The UK’s new Tory Chancellor, George Osborne, has said the first emergency budget will be unveiled on June 22 and a new independent Office for Budget Responsibility (OBR) has been formed that will make forecasts of growth and borrowings by the government.
The Emergency Budget would be released exactly 42 days from the date of formation of the new government. Prime Minister David Cameron had earlier promised to present the Budget within 50 days of the formation of the new government.
Addressing the media here on Sunday, Osborne said that with the OBR in place, the UK would for the first time have a "truly independent assessment of the state of the nation’s finances". Noted British economist Alan Budd would head the OBR. He was the founding member of Bank of England’s Monetary Policy Committee formed in 1997 by the then Labour government.
"We need to fix the budget to fit the figures, not fix the figures to fit the budget. To do this, I am today establishing a new independent Office for Budget Responsibility. For the first time we will have a truly independent assessment of the state of the nation’s finances. So they can get to work immediately, the OBR will initially operate on a non-statutory basis, just as the Monetary Policy Committee operated before it was enshrined in legislation," said Osborne. At 38, he is the youngest chancellor of the exchequer (finance minister) in the UK in the last 120 years.
Summarising the new government’s plans to get to work on war-footing, Osborne said, in a space of one week since the Cameron-led coalition government was formed, it has already changed the way budgets are made, has created a new independent office to monitor government spending, set in motion the creation of the first independently audited national balance sheet and plans to cut £6 billion worth of wasteful spending without affecting frontline services. The government also announced that it would re-examine all spending approvals made since January 1 by the previous Labour government.
"If we don’t get on top of our debt, every family in Britain will be poorer and the dreams of millions of young people will be dashed. Mortgages will be higher, businesses will go bust and debt interest will become one of the largest items of government spending. We urgently need to restore confidence in our economy. And we need the determination to act quickly in the short-term in order to establish credibility for the longer term," said Osborne.
The government’s chief secretary would meet the Cabinet colleagues this week to agree on £6 billion of cuts in this year’s spending. "This is to make an immediate start on tackling the UK’s unprecedented £163 billion deficit, boost credibility and help keep interest rates lower for longer," HM Treasury said today.
As part of cutting government spending, the new Conservative-Lib Dem government last week agreed to cut ministers’ pay by 5 per cent and freeze it over the next five years of the government. Ministers’ pay would also not get any raise to reflect inflation as well.
Yesterday, Cameron announced that bonuses for senior civil servants and NHS managers would be cut by two thirds. This intends to save around £15 million. The new government is also expected to raise value added tax to 20 per cent from the present 17.5 per cent.
On May 11, the new coalition government formed by Conservatives and Liberal Democrats was put in place, ending a 13-year Labour-led government headed by Gordon Brown.