Tories row in behind Osborne in borrowing warning

Various Tory figures are strongly endorsing George Osborne's warning in the Times this morning that too much government borrowing risks a run on the pound.

John Redwood has written on his blog that the shadow chancellor was right to do so and Michael Fallon, the senior Tory on the Treasury select committee, also agrees.

Speaking on Radio 4, the Sevenoaks MP said:

"It's the shadow chancellor's job to warn, and there's a very serious issue with sterling now."

Meanwhile, Justine Greening, a member of the shadow Treasury team herself, has echoed her boss's warnings.

"George Osborne is very much reflecting the broader concerns of the business community... The point we are all making is that whether it's good times Gordon Brown's strategy seems to be borrow and spend, whether it's bad times, the strategy is borrow and spend. Gordon Brown's only strategy to this is more borrowing. Those are the concerns George Osborne is flagging up today".

3pm Alan Duncan: "George is absolutely right to say what he has. There is no convention in British politics that Labour has not already violated. I’d rather have George Osborne telling the truth than Gordon Brown charging around the world in the hope that we all forget Britain’s problems are his fault. Every sensible person knows that Gordon Brown has mortgaged the country and cannot escape the blame. Labour Governments always run out of money.”

5pm George Osborne has issued a further statement:

"What we're seeing before our eyes is the largest fall in the pound in modern British history.  The Brown devalutation of 30% in recent months is bigger than the Wilson devalutation or the Callaghan devaluation. One of the reasons is Gordon Brown's decision to abandon fiscal responsibility and prudence  as his boom turns to bust.  Now behind-the-scenes spinning from the Prime Minister and his entourage in America are fuelling speculation that the government is planning to borrow recklessly for a big unfunded tax con. That will leave the British people with higher debts and higher taxes in years to come. The choice in British politics is clear.  Fiscal irresponsibility and tax cons from Labour; fiscal responsibility and funded tax cuts from the Conservatives."

5.30pm Shadow Chief Secretary Philip Hammond has also been on the BBC to back Osborne:

"What George is spelling out in this interview is borrowing could precipitate a fall in the sterling. He is merely observing what is happening and what those in the markets would have told you. The public must realise there are no free lunches- Brown says to borrow more, there will be a cost to this... George Osborne has been getting on with his job and right now his responsibility is to make aware the risks of Gordon Brown's borrowing, it is important we point them out."

Comments

[Tony Makara]

Great to see everyone adding Mr Osborne's concerns. We have to make this story mainsteam so that those who don't have the time to follow politics too closely understand the damage that Gordon Brown and the Labour government are doing to our currency and our country's economic reputation.

[True tory]

At least the whips office can do a good job. Shame about everyone else.

[Tom FD]

"Tories row" is perhaps a bit of a misleading start to a headline!

[Mike A]

Wokingham, shurely, Ed?

But it is still time for a new Shadow Chancellor.

[wilma miller]

I cannot believe the hypocritical nonsense spouted by Gordon Brown in response to george Osborne. This government always but always falls back on this type of rejoinder. It's like the one they use in the Commons-'I won't take any lessons from the party opposite blah blah.

[Will S]

Mike A, John Redwood is MP for Wokingham, but the Ed was referring to Michael Fallon, the MP for Sevenoaks.

[YMT]

So Labours party line for discussing the economy is along the lines of the three wise monkeys or "talking down the economy" i.e "Don't talk about it". Plus he's trying the Partisan" line again. Seems the idea is that for serious problems, we should worry about them, but just let the government keep digging it's hole.

More attacks, more ferocity, we need to decisively and brutally tell the public what Brown has done, how the good time money was squandered and sound the alarm on further damage they are going to do.

[The Bishop Swine]

Osborne is finally doing what we wanted and is taking the fight to Brown.

Tony Makara

is absolutely right:

"understand the damage that Gordon Brown and the Labour government are doing to our currency and our country's economic reputation."

I am all for George doing the right thing and telling it like it is. If Brown is allowed to get away with his money printing Tax cuts, the recession will last a very long time indeed. We will be paying off debts whilst the rest of the world is enjoying the next boom. As it is the markets are not taken in by Brown and his pseudo-Keysianism.

John Maynard Keynes remains a very misunderstood economist. The fact is Keysianism encourages governments to save for a downturn. Brown it seems has read only half of the theory and is dooming us to economic failure.

[Mark Fulford]

The only thing that will prevent a bigger run on the pound is if all the other advanced economies get themselves equally into debt... which explains why our Great Leader is currently begging them to do just that.

And, while we're on the subject, why have we suddenly recognized China's sovereignty over Tibet?

[ChrisD]

I have just seen the BBC news24 frontpage headline, and its now time to really take the gloves off. I heard Will Hutton and Michael Fallon on the Today programme this morning, I recommend that if you have not listened to it, do so.

The BBC interviewers comments about even discussing the state of Sterling is very illuminating. And this from the British news corporation that took a very different view with Peston's reporting not so long ago?

How can we have a proper debate about this governments economic policies over the last few weeks, or judge the contents of the PBR with regard to increasing public borrowing further, without a discussion on the implications of this pressure on Sterling because Foreign investment has fled?

How can the main opposition do their job properly if they are hamstrung in this way?
Seeing the reaction in the media today to Osborne's warning vindicates the Tory leaderships approach during the Banking meltdown.

I have been continually amazed at the lack of media attention recently to the dramatic fall in Sterling, and the real implications that has for a UK economy so in debt.
All this briefing by Downing Street of huge tax cuts and increased spending in recent weeks could very well have added to this Sterling crisis, but it went unreported by many.

And so to see the BBC giving Brown's line of defence such a prominent headline beggars belief.
This decision by the BBC to sanitise this recession favours the political party in power at the expense, not just of the opposition party, but also the electorate who deserve a balanced debate.

This article in the Guardian is also interesting, especially the last paragraph.
"Osborne to review role and downplay green taxes"

Its worth reading the article in full.

"The rethink by Osborne comes as Tories on the right of the party attempt to exploit his weakened position. At a dinner of the Thatcherite No Turning Back group on Monday night, some Tory MPs said they hoped that a damaged Osborne would deliver their key demand: upfront tax cuts at the next election.

That will not happen, not least because two former ministers admired on the right - Fallon and John Redwood - are being supportive. Fallon said: "Shadow chancellors always take the flak. Geoffrey Howe used to before the 1979 election. They are a lightning conductor. You do not chop and change your shadow chancellor."

Major, Clark, and Lawson are all singing from the same script as Osborne. Redwood has been consistently loyal and supportive, yet that is never really been noted by those demanding Osborne's removal as Shadow Chancellor.

[Mike]

Apparently there was a letter in the Guardian (of all places) recently that asked (I'll paraphrase) 'If it's right to borrow and spend during good times and right to borrow and spend during bad times exactly when is it right to pay back and save?'

Keep up the attack and ignore Labour accusations that 'it's talking down the economy'.

[GB£.com - A Ron not a Roon]

So are the Tories now seeking an interest rate increase to prop up Sterling?

[Votedave]

Gordon Brown says he regrets the Opposition's "partisan" remarks.

So every time we criticise his government, constructively holding them to account - which is the whole point of being in Opposition - we're being partisan? What planet is he on?

[John Moss]

So are the Tories now seeking an interest rate increase to prop up Sterling?

Posted by: GB£.com

Currencies do not necessarily appreciate when interest rates rise, nor depreciate when they fall.

There is a link in stable times when all economies are growing, broadly, at the same rate, as money chases returns, but when the medium term economic prospects are as dire as they are now, the likely future relative rate of growth is the key determinant of value in the market at any time.

The fall in sterling over the last months, relative to both the dollar and euro indicate that the market believes we will have a deeper and longer recession than either the US or the rest of Europe, pretty much what the OECD said in its latest report.

The blame for this lies with Brown's excessive borrowing since 2001. The man has not balanced a budget since then and has borrowed over £250bn, net, since 1997, even before the bail outs began. These facts are conveniently ignored by the BBC.

[pp]

Good show by Osborne - and one would hope (maybe forlornly) that the support he has received from elsewhere will silence those calling for his replacement - their proposed candidates clearly support osborne - so maybe they will too...

And good to see the vastly over-rated cable making a fool of himself again - last two paras of http://news.bbc.co.uk/1/hi/uk_politics/7731163.stm.

[Tony Makara]

We have a situation now where Brown is openly telling the MPC to cut rates and talk of a zero rate is no longer taboo. Who is going to want to hold Sterling?, especially with import costs going up. George Osborne was acting in the national interest when he wrote about his fears for Sterling. Gordon Brown doesn't want people to talk about this, so lets talk!

[David (One of many)]

"What planet is he on?"

Planet Brown. Conditions are drizzly with a 90% chance of loon.

I was speaking to a friend of mine last night - who works in the city - who said that the real scandal is how far the pound has slumped in the past month or so without anyone really commenting on it. So this is good to hear from George, and sod whatever Brown and his army of media chums have to say about it.

[Tony Makara]

David (One of many, check the archives of John Redwood's diary and you'll find that a few of us have been very worried about the state of Sterling for quite a while now.

The good thing is that we now have taken this debate into the open and we have to ask the British people whether they think its worth trashing our currency to prop up Labour's broken economy. I hope and pray this story isn't a one-day wonder. We need to keep hitting Labour with this, they are destroying our Pound.

[Louise]

I think the "partisan" comment was directed at the idiotic phrase "scorched earth" and how Osborne claimed Labour were resigned to losing the election . It is about the same stupidity that Michael Howard revealed when he said the "fear was in Labour's eyes now" - assuming that you have already won the election 18 months beforehand. Stupid, hubristic and will return to haunt us later. If it was meant for a political audience, it's a reasonable statement to make, but if it was meant for a general audience of floating voters, it shows either stupidity, a loose mouth, or improper behaviour, and as such was the partisan part of the article.

To be honest, if it wasn't for that remark it would be an OK article and I am glad to see Redwood supporting him because Cam is not going to move Osborne (political fact rather than my opinion) because there is no alternative. That there should be no alternative is problematic in the extreme, but that's not my judgement call. We are missing a generation of 50-60 year olds because of 1997 - we have to rely on what is coming up through the system rather than being able to field people like Redwood properly. We are the scared ones - or Cameron is the scared one. To bring RW back would be the equivalent of Brown bringing Mandelson back, and that has not been the political suicide that was assumed. Nevertheless Cameron calls the shots here, which will eventually start to reflect on his judgement.

Once again I reckon that we are not going to win the election by negative campaigning. We need strength of our own, backbone of our own. I'm sorry to be so relentlessly negative, but although I agree with the substance of Osborne's article (as does Redwood), I was not surprised by the tone of it, nor the idiotic comments. Howard Flight destroyed the momentum in 2005 because he opened his mouth. George might do the same if he makes any more stupid comments like this.

[Deborah]

Good to see how much support there is for Osborne today - and also how few trolls are out (perchance the two are related).
No overtime pay at weekends I guess.

[David (One of many)]

Tony, I'm sure; I meant the media at large, rather than more economically literate people than myself and the general public. It's not my forte.

And Louise, I disagree. While "scorched earth" may appear partisan, and I don't this 'we're going to win' hubris either; the fact remains that Brown doesn't care about who is going to have to pay for all this. That is a point worth hammering home time and time again.

[albert son of a gypsy]

Initiative lost. Handed to Brown. Bad week for Brown ended by political immaturity by Osborne.

IF Cameron was aware of this then he too must ponder his own strategic antennae. Because, frankly, the Tories are now on the back foot.

It is, frankly, despairing that the party has no clear idea what to do on the economy. Having tied themselves, stupidly, to Brown economics, promised a 'National Approach' and now this it is very very messy.

Far far better for Cameron to have made a major speech, first, outlining why the Tories cannot and will not support Brown.

Then list the mistakes made by Brown. Then for Osborne to make his speech/interview whatever.

What we have it appears is a leader not in control, and a shadow chancellor of the exchequer in a job far too big for him but acting as if he is the leader of the Party.

A total shambles. Goodness knows what lies ahead but I do not want another five years of this Brown Clown! Sadly I fear that Osborne will hand the victory to Brown.

Perhaps that was what was discussed on the Yacht?

[Deborah]

Louise,
The phrase "scorched earth policy" is not idiotic. The way Brown is going he could destroy our economy.

[ChrisD]

"I think the "partisan" comment was directed at the idiotic phrase "scorched earth" and how Osborne claimed Labour were resigned to losing the election . It is about the same stupidity that Michael Howard revealed when he said the "fear was in Labour's eyes now" - assuming that you have already won the election 18 months beforehand. Stupid, hubristic and will return to haunt us later."

What ever you are Louise, its not a Conservative supporter, that is for sure.

[ChrisD]

Tim or Jonathan, can you help me out with a query?

I made a comment upthread. "I have just seen the BBC news24 frontpage headline, and its now time to really take the gloves off. I heard Will Hutton and Michael Fallon on the Today programme this morning, I recommend that if you have not listened to it, do so.

The BBC interviewers comments about even discussing the state of Sterling is very illuminating. And this from the British news corporation that took a very different view with Peston's reporting not so long ago?"

I have just seen this post@218 from Ted(who I think used to post regularly here on ConHom) on PB.com

"198 The various media political correspondents have been spending a lot of time together and in the company of Gordon and his acolytes recently as SuperGord takes them to various international gatherings and visits. When in UK he has had an inordinate number of press conferences, gathering them together.

In the cocoons of planes, hotels and conferences centres (waiting in the ante-chambers drinking cups of coffee and chatting with Brown’s advisors) they are susceptible to adopting Groupthink, guided by the spin they are getting. They are not economics experts, they don’t have easy access to those in their papers or stations who are, they latch onto easy to understand ideas, to thinking that Krugman is only economist in the world. They are impressed by confidence, desperate for insights and eager for stories. They respond to praise, even if it comes from Downing St apparatchniks.

Has anyone in the BBC investigated if there is a convention that the shadow chancellor doesn’t attack the Government’s Sterling policy - have they looked back in the libraries to see if Gordon Brown, Jim Callaghan, John Smith were silent? Were the Conservatives schtum during the many sterling crises experienced from 1945 to 1979?

No Nick Robinson and news editors just accepted there was a convention - has echoes of the convention that oppositions support British armed forces in action so “it probably does exist” was their probable sole thought process."

I have been really amazed at the lack of comment in the media regarding the dramatic fall in Sterling and its implications for our economy, especially borrowing.
*BUT*, this supposed convention has not really been followed completely, has it?

Because the occasional reference to a fall in Sterling helping exports would indicate that its not?
How can you sanitise the economic news in this way, and who does it serve, the public or the government?

[Iain]

"And so to see the BBC giving Brown's line of defence such a prominent headline beggars belief."

I caught the midday news on the radio, here the BBC didn't just give Brown's defence prominence they actually managed to make it the whole story without ever airing Osborne's concerns. So all we got was 'Brown regrets Conservatives break bipartisan line' , 'Brown regrets Conservatives talking down sterling', but made no reference to the argument Osborne was making. UNBELIEVABLE!

If the Conservatives ever get back in office, the first thing they must do is take the BBC outside and shoot it!

[Iain]

I caught the midday news on the radio, here the BBC didn't just give Brown's defence prominence they actually managed to make it the whole story without ever airing Osborne's concerns. So all we got was 'Brown regrets Conservatives break bipartisan line' , 'Brown regrets Conservatives talking down sterling', but made no reference to the argument Osborne was making. UNBELIEVABLE!

If the Conservatives ever get back in office, the first thing they must do is take the BBC outside and shoot it!

[Mike A]

The "scorched earth" stuff is absurd.

[ChrisD]

That is incredible Iain!

[Tony Makara]

Iain, the BBCs partisan line, thats why this story musn't be allowed to die. Gordon Brown doesn't want people talking about Sterling at all, because its an area in which his economic incompetence is exposed. We owe it to the British people to let them know that their Pound is becoming worth less and less. Now its down to everyone who wants to defend our currency to kick up a storm about this, politicians, journalists, anyone with a public voice. Don't let Gordon Brown get away with trashing Sterling.

[David (One of many)]

The folks over at PB are questioning whether this 'convention' actually exists at all. Anyone more knowledgable on the subject?

[SallyC]

This is what Liberal Dem Mike Smithson has to say about it.

'Remember it was Osborne who was behind the hugely effective strategy to attack Brown on the basis of his character .....

It was Osborne who made the IHT change speech last year which started to turn Tory fortunes round.

He’s an effective pol[itican] and a hugely dangerous one to Labour - that’s why they are desperate to get him moved on.

The fact that Labour won’t engage him but just try to smear - as we saw with the response to his exchange rate warning this morning - says a lot.

Osborne will stay.

by Mike Smithson November 15th, 2008 at 4:41 pm

Of the article in the Inde quoting Brown accusing GO of being partisan,he says it sounds 'pathetic'.

He is not on our side - but he is right.

[SallyC]

Some commentators are saying there was a vague convention when we had fixed exchange rates but not since they were floating when its been part of policy to see sterling as too low/too high and to comment on it.

[ChrisD]

David, I posted a [email protected] regarding this, and the excellent point raised by Ted(formerly of this parish) there.

Has anyone asked the Media, and in particular the BBC to provide evidence for its case in putting forward this idea of a convention?

And again, if it exists, how can they justify reporting the only positive aspect of a drop in Sterling. And the end of the day, the important Foreign investors are voting with their feet in very dramatic fashion.

Why do the UK media think that a convention to protect the UK electorate from this fact will damage Sterling. We live here, and the pound is the only currency in town for most of us.

[SallyC]

Interesting post from PB
I would like to refer those who doubt the existence of the “not talking down the pound convention” (sic) to the following exchange between Margaret Thatcher, Peter Tapsall and Neil Kinnock which took place in the House of Commons on 15th June 1989:

Mr. Kinnock : Is that “gladly, joyfully, generously, fully, fully, fully” a refusal to guarantee the future of the Chancellor of the Exchequer?

The Prime Minister : I repeat what I said last week. If the right hon. Gentleman would like a little longer lecture I will read out the entire speech.

Sir Peter Tapsell : While the Leader of the Opposition regards all this as a joke, is it not about time that we all began to take the sterling situation rather seriously and that the Leader of the Opposition ceased to try twice a week to talk sterling down?

The Prime Minister : I entirely agree with my hon. Friend. The Leader of the Opposition is normally trying to help the speculators and talks sterling down in the most unBritish way.

http://www.parliament.the-stationery-office.com/pa/cm198889/cmhansrd/1989-06-15/Orals-2.html, column 119

[A Cllr]

Louise

You wanted attacks on Brown and now you complain.

It is obvious you are a Labour troll so frankly I wouldn't bother posting in future.

[Cleethorpes Rock]

We don't just need to defend Osborne's attack, but to reiterate and reinforce.

Our MPs, along with sympathetic economists like Ruth Lea need to be going on the airwaves and going on the attack.

Brown has overspent and overborrowed, devalued the currency and given Britain the worst recession in Europe. After all this he has the damn cheek to accuse THE TORIES of talking down the economy! He needs to be nailed over this one.

[Teesbridge]

Many who would see the downfall of Labour believe that the best guarantor of that happy state is the maintenance of Gordon Brown in post.

Many who would see the downfall of the biased BBC believe that the best guarantor of that happy state is the maintenance of Nick Robinson and Robert Peston in post.

The BBC's treatment of the "Osborne Convention" story reinforces both arguments.

[John]

Georgie Boy just comes across as an amateur. Is there nobody with gravitas and charisma that Dave can appoint to the important post of shadow minister of the economy at this critical time?

[Perdix]

Interesting article in the WSJ (ht Walt Tyler) - "Brown only interested in his own ratings"
http://online.wsj.com/article/SB122662346962726733.html

[Deborah]

Anyone know what the balance of payments is nowadays? It used to be reported on the news on a regular basis. It's all gone quiet now.

[NigelC]

When I was a kid (1970s) the unemployment figures, the exchange rate and the balance of payments were regularly reported on the BBC news.
Is it taboo to report the dire state of the economy now - or is that partisan?
Would it be "regrettable" if the BBC actually pointed out what a mess Gordon Brown has got us into?

[Liam in Preston]

http://www.statistics.gov.uk/cci/nugget.asp?id=194

Not looking its healthiest....

[john]

John @18.34 is an obvious troll.

This John is behind Osborne all the way.
I should think a majority of people weren't aware that the pound was going through the floorboards, unless they had recently taken a holiday abroad. They know now!

[John F Aberdeen]

I cannot think of anything more hypocritical and nausiating then the words Brown and British Patrioism in the same sentance.

The same Brown an unelected PM, who, despite having been one of the Nulab 2005 election manifesto architects pledging a referendum on the Lisbon Treaty, sneaked off to to sign it on behalf of the UK.
Far from being patriotic, Brown and Zanulabour are little better than traitors and deserve to be punished at Traitors Gate.

So George Osborne is right to attack, attack, attack, the pound has been dropping long before his comments.
As for Bottlers "scorched earth" policy again Osborne is correct because the socialists will do anything to stay in power,, or if they can,t have it, ruin the country they, the BBC and the liberal left hate, Great Britain.

Zanulabour, the Liberal left and the BBC truly are Britains axis of evil.

To attack a traitorous PM and government is as acceptible as the Norwegian patriots executing Quisling or the Romanian patriots executing Caucescu.

So George and the rest of the Tories,, as we say at Old Trafford,, Attack, Attack, Attack.

Like most of the people blogging on Conhome and the likes of Fallon, Redwood, Duncan, Hammond etc I,m 100% in support of George Osbornes attacks,, and have nothing but contempt for those submissive Tories with no stomach for the battle.

[Rachel Joyce]

People need to complain about the BBC headline currently running every 15 minutes that
"George Osborne is coming under sharp criticism" over this issue.

[pp]

Nice to see so many trolls exposed...

It would be nice to see the stats perviously mentioned (unemployment, balance of payments etc - and if they could be back filled so much the better).

Browns latest effort starts to make him looks not only like a man with maxed out credit cards being in denial about the cause -- but further like a man who wants more credit not to mend his ways, but to chase his losses... and every one knows where that leads.

Good on george for making sure noone can deny they were warned...

[Susan]

About time too. Every man and his dog has known that Sterling would dive into xxxx creek under this govt. Good on Osborne for speaking out and good on Cameron for allowing him to do so at last. How you left it so late is beyond me - you should have given George his head before now.

[Patsy Sergeant]

Having read all comments, and just stopped short of sticking my finger down my throat, at the blind stupidity of some of the bloggers, I would like to add another thought!

While the economic situation in this country continues to worsen, regardless of what Labour activists and the PM pretend, more and more people become unemployed - right? Yes of course, we all know that, sooo what are we going to do with the immigrants who are still, doing whatever they can to get to this country, and I am NOT talking about economic migrants.

This benighted government waffles every so often, that they are 'going' to apply suitable curbs to unlimited immigration, and then they hope we will believe that they are actually DOING something. Eventually somebody leaks information that shows that actually nothing has changed!!

So how is this government which is inefficient at the moment, going to deal with thousands of unemployed indigenous people at the same time as finding the funds to provide for all the incomers still coming! Somebody is going to start objecting somewhere, and that is when unrest occurs. After all the police have kept saying recently how overstretched they are!

And even the BBC political interviewers, have to live amongst the rest of us, and are therefore are vulnerable to 'unrest'.

If they could all be more straightforward, or honest about the situation, instead of being obsessed with scoring political points, we might as a country be abke to be better prepared with problems to come!