New Times,
New Thinking.

  1. Business
  2. Economics
12 December 2013updated 26 Sep 2015 10:16am

Osborne promises “billions” more in welfare cuts – where will his axe fall?

The Chancellor suggests a future Tory government would make large welfare cuts, including a lower benefit cap.

By George Eaton

George Osborne has long made it clear that he would like to make greater welfare cuts than the Liberal Democrats will allow, but rarely has he been as explicit as he was at today’s Treasury select committee hearing. After Labour’s Pat McFadden noted the OBR’s finding that day-to-day departmental spending was forecast to fall to its lowest level since records began in 1948, Osborne replied that this figure did not take into account the “further welfare savings” he would make. While refusing to “put a number on it” (such as the IFS forecast that £12bn of welfare cuts or tax rises will be required to keep cuts at their current pace), he said that he wanted “billions” more cut from the welfare budget. 

What cuts could he have in mind? It’s worth looking back at the speech David Cameron made on the subject in June 2012 when he outlined a series of possible measures, including: 

  • The restriction of child-related benefits for families with more than two children.
  • A lower rate of benefits for the under-21s.
  • Preventing school leavers from claiming benefits.
  • Paying benefits in kind (like free school meals), rather than in cash.
  • Reducing benefit levels for the long-term unemployed. Cameron said: “Instead of US-style time-limits – which remove entitlements altogether – we could perhaps revise the levels of benefits people receive if they are out of work for literally years on end”.
  • A lower housing benefit cap. Cameron said that the current limit of £20,000 was still too high.
  • The abolition of the “non-dependent deduction”. Those who have an adult child living with them would lose up to £74 a week in housing benefit.

Osborne would also likely reduce the household benefit cap of £26,000 (he said today that “future governments could change the level” and Tory MPs have been pushing for one of £20,000) and maintain the 1% cap on benefit increases (a real-terms cut). 

At present, the Tories have been prevented from making the cuts above by the Lib Dems, who have refused to consider further reductions until Osborne ends the ring-fencing of pensioner benefits. But should Cameron avoid repeating his 2010 pledge to protect the latter, the door would be opened to further welfare cuts under another Tory-Lib Dem coalition. 

Select and enter your email address Your weekly guide to the best writing on ideas, politics, books and culture every Saturday. The best way to sign up for The Saturday Read is via saturdayread.substack.com The New Statesman's quick and essential guide to the news and politics of the day. The best way to sign up for Morning Call is via morningcall.substack.com
Visit our privacy Policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
THANK YOU

Content from our partners
Can green energy solutions deliver for nature and people?
"Why wouldn't you?" Joining the charge towards net zero
The road to clean power 2030