Osborne says abandoning tax credit cuts not a sign of weakness
Resolution Foundation says Osborne's budget and spending review decisions hit the poor but spare the rich
The Resolution Foundation, the thinktank focusing on the low paid,
has put out a new analysis of the autumn statement and spending review
this morning. It welcomes George Osborne’s decision to abandon his
planned tax credit cuts, but it says that the working poor will still
lose out from the introduction of universal credit over the next five
years.
Here are the key points.
The move to universal credit will cost working households £1,000 on average in 2020, the Resolution Foundation says. It says households with children will lose £1,300 on average.
It says the tax, benefit and minimum wage changes in the
summer budget and the autumn statement, taken together, will cost the
poorer 50% of households £650 on average in 2020. The richer 50% of households will lose nothing, it says. That means, overall, they’re regressive.
Distributional impact of summer budget and spending review tax, benefit
and minimum wage changes in 2020 Photograph: Resolution Foundation
Here is the Resolution Foundation analysis.
And here is a quote from Torsten Bell, the foundation’s director.
The focus in recent months and on the day of the autumn statement was
rightly on the immediate impact on family budgets of tax credit changes
next April. That reinforces how welcome the chancellor’s decision to
reverse those changes is. It will have reassured millions of working
families that were set to be significantly worse off next April.
The attention now turns to the longer term changes to the welfare
system the government has put in train. All the post-2020 welfare cuts
announced in the summer budget remain in place and will eventually
affect millions of families as universal credit is rolled out
nationally.
New Resolution Foundation analysis shows that these cuts fall overwhelmingly on poor working families.
The most damaging changes are to universal credit, the government’s
flagship welfare programme which is at serious risk of being undermined.
For working households with children on universal credit the average
loss with be £1,300 in 2020. These changes will also increase the risk
of people being trapped in low-paid short-hours work.
Q: What do you say to people who think bombing Isis in Syria will make us more of a target, and will risk repeating the mistakes of Iraq and Libya?
Osborne says we are a target already. Look at the attack in Tunisia.
He says Britain is not a country that lets others, like France and
America, defend our interests. We can bring unique capabilities to the
campaign. But bombing on its own is not the anwer. Just because we
cannot do everything does not mean we should not do something.
It is a bit strange and artificial to bomb Isis in Iraq but not in Syria. Q: The government has backed down a lot recently. You look like a government that can be pushed around.
Osborne says he does not accept that. He says he wanted to back the police.
On Syria, the government is learning from Iraq. It is making the case to parliament carefully.
And that’s it. I will post a summary of this interview, and Osborne’s other ones, shortly.
Q: The OBR says you will put fuel duty up in the future. Is that right?
Osborne says the OBR always assumes that in future fuel duty will go
up with inflation. But when budgets happen the Treasury takes a
decision.
Q: How much will council tax bills go up?
Osborne says he wants health and social care to integrate. Whitehall is putting money into local government to help fund that.
Councils will be able to levy a precept to fund social care if they want. Q: How much will that cost a band d council tax payer? £100?
Osborne says it is more like £25 a year.
But people will benefit from other measures, like cuts to fuel bills, he says.
Q: People say the new benefit, universal credit, will still leave people worse off. Are you willing to revisit that?
Osborne says people who argue that are saying the welfare system should not change. That is not his view, he says.
Universal credit will be a simpler benefit. It has been welcomed across the political spectrum.
He says in 2010 nine out of 10 people were on means-tested benefits.
By 2020 it will be five out of 10. That is much more sustainable.
Q: You are gambling that the forecasts will be right?
Osborne says some people say he should cut more quickly. Some say he
should go more slowly. He is trying to make a central judgment. Q: Are you saying you made a mistake with tax credits? Or are you
saying it was the right decision, but you were forced into changing?
Osborne says the central judgment, that Britain needs to move to a
higher wage, lower welfare economy is right. But people argued he was
moving there too quickly. Because the public finances are better, he was
able to move there more slowly. Q: Do you think you just got it wrong?
Osborne says the central judgment was right. But it is not a weakness to listen to people, he says.
One view was that he should not change welfare. He does not agree.
Then others said they agreed with the goal, but wanted help with the
transition. He says he was happy to listen to those concerns.
Nick Robinson is interviewing George Osborne. He says Osborne spent more than expected. Q: When did you discover your inner Ed Balls?
Osborne says he has taken difficult decisions. There is light at the end of the tunnel now. Q: But the economy has not improved that much over the last few months.
Osborne says the OBR is an independent forecaster. Q: Shouldn’t you just use the extra money to pay down the debt?
Osborne says Paul Johnson, the head of the IFS, told the Today
programme earlier that there were still difficult cuts ahead. Previous
chancellors would have decided to run a deficit forever. He says he is
putting aside money for a rainy day.
George Osborne, the chancellor, and John McDonnell, is Labour shadow, have been giving interviews about the autumn statement this morning.
Osborne said that his decision to abandon the planned tax credit cuts was not a sign of weaknesss. He told GMTV:
I don’t think it’s a weakness, if you are doing this job, to listen to people and listen to the concerns that are made.
And McDonnell has been defending his decision to quote from Mao’s
Little Red Book in the Commons. He was being jocular, he said. And he
insisted that he did not support Mao.
McDonnell says he used little red book in a "flamboyant jocular way", adding: "I don't support Mao, of course not." #r4today
On the Today programme he even found himself having to apologise
after it broadcast an interview with a Chinese woman who said she found
the book brought back chilling memories.
John McDonnell on the Mao joke. "Of course if that's caused an offence I apologise to her".
I will post more from the interviews both men have been giving soon.
And Osborne is about to give an interview to the Today programme. I will cover that in detail.
Then David Cameron is making his Commons statement making the case for bombing Islamic State (Isis) in Syria. We are expecting that at 10.30am. I will be covering it in detail.
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