GEORGE Osborne denied that the poor were bearing the brunt of austerity as he defended his mini-budget today.
The Chancellor also rejected accusations that he fiddled the figures to make the Government’s finances look better, and played down fears that the UK’s credit rating could be downgraded.
The bullish comments came as experts pored over the contents of a bleak Autumn Statement, which confirmed that stalling growth meant painful cuts and tax rises would continue until at least 2018.
Most working-age benefits are being cut in real terms for three years, while the better-off will be hit by reductions in higher-rate pension reliefs and a below-inflation rise in the 40p tax threshold.
Sweeteners included scrapping a planned 3p-a-litre rise in fuel duty, a 1% cut in corporation tax, and changes to allowances which will take earnings below £9,440 out of income tax altogether.
One credit ratings agency has warned that Britain’s cherished AAA credit rating is under threat after the Office for Budget Responsibility (OBR) confirmed a key coalition debt target would be missed.
Fitch said it expected that by 2015 debt would now be “approaching the upper limit of the level consistent with the UK retaining its ‘AAA’ status”.
In a round of broadcast interviews this morning, the Chancellor conceded that losing the gold-standard rating would be a blow.
“It wouldn’t be a good thing but the credit rating is one of a number of ways in which people look at countries,” he told BBC Breakfast.
“We are borrowing money at the moment at some of the lowest rates in British history.
“When people look around the world and look at countries to invest in they think Britain is a good investment.”
Mr Osborne said when the Government came to power in 2010, “we had the same interest rates as Spain” but now “the world has confidence in us ... the calls we have made as a Government have been absolutely right”.
Shadow chancellor Ed Balls said Mr Osborne was borrowing £200 billion more than he predicted two years ago.
Some 60% of people affected by the below-inflation 1% increase in benefits for three years were in work, he added.
Mr Balls stopped short of committing Labour to voting against the measure, but insisted it demonstrated the Government was not protecting low and middle-income families.
“We will look at the details over the next week, because we have not even seen the legislation yet,” he told BBC Radio 4’s Today programme.
“The test for me will be, is this hitting working families on low incomes, does it lead to rising child poverty, is it fair for him to take billions of pounds from low and middle-income families when he is spending £3 billion next April on a tax cut for (earnings) over £150,000?”
Labour has estimated that the package of benefit and tax changes announced yesterday mean a working family with children on £20,000 a year would lose £279 a year from April.
However, Mr Osborne told Today the wealthy were being made to pay their share.
“The top fifth of the population are paying a greater share of their income, just over 4% of their income, if you take into account all the measures that we have announced over the last two years,” he said.
“That is more than any other quintile, any other fifth of the population.
“But we are asking all parts of the population to make a contribution. You cannot deal with the biggest budget deficit since the Second World War without asking for a general contribution from the whole population.”
The Chancellor pointed to the increase in the personal tax allowance and scrapping the scheduled 3p increase in fuel duty as moves to help hard-working families.
“There is a general equity in our approach,” he added.
Mr Balls questioned why a £3.5 billion boost from the auction of the 4G mobile spectrum had been included in this year’s figures, even though the sale had not yet taken place.
Mr Osborne refused to say whether the deficit would have been rising without the windfall, dismissing the issue as a “red herring”.
“I don’t think you can just pull out one element of the Budget like that,” he said.
“In this case we followed exactly the practice that the Labour government followed when it scored the 3G receipts. Frankly it has been a bit of a red herring over the last 24 hours for the BBC and others.”
On a visit to east London this morning, Prime Minister David Cameron said: “We’ve had to take very difficult decisions and I don’t hide that for a minute.
“What this Autumn Statement and what this government is all about is being on the side of people who work hard and want to get on.
“By lifting the personal allowance, the amount of money you can earn before you pay any income tax, it is very close now to our goal of £10,000.
“It is hugely helpful to all working people. It means for instance someone on the minimum wage but who works full-time, working hard, we have halved their income tax under this government.
“Clearly by cancelling the 3p increase in fuel duty we’re helping again people who have to use their cars to get to work. So we’re on the side of those who work hard.”