Daily catch-up: Smoke, mirrors and a prudent U-turn – Osborne's good day

We await the verdict of the Institute for Fiscal Studies at 1pm today, and we recognise the possibility, as John McDonnell, the shadow chancellor, said yesterday that "the louder the cheers for the statement on the day, the greater the disappointment by the weekend when the analysis has been done", but George Osborne had a good day yesterday.

The Chancellor dealt with the three pressing problems: he pulled the plug on tax credits cuts; he found extra money for the NHS; and he found a little more to protect police spending. An ingenious combination of a better fiscal position than expected just four months ago, stealth tax increases (an apprenticeship levy and a council tax rise to pay for social care) and more borrowing in the middle years of this parliament allowed him a social-democratic give-away mini-budget.

"This improvement in the nation's finances is due to two things," said Osborne. "Smoke and mirrors," heckled Kevin Brennan, the unofficial leader of the opposition. It was a better line than anything McDonnell came up with, and interestingly became the theme of Labour frontbenchers' response during the afternoon.

My analysis of the Chancellor's speech, what he said and what he meant, is in The Independent today. And my trumpet, which I shall blow, is this column on 11 October, which I think was the first to predict the tax-credits U-turn.

Part of McDonnell's response was effective:

When the Chancellor and the Prime Minister were first elected to their current positions, they were attacked for being “posh boys”. I disagreed with that strongly. People do not choose the class that they are born into, or the wealth that they inherit. Nevertheless, if people are fortunate enough to have wealth or good incomes, like all Members of Parliament, the onus is on them—on us—to take particular care when making decisions about the lives of those who are less fortunate than themselves.

What shocked and, indeed, angered many, not just in the House but throughout the country, was the fact that the Chancellor made no attempt to understand the effects of the decision to cut tax credits. For many families, it would have meant a choice between the children being able to go on that school trip like the other children, and having a decent Christmas or a winter coat. Today the Chancellor has been forced into a U-turn on his tax credit cuts, and I congratulate the Members on both sides of the House who have made that happen. I congratulate the Members in the other House as well. I am glad that the Chancellor has listened to Labour, and has seen sense.

But he was assaulting a fortification that had been abandoned and which will soon be forgotten. Although Janan Ganesh, Osborne's biographer, takes a surprisingly critical view of the problems his subject has created for the future. Future schmuture, I say.

There was little in this Autumn Statement that a Labour chancellor wouldn't have done. Specifically, there was little that Gordon Brown or Ed Balls wouldn't have done. With the tax credits cuts cancelled, it was a centrist budget. Indeed, the 3 per cent extra stamp duty on second homes was a bold soak-the-rich measure from which a Labour government might have shied. But the overall effect was, as the IFS will confirm today, to take more from the poor. If it were not, Osborne would have said so. So it was regressive rather than "progressive", despite Osborne's appropriation of that New Labour word. But it was much less regressive than the July Budget with the tax credits cuts. David Cameron and Osborne have avoided being a government of social injustice, but the Conservatives are hardly the party of social justice that Osborne claims.

If only we had a decent social-democratic opposition to make that case.