Chancellor Rachel Reeves is reportedly planning to introduce £3 billion worth of welfare cuts over the next four years, with a focus on limiting access to sickness benefits. The proposed cuts aim to save this sum by reforming work capability rules set by the previous Tory government.
Under the Conservative plans, eligibility for welfare would be stricter, requiring an additional 400,000 long-term sick individuals to prepare for a return to work. This move is projected to reduce the benefits expenditure by £3 billion by 2028/29. While Rachel Reeves is expected to commit to the same savings target, the actual changes to the system will be decided by Work and Pensions Secretary Liz Kendall.
A Government spokesperson acknowledged that the current Work Capability Assessment system is not functioning adequately and needs reforms or replacement. The government aims to achieve savings through its own initiatives, including providing tangible support to help disabled individuals transition into employment.
Rachel Reeves is aiming to generate up to £40 billion through a combination of tax increases and spending cuts in the upcoming Budget, with the intention of steering clear of austerity measures. The proposed plans faced opposition from some Cabinet members, who expressed concerns about potential departmental spending reductions of up to 20%.
Downing Street cautioned that not all departments would be able to fulfill all their intended activities, emphasizing the necessity of making tough decisions. Prime Minister’s spokesperson confirmed that Rachel Reeves and Sir Keir Starmer have agreed on the key aspects of the Budget, including the spending limits for different government departments.
While spending reductions seem inevitable, tax hikes are expected to be the primary focus of the Budget to address the financial gap left by the previous Tory government. Reports suggest that capital gains tax and inheritance tax might be adjusted to boost revenue and stabilize the economy.
The Budget announcement is scheduled for October 30, where more details on Rachel Reeves’ plans for welfare cuts and revenue generation strategies are anticipated to be revealed.