The tax credit cuts that will still go ahead, the bad news for students, and other devils in George Osborne’s detail

1. Not all tax credit cuts reversed

Tory MPs cheer George Osborne's climbdown on tax credit cuts Read more

Not all of the tax credit cuts announced in the summer are being abandoned. The Treasury is still going ahead with a cut to the “income rise disregard” – the amount of extra money a tax credit claimant can earn before losing benefits. In July, George Osborne announced that this was being cut from £5,000 to £2,500. That cut still applies, and it raises £170m.

2. The Office for Budget Responsibility is assuming another delay in the rollout of universal credit

The OBR is assuming there will be another delay in the rollout of universal credit, the government’s flagship new method of paying benefits. The scheme has been downgraded and delayed repeatedly. This is from the OBR’s report:

We have added our own forecast judgment of a further six-month delay to the managed migration phase of the [universal credit, or UC] rollout. As usual, we have considered evidence from DWP and the latest assessment of UC rollout by the Major Projects Authority. While this indicates greater confidence in the ‘transition phase’ rollout plan, considerable uncertainty remains over the ‘managed migration’ phase. And of course the transition phase rollout schedule has just been pushed back six months, just a year after the previous delay.

And this chart highlights all the delays that have already occurred. (The line on the left shows what was originally meant to happen, and the lines on the right are the most recent forecasts.)

3. Average earnings revised downwards

The OBR report also shows that average earnings have been revised downwards for the next five years (by 0.2% in 2016, then 0.2%, then 0.3%, then 0.4%, and then 0.4%).

Facebook Twitter Pinterest Average earnings revised downwards Photograph: OBR

4. Household disposable income revised down

According to the OBR, the level of real household disposable income has also been revised down for 2015 by 0.5%. That means the OBR thinks we have had less money to spend this year than it previously assumed.

Facebook Twitter Pinterest Household disposable income down Photograph: OBR

5. Student loan repayment threshold frozen

Student loans: Osborne criticised for freezing repayment threshold Read more

The government has quietly announced that it is hitting students in the pocket, by not raising the threshold for repaying their loans.



The Department for Business, Innovation and Skills says:

To reduce government debt, the student loan repayment threshold for plan two borrowers will be frozen until April 2021.

Plan two borrowers are those who took out loans from 2012 onwards. Previously, the threshold for repayments was meant to rise in line with earnings.

Student loan repayment threshold frozen

6. Funding for opposition parties to be cut

Osborne accused of ‘despicable’ attempt to cut opposition party funding Read more

It is often claimed that we don’t have state funding for political parties in the UK. But we do, on a modest level, because opposition parties get so-called Short money (named after Ted Short, a former leader of the Commons) to fund what they do in parliament. Currently this is worth more than £6m a year to Labour, and more than £1m a year to the SNP. All political parties can also get policy development grants, which add up to another £2m a year in total.

This money is now being cut. The Tories will lose a bit through the changes to policy development grant funding, but Labour will be hit the hardest. This is from the autumn statement document:

Therefore, subject to confirmation by parliament, the government proposes to reduce Short money allocations by 19%, in line with the average savings made from unprotected Whitehall departments over this spending review. Allocations will then be frozen in cash terms for the rest of the parliament, removing the automatic RPI indexation. Policy development grant allocations will also be reduced by a similar proportion, ensuring that political parties in receipt of taxpayer funding contribute to the savings being asked of local and central government.

Facebook Twitter Pinterest Funding for opposition parties to be cut

7. New stamp duty rate covers second homes as well as buy to let

George Osborne announced a new top-up stamp duty, 3% above the current rate, for people buying homes for buy to let. Bad news, if you have the money and plan to splash; the new rate will cover all second homes, not just ones that are being let.

Facebook Twitter Pinterest Stamp duty rise on second homes and buy to let

This new levy will raise £625m next year, rising to £880m by the end of the parliament.

According to the Telegraph’s Christopher Hope, unmarried couples will be able to avoid this.

8. London bears brunt of transport cuts, but HS2 survives



Transport has been dealt the biggest cut of any government department as a proportion of its day-to-day spending, with 37% slashed from the Department for Transport’s (DfT) resource budget by 2020, reports our transport correspondent, Gwyn Topham.

Facebook Twitter Pinterest London bears brunt of transport cuts, but HS2 survives

Most of the savings will come from London. Transport for London’s operational budget of almost £700m a year will be entirely wiped out by the end of the decade, leaving TfL to fund its services through commercial investment, cuts or potentially higher fares.

But the chancellor said that transport cuts would be offset by money earmarked for infrastructure funding, up 50% from the last parliament to £61bn over the next six years, including 2020-21.

Much of the later spending will go on HS2, whose price tag has been officially increased to £55.7bn at 2015 prices. Road building will account for £15bn in spending, which Osborne hailed as the largest road investment programme since the 1970s.

London will still receive a total £11bn to continue upgrades and new infrastructure, including Crossrail.

The chancellor said the increased capital budget would ensure that critical rail projects such as the electrification of the Midland mainline and Transpennine route could go ahead, after they were shelved earlier this year, to outcry in the north. The DfT forecasts that rail franchising will deliver bigger returns to the Treasury than it currently receives.

The DfT’s budget will fall from £2.6bn this year to £1.8bn in 2019-20. Its departmental administration budget will be cut by 12% in real terms, a slightly less severe cut than the 18% average across government.