05/12/2012 Newsnight

The deficit is down, borrowing is down, jobs are being created, it is

a hard road, but we are making progress.

There probably wasn't much else he could say. The best the man

managing the nation's economy could come up with, "it's taking longer

than we thought, but we're on the right track". But the austerity

will continue, and some of the worse off people in society, in

particular, will find things getting worse.

The Chancellor laid it out in facts and figures, Plan A isn't quite

working. Instead, he announced Plan B, it

wasn't the Plan B that the opposition wants. He will be

cutting benefits, the better off and butter oingcy.

We will take -- Bureaucracy. We will take a brain scan of

today's Autumn Statement and see what it says.

We speak to the head of the office for budget responsibility on why

his sums went awry again. Next time the Chancellor cites any

of your figures, we have to have it in the back of our minds that they

might be wrong. We will speak to George Osborne's number two and his

Labour equivalent, and reconvene our panel, three pun pundits and

103 opinions. It was National Pantomime Day today,

"no no it isn't" they cried in London, as pundits of various

credibility turned their eyes to Westminster to see the front half

of the coalition pantomime horse tell us what is happening to the

economy. He had almost nothing amuse to go say. We have six more

years of austerity to look forward to, he won't meet his own target

for cutting the public debt, and yet he claims that the plans are

working. "oh no they weren't", cried the opposition. Paul Mason

was somewhere at the back playing with his calculator.

Wrapped up in tinsel, lit by neon, it is hard to accept this is an

economy that is shrinking. But it is. And the Government's plan to

shrug off the debt by-election time, Plan A, has not worked.

Mr Speaker, it's taking time, but the British economy is healing.

Chancellor stood up, knowing he had missed two crucial targets, it will

take two years longer than originally promised to balance the

Government's books, and a year longer to get the total debt

falling. He could have said, well, we will cut harder, but he didn't.

Now, then there are those who say that, despite all that has happened

in the world this year, we should cut even more now to hit the debt

target. That would require �17 billion of extra cuts a year. Let

me explain why I have decided not to take this course. We have always

argued we should let the automatic stablisers work, we have not argued

we should chase down a cyclical or temporary ded tearation in the

economy. Particularly one -- temporary deterioration in the

economy, particularly one that is said to be largely driven by

problems abroad. They face a choice between targets and realisim,

realisim won, so that even the Christmas shoppers of 2017 will be

feeling them, two years longer than planned. This is what growth was

expected to look like two years ago, and here is the reality and the new

forecast, much lower. Low growth meant the Treasury would have had

to borrow an extra �106 billion over the next five years. But it

reduced it to �50 billion, mainly by pocketing the interest stored up

in the Bank of England due to quanative easing. Labour, who had

suggested things might go wrong, were happy to point out they had.

The Chancellor's fiscal strategy has been completely derailed, Mr

Speaker. The defining purpose of the Government, the cornerstone of

the coalition, the one test they set themselves, to balance the

books and get the degt falling by 2015, -- debt fall big 2015, is now

in tatters. Both sides at Westminster are now

facing a new reality, even the Chancellor's supporters think our

long-cherished credit rating is in question. I think that the triple-A

status is likely to go now. If he was going to keep that, he would

have had to make something of the order of �20 billion, he says �17

billion, additional cuts to public spending. The only place he could

have got the money for that, was by cutting the health and schools'

budgets, since that was completely off the political agenda, in

reality, the most you could hope for, is he would carry on with the

cuts he had scheduled to other departments. The Chancellor's

figures have to be signed off by an independent body, called the OBR,

it said today his new definite reduction target is achievable. But

it said that last year, and the year before, and both times he

missed it. It is the same with growth, for three years running,

the OBR has overestimated how much we are going to get of the Why did

they get it wrong? I think, to a very large extent, there are two

reasons, one is the international environment is worse, and what is

going on in the eurozone does impact on us quite severely. The

second thing, they underestimated the negative impact of tightening

fiscal policy, of cutting the deficit too fast, which was a

mistake and had significant economic consequences.

Chancellor was able, just, to keep the deficit falling, by booking

�3.5 billion receipts of the sale of mobile phone license, by

reducing overseas aid, and a reserve earmarked for the Afghan

war. On growth, he has redirected �5 billion into spending on

infrastructure, that, plus a cancellation of 3p rise in fuel

duty, a cut in corporation tax, and big tax reliefs on business

spending, are a clear signal that growing is now more important than

extra spending cuts. I don't think it adds up to a

growth strategy, I think the �5 billion in infrastructure spending

is a welcome recognition that the cuts in investment, which to be

fair, this Government largely inherited from the previous one,

that those cuts were a mistake, and did considerable economic damage,

and this reverse is welcome. But it is not large enough to have a real

significant impact on growth and employment in the next year or two.

The biggest move today came on benefits, instead of rising in line

with inflation, jobseeker's allowance, ESA, the benefit most

disabled people will get, and income support, will all rise by

just 1% a year. By 2015 that, and cuts to the Universal Credit, will

net the Treasury �3.7 billion. At the same time, the Chancellor will

take �600 million from the rich, by limiting tax reliefs on pensions.

The welfare cut is big, politically it will be huge. But for economists,

what matters is Britain's deteriorating position on debt, on

deficit, and on growth. The whole of what the Government calls Plan A

was designed to avoid this moment, so what's left of it?

The two key things this Government would like to be remembered for, I

think, are cutting the deficit and raising the personal allowance to

�10thou though although in this -- �10,000, although he wasn't able to

make progress in terms of cutting the deficit, he was able to make

progress in raising the personal allowance, in this Autumn Statement.

Ploughing on in political strategy is a thing to remember here. In

terms of the next general election, his strategy will be to say, those

that tell you there is an easy way out, are lying to you. There is

only tough and tough and tough. What the Chancellor signalled today

was not an end to austerity, but a limit to it. Where now, into the

battle -- we are now, into the battle, over where the pain will be

distributed. Paul is in the studio, first a

quick word from our political editor, Allegra Stratton. It is

interesting, relating to the point made towards the end of your point,

even my Labour sources said today was a points win for George Osborne,

because he had this terrible news he was supposed to announce, and he

managed to wriggle free, he announced it, but had enough other

things to announce, that the narrative tomorrow will not be what

it was expected to be. It leads to a question, even if you went into

the nebgts election with the growth strategy, and the deficit reduction,

supposed to be the strategy, not being as clean as they would like,

could they still do it and go to that election and get back in. The

question becomes, at what point does the public decide that they

don't think they have delivered on bringing down deficit and debt. So

at what point? There is three things being discussed, because the

public isn't there right now, the three things, is it the credit

rating, when the credit rating industries say they don't buy it

any more, it doesn't have to be, look at America. Is it eurozone

countries doing well, or Labour coming out with their massive plan

themselves. The economics and politics are in different places at

the moment. Paul? The electorate doesn't vote on fiscal policy, it

votes on things like tax, but fiscal policy and all these targets,

it is one stage removed. But, if you look at the narrative of the

coalition Government, not just the Conservatives, it has been very

much around what they have been trying to do. If it was a book, if

the coalition was a book, and you said what is it about, you would

say it is about cutting the deficit to zero. If you asked how the book

ended, it would be they don't cut the deficit, but they might in the

second book of the series. You can see the problem. Committing the

Liberal Democrats to all sorts of future things they might not want

to be committed to. The danger in politics rather than out in the

electorate, is it removes the spring driving the machine? There

is one measure we have that meshs the high politics and the feel for

people lives, the Ronald Regan thing, of are you better off now

than five years ago, tonight the Resolution Foundation, this

programme does a lot of work, they have crunched the numbers in the

OBR's report, and shows that the OBR is pushing back from these

numbers today, the date at which living standards begin to feel a

little less bad. They have pushed that back to 2014, when they were

2013 the electorate will feel the pound is going further, close to an

election. As Labour people were saying this evening, it confirms

the next elections about living standards. The other thing we could

say about the OBR, you are about to talk to the boss of it in a minute.

That is the Office for Budget Responsibility, the first thing is,

not everybody agrees with them, that the hole in the budget that we

discovered today is what we call cyclical. Some economists believe

it is structural, if it was structural, then the Tory

hardliners and the Treasury hardliners, who wanted the cuts of

�17 billion extra a year, for some considerable time, their hand would

have been strengthened. The other issue with the OBR, the other thing

we have covered on this programme forever, is about growth strategy,

how do you grow the UK economy. The Government believes it has a growth

strategy. The OBR put figures on what the effects of that are, it is

distinctly unimpressive. That is facts and figures, it says you have

the growth strategy, but you are still not really cutting it. While

the rest of the country was listening to George Osborne and

exclaiming OMG, the Chancellor just kept repeating those letters you

have just heard, OBR, the Office for Budget Responsibility is George

Osborne's comfort blanket, he created it to have an outfit within

Government which would produce independent forecasts, on which he

could base political decision. The problem is, that the economic

forecasting so often seems a lot more like some spiritualist seance

than anything else. Earlier I caught up with the head of the

Office of Budget Responsibility, Robert Chote. Robert Chote, would

the Government have made a better job of running the economy if your

forecasts had been better? Given that the Government has to make

decisions about tax and spending plans, looking forward into the

future, you always have to base them on some sort of sense of how

the public finances would evolve F we had known, along with every

other forecaster, how long the persistence of weak productivity

growth, and the implications that seems to have for the long-term

potential health of the economy and the public finances, that task

would have been easier than from the start. It rather makes anybody

ask what is the point of you? are difficult judgments to make.

Which you got wrong? Which we have changed, as every other person

making those judgments has. admit you got them wrong? We have

changed our mind about the hit to the economy, and the depth of the

hole in the public finances that has to be filled in. Wouldn't it be

more accurate to say your function is to act as George Osborne's human

shield? No, I think the function, as with the many other fiscal

councils that have been set up in different countries, is to provide

the best professional judgment we can as to the outlook for the

public finances. And for politicians to make policy

decisions based on those. They don't have to believe our forecasts.

They can act in a different way, if they want to. As in other countries,

the finance ministers are have been perfectly -- have been perfectly

happy to say they don't share the view of their fiscal council and

act akorgdly. George Osborne might have been better to just ignore

you? I don't think he could have been. In what way has had helped

him to have duff forecasts? It has helped in the sense that you have

figures that are clearly explained as to where they are coming from.

They are wrong? Every economic forecast turns out to be wrong. We

look back and we explain, as clearly as we can, why things have

turned out differently from the way we have done. It is only by doing

that in a rigorous way, that you provide people with the information

they need to make judgments. Next time the Chancellor cites any of

your figures, we should all have, in the back of our minds, that they

are likely to be wrong? Absolutely. You should be looking at the

uncertainties that lie around every economic forecast. That is why we

demonstrate the confidence you should have in the numbers based on

the accuracy of past forecasts. We look at how sensitive our judgments

on the Government's targets are to different outcomes, what difference

does it make, how important is it? The economy grows more or less

quickly, there is more or less spare capacity, if the spare

capacity in the economy is used up faster or slower. All those are

things that any Chancellor or would-be Chancellor would need to

reach a decision. If they were to say they have come up with a

forecast, and that must be right and I will proceed on that basis,

that would be foolish. Would you give this country a triple-A

rating? That is not something we have to reach a judgment on. I

think the notion of a credit rating agency, in terms of thinking about,

are the Government's finances sustainable, a key difference is

that we are in a position where we have our own currency. In that

sense we have a greater degree of flexibility, that means that the

notion of the danger of insolvency, is a much different question for us.

You mean we just print more money? Well, the Government has been doing

a deal of that, or the Bank of England has been doing a deal of

that, to help keep demand going in the future. So I think that people

take a broad view on whether they think that this Government, or any

other Government, will deal with the difficulties in the public

finances over an appropriate time. A lot of people say it would be a

political disaster if we lost a triple-A rating from. The point of

view of a highly-trained economist, would it matter? Other countries

have seen downgradings and have been in a similar sort of position,

and it hasn't made an enormous difference to the reactions the

markets have to them. Often Credit Rating Agencies are looking at the

same information that everybody else does, its not clear what

additional information, a would-be investor in British Government debt

learns from that, that they couldn't have learned from looking

at our forecasts and others in the first place. Do you think George

Osborne has failed to meet his debt target by 2015? If you look at the

way the market have reacted to the widespread speculation that this

would be the case over the last few weeks. There isn't an dramatic

impression that it has affected the long-term credibility of the

Government's management of the public finances. He had a choice to

make about whether to do what was necessary to ensure that target

would stilling hit. He has chosen to let it go. Parliament has told

us we shouldn't take sides in that debate. As a highly-trained

economist you have no view on this? I have interesting views you can

wait to read in my memoirs. Then they might be wrong? Almost

certainly, yes. Although it was cloaked in the

language of the managing the economy, you wouldn't expect a man

in charge of the election strategy to misan opportunity d miss an

opportunity to score political points, or dig a few holes and

plant pointy sticks in them. It hasn't escaped George Osborne's

notice that the next election will be fought in the midst of austerity.

This is what our political editor, Allegra Stratton, making of it.

As we are about to leave autumn, the Chancellor, today, drove

through the last of the autumn leaves, to deliver the season's

grand economic statement. George Osborne was apparently on the verge

of admitting his economic strategy as good as a plate of autumnal

toast. Far from bringing down borrowing, he was expected to

announce it was up. This is from a man determined not to sanction more

borrowing, also known as Plan B. When the Chancellor did get to his

feet, he delivered Plan B, it wasn't the sort of Plan B that the

opposition has been falling for. We show our determination to do

this fairly, with further savings from bureaucracy, from the benefits

bill, and from the better off. Lots of Bs in parliament, not the

ones Labour thinks the economy needs. The Autumn Statement in 2012

was to be an enjoyable moment for the opposition, an "I told you so"

moment, when the Chancellor returned to his words, "we are all

in this together", the opposition past. This statement can be seen as

an atonement statement by the Chancellor, an admission that he

knows the budget of six months ago unravelled spectacularly, and this

time round more discipline needed. No trips to Washington, or

briefings to the press, and more coalition unity than we have seen

in 12 months. The result is he managed to wriggling out of one

economic target that had been central to his Government, and in

the process, lay a few booby traps for the opposition. In the last two

years, the deficit has fall bin a quarter. Today's figures -- fallen

by a quarter. Today's figures show with or without the APF coupons,

the deficit is forecast to fall this year again, cash borrowing is

forecast to fall too. Osborne was only able to say the

deficit would fall this year, because of �3.5 billion raised from

the sale of 4G mobile phone licenses, it is a sale not yet

taken place. One cabinet minister said they had done so because Ed

Balls had also used the money to stimulate the economy, and they

would do so too. For backbenchers, delighted this evening at the

return of George Osborne the tactition, the booby traps are

these. Firstly, we now know that the Government will do another

Comprehensive Spending Review. This means as of next summer we will

know what it will spend and cut in the years 2015/16, it means we go

into the next election with the Government saying what they will

cut, and Labour will have to come out with more details too. The

second booby trap is this, in April next year there will be a vote on

the uprating of benefits by only 1%, which way does Labour go, again.

The Spending Review a difficult call for the Chancellor, he has to

set spending targets because the election will be a month into the

financial year. He will have to go into the next election, saying we

will cut again spending on transport and education, and

justice and all those sorts of things. Who was this budget for? My

sources within Government diagnosed the group of strivers, as those

earning between �19,000 and �30,000 a year. Help for them today

included a shelving, forever, not just till April, of the planned 3p

rise in fuel duty, and also a surprise, another increase in the

personal tax allowance. For others, not so far up the income spectrum,

not such good news. 400,000 extra people were today brought into the

higher rate of tax. If you have a number of kids, you are actually in

the upper middle bit of income distrib bough, and not feeling

particularly happy -- distribution, and not feeling particularly happy

about your might. It is a difficult decision today to raise more money,

and the Chancellor was up front, which is welcome. The opposition

went for the jugular on capping benefits much The majority of

people who lose from his cuts to tax credits, are people in work.

Millions of families, striving hard to do the right thing, Mr Speaker.

What do the Prime Minister's allies say to that? An important point is

it wasn't a freeze. If you look at where he has rated it, it is the

same place public sector pay will be, in the same place as average

earnings growth in the private sector. It is very much about

parity. That is a very important point. Anything that looked unduly

punitive would have caused those concerns, think he has the right

balance. It was the Autumn Statement and

measures announced today to take you through more than four seasons,

next summer and spring bring the next Spending Review, more cut, but

which ones. With us now is Rachel Reeves, the

Shadow Chief Secretary to the Treasury, and Danny Alexander, her

Government counterpart. Are we supposed to take today's

announcement as evidence you are running the economy well? Yes, I

think we are running the economy well. The statement today reflected

the world we are in, not the world we hope to be in, two years ago.

The OBR and Robert Chote said, we have seen worse parts in the

eurozone and other parts of the world economy, that slowed growth

down. Our response to that is, rather than making more cuts now,

that we could have done, if we were going to chase the debt target,

instead we took more time to deal with the financial problems.

Fundamentally, to get this country back on the right road, we have to

clear up the mess of Labour. misread it? You missed your target?

We have missed our debt target, we are on target to meet the

structural deficit. Of course, look it is taking longer and it is

harder to deal with the economic problems than we expected. Mainly

because, as the O bfpl R themselves say, because of the problems in the

world economy. That is not our problem, but we are responding to

taking further decisions, and as Paul Mason said investing more in

infrastructure, cutting taxes for business and putting more money

into the pockets of working people. Is cutting the deficit still the

number one priority? It is essential. That is not my question,

is it the number one priority? have always said cutting the

deficit is essential to achieve economic growth and restore

prosperity. I notice you don't say it is the number one priority,

which used to be your line? Without it, none of those things are

possible, it is still absolutely essential. Not the number one

priority, George Osborne made a great song and dance about this,

you will recall? It is our first priority as a Government, to get

the public finances in order. To deal with the deficit. Do you just

remind us how much you are borrowing it this year? We will be

borrowing �108 billion. �108 billion. That is down �50 billion

since we came in. We cut the deficit in the first two years in

Government by a quarter. Against these head winds in the world

economy. We set out plans to deal with the deficit going further into

the next parliament t will take longer, because the economic

situation is worse than we expected. At least Robert Chote admits his

forecasts are almost invariably up the spot! -- spout! Don't you have

a similar degree of humility about the pledges you made? We are

setting out our plans based on the best economic forecast we can get.

We set up an independent Office for Budget Responsibility, precisely

because we didn't want forecasts to be interfered with by politicians,

as they were in the past. We make our judgments off the back of those

things. Of course, Robert Chote has been very honest, and I, and George

Osborne, that things have not turned out as we expected. Robert

Chote published a detailed report earlier in the year, giving all the

reasons why he thought his forekas were not accurate, that are

principally to do with, the problems in the eurozone, and the

pricinging and the way it is weighing on small and medium term

business. We didn't cause the mess, but we are doing our best to clear

it up. Let's look at borrowing figures, for example, there is a

figure in there of �3.5 billion, income, from the sale of 4G

telephone licenses. Have I missed something, have they been told?

It is speculative money, it is money that doesn't exist? It is

money that will come in this year. The Office of Budget Responsibility,

looking at the evidence presented to them by the office doing that,

decided to count them in the figures. Just as they do every year.

This is like Billy Bunter's postal order? Not at all, if you look

every year in departmental spending, departments are spending money on

various things, income from assets sales and property sales. All those

things have to be forecast in the normal way. I trust the judgment of

the Office of Budget Responsibility. In coming to the conclusion that it

was right to count that money this year, I'm sorry you don't.

always, I was unaware of this, every year's economic figures

include money that has not been realised and may not be realised?

forecast, by definition, is a forecast of events that haven't

taken place yet. That is why Robert Chote was pointing to the

uncertainty of his forecast reasonably in his interview earlier.

We can't rely on their forecasts or your promises? We have set out

clearly what we are doing to departmental spending every year.

One of the things clear from the OBR today, we have stuck to our

plans from departmental spending, we are slightly ahead of those

plans. We have reduced public spending by more than expected,

that is one of the reasons the deficit is falling this year.

Rachel Reeves, one of the things that is being done in order to

reduce Government spending s to kapt uprating of benefits at -- cap

the uprating of benefits at 1%? need to say what benefits the

Government are uprate anything that way. I'm sure he can tell you?

are published in the Autumn Statement published today.

example, Child Tax Credit, child benefit, maternity pay. The

Resolution Foundation say 60% of those benefits will be falling on

people in work in modest income. We have real issue with the changes.

We haven't seen the bill yet, so it is difficult to say. How we will be

voting on it. But people who are most hit are those on modest income.

The details are in the statement? The bill hasn't been written or

published. It will be, there will be a limit of 1% to the uprating of

benefits. Will you vote in favour of it? The bill hasn't been written

yet, you haven't seen it and neither do I. We know what it will

say? We know the impact on child poverty. Until that information is

published, when the strerb publishes the bill, I'm not going

to commit to vote for a bill we haven't seen yet. But I am clear.

Do you support the principle of it? I don't support the principle of

giving a tax cut for millionaire's next year, and on the same day

cutting support for some of the most vulnerable in society.

don't support it? I don't support those people with the least paying

for deficit reduction, at the same time giving a tax give Ye to the

rich in society worth �-- tax givaway to the rich in society

worth billions. You will have to vote against it? We haven't seen

the Bill yet, we don't know what decision provisions the Government

will be making for poorer people. We will wait and see the bill, that

is responsible. The Government say we will vote before Christmas, I

hope the bill will be published in the next few days.

Do you support performance-related- pay for teachers? What the

Chancellor said today that Michael Gove, the Education Secretary, will

bring forward market-facing pay. My understanding is regional and local

pay. I have spoken to a lot of teachers in my constituency in

Leeds, and around the country, who are saying, actually, it is already

quite difficult to recruit teachers the toughest areas of country. This

is likely to make it harder to do that. You won't support that?

didn't support a regional pay bargaining, we are in favour of a

national pay bargaining structure, where flexibility, where needed to

recruit in hot spots. Moving to local and regional pay, which the

Government have rejected in the National Health Service, they have

said today, but wanting to reduce it in education, that won't get the

best results for kids around the country. There will be a Spending

Review, Danny Alexander's colleague has told us today, there will be a

Spending Review, will it be next summer. Will you be doing a similar

thing? We are not in Government. You can decide how you would run

the economy, having got us partly into this mess? We can't do a

Spending Review if we are not in Government. We are, at the moment,

doing reviews into value for money and efficiency in public services,

we have said when we come to power, we will look at a zero-based

Spending Review, looking at everyone rather than a salami slice

like the Government is doing. It is not something that is

possible without the support of the Civil Service to do it. When it

gets closer to the election. better watch out, it might be the

Office of Budget Responsibility helping you out? Closer to the

election we will publish our manifesto commitment, two-and-a-

half years ahead of a general election it is not possible to do

that. I want to explore the benefits question, most of the

people who receive the benefits in question are actually in work,

aren't they? Yes, people in work will be net better off next year

and the year after as a result of the decisions we have announced.

Were you comfortable with George Osborne talking about some people

going to work, and other people, next door, perhaps, keeping the

curtains drawn and staying in bed, were you comfortable with that

language? That is not the language I use, most people I know are

working very hard to get themselves back into work. This is a difficult

decision to make to deal with the public finances. People in work, on

tax credits, for example, will be net better off, because as a whole

we have also got the biggest increase in the income tax personal

allowances in this country. People in work will benefit from that, as

a result of all the decisions we have made as Government,

people...That Is not what the documents published today. People

will be �50 better off a month. documents shown today show the

average family will be worse off to the tune of �700 because of the

decisions. That is on top of the VAT increase, that hit the average

family by �450. And the tax changes this year will lead to well over a

thousand pounds. I dispute what you are saying. The tax credit changes

on that day means it will be worse off in real terms. Those numbers

don't stack up. I want decisions today about uprating benefits today,

it was a difficult decision, we set out the benefits in the Autumn

Statement. She won't answer that now.

We are reducing taxes for working people. A lot of the newspapers are

referring to this tomorrow morning, it is the fact you have brought

another 400,000 people into the upper tax bracket. Are you pleased

about that? I didn't come into politics to do any of these things,

but we have to do them. The crucial things to make sure is as we deal

with the problems in the public finance, we do so fairly. That

means everyone has to make a contribution. Are those on the top

rate of tax, �3 billion into the hands of the richest people, 8,000

millionaires and �100,000 worse -- better off next year. Those with

the broader shoulders should bear the brunt of it. They are the

numbers that you set up from the OBR, �3 billion tax cut next year.

I won't take lectures from the Labour Party of millionaires. A

party in 13 years in Government, had had millionaire equity fund

managers paying a lower rate of tax on their gains than those cleaning

the office. It was an utterly disgraceful position under the

previous Government. The tuition fees, you are asking million airs

to contribute even less to deficit reduction. You voted in favour of

those things, you are just like the Conservative Party, you vote with

them every single day? It was a contrick, nobody paid it.

Office of Budget Responsibility said �3 billion brought in. The

people saying the price are those on modest and middle incomes.

You have no credibility on that point whatsoever. Credibility, I'm

not taking lessons from the Liberal Democrats on that. All is

tremenduously exciting, with the talk of cyclical borrowing and

fiscal mandate, and it comes down in the end to something simple for

most people, what does it mean for me. Will I feel itch richer or

poorer, -- richer or poorer, will my family or town be worse off. Joe

Lynam got the return off-peak ticket to Nottingham today, where

he went to a flower factory. The moon still hoovers on the icey

morning, days start early at the flower delivery business. Christmas

is one of the busiest times of year. When the Government talked about

strivers, had this family in mind. It started out under an umbrella 60

years ago. We are predominant in the on-line business. What does the

young managing director want now from the Autumn Statement? We want

pounds in people's pockets. Tax breaks and opportunities for real

people on the streets. So that they have got confidence to spend.

My expectations are less in that regard.

So, as the Chancellor began his speech, four employees, with four

very different incomes, were watching carefully. What do you

make of the corporation tax cut to 21%, that will affect you guys?

is a few more pounds which we are able to keep, and invest into

perhaps a new factory. Some equipment. The tax allowance to

�250,000? That is useful, in our case, the really big stuff is

things like a fridge. A cold centre, that costs a lot of money. That

would be very useful. Chris started off in the call centre, and without

any formal training, he's marketing manager. There is a lot of talk and

not a great deal of policies. I don't think he has a lot of room to

manoeuvre. The corporation tax cuts are good. He has done as much as he

can in terms of people's personal allowances. He increased the ISA

amount, to give people a little bit more. I don't think there is a lot

there, to be honest. There was limited sympathy for those facing

benefit cuts? I think it is a self- motivation to want to come in and

do better every day. I'm not sure they are doing enough to encourage

enough people to do that. Again, the been fits are so high for a lot

of people, that there isn't really the encouragement to get up and go

out and try to improve their own skill set. To try to improve their

lives. Especially when you are being paid not to. When you are

being paid not to have a job. are the people sitting at home.

Yeah. 18-year-old hanjoinds Bunches as an apprentice d Hannah, joined

Bunches as an a-- Hannah, joined Bunches as an apprenticeship, she

thinks things aren't so bad. Some people don't want the work, it is

hard for people to get a job. If you are lucky enough like I did,

applied to it must be over 60, then surely one of them has to at least

give you a chance of an interview. Sharon has been with the company

since 197, her daughter is also employed here, she hasn't had a

holiday in three years. Used to go out and buy clothes or go on

holiday, it is just work and pay bills.

This colliery closed in 1987, scaring the town in many place.

Clarence worked there for 37 years, on this icey day he was hand-

delivering Christmas cards. We do worry, the future of the younger

generation. How come? Because they don't work. They are getting worse,

there is no work for the young ones. At the end of the working day, at

Bunches, three generations, all with very different stakes in the

economy, gather to discuss the future.

I think of some of our staff and what they earn on the factory floor.

We pay them a good wage for the job they do. However, it is on the

lower end. I think, you know, about all the working age benefits we

have spoke been today, and they were going to increase by a per

cent, but actually a per cent is less than inflation, so in real

terms of money, they are probably going to have less to spend.

Benefits were cut in real terms today, George Osborne, doubtless

hopes, that will entice many off the dole and into the work force.

Time now to summon the ghosts of Christmas past, present and future,

Danny Finkelstein used to work for Conservative Central Office and

writes for the Times now, Sally worked for Tony Blair and Downing

Street, and Mark Pack editor of Lib Dem Voice, and prolific blogger and

general commentator, I was going to say "nuisance"! Let's talk about

the papers as well. Interesting a Government that

misses its self-impose target, is getting reasonably good -- self-

imposed target, is getting reasonably good press some? Yes,

the -- tomorrow? But how incomes change is how people will really

react. Partly because Ed Balls didn't do as well as he could have

done, George Osborne was confident, the politics were good, it is a

reasonable press in tomorrow's papers. Still, the decisions they

have made are very hard for people. That is very hard incidentally

politically, it is also hard to see. It means people on quite low

incomes will be squeezed. That is very difficult. A hard road to 2018

does catch it? You couldn't listen to those figures without thinking

that. What we wanted to do was capture that in the headline.

has, I mean, Daniely has already mentioned Ed Balls's performance --

Danny has already mentioned Ed Balls's performance today, and

there is talk from Labour supporters of missing an open goal?

I was surprised by his performance, it was pretty much an open goal.

Although George Osborne performed well, the message was pretty bleak.

I thought particularly bad, although he had political headlines

that were rather effective, if you look at the two groups I would be

worried about if I was a Tory backbencher, I would be worried

about the people in the 40% tax band, prime target voters for them.

I would also be worried about labelling everyone as scroungers

when a lot of them are at work. This will unfold in the days and

weeks to come. But they have had a pretty decent first 24 hours is my

guess. When you look at the Lib Dem contribution, you saw Danny

Alexander a moment or so ago, you saw that moment in George Osborne's

speech when Nick Clegg is sitting behind him, and virtually rolling

his eyes. Because George Osborne's dismissed the mansion tax. And

generally, acting in a pretty disloyal sort of fashion. What do

you think the Lib Dems got out of this today? I think that was astute

of Nick Clegg, those facial expressions can be a very effective

way of conveying disagreement. It is no secret that Liberal Democrats

and Tories disagree fundamentally on taxing wealth and taxing

property. Clegg played a smart move by playingp the difference, but in

a way that didn't -- playing up the difference, but didn't overshadow

the news. That is the mistake the parties made for the budget in the

spring, there was bits of good news, but so much was leaked in advance,

all the news on the day was bad news. This time they got it right,

there was good news, limited, but extra good news about cuts in

income tax, the OBR figures better than expected. But those figures

should be taken with a pinch of salt, there was good a genuine

surprises. On the OBR, they forecast like all other economists

forecast. Their analysis of the situation, and the figures

underneath it in terms of the budget, those are very important

for George Osborne, they basically allow him to argue it is not his

fiscal policy that created the situation. The credibility of the

OBR, on the forecasts, has taken a dent, everyone's forecasts were

wrong. But the credibility underneath the budget, on the OBR,

is critical, actually. People in the country want to know if George

Osborne can put it right. In the end it is a pretty esoteric

argument, about OBR figures or somebody else. The question is, can

this man put this right on track. We know something key about the

ground the next election will be fought? We certainly do, it is a

different place than we all expected a few years ago.

advantage of winning in the House of Commons, was the biggest danger

today for George Osborne was to be seen not to make any progress. The

figures could lend themselves to that analysis, very heavily. The

fact that Ed Balls failed to make the point, gave George Osborne an

advantage. In the long run people doesn't watch the events or know

what is happening in the House of Commons. They will feel it in their

pockets, that is a problem for the Government. What about the

suggestion that shortly before the election there will be a tickling

of the economy so people will feel better? No, they have to get the

last year right, and make sure they don't impose unexpected increases

in tax or reductions in business. It will be an interesting sort of

environment to fight an election. The challenge for Labour is

difficult? The challenge for Labour, is, I think that Labour are OK at

the moment. Not bringing home a comprehensive spending plan at the

moment, it would beed madness to bring it forward at this stage. We

got it so wrong in a previous life doing that. Labour is exactly right,

we can't go into the election in that position. That's the challenge

in the next 18 months. The benefits thing, this question of 1% and how

they jump on that, will put them in an awkward spot politically. What

George Osborne did today will unravel, I think, for in a sense,

his labelling all the benefit of not being at work and not seeking

work, it was perfectly clear that was not supported as a headline by

the liberals, and it is not a reality. That is why I thought he

was being smart saying there will be a vote in parliament. People

like Rachel Reeves can't side step it. That will be hard for Liberal

Democrats, and peers, people like Ed Balls have a lot to work out

about how Labour will handle that. If I was the Lib Dem chief in the

House of Lords, I will be thinking it asteriky vote.

You said we knew how the election would go and the politics, the Lib

Dems are clearly going to propose a mansion tax, Vince Cable seems to

have won that battle. It looks like Labour will as well, they have a

position off the baseline, in which they have money, and the Tories

will show how they will match it. We learned something else about the

general election, there will be a lot of arguing about the mansion

tax. And good for you, you think? suspect what we will see the

Liberal Democrats saying at the general election, is mansion tax

and using that revenue to cut knack tax further, so if you are earning

anal minimum wage, in full-time job, you don't have to pay tax at all.

That is a good headline position, it will be hard for the Tories to

say instead of that money for that it goes somewhere else. It will be

hard for Tories to say you need to pay counter tax. Why not liberal

and Conservative. We will reconvene afterChristmas. That is it for now,

the great jazz pianist and composer, Dave Brubeck, has died. His Let's

Take Five was the first number one Take Five was the first number one

Hello, after a very cold, frosty and icey night, it is Scotland that

will bear the brunt of further snow through the Thursday morning rush

hour. Met Office amber warnings in force. Be prepared for the

likelihood of travel disruption. All of that wet weather, rain sleet

and he snow moves into northern England. Tricky conditions in the

Pennine. -- Pennines. Not much rain until afterdark in the south west.

More rain into south-west and South Wales, unwanted rain for those

suffering flooding t will turn wet late afternoon and into the evening

especially. In Northern Ireland a wet start, eatsing off southwards,