Social Security and Welfare Reform

Where does Working Tax Credit go?

  • Published 7th Oct 2014
  • Authors: Adam Tinson,
  • Category: Social Security and Welfare Reform

Working tax credit (WTC) is a benefit paid to workers with a low family income. The aim of this report is to calculate the amount of WTC that can be attributed to different parts of the economy. For instance, how many workers in the retail sector benefit from working tax credit? How much money does this add up to?

This research, based on official survey data for 2010/11 and 2011/12, is the first attempt to quantify these amounts. Results are broken down both by industrial sector and organisation type. We found that

  • The two employment sectors with the largest attribution of WTC were retail (£1.3bn) and human health and social work (£1.2bn). Together they represent 38% of the total attributed WTC spend (£6.5bn per year).
  • The three sectors with the next largest attribution – each around half of that for the top two – were accommodation and food services (hospitality), education and administrative and support activities.
  • Attributed amounts per recipient worker vary little by sector; high attributions therefore reflect large workforce sizes and/or a high proportion of the workforce benefitting.
  • High recipient numbers in retail and health and social work reflect both high employment in those sectors and a high proportion benefitting. The sector with the highest proportion benefitting is accommodation and food services.
  • 80% of WTC is attributable to workers who work in the private sector, 10% to those in the local government and 5% to those employed by a Health Authority or NHS Trust. Only 1% is attributable to those workers employed in central government. The rest is attributed to charitable organisations, universities, and other organisations such as the armed forces.