COMMONS SPEECH:MAJOR CUTS in social welfare, which include radical changes to housing benefits and limits on how long people can claim unemployment benefits before it is reduced, formed a large part of British chancellor George Osborne's plans to cut more than £80 billion (€90 billion) from government spending over the next four years.
Mr Osborne told the House of Commons yesterday that the Conservative/Liberal Democrat coalition had already brought the UK “back from the brink of bankruptcy”, that it had “to confront the bills from a decade of debt” and was now set on putting the public finances on a solid footing.
New local authority tenants will have to pay 80 per cent of the market rent in their localities, while under-35s will only be helped to share a house. They will no longer have any hope of getting accommodation on their own “so that housing benefit rules reflect the housing expectations of people of a similar age not on benefits”, the chancellor said. No one on benefits will get more than the pay of an average worker – around £25,000 a year. Unemployment benefit will be cut after a year.
In cash numbers, British government spending will rise from £702 billion next year to £713 billion in 2011/12. The following year it will rise to £724 billion and in 2014/15 to £740 billion, though once inflation is taken into account spending in real terms will fall to 2008 levels.
The amount available for services will actually be much lower than then because of higher debt interest payments. These are currently running at £45 billion a year, but they will rise by almost 50 per cent – to £63 billion – in 2014/15.
Mr Osborne, however, insisted that the spending cuts announced yesterday, with which he intends to eliminate the budget deficit by 2015, will reduce the figure from what it could have been by £1 billion in 2012, £1.8 billion in 2013 and £3 billion in 2014.
Meanwhile, he runs the risk of middle-class ire after it emerged that cuts to child benefits for one-income families earning more than £44,000 – but up to £88,000 where both partners work – will save £2.5 billion.
This is significantly more than the £1 billion he predicted when he spoke to the Conservative Party conference earlier this month.
Current NHS spending will rise over the four years, though capital spending will fall sharply. However, Mr Osborne has protected politically important benefits for pensioners over which prime minister David Cameron gave a personal pledge during the election campaign. These include free opticians’ examinations, prescription charges, bus passes, TV licences for the over-75s and winter fuel payments.
Some departments will see their budgets fall by almost 30 per cent, largely on the back of administrative savings that will be hard won.
Police budgets will fall by 16 per cent over four years, while local authorities will have to cope with 7.1 per cent cuts in their annual budgets. A plan to build a new prison is to be scrapped, and fewer people will be held in jail.
Day-to-day spending in English schools will be protected, though the budget to build new ones or refurbish old ones will drop by 60 per cent.
A total of 490,000 public sector jobs will be shed. The retirement age for men and women will rise from 65 to 66 by 2020.
At present women can retire at 60 and up to now did not have to face the 66-year finishing line until 2024. The £5 billion saved with this measure will be used to make the state pension more generous, Mr Osborne said.
UK cuts a tough test for North’s coalition: page 15; Editorial comment: page 17