English regions receive £266bn in welfare against £213bn in income tax and NI
Analysis from the Adam Smith Institute reveals that almost every English region now receives more in welfare benefits than it contributes in personal income tax and National Insurance, highlighting what critics argue is an unsustainable welfare system. This comes as Birmingham hosts the Conservative Party conference, with the city's ten constituencies taking £2.54 in welfare for every £1 residents contribute in tax, with not a single seat being a net contributor to the exchequer.
Across England, employees pay £213 billion in income tax and National Insurance whilst welfare spending reaches £266.1 billion, leaving a gap of over £53 billion annually. The North East performs worst, receiving £2.19 for every pound its workers contribute in tax, followed by Yorkshire and the Humber at £1.69, whilst only London and the South East show net positive contributions. London itself is divided though: wealthy constituencies like Chelsea and Fulham contribute substantially more in tax than they receive in welfare, whereas north London constituencies like Edmonton and Winchmore Hill receive significantly more.
- Nearly all regions receive more welfare than tax, with a £53bn annual gap
- Birmingham takes £2.54 in benefits for every £1 in tax paid by residents
- Only London and South East are net contributors to the exchequer
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Welfare systems provide support to people through various benefits, whilst tax systems collect revenue from workers' income. Different regions have different populations, employment rates and income levels, so the balance between what residents pay in taxes and what welfare support they need varies significantly across the country.
These regional differences between tax contributions and welfare spending are closely examined because they raise important questions about how fairly government resources are distributed. Areas with younger, more employed populations paying higher incomes might contribute more in taxes relative to the welfare support they receive, whilst areas with older populations, higher unemployment or lower incomes might receive more in benefits than residents contribute through tax.
Understanding how much regions contribute through tax versus receive in welfare is therefore central to policy debates about government spending, fairness and sustainability. This information influences discussions about whether current arrangements are working effectively and what changes might be needed.
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The strongest fair case each way — we don't pick a winner.
The case for
The Adam Smith Institute analysis highlights an uncomfortable fiscal pattern: almost every English region receives more in welfare than residents contribute through income tax and National Insurance, creating a £53 billion annual shortfall. This suggests potential unsustainability, particularly for regions like the North East where welfare payments are more than double local tax contributions. If most regions are net fiscal recipients, this raises legitimate questions about whether current spending levels are economically sustainable and whether regional economies are generating sufficient productive capacity to support this distribution.
The case against
This comparison presents an incomplete and misleading picture of regional fiscal contributions. It counts only personal income tax and National Insurance whilst ignoring corporation tax, business rates, VAT, and other substantial revenue sources to which all regions contribute according to their economic activity. Moreover, the analysis doesn't account for national spending on services—the NHS, education, defence, infrastructure—that benefits all regions equally but appears elsewhere in the budget. Regional welfare variation is precisely how a national welfare state should function, redistributing resources to areas with higher unemployment and more vulnerable populations.
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Originally published by Daily Mail as “Almost every English region receives more in benefits handouts than it brings in in personal tax, new analysis reveals”.