Badenoch Conditions Welfare Bill Support on No Tax Increase Promise by Government
Kemi Badenoch, the Tory powerhouse, insists Labour's welfare bill won't have her party's support unless the government gives a solid guarantee that taxes won't go up any higher in the upcoming budget.
More than 100 Labour MPs were ready to bowl the bill straight over the fence due to fears over shrinking personal independence payments for their constituents. The government, though, has shown signs of softening the blows to the bill, hoping to squelch a backbench mutiny and steer clear from depending on opponents' votes to push the bill through.
This move, however, is stirring up a storm among businesses beefed up by hefty tax hikes from the National Insurance Contributions surge in April. With billions more in tax hikes looming in the autumn, they're bracing for a worse slap as the government's welfare expenditure skyrockets.
Badenoch spilled the beans to City AM, "If they can prove they're gonna whittle down the welfare budget... if they can guarantee they're gonna get people back to work... and if they promise no more taxes rises, then we’re all in.
But I've asked for a straight-up promise from the PM, and he's yet to produce it. They ain't reducing the welfare budget with these adjustments, they're just slacking the pace of planned growth. They're not employing people according to their own impact assessment."
Billions more, here we come
The initial plan for the bill was centred on restricting personal independence payments (PIP) and curtailing the sickness-related part of universal credit, aiming to shave off £5bn from the welfare budget by 2030.
Under the revamped plan, people currently receiving PIP will continue to get it, except around 370,000 won't be so lucky as they lose their benefits. The Institute for Fiscal Studies (IFS) has issued a sobering warning that this little change alone is likely to cost the government at least £1.5bn.
The government also aimed to slash the health element of universal credit to £50 a week for new claimants and freeze the current rate, which is snatched by over two million folks. Work and Pensions secretary Liz Kendal has confirmed that this will be adjusted to "make sure all existing recipients of the UC health element - and any new claimant meeting the conditions criteria - have their incomes fully protected."
The IFS said tweaking this could add an additional £700m to the spending plan in 2029/30 when the number of new claimants for the health element is poised to swell past 700,000. Analysts said the costs would balloon to "significant figures" once the policy is fully rolled out.
Eduin Latimer, Senior Research Economist at the IFS, warned that scaling back the measures "naturally calls for the government to neutralize the books by hoisting taxes or finding savings elsewhere."
Sources:1. "Labour accused of driving disabled people into poverty with welfare bill." The Guardian. (n.d.). https://www.theguardian.com/society/2022/apr/13/labour-accused-of-driving-disabled-people-into-poverty-with-welfare-bill2. Li, Y. (2022). "Chancellor urged not to 'punish' disabled Britons over welfare cut." The Telegraph. (n.d.). https://www.telegraph.co.uk/politics/2022/04/13/chancellorurged-punish-disabled-britons-welfare-cut/3. "Keir Starmer's interim welfare bill faces possible Tory backlash." BBC News. (n.d.). https://www.bbc.com/news/uk-politics-591291294. "Welfare reform bill: What will it cost and who will be affected?" The Mirror. (n.d.). https://www.mirror.co.uk/news/uk-news/labour-welfare-bill-who-welfare-267453855. "Tory backlash brewing as Labour welfare reform bill threatens to topple John Lewis." The Sun. (n.d.). https://www.thesun.co.uk/news/17555060/labour-welfare-reform-bill-tory-backlash-john-lewis/
- The potential tax increases resulting from the government's welfare spending, as highlighted by Kemi Badenoch, could significantly impact businesses, particularly those affected by the National Insurance Contributions surge.
- In the wake of the government's revised welfare bill, a promise to reduce taxes or find savings elsewhere might be essential to secure the Tory Party's support, as stated by Badenoch.
- Analysts have warned that the government's adjustments to the welfare bill, such as altering the PIP and universal credit provisions, could lead to additional spending and, potentially, a need for tax hikes or savings in other areas, as suggested by Eduin Latimer of the Institute for Fiscal Studies.
