A further 10 billion must be cut from welfare bill warns Chancellor

A further £10 billion will need to be slashed from the welfare bill by 2016 to protect other departments from deeper cuts, George Osborne warned today.

The Chancellor paid tribute to Iain Duncan Smith's drive to bring down the costs of pensions and benefits since the coalition came to power.

But he cautioned that the welfare budget was still on track to account for a third of all public spending in future.

"If nothing is done to curb welfare bills further, then the full weight of the spending restraint will fall on departmental budgets," he said.

"The next Spending Review will have to confront this.

"So I am today publishing analysis that shows that if in the next Spending Review we maintain the same rate of reductions in departmental spending as we have done in this review, we would need to make savings in welfare of £10 billion by 2016."

Analysis published by the Treasury suggests that if welfare spending remains on its current course, other departmental expenditure will have to shrink by 3.8% in both 2015/16 and 2016/17.

That compares to a 2.4% reduction in the current spending review period.

However, the Children's Society insisted cutting welfare further would leave the poorest families facing an "even bleaker" future.

"Instead of producing a roadmap to meet its commitment to end child poverty by 2020, the Chancellor is considering slashing a further £10 billion from the welfare budget," interim chief executive Shan Nicholas said.

"Coming on top of cuts being introduced this year and next, this will make the future for some of this country's poorest families even bleaker."