23 Apr 2012

Osborne avoids clash over UK’s IMF exposure

George Osborne has been defending his decision to increase the UK’s exposure at the IMF by £10bn. But he wasn’t under serious assault. I make it nine Tory MPs asking questions critical of the IMF additional £10b loan, and they were pretty much the usual suspects: Stuart Jackson, David Nuttal, Julian Lewis, Mark Pritchard, Peter Baron, Peter Bone, John Redwood, Douglas Carswell and Sir Peter Tapsell – plus two scpetical though not directly critical questions from Conor Burns and George Eustice.

It would’ve been very different if the chancellor had come back from Washington asking for more than the £10bn and required a vote in the Commons – which, you might think, is why he carefully kept the number under the wire. Mr Osborne said he chose the number simply to conform to traditional UK IMF quotas.

Some Tory MPs had been plotting for months, hoping to mount a rebellion that would beat the record 81 who voted for an EU in/out referendum. Mr Osborne saw that coming and decided some time ago that he wasn’t going to risk it.

Ed Balls attacked the loan but Alistair Darling supported it. Behind the scenes, I hear, Mr Darling was horrified by Ed Balls’ decision to oppose the last vote on extending the UK exposure at the IMF last summer. Mr Darling had been working behind the scenes to persuade Ed Miliband not to back a repeat of that if George Osborne had come asking for Commons support for a bigger loan. Now the problem won’t arise – unless the IMF comes back for more money another time soon.

New Treasury spending rules

The other bit of Treasury activity today was the publication of new spending rules to keep tabs on departments and make sure they have 5 per cent of their budgets readily identified for quick raids in the event of emergencies. This is partly a reflection of the Treasury reserve having been raided already and being pretty dry at the moment. It is also partly a reflection that, as the HMT document says, “some departments are still applying to the Treasury for Reserve support too often.” (There’s a bit of “pushing back” one ex-Treasury hand tells me).

The idea is that departments effectively have their own mini-contingency reserves – spending identified as quickly “in year” cuttable so that it can be re-directed to cover a sudden surge in costs – winter ‘flu epidemics, that sort of thing.

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