Call for left to back benefits spending cap

Capping overall spending on social security benefits and tax credits could provide an opportunity to advance centre-left objectives for reforming 'welfare', argues a new report from the Institute for Public Policy Research think tank.

The report draws on original polling data from YouGov on public attitudes towards social security and tax credit spending.

Key points

  • Expenditure on social security and tax credits has increased 'substantially and steadily' throughout the post-war period. It is now more than three times larger as a share of national income than it was in the late 1940s. Spending increases are being driven by both cyclical factors related to the performance of the economy and structural factors rooted in wider economic, social and demographic forces.
  • The public has significant misconceptions about where social security spending actually goes. People massively under-estimate the amount spent on pensioners, and substantially over-estimate the amount spent on out-of-work benefits. But there is strong support for a number of strategic shifts in spending that could improve the system and save money in the long run. Almost half (49 per cent) of those polled agree that the 'welfare' system provides too little financial protection when people fall on hard times, whereas less than a fifth (17 per cent) disagree.
  • A cap on benefits spending could promote three core 'strategic objectives': bringing down cyclical 'welfare spending' as quickly as possible; switching resources to social investments that target the working-age population; and defending the value and integrity of the state pension.
  • The report highlights majority public support for specific measures including: a limit on the amount of time someone can be unemployed, by requiring them to do work of social value or risk losing access to benefits; cutting spending on housing benefit by building more affordable houses; a substantial increase in the minimum wage; shifting government funding away from child benefit/tax credit towards increasing the amount and quality of affordable childcare; and restricting young people's access to disability benefits and social housing, but providing greater access to education, apprenticeships and opportunities for work-with-training.

Source: Graeme Cooke, On the Front Foot: Designing a Welfare Cap that Reforms Social Security, Institute for Public Policy Research
LinksReport | Summary | Guardian report

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Publication date: 
Sep 20 2013