Incomes· Growth Who will reap the gains of the recovery? 14 September 2015 by Gavin Kelly Poor productivity is only one part of the post-millennial wage disappointment story The productivity crisis of the last few years is far from over but economic recovery is now well-established and there are at least a few flickers of life in the official data on output per hour. The widely shared assumption, often unspoken, is … Continued READ MORE
Work Who gains from the new National Living Wage? 3 September 2015 by Conor D’Arcy The ‘National Living Wage’ – a top-up to the minimum wage for workers aged 25 and over – was the rabbit pulled from the Chancellor’s Red Box at the Summer Budget back in July. But beyond the healine figures published alongside it, it was hard to be sure who the main beneficiaries would be. A … Continued READ MORE
Work The rise and rise (?) of zero hours contracts 2 September 2015 by Laura Gardiner For many, zero hours contracts (ZHCs) are emblematic of the UK’s labour market experience during the financial crash, contributing to stronger-than-expected employment figures but also symbolising rising job insecurity. But with the economic recovery now gaining ground, the key question has been whether they’d fade away or remain as a permanent feature of the labour … Continued READ MORE
Work The importance of digging beneath the headline measure on employment 11 August 2015 by Adam Corlett It may have reversed very slightly in recent months, but the strong employment growth recorded over the last year or two in the UK remains little short of remarkable. The number of people in work topped 31 million in March, establishing a headline employment rate of 73.5 per cent – both historic highs. If not … Continued READ MORE
On borrowed time? The need to make the most of the ‘window of opportunity’ provided by low interest rates 4 August 2015 by Matthew Whittaker More than six years after the Bank of England’s base rate was cut to 0.5 per cent, interest rate rises finally appear to be back on the agenda. There may be good reasons for thinking that modest and gradual action will soon become appropriate, but the debt overhang associated with the pre-crisis credit boom continues … Continued READ MORE
Public finances· Macroeconomic policy What impact will prolonged austerity have on interest rates? 3 August 2015 by Gavin Kelly Time to shine a light on how fiscal and monetary policy interact With prominent members of the Bank of England’s Monetary Policy Committee (MPC) – not least the Governor – lining up in recent weeks to talk up the prospect of rate rises at some point in the coming months, we can expect next week’s … Continued READ MORE
Work Budgeting for the National Living Wage in the social care sector 13 July 2015 by Laura Gardiner The centrepiece of the 2015 Summer Budget – the National Living Wage (NLW) ‘premium’ on the minimum wage for those aged 25 and over – has been rightly welcomed by many as delivering a pay rise to millions of Britain’s low paid workers. However, as with the debate around each annual increase in the National … Continued READ MORE
Incomes· Work· Social security Raising low pay is welcome. But we should still fear the forces hurting family incomes 12 July 2015 by Gavin Kelly George Osborne’s audacious unveiling of what he termed the “national living wage” dominated the budget coverage and succeeded in delighting, outraging and confusing in almost equal measure. Low-pay campaigners were certainly buoyed, just as some business leaders were appalled at what they viewed as a Milibandesque intrusion into pay-setting. Many others were left puzzling over … Continued READ MORE
Tax It’s time to talk about tax relief – how more accountability on tax expenditure could help ease the welfare squeeze 7 July 2015 by Gavin Kelly As the Budget approaches we await the details of deep cuts in welfare spending, but the fact that they are coming is beyond doubt. With the main tax rises having been blocked off, and public services already facing a faster pace of cuts than in the last parliament, every sinew is being strained in the … Continued READ MORE
Budgets & fiscal events· Social security Will wages fill the tax credit gap? Don’t Budget for it 6 July 2015 by Gavin Kelly Recent high-profile converts are bringing headlines and new vim to the debate on working poverty. Good. But with this comes a cacophony of confusion about the National Minimum Wage (NMW), Living Wage, the role of tax credits and the likelihood that a recovery in earnings will compensate for cuts to in-work support. And this risks … Continued READ MORE
Budgets & fiscal events· Tax The Tax-Free Minimum Wage – a gimmick or a real giveaway? 3 July 2015 by Conor D’Arcy and Adam Corlett Amid the flurry of pre-election pledges made by each party, the Conservatives’ ‘Tax-Free Minimum Wage’ attracted a curious mix of attention. The policy – which will ensure that those working 30 hours a week or fewer on the minimum wage do not pay income tax – received widespread media coverage, but much of it described … Continued READ MORE
Incomes· Inequality & poverty· Social security Could Universal Credit hold the key to reducing child poverty? 25 June 2015 by David Finch We discovered this morning that the proportion of children living in relative poverty is at its lowest level since the 1980s. Great news of course, but this headline masks a much more complicated – and worrying – picture. Falls in this headline poverty measure – which captures those children living in households with incomes less … Continued READ MORE
Work Much like the British summer, make the most of the earnings boom while it lasts 15 June 2015 by Laura Gardiner and Adam Corlett Ahead of the summer budget early next month, the Chancellor may be hoping for some positive headlines in the employment statistics due on Wednesday. When it comes to earnings, he’s sure to be rewarded. Our analysis suggests that real regular pay will top 2.5 per cent year-on-year growth in this week’s numbers (covering the three … Continued READ MORE
Budgets & fiscal events· Social security Assessing the proposal to cut £5 billion from Child Tax Credit 14 June 2015 by David Finch Last week, the BBC reported that the government was contemplating a major reduction in Child Tax Credit, in order to go part way towards meeting the £12 billion in working age welfare benefit cuts that it has committed to finding by 2017/18. The report suggested that the government was considering reducing the value of the … Continued READ MORE
Social security Credit where it’s due? How to reform and make the most out of Universal Credit 8 June 2015 by Gavin Kelly There are some issues where a little bit of knowledge, and a lot of bluster, are all that’s needed for a politician – whether government or opposition – to get through a standard media grilling. Universal Credit (UC), the government’s flagship and troubled welfare reform that integrates six separate welfare benefits, is a case in … Continued READ MORE
Work Why Britain is no longer in America’s shadow on employment 5 June 2015 by Adam Corlett The US approach to working-age welfare may come in for criticism in some quarters for failing to offer much support to those who fall out of work, but at least it delivers strong employment outcomes. Not like in the UK of course. While not quite as generous as some of our European neighbours, out-of-work welfare … Continued READ MORE
Incomes· Work The View That Britain Should Be Learning Lessons From the US Labour Market Is Long Past Its Sell-By Date 5 June 2015 by Gavin Kelly Political debates about key policy challenges often tend to idealise – and bastardise – the experience of other countries. Whether it is Finnish schools, Swedish childcare, German vocational training, Danish ‘flexicurity’, Israeli entrepreneurship or Dutch pensions, there are places that we are supposed to look to for inspiration. Usually these views are rooted in some … Continued READ MORE
Budgets & fiscal events· Public finances How much wriggle room will the Chancellor have in the July Budget? 22 May 2015 by Gavin Kelly After the flow of easy pre-election promises, here come the hard choices of government. As George Osborne approaches his ‘emergency Budget’ attention will turn to what room for manoeuvre he really has given all the commitments that have been made. How will it all add up and is there a version of austerity that might … Continued READ MORE
Budgets & fiscal events· Public finances How tightly has the Chancellor tied his own hands on fiscal policy? 22 May 2015 by Adam Corlett Having secured a majority on 7 May, the Conservatives must now set about the difficult job of delivering on their various pre-election pledges. In relation to fiscal consolidation in particular, they can no longer point to the demands of a junior coalition partner as cause for rowing back on any of the harder to execute … Continued READ MORE
Incomes· Inequality & poverty How do we tackle Britain’s huge, shifting poverty challenge? 20 May 2015 by Conor D’Arcy UK poverty rates have been falling relatively steadily since the start of the 1990s. Policy changes have led to particularly significant reductions among pensioners and children. But much less progress has been made among adults without children; and current projections suggest that many of the improvements of recent decades will go into reverse over the … Continued READ MORE
Work Is a pay boom coming and if not, why not? 14 May 2015 by Laura Gardiner Rarely has the trope that a week is a long time in politics rung truer. But yesterday we learned that an hour is a long time in economics. The latest employment statistics are unambiguously encouraging. Employment rose and unemployment fell, strengthening trends in place over the past couple of years. Perhaps more significantly, rising nominal … Continued READ MORE
Budgets & fiscal events· Public finances· Political parties and elections How far apart are the Conservatives and the Lib Dems on fiscal policy? 28 April 2015 by Matthew Whittaker Amid recent discussion of the key role that parties such as UKIP and the SNP might play in ‘propping up’ a minority government after 7 May, less attention appears to have been given to the continued potential leverage of the Liberal Democrats. Of course, any future negotiations will revolve around a multitude of issues and … Continued READ MORE
Public finances· Political parties and elections How far apart are the Conservatives and Liberal Democrats on fiscal policy: could the coalition renew its vows? 28 April 2015 by Adam Corlett Recently we looked at the degree of potential overlap between Labour and Liberal Democrat fiscal plans, and found that the parties are not as far apart as might first be assumed. In this second note, we consider the relative positions of the Conservatives and Liberal Democrats. The Conservative goal appears relatively straightforward: they want to … Continued READ MORE
Work What’s holding back nominal wage growth? 17 April 2015 by Laura Gardiner Today’s statistics mark another welcome step along the road in our long-overdue earnings recovery. A gentle improvement in regular pay in the three months to February 2015 (now 1.8 per cent, with the total pay measure that includes bonuses close by at 1.7 per cent), against a backdrop of inflation having fallen to 0 per … Continued READ MORE
Public finances· Political parties and elections How far apart are Labour and the Lib Dems on fiscal policy? 2 April 2015 by Gavin Kelly If they did a deal what might it look like: an end to austerity? Five weeks to go to polling day and it’s clear that the media, and perhaps the public, aren’t getting the answers they’d like to some of the fiscal questions the next government will have to address. What we’ve termed the candour … Continued READ MORE
