George Osborne
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(12 years, 7 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
I rise to support this Queen’s Speech, and I will say something about the Treasury Bills on banking and pensions that feature in it. But first I had better address, head on, the complete nonsense we have heard for the past 30 minutes. Given the claim by the right hon. Member for Morley and Outwood (Ed Balls) that the eurozone has had no impact on the economic difficulties in Britain, and his claim that his 13 years in government did nothing to lead to the debt and the deficit that this Government are trying to clear up, it is no wonder that there were some rather long faces on the Opposition Benches—[Hon. Members: “Where?”] Over there.
My hon. Friend the Government’s Treasury Whip has just received a text from a Labour Whip saying, “Please, please come to the Chamber for the start of the final day of the Queen’s Speech debate. Ed Balls is opening for us and really needs his support.”
Lyn Brown
May I explain to the hon. Member for Chelsea and Fulham (Greg Hands), who is sitting over there, that we have a very different and more effective way of whipping those on our Benches than he clearly has on his? Finally, as with everything to do with the economy, the Chancellor needs to pay more attention to detail, because that was not the right reading of the text. Indeed, it was not accurate, like much else he does.
Mr Osborne
The Labour party certainly does have a different whipping operation: it sends all its information to the other political parties.
Let us get back to discussing the economy. The central argument that the shadow Chancellor was trying to make, and the argument he makes in the amendment, is that the British economy is not as strong as the German economy—that is what we are all being asked to vote on tonight. He is absolutely right about that. The British economy is not as strong as the German economy, and I will tell hon. Members why. It is because for the past decade, in the good years, Germany fixed the roof when the sun was shining and he did not when he was in government.
I will tell hon. Members what happened when the right hon. Gentleman was in government. Over the decade before the crash, Germany maintained its share of world exports while Britain’s share almost halved; Germany was selling more than £10 billion of goods a year to China while Britain was exporting one fifth of that—indeed we were exporting more to Ireland than to Brazil, India, China and Russia put together; and Germany’s manufacturing sector grew by 34%, whereas our manufacturing sector not only did not grow but halved as a share of our total output, while our over-leveraged banking sector grew by 100%. Germany, after years of sustainable economic growth, entered the financial crisis with a budget surplus. Britain, in the years that he was in charge, led a debt-fuelled consumption that drove an expansion in deficit and in debt. Under Labour we entered the financial crisis with the largest budget deficit in the G7 and left it with the largest in the G20.
Instead of making us more like Germany, the right hon. Gentleman made us more like Greece when he was in the Treasury. Britain’s economy became over-borrowed, unbalanced and unsustainable. The person more responsible for that than anyone else active in politics today, the person who encouraged the borrowing, dismantled the banking regulation and gambled the futures of 60 million people on the City of London, is sitting right over there—the shadow Chancellor. It is the people on this side of the House who are clearing up the mess he left behind.
Andrew Selous
Does the Chancellor agree that one of the infrastructure failures left by the previous Government was the lack of direct flights from this country to the big, growing cities of China—there are many more flights from German cities to China—and that the Government will put that right in due course?
Mr Osborne
I certainly think that a lack of airport capacity is a challenge for this country, but one of the good things that may emerge from the bmi merger is that more slots may become available at Heathrow to open up routes to those cities in China. My hon. Friend makes the very good observation that we have to do much more to expand our exports and our links with the Chinas and Indias of this world. One of the good things that has happened in the past few years is that our exports to China and India are up by a third, and we need to see more of that.
In his speech, the shadow Chancellor dismissed the Governor of the Bank of England as plain wrong. Who appointed the Governor? Did the recommendation ever come across the desk of the shadow Chancellor when he was the political adviser in the Treasury? [Interruption.] We will find out. Yesterday the Governor said:
“We have been through…the biggest downturn in world output since the 1930s, the biggest banking crisis in this country’s history, the biggest fiscal deficit in our peacetime history, and our biggest trading partner, the euro area, is tearing itself apart”.
My message to the House today is that addressing those problems is not easy, but nor is it impossible. I will come on to talk about the eurozone, but first we must put our own house in order, and we are making progress on doing so.
John Hemming (Birmingham, Yardley) (LD)
Tony Blair says in his memoirs that from 2005 onwards Labour
“was insufficiently vigorous in limiting or eliminating the potential structural deficit”.
Does the Chancellor agree?
Mr Osborne
I agree with Tony Blair on that and, indeed, on his views on the shadow Chancellor.
Chris Bryant (Rhondda) (Lab)
One of the difficulties is that some of the cuts that the Government have made are counter-productive in terms of trying to deliver economic growth. The Chancellor referred to this country’s relationship with India. I think that everybody in this House agrees that we need to do more business with Brazil, India, Russia and China. However, if their businessmen find it impossible to get a visa to get into this country or they encounter massive queues when they arrive at Heathrow because of the enormous cuts to the UK Border Force, they are not going to want to do business with this country. Stop cutting off our nose to spite our face.
Mr Osborne
There have been queues at Heathrow for far too many years, and of course those queues need to be addressed—[Interruption.] There have been queues for years. I agree with the hon. Gentleman that we need a visa regime that offers support to enterprising individuals—entrepreneurs, people who can bring real skills and value to this country—to come here, and that is precisely what the visa changes we have made will allow. But I have to say that we can have a visa regime that allows in the brightest and the best only if we can command public confidence that we are in control of our borders and that we have a cap on immigration numbers. Remarkably, not only has the Labour party set itself against a cap on benefits, which it will come to regret, but it has opposed the cap on immigration, and that is a huge mistake.
Let me discuss the progress we are making. As the Governor of the Bank of England reminded us, we inherited the largest budget deficit in peacetime but two years into this Government, we have cut the deficit by more than a quarter. In 2010, the state consumed 48% of national income in this country. Today, it consumes 43%. We took office when Britain’s market interest rates were the same as Spain’s. Two years later, our market rates are the lowest in our history and Spain’s are more than 6%. That is the practical benefit our fiscal credibility has brought.
When we came to office, manufacturing had been withering for years, but after two years this country is exporting more cars than it imports for the first time since 1976—the last time a Labour Government bankrupted this country and went begging to the IMF. Today—as Government Members have mentioned, but, strikingly, Opposition Members have not—we hear that when faced with the choice of which plant to invest in General Motors has chosen Ellesmere Port, in the county that I represent, Cheshire, as the site of their future. That is a successful industrial strategy at work, with Ministers, management, employees and employers working together to secure investment.
The chairman of Vauxhall has just said that the Government have put a strategy in place to attract inward investment and support manufacturing, which all helps to make the UK a great place to build cars.
Richard Burden (Birmingham, Northfield) (Lab)
We all applaud the deal at Vauxhall Ellesmere Port and I am glad that the Chancellor managed to get out—almost through gritted teeth—some acknowledgement of the contribution of the work force and the trade unions in achieving that. Does he speak to motor manufacturers? Does he know that what he has said about the great work they are doing being export-led is linked to the problems? Does he know what is happening to commercial vehicles and the problems the motor industry has in that regard? Finally, is he going to do anything about Lola, one of the most successful performance engineering companies in this country, which went into administration this week?
Mr Osborne
British car companies and their supply chain are doing incredibly well exporting their cars around the world as well as selling them at home. Instead of talking down an industry that is so important to the west midlands and to the rest of the country, the hon. Gentleman should be celebrating not just the decision about Ellesmere Port but the expansion of Nissan in Sunderland and the great news we have had about Jaguar Land Rover in Wolverhampton. Those are real success stories and those companies—Nissan, Jaguar Land Rover and Tata—have choices about where to invest all over the world. They could put that money anywhere but they are choosing to invest in the United Kingdom. We should be celebrating that fact today.
Huw Irranca-Davies (Ogmore) (Lab)
The company that the Chancellor has missed off the list is, of course, Ford in Bridgend, which has just had new investment. I must point out, however, that that investment was also there under the Labour Government over successive years. On Spain, will the Chancellor explain why in quarter 3 in 2009 to quarter 3 in 2010 growth in the UK was 3.2% and flatlining in Spain, whereas now it is 0.2% in Spain, which is much-maligned for obvious reasons, and we are in recession? What has happened in the first two years of his chancellorship to put us back behind Spain?
Mr Osborne
For a start, as of today Spain is in recession, so I am not sure that the hon. Gentleman’s point has a huge amount of force. This claim, which I guess is made only by Opposition Members whom I am looking at now, that the Labour party somehow bequeathed the new Government some enormous golden economic legacy and that we were incredibly fortunate to inherit this massive budget deficit and totally unbalanced economy with no real plan to deal with that debt or deficit—not that we have heard a plan today, either—is absolute nonsense.
We have also had the good news this week, which was of course not mentioned by the shadow Chancellor, that for the second month in a row unemployment has fallen and employment is up. We have 400,000 more people employed than two years ago, and 190,000 fewer people on welfare rolls. Yes, it is an exceptionally difficult economic time and the legacy of debt and disinvestment is a heavy one, but the tough decisions we are making are moving Britain in the right direction.
Mr Mark Spencer (Sherwood) (Con)
I too welcome the improvements in the manufacturing sector of the automotive industry. Does my right hon. Friend recognise that in the food and drinks sector, which is also in manufacturing, there have been enormous increases in the number of jobs and of exports?
Mr Osborne
I certainly do. Part of the work we published last autumn specifically supported what we can do in that sector. We are not ashamed to identify sectors where Britain has a competitive advantage and to see what we can do to enhance it.
Ms Karen Buck (Westminster North) (Lab)
Does the Chancellor not recognise that although everyone welcomes an increase in employment, wherever it comes from, this country has a crisis of underemployment and of people seeking full-time hours that they cannot get? It would have major implications for, among other things, the welfare bill, which his right hon. Friend the Secretary of State for Work and Pensions has quite rightly committed to trying to bring down, if we could help people work the hours they wish to work.
Mr Osborne
Of course we want to help people who are working part time to work full time, if that is what they wish, but four fifths of the people who have taken part-time jobs wanted to work part time. We absolutely must help the fifth who want to turn them into full-time jobs, but I would hope that the hon. Lady, too, welcomes the good news that unemployment has fallen.
Mr Osborne
As I was explaining, four fifths of those who work part-time are getting the part-time work they want. The right hon. Gentleman should celebrate the fact that 400,000 more people are employed than was the case two years ago. Why not get up and welcome that?
If the Opposition’s argument is that we need to do even more, I agree. In the past six weeks alone, we have opened 24 enterprise zones around the country, cut businesses tax to one of the lowest rates in the world, increased support for small business research and development, reformed employment law in the teeth of Labour opposition to double the period before unfair dismissal claims can be made, reinvigorated the right to buy, launched NewBuy mortgage schemes, awarded ultra-fast broadband grants to 10 of our largest cities, frozen council tax across England, launched a £20 billion national loan guarantee scheme that is already delivering cheaper loans to hundreds and thousands of businesses, and increased the personal allowance to cut tax for 20 million working people and lift 1 million of the lowest paid out of tax altogether, with another 1 million to come. That is just in the past six weeks.
Yes, the Government must work harder and do more. The world does not owe this country a living. We will do that, but we have done a great deal already.
Fiona O’Donnell
What does the Chancellor say—apart from “Work harder”—to SMEs in my constituency that tell me that the single greatest contribution his Government could make to economic growth and the creation of jobs is to cut VAT?
Mr Osborne
This is what we have done for small businesses: we have cut the small companies tax rate, which was going to go up under the plans that we inherited and which the Labour party voted for in the previous Parliament; we have got rid of Labour’s jobs tax; and we have frozen the business rates. We will check the record carefully, of course, but I think that in his speech the shadow Chancellor was advocating an increase in national insurance.
Mr Osborne
When my hon. Friends pressed him to explain how he would pay for his package, he said, “We wanted to see national insurance go up.” If he wants to correct the record, he can tell us whether he wants national insurance to go up to pay for his package.
Ed Balls
The Chancellor allocated £500 million for a national insurance tax cut for new firms that were taking on new workers. It has totally flopped and failed, with very little take-up. I said that we should use that £500 million to help existing small firms to take on new employees—a plan that would work, rather than a plan from this Chancellor that is failing. That says it all.
Mr Osborne
So the short answer is yes, he wants higher national insurance for businesses. How on earth will that help companies in the current economic environment? As I have said, we need to do more. We need to help to get more credit to businesses and to housing and infrastructure. We are going to use Britain’s low interest rates to work for us all and we are going to do more to reform our banking system—the epicentre of what went wrong when he was the City Minister.
Mr Osborne
I can tell the right hon. Gentleman that 15,000 businesses have been helped by that scheme. The economic policies that he has drawn up would hurt millions of businesses. What the Labour party wanted and what he campaigned for was an increase in national insurance for all firms and we stopped that.
Richard Fuller
On that point, will my right hon. Friend note that last month we had the largest number of new company formations in my constituency of Bedford? One reason for that is that they want stable, low, long-term interest rates, which this coalition’s policies are delivering.
Mr Osborne
My hon. Friend is absolutely right. That is precisely what businesses need—a stable economic environment in which we are not exposed to some of the financial problems that some eurozone countries face at the moment. The low interest rates and the credibility that our policy bring help every business, not only in Bedford but around the country.
Andrew Bridgen
Does my right hon. Friend agree that just as we need to rebalance our economy away from over-reliance on the public sector, we also need to rebalance our exports away from over-reliance on the eurozone at the moment? The latest figures suggest that this is already happening, with UK exports to non-EU countries up by 12% while those to the EU remain flat.
Mr Osborne
I agree with my hon. Friend that we need to diversify where our exports go, not just because of the problems in the eurozone but because this country should be taking greater advantage of the extraordinary growth in the Asian economies. It remains a staggering fact that we were exporting more to Ireland than we were to Brazil, Russia, India and China put together.
Mr Osborne
Let me make some progress and then I will take some more interventions. I want to say something about some of the Bills in the Queen’s Speech, as we are debating the Queen’s Speech. I want to talk particularly about the banking reforms—something else that the shadow Chancellor mentioned in only half a sentence, so we have no idea whether he supports the reforms or not. [Interruption.] Perhaps he can intervene and tell me when I have made these points.
First, we have the Financial Services Bill, which was carried over from the previous Session. It already seeks to rectify one of the greatest errors of policy making—the decision that the Labour party took in 1997 to remove banking supervision from the Bank of England. The Governor of the Bank commented on that in his lecture on the “Today” programme the other day. That Bill, which is crucial, brings prudential supervision back under the control of the Bank of England, giving it new powers to monitor the build-up of dangerous levels of debt and asset bubbles and to deal with them rather than, as last time, letting disaster strike.
In this Queen’s Speech, we prepare to go further and address the structure of banking itself. We will introduce the Bill that implements the reforms proposed by Sir John Vickers and his Independent Commission on Banking that ring-fences retail banks from the riskier investment banking arms and provides more loss-absorbing capacity so that private investors will bear losses, not the taxpayer. Taken together, those Bills seek to give Britain a safer, more competitive banking system and will allow our country to have successful banks with a global reach while better protecting the taxpayer at home should one of those banks fail. I hope the Bills will command broad support across this House.
I hope that the Bill to reform public service pensions also commands broad support across the House. After all, those reforms are based on the proposals of the Labour former Pensions Secretary, John Hutton. They provide for generous pensions and security in retirement for hard-working public servants that are quite frankly beyond the reach of almost all in the private sector.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
Can the Chancellor really justify asking fire brigade workers, who undertake some of the most high-risk tasks in our society, to pay 13% of their income towards their pension?
Mr Osborne
We have to have public sector pensions that are affordable. The truth is that people are living longer in retirement, which is a good thing, and that if we want to maintain generous pension provision for firefighters and others we have to make reforms that mean the country can afford that. So, the answer to the hon. Gentleman’s question is yes, and we have been in a long and good negotiation with the Fire Brigades Union and others on those reforms. As I have said, we seek to make public sector pensions affordable and it is pretty striking if the tone of interventions from the Opposition is going to be that we do not have support for this far-reaching reform that will put public service pensions on a sustainable footing. Opposition Members are going to have to ask themselves whether they speak in this House for their tax-paying constituents or for the unions that sponsor them.
We look forward to hearing, in the wind-ups, from the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), whom we welcome to his place. Perhaps he will tell us what Labour’s attitude to these Bills will be. We are sorry that he has been removed from his role as Labour’s policy chief. He is yet another Labour politician who has found that their career takes a knock when they try to tell their party some hard truths. He did extremely well in his new job of handing notes to the shadow Chancellor as he spoke today, but there was a time when he wrote his own notes rather than just handing them. There was the time when he wrote that note saying, “I’m sorry, there’s no money left”, but his party’s only message is to spend and borrow more. To be fair to him, he is the politician who tried to tell Labour to get serious about welfare reform and about dealing with the deficit. He was famous in my Department for the very precise memo he sent to civil servants on how to prepare his morning cappuccino and his afternoon espresso. How ironic that what did for him was his attempt to get Labour to wake up and smell the coffee. [Laughter.] I have to say that it was quite late last night when I thought of that one.
Who replaces the right hon. Gentleman as policy chief? The new policy chief for the Labour party is the hon. Member for Dagenham and Rainham (Jon Cruddas). We did some research on how he might approach the job and we found these illuminating remarks from a few weeks ago:
“What interests me is not policy as such; rather the search for political sentiment, voice and language; of general definition within a national story. Less ‘The Spirit Level’, more ‘What is England’.”
Well, that is clear then. Perhaps when the Opposition find out “What is England” they will let us all have the answer. The striking thing is that there is no policy from the Opposition at a time when tough decisions need to be taken about our country’s future and when far-reaching reforms need to be made to secure its prosperity.
Mr Geoffrey Robinson (Coventry North West) (Lab)
The Chancellor is back on politics, where he is happiest. He got through some parts of the Queen’s Speech in about three paragraphs or sentences, I think. On policy, why will he not listen for once and do what we are saying? Why will he not extend to all small companies taking on new workers the national insurance discount, which is nowhere near being taken up yet, instead of dismissing that suggestion? It is a good idea, so why does he not take it on? Why does he not extend his initial idea and make it effective for once?
Mr Osborne
First, as I have said, we have used the money available to us in the balanced Budget to cut the small companies tax rate, which the hon. Gentleman wanted to go up. [Interruption.] He says, “Additional to that”; Labour’s policy was to increase the small companies tax rate. We have not done that. We have cut national insurance across the board for low and middle-paid employees by getting rid of Labour’s jobs tax—that applies whether they are employed in small or larger companies—and we have frozen business rates for smaller companies. So, we have done all those things, but I completely agree that we need to do more to help smaller companies by reducing the red tape burden on them and by helping to get credit to them. That is what the national loan guarantee scheme that was launched at the end of March is doing right now.
Graham Evans
I am a proud Manchester United supporter. The players proudly wear “Aon”—the name of one of the world’s biggest insurers—on their shirts. Can my right hon. Friend tell us why that fantastic international company is closing its headquarters in the USA and moving it to the UK?
Mr Osborne
I am reminded that the players used to wear “AIG” on their shirts. Perhaps it is a sign of how things are improving that they now wear the name of a major Chicago-based insurer that has chosen to move its headquarters to London. We remember all the stories of companies that moved their international headquarters from Britain a few years ago; now they are coming back.
I want briefly to say something about the eurozone crisis.
John Hemming
In 2006, Lord Turnbull, who was at one stage Tony Blair’s Cabinet Secretary, said that borrowing
“crept up on us in 2005, 2006 and 2007, and we were still expanding public spending…You might have thought that we should be giving priority to getting borrowing under better control, putting money aside in the good years—and it didn’t happen.”
Does the Chancellor think the Opposition have learned anything since?
Mr Osborne
I suspect that the shadow Chancellor did not listen to Lord Turnbull when he was at the Treasury, and he certainly does not listen to him now.
Tony Baldry (Banbury) (Con)
May I take this opportunity to ask my right hon. Friend to pick up on something from the Budget? The Chancellor said that he hoped that the VAT on alterations to listed buildings would not have an impact on listed places of worship. The Churches estimate that the tax will cost them £20 million a year. Would my right hon. Friend be kind enough to update the House on what he is proposing to do to assist listed places of worship?
Mr Osborne
First, I pay tribute to my hon. Friend for his work as Second Church Estates Commissioner. He has been in discussions with me and the Treasury about how to make sure that we live up to the commitment I gave in the Budget that churches and other places of worship would not be impacted by the introduction of VAT on alterations to listed buildings. Of course, it is already charged on repairs to listed buildings. I have been in discussions with my hon. Friend and with the Bishop of London, whom the Churches asked to lead on that work, and I confirm that we have reached agreement. The Government will provide £30 million of grant to the listed places of worship scheme. That will be 100% compensation, exactly as we promised in the Budget, for the additional cost borne by churches for alterations. It should also go a long way towards helping the situation on repairs and maintenance, where in recent years they have not been able to get 100% compensation. We think it will deliver 100% coverage for repairs and maintenance. I thank my hon. Friend and the Churches for working with us on delivering what we promised in the Budget.
Mr Frank Field (Birkenhead) (Lab)
I am grateful to the Chancellor for giving way, and even more grateful to him for his statement. I congratulate him on the way he dug himself out of the hole into which he placed himself. May I use this opportunity not only to draw attention to those outside the House who campaigned on the change, but to the Second Church Estates Commissioner, who played his role in the negotiations superbly?
Mr Osborne
I certainly pay tribute to the Second Church Estates Commissioner. We were clear in the Budget that we wanted fully to compensate Churches for the impact of the change and I am glad that we have done so.
Mr David Hanson (Delyn) (Lab)
Now that the Chancellor has dug himself out of that hole, will he turn his attention to another one—the caravan tax? In my area of north Wales, the North Wales tourist board estimates that a 30% drop in sales, on the Chancellor’s figures, will lead to job losses and a reduction in the tourism industry. In the constituencies of my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), and my hon. Friends the Members for Kingston upon Hull North (Diana Johnson) and for Kingston upon Hull East (Karl Turner), caravan manufacturing will go because of the tax. How will that help the growth economy the Chancellor seeks, and will he review the tax urgently?
Mr Osborne
As the right hon. Gentleman well knows, there is already VAT on caravans towed by cars, but there is a consultation on the change. It finishes tomorrow. It is partly due to the good work of my hon. Friends the Members for Beverley and Holderness (Mr Stuart) and for Boston and Skegness (Mark Simmonds), who urged longer consultation, that the period was extended. I propose to allow it to finish and then we will set out our response.
Mr Osborne
I will give way once more, but then I want to say something about the eurozone.
Mr Osborne
I have spent the last 35 minutes explaining how I am digging the country out of the hole that the right hon. Gentleman put us into.
Let me say something about the eurozone crisis. When eurozone central bank governors and Finance Ministers openly speculate on the possibility of Greek exit, the genie is out of the bottle. That and the Greek elections make this a perilous time. We are clear about the three steps the eurozone needs to take if its currency is to function properly.
First, countries in the periphery with high deficits and uncompetitive economies need to confront their problems head-on, as Governments in Ireland, Spain and Italy are. We are doing it in Britain too, but the adjustment our country must go through is made easier by loose monetary policy and a flexible exchange rate. The countries of the eurozone do not have that to help them, so the core of the eurozone, and the European Central Bank, need to do more to support demand and share the burden of adjustment.
Of course, ideas such as the project bonds put forward by the new French Government are worthy of serious consideration, but, fundamentally, the German Finance Minister is right when he says that rising wages in his country and increased domestic demand there can play a substantial role.
Secondly, the eurozone needs to follow what I described a year ago as “the remorseless logic” of monetary union that leads to greater fiscal union. As I said in the same interview, forms of collective support and responsibility must be developed. I echoed the view in many eurozone countries when I spoke of the possibility of eurobonds.
Thirdly, all of us in Europe, including the United Kingdom, need to address our continent’s lack of competitiveness. That involves structural reform to welfare, pensions and labour laws, and completing single markets in services and digital. It means all Europeans, including Britons, rediscovering the ambition and the ethic that made our continent the dynamo of the world economy for so many centuries. It is not that dynamo today. As the Prime Minister says in his speech today:
“The eurozone is at a cross-roads. It either has to make up or it is looking at potential break up.”
No one should underestimate the huge risks of the latter, but Britain will be prepared for whatever comes. We are making the necessary contingency plans. We will take the steps needed to secure our economic stability and protect our financial system. Above all, we will go on with the progress we have made in the last two years on reducing the structural deficit, keeping our credibility in the bond markets and keeping our interest rates low.
Mr Alistair Darling (Edinburgh South West) (Lab)
The Chancellor seems to be setting out quite a significant shift in the Government’s policy on what should be happening in Europe, in particular urging the German Government to do things in relation to promoting growth that many of us have argued for several months. Interestingly, they are not to apply to this country. Will he confirm that this is a significant shift, and will he add to his list that it is now desperately important that the eurozone looks at the health of some of the banks in Europe? The Spanish started last week. I do not know whether they have the strength to do what is necessary, but unless the banking system is significantly shored up, if the problems spreading from Greece continue—contagion and so on—we could have another major banking crisis on our hands. That would be an utter disaster.
Mr Osborne
I very much agree with the sentiment that the former Chancellor expresses. In the autumn of last year, and indeed before that, the Prime Minister, myself and others in the Government did consistently say, in public as well as in private, that surplus countries in the core of the eurozone needed to do more; that the European Central Bank needed to do more—I said it in the House and we said it in the ECOFINs and European Councils that we attended.
What has changed this week is that, first, the Greek elections have brought back the fear of contagion that had never really quite abated, despite the action of the European Central Bank over Christmas. Secondly, over the weekend and at the beginning of this week, central bank governors and Finance Ministers in the eurozone itself were openly speculating on Greek exit, and that has, as I said, let the genie out of the bottle. Some of the things that we were happy to say in private we are now also willing to say in public, because the issue is out there—on the agenda. We have not put the issue out there in the public domain, but now it is out there, put there by other people. We have very clear ideas of what the eurozone needs to do to make their currency work.
Mr Darling
The Chancellor is actually confirming what I thought. It is good that they are saying these things in public, but it does suggest that perhaps there is an opportunity to change direction in Europe. I know we will not agree about what is necessary in this country, but does the Chancellor agree with me that we need to be explicit now that austerity on its own will not work—we need policies of growth to go with it?
Mr Osborne
I completely agree that austerity alone is not enough, and that is why I have just been explaining how we have cut business taxes, set up enterprise zones, set up the national loan guarantee scheme and reformed the labour market. We have done all these things so that car companies expand their production and investment in Britain and choose Britain as a place to do business. Of course those countries in Europe need to undertake structural reforms to go alongside their efforts to get their public finances under control, but we have to ask ourselves this question: if you are running a high budget deficit in a single currency zone, and you do not have the support of loose monetary policy, you do need support from the core of the eurozone but to abandon a commitment to austerity will expose you to even greater pressure on the international money markets than those countries are already exposed to.
Jessica Lee (Erewash) (Con)
Is not another facet to this recovery very much the investment in apprenticeships that this Government have made, with 177,000 new apprenticeship places taken up in the last year, including ones in my constituency of Erewash?
Mr Osborne
First, my hon. Friend is absolutely right that one of the successes that we have had is the apprenticeship scheme, which is now working across all constituencies and supporting many hundreds of thousands of people. We will see what the facts are after the debate, but the information that we have just had says that what the shadow Chancellor was alleging in his intervention on me a few minutes ago is not true. The number of hours worked in this country has actually gone up over the last two years—up by 20 million hours. So on that note, there is a difference—
Mr Osborne
It is over the last two years. But this points to a greater truth: the right hon. Gentleman had 13 years to prove to the country that he had the right policies to run the British economy, and he delivered the greatest economic disaster in this country’s modern history.
Mr Osborne
I will finish now by saying this. We are reducing the structural deficit, keeping our credibility in the bond markets and our interest rates low. We are reforming our banks, helping our unemployed, supporting our businesses, and giving back to our country the prosperous future that the Labour party so cruelly snatched from them.