George Osborne prepares Budget 2016 'for long term'

George Osborne will set out £4bn in extra spending cuts and announce investment in the UK's infrastructure when he presents his Budget to MPs.

The Budget will "choose the long term" the chancellor will say, warning that the "storm clouds are gathering again".

 

His eighth Budget will include £1.5bn to turn all state schools in England into academies and extend school hours.

Shadow chancellor John McDonnell said the Budget looked to be "a press stunt to hide George Osborne's failures".

Mr Osborne will deliver his Budget at 12:30 GMT, after Prime Minister's Questions, setting out the latest economic forecasts and the state of the public finances.

It comes as new figures show UK unemployment fell by 28,000 to 1.68 million between November and January. The rate of unemployment remained at 5.1%, maintaining a decade-low rate, the Office for National Statistics said.

Following the morning's pre-Budget meeting of cabinet ministers, Mr Osborne tweeted

that the Budget would offer "long-term solutions to long-term problems".

Prime Minister David Cameron told his colleagues the Budget would be "pro-enterprise, pro-infrastructure and pro-devolution".

David Cameron left Downing Street earlier for the Commons ahead of PMQs and the Budget

The chancellor is expected to say that the UK economy is "strong" but he will issue a warning about the state of the global economy and say the "storm clouds are gathering again".

"Our response to this new challenge is clear. A Budget where we act now so we don't pay later," he will say, with a pledge to "put the next generation first".

BBC political editor Laura Kuenssberg said people might wonder where the "sunshine chancellor" has gone.

Mr Osborne had "time and again" said the government had "fixed the roof while the sun was shining but "today the metaphors will feel very different", she added.

But she said she would be surprised if there were no "surprises" in his Budget as Mr Osborne usually has "the element of the flourish, always looking for the headline".

In his biggest Parliamentary test to date, Labour leader Jeremy Corbyn will deliver the Opposition's response.

Mr Osborne's statement comes with three months to go before the UK votes on its EU membership. The government is campaigning to remain in the EU, and the chancellor will be keen to avoid antagonising either side in the debate with his announcements.

Justice Secretary Michael Gove arrived at Downing Street for the pre-Budget cabinet meeting

Speaking after, Environment Secretary Liz Truss said the Budget was "very good"

As did Education Secretary Nicky Morgan

As well as eliminating the deficit and securing a small surplus by 2019-20, the chancellor has set himself a target of having debt falling as a share of GDP every year.

Sluggish growth since his November Autumn Statement - when cuts to tax credits and police budgets were watered down - could mean more spending cuts and tax rises are needed to achieve his surplus target.

He has already warned that global uncertainty and the state of the world economy means the UK has to "act now rather than pay later" in making further spending reductions.

The £4bn extra cuts would be "equivalent to 50p in every £100" of public spending by 2020, which was "not a huge amount in the scheme of things", he has said.

Suggested tax rise options include a claim by the insurance industry that another increase in Insurance Premium Tax is planned, while capitalising on low oil prices to raise fuel duty would be opposed by many Conservative MPs.

On the investment side, Mr Osborne is also set to commit £300m for transport projects, with the government funding the start of work on the Crossrail 2 rail line and new High Speed 3 link across the north of England.

Almost half of the transport money committed was announced in the Autumn Statement.

The government has also announced a 'Help to Save' scheme which would give low-paid workers a top-up if they put savings aside.

Under the education package of reforms, every state school in England will have to become an academy - meaning they are independent of local authority control - by 2020 or to have a plan in place by that date to do so by 2022.

The move would end the century-old role of local authorities as providers of education.

Schools will also be able to bid to be allowed to change their hours to suit their pupils' needs.

The proposals have been attacked by Labour, with Mr McDonnell saying it would not address problems such as "increasing class sizes, shortage of teachers and lack of school places".

Meanwhile, the National Union of Teachers has accused Mr Osborne of "undoing over 50 years of comprehensive public education at a stroke".

There have also been calls for tax cuts, with suggestions of an increase in the level at which the higher rate of tax kicks in, while Business Secretary Sajid Javid told MPs this week there were "lots of reasons to cut beer duty".

Mr McDonnell said: "This Budget looks more like a press stunt to hide George Osborne's failures than about any serious policy."

He accused the chancellor of planning "more stealth taxes" and "cruel cuts" to the disabled - and called for "straight talking" from Mr Osborne.

"Only three months ago he came to the House Commons and said our economy was in robust health.

"Now he's coming to the House of Commons to tell us what serious problems we're facing. I want no more press releases about infrastructure projects or housing projects that aren't delivered and aren't properly funded," he said.

The budget was not "about the future, but taking us back to the old politics of spin and little substance", he added.