Surplus Target and Corporation Tax

Debate between Lord Tyrie and George Osborne

Monday 4th July 2016 Commons Chamber

[Mr Osborne]

When I became Chancellor, there was a question mark over Britain’s ability to pay its way in the world, and that was reflected in our bond yields, but because of our determined effort over the last six years, when we have hit an economic shock, as we have done in the last two weeks, the response has been a fall in bond yields—because people have confidence in the UK.

First on planning, extensive contingency plans were in place to deal with financial market disorder as a result of a leave vote, and the fact that we are not debating that today shows that those plans have been effective—we remain vigilant, but those plans were in place. Secondly, we must now decide on the new model of our relationship with the EU. That was not on the ballot paper and has to be a decision for Parliament. We set out the options for the country in advance of the referendum debate, and now we must have that discussion.

Thirdly on planning, the fiscal charter specifically provides for the impact of a negative shock, which is what we have had, and as a result the rules of the charter apply. As I say, it is unlikely that the surplus will be achieved in 2019-20—although that will be for the OBR formally to assess—and it will then be up to the Chancellor to produce new plans to restore the public finances to surplus and for Parliament to vote on them. We thought about that in advance: it is in the charter that the House voted on.

The hon. Gentleman talked about investment. On Friday, I met the Labour leader of Manchester City Council, Richard Leese. We talked about how we could redouble our efforts to invest in transport across the Pennines and about devolved powers for mayors and the like. That will be part of our response to the disfranchisement that too many of our citizens in the midlands and the north of England have clearly felt.

Finally, the hon. Gentleman also asked about business confidence and the corporation tax cuts. Not only have our corporation tax cuts given us the lowest corporation tax rate of all the advanced economies of the world, but we have seen a 20% increase in receipts from corporation tax—because businesses are coming to this country, growing their businesses in this country and employing 2 million people. The best response we can send to the world to show that we are open for business is to go on reducing business tax.

[Mr Andrew Tyrie (Chichester) (Con)]

The Chancellor has done the right thing to buttress the decisions of the Bank on monetary policy with fiscal measures, particularly by allowing the automatic stabilisers to kick in. The 2020 fiscal surplus target was always likely to be a casualty at the first sound of Brexit gunfire, and so it has proved—hence the need to take advantage of the charter’s flexibility. Does he agree that, in order most effectively to bolster credibility in the coming years, over the next few months we need to develop a rule that sets fiscal policy in a longer-term framework and which is resilient to changes in the OBR’s short-term forecasts?

[Mr Osborne]

It is clearly likely that we will be impacted by a cyclical downturn in the public finances—we can already see the growth forecasts being adjusted. The OBR will help us to make an assessment of the referendum result’s structural impact on the public finances and our chances of hitting the target—as I say, it looks unlikely that we will hit it—and then, under the fiscal charter, it will be up to the Government to produce a plan that will be debated and voted on by the House. We have provided for this contingency, and now we need to let the OBR do its work.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 7th June 2016 Commons Chamber

[Mr Osborne]

Over the past five or six years, we have greatly increased the UKTI budget, but as with every Department, since it is paid for by the taxpayers that the hon. Gentleman and I represent, we need to make sure we get value for money. The new head of UKTI is ensuring that the money is going to the frontline to support small and medium-sized Scottish exporters and others in selling around the world. He should welcome the enormous success of many Scottish businesses, from the whisky business to agricultural industries and manufacturing, in exporting around the world, with the support of UKTI—the clue is in the first two letters.

[Mr Andrew Tyrie (Chichester) (Con)]

The Chancellor has introduced a subsidy for peer-to-peer lending tax relief on ISAs, which is a high-risk, high-return market. Most people support the intention, which is to increase competition in the SME lending market, but many are becoming concerned that some of these loans are being marketed to those who cannot reasonably be expected to understand the risks. What is the Treasury doing to ensure that the taxpayer does not end up encouraging the marketing of schemes to people who can least afford to lose the money?

[Mr Osborne]

At its own request, the peer-to-peer lending industry is now regulated by the Financial Conduct Authority, which is alert to the risks that my right hon. Friend identifies, but I wish to make a broader observation. In the financial crash, we saw the limitations of the UK’s credit system, where many companies were reliant on bank finance. In the last few years, we have tried to broaden the range of financing options for small and medium-sized businesses, in terms of not just capital markets but innovative new products such as peer-to-peer lending. Using things such as ISA wrappers to encourage this new form of finance for small businesses is a good thing for our economy.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 19th April 2016 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

The recent information-sharing agreement that the Chancellor has just referred to could turn out to be a very significant step in the fight against tax evasion, and I support it. The public are right to be upset when businesses or individuals do not pay their fair share of tax. Evasion needs to be rigorously pursued, but does the Chancellor agree that when that is caused by tax avoidance, it is the job of Government to simplify the tax code and close the loopholes exploited by the avoiders?

[Mr Osborne]

I broadly agree with my right hon. Friend. I welcome the welcome that he gives to the agreement that we have with four other European countries on the exchange of information on beneficial ownership. We hope that will set an example that not just the rest of Europe, but the rest of the world will follow.

On tax avoidance, of course it is the responsibility of the House of Commons and the Government to try to make sure that the tax code and tax law are simple and do what is intended, but we are in a constant race, as has always been the case, against highly paid accountancy firms and the like, who design very contrived systems to avoid tax and avoid the intention of Parliament. There has been a significant development in our jurisprudence whereby the Supreme Court now takes into account the intention of Parliament, as well as the letter of the law. I think that is right, because as I say, there is sometimes a bit of an arms race in relation to the tax code, and the wishes of Parliament should be taken into account by our courts.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 1st March 2016 Commons Chamber

[Mr Osborne]

I believe that the best way to help the UK steel industry is both to take action at home and through being part of a large economic bloc—in other words, the European Union—raising our concerns about, for example, Chinese steel dumping. Frankly, when we make that argument with China, our voice will be amplified if we make it as part of the EU as opposed to making it alone.

[Mr Andrew Tyrie (Chichester) (Con)]

In the event of a no vote, the Government have committed themselves to triggering article 50 straight away. I cannot see the point of that. Why do not the Government give some time between a no vote and the triggering of article 50, to enable a discussion to take place with counterparties and see the extent to which good faith could be established with the countries of the European Union? It seems illogical to restrict ourselves in that way.

[Mr Osborne]

It is not illogical that if the country votes to leave, we leave the European Union. That is the choice for the people of this country. The only available mechanism is the triggering of article 50, which gives a two-year time limit. Of course, we would try to negotiate in good faith and an extension can be achieved, but only with the consent of 27 other nations. People need to be aware that there are not going to be two referendums. It is decision day on 23 June. People need to choose and I think that voting to remain in the EU is the best outcome for our economic and national security.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 19th January 2016 Commons Chamber

[Mr Osborne]

Of course the redundancies that have been announced at Tata Steel and elsewhere in the steel industry are a real matter of regret. We are providing all the support we can to the families who are affected and helping them to get into work. We are backing the steel industry by responding to its requests that we cut energy bill costs—that policy comes into effect today; that we change the rules around procurement so that companies and the Government buy British steel; and that we take action internationally against cheap imports from China. Not one of those things was done when there was a Labour Government, and during that period the number of steel jobs in this country fell by 50%. We will not take lectures from the Labour party, but we will back our steel industry.

[Mr Andrew Tyrie (Chichester) (Con)]

Does the Chancellor think that the stamp duty surcharge that was announced in the autumn statement for the buy-to-let market will inhibit or advance labour mobility?

[Mr Osborne]

I think that it will help to promote home ownership, because it will mean that there is a more level playing field between an owner-occupier who wants to buy a house, a first-time buying family and a buy-to-let landlord. There is nothing wrong with people investing in property, but there should be a level playing field so that we reverse the decline in home ownership in our country.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 1st December 2015 Commons Chamber

[Mr Osborne]

I am very happy to give consideration to that. We are operating within the maximum flexibility that we believe the European Union rules allows us on this. Any postcode that possibly qualified we put forward for the scheme we introduced in the last Parliament, but I am happy to look at specific cases in Northern Ireland to see if they qualify, too.

[Mr Andrew Tyrie (Chichester) (Con)]

The Chancellor said the apprenticeship levy is a levy, but of course what many businesses see is a 0.5% tax on employment collected through PAYE. Does the Chancellor think that is compatible with the tax lock? While he is answering that question, will he also say what estimate he has made of the cost of the apprenticeship levy to the public sector, which I cannot find anywhere in the Red Book?

Spending Review and Autumn Statement

Debate between Lord Tyrie and George Osborne

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

I want to thank the right hon. Gentleman, who has made sensible and constructive interventions in this debate over recent weeks. The members of his Select Committee also took their task very seriously. Over this Parliament, tax credits are largely being phased out as we move to the new simpler—and better, in my view—universal credit. People will be protected during the transition to universal credit. As he says, we are at the same time reducing the proportion of people’s income that will come from welfare payments because more of it will come from the wages paid by their employers. I do not think we should be supporting and subsidising low pay through the tax credit system in the way we have in the past. In the phasing out of tax credits, the introduction of universal credit and the reforms announced in the summer Budget, including limiting support to families with up to two children, we are creating a fairer welfare system that is fair to the taxpayer.

[Mr Andrew Tyrie (Chichester) (Con)]

A key judgment that the Chancellor has had to make is how much to cut the deficit. With the euro crisis unresolved, the Chinese economy more fragile, the middle east unstable and the US likely to raise rates shortly, does he agree that, given all those risks, it would be not only imprudent but extremely dangerous not to reduce the deficit now, while we have the opportunity to do so? We can never rely on forecasts. Will he confirm that the OBR’s sensitivity analysis towards the back of its report, which I have had a chance to look at only briefly, demonstrates clearly that any future downturn in the public finances would require further retrenchment and that it is therefore absolutely essential we take every opportunity to tighten the finances now, while we have the chance?

[Mr Osborne]

My right hon. Friend is absolutely right. As an economy, we have been growing faster than most of the advanced economies of the world. In that situation, not getting the deficit and the debt falling is really signalling to the world that we are never, ever going to try to bring public finances under control. As it is, we have debt falling in every year of this forecast, and it is lower than the forecast in the Budget. The deficit is also falling and overall borrowing is lower in this forecast than in the one I produced in the summer Budget. We take these steps to pay down our debts. Our national debt, at 80% of national income, is uncomfortably high. It does not necessarily, therefore, give us all the flexibility we would want if we were to be hit by some kind of external shock and is all the more reason for us to use the better times to pay down the debt.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 27th October 2015 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

Does the Chancellor agree that whatever our views may be in this House on the tax credit dispute, in overturning the settled will of the elected Chamber, the unelected Lords has exercised the powers of a Chamber of Parliament in the tax area, whereas for at least 100 years it has been well established that it has, and should have, only the legitimacy of a consultative assembly?

[Mr Osborne]

The Chair of the Treasury Committee makes an important point. Of course, on only five occasions in recent decades has the House of Lords blocked or rejected a statutory instrument, but never on a financial matter. We heard a whole range of opinions yesterday—from Lord Butler, the former Cabinet Secretary, to constitutional experts such as Vernon Bogdanor—telling us that this was unprecedented. We are going to have to address it—the Prime Minister has made that very clear. That is what we have to do to make sure that the elected House of Commons is responsible for the tax-and-spend decisions that affect the people of this country.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 21st July 2015 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

I am sorry about that, Mr Speaker. I thought that the Chancellor was just getting into gear.

Growth will, of course, depend partly on what the Bank of England does. Over the past five years, the Chancellor and Parliament have granted the Bank huge new powers over not only monetary but, in particular, financial policy, which directly affect millions of people. Does that not make the reforms of the way in which the Bank runs itself that the Chancellor will propose, along with greater accountability for its new board—for which the Treasury Committee, among others, has been pressing for a long time—all the more essential?

[Mr Osborne]

I pay tribute to the work that was done during the last Parliament by the Treasury Committee, some of whose members are still in their posts, and I again congratulate my right hon. Friend on remaining Chair of that Committee. Today we are publishing the consultation document on the new Bank of England Bill, which will come before Parliament in due course. The Bill follows the reforms announced by the Governor of the Bank, which built on the work done by the Treasury Committee and others. It will ensure that a modern Bank of England is able to exercise the leadership that is required for the delivery of economic and financial stability. Moreover, for the first time—this is crucial, and I think that Parliament will appreciate it—the Bank will be open to the advice of the National Audit Office, and the value for money that that can deliver.

Greece

Debate between Lord Tyrie and George Osborne

Monday 6th July 2015 Commons Chamber

[Mr Osborne]

I thank the hon. Gentleman for his remarks and his questions, which were sensibly put. I agree that what we want is an orderly way forward, and the risk is a disorderly financial situation in Greece. I have spoken to several of my counterparts, including, as I have just said, the head of the Eurogroup and the managing director of the IMF; the Prime Minister has spoken to the German Chancellor and others. The simple fact is that the eurozone is waiting for the Greek Government to make a new proposal. They have requested a new programme, and they are expecting to receive the details of that request at the eurozone meeting that will be held tomorrow, but we should not underestimate the importance of the Franco-German summit tonight to see what general approach the eurozone will take to this situation.

Greece is now in arrears, so the IMF cannot actually make any payments under the terms under which it has always operated. The IMF would in any case have to operate alongside the eurozone, as it has made very clear.

The UK is monitoring developments in the four branches of the Greek banks and the one subsidiary that we talked about. That subsidiary is regulated by the Prudential Regulation Authority, but the Bank of England is also keeping a close eye on those four branches.

The hon. Gentleman asked about the bank deposit regulation and the insurance we offer. It is an EU directive that sets that rate in euros. The pound has strengthened and we actually achieved a bit of flexibility in the way the directive operates by delaying the change we need to make to the end of this year, to give plenty of time for people to become aware of the change and so that they know how much of their deposits will be protected.

We are in contact with the various tour operators, which are generally well organised to deal with various situations that might occur in holiday destinations. As I said, we have taken the precaution of increasing the consular staff—not just in Athens, but on the islands where we have a consular presence.

The blunt truth is that there are two timetables at the moment, and it is not clear how they will become aligned. The first timetable is political—the meetings that need to take place, the eurozone working together to find a common position and the proposal from the Greeks. All that looks like it will take some time. At the same time, the other timetable is the situation in the financial system in Greece—that, of course, is operating at a much faster pace. The challenge for the eurozone and for Greece is to bring those two timetables together and find an orderly solution.

[Mr Andrew Tyrie (Chichester) (Con)]

I realise that the Chancellor will want to be somewhat guarded in his reply, but how far can he go towards agreeing that Greece probably cannot recover at current euro exchange rates and almost certainly will not be able to repay all its debts, so the best course now—for Greece and the eurozone—would be to encourage Greece to recreate its own currency and for the eurozone to take all the necessary steps to prevent contagion?

[Mr Osborne]

Just as when people try to tell us what currency we should adopt we do not take too kindly to it, we should respect the decision of the Greek Government and people about the currency that they want to use. Clearly the Greek Government are saying that they want to remain in the euro. The tension, which has been there all along, is between that desire to remain in the euro and the conditions of membership that the other members of the eurozone are placing on them. That is the dilemma that has not yet been resolved.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Wednesday 17th June 2015 Commons Chamber

[Mr Osborne]

We made it very clear when we set out our proposals on housing benefit that we would protect particularly vulnerable people, such as those that the hon. Lady refers to, and I welcome her to the House.

I would make a broader argument about welfare reform. This country faces a very simple choice. We have 1% of the world’s population and 4% of its GDP, but we undertake 7% of the world’s welfare spending. We can either carry on on a completely unsustainable path or we can continue to reform welfare so that work pays and we give a fair deal to those on welfare and a fail deal to the taxpayers of this country who pay for it.

[Mr Andrew Tyrie (Chichester) (Con)]

Does the Chancellor agree that today’s elections to chairmanships of Select Committees are a great success story for Parliament as a whole? [Interruption.] Particularly for me—[Interruption.] I am very grateful for that further gesture of support from the whole House of Commons. Since those elections are a success, and particularly if the Prime Minister is going to miss a few Wednesdays, will my right hon. Friend suggest to the Prime Minister that he appear before the Liaison Committee more than three times a year?

[Mr Osborne]

I will certainly pass on the request. My hon. Friend is right to draw attention to the success of these elections, which did not exist before the Conservatives came into office. I am not sure that his own election is the best possible example, as I think he is unelected and unopposed in his own election.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 16th June 2015 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

The Bank of England may be operationally independent, but does the Chancellor agree that Parliament and the Treasury Committee are likely to see the Bank as having a duty to share its thinking, at least as far as it affects its statutory objectives of monetary and financial stability, on the impact of the UK’s membership of the EU?

[Mr Osborne]

I certainly do not presume to tell the yet-to-be-formed Treasury Committee how to go about its business, but I would be very surprised if it did not want to have sessions on this vital issue of Britain’s future membership of the European Union. It is of course within its power to ask the Bank’s Governor and indeed other members of the Bank of England to attend; they do attend regularly. It would be very surprising if the Bank of England was not engaged in these crucial economic and financial issues. That is part of its statutory responsibilities, and I think we would all be disappointed if it was not engaged.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 27th January 2015 Commons Chamber

[Mr Osborne]

I agree with the hon. Lady and I know that she is deeply involved in these issues as the Member of Parliament for Aberdeen South and chairs the all-party committee on these issues. We have to work out how we protect the industry as best we can from a rapid fall in the world oil price, and we must make sure that the brilliant skills, jobs and investment in north-east Scotland continue. That is why we anticipated the challenge by launching the consultation in the autumn statement and making immediate cuts to the tax regime. We have to take further steps over the coming year because we are determined that this brilliant industry will have a brilliant future.

[Mr Andrew Tyrie (Chichester) (Con)]

Will the Chancellor confirm that when the oil price halves, as we have just seen, that is likely to be extremely good news for the British economy? Will he also confirm that this fall in the oil price is particularly good news for the 70% of car owners who need cars to get to work? The House will realise that no Chancellor will want to commit himself now, but will he at least agree that there is now great merit in a period of stability in fuel duty?

[Mr Osborne]

My hon. Friend is right. As I said at the beginning, the fall in the oil price, for all the challenges it poses in the North sea, is good for the British economy and good for British families. It is being felt at the pump, where petrol is now cheaper than when this Government came into office. One of the reasons why is that we abolished Labour’s fuel duty escalator. As a result, petrol is 20p per litre less than it would have been had we stuck with the shadow Chancellor’s disastrous tax plans. We have to make sure that motorists feel the full benefit of the falling oil price. As I say, it was a good move to abolish that disastrous escalator.

Charter for Budget Responsibility

Debate between Lord Tyrie and George Osborne

Tuesday 13th January 2015 Commons Chamber

[Mr Osborne]

There has been a constructive alliance between Labour civic leaders in the north of England and Conservatives to bring an elected mayor to Greater Manchester and deliver High Speed 2. We have done so in the face of the opposition of the Labour shadow Chancellor, who has tried to frustrate all these things all along. Thankfully, Labour civic leaders are not listening to those on their own Front Bench anymore.

Although the deficit has been halved, at 5% of our national income, it is too high. Our national debt, at 80% of our national income, is too high.

[Mr Andrew Tyrie (Chichester) (Con)]

There have probably been about half a dozen attempts to try to buttress fiscal policy with rules in the past 30 years. Most of them have collapsed at some point during the business cycle. To get something that works, does the Chancellor not agree that we need something credible, not just for dealing with the deficit but for reducing the stock of debt, and that that must mean over the cycle running a surplus?

[Mr Osborne]

My hon. Friend is absolutely right. It is not enough to eliminate the deficit. We then have to get our national debt down. It is too high and leaves us exposed to the next economic shock. We do not want to go into the next economic shock with a debt-to-GDP ratio of 80%. That is precisely why, in good economic times, we need to be running an overall budget surplus. That is the only credible and sustained way to get national debt down. That is the way to fix the roof when the sun is shining.

Autumn Statement

Debate between Lord Tyrie and George Osborne

Wednesday 3rd December 2014 Commons Chamber

[Mr Osborne]

Let me also pay tribute to the former Chancellor for his work on the Scottish referendum campaign. To be fair to him, what we did not know in the debate before the previous general election, but which has subsequently been revealed in the various memoires that have been written about the Government he was at the heart of, is that he was arguing internally for the Government to set out the spending cuts that they would make. Indeed, he argued that the Labour Government should commit to a VAT increase, which of course the Labour party, somewhat hypocritically, opposed several months later when we had to take that step. What we know about his role in the previous Government does him great credit.

On the right hon. Gentleman’s point, as I explained in my statement, although borrowing falls in each year, the OBR has revised up the borrowing for the first two years but then revised it down, compared with the Budget, in the years after that. The structural deficit continues to fall at the same pace as in the Budget. This is not the big deterioration in the public finances that everyone has been predicting—it was on the front pages of many newspapers, and indeed the shadow Chancellor went about repeating it. That has not happened. With regard to lower tax receipts, I gave the tax receipts forecast but pointed out that one of the reasons why there has not been that deterioration in the public finances is the big reduction in debt interest payments.

[Mr Andrew Tyrie (Chichester) (Con)]

The OBR forecasts that over the course of this Parliament the eurozone will grow at a little over 2% and the UK will grow at nearly 9%, which of course is a tribute to the capacity of UK businesses, particularly small businesses, to adapt to the huge economic shock of the euro crisis. However, just doing a bit better than the eurozone is not enough; our prosperity will depend on whether we can absorb the annual shock of increased global competition. Is not it therefore crucial, as we have seen with the pressure on Northern Ireland’s corporation tax rate, that we do much more to sustain a globally competitive tax system?

[Mr Osborne]

My hon. Friend is absolutely right. It is not enough just to do better than our neighbours, because of course they have their own problems and are stagnating. If one looks at all the various indexes of global tax competitiveness and global innovation, one sees that the UK is climbing up the ranks. We in the Treasury certainly seek to mark ourselves against the most competitive economies in the world, not just those on the continent of Europe. The steps I have outlined today, which probably will not make it on to the front pages of the newspapers, such as the increase in the small business research and development tax credit, the large company tax credit and changes to entrepreneurs’ relief and its relationship with the enterprise investment scheme, are all designed to support research and development and entrepreneurial business in this country.

EU Budget (Surcharge)

Debate between Lord Tyrie and George Osborne

Monday 10th November 2014 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

This is almost like Budget day. Was it not crass insensitivity on the part of the Commission to make such a demand on several countries in this way? The Government have negotiated an interest-free deferment and a reduction in the sum outstanding, and exactly what those are worth is something that the Treasury Committee will want to examine with the Chancellor in public session in due course. In the meantime, will he give us further details to assure us that such demands will not be made on us or any other country again?

[Mr Osborne]

I welcome my hon. Friend’s support for what has been announced. There was agreement around the table that we should permanently change the EU budget rules. We shall have to consult the European Parliament on that, but it does not have a veto. We should change those rules so that if there is an exceptionally large payment or adjustment in future, as there was this time, member states cannot be bounced with a bill like this. There was strong support around the table for that change.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 4th November 2014 Commons Chamber

[Mr Osborne]

We do not need to raise VAT, because our plans are paid for by the Government living within their means. Does the hon. Lady speak for the Labour party, because she seems to be opposing the increase in the personal income tax threshold? That is a policy that has lifted many low-paid women out of income tax altogether, and I find it surprising that once again the Labour party is against the interests of hard-working people.

[Mr Andrew Tyrie (Chichester) (Con)]

By raising the personal allowance, the Chancellor has pulled 3.2 million people out of tax altogether. At the same time, however, he has dragged 1.6 million people into paying the higher rate of 40p. It is the marginal rates that matter, and that is a massive disincentive to wealth creation in this country. Does he acknowledge that, as soon as the fiscal room to do so is available, it will be essential to act to take as many people as possible out of higher-rate taxation altogether?

[Mr Osborne]

As my hon. Friend knows, people earning up to £100,000 who are paying the higher rate have seen the benefit of the increase in the personal allowance. They have seen their income tax bills fall. He is right to say that more people have been pulled into the 40p rate, however, and that is why we are proposing to increase the threshold to £50,000. That will be in our election manifesto, and it is something that we can deliver in the next Parliament so that people on middle incomes, as well as those on lower incomes, can benefit from a tax-cutting Conservative Government.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 2nd September 2014 Commons Chamber

[Mr Osborne]

The first thing I would say to the hon. Gentleman is that of course we need to tackle long-standing regional disparities in our country, and we are putting investment into Wales, including transport and infrastructure investment, to try to lift the economic performance of Wales. The broader point I make is that we need to bring the economic geography of our country closer together. That is an argument I have made about the north of England. The gap between the regions grew under the last Labour Government. By making the long-term investment under our long-term plan we hope to reduce the disparities under this Government.

[Mr Andrew Tyrie (Chichester) (Con)]

The crucial task now is to develop a long-term supply side reform agenda. Does the Chancellor agree that at the heart of that must be policies to release the energies of millions of small businesses and sole traders up and down the country? With that in mind, will he examine the policies of both the Institute for Fiscal Studies and the Mirrlees review, which in different ways have proposed to reduce the burden of national insurance contributions when that is affordable? Is that not an essential part of Britain’s long-term recovery?

[Mr Osborne]

I agree with the sentiment that my hon. Friend expresses that we want to make it easier to employ people. I would argue that the reductions that we have already made in national insurance on coming into office and the provision of an employment allowance, which has been enormously popular among smaller businesses, and next year’s move to remove under 21-year-olds from the jobs tax are all steps we are taking to support the creation of jobs in the economy. Of course, the Labour party would like to put up the jobs tax, but that would be deeply counter-productive and put people out of work.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 24th June 2014 Commons Chamber

[Mr Osborne]

I would say that through our long-term economic plan we are creating jobs in the hon. Gentleman’s constituency, with the economic security that that brings. We are legislating to deal with the abuse of zero-hours contracts, which for 13 years the Labour party did nothing about, and we have discovered in the last couple of weeks that the shadow Chancellor, who from the Opposition Dispatch Box has criticised zero-hours contracts again and again, uses them in his own office.

[Mr Andrew Tyrie (Chichester) (Con)]

If economic growth turns out to be higher than currently estimated, as has been the case in several quarters over the past 18 months, does the Chancellor agree that that might provide part of the answer to the so-called productivity puzzle? Has the Treasury done any work on that question, and does he agree with the Governor of the Bank of England that we need to do a lot more to improve Office for National Statistics data?

[Mr Osborne]

I agree with my hon. Friend that one of the big challenges now is to improve productivity, which was clearly impaired by the financial crisis. Obviously, in doing that we need to make sure that the data we receive from our ONS is of the highest quality. People at the ONS work incredibly hard on that, but of course there is always room for improvement, as the Governor of the Bank of England pointed out today, and we will work with the Bank and the ONS to ensure that any improvements that can be made will be made.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 29th April 2014 Commons Chamber

[Mr Osborne]

Absolutely, Mr Speaker: having heard all the bad economic news in the previous Parliament, I thought Parliament would want to hear some good economic news. The reduction in fuel duty is one of the number of steps we have taken to support the British economy and families. As my hon. Friend says, we have just published a study that shows that the reduction and freeze in fuel duty has the potential to increase GDP by 0.5%. As Conservatives, we understand that lower taxes mean higher economic growth.

[Mr Andrew Tyrie (Chichester) (Con)]

The whole House will welcome the fact that we now have a policy to drive down costs on hard-pressed motorists, who have found it very tough in recent years. Can we take it from the Government that that reflects a wider shift in policy and that they are seeking to bear down on other energy input costs, including those of fossil fuels, in order to help hard-pressed consumers and encourage British competitiveness?

[Mr Osborne]

We need to have competitive energy prices while at the same time building a sustainable energy mix. The major £7 billion package in the Budget to help with the cost of energy for manufacturers has been welcomed not just by the big energy-intensive industries, but by many small business and, of course, families.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 28th January 2014 Commons Chamber

[Mr Osborne]

The revelations by Tomlinson shocked everyone, and the business practices of RBS, including Ulster bank, are now under the microscope. Of course, these revelations would not have come to light if we had not asked Tomlinson to do his work and had not published the Tomlinson report.

We are particularly aware of the challenge in Northern Ireland, with the weakness of the Northern Ireland banking system—affected by what has happened in the Republic and the fact that RBS is such an important player through Ulster bank—and we are in constant discussion with the Northern Ireland authorities. I know that my hon. Friend the Financial Secretary is talking to the Northern Ireland Executive about precisely what we can do to help to protect the Northern Ireland economy, as RBS implements its bad bank plan.

[Mr Andrew Tyrie (Chichester) (Con)]

The Prime Minister said yesterday:

“I am a tax-cutting Tory”.

So am I. Does the Chancellor agree that, when resources allow, cuts in tax are the best possible tonic that the Government can provide to small businesses? Does he further agree that the best spur to incentives for small businesses is to cut the marginal rates of corporation and personal tax as soon as he can?

[Mr Osborne]

I am a low-tax Conservative as well, and I hope that I am in good company on the Government side of the House. We have made reductions in tax. The small companies tax rate was due to go up to 22% under the Budget plans voted on by the Labour party, but we have reversed that and reduced it to 20%. We are now of course bringing the main headline rate of corporation tax down to 20% as well, and getting rid of the complicated taper. That is all further evidence to support the ambition of reducing marginal tax rates for businesses.

Autumn Statement

Debate between Lord Tyrie and George Osborne

Thursday 5th December 2013 Commons Chamber

[Mr Osborne]

The Leader of the Opposition and I agree on one thing: that was a complete nightmare. The only turkey around here is the speech just given. As for denial, the man who said that borrowing would not come down, unemployment would not come down and growth would not happen, and who refuses to apologise for what he did to the British economy, is the very epitome of denial. That is the central problem with his response and, indeed, his whole economic framework. Not only did he predict that the recovery would never come; he went out of his way to say that if we stuck with our plan it could never come.

This is what the right hon. Member for Morley and Outwood (Ed Balls) said in March this year:

“I’ve said consistently…unless there is a government led plan for confidence, for growth and jobs, the economy will get worse but also the deficit won’t come down, it’ll go up”.

He predicted that the economy would get worse and the deficit would go up and that 1 million jobs would be lost, but the economy is growing, 1 million jobs have been created and the deficit has gone down. I have an explanation for what has happened: we do have a Government-led plan for confidence, for growth and jobs. It is our plan, it is working and the right hon. Gentleman should have welcomed it.

The extraordinary thing about the right hon. Gentleman’s performance was that he could not bring himself to welcome any of the better economic news. He has built his whole proposition as shadow Chancellor on the basis that our effort to deal with the public finances would make that growth impossible. That makes me wonder what the right hon. Gentleman has been up to with his time, but he gave a clue in a newspaper interview this week. He said that he had to cancel his grade 3 piano exam, because it was

“exactly the time when George Osborne is standing up to do the Autumn Statement!”

I think he should have gone ahead with the “Chopsticks” rendition. The newspaper article also says that he asked Miss Perrin, his piano teacher:

“‘If I go wrong can I start again?’ She said: ‘I think it’s probably best to keep going.’”

He takes the same approach to economic policy as he does to his piano. The final thing he said is that he hopes to reach grade 8 piano over the next four years. After his performance today, I can see why he expects to have a lot more time to practise.

Let me turn to the points the right hon. Gentleman raised. The central point is that it is not possible to have a cost of living plan without an economic plan. Labour’s silence on the economy goes to the heart of its weakness. It cannot talk about its record, because it had the biggest recession ever. It cannot talk about the deficit, because it has no plan to deal with it. The right hon. Gentleman cannot even talk about infrastructure and his much vaunted plan for a cross-party consensus, because he was the person who tried to break the consensus on the biggest project of all. He cannot talk about housing, because there were 420,000 fewer affordable homes at the end of the Labour Government. He cannot talk about business rates, because they went up 71% under Labour. He cannot talk about support for business, because he wants to put taxes up on business. He cannot ask about standing up to the powerful, because this is the week that Labour caved in to the trade unions. He cannot ask about jobs, because he wants more jobs taxes. And he cannot ask about banking and financial services, because the person Labour hired to advise it was the Reverend Flowers.

The right hon. Gentleman has said that he would be the co-operative Chancellor. Let me end by saying that that is exactly what he would be: borrowing more than he can afford, with catastrophic management of the finances, and a deluded leadership preaching one thing and doing another. It is hard-working people who will pick up the price if it blows up again. He cannot welcome the economic recovery because he is the biggest risk to economic recovery.

[Mr Andrew Tyrie (Chichester) (Con)]

Does the Chancellor agree that the confidence now returning to the economy is a vindication of the Government’s decision to stand firm on reducing the deficit? Is it not now absolutely crucial that Britain sticks with this policy as the economy recovers, reduces the size of the state and creates room for the economy to grow, and with it, when resources allow—and only when resources allow—to reduce taxes?

[Mr Osborne]

I thank my hon. Friend for his support and his observation about what is happening in the economy. I complete agree with him. One of the things I said in the speech was that of course risks remain, the job is not done, productivity remains too low and we want it to grow. That requires economic reform and reducing taxes on business, which is what we have done again today.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 5th November 2013 Commons Chamber

[Mr Osborne]

It depends, of course, where you buy it. The last price I saw at a petrol station was around £1.35, but it would have been 20p higher if we had stuck with the last Government’s plans—the hon. Gentleman voted for them—in the last Labour Budget. That is the truth, and it is because we are fixing the public finances and fixing the economy that we can avoid these disastrous Labour tax rises.

[Mr Andrew Tyrie (Chichester) (Con)]

The freeze on duty makes a crucial contribution to improving business competitiveness, and will have been welcomed by all our constituents throughout the country. Will the Chancellor undertake, as part of his work on the autumn statement, to publish the Treasury’s own estimate of the full amount by which both motoring and energy input costs have been increased by climate change-related measures?

[Mr Osborne]

Of course the OBR provides an assessment of the impact of Government policies on the economy, and I will consider my hon. Friend’s specific suggestion that we look into the impact of climate change policies on energy prices. We are currently examining the charges and levies that the last Government, among others, added to energy bills, and seeing what we can do to roll them back in order to provide relief for customers.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 10th September 2013 Commons Chamber

[Mr Osborne]

Let us be clear: this country had one of the deepest recessions of any of the countries in the G20 or anywhere else. We had one of the biggest banking crises and our country has had to recover from that, but I point out that in the hon. Gentleman’s own constituency there are now 12,000 more people in work than at the time of the election, and unemployment is down by a third.

[Mr Andrew Tyrie (Chichester) (Con)]

What contribution has real wage restraint in the private sector made to the surprisingly low level of insolvencies in the UK compared with our competitors, which is now enabling more firms to take advantage of the recovery than would otherwise be the case?

[Mr Osborne]

My hon. Friend is absolutely right that wage restraint in the private sector and the public sector has helped preserve jobs during the economic shock that we experienced under the previous Government. That is partly a credit to the labour market flexibility of the policies that previous Governments introduced in the 1980s and early 1990s and the last Government did not reverse. The wage restraint has helped us preserve more jobs than would otherwise have been the case in the public sector, which is why at least until recently it was supported by the Labour party.

Spending Review

Debate between Lord Tyrie and George Osborne

Wednesday 26th June 2013 Commons Chamber

[Mr Osborne]

I will leave it to the country to ask these questions. I make this point. In this spending plan I have set out total managed expenditure of £745 billion, and it is up to all Members of this House to decide whether they support that. We do not know the position of the Opposition, because on Saturday the Labour leader said there would be no more borrowing, but on Sunday the shadow Chancellor said “yes, of course” there would be, so we will see what the position of the Opposition is on this.

The shadow Chancellor mentions what has been said in this House before. Well, let us be clear about what he said in this House before, and how we have responded to it in this spending plan. On 6 June 2011 he said there would be a return to mass unemployment. We have set out welfare plans that help people get back into work. Does he support those or not? That is the question the public will ask of him. He said in October 2010 that we were taking a huge risk with crime. Crime is down 10% or more. He said in July that year that the university reforms would shut out those from disadvantaged backgrounds from university, but actually a record proportion of pupils from disadvantaged backgrounds applied to go to university. He said, in his own words, that the cuts to the border agency would mean we would be unable to enforce our immigration policy. That was wrong, too. Every prediction he has made, including the prediction that there would be no more boom and bust, has proved to be completely wrong, so why would anyone believe a word he has got to say about this?

The simple point is this: we have set out our plans—we have set out our economic strategy, we have set out our spending plans—and those who disagree with them should advance an alternative or retreat from the battlefield, because the shadow Chancellor finds himself in no man’s land. He has abandoned his economic argument but stuck with a disastrous economic policy of borrowing more, and in the end, if we want to know why, we only need to hear what he said this month:

“Do I think the last Labour government was profligate, spent too much, had too much national debt? No, I don’t think there’s any evidence for that.”

All people want Labour to say is, “We’re sorry, we got it wrong, we borrowed too much and we spent too much, and we won’t do it again.”

To answer the specific question that the shadow Chancellor asked me, yes we will have free museum charges—so that people can go to our museums and see the antiquated economic policy advanced by the Opposition, which brought this country to its knees and gave us the worst economic crisis for a generation, and they can learn how this Government cleared up that mess.

These reductions and the control of public expenditure are absolutely essential. That will bolster the credibility of fiscal policy in the markets and it creates room for the private sector to lead the recovery and create the jobs we need, particularly in small businesses in our constituencies, which are desperately trying to find the funding to expand.

[Mr Andrew Tyrie (Chichester) (Con)]

Behind all the noise, most Members actually do agree that both the deficit and public spending are much too high and have to come down, and we should be under no illusions among ourselves just how tough and remorseless a task that is. Those reductions and that control of public expenditure are absolutely essential. They will bolster the credibility of fiscal policy in the markets and create room for the private sector to lead the recovery and create the jobs we need, particularly in small businesses in our constituencies, some of which are desperately trying to find the funding to expand. Sustaining public expenditure control over this period, and now being able to set out plans for the years ahead, is a great achievement by the Chancellor, the Chief Secretary to the Treasury and the coalition.

I want to draw attention to and ask a question about a particular proposal. The cap on nominal welfare spending will need careful scrutiny; it may well be an essential measure to give teeth to controlling annually managed expenditure, which frankly has not been well managed and is threatening to get out of control. Will the Chancellor publish today all the necessary detail to enable Parliament and the Treasury Committee to examine this extremely important proposal?

[Mr Osborne]

I thank my hon. Friend for his support for the difficult steps we needed to take. Our trying to set out these spending plans further in advance, so that Departments have time to make the necessary adjustments, is a good innovation in fiscal policy. The certainty we now have for 2015 will, I think, mean better public policy.

We have set out some of the details of the welfare cap in my speech today, but in the document we publish, we have set its parameters, how it will be set in cash terms, the period over which it will be set and when it will be set—at the Budget. However, it is absolutely my intention to listen to the Treasury Committee, which I hope will take an interest in this issue, and to examine best practice and make sure we get the final details absolutely right. If we want to change the Office for Budget Responsibility charter, we will have to legislate, but that is something we need to examine. We absolutely should work on the details, but the principles and the principal components of the cap have been established.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 25th June 2013 Commons Chamber

[Mr Osborne]

Of course, I respect my right hon. Friend’s experience. A powerful argument has been made that we should completely separate and split up retail banks from investment banks. We asked John Vickers to convene a commission to look at this specific subject, and he came forward with proposals to ring-fence retail banking, as he thought that that would be a better approach. We also set up a cross-party parliamentary commission to consider the ring fence, and it thinks that the ring fence is the best approach. It made a specific recommendation that we should give the regulator the power to split up a bank that had refused to comply with the ring fence, and we are giving the regulator—[Interruption.] The shadow Chancellor shakes his head, but again not one of these things was done when he was City Minister. Let me say to him again, because he obviously does not understand, that we are giving the regulator a specific power to split retail from investment banking in a bank that is ignoring the ring fence. I think that that is the right way forward.

[Mr Andrew Tyrie (Chichester) (Con)]

In the Treasury Committee this morning, the Governor of the Bank of England expressed considerable concern that unacceptable pressure had been brought to bear on the Prudential Regulation Authority from within Government, both from No. 10 and from No. 11, at the behest of the banks, putting at risk the regulator’s independence. Will the Chancellor reassure the House that he knew nothing about this, that he was not personally involved, that he will investigate the allegation that others did bring unacceptable pressure to bear, and that he will report to Parliament?

[Mr Osborne]

Of course, if there is unacceptable pressure, I absolutely say that that is not acceptable—if that is the right way to put it. The PRA, which we created, is completely independent and it has made its independent decisions on capital in our banks. We also have the Financial Policy Committee, which again is completely independent and able to make these recommendations. We empower our regulators to do their job. Of course, banks, consumer groups and anyone else can make their case, but this is ultimately an independent body, an independent regulator, that makes the judgment. That is the system we have created.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 12th March 2013 Commons Chamber

[Mr Osborne]

To get a lecture from the Labour party on demand! The economy shrank by 6% when the shadow Chancellor was in the Cabinet, and we are picking up the pieces of the mess he and his party left behind. One of those pieces was the deeply uncompetitive business tax system which meant that companies were moving their headquarters out of the United Kingdom. Companies are now moving into the UK because of the changes we have made.

[Mr Andrew Tyrie (Chichester) (Con)]

It is small businesses in our constituencies that will hold the key to Britain’s economic revival. Does the Chancellor agree that they are simply not getting the support they need from the banks at the moment and that although the funding for lending scheme is good, most of the money is currently going into mortgages rather than businesses? I realise that he will not want to say much now, just before the Budget, but can he at least reassure the House that the needs of small businesses are right at the top of his agenda for this Budget?

[Mr Osborne]

My hon. Friend has that assurance. The funding for lending scheme, joint with the Bank of England, is now supporting the small and medium-sized business sector as well as the mortgage market, and is repairing the damage to the financial system caused by the financial crisis. He is also right to say that small businesses are the bedrock of our economic revival, which is why we have cut the small companies tax rate, which before the general election the Labour party wanted to put up. We have also carried on the relief for small businesses from business rates, and in the autumn statement we increased tenfold the annual investment allowance, so that small businesses can invest for the future and create jobs. The Government understand that there needs to be a private sector recovery in order not to repeat the mistakes of the past.

Economic Policy

Debate between Lord Tyrie and George Osborne

Monday 25th February 2013 Commons Chamber

[Mr Osborne]

Government Back Benchers are as baffled as I am by the shadow Chancellor’s economic policy, which he has just had a few minutes to explain and still there is no explanation. His answer to a debt crisis is to borrow more. His answer to too much borrowing is to add to it. That is the problem he has, ultimately—that he is responsible for the mistakes that got Britain into this economic mess. This is the verdict from the leading Citi economist, Michael Saunders, today:

“In our view, the underlying causes of the UK economy’s weakness—and hence the rating downgrade—stem from the surge in private credit and public spending during 2000-2007.”

Who was in charge of economic policy during that period? The right hon. Gentleman is the architect of the mistakes that gave Britain its debt problem. He ignores the solution to that debt problem. He is condemned to repeat those mistakes and, as a result, his party is condemned never to be trusted with the public finances again.

[Mr Andrew Tyrie (Chichester) (Con)]

The truth is that any Government would need a credible deficit reduction plan, and the plain fact is that the markets are telling us we have one. Does the Chancellor agree with the shadow Chancellor, though, as he pointed out only the day before yesterday, that what the rating agencies have to tell us, given their dismal forecasting record, is of very limited value?

[Mr Osborne]

I would say that the credit rating agencies are important, but they are one test—[Interruption.] It is the shadow Chancellor who wants to say that the rating agency’s decision is not important, but we should still have a debate on it in Parliament. It is a completely contradictory position. It is important, but it is just one test of the Government’s economic credibility in the markets, and that is tested by the gilt yields, by the value of sterling, by the rates of the stock market and all sorts of other things, and as I say, today we have not seen excessive volatility. I say to the shadow Chancellor and to my hon. Friend and the Treasury Committee that we have to convince the world that we can pay our way in the world, and that is what this Government are going to do.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 29th January 2013 Commons Chamber

[Mr Osborne]

The claimant count has fallen on the most recent measure, which was published last week. As I said, 1 million jobs have been created in the private sector. We are also, as my hon. Friend the Member for Erewash (Jessica Lee) reminded us, creating the apprenticeships to give these young people the skills they need, which the previous Government were not providing, to compete in the modern economy. I would ask the hon. Lady to get behind the education and welfare reforms needed so that people have the right incentives to work and the right skills to get a good job in future.

[Mr Andrew Tyrie (Chichester) (Con)]

The recent cancellation of the rise in fuel duty in the autumn statement was very welcome news for all our constituents, and it will help with jobs. Our constituents now need greater certainty about future rises, so will the Chancellor accept the Treasury Committee’s recommendation, published today, that he should use the Budget to set out a clear medium-term strategy for fuel duty?

[Mr Osborne]

My hon. Friend is right to remind us that fuel duty is 10p per litre lower than it would have been if we had stuck with Labour’s Budget plans. We have also, as a medium-term measure, abolished the fuel duty escalator that the previous Government put in place. He mentions the Treasury Committee’s report. I hope that, as Chair of the Committee, he will welcome the fact that we have got the money in from Switzerland, because one of the issues that the report raised was whether that money would be forthcoming, and the fact that it came last night was very welcome.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 11th December 2012 Commons Chamber

[Mr Osborne]

I think that most people in the House—I thought this was the case in all parties—welcome the innovative work being done on social financing and social impact bonds. Sir Ronald Cohen is one of the leading advocates of this and has been advising the Government. It is all about trying to get new forms of financing into improving our society. I would have hoped she would have welcomed that, rather than criticising it.

[Mr Andrew Tyrie (Chichester) (Con)]

Many on the Treasury Select Committee are already concerned that Whitehall Departments might again find themselves addicted to the “get something now, pay later” culture that bedevilled PFI the first time round. What is also concerning us is that a number of the proposals set out by the Government—I refer, in particular, to page 13 of the document produced—look more like motherhood and apple pie than something substantive enough to offset that Whitehall pressure. Will the Chancellor assure the House that, excluding value-for-money considerations, all accounting incentives to remove PFI from balance sheets will now be closed off to Departments?

[Mr Osborne]

I say to the Chair of the Treasury Select Committee that we will set out at the Budget—of course, he will want to scrutinise this carefully—a new control total for the off-balance sheet liabilities of PFI. We already now publish the whole-of-Government accounts so that people can see the liabilities built up under the previous Administration. The country now has more than £280 billion of PFI debt, of which only £40 billion has been paid off, so he is absolutely right to hold our feet to the fire to ensure that we properly account for this and remove perverse incentives in Whitehall. We want the private sector investing with us in public services, however, so it is important that we have the right regime.

Autumn Statement

Debate between Lord Tyrie and George Osborne

Wednesday 5th December 2012 Commons Chamber

[Mr Osborne]

The 4G licence, yes. We are using the 4G licence. [Interruption.] May I say something about the 4G licence? The shadow Chancellor had 20 minutes to make his points, but he did not make any at all. We are using the 4G money, in part, for new capital spending, including building further education colleges, one of which is called the Leeds city college, in a town called Morley in west Yorkshire. I am not sure what the local MP would make of the shadow Chancellor’s decision that that is not the best use of the money, but he can look at himself in the mirror and ask that question.

The shadow Chancellor cannot answer these basic questions. He tries to claim that all the problems in Britain began in May 2010 and that they are all the fault of this Government. Literally only the people in the Brownite cabal claim that; there is not a single other person in the Labour party, in any business organisation or in any of the international bodies who believes that. The reason he has to maintain this completely incredible position is that if he admitted that the previous Government were responsible for the problems in our country, he would have to admit that he was responsible for them.

Out of necessity not choice, therefore, the Labour party leader has a shadow Chancellor who is more associated with the economic mismanagement that led to Britain’s problems than anyone else in Britain. He will not let his party move on. He is a man trapped in the past. The one thing the Opposition need to say is: “We’re sorry. We spent too much and we borrowed too much, but we won’t do it again”, but that is the one thing the shadow Chancellor cannot say. Until he does, though, the British public will never trust him or the Labour party with the public finances again.

[Mr Andrew Tyrie (Chichester) (Con)]

What the business community—the bedrock of economic recovery—needs most of all is stability, and I believe that what we have heard today delivers more stability. Does the Chancellor agree that businesses, particularly small businesses, need banks that lend? With that in mind, will he examine the radical options to achieve that—opening up banks to much more competition from new lenders, as the Treasury Committee has recommended; cleaning up bank balance sheets, as the Bank of England has advocated in the financial stability report; and possibly even breaking up one or more of the state-owned banks to improve their funding and hence lending?

[Mr Osborne]

My hon. Friend makes a good point: many of the problems in our economy are borne of the credit constraints and the elevated bank funding costs, which I talked about when I mentioned the OBR’s assessment of the economic forecast. There are several responses. The funding for lending scheme has brought bank funding costs down. That scheme, according to the OBR’s assessment, has had an impact, and it is an important part of our macro response. I agree with him that we must do much more to encourage competition in our banking system. We have some new entrants, but we can go further, and we need a much more competitive banking system that is able to serve the public better.

Bank of England

Debate between Lord Tyrie and George Osborne

Monday 26th November 2012 Commons Chamber

[Mr Osborne]

Given the many fierce exchanges that the shadow Chancellor and I have across the Dispatch Box, it is only right for me to acknowledge my real gratitude to him today for welcoming this appointment. He knows Mark Carney, and he knows that he is an outstanding candidate for the job. I shall certainly cherish the words “I commend the Chancellor”, because I will probably never hear them from the right hon. Gentleman again. I sincerely thank him for that.

One of the important things about the independence of the Bank of England, which the right hon. Gentleman helped to establish with the previous Prime Minister, is that it commands cross-party support—it did not at the time; it does now—and we must try to keep the appointment of the Governor out of the day-to-day partisan debate. The right hon. Gentleman has certainly played his role in doing that today. Let me answer specifically his questions about the new role of the Bank of England.

First, on the shadow Chancellor’s point about the new responsibilities, the Bank has heavy new responsibilities because, in our judgment, the tripartite system did not work and was not properly co-ordinated. Indeed, the Select Committee of the last Parliament, which was chaired by Lord McFall—John McFall as he was then—said that it was not clear who was in charge. By insisting that the Bank of England is in charge of macro-prudential and micro-prudential regulation, we bring those things together.

It is also important, secondly, that we recognise that the Government have an important role. When there is a material risk to public funds, there is a clear responsibility in the Bill for the Bank of England to inform the Treasury, without deluging it on a day-to-day basis with everything that is happening and not differentiating the things that are significant and really important. We have taken in the Bill the power of direction that did not previously exist. In the memoirs of my predecessor, the right hon. Member for Edinburgh South West (Mr Darling), he made it clear that at one point he was considering using the almost nuclear power of direction in the Bank of England Act 1946, which no one had ever used, but that he backed away from it because he did not have a more targeted instrument. We now have that targeted power of direction, which the elected Government can use.

Thirdly, we have discussed the role of the deputy governors. Although it is incumbent on any good Governor and any good Chancellor of the Exchequer to try to make sure that views are heard, ultimately the Bank has to reconcile its internal differences rather than, as I have said, allowing the internal differences to be expressed externally without any attempt to resolve them internally. I make it my business in doing my job to see the deputy governors and to make sure that their views are heard.

Finally, let me deal with the asset purchase facility coupons. This was done with the support and acceptance of the Governor of the Bank of England and the Monetary Policy Committee, which discussed it and agreed that that was a more transparent way of accounting for the quantitative easing coupons and how they will affect the public finances through the coming years. I can confirm for the right hon. Gentleman that when the Office for Budget Responsibility produces its report next week for the autumn statement, it will clearly show the impact of the APF coupons on the public finances, both before and after.

[Mr Andrew Tyrie (Chichester) (Con)]

May I begin by thanking Mervyn King for his outstanding public service and hard work through the appalling financial crisis with which he has had to grapple? I support what appears to be the appointment of an extremely talented and experienced Governor, who has already been welcomed on both sides of the House. I welcome the fact that the Chancellor has come out in support of the Treasury Committee’s holding a hearing prior to the appointment of the new Governor and of the reporting of its conclusions to the whole House. Does the Chancellor agree that the legitimacy of the appointment would be further bolstered by giving the House an opportunity to debate that appointment in the light of our findings?

[Mr Osborne]

These days, of course, the House of Commons can choose what it wants to debate through the Backbench Business Committee, while the Opposition are always able to table motions, too. I do not think it would be sensible to try to divide the House on something the appointment of the Governor of the Bank of England. One of the advantages of the Bank of England, as I was saying to the shadow Chancellor, is that there is an agreement that it should be kept out of party politics and the like; we have achieved that today. Mr Carney said clearly in my discussions with him that he did not want to talk about British economic policy at any great length at his press conference today or, indeed, while he continues as the Governor of the Bank of Canada, but that he did want to talk at length to my hon. Friend’s Committee. At a mutually convenient time, he will do that.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 11th September 2012 Commons Chamber

[Mr Osborne]

I will pursue the right hon. Gentleman’s point with all haste.

[Mr Andrew Tyrie (Chichester) (Con)]

Many Members of this House have told me of their deep concern about the development of retrospective tax measures, and the Treasury Committee shares those concerns. Does the Chancellor agree that the best way to prevent loss of revenue from avoidance schemes is to work much harder to create a simpler tax system in the beginning?

[Mr Osborne]

Yes, I agree that that is of course the best approach, but in the tax code of a western democracy there will inevitably be opportunities for abuse and avoidance, which we need to deal with. When it comes to retrospection, I say to my hon. Friend, the Chair of the Treasury Committee, that I think the House of Commons should sanction retrospective taxation only when it is very clear that the explicit wishes of Parliament have been abused and avoided. For example, in the case of a particular UK bank that his Committee and I have corresponded about, we acted retrospectively because there was a clear breach of what Parliament had expressed, and I am very pleased to note that the bank’s new chief executive has today said that the bank will be scaling down its tax structuring activities.

Professional Standards in the Banking Industry

Debate between Lord Tyrie and George Osborne

Thursday 5th July 2012 Commons Chamber

[Mr George Osborne]

Further to that point of order, Mr Deputy Speaker. I welcome the Opposition’s agreement in principle, as I take it, to take part in a joint parliamentary inquiry into what has happened. I suggest that the usual channels now work on the membership of that inquiry and that the Front-Bench teams and my hon. Friend the Member for Chichester (Mr Tyrie) discuss any concerns that Opposition Front Benchers have about resourcing, the secretariat and so on. What everyone now wants to do is get a resolution that all parties can agree on, which we can bring to the House before it rises, so that we can get the Joint Committee up and running, get to the bottom of what went wrong in our banking industry and with the LIBOR scandal, and make the changes needed to legislation to ensure that it never happens again. I would welcome the Opposition’s support in doing that.

[Mr Tyrie]

Further to that point of order, Mr Deputy Speaker. I think the whole House, and actually the whole country, will welcome the engagement that appears to be taking place across the Dispatch Boxes. I reiterate that I will do whatever the House asks me to do, but I believe it is worth my trying to chair the Committee only if it has the full support of all the major parties in the House of Commons.

LIBOR (FSA Investigation)

Debate between Lord Tyrie and George Osborne

Monday 2nd July 2012 Commons Chamber

[Mr Osborne]

First, the inquiry should be genuinely cross-party and it will, of course, be up to the Labour party to choose whom it would wish to be on the Committee, both in the Commons and in the Lords. So there will be a choice for the Labour leadership in that respect. Of course, I hope that they would consult my hon. Friend the Chair of the Treasury Committee, but it is ultimately their choice.

Secondly, the Treasury Committee, under its previous Chair, Lord McFall, did some very good work on investigating what went wrong. So the idea that the Select Committee or a Joint Committee is unable to do this work is nonsense. “The run on the Rock” was a very good report, as I think the right hon. Gentleman would concede, and it provided the basis for some of the changes in the Financial Services Bill. I think we can draw also on the expertise in the House of Lords in this area and have a Joint Committee. As I say, I hope that once tempers have cooled today, we will be able to reflect on that and have a joint-party consensus on it.

[Mr Andrew Tyrie (Chichester) (Con)]

First, may I assure the House that I will not countenance a partisan inquiry and I would not be prepared to chair one either? I do believe that Parliament—both MPs and the other place—has something to contribute to clearing this mess up; they cannot do it all on their own.

By any standards, the LIBOR scandal, for which 20 banks around the world are now being investigated, is shocking. It has corroded trust in the UK financial services industry and it is a shameful affair. I find it particularly sad that it will have unfairly damaged the reputations of hundreds of thousands of our constituents who work hard and honestly in the financial services industry. The UK’s reputation has been tarnished, but it can be restored and enhanced if we draw the right lessons. The Treasury Committee will continue with its inquiry into what exactly happened. We will be holding the inquiry on Wednesday with the chief executive of Barclays, and we will also probably call the British Bankers Association and the regulators to find out exactly how this all happened.

None the less, the immediate task to be conducted by the Financial Services Authority must be to ensure that we have appropriate sanctions for wrongdoing and a regulator strong enough to give us confidence that wrongdoers will be caught. Does the Chancellor agree that another task, on which the Joint Committee will and should concentrate, must be to learn the lessons of the LIBOR scandal for corporate governance and standards in the banking industry?

LIBOR (FSA Investigation)

Debate between Lord Tyrie and George Osborne

Thursday 28th June 2012 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

What is now left of trust between Parliament and the banks? Barclays and probably other banks were profiting by lying and rigging the markets at a crucial time in the last crisis, when the Government had a right to expect that they would supply the then Chancellor with reliable information on the basis of which to conduct policy. The Treasury Committee will now investigate properly. Under the current legislation, as the Chancellor has pointed out, the Financial Services Authority has no power to bring a criminal prosecution in relation to not only LIBOR, but derivatives. Will the Chancellor undertake now to amend the Financial Services Bill to include derivatives and LIBOR in the legislation before Parliament?

[Mr Osborne]

I completely agree with the sentiments that my hon. Friend has expressed. I congratulate him and his Committee on acting swiftly to ask Mr Diamond to come and account for himself. As I said in my statement, we are looking at strengthening the criminal sanctions regime in general for market abuse and market manipulation, not just of LIBOR but in other parts of the market; and next week, as planned, the consultation on potential sanctions for directors of failed banks will be published. Sadly, the Government have been in this situation before with the FSA’s report into the failure of Royal Bank of Scotland, when the authority reported to us that it did not have the powers it would have liked to hold to account those responsible for the failure.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 26th June 2012 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

Now that the Bank of England has finally shown more willingness to provide some liquidity support, there should be no obstacle to the exercising of more flexibility by the Financial Services Authority when it comes to how the liquidity buffers are used. That is being desperately demanded by banks. Does my right hon. Friend agree that the FSA should take action as soon as possible, and that such action is what is required to provide borrowing and lending at reasonable rates for the hundreds and thousands of businesses throughout the country that need it so desperately?

[Mr Osborne]

The liquidity auction undertaken by the Bank of England last week was very welcome, and the Bank is proposing future auctions. My hon. Friend, who chairs the Treasury Committee, has been prescient in pointing to some of the procyclical nature—if unintended—of some of the liquidity regulation in the United Kingdom in recent years. The Financial Policy Committee was set up to look at risks on both the downside and the upside. The Financial Services Authority must make its own independent decisions, but I am sure that it will have paid close attention to my speech and to the speech of the Governor of the Bank of England at the Mansion House.

IMF

Debate between Lord Tyrie and George Osborne

Monday 23rd April 2012 Commons Chamber

[Mr Osborne]

I welcome the right hon. Gentleman’s support for the decision to provide extra resources for the IMF. He was Chancellor of the Exchequer in 2009, when we last made a contribution to it, and, as I said a moment ago, I think that that was one of the highlights—if not the highlight—of the last Labour Government.

The eurozone countries on the periphery are being asked to walk an incredibly difficult path. That is the consequence of being in a monetary union in which it is impossible to devalue. However, it is clear that Ireland, which has had to make some incredibly difficult decisions and take some very tough fiscal measures, is becoming dramatically more competitive—its current account is back in surplus, and its exports are increasing—so it is possible to walk that path.

I certainly agree with the right hon. Gentleman that further action is required on the banking systems in Europe. A European directive which is currently being debated transponds the Basel agreement into European law, and we are keen for it not to be watered down so that it is not used to disguise problems in the European banking system.

[Mr Andrew Tyrie (Chichester) (Con)]

Is not the lesson of the 1930s that the leading economic powers must stick together and support the global financial and trading system, and is that not exactly what the IMF decision is doing now? What we need is a strong and independent IMF. With that in mind, will the Chancellor tell us what discussions he has had with non-eurozone IMF members to ensure that the IMF sees off any special pleading from the eurozone?

[Mr Osborne]

I welcome the support of my hon. Friend, who chairs the Treasury Committee, for our decision to make a loan to the IMF, along with many other countries.

This weekend, plenty of countries, including the UK, made very clear that a contribution to additional IMF resources must come with strict IMF conditionality. They made clear that there could be no special favours for eurozone countries that needed support, and that there was no question of creating some special eurozone fund for IMF resources. Any contribution from the IMF’s shareholders must go into general resources which could be used for eurozone countries or, indeed, for any other country that needed help.

It is worth remembering that there are 53 IMF programmes, three for eurozone countries and 50 for other countries in the world, and that two of the largest programmes are for Poland and Mexico, which are not members of the IMF.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 6th March 2012 Commons Chamber

[Mr Osborne]

I agree with the hon. Gentleman that there are practices in that industry that we want to see stopped—and I would highlight two in particular. The first is the rolling over of loans, which we are working with the industry to stop; the second is the ongoing use of continuous authorities to take money out of bank accounts, which people might not be aware that they have granted to a pay day loan company or anyone else. We are dealing with those specific abuses and, as I say, we are creating a new powerful consumer champion in the financial conduct authority.

[Mr Andrew Tyrie (Chichester) (Con)]

The Financial Services Authority agreed to publish a review of its own conduct in the run-up to the failure of RBS only after considerable pressure from the Treasury Committee. It really should not be that difficult to get some answers out of a regulator.

Does the Chancellor agree that accountability to Parliament would be better served if the Financial Services Bill were amended to require the new regulator, the financial conduct authority, to respond to similar such reasonable requests from the Treasury Committee?

Banking Commission Report

Debate between Lord Tyrie and George Osborne

Monday 19th December 2011 Commons Chamber

[Mr Osborne]

I can assure the former Chancellor that we are still on speaking terms. Indeed, I had an hour and a half conference call just before I came into the Chamber, so I can promise him that a lot of speaking is still going on. The question he rightly asks is: where is the action? The eurozone has taken a number of important steps, but we still need to see a more credible firewall, which will enable it to stand behind its banks even more effectively.

On the right hon. Gentleman’s specific point about the Bank of England and whether this could have prevented what happened when he was Chancellor, of course institutions can get things wrong, and the Bank of England got things wrong in the run-up to the crisis, but it is sensible to try to have one body that is looking at both the prudential risks in individual firms and the overall systemic risks in the economy. The tripartite system clearly failed to do that. I do not think that before he became Chancellor it met in person at a principal level, or perhaps only once. The system did not work and many Committees of this House have pointed that out. For the Bank of England to have clear responsibility for monitoring risks is sensible. As to whether all this could have prevented what happened, I draw attention to two points. First, there are higher capital requirements in Vickers that would have better protected banks such as HBOS, and, secondly—the biggest challenge of all that he had to face—it is precisely the collapse of a large universal bank such as the Royal Bank of Scotland that Vickers is seeking to address. No one pretends that it is easy, but we believe, Vickers believes and many others believe, that the idea of ring-fencing the retail operations focused on the UK will give the Chancellor of the day greater opportunity to protect what really matters to the UK economy without having to resort to bailing out the entire institution.

[Mr Andrew Tyrie (Chichester) (Con)]

The House and the Chancellor will have heard the remarks made across the House about the need to strengthen the accountability of the Bank of England, which the Treasury Committee has already reported on, so I will not dwell on that. On the European angle, does he agree that the UK should be permitted to implement Vickers without awaiting the outcome of Commissioner Barnier’s latest announcement that he will review the merits of breaking up banks altogether, an idea explicitly rejected by Vickers, while at the same time not worrying about another of Mr Barnier’s curious and contradictory proposals, which is that a cap, as has just been mentioned, should be placed on the amount of capital UK regulators could demand of banks, which, if implemented, could prevent us from putting Vickers in place at all?

[Mr Osborne]

As I have said, I will return to the House early in the new year to address the issues that my hon. Friend’s Committee, other Members of the House and the pre-legislative Committee have raised about the accountability of the Bank of England and the accountability and responsibility of the Chancellor in a financial crisis. On his points about Europe, I understand that Commissioner Barnier, or the part of the European Commission that sits under him, is interested in the Vickers report and is looking at it, as is the European Parliament, which we welcome. On maximum harmonisation—in other words, not allowing individual countries with large banking systems to have their own regimes sitting on top of the EU minimum—that is something that other member states are concerned about. It was actually the Swedish Finance Minister who signed the letter that first raised concerns about that and got other Finance Ministers, myself included, to sign it, and the International Monetary Fund has also been very public in raising its concerns. We have not yet reached the point where the directive is about to be passed, but there is certainly a lively debate going on about it.

Autumn Statement

Debate between Lord Tyrie and George Osborne

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

As far as I can tell, the shadow Chancellor complains that we are borrowing too much—and then proposes that we borrow even more. It is completely unconvincing and a reminder to Government Members why we are so pleased that he is in the job that he is doing, for he is a constant reminder of everything that went wrong with Labour’s economic policy—a permanent advertisement for why we should never trust Labour with our money again.

Let me answer the right hon. Gentleman’s specific questions. He welcomes the fact that we have open and honest figures from the OBR. When did we never get them when he was at the Treasury? He complains about the bank levy. He was the City Minister, so why did he not introduce a bank levy? It will raise £2.5 billion a year. In the Labour policy document on the bonus tax that he proposes, his party costs its measure at £2 billion a year. That is less—a tax cut for banks, if can I put it like that.

The right hon. Gentleman complains about off balance-sheet borrowing. That is from Mr PFI. He says that we should have kept the future jobs fund, but 50% of all people who left that scheme were unemployed within 12 weeks, which is in part why we have an unemployment problem.

Yes we are committed to real increases in the health budget, and yes the OBR confirms that we will meet our fiscal mandate and our debt target—[Interruption.] In the terms set out by me in the emergency Budget.

The right hon. Gentleman told the House this extraordinary thing—that the OBR forecasts that growth in the UK will be less than in the euro area. That, I am afraid, is simply not true. I am not going to use unparliamentary language, but it is in the OBR document in black and white: 2012, 2013, 2014, 2015—every single year, growth unfortunately is slow in the eurozone and slower than in the UK. That is one of the problems we are facing.

Let me respond to the three arguments that the right hon. Gentleman advanced in his reply. First, he said that we should try to borrow our way out of a debt crisis; he talked about extra borrowing. His plans—the plans of the previous Government—would have led to an additional £100 billion on top of borrowing over the course of the Parliament. Let us look at the facts. There is not a single credible political party in the entirety of Europe that is proposing more spending at the moment, apart from—and it is not credible—the Labour party. This is what Tony Blair said this morning on the radio—[Interruption.] Go on—have a go at booing him! Tony Blair said on the radio this morning:

“frankly whatever government is in power it is going to be pursuing a pretty tough programme at the moment”.

Blair or Balls—I think the British public made their mind up on Labour politicians long ago.

The second astonishing argument that the right hon. Gentleman deployed was to say that low interest rates in Britain were a sign of failure. Presumably that means that he wants interest rates to be higher in Britain. Presumably the fact that Italian interest rates are over 7% is a sign of success. Presumably the fact that Greek interest rates are 30% is an economic miracle. His policy for higher interest rates would put families’ mortgage bills up, increase debt interest charges for taxpayers, increase the cost of loans for small businesses, and put people out of work. Now people know—you vote Labour, you get higher interest rates.

The third and final argument that the right hon. Gentleman advanced is that the events happening in Europe will have almost no impact on anyone in Britain or on the British economy. [Hon. Members: “That’s not what he said.”] He mentioned it once in passing. That flies in the face of what the Bank of England says and what the OECD said yesterday. He quoted the IMF. The IMF supports our deficit reduction plan. It explicitly asked itself the question, “Should Britain change course?”, and said no. He quoted the independent OBR’s numbers, but he refuses to accept its analysis. Anyone who turns on the television and listens to the news knows that his argument is completely absurd, so we have to ask ourselves why he advances it. Why does he alone advance the argument that Britain is not affected by what has been going on in the world—by the external oil shocks, by the size of the financial crisis, by the eurozone crisis? There is a very simple reason: because if he admits that we are in a debt crisis, then he has to admit that we borrowed too much when he was in office, that the crash here was deeper than anywhere else, and that the effects were longer lasting. It would be an admission of his personal failure.

The right hon. Gentleman was the City Minister who let the City explode. He is the author of the golden rules that failed. He does not have the excuse of the Leader of the Opposition that he was only photocopying orders: he gave the orders; the orders came from him. Labour’s economic credibility will never recover while he remains the shadow Chancellor.

[Mr Andrew Tyrie (Chichester) (Con)]

The whole country, I think, will welcome the supply-side measures announced today, which are an essential counterpart to the deficit reduction plan. Britain’s recovery depends on thousands of small businesses in our constituencies that need the confidence and the cash to invest and grow. That is why the credit easing package that has been announced today is so welcome. Does my right hon. Friend agree, though, that the recovery can be secured in the long term only when we have banks that are operating normally —when we have a return to more normal lending conditions? Does not that reinforce the need for him to work extremely closely with the regulators and the banks to achieve this?

[Mr Osborne]

I agree with the Chair of the Treasury Committee that the impact of the financial crisis and the deleveraging in the British financial system and other financial systems are having a huge impact not just on our recovery but on recoveries around the world. I completely agree that we need to try to clear the impaired balance sheets of the banking system. We need to try to get new lenders on to the high street. That is why we took the decision we took on Northern Rock—to get Virgin Money out there on the high street. I will have more to say on the banking system next month when I respond to the Vickers report and to the very good report from the Treasury Committee.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 1st November 2011 Commons Chamber

[Mr Osborne]

We shall see the 17 members of the euro attempting to co-ordinate their budget policies better, and more mutual surveillance, with sanctions, for those who do not do what has been agreed. I have to say that the confusion, if there is any, is in Labour’s policy, because it is now holding open the prospect of membership of the euro, which would be the ultimate fiscal and monetary integration.

[Mr Andrew Tyrie (Chichester) (Con)]

Does the Chancellor agree that it is wholly unacceptable that the rest of Europe should be held to ransom by Greece? What would be the consequences for the UK and the eurozone of a no vote in a Greek referendum?

[Mr Osborne]

There is no doubt that the decision by the Greek Prime Minister has added to the instability and uncertainty in the eurozone. We can see that today. We are trying to create stability and certainty in the eurozone. Ultimately, it is up to the Greek people and the Greek political system to decide how they make their decisions, but I believe that it is extremely important for the eurozone to implement the package that it agreed last week. I said at the time that that was crucial, as did everyone else involved. We need to get on with it, sooner rather than later.

Eurozone Crisis

Debate between Lord Tyrie and George Osborne

Thursday 27th October 2011 Commons Chamber

[Mr Osborne]

I thank the hon. Lady for some of her questions. Of course, we miss the constructive and consensual approach of the shadow Chancellor. We are talking about the Bretton Woods institutions, and it turns out that he is at a place called Buttonwood, which adds to the pantomime feel of Labour’s economic policy.

Let me deal directly with the hon. Lady’s questions. First, of course we keep the capital and liquidity positions of the British banks under constant review. We would do that in the absence of any European agreement, but of course we have also participated in the recent work by the European Banking Authority. We thought it was important that that was done at EU level rather than eurozone level. I repeat what I said in my statement: the EBA and our own authorities confirm that no British bank requires additional capital, which of course is very good news for us all.

On the hon. Lady’s question about getting private sector involvement in the write-down of Greek debt, that is of course one of the key unresolved issues from last night. We now need to see whether the headline agreement reached on behalf of the private sector can be implemented in practice. I am confident that it can, but that is one of the crucial next steps that need to be got on with.

The hon. Lady asked about the exposure of the UK banking system and the UK economy to various peripheral economies of Europe. Those figures are published regularly by the Bank of England. I do not propose to repeat them today, but they are available for everyone to see.

On the question that the hon. Lady asked about the overall fund, €1 trillion is the number that the eurozone has put on its firewall. Of course, some said it should be larger, but it is very significantly larger than what we had yesterday, which we should welcome. As with private sector involvement in the Greek deal, we now need to see the details of how the eurozone will create that leverage. It has set out two options that can work side by side. One is a kind of first loss insurance on newly issued debt, and the second is the special purpose vehicle, by which it hopes to get external private sector investment. Of course, it is openly speculating about getting Chinese money into that.

The IMF can only lend directly to countries, and countries with programmes or agreed and negotiated flexible credit lines, which will remain the case. It cannot lend into that special purpose vehicle. That is also the UK position. We do not think that Britain, with its deficit, can contribute to the special purpose vehicle. If we were to do so, we would add to our debt, and we do not think that that is appropriate. We have had to use our own resources to deal with our own problems in this country.

It is of course crucial that the IMF remains a central economic institution in dealing with the world’s problems, and I urge the hon. Lady, newly appointed as shadow Chief Secretary, to reconsider Labour’s position—[Interruption.] I know that the hon. Member for Nottingham East (Chris Leslie) led the Labour party in Committee to vote against the increase in IMF resources, which the last Labour Prime Minister negotiated at the London 2009 summit. Whatever I have said about the right hon. Gentleman—and I have said quite a few things—I do not think that anyone would doubt that the highlight of his premiership was the negotiation of the London 2009 G20 deal. It is completely astonishing that the Labour party voted against that agreement.

As we discuss over the next few months increasing the IMF’s resources to deal with all the countries of the world, I urge Labour Members to reconsider their position on that, and also their rather odd position on the euro. They seem to be holding out membership of the euro—[Hon. Members: “No!”] Well, that is certainly what the Labour leader was doing at the weekend. To be in the euro but out of the IMF strikes me as a rather bizarre economic policy at the moment.

That brings me to my final point. Britain has been arguing consistently for months that a solution to this crisis requires recapitalising the banks, reinforcing the firewall and resolving the Greek crisis. We have insisted that the appropriate issues are discussed at the level of 27, which is why there have been two European Councils this week, and an ECOFIN. We will continue to argue for Britain’s national interest as we enter the difficult discussions ahead on the potential treaty change, on making the euro work, and above all on getting the growth and jobs that the hon. Lady talks about across Europe and in this country, by making this continent far more competitive and stopping Britain and Europe from pricing themselves out of the world economy.

[Mr Andrew Tyrie (Chichester) (Con)]

Following on from the Chancellor’s final remarks, I am sure he would agree that without a restoration of growth in the eurozone, the debt crisis simply cannot be resolved. He has been with his counterparts quite a lot in the past few days. What evidence has he seen in discussions with them that the EU has the will to implement the necessary reforms on the supply side of the economy to restore Europe’s global competitiveness?

[Mr Osborne]

There is increasing evidence that people are focused on the structural issues facing the European economy. Indeed, when my hon. Friend looks at the agreement issued by the eurozone last night, he will see that when it refers to Spain and Italy, it stresses the importance not just of getting their budget deficits down, but of plans to increase the pension age and make labour legislation more flexible and competitive—all the sorts of things that this Government are pursuing here in Britain, although every one of those measures has been opposed by the Labour party.

Independent Banking Commission Report

Debate between Lord Tyrie and George Osborne

Monday 12th September 2011 Commons Chamber

[Mr Osborne]

I respect the right hon. Gentleman’s experience of having been through all that he went through as Chancellor. He had to deal with these problems in real time over long weekends, and I have paid tribute previously to the work that he did on behalf of our country in those difficult months. As for his book, I have only just started reading it, but as far as I can see, I get off relatively lightly compared to the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown).

The right hon. Gentleman made a good point about the interconnectedness of the banking system. The Basel rules are significant, and I believe that that process was initiated when he was Chancellor and representing the United Kingdom. New arrangements have been agreed in record time. It took 10 years to come up with Basel II, but about 18 months to come up with Basel III. The international rules are important because they help us to deal with investment banks in foreign jurisdictions, such as Lehman Brothers, and to protect all globally systemically important banks and give them bigger cushions. As he well knows, new proposals are coming down the track for additional capital requirements on the most globally systemically important banks. That is significant. Also, we are putting in place the recovery-and-resolution ideas that, again, he initiated when he was Chancellor in order to ensure that we can deal with the failure of the UK end of an American investment bank. That will ensure that these banks do not just live internationally and die nationally, but that we can resolve any problems.

I would make a broader point, however. Yes, we have to do that at an international level, but we also have to consider regimes that have large concentrations of banking, such as Switzerland—let us, for a moment, leave aside Ireland and Iceland, which were obviously virtually bankrupted by what happened. It is interesting that Switzerland, which, as the right hon. Gentleman knows, is as keen as anyone to remain internationally competitive, has introduced its own domestic regime for its banks. It is wholly appropriate for us to consider doing that in this country while, of course, recommending to other countries changes that we think are sensible for all jurisdictions.

[Mr Andrew Tyrie (Chichester) (Con)]

Sir John Vickers has made a strong case both on competition, on which he has endorsed proposals from the Treasury Committee, and on the ring fence, on which the Committee will now be taking evidence from him. On the timing of implementation, however, rather than adding a ring fence to the list of measures in the current Financial Services Bill, which is already long and complex, surely it is sensible to commit now to a separate ring-fencing Bill in this Parliament, while making it clear now that full implementation of the higher capital and debt requirements, which might lead in the short term to lending risks, can be left at least until 2018 or possibly later?

[Mr Osborne]

The Chairman of the Treasury Select Committee makes a sensible suggestion. It is likely—I do not want to say certain—that we will need a separate piece of legislation on some of these specific changes to banking. However, I hope that we can also use the Financial Services Bill to implement other key parts of the reform. That is the case because we want to get this right. The draft Bill is currently being discussed by the Joint Committee chaired by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), and we simply will not be able to produce all that detail in the next couple of months before the Bill is introduced. We have to get this right. As John Vickers said, short-termism got us into this mess, and we need a bit of long-termism to get it right. However, I hope that the commitment to legislate in this Parliament reassures people that it is going to happen in this Parliament. This bunch of Ministers, this Government, will be held accountable if we do not legislate in this Parliament. We have given a clear commitment, and I am sure that the work of the Treasury Committee, which my hon. Friend chairs, in looking at how this report can be put into practice will be very valuable.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 6th September 2011 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

The Chancellor has made it clear that he thinks that a monetary union requires a fiscal union. Can a credible fiscal union be put in place without a treaty change?

[Mr Osborne]

I think that we can take important steps towards greater co-ordination of fiscal policy by implementing, as I say, the agreements that the eurozone came up with before the summer. That is the task at hand now. Speculating now about major treaty change is unrealistic. It is not going to happen in the next few years. It would take several years to bring about such a major treaty change and get it ratified by all the national Parliaments, even if those Parliaments agreed to it. The challenge this autumn is to bring greater stability to the euro’s governance arrangement, which is what our colleagues in the EU want to do.

Global Economy

Debate between Lord Tyrie and George Osborne

Thursday 11th August 2011 Commons Chamber

[Mr Osborne]

I did meet Mickey Mouse in California, and he seems to be writing the Labour party’s economic policy at the moment.

Let me start with the areas where we agree. We agree that it is right for Britain not to join the euro—perhaps the shadow Chancellor will change the official policy of the Labour party in that respect. I would be very happy to offer him a briefing from the tripartite authorities on the contingency plans of the financial system. Obviously, they have to remain confidential, as he will understand, but I am very happy to give him that briefing.

On what the shadow Chancellor says about European countries being forced to reduce their deficits, I would ask him this question. Who is supposed to be lending those European countries the money that he talks about, in this imaginary world where they are not taking action to reduce their deficits? He voted against the decisions that we took to increase the resources of the IMF, and now he turns round and thinks that there is some magical body or some investors out there who are going to lend money to European countries that do not have credible deficit plans. It is completely for the fairies, as he puts it.

Let me talk about the US debate, which the right hon. Gentleman mentioned. He talked about deficit reduction in America and asked where I stand on the measured pace argument. Actually, I agree with the plan that President Obama set out at George Washington university. [Interruption.] Perhaps the Leader of the Opposition does not know what is going on in America at the moment, but actually, the President of the United States has set out a deficit reduction plan that is at the same pace and on the same scale as the one that we are pursuing in Britain. That is what the President has set out; it is his offer in the debate. Indeed, the composition of tax increases and spending reductions that he has put forward is the same as the spending consolidation that we announced last year, and is based on some of the ideas put forward by the bipartisan Bowles-Simpson commission, which we spoke to after the event. It said that it looked to the UK for inspiration for some of its ideas.

The shadow Chancellor says that there is a global economic crisis. He is right about that, and we agree, but it is caused by an enormous debt overhang. That is what all serious economists are saying at the moment. He is also right when he says that the Labour party needs a tough deficit reduction plan. I agree with him about that. Where is this tough deficit reduction plan? We have just spent two and a half hours listening to Labour MP after Labour MP getting up and complaining about spending cuts and the deficit reduction plan—they are all nodding their heads—but where is the tough deficit reduction plan that he promised? The shadow Chancellor is now almost alone in the world in making the argument that he makes. He talks about international leadership, but if he turned up at the G7, the IMF, the G20 or ECOFIN with his plans to borrow more and increase our deficit, he would be laughed out of that meeting. He is completely irrelevant to where the international debate has gone. I am afraid that he is living proof of why the public will never again trust the Labour party with their money.

[Mr Andrew Tyrie (Chichester) (Con)]

Does the Chancellor agree that the collapse in the credibility of the eurozone is a warning to any Government who flinch on dealing with the deficit? Is that not why he is quite right to stick to the commitments that he made a year ago to put the country on a course to greater stability? Does he not also agree, however, that the credibility of economic policy in the long run will depend on a fully developed strategy for improving the supply side of the economy? He talked a bit about that at the end of his statement. Will he say a bit more, and say whether he intends to publish a fully worked up improvement to the strategy for growth that he put forward at the time of the last Budget?

[Mr Osborne]

I completely agree with what the Chair of the Treasury Committee says about the credibility of the deficit reduction plan and how disastrous it would be in the current environment to weaken that plan. We would—within hours, I think—find ourselves sucked into the global debt whirlpool from which other countries are struggling to get out. I also agree with him that we need to do more to improve the supply side of our economy. That is hard work for Governments, and it means taking on difficult vested interests. We have seen the argument in the last few days about planning controls, where we are trying to make it easier to have economic development, and there are plenty of groups that pop up and oppose that. That is an example of some of the battles that we will have to have and win. I can confirm that we will be producing the second phase of our plan for growth at the time of the autumn forecast.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 21st June 2011 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

The Office for Budget Responsibility is scoring the value of most asset sales other than banks at zero in the forecast, on the grounds that it cannot estimate their value. Will the Chancellor provide every assistance possible to the OBR, so that an estimate can be incorporated in its assessment of long-run sustainability, which it is due to publish in three weeks? Is that not an early issue for the newly appointed non-executives to take up?

[Mr Osborne]

I am certainly aware that the Treasury Committee and the Office for Budget Responsibility are in discussions over privatisation receipts and other asset sales, but I do not think that it would be right for me to intrude in that discussion. I can give my hon. Friend the commitment that we will certainly provide the OBR with any information it asks for.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 10th May 2011 Commons Chamber

[Mr Osborne]

The shadow Chancellor shakes his head. I know that in government he tried to do everything to stop a credible fiscal policy being developed, and he is now doing everything in opposition to stop Labour developing a credible economic policy. Long may he continue to do so.

[Mr Andrew Tyrie (Chichester) (Con)]

The Chancellor will shortly publish draft legislation on financial regulation making the Bank of England the most powerful central bank of its type in the world. The word “Governor” simply does not do justice to the empire over which Mervyn King will shortly preside. What specific proposals does the Chancellor have to ensure full democratic accountability of the reformed Bank to both Parliament and the country?

[Mr Osborne]

I thank my hon. Friend for advance notice of his important question. Both the Governor of the Bank of England and the Government take the accountability of the Bank very seriously. Clearly the Bank will receive considerable new powers for its prudential regulation of our financial system and in its macro-prudential tools. We are looking at specific ideas for enhancing the Bank’s accountability, including to this House, but it would be appropriate first for me to appear before my hon. Friend’s Committee—I know that he has contacted my office seeking a date—and to await the Treasury Committee’s findings, so that we can listen to what it has to say before coming up with our confirmed proposals.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 22nd March 2011 Commons Chamber

[Mr Osborne]

What I would say to the hon. Gentleman is this: we inherited a record budget deficit and there was no credible plan to deal with it. We put a plan in place and it is supported by the international community. The result of all this is that we have interest rates that are closer to Germany’s, despite having been left a deficit that is bigger than Portugal’s or Greece’s.

[Mr Andrew Tyrie (Chichester) (Con)]

Will the Chancellor make every effort to keep the House informed about the cost of our operations in Libya by providing an estimate at the earliest opportunity? Will he also tell us whether those costs will be funded from the Ministry of Defence budget or drawn from the Treasury reserve?

[Mr Osborne]

My hon. Friend alerted me to the fact that he might ask this question. The House will understand that it is too early to give a robust estimate of the costs of the operations in Libya, but I can say that they should be modest compared with some other operations, such as Afghanistan. The MOD’s initial view is that they will be in the order of tens of millions of pounds, not hundreds of millions. I can tell the House today that whatever they turn out to be, the additional costs of operations in Libya will be fully met from the reserve.

Banking

Debate between Lord Tyrie and George Osborne

Wednesday 9th February 2011 Commons Chamber

[Mr Osborne]

Well, that has to be one of the feeblest replies to a statement that I have heard. The only person who seems to be out of his depth at the moment, rather surprisingly, is the shadow Chancellor. There was one thing missing from that rant: an apology. He was the City Minister. I will move on to all the things that we need to do to regulate the City, but I will first remind him that he stood at this Dispatch Box for two years as City Minister and could have done any of the things that were either in my statement or in his reply, but he did not. The truth is that he is man with a past, and we will not let him forget it—even if he does. I took the opportunity to look at his website on which he lists all his achievements in politics, but he does not mention the fact that he was City Minister. He does not mention the fact that he invented the system of City regulation that failed so spectacularly. He might have forgotten what he did not do in government; we will not.

Let me deal specifically with some of the right hon. Gentleman’s questions. He asks how the lending targets will be monitored. I told him in the statement that the Bank of England is going to monitor them. [Interruption.] “How are they going to be enforced?”, Opposition Members cry. The chief executive’s pay will be linked to the targets, and I made it very clear in the statement that, of course, if the deal is not met we will return to the issue.

The right hon. Gentleman talks about transparency. In 13 years, the previous Government never implemented transparency in the City of London. Some £11.5 billion of bonuses were paid in the year in which he was the City Minister, but we are introducing the most transparent regime of any major financial centre in the world.

The right hon. Gentleman continues deliberately—because I know he must know the numbers—to get the sums wrong on the bank payroll tax and bank levy. Her Majesty’s Revenue and Customs confirmed that there is a £2.3 billion net receipt from the bank payroll tax, and that is spelled out in the March 2010 Budget book, which the Labour Government published. We are raising £2.5 billion every year from a bank levy that he opposes— right?—unless he has changed his mind on that. [Interruption.] He now supports it. Well, that is good news.

Perhaps, then, the right hon. Gentleman will listen to the right hon. Member for Edinburgh South West (Mr Darling). The right hon. Member for Morley and Outwood (Ed Balls) quoted quite a lot from the newspapers in his reply. Well, this is from The Daily Telegraph: “Bankers’ bonus tax failed, admits Alistair Darling,” who said:

“I think it will be a one-off thing because, frankly, the very people you are after here are very good at getting out of these things and...will find all sorts of imaginative ways of avoiding it in the future.”

That is from the then Chancellor who actually introduced the tax on which the right hon. Gentleman now pins his entire economic prospects.

Let me end by saying this: the right hon. Gentleman calls for things that he simply did not do in government. On pay and bonuses, he says control them in the nationalised banks; he did not do that last year when he was in the Cabinet, and he did not do it at all when he was in the Treasury. He calls for transparency; he did not introduce it when he was in the Cabinet or in the Treasury. He talks about reforming the banking system; he is the person who designed the banking regulatory system that failed, but he does not admit it. He talks about the bank levy; he wrote 11 Budgets and never put one in. And on lending, he tried as a member of the Government to secure lending agreements throughout the banks, and he completely failed. The truth is this: he is a man running away from his past, with no plan for the future.

[Mr Andrew Tyrie (Chichester) (Con)]

Anybody looking reasonably at the settlement will have to agree that it is a welcome step in the right direction. In normal times, Governments should not intervene to force banks to lend or to reveal commercial details of pay, and I very much hope the Chancellor will confirm that it is a one-off, with one exception. Does he not agree that, without further transparency on bonuses, we will never know whether banks are fuelling risks and mistakes for which one day, as a result of the way they misallocate risk, we may have to pay? Will he also support the Treasury Committee’s initiative, outlined in a letter to the Financial Services Authority, and supported by Sir David Walker, to secure that much higher level of transparency?

[Mr Osborne]

I thank the Chair of the Treasury Committee for the welcome that he gives to the package. Of course, in any normal times one would not want to have to negotiate lending agreements with the banks or, indeed, be in a situation where half our banking sector was in part in the public’s hands, but that is the situation that we inherited as a Government and why I felt that the agreement with the banks was necessary, as well as the additional tax that we are levying on them.

My hon. Friend specifically raises the issue of transparency and his proposals that I know he has put to the FSA. As I said in my statement, we have a voluntary agreement this year on disclosure, which already goes beyond those of other financial centres in the world, but, having consulted, we will legislate in the coming year, and his proposals will deserve close attention.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 8th February 2011 Commons Chamber

[Mr Osborne]

The right hon. Gentleman is absolutely right that unemployment went up by 1 million under the previous Government. We know that even in the good years, the problem of youth unemployment increased and that we as a country were not able to do much about it. This Government are determined to tackle that head-on with reform of the welfare system so that it always pays to work and, at the same time, with the new Work programme, which will give young people the skills and opportunities they need to get off those unemployment rolls.

[Mr Andrew Tyrie (Chichester) (Con)]

In giving evidence before the Treasury Committee, Lord Turnbull made it clear that spending as a proportion of GDP should be nearer 40% than the current level of nearly 50%. The OECD has said that the deficit will retard growth. Will the Chancellor make more of the case that action is needed to tackle the deficit not just on financial grounds but to help release the wealth-creating sectors of the economy?

[Mr Osborne]

My hon. Friend is clearly correct that it is unsustainable for the Government to be consuming almost 50% of national income. Lord Turnbull observes that under Labour and Conservative Governments in the past, the number was closer to 40%. Of course, the deficit reduction plan that we have set out brings that about.

Bank Bonuses

Debate between Lord Tyrie and George Osborne

Tuesday 11th January 2011 Commons Chamber

[Mr Osborne]

I do not know how much longer we are going to have to wait for a serious economic proposal from the shadow Chancellor. I suspect that time is running out for him. Let me repeat that we have introduced a code of practice that extends to 2,500 firms. There were 25 firms covered by the code of practice presided over by the right hon. Gentleman when he was in the Cabinet. We have introduced a permanent bank tax, which he and the Cabinet stood against during the general election.

The shadow Chancellor says that he wants a properly regulated banking system. However, he has opposed our proposals to regulate the banking system, we still do not know whether he supports the proposal to give the Bank of England a serious role, and—let us be clear about this—he has absolutely no idea about how to increase lending in the British economy, which he did nothing to achieve when he was in the Cabinet. Part of the pattern of an Opposition who have no serious plans to clear up the mess that they created is their habit of jumping on every passing bandwagon,

People will look at the shadow Chancellor and say that, although it is difficult to think of a way in which he could reduce his economic credibility further after the week that he has had, he has done just that today.

[Mr Andrew Tyrie (Chichester) (Con)]

First, what steps are the Government taking to ensure that an international agreement is reached on the need for more transparency in regard to bonuses and remuneration? Secondly, does the Chancellor believe that shareholders should be much more actively engaged in restraining pay and remuneration, given the evidence that we heard from the chief executive of Barclays this morning that no conversations on the subject had taken place between Barclays and its shareholders?

[Mr Osborne]

I certainly want to see much more international action on transparency, and I have held discussions with all the European Finance Ministers about how that can happen. We also want the Basel III arrangements to be implemented by all the G20 countries, and to be translated properly into European law.

I strongly agree with the my hon. Friend’s sentiments about shareholders. We want them to be more involved in pay and remuneration, and we want to find a way of improving corporate governance in that regard. That is one of the issues that we are discussing with the banks, and I know that the Department for Business, Innovation and Skills is considering it as well.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 21st December 2010 Commons Chamber

[Mr Osborne]

We have a specific review of advanced manufacturing to see what more we can do to help it, and I intend the Budget on 23 March to focus very much on supporting economic growth and removing the barriers to the expansion of manufacturing businesses and others. We are looking both at specific sectors, such as advanced manufacturing and pharmaceuticals, and at cross-government issues, such as planning and employment law, so that we provide not only the economic stability that we have delivered in recent months, but the platform for economic growth.

[Mr Andrew Tyrie (Chichester) (Con)]

Further to that question and that reply, the Government’s efforts so far in that regard consist of “The path to strong, sustainable and balanced growth”. Frankly, it is an insubstantial document—well short of a strategy. The Chancellor has given us a firm lead on fiscal policy. Will he now commit to cutting through what appear to have been a large number of interdepartmental arguments about this, and give us a clear strategy for growth in his next Budget?

[Mr Osborne]

The first thing that I would say is that, of course, deficit reduction is an essential platform for economic growth. The fact that this Parliament, almost alone in Europe, is not having to discuss the sovereign debt crisis is in itself testament to the success that we have had. But we need now to turn around many Departments that have not really thought for years about this question: how do we stimulate private enterprise and private sector growth? We have inherited government machinery that is not equipped to deal with that. We are turning that around, and the Budget in March is the focus point that I expect all Departments to work towards.

Autumn Forecast

Debate between Lord Tyrie and George Osborne

Monday 29th November 2010 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

In June, the Red Book was forecasting that the savings ratio would remain broadly steady at about 6% for the next five years, which is quite near its long-run average for the previous 40 years. On page 67 of the most recent document however, the new forecast assumes a fall in the savings ratio to just over half that, and for the remainder of the Parliament, at only 3%. Is the Chancellor worried about that fall in the savings ratio, and will he consider measures to address it?

[Mr Osborne]

Yes, I have, of course, seen the forecast for the savings ratio and we will want to address it. It has the savings ratio returning to its average of before the recession, and I think all parties in this House, and certainly the Government, will want to find ways of encouraging saving more effectively than was the case in the past, and to address that particular problem.

Financial Assistance (Ireland)

Debate between Lord Tyrie and George Osborne

Monday 22nd November 2010 Commons Chamber

[Mr Andrew Tyrie (Chichester) (Con)]

I think that the public were shocked to discover that the UK was going to be bailing out a eurozone member, not just through the IMF or bilateral loans, but through the European stabilisation mechanism—that is, through the EU budget. Will the Chancellor reassure the House that he will seek to block British participation in any replenishment of the €60 billion mechanism?

[Mr Osborne]

Let me first say that it is our intention not to be part of the permanent eurozone bail-out mechanism, which of course is the subject of discussion, not least at the December Council. It would be our intention that that mechanism should return to what it was designed for in article 122, which is dealing with natural disasters. There has been a balance of payments support mechanism in the European Union for many years to deal with the accession of the central and eastern European countries. Both that mechanism and that balance of payments support drew from the same €60 billion, and we would certainly not be in favour of somehow replenishing it to make good the amount of money that, potentially, will be committed to Ireland.

Comprehensive Spending Review

Debate between Lord Tyrie and George Osborne

Wednesday 20th October 2010 Commons Chamber

[Mr Osborne]

He’s a nice guy, but he’s in the wrong job. The truth is this: frankly, either member of the Balls family would have done a lot better than that, and they might even have asked me a question or two, but let me try to respond to what he said.

The right hon. Gentleman keeps talking about a plan B, but he has not even got a plan A. There was a complete denial of the fact that this country has the largest budget deficit in the G20. He made no acknowledgement of the fact that the credit rating agencies were looking at this country when he was in the Cabinet and no acknowledgement of the fact that our market interest rates were the same as Spain rather than others. Frankly, he spent half his statement defending the economic policy of the last Labour Prime Minister—who perhaps could have turned up to hear it—but that is totally irrelevant to the questions put before the House today and the proposals that we have set out.

The right hon. Gentleman kept saying, “We want to reduce the deficit.” As far as I could tell, he did not agree with a single measure that I set out. He did not propose a single saving. He is a deficit denier, and the truth is this. We have been told for a whole year that we would get Labour’s deficit reduction plan. Before the election, let us remember, we were told in the debates, “Don’t worry, it’ll come after the election.” During the leadership contest, we were told that it would come after the leadership contest. After the leadership contest, we were told that it would come before the spending review, and then this morning, a member of the shadow Cabinet said on the radio, “We are not going to do an alternative to the spending review.” I then got this message in the Chamber that said that at eight minutes past 1 this afternoon, when the shadow Chancellor was actually in the Chamber, he sent an e-mail to members of the public saying:

“I’m going to be honest with you, being in opposition does mean”

we have to set out “a clear alternative”, and he then said, “Please share your thoughts with us.” Labour Members were in government until six months ago. They sat round the Cabinet table as the deficit increased. Six months later, they have not put forward a single idea for reducing the budget deficit. It is absolutely pathetic.

Despite the fact that the right hon. Gentleman says that he is relatively new to the subject, he dismisses, with a sweep of the hand, the verdict of the IMF, the OECD, the CBI, the chambers of commerce, the European Commission and everyone else who has looked at the British economy. I do not know whether he saw the letter from 35 leading employers in this country, but they included people such as the leaders of Asda and Microsoft—I know that the business community of this country is totally irrelevant to Labour now—and the person who founded the Carphone Warehouse, who I think used to be a supporter of the Labour party. All those people wrote to the national newspapers saying:

“Addressing the debt problem in a decisive way will improve business and consumer confidence.”

If the right hon. Gentleman wants to ignore all those people, what about Tony Blair? There is total silence on the Labour Benches for the man who won Labour three general elections. I think that the right hon. Gentleman was in the Cabinet when Tony Blair was Prime Minister, and he has said:

“The danger now is this: if governments don’t tackle deficits, the bill is footed by taxpayers, who fear that big deficits now mean big taxes in the future, the prospect of which reduces confidence, investment and purchasing power. This then increases the risk of prolonged slump”.

The right hon. Gentleman used to be a Blairite—[Interruption.] Well, at least the right hon. Member for Morley and Outwood (Ed Balls) has been fighting Tony Blair all his career and says he is wrong, but the shadow Chancellor used to be a supporter.

The right hon. Gentleman has dismissed all the leading businesses of Britain, all the international organisations and Tony Blair, but let me answer a couple of his specific questions—[Interruption.] Well, to be fair, in the space of about 10 minutes he asked three, so I will answer them. First, he asked about police numbers. Of course this is a challenge for the Home Office, but we believe that with the advice from the inspectorate of constabulary and Tom Winsor’s report, there will be no reduction in the availability and visibility of policing. However, the right hon. Gentleman was asked during the election—[Interruption.] He was the Home Secretary. [Interruption.] The new Leader of the Opposition asks—[Interruption.] This is what the man who was Home Secretary before the election said in the election, when he was asked a question on the “Daily Politics” show:

“Can you guarantee if you form...the next government that police numbers won’t fall?

Johnson: No”.

So what is the basis on which he makes his argument?

The right hon. Gentleman talks about the national health service, and he said that he agreed with our decision to ring-fence it. Presumably this is the same shadow Chancellor who said recently, “There is no logic, sense or rationality to this policy.” He has done a complete U-turn.

The right hon. Gentleman says that he rejects the minus 20% definition of the Labour cuts. At the same time, he began his statement by praising the Institute for Fiscal Studies, but that number comes from the IFS. He suggests that I have not paid attention to the announcements that he has been making this week. Well, it is true that I have been quite busy, but I have paid attention to what he has said. I understand that not many people got a chance to question him about his policies, but he said that taxes needed to be increased. However, when he was asked which taxes, he said that he was open-minded about it. That is a polite way of saying he hasn’t got a clue.

The right hon. Gentleman was once the great force of modernisation in the Labour party, and he has now ended up reading out the policies dreamed up by the new Leader of the Opposition. He said in that press conference earlier this week that being in opposition was not about “pretending to be in government.” Now we know how right he was.

[Mr Andrew Tyrie (Chichester) (Con)]

This is undoubtedly one of the most radical and—I think most people in all parts of the House would agree—necessary shake-ups of the public sector, whatever the scale of shake-up people wanted. Personally, I particularly welcome the cull of quangos, the re-examination of the private finance initiative, the efficiency drive in Whitehall, and the announcements on Equitable Life and the BBC. The Select Committee on Treasury will be looking in far greater detail than in the past at the Treasury’s decisions, and particularly at the way that it has prioritised between Departments and at the ring-fencing. We will also examine them for fairness. The Chancellor’s analysis in the June Budget presented that Budget as progressive. I would be grateful if he could confirm that this CSR is also progressive. I would also be grateful if he could say something about his plans to denationalise the banks.

[Mr Osborne]

First, let me thank my hon. Friend for the welcome that he gave—to repeat what I said —to what I implied about PFI, the contribution that the BBC will make and the very difficult choice that we all have to make in this Parliament about what is a fair settlement on Equitable Life. In particular, helping the trapped annuitants is an absolute priority and it is a good thing and, as I said, we found three times as much money as John Chadwick recommended.

My hon. Friend raised two particular points. First, he mentioned ring fences, and although we call them ring fences, in the end they are about priorities. We have made a choice. As a coalition Government, we have chosen certain things that we are going to cut—obviously we have made some difficult decisions on welfare—but we have also chosen to spend more money on health care and the resources going into schools. Those are choices, and in the end that is what politics in a democratic country is about. We have made those choices, so I would not regard them particularly as ring fences, more as democratic choices.

Finally, on the distributional impact, we have published distributional analyses in the book that I have published today—my hon. Friend will know that we are the first Government to attempt to do this—and I will very much welcome the Treasury Committee’s inquiry on the spending review, which I know he will conduct. We have used the methodology that is used in many other countries to try to allocate the benefit in kind of public expenditure, as well as the direct income effect of some of the benefit changes. We believe that that shows this is broadly progressive, in that the top quintile pays the most and it is broadly flat across the other quintiles. The same is true of some of the annually managed expenditure decisions as well, on which we have also published tables.

I very much welcome the Treasury Select Committee’s inquiry and its work on this matter. As I have said, this is the first time the British Treasury has attempted to do this, and we very much welcome the Committee’s input.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 12th October 2010 Commons Chamber

[Mr Osborne]

My answer to the right hon. Gentleman is yes and no—yes to the first part of the question. I listened very carefully to what the Treasury Committee said about the two other members of the budget responsibility committee, and I propose that it should indeed have a veto over those two appointments, which were made on the recommendation of a panel that included Robert Chote. I made the suggested appointments, but it will be for the Treasury Committee presumably to hold hearings and hopefully give its approval.

I do not propose to follow the second path that the right hon. Gentleman suggested. If the OBR begins commenting on the fiscal mandate, it intrudes on what is a legitimate matter of debate in the House between elected representatives who have strong views on this. I want to do everything I can to preserve the independence of the OBR, not just for this Government but for future Governments as well.

[Mr Andrew Tyrie (Chichester) (Con)]

Would the Chancellor just confirm that the veto on the other two members of the OBR will function in exactly the same way as it would for the chairman? Would he also confirm that, in line with our recommendations, the OBR will be permitted at the request of Opposition parties at election time to examine their fiscal policies as well?

[Mr Osborne]

What I would say to my hon. Friend in response to his first point is yes, the procedure that I propose is exactly the same, unless he wants to volunteer some alternative method. On his second point, this is genuinely a matter that should be debated in the House in a non-partisan way, because it does not affect just this Parliament. There is a question of whether we want the OBR to be able to cost Opposition policies at the time of a general election. I propose to have discussions with Opposition party leaders about whether that is the appropriate thing to do, and it would be a legitimate matter for the House to debate and decide.

Proposed Public Expenditure Cuts

Debate between Lord Tyrie and George Osborne

Monday 13th September 2010 Commons Chamber

[Mr Osborne]

I draw the hon. Gentleman’s attention to the central forecasts produced by the Office for Budget Responsibility, the Bank of England, the OECD and the European Commission. They forecast steady and sustainable growth over the coming period. I take the view—a view shared by quite a number of people who observe the British economy—that if we had not put in place, in the Budget, a credible plan to reduce the budget deficit, this country would be in an economic mess.

[Mr Andrew Tyrie (Chichester) (Con)]

The Chancellor helpfully published, decile by decile, the distributional effects of a number of his measures in the Budget. But the exclusion from his analysis of a number of other measures has led to a lot of controversy about whether his Budget is progressive or regressive. Will he now commit to publishing in the comprehensive spending review a full analysis of all the measures in aggregate, decile by decile, so that we can see whether their effects will be progressive or regressive?

Financial Services Regulation

Debate between Lord Tyrie and George Osborne

Wednesday 16th June 2010 Commons Chamber

[Mr Osborne]

We need to take some time before coming to decisions on how to dispose of the bank shares that we own in the Royal Bank of Scotland and Lloyds, and the banks we own, such as Northern Rock, not least because at the moment the British taxpayer would make a substantial loss on many of those share purchases. However, we are prepared to consider lots of options. Sir John Vickers’ commission is going to look at competition in the banking industry. It has become incredibly consolidated in the past couple of years and that is not necessarily the best thing for bank customers, as many of us will know from representing businesses that cannot get access to credit. It is sensible to look at what Sir John Vickers and his commission have to say about this.

[Mr Andrew Tyrie (Chichester) (Con)]

Why was so much of this announced on this morning’s “Today” programme rather than here? Who will chair the financial stability committee in a crisis? Will it be, as it should be, the Chancellor of the Exchequer?

[Mr Osborne]

There has been quite a lot of speculation, and as we will see in the coming days not all of it has been very accurate. I cannot account for the speculation, because it certainly has not been coming from my office. I am discovering that it is a feature of being in government that lots of people anticipate one’s views before one expresses them.

I congratulate my hon. Friend on becoming Chair of the Treasury Committee and I hope to have the engagement of his Committee in this important debate over the next year. When it comes to the commitment of taxpayers’ money, the elected Government, who are accountable to the House, will remain in charge.

Oral Answers to Questions

Debate between Lord Tyrie and George Osborne

Tuesday 8th June 2010 Commons Chamber

[Mr Osborne]

I thank the right hon. Gentleman for his welcome. He is Labour’s “man of letters”, and it is good to see him still on the Front Bench. The point that I make to him is that Labour had 13 years in government, and inequality increased during its time in office. What we will do is deal with the very large budget deficit bequeathed to us by him and his colleagues in a way that is fair and reasonable, and protects people across the country.

[Mr Andrew Tyrie (Chichester) (Con)]

It is clear that in the past few days a new system of public expenditure control has been put in place. What will the Chancellor do to ensure that Parliament is fully informed about the new system? Will he publish a full explanation of exactly how it works?

[Mr Osborne]

I think that we have the two candidates for the chairmanship of the Treasury Committee here today. [Interruption.] I do have a vote, but I am not going to exercise it on that matter. The point that I should make to my hon. Friend—I shall speak about this a bit more in our debate on the Queen’s Speech later—is that we are publishing today details of the framework that we will adopt in conducting the spending review. I will say more about that at the time of the Budget—and I will, of course, answer questions about it in detail before the Treasury Committee, whoever is in the chair. Parliament will also have a number of opportunities to discuss it, and when the spending review is finally produced in the autumn it will, of course, be presented to this House. I want all Members of this House, from all parts of it, to engage in the big national challenge of resolving how we get this country to live within its means.