Chancellor George Osborne has said that he has identified all £12bn of welfare cuts that he needs to make as part of the government’s plan to balance the budget in three years.
“We have found that £12bn of savings in welfare that we said we’d be able to find,” Osborne said yesterday in an interview with the BBC, alluding to promises made by the Conservatives in the run-up to May’s General Election.
“We’ve got to have a welfare system that is fair to those who need it, but also fair to those who pay for it,” he added, providing few details about exact policy proposals but pointing to tax credits as a “very, very expensive system”.
Osborne also said that housing benefits were a “major component” of government spending while confirming that the government would deliver on its pre-election promise to lower the cap on the total amount of benefits a household can receive.
The cap will be brought down from £26,000 to £23,000 in London, but Osborne told the BBC that the cap “will be lower in the rest of the country”.
Osborne is expected to lay out full details of the government’s planned welfare cuts and other spending plans in the summer Budget on Wednesday.
But in an article in the Sun newspaper yesterday, the chancellor spelled out how his Budget would crack down on higher earners living in council and housing association homes.
He said the government would require households earning £40,000 a year in London and £30,000 a year in other parts of the country to pay rents in line with market prices, a move that could raise the Treasury up to £250m.
The government has also committed to raising the tax-free personal allowance to £12,500, while adjustments to other closely-watched tax schemes such as the corporation tax and the bank levy remain to be seen.
Separate from Wednesday’s Budget, the Treasury is expected to publish specific plans later this week on how to improve Britain’s productivity.
CUT TO INHERITANCE TAX
Osborne is set to increase the inheritance tax threshold to £1m for couples from 2017, a plan first laid out in the Conservative manifesto.
HIKING COUNCIL RENTS
More than 300,000 council tenants will be told that they need to pay market rent if they earn above £30,000 per year.
SLASHING BBC SUBSIDY
The BBC will be expected to take on a £650m yearly bill for providing free television licences for pensioners, a cost currently borne by the department for work and pensions.
LOWER BENEFITS CAP
Osborne will deliver on a campaign promise to cut the household benefits cap from £26,000 to £23,000 a year.