This article titled “Osborne under fire as Treasury retreats over disability benefits cuts” was written by Heather Stewart, and Rowena Mason in Brussels, for The Guardian on Friday 18th March 2016 19.51 UTC
George Osborne’s budget appears to be unravelling as the Treasury retreats from controversial cuts to disability benefits amid a mounting rebellion from Conservative backbenchers.
A growing number of Tories have signalled their alarm over reductions in personal independence payments (PIP), which the chancellor said would save £4.4bn over the course of this parliament.
On Friday night, one Treasury source said: “This is going to be kicked into the long grass. We need to take time and get reforms right, and that will mean looking again at these proposals.
“We are not wedded to specific sums… it’s not an integral part of the budget.”
The retreat came despite Downing Street earlier insisting the plans would go ahead.
The pause in the plans is a humiliating blow for the chancellor, who had hoped to use his eighth budget on Wednesday to burnish his credentials for the Conservative leadership.
The changes to the way PIP assessments work were announced the previous Friday by the Department for Work and Pensions. The Treasury stressed that the figures included in the budget were the DWP’s work; but DWP insiders complained that they were bounced into publishing the proposals without the time to build support.
Speaking in Brussels on Friday evening, David Cameron had suggested he might be prepared to soften the controversial cuts, promising to consult with disability groups and “make sure we get this right”.
But the Treasury later signalled a more significant climbdown.
Asked by the Guardian about concerns among his MPs and disability charities, the prime minister had said: “A number of reviews have been done, a lot of work has been done and that is why these proposals have been put forward. As the chancellor said, but I will repeat, we will be discussing this with disability charities and others and make sure we get this right.”
The comments appeared to back up remarks made by Nicky Morgan, the education secretary, on Thursday that the proposals were only a “suggestion”.
The apparent climbdown came as Conservative rebels turned their fire on Osborne over what they see as the toxic politics of the budget, which juxtaposed the PIP cuts with tax giveaways for businesses and higher earners.
Conservative backbenchers voiced their concerns, including the former GP Sarah Wollaston, who tweeted that the government would, “never meet approval for change that would reduce entitlement to PIP at the same time as raising the higher rate tax threshold”.
David Burrowes, the Tory MP for Enfield Southgate, urged the government to “press pause”.
Owen Smith, the shadow work and pensions secretary, said: “It is ludicrous for the Tories to pretend that this was anything other than a major part of Wednesday’s budget.
“If the Tories are now postponing or cancelling these cruel cuts altogether it is a humiliating climbdown for George Osborne, although it will come as an incredibly welcome reprieve for hundreds of thousands of disabled people who were due to be affected.”
The Institute for Fiscal Studies (IFS) said the cuts, which help people pay for the costs of living with a disability, would hit 370,000 people, with an average loss of £3,500 a year.
Osborne insisted on Friday the government would “protect the most vulnerable” and ensure that it got the proposals “absolutely right”.
But there were rumblings among Conservative backbenchers that the anger unleashed by the disability cuts had won new converts to the “Anything But George” campaign that is seeking an alternative to Osborne as a potential future leader.
The prime minister has made clear that he doesn’t want to serve a third term and many of his colleagues believe that if voters reject his argument that Britain should remain in the EU in June’s referendum, he would be forced to step down.
Osborne has long been seen as Cameron’s successor; but the growing questions over the budget will remind backbenchers of the notorious “omnishambles” of 2012, when he was forced to reverse a series of planned stealth taxes, on everything from pasties to caravans – and was criticised for cutting the 50p top rate of tax, benefiting the highest earners.
Some of Osborne’s Eurosceptic colleagues argue that he has been so focused on managing what they deride as Project Fear – the campaign to keep Britain in the EU – that he failed to devote enough attention to laying the political groundwork for his budget.
DWP sources suggested the timing of last Friday’s announcement on the cuts was driven by the Treasury. Even though they were expected to save more than £4bn, ministers have stressed that the total cost of disabled support will increase in cash terms.
Osborne has been called to appear before the cross-party Treasury select committee on Thursday to give evidence about the economic costs and benefits of EU membership. It will be a day after they have heard from Boris Johnson, the Eurosceptic mayor of London widely seen as a rival for the Tory crown.
Osborne has already faced scepticism from the IFS, which said he had a “50-50 chance” of meeting his self-imposed target of achieving a surplus on the public finances by the end of the parliament, even allowing for a series of accounting tricks to “shuffle” revenue from one year to another.
Meanwhile, a separate budget rebellion forced the prime minister to raise the issue of the current tampon tax – the levying of VAT on women’s sanitary products – with his EU partners, after Eurosceptics threatened to back a Labour amendment calling for the tax to be struck down.
Separate analysis published on Friday underlines the fact that the costs of further spending cuts are likely to be be borne disproportionately by women, while men, who tend to be higher paid, are the main beneficiaries of the tax cuts.
Yvette Cooper, who commissioned the research from the House of Commons Library, said: “These latest figures show women paying £6bn extra compared to men by 2020 even though women still earn less and own less than men.”
She pointed out that men would receive 75% of the benefits of the increase in the higher-rate tax threshold, one of the key tax cuts in the budget.
“It’s outrageous. Women are more likely to be hit by the PIP cuts and far more likely to be hit by the universal credit cuts. However they are less likely to benefit from higher-rate tax allowances. Working mums and the disabled are the hardest hit of all.”
Osborne had sought to deliver a crowd-pleasing budget, with a new lifetime ISA to help young people save for retirement; tax cuts for businesses; and a freeze on fuel duty.
But he used a series of accounting tricks to suggest he could deliver a surplus on the public finances by 2020.
Just hours after his statement, the director of the Office for Budget Responsibility appeared to question the plausibility of the chancellor’s plans. Robert Chote compared Osborne’s tendency to offer short-term “giveaways” paid for with longer-term “takeaways” to St Augustine’s plea: “Lord make me chaste, but not yet.”
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