Reeves insists ‘broken’ benefits system must be reformed despite fears of Cabinet revolt

14 March 2025, 15:52

Britain must reform its “broken” welfare system and “get a grip” on the country’s ballooning benefits bill, Rachel Reeves has said.

Reeves declared Britain’s benefits system is “not working for anyone” as tensions grow within the Labour party amid reported plans to slash welfare spending.

It comes after backbench MPs met with the Prime Minister as the Labour leadership works to quell fears millions of Brits could be left behind if welfare is cut.

The Chancellor told broadcasters: "We will set out our plans for welfare reform, but it is absolutely clear that the current system is not working for anyone.

"It is not working for people who need support, it's not working to get people into work so that more people can fulfil their potential, and it's not working for the taxpayer when the bill for welfare is going up by billions of pounds in the next few years.

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"So, we do need to get a grip. We need to spend more on national defence, but we need to reform our public services, and we need to reform our broken welfare system."

At least half of the Cabinet has called on the Chancellor to walk back planned reforms, Bloomberg reports.

Downing Street refused to be drawn on reports of welfare cuts but warned the system will continue to "swallow more taxpayers' money and leave more people trapped in a life of unemployment and inactivity" if left in its current state.

The spokesperson added: "That's not just bad for the economy, it's bad for people too, and that's why this Government will set out plans to overhaul the health and disability benefits system shortly so it supports those who can work to do so, whilst protecting those who can't, to put welfare spending on a more sustainable path so that we can unlock growth."

Reeves’ comments come after it emerged the number of working-age people claiming benefits and not working due to health conditions rose by half a million over the last year.

The latest figure for claimants across Great Britain as of December 2024 was up from two million the previous year.

Some 1.8 million (71%) were assessed as having limited capability for work and work-related activity (LCWRA).

The Government said this means the current system is "effectively abandoning" 1.8 million people "and locking them out of work indefinitely" as the LCWRA assessment means they will not get employment support or further engagement from the system after their assessment.

The Department for Work and Pensions said the number of people in this situation had almost quadrupled since the start of the pandemic when it was around 360,000 people.

On Thursday, the Prime Minister denied Britain would be "returning to austerity" under the changes but said the cost of benefits is "going through the roof" and on track to surpass the bill for the Home Office and prisons combined.

The existing system cannot be justified on "moral" or "economic" terms, Sir Keir Starmer added.

Among the Labour backbenchers who have criticised the expected cuts is Richard Burgon, who confronted Sir Keir about the proposals at Prime Minister's Questions in the House of Commons on Wednesday.

He told the Commons that disabled people are "frightened" as he urged Sir Keir to introduce a wealth tax instead of "making the poor and vulnerable pay".