Bloomberg News

Cameron Rebuffs Hammond Call to Cut U.K. Welfare Spending

March 04, 2013

Prime Minister David Cameron rebuffed a call from Defense Secretary Philip Hammond to find savings by cutting welfare spending instead of targeting the U.K.’s defense budget.

Two days ago, Hammond took the unusual step of going public with an appeal to protect the military’s capability, telling the BBC that while “modest” reductions are still possible in the defense budget beyond 2015, any “significant” cutbacks will “erode military capability.” He was cited by the Daily Telegraph newspaper the same day as saying that reductions should be made to the welfare budget instead.

Cabinet ministers are in discussions with Chancellor of the Exchequer George Osborne about their departmental budgets for 2015-16. Home Secretary Theresa May, a Conservative like Hammond, is resisting cuts to her budget, while Business Secretary Vince Cable, a Liberal Democrat, believes taxes should rise to tackle Britain’s record debt. Osborne, who will set out his plan in early summer, has said he needs to find an extra 10 billion pounds ($15 billion) of savings.

“I would remind people that the autumn statement from 2012 has already announced 3.6 billion pounds worth of additional welfare savings for the year 2015-16,” Cameron’s spokesman, Jean-Christophe Gray, told reporters in London today. “If new and specific proposals were to emerge they would need to be considered.”

Defense Spending

Asked by reporters if the premier agreed with Hammond that the defense budget should be protected, Gray replied: “With regard to the Ministry of Defence’s budget, the prime minister’s view is that the equipment budget will go up by 1 percent in real terms from 2015.”

By refusing to protect the entire defense budget instead of just its equipment programs, Gray was signaling to Hammond that Cameron expects him to find further savings.

Asked if the premier found the sight of his Cabinet colleagues negotiating in public helpful, Gray said he “would always expect secretaries of state and departmental ministers to make a robust case on behalf of their priorities. I don’t think there is any particular secret that the government has taken and is going to have to take tough decisions.”

Disquiet among Cameron’s Conservative lawmakers has grown since the party failed last week to capture the parliamentary district of Eastleigh in a special election. The Tories finished in third place behind the Liberal Democrats and the U.K. Independence Party, prompting some to question Cameron’s leadership direction. Hammond’s intervention to protect his defense budget reflects the concerns of rank-and-file Tories.

The Mail on Sunday newspaper reported yesterday that May would shortly announce how she would withdraw the U.K. from the European Court of Human Rights, another grassroots Tory concern.

If Cameron fails to secure a Tory majority in the 2015 election, that may prompt a leadership challenge. Neither Hammond nor May have ruled themselves out as a possible future leader.

To contact the reporter on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling in Paris at jhertling@bloomberg.net


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