Welfare budget faces further £10bn cut by 2016 in addition to current £18bn


George Osborne announced an extra £10bn cut in the welfare budget – roughly £500 a year for each person on benefits. Photograph: Oli Scarff/Getty Images

 

by Randeep Ramesh, The Guardian’s social affairs editor

 

The welfare budget faces a £10bn cut by 2016 because social security will consume one-third of public spending within three years if it is left unchecked, George Osborne has warned.

The chancellor said: “If nothing is done to curb welfare bills further, then the full weight of the spending restraint will fall on departmental budgets. The next spending review will have to confront this.”

A cut of £10bn roughly equates to an average of £500 a year for each of the 18 million people on benefits – a £10-a-week prospective drop in income for the poorest families. This follows the current spending round, which has already has seen £18bn in welfare cuts.

However, Osborne made it clear that benefit spending was rising too fast. Treasury figures show that, by 2016, benefits and tax credits will cost the public purse £230bn – by far the largest component in a total budget of £709bn. This financial year, the spending on social security is £209bn.

The Treasury says that given the rate of increase in welfare spending, if it were left unchecked it would require other departments to make savings of 3.8% a year by 2016 – up from the annual rate of cutbacks of 2.3%.

The Treasury argues that welfare should bear the burden of the cuts. “The biggest component … is welfare spending [social security and tax credit expenditure]. Most other items … are either non-discretionary (eg debt interest) or are self-financing,” it said.

“The government will be examining the cost drivers on all areas of public spending and identifying the further reforms needed to deliver a sustainable welfare system and public services within the resources available.”

Charities said the government had done little to address child poverty in the budget, preferring instead to highlight cuts in the future.

Shan Nicholas, the interim chief executive of the Children’s Society, said: “This budget has fallen a long way short of putting vital pounds into the pockets of low-income families.

“Instead of producing a roadmap to meet their commitment to end child poverty by 2020, the chancellor has said he is considering slashing a further £10bn from the welfare budget.

“Coming on top of cuts being introduced this year and next, this will make the future for some of this country’s poorest families even bleaker.

“If the chancellor wants to support low-income families, he should have invested money in the universal credit. Helping them with their increasing childcare costs would have also gone a long way to making work pay.”

www.guardian.co.uk

Comments
  • John Hargrave March 22, 2012 at 7:28 am

    The money for rich people will go up faster than the welfare budget, and these rich people will claim benefits for any unfortunate people in their families. Cameron did for his son!

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