Chancellor George Osborne announces benefits freeze in two years

Tory Chancellor George Osborne has dropped a bombshell by announcing a freeze in most working-age benefits for two years, while leaving the rich and pensioners from the latest welfare cuts.

Although the announcement was received well at the Conservative Party conference in Birmingham, however both the Liberal Democrats and anti-poverty groups rejected it. One Liberal Democrat source said:

“We know there must be some welfare savings but they should not come from this group. The gleeful elements of the Conservative Party will turn off a lot of people. It speaks volumes about the priorities of the Conservatives that they see benefit cuts for the working-age poor as a crowd-pleasing punchline for a conference speech.”

Julia Unwin, chief executive of the Joesph Rowntree Foundation said: “The plan to freeze welfare for two further years will make things worse for our economy, with more people living below the poverty line leading to lower tax revenues and the wasted potential of millions. The economy is beginning to recover, but for people on low incomes, the forecasts are heading in the wrong direction.”

If the Tories remain in power, Most benefits with includes child benefit, tax credits, jobseeker’s allowance, housing benefit and income support will be frozen by April 2016, in order to save £3.2bn. However payments to pensioners, the disabled and carers and statutory maternity pay will be left out of the freeze.

Osborne himself said at the conference: “This is the choice that Britain needs to take to protect our economic stability and to secure a better future. The fairest way to reduce welfare bills is to make sure that benefits are not rising faster than the wages of taxpayers who are paying for them. We will provide a welfare system that is fair to those who need it, and fair to those to pay for it, too.”

This follows on the heels of Iain Duncan Smith, the Work and Pensions Secretary, announcing that the Tories would introduce a trial scheme after the election to pay benefits on “smartcards”, ensuring that claimants would only buy food and other essentials, not wasting benefits on unessential things such as alcohol.

Shadow Chief Treasury Secretary said: “Labour will balance the books as soon as possible in the next Parliament, but we will do so in a fairer way. We will reverse the Tory tax cut for millionaires, stop paying the winter fuel allowance for the richest 5% of pensioners and cap child benefit rises at 1% for two years.”

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