Rachel Reeves has given her strongest response yet that she will slash billions of pounds from the welfare bill.
The Chancellor is scrambling to balance the books as she deals with global changes in the economy since she set out her Autumn Statement. Early on Friday she admitted the welfare system needing reforming because it’s “letting down taxpayers”, adding that it was a “travesty” a million young people are not at work.
Speaking to Sky News’ Electoral Dysfunction podcast, Ms Reeves gave her strongest indication yet on her plans for her Spring Statement at the end of the month. She said: “We’ve got to reform our welfare system, because at the moment it’s letting down taxpayers because it’s costing too much.
“It’s letting down our economy because there’s too many people trapped on out of work benefits. And it’s letting down the people who are recipients of benefits because they are trapped on benefits rather than actively supported back into work.
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“So we don’t need an office for Budget Responsibility forecast to tell us that we’ve got to reform our welfare system. We’re going to do that because it’s the right thing to do.”
She said she wanted to reform the system to get more people into work. “There are a million young people not in education, employment or training, but that is a travesty,” she said. “Many of those people, I would say the majority of those people should be working. And under the plans that we’re going to bring in, they will be working and crucially, they will be given support to get back to work.
“What a waste of talent that we put people on benefits rather than than supporting them into work. So this is about reforming the system to make it work better for working people, for people on benefits and the economy as well.”
The Chancellor’s room for manoeuvre with the public finances is believed to have been wiped out by global turmoil, including trade tariffs, as well as high inflation and borrowing costs in the UK. But she has faces calls not to become “Labour’s Austerity Chancellor” as she moots forcing people back to work and slashing benefits.
Critics this week warned cuts would leave the poorest bearing the brunt. Fire Brigades Union general secretary Steve Wright said: “Hard pressed families must not be made to pay the price of nearly a decade-and-a-half of Tory mismanagement of the economy. The Chancellor must use her Spring statement to tax the rich to properly fund public services and increase pay. Rachel Reeves must not become Labour’s ‘Austerity Chancellor’.”
Ruth Curtice, chief executive of the Resolution Foundation, said the Chancellor should consider tax rises instead of welfare cuts, which will hit the poorest Brits. She said: “I wouldn’t borrow more but I do think there’s an argument not to cut welfare spending but to look at taxes instead.
“Welfare spending obviously hurts the lowest income family, we have child poverty rates forecast to rise through the Parliament leaving 4.6million children in the UK in poverty and we have inflation rising at about 3% and benefits already only going up this April at about 1,7% so this is a group that’s already under strain.”