Autumn Statement: Osborne's plans will result in 'colossal' spending cuts, thinktank claims, as Chancellor lashes out at 'hyperbolic' coverage

The independent Institute for Fiscal Studies has said just £35bn of Whitehall cuts had happened since 2010, with £55bn expected to come

James Rush
Thursday 04 December 2014 15:03

Plans set out by George Osborne in the Autumn Statement yesterday will result in "colossal" Government spending cuts, the independent Institute for Fiscal Studies has said.

As the Chancellor lashed out at the BBC's "hyperbolic" coverage and predictions about the consequences of the fresh round of cuts, IFS director Paul Johnson said voters would be justified in asking whether the he was planning "a fundamental reimagining of the role of the state".

He said: "One thing is for sure. If we move in anything like this direction, whilst continuing to protect health and pensions, the role and shape of the state will have changed beyond recognition."

While ministers indicated the bulk of the country's fiscal consolidation following the financial crisis of 2008 had been completed, the economic thinktank said just £35bn of Whitehall cuts had happened, with £55bn still to come.

Mr Johnson said if reductions in spending continued at the same pace after next year's General Election as they have over the past four years, £21bn of welfare cuts or tax rises would be needed by 2019/20, at a time when the Tories are committed to income tax cuts worth £7bn.

Mr Johnson stressed it would be wrong to describe the planned cuts, which had not yet been spelt out, as "unachievable."

As the Chancellor delivered his statement yesterday, the Office for Budget Responsibility warned Whitehall budget cuts after the election, expected to total £30bn, would pose "significant challenges."

Mr Osborne condemned "hyperbolic" predictions, and attacked an interview with John Humphrys on the BBC Radio 4 Today programme, suggesting the corporation's coverage was like "listening to a rewind of 2010".

"You had BBC correspondents saying Britain is returning to a George Orwell world of the Road To Wigan Pier," he said. "It is just such nonsense.

"I thought the BBC would have learnt over the past four years that its totally hyperbolic coverage of spending cuts has not been matched by what has actually happened."

He added: "What I reject is the totally hyperbolic BBC coverage of spending reductions. I had all that when you were interviewing me four years ago and has the world fallen in? No, it hasn't.

"Government departments are going to have to make savings. On the welfare bill we are going to have to do things like freeze working-age benefits.

"I'm not pretending these are easy decisions or that they have no impact.

"But the alternative of a return to economic chaos, of not getting on top of your debts, of people looking at Britain across the world and thinking that is not a country in charge of its own destiny, is not a world that I want to deliver."

Mr Osborne complained of "unfair" treatment, adding that although growth was expected to be 3% this year, tax revenues were still struggling, partly due to the "massive" 2008 credit crunch.

He said: "We promised to turn the British economy round and we now have the fastest growing economy in the developed world.

"We promised to create jobs and we have seen unemployment fall at a record rate.

"We brought the deficit down by a half - I would love to have gone further in this parliament but we have been hit by all sorts of economic storms, as you know.

"We have stayed the course and we are continuing to bear down on that deficit so Britain can live within its means."

Shadow chancellor Ed Balls said the £90bn of borrowing now expected this year showed Mr Osborne's plans were not working.

He also said Labour would make "fairer" choices to increase wages and take the burden off the less wealthy.

A BBC spokesman said: "We're satisfied our coverage and analysis has been fair and balanced and we gave the Chancellor plenty of opportunity to respond on the programme.

"We will continue to ask ministers the questions our audience want answered."

Additional reporting by Press Association

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