A new analysis from the Joseph Rowntree Foundation says the most effective way to reduce the United Kingdom’s welfare bill is to raise employment, not to cut benefits. The foundation, which researches poverty and social policy, says that meeting the government’s target of getting 80 percent of the working age population into jobs would lower annual spending on Universal Credit by about £10 billion. The estimate, set out in a forthcoming report, links higher employment to a smaller caseload and fewer top ups for low earnings. The foundation also says fresh polling shows broad public support for a strategy that focuses on tackling the causes of joblessness. The findings come as ministers and officials examine how to manage pressures on welfare spending while trying to raise participation in the labour market.
A jobs first path to a lower welfare bill
The Joseph Rowntree Foundation says a focus on work is the clearest route to sustainable savings in Universal Credit. It argues that when more people secure stable jobs, households either leave the benefit system or receive smaller awards because their earnings rise. On its central scenario, an employment rate of 80 percent among people of working age would reduce the Universal Credit bill by around £10 billion a year. The foundation describes that figure as roughly one eighth of current spending on the benefit.
The charity adds that benefit cuts alone do not address the conditions that leave people out of work or stuck in insecure hours. It points to barriers such as poor health, limited access to childcare, a lack of suitable local roles, and gaps in skills. Universal Credit supports people both in and out of work, so changes in pay, hours and participation all shape how much the system spends. The analysis frames job creation, training and support as central tools for easing the long term cost of income support.
How the modelling links work to spending
The foundation’s economists modelled how changes in employment flow through to welfare costs. They say more people in work, and more people working longer hours, reduce the number of households who qualify for the same level of support. They also say steady wage growth makes a difference, because higher earnings lift some claimants above the thresholds where they receive larger monthly payments.
The analysis highlights the limits of measures that rely only on cuts. Reductions in benefit levels may lower the bill in the short term, but they do not, on their own, move people into work. The foundation argues that policies which tackle health barriers, improve skills, and help with job matching lower spending by changing the number of people who need support. It sets out this pathway as a more durable way to restrain the cost of Universal Credit.
Public mood on welfare and work
Alongside the modelling, the Joseph Rowntree Foundation cites polling that tested different options for reducing welfare costs. It says respondents preferred efforts to expand access to jobs and training over measures that trim benefit rates or eligibility. While views on welfare vary across the country, the foundation says the survey found clear support for focusing on work as the primary lever.
Public sentiment matters for policy design. Ministers often weigh fiscal choices against voter preferences, and a stable base of support can shape what governments choose to pursue. The foundation presents the polling as evidence that a jobs first approach can carry political and civic backing, even as debates continue over how to fund and deliver specific programmes.
Government targets and policy setting
The government has set an objective to lift the working age employment rate to 80 percent. Officials say they want to increase participation, reduce economic inactivity, and support people who can work to find suitable roles. The Joseph Rowntree Foundation’s analysis engages directly with that target, by setting out the likely impact on a large part of the welfare budget if it is met.
Policy choices will sit with ministers and Parliament. The foundation’s work gives them a set of costed outcomes linked to employment growth. It also points to areas where action could make a material difference, such as health support for people with long term conditions, better access to childcare, transport links that connect people to available jobs, and stronger coordination between employment services and employers.
Employment barriers remain uneven across the country
The foundation argues that increasing employment is not simply a matter of encouraging more people to apply for jobs.
Large numbers of people outside the labour market face structural barriers that make returning to work difficult. Long term sickness and disability remain major factors behind economic inactivity. Regional differences also affect access to opportunities, with some areas offering fewer suitable jobs or weaker transport connections.
Childcare availability continues to shape participation for parents, particularly where costs reduce the financial benefit of returning to work. Housing pressures and local wage levels can also influence whether work creates a meaningful improvement in household income.
The report suggests that reducing welfare spending sustainably requires addressing these underlying issues rather than focusing only on the benefit system itself.
Universal Credit and the wider labour market
Universal Credit was designed to support people both in and out of employment and to adjust as earnings change.
Because payments taper as income rises, higher employment does not necessarily remove people from support immediately. Instead, increased earnings gradually reduce entitlement over time.
This means employment growth and productivity improvements can affect spending more gradually than direct policy changes.
The foundation’s modelling therefore points towards long term savings rather than rapid reductions in expenditure.
Supporters of this approach argue that it creates more stable outcomes because households become less dependent on support through higher income rather than lower entitlement.
Questions around delivery and cost
Reaching an employment rate of 80 percent would require sustained progress over several years.
Policies that improve health outcomes, expand training and strengthen employment services also involve upfront spending before savings emerge.
Supporters argue these investments create wider economic benefits through higher tax receipts, stronger productivity and lower demand for public services.
Critics may question whether employment targets alone can deliver projected savings or whether economic conditions and business demand will limit progress.
The debate reflects a broader policy choice between reducing welfare costs directly and reducing the number of people who need support.
What this means
The Joseph Rowntree Foundation’s analysis shifts attention away from benefit reductions as the main route to controlling welfare spending.
Instead, it presents employment growth as the central mechanism for reducing long term costs while improving living standards.
Its estimate suggests that reaching the government’s employment target could significantly lower Universal Credit spending while supporting broader economic goals.
Whether ministers adopt that approach will depend on funding choices, labour market conditions and the pace at which barriers to work can realistically be reduced.
The report is likely to add to ongoing debate over how the UK balances fiscal pressures with policies designed to increase participation and reduce poverty over the longer term.
