Is there any realistic chance of bringing down the welfare bill before the next election? Sir Keir Starmer would have you believe so, even if the evidence currently points the other way.
The Prime Minister insisted that any fresh attempt to reform the welfare state has not been permanently derailed after Labour MPs forced him to drop two major cuts to benefits. He argued it is a moral imperative to get people into work, without which too many will be left behind.
“We must also reform the welfare state itself — that is what renewal demands. Now this is not about propping up a broken status quo. Nor is it because we want to look somehow politically ‘tough’,” Starmer said in a speech on Monday aimed at getting back on to the front foot after a damaging weekend, in which his Chancellor Rachel Reeves was accused of lying over the extent of the black hole in the public finances.
But when pressed by journalists after his address in Waterloo, he refused to commit to reducing the welfare bill by the next election. Not that tough, then.
Welfare spending is forecast to rise from £333bn this year to £406bn by 2030 (which would be 11.2 per cent of GDP), the Office for Budget Responsibility said.
The Conservatives appear to have scored a win with their “Budget for benefits street” attack line. They made plain their disdain for a financial statement that increased spending on welfare while raising levies on working people through a freeze on income tax thresholds, despite Labour’s election manifesto pledge not to increase taxes on working people.
A YouGov poll found 56 per cent of voters think the decision to scrap the two-child benefit cap was the wrong decision at this time.
“Tax rises do make life harder for people. I understand that. It’s obvious, and I’m not going to pretend that there aren’t alternatives. Politics is always about making choices. We could have cut public services, we could have ignored child poverty, we could have rolled the dice with extra borrowing,” Starmer argued on Monday.
Since the Budget, ministers have been making the case that getting rid of the two-child benefit cap was a necessity, even though for the last two years they had argued that doing so would be unaffordable.
The summer welfare climbdown blew a hole of £4.8bn in the Chancellor’s preparations for the Budget, removing expected savings. To counter the narrative that the Government was in hock to its backbenchers, Starmer was keen to show some ankle on the issue. But not much more than that. Any real reform is some time away.
Former Labour health secretary Alan Milburn is currently leading the inquiry into “Neets” – the acronym for young people who are not in education, employment or training. He is set to report this summer.
But a review by welfare minister Sir Stephen Timms, to appease Labour backbenchers who rebelled over the plan to save up to £5bn by limiting access to personal independence payments (PIP), will not report until autumn 2026. It will be “co-produced” with disability groups and will not set out to make savings. Instead, it has been tasked to operate within the budget watchdog’s existing projections for disability benefits spending, which Starmer previously described as unsustainable.
The Government is also yet to set out its response to the consultation on cuts to the health component of universal credit for those under 22. Already it faces an uphill battle to convince disability groups. Charles Gillies from the MS Society, warned: “Positive announcements from the Budget, like scrapping the two-child benefit cap, must not be used as a trade-off for cuts to disability benefits in the future.”
A Labour MP told The i Paper on Monday: “They’ve kicked the problem down the field. And if you want spare capacity at the end of this Government, as you run into a general election, to do lots of cool new things, such as spending on schools or whatever, then we have to take our decisions now. We are storing up problems.”
Interviewed on Times Radio, Darren Jones, Chief Secretary to the Prime Minister, was asked if the intention of the two reviews was to bring down the cost of the welfare bill. He could only reply: “I hope so.”
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Currently, no one in the Labour Party can agree who should lose out. It appears virtually impossible to satisfy disability groups and simultaneously reduce expenses. Added to which, the welfare bill fell not just because of defiant backbenchers. The wrecking amendment to the legislation was endorsed by 126 MPs, among them prominent committee chairs, a former Cabinet minister, and a former Labour whip. These individuals were those to whom the Government would typically turn for assistance.
Even Labour loyalists, who have been burnt by repeatedly defending contentious changes subsequently abandoned, may not play ball. That problem is likely to get worse, not better, as the general election gradually approaches and Labour MPs put their individual interests over those of the party.
Starmer may argue he is on a moral mission to control welfare. He needs to get on with it if the country is to believe him.
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