Asian Infrastructure Investment Bank
George Osborne Excerpts(9 years, 3 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
Today I am announcing the Government’s intention for the UK to apply to become a prospective founder member of the Asian Infrastructure Investment Bank (AIIB).
The AIIB is being established to address the shortage of infrastructure investment in Asia. The Government believe that the AIIB has the potential to become an important part of the international financial architecture, working with existing multilateral development banks to strengthen growth in the region and benefit all our economies.
The UK will become the first major western country to apply to become a prospective founder member of the AIIB, which has already received significant support in the region. This Government have actively promoted closer political and economic engagement with the Asia-Pacific region and is forging links between the UK and Asian economies. Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together.
Subject to agreement by the existing prospective founder members, the UK will become a prospective founder member and participate in negotiations on the bank’s founding principles, with a view to ensuring that the new institution adheres to existing global best practice on governance and safeguards.
The Articles of Agreement establishing the AIIB will be finalised later in the year. At that point, based on the outcome of the multilateral negotiations, the Government will make a final decision on whether to join the AIIB.
[HCWS409]
ECOFIN
George Osborne Excerpts(9 years, 3 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
A meeting of the Economic and Financial Affairs Council will be held in Brussels on 10 March 2015. Ministers are due to discuss the following items:
Investment plan for Europe
The objective of the Council will be to reach a general approach on the proposal on the European fund for strategic investments (EFSI).
Current legislative proposals
The presidency will inform delegations about the state of play of legislative proposals in the field of financial services.
Implementation of the banking union
The Commission will inform delegations about the state of play on the bank recovery and resolution directive (BRRD) implementation and the ratification of the intergovernmental agreement (IGA) on the single resolution fund (SRF).
European semester: country reports
The Commission will present the “country reports” published on 26 February.
Implementation of the stability and growth pact
The Commission has issued assessments of the performance of France, Italy, Belgium and Finland under the stability and growth pact (SGP), and Council will discuss the Commission’s recommendation for next steps it may take for these countries.
[HCWS360]
ECOFIN
George Osborne Excerpts(9 years, 3 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
A meeting of the Economic and Financial Affairs Council was held in Brussels on 17 February 2015. Ministers discussed the following items:
Investment plan for Europe
The presidency gave a state of play update on the Commission’s proposal for a regulation on the European fund for strategic investments.
Current legislative proposals
The presidency gave an update on current legislative proposals.
Annual growth survey 2015 and alert mechanism report
The Council adopted conclusions on the annual growth survey and the alert mechanism report.
Follow-up to the G20 Meeting of Finance Ministers and Central Bank Governors on 9 to 10 February 2015 in Istanbul
The presidency and the Commission debriefed the Council on the G20 meeting of Finance Ministers and Central Bank Governors in Istanbul.
Discharge procedure in respect of the implementation of the budget for 2013
The Council, on the basis of a report from the Court of Auditors, approved draft recommendations on the discharge to be given to the Commission in respect of the implementation of the general budget of the European Union for the financial year 2013. The UK, along with Sweden and the Netherlands, voted against the Council recommendations and submitted a joint statement expressing there had not been an improvement to the Court of Auditor’s error rate assessment.
Budget guidelines for 2016
The Council endorsed guidelines concerning the 2016 budget of the EU, which will be its overall reference for the budget year.
High-level group on own resources—first assessment report
The chairman of the high-level group on own resources presented the group’s first assessment report on the system of financing the EU budget, followed by an exchange of views.
[HCWS334]
Tax Avoidance (HSBC)
George Osborne Excerpts(9 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Speaker
Order. I do not wish to be pedantic, simply accurate, but I think the wording of the urgent question was “avoidance”—the tax avoidance scandal. The point is on the record.
The Chancellor of the Exchequer (Mr George Osborne)
The allegations about tax evasion at HSBC Swiss are extremely serious and have been the subject of extensive investigation by Her Majesty’s Revenue and Customs. Money has been recovered for the Exchequer, and HMRC continues to be in active discussion with our prosecuting authorities. The chief executive of HMRC and the Director of Public Prosecutions have confirmed that they have the necessary resources to carry out their work on this matter, and if they need more resources they will get them.
The House should know, however, that in each and every case the alleged tax evasion—both by individuals and the bank—happened before 2006 when the shadow Chancellor was the principal adviser on tax policy and economic affairs to the then Labour Government. News that the French had got hold of the files with the names of the bank accounts became publicly known in 2009 when the shadow Chancellor was sitting on the Government Benches, and the files were requested and recovered by HMRC before May 2010, when he was a member of the Cabinet.
The right hon. Gentleman has written to ask me five questions about my responsibilities. I will answer each one directly, and in return he can account for his own responsibilities. He asked about what he calls the selective prosecution policy pursued by HMRC, and whether that decision was made by Ministers. Yes, that decision was made by Ministers, and the Inland Revenue’s overall approach to prosecuting cases of suspected serious tax fraud was set out in the Official Report on 7 November 2002, column 784W, in an answer by the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). That was confirmed again when HMRC was created in 2005—again by the right hon. Gentleman. I have increased resources for tackling tax evasion, and as a result prosecutions are up fivefold. I have answered for my responsibility on that question; perhaps the right hon. Member for Morley and Outwood (Ed Balls) will answer for his and tell us whether he drafted that policy.
Secondly, the right hon. Gentleman asked when I was first made aware of the HSBC files, what action I took, and whether I discussed them with the Prime Minister. I first became aware of the existence of the files in 2009 when a story appeared in the Financial Times. I was shadow Chancellor at the time so I could take no action, and I could not discuss it with the then Prime Minister because I was not on speaking terms with him. That is what I knew. The right hon. Member for Morley and Outwood was a Cabinet Minister. When he heard about these revelations, did he speak to the Prime Minister about them?
Thirdly, the right hon. Member for Morley and Outwood asked why we appointed Stephen Green to the Government. We appointed him because we thought he would do a good job as trade Minister, as did the Labour party, which welcomed the appointment. The trade job was not Stephen Green’s first public appointment. That was when he was appointed by the previous Government to be not just a member of the Prime Minister’s business council but its chair—a post he continued to hold after the existence of the HSBC files became public and after HMRC negotiated to recover them under the previous Government. I have explained why we appointed Stephen Green. Perhaps the right hon. Member for Morley and Outwood will explain why he appointed Stephen Green.
Fourthly, the right hon. Gentleman asked about discussions with Stephen Green on tax evasion. I can confirm that the Cabinet Secretary and the director general of ethics at the Cabinet Office carried out the background checks for ministerial appointments that were put in place by the previous Government. Stephen Green’s personal tax affairs were examined by HMRC on behalf of the House of Lords Appointments Commission, again using the procedures put in place by the previous Government. Those are the procedures we followed when we appointed Stephen Green. What procedures did the right hon. Gentleman follow?
Finally, the right hon. Gentleman asked me why I signed a deal with the Swiss authorities in 2012. He does not need my explanation. Listen to what the shadow Chief Secretary at the time, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), said:
“We support the agreement signed by the UK and Swiss Governments to secure billions in unpaid tax.”––[Official Report, Finance Public Bill Committee, 26 June 2012; c. 655.]
She is right: billions of unpaid tax never collected under a Labour Government. Under this Government, tax evasion is at the top of the G8 agenda. We have collected more money and prosecutions have increased five times over. Ahead of the Budget, I set the Treasury to work on providing further ways to pursue not just the tax evaders, but those providing them with advice. So anyone involved in tax evasion, whatever your role, this Government are coming after you. Unlike the previous Government, who simply turned a blind eye, this Government are taking action now and will do so again at the Budget. So I am happy, any time, to answer for our record on tackling tax evasion. Now, let him account for his.
Ed Balls
Finally, the Chancellor has been dragged to the House to answer questions about the HSBC scandal, which broke a full two weeks ago. At a time when the living standards of working people are squeezed, when our public services are under pressure, when HSBC is paying out high bonuses and when the amount of uncollected tax has gone up under this Government, we need proper answers, not another Chancellor sweeping these issues under the carpet as we have heard today. [Interruption.] I think the hon. Member for Northampton North (Michael Ellis) should listen to these questions and then the Chancellor can tell us whether he actually has any answers. Don’t you agree, Mr Speaker?
Detailed information was passed to this Government in May 2010 about 1,100 HSBC clients—[Interruption.]
Mr Osborne
Well, I do not think that performance will save the shadow Chancellor’s political career. Every single question he asked I had already answered. The whole House can see that the person bringing this question to the House is the person with the most to answer for, and that he has no answers. He has nothing to say about the fact that every single one of these alleged offences occurred when he was the principal tax adviser to the last Labour Government, and nothing to say about the fact that the HSBC files came to light while he was in office. He said I admitted I knew about them in 2009. I read the Financial Times—it was in the newspapers; he was in the Cabinet and did absolutely nothing about it. He said that the information was provided to the Government in May 2010.
Mr Osborne
He nods his head, but the information was provided in April 2010, when there was a Labour Government and he was in the Cabinet. He has nothing to say either about the agreement with the French authorities restricting the use that could be made of this information—an agreement that we are now busily trying to change.
None of these things has the shadow Chancellor admitted to or apologised for, and none of it is of any surprise to Government Members, because the Labour party was the friend of the tax avoiders and the tax evaders when it was in office. When we entered office, City bankers were paying lower tax rates than those who cleaned for them; foreigners were not paying capital gains tax; hedge funds were abusing partnership rules; and the richest in our society routinely did not pay stamp duty at all. We have put at end to all of that, and we will take more action in the Budget. All we have on the Opposition Benches is a bunch of arsonists throwing rocks at the firefighters who are putting out the fire that they started.
The shadow Chancellor comes to the House fighting for his political life. He asks about tax evasion, but he was the principal tax adviser when tax evasion occurred. His economic policy is in tatters, and he cannot name a single business supporter of his business policy. His tax avoidance campaign has turned into a war with his own window cleaner. Now he has lost the confidence of his colleagues and his leader, but he lost the confidence of the country a long time ago.
Mark Garnier (Wyre Forest) (Con)
Will the Chancellor confirm that British taxpayers will receive more money back from tax evaders as a result of civil actions than they would through criminal actions?
Mr Osborne
When we can pursue criminal prosecutions, of course we do so, but that is a matter for the independent prosecuting authorities. Frankly, the suggestion from some on the Labour Benches that the Chancellor of the Exchequer should direct the prosecutions of our independent prosecuting authorities shows how far they have gone from the constitutional principles of government. We set the overall resourcing for HMRC and pass the tax laws, but we have independent prosecuting authorities. The shadow Chancellor goes on about the policy, but the policy was set out by the right hon. Member for Kirkcaldy and Cowdenbeath in 2002 and repeated in 2005.
Frank Dobson (Holborn and St Pancras) (Lab)
Does the Chancellor agree that obtaining financial advantage by deception is a criminal offence even when carried out by bankers? Does he recognise that HSBC has 556 subsidiary companies in tax havens? We know what has happened with one of them, but when will there be an inquiry into the other 555?
Mr Osborne
Some very serious allegations have been made about HSBC Swiss and its role in knowingly advising people on tax evasion. Of course, our prosecuting authorities will want to look into the matter, but the House needs to know that the information that was received from the French authorities under the last Government—[Interruption.] This is important, and it is relevant to the right hon. Gentleman’s question. The information was received as the result of a negotiation with the French authorities about what use it could be put to, and the French agreement struck by the last Government said that we could use it only for prosecuting or pursuing individuals with regard to their tax affairs. We are currently in active discussion, which I think will come to a fruitful end, to get the French to allow us to pass some of that information to the Serious Fraud Office and other prosecuting authorities, to address the concern that he rightly raises about the potential or alleged role of banks in the affair.
Jeremy Lefroy (Stafford) (Con)
Will my right hon. Friend explain to the House how many tax avoidance schemes that he inherited in 2010 he has had to close down?
Mr Osborne
More than 40 tax avoidance schemes or loopholes have been closed. Of course, we have also introduced an anti-avoidance and anti-abuse rule, which the Labour Government had 13 years to introduce. Now Labour Members are saying that we should be stiffening the penalties under that anti-abuse rule, but—[Interruption.] I will tell Members who was in charge. The shadow Chancellor was in charge for 13 years and did absolutely nothing. We came in, closed the loopholes, introduced the anti-abuse rule, got rid of the abuse of partnerships by hedge funds, got rid of the abuse of stamp duty by the richest in our society and started collecting the tax that should have been collected long ago.
Mr Mike Weir (Angus) (SNP)
The revelations about HSBC are just the latest in a long line of misdeeds by our banks, which are undermining confidence in the system throughout. Too often, HMRC seems to be on the back foot. The Chancellor said that if it required more resources it would be given them. Will he commit those resources to a proactive investigation of the role of banks, and some of the larger accountancy firms, in both tax avoidance and tax evasion?
Mr Osborne
The amount collected by HMRC as a result of abuse of this kind has risen from £17 billion to £26 billion. That is partly because we have put additional resources into tackling tax evasion and aggressive tax avoidance. We have done a great deal. However, I am the first to say that there is more to be done, and, as I said in my statement, more will be done in the Budget.
Ian Swales (Redcar) (LD)
Does the Chancellor think that corporate entities that advise on tax evasion or enable it to take place should themselves be subject to criminal prosecution?
Mr Osborne
Yesterday the Chief Secretary referred to a policy that the Treasury has been considering for the purposes of the Budget, involving the penalties that should be paid by those who actively facilitate tax evasion. As I have said, we are considering that policy, but the hon. Gentleman will have to wait for the Budget.
Mr David Winnick (Walsall North) (Lab)
If the position is now so clear and has now been dealt with, why did the former Tory treasurer say only the other week that “everyone” was engaged in tax avoidance? He meant the rich. Is not the situation summed up very well by an American woman, Leona Helmsley, who ran hotels? She said—and it apparently still applies in this country to a large extent—
“We don’t pay taxes. Only the little people pay taxes.”
That illustrates the divide between the vast majority of people in our country and the rich.
Mr Osborne
We have taken steps to deal with precisely the abuses to which the hon. Gentleman has alluded, such as the use of vehicles to avoid paying stamp duty, the creation of partnerships so that hedge funds do not pay the proper amounts, and the fact that foreigners did not pay capital gains tax. Disguised income is another abuse that we have sought to clamp down on—and, by the way, the Labour party voted against our action in that regard. As more abuses come to light and more contrived schemes are discovered, we take action to deal with them, but I have to say that we have had very little support from the Labour party.
Steve Baker (Wycombe) (Con)
When objective members of the public review these exchanges, they could be forgiven for thinking that there was little to choose between our parties. Will the Chancellor confirm that he has instituted not just the general anti-abuse rule, but follower notices and accelerated payments, and will he also confirm that our party has dealt with this issue far more robustly than the Labour party?
Mr Osborne
My hon. Friend is absolutely right. The accelerated payments scheme means that if tax is in dispute, we ask for it up front, and if people can prove that we have got it wrong, they get the money back. That is the rule with which the vast majority of our citizens must comply at present, but it was not complied with by those who were very well off. We introduced the accelerator, and as a result we are collecting hundreds of millions of pounds of tax that was previously not collected. As my hon. Friend says, that is further evidence of the gulf between what the Labour Government did during the 13 years for which the shadow Chancellor advised them, and what we have done in the last five years.
Helen Goodman (Bishop Auckland) (Lab)
The Chancellor described the steps taken by the civil service before the appointment of Lord Green, but will he now answer this question? Did he ever discuss this matter with Lord Green, and did the Prime Minister ever discuss it with Lord Green?
Mr Osborne
I said in my statement that the proper procedures had been followed for the appointment of a Minister, and that the Cabinet Secretary and the director general of ethics in the Cabinet Office had been involved. I am not privy to the tax affairs of any individual citizen, and it would be a gross abuse of our constitution if I were. Our procedures allow HMRC to talk to the House of Lords Appointments Commission, and it did so on this occasion, so those procedures were followed. Any Labour Members who ask questions about our appointment of Stephen Green to the post of Trade Minister could be asked questions about their decision to appoint him as chair of the Prime Minister’s business council, and to retain him in that post after the revelations that appeared in the Financial Times in 2009.
Julian Smith (Skipton and Ripon) (Con)
Many small businesses and taxpayers in north Yorkshire will be shocked by the time line that the Chancellor has just described. Will he clarify once again what the last Government knew and when?
Mr Osborne
They don’t want to hear about their record in government, Mr Speaker. Every single alleged offence happened when the Labour Government were in office. The information became publicly known when the Labour Government were in office. Lord Green’s first public appointment was as chair of the Prime Minister’s business council under the Gordon Brown Administration. The information was received from the French authorities under the last Labour Government. So I think the whole House—and, indeed, my hon. Friend’s constituents, who pay their taxes—would like the shadow Chancellor to get up and express a little bit of humility and contrition for the mistakes made when he was in office.
Mr Andrew Love (Edmonton) (Lab/Co-op)
Since 2010 the Chancellor or Treasury Ministers have met HSBC 56 times. Was tax avoidance or tax evasion ever discussed at those meetings, and what was the outcome of those discussions?
Mr Osborne
First of all, it is not surprising that the British Government—Conservative, coalition or Labour—would meet one of the country’s largest institutions and banks. So that it is not a matter for surprise. I am happy to write to the hon. Gentleman about any details we have about particular meetings.
David Mowat (Warrington South) (Con)
In 2005, at the height of all of this, the then Chancellor told the CBI dinner that he supported a “light” and “limited” approach to regulation including tax administration. What does the Chancellor think the previous Chancellor meant by a “light” approach to tax administration, and can he confirm that we have cleared it up?
Mr Osborne
Well, we have taken a much more aggressive approach. As a result, prosecutions are up fivefold. I have the following parliamentary answer from the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), and this is what he told the House:
“Where serious tax fraud has been committed, the Board”—
the Inland Revenue board—
“may accept a money settlement instead of pursuing a criminal prosecution.
The Board will accept a money settlement and will not pursue a criminal prosecution, if the taxpayer, in response to being given a copy of this Statement by an authorised officer, makes a full and complete confession of all tax irregularities.”—[Official Report, 7 November 2002; Vol. 392, c. 784W.]
That was the approach of the right hon. Member for Kirkcaldy and Cowdenbeath to tax policy. [Interruption.] The shadow Chancellor says it was before 2000, but the revelations were made in 2009, and the last time I checked there was a Labour Government in late 2009 and early 2010.
Emily Thornberry (Islington South and Finsbury) (Lab)
Will the Chancellor finally seriously consider the issue of corporate liability for the criminal actions of employees? This would mean that banks could themselves be prosecuted. Would he like a copy of Labour’s policy review on tackling serious crime and white-collar crime that I launched two years ago? I have a copy here; he can have a read of it. I suggest a change in the law.
Mr Osborne
Unfortunately for the hon. Lady, the Labour party had 13 years when they had a Labour Chancellor standing at this Dispatch Box able to introduce all these things she talks about. As I have said, we are looking very seriously in the Budget at what further action we can take to tackle not just those who evade their taxes, but those who facilitate that evasion.
Jacob Rees-Mogg (North East Somerset) (Con)
Does this question itself show the danger of eliding tax avoidance and tax evasion? There is no obligation on anybody to pay more tax than the law requires and even the most respectable families have schemes of arrangements to minimise things like death duties, whereas tax evasion is a very serious criminal offence which should be come down on with the full force of the law.
Mr Osborne
The hon. Gentleman says that that’s the Tory party, but, as it happens, I think my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is referring to the newspaper accounts of the Labour leader. I am not going to get drawn into that. Of course there is a difference in law between tax avoidance and tax evasion, although the shadow Chancellor managed to mess it up in the question he put today, but I have said as well that aggressive tax avoidance is something we also need to clamp down on and stop, and we have taken many actions to do so.
Kevin Brennan (Cardiff West) (Lab)
The Chancellor said he was answering all the questions, but, as I heard him, he left out the second part of the question about the deal with the Swiss authorities, which was why was a deal signed which prevents the UK from actively obtaining similar information in the future. Will he tell our constituents why the Government decided to do that deal?
Mr Osborne
I can confirm that the agreement we have signed would not prevent us from receiving the so-called Lagarde list in exactly the way that we have been doing. Also, thanks to the Prime Minister’s leadership at the G8, we will now have an automatic exchange of information with Switzerland from 2017. That is one of the most important steps forward in tackling tax evasion. The answer is—[Interruption.] The shadow Chancellor is again not listening to the answers that he is getting across the Dispatch Box; the problem is that all his questions have been answered. The answer is that our agreement with Switzerland would not prevent us from receiving the Lagarde list.
Duncan Hames (Chippenham) (LD)
Should we not design greater resilience into our tax base instead of engaging in endless games of cat and mouse with firms of tax advisers?
Mr Osborne
The hon. Gentleman asks a good question. There are two approaches. The first involves introducing into our domestic law things like the general anti-abuse rule, which is more of a catch-all and tries to anticipate changes by accountancy firms and others who devise aggressive avoidance schemes. The second approach, which is not to be underestimated, involves the major international agreement on the automatic exchange of people’s tax information between jurisdictions such as Switzerland and the United Kingdom. That agreement has happened only because the Prime Minister put it at the top of the G8 agenda; no previous leader of the G8 had done so. That is why we will have the automatic exchange of information, which will be a revolution in tax transparency.
Nia Griffith (Llanelli) (Lab)
What explanation can the Chancellor give in response to comments by the former tax inspector Richard Brooks that the Treasury and HMRC
“knew that there was a mass of evidence of tax evasion at the heart of HSBC”
in 2011, but that the Government
“simply washed their hands of it”?
Mr Osborne
As I have explained, HMRC received in April 2010 the disc that had all the information on individual bank accounts. It then set about investigating all those individuals and bringing those prosecutions. We have known—[Interruption.] The shadow Chief Secretary to the Treasury says that we have known this for five years. We have known for five years that there was egregious tax evasion 10 years ago under the Labour Government. We have put the resources into pursuing that, collecting the money and passing the international agreements to ensure that it never happens again in our country.
Alec Shelbrooke (Elmet and Rothwell) (Con)
Will my right hon. Friend clarify what he believes to be the difference between tax avoidance and tax efficiency?
Mr Osborne
As I said earlier, tax evasion is illegal. Aggressive tax avoidance is something that we are taking enormous steps to prevent. We have passed laws and introduced the general anti-abuse rule to ensure that we are collecting a fair amount of taxation from our population.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
The Chancellor has to realise that this will not wash with the general public and the tax-paying businesses in my constituency and elsewhere, or with the companies that paid their taxes under the arrangement in Switzerland and elsewhere when they transferred their money. The reality is that people want a law under which people will not only have money taken off them but go to jail. If he is not going to introduce such a law, he should step aside and let another Government do it for him.
Mr Osborne
These abuses happened when there was a Labour Government in office. That Government, and the former Chancellor, set in place the selective prosecution policy. We have increased the resources and, as a result, the number of prosecutions has gone up fivefold. There is still one particular barrier, however, to the potential prosecution of HSBC Swiss if it is found to have committed a crime. That barrier is the agreement signed by the last Government with the French Government, and we are currently in negotiations with the French Government to unravel that terrible agreement. Then, our independent prosecuting authorities will see whether there are any cases to bring.
Richard Graham (Gloucester) (Con)
It has recently emerged that the Gloucestershire-based business Ecotricity lent its founder £4 million on seriously tax-advantageous terms. Does my right hon. Friend agree that there should be an investigation into whether the transactions between Ecotricity and Dale Vince represent aggressive tax avoidance? Does he also agree that it is possible that Labour has not carried out appropriate due diligence on what might otherwise look like a naked attempt at a thank-you for the £37 million of taxpayer subsidies given to Ecotricity’s onshore wind farm business?
Mr Osborne
I am not going to discuss an individual’s tax affairs, but I would say this: the hypocrisy of the Labour party on this issue is simply breathtaking. Labour Members complain about Conservative party donors and then we hear all these revelations about Labour party donors; they complain about individual accountancy firms and then it turns out that Labour collects hundreds of thousands of pounds of donations from those accountancy firms; and they complain about the alleged tax evasion at HSBC Swiss and every single one of those offences happened when Labour was in government. It is time Labour Members got up and apologised.
Clive Efford (Eltham) (Lab)
No one on the Labour Benches is complaining that the Chancellor met people from HSBC 56 times—we are not surprised by that. The question is: was evasion or tax avoidance discussed at those meetings and what was the outcome of those discussions? [Interruption.]
Mr Osborne
I have already answered that question. [Interruption.] I have; I said it is not surprising that Ministers meet one of the largest companies in this country, which employs close to 50,000 people in Britain and, as I understand it, a quarter of a million people around the world. As I also said earlier, I am happy to write about any of the content of those meetings, which were not just with me, but across the government.
ECOFIN
George Osborne Excerpts(9 years, 4 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr George Osborne)
A meeting of the Economic and Financial Affairs Council was held in Brussels on 27 January 2015. Ministers discussed the following items:
Investment plan for Europe
The Commission presented a proposal on the establishment of a European fund for strategic investments, a key element of the investment plan for Europe.
Current legislative proposals
The Council took note of ongoing work on financial services dossiers.
Presentation of the presidency work programme
The new Latvian presidency presented a work programme on economic and financial matters for the duration of its term, which runs from January to June 2015.
Presentation of the Commission work programme
The Commission presented its work programme for 2015, focusing on the economic and financial agenda.
Economic governance
The Council discussed two communications from the Commission dealing with the EU’s fiscal and economic rules.
Preparation of the G20 meeting of Finance Ministers and Governors on 9-10 February 2015 in Istanbul
The Council endorsed EU terms of reference for a meeting of G20 Finance Ministers and Central Bank Governors in Istanbul on 8-9 February.
[HCWS277]
Oral Answers to Questions
George Osborne Excerpts(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Andrew Percy (Brigg and Goole) (Con)
5. What assessment he has made of the effect of falling oil prices on households.
The Chancellor of the Exchequer (Mr George Osborne)
The fall in the oil price clearly means that certain sectors such as the North sea face real pressure, which the Chief Secretary and I are determined to help them with, but overall this is a good thing for the United Kingdom and for British families. Today’s GDP figures confirm that the recovery is on track, and our plan is protecting Britain from the economic storm with the fastest growth of any major economy in 2014. However, the international climate is getting worse, and with 100 days to go to the election, now is not the time to abandon the plan and return Britain to economic chaos.
Michael Fabricant
We have all noticed that we no longer hear about the cost of living crisis. Could my right hon. Friend tell me precisely how the change in oil prices has affected the retail prices index and how that compares with wage inflation?
Mr Osborne
Inflation is at 0.5% and wages are growing at three times that rate. If the oil price is fully passed on—and we have put pressure on the petrol and utility companies to do so—British families will on average be £750 better off. If we had accepted the ludicrous price freeze proposed by the Opposition we would have locked in those high oil prices and people would not see the benefit in their utility bills.
Andrew Percy
The good folk of Brigg and Goole have noticed that the price of a gallon of petrol has fallen significantly and they welcome that. Many of my residents, however, are off the grid and their heating oil bills have not necessarily fallen as they should have. What steps can the Chancellor take to put pressure on heating oil companies to make sure that the cost of heating also falls for those residents off the grid, in line with oil prices?
Mr Osborne
My hon. Friend has been a champion for his constituents and for all the 1.5 million people who are off the grid and rely on heating oil to warm their homes. That price has fallen by 20%, so people are seeing the benefit of the falling oil price, but we continue to put pressure on the heating oil companies, and we have met them in the Treasury to continue to reinforce the argument that those prices must be passed on and must continue to be passed on.
Stewart Hosie (Dundee East) (SNP)
The oil industry has told us that the softening in the oil price has highlighted the underlying problem in the North sea, which is the high cost of doing business there, driven by an up to 81% tax on production. Instead of waiting till the Budget, will the Chancellor take urgent action on investment allowances and on a cut to the supplementary charge?
Mr Osborne
The Chief Secretary and I certainly recognise the pressure on the North sea producers. We want to make sure that we continue to extract the maximum amount of oil from the North sea basin. That is why we cut oil taxes at the autumn statement, published a consultation on the investment allowance and made it clear that further action may be required at the Budget.
May I draw it to the House’s attention that what the hon. Gentleman calls the softening of the oil price would have done disastrous damage to the finances of an independent Scotland? The Scottish National party’s projections for its oil revenue were out by almost threefold. It is a reminder of the strengths of the United Kingdom that we can bear pressures such as a falling—or, indeed, a rising—oil price across the entire UK.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Industry and economic experts say that thousands of jobs in the North sea oil sector are at risk, yet both the UK and the Scottish Governments seem to be passing the buck, rather than taking the urgent action that is needed. Will the Chancellor give a commitment to bring forward tax measures immediately to support the industry, as we have called for, rather than delaying for another seven weeks until the Budget?
Mr Osborne
As I said, we have already cut the supplementary charge. I announced that in the autumn statement and it came into effect at the beginning of this year. We have launched a consultation on an investment allowance. We regularly meet the industry; we met industry representatives last week. They think the Budget is the appropriate time to make further announcements, if there are further announcements, on the North sea oil and gas tax regime, but the hon. Lady and the industry have my assurance that we will do everything we can to support the North sea oil and gas industry during this difficult time. Of course it is impacted by the fall in the oil price. We want to make sure that we get the maximum amount of oil out of the North sea and that the record investment that we have seen over the past year is sustained.
Mr John Baron (Basildon and Billericay) (Con)
Given the financial short-termism of the previous Government, I welcome the Chancellor’s comments about a shale gas fund. When he is Chancellor after the next general election, will he consider expanding the concept to create a North sea sovereign wealth fund for the benefit of the country as a whole?
Mr Osborne
Of course, our challenge is to eliminate the deficit and to get our debt falling. Sovereign wealth funds are built up by countries that run consistent budget surpluses, which is exactly what we need to do in the United Kingdom. In particular, I would like to see some of the revenues from the shale gas industry used to support local communities. That would be a boost to communities across the country, especially in the north of England.
Dame Anne Begg (Aberdeen South) (Lab)
Although the Government cannot control the world oil price, they can do things such as drive down the costs in the industry. If the oil price remains low and perhaps drops further to the level where it costs more to take the oil out of the North sea, that is bad not just for the economy of Aberdeen and north-east Scotland, but for the economy of the UK.
Mr Osborne
I agree with the hon. Lady and I know that she is deeply involved in these issues as the Member of Parliament for Aberdeen South and chairs the all-party committee on these issues. We have to work out how we protect the industry as best we can from a rapid fall in the world oil price, and we must make sure that the brilliant skills, jobs and investment in north-east Scotland continue. That is why we anticipated the challenge by launching the consultation in the autumn statement and making immediate cuts to the tax regime. We have to take further steps over the coming year because we are determined that this brilliant industry will have a brilliant future.
Mr Andrew Tyrie (Chichester) (Con)
Will the Chancellor confirm that when the oil price halves, as we have just seen, that is likely to be extremely good news for the British economy? Will he also confirm that this fall in the oil price is particularly good news for the 70% of car owners who need cars to get to work? The House will realise that no Chancellor will want to commit himself now, but will he at least agree that there is now great merit in a period of stability in fuel duty?
Mr Osborne
My hon. Friend is right. As I said at the beginning, the fall in the oil price, for all the challenges it poses in the North sea, is good for the British economy and good for British families. It is being felt at the pump, where petrol is now cheaper than when this Government came into office. One of the reasons why is that we abolished Labour’s fuel duty escalator. As a result, petrol is 20p per litre less than it would have been had we stuck with the shadow Chancellor’s disastrous tax plans. We have to make sure that motorists feel the full benefit of the falling oil price. As I say, it was a good move to abolish that disastrous escalator.
Nigel Adams (Selby and Ainsty) (Con)
4. What assessment he has made of the effect of lowering the rate of national insurance on levels of employment.
Adam Afriyie (Windsor) (Con)
6. What assessment he has made of the effect of reducing employers’ national insurance contributions on employment.
The Chancellor of the Exchequer (Mr George Osborne)
This Government inherited damaging plans from the previous Government to increase the jobs tax. We responded by reducing the burden of national insurance. Since then, we have introduced an employment allowance that cuts national insurance for almost 1 million firms, and now we are going to cut national insurance for employing under 21-year-olds and young apprentices. These measures have contributed to record falls in unemployment. A rise in the jobs tax of the kind contemplated by Labour would have the reverse effect and destroy jobs.
Nigel Adams
I am very grateful to the Chancellor. Will he join me in congratulating the entrepreneurs and risk takers who, across my constituency, have stepped up to the plate since 2010—so much so that we now have 60% fewer people claiming out-of-work benefits? What further measures can my right hon. Friend deliver to ensure that the economic recovery continues in my part of North Yorkshire?
Mr Osborne
My hon. Friend is absolutely right that unemployment in his constituency has fallen. Twelve thousand extra jobs have been created in his constituency. That is because local businesses are benefiting from the employment allowance, and there is more to come with the cuts to national insurance for employing under-21s and apprentices. One of the reasons businesses are coming to his constituency is that he is such a champion of his constituency as a place to invest and employ. He goes out of his way to bring businesses and jobs to his constituency. That is why unemployment has fallen so fast there.
Adam Afriyie
It seems to me that we would be wise as a nation to reduce taxation on the activities that we wish to encourage. I therefore very much welcome the reduction in employers’ national insurance, which has created jobs in my constituency, and I suspect in every constituency around the country. Does the Chancellor agree that we would do well to push on with these reductions in employers’ national insurance, which, to all intents and purposes, is a tax on jobs that discourages their creation?
Mr Osborne
My hon. Friend is absolutely right that national insurance is a tax on jobs—
Mr Osborne
My hon. Friend is a champion of businesses in his constituency. That is one of the reasons unemployment has fallen in Windsor and 2,000 businesses in Windsor are benefiting from our employment allowance. We are going to go on reducing national insurance on employing 21-year-olds and apprentices. The alternative path—the path offered by the Labour party—is to put the jobs tax up. That would increase unemployment and return Britain to the economic mess it was in when Labour was last in charge.
Mr Gregory Campbell (East Londonderry) (DUP)
The lower-paid, particularly those who are earning £15,000 a year or less, should benefit from the Chancellor’s decision to raise the personal income thresholds, but will he also look at raising to the same level the threshold at which national insurance contributions are made, so that the lower-paid pay neither income tax nor national insurance contributions on £300 a week?
Mr Osborne
We increased the employer’s threshold when we came into office to reverse the damage done by the jobs tax increase proposed by the previous Labour Government. We have used the personal income tax allowance as the best method of lifting people out of income tax. It stands at £10,600, and our long-term economic plan proposes to raise it to £12,500. I am happy to work with the hon. Gentleman on other measures we can undertake to support employment and jobs in Northern Ireland. Is it not absolutely striking that on a question about the jobs tax and a question about unemployment, not a single Labour MP gets up to speak?
James Morris (Halesowen and Rowley Regis) (Con)
7. What progress his Department has made on supporting businesses.
Miss Anne McIntosh (Thirsk and Malton) (Con)
12. What recent representations he has received on creating a northern powerhouse.
The Chancellor of the Exchequer (Mr George Osborne)
We are making good progress in building a northern powerhouse. Over the past year, private sector employment in the north has increased by more than 200,000, a faster increase than the national average and faster than in the south. We want to sustain that by investing in new transport, new skills and new science, by devolving power and by bringing our northern areas closer together into that powerhouse.
Miss McIntosh
May I applaud the Chancellor and the Government for their work on creating a northern powerhouse? Will he ensure that rural communities participate in that wealth growth, and that rural broadband reaches farms and rural businesses that want to drive the rural economy and economic growth?
Mr Osborne
My hon. Friend is absolutely right that we want our rural communities in the north to be part of the powerhouse. It is not just about connecting the cities; it is about ensuring that the rural economy is a vibrant part of the northern economy. Superfast broadband is a key part of that, and, as she well knows, we have made special efforts to develop it in North Yorkshire. Rural transport is also incredibly important, as is supporting agriculture. The investment that we are making in agricultural science will benefit agriculture all over the country, including in her constituency.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The Chancellor will have noticed that, for the first time in a recessionary period, the unemployment figures in Scotland—our northern powerhouse—are consistently better than in the rest of the UK, as the SNP Government, where possible, have followed different economic policies. Is his opposition to proper economic powers for Scotland based on a fear of being further outperformed by the Scottish Government? Is he afraid of the competition from a real northern powerhouse?
Mr Osborne
I am delighted for Scotland that unemployment has fallen and it is seeing growth. I remember, however, that the SNP predicted that our economic plan would cause unemployment to rise in Scotland and shrink the Scottish economy. That has not been the case because Scotland has been part of a stable United Kingdom that is following a long-term economic plan that is benefiting the entire country.
Andrew Stephenson (Pendle) (Con)
20. On 4 November at Treasury questions, I raised the issue of Brierfield Mill, the largest redundant mill complex in Lancashire and situated in my constituency. Following that, my right hon. Friend the Minister for Universities, Science and Cities visited the project on 16 January. Now, inexplicably, the Lancashire local enterprise partnership has failed to bid for even a penny of funding as part of the second round of the growth deal. Will my right hon. Friend agree to meet me urgently to discuss Government support for that important project?
Mr Osborne
I am well aware of the economic potential of the Brierfield Mill development and when I met my hon. Friend in Nelson recently we talked about those benefits with local businesses. He is a champion of that development and it is extraordinary that the Lancashire LEP and, in particular, Lancashire county council have not promoted the project. He is promoting the project because he is a champion of his constituency and I will happily meet him to see how we can progress the Brierfield Mill project and bring more jobs to the Pendle constituency.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The Centre for Cities recently reported that for every 12 new net jobs created in the south-east of England, only one is created in the rest of the UK. What is the Chancellor doing to address that two-tier economy?
Mr Osborne
The hon. Gentleman says it is a two-tier economy, but youth unemployment is down by 45% in his constituency and unemployment down by 31%. I agree that the Labour Government in the Welsh Assembly are doing damaging things to the Welsh economy, but thankfully the UK Government are promoting Wales and the Welsh economy and, as a result, we are seeing jobs being created. I am happy to continue to come forward with policies that support Wales and its economic development.
Ian Swales (Redcar) (LD)
The north-east chamber of commerce recently said:
“Businesses are surging into 2015 on a wave of sustained growth and positivity”,
and unemployment is falling faster in the north-east than anywhere else in the country. Will the Chancellor ensure that the north-east is properly connected to the northern powerhouse and that the necessary infrastructure investment is delivered?
Mr Osborne
I assure my hon. Friend that that will be the case. The north-east is an incredibly important part of the northern powerhouse, and that is why we are investing in road and rail links there. We are also putting investment into science there, for example at Newcastle university, and of course in his constituency he has seen steelmaking begin again after it ended under the Labour Government. People will have a clear choice at the general election.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
13. What proportion of recipients of tax credits are in employment.
Nadhim Zahawi (Stratford-on-Avon) (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 and prosperity of the economy.
Nadhim Zahawi
We in Stratford-on-Avon are rightly proud of our world-class chamber orchestra, the Orchestra of the Swan, which, as well as playing to packed audiences in Stratford, is busy exporting British culture to the US and China. What assessment has my right hon. Friend made of the extra jobs and growth resulting from the new tax relief for theatres and orchestras?
Mr Osborne
The new tax relief for theatres has been a real success. It has been taken up by many theatres and is supporting regional productions. Separately, at my hon. Friend’s request, we have also helped the Royal Shakespeare Company to take its plays to China. Orchestra tax relief, the consultation on which we announced last week, will be another huge boost for British culture and music. We will set out further details in the Budget about how it will work, but it will be there to support a thriving orchestra industry—if that is the right word!
Ed Balls (Morley and Outwood) (Lab/Co-op)
First, on a note of consensus, today is Holocaust memorial day. Following our conversation last night concerning today’s report by the cross-party Holocaust commission, on which I am proud to serve, will the Chancellor confirm the cross-party agreement to fund the commission’s recommendations, alongside ongoing funding, for the rest of the decade, for the vital work of the Holocaust Educational Trust, to ensure we have a new and permanent memorial and that future generations never forget that terrible atrocity?
Turning to today’s GDP figures, is the Chancellor, like me, concerned that economic growth is slowing? With just 100 days until the election, will working people be better off than when he became Chancellor, or will they be worse off?
Mr Osborne
First, this being the 70th anniversary of the liberation of Auschwitz, we should remember the inhumanity and the suffering of those who died and those who live with the memories of the holocaust, and we should vow as a nation to keep their memory alive. The right hon. Gentleman and Members from other political parties served on the Holocaust commission, the chairman of which, Mick Davis, briefed the Cabinet today on its proposals for a permanent memorial and an education learning centre. I made it clear in the Cabinet meeting that the Government would provide £50 million to support this brilliant plan, and of course we will continue to fund the work of the Holocaust Educational Trust, which takes Members and many school children to Auschwitz to see for themselves the horror that happened there. Across the House, we can come together to commemorate this day and ensure that the holocaust is never forgotten and that we never repeat its mistakes.
I hope you, Mr Speaker, will allow me a slight change of tone for a couple of seconds. The GDP numbers, which the shadow Chancellor complains about, show that Britain’s was the fastest-growing major economy in the world in 2014. He kept telling me to listen to the IMF—well, the head of that organisation said that few countries were driving growth like America and the UK. Growth is improving, the deficit has been reduced and unemployment is falling, and the President of the United States says we must be doing something right. When the shadow Chancellor complained about the Prime Minister’s going for dinner at the White House, he said, “I haven’t been neglected. They invited me in and gave me coffee and biscuits.” That is all the endorsement he is going to get for his economic plan anywhere in the world.
Ed Balls
It is good we have cross-party agreement fully to fund the Holocaust commission’s report.
If things really were fine and if the economy really were fixed, people would be better off, but instead they are worse off, and the Chancellor would have balanced the books, as he promised, but he has not—he has completely failed to do it. It is because of that failure on the deficit that he is now planning spending cuts in the next Parliament that the IFS calls “colossal” and that the Office for Budget Responsibility says will take us back to levels in our economy not seen since the 1930s—before the NHS existed. Every developed country with spending as low as he is aiming for has widespread charges for health care. Is that not the real Tory economic plan?
Mr Osborne
We have a free-at-the-point-of-use national health service, which we are proud of and will continue to fund. What is clear is the total confusion in Labour’s health policy today. This morning the Labour leader said he was going to use his so-called mansion tax to pay down the deficit; six days ago the shadow Chancellor said that money would be used to pay for his NHS plan. It is total confusion today. The only way to have a strong national health service is to have a strong economy.
Let me end on this note. We read in the last couple of days that the shadow Chancellor has been sidelined from the general election:
“In a major humiliation, party bosses have quietly shunted”
him
“out of the media spotlight”.
Let me reach across the Dispatch Box and offer the hand of friendship. Let us resolve that we are both going to put him at the centre of this general election campaign.
Stephen Phillips (Sleaford and North Hykeham) (Con)
T2. By sticking to our long-term economic plan, huge strides have been made towards reducing the deficit—something that seems to evade the shadow Chancellor. Does my right hon. Friend agree that there is only one party that can be trusted to take the difficult decisions needed for prosperity in this country and for sound public finances, and it is the one that he and I represent?
Mr Osborne
My hon. and learned Friend is absolutely right. In Lincolnshire and across the country, people have seen unemployment fall and businesses grow. We have got to stick with the long-term economic plan, particularly at a time when the global economic risks are increasing. By working through that plan, we can deliver that economic security for his constituents and mine, and make sure this country has a brighter economic future.
Mr Jim Cunningham (Coventry South) (Lab)
T4. Is the Chancellor aware that of the 150,000 people employed in Coventry, 50,000 of them—mainly women and young people—are in part-time, low-paid jobs? What are the Government going to do about it?
Mr Osborne
Of course we want to get unemployment down further, and for those who want full-time work, we want to make sure it is available. However, I would point out that, in the hon. Gentleman’s constituency, youth unemployment is down by 73% over this Parliament and unemployment is down by more than a half, so we have got to go on with our long-term plan, which is delivering those jobs in Coventry. Eighty per cent. of the jobs created in the UK at the moment are full time, so we need to sustain that plan, not go back to the chaos we saw under the Government he supported.
Mr John Baron (Basildon and Billericay) (Con)
T3. May I suggest that the Chancellor heed no criticism from the Labour party about deficits, given that it more than doubled the national debt when last in power? As we have heard, the Government have done much to help small businesses, which is why unemployment is falling across the country and in my constituency. As the country’s finances continue to improve, will he look further to ease the tax burden on small businesses—particularly corporation tax—which are very often the backbone of our local economies?
Mr Osborne
My hon. Friend is right that small businesses are absolutely central to our country’s economic growth and job creation in the future. We have cut small companies corporation tax in this Parliament. From April, we will have a single corporation tax, as it is consolidated around 20%, which removes a lot of the bureaucracy. On top of that, we have taken the smallest businesses out of business rates, and the employment allowance has helped with the national insurance bills of small businesses. Of course I will bear in mind anything else we can do to help small businesses. We have got some measures in the pipeline, but there is clearly more to do.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
T6. This Government are demonising those on benefits, while doing little about tax evasion and avoidance, which, as we have heard, have risen significantly on their watch. Today sees the launch of the Tax Dodging Bill campaign, as 85% of British adults say that tax avoidance by large companies is morally wrong, even when it is legal. Why will the Chancellor not impose penalties for breaches of the general anti-avoidance rule, as we have called for?
Mr David Ruffley (Bury St Edmunds) (Con)
T5. I commend the Chancellor’s aim of running an overall budget surplus in 2019-20 and cutting the national debt so that the next generation are not saddled with punitive taxes. Does he agree that this is a case of simple fairness, not ideology?
Mr George Osborne
My hon. Friend is absolutely right. Countries such as Canada and Sweden, both of which have quite strong social democratic traditions, have forms of balanced budget rules, or rules where surpluses are run in good times. That has enabled them to bring their public finances under control and their debt down. They did not endure the hardship we saw as a result of the financial crisis here in the UK. We propose that countries should run a surplus in good times. That is the only sustainable way to get our national debt down. If we do not do that, we leave Britain exposed to whatever economic shocks the world throws at us.
Mr Stephen Hepburn (Jarrow) (Lab)
T7. The Chancellor will be aware of the importance of the success of Newcastle international airport and of the need for successful businesses to plan ahead. He will understand, then, how the possible cut in air passenger duty north of the border is felt as a threat. Will the Chancellor give an assurance to the business of the Newcastle international airport and to other potential businesses affected that we will match any cut in APD funding north of border?
Mr Osborne
The hon. Gentleman raises a serious point, and there is agreement on it across the political divide. The devolution of air passenger duty to Scotland raises the potential for real pressure to be put on airports in north-east England, but also on Manchester airport, which is partly in my constituency. We will of course have to see what the Scottish Parliament does when the powers are devolved, but the hon. Gentleman has my assurance that we will work together to ensure that we minimise the impact on the north-east if this happens, and that we will protect regional airports in England. We have a couple of years to work this out—it does not have be done tonight or tomorrow—and we can work out a plan that protects the brilliant Newcastle, Manchester and other regional airports.
Greg Mulholland (Leeds North West) (LD)
This Treasury team abolished Labour’s unjustifiable and unfair beer duty escalator and delivered two historic successive cuts in beer duty. We still pay more tax on our beer, however, so our British brewers are not getting a fair deal in comparison with their European counterparts. Will the Treasury make it a hat trick?
Kelvin Hopkins (Luton North) (Lab)
Britain has an enormous and persistent trade deficit with the European Union—clear evidence of a misaligned exchange rate. The significant weakening of the euro in recent days will make the position even worse and cause damage to British industry. When are the Government and the Bank of England going to take seriously the need to achieve and sustain an appropriate sterling-euro exchange rate?
Mr George Osborne
This Government do not target a particular exchange rate. Successive previous Governments found to their cost that doing so was difficult and damaging. What we do is ensure that Britain is competitive. I think the best thing to do to support exports is to make sure that our British businesses are taxed in a competitive way; they have great skilled work forces working for them—[Interruption.] They are chuntering away on the Opposition Front Bench. I seem to remember that when the Labour leader was asked recently when Britain would join the euro, he said it depended on how long he was the Labour leader. It is still official policy to join the euro and tie the currency up to the eurozone—with all the ensuing chaos that would follow.
Mr Henry Bellingham (North West Norfolk) (Con)
Is the Chancellor aware that since 2010 unemployment in my constituency is down by a staggering 1,000? What assessment has he made of the role of small business start-ups in reducing unemployment?
Mr Osborne
Small business start-ups have been central to job creation. We have helped them with the employment allowance and the enterprise investment scheme, and we have given the new enterprise allowance to young unemployed people to help them to start businesses—and that has been a great success. We have in place many initiatives to back our brilliant small businesses in Norfolk and across the country.
Ms Margaret Ritchie (South Down) (SDLP)
Considering the economic modelling carried out by one of the Treasury’s own economists, Professor Blake, what further progress has been made on reducing VAT on tourism, which would benefit all regions and particularly coastal regions in the UK?
Mr Nigel Evans (Ribble Valley) (Con)
Cutting beer taxes, raising income tax thresholds and stopping the petrol tax increases proposed by the Labour Government have helped the Evans household and, probably, a number of other household budgets throughout my constituency. In the next Budget, will the Chancellor please keep calm and carry on cutting taxes?
Mr Osborne
I will not make any commitments in relation to the Budget, but my hon. Friend is right to point out that our support for the pub industry and for motorists has provided huge boosts for industries and families in Lancashire and throughout the country. Of course, we do not encourage people to mix the two.
Alison McGovern (Wirral South) (Lab)
Will the Chancellor confirm that he has ruled out a further VAT increase in the next Parliament?
Mr Osborne
Our plans do not involve a VAT increase, because we are prepared to make difficult decisions on public expenditure, including decisions on the welfare budget. The hon. Lady and her colleagues voted for £30 billion of consolidation. If they are not prepared to do that by achieving expenditure savings, they must be contemplating big tax rises. With 100 days to the election, we know the choice: it is between a competent Conservative plan that is delivering growth, and a return to economic chaos under the Labour party.
ECOFIN
George Osborne Excerpts(9 years, 4 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr George Osborne)
A meeting of the Economic and Financial Affairs Council will be held in Brussels on 27 January 2015. Ministers are due to discuss the following items:
Investment plan for Europe
The Commission will present its proposal on the European fund for strategic investment, a key element of the investment plan for Europe, followed by a first exchange of views.
Current legislative proposals
The Council will receive an update from the presidency on ongoing work on financial services dossiers.
Presentation of the presidency work programme
The new Latvian presidency will present to Council its six-month work programme in the ECOFIN area.
Presentation of the Commission work programme
The new Commission will present its work programme for 2015, focusing on the economic and financial agenda.
Economic governance
The Council will hold an exchange of views on two Commission communications on economic governance: first, on the economic governance review and secondly, on clarifying the existing flexibility in the stability and growth pact.
Preparation of the G20 meeting of Finance Ministers and governors on 9-10 February 2015 in Istanbul
The Council will adopt terms of reference in view of the G20 meeting of Finance Ministers and governors in February in Istanbul.
[HCWS225]
Economic Policy
George Osborne Excerpts(9 years, 4 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
I sent yesterday evening to the Governor of the Bank of England a letter setting out the updated remit for the Monetary Policy Committee (MPC).
I have reconfirmed the inflation target as 2% as measured by the 12-month increase in the consumer prices index (CPI).
I have also confirmed that the economic policy objective of the Government is to achieve strong, sustainable and balanced growth that is more evenly shared across the country and between industries.
In the event of CPI inflation moving away from the target by more than 1 percentage point in either direction, the updated remit ensures that the inflation open letter will be sent alongside the first routine publication of the MPC after the meeting that follows the publication of CPI inflation.
In conjunction with the Treasury’s responsibilities under the Bank of England Act, copies of the updated remit for the Monetary Policy Committee have been laid before Parliament.
[HCWS190]
Charter for Budget Responsibility
George Osborne Excerpts(9 years, 4 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
I beg to move,
That the Charter for Budget Responsibility: Autumn Statement 2014 update, which was laid before this House on 15 December 2014, be approved.
The charter sets out the next steps we take to turn Britain around and ensure that the mistakes of the past are not repeated. People will remember the fiscal crisis facing this country five years ago: a deficit that stood at more than 10% of our national income; a Government borrowing £1 in every £4 they spent; a Treasury whose departing Chief Secretary left a note saying simply that there was no money left; a country described by international bond investors as sitting on the financial equivalent of a bed of nitro-glycerine; and a British economy whose ability to pay its way was questioned in the world. That was the appalling inheritance left to us by the last Labour Government.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The Chancellor mentions a British economy with an ability to pay its way. When did the UK last pay its way? When was it last not in deficit?
Mr Osborne
The last time it was not in deficit was when people followed Tory spending plans: there was a surplus at the end of the 1990s and 2000. That is what we advocate again.
At the moment of maximum danger five years ago, as much of the rest of Europe became engulfed in a sovereign debt crisis, Britain faced a choice: did we have the resolve to cut our spending, cut our deficit and set a course for economic stability, or did our country go on borrowing and spending our way to economic ruin?
Sir Edward Leigh (Gainsborough) (Con)
But surely we cannot relax for a moment. When we say we have cut the deficit by half that is good, but it gives the impression that the problem is solved and we are still borrowing £90 billion a year. The debt is still at about £1.7 trillion. Therefore, we cannot relax for a moment and we cannot allow there to be any sort of Government who let the anchor off. We therefore have to say no to a Labour Government.
Mr Osborne
My hon. Friend is absolutely right. Having brought the deficit down, we have to complete the job. We have to run a surplus and get our national debt down—that is what this debate is about. We remember Opposition Members in this House five years ago urging on us a ruinous course of more borrowing and more spending, the very same people who had presided over the borrowing and spending that had put Britain into such a perilous position.
Mr Osborne
I will give way in a moment, but I want people to remember that the country knew better than to listen to Labour again. The country supported this Government as we took the difficult decisions required to cut our spending, reduce our borrowing and get our country living within its means. Then, when the problems in the eurozone became acute and the currency union on our doorstep was threatened with collapse, we heard again, as we hear now, the siren voices luring us on to the economic rocks. “Stop the cuts,” they said, “Spend more, borrow more, adopt a plan B”. But Britain stayed the course. We did not spend more. We did not spend less. We worked through our plan. The result, in the verdict of the International Monetary Fund, is that no other major economy has achieved such a substantial and consistent reduction in its structural deficit over recent years.
Ed Balls (Morley and Outwood) (Lab/Co-op)
The Chancellor told this House that if Britain was to lose its triple A credit rating it would be a disaster for Britain. Can he remind the House when Britain lost its triple A credit rating? Was he the Chancellor at the time? When are we going to get it back?
Mr Osborne
We retain our triple A credit rating with some credit rating agencies. I can tell the right hon. Gentleman one thing for sure: the only way we will get back our triple A credit rating is by dealing with our debts, cutting our spending and making sure this country can live within its means. If anyone thinks the answer to Britain’s debt problems is to borrow £170 billion more, which is what the Labour party is proposing, they will be leading Britain back into economic ruin.
We remember what the shadow Chancellor said was going to happen if we pursued this plan. He said we would choke off growth and that there would be a double-dip recession. Britain has grown faster than any other major European economy in the past four years. We have grown faster than any major economy in 2014 and the one recession we had was the one big recession, the great recession, on Labour’s watch.
Alok Sharma (Reading West) (Con)
It was of course a Labour Government, led by James Callaghan, who went cap in hand to the IMF, and the Blair-Brown Government left us with a record deficit. Does the Chancellor share my view that it does not matter what that lot say today? History repeats itself and, when it comes to Labour, we cannot trust them with the public finances.
Mr Osborne
You cannot trust the Labour party with people’s money. Every Labour Government leads this country into bankruptcy. Every Labour Government left office with unemployment higher than when it came to office. That is what Labour does when it gets into office. People remember that and they will not trust them with the public finances again. We remember what Labour said was going to happen to jobs: they said that 1 million jobs would be lost. Instead, we have 1.7 million more people in work. Unemployment is falling. Youth unemployment is down by more than half. Full employment is in sight. They said that public services would be decimated and crime would rise. Crime has fallen and satisfaction with local government services is up. They said that the north of England would suffer the most, just as it had suffered the most in their great recession. Now, the fastest growing part of our economy is the north of England and we are building that northern powerhouse.
Alec Shelbrooke (Elmet and Rothwell) (Con)
I wonder if my right hon. Friend, during his busy schedule, was able to notice the comment of the Labour leader of Leeds city council, who said that he has to hand it to George Osborne because he is doing more in the north of England than a Labour Government ever did.
Mr Osborne
There has been a constructive alliance between Labour civic leaders in the north of England and Conservatives to bring an elected mayor to Greater Manchester and deliver High Speed 2. We have done so in the face of the opposition of the Labour shadow Chancellor, who has tried to frustrate all these things all along. Thankfully, Labour civic leaders are not listening to those on their own Front Bench anymore.
Although the deficit has been halved, at 5% of our national income, it is too high. Our national debt, at 80% of our national income, is too high.
Mr Andrew Tyrie (Chichester) (Con)
There have probably been about half a dozen attempts to try to buttress fiscal policy with rules in the past 30 years. Most of them have collapsed at some point during the business cycle. To get something that works, does the Chancellor not agree that we need something credible, not just for dealing with the deficit but for reducing the stock of debt, and that that must mean over the cycle running a surplus?
Mr Osborne
My hon. Friend is absolutely right. It is not enough to eliminate the deficit. We then have to get our national debt down. It is too high and leaves us exposed to the next economic shock. We do not want to go into the next economic shock with a debt-to-GDP ratio of 80%. That is precisely why, in good economic times, we need to be running an overall budget surplus. That is the only credible and sustained way to get national debt down. That is the way to fix the roof when the sun is shining.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
Was it not the case that the right hon. Gentleman’s boss, the Prime Minister, said that he would balance the books by 2015?
Mr Osborne
What we have done is cut the deficit by a half. We have neither gone faster than we said we were going to go, nor gone slower than we said we were going to go. We have stuck to our spending plans when people were urging us to take either course. To get lectures in managing the public finances from the Labour party is extraordinary.
Mr Osborne
I will give way in a moment. Labour are in the bizarre situation of complaining that we are borrowing too much, yet they want to borrow even more. Perhaps the shadow Chancellor can help to illuminate this debate and simply confirm that a Labour Government would borrow more than a Conservative Government.
Ed Balls
The Chancellor just said to the House that he has not gone slower on the deficit than he intended to in 2010, but the Office for Budget Responsibility says he has borrowed more than £200 billion more than he planned. Can he explain that remark? I have to say that I think everybody in the country will be totally baffled by the Chancellor’s remark.
Mr Osborne
We have delivered exactly the spending plans we set out in 2010—we have not gone faster, we have not gone slower. Indeed, spending this year is a little bit lower than I predicted in 2010.
Mr Osborne
I will give way in a moment.
There is going to be a test in this debate: will Labour confirm it will borrow more? It cannot complain about our spending cuts if it does not confirm that it would borrow more.
Mr Osborne
We have delivered exactly the spending plans that I set out and which the shadow Chancellor opposed. If he is complaining about those spending plans, and if he would like to spend more, he should be honest with the British people and say that a Labour Government would like to borrow more. Why does he not have the courage to tell the truth? The truth is that he does not tell the British people the truth because he knows that when they discover he wants to borrow £170 billion more, they will not let him near Downing street again.
Andrew Bridgen (North West Leicestershire) (Con)
Does the Chancellor recall, when the Government outlined their deficit reduction plan, that Opposition Members, including the shadow Chancellor, said we were going “too far, too fast”? Now the right hon. Gentleman criticises us for not cutting the deficit enough. Will he make his mind up?
Mr Osborne
It is a totally chaotic and farcical position from the Labour party. It has spent the first two weeks of this year complaining that the Conservative party is cutting too much and promising that it would not cut as much, but now Labour Members are going to troop through the Division Lobby with us in support of a charter that requires £30 billion of fiscal consolidation over the next couple of years. To be fair to the Scottish National party, I think its Members are going to vote against us, as too is the Green party, but Labour Members are sitting there in total silence. They are going to go through the Division Lobby with us to support £30 billion of spending cuts. [Interruption.] Cheer up, it is what the Labour Front-Bench team has asked you to do. It is going to lead the party through the Division Lobby because it does not want to admit to the British people that its plans involve spending more money.
Mr Osborne
Will the hon. Gentleman, who has experience at the Treasury, confirm that Labour’s economic policy is to borrow more?
Mr Robinson
The Chancellor is asking us to be honest and state our position. Will he tell us what he said today? A few moments ago, he clearly said—we can all check Hansard tomorrow—that he had not gone any slower on reducing the deficit. He said that word for word. We are simply inviting him to clarify his remark—to tell us it is not correct, that we must have misheard, or that he will correct Hansard. Whatever he does, will he clarify his position? He is clearly totally out of order.
Mr Osborne
The hon. Gentleman can check Hansard now if he likes. I was clear that we stuck to our spending plans—we did not go faster, we did not go slower—and reduced the deficit by a half, and we are going to carry on with the job.
Mr Osborne
I will give way to the shadow Chancellor in a moment, but I want him to understand what he is asking the Labour party to vote for. To their credit, the SNP and the Green party understand that they do not want to agree with our spending cuts.
The charter sets out that the OBR will continue to monitor our fiscal rules. This is a major innovation. We take it for granted now, but only five years ago we had a Labour Chancellor and the team behind him fiddling the figures and making sure they were marked against their own rules. We then commit in the charter to achieving falling national debt by 2016-17 and a surplus on our cyclically adjusted current budget by 2017-18. That requires £30 billion of consolidation. So for the third time, I ask the shadow Chancellor: will he accept that his plans involve borrowing more? What is wrong with the “borrowing” word? He used to give whole lectures about why the country should have a fiscal stimulus and borrow more. Why does he not get up and say, “Yes, Labour would borrow more”?
Ed Balls
We can accept that the Chancellor may have misspoken—we can check Hansard—but will he confirm that he has reduced the deficit much more slowly than he intended and borrowed £200 billion more than he planned? We do not need to debate what he said. Will he just confirm whether he has reduced the deficit much slower than he planned and borrowed a lot more?
Mr Osborne
We have halved a record budget deficit to 5% of national income. The shadow Chancellor says we should have borrowed more, and his plans involve £170 billion of more borrowing, yet he finds himself in the extraordinary position of asking the Labour party to vote for a charter that requires £30 billion of more consolidation. Where should that £30 billion of consolidation come from? To be fair to the Liberal Democrats, they say we should increase taxes to help achieve that consolidation. The Conservatives say it can be achieved by bearing down on spending, the welfare budget and tax avoidance—£13 billion of savings from the Departments, £12 billion from welfare and £5 billion from tax avoidance. That is our clear plan. Labour cannot pretend to support the charter while claiming that the £30 billion does not exist. It is a totally chaotic position.
Mr Osborne
Will the hon. Lady, who will be voting for the charter, tell us where she would find the £30 billion of cuts?
Julie Hilling
I have been trying to get in for a while, so I am grateful to the Chancellor for giving way now. I cannot move on from what he said about cutting the deficit at the level he said he would. Unless my memory is false, he said in 2010 that he would get rid of the deficit over the Parliament. Furthermore, did he intend there to be three years of flat-lining growth?
Mr Osborne
The British economy has grown faster than any major European economy over the last four years. It has created 1.7 million new jobs and 750,000 new businesses, and today the Governor of the Bank of England described it as being in a “sweet spot”, but Labour opposed every difficult decision we took to do that. It opposed every spending cut and welfare change. It goes around the country pretending it would reverse these things. It has made £20 billion of unfunded spending commitments. Every day in this Chamber, Labour Members ask for more public money to be spent on more things and complain about the difficult decisions we have taken. It is a totally incredible position from the Labour party and it is being exposed today.
Charlie Elphicke (Dover) (Con)
Is it not obvious that the Labour party is stuck in the past, talking about things done years ago and frightened to talk about the future? Did the Chancellor hear Paul Johnson from the Institute for Fiscal Studies say on the “Today” programme that borrowing would be higher under a Labour Government and that debt would be higher in the long run? The IFS says it; the Labour party ought to admit it.
Mr Osborne
My hon. Friend is absolutely right. The IFS today confirmed that Labour would borrow £170 billion more. This is its published plan. It is extraordinary that Labour Members are totally silent about it. They are not prepared to talk to the British people about what I assume they believe to be the right economic policy for the country.
I want to make sense of this strange journey that the Labour party has taken on fiscal policy over this Parliament. After all the twists and turns, I think it has managed to end up in exactly the same place as it started. In 2010, as part of his pitch for the Labour leadership—we thought at the time he was a worse choice than the current leader, but given all that has happened, perhaps we were wrong—the shadow Chancellor said we should not be cutting spending. He said that more spending would grow the economy and that the economic growth would eliminate the deficit. That was the position he set out in his Bloomberg speech—his so-called plan B. The problem was it was rejected by the British public and eventually by the Labour party. So two years ago, Labour changed its approach and committed to the original phrase of “iron discipline”. The only problem was there was no iron discipline and instead it made all those spending commitments. Last autumn, it moved on to another approach—the Basil Fawlty approach—which was not to mention the deficit at all. I think the House can agree that the Labour leader executed that strategy brilliantly at the Labour party conference.
In December, at the end of last year, Labour tried something else. The shadow Chancellor announced that he would seek to balance the current budget and get debt falling, but he would not say when, saying just as soon as possible. When pressed on specific dates, he dismissed them; he said he would not sign up to some arbitrary timetable. When challenged specifically to match our plans, he said a month ago, on 11 December, that he was not going to set a timetable to balance the current budget by 2017. Here he is, one month later, saying that he is going to vote in favour of a timetable to balance the current budget by 2017-18.
I thought that was the end of Labour’s journey. They had ended up supporting a charter that they had previously rejected, a timetable to which they had previously refused to sign up and £30 billion of cuts they had previously denounced. Then, this weekend, we were treated to the spectacle on “The Andrew Marr Show” of the Labour leader dismissing the charter altogether, rejecting the £30 billion figure and returning full circle to where the Labour party started four years ago. This is what the Labour leader said on Sunday:
“if we just try and cut our way to getting rid of this deficit, it won’t work.”
That is the latest version of the Labour party’s policy. It is exactly where they were four years ago. The Labour leader has gone full circle and gone back to saying that the answer to our debts is simply to grow the economy. That is economically illiterate when we have a structural deficit, and it is based on the fiddle of trying to upgrade the country’s trend growth rates—exactly the mistake made by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) when he was Chancellor and got us into this mess. Labour has gone from plan B to plan A to no plan at all.
Ed Balls
The Chancellor is shouting a lot and sounded a bit rattled. Will he clarify where in the charter for budget responsibility it says that we are going to balance the current budget in 2017-18? It actually says that it will be done
“by the end of the third year of the rolling, five-year forecast period.”
A moment ago, the Chancellor said it would be 2017-18, but where is that in the document? I cannot find it.
Mr Osborne
It does not augur well for someone who wants to be the Chancellor that he thinks three years from now is 2017-18. [Interruption.] He will have his chance. I have been wondering what he has been up to all this time while Labour has got itself into such a mess. Let me make this observation, and then I will give way to him. This gives us a clue to what he has been up to. He said to The Independent a couple of weeks ago:
“If I am sitting”
at the piano
“and I start thinking about the deficit, it all goes wrong. On the piano, you have to be totally focused”—
and with that set of priorities, I think the British people would agree that he should go on playing the entertainer and I will go on being the Chancellor of the Exchequer.
Ed Balls
The document does not say 2017-18, and nor does it say in three years’ time. It says
“by the end of the third year of the rolling, five-year forecast period”.
When does the rolling, five-year forecast period end—in 2017-18, in 2020-21 or in 2029-30? It is totally baffling.
Mr Osborne
The third year in the period is three years; that is 2017-18. Perhaps the right hon. Gentleman should use his piano fingers and count one, two, three.
Ben Gummer (Ipswich) (Con)
Does my right hon. Friend draw the conclusion from the Chancellor’s recent interventions—[Interruption.] I mean the shadow Chancellor’s interventions—he will wait a long time to become Chancellor. Does my right hon. Friend draw the conclusion from the shadow Chancellor’s interventions that he either does not understand the paper in front of him or is about to go through the Division Lobby to support something he describes as “baffling”?
Mr Osborne
I think the shadow Chancellor is trying to perpetrate a grand deceit on the British public. I think he has no intention of delivering the £30 billion of cuts. He does not want to do that: he wants to spend and borrow more, but he does not want to tell the British people the truth about that. We had independent confirmation from the IFS today that Labour would borrow £170 billion more. It confirms what we already know—that the Labour leader and the shadow Chancellor would do it all over again: tax, borrow and spend their way into an economic crisis, letting the British people pay the price in lost jobs, lost incomes and lost futures.
The shadow Chancellor faces a choice. He can either confirm by voting for this charter that he accepts the £30 billion of deficit reduction required to fulfil the objectives, in which case, since he does not approve of our spending plans, he admits that there will be major tax rises under a Labour Government; or he can reject the deficit reduction required, in which case he is confirming that voting for this charter today is nothing other than a grand deceit—pretending to the British people that Labour does not want to borrow more when that is exactly what it plans to do. With the Labour party, it is either a tax bombshell or a borrowing bombshell. The only question is which will it be. Either way, it leads to economic chaos for this country.
Mr Osborne
I give way to the Green party Member. We want her and her colleagues in the TV debates. At least the Green party is being straight about the fact that it wants to borrow and spend more money. Why does the Labour party not tell the truth about that?
Caroline Lucas
Does the Chancellor agree with me that with the feeble and inconsistent opposition coming from the Labour Front Bench, there is a very good reason for seeing the SNP, the Greens and Plaid as the real opposition on this issue because we are clear and consistent about the fact that austerity is not working?
Mr Osborne
That shows why we want the hon. Lady’s party in the TV debates.
What is clear today is that there is only one credible plan to deal with our debts, and that is our long-term economic plan. It binds us into eliminating the deficit, getting debt falling and running a surplus. It delivers economic security. This charter is part of that plan, and I commend it to the House.
Ed Balls (Morley and Outwood) (Lab/Co-op)
We have pledged to balance the books in the next Parliament. I said a year ago that the next Labour Government would get the current budget into surplus and our national debt falling as soon as possible in the next Parliament. This charter is fully consistent with our position, so on that basis we will support the motion today. We are not going to change our view about what is in Britain’s best interests, because of another one of the Chancellor’s silly failing games.
If you do not want to take this from me, Madam Deputy Speaker, an interesting press release was issued this morning by the TaxPayers Alliance—not an organisation I normally quote in the House. This is what its chief executive said just an hour ago about this debate:
“This is a meaningless political gimmick of the most transparent kind, and one that serves only to remind taxpayers”—[Interruption.]
The hon. Member for Dover (Charlie Elphicke) should listen to this. The chief executive said that this gimmick
“serves only to remind taxpayers how dramatically this Chancellor has missed his own original targets.”
We are happy to vote to remind people how much the Chancellor has missed his targets.
Mr George Osborne
I have a very simple question. If the right hon. Gentleman thinks it is a gimmick, why is he getting the Labour party to support it? What is his answer to that?
Ed Balls
I will explain that in my speech. What we have before us—this so-called trap—is not a trap at all, as I will explain. I will discuss the new fiscal charter in detail in a moment, but let us first be clear about the background to today’s motion and the new charter before us. This is not the first fiscal charter before us in this Parliament, but the second. The first was presented at the beginning of the current Parliament when the Chancellor lay before the House a charter committing the coalition to balance the books in this Parliament, to get the cyclically-adjusted current budget back into balance and the national debt falling by the coming financial year 2015-16.
As I reminded the House on the day of the autumn statement, the Prime Minister actually went further in 2010. He said that he would balance the Budget in 2015. However, just a few weeks ago, in the autumn statement, independent forecasts from the Office for Budget Responsibility confirmed that this Chancellor was not going to balance the books in 2015, or in 2015-16. In fact, public sector net borrowing in 2015-16 is now forecast to be £76 billion, £7.7 billion higher than was forecast even as recently as the Budget.
The figures on page 15 of the OBR’s “Economic and fiscal outlook” show that this Chancellor, in this Parliament, is borrowing—staggeringly—over £200 billion more than he proposed to spend in the 2010 plans. As a consequence, the national debt, compared to the 2010 forecasts, will be much higher in 2015-16 than he suggested. Back in 2010, he said that in 2015-16 the national debt would be 67.2% of GDP. According to the latest figures, it is now forecast to be not 67.2% but 81.1% of GDP, 14 percentage points higher than the Chancellor’s 2010 figure. Worse than that, according to the 2010 fiscal mandate the national debt would be falling, but the OBR figures show that in 2015-16 it will be rising again, from 80.4% to 81.1%. On the deficit, on the current deficit and on the national debt, the Chancellor made promises in 2010, in a clear fiscal charter, and he has broken every one of them.
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.
Pension Guidance Service
George Osborne Excerpts(9 years, 5 months ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr George Osborne)
At Budget 2014, the Government announced a fundamental change to how people can access their pension savings. From April 2015, everyone with defined contribution pension savings, who is aged 55 and over, will be entitled to access their defined contribution pension savings as they wish, subject to their marginal rate of income tax.
In order to help consumers make confident and informed decisions on how they use their pension savings, everyone approaching such a decision will be entitled to free, fair and impartial guidance.
In response to the “Freedom and Choice in Pensions” consultation on the changes, a team was established within HM Treasury to lead the creation of this guidance service. The Government also committed to publish a progress update on the service design and implementation strategy.
The progress update, “Delivering Pensions Guidance: January 2015 Update”, is available on the gov.uk website at:
http://www.gov.uk/government/publications/delivering-pensions-guidance-january-2015-update.
It includes:
an announcement of the brand name and logo of the new guidance service;
details of how interested potential users can register their interest in early access to the
service and be part of piloting activities;
an explanation of the service design, and how this will be delivered; and
the estimated cost of the service in FY 15/16 of £35 million, to be raised through an FCA levy.
Costs will be confirmed in March 2015.
[HCWS182]