My blog post of 12th April 1956! attracted a rather wider audience than my posts are usually accustomed to reaching. As a consequence, I’ve had quite a large email correspondence on the back of it. Most controversial is the figure I quoted stating that the average person born in 1956 will have consumed some £300,000 more in benefits that they will have paid in taxes.
I’ve had many emails from that age cohort complaining that they’ve ‘never taken a penny’ and demanding to know how the figure is calculated.
The calculation appeared in a paper produced by the Resolution Foundation: An intergenerational audit for the UK (2023):
In Annex 1 – “Analysis of net lifetime benefits from the welfare state” , (Chart) 6 –“Net lifetime benefits from the welfare state, by year of birth” They gave an estimate of between £290,000 and £310,000. As stated in their notes below the chart, they included the following net lifetime benefits: State pension; NHS spending; Education spending; other public service consumption; and cash benefits.
Minus taxes paid: Income tax; National Insurance; VAT and other indirect taxes.
All the figures are discounted to present value and expressed in 2023 prices and, averaged across the entire 1956 birth cohort.
Such a mathematical illustration will invariably include a spread with many well above, and also well below the mean.
What I thought was healthy about the response was that people clearly did not want be seen as being part of a cohort that was not self-reliant, and which consumed more benefits from the state than they paid for in taxation. I take this to mean we are a bit embarrassed about being dependent, that there is still a residual pride about not living ‘on the parish’.
Halleluiah! I had begun to fear that we had become shameless, seeing state benefits as an entitlement, and that we were inured to dependency.
If there remains at least some a concept of a ‘moral peril’ with regard to welfare dependency, then we have a prospect of recovery from it.
Bizarrely, a Government Treasury minister passed me in the lobby and complimented me on the blog. I was surprised (and flattered) that a Minister, with a Red Box of vital state papers to deal with daily, would take time to read a blog of mine. No doubt, an official spotted it and flagged it up to him. Perhaps, the Government has started to think about the future of the Triple Lock on pensions…before the deteriorating state of the public finances causes the IMF to force it to do so.