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
news
Sport
Danny Cipriani of England breaks clear to score his second try
rugby
Life and Style
New research says leaving your desk can help you to avoid serious illness
health
Arts and Entertainment
tvSPOILER ALERT: Like a mash-up of 28 Days Later, Braveheart, The Killing and Lord of the Rings, this GoT episode was a belter
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral