The Andrew Marr Show returns on Sunday 3 May, when campaigning for the local and European elections will be in full swing.
Andrew's guests include the film star Patrick Stewart, and Carol Vorderman joins the newspaper review.
In the meantime read what George Osborne had to say about Labour's economic policies:
Please note 'The Andrew Marr Show ' must be credited if any part of this transcript is used.
Labour's 'economic carnage': shadow chancellor George Osborne says the Budget will be a "day of reckoning".
ANDREW MARR:
Now on Wednesday the Chancellor, Alistair Darling, will deliver his Budget and the figures will be much worse than those predicted in his last financial report to parliament just before Christmas.
But if tax receipts are way down, spending is up and borrowing is soaring, any government is bound to take drastic and uncomfortable decisions to balance the books.
The shadow chancellor is here.
Good morning.
George Osborne MP, shadow chancellor
GEORGE OSBORNE:
Good morning.
ANDREW MARR:
How bad is it going to be, do you think?
GEORGE OSBORNE:
Well I think it is going to be very bad on Wednesday. It will be a day of reckoning and I think you're going to see the Chancellor forecast the longest recession that Britain has had since the Second World War. We're already in the fastest rise in unemployment on record, and I think we'll see the worst public finances not just in the world but also since the Second World War. So it is a truly dramatic moment when the economic carnage of the last ten years is laid bare.
ANDREW MARR:
Do you pay any credence to these stories of some green shoots, a revival a bit on the high street being talked about, because I suspect if there's any green shoots they will be featured heavily in what's said?
GEORGE OSBORNE:
Well I don't think anyone can talk of green shoots when, for example, on Wednesday we're going to get the latest unemployment figures and they will probably show a very dramatic rise, and still there are many companies struggling to stay afloat. I think it is true to say that the rate of decline is slowing - in other words we're not falling as fast as we were a couple of months ago - and I would expect, I would certainly hope that by the end of the year we'll see some signs of economic growth. Now by then we'll have already been through the longest recession since the war, so if we are not seeing some signs of growth by the end of this year, that would be fairly dramatic.
ANDREW MARR:
You gave a very interesting interview to the FT in the course of the week, which seemed to me to be quite a change of tone. All the stuff about sharing the products of growth has gone and you were saying that you wanted the burden of correcting the public finances from when you come into power yourself to fall more on spending than on tax.
GEORGE OSBORNE:
Yes, I think the bulk of the strain of dealing with this enormous fiscal problem, this enormous hole in the budget, must be borne by spending restraint. We shouldn't be overtaxed to pay for the overspending of recent years. And whilst I haven't ruled out tax rises, I'll be looking primarily - if I were the Chancellor - to spending restraint. And indeed I think on Wednesday Alistair Darling can make a start by making it clear that the spending plans already pencilled in by the Labour Party - a 1.1% increase in spending in future years - is already unrealistic and that number needs to come down. So you know Alistair Darling I think faces an interesting choice. He's probably only got a year in the job regardless of who wins the election. Does he take the necessary decisions to restore stability to the public finances, or does he do the bidding of the Prime Minister who obviously will be looking at much more short-term political pressures?
ANDREW MARR:
Now I understand that you don't want to go through what you will have to cut where because you think that Gordon Brown then uses it against you in election campaign. Nevertheless, there'll be a lot of people watching, perhaps in the public sector and so on, thinking quite interested in the Conservatives, might vote for them, but I do want to know a bit more than they're telling me at the moment. So can we first of all agree that it's going to have to be more than the usual "we'll make savings" kind of cuts?
GEORGE OSBORNE:
There will be, have to be a very serious period of fiscal restraint, spending restraint. Now the reason I don't set out detailed figures is that every time I come on this programme - I come on this programme before budgets and autumn statements - and every time I'm told, "What are you going to do about the £40 billion spending hole". That's what happened a year ago.
ANDREW MARR:
Yeah. Good question, I thought.
GEORGE OSBORNE:
A very good question. "What are you going to do about the £110 billion spending hole", which I was asked last autumn by you. This time it might be £175 billion. In other words, the figures change so dramatically month by month, the economy has deteriorated so sharply, that I simply do not know the exact state of the public finances I will inherit should I become the Chancellor in a year's time.
ANDREW MARR:
What you do know is that you're going to have to take very, very hard decisions though.
GEORGE OSBORNE:
I know I'm going to have to take very hard decisions. I know they won't necessarily be popular, but I will try and take the right decisions. David Cameron and I are fiscal Conservatives. We believe in restoring balance and stability to the public finances because we think it's unfair to burden future generations with debt. So we will take decisions about whether spending programmes are strictly necessary; we will take decisions to make sure that public sector pay reflects prevailing economic conditions; we will deal with some of the excessive salaries and some of the quangos; we will deal with the culture in Whitehall, which has been about getting money out of the door - spend, spend, spend - and try and change that to a value for money culture. All I can say, Andrew, is…
ANDREW MARR:
Can I just ask about public sector pensions because that's a very big area and there's a lot of anger in the private sector about what appear to be gold-plated public sector pensions, whereas people in the public sector think well we've earned them. What's your view on that? That's going to have to be looked at again?
GEORGE OSBORNE:
Well first of all I understand the anger in the private sector, and that is partly because of the destruction of private sector pensions and we should be angry about that. When it comes to public sector pensions, I mean the first thing is you know I understand that the nurse in the casualty ward, the soldier in Afghanistan fighting for us, the police on the streets, the teacher in the unruly classroom - these people are doing incredibly difficult jobs for ourselves and our society and we have to respect that and honour what they do and there are lots of ways I'd like to make their job easier. When it comes to pensions, I'm not bound by any deal that the Labour Party has done with the public sector unions who pay their bills, but I will do this in a way that is fair. When I reform public sector pensions, I will want to do it in cooperation - I hope - with those who represent the public sector. You know I am not out to slash and burn the public sector. I want to do this in a way that gets value for money for the taxpayer, but treats the public sector fairly.
ANDREW MARR:
But there are plenty of people who think they're going to get something at the moment who won't get what they think they're going to get.
GEORGE OSBORNE:
Well…
ANDREW MARR:
It has to be the case.
GEORGE OSBORNE:
We are going to look at public sector pensions. I mean public sector pensions are actually a long-term burden on the state and that's why they need to be reformed. They don't actually deal with the immediate…Reforming public sector pensions would not deal with the immediate cash problems that you have this year, next year and the year after.
ANDREW MARR:
(over) So let's turn to that then. I mean what about some of the big capital spending issues? What about Trident? What about the big railway and motorway extensions, those kind of things? Are those on the table at least internally?
GEORGE OSBORNE:
I don't want to talk about individual programmes because it will just create the headline - you know Tories do this or that with a particular capital project. We are looking at the entirety of government spending, we're making sure that we're getting value for money. I want to reform public services, so that you do get more bang for your buck. And all I can tell you is that we are spending an enormous amount of time for an opposition thinking about not just trying to cross the finishing line…
ANDREW MARR:
Sure.
GEORGE OSBORNE:
…and collapse into an exhausted heap at 5 in the morning after the election, but how we will govern afterwards and how we will make sure that in a period of spending restraint you get the money to the frontline; that the money paid for by you and I and everyone else in this country in taxes is well spent in the public sector.
ANDREW MARR:
What's going on at the moment, presumably, is that you are sitting around with your colleagues looking at all of these issues, looking department by department at what you can do. Will people know first of all, broadly speaking, where the pain is going to have to come before the election, or are you going to hold all of that back?
GEORGE OSBORNE:
People will know the principles by which we will…the principles we will follow in spending restraint.
ANDREW MARR:
(over) The principle can be very wide, can't it?
GEORGE OSBORNE:
They will know some of the detail. But of course we don't have access to all the detail. I'd like to have much more access to the government books and know actually the true state of the public finances. I want a mandate. I want people to feel they have voted for a programme that includes spending restraint and that we have a democratic legitimacy for what we need to do to protect this country, protect its future, stop our children being burdened with debt.
ANDREW MARR:
(over) So are you going to include spending cuts? It can't just be spending restraint, which is a bland word.
GEORGE OSBORNE:
Well it's not really a bland word. I mean reducing the growth rate of spending below 1.1% is very tough. I mean I am well…I well understand how tough it is going to be, but it is necessary. I…
ANDREW MARR:
(over) And you'll have people walking up and down the street saying "Tory cuts, Tory cuts" inevitably.
GEORGE OSBORNE:
Well, these are…
ANDREW MARR:
Are you going to be tough enough to do those things?
GEORGE OSBORNE:
With respect, these will be Labour cuts. I mean it is the Labour Party who have been in government for twelve years. It's not my economic hole that I'm trying to climb out of. It's Gordon Brown's economic hole. And it's not my massive budget deficit, accumulated over one of the greatest economic booms we've ever seen, that I'm trying to deal with. It's Gordon Brown's budget deficit. So we will have a mandate, I hope, if we win this election to deal with the problems we inherit, but we will do it in a fair way. We will make sure that all parts of society - the rich as well as the poorest - bear the burden of dealing with these problems. And we will do it in a way that is consistent with the way David Cameron has led this party since 2005 - in other words consistent with a fairer, more equal society where we value people who work in the public sector.
ANDREW MARR:
You mentioned the rich as well as the poorest. We've also talked about…you've also talked about tax. Can I be clear? The 45p rate will stay probably?
GEORGE OSBORNE:
Well it's hard to avoid it coming in is what I've said.
ANDREW MARR:
Fine. What about the national insurance raise because that hits everybody, not just…
GEORGE OSBORNE:
(over) Yeah, I mean I would love to try and avoid that. I mean that's where I'm focusing my efforts…
ANDREW MARR:
Right.
GEORGE OSBORNE:
…because that affects anyone earning over £20,000. It's a tax on jobs in a recovery, which strikes me as you know a bizarre way to go about things. So I am focusing my effort on trying to avoid that Labour tax rise rather than the 45p rate for people earning over £150,000.
ANDREW MARR:
And what about the personal allowance for higher rate taxpayers? What do you think about that?
GEORGE OSBORNE:
What the change to the…
ANDREW MARR:
Yes, clawing it back.
GEORGE OSBORNE:
…personal tax allowance for people earning over £100,000?
ANDREW MARR:
That's right.
GEORGE OSBORNE:
Well I treat that in the same category as the 45p.
ANDREW MARR:
As the 45p. Okay, so that's by and large the same/a mistake??
GEORGE OSBORNE:
(over) And, again, you know I mean I think it's important…. These are not, you know these aren't my tax rises. These are Gordon Brown's tax rises…
ANDREW MARR:
Right.
GEORGE OSBORNE:
…and we will be dealing with these problems in a way that I think will be fair, but also taking the necessary decisions. I mean, as I say, Alistair Darling has a choice. He's not going to be the Chancellor of the Exchequer after the election whether Labour wins or the Conservatives win, so he faces a choice. Does he start to take these decisions that are necessary to get this country back on the right track, so we're not a country that borrows and spends but we're a country that saves and invests in the future?
ANDREW MARR:
What about inheritance tax because there was all the kerfuffle when Ken Clarke said it was an aspiration and so on. Is it the case that this is something that you're determined to do within the lifetime of a parliament…
GEORGE OSBORNE:
Yes.
ANDREW MARR:
…so it could be after four years, I mean it could be after four and a half years possibly?
GEORGE OSBORNE:
It's something I'm determined to do within the lifetime of a parliament…
ANDREW MARR:
But not straightaway.
GEORGE OSBORNE:
…but it is paid for by the tax on the non-domiciles.
ANDREW MARR:
But didn't Kenneth Clarke have an absolutely fair point, a commonsense point, when he said, "We don't know how many non-doms there are or will be and, therefore, we don't know how much this is going to be self-financing"? That's fair enough.
GEORGE OSBORNE:
(over) Well we have a pretty good idea. We have the latest government figures on non-domiciles. Even if half of those pay the charge - in other words the other half don't somehow - we will be able to afford the inheritance tax proposal, which is somewhat cheaper than when I first announced it. But there's a broader principle here. I think it's the right thing to do. We have got to move this country off its obsession with debt, we've got to move this economy off being built on debt, and that means encouraging saving and investment in the future. And that doesn't just mean changing the tax system to encourage people to save - and by the way I also want to help basic rate taxpayers by removing the tax on savings for them and that's something that can happen in the Budget - it also means investing in the future and that means, for example, doing something about the very many young people who are going to be unemployed this summer, helping them stay in…
ANDREW MARR:
(over) And you've got plans for engineering students and other…
GEORGE OSBORNE:
(over) Well there's a looming crisis for young people. There are going to be thousands of people leaving college and university this summer who cannot get jobs. We should be providing master courses for them to keep them in science and engineering degrees that we need for the future. There are going to be people working as apprentices who are sacked from their job, who get absolutely nothing as a result, they don't get any qualification. We should help them complete their apprenticeship in a further education college, perhaps find some other job for them through a clearing house.
ANDREW MARR:
So that's the kind of thing that you…
GEORGE OSBORNE:
These are things that could be announced. The important thing, Andrew, is you know this will not be for the next Conservative government to tackle. It needs to be tackled by the Labour Party now because this is a crisis this summer, and this Budget should help those young people. We do not want to lose a young generation.
ANDREW MARR:
Okay.
GEORGE OSBORNE:
We need the next generation of scientists and engineers, so we don't have an economy so dependent on finance and property.
ANDREW MARR:
But broadly speaking, is it fair to say that over the next five years we are all going to have to feel a bit poorer and work quite a lot harder as a country to pay this back?
GEORGE OSBORNE:
Well Britain has to pay its way in the world. We are a poorer country.
ANDREW MARR:
Okay.
GEORGE OSBORNE:
You only have to go abroad and see that you don't get as much money for your pound to see that and we've got to get Britain back on track, a country that saves and invests in the future.
ANDREW MARR:
Let me turn to the story of the week. You were one of the targets of this abortive smear campaign by Damian McBride and other people in the Labour Party around him. Do you now feel that you have got the apologies and your wife has the apology that you require?
GEORGE OSBORNE:
Well…
ANDREW MARR:
Or deserve.
GEORGE OSBORNE:
You know eventually Gordon Brown on television apologised. He never put it in any letter to me and he's never mentioned anything to my wife or written a letter to my wife. But you know he has to live with the regime he runs out of Downing Street and it was very unpleasant. You know although politicians have thick skins, this was you know pretty personal and went…and you know it referred to…
ANDREW MARR:
Beyond any line.
GEORGE OSBORNE:
It went beyond the line and referred to members of my family. But he has to…You know Gordon Brown in the end is responsible for the culture that he creates in Downing Street and I'm delighted he accepts full responsibility for it…
ANDREW MARR:
(over) Can you promise me…
GEORGE OSBORNE:
…but frankly you know it took six days for him to finally come forward with that.
ANDREW MARR:
Could you promise me - or more importantly the people watching - that if and when the Conservatives come into power nothing like this will ever happen under you; that you will not employ attack dogs of this kind?
GEORGE OSBORNE:
What I can promise is we will do everything we possibly can to change the culture of Downing Street, to make No 10 Downing Street at the heart of our national life a building people are proud of; that we will not engage in smearing the personal lives of our opponents. And you know frankly I mean what we heard today that the General Secretary of the Labour Party was attending meetings where they were going to set up some website to promote smears against political opponents suggests that this goes far beyond Damian McBride; that this is a culture that has grown up under Gordon Brown's leadership and people need to hold the Prime Minister to account for that.
ANDREW MARR:
To account. And there's more in one of the papers today, I think the Sunday Mirror, about this prostitute woman and so on. Is this just more smears? Is this something that you're going to have to live with for a while?
GEORGE OSBORNE:
Well I think you know in politics you get used to the rough and tumble of politics. What you don't expect in that No. 10 Downing Street you've got people, employed by the taxpayer by the way, to spread totally untrue lies about you and your family. And you know that has to end. And the broader culture, which I think is revealed by the fact that the General Secretary of the Labour Party is having meetings about websites that are at an arm's length from the Labour Party, that culture…
ANDREW MARR:
(over) He has denied…He has denied he knew about it.
GEORGE OSBORNE:
Well he hasn't denied he was at the meeting and you know that culture has to end.
ANDREW MARR:
Alright. George Osborne, thank you very much indeed for joining us.
INTERVIEW ENDS
Please note "The Andrew Marr Show" must be credited if any part of this transcript is used.
NB: This transcript was typed from a recording and not copied from an original script.
Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy
E-mail this to a friend 
Printable version 
Bookmark with:
What are these?