George Osbourne promises no UK tax hikes if spending is controlled

Chancellor of the exchequer notes recent indications from IMF that UK economic growth figures may have to be revised upwards


Taxes will not have to rise in the United Kingdom to bring its deficit under control, chancellor of the exchequer George Osborne has said, if pressure is maintained to bring spending under control.

Saying that he suspected Labour would increase taxes if elected in the 2015 general election, Mr Osborne added: “I am clear that tax increases are not required. It can be achieved with spending reductions.”

Displaying confidence following a number of good weeks for the Conservative party, Mr Osborne said: “Successful oppositions move to the centre ground, successful governments move the centre ground.

“Labour is caught in the worst of all worlds, where they have abandoned the argument, but kept the policies . . . There is now a widespread acceptance that more borrowing, more spending will not secure the recovery.”

He noted recent indications from the International Monetary Fund that UK economic growth figures may have to be revised upwards.

Fiscal consolidation
“We just demonstrated that we can deliver £11.5 billion [€13 billion] spending cuts in the spending round. We have set out in the budget book the path of fiscal consolidation . . . I stand by it and I think this can be delivered by spending savings both in welfare and in departments and there is no need for tax rises to contribute to that fiscal consolidation,” he said.

Last month the Institute for Fiscal Studies warned that Mr Osborne would have to raise taxes by £6 billion if still in office after the 2015 election if he is to maintain an 80 per cent/20 per cent split between cuts and tax rises.

Speaking to MPs earlier, he said: “I’m a low-tax conservative who believes we could have lower taxes, but I think they should be sustainably lower. I’m not for deficit-financed tax cuts (where) you end up having to increase taxes later to clear up the mess you have made.”

The chancellor, who is regarded – despite occasional blunders such as last year’s budget – as the most strategic figure in the Conservative party, revealed that there is a battle afoot between senior Conservatives about electoral strategy.

“The election is two years away. There are some who argue that we should now be setting out all the things that we want to do as a Conservative government, and spell out all the things that we can’t because of the Liberal Democrats in coalition.

“Some of my colleagues think that. I actually disagree. I am not a chancellor – and I don’t want us to be a government – that talks about the things that we can’t do.”

The coalition pact with the Liberal Democrats – a decision that he helped make but one that is hated by most Conservative MPs – has “provided us with a sizeable majority every night”, he said.

He also said he would push ahead with a tax break for married couples – a measure worth little more than £100 per year, but which is opposed by the Liberal Democrats because it makes a distinction between different unions.

“I’m absolutely committed to introducing it . . . I think you can expect to see it in the autumn statement,” he said.

Support for marriage
Despite its relatively small value it has near-totemic status for Tories because of the party’s traditional support for marriage, but also because Mr Cameron promised it in his leadership campaign.

In 2010, a transferable tax allowance worth £150 was promised for married couples, but it has got nowhere since, with Lib Dem deputy prime minister Nick Clegg describing it as “patronising drivel that belongs in the Edwardian age”.

Labour opposed his plans, with shadow treasury minister Cathy Jamieson saying the Tories should be prioritising the welfare of all families, “not just some” when living standards are falling.