Number 10 shrugs off Hammond’s call for welfare cuts

The Prime Minister’s spokesman insisted the benefits bill would not be up for grabs in negotiations over the 2015-16 spending review.

The comments came amid growing signs that Cabinet Ministers are digging their heels in over plans for a fresh round of curbs.

With just a fortnight until the Budget, Tory backbenchers have also upped the pressure on George Osborne by warning that Britain is on track to become a “basket case” unless tougher action is taken on Government debt.

Mr Hammond told the Daily Telegraph at the weekend that a number of Conservative cabinet Ministers believed “we have to look at the welfare budget again... if we are going to get control of public spending on a sustainable basis”.

He also cautioned that while “modest” reductions were still possible in the defence budget beyond 2015, any “significant” cutbacks would “erode military capability”.

However, the premier’s spokesman told journalists: “The Autumn Statement for 2012 has already announced £3.6bn worth of additional welfare savings for the year 2015/16.

“If new and specific proposals were to emerge, then they would need to be considered.”

The spokesman pointed out that the spending review was looking at departmental expenditure limits rather than the annually managed expenditure thread, which includes almost all benefits.

“With regard to the MoD’s budget, the Prime Minister’s view is that the equipment budget will go up by 1 per cent in real terms from 2015/16 onwards.”