Facts and figures about UK taxes, benefits and public spending.
Income distribution, poverty and inequality.
Analysing government fiscal forecasts and tax and spending.
Analysis of the fiscal choices an independent Scotland would face.
Case studies that give a flavour of the areas where IFS research has an impact on society.
Reforming the tax system for the 21st century.
A peer-reviewed quarterly journal publishing articles by academics and practitioners.
Today's labour market figures show a slight rise in overall unemployment in the three months up to February 2010. Looking behind these figures, youth unemployment (amongst 18-24 year olds) has risen particularly strongly since the start of the recession, rising from 12.2% in the first quarter of 2008 to 17.7% in the latest data compared with a rise from 5.2% to 8.0% amongst all individuals. The number of people who have been unemployed for 12 months or more has risen from 400,000 at the start of the recession to reach 730,000 in the latest data.
Sensibly, there is general agreement between the three main parties on the need to tackle the large rise in youth and long-term unemployment caused by the recession, and all parties have policies to help deal with the high number of people who are out of work and receiving disability benefits. Today, the IFS publishes an analysis of the welfare and back-to-work policies proposed by the three main UK parties for welfare reform (the full report is available here).
For the under 25s who are unemployed, the Labour Party propose making work or training compulsory after 10 months, whilst the Conservatives would make it compulsory after 6 months. The Liberal Democrats would introduce voluntary work placements. Both Labour and the Conservatives are offering additional support for the long-term unemployed aged 25 or over and both have plans to make them partake in community work.
Labour has announced that it would move all recipients of incapacity benefits to employment and support allowance (ESA), which has a tougher medical test, by 2014, but the Conservative Party think they can do this by 2012. The Liberal Democrats are keen to stress that they would provide better "practical help" for people with disabilities to get to work, and that funding of disability-related equipment would be "already in place" when disabled people apply for a job, but without more detail it is impossible to assess the likely impact of this.
On top of these changes, the Conservative Party propose to replace all welfare-to-work programmes for the unemployed, lone parents and disabled people with a one mandatory Work Programme, delivered by private and voluntary sector organisations, with payment almost entirely by results. It is keen to present this as a "new welfare contract", but most of the ideas behind it merely go a little further in the direction of policy taken or planned by the current government.
The Conservative Party think the Work Programme and its plans for additional training places would cost £600 million over three years. It also claims that it would save £600 million over three years by moving IB recipients to ESA, providing a revenue neutral package. These savings seem odd given the Government has set out plans to implement the same policy. The Conservative Party has argued that these additional savings are credible because it does not believe that the Government would actually make savings from this reform, but the Government has set out a clear plan for moving recipients of incapacity benefits onto ESA, and announced how much it expects to save from this reform. Fundamentally, this is not a credible way of identifying 'savings' relative to the Government's plans, because any opposition party could identify alleged savings in this way at any time by simply asserting that the Government will not do things that it has publicly committed to.
None of the 3 main parties has proposed a substantial increase in the generosity of social security benefits (although government plans are for the pension credit guarantee and the state pension, from April 2012, to rise in line with average earnings, rather than inflation as is the case for most other benefits). On the other hand, the current state of the public finances may mean that the more likely scenario is for the next Government to implement more substantial cuts in social security spending than any of the 3 main parties have suggested in their manifestos. IFS researchers have found that on current policies the public spending plans set out by Alistair Darling in his last Budget imply departmental spending falling by 11.9 per cent by 2014-15, but social security spending growing by 4.4 per cent over the same period. Productivity improvements mean one might be able to squeeze more public services from a given level of departmental spending, whilst the same is not true for spending on cash benefits But, nonetheless, a post-election government may feel reluctant to allow public services spending to suffer this large a real squeeze while allowing benefit spending to grow that strongly.
View all Observations in the series
Cutting the deficit: three years down, five to go?
The UK is in the fourth year of a planned eight-year fiscal tightening. Following further announcements made in Budget 2013, this fiscal consolidation is now forecast to total £143 billion by 2017–18. The UK is intending the fourth largest fiscal consolidation among the 29 advanced economies for which comparable data are available. By the end of this financial year, half of the total consolidation is expected to have been implemented. However, within this tax increases and cuts to investment spending have been relatively front-loaded, while cuts to welfare spending and other non-investment spending have been relatively back-loaded.
The March Budget forecast that borrowing would fall by £0.1 billion from £121.0 billion in 2011–12 to £120.9 billion in 2012–13. On Tuesday, the Office for National Statistics is due to release its first estimate of public sector net borrowing in March 2013 and, therefore, for the whole of 2012–13. Borrowing could easily end up being higher or lower than it was in the previous year, either due to backwards revisions, the uncertainty inherent in forecasting borrowing even a month in advance, or both. However, whether borrowing is slightly up or down in cash terms is economically irrelevant. Either way, the bigger picture is that having fallen by roughly a quarter between 2009–10 and 2011–12, borrowing is forecast to be broadly constant through to 2013–14.
Women working in their sixties: why have employment rates been rising?
Employment rates through the recession have been remarkably robust, with today’s ONS figures showing employment remaining close to 30 million. The young have experienced historically low employment rates and high unemployment rates but the employment rate of women aged 60 to 64 has increased as fast since 2010 as it did during the 2000s. An important explanation is the gradual increase in the state pension age for women since 2010, which has led to more older women being in paid work. Without this policy change, the employment rate for 60 to 64 year women would have been broadly flat since 2010.