What do you need to know ahead of the Spending Review – Welfare

This is the fourth of our posts with Reform looking ahead to the Spending Review. The first three posts were on health, education, and the first hundred days.

What is the budget?

The welfare budget must be at the heart of the debate on how to restore the public finances. The Government spends more on welfare than anything else. In 2009 the bill for social protection was around £199 billion. This has almost doubled in real terms over the last 20 years from £104 billion in 1989. Social protection now represents 32.5 percent of all government expenditure or 14.2 per cent of GDP.

Some welfare spending varies with economic conditions, with increasing unemployment, for example, leading to greater expenditure on assistance to support people back into work. Yet since 2000 spending on welfare has increased even when the economy was growing. Rather than reforming welfare to support enterprise and mobility during this period of growth, entitlements were expanded to groups not in need.