George Osborne is in the unfortunate position of having to find billions in extra money to meet the targets he set himself.
George Osborne promised, during the election, to deliver £10 billion more than it spends by 2020, and use this to pay down the national debt. However, before he stood up on Wednesday, instead of having a surplus of £10 billion, he had a deficit of more than £2 billion.
According to The Guardian, Osborne has a 50 per cent chance of fulfilling his plans to deliver a £10bn surplus on the public finances by 2020, the director of the Institute for Fiscal Studies (IFS) predicts.
Therefore, this is why the budget, announced on Wednesday, is so controversial and has gone so far as to fill the headlines with accusations such as George Osborne targeting the vulnerable with tax plans.
There are a number of controversial proposals. First of all, the reductions in personal independence payments (PIP), which the chancellor said would have save £4.4bn over the course of this Parliament, represent actual cuts to disability benefits. Asked by the Guardian about it, David Cameron backs the plan: ‘As the Chancellor said, but I will repeat, we will be discussing this with disability charities and others and make sure we get this right’.
Obviously, the Conservative rebels voiced their concerns as the budget concerns PIP cuts as well as tax giveaways for businesses and higher earners. Former GP Sarah Wollaston tweeted that the government would, “never meet approval for change that would reduce entitlement to PIP at the same time as raising the higher rate tax threshold”.
Second of all, besides the lower corporation tax, another measure considered outrageous by the public is the new sugar tax. The tax on the soft drinks industry is to be introduced in two years’ time, raising £520m a year. This is considered a strategy of social engineering, to encourage the British people to move on to a healthier lifestyle. The money raised through the sugar taxes to be spent on doubling funding for primary school sport in England.
Additionally, in matters of pensions and savings, a new ‘lifetime’ ISA is planned for the under-40s, with government putting in £1 for every £4 saved. People who save a maximum of £4,000 towards a home deposit or retirement will get a £1,000 top-up from the state every year until they turn 50.
In matters of fuel, the duty is said to be frozen at 57.95p, for sixth year in a row. Fuel duty remains the biggest component of the price of diesel and petrol. The budget targets also a frozen duty on beer, cider and spirits, but raised taxes on tobacco products.
However, the ‘Budget for the next generation’ is far from being decided. The Chancellor of the Exchequer needs to present his Budget statement to MP’s in the House of Commons.