GEORGE Osborne yesterday unveiled his masterplan for a decade of austerity in an autumn statement that critics warned would heap “misery on Scotland” despite an apparent climbdown on tax credit cuts.

To cheers from Tory backbenchers the Chancellor announced he would not push ahead with the controversial plans, but confirmed he would reduce the welfare budget by £12 billion.

The SNP’s depute leader Stewart Hosie told MPs the Chancellor’s plans would take public spending back to levels last seen in Britain during the 1930s and 1940s in an austerity “by choice” strategy.

“Times move on and things change,” he told MPs in his response to Osborne’s spending review.

“The ideology of the Chancellor has not changed. He is, in essence, still intending to cut more than £40 billion a year than he needs to to run a current account budget in balance by the end of this Parliament.

“And notwithstanding the humiliating U-turn on tax credits, this is a government who added £37 billion of cuts and tax rises in the summer Budget to the £121 billion of fiscal or discretionary consolidation in the last Parliament.

“There’s £18 billion announced in the blue book, or the green book, today and the Chancellor is very clear the £12 billion of welfare cuts remain on the table.

“Even after today, the public are facing a decade of austerity and these are political choices.”

Despite the spin, not all tax credit cuts are being reversed. There will still be a reduction in the “income rise disregard” – the amount by which a claimant’s income can increase each year before their tax credits are cut. It will be reduced from £5,000 to £2,500, and is expected to raise approximately £170 million.

Cuts will come too from a cap on housing benefit rates in the social housing sector, limiting them to the same rate as private sector housing benefit rates, while other welfare savings would be made through the rollout of Universal Credit, a new benefit replacing tax credits.

Analysis suggested that under the reforms a single parent of two children working full time on the minimum wage on Universal Credit will lose £2,400 next year due to the cuts.

Defence, meanwhile, will see a real-terms budget increase of more than three per cent over the course of the Parliament

Patrick Harvie, Scottish Green MSP for Glasgow, said: “The Chancellor’s apparent U-turn on tax credit cuts is a mere pretence, and vast numbers of people will still lose out, either now or under universal credit instead.

“The cumulative effect of cuts upon cuts will do untold harm to the least well off in our society. Whether it’s HMRC job losses or the undermining of our renewables industry, this is a Tory government heaping misery on Scotland and the rest of the UK.”

Unveiling his spending review, Osborne said he could abandon the controversial tax credit cuts of £4.4 billion due to improvements in public finances.

He told MPs that higher than predicted tax receipts and lower interest rates meant the Office for Budget Responsibility estimated that public finances would be £27 billion better off over the course of the Parliament than it forecast at the time of the post-election Budget in July.

In the aftermath of the Paris attacks, he announced he would not cut the policing budget.

Concluding his speech Osborne said: “Five years ago, when I presented my first Spending Review, the country was on the brink of bankruptcy and our economy was in crisis.

“We took the difficult decisions then. And five years later I report on an economy growing faster than its competitors and public finances set to reach a surplus of £10 billion.”

But shadow chancellor John McDonnell condemned Osborne’s record, telling MPs that over the last five years there has barely been a target the Chancellor has not missed or ignored.

He said Osborne’s handling of tax credits had been a “fiasco” and said it was essential to see the detail.

Len McCluskey, Unite general secretary said: “Like some economic Dr Frankenstein, George Osborne is conducting some wild experiment on the UK economy and the living standards of the British people.

“We have never before been in a place where a chancellor will pursue a surplus for no evident economic gain. This was a spending review that reflected his zeal, not Britain’s ideals, which will hurt businesses and people struggling to make ends meet.”

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