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George Osborne says deficit can be eradicated without further tax rises George Osborne says deficit can be eradicated without further tax rises
(35 minutes later)
The government can eradicate the deficit without further tax rises after the next general election, chancellor George Osborne said. The government can eradicate the deficit without further tax rises after the next general election, the chancellor George Osborne said.
He also announced he was going to ban the briefing of budgets and autumn statements to newspapers and broadcast media ahead of official announcements. He also announced he was going to ban the briefing of budgets and autumn statements to newspapers and broadcast media before official announcements.
Osborne was speaking to MPs on the Treasury select committee after the Institute for Fiscal Studies warned that tax rises were inevitable if spending cuts are not to be increased by further substantial amounts. Osborne was speaking to MPs on the Treasury select committee after the Institute for Fiscal Studies warned that tax rises were inevitable if spending cuts are not to be increased substantially.
Trying to set out one of the main dividing lines for the next election, the chancellor said he suspected Labour was planning "big tax increases" if it regains power in 2015. Osborne also said a Married Couples Tax Allowance will be in the Autumn Statement.Trying to set out one of the main dividing lines for the next election, the chancellor said he suspected Labour was planning big tax increases if it regains power in 2015.
The IFS warned last week that Osborne would have to raise taxes by £6bn after the election if he was to keep to his existing rule of financing 80% of the government's deficit reduction programme from cuts and 20% from tax hikes. The IFS warned last week that Osborne would have to raise taxes by £6bn after the election if he was to keep to his existing rule of financing 80% of the government's deficit reduction programme from cuts and 20% from tax rises.
But Osborne told the Treasury select committee that the 80/20 split, announced when the coalition came to power in 2010, was only ever a "guide" rather than a firm commitment.But Osborne told the Treasury select committee that the 80/20 split, announced when the coalition came to power in 2010, was only ever a "guide" rather than a firm commitment.
The issue will pose difficult questions for the Liberal Democrats because, like Labour, they support the introduction of new taxes, primarily a mansion tax. The difference between the two parties is likely to make it more difficult for the Liberal Democrats to negotiate a deal with the Tories, in the event of a hung parliament after 2015. The issue will pose difficult questions for the Liberal Democrats because, like Labour, they support the introduction of new taxes, primarily a mansion tax. The difference between the two parties is likely to make it more difficult for them to cut a deal with the Tories in the event of a hung parliament after 2015.
Osborne told the committee: "The further consolidation after 2015/16 is built into the tables as a spending reduction. Osborne told the committee: "The further consolidation after 2015/16 is built into the tables as a spending reduction. I am clear that tax increases are not required to achieve this. It can be achieved with spending reductions."
"I am clear that tax increases are not required to achieve this. It can be achieved with spending reductions." He said a married couples tax allowance will be in the autumn statement. He claimed opposition to his deficit reduction plan is collapsing.
Osborne said a married couples tax allowance will be in the autumn statement. He claimed opposition to his deficit reduction plan is collapsing. The chancellor came under pressure over whether he understood the pain his welfare reforms might have on ordinary people. In reply to a question he said: "No, I have not visited a food bank". He denied their use would increase as a result of his plan to delay unemployment benefit for seven days. He said foodbanks were increasing because of greater public awareness of their existence.
The chancellor came under pressure over whether he understood the pain his welfare reforms might have on ordinary people. He said, "No I have not visited a foodbank", but denied their use would increase due to his plan to delay the payment of benefits for seven days. He said foodbanks were increasing due to greater public awareness of their existence. "I think one of the reasons there has been increased use of food banks is because people have been made aware of the food bank service through local jobcentres. I don't see that's a bad thing. It's a good thing that those services are advertised in jobcentres."
"I think one of the reasons there has been increased use of foodbanks is because people have been made aware of the foodbank service through local jobcentres. Figures released on Thursday by the Trussell Trust show three times as many people received emergency supplies from its food banks in the three months from April compared with the same period last year.
"I don't see that's a bad thing. It's a good thing that those services are advertised in jobcentres." Delays and changes to benefit payments accounted for more than half of the referrals, it said.
Figures released today by the Trussell Trust show three times as many people received emergency supplies from its foodbanks in the three months from April this year compared with the same period last year.
Delays and changes to benefit payments accounted for most of the referrals, it said.
Osborne declined to set a target for public spending as a proportion of GDP, which currently stands at 44.4% and is due to fall to 40.5% by 2017.Osborne declined to set a target for public spending as a proportion of GDP, which currently stands at 44.4% and is due to fall to 40.5% by 2017.
But he said that any country that allowed the level to rise "sharply" above 40% had historically got itself into trouble, and described the level of almost 48% which he inherited from Labour as "totally unsustainable".But he said that any country that allowed the level to rise "sharply" above 40% had historically got itself into trouble, and described the level of almost 48% which he inherited from Labour as "totally unsustainable".
Osborne defended the ringfence on some departmental spending, saying that it was an expression of the nation's values.Osborne defended the ringfence on some departmental spending, saying that it was an expression of the nation's values.
He also foreshadowed big changes in the school spending formula, saying the current system was erratic. He pointed out that school children from deprived backgrounds received £1,700 less funding in Northamptonshire than Derbyshire.He also foreshadowed big changes in the school spending formula, saying the current system was erratic. He pointed out that school children from deprived backgrounds received £1,700 less funding in Northamptonshire than Derbyshire.
He also announced he was going to ban pre-release briefing of budgets and auutumn statements to newspapers and broadcasters. He confirmed that business secretary Vince Cable and defence secretary Philip Hammond had attempted to ease the burden of cuts on their departments by transferring responsibility for medical research and training and army medicine into the health budget.He also announced he was going to ban pre-release briefing of budgets and auutumn statements to newspapers and broadcasters. He confirmed that business secretary Vince Cable and defence secretary Philip Hammond had attempted to ease the burden of cuts on their departments by transferring responsibility for medical research and training and army medicine into the health budget.
But he said he rejected this proposal.But he said he rejected this proposal.
And he defended the ringfence around protected spending areas as "a political expression of what the government wishes to achieve and the support it wants to give to society".And he defended the ringfence around protected spending areas as "a political expression of what the government wishes to achieve and the support it wants to give to society".
He said he was proud of the commitment to keep aid spending at 0.7% of GDP, and did not believe that it had a significant impact on the money available to other departments.He said he was proud of the commitment to keep aid spending at 0.7% of GDP, and did not believe that it had a significant impact on the money available to other departments.
And he said it was "not unreasonable" to increase spending on the NHS in real terms at a time when the population was ageing.And he said it was "not unreasonable" to increase spending on the NHS in real terms at a time when the population was ageing.
The government intends to "live by its commitment" to pensioners to protect the value of their state pension with a "triple lock", said the chancellor.The government intends to "live by its commitment" to pensioners to protect the value of their state pension with a "triple lock", said the chancellor.
But he made clear that the state pension age could rise beyond 67 in the future, as a result of a mechanism built into the pensions bill introducing regular reviews of the impact of increasing life expectancy.But he made clear that the state pension age could rise beyond 67 in the future, as a result of a mechanism built into the pensions bill introducing regular reviews of the impact of increasing life expectancy.