Chancellor John Healey has brought back plans for welfare reform as he vowed not to allow Britain’s benefits bill spiral out of control.
Speaking at his first Labour conference speech as chancellor, he told members it is not progressive “to allow a bigger and bigger benefits” bill.
He was later even clearer in an interview with ITN.
He told ITN: “We have to bring the benefits bill down. I made the case that as a moral case, not just an economic case, that we can't have a bigger and bigger benefits bill. We can't have a system that offers payments and no help.
“And the best thing, especially for young people who at the moment are too often locked out of any future, the best thing we can offer is not a benefits payment, but a first job with a wage and with a future.”
His speech was cheered by Labour members who had previously been sceptical about the Starmer government’s attempts to curtail welfare with £5bn of cuts.
After laying out his credentials as a Labour politicians from his roots in the miners strike in the 1980s through to Tony Blair’s New Labour government and to the Treasury with Andy Burnham, Mr Healey made it clear he shared the values of the audience in the conference centre in Liverpool.
He told them: “Conference, it is not progressive to allow a bigger and bigger benefits bill, and a system which offers an income but doesn’t offer a future,” he said.
“So once again, as a Labour government, it falls to us to act. And this is more than just an economic must. This is a moral duty.
“I refuse to write off a million young people like the Tories have done.”
He added that this was a “moral duty” for the government as he went on to announce a £100m boost to the local apprenticeship services to get Britain’s Neets into employment.
“Our social security system must always be there for those who can never work,” he said. “But for everyone else, benefits should be a bridge to work, to wider participation, to a better life, not a trap that people can’t escape.”
Treasury sources said the speech was Mr Healey’s attempt to “make a moral case for welfare reform in a way that bringing the party with them”.
Sir Keir Starmer and Rachel Reeves faced a massive backbench rebellion when they sought to table their own welfare reforms in June 2025.
But Treasury sources pointed to the “really positive response from the hall” on Monday, which they said “perhaps hasn't happened previously” under previous chancellors.
They said it was “a sign of how this this road that the party is on” in its efforts to get “welfare reform done in a sustainable way”.
The chancellor announced in his speech that mayors will be handed £100 million to fund a new scheme aimed at getting young people into apprenticeships.
Mr Healey said the new “Local Apprenticeship Service” would see teams acting like “football scouts” to link young people with firms, including those who had never been offered an apprenticeship.
It came as a series of ministers privately admitted that the yneeded to revisit attempts to cut the welfare bill which derailed Sir Keir Starmer’s government after a backbench revolt last year.
But they hoped that “better presentation” from Mr Healey and the prime minister would allow them to succeed where Sir Keir and former chancellor Rachel Reeves failed.
“We need to do it,” one minister said but added: “We need to tell a different story.”
Mr Healey told the party conference in Liverpool: “The best thing we can offer a young person isn’t a benefit payment, it’s a first job with training and a wage.
“Our determination to help, matched by their determination to hope.”
Mr Healey described the service as “a down payment” on the work of former Cabinet minister Alan Milburn to tackle the almost one million young people not in employment, education or training (Neet).
The new service was the first announcement in a speech setting out Mr Healey’s economic vision for the country, pledging to bring about a “new age of industrialisation” for Britain.
In his speech, the Chancellor announced that Rolls-Royce would invest £300 million in factories in Derby, Bristol, Glasgow and Rotherham, describing the investment as a “new confidence in Britain lit by this Government, driven forward by business”.
And he stressed that his first Budget next month would maintain his party’s commitment to fiscal discipline, saying it would also give the public “breathing space” and drive “good growth and jobs in more places”.
But he warned that the UK faced more straitened times than when he had served as a junior Treasury minister under Gordon Brown’s chancellorship, blaming the Conservatives for the country’s debt burden.
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