3 Oct 2010

Cuts to dominate Conservative conference

As the government confirms plans to push through fundamental welfare reform, spending cuts will dominate the Conservative conference, which opens today.

The comprehensive spending review on 20 October is likely to see spending cuts of up to 40 per cent imposed on the spending of some government departments.

Earlier this week the Defence Secretary Liam Fox, in a leaked letter to the Prime Minister, expressed concern over the “draconian” reductions in defence spending being demanded by the Treasury.

But in an interview with today’s News of the world, David Cameron promised: “I’m very confident (…) we will have a more strategic, thought-through, more clear defence posture that we can win widespread support for.”

And he insisted British troops would still have “everything they need” to fight the Taliban in Afghanistan after the 20 October announcement.

Cameron avoids the benefits trap
The government is aware that there is considerable support for the notion of stopping "rich" people from being paid things like child benefit and winter fuel payments, writes Krishnan Guru-Murthy.

Mr Cameron also claimed, at the traditional Sunday morning conference opener, there would not be "losers". I suppose he means that in general people will not just find their benefits cut, but instead will be helped back into the world of work with transitional payments that mean "work pays".

But that of course depends on whether there are any jobs for them to go into, and obviously if nobody is going to lose anything it is going to be impossible to reduce the welfare bill by anything very significant. So that might have been a bit of a howler.

To read more from Gurublog, click here

It emerged yesterday that Work and Pensions Secretary Iain Duncan Smith and Chancellor George Osborne had reached an agreement to push through a fundamental reform of welfare.

The deal means the current range of benefits will be replaced with one “universal credit”.

Previous disagreement between the Treasury and the Department of Work and Pensions had centred around the heavy up-front costs of the reform. But these are now to be offset by a phasing-in of the reform over two parliaments.

Speaking on the BBC’s Andrew Marr Show this morning, the Prime Minister hinted that universal entitlements such as child benefit could be overhauled as part of the reform.

He said: “We have got to ask: are there some areas of universal benefits that are no longer affordable?”

But Mr Cameron moved to distinguish child benefits from the state pension system – another universal entitlement.

“I think it is very important that there are universal benefits. We pay into this system. That is why I want a really good state pension system.

“We are the first government in a long time to link the pension back to earnings.”

It is estimated that stopping child benefit payments when children reach 16, rather than the current limit of 19, would save £2bn a year.