Chancellor of the Exchequer George Osborne has revealed plans to cut an extra £25 billion from public spending by the end of 2017-18 if the Conservatives win the next election, with benefits spending as the main target for reductions.
In a speech in Birmingham, Osborne warned that the state would have to be 'permanently smaller' in the future to ensure long-term stability in the economy. This is the first time the coalition government has set out cuts planned for the first half of the next parliament. Osborne said recovery from the economic crisis is a job 'not even half done'. He added: 'If 2014 is a year of hard truths for our country, then it starts with this one: Britain should never return to the levels of spending of the last government. We'd either have to return borrowing to the dangerous levels that threatened our stability, or we'd have to raise taxes so much we'd put our country out of business. Government is going to have to be permanently smaller – and so too is the welfare system'.
Osborne said that £12 billion would need to be cut from the benefits bill in the first two years of next Parliament, so that the government's savings target could be met without any need for tax rises.
Source: Speech by George Osborne MP (Chancellor of the Exchequer), 6 January 2014
Links: Speech | HMT press release | Barnardos press release | Childrens Society press release | Fabian Society press release | Gingerbread press release | TUC press release | Guardian report | Daily Mail report | New Statesman report | Public Finance report | Telegraph report