Welfare Cap

Helen Whately Excerpts

Wednesday 29th January 2025 Commons Chamber

[Helen Whately (Faversham and Mid Kent) (Con)]

The welfare cap we are debating today was introduced back in 2014 by the Conservative Chancellor at the time, George Osborne, to hold the Government to account on the cost of our welfare system. Through the 2010s, in government, we broadly kept to that cap; it was part of the discipline we applied to the welfare system to make it fair for the taxpayer and to put into practice the strongly held Conservative principle that if you can work, you should work. We introduced universal credit to ensure that work always pays and supported businesses to create millions of jobs, and we helped thousands of people into work and drove down economic inactivity—and were opposed at every step of the way by the Labour party.

But in the years during and since the pandemic—I will not shy away from telling the truth—things changed. While the number of jobs kept going up, the number of people economically inactive also started to go up, and with that, the welfare bill, and that is a big problem. It is a financial problem that means we are today debating a welfare cap which has been breached. It is an economic problem because our economy needs the talents and energies of everyone. And it is a social problem: of the 9 million people of working age defined as economically inactive, 2.8 million are not working because of ill health. That includes growing numbers of young people. Young people are starting out on a life on benefits instead of starting out on a career, missing out on the opportunities that work brings—the sense of purpose, the connections with other people, the chance to learn and develop skills—missing out on the experience of being paid for their efforts, and missing out on the chance to build financial independence and security. We as a country have a moral and financial imperative to turn this around and in government we were working flat out to tackle it.

[David Pinto-Duschinsky (Hendon) (Lab)]

Will the hon. Lady acknowledge that under the last Conservative Government inactivity rates among the young were the highest in the OECD, and that they were working on it, but it was not working?

[Helen Whately]

As I am sure the hon. Gentleman heard, I was just acknowledging the fact that the economic inactivity rate started going up in the run-up to and particularly following the pandemic. We have a particular concern, which I am sure the Government share, around growing inactivity among young people. It is a challenge that we are experiencing more than other countries, and there is a lot of work to do to get to the bottom of it. I was involved in that work in government as a Health Minister, and it is imperative that the new Government get a grip on that issue.

[Peter Swallow]

Will the right hon. Member give way?

[Helen Whately]

I will make some progress.

In government, we were working flat out to tackle that problem. We were changing how we assess people’s capability for work, recognising that the world of work has changed. We developed WorkWell to help people with health conditions or disabilities find and stay in work, and we were reforming the fit notes that GPs give people. Once again, we were opposed by Labour every step of the way.

We also had plans to go further. In our manifesto, we committed to £12 billion-worth of savings by reforming sickness benefits. Labour responded at the time by saying that the money is simply not there, and the present Chancellor said that not a single penny could be saved from welfare. It turns out that, on this one occasion, Labour has stuck to its word: it has no plans to control welfare spending. Today, the Government are setting a welfare cap that does not include a penny’s worth of savings at a staggering £195 billion by 2029-30—a 44% increase on this year’s cap. In cash terms, that is more than our entire defence budget. Not content with not saving a single penny, they have given themselves a £10 billion buffer on top of that. That lack of ambition is terrifying.

We believe that money can and should be saved from the welfare bill. The Chancellor finally seems to agree with us, because she has been busy briefing the papers in a panic about cutting spending. But where are those plans? Unfortunately, she has not got any because, as I said, until now she did not believe any savings could be made. Perhaps the Employment Minister can give us some clues. I believe she has canned my fit note reforms, so what will she do to get the welfare bill down and by when? How on earth does she expect to get people into work when 50,000 people were added to the unemployment figures in December alone?

[Alison McGovern]

I think I am being asked whether we stopped the extensive work that the previous Government were doing on rising inactivity. I have to say that when I got into the Department for Work and Pensions, there was not an extensive plan available. That is why we have had to embark on fundamental reform, which we set out in a White Paper in November, and that is why we will shortly be bringing forward a Green Paper on health and disability reform. The idea that somehow there was an instruction list left in the Department that we could just crack on with is a fantasy.

[Helen Whately]

The hon. Lady will know—at least I think she will know—that the vast majority of what she set out in the White Paper was the continuation of things we were doing in government. In fact, if she has read it she will see that it even says that the youth guarantee is essentially a new name for a repackaged set of measures that are already in place. That is literally in the White Paper. I am happy to follow up with her afterwards on the page that she will find that phrase on.

I have yet to see a single sign to suggest that this Government can tackle the welfare bill, and the cap they are setting today tells us that they agree. The Opposition will support efforts to bring down welfare costs sensibly. We need a compassionate safety net, but that net should never become a trap. If the Government do not get a grip of the problem, it will put our entire social contract at risk. Ministers have finally twigged that action is required—a Green Paper is, they say, on its way. I urge the hon. Lady to get on with it, because each month that passes see thousands more drift out of work and into a life of inactivity.