George Osborne delivers Autumn Statement and Spending Review
The chancellor says he has abandoned planned cuts to tax credits
Police budgets also escape cuts with economy boosted by £27bn windfall
Labour says working families will still lose out
Autumn Statement sets out state of UK economy and signals tax and welfare plans
Spending Review set out details of plans to cut government spending over next few years
There's certain to be plenty more debate about the Spending Review on Thursday, including analysis from the Institute for Fiscal Studies. Meanwhile, all eyes will be back on the House of Commons as David Cameron makes his case to MPs for UK air strikes in Syria against targets linked to so-called Islamic State. We'll bring you full coverage and reaction to both stories and the rest of the day's political events.
Newspapers' verdicts on Osborne's statement
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Image source, The TimesSome of Thursday's front pages
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BBC News Channel
The debt to GDP ratio has peaked, the Chancellor has asset sales he will make, and he's forecasting a budget surplus in 2021 of about the same he was forecasting earlier this year, says Observer columnist Will Hutton. "I think the markets will actually give a thumbs up to this," he says.
Chancellor George Osborne does a U-turn on cuts to tax credits and vows to protect police funding in his Spending Review.
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Danny Shaw
BBC Home Affairs Correspondent
Image source, EPAFinding savings and fending off cuts has dominated the policing debate in England and Wales for more than five years.
It was widely anticipated the Spending Review would confirm the need for police efficiencies would remain at the top of the agenda, at least until 2020.
The Home Office is not one of the favoured "protected" ministries shielded from cuts.
And as 71% of its gross spending goes on crime and policing, that is where most of the department's cuts have bitten.
Sir Bernard Hogan Howe, the Metropolitan Police Commissioner says it was the "right decision" not to cut police budgets.
He says London faces a "variety of threats" including terrorism, cybercrime and a rise in sexual assaults and child abuse. He adds resources needed to be moved to those areas along with building up "firearms capability".
Quote MessageWe welcome that clear statement as we continue discussions with the Home Office next year over a new funding formula to allocate resources to different police forces and to recognize the costs of policing a capital city."
BBC News Channel
Louise Cooper, a personal finance writer, says that cutting grants for student nurses and replacing them with loans could increase personal debt for some to an unsustainable level.
Quote MessageIf you look at the situation in the States [US], which is clearly a lot further down this path than we are here in the UK, you're seeing almost unheard of levels of personal indebtedness, leading to personal bankruptcy, and a lot of that has come from student debt."
The National Institute of Economic and Social Research has put out its analysis of the Autumn Statement, external. On tax credits, it points out: "Future Universal Credit claimants still face cuts. Overall, the welfare payment cuts have been delayed, but not fully undone." In addition, it says that two tax credit cuts, "the family element and the two-child cap", are still going ahead.
Kevin Peachey
Online personal finance reporter
Image source, PAIn a speech that lasted for more than an hour, Chancellor George Osborne revealed his financial game plan and how this will affect the wallets and purses of the watching public.
The speech, made up of an Autumn Statement and a Spending Review, included a significant change of tactics - by scrapping his recent plan to cut tax credits.
He threw himself into some big challenges - not least with buy-to-let landlords who could face a tax rise.
But what does it mean for the finances of spectators on the sidelines - the UK public?
Newsnight's policy editor Chris Cook tweets...
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More analysis on the Spending Review on BBC Newsnight at 22:30 GMT
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Cuts to tax credits have been "delayed rather than scrapped" says the Resolution Foundation.
The think tank says the chancellor "did the right thing" by not going ahead with proposed plans.
It adds:
Quote MessageHowever Universal Credit is the big loser because the cuts to it have not been reversed. Millions of low-income working families are still set to be significantly worse off by the end of the parliament if the Universal Credit roll-out goes ahead as planned. Pain tomorrow is better than pain today – but it is still pain.”
Torsten Bell, Director of the Resolution Foundation
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Robert Peston
Economics editor
Image source, ThinkstockSo how has George Osborne pulled off the magical trick of maintaining spending on the police, imposing smaller than anticipated departmental spending cuts in general, and performing an expensive U-turn on tax-credit reductions, while remaining seemingly on course to turn this year's £74bn deficit into a £10bn surplus in 2020.
Well, it is because the government's forecaster, the Office for Budget Responsibility, has increased its prognosis of how much the Treasury will raise from existing taxes (not new ones) and reduced what it thinks the chancellor will shell out in interest on its massive debts.
In total the OBR thinks the national debt, the aggregate of the annual deficits, will be £23bn lower over the four years to 2020, and just because it is more optimistic about tax revenues and assorted costs.
Labour MP and former shadow Chancellor, Chris Leslie, says George Osborne's U-turn on tax credits was not what it seemed:
Quote MessageDon't be under the illusion that it's a U-turn, it's a delay. And in fact the Office for Budget Responsibility make it quite clear in their analysis that it's going to be more than offset by significant cuts to other benefits further down the line. And this is the thing with these spending reviews, they do tend to unravel when people look at the detail."
Spending Review: The main measures
The Office for Budget Responsibility has published its latest projections for the economy and borrowing, maintaining its forecast of 2.4 per cent GDP growth this year. Its director, Robert Chote, explained the impact of George Osborne's policy measures on the forecast for the coming years:
Quote MessageFirst, in terms of the economy, the fiscal giveaway boosts economic growth slightly next year, although the apprenticeship levy slows earnings growth thereafter. Second, the budget balance is stronger in most years than in July measured like-for-like, because the forecast improvement is bigger than the fiscal giveaway. But if you include the reclassification of housing associations, the headline budget balance is weaker through to 2017-18, but a bit stronger thereafter.
Quote MessageOur post measures forecast implies that the government is on course to meet its fiscal rules. But the tax credit U-turn and slow progress on the reform of disability benefits mean that we expect it to breach its welfare cap through to 2018-19, and only stay within the terms of it by a whisker of it thereafter."
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