A record 36 million people in Britain now live in households that receive more benefits from the state—including free education and health care—than they contribute in tax, according to a report by the think tank Civitas.
Civitas analysed data from the Office of National Statistics (ONS) from 2020/21 and found 54.2 percent of individuals were dependent on the state, although those figures would have included furlough payments and other benefits related to the COVID-19 pandemic lockdowns, which took place in Britain from March 2020.
The figure had fallen from 52.5 percent in 2011 to 47.5 percent in 2019/20 but rose sharply because of the lockdowns.
The authors of the report said: “The data presented here do not fully include the impact of the substantial number of people who have left the labour force since the pandemic. These are likely to aggravate the net dependency ratio.”
The analysis by Civitas suggested 83 percent of all income tax in Britain is paid by 40 percent of British adults.
In 2020/21, the top quintile of households paid £35,399 more in taxes than they received in benefits.
When that figure was amended to remove retired people, the figure went up to £41,087.
‘Income Inequality ... Has Fallen’
The report also said: “Income inequality, as measured by the Gini Coefficient, has gradually fallen from a peak of 33.8 percent in 2007/08 to 29.9 percent in 2020/21. It was lower in 2020/21 than it had been for 14 of the previous 20 years since 2000.”The Gini Coefficient is a measure for aggregating the overall differences in income shares across a population.
If it is 100 percent it means one person earns all of the income and if it is zero percent it means everyone has exactly the same income.
In the UK the Gini Coefficient has been stable since the late 1980s. It has fallen 33.8 percent in 2007/08 to 29.9 percent.
It rose under Prime Ministers Margaret Thatcher, Tony Blair, and Theresa May and fell under John Major, Gordon Brown, David Cameron, and Boris Johnson.
The report added: “Benefits in kind from education and from the NHS both increased significantly in 2019/20. There were some other smaller effects of the Covid-19 response on these results—cash benefits increased and self-employment income fell—but these results do not have a large effect on any of the reported outcomes.”
The Department of Work and Pensions is due to publish a white paper in the next few months on changes to benefits.
Work and Pensions Secretary Mel Stride said recently he wanted to increase the number of people in employment.
When he took over as prime minister in October, Rishi Sunak asked Stride to look into the issues, including the so-called “benefits trap,” which keep people from seeking employment.
The benefits trap is the suggestion that some people without skills or higher education find themselves better off on benefits than if they were in low-paid full-time work.
Sunak said last week: “We need to look at how our welfare system is operating and is it operating in the way that we would like to make sure that we are supporting and incentivising people who can be, to be in work.”
But she was forced to do a U-turn by the reaction of the City of London, which was concerned about how the tax cuts would be funded. She eventually resigned from 10 Downing Street after being politically humiliated.
When Sunak succeeded her he promised to put up benefits in line with inflation.
Chancellor Jeremy Hunt said in November benefits would go up by 10.1 percent in April, costing the country an extra £11 billion.
More than 600,000 people on Universal Credit will be asked to meet with a work coach “so that they can get the support they need to increase their hours.”
Britain faces a general election in the next 18 months and the leader of the opposition Labour Party, Sir Keir Starmer, will be hoping to recover dozens of seats lost to the Conservatives in the 2019 landslide defeat.
