Welfare invoice to rise £21bn by finish of subsequent Parliament
Britain’s annual welfare bill will be £21billion higher by the end of the next Parliament thanks to the ageing population and an increase in those who are disabled or unfit to work, new analysis shows.
The figures from the Resolution Foundation highlight the cost of the pensions triple-lock guarantee and the scourge of long-term sickness.
They are among the mounting public spending challenges the next government will have to grapple with, even as parties vow to avoid major tax hikes.
Spending on the welfare state is up from 10 per cent of gross domestic product (GDP) at the time of the financial crisis in 2008 to 11.2 per cent today, the foundation said, with spending on state pensions up from 3.7 per cent to 5 per cent.
Incapacity and disability benefits have risen from 1.2 per cent to 2.1 per cent of national output amid concern about Britain’s long-term sickness epidemic, with figures this week showing the numbers affected hitting a new record of 2.83million.
Benefits bill: Spending on the welfare state is up from 10% of gross domestic product at the time of the financial crisis in 2008 to 11.2% today
The think-tank forecast that total social security spending will increase in real terms – that is, after taking account of inflation – by £20.8billion by the 2028/29 financial year.
It said 90p in every pound of that extra spending would go on the state pension, and disability and incapacity benefits.
According to the report, 45 per cent of the rise in benefits, or £9.5billion, will come from pensions because of an 8.2 per cent rise in the number of pensioners and a 3.6 per cent increase in the real-term value of the state pension.
The value of pensions is rising because of the triple lock, which commits the Government to increasing the payment by either 2.5 per cent, or inflation, or earnings growth – whichever is higher – and which both Labour and the Tories have committed to retaining.
A further 47 per cent of the overall benefits increase will come from a £9.7billion rise in the disability and incapacity benefits.
The question of how to manage this part of the benefits bill remains ‘far more contested’.
- The UK’s economic recovery stalled in April as wet weather dampened retail and construction sector activity. Gross domestic product (GDP) recorded zero growth.
