BBC NewsAndrew Marr Show


Page last updated at 13:48 GMT, Sunday, 16 November 2008

Osborne: 'I am telling the public the truth'

On Sunday 16 November 2008, Andrew Marr interviewed George Osborne

George Osborne

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

George Osborne defends his comments about sterling, and accuses the government of "abandoning fiscal responsibility".

ANDREW MARR: Now then, the Governor of the Bank of England is not generally speaking a man given to overstatement, so when he warned that we're moving into very difficult times, we can assume the situation is very serious indeed - borrowing the pound, unemployment, you name it.

Yet Labour's position in the polls, the Prime Minister's ratings have gone up, which may be strange and frustrating for the Tories. The Shadow Chancellor George Osborne showed a brave face when he found himself presenting a political award to his not very best friend Peter Mandelson recently, but, as we've heard, the last few weeks have been difficult for him.

He's admitted his holiday meetings with a Russian billionaire were a mistake and he's been the target of a whispering campaign by Tories and what you might call a shouting campaign by the Labour Party. So I should start by asking I suppose, Mr Osborne, do you think your job is on the line this weekend?

GEORGE OSBORNE: I think my job is to make sure that both now, and as we approach the next election, people can see there's a clear choice between a Conservative Party offering fiscal responsibility and a Labour Party which has abandoned prudence and fiscal responsibility; between a Conservative Party that is promising real tax cuts - and we've shown how we're going to pay for them - and a Labour Party that is offering a tax con. And that is my job and I'm going to get on and do it.

ANDREW MARR: That is, if I may say so, a description of your job. It's not an evaluation of where you are at the moment and you're in some trouble at this moment.

GEORGE OSBORNE: Well I think my job has been to make the right economic judgements, and we warned this country was borrowing too much and I think we've been proved right by events. We warned that Gordon Brown was playing tricksy tricks with the tax system and the 10p tax con was a perfect example of that. Now we are warning the country - and we want the whole country to have their eyes wide open about the choice before them - we are warning the country that Gordon Brown is abandoning fiscal responsibility; and when a government does that, it stacks up debts for future generations and stacks up tax rises for future generations as well.

ANDREW MARR: So let me be absolutely clear. That with the rest of the world apparently agreeing that there is going to be some kind of fiscal expansion, Gordon Brown and Alistair Darling come back here. They announce some form of tax cuts. You will oppose that?

GEORGE OSBORNE: Well can I take this question in two parts? First of all, there is not some global consensus, despite what Gordon Brown says, that people should just borrow without limit, increase taxes without showing how they're going to pay for them.

ANDREW MARR: The communiqué talks about a fiscal expansion.

GEORGE OSBORNE: The G20 communiqué is worth reading for this very simple reason: it is 3,500 words long, has 21 words on fiscal stimulus and says it should be done where appropriate and provided it is consistent with fiscal sustainability. Gordon Brown told us before going to Washington that it was all about getting a global agreement for a fiscal stimulus package. He has not done that. And indeed if you listen to people like the Head of the IMF, the Head of the European Central Bank, they say that countries with very difficult budget positions should not undertake a fiscal stimulus.

Now Britain has the worst budget position in the world, we are borrowing more than any other advanced economy, and that means we are storing up enormous problems for our future. And I know Gordon Brown wants to max out the nation's credit card, indeed wants to take out another credit card, but the truth is it's the public who's going to have to pay this back, not Gordon Brown.

ANDREW MARR: I want to be absolutely clear about this. That you will oppose tax cuts that are not balanced by cuts elsewhere? You will not accept any unfunded tax cuts however popular they may appear to be and however much middle-income people or lower income people, businesses may feel they need them?

GEORGE OSBORNE: Andrew, Andrew it is not a tax cut if it's not funded. It is a tax con from the man who gave you the 10p tax con. The choice in British politics is going to be funded tax cuts from the Conservative Party and a tax con by the Labour Party that has abandoned 15 years of rhetoric on prudence and fiscal responsibility.

ANDREW MARR: So no extra spending, no fiscal stimulus from George Osborne?

GEORGE OSBORNE: My argument is that if you want to cut taxes - and I want to cut taxes, Conservatives want to cut taxes, we've been arguing against Gordon Brown's tax rises for 15 years - if you want to cut taxes, you've got to show how you pay for it. This country has got into the economic mess it is in because we borrowed too much, we ran up too much debt, Gordon Brown thought he had abolished boom and bust. And the answer to those problems is not more debt, more excessive borrowing, an abandonment of fiscal responsibility at the very moment when we should be careful with public money.

ANDREW MARR: You've made very, very clear what you think about Gordon Brown's responsibility for all of this, but this is not simply a Gordon Brown crisis; this is a world crisis. A lot of people think they don't yet understand what the Conservative view is of the banking crisis generally, the failure in the capitalist system around the world.

GEORGE OSBORNE: Well there was clearly a massive regulatory failure. And by the way, I welcome the kind of cooperation you are getting at the G20 to for example introduce counter cyclical borrowing rules for banks, to change the accountancy rules, to make sure the regulators are on their job, to make sure the credit rating agencies are properly monitored.

These are all very sensible steps and they beg the question why the regulatory system in Britain - and indeed other countries - failed. More broadly I say this. Of course there are international problems - that's a statement of the obvious. Gordon Brown claims they are the only thing affecting Britain. Everyone else knows that we also have a recession made here in Britain and that it is Britain where the recession is predicted now to be worse than any other major economy; it is Britain with the highest levels of personal debt in the entire world; it's Britain with the largest budget deficit in the developed world. And the man who must take responsibility for those things is the man who neither saw the boom coming, nor prepared for the bust, and that of course is the man who was the Chancellor for 11 years, Gordon Brown.

ANDREW MARR: So everybody in this position, as you describe it, has to look again at their policies. Presumably things like sharing the proceeds of growth belong to the old world and that's gone?

GEORGE OSBORNE: Well sharing the proceeds of growth explains how over an economic cycle if you have economic growth - and if we don't have any growth over an economic cycle we'll be back to the Medieval Ages - it's a policy for explaining how you can both increase public expenditure when the economy is growing and also deliver tax reductions. But obviously the focus now is on what's happening at the moment, which is not growth but contraction.

And the economy is contracting at the moment. Despite Gordon Brown saying even earlier this year that he was going to keep the economy moving forward, it is now moving backwards. And so our policies as Conservatives are to focus on what we can do to help people in this downturn and we've set out very clear plans - funded, so it's showing where the money comes from - to freeze the council tax, to help small businesses with their payroll taxes, to help unemployed people get into work through a tax cut for employers paid for by the unemployment benefit that would otherwise be paid on them. In other words, sensible, practical policies to deal with the downturn, to allow monetary policy to do its job, but not to pile up a borrowing bombshell that is going to be placed under the recovery and mean that next year or the year after taxes will have to rocket to pay for Gordon Brown's mistakes today.

ANDREW MARR: Well they're going to have to rise anyway. What I'm wondering is whether and to what extent you're recasting your economic thinking at the moment. Do the promises that were made a little more than a year ago at the Conservative Party conference about tax, do they still stand?

GEORGE OSBORNE: We've been very clear that the promises we made are fully funded; that we've explained...

ANDREW MARR: So that's still the core of your policy?

GEORGE OSBORNE: We've explained exactly where, when we want to reduce a tax, we get the money from, sometimes by a tax rise elsewhere. For example, non-dom taxation. That's another example of the Conservative Party setting the pace in British politics and saying some things which Gordon Brown was not prepared to say. So our commitments stand, but of course the focus, my focus is on how you deal with an exceptionally difficult economic situation and the fact that a man, Gordon Brown, who said he'd abolished boom and bust has led us into a recession which - and it's very important for people to remember this - a recession which now most people in the world think will be worse in Britain than anywhere else in an advanced economy.

ANDREW MARR: A lot of people will look at this - very interesting points, some interesting policies, maybe the right policies...

GEORGE OSBORNE: Well I'm glad, I'm glad they think that.

ANDREW MARR: ...but it is a small... well it is a small scale response, a fiddly response to a massive, massive problem.

GEORGE OSBORNE: I completely reject that. First of all on the regulatory front, we were the people saying you need new rules, that banks set aside money in the good years.

We've been saying that for almost a year and I'm glad the G20 now are signing up to a similar idea. We were the people who were saying that the regulatory system that Gordon Brown created 10 years ago was not doing its job properly.

We have been the people saying the borrowing is getting out of control and that you need an independent Office for Budget responsibility. And let me make one prediction Andrew.

When Alistair Darling delivers that pre-Budget report in ten days time or whenever it is, if he does not introduce a independent oversight of fiscal policy, called for by the Tory Party on sofas and chairs like this for a couple of years, then I think he will be storing up even greater problems for our country's future.

ANDREW MARR: And when it comes to you know your earlier policies on things like green taxes, when it comes to the petrol price stabiliser, those policies remain intact? I mean for instance on petrol, your policy would put 5p up.

GEORGE OSBORNE: No, petrol will be coming down because the price of oil...

ANDREW MARR: So your stabiliser puts the...

GEORGE OSBORNE: The price of oil you know is falling. Although of course - and I know that we're coming on to talk about sterling - but because there has been a big fall in the value of sterling, of course petrol has not come down as much in this country because petrol is priced in dollars. On green taxes...

ANDREW MARR: But, sorry on...


ANDREW MARR: On petrol because it's very, very important this, you would put up something like 5p because that's what your system would suggest?

GEORGE OSBORNE: Our policy will be set in a first Conservative budget...


GEORGE OSBORNE: ...and that was always, that was always...

ANDREW MARR: So it's not necessarily the case that it's...

GEORGE OSBORNE: No, but it would help. A stabiliser would have helped. In the long period of this year when oil was rising would have cushioned people from the blow. Now oil is falling, but not as much in pound sterling because of the devaluation of the currency.

ANDREW MARR: And you're using the past tense about the stabiliser.

GEORGE OSBORNE: Well explaining how over the last year as...

ANDREW MARR: So it's gone?

GEORGE OSBORNE: I'm explaining how over the last year people were not shielded from the very rapid rise in oil. Now that oil is coming down in dollars, although not as much in pounds because of the currency, you know you are having that situation. But the important point is you've got to help people when the cost of living is rising and we have got plenty of proposals to help do that. On green taxes, since you ask - let me make this exactly clear - green taxes are a very useful tool for tackling climate change.

They sit aside things like carbon trading schemes, but for them to work and indeed for them to command public confidence there have to be replacement taxes. There have to be other taxes that are going down. And I have sat here on this programme and told you that Gordon Brown's vehicle excise duty rises next April were a disaster. Now we will see whether that prediction, that judgement call by me was the correct one and whether when he does deliver that pre-Budget report, Alistair Darling abandons that tax rise.

ANDREW MARR: On judgement calls, if when the markets open tomorrow sterling plunges, will you feel some sense of responsibility?

GEORGE OSBORNE: Well sterling on Friday had fallen to a 13 year low against a basket of currencies, and I think what the markets are doing are looking at the economic fundamentals; they're not looking at what politicians, be it you know myself or indeed any other politician, are saying.

These are hard-headed market operators and they are looking at the fundamentals and they are making a judgement about the British economy and they're making a judgement that we are worst placed than other economies - the US economy, some of the Eurozone economies - and the reason why sterling has fallen by more than 25% in recent months is because they don't believe Gordon Brown when he says Britain is better prepared than other economies. Because you've got to remember as sterling falls, it is still falling against other currencies, so people are making a judgement about the relative strength of currencies.

And the interesting thing, you know an interesting historical note, this devaluation under Gordon Brown is greater than the devaluation you saw under James Callaghan, than the devaluation you saw under Harold Wilson, than the devaluation that happened after Black Wednesday, so this is a striking lack of confidence that the markets are indicating in Gordon Brown's handling of the economic situation.

ANDREW MARR: And in this very difficult and sensitive time, there has always been a sort of tacit agreement that politicians don't talk the pound down, as the phrase is, and you are, as you see, highly criticised by a lot of people, not just sort of professional Labour Party people, for breaking that convention.

GEORGE OSBORNE: Well, first of all, Ken Clarke, who was Chancellor of the Exchequer, points out there has never been a convention that politicians, opposition or otherwise, don't talk about the value of sterling.

Second of all, my job as Shadow Chancellor is to tell the British people the truth about the British economy - the truth that it is the worst prepared economy in the world for the recession; the truth we've got the highest levels of personal debt in the world; the truth that the pound has fallen by a record amount against other currencies. I am telling the public the truth and that is the job of elected politicians, particularly opposition politicians in difficult times.

And people need to be very clear. David Cameron and I are deadly serious about fiscal responsibility, about not taking risks with public money, about not storing up a mountain of debt and a tax bombshell in the future that will incur, that will damage our recovery.

ANDREW MARR: Stanley Kalms, a big Tory funder, has called for you to go.

GEORGE OSBORNE: Well Stanley Kalms is a regular critic of the Tory Party. Indeed he tried to stop David Cameron becoming Leader and called for David Cameron to go. So you know he's entitled to his views but, as I say, look at what he said in the past.

ANDREW MARR: A lot of Conservative activists also concerned about your performance. Have you had an absolutely clear promise from your friend David Cameron that you will stay in the job that you currently hold until the election?

GEORGE OSBORNE: David Cameron and I work the whole time, including over this weekend, on economic policy not just for the next few weeks but in the run-up to the General Election. And I'm working very closely with him on economic policy.

I'm also working with him in my role as General Election Coordinator on that General Election, which obviously economic issues are going to play an incredibly important part. So we are working as a team. But let me just say it is not you know the David and George Show. There is also a...

ANDREW MARR: Some people think it is a bit, you see.

GEORGE OSBORNE: Well I think that is just a misunderstanding of how we work. It is a very strong team in the Shadow Cabinet. There are all sorts of people like William Hague, Dominic Grieve, Oliver Letwin, Caroline Spelman, Chris Grayling...

I could go through a whole list of them - Liam Fox - who are working together. And I think it is not, unlike the Cabinet, a one-man band. It is a strong team determined to look after Britain's future, not defend the record of a failed government from the past.

ANDREW MARR: And you feel sure in your job, do you?

GEORGE OSBORNE: I feel absolutely sure that I'm doing the right thing now, making the right judgement calls on the economy, that we're developing the right economic policy¿

ANDREW MARR: (over) And secure as well as sure?

GEORGE OSBORNE: Well, look, I would give the... I'm going to give the same answer that I would give...


GEORGE OSBORNE: But it's important...

ANDREW MARR: Well, look, let me move on in that case. Let's not waste our last bit of time because I need to ask you a couple of things. Oliver Letwin, has he been brought back to look at a new package of spending cuts?

GEORGE OSBORNE: Oliver Letwin has not been brought back. He was always there as Head of Policy and Oliver and I work again very, very closely on making sure that you get value for money out of government, that government can live within its means, that this gross waste of public money that you've seen under this Labour Government is stopped and that money paid for by the taxpayers is well spent.

ANDREW MARR: Now the polls have closed a lot. Do you take any responsibility for that? Do you look at that and think we've done something wrong?

GEORGE OSBORNE: Well, Andrew, the polls frankly... Even today, there are two polls and you know this well because you used to be the Editor of the Independent on Sunday. That poll shows the Conservative lead increasing. So you know polls come and go. We are still...


GEORGE OSBORNE: ...ahead, and the point is the choice is very clear: change under the Conservatives; more of the same under Labour; fiscal responsibility under the Conservatives, fiscal incontinence and imprudence under Labour.

ANDREW MARR: Alright. Thank you very much indeed for coming in on what's been a busy weekend.


ANDREW MARR: George Osborne, thank you very much indeed.


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

Your comments

Send us your comments:

Your E-mail address:

Disclaimer: The BBC may edit your comments and cannot guarantee that all emails will be published.

'Not a poster site has been booked'
16 Nov 08 |  Andrew Marr Show
John Reid MP, Former Cabinet Minister
16 Nov 08 |  Andrew Marr Show
'Music has to come from your life'
16 Nov 08 |  Andrew Marr Show

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit