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George Osborne: tax credits u-turn was not sign of weakness

‘I have listened to the concerns and I hear and understand them, ‘ he told MPs.

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“There is no question that the cuts will be less severe than implied in July”, Johnson said.

“I am today announcing there will be no cuts in the police budget at all”.

While unprotected government departments will see their day-to-day spending fall by 18 percent rather than the 27 percent implied in July, the spending review is still one of the tightest in post-war history, Johnson said.

In real terms police in England and Wales will get an increase of £900m by 2020 to keep up with inflation, but the West Midlands Police and Crime Commissioner, David Jamieson, seems less than happy.

“Today is a good day for our communities and Thames Valley Police but we must also remember that we are still in times of austerity and we will continue to have some hard choices to make about how we allocate our resources according to local priorities”.

While millions of low-paid families will not now see their benefits cut in April, the relief for many will be temporary point out Labour, with tax credits due to be phased out by 2018 in place of Universal Credit.

George Osborne has been accused of using “smoke and mirrors” over welfare cuts – amid claims Universal Credit cuts will render his tax credits u-turn redundant.

Osborne attributed the improved outlook for Britain’s finances, drawn up by an independent budget watchdog, to slightly higher economic growth forecasts in the next two years and lower debt costs than previously thought as yields on British government bonds stay low.

At the IFS’s traditional postmortem into the chancellor’s budget decisions, Johnson said: “This is not the end of austerity”.

But he was forced to admit that he will breach his self-imposed welfare cap in each of the next three years as a result of the tax credit U-turn forced on him by last month’s defeat in the House of Lords.

Yesterday the Chancellor George Osborne stood in the House of Commons to deliver the second package of fiscal policy measures this year.

The changes were going to affect how much individuals lost as their income increased, meaning that they could lose out on thousands of pounds per year.

The Chancellor also unveiled plans to abolish uniform business rates and allow councils to cut rates in order to attract businesses.

He said Office for Budget Responsibility forecasts showed GDP growing “robustly every year”, living standards rising and more than one million extra jobs being created over five years.

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Osborne stuck to his commitment of turning a budget deficit into a surplus by 2020 in a mid-year budget update on Wednesday, confounding predictions that he might have to rein in his ambitions for putting public finances in the black.

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