Low income families and pensioners were given an early Christmas present by the Chancellor of the Exchequer George Osborne as he announced his Autumn Statement today, Wednesday.
Planned £4.4bn in tax credit cuts were abandoned, with taper and threshold rates for working tax credits and child tax credits remaining the same.
He announced the government is to borrow £8bn less than forecast, with the aim of securing £10.1bn budget surplus by 2020.
Overall day-to-day government departmental spending is to be cut by £20bn however, equivalent to 0.8 per cenr of total expenditure each year by 2020, the public sector feeling the pinch.
But policing, health, education, international aid and defence budgets have all been protected.
“The police protect us and we protect the police,” Osborne told MPs.
“We were elected as a one nation government. Today we deliver the Spending Review of a one nation government.
“The guardians of economic security. The protectors of national security. The builders of our better future.
“The government; the mainstream representatives of the working people of Britain,” he said.
However, with health, schools, defence and overseas aid all protected, it meant big cuts for other Whitehall departments.
The Department for Transport will see its operational budget cut by 37 per cent, Energy and Climate Change, Business, Innovation and Skills 22 per cent, and Environment 15 per cent.
The East Midlands Chamber have welcomed the Chancellor’s statement.
Chris Hobson, the Chamber’s Director of Policy, said: “This was largely a positive Autumn Statement which included a number of sensible measures that many local businesses will welcome.
“Upgraded growth predictions gave the Chancellor more room to manoeuvre than he’d had previously, which enabled him to deliver a Spending Review that will provide reassurance to businesses and consumers alike.
“Businesses will welcome the long-term focus on infrastructure, particularly when it comes to building the houses and upgrading the road networks which are so badly in need of repair, but it was frustrating that we still have no further clarity on the route or delivery timeframe for the Eastern Leg of HS2. However it is encouraging to see that funding has been allocated to develop a strategy for the proposed hub station at Toton.
“Significant enhancements to the science, capital investment and low carbon budgets will help the many hi-tech businesses, for which the East Midlands is renowned, continue to innovate and drive advancements in technology.
“The one big disappointment was the lack of acknowledgement for the Midlands Engine for Growth and the role it will play in complementing the Northern Powerhouse to rebalance the economy away from London and the south.
“The challenge for government now is to ensure it can translate this rhetoric into reality, to deliver the improvements to housing, energy, infrastructure, skills and productivity and provide the certainty required by business to enable it to deliver the balanced and sustainable growth the country needs to remain globally competitive.”
Elected mayors would have the power to raise business rates for infrastructure projects, he added.
He also announced 26 new Enterprise Zones - offering tax breaks and fast-track planning - including 15 in towns.
He added: “There would be no jobs without a vibrant sector,” before announcing a cut in corporation tax from 20 to 18 per cent.
Chancellor of the Exchequer George Osborne also announced in the Autumn Statement that by the end of this Parliament local councils will keep 100 per cent of business rates.
Some 600,000 of the smallest businesses would benefit from a year-long extension of small business rates relief, he added.
And he was continuing the industrial strategy, launched in the last Parliament, with a commitment to support the aerospace and automotive industries “for the next decade”.
And spending on science would rise by £500m from £4.75bn “by the end of the decade”.
An apprentice levy would be introduced in April 2017 set at 0.5 per cent of large employers’ wage bill. It was set to raise £3bn and help fund an increase in apprentices from 2m to 2m by 2020.
“It is a huge reform to raise the skills of the nation,” he said.