Treasury says Healey hasn’t committed to cutting welfare bill before election, claiming interview answer misinterpreted
John Healey is rowing back from his answer in an interview in the Today programme implying he wanted welfare spending to go down before the next general election. According to Chris Mason, the BBC’s political editor, Treasury sources are saying his words have been over-interpreted.
This relates to what Healey said in an interview with Nick Robinson for the Today programme. It was broadcast this morning, but recorded yesterday, and the BBC has written it up in a story on its website headlined: “Healey promises reduction in welfare bill before next election”.
For the record, here is the key exchange.
Robinson: Let’s take welfare if we could. £19bn up in the year ahead. That’s the entire police budget for England and Wales. That’s the entire annual defence equipment budget. And yet in your speech you said, well, we’ve got a couple of reports coming next month, then we’ll have a white paper, which in non-Westminster jargon means a consultation, then you’ll have some legislation, then you’ll have a row in the Labour party. You’re not going to make any of these cuts before the next election, are you?
Healey: Well first, I’ve said clearly, the prime minister said as well, we have to bring the benefits bill down. You don’t do that by crude cuts, especially when people are feeling the cost of living pressures. We do have a big report, two big reports being produced next month, that will help us map out the way that we need to change the system for the long run. We are in fact reducing and have been over the last two years the rate of increase in the welfare bill compared to the previous period – I’m afraid to say – of a broken system the Conservatives put in place. We’re bringing back and have brought back face to face assessments which they axed for instance. We’ve been changing universal credits so people aren’t branding themselves as too sick to work in order to make that system work better.
Robinson: But you’re reducing the rate of increase in welfare spending chancellor aren’t you? But the OBR’s forecast is that £1 in every £8 will be spent on welfare by 2030 or thereabouts. You’ve got to make cuts, haven’t you?
Healey: This system is unsustainable. I’ve been clear about that. The prime minister’s been clear about it ….
Robinson: Briefly, because I want to give you the chance to talk about other things – there will be cuts in welfare before the election?
Healey: There will be there will be a reduction in the benefits bill. We’ll do that in a Labour way and we will do that because it is simply not good for Britain or progressive to have a bigger and bigger benefits bill and I feel a moral duty to deal with these youngsters who at the moment have been written off by previous governments.
The answer highlighted in bold is what gave the BBC its story. Healey paused slightly between the first “there will be” and the second “there will be” and it would be perfectly reasonable to interpret it as:
There will be. [Direct answer to Robinson’s question.] There will be a reduction in the benefits bill [etc etc – Healey expanding on the answer.]
But the Treasury is implying what he meant was:
There will be, there will be a reduction in the benefits bill [Healey simply repeating three words as he launches into more general answer, not answering Robinson directly, but just explaining the government’s approach.]
Reasonable people could interpret is either way. But Mason said the Treasury had told him the first interpretation was not accurate, and that if Healey really wanted to commit to getting cutting the benefits bill before the general election, he would have announced that in the budget.
Given that Alan Milburn himself has said that his plans to tackle youth unemployment may require more spending upfront in return for savings later, and given that welfare reforms often take most of a decade to roll out, it does seem unlikely that Healey intended to say the benefits bill would be cut before the election.
But, as Mason pointed out on the Today programme, “correcting” this story means the Treasury is implicitly saying benefit spending won’t go down before the election – which is very helpful to the Tories and Reform UK.
Key events
Healey’s new ‘founder’s relief’ tax cut for entrepreneurs ‘looks bonkers’, says IFS
Helen Miller, director of the Institute for Fiscal Studies thinktank, is giving a presentation summing up the IFS’s view of the budget. Arguing that it contained plenty of “bad things” as well as welcome measures, she singled out founders’ relief for particular criticism.
She said:
After years of arguing that business asset disposal relief was a bad idea – and just when I thought the relief was on its last legs – a new, similar relief has popped up. The new founders’ relief looks bonkers. It gives a lower rate of capital gains tax to a small subset of people with large gains. That will include some entrepreneurs that make investments with broader societal benefits – although most of that activity would have happened without the relief. But it will also include people that just got lucky. There are very complex rules around who gets it – rules that will incentivise people to change their behaviour in weird ways simply to be able to get the relief. I could go on. But the punchline is that this looks to me like yet another tax break for a chosen group with little economic reasoning behind it.
Tories overtake Reform UK in ‘poll of polls’ tracker
Since the start of 2025 Reform UK has been ahead of the Conservative party in the Politico poll of polls, a tracker which averages how the political parties are in surveys carried out by all the main polling organisations. Different polling companies use different methods, and so the poll of polls provides a reliable overview. Other poll of poll trackers are available, but Politico’s may be the most widely read in Westminster.
And today it has good news for the Conservatives. For the first time since early 2025, they have regained their lead over Reform UK.
How 2020s are set to be worst decade, by far, since 1960s for rising living standards, according to Resolution Foundation
The Resolution Foundation has now published its full 48-page report on the budget. Some of its main arguments were covered earlier. (See 8.36am.)
Here are five charts from the report illustrating five of its main arguments.
1) The amount the government is spending paying interest on its debt is “high and rising”, the report says. It says:
Debt interest spending is now forecast to reach £147bn in 2029-30, £13bn more than in March. This leaves debt interest spending at 4.1 per cent of GDP in 2029-30 (and peaking marginally higher at 4.14 per cent in 2031-32, the highest on record since 1956-57) and above the total expected spend on universal credit, Housing Benefit and Child Benefit combined in that year.
2) The 2020s are set to be the worst decade, by far, for more than half a century for rising living standards, the report says.
The 2020s are on course to have the lowest growth in incomes of any decade on record when measured using Real Household Disposable Income (RHDI). RHDI is projected to rise by just 1.4 per cent in total over the decade (equivalent to £400 in 2026-27 prices), one-tenth of the growth rate achieved in the 2010s (which itself was the second-worst decade on record). Income growth this decade is set to be much weaker than GDP growth because of rising taxes and import prices.
3) Labour’s cost of living support package benefits the rich almost as much as the poor, the report says.
Taken altogether, the Government’s £4.4bn cost of living package for 2025-26 and 2026-27 is poorly targeted. As Figure 8 makes clear, support is very widely spread. The Household Energy Payment goes to up to 20 million households in England, which are dispersed across the income distribution (87 per cent of the bottom half of the income distribution and 73 per cent of the top live in Council Tax bands A-D). The VAT cut and the Fuel Duty delay are not targeted at all. Taken together, we estimate that 52 per cent of the whole cost of living package will benefit the poorest half of the income distribution this year and next, with the other 48 per cent going to the top half (equivalent to an average £158 for poorer households, compared to £144 for richer households).
4) But, overall, the tax and benefit changes since the government took power have been progressive, the report says.
We estimate that annual incomes will, on average, be £320 higher for households in the bottom quintile in 2029- 30, compared to £2,000 lower for those in the top quintile as a result of the Starmer and Burnham governments’ measures. This is largely the result of policies announced before this budget: the repeal of the two-child limit and the commitment to uprate the universal credit standard allowance at a higher rate than inflation for four years, both introduced from April 2026.
5) All government spending departments apart from defence, health and education are likely to face cuts in spending per head from the end of this decade under current plans, the report says.
Healey denies postponing difficult decisions on welfare
John Healey has denied postponing difficult decisions on the welfare system, insisting the government is making changes “now”.
Thinktanks and opposition parties have made this claim. But, when this was put to Healey in an interview on GB News, he replied:
This was a broken system. And two years ago we started putting back in place face-to-face assessments. We’ve changed terms of universal credit, so people don’t have to brand themselves as too sick to work.
So, those are changes we’re making now. But in the long run, as I’ve argued, and the prime minister has said, too, we have to bring the cost of benefits down.
Treasury says Healey hasn’t committed to cutting welfare bill before election, claiming interview answer misinterpreted
John Healey is rowing back from his answer in an interview in the Today programme implying he wanted welfare spending to go down before the next general election. According to Chris Mason, the BBC’s political editor, Treasury sources are saying his words have been over-interpreted.
This relates to what Healey said in an interview with Nick Robinson for the Today programme. It was broadcast this morning, but recorded yesterday, and the BBC has written it up in a story on its website headlined: “Healey promises reduction in welfare bill before next election”.
For the record, here is the key exchange.
Robinson: Let’s take welfare if we could. £19bn up in the year ahead. That’s the entire police budget for England and Wales. That’s the entire annual defence equipment budget. And yet in your speech you said, well, we’ve got a couple of reports coming next month, then we’ll have a white paper, which in non-Westminster jargon means a consultation, then you’ll have some legislation, then you’ll have a row in the Labour party. You’re not going to make any of these cuts before the next election, are you?
Healey: Well first, I’ve said clearly, the prime minister said as well, we have to bring the benefits bill down. You don’t do that by crude cuts, especially when people are feeling the cost of living pressures. We do have a big report, two big reports being produced next month, that will help us map out the way that we need to change the system for the long run. We are in fact reducing and have been over the last two years the rate of increase in the welfare bill compared to the previous period – I’m afraid to say – of a broken system the Conservatives put in place. We’re bringing back and have brought back face to face assessments which they axed for instance. We’ve been changing universal credits so people aren’t branding themselves as too sick to work in order to make that system work better.
Robinson: But you’re reducing the rate of increase in welfare spending chancellor aren’t you? But the OBR’s forecast is that £1 in every £8 will be spent on welfare by 2030 or thereabouts. You’ve got to make cuts, haven’t you?
Healey: This system is unsustainable. I’ve been clear about that. The prime minister’s been clear about it ….
Robinson: Briefly, because I want to give you the chance to talk about other things – there will be cuts in welfare before the election?
Healey: There will be there will be a reduction in the benefits bill. We’ll do that in a Labour way and we will do that because it is simply not good for Britain or progressive to have a bigger and bigger benefits bill and I feel a moral duty to deal with these youngsters who at the moment have been written off by previous governments.
The answer highlighted in bold is what gave the BBC its story. Healey paused slightly between the first “there will be” and the second “there will be” and it would be perfectly reasonable to interpret it as:
There will be. [Direct answer to Robinson’s question.] There will be a reduction in the benefits bill [etc etc – Healey expanding on the answer.]
But the Treasury is implying what he meant was:
There will be, there will be a reduction in the benefits bill [Healey simply repeating three words as he launches into more general answer, not answering Robinson directly, but just explaining the government’s approach.]
Reasonable people could interpret is either way. But Mason said the Treasury had told him the first interpretation was not accurate, and that if Healey really wanted to commit to getting cutting the benefits bill before the general election, he would have announced that in the budget.
Given that Alan Milburn himself has said that his plans to tackle youth unemployment may require more spending upfront in return for savings later, and given that welfare reforms often take most of a decade to roll out, it does seem unlikely that Healey intended to say the benefits bill would be cut before the election.
But, as Mason pointed out on the Today programme, “correcting” this story means the Treasury is implicitly saying benefit spending won’t go down before the election – which is very helpful to the Tories and Reform UK.
Healey accused by Resolution Foundation of ‘complete failure’ to target energy bill support at those most in need
Good morning. The day after the budget is often the moment when big initiatives announced by the chancellor the day before with a flourish start to unravel as experts pore over the small print. There is not much of that happening this morning – mainly because John Healey did not have any really big initiatives up his sleeve. Compared with a normal budget, his tax and spending initiatives were mostly relatively minor. That means that the opposition parties have been struggling to find things to attack, and so instead they have resorted to criticising Healey for what he did not do: slash welfare (the Tory/Reform UK solution), or join the EU’s single market (the Lib Dems’).
Healey has given interviews to all the main broadcasters, which are playing out this morning, but they were recorded last night and they don’t have any sensational new revelations. As Rowena Mason reports, one of the top lines was Healey saying he would cut welfare spending before the election.
But there were other lines in the interviews too. I will be posting all the highlights this morning.
The two main public spending thinktanks, the Institute for Fiscal Studies and the Resolution Foundation, are both publishing reports assessing the budget this morning. The RF has issued a news release with its main findings and its assessment of the overall economic impact of the budget measures highlights three problems.
The poorest half of households will gain £158 on average from cost of living support this year and next, just £14 more than the £144 received by the richest half – highlighting a complete failure to target help at those who need it most.
Tight spending plans beyond 2028-29 imply departmental budgets will take more of the strain in the future. But if the 3% defence target is met and real health spending continues to grow at 2.6%, pencilled-in spending totals imply that funding for 13 ‘unprotected’ departments will fall to just 4.7% of GDP by 2031-32, close to the post-austerity historic low.
Median real annual disposable incomes for working age households are set to grow by a paltry £600 over the course of the parliament. Worse still, those gains are already behind us. Between now (2026-27) and the end of the parliament (2028-29), typical incomes are forecast to fall in total by £1,050 (3 per cent).
This is one reason why so many people continue to think Andy Burnham will call an election next spring (before the electorate feels the full misery of getting poorer) – despite Burnham yesterday saying he would not hold one within the next 12 months.
Here is the agenda for the day.
9am: Jonathan Haskel, chair of the Office for Budget Responsibility, and Ruth Curtice, head of the Resolution Foundation, speak at an event where the RF is presenting its budget analysis.
9.30am: Heidi Alexander, the transport secretary, takes questions in the Commons.
10.30am: Helen Miller, director of the Institute for Fiscal Studies, presents the IFS’s budget analysis.
11.30am: Downing Street holds a lobby briefing.
After 11.30am: MPs resume the budget debate in the Commons.
Lunchtime: Andy Burnham is on a visit to a Rolls-Royce factory in the Midlands where he is speaking to the media.
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