UK government defends welfare cuts as economists warn 250,000 could fall into poverty

The UK government is fighting to defend new welfare cuts that independent economists, think tanks and even some of its own backbench MPs warn will force tens of thousands of people into economic hardship.

The measures were announced in the House of Commons yesterday by Chancellor Rachel Reeves, who denies that her government is pursuing economic austerity, something it has promised not to do.

Reeves' proposals are designed to help move long-term unemployed people back into the workforce.

But critics say the chancellor's welfare cuts will end up harming vulnerable people.

The Office for Budget Responsibility (OBR), an advisory body of independent economists funded by the British Treasury, has estimated that if the measures are implemented as proposed, 250,000 more people will be in poverty by the end of the decade, including 50,000 children.

In response, Reeves has said the OBR's assessment is too limited, arguing that it does not take into account the impact of people returning to the workforce and extra spending designed to move people from welfare into work.

"We’re putting £1bn (€1.2bn) in for targeted employment support to get people back to work," she said. "So I’m confident that our plans, far from increasing poverty, will actually result in more people having fulfilling work, paying a decent wage to lift themselves and their families out of poverty."

Reeves made the same point on Thursday, telling Sky News that she is "absolutely certain" that the reforms "will get people into work".

"And we know that if you move from welfare into work, you are much less likely to be in poverty," she said. "That is our ambition, making people better off, not making people worse off, and also the welfare state will always be there for people who genuinely need it."

However, the UK's leading anti-poverty organisations have raised the alarm about the possible consequences of the cuts.

The Joseph Rowntree Foundation, a think tank that campaigns against poverty, warned in a statement that Reeves' proposal "will harm people, deepening the hardship they already face".

“The Chancellor also said the world has changed, and today’s announcements places the burden of that changing world on the shoulders of those least able to bear the load — the 3.2 million families left worse off by these cuts," said the organisation's chief, Paul Kissack.

“With living standards for the poorest under continuing assault, the government needs to protect people from harm with the same zeal as it attempts to build its reputation for fiscal competence," he added.

The Labour government's plans to kickstart the economy were dealt a blow on Wednesday when the OBR halved its annual growth forecast to 1%.