Conservatives could cut another £12bn from welfare budget

George Osborne's tough message on post-2015 savings is another example of how the two coalition parties are diverging ahead of the election

A Conservative government could cut another £12bn off the welfare budget, George Osborne has suggested as he insisted that further savings on benefits would be needed to clear the deficit.

The Chancellor drew a clear and deliberate dividing line with Labour and the Liberal Democrats as he mapped out his strategy for the period beyond the 2015 general election. Mr Osborne insisted that whoever is in power will have to impose significant reductions to welfare. Although the other two main parties are likely to accept limited cuts in this area, they would  not be on the scale contemplated by the Tories.

Mr Osborne told the Commons Treasury Select Committee: “My view is welfare expenditure cannot be excluded from difficult decisions that need to be made. If you want to maintain the same pace of reduction in government spending that we have had over this parliament, rather than accelerating it, then you are going to have to find billions of pounds of welfare savings.  I think that is what this country needs to do. Personally I think if it comes to a choice we should be making our investment in schools and in science, because that's securing the long-term economic health of this country and we shouldn't be cutting those things because we are not prepared to deal with the welfare budget.” He also promised to prioritise the health budget.

The Chancellor was challenged over a calculation by the independent Institute for Fiscal Studies that £12bn of welfare savings would be needed to protect services. He replied: “I don't want to put a number on it, but I agree with the analysis behind that number, that many billions of pounds of welfare savings are going to be required if we want to avoid cutting government budgets any further than they have been.” He added: “Anyone who wants to be honest with the British public about dealing with the deficit and making sure we retain public services of sufficient quality should also be honest about the welfare savings that are required.”

Mr Osborne also hinted that he might be prepared to bow to pressure from some Tory MPs to lower the £26,000-a-year cap on benefit claims by one family. He admitted that any change to it  would be the subject of “fierce debate” inside the Coalition. Later senior Lib Dems confirmed the Nick Clegg would not sanction a lower cap before the election, saying that would be “premature” because the ceiling had only taken effect this year.

Mr Clegg backed a controversial rise of only 1 per cent in many benefits for three years but has ruled out further welfare cuts before the election on the grounds that the Tories will not curb perks such as winter fuel allowances and free bus travel and TV licences for better off pensioners.

Mr Osborne's tough message on post-2015 welfare savings is another example of how the two coalition parties are diverging ahead of the election. It threatens to provoke a clash with Danny Alexander, his Lib Dem deputy at the Treasury, with whom he enjoys a close working relationship. The Chief Treasury Secretary, writing on The Independent's website this week, warned that “some Conservatives are ideologically wedded to continuous cuts as the route to a smaller state” and insisted the Lib Dems did not support that.

Tory strategists believe that further welfare cuts are a potential vote winner in 2015.  Tory ministers have toned down their earlier rhetoric suggesting that benefit claimants are “scroungers” rather than “strivers” amid fears of a backlash, especially in the North. But they insist that many voters will support more “carrot and stick” welfare reforms to encourage jobless people to work and help to “finish the job” of eliminating the deficit by 2019. “It plays very well in marginal seats,” said one Tory aide.

Mr Osborne, who announced that next year's Budget will be held on March 19, was asked whether he agreed with the Office of Budget Responsibility's analysis that it was “inconceivable” that household incomes had not been falling since the financial crisis. He replied: “I agree that what happened in 2008 has made this country a lot poorer. I accept that. What I would say is that the way to make the country richer is to stick with the economic plan that has helped us recover from that economic calamity.”

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Barn owls are among species that could be affected
charity appeal
Sarah Silverman (middle) with sister Reform Rabbi Susan Silverman (right) and sister actress Laura Silverman (left) at Jerusalem's Western Wall for feminist Hanuka candle-lighting ceremony
peopleControversial comedian stages pro-equality Hanukkah lighting during a protest at Jerusalem's Wailing Wall
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
After another poor series in Sri Lanka, Alastair Cook claimed all players go through a lean period
cricketEoin Morgan reportedly to take over ODI captaincy
Have you tried new the Independent Digital Edition apps?
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Finance Director

£65000 - £80000 per annum: Recruitment Genius: Finance Director required to jo...

Recruitment Genius: Medico-Legal Assistant

£15000 - £25000 per annum: Recruitment Genius: This is a unique opportunity fo...

Ashdown Group: (PHP / Python) - Global Media firm

£50000 per annum + 26 days holiday,pension: Ashdown Group: A highly successful...

The Jenrick Group: Quality Inspector

£27000 per annum + pension + holidays: The Jenrick Group: A Quality Technician...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas