The government is doing its best to lay the groundwork for cuts to welfare spending – ahead of what is surely set to be a major internal row in the Labour Party.
The total bill for working-age health benefits has surged since the pandemic, rising from £36bn just before COVID to £48bn last year, and is forecast to grow to nearly £65bn in the next five years.
The number of people claiming long-term sickness benefits – around 2.8 million – makes up nearly a third of the total number of working age individuals out of work, and is expected to increase to four million by the end of the decade.
That huge and rising bill is under real pressure given the strain on government finances ahead of the spring statement due later this month.
With the chancellor’s room to manoeuvre constrained by her promises not to raise taxes or break her fiscal rules and borrow to fund day-to-day spending – it looks like billions of pounds in spending cuts are on the cards and the Department of Work and Pensions is clearly a key target.
On Friday, Downing Street described welfare spending as “unsustainable”.
The government’s strategy is to make a two-fold argument, making both an economic and a social case for change.
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As Cabinet Office minister Pat McFadden put it to Sunday Morning With Trevor Phillips, “we cannot sit back and let this bill grow and write people off in the way that’s happened for many years”, promising that reforms are coming “soon”.
“It’s not fair on the people involved, and it’s not fair on the taxpayer,” he said.
“We do have to act on this to make sure that we give everyone in the country the opportunity to work. We are the Labour Party. The clue is in the name.
“We cannot be relaxed about every year, hundreds of thousands more people going on these benefits.”
He argues that surveys show 200,000 of the 2.8 million would like to be able to work with the right support, which is set to be provided.
Chancellor Rachel Reeves – a former shadow work and pensions secretary who once said Labour needed to be “tougher than the Tories on benefits” – has been making the case too.
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In January, the chancellor promised to deliver “fundamental reform” of the welfare system which “includes looking at areas that have been ducked for too long, like the rising cost of health and disability benefits”.
In an interview with Sky News’ political editor Beth Rigby last week on the Electoral Dysfunction podcast the chancellor argued: “We’ve got to reform our welfare system, because at the moment it’s letting down taxpayers because it’s costing too much, 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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For Labour backbenchers concerned about the impact on some of the most vulnerable members of society, the arguments sound suspiciously like those made by the previous Conservative governments during their regular attempts to crack down on welfare spending. Most recently, Rishi Sunak promised to reform the system to encourage people out of work with long-term sickness to return to employment.
His attack on the UK’s “sick note culture” and controversial claim that benefits had become a “lifestyle choice” for some are unlikely to be echoed by the new Labour administration.
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Interestingly, Mr Sunak’s plans to cut benefits to disabled people and require them to prepare for work faced legal challenges in the high courts – with a judge ruling ministers failed to admit that cost savings were a key driver of the changes.
This time ministers are making the financial imperative clearer.
But many Labour MPs – already scarred by the backlash to cuts to pensioners’ winter fuel allowance – will be deeply nervous.
