Delays add £2bn to the cost of Chancellor's planned benefits bill

Labour claims the problems are another example of 'Tory welfare waste'

Forecasts threaten to undermine George Osborne’s ‘welfare cap’ (Reuters)

The Government will have to spend £2bn more on benefits than it planned a year ago because of delays to two flagship projects, official documents have revealed.

Figures in the Office for Budget Responsibility's forecasts, published alongside the Autumn Statement, threaten to undermine George Osborne's much-heralded welfare cap, which is at the heart of his bid to slash state spending over the next five years. The figures reveal that processing delays have added to the welfare bill.

Rachel Reeves, the shadow Work and Pensions minister, claimed the statistics were another example of what she called "Tory welfare waste".

The OBR's economic outlook reveals the Department for Work and Pensions will have to spend £1bn more on incapacity benefits this year than planned a year ago, because of delays to the process of assessing people for Employment and Support Allowance (ESA), and a further £1bn more on disability-benefit spending than planned because of delays to the roll-out of the Personal Independence Payment (PIP). The ESA was designed to be the replacement for sickness benefit but a backlog of 600,000 has built up and the health-assessment firm Atos has quit its government contract. On the PIP delay, ministers admitted earlier this year that it was "unacceptable" that only 40 per cent of cases had been dealt with.

The Chancellor announced in his mini-Budget last week that after slashing £20bn from the welfare bill, benefits spending would be cut further, with tax credits and unemployment benefits for migrants scaled back, saving the Government £1bn, and more reductions over the next parliament. A cap on overall welfare spending will be introduced next year.

Ms Reeves said: "David Cameron's government is spending £2bn more on disability benefits than ministers planned just a year ago, because of benefit assessment delays and failure. It's another example of Tory welfare waste.

"The failure of ministers to get a grip on disability benefits is hitting disabled people and putting the public finances under greater pressure, with billions of pounds wasted."