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The chancellor has insisted that “we do need to get a grip” on the welfare budget, saying the “current system is not working for anyone”.

Rachel Reeves said the “bill for welfare is going up by billions of pounds in the next few years”, and argued the system should “get people into work so that more people can fulfil their potential”.

Her comments come ahead of an expected announcement next week of “radical” reforms to the welfare system, with many fearing drastic cuts to support for the most vulnerable.

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Asked by broadcasters on Friday about those fears, the chancellor said: “Well, we’ll set out our plans for welfare reform. But it is absolutely clear that the current system is not working for anyone.

“It is not working for people who need support, it’s not working to get people into work so that more people can fulfil their potential, and it’s not working for the taxpayer when the bill for welfare is going up by billions of pounds in the next few years.

“So we do need to get a grip. We need to spend more on national defence, we need to reform our public services, and we need to reform our broken welfare system.”

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Welfare system ‘letting people down’

Ms Reeves’s comments come after the work and pensions secretary said the current system has locked “millions” out of work and called it “dysfunctional” as the system places a person in binary categories of either “fit for work” or “not fit for work”.

The government has promised to either reform or replace the Work Capability Assessment – which determines if a person is fit for work or not – as they say it currently drives people who want to work “to a life on benefits”.

Ministers have been priming MPs and the public for cuts to a ballooning welfare bill since the start of the year, with details expected next week ahead of an announcement in the chancellor’s spring statement on 26 March.

 Rachel Reeves during a visit Babcock in Rosyth. Pic: PA
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Rachel Reeves during a visit Babcock in Rosyth. Pic: PA

The expected welfare cuts

Ms Reeves is expected to announce several billion pounds of spending cuts after losing her £9.9bn headroom since the October budget, with the welfare budget a key target for cuts.

Fiscal headroom is the amount by which government can increase spending or cut taxes without breaking its own fiscal rules.

The welfare cuts are expected to include £5bn in savings by making it harder to qualify for Personal Independent Payments (PIP), which help people with the additional costs of their disability.

PIP payments next year are also expected to be frozen and the basic rate for Universal Credit paid to those searching for work, or in work, is expected to be increased while the rate for those judged as unfit for work will be cut.

The department for work and pensions said new figures show 1.8 million people are now considered too sick to look for work due to a “broken work capability assessment” so are on Universal Credit but getting no support to find work.

It said the number has almost quadrupled since the start of the pandemic when 360,000 were considered too sick to look for work.

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What welfare cuts could be announced?

Labour MPs criticise benefit cuts

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‘Government’s plan to cut welfare is terrifying’

Labour MPs concerned about cuts

A growing number of Labour MPs are publicly raising concerns and, in an unusual move, all 404 Labour MPs were asked to attend “welfare roundtables” in Downing Street with the Number 10 policy unit on Wednesday and Thursday.

On Wednesday, Sir Keir Starmer faced down Labour MPs unhappy over the rumoured welfare cuts – especially for disabled people.

Richard Burgon pleaded with him to make the “moral” choice, telling the Commons disabled people are “frightened” as he urged the PM to introduce a wealth tax instead of “making the poor and vulnerable pay”.

Sir Keir pledged to “protect those who need protecting”, but later added there is no “bottomless pit”.

He said the Tories “left a broken welfare system, which locks millions out of work, that is indefensible in my view, economically and morally”.

Sir Keir Starmer at PMQ's
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Sir Keir Starmer was asked about the welfare cuts at PMQs

Another Labour MP, John Slinger, urged the PM to reassure the Commons he will “provide compassion to those who can’t work”.

Labour MP Nadia Whittome told the BBC the government should impose a wealth tax instead of “placing that burden on disabled people who have already borne the brunt of 14 years of austerity”.

She added that she “can’t look her mum in the eye and support this”.

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Avalanche leads blockchain transaction growth amid US gov’t implementation

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Avalanche transaction growth topped all blockchain networks with 66%, as the smart-contract network saw more government implementation and renewed ETF applications.

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Unicoin says SEC distorted its filings in $100M fraud case

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Unicoin urged a New York judge to toss the SEC’s $100 million fraud case, arguing the regulator misquoted filings and relied on “snippets” taken out of context.

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A ‘revenge’ reshuffle, the next budget and asylum – 30 things to watch for this upcoming political season

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A 'revenge' reshuffle, the next budget and asylum - 30 things to watch for this upcoming political season

We’re back. From Monday, MPs will stream under the portcullis back into the Commons chamber. But this is far from a straightforward autumn, with dangers for all the leaders lurking everywhere.

On the Politics at Sam and Anne’s podcast, released each morning at 7.45am, Anne McElvoy and I give the first guide of the day to what’s coming up.

To get you back in the mood, listen to our back-to-school episode and our “summer box set” deep dives on key issues, and listen daily from Monday.

👉Listen to Politics at Sam and Anne’s on your podcast app👈

Here are 30, no less, things to look out for the autumn, explaining why you can’t tune out from what promises to be a very exciting term.

1. Despite firm Downing Street denials before the summer that this would happen now, there’s highly likely to be a ministerial reset next week.

2. Although the cabinet is likely to be safe, and people like Bridget Phillipson were given personal guarantees from Sir Keir Starmer that they are going nowhere, some in Number 10 have been pushing that the whips should be included in the reshuffle after the welfare vote catastrophe before the summer.

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3. Find out the very latest when we return properly on Monday, Politics at Sam and Anne’s – back daily, in your feeds from 7.30am.

4. And it’s going to be a good one, since everyone expects it to be a “revenge” reshuffle – among the targets are thought to be some ministers actively believed to have been helping the welfare revolt, and loyalists want to see them sacked.

“Loyalists called Josh” will be promoted, said one aide, waspishly.

5. Having redeployed the Number 10 principal private secretary, the official who helps filter advice to Sir Keir, this critical role is now expected to be filled by Dan York Smith, a longtime Treasury aide.

This matters because for many years, this Treasury official was in charge of the budget process and subsequently worked on tax policy. So, Number 10 cannot pretend it doesn’t have the expertise in the run-up to the budget.

6. Indeed, the date of the budget might come next week. The Office for Budget Responsibility (OBR) needs at least 10 weeks’ notice.

By my calculations, that would seem to take us to the second week of November, just past half term. Here’s hoping there’s no clash.

7. You can hear more about Chancellor Rachel Reeves’ challenges in the budget in an economics and Treasury special of the Politics at Sam and Anne’s podcast featuring Ed Conway, part of our summer deep dive into key issues facing the government.

8. The OBR’s twice-yearly assessments have turned into hideous trials for Reeves, since she repeatedly decided to borrow so close to tight self-imposed limits.

Reeves could decide this autumn to move from two to one OBR assessments a year – if you don’t ask the question, you can’t get a bad answer.

9. At the start of the summer, economists were suggesting the OBR would say at the November budget that there is a £20-30bn black hole to meet her fiscal rules. Over the summer, that seems to have extended to £40-50bn. Thankfully for ministers, nobody knows – yet.

10. The Treasury has adopted a position of refusing to shut down any idea being floated to raise money in the budget. Therefore, EVERY idea is being treated with equal prominence and horror.

Whether or not people – eg house movers – start adjusting behaviour because of the speculation.

11. First quote to bookmark, Rachel Reeves in response to suggestions that the answer is a wealth tax on 1 August: “In the budget last year, we got rid of the non-domicile status in our tax system, so people who make Britain their home have to pay their taxes here.

“We increased taxes on private jets, on second homes, and increased capital gains tax (CGT), so I think we’ve got the balance right in terms of how we tax those with the broadest shoulders.”

12. Second quote to bookmark: After the Tories suggested Labour might scrap the capital gains tax exemption on primary residences before the election, Sir Keir said in June 2024 that he could “absolutely” guarantee that they would not.

“This was just a desperate story by the Tories in relation to capital gains tax on primary residences,” he said, adding: “There was never a policy so it doesn’t need ruling out, but let’s rule it out in case anybody pretends that it was.”

A Labour spokesman went further, saying that Labour would not put CGT on primary residences and said: “It’s a bad idea.” Put this point in your favourites.

13. Neither the main parties will be returning to Westminster with too much of a spring in their step. This week’s YouGov/Sky News poll put Reform UK on 28%; Labour on 20%; the Tories on 17%; Lib Dems on 16% and the Greens – mid leadership contest until next Tuesday – on 11%.

The Labour figure is their lowest so far this parliament (and indeed, lowest since 2019).

14. The conference season hits with a bang. Next Friday and Saturday is Reform UK in Birmingham, 5 and 6 September. The Trades Union Congress (TUC) is the following week, Sunday 7 to Wednesday 10 September.

Labour conference begins the following Sunday – the 27th – in Liverpool, Greens on 3 October and Tories begin on 5 October in Manchester.

15. There will be extra episodes of Politics at Sam and Anne’s over the conference season. We are going to do Sunday lunchtime episodes at Labour and Tories, since everyone’s weeks start a day earlier.

There’ll be quick turnaround episodes after the key speeches. Make sure you keep coming back to our podcast feed.

16. Of all the different conferences, the Tories’ feels like it could be the most consequential. It’s Kemi Badenoch’s first as leader – the leadership contest was underway last time.

She’s likely to announce a policy of leaving the European Convention on Human Rights (ECHR) and pausing the various refugee conventions signed after the Second World War, although Nigel Farage has stolen her thunder.

Even front benchers were unimpressed with her “wasted” summer – talking about her loss of faith rather than hammering Labour and Reform UK on the economy. It needs to go well for her.

17. And in the middle of this is Donald Trump’s state visit from 17 September to 19 September, while the UN General Assembly (which may have Angela Rayner rather than Sir Keir attending) is 23-27 September, and the European Political Community is in Budapest on 2 October. The Commons is back after conference season on 13 October – which feels late.

18. Migration, asylum and deportation have dominated the summer. Home Secretary Yvette Cooper did manage a holiday – but has lots to do.

Asylum seekers who are refused sanctuary in Britain are seeing their appeals take an average of 54 weeks to be heard.

There were 50,976 outstanding appeals as of March, which is almost double the number compared with 2024, and seven times higher than in 2023 on top of the almost 79,000 asylum claims awaiting an initial decision.

As of March, there were a total of 106,771 asylum seekers in receipt of taxpayer-funded support, including 32,345 in hotels. Asylum seekers received this support for an average of 413 days.

Taxpayers coughed up £3.1bn for hotel accommodation for asylum seekers in 2023-24, which equated to about £8m a day. Phew.

19. Some of the migrants detained before deportation to France are appealing on human rights grounds, delaying the first individuals going back.

Separately, the Home Office is waiting for the outcome of its appeal against Epping Forest District Council after the High Court ruled that migrants must be removed from the Bell Hotel after the council claimed it had become a “feeding ground for unrest”.

Finally, the Home Office is waiting for the French government to change maritime law to empower French police to tackle migrants in the Channel, but the government may collapse before it can.

20. While Reform UK has pledged to leave the ECHR and the Tories are likely to follow suit at conference, Labour moves are much more limited. Yvette Cooper is reviewing Article 3 (privacy) and Article 8 (family life). Will we hear the outcome of that at Labour conference?

21. Also this autumn, from the Home Office, you’re going to see two other big things. There’s the (delayed) strategy to halve violence against women and girls. There wasn’t much money for this extremely ambitious target in the spending review, but charities are still being told to think big.

22. There’s also going to be a police white paper. This needs to generate a reform plan, which can form part of a pitch to the Treasury for more money for policing in the budget. Could this include force consolidation? Not yet clear.

23. You can hear more about all the challenges in home affairs with veteran home affairs journalist and one-time Labour adviser Danny Shaw on a Politics at Sam and Anne’s special. Shaw is far from clear that the French plan will work as a deterrent, and points out that the rest of the EU has to agree to make the plan permanent.

24. French President Emmanuel Macron will recognise a Palestinian state on 24 September, just after Donald Trump’s departure from the UK after a state visit.

Officials believe Sir Keir will hold true to his pre-summer ultimatum to Israel and recognise a Palestinian state at the same time – but the politics of this is tricky and will put him at odds with Trump during the state visit.

25. US network CBS has reported that the US has stopped sharing Ukraine intelligence with the Five Eyes network, including Britain. This will be high on the agenda for the state visit when Sir Keir meets Trump.

US Director of National Intelligence Tulsi Gabbard said in a memo that all information on Russia-Ukraine peace negotiations be withheld from US allies, and talks were reportedly classed as “NOFORN” by US intelligence, meaning no foreign dissemination. Gabbard subsequently denied this.

26. In other foreign news for the autumn, the European Commission has to determine its mandate for the new deal with the UK, which will bring our SPS – food and agriculture safety – rules in line within the bloc, and consequently mean less friction in trade.

There’s a “common understanding” but no final decision on the EU side. EU relations minister Nick Thomas-Symonds, who is leading on this, thinks he can complete negotiations by 2027. Will he succeed?

27. Health Secretary Wes Streeting had a better summer than most. He got the 10-year NHS plan out of the door pre-summer, although the NHS finances remain in a terrible state.

But he managed at least to pause the resident (junior) doctors’ strikes. While there isn’t a resolution, this is a start. Can he follow through?

28. Education Secretary Bridget Phillipson has a much trickier autumn ahead. She will oversee reform of Special Educational Needs and Disabilities (SEND) which – if mishandled – could lead to the biggest clash with Labour MPs since the welfare revolt.

It may not – but we haven’t heard much detail or pitch rolling. They want to “tilt (special needs) back to the mainstream” – with Canada as a model. It’s “going to take years”, and there is no overnight fix, I’m told. But this is delicate and MPs are worried.

There’s also a wider white paper that seeks to boost extra-curricular activities, and Phillipson will continue her focus on early years, although nursery funding remains a contentious area.

29. …deep breath. There’s also a curriculum review, seeking to embed “oracy, criticality and digital skills”, while the delayed new Ofsted grading system comes in.

Also, they’re working on how to improve university funding sustainability – which sounds like annual inflation increases in tuition fees.

30. Will the Lords kill the Assisted Dying Bill? This will come down firstly to arcane rules on timing in the Lords. There are two sitting Fridays a month.

But then, even if it manages to pass the Lords, there are currently no further sitting Fridays in the Commons scheduled for this session, so the government will come under pressure to put on some extras – but have said they won’t intervene to give it more time.

One senior government figure (who backs it) told me they thought the chances of it passing are worse than 50/50.

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