George Osborne: more cuts to come in 'year of hard truths'

Spending must be cut permanently in order to bring taxes down, the chancellor will say

LAST UPDATED AT 08:40 ON Mon 6 Jan 2014

BRITAIN faces more "painful cuts" in order to put the economy on a sustainable footing, George Osborne is due to announce.

In a speech in Birmingham later today, the chancellor is expected to say that permanently cutting spending is the way to permanently cut taxes. 

The deficit is down by a third but Britain is borrowing about £100bn a year, he will say, and using half of that money to pay the interest on its debts.

"We've got to make more cuts,” he is expected to warn, as he sets out a five-point plan to help the economy. “That's why 2014 is the year of hard truths."

He will ask: "Do we say: 'The worst is over, back we go to our bad habits of borrowing and spending and living beyond our means and let the next generation pay the bill'?
"Or do we say to ourselves, 'Yes, because of our plan, things are getting better – but there is still a long way to go and there are big, underlying problems we have to fix in our economy'?"

Speaking on the BBC's Andrew Marr Show yesterday, Prime Minister David Cameron suggested there could be further cuts to housing benefits. He also refused to rule out scrapping provisions for elderly people, which include free TV licences, bus passes and winter fuel allowances.

However, Cameron has promised to keep the so-called "triple lock" on pensions until at least 2020 if the Tories remain in power. This would mean increasing pensions annually in line with inflation, average earnings or 2.5 per cent, depending on which is highest. With 16 months until the next election, he suggested the Conservatives would be pledging more welfare cuts and more tax cuts in the party’s 2015 manifesto.

Meanwhile, Labour has said Osborne should admit his policies have failed and have led to a cost-of-living crisis. Chris Leslie, shadow chief secretary to the Treasury, said that while "millions of ordinary working people are worse off under the Tories", Osborne and Cameron were "paving the way for yet another top rate tax cut for millionaires". · 

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Why is a high spend, high tax policy not sustainable?

(That, "not sustainable", nothing else).

Well the lefties and the righties now understand that the profligate, anachronistic "British" royals will NOT be facing cuts. ......On the other hand old Etonian Cameron "suggested" that their could be more benefit cuts to come, so perhaps after all the royals will also be on the receiving end of a "hard" time reduction in their £200millions benefit hand-out EACH year!! Nice for some innit!

I don't plan to vote Tory, but respect Osborne's honesty in saying that things are going to continue to be bad, and may get worse, as the year before the General Election starts. I'm glad he's not borrowing loads, because that debt will come back to bite us sooner or later, and when it does whoever is chancellor will have two choices: to make austerity worse, or to print so much money that savings lose a great deal of their value.

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