Were We Really All in it Together? The Distributional Effects of the 2010–15 UK Coalition Government's Tax‐benefit Policy Changes

Bibliographic Data

ID11196475
AuthorsPaola De Agostini (Institute for Social and Economic Research (ISER) University of Essex Colchester UK), Paola Agostini (Institute for Social and Economic Research, corresponding author), John Hills (0000-0002-6852-8261, Centre for Analysis of Social Exclusion London School of Economics and Political Science London UK, corresponding author), Holly Sutherland (0000-0003-3126-4749, Institute for Social and Economic Research (ISER) University of Essex Colchester UK, corresponding author)
Year2018
Volume52
Issue5
Pages929-949
Publication date2018-09-01
Open AccessYes
TypeARTICLE
VenueSocial Policy and Administration (JOURNAL)
Journal identifiersISSN: 0144-5596 • E-ISSN: 1467-9515
PublisherWiley (PUBLISHER • GB)
DOI10.1111/spol.12344
OpenAlexW2751364799
LanguageEN
Citations received21
References cited8

This article examines the distributional impacts of changes to benefits, tax credits, pensions and direct taxes between the UK general elections of May 2010 and May 2015. The changes did not have a common effect on all household incomes; nor did the direct tax‐benefit changes contribute to deficit reduction. Effectively, reductions in benefits and tax credits financed part of the direct taxes cuts, but the overall net fiscal cost increased pressure for cuts in other public services and increases in other (more regressive) taxes. The main gains were in the upper middle of the income distribution, and the main losers were at the bottom and those close to, but not at, the very top. Across most of the distribution the changes were regressive. By comparing with other analyses of policy changes in the same period, we illustrate the importance of analytical choices and assumptions for detailed conclusions on their distributional effects. We also show how some groups were clear losers or gained little on average – including lone parent families, large families and families with younger children. Others were gainers, including two‐earner couples, and those in their fifties and early sixties. The findings show that a dominant feature of the period was that the combination of higher tax‐free income tax allowances, financed by cuts in benefits and tax credits, was generally regressive. As this combination also lies at the heart of the proposed policies of the Conservative government since 2015, we would expect these effects to be intensified in the coming years

Conservative government · Direct tax · Distribution (mathematics · Earned income tax credit · Economics · Government (linguistics · Indirect tax · Labour economics · Political science · Public economics · Tax credit · Tax reform · Gender, Labor, and Family Dynamics · Housing, Finance, and Neoliberalism · Social Policy and Reform Studies

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