06/06/2013 04:55 BST | Updated 05/08/2013 06:12 BST

Liam Byrne Blames Tories For 'Messed Up' Public Finances

Liam Byrne: 'The Government frankly has messed up the public finances'
Liam Byrne: 'The Government frankly has messed up the public finances'

Shadow work and pensions secretary Liam Byrne has dismissed suggestions that Labour was acting on welfare now to restore its credibility after it lost control of it while in office.

He told BBC Breakfast: "The amount of money that we spent on out of work benefits actually fell by about £7.5 billion while we were in office.

"What did go up is the amount of money we spent on pensions, because we inherited some of the worst pensioner poverty in the western world, and we did also invent tax credits, and a lot of people rely on tax credits to balance the books at the end of the month."

He added: "The challenge we've got now is that the social security budget went up during the crash, and it's not come down again.

"It's as clear as day that there's going to be a very, very difficult inheritance in 2015, because the Government frankly has messed up the public finances, and we are saying it's not sustainable in the long term."

Meanwhile, Ed Miliband will bid to wrest back the initiative in the benefits debate today by pledging to cap the overall welfare bill.

The Labour leader will admit the public's faith in the system has been "shaken" - and promise to ease the burden on the taxpayer by cutting housing costs, cracking down on low pay, and making people work for longer before getting job seeker's allowance.

A limit for the social security bill would be set as part of every three-year spending review - although it would be flexible if the economy plunges into recession.

The intervention, in a speech in London, comes as the Opposition seeks to restore its reputation for economic management and shift position on the issue of welfare.

Earlier this week shadow chancellor Ed Balls said the party would stick to the coalition's 2015-16 departmental budgets if it wins the general election, and wealthier pensioners would be stripped of winter fuel payments.

Tories have also seized on news that Labour would not reverse the coalition's child benefit cuts for high earners. The party fought the 1% cap on working age benefit rises and £26,000 limit on how much households can receive.

Mr Miliband will point out this morning that the social security budget is the biggest item of Government spending alongside the health service.

"The next Labour government will have less money to spend," he is to say.

"If we are going to turn our economy around, protect our NHS, and build a stronger country we will have to be laser-focused on how we spend every single pound. Social security spending, vital as it is, cannot be exempt from that discipline.

"So we will reduce the cost of failure in the social security system, including the cost of long term worklessness and the cost of housing benefit."

Mr Miliband will say there is now a "clear choice" for voters. Where the Tories would "slice away" at individual benefits, Labour is determined to control costs by attacking long term problems like persistent unemployment, low pay and housing shortages.

"We can't afford to pay billions on ever-rising rents when we should be building homes to bring down the bill," he will insist. Thirty years ago for every £100 we spent on housing, £80 was invested in bricks and mortar and £20 was spent on housing benefit.

"Today, for every £100 we spend on housing, just £5 is invested in bricks and mortar and £95 goes on housing benefit.

"We expect individual families to negotiate with their landlords when we know there aren't enough houses to go around. It is inevitable that tenants end up paying over the odds - and so does the state, in the housing benefit bill.

"It's time to tackle this problem at source. We can start to bring about the shift from benefits to building. Bringing the housing benefit bill down for the long-term too."

The Labour leader is to accuse the coalition of allowing long-term worklessness to rise to its highest level for a generation, costing the taxpayer billions.