07:26 Monday 14th March 2016
BBC Radio Cambridgeshire
DOTTY MCLEOD: The Chancellor George Osborne warning of further spending cuts in his Budget on Wednesday. He says economies are more uncertain than at any time since the financial crisis of 2008, and Britain must live within its means. I’m joined by our Political Correspondent Paul Rowley. What can we expect then Paul?
PAUL ROWLEY: Not much it seems Dotty. It’s quite a gloomy forecast by our Chancellor, who’s sounding as miserable as Arsene Wenger was last night when Arsenal were knocked out of the FA Cup. Because only four months ago Boy George was positively buoyant in his Autumn Statement, because he found an extra 27 billion quid down the back of the Treasury’s sofa. Now he’s admitting there is an £18 billion black hole in the finances. Not his fault of course, well he says it’s not his fault. He’s blaming the slow-down in the world economy, China in particular, the fall in oil prices, which may benefit us as motorists but not necessarily help the international economy, and the political crisis and instability in the Middle East. This is going to mean he’s going to have to slash his budget by more than £4 billion, not just for the coming year, but for each of the next four years, if he’s to reach his target of balancing the books and eliminating the deficit by the time of the next election.
DOTTY MCLEOD: So we’re going to have some cuts announced; we know that. Is there going to be some European slant to this though?
PAUL ROWLEY: I suspect the word Brexit will not cross his lips during the course of this Statement on Wednesday Dotty. But the fear of the UK leaving the European Union will be at the forefront of everything he’s doing. He won’t want to upset Tory MPs, many of whom are Eurosceptics and want out. And that’s why he’s dropped plans to cut tax relief on pension contributions, which was floated some weeks ago. That would have been a good earner for him. It would have brought in several billion pounds. Similarly even though there may be an economic argument for increasing fuel duty, it’s not gone up for the last five years, petrol prices are now at their lowest for a decade, I suspect he may hold off on that, at least until after the referendum. But should the British people decide to go it alone, I’m almost sure that David Cameron would have to stand down, irrespective of what he’s saying, and also it could well be the Chancellor’s last Budget, because he’s tied in to all this. And it would also mean frankly bang goes his chances of succeeding ‘Call Me Dave’ as Conservative Leader if the Brexiteers as they’re called get their way. That would help his great rival Boris Johnson you would have thought. So there’s an awful lot riding on this Budget Dotty, most of it political rather than economic.
DOTTY MCLEOD: But some economic measures being announced, and indeed this morning David Cameron expected to talk about a new savings scheme specifically for low paid workers. What’s that all about?
PAUL ROWLEY: Well it sounds quite a novel idea. If you’re working and your pay is topped up by tax credits, you will be entitled for the first time to take part in what’s going to be called The Help to Save Scheme. If you put away £50 a month for two years, investing in total £1200, you get an interest rate of 50%, which is something you don’t find on the High Street. If you’re a low earner you’re probably not paying tax and interest on that either, so you get £600 back. And you can do this for a total of four years. It’s clever politics. The Opposition parties can’t really criticise it as a concept, although I suspect a lot of people in Cambridgeshire on low incomes are probably throwing things at the radio at the moment saying well I’d love to save 50 quid a month, but have you seen how much it costs to rent, have you seen my gas bill, do you know how much it costs to bring up kids these days? I’ve got council tax to pay as well. Frankly, I just can’t afford it.
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