Here's my best go at explaining how George Osborne magicked away his tax credits headache.

The cuts he announced in the Summer Budget were worth £4.4 billion.

By axing them completely - he is allowing the Treasury balance sheet to take the hit for the next couple of years.

It means George Osborne will miss his self-imposed welfare cap which he lowered in his last Budget.

For example, the Chancellor set himself a £117.5 billion limit on welfare spending next year.

He's now spend £119.2 billion.

Similarly in the 2017/18, his cap was £116.9bn, he will now spend £117.7bn on welfare.

After that point, more and more of those who currently receive tax credits will move onto Universal Credit.

Some people will face a hit when they change over to Universal Credit. Credit: PA

If circumstances haven't changed, claimants of UC will keep the same level of benefit they were receiving from tax credits.

But all new entrants on Universal credit will receive less.

Universal credit is being rolled out across the country and will replace a host of benefits into one single payment.

What has been abolished from Universal Credit (and this was NOT announced today - but was a little-noticed change in the Summer budget) was the abolition of the work allowance.

So new Universal credit claimants will have benefits removed earlier than previously planned but the taper remains the same (for every £1.00 earned in work, claimants keep 35p of benefit).

So by 2018/19, George Osborne starts to hit his welfare cap again (which will by that time be £115.3bn).

To summarise; the Treasury takes a hit at first, then UC claimants feel the pain of the changes in the future.

The additional square that needs circled is how the Conservatives can still cut the welfare budget by £12 billion as they promised in the 2015 election - without the £4.4bn tax credit savings.

The £12bn target was for the end of the Parliament (2019/20).

George Osborne still hits the target by that date - but Treasury sources now admit that - without tax credits - it is taking them a little longer to get there.