This is a start - but that’s all. Osborne has grasped the central points of the problem and his proposals for the economy are good. But I question if he has got the scale of the problem on board or its urgency. However, it is streets ahead of anything else on offer and if he is to imnplement anything he has to see the Tories back in power - properly in power. So his language may be tempered by electoral considerations.
Christina
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SUNDAY TELEGRAPH 6.12.09
George Osborne: For confidence to return, Britain needs a credible plan
As we look forward to this week's pre-Budget Report our economy faces some serious challenges, writes Shadow Chancellor George Osborne.
Far from "leading the world" out of recession, as Gordon Brown once boasted, Britain's recovery lags the rest of the world. Far from being "better prepared", as Alistair Darling once claimed, we have the worst public finances in the developed world. International investors are increasingly questioning Britain's reputation.
The pre-Budget Report is this Government's last chance to tackle these grave problems. Instead Labour are lurching to the left and abandoning the centre ground. Meanwhile we Conservatives are setting out what needs to be done to get our economy back on track and create lasting jobs.
First, we have put forward a credible plan to start to tackle the deficit. As the Governor of the Bank of England says, there is no credible plan at the moment. Without that credible plan there can be no lasting confidence because businesses and investors will fear soaring tax rises and higher interest rates. At our Party Conference I explained why we need a public sector pay freeze that protects jobs and excludes the million lowest paid workers. I showed how an increase in the basic state pension is only affordable if we bring forward a planned increase in the pension age. Our plans to cut administrative costs by at least one third and cap the biggest public sector pensions would save billions.
Measures like these will be necessary whoever wins the election. It's a matter of honesty. We Conservatives are being straight with people about the mess we are in and what will be needed to get us out of it.
Instead what we hear from Gordon Brown are yet more promises on efficiency. We've heard it all before from him. Past efficiency reports weren't the problem. The problem was they were never implemented.
Second, we Conservatives have published detailed plans to put the Bank of England in charge of financial regulation. In a dramatic moment this week Ben Bernanke, the Chairman of the US Federal Reserve, criticised the system of financial regulation introduced by Gordon Brown twelve years ago for leaving the Bank of England "in the dark". He supported our argument that having the central bank regulate banks was "very very important" for maintaining financial stability. If the Prime Minister stopped playing politics he would adopt our proposals and overhaul his failed system of financial regulation.
As well as overhauling regulation, we need to ensure banks pay their fair share in the recovery. We bailed out the banks so they could lend out to other businesses. Back then, we said that the test of success would be whether credit flowed and we avoided money going into large bonuses. Gordon Brown promised us "binding" lending targets and that "the age of the big bonus is over". Both promises lie in tatters.
Weeks ago I proposed that banks should not pay out large cash bonuses this winter, and use the money instead to get lending going. They should have implemented my proposal already.
The next step is to ensure that when the banks start paying out profits they start paying taxes. It would be unacceptable to see them use past losses for years to come as a way to avoid corporation tax when the exchequer has already protected banks from those losses. The Government appeared to concede this principle last year when they initially said that RBS could not offset losses against future tax bills, but then went back on the idea. Banks must help pay the costs of this recession, and this would encourage banks to keep profits on their balance sheets to support new lending. In the longer term we should be giving very serious consideration to the IMF's idea that banks should pay insurance to protect taxpayers against future losses – but this must be done internationally so that Britain doesn't suffer a competitive disadvantage.
Finally, the PBR must set out a plan to go for growth and show Britain is once again open for business. We have plans for a simpler, lower corporation tax rate, tax breaks for new companies that create jobs, a green investment bank, less burdensome regulation, and much more help for the unemployed.
Britain needs an urgent change of direction to tackle the deficit, reform banking, and go for growth. Above all, we need a government that stops doing everything for short term political gain and starts governing in the long term interests of the country – and for that, I fear, we are all going to have to wait for a General Election.
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