Keir Starmer is facing the biggest rebellion of his premiership over plans to reform the welfare state. Almost a third of Labour MPs have signed an amendment by Meg Hillier aimed at derailing Liz Kendall’s flagship bill, which is due for debate in Parliament next week. The Government will be working over the weekend to water down the bill to avoid a defeat.
Back in March I recommended the Government should look again it it’s proposals, so I probably should be happy.
This is the second time Starmer has run into trouble on welfare. He was recently forced into an embarrassing U-turn over changes to the Winter Fuel Allowance following a public backlash. And yet, despite the political cost, he seems determined to push through reforms. Why?
The Uncomfortable Maths of the Modern Welfare State
To put it simply: too few people are working, and too many are taking out of the system.
In 1951, there were three workers for every non-worker. Today, that ratio has slipped to three workers for every two non-workers. And back then, many of the non-workers were homemakers who drew little or no support from the state. Today, the largest non-working group is pensioners—by far the most expensive group to support.
This shift is unsustainable. As the number of non-workers grows, the tax burden on workers increases while the real value of benefits declines. Everyone gets less for more.
The Hidden Costs of an Ageing Society
Much of the debate about welfare focuses on people “taking out more than they put in.” But what’s often missed is who that really is. Spoiler: it’s not asylum seekers or “scroungers”—it’s pensioners.
- The average female pensioner who retired in her early 60s will have used up all the National Insurance contributions she made while working before she turns 70.
- The average male pensioner did so shortly after his 70th birthday.
They paid in during a time when contributions were lower, life expectancy was shorter, and the NHS treated far less. They’re drawing out in an era of high life expectancy, comprehensive medical treatment, and more generous pensions.
This isn’t a pensioner-bashing exercise—it’s a testament to the success of modern medicine and public health. But it means the numbers no longer work.
We’ve Already Run Out of Money
The UK effectively ran out of money to sustain the welfare state when Liz Truss crashed the economy. Since then, we’ve kept the system going by borrowing from international financial markets. That can’t go on forever.
Investors are willing to lend—for now—because they believe the UK government understands the need for reform. But if that confidence falters, so will our access to cheap credit. Interest rates will rise, and the crisis will deepen.
What’s the Solution?
There’s only one long-term answer: change the ratio of workers to non-workers.
This means more people who currently aren’t working will need to start. That’s the direction of much of the Starmer government’s agenda—even if it’s not being framed that way:
- Expanding childcare access
- Boosting workers’ rights
- Encouraging higher wages
- Allowing people on disability benefits to return to work without penalty
These are designed to increase the workforce and reduce dependency.
Yes, you can quibble with the detail. Frankly, these aren’t the changes I would have made either. But ignoring the problem is no longer an option.
Asylum Seekers Aren’t the Problem—And Never Were
Cynics on the right will tell you this crisis is caused by migrants and asylum seekers. The maths doesn’t back them up.
- Supporting asylum seekers costs around £2.5 billion a year.
- The state pension? £145 billion.
- Other pensioner benefits? £30 billion.
- NHS care? £50 billion.
- Social care? £32 billion.
For every pound we spend on asylum seekers, we spend £99 on people over 65.
What About Taxing the Rich?
Yes, higher taxes on the rich could help. But we already raised taxes by £40 billion last year. The room for further rises without slowing growth—and worsening the fiscal picture—is limited.
Some on the left still cling to the fantasy that a “real socialist” government could avoid this trade-off. But markets won’t keep lending forever to governments that duck hard decisions. If this government fails to deliver reform, the task for any future left-wing administration becomes impossible.
Some of the Labour MPs planning to vote against the Government won’t be persuaded by compromises, sadly there are still a few Labour MPs who would rather be a crank Corbynite party in opposition then try and change the country in Government.
Reform Isn’t a Betrayal of the Welfare State—It’s a Last Attempt to Save It
It’s good that governments listen and adapt—that’s pragmatism, not weakness. But this week’s amendments may end up sending a darker message: that the welfare state is now both unaffordable and unreformable.
And that would be an existential crisis for anyone who still believes in the post-war consensus.
Postscript: Starmer’s Legislative Blitz
While the headlines focus on welfare, the Starmer government is pushing through the most ambitious legislative programme in decades. The last King’s Speech outlined 39 bills, including:
Economic Reform & Investment:
- Budget Responsibility Bill
- National Wealth Fund Bill
- Employment Rights Bill
- Planning and Infrastructure Bill
Public Services:
- Passenger Railway Services (Public Ownership) Bill
- Better Buses Bill
- NHS reform legislation
- Social Care and Mental Health Bills
Constitutional Reform & Accountability:
- English Devolution Bill
- Hillsborough Law
- House of Lords (Hereditary Peers) Bill
Energy & Environment:
- Great British Energy Bill
- Sustainable Aviation Fuel Bill
- Water (Special Measures) Bill
Rights & Justice:
- Renters’ Rights Bill
- Football Governance Bill
- Draft Conversion Practices Bill
- Draft Equality (Race and Disability) Bill
Plus a private members’ bill on assisted dying—government in all but name.
Why the Rush?
Starmer looks like an old man in a hurry—pushing through change at a breakneck pace despite a huge majority and the prospect of multiple terms in power.
This isn’t typical career politician behaviour. He’s already had a successful career. He has a knighthood. He’s faced vitriol and a coordinated campaign to delegitimise his government. You get the feeling he’s not planning to stick around forever.
If he steps down before the next election, the timing of the Manchester and London Mayoral races could open the door for Andy Burnham or Sadiq Khan to enter Parliament in time for a leadership contest—untainted by the hard compromises of government.
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