Chancellor sets welfare bill target for 2030

John Healey confirmed on Wednesday that the government will reduce the total welfare bill before the next general election. The Chancellor stated this goal during interviews following the delivery of the annual budget. He described the current trajectory of spending as unsustainable for the national economy.

The Office for Budget Responsibility projects that total welfare spending will rise from £334bn last year to £431bn by 2030. Approximately half of that amount will go to pensioners. A quarter will be allocated to sickness and disability benefits. The overall forecast for spending has increased by £8bn since March.

Healey said the reduction in costs will target young people who do not accept support for jobs or training. He called this approach tough but necessary. The plan relies on two upcoming reviews to guide specific policy changes. These are the Milburn review of young people and work, and the Timms review of the disability benefit system.

The Chancellor emphasized that the government will avoid crude cuts. He referenced the opposition from Labour MPs when Keir Starmer previously attempted to reduce disability benefits. Healey said the model will mirror policies used by Labour governments in the late 1990s. Those policies imposed stricter conditions on welfare payments for young adults in areas with high unemployment.

Healey told BBC Radio 4 that the government expects young people to take up offers of support. He argued that this method brings down welfare bills in the long term. He noted that a larger benefits bill is not good for progress. The Chancellor said the government will proceed in a way consistent with previous Labour administrations.

The budget included measures to provide immediate relief for households. Energy payments of £100 will be provided to up to 20m households in council tax bands A to D. Standing charges on gas bills have been scrapped. These costs are funded by higher taxes on banks and landlords. The government aimed to give families breathing space during high cost of living periods.

The Resolution Foundation criticized the budget as a scattergun approach. Ruth Curtice, the thinktank's chief executive, said the support is spread too thinly. She noted that typical annual energy bills are expected to reach £1,750 in 2026-27 after government support. This figure exceeds the £1,685 paid during the 2022-23 energy price jump.

Healey deferred decisions on how to fund the increase in defence spending to 3% of national income. He said these difficult choices will be addressed at the spending review. The Chancellor also linked economic stability to global peace. He stated that the single best outcome for UK policy would be peace in the Middle East and Ukraine.