Most benefits and tax credits for working-age people will be cut in real terms for three years in a row from 2013-14, under plans announced by the Chancellor in his 2012 Autumn Statement on the public finances.
The Chancellor admitted he would fail to meet his pledges on public borrowing as a result of worsening prospects for economic growth. Forecasts of growth from the independent Office for Budget Responsibility were revised down significantly for every year between 2012 and 2016. As a result, the Chancellor said, the government's 'austerity measures' would have to be extended until at least 2017-18 – three years longer than originally promised.
In overall terms, however, the measures outlined in the Autumn Statement were neutral in their effect on the public finances. Instead the Chancellor chose to make significant changes in the way spending cuts will fall on different groups and areas of spending.