Autumn Statement

By DeusExMacintosh

UK Welfare State "unaffordable"

The welfare state is unaffordable, George Osborne will tell MPs this week, and permanent cuts will be required to make the public finances “sustainable”.

The Chancellor will use his Autumn Statement on Thursday to set out more details of a new cap on welfare spending after the next general election. It is an attempt to put permanent limits on around £100?billion a year of spending on items such as Housing Benefit and some unemployment payments.

Mr Osborne yesterday hinted that, even after the current austerity programme, more fundamental changes will be needed to give Britain an “affordable state”.

The Chancellor will also use his set-piece economic statement to Parliament on Thursday to update MPs on the state of the public finances.

The economy is recovering and currently growing more quickly than any other developed economy. That will allow Mr Osborne to borrow up to £20?billion less this year than he had expected and some economists have suggested that borrowing over the next five years could be up to £70?billion lower than expected.

The modest improvement in public finances has raised hopes that Mr Osborne will be able to offer tax cuts and higher spending. But he will tell MPs that he will still borrow around £100?billion this year and that his goal of eliminating the deficit is still several years away. Treasury plans show austerity will have to continue until at least 2018.

“People know the job is not done. There are going to have to be more difficult decisions. I’m going to have to take more difficult decisions this week because ultimately you can’t will your country’s public finances to be in better shape,” the Chancellor told the BBC.

Welfare payments account for around £120?billion of the £720?billion the Government spends each year. Mr Osborne suggested that even after the current round of cuts is complete, more fundamental change will be required.

“The cost of welfare is one of the things that makes the public finances unsustainable,” he said, adding: “We need an affordable state.”

The Telegraph

7 Comments

  1. kvd
    Posted December 7, 2013 at 8:00 am | Permalink

    In the years I’ve been reading this blog, this is probably the best, most succinct, post ever.

  2. Mel
    Posted December 7, 2013 at 9:04 pm | Permalink

    “Winter is coming”.

    That line reminds me how much I’ve missed GoT 🙂

    Conservatives always trot out the same old bullshit about the welfare state. They do it in countries where the welfare state is small and mean and in countries where the welfare state is big and generous. They said it here 50 years ago and they’ll say it 50 years from now.

    Far better to spend the money on some jolly splendid boy’s own adventures, apparently.

  3. Posted December 7, 2013 at 9:28 pm | Permalink

    They are (very carefully) not emphasizing the point that the State Pension is classed as “welfare”, and accounts for over 50% of that budget already.

    Labour had their chance and bottled the Hutton Report and the unions are already protesting at contributions escalating to 6% of wages [Australians may insert a horselaugh at this juncture]. Whether the Conservatives can offer anything by way of solutions remains to be seen…

  4. Posted December 10, 2013 at 6:56 am | Permalink

    The whole point of the Hawke-Keating reforms was to create a sustainable welfare state which, with GST added in, we clearly have; tweakings at the margins aside.

    What a lot of folk don’t get is how much good monetary policy helps make a given level of welfare sustainable, by keeping economic growth chugging along nicely.

    The UK clearly has some supply-side problems (it is the only way the economic stats over the last 5 years or so make any sense). It is easier to share out a faster growing pie AND to make adjustments to welfare if folk have more other options.

  5. derrida derider
    Posted December 11, 2013 at 9:42 am | Permalink

    This talk was the purest spin by Osborne.

    It exemplifies one of my pet hates – people who want small government but know they could never sell it to the populace, so instead say “we’d love a welfare state but we just can’t afford it”. It is the purest crap – there IS no fiscal crisis in the UK, as you can clearly see both in any intergenerational accounts or by looking at the price of gilts. If you think it’s a good idea to smash the welfare state then you should try to persuade the voters it’s a good idea – don’t pretend you think it a bad idea but your hands are tied by a non-existent fiscal emergency.

    Of course if you crush an economy for years it will eventually rebound, but that doesn’t mean the crushing was a good idea. In fact the strength of the rebound is just a measure of how much crushing you did; the lost output will never be recovered, nor the shattered lives mended.

  6. Herding cats
    Posted December 14, 2013 at 1:32 pm | Permalink

    Aahhhh, sighs. “Tis, and ‘Twas – always the same. The rich get richer – the poor get poorer.

    Twits, Twats; and us on the margins …. heh.

  7. Posted December 19, 2013 at 2:42 pm | Permalink

    [email protected] Actually, the big news since about the 1820s is the poor getting richer. It’s a pattern that has spread across the globe to the extent that your country nowadays has to be diabolically badly run not to share in.

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