From government pensions to public sector contracts, the British state is intimately involved in the economic lives of the British public. Our inaugural State Reliance Index reveals the extent of this phenomenon - we have calculated that 52.1% of British adults are in some way reliant on the state for their livelihood. This analysis mostly uses figures from 2024. This represents an increase of approximately 0.8% since 2022.

Some examples of the state’s involvement in the economy are intuitive. The number of Universal Credit recipients, including those registered as long-term sick, has increased significantly in the wake of the Covid-19 pandemic. At the same time, an ageing population has increased the proportion of adults who receive a state pension. 

There are also some examples of state involvement which are less intuitive. The massive expansion of regulatory and bureaucratic involvement in the economy has created a class of professionals whose roles exist downstream of the bureaucratic state. Human resources and planning are two such sectors - both fields exist to enable businesses to navigate the arcane regulatory obligations that businesses across the UK now contend with. The number of human resources professionals in the UK has grown four times faster than the overall growth in the number of jobs. 

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. 

Even without the inclusion of these subsidised sectors, more than half of the British public is, in some way, reliant on the state for economic support. This fact is problematic for three key reasons. First, it reflects the growing scale of the fiscal burdens that the British state has assumed over the past few decades. State-issued Pensions, Universal Credit, and Public

Sector Pay are not free - the funds for these spending commitments must be raised from an ever-shrinking pool of productive taxpayers. As recent Adam Smith Research has highlighted, recent tax changes have begun to drive away some of the country’s most productive taxpayers - namely High Net Worth Individuals. Should this trend continue, future Governments may have no choice but to increase the tax burden on ordinary working people - at a time when many household budgets are already squeezed. 

Second, it highlights the extent to which the private sector in the UK is now being stifled. Thanks to the rapid expansion of the regulatory and bureaucratic state over the past few decades, in the shape of quangos, regulators, and ALBs, businesses in the UK now face considerable challenges in starting, growing, and succeeding. Combined with an unfavourable tax environment and expensive commercial energy prices, it’s no wonder that many businesses do not have the capital needed to create new jobs. In the absence of this job creation, more and more Britons are forced to rely on the state. 

Third, it creates a difficult political environment for those interested in reducing the size of the state. Voters who rely upon the state for their income are less likely to support efforts to roll back the state. In turn, this leads to greater state involvement in the economy. There is a risk that, in tandem, these factors create a ‘ratchet effect’, whereby politicians are pushed inexorably towards more state involvement in the economy. 

The aim of our State Reliance Index is not to demonise individuals who rely on the state for their livelihood, in one way or another. There are plenty of circumstances which might lead a person to rely on Universal Credit. Many of those who claim State Pension have worked as productive taxpayers throughout their lives. Many public sector employees are hard-working, skilled, and committed to serving the national interest. 

However, the State Reliance Index does raise questions about the shape of Britain’s economy, and demonstrates the challenge that now faces politicians bold enough to roll back the frontiers of the state.

Full breakdown (of the adult population reliant on the state)

State Pension Recipients: 12, 635,000 (23.29%)

Universal Credit Recipients, including unemployed people: 6,340,000 (11.69%)

Public Sector Employees: 5,940,000 (10.95%)

Higher Education Students: 2,937,155 (5.41%)

Higher Education Employees: 240,420 (0.44%)

Human Resources Employees: 139,623 (0.26%)

Planning Sector Employees: 22,000 (0.04%)