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Osborne scraps cuts to tax credit and police funding

14:29 25 November 2015

The Chancellor of the Exchequer, George Osborne delivers his joint Autumn Statement and Spending Review to MPs in the House of Commons, London. Photo credit should read: PA Wire

The Chancellor of the Exchequer, George Osborne delivers his joint Autumn Statement and Spending Review to MPs in the House of Commons, London. Photo credit should read: PA Wire

George Osborne has scrapped planned cuts to tax credits for millions of low paid workers and ruled out further reductions in police budgets - but Norfolk and Suffolk police will still need to make savings.

Unveiling his Spending Review in the House of Commons, the Chancellor said he could abandon the controversial tax credit cuts of £4.4 billion due to improvements in public finances.

He said he would still be able to deliver the promised £12 billion in welfare cuts over the next five years while balancing the books by the end of the Parliament.

To Tory cheers, he told the Commons: “I’ve had representations that these changes to tax credits should be phased in.

“I’ve listened to the concerns. I hear and understand them.

“And because I’ve been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether.”

Announcing the decision to maintain police budgets, the Chancellor said he had had representations they should be cut by up to 10pc.

But he declared: “Now is not the time for further police cuts. Now is the time to back our police and give them the tools do the job.

“I am today announcing there will be no cuts in the police budget at all. There will be real terms protection for police funding.

“The police protect us, and we’re going to protect the police.”

The Government had faced pressure from senior police officers over budget cuts, especially in the wake of the Paris terror attacks.

The surprise announcement about tax credits came after the House of Lords threw out the original proposals.

There had been speculation Mr Osborne would phase the cuts in instead.

Scrapping them altogether will be welcomed by many Tory backbenchers who were uneasy with the plans.

But Norfolk’s Police and Crime Commissioner warned the county’s constabulary would still need to find savings.

But Mr Osborne said the move would mean the Government would breach its own cap on benefits in the first years of this parliament.

The Chancellor said higher than predicted tax receipts and lower interest rates meant the Office for Budget Responsibility estimated that public finances would be £27 billion better off over the course of the Parliament than it forecast at the time of the post-election Budget in July.

The Chancellor said his Spending Review was designed to make Britain “the most prosperous and secure of all the major nations of the world”.

He said Office for Budget Responsibility forecasts showed GDP growing “robustly every year”, living standards rising and more than one million extra jobs being created over five years.

The OBR had also certified that the Government’s economic plan will deliver on the commitment to reach a surplus by 2019/20 and reduce the debt to GDP ratio every year of this Parliament.

The Chancellor confirmed plans to double the housing budget with spending partly funded by new rates of Stamp Duty that will be 3pc higher on the purchase of additional properties like buy-to-lets and second homes.

He said the extra stamp duty, to be introduced next April, would raise almost a billion pounds by 2021, adding: “We’ll reinvest some of that money in local communities in London and places like Cornwall which are being priced out of home ownership.”

Concluding his speech Mr Osborne said: “Five years ago, when I presented my first Spending Review, the country was on the brink of bankruptcy and our economy was in crisis.

“We took the difficult decisions then. And five years later I report on an economy growing faster than its competitors and public finances set to reach a surplus of £10 billion.”

But shadow chancellor John McDonnell condemned Mr Osborne’s record, telling MPs that over the last five years there has barely been a target the Chancellor has not missed or ignored.

He said Mr Osborne’s handling of tax credits had been a “fiasco” and said it was essential to see the detail.

“This is not the full and fair reversal that we pleaded for,” he added.

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24 comments

  • Andy: GO has made a complete Horlicks of this. If he'd hoped to rehabilitate himself with the general public (all this guff about now about the Tories being the 'mainstream representative of working people'!) he'd have owned up that he got it wrong. What did he do? He said "... because I have been able to announce today an improvement in the public finances..". In other words, 'I didn't get it wrong'! People call him a 'clever politician'. I really can't see that. Moreover, it has taken less than two days for his Statement to explode in his face: both the IFS and the Resolution Foundation (chaired by David 'two brains' Willets, former Tory grandee) point out that the working poor will still get it in the neck to the same degree when UC comes in. Does GO genuinely believe that people will not notice the sleight-of-hand? he consistently underestimates (and frankly insults) the intelligence of Joe and Josephine Public. If he is to succeed Cameron he'll have to sharpen up his act, and I don't think he's got the brainpower or the political nous to do that.

    Report this comment

    martin wallis

    Friday, November 27, 2015

  • Expenditure has continued to increase since 2010 and will continue to increase all the way to 2020. GO is hoping that taxes will catch up. Austerity, what austerity? He did the usual trick of threatening to do worse so people were grateful when he did not. What a sham. This presentation was all about him positioning himself to be the next PM. So we now have one who sees himself as having been the heir to Blair and now one who sees himself as the heir to Brown! What a pity for the country we don't have a strong opposition.

    Report this comment

    andy

    Thursday, November 26, 2015

  • So is there an austerity crisis or not? Either this chancellor agrees there is one and has been thrifty with the truth all along for ideological reasons or he has abandoned his principles and adopted Labour's policies which he has constantly claimed caused the financial crisis which is of course untrue. So perhaps now as he is following Labour Party policies he can admit that he was wrong and that the financial crash was caused by wilful banks and their lending levels. Either way, one has to ask can he ever be trusted???? Oh Milex who will you blame now????

    Report this comment

    Sportswagon

    Thursday, November 26, 2015

  • Damned if he did, damned if he didn't.

    Report this comment

    So_Many_Haters!

    Thursday, November 26, 2015

  • pass it on to the next generation? how long has HMG been running a budget deficit?

    Report this comment

    martin wallis

    Thursday, November 26, 2015

  • @Dr.Zack "had to wait 30 mins for police to arrive last night, 999 call 3 times"...delends on what you called them for. Murder taking place or kids playing football outside your house?

    Report this comment

    Tootyfrooty

    Thursday, November 26, 2015

  • That's it, chicken out. Pass it on to the next generation(s). Couldn't risk the ballot box effect, could he?

    Report this comment

    Green Ink from Tunbridge Wells

    Thursday, November 26, 2015

  • the order of the day is carry on borrowing . But still better than the alternative the clueless labour party

    Report this comment

    milecross

    Thursday, November 26, 2015

  • smoke-and-mirrors from the allegedly 'independent' OBR who miraculously chose now (after the vote in the Lords) to change their 'methodology' so that they could forecast increased tax receipts on the back of which Osborne could claim at the Despatch Box that it was' because of improvements in the public finances' that he was able to 'avoid altogether' slashing working tax credits and cutting police budgets. the commentariat are having none of it, speaking in terms of Osborne 'finding £27bn down the bank of the sofa' 'being lucky with the figures' and so on... and what of Labour's Shadow Chancellor's public promise NOT to take the P out of Osborne in the House if he did a U-turn on working tax credits!? if McDonnell's performance yesterday wasn't taking the P then I'll eat my hat: Heaven help us if he ever gets into Number 11... the long and the short of it is that the working poor will still get shafted when IDS's Universal Credit comes into force: and that will be BEFORE the 2020 election, so Osborne has only put off the day of reckoning (unless he can talk the OBR into coming up with another Cunning Pan to cook the books)

    Report this comment

    martin wallis

    Thursday, November 26, 2015

  • Convoluted political trickery and expenditure burden shell game. Council tax will soar while services are slashed. Root of domestic woe is reckless spending ... ring fenced overseas aid now up 21 percent. Stop profuse haemorrhage of finite UK tax money into foreign folly. UK tax coffers raised by toil of law abiding UK citizens must no longer be exported and freely distributed as international charity. Reinvest UK tax money to develop Britain’s rundown infrastructure and flagging services or curtail tax burden to recoup tangible savings for UK taxpayers. Altruistic overseas development is a global luxury UK taxpayers cannot afford to fund in dire fiscal times.

    Report this comment

    J. Harry

    Thursday, November 26, 2015

  • Good news for many people. However George Osborne will have to claw the money from somewhere else. Generally the Conservative Party is a better choice than any other political party, for the country.

    Report this comment

    NorthStarRaven

    Thursday, November 26, 2015

  • What are tax credits? They are nothing to do with tax. Unlike tax "reliefs", people need not be paying any tax to receive tax "credits". Tax credits are paid to a) families raising children and b) working people on low incomes. In other words they are benefits.

    Report this comment

    Hereandthere

    Thursday, November 26, 2015

  • Well done ted, shows us all you don't understand what working tax credits are LoL

    Report this comment

    Rob44

    Thursday, November 26, 2015

  • OK so he gave way on tax credits but he's not the type to give up easily - who's going to bare the brunt of this? An autumn statement it was NOT a bid for the tory leadership and a statement of intense political intent it was whilst handing over the UK to the Chinese.

    Report this comment

    Rob44

    Thursday, November 26, 2015

  • And don't forget most of us will be paying more National Insurance next April.

    Report this comment

    Ivor

    Wednesday, November 25, 2015

  • had to wait 30 mins for police to arrive last night, 999 call 3 times. so much to cuts being scrapped, the damage has already been done. there are not enough front-line staff out there, we need many more.

    Report this comment

    dr.zack

    Wednesday, November 25, 2015

  • Credit where credit is due... at least he is passing on the proceeds of the tampon tax to women's charities. Oh, wait... they are trying to provide services that he has already cut. Oh well, let's keep looking...

    Report this comment

    arfur

    Wednesday, November 25, 2015

  • Oh, and a cut of 19% in funding for opposition partys' offices - a true friend of democracy is our Gideon.

    Report this comment

    arfur

    Wednesday, November 25, 2015

  • A true friend of the workers indeed. So much so he has given the Queen a 7% pay rise. Gawd bless him (and her)

    Report this comment

    arfur

    Wednesday, November 25, 2015

  • i am pleased he is not cutting tax credits, after all this is paid to decent people that do bother to get up in the morning and go to work. my gripe has always been with the professional, bone idle benefit claimants who have no intention of working or even trying to find work- hit them hard where it hurts the most, in the pocket, no money for drink, drugs or fags.

    Report this comment

    ted

    Wednesday, November 25, 2015

  • alf mate, you have not thought this one through have you? 3% stamp duty will only apply to new purchases, yes this may put a few landlords off purchasing more properties,but in the fullness of time this simply means less properties to rent thereby pushing rents up for everyone. secondly landlords that do continue to buy will simply add this extra cost into their overheads, and yes once again up goes rents. do you really think property prices will drop at all? will property become affordable to first time buyers earning less than 50k a year, and there are not many of them round here are there?-- shot in foot comes to mind here.

    Report this comment

    ted

    Wednesday, November 25, 2015

  • mmm... so lots more to be spent in many areas, some cuts stopped and police budgets frozen.. and here was me thinking that we had more austerity ahead. so.. we are either out of the austerity period or we have yet to find out exactly how all this is going to be funded... i suspect in the coming days and weeks we will actually find out. some ones going to pay!

    Report this comment

    Ivor

    Wednesday, November 25, 2015

  • As usual the devil will be in the detail. but it would be rather churlish of anyone to say this was not a good Autumn Budget. John McDonnell said Labour would not take advantage and make political point scoring of the situation, if Mr Osborne was to withdraw the planned cuts to tax credits. Let`s see if Labour keep to their word. Somehow I doubt it. I think Mr Lewis will milk it for all it`s worth.

    Report this comment

    Hereandthere

    Wednesday, November 25, 2015

  • the fact that osbourne has hit buy to let landlords with more tax is a step forward to helping the housing markets first time buyers

    Report this comment

    alfredsmith177

    Wednesday, November 25, 2015

The views expressed in the above comments do not necessarily reflect the views of this site

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