Buy now, pay later: what do manifestos mean for welfare?

So far this has been a ‘buy now, pay later’ campaign. Both main parties have focused on taxes. Labour have promised not to raise them – the four main ones at least – and the Tories have promised a cut to National Insurance. This leaves both committed to eye-wateringly tight budgets for most Whitehall departments. How this will be achieved has remained largely unclear. The release of party manifestos gives us a chance to look at one very big area of government spending: welfare.

Recently, pressure on the welfare budget has come from both directions. Reforms to working-age benefits have kept a lid on spending but at a considerable cost. Changes like the two-child limit, the rollout of universal credit and below-inflation rises in benefits have been highly regressive, costing the poorest fifth of families 14% of their income since 2010 according to the Resolution Foundation. Sanctioning and conditionality have added to the difficult picture for claimants, pushing many into destitution and often, towards reliance on food banks to eat. Job centres have become benefits policemen with patchy and poor-quality support to get claimants into sustainable employment. On the other hand, generous rises in the state pension and a dramatic increase in claims for disability and incapacity benefits, largely for mental health conditions, have pushed spending up.

Politically, welfare was front and centre for much of the 2010s. As I documented in my recent book on the subject, the decade began with tough rhetoric from both parties and a culture of deriding benefits claimants in the press and on TV. Later, Labour softened its stance considerably as reforms started to hit the poorest. This was reflected in the media and then in public opinion too. I showed in a recent report that this has left the public at its most positive about the benefits system since the early 1990s. This provides an opportune moment for new thinking on how to make the system work better for the poorest in society. Instead, both main parties have provided frustratingly little detail, and little challenge to the status quo.

First, the Conservatives. To achieve their headline-grabbing cut to national insurance they have pencilled in further reductions in the working-age benefit bill. They aim to cut £12bn per year by clamping down on access to long-term sickness benefits, chiefly for mental health conditions, together with more tightening of sanctioning and conditionality for the unemployed. Savings of this scale look optimistic at best and wildly unlikely at worst. The evidence base that sanctioning and conditionality lead to long-term employment is very poor, as emphasised by the Joseph Rowntree Foundation. Indeed, it may be partly behind the recent rise in spending on incapacity benefits as people are simply displaced from one benefits pot to another. Past attempts at reforming incapacity benefits have never achieved savings on this scale. Doing so would probably require extensive – and expensive – new spending on mental health services.

If the Conservative plans appear unrealistic, Labour’s manifesto is heavy on rhetoric but light on specifics.  There are commitments to ‘review’ universal credit and to ‘reform or replace’ Work Capability Assessments, which disability rights campaigners have condemned as intrusive and unfair. There is also a notable change in mood music with a promise to “end mass dependence on emergency food parcels, which is a moral scar on our society” together with strong commitments to tackle child poverty and improve employment support services. None of this, though, adds up to a coherent programme of change – Labour’s election buzzword. Their manifesto gives the impression of a party that has not made its mind up. We could be in for a fundamental rethink of the system or - perhaps more likely - a Labour government would continue the status quo but soften the system’s hardest edges. I expect an early internal row over the two-child limit on benefits. Reversing it would be a startlingly cheap way to tackle child poverty, bringing 250,000 children out of poverty at a cost of just £1.3bn. Such a commitment features prominently in the Liberal Democrat manifesto but has been explicitly ruled out by Labour, despite its own shadow health secretary saying of the policy "I wish it wasn't there". Discussion of the UK’s rising destitution and reliance on food banks feels strikingly absent from the campaign so far.

Finally, commitments on state pension spending have been much more concrete. Both main parties are fully committed to the ‘triple lock’ which has maintained the real value of state pensions and done much to address pensioner poverty.

So where does this leave us in our ‘buy now, pay later’ election campaign? I would not expect much downward movement in the welfare bill if either main party comes to power. Under any future Labour government, there will be pressure for more radical changes and the political space to implement them. Whether the party will do so is not at all clear so far.

Dr Tom O’Grady is an Associate Professor of Political Science at UCL and author of The Transformation of British Welfare Policy (OUP, 2022)