Where can the Chancellor find £12 billion of welfare cuts?
The Chancellor told the Treasury Select Committee yesterday:
“You are going to have to find billions of pounds more in welfare savings if you want to reduce the deficit, eliminate the deficit and get our debt falling.”
He did not demur from the IFS figure that this strategy would require £12 billion worth of cuts in the welfare budget. This is what Paul Johnson, its director, said:
For let’s not forget the scale of the cuts in spending still to come. By the end of 2013-14 DELs (that’s Whitehall spending on public services) will have been cut by just over 8%. Absent further welfare cuts, or tax increases, plans to 2018-19 now imply cuts of more than 20% in total public service spending.
This would actually imply an acceleration in the rate of public service spending cuts – from 2.3% a year between April 2011 and March 2016, to 3.7% a year between April 2016 and March 2019. Simply to avoid such an acceleration in 3 cuts in this kind of spending would require cuts in welfare (or other AME) spending of a further £12 billion a year by 2018-19.
Many Conservatives have noticed that welfare cuts (especially when described in this abstract way) are popular, in a way that most public service cuts are not.
The majority of voters seem to support welfare cuts because they think the government is bearing down on abuse, and thus making the world a fairer place.
But it has not gone all their own way. The bedroom tax is unpopular, there is a growing sense of crisis around Universal Credit and stories about unfair assessments are getting through. Macmillan Cancer Support say “We know that a quarter of our benefits advisers surveyed have come across someone who has died before receiving their benefit.”
So the Chancellor’s certainty that £12 billion more in benefit cuts will not rebound may be over-optimistic.
This is a huge amount – and ten times more than the £1.2 billion estimate for fraud across the whole of the benefits system.
Even if he completely abolished Jobseekers’ Allowance, Maternity Allowance, Statutory Maternity Pay, Industrial Injuries Benefit and Carer’s Allowance, as well as ending all benefit fraud, he would still fail to meet his target.
|2018/19 Forecast £b|
|Statutory Maternity Pay||2.68|
|Industrial injuries benefits||0.90|
While voters think the current system is marred by abuse, they still strongly support the basic principles of a welfare state. Recent TUC polling suggests that when most voters hear the word welfare it conjures up an insurance model – something to which they contribute in case something goes wrong.
Unless he starts to make big cuts in pensions and pensioner benefit – which take up the biggest part of the welfare budget – the Chancellor will find it hard to avoid breaking what the hardworking families he is targetting will see as the fundamental safety net protection provided by their contract with the national insurance system.
And that might make them very cross indeed.