Office for Budget Responsibility

Debate between George Osborne and Ivan Lewis

Monday 14th June 2010 Commons Chamber

[Mr Osborne]

My hon. Friend is absolutely right, and it is worth reminding ourselves that the OBR June 2010 pre-Budget report is based not only on the previous Government’s tax and spending measures and decisions, but partly on the lower interest rates earned by the current Government in the decisions and announcements we have made over the previous month or so. That is why Sir Alan says in his forward that

“the fiscal path assumed”

by the previous Government

“would lead to higher interest rates and so lower economic activity ”.

[Mr Ivan Lewis (Bury South) (Lab)]

Are cuts this year a matter of a small-state ideology or in our economic interests?

[Mr Osborne]

They are, above all, in our economic interests because of the mess left to us by the previous Government.

Economic Affairs and Work and Pensions

Debate between George Osborne and Ivan Lewis

Tuesday 8th June 2010 Commons Chamber

[Mr Osborne]

If my hon. Friend will allow me, I would like to make some progress first.

I guess that the shadow Chancellor is entitled not to apologise. I would only say this to the people who are standing for the leadership of the Labour party. As far as I can tell from their contest at the moment, they seem to think that they just did not speak enough about immigration and Europe in the campaign. Let me tell him: I have done that campaign and I did not get the medal. Perhaps the leadership contenders will at some point turn their attention to the very serious economic problems that this country faces, and tell us what they would do—what they would cut. The amendment that we are being asked to vote for tonight—tabled by the Leader of the Opposition and the shadow Chancellor—states that we need

“a clear plan to bring down the deficit”.

I agree with that; I would happily vote with the shadow Chancellor if he could perhaps tell me exactly what his clear plan to bring down the deficit is because, as far as I could tell, he opposed every single decision that we have taken to try to reduce the deficit.

[Mr Ivan Lewis (Bury South) (Lab)]

In The Sunday Times, the Prime Minister said that the cuts would be unprecedented in their severity and would change Britain. In The Observer, the Deputy Prime Minister said that the cuts would not at all be as serious as in the 1980s and ’90s, and would be progressive in nature. Can the Chancellor tell us—which is it?

[Mr Osborne]

It was the shadow Chancellor who said—and we were reminded of this—that the cuts would be deeper than anything that Margaret Thatcher had undertaken, and that was the proposal from the Labour party when it was in government. It is unfortunately an economic fact that the budget deficit that this country faces is higher than at any point in our peacetime history, and whoever forms the Government of this country has to deal with that budget deficit and cannot ignore it. Indeed, there is a rather striking fact about the Labour Government’s proposals, which they left in their Budget book—the shadow Chancellor has a copy in front of him. There are £50 billion of cuts built into the Labour Budget produced in March, and not one single pound of those cuts has yet been identified by the Labour party.

--- Later in debate ---

[Mr Osborne]

But the reason why European economies, particularly those in southern Europe and in the eurozone, are having to take the measures that they are taking is that there are concerns about sovereign credit worthiness. Of course they must deal with their situation, but, in the month that I have done the job, I am very aware when I sit down at ECOFIN or at the G20 that I represent the country with the largest budget deficit at either of those gatherings. That is the situation that we inherited—[Interruption.] For two years we had to listen to all the lectures about how the European Union, the G20 and the OECD disagreed with what we are saying. Now they agree with what we are saying. The G20 communiqué signed in South Korea stated:

“Those countries with serious fiscal challenges need to accelerate the pace of consolidation”.

That is the situation bequeathed by the previous Government to Britain.

[Mr Ivan Lewis]

I thank the Chancellor for giving way. I have some simple questions. Were we right to save Northern Rock? Were we right to recapitalise the banks? Were we right to go for fiscal stimulus? Can the Chancellor be frank with the House about the decisions that my right hon. Friend the shadow Chancellor made?

[Mr Osborne]

Talk about refighting the last war. We spent the entire general election talking about those decisions. The answer is that the British people agreed with us and not with the shadow Chancellor.