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December 20, 2024 - 4:00pm
New figures published by the Office for National Statistics (ONS) this week, which show that more than half of Britons — and almost half of working-age Britons — receive more from the state than they pay in taxes, ought to be a nasty wake-up call for the Government. Not only is this fact at the heart of the impossible position Rachel Reeves finds herself in over the public finances, but it is only set to get worse.
As Karl Williams of the Centre for Policy Studies set out last year in “Justice for the Young”, the forward projections for the most expensive budgets, such as pensions and social care, are currently only going up. Servicing our current, ramshackle state has taken tax to 36% of GDP; in 50 years’ time, just serving the cost of an ageing population would take it to 46%.
Labour would be very wise to get a grip on this — and might, in a Nixon-goes-to-China fashion, have an easier time doing so than the Conservatives. But that process must start by being honest about what the problem is: that many people are currently receiving money they should not, not necessarily because they don’t “deserve” it but simply because the UK is living wildly beyond its means.
This is baked into the fundamental structure of what is called “entitlement spending”. The clue is in the name: if you meet a certain set of criteria, you are entitled to a certain payment. Yet two problems arise from this. First, there is no top-level control of the growth of these budgets; the Government discovers how expensive they’re getting as the bureaucracies overseeing them sign more people on. At the same time, it creates no disincentives or barriers to administrators signing people up, and creates huge incentives for people to claim they qualify for the benefit in question.
The result is a ballooning bill — or rather, because a lot of Government spending goes to programmes run on this basis, a lot of ballooning bills. Servicing this “Annually Managed Expenditure” now takes up almost 57% of all Government spending, over 25% of GDP.
Consider one example: spending on Special Educational Needs and Development (SEND) in education. There is no fixed pot for this and schools are mandated to pay the first £6,000 in additional costs for any qualifying child, after which the local authority has to pay the rest.
The result? A perfectly predictable explosion in claims, from 240,185 in 2014-15 when the system was introduced to a whopping 1,673,205 in 2023/4. In Wales, it emerged this summer that almost half of all children born in 2002-3 were assessed as having special needs — a figure only plausible if the Welsh Government quietly put lead back in the petrol.
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SubscribeHenry Hill puts his finger on a massive issue and one that has grown under governments of all stripes.
The departmental cap has some merit, in ultimately controlling expenditure, but the real change will only come when we revive the basic idea that welfare is not a ‘lifestyle choice’ but, at best, only a limited safety net. It follows therefore that individual benefits should also be time-limited, after which the individual is expected to support themselves.
I absolutely agree with you. We need to be rid of lifestyle ‘rights’ and focus instead on lifestyle responsibilities.
It’s not a lifestyle choice for many though. Most of those who claim some form of benefit are actually working. However a combination of stagnant wages and runway rents/house prices (as well as expensive utilities) mean they’re simply not paid enough to live on.
Reduce the living costs (predominantly housing) and you can severely reduce the number of people in need of government assistance
I have heard your comment hundreds of times from left-leaners. The state should build 5 million houses in record time without sufficient skilled people, the state should seize all empty houses, the state should force pensioners to move into one-room flats. Then, after all this is achieved in a few years from now, house prices will miraculously fall, everyone will have a house and we will all be smiling. Then – and only then – people will go to work happily. It isn’t even a good theory because it relies so much on state control that corruption will stop it happening. It is merely wishful thinking.
An alternative. All immigration should stop so that numbers of people will fall. All people working from home should return to work to set a good example (people working from home telling other people to get out to work is a nonsense). Pensioners – thousands of people who actually want to work – should be offered 20hr/week jobs without tax penalties and in this way lost skills can be regained quickly. Those on benefits need more regular reviews by civil servants who actually go out to work. Timescales need to be set on benefits.
As an aside, getting civil servants back to work outside will speed up the process of dealing with immigrants to allow proper management of the situation.
You might have heard it hundreds of times but he’s correct – rents / house prices are the fundamental issue.
If you want to bring ‘state control’ into it, consider where all the housing benefit ends up and how house prices got to be where they are.
How housing prices got where they are? Debasement of currency theough excessive money printing – ie government. And the financial repression of the next 10 years will make it much worse.
I once had the eye opener of working with civil servants, specifically as sub-contractor for Schlumbergersema for Defra circa 2003 as a software developer to help them develop a livestock tracking system, after the ‘foot & mouth’ scandal, of that time. I was told by my manager, to slow down, as the amount of code I was producing was showing my team-mates
Honestly ever since I learned about British NEETs were even a thing I’ve been shocked by it the fact that
> “New figures published by the Office for National Statistics (ONS) this week, which show that more than half of Britons — and almost half of working-age Britons — receive more from the state than they pay in taxes”
That is astounding to me, that explains why Britain has no economic growth and no entrepreneurship. It’s a really hard truth that we need to accept, if you don’t work you don’t eat, because those who don’t contribute anything to society, even if it is just capital, are then essentially living off the labors of others, forcing others to provide the necessities of life for them.
If you don’t work, you starve it’s as simple as that, goods and services don’t appear out of nowhere they have to be produced by people working, anyone who tries to obfuscate that fact is deluding themselves.
“He who does not work shall not eat” – Vladimir Lenin
“almost half of working-age Britons receive more from the state than they pay in taxes”
There’s about 37.5M working age Britons, and about 33M in employment.
So a large number of the working age people taking more out in benefits than they are paying in taxes, are in employment.
One of the problems for young people who end up NEET is the government’s obsession with qualifications and academia. Many young people struggle with school for a variety of reasons and they’re pretty much stuck in education till 18. Getting a job without GCSEs isn’t easy either. The school system also instils a fear of failure in these kids and many are too scared to try. If they don’t try – they don’t fail.
Many looked after children struggle with school because when you life is a mess, you’ve been ripped away from everyone you know and love, the idea of focusing on school work is unrealistic for a lot of these kids and schools don’t want them. These academies are too big to have time for troubled kids and IF these kids attend, they often spend most of their time in reflection or wandering the corridors until school just kick them out. The system is failing many kids in many ways.
When I was a younger, you could leave school at 16 and walk into somewhere and ask for a job. Now you need CVs, apply online and if you’re lucky, someone might reply.
I believe that the only way to break the problem of benefits being a lifestyle choice is to ensure that the recipients have to spend 8 hours a day earning them.
The physically fit could be put to work filling potholes, sweeping streets, weeding parks, etc. whereas the unfit could be tasked with say, sorting recyclables into metal, cardboard, plastic etc.
Once people realise that receiving their benefits would take as much of their time as working for a living, a good portion of them would choose the better paid option of actually doing so.
The key point is to ensure that whatever tasks are set to earn benefits are achievable by anyone, no matter what their skill level, thereby shutting down liberal complaints of being unfair to the disadvantaged.
”In Wales, it emerged this summer that almost half of all children born in 2002-3 were assessed as having special needs”
Probably unlikely, but it does say ‘In Wales’
As one of the unhappy few who contributes to the nation’s finances, I’m getting really f@*$ing sick of this.