I’ll use surplus to fund tax cuts, says Osborne

GEORGE osborne has said he will pay for tax cuts for millions by raiding a budget surplus he expects to have built up by 2018.

The Conservatives were accused of making unfunded promises last autumn when they pledged £7billion of tax cuts, including raising the threshold at which people pay the 40p income tax rate to £50,000.

David Cameron said at his party conference that the cuts – which would also see the personal allowance rise to £12,500 – will happen by 2020.

Yesterday the Chancellor insisted the plans would be affordable because the cost would be met by taking money from a surplus in the public finances that he expects to build up by 2018. By 2020, he predicted, this surplus will reach £23billion.

Critics say raiding the surplus will delay paying off the national debt – meaning it will attract even more interest. But Mr osborne said tax cuts would be good for the economy.

The comments were made in Manchester as the Chancellor and Prime Minister pledged measures to boost the economy of the North of england. Mr Cameron said the UK could only have a strong economy if ‘no part of the country is left behind’.

He promised 100,000 more jobs in the North-West in the next parliament, and a £4.5billion investment in transport to benefit the region. He said people in the area – a key general election background – would be better off by an average £2,000 in real terms by 2030.

Mr Cameron also promised to make the North-east a ‘global centre’ for science and to raise the quality of life.

The Chancellor did not say whether he would wait until the 2018-2019 financial year to cut taxes, or do so before the public finances were officially back in surplus.

‘The spending plans we set out show that you can deliver a surplus and the forecast surplus is £23billion by the end of this decade,’ he said.

‘I think it is perfectly consistent to have spending plans that deliver the surplus, that reduce the national debt and to deliver those tax cuts that we have promised because they are all part of the long-term economic plan.’