Osborne’s tax-credit U-turn: no time to celebrate victory

In today’s Autumn Statement, Osborne has announced that the proposed cuts in tax credits will not now go ahead until the introduction of Universal Credit (although families already on Universal Credit will suffer the full cut)  It’s being hailed as a victory for Labour’s opposition to it – some commentators on social media are claiming that it is a vindication of Jeremy Corbyn’s strategy.

It isn’t.

It’s a very clever piece of politics, by a very political Chancellor, who will doubtless find offsetting money elsewhere.  It’s a headline-grabber that will divert attention from the £22m “efficiency savings” in the NHS, which will more than trump the extra NHS cash trailed in advance of the statement.  Or that local government’s financial crisis has just been made worse by a 2% care precept that won’t cover rising costs and will mean councils will have to find additional Council Tax benefit.  Transport budgets have been cut by nearly 40%, which is bound to mean savage cuts and fare rises in the local bus services on which those on low incomes depend.

And it ignores the fact that the UK economy will continue to face huge fiscal constraints; that on Osborne’s watch the national debt has doubled; that real wages for all except pensioners and those on significantly above-average earnings remain below pre-crash levels – that’s nearly ten years.

The fact is that this is a victory for Osborne, because he has been able to make this change without fundamentally altering either his spin or his strategy. We are still in the world of deficit reduction, even though both private and government debt (of which the former is, in economic terms, much more serious) look set fair to rise.  The drive for a Government surplus, funded by further savage cuts in the living standards of the most vulnerable, remains. The Tory narrative is still intact.

The real victory for Labour will come when we have succeeded in wrenching the economic debate out of Osborne’s hands.  John McDonnell is setting out ways of doing that, but we shouldn’t start claiming victory on the grounds of a piece of Tory spin.  This is a very long game indeed.

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