08/03/2017 Newsnight


08/03/2017

A specially extended Budget 2017 edition, with Evan Davis.


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Transcript


LineFromTo

This is the spreadsheet bit, but bear with me,

:00:00.:00:13.

because I have a reputation to defend!

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Disruptive technologies like biotech, robotic systems

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and driverless vehicles are technology I believe the party

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Under the last Labour government, Corporation Tax was 28%.

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By the way, they don't call it the last Labour

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The right honourable gentleman opposite, who is now so far down

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the black hole that even Stephen Hawking has disowned him!

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But behind the partisan gags, he's broken a manifesto pledge not

:00:50.:00:52.

The main rate of class four Nics for the self-employed

:00:53.:01:00.

will increase by 1% to 10%, with a further 1%

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Overall, it felt like a new era in Budget policy-making -

:01:04.:01:10.

a marked change in style, but with a certain

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We'll hear from the Government and the opposition as to

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And here in Brentwood in Essex, what's the reaction been

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on the street where Philip Hammond grew up?

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Do you remember James Bond in Die Another Day?

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Everyone loved the gimmicks at first.

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And then they thought, it's all gone way too far -

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and they went to Daniel Craig in Casino Royale, and it was all

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Well, the Budget today is a kind of Casino Royale.

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It was in a new, plainer style, fewer gimmicks.

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Deadpan Phil delivers them rather well.

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But in line with the plainer style, the substance, too,

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Some have argued that lower borrowing makes a case for more

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unfunded spending. I disagree. Britain has a debt of nearly ?1.7

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trillion. Almost ?62,000 for every household in the country. So the

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only responsible course of action, Mr Deputy Speaker, is to continue

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with our plan. So, no big change of direction,

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this isn't the time. And interestingly,

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while George Osborne's last Budget had 145 pages and 77 different

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measures in it, Philip Hammond's had Many would say it is a non-Budget -

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bar one big controversy, First, this really was some

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moment to celebrate. Because, borrowing is officially

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more or less back in the range of normality for the first

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time since 2009. Yes, we're back at levels

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of borrowing Gordon Brown And, just in time for Brexit,

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we are at last meeting Overall, public sector net borrowing

:03:24.:03:27.

as a percentage of GDP is predicted to fall from 3.8% last year

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to 2.6% this year. And, for those who care

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about such things, it means that we are forecast to meet our 3%

:03:43.:03:45.

EU Stability and Growth Pact target this year for the first

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time in almost a decade. But I won't hold my breath,

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Mr Deputy Speaker, for my congratulatory letter

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from Jean-Claude Junker! Now, before you crack open

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the Prosecco, the bad news was not It's all about the planned austerity

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over the next few years. Now, here's the drop,

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this is what is meant to happen This is spending per head,

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and it dips several The big gamble is whether those cuts

:04:16.:04:30.

can really be delivered. It's whether we'll stomach them

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when borrowing is no But there's a funny

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thing about Budgets - they can become overwhelmed

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by an argument over one It happens a lot, and it's happening

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more quickly than it used to. We haven't quite heard the first

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cuckoo, but spring will soon be upon us, as the buds slowly sprout, it's

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time to prepare for future crimes, both Sunni and Chile. -- for future

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climates, both sunshine and Chile. The Budget was and expectant and a

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list of their, prepared for troubled times. It actually turned out that

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Spreadsheet Phil is so comfortable in his dream job that we witnessed

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gag a minute Phil as he cracked a joke about the last Chancellor, who

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announced the demise of the spring Budget. The Treasury has helpfully

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reminded me that I am not the first Chancellor to announce the last

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spring Budget. 24 years ago, Norman Lamont also presented what was

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billed then as the last spring Budget. What they fail to remind me,

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Mr Deputy Speaker, was that ten weeks later he was sacked!

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LAUGHTER So wish me luck today! A Chancellor

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who thinks he can deliver a deadly serious Budget whilst lightening the

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mood with some gags at the expense of, well, almost everyone. What

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could possibly go wrong's when a Chancellor faces a continuing hole

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in the public finances and pressing demands for extra spending, they

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have to take the tricky step of raising taxes. So why not ask the

:06:29.:06:32.

self-employed to pay a little more in National Insurance contributions

:06:33.:06:35.

to bring them into line with the rest of the workforce? All so

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simple, given that they will be benefiting from the new state

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pension. All so simple on a Treasury spreadsheet. Not so simple when you

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general election manifesto said decisively the opposite. The

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alternative to that plan is actually putting up taxes, and I don't want

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to do that. Note National Insurance rise, that is our vow. I read the

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manifesto, as you would expect, since the Budget, to have a look at

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the precise wording and to try and see if there is any way of getting

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out of the pledge, and as far as I can tell there isn't. It didn't take

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long for the sleuths of Westminster to turn up Tory election tweets

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pledging no increase in National Insurance contributions and talk

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about how Labour was bound to do just that. They have quite blatantly

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broken their manifesto pledge. Let's remember, they've got form for this.

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They told us before 2010 that they weren't going to reorganise the NHS,

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and as soon as they got into power by Jorgensen rated the biggest

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reorganisation that the NHS has ever seen. -- they orchestrated. I was

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flabbergasted at today's announcement doing Chris National

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Insurance the self-employed people, I think it is catastrophic. One of

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the traditions of Budget Day briefing by Treasury officials

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outside the Commons chamber shortly after the childless is down. In its

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heyday, a young Ed Balls -- shortly after the Chancellor sits down.

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Today's briefing was a less confident of that as the Chancellor

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's staff struggled to explain how he had not breached a Tory election

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manifesto. They attempted to justify the move by saying that legislation

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implementing the election tax commitment had pledged not to raise

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National Insurance contributions or Nics in the jargon on employees. It

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was silent on the self-employed. The Nics shambles was coined not by me

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but in our office. It is clearly a betrayal of many people who

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supported the Conservative Party, people who are self employed,

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whatever age they might be, people perhaps who after the crash in 2008

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found themselves out of work from an employer and chose to make their own

:08:59.:09:02.

lot and set up their own business. And they are the kind of people who

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the Government should be thankful to. They kept the unemployment

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figures lower than they were going to be. Budget they would not be

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complete without protesters complaining that arms have not been

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met. Any grief this Chancellor experiences with tax rises will

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illustrate his central dilemma. In an uncertain time, he still needs to

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raise revenue. The new cash will help as he injects an extra ?2

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billion into social care. It is extremely welcome and very

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important. I was absolutely astonished by the Chancellor's

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figure of I think 2.5 million more people aged over 75 cents 2010. 2010

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isn't that long ago. I really didn't know the scale of the problem was as

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big as that. Label was unimpressed. The most worrying thing today was

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that the Chancellor proposed a ?2 billion injection into health and

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social care over three years. That isn't going to even touch the sides.

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We have an NHS and social care system in a state of extreme crisis,

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and we have been told that needs between ?8 billion and ?15 billion

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by 2020s. It is when the days are closing in that he will do the heavy

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lifting in his first autumn Budget, by which time he can assess the

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first state of the Brexit talks. Spring may appear a long way off by

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then. And our Political Editor

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Nick Watt is here. Nick, this kind of erupted into

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quite a controversy through the afternoon, this National Insurance,

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this Nics thing. You have detected unease among ministers. Tim Farron

:10:47.:10:50.

was very proud of his joke of the day. Eynon non-2 subtle reference to

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George Osborne's omnishambles Budget and the fuss over pasty tax. I don't

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think we are at that level of a shambles. Nevertheless there is

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concern among ministers. One minister said to me that the

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Chancellor had been too confident in all of those gag that he was making.

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Also this minister said to me, look, the Chancellor has really undermined

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the Tories' traditional reputation as the party of the entrepreneur,

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the party of the self-employed. This minister said to me, we are shooting

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our own people. I was told this idea is going down like a lead balloon on

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the backbenches. There will be blowback, this minister told me. I

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was told the Government really needs to do a better job in admitting that

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it broke its election manifesto, concede and move on, and then there

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might be some space for the Government to explain the merits in

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this change. Thanks, Nick. Daivd Gauke, the Chief Secretary to

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the Treasury, is with me. Do you concede you broke the pledge in the

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manifesto? No, I don't. You run through the history of this. In the

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March Budget before the general election, the then Chancellor George

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Osborne said that we were looking to abolish class two Nics and reform"

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rope Nics. Yes, there was the manifesto which talked about --

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class four Nics. The manifesto talked about not increasing, but you

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have got to remember that by value, 93% of Nics is class one, that is

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employers and employees' Nics, those are the main rates, that is what we

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focus on and legislate. White that is not what you said in the

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manifesto. Do you regret putting it in the manifesto, in the words that

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you did on page three, we will not raise VAT, National Insurance

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contributions or income tax. Or, as you put on page seven, we commit to

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know increases in VAT, National Insurance contributions or income

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tax. I will go on to explain what we have to support this. We focused on

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the main rates, employers and employees... It didn't say main

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rates. We have said contributions. It implied you will not more. It is

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a on page 27, you said it quite a few times. A Conservative government

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will not increase the rates. That time you said rates, previously you

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said insurance. Nowhere did use a class one. You had it in the front,

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the back and the middle, but you did not say, by the way, we may reform

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class two and class four, but the class one rate will not change. We

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were staying at the time that we were not going to abolish. The

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reason why, in a way it is a surprise that there is a controversy

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over this, we took the legislation through, and at that point the

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legislation was absolutely explicit. We were talking about class one, the

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93% of Nics. We did not include class last two or class four. The

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Labour Party said, you have enacted your Nics pax. Mike we are entitled

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to look at what was in the manifesto and not to say, you retrospectively

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changed what you meant in the manifesto. As I say, it was an

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ongoing point, it was well-known. Do you think that the pledge got you

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some boats when you won the election in 2015? Was part of that because

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you made some pledge on no tax rises? I think in terms of a

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commitment that we were not going to be increasing VAT, income tax or

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National Insurance. All contributions. 93% of value is about

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class one. Did it help you win the election? In terms of... It is very

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difficult to say. Look, I think in terms of the fact that we have said

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that we are not a government that is going to be increasing income tax,

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VAT, all of those, most people, when we had this debate, we would talking

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about employees' National Insurance. You said it five times in your

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manifesto. The Labour Party did not have any objection, did anybody in

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Parliament. Will there be a U-turn on this? There is unease among your

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colleagues and backbenchers, a lot of people don't like it. Can you see

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this, as in the omnishambles Budget, it will be reversed? No, and the

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reason why, people do understand the fairness point. At a time, unlike

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what has happened in the past when essentially the benefits that the

:15:29.:15:32.

self-employed receive for their contributions, are largely the same

:15:33.:15:39.

as employed people do. It is wrong that employed people pay a lot more

:15:40.:15:43.

in National Insurance contributions. That gap should be married. --

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narrowed. And I think that fairness margin is one that we obviously need

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to make and we need to go out there, there will be people who need to be

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persuaded. You know, this is not about being anti-self-employed, we

:15:59.:16:02.

have done a lot for the self-employed. For example, the

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self-employed now get the full state pension, the new state pension is

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worth ?1800 per year. That will require saving something like 50

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?50,000 worth to benefit from that. That was not the case in the past.

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We are looking at paternity and maternity.

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Most of the experts you here will say it is a perfectly sensible tax

:16:24.:16:28.

change, but this is about the principle of the manifesto. In many

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respects, your manifesto was criticised at the time for

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unanswered questions about how you were going to deliver the cuts and

:16:37.:16:40.

the balanced budget that you promised. At the time, when you put

:16:41.:16:46.

in the manifesto, we can make this commitment on VAT, income tax and

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national insurance. Our approach is focusing on reducing wasteful

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spending, making savings in welfare and cracking down on tax evasion.

:16:57.:16:59.

That is how you were going to achieve balanced budgets and all

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these things. You have failed to do it in these respects. And people

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said you were going to fail. They said, you haven't got a plan, and

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you didn't have a plan. And what are we meant to do now when your own

:17:15.:17:21.

government on the basis of a manifesto was undeliverable? I don't

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accept that. We talk about tax evasion, and as a Government we have

:17:26.:17:30.

done a lot in terms of... But you are not close to where you wanted to

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be. You were saying in the election campaign that we are five days away

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from the national debt started to come down. It is not coming down, we

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are still 370 days away from that coming down. Runs through the

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three... You promised a balanced budget by 2018. We don't need to go

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back to the manifesto and look at the national insurance pledge to see

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the whole thing was a Charente. What are we meant to do with parties that

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are going to elections saying stuff that sounds good and then not

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delivering? If I may answer, run through the particular elements. I

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accept that there are some challenges we face in the public

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finances, and we discussed last time I was on this programme why the OBR

:18:17.:18:20.

downgraded some of the tax receipt numbers they had the growth and so

:18:21.:18:25.

on. But if we look in terms of what we are getting an tax evasion,

:18:26.:18:31.

actually we are delivering... So you claim that you have delivered on the

:18:32.:18:36.

manifesto? Those elements. When it comes to delivering on welfare

:18:37.:18:43.

reforms, we have found ?12.5 billion on welfare. And when it comes on

:18:44.:18:49.

public spending, Evan, actually in the last parliament we delivered on

:18:50.:18:53.

our public spending. So your manifesto said from 2019 after a

:18:54.:18:57.

surplus has been achieved, spending will grow in line with national

:18:58.:19:03.

income. Can you make that pledge no? Know, the pledges to cut spending in

:19:04.:19:08.

2019 and to do so quite severely. There have been changes in the

:19:09.:19:12.

economic circumstances which you and I discussed in some length when I

:19:13.:19:14.

was here in November after the Autumn Statement, and that has

:19:15.:19:18.

created challenges for the public finances. There are also some

:19:19.:19:23.

longer-term structural issues with tax receipt and getting that money

:19:24.:19:27.

coming in, which comes back to some of the measures in today's budget,

:19:28.:19:32.

which we are seeking to address, so we have got sustainable tax base, so

:19:33.:19:36.

we can afford to pay for the public services that we need. Economists at

:19:37.:19:43.

the time of your tax pledge criticised, hit out at the proposals

:19:44.:19:48.

to ban tax rises as undermining fiscal credibility and leaving

:19:49.:19:50.

little flexibility to deal with shocks. You have just described a

:19:51.:19:55.

load of shocks. And you didn't have the fix ability to deal with them.

:19:56.:20:00.

You now to say that pledges like, we are not going to raise any major tax

:20:01.:20:06.

like you gave in the last election, those are thing of the past, they

:20:07.:20:13.

were a mistake? We will revisit that issue as we get closer to the next

:20:14.:20:17.

general election. What are we meant to do if you say it next time? That

:20:18.:20:20.

is a matter for some time down the line. I think it was pretty clear

:20:21.:20:26.

that when we fought the last general election, our opponents would have

:20:27.:20:29.

been much more willing to raise taxes... If you come back in 2020

:20:30.:20:33.

and say we are not going to raise taxes and national insurance, can we

:20:34.:20:36.

believe you? What are we meant to do? I come back to the point that we

:20:37.:20:41.

legislated for these measures, we complied with that legislation. I

:20:42.:20:48.

come back to the point, last time I was here, you were saying, you are

:20:49.:20:52.

failing to cut spending this year. One of the things that has come

:20:53.:20:56.

through from today's numbers is we are succeeding in reducing spending

:20:57.:21:00.

this year, and if we can continue at that rate, we will meet our spending

:21:01.:21:04.

plans in this parliament in the same way that we met them in the last

:21:05.:21:07.

Parliament. Thank you very much indeed.

:21:08.:21:11.

Well, let's see how the Budget is going down outside Westminster.

:21:12.:21:13.

Just some background here: One reason for the buoyant economy over

:21:14.:21:16.

the last year is that households have carried on spending,

:21:17.:21:18.

notwithstanding the warnings of economists them about how bad

:21:19.:21:21.

So, are people confident about their own finances?

:21:22.:21:24.

And is the Chancellor seen as a safe pair of hand?

:21:25.:21:29.

A thriving suburban town just outside the

:21:30.:21:40.

London commuter belt, edged with rolling countryside.

:21:41.:21:43.

59% of whom voted for Brexit last year.

:21:44.:21:49.

This is the street Philip Hammond grew up on, and we

:21:50.:21:56.

are here to find out if those locally think their boy has done

:21:57.:21:59.

good with his first, and last, spring Budget.

:22:00.:22:01.

And whether today's announcements will help make their

:22:02.:22:03.

Christine Bennett, a teaching assistant and local school

:22:04.:22:07.

She used to live next door to the man who now holds the red

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We walked to school together, we walked home together.

:22:15.:22:20.

Yes, it was fun, just a fun childhood.

:22:21.:22:22.

I'd like, well, I said education, a bit more money into

:22:23.:22:31.

Today, he has said that he will put doctors, GPs,

:22:32.:22:40.

into the A departments, and that would help, I suppose.

:22:41.:22:44.

But that's not going to go in for a year.

:22:45.:22:48.

We're short of GPs anyway, so I don't know

:22:49.:22:50.

There's more confidence in the Chancellor a few doors down.

:22:51.:22:56.

Thinks Mr Hammond is the right man to steer the UK economy.

:22:57.:23:05.

I know they call him, is it Spreadsheet

:23:06.:23:08.

Which is not a bad idea for a Chancellor.

:23:09.:23:17.

You actually want somebody who's good with numbers.

:23:18.:23:23.

He's done a sensible Budget to start with,

:23:24.:23:25.

with room to manoeuvre if

:23:26.:23:26.

things keep going as they do to give tax cuts in the future.

:23:27.:23:29.

More money for the NHS, that kind of thing, I'm

:23:30.:23:31.

But he has to have his war chest for the Brexit,

:23:32.:23:36.

and then who knows, we might get more money from that if we don't

:23:37.:23:39.

I think there was a lot of pessimism after Brexit.

:23:40.:23:44.

And I think there were a lot of things said that were

:23:45.:23:47.

And actually as a country we've shown that it's not

:23:48.:23:54.

I know we haven't reached the deal and we

:23:55.:23:58.

haven't arrived there, but we're going into it in a very positive

:23:59.:24:01.

way rather than, oh, you know, we're leaving, everything is going

:24:02.:24:04.

No, it hasn't and it won't, because we're a great country.

:24:05.:24:10.

Just a few streets away, Lynn Mitchell, a publican for 12

:24:11.:24:13.

of a strain to manage the rising cost of being in business.

:24:14.:24:24.

So we haven't really personally got any benefits

:24:25.:24:33.

I can't see that he's done anything for us as business people.

:24:34.:24:41.

You don't think it's a fair Budget for businesses?

:24:42.:24:46.

And it won't just be me, it'll be everybody that

:24:47.:24:51.

Because, you know, there's a lot of small businesses

:24:52.:25:01.

out there that are trying to make a living, and all the time you try

:25:02.:25:04.

to make a living, somebody is having a little dig at you,.

:25:05.:25:07.

Yes, we work hard, everybody who's self-employed that I know,

:25:08.:25:11.

they all work hard to make an average living.

:25:12.:25:14.

And that is what it is, an average living.

:25:15.:25:20.

And then the first time somebody's, you know,

:25:21.:25:21.

business goes down and they say, right, they are on the goal.

:25:22.:25:24.

But sometimes you're better off on the

:25:25.:25:26.

Yes, you get people, they are on the dole

:25:27.:25:33.

and they turn round and they get this benefit, that benefit, they are

:25:34.:25:36.

You ask many self-employed people how many times

:25:37.:25:40.

the year they go on holiday, not many.

:25:41.:25:43.

While there is uncertainty ahead of Brexit, stability is key.

:25:44.:25:48.

There are promises of growth, but what Philip Hammond's former

:25:49.:25:51.

neighbours are wondering is how soon will they feel it.

:25:52.:26:01.

Let's look at some of the other things in the Budget -

:26:02.:26:08.

Our Policy Editor Chris Cook is with me.

:26:09.:26:13.

We haven't talked much about social care. It feels like we have been

:26:14.:26:19.

going round in circles on this front while. What we have today is ?1

:26:20.:26:25.

billion bailout. We have efforts to reorganise the local NHS and local

:26:26.:26:33.

governments, but fundamentally, you can do jazzy things with social care

:26:34.:26:36.

in the medium term, and the Government is coming forward with

:26:37.:26:39.

proposals for what it is going to do soon enough on this topic, and we

:26:40.:26:46.

have had dozens of ideas on how to fund social care coming out over

:26:47.:26:50.

decades. But it is actually quite a simple question in the short term.

:26:51.:26:54.

In the short term it is a question of, you have this many old people,

:26:55.:26:57.

they need this much care, and who is going to pay for it? It is too late

:26:58.:27:03.

to ask them to save for it. Absolutely, you could in 20 years

:27:04.:27:08.

ask people to put money away like a pension, but you can't do that now.

:27:09.:27:11.

So another review at another bit of money. Another area that feels quite

:27:12.:27:17.

radical, further education, vocational qualifications.

:27:18.:27:22.

Vocational education is quite different social care. It is

:27:23.:27:26.

actually very complicated as to why we are not good at it as a country,

:27:27.:27:32.

big cultural and social reasons as to how we regulate the labour

:27:33.:27:36.

market, but Philip Hammond announced today basically half ?1 billion of

:27:37.:27:45.

funding for 16 to 18-year-olds to do technical qualifications. We

:27:46.:27:50.

announce them on a 10-year lease I call and get rid of them, so this is

:27:51.:27:54.

I have to say, I already feel like I have heard some of this before, but

:27:55.:27:58.

there is money there. This is also coming as the Government is putting

:27:59.:28:04.

through 3 million people into an apprenticeship over this Parliament,

:28:05.:28:07.

and that is going to be quite radical. There is a big tax rise on

:28:08.:28:11.

business coming in next month, the apprenticeship levy. We are going to

:28:12.:28:17.

have a lot more emphasis on technical education in the next few

:28:18.:28:21.

years. Businesses who have never had apprentices before are basically

:28:22.:28:24.

going to have to pay that tax or lose it if they don't take on an

:28:25.:28:29.

apprentice, so big things ahead for further education, and whether it

:28:30.:28:33.

works or not, I am sceptical. Chris, thank you very much. The budget gags

:28:34.:28:38.

were mostly at the expense of labour, and it wasn't a good day for

:28:39.:28:41.

them as it came after Prime Minister's Questions.

:28:42.:28:49.

But there is a pattern in politics recently,

:28:50.:28:53.

in which the Conservatives mock Labour for wanting to borrow too

:28:54.:28:56.

much, and then in power implement something closer to the Labour plan

:28:57.:28:59.

And right now Labour has a fiscal credibility rule that would avoid

:29:00.:29:03.

most of the painful cuts to come over the next few years.

:29:04.:29:08.

I'm joined by Peter Dowd, the Shadow Secretary to the Treasury.

:29:09.:29:08.

The Labour equivalent of David Gordon. -- David Gauke. Your fiscal

:29:09.:29:16.

plan, you would still aim at a balanced, not a balanced budget but

:29:17.:29:20.

a balanced everyday spending budget? Yes, we would. At its simplest, yes.

:29:21.:29:26.

The golden rule, quite clear, that we would spend money, day-to-day

:29:27.:29:31.

money, on day-to-day money, we wouldn't be borrowing. And I think

:29:32.:29:35.

if you look at the figures today, it means you would probably have to

:29:36.:29:40.

find something like up to ?10 billion, much less than the

:29:41.:29:43.

Conservatives have to find that their plans, because they are more

:29:44.:29:48.

ambitious, so if you have to find ?10 billion of extra spending cuts

:29:49.:29:52.

or tax rises, what is Labour's big idea for making

:29:53.:29:58.

The Government have made choices in relation to tax cuts, Corporation

:29:59.:30:07.

Tax, bankers levy, in heritage stacks, corporate gains tax. That is

:30:08.:30:10.

a choice we have made in that. We would not have made the same

:30:11.:30:17.

choices. You put that back? They have made choices, and when we get

:30:18.:30:21.

into a situation, we will make that decision. That is an example of

:30:22.:30:27.

choices. You have got to find by ?8 billion to ?10 billion. That is one

:30:28.:30:32.

of the ways of doing it. You want more spending from where we are now?

:30:33.:30:37.

The other thing, it has to sort of, you know, the reset button in this

:30:38.:30:41.

one is the whole question of productivity. Productivity in this

:30:42.:30:46.

country, we are 36% less productive than the Germans, 20% less

:30:47.:30:51.

productive than the French, nine 9% less productive than the Italians. I

:30:52.:30:56.

have got productivity next on my list. You are not going to change

:30:57.:31:01.

productivity in five years, that is a 30 year plan. Of course, but at

:31:02.:31:05.

the end of the day, the Government have said they are going to get rid

:31:06.:31:08.

of the deficit in five years, then it went to ten years, now it has

:31:09.:31:13.

gone to 15 years. But what are you going to do? You are being very

:31:14.:31:16.

clever here about not saying what you are going to do. With the

:31:17.:31:27.

greatest respect, the Government had 15, they have had 15 years to get

:31:28.:31:30.

rid of the deficit, for you to push us into, what are we going to do in

:31:31.:31:33.

five years? It is your fiscal credibility plan, not mine. You said

:31:34.:31:36.

you will balance the books in five years' time. I am not going to lay

:31:37.:31:39.

it out in advance. They are examples that I have given you that Labour

:31:40.:31:46.

would get into. OK, what is your productivity plan? The longer term

:31:47.:31:50.

thing about getting the British nation being more productive.

:31:51.:31:54.

Interestingly enough, the Government has a national investment plan of

:31:55.:31:59.

?480 billion, almost ?500 billion. The point that you made before is

:32:00.:32:03.

the opposite. When the Tories coming with a plan that is ?480 billion,

:32:04.:32:09.

half of it paid for by the private sector, Labour come up with the same

:32:10.:32:12.

plan and we get told that we are being irresponsible, how are we

:32:13.:32:19.

going to pay for it? We would be doing in a way what the Tories are

:32:20.:32:22.

doing, we will be investing. Right, Nics has been the controversial

:32:23.:32:24.

issue of the day, National Insurance contributions going up for the

:32:25.:32:28.

self-employed. It is progressive, isn't it? It is taking from the

:32:29.:32:33.

lesser of, giving to them and taking from the rich. It may well be, but

:32:34.:32:39.

there is sort of a contract here with the taxpayer. They said they

:32:40.:32:43.

weren't going to raise National Insurance contributions, and they

:32:44.:32:46.

broke the contract. The issue at the end of the day, there is a

:32:47.:32:50.

difference between unilaterally breaking the contract and deciding

:32:51.:32:53.

through a review process where you engage with people how that might

:32:54.:32:56.

alter and change. The other thing is, it seems to me that they are

:32:57.:33:05.

taxing people on low paid and not necessarily taxing the companies

:33:06.:33:07.

themselves. I want to finish with a word about your reader. In the

:33:08.:33:09.

Commons today, it did feel quite a lot of the time that ridicule was

:33:10.:33:15.

kind of the mood of the occasion -- your leader. I just wonder what it

:33:16.:33:19.

felt like to use it in there, with the other party laughing at your

:33:20.:33:24.

party -- to you sitting there. In a sense laughing at the party because

:33:25.:33:27.

it doesn't feel credible as an opposition. We have have a perfectly

:33:28.:33:31.

sensible conversation. What outrages me is that they are all laughing

:33:32.:33:36.

today, and that the same time they are increasing factors on people,

:33:37.:33:40.

they are not sorting out the social care problem -- increasing taxes.

:33:41.:33:44.

They aren't sorting out the skills problem or the NHS, and they can sit

:33:45.:33:48.

there and laugh when that sort of situation faces the country, it's

:33:49.:33:51.

absolutely disgraceful point Peter Dowd, thank you.

:33:52.:33:56.

Let's have a dissection of the day with a large panel who are each

:33:57.:34:01.

going to give us one paperweight from the Budget.

:34:02.:34:02.

I'm with Rupert Harrison who is Portfolio Manager

:34:03.:34:08.

of Multi-Asset Strategies at Black Rock Investments,

:34:09.:34:17.

Marianna Mazucatto Professor in the Economics of Innovation

:34:18.:34:19.

The Financial Times' Editor Lionel Barber,

:34:20.:34:25.

co-founder of a Eurosceptic campaign group. Good evening, all. OK, you

:34:26.:34:33.

have one takeaway each. Rupert, let's start with you was. If I'm

:34:34.:34:40.

allowed to, I think Philip Hammond continued to get it spot-on, he is

:34:41.:34:46.

in an incredibly difficult position. Your takeaway, come on! When it

:34:47.:34:51.

comes to caution on public finances and investment in the long term, he

:34:52.:34:55.

is making the right judgment. A lot of the focus on the front pages is

:34:56.:34:58.

going to be this National Insurance rise, that is the risk he has taken.

:34:59.:35:03.

I think it is a sensible change. You can defend the fact that the world

:35:04.:35:07.

is changing, more and more people are choosing to be self-employed,

:35:08.:35:10.

the margin between employment and self-employment is much less

:35:11.:35:14.

well-defined than it used to be so it doesn't make sense to have

:35:15.:35:18.

different rates. He has made it progressive, so I think you can

:35:19.:35:22.

defend it. The one thing we can definitely take away, it is unlikely

:35:23.:35:25.

we are facing a snap election. If you are planning a snap election,

:35:26.:35:30.

you don't tend to do sensible but difficult tax changes. Is there

:35:31.:35:34.

anybody here who wants to say, forgetting the manifesto breach, say

:35:35.:35:37.

that this is the wrong thing to do? Or is it the right thing to do,

:35:38.:35:45.

Marina? It depends how you do it. Companies pay 13.8%, you know, for

:35:46.:35:50.

National Insurance for non-self-employed workers and the

:35:51.:35:52.

self-employed workers would have been one way to do that as opposed

:35:53.:35:56.

to hitting the workers themselves. And also, you know, we have the

:35:57.:36:00.

lowest rate of capital gains, corporate income tax, when there is

:36:01.:36:04.

no evidence whatsoever that those rates affect business investment,

:36:05.:36:09.

they affect profits. Where is the FT on the National Insurance change? We

:36:10.:36:12.

have come out in the economic principle of raising the Nic charge

:36:13.:36:19.

because we do think, we buy the fairness argument. We also think, if

:36:20.:36:23.

you look at the way that the labour market is changing, you can

:36:24.:36:27.

understand it. But the politics is a different question. My one

:36:28.:36:31.

takeaway... I haven't asked you your takeaway, I'm going to go to Ruth

:36:32.:36:37.

first! We will get to all of you. My takeaway, basically the overall

:36:38.:36:39.

Budget was right in its fiscal strategy. It was not a giveaway

:36:40.:36:43.

Budget, it was a neutral Budget. I think to be cautious at this moment

:36:44.:36:49.

is correct. My real takeaway is yet again these forecasting bodies have

:36:50.:36:53.

got it wrong. I remember, I actually wrote something for the Financial

:36:54.:36:57.

Times after the Autumn Statement saying that forecasters have been

:36:58.:37:00.

too pessimistic about the reaction of the economy to the Brexit vote.

:37:01.:37:05.

And so far, I'm right, but I maybe wrong further out. What is

:37:06.:37:10.

interesting is that the OBR has actually obviously upgraded Isgrove

:37:11.:37:15.

for 2017 from 1.4% to 2%. And they have downgraded it for the rest of

:37:16.:37:19.

the period. That is perfectly valid. You know, as the recovery is getting

:37:20.:37:24.

a little bit long in the truth, we have had this recovery since 2009,

:37:25.:37:28.

unless there is a real spurt in productivity growth think the

:37:29.:37:38.

economy will down, nothing to do with Brexit. The short-term forecast

:37:39.:37:40.

bounces up and down. The medium-term forecast, we are going to be where

:37:41.:37:43.

we were going to be, isn't that right? The forecast is steady as she

:37:44.:37:46.

goes until 2020. Sticking to the judgment that there is a longer term

:37:47.:37:49.

impact of Brexit, that is still there in the numbers, we might

:37:50.:37:53.

disagree but the OBR sticking to that judgment. They have had to make

:37:54.:37:56.

random assumptions about all of that. Marina, we have mentioned

:37:57.:38:01.

Brexit as a takeaway. What is your takeaway? Well, first of all we

:38:02.:38:05.

should be caring about the sources of growth. Whether growth goes up or

:38:06.:38:09.

down by half a percentage point is less important than what is actually

:38:10.:38:13.

driving it, and what continues to drive growth in the UK is

:38:14.:38:16.

consumption. And that consumption, as your programme showed before,

:38:17.:38:22.

what, you know, how the spending is being financed is through credit

:38:23.:38:25.

cards, personal debt. So the ratio between personal, not public,

:38:26.:38:30.

everybody talks about public debt, but the ratio between personal,

:38:31.:38:34.

private debt and disposable income is back to record levels before the

:38:35.:38:38.

crisis. The big question with Brexit is will it help or hurt that was

:38:39.:38:42.

Mike and the investment, the investment that will fall by from

:38:43.:38:45.

the private sector, when Brexit happens, it hasn't happened, by the

:38:46.:38:49.

way, but when it happens, the fall in public investment that has been

:38:50.:38:54.

coming from the European Union to the figure of between eight and 9

:38:55.:38:59.

billion between 2007 to 2014 just coming from the research money that

:39:00.:39:03.

now we are starting to gradually increase, you know, we need to

:39:04.:39:08.

figure that out. The investment is your main thing, isn't it? The

:39:09.:39:13.

recovery of the economy... The sources of growth are what matters,

:39:14.:39:17.

it is not investment driven. Business is not investing enough,

:39:18.:39:20.

and they will invest less after Brexit. We don't even hear the word

:39:21.:39:28.

Brexit. You don't know that. Let me have one more bike on the

:39:29.:39:30.

self-employed. Just say, the problem is that the Government hasn't really

:39:31.:39:35.

reconciled, they haven't given a good account of how it is that they

:39:36.:39:40.

are praising in effect the great British drops revolution, where you

:39:41.:39:44.

have got 40% or more of the new jobs created since the global financial

:39:45.:39:48.

crisis being self-employed jobs. If we are going to move, we are

:39:49.:39:52.

threatening to talk about turning Britain into Singapore on the

:39:53.:39:55.

Thames, it doesn't quite match. That is what we would like to see. Big

:39:56.:40:00.

takeaway... I want you to respond to this one about investment. I will

:40:01.:40:04.

let you have yours. I don't want to rush through. Do you agree that

:40:05.:40:09.

investment is a problem, it is a Brexit effect was grown there are

:40:10.:40:12.

other countries apart from European countries that are coming to Britain

:40:13.:40:18.

and creating jobs, not least Japan, China and others. But, where Marina

:40:19.:40:21.

is right is that there are some signs that, yes Mike household debt

:40:22.:40:26.

is rising quite quickly, especially over the last 12 months. Whereas

:40:27.:40:30.

business investment by contrast is sort of slowing down. And that's a

:40:31.:40:36.

worry. That is the pessimist's Tate. If you look at unsecured consumer...

:40:37.:40:43.

I am an optimist. There is data out there, you can look at it. You know

:40:44.:40:49.

what, I look at it! And I'm going to tell you some data. On the unsecured

:40:50.:40:54.

consumer credit is not back at the levels of 2008 yet. It is certainly

:40:55.:40:58.

growing quite quickly, 10% year on year, and I accept the fact that

:40:59.:41:01.

that is partly driving consumption growth, which is perhaps not all, it

:41:02.:41:05.

is not the Holst Ory but it is part of the story. A lot of that is

:41:06.:41:09.

because of what is happening in the car industry. If you look at total

:41:10.:41:13.

consumer that including all of the secured debt, I don't regard that...

:41:14.:41:19.

This is quite important, because we have changed the way that we buy

:41:20.:41:23.

cars and we read them now instead of buying them, it counts as debt -- we

:41:24.:41:29.

went them now. The assets look in good shape. This is unsustainable at

:41:30.:41:33.

consumption, it can't go on forever but it can go on for quite a long

:41:34.:41:39.

time. When you have real incomes that have not been increasing, you

:41:40.:41:43.

have to take out that, just in order to stay put -- take out debt. Lionel

:41:44.:41:49.

has been desperate to get his takeaway, what is it? The wisdom

:41:50.:41:56.

that Chancellor Hammond showed last year in ditching George Osborne's

:41:57.:42:00.

this goal frame, which was very smart politics, boxing the Labour

:42:01.:42:05.

Party into the position where they look, you know, show your fiscal

:42:06.:42:09.

responsibility, but not good economics, it didn't make any real

:42:10.:42:13.

sense to aim for a surplus at the end of parliament. Now, having

:42:14.:42:17.

ditched that coming he's got some room. So it is good economics, much

:42:18.:42:23.

better economics, and that's why we are in a better position and why

:42:24.:42:27.

will have ?26 billion by the end of the parliament as an insurance

:42:28.:42:31.

policy. That is based on a lot of state spending cuts. Rupert there

:42:32.:42:40.

with Lord Osborne, making those plans. Did you agree it was the

:42:41.:42:43.

right thing? I think it was the right thing for full apparent to do.

:42:44.:42:46.

I think it is the right thing for a country like the UK because we have

:42:47.:42:49.

high levels of debt and a large banking system and we are dependent

:42:50.:42:51.

on inflows of capital to sustain the way that we live, and therefore it

:42:52.:42:55.

is complacent to say that we can just afford to get that debt down

:42:56.:42:58.

very slowly. In normal times, you would want to be doing that a bit

:42:59.:43:02.

more quickly, that is what running a surplus means. Right now, we are

:43:03.:43:11.

facing a very uncertain time in the next two years. The lip am and was

:43:12.:43:14.

right to push that we. We are sailing around with no physical

:43:15.:43:16.

view, target or anchor at all. What should it be? Labour's policy... He

:43:17.:43:20.

wants to achieve a surplus as soon as is, that is what everybody seems

:43:21.:43:24.

to be contending with. He has gotten anchor, but it is not very tough. He

:43:25.:43:29.

is talking about cyclically-adjusted and borrowing, 2% of GDP by 2020, I

:43:30.:43:33.

have been pressing that all night. That is a very loose target. And of

:43:34.:43:37.

course, because the OBR is forecasting it will only be 0.9% of

:43:38.:43:44.

GDP, it gives him... None of this actually matters, there is no

:43:45.:43:49.

empirical evidence. The debt to GDP ratio in the UK is not abnormally

:43:50.:43:53.

high compared to advanced countries, what matters is what you are

:43:54.:43:57.

investing in. The US after the prices in 2009 had a 10% deficit but

:43:58.:44:02.

invested that in areas that today is producing growth. The difference is

:44:03.:44:06.

what you are doing. We can grow at the same rate as the US will stop we

:44:07.:44:08.

need to leave it there. We have got to go.

:44:09.:44:08.

Banks, all, -- thank you, all. That's it for tonight,

:44:09.:44:15.

on the day of a Budget speech heavy on gags and light on the traditional

:44:16.:44:18.

rabbits out of hats. And it baffles millions,

:44:19.:44:20.

this, you know. When you get the rabbit,

:44:21.:44:30.

it does, anyway. hello. Springlike weather and

:44:31.:45:07.

sunshine more widely spread across the UK tomorrow than today. There

:45:08.:45:08.

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