The new chancellor George Osborne has set a date for the emergency Budget and started the ball rolling on determining the £6bn worth of cuts to be made this year.
The emergency Budget will be held on June 22 and will represent the first Budget of the new coalition government.
The chancellor has also announced the creation of the Office of Budget Responsibility, an independent body which will provide the forecasts for the economy and public finances.
Sir Alan Budd will chair the new body, which has been established on an interim basis today, to assess the state of the public finances.
David Laws, chief secretary to the Treasury, will meet Cabinet colleagues this week to agree £6bn of cuts in this year’s spending to start tackling the UK’s £163bn deficit, following advice from the Treasury and the Bank of England on the need to act quickly to tackle the deficit.
The OBR will make an independent assessment of the public finances and the economy for the emergency Budget. The chancellor will accept the forecasts from the OBR for the Budget and pre-Budget report.
The government is also today announcing that it will re-examine all spending approvals made since January 1, to ensure that they are consistent with the government’s priorities and good value for money.
Sir Alan has recommended that the Treasury appoint Geoffrey Dicks and Graham Parker to complete the 3-member Budget Responsibility Committee. They will lead the work of the OBR on an interim basis.
The Queen’s Speech will provide for legislation to establish the OBR on a permanent, statutory basis. Sir Alan Budd and the BRC will be advising the chancellor on the arrangements for the permanent OBR.
George Osborne, chancellor, says: “If we don’t get on top of our debt, every family in Britain will be poorer and the dreams of millions of young people will be dashed.
“Mortgages will be higher, businesses will go bust and debt interest will become one of the largest items of government spending
“We urgently need to restore confidence in our economy. And we need the determination to act quickly in the short-term in order to establish credibility for the longer term.”
David Laws, chief secretary to the Treasury, says: “The chancellor and I are united in our resolve to deal urgently and decisively with the unacceptable state of our public finances. It is both possible and necessary to start taking action this year.
“By making an early downpayment we are not only helping to reduce the deficit faster, we’re sending a clear and strong message that we intend to do what’s needed to repair our public finances and get our economy moving again.
“We can make these cuts while protecting the quality of key frontline services.”