Higher spending on Universal Credit and disability benefits has contributed to an expected £8.6 billion breach of the welfare cap, according to the Government.

Work and Pensions Secretary Liz Kendall confirmed the forecast overspend in a written statement to MPs, adding ‘no action’ was taken by the previous Tory administration to prevent it.

The welfare cap was introduced in 2014 in a bid to limit the amount spent on certain social security benefits and tax credits, such as disability living allowance, child benefit and pension credit.

The Government has established a new welfare cap for this Parliament and Ms Kendall said the Department for Work and Pensions will outline a plan to ensure spending is on a ‘sustainable path’.

The Conservatives said they had pledged at the general election to reduce welfare spending by £12 billion, adding Labour ‘appears to be set on a different course’ with a ‘42% potential increase’ in the welfare cap over the next five years.

In a written ministerial statement, Ms Kendall said: ‘The Office for Budget Responsibility has made a formal assessment that the previous government’s welfare cap and margin for 2024/25 is on course to be exceeded by £8.6 billion and is therefore not met.

‘Under the terms of the Charter for Budget Responsibility, I am required to lay a paper before the House proposing measures to reduce spending to within the level of the cap or to explain why the breach is considered justified.

‘The forecast breach, due in particular to expected higher expenditure on Universal Credit and disability benefits, is unavoidable given the inheritance from the last government.

Work and Pensions Secretary Liz Kendall confirmed the forecast overspend in a written statement to MPs, adding ‘no action’ was taken by the previous Tory administration to prevent it.

The welfare cap was introduced in 2014 in a bid to limit the amount spent on certain social security benefits and tax credits, such as disability living allowance, child benefit and pension credit.

Shadow Treasury minister Richard Fuller said: ‘With the country now spending over £156 billion on welfare every year, and with the obvious pressures on public expenditure, there should be a determination to find savings in the welfare budget.’

‘The likely scale of the eventual breach has been known since March 2023. No action was taken by the previous administration to avoid it.

‘Whilst this Government has already shown that it will not shy away from difficult decisions, this breach could only have been addressed through implementing immediate and severe cuts to welfare spending. This would not have been the right course of action.

‘The forecast breach underlines the previous government’s failure to control welfare spending and failure to bring forward genuine reform to get more people into work.’

Ms Kendall said the Government has an ambition to achieve an 80% employment rate, adding: ‘We are delivering radical reforms to drive up employment and living standards, getting a grip of the benefits bill, and making the system fairer.’

Proposals to reform the health and disability benefits system are expected to be published in the spring, Ms Kendall said.

Speaking in the Commons, shadow Treasury minister Richard Fuller said the welfare cap has ‘shown its value’ over the last decade.

He added: ‘With the country now spending over £156 billion on welfare every year, and with the obvious pressures on public expenditure, there should be a determination to find savings in the welfare budget.

‘Indeed, that was the intention of the Conservative Party at the last election with a commitment to reduce expenditure by £12 billion.’

Mr Fuller went on: ‘The Labour Government today appears to be set on a different course, with a pathway for the welfare cap which is up not down – growing from this year’s cap of £137 billion to reach £195 billion by 2029/30, a 42% increase in the welfare cap.’