Kemi Badenoch: I’ll only support welfare bill if government pledges no tax rises

Kemi Badenoch has said she would only support Labour’s welfare bill if the government pledges not to raise taxes further at the next budget.

More than 100 Labour MPs had threatened to vote against the bill in its original form amid concerns over a reduction in personal independence payments to their constituents. The government has since signalled it would water down the bill to stave off a back-bench rebellion and avoid having to rely on opposition MPs to get the bill passed.

That has raised concerns among businesses that billions in extra tax rises will be needed in the autumn to cover the government’s swelling welfare budget, adding further pain to companies that have already been hit by huge increases to their tax bills from a rise in national insurance contributions in April.

Badenoch told Morning Wire: “If they can show that they’re going to actually reduce the welfare budget… if they can show they’re going to get people into work… and if they promise no tax rises, then we will support them. 

“But I’ve asked for a commitment at the dispatch box from the Prime Minister. He hasn’t brought that out.

“They’re not reducing the welfare budget with these changes, they’re just slowing the rate of planned increase. They’re not getting people into work according to their own impact assessment.”

Billions more in costs

The bill initially targeted restrictions on personal independence payments (PIP) and limited the sickness-related element of universal credit in a bid to shed £5bn from the welfare budget by 2030.

Under the new concessions, people who currently receive the personal independence payment (PIP) will continue to do so, meaning nearly 370,000 will not lose their benefits.

But the Institute for Fiscal Studies (IFS) has warned that this move alone is set to cost the government at least £1.5bn.

The government had also aimed to cut the health element of universal credit to £50 a week for new claimants and freeze the current rate, which is claimed by over two million people, at £97.

Work and pensions secretary Liz Kendal confirmed this would 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 the move could add an extra £700m to overall spending in 2029/30, when the number of new claimants of the health element is set to top 700,000. Analysts said the costs would mount to “significantly more once the policy is fully rolled out”.

Eduin Latimer, senior research Economist at the IFS, said the scaling back of measures would “naturally” require the government “to raise taxes or find other savings elsewhere”.