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Methodology note

Cut welfare spending by GBP 23bn: calculation note

Scenario assumptions behind the Cut welfare spending by GBP 23bn estimate. The figures are illustrative and exclude unrelated Conservative pledges.

View main policy page: Cut welfare spending by GBP 23bn

Central fiscal result

-GBP 12.0bn - Net fiscal impact in 2028-29

Low case: -GBP 23.0bn. High case: -GBP 3.0bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

  • Model GBP 23bn annual saving as the high-delivery case.
  • Central case assumes GBP 12bn is deliverable by 2028-29.
  • Baseline uses DWP working-age and disability-benefit forecasts.
  • Excludes any separate pensioner-benefit changes.

Affected population

  • Affected population is working-age benefit households, not all welfare recipients.
  • Low case assumes narrow reassessment; high case assumes broad eligibility cuts.
  • Indirect exposure includes councils, NHS, charities and low-income local economies.
  • No individual claimant count is inferred from the savings total.

Gross impact

  • Conservative target: GBP 23bn annual saving.
  • Central: GBP 23bn x 52% deliverability = GBP 12.0bn.
  • Administration and appeal costs partly offset savings.
  • No dynamic GDP gain is scored.

Fiscal build-up, central case

  • Benefit eligibility savings: -GBP 13.5bn
  • Administrative and appeal costs: +GBP 0.5bn
  • Local authority and crisis support: +GBP 0.7bn
  • Lower tax from weaker demand: +GBP 0.3bn

Central net impact: -GBP 12.0bn in 2028-29.

Behaviour and pass-through

  • Low case assumes most announced savings are deliverable and spillovers are contained.
  • Central case assumes around half the target survives legal, operational and hardship constraints.
  • High-cost case assumes only GBP 3bn net savings by 2028-29.
  • Employment effects are not scored as automatic fiscal savings.
  • Spillover costs rise if cuts fall on people with limited work capacity.

Phasing

  • 2026-27: -GBP 0.6bn. Preparation or partial implementation.
  • 2027-28: -GBP 5.4bn. Main ramp-up year.
  • 2028-29: -GBP 12.0bn. Target-year central estimate.
  • 2029-30: -GBP 12.0bn. Continuation at steady-state assumptions.

Main source groups

  • con-plan-2026: Conservative live policy page; used to identify current pledge wording.
  • con-welfare-2025: Conservative welfare statement; used as pledge anchor, not official saving.
  • dwp-benefit-2026: DWP benefit expenditure tables; welfare spending scale.
  • obr-disability-2024: OBR disability-benefits analysis; incapacity and disability spending growth.
  • obr-efo-mar-2026: OBR March 2026 forecast; fiscal and macro baseline.
  • chetty-2008-ui: Welfare and job search; informs behavioural and incidence assumptions.
  • card-kluve-weber-2018: Active labour market programmes; informs behavioural and incidence assumptions.