Alongside the long-term trend of increasing expenditure on pensioners, spending on incapacity and disability-related benefits has increased in the last five years.

This does not mean there has been an increase in generosity within the benefit system, but wider falls in inflation have translated into a slight increase in the value of means-tested benefits for the first time in several years.

Over the last decade, allowing for inflation, expenditure on benefits has increased from £178 billion to £228 billion in 2014/15. Within this pensions continue to dominate at £108 billion, or 47 per cent of total expenditure, compared with 42 per cent in 2004/05. Expenditure in some other areas has been increasing, though not on the same scale.

Incapacity-related benefits accounted for £41 billion in spending, an increase of £7 billion over the last five years and £10 billion on a decade earlier. The increase takes the overall proportion of spending on these benefits to 18 per cent of total expenditure in 2014/15. Housing Benefit expenditure has also crept up over the long term and now stands at £27 billion, an increase of £7 billion on a decade earlier though spending levels have remained stable for the last four years.

In contrast, spending on family benefits, income support and tax credits has fallen to £44 billion compared with £50 billion five years ago, reflecting changes in eligibility and cuts to benefits such as tax credits. Unemployment-related benefits, meanwhile, accounted for £3 billion of expenditure in 2014/15. This is half of the amount spent in 2009/10 and means that spending on unemployment benefits is near the same level as it was a decade ago.

Wider increases in expenditure are not reflected at the individual level as the value of means-tested benefits has been falling in real terms. In 2015, means-tested benefits would allow a pensioner couple £231 per week, compared with £237 five years earlier. Similarly, the amount allowed for having two children within the Income Support system stood at £151, slightly less in real terms than the £155 that was paid five years before. The figures are the weekly value of Income Support expressed in 2015 prices for comparison over time. In the case of children, this would be the amount paid to parents who have two children of this age.

Benefits for working-age adults have also fallen in recent years but the longer term trend is very different for this group. Despite recent falls, the value of benefits for pensioners and children has increased over the longer-term, whereas the real terms value of benefits for a working-age couple has remained relatively stable. In 2015 a working-age couple would be entitled to £115; adjusting for inflation this means that benefits for this group are at a similar level to those seen in the late 1980s.

Indicator: 21A

Indicator: 21B

about the indicator

The first graph compares the level of spending in each of the main social security categories between 2001/02 and 2014/15 using GDP deflators to discount the effects of inflation. ‘Pensions’ includes the state retirement pension, Pension Credit and other benefits paid to pensioners on the grounds of their age.

The second graph shows the real (inflation-adjusted) value of a key means-tested benefit – Income Support – over time separately for: a working-age couple; two dependent children aged two and twelve; and a pensioner couple.

Reliability rating: high. The data all comes from official administrative sources.

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