Burnham has chosen to feed the welfare monster

Share this article

There is a standard response from any Chancellor or Prime Minister asked questions about government finances: ‘I am not going to write the Budget in front of you’. And neither should they. The Budget is a potentially market-moving financial event. The figures it contains have to add up, make sense. The measures have to be presented as a package; if bits of it leak out they may tell a very different story to the one which the Chancellor is trying to narrate. We saw the damage last year when the classic ‘sources close to Rachel Reeves’ started to leak her intentions, destroying economic confidence as markets were forced to contemplate what seemed like every conceivable tax rise under the sun.

Why, then, did Andy Burnham tell the Commons this week ‘national security can’t come at the expense of social security’? He later tried to backtrack, claiming that he is, after all, committed to reducing the welfare bill – one day. But he has undermined his own Chancellor by laying down the rules six weeks before the Budget is due to be presented.

It now seems inevitable that Burnham is not going to allow a single penny to be trimmed from welfare in this Budget. This perhaps should not be surprising, given that Keir Starmer and Reeves seemed to find it politically unacceptable to cut anything from welfare. I never did have a great deal of confidence that Reeves would bring control to the public finances: her ‘securonomics’ came across as pure blather. Yet the moment of realisation for me came the day in July 2025 when Starmer backtracked on his government’s very modest proposal to trim £5 billion from Personal Independence Payments (PIP); the day when Reeves was seen sobbing on the green benches. If Labour backbenchers would not allow the government to see through even those modest cuts, Starmer saw there was no way that they were going to allow any meaningful reforms.

Burnham seems to have come to the same conclusion: it is not politically possible for him to cut the welfare bill, or even to contain it. This voracious monster will be allowed to grow uncontrollably so long as Labour remain in office. Self-diagnosed ADHD sufferers will continue to drive their Motability cars, the mildly anxious and depressed will continue to be able to sign themselves off as unfit for work for the foreseeable future. And all because Labour MPs see it as their saintly duty to resist any welfare cuts. 

John Healey is now in an impossible position. He cannot fail to come up with a plan to increase defence spending. He resigned as defence secretary in June precisely because Starmer had not satisfied his demands for more money. Healey is now in charge of the money himself; he will look utterly ridiculous if he does not deliver a much beefed-up defence budget. But how can he do that if his boss will not allow him to shave a penny off welfare? Here is a very stark figure. Between 2025/26 and 2029/30, without a change in benefits policy, the OBR has forecast that on current policy the welfare budget will increase from £334bn to near £400bn a year. That £66bn a year increase is £6bn a year more than the Government spent on defence in 2024/25. The tragedy is that it wouldn’t take much in terms of welfare cuts to provide a very meaningful increase in defence spending. But if you are not prepared to shave a penny off benefits, not only are you going to fail to fund defence properly, you have little hope ever of balancing the public books.

Some more basic figures: welfare accounts for around a third of all public spending. If you want to close the deficit – £133bn last year – it is going to be extremely difficult, nigh impossible, to do it without touching the welfare budget. You could cut out transport or defence altogether and still not come close to eliminating the deficit.

But then opposition parties, too, are tying one arm behind their backs in promising to retain the triple lock on pensions. The state pension consumes just under half of the welfare budget. The triple lock, which guarantees to increase pensions every year in line with the Consumer Prices Index, average earnings or 2.5%, whichever is greatest, has already added an extra £15bn a year to public spending relative to if pensions had simply increased in line with average earnings.

If public finances are to be brought back under control there are going to have to be no sacred cows. There are going to have to be cuts in every quarter, pensions, PIPs and all. ‘The price of liberty is eternal vigilance,’ goes a saying often, but mistakenly, attributed to Thomas Jefferson. To adapt it, the price of having a welfare state is eternal vigilance of the cost. No political party at present seems willing fully to acknowledge that.

‘Britain is Bust: the coming sovereign debt crisis and what it will mean for you’ by Ross Clark is published this week by Forum Press.

Share this article