John Healey promises benefits bill ‘will come down under Labour’

Confusion arose from Mr Healey’s comments earlier in the week over whether the ballooning cost of welfare would be cut before the next election, with the Government later declining to put a timeframe on it.

He faced questions on the issue following his maiden Budget and the Office for Budget Responsibility (OBR) warning that sickness and disability benefits could cost £100 billion-a-year before the end of the decade.

Pressed on whether he was promising to bring down the overall benefits bill, or slow down the rate of increase, the Chancellor told the BBC’s Sunday With Laura Kuenssberg programme: “The overall bill will come down under Labour.

“We’ll start the changes next year, and we’ll bring that bill down.”

He also said: “Since the election, we’ve already slowed down the rate of increase in the benefits bill, which was – the numbers were booming under the Tories.

“This is a system which is not working. We have to make big changes. We will.”

He said a Government White Paper and legislation next year would follow two reviews due to be published this month, one by social security minister Sir Stephen Timms into the personal independence payment (Pip) benefit and another by former health secretary Alan Milburn on young people and work.

He added: “We’ve set out the timetable for changes. We’ve never set out the timetable for savings, and some of the reporting earlier in the week was simply wrong.”

The Chancellor also suggested there will be more tough choices on slashing public spending after the Institute for Fiscal Studies questioned the likelihood of the Government following through on its plans for departmental reductions in the years to come.

He was challenged over plans to bring down the UK’s debt pile of more than 97% of the whole economy and whether that could entail cuts of around 6% to some government departments over several years.

“In this Budget, we’ve already demonstrated we are prepared to take hard decisions about the priorities in Government,” he said.

“We will carry that through into the 10-year plan and the spending review next year.”

He pointed to devolution and the transformation of public services as ways to make efficiency savings and “meet the challenge of the spending review”.

Mr Healey also refused to say whether Labour will meet its manifesto pledge to ensure younger workers on the minimum wage are paid the same as others by the next election.

The Chancellor said the Government would “take it one step at a time” and signalled the promise to end “discriminatory age bands” might be delayed.

In 2024, Labour committed to closing the gap between adult minimum wage and pay for 18 to 20-year-olds.

Asked whether it may be the case that Labour breaks its manifesto commitment to remove discriminatory age bands, he replied: “There’s no question about whether or if. It’s a question of when.

“It’s a question of how fast. And I want to make sure that we can look hard at those trade-offs that inevitably are there between jobs and wages.

“I want to take business, I want to take trade unions with me, and with the Government, because together we have to get into what at the moment is a moral shame on this nation, a million youngsters written off, without any prospect of being helped into work and making a contribution to this country for the future.”

The blanket 3.9% increase at the Budget had prompted questions about Labour’s promise to equalise minimum wage pay for younger workers, over which unions have previously expressed concerns of a potential delay.

Tory leader Kemi Badenoch accused Labour of leaving a £49 billion “black hole” in the nation’s finances which she claimed would require hefty tax increases.

The Conservatives have said the Government would have to hike levies by £1,700 “per household per year” by 2030-31 to pay for unfunded spending promises.

They say this includes up to £17 billion for a National Care Service and £4 billion for council house-building, and a further £28 billion in “plausible spending pressures” identified by the Institute for Fiscal Studies.

“The Prime Minister gave the game away on Friday when he said he would have written the 2024 manifesto differently,” Mrs Badenoch said in an article for the Sunday Telegraph.

“Let me translate that. He wishes he had more room to raise taxes even further.”

A Treasury spokesperson responded: “This is fiction. The Budget meets our fiscal rules, fully funds our Defence Investment Plan and puts borrowing on a clear downward path.

“This Government has a consistent track record of meeting these targets, and it’s through careful management of the public finances that we’ve been able to give Britain breathing space on the cost of living and cost of business.”

Meanwhile, a former economic adviser to Andy Burnham described the Budget as “small beer” that failed to quell the market’s fears about the Government’s policies.

Ex-Bank of England chief economist Andy Haldane was reminded of his recent comment that the market “suspects that this is a traditional tax-and-spend socialist government with better TikTok videos”.

He told the BBC’s Sunday With Laura Kuenssberg show: “The markets still have those fears.

“We are in a public finance mess.

“This week’s Budget did relatively little to appease those fears.

“A no score draw Budget for growth, a no score draw Budget for burnishing our fiscal credentials…

“More is needed of a radical nature. This week’s Budget was not that radical budget.”