Tories
revolt over Osborne's Brexit 'punishment' budget
Party
rancour grows as 65 MPs defy chancellor in move that signals scale of
difficulties that David Cameron will face after referendum
Heather
Stewart, Rowena Mason and Rajeev Syal
Thursday
16 June 2016 00.00 BST
George Osborne’s
authority has been directly challenged by 65 pro-Brexit Tory MPs, who
have signed a letter saying they will not back the “emergency”
tax-raising budget he said would be necessary if the country voted to
leave the EU.
The backbench MPs
called the chancellor’s measure a “punishment budget”. The
scale of the revolt demonstrates the struggle Osborne and David
Cameron will face in picking up the reins of government next Friday
after the referendum on 23 June.
The 65 MPs who
signed the letter, saying they would refuse to back the measures,
include six former cabinet ministers – Iain Duncan Smith, Liam Fox,
Owen Paterson, David Jones, John Redwood and Cheryl Gillan. Osborne
claimed that a vote to leave would leave a £30bn blackhole, which,
he said, would have to be plugged with income tax rises and public
spending cuts.
George Osborne
warning of £30bn public finances black hole if UK left EU
The joint statement
said it was incredible that the chancellor could set out proposals
reneging on manifesto pledges not to raise taxes.
“If the chancellor
is serious, then we cannot possibly allow this to go ahead,” the
MPs said. “It would be unnecessary, wrong and a rejection of the
platform on which we all stood. If he were to proceed with these
proposals, the chancellor’s position would become untenable.”
Crispin Blunt, chair
of the backbench foreign affairs committee, said: “There’s no
support for this nonsense – and it is nonsense.” Asked whether
the chancellor should continue in his job after next week’s vote,
he said: “That has to be up to the prime minister.”
Another senior
Brexit MP, Bernard Jenkin, said: “[Cameron and Osborne] should take
some deep breaths, calm down and remember they are running the
country, not just a referendum campaign. They should not be talking
up a crisis when there isn’t one. Their campaign has been hugely
irresponsible.”
Osborne’s position
on immigration was also undermined by Theresa May, the home
secretary, who backs remain but is still a possible leadership
contender. May, who has kept a low profile in the campaign, told the
BBC that the UK should “look at further reform in future” of free
movement in the EU – which some senior Labour figures have recently
demanded.
Osborne pointed out
on Wednesday morning that there was no appetite for this in the EU
and argued migration could be controlled through restrictions on
welfare.
There was also
criticism of Cameron, although the leaders of the Vote Leave campaign
have insisted in public that they believe he could remain in post
even in the event of a vote to quit the EU and take charge of the
negotiations for an exit.
But one senior Vote
Leave source told the Guardian the intensity of the campaign had been
such that “we think Cameron would be out by lunchtime”.
The chancellor, who
remains a contender to succeed Cameron, defended his position on
Wednesday and produced a mocked-up budget document to bolster his
argument.
“You would have to
show the British public you had a credible plan to deal with the
public finances,” Osborne insisted. Pressed on whether it would
spell the end of his own career, he said: “It’s not about one
politician, it’s not about one political career … this is about
the future of our country, about who we are as a country. What’s
the point of getting involved in public life if you’re not prepared
to fight for the things you think are really important to our country
and its future, its standing in the world and for jobs and
prosperity?”
He is expected to
double down on the economic arguments on Thursday, delivering a
Mansion House speech in the City of London in which he is expected to
underline afresh the financial risks of leaving. A senior remain
campaign source said: “He makes no apology for making the economic
argument – it is the argument.”
But backbench
Conservatives reacted with fury to the mocked-up document, which
entailed abandoning a series of key Conservative election pledges, on
everything from income tax to inheritance tax.
The Tory MP for
Peterborough, Stewart Jackson, said: “Osborne, by his appalling
conduct, has lost the confidence of the parliamentary conservative
party and the City. His efforts to talk down the UK economy are
unprecedented and his petulant threats of a fantasy budget are
desperate and risible.” He added: “His position is now
untenable.”
Another senior Tory
MP in the Brexit camp, who signed the statement against the emergency
budget, said the country might need Cameron to stay on for a while to
ensure stability if there were a vote to leave but that Osborne was
more dispensable. “I think George’s chances of becoming PM have
been on the rocks for quite some time, since around the time of tax
credits certainly. But this would be hard to come back from. It’s
not impossible, after a few years, if there is a vote to remain, but
a lot of party members voting to leave are very angry about the way
they have been portrayed as little Englanders and unpatriotic by both
David and George.”
However, Michael
Gove, the justice secretary and a leading Brexit campaigner,
dismissed the idea that he would join fellow Tories in voting down an
emergency budget called by Osborne, but only because he did not think
such a fiscal event would be necessary.
Questioning the
judgment of Osborne, who has for years been one of his closest
political friends, Gove said in a BBC Question Time interview: “There
is no need for an emergency budget. The truth is, if we vote to leave
we will be in an economically stronger position.”
The argument arose
on a day of drama in Westminster as the Ukip leader, Nigel Farage,
and pop star Bob Geldof clashed in the middle of the Thames in boats
campaigning for and against remaining in the EU. Farage dismissed the
chancellor’s warning. “Ignore Mr Osborne’s fantasy budget.
Post-Brexit he won’t be the chancellor for very long,” he
tweeted.
Even if the UK votes
to remain in the EU, Osborne’s leadership hopes have already been
wounded by U-turns over tax credits and disability benefit cuts, and
the animosity of much of the Conservative grassroots towards Downing
Street’s campaign to stay in.
Osborne stood his
ground on Wednesday, however, insisting there would be no choice but
to make extremely tough spending decisions to protect the
economy.Cameron backed him and the former Labour chancellor Alistair
Darling, at prime minister’s questions, saying the financial shock
of leaving the EU must not be ignored. “Nobody wants to have an
emergency budget. Nobody wants to have cuts in public services.
Nobody wants to have tax increases,” he said. “But I would say
this. There is only one thing worse than not addressing a crisis in
your public finances through a budget, and that is ignoring it.”
The spotlight will
switch back to Labour on Thursday, with Gordon Brown and the shadow
chancellor, John McDonnell, appearing together in Manchester to make
the argument that northern Britain could be entitled to more EU
funding if it votes to remain next week. Separately, Labour local
council leaders will argue that poorer areas would be hardest hit by
the economic shock in the event of Brexit.
Brown will warn that
leaving the EU could put Britain’s great cities at risk of
industrial decline last seen in the 1980s under Margaret Thatcher.
The Labour former prime minister will say the UK’s 10 biggest
cities outside London would see their economies threatened by leaving
the EU, which has poured funding into areas that the Tories turned
“from industrial heartlands into industrial wastelands”.
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