Britain isn’t working – here’s how much it’s costing you
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- Jeremy HuntBritish Conservative politician
Millions are claiming benefits without ever having to look for work, helping to push the tax burden to hit its highest point since the Second World War.
Of the 5.2 million people claiming out-of-work benefits, roughly 3.7 million have been granted indefinite exemptions from finding a job, following a surge in claims of mental health issues and joint pain during the pandemic, it emerged last week.
On top of this, the controversial decision to maintain the state pension triple lock is estimated to cost taxpayers £1,000 each over the next four years, according to calculations by the TaxPayers’ Alliance, a think tank.
It raises the question, just how much of our hard-won salaries are spent on the benefits of those who do not work? With the calculator below, Telegraph Money can now reveal how much of your salary goes towards bankrolling the welfare state.
Despite Rishi Sunak’s insistence that he is a “low tax conservative” who wants to “bring people’s taxes down”, his chancellor, Jeremy Hunt, has implemented a combination of frozen thresholds, removed investment incentives, and increased corporation tax – all while keeping welfare spending close to £300bn a year.
Economists now predict it will be decades before the tax burden returns to pre-pandemic levels.
At the same time, welfare spending was the single biggest component of public sector expenditure in the financial year 2021-22, at £298.7bn out of a total of £952.3bn. For the typical taxpayer, this amounts to close to a third of their annual tax bill of £6,500 paid directly towards benefits.
Using the latest public spending data, our analysis shows someone with the average UK salary of £33,000 sees £2,000 a year spent on welfare.
Of this, Unemployment Benefit accounts for 0.1pc, equivalent to £8 a year.
Of the 5.2 million people claiming out-of-work benefits, roughly 3.7 million have been granted an exemption from finding a job, following a surge in claims of mental health issues and joint pain during lockdown, according to the Centre for Social Justice, meaning taxpayers may face bankrolling their benefits indefinitely.
It comes as the first three months of 2023 saw productivity in the UK decline by 0.6pc compared to a year ago, and 1.4pc when compared to the end of 2022, according to the Office for National Statistics.
However, while public spending has increased across the board by £200bn over the past five years, the relative share of welfare has fallen, from 36pc in 2017-18 to 31pc in 2021-22.
Many high earners are now paying relatively more towards the welfare state because of the lowering of the 45p tax threshold in 2023-24, which now stands at £125,000, down from £150,000 before. Telegraph analysis shows 6pc of the average salary goes towards paying for benefits, compared to 13pc of a high earner’s salary.
Someone earning £150,000, five times the average salary, contributes close to £19,000 towards the welfare state – more than nine times the contribution of someone on the average salary.
Old age benefits account for the highest share of income tax and national insurance, at 14pc of these taxes – equivalent to £882 a year for someone on the average salary.
These include the state pension triple lock. The soaring cost of the pension guarantee has prompted fears the Government will be forced to either accelerate rises in the state pension age, so that it reaches 69 by 2048, or scrap the triple lock entirely.
Sickness and disability benefits, such as Personal Independence Payments, account for 6.4pc of welfare taxation – making them the second highest share of the tax bill.
Relative spending on health has grown over the same period, from 20pc to 23pc. Health funding now amounts to approximately £1,500 a year for the typical taxpayer.
Spending on economic affairs is also up in the past five years, from 7pc to 10pc, driven by relative increases in spending on fuel and energy as well as transport. In total, this accounts for £660 of the typical tax bill.
Education spending has seen a slight relative fall since 2017-18, from 12pc to 11pc, meaning it now accounts for roughly £700 of the typical tax bill.