John Healey cast more confusion on Labour‘s welfare policy today amid warnings that the UK is still in the crosshairs of debt markets.
The Chancellor refused to give any timetable for bringing down benefits spending as he had yet another go at clarifying his intentions.
The chaos began on Thursday when Mr Healey appeared to vow in a post-Budget BBC interview that costs would be cut before the next general election.
That sparked frantic backpedalling by Treasury aides, before Downing Street and Andy Burnham stepped in to insist there is no deadline and ‘brutal cuts’ are not on the table.
By Friday evening Mr Healey seemed to have reversed his stance entirely, telling Channel 4 News it was ‘not correct to say that we’re going to bring this welfare bill down in this Parliament’.
Speaking to the BBC’s Sunday With Laura Kuenssberg programme, Mr Healey blamed the media for misinterpreting his words, arguing he ‘never set out the timetable for savings’.
‘The overall bill will come down under Labour,’ he said.
John Healey failed to give any timetable for bringing down benefits spending as he had yet another go at clarifying his intentions in a BBC interview
‘We’ll start the changes next year, and we’ll bring that bill down.’
He also said: ‘Since the election, we’ve already slowed down the rate of increase in the benefits bill, which was – the numbers were booming under the Tories.
‘This is a system which is not working. We have to make big changes. We will.’
Mr Healey said a White Paper and legislation would follow two reviews due to be published this month.
One is being conducted by veteran minister Stephen Timms into personal independence payment – Pip – and the other by former health secretary Alan Milburn into youth inactivity.
Mr Healey said: ‘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.’
Questions over welfare intensified after the Treasury’s Office for Budget Responsibility (OBR) watchdog found that welfare is on track to keep rising.
It forecast that sickness and disability benefits could cost £100billion a year before the end of the decade.
Kemi Badenoch accused Labour of being ‘addicted’ to benefits in her response to the Chancellor’s fiscal package.
Mr Healey acknowledged there will be more tough choices on slashing public spending after think-tanks questioned the plausibility of departmental reductions slated for the years to come.
The Institute for Fiscal Studies cautioned that protecting health and boosting defence would entail such deep cuts elsewhere that they might prove politically impossible.
‘In this Budget, we’ve already demonstrated we are prepared to take hard decisions about the priorities in Government,’ Mr Healey said.
‘We will carry that through into the 10-year plan and the spending review next year.’
He pointed to devolution and the transformation of public services as ways to make efficiency savings and ‘meet the challenge of the spending review’.
Meanwhile, a former economic adviser to Mr Burnham gave a damning verdict on the Budget – saying it had not quelled the market’s fears about the Government’s policies.
Ex-Bank of England chief economist Andy Haldane was reminded on the BBC that he recently said the market ‘suspects that this is a traditional tax-and-spend socialist government with better TikTok videos’.
He said: ‘The markets still have those fears. We are in a public finance mess.
‘This week’s Budget did relatively little to appease those fears.
‘A no score draw Budget for growth, a no score draw Budget for burnishing our fiscal credentials…
‘More is needed of a radical nature. This week’s Budget was not that radical budget.’
Mrs Badenoch has accused Labour of leaving a £49billion ‘black hole’ in the nation’s finances which she claimed would require hefty tax increases.
The Conservatives have said the Government would have to hike levies by £1,700 ‘per household per year’ by 2030-31 to pay for unfunded spending promises.
Downing Street and Andy Burnham stepped in last week to insist there is no deadline and ‘brutal cuts’ are not on the table
They say this includes up to £17billion for a National Care Service and £4billion for council house-building, and a further £28billion in ‘plausible spending pressures’ identified by the IFS.
‘The Prime Minister gave the game away on Friday when he said he would have written the 2024 manifesto differently,’ Mrs Badenoch wrote in the Sunday Telegraph.
‘Let me translate that. He wishes he had more room to raise taxes even further.’
A Treasury spokesperson responded: ‘This is fiction. The Budget meets our fiscal rules, fully funds our Defence Investment Plan and puts borrowing on a clear downward path.
‘This Government has a consistent track record of meeting these targets, and it’s through careful management of the public finances that we’ve been able to give Britain breathing space on the cost of living and cost of business.’
