Chancellor George Osborne confirmed the austerity drive in public finances would have to continue through to the end of the next Parliament.
In his Budget speech today, Mr Osborne said that in addition to spending cuts slated for this year and next - to the end of the current five-year Spending Review period - cuts would need to extend through the lifetime of the next Parliament too.
Mr Osborne said: 'Securing Britain’s economic future means there will have to be more hard decisions; more cuts.'
He said the deficit was 11% before the Coalition, took office, was now 6.6% lower than forecast and down by a third, and would be halved from 2010’s level to 5.5% next year.
Mr Osborne claimed reforms to public service pensions, in line with the recommendations of Lord Hutton, would deliver annual £1bn savings. He added pay restraint in the public sector remained key to sound finances.
Calling for the continued ‘prudent management of departmental budgets,’ Mr Osborne confirmed the Treasury would ‘lock in’ and make permanent the £1bn additional Whitehall cuts announced in the last Autumn Statement.
He added the Cabinet Office would lead a search to drive further Whitehall efficiencies. However, against the grain of additional departmental cuts, the chancellor pledged to increase HM Revenue and Customs’ budget to chase tax avoiders and tackle non-compliance.
The chancellor also announced full details of benefits affected by the welfare cap would be announced ahead of a vote in Parliament next week.
He confirmed the permanent cup on welfare spend would be set at £119bn in 2015/16 and would increase, only in line with forecast inflation, to £127bn in 2018/19.
Mr Osborne said: ‘We must bring our national debt substantially down.’ But he argued running a balanced current budget could no longer achieve this aim, and that future Governments would need to run a fiscal surplus in good years.
He cited borrowing forecasts from independent Government economic forecasters the Office for Budget Responsibility (OBR), suggesting Government borrowing was set to be around £24bn less than at the time of December’s Autumn Statement - a figure equivalent to the combined spend of police and criminal justice.
Total debt interest payments would be cut by £42bn from faster deficit reduction measures, he added.
Based on this trajectory, the Government would require no borrowing in 2018/19, and would instead run a small £5bn surplus, the chancellor said.
Mr Osborne also announced a new charter for Budgetary Responsibility would be brought before Parliament this autumn.
Public finance experts believe the Charter for Budget Responsibility would set out strict spending envelope for any future government, as part of efforts to bring national debt down.
