Labour Fiddles as the UK Approaches a Welfare Tipping Point

UK Special Coverage A new report is expected to recommend reducing Britain’s unsustainable benefits—by increasing benefits. UK Special Coverage (Photo by Andy Barton/SOPA Images/LightRocket via Getty Images) Britain’s welfare bill is out of control. Everybody knows. Even the Labour Chancellor John Healey says it is immoral and unsustainable, though he seems to balk at actually reducing it. The current annual cost of £330 billion, already more than the entire receipts from UK income tax, is forecast to rise to £431 billion by 2031 according to the Office for Budget Responsibility. Next week, the former Labour minister Alan Milburn will publish Labour’s long-awaited answer to the problem of young people getting diagnoses for neurodivergent ailments and ending up on benefits, sometimes for life. Labour backbenchers, who never knowingly support benefit cuts, have been waiting for this with some trepidation. They have read reports that Milburn intends to take benefits from people with conditions like ADHD and autism. But the latest intelligence about the Milburn report has eased their anxieties. He is reportedly going to call for more up-front investments to fund new, more interventionist policies based on the systems in Germany and Denmark, where youth unemployment is lower. So benefits must go up before they can come down. The Tory leader, Kemi Badenoch, getting her retaliation in first, says this is not good enough. Before an invited audience in a disused Westminster church, she promised an old-school “tough love” solution. Were she to win the next election—an unlikely prospect admittedly—the self-styled first-generation Nigerian immigrant, who worked at McDonald’s while studying, says she would cut in-work benefits by £36 billion. She intends to do this by restoring the two-child benefit cap (scrapped by Labour last year) and by cutting sickness and disability benefits for many mental health conditions. She also says she would deny benefits to foreign nationals. Labour called this a “charter for homelessness and misery.” The Child Poverty Action Group says the plan would take Britain “back to the Dark Ages.” Unlike her predecessors, however, Badenoch is not so easily silenced by moral outrage from what is sometimes called the charity-industrial complex. Indeed, she seems positively to invite it. In her speech, she said airily that many folk with disabilities can work from home and “people with autism can run some of the biggest tech companies,” (presumably referring to Elon Musk). “Double amputees run marathons,” she declared most controversially. Cue outrage from disability charities. No one has spoken in such a blunt fashion about welfare since Margaret Thatcher. In 1987 she scolded critics on the left, who she said tended to “drool and drivel” about welfare cuts without actually bothering to fix things. Double amputees running marathons is already becoming a negative meme on the left, who point out that paraplegic athletes often rely on benefits to support their achievements. Labour insists that total welfare spending, as a proportion of GDP, is lower in Britain than in many other European countries, and has not risen greatly in the past decade. But that is small comfort, given the situation in countries like France. It also ignores the government’s own forecasts of an unsustainable rise in disability and sickness-related benefits—which are already being paid out to one in ten Britons, at a total cost of £100 billion. A cottage industry has emerged of social media influencers advising people on how to claim their maximum entitlements. Some believe that Britain has inadvertently adopted the idea that a universal basic income is a human right. That has long been a fashionable concept in academia. The irony is that this belief, if such it is, took root largely under recent Conservative governments. After all, it was a Tory chancellor—Rishi Sunak—who devised the “furlough” scheme during the pandemic that paid millions a salary to stay at home and not work. Universal Credit, the complex of proliferating benefit entitlements, was likewise the brainchild of a former Conservative official, Iain Duncan Smith. And, like taxation, the benefits bill reached stratospheric heights under Boris Johnson, the Tory prime minister who also ramped immigration up to nearly 1 million in 2022. So there is some justified skepticism about Badenoch’s promises, for example, to cap full benefits at six months for many unemployed. Would she really freeze housing benefits, which would make homes unaffordable for claimants, and issue “back to work cards” that prevent them buying alcohol and cigarettes? One suspects not—any more than she is going to turn amputees into distance runners. Anyway, £36 billion in cuts wouldn’t put much of a dent in the bill by 2030, especially since the Tory leader has also said she will restore the triple lock, which raises the state pension by average earnings, inflation or 2.5 percent, whichever is higher. Labour has “adjusted” the lock to save some £15 billion by 2030. That cuts the Badenoch Benefit Axe to £21 billion at best, out of £431 billion. She is perhaps right to say that it is wrong to punish pensioners who have contributed throughout their working lives, but that just underlines how difficult it is to halt the benefits culture. Once entitlements are given it is almost impossible to take them away without apparent injustice—and without incurring the condemnation of the media and a legion of well-funded charities. It becomes risky politics. Subscribe Today Get daily emails in your inbox With 25 million people receiving welfare of one kind or another, the numbers are already approaching half the UK electorate, especially if you add 11 million foreign-born immigrants, many of whom were attracted to Britain precisely because of the generous benefits. Then there are the 7 million public-sector employees. They are not of course on benefits. But they, and their public sector unions, support Labour governments, financially and at the ballot box. They typically decry attempts to cut benefits administered by public bureaucracies—as do those employed in the charity “third” sector. Given the electoral arithmetic it might seem surprising that anyone votes for parties that promise to cut benefits, immigration and the size of the state. Yet Labour only attracted 34 percent of the popular vote in 2024. Reform has led opinion polls for much of the past year—though the party has been careful to avoid becoming defined by benefit cuts. It doesn’t take Claude 5.2 to conclude that Britain could reach a demographic tipping point beyond which it will simply be in no party’s electoral interest to cut the welfare bill. Britain is becoming “a welfare state with a country attached,” as Badenoch puts it, in which only fools fail to exploit the system. This is what everybody knows. And to continue the Leonard Cohen lyric, everybody wants a box of chocolates and a long-stem rose.