In the March Budget, Labour set out plans to cut public spending by £38 billion. The OBR's report today provides no justification to go any further next week.
The Office of Budget Responsibility predict that growth will come in lower than forecast in the March Budget but that borrowing will also be lower. With the coalition government intent on cutting a range of taxes, we should be in no doubt about the justification for spending cuts above and beyond the £38 billion mooted in Alistair Darling’s final Budget. They are driven by ideology not necessity.
According to the OBR report presented today by Sir Alan Budd, compared to the March Budget, total managed expenditure is £2.8 billion lower while receipts are up £5.6 billion for 2010-11. This has contributed to the estimate of the current budget deficit falling from £124 billion at the Budget to £114 billion.
Meanwhile, reporting from the OBR’s press conference, Newsnight’s Paul Mason writes:
There is only a 0.3% of GDP difference (maybe 5bn) between Darling’s structural deficit forecast and Budd’s. This means there is no prima-facie ammo in the Budd Report for a significant tightening in order to eliminate “the bulk of the structural deficit”.
As Left Foot Forward showed last week, the coalition government plans – over the course of this Parliament – to cut income tax, employer national insurance, corporation tax, freeze council tax, and “recognise marriage in the tax system”. These are all discretionary decisions which will need to be paid for by additional tax increases or spending cuts above and beyond the £38 billion of spending cuts that Labour set out would be needed in its final Budget (Paragraph 2.57).
With the Government preparing a “climb down” on raising capital gains tax, there are growing suspicions that they will pay for their tax giveaways by raising VAT, which is urged by business, or cutting additional public services.
34 Responses to “No case to cut more than Labour”
winston k moss
as we have seen before the election mr osbourne is not reading the same script as the rest of us.they are dismissive of many things,this will be their downfall,let them fall.labour made mistakes but they knew where they went wrong.CONDEM(us all)NATION PARTY are already imploding due to own greedy ideologies.they have even tried to hoodwinking electorate on voting reform what else belies us all from this unelected party?
winston k moss
RT @leftfootfwd: No case to cut more than Labour http://bit.ly/bsAlfE
aaron peters
RT @leftfootfwd: No case to cut more than Labour http://bit.ly/bsAlfE
Mr. Sensible
Will, I fully agree with you. This Office for Budget Responsibility is turning in to an absolute Own Goal for the coalition.
The coalition made a big thing of sexing up how bad our financial problems were, but given that the report shows that the defecit is forcast to be not as bad as Labour said (for example, Darling predicted in his budget that public borrowing would reach 11.1% of GDP in Financial Year 2010-2011, but the OBR predicts it will be 10.5% of GDP this year), and given also that, as you have identified the coalition is embarking on a series of tax giveaways along with the accademies nonsense, do you agree with me Will that this is a case of George Osborne, in his own words, ‘Fixing the Finances to Fit the Budget’, not ‘Fixing the Budget to Fit the Finances?’
What is more, as the Chartered Institute for Personele and Development said, these cuts are going to force 725000 people out of work, thus pushing unemployment up towards 3 million and having it stay there till 2015 (Chartered Institute for Personele and Development) ; so much for cutting the deficit! And, there is a very real risk that the economy could go back in to recession as a result of these cuts, thus, again, not helping the public finances.
Also, in London this afternoon, Nick Clegg will be speeking in favour of cuts which he opposed during the election campaign.
Isn’t it the case, Will, that we’ve got a Chancellor who’s an absolute hippocrit, and a Deputy Prime Minister who has sold himself for a seat in power, thus questioning the credibility of the New Politics?
David Cameron said before the election that any minister who came to him proposing to cut a frontline service would be shown the door. In which case, if the government wants to stick to its word for once, resign, and call an election.
Mr. Sensible
Indeed, all the figures in that table come in lower than the Treasury’s forecasts.