Spending review 2015: George Osborne scraps tax credit cuts - live
The chancellor is revealing the economic forecasts for the year ahead and setting out public spending cuts for the rest of this parliament
2.41pm GMT
Paul Johnson, director of the Institute for Fiscal Studies, has just been on the BBC explaining how George Osborne has been able to fund his surprise "good news" announcements. Asked if the sums were credible, Johnson said:
[Osborne] has got a bit lucky, in that there are some more tax revenues expected to come in by the OBR. And he's got a bit lucky because he's going to be a spending a bit less on debt interest. He has also increased taxes reasonably significantly. There's a 3bn impost on business to pay for the new apprenticeships. And there are some increases in council tax, probably. And there are some other tax increases there.
So he's done two things. He has taken advantage of increased revenues and reduced spending on debt interest. He's increased taxes a bit. And he's essentially used most of that money to damp down the cuts in spending. And because those cuts in spending were on a relatively limited part of government, the effect of that bit of extra money is to significantly reduce the overall level of cuts.
2.31pm GMT
The OBR has revised up its forecast for income tax and national insurance contributions this parliament by almost 15bn.
That has helped to chancellor to stick to his deficit reduction targets despite raising spending - so there could be problems if they're wrong...
increase in income tax projections, which OBR has overestimated before (but Osborne has spent in the mean time) pic.twitter.com/nNAGXGl5GM
2.27pm GMT
It's official, the cap doesn't fit.
The Office for Budget Responsibility has predicted that the government will fall into its welfare cap trap several times.
Our central forecast shows that the terms of the welfare cap are set to be breached in three successive years from 2016-17 to 2018-19, with the net effect of policy measures raising welfare cap spending in each of those years, and to well above the 2 per cent forecast margin in 2016-17 and 2017-18.
The terms of the cap are set to be observed by very small margins in 2019-20 and 2020-21, with spending above the cap but within the forecast margin and with the net effect of measures in those years reducing spending.
2.21pm GMT
The OBR has calculated that today's measures will raise gross tax take by 28.5bn by 2020.
It says:
These include the new apprenticeship levy (11.6 billion), higher council tax (6.2 billion), and the introduction of higher rates of stamp duty land tax for second homes and buy-to-let purchases (3.8 billion).
Apprenticeships Levy raises 3 billion a year - epic tax rise on business
2.20pm GMT
Today's detailed forecasting by the OBR has some grim news for John Swinney, the Scottish finance secretary, by warning that income from taxes controlled by the Holyrood parliament in Edinburgh are likely to be lower than it thought.
Raising fresh questions about the Scottish government's future finances, the OBR forecasts that tax income from Swinney's flagship replacement for stamp duty, introduced on new house sales earlier this year, will be 20% lower over the next six years than it predicted in July.
2.12pm GMT
Here is a quick round-up of what political journalists and writers are saying about John McDonnell on Twitter. Mostly they are not complimentary.
(The consolation for McDonnell is that it does not really matter. Almost all the media focus today will be on Osborne.)
"Bring back Ed Balls" shouts a Tory but McDonnell making a decent fist of it given he is speaking on something he hadn't previously seen
McDonnell a bag of nerves responding to spending review. Stumbling over words + gulping for air. Good hit on welfare cap, but struggling now
Chris Leslie, Yvette Cooper scouring CSR small print on backbenches. Reminder that McDonnell never done rapid budget reaction. Others have.
McDonnell overachieving against expectations here - on his debut in a tough situation
I don't think it would matter whether McDonnell gave a spectacular response to this. Most Labour MPs are horrified he's even doing it.
McDonnell is waving around Mao's little red book - apparently oblivious to the signal this sends out.
I would say this McDonnell speech is worst response from the dispatch box I have ever seen. Dire.
Labour response now from @johnmcdonnellMP shows why CX felt he cd get away with double U turn. Couldn't make capital out of tax credit win
2.11pm GMT
The Office for Budget Responsibility confirms that it has raised its forecast for tax receipts, allowing George Osborne to ease back on austerity.
In the first combined Spending Review and Autumn Statement since 2007, the Government has taken advantage of an improvement in the outlook for tax receipts - concentrated in the middle years of this Parliament - to further loosen the impending squeeze on public services spending, to increase capital spending and to reverse the main tax credit cuts it announced in July, while still delivering a modestly stronger budget balance in most years on a like-for- like basis. As the boost to receipts begins to ebb, the Government increases departmental spending by less and relies more on tax increases to maintain the bottom line improvement.
Taken together with the other measures in the Autumn Statement, the Government has announced a net fiscal giveaway of 6.2 billion next year, more than half of which is the cost of reversing the tax credit cut. This outweighs a 2.9 billion improvement in the underlying forecast in that year and thereby pushes up the deficit.
In his 1st term, OBR lifted its borrowing forecasts, forcing GO into more austerity. Now, in his 2nd term, opposite seems to be happening
2.01pm GMT
McDonnell is still speaking. He says this statement was part of Osborne's leadership bid.
The statement will be seen as the apex of Osborne's career, he says.
1.58pm GMT
John McDonnell, the shadow chancellor, is responding to George Osborne now. Having to respond to statements of this kind is the hardest task any parliamentarian ever has to undertake (because the opposition gets no advance warning of what is in these statements) and no one ever really triumphs in this role.
McDonnell started by taunting Osborne for the fact that he failed completely to cut the deficit in one parliament as he promised in 2010. McDonnell's argument was sound, although his attempt to lecture the Tories on deficit reduction and economic credibility prompted laughing from the government benches.
1.57pm GMT
The Office for Budget Responsibility's new Economic and fiscal outlook is online too. Now we can see the details of today's figures....
1.49pm GMT
The Spending Review and Autumn Statement are online here.
1.49pm GMT
John McDonnell has just stood up to respond to George Osborne. He has got quite a task, because there were some genuine political surprises there, as well as at least two leaps into Labourish territory. Quite how Osborne will fund his "good news announcements" is a total mystery, on the basis of what Osborne said, but after a few hours with the red book we should find out. But Osborne does probably deserve some credit for abandoning his tax credits completely, instead for opting for a fudge. If you are going to do a U-turn, you may well do one properly, and Osborne pulled this off with some aplomb. His announcement on police funding was a real surprise too (although we need to see the small print). More interesting were the apprenticeship levy - a 3bn tax on big business, not unlike Gordon Brown's 1997 windfall tax, and more ambitious than anything Labour proposed at the election - and the punitive 3% stamp duty for buy to let landlords, another move that sounds Jeremy Corbyn than Ed Balls.
1.48pm GMT
1.43pm GMT
Here's Heather Stewart on today's Autumn Statement:
George Osborne has executed a complete U-turn on his controversial cuts to tax credits, as he delivered what he called, "a big spending review from a government that does big things".
Osborne had promised to modify the plans, which would have seen 3m low-income families lose an average of 1,000 a year, after they were rejected by the House of Lords, and criticised by Conservative backbenchers.
Related: George Osborne scraps tax credit cuts in welfare U-turn
1.40pm GMT
You always expect a few white rabbits from George Osborne.
But this time, the Office for Budget Responsibility handed the chancellor a plump bunny, with better growth forecasts despite recent signs of weakness in the global economy.
Big news: no police cuts. #AS2015
Thatcher left office with spending/GDP 6.4% lower than when she arrived. Osborne will hit 6% in 2015.#spendingreview pic.twitter.com/J6VlnxtH5K
1.38pm GMT
Osborne says the Tories were elected as one nation government. And they are governing as such, he says, as "the mainstream representatives of the working people of Britain".
1.37pm GMT
Osborne says the counter-terrorism budget is going up 30%.
Osborne says some people have said police budgets should be cut by 10%. (This is a reference to Andy Burnham, the shadow home secretary, who said the police could live with cuts of 10%.)
1.37pm GMT
Is the party over for buy-to-let landlords? Newsnight's Duncan Weldon suggests so:
That seems like a big hit to the buy to let sector. #spendingreview
1.36pm GMT
Conservative backbencher David Davis (former shadow home secretary) has also given Osborne the thumbs-up:
David Davis on tax credits U-turn: brilliant news, chancellor to be congratulated for listening to concerns of b'benchers and voters
1.35pm GMT
Osborne turns to security.
It is in the national interest to spend on aid, he says.
1.34pm GMT
Osborne turns to house building. Some details of his plans emerged overnight.
He says he wants to do much more than in the past.
1.29pm GMT
Osborne says under-used courts will be closed. The 700m saved will be used to introduce new technology into the court service.
Nine new prisons to be built.
1.28pm GMT
Osborne turns to apprenticeships.
1.26pm GMT
1.25pm GMT
Osborne says the arbitrary schools funding system will be replaced.
He commends MPs from all parties who have campaign for this.
1.24pm GMT
Osborne says sixth form colleges will be able to become academies, so they do not have to pay VAT.
Councils running schools will become a thing of the past.
1.23pm GMT
Osborne says free school meals and the pupil premium will be maintained.
He says the national citizen service will be expanded. By the end of the decade, there will be places for 300,000 students.
1.22pm GMT
Osborne says the government is making the largest ever investment in free childcare. It will be available from 2017. But it will only be available to families working a certain number of hours per week.
1.22pm GMT
The Shadow Secretary of State for Work and Pensions, Owen Smith, warns that low-income households on Universal Credit are still vulnerable:
Let's be clear: the tax credit reverse is a victory - but the 140k families already on UC will still suffer the full cut 1/2
And all families that would newly qualify for Tax Creds in 2018 will suffer the full cut under UC - so this is not the full & fair reversal
1.21pm GMT
Osborne says sound public finances can help the most disadvantaged.
Inequality is down, and child poverty is down, he says.
1.21pm GMT
Osborne says this is similar to the way Libor fines are used to help service charities. He names various ones that will benefit from Libor money, including the Winston Churchill Memorial Trust.
And there will be a memorial for the victims of 7/7.
1.20pm GMT
Osborne says there are many charities that support vulnerable women.
Some 300,000 people have signed a petition calling for the removal of the tampon tax.
1.18pm GMT
Osborne says cuts in arts funding are a false economy.
The DCMS's administrative budget will be cut by 20%.
1.17pm GMT
Osborne says the Department for Business budget is being cut by 17%.
In the last parliament the budget for science was protected in cash terms. In this parliament it will be protected in real terms, he says.
1.16pm GMT
Professor Geraint Johnes, Professor of Economics at Lancaster University, tells us:
"New freedoms have been given to councils to realise income generated through sales of property. Useful, but can only be done once."
1.15pm GMT
Osborne says the small business rate relief scheme is being extended for another year.
1.14pm GMT
Osborne says support for climate finance is being increased.
A new energy scheme will save 30 a year from the energy bills of 30m households, he says.
1.12pm GMT
Osborne says Defra's budget is falling by 15%.
But there will be 2bn for flood defences.
1.11pm GMT
Osborne says Britain topped the league table of best places in the world to invest in infrastructure spending in a survey last week.
Department for Transport spending will be cut by 37%, he says. But its capital spending will go up by around 50%.
1.11pm GMT
Mary Ann Seighart, who chairs the Social Market Foundation, isn't impressed by Osborne's plan to allow local councils to sell off surplus properties to fund day-to-day spending:
So will councils be allowed to spend capital receipts on current spending? Not very sustainable, that. #spendingreview
1.09pm GMT
Osborne says he wants a deal for Scotland that is fair and fit to last.
If Scotland had voted for independence, it would have its own spending review this autumn. With oil revenues down by around 90%, there would have been catastrophic cuts. But luckily that was avoided, he says.
1.08pm GMT
Osborne says Northern Ireland's block grant will be over 11bn by the end of this parliament.
And he says he is giving a funding floor to Wales, set at 115%. And the government will legislate so the Welsh assembly can get powers over income tax without a referendum.
1.06pm GMT
Osborne says local government is sitting on property worth 250bn.
So councils will be able to keep 100% of the receipts from the assets they sell, he says.
1.05pm GMT
Osborne turns to his northern powerhouse vision, and his plans to devolve power to local authorities.
Some 26 new or extended enterprise zones are being created, he says.
1.03pm GMT
Osborne says the new rate for the basic state pension will be 155.65.
1.02pm GMT
Osborne says the basic state pension will increase by 3.35 a week next year, to 119.30 a week.
1.02pm GMT
On Twitter Rupert Harrison, Osborne's former chief of staff, has explained why Osborne abandoned the tax credit cuts.
After Lords defeat, today's tax credit changes a tribute to GO's favourite rule of politics: you have to know how to count (hat tip LBJ)
Or in other words - if you have a problem, fix it properly... Made possible by growing economy and better public finance forecasts
1.01pm GMT
Labour MP Alison McGovern, of Wirral South, credits tax credit campaigners:
Need detail but hopefully massive #taxcredits u-turn means bit better Christmas for some of my constituents. Thanks to all who campaigned x
1.01pm GMT
Osborne turns to social care.
He says he is increasing the better care fund, to help the integration of health and social care.
1.00pm GMT
Osborne turns to mental health, and he praises Andrew Mitchell, Norman Lamb and Alastair Campbell for their campaigning on this.
12.59pm GMT
Osborne says Simon Stevens, the NHS England chief executive, says the NHS is being funded appropriately.
12.59pm GMT
One of the Conservative rebels over tax credits, Stephen McPartland of Stevenage, has welcomed the decision to abandon the cuts
Delighted Chancellor has listened and abolished the changes to Tax Credits. The victory is his and I can now return to the fold!!!!!!
12.58pm GMT
Osborne says the NHS is the first priority of the government, and the British people.
Health spending was cut by the Labour administration in Wales. But under the Tories it is rising in England, he says.
12.56pm GMT
Osborne says day to day spending in government departments is set to fall by an average of 0.8% a year in real terms.
The government is still spending 4 trillion over the next five years, he says.
12.55pm GMT
Osborne says the cuts are half what they were in the last parliament.
12.55pm GMT
Osborne says total managed expenditure - the government's total spending - will be 756bn this year, rising to 773bn next year, 787bn the year after, 801bn in 2018-19 and 821bn in 2019-20.
12.53pm GMT
Osborne says government spending was 45% of GDP in 2010.
Now it is just under 40%. But the end of the spending review period it will be down to 36.5%.
12.52pm GMT
Osborne turns to tax avoidance measures. The government will build one of the most digitally advanced tax systems in the world.
Everyone will have digital tax accounts by the end of this parliament, he says.
12.50pm GMT
Osborne turns to the deficit forecast.
12.50pm GMT
#taxcredit taper rate and thresholds to remain unchanged #SpendingReview
12.48pm GMT
Osborne says he can help with tax credits.
People have argued the cuts should be phased in.
12.46pm GMT
Osborne says he has cut his borrowing plans by 8bn.
And he will be able to achieve a surplus by cutting less, he says.
12.45pm GMT
12.44pm GMT
OBR growth forecast: basically no big change, UK grows at trend for next 5 years.
12.43pm GMT
Osborne says housing associations have been brought onto the public balance sheet.
That statistical change will be backdated to 2008.
12.43pm GMT
Those growth forecasts mean the UK should grow a little faster than expected in the next two years, before slowing towards the end of the decade:
12.42pm GMT
Osborne says he is still committed to delivering a surplus in 2019-20. The OBR has approved the forecast.
12.42pm GMT
Osborne says Labour claims about the government plans have been proved wrong.
The OBR says the economy will grow robustly every year, and living standards will rise every year.
12.41pm GMT
Osborne reads out the growth forecast.
12.39pm GMT
Osborne says the OBR says debts are too high, and the deficit remains.
Expectations for world growth and world trade have been revised down.
12.38pm GMT
Osborne is turning to the new OBR forecasts.
Since 2010, no economy in the G10 has grown faster than Britain.
12.38pm GMT
12.37pm GMT
Osborne says he will extend opportunities for all.
This is a big spending review, by a government that does "big things", he says.
12.36pm GMT
Osborne says the 12bn of welfare savings will be delivered in full, "and delivered in a way that helps families as we make the progression to a national living wage".
12.36pm GMT
Osborne says he is committed to a surplus.
His plans will deliver that, he says.
12.35pm GMT
Osborne says five years ago the economy was in crisis. As Labour's letter said, there was no money left.
Then the job was to rescue Britain. Now it is to rebuild Britain.
12.34pm GMT
Osborne says the spending review (SR) will put security first.
Economic and national security provide the foundations for everthing the government wants to support, he says.
12.34pm GMT
We are tracking all the key points from the chancellor's statement here:
Related: Autumn statement and spending review key points - live
12.31pm GMT
George Osborne, the chancellor, is just about to start his statement.
It should last for almost an hour.
12.28pm GMT
This is what Cameron said at the start of PMQs about Chris Martin.
Everyone in this House and many people watching at home know from Yes Prime Minister the central role that Bernard, the Prime Minister's Principal PPS plays in the life of the Prime Minister and of Number 10 Downing Street.
Well this morning my Bernard, my Principal Private Secretary died of cancer, Chris Martin was only 42. He was one of the most loyal, hardworking, dedicated public servants that I've ever come across. I've no idea what his politics were but he would go to the ends of the earth and back again for his Prime Minister, for Number 10, and for the team he worked for.
12.26pm GMT
Cameron says we will be hearing more about the infrastructure plan soon.
In a Guardian article, my colleague Juliette Jowit explains why people should be sceptical about government infrastructure plan announcements. Here's an extract.
Chancellor George Osborne has promised to put people such as Dave at the heart of his spending review on Wednesday, when he will unveil plans to spend 100bn in this parliament on new infrastructure: roads, railways, power stations and smart meters, flood defences and broadband.
But there should be widespread suspicion of the pledge. Osborne has published national infrastructure plans every year since 2010. These and the latest plan underpin the chancellor's central themes: that he is investing to create jobs and wealth, giving his party the right to be trusted by voters with the economy.
12.23pm GMT
David Cameron began PMQs with the very sad news that his principal private secretary, Chris Martin, died of cancer today. He was just 42.
In a moving tribute, the PM compared Chris Martin to 'Bernard" of Yes Prime Minister, saying he was:
One of the most loyal, hard working, dedicated public servants I have ever come across.
Really glad PM gave moving tribute to Chris Martin. Lovely man and brilliant civil servant. Will be badly missed
Chris Martin was a model modern mandarin - served us in Labour Treasury with same full commitment as PM said in No10 https://t.co/v06eFI8cqG
Touching tribute by the Prime Minister to his PPS Chris Martin who died of cancer this morning aged 42, condolences to his friends & family.
So sad to hear Chris Martin has died. He was possibly the best official I ever came across in government. He will be much missed
12.20pm GMT
David Cameron and Jeremy Corbyn both paid tribute earlier to Chris Martin, Cameron's principle private secretary, who died this morning at the age of 42. The news has prompted Ed Balls, the former shadow chancellor, to post on Twitter.
Chris Martin was a brilliant civil servant. Quality and integrity shone brightly through all he did. Such a loss. https://t.co/57ynzUnYEH
12.16pm GMT
PMQs - Snap verdict: A relatively low key exchange, but Corbyn chose two subjects where Cameron was vulnerable and he scored some modest hits (although he could probably have pushed Cameron harder about the Rudd leak). Cameron clearly felt a little frustrated about not being able to say more about the domestic violence announcement coming in the autumn statement, but he and Corbyn both know that what they said will be soon forgotten in the light of the big announcements coming shortly.
12.11pm GMT
Corbyn says today is the international day for the elimination of violence against women. Why are one third of those referred to English refuges being turned away?
Cameron says the government has put more money into refuges, and that Osborne will say more about that in his statement.
12.08pm GMT
Corbyn says a UN chief scientist has said Britain has gone backwards on renewable energy.
Cameron says he does not accept that. When the cost of renewable energy falls, subsidies should fall too. Otherwise the cost of energy to taxpayers rises. He also says he his building the first nuclear power station for a long time.
12.06pm GMT
Jeremy Corbyn says 55 Labour councils have made a commitment to run their areas on green energy by 2050. Will Cameron commend them, and urge Conservative councils to do the same.
Cameron says he wants to promote green energy. He will be taking part in the Paris climate talks. But action must be taken locally as well, he says. In the last parliament there was a trebling of the introducing of renewable energy.
12.03pm GMT
Fiona Bruce, a Conservative, asks if the announcements in today's autumn statement will pass Cameron's "family test" (ie, that they should support families). Cameron says George Osborne will have something to say about families later.
12.02pm GMT
David Cameron is now taking prime minister's questions. I will just be focusing on the exchanges with Jeremy Corbyn, and any autumn statement-related material.
11.59am GMT
Hannah Maundrell, editor in chief of money.co.uk, says we could hear pension tax relief changes for top earners, and a potential increase in fuel duty:
Rumours are rife with news that Osborne will be stopping higher earners from cashing in on pension tax relief before he reforms the way this works next Spring. Hopefully he'll step up to the plate and sort out the pension exit fees that are punishing over 55's that take advantage of his new pension freedoms rise too. While he's likely to back peddle on his tax credit reforms, he could end up hitting the same households if he targets housing benefit instead.
A trip to the pump this morning could be worth your while as a fuel duty hike seems inevitable. Petrol and diesel prices are the lowest we've seen for a long time so drivers should expect a second shock after already swallowing the 13 av. increase in insurance premium tax.
11.55am GMT
Evgeny Lebedev, who owns the Evening Standard, looks as if he has just tweeted an autumn statement announcement.
Fantastic news! The Treasury to double every pound raised by our #GivetoGOSH campaign https://t.co/2saxaqZ57H
11.50am GMT
And George Osborne has been tweeting ahead of his statement too.
Today's Spending Review will deliver economic and national security - the foundations for everything we do #SR15 pic.twitter.com/Fgstmgfm48
11.48am GMT
Jeremy Corbyn, the Labour leader, has tweeted about the autumn statement.
Important day - #PMQs at 12pm & #CSR15 after. We hope Tories have listened & u-turn on drastic cuts to police, tax credits & public services
11.42am GMT
Torsten Bell, a former Treasury civil servant and Labour adviser who now runs the Resolution Foundation, has this take on the importance of autumn statements.
Lasting impact of Budgets often over-done in immediate analysis. Opposite true of spending reviews, which set direction for the parliament
11.38am GMT
The Royal Institution of Chartered Surveyors is surprisingly sceptical about the plans that George Osborne is due to announce for 400,000 new homes. This is from Jeremy Blackburn, the RICS head of policy.
A push towards affordable home ownership should not come at the expense of affordable homes for rent. If cities such as London are to thrive, we need to ensure that housing can be provided for all of its workforce - home ownership can only go so far and even shared ownership may prove too expensive for some. We would like to see the chancellor incentivise affordable homes for rent in both public and private sectors.
George Osborne is essentially subsidising one sector of the housing market over all others, in an area that already benefits from significant Government funding. Although the announcement is on the face of it encouraging for certain sectors, the devil will be in the detail.
11.37am GMT
Anyone got any spare metallic paint?
Downing Street Car Crash! Well ... a small prang between Prime Ministerial vehicles ahead of #PMQs pic.twitter.com/gQvhiEY4Y9
Has PM had a car crash? No10 reveals Cameron car "momentarily touched another car" but "no damage was done to either vehicle"
11.27am GMT
George Osborne has just left the Treasury (no, not permanently), and hopped into his limo for the short journey to parliament:
11.13am GMT
Lord Porter, the Conservative chair of the Local Government Association, has told the Guardian in an interview that some councils could effectively go bust if the cuts in the spending review are as deep as expected.
11.09am GMT
Britain's barristers are worried that the justice system could be imperilled if the chancellor swings the axe in its direction today.
"It is because citizens have access to justice that big businesses pay their small firm suppliers in good time, that parents can get the right pay and leave from their employers, and that elderly people get the care to which they are entitled.
"The idea that people who need to use the courts are being subsidised by the tax-payer is completely wrong. When people use the courts and other legal avenues to enforce the law, it helps to ensure that we all play by the rules. Without access to justice, everyone will suffer because the rules will cease to matter."
11.08am GMT
Our colleague Martin Kettle has written a piece this morning saying we would be better off just abolishing autumn statements and spending reviews. Here's an extract.
There is a very strong case for saying that both rituals are largely unnecessary and that, in particular, they allow the Treasury and the chancellor to get far too tough a grip on the government's strategy and approach. While accepting that today's speech and announcements are indisputably important as framing exercises, it is also important to stress that they don't need to be treated as respectfully as they are. In short, we might be better off without either of them.
But surely we have to have them? No we don't. Unlike the annual budget, the autumn statement and the spending review are recent inventions: the autumn statement dates from 1976; the spending review only from 1998. Neither of them is an ordained or ancient part of the way UK government works. The autumn statement is a purely political confection. It has no economic purpose. It exists primarily to allow the chancellor to command a second big parliamentary event of the year (indeed this is the third of 2015, in which Osborne has already delivered two budgets, one of them only four months ago).
11.03am GMT
Here is Patrick Wintour's full story on how the government is planning to breach its welfare cap.
10.55am GMT
There was a slight prang in Downing Street earlier. Bad omen?
Augur for today? slight prang between two cars of the prime ministerial motorcade in Downing St a few moments ago
10.53am GMT
If George Osborne does breach the welfare cap it will be all the more remarkable because even Jeremy Corbyn said he accepted it; he said so in an interview to the New Statesman in September.
10.49am GMT
Here are some pictures of ministers arriving and leaving Number 10 for today's autumn statement cabinet meeting.
Theresa May, the home secretary, is braced for cuts - and did not look overly cheerful.
10.45am GMT
Andrew Harrop, general secretary of the Fabians, has blogged about how breaching the welfare cap would 'liberate' the chancellor:
it was Osborne's pre-election promise of 12 billion of cuts to welfare that really did the damage and led inexorably to the tax credit reforms. First Osborne made the welfare pledge, then he protected pensioners and the severely disabled, and finally he realised that a Tory-only Treasury could not impose cash cuts on the very worst off who are not in work. There was no choice left but to hit the working poor.
It is sometimes said that George Osborne never expected to implement the 12bn promise. It was designed only as a negotiating position in advance of post-election coalition talks. Whatever the truth in that, now the chancellor must let it go and cancel the cuts planned for existing tax credit claimants. And that also means increasing the value of the 'welfare cap', Osborne's self-imposed straightjacket which he tightened at the last Budget and he can now loosen again.
10.38am GMT
Does every u-turn have a silver lining? Nick Clegg's former special advisor, Polly Mackenzie, reckons it might:
Welfare cap only a political trick so breaching it works just as well as not. Vote on breach moves Osborne to the centre ground = victory.
10.35am GMT
Rupert Harrison used to be George Osborne's chief of staff. He is working in the City now, and using Twitter to advise people not to be taken in by Treasury "expectation management" ahead of the autumn statement.
Challenge on the morning of an SR or Budget is telling what is real and what is expectation management by HMT. Usually the latter...
10.22am GMT
Jonathan Portes also hopes that the welfare cap might be dropped altogether:
Welfare cap, like surplus target, never had any economic rationale. Would be best to abandon it permanently. https://t.co/iVG4djlQhQ
"meaningless gesture" - here's how I described "welfare cap" when it was announced. Glad George Osborne now agrees. https://t.co/W3vntX4Obp
10.15am GMT
The Welfare Cap shows the dangers of 'soundbite' driven fiscal policy, argues economist Jonathan Portes, of the National Institute of Economic and Social Research:
Govt may breach own self-imposed, entirely unnecessary "welfare cap". Illustrates absurdity of soundbite budgeting https://t.co/eZ4Wwnk1tc
10.11am GMT
One of the criticisms of George Osborne as chancellor is that he can be too clever by half, that some of his political schemes are so devious that they can backfire. For anyone advancing this theory, the welfare cap now looks like an ideal example.
Osborne announced a welfare cap, a cap on the overall amount the government can spend on certain welfare payments, in the budget of 2014. It is not the same as the benefits cap, the cap on the amount of benefits that an out-of-work family can receive (originally 26,000, but now being cut to 20,000 for families outside London.) The benefits cap proved remarkably popular with voters, and so Osborne decided to apply the same principle to overall welfare spending. At the time it was perceived primarily as a trap for Labour; Osborne was hoping that the opposition would vote against, thus allowing him to depict them as profligate with welfare spending. In the event this ploy failed, because Ed Miliband and Ed Balls decided their party should vote in favour of the welfare cap, and the issue quickly dropped out of the political headlines.
The charter makes clear what will happen if the welfare cap is breached. The chancellor must come to parliament, account for the failure of public expenditure control, and set out the action that will be taken to address the breach ...
The welfare cap brings responsibility, accountability and fairness. Those who want to undo our welfare reforms will now have to tell us about the other cuts that they will make, or else come clean and admit to the public that what they really want are higher welfare bills ..
10.04am GMT
The news that George Osborne is planning to breach his own welfare cap is causing a stir on Twitter:
Breaching own #welfare cap is incredibly embarrassing for @George_Osborne. Surely cutting more would be a better option? #spendingreview
If Chancellor is going to breach his own welfare cap, he'll need to pull a very big rabbit out of the hat to stop that being main story.
@patrickwintour Tarnishes the whole exercise. Many Tory MPs will have difficulty explaining the whole point of the welfare cap to public
Not sure why I put +/- there ... it's a cap so only applies to 2 per cent above that level. Means Osborne has about 2bn in wiggle room.
9.43am GMT
Tom Blenkinsop, Labour MPs for Middlesbrough South and East Cleveland, predicts two u-turns from the chancellor, on the welfare cap and on the 2020 budget surplus.
Today #0sborne will announce that he'll break his own welfare cap, and slash his assumed budget surplus, all only 6 months after #GE2015
9.34am GMT
George Osborne has set in train plans to breach the Treasury's welfare cap after deciding it cannot find enough welfare savings to compensate for the decision to slow the pace of cuts to tax credits.
The chancellor has held discussions with the Department of Work and Pensions to arrange a Commons vote that would give the government permission to breach the cap.
9.33am GMT
Overnight it emerged that housing will be a big focus in the autumn statement. As the Guardian splash reveals, George Osborne will commit himself to "the biggest affordable housebuilding programme since the 1970s - with over 400,000 new homes built across England".
Labour has dismissed this as hot air. This is from John Healey, the shadow housing minister.
If hot air built homes, then Conservative ministers would have our housing crisis sorted. A matter of weeks ago the housing minister promised a million more homes, now George Osborne is saying they'll build 400,000 more.
George Osborne's first act as chancellor in 2010 was to slash housing investment by 60%, and his plans today could still mean 40% less to build the homes we need compared to the investment programme he inherited from Labour.
9.31am GMT
The Centre for Economics and Business Research believes George Osborne could be facing a 30bn 'black hole' in his budget forecasts.
Like many economists, the CEBR believes this year's deficit will be higher than the 69.5bn forecast. But it also reckons that economic growth will be weaker than expected - leaving the UK with a deficit of almost 20bn in 2020, not the 10bn surplus currently pencilled in.
"Because the Chancellor's forecasts rely on an implausibly high rate of growth we think that the Government's fiscal position is much less favourable than was set out in the July Budget.
"The deficit will not be eliminated in the current Parliament."
9.18am GMT
Shares in Britain's house builders are rallying this morning, on the back of reports that the chancellor will pledge an extra 7bn of fresh investment in housing.
Trader have pushed Persimmon, Taylor Wimpey and Barratt to the top of the FTSE 100 leaderboard:
9.03am GMT
The trick to successful trap-laying is to make damn sure that you lure your quarry, rather than falling into it.
But Sky's Faisal Islam believes that George Osborne may have snared himself with his decision to cap Britain's welfare bill. He's doesn't appear to have left himself any margin to change course on tax credits, without pushing up the bill.
The problem arises because Mr Osborne, in addition to making sharp welfare cuts, chose to push down the welfare cap to the levels of welfare spending forecast in July by the Office for Budget Responsibility - 115bn in the 2016/17 financial year.
This means there is no wriggle room for a significantly more generous phasing of tax credits in the coming year without busting the cap.
115bn Welfare Cap breach expected, as Commons vote prepared: my story - https://t.co/LYR9v43cB3
8.54am GMT
Under Osborne's original plans to cut tax credits by 4.4bn, the Resolution Foundation said that 3.3m families would lose on average 1,300 a year.
According to the BBC's Laura Kuenssberg, under the revised plans families earning around 20,000 a year could now lose "only" around 300 a year.
Tory tax credit rebels expect big pulling back from cuts, MAYBE down to 8 a wk loss but details not at all clear or confirmed tonight
8.54am GMT
You can also get up to speed on today's events with our Q&A on the spending review, explaining which departments could be hit hardest:
Related: What is George Osborne's spending review?
8.51am GMT
Katie Allen has pulled together the most important charts to explain today's autumn statement:
Related: Autumn statement 2015: five key charts
8.43am GMT
The most influential commentator on the autumn statement, by a mile, is the director of the tax and spending thinktank, the Institute for Fiscal Studies. As all chancellors have discovered in recent years, if you can persuade the IFS that your numbers stack up, in the court of informed opinion you've won, regardless of what the opposition or anyone else has to say. But if the IFS is critical, you're in trouble.
The current head of the IFS is Paul Johnson and he was on the Today programme this morning. He made two key points.
[Osborne] set himself a really tough target to get to this surplus in 2019, and the problem with this target is it's very much unlike the targets he set himself in the last parliament; it is fixed and inflexible. So if it turns out that the economy does even a little worse than he's expecting over the next few years, I think it will be close to impossible to meet unless he's going to put some tax increases in place.
If the economy pans out as he currently expects, and tax revenues come in as he expects, it might be just about reachable but only at the cost of really big cuts in things like the Home Office, local government and other departments.
There is a reasonable case to be made for getting into surplus at some point because that increases the rate at which we pay down the debt we have, which is currently around 80% of national income which is quite a high level. But whether he meets that target in 2019 or 2020 or 2021 doesn't matter terribly much from an economic point of view.
From an economic point of view, even if you want to get into surplus and stay there, the speed in which you do it doesn't matter that much, as much as getting there within some period.
8.36am GMT
The latest borrowing forecasts are unlikely to bring much cheer.
The Office for Budget Responsibility is expected to revise UP its forecast for the deficit this financial year, from 69.5bn to perhaps 74bn. That's because last month's public finance figures were alarmingly poor, with Britain borrowing more than at any time since 2009 to cover weak tax revenues.
8.26am GMT
Today's autumn statement from George Osborne was supposed to be the big political event of last quarter of the year. In the event, because of the Paris attacks, it does not quite feel like that, but nonetheless this is one of the landmark political moments of the year - and of the parliament too. This is what we're getting.
1) An autumn statement - a mini budget in itself.
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