The forecast breach, due in particular to expected higher expenditure on universal credit and disability benefits, is unavoidable given the inheritance from the last government.
The likely scale of the eventual breach has been known since March 2023. No action was taken by the previous administration to avoid it.
Whilst this government has already shown that it will not shy away from difficult decisions, this breach could only have been addressed through implementing immediate and severe cuts to welfare spending. This would not have been the right course of action.
In her statement Kendall confirmed that measures will be announced later this year to control welfare spending, including reforms to health and disability spending, and measures to tackle welfare fraud.
George Osborne introduced the cap when he was chancellor in 2014. It imposes a supposed limit that can be spent on certain types of benefit (comprising roughly half total welfare spending) and, if a government breaches the cap, it must make a statement explaining itself. This was supposed to incentivise ministers to cut spending.
But economists question its value. This is the fourth time the cap has been breached, and governments have responded to these breaches by changing the level at which the cap applies. In the budget last year Rachel Reeves, the chancellor, updated the cap for 2029-30, and MPs are voting on that this afternoon.
says Rachel Reeves’ speech has gone down well with centre-right thinktanks.
Centre-right think tanks are praising Reeves’ speech, while the main complaints come from climate groups on the left. Perhaps suggests she has begun to make a successful move back to the middle ground of British politics after the budget. And presents a big problem for Kemi Badenoch?
CPS @rcolvile: “The vast bulk of the Chancellor’s speech was hugely welcome”
Britain Remade @samrichardswebb: “For too long, Britain has failed to build the new homes, clean energy infrastructure, and transport links we desperately need. Today’s speech contained concrete steps towards changing that”
IEA @TomClougherty: “The Chancellor is saying all the right things on growth and should be applauded for many of the decisions she has taken today”
Conservative Environment Network @samuelhall0: “These are good market-friendly policies that Conservatives will regret not delivering in government”
PMQs.
Keir Starmer has claimed the Conservatives are the “coalition of blockers” as he defended his government’s growth proposals and employment law reforms.
The prime minister highlighted opposition to airport expansion and a rail project from Tory frontbenchers, which prompted opposition leader Kemi Badenoch to brand Labour “hypocrites” for raising their own objections in the past.
Starmer, who dubbed the government the “coalition of builders”, was also urged by Badenoch to drop a series of measures contained in the employment rights bill because they “fail his growth test”.
After Badenoch told Starmer to “stop being a lawyer and start being a leader”, Starmer replied: “We know she is not a lawyer, she is clearly not a leader, if she keeps on like this, she is going to be the next lettuce.”
His remark was a nod to Liz Truss’s 49-day long premiership, which saw the Daily Star live-stream a lettuce to see if it would last longer than her tenure in No 10.
The bill raised at PMQs includes measures to introduce day-one protections from unfair dismissals, make changes to sick pay and ensures guaranteed hours on zero-hours contracts.
Badenoch said the government has “embraced a series of Conservative policies” before urging Starmer to “drop” the bill as it “clearly fails the prime minister’s growth test”, adding Whitehall analysis suggests it will cost businesses £5bn a year.
Starmer said the government was “not taking lectures” from the Conservatives.
Badenoch said the legislation would make it “harder for business to hire new employees”, adding: “This isn’t an employment bill. It’s an unemployment bill. Given these clauses, will he drop his bill and show that he is not anti-growth?”
Starmer replied: “We believe in giving people proper dignity and protection at work. That’s why we’re proud of our record of supporting workers. They consistently vote against any protection for working people.”
Peter Mandelson has said his past remarks that Donald Trump was “a danger to the world” were “ill-judged and wrong” before his expected confirmation as ambassador to the US, Eleni Courea reports.
Britain could have an Islamist government within the next 20 years. Badenoch had not had time to read the speech, the spokesperson said. But he did say Badenoch was in favour of “free speech” for MPs.
The spokesperson also dismissed suggestions that donors would be flocking to Reform UK, who held a £25,000-per-head dinner in Mayfair this week for wealthy people who might want to support the party. “There are lots of donors out there,” the spokesperson said.
Kemi Badenoch, Keir Starmer said:
We are the coalition of builders; they are the coalition of blockers.
It was reminscent of Liz Truss using her Tory conference speech as PM to attack the “anti-growth coalition” (a term that also could be applied to many Tory MPs, although Truss did not acknowledge that).
At the post-PMQs briefing, asked if Keir Starmer thought that Sadiq Khan was a blocker in the light of his opposition to a Heathrow third runway (see 11.36am), a Labour spokesperson replied:
No, we agree with the mayor of London that growth must come hand-in-hand with our climate obligations, and that’s why the chancellor set out that we support a third runway.
That will be in line with our climate obligations and we look forward to working closely with the mayor throughout the process.
on its website.its impact assessment that the costs to business of the bill (relatively easy to quantify) are justified by the benefits (which are harder to measure), and this was the argument that Starmer deployed.
We believe in giving people proper dignity and protection at work. That’s why we’re proud of our record of supporting workers. They consistently vote against any protection for working people.
We are driving growth on behalf of working people. Good work rights are consistent with growth, every good business knows that.
But it was not just the argument that gave him the edge. For once, he sounded genuinely passionate. He engaged directly with what Badenoch was saying, and he answered her bluntly and powerfully. (“Will he drop these measures from the bill?” – “No, I think they are good for workers and good for growth.”) Maybe it was being accused of being dishonest early, maybe employment rights engages his innate leftism more than other topics, but for whatever reason he sounded effective.
Starmer was also a bit more withering than usual about the Tories’ record, which worked well today. This is a factor that gives him a structural advantage at PMQs – and will continue to do so for a long period of time.
But there was one other moment that helped Starmer this week. For some time now Badenoch has been using the “lawyer, not a leader” jibe against Starmer. It is not a fair criticism (nobody could have crushed Corbynism in the Labour party, as Starmer did, without strong leadership qualities), but it is a neat line, it’s memorable and it probably does encapsulate a lot of the negativity people feel about Starmer’s mangerialism.
Referring to the employment rights bill, Badenoch said:
This bill is terrible for business, but it is great employment for lawyers. I know the prime minister loves the legal profession, but he needs to stop being a lawyer and start being a leader.
And Starmer replied:
I understand she likes straight talking, she is talking absolutely nonsense. She knows that anybody that understands anything about the bill or any employment law will know you can’t start in the morning and go to the tribunal in the afternoon.
Now, we know she is not a lawyer, she is clearly not a leader, if she keeps on like this, she is going to be the next lettuce.
It is not the wittiest line ever. But the Commons at noon on a Wednesday is a cheap audience (or at least, for Starmer, 401 of them are) and in PMQs terms that was a decisive blow.
Andrew Rosindell (Con) says his constituents are shocked by the ONS projection saying the population will rise to 72m. Who voted for that? There is no mandate for that.
Starmer says Rosindell should talk to his leader. Net migration went through the roof under the Tories and Badenoch was “cheering it on”, he claims.
And that is the end of PMQs.
Calvin Bailey (Lab) asks about 10 service personnel killed on a flight over Iraq during the war. He names them all, and asks the PM to join him in commemorating their service.
Starmer does so. He also pays tribute to Bailey for his service in the RAF.
Emily Thornberry (Lab) asks about a constituent who was sacked from MI6 for being gay. Will the government redress this wrong?
Starmer says this is an important issue. The government has approved compensation for armed forces personnel who were sacked for being gay. He says the Foreign Office will look at this issue.
John Milne (Lib Dem) asks what helps councils and hospices are getting with the cost of the rise of national insurance.
Starmer says councils got a funding increase this year.
Gordon McKee (Lab) asks about DeepSeek and AI. To develop AI, you need lots of energy, and cold weather. Scotland has both, he says. So will the government promote AI in Scotland.
Starmer says it is good to hear a Labour voice promoting development in Scotland, in contrast to the SNP.
Conservatives want to roll them back, he says.
Paul Kohler (Lib Dem) says he went into politics as a consequence of being the victim of an attack. A restorative justice programme made a big difference to his family. Will the PM extend these schemes?
Starmer says he has seen the power of restorative justice schemes. Victims should have access to them, he says.
Source: theguardian.com
