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Osborne says no tax cuts as S&P confirms UK's AAA rating

Chancellor pleases Standard & Poors as he says there will be no unfunded tax cuts, but points to a new policy of 'credit easing'.

Osborne says no tax cuts as S&P confirms UK's AAA rating

Chancellor George Osborne got another thumbs up from Standard & Poor's today as the credit ratings agency confirmed Britain’s AAA credit rating.

S&P’s announcement, though peppered with warnings, came as the chancellor told the Conservative Party conference that there will be no unfunded tax cuts, but paved the way for a new policy of 'credit easing'.

‘I’m a believer in tax cuts: permanent tax cuts, paid for by sound public finances’, Osborne told his audience in Manchester.

‘Right now, temporary tax cuts or more spending are two sides of exactly the same coin  - a coin that has to be borrowed…More debt that has to be paid off.’

Though the UK’s credit rating was affirmed at AAA, with a ‘stable’ outlook – only one of 18 countries to do so – the chancellor walks a fine line between preventing the economy from slipping back into recession and keeping the ratings agencies at bay. ‘Although the economy has exited recession, recovery has been lackluster, with output essentially stagnating since the fourth quarter of 2010,’ S&P said in its statement, emphasising that the government’s austerity plan will likely weigh on the economy.

‘The ratings could come under downward pressure if, against our expectations - and perhaps in response to weakening growth prospects – the coalition government's commitment to fiscal consolidation falters,’ S&P warned.

Osborne will not have disappointed the agency, which stripped the US of its triple A rating in August. ‘I’m a believer in tax cuts: permanent tax cuts, paid for by sound public finances, the chancellor said.

‘We’d be risking our nation’s credit rating for a few billion pounds more,’ he added.

Instead, Osborne said: ‘We will help the Bank of England keep interest rates at record lows while the economy is weak. In a debt crisis it is the most powerful stimulus that exists.’

Credit easing

The chancellor announced that the Treasury was working on ways to 'inject money directly into parts of the economy that need it such as small businesses', or ‘credit easing’. Though he gave few details, this would reportedly involve public money being used to buy corporate bonds to boost the supply of credit. 

Phil Orford, chief executive of the Forum of Private Business, a small business group, said: 'The announcement of credit easing is a positive signal but requires greater detail as to the form this might take and how it will free up credit for the businesses that need it.'

'Striking coincidence'

A spokesperson for S&P said that the rating affirmation had nothing to do with Osborne's speech. 'The timing of the announcement was entirely unconnected with George Osborne's speech, and the report was written without any knowledge of his speech'.

A Conservative Party press release described it as a 'striking coincidence of timing'.

To see S&P's statement, see below.

Unsolicited Ratings On The United Kingdom Affirmed At 'AAA/A-1+'

Outlook Stable

Publication date: 03-Oct-2011 00:05:10 GMT

LONDON (Standard & Poor's) Oct. 3, 2011--Standard & Poor's Ratings Services today affirmed its 'AAA' long-term and 'A-1+' short-term sovereign credit ratings on the United Kingdom of Great Britain and Northern Ireland (U.K.) The outlook remains stable. The transfer & convertibility assessment on the U.K. is also affirmed at 'AAA'.

The unsolicited ratings on the U.K. reflect our view of its wealthy and diversified economy, fiscal and monetary policy flexibility, and relatively adaptable product and labor markets. In addition, we view the U.K. as having deep capital markets with strong demand for long-dated gilts by domestic institutional investors. There is also demand from nonresidents for sterling-denominated U.K. government debt,  which provides some diversification to the U.K.'s investor base.

Although the economy has exited recession, recovery has been lackluster, with output essentially stagnating since the fourth quarter of 2010. In our view, the U.K. government's efforts over the next few years to engineer a steep correction in the fiscal accounts will likely weigh on the economy. This is especially pertinent in the short term as households delever and banks tighten lending terms. Private consumption will be dampened by hikes in indirect taxes, a re-indexation of welfare benefits, a weak housing market, and
sluggish nominal wage growth. These factors, in turn, will likely make corporations reluctant to invest in increasing capacity.

The reliance of U.K. economic growth in recent years on a limited number of sectors and regions, fueled by rising private- and public-sector debt, is an issue that the governing coalition intends to address. In our view, however, the official assumption that the private sector will quickly step in to replace the withdrawal of public spending may prove optimistic, especially given weakening external demand and underlying structural impediments to economic growth, which will likely take time to correct. These structural impediments include low absolute levels of labor productivity, a shortage of workers with technical and vocational education, and insufficient investment in infrastructure and innovation. Addressing these issues will be likely be difficult at a time of fiscal austerity.

As a result, we expect the U.K. will post relatively modest growth rates of around 1.8% on average in 2011-2014, lower than the 2.5% forecast by the Office for Budget Responsibility (OBR). Our expectation is based on our view that a rebalancing of the economy away from credit-fuelled private consumption and toward a higher contribution from more externally focused sectors will likely proceed more slowly than the OBR assumes. Nevertheless, accommodative monetary policy should, in our view, provide some support to the economy, as low interest rates keep private-sector debt-servicing costs low, and the
currency at competitive levels. However, we also think that economic rebalancing may lead to lower growth in tax revenues than the OBR currently projects, which could put pressure on public finances.

The government's fiscal mandate aims to balance the cyclically-adjusted current budget (which excludes the cyclical deficit and investment spending) by the end of a rolling five-year time horizon, currently fiscal year 2015-2016. The fiscal gap on the accruals-based European (ESA 95) accounting standard is projected to fall to 1.6% of GDP over the same period, compared with a deficit of 11.4% in 2009-2010. Revenue side measures have already been enacted to achieve frontloaded fiscal consolidation. Meanwhile, spending cuts, which will account for nearly three-quarters of total fiscal consolidation of £126 billion (equivalent to about 8.5% of 2010 nominal GDP), are being spread over five years.

Revenue measures include increasing VAT and capital gains taxes and a bank levy on wholesale liabilities. Budget spending reductions are focused on both consumption and investment, but investment is expected to face deeper cuts. Measures include means-testing and reindexation of welfare benefits, a two-year public-sector wage freeze, and a cut in departmental spending, apart from health care and foreign aid. The U.K. also has plans to raise the state pension age to reduce long-term spending pressures.

We expect the U.K. political consensus on fiscal policy will broadly hold for the near future, and that the government will implement the measures specified in its 2010 fiscal consolidation program in order to achieve its targeted savings. This process will be helped by the U.K.'s highly centralized political system, which allows for quick decision-making.

We forecast a general government deficit of around 3.3% of GDP in calendar year 2014, using ESA 95 methodology, compared with the government's 2.6% projection for fiscal 2014-2015. Standard & Poor's higher estimates for the deficit are largely based on our view that economic growth will likely be lower than that forecast by the OBR. We project the general government gross and net debt burdens to peak in 2013 at about 92% and 87% of GDP on an ESA 95 basis, respectively, before gradually declining (these figures include government loans for recapitalizing distressed financial institutions). The
market-value weighted average maturity of U.K. government debt was more than 13 years at end-June 2011, and this should help to contain the U.K. government's annual public gross borrowing needs compared with those of peer sovereigns.

We estimate as moderate the contingent liability stemming from systemic risk in the banking sector, public enterprises, and public finance initiatives. Under our criteria this suggests general government liabilities of between 30% and 60% of GDP. The banking system is backstopped by explicit and implicit state guarantees that have supported a return to profitability. Banks have also been addressing funding vulnerabilities by increasing reliance on customer deposits and lengthening the duration of their liabilities. Nevertheless, dependence on wholesale funding remains high, a large amount of term funding (including to the public sector) is set to mature by end-2012, and the banking sector is exposed to counterparty and rollover risk stemming from the interconnected European financial system. For example, we estimate that the external balance sheet of the entire U.K. financial system exceeds nine times current account receipts at year-end 2011.

Moreover, we note that debt levels in both the corporate and household sectors remain relatively high, at over 200% of GDP, and further falls in house prices or disposable incomes could halt the recent easing in bank loan losses, as could an eventual rise in interest rates. However, underwriting standards have tightened, with minimal new non-prime or high loan-to-value mortgage lending. The stock of foreign-currency lending to U.K. residents has traditionally been relatively low, as has lending to construction and development (about 3% of lending). The main loan concentration outside residential mortgages (55% of the loan book) is commercial real estate, which accounts for about 12% of lending. This sector has been showing some signs of stress.

Among other contingent fiscal liabilities, we include Network Rail's debt--equivalent to about 2% of GDP in 2011. We have also added in private finance initiative (PFI) debt. The failure of PFI project operators could, in our view, lead to government bailouts in order to safeguard the provision of important public services. Off-balance-sheet PFI projects signed by mid-2011 had a total capital value of 3.6% of GDP.

The stable outlook reflects our expectation that the government will implement the bulk of its expenditure-led fiscal consolidation program, which we believe is likely to cause the net general government debt burden to peak at about 87% of GDP in 2013 and decline thereafter.

The ratings could come under downward pressure if, against our expectations--and perhaps in response to weakening growth prospects--the coalition government's commitment to fiscal consolidation falters. Such downward rating pressure could stem from a reappraisal of our fiscal deficit forecasts or of our view of the government's ability to implement its current fiscal strategy. This unsolicited rating(s) was initiated by Standard & Poor's. It may be based solely on publicly available information and may or may not involve the participation of the issuer. Standard & Poor's has used information from
sources believed to be reliable based on standards established in our Credit Ratings Information and Data Policy but does not guarantee the accuracy, adequacy, or completeness of any information used.

Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at All ratings affected by this rating action can be found on Standard & Poor's public Web site at Use the Ratings search box located in the left column.  Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow 7 (495) 783-4009.

To see George Osborne's speech, see below.

Osborne: Together we will ride out the storm

Today, all around our country – indeed, all around the world – people are anxious, worried about their jobs, their families, how they’re going to pay the bills.

I come to you with words of resolve, determination, confidence and belief.

Belief that the British people will overcome this challenge as we have overcome so many before.

Together, we will ride out the storm.

I don’t want anyone to underestimate the gravity of the situation facing the world economy.

But I also don’t want anyone to think that the situation is hopeless; that there is nothing we can do.

Yes the difficulties are great.

But we should be careful not to talk ourselves into something worse.

And we should never take our eyes off the prize:

A British economy freed from its debts; growing strongly; spreading prosperity to all our people;

so we can fulfill that solemn promise to the next generation:

we will leave the world a better place than we found it.

Our economic problems were not visited on this country by some cruel act of god or blind force of nature.

They were created by the mistakes of human beings.

And the endeavor of human beings can put them right.

What were those mistakes?

There were three above all – and they are all connected with each other.

First, the last government borrowed too much money.

They thought you could borrow without regard to ability to pay, spend without regard for value for money, all on the premise that boom would never end in bust. 

They saddled the country with the worst debt crisis in our history.

What a catastrophic mistake. Let us make sure it never happens again.

“Economic advisor to Gordon Brown”.

I’m not sure I’d put that on my CV if I were Ed Balls.

It’s like “personal trainer to Eric Pickles”.

Although I have to say, when it comes to chasing down council waste, no-one runs faster than our Eric.

The second mistake was made by banks who ran up staggering debts of their own, buying financial instruments even they couldn’t understand.

The banks and those regulating them believed that the bubble would never stop growing, that markets were always self-correcting, that greed was always good, that their ponzi schemes would never collapse, and that none of the debts would ever turn bad.

The message from this hall is clear: they let down their customers, they let down their shareholders, and they let down their country.

And there was a third mistake.

Our European neighbours plunged headlong into the euro without thinking through the consequences.

How could they believe that countries like Germany and Greece could share the same currency when they had vastly different economies and no mechanism to adjust?

For generations to come, people will say: thank god Britain didn’t join the euro.

Let us recognize the foresight and the fortitude, the street stalls and the leaflets, the pavement pounding and the canvassing, of the people in this hall today, who campaigned to keep the pound.

And there’s one man here today, who precisely saw the consequences, warned of them, campaigned against them, put his reputation on the line to oppose them, was ridiculed for it, but who stuck to his course and was proved right – my friend, William Hague. I’ve waited ten years to say that.

And it’s thanks to the leadership of someone else here today that we have kept Britain out of the eurozone bailout of Greece, and out of their permanent bailout fund – our Prime Minister, the country’s leader, David Cameron.

And this also is my opportunity to thank my Treasury team, Mark Hoban, Justine Greening, David Gauke who you have just been hearing from, Greg Hands, and of course Danny Alexander. They are diligent and dedicated in their service of our country.

Tomorrow morning I will travel to a meeting of European Finance Ministers in Luxembourg.

My objective is clear.

The eurozone’s financial fund needs maximum firepower.

The eurozone needs to strengthen its banks.

And the eurozone needs to end all the speculation, decide what they’re going to do with Greece, and then stick to that decision.

Britain is not immune to all this instability.

Indeed, the resolution of the eurozone debt crisis is the single biggest boost to confidence that could happen to the British economy this autumn.

The time to resolve the crisis is now.

They’ve got to get out and fix their roof, even though it’s already pouring with rain.

A debt crisis in government. 

A debt crisis in the banks. 

A debt crisis in the euro.

We in Britain are paying a high price for these mistakes.

The price of jobs lost.

Of careers never started.

Of hopes dimmed.

And our covenant with the British people is this:

We will not stand by and let it happen.

We will do everything, work with anyone, overcome every obstacle in our path to jobs and prosperity.

So that together we will ride out the storm.

Each day, people suggest to me things we should be doing differently.

Some say, borrow more for more spending.

Or they say, borrow more for temporary cuts in tax – so you’d have to put taxes up even more later.

I’m a believer in tax cuts: permanent tax cuts, paid for by sound public finances.

Right now, temporary tax cuts or more spending are two sides of exactly the same coin  - a coin that has to be borrowed. 

More debt that has to be paid off.

I know we are asking a lot from people.

And I want them to know that when these arguments are put to me, I consider them carefully.

Don’t think I haven’t thought hard about what more could be done.

That I don’t explore every option.

I do.

But borrowing too much is the cause of Britain’s problems, not the solution.

That the world is in the grip of a debt crisis has not undermined that argument – it has made it stronger.

So let’s say we added to the structural deficit with more borrowing.

We’d be gambling the priceless fiscal credibility that this government has earned with the international markets on the bet that borrowing a few billion pounds more would make all the difference.

We’d be hazarding our precious low interest rates on a change of course that would put those rates up in the full knowledge that any extra billion pounds of public spending would be wiped out by billions of pounds more in higher interest costs for families, businesses, and taxpayers.

We’d be abandoning the deficit plan that has brought us the stability other nations today crave, for say five, ten, twenty billion pounds more of borrowed spending …

… on the illusion that such sums would transform our economy when we’re already spending three trillion pounds over the next few years.

We’d be risking our nation’s credit rating for a few billion pounds more …

… when that amount is dwarfed by the scale and power of the daily flows of money on the international bond markets, swirling around – ready to pick off the next country that lacks the will to deal with its debts. 

Conference, we will not take that risk.

We are in a debt crisis.

It’s not like a normal recovery.

You can’t borrow your way out of debt.

The fact that the world is in a debt crisis has not undermined that argument. It has made it stronger.

For too long, Britain has been running away from its problems.

We have to face up to them.

We can confront them.

We must fix them.

We must deal with our debts.

We can unblock our banking system.

We will help business create new jobs.

Here’s how.

First, we will help the Bank of England keep interest rates at record lows while the economy is weak.

In a debt crisis it is the most powerful stimulus that exists.

Nothing would be more fatal for an economy as indebted as ours than a sharp rise in interest rates.

Look at our neighbours today.

In Greece market rates are 20%.

In Portugal they are more than 10%.

In Spain and Italy they are now over 5%.

Our budget deficit is bigger than the lot of them – but here in Britain our market interest rates are today just 2.5%.

Fiscal credibility is not some abstract concept – it keeps families in their homes, firms in business, people in their jobs.

A 1% rise in our interest rates today would add £10 billion to family mortgage bills alone, at the worst possible time.

We have a deficit plan that commands the confidence of world markets and has brought stability at home.

It is a plan flexible enough to respond to good times and bad.

A plan independently verified by our Office for Budget Responsibility.

Backed by a Government united in delivering it.

And a Parliament that has legislated for it.

Very few countries can say that today.

The fact Britain can is thanks to the resolve of this Party.

And we are generous enough to say this: it is thanks to the resolve of the Liberal Democrats too – working as a Coalition, together in the national interest.

Keeping interest rates as low as possible for as long as possible is crucial for dealing with a debt crisis.

It’s the first part of our plan.

But because banks are damaged they won’t lend at the current low rates.

It’s like putting your foot on the accelerator but because the transmission mechanism isn’t working properly, the car wheels don’t respond.

So this is the second part of our plan.

We’ve got to get credit flowing in our economy.

Credit means investment. Investment means jobs.

We’re making sure that British banks are strong enough, holding enough capital to cover loans in an emergency.

We’ve expanded loan guarantees.

We’ve struck a deal with the big high street lenders to increase lending to small businesses by 15 per cent this year.

But all this may not be enough.

Of course the Bank of England have their own independent judgement to make on quantitative easing.

I’ve said many times before I will follow the procedures of my predecessor and give Treasury approval if they ask.

But there is more the Government itself can do to get credit flowing and encourage investment.

David Cameron and I have always said we would be fiscal conservatives and monetary activists.

Everyone knows Britain’s small firms are struggling to get credit and banks are weak.

So as part of my determination to get the economy moving I have set the Treasury to work on ways to inject money directly into parts of the economy that need it such as small businesses.

It’s known as credit easing.

It’s another form of monetary activism.

It’s similar to the National Loan Guarantee Scheme we talked about in opposition.

It could help prevent another credit crunch; provide a real boost to British business;

and over time help solve that age old problem in Britain: not enough long term investment in small business and enterprise.

And if this party is anything, it is the party of small business and enterprise.

And this brings us to the question about the kind of economy we want to see, and the kind of banking system we want to serve it.

We all know what kind of banking system we don’t want.

Let’s look at what happened at the Royal Bank of Scotland.

A bank where one individual was so focused on his own success and self-aggrandisment that he put at risk:

the livelihoods of the 200,000 people who worked for the bank
the 15 million people who entrusted the bank with their life’s savings
and the 60 million taxpayers who had to bail out the bank.
That’s what I mean by irresponsibility in business.

It’s what I mean by irresponsibility in government, when they don’t properly regulate banks, don’t control public finances, and leave our country exposed to the whims of the international money markets.

So I ask Ed Miliband, you say you wouldn’t bring back Fred Goodwin to run our banking system, so why on earth would you bring back Ed Balls to run our economy?

There are business practices that are irresponsible, and we will deal with them with a regulatory system that works.

But Labour’s latest policy, that there should be two newly created rates of tax is frankly ridiculous.

one for producers, one for predators
one for companies a Labour Chancellor likes, and one for companies a Labour Chancellor doesn’t like
Imagine a Labour Chancellor sitting there in Number 11 every morning, with a copy of the Financial Times in one hand and the Guardian in the other, weighing up corporate Britain on some homemade scales of justice.

What a completely unworkable idea.

I think it’s the moment when, as an opposition, Labour ceased to be either a producer or a predator.

You know, there was a time when Labour seemed briefly to realise that to win elections it had to accommodate itself to the real world, stop being anti-business, make peace with middle Britain.

Not now. It's over.

Once they cheered Tony Blair, now they boo him.

I fought three elections against Tony Blair, and I know the damage he did to our country.

But it wasn’t just him they were booing last week.

They were booing the millions of voters who once turned to Labour because they thought Labour had changed.

They were booing the business people who thought Labour wanted to work with them.

They were booing all those people who thought Labour had finally woken up to the modern world.

But to all those people who heard those boos and realised they were aimed at them…

… for all those people who aspire, who want a strong society and a strong economy …

… to those people abandoned by Labour today...

… I say the Conservative Party will be your voice.

So we are repairing the damage of an age of irresponsibility.

Ending the something for nothing society that flourished during it.

Reforming welfare yes, so that those who work get more than that those who refuse to.

But also introducing the first ever permanent bank tax;

the first ever higher levy for long stay non-doms;

the first ever treaty with Switzerland to get back tax money owed to this country.

I want people to be successful. 

To create wealth and jobs. 

To get the most out of society – and to put something back.

But I’ll tell you what this Conservative Chancellor says to rich people who evade their taxes:

We will find you.

And we will find your money

The days of getting away with it are over.

Just as tough on tax evasion as benefit fraud.

We are all in this together.

And that includes the banking sector.

Yes, we want Britain to remain the number one international centre for finance, employing thousands of people across the country.

Driving that business to Hong Kong or New York or Zurich would be completely self-defeating.

I understand the anger people feel about what happened.

I share it.

But ramping up the populist rhetoric is not going to stop banks failing.

We’ve got to do the real work to ensure that Britain’s largest industry is no longer the British taxpayer’s largest risk.

That’s why we’re abolishing Labour’s failed tri-partite system and putting the Bank of England back in charge of monitoring debt …

… a responsibility that should never have been taken away from them by Gordon Brown.

It’s why we’ve committed to the principles in the Vickers Report we commissioned, to ring fence our high street branches to protect them from their riskier trading floor activities.

We changed our Party for this moment.

So we can tackle the banks without fear;

So we can speak truth to power and wealth;

And so that the society and the economy we build works for everyone.

Reforming finance.  Keeping interest rates low.  Getting credit to small business.  Helping fix the Eurozone crisis.

These are all essential for growth.

And that would be ambition enough for most governments.

But they are not enough for us.

We have to help business create tomorrow’s jobs.

My children are eight and ten years old.

I don’t want them to read about how China has just built the world’s most advanced aircraft; how India is leading the globe in computer design; and have to say to my children: that used to be Britain. 

I want Britain to be the home of the greatest scientists, the greatest engineers, the greatest businesses – a land of innovators. And we can be.

The sacrifices we make, that’s what they’re for.

The determination I show, that’s what drives me.

Tomorrow’s world is being shaped here in Manchester.

Manchester, the first City of the Industrial Revolution.

The city where the first computer was built.

Where Rutherford split the atom.

And the Miliband brothers split the Labour Party.

Manchester, home to the two brilliant scientists I met this morning who have just been awarded the Nobel Prize for physics.

Their prize was for the discovery of a substance called Graphene. 

It’s the strongest, thinnest, best conducting material known to science, to be used in everything from aircraft wings to microchips.

The inventors could have gone anywhere in the world to conduct their research.

But they chose the University of Manchester.

Now countries like Singapore, Korea and America are luring them with lucrative offers to move their research overseas.

But they want to stay here, in Britain.

They think it’s the best country in the world for them and their work.

We’ve already protected the science budget.

And today, I am confirming that on top of that we will fund a national research programme that will take this Nobel-prize winning discovery from the British laboratory to the British factory floor.

And we’re going to fund the frontier of high performance computing as well to give the best tools to our designers and engineers.

Let’s stop thinking that the only growth that can happen in Britain takes place in one industry in one corner of our country.

We’re going to get Britain making things again.

I’ve never believed the Government should just stand on the sidelines, that it has no role in fostering enterprise and creating jobs.

I will intervene when the market doesn’t work, and set it free when it does.

We’ve been doing a huge amount in the past sixteen months to make Britain open for business.

We’re cutting business taxes to one of the lowest rates in the developed world.

We’re cutting income tax bills for over twenty million people – and taking over a million of the lowest paid out of tax altogether.

At a time of deficit reduction we’re actually increasing capital spending on roads and railways.

We’re creating a super-fast broadband network.

We’re reforming our planning laws so they work for our economy and our countryside;

We are reforming the tax system so multinationals are coming to Britain not leaving;

We are creating more apprenticeships than this country has ever seen;

We are simplifying our tax code;

For small businesses we’re freezing rates, cutting taxes, stopping new regulations in their tracks.

Don’t tell me this Government isn’t going for growth.

And that’s not it.

We are today extending mobile phone coverage for up to six million people.

The new Right to Buy and housing plans David Cameron announced yesterday will build 200,000 new houses and create 400,000 jobs. 

We’re launching new enterprise zones.

We’re helping unemployed people get jobs through our Work Programme; helping them start businesses with our Enterprise Allowance.

We’re reforming welfare; transforming education.

And we’re reforming public sector pensions so they are generous to public servants and also fair to taxpayers.

Let me say this to the unions: to go on strike in economic times like this, when you’re being offered pensions far more generous than most other people could ever afford, will hit growth, will cost jobs. It is totally irresponsible.

We’ve made all these changes in the space of just sixteen months.

But it’s not enough.

I know that.

We need to do more.

We need to make it easier for businesses to hire people.

I know it’s important to respect employment rights.

It’s the heritage of our party.

136 years ago it was a Conservative politician under a Conservative Government who introduced the Chimney Sweepers Act that brought an end to children becoming sweeps…

Unfortunately, unlike today, in their long battle our predecessors did not always have the good fortune of being supported by the Liberals.

But we also respect the right of the unemployed to get a job and not be priced out of the labour market.

And we respect the right of those who have spent their whole lives building a small business not to see that achievement destroyed by a vexatious appeal to an employment tribunal.

So we’re now going to make it much less risky for businesses to hire people.

We will double to two years the amount of time you can employ someone before the risk of an unfair dismissal claim.

And I can tell you today we are going to introduce for the first time ever a fee for taking a case to a tribunal that litigants only get back if they win. 

We’re ending the one-way bet against small business. 

Now we know that a decade of environmental laws and regulations are piling costs on the energy bills of households and companies.

Yes, climate change is a man made disaster. 

Yes, we need international agreement to stop it.

Yes, we must have investment in greener energy. And that’s why I gave the go ahead to the world’s first Green Investment Bank.

But Britain makes up less than 2% of the world’s carbon emissions to China and America’s 40%. 

We’re not going to save the planet by putting our country out of business.

So let’s at the very least resolve that we’re going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe.

That’s what I’ve insisted on in the recent carbon budget.

And there is one more thing I can tell you.

We’ve had to make difficult decisions about public spending;

and careful choices about what to protect.

So by relentlessly eliminating waste, we could afford to protect funding for Conservative priorities like the NHS and schools.

Two years ago I stood here and said we would cut the cost of central bureaucracy by a third.

Some were skeptical of politicians who said they could cut waste.

But we’re doing it and we’re ahead of plans.

So I can tell you that next year we will again freeze the council tax.

When so many bills are going up, council tax can be the one bill that doesn’t.

That’s help for families, so together we ride out the storm.

Resolve, Determination, Confidence, and Belief.

Resolve: that we will deal with our debts and reshape our state to live within our means.

Determination: that we will see through our policy, keep interest rates low, and get credit flowing.

Confidence: that there are things we can do, and measures we will take to get the economy moving again and create jobs.

And belief.

We do all this because we believe.

We do all this because we believe that our country’s best days lie ahead of us.

We do all this because we are optimistic for the future.

We do all this because we know that the sacrifices our country makes will not be made in vain.

That the difficult choices we have made will not have been made for nothing.

We do all this for a better Britain, and a stronger economy.

To which everyone can contribute; from which everyone will gain.

An economy that works for all.

I don’t pretend to you that these are not difficult days

and that there are not difficult days ahead;

but together we will ride out the storm.

And together we will move into the calmer, brighter seas beyond.

5 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Oct 03, 2011 at 18:20

Wonder what the situation would have been under Gordan, we would probably all be on benefits by now or Govt. employees, with the EC bailing us out.

Credit easing...... what for .....further debt...... only positive indication that the Govt. is in control is when we have tax cuts - PAYE & NI. and less Govt. Ponzi Bonds.

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In the Dark

Oct 03, 2011 at 21:06

Interesting, of course I would appreciate a personal tax cut just to help my cash flow or a pay rise would help. But debt reduction is the current name of the game. Still early days, but at what point is the Chancellor going to encourage us wealth creator to step up our game?

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Oct 03, 2011 at 21:39

I notice the Labour Party and Unions grizzle most about his policies, but surely its their members who have most to gain by low interest rates. Its people with investments and money in the bank that are the big losers.

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Oct 03, 2011 at 22:07

re: "public money" being used to buy corporate bonds

I'm not sure "public money" is the correct term, this is new money that the Bank of England creates electronically so it will increase the monetary base and of course cause the inevitable inflation.

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Martin Drew

Oct 04, 2011 at 09:27

It's a guessing game. Credit easing by buying corporate bonds with public money will, if carefully managed, eventually allow those bonds to be redeemed at face value plus interest and so the public will get its money back and, if the businesses have used the money to expand, more people will be employed and so less public money will be being spent on job seekers allowances and other benefits and, assuming the jobs are good skilled work, the hitherto benefit beneficiary will be paying NI and tax. If it is not carefully managed the money will disappear into Eastern Europe as a result of fraudulent bonds being created, no-one will be employed and the public will never get its money back.

On the basis of past experience I fear the latter is the more likely outcome, but I hope I am wrong.

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