SIR Keir Starmer has promised to impose tough reforms on public services in return for extra billions in investment.
The PM scrambled to reassure panicked markets in the wake of Labour’s £40 billion tax-hiking Budget.
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Meanwhile, experts told The Sun on Sunday that reforming welfare to give local communities more powers could get 700,000 people back to work.
The Government is drawing up plans for sweeping reforms across the state to get better value for money out of taxpayers cash.
This will include changing the welfare system, using more tech in the NHS and reviewing prison sentences.
Writing in The FInancial Times, Sir Keir said the next stage of his economic plan is “reform”.
He said: “Just as we cannot tax and spend our way to prosperity, nor can we simply spend our way to better public services.
“That is why reform is an essential pillar of this government’s agenda. Reform of our creaking state. Reform of our public services. And reform of our economy.”
Proposals to reform the welfare system are set to be unveiled before Christmas.
The welfare bugdet is predicted to soar from £296.3 billion this year to £361.4bn by 2029, according to the Office for Budget Responsiblity.
There are currently a record 2.8 million people off work on long term sickness.
The Centre for Social Justice said Britain should adopt reforms already in place in Holland which devolves power for employment support to local communities.
The respected think-tank is calling on the Government to switch £6 billion from Whitehall to local government to tackle economic inactivity.
The radical reforms could get an estimated 700,000 Brits back to work, the organisation said.
Andy Cook, chief executive of the CSJ, siad: “The Government must take radical action to tackle the epidemic of long-term sickness and economic inactivity by adopting a Dutch-style system.
“Giving local communities these powers can get 700,000 Britons working again.”
Analysis by the CSJ has found that spending on working-age health and disability benefits is expected to increase by over £19 billion by the end of the parliament.
This is even more than the £16 billion the Government expects to net by raising National Insurance on employers.
The Sun on Sunday revealed last month that ministers want to give more power to regional mayors to spearhead back to work programmes and control job centres.
