Labour created the welfare state. Now, it’s intent on cutting it back
Labour was the party that created the welfare state. Now it is intent on cutting it back.
And in Liz Kendall, the government has found a Labour work and pensions secretary clearly entirely comfortable in going harder on benefit cuts than any of her Conservative predecessors since 2015, according to the Institute of Fiscal Studies.
When I ask her about that, she is unrepentant and unfazed by colleagues’ criticisms.
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‘I wouldn’t be able to survive’
“I am going to be a Labour work and pensions secretary who fixes a broken system,” she said, “who says to people who’ve been written off and denied chances and choices that we believe in them…
“I am cross, because I’ve seen in my own constituency people written off to a life that is not the life they hoped for themselves or their children or their families.
“I want to fix it. And that’s what I’m determined to do.”
This, then, is the moral case for reform that she and the prime minister have talked about in recent weeks.
And on Tuesday, Ms Kendall outlined reforms designed to reduce those claiming the main disability, with hundreds of thousands of people expected to lose personal independence payments (PIP) if they suffer from milder mental health conditions and less severe physical difficulties.
Read more: Further benefit cuts not ruled out
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Labour announces benefit cuts
The target is to save £5bn from a disability benefits bill for working-age people set to balloon by over £20bn to £75bn by the end of the decade.
Ask some in Labour and they will privately acknowledge and argue this is but a drop in the ocean, with one insider telling me this week they didn’t think the reforms went far enough.
“I don’t think people have clocked the size of the numbers going on here,” they said. Look at the public finances and you can see why.
While the Labour Party clearly talked about welfare reform in its manifesto, it never signalled it would make these sorts of cuts to the benefits bill. But the environment has changed.
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‘I wouldn’t be able to survive’
Growth is sluggish, which many businesses – and the opposition – blame on tax rises in the October budget, while the cost of government borrowing is on the rise.
The chancellor now finds herself with a hole in the public finances to the tune of £9.9bn, which she has to fill if she is to fulfil her self-imposed fiscal rule that day-to-day government spending must be funded through tax receipts – not borrowing – by 2029/30.
She was crystal clear to me in our conversation for the Sky News’ Electoral Dysfunction podcast that she was not going to loosen her fiscal rules – although many MPs think she should.
She was also clear she wasn’t coming back with more tax rises. Instead it will be spending cuts, and welfare is the first wave, with a spending squeeze across Whitehall departments expected in the Spring Statement.
Read more:
Starmer says welfare bill is ‘indefensible’
The town where almost a third are out of work
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Benefits cuts explained
Sir Keir Starmer told me last week that his plans to reform the state, with thousands of job cuts already signalled in NHS England and benefit cuts, that there will be “no return to austerity”.
His hope is that reform – be it through technology or efficiency savings – can mean public services are maintained even if rates of spending growth are reduced.
It may not feel like that for those who are at the sharp end of the £5bn of benefit cuts coming down the track.
Liz Kendall would not rule out further cuts to the welfare bill further down the line in an interview with Sky News on Tuesday, which will make many in her party nervous with some MPs and ministers concerned about the motivations of the government in its overhaul of the benefits system.
“The intellectual question hasn’t been answered here: is this about principled reform or is it a cost-saving exercise?,” one cabinet source told me on Tuesday.
“There are some concerns this doesn’t fix the issues around welfare but rather is about finding quick savings.”
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There will be unease among MPs, unions and charities as the Labour Party moves onto traditional Tory territory with welfare cuts as a strapped Labour government looks for savings. It is uncomfortable terrain.
“I have to say these are Conservative policies that Labour MPs will be voting for,” the former Tory work and pensions secretary Baroness Coffey told me on Tuesday.
“Overall, I think a lot of Labour MPs will be very unhappy about what they heard today [but] I think the Conservatives will support a considerable amount of that because, as I say, a lot of this was Conservative policy. We didn’t have time to do the legislation, unfortunately, towards the end of the parliament.”
Sir Keir Starmer has the majority to bring in these changes, but cutting the benefits of those living with disabilities will be controversial in the Labour movement even if the measures are more popular with the wider public.
As one veteran Labour MP put it to me: “This is one of these issues that come back to bite later.”
The devil will be in the detail, and for now, hundreds of thousands of benefits recipients don’t know if they will still be eligible for the main disability benefit – personal independence payments – in the coming months, with the government yet to outline where the £5bn of savings will be found.
It is an anxious time for those who rely on the welfare state. How long a shadow these reforms will cast over Sir Keir’s domestic agenda is hard to tell – but these reforms look set to become his hardest sell.
A nine-year-old girl found dead in Weston-super-Mare has been named on the day police revealed a teenager had been charged with her murder.
Emergency services were called to Lime Close in the Somerset town at 6.09pm on Monday but Aria Thorpe was pronounced dead at the scene.
Police said a 15-year-old boy had been charged with her murder and that a preliminary post-mortem found she died from a single stab wound.
The teenage boy – who can’t be named due to his age – will appear at Bristol Magistrates’ Court later today.
A police cordon remains in place as forensics officers continue their work.
Flowers and tributes have been left at the scene. Pic: PA
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Superintendent Jen Appleford, from Avon and Somerset Police, said the community was in shock and Aria’s family were being supported by police.
“It is impossible to adequately describe how traumatic the past 36 hours have been for them and we’d like to reiterate in the strongest possible terms their request for privacy,” she said.
Supt Appleford said police were working with local schools and other agencies to make sure support is available.
Britain loves chocolate.
We’re estimated to consume 8.2kg each every year, a good chunk of it at Christmas, but the cost of that everyday luxury habit has been rising fast.
Whitakers have been making chocolate in Skipton in North Yorkshire for 135 years, but they have never experienced price pressures as extreme as those in the last five.
“We buy liquid chocolate and since 2023, the price of our chocolate has doubled,” explains William Whitaker, the real-life Willy Wonka and the fourth generation of the family to run the business.
William Whitaker, managing director of the company
“It could have been worse. If we hadn’t been contracted [with a supplier], it would have trebled.
“That represents a £5,000 per-tonne increase, and we use a thousand tonnes a year. And we only sell £12-£13m of product, so it’s a massive effect.”
Whitakers makes 10 million pieces of chocolate a week in a factory on the much-expanded site of the original bakery where the business began.
Automated production lines snake through the site moulding, cutting, cooling, coating and wrapping a relentless procession of fondants, cremes, crisps and pure chocolate products for customers, including own-brand retail, supermarkets, and the catering trade.
Steepest inflation in the business
All of them have faced price increases as Whitakers has grappled with some of the steepest inflation in the food business.
Cocoa prices have soared in the last two years, largely because of a succession of poor cocoa harvests in West Africa, where Ghana and the Ivory Coast produce around two-thirds of global supply.
A combination of drought and crop disease cut global output by around 14% last year, pushing consumer prices in the other direction, with chocolate inflation passing 17% in the UK in October.
Skimpflation and shrinkflation
Some major brands have responded by cutting the chocolate content of products – “skimpflation” – or charging more for less – “shrinkflation”.
Household-name brands including Penguin and Club have cut the cocoa and milk solid content so far they can no longer be classified as chocolate, and are marketed instead as “chocolate-flavour”.
Whitakers have stuck to their recipes and product sizes, choosing to pass price increases on to customers while adapting products to the new market conditions.
“Not only are major brands putting up prices over 20%, sometimes 40%, they’ve also reduced the size of their pieces and sometimes the ingredients,” says William Whitaker.
“We haven’t done any of that. We knew that long-term, the market will fall again, and that happier days will return.
“We’ve introduced new products where we’ve used chocolate as a coating rather than a solid chocolate because the centre, which is sugar-based, is cheaper than the chocolate.
“We’ve got a big product range of fondant creams, and others like gingers and Brazil nuts, where we’re using that chocolate as a coating.”
The costs are adding up
A deluge of price rises
Brazil nuts have enjoyed their own spike in price, more than doubling to £15,000 a tonne at one stage.
On top of commodity prices determined by markets beyond their control, Whitakers face the same inflationary pressures as other UK businesses.
“We’ve had the minimum wage increasing every year, we had the national insurance rise last year, and sort of hidden a little bit in this budget is a business rate increase.
“This is a small business, we turn over £12m, but our rates will go up nearly £100,000 next year before any other costs.
“If you add up all the cocoa and all the other cost increases in 2024 and 2025, it’s nearly £3m of cost increases we’ve had to bear. Some of that is returning to a little normality. It does test the relevance of what you do.”
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