The UK Chancellor usually plays second fiddle to the Prime Minister’s first violin – with one exception: Budget Day. Then it’s his – or her – moment of glory.
But this Wednesday, our Chancellor will tell us she is a victim. Standing at the despatch box, she will play an ambushed heroine battling forces beyond her control: unforeseen black holes, Brexit and Donald Trump’s tariffs. No one should be taken in.
The higher taxes she will impose aren’t the result of fate, but of colossal failure. And no performance can hide that from the millions who will pay the bill.
The truth is simple: Labour are unwilling and unable to control Britain’s ballooning welfare bill. So instead, they are going to put your taxes up.
In the summer they failed to make £5bn of savings from the £140bn (and rising) working-age benefits bill. And then this week, if they lift the two-child benefits cap, they will spend another £3.5bn more. That’s £8.5bn in total – about the same as the amount they’ll raise by freezing income tax thresholds.
If that’s the choice she makes, Rachel Reeves will be taxing the incomes of people who work and have saved to increase the benefits going to millions who don’t.
Benefits for people of working age now cost £140bn a year. For every £3 sunk into welfare, we spend only £1 on defence. Nearly 8,000 people signed onto Universal Credit every day of October. Ten million working-age adults are now on benefits, and once on, few ever come off.
“Why didn’t you fix that when you were in government?”, is a question I’m often asked. The fact is that before the pandemic we brought the welfare bill down. But I’m not blaming Covid for what happened next.
As a society we’ve rightly tried to reduce the stigma of mental illness. In government we invested in mental health services and aimed for “parity of esteem” with physical health. But this had unintended consequences.
Every month thousands of people are signing onto sickness benefits for mental health or neurodiversity, at a rate which doesn’t make sense – and that the country cannot afford.
And then the incentives trap people once they’re in. Sickness benefits can give you £5,000 more a year than working full time on the minimum wage. You won’t be fired or made redundant. You don’t even have to show up.
That’s why I’ve said we must stop giving sickness benefits for low-level mental health problems and neurodiversity. They’re not solving the problem, and the bill is out of control.
Yet this is the system Labour MPs are determined to keep. Phrases like “I didn’t come to Parliament to cut benefits” stick in my mind from this summer’s welfare debate, shortly before the government abandoned their savings attempt.
And now, as Keir Starmer struggles to keep his job, it looks like another bone will be thrown to his backbenchers. We never know where the U-turns will end up, but it seems the end of the two-child benefit cap is nigh.
Where does this get our country? More people unemployed. More people off sick. More spent on benefits. More taken in taxes.
The news that emigration from the UK is higher than expected gives us part of the answer. Over a quarter of a million Britons left the country last year. Successful people are leaving, taking their taxes and spending with them. So are the bright young things – the entrepreneurs and wealth creators of the future.
Those staying are asking themselves, “why bother?” Why bother striving to build a bigger business? Why work all those evenings and weekends?
There goes growth and with it, opportunity.
As Kemi Badenoch says, the rider is now as large as the horse: 28 million working people are supporting roughly the same number who are not in work.
We are at a tipping point.
On Wednesday, Rachel Reeves should face down her backbenchers and tell the truth: the country cannot afford this.
There is another way: get a grip of the welfare system, make savings instead of hiking taxes, go for growth over decline.
Conservatives would make different choices. But she won’t.
Helen Whately is Conservative MP for Faversham and Mid Kent and shadow secretary of state for work and pensions
