What are the government’s options for reducing welfare spending?  

The final Milburn report is expected in the coming weeks, as well as a separate final report from disability minister Stephen Timms into the options for PIP reform.

There has been speculation that these could recommend creating a new welfare system for people under the age of 25, external, so they are not eligible for PIP and receive lower payments than older people.

There are also suggestions Timms could propose a new PIP eligibility test to reduce access, external, although he was not specifically instructed to find savings.

Reforms along these lines could potentially make some savings to the welfare bill relative to the existing trajectory of rising spending, as well as reducing forecast welfare spending as share of GDP.

But some analysts argue that to be effective in delivering sustainable savings, such reforms are likely also to require the government to spend a lot more, external to enable young people in particular to get into and remain in work.

This was signalled by the interim Milburn report which noted that for every £1 the government spends on employment support for young people around £25 is spent on benefits, suggesting he could propose a significant increase in government spending on welfare-to-work schemes.

This means that any welfare savings could, in the near term at least, be offset by additional spending in other departments.

However, in the long term this approach could still deliver welfare savings if the employment support was effective.

Graphics by Rob England