UK welfare spending is projected to be £5 billion a year higher than previously forecast, reaching an estimated £431.1 billion annually by 2030-31, according to the Office for Budget Responsibility (OBR). This increase, up from the March forecast of £406.9 billion, has drawn criticism from opposition parties who accuse the government of an "addiction to welfare spending."
The OBR report indicates that health and disability benefits alone are expected to surpass £100 billion per year by the 2028-29 financial year, an earlier projection than the previous forecast of £100 billion by 2029-30. The OBR attributed the overall spending increase to higher benefit uprating adjustments and an increased caseload for health-related universal credit claims.
Chancellor John Healey stated that two key reviews, one on youth unemployment led by Alan Milburn and another on personal independence payments by disability minister Sir Stephen Timms, are scheduled for publication in November. However, he did not outline specific measures to reduce the overall welfare bill during his budget address, prompting accusations of delaying difficult decisions.
Tory leader Kemi Badenoch criticized the government, stating that Britain is "about to collapse under the weight of welfare" and that tough love is necessary. Andrew Griffith, the Shadow Chancellor, echoed these sentiments, calling it "Labour's addiction to welfare spending" that comes at the cost of increased debt.
The Centre for Social Justice think-tank described the budget as a "fudge-it Budget," arguing that the government avoided necessary reforms. Policy director Joe Shalam noted that sickness benefit spending is expected to exceed £100 billion by the end of the decade, with 6.7 million people on out-of-work benefits, while the general taxpayer faces higher taxes due to inaction.
Sources within Whitehall suggested that the timing of the review publications, deliberately scheduled after the budget, was intended to avoid immediate action on welfare spending. Former Bank of England chief economist Andy Haldane had previously advised that cutting welfare could lower borrowing costs by demonstrating a commitment to reform.
Conservative shadow minister Neil O'Brien highlighted a discrepancy between Healey's rhetoric and the OBR's forecasts, tweeting that working-age welfare spending is projected to increase by over £50 billion annually between 2024 and 2030.
The Treasury has stated that its efforts to reduce the welfare bill include increasing face-to-face assessments, combating fraud and error, and revoking benefit entitlements for some prisoners.