George Osborne does a U-turn on cuts to tax credits

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.

Johnson said that by “bank[ing] some changes in forecasts for lower debt interest payments and higher tax revenues”, the chancellor was “lucky”.

Under the new benefit, spending on welfare for working-age Britons would fall to a 30-year low as a share of national income.

Chancellor of the Exchequer George Osborne will “need his luck to hold out” if he is to meet his surplus goal by 2020, after scaling back the severity of budget cuts, the Institute for Fiscal Studies said.

Devon and Cornwall Police had been braced for further huge cuts to its budged, warning that cuts of £52m over the next four years could see “bobbies on the beat” and neighbourhood police officers become a thing of the past.

Mr Johnson cautioned: “The forecasts will change again, and by a lot more than they have over the past few months”.

Labour’s shadow chancellor, John McDonnell, claimed Osborne’s handling of tax credits had been a “fiasco” and that his U-turn was not “the full and fair reversal that we pleaded for” as some claimants would face cuts when the benefit is replaced by Universal Credit.

They calculate that once the welfare cuts work their way through, working households on Universal Credit, the replacement for Tax Credits will lose an average of £1,200 in 2020, rising to £1,300 for those with children.

“We said this was a smoke-and-mirrors spending review and we were right”.

“I am today announcing there will be no cuts in the police budget at all”, Osborne said.

“The Government has furthered their commitment to regenerating the housing sector by announcing a doubling of the housing budget to over £2 billion a year, making it the biggest house building programme by any government since the 1970s”.

Mr Osborne said that over the course of the Parliament the Government would borrow £8 billion less than previously forecast while spending £12 billion more on capital investment.

HM Revenue and Customs is to have to make savings of 18% in its own budget and invest an extra £800m in the fight against tax evasion, while the Department for Transport will see its funding cut by 37%. The houses will be sold after five years, with the tenant given first refusal.

“This is not the end of austerity”, said Mr Johnson.

Stormont finance minister Arlene Foster has also warned that overall the chancellor’s spending review is not particularly good for Northern Ireland, representing a 5.3 per cent real terms reduction in the budget for day to day services. We will abolish the uniform business rate so councils will be able to cut rates to attract new businesses, but because the amount government raises in business rates is much greater than the amount we give to local councils through the local government grant we will phase that grant out entirely and devolve additional responsibilities.

Larger businesses are hit with a major new tax, created to help fund apprenticeships.