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With no coalition partner, George Osborne negotiates himself out of £12bn welfare cut

7 July 2015

10:29 PM

7 July 2015

10:29 PM

Let’s face it: George Osborne’s pledge to save £12 billion from welfare over two years was never really credible. He never told us where the savings would come from, and it seemed as if he didn’t really know. So tonight’s news, that the Chancellor has cut this to £8bn and given himself an extra year (or two) to make the full £12bn, is welcome.

He kinda plucked the £12 billion figure out of the air in the middle of the general election. It was doable, from the whole welfare budget. But then Osborne’s election-time promises came: pensioners (who are more likely to vote) would not be affected. So yet again, the pain would be borne by the working-age – precisely the same group that had taken most pain thus far. And over two years? Really? It was too much. And needless.

Now, remember at the time of making Screen Shot 2015-07-07 at 22.58.05the £12bn promise the Tories didn’t expect to win. Andrew Cooper, Cameron’s ex-chief strategist who runs Populus, calculated that his old boss had a 0.5 per cent chance of victory (right). This figure is worth remembering because it sums up the circumstances in which Osborne etc were making promises. The odds on having to actually implement the Tory manifesto seemed minuscule.

So the Tories always expected this £12bn figure to be negotiated down by their coalition partners. As it turned out, there were no coalition partners – so Osborne has ended up negotiating himself down from the £12bn. Just as Cameron had to negotiate himself down from his pledge to scrap the Human Rights Act in his first 100 days. The Tory manifesto was intended as a negotiating document; now they’re negotiating with reality. And, so far, with encouraging results.

I’m a fiscal hawk, but even so I’m quite glad that Osborne has relented. The UK can borrow at 2.2pc right now, so there’s no great urgency. Tax revenues are ahead of forecast (below) so that helps further.

Screen Shot 2015-07-07 at 22.31.50

Tax credits do need to be reformed, the system does need to be made to work far better – but too many families’ finances are at stake for this to be done in a hurry. If One Nation Conservatism means anything it should mean being mindful of the need to do what’s right by those who have moved from welfare into low-waged work and need government support as they move their way up the ladder.

One final thing: Osborne needs to watch his language. Writing in The Sun, he said he was bracing himself for “depressingly predictable howls of protest” over welfare cuts. He should realise that while there may be no alternative to the tax credit cuts he’s about to make, the howls will be ones of pain – genuine pain. It’s not something he, or any Conservative, should belittle.


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