Chancellor Rachel Reeves has taken a firm stance against Labour rebels, insisting that the escalating benefits bill will not go “untouched” in a renewed effort to address the issue, reports BritPanorama.
Her remarks follow a significant U-turn this past July, which added £5 billion to government spending and left the Treasury scrambling to find alternatives through tax increases or budgetary cuts.
Speaking in Washington D.C., Reeves stated, “We can’t leave welfare untouched. We can’t get to the end of this Parliamentary session and I’ve basically done nothing.” She emphasized the necessity for reform to be implemented thoughtfully to garner public support.
The proposed reforms faced backlash over the summer when 120 Labour MPs pledged to oppose plans, highlighting concerns that many would be pushed into poverty as a result. However, Reeves now confronts an impending financial shortfall projected to reach £30 billion ahead of next month’s Budget.
In an interview with Channel 4 News, she noted that even those opposed to changes acknowledge that “the welfare system is not working.”
Currently, the government has considered tightening eligibility for Personal Independence Payments for disabled individuals with less severe conditions and aimed to limit the sickness-related component of Universal Credit. These efforts were abandoned following the backlash from MPs.
Leading economists at the Institute for Fiscal Studies recently indicated that reducing benefits could signal a strong financial commitment to the markets, suggesting it would be seen positively as a sign of intent to mend public finances.
Reeves has affirmed her readiness to counter any dissent concerning her upcoming Budget proposals, asserting that leadership requires making tough decisions and exhibiting resilience. She remarked, “You have to be able to say no and you have to have that sort of toughness, discipline and that resilience.”
Looking towards fiscal compliance, Reeves stated that maintaining current fiscal rules will help decrease the deficit and diminish debt over the next three years—an approach she plans to uphold in the forthcoming Budget.
This week, in Washington, forecasts from the International Monetary Fund (IMF) suggested a downward adjustment of UK growth estimates for the upcoming year and predicted the highest inflation rates in 2025 among G7 nations.
Reflecting on the challenges of her role, Reeves recounted a moment of vulnerability in the House of Commons, expressing that despite the difficulties faced, she will “keep going and keep fighting” to prove her effectiveness as Chancellor. She acknowledged increasing recognition of her challenging position in the government.
