Starmer to launch fresh push for welfare spending reform

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Sir Keir Starmer will on Monday insist that his attempts to reform the welfare state have not been derailed after Labour MPs forced the prime minister to drop two major cuts to benefits. 

The prime minister will use a speech to argue that taking on Britain’s spiralling benefits payments is a moral imperative without which too many people will be left behind. 

Starmer’s tough talk on welfare is likely to prompt fresh unease among Labour MPs about attempts to cut the benefits bill.

“We must also reform the welfare state itself — that is what renewal demands. Now this is not about propping up a broken status quo. Nor is it because we want to look somehow politically ‘tough’,” Starmer will say.  

But critics are likely to ask whether Starmer has the political willpower to bring down the benefits bill, given Labour put up taxes by £26bn in last week’s Budget, of which more than a third will go towards welfare. 

Labour MPs have already forced Starmer to drop attempts to limit winter fuel payments to pensioners and to shave billions of pounds off the disability support budget, while also last week scrapping the Tories’ two-child benefit cap — at a total cost of £10bn. 

Starmer will argue that trapping millions in a “cycle of worklessness and dependency” for decades costs the country opportunity and potential, adding: “Any Labour party worthy of the name cannot ignore that.”

Starmer recently appointed Alan Milburn, a cabinet minister in Sir Tony Blair’s government, to lead an independent review into the rising number of young people not in education, employment or training.

Starmer will use his speech to make a robust defence of the Budget after the government became mired in a row over whether chancellor Rachel Reeves had been honest in the run-up to the fiscal event. 

The Office for Budget Responsibility, the fiscal watchdog, revealed on Friday that official forecasts for the public finances were healthier than Reeves had suggested earlier in the autumn — an intervention that threatens to undermine her credibility.

Kemi Badenoch, Tory leader, said on Sunday that Reeves should resign.

“The chancellor called an emergency press conference telling everyone about how terrible the state of the finances were, and now we have seen that the OBR had told her the complete opposite,” she said. “She was raising taxes to pay for welfare. It’s all to pay for welfare to save her job.”

The Tories have written to the Financial Conduct Authority, calling for an investigation by the financial regulator. Nigel Farage, leader of Reform UK, has written to Sir Laurie Magnus, Starmer’s ethics adviser, requesting an inquiry into whether Reeves broke the ministerial code.

In his speech, Starmer will highlight some of the measures in the Budget to tackle the cost of living, such as cuts to energy bills and frozen rail fares.

He will repeat his regular calls for ministers to hack back red tape and regulation, while accepting the recommendations from a review of nuclear power development published last week.

But the speech will also serve as a reminder of how Starmer and Reeves had indelibly tied their political fortunes together as Labour endured a slump in opinion polls, Labour MPs said.

“Keir still can’t afford to lose her,” said one MP, while a Labour veteran added: “If she goes, he goes.”

On Sunday Reeves insisted she did not exaggerate the poor state of the public finances in an attempt to soften up the public for the tax rises she announced in the Budget. Asked by Sky News if she had lied, she replied: “Of course I didn’t.”

The tax rises will help build a bigger fiscal buffer to enable Reeves to meet her borrowing rules, but will also pay for higher welfare spending.

In the lead-up to the Budget the chancellor had emphasised the £16bn negative impact of weaker productivity growth forecasts on tax revenues, while staying silent on the fact that most of this would be offset by stronger wage and inflation assumptions.

Reeves told the BBC she had always been clear that she wanted to build up greater resilience for the public finances.