Speeches recovered from the Conservative party’s online archive More…

George Osborne: Taxpayers pick up the bill for Labour's irresponsibility

Thank you very much, Mr Speaker. I thank the Chancellor for his statement but, to be blunt, we have heard all these claims before.

Back in October, just like today, he told us that a huge taxpayer bail out of the banks would 'get lending started again'; he stood there, just as he has done again today, waving a piece of paper and claiming he had binding legal agreements with RBS; yet business lending, of course, has fallen by £5 billion since October and, as the inflation report shows, continues to fall.

Back in October, just like today, he said his first bail out was a good deal for the taxpayer - indeed, the Prime Minister claimed we'd soon be making money on the shares we'd bought; but now we all know of course that the taxpayer has, to date, lost £16 billion on the deal that was done in October.

Back in October, just like today, he said that a key condition of the bail out would be an end to excessive bonuses and rewards for failure - yet today we discover that the Chief Executive who helped bring RBS to its knees is getting a £650,000 a year pension for life - negotiated with the Government.

So while a second bail out seems inevitable, we will treat the claims he makes about his latest plan with a healthy degree of scepticism.

Let me ask him these specific questions.

First, on lending.

He says RBS has committed to lend £25 billion a year. 

First of all, will he confirm that this represents just 3.4% of total RBS lending to non-bank customers?

He says once again, as he has often done, that he has a legally binding agreement, but the new Chief Executive of RBS said on the radio this morning that the agreement is subject to them continuing to 'price on arms length terms' - given that that price is currently prohibitive to many businesses, large and small, why does he expect this legally binding agreement to be any more binding than the last legally binding agreement he had?

And indeed, he says the lending agreement is legally enforceable.  How exactly is he going to enforce it?  Will he give the money to RBS to pay the fine? 

The second question I have is to ask the Chancellor to be absolutely straight with people about how much the taxpayer could lose.

Of course, this is a sweet deal for the banks, their management, their remaining shareholders and above all their creditors.

The first loss born by the bank is just 6%.  Now, that is much lower than the 10% the Treasury were originally briefing and, of course, lower than the 10% the Dutch authorities imposed on ING.

The fee is just 2%, half the level the Treasury set out trying to negotiate - and it is only being paid in non-voting shares.  Will he confirm that that is presumably because otherwise, according to Stock Exchange rules, RBS would stop being listed altogether?

And what's more, we're actually giving the bank billions of pounds to pay the fee to ourselves.

That's like saying: lend me a tenner and I'll buy you a pint.

Will he now say exactly what the potential exposure of the taxpayer is under this deal?  He didn't answer that question on the radio - will he answer it today?

And will he now impose the full, independent audit, asset by asset, of the British banks which the Governor of the Bank of England has just called for at the Treasury Select Committee and which I called for at this Dispatch Box last month?

Finally, on excessive bonuses and rewards for failure.

Once again, we have the Chancellor promising that there will be none.

Yet this morning he said in his radio interview that he only learnt a very short time ago that Sir Fred Goodwin was paid off with a £650,000 a year pension funded by the taxpayer.

But the new Chief Executive, who was on the same radio programme as him, said that the deal was negotiated with the government.

So who exactly in the government knew about this deal?  Could he answer the claims that Fred Goodwin's departure was delayed so he could secure this pension?

Whichever way one looks at it, this obscene pension is unacceptable and the government is on the hook: either they did know and failed to act, or they didn't know and failed to ask the right questions.

It is a totally irresponsible use of taxpayers' money.

And there is, of course, now only person who can correct this huge error of judgement by the Chancellor, and that is Fred Goodwin himself who should in all decency renounce his pension.

Mr Speaker,

The government have no option but to undertake a second enormous taxpayer bailout of the banks because the first enormous taxpayer bailout has failed.

But let's hear no more nonsense about what a good deal has been struck - the British taxpayer is insuring the car after it has crashed.

And the sad truth is that it's families up and down the country who are paying the price, while those responsible try and walk away from the wreck so far unscathed.

The Prime Minister who presided over the whole fiasco is off trotting the world stage while the man he knighted, Fred Goodwin, is walking off with a £650,000 a year pension.

And that is why the government have lost the confidence of the British people in their ability to deal with the recession they helped create and the banking crisis they failed to prevent.

They have announced so many different schemes -


The Chief Secretary should just concentrate on her leadership campaign and stop barracking the Opposition.

The fact is, they have announced so many different schemes, exercised so many about-turns, made so many false claims, broken so many promises, that no one believes a word they say anymore.

They are running around like headless chickens trying to save their own necks.

And once again, it will be the British taxpayer who pays the huge bill for the mistakes of Labour's age of irresponsibility."

Keyboard shortcuts

j previous speech k next speech