The chancellor's retreat on welfare bill cuts came on Thursday, after critics lined up to warn that his first budget had ducked the hardest choices. John Healey had begun the day telling BBC Radio 4's Today programme: "We have to bring the benefits bill down." By the end of it, the Treasury was insisting he had set no timetable for doing so within this parliament.

IFS warnings on spending decisions

The Institute for Fiscal Studies said Healey had left himself a mountain to climb by ducking big tax and spending decisions. According to the thinktank, he would have needed to set aside an additional £28bn a year to offset the impact of inflation on future spending plans and to meet the target of spending 3% of GDP on defence by 2030.

IFS director Helen Miller said Healey had opened the way to a spending review that looks pretty brutal for some departments, including real-term budget cuts. She added that he could face another season of damaging speculation about tax rises.

From 'bring the benefits bill down' to no timetable

The chancellor's position shifted visibly over the course of the day. Asked on the Today programme whether the benefits bill would fall before the next election, Healey said: "There will be. There will be a reduction in the benefits bill." He added that the government would do it "in a Labour way", because it is not good for Britain to have a bigger and bigger benefits bill.

Treasury officials then moved to clarify that he had not meant to give a timeline. Later, speaking to Channel 4, Healey put the point beyond doubt:

Instead of a timetable, the chancellor pointed to two forthcoming reviews: one from Alan Milburn on employment support for young people, and another from Stephen Timms on disability benefits. Milburn is expected to recommend additional spending upfront, aimed at bringing down costs over the longer term by helping more young people into employment.

What the welfare forecast shows

The scale of the question the reviews must address is set out in the Office for Budget Responsibility's numbers:

• •Total welfare spending is forecast to grow from £334bn last year to £431bn by 2030.
• •About half of that is spent on pensioners, and a quarter on sickness and disability benefits.
• •The OBR's forecast welfare spending has risen by £8bn since March.

Despite the pressure those figures represent, the welfare bill will not be part of the spending review, which focuses on departmental budgets. That leaves the promised reduction in the benefits bill without a vehicle and, following the chancellor's Channel 4 statement, without a deadline in this parliament.

A budget under fire and a thin buffer

The criticism of the budget itself focused on its cost-of-living measures, which centred on a £100 winter cost of living payment for most households. Critics accused Healey of taking a scattergun approach and of not hitting Britain's banks hard enough to fund the package.

Resolution Foundation chief executive Ruth Curtice said: "Faced with a tough backdrop amid global economic turmoil, the chancellor delivered a scattergun budget that did little to address the sharp challenges facing Britain." She argued cost of living support is being spread far too thinly, leaving even families receiving help facing higher energy bills than during the last energy price shock.

On the banks, the chancellor doubled the surcharge they pay on their profits from 3% to 6%, but only for 15 months. TUC general secretary Paul Nowak said it was right to tax banks to help people with their energy bills, but that banks could have been asked to pay a fairer share. He wants the bank tax review due in 15 months to extend and increase the tax if banks are still making windfall profits.

The fiscal room for manoeuvre is also narrower than it was in the spring. The IFS said the £15bn headroom Healey left against Labour's fiscal rules could easily be eroded by higher than expected energy costs. Rachel Reeves had built up £24bn of headroom at the spring statement, and the buffer has since absorbed some of the impact of the Iran war, which has driven up the government's cost of borrowing.

Miller called the decision to accept a smaller buffer a reasonable one, but said a lower buffer leaves the chancellor more exposed to future bad news - the backdrop against which Healey has now ruled out welfare bill cuts this parliament.