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Hunt vows to slash ‘unsustainable’ welfare bill amid worklessness crisis

Chancellor of the Exchequer Jeremy Hunt speaks during The Semafor 2024 World Economy Summit in Washington
Mr Hunt stresses that he would only reduce taxes in a 'responsible' way - Mandel Ngan/AFP

Jeremy Hunt has vowed to go “further and faster” to slash the welfare bill as he warned of an unsustainable rise in the cost of workless benefits.

In an interview with the Telegraph, the Chancellor also said he wanted to cut National Insurance by another 2p before the election but stressed that he would only reduce taxes in a “responsible” way.

Hunt said getting more people back to work and slashing the benefits bill would form a key part of the Conservative manifesto as he sought to draw a dividing line between the Tories and Labour on welfare.

He added that too many people were being “labelled” with mental health conditions and “park[ed] on benefits outside work” indefinitely.


He said over-labelling had become an increasing concern within Government, adding that Work and Pensions Secretary Mel Stride was spearheading a drive to “change the equation” on welfare.

He suggested that the Government was looking to build on its “stick and carrot” policies, including harsher sanctions for people who refuse to look for work as well as more support to stop people with mental health issues from quitting their jobs.

“It is going to make those problems worse if we park you on benefits outside work,” said Mr Hunt. “This is a great insight that Mel Stride has identified and we are absolutely backing him to go further and faster with those reforms.”

Mr Hunt added: “It is not sustainable to carry on increasing our welfare spend at the rate that we are doing”.

The Chancellor also hinted that the Tories were preparing more public sector reforms as part of a drive to increase productivity in the sector.

Asked what he was doing to tackle worklessness and make work pay, Mr Hunt said: “Let me just say this – I think you’ll see in our manifesto going forward further plans to address this issue. It’s something that we are doing a lot of work on inside Government because we do believe that we can bring down the tax burden on working families.

“But the two pillars on which that depend are welfare reform and productivity in public services, and in both those areas we’ve said a lot and we will say even more.”

A record 2.8 million people are now economically inactive because they are too ill to work. The number has jumped since lockdown, with the increase now the longest sustained rise on record.

In total, 9.4 million people aged between 16 and 64-years old are economically inactive – neither in work, nor looking for work – according to the Office for National Statistics, with long-term sickness the most common reason for inactivity.

Mr Hunt said he agreed with Mr Stride that over-labelling of mental health conditions was a big issue in the UK.

He said: “Labelling is a particular problem if what it leads to is a benefit package that means people feel they can’t work because they worry that if they engage in the world of work, they might lose benefits that they’re dependent on.

“We’ve got to change that equation because if you’ve got moderate anxiety and then you leave the world of work, it’s far more likely to become a serious issue than if you stay in work.”

Asked if cutting National Insurance by another 2p in the next fiscal event was a priority, he said: “We want to bring down employees’ National Insurance and ultimately abolish it. So yes, that is definitely something that we would like to do, but we will do it in a way that’s responsible.”

Mr Hunt’s comments put him on a potential collision course with the International Monetary Fund (IMF), which warned that pre-election tax cuts will keep Britain’s debt rising until the end of the decade.

Another 2p off National Insurance, which will save the average worker £900 a year, would cost roughly £9bn a year.

The IMF said it was “critical” that the UK do more to reduce borrowing as it warned that “significant” reductions in National Insurance would “worsen the debt trajectory”.

The Institute for Fiscal Studies (IFS) also warned that the next government would be forced to hike taxes unless public spending was brought under control.

Martin Mikloš, an economist at the IFS, said: “The increase in taxes, while historically and internationally large, has not matched the growth in spending.”