:00:00. > :00:07.the Chancellor enjoys a bounty of better financial forecasts, and
:00:08. > :00:17.uses them to soften his cuts and talk the politics of the centre.
:00:18. > :00:20.We were elected as a one-nation Government.
:00:21. > :00:24.Today we deliver the Spending Review of a one-nation Government.
:00:25. > :00:33.This Government the mainstream representatives
:00:34. > :00:48.Much of the day's attention though was focused on the
:00:49. > :00:54.Shadow Chancellor's red face after waving Chairman Mao's red book.
:00:55. > :01:05.It's the new politics, man. It shah shaken things up.
:01:06. > :01:08.George Osborne's former right-hand man is with us to explain it all,
:01:09. > :01:11.and we'll hear from Labour and the Conservatives on where it leaves
:01:12. > :01:15.Also tonight, we hear from the youthful new Prime
:01:16. > :01:20.I have a tremendous amount of faith in citizens, that if I
:01:21. > :01:23.didn't have anything to say - it didn't matter how good
:01:24. > :01:33.my hair was - I wouldn't be sitting here right now talking to you.
:01:34. > :01:38.Remember Napoleon famously said he didn't want good generals,
:01:39. > :01:43.Well, George Osborne looks to be enjoying
:01:44. > :01:49.Because, there was one number that mattered in his Autumn Statement
:01:50. > :01:54.today, one figure that had nothing to do with him - it was ?27 billion.
:01:55. > :01:58.That was the good news in the forecasts,
:01:59. > :01:59.the underlying improvement over the five-year parliament
:02:00. > :02:10.?27 billion is about ?5.5 billion a year.
:02:11. > :02:20.Combine the effects of better tax receipts and lower debt interest and
:02:21. > :02:23.the OBR calculate means a ?27 billion improvement in our public
:02:24. > :02:26.finances in the forecast period compared to where they we were in
:02:27. > :02:26.the budget. Now, a lot of people missed that
:02:27. > :02:29.during the Chancellor's speech and were thus baffled for the remaining
:02:30. > :02:32.50 minutes as to how he could A spectacular U-turn on tax credits,
:02:33. > :02:36.no cuts to the Police, extra money for house building,
:02:37. > :02:38.roads and infrastructure. Plus some smaller gratuities
:02:39. > :02:40.for the Arts Council, UK Sport, the Commonwealth War Graves
:02:41. > :02:42.Commission, women's health But, if you've got
:02:43. > :02:48.an extra ?5 billion or ?6 billion to play with, everything's much easier
:02:49. > :02:51.than it was before. In fact, back in the July Budget
:02:52. > :02:54.things were already improving So a killer fact is that the actual
:02:55. > :03:02.cuts to day-to-day departmental spending that we are going to see
:03:03. > :03:06.are about a quarter of the ones that Don't dance a jig -
:03:07. > :03:10.the cuts still won't be easy. But not as difficult
:03:11. > :03:14.as tough-sounding Conservative What the OBR giveth,
:03:15. > :03:21.it can take away. The last Chancellor to enjoy
:03:22. > :03:26.improving forecasts was this one: We are not only providing the ?40
:03:27. > :03:30.billion extra we promised to health and education, but today I will
:03:31. > :03:32.announce more money and more capital investment in schools, hospitals,
:03:33. > :03:42.transport and fighting crime. In Gordon Brown's day,
:03:43. > :03:49.he actually made the forecasts. Today, they are independent,
:03:50. > :03:52.and I think they are independent. So the key question today is, where
:03:53. > :03:58.did the ?27 billion improvement come Here's our economics editor,
:03:59. > :04:13.Duncan Weldon. It might only be November but the
:04:14. > :04:18.Christmas lights are already up, and today the Chancellor got an early
:04:19. > :04:23.present in the form of a ?27 billion windfall over the next five years.
:04:24. > :04:26.The new forecast from the office of bubble responsibility show an
:04:27. > :04:30.unexpected improvement in the public finances. This graph shows changes
:04:31. > :04:36.to the borrowing forecasts since the budget in July. Above the line means
:04:37. > :04:41.higher borrowing and below it is lower borrowing. ?27 billion less
:04:42. > :04:45.borrowing across the Parliament, with especially big falls in the
:04:46. > :04:51.middle between 2017 and 2019. That gave the Chancellor the room for a
:04:52. > :04:55.net giveaway in almost every year and still meant that after this year
:04:56. > :05:00.borrowing is forecast to be lower in each year. Finding ?27 billion is
:05:01. > :05:03.going to give anyone a big sense of Christmas cheer. Especially when it
:05:04. > :05:07.helps dig you out of a tight political hole. Forecasts for the
:05:08. > :05:11.rest of the economy is broadly unchanged so. , where on earth has
:05:12. > :05:17.it come from? Some of it was from lower interest rates. But much of it
:05:18. > :05:21.was from a change in how the OBR model tax revenues. George Osborne
:05:22. > :05:26.certainly benefitted from two pieces of good news from the OBR today that
:05:27. > :05:30.I don't think many people were expected them to be that size. Tax
:05:31. > :05:33.receipts have come in better this year and the OBR thinks that is
:05:34. > :05:41.going to continue in the medium term. That boosts the forecast for
:05:42. > :05:45.revenues. But there were different modelling changes in VAT and
:05:46. > :05:51.national insurance contributions, which gave George Osborne a bit more
:05:52. > :05:56.room for manoeuvre. The timing might be fortuitous for the Chancellor but
:05:57. > :06:07.the OBR is widely regarded as impartial. We reviewed forecast
:06:08. > :06:12.methods all the time. There is an official process which happens once
:06:13. > :06:17.a year, and we look back on our errors and we decide how to change
:06:18. > :06:23.how we work. The Christmas bonus didn't just mean a cancelling of tax
:06:24. > :06:27.credit cuts but eased the pain in Whitehall. In the last budget huge
:06:28. > :06:34.cuts in departmental spending were pencilled in. A ?40 billion plus cut
:06:35. > :06:42.in four years and then a rise. What was called the roller poster. After
:06:43. > :06:45.the election the cuts were scaled back and today the unexpected
:06:46. > :06:51.windfall has been used to iron out even more of them. The roller
:06:52. > :06:57.coaster is now a gentler incline and the departmental cuts are a quarter
:06:58. > :07:02.of the size outlined 8 months ago. Today the OBR has acted as is about
:07:03. > :07:05.tota clause, but unlike Father Christmas they sometimes take
:07:06. > :07:09.presents away. In the past when they've given George Osborne bad
:07:10. > :07:11.news he's responded by pushing the date by which he wants to balance
:07:12. > :07:17.the books further away. Today when giving good news, rather than
:07:18. > :07:22.pulling that date back he's chosen to spend the windfall.
:07:23. > :07:22.pulling that date back he's chosen economists would call an
:07:23. > :07:29.asymmetrical economists would call an
:07:30. > :07:31.a politics fixed on deficit reduction might call not fixing the
:07:32. > :07:43.There was a big U-turn on roof
:07:44. > :07:47.credits. Is it as straightforward as a simple U-turn. It is a handbrake
:07:48. > :07:52.180 degree turn. They a simple U-turn. It is a handbrake
:07:53. > :07:54.cut tax credits. Those cuts have now a simple U-turn. It is a handbrake
:07:55. > :07:55.gone. In the July budget a simple U-turn. It is a handbrake
:07:56. > :07:58.Government said they were making a simple U-turn. It is a handbrake
:07:59. > :08:03.credit, the new welfare a simple U-turn. It is a handbrake
:08:04. > :08:06.what that means is a lot of the tax credit cuts have been reversed
:08:07. > :08:10.today, meaning people will have more money in two or three years. But by
:08:11. > :08:13.the end of the Parliament, because the universal credit cuts are in
:08:14. > :08:18.place, there'll be a substantial number of people losing a
:08:19. > :08:23.substantial amount of money. Right, so the other thing we need to talk
:08:24. > :08:26.about is this issue about the OBR and its independence. Because you
:08:27. > :08:33.and I know system of these people. and its independence. Because you
:08:34. > :08:37.What do you think, a lot of people are taking the line that it is so
:08:38. > :08:42.convenient for the Chancellor to have all of this before Christmas.
:08:43. > :08:46.On Twitter today that was the line, that
:08:47. > :08:48.On Twitter today that was the line, numbers for the Chancellor, and
:08:49. > :08:53.On Twitter today that was the line, are, but the
:08:54. > :08:58.On Twitter today that was the line, If you remember the huge fight
:08:59. > :09:00.before the election about cutting spending back to 1934 levels. That
:09:01. > :09:10.was a big tranche of good news
:09:11. > :09:29.in the forecast, but the Chancellor billion or so from buy-to-let
:09:30. > :09:30.investors. Extra taxes,
:09:31. > :09:32.and smaller spending cuts. Should we have predicted
:09:33. > :09:34.that back at the election? All in all, it makes the judgement
:09:35. > :09:37.about the politics more nuanced. Mr Osborne more centrist
:09:38. > :09:39.than he likes to posture. Let's look at the politics
:09:40. > :09:48.of it all, with Allegra. Today we got a
:09:49. > :09:52.Not just of what the state will look like but the career prospects of our
:09:53. > :09:56.current Chancellor. The most powerful man in Government has been
:09:57. > :10:01.in trouble since his emergency budget in July. How would he get out
:10:02. > :10:05.of this fix? I've listened to the concerns. I hear and understand
:10:06. > :10:08.them. And because I've been able to announce today an improvement in the
:10:09. > :10:16.public finances the, the simplest thing to do is not to phase these
:10:17. > :10:23.chains these changes in but to avoid them altogether. It took the Shadow
:10:24. > :10:29.Chancellor a while to claim victory. There is such a thing as the iron
:10:30. > :10:34.law, and the louder the cheers for the statement on the day, the
:10:35. > :10:40.greater the disappointment by the weekend when the analysis goes in.
:10:41. > :10:52.George Osborne today shelved the untra painful tax credit changes due
:10:53. > :10:56.in April. Everyone is being moved on to a less generous universal credit
:10:57. > :11:02.system. Watch the face of Labour's deputy leader on the right of your
:11:03. > :11:08.screen. To assist comrade Osborne in his dealings with his new-found
:11:09. > :11:13.comrades I've brought him Mao's little Red Book. Let me quote, Mr
:11:14. > :11:19.Speaker. THE SPEAKER: Order! I want to hear
:11:20. > :11:25.about the contents of the book! Today was a win for the opposition,
:11:26. > :11:29.except many in Labour's ranks feel dispirited right now. They know
:11:30. > :11:33.George Osborne only did what he did on tax credits because he doesn't
:11:34. > :11:38.feel threatened by Labour. Instead it was an exercise of clearing the
:11:39. > :11:43.decks for the Chancellor, so get rid of the tax credit problem to
:11:44. > :11:47.underscore that you are the party of workers, he hopes. Get rid of the
:11:48. > :11:52.the threat of risk to police forces, to show that you are the party of
:11:53. > :11:56.security, he hopes. Many don't expect Jeremy Corbyn do lead Labour
:11:57. > :12:02.into the next election, so today they were readying themselves for
:12:03. > :12:08.what comes next. But how did we get here? It was the prospect of another
:12:09. > :12:11.mauling by Tory rebels in the Commons that probably proved most
:12:12. > :12:18.deadly. Baroness Stroud was critical of the changes. In 2010, nine in 10
:12:19. > :12:22.people were in receipt of tax credits if they were working with
:12:23. > :12:27.families. The changes he made up to 2015 were to reduce that to six in
:12:28. > :12:31.ten. These changes only took it to five in ten. If you spoke to the
:12:32. > :12:35.average person on the street and said, who should the Government be
:12:36. > :12:41.supporting, they would say probably 50% of the population is quite
:12:42. > :12:45.generous. So he looks at it in macroterms and structural terms, but
:12:46. > :12:49.the changes today about human lives are about people, and about saying
:12:50. > :12:54.actually we and that losing money is really difficult. Are you surprised
:12:55. > :13:00.you won this debate? I'm delighted we won this debate. You must find
:13:01. > :13:05.yourself with real goals and targets and being quite disciplined to get
:13:06. > :13:08.these things delivered, but it is probably easy to forget perhaps what
:13:09. > :13:13.the real world is like out there. But the important thing is he's
:13:14. > :13:17.reeled, he's listened to us and changed it. . In the Conservative
:13:18. > :13:22.Party a lot of people voted for us the first time because they trusted
:13:23. > :13:26.us and perhaps hadn't before. We risked destroying that if we were
:13:27. > :13:33.all about financial responsibility, not thinking about people. We had to
:13:34. > :13:39.call time on that. It may be that Labour's right that the devil is in
:13:40. > :13:43.the detail and further scrutiny will see today's measures unravel, George
:13:44. > :13:48.Osborne taking people for fools, or just as after the omnishambles
:13:49. > :13:53.budget in the last Parliament the Chancellor really has learnt. In
:13:54. > :14:01.tarot I'm told the death card can often mean renewed life.
:14:02. > :14:04.The man who was joined at the hip to George Osborne
:14:05. > :14:08.until the election was Rupert Harrison, his chief of staff.
:14:09. > :14:13.He's left the Treasury now, but he's here in the studio.
:14:14. > :14:22.Good evening. Give us some insight. Back at election time, did you
:14:23. > :14:29.really expect to make the cuts that you were talking about then? I think
:14:30. > :14:35.we certainly thought it was doable. We came on a lot of shows, I didn't
:14:36. > :14:39.but George Osborne and other Conservative Ministers came on
:14:40. > :14:44.endless shows like annuity and were asked a lot of questions and we had
:14:45. > :14:49.answers. In the back of the minds of most people in the Conservative
:14:50. > :14:52.Party and indeed almost everybody in the commentariat at the time there
:14:53. > :14:55.was an unspoken assumption there would probably be a coalition and I
:14:56. > :15:01.think that coloured a lot of people's views. I don't think they
:15:02. > :15:05.put together plans that were unimplementable. There was maybe an
:15:06. > :15:10.expectation you might have been negotiating. At the back of people's
:15:11. > :15:15.minds was the mainstream expectation but we ation, put together a plan
:15:16. > :15:18.that was knowingly impossible. Conservative politicians came under
:15:19. > :15:23.a lot of pressure at that election from you and others on how difficult
:15:24. > :15:29.they were. A lot of us looked at it and said wow! That's eye wateringly
:15:30. > :15:32.difficult and the OBR said back to the Government of the 1930s. That
:15:33. > :15:36.was quite ferocious. Surprise, surprise you haven't thrived those
:15:37. > :15:42.cuts. Are you surprised? It is not me. Sorry, you wrote them at the
:15:43. > :15:47.time, but the cuts haven't been delivered.
:15:48. > :15:55.The economy is in a better place than people thought, and receipts
:15:56. > :16:01.are a bit better. It is unfair that politicians get a raw deal, and when
:16:02. > :16:05.things go worse than it expected, it is their fault. George Osborne had
:16:06. > :16:10.some money to play with today because of a stronger economy, a
:16:11. > :16:15.stronger economy he has been talking about for five years. As a
:16:16. > :16:20.Chancellor, you make your own luck. Explain to me why you had to put
:16:21. > :16:26.taxes up today. Taxes have gone up by around ?5.5 billion. You were not
:16:27. > :16:33.talking about that in the election campaign. The spending cuts were not
:16:34. > :16:43.as difficult as you thought, but you still... You keep saying, you! The
:16:44. > :16:48.big one today is the apprenticeships levy, which is a system designed to
:16:49. > :16:53.incentivise companies to provide apprenticeships. They get the money
:16:54. > :16:59.back if they do. In terms of taxes in general, the big picture, as a
:17:00. > :17:07.result of today, is that spending is coming down to around 36% of GDP,
:17:08. > :17:13.towards the lows of our lifetimes. Equally, tax receipts as a share of
:17:14. > :17:20.GDP, the amount of tax coming in, is in line with the average. It is
:17:21. > :17:25.rising. The details today, there was ?1 billion from stamp duty, there
:17:26. > :17:30.was a specific policy aimed more at the dynamics of the housing market
:17:31. > :17:35.than bringing in revenues, but you have a Chancellor who is taking
:17:36. > :17:41.difficult decisions, cutting spending, and most of that is being
:17:42. > :17:45.done by spending cuts. Before the election he was posturing as tougher
:17:46. > :17:53.than he really is - you would deny that? It is a strategy to posture
:17:54. > :17:58.that you would do more terrible things than you pretend. I think he
:17:59. > :18:04.wanted to mandate for those difficult decisions. He didn't know
:18:05. > :18:09.what those decisions would be. In 2010, the interesting thing about
:18:10. > :18:14.the UK compared to other countries who have struggled with deficit is
:18:15. > :18:17.that no one question the mandate that George Osborne and David
:18:18. > :18:21.Cameron had to cut spending, because they went into the election with
:18:22. > :18:26.quite a lot of honesty about what they were going to do. The lesson
:18:27. > :18:30.they drew from that was that it gave them the mandate to go on and do it.
:18:31. > :18:37.They were confident in the last election that the job wasn't done
:18:38. > :18:42.and they had to go on to do it. The relationship between the OBR and the
:18:43. > :18:49.Treasury... When did they tell you how much you have a year? It happens
:18:50. > :18:56.in phases. You get an initial forecast from them about six weeks
:18:57. > :19:01.to two months out. We learn to take that initial forecast with a pinch
:19:02. > :19:06.of salt. When you start putting together this Rubik 's cube... You
:19:07. > :19:09.get an update every couple of weeks. George Osborne would have
:19:10. > :19:14.known that things were looking better. We have been allowed to
:19:15. > :19:19.believe it was all much more serious than it was. He might have known
:19:20. > :19:22.with more certainty two weeks to go than six weeks to go. Thank you.
:19:23. > :19:25.Just because a Spending Review isn't as dripping in blood
:19:26. > :19:28.as you thought it would be doesn't mean it isn't still pretty brutal.
:19:29. > :19:33.Ironically, the areas in most pain at the moment are health
:19:34. > :19:36.With a bit of extra money, and a little financial trickery, health
:19:37. > :19:39.and social care looked like winners today - but that doesn't mean their
:19:40. > :19:44.problems are solved, as our policy editor, Chris Cook, explains.
:19:45. > :20:06.And in this Spending Review, people - our national health.
:20:07. > :20:14.Taking a step back, things are a little bit murkier than the
:20:15. > :20:18.For example, spending on NHS England has definitely risen
:20:19. > :20:21.by a sizeable amount, but there have been cuts to health services
:20:22. > :20:34.So, taken altogether, the health budget is rising, but the Chancellor
:20:35. > :20:43.has been a lot less generous than he would like to think. The Chancellor
:20:44. > :20:50.told us there would be ?5.5 billion of extra spending for the NHS last
:20:51. > :20:57.year. After information, that's 3.8 billion. Part of it is being covered
:20:58. > :21:03.by a ?1.5 billion cut to things which are not considered part of the
:21:04. > :21:07.NHS, but only really because of technicalities. There is a jet
:21:08. > :21:12.covering vaccination and training doctors that will drop by about 10%.
:21:13. > :21:16.There will be a sigh of relief from some people who were wondering
:21:17. > :21:21.whether they would be able to pay their staff next year. The NHS
:21:22. > :21:25.starts the next financial year already in deficit. When this was
:21:26. > :21:32.asked for, they did not envisage there would be a number of other
:21:33. > :21:38.things that have been announced, such as seven-day GP surgeries. It
:21:39. > :21:42.is very challenging. The amount of efficiency improvement going to be
:21:43. > :21:47.asked for is unprecedented. There is some question whether this is a
:21:48. > :21:53.doable task in the time available. The overall health budget will get
:21:54. > :21:58.an increase of less than 1% a year above inflation. Not a huge one. You
:21:59. > :22:03.cannot talk about the NHS without talking about social care, which is
:22:04. > :22:08.largely provided by local authorities. Today, there was
:22:09. > :22:12.discussion is about how problems in social care are feeding back into
:22:13. > :22:16.hospitals who cannot discharge patients anywhere that can look
:22:17. > :22:22.after them. How did social care do today? Those local authorities
:22:23. > :22:28.responsible for social care will be able to levy a social care pre-set
:22:29. > :22:33.of up to 2% on council tax. The money raised will have to be spent
:22:34. > :22:39.exclusively on adult social care, and for authorities who make full
:22:40. > :22:44.use of it, it will bring ?2 billion into the social care system. Local
:22:45. > :22:53.authorities will be able to access an extra ?1.5 billion by 2019-20. It
:22:54. > :22:58.is fine to give councils the freedom to put up their council tax a bit,
:22:59. > :23:03.but the councils who have the most need for social care are those which
:23:04. > :23:08.have the least revenue from raising council tax. Deprived areas will not
:23:09. > :23:12.do as well from this settlement, and there is nothing to address what I
:23:13. > :23:17.would see as the fundamental injustice. If you have cancer you
:23:18. > :23:22.are entitled to a lot of free, expensive health care. If you have
:23:23. > :23:27.dementia, all too often, you and your family are left to struggle
:23:28. > :23:32.with inadequate help. There is enough to keep social care and the
:23:33. > :23:36.NHS going for now, but there will be problems in some areas. Keeping
:23:37. > :23:44.within this budget for five years will be phenomenally difficult. With
:23:45. > :23:51.me now is Greg Hands and Seema Malhotra. Greg Hands, you heard that
:23:52. > :23:56.the long-term problems of health and social care are not really resolved.
:23:57. > :24:00.We had a Royal commission to decades ago, yet still, we are having to
:24:01. > :24:07.pump extra money in without a true solution being found. I disagree
:24:08. > :24:13.with that. We set out two things today. First, central government is
:24:14. > :24:17.going to put in an additional ?1.5 billion into social care from
:24:18. > :24:23.central budgets. Councils will be able to raise a 2% per annum
:24:24. > :24:29.precept, so long as it is spent on social care, to deliver that at
:24:30. > :24:34.local authority level. Does it fill the gap between need and cash? It
:24:35. > :24:39.will allow local authorities to increase the amount of money spent
:24:40. > :24:44.on social care in real terms. But the demand is increasing every year.
:24:45. > :24:49.Does it fill the gap between funding and demand? We are confident it
:24:50. > :24:53.offers a very good solution in terms of the amount of money we raise
:24:54. > :24:59.locally, the amount we put in century, a long-term solution on
:25:00. > :25:02.social care. Part of that, the police. When was it decided that
:25:03. > :25:08.there would be no cuts in the police budget? That decision was taken
:25:09. > :25:13.partly as a result of presentations we have had, partly as a result of
:25:14. > :25:19.the increased public finance figure is mentioned in your programme
:25:20. > :25:22.earlier, the ?27 billion improvement, which allowed us more
:25:23. > :25:27.room to do something which is the right things to do. But when
:25:28. > :25:32.exactly? Literally in the last couple of days? A lot of these
:25:33. > :25:36.things move around all the time when you are doing something like a
:25:37. > :25:41.Spending Review, with five years of government budgets in front of you,
:25:42. > :25:46.as well as an Autumn Statement, a lot of things move around all the
:25:47. > :25:52.time. Why was it necessary to raise taxes today? You had ?27 billion of
:25:53. > :26:01.good news, and you have had to raise taxes. Why? The two main items that
:26:02. > :26:06.you mention when you talk about taxes, firstly the apprenticeship
:26:07. > :26:10.levy, which isn't really a tax in a conventional sense, but it is an
:26:11. > :26:15.amount of money that businesses will have to pay into to provide
:26:16. > :26:20.apprenticeships and training for their own workforce. Secondly, in
:26:21. > :26:25.terms of stamp duty land tax on additional homes, and extra 3%
:26:26. > :26:30.surcharge on the rate of stamp duty paid, which is about revenue and
:26:31. > :26:34.sending a message to first-time buyers that we want to bias the
:26:35. > :26:40.system back towards first-time buyers in terms of what they can do
:26:41. > :26:45.in the housing market. Am I right that the taxes raised, for whatever
:26:46. > :26:51.motive, have helped the public finance systems to the tune of ?5.5
:26:52. > :26:59.billion? The taxes that have been raised have been helped by public
:27:00. > :27:06.finance. So there is a ?5 billion tax... We are funding the
:27:07. > :27:12.apprenticeships as well, because the cost of the apprenticeship will
:27:13. > :27:19.improve. The IFS said, be ready for taxes to ride -- to rise, on
:27:20. > :27:25.February the 4th. The IFS said it because the spending increasing
:27:26. > :27:29.didn't look possible. Amazingly, within a year of the election, we
:27:30. > :27:34.have had taxes rising and we haven't had the spending cuts that were
:27:35. > :27:40.promised. It is an extraordinary departure. I disagree with the
:27:41. > :27:44.premise of that question. There are spending cuts coming. Some are
:27:45. > :27:49.unprotected. We have delivered the tax lock, going into the general
:27:50. > :27:55.election which we will preserve over the course of the parliament, income
:27:56. > :28:01.tax, national insurance and DAT will not be raised during the course of
:28:02. > :28:08.the parliament. Seema Malhotra. Can you help me out? What is the Labour
:28:09. > :28:13.critique of the Autumn Statement? It is really disappointing to hear what
:28:14. > :28:19.Greg has been saying on the NHS and other matters. This was a smoke and
:28:20. > :28:23.mirrors Autumn Statement. What you saw and heard isn't necessarily what
:28:24. > :28:29.we are going to get. There was no big story about investment for the
:28:30. > :28:34.future, when we have seen infrastructure investment dropped.
:28:35. > :28:42.It dropped in the last Parliament from over 3% of GDP to 1.5%, and
:28:43. > :28:49.falling further. That was Alistair Darling's projected cuts. It was
:28:50. > :28:52.under George Osborne. Only 9% of infrastructure projects have
:28:53. > :28:58.started. Average earnings forecasts are set to go down over the next
:28:59. > :29:03.three years, as our productivity forecasts. We already have a 20
:29:04. > :29:09.point gap in our productivity between us and other G-7 nations. If
:29:10. > :29:14.I can mention about tax credits. What we saw today was in one way a
:29:15. > :29:21.U-turn, but it isn't all it seems. It has been an effective delay, and
:29:22. > :29:26.a disguise of those cuts, which will come forward in a another form in a
:29:27. > :29:32.few years' time, did the same families, through the Universal
:29:33. > :29:36.Credit. Tonight we heard from the Resolution Foundation, chaired by
:29:37. > :29:41.David Willetts, that 3 million families will see an average drop of
:29:42. > :29:43.?1000 in their household income by 2020. Can you confirm those
:29:44. > :29:54.figures? We haven't seen those figures yet.
:29:55. > :29:58.Our election pledge to deliver ?12 billion in welfare savings by the
:29:59. > :30:01.year 1920 will be delivered. You were elected having said you will
:30:02. > :30:05.not be cutting tax creditsment that's why George Osborne has seen a
:30:06. > :30:09.big knock to his trust and credibility. What you've tried to do
:30:10. > :30:14.is force this through Parliament through the back door. And now he
:30:15. > :30:19.said today is a U-turn. This is going to unravel, because it's been
:30:20. > :30:23.a delay. Greg Hands, you've done modelling of the effects on
:30:24. > :30:28.individual households of the tax credits and universal credit
:30:29. > :30:34.packages open to the Parliament. The Resolution Foundation think a single
:30:35. > :30:40.parent working part time with a child on the living wage will lose
:30:41. > :30:48.?1,000 by 2020. . I haven't seen the figures. But you must know the
:30:49. > :30:52.effects. We've made sure it is much better aligned with what we are
:30:53. > :30:58.doing with welfare and elsewhere this re this
:30:59. > :31:06.doing with welfare and elsewhere this re -- in the system. Don't
:31:07. > :31:11.forget the tax allowance which will rise... Sorry, that's been taken
:31:12. > :31:15.into account. You've done these figures, the you've modelled effects
:31:16. > :31:20.on households. Not you personally, the Treasury. Not me personally, but
:31:21. > :31:27.what I will say is we are delivering on that pledge to save ?12 billion
:31:28. > :31:30.of welfare and we've done a budget surplus, which is very important.
:31:31. > :31:36.Sounds like you haven't worked out what the effects are, but we can
:31:37. > :31:41.come back to that. Seema Malhotra, I heard your Shadow Chancellor say he
:31:42. > :31:46.opposed all the cuts but I also heard him criticise the Government
:31:47. > :31:50.for having cleared the deficit already. You can't have it both
:31:51. > :31:54.ways. George Osborne has failed on the targets he set himself. If you
:31:55. > :31:57.have a situation where you are continually failing on your
:31:58. > :32:02.financial or fiscal targets, you have to ask the question where you
:32:03. > :32:06.are held to account for that. When we lost the election in 2010, we
:32:07. > :32:10.still said it was possible to halve the deficit over five years. And we
:32:11. > :32:15.said you could do that by continuing to invest for the future as well as
:32:16. > :32:20.making cuts. What we've seen is that George Osborne has done that through
:32:21. > :32:24.a much more painful route, with a massive impact on the communitieses
:32:25. > :32:28.this country. We've seen a huge impact on affordable house building,
:32:29. > :32:33.which if you look at some of the detail in the OBR report shows even
:32:34. > :32:37.since July the impact that George Osborne's decisions are going to
:32:38. > :32:42.have on knocking back affordable housing is absolutely true. You can
:32:43. > :32:47.look at the graph yourself Greg. We are out of time. I do want to ask
:32:48. > :32:52.about the Red Book moment in Parliament. What did you think of it
:32:53. > :32:56.in the Well, John's going to make his own decisions on this. What was
:32:57. > :32:59.important was the point he was making. He was making a really
:33:00. > :33:03.important point about the lack of investment that George Osborne is
:33:04. > :33:07.making in Britain. You can look to have external investment... Do you
:33:08. > :33:11.think that's what people have taken away from it? I think a lot of it is
:33:12. > :33:17.actually, because there's a real concern about what is happening at
:33:18. > :33:21.the moment There's a real concern about what... Did you know he was
:33:22. > :33:29.going to do it? Look, he made his own decision on this. Come on, did
:33:30. > :33:35.you now... He made his own decision on this. I didn't know. But that the
:33:36. > :33:41.his choice. Have you read it? I've studied politics, I've read a lot.
:33:42. > :33:45.But my point is this. It is a really important point about how George
:33:46. > :33:48.Osborne is selling our assets on the cheap and not investing in the
:33:49. > :33:52.future in this country in our industry as he should be. Sorry, we
:33:53. > :33:53.do have to leave it there. Thank you both very much.
:33:54. > :33:57.We'll return to the Autumn Statement soon, but first - to Canada.
:33:58. > :33:59.Which has a dashing, youthful new prime minister.
:34:00. > :34:05.Justin Trudeau - son of Pierre, a Prime Minister back in the 70s.
:34:06. > :34:07.And to be brutal, the last Canadian Prime Minister whose name
:34:08. > :34:12.Justin's Liberal party was not meant to win the election,
:34:13. > :34:17.And his arrival at 24 Sussex - the Canadian equivalent of Number 10
:34:18. > :34:21.If scepticism with politics has been sweeping the west,
:34:22. > :34:24.he seems to have beaten the trend, and in a liberal kind of way.
:34:25. > :34:27.He's been in London today, to see the Queen and the PM, but
:34:28. > :34:37.I began by asking about his Government's approach to dealing
:34:38. > :34:40.with so-called Islamic State. We've decided that we're going to
:34:41. > :34:42.cease the actual bombing mission that Canada has
:34:43. > :34:45.so far been involved in, and shift We have consistently said that
:34:46. > :34:54.Canada has a strong role to play, obviously on a humanitarian and
:34:55. > :34:57.refugee side, as well as part of But we also know that Canada has
:34:58. > :35:03.a tremendous level of expertise, hard-won in Afghanistan over
:35:04. > :35:07.the past ten years, to help with training, to help local troops be
:35:08. > :35:10.more effective in the fight on the ground, and I think we're going to
:35:11. > :35:13.be stepping our involvement in that It was more a decision about Canada
:35:14. > :35:22.and whether it was able to add value There's a wide range of things that
:35:23. > :35:27.Canada can do, and certainly our Royal Canadian Air Force is
:35:28. > :35:31.outstanding in doing what it does, but I know that we have different
:35:32. > :35:36.ways that we can be possibly even more helpful to our friends
:35:37. > :35:42.and allies, and I've had this conversation a number of times
:35:43. > :35:45.with my fellow leaders, and they are reassured that Canada is continuing
:35:46. > :35:48.to be a strong and active partner And Paris has made no difference to
:35:49. > :35:53.your view in what Canada's role I think Paris has highlighted for us
:35:54. > :35:59.in a very personal way - myself being a French Canadian, I obviously
:36:00. > :36:05.feel a tremendous closeness to our French cousins, and continue to
:36:06. > :36:08.stand resolute in that Canada has Let's talk a little more generally
:36:09. > :36:16.about politics in the West. There's political scepticism
:36:17. > :36:21.in many, many countries, political disenchantment,
:36:22. > :36:24.antipathy towards the elites and I wonder what you think
:36:25. > :36:31.your election in Canada said And potentially
:36:32. > :36:35.about ways politicians can react to You have, over
:36:36. > :36:42.the past little while, seen the rise of the anti-politician, whether it
:36:43. > :36:48.was our own Rob Ford in Toronto who was very much an anti-politician,
:36:49. > :36:52.or Donald Trump, who makes a big I think that has,
:36:53. > :37:01.to a certain extent, run its course, just because people don't want the
:37:02. > :37:05.usual kinds of politicians, fine. They are also looking for people who
:37:06. > :37:08.are going to be serious about bringing people together,
:37:09. > :37:11.serving, and being upfront about the That's a very optimistic point
:37:12. > :37:14.of view. If anything, Donald Trump, contrary
:37:15. > :37:18.to what everybody expected, is We've seen this a few times, not
:37:19. > :37:41.just in our election, where polls showing that more divisive positions
:37:42. > :37:45.were very popular, but when you get right down to it, when citizens take
:37:46. > :37:48.a long hard look in the ballot box about actually voting
:37:49. > :37:50.against your neighbour, against In pluralistic societies
:37:51. > :37:53.like we have, it becomes very Or the fear of, you know,
:37:54. > :37:57.the shopkeeper you see down the street every day, or your
:37:58. > :38:01.colleague from two cubicles over. That dynamic is what is really
:38:02. > :38:06.a source of optimism for me. Lots has been written about your
:38:07. > :38:10.appearance, good looks, tattoo. Do you think they contributed
:38:11. > :38:14.to your success? You look like a fresher faced kind
:38:15. > :38:17.of politician to some of the others, It didn't really play all that
:38:18. > :38:27.much during the election campaign. In the beginning, there was a little
:38:28. > :38:33.bit more interest in appearance. The fact that I'm friendly and
:38:34. > :38:38.like people shouldn't count against me when I'm hoping to
:38:39. > :38:45.represent them on the world stage. In Australia there's been a real
:38:46. > :38:51.debate about whether the Queen should be head of state. It doesn't
:38:52. > :38:56.feel as though there's been that debate in Canada to the same degree,
:38:57. > :39:02.but you took the Queen's portrait down in one Government building. Why
:39:03. > :39:06.did you do that? There's been a long tradition of showcasing Canadian
:39:07. > :39:12.artists in our embassies around the world, as you've seen here at Canada
:39:13. > :39:18.House, so it was something that the previous Government did as a I think
:39:19. > :39:23.sign of disrespect towards the art commuters for which they had been
:39:24. > :39:27.famously accused. And I think rightly accused on many levels. It
:39:28. > :39:33.was more about restoring Canada's place and not meant at all as a
:39:34. > :39:38.disrespect to our Queen, who is still a, who still adorns many
:39:39. > :39:43.banknotes and others. You are right that there is not a huge appetite
:39:44. > :39:45.for that in Canada. There are far more pressing things and we are
:39:46. > :39:49.perfectly happy with our Queen of Canada. When you look at Canada
:39:50. > :39:51.today, it is interesting, because you are not the United States.
:39:52. > :39:57.Clearly different to the United States in a whole lot of respects,
:39:58. > :40:03.right? Do you feel Canada's closer to the UK, or to the United States?
:40:04. > :40:09.I think that the time of Canadians worried that there is no Canadian
:40:10. > :40:13.identity has passed. We have succeeded in creating an
:40:14. > :40:19.extraordinary country based on shared values and approach. And an
:40:20. > :40:31.optimism about the world that quite frankly leaves us a little less
:40:32. > :40:34.needily in terms y in terms offics term definitions. That's
:40:35. > :40:41.interesting. Obviously you are not going to join the United States...
:40:42. > :40:45.No, but if they wanted to join us as provinces we could talk about that.
:40:46. > :40:49.You are standing for new politics, a new generation, and of course your
:40:50. > :40:53.name is an old name in Canadian politics. Most people here will know
:40:54. > :41:00.that your father was Prime Minister. Let me be brutal. Does it embarrass
:41:01. > :41:04.you that you are part of Canada's first family dynasty? No, because
:41:05. > :41:07.I'm incredibly proud of my father, the values he stood for, the place
:41:08. > :41:14.he gave da on the world stage. The the values he stood for, the place
:41:15. > :41:19.he gave da on the world stage. -- he gave Canada on the world stage. Do
:41:20. > :41:24.you believe would be there if you hadn't been a Trudeau? I don't deny
:41:25. > :41:29.that doors opened up for me. The way I was raised was that I had to work
:41:30. > :41:33.two or three times as hard as anyone else would to walk through that door
:41:34. > :41:38.now that it was open. I think Canadians get that. There's a lot of
:41:39. > :41:43.people who shrugged and said, he has nothing but a name to go on, and
:41:44. > :41:49.found themselves slightly bewildered as I left them in the dust. Justin
:41:50. > :41:54.Trudeau, very nice to talk to you. A real pleasure. Thank you. Back to
:41:55. > :41:55.the Autumn Statement. Well, as much talked about today
:41:56. > :41:57.as the Chancellor's Autumn Statement was the Shadow
:41:58. > :41:59.Chancellor's response to it. John McDonnell's wielding
:42:00. > :42:01.of Chairman Mao's red book, It was a joke -
:42:02. > :42:04.and a courageous one. But who exactly were we meant
:42:05. > :42:07.to be laughing with, or at? Stephen Smith has been looking
:42:08. > :42:10.at the wisdom of Mao and why it hasn't played
:42:11. > :42:25.a bigger part in the proceedings A journey of a thousand miles begins
:42:26. > :42:30.with a single step, Mao is supposed to have said. But I don't think even
:42:31. > :42:36.he could have imagined we would end up here. To assist comrade os worn
:42:37. > :42:42.in his dealings with his new-found comrades I've brought him along
:42:43. > :42:47.Mao's little Red Book. Let me quote... Was it a joke? To the
:42:48. > :42:51.Conservatives and most of Fleet Street it was a gaffe, and like the
:42:52. > :42:58.Great Wall big enough to see from space. We must learn to do economic
:42:59. > :43:05.work from all who know how. No matter who they are. We must esteem
:43:06. > :43:08.them as teachers, learning from them respectfully and conscientiously,
:43:09. > :43:15.but not pretend to know what we do not know. I thought white come in
:43:16. > :43:20.handy for him. George Osborne could gorge himself on fortune cookies
:43:21. > :43:26.before he got this lucky again. So the Shadow Chancellor literal stood
:43:27. > :43:30.at the dispatch box and read out from Mao's little Red Book!
:43:31. > :43:39.LAUGHTER Look, it's his personal from Mao's little Red Book!
:43:40. > :43:44.CHEERING. What was Jock McDonnell thinking of? On the face of it all
:43:45. > :43:51.he did was make the Tory front bench weep with laughter and some of his
:43:52. > :44:00.own MPs just weep. He put the moist into Maoist. I wouldn't
:44:01. > :44:04.How did you feel? I saw the footage of it afterwards. I think I was
:44:05. > :44:06.talking to the BBC. What about when you saw it? I thought, that's a
:44:07. > :44:22.different way of doing things. The Conservatives were quick to
:44:23. > :44:27.more choice quotes. People say Chairman Mao is not a joke. He was
:44:28. > :44:32.responsible for about 20 million deaths in China. Of course, and I
:44:33. > :44:36.condemn all that. The point of doing it today was to get across the fact
:44:37. > :44:41.that what this government is doing is selling off our assets. This is
:44:42. > :44:48.selling off virtually the family furniture. After Mr MacDonald's
:44:49. > :44:59.performance, 1000 flowers bloomed, so to speak, on social media. -- Mr
:45:00. > :45:04.McDonnell's. He has tried to talk about conservative failures, but
:45:05. > :45:09.talked about his own failures. Marxism is still completely relevant
:45:10. > :45:15.as a form of historical analysis, but getting a little red book out!
:45:16. > :45:22.People have whatever fashion accessories they have, iPad or hover
:45:23. > :45:31.boards! It's different times. What would Bell himself have made of the
:45:32. > :45:38.Corbyn-McDonnell Project. -- Mao himself. It's too early to tell.
:45:39. > :45:44.Let's talk about Labour's day and himself. It's too early to tell.
:45:45. > :46:00.the conservative's day. Word does it leave George Osborne?
:46:01. > :46:01.In recovery. He had this extraordinary good fortune of
:46:02. > :46:05.increased tax receipts out of extraordinary good fortune of
:46:06. > :46:08.nowhere. He has two extraordinary good fortune of
:46:09. > :46:14.for their generosity. He has played his cards well. He has spent all
:46:15. > :46:20.that money on tax credits, as well as bedding out the NHS and the
:46:21. > :46:26.police. He has solved big headaches by a big stroke of fortune. The
:46:27. > :46:33.other stroke of fortune you just saw, John McDonnell. George Osborne,
:46:34. > :46:40.how does it change your view of him? He's very clever. He's very
:46:41. > :46:45.political. He's been very nifty. Instead of front loading the cuts,
:46:46. > :46:50.he has back loaded them. He's assuming he is not going to be
:46:51. > :46:54.Chancellor in the run-up to the next election. But he absolutely has not
:46:55. > :47:02.changed course. He has always said he would reduce the size of the
:47:03. > :47:08.state to 36% of GDP, smaller than it has ever been, permanently. Mrs
:47:09. > :47:13.Thatcher had a state of 46%. They are not being blown off course. It
:47:14. > :47:19.is happening a bit slower, but the same people will be hit in the same
:47:20. > :47:24.way. Just later. You would reject the hypothesis that George Osborne
:47:25. > :47:28.is trying to pull the Conservatives to the centre with infrastructure
:47:29. > :47:33.spending and more spending on the NHS. You still think he is ie
:47:34. > :47:37.geologically very right-wing? He has understood that his cuts were
:47:38. > :47:46.becoming very un-pop killer, and he needed to make political gestures.
:47:47. > :47:52.It will just about get the NHS through. It doesn't solve the
:47:53. > :47:56.problem, but he had to do this fix. Police would have been a disaster.
:47:57. > :48:01.If we have some sort of jihadist attack, what would it do to his
:48:02. > :48:07.political career if he cut the police? Do you think he is a
:48:08. > :48:14.pragmatic centrist, or ideologically right? Is it hard to tell? He is on
:48:15. > :48:20.the Move ideologically. He is a very clever politician, a chameleon. He
:48:21. > :48:27.has put himself banged on the centre now. He was accused by Ukip today of
:48:28. > :48:34.being a horrible Blairite for abandoning austerity. Several front
:48:35. > :48:37.pages of newspapers are screaming, what has happened to austerity? He
:48:38. > :48:43.has cleverly put himself on the mainstream. By varying the tax
:48:44. > :48:51.credits problem, he is re-engaging the one nation narrative. Everyone
:48:52. > :48:57.knows that those tax credit cuts are coming, just under Universal Credit
:48:58. > :49:02.is, and a bit later. The Sun takes the credit for campaigning against
:49:03. > :49:12.credit cuts. What is the son's take on universal credit? Will you take
:49:13. > :49:17.up the campaign against that? It took several months for all of us to
:49:18. > :49:23.get our heads round what he did with tax credits in the summer budget.
:49:24. > :49:29.Some of us on the living wage of going to be better off come the
:49:30. > :49:34.summer. No, because they lose it under tax credits. It is about your
:49:35. > :49:38.household income and how many children you've got. Universal
:49:39. > :49:41.Credit has always been so complicated that most Tory MPs have
:49:42. > :49:48.never understood it at all. Another fact put out today is that Britain
:49:49. > :49:53.will be spending more on overseas than on the Home Office by the end
:49:54. > :49:58.of this government. They fiddle what they are going to use the overseas
:49:59. > :50:03.aid budget on. They say, now we will use it on those failed states who
:50:04. > :50:08.are sending their migrants towards us. We are using it for our own
:50:09. > :50:17.purposes. We do have to finish on the Redbook moment. I am told the
:50:18. > :50:23.Chancellor has taken his copy of the Redbook back to his chambers and is
:50:24. > :50:29.planning on framing it. Tax credits, ring-fencing, we will not remember
:50:30. > :50:36.that in a few months' time. Today we will remember for one reason only,
:50:37. > :50:43.John MacDonald's little red book. What was it? Did he not have a clear
:50:44. > :50:48.critique? It is an impossible day. No Shadow Chancellor should be
:50:49. > :50:53.expected to reply on the same day to stuff they haven't seen before. But
:50:54. > :50:58.that was a terrible error, because it played into what people think of
:50:59. > :51:04.Corbyn and McDonnell anyway, that they have little red books in their
:51:05. > :51:10.pockets. The blood drained from all of the Labour MPs behind him. It was
:51:11. > :51:15.a blunder. All he had to do today was look credible. Thank you very
:51:16. > :51:18.much indeed. That is all we have time for. I will be back tomorrow.
:51:19. > :51:20.We will be talking about Syria.