Spending Review and Autumn Statement

Debate between George Osborne and Lord Clarke of Nottingham

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

So the shadow Chancellor literally stood at the Dispatch Box and read out from Mao’s little red book. And look—it’s his own personal signed copy. The problem is that half the shadow Cabinet have been sent off for re-education. People treat this Labour leadership as a joke, but they are actually a deadly threat to the economic and national security of this country.

The hon. Gentleman comes here to complain that the deficit and the debt are too high, yet he wants to increase the deficit and the debt and to borrow forever. The problem is that he would borrow in the good times, because he says the country can afford it, and borrow in the bad times because the country could not afford not to. He would always be borrowing money. And how would he be able to afford it? He could afford it because, as he says, his policy

“can readily be funded...through printing money”.

He has said that he would end the Bank of England’s control over interest rates, and he calls it the “people’s quantitative easing”. That is called deficit financing, and it has only been tried in Weimar Germany and Zimbabwe. It would lead to the economic ruin of this country. The Labour leadership’s chief adviser on the economy has said that it would cause a sterling crisis, but that the

“sterling crisis would pass very quickly”.

The shadow Chancellor talks about our support for business and defence industries, but he is a threat to the free market of this country. He wants literally to take control of the commanding heights of the economy. His manifesto is all about nationalising industries. He wants to nationalise the whole banking system of this country—as if the last Labour Government did not do a good enough job by nationalising half of it.

The hon. Gentleman gave a speech at the weekend in which he described his policies as “socialism with an iPad”. The problem is that if the socialists built an iPad, it would weigh a ton, it would be impossible to use and no one would design any programmes for it. It would literally be app-less. And then he has the temerity to get up and talk about defence industry jobs and the police. He has spent his entire career attacking the police forces of this country and calling for them to be disarmed. He has sent me a letter saying that I should fund the Security Service, but it turns out that he has been campaigning to disband MI5. He says he is on the side of the British Army, but he has been sharing platforms with the Irish Republican Army. That is the truth.

Let me end by asking this question. Where is the shadow Chancellor going this evening? He is travelling to Waltham Forest to support the new hard-left members of the constituency Labour party there who are trying to deselect the hon. Member for Walthamstow (Stella Creasy). He is addressing a rally called “Keep up the momentum”—[Interruption.] Well, if he was actually in charge of this country, we know where the momentum would be. It would be in one direction: growth down, jobs down, the security of the country destroyed. In the last three months, he and his friends have taken control of one of the great institutions of our political democracy, the Labour party, and they have brought it to its knees. That is their business, frankly, but Conservative Members are going to make sure that they never get their hands on any of the other institutions of this country, so that we can keep our country safe.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

I congratulate my right hon. Friend on sticking unswervingly, despite all the recent difficulties, to his commitment to a balanced budget over the cycle and on answering the fears expressed by some of us by sticking to his aim of a modest budget surplus if the economic cycle remains strong. Will he reinforce the argument that that is an essential precondition for our building a modern, sustainable economy in this country that is able to withstand such shocks as the global economy will send us in the next few years? When the cheers die down—as they will—and as people fall upon the details, assisted by lobbies, will he tell the responsible majority that ought to exist in this House and in the House of Lords that no Chancellor acting in the national interest could possibly produce a Budget that had no reductions in public spending and no increases in revenue? We do not want a repeat of the utterly irresponsible reversal of the £4 billion a year savings that were made in his earlier Budget.

[Mr Osborne]

I thank my right hon. and learned Friend; he is absolutely right. We do not know what economic storms lie ahead, but we sure as hell know that we have not abolished boom and bust in this country, so we have to prepare for whatever the world throws at us. If a country is not running a budget surplus after nine or 10 years of economic growth, when is it ever going to do so? We are taking sensible steps to build up that surplus and pay down our debts, which have in my view reached dangerously high levels because of the very large deficit we ran over recent years. So those are the steps we are taking. He is also completely right about the lobby groups. In the end, the best way to have great public services is to have sustainable finances. We know to our cost what happens when those public finances are not sustainable: the people who suffer in our country are the most vulnerable and those who are least advantaged. That is why we have taken these steps today to protect them.

Greece

Debate between George Osborne and Lord Clarke of Nottingham

Monday 6th July 2015 Commons Chamber

[Mr Kenneth Clarke (Rushcliffe) (Con)]

I am glad to say I was, Mr Speaker. I was not going to ask my right hon. Friend about my birthday, but thank you very much for your kind remarks.

Will my right hon. Friend continue to give support to those of our sensible European allies who insist that the Greek Government cannot just expect a third bailout and a second restructuring of their debts, so that Irish, Portuguese, Spanish and other taxpayers can continue to pay for untenable levels of public expenditure, including generous early retirement schemes, bloated public sector payrolls and so on? Does he also accept that if in the next week or two the Greek Government just print a new currency, called the new drachma, it will be a quite worthless means of exchange that will probably not be used by the Greek population or by foreign suppliers of commodities? There is therefore no alternative to the Greek Government eventually agreeing structural reform, to give them a competitive economy for the future and to rejoin the European community of nations.

[Mr Osborne]

First, let me join in congratulating my right hon. and learned Friend on his birthday. The points he makes are echoed by many eurozone Governments that we speak to. There are countries in the European Union with lower GDP per capita incomes and there are Governments in the eurozone who have undertaken incredibly difficult structural reforms—he names our close neighbours in Ireland—so these points are regularly made. It is clear that there needs to be major structural reform of the Greek economy and certain conditions set on eurozone membership, and that is why the eurozone is waiting for the latest proposal from the Greek Government. Equally, we urge all parties in this, including those other eurozone Governments, to be open to new offers and to be ready to sit round the table.

Greece

Debate between George Osborne and Lord Clarke of Nottingham

Monday 29th June 2015 Commons Chamber

[Mr Kenneth Clarke (Rushcliffe) (Con)]

I am always quietly inconspicuous in this Chamber, Mr Speaker.

Will my right hon. Friend confirm that the IMF has always made advances to countries in financial crises conditional on a programme of reform aimed at minimising the effect on creditors and, above all, on restoring a competitive and effective economy to prepare for a healthier future? It would be quite irresponsible for the IMF or the European Central Bank to abandon that approach at the moment. The best outcome would be for the Greeks to vote yes in the referendum. The one thing my right hon. Friend has not touched on is the great hardship that could be caused to the Greek people if they vote no and their economy goes into total collapse. Are there any discussions going on about the way in which the friends of Greece can mitigate those consequence for the ordinary Greek population? There is no quarrel in this House with Greece or the ordinary people of Greece who are not responsible for the mismanagement by their Government.

[Mr Osborne]

My right hon. and learned Friend is right to remind us that the people of Greece have paid a very high price for the mismanagement of their economy by previous Greek politicians and Greek Governments. Of course it is now a matter for the Greek people to decide their future, and we should respect that. I made it clear in my statement that most people now consider this referendum as one on whether Greece leaves the euro. Of course there are considerable consequences of taking that step, but I do not think we should be telling the people of Greece how to vote. It is for the people of Greece to make that decision, but they should be aware of the consequences. That is the broad approach that we shall take. The discussion of what would happen if Greece were to leave the euro should probably happen at a later date, but there will clearly be issues over the support that the family of western nations can provide to that country.

Charter for Budget Responsibility

Debate between George Osborne and Lord Clarke of Nottingham

Tuesday 13th January 2015 Commons Chamber

[Mr Clarke]

No two crises are the same. The causes of the problems in the 1920s were quite different. The steps taken to stimulate demand then were too late. We have been running a deficit throughout these difficult times. We are not going into surplus until the next Parliament. As I have said, the circumstances in which the United Kingdom found itself trading are much more difficult than anybody predicted in 2010, but the idea that what we have done so far resembles anything that was done by the less successful Government in the 1930s is absolute nonsense. The idea that we are going back to the 1930s is also nonsense. The Labour Front Bench has just accepted that what has been proposed by the Chancellor is an essential pre-condition to any lasting success for the benefit of our children.

There are all kinds of other things, but I have no time to go into them. The structural changes that we, like many other Europeans with damaged economies, have got to go in for, and that we are going in for, include: bank regulation; skills training; education reform; and stimulating modern technological industry and businesses in this country. All of those are absolutely essential and include sensible infrastructure spending, which we are sustaining. Unless we get the deficit under control, we have no prospect of getting back to the kind of levels of growth to which we used to aspire. In fact, the debts we are running are rather easier to sustain with interest rates down to a 300 year-low. Once we go back to ordinary levels of interest, all those countries that have failed to tackle their underlying problems of fiscal discipline will find themselves in terrible, terrible trouble. This is a challenge for every western democracy, and it is a difficult message to get across in a democracy. The Greeks may be the latest population in danger of being seduced into not doing difficult things and living on other people’s money. That is very dangerous indeed. The next time that we have another crisis will be difficult because, with the present level of debt, we will have so little in reserve to draw upon to help us through.

The last Labour Government completely failed to foresee what happened, and I think that even now they do not quite understand where they went wrong. They ran a massive surplus during the dotcom bubble, because they stuck to my fiscal figures, and found their tax revenues were inflated for a time. Then, when the next South Sea bubble came around and we had the credit bubble and the credit crunch, they were still—at the top of crazy levels of growth—running a fiscal deficit. They borrowed, but claimed they did not have a deficit. Well, they did not have much of one in 2006, but once the crazy tax revenues from the City collapsed, they were left high and dry, with the full extent of their irresponsibility exposed. They had failed to regulate the mad borrowing and lending in the City of London just as the Americans had failed in Wall Street. It was free money, which their last Chancellor indulged in, and when the bubble burst they were caught.

[Mr George Osborne]

The former Chancellor is making a strong speech. He might remember that the Labour Government increased the trend growth rate—a decision that at the time was in the hands of the Treasury, rather than an independent OBR. That led them to spend more money and run a structural deficit—the highest, according to the IMF—during that period. Now, we have come full circle and the shadow Chancellor, who was an economic adviser at the time, is proposing exactly the same assumption to underlie his economic policy, so that he can spend and borrow more.

[Mr Clarke]

I entirely agree. The shadow Chancellor has done just the same today. In his way of looking at things, the future trend rate of growth will be what he says the future trend rate of growth has to be to justify his plans. I used to envy the Ministers in China, who did not have to worry about a national statistical office: what the Minister said the growth rate was now was what the statisticians told him his growth rate was.

Autumn Statement

Debate between George Osborne and Lord Clarke of Nottingham

Wednesday 3rd December 2014 Commons Chamber

[Mr Osborne]

With that performance, we see why the right hon. Gentleman is totally unfit to be put in charge of the nation’s finances in six months’ time. We have had an object lesson in how not to plan an autumn statement reply before hearing the autumn statement. That was what he expected to hear, as we know because he went round the TV studios over the past few weeks predicting it. He said that the deficit would go up this year. He said it last month, he said it last week, he said it on Sunday. I have his words. He said that the Chancellor is going to have to make an autumn statement where he is

“going to have to say that the economy is weakening, the deficit is getting larger”.

I have just quoted independent forecasts which show that the economy is stronger, the deficit is falling and the debt is lower in every future year. The shadow Chancellor got it completely wrong.

It is hardly surprising that his party has such low economic credibility when the shadow Chancellor repeatedly makes predictions about the British economy that turn out to be completely wrong. No more boom and bust, he said—wrong. A double-dip recession, he predicted—completely wrong. He has spent the past three months betting the entire credibility of the Labour party’s response to the autumn statement on the prediction of a massive deterioration in the public finances and the deficit going up, and he got that completely wrong. People say there is a split in the leadership of the Labour party. They are right. It is between people who get the deficit figures completely wrong and people who forget about the deficit altogether.

The Opposition have no economic credibility and they have policies that show that they are not up to the job. The shadow Chancellor mentioned his homes tax. We still do not know what the Labour party’s view is of the stamp duty reforms. I guess we will find out in the next few days. We do not have a clue what its views are on the postgraduate changes or the infrastructure investments that we have announced. The right hon. Gentleman spoke about his homes tax. This is what the Labour party thinks about his homes tax. The Chair of the Public Accounts Committee says:

“I don’t think it’s the world’s most sensible idea.”

The former Housing Minister, the right hon. Member for Greenwich and Woolwich (Mr Raynsford), says that it hits the “cash poor”. The right hon. Member for Tottenham (Mr Lammy) says it is “a tax on London”, and the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) says:

“Let’s stop calling it a ‘mansion tax’…these are family homes”.

One of Labour’s council group leaders summed it up best when they said it was “completely bonkers”. That is the housing policy—to put taxes on housing.

The shadow Chancellor asked about our tax cut on apprentices. His jobs tax policy is to increase national insurance. He talks about pensions. His pensions policy is to tax pensions. He asked me a couple of questions about savings in the public finances. I was hoping that he was going to give me some suggestions for savings that we can make in the public finances. I have had to do a bit of research myself about what his party’s policy is.

The Opposition have conducted what is called a zero-based review for the past year and identified two surplus assets that the Government should sell. The first is the Queen Elizabeth II conference centre. The shadow Chancellor first proposed selling that in 2001 and seems to have forgotten that it is the only bit of Government that pays us an income. The other thing they found to pay down the national debt—it is in the Labour party document—is a restaurant in St James’s park, estimated to be worth £6.7 million. That is 0.005% of the national debt, so their national economic policy is literally out to lunch.

That is the problem that we have seen in the right hon. Gentleman’s reply. He has absolutely no answers to the economic challenges that Britain faces. He has no credibility and no workable policies because Labour has no workable plan. We are five months away from a general election in which people will have to choose their Government. The most serious responsibility incumbent on anyone seeking office is to show that they can provide economic stability to the nation and protect the families who live here. The Opposition do not have a clue how to do that. They do not have a plan. Their whole response today shows that they would take Britain back to square one. Britain has pulled itself out of the economic crisis that the shadow Chancellor created, and we are not going to let him take us back there.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

Does my right hon. Friend recall, as I do, that the shadow Chancellor was the right-hand man of the Chancellor who presided over the credit crunch, the banking collapse and the incurring of the biggest deficit in the G20, and does he not find his conversion to rigid fiscal discipline and the pursuit of fiscal surpluses absolutely quaint and ridiculous?

On a more serious note, my right hon. Friend is proposing to devolve considerable powers, in a very welcome way and to varying degrees, to the different nations and cities of the United Kingdom. Can he reassure us that he will combine that with firm and enforceable commitments to financial responsibility so that he and the UK Treasury can retain overall responsibility for the stability of sterling and our economy, because not every local government Labour leader can be trusted to follow the clear and effective path that he has followed in getting our debt back under control?

[Mr Osborne]

My right hon. and learned Friend makes a good observation about the shadow Chancellor’s career. I should pay tribute—probably for the first time—to the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), who this week announced his retirement: first, for his commitment to advancing international development and to British aid, which I fully support; and secondly, because when he was shadow Chancellor, as we all remember, he built up a really compelling case for fiscal discipline. That, in part, is why the Labour party won the 1997 general election. That stands in such marked contrast to the shambles we see from the pair sitting opposite me now, who subsequently advised him.

On my right hon. and learned Friend the former Chancellor’s good point about devolution, of course both local government and the different nations of the United Kingdom—the devolution arrangements apply to both—will have in place robust arrangements that protect taxpayers across the United Kingdom. That is certainly an important part of the Smith commission report and how we must take it forward. It is also at the heart of the devolution settlements that we have discussed with English local authorities.

EU Budget (Surcharge)

Debate between George Osborne and Lord Clarke of Nottingham

Monday 10th November 2014 Commons Chamber

[Mr Osborne]

I completely agree with the hon. Lady, which is why I made the point at the end of my remarks that the whole episode demonstrated why we needed reform in Europe. She, of course, is one of a growing number of Labour MPs who join us in wanting to see that referendum—I hope she can persuade the Labour Front-Bench team.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

Does the Chancellor agree that whatever deal he had obtained last Friday—even if he had come back bearing sackfuls of tribute in gold—it was wholly predictable that hard-line Eurosceptics would immediately say that this was robbery by Brussels and that the shadow Chancellor would immediately claim that, in some mysterious way, he could have produced some superior outcome for this country? Would the Chancellor accept my congratulations on a surprisingly good result that he achieved at that meeting, which I strongly suspect was a friendly discussion between 28 Finance Ministers and a Commissioner on a technical subject, and did not resemble the gunfight at the O. K. Corral, which is how everybody has to present European Council meetings and the debates we have on these subjects in this House?

[Mr Osborne]

I thank my right hon. and learned Friend for his support; he is not always fulsome in his support of our European policies, so that is particularly appreciated. He is right that around the table were other members states that had been hit by this very large payment—the Dutch, the Italians, the Greeks and others—and therefore there was a lot of sympathy for trying to change the rules. In parallel, as he would know, there is a discussion with the Commission about the British rebate, which is properly a matter for the discussion with the Commission rather than ECOFIN.