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UK minister warns of major welfare cuts

Osborne's plan to slash $20bn from annual welfare budget after next election sparks criticism within ruling coalition.

Last updated: 07 Jan 2014 01:43
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Critics accuse the government of attempting to balance the books on the backs of the poor [AP]

Britain's finance minister has warned of major cuts to the country's future welfare spending, spelling out the next phase of a push to fix public finances.

Conservative Finance Minister George Osborne said on Monday that he wanted to slash about $20bn from the country's annual welfare budget in the two years after the 2015 election, accounting for a significant portion of an overall $41bn in cuts he said were needed to reduce borrowing and help balance Britain's budget.

"The truth is there are no easy options here, and if we are to fix our country's problems, and not leave our debts to our
children to pay off, then cutting the welfare bill further is the kind of decision we need to make," Osborne said.

The announcement on Monday, which comes 16 months before the next election, quickly sparked criticism within Britain's coalition government.

Deputy Prime Minister Nick Clegg, leader of the Liberal Democrat party, called it a "monumental mistake".

"Yes you need to fill the black hole in public finances, yes you need to finish the job of balancing the books, but you don't do it only on the backs of the poor," Clegg said.

Fault lines

Clegg's criticism underscored one of the key fault lines on fiscal policy that is expected to split the coalition as the election approaches: the Conservatives want to balance the books only by cutting spending, while the Liberal Democrats also want more taxes.

Although Osborne is under pressure from some members of his Conservative party to cut income taxes more aggressively, he made clear he would not be rushing to make further tax cuts.

The Conservatives continue to lag behind the opposition Labour party in opinion polls, but they score higher on economic policy, and they regularly blame the previous Labour government for running up a budget deficit equivalent to 11 percent of gross domestic product.

A surprisingly strong recovery in the economy last year turned Britain from a laggard to a leader in growth terms among the world's big rich nations, though overall output is still below pre-crisis levels.

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Source:
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