Osborne says he has found £12 billion of welfare cuts
Reporting by William James; Editing by Larry King
LONDON, July 5 (Reuters) – Chancellor of the Exchequer George Osborne said he had found all £12 billion of welfare cuts he needs as part of his plan to balance the current account deficit by 2017/18, speaking ahead of his budget announcement on Wednesday.
The budget is Prime Minister David Cameron’s Conservatives’ clearest chance in almost two decades to remould Britain into a low-tax, small-state economy after an unexpectedly decisive election victory handed Osborne a mandate to make deep cuts.
To meet his target, Osborne says he needs to cut the annual welfare bill by £12 billion, make £13 billion of departmental spending reductions, and to raise an extra £5 billion by clamping down on tax evasion and avoidance.
“We have found that £12 billion of savings in welfare that we said we’d be able to find,” Osborne said on BBC television, without specifying full details. “We’ve got to have a welfare system that is fair to those who need it, but also fair to those who pay for it.”
But the opposition Labour Party warned against “self-defeating” spending cuts.
“On the deficit we need, of course, sensible savings but I want to see proper welfare reforms, proper public services that aren’t self-defeating, that aren’t going to cost much more for the country in the long term,” Labour spokesman Chris Leslie told the BBC.
Osborne said that people living outside London would be subject to a lower cap than previously thought on the total amount of benefits they can receive. The cap will be reduced to £23,000 for those living in London, in line with pre-election promises, but he did not set out the lower ceiling that would apply elsewhere.
He also said those on high incomes in subsidised local authority housing would have to start paying closer to the market rental rates.
The Sunday Times reported that Osborne plans to launch a £650 million raid on the BBC to help cover the country’s benefits bill, forcing the corporation to meet the cost of free television licences for the over-75s.
Note the huge disparity between the size of the savings Osborne proposes to make through cracking down on tax evasion and avoidance (£5 billion) and those he plans to make through cuts in welfare spending (£12 billion). There is obviously much more scope for savings to be made through closing loopholes in tax law and a tougher enforcement regime, but Osborne doesn’t want to upset the tycoons who fund the Conservatives’ election campaigns.
While capping benefits and raising rents for council tenants on high incomes, are reforms which will be welcomed by the great majority of taxpayers, government should also abolish the bloated and wasteful foreign aid budget of £13 billion per year.
But since much of this finds its way into the bank accounts of corrupt politicians and bureaucrats, this vital reform will probably have to wait for the election of an honest nationalist administration, headed by Patria.