The Labour leader also defended his finance minister against claims by the Conservative opposition that she misrepresented the state of the nation’s finances in the run-up to her budget last week.
Chancellor Rachel Reeves’s budget proposed higher taxes to fund measures to tackle the cost-of-living crisis, including lifting a benefit cap on children.
It was fairly well received by the markets and left-wing Labour MPs, but has led to accusations that Labour broke manifesto promises not to increase taxes for workers.
“As the budget showed the path to a Britain that is truly built for all requires many more decisions that are not cost-free and they’re not easy,” Starmer said in his Monday speech.
He said his government “must also reform the welfare state itself”.
Over the summer, the government had to back down over earlier proposed social security reforms — including slashing disability and sickness benefits — after more than 120 of its own MPs rebelled.
Many of his own MPs have complained of a disconnect between Starmer’s leadership, which is focused on fighting the rise of the hard-right Reform UK party, and Labour’s traditional centre-left principles.
Britain has a record number of people — many of them young people — on long-term sickness leave and out of the job market.
“If you are simply written off because you’re neurodivergent or disabled, then it can trap you in a cycle of worklessness and dependency for decades,” Starmer said.
That, he said, “costs the country money, is bad for our productivity, but most importantly of all — costs the country opportunity and potential”.
Starmer insisted Reeves had been honest ahead of her budget despite financial documents suggesting the country’s finances were not as dire as she had claimed.
“There was no misleading,” he said.
Opinion polls suggest his government is struggling over a number of issues, including its failure to fire up Britain’s anaemic economy.
Starmer, who has vowed not to take Britain back into the EU single market or customs union, said Brexit had “significantly hurt” the UK’s economy.
“We have to keep moving towards a closer relationship with the EU, and we have to be grown-up about that, to accept that this will require trade-offs,” he said.