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Welfare cuts ‘set to save £50bn’

Cuts to welfare will save taxpayers £50 billion over the course of this Parliament – the equivalent of almost £2,000 for every household in the country – according to the Department for Work and Pensions (DWP).

Almost half of the savings are due to come in the next 12 months, as the impact is felt of a raft of reforms introduced a year ago, such as the removal of what ministers call the spare room subsidy – branded a “bedroom tax” by critics – and the £500-a-week benefits cap.

But the DWP said it will be three years before welfare payments as a proportion of national income return to the levels seen in 2008/09, at the time of the financial crash.

Official figures suggest that savings to the taxpayer from welfare reforms totalled £0.4 billion in 2010/11, £2.6 billion in 2011/12 and £7.8 billion in 2012/13.

Savings then rose sharply after a set of changes in April last year, including the removal of the spare room subsidy, the imposition of the benefits cap, a 1% limit on working-age benefit upratings and the introduction of Personal Independence Payments, to reach £14.7 billion in 2013/14 and a predicted £21.7 billion in 2014/15.

The DWP said the hoped-for savings over the course of the Parliament amount to the equivalent of a year’s pay for 300,000 nurses and 150,000 doctors, 500 secondary and 500 primary schools, 2,000 new electric train carriages and 195 new Crossrail trains and all of the TV licence revenue collected by the BBC.

After rising by 29% over the last decade, Britain’s spending on benefits and tax credits is now falling as a proportion of GDP, with this year’s level expected to be 12.1%, down from 12.4% in 2013/14, said the DWP.

Work and Pensions Secretary Iain Duncan Smith said: ” I have always said that our welfare reforms are, at heart, about transforming the lives of the poorest in society and ensuring that everyone who has the capacity to work has the opportunity to do so.

” But our reforms are also about bringing sense back to the welfare system – ending the something for nothing culture, and getting control of the ballooning benefits bill we were left with.

” Our vital reforms are set to save the taxpayer £50 billion by the end of this Parliament.

” We are creating a fair, affordable and effective welfare system that provides a safety net for people in times of need and will secure a better future for Britain.”

Mr Duncan Smith said that the drive to get claimants off welfare and into work was turning round the lives of people in communities such as Birmingham’s James Turner Street – better known as Channel 4’s Benefits Street.

The Work and Pensions Secretary told the Sun on Sunday: “I see every job as a step on the ladder of life. It’s one foothold which makes things change for you.

“Yes, they may be on the minimum wage but they move on to other jobs, their lives change. As their families change, they change their neighbours’ lives. The positive experience of work rubs off and starts to change others’ lives.”

He added: “People were shocked when they saw Benefits Street. That’s because for too long the problems of welfare dependency and worklessness have been kept out of sight.

“In visit after visit to some of Britain’s most deprived areas, I have seen how urgently life change was needed. And that’s the opportunity our reforms offer.

“Bit by bit, these places are being turned around. Most people are decent and they just get cowed by what goes on and can’t see a way out.”

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