Readers Question: What does the Government spend its money on?
The government spends money for a variety of reasons:
- Reduce inequality (welfare payments like unemployment benefit).
- Provide public goods (fire, police, national defence)
- Provide important public services like education and health (merit goods)
- Debt interest payments.
- Transport
- Military spending
In the UK, the biggest department for public money is social security. This takes almost a quarter of all public spending. It goes on financing a variety of benefits (Unemployment, housing benefit, child support, pensions).
Government spending as % of GDP
Main Areas of Government Spending 2013
[+] Pensions (old age and sickness) £138.1bn
[+] Health Care £125.9bn
[+] Education £34.2bn + £59.1bn (local) total education = £97.2bn
[+] Defence £46.4bn
[+] Social Welfare (income support, unemployment benefits) £117bn
[+] Protection (police, law, courts, fire) £33.4bn
[+] Transport £18.5bn
[+] General Government (e.g. civil service) £17.9bn
[+] Other Spending (mainly local, e.g. waste management, sports and leisure) – £48.6bn
[+] Interest payments on Government debt – £45.1bn
[+] Total Spending £683.bn
[+] Public Net Debt £1,159)
Other Notes
- Foreign Aid £7.8 billion or 0.7% of GDP 2011/12 (Cost of Foreign aid)
Total Government Spending
Government Spending as % of GDP
In 2010, the government embarked on tough spending cuts to try and reduce the budget deficit. However, spending on debt interest payments rose to £48bn. Also, spending on welfare benefits rose because of the increase in unemployment. Overall the government plan to keep spending static in real terms (adjusted for inflation)
See also: Total UK government spending
Welfare Payments
The welfare budget includes spending on unemployment, income support (universal credit), housing benefit and disability allowances. It increased to £105bn in 2011-12
As a percentage of GDP, welfare spending is just over 7% of GDP.
Total Benefit Spending
Total benefit spending includes the welfare budget, plus also the total spending on pensions. The total benefit bill for the UK was £200bn in 2012. See growing size of welfare state
how much does the government actually spend on “Helping the unemployed and those on benefits back to work?”
Including all the costs for DWP, G4S, A4E,The work programme and the multitude of other government funded schemes.
fact is that currently the uk government is overspending with a £122 billion deficit and nearly £50 billion a year spent on interest payments alone.this is unsustainable and if our interest payments go up then we are in trouble. the solution as I see it is to index government revenue against goverment spending as a covenant with the uk people enshrined in law to avoid the populist flaw in the democratic system. For example income tax should equal social protection, governments should not be allowed to spend more than is contributed from this revenue section. national insurance should be realigned and indexed against Heath spend, again governments should not be allowed to spend more than is contributed from NI revenue, currently this would be an overspend of around 25% and this would be brought back in line through indexing. The government would not be held to account if this indexing was enshrined in a social people charter to avoid the inevitable social people unrest. Most people get the idea that you can’t spend more than you have.
I agree with your point about there being a ‘flaw’ in democratic systems which encourages politicians to raise money from borrowing. I think the £43 billion interest bill to be a wasteful use of government revenue and would like to see it greatly reduced. .
However, I am genuinely puzzled by the commonly aired view that current levels of debt are unsustainable. My question would be: what makes the current debt ‘unsustainable’ when historically we appear to have been able to sustain even higher debt levels over long periods of time?
The debt isn’t unsustainable, and debt interest payments as % of GDP are fairly low by historical standards
i think goverment should spend money on sport facilities for young people as would keep them from commiting crime. in addtion it is beneficial for health
Stop beliveing the stereotypes. We don’t commit crimes every day. Our to do list does not consist of be a pain, terrise a shop by standinbg outside it and rob another shop! Plus, it’s businesses that spend money on that not the goverment
Tax sources http://www.economicshelp.org/blog/4001/economics/tax-revenue-sources-in-uk/
Thanks for this very useful website and for the information on the UK National Debt and Government spending.
I would also find it helpful if there were information on Government Income – Corporation Tax, Income Tax, VAT, Excise Duties etc, just to complete the picture.
Cheers.
Yes,a pie chart laying out percentages of income from corporation tax, income tax, vat, excise duty’s etc.. would be very good.
Also a pie chart showing percentages of income by sector, banking, retail, I.T., export… would also be good.
I’ve got an assigment and got to write what the goverment spend its money that they get please help ?
I’ve got an assigment and got to write what the goverment spend on the Vat and Income tax money that they get please help ?
hey guys was just wondering how much david cameron is going to cut from us working middle class guys
your website could give more informatio about spending money
x
What checks the use of the UK’s public money. Starts with P and has 3 letters altogether?! Looks as if Aidan and I are doing the same crossword!!
What checks the use of the UK’s public money. Starts with a ‘p’ , three leters altogether.