You can already sense Rachel Reeves’s spin machine whirring into action. It was Donald Trump wot ruined my careful book-keeping, the Chancellor will tell us as once again her fiscal headroom disappears and she ends up banging her scalp painfully on the ceiling. But could it be unrealistic expectations for her welfare reforms which prove her undoing? Tucked away in the government’s own figures is the revelation that Labour’s welfare shake-up could result in 400,000 more people signed off unfit for any work.
Britain’s workshy culture has received another boost
The contents of the impact assessment on her Spring Statement, published by the Office for Budget Responsibility (OBR) last week, are still being digested. But what it clear is that the OBR is not as confident as Reeves that it will result in people flocking back to the workplace.
The sting in the tail of the Chancellor’s plans is her abandonment of proposed changes to the Work Capability Assessment (WCA) which had been proposed by Rishi Sunak’s government. That would have made it more difficult to claim the health element of Universal Credit. Yet Reeves is dropping those plans, and indeed intends to abolish WCA altogether. The result, according to the OBR? An extra 370,000 people claiming the health element of WCA, each of them gaining an average of £50 a week or £2,600 a year.
True, Reeves is planning to freeze the benefit for existing claimants at £97 per week, and to cut it for new claimants to £50 per week. Yet astonishingly, considering the number of Labour MPs grumbling about Reeves kicking away the crutches of the poor and disabled, the OBR calculates that there will be more overall winners from her reforms than there will be losers – 3.8 million of the former and 3.2 million of the latter. It still estimates that the reforms will save money as a result – £4.8 billion by 2029/30 – because the losers will miss out on more on average (£1,720) than the winners will gain (£420). Nevertheless, the government’s claim to be weaning people off benefits and back into work by doing away with perverse benefits do look somewhat questionable.
What Reeves’s reforms are really doing is to make the welfare system broader but less deep. Ultimately, according to the OBR, we are going to have more Universal Benefit claimants being compensated for claimed illness and disability than we have now. That is not a policy which looks designed to put an end to shirking. On the contrary, while genuinely disabled people will be receiving less, it looks as if it might become even easier to claim enhanced Universal Credit if you are feeling a bit down in the dumps.
Reeves has expended a tremendous amount of political capital among members of her own party by chopping some benefits. But it seems increasingly clear that that capital has not been wisely spent. It is unlikely, given the reaction to those reforms, that the Chancellor will be able to come back for a second bite at the welfare budget.
The Chancellor has missed an opportunity for proper reform. Britain’s workshy culture will receive yet another boost, quite possibly leaving a shrinking pool of taxpayers under even more pressure.
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