by Rachel Reeves is considering about £3bn of cuts to the welfare bill over the next four years by restricting access to sickness benefits, it is understood, as the chancellor embarks on a brutal cost-cutting mission to cut £22 billion as it is called filling. hole left by the Tories.
Under Conservative proposals, welfare eligibility would be tightened so that around 400,000 more long-term sign-outs would be assessed as needing preparation for employment by 2028/29, as well as being entitled to £260 in the month less in benefit. . The OBR estimated that the reforms would cut around £3bn from the welfare bill.
According to The TelegraphMiss Reeves agreed to honor the £3bn savings, but work and pensions secretary Liz Kendall will decide exactly how the system will be changed to save the same amount.
Asked why Labor was pushing ahead with plans by the previous Conservative government to reform work ability rules, work and pensions minister Alison McGovern said the department “needs to make savings because we in financial distress.”
But she said: “To be clear, at that point we will bring forward our own reforms because it has been a complete failure over the last 14 years in terms of employment.”
Pressed if this meant there would be no cuts, she said Times Radio: “We will not go ahead with the Tory plan because it was theirs. We will have to make savings like all departments, but we will bring forward our own reforms.”
In opposition, Ms Kendall claimed the plans were just “tinkering on the edges of a failing system”.
2.8 million people are out of work as a result of long-term illness, and the cost of benefits for working-age people is set to reach £64bn by the end of the parliament. This figure will be a £30bn increase on pre-pandemic levels.
When asked about the plans, the Prime Minister’s official spokesman said: “We need to take action to put more people to work. Too many people are out of work and a healthy population is directly linked to a healthy economy.”
Disability charity Scope has said the Tory cuts would have a “devastating impact on large numbers of disabled people”.
James Taylor, from the charity, warned that “cutting support for those who need it most will lead to more disabled people living in poverty”.
The government wants to use the October 30 Budget to raise up to £40bn from tax rises and spending cuts, with some departments facing cuts of as much as 20 per cent.
But Sir Keir Starmer and his chancellor are facing a backlash from Cabinet ministers over the proposals.
Ms Reeves told ministers during Tuesday’s Cabinet meeting that the plans to plug a £22bn hole in the public finances were enough to “keep public services afloat”.
After pledging “no return to austerity” under Labour, the chancellor is seeking the extra £18bn to fund a cash injection into the NHS and avoid cuts in real terms to some key departments.
But a number of ministers wrote directly to the prime minister on Wednesday to express concern about the proposed cuts.
Downing Street warned that “tough decisions” would have to be made, saying “not every department will be able to do everything they want”.
The Prime Minister’s official spokesman confirmed that Sir Keir and Ms Reeves had agreed on the “major measures” of the Budget, including the “spending envelope” which sets limits for individual Whitehall departments.
The envelope was presented to the Office for Budget Responsibility (OBR) on Thursday after it was completed by Downing Street.
The chancellor is expected to raise the cash through a series of tax increases, with a widely expected rise in the employer’s national insurance rate.
Downing Street has repeatedly refused to rule out the change, despite such a move being a breach of Labour’s general election manifesto.
A 1p increase in the rate could raise up to £17bn, according to IFS director Paul Johnson.
Labour’s manifesto promised no rise in taxes on working people, saying this was “why we won’t raise national insurance”.
Ministers argued that the promise only applied to the employee national insurance rate, which sits at 8 per cent, and not the employer contribution rate of 13.8 per cent.
Capital gains on profits from the sale of shares, currently set at 20 per cent, are likely to rise by several percentage points, ie The Rising reported, a move that would raise billions.
The Exchequer is also looking at plans to increase inheritance tax, the BBC reported on Friday, and the chancellor said that he is considering some changes to the tax.
Inheritance tax is usually charged at 40pc on assets above the £325,000 threshold when a person dies.
A spokesman for the Department for Work and Pensions said: “Spiraling inaction and millions of people being denied the right support is holding the country back and straining the economy.
“We believe that the Work Capability Assessment is not working and needs to be amended or replaced, along with a proper plan to support people with disabilities.
“We will deliver the change the country needs; supporting those who can work, get into work, and deliver growth in every part of the country.”
