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Budget to cut 'housing subsidies' for higher earners George Osborne: £12bn in welfare savings have been found
(about 4 hours later)
A clampdown on "taxpayer-funded subsidies" for "higher earners" living in social housing is to be announced by the chancellor in Wednesday's Budget. Chancellor George Osborne says he has identified how the government will make the £12bn of welfare cuts promised in the Conservative election manifesto.
Local authority and housing association tenants in England who earn more than £30,000 - or £40,000 in London - will have to pay up to the market rent, George Osborne will say. He will announce the bulk of the savings in his Budget on Wednesday, the BBC understands.
Those known so far include a reduction in the benefit cap and removing subsidies for social housing.
Mr Osborne is also expected to announce that the BBC will have to pay for TV licences for over-75s.
'Higher earners'
Mr Osborne said the welfare cuts were needed to prevent even deeper cuts to public services and to fulfil the government's aim of eliminating the deficit and running a surplus.
"So yes, we've got to find savings in welfare - and we have found that £12bn of savings in welfare that we said we'd be able to find in the election," he said.
The headline Budget announcement over the weekend was a clampdown on "taxpayer-funded subsidies" for "higher earners" living in social housing in England.
But Mr Osborne also announced:
Mr Osborne confirmed he would be seeking to make cuts to tax credits for people on low incomes, which had become a "very expensive" system, costing £30bn.
'Austerity cult'
He said the low paid would be compensated by tax cuts in an effort to end the "merry-go-round on which people pay their taxes and then get back benefits" and firms would be encouraged to pay higher wages.
Shadow chancellor Chris Leslie said Labour backed the benefits cap but Mr Osborne should introduce tax breaks for employers that pay the "living wage", which is £9.15 an hour in London and £7.85 elsewhere, as a way of boosting people's incomes.
He told Andrew Marr: "If we can finally persuade George Osborne to U-turn and back some incentives for a living wage, that I think would be very welcome.
"But don't underestimate how important some of these tax credits have been, not just helping people be able to afford to be able to go to work - all those travel costs, childcare costs and so forth - but also there's an important principle about helping the very most vulnerable in society."
Meanwhile, Mr Leslie suggested that Labour could back the chancellor's move to make the BBC pick up the £650m bill for free television licences for the over-75s, but wanted to see the full details before deciding.
The SNP said Mr Osborne's Budget would be a "sermon from an austerity cult - cutting where it is not necessary and weakening further the chance of a sustained recovery".
Housing subsidies
Under the planned changes to housing subsidies, local authority and housing association tenants in England who earn more than £30,000 - or £40,000 in London - will have to pay up to the market rent, Mr Osborne will say.
The move is expected to raise up to £250m a year by 2018-19.The move is expected to raise up to £250m a year by 2018-19.
It is thought that this could affect 340,000 households.It is thought that this could affect 340,000 households.
The change - which will cost tenants on average up to £70 extra a week - will build on measures introduced under the coalition government that enabled housing associations and local authorities to charge market rents to those on incomes of more than £60,000.The change - which will cost tenants on average up to £70 extra a week - will build on measures introduced under the coalition government that enabled housing associations and local authorities to charge market rents to those on incomes of more than £60,000.
Extra money from those living in local authority properties will go straight to the Exchequer.Extra money from those living in local authority properties will go straight to the Exchequer.
The chancellor also spoke about the following issues on BBC One's Andrew Marr Show:
'Matter of fairness'
Writing in The Sun on Sunday about the social housing decision, Mr Osborne said the Budget would "reward work over welfare" and allow people to keep more of the money they earned.
"We've also decided it's time to act on the higher earners who use taxpayer-funded subsidies to live in council and housing association homes when they could afford the market rent that others on their salaries pay," he wrote.
"It's a simple matter of fairness. The welfare system I want to see is one that helps people to get good jobs instead of giving them handouts."
Mr Osborne confirmed reports the benefit cap, which is being reduced across the country, will be lower outside of London.
It was previously announced the benefit cap would be cut to £23,000 across the UK.
He told Andrew Marr: "It is not fair, for example, that people out of work can earn more than people in work.
"So we're going to cut the benefit cap, as we said in our manifesto, to £23,000 in London.
"But I can tell you today it will be lower in the rest of the country."
The Budget will also confirm the end of inheritance tax on family homes worth up to £1m.The Budget will also confirm the end of inheritance tax on family homes worth up to £1m.
Mr Osborne is expected to tell MPs on Wednesday the threshold at which the tax is levied will rise for couples from £650,000 after April 2017.Mr Osborne is expected to tell MPs on Wednesday the threshold at which the tax is levied will rise for couples from £650,000 after April 2017.
The chancellor is not expected to outline the £30bn in departmental spending cuts that the Institute for Fiscal Studies says he will need to find over the next three years on Wednesday - these are likely to be set out in the autumn in a spending review.
Are you affected by issues covered in this story? You can email haveyoursay@bbc.co with your comments. Please leave a contact number if you're happy to be contacted by BBC journalist.Are you affected by issues covered in this story? You can email haveyoursay@bbc.co with your comments. Please leave a contact number if you're happy to be contacted by BBC journalist.