.:46:30.

as Vince Cable, but I do think we do need a long-term plan, and I see

:46:30.:46:36.

glimmers of it in the Budget Day. In terms of enterprise, tax yaix

:46:36.:46:41.

simplification, investment, -- taxationismcation, investment, all

:46:41.:46:46.

these things he has touched on, or fundamentally, he has helped.

:46:46.:46:50.

Growth has to come from the household sector. He has targeted

:46:50.:46:54.

companies, and the points and the list you have given, is the right

:46:54.:46:59.

list. It will take a longer time. That is exactly right, the message

:46:59.:47:04.

that Timothy Geithner Sunday scored again, 24hoirs ago, this is a tough

:47:04.:47:09.

slog, it will take -- 24 hours, this is a tough slog, and will go

:47:09.:47:14.

on to the next election and beyond. Let's talk through the impact of

:47:14.:47:21.

this budget, with three figures we usually send out to do the tough

:47:21.:47:25.

stuff, taking cabinet ministers to lufrpbl. Three editors, not a

:47:25.:47:31.

single green eye shade between them. Brendan Barber, the eminence editor

:47:31.:47:36.

of the Thames, the first to speed, mandarin, Japanese French and

:47:36.:47:41.

Germany. And Jonathan Sandler, alum nigh of the Sevenoaks courier and

:47:41.:47:45.

now the London Evening Standard. The way to do this is to look at

:47:45.:47:55.
:47:55.:47:57.

some front pages. The Times, you went with the 50p gambler.

:47:57.:48:01.

It is a bit old, isn't it? It is a story, this will be the story that

:48:01.:48:05.

dominated. I think our point clearly was that on the one hand

:48:05.:48:11.

this was Osborne's big bet, you could say it is a bet he made with

:48:11.:48:15.

small change, 50p. The truth is, it will be the thing that defines him

:48:15.:48:20.

and the Tories for a while yet. is a political gampbl or economic

:48:20.:48:24.

gamble? It is clearly both. A political gamble, they will stake

:48:24.:48:28.

their party's reputation and lose a bit of that compassionate

:48:28.:48:34.

Conservatism. The thing is can they send a signal to business, meaning

:48:34.:48:39.

from cutting to 50p 045p, there will be a return on investment.

:48:39.:48:44.

What do you think of the 50p, is it a gamble? I think he has already

:48:44.:48:51.

cleared it, pretty well. I'm maizeed he has got away with it,

:48:51.:48:55.

three months ago people were saying it was inconceivable, he has done

:48:55.:48:59.

it. He has everybody on side, he has an independent auditor to say

:48:59.:49:05.

it is the right thing to do. It schemes to me a skillful managing

:49:05.:49:10.

of expectations. Your peace processer, the Financial Times --

:49:10.:49:14.

paper, the Financial Times, I can't see the headline? We are working on

:49:14.:49:22.

it! What have you gone with here? Business budget faces backlash.

:49:22.:49:27.

What does that mean? How much of a gamble is this? The answer is the

:49:27.:49:30.

biggest gamble of all was taken at the beginning of the coalition

:49:30.:49:36.

Government, which was to embark on a really serious deficit reduction

:49:36.:49:42.

plan, which has led to very cheap bore lowing for this Government, --

:49:42.:49:46.

borrowing for this Government. It has given the Chancellor room to

:49:46.:49:50.

take a smaller political gamble on cutting the top rate of income tax.

:49:50.:49:55.

In a year's time. We wouldn't have supported this at this particular

:49:55.:50:00.

time, but we can see consistency, from the coalition, in cutting the

:50:00.:50:07.

top rate, and taking a large number of people, the working poor, out of

:50:07.:50:11.

this tax band. They have sent some important signals in corporation

:50:11.:50:18.

tax, reduction of corporation tax for companies a little along the

:50:18.:50:24.

lines of Ireland, which is doing a lot better than you might expect.

:50:24.:50:28.

Your paper, the London Evening Standard, you didn't use the word

:50:28.:50:37.

"gamble", you used "gambit", you went on the child tax benefit.

:50:37.:50:42.

had been very heavily leaked, child benefit was something that was new

:50:42.:50:46.

to us. The fact that the threshold was higher. It was new, new, new.

:50:46.:50:50.

The other thing we have tried to get across in that headline, is

:50:50.:50:53.

that it is politically neutral. It is also, I think, interesting low,

:50:54.:51:00.

a very London centric budget -- interestingly, a London centric

:51:00.:51:06.

budget. Boris could have given it, it is pro-workers, and you get

:51:06.:51:09.

extra train carriages. The sort of budget Boris would like to give,

:51:09.:51:17.

that is another matter. We still have one or two other front pages.

:51:17.:51:22.

The Guardian Telegraph have gone with this regard attack upon

:51:22.:51:27.

pensions and peingers, and there is the front page of the Guardian,

:51:27.:51:33.

pensioners to fund tax cut. The Telegraph call it is a granny tax.

:51:33.:51:36.

How politically difficult do you think that is? Pretty difficult.

:51:36.:51:43.

Maybe on the scale of increasing or introducing the tuition fees, this

:51:43.:51:47.

is a very powerful lobby, one, by the way, which has been well

:51:47.:51:52.

protected in the first two years of this Government. They have got good

:51:52.:51:56.

index-linked pension increases, so, I'm afraid, it is their turn, we

:51:56.:52:00.

are all in it together, this is going to upset a few people. But it

:52:00.:52:08.

is true. The coalition Government could have sat on its hand and had

:52:08.:52:12.

a budget and done nothing. Actually it has made hard, tough political

:52:12.:52:16.

choices and taking on some lobbies, in order to get some movement, and

:52:16.:52:24.

in general, set a path towards lower taxes. We do have a young

:52:24.:52:28.

columnist writing tomorrow, who take as tough line on the

:52:28.:52:34.

pensioners. A shameless plug for your paper? It is the quit moaning

:52:34.:52:39.

granny, the baby boomers have had it easy, if you are young and

:52:39.:52:41.

saddled with the debts, they are complaining. There you see the

:52:41.:52:45.

front page of the Telegraph, read by lots of pensioners, you know,

:52:45.:52:51.

these people vote, unlike a lot of the young people who are make --

:52:51.:52:54.

making the point you appear to sympathise with? Where is the real

:52:55.:53:00.

big cost in this budget? It has come from raising the threshold up

:53:00.:53:04.

to �9,205. That cost �4 billion, you have to find it from somewhere.

:53:04.:53:09.

The one thingly say on the pensions point. What has happened -- the one

:53:09.:53:14.

thing I will say on the pensions point, is the money they had is

:53:14.:53:18.

taken away from them. It is painful for everyone, even if you are at

:53:18.:53:24.

the top end of the income scale, in theory your taxes will rise. Lower

:53:24.:53:31.

income people should see their taxes reduced. They have had to

:53:31.:53:35.

find �4 billion from it. We get so obsessed with the tinkering around

:53:35.:53:39.

the taxation we miss the two bigger stories. The economy is growing at

:53:39.:53:43.

0.8%. We have a fragile economy, that is driving everything

:53:43.:53:46.

happening, the big fight we will have will be around this �10

:53:46.:53:53.

billion in welfare cuts. I think if you think it this argument will be

:53:53.:53:56.

bloody, wait until the rest of the year. You need it look at the

:53:56.:54:00.

international environment here. Obviously if the world economy

:54:00.:54:06.

starts to get up, and pick up steam, there is better news out of America,

:54:06.:54:09.

growth will change all the budget calculation. You were putting Danny

:54:09.:54:15.

Alexander on the spot, and saying how can you, he can't prove it, but

:54:15.:54:19.

things will get better if the world economy gets better. No European

:54:19.:54:22.

Government could have delivered a budget like this. They have no room

:54:22.:54:27.

for manoeuvre, all they are doing is cutting, cutting, cutting. With

:54:27.:54:31.

just austerity, you won't get growth. This gives us a glimmer, a

:54:31.:54:35.

glimmer of hope. Setting a path for lower taxes in the future. Which we

:54:35.:54:41.

need in this country. You sound rather upbeat? I'm always prudently

:54:41.:54:49.

upbeat. With a purpose? I do think it is

:54:49.:54:52.

important it is very easy to second guess politicians. The coalition,

:54:52.:54:55.

just two years ago, people said if there is a hung parliament or

:54:55.:54:58.

coalition, interest rates will go through the ceiling, they won't be

:54:58.:55:02.

able to do anything. Actually, this Government has done something.

:55:02.:55:08.

is your sense of the public mood? One of the reasons why it was a

:55:08.:55:11.

good budget. I don't think the economy is in good shape, I think

:55:11.:55:16.

it is a good budget. It is the sense that we are a country that is

:55:16.:55:19.

drifting, we are essentially unable any more to make the weather, we

:55:19.:55:24.

are just going to have to live with it, live with what happens in

:55:24.:55:28.

Europe live with a long period of slow growth and austerity. At least

:55:28.:55:32.

this growth had ambition, it started saying we will deal with

:55:32.:55:36.

the scandal of stamp duty avoidance and take that on, and deal with the

:55:36.:55:40.

problems we have an airport problem in the south-east, we will say

:55:40.:55:47.

there is businesses that go. Things will have to happen in the economy

:55:47.:55:51.

that go beyond financial services in the south-east. What was your

:55:51.:55:58.

sense? I think raising the threshold for low paid workers,

:55:58.:56:02.

that was a good thing. That goes down well, the mood is very

:56:02.:56:05.

realistic, that is something that George Osborne has been skillful

:56:05.:56:09.

about, that people aren't expecting great things to happen, that they

:56:09.:56:16.

just think if we just keep ploughing on, maybe eventually

:56:16.:56:22.

there will be green shoots. It is easy to make fun of the

:56:22.:56:25.

Churchillian flourish of the Chancellor today, he he is's

:56:25.:56:29.

setting a course, some small steps -- he's setting the course, some

:56:29.:56:33.

small steps in the right direction in a difficult environment. That is

:56:33.:56:37.

all from Newsnight tonight, more from us tomorrow, until then good

:56:37.:56:47.
:56:47.:56:48.

from us tomorrow, until then good night.

:56:48.:56:52.

A chilly night in store, clear skies, a touch of frost away from

:56:52.:56:56.

the major towns and city centres into the morning. For most sunshine

:56:56.:57:00.

overhead. A bit more cloud in the south west, one or two showers, a

:57:00.:57:06.

stiffening breeze, the cloud north of Scotland clears. 16 or 17, a

:57:06.:57:10.

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