Budget 2013: George Osborne Warns Of 'Tough Choices' But Will Not Change Course On 'Austerity'


George Osborne braced the country for more "tough choices" in Wednesday's Budget but warned abandoning the austerity package would be a "disaster".

The Chancellor is under mounting pressure to change course and kick-start growth as the UK teeters on the brink of a triple-dip recession.

Writing in the Sun on Sunday, Osborne warned of "tough choices ahead"

An opinion poll suggests most voters - including more than a quarter of Conservative supporters - think his policies are failing.

But Osborne dismissed "miracle cure" calls for extra borrowing to cut taxes or finance a "spending spree" and vowed to "stay on the right track".

Writing in The Sun on Sunday, Osborne hinted he would do more to help homebuyers, business start-ups, apprentices and people saving with retirement.

Helping create jobs would mean "cutting tax rates and red tape, backing scientific advance, building new roads and broadband" and making the UK an attractive investment option, he said.

However he warned of "more tough choices" to be made on further slashing public spending from 2015 - with the scale of the squeeze to be unveiled in his statement.

"It won't be easy," he warned, amid rows between ministers over where the axe should fall.

Hopes the economy could grow in this quarter and thus avoid returning to recession were dealt a blow this week by a 1.5% fall in manufacturing output in January.

Former cabinet minister Liam Fox is leading Tory calls for a change of course - suggesting Corporation Tax be reduced to zero and far bigger cuts to public spending, notably welfare.

Other prominent backbench demands include cancelling a fuel duty rise due in the autumn and scrapping the beer duty escalator that automatically ups the price of a pint.

Osborne is tipped to announce extra investment in housebuilding and road projects - called for by leading business groups - and help for people to buy homes.

But he will not abandon "Plan A" by increasing borrowing to fund it - a move being floated within the coalition by Liberal Democrat Business Secretary Vince Cable.

Shadow chancellor Ed Balls said he would welcome extra borrowing to fund a cut in the basic rate of income tax to put more money into people's pockets.

But Osborne hit back: "I think the British people know there are no easy answers in today's world. They aren't fooled by the miracle cures peddled by the same snake oil politicians who got us into this mess.

"Labour's answer to Britain's borrowing problems is to borrow even more - that simply doesn't make sense.

"If there were easy options and miracle cures then of course I would take them, but sadly there aren't.

"With me you will not get a spending spree we can't afford. You won't get unfunded tax cuts that have to be borrowed.

"Instead I want to tell it straight: it's a hard road, it's longer than any of us hoped, but we're making progress.

"There are more tough choices ahead, but because of the plan we put in place we can already start to see the shape of a better future for our country.

"Turn back now and it will be a disaster. In next week's Budget we will stay on the right track."

The 2015/16 spending review will be published in June, but the total sum the Chancellor is demanding be slashed from budgets will be revealed on Wednesday.

Ministers have already begun lobbying to protect their departments and there is pressure on Osborne to remove the protection granted to the health, schools and aid budgets.

The Chancellor said the fresh round of reductions would be made "carefully, protecting the things people most depend on like the NHS and pensions" and fairly.

But he said it would mean "mean more tough choices in the months ahead" and stressed that there was still a need to "fix welfare" by cutting the cost of benefits.

"But it's the right thing to do because the alternative would be so much worse," he said.

"If the world thought we didn't have the resolve to stay the course then interest rates could soar - businesses would go bust and families would lose their homes, destroying people's dreams and aspirations. Our children would end up paying for our debts and even more, and we'd end up spending many billions more just on the interest payments we'd owe to the rest of the world."

The Chancellor also confirmed that the Budget would include moves to implement a large-scale devolution of funding to English regions to stimulate growth.

"I want to take forward Michael Heseltine's inspirational ideas on how to put local communities and businesses back in control of how money is spent in their area," he said of the Tory former cabinet minister's review.

"What he achieved in Liverpool or London's Docklands can be a model for our whole country."

One Budget measure already announced is the closure of a tax loophole which allows firms to dodge around £100 million a year in National Insurance payments.

Around 100,000 employees - mostly teachers, nurses and oil and gas workers - are believed to be paid via offshore payroll services and could be unknowingly ineligible for statutory sick pay.

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