Welfare Cuts in the October Spending Review

ANALYSIS by Sam Neagus

The October Spending Review is a matter of weeks away, and the pressure is on Chancellor George Osborne to come up with plans to cut public spending, with many analysts predicting that the most extensive cuts will be on the governments biggest single cost; the welfare state. Critics of the coalition governments plans to cut spending so quickly quote a refusual to see the logic in doing so. However, with the interest on the public deficit predicted to reach a huge £67 billion by 2014-15, decisive action has to be taken to ensure that this level is kept to a minimum.

Indeed, since 1988 spending on welfare has doubled in real terms and is now estimated to cost the government £200 billion a year, all of which is funded out of the public purse.

It is thought that one of the first cuts the Treasury will make is in housing benefits. At present, over five-thousand people receive at least £100k a year in housing benefits alone.Quite absurd, and is in no way fair to tax payers for such generosity by the state. However even if cut, the money that this will save in the grand scheme of things is still minor, and so the government has had to search for wide-ranging and extensive cuts which will enable them to claw back such a large deficit.

The first such way the government has proposed is to cut tens of billions of pounds from the ‘middle class welfare’; that is benefits paid to well off families. Frank Field, the so-called government Poverty Tsar, has suggested that the long-established Child Benefit scheme should no longer be provided to families with older children, and there are even suggestions that some other benefits, notably the Winter Fuel Allowance, positively affect beneficiaries and instead go to families with little need for such payments.

However, one concern is that lower-middle class families will lose out if such schemes were cut
and it would have a detrimental effect on their family income. Some analysts have even argued that these schemes needed to be extended as the take up of these programmes is poor among low income families. Having simpler application forms and improving administration would actually save a fair amount of funds, the bureaucracy surrounding them is where the money is really being wasted they claim.
In an additionial cost cutting proposal, the government has indicated that they will move away from setting out to improve poverty targets based on a families annual income, and focus on improving the place of the poorest families in the education and employment sector; thus encouraging ‘self-help’ and in the long term, and improving social mobility by doing so.

As I see it, there are potential improvements the government’s plans to save billions of pounds in public spending, outside of large cuts to welfare. By making means testing something which can actually work, rather than a system which is open to abuse, and not to giving billions of pounds of public money to well off, middle class families who are in little need of such payments, large savings could be made without hitting those further down the income scale hard.