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George Osborne: An empty budget

I welcome this annual opportunity to begin the second day of the Budget Debate, for it gives me a chance to bring to the House's attention all the things that were in the Budget but never mentioned in the Budget debate.

And it gives us all a chance to reflect on the rest of the country thinks about what we heard yesterday. It's a particular pleasure to do so opposite the RHL, the Member for Castleford.

Because, depending on the result of the election, it's pretty clear that either she's going to be living in Number 11 Downing Street in a few weeks time or I am.

Now it normally takes 24 hours for people to see through this government's budgets.

On this occasion it took about 24 minutes.

Indeed, it was clear before the Chancellor even sat down that he had completely failed to rise to the challenge of the times, and the expectations of his high office.

This country faces a storm of economic problems.

One in five young people can't find work.

Our recovery is one of the weakest in the G20.

Our banking system cannot finance that recovery.

Family incomes are being squeezed.

Our credit rating is under threat.

Confidence is lacking.

Manufacturing is shrinking.  Exports are falling.  Business investment has collapsed.

Everything cries out for urgent action.  Energy. Vision. Leadership. New ideas to get our economy moving.

And what do we get from this exhausted, discredited government?

Nothing. Nothing at all.

An empty budget.

An exercise in politics, not an example of governing.

Literally, the only ideas in it of any real substance are Conservative ideas.

Taking first time buyers out of stamp duty.

Announced by me at the Conservative Conference three years ago, roundly condemned by Labour Ministers like the RHL opposite, now official Labour policy.

How does the Chancellor explain away the comments of his own junior Minister, who said when he thought it was just a Conservative idea that it was not "an effective use of public money".

It must be the first Budget policy openly attacked by the Ministers responsible for the Budget.

And, of course, with this government there's always a catch.

Look in the Red Book table and you will see that the stamp duty cut on first time buyers is only for two years.

But the stamp duty rise to 5% to pay for it is permanent.

He said yesterday he was taxing the drinks that cause the binge drinking problems.

Announced by us at our Conference last year, denounced by them - and it seemed, adopted by them.

Except, it turns out, they haven't actually copied our idea. 

They've used it as a cloak for a huge duty rise on all cider drinkers - instead of just the super strength white ciders that are linked to problem drinking - and that is something that will hit the industry hard and it is something we oppose.

Then there were new student places.

Announced by my colleagues the Shadow Skills Secretary at the Conservative Conference last year. 

Dismissed as elitist by Labour Ministers one day, announced by them the next.

But again, there's a catch.

The Chancellor said yesterday the Government would to provide funds to "create 20,000 more university places ... starting in September this year".

Well, first it turns out that only 10,000 actual full undergraduate degree places are being created.

And then it turns out, if you delve deep into the Department for Business website, that the funding is provided for one year only.

So they are going to pay for the student's first year at university, but not the second or third.

The funding for those years has to come from existing budgets of universities.

What a complete con.

A Green Investment Bank. We proposed it in January, and they adopt it in March.

We don't mind this pathetic government, in its dying days, adopting our policies.

But let me tell you - we will never again listen to their lectures about how we've got nothing to offer the country, when the only things they've got to offer the country are nicked straight from us.

Stealing Conservative policies is not going to hide the fact that the Party opposite has got nothing more to say to the British people.

And that is the extraordinary thing about this Budget.

It is more interesting, if that is the right word, for what it doesn't say than for what it does.

And that's what I want to focus on today.

What wasn't in the budget, but should have been.

First, let's start with the things that weren't in the budget speech itself.

How on earth did the Chancellor think he could get away with freezing the personal tax allowances of 30 million people in one week's time, and not mention it at that Dispatch Box?

You would have thought that having watched all those budget speeches from his predecessor the Prime Minister, where the stealth taxes weren't mentioned and spending was double counted, and having seen the damage that did to the reputation of the Treasury, he would have learned the lesson.

Apparently not.

Did he think people wouldn't reach page 123 of the Red Book?

When this allowance freeze was slipped out in December, inflation was negative. 

That was the Treasury's justification. 

Did he think no one would notice that RPI is now 3.7%, which makes this in real terms a five billion pound tax rise on working Britons?

What else never made it into the Budget speech?

The new tax rises on small businesses.

The Chancellor told us yesterday that he was going to provide "extra support to small businesses through the tax system".

What he didn't tell us was that that extra support was more than cancelled out by the tax rises.

He told us he was cutting business rates, but the Red Book reveals he's expecting to raise a billion pounds extra in rate revenue next year.

He made a great fuss of doubling the small business investment allowance at a cost to the Treasury of around £100 million, but didn't mention the fact he's increasing the small companies tax rate at a cost to small businesses of £420 million.

No wonder the response of the Federation of Small Businesses responded to his proposals by saying the Budget "will not help job creation."

He made a great play of his lending agreements.

He didn't mention the banks missed the lending targets he said were "binding" last year.

He didn't repeat what the Public Accounts Committee told us last month that despite the Government's promises:

'The Treasury has only limited sanctions available to it to encourage RBS and Lloyds Banking Group to meet what are described as legally binding lending commitments.'

But worse than that, he employed a trick that would make the Prime Minister proud as he gave the impression the new lending targets were higher, when in fact they could be lower.

The old targets were for total extra lending. A net figure.

These targets are for new lending - excluding the loans that are paid back. That's a gross figure.

So lending could actually fall, and he would still claim to have hit his target.

What a totally and transparently cynical manoeuvre.

But of course all these things that were never mentioned in the Chancellor's speech really pale into insignificance alongside the missing centre-piece of the Budget.

A credible plan to deal with the deficit.

Yes, he confirmed that we have the worst deficit in the G7.

Yes, he announced that we have the second worse deficit in the OECD after Ireland.

But did he convince anyone that he was serious about dealing with this problem.

Serious about protecting our country's credit rating.

Serious about avoiding the rise in gilts that mean higher interests rates in a recovery.

Serious about confronting the truth that this Government has ended up borrowing one pound for every four that it spends, and having entered office on the pledge to cut the bills of social failure now heads for the exit door with Britain spending more on debt interest than it does on education.

No he did not.

The Government seems to believe that if they say often enough that they have a credible plan, somehow fiction will become reality.

But the definition of a credible plan is that someone out there believes it.

Let's look at what investors said after he sat down:

Standard Chartered called it: "A do nothing Budget that had shades of Nero about it..."

Citibank said there was "no proper medium-term public spending plans" and no "credible plan to return to fiscal sustainability."

The same rating agency that yesterday downgraded Portugal, whose deficit is half ours, came out immediately to warn that the plan was "too slow".

It is clear that the only thing holding together Britain's reputation in the international community is the prospect of a Conservative Government who can get our economy moving.

Like some giant fiscal doughnut, yesterday's Budget had a gaping hole in the middle where a proper comprehensive spending review should have been.

You can see the hole here, in table A1. They've had to print a page with gaps where there should be spending plans.

Is there anything more risible than the explanations from Government Ministers about why that Spending Review cannot take place?

The say that because of the uncertainty in the economy, they cannot conduct such a review in March this year.

But they can apparently conduct it in October.

The fact that there's an election in May has nothing of course to do with it.

The only people they are fooling are themselves.

If ever there was a time when government - with all the resources and information at its disposal - should be reviewing all spending, it is now.

And the failure to do so for the most naked of political reasons is why this Budget has been greeted with such dismay.
Of course, they knew this was going to be a problem in advance and so they came up with a smoke screen.

Three hours after the Budget was delivered, they would produce by written statement a serious of efficiency plans from different government departments.

And then Ministers, like the RHL, would pop up on television saying: "I've found my cuts" - in the hope that we would all be impressed.

Never mind the fact that this government has produced endless promises of efficiency, and yet waste and bureaucracy and chronic mismanagement of public money has grown and grown.

Never mind that the National Audit Office could only identify one quarter of the efficiency gains the government claimed it was making at the time of the last election.

These efficiency savings are completely bogus as the answer to the question of the spending review,because there's no baseline budgets against which to measure them.

Take her own department.

I've got the press release here.

It basically consists of three sentences that announce that the DWP is going to find £550 million of savings by the year 2012/13.

But she cannot tell me what her budget is in 2011 or 2012.

What did the officials who put it together say of it?

One official in the Department for the Environment said this: It's

"All quite deliberately vague. We haven't got any detail on where those savings will be gathered. We haven't got a breakdown of the detail: it doesn't exist."

Another said:

"We certainly don't have a list as of today. It's a figure that we have agreed with Her Majesty's Treasury, as part of Building Britain's Future or whatever the slogan is that's on our press release."

Another was asked about the £10m "Corporate Services Reform Programme". 

"Corporate services" he said. "Christ! Let me see if I can find out."

There we have it.  The largest budget deficit in our peacetime history and they are turning to God for help to sort it out.

One thing the Government could do right now, in the absence of a full spending review, is publish the internal fiscal forecasts.

That's the secret document that we published after the last Budget, when it was leaked.

That's the secret document that shows that departmental budgets are being cut by 9% in the coming years.

That's the secret document that tells how many billions they expect to be spending on debt interest.

It exists in the Treasury and the interests of a proper debate over the weeks ahead, they should publish it today.

And I have written to the Permanent Secretary to request that he does, but it don't expect this bunch of Ministers to do anything that enhances the honesty and transparency of government.

Mr Speaker,

The failure to produce a credible plan to deal with the budget deficit is the hole at the heart of this empty budget.

When the Government had the opportunity to rise to the challenge, they failed.

When the Chancellor, is his swansong, got the chance to put the national interest before his party interest he failed.

And that is a tragedy for him, and for the country.

We now need a new government that will fix this broken economy.

Deal with the budget deficit that threatens the recovery.

Boost enterprise and small business.

To get Britain working.

And to build an economy that works for everyone.

The sooner that government can be elected the better.

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