Overview

The Centre as a place of international excellence

The value of ESRC core funding to the Centre

Academic impact

Some major contributions to academic work in the UK and overseas

Policy and practice

Five important impacts on policy and practice [ Hide]

Thanks to ESRC Centre funding, IFS is renowned for providing timely, independent and rigorous contributions to the public policy debate. Here, we highlight five of the many important contributions the Centre has made to policy and practice.

1. Informing public debate about fiscal policy

Most of the Chancellor's annual Budget and biennial spending review are shrouded in secrecy until they are unveiled to Parliament. Centre funding allows us to publish a Green Budget each year to inform debate around the key policy issues to be addresed in the Budget and spending reviews. This is one of the most influential and widely reported events in the fiscal policy calendar. We also contribute to the fiscal policy process throughout the year by holding conferences to present timely analysis of key policy announcements and publications. These cover the public finance and distributional implications of any changes to taxes, tax credits and benefits, in addition to any other specific issues. For example, in recent Green Budgets we have argued that a significant budgetary tightening would be necessary to bring about the improvement in the public finances that the Treasury had been predicting - a tightening that the Treasury eventually signalled only after the 2005 General Election.

Fiscal Facts contains downloadable information on how the tax and benefit system has changed over time; these documents were accessed, for example, over 5,500 times in April 2006, the month following the Budget. We frequently update and expand these sections. The Centre also produces analysis of the current government's record to date and an assessment of the impact of the proposals put forward by the main parties in the run-up to General Elections. These analyses improve the quality of debate on fiscal matters.

2. Measurement and analysis of the distribution of income and asset wealth

The Centre has made a lasting impact on the measurement and analysis of the distribution of income, expenditure and asset wealth. An important achievement in the mid-1990s was to develop a consistent series of income distribution data for Great Britain for every year since 1961, which allowed us to place the inequality rises of the 1980s and early 1990s into the context of previous decades for the first time. The series has been updated every year and now spans 43 years. This has provided the basis for a broad range of influential research on both income inequality and poverty, and allows us to publish timely, independent analysis of the government's household income statistics each year and to comment authoritatively on policy issues such as pensioner poverty and the government's child poverty targets.

Research at the Centre comparing the differences between income and consumption inequality has also proved influential in changing both the academic and the policy debate surrounding the substantial rise in income inequality witnessed in Britain. We have also made a substantial contribution to the measurement of asset wealth in the UK. This has been particularly crucial in considering pension saving and retirement. Contributions by Centre researchers to the NBER International Comparisons of Social Security project have been influential. Centre researchers have played a major role in the design, running and analysis of a new and important data-set, the English Longitudinal Study of Ageing (ELSA).

3. Tax credits and welfare to work

Researchers at the Centre have developed TAXBEN, a programme that simulates the impact of the UK tax and benefit system on a large number of households using data from a range of household surveys. This model is widely use by Centre researchers, political parties, the media and others to evaluate actual and potential policy reforms. For example, it was the foundation of recent work analysing what policies will be needed to meet the government's future child poverty targets, and was used extensively in analysing who might win and who might lose from a move from council tax to local income tax.

The development and use of TAXBEN has been influential in moving debate away from using example families towards considering the impact of reforms across the entire distribution, and in showing how low-income workers may face very high effective marginal withdrawal rates when they face multiple and interacting benefit tapers.

With information on tax and benefit systems since 1975 and household survey data from 1978, Centre researchers have also used micro-simulation to address the contribution of tax and benefit changes to trends in income inequality, the level and distribution of effective marginal deduction rates, and the generosity of cash transfers to children.

4. Taxation of business

The Centre has made important and influential contributions to debates around corporate taxation. In the 1990s these included development of the Allowance for Corporate Equity proposal, a version of which has recently been implemented in Belgium. Centre research highlighted problems with the UK imputation system, particularly those due to surplus ACT. We developed Effective Average Tax Rate measures that are now widely used to study the impact of taxation on location decisions, for example by the European Commission. More recently, Centre researchers have provided important analysis and commentary on the design, implementation and effectiveness of R&D tax credits, and issues in European and international tax competition.

5. The practice of policy evaluation

Centre researchers, often with joint funding from other sources, have carried out evaluations of numerous policies. For example, our work on the returns to higher education provided an influential contribution to the 1997 Dearing Report, which recommended the introduction of university tuition fees. More recently, we have used new methods for simulating the full distribution of future graduate incomes to spell out the distributional effects of the latest university tuition fee reforms. Another example is the design and implementation of national programmes in the UK - e.g. the New Deal for Young People (NDYP), the Education Maintenance Allowance (EMA) and the Excellence in Cities programme - in other OECD countries - e.g. the Swedish Active Labour Market programmes - and more recently in developing countries. The EMA evaluation in particular has influenced policy, and the results led to the national implementation of the programme. In all cases, engagement with both policymakers and academics has been key to the research process.

Use of the Centre's work by policymakers and practitioners

Research capacity

The Centre's contribution to UK research capacity

Staff development in the Centre