The social security system: long-term trends and recent changes

Executive summary key points

Public spending on social security has risen as a share of national income over time, from around
4% in 1948- 49 to nearly 13 % in 2013

It is the largest single component of government spending,
making up around 30 % of total expenditure.

More than half of social security spending goes to
pensioners, and their share of total spending has been rising in recent years.

This partly reflects the ageing population, but it is also the result of policy choices, including
the current government’s decision to focus cuts to
the social security budget on working age individuals

The contributory principle plays an increasingly marginal role in the social security system, particularly for those of working age. In 2013 14, around four-fifths of non-pensioner social security spending was means-tested, compared with around a quarter in 1978 79

Support specifically for families with children is now mostly delivered through the tax credit system. On a consistent basis, real – terms tax credit spending more than
quadrupled between 1997- 98 and 2010 11,
from £7 billion a year to over £30 billion a year

Real terms spending on housing benefit has
almost doubled over the last two decades. This
reflects rising private rents and the growth of
the private rented sector, as well as reductions in other government subsidies for housing.

By the end of the parliament, reforms introduced by the current government will have reduced working-age social security spending by around £20 billion a year
relative to estimated spending on an unreformed system.