Spending Review: Chancellor George Osborne hints Tories would make further welfare cuts rather than increase taxes after next election - New Articles - The Independent

Spending Review: Chancellor George Osborne hints Tories would make further welfare cuts rather than increase taxes after next election

While respected fiscal think tank criticises George Osborne's decision to continue the freeze on council tax

The Conservatives would make further cuts in the welfare budget rather than increase taxes after the 2015 general election, George Osborne has suggested.

The Chancellor sketched out another dividing line with Labour after experts warned that tax rises and spending cuts would be needed to balance the nation's books in the two years after the election.

Senior Tories believe the party's manifesto will pledge several billions of pounds of benefits savings to meet the new cap on the welfare budget announced in Mr Osborne's spending review on Wednesday.  The Chancellor intends to maintain the current  split under which 80 per cent of his deficit-reduction programme is met by cuts and 20 per cent from tax rises. In contrast, Labour and the Liberal Democrats are expected to pledge to raise a higher proportion from tax increases. Both are already committed to bring in a mansion tax on homes worth more than £2m and Labour may bring back a 50p top rate of tax on earnings over £150,000 a year.

In a round of media interviews, Mr Osborne said: “I think most of the effort for dealing with this country's problems should come from cutting government spending, controlling the welfare bill.”

Although he refused to categorically rule out any post-election tax rises, he said: “This will be an issue, I suspect, eventually when people come to choose their next government because my political opponents would probably want to put taxes up, my instinct is let's try and control welfare bills, let's try and control the cost of what we're doing. Just putting more and more taxes on people is not really the right answer.”

A respected fiscal think tank criticised Mr Osborne's decision to continue the freeze on council tax. “This is not a sensible reform and it is not one that is being properly announced or debated” said Paul Johnson, director of the Institute for Fiscal Studies (IFS).

The Chancellor announced on  Wednesday that he would fund councils to freeze council tax for a further two years from next April. He said that this would knock around £100 from the average council tax bill, bringing the total saving for families over the Parliament to £600.

But Mr Johnson said these rolling freezes on council tax were undermining the UK's main tax on property with potentially serious consequences for the future stability of local government finances.

“We know that the more often you offer one-off freezes to taxes the harder it is to unfreeze them” he said. “We need an effective property tax and we need a robust source of funding for local government. This continuing policy looks set to undermine both”.

Council tax raises £27bn nationwide annually. The IFS estimates that by the end of 2015-16 these revenues will be £3bn lower than they would have been in the absence of the Coalition's freezes.

The IFS also attacked the Treasury for the paucity of detail it released in Wednesday's review, which set departmental spending limits for the first year of the next parliament. “Publishing such a small amount of information with so little explanation is not an exercise in open government” said Mr Johnson.

For example, he pointed to that fact that March's Budget documents had pointed to a £7.4bn spending limit for the Home Office in 2014-15, but the spending review said the limit would be £10.4bn. Mr Johnson said that the explanation turned out to be that the police grant has been quietly shifted out of the local government budget and into the Home Office budget.

News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Sport
FootballFull debuts don't come much more stylish than those on show here
News
i100
PROMOTED VIDEO
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
News
The ecological reconstruction of Ikrandraco avatar is shown in this illustration courtesy of Chuang Zhao. Scientists on September 11, 2014 announced the discovery of fossils in China of a type of flying reptile called a pterosaur that lived 120 millions years ago and so closely resembled those creatures from the 2009 film, Avatar that they named it after them.
SCIENCE
Life and Style
tech
Arts and Entertainment
Matisse: The Cut-Outs exhibition attracted 562,000 visitors to the Tate Modern from April to September
art
Life and Style
Models walk the runway at the Tom Ford show during London Fashion Week Spring Summer 2015
fashionLondon Fashion Week 2014
News
Kenny G
news
News
peopleThe black actress has claimed police mistook her for a prostitute when she kissed her white husband
Life and Style
techIndian model comes with cricket scores baked in
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week