:00:00. > :00:00.there will be a spring statement instead and viewers in Scotland will
:00:00. > :00:00.leave us now for more on the impact of the Autumn Statement north of the
:00:00. > :00:14.border. Good afternoon and welcome
:00:15. > :00:16.to a special edition The Chancellor Philip Hammond says
:00:17. > :00:20.the Scottish Government is to receive an extra ?800 million
:00:21. > :00:24.per year as a result of increased infrastructure spending
:00:25. > :00:38.in the rest of the UK. We resolve today to confront those
:00:39. > :00:42.challenges head on, to prepare our country to seize the opportunities
:00:43. > :00:45.ahead and in doing so, to build an economy that works for everyone.
:00:46. > :00:48.Here at Westminster, we'll be getting political reaction
:00:49. > :00:50.to the Chancellor's handiwork and asking, are the headlines
:00:51. > :00:56.of today the real story behind the Autumn Statement?
:00:57. > :00:58.In his Autumn Statement, Mr Hammond said the UK's deficit
:00:59. > :01:02.would be cleared "as early as possible" after 2020.
:01:03. > :01:05.He pledged new infrastructure spending and billions of pounds
:01:06. > :01:08.And there's help for people on low and middle incomes.
:01:09. > :01:11.We'll look in a moment at how he might do that.
:01:12. > :01:14.To help us make sense of it all, I'll be speaking
:01:15. > :01:15.to the economic commentator Alf Young
:01:16. > :01:17.and our Business correspondent David Henderson.
:01:18. > :01:19.But, first, let's hear what that boost to infrastructure spending
:01:20. > :01:31.The major increase in infrastructure spending I have announced today will
:01:32. > :01:37.represent a significant increase in funding through the Barnett formula
:01:38. > :01:41.of over ?250 million to the Northern Ireland Executive, ?400 million to
:01:42. > :01:51.the Welsh Government and ?800 million to the Scottish Government.
:01:52. > :01:55.Let's have a chat to Alf Young and David Henderson first of all, give
:01:56. > :02:00.us the big picture about what this all means. I think today's statement
:02:01. > :02:03.was dominated by Brexit, that decision in June to leave the
:02:04. > :02:11.European Union, it has had huge impact as a result on the official
:02:12. > :02:17.figures from the Independent Office for Budget Responsibility, about the
:02:18. > :02:21.state of the economy, that sets out predicted growth rates, that in turn
:02:22. > :02:24.dictates room for manoeuvre that the Chancellor has today and the
:02:25. > :02:30.decisions he is able to make. Let's start with the big picture, the key
:02:31. > :02:34.one is growth rate. Here is the OBR's prediction for growth rate
:02:35. > :02:44.over the next couple of years. 2.1% this year, falling down from 2.2%
:02:45. > :02:47.down to 1.4%, so a sharp fall on where things might have been had
:02:48. > :02:53.there not been a Brexit vote and only picking up back to somewhere
:02:54. > :02:57.close to where growth would have been by 2020. Now, the OBR are
:02:58. > :03:02.saying that because we don't know the future shape of the Brexit deal
:03:03. > :03:08.in any sort of detail, it could be hard Brexit, it could be a soft
:03:09. > :03:12.impact, those figures are going to have to be looked at and they may be
:03:13. > :03:17.different, they may change as time goes on, so those are the growth
:03:18. > :03:26.figures. "Get Out" was the word for it. We will take them for -- with a
:03:27. > :03:33.pinch of salt. As a result of that, the Government is playing along
:03:34. > :03:36.game. Remember, the plan was to return the UK Government's project
:03:37. > :03:42.to surplus, in other words to raise more money than they spend. No plan
:03:43. > :03:45.to do that in this Parliament. There is a hope that they can do it over
:03:46. > :03:51.the course of the next parliament, but the end result of that is debt
:03:52. > :03:58.will rise, it will rise by ?155 billion over five years. We also
:03:59. > :04:03.heard there, you saw the clip from Philip Hammond, about a mild
:04:04. > :04:10.stimulus, spend on infrastructure across the UK, the impact through
:04:11. > :04:14.the Barnett in Scotland will be ?800 million. That is spread over the
:04:15. > :04:22.period between now and 2021, so pretty mild stimulus package but
:04:23. > :04:28.better than nothing. OK. Alf Young, what do you make of it? Well, the
:04:29. > :04:34.decline in the growth forecast for the 2017 and 2018 is going to clog
:04:35. > :04:38.quite a lot of activity out of the system. There are problems on the
:04:39. > :04:41.tax front in terms of revenues coming in and some of the debt
:04:42. > :04:46.figures that are emerging as a consequence of that, and as a
:04:47. > :04:52.consequence of Philip Hammond's 23 billion programme over the whole of
:04:53. > :04:56.the UK... Yes, one figure we should mention is the national debt as a
:04:57. > :05:03.percentage of GDP is going to go to over 90%. And another way of looking
:05:04. > :05:08.at it is net debt, by the end of this Parliament, could look like ?2
:05:09. > :05:14.trillion. When the Tories came to power in 2010, it was under 1
:05:15. > :05:17.trillion. Going to two at the end of the decade against a backdrop of
:05:18. > :05:22.trying to negotiate this excerpt from the EU, possibly from the
:05:23. > :05:27.single market. It is difficult times and I think the faces of ministers
:05:28. > :05:31.who were trying to explain afterwards, I have seen some of that
:05:32. > :05:39.already, it just looked a bit gloomy and grim. Why? What do you think the
:05:40. > :05:43.plan is here? ?23 billion over five years, yes, fine, it is spending on
:05:44. > :05:48.infrastructure. I don't think even they would claim that is some sort
:05:49. > :05:52.of big fiscal stimulus and in Scotland, 800 million over five
:05:53. > :05:58.years, fine, build a new road. It is pretty trivial. I get the impression
:05:59. > :06:02.that what Philip Hammond is doing is not having a big fiscal stimulus
:06:03. > :06:07.because he is really worried that in a couple of years' time, he is going
:06:08. > :06:12.to need it then. Yes, because if he doesn't now on a big scale, it is
:06:13. > :06:19.not there to do later on if it is needed in terms of the X it from the
:06:20. > :06:24.EU. But it is billed as this great stimulus for productivity and he
:06:25. > :06:29.pointed out we are 30 points behind US levels of productivity, we are
:06:30. > :06:33.even eight points behind Italy and whether any of this is actually
:06:34. > :06:39.going to get the average British worker, who is getting minor
:06:40. > :06:44.tinkering here and there with their tax rates, to work harder...?
:06:45. > :06:51.Productivity, like budget deficit, it is hard to target directly. You
:06:52. > :06:56.might build new roads, it might not be the British workers open up. We
:06:57. > :06:59.have tried for decades to increase productivity in the UK and
:07:00. > :07:05.singularly failed to do it. We know how to do it against the backdrop of
:07:06. > :07:09.leaving Europe, against mounting, mounting debt at a Government level.
:07:10. > :07:15.It is not an easy Asko, any of it. And on that point, on productivity,
:07:16. > :07:18.if you are wanting to solve the productivity problem, you have to
:07:19. > :07:24.understand what causes it in the first place and I think Economist
:07:25. > :07:30.steelworker -- struggle to work out. While productivity has collapsed
:07:31. > :07:37.since the banking collapse. So you have seen the measures today to
:07:38. > :07:40.avoid tax avoidance by big companies, little bit of a reward
:07:41. > :07:47.for those who work hard, a little rise in the National Living Wage.
:07:48. > :08:00.And great news. The link. -- for sterling. Not sterling, Stirling.
:08:01. > :08:05.They want a city deal to mirror that of other cities. There's also talk
:08:06. > :08:13.of initiating discussions with Perth and Dundee to get a Tayside deal put
:08:14. > :08:18.in place to try to boost productivity and boost investment
:08:19. > :08:22.there as well. And the ?800 million, we should stress, it is over five
:08:23. > :08:28.years and ?200 million in the context of the Scottish economy is
:08:29. > :08:32.pretty trivial. Well, it is and it is a steady as she goes budget,
:08:33. > :08:36.there is no doubt about that. The problem for Philip Hammond is he is
:08:37. > :08:40.looking ahead to Brexit of negotiations. He needs to keep money
:08:41. > :08:45.in the kitty in case he needs it next year. He needs to know what
:08:46. > :08:49.type of stimulus he needs to present before he makes a commitment. The
:08:50. > :08:52.difficulty for him is we don't know what Brexit really mean jet, we
:08:53. > :08:58.don't know what kind of Brexit there is going to be. -- means yet. It is
:08:59. > :09:02.like patching up an injury, you have to know what the injury is before
:09:03. > :09:06.you patch them up and what kind of plastic to apply and if you don't,
:09:07. > :09:10.you keep your plasters in your first aid kit and who you really need
:09:11. > :09:14.them. That was a metaphor you managed to stretch for many
:09:15. > :09:18.sentences. Don't go away, we will be back. Let's get the reaction from
:09:19. > :09:26.Holyrood. Political editor Brian Taylor joins us. What do they think
:09:27. > :09:33.of it there? In terms of the 800 million, it is over four years,
:09:34. > :09:37.16-17 up to 20-21, and the current year is nearly done, and then the
:09:38. > :09:41.remainder over the period. With regard to the Brexit timetable, I
:09:42. > :09:44.think the calculation by most is that it can take two to three years
:09:45. > :09:48.for capital investment to have a productive impact on the economy and
:09:49. > :09:53.employment, so he is doing it now perhaps with an eye to that period
:09:54. > :09:56.around 2019, where it is presumed that Brexit will actually have
:09:57. > :10:01.happened because at this stage, all we have is the impact of the vote.
:10:02. > :10:05.In terms of the commentary upon the Chancellor's performance generally,
:10:06. > :10:09.he isn't going to rival Michael McIntyre, he won't get a role in
:10:10. > :10:14.panto any time soon, but he did try a few funnies and most of them were
:10:15. > :10:18.effective but most of it was deadpan and self-contained. Why? Because the
:10:19. > :10:22.figures he was giving right at the top, right up front, are pretty
:10:23. > :10:28.grim. Higher borrowing, higher debt and above all, that figure that
:10:29. > :10:32.album drew attention to, potential growth, to put 4% lower than it
:10:33. > :10:39.would have been as a direct consequence of Brexit -- 2.4%. He
:10:40. > :10:43.was telling it straight and have an trying to offer the remedy of
:10:44. > :10:47.enhanced investment in housing and productivity. I am confused about
:10:48. > :10:50.what you think the political reaction will be. Although the
:10:51. > :10:56.figures as you say are grim, and when you read the OBR report, it
:10:57. > :11:02.really is grim, but he presented it in a very upbeat way. Are the
:11:03. > :11:07.Brexiteers going to say this is an attempted countercoup by someone who
:11:08. > :11:11.voted remain, or will they swallow his rhetoric rather than the
:11:12. > :11:15.underlying reality? They will have to take it, because they haven't put
:11:16. > :11:19.forward an alternative prospectus to that of the Chancellor, they have
:11:20. > :11:23.not put forward any ideas whatsoever, frankly, as to how
:11:24. > :11:27.Brexit will be handled in practice. I was talking to somebody from the
:11:28. > :11:31.Conservative team the other day who was saying, OK, which I did Alex
:11:32. > :11:33.Salmond over his white paper in advance of the independence
:11:34. > :11:39.referendum in 2014 but at least he put forward a prospectus. Those who
:11:40. > :11:42.were advocating a departure from the European Union basted upon that
:11:43. > :11:47.simple offer, rather than a prospectus explaining how that might
:11:48. > :11:51.happen -- based it. The Chancellor is trying to say there is an
:11:52. > :11:55.underlying strength to the UK economy, there is a long-running
:11:56. > :12:00.problem with productivity and there is, perhaps, he hopes, a temporary
:12:01. > :12:04.challenge coming from Brexit. He is praising the first bit and trying to
:12:05. > :12:09.tackle the other two and he is tackling them in a way which deals
:12:10. > :12:12.with the long-term problem of productivity and, he hopes, the
:12:13. > :12:17.short-term problem of the hoped for a need for a capital stimulus. I
:12:18. > :12:21.don't think he can come under attack from Brexiteer is for dealing with
:12:22. > :12:25.the facts that are presented to him, not from the Treasury but from the
:12:26. > :12:27.OBR taking an independent outlook. Brian, thank you.
:12:28. > :12:41.David Porter has some sunshine and Ian Murray. You know it is a busy
:12:42. > :12:45.day at Westminster when it is a busy College Green and it is very busy
:12:46. > :12:47.today and I am pleased to say it Murray, Scottish Labour's
:12:48. > :12:56.Westminster spokesman has found his way to us.
:12:57. > :13:06.What is in this for Scotland? This is the Tory Brexit bed that everyone
:13:07. > :13:10.has to lie in, growth is down, deficit is up, dead is up, and
:13:11. > :13:13.although he has put some slight infrastructure spending into the
:13:14. > :13:16.economy, it is a drop in the ocean to what is required. I am glad he
:13:17. > :13:21.has come round to some infrastructure spending, we have
:13:22. > :13:24.been calling for that since 2010, to boost infrastructure and employment,
:13:25. > :13:29.but it is too little, too late, and he has failed again on everything
:13:30. > :13:34.they set back in March at the Budget, and the chance that needs to
:13:35. > :13:38.find a way to manage it rather than austerity. May it not be eight canny
:13:39. > :13:45.political move, keeping something in the locker in case it gets worse,
:13:46. > :13:48.and that the next Budget, if things are not looking good, I can put
:13:49. > :13:54.those in? Does it not make political sense to say, I will keep a little
:13:55. > :13:59.bit in the back? It me, but this is a consequence of Brexit. Everyone
:14:00. > :14:02.who said, let's vote to leave the European Union, Britain will be at
:14:03. > :14:08.the height of the G20, that is falling apart, because he is about
:14:09. > :14:13.to borrow ?122 billion more than was forecast just a few months ago. The
:14:14. > :14:19.deficit is stubbornly high at well over 62 ?5 billion, he said he would
:14:20. > :14:22.eradicate that in 2010, so this Budget is a Groundhog Day failing
:14:23. > :14:27.all the targets are not doing what is in the interests of the British
:14:28. > :14:30.people. Brexit is bad for the UK, bad for Scotland, and this Autumn
:14:31. > :14:35.Statement shows how bad it is going to be. He can do not about Brexit,
:14:36. > :14:41.he may not like what the electorate have said, but the UK Government is
:14:42. > :14:45.now bound to take the UK out of the EU, so he has to deal with the
:14:46. > :14:49.situation he has got. Of course he does, but if the previous
:14:50. > :14:52.Chancellor, his predecessor, was not so gung ho in terms of austerity and
:14:53. > :14:55.his lack of ambition is for investment in terms of
:14:56. > :15:00.infrastructure to create employment, that growth would be in a better
:15:01. > :15:05.position than we are now. He has downgraded growth by over 2.2%
:15:06. > :15:09.between now and 2020, a significant impact on the economy, where dead is
:15:10. > :15:14.still continuing to rise and the deficit is stubbornly high. It is
:15:15. > :15:18.good news for Scotland in terms of the ?800 million of additional
:15:19. > :15:21.capital spending, the Scottish Parliament now has control of income
:15:22. > :15:25.tax, so they can make different choices in terms of public spending,
:15:26. > :15:29.and I was delighted to hear that the Edinburgh city deal which we have
:15:30. > :15:34.fought for so long, that looks like it will be signed, and sterling is
:15:35. > :15:39.on the march to get one as well. The fundamentals of austerity, of dead,
:15:40. > :15:43.of deficit, of missing the targets, that is the key principle in the
:15:44. > :15:48.Budget. Every city in Scotland is going to have a city deal, it does
:15:49. > :15:52.seem to me that if you are a city in Scotland, as opposed to a town, you
:15:53. > :15:58.will get special treatment. These are regional deals, so the Edinburgh
:15:59. > :16:02.deal takes into account Fife and the Borders, it is much larger than just
:16:03. > :16:06.Edinburgh, so there are impacts for the wider regions, and that is why
:16:07. > :16:10.the deals are attractive. It does go into the towns and a smaller places
:16:11. > :16:14.that we require to have investment in, but the key thing about a city
:16:15. > :16:16.deals and this Autumn Statement is you have to invest in the
:16:17. > :16:20.infrastructure of the future to create the jobs and growth of the
:16:21. > :16:28.future. That is what these deals are, so the Chancellor has proven
:16:29. > :16:31.the point that Labour have been calling for for six years, you have
:16:32. > :16:34.to borrow to create economic growth. I am glad he has come some way
:16:35. > :16:37.towards that, but he is still not doing enough. You mention the extra
:16:38. > :16:41.?800 million for the Scottish Parliament - does that mean it
:16:42. > :16:45.blunts their argument, if they are getting extra money, they are going
:16:46. > :16:50.to use that money, they can decide where it goes within parameters of
:16:51. > :16:54.it being for capital spending, so does that mean it puts the onus on
:16:55. > :16:58.the Scottish Government themselves? Well, the Scottish Government have
:16:59. > :17:02.to deliver, because now they are getting a next ?800 million of
:17:03. > :17:05.capital expenditure, which they can spend on Scottish infrastructure, a
:17:06. > :17:12.whole host of things they could be looking ats broadband could
:17:13. > :17:15.transform the Scottish economy, along with 5G, getting rural places
:17:16. > :17:20.onto the network properly could be really good for economic growth. The
:17:21. > :17:22.two key things to look at from the Scottish Parliament true
:17:23. > :17:26.perspective, firstly, the Scottish Parliament has to use the powers it
:17:27. > :17:30.has got to take a different path from austerity down here, and so far
:17:31. > :17:34.they have refused to do that. Secondly, they have to welcome these
:17:35. > :17:39.powers, the money that is coming to Scotland, spend it wisely and take a
:17:40. > :17:43.second independence referendum off the table, clearing that additional
:17:44. > :17:48.uncertainty. Ian Murray, thank you very much for joining me, Gordon,
:17:49. > :17:56.back to you. One point you mentioned, it was sunshine down
:17:57. > :17:59.here, you need a new pair of glasses! The problem is I have just
:18:00. > :18:03.got a new pair, they are clearly not working! Philip Hammond announced
:18:04. > :18:09.that the national living wages to increase by 30p an hour to ?7.50,
:18:10. > :18:13.and cuts two in-work benefits will be softened, but will it be enough
:18:14. > :18:21.for what I've been called the Jam families, those were just about
:18:22. > :18:24.managing? I'm joined by the director of Child Poverty Action Group.
:18:25. > :18:31.Firstly, your reaction overall, is it helpful, do you think? Overall,
:18:32. > :18:34.this is hugely disappointing. There is a helpful improvement in the
:18:35. > :18:40.taper within universal credit that will benefit families to the amount
:18:41. > :18:45.of a few hundred fans, but in the context of cuts to the work
:18:46. > :18:48.allowance within universal credit, announced a nasty's Budget, and
:18:49. > :18:53.which the Chancellor is pressing ahead with, these will impact low
:18:54. > :18:58.income families, they will lose thousands of pounds a year. --
:18:59. > :19:02.announced in last year's Budget. His response to the problem is totally
:19:03. > :19:09.inadequate, to the pressures and cuts that these low income families,
:19:10. > :19:13.who are just about managing at the moment, but with these cuts, they
:19:14. > :19:17.will be pushed over the edge. Which would be your view by the end of
:19:18. > :19:22.this Parliament low income families will be worse off because of the
:19:23. > :19:26.cuts you have just mentioned and the freeze in benefits, worse off even
:19:27. > :19:30.with the measures announced today than they are now? Got absolutely,
:19:31. > :19:34.these measures are a drop in the ocean. They are worth overall
:19:35. > :19:38.hundreds of millions a year compared to the billions a year that have
:19:39. > :19:43.been removed from family pockets, by the end of the decade, by the end of
:19:44. > :19:48.the parliament. We know that the cuts, the freeze to benefits, the
:19:49. > :19:53.cuts to the work allowance of universal credit, the first child
:19:54. > :19:57.element of universal credit, the introduction of the two child policy
:19:58. > :20:00.- these are all going to slash the financial support available to low
:20:01. > :20:04.income working families who are just about managing, but who are already
:20:05. > :20:08.struggling at the moment to put food on the table, to pay the bills, to
:20:09. > :20:13.enable their children to participate in school chips and activities. The
:20:14. > :20:17.scale of the cuts they will see in the coming years completely dwarf
:20:18. > :20:20.the few hundred pounds that they are going to see as a result of the
:20:21. > :20:27.improvement in universal credit tapering. Can you just explain, the
:20:28. > :20:31.taper on universal credit is all very well, and I may be completely
:20:32. > :20:35.wrong on this, but as I understood it, universal credit was being
:20:36. > :20:40.rolled out at the moment... That is right. And it keeps being delayed, I
:20:41. > :20:44.am not sure what proportion of people on benefits are actually on
:20:45. > :20:48.universal credit yet. It is being rolled out at the moment, so
:20:49. > :20:52.increasingly more and more families will be receiving universal credit
:20:53. > :20:57.as opposed to the current tax credits... What proportion are on it
:20:58. > :21:01.at the moment? A small proportion at the moment, and we are also seeing
:21:02. > :21:05.significant cuts, a freeze on benefits, for example, a blanket tax
:21:06. > :21:11.credits as well as to the universal credit. The two child policy applies
:21:12. > :21:15.to that as well, so a significant number of cuts, particularly that
:21:16. > :21:19.freeze on benefits, that complete breaking of the link between the
:21:20. > :21:22.value of financial support to families and inflation, with
:21:23. > :21:25.inflation likely to increase in the years ahead, that will break that
:21:26. > :21:29.link, and increasingly leave low-income families both in and out
:21:30. > :21:34.of work further behind, struggling even more to pay for essentials. But
:21:35. > :21:38.the rise in the minimum wage you would presumably welcome?
:21:39. > :21:43.Absolutely, that rise is welcome. Again, my understanding is that it
:21:44. > :21:50.is less than was expected and what was recommended. It is still far
:21:51. > :21:56.below the living wage that campaigners as at ?8.45 an hour, so
:21:57. > :21:59.clearly it is good news in itself, but it is completely outweighed by
:22:00. > :22:03.the same families, particularly families with children, who rely on
:22:04. > :22:10.tax credits and the universal credit system to support their wages. The
:22:11. > :22:14.cuts to those, they dwarf the gains that we have seen through the
:22:15. > :22:20.increase in the national minimum wage. OK, thank you very much
:22:21. > :22:24.indeed. Alf Young is still here, you were going to chip in on universal
:22:25. > :22:32.credit. I think it is about 400,000 who are getting it across the UK.
:22:33. > :22:34.Which is what? A fairly small proportion? Presumably, this taper
:22:35. > :22:39.will benefit those who are already on it, but if you do not have to be
:22:40. > :22:44.on it, you are not going to get the benefit. Because the roll-out has
:22:45. > :22:52.been delayed and delayed. It goes down from 65p steal 63, it seems
:22:53. > :22:55.very modest, it is not going to claw back all that they are going to
:22:56. > :23:00.suffer from, and then as John rightly says, the onset of high
:23:01. > :23:07.inflation, which looks likely with the collapse of sterling, is going
:23:08. > :23:13.to add to bills at the supermarket. We will come back to you at the
:23:14. > :23:17.moment, because I believe we have the Chief Secretary to the Treasury,
:23:18. > :23:22.David Gauke, yes we do. Hello, can you hear me? I can, yes.
:23:23. > :23:27.Lowe, it is Gordon Brewer in Glasgow. First of all, can I just
:23:28. > :23:35.ask you, what would you say to people who, for the past six years,
:23:36. > :23:38.have taken seriously or government's rhetoric about austerity? If they
:23:39. > :23:43.work for the public sector, they may have lost their jobs, they have been
:23:44. > :23:48.suffering as private citizens from services being cut back, and now
:23:49. > :23:52.your government turns around, and you were passionately involved with
:23:53. > :23:55.George Osborne in influencing those policies, and now suddenly balancing
:23:56. > :24:01.the budget doesn't matter any more. Well, it does matter, but we are in
:24:02. > :24:06.different circumstances now following the Brexit vote and the
:24:07. > :24:11.challenges that we face as a consequence of that. Delivering the
:24:12. > :24:15.surplus target that we previously had is not feasible. We have
:24:16. > :24:18.responded in a pragmatic way, we are still making it clear that at some
:24:19. > :24:23.point in the course of the next parliament we will get into overall
:24:24. > :24:28.surplus, but we have to respond to the circumstances that we are in at
:24:29. > :24:32.the moment. That is why we are taking longer to eliminate the
:24:33. > :24:37.deficit, that is why we are investing in infrastructure... Hang
:24:38. > :24:42.on, balancing the budget doesn't matter any more? When Philip Hammond
:24:43. > :24:47.stood up there and said, oh, we will eliminate the deficit in the next
:24:48. > :24:52.parliament, he might as well have whistled The White Cliffs Of Dover,
:24:53. > :24:55.it is completely meaningless. What you have done is completely
:24:56. > :25:04.abandoned the targets which you have spent six years telling us work the
:25:05. > :25:07.overridingly important thing! Got circumstances have changed, it is
:25:08. > :25:11.because of the measures that have been taken over the last six years
:25:12. > :25:15.that we do have the credibility with the markets to have the greater
:25:16. > :25:20.flexibility at the moment. That is why we are in a position to be able
:25:21. > :25:27.to invest in our infrastructure and take longer to reach that surplus
:25:28. > :25:31.target. The Government is not abandoning it, I am grateful for the
:25:32. > :25:36.opportunity to make it clear that we do have to address that, but at the
:25:37. > :25:39.moment we are in a period of uncertainty, and the priority has to
:25:40. > :25:44.be to deal with that period of uncertainty. That is why we need to
:25:45. > :25:47.have flexibility. It is also why we need to drive up productivity, which
:25:48. > :25:52.is why we are investing more in research and development, and we are
:25:53. > :25:56.investing more in transport and housing in England, which obviously
:25:57. > :26:01.leads through to greater money. And through the Barnett formula. When
:26:02. > :26:06.balancing the books was of overriding importance, you told us
:26:07. > :26:10.that you should have credible targets to balance the books by the
:26:11. > :26:14.end of the decade, by 2015 originally, but then by the end of
:26:15. > :26:18.the decade, you were worried that Britain's credit rating would be
:26:19. > :26:21.downright - it was downgraded anyway. Do you assume that Britain's
:26:22. > :26:27.credit rating will be downgraded even further because you have got
:26:28. > :26:32.off balancing the budget into the never-never? That is a matter for
:26:33. > :26:35.the credit rating agencies. Would you be concerned if they do
:26:36. > :26:39.downgraded? What is very clear if you look at the way in which the
:26:40. > :26:42.Government is able to borrow and the rate at which we are able to borrow,
:26:43. > :26:50.the international markets that we depend upon to continue to view the
:26:51. > :26:57.UK as a reliable entity to lend to. It is the case that we are able to
:26:58. > :27:02.borrow at historically low prices. That has been the case since 2008,
:27:03. > :27:05.you could have borrowed at historically low rate of interest,
:27:06. > :27:10.but you told us you have to have austerity. Now you are at admitting
:27:11. > :27:15.there was no need for that. Not at all, far from it. The point is,
:27:16. > :27:19.because the UK has taken difficult decisions, because we have
:27:20. > :27:23.demonstrated that we are serious about the public finances, over a
:27:24. > :27:26.period of time, and sometimes there have been significant challenges, it
:27:27. > :27:31.has been clear that the markets have believed that the UK is a place that
:27:32. > :27:36.can be lent to safely. Now, had we not taken the action that we did in
:27:37. > :27:39.2010, and followed that up over the course of the past six years, we
:27:40. > :27:43.would not be in that position, we would not have flexibility, we would
:27:44. > :27:47.not have any choice. Like other countries, we would have been forced
:27:48. > :27:51.into much more significant measures to get control of public spending.
:27:52. > :27:56.Now, in the circumstances we are at the moment, because of the
:27:57. > :28:00.uncertainty that we face, because that is likely to be through into
:28:01. > :28:03.business investment, and therefore wage growth, we now face more
:28:04. > :28:06.challenging circumstances. What a government should do in those
:28:07. > :28:11.circumstances is be pragmatic, reset the position, but member that,
:28:12. > :28:13.ultimately, we have to live between our means. And today we have set out
:28:14. > :28:21.the path by which we can do that. This investment programme but the
:28:22. > :28:26.Chancellor announced today, five or 6 billion a year for the next four
:28:27. > :28:32.years, about 200 million a year up here in Scotland, presumably even
:28:33. > :28:36.you would not claim this is a fiscal stimulus? The spending on roads
:28:37. > :28:40.might be a good idea but it is so trivial, it is not a fiscal
:28:41. > :28:45.stimulus. The case is not for a fiscal stimulus, the case is for
:28:46. > :28:49.targeted spending in areas that can improve the productivity of all of
:28:50. > :28:53.the United Kingdom. So you are right, I am not claiming this is a
:28:54. > :28:58.fiscal stimulus or the purpose is a fiscal stimulus. The purpose is to
:28:59. > :29:04.make the United Kingdom are more productive economy. And presumably
:29:05. > :29:08.the reason it's not a fiscal stimulus is that you need to have
:29:09. > :29:13.some flexibility over the next few years? Because these forecasts, both
:29:14. > :29:19.from the Treasury and the OBR, must, to some extent, the wild guesses,
:29:20. > :29:22.because we don't know what kind of Brexit we will have? Presumably,
:29:23. > :29:28.what you want to do is have the ability to pump money into the
:29:29. > :29:31.economy if it tanks? Well it is the case that we have flexibility within
:29:32. > :29:35.the rules the Chancellor set out today, so there is scope for us to
:29:36. > :29:41.take action if that is the right thing to do for the economy. But the
:29:42. > :29:46.circumstances we face at the moment, let's remember, this year, 2016, the
:29:47. > :29:51.UK will be the fastest-growing G-7 economy. Although the OBR have
:29:52. > :29:57.revised down growth for next year and the year after, we will still be
:29:58. > :30:02.growing on a way that is compatible with Germany and a little bit faster
:30:03. > :30:06.than France and Italy. But, yes, it is the case we face a greater range
:30:07. > :30:11.of uncertainty. The OBR is very clear about that and any pragmatic,
:30:12. > :30:14.sensible Government would want to give itself room to respond to that
:30:15. > :30:21.uncertainty. That's exactly what we have announced today. Your party has
:30:22. > :30:25.been in power in one form or another since 2010, promising all that time
:30:26. > :30:30.to balance the books and we now learn that the national debt is
:30:31. > :30:37.going to go to over 90% of GDP, and absolutely enormous quantity of
:30:38. > :30:42.debt. I mean, if this is not an index of failure, I don't know what
:30:43. > :30:46.is. Well, we are a Government that has presided over the
:30:47. > :30:49.fastest-growing economy in the G-7, record levels of employment and
:30:50. > :30:54.particularly in the last couple of years, significant increases in
:30:55. > :30:58.living standards. But it is right that we do remember the public
:30:59. > :31:00.finances, there are plenty of politicians and political parties
:31:01. > :31:06.who would say you shouldn't bother about it at all and not to worry. We
:31:07. > :31:12.do have the recognise... Virtual record on public finances is
:31:13. > :31:15.dreadful. Ultimately, we have to bring that number down. That would
:31:16. > :31:20.be much worse but for the decisions we have taken over the last six
:31:21. > :31:24.years. Ultimately, we are going to have to bring those numbers down but
:31:25. > :31:27.we now face a set of circumstances where there is uncertainty and the
:31:28. > :31:32.sensible, pragmatic response for any Government is to ensure we give
:31:33. > :31:36.ourselves the room to respond to that and we set out policies that
:31:37. > :31:41.can improve the long-term growth of the economy. You have presided over
:31:42. > :31:46.six years of rising debt, what is your message to the public watching
:31:47. > :31:50.this? Are you trying to say your austerity policy failed in terms of
:31:51. > :31:53.getting debt down or are you saying you never really implemented your
:31:54. > :31:59.austerity policies in the way you claimed you were doing? In simple
:32:00. > :32:06.terms, debt is the accumulation... We inherited an annual deficit that
:32:07. > :32:09.was at their peacetime record, we have brought it down every year and
:32:10. > :32:14.we are forecast to bring it down every year, but from a very, very
:32:15. > :32:18.high level. There are some that criticises that we went too far, too
:32:19. > :32:23.fast and were too obsessed with bringing down the deficit is. I
:32:24. > :32:26.don't think they are now in a position to criticise us for the
:32:27. > :32:31.debt levels being where they are. We have sought to bring down the
:32:32. > :32:35.deficit but that has continued to grow and until we essentially
:32:36. > :32:38.reduced the deficit further, it will continue to grow but we have set out
:32:39. > :32:45.a long-term plan as to how we do that. George Osborne, for whom you
:32:46. > :32:48.worked, claimed that balancing the books was the number one most
:32:49. > :32:54.important thing that the Treasury had to do. Would you finally and
:32:55. > :33:02.briefly give us your guess as to when the books will be balanced in
:33:03. > :33:08.Britain? Give us a date. What the Chancellor says... I know what the
:33:09. > :33:12.Chancellor says, give us your guess. I agree with the Chancellor that we
:33:13. > :33:15.should eliminate the overall surplus in the course of the next
:33:16. > :33:18.Parliament. Putting a date on it at this point in time doesn't make
:33:19. > :33:24.sense because we are going to go through a period of uncertainty. He
:33:25. > :33:32.raised a very good point... It made sense in every budget George Osborne
:33:33. > :33:36.produced but now doesn't make sense? There is uncertainty over what will
:33:37. > :33:39.happen in the years ahead as we go through the Brexit negotiation
:33:40. > :33:44.process. Now, given that uncertainty, it does not make sense
:33:45. > :33:50.to specify a specific date at this point. Look, thank you very much for
:33:51. > :33:55.joining us. Let's get some reaction from the Scotland business
:33:56. > :34:04.community. Colin Boyland, your reaction to this? I think all eyes
:34:05. > :34:07.will be on the ?800 million of capital spending coming to the
:34:08. > :34:10.Scottish Government. There are people who have argued consistently
:34:11. > :34:14.about the economic benefits of infrastructure spending and it was
:34:15. > :34:22.heartening. It is not very much, 200 million a year. Well, it is about ?2
:34:23. > :34:26.billion it is reckoned to get things up to scratch on local roads, but it
:34:27. > :34:30.is better than nothing and targeted investment could make a difference.
:34:31. > :34:35.So the real test here will be how Scottish ministers choose to spend
:34:36. > :34:40.it. These city projects and city deals, there is one for Stirling and
:34:41. > :34:45.they are talking about one for the Perth Dundee area. Can you explain
:34:46. > :34:50.in simple terms what that means? Essentially, it is a way of leave
:34:51. > :34:56.the ring UK Government money, along with Scottish and other money, into
:34:57. > :35:02.delivering large infrastructure projects. I think the key thing for
:35:03. > :35:06.those city deals is it has got to be business lead, stuff that local
:35:07. > :35:13.businesses say are going to help us. What sort of things? I would like to
:35:14. > :35:17.see more stuff around about making it easier for people to get about to
:35:18. > :35:29.do business, to trade, to get to the market on time, rather than maybe
:35:30. > :35:34.larger... The big-ticket things that perhaps deliver less in terms of
:35:35. > :35:38.economic value. I think they are talking in the Stirling area, the
:35:39. > :35:42.idea is that Central Scotland, you could pretty much get from
:35:43. > :35:47.everywhere to anywhere else and it would be commuting distance, isn't
:35:48. > :35:51.that the idea? I'm not upon the details of the Stirling one but if
:35:52. > :35:56.are going to improve connectivity between areas, that is good news but
:35:57. > :35:59.when you get to those ordnance centres, you have to be able to get
:36:00. > :36:06.about and do business easily. That is what the local transport
:36:07. > :36:10.infrastructure fund, I think that is what the Chancellor is aiming for.
:36:11. > :36:16.Big cuts but they won't necessarily apply here, will they? They won't
:36:17. > :36:21.and the 6 billion was previously announced. We are going to see the
:36:22. > :36:25.Scottish judgment next month, I think we are already committed to
:36:26. > :36:29.something like 100,000 properties benefiting in Scotland, so that has
:36:30. > :36:35.got to be good news. An interesting thing with business rates, we talked
:36:36. > :36:38.about how new fibre will attract 100% relief. It will be interesting
:36:39. > :36:44.to see if that will be replicated north of the border. Was there
:36:45. > :36:48.anything that you were looking for that didn't materialise? I wanted to
:36:49. > :36:52.hear a little more about quarterly tax reporting. It is a big concern,
:36:53. > :37:01.this idea that rather than doing itemised tax reports, turning over
:37:02. > :37:06.quarterly. -- annualised tax reports. I wanted to hear a little
:37:07. > :37:09.bit more, that is interesting and a bit more about the self-employed,
:37:10. > :37:13.how we will get something of a fairer deal for them. There was a
:37:14. > :37:16.reference to how self-employment is operating in the UK economy now. I
:37:17. > :37:21.don't know if that is about maximising tax take but... It
:37:22. > :37:26.sounded like it was, but I might be wrong. I think reading between the
:37:27. > :37:30.lines, that is what it looked like. There is a lot we can do when so
:37:31. > :37:32.many of us are no self-employed to get the self-employed a fairer deal
:37:33. > :37:37.and it is something the UK Government needs to look at before
:37:38. > :37:45.it is overtaken by other events. Colin Borland, thank you. Alf? David
:37:46. > :37:47.Gauke, what did you think? It is difficult, because everything they
:37:48. > :37:53.are telling us is the most important thing goes out the window. You are
:37:54. > :37:56.right, but a lot of people said back in the day, immediately after the
:37:57. > :37:59.crash and immediately after they came to power, that they had the
:38:00. > :38:04.opportunity to borrow at historically low rates. They could
:38:05. > :38:08.have done quite a lot of infrastructure work then. We were
:38:09. > :38:12.now presumably seeing some of the feed through benefits of that. Now
:38:13. > :38:18.they are starting it next year with a new fund which is... Which is not
:38:19. > :38:22.very big. And it is not going to bridge the benefits until we are
:38:23. > :38:28.right in the middle of that X from Europe. I thought it was interesting
:38:29. > :38:35.that he said he is not even claiming this is a fiscal stimulus. No, I
:38:36. > :38:38.think the analysis that says they are keeping their main powder dry
:38:39. > :38:42.because they know they have do, because they don't know what the
:38:43. > :38:45.process of getting out of Europe will look like and what the
:38:46. > :38:50.consequences of it are going to be, so they are holding back and this
:38:51. > :38:54.was, in a sense, do as little as you can but get the odd headline here
:38:55. > :38:59.and there that might bring you some good news. But when any of that is
:39:00. > :39:07.put under any kind of scrutiny, since it has been said, they look so
:39:08. > :39:12.kind of downbeat and rather... It is not a stimulus after all. It is
:39:13. > :39:15.already looking a wee bit threadbare, isn't it? And they are
:39:16. > :39:19.quite boxed in, you can understand why they want to keep some
:39:20. > :39:23.flexibility for a fiscal stimulus should things go badly with Brexit,
:39:24. > :39:28.because interest rates are already at zero and they don't have that.
:39:29. > :39:32.Quantitative easing, we have had masses of that but economists are
:39:33. > :39:37.still arguing about whether it has much or indeed any effect. So the
:39:38. > :39:41.only thing they have got left is the tool box. They have run out of road
:39:42. > :39:44.and monetary policy, there is nowhere for central banks to go in
:39:45. > :39:50.terms of printing money or lowering rates, there is virtually nowhere
:39:51. > :39:53.else go. They didn't do any stimulus in the early years, so they have not
:39:54. > :39:56.got the impact of that coming through. They are struggling to get
:39:57. > :40:00.tax take and Colin Borland was worried about what they were saying
:40:01. > :40:05.about the self-employed, they were also saying things about
:40:06. > :40:10.incorporation as a way of paying less tax and being tougher on that.
:40:11. > :40:17.They have confirmed they are going down the road of lower corporation
:40:18. > :40:21.tax rate, it is going to go to 17%. Theresa May at the CBI even hinted
:40:22. > :40:27.it would go lower still, so they have got huge challenges on raising
:40:28. > :40:31.revenue, on seeing the impact of a belated mini stimulus in terms of
:40:32. > :40:40.infrastructure and the great unknown of how Brexit actually formulates
:40:41. > :40:43.into an actual exit with consequences, but what these
:40:44. > :40:47.consequences are going to be and what it will look like, we don't
:40:48. > :40:51.begin to know. Dogs that didn't bark. There was all sort of talk
:40:52. > :40:55.before the Autumn Statement that they might cut VAT, as Alistair
:40:56. > :40:58.Darling did to stimulate the economy, talk of cutting air
:40:59. > :41:06.passenger duty or abolishing it, because it will help the famous deer
:41:07. > :41:14.Theresa May talks about. If you are -- one of these famous Jams. The
:41:15. > :41:22.cuts to universal credits are still apply, the freeze to payments still
:41:23. > :41:26.apply. Are people going to end up worse off? I think they are, on the
:41:27. > :41:31.margin. We will hear from the IFS and others who will, in due course,
:41:32. > :41:34.be telling us more but I think that is probably the case, yes. We will
:41:35. > :41:43.be back with you in a moment but let's go back to a bleak
:41:44. > :41:46.Westminster, with David Porter. We will try and raise your spirits in
:41:47. > :41:53.the next few minutes. Joining me now is the SMP Treasury spokesman
:41:54. > :41:58.Stewart Hosie. Stewart Hosie, would you characterise this as an Autumn
:41:59. > :41:59.Statement that was shaped by Brexit and had reacted to the fact that we
:42:00. > :42:07.are going to get Brexit? No, I wouldn't and I
:42:08. > :42:13.wish it had been. The Treasury know the numbers, potentially 66 billion
:42:14. > :42:17.loss of tax, GDP down 10%, 80,000 jobs in Scotland. He should have
:42:18. > :42:22.been much more explicit today about how he was going to mitigate those
:42:23. > :42:25.dangers, even saying he wanted a soft Brexit, access to the single
:42:26. > :42:30.market. Those things were missing. Is that your way of saying he should
:42:31. > :42:36.have loosened the purse strings even more. I think he should have. Over
:42:37. > :42:41.the five, six year period, the total increase in total expenditure was
:42:42. > :42:45.1.5% on the previous forecast, so this was not a massive fiscal
:42:46. > :42:50.stimulus, but tackling Brexit didn't necessarily mean spending more money
:42:51. > :42:54.but it would have been very helpful indeed if he had laid out detailed
:42:55. > :42:58.plans about how they would have mitigated the damage and he failed
:42:59. > :43:04.to do that. Surely if he laid out plans, you would have been saying
:43:05. > :43:09.those plans need more money? Only if they needed more money and cost more
:43:10. > :43:16.money. If he had argued for a soft Brexit it rapidly Brexit, things
:43:17. > :43:19.that might not have had a massive cost but could be beneficial and
:43:20. > :43:23.mitigate the losses that follow, he could have done that easily. While
:43:24. > :43:27.we are talking about numbers, a figure he was very keen to put
:43:28. > :43:31.forward was ?800 million extra to the Scottish Government over the
:43:32. > :43:32.next five years for capital projects. As your Administration in
:43:33. > :43:42.Edinburgh got those projects ready? The Scottish Government will be
:43:43. > :43:46.announcing its Budget in a couple of weeks' time, but what I would say
:43:47. > :43:52.is, since this government came to power, we have had a 10% cut in
:43:53. > :43:56.revenue spending, a 16% cut in capital spending, so however long
:43:57. > :44:01.the 800 million is, it does not reverse the damage already done. It
:44:02. > :44:06.may not go as far as you would like, that is pretty obvious, but it puts
:44:07. > :44:10.the onus on your administrations - OK, we have a list of projects, we
:44:11. > :44:13.will get the diggers digging holes in the ground pretty quickly. The
:44:14. > :44:16.Scottish Government have a good track record of making sure
:44:17. > :44:20.shovel-ready projects are up and running, and I do not doubt that the
:44:21. > :44:23.money will be spent on the appropriate capital projects to help
:44:24. > :44:28.boost the economy and a liver resilience in the long run. He said
:44:29. > :44:34.he's going to keep the help for the oil and gas industry, and he has
:44:35. > :44:42.frozen fuel duty as well. As far as the new phrase that we are all
:44:43. > :44:46.using, Jams, just about managing, the fuel duty is quite astute
:44:47. > :44:51.politics, isn't it? We called for the freeze, it makes sense to do
:44:52. > :44:54.that, putting that on families now would have been silly. In terms of
:44:55. > :44:58.the oil and gas sector more generally, he said what is there
:44:59. > :45:01.will be maintained, but there was nothing in terms of decommissioning
:45:02. > :45:05.allowances, and I think we need to look very carefully at whether he
:45:06. > :45:08.means this is it and no more, or whether there is more wriggle room
:45:09. > :45:13.to see what can be delivered in the future. He also announced that
:45:14. > :45:17.sterling would be encouraged to go for city Deal status, which would
:45:18. > :45:21.mean all of the six recognise cities in Scotland should be able to get
:45:22. > :45:28.the help that goes with that. Stirling. Your own city, Dundee, is
:45:29. > :45:33.looking to go down this process - in local political terms, how important
:45:34. > :45:37.is the city Deal? They are important if they are properly constructive,
:45:38. > :45:40.infrastructure creates jobs, you will have long-term benefits from
:45:41. > :45:45.them, and I'm very pleased about that, but the credit should go to
:45:46. > :45:49.the various local authorities and others who put these deals together.
:45:50. > :45:53.They are the ones who say, this will deliver real economic benefit for
:45:54. > :45:57.our citizens. All the credit should go to them. Listening to you, you
:45:58. > :46:02.would have obviously liked more, do you get the feeling this is Philip
:46:03. > :46:06.Hammond saying, I will keep a bit more in my back pocket in case the
:46:07. > :46:09.Brexit negotiations do not go well and the economy takes a turn for the
:46:10. > :46:14.worst? Do you think you might find that there are a few more sweepers
:46:15. > :46:21.next year? No, I do not think there will be. What we got today is
:46:22. > :46:24.appalling deficit figures, what was put five years ago will not be met
:46:25. > :46:28.in this Parliament. He has gone as far as he can in admitting that sort
:46:29. > :46:33.of austerity was a failure, but not far enough to deliver the real
:46:34. > :46:36.fiscal stimulus to match the monetary policy activism of the
:46:37. > :46:38.central bank to grow the economy. Stewart Hosie, thank you very much
:46:39. > :46:42.for joining me. Gordon, back to you. who gets to mark the Chancellor's
:46:43. > :46:46.homework after an event like this. It's Paul Johnson, the director of
:46:47. > :46:53.the Institute for Fiscal Studies. Paul, can we start with something
:46:54. > :46:58.really basic, which we were talking to David Gauke about earlier on? How
:46:59. > :47:04.is it, after years of George Osborne's austerity, that we have
:47:05. > :47:09.got debt forecast to rise to over 90% of GDP? It doesn't seem to make
:47:10. > :47:13.any sense. It is essentially because the economy has not really been
:47:14. > :47:16.doing all that well. If you don't have the economy growing, you don't
:47:17. > :47:21.bring in the tax revenue that you are looking for, and of course the
:47:22. > :47:25.dead is the accumulation of all the deficit, so the deficit was over
:47:26. > :47:30.?150 billion a year back in 2010, and that has really come down quite
:47:31. > :47:35.a lot over that period. But we still have a big deficit, and that is
:47:36. > :47:38.adding to the debt every year, so it is not surprising in that sense that
:47:39. > :47:43.it continues to rise. The forecast is that it will start 2-level off
:47:44. > :47:49.and fall by the end of the parliament, even with the numbers
:47:50. > :47:55.that we got today. Is that 90% of GDP higher than you were
:47:56. > :47:59.forecasting? I think we can over focus on that 90% number, because
:48:00. > :48:03.some of it is down to some strange accounting, the way that the Bank of
:48:04. > :48:07.England does stuff. If you strip that out, it remains about 85% of
:48:08. > :48:12.national income, which is roughly where we thought it would stay.
:48:13. > :48:16.Let's try to get some clarity on public spending - am I right in
:48:17. > :48:20.thinking that they did not really announce any change from George
:48:21. > :48:23.Osborne's public spending targets? Austerity, in that sense, is still
:48:24. > :48:29.in place. Austerity is very much still in place, there were very
:48:30. > :48:34.small changes to the benefit cuts, but essentially they all stay in
:48:35. > :48:39.place. Spending on things like the NHS and local government and so
:48:40. > :48:44.won't remain very much as it was, so that is pretty or steel. -- and so
:48:45. > :48:49.on. The one recently significant change is that there has been a bit
:48:50. > :48:53.of an increase in the amount allocated for capital spending over
:48:54. > :48:59.the next several years, so more money for transport and housing in
:49:00. > :49:03.particular. David Gold said that he was not claiming this was
:49:04. > :49:13.sufficiently large to count as a fiscal still is. -- David Gauke. It
:49:14. > :49:16.would certainly be a very small fiscal stimulus if that is what it
:49:17. > :49:22.is, but I think the Chancellor has given himself some wiggle room for
:49:23. > :49:26.more WISPA stimulus in six months or year's time, if the economy seems to
:49:27. > :49:34.be doing a bit worse in response to the Brexit vote than the OBR thinks.
:49:35. > :49:38.-- fiscal stimulus. Or if things get better than he is expecting without
:49:39. > :49:42.being able to get into a deficit. This is very much a wait and see
:49:43. > :49:47.statement, because he has so much uncertainty to deal with at the
:49:48. > :49:50.moment. What about these people who are just managing, the Jams, as
:49:51. > :49:55.Theresa May has dubbed them? Does it really make any difference for them,
:49:56. > :50:01.this Budget? There are claims that they will end up worse off. There is
:50:02. > :50:07.really not very much in here for that group. There is a small rowing
:50:08. > :50:11.back on the cuts to universal credit, which comes in in a few
:50:12. > :50:16.years' time, but still the cuts announced last year basically stay
:50:17. > :50:21.in place. Not much else, there is the freezing of fuel duty, that
:50:22. > :50:25.helps anyone who is a driver, and you are more likely to use more
:50:26. > :50:29.petrol if you are better off than if you are worse off. The really bad
:50:30. > :50:32.news for the just about managings and everybody else is the
:50:33. > :50:36.confirmation from the OBR that along with everybody else they think that
:50:37. > :50:39.growth will be less, therefore earnings growth will be less, and
:50:40. > :50:43.inflation will be higher than it otherwise would have been, and that
:50:44. > :50:47.means all of the income that anybody get is going to go less far. So we
:50:48. > :50:51.will be less well off than we thought we were going to be because
:50:52. > :50:58.of lower growth and higher inflation. There are always, Paul,
:50:59. > :51:02.risks in economic forecasting - presumably they are much larger this
:51:03. > :51:07.time than they would be usually, because depending on what happens
:51:08. > :51:11.with the Brexit negotiations, or even if it becomes clear up before
:51:12. > :51:16.they are finalised what kind of Brexit Britain is going to undergo,
:51:17. > :51:19.that could have enormous effects on confidence in the British economy,
:51:20. > :51:25.and presumably enormous effect on things like tax revenues. I think
:51:26. > :51:28.you are exactly right. The Office for Budget Responsibility, by law,
:51:29. > :51:33.has to provide a single central forecast, but there is clearly a
:51:34. > :51:38.huge amount of uncertainty around this one. Both in the short run,
:51:39. > :51:41.because there is quite a lot of disagreement about what the
:51:42. > :51:44.short-term impact of the vote will be, and in particular at the 29
:51:45. > :51:51.when, in principle we should be of the European Union. -- after 2019.
:51:52. > :51:55.We do not know what can of impact it will have on trade, so there is a
:51:56. > :51:59.huge amount of uncertainty, particularly in the back end of this
:52:00. > :52:03.forecast, which is why I think the Chancellor has not done ever so much
:52:04. > :52:06.to give himself the wiggle room, and secondly he has a new fiscal target
:52:07. > :52:11.which is looser than the one he had before, and again it gives him a bit
:52:12. > :52:15.of a get out clause if things turn out to be worse than expected. And
:52:16. > :52:20.balancing the budget just seems to be over the hill and far away - to
:52:21. > :52:24.say it will be balanced some time in the next Parliament is, you know,
:52:25. > :52:28.given the history of the last ten years, utterly meaningless. It
:52:29. > :52:35.doesn't have a lot of meaning, does it, to say that? I think he got it
:52:36. > :52:39.even slightly looser than that, when it is possible, when you can get it
:52:40. > :52:43.down to that level - and that could be right up to 2025. I think he was
:52:44. > :52:47.forced into that position, to be honest, because of what we were
:52:48. > :52:51.talking about, the level of uncertainty he is facing. So he is
:52:52. > :52:56.saying, we will keep the deficit within about 2% of national income,
:52:57. > :53:00.?40 billion by the end of the parliament - he has quite a lot of
:53:01. > :53:04.headroom on that - and we will try to keep getting it down after that.
:53:05. > :53:08.He is between a rock and a hard place, he had to get some sense of
:53:09. > :53:13.direction but did not want to tie himself to anything specific.
:53:14. > :53:17.Briefly, if we are not going to count the 23 billion as a serious
:53:18. > :53:23.fiscal stimulus and if they want flexibility to have one should the
:53:24. > :53:26.economy starts tanking because of Brexit, I mean, what kind of scale
:53:27. > :53:29.of fiscal stimulus do they have room for? David Gauke said that they do
:53:30. > :53:35.have room for that at some point over the term of this Parliament,
:53:36. > :53:39.but what would need to be make any difference? Well, it depends, of
:53:40. > :53:43.course, on what sort of downturn we might face, but what the Chancellor
:53:44. > :53:48.has left unsolved in terms of wiggle room is ?20 billion of borrowing at
:53:49. > :53:53.the end of the Parliaments, or a bit more than that, still to stay within
:53:54. > :53:59.his new this, crepe target. Just to be clear, that 23 billion is a
:54:00. > :54:03.number that I hate, because it is accumulated over a few years. He has
:54:04. > :54:10.got the scope within the disk two numbers, if he needs to, to increase
:54:11. > :54:17.spending by 20 billion. -- the fiscal numbers. So there is scope in
:54:18. > :54:21.that situation, but if we get into a situation where growth is worse and
:54:22. > :54:24.tax revenues are down, to keep to that deficit target, he has less
:54:25. > :54:30.space than it looks like at the moment. Thank you very much indeed.
:54:31. > :54:41.Let's have a recapture what the Chancellor's statement means - more
:54:42. > :54:47.capital spending for and the daft Budget for Scotland is just a few
:54:48. > :54:52.weeks ago. -- and the draft Budget for Scotland is just a few weeks
:54:53. > :54:57.away. 200 million is not not think, is it? It is not nothing, the
:54:58. > :55:02.investment spend by the Scottish Parliament is around 3.5 billion a
:55:03. > :55:08.year, less than 10% of that, so it is a fairly small addition, but
:55:09. > :55:12.nevertheless there are things that the Scottish Government have lined
:55:13. > :55:17.up that they could do with this. And they will do it, will they? They
:55:18. > :55:24.have the powers to reallocate that to current spending. That is an
:55:25. > :55:28.interesting issue. I mean, they may decide to move staff into current
:55:29. > :55:34.spending. I suspect that they won't. At the moment, the main power, the
:55:35. > :55:39.new powers next year will be the income tax powers. I think, once you
:55:40. > :55:43.get the welfare powers, which are a bit farther down the line, then the
:55:44. > :55:47.question about moving stuff about will become a lot tougher, because
:55:48. > :55:51.you know, there will be very strong political pressure, it seems to me,
:55:52. > :55:56.to increase welfare spending in Scotland when the new powers become
:55:57. > :56:04.available. What do you make of this debt? I keep mentioning this figure
:56:05. > :56:06.of 90%, there was a very influential paper produced after the financial
:56:07. > :56:10.crisis which said economy is recovering from severe financial
:56:11. > :56:15.crises, that is us, if the stock of debt as a percentage of GDP goes
:56:16. > :56:19.over 90%, that is very bad news for future growth. I know they qualified
:56:20. > :56:23.that have it, and I know Paul Johnson says some of it is
:56:24. > :56:28.accounting, it is actually 85%, but it is not a great place to be, is
:56:29. > :56:36.it? It is not fantastic, and that paper was based on an error in an
:56:37. > :56:40.excel spreadsheet! They'd you -- they do claim they got the numbers
:56:41. > :56:45.right by doing it again! There are countries with higher debts, Italy
:56:46. > :56:50.has 110, Japan 120%. Their economic record has not been a strong
:56:51. > :56:55.recently. So it is not a good direction to be heading, put it that
:56:56. > :56:59.way, because what matters really is what are the debt interest charges
:57:00. > :57:04.that you are paying? At the moment, because of the rates of interest
:57:05. > :57:10.that the Government is paying an debt, relatively low, that amounts
:57:11. > :57:16.to just over 1.5% of GDP, which, in historic isn't huge. So the interest
:57:17. > :57:21.payments are manageable. What you do not want to happen is interest rates
:57:22. > :57:25.to go up very significantly. If you were Derek Mackay and had two and ?1
:57:26. > :57:33.million in your pocket, what would you do with it? -- and had ?200
:57:34. > :57:37.million. It has got to the stage where it is difficult, I used to be
:57:38. > :57:41.vaguely involved in this in a local regeneration context, and I know
:57:42. > :57:45.that spending money from the city deal, on things we used to want to
:57:46. > :57:51.be doing but could not raise the funding for, and... What sort of
:57:52. > :57:58.things? Things like reinforcing Haarbocht wars, so you could bring
:57:59. > :58:03.more cruise ships in. -- harbour walls. Redeveloping a power station
:58:04. > :58:07.as housing. The kind of things that are part of the statement today. One
:58:08. > :58:15.of the things about this is that it does take time, you have got
:58:16. > :58:18.planning, you have got all the pre-dealing and putting together
:58:19. > :58:23.developers and all the rest of it. So you know, I wouldn't be too
:58:24. > :58:27.worried about finding... There are plenty of things to do, but maybe
:58:28. > :58:31.the best way is to do it in quite small packages.
:58:32. > :58:40.That is what Colin Borland was saying. You can turn it around
:58:41. > :58:56.quickly and deal with local pinch points, whether it is in transport
:58:57. > :59:00.or access or ... The Budget now moving to the autumn, we had to
:59:01. > :59:03.rethink the whole architecture about what devolved nations and regions do
:59:04. > :59:11.with their planning for the next year and what the Government used to
:59:12. > :59:15.do in March. On this point about the two governments like to do big
:59:16. > :59:19.projects instead of little things? In reports ahead of the budget and
:59:20. > :59:22.what he was saying, Philip Hammond were saying the money that was
:59:23. > :59:25.announced for roads in England was very, apart from the Oxford or
:59:26. > :59:31.Cambridge thing, was very much that, little bypasses and pinch points. Do
:59:32. > :59:34.you think that makes sense, take that extra money in Scotland and do
:59:35. > :59:41.a whole lot of things that might make a difference rather than build
:59:42. > :59:46.a third Forth Road Bridge? I agree very much with that. We have a
:59:47. > :59:49.capital stock, we can add to it by adding new bridges or roads but you
:59:50. > :59:52.have got to maintain the capital stock, you have to make sure it
:59:53. > :59:57.doesn't appreciate, which means you have to spend money on maintaining
:59:58. > :00:01.the capital stock, wherever that may be. I think we would all agree that
:00:02. > :00:07.over the last seven or eight years, large chunks of Scotland's capital
:00:08. > :00:12.stock aren't in as good shape as they used to be, so let's spend some
:00:13. > :00:17.money in these areas. Make it consistent so it joins up. We have a
:00:18. > :00:23.mile and a half near we live -- Way we live of a dedicated cycle path
:00:24. > :00:26.which, to my eyes, is not actually attracting that they cyclists
:00:27. > :00:30.because it doesn't start or end in a very interesting place, but the
:00:31. > :00:34.council have now changed the plans for the next step, so there will not
:00:35. > :00:38.be the next stage. So if you do one stage and not the next, it is a
:00:39. > :00:41.waste of money. So it has to be smaller and more fleet of foot but
:00:42. > :00:46.it has to be knitted together into some conception of where you deliver
:00:47. > :00:52.something. The rhetoric was all about productivity and, you know,
:00:53. > :00:55.harbour walls, cycle paths, new roads and bridges, they might, in
:00:56. > :01:02.the very long-term have an effect on productivity we have a deficit in
:01:03. > :01:07.productivity now and it's not show anything addresses this. There is a
:01:08. > :01:12.bit of extra money for science and innovation, but that is long
:01:13. > :01:16.gestation money, it seems to me. One of the things, in a way, the UK
:01:17. > :01:21.economy perhaps doesn't need a fiscal stimulus at the moment
:01:22. > :01:26.because we are at full employment. The part of the problem associated
:01:27. > :01:29.with that is we have lots of people employed in very low skilled jobs,
:01:30. > :01:36.they are not very productive in those tasks and what we really need
:01:37. > :01:41.to find is a way of basically enhancing the people who are in
:01:42. > :01:45.these kinds of jobs to move them up the productivity chain a bit. That
:01:46. > :01:50.could have a massive effect on the economy as a whole, but it seems to
:01:51. > :01:54.be a very difficult nut to crack. We will have to leave it there, thank
:01:55. > :01:59.you both very much for joining us. That's all we have time for, join us
:02:00. > :02:01.for First Minister's questions tomorrow. Until then, goodbye.