George Osborne\u2019s scrapping of the tax credit cuts announced last summer is momentous in several ways. But it is by no means the end of his mission to reduce families\u2019 dependence on the state.<\/p>\n
First and foremost, the changes save millions of badly-off working families from some drastic reductions in their incomes next April, typically by well over \u00a31000 a year. The day these cuts were announced in the Summer Budget, I pointed out<\/a> that even people benefiting from the new \u2018National Living Wage\u2019 would lose out by these large amounts; but I did not dream that this argument would cause the cuts to be scrapped. \u00a0It was only when the evidence piled up \u2013 my analysis for Joseph Rowntree Foundation<\/a>, alongside reports by the Institute for Fiscal Studies<\/a> and Resolution Foundation<\/a> \u2013 that it persuaded Conservative MPs, amongst others, that the backlash could be disastrous.<\/p>\n So a second important aspect of the reversal is that the evidence got through clearly to politicians, and made a difference \u2013 a rare enough event in social policy these days. The reasons it caused such wobbles are also revealing. \u00a0Unlike many welfare cuts, the 2016 changes to the tax credit allowances and withdrawal rate (a) came in one fell swoop, (b) affected existing recipients not just new ones and (c) were entirely borne by those in work. \u00a0In other words, they would have instantly and drastically hit the pockets of people seen as \u2018deserving\u2019.<\/p>\n