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Welfare reforms will still take £3bn from poorest Britons, Labour warns

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Welfare reforms will still take £3bn from poorest Britons, Labour warns

The Labour party has seized on new costings of George Osborne’s welfare reforms to argue that he still plans to take £3bn a year out of the pockets of Britain’s poorest families, despite reversing his controversial tax credits cuts.

Analysis from the independent Office for Budget Responsibility, published on Friday, suggested the changes to universal credit announced in the July budget would save the chancellor close to £3bn by 2019-20.

“Labour warned last week that George Osborne’s U-turn on tax credits might not be all it seemed and today’s report from the OBR shows it was a total con job,” said Owen Smith, Labour’s shadow work and pensions secretary.

Osborne was forced to cancel the planned cuts to tax credits he announced in July, after the House of Lords rejected them and amid disquiet from anti-poverty campaigners and Tory backbenchers.

But the chancellor left in place similar changes to the universal credit system, which is due to replace tax credits, and will now be significantly cheaper.

In his autumn statement speech, the chancellor said: “The simplest thing to do is not to phase these changes in but to avoid them altogether.” But he added: “Tax credits are being phased out anyway as we introduce universal credit.”

The OBR said it had revised down its estimate of how much the tax credits cuts would have saved the exchequer, from £4.4bn next year to £3.4bn, after calculating knock-on effects, such as the resulting increase in the housing benefit bill.

Source: Welfare reforms will still take £3bn from poorest Britons, Labour warns | Politics | The Guardian

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