19 Mar 2015

George Osborne wages war on tax evasion and avoidance

George Osborne unveils a new raft of powers for prosecutors and tax authorities to clamp down on wealthy people who use offshore accounts to evade or avoid tax.

The chancellor said the moves – part of a £5bn clampdown on tax avoidance – will help prevent the public spending “roller coaster” which independent economists believe will result from his budget plan to end austerity a year early in 2018/19.

The Office for Budget Responsibility warned of a “sharp acceleration” in the pace of reductions to public service spending between 2016 and 2018 while the Institute for Fiscal Studies predicted “significant and some really quite deep spending cuts” over the same period.

‘New criminal powers’

But Mr Osborne insisted that balancing the books was necessary to provide the “stability” needed to deliver high-quality health, education, defence and law and order over the long-term.

He said that part of the burden of £30bn worth of savings planned by the Conservatives would be shared by £12bn reductions in welfare spending and £5bn in tax avoidance measures.

Read more: who are the winners and losers?

He told BBC1’s Breakfast: “What we are going to be announcing are far-reaching new criminal powers to go after people with offshore bank accounts and go after the companies who help people evade tax.

“It is a whole new set of weapons in our armoury to make sure that people make a fair contribution. By doing that, we can then reduce the burden of cuts in the departments and the savings we need to make on welfare.”

Meanwhile, Liberal Democrats were setting out an “alternative budget” which Treasury Chief Secretary Danny Alexander said would eliminate the deficit “in a fairer way” by ensuring a “substantial proportion” of the burden of consolidation is borne by tax increases.


Shadow Chancellor Ed Balls on Thursday said that Mr Osborne’s plans meant cuts “more severe in the next three years than the last five”, which would almost certainly lead to VAT rises or resources being taken out of the NHS if Tories win the 7 May general election.

Mr Balls insisted that “nothing very much changed” in the political battle as a result of the budget and that Mr Osborne’s plan for three more years of deep cuts was “a pretty scary prospect” for voters.

“For all his boasts, people are worse-off than they were and the squeeze on living standards has been very severe,” Mr Balls told BBC Radio 4’s Today programme.

Read more: austerity squeeze to end a year early

“If you look at his plans for the next parliament, as the independent OBR say, the cuts in public spending under the Osborne plan are more severe in the next three years than in the last five.

“His desire to get to an overall surplus by 2019/20 means even bigger cuts in the next three years to our police, our defence forces than we’ve seen in the last few years.

“I don’t think those cuts are going to be possible for George Osborne. He’s going to end up either cutting our National Health Service or raising VAT.

“The truth at the election will be, do you want Labour’s more balanced, fairer approach to deficit reduction, which focuses on raising wages and being fair, or do you want to go for even deeper spending cuts over the next three years?”