Osborne prepares to slash £12bn from social welfare in UK budget
Britain's finance minister George Osborne will go ahead with £12bn (€17bn) of welfare cuts as part of his plan to balance the current budget by 2017/18.
The chancellor also signalled his intent to slash £650m from the BBC's budget in Wednesday's budget.
To meet his overall target, Mr Osborne says he needs to cut the annual welfare bill by £12bn, make £13bn of departmental spending reductions, and to raise an extra £5bn by clamping down on tax evasion.
"We have found that £12bn of savings in welfare that we said we'd be able to find," Mr Osborne said on the BBC yesterday. "We've got to have a welfare system that is fair to those who need it, but also fair to those who pay for it."
Ministers will go further in capping welfare payments than the proposed £23,000-a-year household limit set out in the Tories' election manifesto, while at the same time curbing the cost of tax credits.
But the opposition Labour Party warned against "self-defeating" spending cuts.
"On the deficit we need, of course, sensible savings but I want to see proper welfare reforms, proper public services that aren't self-defeating, that aren't going to cost much more for the country in the long term," Labour spokesman Chris Leslie said.
Mr Osborne said people living outside London would be subject to a lower cap than previously thought on the total amount of potential benefits.
The cap will be reduced to £23,000 for those living in London, in line with pre-election promises, but he did not set out the lower ceiling that would apply elsewhere.
He also said those on high incomes in subsidised local authority housing would have to start paying closer to the market rental rates.
Mr Osborne also indicated that he was looking to transfer the £650m-a-year bill for providing free television licences for the over 75s from the Exchequer to the BBC as he delivered a stinging side-swipe at the broadcaster's "imperial" ambitions.
However, there was disappointment for Conservatives pressing for a reduction in the 45pc top rate of tax as he made clear that his priority was to reduce taxes for middle and low income earners.
Nevertheless, many Tory MPs will welcome the move by the Chancellor to require the BBC to shoulder the burden of free licences for the elderly - a change that would cost the corporation around a fifth of its annual £3.7bn licence fee revenues.
Mr Osborne said: "The BBC is also a publicly funded institution and so it does need to make savings and contribute to what we need to do as a country to get our house in order. So we are in discussion with the BBC."
Reports suggested that the BBC would be able to recoup up to £150m of lost revenue through charging for the use of its iPlayer and other online catch-up services.