Spending Review: Osborne defends cuts ‘fairness’

Chancellor George Osborne has defended the “fairness” of his UK spending cuts after Labour claims they were reckless and would hit the poorest hardest.He told the BBC that including Budget measures, the top 10% of earners would be hit hardest but everyone was making a contribution to cutting the deficit.He said “the path to economic ruin” lay ahead if the deficit was not tackled.Labour called the £81bn cuts – the biggest since the 1970s – a “reckless gamble” with the economy.It has been estimated that the measures will lead to the loss of 490,000 public sector jobs, but Mr Osborne told BBC Breakfast he expected many more private sector jobs to be created over the four year cuts programme.Mr Osborne told MPs on Wednesday that he had acted to restore “sanity to our public finances” and deal “decisively” with Britain’s record peacetime deficit.Fair choices’The government says public debt interest repayments now total £120m a day, or £43bn a year.Hours after Mr Osborne’s speech, crowds of demonstrators gathered outside Downing Street to protest against the cuts, which the TUC has said will have a devastating social impact.The Local Government Association say they estimate 100,000 jobs will be lost in local authorities as a result of a planned 7.1% cut to government funding.According to the Institute for Fiscal Studies (IFS) think tank, the Spending Review represent the deepest six-year period of cuts since the 1970s – not since World War II as was being suggested ahead of Mr Osborne’s statement – but it would hit the poorest the hardest.
Mr Osborne told BBC Radio 4’s Today Programme he had made a conscious decision to “curb the rise on the benefits bill” to pay for continued investment in the NHS and schools.

“That has involved some hard choices, but I think they are fair choices,” he said.”We have got to put the welfare state on a sustainable footing and we have got to reform it so that it always pays to work.”But Shadow Chancellor Alan Johnson, for Labour, challenged the chancellor’s claim that the cuts were a necessary response to Britain’s financial situation, saying: “It is not unavoidable and it is certainly not fair.”He said he did not think Mr Osborne was cutting spending for ideological reasons, even if his actions were “reminiscent” of the Conservative government of the 1980s.But he said the chancellor’s claim to have “pulled the country back from the brink of bankruptcy” was “total nonsense” and there was a way to cut the deficit “without diminishing our society and our communities”.

“There is great cruelty in this and great unfairness being introduced into our society,” he added.Credit ratingIn his Spending Review statement, Mr Osborne unveiled plans to cut a further £7bn from the welfare budget – on top of £11bn cuts already announced – which include putting a time limit on some incapacity benefits and changes to tax credits and housing benefit.This had enabled him to restrict departmental spending cuts to an average of 19% over four years – not the 20% he said Labour had planned, he told MPs.Under the changes, the Employment and Support Allowance, which replaced incapacity benefit, will be withdrawn after a year for those claimants judged able to work.
In addition, those aged under 35 will only be able to claim housing benefit for a room in a shared house rather than their own flat. The mobility allowance will also be cut for care home residents.

The working tax credit rules will also be tightened so that couples with children will have to work at least 24 hours a week between them in order to claim it.Mr Osborne also announced that the state pension would rise to 66 for both men and women in 2020 – six years earlier than planned – and there would be a £3.5bn increase in public sector employee pension contributions.These plans were unveiled alongside other changes, including a permanent bank levy, tax changes and cuts to child benefit for higher earners.Banks will find out later how a new levy on their finances will operate.

However, Labour said the Treasury’s own figures showed that the poorest 10% of people would pay more to reduce the deficit than everyone other than the richest 10%.The Institute for Fiscal Studies also suggested it was still “quite possible” that the chancellor would have to make further spending cuts or put up tax in order to meet his target for tackling the deficit – if it turns out to be larger than the official estimate.However, the Fitch ratings agency said Mr Osborne’s measures should help the UK retain its prized triple A credit rating – Bbc