Osborne Scraps Tax Credit Cuts- Society’s Vulnerable Await Universal Credit

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Tax credit cuts
Prime Minister David Cameron and Chancellor George Osborne share a joyous moment in parliament as they listen to opposition demands from across the aisle.

Labour’s former top economic adviser, Karim Palant, says that despite Chancellor Osborne’s U-turn on tax credit cuts, society’s most vulnerable will still be hit somehow by the proposed £12bn welfare cut.

International Business Times reports:

The big announcement from the Chancellor’s Autumn Statement and Spending Review was that the chancellor was scrapping previous plans to introduce cuts to tax credits that would have cost families up to £1,350 ($2,036) each.

Karim Palant, Labour’s former head of economic policy to previous shadow chancellor Ed Balls, told IBTimes UK that the climb-down while embarrassing was in the best interest for Osborne in the long term.

“Clearly there will be questions about his judgement about why he made the decision in July to cut tax credits. But in the end it’s a better scenario for him than carrying out those cuts which would have directly affected about 3 million people hugely,” Palant said.

Despite the u-turn, the chancellor still promised to deliver £12bn in welfare cuts in this parliament. With tax credits spared, the question remains as to where the axe will fall to achieve this. Palant believes the most vulnerable in society will continue to be targeted.

“He shown over the last four or five years that hitting some of the most vulnerable people, those in social housing or with disabilities, he can get away with that. The bedroom tax or the household benefit cap have both forced people to move out of London and pay significantly more of their income. There is obviously a limit to how far he can get away with that but he’s calculated he can get away with that,” he said.

Strain on the NHS

The chancellor also committed a £10bn increase in real terms for the NHS, with £6bn to come next year. He also announced loans for student nurses to create 10,000 training places.

“This is partly funded by cuts to the Department of Health budget which covers prevention and this will have a knock-on effect on the NHS,” Palant noted.


Think Tank warns that families will be affected when Universal Credit is introduced to replace benefits such as Tax Credit.

ITV reports:

The Treasury’s decision to scrap cuts to tax credits means that families will be affected when the planned changeover to universal credits happens, a think tank has warned.

Cross-party think tank Demos “welcomed” the announcement to scrap the unpopular cuts to tax credits but said large portions of the promised savings to the welfare budget now depend on future universal credit figures.

In a statement, Demos said:

The Chancellor’s welcome decision to shelve plans to cut tax credits will protect working families now, at the expense of the Treasury; but over time, the plan is to move from tax credits (and other benefits) to Universal Credit – entitlements we know, from the Summer Budget, will be subject to cuts.

So it is when families make the transition from one system to another that the real savings will be made.



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