Is this the coalition's 10p tax moment?

Child benefit cuts come under attack from all sides.

It must count as some achievement to attract the simultaneous ire of the Daily Mail, the Daily Telegraph, the Institute for Fiscal Studies, the trade union movement and the Labour Party. That's the unusual position George Osborne finds himself in this morning as his raid on child benefit comes under attack.

It appears that the cabinet was given little, if any, advance warning of the move, with one minister describing it as "complete bombshell". The Mail and Telegraph both attack the measure as a blow against the family in their leaders this morning and the IFS warns of the perverse anti-work incentives that result from the move. The decision to abolish child benefit for all higher-rate taxpayers means that a one-earner couple with two children with a gross income of £43,876-£46,850 would be worse off than if their income were £43,875. A one-earner couple with an income of £43,875 would need a pay rise of at least £2,975 to ensure they were no worse off after paying tax and losing child benefit.

It's for reasons like this that, less than 24 hours after the measure was announced, the children's minister, Tim Loughton, has already floated the possibility of "compensating measures" for those who have lost out. Is this the coalition's 10p tax moment? It would be foolish to rule it out. The decision to simultaneously abolish tax credits for all those earning over £30,000 means that there will be howls of anguish from those set to lose thousands of pounds of benefits in a single stroke.

But far more significant is the fact that this marks the opening salvo in the coalition's war on the universal welfare state. The decision to make child benefit universal was never just about income, rather it was the means by which society collectively recognised and supported the decision of couples to start a family. Once the poison of means-testing is injected into the system, the principles on which the entire welfare state is built start to break down. And it is the poorest who will suffer the most from the abandonment of universality. As the great sociologist, Richard Titmuss phrased it: "services for the poor will always be poor services." Ed Miliband must live up to his campaign promises and resist the coalition all the way.

George Eaton is political editor of the New Statesman.

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Autumn Statement 2015: George Osborne abandons his target

How will George Osborne close the deficit after his U-Turns? Answer: he won't, of course. 

“Good governments U-Turn, and U-Turn frequently.” That’s Andrew Adonis’ maxim, and George Osborne borrowed heavily from him today, delivering two big U-Turns, on tax credits and on police funding. There will be no cuts to tax credits or to the police.

The Office for Budget Responsibility estimates that, in total, the government gave away £6.2 billion next year, more than half of which is the reverse to tax credits.

Osborne claims that he will still deliver his planned £12bn reduction in welfare. But, as I’ve written before, without cutting tax credits, it’s difficult to see how you can get £12bn out of the welfare bill. Here’s the OBR’s chart of welfare spending:

The government has already promised to protect child benefit and pension spending – in fact, it actually increased pensioner spending today. So all that’s left is tax credits. If the government is not going to cut them, where’s the £12bn come from?

A bit of clever accounting today got Osborne out of his hole. The Universal Credit, once it comes in in full, will replace tax credits anyway, allowing him to describe his U-Turn as a delay, not a full retreat. But the reality – as the Treasury has admitted privately for some time – is that the Universal Credit will never be wholly implemented. The pilot schemes – one of which, in Hammersmith, I have visited myself – are little more than Potemkin set-ups. Iain Duncan Smith’s Universal Credit will never be rolled out in full. The savings from switching from tax credits to Universal Credit will never materialise.

The £12bn is smaller, too, than it was this time last week. Instead of cutting £12bn from the welfare budget by 2017-8, the government will instead cut £12bn by the end of the parliament – a much smaller task.

That’s not to say that the cuts to departmental spending and welfare will be painless – far from it. Employment Support Allowance – what used to be called incapacity benefit and severe disablement benefit – will be cut down to the level of Jobseekers’ Allowance, while the government will erect further hurdles to claimants. Cuts to departmental spending will mean a further reduction in the numbers of public sector workers.  But it will be some way short of the reductions in welfare spending required to hit Osborne’s deficit reduction timetable.

So, where’s the money coming from? The answer is nowhere. What we'll instead get is five more years of the same: increasing household debt, austerity largely concentrated on the poorest, and yet more borrowing. As the last five years proved, the Conservatives don’t need to close the deficit to be re-elected. In fact, it may be that having the need to “finish the job” as a stick to beat Labour with actually helped the Tories in May. They have neither an economic imperative nor a political one to close the deficit. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.