Snapshot: The Welfare State

Posted on August 4, 2015 · Posted in Accounting & Business

The Welfare State

“If you want to maintain the same pace of reduction in government spending, then you’re going to have to find billions of welfare savings”, Chancellor George Osborne told the House of Commons Treasury Select Committee a year ago.

But what exactly is ‘welfare’ spending? The Government’s new statement to taxpayers of how their money is spent uses a definition that has been criticised as simplistic, or even misleading. According to the Government’s statement, 25% of tax revenues are spent on ‘welfare’.

What is considered ‘welfare’ turns out to be subjective. State pensions, on which 12% of tax revenues are spent, are excluded. Yet personal social services – such as domiciliary care – are included. So too are public service pensions and financial support for pensioners that is not the state pension.

This definition of ‘welfare’ spending is drawn from the Government’s public expenditure statistical analysis – where it is described (along with state pensions) as ‘social protection’.

This is how the Government counts ‘welfare’ spending:

£96bn – benefits for working age people (the low paid and unemployed)

£28bn – benefits for the elderly, excluding state pensions

£28bn – personal social services

£21bn – public sector pensions.

Source: the Institute for Fiscal Studies