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| Very significant spending cuts to come, think tank warns | Very significant spending cuts to come, think tank warns |
| (about 1 hour later) | |
| "Very significant" government spending cuts will still be imposed before the next general election, an influential think tank has warned. | "Very significant" government spending cuts will still be imposed before the next general election, an influential think tank has warned. |
| Paul Johnson, director of the Institute for Fiscal Studies, said that George Osborne's Spending Review on Wednesday was "not the end of austerity". | Paul Johnson, director of the Institute for Fiscal Studies, said that George Osborne's Spending Review on Wednesday was "not the end of austerity". |
| "This Spending Review is still one of the tightest in post-war history," he said. | "This Spending Review is still one of the tightest in post-war history," he said. |
| The chancellor surprised many by axing planned changes to tax credits. | The chancellor surprised many by axing planned changes to tax credits. |
| Mr Osborne said the Spending Review was not an end to "difficult decisions", but that higher than expected tax receipts and better public finances had provided some room to manoeuvre. | Mr Osborne said the Spending Review was not an end to "difficult decisions", but that higher than expected tax receipts and better public finances had provided some room to manoeuvre. |
| Welfare shift | Welfare shift |
| Despite the chancellor's decision to abandon changes to tax credits planned for next year, Mr Johnson said the long-term cost of the move would be nil. | Despite the chancellor's decision to abandon changes to tax credits planned for next year, Mr Johnson said the long-term cost of the move would be nil. |
| "Why? Because the equivalent cuts to Universal Credit, now legislated, were left untouched," he said. "The long-term generosity of the welfare system will be cut just as much as was ever intended." | "Why? Because the equivalent cuts to Universal Credit, now legislated, were left untouched," he said. "The long-term generosity of the welfare system will be cut just as much as was ever intended." |
| Universal Credit is a new welfare payment that merges a number of benefits into one. It is being phased in over the next few years, starting in different regions at different times. | Universal Credit is a new welfare payment that merges a number of benefits into one. It is being phased in over the next few years, starting in different regions at different times. |
| The IFS estimated that 2.6 million families would be an average of £1,600 a year worse off under the new system of Universal Credit than they would be under existing tax credits, but 1.9 million would be £1,400 better off. | The IFS estimated that 2.6 million families would be an average of £1,600 a year worse off under the new system of Universal Credit than they would be under existing tax credits, but 1.9 million would be £1,400 better off. |
| However, no individual families will lose out. | |
| Anyone transferring from the existing benefits system to Universal Credit will see their payments protected. | |
| Only new claimants will receive less money. | |
| Tax rises | Tax rises |
| The think tank, which conducts independent economic analysis, highlighted the danger of Mr Osborne missing his own economic target. | The think tank, which conducts independent economic analysis, highlighted the danger of Mr Osborne missing his own economic target. |
| Mr Johnson said that Mr Osborne would "need his luck to hold out" given the chancellor's self-imposed target of achieving a surplus in 2019-20. | Mr Johnson said that Mr Osborne would "need his luck to hold out" given the chancellor's self-imposed target of achieving a surplus in 2019-20. |
| "If he is unlucky - and that's almost a 50-50 shot - he will have either to revisit these spending decisions, raise taxes, or abandon the target," he said. | "If he is unlucky - and that's almost a 50-50 shot - he will have either to revisit these spending decisions, raise taxes, or abandon the target," he said. |
| The IFS also highlighted the tax rises contained in the statement. | The IFS also highlighted the tax rises contained in the statement. |
| They include the apprenticeship levy on large employers that will raise £3bn, the £1.7bn from a 2% levy on council tax to pay for more social care; and the near-£1bn to be generated by higher stamp duty for second homes and buy-to-let properties. | They include the apprenticeship levy on large employers that will raise £3bn, the £1.7bn from a 2% levy on council tax to pay for more social care; and the near-£1bn to be generated by higher stamp duty for second homes and buy-to-let properties. |
| Mr Johnson said the stamp duty move was "ill-designed" because it reintroduced a cliff edge that Mr Osborne had abolished just a year ago. | Mr Johnson said the stamp duty move was "ill-designed" because it reintroduced a cliff edge that Mr Osborne had abolished just a year ago. |
| Spending cuts | Spending cuts |
| The IFS also mentioned other spending cuts, such as the 40% reduction in capital grants for housing associations by 2017-18. | The IFS also mentioned other spending cuts, such as the 40% reduction in capital grants for housing associations by 2017-18. |
| Wednesday's statement revealed glimpses of Mr Osborne's desire to reform the public finances, it said. | Wednesday's statement revealed glimpses of Mr Osborne's desire to reform the public finances, it said. |
| "He really is cutting spending on non-pension benefits to its lowest level relative to national income for about 30 years," Mr Johnson said. | "He really is cutting spending on non-pension benefits to its lowest level relative to national income for about 30 years," Mr Johnson said. |
| "The changes to local government financing and devolution are genuinely radical and could transform both the role of local government and the UK's fiscal architecture." | "The changes to local government financing and devolution are genuinely radical and could transform both the role of local government and the UK's fiscal architecture." |