George Osborne’s cuts to the welfare budget could be avoided if he would aim for a “slightly smaller surplus”, according to the official watchdog of the Budget.
Robert Chote, Office for Budget Responsibility chairman, told MPs at the Treasury Committee on Tuesday that the Chancellor could choose to aim for a slightly smaller surplus this year or try to find the money from elsewhere.
Mr Osborne must now seek to find another £4.4 billion in savings after he was forced into a humiliating u-turn over personal independence payments, or disability benefit, on Monday.
Mr Chote said that the u-turn does not change the OBR’s forecast that the Chancellor only has a 55 per cent probability of cutting the deficit, or the gap between the Government’s tax income and spending.
The calculation is made using a fan chart, Mr Chote said, though he added that if you drilled down into the numbers, the likelihood of Osborne meeting his target would be slightly less.
Helen Goodman, the Labour MP, confirmed with Mr Chote that the £1.3 billion a year hole in the Budget will have to be found through tax increases, cuts to spending or a change in the Chancellor’s plans.
Mr Osborne has stuck to his plan to achieve a budget surplus by 2019/20, requiring a swing of more than £31 billion in the public finance from a deficit of £20 billion or more in 2018/19.
To get there, Osborne has said that he will seek £3.5 billion in as-yet-unspecified spending cuts.
Or he could ease the pain of his own targets by aiming for a smaller surplus in the short term.
“The Chancellor has clearly seized a £10bn surplus as 2019-20 as a desirable feature of successive forecasts. It is for others to judge whether the degree of fine-tuning required is a sensible response to the noise in the pre-measures forecasts, or not," Mr Chote said.
Andrew Tyrie, Conservative MP, replied: “It seems there is a good degree of logic to taking a longer-term view.”
