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Osborne Budget sets 'permanent' cap on welfare spending - apart from the state pension

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Osborne Budget sets 'permanent' cap on welfare spending - apart from the state pension

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Published by Jon Land for 24dash.com in Central Government and also in Bill Payments, Housing

Osborne Budget sets 'permanent' cap on welfare spending - apart from the state pension Osborne Budget sets 'permanent' cap on welfare spending - apart from the state pension

George Osborne used today's budget to confirm a £119.5 billion cap on welfare spending for the period 2015-16.

Setting the cap for the next four years, the chancellor said all welfare spending would be included bar the state pension.

Osborne told the House of Commons: "We set out today the details of that welfare cap – and we will seek the support of Parliament for it next week.

"From housing benefit to tax credits, the full list of benefits included in the cap is published in the Budget document today.

"Only the State Pension and the cyclical unemployment benefits are excluded.

"I am setting it at £119 billion in 2015-16. It will rise, but only in line with forecast inflation, to £127 billion in 2018-19.

"Britain should always be proud of having a welfare system that helps those most in need.

"But never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work.

"In future, any government that wants to spend more on benefits will: have to be honest with the public about the costs, need the approval of Parliament, and will be held to account by this permanent cap on welfare."

Jonathan Portes, head of the National Institute for Economics and Social Research (NIESR) and a former Cabinet Office chief economist, said the welfare cap was little more than "smoke and mirrors".

"Simply announcing an overall spending cap for a period that is after the next election, without announcing any specific measures (i.e. cuts to specific benefits) is smoke and mirrors," he said. "The real test comes when government, this or the next one, announces actual policy changes to deliver the cap."

Dr Faiza Shaheen of the New Economics Foundation, added: “The £119m structural welfare cap has nothing to do with the strength of our economy. It’s a purely political move, designed to cement the Tory’s vision of a slimmer, trimmer state into place and constrict the welfare debate further.

"But if we’re serious about economic resilience we need to be talking about living wages, creating good jobs and investing in rather than cutting our social infrastructure.”

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