Chancellor to reveal savings of £12 billion in cuts to welfare bill

Chancellor George Osborne announced over the weekend that he has identified how he can make £12 billion savings to the welfare bill, the bulk of which will be announced in his forthcoming budget.

Savings will be made by removing subsidies for social housing and lowering the cap for benefit claims to £20,000 per year, for those living outside London, and to £23,000 for those who live in the capital. Approximately 89,000 households across the UK are likely to be affected by the new cap on benefits which, says the Treasury, will save taxpayers £1.67 billion over the next five years.

George Osborne also confirmed that tax credits payable to households on low incomes will be cut but that this will be offset by reduced taxes. Tax credits are currently ‘very expensive,’ said the Chancellor, costing over £30 billion and often leading to ‘a merry go round,’ as people pay taxes and then claim the equivalent back through the benefit system.

Housing subsidies are likely to be removed from households with a joint income of more than £30,000 per year outside London, and £40,000 within the capital. The move will mean that social housing tenants pay an extra £70 a week on average in rent. 340,000 households are likely to be affected, saving the Treasury up to £250 million a year by 2019.

The taxpayer will no longer fund BBC television licences for the over 75s which must, instead, be paid for by the BBC itself. This move is likely to save the Treasury around £65 million per annum. It is thought likely that Osborne may use Wednesday’s budget to announce that the TV licensing law will be changed, to enforce those watching only BBC iPlayer and not live television to buy a licence in a bid to appease the BBC.