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| Spending Review: Economists assess windfall-funded U-turn | |
| (about 3 hours later) | |
| Economists are poring over the details of George Osborne's Spending Review, in which he funded a U-turn on tax credit cuts with a £27bn windfall. | |
| He abandoned plans to cut credits for millions of low-paid workers, thanks to better-than-expected forecast tax receipts and low debt interest rates. | He abandoned plans to cut credits for millions of low-paid workers, thanks to better-than-expected forecast tax receipts and low debt interest rates. |
| However, cuts totalling £20bn to Whitehall departments and £12bn to welfare were detailed. | However, cuts totalling £20bn to Whitehall departments and £12bn to welfare were detailed. |
| The Institute of Fiscal Studies will deliver its full assessment later. | The Institute of Fiscal Studies will deliver its full assessment later. |
| Paul Johnson, of the independent economic think tank, said the tax credit move would change nothing in the long run because the cuts would still feature in the new Universal Credit system, which is due to replace tax credits by 2018. | Paul Johnson, of the independent economic think tank, said the tax credit move would change nothing in the long run because the cuts would still feature in the new Universal Credit system, which is due to replace tax credits by 2018. |
| Mr Johnson also said the chancellor had been "quite lucky". | Mr Johnson also said the chancellor had been "quite lucky". |
| '50-50 risk' | '50-50 risk' |
| He said "the public finance forecasts were not desperately rosy relative to where they were in July" at the time of the Budget, and the revisions on tax receipts were "easily within the margins of error". | He said "the public finance forecasts were not desperately rosy relative to where they were in July" at the time of the Budget, and the revisions on tax receipts were "easily within the margins of error". |
| He told the BBC: "The risk for him, and this must be at least a 50-50 risk, is that the next time round, or the time after, or the time after, these tax revenue forecasts will look less rosy." | He told the BBC: "The risk for him, and this must be at least a 50-50 risk, is that the next time round, or the time after, or the time after, these tax revenue forecasts will look less rosy." |
| If that happened, the chancellor would need to either cut spending further or raise taxes in order to meet his target of bringing the public finances back into surplus. | If that happened, the chancellor would need to either cut spending further or raise taxes in order to meet his target of bringing the public finances back into surplus. |
| Labour also argued that working families would still lose out with tax credits due to be phased out by 2018. | Labour also argued that working families would still lose out with tax credits due to be phased out by 2018. |
| Shadow chancellor John McDonnell, who faced criticism from some Labour MPs for quoting former Chinese Communist leader Chairman Mao in his attack on the government, said the tax credits reversal was a victory for his party. | Shadow chancellor John McDonnell, who faced criticism from some Labour MPs for quoting former Chinese Communist leader Chairman Mao in his attack on the government, said the tax credits reversal was a victory for his party. |
| BBC political editor Laura Kuenssberg said the £27bn windfall had allowed Mr Osborne to "cut with a blunt knife rather than a sharp axe" and press on with his bid to "anchor the Conservatives to the mainstream" of British politics. | BBC political editor Laura Kuenssberg said the £27bn windfall had allowed Mr Osborne to "cut with a blunt knife rather than a sharp axe" and press on with his bid to "anchor the Conservatives to the mainstream" of British politics. |
| Among the cuts in welfare spending will be a fresh squeeze on housing benefit. | Among the cuts in welfare spending will be a fresh squeeze on housing benefit. |
| The chancellor was forced to rethink plans to cut £4.4bn from tax credits from April after they were rejected by the House of Lords. | The chancellor was forced to rethink plans to cut £4.4bn from tax credits from April after they were rejected by the House of Lords. |
| Rather than phasing the cuts in, as he had been expected to do, Mr Osborne said he had decided the "simplest thing" was "to avoid them altogether", even though it would mean missing his own target for overall welfare spending in the early years of this Parliament. | Rather than phasing the cuts in, as he had been expected to do, Mr Osborne said he had decided the "simplest thing" was "to avoid them altogether", even though it would mean missing his own target for overall welfare spending in the early years of this Parliament. |
| SNP Treasury spokesman Stuart Hosie said Mr Osborne's "complete and humiliating U-turn on tax credit cuts shows that we were right to keep the pressure up to the last minute" for the cuts to be scrapped. | SNP Treasury spokesman Stuart Hosie said Mr Osborne's "complete and humiliating U-turn on tax credit cuts shows that we were right to keep the pressure up to the last minute" for the cuts to be scrapped. |
| A string of government departments will have to find double-digit savings in their running costs and local government is in line for further big cuts. although local authorities with responsibility for social care will be allowed to levy a new precept of up to 2% on council tax. | A string of government departments will have to find double-digit savings in their running costs and local government is in line for further big cuts. although local authorities with responsibility for social care will be allowed to levy a new precept of up to 2% on council tax. |
| Other Spending Review announcements include: | Other Spending Review announcements include: |
| Special report: Full in-depth coverage of the Spending Review and Autumn Statement | Special report: Full in-depth coverage of the Spending Review and Autumn Statement |
| How are you affected by the spending review? Do you have a question for our experts? Share your experiences. Email haveyoursay@bbc.co.uk with your stories. | How are you affected by the spending review? Do you have a question for our experts? Share your experiences. Email haveyoursay@bbc.co.uk with your stories. |
| Please include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways: | Please include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways: |
| Or please use the form below: | Or please use the form below: |