With its double policy U-turn, fancy fiscal footwork, and political pirouettes, George Osborne's autumn statement and spending review was a virtuoso display of skill and poise that put Strictly Come Dancing in the shade.
Battered for weeks by the fallout of the House of Lords' rejection of his plan to save more than £4 billion by cutting benefits for the working poor, the chancellor of the exchequer entered the Commons chamber on Wednesday with his political reputation in the balance. By the time he sat down, the Conservative benches were exultant, Labour MPs were in even deeper gloom than usual, and Osborne was restored as the clear favourite to succeed David Cameron as prime minister when the time comes.
The chancellor was widely expected to delay or slow down the cuts to tax credits, which would have left 3.3 million families worse off by an average of £1100 a year. Instead, he wrong-footed his detractors by announcing that he was scrapping the cuts altogether. One opposition fox down, he went on to shoot another, declaring that he would not be making heavily trailed cuts to police spending.
“Now is not the time for further police cuts. Now is the time to back our police and give them the tools do the job” he oozed. “The police protect us, and we’re going to protect the police.”
The good news kept coming, as Osborne announced more cash for spies, billions of pounds in subsidies for house building, and more money for pensioners. Despite this largesse, the chancellor said he will still reach his target of eliminating the budget deficit by 2020 and reduce the public debt.
Osborne did announce big cuts to some government departments and there will be significant tax increases, including stamp duty on second homes and buy-to-let properties.
But what allowed him to loosen the purse strings was an unexpected windfall of £27 billion, which was fortuitously conjured up by the Office for Budget Responsibility.
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The budget watchdog, which is independent, has concluded that tax receipts will be better than expected, chiefly because the British economy is doing well. If it was a good day for the chancellor and the Conservatives, it was a bleak one for the party opposite. But nothing is so bad for Labour MPs these days that their own leadership cannot make it worse.
And so it was that shadow chancellor John McDonnell decided to lighten the atmosphere by taking out a copy of Mao's Little Red Book, quoting from it to tease Osborne about his enthusiasm for doing business with China.
“Let’s quote from Mao, rarely done in this chamber. The quote is this: ‘We must learn to do economic work from all who know how, no matter who they are, we must esteem them as teachers, learning from them respectfully and conscientiously, but we must not pretend to know what we do not know.’ I thought it would come in handy for him in his new relationship,” he said.
Tories roared with delight as McDonnell tossed the book across the despatch box. Behind him, Labour MPs were silent, numbed by despair.