Osborne hints at more welfare cuts

Chancellor George Osborne has hinted at further welfare cuts
12 April 2012

Chancellor George Osborne has signalled that the coalition Government was preparing a fresh round of benefit cuts in the wake of Tuesday's £11 billion Budget squeeze on welfare payments.

Mr Osborne said that if further savings could be found from the welfare budget, other public services could be spared even more savage cuts in the forthcoming autumn spending review.

Meanwhile Prime Minister David Cameron indicated that public sector pensions would also be hit as the Government set about repairing the £85 billion "black hole" in the public finances.

The respected Institute for Fiscal Studies (IFS) warned that public services were facing "the longest, deepest, sustained period of cuts" since the Second World War, in the wake of the Chancellor's emergency Budget.

In its post-Budget analysis the IFS said that some departments could now see their spending slashed by a third - with the Home Office, justice, transport, housing and higher education all potentially set to lose out. However it said that the impact on services could be mitigated if the Government was able to find further welfare savings.

Earlier, in a round of broadcast interviews, the Chancellor indicated that another welfare squeeze was on the cards.

"If over the coming couple of months we can find further savings in the welfare budget, then we can bring that 25% number down," he said. "In the end, that is the trade-off not just between departments but also between the very large welfare bill and the departmental expenditure bill."

Mr Cameron, appearing with Deputy Prime Minister Nick Clegg in a televised BBC question and answer session, warned that public sector workers also faced changes to their pensions on top of the two-year pay freeze announced in the Budget.

"For the future, there may be changes to pension arrangements that affect existing employees," he said. "What has happened in the private sector is that many people's pensions have changed. They are no longer in final salary schemes or they're having to put more money in."

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