George Osborne
Main Page: George Osborne (Conservative - Tatton)Department Debates - View all George Osborne's debates with the HM Treasury
(10 years, 8 months ago)
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John Cryer (Leyton and Wanstead) (Lab)
1. What recent comparative assessment he has made of trends in real wages in the UK and in similar economies.
The Chancellor of the Exchequer (Mr George Osborne)
The hon. Gentleman asks about trends in real wages. The main deterioration in wages and salaries was from 2007 to 2009 when growth fell from 5.7% to minus 0.6%. This is a vivid reminder of the damage that the great recession did. The Government have taken continued action to help with the cost of living so that last year real household disposable income grew by 1.4%, the fastest growth for three years. Of course, however, these remain difficult times for families, and the only way to deliver improved living standards for the long term is a sustained, balanced economic recovery with low mortgage rates, more jobs and more income tax-free. Our economic plan is delivering that. The Opposition’s plan for more spending and more borrowing would make things worse.
John Cryer
Well, that is one of the most vacuous answers I have ever heard, and that is against some very stiff competition. In the past three years real wages in this country have fallen lower than in any G20 country bar one—we are second from bottom. For how long is that going to be sustainable?
Mr Osborne
Let us be clear: this country had one of the deepest recessions of any of the countries in the G20 or anywhere else. We had one of the biggest banking crises and our country has had to recover from that, but I point out that in the hon. Gentleman’s own constituency there are now 12,000 more people in work than at the time of the election, and unemployment is down by a third.
Mr Andrew Tyrie (Chichester) (Con)
What contribution has real wage restraint in the private sector made to the surprisingly low level of insolvencies in the UK compared with our competitors, which is now enabling more firms to take advantage of the recovery than would otherwise be the case?
Mr Osborne
My hon. Friend is absolutely right that wage restraint in the private sector and the public sector has helped preserve jobs during the economic shock that we experienced under the previous Government. That is partly a credit to the labour market flexibility of the policies that previous Governments introduced in the 1980s and early 1990s and the last Government did not reverse. The wage restraint has helped us preserve more jobs than would otherwise have been the case in the public sector, which is why at least until recently it was supported by the Labour party.
Graeme Morrice (Livingston) (Lab)
23. Will the Chancellor confirm, however, that after three years of flatlining growth and with prices still rising faster than wages, working people are on average £1,500 a year worse off than in 2010?
Mr Osborne
People have been helped with their low mortgage rates which our credible economic policy is delivering. They are helped by the increase in the personal allowance—£600 this year, £700 next year. They will be helped by our tax-free child care, but above all they are helped by an economy that is turning the corner. The worst thing for living standards, the worst thing for household incomes, would be a return to the disastrous economic policies of the Labour party.
Mr Julian Brazier (Canterbury) (Con)
Does my right hon. Friend agree that the trend in real wages further emphasises the need to hold down social security spending?
Mr Osborne
Of course, the key thing about social security and welfare is that it should encourage people into work. One of the remarkable achievements of my right hon. Friend the Secretary of State for Work and Pensions is that the number of workless households is now at a record low in this country. That is a huge achievement. Since the Opposition have been raising all these questions about living standards and wages, perhaps they would like to hear what the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), a member of their shadow Cabinet, has been saying. He said:
“From 2004 onwards…families on ‘median incomes’—millions of workers—…were feeling the strain…people were working just as hard as ever—but were not getting on”.
He presented his findings to the Cabinet in 2010 but they got buried:
“We picked it up too late. It was very late in the day, is the truth”.
Rachel Reeves (Leeds West) (Lab)
The truth is that working families have paid the price for the three years of flatlining under this Chancellor. Prices have risen faster than wages for 37 of the 38 months that he has been in office. I have a quiz question for the Chancellor this morning. Can he tell the House which one of those 38 months is the odd one out and why?
Mr Osborne
First, may I welcome the hon. Lady back and congratulate her and her husband Nick on the birth of their baby, Anna?
There has been wage restraint in the public sector, but I thought that, as shadow Chief Secretary, the hon. Lady supported that. When she gave her speech about fiscal discipline before going on maternity leave, she supported wage restraint in the public sector. I am not clear whether she has changed her policy.
Rachel Reeves
The right hon. Gentleman obviously does not get the bonus point. He might find the truth embarrassing, but I must tell the House that the only month in which real wages rose was the month when bank bonuses soared by 80%, as the highest paid took advantage of his tax cut for millionaires. Rather than cutting taxes for the richest, why does he not help families facing the cost of living crisis on his watch?
Mr Osborne
When the shadow Chancellor was the City Minister, bank bonuses were £14 billion a year. They are now a fraction of that. Indeed, the income tax rate in every year of this Government is higher than in any year of the previous Government. By the way, inequality is now at its lowest level in this country since 1986. We have taken difficult decisions and tough action to ensure that our economy turns the corner. All those things were opposed by the Labour party, but as a result, because of low mortgage rates, because of the large tax-free allowance and because we are creating jobs in the economy, we can hold out the prospect of an improvement in the long-term living standards of the British people.
Mike Thornton (Eastleigh) (LD)
Does the Chancellor agree that taking 2.7 million taxpayers out of income tax through a higher allowance—a Liberal Democrat policy—will help improve living standards?
Mr Osborne
It is a policy being delivered by a Conservative Chancellor and a Liberal Democrat Chief Secretary. The hon. Gentleman is right that together we have taken millions of the low-paid out of income tax. Of course, that is also delivering a tax cut to 25 million working people, and there is more to come next April. It is one of the ways that, by securing the economic recovery and having credible policies with the public finances, we can help people by, for example, increasing the tax-free allowance.
Kerry McCarthy (Bristol East) (Lab)
2. What recent assessment he has made of the effect of fiscal policy on family incomes.
Dr Phillip Lee (Bracknell) (Con)
13. What recent steps he has taken to support small businesses.
The Chancellor of the Exchequer (Mr George Osborne)
This year the Government are taking further steps to help small businesses. We have increased the investment allowance tenfold, and from next April we will introduce a new employment allowance worth £2,000 for every small employer, taking around one third of small employers out of employer national insurance contributions altogether. From next Monday we will help small businesses get the best deal from their banks by guaranteeing that they can switch their accounts within seven days. That service will also be available to families, which is real choice and competition in banking being introduced by the Government.
Steve Brine
I thank the Chancellor for that answer. I know he will want to welcome the new business centre I opened recently in the centre of Winchester, which is part of our plans to find and develop new start-ups. That is all happening in the light of increased business confidence, increased takings and reduced vacancies on the high street. Will he therefore join me in backing Winchester city council, which is working strongly in partnership with the business improvement district to help drive recovery in my area?
Mr Osborne
I certainly welcome that. I met members of my hon. Friend’s local authority who came to Downing street to tell me about the business improvement district. That involves the local council, the local MP and local businesses working together to attract jobs and investment to Winchester. I congratulate him on the leadership he has shown.
Dr Phillip Lee
In the past year, 502 small businesses have been set up in my constituency, which is a 12.6% increase on the previous year. Does the Chancellor agree that further extending rate relief to new small businesses will both help them and inspire other people to set up new businesses in the economically vibrant part of the world that I have the privilege to represent?
Mr Osborne
We have had rate relief for small businesses—I have announced that in previous fiscal statements, and my hon. Friend must wait for further announcements—but we are also helping businesses with the employment allowance. That major change in the tax system means we are taking a third of small businesses out of employer NICs. Four hundred and fifty thousand small businesses will benefit, which I hope is welcomed on both sides of the House.
Ms Margaret Ritchie (South Down) (SDLP)
Given the need to underpin local economies, what progress has been made toward reviewing the current approval criteria for a simplified import VAT accounting scheme? That would enable new businesses, but particularly import businesses, to be underpinned.
Mr Osborne
I will write to the hon. Lady on her specific point, to which I do not currently have an answer. However, more broadly, the Government are open to ways in which to make the VAT system and the business tax system simpler. We have created the Office of Tax Simplification, which has specifically looked at the burden on small businesses. I will take what she says as a submission.
Mr Geoffrey Robinson (Coventry North West) (Lab)
I wonder whether I could yank the Chancellor out of his complacency for one moment. Is he aware that, in the year since the funding for lending scheme was announced, lending to small and medium-sized businesses is, on the most recent figures, negative? Is he aware that that is symptomatic of a broader failure on investment under his reign?
Mr Osborne
Gross lending is up under the funding for lending scheme, which we operate jointly with the Bank of England. We are aware of the specific challenge of small business finance, which is why, just before the summer, with the previous Governor, we launched a focus of the scheme on small business funding.
The hon. Gentleman says investment is failing under this Government. He is an MP from the midlands. Given his personal history, I would have thought he would welcome the announcement by Jaguar Land Rover of the 1,700 jobs being created in Solihull. As he well knows, four years ago there was a choice of closing either Castle Bromwich or Solihull. Not only are both open, but a huge investment in the new technology of ultra-light cars is coming along with 1,700 new jobs. The hon. Gentleman is a midlands MP and used to work for the company, so I would have thought he would welcome that.
Mr Brooks Newmark (Braintree) (Con)
19. I met the Braintree district business forum last week. The feedback was very positive—the economy is turning around and demand for business is growing—but, as businesses grow, they face a working capital squeeze. What are the Government doing to enable businesses to access working capital more easily?
Mr Osborne
The business bank is up and running, and £300 million is in the market to help support small business lending. My hon. Friend has gone around the country promoting some of the investment tax breaks we have provided, such as the seed investment tax break, which provides that crucial, early-stage capital so that the many businesses now being created have the money to grow.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
I am glad the Chancellor mentioned the banks. The small businesses in my constituency report that the predatory and risk-averse nature of the banks is still their biggest problem. One particular company has large contracts, including one in Parliament, which the banks have funded and which has just got started on time—the company is tooling up. However, the bank is now talking about stripping its assets and threatening its viability. What can the Chancellor do to stop banks in this country being so risk-averse and get them to support business?
Mr Osborne
That is a good question from the hon. Gentleman. The repair of the financial system perhaps remains one of our biggest domestic economic challenges. We are conducting a review of the future structure of the Royal Bank of Scotland and I will report back to Parliament this autumn on that specifically. More generally on the banking system, the funding for lending scheme, as a monetary intervention, has helped to support lending. Account switching, which will be possible from next Monday as the result of Government pressure, will help small firms to change their bank account much more easily and, as a result, get a better service.
Simon Kirby (Brighton, Kemptown) (Con)
20. Unemployment in Brighton Kemptown is falling, although there is still much to do. Does my right hon. Friend agree that the £2,000 cut in jobs tax will help small businesses in Brighton take on more staff and get even more people into work?
Mr Osborne
My hon. Friend is absolutely right. It is not just jobs that are being created in Brighton; there has been an increase in the number of businesses being created, too. Employment allowance is coming in and people will see that as a real way of helping small businesses with the cost of labour. That should help them employ more people and help the people who are already employed. That is just one example of what we are doing to ensure that this is a balanced private sector recovery, and that we do not repeat the mistakes of the past.
Dame Anne Begg (Aberdeen South) (Lab)
Her Majesty’s Revenue and Customs expects businesses to provide real-time information, which a lot of small businesses find either very difficult or impossible to do. What help will be put in place to ensure that they are able to move on to the new system? Even if universal credit eventually comes into being, it will depend on that information.
Mr Osborne
Some 90% of businesses are on real-time information. Of course, the transition to any new system is a challenge, but the new system will be much easier for small businesses, and all businesses, to keep an accurate account of their tax payments, and that will help them. We have phased it in so that small businesses, in particular, have time to prepare. This is a real improvement on a tax system that was many decades old and had not kept up with modern technology.
Sir Bob Russell (Colchester) (LD)
Will the Chancellor consider abolishing business rates for small retail establishments, and to make that fiscally neutral by putting a levy on out-of-town car parks?
Mr Osborne
I am not sure about the out-of-town car park part of the question, because I want to encourage retail and employment wherever they happen. We are aware of the challenge on our high streets, particularly for small retailers. The Government have, in previous Budgets and autumn statements, extended relief from business rates for small businesses, which has meant that many of the smallest firms do not pay business rates. I will take the suggestion as a good submission for a future fiscal statement.
Ann McKechin (Glasgow North) (Lab)
6. What recent progress he has made on implementation of the mortgage guarantee scheme.
John Robertson (Glasgow North West) (Lab)
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.
John Robertson
I thank the right hon. Gentleman for that extensive answer. He was boasting yesterday that he had saved the country, while we have people struggling with electricity bills, transport costs and food prices are up, people on the same wages are getting less and less for their money, and zero-hours jobs mean that people cannot get a mortgage or a loan, unless it is a payday loan. What would the Chancellor say to those people?
Mr Osborne
I could give a more extensive answer and point out that, in Glasgow North West, which the hon. Gentleman represents in this Parliament, the claimant count is down this year and employment is up. In other words, we are turning the corner and putting right what went so disastrously wrong under the previous Government.
We have now had 50 minutes of this Treasury Question Time, and we are hunting for a Labour economic policy. We have not heard one advocated yet; maybe we will get one soon.
Paul Maynard (Blackpool North and Cleveleys) (Con)
T2. Many of my constituents have been adversely affected by the troubles at Equitable Life. May I please ask the Chancellor, on their behalf, for an update on the Government’s position?
Mr Osborne
I said in the Budget that we would make special ex gratia payments to Equitable Life policy holders who had bought their with-profits annuity before 1992. I said that we would try to make those payments as soon as possible, and I am pleased to be able to tell the House and the constituents of my hon. Friend, who represents them so well, that we can make those payments in this financial year, rather than in the next one as we originally predicted. We will shortly be writing to those annuitants with more information, but I can confirm that they will receive the money directly, without having to make an application. We are doing this not because we are legally obliged to do it but because, quite simply, it is the right thing to do.
Ed Balls (Morley and Outwood) (Lab/Co-op)
On growth, on living standards, on the deficit, on every test that the Chancellor set himself, his economic plan has failed. Since 2010, growth has been not 6.9% but 1.8%, families have been worse off not better off, and the deficit has not gone down to £60 billion but is stuck at £120 billion. How on earth can the Chancellor now claim that his economic plan has worked? After three wasted and damaging years, does he not realise that he cannot just airbrush out his failure?
Mr Osborne
The shadow Chancellor cannot airbrush out his predictions. He said:
“Britain’s double-dip recession is even deeper than first thought”,
but there was no double-dip recession. He also said that it was a “complete fantasy” that private sector job creation would replace losses in the public sector, but it has done so three times over. And three months ago, he said that our policy would choke off the recovery. The fact is that he cannot stand the fact that the economy is recovering and his plan would have been a disaster. Let us fear that the predictions about his own future in the shadow Cabinet turn out to be more accurate than his predictions about the British economy.
Ed Balls
Three years ago, this Chancellor did choke off the economic recovery. That is what happened, and his arrogant complacency will jar with millions of ordinary families who, even with growth returning at last, are still worse off because of his failing plan. Let me ask him who is benefiting from his policies. Can he confirm what the Office for National Statistics reported last month—namely, that the incomes of the highest earners were boosted in April because they delayed receiving their bonuses by a month in order to benefit from the tax cut for people earning more than £150,000 a year? The wealthy might be celebrating with the Chancellor, but everyone else thinks that he is completely out of touch.
Mr Osborne
I hope this is not our last encounter across the Dispatch Box, because we are enjoying this. We are enjoying the fact that the shadow Chancellor simply does not admit to the mistakes he made, not only in office but in opposition. He is increasingly like Monty Python’s black knight defending that bridge. When unemployment falls, he says that it is but a scratch; when business confidence rises, he says, “I’ve had worse”; the recovery—it is just a flesh wound. The limbs are falling off his economic argument, and it would be a comedy if it were not for the fact that Labour’s economic policies were a tragedy for this country.
Stephen Mosley (City of Chester) (Con)
T6. Next week, along with the university of Chester riverside innovation centre, I am organising a small business fair in Chester to try to encourage people to set up their own small businesses. Will my right hon. Friend the Chancellor tell us what the Government are doing to encourage people to set up their own businesses and create jobs in addition to the 1.3 million that have already been created in the private sector?
Mr Osborne
There is a record number of business start-ups in this country at the moment, and I congratulate the business community and people in Chester who want to set up their own business. We are doing everything we can to support them. The new employment allowance will help many hundreds of businesses in my hon. Friend’s constituency. Together, as Cheshire MPs, we can of course make a broader argument that Cheshire is a great place to invent.
Kelvin Hopkins (Luton North) (Lab)
T3. To sustain strong economic growth, to restore full employment and to support manufacturing for the long term, it is vital to establish an appropriate exchange rate. Does the Chancellor accept that case and, if so, what is he doing about it?
Mr Osborne
I make it a practice, like previous Chancellors, not to comment on the exchange rate, but let me make a broader point about monetary policy. At the Budget, I set a remit for the Bank of England to consider the use of forward guidance. Since we last met, the Monetary Policy Committee has, of course, made an independent judgment to take that up and has made a very clear statement about the future path of interest rates.
Graham Evans (Weaver Vale) (Con)
T7. Does my right hon. Friend the Chancellor agree that manufacturing surging to a three-year high and investment intentions rising to a six-year high show that this Government are committed to securing a balanced economy?
Mr Osborne
My hon. Friend, who is my constituency neighbour, knows as I do that manufacturing businesses are doing better now. Orders are up and exports, particularly to the new emerging markets, are up. In Daresbury in my hon. Friend’s constituency, we are committed to making sure that the manufacturing businesses at the cutting edge of technology get support, and we will continue to do that.
Karl Turner (Kingston upon Hull East) (Lab)
T4. I congratulate the Chancellor on his comedy haircut, but let me tell him that his policies are not very funny for people in my constituency, who are at least £1,500 a year worse off than they were in 2010. Does he accept that a certain few at the top are better off under his policies?
Mr Osborne
I have not heard in the 54 minutes of these questions either an apology for what happened under the Labour Government or a single economic policy being advanced. If the Labour party is against our welfare cuts or spending cuts, let it have the courage to get up and say that it would reverse them. We have not heard that at all in this questions session.
Kwasi Kwarteng (Spelthorne) (Con)
T8. My right hon. Friend is well aware that 80% of the employment in my constituency comes from the private sector. Will he tell us his plans for increasing private sector involvement in the economy and for giving that vital sector some support?
Mr Osborne
Of course one of the key things as the economy recovers is not to make the mistakes of the past and not to have the unbalanced economy that we had before the financial crash, when, for example, even in the boom years, private sector employment fell in some regions such as west midlands. What we must do in my hon. Friend’s constituency and elsewhere is support small businesses that are starting up, get the capital to the small businesses that want to expand and encourage the big companies to invest. In all those areas, there is positive news, but we have to stick at it.
Chris Williamson (Derby North) (Lab)
T5. Yesterday, the Chancellor said that those who opposed austerity had lost the argument, but wages are falling, child poverty is increasing and he is presiding over the slowest economic recovery in over 100 years. Unless the Chancellor is living in cloud cuckoo land or residing on planet Zog, he will surely admit that his record of economic competence has been less than satisfactory—
Mr Speaker
Order. I am sorry, but we have a lot to get through, so much shorter questions are required.
Mr Osborne
On planet earth, we inherited an economic mess, and we are putting it right. As I say, if Labour Members are serious about advocating an alternative economic plan, perhaps they would tell us today—perhaps someone will stand up and tell us—whether they oppose our spending cuts and would reverse them. We have not heard that today.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
T9. Will my right hon. Friend continue his support for specific major infrastructure projects such as superfast broadband, rail electrification and High Speed 2, which should begin to address the divide between north and south that grew so much wider under the previous Government?
Mr Osborne
I strongly agree with what my fellow north-west MP has said. I think that investment in infrastructure is important, whether it is investment in superfast broadband for rural areas in Lancashire, investment in the northern rail hub—which, although it was campaigned for by parties on all sides in the north of England for years under the last Government, did not happen then, but is happening under this Government —or, indeed, investment in High Speed 2, which will help to change the economic geography of the country, and will ensure that all parts of it benefit from the economic recovery. I absolutely agree with my hon. Friend: those things need to go ahead.
Chris Ruane (Vale of Clwyd) (Lab)
T10. What assessment has the Chancellor made of the impact of zero-hours contracts on the health and well-being of British workers, and also on the consumer confidence of the hundreds of thousands of workers who are on such contracts?
Mr Osborne
The Department for Business, Innovation and Skills is investigating zero-hours contracts. It is seeking to establish whether there is abuse, and, if there is abuse, what we should do about it.
The Labour party seems to have suddenly discovered this issue. I do not remember a single Minister ever raising it when Labour were in government. Moreover, a number of Labour councils use zero-hours contracts.
Sir Peter Tapsell (Louth and Horncastle) (Con)
Although the economy is improving, I am afraid that the same cannot be said of the deputy Chancellor—[Interruption.]
Mr Speaker
I will grant the right hon. Gentleman an Adjournment debate on the matter if he judges it to be necessary after he has heard the reply to his question. We shall see—but I am grateful to him.
Mr Osborne
Let me say first that the shadow Chancellor was in effect the deputy Chancellor for 13 years, when the economy became so unbalanced and we experienced the biggest crash in modern history.
My right hon. Friend raised a serious question about the separation of retail and investment banking and about, in effect, Glass–Steagall-like reforms or a Volcker rule in the United Kingdom. We asked John Vickers— whom he mentioned—to look into the issue, along with a serious commission of experienced people, and they concluded that ring-fencing retail banks was a better solution. That is what we are legislating for, and it shows that we are learning from the mistakes of what went so badly wrong when that deputy Chancellor was in charge of the City.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
As the Chancellor knows, a large number of small and medium-sized enterprises were let down by the conventional banking system. Many are finding that crowdfunding is a useful way of enabling them to start up and grow. Will he and the Secretary of State for Business, Innovation and Skills be very cautious before introducing unnecessary regulation to curb crowdfunding, which is a good thing for most small businesses?
Richard Fuller (Bedford) (Con)
Worse than the shadow Chancellor’s talking down of the British economy is the Labour party’s love of the jobs tax, which reduces employment, depresses wages and discourages enterprise. Will my right hon. Friend think about what he will do with the employment allowance next year, and see whether he can reduce it further so that we can reverse those trends?
Mr Osborne
I well remember my trip to Bedford with my hon. Friend before the 2010 election, when we were campaigning against the jobs tax which was the Labour Government’s solution to rising unemployment. This Government are adopting the opposite approach. We are taking taxes off jobs, and from next April there will be a new employment allowance that will help the many businesses in Bedford and throughout the country. That is just one example of what we are doing to fix what went so badly wrong.