Facts and figures about UK taxes, benefits and public spending.
Income distribution, poverty and inequality.
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Analysing government fiscal forecasts and tax and spending.
Analysis of the fiscal choices an independent Scotland would face.
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Reforming the tax system for the 21st century.
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This government, alongside most of its predecessors, is concerned about social mobility. A society in which one's prospects are largely or wholly determined by chance of birth is not one with which many will feel comfortable. But any strategy to increase social mobility must be long term, multi-faceted and cautious in its claims.
As the coalition government prepares to launch its own strategy for tackling social mobility, recent work at IFS exploring the literature on social mobility has highlighted some important conclusions that the government would be wise to bear in mind.
First, countries with higher income inequality tend to have lower social mobility (at least when using income-based definitions of mobility). In an unequal society there is further to travel to get from the bottom to the middle or the top. The UK has relatively high income inequality and low social mobility. It is therefore likely to be very hard to increase social mobility without tackling inequality.
Particularly in a context of high levels of inequality such as that in the UK it is important to be clear what one is trying to achieve through increased social mobility. It is obvious that pursuing relative social mobility implies downward mobility for individuals from rich/middle income families. In a world in which the consequences of downward social mobility are significant, there will be many who find this mobility very uncomfortable.
It also matters whether the government is more concerned about improving the mobility of the most disadvantaged or those somewhat further up the social spectrum. Policies aimed at improving the mobility of the most disadvantaged or the least skilled can be very costly. In part this is because the UK labour market appears to be "hollowing out", by which we mean there are increasing numbers of high skill and low skill jobs, and fewer in the middle. So it may be harder and more costly to help those at the very bottom than it will be to help those somewhat above the bottom. Any comprehensive social mobility strategy is likely to want to deal with both of these groups and may need to treat them quite differently.
One set of interventions which we know are important are those aimed at very young children, as the recent Field Review and Allen Review have highlighted. But it is equally important to understand that they will never be enough by themselves. The evidence is clear that early investments are most productive if they are followed up with later investments. Important findings in this area are that:
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Death to the death tax?
Last week the Prime Minister, David Cameron, stated that he would like to increase the inheritance tax threshold, reviving memories of the 2010 Conservative Party manifesto pledge to increase the threshold to £1 million. This observation sets out how much this would cost, who would benefit and sets out arguments for alternative reforms to inheritance tax.
No new money, yet more generous support for childcare
The Government has today announced more details on its new Tax Free Childcare scheme and the way in which childcare will be supported in Universal Credit. The announcement means that the planned system will be significantly more generous than initially envisaged, providing support to children aged up to 12 straight away, will provide a higher level of support, and will provide more generous support for childcare in Universal Credit. Yet the Treasury has not increased its estimate of the total cost, as it has revised down considerably its estimate of how many families will benefit.
Scotland's fiscal position worsened in 2012–13 as North Sea revenues fell
Today, the Scottish Government published the latest version of its annual Government Expenditure and Revenues Scotland (GERS) publication. For the first time in 5 years GERS suggests that Scotland's net fiscal balance, or budget deficit, was worse than that of the UK as a whole even when allocating North Sea revenues to Scotland on an illustrative geographic basis. Until now these revenues have been enough to more than outweigh the higher public spending per head in Scotland than in the rest of the UK. But not in 2012–13.