George Osborne is close to agreeing a freeze on benefits as part of his emergency Budget to save £4.4 billion, The Daily Telegraph has learned. Welfare payments such as child benefits, disability benefits, housing benefit and unemployment benefit would not increase for at least a year under the Chancellor’s plans. The measure would prove politically volatile because it amounts to an effective cut in benefits when inflation is taken into account. In the City, however, it will be seen as a clear sign that the Chancellor is determined to push through painful measures to reduce the deficit.
The figure put on the potential saving by the Treasury is £4.4 billion. The Institute for Fiscal Studies puts it at £4.1billion for a one-year freeze, rising to £24.6 billion if it were extended for the whole parliament. While it is highly unlikely that Mr Osborne will announce a freeze for longer than 12 months, documents in circulation talk about the “year one saving” of £4.4billion.
The Daily Telegraph
