The government must push through its welfare bill at all costs

Times

4 days ago

Few matters are so important that a government should risk its future to get its way. The bill to reform the welfare system is one such. Rebel Labour MPs are threatening to kill the bill in a vote next week. The government should do its utmost to stop that happening, even if it means turning the issue into a vote of confidence.
Britain's economic future depends on welfare reform. Government debt is the size of the entire economy. With growth stagnant and the war in Ukraine forcing unexpected increases in the defence budget, getting a grip on public spending is essential. The most obvious candidate for cuts is welfare expenditure. Spending on sickness benefits has grown from less than £50 billion a year before the pandemic to £80 billion now. The government's bill would make it harder to access personal independence payments and would reduce the higher level of incapacity benefit. Even after those changes, the cost of sickness benefits is ­expected to reach £98 billion by 2030.
Reasonable people might therefore conclude that the main problem with the government's plan is that it does not go far enough. However, 108 Labour MPs, including 10 select committee chairs, regard these modest economies as excessive. They have signed an amendment which would, in effect, sabotage the bill. Privately, a dozen members of the government have threatened to resign over the proposed cuts.
Despite the government's large parliamentary majority, the revolt is big enough to defeat the proposed legislation. Rebels have been emboldened by the U-turn which the government performed earlier this month when it rowed back on an intended cut to pensioners' winter fuel payments. If the government caved on that, surely they can persuade it to back down on this?
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But the benefits bill is far more important than winter fuel, and not just in monetary terms. It represents the most serious attempt yet by ministers to rein in spending. If a bill as modest as this cannot get through parliament, there is no hope of getting the public finances under control.
The bond market will be watching the bill's progress closely. Britain's reputation for financial management is already poor enough that the government pays 4.5 per cent on its debt, compared with Germany's 2.5 per cent and France's 3.3 per cent. Further evidence of fiscal irresponsibility could trigger another rise, which would push up interest costs further still. At £108 billion per year, the government already spends about twice as much on debt interest as it does on defence. Neither the government nor the country can ­afford to see the welfare reform bill fall. If Sir Keir Starmer performs another U-turn or loses the vote, his credibility, already weakened, will be ­destroyed. If borrowing rates rise further, Britain's finances will be further destabilised.
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An opposition that placed the country above political advantage would vote for the planned cuts. Kemi Badenoch, the Conservative leader, has promised to back the bill, but only if the prime minister promises in the Commons to levy no new taxes in the autumn, and to cut the welfare budget rather than merely restrict its growth.
Given this heavily-qualified offer, Sir Keir must use this week to bring his rebels to heel. To do so, he must rediscover the ruthlessness he demonstrated before the election when he purged Labour's candidates list of left-wingers, and when he suspended seven MPs for opposing his plan to keep the two-child benefit cap. He should make it clear that he is prepared to turn the vote on the benefits bill into one of confidence in his government. That is the nuclear option: if he lost, an election would be called. This bill is not just a tweak to the welfare system. The country's future is at stake. Sir Keir must make it clear to the rebels that for Labour, and for Britain, this is make or break.