The Chancellor is to fast-track a crackdown on sickness benefits in a move that threatens civil war in the Labour party.
Rachel Reeves is now targeting the ballooning benefits bill by adopting Tory proposals to reform assessments of the ability of people to work, which will remove benefits from hundreds of thousands of people.
The Treasury is understood to be specifically targeting benefits for those signed off work for mental health reasons, including anxiety.
The move faces a backlash from charities and Labour MPs who have previously rebelled over the axing the winter fuel payment for pensioners and a refusal to remove the two child cap on benefit support for struggling parents.
The reforms come as part of a broader strategy to revitalise Britain’s economy, with a major growth speech planned for this week.
This will see a major overhaul of Jobcentres, including the adoption of AI, to get the long term sick back into work.
Rachel Reeves has vowed to tackle spiralling welfare costs after criticising the Tories for shelling out £8billion more than they had initially budgeted on benefits.
She said: “As a country, we cannot keep footing the bill for the spiralling numbers of people out of work.
“I will tell the country that when it comes to our welfare system, I will not hesitate to act, as we have done to restore the public finances.
“This is an urgent problem. It can’t be ignored. We’ve got to grip it, once and for all.”
As it stands, the Government spends nearly £65billion on incapacity and disability benefits, exceeding the entire defence budget. Without action, it is predicted to top £100 billion by 2030.
Reeves is set to deliver a major speech this week promising to unleash Britain’s “animal spirit” and bring more Trump-like positivity to the economy.
The Chancellor will announce reforms to planning regulations, ensuring newts and “nimbys” can no longer block new housebuilding developments.
She has also pledged to slash “unnecessary regulation and red tape” and “turbocharge our economy”.
The reforms will include default approval for new homes near train stations, subject to appropriate applications.
Additionally, she will signal support for expanding airports, including Heathrow, despite opposition from some Cabinet members including Ed Miliband.
Eco rules hampering major infrastructure projects will be eased under the new plans, particularly addressing delays caused by protected species like bats.
