George Osborne hints at fresh cuts in welfare sector

Published on Monday 28 June 2010 01:40

CHANCELLOR George Osborne yesterday made clear that welfare payouts face a fresh assault over the summer, as the government looks for savings to reduce Britain's massive state deficit.

Mr Osborne said there would be a "trade-off" which could see savings in the multi-billion-pound benefit bill used to cushion the impact of cuts of as much as 25 per cent in budgets for public services like the police, defence and schools.

He named Housing Benefit and Employment and Support Allowance – which replaced Incapacity Benefit for people with long-term health problems – as areas where the axe may be wielded.

Mr Osborne stressed that any reforms would protect the disabled and those in "genuine need", but would aim to encourage those who are able to work to get off benefits and into employment.

Some 2.6 million people claim ESA or Incapacity Benefit at a cost of around 12.5 billion annually, while Housing Benefit pays out about 21bn a year. These figures make the benefits bigger drains on taxpayers' money than many Whitehall spending departments, pointed out Mr Osborne.

Ministers have been told to look for ways of reducing the welfare bill over the summer, in time for details to be unveiled in the Spending Review on 20 October.

During the election campaign, Prime Minister David Cameron made specific pledges not to reduce benefits for the elderly, like the pension credit, free bus passes, television licences and the winter fuel payment.

But Mr Osborne made clear that other benefits are on the table, saying pointedly:

"We have got to look at all these things, make sure it protects those in genuine need, protects those with disabilities and protects those who can't work, but also encourages those who can work into work.

"That is the purpose behind our welfare reform."