Friday, 31 October 2008

Tories have no coherent answers on the economy

George Osborne has again shown today that the Tories do not have a coherent answer to the global financial turmoil.

The Tories remain totally confused on borrowing: first calling for borrowing to fall, then for it to rise, now George Osborne says he wants a limit but cannot say what that limit would be.

Only two weeks ago, Osborne pledged not to interfere in the Bank of England's independence in setting interest rates, now he's calling for a cut.

And today, while Labour is reducing taxes by £120 for 22 million basic rate tax payers and freezing fuel duty, George Osborne is the one who is proposing an immediate 5p per litre increase in fuel duty - a damaging tax rise at a difficult time for families and small businesses.

Because of his willingness to create headlines on the hoof, Osborne has called it wrong at every turn - opposing Labour's decisive action on Northern Rock, on Bradford and Bingley, on regulating the mortgage market.

His speech today was a chance to correct some more of his mistakes - such as the £8 billion miscalculation in the Tory health policy - but Osborne has got it wrong again.


Tory Confusion on borrowing

"So we will rein in Government borrowing", David Cameron, speech to Conservative Party Conference, 1 October 2008

"No sensible set of fiscal rules would suggest reducing borrowing at this point of the cycle", Philip Hammond, Shadow Chief Secretary to the Treasury, Hansard, 07 October 2008

"Borrowing goes up. That is inevitable and you have to allow that to happen. Those automatic stabilisers as Keynes called them, those have to operate. But the question should you then go on another spending splurge over and above that, I think that would be a mistake", David Cameron, Today Programme, 20 October 2008

"Increasing borrowing is not a strategy for dealing with the recession", Philip Hammond, BBC News, 27 October 2008. Then in the same interview he said, "To increase borrowing to deal with an economic downturn - that's a perfectly sensible thing to do."

Confusion on interest rates

"I take the view, as someone who hopes to be the next Chancellor, that you shouldn't speculate on interest rate decisions... and leave that to an independent central bank", George Osborne, Today on Radio 4, 8 October 2008

"...with interest rates still at 4.5 per cent, there is plenty of scope to stimulate demand with lower rates", George Osborne, Daily Telegraph, 29 October 2008

Confusion on fuel duty

George Osborne still can't admit the Tories would hit families and business today with an increase in fuel duty. In a BBC Breakfast interview this morning, George Osborne was pressed on the issue of his plans to increase fuel duty and had no answers:

Charlie Stayt (interviewer): You'll know very well that what people love to hear from people in your position is specifics. What would you actually do about a specific ... now help me with the fuel surcharge issue. Am I right in thinking that the Tories had a policy that you suggested when the price of petrol goes up you should reduce the levy on it and when it goes down as it has now, you would add to people's bills. Is that right now, if you were in power, would you be adding more to people's petrol bills?

George Osborne: Well when the price of oil surged the government didn't help people and for months people have been struggling with those higher petrol prices at the pumps and we suggested, you know you need to work out the exact details of how the scheme operates and we would introduce it having consulted on it, you know, first Conservative budget. But what we've said is that when the oil price surges you shouldn't be making things worse by putting up the taxes on families.

CS: But help me with the other end of it. If the prices come down would you or would you not ...

GO: Well of course ...

CS: ... put extra money on it so it costs people more?

GO: Well of course you've got to remember what's happening now. The prices are coming down from the very high point where we would have been able to cut duty as it went up, so that's, you know, that's a very key point to bear in mind.

CS: So you would?

GO: Well, from...

CS: People would pay more money for their petrol if the Tories were in charge now?

GO: As it happens, the sterling, the price in pound, for oil today is same as the forecast in the Budget when we talked about this policy. So what we're saying is governments should be there to help people by getting money into their pockets when the price of the goods they're buying like petrol is going up. We should be helping people now by freezing their council tax, we should be helping people who run a small business by cutting their payroll taxes and giving them a VAT holiday, so these are very specific tax measures and there is a big contrast in British politics because Gordon Brown or Alistair Darling when they sit on this sofa what they say is we need big spending splurges, more big government programmes in the hope it's going to trickle down to people at the bottom of the tree. I don't think it works. What people want is a gov ernment that's in control of the public finances and then is able to offer targeted tax help.

George Osborne and Charlie Stayt, BBC Breakfast, 31 October 2008

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