Radical changes to the UK's social care system implemented by the Conservatives over the past decade have disproportionately benefited pensioners and people on disability benefits, while working-age families face significant financial losses, according to a recent report from the Decision Foundation.
The report highlights that the Conservative Party's 14-year sweep of social security reform has redirected spending from children and housing to support for the elderly, breaking the link between entitlement and need for some of the country's poorest families.
Although the size of the welfare state has increased slightly from 10% of GDP in 2007-08 to 11.2% in 2024-25, this rise has been driven by increasing costs of state pensions, disability and disability benefits, which now account for More than 90 pence of GDP. Every £1 spent on social care.
The financial impacts of these welfare reforms were uneven across different population groups. Pensioners gained an average of £900 a year, while working-age households lost an average of £1,500 a year. The groups most affected since 2010 include unemployed families receiving benefits, losing an average of £2,200 a year, and large families with three or more children, who are £4,600 worse off on average.
The Resolution Foundation found that, outside of pensions and disability benefits, social care spending is set to fall from 4.1% to 3.9% of GDP between 2024-25 and 2028-29. Although this represents a modest real-term spending increase of £1.6 billion, it is unlikely to address the extreme poverty and housing instability resulting from previous cuts. “There is strong evidence that basic levels of benefits are inadequate,” the report notes.
The next government will face the challenge of managing the two-child limit introduced in April 2017, which restricts parents from claiming Child Tax Credit or Universal Credit for more than two children. This policy is expected to push 51% of families with three or more children into poverty by 2028-2029. Despite pressure, Labor leader Keir Starmer has resisted calls to scrap the policy.
In addition, the freeze on local housing allowances, despite rents expected to rise by 13% by 2027, will increase the risk of homelessness. The number of families living in temporary accommodation has doubled since 2010.
Both Labor and the Conservatives have committed to maintaining the triple pension lock until the end of the next parliament, ensuring state pensions increase every April. However, their approaches differ on deficit spending, with the Conservatives proposing annual cuts of £12bn, a move the Resolution Foundation suggests is not feasible without impacting current beneficiaries. Labor has not yet commented on its plans for disability benefits.
Alex Clegg, economist at the Resolution Foundation, said: “Social care reform is currently focused on disability-related benefits, which is understandable given that spending is set to rise by £10 billion a year during the next Parliament.” He added: “But whoever wins the upcoming elections will face broader challenges at the social welfare level, from homelessness to child poverty.”