What are the government's options for reducing welfare spending?

Image source, Bloomberg via Getty ImagesByBen ChuPolicy and analysis correspondentChancellor John Healey and Prime Minister Andy Burnham have both spoken of their desire for the benefits bill to come down, but the government has not yet laid out a timetable for any reductions.Their political opponents have criticised them for a lack of detail on welfare reform in Wednesday's Budget, accusing the government of delaying difficult decisions over cuts.Official forecasts released alongside the Budget indicate welfare spending is going to increase by £79bn in cash terms over the next few years.BBC Verify has taken a look at the numbers behind this thorny political issue and some of the difficult options the government have to bring down welfare costs.How much is being spent on welfare?The official forecaster, the Office for Budget Responsibility (OBR), estimates in its latest forecasts that the cost of the welfare system will rise, external from £353bn this year to £431bn in 2032.The OBR's figures include spending on pensioners, which accounts for just under half of the total. The majority of this cost is on the state pension.However, if we look at the size of welfare spending relative to the size of the overall economy the OBR's projections are less dramatic, increasing from 11.1% today to 11.3% of GDP in 2032.The problem of NeetsWhat could cutting the benefits bill mean?Looming reports may offer optionsThe final Milburn report is expected in the coming weeks, as well as a separate final report from disability minister Stephen Timms into the options for PIP reform.There has been speculation that these could recommend creating a new welfare system for people under the age of 25, external, so they are not eligible for PIP and receive lower payments than older people.There are also suggestions Timms could propose a new PIP eligibility test to reduce access, external, although he was not specifically instructed to find savings.Reforms along these lines could potentially make some savings to the welfare bill relative to the existing trajectory of rising spending, as well as reducing forecast welfare spending as share of GDP.But some analysts argue that to be effective in delivering sustainable savings, such reforms are likely also to require the government to spend a lot more, external to enable young people in particular to get into and remain in work.This was signalled by the interim Milburn report which noted that for every £1 the government spends on employment support for young people around £25 is spent on benefits, suggesting he could propose a significant increase in government spending on welfare-to-work schemes.This means that any welfare savings could, in the near term at least, be offset by additional spending in other departments.However, in the long term this approach could still deliver welfare savings if the employment support was effective.Graphics by Rob EnglandMore on this story