Whilst Jeremy Hunt’s cut to National Insurance may grab the headlines, the real story of today’s Budget was hidden in the official forecasts accompanying it.

These forecasts point to a disaster for Britain’s labour force. The UK already had one of the worst post-lockdown workforce recoveries in the world, with a record 2.8 million people off work due to long-term sickness. But today the OBR said things are only going to get worse.

Spending on welfare now makes up the second biggest portion of your tax bill –  narrowly pipped to the post by our NHS

The OBR gave the Chancellor credit for expanding childcare provision, attempting to reform welfare and reducing personal tax rates – which it says will boost the labour supply by 300,000 people.

But the forecasters said ‘the post-pandemic rise in economic inactivity is likely to prove more persistent than we previously thought’. They pointed to figures first reported by The Spectator which show a third of the working-age inactive population cite long-term illness as the reason they can’t look for work.

Even worse for the Chancellor was what the OBR say about the stealth tax of fiscal drag, caused by tax thresholds not rising with inflation: ‘The ongoing “fiscal drag” from frozen personal tax threshold will also weigh on work incentives, offsetting over a third of [Hunt’s labour market increases].’

Overall, the OBR expects inactivity to keep rising, by half a percentage point more than they expected in November. That’s thousands more people missing from the labour market.

Not only is the rise in worklessness a human tragedy, it’s going to harm the economy too. Rising inactivity and the reduction in average hours worked will leave output in five years’ time lower than previously forecast. The OBR blamed Britain’s ‘persistent weakness in output per head’ specifically on rising inactivity. It’s becoming easier to see why the economy isn’t growing.

Things get bleaker still when you look at the details. As Kate Andrews and Max Jeffery reported in the magazine last month, some 5.6 million people are on out-of-work benefits. This is a near record high; 4,000 workers are signed off sick every single day and spending on disability benefits is forecast to surge.

In fact, spending on welfare now makes up the second biggest portion of your tax bill – narrowly pipped to the post by ‘our NHS’. You can use the calculator below to see how much of your taxes are funding the DWP.

The next few weeks won’t be much better for the Treasury and DWP either. After every Budget or autumn statement detailed forecasts are released covering benefit costs and caseloads. Last time they showed benefit caseloads rising by a staggering 920 a day. We’ll have to wait for those estimates to be updated. But judging by what the OBR said today, the numbers are not going to be pretty.

Perhaps with this in mind, the Work and Pensions Secretary has been pounding the streets of Westminster this week, for a video in which he ‘set the record straight’ on economic inactivity.

Let’s set the record straight?? pic.twitter.com/sY3wOOtNaV

— Mel Stride (@MelJStride) March 5, 2024

The first step to resolving the welfare crisis is acknowledging it exists. Both parties seem to have their heads in the sand. But the data published for today’s Budget, along with increasingly depressing figures from the Office for National Statistics, are going to make this human tragedy pretty difficult to ignore. We’ll be tracking it all on The Spectator data hub.