Morning Call: pick of the papers

The ten must-read pieces from this morning's papers.

1. Alex Salmond's wish is for a home rule option for Scotland -- and he'll get it (Guardian)

Martin Kettle warns that the now imminent date for the Scottish referendum leaves little time for the consideration of its impact on the rest of the UK.

2. If the benefit cap doesn't fit, don't wear it (Times) (£)

The limit of £26,000 is easy to understand but is largely symbolic, says David Aaronovitch. The trouble is, it's unfair on too many people.

3. Meddle with the market at your peril (Financial Times)

No other system, from Fabian socialism to Soviet-style communism, has met its people's needs, writes Alan Greenspan.

4. Hayek helped us to find capitalism's flaws (Financial Times)

We work more like a market than business does, write Occupy London.

5. In a sombre year Davos worries about greater equality (Independent)

Hamish McRae notes that on the difficulty of delivering equity, though, developed and emerging economies are alike.

6. Fear may well save the euro. Now for the politics of hope (Guardian)

We must recognise that stability of the eurozone is no substitute for the larger project it was designed to usher in, says Timothy Garton Ash.

7. Europe: rumours of its demise are exaggerated (Times) (£)

At Christmas catastrophe seemed inevitable, says Camilla Cavendish. Now, thanks to the two Marios, the outlook is far brighter.

8. Hester and Huhne are symbols of a country in moral freefall (Daily Telegraph)

Small wonder young people are becoming less honest, given the example they are set, writes Peter Oborne.

9. Human rights: Cameron's message to Europe (Guardian)

The European court of human rights is not all David Cameron has his sights on, says Francesca Klug.

10, The State of the Contest (Times) (£)

President Obama's address to Congress set the election agenda, says this leading article.

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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.