A CABINET minister has said the “clue is in the name” when defending Labour’s plans to slash welfare spending.
Labour are reportedly eyeing up cutting several billion pounds worth of public spending – after official forecasts showed that the Government’s £9.9 billion “fiscal headroom” had evaporated since the Budget.
Justice Secretary Shabana Mahmood insisted there was a “moral case” to gut the Department for Work and Pensions budget, saying too many people who were able to work had left the labour market.
She told BBC Radio 4’s Today programme: “Well, this is the Labour Party. The clue is in the name. We believe in work. We know that there are many people who are currently receiving state support for being out of work, who want to be in work.
“We know that we have too many of our young people currently out of work, not in education, employment or training.”
'Every bit of Government has to play its part' Justice Secretary Shabana Mahmood spoke to #BBCBreakfast after the BBC learned the Treasury has earmarked several billion pounds in draft spending cuts to welfare and other government departmentshttps://t.co/PDgLLM3xkO pic.twitter.com/UJX48JQOVG
— BBC Breakfast (@BBCBreakfast) March 5, 2025
Mahmood’s phrase echoes controversial comments made by Rachel Reeves who in 2013 pledged that Labour would be “tougher” than the Tories on benefits. In a 2021 interview, Reeves conceded she had made her point “badly”.
Reeves, now the Chancellor is due to give a major fiscal update on March 26, which is expected to include big changes to the Government’s tax and spending policies to meet her self-imposed fiscal rules.
A leaked early draft of the forecast indicated that the spending watchdog, the Office for Budget Responsibility (OBR), is cutting its forecast for economic growth and Government borrowing will be more expensive because of turbulence in the bond markets in January.
At the time of the Budget in October, the OBR said Reeves had £9.9bn of headroom against her self-imposed rule to fund day-to-day spending through tax revenues rather than extra borrowing.
A Government insider told the BBC: “Clearly the world has changed a lot since the autumn Budget. People are watching that change happen before their eyes.
“The Office for Budget Responsibility will reflect that changing world in its forecasts later this month and a changing world will be a core feature of the Chancellor’s response later this month.”
Work and Pensions Secretary Liz Kendall, who is expected to set out reforms within weeks, told Cabinet colleagues on Tuesday there are 2.8 million people not in work due to ill-health and one in eight young people not in education, training or employment.
She told them this is “holding back the economy” and is “bad for people’s wellbeing and health”, with the sickness and disability bill for working age people rising by £20bn since the pandemic and forecast to hit £70bn over the next five years.
A Health and Disability Green Paper will set out plans to get people off benefits and into the workforce, Kendall said.
Cabinet Office minister Pat McFadden and Health Secretary Wes Streeting are also expected to set out an efficiency drive, which will reduce the number of civil servants and cut costs, in the run-up to the statement, the BBC said.
