Part of benefit cuts shifts to last-resort assistance

Confidence: Medium

On by default

Shape: Proportional

When social security is cut, some people apply for last-resort social assistance, so the real saving is smaller than the cut.

Of every 100 euros that a change to “Social protection (incl. pensions)” saves or brings in, 15 € comes back as extra spending on the line “Social protection: social assistance and other social exclusion” every year. (The other way round if the change adds spending or cuts taxes.)

E(t) = s × T(t)

Of the 2024 housing allowance cuts, 20% came back as social assistance (77.2 / 385 m€, the government's estimate). Housing allowance is the benefit most easily replaced by social assistance; for social protection as a whole (including pensions) the share is likely smaller, hence the default of 15%.

Sources: Social Affairs and Health Committee report StVM 14/2023 (bill HE 74/2023): housing allowance cuts lower housing allowance spending by €385m and raise social assistance spending by €77.2m a year (in Finnish)

How the effect builds up over time

Share of the change's own effect on the balance, year by year while the change continues: −15% means 15% of a saving comes back as cost (or 15% of extra revenue is lost). With the default values.

You can switch the effect on or off and adjust its assumptions in the simulator under Cause-and-effect chains.