'I joined the Labour Party, not the benefits party': Government's former 'cost of living tsar' demands welfare overhaul at this week's Budget

Lord Walker, the boss of supermarket Iceland and a Labour peer, has urged a welfare overhaul at the Budget by declaring: 'I joined the Labour Party, not the benefits party.'

The 46-year-old businessman warned against 'leaving people languishing on benefits' as he called on Chancellor John Healey to help 'make work pay'.

Lord Walker called for a 'meaningful cash reward for people who move from long-term benefits into a job and stay there'.

He also demanded the Chancellor make it cheaper to employ younger workers by offering tax relief to firms that do so.

And he told Mr Healey to also slash corporation tax for smaller businesses and entrepreneurs in a bid to boost economic growth.

Lord Walker, who was former prime minister Keir Starmer's 'cost of living tsar' until July this year, said he had 'seen inside Government how painfully slow decisions can be'.

He pledged his backing to new PM Andy Burnham and Mr Healey and credited them for 'recognising that growth and youth employment matter'.

But, in his call for action ahead of Mr Healey unveiling his first Budget on Wednesday, he added that 'good intentions aren't enough'.

In an article for the Sun on Sunday, Lord Walker wrote: 'I joined the Labour Party, not the benefits party.

'I said that in the House of Lords earlier this year and I stand by every word. Because I believe work gives people dignity, independence and a stake in society.

'And Labour should be the party that helps people get on in life, not leaves them dependent on the state. But look at where Britain is today.

'One in seven households has nobody in work and around 1.3million children are growing up in long-term workless households. A quarter of a million live in homes where nobody has ever worked.

'Think about that. Children growing up without ever seeing a parent go out to earn a living.'

Setting out his demands ahead of the Budget, Lord Walker added: 'Of course, we must protect people who genuinely cannot work. That’s what a decent society does.

'But leaving people languishing on benefits when they could be working isn’t compassion. It’s letting them down.

'We need more carrot and, yes, sometimes more stick. I’d introduce a meaningful cash reward for people who move from long-term benefits into a job and stay there. And reward employers prepared to give them a chance.'

Lord Walker is set to be disappointed in his call for more action on welfare in Wednesday's Budget, with Mr Burnham said to have delayed a major report on youth inactivity to prevent it overshadowing the fiscal showpiece.

The Government is now expected to publish two reports next month - one by Alan Milburn on youth unemployment and one by Stephen Timms on disability benefits - before coming forward with proposed welfare reforms next year.

Sir Keir named Lord Walker as his 'cost of living champion' in February – despite the Labour peer having previously only given the then-PM a 'six out of ten' rating.

He is the chairman of Iceland and the son of the supermarket chain's founder, Malcolm Walker.

Lord Walker previously hoped to be a Conservative MP, but quit the Tories in 2023 before going on to support Labour.

The businessman attended the launch of Labour's manifesto ahead of the 2024 general election, but later went on to be critical of Sir Keir's first few months in power.

He last year gave the Government a lacklustre 'six out of ten' rating for its performance and also criticised former Chancellor Rachel Reeves' tax hikes on businesses.

Despite his comments, Sir Keir handed Lord Walker – who has previously expressed a desire to be PM himself – a life peerage at the beginning of this year.