Government announces disability benefit cuts, aims to save £5bn
Work and pensions secretary Liz Kendall told parliament on Tuesday that the changes were part of a "significant reform package" intended to help disabled people enter the workforce.
Before the announcement, Starmer said the government could not avoid making difficult decisions and that the current benefits system was not sustainable.
THE GOVERNMENT has announced cuts to disability welfare payments, aiming to save over £5 billion by 2030. The decision comes as the country faces economic challenges, with slow growth and rising public spending.
Work and pensions secretary Liz Kendall told parliament on Tuesday that the changes were part of a "significant reform package" intended to help disabled people enter the workforce.
Labour, which has historically been criticised by the right for high spending on benefits, argues that the cuts are necessary to address a £22 billion budget shortfall it says it inherited from the previous Conservative government.
Kendall’s announcement was made ahead of chancellor Rachel Reeves’s Spring Statement on 26 March, where further spending cuts across various government departments are expected to be outlined.
Rising benefit costs
Kendall stated that UK spending on benefits had continued to rise since the pandemic, unlike in comparable countries where it had stabilised or declined.
Before the announcement, prime minister Keir Starmer said the government could not avoid making difficult decisions and that the current benefits system was not sustainable. "The government could not put off difficult decisions," he said, adding that the existing system was "not defensible in moral or economic terms."
He pointed out that one in 10 working-age people were claiming at least one type of health or disability benefit. Starmer’s spokesman also noted a significant increase in applicants citing anxiety and depression as their primary condition.
The reform focuses on reducing eligibility for the Personal Independence Payment (PIP), a benefit designed to support disabled individuals. PIP is not means-tested and is available to those in employment.
Official data released on Tuesday showed that 3.66 million people in England and Wales were receiving PIP at the end of January, a 71 per cent increase from pre-pandemic levels.
"Every day, there are more than 1,000 new PIP awards," Kendall told MPs. "That is not sustainable long term," she added.
According to the Office for Budget Responsibility (OBR), spending on health and disability benefits for working-age adults is projected to rise from £48.5 billion in 2023/24 to £75.7 billion in 2029/30.
The OBR also reported that the UK spent £296.3 billion on welfare in 2023/24, with almost half allocated to pensions.
This spending accounted for nearly 11 per cent of the UK’s gross domestic product (GDP).
Reactions to the cuts
Labour MP Clive Lewis criticised the government’s approach to disability benefits, calling it contradictory.
"On the one hand, it's trying to fix our broken welfare system and at the same time save money. This is not possible," Lewis told AFP before Kendall’s statement. "And it is doubly impossible if we are to adhere to the Labour values people elected this government to pursue."
The announcement comes as the government recently committed to increased defence spending, adding further pressure on public finances.
Meanwhile, official data released last week showed that the UK economy unexpectedly contracted in January, raising concerns ahead of the upcoming Spring Statement.
Global economic uncertainty, including the impact of tariffs imposed by former US president Donald Trump, has also contributed to financial pressures.
India’s prime minister Narendra Modi will visit China later in August, his security chief said on Tuesday (19), during talks with Beijing's foreign minister in New Delhi.
Modi will attend the Shanghai Cooperation Organization summit opening on August 31 in Tianjin, his first visit to China since 2018, Ajit Doval said, in public comments at the start of a meeting with Beijing's foreign minister Wang Yi.
"Our prime minister will be visiting for the SCO summit," Doval said, speaking of "new energy" in diplomatic ties.
China "attaches great importance" to Modi's visit to the SCO summit, Wang said, according to an official translator.
"History and reality proves once again that a healthy and stable China-India relationship serves the fundamental and long term interests of both of our countries," Wang added.
The comments came as the neighbours rebuild ties damaged by a 2020 border clash.
"There has been an upward trend. Borders have been quiet. There has been peace and tranquillity," Doval told Wang as he opened the talks.
"Our bilateral engagements have been more substantial. The new environment that has been created has helped us in moving ahead in the various areas that we are working on.”
Wang said the setbacks the two countries experienced over the past few years were not in the interests of the people of the two countries, according to a translation of his remarks.
During talks on Monday (18) with Subrahmanyam Jaishankar, India's foreign minister, Wang said the two countries should "view each other as partners and opportunities, rather than adversaries or threats".
He pointed to the resumption of "dialogue at all levels" and "maintenance of peace and tranquility in border areas" as evidence bilateral ties were on a "positive trend of returning to the main path of cooperation".
Earlier on Tuesday, an Indian source said China had promised to address three key Indian concerns.
Wang, the source said, had assured Jaishankar that Beijing is addressing India’s need for fertilisers, rare earths and tunnel boring machines.
The Indian foreign and mines ministries did not respond immediately to requests for comment.
China's commerce ministry also did not immediately respond to a request for comment.
It was not immediately clear whether China had agreed to approve export licenses faster or grant blanket exemptions for India.
China has previously committed to speeding up export licenses for Europe and the US, without actually dismantling the control regime.
China's exports of rare earths and related magnets jumped in June after these agreements and as the commerce ministry worked through a huge backlog of applications.
However, rare earth magnet exports to India were still down 58 per cent compared to January levels, according to Chinese customs data.
June is the last month for which country-level data is available.
India has the world's fifth-largest rare earth reserves, at 6.9 million metric tons, but there is no domestic magnet production. India relies on imported magnets, mainly from China.
Bilateral relations have improved since October, when Modi and Chinese president Xi Jinping met for the first time in five years in Russia.
Chinese and Indian officials have said in recent weeks that the two countries were discussing the resumption of border trade, which has been halted since 2020.
Its resumption would be symbolically significant, and follows discussions to resume direct flights and issue tourist visas.
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Britain’s food retailers have said that higher employer taxes and regulatory costs as well as increased staff wages are adding to inflationary pressure
British grocery inflation nudged down to stand at five per cent over the four weeks to 10 August, data from market researcher Worldpanel by Numerator showed on Tuesday (19), providing a little relief for consumers.
The figure, the most up-to-date snapshot of UK food inflation, compared with 5.2 per cent in last month’s report.
“We’ve seen a marginal drop in grocery price inflation this month, but we’re still well past the point at which price rises really start to bite and consumers are continuing to adapt their behaviour to make ends meet,” Fraser McKevitt, head of retail and consumer insight at Worldpanel, said.
The researcher said prices were rising fastest in markets such as chocolate, fresh meat and coffee and falling fastest in champagne and sparkling wine, dog food and sugar confectionery.
Britain’s food retailers have said that higher employer taxes and regulatory costs as well as increased staff wages are adding to inflationary pressure from higher prices for commodities.
Trade body the British Retail Consortium, which represents Britain’s biggest retailers, predicts that food inflation will hit 6 per cent by the end of the year, putting more pressure on household budgets in the run-up to Christmas.
The Bank of England has forecast it will hit 5.5 per cent before Christmas and then fall back as global wholesale factors fade.
Official UK inflation data for July will be published on Wednesday. (Reuters)
London mayor Sadiq Khan said he would be willing to meet Donald Trump, even as he warned the US president could be “inadvertently radicalising people” and was “not a force for good”.
The Labour politician dismissed Trump’s recent jibes during a visit to Scotland, where the president called him “a nasty person” who had “done a terrible job”. Khan said the remarks were “water off a duck’s back”, though at times they made him feel “nine years old again” and “in the school playground”.
Speaking at the Edinburgh Festival Fringe, Khan criticised Trump’s record. “Somebody who has views like he does about black people, about women, about gays, about Muslims, about Mexicans, thinks I’m nasty. Really. He is the leader of the free world, arguably the most powerful man in the world, and really,” he said.
Khan noted that since Trump began his second term in January, “there have never been more Americans applying to British citizenship and living in London”, adding: “I think Americans have got good taste by and large.”
The mayor said he hoped Trump would come to London on his state visit next month, stressing that the capital’s “diversity” was a strength. But he warned that some of Trump’s rhetoric risked moving “potentially dangerous” views into the mainstream.
“He inadvertently – I’m not going to suggest he does it deliberately – he inadvertently could be radicalising people with views that could lead to them doing things that are dangerous,” Khan said.
Still, Khan said he would be “more than happy to meet President Trump” to show it was possible to be both British and Muslim. “If there was an opportunity to meet President Trump, I would be more than happy to do so,” he said. (Agencies)
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Healthcare professionals from India, Africa and other Asian countries account for 23 per cent of HSE nurses and midwives, according to the Irish public health service provider. (Representational image: iStock)
IRELAND'S Health Service Executive and the largest nurses’ union have spoken out against the “racist abuse and assaults” targeting members of the Indian community and cautioned that their exodus would have a “dramatic impact" on the healthcare sector.
In a statement on Wednesday (13), the Health Service Executive (HSE) said the effective operation of many essential health services in Ireland would be “seriously threatened” without the support of the thousands of international staff employed in the country’s hospitals and community services.
Healthcare professionals from India, Africa and other Asian countries account for 23 per cent of HSE nurses and midwives, according to the Irish public health service provider.
“The HSE unequivocally condemns all incidents of racist abuse and assaults of people from abroad, their families and the wider community. It is unacceptable. People should not be afraid to leave their house or go to work for fear of abuse,” said Anne Marie Hoey, chief people officer of the HSE.
“We are proud of our organisation’s diversity and are dependent on all our staff for the delivery of frontline, essential services… We are deeply grateful to international workers who have chosen to move their lives and families to Ireland to work with the HSE and help provide essential care and support for patients,” she said.
Hoey said the HSE was “saddened” to hear reports that some international staff, now fearful for their personal safety, are considering moving away.
“This will have a dramatic impact on staff levels and the provision of health services and should be a cause for alarm for people in this country,” she said.
The intervention came after a spate of violent assaults on Indians in the capital Dublin and other regions were reported to the Irish police force, An Garda Síochána.
Last week, the Irish Nurses and Midwives Organisation (INMO) condemned the “racially motivated abuse” of its workers and called for robust action against the perpetrators.
The Indian Embassy in Dublin earlier this month issued a safety warning after "an increase in instances of physical attacks reported against Indian citizens in Ireland recently".
Indians "are advised to take reasonable precautions for their personal security and avoid deserted areas, especially in odd hours", the embassy said in a statement.
The Irish embassy in New Delhi said it "condemns" the attacks and said it was in contact with police regarding investigations.
Local media reported that a six-year-old girl of Indian origin was assaulted and called racial slurs earlier this month in southeast Ireland.
The Irish Times also reported that an Indian taxi driver was attacked with a broken bottle by two passengers in Dublin and told to "go back to your country".
There are around 80,000 people of Indian descent in Ireland, according to various estimates – around one per cent of Ireland's population.
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In his Independence Day address, Modi said the goods and services tax (GST) would be reformed and rates lowered by Diwali, which falls in October. (Photo: Getty Images)
INDIA’s government will reduce consumption tax rates by October, a top official said on Friday, hours after prime minister Narendra Modi announced reforms to support the economy amid trade tensions with the United States.
The federal government is planning a two-rate structure of 5 per cent and 18 per cent, removing the existing 12 per cent and 28 per cent slabs, the official told Reuters, requesting anonymity as the plans are still under discussion.
According to the official, 99 per cent of items currently taxed at 12 per cent, including butter, fruit juices, and dry fruits, will be shifted to 5 per cent. The move could affect companies such as Nestle, Hindustan Unilever, and Procter & Gamble.
The announcement follows rising trade tensions between New Delhi and Washington over US tariffs on Indian goods. Modi on Friday urged people to promote domestic products, with some of his supporters calling for a boycott of American goods.
In his Independence Day address, Modi said the goods and services tax (GST) would be reformed and rates lowered by Diwali, which falls in October.
"This Diwali, I am going to make it a double Diwali for you. Over the past eight years, we have undertaken a major reform in goods and services tax. We are bringing next-generation GST reforms that will reduce the tax burden across the country," Modi said.
The final decision will be taken by the GST Council, chaired by the finance minister and comprising state finance ministers, the official said. The council is expected to meet by October.
Brokerage Citi estimates that about 20 per cent of items, including packaged food, beverages, apparel and hotel accommodation, are in the 12 per cent slab. These account for 5-10 per cent of consumption and 5-6 per cent of GST revenue.
If most of these are moved to the 5 per cent slab and some to 18 per cent, the government could see a revenue loss of about 500 billion rupees, or 0.15 per cent of GDP, Citi said. This could take the total policy stimulus for households in the 2025-26 financial year to 0.6-0.7 per cent of GDP, it added.