Newsnight Welfare Debate – how can we find £10bn of welfare savings

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The chancellor in his 2012 budget speech announced that he was looking for another £10bn of welfare cuts.

With almost £18bn of savings already announced since the election, this blog asks whether the country can really find much more?  Below is an overview of the welfare budget, and some initial thoughts on how such savings could be made, if they had to be.

Read the blog post below, watch Newsnight summarise the debate and leave your comments below.  For my money, the best way to tackle the working age welfare budget is to get more people into work, and importantly working more.  The main alternatives are to tackle the growing expenditure on pensions and benefits for older people, sort out the cost of housing for claimants and non-claimants alike or to raise taxes.  Please keep any comments sensible and supported by evidence.

£18bn of cuts to date

The Government has attempted to protect those on the lowest incomes by withdrawing eligibility from higher earners and households with other sources of income, and by making housing support fall in line with choices working families have to make.

£11bn of savings were announced in the emergency budget, the main being the switch to CPI indexation saving £5.8bn by 2015, by eating into the real value of benefits).  Changes to housing benefit will save another £1.8bn through the reduction in LHA to 30% of median rents, caps on benefit payments and reduced support for single people under five and people with extra rooms.  Reduced entitlement will affect those with other sources of income.

Where to look for additional welfare savings

In a welfare budget of £160bn, £105 bn is spent on pensioners, and due to demographic changes this is rising fast.  The state pension alone will be over half of all welfare spending by 2014.  The total spend on benefits is balanced against an administrative cost of £9bn.  (Administration (Del) = 5% of the Benefit (Ame) budget).

A selection of items from the 2012 welfare budget are pasted below.  The units are £ Billions.


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