Tighten benefit job-offer rules: calculation note

Central fiscal result

-£5.0bn - Net fiscal impact in 2027-28

Low case: -£15.0bn. High case: +£5.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Two refused job offers lead to benefit withdrawal.
• Applies only to claimants judged fit for work.
• Reform's two-million returner claim is not assumed centrally.
• Child and disability protections are unspecified.

Affected population

• Affected units are working-age benefit claimants and households.
• Central exposure is below the two-million political claim.
• Employers may see more low-wage applicants.
• Local labour markets face uneven effects.

Gross impact

• Central saving assumes fewer claims and some employment.
• Tax gains are modest because many jobs are low-paid.
• Hardship and appeal costs reduce net savings.
• High case allows savings to disappear.

Fiscal build-up, central case

• Benefit payments reduced: -£7.5bn
• Extra income-tax and NI receipts: -£1.0bn
• Employment support and appeals: +£1.5bn
• Hardship and local-service costs: +£2.0bn

Central net impact: -£5.0bn in 2027-28.

Behaviour and pass-through

• Low case assumes stronger genuine employment gains and lower repeat claims.
• Central case assumes many exits do not become stable work.
• High case assumes appeals, hardship and poor matches offset savings.
• GDP gains are not counted without evidence of sustained earnings.

Phasing

• 2026-27: +£0.0bn. Preparation or partial implementation.
• 2027-28: -£5.0bn. Main scenario year.
• 2028-29: -£6.0bn. Behaviour and pass-through develop.
• 2029-30: -£6.0bn. Steady-state uncertainty persists.

Main source groups

• Chetty, "Moral Hazard versus Liquidity and Optimal Unemployment Insurance" (Journal of Political Economy, 2008): Unemployment-benefit effects on joblessness include both moral-hazard and liquidity channels; warns that tougher sanctions can raise hardship as well as job-search pressure.
• Card, Kluve and Weber, "What Works? A Meta Analysis of Active Labor Market Program Evaluations" (Journal of the European Economic Association, 2018): Evidence across active labour-market programmes is mixed; job-search assistance tends to work better than public employment; relevant to whether tougher conditions improve employment outcomes.
• Reform UK, "Our Contract with You" (2024): Reform proposed a two-strike job-offer rule and claimed benefit reforms could motivate up to 2m people into work; defines the costable welfare scenario.
• Institute for Fiscal Studies, "Response to Reform UK policy announcements" (2025): IFS warned that large giveaways were paired with unspecified public-service and welfare cuts; supports scepticism about unverified benefit savings.
• Department for Work and Pensions, "Benefit sanctions statistics" (2025): Used to size the affected population, baseline economic quantities and sectoral exposure.
• Reform UK, "Our Policies" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.