Budget 2012: Alarm growing after Osborne’s welfare cuts warning

By Alex Stevenson

Campaigners are reeling after George Osborne raised the prospect of an extra £10 billion of welfare cuts in his Budget statement yesterday.

The chancellor told MPs that further cuts would be necessary on top of the £18 billion reduction in the Welfare Reform Act passed two weeks ago.

"Even with the Act, the welfare budget is set to rise to consume one third of all public spending," he warned.

"If nothing is done to curb welfare bills further, then the full weight of the spending restraint will fall on departmental budgets. The next spending review will have to confront this."

Mr Osborne said if spending reductions are made in the next spending review period at the same rate as took place in this parliament, welfare savings of £10 billion will have to be made.

This means the poorest families would suffer a drop in their benefit payments of £10 a week.

Oxfam's UK poverty programme director Chris Johnes said the suggested cut would have a "catastrophic" impact.

David Congdon, head of campaigns and policy at learning disability charity Mencap, added: "The government has a responsibility to ensure the cuts do not disproportionately impact on those people least able to afford it, yet the chancellor's focus on further welfare cuts means many disabled people will fear they will continue to be the hardest hit.

"If the government seeks to make further cuts in expenditure, we urge them to adopt a wider view as to how these could be realised, looking beyond just one area of spending alone."

The Children's Society said in a statement it had hoped to see Mr Osborne produce a roadmap to meeting its commitment to end child poverty by 2020 – but had instead been greeted by the prospect of the chancellor "slashing" benefit payments further.

'Coming on top of cuts being introduced this year and next, this will make the future for some of this country’s poorest families even bleaker," it noted.

Centre-right think tank Policy Exchange said the Budget had left the "toughest political decisions" on welfare and public sector pay for the future.

It warned that achieving the £10 billion cuts Mr Osborne pointed to would be a "real challenge".

The think tank said the Budget would have a broadly positive effect, but John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, said it did not appear to be a Budget for growth and jobs.

He added: "And if once the fine print has been scoured over it proves to be a 'Robin Hood' budget, it's surely 'Robin Hood lite' with less for those not in work and the promise of perhaps an extra £10 billion of welfare cuts to come."