UK’s Osborne sticks to budget target, scraps cuts to tax credits

The Scottish National Party, the third largest parliamentary group, said Osborne had performed a “complete and humiliating U-turn on tax credits”.

Almost 40% of workers in Rochdale have their wages topped up by some sort of tax credit, a much higher proportion than the United Kingdom average. There will be real terms protection for police funding.

Describing the eurozone as a “persistent problem”, Osborne said there were “yet more reasons” to protect the UK’s economic security. “I hear and understand them”, Osborne said, adding that the improved outlook for public finances meant he was dropping the cuts’ plan altogether.

As income increases, the amount of tax credits available decreases.

The Treasury rejected the IFS’s claim that Universal Credit will push through the savings that tax-credit cuts were meant to deliver, saying the comparison is “not legitimate”. “But people raised concerns with me that the speed of getting there was too quick, that we weren’t doing enough to help families in the transition”, he said.

He said: “I know, from the number of emails I received on the issue, that many of my constituents will welcome the fact the Government will be able to avoid changes to tax credits because of an improvement in the public finances”. That decision will cost working households £1,000 on average in 2020 and the losses could rise to £3,000 for some families, the Resolution Foundation said. However from April 2018, new claimaints will not be given tax credits, and instead they’ll be switched over to the new Universal Credit benefit, which Paul Johnson, director of the Institute for Fiscal Studies said will be “less generous” than it would have been’.

He hailed higher tax receipts and lower interest payments for helping reduce the country’s debts and borrowing.

“Above all, we want to protect the people of London and make this the safest global city”.

He shrugged off suggestions that the Autumn Statement had been a pitch for Mr Cameron’s job.

Mr Osborne was forced to rethink the plans after peers blocked the move and a string of Tories spoke out publicly criticising the plans.

There are also big changes to local government funding, with councils being allowed to keep all business rates by the end of the parliament (while also cutting the central government grants). Osborne admitted that prospects for global growth have also darkened since the summer Budget – underlined by worries over the health of previously fast-growing economies like China and Brazil – prompting the OBR to cut its world growth forecast. “This spending review is one of the tightest in post-war history”, he was due to say.

Louis Stephen, the chairman of the city’s Green branch, says he was left disappointed after the Chancellor chose to focus on a raft of other themes in his spending plans.