Osborne rules out 'miracle cure'
Wednesday, 05 December 2012 08:24
George Osborne outside No 11George Osborne will speak from 12:30 (GMT)

Chancellor George Osborne will tell MPs there is "no miracle cure" to the UK's economic problems when he delivers his Autumn Statement.

Mr Osborne makes his statement to MPs against a gloomier economic background than forecast in March's Budget.

He will say the coalition are "confronting the country's problems" and insist he is not ducking the "hard work" of reducing the deficit.

Labour has called the government's economic policy "a terrible failure".

The chancellor will set out the state of the UK economy and his deficit-cutting programme from 12:30 GMT.

He is expected to say: "In this Autumn Statement, we show that this coalition government is confronting the country's problems, instead of ducking them.

"The public know that there are no miracle cures. Just the hard work of dealing with our deficit and ensuring Britain wins the global race."

Spending squeeze

The Office for Budget Responsibility is expected to downgrade its forecasts for growth in figures to be released alongside Mr Osborne's statement.

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What is the Autumn Statement?

Autumn leaves
  • One of the two major statements the chancellor has to make to Parliament every year
  • Since 1997 the main Budget - which contains the bulk of tax, benefit and duty changes - has been in the spring before the start of the tax year in April
  • The second statement has tended to focus on updating forecasts for government finances
  • Over the past few years this distinction has become blurred, with the Autumn Statement becoming more of a mini Budget
  • Under the last Labour government it was called the pre-Budget report

If the figures are as bad as many expect, the chancellor could miss his targets for paying off Britain's debts.

Mr Osborne has already admitted cutting the deficit was "taking longer" than planned.

The BBC's chief economics correspondent Hugh Pym says what was set out as a five-year plan when the coalition took office in 2010 to eliminate the underlying deficit will, by the end of the day, probably have become an eight-year plan.

Paul Johnson of the Institute for Fiscal Studies told the BBC the apparent "permanence" of the UK's low growth was the real problem in terms of the public finances, rather than the chancellor's erring time scale.

"I don't think from an economic point of view he's going to lose an enormous amount from saying I don't think I'm going to meet this target - so long as he looks like he's continuing to focus on the long term."

The chancellor is also expected to give more detail on plans to squeeze spending in most Whitehall departments and use the money to build new schools and transport schemes.

All but four departments will be asked to save an extra 1% next year and a further 2% the following year.

The prime minister said the £5bn saved would be spent on capital projects to kick-start growth and make the UK "work better".

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Autumn Statement on the BBC

  • Online: Full news and analysis, with live text from BBC experts and video stream
  • On TV: Daily Politics special on BBC Two from 11:30-15:30. Rolling coverage on the BBC News Channel
  • On radio: Live coverage on BBC Radio 5live. Reaction and analysis on You and Yours and the World at One on BBC Radio 4

Treasury sources say the Autumn Statement will also spell out how £1bn will go towards building 100 new free schools and academies, creating an additional 50,000 new school places.

Health, education, international development, HM Revenue and Customs and nuclear decommissioning will be protected from this latest squeeze.

Front-line services in all other departments will also be shielded with the bulk of the savings coming from administration and back office staff, government sources say.

Under the plan, the government believes it will be able to spend more annually on capital investment, as a proportion of GDP, than Labour did when it was in power.

The decision to cut Whitehall budgets comes after a mid-term spending review carried out by Chief Secretary to the Treasury Danny Alexander, which suggested many departments were over-achieving on planned savings.

'Bad for Britain'

Departments have under-spent by a total of £3bn over the past two years, the review found, reassuring Mr Osborne that it would be possible to divert spending into more economically valuable areas.

The Treasury believes there may be scope for further efficiencies. If all departments reduce their administrative spending by the same amount as the Department for Education, they would save almost £1bn by 2014-15, sources said.

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Start Quote

George Osborne will have to publish grim official forecasts with serious political and economic consequences”

End Quote

The changes apply to England only, but will have knock-on effects in Scotland, Wales and Northern Ireland because of the funding formula used.

Labour leader Ed Miliband said that Mr Osborne's policies had been a "terrible failure" which were "bad for Britain... and I'm afraid what we're going to see is ordinary families paying the price of that".

He told the BBC: "What we need, and what we need George Osborne to admit, is if you've been trying an approach for two and a half years and it hasn't worked, you don't just keep ploughing on regardless."

Labour's Chris Leslie also questioned how "fair" the chancellor's statement would be and suggested those on low and middle income would have to shoulder the burden of austerity.

Speaking to BBC 5 Live he said: "This isn't a chancellor who believes in fairness - it's one rule for those at the top and he just thinks everybody else will shrug and take it."

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source: http://www.bbc.co.uk/news/uk-politics-20600442#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa


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