Lone parents are targeted in pounds 1bn social security cuts

Social security spending is to be cut by another pounds 1bn a year in a drastic package of savings agreed between Peter Lilley and the Treasury to help provide room for Budget tax cuts, according to a letter leaked to the Independent.

The letter from the Social Security Secretary to William Waldegrave, the Treasury Chief Secretary, also foreshadows for the first time deep cuts in housing benefit for the under-25s and cuts of up to 75 per cent in industrial injuries benefit, plus a tough new clampdown in payments made to single parents.

Mr Lilley's offer on housing and injuries benefit, wrung from him in an acrimonious wrangle between the two ministers, is in addition to an agreed programme of savings which will reduce his budget immediately by pounds 400m rising to pounds 1bn over three years.

The confidential letter, leaked to Labour's Social Security spokesman, Chris Smith and shown to the Independent, reveals that ministers are ready to risk what they admit could be a parliamentary defeat by forcing through the benefit cuts for 1 million single parents.

It shows that Mr Lilley had already agreed by the end of last month to abolish for all new claimants the pounds 5.20 a week Lone Parent Premium paid to those on income support, and to freeze the One Parent Benefit paid to single mothers irrespective of income. The Lone Parent Premium will also be frozen for existing claimants, meaning a real terms cut for some of the poorest parents in Britain. But it also reveals that Mr Lilley fought a frantic rearguard action against demands to go even further by introducing full scale bills in the next parliamentary session to abolish One Parent Benefit for all new cases and to make even more draconian cuts in young people's housing benefit - which would have also required primary legislation.

The Social Security Secretary warns that abolition of One Parent Benefit would save a maximum of pounds 60m in the third year and would certainly precipitate a "closing down sale." This is a Whitehall euphemism for a rush of single parents postponing marriage or even deliberately having children before the benefit has ended.

Mr Lilley says in his letter, sent on 24 October, that "with our shrinking majority" the secondary legislation needed to end One Parent Benefit "may be voted down" but if EDX [the Cabinet spending committee] are minded to act in this area, they might consider that this would be less calamitous than losing a Bill which might save only a little more." The letter also reveals that Mr Lilley tried hard to resist staff cuts including those in DSS offices.

Mr Smith said last night that the letter showed the Government was not interested in a "sensible welfare system" and added: "They're simply grabbing money from those who already have the least. They're robbing the poor to pay for the rich. In a desperate search for election tax bribes the Government are clearly intent on hammering the poorest people in the land. Young people living in rented accommodation, single parents struggling to bring up children, people who have suffered injury at work; thousands will suffer if these proposals go through."

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