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UK Chancellor Makes Spending Review Statement

Friday, 28 June 2013   (0 Comments)
Posted by: Author: Amanda Banks
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Author: Amanda Banks

UK Chancellor George Osborne has delivered his 2013 Spending Round statement to the House of Commons, in which he discussed an extended freeze on council tax, a Welfare Cap on tax credits, measures to stimulate the shale gas industry, and extra resources to tackle tax evasion.

Osborne explained that the council tax freeze had been due to end in April 2014, but he does "not want that to happen." Instead, the Government will continue to provide funding to councils to keep the freeze for the next two years, representing a saving of nearly GBP100 per household.

Introducing the Welfare Cap, he announced that it would be set each year at the Budget for four years, starting from April 2015, and will reflect inflation forecasts. The Cap will apply to tax credits, housing benefit, disability benefits, and pensioner benefits, but not to the state pension,

On shale gas, Osborne said that the UK's exploitation of gas in the North Sea is "second to none," and he stated that "now we make the tax and planning changes which will put Britain at the forefront of exploiting shale gas." Osborne outlined those measures during his Budget speech in March, including moves that would in effect lower the tax rate for some shale gas production from 62 percent to 30 percent, and allow producers to inflate losses offset against future income by 10 percent per year over 10 years.

Osborne also told the House that HMRC would see a 5 percent reduction in its resource budget, but that that the Government was "committed to extra resources to tackle tax evasion." He said that he expected an extra GBP1bn "from those who try and avoid paying their fair share."

The Chancellor also touched on the subject of tax devolution, stating that the Government would shortly publish its response to the Silk Commission on devolution in Wales.

Osborne described his Review as guided by the principles of "reform, growth, and fairness," and he stated that Government borrowing was down by GBP49bn.

The Spending Review Statement was condemned by Shadow Chancellor Ed Balls. Balls called for a mansion tax to pay for a new GBP0.10 tax band, and for a tax on bankers’ bonuses.



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