The welfare bill is big and getting bigger. We now spend over £330bn a year on all forms of welfare combined. For the last 13 years, welfare spending has exceeded revenues raised from income tax, a stark if depressing comparison.
There are various factors within that total. Youth unemployment is alarmingly high, as tax hikes and regulation on employers make it harder to hire people. The number of people on incapacity or sickness benefits has risen to more than four million, up from 2.8 million in 2018.
Successive chancellors have identified welfare spending as a problem for the public finances that must be addressed. Yet we often forget that the outright majority of the welfare bill is not the unemployed, those unable to work, or even in-work income support. A total of £177 billion a year – 55 per cent of all welfare spending – goes to pensioners.
What’s more, that has risen fast and is set to keep on rising. When the Conservative/Lib Dem Coalition government introduced the pensions triple lock, it did so both to secure Lib Dem support to govern and to address a genuine problem of pensioner poverty. It worked on both measures: since 2012 the basic state pension has increased by a remarkable 71 per cent. The pension is now worth 11.4 per cent more than it would be had it simply tracked inflation over the last decade.
