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Osborne sets out plan to slash BBC budget by £650m

By Gavin Cordon

Published 06/07/2015

George Osborne
George Osborne

George Osborne has signalled a £650 million raid on the BBC finances and a tighter-than-expected squeeze on welfare payments as he prepares to deliver his first all-Conservative Budget.

The Chancellor - who will set out his plans in the Commons on Wednesday - said he had "found" the £12bn of welfare savings promised by the Tories as part of their plan to eliminate the deficit in the public finances.

Ministers will go further in capping welfare payments than the proposed £23,000-a-year household limit set out in the party's election manifesto, while at the same time curbing the cost of tax credits.

"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," Mr Osborne said.

He said he would also be looking to make savings to the tax credits system brought in under the previous Labour government.

He said: "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.

"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."

Mr Osborne also indicated that he was looking to transfer the £650m-a-year bill for providing free TV licences for the over 75s from the Exchequer to the BBC as he delivered a swipe at the broadcaster's "imperial" ambitions.

But there was disappointment for Tories pressing for a reduction in the 45p top rate of tax as he made clear that his priority was to reduce taxes for middle and low income earners. Nevertheless, many Tory MPs will welcome the move by the Chancellor to require the BBC to shoulder the burden of free licences for the elderly - a change that would cost the corporation around a fifth of its annual £3.7bn licence fee revenues.

On BBC1's The Andrew Marr Show, Mr Osborne said: "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."

Reports suggested that the BBC would be able to recoup up to £150m of lost revenue through charging for the use of its iPlayer and other online services.

He hinted that the website could be scaled back, saying that the BBC had effectively become "the national newspaper as well as the national broadcaster".

The move was condemned by former BBC chairman Sir Christopher Bland, who accused the Chancellor of "shoddy" accounting practices.

But the Labour Party could support the plan.

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