Surplus Target and Corporation Tax

Debate between George Osborne and Stephen Timms

Monday 4th July 2016 Commons Chamber

[Mr Osborne]

We need to do two things. First, we need to determine our new trading relationship with our European partners; about half of our exports go to the European continent and, in my view, we should be pushing for the best possible terms of trade in goods and business services, including financial services. Secondly, we should be maximising our links with the rest of the world. We have a real opportunity with China. As my hon. Friend will know, I have been very involved in trying to strengthen the relationship with that big emerging economy in our world, but we should also look to our links with Japan, India, the United States and the Commonwealth, and this is a call to action that we need to redouble our efforts.

[Stephen Timms (East Ham) (Lab)]

The Chancellor gained his office because he promised in 2010 that he would eradicate the deficit by 2015. He failed on that, as we always knew he would, and he is now giving up on achieving that aim by 2020 or indeed by any specific date. Was not his long-term economic plan, which he has now dumped, only ever just a vacuous slogan?

[Mr Osborne]

We gained office because we were faced with the complete economic mess created under the last Labour Government. We promised to turn that around, and we got a record number of people into work and have had the fastest growing economy for the past three years. When it comes to the deficit, the right hon. Gentleman was a Treasury Minister and he left me with an 11% budget deficit—the highest in the peacetime history of this country—but this year it is forecast to be below 3%, so I will compare our record with Labour’s record.

Oral Answers to Questions

Debate between George Osborne and Stephen Timms

Wednesday 9th December 2015 Commons Chamber

[Mr Osborne]

My hon. Friend is right to raise that case. We all saw the tragedy that befell the family of the “Strictly Come Dancing” presenter and the campaign that her family have undertaken to change the regulations. It is true that we do not have the same flame-retardant regulations for children’s fancy dress costumes. That seems wrong. I know that my right hon. Friend the Business Secretary is looking at the matter and will ensure that that changes.

[Stephen Timms (East Ham) (Lab)]

Q11. Will the Chancellor take this opportunity to correct the bizarre claim made yesterday by Donald Trump about parts of London being no-go areas for the Metropolitan police? Will he point out to Mr Trump that relationships between the Muslim communities of London and the police are in fact excellent?

[Mr Osborne]

The right hon. Gentleman speaks for everyone in this House. The Metropolitan police do a brilliant job, and they have fantastic relations with British Muslims. British Muslims have made a massive contribution to our country. Donald Trump’s comments fly in the face of the founding principles of the United States, which have proved such an inspiration to so many people over the past 200 years. The best way to defeat such nonsense is to engage in robust, democratic debate and make it very clear that his views are not welcome.

Spending Review and Autumn Statement

Debate between George Osborne and Stephen Timms

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

The apprenticeship levy and the commitment we have made to 3 million apprentices is a huge boost to skills in this country, and it addresses one of the endemic weaknesses in the British economy that has bedevilled us for many decades. Small businesses are a big winner from the scheme: they do not have to pay the levy, but they get the advantage of the funded apprenticeships. We are also increasing the amount we pay for some of the apprenticeship courses. Indeed, there is a general uplift in apprenticeship funding. This will help small businesses, which do so much to support our economy, but which did not always get the support they wanted for training in the past.

[Stephen Timms (East Ham) (Lab)]

The local government grant is available because some local authorities have a lower tax base than others. Can the Chancellor reassure us that the same necessary degree of rebalancing will be delivered once the grant has been phased out?

[Mr Osborne]

The reallocation of business rates, which takes place after we allowed local authorities to retain 50% of their business rates in the last Parliament, will be in place from day one. Thereafter, local areas, such as the right hon. Gentleman’s, will have strong incentives to attract businesses to their area. They will be able to cut business rates, if they would like to bring in those businesses. Frankly, I think that will also help with speeding up planning decisions and encouraging local economic development. We all know that the trouble is that there is always a cost to local councillors saying yes to developments in our constituencies. It is often controversial and they do not see the benefits. Councillors will now see the benefits, and, more importantly, so will local communities.

Autumn Statement

Debate between George Osborne and Stephen Timms

Wednesday 3rd December 2014 Commons Chamber

[Mr Osborne]

That is quite an offer. I met Tom Pursglove and my hon. Friend to discuss the infrastructure improvements that they wanted in the east midlands. We have been able to deliver what they have so successfully campaigned on and attracted so much local support for. That is a good combination of two strong local campaigners working for their local area to deliver improvements that, frankly, were never delivered under a Labour Government and that Labour MPs have never asked me for.

[Stephen Timms (East Ham) (Lab)]

The Chancellor has recognised that he will not deliver on his commitment to eradicate the deficit in this Parliament. Will he also recognise that a large part of the reason for the failure is that, as the OBR has acknowledged, tax receipts have been hard hit by the fall in real wages since the general election?

[Mr Osborne]

I acknowledged in my statement that tax receipts are £24 billion below what we forecast for 2017-18, but I pointed out that people have focused only on the tax side, not the spending side of the equation: lower unemployment and lower inflation have an impact on welfare payments and debt interest payments—we are paying £18 billion less in debt interest than was forecast—which is of course why we have not seen the big deterioration in the public finances that he and others predicted.

Oral Answers to Questions

Debate between George Osborne and Stephen Timms

Tuesday 2nd September 2014 Commons Chamber

[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?

Oral Answers to Questions

Debate between George Osborne and Stephen Timms

Tuesday 11th September 2012 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

T5. Why is Britain in a double-dip recession when France and Germany are not?

[Mr George Osborne]

In case the right hon. Gentleman had not noticed, the eurozone is in recession. He talks about France and Germany, but the International Monetary Fund—[Hon. Members: “Answer!”] I am about to give him the answer. The IMF’s latest forecasts for growth next year show the UK growing at almost twice the speed of France, and the same with Germany. If the question is, “Why isn’t the British economy more like Germany’s?”, I will give him the answer. It is because we did not invest in skills over the past decade. We did not build our export links with China and India and the growing parts of the economy. We put all our bets on the City of London when the right hon. Member for Morley and Outwood (Ed Balls) was the City Minister and it all went spectacularly wrong. We are now clearing up the mess.

Oral Answers to Questions

Debate between George Osborne and Stephen Timms

Tuesday 26th June 2012 Commons Chamber

[Mr Osborne]

The funding for lending scheme, which the Governor and I announced at the Mansion House, is explicitly designed to address the high bank funding costs and it is tied to lending into the UK economy, so that is precisely what this new scheme is designed to do.

[Stephen Timms (East Ham) (Lab)]

3. What recent estimate he has made of the level of economic growth in 2012.

The Economy

Debate between George Osborne and Stephen Timms

Tuesday 6th December 2011 Commons Chamber

[Mr Osborne]

We restricted cash payouts in the Royal Bank of Scotland in the last bonus round to less than £2,000. That is what we did when we had the opportunity. The hon. Lady was a Minister in the last Government. Perhaps in 30 years’ time we will discover that she was sending letters to the Treasury asking “What are we doing about transparency in pay in the City? Why do we not introduce a permanent bank levy?”, and saying “I am really worried about the regulation of Britain’s financial services.” We will just have to wait for 30 years to find out whether, when she held Executive office, she once raised the concerns that she now raises in opposition.

Both the slow repair of our banking system and the crisis in the eurozone were identified by the Office for Budget Responsibility as causes of weaker economic activity. They are also a reminder of why it is so essential for Britain to maintain its fiscal credibility as we deal with a budget deficit that is higher than almost any other in the world. A month ago I was told by the OBR, as part of the formal preparation for the autumn forecast, that weaker economic activity would give Britain a less than 50% chance of meeting the fiscal mandate and the debt target that I had set out unless we took further action.

I believe that at that moment the OBR proved not just its independence, but its worth. It forced the Government to confront the issues at hand, and to use the weeks available to us before the statement to come up with a credible response. We know that under the previous forecast regime, those weeks would have been used to fiddle the forecasts, to tweak assumptions about the output gap, and to pencil in over-optimistic numbers on tax receipts: in other words, to do all the things that my predecessor, in his memoirs, says were done during his dealings with No. 10 Downing street. It would have been a case of choosing economic figures to fit the Government’s policies, rather than choosing Government policies to respond to the economic figures.

I believe that the existence of the Office for Budget Responsibility, which was consistently opposed by the shadow Chancellor in every position that he held in the last Government, has given the whole of Parliament confidence in the integrity of the forecast.

[Stephen Timms (East Ham) (Lab)]

Did the Chancellor use those weeks to rethink his plan, because the OBR was telling him that the assumptions on which his plan was based were mistaken? We were told that employment would rise every year, but that has not happened, and it is not going to happen. We were told that the budget would be balanced in this Parliament, and that is not going to happen either. Surely the whole plan should have been rethought?

[Mr Osborne]

The OBR was also very clear in its analysis of why there had been weaker growth. Over the past seven days the shadow Chancellor and others have paraded around the TV studios citing the OBR’s numbers while refusing to accept the OBR’s analysis of what lies behind those numbers. The OBR is very clear; it gives three reasons for the deterioration in the economic forecasts. First, it attributes the primary reason for the weakness since its last forecast to the external inflation shock of the high oil price. Secondly, it attributes the current weakness in the economic position to the lack of confidence caused by the eurozone crisis. Thirdly, it says its assessment both of the boom before 2007 and the subsequent bust and of the impact of the repair of the financial system is greater than it had previously estimated. That is its independent analysis. The Opposition cannot agree that we should now have an independent body and accept the figures it produces, only then to reject the analysis on which those figures were arrived at.

Oral Answers to Questions

Debate between George Osborne and Stephen Timms

Tuesday 6th September 2011 Commons Chamber

[Mr Osborne]

The Opposition remind me of the very good election slogan that we had—although it was not particularly successful—which was “Save the Pound”. We have managed to save the pound on the Eurostar—or rather, the company itself has anticipated questions such as the one from my hon. Friend. I am glad to hear that, as he travels to and from Brussels and Paris, he will continue to be able to buy his meals in pounds sterling.

[Stephen Timms (East Ham) (Lab)]

Before the Chancellor meets the head of the IMF on Friday, will he recognise that in warning that slamming on the brakes too quickly will harm the recovery, she has a point? Does not Britain’s experience illustrate that?

[Mr Osborne]

The point that the IMF has made consistently over the last two years is that countries with fiscal space can of course use it, but that Britain does not have that fiscal space. It made that point in its article IV assessment of the UK just a few weeks ago, and that is also the view of Christine Lagarde. As I say, she is coming to this country on Friday and we will hear what she has to say.

Global Economy

Debate between George Osborne and Stephen Timms

Thursday 11th August 2011 Commons Chamber

[Mr Osborne]

We do debate the European budget in this Parliament, and they are often quite lively debates. We are fighting hard for a real-terms freeze in the European budget not just for next year but for the coming new financial perspective from 2014, and we have enlisted a number of allies. There is now an understanding across Europe that, with very tough public expenditure decisions at home in every European country, we also need to get control of the European budget.

[Stephen Timms (East Ham) (Lab)]

The momentum for growth in the UK economy has clearly now run out, and I am glad that the Chancellor will make announcements on growth in the autumn. As he plans for them, will he take account of the International Monetary Fund’s view that if there is the prospect of a lengthy period of weak growth ahead, he should be willing to consider temporary tax cuts?

[Mr Osborne]

Of course we bear in mind advice from the IMF and others, but it makes it clear that that is not its central view at the moment. It asked itself a specific question, and it says this:

“The weakness in growth and rise in inflation raises the question whether it is time to adjust macroeconomic policies. The answer is no…Strong fiscal consolidation is underway and remains essential”.

That is what the IMF says in its article IV report into the United Kingdom published on 1 August this year.

Oral Answers to Questions

Debate between George Osborne and Stephen Timms

Tuesday 10th May 2011 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

A year ago the Office for Budget Responsibility was projecting growth in the UK economy of 2.6% this year. Now the forecast is down to 1.7%. What has gone wrong?

[Mr Osborne]

As I am sure the right hon. Gentleman knows, there are very significant global headwinds of the high oil—[Interruption.] I know that Labour Members live in a complete vacuum but, according to the most recent growth figures for this first quarter, the British economy posted a higher quarterly growth rate than the United States of America. Of course we have the high oil price and the ongoing problem in the eurozone, but what is required above all is a credible deficit reduction plan that keeps Britain out of the financial danger zone.

Oral Answers to Questions

Debate between George Osborne and Stephen Timms

Tuesday 8th February 2011 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

The figures underline that the economy is not out of the danger zone. Does the Chancellor know of the concern expressed by the Recruitment and Employment Confederation about a new lost generation of unemployed young people of the kind we saw in the ’80s and ’90s? What assessment has he made of measures the Government can take to avoid that problem?

[Mr Osborne]

The right hon. Gentleman is absolutely right that unemployment went up by 1 million under the previous Government. We know that even in the good years, the problem of youth unemployment increased and that we as a country were not able to do much about it. This Government are determined to tackle that head-on with reform of the welfare system so that it always pays to work and, at the same time, with the new Work programme, which will give young people the skills and opportunities they need to get off those unemployment rolls.

Oral Answers to Questions

Debate between George Osborne and Stephen Timms

Tuesday 12th October 2010 Commons Chamber

[Mr Osborne]

The short answer to my hon. Friend’s questions is yes. The OBR will move out of the Treasury—in the period immediately after the general election, that was the quickest way to establish it—to a permanent home. The choice of location will be for the permanent chair of the OBR who, I believe, will make a statement on that later today. I think the veto given to the Treasury Committee is the first of its kind in this Parliament, and will be enshrined in legislation.

[Stephen Timms (East Ham) (Lab)]

The Chancellor has announced two new appointments to the budget responsibility committee today. In line with the Treasury Committee’s recommendation, will he extend its veto to those two appointments, as well as to the position of the chair? Will he invite the OBR to comment, as the Select Committee envisages, on the fiscal mandate?

[Mr Osborne]

My answer to the right hon. Gentleman is yes and no—yes to the first part of the question. I listened very carefully to what the Treasury Committee said about the two other members of the budget responsibility committee, and I propose that it should indeed have a veto over those two appointments, which were made on the recommendation of a panel that included Robert Chote. I made the suggested appointments, but it will be for the Treasury Committee presumably to hold hearings and hopefully give its approval.

I do not propose to follow the second path that the right hon. Gentleman suggested. If the OBR begins commenting on the fiscal mandate, it intrudes on what is a legitimate matter of debate in the House between elected representatives who have strong views on this. I want to do everything I can to preserve the independence of the OBR, not just for this Government but for future Governments as well.