05/12/2012 Newsnight


05/12/2012

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


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Transcript


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

:00:13.:00:19.

a hard road, but we are making progress.

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

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

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

:00:31.:00:33.

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

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particular, will find things getting worse.

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

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working. Instead, he announced Plan B, it

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

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cutting benefits, the better off and butter oingcy.

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

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today's Autumn Statement and see what it says.

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

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

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

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

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

:01:27.:01:37.
:01:37.:01:37.

103 opinions. It was National Pantomime Day today,

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

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credibility turned their eyes to Westminster to see the front half

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

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

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

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

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

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was somewhere at the back playing with his calculator.

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

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

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

:02:34.:02:39.

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

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

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take two years longer than originally promised to balance the

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

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

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

:02:58.:03:04.

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

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

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

:03:13.:03:18.

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

:03:18.:03:22.

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

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economy. Particularly one -- temporary deterioration in the

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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in tatters. Both sides at Westminster are now

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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second thing, they underestimated the negative impact of tightening

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

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mistake and had significant economic consequences.

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

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

:05:59.:06:02.

reducing overseas aid, and a reserve earmarked for the Afghan

:06:02.:06:08.

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

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

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

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

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

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

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

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fair, this Government largely inherited from the previous one,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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distributed. Paul is in the studio, first a

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

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

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

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

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

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

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

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

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

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

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

:09:15.:09:19.

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

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

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

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

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

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

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themselves. The economics and politics are in different places at

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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than five years ago, tonight the Resolution Foundation, this

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

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

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

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

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

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

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

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

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

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

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discovered today is what we call cyclical. Some economists believe

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

:11:33.:11:37.

hardliners and the Treasury hardliners, who wanted the cuts of

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

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

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

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

:11:51.:11:58.

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

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

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

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the rest of the country was listening to George Osborne and

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exclaiming OMG, the Chancellor just kept repeating those letters you

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

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

:12:20.:12:23.

Government which would produce independent forecasts, on which he

:12:23.:12:27.

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

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forecasting so often seems a lot more like some spiritualist seance

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

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

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

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

:12:47.:12:50.

decisions about tax and spending plans, looking forward into the

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

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

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other forecaster, how long the persistence of weak productivity

:13:02.:13:06.

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

:13:06.:13:10.

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

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

:13:13.:13:17.

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

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

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

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

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

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

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

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

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

:13:47.:13:49.

public finances. And for politicians to make policy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

:14:43.:14:47.

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

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

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demonstrate the confidence you should have in the numbers based on

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

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

:15:01.:15:06.

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

:15:06.:15:09.

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

:15:09.:15:14.

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

:15:14.:15:17.

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

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

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

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

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

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

:15:36.:15:39.

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

:15:39.:15:44.

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

:15:44.:15:48.

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

:15:48.:15:53.

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

:15:53.:15:57.

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

:15:57.:16:00.

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

:16:00.:16:04.

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

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

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other Government, will deal with the difficulties in the public

:16:13.:16:17.

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

:16:17.:16:20.

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

:16:20.:16:23.

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

:16:23.:16:28.

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

:16:28.:16:31.

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

:16:31.:16:34.

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

:16:34.:16:39.

same information that everybody else does, its not clear what

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

:16:42.:16:46.

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

:16:46.:16:51.

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

:16:51.:16:56.

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

:16:56.:17:02.

way the market have reacted to the widespread speculation that this

:17:02.:17:09.

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

:17:10.:17:14.

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

:17:14.:17:17.

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

:17:17.:17:21.

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

:17:21.:17:24.

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

:17:24.:17:28.

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

:17:28.:17:33.

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

:17:33.:17:38.

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

:17:38.:17:41.

certainly, yes. Although it was cloaked in the

:17:42.:17:45.

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

:17:45.:17:49.

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

:17:49.:17:53.

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

:17:53.:17:57.

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

:17:58.:18:01.

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

:18:01.:18:11.

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

:18:11.:18:21.
:18:21.:18:33.

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

:18:33.:18:36.

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

:18:36.:18:40.

grand economic statement. George Osborne was apparently on the verge

:18:40.:18:44.

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

:18:45.:18:48.

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

:18:48.:18:52.

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

:18:52.:18:55.

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

:18:55.:18:59.

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

:18:59.:19:07.

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

:19:07.:19:11.

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

:19:11.:19:20.

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

:19:20.:19:23.

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

:19:23.:19:29.

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

:19:29.:19:35.

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

:19:35.:19:39.

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

:19:39.:19:42.

an atonement statement by the Chancellor, an admission that he

:19:42.:19:47.

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

:19:47.:19:50.

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

:19:50.:19:53.

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

:19:53.:19:58.

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

:19:58.:20:00.

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

:20:00.:20:04.

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

:20:04.:20:09.

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

:20:09.:20:15.

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

:20:15.:20:19.

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

:20:19.:20:24.

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

:20:24.:20:29.

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

:20:29.:20:33.

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

:20:33.:20:36.

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

:20:36.:20:39.

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

:20:39.:20:45.

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

:20:45.:20:47.

return of George Osborne the tactition, the booby traps are

:20:47.:20:52.

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

:20:52.:20:55.

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

:20:55.:21:01.

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

:21:01.:21:04.

into the next election with the Government saying what they will

:21:04.:21:08.

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

:21:08.:21:13.

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

:21:13.:21:20.

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

:21:20.:21:24.

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

:21:24.:21:27.

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

:21:27.:21:31.

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

:21:31.:21:34.

will cut again spending on transport and education, and

:21:34.:21:40.

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

:21:40.:21:43.

sources within Government diagnosed the group of strivers, as those

:21:43.:21:48.

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

:21:48.:21:52.

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

:21:52.:21:55.

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

:21:56.:22:00.

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

:22:00.:22:04.

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

:22:04.:22:09.

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

:22:09.:22:13.

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

:22:13.:22:18.

particularly happy -- distribution, and not feeling particularly happy

:22:18.:22:22.

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

:22:22.:22:26.

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

:22:26.:22:29.

went for the jugular on capping benefits much The majority of

:22:29.:22:34.

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

:22:34.:22:40.

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

:22:40.:22:44.

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

:22:44.:22:47.

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

:22:48.:22:51.

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

:22:51.:22:54.

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

:22:54.:22:59.

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

:22:59.:23:03.

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

:23:03.:23:05.

balance. It was the Autumn Statement and

:23:05.:23:09.

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

:23:09.:23:13.

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

:23:13.:23:18.

which ones. With us now is Rachel Reeves, the

:23:18.:23:21.

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

:23:21.:23:24.

Government counterpart. Are we supposed to take today's

:23:24.:23:30.

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

:23:30.:23:33.

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

:23:33.:23:38.

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

:23:38.:23:42.

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

:23:42.:23:45.

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

:23:45.:23:48.

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

:23:48.:23:53.

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

:23:53.:23:56.

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

:23:56.:23:59.

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

:23:59.:24:06.

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

:24:06.:24:11.

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

:24:11.:24:15.

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

:24:15.:24:17.

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

:24:18.:24:22.

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

:24:22.:24:26.

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

:24:26.:24:32.

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

:24:32.:24:35.

infrastructure, cutting taxes for business and putting more money

:24:35.:24:39.

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

:24:39.:24:42.

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

:24:42.:24:47.

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

:24:47.:24:50.

deficit is essential to achieve economic growth and restore

:24:50.:24:54.

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

:24:54.:24:58.

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

:24:58.:25:02.

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

:25:02.:25:04.

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

:25:04.:25:07.

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

:25:07.:25:11.

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

:25:11.:25:18.

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

:25:18.:25:24.

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

:25:24.:25:27.

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

:25:27.:25:31.

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

:25:31.:25:34.

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

:25:34.:25:38.

the next parliament t will take longer, because the economic

:25:38.:25:43.

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

:25:43.:25:49.

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

:25:49.:25:53.

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

:25:53.:25:56.

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

:25:56.:26:00.

We set up an independent Office for Budget Responsibility, precisely

:26:00.:26:04.

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

:26:04.:26:08.

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

:26:08.:26:13.

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

:26:13.:26:17.

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

:26:17.:26:20.

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

:26:20.:26:24.

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

:26:24.:26:29.

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

:26:29.:26:34.

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

:26:34.:26:37.

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

:26:37.:26:41.

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

:26:41.:26:49.

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

:26:49.:26:56.

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

:26:56.:26:59.

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

:26:59.:27:03.

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

:27:03.:27:08.

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

:27:08.:27:12.

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

:27:12.:27:17.

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

:27:17.:27:24.

every year in departmental spending, departments are spending money on

:27:24.:27:29.

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

:27:29.:27:34.

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

:27:34.:27:37.

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

:27:37.:27:40.

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

:27:40.:27:47.

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

:27:47.:27:52.

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

:27:52.:27:56.

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

:27:56.:27:59.

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

:27:59.:28:03.

uncertainty of his forecast reasonably in his interview earlier.

:28:03.:28:08.

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

:28:08.:28:11.

clearly what we are doing to departmental spending every year.

:28:11.:28:14.

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

:28:14.:28:18.

plans from departmental spending, we are slightly ahead of those

:28:18.:28:21.

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

:28:21.:28:24.

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

:28:25.:28:29.

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

:28:29.:28:34.

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

:28:34.:28:40.

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

:28:40.:28:44.

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

:28:44.:28:48.

are published in the Autumn Statement published today.

:28:48.:28:54.

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

:28:54.:29:00.

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

:29:00.:29:04.

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

:29:04.:29:09.

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

:29:09.:29:14.

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

:29:14.:29:18.

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

:29:18.:29:24.

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

:29:24.:29:28.

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

:29:28.:29:33.

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

:29:33.:29:40.

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

:29:40.:29:43.

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

:29:43.:29:47.

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

:29:47.:29:54.

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

:29:54.:29:58.

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

:29:58.:30:02.

cutting support for some of the most vulnerable in society.

:30:02.:30:05.

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

:30:05.:30:10.

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

:30:10.:30:16.

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

:30:16.:30:19.

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

:30:19.:30:25.

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

:30:25.:30:30.

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

:30:30.:30:34.

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

:30:34.:30:37.

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

:30:37.:30:42.

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

:30:42.:30:46.

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

:30:46.:30:50.

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

:30:50.:30:52.

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

:30:53.:30:57.

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

:30:57.:31:03.

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

:31:03.:31:09.

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

:31:09.:31:14.

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

:31:14.:31:18.

national pay bargaining structure, where flexibility, where needed to

:31:18.:31:21.

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

:31:21.:31:24.

Government have rejected in the National Health Service, they have

:31:24.:31:29.

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

:31:29.:31:34.

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

:31:34.:31:37.

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

:31:37.:31:42.

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

:31:42.:31:45.

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

:31:45.:31:49.

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

:31:49.:31:52.

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

:31:52.:31:56.

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

:31:56.:32:01.

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

:32:01.:32:05.

Spending Review, looking at everyone rather than a salami slice

:32:05.:32:09.

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

:32:09.:32:12.

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

:32:12.:32:17.

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

:32:17.:32:20.

Office of Budget Responsibility helping you out? Closer to the

:32:20.:32:23.

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

:32:23.:32:26.

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

:32:27.:32:29.

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

:32:29.:32:33.

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

:32:33.:32:37.

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

:32:37.:32:41.

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

:32:41.:32:44.

Were you comfortable with George Osborne talking about some people

:32:44.:32:48.

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

:32:48.:32:52.

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

:32:52.:32:56.

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

:32:56.:32:59.

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

:32:59.:33:04.

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

:33:04.:33:08.

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

:33:08.:33:12.

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

:33:12.:33:15.

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

:33:15.:33:20.

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

:33:20.:33:24.

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

:33:24.:33:29.

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

:33:29.:33:32.

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

:33:32.:33:37.

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

:33:37.:33:44.

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

:33:44.:33:48.

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

:33:48.:33:51.

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

:33:51.:33:56.

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

:33:56.:34:00.

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

:34:00.:34:03.

Statement. She won't answer that now.

:34:03.:34:06.

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

:34:06.:34:10.

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

:34:10.:34:14.

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

:34:14.:34:17.

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

:34:17.:34:21.

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

:34:21.:34:26.

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

:34:26.:34:32.

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

:34:32.:34:39.

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

:34:39.:34:47.

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

:34:47.:34:51.

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

:34:51.:34:56.

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

:34:56.:34:59.

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

:34:59.:35:03.

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

:35:03.:35:07.

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

:35:07.:35:12.

the office. It was an utterly disgraceful position under the

:35:12.:35:17.

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

:35:17.:35:20.

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

:35:20.:35:23.

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

:35:24.:35:29.

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

:35:29.:35:32.

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

:35:32.:35:35.

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

:35:36.:35:39.

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

:35:39.:35:44.

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

:35:44.:35:47.

tremenduously exciting, with the talk of cyclical borrowing and

:35:47.:35:50.

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

:35:50.:35:55.

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

:35:55.:35:59.

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

:36:00.:36:05.

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

:36:05.:36:14.

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

:36:14.:36:20.

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

:36:20.:36:26.

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

:36:26.:36:32.

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

:36:32.:36:36.

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

:36:36.:36:40.

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

:36:40.:36:43.

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

:36:43.:36:50.

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

:36:50.:36:57.

My expectations are less in that regard.

:36:57.:37:01.

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

:37:01.:37:06.

very different incomes, were watching carefully. What do you

:37:06.:37:10.

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

:37:11.:37:15.

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

:37:15.:37:23.

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

:37:23.:37:28.

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

:37:28.:37:33.

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

:37:33.:37:39.

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

:37:39.:37:43.

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

:37:43.:37:47.

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

:37:47.:37:56.

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

:37:56.:38:00.

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

:38:00.:38:04.

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

:38:04.:38:11.

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

:38:11.:38:15.

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

:38:15.:38:21.

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

:38:21.:38:25.

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

:38:25.:38:31.

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

:38:31.:38:36.

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

:38:36.:38:41.

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

:38:41.:38:47.

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

:38:47.:38:55.

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

:38:56.:39:03.

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

:39:03.:39:08.

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

:39:08.:39:12.

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

:39:12.:39:17.

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

:39:17.:39:22.

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

:39:22.:39:27.

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

:39:27.:39:33.

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

:39:33.:39:43.
:39:43.:39:44.

holiday, it is just work and pay bills.

:39:44.:39:47.

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

:39:47.:39:52.

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

:39:52.:39:56.

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

:39:56.:40:00.

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

:40:00.:40:06.

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

:40:06.:40:10.

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

:40:10.:40:13.

economy, gather to discuss the future.

:40:13.:40:19.

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

:40:19.:40:23.

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

:40:23.:40:29.

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

:40:29.:40:32.

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

:40:32.:40:37.

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

:40:37.:40:42.

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

:40:42.:40:47.

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

:40:47.:40:51.

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

:40:51.:40:56.

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

:40:56.:40:58.

Danny Finkelstein used to work for Conservative Central Office and

:40:58.:41:03.

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

:41:03.:41:08.

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

:41:08.:41:13.

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

:41:13.:41:20.

the papers as well. Interesting a Government that

:41:20.:41:24.

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

:41:24.:41:29.

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

:41:29.:41:34.

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

:41:34.:41:38.

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

:41:38.:41:42.

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

:41:42.:41:45.

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

:41:45.:41:50.

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

:41:50.:41:54.

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

:41:54.:41:59.

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

:41:59.:42:03.

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

:42:03.:42:07.

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

:42:07.:42:15.

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

:42:15.:42:19.

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

:42:19.:42:23.

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

:42:23.:42:27.

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

:42:27.:42:32.

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

:42:32.:42:35.

I thought particularly bad, although he had political headlines

:42:35.:42:39.

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

:42:39.:42:42.

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

:42:42.:42:48.

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

:42:48.:42:51.

I would also be worried about labelling everyone as scroungers

:42:51.:42:56.

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

:42:56.:43:02.

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

:43:02.:43:07.

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

:43:07.:43:10.

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

:43:10.:43:14.

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

:43:14.:43:18.

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

:43:18.:43:21.

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

:43:21.:43:26.

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

:43:26.:43:29.

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

:43:29.:43:34.

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

:43:34.:43:37.

and Tories disagree fundamentally on taxing wealth and taxing

:43:37.:43:43.

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

:43:43.:43:48.

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

:43:48.:43:51.

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

:43:51.:43:55.

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

:43:55.:43:59.

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

:43:59.:44:04.

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

:44:04.:44:08.

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

:44:08.:44:13.

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

:44:13.:44:19.

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

:44:19.:44:22.

forecast. Their analysis of the situation, and the figures

:44:22.:44:26.

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

:44:26.:44:29.

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

:44:29.:44:32.

fiscal policy that created the situation. The credibility of the

:44:32.:44:37.

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

:44:37.:44:41.

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

:44:41.:44:45.

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

:44:45.:44:49.

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

:44:49.:44:54.

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

:44:54.:44:58.

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

:44:58.:45:02.

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

:45:02.:45:05.

different place than we all expected a few years ago.

:45:05.:45:09.

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

:45:09.:45:13.

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

:45:13.:45:17.

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

:45:17.:45:20.

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

:45:20.:45:24.

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

:45:24.:45:27.

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

:45:27.:45:32.

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

:45:32.:45:35.

suggestion that shortly before the election there will be a tickling

:45:35.:45:38.

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

:45:38.:45:43.

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

:45:43.:45:50.

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

:45:50.:45:53.

environment to fight an election. The challenge for Labour is

:45:53.:45:59.

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

:46:00.:46:03.

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

:46:03.:46:07.

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

:46:07.:46:11.

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

:46:11.:46:15.

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

:46:15.:46:21.

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

:46:21.:46:27.

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

:46:27.:46:31.

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

:46:31.:46:36.

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

:46:36.:46:43.

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

:46:43.:46:46.

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

:46:46.:46:51.

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

:46:51.:46:54.

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

:46:54.:46:57.

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

:46:57.:47:03.

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

:47:03.:47:10.

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

:47:10.:47:14.

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

:47:15.:47:19.

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

:47:19.:47:24.

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

:47:24.:47:28.

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

:47:29.:47:31.

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

:47:31.:47:35.

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

:47:35.:47:40.

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

:47:40.:47:42.

Liberal Democrats saying at the general election, is mansion tax

:47:42.:47:50.

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

:47:50.:47:53.

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

:47:53.:47:58.

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

:47:58.:48:08.

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

:48:08.:48:11.

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

:48:11.:48:16.

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

:48:16.:48:26.
:48:26.:48:27.

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

:48:27.:48:37.
:48:37.:48:44.

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

:48:44.:48:54.
:48:54.:49:02.

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

:49:02.:49:06.

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

:49:06.:49:10.

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

:49:10.:49:15.

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

:49:15.:49:20.

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

:49:20.:49:28.

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

:49:28.:49:34.

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

:49:34.:49:40.

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

:49:40.:49:44.

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

:49:44.:49:49.

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