Osborne's new spending cap points to more welfare cuts

The Chancellor's plan to limit "Annually Managed Expenditure" shows how a Tory government would seek to further curb benefit spending.

George Osborne has already capped benefits for out-of-work families at £26,000 a year, now he's proposing to go further and introduce a cap on total welfare spending. One of the most significant announcements in the Budget was that the Chancellor is planning "a new limit" on what's called "Annually Managed Expenditure" (AME). This is the area of spending concerned with non-departmental items such as welfare payments, debt interest and EU budget contributions (which account for around 50 per cent of all state spending). It is the automatic rise in the first two, in particular, that has made it so hard for the government to stick to its deficit reduction targets. Osborne is now proposing to end this fiscal irresponsibility (as he sees it) by introducing a limit on "a significant proportion" of this expenditure. 

In practice, this will almost certainly mean even greater welfare cuts. Although Osborne said that the new cap would be set out in a way "that allows the automatic stabilisers to operate", he added that it would "bring real control to areas of public spending that had been out of control." And since the government has less influence over debt interest payments (the markets decide those) and EU budget contributions (the EU 27 decide those) than it does over welfare spending, it is benefits that will bear the brunt of the squeeze.

The Treasury is briefing that the new cap will not affect the government's plan to avoid further welfare cuts in this summer's 2015-16 Spending Review (a victory for the Lib Dems) but it is a signal that a future Conservative government (or a future Tory-led coalition) would seek to further curb welfare spending. What form could this take? Osborne is likely to extend the 1 per cent cap on working-age benefit increases beyond 2015-16 and to look again at measures such as the abolition of housing benefit for the under-25s and the restriction of child benefit for families with more than two children.

Other policies trailed by David Cameron in his welfare speech last summer included:

- Preventing teenagers from claiming benefits as soon as they leave school.

- Paying benefits in kind (like free school meals), rather than in cash.

- Reducing benefit levels for the long-term unemployed.

- A lower housing benefit cap. Cameron said that the current limit of £20,000 was still too high. 

I expect some or all of these are under consideration for the next Conservative manifesto. 

A young boy plays football in a run down street with boarded up houses in the Govan area of Glasgow, Scotland. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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The most terrifying thing about Donald Trump's speech? What he didn't say

No politician uses official speeches to put across their most controversial ideas. But Donald Trump's are not hard to find. 

As Donald Trump took the podium on a cold Washington day to deliver his inauguration speech, the world held its breath. Viewers hunched over televisions or internet streaming services watched Trump mouth “thank you” to the camera, no doubt wondering how he could possibly live up to his deranged late-night Twitter persona. In newsrooms across America, reporters unsure when they might next get access to a president who seems to delight in denying them the right to ask questions got ready to parse his words for any clue as to what was to come. Some, deciding they couldn’t bear to watch, studiously busied themselves with other things.

But when the moment came, Trump’s speech was uncharacteristically professional – at least compared to his previous performances. The fractured, repetitive grammar that marks many of his off-the-cuff statements was missing, and so, too, were most of his most controversial policy ideas.

Trump told the crowd that his presidency would “determine the course of America, and the world, for many, many years to come” before expressing his gratefulness to President Barack Obama and Michelle Obama for their “gracious aid” during the transition. “They have been magnificent," Trump said, before leading applause of thanks from the crowd.

If this opening was innocent enough, however, it all changed in the next breath. The new president moved quickly to the “historic movement”, “the likes of which the world has never seen before”, that elected him President. Following the small-state rhetoric of his campaign, Trump promised to take power from the “establishment” and restore it to the American people. “This moment," he told them, “Is your moment. It belongs to you.”

A good deal of the speech was given over to re-iterating his nationalist positions while also making repeated references to the key issues – “Islamic terrorism” and families – that remain points of commonality within the fractured Republican GOP.

The loss of business to overseas producers was blamed for “destroying our jobs”. “Protection," Trump said, “Will lead to great strength." He promised to end what he called the “American carnage” caused by drugs and crime.

“From this day forward," Trump said, “It’s going to be only America first."

There was plenty in the speech, then, that should worry viewers, particularly if you read Trump’s promises to make America “unstoppable” so it can “win” again in light of his recent tweets about China

But it was the things Trump didn't mention that should worry us most. Trump, we know, doesn’t use official channels to communicate his most troubling ideas. From bizarre television interviews to his upsetting and offensive rallies and, of course, the infamous tweets, the new President is inclined to fling his thoughts into the world as and when he sees fit, not on the occasions when he’s required to address the nation (see, also, his anodyne acceptance speech).

It’s important to remember that Trump’s administration wins when it makes itself seem as innocent as possible. During the speech, I was reminded of my colleague Helen Lewis’ recent thoughts on the “gaslighter-in-chief”, reflecting on Trump’s lying claim that he never mocked a disabled reporter. “Now we can see," she wrote, “A false narrative being built in real time, tweet by tweet."

Saying things that are untrue isn’t the only way of lying – it is also possible to lie by omission.

There has been much discussion as to whether Trump will soften after he becomes president. All the things this speech did not mention were designed to keep us guessing about many of the President’s most controversial promises.

Trump did not mention his proposed ban on Muslims entering the US, nor the wall he insists he will erect between America and Mexico (which he maintains the latter will pay for). He maintained a polite coolness towards the former President and avoiding any discussion of alleged cuts to anti-domestic violence programs and abortion regulations. Why? Trump wanted to leave viewers unsure as to whether he actually intends to carry through on his election rhetoric.

To understand what Trump is capable of, therefore, it is best not to look to his speeches on a global stage, but to the promises he makes to his allies. So when the President’s personal website still insists he will build a wall, end catch-and-release, suspend immigration from “terror-prone regions” “where adequate screening cannot occur”; when, despite saying he understands only 3 per cent of Planned Parenthood services relate to abortion and that “millions” of women are helped by their cancer screening, he plans to defund Planned Parenthood; when the president says he will remove gun-free zones around schools “on his first day” - believe him.  

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland