£11bn slashed from welfare bill
Updated on 22 June 2010
The Government has announced plans to slash the country's welfare bill by £11 billion within four years.
The shake-up will see tax credits reduced for middle income families, child benefit frozen for three years and the introduction of a new medical assessment from 2013 for people claiming Disability Living Allowance.
All benefits, tax credits and public service pensions, except the state pension and pension credit, will be increased in line with consumer prices inflation, rather than retail prices inflation, from next year, saving around £6 billion a year by the end of the next Parliament.
Chancellor George Osborne also promised to put an end to the current housing benefit system, which sees some families claiming up to £104,000 a year, and costs the country £21 billion annually.
Instead a number of reforms will be introduced, including setting a maximum limit of £400 a week for a house with four or more bedrooms on the amount that can be claimed.
This move, combined with other changes to the benefit, will lead to savings of £1.8bn a year by the end of this Parliament.
Other casualties in the benefits shake-up include the health in pregnancy grant, which will be abolished from April next year, while the Sure Start maternity grant will be restricted to the first child. Lone parents will also be expected to look for work when their youngest child starts school.
Tax credits will be reduced to families earning over £40,000 next year, the taper rate at which awards are reduced will be increased, and the baby element will be removed for new children from April 2011, as will the one-off payment to new workers over 50 from April 2012.
The income disregard will be cut from £25,000 to £10,000, and then £5,000, while people will only be able to claim back-dated credits for one month, not three.
Mr Osborne said total welfare spending had soared from £132bn 10 years ago to £192bn now, an increase of 45%, and he hopes the planned shake-up will save the country £11bn by 2014/15.
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