Chancellor Rachel Reeves is making preparations for the upcoming Spring Statement by proposing “several billion pounds” in welfare spending cuts, as reported by the BBC. Justice Secretary Shabana Mahmood expressed concern over the unsustainable rise in the welfare budget during a recent interview. In light of these developments, BBC Verify has taken a closer look at the proposed budget adjustments and their potential implications.
Understanding the current size and trajectory of the welfare budget is crucial before delving into the specifics of the proposed cuts. According to the Office for Budget Responsibility (OBR) figures from the October 2024 Budget, total spending on health and disability benefits is projected to increase significantly in the coming years. The OBR highlights that welfare spending on working-age adults is expected to see the most substantial rise, indicating a notable shift in the distribution of welfare resources.
The welfare bill’s growth can be largely attributed to the increasing number of individuals seeking incapacity and disability benefits, driving the OBR’s projections. Recent trends show a reversal in the balance of people coming on and off welfare benefits, with more individuals now enrolling for support. Various factors, including the aftermath of the Covid-19 pandemic, mental health challenges, and changes in financial incentives within the welfare system, have contributed to this shift. Determining the root causes behind this surge remains a top priority for policymakers.
While no official announcement has been made regarding the specific elements of the welfare bill that might face cuts, it is evident that incapacity and long-term sickness benefits constitute a significant portion of the working-age welfare expenditure. Experts believe that reforms are necessary to realign welfare spending with the changing landscape of health and disability support. However, achieving sustainable savings in the welfare sector has historically proven to be a complex and challenging endeavor, as demonstrated by past budget reduction targets set by the government
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