Theresa May orders Philip Hammond and the Treasury to reverse some of George Osborne’s eye-watering benefit cuts
Chancellor Philip Hammond will reverse some of Osborne's £3.4billion axe
THERESA May has ordered the Treasury to soften the blow of George Osborne’s eye-watering benefits cuts on the poorest workers.
Chancellor Philip Hammond will reverse some of the £3.4bn axe that his predecessor took to Universal Credit in his mini-budget on Wednesday, The Sun can reveal.
The move will halt up to three million of the most needy losing £1,000 from their annual income.
Taking the cash away from the work allowance element of Universal Credit reduces the incentive to stay in work, putting the landmark new benefits overhaul at risk of failure.
But a fresh squeeze on the nation’s poorest workers, with inflation also now rising again, has prompted a major rethink.
No10 also began to fear a big backbench revolt in the Commons after a series of Tory MPs wrote to Theresa May urging her to reconsider.
The PM insisted on stopping as much of the benefits raid as was affordable as it was hitting her target strivers, a group dubbed Just About Managings.
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A government source said: “There has been a fairly passionate debate between No10 and No11 about this recently.
“Theresa is adamant that the government cannot be seen to let down the very people she promised to help on No10’s steps.
“Softening the blow as much as we can will send out a powerful message about who’s side she is on.”
The move will be seen as another slap in the face to ex-Chancellor Mr Osborne, who Mrs May viciously sacked.
Mr Osborne was forced to U-turn on controversial cuts to tax credits last year after a bitter defeat in the House of Lords.
But the reductions were kept to the all-encompassing new handout when it replaces tax credits for families from next year.
Only last month, Work and Pensions Secretary Damian Green said he is “not looking to reverse” Mr Osborne’s cuts.
But hope was growing last night among campaigners of victory.
Former Tory leader and Work and Pensions Secretary Iain Duncan Smith – who has called for the reversal – said: “I am increasingly optimistic that the government has listened to my and others’ concerns.
“Universal Credit absolutely comes down to the group of people that are just managing.”
The Chancellor’s officials initially resisted any reversal of the benefits cuts because of the cost.
But No10 argued a fresh delay in Universal Credit’s full roll out made the move less expensive over the next four years.
IDS called for the reversal – which would cost £2bn – to be paid for by delaying tax cuts for middle earners, which is a Tory manifesto promise.
Pressure grew on Mr Hammond to act when a second former Tory welfare boss added his backing to the calls.
Ex-Work and Pensions Secretary Stephen Crabb also broke ranks to say the cuts “offends everyone’s sense of justice”.
A new study yesterday by the Policy in Practice consultancy claimed people on low incomes will lose more than £2,500 by 2020 because of the triple squeeze of rising inflation, a freeze on benefits rising and the Universal Credits cuts.