What do the General Election 2024 manifestos tell us about work and welfare?

As the General Election 2024 approaches the manifestos released by the main political parties are filled with promises and policy proposals, some costed, some not, all aimed at addressing the nation’s most pressing issues.

This blog post gives an overview of where the parties stand on critical areas such as income, tax and welfare reform. We’ll examine their proposals for minimum wage adjustments, tax cuts, Universal Credit and welfare reforms to understand what changes might be in store for workers, families and the broader economy.

From banning mobile phones in schools to increasing defence spending, it’s fair to say the manifestos cover a wide range of public policy. For our purposes, we’ve pulled out comparable statements on work and social security and grouped what we’ve found into three main topics crucial for social security, local government, and inequalities:

1. Work and welfare
2. People: women, children, older people, and people with disabilities
3. Housing and local government

We will blog about who says what about each of these policy areas and what we can expect to see from a new government. Our analysis looks at UK-wide party manifestos with an overview of country-specific manifestos to follow. Today we kick off our analysis with income, tax, and welfare reform.

Making work pay: a ‘genuine living wage’ for all?

A major theme throughout each General Election 2024 manifesto is work, employment and taxation on income. And, as we might expect to see, there is variation on how this crucial and often divisive topic is approached.

Let’s begin with minimum wages. If successful, what could these policies deliver for people earning the minimum wage, the living wage, or less?

	Maintain the National Living Wage in each year of the next Parliament at two-thirds of median earnings. On current forecasts, that would mean it rising to around £13 per hour by the end of the next parliament
	Make sure the minimum wage is a genuine living wage: change the remit of the independent Low Pay Commission to account for the cost of living Remove age bands for minimum wage
	A genuine living wage across all sectors, with government departments and all other public sector employers taking a leading role in paying it 20% higher minimum wage for people on zero-hour contracts at times of normal demand to compensate them for the uncertainty of fluctuating hours of work
	Introduce a minimum wage of £15 an hour for all, no matter your age, with the costs to small businesses offset by increasing the Employment Allowance to £10,000 Introduce a maximum 10:1 pay ratio for all private and public-sector organisations
	Not discussed

The national minimum wage was first introduced in 1999 at £3 an hour for people under the age of 21. Today, the Low Pay Commission tells us approximately 1.6 million workers, around 5% of the workforce, are paid at or below minimum levels. Workers employed in the private sector, in part-time employment, in temporary jobs, or from a Bangladeshi or Pakistani background are more likely to have a minimum wage job.

Increases to the minimum wage will be welcomed, but the details, especially how they interact with Universal Credit, are crucial.

With Universal Credit reducing at 55p for every pound earned over the work allowance, increasing the minimum wage would mean workers would earn more, but these earnings may be subject to the Universal Credit earning taper of 55%.

Unless increases to earnings are accompanied by raising earnings limits or related financial thresholds, increasing the minimum wage could push more families out of Free School Meal eligibility, free prescriptions, or depending on where they live, out of Council Tax Support.

We will need to wait to see how far reaching changes to the national minimum wage go, and whether or not changes to the welfare system will accommodate, or work against, these increases.

The Green Party would increase the National Minimum Wage to £15 an hour, a 27% increase compared to the current over 21 rate of £11.44. The Conservatives would increase the national minimum wage gradually over the course of a parliamentary term to £13 an hour, and while Labour and the Liberal Democrats don’t put a figure to it, both commit to a ‘genuine living wage’.

Labour does however pledge to scrap age-related minimum wages, bringing some 25,000 minimum wage earners under the age of 20 into higher rates of pay.

Women make up 56% of full time minimum wage earners and 59% of part time minimum wage workers, around 60,000 minimum wage workers are employed in the health and social care industry, and more than 25% of minimum wage workers live in the North of England. Needless to say, the minimum wage provides for people, industries, and regions where these types of policies boost protections for low income communities.

Will the state pension become unaffordable if the triple lock continues?

With potential increases for the lowest earners, how much tax and national insurance will workers pay?

Having only recently cut National Insurance in the Spring Budget this year, the Conservatives promise to bring National Insurance contributions down even further to 6% by 2027, a policy they say will result in a total tax cut of £1,350 for the average worker earnings £35,000 a year.

Conservatives would also like to see the end of National Insurance altogether. While Labour pledge not to increase it, the Liberal Democrats and Green Party want to see more parity in the system with the Greens looking to lift the cap on National Insurance contributions. For Reform UK, their taxation policy focuses on reducing the tax burden for frontline NHS workers, increasing personal tax allowances to £20,000, and placing additional contributions on workers from overseas.

Plans to cut tax and National Insurance will benefit workers, but less so those relying on Universal Credit or Pension Credit. Both the Conservatives and Labour would protect the triple lock on pensions – a policy that has seen state pension increases above inflation rates. But with 55% of all social security spending going to state pensions, and with the triple lock forecast to increase state pension spending by a further £18 billion a year by 2050, will these policies eventually become too expensive to justify?

	Cut tax for workers by 2p off employee National Insurance Abolish the main rate of self-employed National Insurance entirely by the end of the Parliament When it is affordable to do so, keep cutting National Insurance until it’s gone Retain the National Insurance holiday for those who employ veterans Cut tax for pensioners with the Triple Lock Plus, guaranteeing that both the State Pension and the tax free allowance for pensioners always rise with the highest of inflation, earnings or 2.5%
	Will ensure taxes on working people are kept as low as possible. Labour will not increase taxes on working people, they will not increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT Will maintain the triple lock for pensioners
	When the public finances allow, cut income tax by raising the tax-free personal allowance Establish a new ‘dependent contractor’ employment status in between employment and self-employment, with entitlements to basic rights such as minimum earnings levels, sick pay and holiday entitlement Review the tax and National Insurance status of employees, dependent contractors and freelancers to ensure fair and comparable treatment
	No increases in the basic rate of income tax during this cost of living crisis Will call for the reform of tax rates on investment income, by aligning them with the tax and NIC rates on employment income Remove the Upper Earnings Limit that restricts the amount of National Insurance paid by high earners
	Lift the income tax starting threshold to £20k The National Insurance rate would be raised to 20% for foreign workers All frontline NHS and social care staff would pay zero basic rate tax for 3 years As soon as finances allow, introduce a UK 25% transferable marriage tax allowance. This would mean no tax on the first £25,000 of income for either spouse

Welfare reform: From scrapping particular policies to reviewing the system as a whole

After 14 years of welfare reform how might the next government tackle increased public spending, the widening unclaimed benefits gap and the handful of controversial welfare policies that regularly hit the headlines?

The Conservatives pledge to reduce welfare spending by £12 billion a year and therefore further cuts to eligibility and benefits rates can be expected. Labour plan to review Universal Credit. Liberal Democrats and the Green Party hit out at specific policies such as the bedroom tax and two-child limit. And Reform will reform the reforms.

	Accelerate the rollout of Universal Credit - move all of those remaining on legacy benefits onto Universal Credit Introduce tougher sanctions rules so people who refuse to take up suitable jobs after 12 months on benefits can have their cases closed and their benefits removed entirely Bring forward the new claimant review point for the long-term unemployed from 18 months to 12 months Reduce the welfare bill by £12 billion a year Reform the system to make it fairer and more sustainable, unlocking the potential of millions of people and giving them the support they need to get into work
	Review of Universal Credit so that it makes work pay and tackles poverty. Tackle the Access to Work backlog and make sure people can try out a job without an immediate benefit reassessment if it does not work out. Reform employment support so it drives growth and opportunity. The system will be underpinned by rights and responsibilities – people who can work, should work – and there will be consequences for those who do not fulfil their obligations Reform or replace the Work Capability Assessment, alongside a proper plan to support disabled people to work
	When the public finances allow, cut income tax by raising the tax-free personal allowance Establish a new ‘dependent contractor’ employment status in between employment and self-employment, with entitlements to basic rights such as minimum earnings levels, sick pay and holiday entitlement Review the tax and National Insurance status of employees, dependent contractors and freelancers to ensure fair and comparable treatment
	Abolish the bedroom tax Abolish the two-child limit Abolish the benefit cap Establish an independent commission to recommend further annual increases in Universal Credit to ensure that support covers life’s essentials, such as food and bills Reduce the wait for the first payment of Universal Credit from five weeks to five days Replace the sanctions regime with an incentive-based scheme to help people into work Restore the full rate of Universal Credit for all parents regardless of age Exempt groups of homeless people, and those at risk of homelessness, from the Shared Accommodation Rate Ensure that military compensation for illness or injury does not count towards means testing for benefits
	Reforms to benefit support and training to help people back into work. Particular focus on 16-34 year olds. Tax relief for businesses that undertake apprenticeships. All job seekers and those fit to work must find employment within 4 months or accept a job after 2 offers. Otherwise, benefits are withdrawn. Personal Independence Payment and Work Capability Assessment would be face to face. Will require independent medical assessments to prove eligibility for payments. Those registered with severe disabilities or serious long term illnesses would be exempt from regular checks. Front load the Child Benefit system for children aged 1-4 to give parents the choice to spend more time with their children

The high profile reforms proposed by the Liberal Democrats and Green Party target some of the most criticised policies introduced alongside Universal Credit. For the Liberal Democrats and the Greens, the bedroom tax, the two child limit, and the benefit cap would be scrapped along with the five week wait for the first Universal Credit payment, amongst other reforms such as ending or replacing benefit sanctions.

The bedroom tax, also known as the under occupancy charge and the spare room subsidy, reduces the amount of housing allowance in Universal Credit or Housing Benefit if there are more bedrooms in a property than needed for the size of the household. Initial policy intentions aimed to incentivise downsizing to create some movement in the housing rental market and free up larger homes for larger households.

Research since its implementation in 2013 has found that the bedroom tax has not resulted in people moving to downsize but rather households subject to the limit absorbed the costs, with regional disparities in the availability of smaller properties impacting choice.

The two child limit has also been subject to academic evaluation exploring various angles: the negative impact on women, the impact on larger family budgets, and the material, social and emotional impact on families.

Since 2017, third or subsequent children born into a family will be disregarded when calculating benefits, meaning additional amounts available for each child in a household will not be delivered from a third child onwards, subject to some exemptions.

While not mentioned in their General Election 2024 manifesto, Labour has recently refused to confirm they would scrap the two child limit and the Conservatives have also excluded it from their manifesto.

Calls to remove the two child limit are likely to continue with the new government appointed after the General Election 2024 is and with child poverty rates at their highest in some 30 years.

Tackling poverty through welfare and welfare reform remains one of the key issues we face today. With rises in child poverty and inequalities in general, and with a rising national welfare bill, attention from political leaders is welcomed.

Universal Credit has made great strides towards reforming a decades old system such as single applications and use of data and technology. The future of Universal Credit does not look to be in danger, though there are clear changes to be made.

Whether changes come in the form of specific policies such as the two child limit, or wider reforms such as increased data sharing as a result of General Election 2024 we will wait and see.

How Policy in Practice is helping organisations to tackle work and welfare issues

With £23 billion in unclaimed benefits every year we will continue to push income inequality and smarter use of available data across the system. To find out why people don’t claim and what we’re doing with organisations from the finance sector, housing sector and local authorities, listen back to our on demand webinars.

Join us on Wednesday 26 June as we focus on an innovative campaign run by Lewisham Council to automatically award Free School Meals in one London Borough. For details and to register see here.