Afternoon summary
- George Osborne refused to apologise for attempting to make £4.4bn of benefit cuts for people with disabilities as he defended his controversial budget that sparked the resignation of the work and pensions secretary. As Rowena Mason reports, In his first House of Commons appearance since the fiasco, the chancellor acknowledged the disability cuts had been a mistake and would be withdrawn. However, Osborne struck a combative tone as he defended the core principles of his tax-cutting budget and overall economic strategy, which Iain Duncan Smith attacked as “deeply unfair” after resigning from the cabinet.
- John McDonnell, the shadow chancellor, has said Osborne is not fit to hold senior office. Effectively calling for Osborne’s resignation McDonnell criticised his handling of the budget, and especially the Treasury’s apparent decision to blame Duncan Smith, the former work and pensions secretary, for approving the cut to the Personal Independence Payment (PIP). McDonnell said this was “one of the most despicable acts we’ve witnessed in recent political history”. (See 2.38pm.)
- Theresa May, the home secretary, has said security checks are being intensified at the UK’s borders in the wake of the Brussels terror attacks. (See 4.21pm.)
That’s all from me for today.
Thanks for the comments.
The Telegraph’s Michael Deacon has filed his sketch of George Osborne’s speech. He says “a display of almost rabid bravado”.
Here’s an excerpt.
After a few token words of appreciation for Mr Duncan Smith’s time in office, he reached the matter of his u-turn. Government, he said, required difficult decisions – “And when we don’t get them right, I’ve always been prepared to listen and learn.”
Note the subtle difference between those pronouns. We make mistakes. I fix them.
When George Osborne was speaking in the budget speech, the Labour MP Rachel Reeves asked a question. (See 1.12pm.) Osborne responded by saying she should welcome the money in the budget for flood defences in Leeds, where she is an MP.
In her speech Reeves said she had no reason to be grateful.
The chancellor said earlier I should have welcomed the money for flood defences. But in 2011 the government cancelled a flood defence scheme in Leeds worth £135m and they announced last week money for Leeds of £35m.
Well I’m sorry for not thanking him, but £35m rather than £135m isn’t really worth the thanks and the businesses in my constituency will be paying a heavy price if those rains come again.
Tory MP says government should 'look again' at decision to protect pensioner benefits
In the budget debate the Conservative MP Stewart Jackson said the government should “look again” at its decision to protect pensioner benefits.
I think we need to look again at pensioner benefits. You cannot discuss welfare without looking at things like the triple-lock and pensioner benefits.
You can’t see this in a vacuum and it’s important we look again at means-testing and pensioner benefits.
It’s wrong morally I believe to make large-scale transfer of wealth from the young to the old, and I think there has to be a consensus.
He also said that, if the government were to means-test pensioner benefits, the money should be used to protect spending on adult social care.
Clarke says he would have introduced a 'much tougher' budget
In his speech in the budget debate, echoing a point he made in his Today programme interview (see 9.36am), Kenneth Clarke, the Conservative former chancellor, said that he would have introduced a tougher budget if he were still in charge of the Treasury.
Before the budget was delivered I decided that if I were in that position, and thank the Lord I’m not because I never faced problems of the kind that my right honourable friend actually inherited from his predecessor, but had I been in his position I expected a much tougher budget. I think my first thoughts would have been to get on with it. I would have introduced a budget, as I frequently did in my time, raising taxes and cutting public expenditure.
He also said that he thought that George Osborne was “quite right” to “wait for events and see what happens” between now and the autumn statement before deciding how to fill the £4.4bn black hole (over four years) created by his decision to scrap the PIP cuts.
Cooper says Osborne will breach welfare cap if he keeps promise on no further welfare cuts
Yvette Cooper, the Labour former Treasury minister and former work and pensions secretary, has issued a statement following George Osborne’s speech in the Commons. She says that Osborne will either have to breach his welfare cap again or break his promise not to look for further cuts in the welfare budget.
She explained:
This is either a further massive climb-down from the chancellor or he and the new work and pension secretary are misleading the House and there are still more welfare cuts to come.
George Osborne’s budget last week committed him to meeting the welfare cap he set with great political fanfare by the end of the parliament. And he also said he would set out the measures needed to meet the welfare cap by the autumn statement.
The Office for Budget Responsibility have shown that will require £3.2bn a year further welfare cuts by 2020. And his U-turn on PIP cuts means he would need an additional £1.3bn cuts on top of that - all from working age benefits.
Yet today he appeared to support the work and pensions secretary pledge that there would be no further welfare cuts this parliament.
So which is it? Either he has ripped up his own welfare cap and ditched another big plank of his budget in just a few days. Or he and the work and pensions secretary have used the most awful weasel words in Parliament and there are still more welfare cuts to come. Either this is chaos or it is a con.
Theresa May's statement on the terror attacks in Belgium
Theresa May, the home secretary, has just started giving evidence to the Commons home affairs committee.
She opened with a short statement about the terror attacks in Belgium. They were “appalling” attacks, she said.
We don’t yet know the full details, she said. There have been multiple explosions at Brussels airports and a further explosion at Malbec metro station, she said. At least 30 people have died, she said, and hundreds more have been injured.
At least one British national was caught up in this, she said.
She said she was aware of reports that the terrorist group Daesh (Islamic State) have claimed responsibility.
She said that David Cameron has spoken to his Belgian counterpart, Charles Michel. And she said she had offered support to her counterpart.
We stand together against the terrorists and they will not win.
She said the UK already worked with the Belgian authorities on counter-terrorism.
In the UK she said the threat level had not changed. It is currently set at “severe”, which means an attack is highly likely, she said.
I would urge everyone to remain alert but not alarmed.
She said the UK was taking a number of precautions to ensure public safety and to provide public reassurance. Border Force was carrying out more intensive checks at the border, she said. And the police have deployed extra officers at key locations and on the transport network, she said.
And some travel firms have suspended services to Belgium.
There is more information at the attacks in Brussels on our separate live blog.
During John McDonnell’s speech in the budget debate two Tory MPs accused him of supporting terrorism. They were referring to comments McDonnell has made in the past, most notably these ones, for which McDonnell apologised last year.
Former Army officer Tom Tugendhat said McDonnell had stood alongside terrorists who murdered his friends. He told McDonnell:
You have called into question the morality of the leadership of the chancellor. Will you please discuss with this House the morality that allows you to stand with bombers who murdered my friends in Northern Ireland and question the integrity of the chancellor?
And James Cartlidge said:
You make a very personal point about fitness for office on the day of a major terrorist attack. Will you withdraw your previous support for terrorist organisations that have attacked this country?
The interventions provoked loud shouting from Labour MPs.
McDonnell replied:
You have heard me share the sentiments of the whole House on the issue of Belgium. To bring that into the debate as a political point at this stage is unacceptable.
Another U-turn! The government has announced that it is not going to ban poppers.
George Osborne's speech - Summary
Here are the main news points from George Osborne’s opening speech.
- Osborne accepted that the proposal to cut the Personal Independence Payment (PIP) had been “a mistake”. But he refused repeated demands from Labour MPs to apologise for what he had done. He said:
Where we’ve made a mistake, where we’ve got things wrong, we listen and we learn. And that’s precisely what we’ve done.
- He paid tribute to Iain Duncan Smith. He said:
I’m sorry that my right honourable friend chose to leave the government, and let me hear in this House recognise his achievements in helping to make work pay, protecting the vulnerable and breaking the decades-old cycle of welfare dependency.
But he admitted there was always “robust discussion between the Treasury and the spending departments where money needs to be saved”. But he said he and Duncan Smith had worked together longer than any other chancellor and work and pensions secretary.
Osborne’s comments about Duncan Smith were positive, but not warm. For a better insight into their relationship, it is worth reading what Daniel Finkelstein, the Times columnist, wrote about this yesterday (paywall). The blurb to the article described Finkestein as a friend and ally of Osborne. Finkelstein wrote:
From virtually the beginning of their time in office together, there has been tension between Mr Duncan Smith and George Osborne. Anyone knowing either of them at all well (I am a long-standing friend of the chancellor) will have been aware of it.
The chancellor has been clear from the start (and the maths even clearer) that without welfare savings the structural deficit cannot be eliminated.
Yet the work and pension secretary’s reform plans often (not always) seemed either to involve spending more money, or to be ineffective in saving the money they promised.
Mr Duncan Smith believes that this is due to his superior moral conscience and concern for the vulnerable. The Treasury has been inclined to the view that his grasp of detail isn’t what it should be. Mr Duncan Smith’s plans for personal independence payments (PIPs) is this dispute boiled down to its essence.
- Osborne appeared to reject claims that pensioners have been protected for austerity measures. This was one of Duncan Smith’s complaints in his resignation letter. Osborne said:
Let me just say this about benefits to pensioners because it’s been raised - in the same breath, some people say to me we’re not saving enough from pensioners but at the same time complaining about everything from long-term increases in the state pension age to keep pace with rising life expectancy, to restrictions on the lifetime allowances for the largest pension pots.
The truth is that we have made substantial savings from pensioner welfare - half a trillion pounds of savings.
They are vital to the long-term sustainability of our public finances but we’ve made these savings in a way that enables us to go on giving people who have worked hard all their lives a decent, generous basic state pension that we committed to in our manifesto, and I am not going to take that away from people.
The problem with this argument is that although increases in the state pension age and cuts to pension tax relief sound like measures affecting pensioners, in reality their negative impact falls on the working-age population.
- He signalled that he would not abandon the pension “triple lock”, which guarantees pensioners an annual increase of at least 2.5%. This is what said he would carry on paying “a decent, generous basic state pension”. The Institute for Fiscal Studies and others have said the triple lock can no longer be justified.
- He said the government had now achieved the £12bn welfare cuts proposed in the Conservative manifesto.
- He refused to say how the government would compensate for the £4.4bn black hole left in his budget finances by the decision to abandon the PIP cut.
“We made very substantial savings in the Welfare Reform and Work Act that has just passed through Parliament so we’ve now legislated for 12 billion a year of working-age welfare savings - the 12 billion we committed to in our manifesto and we’re going to focus now on implementing that.
- He said the government would assess the level of the welfare cap (the rule limiting overall government welfare spending) in the autumn statement.
- He said he endorsed what Stephen Crabb, the work and pensions secretary, said yesterday about the government not “seeking further savings from the welfare budget”. Crabb’s comment was seen as going marginally further than his original statement about not having plans for further welfare cuts.
- Osborne said it was a “socialist illusion” to think taxing the rich would solve all society’s problems.
It’s a classic socialist illusion to think you can solve all society’s problems with taxes on the very richest.
- He said social justice depended on sound public finances.
There is not some inherent conflict between delivering social justice and the savings required to deliver sound public finances.
They are one and the same thing. Without sound public finances there is no social justice.
John McDonnell's speech - Summary
John McDonnell, the shadow chancellor, responded to George Osborne. His speech was probably a bit top-heavy on hyperbole, but he made some powerful points and he pressed ahead quite well in the face of of a very hostile Tory heckling/intervention operation.
Here are the main points.
- McDonnell suggested that Osborne should resign. And he said he was not fit to hold senior office.
Let me make it clear from the outset that, in my view - and, I believe, that of many others - the behaviour of the chancellor over the last 11 days calls into question his fitness for the office he now holds.
I also believe that it certainly calls into question his fitness for any leading office in government.
What we’ve seen is not the actions of a chancellor, a senior government minister, but the grubby, incompetent manipulations of a political chancer.
UPDATE: I’ve corrected the quote above. Originally it said “political chancellor”, but having heard the tape again, I’m clear he said “political chancer”.
- He said Osborne’s PIP cut undermined his “we’re all in this together” rhetoric.
The chancellor was willing to cut away this vital support to some of the poorest and most disadvantaged people of our community. Do not tell us we’re all in this together.
- He criticised Osborne for letting the Treasury blame Iain Duncan Smith for the flawed PIP decision. He said this was “one of the most despicable acts we’ve witnessed in recent political history” and a “disgraceful act of betrayal of one of his own colleagues to save his skin and his own votes”.
By the Friday of last week the chancellor was under so much criticism he needed to find someone to blame. So, I think, in one of the most despicable acts we’ve witnessed in recent political history, the chancellor sent out his large team of spin doctors to try and lay the blame on the former secretary of state for work and pensions.
This was a disgraceful act of betrayal of one of his own cabinet colleagues to save his own political skin and his leadership hopes. The betrayal was why Mr Duncan Smith resigned.
- He said that there was “complete confusion” yesterday as to whether or not the government was giving a firm pledge not to cut welfare spending further. And he said that no one believed the government’s “mealy-mouthed assurances” on this.
- He criticised Osborne for not saying how he would fill the £4.4bn black hole in his budget.
Updated
George Osborne's speech - Verdict from the Twitter commentariat
This is what some political journalists are saying about George Osborne’s speech on Twitter.
If there’s a consensus, it’s that this was a victory for the Tory whips office.
From the BBC’s Laura Kuenssberg.
Looking for any sign of remorse from Osborne today, that statement wasn't it.. he looks pleased and relieved as he sits down
— Laura Kuenssberg (@bbclaurak) March 22, 2016
This is also a contest for who can be most loyal Tory backbencher.... a lot of competition on that front today
— Laura Kuenssberg (@bbclaurak) March 22, 2016
Whatever happens debate, do note Osborne confirmed Crabb's position on no more welfare savings, a stronger statement than just 'no plans'
— Laura Kuenssberg (@bbclaurak) March 22, 2016
Kuenssberg is referring to the fact that Osborne backed this comment from Crabb yesterday, saying the government will not seek further welfare savings, which went marginally further than Crabb’s original statement about having no plans for further welfare cuts.
From the Daily Mail’s Jason Groves
Tory whips hv mounted effective 'save Osborne' op. Lots of cheering + planted qs. Unlike the weekend, criticism confined to the opposition
— Jason Groves (@JasonGroves1) March 22, 2016
From the Spectator’s James Forsyth
Osborne's aim clear: divide the chamber on partisan lines and turn this in to a straight Labour / Tory fight. Working so far...
— James Forsyth (@JGForsyth) March 22, 2016
Tory whips and PPSs have earned their corn today. No difficult questions from the Tory side, lots of patsy questions and plenty of noise
— James Forsyth (@JGForsyth) March 22, 2016
From Huffington Post’s Paul Waugh
Osborne doesn't sound vcontrite. In fact, complete with supportive Qs from own side, he's back in full 'Isn't My Budget Brilliant?' mode
— Paul Waugh (@paulwaugh) March 22, 2016
From the Sun’s Steve Hawkes
Fair play to George O, he's got some guts. Most chaotic Budget of his career, the plc equivalent of a profit warning, and he's boasting!
— steve hawkes (@steve_hawkes) March 22, 2016
From the Daily Mail’s Isabel Oakeshott
Overall very very robust performance by @George_Osborne Not sure tone enhances his damaged leadership prospects but he emerges well in tact
— Isabel Oakeshott (@IsabelOakeshott) March 22, 2016
Osborne's speech - Snap verdict
Osborne’s speech - Snap verdict: We were told in some of the briefing ahead of his speech that George Osborne would adopt a rather contrite tone, accepting that he had had got the PIP cuts wrong and lavishing praise on Iain Duncan Smith, the former work and pensions secretary who used his resignation letter to rubbish Osborne’s record. But if Osborne was planning such a speech, it is probably now lying in a Treasury bin. Osborne made only minimal concessions to humility and instead came out with a coarse and scrappy defence of his budget that was lacking in finesse - and confidence.
Osborne admitted that the plans to cut PIP had been “a mistake”, but he refused repeatedly to apologise, or to say he was sorry. (This was probably an error; a bit of humility would have gone down well, and it would not have taken much to say something to the effect that he’s “always sorry when he makes a mistake”.) Osborne’s comments about Duncan Smith also sounded a bit cursory, rather than like a serious attempt to make peace.
The chancellor did argue (like William Hague in the Telegraph today - see 10.33am) that there is an important link between social justice and sound public finance. But he did not address the key charges that Duncan Smith levelled against him (that he has abandoned the “we’re all in it together” equality ethic in public spending decisions, and that he is only governing in the interest of Tory-supporting demographic groups). And he did not address the issue that his budget now contains a £4.4bn black hole.
But ... Tory MPs were cheering wildly (or rather jeering wildly, at Labour), not sitting silently on their hands. Osborne’s standing amongst his backbenchers may be a lot lower than it was last week, but they have not abandoned him entirely. This did not feel like a speech that will repair his reputation. But it has probably done enough to edge him out of the crisis zone and to lift his standing a little.
By no means a triumph, but it could have been worse.
Updated
Osborne is winding up now.
He says this is a One Nation budget. It devolves power, and supports our children’s future.
It cuts taxes, he says. It delivers security and looks to the future. It is a One Nation, compassionate budget.
Tory MPs are bellowing like cattle: “More”.
Osborne says people have focused on what Jeremy Corbyn did not say yesterday.
But he wants to focus on what Corbyn did say. Coryn attacked the corporation tax cut, he says.
He says that is what Labour is a threat to the economy.
A Tory MP says the national debt would be £900bn higher under Labour’s plans.
Osborne rounds this up. Labour would have left the country with £1 trillion more of debt, he says.
Labour’s Wes Streeting says Stephen Crabb said yesterday that the government would not be coming forward with proposals for further welfare savings. Can you rule out further cuts.
Osborne says the position is exactly as Crabb set out.
Osborne says Gordon Brown spent a decade going around the country saying yes to more public spending and more welfare.
Britain paid the prices, he says.
And it was not Labour MPs who paid the price. It was ordinary people.
These are the people he is fighting for, he says.
He says getting things right for these people is what he worries about.
Osborne says social justice impossible without sound public finances
Osborne says it is a classic socialist delusion to think you do not need savings.
Without sound public finances, there is no social justice, he says.
- Osborne says social justice impossible without sound public finances.
Chris Pincher, a Conservative, says a young constituent tweeted to him about the lifetime ISA during the budget. He wanted to know where he could get one.
Osborne says it will come in next year, but Pincher’s constituent can get a help-to-buy ISA in the meantime.
Osborne says the head of the IFS said recently the highest earners have seen significant tax increases. “We are all in this together,” he says.
The SNP’s George Kerevan asks Osborne to apologise to the 340,000 people who thought they would lose money from PIP.
Osborne says he could not have been clearer; he listened, he learnt, he accepted he made a mistake and he changed the policy.
Labour’s David Anderson asks why Osborne announced the PIP cut in the first place if it is so easy to balance the budget without it.
Osborne says, if he did not take difficult decisions, the country would be in a bigger mess.
V good Q from David Anderson: if it's so easy to absorb this U-turn on £1bn cut in disability benefits, why worry so many ppl in 1st place?
— Paul Waugh (@paulwaugh) March 22, 2016
Updated
Osborne says he will go on delivering economic security.
A Tory MP asks Osborne to remind people of Gordon Brown’s 10p tax rate fiasco.
Osborne says the government has turned the 10p rate into zero.
Osborne says Labour left a black hole in the public finances so big it would break the Hadron collider.
Osborne says the government made substantial changes in the welfare reform and work act.
It has legislated for savings of £12bn. And now it is going to focus on implementing those, he says.
He says some people want the government to take more from pensioners. Yet the pension age is going up, and there have been restrictions on pension tax relief.
There have been savings from pensioners, he says.
But this has not stopped the government giving pensioners a decent state pension. He is not going to take that away from them, he says.
- Osborne rejects claims that pensioners have been totally unaffected by the government’s austerity measures.
Andrew Griffiths, a Conservative, says the IFS says inequality is at its lowest level for 25 years.
Osborne agrees. And there are more people in work. And he got in a freeze on beer duty too, he says.
A Labour MP asks Osborne to apologise to constituents who were alarmed by the prospect of PIP being cut.
Osborne says he has addressed this. The PIP cuts are not going ahead, he says.
Osborne turns to the welfare cap.
It is judged by the Office for Budget Responsibility.
The government has to meet it, or explain to parliament why it won’t.
He says he finds it incredible that Labour objects to this. Under Labour there were no controls on welfare spending, and no transparency.
Osborne says it is clear that the PIP cuts did not attract support. They have been withdrawn.
Over 3m disabled people are in work. The budget has risen and will continue to rise.
The government will continue to develop a system of disability support that works better with health and social services, he says.
Rachel Reeves, the Labour former shadow work and pensions secretary, says Stephen Crabb just said yesterday there were “no plans” for further welfare cuts. Can Osborne rule out further cuts?
Osborne says Crabb set out the government’s position. There are no plans for further welfare cuts beyond the substantial ones it has announced. It will focus on implementing those.
Very very rowdy scenes as Osborne battles to defend his record
— Isabel Oakeshott (@IsabelOakeshott) March 22, 2016
Noisiest commons for some time as Osborne uses clash with Yvette Cooper to force tribes to take sides.
— Torcuil Crichton (@Torcuil) March 22, 2016
Sir Simon Burns, a Conservative, asks Osborne to acknowledge that spending on disability benefits is going up.
Osborne says Burns is right. He says the government is spending almost £50bn on disability. Spending on disability living allowance and the Personal Independence Payment (PIP) has gone up from £13bn in 2010 to £16bn now, and will rise to £18bn in the future.
Yvette Cooper, the Labour MP, says Osborne is the first chancellor in 20 years to open a debate like this because he is the first to have to abandon such a big part of his budget. Does he think Iain Duncan Smith was “deluded” when he criticised the budget.
Osborne says the deficit rose from £76bn to £154bn when Cooper was a Treasury minister.
.@YvetteCooperMP offering a reminder of what effective opposition looks like in #budget debate
— Ian Katz (@iankatz1000) March 22, 2016
Updated
Tim Farron says Osborne should resign
Osborne says achieving change is difficult.
But many progressive acts are difficult to achieve, he says.
Tim Farron, the Lib Dem leader, says leaving the EU would damage the economy. He says Iain Duncan Smith has damaged Osborne’s authority. Will he act in the national interest and resign in the interests of helping the government win the EU referendum?
- Tim Farron says Osborne should resign.
Osborne says Farron’s intervention sounded like one of those interminable interventions at an Ecofin meeting. He says that is a debate for another day.
(He is referring to EU membership, I assume, not the question of whether or not he should resign.)
Osborne says the PIP cuts were “a mistake” and that the government has learnt
Osborne says he is sorry that Iain Duncan Smith felt the need to resign.
He praises Duncan Smith’s record, in language very similar to that released by the Treasury earlier. (See 10am.)
There are always “robust” discussions between chancellors and spending departments, he says.
But he and Duncan Smith worked together in their respective jobs longer than any of their predecessors, he says.
Labour’s Chris Leslie asks Osborne to acknowledge that proposing the PIP cuts was a mistake.
Osborne says he has just said where he makes a mistake, he listens and learns. That is what he has done.
But why won’t Labour apologise, he says.
- Osborne says the PIP cuts were “a mistake” and that the government has learnt.
Osborne says this budget debate is an example of the democracy that we are fighting to protect.
He says there has been a lively debate about the budget. But it is about providing economic security.
George Osborne's speech
George Osborne starts by offering condolences to those killed and injured in the attack in Belgium and to their relatives.
Security in the UK has been stepped up, he says.
This is from the Sun’s Tom Newton Dunn.
Front bench rammed to support Osborne's closing Budget speech. Michael Gove sitting prominently next to Chx.
— Tom Newton Dunn (@tnewtondunn) March 22, 2016
Bercow suggests MPs could debate Sports Direct founder Mike Ashley’s refusal to give evidence to Commons committee
The budget debate has been held up by points of order, one of which came from Iain Wright, the chair of the Commons business committee. He asked John Bercow, the Speaker, what his committee should do about the fact that Mike Ashley, the Sports Direct founder, has refused an invitation to appear before the committee.
Bercow said that if Wright and his committee want to take this further, they need to make a report for the Commons setting out the facts. Wright could then ask for the House to debate this as a matter of privilege, Bercow said.
Bercow said Wright would need to set his request out in a letter to the Speaker.
- Bercow suggests MPs could debate Sports Direct founder Mike Ashley’s refusal to give evidence to a Commons committee.
Bercow did not say what would happen next - partly, probably, because at this point the rules get fuzzy.
In theory the Commons can send the sergeant-at-arms to arrest someone like Ashley for refusing to appear before a committee, and even lock him up.
But this “power” has not been used for centuries, and in practice it is now considered obsolete (not least because modern human rights laws would not allow it).
Updated
Labour's five questions for George Osborne
Labour has sent out a briefing note ahead of the budget speech identifying the key questions that it wants George Osborne to answer. Here they are.
1) How will the fill the £4.4bn black hole in his budget?
2) If he has ruled out further cuts to welfare to fill this black hole will it instead come from (a) higher taxes or (b) further cuts to departmental spending?
3) What does this £4.4 billion black hole mean for his surplus target?
4) Has he now abandoned the government’s overall cap on welfare spending?
5) Will he categorically rule out any further cuts to welfare spending in the lifetime of this parliament?
And this is from Seema Malhotra, the shadow chief secretary to the Treasury.
The Tories are in disarray over their unfair budget.
George Osborne has today been dragged to the House to explain how he will fill the £4.4bn black hole that has opened up in his Budget in less than a week.
Vague promises of “no plans” to make further welfare cuts are not good enough. Given the Tories’ record of unfairness we need clear answers from George Osborne on who will pick up the bill for his failure and what this mess means for his already discredited fiscal rule.
Lunchtime summary
- Kenneth Clarke, the Conservative former chancellor, has said the government should leave open the possibility of imposing further welfare cuts during the current parliament if it is to tackle the fiscal deficit. Clarke was speaking ahead of this afternoon’s budget debate, which is due to start in about 10 minutes. George Osborne will be opening the debate with an important speech which will give him the chance to try to rescue his reputation after six days which have seen his budget unravel. I will be covering the opening of the debate in detail.
- Robert Chote, chair of the Office for Budget Responsibility, has said the disability cuts U-turn will not affect the government’s chance of getting the budget into surplus.
Robert Chote, OBR, on the "loss" of the disability payment savings in 2020: "£1.3bn is not a large number at that time horizon."
— Kamal Ahmed (@bbckamal) March 22, 2016
There is full coverage of Chote’s evidence to the Treasury committee on our business live blog.
- David Cameron has chaired a meeting of the Cobra emergency committee to discuss the terror attacks in Belgium. There is full coverage of this story on a separate live blog.
- Nicola Sturgeon, the Scottish first minister, has said Scotland’s highest earners will not receive a tax cut proposed for the rest of UK if the SNP stays in power. As the Press Association reports, Sturgeon said the basic rate of tax would not rise at all under the SNP in the next parliament. She also announced that if the SNP win May’s Holyrood election there will be no increase next year in either the higher 40p rate or the additional rate of 45p paid by those earning 150,000 a year or more But plans from chancellor George Osborne to increase the threshold at which workers start paying the 40p rate from £43,000 to £45,000 in 2017-18, effectively a tax cut for the higher paid, will not be implemented in Scotland. Instead the threshold will rise with inflation, to £43,387, meaning Scots earning this amount or more will pay more in tax than people on the same salary south of the border. This could raise £1.2bn for public services in Scotland.
- George Osborne’s plan to cut the budget deficit remained off-track in February after self-assessment tax receipts increased by only a small margin. As Phillip Inman reports, official figures showed that borrowing is likely to be higher in this financial year than in 2014-15, in breach of the chancellor’s supplementary fiscal rule that the annual deficit falls in each year of the parliament.
There are two particularly good columns on the Conservative party in the papers today.
David Willetts, the former minister and author of Modern Conservatism, argues that his party’s electoral strength has always depended on blending the instincts of patrician Tories such as Mr Duncan Smith with metropolitan liberals like Mr Osborne. “The great success of the Conservatives over the past century has been to combine these two traditions so you have both that sense of roots and belonging together with the excitement and dynamism of the modern market place,” he says. David Cameron himself is a canny mix — a shire Tory son of a stockbroker who moved to Notting Hill and embraced modernisation. One cabinet minister says he is “yin and yang”, embodying both Conservative traditions. But as his leadership draws to an end, the equal and opposite forces are starting to break apart.
It has been assumed that the next Tory leadership contest will be a battle between an “Inner” and an “Outer”, but the Europe question will have been resolved by then. There may be a more interesting distinction to be drawn on social justice. Boris Johnson is already positioning himself on the opposite side of this divide to Mr Osborne, sounding remarkably similar to Mr Duncan Smith as he argues that the Conservatives must become the “warriors of the dispossessed”.
Usually framed as the “Tory right”, these dissenters understandably resent such a blunt label. So let us characterise them by their history.
They did not vote for Mr Cameron as leader in 2005, or for Ken Clarke in 2001, or for any of the handful of Tories that Britons recognise as fellow mammals. Since Margaret Thatcher, a prime minister they misremember as undeviatingly consistent, they have made apologies for every leader apart from the two winners, Mr Major and Mr Cameron.
When the party loses, they are usually in the vicinity. When it prospers, they are chuntering on the margins. You might infer that electoral politics is not their game but sheer pluck keeps them dispensing strategic counsel to others with the swagger of a Roosevelt. They would rather be central to an opposition than peripheral to a government. They want more austerity, except when they want less. Some have achievements to their name; many more, it must be said, reek of thwarted dreams.
No plausible Tory leader is of this tribe. Boris Johnson, the London mayor, does the best job of flattering them while stifling a laugh. Theresa May, the home secretary, does not share their support for Brexit. Mr Osborne knows from experience what happens when they are allowed near the helm. You have to delve into the junior ranks to find a future leader who fits this crowd.
Clegg says he warned Osborne that trying to cut welfare by £12bn would be a mistake
It is a day for newspaper columns from former party leaders. Nick Clegg, the former Lib Dem leader and former deputy prime minister, has one in the Times (paywall) in which he essentially says “I told you so” to David Cameron and George Osborne over welfare cuts.
Here’s an excerpt.
Shortly before the election last year, I privately warned George Osborne that his ambition to cut £12 billion from the welfare budget whilst refusing any additional tax rises on the better-off was a strategic error.
Any further savings were bound to hit the working poor — strivers, not shirkers — and the vulnerable and sick. It would confirm the public’s worst suspicions about the Conservatives: they would be seen as the party of the rich.
So I imagine Osborne must have felt pretty smug when the Conservatives won a majority and the Liberal Democrats were left out cold on the canvas ...
In politics, just as in life, all big decisions eventually catch up with you. The resignation of Iain Duncan Smith brings to a head a contradiction at the heart of the Conservatives. Cameron and Osborne are smart enough to know that they have to tack to the centre; they only do so rhetorically, acting instead in a way which contradicts what they say about themselves.
Conservative for Britain, a group campaigning for Brexit, are claiming today that the government could “end austerity” if Britain voted to leave the EU. This is based on the claim that Britain pays £19bn to the EU every year, gets £9bn back, and would therefore have an extra £10bn to spend if it left.
The group has issued a press notice with some suggestions as to how this money could be spend.
The Conservatives for Britain spending suggestions for the first post-Brexit budget include:
£1.1 billion for disability benefits to avoid controversial cuts
£800 million to train an extra 60,000 nurses a year to deal with shortages and excess agency staff
£250 million a year to provide an additional 10,000 doctors a year to deal with doctor shortages and to staff the seven day NHS well
£750 million a year on social care to offering better support for people in their own homes, and for more care home and respite care places.
£200 million to cancel hospital car parking charges
£400 million for dearer medical treatments not currently licensed by NICE, for example cancer treatments such as Proton Beam therapy and Meningitis vaccines
£1.9 billion to abolish VAT on domestic energy, energy saving materials, on converting existing dwellings and on carry cots, children’s car seats and safety seats
£1.5 billion to keep Council Tax down by offering councils the money to pay for a discount on bills they issue
£900 million to remove Stamp Duty on the £125,000 to £250,000 band of home purchase
£500 million should be allocated to a local road fund to support local schemes to improve junction safety and flows, and to provide additional capacity and bypasses on busy roads in congested areas.
Britain Stronger in Europe has responded with a briefing dismissing this as “fantasy economics”. It calculates the UK’s net contribution to the EU as £7bn a year (which is still a sizeable sum) and argues that this is equivalent to just 30p per person per day.
A new poll it out today showing voting intention for the Welsh assembly elections in May. ITV has written up the full details here. Support for Labour and the Tories has not changed since last month, but support for Plaid Cymru is up and support for Ukip is down. Here’s an excerpt from the ITV write-up.
Plaid Cymru will clearly be pleased to see their support moving upwards on both votes in this survey. It is possible that the party was helped by the fact that the first few days of sampling occurred immediately after the party’s– apparently successful – spring conference. Nonetheless, it is always better to be moving forward than backwards. Plaid will also, one imagines, be pleased to see the threat from UKIP apparently receding. But this poll still indicates that they will need a very strong Assembly campaign in order to come close to realising their electoral ambitions in May.
The largest changes that we see in this new poll concern UKIP, whose support falls significantly on both votes from the February Barometer poll. However,it is perhaps worth remembering that that poll had shown a three point rise inUKIP support for the constituency ballot and a two point rise on the regional vote; it may have been simply one of the occasional ‘outliers’ that polling produces. But it is also plausible that these new figures reflect some of the negative publicity that UKIP has attracted in recent weeks in Wales, over internal divisions regarding candidate selection and the somewhat interesting profiles of some of its Welsh Assembly candidates. Yet we must not overstate things: the evidence continues to suggest that UKIP is still firmly on course to win seats in May – indeed, to enter the Assembly in quite significant numbers.It would now be a major shock if they were to fail to do so.
This is from the Daily Mirror’s Jason Beattie.
John McDonnell to reply for Labour at beginning of Budget debate, Angela Eagle to wind up.
— Jason Beattie (@JBeattieMirror) March 22, 2016
Hague accuses Duncan Smith of 'playing into the hands of a leftwing fallacy'
Here is more from William Hague’s Telegraph column today criticising Iain Duncan Smith’s decision to resign last week. Hague’s comments are rather strong, and somewhat at odds with Number 10’s attempts to call a truce after the weekend mudslinging generated by Duncan Smith’s resignation.
Here’s an extract.
For his party it was abundantly wrong, since it is currently suffering the divisions that result from holding a referendum on an issue over which Tories are naturally split, for the sake of giving the electorate the democratic say that he and I have both long called for. It is fairly obvious that such a period requires leading figures to minimise their disagreements on other issues if the Government is to function properly afterwards.
Many party members will feel let down by such an unhelpful development so close to elections in Scotland, Wales and London. Resigning now is damaging not just to the Prime Minister and Chancellor, but also to every Conservative candidate for a seat in an assembly, or a police commissionership, or for Mayor of London. And these are the people to whom we ex-leaders have a special responsibility, because they tramped the streets for us when we needed them ...
It is a central Conservative argument that pro-business tax changes are not an alternative to welfare spending, but a crucial necessity if we are to pay the vast welfare bills of the future. Depicting the budget as a zero-sum reduction in welfare spending to pay for tax cuts – or juxtaposed with them, as Iain Duncan Smith put it – is simply playing into the hands of a leftwing fallacy that would take us back to Gordon Brown’s policies if put into practice.
Hague also reveals that when he was party leader he promoted Duncan Smith in the run-up to the 2001 general election partly to damage the prospects of his leadership rivals.
Four years later, realising that I might not have much longer as party leader, I moved him into the “A-team” of shadow ministers, fronting the media and touring the constituencies. This was a deliberate act of mine in order to give him a crack at the leadership himself, partly because of his own merits, and partly to mess up the plans of others who thought they would succeed me. Leaders can be mischievous like that.
Hague is referring primarily to Michael Portillo.
Nicky Morgan, the education secretary, had an uncomfortable exchange with Newsnight’s Evan Davis last night when he asked her about an analysis from the Institute for Fiscal Studies showing that the poor lose most from the tax and benefit changes being introduced in this parliament. Newsnight screened the figures. Morgan claimed she had not seen them, but instead quoted Treasury figures saying the top 20% are paying more in tax.
You can watch the exchange here.
Newsnight were showing a version of this chart, from the IFS’s distributional analysis published last week (pdf).
Inflation remains at 0.3%
Here is the start of the Press Association story on the inflation figure. Consumer price inflation (CPI) remains at 0.3%.
Inflation remained at 0.3% last month as the falling cost of second-hand cars was offset by rising food prices, according to official figures.
The Office for National Statistics (ONS) said the cost of second-hand cars fell 5.6% year on year in February, while motorbikes and bicycles also dropped 3.6% over the same period.
Food prices were down by 2.4% compared with February 2015, but the fall was smaller than the 2.8% annual drop seen in January 2016, driven in part by the rising price of potato crisps.
The cost of food has been dropping for more than a year, as the rise of German discounters Aldi and Lidl forces the Big Four supermarkets to slash prices.
Despite February’s 0.3% rise in the consumer prices index (CPI), inflation still remains historically low, with the Bank of England predicting it to stay far below the government’s target for some time.
Sharply lower oil prices have also kept a lid on inflation, leaving the central bank in no hurry to raise rates above 0.5%, where they have remained for nearly seven years.
ONS statistician Phil Gooding said: “CPI is unchanged and remains around historically low levels.
“Although most prices remained stable, we have seen falling prices for second-hand cars and bicycles, offset by rising food prices.”
The Treasury have sent out a statement from George Osborne ahead of his speech in the budget debate later. It is not a precise extract from his speech, but I’m told it gives an indication of the argument he will make.
As Conservatives, we know that those who suffer most when Britain loses control of its public finances and the economy crashes aren’t the best off but the poorest and the most vulnerable.
That’s what’s informed all we have done over the last six years and was at the heart of the manifesto we were elected to deliver.
I’m sorry Iain Duncan Smith chose to leave the government last week, and want to recognise his achievements in helping to make sure work pays, breaking the old cycles of welfare dependency and ensuring the most vulnerable in our society are protected.
That’s work this government will go on doing.
We’ve listened to concerns and, as we made clear last week, we won’t proceed with changes to the personal independence payment.
But this budget will lift 1.3m of the lowest paid out of income tax, it will deliver improvements to our schools, help the least well-off to save, and support business and enterprise to create jobs and boost social mobility.
It is a budget of a compassionate, one nation Conservative government determined to deliver both social justice and economic security. It’s a budget that puts the next generation first.
As Graeme Wearden writes here on his business live blog, analysts at Moody’s Investor Services have warned that the budget unveiled by George Osborne last week is ‘credit negative’.
They are unimpressed by the latest economic forecasts, showing weaker growth, and the fact that Britain will borrow more than £30bn more than planned between now and 2019 ...
This isn’t a formal rating decision from Moody’s, who stripped Britain of its prized AAA rating in 2013. It does suggest, though, that another downgrade is possible if economic conditions don’t improve.
Kenneth Clarke's Today interview - Summary
Here are the key points from Kenneth Clarke’s interview with the Today programme earlier. Clarke was chancellor in the 1990s and he was the last chancellor to do what George Osborne is doing today, and give the opening speech in a debate on the budget resolutions.
- Clarke questioned whether the government was ruling out further cuts to the welfare budget. Stephen Crabb, the new work and pensions secretary, said yesterday there were no plans for further welfare cuts, but quite what this means in practice is a matter of dispute. Clarke said he heard Crabb’s statement and did not get the impression he was absolutely ruling out further cuts. He said:
The usual form of words is ‘we have no present plans to make any further cuts in welfare’. As a former chancellor I’d be rather startled if you were ruling out ever again ruling out any aspect of the welfare benefits. I would advise against that.
- He said the government had ring-fenced too many departments from spending cuts, and ruled out too many tax increases (income tax, national insurance and VAT).
I would have thought so, indeed I think we have ring-fenced rather too much, as you imply. We’ve ruled out too many taxes from any increase.
- He defended the proposal, which was in the budget but abandoned on Friday, to cut the Personal Independence Payment, a disability benefit. But the govrnment should have explained it better, he said.
They have been paying for extra costs for people who are not incurring extra costs. And they had a study on which it was based. When they announced it, even the Labour party did not create very much stir. But then came all the politics of the budget ...
If you had an appliance you were regarded as having extra cost. A very good civil servant called Paul Gray studied it and found 90% of them didn’t have extra cost. The actual underlying income of disabled people nowadays is quite rightly vastly higher than it was in my day as chancellor. We’ve reached the astonishing position where we are paying out more to disabled people by benefit than the entire budget of the Ministry of Defence. But you see it is very difficult to change, they should have worked out how they were going to explain it, how they were going to sell it.
- He said if he were chancellor he would not have cut taxes in the budget in the way that Osborne did.
It was meant to be a popular budget. It actually eases fiscal policy, which is not what I would have done. It’s reduced taxes and put off spending cuts, which is very unusual for the first budget after an election.
- He said Iain Duncan Smith’s resignation was was “all wrapped up with Europe and the leadership and this kind of thing”.
Iain was in a funny position anyway because he was still in the cabinet having a public debate on a fundamental disagreement about Britain’s role in the world. That’s what lies in the background [to his resignation].
- He praised Osborne’s overall record as chancellor.
Fortunately George I think has been very successful, brilliantly successful these part five or six years, despite all these constraints of modern politics. If I may talk as an old-fashioned chancellor, he has managed to get on top of the financial crisis, produced at the moment the fastest growing economy in the western world.
I’ve taken some of the quotes from PoliticsHome.
Updated
George Osborne will come to the House of Commons today to launch a career-salvaging operation. Last week’s budget arguably caused more damage to his party than any of the other seven he has delivered (event the “omnishambles” one did not trigger a major cabinet resignation) and this morning a YouGov poll for the Times has some damning figures on his current standing.
Just 8% of people think Osborne would be a good PM as post-budget crash continues https://t.co/RcgOqCRjh2 pic.twitter.com/q2kM1lGnhi
— Red Box (@timesredbox) March 22, 2016
Osborne is reportedly planning to adopt a relatively chastened tone, admitting that the plan to cut the Personal Independent Payment (a disability benefit), which he has now abandoned, was a mistake. He also plans to praise Iain Duncan Smith, who resigned on Friday over the proposed PIP cut. Osborne is expected to say:
[I] want to recognise his achievements in helping to make sure work pays, breaking the old cycles of welfare dependency and ensuring the most vulnerable in our society are protected.
But this morning other Tory colleagues are not being so complimentary towards Duncan Smith. In his Daily Telegraph column William Hague, the former foreign secretary, says Duncan Smith was wrong to resign.
In some ways, I was not surprised when I heard of his departure. Near the top of government, as in any other walk of life, people get fed up. The long years in office, the endless negotiations that are part of cabinet government, and the frustration of being so senior yet not fully in charge, get to them.
Resentments and repressed anger accumulate, all the more so when you’ve been doing the same job for six years at a stretch. And then, at a time when tensions are high in any case, it all boils over, even when the immediate problem is quite minor compared to the achievements of the previous years. The straw does break the camel’s back.
Such feelings are human and understandable, but that does not make resigning in a way that damages the people and the cause you have always worked for the right thing to do. Iain’s resignation was very much the wrong thing to do, for himself, his work, his party and his country.
And, on the Today programme this morning, Kenneth Clarke, the former justice secretary, said that Duncan Smith’s resignation was “all wrapped up with Europe and the leadership and this kind of thing”.
Here is the agenda for the day.
9am: LBC hosts a debate for the London mayoral candidate.
9.30am: The Office for National Statistics publishes inflation figures and a house price study.
10am: Robert Chote, chair of the Office for Budget Responsibility, and OBR colleagues give evidence to the Commons Treasury committee. My colleague Graeme Wearden will be covering the hearing on his business live blog.
11am: Ed Miliband, the former Labour leader, gives a speech on Europe. He will tell Labour voters that if they fail to turn out and vote to keep Britain in the European Union on 23 June, the country will become the laboratory for a rightwing, free market experiment.
Around 12.40pm: George Osborne, the chancellor, opens the budget debate.
4pm: Theresa May, the home secretary, gives evidence to the Commons home affairs committee.
Today I will be focusing on the George Osborne speech, and the Tory budget turmoil generally, but I will also be covering other breaking political news as it happens, as well as bringing you the best reaction, comment and analysis from the web. I will post a summary at lunchtime and another in the afternoon.
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