Osborne sets clear welfare challenge to Labour – and his coalition partners

We already knew that the Chancellor would focus on welfare as a field ripe for further cuts in his speech in Birmingham today. When he delivered that speech, George Osborne announced that the Treasury’s current forecasts suggest that £12 billion of further welfare cuts are needed in the first two years of the next Parliament, and framed this as a challenge to all parties not to let voters down by refusing to cut benefits. He said:

‘So when you see people on the telly who say that welfare can’t be cut anymore – or, even worse, promising they will reverse the changes we’ve already made and increase housing benefit – ask yourself this: way public services would they cut instead? What taxes they would put up in their place? Or would they borrow and spend more, and risk our country’s economic stability again?

‘This is what I mean when I say Britain has a choice. 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 is setting up a choice between politicians cutting back welfare or making ‘hardworking families’ suffer through tax rises and hits on sacred cows such as the NHS. He is challenging not just Labour but also the Lib Dems to say how they would plug the gap in any other way. Nick Clegg has his monthly press conference in just over half an hour, and while in the past he has said that welfare cannot be cut further without politicians also reforming pensionable-age benefits, he also didn’t rule out further cuts when he last took questions from journalists. It will be interesting to see whether he now feels he must agree with Osborne that this is the only choice facing politicians.

But of course the primary target of this choice that Osborne has set up is Labour. While Ed Miliband wants to talk about the cost of living or the ‘cost of Cameron’ as Labour MPs have started calling it, Osborne wants to make the 2015 election debate about the cost of shying away from cutting the welfare bill again.