Discussion of the cost of benefits has been plagued by apparently conflicting accounts of what is happening. The Office of Budget responsibility has put the figure at £182 billion; the Daily Mail has recently cited costs of £180 billion and £200 billion; I have heard £210 billion from the BBC. Two recent defences of the welfare system (Owen Jones in the Independent, and Toby Helm in the Guardian), point out that 40% of the money goes on pensioners; that is a serious underestimate.
Much of the confusion happens because different figures refer to different ways of counting. The benefits administered by the DWP are expected to cost £166 billion in 2012-13, though the latest Budget adjustment has that at £164.5 billion. £12.1 in Child Benefit, £5.5 billion for Northern Ireland and some other additions bring this to £182.8 billion. Then there is £28.6 billion in Tax Credits, which are not part of the benefits system. That means that people might cite approximate figures of £165 billion, £183 billion and £211 billion, all of which are correct from different perspectives.
Where the commentators tend to go wrong is calling all of this ‘welfare’, and assuming that it is driven by the ‘out of work’ benefits. Apart from the State Pension and Pension Credit, pensioners receive a range of other benefits, including not just those associated with pensioners – Attendance Allowance and Winter Fuel Payment – but Housing Benefit, Council Tax support, Attendance Allowance, and (perhaps surprisingly) Disability Living Allowance. The DWP’s current tally is that £107.5 billion is spent on people over working age. That means that two thirds of the lower figure, and more than half of the high figure, goes to pensioners.