TORY Chancellor Osborne yesterday confirmed the government’s intention to savagely attack child benefits, disability benefits and housing benefits in his Emergency Budget, whilst pushing up the cost of living by increasing VAT to 20 per cent.
To uproar Osborne declared that it was a ‘fair’ and ‘progressive’ budget – whilst declaring that the Welfare State had to be subjected to ‘lasting reform’.
He said that to avoid a ‘catastrophe’, his government intends to eliminate the ‘structural current deficit’ by 2015-16.
He praised the ex-Labour government minister John Hutton for joining the Tory Lib-Dem coalition to review the entire system of public sector pensions.
The response of acting Labour Party leader Harriet Harman was to denounce the budget as ‘reckless’ and an attack on the poorest sections of society, condemning the Tories’ Liberal Democrat partners for helping to bring in the very policies they had opposed at the general election.
She warned that tens of thousands of workers would be thrown out of their jobs as a direct result of yesterday’s announcements.
Osborne opened his Budget statement by boasting that he would deal ‘decisively with our country’s record debts’.
The savage cuts envisaged would be achieved through 77-23 per cent split between public spending cuts and tax rises.
He predicted a Public Sector Net Borrowing of £149 billion this year, but just £20 billion by 2015-16 and that government borrowing as a percentage of Gross Domestic Product (GDP) would fall from 10.1 per cent this year to just 1.1 per cent by the end of the government’s projected five-year term in office.
This would result in a ‘structural current balance’ of plus-0.8 per cent in 2015-16 compared to minus-4.8 per cent this year.
‘In other words, it will be in surplus,’ Osborne claimed.
‘Public sector net debt as a share of GDP will be 62 per cent this year, before peaking at 70 per cent in 2013-14.
‘Because of our action today, it then begins to fall, to 69 per cent in 2014-15 and then 67 per cent in 2015-16.
‘As a result of our measures debt interest payments will be £3 billion a year lower by the end of this Parliament.’
Osborne then proceeded to announce his ‘tough’ medicine of savage cuts and VAT increases.
• Capital spending on major projects will be slashed from £69 billion to less than £46 billion by 2014-15.
• The government will sell-off: High Speed 1, its shareholding in NATS, the air traffic control service, and the student loan book, and ‘facilitate’ the privatisation of Royal Mail.
• Cut the budgets of government departments by £61 billion a year by 2014-15 (£244 billion) – ‘an average real cut of around 25 per cent over four years’ for ‘unprotected’ departments.
• Savage cuts to public sector pay and pensions, starting with a two-year public sector pay freeze.
• The doubling of the ‘operational allowance’ to soldiers to £4,800.
• An interim report from the ex-Labour minister Hutton on public sector pensions by September, in time for the Autumn Spending Review.
• Speed-up the raising of the State Pension Age to 66.
Osborne then announced the savaging of social security, starting with:
• Linking any future ‘up-rating’ of benefits and tax credits to the Consumer Prices Index, rather than the (higher) Retail Price Index – ‘saving’ the government more than £6 billion by 2015-16.
• Slashing tax credits: cutting payments to families.
• Reducing back-dating from three months to one month and no new tax credit element for infants.
• Abolish the Health in Pregnancy Grant and limit Sure Start maternity grants to the first child only and make single parents ‘look for work’ as soon as their youngest child reaches school age.
Osborne then announced to a storm of protest:
• Child benefit to be frozen for the next three years.
• A massive attack on Disability Living Allowance: by seeking to drastically reduce the number of claimants through a ‘medical asessment’ scheme from 2013 for all new and existing claimants.
• Drastic cuts in Housing Benefit.