Osborne forced to scrap tax credit cuts in face of public fury – but slash to universal credit will go ahead
CHANCELLOR George Osborne was forced into a humiliating climbdown yesterday over his toxic plans to slash tax credits.
The Tory appeared to make a complete U-turn on the cuts in his Autumn Statement after a campaign led by Labour leader Jeremy Corbyn.
It saved three million families, who were set to lose £1,300 on average from next April, from being plunged further into poverty.
Unison general secretary Dave Prentis said: “Working families countrywide have breathed a collective sigh of relief.
“Since the cuts were announced in the summer, parents have faced increasing anxiety over losing the tax credits they rely upon so heavily.”
The Chancellor has been under huge pressure since he announced the policy in the first all-Tory Budget for two decades.
The government suffered a historic defeat in the House of Lords when peers refused to pass the cut into law last month.
He even faced a growing rebellion in his own party, with Tory MPs Stephen McPartland and Heidi Allen publicly condemning the cuts.
Announcing his U-turn yesterday, Mr Osborne said: “I’ve had representations that these changes to tax credits should be phased in.
“I’ve listened to these 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.”
But the small print of his spending plans reveals £1 billion will still be cut from tax credits next year.
July’s Budget included cuts to tax credits amounting to £4.4bn, but Treasury documents show Mr Osborne has only reinstated £3.3bn to that Budget.
And the Chancellor said himself that the U-turn on tax credits will only provide a temporary reprieve until 2018 for Britain’s poorest workers.
“Tax credits are being phased out anyway as we introduce universal credit,” he said spitefully.
In addition, 140,000 families already receiving universal credit will still suffer the cut to tax credits immediately, while they will hit new applications from 2018.
Shadow chancellor John McDonnell said: “The Chancellor has been forced into a U-turn on his tax credits.
“And I want to congratulate the members in this House on all sides who have made this happen.
“I’m glad he’s listened to Labour and seen sense.”
But Mr McDonnell said the impact on new applicants and universal credit meant this was not the “full and fair reversal that we pleaded for.”
TUC general secretary Frances O’Grady said: “The Chancellor has been forced into a spectacular climbdown on tax credits.
“But by the end of the parliament many working people will still suffer big losses because he is keeping planned cuts to universal credit.”
Mr Osborne also vowed he would “deliver in full” the unprecedented £12 billion welfare spending cuts included in the Budget.
Mr McDonnell said: “We know where they’ll fall — on the most vulnerable, the poorest and those just struggling to survive.”