Ryan FowlerThe Government’s proposed reforms to health and disability-related benefits may boost employment by as many as 105,000 by the end of the Parliament, but they risk driving hundreds of thousands into poverty, according to new analysis from the Resolution Foundation.
The think tank’s report highlights that while the changes include a higher standard rate of Universal Credit and the scrapping of planned reforms to the Work Capability Assessment, the overall effect will produce nearly as many financial losers as winners. The Government’s own impact assessment states that while 3.8 million people will gain an average of £420 a year, 3.2 million will lose an average of £1,720 annually.
The most controversial finding is that 250,000 individuals will be pushed into poverty, with a further 700,000 families expected to fall deeper into it. Ministers have rejected this conclusion, arguing that the reforms aim to increase employment. However, the Office for Budget Responsibility was unable to assess these employment impacts due to the last-minute submission of the proposals.
The Resolution Foundation tested this claim by analysing three core elements of the reform package: whether the removal of Personal Independence Payment (PIP) acts as a work incentive, whether cuts to the health component of Universal Credit encourage employment, and whether the planned £1.9bn investment in employment support from 2026-27 to 2029-30 is effective.
Its analysis concludes that each measure would result in some additional employment, with total gains estimated at between 60,000 and 105,000 by 2029-30. But these positive outcomes are outweighed by the wider financial losses across the population.
Greg Thwaites, research director at the Resolution Foundation, said: “The Government’s welfare reforms are hugely controversial, with its own assessment suggesting that the plans will push a quarter of million people into poverty. Ministers dispute this and claim that, instead of pushing people into poverty, the reforms will help people into work. But while up to 105,000 people could find work as a result of these reforms, these gains are dwarfed by the income losses that millions of families will face.”
Thwaites added: “The reforms as they stand will increase poverty, but sensible tweaks can do more to support families through the changes. The Government should front-load employment support to give people more help finding work and offer transitional protections to prevent disabled people from suffering sharp immediate income shocks if they lose eligibility for PIP.”
