George Osborne
Main Page: George Osborne (Conservative - Tatton)Department Debates - View all George Osborne's debates with the HM Treasury
(11 years, 10 months ago)
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Natascha Engel (North East Derbyshire) (Lab)
2. What estimate he has made of the proportion of the money issued through quantitative easing which has been used by banks to pay off their debts.
The Chancellor of the Exchequer (Mr George Osborne)
Quantitative easing is a tool of the independent Monetary Policy Committee and has been designed to work through channels other than the impaired banking system by stimulating activity in capital markets. The Government and the Bank of England are working together on a new funding for lending scheme that will more broadly support sustained and increased bank lending to the economy. I can confirm for the first time that in the three months since the start of the national loan guarantee scheme, over 10,000 cheaper loans worth over £1.5 billion have been offered to businesses. I can also confirm that we have today secured EU state aid approval to extend the scheme to medium-sized businesses with a turnover of up to £250 million. That means 99.9% of UK businesses can now benefit.
Natascha Engel
Quantitative easing was certainly intended to stimulate the economy, but in reality it is being used to write off the debts of reckless banks with hundreds of billions of pounds’ worth of virtual money. Has anyone in Government thought through the consequences of this policy, and if so, what are they?
Mr Osborne
The Bank of England conducted a study of the first round of QE that it undertook under the last Government, and estimated that it had increased real GDP by between 1.5% and 2%. The Bank’s chief economist says that the asset programme regime
“was explicitly designed to go around the banking system”.
I therefore do not accept the hon. Lady’s characterisation.
Mr Andrew Tyrie (Chichester) (Con)
Now that the Bank of England has finally shown more willingness to provide some liquidity support, there should be no obstacle to the exercising of more flexibility by the Financial Services Authority when it comes to how the liquidity buffers are used. That is being desperately demanded by banks. Does my right hon. Friend agree that the FSA should take action as soon as possible, and that such action is what is required to provide borrowing and lending at reasonable rates for the hundreds and thousands of businesses throughout the country that need it so desperately?
Mr Osborne
The liquidity auction undertaken by the Bank of England last week was very welcome, and the Bank is proposing future auctions. My hon. Friend, who chairs the Treasury Committee, has been prescient in pointing to some of the procyclical nature—if unintended—of some of the liquidity regulation in the United Kingdom in recent years. The Financial Policy Committee was set up to look at risks on both the downside and the upside. The Financial Services Authority must make its own independent decisions, but I am sure that it will have paid close attention to my speech and to the speech of the Governor of the Bank of England at the Mansion House.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
Notwithstanding the Chancellor’s warm words about the impact of quantitative easing, I have yet to meet a banker, a businessman or indeed a Government representative who can identify the benefits that have accrued as a result of its introduction. While I do not necessarily oppose it, all the evidence that I am being given by bankers suggests that lack of demand is causing the main problem. Will the Chancellor do something to stimulate consumer demand and investment confidence in order to maximise the potential that quantitative easing might bring?
Mr Osborne
In conducting its most recent assessment of the UK economy, the IMF explicitly looked at unconventional monetary policy tools that are currently being used, and concluded that quantitative easing was having a positive impact. I think that we should welcome that. I believe that we are able to pursue loose monetary policy—that we are able to use all the tools that are available to us on the monetary policy side—precisely because we have international credibility on the fiscal side.
Matthew Hancock (West Suffolk) (Con)
21. I, too, warmly welcome the action of the Bank of England last week to increase liquidity in its liquidity auction, but should not the role of the Financial Policy Committee be not only to stand against procyclical financial policy and liquidity buffers, but to lean against the wind and make sure that we can get the lending to businesses in our constituencies?
Mr Osborne
The Government established the Financial Policy Committee because under the previous tripartite regime, designed and implemented by the shadow Chancellor, absolutely no one was paying attention to overall levels of debt and credit in the economy. That is why we had such a deep recession, and why we went from such a large boom to such a big bust—to coin a phrase. My hon. Friend is entirely right: the FPC should be symmetrical in the way in which it looks at risks. We have made that clear, and we are amending the Financial Services Bill in the House of Lords to ensure that that the FPC has, as a secondary objective, due regard for the Government’s broader economic policy.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Yesterday the Financial Times reported that the Bank for International Settlements was warning of the dangers for economies that get hooked on ultra-low interest rates. Is not the reality that monetary policy alone will not kick-start the sustained recovery, and that fiscal intervention will be needed if we are to avoid a lost decade?
Mr Osborne
The very low interest and mortgage rates in Britain are extremely welcome to families and businesses across the country. If we want to know what the alternative looks like, we just have to look across the channel at countries that have not been able to maintain their credibility in international markets, where we see rising bank lending and funding costs and increased costs for Government borrowing. We have now five countries in the eurozone who have had to apply for bail-outs. It is because we have fiscal credibility despite inheriting the largest budget deficit in the European Union that we have been able to keep our interest rates very low.
Ian Swales (Redcar) (LD)
I, too, welcome the announcement of extra liquidity for our banks, but how will the Chancellor ensure that our international banks lend this money to British businesses?
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 Chancellor of the Exchequer (Mr George Osborne)
Rising global prices have increased the cost of living for families here in Britain. This coalition Government will do everything we can to help. We have already frozen council tax, kept mortgage bills low and abolished the fuel duty escalator. I can tell people that we will now stop any rise in fuel duty this August and freeze it for the rest of the year. This means that fuel duty will be 10p a litre lower than planned by the last Labour Government. We are on the side of working families and businesses, and this will fuel our recovery at this very difficult economic time for the world. The one-off cost of this change will be fully paid for by the larger than forecast savings in departmental budgets, and we will set out details of those, as usual, in the autumn statement.
Sarah Newton
If I were not on crutches I would be jumping for joy. The people of Cornwall will really welcome this move, which proves once more that this Government are on the side of hard-working families.
Mr Osborne
My hon. Friend is absolutely right and I know this news will be welcome in Cornwall, as across the country. I repeat: because of the actions we have taken today and in recent Budgets, petrol duty is 10p a litre lower than it would have been under the Budget plans voted for by the Labour party. We are on the side of working families, we are helping motorists, helping businesses—doing everything we can in very difficult circumstances for the world.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I am glad that the Chancellor is beginning to listen to the shadow Chancellor. However, the Government’s own figures show that cuts to tax credits are leaving thousands of parents up to £72 a week worse off, and some are better off if they quit their jobs. With the cost of living rising and the economy in double-dip recession, surely it is time we saw a U-turn on this perverse policy, to make sure that work pays.
Mr Osborne
First, all families, if we take into account the benefit and tax changes, are £5.50 better off a week from April, and we have actually increased tax credits for the poorest families. We have had to make difficult welfare changes. They were completely opposed by the Labour party, which also opposed the cap on welfare benefits. We have to ask the question: what would Labour Members do to get control of the budget deficit that they created? We have had two years and not a single answer from Labour. That is why, as I say, we are the people trusted to lead this country out of the economic mess that they put us in.
Andrea Leadsom (South Northamptonshire) (Con)
Does my right hon. Friend agree that it is astonishing that Opposition Members do not welcome his announcement to cut the fuel duty that they proposed when they were in government? Does he agree that this Government will focus everything they can on cutting the cost of living for hard-working people?
Mr Osborne
We should judge people by actions as well as words, and Labour Members voted for increases in fuel duty, which this Government have stopped. That is because we are on the side of working families, whereas Labour Members are simply on the side of the economic mess that they created.
Damian Collins (Folkestone and Hythe) (Con)
9. What recent steps he has taken to encourage economic growth.
The Chancellor of the Exchequer (Mr George Osborne)
To help the economy, we are cutting taxes for businesses and families. We are, as we have just heard, freezing fuel duty, helping 10,000 businesses with the national loan guarantee scheme, reforming the planning system, creating enterprise zones, setting up the regional growth fund and creating the biggest number of apprenticeships this country has ever seen.
Damian Collins
The recent Growth Factory report on industrial strategy highlighted the importance of rebalancing our economy. Does the Chancellor agree that the record increase in employment in the manufacturing sector in the first quarter of this year is a welcome sign of the growing confidence at the heart of our economy?
Mr Osborne
My hon. Friend is right and I commend him and his group for the interesting ideas, many of which I agree with, that they are promoting. He is absolutely right to point out the increase in employment, including in manufacturing employment. An interesting recent statistic from an independent international body on the British economy showed that the share of manufacturing in the UK economy is increasing for the first time in a very long time, having almost halved under the previous Labour Government.
Mr Jim Cunningham (Coventry South) (Lab)
Why did not the Chancellor cut fuel duty sooner? Why has it taken him all this time? He has done about 33 U-turns as far as I can see.
Mr Osborne
Last year we cut fuel duty and froze it. This year, we have frozen it again and the hon. Gentleman should welcome that. I know that he is in a slightly difficult position in that he was one of the Labour MPs who voted for the increase that we have now delayed, but he should just get up and welcome these moves.
Stephen Gilbert (St Austell and Newquay) (LD)
Economic growth in Cornwall would be discouraged by the introduction of regional pay or the regionalisation of benefits. Will the Chancellor undertake to publish the Government’s evidence to the independent pay review bodies that are considering this issue?
Mr Osborne
I point out to my hon. Friend that we have published that evidence. As I say, the matter is now with the independent pay review bodies, so let us wait to hear what they have to say.
Roberta Blackman-Woods (City of Durham) (Lab)
10. If he will discuss with his ministerial colleagues bringing forward the timing of public infrastructure investment in order to encourage economic growth.
David Morris (Morecambe and Lunesdale) (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 of the economy, promote growth and employment, reform banking and manage the public finances so that Britain starts to live within her means.
David Morris
Inflation has now lowered from 3% to 2.8% in May, which should be welcomed on both sides of the House. Does my right hon. Friend agree that it is other Government measures such as freezing the council tax, freezing the fuel duty and increasing the personal allowance that have helped tens of thousands of my constituents in Morecambe and Lunesdale with their cost of living?
Mr Osborne
I absolutely agree with my hon. Friend that it is very welcome news that inflation is now falling. That will help families. The Government want to help families further by keeping those mortgage costs very low, and the only way we can do that is by having a credible plan for the public finances. We have also frozen the council tax, increased the personal allowance, with another big increase next year, and as my hon. Friend has just heard, frozen fuel duty for the second year running, so that his constituents in Lancashire and people across the whole country can be helped at this difficult economic time.
Ed Balls (Morley and Outwood) (Lab/Co-op)
The Chancellor told the “Today” programme a few weeks ago that the only thing worse than listening is not listening. Well, he certainly listened to the “Today” programme this morning. We have now had U-turns on pasties, churches, charities, caravans and skips, and today a U-turn on fuel, which we welcome. It would be interesting to know at what point this morning the decision was made, and whether the Transport Secretary was even told. Now that the Chancellor is on a roll, will he also do a U-turn on the millionaires’ tax cut and rescind the granny tax rise? There is a vote next week. Will he join us in the Lobby or will he do the U-turn first?
Mr Osborne
It is quite difficult for a Conservative Chancellor to do a U-turn on a Labour policy. I am not sure the Opposition is entirely joined up—or maybe it is because the right hon. Gentleman waited half an hour to come in. The hon. Member for Hyndburn (Graham Jones), sitting directly behind him, who is a Labour Whip, has just tweeted on the fuel duty announcement that it is a deferred rise and cannot improve the economy. If the Labour Whip thinks it will not improve the economy, what does the shadow Chancellor think it will do?
Ed Balls
It is about time this part-time, U-turning Chancellor took some responsibility for his own decisions. What is the reality? A double-dip recession, borrowing rising, family budgets under pressure—his plan has failed. Is it not time he listened to the Opposition and admitted that austerity has failed? Is it not time he did another U-time and adopted Labour’s five-point plan for growth and jobs?
Mr Osborne
We enjoyed reading recently that the right hon. Gentleman has been spending thousands of pounds on commissioning private opinion research about why his economic message is not getting through. It was leaked to the papers, saying that he was seen as “uninspiring” and “untrustworthy”. He had no need to spend thousands of pounds on that. He can ask Labour MPs and get that opinion of the shadow Chancellor. He has had two years to come up with a credible economic policy, and two years to apologise for his part in putting Britain into the economic mess that we are taking Britain out of.
Mr David Evennett (Bexleyheath and Crayford) (Con)
T5. Does my right hon. Friend agree with the head of the IMF, who said that she shivers to think what would have happened to the British economy without this Government’s plans to reduce Labour’s deficit?
Mr Osborne
The managing director of the IMF put it in a very graphic way. She presented to the whole country the alternative that we faced in May 2010. If we had stuck with the Labour party’s incredible plans, we would be one of the countries seeking a bail-out, rather than, as we are now, a country that is a relatively safe haven in the very, very difficult European situation. [Interruption.] The shadow Chancellor will not move forward unless he concedes his role in getting Britain into this mess. Until he does that, he will remain a man of the past with no ideas for the future.
Jim McGovern (Dundee West) (Lab)
T2. Will the Chancellor update the House on what progress has been made on his offer to the computer games industry of tax incentives in his last Budget? It is important to get the details of the policy correct, but it is also important that time is not wasted unnecessarily. As the old adage goes, actions speak louder than words. When can we expect to see the words turned into action?
Mr Osborne
We will be consulting on that policy very, very shortly, alongside the new credits for animation and high-end television production. The video games industry is important in Scotland—for example, in Dundee there is a particular centre of excellence—but it is important across the entire UK, and the video game tax credit will help, alongside animation and high-end TV production.
Jessica Lee (Erewash) (Con)
T4. In order to help small businesses and those seeking new opportunities, will my right hon. Friend endorse the jobs fair that I am hosting in Erewash on 5 September? Will he further set out what the Government are doing to support small businesses, which remain the real engine of the British economy?
Mr Osborne
I certainly support my hon. Friend and congratulate her on organising the jobs fair. As the most recent unemployment figure showed, not only is unemployment falling but 200,000 private sector jobs have been created in the last few months in our economy. When it comes specifically to small businesses, as I set out to the House earlier, the national loan guarantee scheme has already helped more than 10,000 businesses with loans, we have cut the small companies corporation tax from the rate we inherited from the last Government, and the freeze in fuel duty will also help small businesses.
Mr Dennis Skinner (Bolsover) (Lab)
T3. In a time of austerity, when food banks are increasing in almost every town and city in Britain, is it not high time that the Government published a comprehensive list of all those people who are profiting from these tax avoidance schemes? Even Graham Aaronson, a Government adviser, forecast today that if something is not done there will be riots on the streets. This is a home-grown problem. Do not blame anybody else. Let us have a list of all those people close to home and those on millionaires row.
Mr Osborne
The last Labour Government, which the hon. Gentleman supported, had 13 years to introduce a general anti-avoidance rule; we are introducing one after just two years in office. The last Labour Government had 13 years to stop stamp duty avoidance schemes; this Government, after two years in office, are doing exactly that and stopping those schemes. The last Labour Government had 13 years to cap uncapped income tax reliefs, which are used for avoidance; we have introduced and are introducing that cap. Frankly, actions speak louder than words.
Mr John Baron (Basildon and Billericay) (Con)
T6. With belt-tightening very much on the agenda right across Europe, will the Chancellor at least consider making deep cuts to our EU budget contributions, and so ally himself with the vast majority of people in this country?
Mr Osborne
We have worked very hard to freeze the EU budget during the last couple of years and avoid the very large increases that both the Commission and the European Parliament have sought. We are now beginning the very important negotiations on the next multi-year budget framework, and our objective is to deliver the best deal for the British taxpayer and make sure that unnecessary money is not going over to Brussels.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
T10. Written answers to my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) reveal that the nationalist Scottish Government have made no approach whatever to the UK Government on membership of the Bank of England’s Monetary Policy Committee. Does the Chancellor think that Scotland would have more influence on monetary policy as part of the UK or outside the UK using sterling as a foreign currency?
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
Can the Chancellor confirm that the Government are going to spend an additional £150 billion in borrowing above their plan of a year ago?
Mr George Osborne
The Institute for Fiscal Studies was very clear that, had we pursued the plan proposed by the previous Government, borrowing would be £200 billion more than it is today. As I have said, it is this Government’s credible fiscal plan that has brought record low interest rates and market credibility. We can see across the English channel what would happen if we did not have that credibility. That is where Labour would have put us.
Sir Tony Baldry (Banbury) (Con)
T8. Has my right hon. Friend noticed that the most recent figures from the Office for National Statistics show that employment is up by 311,000, the biggest quarterly increase since the general election, and does not that mean that since the general election two jobs in the private sector have been created for every job lost in the public sector?
Mr Osborne
My hon. Friend—a knight of the realm—is absolutely correct. Despite these very difficult and challenging economic times, the private sector is creating jobs. We of course have to help it to create more jobs through the measures I have already outlined—cutting the small companies tax rate, help with credit and the like—but we also need to help those looking for work. That is why we have the Work programme and the youth contract, instruments that are much more effective than the programmes promoted by the previous Government at helping people who are out of work to link up with companies that want to employ people.
Chris Williamson (Derby North) (Lab)
Britain is the only G20 country in a double-dip recession, youth unemployment is at record levels, poverty is on the increase, public services are in meltdown, and the Government are borrowing around £4 billion more this year than they did last year. The lessons of the 1930s demonstrate that the austerity programme that the Chancellor is pursuing will not work. Will he learn the lessons of history—
Mr Speaker
Order. We are extremely grateful, but I am afraid that we do not have time to go back to the 1930s now. We have the gravamen of the hon. Gentleman’s question.
Mr Osborne
I suggest that tonight and tomorrow the hon. Gentleman turns on the television and watches the evening news, because he will see that there are problems facing many economies around the world. The Labour idea that somehow Britain alone faces these challenges because the Government are trying to deal with the debt is absolutely ridiculous. There are all these European economies in recession, the US economy had disappointing jobs data, and the Chinese economy is slowing. These are difficult times, but we are doing everything we can to help the British economy deal with the problems we inherited.
Mr Dominic Raab (Esher and Walton) (Con)
T9. Last year we lost the most working days to strikes in 20 years, and since the last election union leaders have never won the backing of a majority of their members for any major strike. Will my right hon. Friend task the Office for Budget Responsibility to provide annual estimates of the cost to the economy of strikes and of the concessions, paid for by taxpayers, to avoid them?
Mr John Redwood (Wokingham) (Con)
When will the House be given the details of the three very large schemes for monetary easing announced at the Mansion House, and when will we be given a chance to debate them?
Mr Osborne
It is standard practice for the Bank to announce its own monetary and liquidity schemes. That is what it did with the liquidity proposals, and the Governor of the Bank was answering questions about them this morning before the Treasury Committee in this House. When we have further details about the funding for lending scheme, we will of course come to the House and make that announcement, but I hope that my right hon. Friend will allow me to continue to make Mansion House speeches as Chancellors have before.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
The counter-party proposal and the levy control mechanism fall within the ambit of the Treasury. Within the past hour the Energy Secretary has told the Energy and Climate Change Committee, which is undertaking pre-legislative scrutiny of the Energy Bill, that he would welcome a Treasury Minister going before it to explain those proposals. Why is the Economic Secretary refusing to do so?