Welfare cuts pose an image problem for Cameron

Mon Jan 14, 2013 7:24am EST
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By Andrew Osborn

LONDON (Reuters) - A descendant of King William IV and an alumnus of Britain's Eton College, British Prime Minister David Cameron has struggled to counter the charge he favors the interests of the wealthy minority into which he was born.

An outspoken lawmaker in his own Conservative party has called him and his finance minister "two posh boys who don't know the price of milk", while opposition lawmakers and parts of the media have likened him to "Flashman", a fictional upper class literary anti-hero of the nineteenth century.

Cameron's determination to push through a real-terms cut in state handouts for some of the most vulnerable groups in British society in an effort to cut the country's large budget deficit risks compounding his image problem.

Credit ratings agencies have said Britain's triple A rating is in danger. Financial markets could swiftly turn against Britain if they sense the budget is veering off track, in the same way they turned on weaker members of the euro zone in recent years.

Battling to make inroads into a deficit that stands at 8.0 percent of gross domestic product, Cameron, a graduate of Oxford University and the son of a wealthy stockbroker, has taken aim at the amount of money the government pays out in welfare benefits each year.

His Conservative-led coalition government - with the Liberal Democrat party as the junior partner - is currently pushing through legislation that would cap the amount that welfare benefits rise by 1 percent between 2014 and 2016.

The welfare budget includes pensions and tax credits as well as unemployment, sickness, housing, local tax and child support benefits. Such benefits have traditionally risen in line with inflation.

Welfare is an appealing target for Cameron. The bill for Britain's welfare state - the product of a post-World War Two Labour government - stands at just over 200 billion pounds per year, swallowing up more than one third of the state's budget.   Continued...

Britain's Prime Minister David Cameron leaves Downing Street in London December 19, 2012. REUTERS/Neil Hall