Osborne blinks first

Osborne – with his ‘Caesar’ haircut – stood at the Commons despatch box yesterday with his Labour political opponents in front of him and his Tory political enemies behind him. We all know how Caesar’s career ended.

In this uneasy political stand-off, Osborne blinked.

He didn’t want to. He didn’t like it. What he did was driven by the fear that he won’t make the move to Cameron’s job and the bigger house next door. But he moved on tax credits, defence spending and police cuts.

The tax credit u-turn – or swerve – means Osborne misses his ‘welfare cap’ for three years. That cap did not fit for long, showing how daft it is to pass pointless laws.

McDonnell was cutting. “I’m convinced this is sheer economic illiteracy built on incompetence and poor judgement. Only four weeks ago he brought to this House the Charter for Fiscal Responsibility; a central part of that was adherence to the welfare cap. Today he’s broken his own welfare cap.”

The swervy u-turn won’t stop further attacks on welfare in the future – there will be cuts in Universal Credit – or further news of police cuts. But at least they spotted how daft it was for aircraft carriers not to have aircraft. And importantly, over 3m households will not now lose an average of over ÂŁ1,000 in five months.

Whisked out of nowhere

And for sure, billions of pounds have been whisked out of nowhere to supply the glue and sellotape which holds together his spending plans. Another £27bn from forecasts of extra tax income – with only a 50-50 chance of this money actually appearing it has seemingly come out of thin air.

The extra tax revenue forecast is a real stonker. Because for the last three months in a row – for the year as a whole too – of the actual figures, tax revenue has been lower than forecast and spending greater.

That is what is known as a deficit. And, as we know, Osborne has an established track record of not hitting his own targets by a very large margin.

Labour’s John McDonnell rubbed his nose in it. Austerity was meant to be ended by now, but incompetent Osborne had stretched austerity cuts from five years to 10 years missed his self-imposed targets on the deficit.

Credit to John McDonnell, he has scared Osborne into at least some changes, spectacularly so on tax credits, police and defence funding. And quite possibly also into whisking up an unlikely amount of extra tax revenues.

There are cuts and bad news for workers, but Osborne had read the tea leaves about the fatal impact full on austerity would have on his political ambitions. We are partially saved by his ego and his ambition.

In truth the Autumn Statement, setting out five years of government spending adds little to the alleged long term economic plan. The Office of Budget Responsibility (OBR) says the announcements will “have a small impact on the economy, boosting growth a little in the short term.”

That’s underwhelming. But the boost to economic growth – says the OBR – is only possible because Osborne eased off a bit on cuts and because of population growth. If he’d stuck to his ‘plan’, he would have put a choke hold on growth

Growth needed to cut deficit

Some credit to McDonnell again, who had made a huge play on the need for growth to cut the deficit and his criticism that Osborne’s austerity was holding it back. Osborne blinked.

But the OBR warns that cuts and other measures will eventually dampen down what weak wage growth we are seeing.

So the self-proclaimed party of the workers is making the workers pay – again.

As for housing, it will become even more unaffordable than it is now. The OBR predicts a 5 per cent annual house price inflation. Wage rises will neither keep up with house price growth, nor with private rent rises.

The ÂŁ7bn housing investment scheme to create so-called affordable homes will therefore fail. With each passing year buying a home becomes more out of reach even with public subsidy.

And as for housebuilding – anyone in construction says the same. The private sector does not have the capacity to build all the homes we need – affordable or not.

And not a single mention of council homebuilding to boot.

Health was seemingly ‘protected’ but with ÂŁ20bn in ‘efficiency savings’ – that is not extra money, and it usually means stealth generating savings. It means the NHS will continue to run on a wing and a prayer. And with cuts to public health it will not keep pace with the demands of a growing and ageing population.

And in a particularly mean-minded twist, the Tories are generating some money by removing nursing student grants and turning them into loans. So more indebted nurses.

Social care

Has the silent crisis in social care produced some movement? The elderly and the vulnerable rely on it and according to charity Independent Age, 400,000 fewer elderly and disabled people are getting the care services they would have got back in 2010.

Local councils have slashed annual adult social care budgets by ÂŁ4.7bn since April 2010. That was part of Osborne’s last five-year plan.

Osborne will let councils increase council tax by up to 2 per cent, but only if it is spent on social care. It might generate a maximum of ÂŁ2bn a year says Osborne, plus ÂŁ1.5bn from the better care fund by 2020.

But there is still a massive shortfall as all he has done is partially filled the massive funding gap he created in the last five years – in an area that has always been underfunded. In combination with local government being again hit incredibly hard, the impact could be devastating.

It’s only today we find the official statistics which show there were nearly 44,000 ‘excess winter deaths’ that occurred in 2014/15. The highest level of excess winter deaths this millennium.

Most of those deaths were amongst those aged 75 and over – an estimated 36,300 winter deaths in that age group alone. The numbers are like WW2 battle casualties. The number of deaths suggests a catastrophic lack of care.

The news about police funding makes life interesting. Police cuts will still go ahead, on top of the 17,000 frontline police posts which have already gone.

Referring to the Paris attacks, McDonnell pointed out there is more to a response to terror than the police. Osborne mentioned the ’emergency services’ but decided only to protect police funding – the fire service will still face full on cuts.

Police funding might appear to be ok for now. But our overall capacity to respond to a whole range of incidents – terrorism, huge fires, floods, and plain old freezing weather – through fire and ambulance services, is greatly reduced and will get worse.

Make no mistake, Osborne has blinked.

His plan – if you can call it that – is based on a lot of rosy forecasting. But Osborne has looked in the cuts abyss and John McDonnell looked back at him. And in the background Osborne’s Tory enemies sharpened their knives for the man with the Caesar haircut.