Chancellor says £23,000 figure in manifesto only applies in Greater London as he launches further attacks on BBC during interview about welfare savings
Benefit payments to families living outside Greater London are to be capped at £20,000 a year.
In the first Conservative budget for 19 years, George Osborne will say that the previously announced figure of £23,000 will only apply to families living in the capital in a further cut to the welfare budget.
Disclosure of the additional cut came during the chancellor’s appearance on the BBC’s Andrew Marr Show, in which he claimed to have found the £12bn of welfare savings promised by the Conservatives as part of their plan to eliminate the deficit in the public finances.
Other savings to be announced in Wednesday’s budget will include a £650m raid on the BBC’s licence fee, Osborne confirmed, before launching an attack on the broadcaster’s “imperial” ambitions.
He has resisted demands from the Conservative right for a reduction in the 45p top rate of income tax as he made clear that his priority was to reduce taxes for middle and low-income earners.
Ministers will go further in capping welfare payments than the proposed household limit set out in the party’s election manifesto, at the same as time curbing the cost of tax credits.
The plan will prompt claims that lowering the cap for the rest of the country will be unfair on many claimants who live just outside Greater London but whose cost of living is still high.
Osborne said during his interview with Marr that he would be going further than previously planned in cutting the benefits cap currently set at £26,000 a year in order to ensure the system was fair to working people.
“It is not fair that people out of work can earn more than people in work, so we are going to cut the benefit cap, as we said in our manifesto, to £23,000 in London … it will be lower in the rest of the country,” he said.
It is understood that he will announce the cap outside London at around £20,000. Across the country as a whole, the government believes tthe move will affect 90,000 households. It will exempt those on disability benefits such as disability living allowance, personal independence payment and employment and support allowance.
Osborne made clear that he would also be looking to make significant savings to the system of tax credits brought in under the previous Labour government to top up the incomes of low-paid working families.
“It has become a very, very expensive system. When it was introduced, we were told by Gordon Brown it was going to cost a couple of billion pounds,” he said.
“It now costs £30bn. That is a huge sum of money. That’s three times the Home Office budget, so we have to make savings.”
Osborne confirmed reports that he wishes to transfer the annual £650m cost of providing free television licences for the over-75s from the Treasury to the BBC.
“The BBC is also a publicly funded institution, and so it does need to make savings and contribute to what we need to do as a country to get our house in order. So we are in discussion with the BBC,” he said.
He reserved his most outspoken criticism of the BBC for its website, and claimed that it had effectively become “the national newspaper as well as the national broadcaster”.