Benefits bonanza: Over 600,000 households now paid more than average salary as welfare row erupts
CP
More than 600,000 households are now receiving more in benefits than the average worker earns, in a stark snapshot that will fuel fresh anger over Britain’s soaring welfare bill.
The analysis, produced by Conservatives, shows 625,618 households were handed more than £32,200 last year, roughly what a typical worker takes home after tax.
Despite years of promises to control spending, payouts on this scale continue, with around 16,000 households receiving more than £60,000.
The figures have intensified criticism of Keir Starmer and his government, already under mounting pressure to get a grip on public finances while pledging increases in defence spending.
Critics say the numbers expose a system drifting dangerously out of balance, where in some cases benefits outstrip full-time wages, undermining the principle that work should always pay.
Neil O’Brien, who led the analysis, warned that the scale of high-value claims among working-age households shows welfare reform has stalled. He argued the cap on benefits is no longer doing its job, allowing ever larger payouts to slip through.
The controversy centres on a long-standing exemption. Introduced under George Osborne, the benefit cap was meant to limit how much households could receive. But the cap does not apply if one member qualifies for certain disability payments, meaning entire households can receive uncapped support.
Conservatives say this has created a loophole that Labour has been warned about and failed to tackle, despite the growing cost. They argue it allows households to receive vastly different sums depending on technical eligibility, rather than genuine need.
Conservative Shadow Minister, Helen Whately said the current system risks rewarding inactivity, warning that some households can receive tens of thousands more than working families. She said reforms would force the cap to “do what it was meant to do”, ensuring employment is always the better option.
Labour has pushed back, insisting those receiving the highest payments are among the most vulnerable, often including people with severe disabilities. But critics say that defence avoids the broader issue, that the system as a whole has expanded rapidly with too little scrutiny.
The numbers underline that growth. Around 800,000 working-age households now receive more than £30,000 a year in benefits, a sharp rise in recent years. Even after a slight drop, the number receiving above the average salary remains far higher than before the pandemic.
Altogether, these households account for roughly one in 30 across Britain, with hundreds of thousands receiving £40,000 or more.
With the welfare bill now standing at around £155 billion, pressure is building on ministers to act. Conservatives estimate closing the exemption loophole could save up to £1 billion, money they say could be better used elsewhere or help steady the public finances.
For many voters, the issue cuts to a simple question of fairness, whether a system funded by taxpayers can justify paying out more than many of those taxpayers earn.
As the political battle lines harden, Labour faces a difficult choice, defend a system critics say is spiralling, or risk more backlash by tightening support in an already strained economy.
This article (Benefits bonanza: Over 600,000 households now paid more than average salary as welfare row erupts) was created and published by Conservative Post and is republished here under “Fair Use” with attribution to the author CP
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New data shows the number of really large welfare claims is even higher than thought
NEIL O’BRIEN
A while back I wrote about the growth of really large benefit claims and made a welfare atlas of Britain.
I did warn that some of the data was about to change – and it has.
The Family Resources Survey (FRS) is kind of a big deal in government statistics. They ask a load of people very detailed questions about exactly how much money they have coming in from earnings, investments, benefits and so on. It is used to calculate many things – like measurements of relative poverty and the “distributional analysis” you see alongside the Budget, and so on.
The nice thing is that it links together information from many sources; income from work, every type of investment, every type of benefit, together with info on the household: whether they are carers or disabled, what sort of household it is and so on.
But for many years people have noted that when you add it all up, the amount people report receiving in benefits is smaller than the actual total the government is spending. People forget what they have received.
So the DWP have now started supplementing the survey data with some administrative data – they link up people’s survey replies to administrative records.
This is a work in progress. So far they have only thoroughly revised the data for the years after 2021/22, thought there are some changes to earlier years too.
The effect has been to halve, but not fully close, the gap between the money sent out and the income reported. According to DWP:
“At a United Kingdom level, the average survey undercount over the three years to 2024 is 18%, while the admin-linked percentage is 9%”
The gaps are different for different places and benefits. For example, under-reporting was particularly high in Northern Ireland. And some benefits are more under-reported than others:
More large claims
One thing that the new data does is shed new light on the phenomenon of really large welfare claims. DWP refuse to use their administrative data to answer questions about how many households are making large benefit claims, so the data from FRS is the best tool we have to look at this. Though a chunk of benefit spending is still missing, we can now get a more realistic sense of how many households are making really large welfare claims and the numbers are larger than previously reported.
The average full time worker earns about £39,800 a year, which is £32,200 after tax.
There are many working age households getting more than this in benefits. There are now:
- 819,000 households getting over £30,000 a year in benefits,
- 626,000 getting over £32,200 (so more than the average take home)
- 267,000 getting over £40,000,
- 91,000 getting over £50,000,
- 16,000 getting over £60,000.
The (revised) number getting over £30,000 in real terms is up by 7% since 2021/22 – and is up by a third compared to the figures before they were revised.
What do we know about these households?
In terms of where they are, a greater proportion of working age households have large claims in London and the North East, and lower in the Midlands, Wales and the East of England.
In terms of ethnicity, some groups are more likely to see large claims than others. Indian households of working age were the least likely to have large claims while Pakistani, Arab and Bangladeshi households were more likely – one in eight Bangladeshi households of working age claim over £30,000 in benefits, compared to less than one in 25 nationally.
The proportion of households making large claims is much higher among those in social housing – again, over one in eight. The big difference with private renters is slightly surprising – after all, households in social housing are already benefitting from a rent subsidy. The value of that non-cash subsidy is not captured in this data and in fact it should reduce any housing benefit income, which is measured here.
If we were to include the implicit value of their social housing the sums these households are receiving from taxpayers would be even larger.
Conclusion
I wrote before that the real-terms growth and scale of really large benefit claims from working age households makes the case for a return to welfare reform stronger. We need reforms across all types of benefit – and particularly the Household Benefit Cap, which is no longer really constraining the growth of really large claims. Over the weekend Kemi Badenoch and Helen Whately have been setting out our plans to fix this.
A significant number of households are getting a lot more in benefits than the average person gets to take home after working full time. We need a system that’s fair to taxpayers as well as those benefitting from it.
This article (New data shows the number of really large welfare claims is even higher than thought) was created and published by Neil O’Brien and is republished here under “Fair Use”
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