Guidance Guarantee Implementation

George Osborne Excerpts

Monday 20th October 2014 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

Today the Government are pleased to announce that they are making excellent progress in implementing the guidance guarantee, and are on track to get the guidance service up and running in good time for April 2015. The Government have therefore:

Announced that online guidance will be available on https://www.gov.uk; face-to-face guidance will be provided by Citizens Advice, Citizens Advice Scotland and Citizens Advice Northern Ireland; and telephone guidance by The Pensions Advisory Service (TPAS); and

Confirmed that they will bring forward legislation to underpin implementation of the guidance guarantee, including the legislative framework for the Financial Conduct Authority’s standards regime for the guidance service.

The Government have been clear that in order to deliver the guidance they must build on trusted, independent consumer advice services. That is why the Government are pleased to announce that TPAS and Citizens Advice (England and Wales, Scotland, and Northern Ireland) will be delivery partners in the guidance service.

This week the Government will bring forward amendments to the Pensions Schemes Bill that will underpin the implementation of the pensions guidance guarantee as announced at Budget 2014.

Bilateral Loan to Ireland

George Osborne Excerpts

Monday 13th October 2014 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

I would like to update the House on the UK’s bilateral loan to Ireland.

In 2010, the Government committed to providing a £3.2 billion bilateral loan to Ireland as part of an international assistance package of €67.5 billion including loans provided by the International Monetary Fund (IMF), European Union (EU), euro-area member states and other bilateral lenders Sweden and Denmark.

The UK provided this bilateral loan in order to help put Ireland back on a sustainable path, ensure economic stability and because Ireland is a key trading partner and ally. I regard Ireland’s stability to be a key component of the stability of the UK economy and the banking sector, particularly in Northern Ireland.

Ireland has now set out its intention to repay early up to €18.3 billion of loans obtained from the IMF. The IMF loans carry a significantly higher interest rate than other elements of the programme.

The loan agreements of all other creditors under the assistance package, including the UK, each have a clause requiring that Ireland makes a proportional early repayment to them in the event that Ireland repays any creditor under its assistance programme ahead of schedule. On 19 September, Ireland formally requested that the UK, and all other lenders besides the IMF, provide a waiver for this clause.

I can inform the House that I have today provided a waiver under clause 19.3 of the Credit Facility Agreement (Amended 4 October 2012) enabling Ireland to make early repayments to the IMF of up to €18.3 billion without the requirement to make pro rata early repayments to the United Kingdom. This decision does not amend the amount or timing of interest and principle repayments owed to the UK as originally foreseen in the Credit Facility Agreement (Amended 4 October 2012).

It is clear to me that, where all other lenders provide similar waivers, granting a waiver for the UK bilateral loan delivers significant benefits to Ireland’s fiscal position and debt sustainability in the coming years. However, the benefits of these actions are not exclusive to Ireland, as the potential improvements also enhance the likelihood of repayment of the UK’s loan.

The waiver I have agreed is conditional upon all other assistance providers, besides the IMF, issuing similar waivers. Ireland has also committed to ensuring the IMF continues to play a role in monitoring Ireland in the coming years. All member states have now agreed to provide a waiver to Ireland on the outstanding loans.

In addition to this announcement, HM Treasury has today provided a further report to Parliament in relation to Irish loans as required under the Loans to Ireland Act 2010. The report relates to the period from 1 April 2014 to 30 September 2014.

A written ministerial statement on the previous statutory report regarding the loan to Ireland was laid in Parliament on 28 April 2014, Official Report, column 33WS.

ECOFIN

George Osborne Excerpts

Friday 12th September 2014 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

An informal meeting of the Economic and Financial Affairs Council will take place in Milan on 12 and 13 September 2014. This follows immediately after the eleventh Asia-Europe meeting (ASEM) of Finance Ministers, which will prepare input into the ASEM summit in mid-October.

At ECOFIN the following working sessions will take place:

Working Session 1

Ministers will discuss a strategy for the Finance for Growth agenda. The Government look forward to an exchange of views on measures to improve the financing of the real economy.

Working Session 2

There will be the usual discussion on the economic outlook and financial stability issue, which will likely consider the euro area’s outlook, developments on inflation and growth and potentially issues relating to the ongoing situation in Ukraine.

In preparation of the G20 Finance Ministers and Central Bank Governors’ meeting and the International Monetary Fund (IMF) and World Bank annual meetings, Council will be asked to endorse terms of reference.

The Commission will present to Council a note for discussion on international co-operation in financial services.

Working Session 3

There will be an update on the asset quality review and stress tests as part of the European Central Bank’s (ECB’s) comprehensive assessment prior to its assumption of responsibility for banking supervision under the single supervisory mechanism (SSM) in November 2014.

In addition, the Commission will update on national arrangements and communication issues on backstops flowing from the comprehensive assessment.

Subsequently, a discussion will take place on the appointment, by Countries signed up the SSM, of members of the mediation panel of the ECB.

Finally, Council will be updated on work on the implementing legislation that will determine the contributions to be paid by banks to resolution funds established under the directive on bank recovery and resolution and the regulation on the single resolution mechanism.

Working Lunch

Following discussions by Employment Ministers in July, Finance Ministers will hold an exchange of views on measures to enhance the resilience of the EU and stabilise the euro area economy, including the potential for a common unemployment insurance scheme.

Office for Budget Responsibility (External Review)

George Osborne Excerpts

Wednesday 3rd September 2014 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

Today the first external review of the independent Office for Budget Responsibility (OBR) has been published and presented to Parliament. Formally reporting to the OBR non-executives, the review was led by Kevin Page, former Parliamentary Budget Officer in Canada. In commissioning this report, the OBR non-executives meet their legal requirement to ensure an external review is conducted at least every five years.

In its findings, this report overwhelmingly supports the high-quality work and independent analysis produced by the OBR. The review therefore attests to the Government’s creation of the OBR in 2010 which has placed the UK at the forefront of fiscal institutional reform internationally. In giving the OBR a duty to produce official economic and fiscal forecasts, this Government have ensured that for the first time we have a truly independent assessment of the state of the nation’s finances.

The Government welcome the review’s overall findings and recommendations. These aim to ensure the long-term sustainability of the organisation and include the recommendation that,

“caution be exercised in considering any expansion to the OBR’s mandate (e.g. costing certification of opposition manifestos)”.

Alongside the OBR, the Treasury will consider the full recommendations and conclusions of the report in more detail. Building on the analysis and conclusions of this independent report, the Government have already announced their intention to conduct their own review of the OBR at the start of the next Parliament.

The external review report was presented before Parliament earlier today and copies are available in the Vote Office and Printed Paper Office. Copies will also be made available to members of the public online.

Oral Answers to Questions

George Osborne Excerpts

Tuesday 2nd September 2014 Commons Chamber

[Graham Evans (Weaver Vale) (Con)]

14. What progress he has made on his long-term economic plan.

[The Chancellor of the Exchequer (Mr George Osborne)]

The Government’s long-term economic plan is working, and the International Monetary Fund expects the United Kingdom to grow faster than any other G7 country this year. But the job is not yet done; there are growing risks abroad from a disappointingly weak eurozone and persistent risks at home from Opposition Members who would abandon the long-term plan and return Britain to the economic mess they left it in.

[Fiona Bruce]

I welcome the statistics out today on the Government’s flagship Help to Buy scheme. It is helping those families it was designed for: those buying a house worth less than the national average—overwhelmingly, these are people outside London and the south-east. The policy is boosting aspiration and helping hard-working families on to the housing ladder. So will my right hon. Friend confirm that he will not listen to the Labour party, which has opposed the policy, and will instead continue with Help to Buy as part of our long-term economic plan to deliver greater economic security and a brighter future for our country?

[Mr Osborne]

My hon. Friend is absolutely right about that. We heard lots of scare stories from the Opposition about how this scheme would be used only in central London and the like. The fact is that today’s figures show that almost 50,000 people have been helped by Help to Buy, and that 80% of those have been helped outside London and the south-east of England. In her own council area, more than 300 families have been helped. Members of Parliament from west Yorkshire would like to note that Leeds is the No.1 location for people using Help to Buy. The scheme is working, it is about backing aspiration and it is about helping people get on in life.

[Graham Evans]

Businesses and families across my constituency will all benefit from recent investments in the Halton curve railway, the Mersey gateway bridge and the Hartree centre for supercomputing in Daresbury. I urge my right hon. Friend the Chancellor to continue the important work he is doing as part of the long-term economic plan to build the northern powerhouse, which will continue to create jobs and economic security in Weaver Vale and across the north of England.

[Mr Osborne]

Of course, I want Weaver Vale and Cheshire to be part of that northern powerhouse, and may I commend my hon. Friend for the campaigns he has fought to get the second Mersey crossing, the Halton curve and the investment in Daresbury? Those are things that Labour MPs, including the one who used to represent his seat, campaigned for for years and got nothing from a Labour Government. We now have a Conservative MP delivering for his constituents under a Conservative Chancellor.

[Ian Lucas (Wrexham) (Lab)]

In 2010, the Chancellor said that he would eliminate the deficit by 2015. Why has he failed?

[Mr Osborne]

For the reasons that I have set out before—with the slower growth in Europe. This is extraordinary: all we get at Treasury questions and generally from the Labour party are requests for more spending and more borrowing, but now Labour Members seem to be complaining that we have not cut enough. Over the summer, we did our sums, we added up their summer spending spree and we found there had been £21 billion of Labour spending commitments in the past five or six weeks alone. That is another reminder of why it cannot be trusted with the British economy again.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

New research by the Inequality Briefing highlights the fact that nine of the 10 poorest regions in northern Europe are in the UK—these include the ones I represent in west Wales. The UK is also home to the richest region in northern Europe: inner London. What has happened to the long-term plan to geographically rebalance the UK economy?

[Mr Osborne]

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

[Mr Andrew Tyrie (Chichester) (Con)]

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

[Mr Osborne]

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

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Does the Chancellor find it a cause for concern that the Bank of England has halved its forecast for wage growth for the rest of this year?

[Mr Osborne]

Of course one of the challenges across the western world has been wage growth. The shadow Chancellor put it very well in an interview he gave last week. He said:

“I think that the fact that you had the massive…financial crisis which happened on our watch meant people saw their living standards hit.”

There is an admission of where the source of the problem is, and the solution is to grow our economy, create jobs and help people get on in life, and that is what we are doing.

[Chris Leslie]

I am not sure whether I detected any concern from the Chancellor. But if he is concerned about this issue, why is it that under his plans it is always those with the lowest incomes, those in the poorest areas and those who are most vulnerable in society who end up being hit hardest by these measures? Will he now prioritise action to ensure that we have proper enforcement of a decent minimum wage, end those exploitative zero-hours contracts and promote some incentives to have a living wage?

[Mr Osborne]

We are introducing new measures to strengthen enforcement of the minimum wage and to ensure that there is not an abuse of zero-hours contracts. Might I add that for 13 years the Labour party had the opportunity to introduce those measures and it did not? The record under this Government, despite the incredibly difficult economic inheritance, is that child poverty is down by 300,000 and inequality is lower than it was on average under the previous Labour Government, so we are proceeding to deal with the enormous problems that we inherited in a way that is consistent and fair.

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[Stuart Andrew (Pudsey) (Con)]

6. What recent estimate he has made of the level of employment.

[The Chancellor of the Exchequer (Mr George Osborne)]

There are a record number of people in work, and 1.8 million jobs have been created since 2010. We are also seeing the largest fall in youth unemployment on record. But too many people remain without a job, which is why we are determined to achieve full employment by helping businesses to take on new staff, and reforming welfare so that it always pays to work.

[Stuart Andrew]

Unemployment continues to fall across Leeds, and in my constituency it has fallen by 39% to 1.8%. That is providing families with the stability and security of a regular pay packet. But is my right hon. Friend aware that of the 2 million jobs created, more than three quarters have been in full-time employment, and does not that show that the long-term economic plan of this Government is building a healthier and stronger economy?

[Mr Osborne]

My hon. Friend is absolutely right. I remember visiting with him Hainsworth & Sons, a textile company in his constituency, which is now exporting to China. In his constituency, as in others, we have seen a dramatic fall in unemployment. Unemployment is down 31% in the last year; youth unemployment has fallen too. Many of those jobs are in full-time employment, as he says, but of course we are also supporting those in self-employment.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

Of all those jobs created, many are part time, and part-time jobs for people who are looking for full-time employment—over a quarter of a million people are involved there. What is the Chancellor doing to increase the opportunities for full-time employment in this country?

[Mr Osborne]

What the hon. Gentleman says is not a clear statement of the facts, because actually, full-time employment accounts for three quarters of all the new jobs created since 2010. Of course there are those who want part-time employment, but for those in part-time employment who want full-time employment, the answer is to continue to support the economy, to do the difficult things necessary on the public finances to inspire confidence in that economy, and not to have disastrous things like a jobs tax rise, which would make it more difficult for those people to get full-time work.

[Greg Mulholland (Leeds North West) (LD)]

Key to a long-term employment plan is the wonderful apprenticeship scheme. The new scheme was launched by the Business Secretary in Leeds. We have seen the creation of 2,000 apprenticeships since 2010. Will my right hon. Friend also welcome the fact that now, finally, Leeds city council is talking about a university technical college? Considering that there is a spare Leeds city council site, does he not think it is time that Leeds city council got on and built one?

[Mr Osborne]

I very much agree with my hon. Friend. The university technical colleges have been a real boost to technical education in our education system, and I know that there are ambitious proposals in Leeds. Indeed, I think, from memory, that one has just been given the go-ahead in Leeds. But I would also say that the apprenticeship scheme has been very successful. Working with myself and the Business Secretary, more than 2 million apprenticeships have been provided. We want to see more of those provided, so that young people have the skills to take the opportunities that the economy is now providing them.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Does the Chancellor regret that under his watch the number of young people staying on jobseeker’s allowance for more than 12 months has risen by more than 46%? Is it not now time for Labour’s compulsory jobs guarantee to ensure that young people are not left behind?

[Mr Osborne]

Interestingly, a lot of Labour MPs have regularly asked about long-term youth unemployment during Treasury questions over the past couple of years. I bring that up because the hon. Lady asks about this, but long-term youth unemployment is now lower than it was when this Government came to office. We heard a lot of complaints about long-term youth unemployment over the past two years, so let us have some Labour Members congratulating the Government now.

[Steve Brine (Winchester) (Con)]

7. What measures he has introduced to reduce the level of tax paid by households.

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[Guy Opperman (Hexham) (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 the stability and prosperity of the economy. That is delivered by our long-term plan. I can tell the House that the plan will be further expanded in the autumn statement, which I will deliver on Wednesday 3 December.

[Guy Opperman]

I thank the Chancellor for that answer. This summer, the Labour party set out a summer spending plan of some £21 billion of extra spending a year. I suggest this further debt will make our constituents wonder whether it has actually learned anything from bankrupting this country under Blair and his successors. Has my right hon. Friend assessed the impact on the public finances of such a disastrous decision?

[Mr Osborne]

My hon. Friend is right, of course. The Treasury’s own independent analysis of the Labour party’s approach to public spending shows that it could borrow over £166 billion more in the next Parliament. Labour Members have started to contribute to that with a £21 billion shopping list this summer. Perhaps the shadow Chancellor can get up and explain how he is going to pay for it.

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

Let me start by welcoming the Exchequer Secretary to her new post on the Front Bench, and by saying to the Chancellor, “Don’t worry—I’m not going to press you on my ice bucket challenge to you today.”

Let me instead ask the Chancellor about another highly topical economic issue, particularly among his Back Benchers. Before the last election, he told the Centre for European Reform that he was a “pro-European”. This week, The Times is reporting that the new chapter in his biography says that the Chancellor has gone cold on Europe—an “unmistakable hardening”—and is now pondering exit. I suspect we may know the answer, but let me ask the Chancellor: what has changed?

[Mr Osborne]

First, I thank the right hon. Gentleman for nominating me for the ice bucket challenge. I would rather make the extra donation to charity and pour the cold water over his economic policies. When it comes to reading biographies, we do not need a biography to know his life story: he was put in charge of the British economy, and he wrecked it.

On Europe, our position is the one that I think is shared by the majority of the British people, which is that we seek a renegotiation of Britain’s terms of membership of the European Union, and that we will then put that to the British people in a referendum. Why does the right hon. Gentleman not get up and commit the Labour party to letting the people have a say?

[Ed Balls]

The Chancellor cannot even convince his own Back Benchers of his policy on Europe, let alone anybody else. Let me tell the House what the president of the CBI said last week. He said that the Government’s policy on Europe

“has already, and is increasingly, causing real concern for business regarding their future investment”.

Yet the Chancellor is flirting with exit. We know what has changed: Boris Johnson has said that he is returning to Westminster and that he is flirting with exit, and—surprise, surprise—the Chancellor is too. Let me ask the Chancellor this. I want reform in Europe but, like the CBI, I am determined to put the national economic interest first. Surely the Chancellor should put his leadership ambitions aside and put the national economic interest first too.

[Mr Osborne]

We put the national economic interest first by fixing the mess that the shadow Chancellor left the British economy in. I have been doing some research on what he has been up to over the summer. I read an article in the Express & Star called, “Out and about with Labour’s Ed Balls”, about when he went canvassing last week. It says:

“as we walk down Essex Drive to another house (there’s no-one in), a group of boys on their bikes look over”.

They say, “Oh look, it’s Gordon Brown.” Even they can spot more borrowing and more debt—it is Gordon Brown all over again.

[Mr Marcus Jones (Nuneaton) (Con)]

T2. Some Members of the House predicted that the Government’s deficit reduction strategy would result in the number of jobs lost in the public sector far outweighing the number of jobs created in the private sector. Will my right hon. Friend tell us who was right and whether that prediction was accurate?

[Mr Osborne]

That prediction, like all the Opposition’s predictions, was completely wrong. For every job that has been lost in the public sector because of the necessary and difficult decisions that we have had to take to reduce the 11% budget deficit, more than five jobs have been created in the private sector. That is testimony not only to the strength of the Government’s economic plan, but to the ingenuity of British business in creating such opportunities.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

T4. The Chief Secretary has been keen to trumpet free school meals for six, seven and eight-year-olds. However, this week in Hackney, many of the 47% of children who are living in poverty will turn up at school not having had a square meal for six weeks. They will be fed by the free breakfast clubs that are supported by head teachers and charities. Is it not time that the Government woke up to the reality of poverty? The parents of those children can get only low-paid, part-time work if they are lucky. Is it not time that the Government took action to tackle child poverty?

[Nicola Blackwood (Oxford West and Abingdon) (Con)]

T3. The appalling congestion in Abingdon makes life miserable for families and commuters and inhibits local economic growth. With 600 new and needed houses planned on Dunmore road, will the Chancellor meet met to discuss why investing in a diamond junction on Lodge hill on the A34 is the answer not only to making that development sustainable, but to unlocking growth in the wider region?

[Mr Osborne]

Of course, I would be happy to meet my hon. Friend to discuss improvements on the A34. We are making an enormous number of improvements to the UK road system and spending more on transport and road improvement than the previous Government. We are also investing in science, and I remember making a useful visit with my hon. Friend to her constituency to see the results of the money that we have contributed to Begbroke science park. I will certainly have a meeting with her about the A34.

[Grahame M. Morris (Easington) (Lab)]

T6. We know from survey evidence that more than half of the licensees who are tied to large pub companies earn less than £10,000 a year. Does the Chancellor support the save the pub group’s call for a market rent-only option to ensure that tied licensees can earn a fair living and play their part in contributing to the local and national economy?

[Mr Osborne]

I am perfectly willing to consider representations, but the Government have set out legislation to deliver a fairer deal for pub tenants—something for which Members have been calling for many, many years. I hope that it commands his support.

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[Mr Henry Bellingham (North West Norfolk) (Con)]

T7. Is the Chancellor aware that unemployment in my constituency has fallen by nearly 700 since July last year, thus giving new hope to many families? Will he tell the House how the UK’s job creation record compares with other G20 countries?

[Mr Osborne]

The answer is that it compares very well. There has been a much faster rate of job creation in the United Kingdom than in the rest of Europe, for example, which I suggest is because we have instilled confidence in our ability to pay our way in the world through our difficult but necessary deficit reduction plan. We have helped businesses to employ extra people through the employment allowance and other tax changes, and we have created a more entrepreneurial economy, so that people who were out of work when this Government came to office got a chance of being in work, with all the security and opportunity that brings.

[Stephen Timms (East Ham) (Lab)]

May I press the Chancellor on the deficit? The central objective of his plan when he launched it was to eradicate the deficit in this Parliament, but he now estimates that he will only halve it. Why has the plan fallen so far short of that central objective?

[Mr Osborne]

This has been the subject of much discussion across the Dispatch Box, and I have pointed out that while this Government have been in office we have had the near collapse of the eurozone economy on our doorstep—[Interruption.] The shadow Chancellor chuckles. Perhaps he should chuckle at the fact that the British economy is performing more strongly than any other major advanced economy in the world. He predicted that the deficit would go up, but it has come down; he predicted that millions of people would be unemployed, yet millions of jobs have been created. This summer, Labour Members set out £21 billion of more spending commitments, so the deficit would go up if they ever got the chance of office again.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

I thank my right hon. Friend for reminding the House that the autumn statement will be on 3 December. May I urge him to ensure that there will be investment in our roads and railways in the south-west, so that we have trains that get into Plymouth before 9 o’clock in the morning, and more three-hour train journeys to and from London?

[Mr Osborne]

The autumn statement will be an opportunity to set out further improvements to infrastructure in the south-west, and the services, roads and railways that support Plymouth. My hon. Friend has been a doughty champion for that city and delivered huge investment to it, which was never forthcoming before. I assure him that we are looking at specific transport improvements to connect better the whole of the south-west with the rest of the United Kingdom.

[Mr Jim Cunningham (Coventry South) (Lab)]

Many local authorities are struggling to implement the Government’s policy on free school meals—for example, Coventry has to find something like an additional £1 million. What are the Government going to do about that?

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[Kelvin Hopkins (Luton North) (Lab)]

Britain has an enormous trade deficit, especially with the EU, which is clear evidence of a misaligned exchange rate, and UK manufacturing is again suffering as the euro has depreciated relative to sterling. When is the Chancellor going to take the exchange rate seriously?

[Mr Osborne]

I follow the practice that previous holders of this job have followed over the past 20 years, which is not to comment on the exchange rate, but as I said in my response to the first question in this session, the weakness in the eurozone is an emerging risk to the UK economy and something to which we need to be alert.

[Nigel Adams (Selby and Ainsty) (Con)]

Constituents of mine have been targeted by phone fraudsters calling them at home pretending to be from their bank, and several have had their bank accounts emptied, leaving them devastated. Will the Minister meet me and other hon. Members whose constituents might have been affected to discuss a way forward to ensure that banks have in place proper, robust security measures to prevent that from happening again?

[Julie Hilling (Bolton West) (Lab)]

We now know that the Chancellor has had a letter from the head of the UK Statistics Authority, so when will he correct the record and apologise for giving the House—obviously inadvertently—incorrect information which inflated the success of his tax avoidance programme?

[Mr Osborne]

The Government, including me, did inadvertently give the wrong information, but the explanation provided by the permanent secretary at the HMRC was accepted by the Chair of the Public Accounts Committee, the right hon. Member for Barking (Margaret Hodge), as a fair explanation of what happened.

[Duncan Hames (Chippenham) (LD)]

The Treasury’s infrastructure fund is paying for increased transport capacity in enterprise zones, through roads and rail services, unlocking large new housing developments. Is the Chief Secretary prepared to use the fund also to pay for the internet and communications infrastructure that those homes and businesses will desperately need?

Pensions

George Osborne Excerpts

Monday 21st July 2014 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

This Government believe that individuals should be trusted to make their own decisions with their pension savings. One of the most important stages in life everybody has to save for is retirement, and one of the biggest financial decisions people will take is what to do with those savings when retiring. Under the old system, only those with very large or very small pension pots could access them with any flexibility.

That is why at the Budget I announced the most radical change to how people can access their pension in almost a century. From April 2015, everyone over the age of 55 with defined contribution pension savings will be able to access them as they wish, regardless of their total pension wealth, subject to their marginal tax rate.

Those who want the security of an annuity will still be able to purchase one. Equally, those who want to access all of their pension savings will be able to take them as a lump sum. Those who do not want to purchase an annuity or withdraw their money in one go, will be able to keep their pension invested and access it overtime, for instance through a draw-down product.

These reforms mark a radical departure, by giving choice back to individuals, and since the Budget the Government have consulted extensively on how best to implement the changes. I am pleased to say the reforms have overwhelmingly been positively received.

Later today I will lay the Government’s full response to the consultation on delivering these changes before Parliament. Before then I wanted to provide a high-level summary of the response, information about the resource expenditure for the guidance guarantee and the full details of the decisions with regard to private sector defined benefit pension schemes, which I am setting out in full this morning before markets open.

These reforms create more choices for individuals, and the Government want people to be equipped and ready to make informed decisions. The right to free and impartial guidance I announced at the Budget will empower savers and ensure that they are clear on their retirement income options before they make any decisions about what to do with their savings.

Given the need for guidance to be trusted by savers, I can confirm today that the guidance guarantee will be provided by independent organisations—with no actual or potential conflict of interest—in order to ensure complete impartiality. Delivery partners will include the Pensions Advisory Service (TPAS) and the Money Advice Service (MAS). The Government welcome expressions of interest from a range of trusted consumer-facing organisations, including Citizens Advice and Age UK, and looks forward to discussing further with these and other independent organisations how they can be involved.

The Treasury has obtained approval for an advance from the Contingencies Fund of £10,000,000 (out of the £20,000,000 development fund for the guidance guarantee announced at Budget) for preparatory work for the guidance guarantee in advance of Parliament’s approval. Parliamentary approval for additional resource of £10,000,000 for this new expenditure will be sought in a supplementary estimate for HM Treasury. Pending that approval, urgent expenditure estimated at £10,000,000 will be met by repayable cash advances from the Contingencies Fund. The repayment is expected to be made in the financial year 2014-15.

I can also confirm today that a new override will be introduced to ensure that pension schemes are able to offer individuals flexible access to their savings, and the tax rules will be amended to allow providers to develop new retirement income products that are tailored to the needs of individual consumers.

The Government want to maximise freedom and choice for retirement savings, but not if this were to be at the expense of the wider economy. For most defined benefit scheme members, it will be in their best financial interest to remain within their scheme. However, the Government, having considered the issues carefully, agree with the view of many stakeholders (including the Confederation of British Industry, Association of British Insurers and the National Association of Pension Funds) who have argued it is right to preserve the existing freedom to transfer out of a defined benefit scheme under the new arrangement. The Government will therefore continue to allow transfers from private sector defined benefit to defined contribution schemes, excluding pensions already in payment, subject to additional and important safeguards.

The Government continue to believe that transfers from unfunded public service defined benefit schemes should be banned, in order to protect the Exchequer and taxpayers. Transfers from funded public service defined benefit to defined contribution schemes will be permitted, and safeguards similar to those in the private sector will be introduced where appropriate.

The Government will present the document “Freedom and choice in pensions: Government response to the consultation” to Parliament and place copies of the document in the Libraries of both Houses. The relevant extracts from the defined benefit chapter of the consultation response document are copied below.

Extract from Freedom and choice in pensions: Government response to the consultation.

For the majority of individuals, retained membership of a defined benefit pension is likely to be their best option, as defined benefit pensions offer a level of security and guaranteed indexation that defined contribution pensions do not. Furthermore, the transfer values offered when requesting to transfer out are often less than the net present value of the benefits that an individual would ultimately receive from their defined benefit pension.

Nonetheless, it is likely that some individuals will request transfers out of their defined benefit pensions, and for some individuals, this may be in their best interests.

Discussions with stakeholders during the consultation highlighted a range of estimates of the proportion of those who would seek to transfer from a defined benefit scheme. The majority of estimates were between 10% and 20% but with a number expecting transfers to be below 10%. These estimates are consistent with stakeholder feedback that the Budget announcements had resulted in only a very small number of additional requests for transfers.

A precise figure of the proportion of transfers will be inherently difficult to determine, being dependent on a number of factors, including: whether pension schemes actively promote transfers; the attractiveness of new financial products being offered in the defined contribution market; and any requirements to take, and the quality of financial advice.

Pensioners are excluded from the right to transfer

Currently, existing (as opposed to future) pensioners are prevented from transferring out of their defined benefit schemes by law. A number of stakeholders highlighted the risks of changing the current position; very few representations were received arguing to do so.

Stakeholders highlighted the significant adverse selection risk of allowing current pensioners to transfer out of their defined benefit schemes. Such a scenario would place significant risk onto the pension fund, and would be unfair to remaining members, and could require schemes to increase their funding requirements. Stakeholders noted that retaining the current position whereby pensioners have no statutory right to transfer would retain equality with those who have already purchased annuities with their defined contribution savings. The Government have therefore decided to retain the current ban on existing pensioners transferring out of defined benefit schemes. Netting out pensions in payment from the total asset base reduces substantially the amount of assets potentially subject to transfers.

Timing of transfers out of defined benefit schemes

The timing of any transfers out of a defined benefit scheme will also make a difference to the impact on scheme investments.

Stakeholders noted that members of private sector defined benefit pension schemes who wish to transfer would benefit by doing so as close as possible to the point they crystallise their pension. It is unlikely that transferring to a defined contribution scheme earlier in life would lead to greater pension wealth in retirement compared to accruing more years of defined benefit pension, or, for those with deferred benefits, benefitting from index linked uplifting. This means that any transfers would be likely to take place over a number of years, in line with the age profile of members, rather than all at once.

Wider defined benefit investment trends

As a number of responses to the consultation highlighted, in recent years, there has been a significant trend of de-risking by defined benefit pension schemes, characterised by shifts in asset allocation from equities into fixed income. This trend has been driven by changes in the regulatory approach, accounting standards, increasing risks from longevity, and the increasing maturity of schemes, with most closed to new members (and some to future accruals).

Therefore it is expected that there will still be a strong continuing demand for high-quality fixed income assets, including Government and corporate bonds, in the future from defined benefit schemes, even allowing for a possible reduction in demand due to transfers out.

Impact on financial markets

Taking into account the exclusion of pensioners from the right to transfer; the limited number of active and deferred scheme members for whom it would be in their best interests to transfer; and the likelihood that those transferring would do so when they reach the scheme’s normal age for crystallising their pension pots, the Government believe that the overall impact on the existing defined benefit asset base is likely to be limited if private sector defined benefit to defined contribution transfers continue to be allowed.

From a market perspective the impact of maintaining defined benefit flexibility will at the margins necessitate greater liquidity in asset holdings. However, the main driver underpinning portfolio restructuring in the future is likely to continue to be increasing maturity of defined benefit schemes and corresponding de-risking, irrespective of any decision on defined benefit flexibility.

Therefore, the Government have decided that retaining the existing flexibility of transfers out of private sector defined benefit schemes for all pension members (other than those whose pensions are already in payment), together with the additional safeguards outlined below, is appropriate.

Introducing additional safeguards—supporting individuals to make an informed choice

A number of stakeholders who supported retaining the current right for private sector transfer suggested that current safeguards could be improved.

At present, although the majority of defined contribution schemes will only accept transfers if professional financial advice is taken, guidance for transfers from defined benefit schemes only stipulates that such advice has to be taken when transfers are instigated by the employer not when they are instigated by the employee. The Government intend to make it a statutory requirement on the transferring scheme for all individuals who are considering transferring out of defined benefit schemes to take advice, from a professional financial adviser who is independent from the defined benefit scheme and authorised by the FCA, before transferring. The FCA are today publishing a thematic report on enhanced transfer values out of defined benefit schemes, summarising examples of good and bad advisory practice.

As a result, defined benefit schemes will be required to check that a member has taken advice from a professional financial adviser who is independent from the defined benefit scheme and authorised by the FCA before allowing a transfer out of the scheme. In most cases the individual pension member will need to pay for the financial advice. However, responsibility for paying for the financial advice will fall on the employer if the transfer is from defined benefit to defined contribution schemes within the same scheme, or as a result of an employer led incentive exercise.

The proposal to make it a statutory requirement to take professional financial advice was recommended by a large number of stakeholders including the ABI and CBI. It will ensure that all pension fund members are fully informed before taking any decision, and counteract the risk that a significant number of pension scheme members act against their own best interests or are coerced out of their scheme. This requirement for professional financial advice would not apply to small pot holders with pension savings below £30,000 as the trivial commutation rules would still apply.

Introducing additional safeguards - protecting pension schemes

Although it is unlikely that the number of members of defined benefit schemes wishing to transfer would be sufficient to destabilise any individual scheme, this was nonetheless a concern raised by a number of stakeholders who were supportive of allowing continued flexibility.

At present pension fund trustees have the power to ask the regulator for longer to make transfer payments if the interests of the members of the scheme generally will be prejudiced by making the payments within the usual period. Trustees are also able to reduce the transfer values offered to individual members to reflect the schemes current funding position. As it stands current powers available to trustees are sufficient to keep schemes viable under the new flexible pensions regime. However, the Government want to ensure that trustees are fully aware of these powers and are prepared to use them should the need arise. The Government therefore intend to ensure that there is new guidance to trustees on the powers available to them to maintain the sustainability of schemes. The Government will work with the pensions regulator, employers and trustees to develop the guidance.

Future changes to private sector defined benefit transfers

A number of stakeholders raised the issue during the consultation of allowing full or partial withdrawals direct from a defined benefit scheme, rather than an individual first needing to transfer to a defined contribution scheme. The argument being that requiring members first to transfer to defined contribution schemes creates additional unnecessary burdens and that allowing full or partial withdrawals from defined benefit schemes would better enable the pensions industry to provide the pension products that their members want. The Government intend to consult further on this issue.

Oral Answers to Questions

George Osborne Excerpts

Tuesday 24th June 2014 Commons Chamber

[Chris White (Warwick and Leamington) (Con)]

12. What recent assessment he has made of the effect on the economy of the level of employment.

[The Chancellor of the Exchequer (Mr George Osborne)]

There are more people in work than ever before, with the latest figures showing the fastest increase in employment since records began. Today we have the very welcome news that Abu Dhabi will be investing £1 billion in building new houses in Manchester. That is a step towards it becoming the northern powerhouse I want to see, and it is a £1 billion vote of confidence in our long-term economic plan.

[Mr Harper]

Between 2003 and 2008 the Labour Government did create jobs, but unfortunately less than 10% of them benefited British citizens. Since this Government have come to power, through our skills, immigration and welfare policies over three-quarters of the 1.4 million new jobs have benefited British citizens. Is that not a long-term economic plan of which to be proud?

[Mr Osborne]

My hon. Friend is absolutely right, and I pay tribute to his contribution in making sure that the jobs that are being created in this recovery are jobs that British people have the skills and incentives to take. It is heartening that three-quarters of these jobs are going to UK citizens, as opposed to the truly staggering record of the last Government, when less than a quarter were taken by British citizens.

[Chris White]

Is my right hon. Friend aware that there has been a 59.5% fall in the number of jobseeker’s allowance claimants in Warwick and Leamington since April 2010? Also, recent figures show that a record number of companies were formed in Leamington Spa in the first quarter of this year. Will the Chancellor pay tribute to the local council, local chambers of trade and commerce and the local businesses that have made this possible, and will he outline what more can be done to further increase support for businesses in increasing employment?

[Mr Osborne]

I certainly pay tribute to the local council and local businesses who have worked with the excellent Member of Parliament, my colleague—[Interruption.] Yes, my hon. Friend has done remarkable work in bringing down the number of people claiming JSA by 60% since this Government came to office, and of course we will go on supporting businesses locally with important infrastructure, with the employment allowance and with awards. As I am sure my hon. Friend will be aware, Dennis Eagle, one of the companies in his constituency, has just been awarded a grant under our advanced manufacturing supply chain initiative, so we are backing manufacturing in the midlands, and backing his constituents all the way.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Sixty percent is a very interesting statistic. Does the Chancellor accept that the number of young people unemployed for more than 12 months has risen by 60% since he became Chancellor?

[Mr Osborne]

Youth unemployment is down 100,000 over the last year, and in the hon. Gentleman’s constituency the claimant count is down by 30%. I would have thought he would be welcoming that.

[Jack Dromey (Birmingham, Erdington) (Lab)]

When a proud Kingstanding dad of a newborn baby son tells me he has been on zero-hours contracts for two years and cannot plan from one week to the next, and says “Do them up there”—the Government—“get what life is like down here?”, and when a proud Stockland Green mother caring for her disabled son says, “My husband’s been made redundant twice in the last three years, with each new job less secure and on a lower rate of pay,” and adds, “What planet does the Chancellor live on?”, what does the Chancellor have to say to them?

[Mr Osborne]

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

[Mr Andrew Tyrie (Chichester) (Con)]

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

[Mr Osborne]

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

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

Is it not the truth that people in employment have seen their living standards fall year on year under this Chancellor? So can he tell us, will working people be better off next year than they were in 2010—yes or no?

[Mr Osborne]

The many thousands of people who are getting jobs in the hon. Lady’s area are better off, and of course—[Interruption.] Let me explain to the shadow Chancellor: if you bring the British economy to its knees, if you have the deepest recession for 100 years, if you preside over the biggest banking crisis in our history, you make this country poorer. But it is by fixing those problems, by working through our long-term economic plan, that we are going to make the country richer again.

[Mr Gareth Thomas (Harrow West) (Lab/Co-op)]

2. What recent assessment he has made of the level of bank lending to businesses since May 2010.

--- Later in debate ---

[Sir Richard Ottaway (Croydon South) (Con)]

3. What recent assessment he has made of the potential effect of increasing tax on businesses on public finances.

[The Chancellor of the Exchequer (Mr George Osborne)]

Government analysis has shown that high corporate taxes have a negative impact on investment, jobs and growth, so we have cut the corporation tax rate from 28% to 21%. Next year, it will fall to 20%, the joint lowest rate in the G20. Increasing corporation tax, as some propose, would damage the economy, cost jobs and drive away investment. It is anti-business and we will not do it.

[Sir Richard Ottaway]

I welcome that answer. There is growing evidence that, in a number of sectors where we have cut taxation, revenues are starting to rise. Does my right hon. Friend agree that those proposing increases in taxes are doing so for purely ideological reasons and because they are engaging in the politics of envy?

[Mr Osborne]

Whatever their motivations—I think my right hon. Friend is right—we are absolutely clear about the results. It will put people out of work and ensure that investment does not come to Britain. We are against plans to increase corporation tax. Indeed, I think that most people from around the world would look on in bemusement if Britain were to increase its business taxes, as the Opposition propose. To come to the point, the Treasury and Her Majesty’s Revenue and Customs are now providing more dynamic modelling of the effect of tax cuts on investment and growth, and cuts in corporation tax and fuel duty are shown to have positive impacts on the economy.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

High profile companies operate schemes that lead to the UK economy losing out, and not benefiting to the fullest extent. Is the Chancellor aware that Google AdWords is de-ranking small firms if they do not stump up substantial funds? It means not only that Google’s profits go up, helped by its tax arrangements, but that the profits of small firms, such as those in my constituency, go down, and the Exchequer is the net loser. Will he please discuss that with his colleague, the Secretary of State for Business, Innovation and Skills?

[Mr Osborne]

I will make a general point, which is that the internet has provided an enormous opportunity for many small businesses, because it has dramatically cut distribution and start-up costs and created all sorts of opportunities that did not previously exist for small businesses in Britain. If we believe in free markets and technological change, we should believe in the innovation that that brings. Specifically on the tax issue, we are working internationally—this cannot be done in one country—to ensure that the international corporate tax system reflects the digital economy and international business of today. We are helping to fund that OECD work, and we are expecting the first conclusions this autumn.

[Mr Marcus Jones (Nuneaton) (Con)]

Employment is up substantially in my constituency of Nuneaton, and unemployment has dropped 20% in the past year. Does my right hon. Friend agree that it would be absolute suicide to increase employers’ national insurance contributions, and can he rule that out as part of our long-term economic plan?

[Mr Osborne]

My hon. Friend has done some fantastic work with local businesses to increase jobs in Nuneaton and to ensure that small businesses expand. He is absolutely right that the Opposition’s plans for an increase in corporation tax, which they talk about openly, and for a jobs tax, which they talk about secretly, would be a double whammy that would put people out of work in his constituency.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Is the Chancellor aware that most people do not mind paying tax if it is fair and transparent and if everyone pays their fair whack? When will he ensure that those people who avoid taxation actually pay it?

[Mr Osborne]

We have put a huge effort—I pay tribute to the Exchequer Secretary who has led this work—into ensuring that we collect the taxes that are due. As a result, many billions of pounds more in taxes are collected. We are eliminating abuse that existed before we arrived, such as that involving stamp duty, and we set our tax rates fairly. We do not have a situation, as we did under the previous Government, where people in the City were paying lower tax rates than the people who cleaned for them.

[Steve Baker (Wycombe) (Con)]

4. What steps he is taking to ensure future stability in the housing market.

[The Chancellor of the Exchequer (Mr George Osborne)]

Our economic plan is about stability and security, so we are taking two steps on housing. First, we are building more homes, so that supply better matches demand. The Government’s reforms mean that housing starts are now at a six-year high. Secondly, we have given the Bank of England the responsibility and the tools to deal with any financial risk associated with the housing market, and I am clear that the banks should not hesitate to use those new powers if they think it is necessary to protect financial stability.

[Steve Baker]

On 19 May, The Telegraph reported that house prices jumped £10,000 in five weeks when the Bank of England threatened to cap mortgages. Will my right hon. Friend take steps to ensure that the Bank does not inadvertently promote financial instability when it exercises those powers?

[Mr Osborne]

I do not think that the Bank is doing that. We have taken a big step forward in this Parliament to give the Bank of England macro-prudential tools to intervene in areas such as housing if it thinks that there is a financial risk. Clearly, these things did not exist before, which is one of the reasons why the economy was in the mess that it was in when we came to office. At the Mansion House, I offered the Bank of England new direct powers to impose limits on loan-to-value and loan-to-income ratios. It is, of course, entirely up to the Financial Policy Committee, acting independently of the Government, to deploy any of its tools if it sees risks developing.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

The greatest threat to stability in the housing market is the mismatch between supply and demand. The House knows what the Chancellor has done to stoke up demand, but supply is at its lowest level since records began—fewer than 150,000 units. I heard what the Chancellor said in his initial reply. What more is he going to do to boost supply in the housing market?

[Mr Osborne]

Housing starts are now at their highest since 2007, and we have seen an increase in housing starts and planning permissions this year. I was with the hon. Gentleman in his constituency just the other day, talking about what we could do to get more housing going in his part of London on a brownfield site that he knows has been left derelict for many years. He was working very co-operatively with me then, but perhaps the Chamber of the House of Commons brings out a more adversarial encounter.

[Tim Farron (Westmorland and Lonsdale) (LD)]

My right hon. Friend the Chancellor is right to say that meeting demand with supply is absolutely critical. Given that meeting that demand means 3 million new homes over the next 10 years and that the private sector built only 180,000 houses a year, at best, during the height of the housing boom in the 1990s, does he agree that public investment is needed in social rented housing, in the private sector and in the public sector, if we are to meet the 3 million target?

[Mr Osborne]

I do agree with my hon. Friend. We need to ensure that planning is reformed, and we have done that. It was a controversial decision, but as a Government we have pushed that through, and planning permissions are up. We need to create incentives for the private sector to build homes, and Help to Buy has done that. But we also need to go on building social housing, and as he well knows, the coalition Government are delivering the largest programme of social housing for a generation.

[Andrew Gwynne (Denton and Reddish) (Lab)]

Does the Chancellor seriously believe that taxpayers subsidising mortgages on properties worth £600,000 is really leading to stability in the housing market?

[Mr Osborne]

I find it extraordinary that the Labour party is against Help to Buy, which is assisting those who are on low and middle incomes to get into the housing market. The great majority of those homes are outside London and the south-east. Almost none of them has been bought at £500,000 or £600,000, as the hon. Gentleman says, and what we are actually seeing is that the homes that are being built and bought are below the national average. So instead of carping about Help to Buy, Labour should get behind it.

[Mark Garnier (Wyre Forest) (Con)]

A key component of the financial crisis was a debt-fuelled housing bubble. The Governor of the Bank of England confirmed to the Treasury Committee this morning that a failure of regulation and macro-prudential policy was instrumental in that crisis. Is my right hon. Friend confident that the measures that he has introduced, including the new regulatory framework as well as the Financial Policy Committee, will succeed in heading off any future housing bubble-inspired crisis?

[Mr Osborne]

The Bank of England now has very powerful tools to deal with the kind of risks that we saw develop in 2006 and 2007, with such catastrophic consequences for our banking system and for our economy. The new powers that it will receive—subject, of course, to parliamentary approval—on being able to limit loan-to-income ratios and loan-to-value ratios for every mortgage or, indeed, as a percentage of mortgage portfolios, are very powerful tools. It is up to the Bank of England to make independent judgments about when to deploy them, because, as we have learnt with such monetary and macro-prudential policies, it is better that the politicians stay out of it.

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

Under this Chancellor, we have had the lowest level of house building in peacetime since the 1920s. The Financial Times reported a few weeks ago that the Chancellor is “relaxed” about an early rise in interest rates to rein in our unbalanced housing market. Can he tell the House how much a 1% rise in interest rates would add to the average mortgage bill?

[Mr Osborne]

I am not going to comment on interest rates because, as the right hon. Gentleman should remember, the Bank of England is independent, and it is for the Bank to make its judgment. Let me pick him up on what he says about housing. I absolutely believe that we need to build more homes, and housing starts are now more than double what they were in the last year of the Labour Government, in whose Cabinet the right hon. Gentleman sat. If he supported our planning reforms rather than opposed them, if he supported our approach to spending, which has enabled us to pay for the new social housing, and if he backed Help to Buy, he would have a bit more credibility when he stood at the Dispatch Box. As it is, I prefer to listen to the Labour leader’s speechwriter, who said this week:

“I fell out with Ed Balls because Labour’s economic policy is nonsense.”

[Ed Balls]

The Chancellor used to boast that record low mortgage rates were a sign that his policy was working. Now, with the Governor warning of an early rise in interest rates as demand outstrips supply, the Chancellor is desperately trying to claim that higher interest rates would be a sign of success as well. Is not the truth that his failure to get house building moving in the last four years is the reason our housing market is so unbalanced and early interest rate rises are on the cards? As for the question about mortgages, let me answer by quoting the Chancellor, who said in the House of Commons that

“a 1% rise on the average mortgage bill would add £1,000.”—[Official Report, 6 December 2011; Vol. 537, c. 147.]

I can tell him that homeowners up and down the country will not be relaxed about that.

[Mr Osborne]

The shadow Chancellor has got into pretty desperate territory when he says that an exit from exceptionally loose monetary policy, implemented in the middle of a crisis, whenever that comes, is a catastrophe for the British economy. The truth is that under any Bank of England setting, if the right hon. Gentleman was in office, the fiscal policy would be out of control and interest rates would be higher than under this Government.

The Prime Minister and I paid an interesting visit yesterday to the right hon. Gentleman’s constituency, along with the next Conservative MP for Morley and Outwood, Andrea Jenkyns. I will tell him what we found: people who had been unemployed now in work; the number of apprenticeships in the constituency doubled; and the Coca-Cola plant, which we visited, putting more money into Britain. The recovery in Morley and Outwood and the rest of the country is the real thing.

--- Later in debate ---

[Julian Sturdy (York Outer) (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 the stability and prosperity of the economy.

[Julian Sturdy]

As we strive to close the north-south divide and continue to deliver faster growth for the north, what further steps is my right hon. Friend proposing to promote the area as an economic powerhouse to rival London and our global competitors?

[Mr Osborne]

Yesterday I had a very good meeting in Manchester with civic leaders from all parties and with universities from the north of England to discuss how we could improve the transport links across the Pennines and through Yorkshire and Lancashire and ensure that we have strong civic governance as well. Today’s investment by Abu Dhabi in Manchester is a good example of the confidence in the northern economy.

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

The House and the Chancellor should know that the jury has just delivered its verdict and the Government’s former director of communications, Mr Coulson, has been found guilty of conspiracy to hack phones. Does the Chancellor now accept that it was a terrible error of judgment for—

[Ed Balls]

Does the Chancellor accept that he has brought the office of the Chancellor and the Treasury into disrepute by urging the Prime Minister, for his own reasons, to bring Mr Coulson into government? Has the Chancellor not damaged his own reputation and that of the Government?

[Mr Osborne]

Obviously the verdict has been announced while we have been doing Treasury questions. I will go away and study it, and of course if a statement is appropriate from me and the Prime Minister, there will be one—not in Treasury questions, when we are talking about the economy. May I say to the right hon. Gentleman that the person who worked alongside Damian McBride is no person to give lectures on anything?

[Mr Philip Hollobone (Kettering) (Con)]

T2. According to the Department for Transport, for Kettering’s sustainable urban extension to be sustainable a new road junction on the A14, junction 10A, costing £39 million, needs to be provided. Despite the best efforts of local people with numerous Departments, this funding has not been forthcoming. Would the Chancellor be kind enough to set up a meeting for local people with the Commercial Secretary to the Treasury so that funding for this vital infrastructure can be secured?

[Mr Osborne]

I am certainly aware of the importance to local people of this project, and I know that my hon. Friend has been speaking to the Department for Transport. I am of course happy to arrange for him to meet the Commercial Secretary, and I know there is also a bid in to the single local growth fund, on which we will be making an announcement in the coming weeks. May I also say that my hon. Friend has been a doughty champion of his constituents and of businesses in his constituency?

[Kate Green (Stretford and Urmston) (Lab)]

T3. The rate of employment of disabled people is approximately 30% lower than that of non-disabled people, and 650,000 more disabled people are required to look for work as a result of welfare reforms since 2008. The Chancellor of the Exchequer has spoken of his ambition of achieving full employment. Is he confident that the Government have a strategy sufficient to close this gap, as that will be essential to achieving that goal?

[John Pugh (Southport) (LD)]

T6. May I congratulate the Chancellor on his excellent HS3 proposal? It follows on from an equally visionary plan from the Deputy Prime Minister—in the previous Government. How does the Chancellor’s plan exceed Lord Prescott’s ambition?

[Mr George Osborne]

I am sorry, but when the hon. Gentleman was talking about an excellent Deputy Prime Minister I assumed he was talking about the leader of the Liberal Democrats rather than John Prescott—perhaps the hon. Gentleman was just being ironic about Lord Prescott. Lord Prescott was on the television yesterday boasting that he had set out a plan in 2004, and then someone pointed out that nothing had happened to his plan since. We are talking about improving the links from the Greater Merseyside region across Manchester and Leeds to Hull, and indeed across all parts of the north. High-speed rail is part of this, but it is only part of it: this is also about solving local bottlenecks, such as with the money we are putting into the M62, and about speeding up the commuter trains, which is what the northern hub is all about. This is a coherent plan to back a northern powerhouse.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

T4. Despite the Chancellor’s boasts, the former Tory Chancellor admitted recently that people have “not yet felt any sense of recovery”.Does this Chancellor agree with him, yes or no?

[Mr Osborne]

I agree with the previous Deputy Prime Minister, John Prescott, who said that Labour gets “smashed on the economy”.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

T8. Many trains now take longer to go from Liverpool to Manchester to Leeds than they did in the 19th century, so I welcome the Chancellor’s comment on HS3, but may I ask him to look particularly at how we can improve wider transport connectivity, not just an HS3 line?

[Mr Osborne]

High-speed connectivity across the Pennines is of course an important component of having the northern powerhouse, but it is also important to improve transport links within Lancashire, to Blackpool and other such places. We are going to be introducing electric trains on some of these lines in Lancashire from December, which will improve the quality of travel as well as the speed. As I said yesterday, when we also put in the franchise for the Northern rail line, we will be seeking to try to get better and more modern carriages, because one of the experiences of people living in the north is a feeling that the carriages are not as good as those in the south of England, and we want to address that in the franchise.

[Dan Jarvis (Barnsley Central) (Lab)]

T5. Next year will mark 100 years since the execution of Edith Cavell, the brave nurse who saved countless lives during world war one. In this important year of remembrance, will the Chancellor join me and the 110,000 people who have signed an online petition and urge the Royal Mint to mark the anniversary by including Edith Cavell on its list of designs for the new £2 coin, so that we can honour all those who served and made sacrifices for our country in different ways a century ago?

[Mr Osborne]

As well as being Chancellor of the Exchequer, I am Master of the Royal Mint. I can therefore address the hon. Gentleman’s question directly. I am certainly aware of the campaign, and I of course honour the bravery and sacrifice of Edith Cavell. There will be a whole series of coins to commemorate the first world war, some of which will be in general circulation and some of which will be for collectors. Like previous Governments, we act on the advice of a Royal Mint advisory committee on these topics, but I will directly take up with it the suggestion of marking Edith Cavell’s sacrifice and make sure that it is honoured in an appropriate way.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

T9. Pembroke refinery, which employs 1,100 people in my constituency, is 50 years old this year. Will the Chancellor assure the operator, Valero, that it has the full support of the UK Government and that the UK is a good place for refining to remain?

[Mr Osborne]

I can absolutely give my hon. Friend and his refinery that assurance. Refineries such as the one at Pembroke play a key role in the UK’s energy security and provide many thousands of skilled jobs across the country. Our energy policy enables companies to know that investment is coming in, and therefore to make investment decisions for the future. I hope that Valero will look at the British economy and see that it is recovering and on the rise, and that that, with activity increasing, will mean more requirements for refining capacity.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

T7. May I remind the Chancellor that it was actually Daniel Adamson, who envisaged the Manchester ship canal in 1882, who talked about an economic powerhouse of the north from the banks of the Mersey estuary through to the North sea at Hull? That vision’s time has come, but it will take leadership, guts and gravitas locally and nationally, and on both sides of the House, to create a powerhouse that will rival any on the global stage.

[Mr Osborne]

I agree with the hon. Gentleman. One of the refreshing things about the discussions we had yesterday was that they took place on a genuinely cross-party basis. The Labour mayor of Liverpool, Joe Anderson, came to the speech I gave and met me and the Prime Minister to talk about what we could do, as did the civic leaders in Manchester. We are working across the political parties, as northern MPs, to bring this about, and of course the ship canal could be part of the exciting Atlantic gateway project, which would create regeneration and jobs along the course of that incredible waterway.

[Neil Carmichael (Stroud) (Con)]

T10. With manufacturing growing at an impressive rate, as I saw on my recent visit to ABB in my constituency, what steps is the Chancellor taking to ensure that manufacturing growth remains sustainable?

[Mr Osborne]

We are taking steps to reduce business taxes, when others would put them up. We are also taking steps to ensure that energy costs for manufacturers are lower; we set out a package in the Budget. Above all, we are creating a country in which people want to invest and create jobs because they have confidence in our long-term economic plan.

[John Cryer (Leyton and Wanstead) (Lab)]

The number of tax compliance inspections of companies by Her Majesty’s Revenue and Customs is falling, rather than rising. Why is that the case?

[Angie Bray (Ealing Central and Acton) (Con)]

The Chancellor of the Exchequer will recall that we met a group of McDonald’s apprentices and an Ealing McDonald’s franchise owner, Atul Pathak, last week to celebrate the announcement by McDonald’s of 8,000 new apprenticeships across the UK. Does my right hon. Friend agree that the Government’s initiative on supporting apprenticeships has been one of our great success stories—good for the economy and good for youth unemployment?

[Mr Osborne]

We had a fantastic meeting with McDonald’s employees, at which my hon. Friend was present, and it was heartening to hear about their confidence in their economic future. It is remarkable that we have had an hour of Treasury questions, during which we have discussed youth unemployment, and there were Department for Work and Pensions questions yesterday, but not a single Labour MP has mentioned the welfare plan that their leader published last week. That shows why the Labour economic policy lacks credibility even with Labour MPs and why the Labour leadership is in crisis.

[Ms Margaret Ritchie (South Down) (SDLP)]

Unemployment is bringing despair to a generation of young people in Northern Ireland, where nearly one in four young people are unemployed and have to seek their prospects elsewhere. Has the Chancellor had any discussions with the Secretary of State for Northern Ireland? If so, what plans are in place to address this particular issue, as youth unemployment poses a risk to peace and the political process?

[Mr Osborne]

I certainly have regular discussions with the Secretary of State for Northern Ireland, who is very focused on Northern Ireland’s economic development. Of course, I also meet the Northern Ireland Executive. We have plans to increase investment through the enterprise zone, and I commend the work of people across Northern Ireland to bring new businesses to Northern Ireland. We have more work to do on fixing the banking system in Northern Ireland, which remains impaired by what happened a couple of years ago, but I assure the hon. Lady that we will work together to deliver an economic recovery of real strength in Northern Ireland.

[Mr Simon Burns (Chelmsford) (Con)]

Does my right hon. Friend accept that, as a result of the long-term economic plan, unemployment in Chelmsford over the past 12 months has fallen by just over 30% and, equally important, youth unemployment has fallen by just over 36%? Does he accept that any Opposition Member who thinks we should abandon that plan is a believer in voodoo economics?

[Mr Osborne]

I would suggest that it is not clear what Labour’s economic policy is. The shadow Chancellor wants to tax, borrow and spend more, but he is keeping his head down because he can see the car crash—he has experience of those—looming with the Labour leader, while the Labour leader is talking about prices and incomes policies and an anti-business agenda. It is totally muddled and means that if Labour ever got the chance again, it would put Britain back into crisis.

[Clive Efford (Eltham) (Lab)]

The Chancellor talks about credibility in economic policy, yet he consistently sets his face against having his economic policies, along with those of the other major parties—certainly those that would take part in television debates before the next general election—put before the Office for Budget Responsibility so that the electorate can understand what parties are saying about economic policy and be better informed when they vote.

[Mr Osborne]

As Robert Chote has set out, there would be very serious implications if the OBR, a new institution which, of course, the Labour party did not support when in government—[Interruption.] I remember proposing it time and again as shadow Chancellor and hearing Ministers say at this Dispatch Box that it was not a good idea. The proposal would make big changes to the role of the civil service as well as that of the OBR. Robert Chote is right to say that, while we can consider it in the next Parliament:

“To embark on this exercise in a rush, or with insufficient resources, could be…very damaging to the OBR.”

[Mr Speaker]

Very briefly, Greg Mulholland.

[Mr Speaker]

Put the long version in the Library.

[Mr Osborne]

I am happy to look into the freedom of information request, but we have been working very closely with the Business Secretary on these proposals, and I would hope that the hon. Gentleman would welcome the legislation we are introducing to make sure that local pubs and publicans get a good deal.

[Mr Speaker]

Last but not least, Lucy Powell.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

May I take this opportunity to welcome today’s announcement of the partnership between Manchester city council and the Abu Dhabi United Group to build 6,000 new homes in my constituency? Does the Chancellor agree that that shows that when we give freedoms, powers and budgets to good local authorities, they can increase housing supply in their areas and build the economy locally?

[Mr Osborne]

I certainly join the hon. Lady in commending the work that Manchester city council has done. One of the things I talked about yesterday was what we can do to make sure that cities such as Greater Manchester have more powers, perhaps through elected mayors. We should also pay tribute to Lord Deighton, who is in Abu Dhabi at the moment, for negotiating that deal. There was a good partnership between the city council and the Treasury, and it is fantastic news that Abu Dhabi United Group is making that big investment in the UK.

[Ed Balls]

On a point of order, Mr Speaker.

The Economy and Living Standards

George Osborne Excerpts

Thursday 12th June 2014 Commons Chamber

[Ed Balls]

The argument that I am making is that if we as a House—those of us on the left and on the right—are to face up to the challenge of delivering more and better jobs for working people and if we are to see off the pressures for isolation and withdrawal, we cannot take the wrong-headed approach either of denying that there is a problem or of appeasing those who would try to walk away. We need a Queen’s Speech that rises to that challenge. My point is that, in putting all its energy into Europe and the referendum, the Conservative party has the wrong strategy to deal with the challenge that we face.

[The Chancellor of the Exchequer (Mr George Osborne)]

Just so that we can be absolutely clear, will the right hon. Gentleman make it clear from the Dispatch Box that Labour will not offer a referendum on Britain’s membership of the European Union now or in the manifesto at the general election and will therefore vote against any private Member’s Bill that proposes one?

[Ed Balls]

We have said very clearly that we do not believe in an ever-closer Union. If there is any proposal to transfer powers to Brussels from London, we will have a referendum in the next Parliament. Our position is clear. We are not turning our face against a referendum. What we are turning our face against is a referendum that would destabilise our country and cause it to lose investment and jobs.

Hon. Members do not have to take my word for it: let me read the conclusion, a year on from the Prime Minister’s decision, of the Chancellor’s biographer in the Financial Times. He stated that Downing street’s three objectives for the referendum were

“to pacify Tory MPs, sap the momentum of the fringe UK Independence party and put the troublesome subject of Europe to sleep until the general election in 2015. On all scores, it failed.”

That must qualify as the understatement of the year. [Interruption.] I have given my view.

[Mr Osborne]

I ask the shadow Chancellor to answer the question that I put to him. Does he rule out offering, now or in the Labour manifesto at the general election, an in-out referendum on Europe, and will the Labour party therefore vote against any private Member’s Bill that is introduced?

[Ed Balls]

The answer is no, of course we will not rule that out, because we have a clear commitment that if there is any proposal to transfer powers, we will have an in-out referendum in the next Parliament. That is our position. I gave the Chancellor the answer once, he did not listen and I gave it to him again.

Is not the reality that the Prime Minister’s attempt to appease Tory Back Benchers has failed and that it has not worked very well with the Front Benchers either? Just a few months ago, just after the Budget, the last time we had such a debate, we had read stories in the newspapers about the Education Secretary trying to undermine the leadership ambitions of the Mayor of London—it was briefed, I believe, to The Mail on Sunday at a lunch. Last week, it was the Home Secretary who was targeted by the Education Secretary, this time to The Times over lunch. The first time, the Education Secretary explained that he was tipsy. He has obviously been on the sauce again. There is a pattern here: a rival to the Chancellor tops the “ConservativeHome” leadership poll and the Education Secretary is sent out to try to stop them at all costs. Now we know that when the Chancellor and the Education Secretary have a late-night chat about the Prevent strategy, they are talking about a rather different prevent strategy from the one that we are talking about. It is pretty clear who the Chancellor has tried to prevent through all his interventions.

--- Later in debate ---

[The Chancellor of the Exchequer (Mr George Osborne)]

I rise to support the Queen’s Speech and its many measures that back business, savers and hard-working people. The shadow Chancellor has come with a new catchphrase. He talked about a “long-term economic plan”. I think it is good; it might catch on. It has a ring to it, but I am sure I have heard it before. That is the problem with his entire speech: he could not utter the inescapable truth that Britain has a long-term economic plan, and that that plan is working.

We are attracting more investment than Germany and creating jobs at a faster rate than the United States. We are expanding more than four times faster than the Government the right hon. Gentleman admired in France, and growing faster than any major economy in the world. Of course, there is much more to do to build our exports, back our businesses, encourage savings, build homes, secure investment, build our economic infrastructure and rebalance our economy, and the Bills in this Queen’s Speech take us forward in that direction.

[Toby Perkins]

The Chancellor says that the economic plan is working, but who is it working for? It might be working for his friends who he used to go boozing with at the Bullingdon club, but working people in my constituency find that it is harder and harder every single month to make work pay. What will the Chancellor do to make work pay under his Government?

[Mr Osborne]

That is what is so revealing about the Labour party’s performance in the past half hour. The shadow Chancellor started by reading out the article in the New Statesman this morning and trying his piece on new politics, but within about 10 minutes it all descended into Bullingdon club jokes, and the hon. Member for Dudley North (Ian Austin) having to withdraw his comment. The shadow Chancellor then descended into the normal slapdash that we have got used to in the House. Incidentally, there is a striking echo of what went wrong with the Leader of the Opposition’s speech at the beginning of the Queen’s Speech debate. That is because he is unable to engage in the serious economic argument about what needs to happen in this country.

[Robert Halfon]

When a hard-working person in Harlow considers the economy, he will leave his house in the morning on the way to work probably knowing that his mortgage is low and fuel duty is frozen. When he gets to work he will see more people in work and more apprentices, and when he looks at his pay packet, he will see that his tax bill has been cut by hundreds of pounds.

[Mr Osborne]

My hon. Friend is right. By reducing income tax and increasing the personal allowance, by freezing fuel duty—something he campaigned on powerfully in this Parliament—and above all by having an economy that creates rather than destroys jobs, we are holding out the prospect of economic security and better prosperity for our country in the decade ahead. That is what we all want to secure.

[Several hon. Members]

rose—

[Mr Osborne]

I will give way in a moment, but let me make some progress. I know that about 50 Members want to speak in this debate—[Hon. Members: “Not on your side.”] Well, we will hear. No doubt Labour Members can all get up on their feet and repeat what they said last year .

I have done something that I know we are not supposed to do in this place, because I actually bothered to read what the shadow Chancellor said in the House last year. Here we are in the privacy of the House of Commons where no one is listening, but what were his pearls of wisdom? In this exact debate last year he issued a stark warning that the British economy would “flatline” unless we abandoned our plan immediately. Since he made that prediction, we have stuck to our plan and our economy has grown by more than 3%.

Last year in this debate the shadow Chancellor said that business investment would “stall”, but it has since grown by almost 9%. He told us that unemployment would rise, but since he made that prediction more than 800,000 new jobs have been created. He warned ominously that youth unemployment would rise too, but it is down by 100,000 over the past 12 months. From re-reading the speeches of the shadow Chancellor, I have discovered that he performs a very useful function. He is an infallible guide to the future performance of the British economy: whatever he predicts, we can be sure that the exact opposite happens.

[Mr Donohoe]

Will the Chancellor answer a simple question about employment? How many people are on zero-hours contracts?

[Mr Osborne]

I do not have the number the hon. Gentleman asks for here, but there were zero-hours contracts under the previous Labour Government and there are Labour councils that use zero-hours contracts. As those on the Labour Front Bench have pointed out, not all zero-hours contracts are bad. One measure in the Queen’s Speech that was not mentioned by the shadow Chancellor—indeed, he did not actually address the speech in his remarks—will ban exclusivity with zero-hours contracts. Labour had 13 years; the shadow Chancellor was in charge of economic policy for 13 years and could have taken such a step, but he did not. I suggest that Labour Members hold their tongues and come with the Government through the Division Lobbies as we do something about an abuse that they did absolutely nothing to crack down on.

[Christopher Pincher (Tamworth) (Con)]

On the topic of pearls of wisdom from the shadow Chancellor, does my right hon. Friend agree that his rather careful formulation that a jobs tax is not his argument was rather too clever by half? We did not hear from the shadow Chancellor a clear commitment that a jobs tax is not Labour’s policy now or at the general election.

[Mr Osborne]

My hon. Friend is right. We listened carefully, but like the Leader of the Opposition the shadow Chancellor did not rule out a jobs tax. Why? Because it is Labour’s tax of choice. That is what they did in government when they increased national insurance, and what they proposed at the general election. A couple of years ago the shadow Chancellor admitted that he would be minded to do that as a means of bringing order to the public finances—his weapon of choice is a jobs tax. That is Labour’s answer to jobs: tax them, destroy them, make people unemployed. That is why every Labour Government in history have left unemployment higher than when they entered office.

[Several hon. Members]

rose—

[Mr Osborne]

Let me make a little progress and then I will take more interventions. In a debate after last year’s Queen’s Speech—[Interruption.] I am talking about this year because last year the shadow Chancellor urged me to do something this year. In the conclusion to his speech last year, he said that the Chancellor should listen to the International Monetary Fund. He also said that

“a sensible and economically literate chancellor would heed the IMF’s advice.”

I have reflected on that advice, and I think I will listen to the IMF. I have its most recent statement from last week and it states that growth in Britain is projected to be

“the fastest among the major advanced economies.”

It says that the economy has rebounded strongly, that inflation has fallen rapidly, that growth is becoming more balanced, that we are moving towards an investment-led economy, and that that good macro-economic performance is expected to persist. It stated that the news coming out of the UK recently has been “pretty much all good”, in contrast to the shadow Chancellor’s predictions, which were pretty much all bad. It concludes that our fiscal policy—the deficit reduction plan that the shadow Chancellor bets his entire economic credibility on opposing—is the “anchor” of Britain’s stability and economic success. My answer to the right hon. Gentleman is this: I am listening to the IMF, the CBI, the chambers of commerce, the Institute of Directors, the Federation of Small Businesses and the OECD. Who on earth is he listening to?

[Helen Goodman (Bishop Auckland) (Lab)]

Will the Chancellor listen to the IMF on the housing market, of which he has made a total mess? House prices are rising by 20% in London, and there is negative equity in the north. Not one property was sold for £600,000 in my constituency. Will the Chancellor now abandon the stupid Help to Buy scheme, which goes up to £600,000 for new home owners?

[Mr Osborne]

I will come on to say something about the housing market, and I am the first to say that we must be vigilant about housing. But to get a lecture from the party that presided over the biggest housing boom and bust in British history—

[Ed Balls]

What?

[Mr Osborne]

The shadow Chancellor says “what?” He might forget what happened in 2007-08 when the banks almost went bust because they extended housing loans that people could not afford, house prices fell, housing starts went off a cliff, and the people of Britain paid the price of an economic policy predicated on the fact that there would be no more boom and bust. The people of Britain are living with the consequences of that policy. Will he just accept now that basing an economic policy on the prediction that there would be no more boom and bust was an error of judgment?

[Ed Balls]

Will the Chancellor like to tell the House how many people went into negative equity after 2007, and how that compares with the number of people—the tens of thousands—who were put into negative equity after the Conservative housing crash of 1989? If he is going to make these statements he ought to be able to make them stand up. While we are here, will he tell us—

[Madam Deputy Speaker (Dawn Primarolo)]

No, no, no. Mr Balls, sit down. Not “While we are here.” One point at a time.

[Mr Osborne]

The right hon. Gentleman’s argument seems to be, “My crash was better than your crash.” That is a brilliant argument. I will tell him the answer. He was going to remove a temporary scheme that protects people from mortgage costs when they become unemployed. I extended it year after year after year. I have extended it again in the Budget to make sure that people do not find themselves having their homes repossessed. Can I also tell him that the housing market fell by almost 20%? The price of houses fell and there were people at Northern Rock—[Interruption.] His argument is literally, “I’m sorry we messed it up, but you messed it up in the past as well.” That is an absolutely hopeless argument. I have learned the lesson from the terrible mistake—

[Ed Balls]

You were wrong.

[Mr Osborne]

I was wrong? This is the man who presided over the deepest recession in British modern history and the biggest banking crisis since the Victorian age. He has the nerve to get up and say to the team that is turning the country around that we got it wrong. The truth is that he is the person who got it wrong.

There was a very interesting observation this week by Charles Clarke, who was the Home Secretary when Labour were in office. This is what he said:

“we have rested a great deal on assuming that the Conservative strategy wouldn’t succeed, that ‘plan A’…would not work and that has proved to be an unwise judgment because in fact, the Conservatives have succeeded in getting the economy onto a more positive path which leaves us”—

the Labour party—

“very little place”.

[Alison McGovern]

I think the Chancellor gave himself away at the beginning of his speech when he described “long-term economic plan” as just a catchphrase. He said he would close the budget deficit and he has not. If his policies are such a success, why not?

[Mr Osborne]

It is not a catchphrase; it is a plan that has cut the claimant count in the hon. Lady’s constituency by 45%. That is a plan that is working. The budget deficit has been halved. If her argument is that we should be cutting faster or trying to get the deficit down faster, that is a novel argument because it is not one I remember being made at any one of the economic debates when she and the rest of the Labour party trooped through the Division Lobby against every single change we have made to try to bring the public finances under control.

[Several hon. Members]

rose—

[Mr Osborne]

I will give way to my hon. Friend the Member for Portsmouth North (Penny Mordaunt) who made an absolutely brilliant opening to this Queen’s Speech debate.

[Penny Mordaunt (Portsmouth North) (Con)]

I can understand why the shadow Chancellor does not want to congratulate those on the Government Front Bench. Does my right hon. Friend agree that the people in Portsmouth—those who have taken a risk and set up a business, and the 2,000 people who have got back into work—ought to be praised for their achievements rather than have them dismissed by the Labour party?

[Mr Osborne]

I completely agree with my hon. Friend. The progress being made in Portsmouth—the jobs created, the businesses set up and the support people get from their Member of Parliament—is an example of how the long-term economic plan is working for the people of Portsmouth, and how we need to go on working with that plan, rather than abandoning it.

The hon. Member for Wirral South (Alison McGovern) asked me what we can do to get the budget deficit down. I suspect that even the shadow Chancellor does not know. He tabled a motion today, although he did not speak to it. The cost of implementing it would be £14 billion. There is not a single measure in it that would reduce public spending or pay for that £14 billion price tag. It is completely incredible.

[Several hon. Members]

rose—

[Mr Osborne]

I will make a little progress and then give way.

That speaks to a broader point. The shadow Chancellor is not a naturally retiring type. He likes to get out there and meet people. He likes to go to supermarkets and shake people’s hands. The truth, however, is that he has gone quiet in recent months and we do not see him so much on the television or hear him on the radio. I think that is because he knows—or rather his party leadership knows—that they have lost the macro-economic argument. He is now losing the micro-economic argument within his own party. The Leader of the Opposition does not want to talk anymore about Labour’s spending and borrowing plans, because he knows they are very unpopular. Instead, there is a whole series of populist initiatives on price controls, incomes policies, bans on foreign investment, renationalisation, and wars on business and enterprise. The truth is that the shadow Chancellor actually spent a considerable period of time, in Opposition in the 1990s and then in office, trying to get his party to reject these kinds of things. He knows that they will lead to higher prices, lower incomes, less investment and fewer businesses.

In fact, the shadow Chancellor makes no secret, if we read between the lines of his speech today and his article in the New Statesman, of the fact that he is not in favour of trying to restrict the open economy, and that he values foreign investment coming into the country. The problem is that the message being given out by the leader of the Labour party is the complete opposite of that—it is in a completely different direction. He jumps on every single issue to make the argument, essentially, that we need a more closed economy and that there is a dangerous race to the bottom. The truth is that I think the shadow Chancellor and I agree that it would be a disaster for Britain to head down that route.

The shadow Chancellor has a macro-economic argument, which is that Britain should be borrowing and spending more, and, if necessary, increasing taxes to pay for it, but the Labour leader will not allow him to make that argument anymore, so he has gone completely silent. Normally, he is there right behind the leader of the Labour party, right behind his shoulder blades waiting to support him. Instead, he has learned a trick from his old friend the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown): when the Labour party is doing badly, losing by-elections and the like, stay quiet and disappear. That is what he has attempted to do in the past couple of months. The truth is that the threat that his economic approach represents—higher taxes, and borrowing that would destroy our public finances and push interest rates up—does not go away just because he goes away. That is the plan he would put into practice were he ever to walk through the doors of the Treasury again.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Before the Chancellor moves on, he was giving us a history lesson earlier but could we have some proper history? He was criticising the shadow Chancellor for the period when the Chancellor alleges things went wrong with the banks and lending. He himself, the present Chancellor, was urging less control and less regulation. Let us get that history right. Will the Chancellor address one issue: why is productivity failing to improve?

[Mr Osborne]

I agree with the hon. Gentleman that productivity is one of the challenges for the British economy. I have to say that if offered the choice in the early stages of a recovery between productivity improvements and increased job numbers, I would take increased job numbers because of the considerable human damage and the potential serious long-term economic damage that high unemployment can cause. I am enormously proud of the record of the British business community in creating those jobs, and of the people who have got those jobs and are holding them. I agree that we want to make our economy more productive. We do that by having an open economy where we welcome investment, support enterprise and support business. The Labour party’s policy proposals on prices, incomes, new restrictions on foreign investment, higher taxes on business and a higher corporation tax are all the wrong approach and would make our economy less productive.

[Several hon. Members]

rose—

[Mr Osborne]

I will give way to my hon. Friend the Member for North West Norfolk (Mr Bellingham) and then make some progress.

[Mr Bellingham]

Earlier my right hon. Friend mentioned Charles Clarke, who knows quite a lot about what is happening in Norfolk and will be aware that unemployment in my constituency has fallen by 660 over the last year. That is 660 families with jobs, a wage packet and hope for the future. Is my right hon. Friend aware that the vast majority of those jobs are either full time or in self-employment?

[Mr Osborne]

My hon. Friend is absolutely right: there has been a remarkable jobs story in Norfolk as well, supported by the economic investment we are putting into new roads in the county. I have spoken to the chamber of commerce there and seen its ideas for attracting more investment into King’s Lynn and other key centres, and I congratulate my hon. Friend on all he is doing to back business there.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

Does my right hon. Friend accept that his economic strategy has seen unemployment in my constituency fall by 25% over the last four years? The Government’s decision to grant a city deal to Plymouth will create 10,000 new jobs by releasing some of the land in the dockyard.

[Mr Osborne]

My hon. Friend is absolutely right. The city deal, which he championed and urged on us, has a real prospect of bringing more investment and jobs to Plymouth. It is great news that work is being created in that great city and I congratulate him on all the local leadership he is showing there.

[Several hon. Members]

rose—

[Mr Osborne]

I will take one more intervention from a Labour Member and then make some progress.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Before the Chancellor descends further into his self-congratulatory speech and quotes statistics about my constituency to me, will he confirm that the employment rate is still below pre-recession levels and that a third of the jobs in my constituency are below the living wage?

[Mr Osborne]

Well, yes, the employment rate is below what it was before the economy crashed and we had the deepest recession since the 1920s and ’30s, but the good news, as the hon. Lady will have noted, is that there has been a sharp rise in the employment rate in the last year—800,000 new jobs created. The employment rate now is very close to its pre-recession peak, so I would suggest that she should not make too many predictions on that front.

I am absolutely explicit that I want to get the employment rate up. I want to ensure that our schools are providing kids with the right skills, that we are creating more apprenticeships—one of the great success stories of this Government—and that we have more students coming out of our universities with the right graduate qualifications, so that we get our employment rate up even higher and achieve the goal of full employment in this country.

One of the risks that will face any economy—particularly one such as the United Kingdom’s, with a large number of financial services in it—is any risk from financial markets. As we begin to see the slow withdrawal of monetary stimulus here in the UK and in the United States, and with the eurozone heading in the other direction, we might expect to see an increase in market volatility. That is all the more reason why the financial markets in foreign currencies, commodities and fixed income should be fair and effective. Tonight at Mansion House and here in the House of Commons, I want to set out briefly the steps that the Governor of the Bank of England and I are taking.

We will bring forward enhanced criminal sanctions to punish and deter market abuse, but we will not opt into European rules, instead developing our own tough domestic powers. We will extend the senior managers regime proposed by the Parliamentary Commission on Banking Standards—so ably chaired by my hon. Friend the Member for Chichester (Mr Tyrie)—so that it covers the branches of foreign banks. We will also use the legislation we asked Parliament to pass in the wake of the LIBOR scandal to regulate further benchmarks in areas such as foreign exchange, fixed income and commodities. The new review that the Governor and I are establishing, chaired by the former deputy managing director of the International Monetary Fund, Minouche Shafik—now the deputy governor of the Bank of England—and involving the Treasury and the Financial Conduct Authority, will provide further recommendations.

Let me be absolutely clear: the integrity of the City matters to the economy of Britain. Markets here set the interest rates for people’s mortgages, the exchange rates for our exports and holidays, and the commodity prices for the goods we buy. We are going to deal with abuses, tackle the unacceptable behaviour of the few and ensure that markets are fair for the many who depend on them. We are not going to wait for more financial scandals to hit; instead we are going to act now and get ahead. We will take these steps to build resilience in our financial markets and our economy.

[Mr Julian Brazier (Canterbury) (Con)]

I greatly welcome those steps. Will my right hon. Friend reassure the House that enforcement will be based on simple principles of integrity and not create a climate of box-ticking of the kind that we saw with the now discredited Financial Services Authority, which was introduced by the last Government?

[Mr Osborne]

My hon. Friend is absolutely right that what we need in our regulation is the exercise of judgment, rather than just process. One of the biggest errors of judgment was the abolition of the Bank of England as an authority that would oversee systemic risks in our economy and monitor levels of debt, and the creation of the tripartite regime, which we have abolished.

One of the new features of the financial regulation landscape is the Financial Policy Committee, which is the group, independent of the Government, that looks at systemic financial risks, seeks to spot asset booms and has the tools to do something about them—something that, sadly, was completely lacking six or seven years ago. We have given the Financial Policy Committee far-reaching powers over capital ratios and mortgage standards, with powers to recommend limits on loans-to-income and even loans-to-value. That is the answer to the question about housing and the impact of housing debt on our financial system and families. I am clear that the Bank of England should not hesitate to use those powers, and any others we make available, should it see serious risks emerging in the housing market. That is a fundamental improvement in the resilience of the British economy.

I agree that we need more homes as well, and the changes to our planning system are now increasing housing supply. Planning permissions and starts are now at a six-year high. The fundamental answer to the challenge of the British housing market is to see more homes built. Frankly, I would ask the Labour party, which opposed the planning changes when they were introduced a couple of years ago, to reconsider its position and confirm that they will remain in place. And by the way, as the hon. Member for Bishop Auckland (Helen Goodman)—who I think sits on her party’s Front Bench—said that Labour should get rid of the Help to Buy scheme, let me tell her that it is helping families across the country, overwhelmingly outside the south-east of England, to buy homes that are well below the national average house price. I am proud that this Government are helping people with the aspiration of buying their own home and providing the support for families who can afford it to get on the housing ladder.

[Ed Balls]

May I ask for a clarification of what the Chancellor is announcing to the House today and at Mansion House later? He wrote to the Governor of the Bank of England setting the remit for the Financial Policy Committee as recently as March. The Governor of the Bank of England wrote back to the Chancellor with his comments on the remit on 31 March. Is the Chancellor now, a couple of months later, having to add to, revise or supplement that remit? Is that a reflection of the fact that there is widespread and growing concern, including in the Bank of England, that what is happening in the housing market is destabilising, and does he regret that he did not face up to these issues earlier?

--- Later in debate ---

[Mr Osborne]

What the remit that I sent to the Financial Policy Committee said is that we need to be vigilant about risks emerging in the housing market. Last week the IMF said very clearly that there is not a credit-fuelled boom today, but we need to be vigilant, and I completely agree with that. More than that, I have created—Parliament legislated for—the system of that vigilance. The Financial Policy Committee did not exist before this Government came to office; there was no such thing as the remit that the shadow Chancellor has just referred to. We have given the Financial Policy Committee tools to look at mortgage standards, alter capital ratios and make recommendations on loan-to-income ratios and loan-to-value ratios, and I am clear that it should not hesitate to use them if it judges that to be necessary. That message goes out loud and clear from this Dispatch Box and it will go out loud and clear at Mansion House tonight.

[Mike Thornton (Eastleigh) (LD)]

I wonder whether the Chancellor is aware that when I worked for Northern Rock, I used to visit Newcastle and we used to see members of the Financial Services Authority leaving the chief executive’s offices and thanking him for his advice on how to do their jobs.

[Mr Osborne]

My hon. Friend brings his experience to bear in the Chamber. Northern Rock was the epitome of what went wrong—the 125% mortgages. It is the important link between rising house prices and mortgages that families find unaffordable if prices fall or they lose work and the risks to the balance sheets of banks that came together in a toxic combination in 2007 and 2008. The Financial Policy Committee exists to make sure that we spot those risks in advance.

[Several hon. Members]

rose—

[Mr Osborne]

Let me make a little progress, as I know many Members want to speak. I want to cover a couple of the key legislative measures in the Queen’s Speech.

I hope that the Bill to support small businesses and enterprise will receive support from across the House, as it will help those small businesses with their exports, reduce tribunal delays and open up even more Government procurement to them. We are, of course, going to help smaller businesses—and indeed all businesses—by taking under-21-year-olds out of the jobs tax altogether. That is in stark contrast to the jobs tax plan that the Labour party is developing.

Then there is the tax-free childcare Bill—a really important measure to help hard-working families. In this Parliament, we have already extended the free nursery care available to parents of three and four-year-olds to 15 hours. From this September, 260,000 two-year-olds from low-income families will be eligible for free hours as well. Now we are taking another big step forward in helping working parents. Once we pass this new Bill, all families with children under 12 will, in effect, be able to get tax relief for their child care costs—up to £2,000 of help every year for every child. That is a huge boost to working families in this country, and this tax-free child care is affordable only because of the difficult decisions we have taken to bring the public finances under control.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

The Chancellor mentioned help to small businesses, but surely the help they really need is an increase in net lending to them from the banking sector, yet it is continuing to fall. How does the Chancellor explain that in the light of the funding for lending scheme, which simply does not appear to be working?

[Mr Osborne]

Funding for lending is now, of course, skewed away from mortgages—a decision taken by the Governor of the Bank of England and me before Christmas—precisely to start to apply some macro-prudential controls to the housing market. It is heavily skewed towards small business lending in order to address the issue of an impaired banking system, still deeply damaged by what went on six or seven years ago. The good news is that a huge amount of progress has been made since this debate last year and since last year’s Mansion House speech; we are undertaking a major restructuring of the Royal Bank of Scotland and, of course, starting to return Lloyds to the private sector. All of that will help make sure that our financial system is functioning properly and supporting businesses that want to grow and expand.

[Ian Lucas]

Will the Chancellor give way?

[Mr Osborne]

Let me make this final point before taking another intervention.

I want to conclude by mentioning a measure that the shadow Chancellor—or, indeed, the Leader of the Opposition, which is pretty revealing—did not mention at all. I refer to the pensions tax Bill, which will give people real choices about what they do with their defined contribution pension pots, and ensure that they get free and impartial guidance on those choices. We have spent the last three months in consultation, and I have met pension providers and many consumer groups. The consultation closed yesterday, and I will announce next month the details of how the freedoms and the guidance will work. We will set out the implications for defined benefit pensions, too.

We want an economy in which effort is rewarded and those who save are trusted with their pension savings in retirement. We will enshrine all this in law; it heralds a revolution in pensions based on this simple principle: “you earned it; you saved it; now you have control over your own money”. Because it is such a simple principle, because it involves trusting people and because that is popular with people, the Labour Opposition have not got a clue about how to respond to it. From the moment that the Leader of the Opposition rose to give his dismal, pre-scripted reply to the Budget, they have been completely pole-axed by it.

[Ian Lucas]

rose—

[Mr Osborne]

Perhaps the hon. Gentleman will tell me whether he will support this Bill in the Division Lobbies.

[Ian Lucas]

Unlike the right hon. Gentleman, I ran my own business in the 1980s, and I remember the pension mis-selling and how many people lost their life savings as a result of reckless Conservative legislation and a lack of proper advice. This is a very serious matter, so rather than taking cheap political pot shots, will the right hon. Gentleman tell me what exactly will be the nature of the advice given to people about their life savings before he asks them to spend it?

--- Later in debate ---

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I think that the Chancellor has got the message.

[Mr Osborne]

Well, Mr Deputy Speaker, that was the definition of a cheap political pot shot, and it rather sums up the tone of Labour Members’ approach. They started with a whole spiel about new politics and having to engage with the disenchanted, but after only a few minutes, it has swiftly deteriorated.

[Ed Balls]

rose—

[Mr Osborne]

Let me directly answer the hon. Gentleman’s point and then I shall take a final intervention from the shadow Chancellor before winding up.

We are very clear that we want impartial and free guidance—face to face if people want it. We are talking to consumer groups such as Which?, Saga, and Citizens Advice about how to ensure that we deliver such free and impartial advice through the industry and consumer groups all working together.

[Ed Balls]

We have welcomed annuities reform and the introduction of collective pension vehicles. The test for us is whether the sums will add up, whether it will cost more, whether it will work in a fair and equitable way and whether the advice and guidance will be sufficient. I put it to the Chancellor that this may be something on which we could try to get a cross-party consensus in the long term rather than play politics.

[Mr Osborne]

I certainly hope, in the spirit of new politics, that there will be agreement across the House and that the Labour party will support our reforms. There was no agreement on this issue when we were in opposition. My hon. Friends who were Opposition MPs at the time—when, indeed, the right hon. Gentleman was a Treasury Minister—will remember that we tried time and again to get the Treasury to open up annuities and to remove the compulsory requirement to annuitise. We remember the private Member’s Bill proposed by David Curry—and my right hon. Friend the Member for Croydon South (Sir Richard Ottaway) was involved, too—attempting to achieve this objective, with the Conservative party turning up en masse to try to deliver it. We tried. If the shadow Chancellor is telling me that he has had a change of heart and supports this measure, I can say “all well and good”. Perhaps that will help to address the disillusionment of Labour supporters that he he mentioned earlier—[Interruption.] The shadow Chancellor ends like he started. He wanted to give us a big new thing about new politics, but he cannot resist trading the blows across the Chamber.

[Ed Balls]

The point I made to the Chancellor in my speech was that there is a disillusionment across politics, incorporating Labour and Conservative voters, and that we need to face up to it collectively rather than just play partisan politics. That was my point.

[Mr Osborne]

I would argue that the best way to address people’s disillusionment is to create an economy that works for people and grows jobs for people. I enjoyed the right hon. Gentleman’s tour d’horizon of the global economy, and I certainly agree that the Google self-drive car will be an important intervention—and he will probably be one of the first customers for it.

We passed a milestone this week when we learned that 2 million new jobs had been created by our economic plan. We saw new surveys this week showing Britain attracting investment from around the world. The IMF said we would have the fastest- growing major advanced economy in the world and confirmed that deficit reduction strategy at the heart of our approach is the anchor of stability. We saw again today that the shadow Chancellor and the Labour party would be a disaster for the British economy, with more borrowing, more spending, more taxes and a war on business. In this Queen’s Speech, we reject these disastrous policies. Instead, we deliver on the long-term economic plan that is turning Britain around and offers a brighter future for all. I urge the House to support the Queen’s Speech.

[Several hon. Members]

rose—

ECOFIN

George Osborne Excerpts

Wednesday 14th May 2014 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

A meeting of the Economic and Financial Affairs Council was held in Brussels on 6 May 2014. Ministers discussed the following items:

Current legislative proposals

The presidency provided an update on the ongoing work on financial services.

Parent subsidiary directive

Council discussed a proposal for a directive to amend the parent subsidiary directive. The proposal looks to close a loophole whereby companies operating across Europe could exploit differences between member states in the tax classification of certain financial instruments in order to reduce their overall tax liability. The presidency concluded that further work will need to take place at technical level to clarify the text as necessary and that it will need to return to a future Council, probably in June. The Government support an agreement as soon as possible.

Financial transaction tax

Council held a state of play discussion on the proposal for a Council directive implementing enhanced co-operation in the area of financial transaction tax (FTT). A total of 10 of the member states participating in the enhanced co-operation circulated a statement during the Council expressing their political commitment to a FTT. The main points of note are that the participants wish to implement the tax in stages, with the first stage applying to shares and some derivatives; and that they wish to implement this first stage by 1 January 2016.

At Council, which was in public session—and can be seen here http://video.consilium.europa.eu/webcast.aspx? ticket=775-979-14373—the UK stated concerns about the economic impact of the tax and that the enhanced co-operation procedure has to operate with transparency as article 330 of the treaty on the functioning of the European Union sets out, with all member states participating in the deliberations. The UK was supported on these points by a number of other member states. Additionally, the UK expressed that the Court of Justice of the European Union’s recent ruling allowed for the UK and any member state to challenge an adopted FTT in court if it is harmful to them or the single market.

Macro-economic imbalances procedure: in-depth reviews

Council adopted Council conclusions on the results of the UK and 16 other member states’ macro-economic imbalances procedure: in-depth reviews. The UK does not have an excessive imbalance and does not need to take further action under the macro-economic imbalances procedure.

Follow-up to the meetings of G20 Finance Ministers and governors (10-11 April) and IMF/World Bank (11-13 April) in Washington DC

The presidency and Commission debriefed Ministers on the main outcomes of the G20 Finance Ministers and central bank governors and IMF/World Bank meetings held in Washington DC from 10-13 April. The Government remain supportive of the Australian G20 agenda, particularly on the development of comprehensive growth strategies.

ECOFIN

George Osborne Excerpts

Tuesday 6th May 2014 Written Statements

[The Chancellor of the Exchequer (Mr George Osborne)]

A meeting of the Economic and Financial Affairs Council will be held in Brussels on 6 May 2014. The following items are on the agenda to be discussed.

Current Legislative Proposals

The presidency will provide an update to Council on the ongoing work on financial services dossiers.

Parent Subsidiary Directive

Council is expected to be asked to reach political agreement on an amending directive to the parent subsidiary directive. The Government support the proposed amendment, which will effectively close a loophole whereby companies operating across Europe could exploit differences between member states in the tax classification of certain financial instruments in order to reduce their overall tax liability.

Financial Transactions Tax

Council will hold a state of play discussion on the proposal for a Council directive implementing enhanced co-operation in the area of financial transactions tax. Following a number of working level meetings, this is the first opportunity for Finance Ministers to discuss the proposal since the Council decision authorising enhanced co-operation was adopted early last year.

Macro-economic Imbalances Procedure—In-depth reviews

Council will discuss the in-depth reviews published on 5 March and adopt a set of related Council conclusions. The Government take note of the Commission’s assessment that the UK is not experiencing excessive imbalances, and can support the proposed conclusions.

Follow-up to the meetings of G20 Finance Ministers and Governors (10-11 April) and IMF/World Bank (11-13 April) in Washington DC

Council will be informed of the main outcomes of the G20 Finance Ministers and Central Bank Governors and IMF/World Bank meetings held in Washington DC from 10 to 13 April. The Government remain supportive of the Australian G20 agenda, particularly on the development of comprehensive growth strategies.