"Look up" is literally to look up. "Sleep off a life on benefits" refers to the UK's benefuts system and how people can just get money when they don't work. The "closed blinds" is literally that. The blinds are closed, suggesting that the neighbor is sleeping yes.

1. "look up" is the physical movement of the eyes. We can imagine the neighbour's bedroom on the upper floor of the house and the worker looking up to see the blinds closed - evidence that the person is still asleep. 2. "sleep off a life of benefits" is a strange and ambiguous phrase. George Osborne's speechwriter was a bit sloppy here. The use of "off" here is similar to "from" "because of" or "as a result of". This usage of "off" is colloquial and I don't recommend it. The meaning is that the neighbour can sleep late because he receives plenty of government money (benefit) because he is ill or unemployed. George Osborne is aiming for the votes of poorer workers who think that people without a job have a better life which is subsidised by the government.