Over Half of Brits Reliant on State for Their Income

• According to new analysis by the Adam Smith Institute, 52.1% of British adults are reliant on the state for their livelihood;

• In an accompanying comment, the Leader of the Opposition, the Rt Hon Kemi Badenoch MP, warns that a ‘culture of dependency has developed beyond welfare’ and says that the ASI’s data ‘makes the case for fundamental reforms that will redirect the talents of the British people’; 

• It comes as the Government announced a package of welfare reforms on Tuesday;

• The Adam Smith Institute (ASI) has calculated the State Reliance Index using the number of people who either receive universal credit or the state pension, are students at or are employed by a Higher Education institute, or who work in the public sector;

• The leading think-tank’s calculations also included the number of employees in human resources and the planning sector. This is because the increases in regulation have been the primary driver of the growth of these roles;

• The state has made huge spending commitments, and the Government may have to hike our taxes even higher to pay for them;

• Author Sam Bidwell also highlights how the private sector is being stifled by regulation and taxes, and that this will only lead to greater reliance on the state.

The State Reliance Index is a new initiative from the Adam Smith Institute (ASI), which calculates the percentage of the British adult population who are in some way reliant on the state for their livelihood. 

According to their new analysis, 52.1% of British adults rely in some way on the state for their income. 

This has been calculated by looking at the number of people who are either:

• receiving the state pension

• receiving universal credit, including unemployed people;

• Higher Education students;

• employed by a Higher Education institution;

• public sector employees.

The ASI also took the number of employees in human resources and the planning sector into account.  This is because the ever-expanding reach of the state has been the primary driver of the growth of these roles. These professions enable businesses to navigate the huge regulatory burdens that the state has placed on them.

The ASI’s state reliance index did not factor in those who work in private sector jobs, such as in green energy, that are either directly or indirectly subsidised by the state. The true number of Brits who are in some way reliant on the state is therefore likely to be much higher. 

This analysis by the ASI’s Director of Research Sam Bidwell shows that Britain is facing three major challenges:

• The state has made huge spending commitments and it is unclear how we will pay for them. The money will have to be raised from a pool of taxpayers which is already shrinking as millionaires leave and the population ages. The Government may have to hike our taxes even higher.

• The private sector is being stifled and is finding it harder to create the jobs that we need. Thanks to the rapid expansion of the regulatory burden and increases to  anti-business taxes such as employers’ National Insurance, fewer jobs are being created. This means that more and more Brits will have to rely on the state. 

• It’s hard for politicians to reduce the size of the state. Voters who rely on the state are less likely to support efforts to roll back the state and so politicians get the state more and more involved in the economy, creating a vicious cycle.  

The Rt Hon Kemi Badenoch MP, the Leader of the Opposition, said: 

“This index is an important contribution to the necessary work of rewiring the state. A culture of dependency has developed that goes beyond welfare to a bureaucratic class with so many talented people working in the unproductive parts of the public sector and working on compliance with government regulations in the private sector. 

An increasing reliance on state subsidy and regulation is holding back enterprise and growth. The Adam Smith Institute’s data makes the case for fundamental reforms that will redirect the talents of the British people - away from stifling bureaucracy and into innovative and productive work.”

Sam Bidwell, Author of the State Reliance Index and Director of Research at the Adam Smith Institute, said:

“The results from the State Reliance Index are astonishing, but hardly surprising. They are the inevitable result of decades of government meddling in the economy and our lives. Worse still, considering that some private sector jobs are subsidised by the state, the true number of those who are in some way reliant on the state is likely to be higher.

We should not demonise those who rely on the state. After all, there are many reasons why someone is on Universal Credit, there are many pensioners who were productive taxpayers throughout their working lives, and there are many public sector workers who work hard in the national interest. But we have to wake up to the fact that an ever-shrinking pool of taxpayers is having to prop up the government’s vast spending commitments.

This is completely unsustainable. The Government made some good first steps at tackling welfare dependency, but without comprehensive reform of the single largest item of welfare spending- the state pension- and a reduction in the regulatory burdens on wealth-creating businesses, this problem will only get worse.”

-ENDS-

Methodology:

Our State Reliance Index uses publicly available statistics from reputable governmental and non-governmental sources, to identify the share of Britain’s adult population who are, in some way, reliant on the state for their livelihood. For the purposes of this research, ‘British adults’ are defined as those who live in the United Kingdom, and who are older than 18 years of age. 

For the purposes of this research, ‘state reliance’ includes individuals who are dependent on the state, directly or indirectly, for their employment, or who receive significant financial support from the state. While a proportion of those who are classified as ‘reliant’ under this definition will also support themselves with additional funds (e.g. those on state pensions, who may also have private pensions), the support provided to them by the state is nevertheless likely to constitute a significant proportion of their income, and will undoubtedly influence their long-term financial planning. 

This Index also does not account for individuals employed in private sector roles which are directly or indirectly subsidised by the state, such as agriculture or ‘green energy’. Given the sheer extent - and opacity - of Government subsidy for private companies in sectors such as these, it is difficult to quantify exactly how many jobs have been created as the direct result of public investment.  However, it should be noted that a high proportion of jobs in sectors such as these are likely to be reliant upon state subsidy, either directly or indirectly. 

Notes to editors:  

For further comments or to arrange an interview, contact press@adamsmith.org | 0758 477 8207

Sam Bidwell is Director of Research at the Adam Smith Institute. 

The Adam Smith Institute is one of the world’s leading think tanks. It is ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.