George Osborne refuses to apologise for disability benefit cuts 'mistake'

George Osborne repeatedly refused to apologise over the attempt to introduce £1.3 billion a year cuts in disability benefits as he insisted the cost of abandoning the policy could be absorbed because public spending was under control

The Chancellor admitted the now-shelved cuts had been a "mistake" and insisted he had listened to and learned from concerns about the changes to the personal independence payment (PIP).

But he stressed that the public finances had to be brought under control to protect people who would be "crushed" by a collapsing economy.

Mr Osborne defended his record as he responded to Iain Duncan Smith's explosive resignation from the Cabinet over the cuts to the welfare budget.

Taking the unusual step of opening the final day of Commons debate on the Budget, Mr Osborne insisted that he was part of a "compassionate, one nation Conservative government determined to deliver social justice and economic security" and repeated his mantra that "we are all in this together" - a claim challenged by Mr Duncan Smith in his resignation letter.

Shadow chancellor John McDonnell called for Mr Osborne to quit and said his behaviour "calls into question his fitness for the office he now holds" or, in a reference to the prospect of a future Tory leadership battle, "any leading office in government".

Mr Osborne was challenged by a series of MPs to say sorry to the disabled people who feared losing out as a result of the now ditched plans to cut PIPs.

Former shadow chancellor Chris Leslie told him: "You have made a welcome U-turn, but shouldn't you now acknowledge that was a mistake that you should say sorry for?"

Mr Osborne replied: "I have made it clear that where we've made a mistake, where we've got things wrong, we listen and we learn.

"That's precisely what we've done."

Former work and pensions secretary Mr Duncan Smith stormed out of the Government on Friday, complaining that he was again being forced to make cuts to the most vulnerable while Mr Osborne was handing tax cuts to the better-off, which risked dividing the country.

Mr Osborne acknowledged the pair had argued over Treasury cuts to welfare spending in the past but praised the former work and pensions secretary for being part of the team which has delivered a "fairer society for all".

The reforms to PIPs had been due to save a total £4.4 billion from the welfare budget by 2020.

The Government has ruled out a further raid on welfare to pay for the cost of the U-turn and Mr Osborne insisted that the public finances could "absorb" the lost savings.

Mr Osborne said: "These are the changes you can afford to absorb when you are getting public spending under control. So we can make these changes and still achieve a sensible surplus of half a percent of GDP by 2019/20. In short we go on delivering the economic security that this country elected us to provide."

The head of the Officer for Budget Responsibility Robert Chote said that following the decision to cancel the PIP cuts, the Government was now set to exceed its own welfare cap by £4 billion a year.

"Taking into account the loss of the money from PIP, you breach by about £4 billion in most years. It bobs up and down ,but it is essentially £4 billion a year," he told the Commons Treasury Committee.

Mr Osborne said the extra £1.3 billion a year spent on disability benefits by the end of the decade "will be an important factor but only one of many" that will affect the overall forecast for welfare spending that the OBR will make in the autumn "and at that point we will assess the level of the cap".

Addressing some of the criticisms levelled at him by Mr Duncan Smith the Chancellor insisted he was committed to social justice - but that could only be achieved if the deficit was under control.

"There is not some inherent conflict between delivering social justice and the savings required to deliver sound public finances. They are one and the same thing," he said.

"Without sound public finances there is no social justice."

Mr Osborne said the poorest and most vulnerable would pay the price if he failed to create a stable economy.

"These are the people that I am fighting for, real decent hard-working people, not numbers on a Treasury spreadsheet but people whose lives would be impoverished, whose hopes and aspirations would be crushed if we had gone on spending more and more than the country earned," he said.

"Getting things right for these people is what I'm all about and it weighs on every decision I have taken as Chancellor over the last six years. These are the people that we in this party have been elected to serve."