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IFS says Osborne may have to cut public spending even further to raise £7bn

GEORGE Osborne might have to cut public spending even deeper to pay for £7 billion of uncosted spending commitments, Britain's leading economic think-tank has claimed, confirming living standards will be lower at the end of this parliament in 2015 than they were at the start in 2010.

The Institute for Fiscal Studies also claimed the Chancellor was relying on "uncertain" revenues from a crackdown on tax avoidance and an increase in the bank levy to fund a series of giveaways in this week's Autumn Statement.

Announcements made in the spring Budget, together with Thursday's economic statement, such as not increasing fuel duties, giving free school means to English primary schoolchildren and the marriage tax break, would add an extra £7bn of spending from 2015/16.

Paul Johnson, of the IFS, said: "The Chancellor continues to make specific promises on spending increases while stating that he will keep total spending at the same level. He can't keep doing that.

"While the costs of his tax cuts are pretty definite," he explained, "the benefits from his anti-avoidance measures, and indeed of the increase in the bank levy, are rather less certain."

The IFS also warned that Mr Osborne's plans to return the budget to surplus by 2018/19 implied further hefty cuts to public services over the next five years.

Last night, Labour's Chris Leslie said: "The independent verdict from the IFS is that people will be substantially worse off after five years under David Cameron.

"That's why George Osborne's Autumn Statement has failed millions of ordinary people across Britain. It had no plan to tackle the cost-of-living crisis and earn our way to higher living standards for the many and not just a few."

The Shadow Chief Secretary to the Treasury said the think-tank had confirmed real wages were £1600-a-year lower than in May 2010 and that incomes would be substantially lower at the end of this Parliament than at the start.

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