Chancellor performs u-turn on tax credit cuts

Chancellor George Osborne has scrapped plans to save £4.4bn by cutting tax credits.

The planned cuts had been widely criticised and were rejected by the House of Lords.

Laying out his Autumn Statement and Spending Review to the House of Commons, Osborne said: “I’ve had representations that these changes to tax credits should be phased in. I’ve listened to the 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.”

Universal credit is being phased in, and the Chancellor said the minimum income floor for the benefit will rise with the minimum wage, which he has called the ‘National Living Wage’.

Housing benefits will be cut as part of a £12bn cut to the welfare bill.

The move was welcomed by First Minister Nicola Sturgeon, who tweeted: “Well done to all who kept pressure on Chancellor to drop tax credit cuts. Now need to scrutinise housing benefit cuts.”

However Scottish Greens co-convener Patrick Harvie was more sceptical.

"The Chancellor's apparent u-turn on tax credit cuts is a mere pretence, and vast numbers of people will still lose out, either now or under Universal Credit instead,” he said.