George Osborne is due to speak to the Conservative party conference just before lunch today. What he tells the Symphony Hall at the International Convention Centre may well put his Liberal Democrat coalition partners off their food, as his speech will make clear the Chancellor’s determination to cut a further £10 billion from the welfare budget.
The Lib Dems appear to have adapted their position somewhat over the summer. In July, I reported senior sources saying that the £10 billion cut was ‘just not going to happen’. A little later, the party started making the connection between this new package of cuts and the wealth tax which Nick Clegg flew as a kite, arguing that the books must be balanced on the backs of the richest in society. But yesterday, after Osborne shot down both the wealth tax and the mansion tax, the party still seemed resigned to welfare spending being slashed. As I blogged yesterday, senior sources were telling me that the priority was to get a package which ensured that the rich pay more. If they secured that from the Chancellor, they could still sign up to the welfare cuts.
Iain Duncan Smith, who also vetoed the idea of more welfare cuts earlier this year, seems to be making a similar journey. Last night James reported that the Work and Pensions Secretary accepted to a fringe event that given the country’s fiscal position, ‘we will have to take more money out of the welfare system’. IDS has fought tough battles with the Treasury on the existing cuts, and chances are that he’s in for round two. But in today’s Daily Mail, he signs a joint article with Osborne, writing:
‘For example, as the Treasury illustrated at the time of the last Budget, if the rate of reductions in departmental budgets in the next spending review period is to be kept the same as the current rate, then the welfare budget would have to be reduced by more than £10billion by 2016-17. We are both satisfied that this is possible and we will work together to find savings of this scale. All of this will require some tough choices, but those choices will be guided by clear principles and a vision of what the welfare system should be. It should be a support for those who need our help but also a system that always requires those who are out of work to make the same kind of choices as those in work.’
Osborne will say in his speech that the rich will pay more while repeating his rejection of the taxation measures favoured by the Lib Dems. He is likely to point to limiting housing benefit for under 25s and cuts to child tax credits. His joint piece with IDS frames both ideas within an argument about entitlement, asking whether it’s ‘right’ for certain benefits to be paid, while insisting that universal pensioner benefits will be safe. Expect a furious row over the coming months about who is entitled to receive certain benefits, and who isn’t.
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