Osborne cuts welfare and risks UK credit rating

George Osborne’s Autumn Statement has been published with one of the most talked about elements of the statement being the cuts and caps on various aspects of the benefit system.

Welfare payouts will now be limited to a below inflation 1% rise in the coming years. This will allow the government to save more than £3.5bn a year, which is crucial in its plan to cut down the deficit. Pensioner and disability allowances are to be exempt from this cap.

As has been case with a great deal of arguments and controversy over the last few years, being out of work and staying out of work, be that by choice or lack of option, in a number of cases led to the benefit claimants being better off than working taxpayers.

In defence of his cap on benefit increases, Mr Osborne revealed that out-of-work benefits had risen by more than 20% since 2007, whilst many workers have endured either wage freezes or minimal increases.

Mr Osborne stated: ”That’s not fair to working people, who pay the taxes that fund them. Those working in the public services, who have seen their basic pay frozen, will now see it rise by an average of 1%. A similar approach of 1% should apply to those in receipt of benefits. That’s fair and it will ensure that we have a welfare system that Britain can afford.”

After the statement announcement in the House of Commons, the international credit rating agency Fitch pitched in with regards to Mr Osborne’s plans to increase the length of Britain’s austerity until 2018, by which point there may already be an entirely new government in place.

They have now stated that Britain’s AAA credit rating could potentially be in jeopardy. The AAA rating affects the amount of interest required on borrowed spending, meaning, if the rating is lost, the rate of debt could potentially increase dramatically.

Mr Osborne spoke to BBC Breakfast and countered Fitch’s statement, by simply saying: “It wouldn’t be a good thing but the credit rating is one of a number of ways in which people look at countries.”

Ali Kirkby