Dependent Nation: More Than Half of British Households Get More From Govt Than They Pay In

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Oliver JJ Lane

A shifting tax burden and a swelling state has seen dependency on government aid reach the highest level ever, with more than half of British households ‘putting in’ less than they get out, analysis of government figures has found.

Some 36 million people, or 54.2 per cent of individuals in the United Kingdom, lived in a household which received more government benefits than they paid in taxes in 2021, the highest proportion ever, standing a considerable 13-points higher now than the long-term trend average going back half a century.

These findings appear to underline the impact of the creeping state drawing more and more families into its clutches while piling the responsibility for paying for this ballooning welfare state onto a dwindling number of taxpayers.

Looking at the so-called ‘net dependency ratio’, the Civitas think tank found that over 54 per cent of people are in a household getting more than they pay in, and that this figure has been rising. In 2019 47 per cent of people were in households getting more out, and it was as low as 40 per cent in the year 2000. The average level of dependency between 1977 and 2000 was 41.2 per cent.

While many will feel, therefore, they are getting a good deal out of the state the considerable imbalance in welfare — which includes both cash benefits and ‘benefits in kind’ like education and the NHS socialised healthcare system — it begs questions about the sustainability of such a lopsided system. Perhaps of greatest concern is the way in which taxation in the UK has shifted away from a system where the majority pay in to have a state safety net if they need it later, to one where a small minority of high earners — who are perhaps among the most mobile and motivated to go elsewhere — pay a disproportionate amount of tax.

Illustrating how lopsidedly this burden is carried, Civitas said the top ten per cent of earners paid over half of all income tax, and paid three times as much tax as the bottom 60 per cent of taxpayers. Those in the top-fifth of earners paid, on average, £35,400 more in taxes a year than they received from the state.

The Daily Telegraph cited the remarks of report co-author Tim Knox, who underlined the concern felt about the growing state and disproportionate strain this put on some. He said: “The proportion of households who are receiving more from the state than they pay in taxes has never been larger – and the outlook for the near future is bleak… Is it a good thing that more than half of Britons take more from the state than they put in? Is a further increase in dependency welcome? Do we, as a country, want so many people to be dependent on the state? Or are we collectively hooked on more and more bread and circuses?”.

The reasons for the changes seen in this report are diverse, but the Civitas authors emphasised the way in which taxes are levied on one hand, and the sudden surge in the size of the government over coronavirus. Indeed, were it not for an accounting trick which saw covid handout payments not counted as a benefit, Civitas said, the so-called ‘dependency ratio’ would be even higher.

These revelations come against a backdrop of long-term failures of the British tax system to best serve those at the heart of society, families. Indeed, fiscal drag and a punishing tax code sees the middle classes ever-more clobbered with punishment taxes originally created to clobber the super-wealthy, and families disincentivised from making life work best for them by attacking single-earner homes have all been imposed upon the public by the Tory government.

Meanwhile, polling shows the UK public has given up on the idea of right-wing parties being in favour of a smaller state at all, and the UK’s Conservative Prime Minister said last week that “idiots” believe the government can cut tax.

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