Autumn Statement: Osborne's spending review takes risks & makes U-turns to dodge political storms - but only in the short term

George Osborne wants to be seen as a builder and as a friend to workers. Lower borrowing costs allow him to cut less this time around and tax rises offer more apprenticeships, yet it all rests on a series of gambles. Photograph: The Chancellor with guests at Port of Tilbury on 1 April 2014 by HM Treasury (License) (Cropped)

This was expected to be an announcement of ever deeper cuts than ever before, with £20bn needed to keep on course with Conservative fiscal targets (Kuenssberg et al, 2015). With George Osborne as Chancellor, however, it was never quite possible to be too sure.

The big unexpected move this time around was the Chancellor's decision to drop the proposed cuts to tax credits (Robinson, 2015). Announcing a better than expected fiscal situation, and saying he had listened to concerns, Osborne said it was easier simply to avoid the changes altogether (Politics Home, 2015).

That was accompanied by the announcement of no cuts to police budgets and the frontloading of NHS funding at £6bn next year (ITV, 2015; Dominiczak, 2015). In sum, these announcements gave the impression of a much less stringent budget, on the back of an Office of Budgetary Responsibility (OBR) assessment that more money would be available, with lower borrowing costs, and so less would need to be cut (Reuben, 2015).

These announcements followed the Osborne's habit from previous budgetary statements and announcements, of pulling out a surprise. And yet, for everything that Osborne hasn't cut, he is still gambling on the market bailing him out later by delivering the OBR's predicted strong economic conditions, rewarding him with higher tax receipts, if he is going to meet his own targets.

If expectations and receipts fall short then cuts will still have to be found later. In fact, the observation has been made that the backdown on tax credit cuts is only a temporary stay, as the cuts will still come with its phasing out to be replaced with the universal credit by 2020 (Kuenssberg, 2015; Eaton, 2015).

Burdens are once again being shifted by the Chancellor. Along with the private debts taken on over the last five years by students, joined now by student nurses (BBC, 2015), there will be caps on housing benefits (Peston, 2015). There was also no relief from the Tampon Tax, with the odd decision to maintain the tax but to use it to fund women's charities (Richards, 2015).

The burdens are also being stacked onto local government and the private sector - with new taxes on business to pay for apprenticeships and local government expected to raise local rates to cover certain services (ITV, 2015{2}; Wintour, 2015).

Full analysis of the line-item details will follow from all corners of the media and political world.

Yet the initial impression is that the Chancellor is once again taking a risk. Osborne is gambling on markets and the broader economy to perform well enough to buy him time and space until the political storms blows over - which allows him to wriggle around on the nose cuts, in favour of less dramatic phased changes.

References

Laura Kuenssberg, Robert Peston & Kamal Ahmed's 'Spending Review/Autumn Statement: BBC editors on what to expect'; on the BBC; 24 November 2015.

Nick Robinson's 'Chancellor performs complete screeching 180 degree U turn on tax credit cuts & claims he can pay for it thanks to better borrowing figures'; from Twitter; 25 November 2015.

'Osbo: "The simplest thing to do is not to phase these changes in, but to avoid them altogether.” http://bit.ly/1P8Fk4I #spendingreview'; from Politics Home; on Twitter; 25 November 2015.

'Spending Review: Chancellor scraps plans to cut tax credits and police budgets'; on ITV News; 25 November 2015.

Peter Dominiczak's 'George Osborne will use Autumn Statement to increase NHS funding by £6billion: The Chancellor will this week announce that the NHS is to receive a £6billion cash injection next year to protect the health service from a deepening crisis that could affect millions of patients'; on The Telegraph; 24 November 2015.

Anthony Reuben's 'Autumn Statement: Public finances better off by £27bn'; on the BBC; 25 November 2015.

Laura Kuenssberg's 'Important to note some cuts to Universal Credit which will replace tax credits have already passed'; from Twitter; 25 November 2015.

George Eaton's 'Tax credit cut hasn't been abandoned but deferred to 2020 as part of Universal Credit. #spendingreview'; from Twitter; 25 November 2015.

'George Osborne announces grants for student nurses will be scrapped and replaced with loans http://bbc.in/1XquOoy #SpendingReview'; on the BBC; from Twitter; 25 November 2015.

Robert Peston's 'Another bash to housing associations and councils through cap on housing benefit'; from Twitter; 25 November 2015.

Victoria Richards' 'Tampon tax: Osborne says VAT on sanitary products will fund women's charities in Autumn Statement - Tampons and sanitary towels will continue to be considered 'luxury' items'; in The Independent; 25 November 2015.

'Spending Review: Chancellor scraps plans to cut tax credits and police budgets'; on ITV News; 25 November 2015{2}.

Patrick Wintour's 'Osborne plans to allow 2% council tax rises to plug social care holes'; in The Guardian; 20 November 2015.