Following his decision to scrap planned changes to tax credits, Chancellor George Osborne has stated that other steps will have to be taken in order to eradicate the budget deficit before the next election.
A promise was made to cut the Government’s spending and the welfare budget so that a budget surplus of £10.1bn can be achieved by 2019-20.
In a surprise move, the Chancellor abandoned his plans to cut £4.4 billion from tax credits, following the general consensus among the public, as well as a vote at the House of Lords.
The Chancellor will still ensure that cuts amounting to £12 billion are made, but £27 billion of additional freedom will make the job easier, following tax receipt estimates from the Office for Budget Responsibility, which are higher than expected.
During an interview with Nick Robinson, Mr Osborne said: “We are moving in the right direction and we are making billions of pounds of savings in the welfare budget.
“But people raised concerns with me that the speed of getting there was too quick, that we weren’t doing enough to help families in the transition. And because the public finances had improved a little I could use some of that improvement to smooth the transition to that lower welfare economy.
“So we are heading in the same direction, we are just taking an easier path to it.”
He also announced that £28.5 billion will be raised over the next five years from three tax changes including the new apprenticeship levy on large businesses; a cut to the money given to local councils; and a higher rate of stamp duty being charged on buy-to-let properties and second homes.