Labour's dismal failure to grip spiralling benefits bill 'could cost taxpayers £700 each'

Labour's failure to rein-in benefits spending could cost each taxpayer £700 more on average every year by the end of the decade, a leading think tank warns. The Centre for Social Justice (CSJ) estimates spending on working-age disability, incapacity and carers benefits will rocket from £49.6billion in 2023-24 to £76.8billion in 2029-30.

It has calculated that "with 39.1 million people paying income tax, the £27.2 billion increase will cost each taxpayer £700 more on average every year by the end of the decade". It claims that with the same amount of money, the Chancellor could slash 3p off income tax - with £5billion left over".

Joe Shalam, the CSJ's policy director and a former special advisor at the Department for Work and Pensions under the Conservatives, said: "Everyone can see the system is failing. Abandoning proper welfare reform while costs surge is a political choice with a £27billion bill attached.

"That bill lands on every taxpayer, and even worse, a lost generation will be stuck on benefits with no route back to work or independence. It is time for change this Budget."

The Government was forced to water down welfare reforms in July to prevent a humiliating defeat at the hands of Labour rebels but the CSJ is pushing for a radical overhaul of benefits in this month's Budget to avoid a "lost generation" of workers.

It warns numbers receiving Personal Independence Payments (PIPs) have shot up by 1.3 million since the pandemic, with more than 800,000 expected to start receiving the benefit by the end of the decade. It report claims for depression and anxiety have gone up "threefold since 2019".

The Government has launched a major review of PIPs, led by former Chief Secretary to the Treasury Sir Stephen Timms. However its terms of reference state its purpose is not to "generate proposals for further saving".

The think tank warns this decision will "sharply increase welfare spending and see millions consigned to a life on benefits".

It claims the "current disability and health benefits model traps people out of work, pushes up long-term sickness, and delivers worse outcomes at higher cost".

Shadow Chancellor Sir Mel Stride accused Labour of "planning for failure" by not making savings from welfare.

He said: "Taxes are going up to pay for higher welfare spending, thanks to Labour's weak leadership."

He added: "We need urgent welfare reform to tackle the skyrocketing numbers going onto long-term benefits. Every person on benefits who could be in work is a travesty - for them, for our economy and for taxpayers. The Conservatives have set out reforms which would reduce the benefits bill by £23bn, so we can avoid damaging tax rises and get Britain working again."

A spokesperson for the Department for Work and Pensions said: "We want a welfare state that is there for those who need it and supports people into work, while delivering fairness to the taxpayer. That's why we've launched the Timms Review to make sure PIP is fair and fit for the future.

"We're shifting our focus from welfare to work, skills and opportunities so more people can move out of poverty and into good, secure jobs as part of the plan for change."