THE GUARDIAN: Slowdown in economic growth makes reducing deficit harder, says Office for Budget Responsibility
Rising unemployment will cost the government £1.5bn more than expected in welfare benefits, according to official forecasts that reveal the hidden cost of the coalition's austerity drive.
As big increases in VAT are due to bite from Tuesday, analysis from the Office for Budget Responsibility shows slowing economic growth will make it harder to reduce the deficit by forcing more people to seek state support.
The Treasury watchdog calculates the government will have to pay out £700m more in unemployment benefit than previously forecast. Similarly, a higher number claiming jobseeker's allowance as well as falling into lower wage brackets will see the government needing to pay out another £700m more in housing assistance over the next four years.
Though the OBR data, released last month, confirms the government is still making substantial savings from its changes to both benefits, the shadow work and pensions secretary, Douglas Alexander, said the OBR's fresh assessment suggested it was government strategy that was leaving these higher numbers exposed.
He said: "The growing cost of the risk the government is running with the economic recovery is now emerging. The result of policies which undermine growth and jobs is a longer dole queue and a higher welfare bill." >>> Allegra Stratton and Julia Kollewe | Sunday, January 02, 2011
