Revealed: how much the highest earners pay towards Britain's benefits bill

Telegraph

2 days ago

Britain's ballooning welfare state bill is costing the top 10pc of earners at least £6,281 a year each, Telegraph analysis shows.
Almost a third of all income tax revenue and National Insurance contributions are being spent servicing the nation's benefits bill.
Welfare spending totalled £296bn in 2023-24, the last year for available data, an increase of £86bn compared to a decade ago.
Analysis by The Telegraph shows a worker earning £72,150 a year, equivalent to being in the top 10pc of earners, pays £19,746 in income tax and National Insurance.
Of this, £6,281 – or 32pc – is spent on welfare benefits. The majority (£2,553) goes towards the state pension and other old-age benefits. But a similar amount (£2,247) is spent on unemployment benefits in the form of Universal Credit and disability benefits such as Personal Independence Payments (PIP).
PIP is the main non-means-tested benefit for those with health conditions or disabilities, with payments of up to £9,500 a year to help people with living costs and getting around.
However, the cost of the benefit has spiralled since lockdown, and is on course to climb from £15bn in 2019-20 to £36bn in real terms by the end of the current Parliament.
Mel Stride, the shadow chancellor, told The Telegraph: 'Our welfare system is on a path to becoming completely unsustainable and Labour are asleep at the wheel. Since the pandemic we've seen a particularly steep rise in the numbers of people on benefits for health problems or disabilities, and it is set to continue spiralling higher still.
'We need fundamental reform to get the bill down and move people off welfare and into jobs. Without radical action the burden on taxpayers will only continue to rise.'
The Telegraph's data relates to spending made in the 2023-24 financial year based on analysis by the Institute for Fiscal Studies.
It also found the median full-time worker, earning £38,000 a year, pays £2,265 in taxes towards benefits.
Their taxes contribute a further £1,455 towards the NHS and £817 is spent paying off the interest on the Government's £2.7 trillion worth of debt.
For an additional rate taxpayer earning £125,140 a year, almost £15,000 (£14,960) of their income goes towards the welfare state and £10,000 (£9,608) is spent on the NHS.
The Office for Budget Responsibility has forecasted welfare spending will total £378bn by the end of the decade.
However, this calculation was made prior to Sir Keir Starmer's £5bn about-turn last week when he decided to reinstate the winter fuel allowance for most pensioners amid growing anger from his backbench MPs and Labour's dismal performance in this month's local elections.
Reinstating the pensioner benefit will cost the Treasury £1.5bn. The Prime Minister is also considering axing the two-child benefit cap, which would cost the Treasury another £3.5bn.