Labour's Budget Squeeze

Cabinet ministers have been warned that any remaining Budget funds will be redirected to Labour’s top five “missions,” highlighting increased financial pressure on Whitehall.

Chief Secretary to the Treasury, Darren Jones, has launched a spending review to set departmental budgets for the next three years. He urged ministers to identify cost-saving measures, including adopting more efficient technology. With tight finances, many areas are unlikely to receive additional funding in the October Budget, and some may face cuts.

Pension and Welfare Concerns

Despite the government's £84 billion in various compensation programs, the 3.6 million women affected by the state pension age changes (Waspi) have yet to see any financial relief. Compensation appears unlikely in the upcoming Budget, despite the Department for Work and Pensions being found guilty of "maladministration" by the Parliamentary and Health Service Ombudsman. A Waspi representative noted that while ministers must manage tight budgets, they should also admit when an independent body finds the system to have failed.

Labour is also considering reforms to welfare spending, potentially tightening eligibility for personal independence payments (PIP) and incapacity benefits. Welfare costs are projected to rise significantly, with disability benefits alone expected to increase from £30 billion to £52 billion by 2028-29.

Social Care and Taxation

Labour has scrapped plans to cap social care costs, saving the Treasury around £1 billion. Sir Andrew Dilnot criticized this decision, calling it a “tragedy” and expressing disappointment that social care is “Being given too little attention, being ignored, and being tossed aside.”

In tax policy, Chancellor Rachel Reeves has ruled out raising taxes on working individuals but may maintain current tax thresholds, a move that could increase tax revenue through “fiscal drag” as wages rise.

Infrastructure Cuts

Reeves has also announced the cancellation of several infrastructure projects, including the A303 tunnel under Stonehenge, to save £785 million.