Independent think tank The Resolution Group has cautioned that proposed benefit cuts by the Labour government could cause more harm than good and will not be offset by employment gains.
In March 2025, the Government released its Pathways to Work Green Paper, setting out a package of welfare reforms that amounted to a net reduction in spending of £4.8 billion in 2029-30. As per the Government’s own figures, 3.2 million families will lose out, 250,000 people will fall into poverty, and 700,000 families will fall further below the poverty line.
These benefit cuts were accompanied by a significant increase in employment support costing a cumulative £1.9 billion between 2026-27 and 2029-30 but with over half of that not coming until the final year.
While the goal of these cuts is to lift people out of poverty and into work, the result is likely to be a mixture of both, the Resolution Group said.
It estimates that the Government’s cuts to disability and incapacity benefits will lead to between 38,000 and 57,000 more people in paid work by 2029-30, while additional employment support delivers extra employment of between 23,000 and 48,000. Under a best-case scenario, 105,000 more people would be in work by the end of Parliament.
“There are large uncertainties around these numbers, and we have not tried to quantify any gains from changes in conditionality regimes, or possible disemployment effects from the increase in the UC standard allowance,” it said.
“But it is clear that any increases in employment by the end of the decade will be far too small to fully offset the hit to family incomes. Even if each and every one of the extra jobs were to prevent people from crossing the poverty line, the increase in poverty would not be halved.”
The group noted that if employment gains are evenly spread among the losers, they amount to only 3% of those affected moving into work.
“So even after employment increases are accounted for, low-income families will suffer material income losses and the reforms will cause higher poverty rates.”
Alternative plan needed
The group has instead proposed the following changes, which it said will have a much better chance of helping the government achieve its stated goals:
- Reforming the assessment process for Personal Independence Payment (PIP):
By narrowing the eligibility criteria for the daily living part of PIP. Previously, claimants needed to score at least eight points from the 10 daily living headings to qualify for the standard rate of this element; under the new system, claimants will also need to score at least four points in any single heading. This will affect any new claim or reassessment of an existing claim from 2026-27 onwards. By 2029-30, 800,000 people are expected to lose the daily living part of PIP and 400,000 will lose PIP altogether.
- Cutting the rate of Universal Credit for people with health conditions (UC-H):
For existing claims, this element will be frozen in cash terms for the rest of the Parliament; for new claims from 2026-27, its value will be halved (from £97 a week to £50 a week) and then frozen for the rest of the Parliament. This change is estimated to affect 3 million families by 2029-30 (730,000 new claims and 2.3 million existing claims).
- Increasing the value of the UC standard allowance:
This will happen gradually between 2026 and 2029; by the end of the Parliament, the value of the UC standard allowance will be 5 per cent (£5 a week) higher than it would have been under the default uprating scenario. This will benefit 6.8 million families overall, but will lead to a net increase in benefit income only for the 3.8 million households expected to be receiving Universal Credit by 2029-30 who are not affected by the UC-H cut.
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