Benefits: Who gets them and how much do they cost?

Woman and baby with a benefits officerGetty Images

Chancellor Jeremy Hunt has announced how much benefits will rise in 2024.

The changes will take effect from April.

How much will benefits increase?

Most working-age benefits will rise 6.7%, which is in line with September's CPI inflation rate.

Inflation measures how fast prices are rising based on the cost of a basket of goods.

State pensions will go up in line with the so-called triple lock, which means they rise by inflation, average earnings or 2.5%, whichever is higher.

This year, the highest was the rise in average wages, which was 8.5%.

In Scotland some disability benefits are devolved, meaning the Scottish government decides how to increase them.

Benefits are fully devolved in Northern Ireland, but changes are likely to be similar to those for the rest of the UK.

How are the rules on benefits changing?

Jeremy Hunt announced that claimants who have not found a job after 18 months would be put on mandatory work placements, "to increase their skills and improve their employability".

He said that claimants who did not engage with the process after a further six months would have their benefits stopped.

How much is spent on benefits?

In August 2023, 22.6 million people were claiming some form of benefits, in England, Scotland and Wales.

In 2023-24, the government is expected to spend £265.5bn on paying pensions and benefits, just over half of which (£134.8bn) goes on benefits to pensioners.

By comparison, the government is expected to spend £245bn on health.

Universal credit

After the state pension, universal credit (UC) is the government's highest benefit spend, allocated £59.8bn this year.

In October 2023, 6.2 million people were claiming it, about 38% of whom have jobs.

UC is a monthly payment to help with living costs. It was introduced to replace a number of existing benefits, including:

  • child tax credit

  • housing benefit

  • income support

  • income-based jobseeker's allowance

What is universal credit and who qualifies for it?

Housing benefit

It is expected that £14.3bn will be spent on housing benefit this year, which helps people pay their rent.

In May 2023, there were 1.3 million working-age recipients and 1.1 million of pension age.

Housing benefit is gradually being replaced by UC.

Disability benefits

The main benefits for disabled people are:

In February 2023 there were:

  • 1.6 million people claiming ESA

  • 4.2 million people claiming either PIP or DLA

  • 1.6 million attendance allowance claimants

Child benefit

The government is expected to spend £12.6bn on child benefit this year.

Since 2013, claimants earning more than £50,000 gradually have the benefit reduced the more they earn.

At £60,000 and above, child benefit is fully withdrawn.

And that figure has not been adjusted to reflect rising prices since then, meaning it now affects many more people.

In August 2022, seven million families were receiving child benefit.

Personal tax credits

Child tax credit and working tax credit are being replaced by UC.

The government is expected to spend £8.8bn on them this year.

Pension Credit

Separate from the state pension, pension credit helps people over state-pension age with low incomes with living costs, at a cost of £5bn in 2023-24.

More than 1.4 million people currently receive pension credit, although the government says there are significantly more eligible pensioners who do not claim.

How does UK benefit spending compare with other countries?

The UK spends 12.9% of gross domestic product (GDP) - the total value of goods and services produced in the country - on social benefits, according to the latest data from the Organisation for Economic Co-operation and Development (OECD).

Comparing benefits paid to households. Social benefits as a % of GDP. USA and Japan figures are 2021 - all others are 2022.

That puts it in fifth place on the G7 list of big economies.

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