George Osborne
Main Page: George Osborne (Conservative - Tatton)Department Debates - View all George Osborne's debates with the HM Treasury
(13 years, 9 months ago)
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Chris Evans (Islwyn) (Lab/Co-op)
1. What factors he has identified as underlying the fall in gross domestic product in the fourth quarter of 2010.
The Chancellor of the Exchequer (Mr George Osborne)
The Office for National Statistics attributes the actual fall in GDP to the bad weather in December, but we have been clear that even without that effect, the numbers were disappointing. In the past week, there have been more encouraging survey data showing services, construction, retail and especially manufacturing all growing more strongly—something the Opposition have been mysteriously silent about.
Chris Evans
Could the Chancellor please tell the traders on Blackwood High street whom I met this Saturday whether the rise in VAT will help or hinder them this quarter?
Mr Osborne
The VAT increase, like the other measures we are taking, helps to deal with the record Budget deficit that we inherited from the Labour party. By dealing with that, we have provided financial stability for the British economy. That has also been made clear by the previous Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), who would also have gone ahead with a VAT increase.
Mr John Redwood (Wokingham) (Con)
Given that the last quarter of last year saw a big real increase in public spending and a further big increase in debt, does that not show that there is no necessary connection between those things and growth and that it would be quite wrong to think that spending and borrowing more would solve the problem?
Mr Osborne
My right hon. Friend is absolutely correct. Of course, in December, the Government were spending, in real terms, a record amount. I make the point again that we inherited a record Budget deficit. I believe that Labour’s plan, set out in its March Budget, was to start cuts in April this year. We have set out a credible plan and we are awaiting one from Labour.
Stephen Timms (East Ham) (Lab)
The figures underline that the economy is not out of the danger zone. Does the Chancellor know of the concern expressed by the Recruitment and Employment Confederation about a new lost generation of unemployed young people of the kind we saw in the ’80s and ’90s? What assessment has he made of measures the Government can take to avoid that problem?
Mr Osborne
The right hon. Gentleman is absolutely right that unemployment went up by 1 million under the previous Government. We know that even in the good years, the problem of youth unemployment increased and that we as a country were not able to do much about it. This Government are determined to tackle that head-on with reform of the welfare system so that it always pays to work and, at the same time, with the new Work programme, which will give young people the skills and opportunities they need to get off those unemployment rolls.
Mr Andrew Tyrie (Chichester) (Con)
In giving evidence before the Treasury Committee, Lord Turnbull made it clear that spending as a proportion of GDP should be nearer 40% than the current level of nearly 50%. The OECD has said that the deficit will retard growth. Will the Chancellor make more of the case that action is needed to tackle the deficit not just on financial grounds but to help release the wealth-creating sectors of the economy?
Mr Osborne
My hon. Friend is clearly correct that it is unsustainable for the Government to be consuming almost 50% of national income. Lord Turnbull observes that under Labour and Conservative Governments in the past, the number was closer to 40%. Of course, the deficit reduction plan that we have set out brings that about.
Ed Balls (Morley and Outwood) (Lab/Co-op)
It is an honour and a great responsibility to shadow the Chancellor of the Exchequer at this critical time for our economy and our country. I pay tribute to my predecessor and thank him for everything he did despite the fact that I seem to have inherited an excessively large number of breakfast meetings from him. It is a good job that I did not have one today, or I would have missed this morning’s rather hurried mini-Budget.
It snowed so badly in December in Britain that airports closed, our economy shuddered to a halt, consumer confidence slumped and unemployment rose. In America, it also snowed so badly that airports closed, but the pace of US economic growth increased, consumer confidence was high and unemployment fell to a two-year low. Could the Chancellor tell the House whether there is something different about snow in Britain—or is there a better explanation as to why the American economy grew and Britain’s did not?
Mr Osborne
First, I welcome the right hon. Gentleman to his post and congratulate him on his appointment. Now he and the Leader of the Opposition know what it is like to be second choice. The new shadow Chancellor knows, because he was at the Treasury and he is a man with a past, that Britain had the largest housing boom, the biggest banking crash and the largest budget deficit, and as a result, recovering from the deepest recession was always going to be challenging and choppy, but we have set out a credible plan, including an increase in the bank levy, to deal with the budget deficit, which he refuses to deal with because he is a deficit denier.
Ed Balls
No answer to the question on America. Perhaps the Chancellor should have spent less time on the ski slopes of Switzerland and more time in the conference halls of Davos, listening to the American Treasury Secretary. Let me tell the right hon. Gentleman what he said:
“You’ve got to make sure you don’t hurt the recovery . . . There are some people who like to move . . . very quickly to do very deep cuts in spending but it is not the responsible way to do it.”
In June, unemployment was falling and growth was forecast to be 2.3% this year. Now unemployment is rising and growth is stalled. With consumer confidence falling, inflation rising, no bank lending agreement, no plan for jobs, no plan for growth, no plan B, does the Chancellor really expect us to believe that he can meet his forecast for economic growth this year, or will he have to stand at the Dispatch Box at the Budget in six weeks and downgrade his very first growth forecast?
Mr Osborne
The right hon. Gentleman clearly had a lot of time to prepare that, but I am not sure it all came out as he expected. We have had to deal with his economic legacy and he is running away from his past. He was the City Minister who knighted Fred Goodwin. He is the economic adviser whose fiscal policy has led to fiscal disaster. He is the leadership candidate who, for reasons of political positioning, denies the deficit. The truth is this: we have a plan to clear up his mess. He has no plan at all.
Karl MᶜCartney (Lincoln) (Con)
2. What progress he has made in reforming the tripartite system of financial regulation.
David Tredinnick (Bosworth) (Con)
10. What progress he has made in reforming the tripartite system of financial regulation.
The Chancellor of the Exchequer (Mr George Osborne)
The tripartite system of financial regulation put in place by the new Chancellor and his advisers in 1997 failed spectacularly and cost the British people billions of pounds. That is why we are replacing the tripartite system with a much tougher and more coherent regime led by the Bank of England. We aim to have that system in place by the end of 2012. I repeat what I just said: we have today increased the rate of the Government’s permanent bank levy for this year in order to raise £2.5 billion net. This will mean that the banks pay more in tax in each and every year of this Government than they did in the last year of the previous Government. Through this new bank tax being made permanent and with the revenue announcement today, the banks will be making a fairer contribution to our economic recovery.
Karl MᶜCartney
Does my right hon. Friend regret the fact that the system of financial regulation, which was drawn up by the right hon. Member for Morley and Outwood (Ed Balls), failed to prevent the greatest financial crisis in our country in living memory?
Mr Osborne
Of course I regret it, because we are all having to deal with the consequences. We still do not know—the legislation will come before the House of Commons—whether the Opposition support changing the system of regulation that was established by the right hon. Member for Morley and Outwood (Ed Balls) in 1997. I guess we will find out. The Government are clear—we must fix the system of regulation that went so badly wrong, and we believe that giving the Bank of England the lead responsibility on that will help.
Jane Ellison
As the Chancellor knows, the Leader of the Opposition has admitted that the previous Government got regulation wrong. One area that was wrong was inadequate customer protection in the consumer credit market. Given considerable recent interest in the subject in the House, can he update us on the creation of the consumer protection agency?
Mr Osborne
My hon. Friend is right. It was an interesting admission from the Leader of the Opposition that things started to go badly wrong when he was an adviser at the Treasury. Maybe the man he did the photocopying for will make a similar admission. The creation of a consumer protection and markets agency will provide a stronger consumer voice and a consumer champion. It will be a world-class regulator. We are assembling the right team to run that agency, including many talented people who were at the Financial Services Authority. I am delighted that Martin Wheatley has been appointed as the chief executive designate. He has an outstanding record as a regulator around the world and his arrival bodes well for the future of the new agency.
David Tredinnick
Was the three-way split in financial regulation the worst financial decision taken by the previous Government, or has something else caught my right hon. Friend’s eye?
Mr George Osborne
There is the selling off of the gold at a record low and the pensions tax that destroyed our pensions system, but I have to say that, in terms of sheer cost to the British taxpayer, the system of regulation designed by the shadow Chancellor was pretty catastrophic.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Why did the Chancellor endorse the report published by the right hon. Member for Wokingham (Mr Redwood) just a few weeks before the collapse of Northern Rock, which called for the deregulation of the mortgage market? Does he still support its conclusions?
Mr Osborne
The new Parliamentary Private Secretary is barracking; what a shame he has moved four Benches down, because he is probably going to get louder. I can tell the hon. Lady that I explicitly disagreed with that recommendation in the report at the time.
Stewart Hosie (Dundee East) (SNP)
It is understood that the new Prudential Regulation Authority intends to do less than the Financial Services Authority did to reduce the probability of bank failure. Given that the failure of any bank, even with a proper resolution regime, could contribute to a systemic crisis in confidence, can I have the Chancellor’s assurance that he will put all the pressure he can on the PRA to ensure that it continues with active supervision to minimise the probability of bank failure at any level?
Mr Osborne
The hon. Gentleman can rest assured that I will certainly do that. I do not think that he has given a fair representation of the role that we expect the prudential regulator to fulfil. What I will say about the prudential regulator and the fact that it will come under the aegis of the Bank of England is this: I hope that it will exercise discretion and judgment as well as simply making sure that boxes are ticked. The decision to allow Royal Bank of Scotland to buy ABN AMRO in 2007 might have ticked the various boxes in the regulations at the time, but it was clearly the wrong judgment. I expect and hope that in future our new regulator would be able to step in at that point.
Ms Angela Eagle (Wallasey) (Lab)
Instead of making politically convenient and economically ludicrous pronouncements that it was the UK’s tripartite system of banking regulation that somehow caused the global credit crunch, can the Chancellor explain to the House why his own flagship banking reforms are now running late and why his cosy private talks with the banks on bonuses have failed to materialise? Was not today’s panic announcement just further proof that with this Chancellor, as CBI chief Richard Lambert has said, it is all politics and no economics?
Mr Osborne
The hon. Lady asks why the legislation is “running late”. The previous shadow Chancellor wrote to me and asked for pre-legislative scrutiny, and I agreed to the request. Obviously, that has not been communicated to those on the Opposition Front Bench.
Fiona Bruce (Congleton) (Con)
4. What assessment he has made of the prospects for growth of the manufacturing sector.
Andrew Selous (South West Bedfordshire) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purposes of the Treasury are to ensure the stability of the economy, promote growth and employment, reform banking, manage the public finances and generally clear up the mess left by the Labour party.
Andrew Selous
Will the Chancellor update the House on the progress made in making us one nation in pensions, so that people in the private sector do not have to pay for public sector pensions that they can only dream of receiving themselves?
Mr Osborne
We are seeking a more equitable balance. Lord Hutton is due to produce his final report just before the Budget, and we await that. However, we have already made it clear that we need to see savings for the taxpayer. Those were set out in the spending review, and, as I said, we are committed to them. However, in conversations with trade unions, I have been prepared to enter into discussions with them on an extended time frame—to June—about exactly how those savings can be found across schemes and different pay scales.
Stephen Pound (Ealing North) (Lab)
T2. The Chancellor of the Exchequer will be aware of the statement made by the Northern Ireland Justice Minister yesterday. Will he explain the reason for the continued failure to make a decision?
Mr Osborne
I assume that the hon. Gentleman is referring to the request for additional support for the security situation in Northern Ireland. It is a request that I have taken very seriously, and we are interrogating the request properly—[Laughter.] I know that it comes as a complete surprise to Labour Members that the Treasury should actually interrogate spending requests from Departments, but we have decided that there is new management in charge at the Treasury, and that we should start doing that. We will treat the request with due diligence, but I am clear that security comes first. That will be my priority.
Mr Tobias Ellwood (Bournemouth East) (Con)
T3. Is my hon. Friend aware of recently passed US legislation—the Dodd-Frank Wall Street Reform and Consumer Protection Act—that obliges oil, gas and mineral extraction companies listed on US stock exchanges to declare how much they pay directly to a Government for the rights to mine those resources? This has a huge impact in Africa in tackling corruption, increasing transparency and stopping the backhanders that end up being given to Heads of State. Would he agree to meet me to see whether we can introduce such legislation here in the UK?
Mr William Bain (Glasgow North East) (Lab)
Does the Chancellor agree that any credible strategy for growth must include proposals for a fully capitalised, properly independent green investment bank? Will he assure the House that the Treasury has ceased to act as a roadblock to the creation of such a bank?
Mr Osborne
We are absolutely committed to creating the green investment bank. Indeed, we set aside money in the spending review to achieve that, and we will have an announcement in due course.
Andrew Bingham (High Peak) (Con)
T5. As the rising cost of motoring and fuel has such a significant effect on rural constituencies such as mine, can my right hon. Friend update the House on any consideration he is giving to mitigate such problems as part of next month’s Budget?
Mr Osborne
I completely understand the pressure that motorists in my hon. Friend’s constituency and others are facing, partly due to the increase in the oil price. We have a proposal, in the Budget introduced by the last Labour Government, for an increase on 1 April. As I have said, we are looking at that. We are also considering the case for a fuel duty stabiliser, and we will have announcements on this, potentially at the Budget.
Lilian Greenwood (Nottingham South) (Lab)
Does the Chancellor understand the anger that thousands of people in Nottingham feel when they are losing their jobs as a result of his policies, whereas the bankers who caused the credit crisis will be getting huge pay-outs and he has done nothing to stop them?
Mr Osborne
The reason difficult decisions are being taken is because of the policies of the Labour party. Until the Opposition—and in particular the man who had greater influence over Labour’s economic policy than any other—face up to that, they will not be a credible alternative. We are clear that we need to put in place steps to deal with the budget deficit and to ensure that the banks lend more, including in Nottingham, and pay less in bonuses than they did when Labour was in government. We expect to have announcements on that in the next week, but we need also to reform the way we help people who are unemployed, and that is what the Work programme will do.
Mr Adam Holloway (Gravesham) (Con)
T6. Given the astronomical levels of debt left to families in my constituency, can the Chancellor confirm that the planned cuts for this April that he inherited from Labour were just £2 billion less than those of the Government?
Mr Osborne
I can indeed confirm that, and this is one of the great paradoxes at the moment. The plan, which the previous Government all appeared to have signed up to, including the shadow Chancellor—that is, the plan put in place by the last Chancellor of the Exchequer—starts in eight weeks’ time and involves billions of pounds of cuts, amounting to just £2 billion less than what we are planning this year. We have not had any proposals from the Opposition; they have eight weeks to come up with a plan.
Rachel Reeves (Leeds West) (Lab)
In Leeds we will lose 11 citizens advice bureaux debt advisers next month because of the cancellation of the financial inclusion fund. Where would the Minister suggest that my constituents who are struggling with debt and excessive and escalating charges from doorstep lenders go for advice?
Gavin Williamson (South Staffordshire) (Con)
T8. Will my right hon. Friend join me in welcoming the decision by Moog Aircraft, which is based in my constituency, to invest millions of pounds in a new site to replace its old factory, securing 400 jobs in South Staffordshire? After 13 years of Labour’s decline in manufacturing, is this not a further sign that we are now seeing a manufacturing recovery?
Mr Osborne
My hon. Friend makes an excellent point. I join him in congratulating the company on its announcement. Under the last Labour Government the share of the economy taken by manufacturing halved; under this Government we are seeing a manufacturing revival.
Naomi Long (Belfast East) (Alliance)
Further to his answer to the hon. Member for Ealing North (Stephen Pound), will the Chancellor please confirm for the House that what the Minister for Justice in Northern Ireland has actually requested is not additional funding, but simply that the Treasury stands by the negotiated financial agreement that led to the devolution of policing and justice in the first place?
Mr Osborne
As I said to the hon. Member for Ealing North, we are carefully considering the request. I am clear that security comes first. Of course the Treasury has to apply due diligence to any request from a Department or devolved authority, but she should take it from me that we put security first.
Tim Farron (Westmorland and Lonsdale) (LD)
Our mountain rescue teams are staffed by outstanding volunteers doing professional work, but outrageously they have to pay VAT and vehicle excise duty on life-saving equipment. Is it not time that this Government put an end to this and refunded that VAT?
Mr Chuka Umunna (Streatham) (Lab)
It is extremely important that the Government are seen to act on the recommendations of the Independent Banking Commission, when they come out, in the national interest rather than in the interest of any particular sector. Does the Chancellor think that it is wise for the Minister, the noble Lord Green, an immediate former chair of the British Bankers Association, to sit on the Cabinet Committee that makes decisions on such matters? He joined that Committee last month, just two months after leaving the chairmanship of HSBC, a bank for which he worked for more than 25 years and which will be profoundly affected by the decisions that the Committee makes.
Mr Osborne
First, I am glad that the hon. Gentleman welcomes the creation of the Independent Banking Commission. I hope that all hon. Members have an open mind about the recommendations that it will make, and that they agree that we should not close off any options until we have heard from John Vickers. He is doing an excellent job, and we await his final report later this year. The hon. Gentleman is ungenerous in his remarks about Lord Green, who brings enormous experience to the job of Trade Minister. I would just point out that he has replaced Lord Davies, who was appointed by the Labour Government at a time when he was chief executive of Standard Chartered, so it is not as though bringing top bank chiefs into the Government is an innovation.
Andrea Leadsom (South Northamptonshire) (Con)
In the light of the recent appalling press about Her Majesty’s Revenue and Customs’ problems with PAYE and, now, with national insurance contributions matching, is the Minister as concerned as I am about the imminent introduction of online filing for companies, many of which have said that they simply lack the preparedness to deal with it?
Kelvin Hopkins (Luton North) (Lab)
Manufacturing has undoubtedly been helped a lot by the depreciation of sterling, which took place under the last Labour Government. That was only possible because Labour wisely kept us out of the euro. There is now a possibility that interest rates might rise. Will the Chancellor be putting pressure on the Monetary Policy Committee not to raise interest rates?
Mr Osborne
The Monetary Policy Committee is independent of this Chancellor—and, indeed, of previous and future Chancellors—and that is how we intend to keep it. On the hon. Gentleman’s point about the devaluation of the currency, I would just observe that it is incredibly important that the manufacturing industry makes itself even more competitive, and it could use the devaluation as an opportunity to do that. Some Government policies—on taxation and on employment law, for example—will also help in that regard, but the thrust of his question is right: we should not rely solely on the devaluation to make our manufacturing industry globally competitive.
Mr Douglas Carswell (Clacton) (Con)
The Chancellor is entirely right to emphasise the need to be careful with public money. Will he therefore please explain his role in approving the deal to make the UK taxpayer liable for billions of pounds to bail out the euro under the European stabilisation mechanism? Will he respond to my freedom of information request, and publish the advice that he was given on the agreement on assuming office?
Mr Osborne
First, I will look at my hon. Friend’s FOI request, because I have not seen it. The broader point that I would make is that my predecessor as Chancellor, in the weekend between the general election and the creation of the new Government, agreed to the creation of the European stability facility. That involves a UK commitment which takes place on the basis of qualified majority voting; we do not have a veto. I made it clear to the previous Chancellor at the time that I did not support what he had done. However, it has happened and we have to live with the consequences.
Ian Austin (Dudley North) (Lab)
In a speech to the City in 2008, several months after the collapse of Northern Rock, the then Leader of the Opposition—now the Prime Minister—complained that the City had been subjected to too much regulation and to “excessive bureaucratic interventionism”. He also said that
“government needs to do less taxing and regulating”.
Can the Chancellor tell us what he meant?
Mr Osborne
I am reminded of the speech in the City made by the right hon. Member for Morley and Outwood (Ed Balls), when he said in 2006:
“In my first speech as City Minister at Bloomberg in London, I argued that London’s success has been based on…light-touch…regulation”.
He also said that he hoped the City would take comfort from the way the Labour Government had responded to new risks and to events. That is the Bloomberg speech that he likes to forget.
Mr David Davis (Haltemprice and Howden) (Con)
There is a lot of public disquiet about alleged enormous sweetheart deals done with major public companies—Vodafone and others—in the last five years. Three or four months ago, I tabled a question asking how many of these deals had been done, costing more than £100 million at a time. The answer I received was that the information requested was “not readily available” and could be provided “only at disproportionate cost”. I received a similar blocking answer this morning. When is the Minister going to tell the House what HMRC has been up to?
Alison McGovern (Wirral South) (Lab)
I was just checking and realised that the Government’s own business planning projections show that the proportion of young people on the dole by the end of this Parliament will be reduced by less than 1%. Will the Chancellor explain what his plan is to increase the number of jobs made available to those young people?
Mr Osborne
This country has a problem with youth unemployment that has been apparent for a decade. Even in the boom years during the middle part of the last decade, youth unemployment was increasing and a whole generation was being left behind. I hope that we can achieve some kind of cross-party consensus on trying to reform our welfare system so that people do not get trapped in poverty and work always pays. We are reforming the new deal and replacing it with the Work programme so that we are more effective at giving young people the training they need and the opportunities that have been lacking for the last decade.
Stephen Williams (Bristol West) (LD)
Following on from the question from the right hon. Member for Haltemprice and Howden (Mr Davis), many of us will have seen—and some of us, myself included, will approve of—the demonstrations organised by UK Uncut outside certain high street well-known names. What are the Government doing to tackle corporate tax avoidance schemes by some large corporates; and what is the Chancellor going to do to make sure that the actions of some well-known and popular figures, such as premiership football stars and grand prix drivers, are also tackled?