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| George Osborne's spending plan: seven more years of pain | George Osborne's spending plan: seven more years of pain |
| (35 minutes later) | |
| The chancellor, George Osborne, warned on Monday that austerity may continue until 2020 as he set out plans for a new fiscal mandate that will require further welfare cuts to build an overall budget surplus by the end of the next parliament. | The chancellor, George Osborne, warned on Monday that austerity may continue until 2020 as he set out plans for a new fiscal mandate that will require further welfare cuts to build an overall budget surplus by the end of the next parliament. |
| In his keynote speech to the Conservative party conference in Manchester, he said the budget surplus, a post-war rarity for UK governments, could be achieved without raising taxes, but added: "We have to confront the costs of modern government and cap working age welfare." | In his keynote speech to the Conservative party conference in Manchester, he said the budget surplus, a post-war rarity for UK governments, could be achieved without raising taxes, but added: "We have to confront the costs of modern government and cap working age welfare." |
| Osborne's highly political move is designed to set out a fiscal target that Labour cannot match and refocus the public mind on the long-term battle to bring public spending under control – territory that the Tories regard as their own. | Osborne's highly political move is designed to set out a fiscal target that Labour cannot match and refocus the public mind on the long-term battle to bring public spending under control – territory that the Tories regard as their own. |
| In a speech that repeatedly reflected the Tories' need to find a response to Labour leader Ed Miliband's conference pledges last week, Osborne also set out plans to freeze petrol duty until after the election and blocked the planned 2p rise in fuel duty next September. | In a speech that repeatedly reflected the Tories' need to find a response to Labour leader Ed Miliband's conference pledges last week, Osborne also set out plans to freeze petrol duty until after the election and blocked the planned 2p rise in fuel duty next September. |
| Tory strategists believe the commitment to a budget surplus will provide the biggest political dividends in the runup to the 2015 election. | Tory strategists believe the commitment to a budget surplus will provide the biggest political dividends in the runup to the 2015 election. |
| Osborne said the twin fiscal mandate would be to achieve a budget surplus by the end of the parliament and to ensure capital spending grows at least in line with GDP. His officials said the two pledges could only be met by "extremely tight, sustained controls on departmental spending and by capping welfare through the parliament". | Osborne said the twin fiscal mandate would be to achieve a budget surplus by the end of the parliament and to ensure capital spending grows at least in line with GDP. His officials said the two pledges could only be met by "extremely tight, sustained controls on departmental spending and by capping welfare through the parliament". |
| The budget deficit in 2013-14 is set to be £120bn and is forecast to fall to £43bn in 2017-18, so further cuts will be needed in the following three years. | The budget deficit in 2013-14 is set to be £120bn and is forecast to fall to £43bn in 2017-18, so further cuts will be needed in the following three years. |
| Labour has so far only said that it will match coalition spending for 2015-16, but it would be a large ideological leap for it to embrace a budget surplus by the end of the next parliament, especially since the triple lock on pensions will see some welfare spending rise. | Labour has so far only said that it will match coalition spending for 2015-16, but it would be a large ideological leap for it to embrace a budget surplus by the end of the next parliament, especially since the triple lock on pensions will see some welfare spending rise. |
| The Tories presented their proposals as a break with the past, pointing out that the British government has only run a surplus in seven of the last 50 years and three of the last 20 years. Among G8 nations, only Germany is in surplus. Setting out the virtues of balancing the books, Osborne said: "Never again should anyone doing my job be so foolish, so deluded, as to believe that they have abolished the age-old cycle of boom and bust. | The Tories presented their proposals as a break with the past, pointing out that the British government has only run a surplus in seven of the last 50 years and three of the last 20 years. Among G8 nations, only Germany is in surplus. Setting out the virtues of balancing the books, Osborne said: "Never again should anyone doing my job be so foolish, so deluded, as to believe that they have abolished the age-old cycle of boom and bust. |
| "So I can tell you today that when we've dealt with Labour's deficit, we will have a surplus in good times as insurance against difficult times ahead. Provided the recovery is sustained, our goal is to achieve that surplus in the next parliament. That will bear down on our debts and prepare us for the next rainy day." | "So I can tell you today that when we've dealt with Labour's deficit, we will have a surplus in good times as insurance against difficult times ahead. Provided the recovery is sustained, our goal is to achieve that surplus in the next parliament. That will bear down on our debts and prepare us for the next rainy day." |
| Saying he was offering "a serious plan for a grown-up country", he insisted: "This time we are going to run a surplus. This time we are going to fix the roof while the sun shines." | Saying he was offering "a serious plan for a grown-up country", he insisted: "This time we are going to run a surplus. This time we are going to fix the roof while the sun shines." |
| Labour claimed Osborne had rebranded a new fiscal rule only after totally failing to meet what was in effect a similar set of deficit targets due to have been met by the end of this parliament. | Labour claimed Osborne had rebranded a new fiscal rule only after totally failing to meet what was in effect a similar set of deficit targets due to have been met by the end of this parliament. |
| The new target is more stringent than the discarded ones in two respects: Osborne would not have the option of cutting capital spending faster than GDP growth and he would be required to reduce the national debt in cash terms rather than as a percentage of GDP. | The new target is more stringent than the discarded ones in two respects: Osborne would not have the option of cutting capital spending faster than GDP growth and he would be required to reduce the national debt in cash terms rather than as a percentage of GDP. |
| Battling to strike the right balance between optimism and complacency, Osborne said he was optimistic about the UK's economic prospects, saying the "sun had started to rise above the hill" after years of recession and flat growth. | Battling to strike the right balance between optimism and complacency, Osborne said he was optimistic about the UK's economic prospects, saying the "sun had started to rise above the hill" after years of recession and flat growth. |
| But he said much more needed to be done to ensure improved living standards for this generation and the next and warned that family finances would not be "transformed overnight". | |
| "There is no feeling at the conference of a task completed or a victory won," he said. "The battle for turning Britain round is not even close to being over." | "There is no feeling at the conference of a task completed or a victory won," he said. "The battle for turning Britain round is not even close to being over." |
| In other announcements at the conference on Monday, the home secretary, Theresa May, said the party was prepared to withdraw from the European convention on human rights after the next election and detailed a fresh drive to curb the appeal rights of 70,000 people who face deportation each year. | In other announcements at the conference on Monday, the home secretary, Theresa May, said the party was prepared to withdraw from the European convention on human rights after the next election and detailed a fresh drive to curb the appeal rights of 70,000 people who face deportation each year. |
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