George Osborne will announce fresh austerity measures on Wednesday as he delivers his eighth budget against the backdrop of a darkening economic outlook.



The chancellor has signalled that he will make spending cuts of £4bn, as he battles to hit his self-imposed target of delivering a surplus on the public sector finances by the end of this parliament.

But he is also expected to concede that he will fail to meet his aim, set out in last July’s budget, of cutting the UK’s debt-to-GDP ratio this year.

Osborne will blame the fragile state of the global economy, including the eurozone, where interest rates were slashed to zero last week, for the worse-than-expected state of the public finances.

But he will still promise to set aside new funds for pet projects, including extending the school day for secondary pupils; backing transport infrastructure schemes; and developing technologies, including driverless cars.

The chancellor will also announce a radical shakeup of the schools system in England, aimed at turning every school into an academy – effectively ending local authorities’ control – by 2020.

The plans are aimed at proving the government is determined to press ahead with changes at a time when critics say the battle over Britain’s future has halted the business of government.

Draft legislation, which may be published as soon as Thursday, will begin the process of implementing a pledge made by David Cameron in his conference speech last autumn. The prime minister said his “vision for our schooling system” was to place education into the hands of headteachers and teachers rather than “bureaucrats”.

Nicky Morgan, the education secretary, who has been touted as a potential rival to Osborne for the Conservative leadership when the prime minister steps down, is expected to give more details of the plan for the education shakeup when she opens the House of Commons debate on the budget on Thursday. She will appear on the BBC’s Question Time on Thursday evening.

Osborne had faced claims of backing away from major changes after he dropped proposals for a radical overhaul of tax relief for pension contributions.

However, he is expected to use the budget to set out the next steps towards implementing the Conservatives’ pre-election tax pledges, including increasing the threshold for the higher rate of income tax towards £50,000 by the end of the parliament and raising the tax-free personal allowance to £12,500.

Osborne has already faced criticism for finding some of the funding to meet these promises by cutting support for the disabled.

Labour estimates that cuts to personal independence payments could result in about 200,000 disabled people losing up to £3,000 a year. Disability charity Scope said its national helpline has experienced a surge in calls from disabled people concerned about changes to disability benefits. Its chief executive, Mark Atkinson, said: “With the chancellor stating he is looking to find further spending cuts, disabled people are anxiously awaiting tomorrow’s budget.”

The chancellor will confirm that he will give the green light to a series of infrastructure projects recommended by the National Infrastructure Commission chaired by former Labour transport minister Lord Adonis, including a trans-Pennine tunnel and Crossrail 2, a new rail link across London.

The government’s education plans will be fiercely opposed by Labour, which argues that taking thousands of schools out of council control undermines democratic accountability for the education system.

Lucy Powell, the shadow schools minister, said there was “no evidence to suggest that academisation in and of itself leads to school improvement”.

She pointed out that the chief inspector of schools, Sir Michael Wilshaw, had written to the secretary of state for education highlighting serious weaknesses in academy chains.

“How the government can plough ahead with the wholesale academisation of all schools in light of his evidence beggars belief. We want to see robust accountability and oversight of all schools regardless of type,” she said.

Powell said ministers should focus instead on teacher shortages, school places and inequalities.