How has welfare expenditure changed over the last two decades? What are savings from tax credits as a proportion of total tax credits expenditure? Which is the single largest measure to have reduced expenditure on Housing Benefit since 2010?

The House of Commons Library Welfare Expenditure and Savings Tool (WEST) enables us to answer these and many more questions, combining multiple sources of expenditure and savings data into one easy to use, up-to-date analysis tool. WEST is available to download and use as an Excel spreadsheet, below.

Section 1 of the accompnaying PDF provides summary analysis of welfare expenditure and savings over time, produced using the analysis tool, while section 2 explains how WEST has been created.

Welfare savings of around £26 billion in 2016-17, roughly 10% of expenditure 

Expenditure on UK social security and tax credits is forecast to be £218.4 billion in   2016-17, 28.3% of total managed expenditure. Assuming all savings announced between June 2010 and March 2016 are realised, as initially forecast, in full, a total of around £26 billion will be saved in 2016-17 as a result of changes in welfare spending.

This is roughly 10% of what welfare spending might otherwise have been had the then Government’s changes not been implemented. In 2020-21, savings equate to roughly 15% of what total spending might otherwise have been.

Of all savings announced June 2010 to March 2016, the three single largest measures are:

  • Switching the uprating of most benefits to CPI from 2011-12;
  • Limiting the uprating of most working age benefits and tax credits to 1% for three years from 2013-14;
  • Removing Child Benefit from families with a higher rate tax payer.

The greatest savings are from tax credits and, in percentage terms, Child Benefit…

In 2016-17 HMRC Tax Credits expenditure was around £4 billion lower than it might otherwise have been had changes not been introduced, the largest reduction in monetary terms to any welfare category. Expenditure on Child Benefit was around 22% lower than it might otherwise have been, the largest reduction of any welfare category in percentage terms.

… while expenditure on the State Pension continues to rise as a percentage of welfare expenditure

The State Pension was the single largest source of expenditure in each year 1996-97 to present, comprising 36% of expenditure in 1996-97 and 42% in 2016-17. In 2016-17 State Pension expenditure was, assuming initial estimates were realised as forecast, around £1.6 billion higher as a result of measures introduced since June 2010.

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