George Osborne defending sugar tax Budget


George Osborne will defend the Budget amid complaints he announced a tax on fizzy drinks to "sugar the pill" of seeking to get his fiscal plans back on track through deeper cuts and a squeeze on disability benefit

The Chancellor will take to the airwaves to be grilled about his latest fiscal blueprint, made one of his most difficult by sharply reduced growth forecasts he blamed on a "dangerous cocktail" of risks from the global economy.

Upgraded borrowing forecasts from the Office for Budget Responsibility forced him to reduce spending by another £3.5 billion to keep alive his hope of hitting his target of getting the nation's books into surplus by 2019.

He was forced to admit that Government debt will rise as a proportion of GDP this year - breaking a key rule he set himself.

Despite the gloom, Mr Osborne delivered a freeze in fuel duty for the sixth successive year, and gave tax cuts to millions of families by raising the income tax personal allowance to £11,500 and the higher 40p rate to £45,000 next year.

There were also boosts for business, with 600,000 small companies taken out of rates altogether and a cut in corporation tax from 20% to 17% by 2020. Mr Osborne sought populist applause by freezing duties on beer, spirits and most ciders.

A new Lifetime Isa will help under-40s save for their first homes, with a 25% bonus from the Government on up to £4,000 of savings a year.

But the respected Institute for Fiscal Studies think-tank said that overall the Budget delivered "measures that will increase tax revenues and cut spending".

The most eye-catching measure was a levy on soft drinks firms which from 2018 will see companies charged according to the level of sugar in their products. The £520 million raised will be used to help support primary school sport.

The levy was welcomed by health campaigners including TV chef Jamie Oliver - who tweeted the message "We did it!" to supporters - but sent shares in soft drinks companies tumbling on the stock exchange.

The OBR said signs of a pick-up in productivity growth had turned out to be a "false dawn", as it downgraded its growth estimates for this year from 2.4% to 2% and next year from 2.4% to 2.2%.

Debt is expected to be 82.6% of GDP in 2016/17 rather than 81.7% and the deficit is set to fall next year to 2.9% rather than 2.5%.

Mr Osborne insisted the UK was "well placed" to handle the worldwide slowdown and said the Government would "act now so we don't pay later".

He was accused by Labour leader Jeremy Corbyn of having "declared war on the disabled" by confirming that £1.3 billion of £4.2 billion annual cuts due by 2020/21 would come from reductions to Personal Independence Payments (PIP).

Mr Corbyn said Labour would "fight to overturn these callous cuts" which were dubbed "morally reprehensible" by shadow chancellor John McDonnell.

Opposition to the move was illustrated by the decision of lifelong Tory voter Graeme Ellis to quit the party and make his views clear on the official site of the Conservative Disability Group, on whose executive he has served.

"This website is temporarily closed owing to Disability Cuts," a message read.

Mr Osborne also faced claims of making a cut "by the back door" as he revealed public sector employers will have to increase their contributions to unfunded pension schemes - such as those for the Army, NHS staff and teachers.