British government makes U-turn on controversial tax credit plan

Britain's Treasury chief George Osborne has told the House of Commons that his controversial cuts to tax credits will be scrapped altogether.

Delivering the Autumn Statement and the Spending Review on Wednesday, Osborne said he's listened to the concerns of the people about the tax credit change.

"I’ve had representations that these changes to tax credits should be phased in. I’ve listened to the concerns. I hear and understand them," he said.

"And because I’ve been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether. Tax credits are being phased out anyway as we introduce universal credit. What that means is that the tax credit taper rate and thresholds remain unchanged."

Tax credits, which were increased by Gordon Brown during the last Labour government, are benefits for lower-paid people who are in employment. More than 4 million claim the benefit, with the average tax credit per year working out at £6,340.

There was widespread opposition to Osborne's plans to scrap the credit, including from other Conservative MPs. Last month, the government was dealt another blow to their plan after the House of Lords voted to delay the cuts by a vote of 289 to 272.

The Autumn Statement — one of two showpiece budget updates — gives Osborne an opportunity to lay out his spending priorities. It's accompanied by economic forecasts from the Office of Budget Responsibility.

Source: MashableUK