John Healey was forced into a humiliating climbdown over welfare on Thursday.

The Chancellor triggered chaos in Whitehall after suggesting the runaway benefits bill would be cut before the next election in 'a Labour way'.

Within hours, the Treasury was trying to row back on his words and Downing Street distanced itself, saying Andy Burnham would not commit to an 'arbitrary timetable' for curbing spending on benefits.

And, last night, Mr Healey reversed his position, saying it was 'not correct to say that we're going to bring this welfare bill down in this Parliament'.

Kemi Badenoch said it was 'astounding' that the Government could not commit to reducing benefits this decade, despite the costs forecast to rise by more than £60billion by 2029.

The Tory leader told the Daily Mail: 'Labour is addicted to benefits and this is why they are getting into a mess every day.

'In just 24 hours, the Chancellor has said there will be no cuts to the benefits bill, gone on the BBC and said actually there will, then had to admit that actually there won't be. 

'All while officials scramble to clean up the chaos. It appears the Prime Minister's 'foot in mouth' is contagious.'

Mrs Badenoch said ministers should be 'cutting welfare, funding defence and slashing red tape to get Britain growing', adding: 'Instead they are tinkering around the edges, too scared to confront their MPs ahead of an early election.'

The row came after new forecasts suggested the welfare bill is set to continue rising sharply following Labour's decision to abandon reforms last year.

The Centre for Social Justice think-tank revealed that working age and child benefits alone are set to jump by £33.4billion over the next five years. 

The increase is so big it will swallow up the entire proceeds of the stealth raid on tax thresholds, which is expected to raise £33.1billion over the same period.

Joe Shalam, policy director at the CSJ, said: 'Public support for a system there to protect the most disadvantaged is being pushed to breaking point. A holding position will not fix that. No doubt this will all be addressed in a manifesto that is surely in the post.

'But Britain cannot wait for an election. When the sugar rush wears off, all that will be left is wasted money and wasted potential.'

Meanwhile, the Office for Budget Responsibility warned that benefits spending has grown so rapidly under Labour that the Government is now on course to break its own generous 'welfare cap'. 

The cap covers most working age benefits but excludes pensions. It was set by the last Conservative government at £135.4billion, only to be lifted by Rachel Reeves to a total of £204.2billion by 2029.

The OBR now predicts that spending covered by the cap is now on course to hit £207billion in 2029, busting the limit by almost £3billion.

Breaking the cap would require ministers to bring forward measures to reduce spending – or justify the breach to Parliament.

Polling by More in Common found the public believes spending on benefits is 'unsustainable' by a margin of 60:23. 

Concern cuts across party lines, with Labour voters raising doubts about long-term affordability. The PM yesterday claimed the Government was working 'flat out' to cut spending on benefits and wants to do so 'as soon as we possibly can'.

Downing Street said two reviews will come next month and a policy paper would follow, but could not say whether it will be published in the next 12 months.

Any reforms are then likely to need legislation. Eduin Latimer, from the Institute for Fiscal Studies, said the 'most straightforward' way to get 'guaranteed savings' was to cut the level of benefit payments or reduce the number of those eligible, as the Conservatives and Reform are proposing.

He added: 'An alternative is to try to invest in support, things like employment support or increased health spending, which might reduce demand for benefit spending. I think that is closer to this suggestion from the Government of a 'Labour way' … but it's much more uncertain.'

Delivering his Budget on Wednesday, the Chancellor said the Government would 'bring down the welfare bill' but offered no new proposals to cut a bill that is forecast to top £350billion next year. 

In an interview broadcast yesterday, but recorded on Wednesday evening, he suggested in response to a question on BBC Radio 4's Today programme that there would be welfare cuts before the next general election.

But Treasury officials insisted his words did not commit the Government to cuts before the election. 

At the end of a shambolic day, hours after Downing Street had distanced itself, Mr Healey U-turned, saying he had no expectation of making quick savings on welfare.

Reform's Treasury spokesman Robert Jenrick said Mr Healey had been 'utterly humiliated'. He added: 'You can change the Chancellor, but you will never change the Labour Party's addiction to benefits spending.'

Poundland could disappear from the High Street within days as Andy Burnham asks questions over how its owners handled a sales process.

Thousands of nervous staff are waiting to hear what will happen to the discount retailer after it filed a notice to appoint administrators with the High Court today. 

This will give the business, bought by US investment firm Gordon Brothers for less than £1 last year, some breathing room – ten days – to find a rescue deal. AlixPartners is poised to take over a potential insolvency process.

But the Poundland brand and its 600 shops will not be sold as a whole, leading to a carve-up of the 36-year old retailer, meaning jobs are at risk at any shops that are not bought. 

And on Thursday night, the Prime Minister said he is ready to demand answers from owners amid a 'deeply worrying time' for staff and their families. 

Burnham told The Telegraph: 'We want to see jobs protected. If there was a potential owner to avoid this that hasn’t been accepted, then the Business Secretary and I want to know why that is the case.'

It would mark the biggest high street collapse since Debenhams closed its doors in 2021 with the loss of 12,000 jobs. 

Job losses could hit 600 shops and a distribution centre in Makerfield, Prime Minister Andy Burnham’s constituency, which employs around 270 people.

Business secretary Jonathan Reynolds also said he was ‘very much concerned’ and would push for answers as workers and bosses seethe over its failure to find a buyer.

He told The Telegraph: ‘If it is true that it was not necessary to put the business into administration then the present owners will have to account for that.’

Why has Poundland struggled? 

Chains like Poundland are battling shoppers with constrained budgets while costs, such as employing people, have increased – following Government moves to hike wages and employer National Insurance contributions. Savvier shoppers are looking for cheaper online alternatives, including Amazon, Temu and TikTok Shop.

Former owners, the Warsaw-listed Pepco Group, made some wrong moves that did not go down well with its customers, including putting Pepco clothing in its shops.

Its most recent woes stem back to last year, when it narrowly avoided collapsing into administration. The chain was sold in June 2025 to US firm Gordon Brothers for a nominal €1 amid 'challenging trading conditions'.

By November 2025, around 100 Poundland shops had been shut or earmarked for closure. Two months later, as part of its radical turnaround plan, Poundland had shut 149 stores with 2,200 job losses.

But this year, Poundland bosses insisted it was turning a corner, pointing to like-for-like sales growth of 3.3 per cent in the three months to September 26.

Poundland's managing director Barry Williams said earlier this month: 'Our recovery plan is working, thanks to our investment in simple low pricing and new ranges, powered by our new in-house teams.'

Why is there a dispute between Poundland’s owners and its bosses?

Both shop workers’ union Usdaw and Poundland’s management have accused Gordon Brothers of mishandling a sales process, which it kicked off at the beginning of September.

The union met with the minister for the future of work, Kate Dearden, on Wednesday, amid warnings of what would be the biggest High Street collapse in years.

Three directors, appointed less than a fortnight ago, this week walked out following a dramatic dispute with owners Gordon Brothers.

Hours later the retailer’s management hit out at the owners, calling the process ‘unexpected, unwanted and avoidable’.

Government adviser David Bickerton is set to ask ‘fairly basic questions of senior people around Poundland’ in order to ‘establish what the situation is,’ on behalf of the business secretary, the Financial Times reported.

What does a notice to appoint administrators mean?  

‘Filing a notice of intention isn’t administration itself,’ explains Julie Palmer, managing partner at real estate advisory group BTG.

Instead, it effectively keeps the wolves from the door for up to ten business days of protection and helps the firm preserve cash.

She added: ‘If an appointment follows, the administrators take control of the company from the directors. Their first duty is to try to rescue it as a going concern. 

'If that isn’t possible, they aim for a better result for creditors than liquidation would give. In practice that usually means a sale, either of the whole business or in parts. For staff and customers, stores normally keep trading while that happens, but the risk is that the business is broken up, with stronger stores sold and weaker ones closed.’

Who could buy the shops?

Owner Gordon Brothers rejected a takeover offer from Irish real estate firm Martin Property Group – despite management and unions arguing this was the best deal on the table.

This would have been for the whole business, including its brand and full store estate.

But now it seems like other major retailers, especially those with grand expansion plans, could pick up some shops from Poundland.

The owner of The Range, Homebase and Wilko – known as Britain’s ‘Del Boy Billionaire’ – is thought to be interested. Chris Dawson, 74, who runs CDS Superstores, acquired the Wilko brand out of administration in 2023.

Dawson got his nickname, the 'Del Boy billionaire', via the press as a reference to his yellow Lamborghini Urus, which has a personalised number plate 'DE11 BOY', a homage to the character Del Boy Trotter from the classic TV show Only Fools and Horses.

Dawson started his career as a market trader, before founding The Range and scaling it to a major high street chain. He has since acquired Wilko and Homebase out of administration.

Poundstretcher owner Fortress is also understood to be looking at buying shops. The rival discount retailer runs more than 300 shops in the UK.

Supermarket Lidl also hopes to be able to snap up some of its stores if the retailer fails to sell the whole company. The discounter is pushing ahead with a major expansion mission.

TG Jones owner is also understood to be interested in buying parts of the Poundland business.

The private equity group owns Britain's WH Smith shops, now known as TG Jones stores and previously bought ailing accessories chain Claire's, Hobbycraft and The Original Factory Shop.

All Claire's standalone shops in the UK and Ireland stopped trading earlier this year after its financial woes saw it fall into administration twice in a year.

Are shops open and will staff be paid?

Poundland shops are currently open and operating business as usual.

But Poundland's managing director Barry Williams wrote a letter to around 12,000, accusing the retailer’s owner of limiting the chain's access to funding.

This has effectively prevented bosses from making routine payments, with suppliers now worried they will not be paid on time this week, according to Sky News.

But sources close to the crisis talks insisted that this should not prevent staff from being paid at the end of the month.

Williams told staff: 'I'm disappointed to have to tell you that Gordon Brothers have given instructions that restricts our access to funds that we would, in normal circumstances expect to access fully under our existing loan agreement.'

Gordon Brothers are accused of breaching the terms of an asset-based lending facility by failing to submit a budget to the shareholders on time despite an agreed grace period – with the business now outperforming those forecasts, Sky News reported.

Julie Palmer, managing partner at real estate advisory group BTG, says that in this situation, ‘existing commitments such as payroll and supplier invoices can still be met from cash already available‘.

But bosses cannot ‘draw further funds to cover anything beyond that,’ she says, which poses a problem as retailers typically draw from these loans in the autumn to buy Christmas stock - before repaying from festive sales in December and January.

She added: ‘If a lender has concerns about longer-term viability, it may simply be unwilling to increase its exposure by funding that stock build, particularly when it can’t be sure who will own the business, or what shape it will be in, by the time the money needs to come back.

‘That leaves management with very little room to manoeuvre. It limits their ability to buy stock or take on new commitments, and puts directors in a difficult position, because they must be confident the company can meet its liabilities before taking on new ones. Once credit insurers pull back and suppliers start asking for payment up front, the squeeze tightens quickly.’