George Osborne should withdraw his Budget after leaving a chaotic “hole” in the public finances, Labour has said.
As well as a major U-turn on steep cuts for disability benefits, the Government has said it will not oppose a number of Labour amendments on issues including the so-called Tampon Tax and VAT on solar panels.
John McDonnell said there would be at least a £4.4 billion gap in the Budget’s Red Book if the disability benefit cuts were cancelled. He said it would thus be “prudent” for the Chancellor to withdraw his Budget and start again.
“The Budget process is in absolute chaos,” he said. “It is unprecedented for a Government to have withdrawn a large part of its Budget and accepted two opposition amendments before it even reached the third day.
“If the Chancellor halts the attack on disabled people a £4.4 billion hole is created in the Budget. At to this the billions of unidentified cuts and the amendment on Tampon Tax and solar panels we have won today – within five days an enormous hole has appeared in the Budget.
“Isn’t it the prudent thing for the Chancellor to do to withdraw this Budget and start again. This is no way to deliver a Budget and no way to manage an economy.”
The Treasury minister did not directly answer the question but stood by the Budget.
“Does the shadow chancellor really want to talk about fiscal black holes? Does he really want to do that?” he said.
“It’s a Budget that continues [Britain’s] economic recovery, a Budget that takes us into surplus by the end of this parliament,” he said.
Following the statement Labour leader Jeremy Corbyn said Mr Osborne should come to the House of Commons to defend his Budget or that David Cameron should sack him.
David Cameron told MPs: “We must continue to cut the deficit, control the cost of welfare, and live within our means. We must not burden our children and their children with debts we didn’t have the guts to pay off in full.”
George Osborne 2016 budget at a glance
George Osborne 2016 budget at a glance
1/8 Debt forecasts up, growth forecasts down
The OBR’s new forecasts have downgraded growth in all of the next five years to 2020. The watchdog says the economy will only grow by 2 per cent in 2016, as opposed to the anticipated 2.4 per cent. Borrowing and productivity growth are also down – with forecast borrowing in 2018-198 £16 billion higher
2/8 New tax on sugary drinks
The Chancellor announced a new tax on sugary soft drinks, which is projected to raise £520 million. At least some of the money will be spent on doubling funding for school sport, the Chancellor says. Labour leader Jeremy Corbyn welcomed the levy
3/8 Tax cut for higher earners paying the 40p rate
The Chancellor has raised the threshold for paying the higher rate of income tax to £45,000. The higher rate is paid by roughly the richest 15 per cent, currently people earning over £42,386
4/8 Increase in tax-free income tax threshold
The tax-free allowance increase to £11,500 in April 2017 – up from £10,600 now. The Chancellor previously raised the allowance from £6,475 in coalition with the Liberal Democrats. The Conservative manifesto pledges to put the allowance up to £12,500 by the end of the Parliament
5/8 New devolution for counties and powers for London and Manchester
The West of England, the East of England and Greater Lincolnshire will all get elected mayor-led combined authorities with new powers. The Chancellor says they are backed by £1 billion new funding. Greater Manchester will get new powers of criminal justice while London will keep its business rates – giving whoever is elected Mayor a lot more spending power
6/8 Fuel duty frozen for sixth year running
The Chancellor had planned to end the fuel duty freeze he had put in place for the whole previous parliament. In the event, he has announced a freeze for another year
7/8 All schools to become academies
As reported yesterday the Chancellor unveiled legislation to turn all schools into academies. He said all schools would either be academies or on their way to being academies by 2020, and that funding had been set aside to fund the change
8/8 Lifetime ISA
The Chancellor announced a new savings account to encourage under-40s to save for retirement – for every £4 saved, the Government will top this up by £1 up to the value of £4,000 a year. Tax-free ISAs will also be increased from £15,000 to £20,000
He said the Budget would “strengthen the economy and make sure we have a fairer society”.
MPs will vote on the Budget as a whole on Tuesday.