George Osborne
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(13 years ago)
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The Chancellor of the Exchequer (Mr George Osborne)
I welcome this opportunity to discuss the very difficult economic situation that this country and the rest of the western world face at the moment. After that vaudeville act, I am trying to remember whether the shadow Chancellor actually set out the five-point plan. He did not actually go through it, so we will go through it for him.
Of course, the concern of everyone here is to see growth, support jobs and get Britain through this debt storm; that is what we are talking about and working on. As this is an Opposition day, however, before I turn to what the Government are doing it is worth considering what the Opposition propose, and what the shadow Chancellor did and did not say. We should consider what his political friends, as well as his political opponents, are saying about him.
The right hon. Gentleman dismissed the intervention by one of my hon. Friends about Charles Clarke—[Interruption.] Well, there you go. It was not picked up by the microphones, but the shadow Chancellor just dismissively said, “Charles Clarke!” The Opposition dismiss everyone with whom they served in government. They boo their ex-Prime Ministers, they dismiss their ex-Ministers. Here is what the man who was the Labour Home Secretary said, not weeks ago but yesterday:
“I think the Labour conference failed to come across strongly with an alternative to what the Government is doing. I think the economic proposition that Labour puts at the moment is unconvincing…we are simply dismissed by most people thinking about the most central question facing the country today, which is the economy.”
That is the verdict not of the Conservative party, the Liberal Democrats or anyone else but of former members of the Labour Cabinet.
If we want to know why the shadow Chancellor is failing to convince the country, let alone his own party, of why he has not come forward with a convincing alternative, I suggest that we focus on three things that were not in his speech. I will cover each in turn. First, there was absolutely no plan to deal with the deficit. There was a not a single suggestion of how public expenditure could be saved. Let us remember what he said—
Mr Osborne
I will in a moment, because perhaps the hon. Gentleman can respond to this point.
The shadow Chancellor said, when we debated the matter in August, that he would set out
“a tough, medium-term plan to get our deficit down”.—[Official Report, 11 August 2011; Vol. 531, c. 1110.]
Mr Osborne
He nods, but where on earth is that tough, medium-term plan to get the deficit down? It was promised two months ago. Where are the cuts that he would make? He should give us some examples. We have been waiting for three years for ideas from the Labour party about what it would cut, and none has been forthcoming. The former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), who is in his place, was pretty revealing in his memoir about what was actually going on. He stated that
“the ‘investment versus cuts’ argument…simply wasn’t credible…I did want some examples of things we were prepared to cut. I could see, though, that there was no appetite for this in No. 10.”
And we know who was advising the occupant of No. 10 Downing street at the time.
Ed Balls
The International Monetary Fund has stated that if the UK has a period of stagnation or contraction, the Government should change course and delay their planned tax rise and spending cuts. The economy has flatlined since the autumn, with zero growth. Does that represent the sustained stagnation that would cause the Chancellor to take the IMF’s advice and change course?
Mr Osborne
The right hon. Gentleman quotes the IMF, but its managing director said a month ago that
“in the United Kingdom strong fiscal consolidation is essential to restore debt sustainability… The policy stance remains appropriate.”
The right hon. Gentleman also quoted the OECD, saying that it was telling me to change course, but the OECD’s chief economist, whom he used to quote in the House, says:
“The Government should not change its course. A cut in the VAT…would not be appropriate in our view.”
So before the shadow Chancellor bandies around the recommendations of international organisations, he should quote them properly in the House.
Ed Balls
I will quote them verbatim. The Chancellor quoted the IMF from September and the OECD from before the summer, but let me quote the IMF from October, just two weeks ago. It stated:
“If activity were to undershoot”—[Interruption.]
Let me read it, because the Chancellor has asked for the full quote, which is from October.
“If activity were to undershoot current expectations and risk a period of stagnation or contraction, countries that face historically low yields (for example, Germany and the United Kingdom) should also consider delaying some of their planned consolidation.”
Is that stagnation and contraction in place, and has it been in place for long enough yet to justify his taking the IMF’s advice of just two weeks ago?
Mr Osborne
In precisely the advice that the right hon. Gentleman reads out, the IMF, in its current forecasts for the UK economy, is very specific that the UK should not change its fiscal stance. It has consistently recommended that this country undertake credible deficit reduction. The Government have set out many proposals—controversial proposals—to get our budget deficit down, but in the 16 months that we have been in office we have heard not one single suggestion from the shadow Chancellor on how he would get the deficit down.
Mr Osborne
I will take the hon. Gentleman’s intervention in a second.
Last week, the Opposition tabled an amendment to the Welfare Reform Bill that would have cost this country £11 billion. That one amendment on one day in this House of Commons shows how completely incredible they are.
Mr Osborne
The policies that we have set out deliver the low interest rates that are essential for economic growth.
Nadhim Zahawi
The shadow Chancellor has quoted the IMF. Why does the Chancellor think that the Labour party voted against our subscription to the IMF? Why did the Labour Government not put their best people to work to deal with the deficit and the debt, but instead hire 17 people and spend £4.8 million on the euro preparation unit?
Mr Osborne
My hon. Friend reminds me that one of the first things I did in the Treasury was shut down the euro preparation unit. More importantly—
Mr Osborne
The shadow Chancellor, who has just been quoting the IMF, wants to intervene again, but let me say this, because my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi) reminds me of another important point. Will the shadow Chancellor explain why he led his party—not everyone in his party, because I can see in the Chamber some prominent Labour Members who chose not to vote in that Division—into voting against a quota increase to the IMF, which was a central part of the London G20 summit chaired by the previous Prime Minister? How on earth does he think he could be taken seriously in any of the international meetings taking place at the moment if he had succeeded in winning that vote? Why did he do it?
Ed Balls
As the former chair of the IMF deputies, I am a huge supporter of the IMF. The rise in subscriptions is important, but for the Chancellor to try to ram it through the House before he sorted out the flawed European stability mechanism was a mistake—we voted against because we had doubts about his European policy.
However, to come back to my earlier intervention, let me ask the Chancellor this question again. Unemployment is rising, and output has been flat for a year: how much longer does he have to wait before he takes the IMF’s advice and changes his deficit reduction plan? How bad does it have to get?
Mr Osborne
We are sorting out the mess that we inherited from the Labour party. Much as I wish that that could be done overnight, it cannot. So great was the hole into which they put the British economy that it takes time and effort to come out of it.
Tony Baldry (Banbury) (Con)
Before my right hon. Friend was distracted, he quoted the previous Chancellor, who writes in his memoirs of his last pre-Budget report. He says that any coherent strategy would have been better than none, but that the previous Government simply did not have one. Are not the facts of the matter that the Labour party did not have a coherent economic strategy before the last general election, and that it still does not have one, as we all clearly heard this afternoon in the knockabout speech by the shadow Chancellor?
Mr Osborne
My hon. Friend is absolutely right. The previous Chancellor’s memoirs reveal the very divisive role that the shadow Chancellor played in stopping the previous Labour Government coming up with a coherent economic policy and a credible economic plan, and even in stopping Nos. 10 and 11 talking to each other.
Mr Osborne
I shall tell the hon. Gentleman what I inherited as Chancellor and what this country inherited from the previous Government: we inherited the second deepest recession in the entire world. The hon. Gentleman talks about GDP, but we had the biggest fall in GDP of any country in the world with the sole exception of Japan.
Mr Osborne
I will give way in a moment, because I want to ask Opposition Members some questions. The House is today asked to support an Opposition motion that would add another £20 billion to the structural deficit. They maintain the fiction that they are sticking with the so-called Darling plan on the deficit—[Interruption.] That is what they say. Does the shadow Chancellor agree?
Mr Osborne
Okay. The motion tears up the Darling plan—it is £27 billion off the plan set out in the March 2010 Budget. That is the truth.
Mr Osborne
I shall give way to the parliamentary private secretary to the former Prime Minister to defend his record.
Alison McGovern
I will defend the record of our former Prime Minister any day of the week, but will the Chancellor defend his own record, and tell the House how far away he is from his deficit payback plan?
Mr Osborne
The hon. Lady has to defend the record of the former Prime Minister because he never turns up in this House to defend it himself.
The one thing that we want to avoid in a debt crisis is a sharp rise in interest rates, but that is what the motion would bring about. Let me give the House some new information.
Mr Osborne
I will give way in a moment. Let me make progress. Do not worry: there will be lots of opportunities for Opposition Members to answer my questions.
I can give the House new information on what just a 1% rise in interest rates would mean for this country at the moment. Such a rise would cost British families an additional £10 billion a year in higher mortgage payments and the British Government an additional £6 billion a year in higher interest costs, and it would increase our net payments to foreign creditors by around £15 billion a year—£15 billion that would leave our economy. Given the sums involved, the impact on family mortgages and small business loans would completely outweigh any fiscal effects of the proposals in the shadow Chancellor’s motion.
Mr Osborne
I said that I would give way in a moment. Labour’s approach would lead to a credit downgrade of this country. The shadow Chancellor shakes his head, but there is no doubt about that any more. This is what the credit rating agency, Standard & Poor’s—[Laughter.] Opposition Members laugh at the credit rating agencies and the need for this country to preserve its triple A credit rating, but Standard & Poor’s says that the ratings would
“come under downward pressure if the Coalition’s commitment to fiscal consolidation falters”.
That is what we would get under Labour: a downgrade to our credit rating, higher interest rates and the economy sent into a tailspin.
Mr Osborne
I give way to the right hon. Member for Holborn and St Pancras (Frank Dobson).
Frank Dobson (Holborn and St Pancras) (Lab)
Why does the Chancellor give such credence to Standard & Poor’s, which gave triple A ratings to every stupid, risk-taking banker, including those in Northern Rock? Standard & Poor’s advised Northern Rock on one of its products for about a year, and then surprisingly gave Northern Rock a triple A rating. Why should we take any notice of people like that?
Mr Osborne
That, of course, is the attitude of the Labour party. It ignores entirely the views of the world bond markets and the credit rating agencies. That is exactly the approach that got Britain into this economic mess. Because the Government have a credible plan, we are pulling this country out of that mess.
Jesse Norman
Does the Chancellor share my amazement at the lack of reality on the Opposition Benches? The eurozone is in crisis, the credit markets for the banking system across Europe are in desperate straits, and yields are rising, and yet the Opposition would squander £20 billion to £30 billion and increase our deficit.
Mr Osborne
My hon. Friend is absolutely right. Low interest rates are a precious commodity for the UK at the moment, and Members of the House, sent here to represent their constituents, have to ask themselves, “Do we really want an increase in interest rates at this time?” Is that what we want? It is what the motion would lead to.
Mr Osborne
I shall give way to the member of the Treasury Select Committee, the hon. Member for Edmonton (Mr Love) and then the representative of the Scottish National party, the hon. Member for Dundee East (Stewart Hosie), and then I shall make some progress.
Mr Andrew Love (Edmonton) (Lab/Co-op)
How can the Chancellor possibly describe as credible a deficit reduction programme that ends up increasing debt by £46 billion?
Mr Osborne
As I have said, the British structural deficit is coming down because of the measures that we are taking, but the proposal put to the House today would push the budget deficit this year into double figures. No country in the world would consider that a sensible approach at a time such as this for a country such as Britain. It is economic nonsense, and I suspect that the hon. Gentleman knows it.
Stewart Hosie (Dundee East) (SNP)
I thank the Minister for giving way. He is being very generous. May I take him back to his exchange with the shadow Chancellor on IMF quotes? On 20 September, Monsieur Decressin, the senior adviser to the IMF research department, said that the IMF view was that
“policies in…the UK should only be loosened if growth really threatens to slow down substantially, relative to what we are forecasting. For so long as the forecast seems to pan out, there is no reason to change fiscal plans.”
The IMF has set down a marker for growth and, in effect, said that if it falls substantially, as it is doing, it would accept fiscal loosening. Does the Chancellor recognise that if growth continues to flatline or fall, there is at least an argument for fiscal loosening?
Mr Osborne
The IMF is clear that on its forecasts, which are some of the more pessimistic forecasts for the UK at the moment, it is not recommending a change in policy stance. That is what it says. It is what the managing director has said; what the article 4 report on the UK said; what the OECD is saying; and what all the business organisations in Britain are saying. That is why the path that the shadow Chancellor has laid out for the country is so incredible and does nothing to deal with the problems that he left to the country.
Richard Fuller
In response to the question from the hon. Member for Dundee East (Stewart Hosie), I would say that that is not the answer to a debt recession, because a debt recession relies on credibility. One of the key points in the motion is that the Labour party’s so-called plan would provide, through a temporary reverse of the VAT increase, a benefit of £450 for every couple with children. Has the Chancellor worked out the benefit to average families in the country of maintaining the credibility of our country’s finances and ensuring lower interest rates?
Mr Osborne
As I was just explaining, a 1% rise in interest rates—I am not talking about the level of interest rates in Spain and Italy—would mean £10 billion in higher mortgage bills for British families. That is the reality of what the shadow Chancellor is proposing.
Mr Osborne
I shall take the right hon. Gentleman’s intervention, and then I shall make some progress and give way again later.
Ed Balls
The former chief economist at the Cabinet Office, who actually drew up the plan B that the Chancellor then shelved, said in August:
“Low long-term interest rates appear to reflect economic weakness and lack of market confidence in the prospects of the UK economy, not the reverse.”
Is the Chancellor saying that the former chief economist at the Cabinet Office, now head of the National Institute of Economic and Social Research, is wrong to say that low interest rates are a sign of lack of confidence and prospects for growth?
Mr Osborne
I am glad that I took that intervention, because the implication is that the shadow Chancellor wants higher interest rates in Britain. That is the revelation we have just heard from him, and it tells us everything about what he is proposing: a catchy five-point plan—the clue is in the title—for a conference speech that would put Britain back at the mercy of the international bond markets, with higher interest rates affecting families and businesses and causing homes to be repossessed and jobs to be lost. We will have no part in it.
Mr Osborne
I have already given way quite a bit. I shall give way again later when I have dealt with this point and when perhaps the shadow Chancellor can answer the questions that I am about to put to him.
Ed Balls
The Chancellor—the Chancellor!—must be the only person in the whole country who thinks that to have Bank of England interest rates at less than 1% for three months is a sign of economic strength, not of the fact that our economy has not grown for a year and that unemployment is rising. The long-term interest rates at the long end of the curve are a reflection of expectations that those interest rates will stay persistently low. The former chief economist said that they
“reflect economic weakness and lack of market confidence in the prospects of the UK economy, not the reverse”.
Is the Chancellor saying that Jonathan Portes, from the National Institute of Economic and Social Research, is wrong?
Mr Osborne
My first point is that Jonathan Portes and I have had our disagreements for the past 16 months. He was not my appointment to the Government, but the shadow Chancellor’s, and he is not working for the Government any more. The second thing I want to say is that he cannot have it both ways. He cannot say that Britain is alone in facing these problems, which was the implication of his speech, and then not look at long-term interest rates—or, indeed, the short-term interest rates—in the United States and Germany, which are lower than ours, although we are close to them. [Interruption.] The shadow Chancellor says that they are weak. One of our problems is that the German, US and French economies have ground to a halt. That is why we also need a solution to the eurozone crisis, which has hit all western economies. His idea that Britain is unique in the world in facing these problems is frankly laughable.
Mr Denis MacShane (Rotherham) (Lab)
My constituents listening to this will be unable to comprehend all the statistics that the Chancellor is placing in front of us. However, we are missing the human dimension. In Rotherham, for the first time in nearly 20 years, unemployment today rose above 10%. That is taking us back to the south Yorkshire de-industrialisation of the 1980s. We are talking about real people. Does the Chancellor have even the tiniest nanoscintilla of doubt about his policy? He has been in charge for nearly 18 months. Does he have any concerns that perhaps his policy is not working?
Mr Osborne
I am clear that what we are doing is tough but necessary because of the very difficult situation that we inherited. The right hon. Gentleman talked about the impact in south Yorkshire. We inherited a record budget deficit and a bigger recession than in any other country in the world apart from Japan. That is what we are recovering from. Arguably, it was the biggest banking crash in the entire history of the country—at a time when those banks were supposed to have been regulated by the Government of which he was a Minister. That is what we are dealing with. Of course, it is extremely difficult, and many countries are facing problems at the moment, but I think that the steps that we have taken have helped us to weather this global debt storm and kept interest rates low for people in Rotherham. I shall come on to the steps that we can take to ensure that Rotherham does not suffer in the future as it has done in recent years under the Labour Government.
Mr Osborne
I shall make some progress and then take some more interventions.
I shall touch briefly—because we covered this during Monday’s statement—on the situation in the eurozone. I set out on Monday what I felt was needed and what many in the world now feel is needed: we need to ring-fence the eurozone by giving its bail-out fund maximum power; recapitalise Europe’s banks when they are weak; resolve the situation in Greece; and then set out the path to the political and economic changes required to make monetary union work, with greater fiscal integration and improvement in competitiveness on the periphery. I said that Britain wanted no part in the fiscal integration, but that we want to protect our say in the single market, financial services and competition issues. We also want the whole of the UK to become more competitive—with a more complete single market and freer trade.
Since Monday’s statement, we have had the news that the Slovakian Parliament has voted down the proposed changes to the eurozone financial fund—the European financial stability facility—which is clearly a disappointment. We all hope that it will pass in the coming days and urge the Slovakian Parliament to pass it. What has also been disappointing in the past couple of days is the suggestion from the President of the European Commission that Britain should make a direct contribution to eurozone bail-outs. Britain chose not to join the euro and the British Prime Minister has fought hard to get Britain out of the bail-out fund to which the previous Government signed us up. I want to make it clear that whatever the Commission President says, British taxpayers will not be contributing to the eurozone’s bail-out of Greece—full stop. However, we will work with our eurozone partners to help them to resolve the crisis and work with our international partners in institutions such as the IMF to ensure that they have the resources to deal with the problems across the world.
I said that the first thing missing from the shadow Chancellor’s speech was a credible deficit plan, but there was—
Mr Osborne
Let me make just a little bit of progress and then I shall give way.
There was an absolutely staggering second omission from the shadow Chancellor’s speech, which was any reference—I will take an intervention if I have got this wrong—to Labour’s big new economic policy idea, which was unveiled at the Labour conference two weeks ago. I am referring, in case hon. Members have forgotten, to that great plan to divide British businesses into producers and predators—good and bad—and to levy different tax rates on them. Remember the speech from the Labour leader? Did the shadow Chancellor have any part in writing that speech?
Mr Osborne
At last there is something we agree on. It was absolutely the speech that we wanted to hear from the Labour leader at the Labour conference. I want to know what happened to this great idea, which was the centrepiece of Labour’s growth strategy for the new economy. Two weeks later it is not even referred to in the motion that we are being asked to debate. It is like the Lord Lucan of policy ideas: we do not know whether it is dead already or whether it has just gone missing for ever. I was really disappointed, because we know that the shadow Chancellor likes to cover all the policy areas in the shadow Cabinet and I was hoping for an explanation from him about how the idea was going to work. Are we supposed to grow our economy by levying new taxes and regulations on companies owned by private equity firms such as Boots, T-Mobile, the AA, Saga, Somerfield, Legoland and Chessington World of Adventures, those well-known centres of predatory business activity? [Laughter.] It would be laughable if it were not the centrepiece of the Opposition’s economic policy.
Mr Osborne
The Prime Minister gave his speech, which the shadow Chancellor should have paid close attention to, and made it absolutely clear that people are paying off their credit cards—because of the situation that the Labour party has left this country in—but I would ask the shadow Chancellor this question. He had a chance before; will he please mention—just once, in one intervention—the policy of the Labour leader? Come on, just get up and say you support it.
Ed Balls
I think the research and development tax credit to encourage and incentivise investment in research and development was a good thing. I think our proposal to cut national insurance for small companies that take on more employees is a good policy. It was in the Leader of the Opposition’s speech; it was in our five-point plan; it is in the motion—so why do Government Members not vote for it?
Mr Osborne
I guess that is called an “Ed Balls endorsement”—that is what the last Chancellor and Tony Blair got used to. We increased the R and D tax credit for small businesses in the Budget, so we have taken that idea—which we came up with—and introduced it. I am very pleased that the Labour party now supports it, but what about this idea that a Labour Chancellor would sit there in No. 11 with his home-made scales of justice weighing up the companies he likes and those he does not like and levying different levels of tax on them? What happened to that? It was the centrepiece of the Labour conference two weeks ago, and it shows why Labour simply cannot be trusted to run the economy of this country and why it has become the anti-business party again.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I thank the Chancellor for giving way. It is interesting that he brings up those points, but can he please tell us where the ghost—or the ghoul—of the regional growth fund is? It has now been six months and the north-east is still waiting for the regional growth fund money that it was promised. Businesses are hanging on the wire for that money. Will he please tell us where that cash is?
Mr Osborne
Again, that was another opportunity to talk about Labour’s big economy idea. The hon. Gentleman did not take it, but I am glad that he raised the regional growth fund, which has allocated money to the north-east and other parts of the country. That money is flowing and those projects will get going. We are also setting up enterprise zones in Teesside and Tyneside, and doing what we can to get the north-east economy, which also suffered in recent years, on the front foot, creating private sector jobs so that that region, too, has prosperity.
Mr John Redwood (Wokingham) (Con)
I am grateful to the Chancellor for giving way. I welcome the work that he and his colleagues are doing on a growth strategy, which he said is needed. A big component of that is the £75 billion of quantitative easing. We are also told that there will be credit easing to get the money into private companies. Will that be on top of the £75 billion injection or within it?
Mr Osborne
It will be on top of the £75 billion. I have not gone through the QE and credit easing policies in detail today because I went through them in the House on Monday, but I would be happy to do so if Members like. QE is an operation undertaken by the Bank of England under the procedures established by my predecessor. The credit easing options that we are looking at involve the Treasury—or rather the Government—using its balance sheet to get money to small businesses either by purchasing securitised small loans, purchasing mid-cap company bonds in the bond market or issuing guarantees through the banking system. All those things currently happen in Britain, but on a very small scale. Our intention is greatly to increase them, and I will set out the proposals in November.
David Wright (Telford) (Lab)
I am grateful to the Chancellor for letting me intervene. Would he be willing to release all the information relating to meetings and discussions that he had with the Governor of the Bank of England on introducing the latest phase of QE, and does he anticipate that we may need more?
Mr Osborne
No, and not even in my memoirs, because the conversations between the Chancellor and the Governor of the Bank of England should be confidential. However, let me make it absolutely clear to the hon. Gentleman that we are talking about an entirely independent decision by the Monetary Policy Committee—not just the Governor of the Bank—and that I followed exactly the procedures established by my predecessor.
Mr Osborne
No, I will make some progress and then perhaps take an intervention from the hon. Gentleman.
We did not hear today about the big Labour idea on the economy that was unveiled two weeks ago. Hitting businesses with more taxes and more regulation at a time like this is absolutely the wrong thing. The way to help businesses to create jobs is to give them competitive tax rates. That is why we have cut corporation tax this year—we have three more cuts to come—and why we have reversed the proposed Labour increase in the small companies tax rate and frozen business rates for all. It is also why we have set up a series of schemes to help unemployed people who have either just lost their jobs or never had a job into the labour market by getting them work. We have launched the biggest back-to-work scheme that the country has seen in 80 years and funded 250,000 more apprenticeships and 100,000 work experience places. Today we have launched the new sector-based work academies to help tens of thousands of young people with training and job interviews. Youth unemployment in this country has been rising since 2004. The last Government did next to nothing to confront it; we are rolling up our sleeves and getting stuck in to sort out this long-term problem for Britain.
Toby Perkins (Chesterfield) (Lab)
The Chancellor has been very generous in giving way, although not so generous in actually answering the questions that he has been asked. He has just laid out all the things that he is doing to put things right, yet the economy is flatlining, with record youth unemployment and no growth back in the economy. What is he going to do to improve the situation? Does he not recognise that we cannot just cut the deficit if we do not have growth?
Mr Osborne
We would not have growth if there was a big increase in interest rates. Let us look at other countries in the world that do not have a credible plan to deal with their deficits. Of course this is a difficult time, when many western economies have this problem, but we are taking the tough steps necessary to get the economy going and make it easier for businesses to hire people, which brings me on—
Mr Osborne
I will take interventions in a moment, because I want to know the Labour attitude to these policies that we are proposing.
We are proposing to extend the probation period before a new employee can make an unfair dismissal claim from one to two years. We are also proposing to introduce, for the first time ever, a fee that someone has to pay before they can take a case to an employment tribunal and which they get back if they win. Those are two difficult measures; they are controversial, but they will make it easier and less risky for businesses to hire people. I want to know whether the Labour party will support those measures when they come before the House of Commons. Will it? I want to know whether the right hon. Gentleman will support these things when they come before the House of Commons. Yes or no?
Mr Osborne
It is not going to hit people; it is going to help people into work. I want to know another thing from the shadow Chancellor. I have made it clear that this proposal is going to help people to get into work and help businesses to hire men and women to do jobs without taking the risk that they might bring an unfair dismissal claim within the first couple of years. He kept talking about the Federation of Small Businesses in his speech; it supports the proposal. Does he? It is a simple question. Yes or no?
Mr Osborne
No, no—I am talking about claims for unfair dismissal, and I want to know whether the right hon. Gentleman supports those proposals. This is not about statutory maternity pay; it is about extending the probation period for unfair dismissal.
Here is another question for the Labour party. The trade unions are proposing to go on strike this autumn. That is what they are balloting on. I think everyone in the House would agree that a strike is absolutely the worst thing for the British economy at the moment, and I want to know whether Labour will support that strike or condemn it. Is the shadow Chancellor going to condemn the strike—yes or no? And I do not want any weasel words about a proper negotiation process; I want to know whether, if it comes to a strike, he will condemn it.
Ed Balls
The whole country wants to avoid a strike, but that will require this Chancellor to change his proposals on a deeply unfair 3% rise in pension contributions. We can avoid a strike, but it will require this inflexible Chancellor to do the right thing, not the wrong thing.
Mr Osborne
That is another thing that Labour refuses to condemn. There we have it. We asked the former Labour Work and Pensions Secretary, Lord Hutton, to do a report for us. In his interim report, he set out a case for increased contributions. In his final report, he set out proposals for the defined benefit. We are negotiating on the basis of that. I want to know whether, if it comes to a strike, the people who are paid for by the trade unions are going to condemn trade union activity that would be the wrong thing for the British economy at the moment. Will the shadow Chancellor condemn it?
Bill Esterson
The only people in this country who want a strike are the people sitting on the Government Benches, because they think that they will get a short-term political gain from it. The Chancellor has mentioned interest rates a number of times. Is it not the truth that they, and confidence, are low because the economy has ground to a standstill because of his policies? Will he confirm that?
Mr Osborne
I will tell the hon. Gentleman what would damage confidence: a strike by the trade unions this autumn. Opposition Members are the people who are paid for by the trade unions, and I want to know whether they are going to condemn the strike or not.
Mr Osborne
I will make a bit of progress before I give way.
Not only are we taking measures to make it easier to employ people and putting in place measures to get people back into work—[Interruption.] They are not going to hit women; they are going to help women get into work. We have also announced new investment in local transport links. We are spending more on roads and railways than the last Labour Government did. We have plans for 200,000 new homes, many of them on the back of a new right to buy. We have created two dozen new enterprise zones, and this month committed almost £250 million to world-beating scientific research. That is because, unlike the last Government, we think it is important that things are made in Britain again.
Andrew Selous (South West Bedfordshire) (Con)
The Chancellor has just told us that there have been £31 billion of extra Labour spending pledges—£11 billion from an amendment last week and £20 billion today. Given that we already pay £120 million every day in debt interest, can he tell us how much extra debt interest we would be paying every day if those Labour proposals went through?
Mr Osborne
I have not got that calculation on me, but I will certainly give it to my hon. Friend and use it at a future opportunity, because it is a reminder that this money is coming directly out of the Government coffers in debt interest payments every single day.
Mr Osborne
I will make a little progress, as I know that many people want to speak in the debate.
We have taken steps to try to help people who are facing this difficult situation. We have announced a freeze in council tax, not just this year but next year, and we have taken more than 1 million people out of income tax and delivered an income tax cut for 20 million more. The shadow Chancellor often talks about fairness in paying for all those things, but I want to know why, in all the years that he was chief economic adviser to the previous Government, he blocked and never introduced a permanent bank levy. Why did he never introduce a higher charge for long-staying non-doms? Why did he never conclude a tax treaty with Switzerland to get back some of the money that should be paid into the British Exchequer?
Mr Osborne
I will give way to the right hon. Gentleman after I have made this point. His only achievement in that field was to introduce a capital gains tax regime so riddled with loopholes that some of the richest people in this country boasted about paying less tax than the people who cleaned their houses. Is he proud of that record?
Mr Osborne
The IFS says that child poverty is rising, but the reason it is rising is that the right hon. Gentleman put this country into a complete economic mess. I can see my right hon. Friend the Secretary of State for Work and Pensions standing at the Bar of the House. He is introducing universal credit, which will do more than any other measure to bring child poverty down, to give opportunities to people who have none at all, and to ensure that work pays. That is what we are doing, and I want to know whether the shadow Chancellor supports that. Does he?
Ed Balls
I support welfare reform—[Hon. Members: “Ah!”] Of course I do, but I have to say that I hope the Chancellor will give the Work and Pensions Secretary the money to make it work. The IFS said this week that any gain in child poverty through universal credit would be more than swamped by the Chancellor’s other measures, particularly the change from RPI to CPI, so that the fall in child poverty under Labour would be reversed under the Tories. Is the IFS right?
Mr Osborne
I thought that Labour supported the link to CPI. Is the shadow Chancellor changing his mind on that? In the debates, the Labour party supported the link to CPI, and he has just raised the matter. Has he changed his mind? [Interruption.] Thank God he has a new shadow Chief Secretary to give him the answer.
Ed Balls
We have always said that we would support a temporary rise in CPI during this Parliament, but that we would not support a permanent rise. It is a permanent rise that will see child poverty rising year on year under the Tories. Child poverty fell under Labour; it will rise under the Tories. That tells us everything that we need to know.
Mr Osborne
The shadow Chancellor is all over the place. He was asking me about child poverty numbers in 2012, 2013 and 2014, and he said that, according to the IFS, the principal cause of the rise was a policy to link benefit increases to CPI. That is a policy supported for this Parliament—that is, in 2012, 2013 and 2014—by the Labour Opposition, and it is complete hypocrisy for them to complain about it now. Will the shadow Chancellor confirm that he supports the CPI policy for this Parliament—yes or no?
Mr Osborne
We have kept that target, but the right hon. Gentleman has still not confirmed that—[Interruption.] I welcome the shadow Chief Secretary to her position, but I have to tell her that the shadow Chancellor has just raised with me the question of the IFS estimates on child poverty over this Parliament. The IFS says that one of the principal causes is the policy on the link to CPI. That is the IFS’s view, although universal credit will do a huge amount to offset that impact. It is a policy supported by the Labour party, and it is completely hypocritical of the Labour party to come to this Parliament and raise those statistics and complain about that policy when they said they supported it all along.
Mr Osborne
Let me make a little progress, as I know many Members want to speak.
I shall touch finally and briefly on the last thing missing from the shadow Chancellor’s speech—and we all know what that was. It was an apology for everything that had gone wrong. The right hon. Gentleman has apologised for so many things now—for the worst banking crash in our history, the 10p tax rate, the 75p pensions increase, gold, although I am not sure that he has apologised for that, the feuds in Downing street—yet he still refuses to apologise for spending and borrowing too much. He said that Labour did not spend “more money” than “we had available”, but he missed his golden rule by more than £400 billion. He doubled and then redoubled the national debt. Everyone knows he was spending too much, and everyone has said so. The IFS, since he mentioned it, has said so; Tony Blair has said so; the last Chancellor conceded it in 2007. It is an open secret that half the shadow Cabinet want him to make this apology, but the shadow Chancellor refuses to do it—and we know why. If he did, it would be the final damning indictment of the economic policies he imposed on this country for a decade or more. It would be the final confirmation that his promise to end boom and bust—remember that?—led to the greatest boom and the biggest bust this country has ever seen.
What did we get? No apology; no mention of Labour’s latest economic idea; no credible plan to reduce the deficit. That is why Labour is neither convincing nor credible on the economy. Yes, these are difficult times; yes, this is a global debt crisis. We are dealing with Britain’s record debt problems. We have set out a course to ride through the storm and build a more prosperous future. Today we were reminded that no one, least of all the people who got us into the mess, has produced a convincing alternative to the course we have set.