George Osborne
Main Page: George Osborne (Conservative - Tatton)Department Debates - View all George Osborne's debates with the HM Treasury
(14 years, 2 months ago)
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Glyn Davies (Montgomeryshire) (Con)
6. What recent representations he has received on steps to reduce the budget deficit.
The Chancellor of the Exchequer (Mr George Osborne)
The Government’s plan to tackle the record budget deficit they inherited has been supported by the CBI, the OECD and, now, the International Monetary Fund. We have received more than 60,000 representations from the public as to how to go about deficit reduction and many of their suggestions are being put into effect. To date, we have received no proposals and no suggestions from the official Opposition, who created the deficit in the first place.
Mr Jones
I thank my right hon. Friend for his response. With the country set to pay £43 billion in interest in 2010-11, I am reassured that the general public have been willing to contribute to the tough decisions required of this Government to turn our economy around. Has he received any helpful advice from the Labour party, past or present, other than that from Tony Blair?
Mr Osborne
My hon. Friend is absolutely right about debt interest; this country is now paying £120 million a day in debt interest. Debt interest under the previous Government was forecast to rise to £60 billion a year, making it one of the largest items of Government expenditure. He talks about suggestions from Members of Parliament. The new leader of the Labour party said:
“I think whoever is the Labour leader will, by the time of the spending review, have to show that they have an alternative plan”.
So the clock is ticking.
Glyn Davies
The Chancellor attended the IMF conference at the weekend. Can he share with us what our international partners are saying about the coalition Government’s efforts to deal with the deficit?
Mr Osborne
As I am sure my hon. Friend is aware, the IMF’s article IV study of the United Kingdom said:
“The government’s strong and credible multi-year fiscal deficit reduction plan is essential to ensure debt sustainability.”
That is in marked contrast to last year’s IMF report on the UK. At the IMF annual meetings, which I attended last weekend, it was made clear that concerns about sovereign debt issues in Europe were one of the greatest threats to the world recovery. Of course, the decisions that we have taken in this House have moved Britain out of the financial danger zone and helped to deal with that potential threat.
Derek Twigg (Halton) (Lab)
On reducing the budget deficit and the issue of fairness, how does the Chancellor square the fact that his local authority has had a cut of only £600,000 to its education budget with the fact that Halton, the 30th most deprived authority, has had a cut of more than £1.2 million? How is that fair?
Mr Osborne
Decisions on local government allocations are properly a matter for the Secretary of State for Communities and Local Government, but I make the observation that we face a series of tough decisions because of the economic mess that the Labour party left us. To date, it is living in complete denial: there is not one single suggestion from one single Labour Member on how to reduce the budget deficit, or even achieve the £44 billion of cuts on which Labour fought the last election.
Mr Andrew Love (Edmonton) (Lab/Co-op)
Can the Chancellor confirm or deny reports in the weekend press that he has given the Governor of the Bank of England the green light to increase quantitative easing, to deal with the policy that the Chancellor is pursuing on the deficit?
Mr Osborne
What I said at the weekend was that I would follow the exact same procedure that my predecessor, the right hon. Member for Edinburgh South West (Mr Darling), pursued when he was Chancellor of the Exchequer. The fact that that is regarded as something of a surprise by the Labour party shows how far it has departed from the centre ground of British politics.
Mr David Ruffley (Bury St Edmunds) (Con)
Our net contribution to the EU is, amazingly, projected to double in this Parliament from £4.7 billion to £9.5 billion a year. Does my right hon. Friend agree with me and many of my Bury St Edmunds constituents that if we are to cut the deficit, we need to cut our spending on the EU?
Mr Osborne
It is good to see my hon. Friend. I make the observation that the situation is, unfortunately, yet another legacy of the previous Government. [Interruption.] Well, Labour Members obviously do not know the history: Tony Blair gave away our Budget rebate in return for the French reforming the common agricultural policy. So far as I have noticed, that deal has not held, and our contributions are rapidly rising. We have made strong arguments at the European level for similar budget restraints in the EU to those that member states are having to impose domestically. Of course, that will be our negotiating stance as we go into the new budget review period.
Alan Johnson (Kingston upon Hull West and Hessle) (Lab)
Will the timing of the spending cuts that are to be announced next week be exactly as laid out in June’s emergency Budget, and will the Chancellor confirm that the aim continues to be that the deficit will be eliminated by 2015?
Mr Osborne
First, I should welcome the right hon. Gentleman to his new role on behalf of all Government Members. I did the job for five years, and I hope that he does it for even longer than I did. The answer to his question is yes.
Alan Johnson
Well, the reason I ask is that there was some speculation at the weekend, when the Energy Secretary suggested, in a rather unfortunate yachting analogy, that he would not be “lashed to the mast” with a particular set of spending numbers. That is important, because from my vast experience in this job I am absolutely clear about this: the Chancellor says that the deficit was wrong and that his emergency Budget measures were unavoidable, but I believe that it is the other way round. The deficit was unavoidable if we were to avoid financial meltdown, and his Budget proposals were entirely wrong—wrong because they would, according to the Institute for Fiscal Studies, have two and a half times the adverse effect on the poorest as on the richest in our society, and wrong because he is seeking to cut public spending before there is any momentum for private sector spending in our economy.
Mr Osborne
Quite frankly, being in opposition involves choices, just as being in government does. The right hon. Gentleman talks about the Budget; there is a simple choice before the House today, which is whether we proceed with a graduate tax. Lord Browne’s report says that such a tax would add £3 billion to the deficit and would not produce savings until 2041. That is a real choice on the deficit before us today. The right hon. Gentleman is the shadow Chancellor and opposes a graduate tax; is he going to assert his authority over Opposition tax policy?
Jacob Rees-Mogg (North East Somerset) (Con)
5. Whether he has assessed the merits of returning responsibility for debt management to the Bank of England.
Henry Smith (Crawley) (Con)
7. What steps he is taking to ensure the independence of the Office for Budget Responsibility.
The Chancellor of the Exchequer (Mr George Osborne)
The independence of the Office for Budget Responsibility is central to its credibility. With the approval of the Treasury Committee, I have appointed Mr Robert Chote to be its new chair. Today I am also appointing the distinguished economist Stephen Nickell and the experienced forecaster Graham Parker to serve alongside Mr Chote as permanent members of the budget responsibility committee. I am also publishing new terms of reference that safeguard the independence of the OBR, and copies are available in the Vote Office. I have asked the OBR to publish its autumn forecasts on the economy and the public finances on Monday 29 November.
Henry Smith
I thank my right hon. Friend for his answer. I warmly welcome the creation of the OBR, at last, as an independent economic forecaster. I know that the Treasury Committee has raised a number of concerns, including the location of the OBR and whether the veto over the chairmanship of the Select Committee will be in the Bill.
Mr Osborne
The short answer to my hon. Friend’s questions is yes. The OBR will move out of the Treasury—in the period immediately after the general election, that was the quickest way to establish it—to a permanent home. The choice of location will be for the permanent chair of the OBR who, I believe, will make a statement on that later today. I think the veto given to the Treasury Committee is the first of its kind in this Parliament, and will be enshrined in legislation.
Stephen Timms (East Ham) (Lab)
The Chancellor has announced two new appointments to the budget responsibility committee today. In line with the Treasury Committee’s recommendation, will he extend its veto to those two appointments, as well as to the position of the chair? Will he invite the OBR to comment, as the Select Committee envisages, on the fiscal mandate?
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.
Rehman Chishti (Gillingham and Rainham) (Con)
9. What recent representations he has received on his Department’s spending challenge.
Mr Peter Bone (Wellingborough) (Con)
10. What recent discussions he has had with the Minister for the Cabinet Office on the cost to the public purse of the Government Whips Office and the Opposition Whips Office.
The Chancellor of the Exchequer (Mr George Osborne)
I have had discussions with my right hon. Friend on the overall Budget for the Cabinet Office as part of the spending review. As my hon. Friends might expect, I am keen to ensure maximum value for money from the Government Whips Office. When it comes to the Opposition Whips Office, that is an area of public spending where I am prepared to tolerate inefficiency and poor leadership.
Mr Bone
My right hon. Friend will be aware that during this Parliament, the additional salaries paid to Whips will be more than £6 million. As we now have a Backbench Business Committee and will soon have a House Committee, would that not be an area for cutting? After all, we are all in it together.
Mr Osborne
Unfortunately, the Parliamentary Secretary to the Treasury, the Government Chief Whip, is not here to listen to that question, but as Ministers in the Government Whips have already taken a 5% pay cut and had their salaries frozen during the Parliament, so they have already shown some restraint. If my hon. Friend wants to catch the ear of the Chief Whip in the Aye Lobby tonight, he can do so.
Clive Efford (Eltham) (Lab)
Has the Government Whips Office had cause to contact the Secretary of State for Energy and Climate Change, following his comments last week? Has having the Liberal Democrats as part of the Government increased the costs of the Government Whips Office?
Mr Osborne
The presence of the Liberal Democrats in the coalition means that two parties are working together to sort out a problem that one party created.
Mike Freer (Finchley and Golders Green) (Con)
11. What steps his Department is taking to simplify the tax system.
Julian Smith (Skipton and Ripon) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure economic stability, promote growth and employment, reform the banking system and restore some sanity to the public finances.
Julian Smith
What message does my right hon. Friend think the national insurance holiday and the abolition of Labour’s jobs tax sends to those thinking of setting up their own firm in God’s own county?
Mr Osborne
It will be my great good fortune to visit Yorkshire later this week to hand out the Yorkshire Post awards in Leeds. My hon. Friend makes a good point. We have introduced a regional tax cut for the first time in British history, which means that businesses that are set up outside the south-east of England will benefit from a national insurance holiday on the first few employees that they bring on board. We have also got rid of Labour’s job-destroying jobs tax, which, as we now read in the memoirs of various senior members of the Labour Government, they tried to dissuade the previous Prime Minister from introducing.
John Mann (Bassetlaw) (Lab)
T3. As confirmed by the OBR and Treasury officials to the Treasury Committee, the Budget is predicated on having in this Parliament an extra 700,000 EU migrants net living in this country. Where will they live and work? How will they be spread across the United Kingdom?
Mr Osborne
The Office for Budget Responsibility is using the statistics from the Office for National Statistics. Of course, one of the decisions that the previous Government made was to allow countries to join the European Union without any transitional controls whatsoever on their citizens’ movement to the United Kingdom. We are living with the consequence of that decision.
Karen Bradley (Staffordshire Moorlands) (Con)
T2. Many small businesses in Staffordshire Moorlands tell me that they have enough to deal with without the intricacies and complications of the tax system. Will the Minister provide more information to the House about how the work of the Office of Tax Simplification will help those small businesses?
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
T4. Many pensioners in my constituency are concerned about the indexation of pensions changing from the retail prices index to the consumer prices index. A pensioner who currently receives a pension of £10,000 will be more than £800 worse off by 2016. Does the Minister think that it is fair for pensioners to be hit in that way?
Mr Osborne
The Government have introduced a triple lock on the basic state pension, which means that it rises by earnings, or by CPI or RPI—whichever is higher. The previous Government had 13 years to do that, and they did not.
Andrew Bridgen (North West Leicestershire) (Con)
T5. In my constituency, more than 7,000 jobs are directly linked to east midlands airport. I believe that it has been shown that there would be no environmental or fiscal gain from the introduction of a per plane tax, as flights would simply divert to other European hubs. Is the Economic Secretary willing to reconsider any plans for a per plane tax, and will she meet me as a matter of urgency to discuss that?
Toby Perkins (Chesterfield) (Lab)
T8. The Chancellor was a millionaire the day he was born, so he has not got a clue what it is like to try to raise a family on £40,000 a year—[Interruption.] Do you mind? He cannot hear me. People who earn that much are not the super-rich; they are hard-working people who are getting by and getting on. The cuts to child benefit will take about 10% of the income of some of them. By what definition of fairness does he think robbing 10% from hard-working people is a fair deal for such families?
Mr Osborne
I will make one observation if the hon. Gentleman wants to lay into my background: I went to the same school as the deputy leader of the Labour party.
On child benefit, we have had to take some difficult decisions. It is quite extraordinary that the Labour party finds itself opposing our decision. Yes, it was a tough decision, but it was fair in the context of the decisions that we must take. The fact that Alan Milburn today warned Labour Members not to oppose the measure—[Interruption.] Of course, the sensible part of the Labour party is no longer on the Front Bench. The fact that Alan Milburn, whom Labour appointed as its social mobility tsar, is warning them is something to which Labour Members should pay attention.
Mike Freer (Finchley and Golders Green) (Con)
T6. Although my constituents accept the need to tackle Labour’s legacy, many of them have large families and are concerned about the changes in child benefit. Will the Minister consider transitional arrangements to help families to adjust?
Mark Menzies (Fylde) (Con)
T7. In the Budget statement, the Chancellor of the Exchequer mentioned the need to rebalance the economy towards export-led growth, which is particularly important for constituencies such as mine in the north-west. Will he update the House on the Government’s progress in that respect?
Mr Osborne
I have seen at BAe Warton in my hon. Friend’s constituency a very good example of high-skilled manufacturing. Everything the Government do is designed to support a private sector recovery and to rebalance our economy, so that not all the growth that takes place does so in only one corner of the country.
Barry Gardiner (Brent North) (Lab)
After the row at the International Monetary Fund summit at the weekend, has the Chancellor concluded that the renminbi is undervalued, or that the US is under-focused on consumption-led domestic growth?
Mr Osborne
I have concluded that it is very sensible for the serving Chancellor of the Exchequer of the day not to comment on the value of currencies.
Tom Brake (Carshalton and Wallington) (LD)
T10. When the Chancellor and the Chief Secretary consider how to address the huge budget deficit they inherited from Labour, will they not lose sight of the importance of investing in affordable housing, specifically to ensure that homes meet the decent homes standard?
Dr William McCrea (South Antrim) (DUP)
During a visit by the Deputy Prime Minister to Northern Ireland last week, he stated, “I will go away with colleagues in the coalition Government to look at the possible impact of the deficit reduction plan on capital expenditure in Northern Ireland.” Can the Chancellor confirm that that has been done and what steps will be taken in response?
Mr Osborne
As the hon. Gentleman may know, I have met the First Minister and Deputy First Minister of Northern Ireland and I am looking at the points that they raised with me. If he will forgive me, I will make an announcement on 20 October.
Penny Mordaunt (Portsmouth North) (Con)
Does the Minister think that we will stand a greater chance of having fairer taxation now that Finance Bills are published and properly consulted on, and will that stop appallingly unfair policies such as the abolition of the 10p tax rate ever being introduced again?
Michael Connarty (Linlithgow and East Falkirk) (Lab)
With all this talk of fairness, why is it that no one has mentioned VAT? A 14.5% increase in real terms in the VAT rate has been attacked by what I thought were Conservative-voting business people and families in my constituency, and will punish those at the lower end of the income spectrum. Why is such a high rate of VAT being pursued by this Government?
Mr Osborne
We are having to take decisions to close the highest budget deficit in the G20. I listened to what the previous Chancellor of the Exchequer said recently on “The Andrew Marr Show”. He was asked:
“we now read from Peter Mandelson’s book that you were quite keen on the idea of VAT going up”.
Alistair Darling replied:
“Well yeah, obviously…It would have allowed you to have done you know a lot more to take down the deficit…and would have…ameliorated some of the worst effects of reductions”.
For once, the previous Chancellor of the Exchequer had the right idea—[Interruption.] That is because he was overruled by the then Prime Minister.
Robert Halfon (Harlow) (Con)
May I bring to the Minister’s attention the case of my constituent, Mr Peter Gorse? Mr Gorse ran a healthy small business until the Royal Bank of Scotland forced him into bankruptcy so that it could repossess his assets. Will the Minister agree to meet me and my constituent so that his case can be heard fairly by that taxpayer-owned bank and to ensure that cases such as his are fairly considered as we reform the banking system?
Mr Osborne
I agree with my hon. Friend. As we are just a couple of minutes from the statement on higher education, it would be interesting to hear from the Opposition about whether they really will pursue this graduate tax, which the shadow Chancellor has passionately opposed, including in the open letter he wrote to his party leader just a couple of weeks ago.
Emma Reynolds (Wolverhampton North East) (Lab)
The Government failed to conduct an equality impact assessment on the June 2010 Budget. Can the Chief Secretary reassure me that they will not make the same mistake again, and will the Government ensure that they assess the—probably disproportionate—impact on women of the comprehensive spending review?
Matthew Hancock (West Suffolk) (Con)
Since the formation of a Government who are determined to deal with the deficit, market interest rates have in some cases halved. What impact does the Chancellor think that has had on both our GDP growth and the interest payments that we have to make on Government debt?
Mr Osborne
First, the fall has helped to reduce interest payments, and secondly it has helped many companies during the recovery. It is striking how our market interest rates have fallen since taking the steps that we announced in the Budget. That is not the case in some other countries in Europe that had similar market interest rates to ours at the time of the general election.
Rachel Reeves (Leeds West) (Lab)
Does the Chancellor agree that market interest rates were falling before the election? The fall is not due to the Government’s policies—they were falling before.
Mr Osborne
I advise the hon. Lady to look at the market interest rates of Spain and the United Kingdom, which were the same at the time of the general election. In Spain, they have hardly fallen at all, but they are 1% lower in the United Kingdom. That is a real boost to businesses.
Dr Julian Huppert (Cambridge) (LD)
Is the Chancellor aware that the Treasury is the only large Department that does not have a chief scientific adviser? Does that say anything about its interest in and understanding of science, and will he appoint a chief scientific adviser?
Mr Osborne
I assure my hon. Friend that I have received plenty of advice—public and private—from the nation’s scientists.