Local Government Finance
Debate between Alison McGovern and Judith Cummins(1 week ago)
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The Minister for Local Government and Homelessness (Alison McGovern)
On 20 November, my Department published a policy statement setting out our approach to the first multi-year local government finance settlement in a decade. Today, we publish the provisional settlement itself and launch our formal consultation on the proposals. It represents the choices we are making as a Government. Unlike the Tories, we will not look the other way as poverty gets worse. We will not ignore the economic and social costs of deprivation. The spending review announced over £5 billion of new grant funding for local services over the multi-year settlement period. That includes £3.4 billion of new grant funding being delivered through this settlement.
Before I give more details, I want to make this point. For 14 years, the Tories decimated local government, asking local leaders to do more with less, and that had consequences. Local high streets are always changing, but deprived towns saw more empty shops, more vape shops and more pawnbrokers than other places. Their councils did not have the resources to do anything about it. In 2019, the Chartered Institute of Public Finance and Accountancy found that nearly 800 libraries had closed since 2010. In 2022, The Guardian newspaper uncovered a real-terms annual cut of nearly £330 million to the upkeep of our local parks, with the biggest cuts in the poorest parts of the country. The last decade and a half of austerity impacted every community, but the very worst effects were felt by people living in the most deprived areas—and that was a choice.
By breaking the link between funding and deprivation, the Tories punished poorer councils. Year after year, they exacerbated inequality. As a result, too many places in this country feel forgotten and left to fend for themselves. The answer is not Reform’s return to austerity or the Tories’ carping from the sidelines; it is to use the best data we have available to redesign the funding system so that deprivation is recognised and addressed within the settlement. That is why the figures we are publishing today are derived using the very latest data from the 2025 index of multiple deprivation released at the end of October this year. It is why, according to our analysis, whereas under the old system deprivation scores could account for only 25% of variation in per capita funding applications, under this settlement it is up to 75%, with other important factors such as coastline, miles of road or visitor numbers making up the rest.
In addition, we are giving councils more certainty with the first multi-year settlement in a decade, allowing local leaders to focus on long-term investment and change. We are addressing the damage of austerity by maintaining the £600 million recovery grant allocations from 2025-26, targeted towards those most impacted by the cuts, and introducing a recovery grant guarantee, providing an above-real-terms increase to social care authorities that received the grant last year.
We are supporting local authorities through change by providing funding floors and phasing in new allocations across the multi-year settlement. We are improving efficiency and value for money by simplifying an unprecedented 36 funding streams, worth more than £56 billion over the multi-year settlement. We are resetting the business rates retention system to restore the balance between aligning funding with need and rewarding local growth, and unlocking the dream of home ownership for more people by boosting real incentives for councils to build new homes. We know that councils are concerned about what will happen at the next spending review, so we will keep working closely with them to avoid cliff edges in funding.
This settlement is our most significant move yet to make English local government sustainable at last. It will take overall core spending power for local government to over £84.6 billion by ’28-29—equivalent to a 15% cash-terms increase compared with ’25-26. The Labour Government have made it clear that we back local government through action. Since coming into power, we have made available a 23.6% increase in core spending power in ’28-29 compared with ’24-25.
However, we have to do more, because the previous Government’s funding system left local government in chaos. Social care costs were soaring out of control, with very little focus on prevention. Children’s social care, the impact of a failing special educational needs and disabilities system, and the spiralling costs of homelessness and temporary accommodation have destabilised council funding, even where councils have acted judiciously to protect the public pound through this difficult era. That is why we need national change to empower local councils to maximise the benefit of this announcement.
The Government are building a national care service based on higher quality of care, greater choice and control and better integration. This is backed by around £4.5 billion of additional funding made available for adult social care in ’28-29, compared with ’25-26. We are changing children’s social care through the families first partnership, funded with £2.5 billion over the next three years, because all children deserve good parenting and a loving home environment—and we know that costs less in the long run, too.
The children’s social care residential market is broken, and we are taking action. Using powers in the Children’s Wellbeing and Schools Bill, the Housing and Education Secretaries will explore how we might implement a profit cap in the children’s social care placement market, which would be a crucial step in ensuring that public money delivers value and care, not profiteering. We will set out further information on our approach in 2026.
On special educational needs and disabilities, in the new year the Government will bring forward the schools White Paper, which will set out ambitious plans to reform special educational needs provision. But we recognise the impacts of the dedicated schools grant deficits on local authorities’ accounts. In future, special educational needs provision will be funded by central Government; local authorities will not be expected to fund costs from general funds once the statutory override ends in March 2028. We will provide further details on our plans to support local authorities with those deficits later in the settlement process.
On homelessness, Members have already heard me acknowledge that temporary accommodation is another growing financial pressure on councils, with spend reaching nearly £3 billion in ’24-25. Last week, we published the national plan to end homelessness—our strategy to prevent homelessness before it occurs. We have set clear objectives to get our children out of costly B&Bs and to help councils to balance the books.
The Government intend to maintain a core 3% council tax referendum principle and a 2% adult social care precept for the vast majority of councils. We are committed to ensuring that the funding system is fair for taxpayers throughout the country. In some areas, council tax levels are radically lower than others. Council tax bills for £10 million houses in some of the wealthiest parts of the country can be less than what an ordinary working family pays in places like Blackpool or Darlington.
The Government plan to lift referendum principles in ’27-28 and ’28-29 for Wandsworth, Westminster, Hammersmith and Fulham, City of London, Kensington and Chelsea and Windsor and Maidenhead. This change will improve fairness, as taxpayers in those councils have the lowest bills in the country, and this year paid up to £1,280 less than the average council taxpayer. It will enable the Government to allocate more than £250 million of funding in the system more fairly, instead of subsidising bills for the half a million households in those council areas. It will also provide greater flexibility for those authorities in deciding how to manage their finances following our reforms. The councils will decide on the level of council tax increase to set and whether to draw on the relatively high alternative sources of income from which a number of them benefit.
We know that adapting to our reforms will take time. We will therefore continue to have a support framework in place next year to help authorities in challenging positions. Following precedent set by previous Governments, councils in significant financial difficulty can request additional flexibility from the Government. In making that decision the Government have been clear, unlike the Tories, that they will not agree to increases where the council has above-average council tax. In recognition of cost of living pressures, each application will be considered on a case-by-case basis, and decisions will reflect the support offered to low-income and vulnerable residents.
In closing, I go back to the libraries that have been closed and the parks that have been neglected. Under this Labour Government not only is our Chancellor of the Exchequer making sure that our schools have libraries, but we are making sure through this funding that councils can ensure that parks are good for our children to play in. We can never turn the clock back—we cannot undo all the past damage to councils—but we can change town hall finances so that councillors battling the consequences of poverty have a Government who are on their side for once.
We said we would restore the link between funding and deprivation, and today we are doing exactly that. There will be no more forgotten people left to fend for themselves and no more forgotten places sneered at by Conservative Members, but a fighting chance for every place in this country. I commend this statement to the House.
Alison McGovern
I can hardly wonder at getting that purely political response when I made the perfectly legitimate political point that under the Tories a lot of councils were dealt very bad funding settlements indeed. We do not need to trade political insults to see the libraries closed, the parks left unmaintained and the damage done to councils, but I look forward to discussing this issue with the hon. Member across the Dispatch Box as we move forward, once he has talked to his own councils about the funding settlement they will be receiving.
The hon. Member asked some slightly more important questions, particularly on SEND. He will know that this is primarily a matter of getting the absolute best outcome for our children. The Department for Education will bring forward plans in the new year, and I am working closely with Ministers in that Department to ensure that we get it right. I mentioned some of the details in my statement.
I do not recognise the picture described by the hon. Member on devolution, and I feel confident in saying that nor would the Minister for devolution, my hon. Friend the Member for Peckham (Miatta Fahnbulleh), who is in her place. She announced significant investment for the places affected, and we all look forward to working with areas up and down the country to ensure that our country grows as we wish it to.
Madam Deputy Speaker (Judith Cummins)
I call the Chair of the Housing, Communities and Local Government Committee.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I thank the Minister for her statement. I know she has been working really hard on this issue since she took on the role a few months ago. She is aware of the many pressing issues facing councils up and down the country—from SEND to temporary accommodation, housing and adult social care—and 14 years of under-investment will not be reversed by one funding settlement. It is therefore important that we continue to work with councils.
This is the first multi-year settlement in a decade, which will help our local leaders in planning for the future and, most importantly, planning for their local residents. I welcome the inclusion of local housing costs in the new funding formula, but ultimately it does not take in local housing allowance, which the Minister knows has been frozen for many years and is still causing a lot of pressure for councils.
The Minister mentioned that the Government will be looking at the council tax freeze in some areas, and at lifting referendum principles. She knows there is growing consensus on wholescale council tax reform instead of us tweaking it. It is the most regressive form of taxation and there is inequality across the country. Will the Minister look at what the Committee’s report says about a wholescale review of council tax banding, so that local leaders can have funding to spend on their local areas, and make sure that other areas see that funding come through?
Alison McGovern
I thank the Chair of the Select Committee for that comprehensive run through all the issues. She is right that we need not just funding but policy change to get councils to financial sustainability. I look forward to discussing that with my hon. Friend and her Committee. She also asked about council tax reform, which was not the subject of my statement, but I have no doubt that she will be asking me about it again in the near future.
Madam Deputy Speaker (Judith Cummins)
I call the Liberal Democrat spokesperson.
Zöe Franklin (Guildford) (LD)
I thank the Minister for advance sight of her statement. The Liberal Democrats welcome the fact that this is a multi-year settlement, which gives councils a greater degree of certainty and the ability to plan ahead. We have long called for that. However, a longer settlement on its own does not resolve the deep financial instability facing local government. The Minister is right to say that social care, SEND and homelessness costs are destabilising council finances—a direct result of years of Conservative neglect—but recognising the problem is not the same as resolving it.
It will take us and council teams time to review the detail of the settlement and understand what it means in reality for local government. However, early conversations with local government colleagues have highlighted a concerning lack of clarity on the SEND debt. The settlement provides minimal information on how councils are to manage SEND costs until 2028, or how existing deficits will be resolved. Can the Minister provide a clear timeline for when councils will receive certainty on the SEND deficit? Without one, responsible financial planning is simply not possible.
I also seek clarity on the issue of social care. Although the statement includes various measures to try to address the social care crisis, the reality is that that will be swept away by the rising scale of need and the costs of social care. When will the Government finally bring forward a fully funded, long-term plan for adult social care reform that ensures that local authority funding settlements are not undermined by the escalating costs of a social care system that is bankrupting councils and placing unsustainable pressure on the NHS?
Alison McGovern
The hon. Lady mentions multi-year settlements alone not being the answer—no, but they do help. That relates to her two other points on SEND and social care, because multi-year settlements allow councils to plan properly and undertake commissioning activities over a longer period of time. That was our objective, which we have achieved with this. She asked for more details on SEND. I mentioned in my statement that local authorities will not be expected to fund costs from general funds once the statutory override ends in 2028. We will have more to say on that throughout this settlement process.
The hon. Lady asked about adult social care. Significant reform is needed there, but I do not think that anybody could say that we have not done anything. We are building a national care service, backed by about £4.5 billion of additional funding for adult social care in 2028-29, compared with 2025-26, including £500 million for the first ever fair pay agreement. I will never forget visiting care homes after they had got through the hell of covid. All that we do on social care has to back those people who did the most when our country needed them.
Madam Deputy Speaker
Members will have seen that many want to speak, so I make a plea to help one another out and keep questions and answers concise.
Helen Hayes (Dulwich and West Norwood) (Lab)
I thank the Minister for her statement. I particularly welcome the restoration of the link between funding for local government and deprivation, and the inclusion of housing costs within the measure of deprivation. It makes no sense to do anything other than that.
Even with the funding settlement, the financial situation will continue to be very challenging for my local authorities of Lambeth and Southwark without meaningful support from the Government with the costs of temporary accommodation. When does the Minister expect to be able to set out more detail on how councils will be supported to reduce the need for temporary accommodation and to bring the costs down?
National Plan to End Homelessness
Debate between Alison McGovern and Judith Cummins(1 week, 6 days ago)
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The Minister for Local Government and Homelessness (Alison McGovern)
I would like to make a statement to the House about the publication of our national plan to end homelessness.
The strategy we have published today, I want to say from the outset, builds on the work of my hon. Friend the Member for Bethnal Green and Stepney (Rushanara Ali) and my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner). I pay tribute to both of them for their considerable work.
This Labour Government inherited a homelessness crisis. Both rough sleeping and households in temporary accommodation increased radically from 2010. It is not just the people we can see sleeping in Westminster tube station as we leave this building, but the families and children we cannot see—those living in unsuitable temporary accommodation such as bed and breakfasts, without a kitchen and far away from family, friends and schools. For some, this has been a matter of life and death: 1,142 people died while homeless last year, and 74 children’s deaths were connected to temporary accommodation in the five years to 2024—58 of them were babies under one. Everyone deserves a roof over their head. Children in the worst housing our country can offer deserve the attention of this House. The strategy outlines the tangible actions and targets we have set ourselves for delivery this Parliament, which will act as milestones on the way to achieving the long-term vision.
We have looked at the issues carefully. As well as the interministerial group, the Ministry of Housing, Communities and Local Government convened a lived experience forum, so that the people who have experienced homelessness and rough sleeping could influence the strategy. We established an expert group to bring together representatives from organisations that support people, local government and experts to provide knowledge, analysis and challenge. I thank them all, on behalf of the House, for their contribution.
To tackle the root causes of homelessness and break the cycle of failure, we must build more homes. We want to build 1.5 million new homes, including more social and affordable housing—more than has been built for years. The new programme could deliver around 300,000 social and affordable homes over its lifetime, with about 180,000 for social rent.
Not having enough money is another cause of homelessness. The child poverty strategy, presented to the House last week, will lift 550,000 children out of poverty by 2030, including through the removal of the two-child limit. The implementation of the Renters’ Rights Act 2025 will give more protection to renters by abolishing section 21 no-fault evictions, closing a key route into homelessness.
Building more homes and preventing homelessness overall will take time, but families living in squalid, overcrowded conditions simply cannot wait. The Government will eliminate the use of B&Bs for families in this Parliament and make sure that, on the rare occasion that homelessness cannot be prevented, temporary accommodation is liveable. We have already proven that that is possible through innovation funded by our emergency accommodation reduction pilots programme. The programme funds new work to find more sustainable accommodation, the inspection of properties, the acquisition of long-term accommodation for families, and support to make that transition. That is why, in this strategy, we are increasing funding to £30 million to stop a wider range of poor practice, including the overuse of B&Bs and unsuitable out-of-area placements.
There is £950 million for the fourth round of the local authority housing fund. That means councils can invest in owning their accommodation, rather than paying through the nose to rent bad accommodation, and we will explore partnering with social impact and institutional investors to use private finance and support from the National Housing Bank to yet further increase the supply of good-quality temporary accommodation.
To make sure that children in temporary accommodation get the support they need, we will introduce a new duty on councils to notify schools, health visitors and GPs when a child is in temporary accommodation—something that Members have called for. That will improve health outcomes and school attendance, and reduce the risk of mortality for those children. Most crucially, we will work with the NHS to end the practice of discharging newborns with their mums into B&Bs.
There is no worse feeling for any of us as public servants than seeing a man or woman on the street in need of help that we failed to give them. Over a third of people who have been sleeping outside have been doing so for months, and some for years. They have complex underlying needs and have been failed by services again and again. This cannot continue, so today we are setting a target to halve the number of people sleeping rough long term by the end of this Parliament. We will help more vulnerable people off the streets and into stable housing by investing £124 million over the next three years in supported housing services. We will provide £37 million to our partners working in the voluntary, community and faith sector to support recovery from homelessness. We will target £15 million for councils to test innovative approaches to helping people experiencing long-term rough sleeping, which is often complicated.
In a country such as ours, we really should be able to prevent homelessness; instead, hard-working professionals are stuck responding to crisis after crisis. Many councils have simply become overwhelmed by the costs, and people are having to face a night on the street just to access support in the first place. I am proud that the strategy prioritises the targeted prevention of homelessness among vulnerable groups, like young people and survivors of domestic abuse. We are providing more support to young people in supported housing, helping them to develop the skills and independence they need. By making work pay—crucially, by removing the work disincentive for those in temporary accommodation and supported housing —we are ensuring that a job is a reasonable and achievable outcome.
Public institutions should lead the way in preventing homelessness, and this strategy sets out our long-term ambition that no one leaves a public institution into homelessness, with cross-Government targets to start the change to reduce homelessness from prisons, care and hospitals. To force lasting system change, we will introduce a duty to collaborate—to compel public services to work together to prevent homelessness.
We are backing up all these actions with record levels of funding. We have invested more than £1 billion in homelessness services this year, including the largest ever investment in prevention services. Today I can announce the allocation of an extra £50 million top-up to the homelessness prevention grant this year, which further boosts the support available to people at risk of homelessness right now. The strategy sets out how we will provide a further £3.5 billion for homelessness and rough sleeping services over the next three years, with much more freedom and flexibility for councils to get on and do.
We have made our ambition clear, and we will hold ourselves accountable for achieving the outcomes we seek. The strategy sets out three new national targets, alongside commitments from six of our most crucial partner Departments across Whitehall. The interministerial group on homelessness and rough sleeping will continue to meet to deliver the strategy, and will publish a report on progress at least every two years—although I have absolutely no doubt that hon. Members will hold us accountable for the targets week in, week out. We will monitor local progress with new outcomes metrics, with councils setting targets and publishing action plans.
On those goals—ending the use of B&Bs, halving long-term rough sleeping and increasing the rate at which homelessness is prevented—I know that everyone in this House wants all our places, up and down the country, to succeed. Now more than ever, we need our partners to join us in this mission: councils, frontline public services, homelessness organisations, and voluntary, community and faith groups. If we join forces, the strategy will set us on the path to ending homelessness and will deliver immediate action to improve the lives of people experiencing homelessness and rough sleeping.
For every child without a bedroom to do their homework in, for every adult whose life could be turned around by an arm around their shoulder, and for every person who needs a home for Christmas and beyond: this plan is for you, and this Government are for you too. I commend this statement and our strategy to the House.
Alison McGovern
I thank the hon. Gentleman for his comments, and I thank hon. Members across the House for the cross-party way in which they have engaged on the strategy. We will disagree—I am sure we will disagree about the manner in which Opposition Members sometimes discuss social security—but where we agree, let us make every effort to put the people who need this strategy first. Those are people who have been on the streets for too long and children who deserve a proper childhood. I hope that we can share that ambition.
The hon. Gentleman asked about metrics. The Department publishes a number of datasets that we are using to analyse the metrics. He mentioned a couple of them—children in temporary accommodation and long-term rough sleeping—but we also know how many people present themselves to councils at risk of homelessness, and we want to increase the rate at which that is prevented. I will ensure that we report regularly to Parliament on that.
The hon. Gentleman mentioned repealing the Vagrancy Act. Some other bits of legislation need to come into force so that we can do that. I will write to him with the exact timings, because they relate to the business of another Department.
On the matter of councils’ strategies and whether it is just paperwork, I can tell the hon. Gentleman that it very much is not. The statistics show that in some areas, we have been able to get on top of B&B use—there are more details in the strategy—while in some areas, we have not. It is less about paperwork and more about transparency over outcomes and then taking action to ensure that best practice informs what is going on everywhere.
The hon. Gentleman asks about targets and how cast-iron they will be. Thinking about the state of house building, we were always going to have to ramp up over time. I am clear that the goals in the strategy are achievable, and I would welcome the support of the hon. Gentleman and the rest of the House in ensuring that we see them done.
Madam Deputy Speaker (Judith Cummins)
I call the Chair of the Housing, Communities and Local Government Committee.
Florence Eshalomi (Vauxhall and Camberwell Green) (Lab/Co-op)
I thank the Minister for her statement this afternoon. I pay tribute to my hon. Friend the Member for Bethnal Green and Stepney (Rushanara Ali) and my right hon. Friend the Member for Ashton-under-Lyne (Angela Rayner) for their work; this is an area they were both committed to when they were in their previous ministerial roles. The Minister is correct that reversing the tide of homelessness should certainly be a national priority. It is not something that will happen overnight, and we know that further action will be needed to ensure that councils have the support they need for the pressures they are facing—particularly London councils, as the Minister will know, which are collectively facing costs of £5 million a day just on TA.
One of the ways the Government can help to alleviate those pressures and stop people becoming homeless in the first instance is with their rents. There have been asks of Government with cross-party support and from a number of organisations, including the Local Government Association, to look at local housing allowance rates to ensure that people can afford to rent locally so that they do not find themselves facing the threat of eviction and homelessness. Has the Minister discussed this matter with colleagues in the Department for Work and Pensions and the Treasury to ensure that our residents and tenants do not find themselves evicted? I think of the many children who, two weeks from today, will be opening their presents in another B&B or in more unsuitable temporary accommodation. For them and for many others, we have to make sure we get this right.
Alison McGovern
I thank the Chair of the Select Committee for her words and for her long-standing commitment to tackling homelessness in the capital and right across the country. She is right to ask about council pressures, and we are trying to address the inadequacies of council funding across the country. At the moment, the costs of TA and the spikes in demand are putting pressure on councils that will make it even harder for them to balance their budgets, and that serves nobody. We have to get this under control, because it is a waste of taxpayers’ money, no less than it is a waste of childhoods. We have got to get on top of it.
My hon. Friend asks about incomes and whether I have discussed that with other Departments. This is a cross-departmental strategy, and Ministers from DWP and other Departments have been very involved in it. At the heart of the problem is the lack of social housing, particularly in London, which is why we need to build more. I am glad that this strategy comes closely after the child poverty strategy last week, which saw action to improve family incomes, not least the removal of the two-child limit.
Gideon Amos (Taunton and Wellington) (LD)
We Liberal Democrats also welcome this statement and the additional funding, although I still have some questions. For Liberals from Beveridge to Stephen Ross, who introduced the first homelessness legislation into this Chamber, tackling homelessness and poor housing has been central to allowing people to lead the fulfilled and free lives that we want to see them lead. I pay tribute to the Shared Health Foundation for highlighting the tragic numbers, as the Minister mentioned, of children and babies who have died with temporary accommodation mentioned on their death certificate as a contributory factor. It is a truly tragic situation.
The 132,000 households in temporary accommodation, with 12,000 households on the waiting list in my Somerset council area, are far too many. Even one homeless house- hold is, of course, far too many. As the hon. Member for Harrow East (Bob Blackman) raised last week, there has been a 22% increase in the number of people homeless after being discharged from public institutions, which, as the Minister said, is a massively important aspect of this.
Our Liberal Democrat manifesto called for an end to section 21 evictions and for a cross-Whitehall strategy on homelessness, and we welcome both of those things—it is excellent that they have happened. However, we urge the Government to go further, in particular by increasing the social housing target from 18,000 to 150,000 social homes per year, or at least to the 90,000 social homes per year that are required according to Shelter and the National Housing Federation.
In welcoming the statement, I have a few questions for the Minister. What is the timeline is for completing the repeal of the Vagrancy Act provisions? Will the Government uprate the local housing allowance to represent the bottom third of rents and index-link that allowance to those rents, and when will housing benefit be effectively unfrozen by reviewing that local housing allowance? Finally, will the Government consider exempting homeless people from the shared accommodation rate, which both reduces the quantity and diminishes the quality of housing available to homeless people?
Welfare Cap
Debate between Alison McGovern and Judith Cummins(10 months, 3 weeks ago)
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The Minister for Employment (Alison McGovern)
I beg to move,
That, pursuant to the Charter for Budget Responsibility: Autumn 2022 update, which was approved by this House on 6 February 2023 under section 1 of the Budget Responsibility and National Audit Act 2011, this House agrees that the forecast breach of the welfare cap in 2024–25 due to higher forecast expenditure on Universal Credit and disability benefits is justified and that no further debate will be required in relation to this specific breach.
Madam Deputy Speaker
With this it will be convenient to discuss the following motion:
That the level of the welfare cap, as specified in the Autumn Budget 2024, which was laid before this House on 30 October 2024, be approved.
Alison McGovern
Before this Government were elected, we said that we would change this country, and we will. To get change done, any Government have to stand on firm foundations, which is why, as we have just heard from the Chief Secretary to the Treasury, we promised to be responsible with the public’s money. We know that every penny counts in this mission, because if we fail to protect the public purse, we fail to protect the purses of the public. Family finances can never withstand fantasy economics.
That was supposed to be the whole point of the welfare cap. It was designed to help better control public spending, counting the cost of the rising price of failure. I will come to some of the failures we are now seeing and the people thrown on the scrapheap as a result of the failure of 14 years of economic policy, particularly on the labour market.
The welfare cap was intended to ensure that the cost of important parts of the social security system, such as universal credit—though not counting those actively looking for work—the personal independence payment and pension credit, remains predictable and affordable. Only the state pension and benefits for unemployed households were excluded.
What was the result of a decade of Conservative welfare caps? Repeated breaches of the cap, with ever higher limits. The latest cap is now on course to be breached by an £8.6 billion overspend. This is not tolerable, given the state of our economy and the public finances.
Worse still, there is the human cost for every single person who could be enjoying the benefits of work but has been denied the choices and chances they deserve. I regularly meet people in that position. There is the young person who has not recovered from the dreadful legacy of the pandemic—not in college, not starting their first job, barely even able to go out with friends, and bearing the burden of the mental health crisis that our young people face. I believe the pandemic generation was completely let down.
There are our older relatives who have been pushed out of work before their time with hip or knee pain. The NHS is just not able to help them at the moment, and they are not even getting advice about how to make ends meet. That is the legacy we inherited, and it is not good enough for anybody. It is also the legacy of low growth, the higher cost of living and high inactivity, with employment and social security systems ill equipped to meet the requirements of an older, sicker nation. That is the Conservative party’s record.
Unfortunately, this breach—forecast as far back as March 2023 but ignored—is now wholly unavoidable in this fiscal year, given the scale of failure we have inherited. We will not duck the difficult decisions needed to restore economic stability, and we will deal with the failure we see before us.
Before I say how we will do that, I want to reflect on exactly how we ended up in this situation. The sad truth is that, in way too many parts of the country, too many people are denied the opportunity to have a good job so that they can support themselves and put a roof over their family’s heads.
The benefits bill only reflects that failure, with 2.8 million people locked out of the workforce due to poor health, and 3.4 million more working-age people reporting a long-term health condition than 10 years ago. We have large numbers of people turning up to a social security system that is not geared up to meet what has become the greatest unemployment challenge of a generation.