Osborne seeks Budget election boost

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Published: Thursday 19th March 2015 by The News Editor

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George Osborne will seek to maximise electoral gain for the Tories from a generally well-received pre-general election budget which saw him offer financial goodies to savers and regional voters and seek to blunt Labour’s key weapons.

But the Chancellor will have to fight Opposition claims he tried to hide from the public the scale of future spending cuts so deep that the NHS would have to be squeezed or VAT raised.

And his Treasury deputy Danny Alexander will starkly underline the end of coalition co-operation ahead of the May 7 national poll by setting out in a formal Commons statement the Liberal Democrats’ rival fiscal plan.

Mr Osborne garnered a slew of positive newspaper headlines for a package that included the abolition of tax on the vast majority of savings accounts, up to £3,000 help for first-time buyers and an effective tax cut for 27 million people.

“The sun is starting to shine,” he declared – boasting the UK was “walking tall again” thanks to his stewardship of the economy.

Improved economic forecasts allowed Mr Osborne to declare that austerity spending cuts would end a year earlier than predicted in 2018/19 if the Tories were in power and that he had met his 2010 target to have debt falling as a share of national income by the end of this Parliament.

Labour dismissed though his bid to kill off its charge that a Tory government would take spending back to 1930s levels, insisting the Chancellor’s claim that by 2019/20 it would be the same as a share of GDP as under Tony Blair in 2000 was not backed by the figures.

Shadow chancellor Ed Balls said it had been achieved only by intensifying the spending squeeze in the next three years beyond that of the previous parliament, leaving day-to-day spending as a share of GDP as low in 2018 as in 1938.

Mr Balls pointed to the finding of the independent Office for Budget Responsibility that “one implication of the Government’s spending policy assumptions is a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services and administration in 2016/17 and 2017/18”.

Treasury sources said this calculation did not take into account the £12 billion in savings on welfare promised by the Chancellor, but Labour retorted that Mr Osborne had yet to show how he would achieve this.

The Budget programme was signed off by both sides of the coalition government and even described by Mr Alexander, who will give MPs more detail of efforts to recoup more cash from tax avoiders, as “a very Liberal Democrat Budget “.

In an unprecedented parliamentary manoeuvre however, he will also use a formal ministerial Commons statement to present an official Treasury document laying out the “stark” differences between his party’s tax and spending priorities through to 2020 and those of Mr Osborne.

The alternative trajectory will feature a significantly-higher reliance on tax rises than spending cuts.

In a highly-political sixth Budget as Chancellor, Mr Osborne regularly ridiculed Labour and openly courted voters in areas where his party must boost support if it is to form the next government with promises of investment and enhanced powers for local authorities.

Deals with Greater Manchester and Cambridge will allow councils to keep 100% of additional growth in local business rates, while the Midlands will benefit from a £60 million investment in the new energy research accelerator

The South West will get a new rail franchise, bringing new intercity express trains, while Wales will see Severn Crossing toll rates cut and negotiations opened on a Swansea Bay tidal lagoon to generate green electricity.

Labour leader Ed Miliband condemned the Chancellor for failing to mention investment in the NHS and public services and said there had never been such a large gap between Mr Osborne’s rhetoric and the reality of people’s lives.

“This is a Budget people won’t believe from a Government that is not on their side – because of their record, because of their instinct, because of their plans for the future,” said the Labour leader.

CBI director general John Cridland said the Budget offered “a clear plan for fiscal health and growth” with “encouraging measures to help businesses create jobs for the benefit of all.”

But TUC general secretary Frances O’Grady said: “The Chancellor’s Britain, where happy people skip to their secure jobs to celebrate their rising living standards, is not one that many will recognise.

“But it’s what he did not say that is most significant. He did not spell out where, if re-elected, he will make the huge spending cuts he plans for the next parliament, nor did he tell Britain’s low-paid workers which of their benefits he will cut.”

Ukip leader Nigel Farage branded Mr Osborne’s statement the “long-grass economic plan”, saying: “This Government has evidently failed in its promise to the British people to eradicate the deficit and whilst it took Labour 13 years to double the debt this Government has done it in five.”

Published: Thursday 19th March 2015 by The News Editor

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