The government constantly performs a delicate balancing act to ensure every sector of society receives a fair share of national resources. Even a slight shift can tip the scales, posing significant challenges.

This is particularly evident in the welfare sector, where the Tories struggle to maintain equilibrium amid competing priorities.

According to a new report by the Resolution Foundation, radical changes to the welfare system by the Conservatives over the last decade have significantly benefited pensioners and people on disability benefits over working-age families.

The Conservatives’ 14-year overhaul of the social security system has resulted in a marked shift in spending priorities.

The report highlights a redistribution of funds away from children and housing, directing more support towards elderly individuals.

This shift has disrupted the connection between entitlement and needs for some of the UK’s poorest households.

Researchers found that the size of the welfare state has increased modestly, growing from 10% of GDP in 2007-08 to 11.2% in 2024-25.

This growth is primarily driven by rising costs associated with state pensions and disability and incapacity benefits, which now consume over 90 pence of every pound spent on welfare.

However, the impact of these changes has been unevenly distributed across the population.

Pensioners have seen average annual gains of £900, while working-age families have experienced average losses of £1,500 per year.

The most severely affected groups since 2010 include out-of-work households receiving benefits, who have lost an average of £2,200 annually, and large families with three or more children, who are on average £4,600 worse off each year.

Spending outside of pensions and disability benefits is set to decline, falling from 4.1% to 3.9% of GDP between 2024-25 and 2028-29.

This equates to a modest real-term increase in spending of £1.6 billion, an amount that may prove insufficient to address the significant poverty and housing instability exacerbated by previous cuts.

The Resolution Foundation emphasized that “there is substantial evidence that core levels of benefits are inadequate.”

Possible Challenges To Face Next Government

Looking ahead, the next government will need to address the consequences of the two-child limit policy introduced in April 2017.

This policy restricts parents from claiming child tax credit or universal credit for more than two children, a measure projected to push 51% of families with three or more children into poverty by 2028-29.

Despite the policy’s controversial nature, Labour leader Keir Starmer has so far resisted calls to revoke it.

Adding to the challenges freezes on the local housing allowance amid rising rents — projected to increase by 13% by 2027 — will heighten the risk of homelessness. The number of families living in temporary accommodation has already doubled since 2010.

Both major political parties have committed to maintaining the pensions triple lock, ensuring the state pension rises annually.

However, their approaches diverge on disability spending. The Conservatives have pledged to implement cuts of £12 billion a year, a plan the Resolution Foundation criticizes as unrealistic without impacting current recipients.

“Welfare reform is currently focused on disability-related benefits, which is understandable given that spending is due to rise by £10 billion a year over the next parliament,” said Alex Clegg, an economist at the Resolution Foundation.

“But whoever wins the next election will face wider welfare challenges, from homelessness to childhood poverty.”
Alex Clegg

As the political landscape prepares for future elections, the debate over welfare spending remains a crucial issue, with significant implications for millions of citizens across the UK.