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.

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.

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

George Eaton is political editor of the New Statesman.

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Commons Confidential: Fearing the Wigan warrior

An electoral clash, select committee elections as speed dating, and Ed Miliband’s political convalescence.

Members of Labour’s disconsolate majority, sitting in tight knots in the tearoom as the MP with the best maths skills calculates who will survive and who will die, based on the latest bad poll, observe that Jeremy Corbyn has never been so loyal to the party leadership. The past 13 months, one told me, have been the Islington rebel’s longest spell without voting against Labour. The MP was contradicted by a colleague who argued that, in voting against Trident renewal, Corbyn had defied party policy. There is Labour chatter that an early general election would be a mercy killing if it put the party out of its misery and removed Corbyn next year. In 2020, it is judged, defeat will be inevitable.

The next London mayoral contest is scheduled for the same date as a 2020 election: 7 May. Sadiq Khan’s people whisper that when they mentioned the clash to ministers, they were assured it won’t happen. They are uncertain whether this indicates that the mayoral contest will be moved, or that there will be an early general election. Intriguing.

An unguarded retort from the peer Jim O’Neill seems to confirm that a dispute over the so-called Northern Powerhouse triggered his walkout from the Treasury last month. O’Neill, a fanboy of George Osborne and a former Goldman Sachs chief economist, gave no reason when he quit Theresa May’s government and resigned the Tory whip in the Lords. He joined the dots publicly when the Resolution Foundation’s director, Torsten Bell, queried the northern project. “Are you related to the PM?” shot back the Mancunian O’Neill. It’s the way he tells ’em.

Talk has quietened in Westminster Labour ranks of a formal challenge to Corbyn since this year’s attempt backfired, but the Tories fear Lisa Nandy, should the leader fall under a solar-powered ecotruck selling recycled organic knitwear.

The Wigan warrior is enjoying favourable reviews for her forensic examination of the troubled inquiry into historic child sex abuse. After Nandy put May on the spot, the Tory three-piece suit Alec Shelbrooke was overheard muttering: “I hope she never runs for leader.” Anna Soubry and Nicky Morgan, the Thelma and Louise of Tory opposition to Mayhem, were observed nodding in agreement.

Select committee elections are like speed dating. “Who are you?” inquired Labour’s Kevan Jones (Granite Central)of a stranger seeking his vote. She explained that she was Victoria Borwick, the Tory MP for Kensington, but that didn’t help. “This is the first time you’ve spoken to me,” Jones continued, “so the answer’s no.” The aloof Borwick lost, by the way.

Ed Miliband is joining Labour’s relaunched Tribune Group of MPs to continue his political convalescence. Next stop: the shadow cabinet?

Kevin Maguire is Associate Editor (Politics) on the Daily Mirror and author of our Commons Confidential column on the high politics and low life in Westminster. An award-winning journalist, he is in frequent demand on television and radio and co-authored a book on great parliamentary scandals. He was formerly Chief Reporter on the Guardian and Labour Correspondent on the Daily Telegraph.

This article first appeared in the 27 October 2016 issue of the New Statesman, American Rage