London: British finance minister George Osborne unveiled fresh austerity measures yesterday to slash the country’s debt, evoking the plight of crisis-hit Greece in presenting the first purely Conservative budget for nearly 20 years.
Chancellor of the Exchequer Osborne slashed welfare spending to honour campaign promises after his Conservative party – headed by Prime Minister David Cameron – unexpectedly won an outright majority in a May 7 general election.
“This is a Conservative budget that can only be delivered because the British people trusts us to finish the job,” said Osborne, who now has a free hand with the public finances after a tense five-year coalition with the centrist Liberal Democrats.
“The greatest mistake this country could make is to think all our problems are solved,” he told lawmakers during a speech lasting over an hour.
“You only have to look at the crisis in Greece to realise if a country is not in control of the borrowing, the borrowing takes control of the country.”
The budget would transport Britain “from a low wage, high tax, high welfare economy, to the higher wage, lower tax, lower welfare country we intend to create”, he said.
Osborne declared the government would save £37 billion ($57bn, 51bn euros) in further fiscal consolidation over the next five years.
“Today I set out how we will find just under half of that – £17bn.” he told lawmakers.
“We found savings of £12bn from welfare and £5bn from tackling tax evasion, avoidance, planning and imbalances in the tax system.
“The other half will largely come from departments through savings and cuts.”
The public deficit is to be cut at the same pace as in the previous 2010-2015 parliament.
The public purse is expected to shift to a surplus by 2019/2020, which is a year later than predicted at the time of the last budget presented in March.
“Without sound public finances there is no economic certainty for working people,” Osborne said.
But he admitted: “Britain still spends too much, borrows too much and our weak productivity shows we don’t train enough or build enough or invest enough.” Borrowing was revised down to £69.5bn in the current financial year, but was then revised up to £43.1bn and £24.3bn the following two years, compared to a March forecast of £39.4bn and £12.9bn respectively.
Osborne also confirmed there would be no change to income tax thresholds or value added taxation (VAT) for at least five years.
He will cap annual welfare payments at £23,000 per household in London, against the current level of £26,000. The amount will be set at £20,000 outside the capital.
Corporation tax, levied on business profits, will be reduced from 20pc to 19pc in 2017 and 18pc by 2020.
The Tories swept into power on the back of promises to stick to the austerity plan that they implemented with the Liberal Democrats during the last coalition government.
Yesterday’s spending plan sought to build upon Osborne’s first budget of the year, which was presented under the previous coalition in March.
It was Britain’s first budget written solely by the Conservatives since 1996.
During the coalition years, Osborne was forced to soften some of his austerity measures in the face of fierce pressure from the Liberal Democrats.
However, his priority remains tackling Britain’s total debt, which stands at about £1.5 trillion.
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