Social security spending (spending on benefits, tax credits and state pensions) is the biggest single component of government spending. The design and generosity of the system affects the incomes and work incentives of millions of households. Since 2010, there have been a number of cuts to the generosity of working-age benefits, while pensioners have been mostly protected and have benefited from the 'triple lock' on the state pension. Government plans for future cuts would significantly reduce the incomes of low-income working-age households, particularly those with children (as shown in the figure below). The next government will face important choices about how much to spend on benefits and the state pension, and where that money should go. In the run-up to the 2017 general election we will be publishing analysis of benefit and pension changes that parties are proposing.
Long-run impact of planned tax and benefit reforms by income decile and household type
Note: Income decile groups are derived by dividing all households into 10 equal-sized groups according to net income adjusted for household size using the McClements equivalence scale. Assumes full take-up of means-tested benefits and tax credits, and that all planned changes are fully in place.
Source: Figure 3, The impact of tax and benefit reforms on household incomes, 27 April 2017