Thank you inviting me to speak to you today here at Sertec.

Im here because youre a great manufacturing company, of the kind we need to see many more of in this country. You make parts for British cars that are exported all around the world. When we hear on the news that our economy is recovering, people wonder what it means for them. For some it feels abstract, remote. But here theres nothing abstract about the 200 new employees this company has created in the last year. Or the 400 additional people that Sertec has announced today it will be taking on in the next four years. Thats a vote of confidence in the workforce here. Its a vote of confidence in the Midlands. Its also a vote of confidence in the economic plan that is working for Britain. This factory is a good place to talk about that plan. For you know more than most that the world does not owe Britain a living. Car manufacturing is fiercely competitive. Components can be sourced from around the world. You know that there are hundreds of companies in dozens of countries that would like to be manufacturing the products you make here. And its only because of your skill and your professional approach that the work comes here here to this company. If the quality slipped, or the costs went up or the company was badly run then the jobs would go elsewhere. What is true of this company is true of our country. Its because the rest of the world sees that Britain is a country where were now back in control of our destiny, a country where were supporting business, that jobs like the ones here today - are being created across our country.

Over one million new jobs. But if our country is badly run, if the finances are in a mess, and costs go up, and businesses dont feel welcome, then jobs would quickly disappear from Britain again. Our country was in a real mess a few years ago more so than almost any other major country in the world. Hundreds of thousands of people lost their jobs. Millions of families like yours have seen their incomes squeezed. Britain was made a lot poorer. Thats the terrible price people totally unconnected with politics and politicians pay when you get the wrong economic policy. Its why getting the right plan and holding to it is so important. Weve got the right plan now. Its a long term plan for turning our country around. Ive never promised it was going to be easy. I went out of my way to say the opposite and be open with you about the difficult sacrifices we had to make. And like the success of this company, its been a team effort with a lot of hard work. Now that team effort is paying off. The plan is working. For the first time in a long time, theres a real sense that Britain is on the rise. Jobs are being created. The deficit is coming down. That brings its own risks. As we start the New Year, I want to warn you about a dangerous new complacency around at the moment.

You hear some talking as if the hard part of the job is done and we can go back to the bad old habits. But beware those who come along this year and promise you easy answers, no more sacrifices, just more spending on this and more spending on that, all paid for by more borrowing. [political content removed] For the truth is there are still plenty of risks out there. Our biggest trading partner, the Eurozone, is still weak. And there are fears about slowing growth in the emerging economies further afield. Here at home, the banking system is still not working as we need it to, so were still fixing it. We have to do even more to encourage the exports and investment and saving our economy needs for a responsible recovery. Above all, weve still got a huge amount to do to reduce the deficit and get our debts falling. And its worth remembering, as the festive season comes to an end, that our own independent Office for Budget Responsibility, is predicting a slowing of quarterly GDP growth this year. So its far too soon to say: job done. Its not even half done. Thats why 2014 is the year of hard truths. The year when Britain faces a choice. Do we say: "the worst is over; back we go to our bad habits of borrowing and spending and living beyond our means and let the next generation pay the bill"? Or do we say to ourselves: yes, because of our plan, things are getting better. But there is still a long way to go and there are big, underlying problems we have to fix in our economy. More repairs.

More cuts. More difficult decisions. Thats the choice in 2014: to go on working through a plan that is delivering for Britain, putting us back in control of our destiny with the security and peace of mind that brings; or squander what weve achieved and go back to economic ruin. Ultimately its your choice a choice for the British people. Our long term economic plan has five key parts to it. The first is to go on reducing the deficit so we deal with our debts because thats the way to safeguard our economy for the long term and keep mortgage rates low. If 2014 is a year of hard truths for our country, then it starts with this one: Britain should never return to the levels of spending of the last government. Wed either have to return borrowing to the dangerous levels that threatened our stability, or wed have to raise taxes so much wed put our country out of business. Government is going to have to be permanently smaller and so too is the welfare system. When I took this job, Britain was borrowing more than 400 million every single day to pay for government spending. But as a result of the painful cuts weve made, the deficit is down by a third and were borrowing nearly 3000 less for every one of you and for every family in the country. Thats the good news. The bad news is: theres still a long way to go. Were borrowing around 100 billion a year and paying half that money a year in interest just to service our debts. Weve got to make more cuts. 17bn this coming year. 20bn next year. And over 25bn further across the two years after.

That's more than 60bn in total. Some say theyd deal with the deficit, but they shy away from committing to numbers. So this year, were going to ask Parliament to vote on these plans. I want our countrys commitment to economic stability entrenched. Even after weve reduced the amount we borrow each year, that still leaves us with a high debt from all the past borrowing. That debt leaves Britain vulnerable and I want to make us safe. So Im going to ask Parliament to vote too this year on a new charter for budget responsibility that will commit us to reducing those debts. It means not spending again when borrowing falls, including using surpluses in good years to reduce debt so in future, we fix the roof when the sun is shining. These votes will force Parliament to make a choice and confront the truth. We also need to confront truths about the cost of living. I know it has been hard for families since the crash. It is not a case of not understanding these difficulties. Its a case of being honest about why things are difficult and what we can actually do to make things better. The truth is that Britain is poorer because of the great recession that happened, and families feel that. As the economy recovers, so too will family finances. Peoples earnings are expected to go up. Inflation has fallen, and that helps. So too does the governments action to cut the costs we impose on your family gas and electricity bills. But theres no point pretending that theres some magic wand a Chancellor can wave to make the whole country feel richer than it actually is or that I can control the global oil price from an office in Whitehall.

Its simply not being straight with people. The only way to improve peoples living standards for the long term is for Britain to earn its way in the world and create more, better jobs just as this company is doing every day. And if government wants to find a direct way to put money into peoples pockets, you do that by permanently cutting peoples taxes by permanently cutting the spending those taxes pay for. Thats what the second part of our long term plan is about: cutting income taxes and freezing fuel duty to help hardworking people be more financially secure. This April, youll see what that means in your wage packet. Thats when we increase the tax-free allowance to 10,000 - and it means in total an extra 60 or so a month for the typical worker. Im also freezing fuel duty again this year, so your car will cost 11 less to fill up than it would have done. And from next year, there will be tax free childcare - to help working families. Making tax promises like these is meaningless unless youre prepared to say how youd pay for them. Weve paid for every single pounds worth of these tax cuts all 50 billion in total without a single penny of extra borrowing because weve made the savings needed in the cost of government. Its all about fairness and whose side youre on. And while no sensible Chancellor ever rules out tax changes, our whole economic plan can be delivered by reducing spending further not by increasing taxes. Thats how you create a country where people who work hard and want to get on are supported. You all know that there is no better financial security than having a job and so thats the third part of our plan: creating more jobs by backing small business and enterprise with better infrastructure and lower jobs taxes. Thanks to this plan, there are now a record number of people in work in our country. But as you know here at Sertec, the competition is fierce and the work can go anywhere in the world.

If we are going to go on being a country where companies grow, invest and want to take on new people, then weve got to make ourselves the best place in the world to do business. Thats why Im cutting business taxes, introducing an employment allowance that will benefit small firms most. Its why Im helping with high street business rates and now Im abolishing jobs tax altogether for those aged under 21. These are all steps were taking as part of our plan to create more jobs in Britain. Others say theyd do the opposite. They say businesses should pay more with a higher corporate tax rate. I think that would send a disastrous signal to the rest of the world about the direction Britain was heading in. It would cost jobs and investment. It would be a massive own-goal for Britain. It would also be a mistake if we didnt invest in future infrastructure that our country needs to be prosperous. Like the new power plants that keep factories like this going, and the roads and railways and broadband that carry our goods and services. Thats why weve made spending on these things the priority when money is tight. Its why I say we need more homes, and to support families who dream of owning a home with our Help to Buy. And its why were prepared to take controversial decisions on long term things like high speed rail, and the search for cheaper gas in shale. Because I dont want to condemn our country to ageing infrastructure and expensive energy when so many others in the world are heading in the direction of the future. A strong economy and a fair economy go hand in hand. We have to make sure the recovery supports those who work hard and play by the rules. Thats why the fourth part of our economic plan is about reducing immigration and capping welfare.

Migration, when its controlled, is an important part of a successful economy. But uncontrolled immigration, of the kind we saw over the last decade, brings pressures on public services and leads to abuse of our welfare system. Thats why weve tightened the rules so people cant just come to this country to claim benefits - and its why for the first time weve introduced an immigration cap. That new fairness applies across our welfare system too. Britain is a proud country that does, and in my view always should, protect the most vulnerable through our welfare system. But it should not be a welfare system that offers up benefits as a lifestyle choice. We need to be fair to those who need our welfare system and fair to those like you who pay their taxes for that system. Benefits are now capped, so no family gets more for being out of work than the average family gets from being in work. And with our new Universal Credit, were going to make sure it always pays to work. In 2014, were bringing in more changes. The long term unemployed are no longer going to get something for nothing. Theyll have to put back into their community, including compulsory work, with our Help to Work. And this year, we will for the first time set a cap on the overall welfare budget so it can be properly controlled. State pensions wont be included in that cap. As the Prime Minister said this weekend, we are committed to giving everyone whos worked hard and saved though their lives the generous state pension they deserve. And the country can only afford to do so because of the difficult decision weve taken on increasing the pension age as the population lives longer. That saves many billions of pounds for taxpayers; and we need to save billions more from the rest of the welfare budget. When you think about the competition this factory faces from around the globe, and the kind of world your children are going to grow up in, wouldnt it make more sense that

your government was spending your money on things like schools and science and a better NHS than more welfare? So heres another hard truth: welfare cannot be protected from further substantial cuts. I can tell you today that on the Treasurys current forecasts, 12 billion of further welfare cuts are needed in the first two years of next Parliament. Thats how to reduce the deficit without even faster cuts to government departments, or big tax rises on people. So when you see people on the telly who say that welfare cant be cut anymore - or, even worse, promising they will reverse the changes weve already made and increase housing benefit - ask yourself this: what public services would they would cut instead? what taxes they would put up in their place? or would they borrow and spend more, and risk our countrys economic stability again? This is what I mean when I say Britain has a choice. The truth is there are no easy options here, and if we are to fix our countrys problems, and not leave our debts to our children to pay off, then cutting the welfare bill further is the kind of decision we need to make. The final part of our economic plan is all about delivering the best schools and skills for young people so the next generation can succeed in the global race. I want the new jobs being advertised right here at this company to go to local kids coming out of the schools and colleges here. But thats only going to happen if standards are high enough. One of the most depressing discoveries of 2013 was that over the last decade Britains education fell even further behind other countries in the world. Reversing that is essential. Thats why were turning more and more schools into academies, and creating new free schools. Its why we insist on exam standards that are more rigorous.

Were also creating many more apprenticeships, so more young adults get a chance to earn and learn in companies like this. And this autumn well start lifting the cap we impose on the number of university students. If Britain is going to compete in the global race to the top, there should be no limits on aspirations we need all our young people to develop their talents to the maximum. So thats our long term economic plan with 5 key points. Cutting the deficit. Reducing taxes for hardworking people. Creating more jobs by backing business. Capping immigration and welfare. Delivering the best schools and skills. It is a plan that is working. But growing the economy, helping businesses succeed, reducing the deficit: these are not an end in themselves they are a means to an end. So let me set out clearly what that end is, what our long term economic plan is really for what the motivation behind it is. Our plan is about more than rescuing our economy from the brink of collapse. Its about instilling a new belief in Britain. So we can all live in a country that is in control of its own destiny in this world. A country where we can have the peace of mind that comes with knowing you can provide for your family. A country that offers security and a better life for the next generation. Peace of mind. Security. A better life for our children.

Controlling our own destiny. Our economic plan is for the long term. And just as there are no short-cuts to the work you do here, theres no short-cut to that economic security for Britain. Thanks to the hard work of the British people, our economy is on the mend and our country is doing better. But what was hard won, can be easily lost. So we have a choice in 2014. We can give up, go back to square one, risk everything. Or we can confront the hard truth that more difficult decisions are needed and work through the plan that is turning Britain around. I say: lets finish the job.