Osborne predicts cuts or taxes choice

Mr Osborne will force a vote on a three-year target to axe the deficit, with Labour agreeing to back the Charter.

He maintained while the Conservatives were open about the need to once again swing the budget axe in spending departments, including welfare cuts, Labour had refused to set out any specific budget cuts. The only alternative, he told MPs on the Treasury Select Committee, was tax rises.

“If you are saying you sign up the £30bn deficit reduction but you do not say what savings you will make then you are saying
 the figure will be met with major tax rises, and people should be honest about that,” Mr Osborne said.

Labour have promised to back a Budget charter vote, but dismissed it as a “political stunt”.

Mr Osborne also revealed the date for his last Budget before the General Election.

The Chancellor will announce his final changes on March 18, just weeks before parliament breaks up for the May election.

He warned people not to expect any unfunded giveaways, telling MPs that there will not be any.

Mr Osborne stressed he was “very happy” to be judged on his performance on the economy by voters when they cast their ballots next year.

He declined to rule out a VAT hike following the election, but said: “I have set out proposals that don’t require an increase in taxes, including VAT.”

And he said that his tax 
priorities after the election 
would be to raise the personal threshold for income tax to £12,500, and to increase to £50,000 the level at which workers pay the 40p rate.

Mr Osborne came under fire from Labour MP John Mann for his failure to eliminate the deficit during this Parliament, as he planned in 2010, and for presiding over a 10-fold increase in the number of food banks during his time in office.

Mr Mann, the MP for Bassetlaw, said that borrowing of £91bn a year was “a calamitous out-turn compared to what you promised Parliament when you brought in the cuts”.

But Mr Osborne said that he had taken a conscious decision to shift the borrowing target in 2012, when the impact of economic turmoil in the eurozone became apparent.

“I think that was a correct decision,” he told MPs. “I am very happy to be judged on my performance as Chancellor.”

Mr Mann demanded to know whether Mr Osborne’s own family had become better off during his time at the Treasury.

The Chancellor responded: “We live in an economy whose prospects are improving and where jobs are being created. I received a pay rise when I went from being shadow chancellor to Chancellor of the Exchequer, although I reduced the pay from that of my predecessor and froze it.”

Asked whether an ordinary worker like a binman was better off than in 2010, Mr Osborne said: “I’m not going to be specific about individuals, but we have increased the tax-free allowance so people are £800 better off.”

Mr Osborne conceded he could not give “a precise number” for food banks in the UK, but told Mr Mann: “I do know they increased ten-fold under Labour.”

Mr Mann retorted that there are now 600 food banks across the UK, which in itself represented a 10-fold increase.