Tax credits U-turn won’t deter Osborne from taking 'difficult decisions'
Britain’s chancellor of exchequer says he is not abandoning his overall approach to eliminate structural budget deficit despite changes in his planned tax credits cuts.
George Osborne says he would continue to cut day-to-day government spending and the welfare budget in order to deliver an overall surplus of £10.1bn by 2020.
In an interview with BBC Radio, after unveiling his spending review on Wednesday, the chancellor said he had listened to critics after he abandoned altogether his plans to cut £4.4bn from tax credits.
Osborne declined to admit that he had made a mistake after he outlined the cuts in his July budget as part of his plan to deliver £12bn in welfare savings.
“We are moving in the right direction and we are making billions of pounds of savings in the welfare budget. 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.
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.
However, cuts to universal credit – the benefit set to replace tax credits for most claimants in the last years of the parliament – are to go ahead. About 140,000 people currently receive universal credit.
Osborne’s U-turn means he faces the political embarrassment of needing to go to the Commons to seek permission to breach his self-imposed welfare cap for three years from 2016.
A “victory for Labour” was how John McDonnell, the shadow chancellor, described Osborne’s change of heart. But that could not make several others happy as some Labour MPs found tossing a copy of Mao’s Little Red Book at the chancellor in a bid to illustrate that the Treasury was flogging off state assets to the Chinese.
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