Heroic announcements on public service spending cannot detract from the reality of our economic situation.
Heroic announcements on public service spending cannot detract from the reality of our economic situation
This week the chancellor George Osborne will give his Autumn statement, setting out the government’s plans for spending. With the general election months away, Osborne’s announcement will be a seminal moment for the Tory campaign.
The election results may be unpredictable, but we can make a fairly good guess at the contents of the statement. Here are five things we’re expecting from George Osborne on Wednesday.
1. £2bn a year for NHS frontline services
The investment is an attempt to save a health service which is currently in dire straits; the NHS in England has estimated that it would need annual increases of at least 1.5 per cent if it is to avoid a funding gap of £30bn by 2020.
Osborne is expected to unveil funds that will allow certain types of chemotherapy and kidney dialysis to be offered in GP surgeries, as part of plans to enable more services to be devolved from hospitals to communities.
Although health chiefs have welcomed the plans, there has already been doubt over their legitimacy. Labour have pointed out that about £700m of the increase comes from money that had already been allocated to the Department of Health, prompting allegations that the Treasury is simply recycling funds.
2. A freeze on petrol duty
Despite large falls in the cost of oil, the upcoming election means that Osborne will not renege on his 2013 promise to freeze petrol duty. This will come as a huge relief to millions of voters who feared a reintroduction of the ‘fuel duty escalator’ that would mean above-inflation rises for petrol.
When the chancellor got rid of the escalator in 2011 he indicated that he would restore it if prices fell below $75 a barrel. According to the Financial Times, the price of Brent Crude was $72 on Friday. This has led to speculation that in the event of winning the election, the Conservatives would again increase duty.
3. £15bn for major road improvements
The chancellor is expected to pledge £15bn for a programme to improve Britain’s major roads. 84 new schemes are planned to relieve jams and bottlenecks by adding 1,300 miles of new lanes to motorways across the UK. David Cameron called the plans the ‘biggest, boldest’ road building scheme for forty years.
The project is in line with predictions by the RAC Foundation, which estimates that the country’s growing and ageing population will mean that there are seven million more drivers on the roads by 2035.
One of the programme’s key projects is the creation of a 1.3 mile tunnel under Stonehenge, part of plans to limit tailbacks on the A303, a route popular with holidaymakers and notorious for its traffic jams. The project is expected to create 1,300 jobs and will cost £2bn.
4. Humbling figures
Despite attempts to highlight the Tories’ positive economic contribution, it will be difficult for Osborne to get round the bleak reality of the figures. The still-rising budget deficit will be almost £100bn this year. Weak income-tax receipt – revenues this year rose by just 0.6 per cent – mean that government borrowing will shoot up regardless of who is in parliament.
The Office for Budget Responsibility (OBR) predict that the deficit will reach nearly £280bn by 2020 – this is £75bn more than planned. These figures will overshadow all of Osborne’s promises – the NHS investment, for example, will clearly have to come from cuts in other areas.
5. Tougher rules on tax evasion
The chancellor is expected to introduce new criminal sanctions and stronger civil sanctions for offshore tax evasion. The new rules could mean that anybody failing to declare taxable offshore income would be deemed to have committed a criminal offence.
Measures to close schemes and loopholes that allow people to avoid paying tax will be popular with all voters, so expect this to be Osborne’s fall-back after delivering the bad news.
Ruby Stockham is a staff writer at Left Foot Forward. Follow her on TwitterLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.