TENS of thousands of anti-austerity demonstrators marched past his front door in London on June 20th, but David Cameron appeared not to be listening. Two days later, in a speech in Cheshire, the prime minister hinted at how he plans to cut £12 billion ($19 billion) from the welfare budget, to help close the £75 billion (4% of GDP) deficit by 2018-19. In the crosshairs are top-ups for the working poor, known as tax credits.
Plans already announced to freeze benefits until 2017-18 and reduce the annual household benefit cap from £26,000 to £23,000 could save more than £1 billion a year, according to the Institute for Fiscal Studies (IFS), a think-tank. Tightening the rules on disability benefits and taxing them could save another £1.5 billion. But after ring-fencing pensions and child benefit, two of the biggest chunks of the £220-billion annual welfare bill, Mr Cameron is left with only about £110 billion that is open to cuts. The most sliceable parts are tax credits and housing.
These benefits have boosted the incomes of many low-paid Britons. But Conservatives argue that they subsidise companies and landlords. “Business knows the state will top up if only the minimum wage is paid,” says Christian Guy of the Centre for Social Justice, a right-leaning think-tank. “And landlords let properties to the state, which then pays off their...Continue reading
via Brian Rushton, No funfair
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