You would be forgiven for thinking that the Conservatives and Reform UK now agree on something. If one looks past the different tactics – with the Tories putting forward a better thought-through set of options – both parties recognise that tackling our increasingly unsustainable welfare bill is crucial if this country is to regain any semblance of economic growth and prosperity.
The UK Government spends more on welfare and pensions than anything else – roughly the same as combined spending on health and education. And that amount is only going up. Before the coronavirus pandemic struck in 2020, total welfare spending stood (in real terms) at around £280bn. This year, the government is expected to pay around £352bn, with around £140bn on working-age benefits alone. By 2030-31, independent forecasters predict that total welfare spending is going to exceed £400bn per year – over 11 per cent of our national income. By way of comparison, we currently spend just under £70bn on our entire armed forces to keep our country safe.
There is no possible justification for this alarming trend. Many commentators point to the pandemic itself, which saw the Treasury issue emergency welfare payments to temporarily boost household finances, alongside furlough and other employment support schemes. Whilst this was unavoidable at the time, attempts to wean the country off what had mistakenly become the drug of universal state support were lambasted by disability groups and Labour parliamentarians as unthinkable.
The result is a severely scarred labour market, in which the overall rate of employment has not returned to its pre-pandemic level. Compounding the problem, over one million young people are not in education, employment or training – potentially consigning a whole generation to a life on welfare, instead of work. We simply cannot function properly as a society if there is an acceptance that the number of people dependent on the state is only going to increase, deprived of the dignity that comes with a decent job that allows them to stand on their own two feet. It would be morally unforgivable to perpetuate this situation further. Support should always be made available for those who truly need it, but hard choices will be necessary to encourage those who can work and contribute to society to do so.
Even more importantly, this country simply cannot afford it. With an ageing population and higher borrowing costs than most other similar countries, the UK faces hard choices and trade-offs in what it can spend money on. If we want higher defence spending, that must be paid for. If we want to address social care, that must be paid for. Our annual debt interest bill means more borrowing is increasingly impossible. And taxes have already been hiked to the highest levels in seventy years, squeezing an economy desperately starved of growth. That leaves only one option: cut existing spending elsewhere so we can spend money on other priorities.
Tackling benefits necessarily implies tough measures. These are not easy, and both parties are brave for raising some of the politically difficult decisions that will eventually have to be made. Indeed, whether consensus grows over doing the unthinkable – scrapping the state pension triple lock, which is a huge millstone around our country’s neck – is difficult to imagine. But the Right of British politics is at least diagnosing the problem and offering possible solutions. We are spending too much money as a country.
Labour will never be able to deal with this issue. Sir Keir Starmer not only stumbled over scrapping universal winter fuel payments, but he could not even convince his considerable army of MPs – whom he led to a huge election victory only a year previously – that welfare spending needed to be trimmed by a meagre £5bn. Andy Burnham has made more positive noises about tackling the problem, but there are no concrete proposals and it remains to be seen whether he prioritises this issue with his backbenchers over his ambitious plans for regional devolution or social care.
Work and Pensions Secretary Pat McFadden’s confession that all Labour MPs want to know who can be taxed in return for higher benefits gives the game away. The result will be a Labour Government that refuses to cut spending and knows that it cannot borrow more money: that only means higher taxes. For now, those taxes will almost certainly fall on high-income families and wealth creators in the south of England. Once the Prime Minister realises that the tax lock in the Labour manifesto is depriving him of raising the revenue he needs to fuel higher spending, expect either a manifesto breach or a general election.
This is likely to emerge as the key dividing line over the coming months: who is brave enough to reduce our levels of spending, starting with benefits? It is abundantly clear that we are living beyond our means as a country. If we are brave enough to tackle welfare spending, we will finally be able to reduce our tax burden and focus our attention on other priorities. For the right of British politics, this is the right issue to try and unite behind.
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