Osborne rules out further welfare cuts and tax rises as he targets Whitehall

The Chancellor reveals that he has already secured agreement from seven departments to cuts of up to 10 per cent and makes it clear that he's after more.

After reports at the weekend that he is struggling to secure agreement from cabinet ministers to any cuts in next month's Spending Review, George Osborne has taken the unusual step of touring the studios to reveal the progress he's made so far. On ITV's Daybreak, he announced that seven departments had "agreed provisionally" to cuts of up to 10 per cent, mentioning Justice, Energy and Communities by name (the others are reported to be the Foreign Office, the Cabinet Office, the Treasury  and Northern Ireland). He later added on BBC News that this meant he was now "about 20 per cent of the way there"

Today's Telegraph reports that Iain Duncan Smith has offered to cut welfare by another £3bn in order to protect spending on defence and the police, but Osborne made it clear that with the Lib Dems opposed to any further welfare cuts, this was not an option. "We've already accepted big reductions in welfare, including big reductions for this year, now we've got to look for savings in Whitehall, in government, in bureaucracy," he said. And he made it clear that this would include further cuts to the Home Office and Defence, despite the public protestations of Philip Hammond and Theresa May. While Osborne emphasised that he was "not going to do things that are going to endanger the security of the country, either at home or abroad", he added, "that doesn't mean you can't find savings in the way these big departments operate." In addition to dampening Tory hopes of further cuts to welfare, Osborne also signalled that had no plans to introduce further tax rises on top of those announced in the Budget. "I am in effect ruling it out, I'm looking for the money from Whitehall", he said. 

Challenged on why he was having a Spending Review at all, when he might not be in government for the period in question (2015-16), Osborne pointed out that "the financial year starts before the general election" and also revealed his underlying political motive. The review, he said, would raise the "very interesting question" of whether Labour "would match these plans". Should Labour fail to do so, Osborne will accuse them, as the Tories did in 1992, of planning a "tax bombshell" or more of the borrowing "that got us into this mess in the first place". After the Chancellor's pre-Spending Review report this morning, that is a dilemma Ed Miliband and Ed Balls will soon to have to confront. 

George Osborne arrives at media company Unruly, on April 25, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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