This fleshes out the preliminary details in his conference speech of the action he. as Tory Chancellor, would take to restore our finances. As I suggested these were no more than indicators,. Here he goes further and he is already in international talks right now to restore confidence in Britain.
The importance of maintaining that credit rating is crucial. Brown last week did much to wreck it by forgetting about cuts and merely producing a list of uncosted goodies to tempt the voters. The whole country, even now, depends on the favourable view the rating agencies hold of an incoming Tory government, This confidence is due in large part to confidence in Osborne and his approach.
Christina
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THE TIMES 8.10.09
Osborne sets out to convince the world he's creditworthy
Francis Elliott and Philip Webster
The Conservative leadership is in private talks with international credit-rating agencies to persuade them that it is “deadly serious” about dealing with Britain’s debt mountain, George Osborne discloses in an interview with The Times today.
The Shadow Chancellor says that preserving the country’s AAA rating is “incredibly important for our international reputation and for the cost of our debt”. [This has been my theme all along that if borrowers turn against Britain the terms of borrowing will become so onerous that collapse would follow -cs] He says: "We must do what we can — if we are elected — to preserve that rating. I think there will be a lot of pressure on a government early on to be able to demonstrate they have a credible fiscal plan.”
Mr Osborne reveals that the purpose of a Budget held within weeks of an election victory would be to “reassure domestic business and international investors that this country can pay its way”.
His disclosure of the talks, which he says the Government is also holding, sheds new light on the Conservative political strategy to confront Britain with its austere future. He rejects criticism that raising doubts about the nation’s creditworthiness in public is irresponsible. “Look, this is the real world. And the real world is that these things are being discussed,” the Shadow Chancellor says.
He adds that it is a “statement of facts” that three agencies, Moody’s, Fitch and Standard & Poor’s, had all voiced concerns about Britain’s ability to pay off its record debts. Mr Osborne refuses to say with whom he has held talks, but adds: “They are private conversations, but they want to know what our thinking is. Above all they want to hear that we are absolutely serious about this.”
In an interview the day after he set out the first cuts of a Tory government, including a pay freeze for millions of workers, Mr Osborne revealed:
~He is holding the threat of a windfall tax if banks refuse to restrain excessive pay and bonuses.
~He will not pledge to reverse the rise in National Insurance of 0.5 per cent, due in April 2011, at the next election.
~He will spell out the timetable for a “more ambitious” and faster plan to halve the deficit after next year’s Budget, but before polling day.
~He is already recruiting figures to staff a new watchdog to police spending restraint across government.
~He will cut “tens of billions of pounds” in failed, inefficient and wasteful spending.
The Shadow Chancellor declined to say how he thought the Bank of England’s programme of increasing the money supply, known as quantitative easing, should be unwound. “It’s a very sensitive subject. I don’t think that it’s right that I should discuss it.”
Mr Osborne admitted that the package he set out on Tuesday, which he claimed would trim £23 billion from the deficit, was “not the whole solution” and that a Tory government would slash “tens of billions” from Whitehall budgets after the election.
He disclosed that he has been talking to the last Conservative Shadow Chancellor to arrive at Number 11, Lord Howe of Aberavon. Asked whether he would imitate Lord Howe and bring in a windfall tax on the banks, he said: “I am absolutely clear that the money provided by the taxpayer should not be distributed in excessive profits and excessive pay and bonuses.
“We reserve the right to take action through the tax system. The credit crunch may be coming to the end in the City, it’s not coming to an end in places like Manchester. The banking system is not functioning normally.”
Asked whether he was worried that his announcements on pension-age rises and a public sector pay freeze risked turning public opinion decisively against the Tories, he said: “David Cameron and the Conservative Party are at their best when they are making the argument and setting the terms of trade in British politics.”
Finally, he said that he rejected those in his party who worried that he could not remain both Shadow Chancellor and oversee the Tory election campaign. “In order to achieve what we need to do with the debt, you’ve got to take public opinion with you, you’ve got to have a democratic mandate to do what you want to do. I don’t see preparing for the Budget as somehow entirely separate from persuading the public to put us into office, because they are closely linked.”
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FINANCIAL TIMES 8.10.09
Senior Tory sees ‘two years of pain’
By Jean Eaglesham, George Parker and Nicholas Timmins in Manchester
Britain could be booming by the end of the first term of a Conservative government after enduring “a couple of years of significant pain”, according to the shadow cabinet member responsible for cutting public spending.
Philip Hammond, shadow Treasury chief secretary, told the Financial Times that within five years Britain could be enjoying growth similar to the mid-1990s, when the economy raced ahead at an average 3.4 per cent a year.
Mr Hammond’s suggestion that the “significant pain” of Tory spending cuts could be over within two years chimes with an upbeat message to be delivered by David Cameron to the party’s conference in Manchester on Thursday.
Mr Cameron will say: “There is a steep climb ahead. But I tell you this: the view from the summit will be worth it.”
The Tory conference has fallen into two halves: the first saw George Osborne, shadow chancellor, set out a sombre picture of cuts, announcing plans to reduce the deficit by £7bn a year. [Then there’s Osborne’s interview, first above, going much further -cs]
Now Mr Cameron, while acknowledging impending pain, will map out “how good things could be” if the country was to take tough Tory medicine.
Mr Hammond has been asked by Mr Cameron to draw up a cuts package which will be implemented within weeks of a general election.
The shadow chief secretary conceded the opening two years would be painful but he believes a strong recovery would help to repair public finances and deliver another Tory election victory.
He revealed that a Tory government would axe more than 20,000 jobs from Whitehall and quasi-public bodies.
“The most obvious thing that an incoming chancellor could do is top-slice some of the departmental budgets,” he said.
“Nobody likes to be told that there’s going to be a couple of years of significant pain for everybody. But we are being honest with people and the prize is great,” Mr Hammond said.
He stressed that the duration of the pain of reducing the £175bn deficit would depend on the speed of the recovery.
“If we are successful in stimulating economic growth, I think we can look forward within the lifetime of the next parliament to things looking distinctly brighter by the end of it.”
He said that if the Tory fiscal consolidation worked and interest rates were held low “we will start to feel probably where we were in the mid-1990s”
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