Sir Keir Starmer will signal plans to curb welfare for young people with mental health issues amid criticism over Budget tax rises helping to pay for benefits handouts.
In a speech on Monday, the Prime Minister will restate his commitment to driving economic growth after the Budget was criticised for failing to contain any measures to boost gross domestic product (GDP).
Starmer will also highlight the cost of living support announced by Rachel Reeves last week in what is being seen as an attempt to shore up the Chancellor who is facing criticism on multiple fronts after her Budget.
It comes after Reeves’s Budget – which included £26bn in tax rises and a £16bn increase in welfare spending – went down as the most unpopular among voters since Liz Truss’s notorious ‘mini-Budget’, according to polling for The i Paper.
Starmer will promise “reform” of the welfare state designed to help young people overcome mental health issues and stop being “written off” because they are neurodivergent or disabled, arguing it traps them in a “cycle of worklessness and dependency for decades”.
It comes after the Conservatives accused Reeves of presiding over a “Benefits Street Budget” after the Chancellor U-turned on plans to tighten access to disability payments and decided to lift the two-child cap on benefits, lifting 450,000 children out of poverty, after heavy pressure from Labour MPs.
Reeves is also accused of breaking her manifesto pledge not to raise taxes on working people by extending a freeze to income tax thresholds, pulling around 1.8m people into paying higher taxes by 2031, having allegedly misled the public over the state of the public finances.
It is in this context that Starmer will pledge the Government will refocus on tackling issues in the welfare system, including reining in spending on welfare for young people.
The Prime Minister will highlight the review being led by ex-Cabinet minister Alan Milburn on young people, economic inactivity and work, which is due to publish its final report in summer 2026 potentially paving the way for a welfare crackdown in next year’s Budget.
Starmer will say: “We have to confront the reality that our welfare state is trapping people, not just in poverty, but out of work. Young people especially. And that is a poverty of ambition. And so while we will invest in apprenticeships and make sure every young person without a job has a guaranteed offer of training or work.
“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’. The Tories played that game and the welfare bill went up by £88bn. They left children too poor to eat and young people too ill to work. A total failure.
“We must also reform the welfare state itself – that is what renewal demands. Now – this is not about propping up a broken status quo.
“No, this is about potential. Because if you are ignored that early in your career. If you’re not given the support you need to overcome your mental health issues, or if you are simply written off because you’re neurodivergent or disabled, then it can trap you in a cycle of worklessness and dependency for decades.
“Which costs the country money, is bad for our productivity, but most importantly of all – costs the country opportunity and potential. And any Labour Party worthy of the name cannot ignore that.”
Reeves on Sunday defended her decision to abolish the two-child benefit cap, saying the Government was “choosing children”.
She told the BBC’s Sunday with Laura Kuenssberg: “The people I was thinking about were kids who I know in my constituency go to school hungry and go to bed in cold and damp homes, and from April next year those parents will have a bit more support to help their kids.”
The Prime Minister will also signal further measures to deregulate, amid reports he will rip up red tape blamed for blocking new nuclear plants, as he argues economic growth is crucial to bring down the cost of living.
“Rooting out excessive costs in every corner of the economy is an essential step to lower the cost of living for good, as well as promoting more dynamic markets for business.”
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He will say he has asked Peter Kyle to provide monthly updates on the implementation of the industrial strategy which focuses on driving investment into the UK’s growth sectors.
Shadow Chancellor Sir Mel Stride said: “It is frankly laughable to hear the Prime Minister say Rachel Reeves’ Benefits Street Budget has put the country on the right course and that he wants to fix the welfare system.
“His Chancellor has just hiked taxes by £26bn to pay for a welfare splurge, penalising people who work hard and making them pay for those who don’t work at all. And she misrepresented why she was doing it, claiming there was a fiscal black hole to fill that she knew didn’t exist.”
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