Healey promises ‘reduction’ in welfare spending before election

John Healey has promised there will be a “reduction” in the welfare bill before the next election despite the Budget not addressing huge payments on benefits and pensions. Healey told broadcasters on Thursday morning that the government was “ready to take some pretty tough decisions” to rein in spending although he echoed his predecessors in claiming the “best economic policy” was to find an end to wars in the Middle East and Ukraine. The Chancellor said he would look to cut spending on benefits by giving people a chance to work, adding it was “not progressive” to see total welfare spending rise from £334bn last year to £413bn in 2030. .

“There will be a reduction in the benefits bill,” Healey told the BBC’s Today programme. “We’ll do that in a Labour way and we will do that because it is simply not good for Britain or progressive to have a bigger and bigger benefits bill, and I feel a moral duty to deal with these youngsters who at the moment have been written off by previous governments and I’m not prepared to see that happen in the future.” The welfare bill is mainly made up of pensioner spending, although disability benefits and Universal Credit are set to rise by £20bn and more than £14bn respectively between 2025 and 2030.

As a per cent of GDP, health and disability benefits is set to rise by about 0.4 percentage points in this time. Former health secretary Alan Milburn’s review on youth joblessness and Sir Stephen Timm’s review on disability payments were not completed before the Budget, stopping the Chancellor from taking action to curb the spiralling bill. At his Budget , Healey confirmed that either report would be finished by the end of the year, at which point the government will look over recommendations.

Andy Burnham recently said he did not want to see “anyone in their 20s on benefits”. Healey insists Cabinet ‘can control spending’ Economists at the government’s fiscal watchdog warned of the mounting spending pressures facing Healey in the upcoming years. The Office for Budget Responsibility’s report warned that the Chancellor could be tasked with finding £11bn across government departments to keep spending commitments on defence and other “protected” areas including welfare on track.

On Thursday, Healey told Bloomberg that he was working with ministers to identify savings and cuts as the government was showing it can “exert fiscal discipline”. “We’ve demonstrated also that we can, despite the pressures, control spending,” Healey said. He also suggested that next year’s Spending Review would be focused on Burnham’s 10-year plan, with a speech by the Prime Minister setting out his priorities for governing Britain set to come in the next few weeks.

At the Labour Party conference, Burnham said he would create a new free-at-the-point-of-use care service, which would be partly funded by reforms on the triple lock pension that ensure the state benefit did not outpace workers’ wages in the long run. The OBR said in its report that the announcement “should significantly reduce the projected increase in the cost of state pension uprating over the long term” as the “spending ratchet effect” would be removed.

Echoes of Reeves and Starmer But the independent body’s report broadly focused on risks facing public finances and the wider UK economy. Figures show that borrowing in the near-term is expected to rise as the government scrambles to support households through a tough winter of high inflation, caused by trade disruption across the Gulf region. Healey said that “no government can completely offset or cover the costs that people face” even as a scheme to offer 20m households a one-off £100 payment – at a cost of £2.6bn to taxpayers – was announced on Wednesday.

He echoed Sir Keir Starmer and Rachel Reeves in saying that international diplomacy remained the government’s best lever to reduce costs. “The single best economic policy for Britain would be peace in the Middle East and an end to the Iran conflict, and also the end of Russia’s invasion of Ukraine. And President Trump is probably the one man that can bring those parties together.”