George Osborne in the House of Commons
The Chancellor conducted a full U-turn on tax credit cuts after coming up against stiff oppositionReuters

George Osborne has dramatically dropped his plans to cut tax credits after the proposal was rejected in the House of Lords. The Chancellor made the announcement during the joint Spending Review and Autumn Statement in the House of Commons on 25 November.

The top Tory was expected to make revisions to the welfare curbs after peers embarrassingly voted against the plans, but by totally scrapping the plans the decision will be seen as a big victory for Jeremy Corbyn and Labour.

The move came after the independent think-tank the Institute for Fiscal Studies (IFS) warned that on average claimants would be £1,350 ($2,036) a year worse off under the plans. Tory backbenchers did show some discontent about the reforms but the statuary instrument, rather than a full Bill, passed through the Commons.

But the upper chamber eventually voted to halt the cuts by 307 to 277 after crossbench peer Baroness Meacher tabled an amendment in the Lords against Osborne's plan.

The Chancellor was expected to unveil that the government would phase in cuts by adopting a plan similar to Labour veteran and Work and Pensions Committee Chair Frank Field, who wanted to introduce an additional earnings threshold. However, Osborne conducted a full U-turn on the issue. "The simplest thing to do is to not phase these changes in, but to avoid them all together," he told MPs.


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