Three quarters of constituencies in England receive more in welfare than their workers pay in income tax and National Insurance, finds new research by the Adam Smith Institute (ASI).
The ASI’s new Welfare Sustainability Tracker, released today, shows that England spends £1.25 in welfare for every £1 of income tax and National Insurance it receives; for Wales, that number is £1.88.
That means Wales spends nearly twice as much in welfare as its workers pay into the system.
47% of the welfare bill is the State Pension and Pension Credit; the rest is mainly Universal Credit (28%), Personal Independence Payments (11%), and housing benefits (4%).
Birmingham spends £2.54 on welfare for every £1 of income tax and NI. Liverpool spends £2.05 and Manchester £1.52, while London, a net contributor, spends 78p.
Reform UK is the major party with the highest proportion of welfare-dependent constituencies: 7 of its 8 seats spend more on welfare than they contribute in income tax.
The Adam Smith Institute’s Welfare Sustainability Tracker, released today, examines the fiscal sustainability of the welfare state across every region and parliamentary constituency in England and Wales, comparing welfare expenditure with the income tax and National Insurance contributions paid by workers.
The Tracker reveals that, across England and Wales, welfare spending exceeds the income tax and National Insurance contributions paid by workers. Only London and the South East generate more in income tax and National Insurance than they receive in welfare spending. Every other region runs a deficit on this measure.
The North East is the most welfare-dependent region, with £2.19 spent on welfare for every £1 raised through income tax and National Insurance. At constituency level, the disparity is even greater. Birmingham Perry Barr is England’s most welfare-dependent constituency, receiving £4.41 in welfare spending for every £1 contributed through these taxes.
The Tracker is based on the principle that the core components of the welfare state should be fundable through income tax and National Insurance contributions. By this measure, the current system is not fiscally self-sustaining: welfare expenditure exceeds these revenues, meaning the shortfall must be covered by other taxes or government borrowing.
Reform UK has the highest proportion of welfare-dependent constituencies of any major party, with seven of its eight seats receiving more in welfare spending than their workers contribute in income tax and National Insurance. Reform-held constituencies also record the highest levels of working-age benefit spending among the major parties. By contrast, a majority of Liberal Democrat constituencies (37 out of 65) generate more in these taxes than they receive in welfare. Of the ten most welfare-dependent constituencies, seven are represented by Labour MPs, with one each held by the Conservatives, Reform UK, and an Independent.
The ten constituencies with the highest welfare spending per adult tend to have younger populations, more children, higher rates of disability, and greater concentrations of social housing than England as a whole. They also have lower educational attainment, higher unemployment, and higher reported rates of obesity and depression. Nearly a quarter (24%) of residents have no formal qualifications, compared with 18% across England.
By contrast, constituencies with the lowest welfare spending per adult tend to have higher employment rates, higher average salaries, fewer children, and lower rates of disability. Nearly half of residents hold university degrees, compared with a national average of 34%.
Interestingly, both ends of the welfare spending spectrum have a higher proportion of foreign-born residents than England as a whole. In the ten constituencies with the highest welfare spending per adult, 22% of residents were born abroad, compared with 27% in the ten with the lowest spending. Both figures exceed the England-wide average of 17%.
Comments:
Viggo Terling, Chief of Staff and Digital Manager at the Adam Smith Institute, said:
“A welfare state that spends more than it raises through income tax and National Insurance is one that increasingly relies on other taxes and borrowing to stay afloat.
Our Tracker exposes the scale of this imbalance. With only London and the South East contributing more through these taxes than they receive in welfare spending, we must ask serious questions about the long-term sustainability of the system.
A compassionate welfare state must also be a financially sustainable one.”
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For further comments or to arrange an interview, contact press@adamsmith.org | 07985 540467.
Methodology:
For each constituency, the tracker estimates how much workers contribute through these taxes and compares this with government expenditure on welfare, including the State Pension, Universal Credit, Personal Independence Payment (PIP), housing benefits, and other support.
The data for the Tracker comes from Adam Smith Institute modelling using DWP Stat-Xplore, ONS ASHE 2025 (provisional), and ONS mid-2024 population estimates, and, for England only, Census 2021, ONS APS, and NHS QOF 2024/25. Tax is income tax and employee National Insurance on wages, after an assumed 3% salary sacrifice. Party of sitting MP as at November 2026; MP names from the UK Parliament Members API, November 2026. Boundaries: ONS Westminster Parliamentary Constituencies (July 2024).
The Adam Smith Institute is one of the world’s leading think tanks. It was ranked first in the world among independent think tanks and as the best domestic and international economic policy think tank in the UK by the University of Pennsylvania. Independent, non-profit and non-partisan, the Institute is at the forefront of making the case for free markets and a free society, through education, research, publishing, and media outreach.