Chancellor George Osborne ditches tax credit cuts and protects police

“We said this was a smoke-and-mirror spending review and we were right”, he told reporters.

George Osborne has scrapped planned cuts to tax credits for millions of low paid workers and ruled out further reductions in police budgets.

But the IFS – which releases a closely watched analysis after each British budget statement – said Osborne had little room for manoeuvre if growth was weaker than expected, tax revenues fell short or spending proved intractable.

George Osborne’s spending review was a political masterclass, neutralising the biggest threats to the Government’s and his own reputation – tax credits and police budgets – and seemingly keeping a steady hand on the economic tiller.

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”.

Mr Osborne won loud cheers from the Tory backbenches as he announced that, rather than phasing in the £4.4 billion tax credit changes, as expected, he was going to “avoid them altogether”.

There was delightful moment for campaigners and Conservative MPs after Osborne abandoned the tax credit cuts saying he is not going to phase in the controversial £4.4bn cuts.

“He really is cutting spending on non-pension benefits to its lowest level – relative to national income – for 30 years”, Mr Johnson warned. A swathe of departments will see real-terms cuts.

But Labour’s Shadow Chancellor John McDonnell criticised targets that Government had set and failed to make.

The IFS criticised the tax grab of almost £1 billion through extra stamp duty on second and buy-to-let homes as “ill-designed” and said that a £3 billion bill had been imposed on large companies to fund apprenticeships.

David Wilkin, the force’s director of resources said: “We’re pleased by the Chancellor’s statement today promising no cuts to the police budget”.

Mr Johnson said the Chancellor had been “quite lucky” but added “the public finance forecasts were not desperately rosy relative to where they were in July” at the time of the Budget and the revisions were “easily within the margins of error”. He has set himself a completely inflexible fiscal target – to have a surplus in 2019/20.

The NHS in England has been promised an additional £3.8 billion for frontline services in 2016/17, while ministers have pledged to bring in a fairer funding formula for schools and the Government will continue to meet the United Nations target of spending 0.7% of GDP on global aid.

There are two main types of tax credits available to people in the United Kingdom: working tax credits and child tax credits.

Universal Credit itself is already subject to cuts announced in June.

While millions of low-paid families will not now see their benefits cut in April, the relief for many will be temporary point out Labour, with tax credits due to be phased out by 2018 in place of Universal Credit.