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UK plans deeper welfare cuts

Sep 09 2010 20:13 Reuters

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London - British Finance Minister George Osborne plans an extra £4bn of welfare cuts on top of an £11bn reduction to the annual bill already planned, the BBC reported on Thursday.

Osborne said he would detail the exact cuts in October's spending review, which will also explain how the government will implement previously announced 25 percent cuts to the budgets of many government departments.

"There will be further welfare cuts announced on 20th October," Osborne said in an interview with BBC television. "They will amount to several billion pounds additional to what I announced in the budget."

The BBC said this "several billion" would amount to £4bn, but a Treasury spokesperson declined to confirm this or add to Osborne's broadcast remarks.

A total 15 billion pound reduction in the annual welfare budget would save about 6 percent of total spending in the area.

Cutting public spending has been the key theme for Britain's ruling coalition of Conservatives and Liberal Democrats since the Labour Party's defeat in a May 6 election. Before the election Osborne's Conservatives promised to reduce the budget deficit faster than Labour.

Britain's annual public sector net borrowing, excluding financial sector interventions, totalled £154.7bn in the fiscal year ending April 2010, equivalent to 11.0% of GDP - among the highest of any economy.

Osborne said many of the long-term unemployed would face extra pressure to get a job after October's spending review.

"What I am saying is that we are going to reform the out-of-work benefit system so there is a very strong incentive for people who can work to get work," he said.

"People who think that it is just a lifestyle choice to just sit on out-of-work benefit ... that lifestyle choice is going to come to an end."

Osborne's June budget set out an intention to reduce the budget deficit to £37bn, or 2.1% of GDP, by the 2014/15 fiscal year.

Former Labour work and pensions secretary Yvette Cooper said the government should focus on getting more people into work.

"What we have just got from the government is an arbitrary figure with no explanation of what this means at a time when their own policies are going to be increasing the number of people on benefits ... because they are cutting the number of jobs in the economy."




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