Budget 2014: Welfare cap set at £119bn

19 Mar 14
Welfare spending across 26 benefits, including elements of the Universal Credit, is to be capped at £119.5bn from 2015/16, Chancellor George Osborne has announced

By Richard Johnstone | 19 March 2014

Welfare spending across 26 benefits, including elements of the Universal Credit, is to be capped at £119.5bn from 2015/16, Chancellor George Osborne has announced.

BudgetBox-2014_PA

He said the restrictions on benefits, excluding payments to jobseekers and pensioners, were needed to keep government spending in check and protect Britain from future economic storms.

Osborne also announced that £1bn cuts in departmental spending first announced in last year’s Autumn Statement for three years from 2013/14 would now form a permanent part of departmental spending plans.

The welfare cap will increase by the projected levels of inflation to £122bn in 2016/17, £124.6bn in 2017/18 and £126.7bn in 2018/19, he said.

Under the Budget plans, if spending on the benefits included in the cap – which include Disability Living Allowance, Employment and Support Allowance and Child Benefit – goes above 2%, then ministers will need the approval of Parliament.

‘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,’ Osborne told MPs. ‘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.’

Parliamentary approval will be sought for the cap in a vote next week and it will also form part of the government’s new Charter for Budget Responsibility this autumn.

Osborne also confirmed that public sector pay restraint would continue as an ‘essential part of maintaining sound finances and economic stability’.

This was necessary to ensure that the government would run a total spending surplus in times of growth, which he said the government was on track to reach in 2018/19. 

‘I can confirm that in addition to the cuts this year and next, there will be cuts in the next Parliament too,’ he said of the permanent £1bn reductions in public spending. 

‘To lock in our country’s commitment to this path of deficit reduction we will seek the support of Parliament in a vote.’


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