How is social security funded?

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

The Information Technology Agency - develops, implements and supports the IT system which now plays a major role in social security

In Northern Ireland the Social Security Agency administers contributions and benefits.