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| Tory MPs threaten to block Osborne’s post-Brexit budget | Tory MPs threaten to block Osborne’s post-Brexit budget |
| (about 1 hour later) | |
| George Osborne is facing an extraordinary challenge to his authority as chancellor from 57 Conservative MPs, who are threatening to block his emergency budget of tax rises and spending cuts if Britain votes to leave the EU. | George Osborne is facing an extraordinary challenge to his authority as chancellor from 57 Conservative MPs, who are threatening to block his emergency budget of tax rises and spending cuts if Britain votes to leave the EU. |
| Several former cabinet ministers, including Iain Duncan Smith, Liam Fox and Owen Paterson are among the MPs who have said Osborne’s position would be untenable if he tried to impose a “punishment budget” in the the event of Brexit. | Several former cabinet ministers, including Iain Duncan Smith, Liam Fox and Owen Paterson are among the MPs who have said Osborne’s position would be untenable if he tried to impose a “punishment budget” in the the event of Brexit. |
| Osborne claimed cross-party support for an emergency budget after his warning was backed by his Labour predecessor, Alistair Darling. | Osborne claimed cross-party support for an emergency budget after his warning was backed by his Labour predecessor, Alistair Darling. |
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| Speaking on the BBC Radio 4’s Today programme, the chancellor said: “For the first time today you have a Conservative and a Labour chancellor agreeing on the scale of the decisions needed to fix the public finances if we quit the EU. There would have to be increases in tax, there would have to be cuts in public spending to fill the black hole.” | Speaking on the BBC Radio 4’s Today programme, the chancellor said: “For the first time today you have a Conservative and a Labour chancellor agreeing on the scale of the decisions needed to fix the public finances if we quit the EU. There would have to be increases in tax, there would have to be cuts in public spending to fill the black hole.” |
| He added that a vote for Brexit would amount to “self-imposed austerity for many years to come”. | He added that a vote for Brexit would amount to “self-imposed austerity for many years to come”. |
| However, John McDonnell, the shadow chancellor, said the Labour party would never support such a move bringing in further austerity and disowned Darling’s backing for the approach. | However, John McDonnell, the shadow chancellor, said the Labour party would never support such a move bringing in further austerity and disowned Darling’s backing for the approach. |
| The Tory rebellion of 57 MPs and the lack of support from Labour means Osborne would find it impossible to get through the House of Commons. | The Tory rebellion of 57 MPs and the lack of support from Labour means Osborne would find it impossible to get through the House of Commons. |
| Paterson, a former environment secretary, said it was a sign the remain campaign had “reached panic stations”. “They have lost all the major arguments and have now resorted to scaring the British people. They are taking us for fools,” he said. | Paterson, a former environment secretary, said it was a sign the remain campaign had “reached panic stations”. “They have lost all the major arguments and have now resorted to scaring the British people. They are taking us for fools,” he said. |
| “If the chancellor thinks he could pass such a punishment budget through the House of Commons he is utterly delusional. I wouldn’t hesitate about voting against it.” | “If the chancellor thinks he could pass such a punishment budget through the House of Commons he is utterly delusional. I wouldn’t hesitate about voting against it.” |
| Such open defiance of Osborne by senior Eurosceptics makes it difficult to see how the current Conservative leadership could continue if there is a vote to leave the EU, although no serving government minister has signed the letter of rebellion. | Such open defiance of Osborne by senior Eurosceptics makes it difficult to see how the current Conservative leadership could continue if there is a vote to leave the EU, although no serving government minister has signed the letter of rebellion. |
| David Cameron has always insisted he would continue in post to negotiate an exit with Brussels but that has appeared increasingly untenable as the referendum approaches, as Brexit MPs are furious about the force of his campaigning in favour of the EU. | David Cameron has always insisted he would continue in post to negotiate an exit with Brussels but that has appeared increasingly untenable as the referendum approaches, as Brexit MPs are furious about the force of his campaigning in favour of the EU. |
| If Cameron does not step down in the event of a vote to leave the EU, a major revolt against his chancellor’s emergency budget could force their resignation and spell the end of the current government. | If Cameron does not step down in the event of a vote to leave the EU, a major revolt against his chancellor’s emergency budget could force their resignation and spell the end of the current government. |
| Osborne took the decision to publish an “illustrative budget scorecard” warning of tax rises and spending cuts at a time of panic within the remain camp about several polls suggesting leave is in the lead. | Osborne took the decision to publish an “illustrative budget scorecard” warning of tax rises and spending cuts at a time of panic within the remain camp about several polls suggesting leave is in the lead. |
| The document, issued jointly with Darling, comprises a long list of the sort of measures they say may have to be implemented including: | The document, issued jointly with Darling, comprises a long list of the sort of measures they say may have to be implemented including: |
| In response, a joint statement issued by Vote Leave said it was incredible that the chancellor was “threatening to renege on so many manifesto pledges”. | In response, a joint statement issued by Vote Leave said it was incredible that the chancellor was “threatening to renege on so many manifesto pledges”. |
| It said: “It is absurd to say that if people vote to take back control from the EU that he would want to punish them in this way. If he were to proceed with these proposals, the chancellor’s position would become untenable.” | It said: “It is absurd to say that if people vote to take back control from the EU that he would want to punish them in this way. If he were to proceed with these proposals, the chancellor’s position would become untenable.” |
| Osborne responded to the letter by saying an emergency budget would be necessary to stem financial chaos and fill a £30bn black hole triggered by a vote to leave. | Osborne responded to the letter by saying an emergency budget would be necessary to stem financial chaos and fill a £30bn black hole triggered by a vote to leave. |
| He said: “The kind of measures we would have to take are ones that any chancellor and any government would have to make. No Conservative wants to raise taxes, least of all me. But equally Conservatives understand, and indeed I suspect many Labour politicians understand, that you cannot have chaos in your public finances, you have to deal with the hole that would emerge if we quit the EU. And we would have to take the necessary measures.” | He said: “The kind of measures we would have to take are ones that any chancellor and any government would have to make. No Conservative wants to raise taxes, least of all me. But equally Conservatives understand, and indeed I suspect many Labour politicians understand, that you cannot have chaos in your public finances, you have to deal with the hole that would emerge if we quit the EU. And we would have to take the necessary measures.” |
| Osborne was pressed on how he could impose such a budget when 57 Tory MP were against it. He said: “The Conservative government would do what was needed to deal with huge instability in our economy and the chaos in the public finances. Would it be easy for folk who pay their taxes for the public services? Of course not, but we would have imposed this on our country. And there is an alternative. If we vote to remain in the EU next week then we are going to be stronger, safer, better off.” | Osborne was pressed on how he could impose such a budget when 57 Tory MP were against it. He said: “The Conservative government would do what was needed to deal with huge instability in our economy and the chaos in the public finances. Would it be easy for folk who pay their taxes for the public services? Of course not, but we would have imposed this on our country. And there is an alternative. If we vote to remain in the EU next week then we are going to be stronger, safer, better off.” |
| He added: “If we walk through that door and we quit the EU, taxes will go up, public spending will be cut and we be living for the consequences for years to come.” | He added: “If we walk through that door and we quit the EU, taxes will go up, public spending will be cut and we be living for the consequences for years to come.” |
| Darling brushed off the row in the Tory party, but backed Osborne’s warning. “I will leave the Tories to get on with it,” he told Sky News. | Darling brushed off the row in the Tory party, but backed Osborne’s warning. “I will leave the Tories to get on with it,” he told Sky News. |
| He added: “If we decide to leave the European Union, all commentators are saying that we are going to take a hit, which will mean our economy will be smaller. That means you’ve got less money around to spend on things like the health service, on education, on transport. You do start having to look at tax increases. You can’t ignore these things. | He added: “If we decide to leave the European Union, all commentators are saying that we are going to take a hit, which will mean our economy will be smaller. That means you’ve got less money around to spend on things like the health service, on education, on transport. You do start having to look at tax increases. You can’t ignore these things. |
| “If our economy gets smaller as happened in the financial crisis eight years ago, there are consequences and you can’t ignore them. You will force the chancellor of the day to have to take decisions that he or she would not want to take.” | “If our economy gets smaller as happened in the financial crisis eight years ago, there are consequences and you can’t ignore them. You will force the chancellor of the day to have to take decisions that he or she would not want to take.” |
| Challenged on the remain campaign’s tactics, Darling said: “It is entirely legitimate to ask tough questions of your opponents. How else are people going to make a sensible decision? After that [the crash of 2008] some very difficult decisions had to be made in order to stop a complete meltdown. I don’t want our country, eight years on, just when we are beginning to grow again, to be facing exactly the same sort of trauma, perhaps years of uncertainty. It is just the wrong thing to do. It is very damaging.” | Challenged on the remain campaign’s tactics, Darling said: “It is entirely legitimate to ask tough questions of your opponents. How else are people going to make a sensible decision? After that [the crash of 2008] some very difficult decisions had to be made in order to stop a complete meltdown. I don’t want our country, eight years on, just when we are beginning to grow again, to be facing exactly the same sort of trauma, perhaps years of uncertainty. It is just the wrong thing to do. It is very damaging.” |
| McDonnell made it clear Labour would never support such a plan and suggested Darling would not actually do so himself. | McDonnell made it clear Labour would never support such a plan and suggested Darling would not actually do so himself. |
| “This may be a natural Tory approach but no Labour chancellor would respond to an economic shock in this manner,” he said. “And neither did Alistair Darling in 2008. Any credible economist would tell you that raising taxes or cutting spending or both in response to an economic shock is the wrong thing to do. | “This may be a natural Tory approach but no Labour chancellor would respond to an economic shock in this manner,” he said. “And neither did Alistair Darling in 2008. Any credible economist would tell you that raising taxes or cutting spending or both in response to an economic shock is the wrong thing to do. |
| “It’s deeply worryingly that this suggests the current Tory chancellor thinks this is a sensible response. But it highlights what is on offer under a Tory Brexit as George Osborne is only saying what those Tories campaigning for a Tory Brexit truly believe deep down.” | “It’s deeply worryingly that this suggests the current Tory chancellor thinks this is a sensible response. But it highlights what is on offer under a Tory Brexit as George Osborne is only saying what those Tories campaigning for a Tory Brexit truly believe deep down.” |
| The likelihood of an emergency budget divided economic experts.Prof John Fender, lecturer in macroeconomics at the University of Birmingham, said the prospect of such an emergency budget was feasible. | The likelihood of an emergency budget divided economic experts.Prof John Fender, lecturer in macroeconomics at the University of Birmingham, said the prospect of such an emergency budget was feasible. |
| “If there is a vote to Brexit on 23 June, its likely consequences for the public finances need to be taken very seriously,” he said. “Any economic downturn will reduce revenues and put in question the chancellor’s goal of achieving budget balance by the end of the decade. Something will need to be done to restore confidence, and an emergency budget similar to that suggested by the chancellor may well be on the cards.” | “If there is a vote to Brexit on 23 June, its likely consequences for the public finances need to be taken very seriously,” he said. “Any economic downturn will reduce revenues and put in question the chancellor’s goal of achieving budget balance by the end of the decade. Something will need to be done to restore confidence, and an emergency budget similar to that suggested by the chancellor may well be on the cards.” |
| But Jonathan Portes of the National Institute of Economic and Social Research, a former government economist, said it would be “precisely the wrong response”, which he said “should not and will not happen”. | But Jonathan Portes of the National Institute of Economic and Social Research, a former government economist, said it would be “precisely the wrong response”, which he said “should not and will not happen”. |