PM hints at major welfare reforms

Tony Blair has suggested the Government would use a third term in office to help those "languishing on benefits" to find meaningful employment and a way out of the "benefit trap".

Speaking in the Hungarian capital of Budapest on Wednesday, at the Policy Network conference on how to rebuild centre-left politics in Europe and beyond, the Prime Minister also hinted that public spending may increase to help pensioners struggling to get by in old age.

But Mr Blair said savings would have to be eked out from elsewhere to make up the difference.

The Blair government may balance the books by targeting Britain's current 2.7 million incapacity benefit claimants.

Mr Blair told the conference: "In the UK today we have a big debate about how we can provide pensions for people for the future.

"And we will probably have to spend more as a government supporting pensioners in the future.

"But that will mean we have to spend less, particularly on areas where there are people who could work but who presently languish on benefits."

Earlier this week, Mr Blair said there was a pressing need to end the dependency culture in Britain.

Alan Johnson, the pensions secretary, yesterday said a universal pension - dubbed the citizens' pension - which would be based on the length of residency in the UK, not just National Insurance contributions, would be a way forward to help those, particularly women, who have taken a career break and therefore are not entitled to a full state pension.

His comments came in the wake of the Turner pensions review

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