Healey backs away from cutting welfare cost despite warnings of public finance shortfall
Summary
Chancellor John Healey said he had not set a timetable for reducing welfare spending, despite earlier remarks that the benefits bill would fall. The Institute for Fiscal Studies estimated that the government needs an additional £28bn a year to account for inflation and meet its defence spending target, warning that current plans could lead to tight departmental budgets and possible real-term cuts.Key Facts
- The IFS said the government needs to set aside an additional £28bn a year to account for inflation and reach defence spending of 3% of GDP by 2030.
- IFS director Helen Miller warned that some departments could face real-term budget cuts under a future spending review.
- Healey said the government must bring down the benefits bill but later clarified that it had set no timetable for doing so.
- The spending review will focus on departmental budgets and will not include the welfare bill.
- Reviews led by Alan Milburn and Stephen Timms will examine employment support for young people and disability benefits.
- The Office for Budget Responsibility forecast welfare spending would rise from £334bn last year to £431bn by 2030.
- The OBR's overall welfare spending forecast has increased by £8bn since March.
- Healey said Brexit had reduced UK growth and trade, but said he did not expect to see the UK rejoin the European Union in his lifetime.
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