LONDON (Reuters) – The British government is planning to make more than 6 billion pounds in welfare savings, ITV News reported on Friday, as finance minister Rachel Reeves seeks to balance the books.
Reeves will deliver her Spring Statement on March 26, but economic headwinds since the October budget mean she will have to find more money in order to meet her strict fiscal rules in the wake of worries over slowing growth and global concern at possible U.S.
tariffs.
On Tuesday, she said the welfare budget had “got out of control” under the previous Conservative government, in power for 14 years until July 2024, with a leading think tank saying she would have to choose between tax rises and a return to austerity.
ITV reported that the government would seek to make billions of pounds of welfare savings by making it harder to qualify for Personal Independence Payments, a disability benefit, and freezing those payments next year so they do not rise with inflation.
The changes would also see a rise in the basic rate of Universal Credit paid to those searching for work, or in work, but a cut for those who are judged as unfit to work.
Britain’s Office for Budget Responsibility has forecast that the cost of disability and incapacity benefits will reach 100 billion pounds ($128 billion) a year by 2029/30 – when Reeves has a target to balance day-to-day spending with tax revenues.
The Resolution Foundation, a think-tank which focuses on issues affecting low earners, said on Thursday the government should focus its search for welfare savings on the level of health and disability benefits rather than on tightening eligibility.
On Thursday, the government said it would bolster employment support for those who were sick or disabled to help them back to work.
(Reporting by Michael Holden; Editing by Kirsten Donovan)
