Social Security Spending Richard Exell Making Work Pay? 8 December 2014

Spending as a Share of GDP 2013/14 BenefitShare of GDP (%) State pension5.0 Tax credits1.7 Housing Benefit1.4 Incapacity benefits (ESA, Income Support for disability, IB, SDA)0.8 Disability Living Allowance/Personal Independence Payment0.8 Child Benefit0.7 Pension Credit0.4 Jobseekeer's Allowance0.3 Attendance Allowance0.3 Northern Ireland social security0.3

Is Social Security Out of Control?

Yes, Spending Went Up in the Recession Between and , during the recent recession and weak recovery, higher spending and very weak nominal GDP growth pushed welfare spending up to a fresh peak of 13.6 per cent of GDP. This was a slightly smaller rise than that seen during the recession and recovery of the 1990s, even though the latest recession was much deeper. (Para. 4.5)

What Has Been the Level of Benefit Cuts So Far? Between 2009/10 and 2014/15, we have had cuts equivalent to 5.2 per cent of GDP (para 1.32) Including welfare cuts equivalent to 0.7 per cent of GDP (para 1.33) Research Howard carried out for us this summer estimated the annual impact of social security cuts at £30.47 billion if we exclude the impact of Universal Credit (as it has not yet been fully introduced) or £35.64 billion if we include UC.

What Sort of Cuts Might Be Coming? “We calculate that, just to keep the pace of departmental spending cuts over the next parliament to that which has been achieved over this parliament – that is cutting at just over 2% a year – would require welfare cuts and or tax rises of about £21 billion a year by The Conservatives have promised, largely unspecified, welfare cuts of £12 billion, but partially offset by tax cuts of £7 billion.” Paul Johnson, IFS

To Put That in Context Employment and Support Allowance £14.4 bn Child Benefit £11.6 bn Jobseekeer's Allowance £3.1 bn Income Support £2.9 bn Carer’s Allowance £2.9 bn Winter Fuel Payments £2.0 bn SMP £2.7 bn

Thank you Richard