Public services, personal benefits

This report looks in detail at the costs of public services (such as care, education, public administration and safety) and the benefits that citizens derive from the government expenditure involved in delivering those services. In 2003, the costs of these services accounted for approximately 40% of gross domestic product. Partly due to population ageing, government spending is set to come under pressure in the future. This could have an impact on the level of public services. With this in mind, public spending on care, safety, education, public administration, defence and housing subsidies is regularly subjected to critical review, partly in the light of the services delivered. One of the problems encountered in this exercise is that the prices of these services are found to increase much more rapidly than the prices of goods produced by the private sector. This is partly because staff costs in the public sector have risen more quickly than those in the private sector. 
The benefits from the government amount to approximately 10% of GDP. Individual citizens benefit from government spending as users of childcare services, home care services and housing benefit, or as visitors to museums or classical concerts. But who gains most from the government: citizens with higher or lower incomes? And do those on middle incomes ultimately foot the bill? It is also uncertain whether those who actually derive benefit are the intended beneficiaries. With this in mind, the actual distribution of the benefits of public spending are compared with the distribution that would have arisen if the government had reached the intended target groups. It emerges from this that those on lower and middle incomes benefit slightly less than expected and those on higher incomes slightly more.