Osborne to 'hunt down' tax evaders and raid pensions of the wealthy – but faces battle with Lib Dems to freeze welfare payments
Reports that welfare payments move has been vetoed by Clegg and CableChancellor could announce 1% rise in dole and other state handoutsHe would save only half the 4bn he'd hoped to get over next two yearsTells Andrew Marr Show: 'To turn back now would be a complete disaster'He admits it's taking
longer to recover from financial crisis than he hopedPoll: Two thirds of Britons would replace Osborne with an entrepreneurMiliband described Osborne's U-turn Budget as an 'omnishambles' in April
13:07 GMT, 2 December 2012
George Osborne today announced a heavier crackdown on tax avoidance by global companies with British operations amid widespread
condemnation of firms such as Starbucks, Google and Amazon.
The Chancellor said he plans to bolster the
Inland Revenue team that deals with multinationals after outrage following revelations that the three huge firms pay little or no corporation tax in the UK.
It came as he fought a rearguard action
to force through a freeze in welfare payments amid reports that the move
has been vetoed by Liberal Democrat Cabinet colleagues Nick Clegg and
Chancellor: George Osborne (pictured on The Andrew Marr Show on BBC One today) was fighting a rearguard action last night to force through a freeze in welfare payments
Mr Osborne told BBC One's Andrew Marr Show: 'I am going to
be announcing tomorrow extra investment in the part of the Inland
Revenue that tackles tax avoidance by multinational companies.
'OSBORNE OUT, BRANSON IN!'
More than two thirds of Britons would replace George Osborne with an entrepreneur and their top choice is Sir Richard Branson (right), a survey has found.
With 49 per cent feeling worse off now than they did a year ago, 86 per cent of those questioned said they would change the Chancellor of the Exchequer according to Gocompare.com's poll.
The top favourite to replace him was Virgin boss Sir Richard Branson, who recently clashed with the Government over the bid for the West Coast rail franchise.
Lord Alan Sugar was the second choice as 23 per cent of the 2,000 Brits surveyed chose The Apprentice's frontman to take charge.
He said he will also ensure 'internationally we have the right rules and it is
actually Britain who has been working with Germany and France to get
those rules on the international table'.
Mr Osborne added: 'It will be a big
priority for the G7, G8, which we host next year. So we are doing those
things but let me just say we can't tackle this
by pricing Britain out of the world economy.
'If we make our taxes less
competitive that will just mean more companies stay out of Britain'.
Starbucks, which has more than 700 outlets in Britain, is understood to have met with HM Revenue & Customs following a customer boycott to discuss increasing the tax it pays.
Mr Osborne's plans come as it emerged today – after he hosted a private tour of Downing Street for Dr Dre last month – that one of the US rapper’s firms has a low UK tax liability thanks to its structure, reported the Sunday Times.
Mr Osborne also admitted it was taking longer for Britain to recover from the financial crisis than he hoped today amid warnings that the Government would miss its key economic targets.
‘We had two targets, one was to get debt share falling as a share of national income by 2015/16 and also to balance the current budget,’ he told The Andrew Marr Show.
‘It is clearly taking longer to deal with Britain's debts, it's clearly taking longer to recover from the financial crisis than one would have hoped – but we have made real progress.’
Government sources say the Chancellor could announce the dole and other state handouts may go up by more
than one per cent – close to the rise in earnings – after the Lib Dems
claimed a freeze would be ‘cruel’ to the poor.
would mean he would save only half the 4billion he had hoped to get
over the next two years to help dig the UK out of the red.
The Chancellor, strongly backed by Work and Pensions Secretary Iain Duncan Smith, wanted to freeze most state benefits, with pensions and disability the main exceptions, to try to cut the Government’s mounting deficit.
Protest: Mr Osborne is thought to have shelved plans to withdraw housing benefit for the under-25s after Lib Dem objections led by Vince Cable (pictured)
Instead, he faces having to agree to a rise of about one per cent to win Lib Dem approval for his Autumn Statement on Wednesday.
Welfare payments usually go up in line with prices. But last year that resulted in a massive five per cent leap, while workers had to make do with pay rises of less than half that.
Mr Osborne argued that it was grossly unfair for the income of those out of work to go up by more than those in work. Immediately after the five per cent benefit rise, inflation fell dramatically.
He and Mr Duncan Smith wanted to redress the balance – and save 4 billion – by using the Autumn Statement to announce a freeze of key benefits for two years.
An increase of more than one per cent would be a setback to Mr Osborne’s publicly stated aim of reducing the welfare budget by 10 billion over the next five years.
Conservative officials denied they had caved in, claiming that a one per cent rise was ‘a major improvement’ on last year’s five per cent.
And welfare campaigners are certain to complain that it represents a real-terms cut in the standard of living for those on benefits.
Treasury sources last night said that no final decision had been made, though the Lib Dems claim they have won a key concession in the Coalition tug-of-war over the Autumn Statement.
Mr Clegg dug his heels in over the welfare freeze plan after David Cameron objected to the Lib Dems’ demand for a ‘mansion tax’ on homes worth more than 1million.
Opinions: Deputy Prime Minister Nick Clegg dug his heels in over the welfare freeze plan after David Cameron objected to the Lib Dems' demand for a 'mansion tax' on homes worth more than 1million
The Chancellor was prepared to accept a
watered-down version of the mansion tax in return for a welfare freeze,
but Mr Cameron complained it would hit Tory voters in the Home Counties,
where property prices are high.
OSBORNE: EVERYONE MUST HELP
Mr Osborne said his approach to Wednesday's Autumn Statement is based on the principles of staying 'on the right track', everybody being 'in this together' and 'preparing for tomorrow'.
'The economic situation we and the rest of the world face remains very difficult,' he told the Sun. 'After the biggest financial crisis in our history it was always going to be a hard road to recovery. But we are making progress.'
Mr Osborne said: 'Everyone must make a contribution to dealing with our debts – from the richest to those on benefits.'
He added: 'We are hunting down those who evade tax wherever they try to hide.'
Mr Osborne told The Andrew Marr Show this morning that he would stick with his deficit-reduction programme when he
presents a half-yearly fiscal statement, despite weak economic growth.
'It's clearly taking longer to deal with Britain's debts, it's clearly taking longer to recover from the financial crisis than anyone would have hoped, but (to turn back now) would be a complete disaster,' he told the BBC One show.
Mr Osborne is also understood to have shelved plans to withdraw housing benefit for the under-25s, which would have saved 1.5 billion, after Lib Dem objections led by Business Secretary Mr Cable.
Lib Dem anger over Tory welfare cuts surfaced last month when former Lib Dem Minister Sarah Teather denounced them as ‘immoral’.
Mr Osborne is expected to unveil other measures to meet Lib Dem calls for the well-off to pay more tax. But Government sources say Lib Dem plans to slash pension tax relief for high-earners from 50,000 to 30,000 have been turned down.
Rivals: Shadow Chancellor Ed Balls (left, with Mr Osborne, right) said it was time to 'change the medicine, or change the doctor'
They refused to comment on claims that stamp duty on multi-million-pound home purchases could be increased. The cost of welfare spending has surged by almost eight per cent in the past year, far outpacing the rise in average pay.
'George Osborne's failed policies will mean a difficult Christmas for families'
Shadow Chancellor Ed Balls
Total welfare spending, including pensions, has risen 15 per cent over the past three years.
Shadow Chancellor Ed Balls said it was time to ‘change the medicine, or change the doctor’.
He told the Sunday Mirror: ‘George Osborne's failed policies will mean a difficult Christmas for families, but millionaires will raise a toast to the Chancellor to thank him for their New Year tax cut.’
Mr Balls repeated his calls for the Government to use funds from the 4G auction of mobile airwaves to build 100,000 affordable homes and create hundreds of thousands of jobs.
He also wants stamp duty cut for first-time buyers as well as a tax on bankers' bonuses to fund a jobs guarantee for every young person out of work for over a year.
Concerns: TUC general secretary Brendan Barber said Mr Osborne's plan is 'causing borrowing to rise and the economy to stagnate'
Meanwhile Mr Osborne has been told ahead of his Autumn Statement that he must renege on his debt targets or hit households and businesses with further harsh austerity measures.
With Government borrowing on course to overshoot official forecasts and the economic recovery struggling to take off, experts warned the Chancellor has been left with little room for manoeuvre.
'The Chancellor's self-defeating austerity plan is causing borrowing to rise and the economy to stagnate. He should abandon his fiscal targets and start a fresh plan for growth'
TUC general secretary Brendan Barber
Independent tax and spending watchdog, the Office for Budget Responsibility, will increase the pressure by slashing its growth forecasts and predicting borrowing will be billions of pounds higher over the next five years than previously expected.
Against this bleak backdrop, experts said the Chancellor will have to put back his goal to cut the nation's debt as a percentage of gross domestic product in 2015/2016 or face the unpopular decision of further spending cuts and tax rises.
The Institute for Fiscal Studies warned a VAT hike from 20 per cent to 25 per cent may be required to tackle the nation's debt, which at the end of October was 1.1 trillion, equal to 67.9 per cent of GDP.
TUC general secretary Brendan Barber said: ‘The Chancellor's self-defeating austerity plan is causing borrowing to rise and the economy to stagnate.
‘So rather than make things worse – and hit families even harder – with yet another raid on the welfare budget, he should abandon his fiscal targets and start a fresh plan for growth.’
Not impressed: Alistair Darling accused Mr Osborne of a 'bankruptcy of ideas' over how to generate growth
Labour's former chancellor Alistair Darling accused Mr Osborne of having a ‘bankruptcy of ideas’ over how to generate growth.
He told Sky News that the Chancellor was ‘wildly off all his targets’ for cutting the record budget deficit and urged new announcements in the Autumn Statement for major engineering projects.
'The problem is that they have choked off growth – they trashed confidence when they came into office'
Former Labour chancellor Alistair Darling
‘It strikes at his very credibility and the credibility of this government's economic judgment,’ said Mr Darling.
‘The problem is that they have choked off growth – they trashed confidence when they came into office.’
He added: ‘It's so important this Wednesday that he sets out a clear sense of direction in rebuilding our infrastructure – transport, energy, housing and so on.’
Mr Darling said that instead of plans for growth, ‘you have got a complete bankruptcy of ideas’.
Labour leader Ed Miliband described Mr Osborne’s U-turn Budget as an ‘omnishambles’ in the House of Commons in April – and it was named word of the year by the Oxford University Press last month.
10% OF HOUSEHOLDS HAVE DEFAULTED ON LOAN, BILL OR HOUSING COSTS
Stressed: The Which 'squeezometer' found almost one in four people are feeling financially squeezed, equating to 10.2 million households (file picture)
More than 10million households are feeling financially squeezed and almost one in 10 have defaulted on a loan, bill or housing costs, a consumer group said today.
Releasing its findings ahead of Mr Osborne's Autumn Statement this week, Which urged the Government to ensure spiralling energy and food costs are kept under control.
The group's ‘squeezometer’ found almost one in four people are feeling financially squeezed, equating to 10.2 million households.
Researchers found 9 per cent of households have defaulted on a loan, bill or housing costs, equating to 2.3 million families if the figures are projected nationally.
Some 6 per cent of households have gone into an unauthorised overdraft or used a payday loan to tide themselves over, which would be around 1.5 million families on a national level.
Researchers highlighted consumers' top worries as the price of fuel, energy and food. A string of energy firms have recently announced bill hikes, putting further pressure on families this winter.
Food costs are also on the increase. Last week the Office of Fair Trading said eight supermarkets have agreed to a set of principles following concerns over special offers for food and drink.