Morning Call: pick of the papers

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

1. Benefits: taking money from the poor (Guardian)

A historic wedge is being driven between rich and poor, says a Guardian editorial.

2. Labour believes George Osborne will be snared by his own welfare benefits trap (Daily Telegraph)

The Chancellor’s caricature of welfare claimants as slobs on sofas bears no comparison with reality, writes Mary Riddell.

3. Cameron holds the aces. He should sit tight (Times) (£)

In the struggle between Europhiles, Eurosceptics and Europhobes, the middle ground is stronger than people think, says Daniel Finkelstein.

4. Don't mock Nick Clegg – he may stay in power for a generation (Guardian)

Since 2010 the deputy PM has been dismissed as politically crippled, writes Simon Jenkins. Yet his cunning could leave him kingmaker again.

5. Signs of trouble to come for China's new leader (Independent)

Protests over press freedom will test Xi Jinping's reformist image, says an Independent editorial.

6. There is a problem with welfare, but it's not 'shirkers' (Guardian)

This economic model isn't delivering jobs or decent wages, says Seumas Milne. The real scroungers are greedy landlords and employers.

7. A trade deal for Europe and US (Financial Times)

Timing for transatlantic talks is as good as it will ever get, says an FT leader.

8. Does a rise in borrowing mean a return to normality? (Independent)

There are several potential benefits to higher interest rates, says Hamish McRae.

9. Withdrawing child benefit is like sticking two fingers up to stay-at-home mothers (Daily Telegraph)

The coalition is signalling it believes there is nothing to gain from women bringing up their own children, writes Judith Woods.

10. American industry is on the move (Financial Times)

Manufacturers using ‘big data’ are setting the scene for a revival, says Sebastian Mallaby.

Photo: Getty Images
Show Hide image

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.