A recent report by the Sunday Times newspaper, published on July 25th highlights the worrying cost to taxpayers of current welfare system, which this year alone will account for nearly £200bn of government spending.
In the last decade under the Labour government welfare ‘benefits’ spending in Britain has spiralled out of control.
Figures compiled by the Treasury, DWP (Department for Work & Pensions) and Civitas show that between 2000 and 2010 welfare spending went from £132bn to £192bn. Perhaps what is more concerning is the amount of people as a percentage of the population that rely on the welfare system; in 1960, 5% of population received benefits in stark contrast to today where a shocking 29% of the UK population receive benefits of some kind. A breakdown of the figures show the £30bn alone in spent on jobseekers allowance, housing benefit and income support, which represent the three most common forms of welfare payments. The yearly cost to the taxpayer of people claiming disability benefits is £11.5bn, which is larger than the entire budget for the Home Office. Also highlighted in the figures is the amount of people that are currently unemployed which currently stands at 5.9m. An alarming trend in these figures is that 1.4m of these have claimed 9 out of the last 10 years.
Also highlighted in the Sunday Times report is that over 3,000 families are claiming benefits of £26,000 a year. A rising trend seems to be where three generations of families are living on benefits, which is now creating a substantial strain on government spending in a time of austerity. This is making life increasingly difficult for policymakers who are trying to wean entire generations of families of benefits. As a consequence of this, is that they are becoming accustomed to a life of idleness, which then creates its own set of problem; one is that they as a result of spending long periods out of work become increasingly unemployable as a result of their physical condition and secondly they rapidly lose the skills necessary to carry those jobs in today rapidly changing job market.
Labour’s Sure Start scheme was designed to give children in deprived areas of Britain’s communities a better start in life a so called ‘early intervention’ program; however this was criticised as an expensive political piece of social engineering. The Conservatives proposed in their manifesto a ‘big society’ approach, which has also received criticism.
A more effective approach that has been proposed is the possibility of getting private businesses to invest money in projects for children at an early stage in the hope of getting returns on their initial investment at a later date. A report was published by Smith Institute and the Centre for Social Justice, which was founded by Ian-Duncan Smith with the purpose of mending a ‘broken Britain’. A comparative study was also carried out in the US back in the 1960s titled the Perry pre-school study focusing on African-Americans, with positive results.
John Bird, the founder of the Big Issue presented research to David Cameron that demonstrated that among his homeless magazine vendors that it has cost the state more to keep them in care as children as it would have cost to send them to Eton. Showing that simply throwing money at the problem isn’t necessarily the answer.
Perhaps the financial crisis will have one lasting positive effect on the Britain’s welfare system. The reason being is that in the ‘age of austerity’ weaning over-reliant people of benefits will have to speeded up since Britain can no longer afford to maintain its current rate of spending in this area. This will in turn bring forward the increased activity from the private sector in helping alleviate Britain’s social problems, which have positive long term impact on Britain’s economy. As Allen has stated “early intervention is not only cheaper but more effective”.