John Healey had said there will be a reduction in the welfare bill before the next election, with a “tough” approach to young people who do not accept support to get a job or training.
The chancellor was repeatedly pressed on the issue in broadcast interviews after documents from the Office for Budget Responsibility suggested sickness and disability benefits would cost £100bn a year before the end of the decade.
Healey delivered a budget on Wednesday with small giveaways for most households such as £100 off energy bills to help ease the cost of living. But he deferred some difficult decisions on how defence spending at 3% of national income will be paid for and did not set out any changes to welfare – both of which are likely to be addressed at the spending review.
Speaking after the budget, Healey told BBC Radio 4’s Today: “We have to bring the benefits bill down.”
He echoed the words of Andy Burnham when he said there would be no “crude cuts” after Keir Starmer’s attempts to cut disability benefits were stopped by Labour MPs.
But he said the welfare system was “unsustainable” and that the government would set out changes after two big reports on how it can be overhauled: the Milburn review of young people and work and the Timms review of the disability benefit system.
Healey added: “We will expect, as we’ve done before, that (young people) take up the offers, take up the offers, and that’s the way that we can bring welfare bills down in the long term.”
Asked whether there would be a cut to the overall welfare bill before the next election, the chancellor said: “There will be a reduction in the benefits bill. We’ll do that in a Labour way and we will do that because it is simply not good for Britain or progress to have a bigger and bigger benefits bill.”
The chancellor told Good Morning Britain that the model would be based on previous Labour governments having more conditions on welfare payments for young people. “We did this when the last Labour government was first elected at the end of the 90s. We had huge youth unemployment then. In our area of South Yorkshire it was one in five.
“We did exactly the same there. Tough on those who weren’t prepared to take up the offer, but also real support and advice that said to the young people then, as we must do now: ‘You have real potential.’”
The Office for Budget Responsibility said total welfare spending would grow from £334bn last year to £431bn by 2030 – with about half of that being spent on pensioners and a quarter on sickness and disability benefits. The overall forecast spending has risen by £8bn since March.
In his post-budget interviews, Healey explained the choices he had made to give households some “breathing space”, paid for by higher taxes on banks and landlords.
But he said the single best thing for UK economic policy would be peace in the Middle East and Ukraine. Asked by Sky News if he was frustrated by Donald Trump’s international actions, Healey said: “President Trump is probably the one man that can bring those parties together.
“That’s why I will always work with him, if that’s what he’s pursuing. And I think it’s why the British government now is doing what we can to bring those parties together. We want to reopen the strait of Hormuz, and we absolutely want to see an end to the Russian invasion of Ukraine.”
Meanwhile, a leading economic thinktank said Healey had delivered a “scattergun” budget that did little to address Britain’s economic challenges. The Resolution Foundation said measures aimed at easing household costs would not prevent energy bills from jumping above levels seen during the last energy shock.
Measures announced in the budget aimed at tackling soaring energy costs include the scrapping of standing charges on gas bills and energy payments of £100 for up to 20m households in council tax bands A to D.
But in its analysis of the budget, the Resolution Foundation said typical annual energy bills were expected to reach £1,750 after government support in 2026-27.
That compares with £1,685 paid during the 2022-23 energy price jump after Russia invaded Ukraine.
Ruth Curtice, the chief executive of the thinktank, said: “Faced with a tough backdrop amid global economic turmoil, the chancellor delivered a scattergun budget that did little to address the sharp challenges facing Britain.
“Cost of living support is being spread far too thinly and will leave even those families receiving help facing higher energy bills than they did during the last energy price shock.”
