George Osborne’s latest budget plans do not represent a “rollercoaster” ride, as described by the country’s independent budget watchdog, he has insisted.
Osborne said he did not plan to deepen his spending cuts if he remains in his job after May’s elections, challenging claims from the main opposition Labour party.
The Office for Budget Responsibility said that the government’s new budget statement implied a much sharper squeeze on real spending in the 2016/17 and 2017/18 financial years than anything seen over the past five years.
That would be followed by the biggest increase in real spending for a decade in 2019/20, the OBR said, representing “a rollercoaster profile for implied public services.”
“That is not actually the approach that we, as Conservatives, will take,” he told BBC radio. “We want to take a more balanced approach and we would not put all the cuts in the government departments as the OBR forecast shows,” said Osborne.
The government would seek to make further savings from welfare spending and bring in more tax revenues from a crackdown on tax evasion and avoidance, he added.
“I am not proposing deeper cuts than the ones of the past five years. I am proposing the same pace of cuts for the next couple of years as we had over the last five.”
Osborne created the OBR as an independent budget forecaster and watchdog soon after the Conservative party took power at the head of a coalition government in 2010.
In December, the OBR said a plan by Osborne to build up a budget surplus of 1 per cent of gross domestic product by the end of the decade would reduce public spending as a share of GDP to its lowest level since the 1930s.
That description provided ammunition for the Labour party to accuse Osborne of pursuing an ideologically driven campaign to shrink the size of the British state.
In his latest budget announced yesterday, the Chancellor of the Exchequer sharply reduced the size of the surplus he would aim for by 2019/20 by pencilling in a sharp rise in spending in that year.
There were voter-friendly sweeteners with tax cuts on beer, cider and spirits, while a fuel duty rise was axed following a slump in world oil prices in Osborne’s budget.
There was also a reward for savers who have long been punished by Britain’s record-low interest rates, with the introduction of a new personal savings allowance under which the first £1,000 in interest will be tax free.
In a wide-ranging announcement, Osborne unveiled a tax on profits aimed at cracking down on multinationals that shift profits offshore, and also increased a special tax on the banking sector.
“Our new diverted profits tax is aimed at large multinationals who artificially shift their profits offshore,” he announced following controversy over the British tax affairs of global giants such as Amazon, Google and Starbucks.
“I can confirm that we will legislate for it next week and bring it into effect at the start of next month,” he said.