The government has refused to set a binding timetable for reducing the national benefits bill, opting instead to wait for separate policy reviews led by Stephen Timms and Alan Milburn. This approach comes amid projections from the Office for Budget Responsibility that welfare costs will expand from £334bn to £431bn by 2030. At the same time, thinktanks have criticized current household cost-of-living measures, including a £100 winter payment, as poorly targeted relief that fails to raise adequate revenue from the banking sector.
Key points
Government departments face severe real-term spending cuts unless unresolved multi-billio…: Government departments face severe real-term spending cuts unless unresolved multi-billion-pound funding shortfalls are directly addressed.
Welfare reform remains stalled while ministers await the results of independent reviews i…: Welfare reform remains stalled while ministers await the results of independent reviews into disability benefits and youth employment.
Economic strategy relies heavily on international peace to stimulate domestic growth whil…: Economic strategy relies heavily on international peace to stimulate domestic growth while ruling out closer European market integration.
Sources checked by our analysis pipeline: 1
John Healey has backed away from cutting the cost of welfare this parliament, amid dire warnings his first budget could lead to brutal spending cuts because of a £28bn shortfall in public finances.
Experts rounded on Healey’s steady-as-she-goes budget on Thursday, with the Institute for Fiscal Studies saying he had left himself a mountain to climb by ducking big tax and spending decisions.
In a damning analysis, the IFS said Healey would need to have set aside an additional £28bn a year, to offset the impact of inflation on future spending plans and hit the target of spending 3% of GDP in defence by 2030.
Instead Helen Miller, the IFS director, said Healey had opened the way to “a spending review that looks pretty brutal for some departments” – including real-term budget cuts.
“Public service spending plans look extremely tight. They don’t look to me like plans that this government would want to deliver,” she said, adding that meant Healey could face, “another season of damaging speculation about tax rises”.
The welfare bill will not be part of the spending…
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