Benefits overhaul for Neets, USA News: Plans to cut benefits for young people by helping them back to work will take 10 years to complete, The i Paper understands. It comes after the Chancellor, John Healey, faced a day of criticism over the lack of measures to cut the burgeoning welfare bill in the Budget, and was forced into a series of clarifications over whether or not there would be cuts to the ballooning benefits bill in this Parliament.
Andy Burnham was drawn into the row after Healey appeared to tell the BBC’s Today programme there would be cuts by 2029 only for the Treasury to backtrack. In the evening, on Channel Four News, Healey said there would not be cuts. “It’s not correct to say that we’re going to bring this welfare bill down in this Parliament because we’ve not set a timetable for that.” Earlier, the Prime Minister had said he wanted to cut the benefits bill “as soon as we possibly can” while No 10 said: “We’ve never set an arbitrary target or timetable on that.”
Burnham wants to cut the welfare bill in a “Labour way”, which means by bringing people back into work rather than by “crude cuts”. But the latest row comes a year after his predecessor, Sir Keir Starmer, was forced to abandon welfare cuts and risks several more years dominated by the issue but with little or no inroad into the problem.
The Milburn Review
Labour grandee Alan Milburn’s review into 16- to 24-year-olds not in employment, education or training – so-called Neets – is understood to set out plans for 10 years of change to bring down the high cost of unemployment in young people, The i Paper understands. The former cabinet minister’s review is expected to find savings but insiders say for Millburn’s reforms to be successful, benefit claimants will need wholesale support.
It comes as the Institute for Fiscal Studies (IFS) told The i Paper that a boost to work support will not make savings for five to 10 years and would be expensive in the short term. This is despite warnings from the Office for Budget Responsibility (OBR) – the UK’s financial watchdog – that the benefits bill is on course to exceed the Government’s welfare spending cap and its permitted margin by £2.8bn in 2029-30.
Eduin Latimer, senior research economist at the IFS specialising in welfare, said breaching the cap “doesn’t have any forcing effect on Government policy” and that the bigger issue driving policy is rising spending.
Welfare Spending Pressures
The OBR points to rising numbers claiming health-related and in-work benefits as key pressures on spending. The number of people on incapacity benefits has risen from 2.5 million in 2019-20 to 3.7 million in 2025-26, while the disability benefits caseload in England and Wales has increased from 4.7 million to 6.9 million.
The welfare bill is projected to hit £353bn this year, a rise of £19bn, and forecast to rise to £431bn in 2031-32 according to the OBR, with just under half of this spent on pensions. The Conservatives accused Labour of being “addicted to welfare”, while Reform UK said the Budget did not address the “ballooning” benefits bill.
The Milburn review is expected to be published next month, along with Sir Stephen Timms’s report on the “failures” of the disability benefits system. Healey said he would respond with a White Paper early next year with legislation to follow. This means any effective action may not happen until 2028.
