UK welfare data show record share of households net beneficiaries, with warning it could worsen under Labour
More than half of the population lives in households that receive more in benefits than they pay in tax, raising questions for policy and growth.
LONDON — A record 35.8 million people live in households receiving more in state benefits and services than they pay in tax, according to new Office for National Statistics figures. The data, for the year ending March 2024, covers 53.3% of the population and marks the highest level outside the Covid-19 pandemic, when the figure reached 36.5 million.
The figures illustrate a long-running trend: the share of Britons in net recipient households rose from about 40% in the 1980s to around 50% by the time of the 2009 financial crisis, then spiked to 55% in 2020/21 during the pandemic and has remained above pre-pandemic levels since.
Critics say the data reflect an unsustainable expansion of state spending as Britain's tax burden climbs to the highest level since the 1940s. The British Chambers of Commerce warned the economy is hampered by a sicknote problem, with about 7% of the workforce out of work due to long-term sickness — higher than in any other G7 country.
Earlier this year, Labour's attempt to reform the welfare bill was blocked by backbench MPs, complicating Chancellor Rachel Reeves' effort to trim the cost of benefits ahead of the autumn Budget. Reeves is preparing to unveil a package that would shape the government's fiscal stance, with supporters and critics watching how it would affect incentives for work and investment. Pat McFadden, chosen as the next Work and Pensions Secretary, faces the political task of translating welfare reform into credible policy amid a tight fiscal backdrop.
Disability-benefit data also drew attention. Research by the Centre for Social Justice showed almost 650,000 people were claiming Personal Independence Payments for anxiety and mood disorders in July, with about 250 additional claims each day since Labour took power.
Economists say the pattern raises questions about the long-run sustainability of public finances as the tax burden moves toward postwar highs. Some warn that without meaningful reform, higher taxes coupled with a large share of households relying on benefits could constrain growth and limit the government's room to maneuver in future downturns.