The problem with welfare is that it creates a class of people that are dependent on the state. So, essentially it's the states way of bribing voters.
When the welfare state was set up, only people over the age of 70 were given a weekly payment. This made the welfare system very cheap, because the life expectancy in Britain at the time was 48.
However, although cutting benefits will decrease government spending it doesn't address the real issue of private debt (mortgage payments, credit cards, student loans, bank loans etc). If the public is paying down debt it's inevitable sovereign debt will increase as the government tries to circulate the money into the economy that isn't being circulated as the public is saving in order to pay their debt.
We're the most indebted nation in the developed world, our total debt is 900% of GDP, and most of that is private debt-not government debt. Debts that can't be repaid, won't be repaid, and either we have to default and go bankrupt, or a significant proportion of the debt will have to be written off.
IMO, the initial bailout that was given to the banks, should have gone to the public in order to pay down their own debt, thus giving the money to the banks in the form of debt repayments, and giving the public more disposable income, to save, or spend within the economy.
Unfortunately, because of the nature of our political system, no Politian is willing to stand up to the Ponzi scheme running-oligarchs in the financial sector. They're just happy to keep the bubble inflated long enough so the 5hit doesn't hit the fan while they're in office.
Edit:
Just to add, the UK's current (trade account) is also far more concerning than is portrayed by the government and the media. Our economy will never be able to recover if we don't start producing more than we consume, there needs to be a reindustrialisation of Britain.
