Welfare Expenditure

Baroness Sherlock Excerpts

Thursday 15th October 2026 Lords Chamber

[Lord Balfe]

To ask His Majesty’s Government what assessment they have made of the Office for Budget Responsibility’s forecast that welfare expenditure will reach £407 billion by 2030–31.

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, the Budget on 28 October will set out the latest forecast on government spending, including social security. This Government are prioritising welfare reform, putting work and opportunity at the centre. Our system should support people to get into work and get on in work, while ensuring that those who cannot work get the support they need. We have already introduced significant reforms through the Universal Credit Act 2025 and invested in employment support, while the Timms review and the Milburn review are considering further changes to ensure that the system is sustainable and focused on helping people who can work get into employment.

[Lord Balfe (Con)]

I thank the Minister for her reply. This is not a problem of one party, but the fact of the matter is that over the last 15 years, welfare expenditure seems to have run completely out of control. It is now increasing at a rate that, frankly, is not affordable in the long run. Will the Government try to cut back on expenditure and find ways of getting people off benefits rather than piling more and more people on to benefits?

[Baroness Sherlock (Lab)]

My Lords, the noble Lord and I agree on one thing, which is that we have a shared objective—that all those who can work, should work. The job of the state is to make that possible, to give them the support they need and to help them get into jobs, and that is exactly what we are doing. We are investing £2.5 billion in the youth guarantee and expanding the growth and skills levy. We have already rebalanced universal credit to make sure that the incentives are in the right place, so that people are moving into work and are better off in work. We are overhauling jobcentres so that they are places where you go to sign up for work. We are investing in personalised work programmes for those who have health and skills challenges. I absolutely agree with the noble Lord, and that is exactly what this Government are doing.

[Lord Bird (CB)]

It is wonderful to hear all the things the Government are doing once people have fallen into poverty, but what are they doing, and what is their thinking, about the prevention of poverty—turning the tap off? I do not see much indication of thinking in this Government or the last Government about turning the tap off and stopping people slipping into the need for social security.

[Baroness Sherlock (Lab)]

My Lords, I know that this is something the noble Lord is passionate about. We have had many exchanges on this and I agree with him. I point him towards two examples of how this Government are taking that seriously. The first is our child poverty strategy, which is looking precisely at the full range of things that help stop people falling into poverty as well as lifting them out of it. Secondly, one of the reasons we prioritise young people in our welfare reform is precisely to get people right at the start of their adult life. We should not have 1 million young people who are not in employment, education or training. If they start their adult life like that, what hope is there to be able to keep them out of poverty throughout their life? That is why we have prioritised that and are investing so much money in making sure that they get the help they need. It is why we are making sure that the review coming forward from Alan Milburn will give us clear evidence for reform and clear recommendations. We can all get behind that, I hope.

[Baroness Lister of Burtersett (Lab)]

My Lords, given the threadbare nature of our social security system after years of Tory cuts and restrictions, it nevertheless has a crucial role in tackling child poverty and providing security for a wider population, thereby reducing pressure on services such as the NHS. Does my noble friend agree that we should now be looking at how to strengthen social security further, in addition to the improvements she has mentioned, rather than denigrating it as an easy target for more cuts in the false belief that current spending is, as the noble Lord said, out of control? It is not out of control.

[Baroness Sherlock (Lab)]

My Lords, my noble friend makes an excellent point, which is that the welfare state has always been a safety net. To function as a safety net, it needs to do its job properly. There are always going to be people in our society who cannot work and need help, and the state should support them properly. That is why sometimes in the past, when Governments have simply tried to slash all benefits and hope that that would make a difference, it has not only left lots of people in poverty but ended up with much bigger costs to the state down the line. It also has not worked. If we look at what happened to the number of people who were out of work because of sickness and health issues under the last Government, it was rising at much higher rates than it is now. It does not do the job. Simply cutting just moves costs around. Our job is to get people into work and get them on in work, so that they can have a sustainable life which they can build on and look after their families.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for her detailed reply and the information that she regularly sends us. But can she explain why it was reported today that a person on sickness benefits who has recovered from an operation and sought to come off sickness benefits is still waiting for a reassessment four years later? Despite being called for a telephone meeting, he was told that there was no set date for him to be reassessed. Despite what the Minister has said to the House, it is no surprise that welfare expenditure is at such a high level when someone cannot get reassessed. How common is that?

[Baroness Sherlock (Lab)]

My Lords, obviously the noble Lord will understand that I cannot comment on an individual case. But I can assure him that the department is aware of cases and looks into them. There is no question that there had been backlogs on assessments building up for years. One of the problems we have is that the number of people applying for sickness and disability benefits has been going up steadily—at a very significant rate, as I said, under the last Government. We have begun to bend it under this one. The way we have to make a difference is by doing two things. One is to address the incentives at source. That is why we have rebalanced the universal credit rates to reduce the amount going to those on sickness and disability benefits compared with those who are not, to try to redirect people to make sure that they go into work. The second is to make sure that the system is fit for purpose. We know that PIP is not fit for purpose, the Timms review made that very clear, so when we get that report out, we will look at how the system is working and how we can put it right.

[Baroness Stedman-Scott (Con)]

My Lords, there is agreement among many in the House, but not all, that the welfare bill must be brought down. But when people who want to come off benefits are told, “No” or “Not yet”, how confident is the Minister that the Government will achieve this?

[Baroness Sherlock (Lab)]

One thing I would point out is that although overall spending on social security in this Parliament is still going up—the noble Baroness is right—it is rising at half the rate that it was in the last Parliament. The previous Government tried all kinds of things. They created PIP in the first place, to replace the previous system. What happened? The numbers and the spend simply kept going up. We have to get the system doing the right thing in the first place. We have to get people working, work out what is getting in the way and address that at root cause. We are doing lots of things in the short term, which I have already described at great length, and I have written to the noble Lord, Lord Palmer, many times, I accept that, but the reason we asked Alan Milburn and Stephen Timms to do reports is because we have to review things at source. We are going to be doing that, and we will respond in the near future.

[Baroness Watkins of Tavistock (CB)]

There is a great emphasis at the moment on the fact that people who can work, should work. I want to remove “should”. The vast majority of people who are unemployed want to work. A survey reported in the Times today shows that young people would value the opportunity to have a paid year of public service voluntary work. Will the Government seriously think about that, across a range of public services, so that people can get into the system of work rather than have two or three years of unemployment?

[Baroness Sherlock (Lab)]

The noble Baroness is absolutely right. We know that most young people want to work because our colleagues talk to them all the time. I am grateful to her for saying that. This is not a snowflake generation that does not want to work; of course they want to work. But they need a chance to get a start. We have already begun to do that through supported jobs and employer incentives. We have young people, often for the first time in their life, working for employers such as Boots and others—doing real jobs. Only this morning it was announced that there is a partnership between major hospitality employers, including Whitbread, McDonald’s and Nando’s, and UKHospitality. They ae going to create jobs and are committed to hiring 100,000 young people who are not in employment, education or training. Hospitality is a big employer of young people. Having these real jobs, whether work experience or actual jobs, is the way that we get young people into work, giving them the experience and the chance to get in there. Once they have done that, they can move onwards and upwards.

[Lord Hintze (Con)]

My Lords, we need to look after the vulnerable—

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[Baroness Altmann (Non-Afl)]

My Lords, we have heard a lot today—and it is important—about youth unemployment and getting the youth back into the workforce, but there is a serious problem at the other end of the scale with people in their 50s and into their 60s who face age discrimination, cannot get into work or are overlooked for training and are certainly not taken on in the recruitment process. Can the Government reassure the House about what they are doing to address the real problem for those people who do not have work and have to wait longer for their state pension?

[Baroness Sherlock (Lab)]

I am grateful to the noble Baroness for raising the important point about people who want to work but who may have lost a job towards the middle of their career, or later on, and are struggling to get back into it. We have a fantastic programme called Connect to Work, working with people who have faced barriers to getting back into work. Sometimes that help has to be about helping them to rethink what the next stage of life may look like, it may be about helping them to have the right skills to navigate changing recruitment processes—as we all know, it is not the way it was when we were setting out in life—or it may be about giving them additional skills or retraining to do something totally different. The key is a personalised conversation to understand their barriers and help them to get back into work. We cannot afford to write off young people, but we also certainly cannot afford to write off those who have years or decades of experience. The country cannot afford that.