In a gloomy autumn statement, Chancellor George Osborne is set to warn there are no “miracle cures” for Britain as he looks for £5bn more cuts and signals austerity is here to stay.
The chancellor’s “mini-budget” is also expected to concede that slow growth means tackling the deficit is proving more difficult than expected, and key targets will be missed, such as the coalition’s aim to have public sector debt falling by 2015-16.
Effectively, it appears that George Osborne is warning that “austerity Britain” could be where we all live for rather longer than originally anticipated – at least until 2018, deep into the next parliament.
In the autumn statement, set to be delivered at 12.30pm, the chancellor will also confirm that Whitehall departments will be asked to find further cuts to fund £5bn of “shovel-ready” projects designed to kick-start the economy.
The public know that there are no miracle cures. Chancellor George Osborne
Mr Osborne will argue he is “confronting the country’s problems instead of ducking them”.
“The public know that there are no miracle cures. Just the hard work of dealing with our deficit and ensuring Britain wins the global race,” he will say.
Prime Minister David Cameron said the £5bn of so-called “shovel-ready” projects, which will include £1bn for building schools, would “make a difference in our country and in our economy.”
But the Labour party said the announcement amounted to an admission that cutting infrastructure spending since 2010 had been a mistake.
What to expect from George Osborne's autumn statement
Other organisations warned that further departmental cuts would be crippling.
TUC general secretary Brendan Barber said the cuts would “put our stretched public services under even greater strain” while the £5bn additional investment was “nowhere near enough to undo the damage caused by £22bn of infrastructure cuts of the last two years”.
Health, schools, international aid, HM Revenue and Customs and nuclear decommissioning will be protected from the latest round of cuts, while local government will be exempted for the first year and the Ministry of Defence will be given flexibility to carry over savings from previous years. The changes apply directly only to England, but will have a knock-on impact on devolved administrations.
Mr Osborne will also use today’s statement to signal his approval for up to 30 new gas-powered electricity power stations, as well as floating possible tax breaks and regulatory reforms to encourage investment in innovative but controversial “fracking” technologies for extracting gas from shale deposits. The autumn statement is also expected to include other tax changes affecting both ends of the pay scale as well as further new announcements on fuel duty, pensions and benefits.
Alongside Mr Osborne’s bleak statement, the Office for Budgetary Responsibility is expected to cut its forecasts for growth.