George Osborne has announced that there will be additional cuts worth 0.5% of total government spending in Wednesday’s Budget — but insisted it was “not a huge amount in the scheme of things”.
The chancellor cited a worsening global economic situation as the reason behind the extra spending reductions.
Growth and tax revenue forecasts could be revised down by the Office for Budget Responsibility in the Budget, putting in jeopardy Osborne’s target to achieve a budget surplus by the end of the parliament.
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The chancellor has vowed to achieve a £10bn surplus on the UK’s budget by 2020, and unprotected government departments drew up plans for their own contributions towards that aim at November’s Spending review, with cuts across those departments averaging 18% on current levels.
“We are going to have to make further savings equivalent to 50p in every £100 the government spends by the end of the decade,” he told the Andrew Marr Show this morning.
“I think we can find those savings. It’s not a huge amount in the scheme of things.”
He insisted the UK was in a stronger place to deal with a downturn in the global economy than at the time of the financial crisis.
He said: “Eight years ago when we had the financial crash, Britain was one of the worst prepared countries for what happened; this time in uncertain times, Britain is one of the best prepared countries.”
The chancellor has faced calls to abandon his promised increase in the higher rate tax threshold, after analysis found that 85% of its benefits would go to the richest half of households.
Critics say it is wrong to go forward with that cut at the same time as another £1.2bn is shorn from the welfare budget by cutting Personal Independence Payments.
Osborne defended the plans today, saying: “We are providing more support to disabled people and, yes, we back working people.”
He confirmed he would “deliver on the manifesto”, but refused to be drawn on whether the tax cuts would be accelerated this year.
Former chancellor Ken Clarke said low oil prices meant Osborne “ought to look at reintroducing” the fuel duty escalator.
The chancellor has not increased fuel duty for six years and he would not confirm his plans for the tax: “What I would say is every time we can help our economy be more competitive we do.