Osborne ‘must cut billions more’

Chancellor George Osborne
Chancellor George Osborne

George Osborne may need to cut £45 billion a year from public spending by 2018-19 to balance the books rather than the £30 billion of consolidation measures currently planned, a think tank has claimed.

The Social Market Foundation claimed the plans set out in the Conservative manifesto do not represent the “full scale of the savings needed”.

The think tank argues that the £30 billion does not take into account the increased spending on areas such as overseas aid, the NHS and schools, or likely rises in the cost of debt interest payments.

The Tory manifesto committed the party to eliminate the deficit by cutting spending by 1% each year in 2016-17 and 2017-18 then freezing it in real terms in 2018-19.

The consolidation effort will involve £13 billion from departmental spending, £12 billion of welfare cuts and £5 billion raised from tackling tax dodgers.

But the SMF analysis claimed that the planned cuts would not go far enough when the increased expenditure was taken into account.

The think tank also assumes that the Government will not want to reduce gross capital spending below the levels set out in March.