Election 2024: Resolution Foundation casts doubt on whether Conservative pledge to reduce welfare spending by £12 billion is achievable in next Parliament

Recent history of failure to deliver promised savings suggests otherwise, says Foundation

The Resolution Foundation has cast doubt on whether the Conservative Party's pledge to reduce welfare spending by £12 billion is achievable in the next Parliament.

Commenting on the publication of the Conservative Party Manifesto 2024 yesterday, the Foundation says that, while the tax changes pledged would mean a typical employee seeing their personal tax bill fall by £170 in 2028/2029 -

'... these pledges rely on making £12 billion of welfare cuts that recent history suggests will not be achievable over the next Parliament.'

Noting that the Conservatives have indicated that the cuts to social security spending would focus on personal independence payment (PIP) and the limited capability for work-related activity element of universal credit, the Foundation highlights that -

'Reducing spending on PIP by £12 billion would imply a cut of 40 per cent which would be extremely challenging to deliver, not least as it would likely involve cuts to the entitlements of existing claimants. Were the savings instead to be made entirely via reducing the PIP caseload, it would mean 1.6 million fewer people than forecast would be in receipt of the benefit by the end of the next Parliament.'

The Foundation adds that the Conservatives’ recent record on delivering cuts to welfare spending gives it reason to doubt whether the promised savings will be achieved -

'First, the introduction of PIP saved £0.1bn in 2015/2016 - just 7 per cent of the £1.4bn that was originally expected to be saved by the end of the Parliament. Second, the Conservative government previously announced £12 billion of unspecified welfare cuts in its 2015 Manifesto, with details following in July 2015, followed by a U-turn on important aspects of cuts to tax credits by October 2015 – six months before any cuts were actually delivered.'

Interim Chief Executive of the Resolution Foundation Mike Brewer said -

'There are big questions over whether doubling down on firm tax commitments, funded by pledges to massively cut spending in record time, really passes the plausibility test, or whether this approach answers the big economic challenge Britain faces on growth.

The unspoken issue looming over this manifesto is that it will only take a small dose of bad economic news for these plans to fall foul of the fiscal rules, and for a future Conservative government’s tax and spend plans to have to return to the drawing board.'

NB - in the costings document to accompany its manifesto, the Conservative Party says that the welfare saving of £12 billion by the end of the next Parliament is a 'reasonable estimate', adding that -

'If we brought the number of working age people claiming benefits for a health condition or disability back to the level it was before the pandemic, by the end of the decade we would spend £34.6 billion less than currently forecast. Even if we simply maintained the overall number of working age people claiming benefits for a health condition or disability at its current level, spending would be more than £14 billion lower by the end of the decade than currently forecast.'

For more information, see Conservative manifesto proposals would mean tax cuts of £170 for a typical employee but plans rest on £33 billion of spending cuts in order to get debt falling from resolutionfoundation.org

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