05/12/2012 Newsnight


In-depth investigation and analysis of the stories behind the day's headlines, presented by Jeremy Paxman.

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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,


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