All taxpayers, employers and employees contribute to the cost of social security. The programme has two sources of finance.
• The cost of contributory benefits and their administration is met from the National Insurance Fund, to which all employers and employees contribute. The Fund also has income from its investments.
• Non-contributory benefits and their administration are financed from general taxation.
General taxation provides more than half of social security income, National Insurance contributions from employers around a quarter and National Insurance contributions from employees about a fifth.
How is the money spent?
The total social security budget in 1997-1998 was more than ₤ 92 billion, which is almost a third of all government spending. The pie chart top left show how the budget was spent on people who received benefits for the year 1997-1998. The pie chart bottom left shows how the money was spent in terms of benefits for the same year.
Who receives benefits?
More than 20 million people receive some sort of benefit in Britain. The elderly and the short-term sick receive predominantly contributory benefits, unemployment people receive mainly income related benefits, families mainly other benefits while the long-term sick and disabled receive all three types of benefit.
Benefits and who receives them
Group Benefit
Elderly people Retirement Pension
Non-contributory Retirement Pension
Christmas Bonus
The principal income-related benefits
Winter Fuel Payment
Long-term sick and disabled people Incapacity Benefit (long-term rate)
Attendance Allowance
Disability Living Allowance
Disability Working Allowance
Industrial Injuries Disablement Benefit
Other Industrial Injuries Benefit
Severe Disablement Allowance
Invalid Care Allowance
War Pensions
Independent Living Fund
Motability
Christmas Bonus
Principal income-related benefits
Short-term sick people Statutory Sick Pay
Incapacity Benefit (short-term rate)
Principal income-related benefits
Families Child Benefit
Family Credit
Statutory Maternity Pay
Maternity Allowance
Maternity Grant
Principal income-related benefits
Unemployed people Unemployment Benefit
Jobseeker's Allowance
Principal income-related benefits
Widows and others Widow's Benefits
War Widow's Pensions
Guardian Allowance and Child's Special Allowance
Industrial Death Benefit
Social Fund Funereal Payments
Earnings Top-up Pilots
Income support paid to people who do not fall within the other client groups
How is Social Security organised?
The Department of Social Security (DSS) comprises a small central headquarters which support the Secretary of State for Social Security and a team of Ministers in developing policy, and five executive agencies. Most of the services in Great Britain are run by the separate agencies.
Executive agencies of the DSS
The Benefits Agency - pays most social security benefits
The Child Support Agency - collects child maintenance from absent parents
The War Pensions Agency - administers benefits and delivers services for war pensioners and their dependants