Budget to tackle higher earners using subsidies to live in social housing

Chancellor George Osborne said on Sunday that he planned to use this week's Budget to prevent higher earners from using taxpayer-funded subsidies to live in council and housing association homes.

He said those people who generate enough income to afford the market rent that others on their salaries pay, namely those earning £40,000 a year in London and £30,000 a year in other parts of the country, will have to pay the market rent "or at least something close to it, if they want to stay in their homes".

"The welfare system I want to see is one that helps people to get good jobs instead of giving them handouts," he wrote in the Sun on Sunday.

"It’s a simple matter of fairness."

The changes are part of a wider programme of £12bn welfare cuts, which he warned "won’t be easy and some will be controversial".

They include a reduction in the current £26,000-a-year benefit cap that was imposed during the last Parliament.

He also said he would be increase the personal allowance to £12,500 by the next General Election.

"As former Labour welfare minister Frank Field said last week, it can’t be right that the system Gordon Brown introduced means we tax people on the minimum wage, then pay them their own money back again in welfare.

"That’s why we’ve pledged to increase the amount you can earn before you pay any tax at all, to £12,500 by the next General Election, and to ensure those on the minimum wage are taken out of tax."