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| Version 1 | Version 2 |
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| George Osborne scraps tax credit cuts in welfare U-turn | George Osborne scraps tax credit cuts in welfare U-turn |
| (35 minutes later) | |
| George Osborne has executed a complete U-turn on his controversial cuts to tax credits, as he delivered what he called, “a big spending review from a government that does big things”. | George Osborne has executed a complete U-turn on his controversial cuts to tax credits, as he delivered what he called, “a big spending review from a government that does big things”. |
| Osborne had promised to modify the plans, which would have seen 3m low-income families lose an average of £1,000 a year, after they were rejected by the House of Lords, and criticised by Conservative backbenchers. | Osborne had promised to modify the plans, which would have seen 3m low-income families lose an average of £1,000 a year, after they were rejected by the House of Lords, and criticised by Conservative backbenchers. |
| Related: Spending review 2015: George Osborne scraps tax credit cuts - live | Related: Spending review 2015: George Osborne scraps tax credit cuts - live |
| But delivering his combined autumn statement and spending review, the chancellor said higher-than-expected tax revenues and lower interest payments on government debt had opened up an extra £27bn of fiscal wriggle-room, which would allow him to cancel the cuts altogether. | But delivering his combined autumn statement and spending review, the chancellor said higher-than-expected tax revenues and lower interest payments on government debt had opened up an extra £27bn of fiscal wriggle-room, which would allow him to cancel the cuts altogether. |
| He will also raise an extra £1bn a year by 2020 from a new 3% stamp duty charge on buy-to-let properties and second homes, amid growing concerns that buy-to-let landlords are driving up property prices and crowding out local buyers. | He will also raise an extra £1bn a year by 2020 from a new 3% stamp duty charge on buy-to-let properties and second homes, amid growing concerns that buy-to-let landlords are driving up property prices and crowding out local buyers. |
| However, reversing the cuts, as well as being an embarrassing climbdown from proposals delivered just four months ago, will mean he breaches his self-imposed “welfare cap”, which was meant to limit the cost of social security. | However, reversing the cuts, as well as being an embarrassing climbdown from proposals delivered just four months ago, will mean he breaches his self-imposed “welfare cap”, which was meant to limit the cost of social security. |
| The chancellor said he would still cut £12bn from the country’s welfare bill, but do so “in a way that helps families, as we make the transition to our national living wage”. | |
| In a wide-ranging statement, he also announced £12bn of cuts to government departments, moving Britain “out of the red, and into the black”, promising that efficiency savings and changes in the way Britain is governed would allow the Treasury to continue investing in protected areas including health and education. | In a wide-ranging statement, he also announced £12bn of cuts to government departments, moving Britain “out of the red, and into the black”, promising that efficiency savings and changes in the way Britain is governed would allow the Treasury to continue investing in protected areas including health and education. |
| He also delighted Conservative MPs by promising that there would be no cuts in police budgets, saying: “The police will protect us, and we are going to protect the police.” | |
| Surplus target | Surplus target |
| The Treasury will still target a £10bn surplus on the public finances by the end of this parliament, as expected in his July budget. The latest forecasts show a £73.5bn deficit in the current financial year, falling to a shortfall of just £4.6bn in 2018-19, and turning into a surplus of £10.1bn in 2019-20. | The Treasury will still target a £10bn surplus on the public finances by the end of this parliament, as expected in his July budget. The latest forecasts show a £73.5bn deficit in the current financial year, falling to a shortfall of just £4.6bn in 2018-19, and turning into a surplus of £10.1bn in 2019-20. |
| Many departments will face deep cuts in their budgets for day-to-day spending: 37% for the Department for Transport, 15% for the Department for Environment, Food and Rural Affairs and 17% at Business, Innovation and Skills. | Many departments will face deep cuts in their budgets for day-to-day spending: 37% for the Department for Transport, 15% for the Department for Environment, Food and Rural Affairs and 17% at Business, Innovation and Skills. |
| However, the chancellor stressed that capital budgets for longer-term projects will be protected, allowing him to promise the biggest road-building programme since the 1970s, and more funding for investment in innovative energy technologies, for example. | However, the chancellor stressed that capital budgets for longer-term projects will be protected, allowing him to promise the biggest road-building programme since the 1970s, and more funding for investment in innovative energy technologies, for example. |
| Related: Autumn statement and spending review key points - live | Related: Autumn statement and spending review key points - live |
| Public debt is now expected to fall, from 82.5% of GDP this this year to 81.7% in 2016-17, and continue declining until the end of the parliament, reaching 71.3% in 2020-21. | Public debt is now expected to fall, from 82.5% of GDP this this year to 81.7% in 2016-17, and continue declining until the end of the parliament, reaching 71.3% in 2020-21. |
| The chancellor also announced the independent Office for Budget Responsibility’s latest forecasts for the economy. GDP growth is expected to expand by 2.4% in 2015, unchanged from the July projection; and 2.4% in 2016, marginally up from the 2.3% the OBR was expecting in the summer; and 2.5% in 2017. | The chancellor also announced the independent Office for Budget Responsibility’s latest forecasts for the economy. GDP growth is expected to expand by 2.4% in 2015, unchanged from the July projection; and 2.4% in 2016, marginally up from the 2.3% the OBR was expecting in the summer; and 2.5% in 2017. |
| Among the rare winners in the spending review were women’s charities, which will receive £15m a year from the so-called “tampon tax” - the VAT levied on sanitary products - and the sports budget at the Department for Culture Media and Sport, which is set to increase by 29%, allowing Britain to “go for gold” in the Rio Olympic Games. The Foreign Office will see its budget protected in real terms. | Among the rare winners in the spending review were women’s charities, which will receive £15m a year from the so-called “tampon tax” - the VAT levied on sanitary products - and the sports budget at the Department for Culture Media and Sport, which is set to increase by 29%, allowing Britain to “go for gold” in the Rio Olympic Games. The Foreign Office will see its budget protected in real terms. |
| As expected, Osborne singled out housing as a major theme, promising to double the housing budget to £2bn, and “turn Generation Rent into Generation Buy”, including by providing financial support for building 200,000 “Starter Homes” — a policy first announced earlier this year. | As expected, Osborne singled out housing as a major theme, promising to double the housing budget to £2bn, and “turn Generation Rent into Generation Buy”, including by providing financial support for building 200,000 “Starter Homes” — a policy first announced earlier this year. |