Chancellor George Osborne announced a package of cuts after the 2015 election worth £25 billion. This includes a £12 billion cut in welfare spending. Mr Osborne identified cuts to the payment of housing benefit to people aged under 25, saving £1.9 billion, and people living in social housing while earning more than £65,000 a year.
A total of £60 billion in spending cuts have now been confirmed by the Chancellor with £17 billion coming this year and £20 billion next year, according to Houemark
Inside Housing reports that the proposed cuts to welfare spending have split the Cabinet. Work and Pensions Secretary Iain Duncan Smith was ‘alarmed’ by the proposal.
In speaking to Channel 4 news Deputy Prime Minister Nick Clegg accused Mr Osborne of heaping the impact of further budget cuts on those with the “narrowest shoulders”. Mr Clegg said:
“The Conservative party is now out on an ideological limb, almost unique in developed economies, in saying we are not going to ask people of very great wealth, very high incomes making any additional contributions to the tax system at all but only ask people with narrower shoulders to make further sacrifices to finish the job.”
Chartered Institute of Housing Chief Executive Grainia Long said the government is concentrating its efforts on entitlement to benefits rather than the fundamental problems in the housing and labour markets. She added:
“CIH has already warned that cutting housing benefit for under 25s would be a dangerous move. It is difficult to build the economy without a young, mobile workforce. It would mean that young people would be unwilling to take risks such as moving for work because there would be no safety net for them.”
L&Q Chief Executive David Montague looked at an alternative approach by outlining two measures that would, over time, reduce the public deficit, create more jobs, reduce income taxes and, through the provision of more affordable housing, reduce welfare spending.