Britons dependent on state at record high

Record number of people take more from state than they put in – and outlook looks bleak, says think tank

Dependency on state benefits has reached an all-time high, with more than half of Britain’s households receiving more from the state than they pay in taxes, a study has found. Some 36 million people – 54.2 per cent of all individuals – paid less tax than they received in benefits and “benefits in kind,”, according to Office for National Statistics data for 2020-21. It trumps the previous high of 52.5 per cent in 2012/13, which was fuelled by Labour’s rise in government spending.

DEPENDENCY on state benefits has reached an all-time high, with over half of Britain’s households receiving more from the state than they pay in taxes, a study has found. Some 36 million people – 54.2 per cent of all individuals – paid less tax than they received in benefits and “benefits in kind,” defined as the imputed cost of NHS and state education services, according to Office for National Statistics (ONS) data for 2020-21.

It trumps the previous high of 52.5 per cent in 2012/13 when it was fuelled by Labour’s surge in government spending under Tony Blair and Gordon Brown, research by the think tank Civitas found.

Tim Knox, co-author of the report and former director of the Centre for Policy Studies, said: “The proportion of households who are receiving more from the state than they pay in taxes has never been larger – and the outlook for the near future is bleak.

“The questions that all parties should answer is: what is your target for the net dependency ratio? And what are the practical implications for achieving such a target?

“Is it a good thing that more than half of Brits take more from than they put in? Is a further increase in dependency welcome? Do we, as a country, want so many people to be dependent on the state? Or are we collectively hooked on more and more bread and circuses?”

The analysis shows a dramatic rise in state dependency compared with 2000, when it was just 40.3 per cent, and is significantly above the average of 41.2 per cent between 1977 and 2000.

It fell from its peak in 2010-11 under Labour before falling under the Conservative administrations of David Cameron and Theresa May before rising under Boris Johnson. The trend is partly explained by the increased spending during Covid and a shift in the tax burden on to the top 40 per cent of the population and particularly the top fifth of earners. The analysis shows 83 per cent of all income tax is now paid by just 40 per cent of British adults – and the top fifth of taxpayers account for two thirds of the total income for the Exchequer from earnings. The top 10 per cent account for 53.1 per cent.

It means the top fifth of households paid on average £35,399 more in taxes than they received in benefits, while the bottom fifth received £17,648 more in benefits than they paid in tax. The average tax paid by households fell from £24,084 to £21,925.

An analysis by Labour, published today, shows that 1.9 million over-50s were receiving out-of-work benefits in May 2022, up from 1.6 million in February 2020. John Ashworth, shadow work and pensions secretary, said that it showed the Government was “woefully failing over-50s”.

The welfare state was established in the aftermath of the Second World War to act as a safety net for those unable to look after themselves either through old age, incapacity or temporary joblessness.

Its architects never envisaged that reliance on benefits would become a way of life rather than a staging post to a better future. But over the decades, socialised welfare has crept ever higher up the income scale to encompass people who would never have been regarded as poor and who do not consider themselves to be so.

Benefits are now payable to so many that more than half of Britain’s households receive more from the state than they pay in taxes. A study by the think tank Civitas has found that some 36 million people – more than 54 per cent of all individuals – paid less tax than they received in benefits and “benefits-inkind,” defined as the imputed cost of NHS and state education services. This is the highest proportion of the population ever to take more out than they put in. It surpasses the previous high of 52.5 per cent in 2012-13, which was fuelled by the surge in the previous Labour government’s spending under Tony Blair and Gordon Brown.

That this has happened after 12 years of Conservative-led government is particularly depressing. Successive prime ministers, including the present incumbent, have professed their belief in a smaller state and lower taxes, but none have delivered.

Rishi Sunak said last week that anyone who thought taxes should be lowered in the current economic conditions were idiots. But the problem, as Civitas observes, is that this is not getting better, but worse. Both parties vie with each other as to which can spend the most and offer the most generous state help.

No one is making the argument anymore for reducing the size of the state to the levels seen in the most competitive economies in Asia like Singapore, where compulsory savings make sure people have individually tailored packages for their old age and health needs.

Here, the sense that someone else will always be around to pick up the tab has become so deeply ingrained in the political psyche that even to question it is to invite denunciation. The many thousands spending the weekend filling in their tax forms ahead of this month’s self-assessment deadline might be forgiven for wondering if it is worth it.