The debate around the government’s welfare reforms is set to rage all week. Whatever the arguments for and against, one undisputable fact that is not used enough is that we are currently paying close to £100 billion a year to working age benefit claimants. Such a large number is hard to quantify. It is roughly equivalent to half of the total public sector pay bill in the UK or the entire New Zealand economy.
That is a staggering amount of money. Just a 5% reduction would pay for a four runway airport at Heathrow in two years or a number of other major capital investment projects such as new schools and hospitals. The sheer scale of expenditure and potential trade-offs warrants a close examination to assess whether it is providing the outcomes we want or whether it might be better spent on other areas.
One thing to make clear from the start is that our benefit system provides a vital and often uncelebrated role in helping those unable to work and supporting families in times of need. It is an institution that, as a country, we should celebrate and be proud of. But 50 years of tinkering and political game playing meant that by 2010 it had become sprawling and unsustainable, paying out tax credits to families earning in excess of £50,000 and transferring tens of thousands of pounds to some families without effective assessment of circumstance or need. As countless surveys have shown this has contributed to a downward spiral in public support for the welfare state. Three in four people now think that we spend too much on welfare.