Coffee House Shots
James Forsyth and Isabel Hardman discuss George Osborne’s performance
Abridged transcript of George Osborne’s interview with Andrew Neil.
AN: Now you claim the European Union could cause armed conflict if we leave, could put a bomb under our economy if we leave – the Prime Minister’s words: hurt pensioners, collapse house prices. Why are you risking all that with a referendum?
GO: Well, I don’t think it is ever a risk in a democracy to ask the people. And all my lifetime this issue of Britain’s membership of the European Union has hung over our economy and our security and I think it’s right that the people decide. I think Britain can be one of the great success stories of the 21st century, we’ve got the talent, the drive, the connections around the world but if we vote to leave then we lose control. We lose control of our economy and if you lose control of your economy then you lose control of everything and that’s not a price worth paying.
Before you called this referendum did you ever think that the consequences of losing then would be by your own standards so bad?
Well I knew it was a big decision, as of course did the Prime Minister, but it was also a decision of the British people. We put this in the manifesto upon which we were elected and I think people should be under no illusions. I doubt there is going to be a bigger decision that we are going to be asked to take as citizens of this country and all of us, you and me, people watching at home, we all have one vote so let’s use it.
Now despite everything you’re saying would happen if we leave, only a few months ago the Prime Minister assured us we’d be okay outside the European Union. This is what he told the CBI:
(Clip of David Cameron saying: “Today I also want to debunk an argument that’s sometimes put around by those who say that really Britain couldn’t survive, couldn’t do okay outside the European Union. I don’t think that is true”.)
So last November we’d be okay if we left the European Union now it’s plague and pestilence, Sodom and Gomorrah, what’s changed?
Well “okay” is not good enough for Britain, losing control of your economy is not good enough for Britain, I want Britain to be out there shaping the world, not shaped by it.
But you’re not just saying now that if we left we’d be okay, you’re saying it would bomb our economy, you have said it would be an extraordinary piece of self-harm and yet a few months ago we were told it would be okay.
But okay is not good enough for one of the great success stories potentially of the 21st century. Look, I don’t want to be sitting here as the Chancellor who has helped, with the British people, pull us out of the mess we were in six or seven years ago, climbed up those ladders on the snakes and ladder board and find ourselves hitting the big snake that takes us down to the bottom. That’s what’s at stake and it’s not abstract, it’s about people’s jobs, their livelihoods, their ability to provide for their family, that is on the ballot paper on 23rd June.
Well let’s look in more detail at some of your scarier predictions if we leave. You claim house prices would plummet. Now why would they plummet when even the Treasury is only forecasting – and it may be wrong – a very shallow recession if we were to leave?
Well because the country is poorer. People in the country have lower incomes than they would otherwise have and as a result their ability to afford homes is reduced, so the value of homes is less. As we have heard from the Governor of the Bank of England, mortgage rates might be higher so being able to afford mortgages is also constrained. It’s interesting, we estimated in the Treasury, the Treasury economists, that house prices would be 10 to 18 per cent lower than they otherwise would be and do you know what, Fitch, the rating agency respected around the world, they said actually it could be 25 per cent so there are various estimates out there …
That’s a rating agency who said all the toxic debt on the Royal Bank of Scotland’s bank sheet should be rated Treble A, why would you listen to them?
Because if you listen to everyone, all the economists out there, the big international organisations, the companies large and small, the trade union movement, the leaderships of the Conservative party, the Labour party, the Greens, the Liberal Democrats, the Scottish Nationalists, the Ulster Unionists, if you listen to everyone and they are telling you that Britain would be poorer, the families in Britain would be poorer and look, we can talk about any number of numbers, I’ll tell you what they’ve all got in common – one big fat minus in front of each one of them. That’s the consequence for the people watching this programme.
But I am puzzled that since the central forecast of the Treasury is for a shallow recession – and nobody wants a recession at all but the central forecast is for a shallow recession if we were to leave, so shallow it is actually within the Treasury margin of error – that the fall in house prices is so high. It is curiously precise, 18 per cent you say. You don’t really know that unless you are not just the Chancellor, you’re Mystic Meg.
Hold on, the 18 per cent that you quoted, that’s the Treasury’s forecast if there is a severe shock and that is not a shallow recession, that is if the financial market turbulence which we are likely to see in the hours and days after a vote to leave, is compounded by uncertainty over the next few years as we fail to find a suitable arrangement with our closest trading partners and then this is the crucial point, unlike actually the very deep recession we had seven or eight years ago, people would know, businesses would know, investors would know that the country is permanently poorer so the value of the assets of the country – the houses, the pensions, the shares – they all fall to take accommodation for that.
You’ve been scaring pensioners too haven’t you? You claim, or the Remain campaign claimed they could be £32,000 worse off, pensioners. Here’s the official tweet designed to frighten the older folks, we see it there with the purse. Let’s just look at this: state pensions are protected by your own triple lock whether we are in or out of the EU so pensions in real terms wouldn’t fall.
We’ve had a successful strong growing economy which we don’t want to put at risk. [So the state pension] rises by the so-called triple lock either by the rate of inflation or by 2.5 per cent. Well if the rate of inflation is higher, and people are forecasting that it could be 3-4 per cent the rate of inflation instead of what it is today, well that will eat away at the real value of people’s pension. To put that in plain English, pensioners will have less to spend.
The airbus moment
Andrew, this all feels very abstract but I have brought along …
Not at all …
…I brought along this because I went to a factory that makes part of an Airbus plane and it is made by a real person on a real production line and he worries about his job and his company worries about their ability to access the single market. This is not abstract, this is a decision on 23rd…
We make the wings for Airbus, right?
We don’t know whether …
We make the wings, where would Airbus go to buy the wings if not Britain? In or out the EU? Who else makes these wings?
By the way, the Chief Executive of Airbus has themselves said it would threaten their investment in the United Kingdom and the point about this, this isn’t an Airbus factory, this is a small manufacturing business in West Yorkshire supplying the wings. This is the reality of the single market.
This is another scare story. Airbus would come to Britain to buy its wings and its Rolls Royce engines whether we are in or out of the EU.
That is not what the Chief Executive says, the Chief Executive says that investment in the UK …
So where would they go?
They have got factories in Toulouse, they have got factories in Germany …
They don’t make wings in Germany.
The whole point about Airbus is that it is an integrated supply chain. We import things from Germany, we sell them to France and if there are tariffs, a tax on those exports, then why would the business happen in the UK? We’d be out of the single market, that’s the reality. Britain would be quitting – quitting the single market, quitting the prosperity, quitting the source of jobs. The people who pay the price are not you or me, Andrew, it’s that person working on the assembly line in Keighley.
The £4,300 figure
What people who are watching this programme want to know is what you are telling is a scare story or true. Now you prepared a longer term report as well about leaving. The key finding that you were very keen to promote is that by 2030 households would be £4,300 worse off. Here’s the poster, you even stood in front of the poster there, there’s your figure. But the Treasury report doesn’t say families would be £4,300 worse off does it? It’s a bogus and misleading figure.
Well that’s not the case, that is how much per household our GDP would shrink and if you look at …
No, no, it’s not shrinking, on either scenario in or out, the Treasury report showed substantial growth in our economy to 2030, not shrinking.
Hang on Andrew, the question on 23rd June is what does the world look like if we’re in the European Union or if we leave the European Union and quit it and families would be £4,300 a year worse off as a proportion …
No they wouldn’t, it doesn’t mention their income.
As a share of GDP. Well their incomes would be hit and, hold on, the wealth of the nation that provides the public services they depend on – leave that picture up because people need to know the real …
Chancellor, I am going to put what the Treasury Select Committee said about your £4,300 under that picture, that is not what the main Treasury analysis found says the Select Committee. The average impact on household disposable incomes would be considerably smaller than this number, neither government departments nor the Remain side should repeat this mistaken assertion. To persist with this claim would be to misrepresent the Treasury’s own work. Why are you misrepresenting your own department?
If you actually read the full paragraph in that report it says the Treasury accurately presented the numbers and that it is perfectly legitimate to talk about the impact on households as a proportion of GDP.
But they told you not to repeat this figure, it says don’t repeat it, it would be to misrepresent your own department’s work.
I’m sorry, you are selectively quoting from that report.
Not at all, that is what the Treasury Select Committee says.
You are selectively quoting from that report. What the report says …
…is that your £4,300 figure is bogus.
Andrew, a) you are selectively quoting from that report. The report said, and I read it of course, that first of all the Treasury had accurately presented those figures. Second, it is absolutely right that people in this country understand it is not just their incomes but the value of the public services they receive and, by the way, this is exactly the sort of number we have heard from a whole host of international organisations. Just this week you have had …
No other organisation uses that figure.
Well they do, the OECD.
It hasn’t used £4,300.
I’m sorry, OECD uses GDP per household and comes out with a very similar number to that.
No, not very similar. Let me move on to immigration …
The Treasury forecast does reveal one thing though doesn’t it? It reveals that your promise, your government’s promise to reduce net migration to 100,000 a year is over isn’t it, you’re not even trying to do that now.
Well I think it is achievable, it’s an ambition we set out in the manifesto.
Except that your forecast for the £4,300 and everything else by 2030, they assume net migration of another three million over the next 14 years. That’s an average of 214,000 a year, twice the promise you made back in 2010 and repeated in your 2015 manifesto.
Well first of all what those numbers show, what the Office for National Statistics show and of course independent of government, not taking into account by the way the most recent controls we’ve had on non-EU migration or the welfare restrictions which we will no doubt come on and talk about, but what it shows is net migration falling from 321,000 odd this year, to 181,000 odd over five years.
And stays there for the whole of the next decade.
I think the crucial thing to managing migration is first of all not to lose control of your economy but to a) make sure you are restricting non-EU migration which is over half of the migration we get, second as you are doing this to make sure you don’t have the abuse of the free movement of people and we’ve got that. Crucially what you’ve got to make sure is that we have a growing British economy and a growing European economy and the good news is that the European economy is growing now. We have had an exceptional two or three years where we have been doing well and Europe has not been doing as well but actually if you look at the most recent GDP…
I know all that, I am more concerned about your promises. You promised in 2010 to cut net migration to 100,000 by 2030, 20 years later and you are still assuming it will be twice that amount, it will still, a number of people the size of the population of Newcastle will be coming in. It’s a broken promise, it’s over.
It’s an ambition we intend to reach.
It’s an ambition now?
That’s what it was in our manifesto.
No it wasn’t, it was a promise, no ifs, no buts the Prime Minister said.
Andrew, in the manifesto that the country voted on last year, we set it out as an ambition. I believe it is an ambition we will achieve if we manage migration by a) dealing with the non-European migration, b) dealing with the abuse of free movement and people coming here and taking out before they put in…
Well let’s come on to that.
And c) as both economies grow, the European economy and the British economy, you don’t have this exception situation you have had for the last couple of years where you’ve had very weak economies on the continent of Europe. Thankfully they are now growing, that’s a good thing for Britain because we export to these economies and they are crucial to our economic…
Except you still expect almost 200,000 to come in by 2030. There was a time when David Cameron said he’d get a grip on immigration by ending free movement from the EU, this is what he told the Tory conference in 2014.
[Clip of David Cameron: “It will be at the very heart of my renegotiation strategy. Britain, I know you want this sorted so I will go to Brussels, I will not take no for an answer and when it comes to free movement I will get what Britain needs”.]
“I will not take no for an answer” – and in a sense he didn’t because in the end he didn’t even ask for any serious limits on free movement. He bottled it.
The Prime Minister got a good deal for Britain which by the way no previous Prime Minister has got, which is you cannot come to this country and get out before you put in. That is a key change which addresses actually I think the big public concern that people have about…
He didn’t get any fundamental change to free movement, did he? Can we agree that?
Well yes he did actually, a fundamental change which is you can’t just come here and claim welfare.
Mr Cameron has been a big supporter of Turkey joining the EU, he went to Ankara not long after he had become PM, the capital of Turkey, in 2010 and this is what he had to say.
[Cameron clip: When I think about what Turkey has done to defend Europe as a NATO ally and what Turkey is doing today in Afghanistan alongside our European allies, it makes me angry that your progress towards EU membership can be frustrated in the way that it has been. My view is clear, I believe it is just wrong to say that Turkey can guard the camp but not be allowed to sit in the tent so I will remain your strongest possible advocate for EU membership and for greater influence at the top table of European diplomacy.]
That was six years ago and now the Prime Minister says that Turkey may not join for almost a thousand years he says. Now who is he misleading, is he misleading the Turkish people in 2010 or is he misleading the British people in 2016?
Well I was 16 years old when Turkey first applied to join the European Union, I’m now 45 and I don’t think it’s going to happen in my lifetime because sadly actually over recent years Turkey has gone backwards, there are concerns about democracy and human rights there, these are all conditions you need to meet before you even are considered for membership of the European Union. Now Turkey is a key ally, they are a member of NATO, by the way an organisation that on all sides of the campaign that we talk up but is it going to be a member of the European Union? No, it’s not.
…Unfortunately Turkey has taken backwards steps but look, I make a broader point. There are a lot of scare stories, you asked about scare stories, there are a lot of scare stories out there, disgusting things said about bodies of migrants being washed up on the shores of Kent, or about women being raped by migrants. Let’s be clear, this is a battle for the soul of our country. I do not want Nigel Farage’s vision of Britain, it is mean, it is divisive, it is not who we are as a country. Britain is a great country that is open and inclusive, it is a country that shapes the world not is shaped by the world and that is what we’re fighting for.
I understand that …
We are fighting for the soul of this country and sadly …
We are also fighting for truth.
Sadly Nigel Farage and his vision of Britain has taken over the Leave campaign and we are fighting against that and I want the mainstream and the majority of this country to stand up and say we do not want Nigel Farage’s vision of this country.
One last question. A lot of people will think you have exaggerated the claims about the economic impact of Brexit, you promised the British people restrictions on immigration, you haven’t delivered, that’s clear. The Prime Minister has told Turkey he wants it to become an EU member, he’s passionate for the case, then he told the British people the opposite. Why exactly should the British people trust you when you say vote to remain?
Because it’s very simple, if we vote to remain then Britain will be stronger, better off, safer as a country but if we leave then we will lose control of our economy, that means losing control of everything. I’m a father of two children and I don’t want to look around to them in 20 years’ time and say, you know Britain used to be a great success, it used to be connected to the world but we took a decision and we retreated from this world. That used to be us. I don’t want to say that to my children, I want Britain to be the great success story of the 21st century.
Coffee House Shots
James Forsyth and Isabel Hardman discuss George Osborne’s performance