Osborne told to act as deficit plan goes off track

The Chancellor warned the rich and benefit claimants would be targeted as he prepares to unveil Wednesday’s Autumn Statement.

But today business leaders from Britain’s hard-pressed manufacturing sector are urging him to act to prevent a further downturn as a report by an influential thinktank warns the squeeze in the NHS could last for a decade.

Official growth forecasts for the UK economy are this week expected to be downgraded, with borrowing predicted to be billions of pounds higher over the next five years.

Mr Osborne, who will today unveil a massive blitz on tax avoidance and evasion to raise £2bn for the Treasury each year, yesterday admitted it was taking longer for the Government to deal with Britain’s debts but claimed “real progress” had been made.

He said: “I’m very clear going forward we have got to deal with this deficit. It is going to take longer, that means more difficult decisions and it’s got to be done fairly. That means yes, the richest have to bear their fair share and they will. That does mean more than they are paying at the moment.”

He said the Government was also going to tackle welfare bills. “That is the Conservative approach to fairness, make the rich pay but also make sure you are tackling the welfare system, which is deeply unfair,” he added.

But Labour’s former Chancellor Alistair Darling accused Mr Osborne of a “bankruptcy of ideas” over growth. He said Mr Osborne was “wildly off all his targets” for cutting the record budget deficit and urged new announcements in the Autumn Statement for major engineering projects.

“It strikes at his very credibility and the credibility of this government’s economic judgment,” he said. “The problem is that they have choked off growth, they trashed confidence when they came into office.”

The EEF manufacturers’ organisation urged the Government to act as figures show the sector suffered another fall in orders and output in recent months. A survey of 400 firms found the uncertain outlook is hitting recruitment plans and tough trading conditions are expected to continue.

Chief executive Terry Scuoler said: “The Chancellor must send a strong signal to industry that it is getting a firm grip on the levers of growth and get business investment going again.

“The Autumn Statement should prioritise measures to support investment through the tax system and to increase competition in business banking. They should be part of a growth plan that demonstrates to business that all of government has a week-in, week-out focus on growth.”

In a report today, the Nuffield Trust said the NHS could have a £54bn black hole in its finances by 2022 if it fails to hit unprecedented productivity targets, or without above-inflation funding.

Its chief economist, Anita Charlesworth, said: “Without unprecedented sustained increases in productivity, funding for health in England will need to increase in real terms after 2014-15 to avoid cuts to the service or a fall in the quality of care patients receive.”

Peter Carter, of the Royal College of Nursing, said: “This is a worrying report and echoes many of our own concerns about the future of the NHS. Even though we are only two years into the drive for efficiency savings, there are already huge cuts to jobs and services, with tens of thousands of NHS posts axed or set to go.”