Osborne promises "billions" more in welfare cuts - where will his axe fall?

The Chancellor suggests a future Tory government would make large welfare cuts, including a lower benefit cap.

George Osborne has long made it clear that he would like to make greater welfare cuts than the Liberal Democrats will allow, but rarely has he been as explicit as he was at today's Treasury select committee hearing. After Labour's Pat McFadden noted the OBR's finding that day-to-day departmental spending was forecast to fall to its lowest level since records began in 1948, Osborne replied that this figure did not take into account the "further welfare savings" he would make. While refusing to "put a number on it" (such as the IFS forecast that £12bn of welfare cuts or tax rises will be required to keep cuts at their current pace), he said that he wanted "billions" more cut from the welfare budget. 

What cuts could he have in mind? It's worth looking back at the speech David Cameron made on the subject in June 2012 when he outlined a series of possible measures, including: 

  • The restriction of child-related benefits for families with more than two children.
  • A lower rate of benefits for the under-21s.
  • Preventing school leavers from claiming benefits.
  • Paying benefits in kind (like free school meals), rather than in cash.
  • Reducing benefit levels for the long-term unemployed. Cameron said: "Instead of US-style time-limits – which remove entitlements altogether – we could perhaps revise the levels of benefits people receive if they are out of work for literally years on end".
  • A lower housing benefit cap. Cameron said that the current limit of £20,000 was still too high.
  • The abolition of the "non-dependent deduction". Those who have an adult child living with them would lose up to £74 a week in housing benefit.

Osborne would also likely reduce the household benefit cap of £26,000 (he said today that "future governments could change the level" and Tory MPs have been pushing for one of £20,000) and maintain the 1% cap on benefit increases (a real-terms cut). 

At present, the Tories have been prevented from making the cuts above by the Lib Dems, who have refused to consider further reductions until Osborne ends the ring-fencing of pensioner benefits. But should Cameron avoid repeating his 2010 pledge to protect the latter, the door would be opened to further welfare cuts under another Tory-Lib Dem coalition. 

George Osborne speaks at the Conservative conference in Manchester earlier this year. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Recess confidential: Labour's liquid party

Sniffing out the best stories from Westminster, including Showsec, soames, and Smith-side splits.

If you are celebrating in a brewery, don’t ask Labour to provide the drinks. Because of the party’s continuing failure to secure a security contractor for its Liverpool conference, it is still uncertain whether the gathering will take place at all. Since boycotting G4S, the usual supplier, over its links with Israeli prisons, Labour has struggled to find an alternative. Of the five firms approached, only one – Showsec – offered its services. But the company’s non-union-recognition policy is inhibiting an agreement. The GMB, the firm’s antagonist, has threatened to picket the conference if Showsec is awarded the contract. In lieu of a breakthrough, sources suggest two alternatives: the police (at a cost of £59.65 per constable per hour), or the suspension of the G4S boycott. “We’ll soon find out which the Corbynites dislike the least,” an MP jested. Another feared that the Tories’ attack lines will write themselves: “How can Labour be trusted with national security if it can’t organise its own?”

Farewell, then, to Respect. The left-wing party founded in 2004 and joined by George Galloway after his expulsion from Labour has officially deregistered itself.

“We support Corbyn’s Labour Party,” the former MP explained, urging his 522,000 Facebook followers to sign up. “The Labour Party does not belong to one man,” replied Jess Phillips MP, who also pointed out in the same tweet that Respect had “massively failed”. Galloway, who won 1.4 per cent of the vote in this year’s London mayoral election, insists that he is not seeking to return to Labour. But he would surely be welcomed by Jeremy Corbyn’s director of communications, Seumas Milne, whom he once described as his “closest friend”. “We have spoken almost daily for 30 years,” Galloway boasted.

After Young Labour’s national committee voted to endorse Corbyn, its members were aggrieved to learn that they would not be permitted to promote his candidacy unless Owen Smith was given equal treatment. The leader’s supporters curse more “dirty tricks” from the Smith-sympathetic party machine.

Word reaches your mole of a Smith-side split between the ex-shadow cabinet ministers Lisa Nandy and Lucy Powell. The former is said to be encouraging the challenger’s left-wing platform, while the latter believes that he should make a more centrist pitch. If, as expected, Smith is beaten by Corbyn, it’s not only the divisions between the leader and his opponents that will be worth watching.

Nicholas Soames, the Tory grandee, has been slimming down – so much so, that he was congratulated by Tom Watson, Labour’s deputy leader, on his weight loss. “Soon I’ll be able to give you my old suits!” Soames told the similarly rotund Watson. 

Kevin Maguire is away

I'm a mole, innit.

This article first appeared in the 25 August 2016 issue of the New Statesman, Cameron: the legacy of a loser