Budget 2015: More spending cuts are there in George Osborne's small print

Political Editor Jonathan Walker looks closer at George Osborne's final budget before the general election on May 7

Jonathan Brady/PA Wire Chancellor of the Exchequer George Osborne
Chancellor of the Exchequer George Osborne

Chancellor George Osborne had plenty to boast about in his final Budget before polling day on May 7.

And there were goodies to tempt voters, with taxes cut for many workers and savers.

But hidden in the small print were plans for massive spending cuts - which go even further than the cuts which have already hit councils and police services.

It comes as services already face huge savings with Northumbria Police, for example, announcing it will have to lose more than 400 jobs.

The Chancellor told MPs that public spending cuts would come to an end in 2019-20 – a year earlier than previously planned.

But his success in getting the deficit down is partly a result of plans for massive cuts in public spending before 2019 which is higher than anything we have seen so far.

The Chancellor is expected to cut spending by £65 billion over the next five years – with most of the cuts in the 2016-17 and 2017-18 financial years.

The details were revealed in documents published alongside the Budget by an independent watchdog set up by the Treasury, the Office for Budget Responsibility (OBR).

Spending on day-to-day public services and administration will fall by £25 billion in 2016-17 and by £24 billion in 2017-18, the OBR said.

And these massive cuts would allow the Chancellor to bring the cuts programme to an end a year early.

The OBR report warned: “This leaves a rollercoaster profile for implied public services spending through the next Parliament: a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over the past five years followed by the biggest increase in real spending for a decade in 2019-20.”

In a series of pre-election announcements, Mr Osborne announced a series of tax cuts, including a new Personal Savings Allowance will let people earn up to £1,000 a year in interest tax free.

First-time buyers will get a subsidy on the deposit to buy a home. For every £200 they save, the Government will top it up with £50, up to a maximum of £3,000.

The amount that people can earn before paying income tax will rise from £10,600 this year to £10,800 next year – and then to £11,000 the year after.

In his upbeat speech, the Chancellor insisted the Government’s long term economic plan had worked, with national debt set to fall as a proportion of the total economy in 2015-16.

He said: “This is the Budget for Britain – the comeback country.”

And he was keen to argue that he was delivering economic growth for “every corner of the country”.

This included the bold claim that he had done what Labour always failed do to, and started closing the North-South economic divide.

He announced a series of measures to help the North, including £1 million for the Centre for Process Innovation, to back the North East’s chemicals sector, and expansion of the Enterprise Zone at Tees Valley, to support the oil and gas decommissioning industries.

But while this may be welcome, the biggest regional announcement once again involved Manchester, which was told it would be allowed to keep 100% of additional growth in local business rates – effectively devolving more funding from the Treasury to the local combined authority.

Why does Manchester get this windfall and not other parts of the country?

Mr Osborne made the answer clear, telling the Commons: “Our agreement with Greater Manchester on an elected mayor is the most exciting development in civic leadership for a generation – with the devolution of power over skills, transport and now health budgets.”

In other words, it’s because Greater Manchester has a directly-elected mayor. If other regions want the same deal, they need a mayor too – at least, as long as Mr Osborne is Chancellor.


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