Tony Blair has warned that Labour must slash the UK’s ballooning welfare bill and end the triple lock guarantee for pensions to get the sluggish UK economy growing again.
The former prime minister said the rising number of people on disability benefits was unsustainable and must be cut as a priority.
He also said the triple lock on pensions, which sees state pension payments increase in line with either inflation, average earnings growth or 2.5 per cent, was no longer affordable.
His warning follows a major intervention in a 5,600 word essay where he launched a scathing attack on Keir Starmer’s government and the Labour Party in which he called for a return to its “radical centre” if it is to secure a second term.
His concerns on the mounting welfare bill follows a climbdown by Sir Keir’s government last summer when a massive Labour backbench rebellion saw him forced to abandon plans to reduce the benefits budget by £5bn a year.
Sir Tony told the BBC’s Today programme on Wednesday morning: “We are about to end up in a situation where before the pandemic, only five or six years ago, we had 2.8 million working age people on disability and incapacity benefits. We are going to have by the end of this decade almost 5 million people [on incapacity benefits].
“You can’t carry on with a situation where you are going to end up spending more on incapacity and disability benefits than you are on defence.”
Referring to the Labour welfare rebellion last year he added: “I know all of these changes are really difficult which is why I think whoever takes them on is going to have a really tough time.”
Turning to the pensions bill, he added: “It’s like the triple lock on pensions, you look at the figures and you look at where Britain is going to be in 20 or 30 years time if it continues with this policy, it is not affordable.
“At some point you have got to be able to stand up and have an honest debate with the public which is to say ‘look ultimately we are probably taxing people too much, spending too much, borrowing too much at the moment’.
“If we carry on like this, we're going to create a situation where economically we're not able to grow because we have put such a weight affecting growth on the back of our economy."
He also urged for a much greater involvement of the private sector with the health service using artificial intelligence.
He also warned that politics needs to go beyond "traditional left/right politics” and suggested that he agreed with the Tories on a number of their policies.
Ministers have been unable to say whether Sir Tony gave the prime minister and Downing Street a warning ahead of his major intervention which comes at a time when the Labour leadership appears to be about to change.
But Sir Tony also took aim at Andy Burnham for the Greater Manchester mayor’s suggestion that 40 years of neo-liberalism was the problem.
“Is he really saying nothing done by the Thatcher government or New Labour was right?” Sir Tony said of the man expected to challenge Sir Keir for the Labour leadership if he wins the upcoming Makerfield by-election.
But supporters of Mr Burnham from the left of the party have already pushed back on sir Tony’s intervention.
Norwich South MP Clive Lewis wrote: “Whether it is Tony Blair’s interventions, the bond market’s reaction or privatised utilities warning of doom, the pattern is the same.
“When anyone suggests progressive change, those with wealth and power push back. Whether the figure in question is Andy Burnham or [Green leader] Zack Polanski, progressives need to understand what we are up against, and how to defeat it.”
He went on: “Burnham needs a state that is able to pay for big-ticket, social-democratic projects: council homes, clean energy, public transport, water, skills and resilience. Those things cannot be wished into being. They require public investment at scale.
“That is where Rachel Reeves’s fiscal rules become more than an accounting device. In plain English, they are self-imposed limits on borrowing. They are political choices, not laws of nature. But they matter because they set the boundaries of what Labour says it can afford.”
