This morning the justice secretary pointed to a “huge rise in the welfare budget” as justification for targeting benefit spending to make fiscal savings. So how big has the rise in welfare spending been?
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Total social security spending rose by about 1% of GDP from the eve of the financial crash to 2024-25, driven by increases in spending on the State Pension and non-pensioner health-related benefits
While not insignificant, it is difficult to call this rise ‘huge’. So, is the issue that welfare spending is set to rise massively in the coming years?
The DWP forecast is in fact for welfare spending to stay flat as a proportion of GDP from now until 2029-30, with forecast rises in spending on health-related benefits offset by the rollout of around £3bn of planned cuts to other non-pensioner benefits
But while welfare is not rising as a share of the economy, it is set to rise in real terms by 2029-30, driven by a) spending on the State Pension - largely set in stone with an ageing population and Govt commitment to the triple lock, and b) rising spending on non-pensioner health-related benefits…
This is, of course, a much more contentious area in which the Govt have promised to make at least £2bn worth of cuts. Spending on other non-pensioner benefits, where recent Governments have chosen to target savings, is set to fall in real terms as previously announced cuts continue to take affect.
Breaking down that forecast rise in health-related benefit spending, it is working-age and children’s disability benefits that continue to rise quickly, with spending on working-age incapacity benefits and pensioner disability benefits plateauing.
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