Always happy to debate aspiration

On Sunday 6 December Andrew Marr interviewed Shadow Chancellor of the Exchequer George Osborne MP.

Please note 'The Andrew Marr Show' must be credited if any part of this transcript is used.

ANDREW MARR:

Anyway, Wednesday is going to be a big day in the House of Commons with the Pre-Budget Report when the Chancellor will deliver his assessment of where the economy is heading over the next year or so and what that means for public spending and taxes. Now the Conservatives say the situation is so dire, they'd have a full-scale emergency budget within fifty days if they win the Election. Well the Shadow Chancellor joins me now from the new Marthall Village Hall in his constituency in Cheshire. Good morning, Mr Osborne.

GEORGE OSBORNE:

Good morning.

ANDREW MARR:

Can I ask you, first of all, about this row between the Royal Bank of Scotland and the government over bonuses. Were you Chancellor, would you stop these bonuses being paid?

GEORGE OSBORNE:

Well if I were Chancellor, I would hope we would never be in this situation. I warned several weeks ago that there were huge bonuses looming for this winter, and I think we shouldn't be paying significant cash bonuses and any bonuses in shares we're paying should be in newly issued shares, not in existing shares, which are the equivalent of cash. Because in the end the taxpayer put this money into the Royal Bank of Scotland and indeed provided guarantees for other banks, so that we could get lending going again in the economy. And the real scandal this week is, we discover, that the lending agreements that people like Alistair Darling and Gordon Brown came on your show and promised us were legally binding have simply not been met, credit's not flowing in the economy, and that's one of the reasons Britain - almost alone in the world - is still in recession.

ANDREW MARR:

I'd like to come onto the economy generally in a moment, but if you were Chancellor you would pick up the phone and you would speak to the top people at the Royal Bank of Scotland and say this is not going to happen?

GEORGE OSBORNE:

Well I'm very clear that, as I say, they should not be paying large cash bonuses, they should not be paying bonuses in existing shares. If you want to reward some people in that bank, or any bank, then the way to do that at the moment is to issue new share capital which will support new lending. And there's another issue, which is we should be looking at the ability of these banks to write off future taxes against past losses. I mean I'm very clear that when the banks start making money again, they should start paying taxes again because everyone is in this together. We have all got to contribute to dealing with this enormous budget deficit, which is threatening Britain's recovery.

ANDREW MARR:

You say we're all in this together. One of the issues where the Conservatives have taken some incoming fire is on your inheritance tax promise. Isn't that now simply not worth the political price you're paying for it?

GEORGE OSBORNE:

Well, frankly, this is a Labour Party political attack, and if the Labour Party wants to say to people don't aspire to get on in life, don't aspire to own your own home, don't aspire to leave anything to your children, then so be it. It is part of their lurch to the Left. But I'm clear that over time, when we can afford it - and, as I've said, we're not likely to be able to afford it in the first couple of budgets, but later in the parliament - we want to help people who have saved through their lives, who've done the right thing and who want to leave something to their children. And I'm very happy to debate aspiration with the Labour Party.

ANDREW MARR:

So when it comes to the generality of tax and spending, you've also said you would prefer not to raise taxes. But given the depth of the hole that the country is facing, can you say now that it's all going to be on the spending cut side and nothing on the tax raising side?

GEORGE OSBORNE:

Well, Andrew, I've always said I can't rule out tax rises. I said that in the good years and I've said that in the difficult years. I've been doing this job for four and a half years now, and I know that it's not sensible for a shadow chancellor to rule out tax rises. But I've also said that this country is in the mess it is in because we over spent, and to deal with that over spending we have to restrain government spending. And the bulk of dealing with these enormous debts has to come from restraining spending. Now I have set out at our party conference the hard choices that need to be taken. I've talked about how we need a public sector pay freeze that protects the lowest paid million. I've talked about how we need to reduce costs in Whitehall. I've talked about restricting Child Trust Funds to the poorest in our country. I've talked about taking away child tax credits from the richest. And the truth is this. You're about to have the Chancellor of the Exchequer on this programme. They have said nothing like this. They have not spelt out, this government, the detail of how they're going to take this country out of the economic mess that they have put it in, and that is because they are behaving like an opposition and we, the opposition, are now behaving like the government.

ANDREW MARR:

Well you're absolutely right that you have laid out quite a lot of things, but when you tot up the savings from that, you still only get to 7 billion. You know a drop in the ocean compared to what you're going to have to do. In this sort of campaign or this competition to be more honest, don't you have to go further? What about this Canadian model of taking a percentage cut out of every budget? They did it. They did it quickly, they did it brutally, and they got the benefits from it.

GEORGE OSBORNE:

Well we have been speaking to the Canadians who underwent this process, and indeed the Swedes who also had a very successful period of fiscal consolidation. Interestingly, they were both progressive governments, so you can match progressive politics with being fiscally conservative. And the lesson is, yes, you do have to take some hard choices, and this government is woefully inefficient. There's enormous amounts of waste. Now the Prime Minister's going to give a speech tomorrow talking about that, but people will ask hold on, aren't you the person who for 12 years has been telling us you're going to make things more efficient or you're going to deal with waste, and yet the public sector has become less and less productive? So we do need to find savings, many billions of pounds of savings, in other government departments. We have made a decision based on our values and, we think, the country's priorities, which is to protect the National Health Service budget, to honour our international aid commitments, but to say across the rest of Whitehall we are going to have some very difficult choices. You know I … this is not a situation I'd wish upon the country.

ANDREW MARR:

(over) Sure, but the argument is across the board.

GEORGE OSBORNE:

(over) Just let me say this, Andrew. You know this is not, this is not … Can I just say this? This is not a situation we would wish upon the country, and this is not the economic inheritance that I thought I would be enjoying if we won the Election some years ago, but it is the reality. This country is virtually bust. If you look around the world, people are looking to Britain and saying should they keep their credit rating, can we rely on them as a place to invest, and they are raising some very serious questions. If we don't deal with those debts, then we are not going to have the sustainable recovery and the jobs that this country so desperately needs at the moment.

ANDREW MARR:

Well we started off talking about the banks. A lot of people are saying - and it's in the papers again this morning - there should be some kind of windfall tax, so that the banks also pay their part.

GEORGE OSBORNE:

Well I wouldn't rule out a tax of the kind that's being speculated, although frankly if you look at the newspapers it seems the Treasury's briefing one story to one paper and another story to another. But I think the place to start is by looking at the losses, looking … The banks at the moment are going to be able to accumulate their losses and, against that, write off future tax. In other words, even though they'll be making money, they won't be paying tax. And I don't think that is acceptable, given the help that we've provided. So my message is clear - when the banks start making profits again, they should start paying taxes again - and that is a good place to start.

ANDREW MARR:

Shadow Chancellor, thank you very much indeed for joining us this morning. George Osborne, thank you very much for that.

INTERVIEW ENDS

E-mail this to a friend

Printable version