George Osborne breaches his own welfare spending cap

The cap was imposed by the Chancellor to limit total social security spending

The Chancellor George Osborne (Getty Images)

George Osborne has confirmed he will be forced to breach his own limits on welfare spending.

The Chancellor is said to have held discussions with the Department for Work and Pensions, which administers benefits, after it became increasingly clear his welfare cap would not be met.

And in his Autumn Statement on Wednesday, he confirmed he would be scrapping tax credit cuts, meaning the welfare cap will be breached in the early stages of the parliament - although he's promised to make it back in later years

The move comes after the Chancellor pledged to mitigate the impact of his planned cuts to tax credits after a defeat in the House of Lords.

Mr Osborne imposed the welfare spending cap on government expenditure to cap the total amount of spending on social security in a year.

This cap is distinct from the separate but similarly named household benefit cap, which limits the amount any individual household is allowed to get.

Some Labour MPs criticised the cap at the time as a political gimmick on the basis that any government with a majority to pass a budget could also change the cap.

An increase in welfare spending is also bad news for Mr Osborne’s wider fiscal plans. The latest public borrowing figures in October show no progress on borrowing in that month since 2012.

The Chancellor has pledged to work towards a surplus but is looking increasingly likely to miss an annual deficit milestone next April.

Higher than expected government spending could however have a positive effect on economic growth figures.

Aside from the mitigation of cuts to tax credits, other measures expected to be officially announced in the autumn statement include a pot of money to kickstart the Government’s starter homes scheme and new welfare reforms to get the long-term sick and disabled into work.