Benefits Bill Soars as Fiscal Pressures Mount
OBR warns of £100 billion annual cost for sickness and disability benefits; Labour's minimum wage pledge faces implementation timeline questions.
Carla Rooney
Sickness and disability benefits could cost £100 billion annually before the decade ends, the Office for Budget Responsibility warned.
Chancellor John Healey stated that media interpretations suggesting he wanted the benefits bill to start falling before the general election were incorrect. Healey confirmed the overall benefits bill would decrease under Labour, with changes commencing next year.
Healey indicated that more tough choices on slashing public spending are anticipated. This follows questions from the Institute for Fiscal Studies regarding the likelihood of departmental reductions. He asserted, "We’ve set out the timetable for changes. We’ve never set out the timetable for savings, and some of the reporting earlier in the week was simply wrong."
The Chief Secretary to the Treasury stated the government would not implement 'crude cuts' to welfare. Instead, legislation will be introduced to reduce the welfare bill in a fair and sustainable manner.
Labour's 2024 commitment to close the gap between the adult minimum wage and pay for 18 to 20-year-olds faces an uncertain implementation timeline. Chancellor Healey indicated this manifesto pledge might not be enacted before the next election, stating the Government would "take it one step at a time."
Healey clarified there is no question about whether Labour will meet its manifesto pledge to ensure younger workers on the minimum wage are paid the same as others. He stated, "There’s no question about whether or if. It’s a question of when. It’s a question of how fast."
There’s no question about whether or if. It’s a question of when. It’s a question of how fast.
A Treasury spokesperson refuted claims of fiscal mismanagement. The spokesperson stated, "This is fiction. The Budget meets our fiscal rules, fully funds our Defence Investment Plan and puts borrowing on a clear downward path." Careful management of public finances has provided Britain with breathing space on the cost of living and business, the spokesperson added.