IFS warns on Osborne Budget plans


Britain Economy

Chancellor George Osborne may have difficulty in making his Budget sums add up, a leading economic think-tank has warned.

The Institute for Fiscal Studies said he was relying on "uncertain" revenues from a crackdown on tax avoidance and an increase in the bank levy to fund a series of giveaways in his Autumn Statement yesterday.

Mr Osborne told MPs that the measures he had set out were "fiscally neutral" - leaving the overall level of projected Government spending unchanged.

However, IFS director Paul Johnson said the Chancellor's cuts in fuel duty, employers' National Insurance contributions and business rates, and his introduction of a tax break for married couples would cost the Exchequer around £2.5 billion a year.
The increase in the bank levy is only expected to raise around £500,000, while the new anti-avoidance measures are slated to bring in an "inevitably uncertain" £1 billion - leaving a £1 billion shortfall.

At the same time, the Treasury is assuming that the £750 million a year cost of the Liberal Demorcats' free school meals for five- to seven-year olds will be swallowed up into the "overall spending envelope" from 2016-17 - which would mean even deeper cuts in other spending.

"The Chancellor continues to make specific promises on spending increases whilst stating that he will keep total spending at the same level. He can't keep doing that," Mr Johnson said.

"Whilst the costs of his tax cuts are pretty definite, the benefits from his anti-avoidance measures, and indeed of the increase in the bank levy, are rather less certain."

Autumn Statement 2013 - who were the winners and losers?

Autumn Statement 2013 - who were the winners and losers?