Rachel Reeves should consider welfare cuts in budget, IFS says

"Britain's leading tax and spending experts have urged Rachel Reeves to consider announcing billions of pounds in welfare cuts in next month's budget to help placate jittery financial markets. After the chancellor gave her strongest hint yet that spending cuts were under consideration, the Institute for Fiscal Studies (IFS) called on Reeves to take bold action to plug a potential 22bn shortfall in the government finances."

"Warning the chancellor against doing the bare minimum to rebuild a financial buffer against her self-imposed fiscal rules, the thinktank said that she could be forced to look again at welfare savings alongside tax rises. The IFS said options could include scrapping the pensions triple lock, a fresh drive to cut health-related and disability benefits, and limiting growth in spending on special educational needs."

"However, such steps could reignite tensions with backbench Labour MPs after ministers were forced into an embarrassing U-turn earlier this year, following an attempt to push through billions of pounds in welfare savings. Ben Zaranko, an associate director at the IFS, said any changes would need to be presented as reforms which would improve outcomes for individuals. Trying to do it to chase particular savings isn't a recipe for success, he said."

IFS urges Rachel Reeves to consider announcing billions of pounds in welfare cuts in next month's budget to placate financial markets and plug a potential £22bn shortfall in government finances. The IFS warns against doing the bare minimum to rebuild a financial buffer against self-imposed fiscal rules and says welfare savings may be required alongside tax rises. Possible measures include scrapping the pensions triple lock, cutting health-related and disability benefits, and limiting growth in special educational needs spending. Such steps risk reigniting tensions with backbench Labour MPs after an earlier welfare U-turn. Any changes should be presented as reforms that improve individual outcomes.

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