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.
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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3:05
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.
Image: 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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0:52
‘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”.
Image: 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”.
Bridget Phillipson has emerged as the early frontrunner in the Labour deputy leadership race as other candidates scramble to catch up ahead of a crunch deadline.
The education secretary had the backing of 44 colleagues as of 6pm on Tuesday, according to the first official tally released by the Parliamentary Labour Party (PLP) since nominations opened.
Former Commons leader Lucy Powell, who was sacked by Sir Keir Starmer in his reshuffle last week, is close behind with 35, followed by backbenchers Bell Ribeiro-Addy with eight, Dame Emily Thornberry with seven and Paula Barker with three.
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2:24
Who could replace Angela Rayner?
Housing minister Alison McGovern is currently coming last with two nominations, though sources on her campaign team suggested this did not reflect the true level of support behind her.
Candidates have until 5pm on Thursday to receive the backing of 80 colleagues, meaning there is still plenty left to play for as less than 100 MPs have made their official nominations so far, out of 398.
A fresh tally will be published by the PLP on Wednesday evening, though MPs may publicly reveal who they are backing before then.
Those not on the PLP’s current list include Southport MP Patrick Hurley, who has thrown his weight behind Ms McGovern in a post on X.
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Candidates will have the chance to woo undecided colleagues during a hustings event on Wednesday evening, but there are fears it could descend into chaos as the event will be held online only.
That means hundreds of MPs will have just one hour to quiz the six contenders virtually. It is not clear if or how the event will be moderated.
Image: Bridget Phillipson, Bell Ribeiro-Addy, Lucy Powell, Dame Emily Thornberry, and Paula Barker
Ms Barker, the MP for Liverpool Wavertree, expressed concern about the logistics of the contest.
Asked if she feels confident she can get the numbers, she told Sky News: “I think the very tight timeframe and the fact hustings for MPs are being held online 8pm – 9pm when the majority of colleagues are travelling home undoubtedly compounds the issue.
“Of course, that is an issue to be addressed by whoever wins the race and at this moment in time we are all in the same boat.”
However, a Labour source defended the decision, saying: “There’s frankly no convenient time to do it. Ministers will have busy diaries serving the public during the day… priority has to remain public service.”
Ms Ribeiro-Addy has also criticised the contest’s rules, telling Sky News’ Politics Hub with Sophy Ridge that having just a few days to get 80 nominations “doesn’t feel right”, especially given the winner is “ultimately decided by members”.
Candidates who make it through the first round must go on to win the support of either 5% of Constituency Labour Parties (CLPs) or three organisations affiliated to the party, two of which must be trade unions.
The successful candidates will then appear on the ballot for a vote of all party members and affiliated party supporters, with results declared on 25 October.
The six-week timeline was set by Labour’s ruling National Executive Committee but will be overseen by the party machinery who insist they will work with all candidates to give them a fair hearing.
There are many MPs and ministers who want to see the contest done quickly, to avoid it being a distraction from the government’s priorities.
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5:11
Length of race ‘doesn’t feel right’
Candidates make their pitch
The race was triggered by the resignation of former deputy prime minister and housing secretary Angela Rayner after she admitted underpaying stamp duty on a flat she bought in Hove.
Following calls for her replacement to be a Northern woman, all six candidates who entered are female, though Ms Ribeiro-Addy and Dame Emily represent seats in London.
Ms Phillipson and Ms McGovern are seen as candidates that would remain loyal to Number 10, which some MPs want to see to avoid the party becoming more divided. They both honed in on their Northern roots while pitching themselves as the candidate to take on Reform UK when announcing their deputy leadership bids on Tuesday.
Clapham and Brixton Hill MP Ms Ribeiro-Addy is seen as the left-wing candidate, and has the backing of many MPs in the Socialist Campaign Group (SCG) such as Corbynite Richard Burgon.
However, Ms Baker, a former trade union official and Ms Thornberry, chair of the foreign affairs committee, have also vowed to challenge the government on issues like welfare and Gaza.
Manchester Central MP Ms Powell was recently ousted from government and said she decided to stand “after much encouragement” from colleagues.
A Survation survey of 1,308 Labour members who read the LabourList website suggested Ms Phillipson was the most popular choice for the role.
The Protect Progress PAC spent more than $1 million to support James Walkinshaw in a primary for the congressional seat, in a race that could narrow Republicans’ House majority.
Kemi Badenoch has offered to help the government pass legislation to slash the welfare bill – but with conditions attached.
In a speech on Tuesday morning, the Conservative Party leader accused the government of having “totally lost control of spending” and “leading Britain into a deeper and deeper crisis”.
She argued that the only way to fix the issue was to dramatically reduce the welfare budget – and set out to Sky News political correspondent Tamara Cohen her conditions for supporting the government.
Speaking at the Institute of Chartered Accountants, Ms Badenoch said: “We are the only party arguing that government has to live within its means.
“Every single other political party in parliament today, every single other one, wants to increase welfare spending and they voted to do so.
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“They wanted to lift the so-called two child benefit cap. They don’t mind that our sickness benefits bill alone is on course to reach £100bn by 2030.”
The Tory leader said the chancellor will have no option but to raise taxes at the budget in the autumn to fund Labour’s spending plans, and also pay the interest on the vast government debt.
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3:34
Is Badenoch right to say UK might need a bailout?
But she claimed that “some in government must know that things need to change”, saying: “You can picture their grim faces, looking at the latest OBR [Office for Budget Responsibility forecast] figures.
“But the truth is they came into government with no real plans for how to save money – only how to spend it. That’s why they are in trouble.”
To that end, she said she is “making the prime minister a serious offer” because “the Conservative Party will always act in the national interest”.
She noted that Sir Keir Starmer had tried to cut welfare spending by targeting benefits paid to disabled people, but had to “gut” the legislation just before the vote and was “humiliated by his own backbenches”.
But she continued: “If he is serious about cutting spending, and really bringing down the welfare bill, we will help him.”
And pointing to Angela Rayner’s resignation, and the ensuing contest for a new deputy Labour leader, Ms Badneoch said: “Whether he wants to admit it or not, Keir Starmer needs our help.”
‘We need to find common ground’
Speaking to Sky News after her speech, the Tory leader said she will only support new government legislation on welfare as long as it brings the total spending down.
“Right now, what I’m offering is for us to sit down together and find common ground,” she told Cohen. “We know that this is difficult, but Conservatives have done this before. We had to find welfare savings and reform welfare in the coalition, [majority] government and after, and we can do it again.”
Image: Labour called the Tory leader ‘delusional’. Pic: PA/House of Commons
She insisted the Tories reduced the welfare bill before the pandemic, when it started going up again.
She said: “We fixed the previous problem. There is now a new problem and what we’re saying is let’s work together to fix it.”
“If we don’t live within our means, we will go bankrupt and our children will have to pay off the debt,” she added.
‘Stop all these distractions’
Ms Badenoch was also challenged on her claim that she was offered a scholarship place at the Stanford Medical School in California, which The Guardian reports has been denied by the admissions staff who were there at the time.
She told Cohen: “They’ve been told something that I didn’t say. I didn’t say I was offered a place – I said I was offered a scholarship, a part scholarship. I hadn’t applied for it.
“But I stand by every single thing that I said. It’s something American universities do. They send out speculative offers.”
Image: Kemi Badenoch was asked about scholarship offer claims. Pic: PA
She called on people to “stop all these distractions about who said what, and who’s up and who is down”, and focus on Angela Rayner’s property taxes, and the economy.
“I tell the truth. I stand by what I said. But right now, the truth is our economy is going in the wrong direction – it’s in free fall, and we have got to fix this.”
A Labour Party spokesperson rejected Ms Badenoch’s offer of help.
“It’s delusional of Kemi Badenoch to think anyone would want to take economic advice from her Conservative Party,” they said. “Their economy-crashing, growth-killing, irresponsible approach to governing left mortgages spiralling and working people worse off.
“The only thing in Britain that needs a bailout is the Conservative Party from its leadership. The Tories haven’t listened, they haven’t learned, and they can’t be trusted.
“Labour is clear that people who can work should work. This Labour government is getting people back into the workplace and out of the doom loop of joblessness that spiralled out of control under the Conservatives.”