T’was the week before Christmas and while the rest of us were preparing for the season of goodwill to all mankind, the Telegraph was busy creating headlines designed to get people OUTRAGED at all the workshy, lazy, benefits scroungers. Bah Humbug and all that!
“Majority of Britons receive more in benefits than they pay in taxes” screamed the headline of the paywalled article that most people will never read. So, I thought I’d do a little dive into the data to see if it was true.
Yes, more than half of people in the UK receive more in benefits than they contribute in taxes: 52.6 per cent to be precise.
Gosh, does that mean the fictional Telegraph reader was right all along? Didn’t they always say the poor/the young/the snowflakes were scroungers!?
Well, no, not exactly. In fact, if they read the article they’d be in for a bit of a shock!
What’s important, is the definition of ‘benefits’.
They are defined as both cash benefits AND the use of public services such as the NHS, schools, health and social care and free childcare! A net contributor pays more in direct and indirect taxes than they receive in benefits and public services.
The biggest net contributors are, of course, working-aged people. Among this group, only 45.3 per cent receive more from the state than they contribute. Those that receive more, do so in large part due to the ‘benefits’ of their children being in education or because they receive childcare benefits.
Pensioners on the other hand (oooh! … Telegraph readers won’t like this!), are “overwhelmingly classed as net recipients”, with 85.3 per cent receiving more than they contribute. That’s not a surprise as pensions account for about half of welfare spending and NHS spending per person rises sharply after the age of 50.
Here is a quick look at the welfare spending breakdown.
Pensioner benefits (that is, state pension, winter fuel allowance, pension credits etc) make up around half of all UK welfare spending.
Universal Credit (UC) is the next chunk, and it is worth noting that around 40per cent of UC claimants are in work.
It is also worth covering the common misconception that the state pension exists outside of the benefits system. The state pension is very much a ‘benefit’ in the sense that it is paid for out of the same pot of tax income as all other benefits and government spending, funded by the current working generation. No-one has ‘paid into’ their own state pension, as one would a private pension. They have paid their taxes (including national insurance) which funded previous pensioners, and now their own pension is being funded by current workers.
The word ‘benefits’ has been so stigmatised by the likes of the Daily Mail and the Telegraph that older people now squirm at the idea that the state pension is a benefit. If you’ve spent your life looking down on ‘benefit claimants’ as they’re demonised day in, day out, I can imagine it feels uncomfortable to find yourself in receipt of ‘benefits’. But there you go; they are classed as a benefit regardless.
Alongside the ever-increasing pensions bill, there’s been a big rise in sickness and incapacity benefits, particularly since COVID. It turns out that underfunding the nation’s healthcare system under the guise of austerity, failing to properly manage a deadly pandemic, and hoping that Long Covid was no big deal, causes a LOT of the workforce to require sickness and incapacity benefits.
Interestingly, the Telegraph article reports that it is the richest households that saw the biggest rise in cash benefits, because of the cost-of-living payments and rising disability benefits. Meanwhile, those on the lowest incomes experienced a 0.5 per cent drop.
So, to conclude, when you see a headline like that, stop picturing ‘scroungers with their flat screen TVs’ and take a moment to think about what they mean by ‘receiving benefits’. You will almost certainly be surprised if you chose to look beyond the headline! Perhaps make checking headlines a new year’s resolution?