Binyamin Jayson: The hard truths we must face on reforming the welfare burden or see economic revival crushed

Binyamin Jayson is a writer focusing on UK politics and Conservative thinking.

Since entering office, Kemi Badenoch has promised to start telling hard truths. She has spoken about being tougher on benefits and has outlined her plans to take a more robust approach to the welfare state.

It is incumbent on Conservatives to communicate the urgent need to cut the size of the state.

Not only is this politically advantageous (as I argued in an earlier article for The Bruges Club), but it is, more importantly, an economic necessity. Our economy today is dangerously bloated and tough measures must be taken to shed some of the fat of the state.

Why the UK economy is stagnating

The last 30 years of over-intervention have led to a stagnating economy. Rising taxes, excessive government regulation, the net-zero fantasy, and, most significantly, the Covid-19 pandemic have left the UK economy struggling to stay afloat.

Immigration has been a serious challenge. Instead of small waves of highly skilled workers from cultures broadly compatible with our own, the UK has seen large influxes of low-skilled immigrants from third world countries with very different cultures. This has increased dependence on the state, pushed up taxes, strained the NHS, driven up house prices, and, most importantly, lowered living standards, leaving many Britons feeling poorer.

We have this awful habit of expecting government spending to keep increasing by 2-5 per cent each year, even when the government revenue is stagnant. This results in the government having to dig deeper into the pockets of British taxpayers. The reality is that our government is spending money which we simply don’t have, increases in either borrowing or taxes which will just result in further chaos and a speedier economic decline.

In Britain we have grown to expect European level public services with American level taxes. Given the stagnation seen across much of Europe, perhaps it makes more sense to look across the Atlantic and learn from the Americans, who have created a dynamic, efficient environment that fosters both wealth creation and broader economic growth.

The economic state of Great Britain will only get worse. Under Rachel Reeves, unemployment is up, taxes are up, borrowing is up, overall spending is up, and the rich are fleeing the country.  Even when she wanted to make cuts in the chaotic welfare bill, she was blocked by the far-left caucus in the Party who fail to understand the hard truth that the government is already spending far beyond their means.

Kemi Badenoch is absolutely right to push for welfare cuts, lower intervention and lower taxes. In a speech given to the Centre for Social Justice (CSJ), she powerfully communicated the urgent need to make cuts in sickness and disability benefits. The Conservatives have finally begun to seriously communicate the need to have a small state that works rather than a big state that fails. In that sense they are certainly going in the right direction.

A few months ago Kemi Badenoch revealed in an interview with the Financial Times that Argentinian president Javier Milei will be the ‘template’ for her government. Even though completely replicating Milei’s economic policy word for word won’t work due to our vastly different economic systems, I still think it would be highly beneficial to look over to Argentina and see how his Government is going about taking the chainsaw to the state.

When he took over in 2023, Milei eliminated roughly half of the government’s departments and privatised several industries. His radical economic approach drove poverty up to over 50 per cent and drew Argentina into a recession. Milei, however, did warn the Argentinians that things will get worse before they get better. Amazingly, he retained his popularity in the less economically prosperous periods.

Milei got rid of rent control programmes because he knew that they depress housing supply and explode rent for the majority of the population. As a result, housing supply in Buenos Aires increased by 170 per cent, and rents fell by 40 per cent.

BBVA forecasts 5.5 per cent growth for 2025. Inflation is steadily falling, poverty has declined, and agricultural production is booming. The Argentine economy has recovered remarkably since Javier Milei took office.

Although she may not be a libertarian radical at heart, Kemi Badenoch can certainly take lessons from Javier Milei’s bold economic reforms. If she communicates her message effectively, like Milei, she can keep the country onside through significant welfare cuts and other necessary austerity-style measures. The most urgent place to start in the UK is by tackling the unsustainable welfare spending, applying some of the same boldness that Milei has exemplified in Argentina.

Tackling welfare and pensions

 As part of a broader restructuring of the welfare state, as well as relooking certain disability benefits as she called for previously, she can also look at means testing the triple lock.

In 2024–25, the OBR reported that the UK is spending approximately £138bn on the State Pension, around 5% of GDP. Against total public spending of £1,278.6bn, this represents roughly 10.8 per cent of all government expenditure. With an aging population and a fundamental imperative to cut welfare, maintaining the triple lock on the State Pension is simply not viable.

Campaigning to means-test the triple lock would be a huge challenge for any party, but especially for the Conservatives. Most people only begin voting Tory in their 60s, which makes it particularly difficult for Kemi Badenoch to argue for cuts to state pensions. Yet in a recent BBC interview, Badenoch said politics is about “doing the right thing, even if it’s unpopular.” Pensions are exactly where she should start.

If we as Conservatives don’t champion true fiscal conservatism, our country is likely to continue sliding further into economic decline. DWP tables project State Pension spending for 2025–26 at approximately £145.6 billion for Great Britain—an increase of over £7 billion from the previous year. We must be honest about what we can afford, and this level of spending is simply unaffordable and is not at all sustainable.

This is why our pension system needs reform. People may not want to hear it, but at a time when our economy is stagnant and our population is aging, we simply cannot afford to continue with the current pension system.

Reforming the current pension system is not straightforward. One potential approach could be to means-test the state pension entirely, or alternatively, to means-test only the triple lock mechanism and align it more closely with wage growth. Whatever form it takes, such a reform would represent a step towards reducing the size of an increasingly bloated state. We need to ensure any pension reform is done safely and doesn’t leave too many people behind, but we need to speak about the pension, now. This will be a tough message to communicate but along with a broader message of welfare restructuring we can frame this as part of a wider process of rewiring our economy.

A conservative path forward

Our economy needs restructuring. We have seen 30 long painful years of stagnation. With lower taxes that incentivise business start-ups and wealth creation, we can finally get our economy off the ground and moving again. It’s time to implement real tough fiscally Conservative policies of cutting intervention, cutting welfare and cutting taxes.

Either we can continue in the delusion that further borrowing and increased taxes will help us out of this mess, or we can be honest and call for real economic reform.