Labour government to cut welfare spending 'by billions'

Labour is planning billions in welfare spending cuts as part of Rachel Reeves’ upcoming spring statement, new reports have suggested.

- Albert Toth, The Independent

The chancellor will be announcing her plans for the government's finances on 26 March, with a raft of multi-department cuts floated. The Department for Work and Pensions (DWP) is expected to bear the brunt of these, with as much as £5bn reportedly to be earmarked for savings. Estimates of exactly how much Ms Reeves is looking to pull back from government receipts have only increased in recent months. Treasury insiders have indicated that the £9.9bn fiscal headroom left after Labour's October Budget has been severely reduced, with one telling the BBC that “the world has changed” since then. The subsequent months have seen the economy essentially flatline, while borrowing costs have risen and mass uncertainty takes hold amid tensions around the US and Ukraine. A Treasury source also told The Independent that taking action on welfare “is something we would need to do” regardless, given the rising welfare bill. Spending on health-related benefits rose to £65bn last year, up 25 per cent from the year before the Covid pandemic. This is forecast to rise to £100bn before the next election.