---
title: "Welfare costs expected to offset stealth tax revenue gains"
publisher: "Stockmark.IT"
author: "Stockmark.IT Website"
published: "2026-10-30T08:11:45+00:00"
modified: "2026-10-30T08:11:45+00:00"
date: 2026-10-30
canonical: "https://stockmark.it/rising-welfare-bill-set-to-swallow-stealth-tax-revenue/"
category: "Tax"
categories: ["Tax", "UK Government"]
image: "https://i0.wp.com/stockmark.it/wp-content/uploads/2026/10/welfare-costs-expected-to-offset-stealth-tax-revenue-gains.png?fit=1536%2C1024&quality=80&ssl=1"
format: "news"
language: "en-GB"
---

# Welfare costs expected to offset stealth tax revenue gains

**Published:** October 30, 2026
**Author:** Stockmark.IT Website
**Categories:** Tax, UK Government
**Featured image:** ![Welfare costs expected to offset stealth tax revenue gains](https://i0.wp.com/stockmark.it/wp-content/uploads/2026/10/welfare-costs-expected-to-offset-stealth-tax-revenue-gains.png?fit=1536%2C1024&quality=80&ssl=1)

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Rising benefit expenditure is projected to neutralise the additional revenue generated by frozen tax thresholds, according to new analysis. The Centre for Social Justice has stated that the anticipated increase in spending on working-age, disability and child benefits between 2027 and 2032 will broadly match the rise in receipts from higher taxes on workers. This finding suggests that the financial gains from so-called stealth taxes will be effectively absorbed by the growing cost of the welfare system.

The Office for Budget Responsibility forecast indicates that annual spending on these benefits will rise by over £33.4 billion during the specified period. This figure roughly equals the additional £33.1 billion in revenue expected from increased income tax and National Insurance contributions. Joe Shalam, policy director at the think tank, argued that the government’s current stance on welfare would result in wasted money and potential. The report concluded that rising benefit costs are set to swallow the entire increase in annual revenue derived from these tax measures.

The release of this analysis coincided with scrutiny of comments made by John Healey regarding the reduction of the welfare bill. Speaking to the BBC’s Today programme, Healey asserted that there would be a reduction in the benefits bill before the election, stating that this would be achieved in a Labour way. He also pledged to avoid crude cuts, suggesting instead that investment in employment opportunities would support individuals in entering the workforce. However, Treasury officials reportedly took issue with these remarks being interpreted as a firm commitment to cut the welfare bill by 2030.

A Prime Minister’s spokesman later declined to clarify the specific timeframe or meaning behind the government’s push to lower welfare costs. The Office for Budget Responsibility notes that the welfare bill is set to rise by about 0.4 percentage points as a share of GDP between 2025 and 2032, adding pressure to public finances. Andy Burnham’s spokesman indicated that the government is awaiting the publication of reviews on disability payments and youth unemployment to outline measures for tackling benefits spending. Full policy measures on welfare reforms are expected to be announced early next year. The government confirmed it is already taking action to reform the system by changing Universal Credit, cracking down on fraud, and ending benefit entitlement for serious offenders detained in hospital. Any changes to the triple lock on state pensions, which Burnham has vowed to reform to stop a ratchet effect on spending, will only occur after 2030.

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