David Cameron is considering ordering billions of pounds in extra welfare cuts proposed in a confidential Downing Street policy paper, The Daily Telegraph can disclose….
By Robert Winnett, Political Editor
10:00PM BST 15 May 2012
The plans include a new crackdown on housing benefit and a “mark two” system of universal credit to help push people off benefits back into full-time, rather than part-time, work. There are also understood to be a range of measures to encourage more women, particularly single mothers, to return to work.
The proposals have been drawn up in a policy paper for the Prime Minister presented by Steve Hilton, the outgoing Number Ten director of implementation, and Iain Duncan Smith, the Work and Pensions Secretary.
Mr Hilton, who left Downing Street yesterday for a post at a Californian university is understood to believe that another £25 billion can be cut from the welfare budget although this level of saving is regarded as “absolute nonsense” by Mr Duncan Smith.
The savings will be made from cutting back benefits for people of working age. However, the Work and Pensions Secretary has privately indicated that pensioner benefits should also be re-considered in future, but not for people who have already retired.
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The new round of welfare reforms are designed to be introduced from 2014 as the measures are expected to be politically popular in the run-up to the next election. However, the plans are understood not yet to have been shared with the Liberal Democrats.
A Downing Street source said: “There is some really radical thinking going on around welfare, which is the most successful area of government policy so far. Why should people only work part time? Why are young people who are out of work not living at home? Why are we incentivising people to have more children?
“The Prime Minister is very keen on the next stage of welfare reform and there are some properly worked out plans which have been submitted by Steve [Hilton} before he left.”
Another senior Government source said: “What we are engaged in is the mark-two stage of welfare reform. Its how do you take the universal credit into the next phase… encourage people to work longer hours, not just languish on 10, 15 or 20 hours.
“These things are part of a much bigger extended programme from where we are, to take us forward. There are longer term saving by getting more people into work, by giving people greater control of their lives, by making them essentially the masters of their destiny again, we will reap massive rewards and thus massive savings.”
Other proposed areas for further welfare reductions include stopping young unemployed people from claiming housing benefits when they could live at home. A lower cap on housing benefit for those living outside London and other expensive areas of the country may also be introduced.
Mr Duncan Smith is understood to have given a cautious welcome to the plans. However, he has not costed the proposals and has publicly indicated previously that he does not believe his department should be forced to make disproportionate levels of cuts beyond those required elsewhere.
George Osborne, the Chancellor, has indicated that the welfare budget should be cut by another £10 billion between 2015 and 2017 but the latest proposals go far beyond this level.
The Department of Work and Pensions believe that some of the “savings” that Mr Hilton is proposing will occur naturally through “behavioural changes” as a result of the current welfare reforms.
However, these behavioural changes are not factored into the official savings to the benefit system by 2015, estimated at up to £20 billion by the Treasury.
“Some of the reforms being proposed as things which should be a natural consequence of what is already happening, but not factored into the official spending figures,” said one source.
Ministers have already made dramatic reforms to incapacity and unemployment benefits. From next year, a new universal credit will replace many other benefits and provide people with a single payment. This is designed to encourage people back to work.
In an interview with The Daily Telegraph earlier this week, Mr Duncan Smith set out plans to cut disability benefits, the next stage of the welfare reform programme.
The reform of welfare is regarded as one of the Government’s most popular policies. Labour has sought to oppose many of the cutbacks, but several senior Labour figures are uneasy about the party’s stand which has alienated some working class voters.
Mr Hilton is regarded as a “blue sky thinker” whose radical and ambitious ideas have infuriated civil servants. Although some of his proposals have been dismissed as too radical and unrealistic, his plans for welfare reform are understood to be highly respected by the Prime Minister.