George Osborne has stated that he will deliver a new Budget on the 8th July. He said that it would focus on raising productivity as well as living standards and that this unusual move of having a second Budget within a one-year period is to keep the commitments made to people in work.
The chancellor gave a broad outline of his plans for the next budget but would not comment on the details, including the Conservatives’ planned £12 billion of welfare cuts, Osborne said outside 11 Downing Street. The previous Budget was held on 18 March and included tax cuts for first-time house buyers. After this Budget, the independent forecaster in Institute for Fiscal Studies (IFS) stated that Osborne needed to say exactly how he could go ahead with his plans to cut £12 billion from welfare spending. Of these cuts, £2 billion were outlined ahead of the general election and all cuts are predicted to be in place between 2017 and 2018.
If the economy performs as forecasts made by the independent Office for Budget Responsibility say it should, borrowing will be reduced to £41 billion in 2016-17 and £14.5 billion in 2017-18. However, by 2018-19 the plan for the UK is to be running a budget surplus of £4 billion.
The Conservatives were under pressure form the Institute for Fiscal Studies (IFS) during the election campaign that wanted an explanation as to how they would find the remaining £10.5 billion, considering they gave details of how they will find £1.5 billion of savings from the UK’s social security budget.
The IFS said that the scale of the overall savings would involve the Conservatives looking at child benefit, child tax credit and disability allowances. The Budget would announce reforms of welfare that intended to protect the vulnerable while also making sure that the system is fair to taxpayers, according to the Treasury.
Osborne will say in the Budget that the Conservatives plan to have a fair and balanced approach to the deficit reduction and that the package will include a promise that spending on the NHS will be improved while cutting £13 billion from other Whitehall departments. In addition, designed to raise £5 billion will be a fresh crackdown on tax avoidance.
The timing of the Budget on the 8th July will mean that the Office for Budget Responsibility will produce new forecasts for the economy and the public finances. They will also give time for a finance bill to be passed.