Rising welfare bill set to ‘swallow’ stealth tax revenue
Rising benefit costs will “swallow” all the revenue from frozen tax thresholds that are dragging millions of workers into paying higher rates, analysis has found. The Centre for Social Justice has said that the £33bn increase in benefits spending between 2027 and 2032 will broadly match a rise in projected receipts from frozen income tax [...]
The Centre for Social Justice report warns that soaring benefit costs will consume all the revenue generated by frozen tax thresholds, leading to a rise in the welfare bill by £33.4bn between 2027 and 2032. This increase roughly matches the additional £33.1bn in revenue from higher taxes on workers, according to figures highlighted by the analysis.
This analysis came out as John Healey, the Chancellor, faced questions over his comments to reduce the welfare bill before the election. Healey promised a reduction in the benefits bill but refused to commit to a specific reduction, stating that the government was awaiting the Sir Stephen Timms review on disability payments and the Alan Milburn review on youth unemployment.
The government's push to cut the welfare bill also comes amid pressures on public finances, with the welfare bill forecast to rise by 0.4 percentage points as a share of GDP between 2025 and 2032.
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