The Politics of Welfare

“Every meeting I have is ‘who can we tax in order to pay benefits to others?”. So said the current Work and Pensions Secretary Pat McFadden in his now infamous WhatsApp message to Peter Mandelson. It was an embarrassing leak but more importantly underlines a bigger challenge for the government in an area where political battlelines are being drawn by Nigel Farage’s Reform UK party. 

Before looking at the positions of the Labour Party and Reform UK, who are providing the primary political opposition on this front at the moment, it is worth looking at the size of the issue. Welfare spending in the UK in 2025/26 amounted to £333.7bn, equivalent to 10.9% of GDP. By 2030-31 those figures are is forecast to reach £408.6bn, 11% of GDP. 

One way or the other this is a matter that needs to be grasped. It is both a huge financial challenge and a massive societal problem. 

It is now becoming a key political battleground between a Labour Party, resurgent under its new leader and Prime Minister Andy Burnham, and Reform UK as they seek to shake off a torrid few months that have been dominated by allegations about the finances of senior party members. 

The other three parties in our five party system, the Conservatives, Liberal Democrats and the Greens are currently pointing at various problems with welfare without demonstrating that they have been forming plans and policies to solve those problems. 

Andy Burnham and the government’s approach to dealing with the welfare budget is developing but it is clearly going to be much more focused on ‘supply side’ solutions. Speaking to Andrew Marr shortly before becoming prime minister Burnham said “I’m not going to go with the crude cuts to benefit levels that then just put people who are struggling in even worse poverty”. The focus of the new Prime Minister and his team is to bring welfare spending down by increasing employment, improving access to affordable housing and tackling health issues that are preventing people from working. 

Burnham clearly believes, with some justification, that there are public policy barriers that are driving up welfare and housing spending. The ‘rewiring the state’ agenda that the government announced is directed at tackling these underlying causes. And this approach is popular with a large proportion of the voting public who agree with Burnham that people should be given more help to be liberated from welfare dependency. 

Also popular with sizeable chunks of the electorate is the approach that is being taken by Reform UK. In a speech on 17th August, Reform UK’s Treasury spokesman, former Tory MP Robert Jenrick announced their proposals for tackling the ever growing welfare budget. 

Jenrick’s proposals can be considered as being much more focused at the ‘demand side’ of the ledger. Among other policy proposals Reform, if they form the next government, would: 

• Require all work-capable long-term claimants to contribute by working for their communities 

• Make British citizenship a condition for accessing almost every form of benefit 

• Reintroduce the Two-Child Benefit Cap and toughen up fraud and error enforcement 

They estimate that, if implemented in this fiscal year, their overall package would save around £50bn a year by 2030. 

While the proposals themselves (from either party) have not dominated the airwaves for both parties they have helped with a regaining of the political narrative. It was reported after the Reform press conference at which Jenrick announced the policy proposals, that senior Reform officials were remarking that it was the first time in months that they had held a press conference and not been asked about Nigel Farage’s finances. 

Similarly, the Labour Party are once again being given a hearing on these issues where until recently the public had largely turned off. 

Over the coming months this divide between Labour and Reform will start to define the debate in the run to the next general election. Other parties need to catch up quickly with their own ideas. Burnham is staking a lot on a slow structural supply-side recovery while Reform UK is utilising a highly visible, reallocation strategy designed to appeal to an increasingly impatient electorate. 

Whichever party can convince the electorate that they have the answers to this issue will reap significant dividends at the next general election.