George Osborne: Deficit cut could take longer than planned
Chancellor George Osborne has acknowledged that deficit reduction may take longer than he had planned.
He has called for people to “have the courage to stay the course” amid suggestions that the better-off could be required to contribute more.
It comes as Mr Osborne concludes his work on the Autumn Statement, to be delivered on Wednesday.
Shadow chancellor Ed Balls said it was time to “change the medicine – or change the doctor”.
‘In it together’
BBC political correspondent Iain Watson said the Autumn Statement was a Budget by any other name and some tax rises for the wealthy and cuts in welfare were widely expected.
He added that Mr Osborne, writing in the Sun on Sunday, had in effect acknowledged that he was not currently on course to get debt falling as a share of national income by the time of the next general election, due in 2015.
The chancellor warned that the road ahead was longer than thought but that he would not be doing a U-turn as “turning back now would be a disaster”.
He said if he did not continue his drive to bring down the deficit, then Britain would be plunged even deeper into debt and interest rates would rise as a result.
Mr Osborne said: “We are still all in this together. Everyone must make a contribution to dealing with our debts, from the richest in our society to those living a life on benefits.
“Every one of my Budgets has raised more from the richest. The situation under Labour where top people in the City were paying lower tax rates than their cleaners has been ended. And we are hunting down those who evade tax wherever they try to hide.
“But we understand that fairness isn’t just about taxing the rich. It’s also about ending the something-for-nothing benefits culture.
“So we have introduced a new cap on benefits and are changing the welfare system with our new Universal Credit so that it always pays to work. Unbelievably, the Labour Party opposes these vital changes.”
He added: “The road ahead may be longer than we thought but it leads to a better future. Let’s have the courage to stay the course.”
In an article for the Sunday Mirror, Mr Balls said he believed it was reckless for the government not to change course as the economy was not growing, and he repeated his call for a tax on bankers’ bonuses.
Mr Balls said he would also like to see a delay in January’s fuel duty increase and a temporary tax cut for people on low and middle incomes, such as through reducing VAT.
He said: “Everyone knows how tough things are right now. Prices are rising faster than wages, our economy is flatlining, and long-term unemployment is rising.
“This failure means the government isn’t even passing the one test they set themselves – reducing the deficit.”
He added: “We need a change of course from David Cameron and George Osborne. When the medicine makes the patient sicker, you don’t just take more of it. We need to change the medicine, or change the doctor.”
According to the Sunday Times, the chancellor is poised to cut the £50,000 annual tax relief cap on pensions to as little as £30,000 in his Autumn Statement.
The change, affecting the wealthiest pension pots, would reportedly bring in up to £1.8bn a year.
There has been no comment from the Treasury.
What do you think about a possible longer period of deficit reduction? What do you want to see from the Autumn Statement? You can send us your views using the form below.