The Staggers

The New Statesman’s rolling politics blog

The Lib Dems cave in to Osborne over £10bn welfare cuts

Chancellor secures agreement of Clegg's party for £10bn of further welfare cuts in 2015-16.

By George Eaton Published 08 October 2012 7:32

Chancellor George Osborne at the Conservative conference in Birmingham.

Chancellor George Osborne at the Conservative Party conference in Birmingham. Photograph: Getty Images.

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.

Nick Clegg previously insisted that the Lib Dems would not sign up to further welfare cuts without the introduction of some form of wealth or property tax. 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.

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Tags: George Osborne Iain Duncan Smith Welfare Liberal Democrats

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23 comments

Thu, 2012-10-11 15:58 — mittfh

I heard somewhere that the Housing Benefit changes are likely to save a few hundred million pounds - chickenfeed compared to the £10bn extra they've got to save (is this the same £10bn that's been signposted for ages or an additional £10bn?) Added onto which, as Shelter has stated, what if the young person's parents live in an employment blackspot - (a) if they're unemployed it isn't going to help them get a job, and (b) if they're already employed and claiming due to low wages, they'll have to give up their job and claim JSA...

I imagine the restrictions on extra benefits for those with multiple children won't save much either as they're probably a relative minority, while the freeze on benefits and lowering their uprating won't save anything in the short term but will only really start to save in the medium to long term.

So where's the rest of the £10bn going to come from? I imagine ATOS will be able to contribute (although they'd probably want a larger fee in return, so at least part of what's saved with one budget will be spent with another...

Wed, 2012-10-10 02:33 — john hurt (not verified)

If someone of social security can afford a flat but someone in work can't, surely raising wages rather than slashing benefits is the answer. An idea never discussed in the media, like nationalisation of transport and utilities. The free market dsnt work, a strong government with the welfare of the majority as its priority is whats needed.

Wed, 2012-10-10 02:33 — john hurt (not verified)

Mon, 2012-10-08 22:02 — Alan h (not verified)

There was a lot about clegg resisting another £10b on lib dem voice. Oddly nothing at all about the u turn

Mon, 2012-10-08 22:02 — Alan h (not verified)

There was a lot about clegg resisting another £10b on lib dem voice. Oddly nothing at all about the u turn

Mon, 2012-10-08 18:17 — GMGERRY (not verified)

George - Lib Dems havent "caved in" as you quaintly put it!

All their posturing at their conference was just that: posturing. They NEVER intended to push for a wealth tax or mansion tax or indeed any tax on the rich, or super-rich..they are 100% signed up to George Osborne's strategy of cutting taxes for the rich, and cutting benefits for the young - heck, this was all flagged up by David Laws and Nick Clegg himself in 2010!

So George- wise up! Lib Dems lost the Av referendum, and Lords reform, but have still 100% supported Tory tax policy and the cuts agenda - what does this tell you George? It tells you that the Lib Dems in 2102 are a fully Thatcherite party and any "left" or "progressive" or "redistributive" window dressing has been well and truly forever ditched...

Mon, 2012-10-08 18:15 — Fraziel1

Actually, I tell a lie, I occasionally read the Daily Record which is a left leaning tabloid. The lies they tell about benefits are truly staggering.Worse than anything I have read in other centre right papers. People are apparently , according to the Record, in " destitution" in Scotland due to benefit cuts despite receiving the equivalent of a 50k salary a year in benefits. Clearly the word destitute has a different meaning to the left. The Guardian is just as bad.

Mon, 2012-10-08 18:07 — Fraziel1

Pathetic responses as usual. Huffs and tantrums by all.To be expected I suppose and still no one can say why those on benefits should have special treatment over those in work when it comes to having children.Oh, and I don't read tabloids. Not a one but If i did I am sure they are a lot closer to understanding how ordinary people feel than the liberal out of touch shite printed in the Guardian.

Mon, 2012-10-08 15:40 — lisacat1999 (not verified)

'The Lib Dems cave in to Osborne over £10bn welfare cuts'.
We're so used to this now that there's no need to spell it out. LDCI is enough.
e.g.
LDCI over welfare cuts.
LDCI over tuition fees.
etc....

Fri, 2012-10-12 10:00 — sqrt (not verified)

It's tended to be "deliver Labour's policy on", mind. Thus

LDDLPO electoral reform through an AV referendum
LDDLPO tuition fees (though at the lower £9k not Labour's £15k plan and with breaks for the less well-off that Labour would never have included)
LDDLPO housing benefit "slashing" reforms
LDDLPO scrapping EMA as announced in 2007
LDDLPO letting ATOS loose on the disabled
LDDLPO raising VAT
etc

Mon, 2012-10-08 14:33 — Eddy S (not verified)

we need to iron out the inconsistencies of the welfare state. for example the young person who never works and lives in their own flat whilst someone who does having to live with their parents because they cannot afford their first home. Welcome to the effects of the property boom of the noughties. The property boom gave us buoyant tax revenues and every party loves them because we are a house loving nation but when things get out of control the side effects cannot be ignored.

Fri, 2012-10-12 09:54 — sqrt (not verified)

Except the person working in that scenario can afford their place to live just the same as the person on the dole, with means-tested housing benefit supplementing low incomes. They're just choosing not to live in rented accommodation and instead using the privileged position of having the option of a parental home (a choice not open to all) to amass personal wealth.

Mon, 2012-10-08 14:08 — Fraziel1

Astonishing cruelty? You are having a laugh. A benefits freeze is harsh but linking benefit rises to pay and only paying for a certain number of children seems profoundly sensible to me. After all it is what everyone in work has to do. We cut our cloth and it is grossly unfair to expect people on benefits to get paid for every new child without limit. No one else can do it, why should they? It is fair and will also encourage responsibility. Linking benefits to pay seems perfectly reasonable too. I would love someone on the left, without the usual histrionics, to tell me why people on benefit should be paid for children without limit when those in work cannot have kids without limit.

Not making housing benefit available to under 25's who have not worked is also a great idea. Why should you be able to leave home without a job, get a local authority house and then expect other people to pay for it? I don't agree with a lot of tory policy but their ideas for reform of the welfare state are sensible, logical and fair.

Mon, 2012-10-08 22:11 — Livers (not verified)

You are operating on the assumption that it is the unemployed that claim benefits when the truth is the working poor are dependant.

This is why a living wage is so important - get the employers to pay a fair wage so the taxpayer doesn't have to make the difference.

Now it seems the government want the working poor to suffer, might it be a good idea to look at the employers and ask why they don't stump up? or ask why the buy-to-let landlords should continue to coin it in from housing benefit?

Mon, 2012-10-08 17:53 — Dark Heart of Toryland (not verified)

Faced with a profoundly dysfunctional economic system, which generates grotesque and obscene disparities of wealth, the Tory party comes up with a policy which punishes the poor for their poverty. It then lamely attempts to justify it by claiming a specious 'fairness' whereby benefits are slashed to make the working poor seem comparatively less badly off. In fact, of course, it is a based on a lie, as many working families are so poorly paid that they need to claim a variety of benefits. But clearly, this post demonstrates that there are people who are selfish, mean-spirited and stupid enough to fall for it.

Mon, 2012-10-08 14:41 — Benjamin Rae (not verified)

I've nothing to say to you. Your riddled with prejudice and nasty opinions plucked from downmarket tabloids. God knows why Scottish independence appeals to you as there is a social democratic consensus in Scottish politics.

Mon, 2012-10-08 11:57 — Benjamin Rae (not verified)

Quite astonishing cruelty. There is no limit to the depths they'll sink to unless people say
'enough is enough'. The Lib Dems are beneath contempt in all of this. How they can claim to be standing up for the vulnerable and sign up for this kind of thing is beyond comprehension.
People shouldn't forget, nobody as a group is milking the public purse more than the scumbags making these decisions.

Mon, 2012-10-08 11:43 — kelelmist (not verified)

Attacking families with more than 2 or 3 children seems an attack on a variety of minorities. It is a attack on humanity, profoundly wrong, even evil.

Mon, 2012-10-08 11:08 — Dark Heart of Toryland (not verified)

'The Lib Dems cave in to Osborne over £10bn welfare cuts'.

And in other news, bears have been seen defecating in the woods.

Mon, 2012-10-08 11:02 — Herbert (not verified)

'Nick Clegg previously insisted that the Lib Dems would not sign up to further welfare cuts...'

... until his pal David 'Housing benefit' Laws was back in the saddle to stiffen his sinews.

Mon, 2012-10-08 08:07 — Livers (not verified)

Why announce measures for after the election? Seems odd.

Fri, 2012-10-12 09:50 — sqrt (not verified)

Not if you give it more than two seconds thought. With the general election in May and a tax year starting in April, a 2015/16 budget needs to be in place, even if there is then a change of government and a rebalancing of that budget in June. Pretty blooming obvious, really.

Mon, 2012-10-08 08:47 — Barrie J (not verified)

Odd, indeed.
Just about everybody in work this morning presume it to be rhetoric to rally the undead neocons and those with advanced senile dementia at Party Conference.
This assault on the poor is not going to end well.....
If I was the Home Secretary I'd start throwing shed loads more mony at their bully boys in blue.
No problems with the Tory press and the Beeb will run to fall in line.
Governments always need an enemy/bogy man, once the Jews/Irish/Immigrants now it's the turn of the unemployed/disavantaged/disabled.
Very, very good to see the return of the Toxic Tories though and their Limp Damp lap dogs, what a revelation their behaviour has been
All unreconstructed vermin.