Osborne to take another £4bn out of welfare

Chancellor George Osborne signalled a renewed crackdown on the "out of control" welfare budget yesterday – announcing further cuts of £4bn would be made in the spending review this autumn.

The move is on top of an 11bn reduction made in June's Budget and Mr Osborne said he wanted to tackle those who saw claiming out-of-work benefits as a "lifestyle choice".

He failed to rule out changes to more sensitive help such as the winter fuel allowance and came under immediate fire from two Liberal Democrat MPs who pledged to oppose the fresh assault.

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Bob Russell and Mike Hancock accused the Chancellor of failing to consult the Tories' coalition partners and criticised his decision to announce the fresh assault in a television interview.

Mr Osborne used a BBC interview to confirm that further reductions in benefits would form part of his package of severe cuts to public spending to be unveiled on October 20.

"This will be done in a way that encourages people into work but there will be further welfare cuts – they will amount to several billion pounds additional to what I announced in the Budget because I think the people of this country understand this choice and they have chosen for us as a Government to push further on welfare reform," he said.

"There are five million people living on permanent out of work benefits. That is a tragedy for them and fiscally unsustainable for us as a country – we can't afford it any more," he added.

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"Of course, people who are disabled, people who are vulnerable, people who need protection will get our protection, and more but people who think it's a lifestyle choice to just sit on out-of-work benefits – that lifestyle choice is going to come to an end. The money won't be there."

David Cameron repeatedly rejected Labour claims during the General Election campaign that his party would cut benefits for older people as "lies".

The coalition agreement contained a pledge to "protect key benefits for older people such as the winter fuel payment" but did not rule out reforming them.

Mr Hancock said a further 4bn cut would go "right to the heart" of the benefits system and hit the poorest – and joined Mr Russell in saying he would vote against any such measure.

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Earlier the Liberal Democrats' leader Nick Clegg, MP for Sheffield Hallam, had appeared to soften the Government's rhetoric by stressing that departmental reductions would be staggered over four years.

Although people were understandably anxious, they should not feel there was a "sword of Damocles" that would fall overnight, he added.

Mr Clegg issued his plea against panic with just six weeks to go until the results of a tough Comprehensive Spending Review are revealed.

He conceded there was still a danger that sharp reductions in expenditure would hamper the bounce-back from recession, saying people should be braced for a "choppy" recovery.