Press Release

Tough choices to make as welfare, health and care bills rise

Date: 10 August 2011

We often worry about increased spending on health, long term care and social security in the future. We are right to. But we perhaps underestimate the extent to which the shape of the state has already changed to accommodate much greater spending on these areas. Between them they accounted for a third of all spending in 1978-79. They now account for half of spending. Add in education and the "core" welfare state - education along with health, social security and social care accounts for nearly two thirds of spending, up from a half at the end of the 1970s.

This dramatic increase in the share of health and social welfare spending has been made possible by substantial reductions in the proportion of spending going to defence, housing, and support for business and industry.

Going forward, spending on health, pensions and long term care is set to rise fast. Just these elements of spending, excluding all the welfare benefits paid to non-pensioners, will reach half of all public spending over the next 50 years unless there is significant reform or unless total spending is significantly increased.

These are among the findings of new analysis of recent government figures by researchers at the IFS.