Election 2015

Why welfare and benefits matter in this election

street in Hull

At any one time, half the UK population receives help in the form of government benefits, and most of us will at some point in our lives. Each of us pays more for the welfare system than we do for the NHS, defence and transport combined.

Welfare is a devolved power in some parts of the UK.

What's at stake?

In 2013, the current government embarked on massive reforms. However, some of those are incomplete - such as the flagship Universal Credit programme - and others have been dogged with problems.

So any new government will have to decide how to sort the system out, and what to do about the ever-increasing budget.

Spending in nominal terms is forecast to continue rising for the next 10 years. However, as a proportion of GDP, it is expected to fall - thanks to an expanding economy.

So here's the dilemma: should a future government try and trim the budget - which might reduce the deficit and be popular with many voters - or should it just accept that increasing welfare payments may be the best means of reducing poverty?

What are the numbers?

Last year about 29% of all government spending went on social security and tax credits.

Total welfare spending is expected to be £213.9bn in 2014-15, rising to £236.3bn by 2018-19. As a proportion of GDP, welfare spending peaked at 13.6% in 2012-13, and is expected to fall to 11.6% by 2018-19, according to the Office for Budget Responsibility.

Some 55,000 individuals claim Universal Credit so far, out of seven million eventually eligible. Some 55,300 households have had their benefits capped since April 2013 - 45% of which are in London. About 12,500 households are no longer capped, due to finding work

Welfare and benefits


proportion of welfare budget saved because of benefit cap

  • £26,000 cap on benefits per household, introduced in 2013

  • £225m savings from benefit cap over two years

  • £12bn of benefits unclaimed annually


OBR report on welfare trends

Joseph Rowntree Foundation report on housing benefit changes

What won't the politicians be saying?

Even though some politicians will promise to bring welfare spending under control, history shows it is difficult to achieve. Spending is determined as much by the state of the economy as by political will.

The introduction of the benefit cap in 2013 has saved virtually nothing, in relative terms. Indeed its main impact may simply have been to make those households poorer. But it is hugely popular among voters. That is why no party will argue against it.

Despite practical problems with the introduction of Universal Credit, most welfare groups think it is a very positive development and will encourage claimants to find a job. So whatever the parties say, any new government will try to make it work.

IFS report on benefits cap

What has happened since 2010?

  • Introduction of Universal Credit - combines six working-age benefits into one. Currently two years behind schedule
  • End of spare room subsidy (dubbed "bedroom tax" by Labour)
  • Introduction of benefit cap at £26,000 a year
  • Most benefits limited to 1% annual rise
  • Personal Independence Payments replace Disability Living Allowance
  • Council Tax Reduction replaces Council Tax Benefit
  • Welfare cap will limit total spending from April 2015

What do the experts say?

"In a way there's been too much welfare reform at once. So it would be good for the next government to pause and reflect before reforming anything further" - Chris Goulden, Joseph Rowntree Foundation

"We have a lot of evidence that sanctions have gone through the roof. You've also got these huge claim delays - and they need to get a grip on Universal Credit" - Lee Healey, IncomeMAX advisory firm

"Universal Benefit is a really positive change, but we want to see more discretion at the front line - perhaps a model like nursing, where work coaches are able to be more responsive" - Rachael Badger, Citizens Advice

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