John Healey was forced into an embarrassing retreat over welfare spending on Thursday.
The Chancellor sparked confusion across Whitehall after indicating that the rapidly expanding benefits bill would be reduced before the next general election, using what he described as a distinctly “Labour way”.
Within hours, Treasury officials were attempting to clarify his remarks, while Downing Street distanced itself from the suggestion. Officials said Andy Burnham would not agree to an “arbitrary timetable” for bringing welfare spending under control.
By last night, Mr Healey had changed course, insisting: “It is not correct to say that we’re going to bring this welfare bill down in this Parliament.”
Kemi Badenoch branded it “astounding” that the Government could not pledge to reduce benefits spending during the current decade, despite forecasts showing costs rising by more than £60billion by 2029.
The Tory leader told Our News Outlet: “Labour is addicted to benefits and this is why they are getting into a mess every day.
“In just 24 hours, the Chancellor has said there will be no cuts to the benefits bill, gone on the BBC and said actually there will, then had to admit that actually there won’t.
“All while officials scramble to clean up the chaos. It appears the Prime Minister’s ‘foot in mouth’ is contagious.”
John Healey was forced into an embarrassing retreat over welfare on Thursday (Britain’s Secretary of State is pictured outside Downing Street)
Kemi Badenoch called it “astounding” that the Government could not commit to cutting benefits spending this decade (The Tory leader is pictured last week)
Mrs Badenoch said ministers should be “cutting welfare, funding defence and slashing red tape to get Britain growing”. She added: “Instead they are tinkering around the edges, too scared to confront their MPs ahead of an early election.”
The dispute followed fresh forecasts indicating that the welfare bill will continue to climb steeply after Labour abandoned planned reforms last year.
The Centre for Social Justice think-tank said spending on working-age and child benefits alone is expected to increase by £33.4billion over the next five years.
That rise would absorb virtually all the revenue from the stealth tax raid on income-tax thresholds, which is projected to raise £33.1billion over the same period.
Joe Shalam, policy director at the CSJ, said: “Public support for a system there to protect the most disadvantaged is being pushed to breaking point. A holding position will not fix that. No doubt this will all be addressed in a manifesto that is surely in the post.
“But Britain cannot wait for an election. When the sugar rush wears off, all that will be left is wasted money and wasted potential.”
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The Office for Budget Responsibility has also warned that welfare spending has risen so quickly under Labour that the Government is on course to breach its own generous “welfare cap”.
The cap covers most working-age benefits but excludes pensions. The previous Conservative government set it at £135.4billion, before Rachel Reeves raised it to £204.2billion by 2029.
The OBR now expects spending covered by the cap to reach £207billion in 2029, exceeding the limit by almost £3billion.
If the cap is breached, ministers would have to introduce measures to reduce spending or explain the overshoot to Parliament.
Polling by More in Common found that the public considers benefits spending “unsustainable” by a margin of 60 per cent to 23 per cent.
The concern extends across party lines, with Labour voters also questioning whether the current level of spending can be maintained. The Prime Minister said yesterday that the Government was working “flat out” to reduce the benefits bill and wanted to do so “as soon as we possibly can”.
Downing Street said two reviews would be published next month, followed by a policy paper, but could not confirm whether that paper would appear within the next 12 months.
Prime Minister Andy Burnham is pictured watching Everton on Thursday, just hours after Healey came under pressure over the Budget
Any changes are likely to require legislation. Eduin Latimer of the Institute for Fiscal Studies said the “most straightforward” route to securing “guaranteed savings” would be to reduce benefit payments or tighten eligibility, as proposed by the Conservatives and Reform.
He added: “An alternative is to try to invest in support, things like employment support or increased health spending, which might reduce demand for benefit spending. I think that is closer to this suggestion from the Government of a ‘Labour way’ … but it’s much more uncertain.”
When delivering his Budget on Wednesday, the Chancellor said the Government would “bring down the welfare bill”, but unveiled no new measures to curb spending that is forecast to exceed £350billion next year.
In an interview broadcast yesterday but recorded on Wednesday evening, he appeared to suggest that welfare cuts would be made before the next general election in response to a question on BBC Radio 4’s Today programme.
Treasury officials, however, insisted that his comments did not amount to a commitment to cut spending before the election.
After a chaotic day and following Downing Street’s public distancing from his remarks, Mr Healey reversed course, saying he did not expect to deliver rapid savings from welfare.
Reform Treasury spokesman Robert Jenrick said Mr Healey had been “utterly humiliated”. He added: “You can change the Chancellor, but you will never change the Labour Party’s addiction to benefits spending.”
