John Healey says no timetable for welfare savings as Budget criticism grows

John Healey has defended his first Budget after a day of criticism, but the government has moved to clarify its position on welfare. In an interview with Channel 4 at a Rolls-Royce factory in Derby, the Chancellor said it was not correct to say he had set a schedule or time limit for bringing the welfare bill down. He said a white paper would come in the new year and legislation next year, and that the changes would help before the next Parliament.

The centrepiece of the Budget was a one-off £100 payment in January to households in council tax bands A to D in England, with equivalent money for the devolved administrations. The VAT cut on electricity bills is extended to July. Sky News reported that the Budget also abolishes standing charges on household gas bills and extends the 5p fuel duty cut to July, while the national living wage rises by 3.9% for 2.3 million workers. Forecasts put the typical annual energy bill increase at more than £460 in January, with the BBC putting it as high as £469, so the payment covers only a fraction of the rise.

ITV and Channel 4 reported that the package contained 98 measures. ITV reported that the £100 payment would reach four out of five homes, but critics said it was poorly targeted because it used council tax bands and would not touch the sides for many people. The Chancellor said no government could completely offset the pressures households face. The BBC reported that living standards are expected to fall this year, with the decade on course to be the worst for income growth on record.

Defence was another point of dispute. Healey told Sky News that the target of spending 3% of GDP on defence by 2030 would be fully funded, and he promised an extra £10 billion for Ukraine. Channel 4 reported that the Conservatives said defence had not been properly funded. The Chancellor also faced criticism over the scale of the Budget. Channel 4 reported that the Institute for Fiscal Studies accused the government of tinkering with the economy and kicking key decisions down the road, while the Resolution Foundation called it a scattergun budget.

Welfare was the sharpest source of confusion. The BBC reported that Healey told Radio 4's Today programme there would be cuts in welfare before the election and a reduction in the benefits bill. Treasury sources then disputed that interpretation, and Number 10 said the welfare bill needed to come down but no arbitrary target or timetable had been set. Channel 4 reported that the welfare bill is set to reach £400 billion by the end of Parliament, with health-related benefits alone rising to £110 billion. It also reported that the OBR said the bill could be £13 billion lower if new health claims returned to pre-pandemic levels, enough to cover the cost of defence reaching 3% of GDP.

Channel 4 reported that Kemi Badenoch, the Tory leader, said the country was drowning in an out-of-control welfare system and that nothing seen so far suggested the government was serious about reforming welfare. The Chancellor insisted the Budget offered breathing space now and changes to energy markets for the long term. The criticism from economists and opposition parties left the government defending a Budget that it says helps where it can while acknowledging that global shocks and higher bills limit what it can do.