Spending on benefits for working-age people dwarfed investment in key infrastructure such as schools and trains by £1.1 trillion between 2006 and 2025, new research has found.
The Centre for Social Justice said that spending on disability support and other forms of welfare racked up to £1.1 trillion more than capital expenditure in the same period of time.
Researchers warned that welfare spending had been used to “compensate for weak local economies”, reversing a trend seen in the immediate years after World War II.
A 250-page report found that while benefits spending amounted to 2.5 per cent of GDP between 1949 and 1975, it increased to about five per cent between 1975 and 2016.
Benefits spending is running at about 4.6 per cent today compared to just 2.9 per cent for public investment.
The findings, which converted historic figures to 2026 prices, add to growing calls for the UK to rethink the design of the welfare state amid pressures on Andy Burnham and John Healey to increase expenditure on defence or lower the tax burden for households and businesses.
Authors of the think tank’s report will warn that welfare is the “anaesthetic that has kept areas of the country numbed during two decades of economic failure”.
Ben Gregg, head of welfare at the CSJ, said that governments had chosen to “compensate struggling regions for decline rather than reverse it”, adding that spending priorities had to be re-wired in order to boost people’s income.
“A Britain where everyone has a stake in prosperity is one where good jobs and thriving towns are within reach of every community,” Gregg said.
“That is not achieved by writing a cheque and forgetting about people. It comes from investing in these places and removing the barriers that stop businesses doing the same.”
Pressure on ministers to curb benefits spending
Labour ministers will have to consider a range of proposals following the publication of the Alan Milburn review into youth unemployment and the Sir Stephen Timms review into personal independence payments for disabled people.
In an interim report, Milburn said young people out of work, education and training cost the country about £125bn a year in lost potential and long-term impacts.
He noted that the ratio of benefits spending on young people to investment in employment opportunities was 25:1.
A separate review by Timms meanwhile has no mandate to identify savings after a Labour backbench rebellion stopped former Chancellor Rachel Reeves from slashing the huge £136bn bill by £5bn.
A government spokesperson said: “For too long, worklessness has been entrenched in too many communities, and people not given the opportunity to thrive.
“We are determined to get Britain working and boost growth in every postcode, including publishing the 10-year infrastructure strategy, increasing public investment by £120 billion to unlock private capital, and delivering reforms to planning, major infrastructure and regulation.