George Osborne has rejected the Office for Budget Responsibility’s assessment that there will be a rollercoaster of deep cuts in the next parliament but refused to spell out what his plans would actually look like.
The chancellor dismissed an assessment by the independent watchdog, which found there would be a “much sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over the past five years” followed by a big increase in spending after that.
Asked about the OBR’s analysis on BBC Radio 4, Osborne insisted he was not proposing deeper cuts but the same pace of cuts as the last five years.
“That is not actually the approach, as Conservatives, that we will take,” he said. “We want to take a more balanced approach and we would not put all the cuts in government departments, as the OBR forecast shows.
“We would also make savings in the welfare budget and take additional action against tax avoidance, tax evasion, aggressive tax planning. So we would have a more balanced approach.
“The cuts in financial departments would be at the same pace as the last couple of weeks and that we are going to have in a couple of weeks’ time as we have the new financial year.”
The rhetoric of the OBR has annoyed the Treasury as the budget was designed to slightly ease the pace of austerity to undermine Labour’s argument that the Conservatives wanted to shrink the public sector back to the level of the 1930s as a proportion of national income.
The new forecasts mean Labour can still argue that Osborne is taking an unbalanced approach.
The OBR’s judgment about large cuts in the early years of the parliament has also put pressure on Osborne to spell out exactly where his axe is going to fall.
He refused to say exactly where £12bn of welfare cuts would come from, beyond freezing payments, saying people would have to look at his approach.
“We’ve saved £21bn in this parliament and now we need £12bn in the next ... People can judge me on my track record,” he said.
The Treasury financial secretary David Gauke said later he did not believe the Conservatives will set out the detail of their plans for £12bn of welfare cuts before the general election, arguing that the detail will have to wait for a spending review after the election.
Gauke was speaking on BBC2’s Daily Politics and said he believed the government had credibility on welfare cuts because of its track record of achieving larger welfare cuts in this parliament. The cuts are needed to be achieved by 2017-18, and are intrinsic to the Tory plan to get the current account in balance by that date.
Paul Johnson, the head of the Institute for Fiscal Studies, criticised the lack of plans for scrutiny.
“He has given us almost no details about what that looks like and I think it’s rather disappointing that so far in we still haven’t heard any details about that,” he told BBC Radio 4’s Today programme.
Ed Balls, the shadow chancellor, cast doubt on Osborne’s claims to be able to make the scale of the cuts he is proposing without reducing the NHS or raising VAT.
“I don’t think those cuts are going to be possible for George Osborne,” he said. “He’s going to end up either cutting our National Health Service or raising VAT.”
Separately, Danny Alexander, the Lib Dem Treasury minister and economics spokesman, took the unprecedented step of setting out his party’s own spending plans in contrast to its coalition partner’s.
He outlined new criminal powers to tackle tax evasion although Osborne mentioned them first on BBC Breakfast.
There will be a new strict liability criminal offence of tax evasion, and heavier fines for accountants and lawyers who assist it, as well as the possibility of a new criminal offence for them, too.
“So it’s a whole new set of criminal powers, new fines to make sure we continue the fight against tax evasion and avoidance,” Osborne said.
