U.K. Prime Minister David Cameron outlined some of his government’s plans to slash welfare spending, pledging to cut the maximum amount of state support Britons can claim and freeze rates on most working-age benefits.
The Queen’s Speech on Wednesday set out the “Full Employment and Welfare Benefits Bill” to be debated in Parliament. This reiterates Conservative manifesto pledges to cut state payouts. The total amount a family can receive per year will be reduced to 23,000 pounds ($35,500) from 26,000 pounds. Most working-age benefits, tax credits and child benefit will be frozen for two years from the fiscal year starting April 2016.
“Our reforms will incentivize work -- so people are always better off after a day at the office or factory than they would have been sitting at home,” Cameron said in an introduction to the government’s program. “That’s true social justice -- not handing people benefit check after benefit check with no end in sight.”
The measures fall far short of the 12 billion pounds of welfare cuts promised by Cameron and Chancellor of the Exchequer George Osborne before the election as part of their pledge to balance Britain’s books by 2018. While the chancellor may announce more cuts in his July 8 budget, the Institute for Fiscal Studies estimates another 10.5 billion of savings are still needed to meet the target.
Pensioners will be protected from the freeze, as will benefits relating to the additional costs of disability. Statutory maternity, paternity and adoption pay will also be exempt.
Under the bill there will be no increases in income tax, value-added tax on sales or National Insurance Contributions for the next five years.
The government will also seek to bring forward legislation ensuring that people earning the minimum wage and working 30 hours a week don’t have to pay income tax. This comes on top of the existing government commitment to increase the threshold at which people start paying tax to 12,500 pounds.