Tories Pledge Welfare Reforms to Save £12 Billion a Year

Prime Minister Rishi Sunak speaks during the UK's national commemorative event for the 80th anniversary of D-Day, hosted by the Ministry of Defence on Southsea Common in Portsmouth, Hampshire, England, on June 5, 2024. Leon Neal/PA Wire

The Conservative Party has pledged to reform the welfare system, claiming its plans can save £12 billion a year by 2029.

The plans include investment in mental health treatment, a targeted disability benefit system, and a clampdown on welfare fraud.

Prime Minister Rishi Sunak said Labour “doesn’t have the courage to tackle this issue and will let the welfare bill spiral,” while Labour said the Tories’ £12 billion savings target was plucked “out of thin air.”

The Institute for Fiscal Studies (IFS) think tank said it “looks difficult in the extreme” that the measures would enable further savings of £12 billion compared to the forecast based on the Spring Budget.

The number of working-age people who are out of work has risen sharply since the COVID-19 pandemic and is thought to be driven in part by those who have taken early retirement and those with long-term health conditions waiting for treatment on the NHS.

But the Conservative Party said the 40 percent increase in economically inactive people from 2 million to 2.8 million overall since the pandemic is unsustainable.

They have promised to bring this total down, claiming the cost of providing benefits for working-age people with health conditions could rise as high as £90 billion by the end of the next Parliament.

Among the steps the party would take to do this are several where the early stages have been floated by the Tories in government.

This includes a £700 million investment in NHS mental health treatment, to ensure 500,000 more people can access talking therapies to help with poor mental health.

A pledge to reform the disability benefits system and target it at those most in need is also part of the offer, as is a tightening of the criteria for work capability assessments.

Previously announced plans to pass on the responsibility for issuing sick notes from GPs to specialist work and health professionals are within the Tories’ plans.

The Conservatives also promise to toughen benefit sanction rules, speed up the rollout of universal credit, and clamp down on benefit fraudsters.

Promoting the plans in an article published in The Sun, Mr. Sunak said it’s “alarming” that the biggest rise in economic inactivity has been among young people.

The prime minister said it’s not right or fair that young people are “being parked on benefits,” adding, “A job gives you not just the chance to earn but a sense of purpose.”

He also said that he wants to reduce immigration, but it means “we must get our own people back to work.”

Pitching the plan to voters, Mr. Sunak said the July 4 general election is a choice between “a Tory Party that will get people back into work or a Labour Party that doesn’t have the courage to tackle this issue and will let the welfare bill spiral, leading to a huge waste of human potential and higher taxes for you.”

Labour accused the prime minister of causing a spiralling benefits bill in the first place.

“This is the latest desperate announcement from Rishi Sunak, who has once again plucked numbers out of thin air in an attempt to disguise the fact that he has caused a spiralling benefits bill,” a spokesperson said.

“These reheated pledges, old policies, and vague promises will not get Britain healthy or benefits under control, and do nothing to solve the fact that £10 billion of taxpayers’ money was lost to benefit fraud just last year.”

The spokesperson said Sir Keir Starmer’s party “has a plan to cut NHS waiting lists, get Britain back to work, make work pay, and get the benefits bill down.”

The Institute for Fiscal Studies (IFS) think tank said while cuts are possible, the pledge won’t change the latest spending forecast because most of the plans have already been accounted for.

Tom Waters, IFS associate director, said in a statement, “Most of the measures that the Conservatives have announced are confirming that they would go ahead with proposals that are existing government policy. Including these in their manifesto can make them easier to legislate. But they cannot be expected to deliver reductions in spending relative to the latest forecasts, since those forecasts are already predicated on most of these policies happening.

“The most substantial proposal that is not already baked into the forecast is one intended to reduce the numbers who are able to receive disability benefits on the basis of a mental health condition. Cuts are certainly possible. But history suggests that reductions in spending are often much harder to realise than is claimed,” he said.

“Delivering an additional £12 billion saving from this set of measures relative to what was forecast in the March Budget looks difficult in the extreme. That said, even if it was achieved, it would still only leave spending around its current level.”

According to the IFS, £12 billion of savings by the end of the next Parliament would only “offset the forecast growth in spending.”

PA Media contributed to this report.