When Andy Burnham enters No 10 Downing Street, he will inherit a welfare system that costs £58bn a year – and is on course to hit £78bn by 2030. The number of people claiming Personal Independence Payments (Pip), a disability benefit, is forecast to rise from four million today to five million by 2030, driven increasingly by younger claimants with mental health problems or neurodevelopmental disorders such as ADHD.
Previous attempts to control the cost have failed. The Conservative government saw spending continue to rise. Sir Keir Starmer’s government tried to cut the Pip bill by £5bn a year by 2030 by tightening eligibility, but performed a U-turn after a revolt by Labour MPs. A recent interim report by the disability minister, Sir Stephen Timms, co-produced with disability groups, accepts Pip is “not fit for purpose”. The final report is expected to propose reforms later this year, which Burnham could adopt. Speculation has swirled that this might involve offering young people therapy or other support rather than cash. But any reforms risk backlash from disability groups and Labour MPs if considered unfair.
“Burnham inherits £58bn disability benefits bill projected to hit £78bn by 2030.”
Burnham has recently said he does want to reduce the welfare bill, but by encouraging people into work and not through “crude cuts”.
Defence presents another headache. After a delay of almost a year, Starmer finally published the government’s Defence Investment Plan in June, which only takes spending to 2.7% of GDP by 2030 – and is not fully funded, requiring savings from other Whitehall departments. The former defence secretary, John Healey, resigned over the issue, and pressure on Burnham to lift spending to 3% by 2030 will continue. That would cost an additional £9bn a year. A further challenge is the new Nato target of 3.5% by 2035, which would cost an extra £24bn a year relative to current plans.
Burnham will have to navigate these forces – rising welfare costs and demands for more defence spending – while facing the same political constraints that thwarted his predecessors.