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Osborne plays down prospects of tax cuts
10:17am Monday 2nd December 2013 in Business News
GEORGE Osborne has played down the prospect of significant tax cuts or extra spending commitments in his Autumn Statement this week as he promised to deliver a responsible recovery.
The Chancellor insisted the coalition would keep the public finances under tight control, saying moves to cut energy bills and give home buyers 1,000 grants for insulation would be fully funded through a crackdown on tax dodgers.
The comments came as ministers made a concerted bid to blunt the Labour attack on cost of living.
The coalition has been on the back foot over energy bills ever since Ed Miliband pledged to freeze prices for 20 months if he wins in 2015, with public fury greeting news that suppliers were hiking prices by up to 10 per cent.
Signs of growth have led to speculation that Mr Osborne could have room to ease the pressure on families after years of austerity.
But although he is expected to curb business rates and target other help at small firms, the Tory MP stressed he was still having to take difficult decisions.
"In the Autumn Statement I will say the job is not yet done because we have got to make sure we go on taking the difficult decisions to secure the recovery," he said.
"We also want a responsible recovery. We want to learn from the mistakes of the past and not see a re-emergence of those problems in the financial system that brought this country to its knees."
The changes to environmental levies will see the cost of the Energy Company Obligation (ECO) scheme halved by giving the Big Six power firms two years longer to hit targets.
Other policy charges will be funded from general taxation in future. EDF has welcomed the move and indicated that it is not likely to increase prices again before 2015, with other firms expected to follow suit.
To ensure carbon emissions do not rise as a result of the deal, anyone buying a home will be eligible for the 1,000 grant for energy efficiency measures, such as installing insulation or replacing the boiler. The sum could be even higher if the property needs a lot of work.
Mr Osborne dismissed the idea that energy companies will pocket the reduction in government levies without bringing down bills.
"We are absolutely insistent that this is passed on... I am pretty clear with you that it is going to happen," he said.
He refused to give details of the new drive against tax avoidance but said people were wrong to be sceptical about whether such action really raised revenue.
"The money will come from additional taxes that we will raise from dealing with tax avoidance," he said.
"This Government has taken step after step and the amount of tax we collect from people who were previously avoiding their tax goes up by billions of pounds over this parliament."
The Chancellor attacked Labour's policy of an enforced freeze, saying that ministers could not control international energy markets.
"We are doing it in the way that government can do it, which is controlling the costs that families incur because of government policies, he said.
"We are also doing it in the way that is not going to damage the environment or in any way reduce our commitment to dealing with climate change."
He went on: "It is all about providing people with carrots not sticks and I think that is the right way for this country to go green."
Liberal Democrat party president Tim Farron said it had been a struggle to persuade the Tories that funding for environmental measures should be maintained at the same level.
"I was as despondent as many reasonable people when David Cameron's panicked reaction to the issue in the last month or so was to decide to ditch all the green stuff, and its been a job and a half over the last month to make sure we hold him very much to those sort of pledges and the green core of this Government.
"That is why were not scrapping the investment, were just making sure its funded from general taxation."
He added: "The notion we should stop insulating the homes of elderly people or indeed stop investing in British manufacturing to the green industry is something that I absolutely, resolutely oppose.
"But I'm very pleased the funding is still going to be made available for all that and instead come from general taxation."
Chief Secretary to the Treasury Danny Alexander, another Lib Dem, stressed that the new measures would be paid for by tax dodgers and would not sacrifice a single gram of carbon.
Addressing staff at the VW National Training Centre in Milton Keynes today, Mr Miliband will dismiss the Government's energy levies shake-up as smoke and mirrors.
The Labour leader is to insist that the cosy deal reached with the Big Six power firms will still see bills going up this winter.
"A lot of people think that David Cameron and George Osborne are trying to catch up with One Nation Labour on the cost-of-living crisis: from pay-day lending to energy bills," he will say.
"But the truth is they are struggling to catch up with the British people who live at the sharp end of an economy where the link between the wealth of our nation and family finances has been broken. That is the cost-of-living crisis that is happening in our country today.
"That is how this Government and any government will be judged. And it is how the Autumn Statement will be judged."
Shadow chancellor Ed Balls insisted the Government should get a grip and impose a freeze at the expense of the energy companies, rather than transferring costs to general taxation.
"Why do David Cameron and George Osborne run scared in the face of energy companies who have been putting up bills month by month, year by year?" he said.
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