The word omnishambles, you might remember, was chosen by the Oxford English Dictionary as its Word of the Year in 2012. It is defined online as “a situation that has been comprehensively mismanaged, characterised by a string of blunders and miscalculations”. Where the Chancellor is concerned, that just about covers it.

Until the weekend, bets on George Osborne becoming the next leader of the Conservative Party were still plentiful. By Monday night, when the Lords handed out a lesson in parliamentary procedure, he was starting to look like a long shot. One omnishambles in matters financial might be regarded as a misfortune; two leaves your audience paraphrasing Oscar Wilde.

Where cuts to tax credits are concerned, Mr Osborne is, as it were, in the thick of it. At Treasury Questions yesterday he took considerable care to blame everyone but himself. His contempt for the unelected Lords was withering. No one in the Tory Party will ever accept a peerage again, apparently.

The truth is that the Chancellor and his Prime Minister only have themselves to blame. They omitted to mention £4.4 billion of tax credit cuts in their manifesto, thus freeing the Lords from one non-aggression pact. Then they pushed through the measure as a statutory instrument, rather than include it – and why not? – in the Finance Bill.

The Speaker, John Bercow, issued all sorts of dire warnings to the Lords on the absolute financial privilege of the Commons and the convention of non-interference, but he could not certify an instrument, by definition, as a money bill. The peers had done their homework. The tax credits measure was fair game. You could say the Upper House exploited a technicality, but the rules were obeyed.

Mr Osborne and David Cameron didn’t see this coming? They forgot an in-built Tory majority in the Lords has gone the way of the loyal hereditaries, ready to rubber-stamp anything the party desired? When the Liberal Democrats have just eight MPs, but (absurdly) 112 peers on their side, when declared Tories account for just 249 of the 826 members of the Lords, only the timing of the omnishambles remains to be decided.

Mr Cameron could embark on reform of the peerage and risk losing the power of patronage so dear to his heart. He could flood the Upper House with his kind of people and hope voters won’t notice the difference between a hand-picked mob and legislators of independent mind. Neither strategy is likely. Neither is, in any case, of the slightest help to Mr Osborne.

Yesterday he said, in essence, that he will come up with something in time for the Autumn Statement. He didn’t say what “something” might be because, clearly, the Chancellor hasn’t a clue. He wants a fix that will placate rebel peers, Opposition MPs, fearful back-benchers, the economic think tanks, three million families and a host of other voters while keeping most of his £4.4bn intact. It can’t be done.

One of his big mistakes has been to fib so flagrantly about his assault on the working poor. For months, Mr Osborne has been claiming, in the face of unimpeachable evidence to the contrary, that “most” of the three million will be no worse off with income thresholds cut drastically, brutal “tapers”, and effective marginal tax rates at the 80 per cent mark. The National Living Wage, so called, new personal allowances and help with child care would sort everyone out, said the Chancellor.

It wasn’t true. It cannot be true now or in the future if Mr Osborne is determined to have his £4.4bn starting next April. Yesterday, responding to the first snapshot of slowing growth in GDP, he tweeted that “global risks mean we go on with tough decisions to live within our means”. Three million households, and more besides, must have wondered if the reference to means was a joke.

At Treasury Questions, the Chancellor said only he would “smooth the transition” for victims of his cuts and “lessen the impact”. Beyond that, he would press on: “living within our means” was the mantra, repeated freely. What might it cost to “smooth” or “lessen” the impact of a scorched-earth policy, given £4.4bn is just the first instalment on the £12bn Mr Osborne is demanding? He didn’t say.

If the Chancellor retreats in any significant way, the omnishambles will be complete. If he has to delay until the effect of cuts is assessed, as one Lords vote decrees, his chances of achieving a budget surplus before the next election approach zero. If he has to give full redress to households liable to lose over £1,000 on average, as the other Upper House vote demands, his austerity policy will be history. His hopes of leading party and country won’t look too clever, either.

Back down or press ahead? It’s hard to say which would be worse for Mr Osborne. Backing down means that everything he has proclaimed since 2010 would stand revealed, finally, as nonsense. The claim that deficit and debt must be dealt with in his way, at his pace, would be demolished. The balance between Treasury targets and human costs would be redressed.

Mr Osborne won’t fancy that. He would, rightly, never hear the end of it. The second great omnishambles would eradicate all memory of the notion, always fanciful, that the Chancellor is the cleverest of political and economic managers. He got himself into this mess. Admitting as much now would be the last straw.

The attempt to march ever onwards bearing high the banner of – in yesterday’s words – “Controlled Welfare” looks equally daft. Mr Osborne has not just struck an obstacle or two. Opposition to his plans is widespread and deep. It is not going to shift because the eldest son of the 17th baronet decides to be rude about unelected peers.

This is not just about the Scottish National Party, or Labour, or the LibDems, or the peers, the experts and all those families. Swathes of the Chancellor’s party have lost their nerve, or decided, for once, that he is simply asking too much of those who can least afford his schemes. “Impoverish the Strivers” is not the slogan they were looking for.

Something cosmetic will be attempted. While the respray is going on, strenuous attempts will be made to manage opinion. There will be lots of talk, but only talk, about the constitutional challenge of reckless peers. There will be more of the meaningless rhetoric Mr Osborne offered yesterday when he attacked an “unlimited welfare budget”.

Sooner or later, however, he will have to produce numbers. If he continues to demand £4.4 billion, his problems will remain. If he persists with austerity, his problems will remain. Meanwhile, Mr Cameron can embark on Lords reform, or have a serious word with his Chancellor about that “long-term economic plan” and what it presages for this government.

Never mind the Lords. The Tories’ Commons majority is tiny. And it won’t last beyond the next Osborneshambles.