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HAVE YOUR SAY: Welfare budget faces £10billion cut
9:00am Monday 8th October 2012 in Latest
The Government is to press ahead with plans to slash an extra £10 billion from the welfare budget by 2016-17, on top of the £18 billion cuts already under way, Chancellor George Osborne will say today.
Among the payouts which look set to be targeted is housing benefit for the under-25s, who Prime Minister David Cameron has previously said should live with their parents if they cannot afford to fund their own home. Unemployed parents are also set to lose their benefits if they have another child.
But there will be no "mansion tax" for those owning homes worth more than £2million.
Mr Duncan Smith is understood to have initially resisted the cuts proposal, arguing that savings should be found by means-testing benefits such as free bus passes and winter fuel payments for wealthy pensioners.
But in a joint article today, he and Mr Osborne said they have reached agreement that the savings can be found without touching the universal benefits for pensioners.
''We are both satisfied that this is possible and we will work together to find savings of this scale,'' they wrote, rejecting the alternative options of cuts to economically-productive spending, higher taxes, or more borrowing and debt.
The announcement, to be spelt out in Mr Osborne's keynote speech to the Conservative Party conference in Birmingham, will set the Tories on collision course with their Liberal Democrat coalition partners.
Deputy Prime Minister Nick Clegg told his own party's conference last month that he would not allow ''wild suggestions'' of a £10 billion cut in welfare, while Chief Secretary to the Treasury Danny Alexander told delegates: ''We simply will not allow the books to be balanced in a way that hits the poorest hardest.''
Mr Osborne will say today that a further £16 billion of savings must be found in 2015/16 alone to meet his target of balancing the nation's books within five years, and he will make clear that sums of this magnitude cannot be found simply by increasing taxes on the rich.
Both the Chancellor and Prime Minister David Cameron indicated yesterday that the rich will be expected to ''pay their fair share'' towards deficit reduction, but ruled out the introduction of a ''wealth tax'' such as the mansion tax on expensive properties favoured by the Lib Dems.
In today's speech, Mr Osborne will argue that while the Government should not attempt to balance the budget on the backs of the poorest, it is an ''economic delusion'' to think it can be balanced on the wallets of the richest.
It is wrong to have a welfare state where those who live on benefits can be better off than those who have a job, he will argue.
Mr Osborne will attack Labour leader Ed Miliband for failing to mention the deficit in his own conference speech last week, arguing that anyone who is serious about tackling the country's problems must set out the principles they will apply to finding savings to get the deficit down.
And he will take on Labour's claim to be fighting for ''fairness'', arguing that the British people believe it is fair for those who make the greatest efforts to get the greatest rewards.
Mr Osborne will say that each of his budgets has increased overall taxes on the very wealthiest. And he will say that - despite the cut in the top rate of income tax from 50p to 45p - the rich will pay a greater share of the UK's total tax revenue in every year of this Parliament than they did in any of Labour's 13 years in office.
In their joint article, Mr Osborne and Mr Duncan Smith gave their backing to a proposal floated by Mr Cameron earlier this year to scrap most of the £1.8 billion in housing benefits - worth an average £90 a week - currently paid to 380,000 under-25s.
Jobless people should face the same choices on what homes and lifestyles they can afford as their contemporaries who are in work, they said.
Mr Osborne said the planned cap on benefits due to come in next year would mean claimants faced the same choices about how many children to have as working families.
The Chancellor told BBC Breakfast: ''One of the questions we ask is when you are in work and you want to have another child you have to consider the financial cost of that because it is an expensive thing to do, wonderful as it is to have more children.
''When you are on benefits you automatically get extra money when you have a child, so, you can be better off. We are just asking the question, does that work? Is that the right value we have in our society?
''We are very clear by introducing a benefit cap, for example, next year that there should be a limit on the total amount that you get no matter how many people there are in your family so that no-one out of work gets more than the average family gets by going out to work.''
Mr Osborne said people are ''angry'' that their taxes are going to support people who ''enjoy a lifestyle'' on benefits.
He added: ''I speak directly to your viewers who are probably getting ready for work, they are going to work hard all day to provide for their families, they pay taxes, we use those taxes to fund the National Health Service, to support our schools and the police, I just wonder whether it is right that a third of all that money they raise in taxes goes on welfare and of that some £80 billion goes to support the welfare of those out of work.''
Mr Osborne and Mr Duncan Smith also confirmed their commitment to the flagship Universal Credit, which is intended to simplify the welfare system by replacing a raft of different benefits, but has been subjected to growing scepticism about whether it can be delivered as planned.
''We are united in our determination to deliver Universal Credit, the most fundamental reform of our benefits system for a generation, on time and on budget,'' they wrote.