Britain is in the midst of a welfare crisis. In the financial year 2025/26, we spent £329.1 billion on benefits – almost £5,000 per person. That makes it the single biggest slice of state spending, larger than what we spend on the NHS, defence or education.
You’d have thought that with all this money being spent on welfare, more people would be able to use this level of financial security to find work. You’d be wrong. Worklessness is rife, particularly among the young, with nearly 1 million young people aged 16-24 not in education, employment or training (NEET).
If Andy Burnham fails to implement the reasonable recommendations of the Milburn Review, he will have ceded control of the welfare debate to the Right
Alan Milburn’s long-awaited report on youth unemployment will be published on Tuesday, and is expected to recommend that under-25s should no longer be eligible to claim the health element of Universal Credit or Personal Independence Payment (PIP) – the main disability benefit available in England and Wales.
The scale of PIP dependency is staggering. As of 2026, over 4 million adults in England and Wales were claiming the benefit. A great number of these – about half a million – are doing so for conditions which, frankly, ought not to render you dependent on the state. There is no tonic for anxiety or depression like meaningful work, and those suffering should be incentivised – alongside receiving appropriate therapy – to find it. I’m no expert, but I doubt any decent psychologist would prescribe a life of welfare dependency for low mood.
Milburn has said that his proposals will not be ‘pain-free’ and will impact both new and existing claimants. If only the rest of his party would approach this issue with the same candour.
As we saw with the erosion of Keir Starmer’s flagship welfare bill, the Labour Party is institutionally unable to think realistically about the benefits system. In September, Andy Burnham chose welfare over preparedness for warfare when he said in the Commons that defence funding ‘cannot come at the expense of social security’. It has not even been published, and the Milburn Review has already acted like a political hand grenade for Labour. Neil Duncan-Jordan, MP for Poole, has written to the Government demanding that Burnham disregard the findings of the Review, declaring ‘cuts don’t create jobs. They create poverty.’ On a completely unrelated note, there are 5,746 PIP claimants in Poole, and Duncan-Jordan only has a majority of 18.
Not all of the anticipated proposals in the Milburn Review are sensible. For example, his plan to decant legions of young NEETs into the public sector is absurd. The public sector is bloated, unproductive and expensive as it is, and the last thing Britain needs is hundreds of thousands of young people being taught how to go on strike. It would be better for them and the economy if they learned how to pour pints and flat whites instead.
However, if Burnham fails to implement the reasonable recommendations of the Milburn Review, he will have ceded control of the welfare debate to the Right. Reform UK published their proposal for shrinking the welfare state a couple of months ago, which I covered for CapX at the time. This week, the Conservatives published theirs. How does it stack up?
Kemi Badenoch’s plans will apparently cut £36bn a year from the benefits bill. Measures include saving £2.8bn by refusing 70% of child benefits claims for behavioural disorders, learning disabilities and ADHD. The Tories will also save £13.7bn by making less serious conditions ineligible for PIP, reassessing existing claimants under stricter rules and lowering the number of people claiming benefits for back and joint pain to 2021 levels.
Like Reform, the Conservatives will also target foreign nationals claiming welfare. A further £9.5bn will be saved annually by preventing foreign nationals from accessing the benefits system, though those with EU settled status will be exempt. This is disappointing. There are 745,000 individuals claiming Universal Credit in Britain who are covered by the EU settlement scheme, whereas there are 537,000 from outside the EU. The number of Britons claiming local welfare in countries across the EU pales in comparison, amounting to around 30,000 at the last count. This is an expensive double standard that must be corrected.
That being said, the vast majority of the measures detailed in the Conservatives’ plan are welcome and would go a long way in cutting the benefits bill. Though both they and Reform should go further. There is a case to be made for scrapping PIP entirely and we at the Prosperity Institute have calculated that freezing the National Living Wage for five years would create up to 600,000 jobs for young people, which alongside welfare reform would significantly reduce the working-age benefits bill.
Burnham now has a golden opportunity to prove that he can change his party in a way that his predecessor could not. Though I am sceptical that his backbenchers will ultimately allow him to. If Labour give up on welfare reform altogether, it will be up to the Conservatives and Reform to battle it out. While both have made welcome starts, neither prospectus is yet complete.
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