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”.
The combination of full prisons and tight public finances has forced the government to urgently rethink its approach.
Top of the agenda for an overhaul are short sentences, which look set to give way to more community rehabilitation.
The cost argument is clear – prison is expensive. It’s around £60,000 per person per year compared to community sentences at roughly £4,500 a year.
But it’s not just saving money that is driving the change.
Research shows short custodial terms, especially for first-time offenders, can do more harm than good, compounding criminal behaviour rather than acting as a deterrent.
Image: Charlie describes herself as a former ‘junkie shoplifter’
This is certainly the case for Charlie, who describes herself as a former “junkie, shoplifter from Leeds” and spoke to Sky News at Preston probation centre.
She was first sent down as a teenager and has been in and out of prison ever since. She says her experience behind bars exacerbated her drug use.
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Image: Charlie in February 2023
“In prison, I would never get clean. It’s easy, to be honest, I used to take them in myself,” she says. “I was just in a cycle of getting released, homeless, and going straight back into trap houses, drug houses, and that cycle needs to be broken.”
Eventually, she turned her life around after a court offered her drug treatment at a rehab facility.
She says that after decades of addiction and criminality, one judge’s decision was the turning point.
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“That was the moment that changed my life and I just want more judges to give more people that chance.”
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0:22
How to watch Sophy Ridge’s special programme live from Preston Prison
Also at Preston probation centre, but on the other side of the process, is probation officer Bex, who is also sceptical about short sentences.
“They disrupt people’s lives,” she says. “So, people might lose housing because they’ve gone to prison… they come out homeless and may return to drug use and reoffending.”
Image: Bex works with offenders to turn their lives around
Bex has seen first-hand the value of alternative routes out of crime.
“A lot of the people we work with have had really disjointed lives. It takes a long time for them to trust someone, and there’s some really brilliant work that goes on every single day here that changes lives.”
It’s people like Bex and Charlie, and places like Preston probation centre, that are at the heart of the government’s change in direction.
“As far as I’m concerned, there’s only three ways to spend the taxpayers’ hard-earned when it comes to prisons. More walls, more bars and more guards.”
Prison reform is one of the hardest sells in government.
Hospitals, schools, defence – these are all things you would put on an election leaflet.
Even the less glamorous end of the spectrum – potholes and bin collections – are vote winners.
But prisons? Let’s face it, the governor’s quote from the Shawshank Redemption reflects public polling pretty accurately.
It’s a phrase that is frequently used so carelessly that it’s been diluted into cliche. But in this instance, it is absolutely correct.
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Without some kind of intervention, the prison system is at breaking point.
It will break.
Inside Preston Prison
Ahead of the government’s Sentencing Review, expected to recommend more non-custodial sentences, I’ve been talking to staff and inmates at Preston Prison, a Category B men’s prison originally built in 1790.
Overcrowding is at 156% here, according to the Howard League.
Image: Sophy Ridge talking outside Preston Prison
One prisoner I interviewed, in for burglary, was, until a few hours before, sharing his cell with his son.
It was his son’s first time in jail – but not his. He had been out of prison since he was a teenager. More than 30 years – in and out of prison.
His family didn’t like it, he said, and now he has, in his own words, dragged his son into it.
Sophie is a prison officer and one of those people who would be utterly brilliant doing absolutely anything, and is exactly the kind of person we should all want working in prisons.
She said the worst thing about the job is seeing young men, at 18, 19, in jail for the first time. Shellshocked. Mental health all over the place. Scared.
And then seeing them again a couple of years later.
And then again.
The same faces. The officers get to know them after a while, which in a way is nice but also terrible.
Image: Sophy Ridge talking to one of the officers who works within Preston Prison
The £18bn spectre of reoffending
We know the stats about reoffending, but it floored me how the system is failing. It’s the same people. Again and again.
The Sentencing Review, which we’re just days away from, will almost certainly recommend fewer people go to prison, introducing more non-custodial or community sentencing and scrapping short sentences that don’t rehabilitate but instead just start people off on the reoffending merry-go-round, like some kind of sick ride.
But they’ll do it on the grounds of cost (reoffending costs £18bn a year, a prison place costs £60,000 a year, community sentences around £4,500 per person).
They’ll do it because prisons are full (one of Keir Starmer’s first acts was being forced to let prisoners out early because there was no space).
If the government wants to be brave, however, it should do it on the grounds of reform, because prison is not working and because there must be a better way.
Image: Inside Preston Prison, Sky News saw first-hand a system truly at breaking point
A cold, hard look
I’ve visited prisons before, as part of my job, but this was different.
Before it felt like a PR exercise, I was taken to one room in a pristine modern prison where prisoners were learning rehabilitation skills.
This time, I felt like I really got under the skin of Preston Prison.
It’s important to say that this is a good prison, run by a thoughtful governor with staff that truly care.
But it’s still bloody hard.
“You have to be able to switch off,” one officer told me, “Because the things you see….”
Staff are stretched and many are inexperienced because of high turnover.
After a while, I understood something that had been nagging me. Why have I been given this access? Why are people being so open with me? This isn’t what usually happens with prisons and journalists.
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1:10
Probation centres answer to UK crime?
That’s when I understood.
They want people to know. They want people to know that yes, they do an incredible job and prisons aren’t perfect, but they’re not as bad as you think.
But that’s despite the government, not because of it.
Sometimes the worst thing you can do on limited resources is to work so hard you push yourself to the brink, so the system itself doesn’t break, because then people think ‘well maybe we can continue like this after all… maybe it’s okay’.
But things aren’t okay. When people say the system is at breaking point – this time it isn’t a cliche.
Goldman Sachs-backed cryptocurrency custody firm BitGo is the latest cryptocurrency company to secure regulatory approval to operate across the European Union.
Germany’s financial regulator, the Federal Financial Supervisory Authority (BaFin), granted BitGo Europe a Markets in Crypto-Assets Regulation (MiCA) license to provide digital asset services in the EU, the firm announced on May 12.
The license allows BitGo to offer services to crypto-native firms and traditional finance institutions, including banks and asset managers within the EU.
“This license underscores our commitment to the highest standards of security, transparency, and trust,” BitGo Europe managing director Harald Patt said.
BitGo set up the EU headquarters in 2023
Founded in 2013 in Palo Alto, California, BitGo is a major platform in the cryptocurrency industry specializing in crypto custodial services, holding cryptocurrencies like Bitcoin (BTC) on behalf of its clients.
Since setting up BitGo Europe in Germany, BitGo has received multiple registrations in EU states, including Italy, Spain, Poland and Greece.
“With the MiCA license now secured, BitGo can operate across the entire EU under a unified, forward-looking regulatory framework,” the firm said in the announcement.
“Broad range of institutional-grade solutions”
BitGo did not specify the services it intends to roll out immediately under the new MiCA license.
“BitGo’s MiCA licence comes at a pivotal moment as BitGo expands its product suite to offer a broad range of institutional-grade digital asset solutions,” the announcement added.