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Half Of Households Receive More In Benefits Than They Pay In Taxes

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Half of households receive more in benefits than they pay in taxes

More than half of households in Britain receive more in benefits and benefits-in-kind than they pay in taxes, official figures have revealed as George Osborne prepares to make £12billion worth of welfare cuts.

The Office for National Statistics disclosed that 13.7million households in Britain receive more in benefits, while the richest fifth of Britons pay 43.7 per cent of the nation's tax.

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The proportion receiving more in benefits than they pay in tax has risen significantly, from 45.9 per cent in 1997 to 51.5 per cent last year. It remains higher than it was before the recession.

Mr Osborne is next week expected to announce in his Budget a series of swathing cuts to Britain's welfare state, with the levels tax credits and child benefit likely to be significantly reduced.

Households receiving more in benefits than they pay in taxes
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Office for National Statistics

The move will prove highly controversial. Boris Johnson, the Mayor of London, has said he is against "hacking back" benefits for low paid workers until companies "cough up more money and increase pay.

Harriet Harman, the acting Labour leader, has said that cutting tax credits would mean "robbing" working families of an average of £1,400 a year.

However the figures from the ONS demonstrate the scale of the welfare state in Britain.

The average household pays £13,402 in taxes and receives £12,940 in benefits, which include both cash payments such as tax credits and benefits-in-kind such as the cost of education and the health service. The poorest fifth of households receive £14,868 in benefits but pay just £4,886 in tax.

Their incomes have been boosted significantly by a series of government policies aimed at helping the lowest paid, including Mr Osborne's decision to raise the personal allowance to £10,600.

The official figures also disclose that average incomes have risen by 3.4 per cent over the past year, the biggest annual increase since 2002/03.

However, the biggest rise in incomes since the start of the has been for pensioners, who have seen their incomes rise by an average of 7.3 per cent or £1,400.

They have been protected by government policies such as the triple lock, which automatically increases pension in line with wages, prices or 2.5 per cent - whichever is highest.

Incomes for working age families have fallen by 5.5 per cent over the same period because of the impact of the recession, the ONS said.

The Institute for Fiscal Studies has said that the government's decision to protect pension benefits will see the welfare budget fall to its lowest level for 25 years.

Britain currently spends £125billion a year on working age benefits. Over the last Parliament the government achieved £15billion worth of cuts but Mr Osborne is now pushing ahead with £12billion worth of cuts in just two years.

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Known and open fact in regard to income tax....income tax is not the only tax.....a large chunk of benefits when spent ends up going back into the tax pot....so keeping others in work and business.....

A fair few who earn a fair bit avoid or even evade paying large chunks of tax, little different than a benefit seeker but they can shuttle their excess........ ;)

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Quote: The official figures also disclose that average incomes have risen by 3.4 per cent over the past year, the biggest annual increase since 2002/03.

Hmmm.... About 3.4 per cent more than most people I know, whose wages are largely stagnant or even falling.

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If the are paying taxes, they are working, thy are they getting benefits

Labour have left us with a communist country.

totally agree. i pay tax and get ZERO Benefits. i get zero gain. benefits are a massive wealth transfer scam from to scrounger to corporate profit takers. why should i subsidise scrotes/scroungers ?

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it means that more than half of the country are in the Free 5hit Army. If your not getting free 5shit then your paying for it. Of course none of this is sustainable. wheres my free Shit?

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it means that more than half of the country are in the Free 5hit Army. If your not getting free 5shit then your paying for it. Of course none of this is sustainable. wheres my free Shit?

"hi, I know there's a 6k saving limit after which benefits get reduced. My partner gets Personal Independent payments of over £500 a month, I get Income support and carers allowance of under £2k a month and some money related to the kids. We have all our rent and council tax paid and my part time degree gets fully paid (live in scotland) so we are able to save over £1k a month.
Are we expected to just spend all this or is there any way we can get around this, for example by putting it in our kids name? We have just under 6k saved and after buying everything we need for the house and garden it's getting to the stage where there's really not much to buy.
I know this will annoy a lot of people but that's the situation. We've been told by friends to get a safe in the house but I don't want to break the law, want to do everything above board. Any advice welcome."

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I wonder if this includes, just to pick one example, the massive wealth handed by the government to landowners next to cross-rail stations?

In fact you cannot calculate who pays what tax, nor who collects the most benefit, because taxes cause prices and wages to change.

Since anyone with even a rudimentary economics education knows this, this ONS report must be politically motivated, which is pretty cynical.

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No this does not include cross rail HPC, low IR, QE bailouts, tax Voidance , BTL relief...

Methinks, wealthy pensioners I.e ones with BTLs and/or mansions should not claim any benefits? Is this too much to ask for?

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totally agree. i pay tax and get ZERO Benefits. i get zero gain. benefits are a massive wealth transfer scam from to scrounger to corporate profit takers. why should i subsidise scrotes/scroungers ?

They're including in-kind benefits, so they may not be counting you as a net contributor.

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May be this is heads up(preparation) for potential bombshell on the 7th.

I'm sure it is, but the ONS are supposed to be independent. People are so easily taken in by this stuff, Osbrown must be pissing himself laughing.

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That's not surprising considering the exponential earnings curve

Yeah I always find it odd that the "top x% pay y% of the tax" line is somehow used to say how hard the top x% have it. They already contribute so much the poor lambs. Like you say, it is more an indictment of how skewed the income distribution is away from anything approaching normal. I always think - what does the average person expect that figure to be? The top 1% should pay 1% of income tax, 10%? 50%? Getting the lay person to understand about a distribution income is tough enough.

It does make me occasionally think that the skewed income distribution has to be a reality - the whole world works on multipliers, so eventually you end up with a log-normal distribution. A really progressive tax might force that back to something more normal looking. So you could start by only taxing income above the median and getting close to a pay cap at 2x median earnings. Probably a bit extreme - we need a bit of a positive tail to keep the aspirational dream alive.

Edited by Deft

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it means that more than half of the country are in the Free 5hit Army. If your not getting free 5shit then your paying for it. Of course none of this is sustainable. wheres my free Shit?

"hi, I know there's a 6k saving limit after which benefits get reduced. My partner gets Personal Independent payments of over £500 a month, I get Income support and carers allowance of under £2k a month and some money related to the kids. We have all our rent and council tax paid and my part time degree gets fully paid (live in scotland) so we are able to save over £1k a month.
Are we expected to just spend all this or is there any way we can get around this, for example by putting it in our kids name? We have just under 6k saved and after buying everything we need for the house and garden it's getting to the stage where there's really not much to buy.
I know this will annoy a lot of people but that's the situation. We've been told by friends to get a safe in the house but I don't want to break the law, want to do everything above board. Any advice welcome."

LOL This is the internet.

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it means that more than half of the country are in the Free 5hit Army. If your not getting free 5shit then your paying for it. Of course none of this is sustainable. wheres my free Shit?

....well if it were free shit why is not everyone claiming?.......because anyone fortunate enough to not have to claim is quids in......and they know it or else they would see that they would be claiming...... ;)

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The problem is if this tax rebate is removed GDP collapses. Low income individuals spend all their income, if you reduce it so will there consumption.

As already stated it's hard to work out who pays what tax because you need to include VAT etc.., however you get a bit of a circular argument going because some of the money given to these individuals is returned back via VAT.

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I am pretty sure I'm a net contributor. I'm all for wealth redistribution and in a normal economy I would have no problem with giving poorer people a leg up. Everyone needs help once in while.

But that only works if us 'wealthy' people are actually doing better than the 'poor' people we're helping.

I have no hope of a house of my own. I am not ok with paying for other people's housing - providing people with housing benefit or tax credits, when those people objectively have a much better standard of living than my work can buy for myself. Being on benefits sucks but if you have a secure tenancy you're a lot richer than I am where it counts.

Gordon Brown has a lot to answer for.

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Including the £500+ billion pa (2014) housing equity benefit for owners and related stuff that those who own nothing and earn little facilitate via mere existence and agglomeration effects, and other policy-injected investment gain benefits?

Forget that, it doesn't even include EU land handouts. Mind you, they aren't included in the benefit cap either despite some of the welfare claims running into hundreds of thousands of pounds.

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