Prime Minister dismisses call for welfare cuts

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Downing Street has dismissed a call from Defence Secretary Philip Hammond for welfare to bear a greater share of austerity pain.

The Prime Minister’s spokesman insisted the benefits bill would not be up for grabs in negotiations over the 2015-16 spending review.

The comments came amid growing signs that Cabinet ministers are digging their heels in over plans for a fresh round of curbs. David Cameron is set to attempt to calm Conservative nerves with a major speech on the economy later this week, it emerged last night.

The speech on Thursday will aim to drive home the Prime Minister’s message on the need to stick to the course on economic policy, aides said.

With just a fortnight until the Budget, Tory backbenchers have also upped the pressure on George Osborne by warning Britain is on track to become a “basket case” unless tougher action is taken on government debt.

Mr Hammond said over the weekend that a number of Conservative Cabinet ministers believed “we have to look at the welfare budget again if we are going to get control of public spending on a sustainable basis”.

He also cautioned that while “modest” reductions were still possible in the defence budget beyond 2015, any significant cutbacks would “erode military capability”.

However, Mr Cameron’s spokesman said yesterday: “The Autumn Statement for 2012 has already announced £3.6 billion worth of additional welfare savings for the year 2015-16.

“The government has already set out additional welfare savings. If new and specific proposals were to emerge, then they would need to be considered.”

The spokesman pointed out that the spending review was looking at departmental expenditure limits (DEL), rather than the annually managed expenditure (AME) thread – which includes almost all benefits.

Asked if Mr Hammond’s comments were helpful, the spokesman said: “One would always expect secretaries of state and departmental ministers to make a robust case on behalf of their priorities. I think that is entirely to be expected.

“There will be a process of ministerial discussion and negotiation, and following that departmental budgets will be announced.”