£1 in every three raised in tax goes on benefits
BRITAIN’S benefits bill will hit record levels this year – even though ministers claim they are restricting welfare.
More than £208billion in welfare payments will be funded by the taxpayer in 2012/13, according to an analysis by the House of Commons library.
It means that almost one pound in every three raised in tax will be spent on benefits.
The total eclipses the £205.6billion spent last year and far outstrips the £129.8billion spent when Labour took office in 1997/98.
The figures come a day after it was revealed that over the past five years, handouts for the unemployed have risen almost twice as fast as average wages. Out-of-work benefits have jumped in value by 20 per cent since 2007, while wages have crept up by only 12 per cent.
The Coalition contributed to this by agreeing last year to a 5 per cent rise in payments to the unemployed. The increase wiped out savings made from other benefit cuts – and the total welfare bill will now only start falling next year, on current projections.
The House of Commons library research shows that the total welfare bill is due to peak at a record 13.2 per cent of national income during the current financial year.
Ministers have unveiled plans to slash the burgeoning bill by restricting entitlement, and by
‘An argument about fairnesss’
ensuring that in future years the annual increases for those of working age are restricted to a maximum of 1 per cent a year.
This is actually a year- on-year cut, because prices are rising much faster than this. The measure, proposed in the Autumn Statement last month, is being opposed by Labour and will be voted on by MPs in the coming weeks. The Commons research also showed that just 43 per cent of welfare payments are now contributory – made to those who have paid National Insurance – compared with about 70 per cent of benefits paid in the 1960s and 1970s.
Tory chairman Grant Shapps said yesterday: ‘I do think that it’s right for the taxpayer at large, who after going out, working hard, paying their taxes, should feel that they’re not having to pay for people who are in receipt of benefits to get a higher effective pay rise than the people actually working. So I think this is an argument about fairness.’
But Labour’s work and pensions spokesman, Liam Byrne, said his party would attempt to block the below-inflation rise in benefits and tax credits.
‘For those people who are in work and are at the low paid end of the labour market, tax credits are absolutely key,’ he said. ‘The lion’s share of the savings from this bill will actually come from people’s tax credits… that’s going to hit hard-working people very hard.’