The chancellor's cost-cutting budget
PUBLISHED: 12:00 22 June 2010 | UPDATED: 17:27 01 July 2010
Chancellor George Osborne will today end the coalition government's honeymoon with a budget promising a painful combination of tax rises and spending cuts.
Chancellor George Osborne will today end the coalition government's honeymoon with a budget promising a painful combination of tax rises and spending cuts. But is he saving Britain from the road to ruin as he insists or actually in danger of leading us further along that path? Public affairs correspondent Shaun Lowthorpe reports.
Life has been lived in a kind of bubble for the past few months.
But by lunchtime today we will start to see exactly what lies in store for us as the chancellor George Osborne will rise in the House of Commons to deliver an austerity budget which promises pain not seen since one of his predecessor's, Lord Howe in the early 1980s.
There are predictions the chancellor will outline a further £27bn to £40bn of cuts as well as between £10bn £15bn in tax rises on top of what his predecessor Alistair Darling previously announced.
Yet Mr Darling accuses his successor of using the budget as an excuse to inflict some brutal ideologically driven cuts.
And he is warning that it runs the risk of tipping us in to a 'double dip' recession and unemployment not seen since the 1970s.
However with Labour still in leadership limbo and previously incapable of setting out its own stall on precisely how it would tax and spend its way out of the current mess, it is a difficult case for the opposition to make stick.
But there is clearly a sign of unity of purpose at the top end of the coalition as the budget was signed off by prime minister David Cameron and his deputy Nick Clegg last Thursday together with chief treasury secretary Danny Alexander.
The government is expected to announce a rise in VAT possible up to 20pc, bringing in another £11.5bn. Mr Osborne is also signalling a big rise in capital gains tax, which could alienate the Tory right wing, but is seen as crucial to delivering a Lib Dem coalition demand of raising the tax free allowance to £10,000.
Research out yesterday suggested that while the VAT rise would bring in an extra £11.4bn for the Treasury, but it would cost a typical household more than £400 a year.
The threshold for child tax credits is also likely to be lowered to closer to £30,000. A bank levy, which could raise between £1bn and £5bn is also thought likely.
The chancellor is in no doubt that the bitter pill is what is needed to save us from ruin and get us off our dependency of living as a nation in tick.
While promising to be 'firm but fair', he also believes that tough action is needed to avoid the sort of clashes seen in Greece and Spain as anger at austerity cuts spills on to the streets while also preventing the country going cap in hand to the IMF for a financial bailout.
But he faces warnings that cutting too deeply and too fast will provoke exactly the same kinds of thing in this country.
Today he will set out the political and economic tests by which his budget will be measured and the coalition government will be judged.
Have your say on the Budget with our live updates at www.eveningnews24.co.uk and see tomorrow's paper for more on reaction to the budget.