:00:10. > :00:16.how could it be when one of the biggest deals was the news of a new
:00:17. > :00:20.shape for the pound coin. In three years time. But there was comfort
:00:21. > :00:24.for older people and grand claims about how the economy as a whole is
:00:25. > :00:29.recovering. We will be asking the Chief Secretary to the Treasury
:00:30. > :00:32.whether the budget's appeal to older people has anything to do with the
:00:33. > :00:37.fact that they are more likely to vote. His Labour shadow thinks the
:00:38. > :00:42.whole budget is a bit of a con. With the man described in one of the
:00:43. > :00:45.newspapers in all seriousness as the "pensions Superman" and we have
:00:46. > :00:49.convened the very muchable Trinity of the Newsnight -- venerable
:00:50. > :00:59.Trinity of the Newsnight political panel to pass their judgment on the
:01:00. > :01:03.budget. It is all going terribly well, take the Chancellor of the
:01:04. > :01:08.Exchequer's claims about the healthy state of the British economy with as
:01:09. > :01:11.much salt as suits your taste. Today's budget teach was a long way
:01:12. > :01:15.short of the most exciting ever delivered. But it is noticeable that
:01:16. > :01:20.a year out from an election wealthier, older people, the sort of
:01:21. > :01:25.people who vote benefitted most from tax changes. We will pick over the
:01:26. > :01:31.budget starting tonight, with Emily Maitlis's reading of the political
:01:32. > :01:35.tale. Seen from this angle perhaps we should have realised that a box
:01:36. > :01:40.that size in a year like this could never really have fielded that big a
:01:41. > :01:45.rabbit. But for a while this morning amongst the spring daffodils,
:01:46. > :01:51.Westminster village forgot the 2004 hunting act and raised in pursuit of
:01:52. > :01:54.that bunny. But it never entirely came. I think George Osborne felt he
:01:55. > :01:59.didn't need a huge populist rabbit, if you like. He's able to say the
:02:00. > :02:04.economy is in recovery, we're cutting people's income tax, we are
:02:05. > :02:11.helping people with childcare. We're getting the job done on the economy.
:02:12. > :02:16.What did it tell us? Growth is two. 7%, but it won't be matched in the
:02:17. > :02:19.years after and the deficit won't disappear until 2018. Whilst there
:02:20. > :02:25.was no fireworks there was radical reform. Aimed at the pensioner, the
:02:26. > :02:27.manufacturer and the worker? This is budget for the makers, doers and
:02:28. > :02:40.savers. Pensioners will have complete
:02:41. > :02:45.freedom to draw down as much or as little of their pension pot as they
:02:46. > :02:52.want any time they want, no caps, no draw down limit, let me be clear,
:02:53. > :02:57.no-one will have to buy an annuity. It is hard to ignore the voter
:02:58. > :03:03.targeted older, traditionally Tory, not badly off, also fits the profile
:03:04. > :03:09.of the putative UKIP voter. Not surprising that with elections
:03:10. > :03:11.looming a few sprinkled measures to entice that sort of vote back to the
:03:12. > :03:27.Tory fold. Here you will find no factory line,
:03:28. > :03:32.no noise, no men. Leave your preconceptions about manufacturing
:03:33. > :03:36.at the door. They make face cream here for sensitive skin and they
:03:37. > :03:40.export a lot. A business that Sarah Brown started in her own garage
:03:41. > :03:45.seven years ago, now with a turnover of ?1. Three billion. She welcomes
:03:46. > :03:49.the increase in capital allowance which has doubled. But, says the
:03:50. > :03:54.hurdles for exporters are still high. 50% of our business is coming
:03:55. > :03:59.from overseas, that's fantastic, we're hungry for more, we wa export
:04:00. > :04:03.more. But there are barriers to that. It is the emerging markets
:04:04. > :04:14.that excite us most, we want to get in first, Brazil is great example.
:04:15. > :04:17.There is a 40% import duty into that country. It is a closed market for
:04:18. > :04:25.us, the Government can help with that. What about the doers? They
:04:26. > :04:30.learned a salsa pretty young here, average age 12 weeks, and when their
:04:31. > :04:34.mothers aren't dancing they are working. That is if they are
:04:35. > :04:39.convinced it is worth it. It would probably cost me as much money
:04:40. > :04:43.putting her into childcare three days, if I go back to work three
:04:44. > :04:48.days a week, than it would if I didn't go to work. The Chancellor
:04:49. > :04:52.hopes his ?20,000 hand-out for childcare will convince her it is,
:04:53. > :04:58.an early leap from the budget, keen to put workers centre stage. When it
:04:59. > :05:01.came to a cap on the welfare budget at ?119 billion, the Chancellor
:05:02. > :05:06.offered a vote. A move that leaves Labour with an interesting dilemma.
:05:07. > :05:15.And then it was down to the more ease so esoterics winners. You
:05:16. > :05:22.couldn't wonder if it was a set up for the vintage George Osborne line.
:05:23. > :05:26.King John's defeat centuries ago scenes unimaginably distant, a weak
:05:27. > :05:31.leader who had risen to the top after betraying his brother. So how
:05:32. > :05:35.would Ed Miliband respond, not to that line, I mean to the budget as a
:05:36. > :05:41.whole. It is very simple, all the Prime Minister needs to do is to nod
:05:42. > :05:44.his head if he's going to rule out cutting 45p tax to 40p in the next
:05:45. > :05:50.parliament. Nod your head, come on, come on! There you have it. There
:05:51. > :05:55.you have it. There you have it, Mr Deputy Speaker. So not a response to
:05:56. > :05:59.the budget but a line he's used in the past. And the focus might have
:06:00. > :06:04.dwelt on that Labour response, were it not for the Tory advert which
:06:05. > :06:11.surfaced this evening. Commending the hard working beer drinkers of
:06:12. > :06:14.the bingo halls, labelled patronising and a bit Marie
:06:15. > :06:18.Antoinette. This is traditionally the time the you find the budget
:06:19. > :06:22.land mine, if things are going to unravel they do it now. The
:06:23. > :06:26.Chancellor and who knows a leader in waiting has been careful to avoid
:06:27. > :06:30.the traps, it seems, no splashy hand-outs, nothing that leaves him
:06:31. > :06:37.open to charges that austerity has thrown away. The move on pensions is
:06:38. > :06:40.big, but if he stayed away from more obvious pyrotechnic, a cut in the
:06:41. > :06:44.basic rate on national insurance, or a pushing up of the 40p, well
:06:45. > :06:48.there's a clear political reason behind that, against back drop of
:06:49. > :06:56.good growth figure, the Chancellor can't afford for things to look too
:06:57. > :07:00.rosy. The last message he wants is everything is fine, the job is done
:07:01. > :07:03.and they can pack up and go home. The economic picture painted by the
:07:04. > :07:09.budget was actually pretty cheery. Growth up and unemployment down. So
:07:10. > :07:18.are we out of the woods? Our policy editor has this health check on the
:07:19. > :07:23.state of the economy. Let's start with the good news, first of all,
:07:24. > :07:27.growth. Recent growth has been very robust and the OBR expects its
:07:28. > :07:31.previous estimates of how much the economy would expand in this year
:07:32. > :07:35.and next year are too low. It has revised them up. Now it has revised
:07:36. > :07:40.them down a little for the years after that, but even so, the news is
:07:41. > :07:43.broadly positive. Look at unemployment, the rate at which
:07:44. > :07:48.unemployment is expecting to fall is increasing. That is good news too.
:07:49. > :07:52.And have a look at wages and prices. The squeeze on living standards, on
:07:53. > :07:56.some measures now looks like it is going to reverse, people's real
:07:57. > :08:00.incomes are going to start to rise quite soon. But there are reasons to
:08:01. > :08:06.be worried about some of these projections. Economists have spotted
:08:07. > :08:10.some slightly troubling symptoms. For example some statisticians think
:08:11. > :08:15.there is very little slack left in the British economy. They think that
:08:16. > :08:20.the easy fast catch-up growth that a country usually gets after recession
:08:21. > :08:26.may already be over. In the jargon, they think that the output gap is
:08:27. > :08:30.already zero. The OBR, however, has assumed there is still a few years
:08:31. > :08:40.of that easy fast growth yet to come. The OBR also assumes that our
:08:41. > :08:44.growth is going to be Britain -- driven by demand. They have to
:08:45. > :08:47.assume that household also rack up the debt we haven't seen since the
:08:48. > :08:50.financial crisis. They also assume that businesses will pile in to
:08:51. > :08:56.investment, they think that the amount that they spend on kit is
:08:57. > :09:01.going to grow by 8-9% a year for the remainder of this parliament and
:09:02. > :09:10.into the next. That is a pretty bald assumption. We also suffer from a
:09:11. > :09:12.particular British disease. Our labour productivity, that is to say
:09:13. > :09:21.the amount of stuff our workers can make in an hour hasn't risen since
:09:22. > :09:24.2007. That is very, very strange it is also very troubling in the long
:09:25. > :09:30.run. It is productivity that determines how rich we are as a
:09:31. > :09:33.country. It is productivity that determines how much our Government
:09:34. > :09:37.can afford and whether or not we need yet another dose of austerity
:09:38. > :09:45.to get our debt burden down to where we want it to be. With us to discuss
:09:46. > :09:50.the budget are Danny Alexander Chief Secretary to the Treasury and Lib
:09:51. > :09:54.Dem MP. And Chris Leslie his shadow. Can we talk about pensions first
:09:55. > :09:57.off. How many pensioners could you reckon will run out of money as a
:09:58. > :10:02.consequence of these changes? I suspect not very many. I think that
:10:03. > :10:08.one of the main reasons why we can go ahead with this change now is
:10:09. > :10:12.because as a coalition Government we've introduce the single tier
:10:13. > :10:16.pension, it clears away the morass of means testing that existed under
:10:17. > :10:19.Gordon Brown. It means from 2016 every pensioner will have basic
:10:20. > :10:22.pension from the state that keeps them out of poverty. I think people
:10:23. > :10:27.who save for retirement, people who have built up a pension pot are
:10:28. > :10:29.responsible people who the state should trust to make the right
:10:30. > :10:35.choices for themselves. But they could, they could blow the whole
:10:36. > :10:40.thing on a couple of holida? That is unlikely, but it is possible someone
:10:41. > :10:44.could do that. That would be to their own detriment. They would take
:10:45. > :10:49.a large pension pot in one go and pay more tax. That makes it all
:10:50. > :10:53.right does it? No. Presumably you did some research on this before you
:10:54. > :10:58.made the change? The evidence from other countries shows that people in
:10:59. > :11:03.general terms don't do that. Did you research it? Yes of course we did.
:11:04. > :11:07.But some people might choose to take their pension pot in one go use it
:11:08. > :11:12.perhaps some of it to pay off a mortgage. They mate decide to draw
:11:13. > :11:15.it down in different lumps. Some people might buy a partial annuity
:11:16. > :11:21.that might be a better choice for them. I suspect a lot of people will
:11:22. > :11:26.buy annuities, but it will help to make the market more competitive.
:11:27. > :11:29.Someone One of the concerns is that the annuity market isn't serving as
:11:30. > :11:32.well as it could do or as competitive as it could be. Let's
:11:33. > :11:38.look at the state of the economy generally, your very distinguished
:11:39. > :11:41.colleague, Vince Cable thinks it is the wrong sort of recovery? I'm not
:11:42. > :11:44.sure that is what he thinks. He thinks it is based on consumer
:11:45. > :11:48.spending and house price inflation, is that a healthy basis for a
:11:49. > :11:52.recovery? It is the way that most recoveries get going. It is the
:11:53. > :11:55.right start for the recovery. Actually a large component of this
:11:56. > :11:58.recovery isn't driven by those things. It is driven by
:11:59. > :12:02.manufacturing, it is driven by trade. It is not driven
:12:03. > :12:05.by-productivity improvement is it? No it isn't yet. Why is that? One of
:12:06. > :12:09.the things I have been saying for the last six months or so is 2014
:12:10. > :12:12.has to be the year when we see business investment really get
:12:13. > :12:17.going. It is one of the reasons why in this budget we have taken steps
:12:18. > :12:20.to increase capital allowances, support energy-intensive businesses,
:12:21. > :12:23.to encourage businesses to invest, because it is that which will help
:12:24. > :12:28.productivity to improve. Of course it is only with a strong recovery,
:12:29. > :12:30.with rising productivity that we can really secure better living
:12:31. > :12:34.standards for British people. Without that improvement in
:12:35. > :12:37.productivity we are not going to see an improvement in living standards
:12:38. > :12:41.are we? That is why it is so important to do the things we have
:12:42. > :12:45.done today. We haven't seen it so far? The figures today suggest some
:12:46. > :12:49.improvement, but there is a long way to go. The OBR forecasts today,
:12:50. > :12:52.building on the recent data of improving business investment.
:12:53. > :12:56.Suggests business investment is likely to pick up. We are not
:12:57. > :12:59.resting on our Laurels waiting for the forecast to happen. We are doing
:13:00. > :13:04.things to support exporters to grow, the big changes today to the export
:13:05. > :13:08.finance regime. Big changes to the tax allowances for businesses to
:13:09. > :13:12.invest in plant and machinery. Extra incentives for businesses to take on
:13:13. > :13:17.apprentices, to improve the skills of their own work force, all things
:13:18. > :13:21.that help our recovery to be more sustainable. The Office for Budget
:13:22. > :13:25.Responsibility says exports won't increase? We are working as hard as
:13:26. > :13:30.we can to make sure we do expand exports. The exports to emerging
:13:31. > :13:34.markets have risen 23% since we came into office. The exports to EU
:13:35. > :13:38.countries has been less because of the problems in the eurozone. I do
:13:39. > :13:42.think as the eurozone gets going, which I hope it will, I don't know
:13:43. > :13:45.it will, that we will see our exports to Europe expand too. I'm
:13:46. > :13:50.going to bring you in a second Chris, I would just like to ask,
:13:51. > :13:56.first of a you will, what do you make of this fantastic poster
:13:57. > :13:59.advertising this marvellous budget achievement, what do you make of it?
:14:00. > :14:04.I thought it was a spoof at first, it is pretty extraordinary. That is
:14:05. > :14:10.your budget they are talking about? It may be our budget it it is their
:14:11. > :14:14.words. I think it is rather patronising. I think it demeans some
:14:15. > :14:19.sensible things. There are good reasons to be supporting bingo,
:14:20. > :14:22.there are good reasons to be encouraging our pub sector to be
:14:23. > :14:27.stronger. That is the analysis behind those measures, this is, I
:14:28. > :14:32.don't know if it is a tweak to dry to prove -- try to prove Michael
:14:33. > :14:37.Gove right in one second. The Treasury have been tweeting this,
:14:38. > :14:41.they are also under the impression this is what they do? I'm not sure
:14:42. > :14:44.how to respond to that. The whole point of the budget is to say that
:14:45. > :14:50.there are many ways in which the Government can help people with the
:14:51. > :14:53.pressures that they are under. We're all under. I think the most
:14:54. > :14:58.important measure in the budget is the increase in the income tax
:14:59. > :15:01.personal allowance, that is what Liberal Democrats have been
:15:02. > :15:06.championing and celebrating. This language that is for Grant Shapps to
:15:07. > :15:09.justify. What do you make of it? What better of an example of an
:15:10. > :15:12.out-of-touch Government could you have when they start patting people
:15:13. > :15:17.on the head and saying what they would like. It is astonishing but we
:15:18. > :15:21.know, don't we, that is the sort of view that David Cameron and George
:15:22. > :15:25.Osborne have about people. You can play bingo more cheaply and have
:15:26. > :15:30.beer more cheaply, that is good isn't it? If you have 300 points of
:15:31. > :15:34.beer then you could get one for free on the penny-off basis, but honestly
:15:35. > :15:38.the thing that was wrong with this budget was what was missing and what
:15:39. > :15:41.was missing was any action on the cost of living pressures that people
:15:42. > :15:45.are facing. You have been talking a little bit about pensions and
:15:46. > :15:51.savings changes. Real growth in incomes coming up, that will
:15:52. > :15:56.completely... Prices are still exceeding those, the problem we have
:15:57. > :16:01.is we have had the record... It stops your cost of living argument?
:16:02. > :16:05.Life is getting harder for most people, for a record period, 44 out
:16:06. > :16:08.of the last 45 months when David Cameron has been Prime Minister,
:16:09. > :16:13.earnings haven't kept pace with prices. How many times do you think
:16:14. > :16:16.in the 120-pages of the budget red book cost of living was mentioned,
:16:17. > :16:20.not once. They don't understand it. One thing not mentioned once was
:16:21. > :16:24.productivity? There is a real problem. Not once was that
:16:25. > :16:28.mentioned? That is the inbalance we have in terms of -- imbalance in
:16:29. > :16:31.their approach to the economy. They have to have action on savings, the
:16:32. > :16:35.reason we have a savings crisis is because people are struggling to
:16:36. > :16:39.make ends meet. Once people have dipped into their savings that is no
:16:40. > :16:43.wonder the growth projections are starting to come down in the
:16:44. > :16:47.long-term. That has been the fuelling a little bit of the
:16:48. > :16:50.recovery we have seen. But the recovery still isn't felt by the
:16:51. > :16:55.vast ma the Jo of people. The savings ratio is coming down, the
:16:56. > :17:00.OBR has confirmed that Danny, hasn't it? The OBR does forecast the
:17:01. > :17:04.savings ratio to fall as you see in almost any economic recovery. I'm
:17:05. > :17:07.disappointed that Chris if he is concerned about the pressures that
:17:08. > :17:12.households in this country are under, hasn't welcomed the
:17:13. > :17:21.substantial increases in the income tax personal all lions, worth now --
:17:22. > :17:27.allowance, worth now ?800. You This is 25 million people paying tax at
:17:28. > :17:31.the basic rate. If you are really worried about cost of living
:17:32. > :17:34.pressures on families, your party wouldn't have crashed the economy,
:17:35. > :17:39.and causing an economic crisis. It was a banking crisis. And who was in
:17:40. > :17:43.charge of the banks. Your boss Ed Balls was the City minister. Do you
:17:44. > :17:48.think that Gordon Brown created Lehman Brothers to go bust. You are
:17:49. > :17:51.better than that Danny. I know as Jeremy says, sorry I shouldn't be
:17:52. > :17:55.asking the questions, you should. But you know Gordon Brown said there
:17:56. > :17:57.would be no more boom and bust, it was the Labour Party that was
:17:58. > :18:01.responsible for regulating the financial system so catastrophically
:18:02. > :18:04.poorly for many years before the crisis, it was the Labour Government
:18:05. > :18:08.that was running a structural deficit in our economy. We have
:18:09. > :18:16.heard your attack message. For many years before the crisis. Why have
:18:17. > :18:19.the deficit going to be ?75 billion at the next election, we didn't get
:18:20. > :18:24.the growth, you failed to get that. You can continue this argument in
:18:25. > :18:29.private in a minute. There is a lot to answer. In the pub over a penny
:18:30. > :18:33.cheaper pint of beer. With a game of bingo! One thing the Chancellor of
:18:34. > :18:37.the Exchequer trumpeted is what he called the biggest shake up of
:18:38. > :18:41.pensions in 100 years. He claimed I wanted to give -- he wanted to give
:18:42. > :18:45.people with pensions more access to their money. This has implications
:18:46. > :18:57.not just for those who are sensible enough to put money aside for their
:18:58. > :19:02.old age but everyone. The Chancellor may. Ing the tax on bingo, but he as
:19:03. > :19:09.also giving 13 million private pension savers the freedom to claim
:19:10. > :19:14.a bumper payout from themselves. Unlike those in the safe, called
:19:15. > :19:18.defined benefit pensions where you know what you are getting out,
:19:19. > :19:22.members of the defined contribution schemes only know what they are
:19:23. > :19:28.getting in, and what they get out depends on the luck of the markets.
:19:29. > :19:32.What private pension savers have to do when they retire is swap the fund
:19:33. > :19:37.they have built up for an income until dealt. The income they get
:19:38. > :19:41.will depend on annuity rates, those depend on how long people are living
:19:42. > :19:46.for and interest rates. If you buy an annuity now you are unlucky you
:19:47. > :19:50.will get half what you got ten years ago. If you swap the average pension
:19:51. > :19:54.fund of ?25,000, the best annuity would pay little more than ?1500 a
:19:55. > :19:57.year, that doesn't go up with inflation. From April next year,
:19:58. > :20:06.instead of taking your pension money as income you will be able to take
:20:07. > :20:13.the whole ?25,000 up front. That could make a big difference to the
:20:14. > :20:20.likes of Done, who has a tiny ?2. ,500 pension fund. The rules say I
:20:21. > :20:26.have to buy an annuity, with the rates so poor I would get perhaps
:20:27. > :20:31.under ?5 a week. It is derisory, it is a ridiculous sum. It is so
:20:32. > :20:37.frustrating, I thought I had saved it for my old age, I'm 81 now, when
:20:38. > :20:41.will I get it. I can see me dying and it is still in there. The new
:20:42. > :20:45.freedom of choice means he can get all his money next year. Even
:20:46. > :20:49.advisers who welcome the freedom of choice, say most pensioners won't
:20:50. > :20:53.want to risk spending their pension too soon. There will be a minority
:20:54. > :20:57.of people choose to use the flexibility announced today. Most
:20:58. > :20:59.people don't want to blow 40 years worth of pension savings
:21:00. > :21:05.immediately. They have saved to provide themselves with a secure,
:21:06. > :21:09.guaranteed lifetime income. On the stock market traders reacted to the
:21:10. > :21:13.budget by hammering the shares of annuity providers like Legal and
:21:14. > :21:18.General and Aviva, they are expected to lose big business. It is a
:21:19. > :21:21.cataclysmic announcement, it is a major change and nobody should
:21:22. > :21:25.underestimate that, the extent of the shock market reactions reflect
:21:26. > :21:29.that. It is too -- stock market reactions reflect. That it is too
:21:30. > :21:31.early to say where this will go. If we compare other markets in the
:21:32. > :21:36.United States, where there is no compulsion to buy annuity, then
:21:37. > :21:40.around 10% of people buy an annuity, and 90% don't. That is the polar
:21:41. > :21:45.opposite to what happens here in this country. Markets have to worry
:21:46. > :21:51.will the market drop by a half, 80%, no-one yet knows for certain. With
:21:52. > :21:55.more pension money spent sooner rather than later, the Treasury is
:21:56. > :21:59.assuming it will get more than a billion a year extra in tax. It also
:22:00. > :22:02.admits to a risk. Member of public sector pensions who want their money
:22:03. > :22:06.early could transfer their money out to the new flexible schemes, costing
:22:07. > :22:09.the Treasury hundreds of millions. So, they are banning those
:22:10. > :22:17.transfers. If you are in one of those schemes it means less freedom
:22:18. > :22:21.not more. Mark Wood is the boss of JLT Employee Benefits, a pensions
:22:22. > :22:26.consultancy. Is this a good idea? I think there is a vast array of
:22:27. > :22:29.different things included in the announcements today. We need to be
:22:30. > :22:32.specific. The big changes taking place is people are given so much
:22:33. > :22:35.more opportunity to do what they will with the money that they have
:22:36. > :22:39.accumulated during a lifetime. Is that a good idea? I think it is a
:22:40. > :22:42.good idea for some, and not such a good idea for others. One of the
:22:43. > :22:46.problems we have is people find it very difficult to appreciate just
:22:47. > :22:50.how long they are going to live for. And one of the great Joyce of
:22:51. > :22:54.annuity purchase, which is the old regime, is that the money you
:22:55. > :22:59.received was guaranteed for life. And now people will have to estimate
:23:00. > :23:03.how much they draw of their capital over time. As your film illustrated
:23:04. > :23:14.there will be some relatively elderly people who potentially run
:23:15. > :23:19.out of money. What happens then? Life expectancy is 2. 5 years every
:23:20. > :23:22.decade for a 65-year-old, that is six-and-a-half hours day, it is a
:23:23. > :23:26.dramatic increase. People need to provide for that length of
:23:27. > :23:34.retirement. We saw that annuity providers, pensions companies, their
:23:35. > :23:38.shares, many of them, took a real pasting today, was that wise? I
:23:39. > :23:41.think the market overreacted to this announcement. Large number of
:23:42. > :23:44.people, for the reasons I just described will continue to buy
:23:45. > :23:49.annuities for at least part of their pension provision. We might see
:23:50. > :23:53.going forward people will buy some of their capital for annuities for a
:23:54. > :23:58.portion of their income. Would you buy an annuity now? I wouldn't buy
:23:59. > :24:02.one today. The market clearly has reacted to quantitative easing, real
:24:03. > :24:06.interest rates have dropped dramatically. That is reflected in
:24:07. > :24:10.the price of an annuity, we need to get to a position where we have
:24:11. > :24:13.stronger real rates of return for annuities to become real value. Your
:24:14. > :24:17.advice would be don't buy annuities until interest rates go up? If you
:24:18. > :24:20.can afford to put it off. That is one of the occasion where is this
:24:21. > :24:25.change today is very good news, because it enables people to draw a
:24:26. > :24:29.bit of their capital, put off buying an annuity, wait until an annuity is
:24:30. > :24:35.better value and then invest in an annuity when the market is more
:24:36. > :24:38.favourable. Thank you very much. Now they weren't paying much attention
:24:39. > :24:42.to George Osborne's speech in the Crimea today, they had rather more
:24:43. > :24:54.pressing things on their mind, like who are they? After Vladimir Putin's
:24:55. > :25:01.incursion yesterday, including the Ukrainian's Navy head quarters. We
:25:02. > :25:10.report from there. The seizure of the Ukraine naval head quarters was
:25:11. > :25:13.a well choreographed operation. Regular troops from the naval
:25:14. > :25:17.infantry took over. One of the organisers of this morning's assault
:25:18. > :25:25.gave vent to emotions that Ukrainian rule in place since the collapse of
:25:26. > :25:29.the Soviet Union was coming to an end bloodlessly. TRANSLATION: We
:25:30. > :25:33.would like to thank all Ukrainian military men, they understand the
:25:34. > :25:43.citizens here. After 23 years of occupation, we still remain the
:25:44. > :25:47.Russian citizens. I broke down in tears when Putin said yesterday
:25:48. > :25:56.Crimea is part of the Russian federation. It started with hundreds
:25:57. > :26:01.of Russian locals storming the building, apparently unarmed. But
:26:02. > :26:11.things like this don't happen by accident here and the Ukrainian
:26:12. > :26:17.garrison's readiness to reply had been worn down. Many came out in
:26:18. > :26:20.civvies, having salvaged possessions but not dignity. TRANSLATION: There
:26:21. > :26:27.were many promises from the Russians and our side that the base would not
:26:28. > :26:30.be stormed. That all issues would be resolved from political means. It
:26:31. > :26:34.was stormed and no issues solved through political means. What has
:26:35. > :26:38.happened here today which is afterall the headquarters of the
:26:39. > :26:42.Ukrainian Navy shows how futile it is for Ukrainian service men and
:26:43. > :26:45.women to try to struggle on here, knowing as they do that there is
:26:46. > :26:50.little practical backing that their Government in Kiev can give them,
:26:51. > :26:58.and they are surrounded by a hostile population. And it wasn't just the
:26:59. > :27:02.capital that was stormed today, here another naval facility was taken and
:27:03. > :27:06.the Ukrainian national symbol soon replaced by a Russian one. As the
:27:07. > :27:13.bases fall, the Ukrainian servicemen are given an awful choice.
:27:14. > :27:17.TRANSLATION: Soldiers who will local, settled with kids and homes
:27:18. > :27:22.will statement those like me from other regions like central and
:27:23. > :27:27.western Ukraine, what have we got here, nothing. Acknowledging that
:27:28. > :27:32.some will stay, but many of their 20,000 troops will go, out Ukrainian
:27:33. > :27:41.Government was tonight discussing an evacuation plan. Elsewhere we found
:27:42. > :27:46.men of Ukrainian unit 3009 awaiting their fate forlornly. Outside,
:27:47. > :27:51.unarmed middle-aged local Russian defence volunteers maintained their
:27:52. > :27:54.vigil, confident that the Stranded garrison will change sides.
:27:55. > :27:58.TRANSLATION: Many, many soldiers and officers present at this base are
:27:59. > :28:02.changing their allegance from the Ukrainian to the Russian army. Look
:28:03. > :28:08.at us, we don't have any arms, in a few days most of the bases here will
:28:09. > :28:15.also be under Russian control. It is not Evra where and it could still be
:28:16. > :28:19.bloody. Here where there is a unit of Ukrainian paratroop who is might
:28:20. > :28:25.fight, Russia is approaching things more gingerly. How quickly to press
:28:26. > :28:30.the snuffing out of these Ukrainian forces that is the question that now
:28:31. > :28:39.preoccupies the Russian volunteers. If they miscalculate we will all
:28:40. > :28:43.know about it. Yet another day without a sign of the missing
:28:44. > :28:52.Malaysian airliner and the people on board. Tonight there have been some
:28:53. > :28:55.new development its. It is clear the Americans know far more about what
:28:56. > :28:58.happened to the plane than they are letting on publicly. It appears they
:28:59. > :29:02.are taking the lead on the search and feeding information in,
:29:03. > :29:05.particularly to the Australians. They have been examining the
:29:06. > :29:09.satellite data, the satellite pings, and I think they have established a
:29:10. > :29:14.far clearer route of where they think the plane went. Remember there
:29:15. > :29:17.was a northern arc and southern arc, it is clear they think that the
:29:18. > :29:22.plane went to the south, just off the coast of Australia. They
:29:23. > :29:25.prepared a map and the Australian authorities prepared a map. This is
:29:26. > :29:30.the search area they think the plane has gone to. Provided by the
:29:31. > :29:34.national transportation safety. That is south-west of Perth, it is miles
:29:35. > :29:38.from where it was said to be? What they think happened is after it
:29:39. > :29:44.disappeared from Malaysian radar it went south and it kept going until
:29:45. > :29:50.I'm afraid the grim scenario they are decribing is it ran out of fuel
:29:51. > :29:54.and fell into the sea. You have found something on the flight
:29:55. > :29:59.simulator that the pilot was said to have spent a lot of time on? It was
:30:00. > :30:03.a lot made about whether this was a sincer fact or some data will be on
:30:04. > :30:10.it. The Americans have been given access to the data on that, to
:30:11. > :30:14.determine whether there is data on there. We have uncovered through
:30:15. > :30:22.finding posts on lots of obscure flight simulator hobbyist websites
:30:23. > :30:27.that the captain was in fact an avid flight simulator hobbyist going back
:30:28. > :30:30.to 1985. These are some of the posts he has done. One of the last ones
:30:31. > :30:36.was talking about how cool the new system was that allowed him to
:30:37. > :30:40.simulate jettisoning fuel there. That was back in November of last
:30:41. > :30:43.year. It may be that the flight simulator does yield clues as to
:30:44. > :30:46.what happened to this flight, but there is, it seems, another
:30:47. > :30:51.explanation and more innocent explanation from having this flight
:30:52. > :30:57.simulator. He was a hobbyist. Back to the budget now. Our political
:30:58. > :31:03.leaders are too high minded to notice anything as self-interested
:31:04. > :31:07.as in a year there will be an election, but there will. The state
:31:08. > :31:10.of the economy and how people feel about the economy and their own
:31:11. > :31:14.household will be vital in how that pans out. Crucially will the
:31:15. > :31:18.coalition be able to cash in on any credit for the recovery. On the day
:31:19. > :31:29.of much travel when one of us got to go to Wimbledon. We went to the
:31:30. > :31:33.super marginal seat of Watford. A typical town, maybe not the centre
:31:34. > :31:38.of the universe, but George Osborne must pay attention here. Behind the
:31:39. > :31:45.net curtains lurks swing voters, those whose wallets could decide the
:31:46. > :31:48.next election. Here in Watford you have marginal Britain personified.
:31:49. > :31:52.It is marginal because it is a mixture of better-off and less
:31:53. > :31:59.well-off and middle Britain places. You have got Britain in microcosm.
:32:00. > :32:02.Watford school kids are growing up in a town where there are more
:32:03. > :32:09.people in work than ever. Most of them earning about ?20 more a week
:32:10. > :32:16.than a couple of years ago. But still there is a squeeze. Tim Henson
:32:17. > :32:20.is the head of PE. His wife stopped working to look after his three
:32:21. > :32:23.kids. He used to vote Labour but chose the Tories last time, he has
:32:24. > :32:34.just had to start paying the higher rate of tax although he's earning
:32:35. > :32:43.more. These are the issues, we don't go shopping, we have had to change
:32:44. > :32:46.our lifestyle, we don't go out to dinner because we have the children.
:32:47. > :32:51.People are offering to lend more money. People are saying we can have
:32:52. > :32:57.an extension on credit cards. How will you vote if you have decided?
:32:58. > :33:00.It is a trust issue, it is who do you trust the most out of the
:33:01. > :33:11.choices in front of you. Do you trust any of them? I would like to.
:33:12. > :33:14.Martin had to sign on today, his son is at school so his income support
:33:15. > :33:19.has stopped? You have applied for jobs at lots of places in the high
:33:20. > :33:26.street then. Just in the space of three weeks I have handed out 40
:33:27. > :33:31.CVs. 40? He backed the Lib Dems last time but the coalition recovery
:33:32. > :33:34.certainly hasn't reached him. I don't know what I'm going to live
:33:35. > :33:40.on, I'm with British Gas, which costs me the earth. I'm on a mooter,
:33:41. > :33:45.it was there -- a metr it was there when I moved in, it is either heat
:33:46. > :33:57.the house, keep my son warm and not eat, properly, or eat properly and
:33:58. > :34:00.not heat the houseetre, it was there when I moved in, it is either heat
:34:01. > :34:03.the house, keep my son warm and not eat, properly, or eat properly and
:34:04. > :34:05.not heat the house. I was in tears earlier thinking about everything.
:34:06. > :34:10.It is hard. The Government says the economy is recovering, do you think
:34:11. > :34:15.the economy is recovery? I think for some people it is recovering, for
:34:16. > :34:24.others it is not. I think the country is split in two. In Watford,
:34:25. > :34:28.like all over the country, Osbourne's recovery has come with
:34:29. > :34:35.hundreds of new firms, Andrew and Clare's dog care company is
:34:36. > :34:38.thriving, not a luxury they insist. They say they are traditional
:34:39. > :34:43.Tories, but now they are not so sure. We are fiddling around at the
:34:44. > :34:47.edges of the economy and stuff isn't enough. I think someone needs to
:34:48. > :34:52.take a real hold of things and really take drastic approach. When
:34:53. > :34:56.you are down right in it, running a business and you do want the
:34:57. > :34:59.Government to get behind the small businesses that are creating jobs
:35:00. > :35:03.for people out there, you want them to see that and actually maybe speak
:35:04. > :35:08.to us and speak to others like us who are in smaller businesses to see
:35:09. > :35:13.what we actually need. It certainly wasn't a budget that will get
:35:14. > :35:16.average voters in average towns's pulses racing, there probably wasn't
:35:17. > :35:20.much that will change how most people feel about their own
:35:21. > :35:23.situation. But Westminster's assumption is that what is said on
:35:24. > :35:28.the economy will decide the election. In a marginal seat like
:35:29. > :35:33.Watford the economic argument is vital. The argument is a contest
:35:34. > :35:38.between two narratives, the Tory narrative, don't give the keys back
:35:39. > :35:41.to the people who crashed the car, Obama's favourite slogan from a
:35:42. > :35:46.couple of years ago. Versus Labour saying are you better or worse off
:35:47. > :35:50.than you were in 2010 when the coalition came into being. Labour is
:35:51. > :35:53.fractionally ahead on standards of living, but on all the other
:35:54. > :35:58.economic independent Kators the Tories are ahead. And perhaps
:35:59. > :36:13.crucially people do think that cutting the deficit must be the
:36:14. > :36:17.prime objective of the Government. Here and everyone the economy
:36:18. > :36:30.matters. Dwarfing everything said today the economy is still the
:36:31. > :36:32.biggest show in town. Government. Here and everyone the economy
:36:33. > :36:34.matters. Dwarfing everything said today the economy is still the
:36:35. > :36:37.biggest show in town. Now the judgment of the Newsnight panel,
:36:38. > :36:49.they have been still at it. Lord Fink, Lord Finkelstein, ollie,
:36:50. > :36:56.thinking it both democratic and undemocratic and John McTernen, who
:36:57. > :37:00.has paid his debt to society after serving in John Major's Government.
:37:01. > :37:06.Do you think it was a very political budget, it was wasn't it? Actually I
:37:07. > :37:09.thought that the politics of it were dwarfed by the policy. I don't think
:37:10. > :37:13.the political shift that is budgets make are really huge, but the policy
:37:14. > :37:19.revolution on pensions is very significant. Its implications will
:37:20. > :37:25.last for years. Obviously it depends who is right. I personally I'm in
:37:26. > :37:30.favour of the rather radical package on the liberalising of pensions. You
:37:31. > :37:36.are less in favour of it. I think it is right thing to do. What are you
:37:37. > :37:42.sniggered for, please -- sniggered for, please explain? Budgets have
:37:43. > :37:46.ideas that look good on the day and fall apart in the coming days.
:37:47. > :37:59.Nobody understood it in the House when it was set out. Steve Webb
:38:00. > :38:02.probably did. The implications are bigg days. Nobody understood it in
:38:03. > :38:04.the House when it was set out. Steve Webb probably did. The implications
:38:05. > :38:07.are big. We encouraged people to save for pensions and gave them tax
:38:08. > :38:12.relief. The moral hazard is great, in the 80s and 90s a lot of people
:38:13. > :38:16.will end up on benefits because you can't trust people to spend their
:38:17. > :38:21.own money sensibly, planning for their retirement. They don't imagine
:38:22. > :38:27.at 65 they will live for 30 years and you are encouraging them now to
:38:28. > :38:30.spend all their money. Steve Webb whose finger prints are all over
:38:31. > :38:34.this would talk about the fingertip pension which is generous in the
:38:35. > :38:37.extreme. There is a complete revolutionary change coming in that
:38:38. > :38:41.respect as well as in pensions, I agree with John, as everyone was
:38:42. > :38:45.sitting in the chamber, instantly overnight everyone is becoming a
:38:46. > :38:49.pensions expert. We don't force people to save in the first place at
:38:50. > :38:53.that rate, it seems wrong to force them to have to spend the investment
:38:54. > :38:58.on an annuity in that way. They could run out of money by not saving
:38:59. > :39:02.it. The point of this policy is it will encourage them to save. If they
:39:03. > :39:06.spend additional money they have to pay tax for them in the end. That is
:39:07. > :39:09.a disincentive. In a policy sense this is the difference between
:39:10. > :39:12.people who think people should be trusted with their income and those
:39:13. > :39:16.people who think it is a gamble. It is a gamble. We know that
:39:17. > :39:20.20-year-olds don't save enough, we are trying to force them through
:39:21. > :39:24.automatic enrolment to do. That there is a contradiction. The
:39:25. > :39:29.question about is it a political budget, it is a deeply political
:39:30. > :39:34.budget. I disagree with Danny. It is the pensions and the substantive
:39:35. > :39:38.change and I would say with the tax threshold on the front of the Lib
:39:39. > :39:43.Dem manifesto, it is delivered and plus, plus. It is now ?800
:39:44. > :39:50.deduction, that is incredibly political. Single individual
:39:51. > :39:54.puttings don't have very profound political effects. It sends a
:39:55. > :39:57.message. We always ignore when budgets happen is what is underneath
:39:58. > :40:00.the budget. In other words the budget consists of some changes that
:40:01. > :40:03.have been made on the existing situation on tax and spending. But
:40:04. > :40:07.actually what will settle the election is the existing position on
:40:08. > :40:11.tax and spending and growth. So the Conservatives, for example, are
:40:12. > :40:14.going to have a big fight on their hands and the Liberal Democrats too
:40:15. > :40:17.on the issue of public spending, because this budget means there is
:40:18. > :40:20.going to be big public spending cuts.
:40:21. > :40:27.Let's take what is said about growth. Does this, Danny Alexander
:40:28. > :40:33.sounded quite cocky about the fact that it is not as Vince Cable says a
:40:34. > :40:37.false recovery? There is going to be a people's personal income --
:40:38. > :40:40.people's personal incomes are going to recover, that is clearly going to
:40:41. > :40:42.be something that will help the coalition parties at a general
:40:43. > :40:48.election. It is not the only issue, it is not decisive but clearly it
:40:49. > :40:52.will help. The OBR projection was adjusted for greater growth an a
:40:53. > :40:55.year ago, that is significant. What is it based on? The big political
:40:56. > :41:01.challenge for Labour. It is not based on any productivity
:41:02. > :41:05.improvement at all? It is based on increasing employment and salaries
:41:06. > :41:09.will increase as well and mostly on the Helps to Buy. This is a problem.
:41:10. > :41:14.There in lies an issue. It is house prices. There in lies the absolute
:41:15. > :41:17.contradiction at the heart of this you say you rebalance the economy,
:41:18. > :41:20.and there you have a Government-driven, house price-led
:41:21. > :41:25.economic boom, and the problem with that is that booms are followed by
:41:26. > :41:29.busts, we had a situation like this. There was somebody who predicted
:41:30. > :41:32.there will be no more boom and bust I'm trying to remember who it is.
:41:33. > :41:36.The challenge for the Labour Party is there is also a very political
:41:37. > :41:40.moment from George Osborne which is about this benefit cap issue. I
:41:41. > :41:46.think that is a real challenge for Labour and I was really surprised
:41:47. > :41:49.that even in the chamber that Ed Miliband didn't in any way find a
:41:50. > :41:53.way to respond to it. Clearly this question of where people are with
:41:54. > :41:57.their incomes will be of importance. Basically John Labour and you have
:41:58. > :42:01.been against the fact that there wasn't an increase in growth and now
:42:02. > :42:05.you are against the growth. Let's go back to the benefits cap, it is a
:42:06. > :42:11.good question and point to make, I'm pretty sure that Labour will support
:42:12. > :42:18.the benefits cap, however, you have a benefits cap of ?26,000 if you are
:42:19. > :42:21.poor, but a childcare cap of ?300,000, what is the logic there,
:42:22. > :42:25.go back to the policy, it is to buy the votes of professional voters.
:42:26. > :42:33.What age group do you think the budget was most directed at? Over
:42:34. > :42:39.45, probably 55. Old people? People in that age gap are four-times more
:42:40. > :42:43.likely to vote than younger people. He may be right? Let's question
:42:44. > :42:47.that, what older people are going to do is be able to withdraw from the
:42:48. > :42:51.savings policy, but this actually allows people to save during their
:42:52. > :42:54.working life. It is not just a policy that works for older people.
:42:55. > :42:58.Clearly by the way it does. And I think you know looking at the
:42:59. > :43:02.political implications, obviously one of the implications will be to
:43:03. > :43:06.try to assist the Conservative Party against UKIP. That is no question
:43:07. > :43:11.that a political calculation that is. Their voters are by and large
:43:12. > :43:16.male and older people who are economically less well off. Clearly
:43:17. > :43:20.it is designed to help them some what. This fails to recognise that
:43:21. > :43:24.kind of especially for Lib Dems in movement what has been a substantive
:43:25. > :43:27.change and really fascinating is the tax threshold, but staying with
:43:28. > :43:33.pensions, you have had the same minister who is known to be an
:43:34. > :43:39.expert in that sector, in this job, in DWP, Steve Webb, the question,
:43:40. > :43:43.the exam question he will not have asked himself is what will win the
:43:44. > :43:51.number of votes? What can we do in this sector that is going to make a
:43:52. > :44:01.difference? My My problem with the -- pensions is that they have to be
:44:02. > :44:05.changes. Why wasn't it consulted on? Probably because there are losers.
:44:06. > :44:08.The rollout isn't until 2026. There is time for people to adjust. You
:44:09. > :44:13.should have consulted before the announcement was made, pensions are
:44:14. > :44:18.really delicate areas. This is a liberalisation. Can we get away from
:44:19. > :44:24.this Steve Webb fan club! You wrote an article in the Times this morning
:44:25. > :44:29.in which you argued that the budget, the whole Budget Day thing was
:44:30. > :44:32.profoundly misconceived? Yes. I think that. That is one of the
:44:33. > :44:35.reasons I said at the beginning that I thought the political implications
:44:36. > :44:38.of it were always overestimated. I believe that Governments should try
:44:39. > :44:42.to set frameworks within which people can operate and they can be
:44:43. > :44:47.different kinds of framework, I'm not judging which they could be. Let
:44:48. > :44:51.as say you believe that a low-tax, low-regulation economy was a good
:44:52. > :44:55.thing. If you have freak budgets you basically start to meddle, you move
:44:56. > :45:01.up and down as the forecasts move up and down. You adjust taxation in
:45:02. > :45:05.order to create posters or short-term effects. I think our
:45:06. > :45:09.political life is strewn with events, springs conferences, annual
:45:10. > :45:13.conferences, budgets, Autumn Statements, each of which put a
:45:14. > :45:19.pressure on the office of the minister, the Chancellor, to make
:45:20. > :45:25.silly announcements. We get more and worse policy announced at these
:45:26. > :45:30.events than if we had the perameters -- parram at thes set. It is like
:45:31. > :45:48.the lowest common denomination version of this is the road trip.
:45:49. > :45:51.Let's take the beer tax. The beer tax has been designed to produce
:45:52. > :45:56.headlines on the day. You have to have enough so Newsnight doesn't
:45:57. > :45:59.have to start with this stuff because it is boring. That is what
:46:00. > :46:02.you are after. I don't think that is driving good policy making. That is
:46:03. > :46:28.enough excitement for tonight, thank you all very much from us good
:46:29. > :46:31.night. Good evening. Not a particularly pleasant start to the
:46:32. > :46:35.day across Scotland and Northern Ireland, it will be wet and windy, a
:46:36. > :46:36.gust of wind, 50, 60 miles an HOUFRMENT all