Rachel Reeves today announced further welfare cuts as she scrambled to fill a shortfall in the public finances.
The Chancellor put a further squeeze on benefits after the Office for Budget Responsibility said her previous action would not save as much as she’d hoped.
Only last week, Ms Reeves signed off on what was claimed to be £5billion of cuts to Britain’s ballooning welfare bill.
In plans unveiled by Work and Pensions Secretary Liz Kendall, Labour said it was narrowing access to disability and incapacity benefits as part of a slew of measures.
But the OBR assessed those changes would only amount to savings of around £3billion by 2029/30 – prompting the frantic effort by Ms Reeves to find more cuts.
At her Spring Statement today, the Chancellor announced a further squeeze on Universal Credit.
She told the House of Commons that the Universal Credit standard allowance will increase from £92 per week in 2025-26, to £106 per week by 2029-30.
But the health element of the benefit will be cut by 50 per cent and then frozen for new claimaints, Ms Reeves said.
The Chancellor put a further squeeze on benefits after the Office for Budget Responsibility said her previous action would not save as much as she’d hoped
A protester displayed a placard as Ms Reeves left Downing Street to deliver her Spring Statement
The Chancellor told MPs: ‘Overall, these plans mean that welfare spending as a share of GDP will fall between 2026-27 and the end of the forecast period.
‘We are reforming our welfare system, making it more sustainable, protecting the most vulnerable and supporting more people back into work.’
Ms Reeves claimed Labour had ‘inherited a broken system’ on welfare.
‘More than 1,000 people qualify for Personal Independence Payments (PIP) every single day and one in eight young people are not in employment, education or training,’ she added.
‘If we do nothing, that means we are writing off an entire generation. That cannot be right. It is a waste of their potential and it is a waste of their futures.’
The additional squeeze on welfare is likely to spark a further backlash against Ms Reeves and Prime Minister Sir Keir Starmer from Labour MPs.
As the Chancellor spoke in the Commons this afternoon, left-wing demonstrators gathered outside to protest against benefits cuts.
Groups including Stop The War Coalition, Disabled People Against Cuts and Socialist Worker convened outside Downing Street ahead of the Spring Statement.
They held signs that read: ‘Cuts kill’ and ‘Cut war not welfare’, as well as a large banner saying: ‘Welfare not warfare’.
One woman was pictured holding a sign that said: ‘You are killing my mum to bomb someone’s son’.
According to videos on social media, those gathered chanted: ‘No more deaths from benefit cuts’ and ‘the people united will never be defeated’.
It came as charities and health experts warned Labour’s welfare cuts could risk lives.
A tightening of eligibility for the main disability benefit PIP and cut to the health element of universal credit prompted stark warnings and calls for a rethink.
Changes to PIP are expected to account for the largest proportion of savings.
The Resolution Foundation think tank has estimated this could see between 800,000 and 1.2 million people in England and Wales losing support of between £4,200 and £6,300 per year by the end of the decade.
Charities have reported a surge in calls and visits to their advice pages following last week’s announcement, which came after lengthy speculation about what might be in store.
Mental health charity Mind said its helpline advisers had reported that some people had indicated their level of worry was such that they felt they had ‘no choice but to end their own life’.
The charity’s welfare advice line saw calls rise from 90 the previous week to 182 last week, while other information and support lines received more than 2,540 calls, which was a 10 per cent rise on the previous week.
Disability charity Scope said calls to its helpline on the day of the announcement had more than doubled to 344 from 118 the week earlier, while its online community saw 20,000 interactions on the day compared to 15,000 seven days before.
Citizens Advice saw views of its PIP advice pages rise to almost 80,000 views last week, which was a 44 per cent rise from the week before.
Scope said people feel ‘abandoned by the Government’. Meanwhile, a group of public health experts said further cuts to social security could lead to deaths.
Writing in the British Medical Journal (BMJ), they said the reforms, coming after years of austerity, would have a detrimental effect on already-vulnerable people.
One of the group, Professor Gerry McCartney – a specialist in wellbeing economy at the University of Glasgow, said: ‘There is now substantial evidence that cuts to social security since 2010 have fundamentally harmed the health of the UK population.
‘Implementing yet more cuts will therefore result in more premature deaths. It is vital that the UK Government understands this evidence and takes a different policy approach.’
The Government has pledged to invest an additional £1 billion-a-year by 2029/2030 to help support people into work including through one-to-one help and said it will protect disabled people who will never be able to work by scrapping the need for them to have benefits reassessments.
Ministers have warned the current benefits bill is ‘not sustainable’ amid projections that welfare spending, which already exceeds Britain’s defence budget, will top £100billion by 2030.
