If Starmer’s welfare reforms go through £9.2 billion will come from one benefit – London Business News | London Wallet

The vote on the Government’s welfare bill is currently due to take place next Tuesday.

According to OBR estimates the cumulative saving of the changes to both incapacity benefits and disability benefits will total £13.7bn by 2029/30 – of which £9.2bn stemming from PIP reform.

If the Government is unable to pass this bill, the cost would be large enough to erase the narrow £9.9bn headroom against the Chancellor’s Stability Rule, putting her in an even more difficult position in the autumn. This means she will face the difficult choice of either cutting current expenditure or raising taxes if she wants to meet her self-imposed fiscal rules.

More considered policy could help reduce political churn and the associated economic cost, particularly when consumer and business confidence is already low. Clarity, consistency and a larger fiscal buffer needs to be established so that the Chancellor can build credibility against her fiscal rules. This may include unpopular tax hikes in the autumn.

Nonetheless, this is preferable to protracted economic uncertainty stemming from piecemeal policy tinkering.