BY GEORGE EATON PUBLISHED 08 OCTOBER 2012 7:32
Osborne secures agreement of Clegg’s party for £10bn of further welfare cuts
Ahead of George Osborne’s speech to the Conservative conference, the big announcement is that the Chancellor has secured the agreement of Iain Duncan Smith and the Lib Dems to a further £10bn of welfare cuts in 2015-16 on top of the £18bn of cuts already announced.
In a joint article for the Daily Mail, Osborne and Duncan Smith write:
[A]s the Treasury illustrated at the time of the last Budget, if the rate of reductions in departmental budgets in the next spending review period is to be kept the same as the current rate, then the welfare budget would have to be reduced by more than £10billion by 2016-17.
We are both satisfied that this is possible and we will work together to find savings of this scale. All of this will require some tough choices, but those choices will be guided by clear principles and a vision of what the welfare system should be.
The cuts are likely to include:
-The abolition of housing benefit for the under-25s.
-A two-year freeze in most benefits.
-A limit on benefits paid to families with more than two or three children.
But with the Chancellor having already ruled out a “mansion tax” or higher council tax bands, it remains unclear what Clegg’s party will receive in return for consenting to another attack on the poorest.
One possibility is that the coalition will again increase the top rate of capital gains tax and raise stamp duty on multi-million properties.
The move will also put further pressure on Labour to say whether, if elected, it would stick to Osborne’s spending plans for 2015-16 or adopt its own alternative proposals.
PUBLISHED ON THE SAME DAY IN THE TORYGRAPH:
By James Kirkup, Deputy Political Editor 10:00PM BST 08 Oct 2012
Nick Clegg has said that “nothing has been agreed” on cuts in public spending in 2015/16, insisting he would not accept benefits cuts without new taxes on the rich.
He spoke amid growing questions over the agreement George Osborne, the Chancellor, and Iain Duncan Smith, the Work and Pensions Secretary, claimed they have struck on cuts in welfare in that year.
A weak economy has forced the Coalition to extend its timetable for reducing the deficit and draw up plans for more cuts after the current four-year spending round.
The allocation of £18 billion of cuts in 2015/16 has emerged as major battleground between and within the two Coalition parties.
Mr Osborne wants £10 billion to come from working-age benefits, something both the Lib Dems and Mr Duncan Smith have resisted.
Mr Clegg said that despite claims at the Conservative Party conference, the Coalition has not agreed to more welfare cuts after the current spending round.
“Nothing has been agreed within government on the detail of any further changes; these are the kind of things that we will thrash out within government in the months ahead.”
The Lib Dems want a new tax on wealth before signing up to benefits cuts. That could be a “mansion tax” or higher council tax bands for high-value homes, both so far rejected by senior Tories.
Mr Clegg told the BBC:
“As we have to make more savings as a country – as we do – you start at the [top] and work your way down, not the other way around.”
Even if a wealth tax is agreed, A Lib Dem source said that the party was “extremely unlikely” ever to agree a cut of £10 billion, predicting the final figure would be lower.
Mr Duncan Smith is regarded by the Lib Dems as an ally in the internal fight over benefits and has previously questioned the £10 billion figure.
He and Mr Osborne wrote a joint newspaper article saying that £10 billion of cuts are “possible” and promising to work towards that goal.
However, Mr Duncan Smith has stopped short of committing himself to the £10 billion figure. His speech to the Birmingham conference made no mention of the figure, and nor did Mr Osborne’s.
At a fringe meeting in Birmingham this week, Mr Duncan Smith warned that he will only accept welfare cuts that not jeopardise reforms that ensure people on benefits are better off when they take work.
“I recognise we will have to take more money out of the welfare system but it will absolutely have to fall in with my view of allowing people to take control.”