Chancellor toughens rules on benefits as he announces Civil Service freeze

Chancellor Jeremy Hunt has reiterated the government’s commitments to make benefits sanctions harsher – while also committing to raising the national living wage above £11 an hour.

In his speech to the Conservative Party conference in Manchester, the senior minister also revealed a plan to save £1bn by freezing the expansion of the Civil Service and reducing the level of staffing to pre-pandemic levels.

Mr Hunt‘s intervention comes around six weeks ahead of his autumn financial statement.

While not as tumultuous as his predecessor’s party conference speech last year – where Kwasi Kwarteng had to admit his party was U-turning on a key part of his mini-budget – Mr Hunt is still under pressure.

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Many voices within the Conservative Party want him to cut taxes, including cabinet ministers.

Speaking to Sky News’ Sunday Morning with Trevor Phillips, Levelling Up Secretary Michael Gove said he would “like to see the tax burden reduced by the next election”.

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Mr Hunt on Saturday said the government was “not in a position to talk about tax cuts at all” – but all bets are off when it comes to party conferences.

The government has been eyeing welfare changes as a way to cut down on spending, and also encouraging people back into work in a bid to grow the economy.

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Mr Hunt told the party membership in Manchester: “Since the pandemic, things have been going in the wrong direction. Whilst companies struggle to find workers, around 100,000 people are leaving the labour force every year for a life on benefits.

“As part of that, we will look at the way the sanctions regime works. It is a fundamental matter of fairness. Those who won’t even look for work do not deserve the same benefits as people trying hard to do the right thing.”

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The chancellor also announced that Work and Pensions Secretary Mel Stride would look again at the benefit sanctions regime to make it harder for people to claim benefits while refusing to take active steps to move into work.

And a spokesman confirmed the proposals would be set out in the upcoming autumn statement.

Speaking last month, Mr Stride said that he was consulting on changes to the Work Capability Assessment, the test aimed at establishing how much a disability or illness limits someone’s ability to work.

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Mr Hunt also confirmed a new policy that could seek people looking for new jobs, with a freeze on the number of civil servants.

“We have the best civil servants in the world – and they saved many lives in the pandemic by working night and day,” said the chancellor. “But even after that pandemic is over, we still have 66,000 more civil servants than before.

“New policies should not always mean new people. So today I’m freezing the expansion of the civil service and putting in place a plan to reduce its numbers to pre-pandemic levels. This will save £1bn next year.

“And I won’t lift the freeze until we have a proper plan not just for the civil service but for all public sector productivity improvements.”

Raising the living wage

On the national living wage, Mr Hunt said the government was going to accept the Low Pay Commission’s recommendation to raise the baseline to at least £11 an hour from April 2024.

Resisting sizeable pay increases in the public sector has been part of the government’s strategy to keep spending and inflation under control.

Mr Hunt said: “Since we introduced the national living wage, nearly two million people have been lifted from absolute poverty. That’s the Conservative way of improving the lives of working people. Boosting pay, cutting tax.”

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Ahead of the speech, Prime Minister Rishi Sunak, said: “I’ve always made it clear that hard work should pay, and today we’re providing a well-earned pay rise to millions of people across the country.

“This means a full-time worker will receive an increase of over £1,000 to their annual earnings, putting more money in the pockets of the lowest paid.

“We’re sending a clear message to hard-working taxpayers across the country; our Conservative government is on your side”.

Labour’s shadow work and pensions secretary, Liz Kendall, said her party “believes in responsibility – that those who can work, should look for work and take jobs when they are offered”.

But she said the government also had “a responsibility to create real opportunities and not write people off”, adding: “This is something the Tories have utterly failed to deliver.

“We now have record numbers of people out of work due to long-term sickness, which is costing taxpayers an extra £15bn a year just since the pandemic.

“[Labour] will tackle the root causes of economic inactivity by driving down NHS waiting lists, reforming social security, making work pay, and supporting people into good jobs across every part of the country. Real opportunities matched by the responsibility to take them up – because that’s what fairness is all about.”

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