Tories alarmed that Covid has created a ‘something for nothing’ culture in Britain today as more than half were found to be receiving more from the state than they first put into it.
According to a study by Civitas, some 36 million people live in households that receive more from the government than they pay in taxes.
The findings are based on the most recent official data from 2020-21 and reflect the huge support ministers have given to keep the country going during the lockdown.
The estimates include the amount individuals receive from ‘benefits in kind’, such as using the NHS and state education, as well as pensions for people who have contributed during their working lives.
It does not take into account the massive furlough scheme – but the level will also have been impacted by the dramatic fall in income for millions, reducing the tax burden.
The spike to 54 percent of households being net beneficiaries is similar to the two-fifths – 24 million people – recorded when Tony Blair was in power at the turn of the millennium. Under Thatcher the figure was even lower, although the population is aging significantly. It has risen during recessions and has not fallen back to previous levels afterwards.
MPs warned that the massive government aid during the Covid pandemic could have changed the country’s psyche.
According to a study by Civitas, some 36 million people live in households that receive more from the government than they pay in taxes. The findings are based on the latest official data from 2020-21 and reflect the huge support from ministers to keep the country going during the lockdown
The poorest fifth of households receive an average of £17,600 more in state assistance and non-financial benefits than they pay in tax
Britons are more dependent on the state than ever, a bombshell report found today. Prime Minister Rishi Sunak is photographed on January 19
The think tank’s report highlighted that the top 10 percent of earners pay 53 percent of all income taxes.
Civitas said the levy was a “stealth wealth tax.”
The poorest fifth of households receive an average of £17,600 more in state assistance and non-financial benefits than they pay in taxes.
Senior Tories responded by demanding tax cuts to boost growth and a new debate on the role and size of the state.
Meanwhile, an analysis from Labor published today found that there will be 1.9 million people over 50 receiving unemployment benefits by May 2022 – an increase of 300,000 compared to pre-pandemic levels.
Iain Duncan Smith, former Conservative leader and ex-works and pensions minister, said: ‘Lockdown has changed the psyche of the British people.
“All these years we told them you can’t get anything for nothing, and suddenly they did. The British public thought the government could do it all – even pay their salaries and they don’t have to work.’
The Civitas analysis used data from the Office for National Statistics to compare how much tax people pay against the benefits they receive from the government.
These include social benefits, such as Universal Credit, Jobseeker’s Allowance and the state pension, and non-financial benefits, such as the use of the NHS and social care, free school meals and subsidized housing.
The share of those getting more from the state than they put into it has risen steadily over the last few decades and is now higher than it was under the premierships of Sir Tony or Gordon Brown.
The number of people getting more from the state than they pay in taxes has risen from 24 million, or two-fifths of households, when Tony Blair was in power at the turn of the millennium. Tony Blair is photographed on January 19 on the WEF forum
Sir Iain Duncan Smith, former Conservative leader and ex-Secretary for Work and Pensions, said ‘Lockdown has changed the psyche of the British people’
The country’s dependence on the state peaked between 2020 and 2022, due in part to the massive rise in health spending, the drop in VAT receipts during lockdowns, and a growing benefit bill.
The report’s authors said the true figure would likely be even higher than 36 million people, as their findings exclude the £70bn furlough scheme.
The latest data also fails to take into account the tens of billions of pounds set aside to subsidize energy bills and the impact of hundreds of thousands of people disappearing from the labor market.
The report fueled fears that the state has blown up, stifling entrepreneurship and forcing the low-paid into a benefit trap.
It follows data released last month that showed benefit fraud has reportedly risen to more than £8.5 billion a year.
Ministers were recently reprimanded by a committee of MPs after the bumbling staff at the Department for Work and Pensions lost a record £8.6bn in taxpayers’ money in 2021 through fraud and error – nearly double what was lost the year before the pandemic was lost.
Mr Duncan Smith said: ‘The more we spend, the more we have to tax or borrow. The government needs to act, and quickly. Start cutting taxes and put money back in people’s pockets.”
Labor more likely than Tories to cut taxes
Voters believe Labor is more likely than the Tories to cut taxes, according to a poll that will concern ministers.
Rishi Sunak is receiving increasing calls from his own MPs to take swift action to reduce the burden on individuals and businesses.
According to a poll for the Sunday Telegraph, some 49 percent of the public think the tax burden is too high.
When asked which party they ‘trust more’ to cut taxes, 49 per cent answered Labour, compared to 23 per cent the Tories said.
Tory MP Ben Bradley added: ‘None of this is sustainable. You can’t let more people leave than come in.
“As a society, we need to have a serious conversation about our demands and expectations of the state.”
Former Tory cabinet minister Sir John Redwood said: ‘The government must take on board the message of this report. We need to get more people to work.’
Liz Truss and Kwasi Kwarteng announced massive tax cuts in their disastrous September mini-budget, but new Chancellor Jeremy Hunt dropped the plan.
But as energy prices fall, Tory MPs and business leaders have questioned whether the government is doing enough to promote economic growth.
There is also a growing backlash from many conservative backbenchers, who believe that taxes on high earners, the ‘stretchers’, are too exaggerated.
Tim Knox, author of the Civitas report, said all political parties should ask themselves: ‘Is it a good thing that more than half of Britons are taking more from the state than they put into it?
‘As a country, do we want so many people to depend on the state?’
A government spokesman said: “Our priority is to help families gain financial independence through work, but we recognize that we need to go further and look at how to reduce economic inactivity at a rapid pace.”
The DWP told MailOnline they saw an increase in Universal Credit claims as the pandemic hit and more people needed support.
However, this caused an increase in fraudulent claims — co-driven by gangs “benefiting” from a relaxation of application rules.
The DWP quickly established an enhanced review team consisting of 1,000 employees in seven regional offices to investigate suspicious activity. According to The Times, this has successfully blocked tens of thousands of claims.
About 172,000 applications that appeared to be fraudulent were automatically stayed – with the claimants invited for an interview to prove their innocence. These claims amounted to £2 billion.
In November, the Commons Public Accounts Committee published a report critical of the government’s response to fraud, saying there was no clear plan to address ‘unacceptably high’ levels of false claims.
A DWP spokesperson previously told MailOnline: “When the pandemic hit, we saw a surge in Universal Credit claims, which required an extraordinary response to help anyone in dire need.
“Unfortunately, unscrupulous fraudsters have taken advantage, but we are rooting them out and have already reviewed 900,000 claims.
“Last year alone we saved £2bn by correcting and preventing fraud and error. But we are going much further, with our robust fraud plan to prevent losses of £2bn over the next three years, and over £4bn over the next five years.”
Get started with the copper tax
More than half of people live in households that receive more from the state than they pay in taxes – the highest ‘dependency’ level ever
The number of households receiving more than paid has increased from 24 million or 40.3 percent of the population in 2000 to 36 million or 54.2 percent today
The average household receives nearly £5,000 a year more in social benefits, healthcare, schooling and other ‘benefits’ from the state than they pay in tax
The top 20 per cent of highest earning households pay £35,000 more in tax than they receive in ‘benefits’
The poorest fifth of households receive £17,600 more in ‘benefits’ than they pay in tax
The top two-fifths of earners pay 83 percent of income tax