She defended the cuts in a speech on Wednesday, insisting they were essential to prevent the system’s cost from spiralling out of control.
But economists have cast doubt on her claim of impending “collapse”.
“Whether or not they can do that is dependent upon absolutely loads of things, of which disability benefits is only one small part,” he said. “I don’t think that we’re near the Government being unable to borrow money from the markets to make its spending commitments.”
“They could choose to try and raise taxes to not make this cut, and so on. Instead, it is taking the choice to try and save some money here.”
According to the Office for Budget Responsibility (OBR), just under a quarter of the money the Government spent in the year ending April 2025 went on welfare – £303bn in total and the equivalent of around 11 per cent of the UK’s GDP.
Working-age benefits, which include universal credit and jobseekers allowance, cost £118bn over the same period, while disability benefits cost £90bn.
It should be noted that the OBR assessment is that changes to disability and incapacity benefits will save £3.4bn in 2029-30 rather than the more than £5bn claimed by ministers.
Mr Waters said: “People mean different things by the welfare state, but if you think of it as meaning the benefit system for working age people and for pensioners, at the moment, the spending is in the neighbourhood of more than £300bn a year.
How much would scrapping the triple lock save?
If the state pension triple lock was axed, it would not save anything immediately but would save the Government in the future, Waters said. But the savings would be significantly lower than the £5bn worth of cuts announced, he said.The triple lock uprates the state pension by the highest of inflation, average earnings growth, or 2.5 per cent each year. One proposed alternative to this is a so-called double lock, where the state pension increases by the highest of inflation or average earnings growth each year.
If inflation and earnings growth settle down below 2.5 per cent in the future, then removing the 2.5 per cent element of the triple lock could save some cash.
square MONEY June 2025 DWP payment dates for benefits and pensions, in full
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The state pension is by far the most expensive of the UK’s benefits, accounting for £146bn of the welfare budget in the year ending April 2025. By the 2027-28 financial year, it is expected to rise to £153bn.
If the Government had opted for a “double lock,” which would only increase the pension by the higher of inflation or average earnings, the cost to the Treasury would have been around £4bn lower.
The think tank has instead called for a “smoothed earnings link,” which would involve setting a target for the state pension’s level relative to average earnings and capping increases if it is above that level.
According to an analysis by the Resolution Foundation in 2023, this approach “would reduce welfare spending in 2041-42 by some 0.5 per cent of GDP – or £14bn in today’s terms”.
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