• Menu
  • Latest publications
    • Back
    • Economic and fiscal outlook – October 2018
    • Fiscal sustainability report – July 2018
    • Forecast evaluation report – December 2018
    • Welfare trends report – January 2019
    • Fiscal risk report – July 2017
    • Monthly public finances release
    • Other publications
  • News
  • About the OBR
    • Back
    • What we do
    • Who we are
    • Working with Government
    • Legislation and related material
    • Vacancies
    • Contact us
    • Feedback
  • Forecasts in-depth
    • Tax by tax, spend by spend
    • The economy forecast
    • Policy costings
    • Brief guides and explainers
    • Brexit analysis
    • Forecast process and papers
    • Databases
  • Box sets
  • Topics
    • Back
    • Scotland, Wales and Northern Ireland
    • OBR macroeconomic model
    • International engagement
    • Governance and reporting
    • Parliamentary questions
    • Evidence to parliaments
    • Freedom of information
  • Publications
  • Data
  • FAQs
  • Contact us
Office for Budget Responsibility

"It is the duty of the Office to examine and report on the sustainability of the public finances"

  • News
  • About
  • Publications
  • In-depth
  • Box sets
  • Data
  • FAQs
  • Contact
  • @obr_uk

Box sets » Public spending » Welfare spending

  • Housing benefit
  • Universal credit
  • Unemployment benefits
  • Incapacity and disability benefits
  • State pension
  • Tax credits
  • Carer's allowance
  • Economic and fiscal outlook - March 2018 | Box: 4.3 | Page: 139

    Tax credits income growth assumption

    Spending on tax credits came in consistently lower than our forecasts from 2014-15 onwards. In our March 2018 EFO we increased our assumption for the growth in incomes of tax credits families relative to headline earnings growth, significantly lowering our tax spending forecast. This box set out the analysis that underpinned this change in forecasting assumption.

    Fiscal categories: Tax credits, Welfare spending

    Read more
  • Welfare trends report - January 2019 | Box: 2.1 | Page: 24

    Measurement issues with reported disability prevalence

    Measures of reported disability prevalence are often subject to great variability and this can make drawing precise conclusions from them difficult. In this box, we considered two examples where measures varied. The first related to differences between Labour Force Survey and General Health Survey measures of working-age disability prevalence and the second to large changes in the former. We discussed differences in methodology and changes in attitudes as possible drivers.

    Fiscal categories: Incapacity and disability benefits, Welfare spending

    Read more
  • Welfare trends report - January 2019 | Box: 3.1 | Page: 41

    Other welfare spending in support of disabled people

    Public financial support for disabled people extends beyond the extra-costs disability benefits and includes several other welfare payments. This box gave an overview of some of the most important interactions between disability and other benefits that provide support for disabled people.

    Fiscal categories: Incapacity and disability benefits, Welfare spending

    Read more
  • Welfare trends report - January 2019 | Box: 4.1 | Page: 74

    Benefit administration and data quality

    Our ability to forecast accurately is heavily dependent on the quality of the data we can use. In this box we explained how statistical and expenditure data could be distorted by problems in delivery of the benefit, and the difficulties this creates in identifying emerging trends in the data.

    Fiscal categories: Incapacity and disability benefits, Welfare spending

    Cross-cutting categories: Data limitations, Forecast process

    Read more
  • Welfare trends report - January 2019 | Box: 5.1 | Page: 101

    Approaches to modelling PIP and DLA spending on working-age adults

    There are several possible approaches to forecasting benefit spending. In this box we outlined the key issues the modelling of disability benefits needed to address, the three approaches we used to forecast spending, and the strengths and limitations of each, concluding that a combination of approaches was better than reliance on any single one.

    Fiscal categories: Carer's allowance, Incapacity and disability benefits, Tax credits, Welfare spending

    Cross-cutting categories: Data limitations, Forecast process

    Read more
  • Fiscal sustainability report - July 2018 | Box: 3.2 | Page: 67

    Reviews of the State Pension age

    The Government commissioned two reports published in 2017 to inform its review of the State Pension age (SPA): an independent review by John Cridland and a report by the Government Actuary’s Department (GAD). This box summarised the key findings from these two reports.

    Fiscal categories: Public spending, State pension, Welfare spending

    Cross-cutting categories: Pensions

    Read more
  • Fiscal sustainability report - July 2018 | Box: 3.3 | Page: 85

    Age-related spending in Europe

    Our 2018 long-term fiscal projections suggested that, if left unaddressed, the public sector finances would come under increasing pressure over the next 50 years. This box compared our long-term age related spending projections over the period from 2025 to 2065 with those presented in the European Commission's 2018 Ageing Report.

    Fiscal categories: Departmental spending, Education, Health, Public spending, State pension, Welfare spending

    Cross-cutting categories: Ageing population, Demographics, Pensions

    Read more
  • Welfare trends report - January 2018 | Box: 3.1 | Page: 66

    Work allowances and UC forecast revisions

    In our 2018 Welfare trends report, Chapter 3 looked at the design of universal credit, including how the 'work allowances' within it have been changed since the policy was first factored into our forecasts. This box looked at how our estimates of the net cost or saving from UC relative to the legacy benefits have evolved over time, and the important part played by Government decisions to reduce the UC work allowances.

    Fiscal categories: Universal credit, Welfare spending

    Read more
  • Welfare trends report - January 2018 | Box: 3.2 | Page: 77

    The role of UC work coaches

    In our 2018 Welfare trends report, Chapter 3 looked at the design of universal credit, including the role to be played by UC work coaches setting conditions and applying sanctions to encourage claimants to seek and progress in work. This box outlined the role, responsibilities and renumeration of work coaches, as set out in DWP's candidate information pack for applicants for the role.

    Fiscal categories: Universal credit, Welfare spending

    Read more
  • Welfare trends report - January 2018 | Box: 4.1 | Page: 88

    DWP’s policy simulation model and the Family Resources Survey

    In our 2018 Welfare trends report, Chapter 4 described how we model the effects of universal credit on spending. This draws heavily on two models owned and operated by DWP - the Policy simulation model (PSM) and the Integrated forecasting model (INFORM). PSM is a static micro-simulation model that uses Family Resources Survey (FRS) data to analyse policy changes. This box detailed how the FRS is used in PSM and some of the issues that raises for our UC forecast.

    Fiscal categories: Universal credit, Welfare spending

    Read more
  • Welfare trends report - January 2018 | Box: 4.2 | Page: 89

    Integrated forecasting model (INFORM)

    In our 2018 Welfare trends report, Chapter 4 described how we model the effects of universal credit on spending. This draws heavily on two models owned and operated by DWP - the Policy simulation model (PSM) and the Integrated forecasting model (INFORM). INFORM is a dynamic micro-simulation model that uses DWP administrative data to forecast the caseloads for different benefits. This box described how INFORM is used in our UC forecast and some of its limitations.

    Fiscal categories: Universal credit, Welfare spending

    Read more
  • Economic and fiscal outlook - November 2017 | Box: 4.1 | Page: 99

    New UK population projections

    The Office for National Statistics (ONS) published new UK population projections in October 2017, based on 2016 population estimates and updated assumptions for fertility, mortality and net migration. This box compared the latest projections with the previous 2014-based principal projections that underpinned our March 2017 forecast and summarised their effects on our November 2017 fiscal forecast.

    Economy categories: Labour market, Population and migration

    Fiscal categories: State pension, Welfare spending

    Cross-cutting categories: Demographics, Pensions

    Read more
  • Economic and fiscal outlook - March 2017 | Box: 4.5 | Page: 144

    Universal credit and the legacy benefits in 2017-18

    A key issue in our welfare spending forecast is the transition to universal credit (UC) from the existing ‘legacy’ benefits and tax credits systems. In our March 2017 Economic and fiscal outlook, our central forecast was constructed by forecasting the ‘legacy’ system as though UC did not exist, then subtracting from it an estimate of the marginal saving associated with rolling out UC. This box presented estimates for actual gross spending in 2017-18 on UC and the legacy benefits and tax credits that it is replacing.

    Fiscal categories: Public spending, Unemployment benefits, Universal credit, Housing benefit, Welfare spending

    Read more
  • Economic and fiscal outlook - March 2016 | Box: 3.2 | Page: 50

    The economic effects of policy measures

    In each Economic and fiscal outlook we publish a box that summarises the effects of the Government’s new policy measures on our economy forecast. These include the overall effect of the package of measures and any specific effects of individual measures that we deem to be sufficiently material to have wider indirect effects on the economy. In our March 2016 Economic and Fiscal Outlook, we made a number of economy forecast adjustments to GDP, business investment, wage growth, inflation and the housing market.

    Economy categories: Business investment, GDP by expenditure, GDP by income, Household disposable income, Inflation

    Fiscal categories: Departmental spending, Housing associations, Insurance premium tax, National Insurance Contributions, Public spending, Receipts, Soft drinks industry levy, Welfare spending

    Read more
  • Economic and fiscal outlook - November 2015 | Box: 3.1 | Page: 46

    The economic effects of policy measures

    In each Economic and fiscal outlook we publish a box that summarises the effects of the Government’s new policy measures on our economy forecast. These include the overall effect of the package of measures and any specific effects of individual measures that we deem to be sufficiently material to have wider indirect effects on the economy. In the 2015 Autumn Statement and Spending Review, we made a number of adjustments to real and nominal GDP, the labour market, inflation, and the housing market.

    Economy categories: Labour market, Housing market, Inflation

    Fiscal categories: Public spending, Receipts, Stamp duty land tax, Welfare spending, Housing associations

    Read more
  • Economic and fiscal outlook - November 2015 | Box: 4.3 | Page: 138

    Impact of the Summer Budget 2015 welfare package

    The July 2015 Budget included a large number of complex welfare measures that cut across multiple benefits with many interactions. At Autumn Statement 2015, we identified a number of measures where interaction effects had not been correctly estimated or classified. In this box of our November 2015 EFO, we discussed the re-estimation and reclassification of the interaction effects of a number of welfare measures. This included the reclassification of three tax credits measures and the measure extending the `lone parent obligation’ to ensure that these costings were consistent with our marginal universal credit (UC) forecast. The impact of cuts to tax credits on housing benefit entitlement were also re-estimated and reallocated to the housing benefit forecast from the tax credits forecast as the effect had previously been incorrectly allocated to tax credits.

    Fiscal categories: Public spending, Unemployment benefits, Universal credit, Welfare spending, Housing benefit

    Read more
  • Economic and fiscal outlook - July 2015 | Box: 3.3 | Page: 41

    The economic effects of policy measures

    In each Economic and fiscal outlook we publish a box that summarises the effects of the Government’s new policy measures on our economy forecast. These include the overall effect of the package of measures and any specific effects of individual measures that we deem to be sufficiently material to have wider indirect effects on the economy. In the July 2015 Economic and fiscal outlook, we made a number of adjustments to real and nominal GDP, the labour market, inflation, business and residential investment, and the housing market.

    Economy categories: Business investment, GDP by expenditure, Housing market, Inflation, Labour market, National Minimum Wage and National Living Wage, Residential investment

    Fiscal categories: Housing associations, Housing benefit, Inheritance tax, Insurance premium tax, Public spending, Receipts, Vehicle excise duties, Welfare spending

    Read more
  • Economic and fiscal outlook - December 2014 | Box: 4.7 | Page: 154

    Reforms of incapacity and disability benefits

    In Chapter 4 of our December 2014 EFO, we discussed the fiscal outlook for 2014-15 to 2018-19. In this box, we discussed revisions we made to the forecast in light of reforms to incapacity and disability benefits. Spending on incapacity benefits was revised up by £0.7 billion a year on average between 2014-15 and 2018-19, largely reflecting a lower-than-expected number of Work Capability Assessments carried out by the Department for Work and Pension’s private contractors. On the basis of the latest evidence, spending on disability benefits was also revised up by £0.7 billion a year on average between 2014-15 and 2018-19. This was largely due to higher than expected success rates for new claims to the personal independence payment.

    Fiscal categories: Incapacity and disability benefits, Public spending, Welfare spending

    Read more
  • Economic and fiscal outlook - December 2014 | Box: 4.8 | Page: 155

    Universal credit

    In Chapter 4 of our December 2014 EFO, we discussed the fiscal outlook for 2014-15 to 2018-19. In this box, we discussed the latest universal credit rollout plan following the 2014 universal credit business case. Whilst we agreed that the plan to fully rollout universal credit for jobseeker’s allowance cases by March 2016 was central, we decided that the migration plan for claimants of other legacy benefits was still highly uncertain and so implemented a six month delay to the plans for our forecast. This had the effect of reducing the volume of migrations in all years of the forecast but did not substantially alter the universal forecast given that it marginal to the legacy benefits.

    Fiscal categories: Housing benefit, Public spending, Unemployment benefits, Universal credit, Welfare spending

    Read more
  • Welfare trends report - October 2014 | Box: 4.1 | Page: 48

    The cyclicality of spending on benefits and tax credits

    In our 2014 Welfare trends report, Chapter 4 reviewed the overall trends in welfare spending. In this box, we considered how responsive welfare spending is to the economic cycle by estimating the elasticity of benefits and tax credits spending as a share of GDP with respect to changes in the output gap (the difference between actual GDP and an estimate of its potential or underlying level). We found that the most counter-cyclical benefits have caseloads closely associated with the economic cycle whereas mildly counter-cyclical benefits are likely to only exhibit cyclicality due to spending varying less than GDP, thereby producing a denominator effect.

    Economy categories: Output gap

    Fiscal categories: Housing benefit, Incapacity and disability benefits, Public spending, State pension, Tax credits, Unemployment benefits, Welfare spending

    Cross-cutting categories: Pensions

    Read more
  • Welfare trends report - October 2014 | Box: 4.2 | Page: 66

    Universal credit

    In our 2014 Welfare trends report, Chapter 4 reviewed the overall trends in welfare spending. In this box we discussed the latest Universal Credit (UC) forecast at the time of writing. This forecast assumed UC would roll-out slowly during 2014-15 and 2015-16 before accelerating in 2016-17 and 2017-18, by which time 5.8 million people were expected to be receiving the benefit. We highlighted that the roll out of UC had already been subject to previous delays and that the decision to produce a top-down UC forecast helped mitigate the uncertainties caused by delivery challenges. We then decomposed the marginal UC forecast into its constituent gross savings and gross costs forecasts.

    Fiscal categories: Housing benefit, Public spending, Unemployment benefits, Universal credit, Welfare spending

    Read more
  • Welfare trends report - October 2014 | Box: 8.1 | Page: 157

    The ratio of JSA claimants to LFS unemployed

    In our 2014 Welfare trends report, Chapter 8 considered spending on unemployed people. This box compared outturn data on unemployment and claimants of unemployment benefits to the levels implied by our March 2014 forecast. As the economy performed better than anticipated in our March 2014 forecast, the ratio of claimants of unemployed benefits to the Labour Force Survey (LFS) measure of unemployment deviated from our projections. This was largely due to a drop in the rate of inflows into unemployment benefits and a rise in the rate of outflows from unemployment benefits, though an increase in the number of people looking for jobs but not claiming unemployment benefits may have increased LFS unemployment and so been a contributing factor.

    Economy categories: Employment and unemployment, Labour market

    Fiscal categories: Housing benefit, Public spending, Unemployment benefits, Universal credit, Welfare spending

    Read more
  • Fiscal sustainability report - July 2014 | Box: 3.2 | Page: 66

    Fiscal drag and price uprating

    We updated our July 2013 analysis of fiscal drag on income tax and NICs to reflect new data, our latest assumptions and the effect of measures announced over the past year. This box outlined how fiscal drag effects income tax and NICs receipts and the long-term assumptions used.

    Fiscal categories: Financial transactions, Income tax, National Insurance Contributions, Public spending, Receipts, State pension, Student loans, Welfare spending

    Cross-cutting categories: Fiscal drag and price uprating, Pensions

    Read more
  • Economic and fiscal outlook - December 2013 | Box: 4.5 | Page: 134

    Universal Credit

    In Chapter 4 of our December 2013 EFO, we discussed the fiscal outlook for 2013-14 to 2017-18. In this box, we discussed the delays to the Government’s universal credit rollout plan. Compared to the March 2013 rollout plan, large increases in the universal credit caseload were assumed to start later than previously planned in 2016 and 2017. Fewer people were also expected to be on universal credit at the end of the forecast horizon, with 700,000 fewer claimants assumed to have migrated by the end of 2017-18 compared to the March 2013 rollout plan. We explained that the changes to the rollout schedule was a key source of change in the profile of our forecast relative to March 2013, with lower spending up to 2015-16.

    Fiscal categories: Housing benefit, Public spending, Unemployment benefits, Universal credit, Welfare spending

    Read more
  • Fiscal sustainability report - July 2013 | Box: 3.2 | Page: 74

    Fiscal drag and price uprating

    We updated our 2012 analysis of fiscal drag on income tax and NICs to reflect new data, our latest assumptions and the effect of measures announced over the past year. This box outlined how fiscal drag effects income tax and NICs receipts and the long-term assumptions used.

    Fiscal categories: Financial transactions, Income tax, National Insurance Contributions, Public spending, Receipts, State pension, Student loans, Welfare spending

    Cross-cutting categories: Fiscal drag and price uprating, Pensions

    Read more
  • Economic and fiscal outlook - March 2013 | Box: 4.1 | Page: 135

    Universal credit

    In Chapter 4 of our March 2013 EFO, we discussed the fiscal outlook for 2013-14 to 2017-18. In this box, we introduced a new marginal cost presentation of the universal credit forecast and also outlined contributing factors to changes in the forecast. These factors included policies announced at the 2012 Autumn Statement and changes to a number of the universal credit policy parameters as well as refinements to the methodology and assumptions used to forecast universal credit. The analysis in this box has since been superseded by developments in the universal credit forecast.

    Fiscal categories: Public spending, Unemployment benefits, Universal credit, Housing benefit, Welfare spending

    Read more
  • Economic and fiscal outlook - December 2012 | Box: 3.3 | Page: 51

    The economic effects of policy measures

    In each Economic and fiscal outlook we publish a box that summarises the effects of the Government’s new policy measures on our economy forecast. These include the overall effect of the package of measures and any specific effects of individual measures that we deem to be sufficiently material to have wider indirect effects on the economy. In our December 2012 Economic and Fiscal Outlook, we made adjustments to our forecasts of real GDP, inflation and property transactions

    Economy categories: Housing market, Inflation, Sector net lending

    Fiscal categories: Corporation tax, Departmental spending, Fuel duty, Public spending, Receipts, UK-Swiss tax agreement, Welfare spending

    Cross-cutting categories: Financial sector, Monetary policy

    Read more
  • Economic and fiscal outlook - December 2012 | Box: 4.3 | Page: 145

    Universal credit

    In Chapter 4 of our December 2012 EFO, we discussed the fiscal outlook for 2012-13 to 2016-17. In this box, we discussed changes to the provisional universal credit forecast that was included in our March 2012 EFO. Changes to the forecast were due to a number of factors, including policies announced at Budget 2012 and finalisation of policy parameters in universal credit as well as .refinements to the methodology and assumptions used to forecast universal credit. We also discussed the main uncertainties in the forecast, which largely related to the unpredictability given the scale of the policy. The analysis in this box has since been superseded by developments in the universal credit forecast, though many of the key uncertainties remain.

    Fiscal categories: Housing benefit, Public spending, Unemployment benefits, Universal credit, Welfare spending

    Read more
  • Fiscal sustainability report - July 2012 | Box: 2.1 | Page: 42

    ONS’s new statistics on UK pension liabilities

    In April 2012, the Office for National Statistics (ONS) published the first set of new statistics on the total gross liabilities of UK pension providers, including the UK government. This box explored how the ONS’ pension liability estimates were calculated for public service pensions and state pensions, and compared the public service estimate to the Whole of Government Accounts (WGA) methodology.

    Fiscal categories: Public service pension payments, Public spending, State pension, Welfare spending, Whole of Government Accounts and National accounts

    Cross-cutting categories: Data revisions, Discount rates, Experimental statistics, Pensions

    Read more
  • Fiscal sustainability report - July 2012 | Box: 3.1 | Page: 56

    Fiscal drag and price uprating

    We updated our 2011 analysis of fiscal drag on income tax and NICs to reflect new data, our latest assumptions and the effect of measures announced over the past year. This box outlined how fiscal drag effects income tax and NICs receipts and the long-term assumptions used.

    Fiscal categories: Financial transactions, Income tax, National Insurance Contributions, Public spending, Receipts, State pension, Student loans, Welfare spending

    Cross-cutting categories: Fiscal drag and price uprating, Pensions

    Read more
  • Fiscal sustainability report - July 2012 | Box: 3.2 | Page: 73

    European Commission estimates of ageing pressures

    The European Commission (EC) produces its own analysis of ageing pressures for member states every three years. This box contrasted the forecast made by the EC and the OBR for UK age related spending such as pensions, health care and long-term care.

    Fiscal categories: Departmental spending, Health, Public spending, State pension, Welfare spending

    Cross-cutting categories: Ageing population, Demographics, External forecasts, Pensions

    Read more
  • Economic and fiscal outlook - March 2012 | Box: 3.1 | Page: 46

    The economic effects of policy measures

    In each Economic and fiscal outlook we publish a box that summarises the effects of the Government’s new policy measures on our economy forecast. These include the overall effect of the package of measures and any specific effects of individual measures that we deem to be sufficiently material to have wider indirect effects on the economy. In our March 2012 Economic and Fiscal Outlook, we made adjustments to our forecasts of real GDP, business investment and inflation.

    Economy categories: Business investment, GDP by expenditure, GDP by income, Household disposable income, Inflation, Labour market

    Fiscal categories: Corporation tax, Income tax, Public spending, Receipts, VAT, Welfare spending

    Cross-cutting categories: Financial sector

    Read more
  • Economic and fiscal outlook - March 2011 | Box: 4.3 | Page: 144

    Impact of inflation on the public finances

    This box set out the various impacts that higher inflation has on the public finances. These include direct effects (e.g. on income tax and debt interest spending), the impact on nominal tax bases (such as household consumption) and the impact on departmental spending.

    Economy categories: Inflation

    Fiscal categories: Business rates, Departmental spending, Income tax, National Insurance Contributions, Public service pension payments, Public spending, Receipts, State pension, VAT, Welfare spending

    Read more
  • Publications

    • Economic and fiscal outlook
    • Fiscal sustainability report
    • Forecast evaluation report
    • Welfare trends report
    • Monthly public finances briefing
    • Brief guides
  • Topics

    • Scotland, Wales and Northern Ireland
    • OBR macroeconomic model
    • Legislation and related material
    • Governance and reporting
    • Evidence to parliaments
    • International engagement
    • Requests for information
    • Press notices and presentations
    • Links
  • About the OBR

    • What we do
    • Who we are
    • Working with Government
    • Legislation and related material
    • Contact us
    • Vacancies

    The OBR

    • Accessibility
    • Privacy Policy
    • Cookie Policy
    • Copyright
    • Contact us

© 2019 Office for Budget Responsibility

14T, 102 Petty France, London SW1H 9AJ
obr.enquiries@obr.uk
0203 334 6117

Website design and build: P & F
Hosting: Redweb

This site uses cookies: Find out more.