Labour was warned two years ago how to tackle Britain’s soaring welfare bill – now it risks running out of time to act

36 comments 36 Next THE most uncomfortable welfare report for Labour may not be the one Alan Milburn is about to publish. It could be the one he wrote more than two years ago. Prime Minister Andy Burnham promised he would cut the welfare bill as soon as possible Source: Getty Former Cabinet Minister Alan Milburn Source: Nick Gammon Advertisement In July 2024, barely three weeks after Labour swept to power , the former Cabinet minister unveiled a major study into Britain’s growing army of people out of work.

It warned successive governments had failed to tackle the causes of economic inactivity and set out an ambitious timetable for reform. Sign up for the Politics newsletter Thank you! Email address Please provide a valid email. Your info will be used in accordance with our Privacy Policy You'll now receive top stories, breaking news, and more, straight to your email. Within six months, the Department for Work and Pensions should begin transforming itself into a department for work.

Within a year, Britain should have a new national strategy to get more people into employment . READ MORE ON POLITICS LEVY FURY Labour's tax rises force Betfred to axe sponsorship of horseracing events LAST GIFT Football-loving former MP left six-figure sum for third wife after death aged 84 And within eighteen months, the Government should be reforming work capability assessments. The report even criticised Whitehall’s habit of allowing months to pass between publishing recommendations and putting them into practice.

“The idea is to move to action immediately,” Milburn declared. Fast-forward to November 2026 and ministers are awaiting another report from the very same man. Advertisement Most read in The Sun SICK PROPAGANDA Moment girl, 10, is forced to smile after being snatched by Vlad's soldiers NUKE SUB RECORD Royal Navy nuclear submarine breaks world record for the longest patrol BRAVE DOCS How brave surgeons raced to save hero cop who shot 'far-right gunman' in Poland VILE CLAIMS Children’s doctor 'took photos of patient's genitals during medical procedures' His latest review, this time into the nearly one million young people not in education, employment or training, was originally supposed to deliver its findings in the summer .

At one stage it was being lined up as a centrepiece of Labour’s autumn conference but publication slipped beyond both the conference and October Budget. Ministers now expect it this month, with major legislative changes unlikely before well into next year. Labour has launched employment initiatives in the meantime but the delay matters because helping somebody back into work can take years. And the Government has rather less time than it might like.

Advertisement The Office for Budget Responsibility forecasts Britain’s annual welfare bill will soar from £334billion to £431billion by 2031-32, with health and disability payments alone rising from £85.6billion to £120billion. Almost half the increase comes from pensions while Personal Independence Payment can still be claimed by people in employment. It means even successful efforts to get people into jobs may not be enough to make the overall bill fall.

That uncomfortable distinction was exposed last week when Chancellor John Healey appeared to promise welfare spending would drop before the next election, only for Downing Street to swiftly insist no such deadline had been set. Andy Burnham maintained Labour was determined to bring spending down without the “crude cuts” that could push vulnerable people into hardship. Advertisement But privately, government figures fear the party could pay a heavy political price.

One source said: “Welfare is going to be one of the defining issues of the next election. The Tories have a simple message: slash the benefits bill and spend the savings on defence. “But the truth is getting welfare spending down is incredibly difficult. If we go into the next election without a credible plan to get a grip on the bill , we will be in serious trouble.” Much of the crisis was inherited from the Conservatives, under whom the number of people out of work because of long-term sickness climbed from around two million in 2019 to 2.8million by 2024.

Yet Labour’s own attempts to tackle disability spending have already ended in a humiliating retreat after a rebellion by its MPs. Advertisement Now Sir Stephen Timms is conducting a separate review of PIP, examining whether payments properly reflect the additional costs faced by disabled people. His findings are expected to follow Milburn’s, potentially in a different week rather than being unveiled together. But unlike a Treasury savings exercise, Timms’s review was not instructed to cut spending, and any proposals that leave claimants worse off risk another confrontation with Labour backbenchers.

It leaves ministers relying heavily on their other ambition: getting more people into employment. Unfortunately, there are already questions about how much money that will save. Advertisement This week, the OBR revealed an expansion of NHS Talking Therapies, previously expected to help another 10,000 people into work, had not been implemented as planned. Another scheme, Connect to Work, is now expected to support around a third fewer people than originally envisaged.

The watchdog warned it would set “quite a high bar” before accepting the employment gains promised by future schemes. Joe Shalam, Policy Director at the Centre for Social Justice, said: “This leaves the Government without a credible route to bringing the benefits bill down this Parliament . “With 6.7 million people on out-of-work benefits and a minimum-wage worker needing six days a week to match the combined benefit package, savings will only come if reform makes work pay.

That goes for any party promising to cut the bill.” Advertisement The Conservatives insist they have an answer, promising £36.1billion in annual welfare savings through tougher eligibility rules and restrictions on benefits. But even if every penny were saved, the welfare bill would still be nearly £28billion higher in 2029-30 than in 2025-26. The sheer scale of the challenge means that whoever is in power will need more than ambitious promises to bring spending under control.

There is no shortage of ideas for fixing Britain’s welfare system and Milburn is about to add another set to the pile. RECOMMENDED STORIES What Labour cannot recover quite so easily is the time needed to make them work. Advertisement 36 comments 36