Taxes and benefits

Corporate tax has rarely received as much attention, either from policy makers or the public, as in recent years. The coalition government has enacted a series of policy changes including reductions in the main and small profits rates, changes to capital allowances, the introduction of a preferential rate for patent income (Patent Box), changes to rules concerning the taxation of foreign income, and a raft of anti-avoidance measures. The explicit, and fulfilled, aim was to increase the competitiveness of the UK corporate tax system.

Following David Cameron's announcement that universal pensioner benefits will again be protected, should the Conservative Party win the election, Andrew Hood examines the support given to pensioners in an article published in the Daily Telegraph. Over the past 30 years, pensioner incomes have caught up with those of non-pensioners. The data show very clearly that pensioners are now no more likely to be in poverty than the rest of the population. And after accounting for housing costs, the typical pensioner is now better off than the typical non-pensioner.

This presentation was delivered to audiences comprised of academics and policymakers at The London School of Economics and Political Science and the Centre for Regional Economic and Social Research, Sheffield, on 21 and 28 January 2015, respectively.

The IFS Green Budget 2015 shows that a future government would have to implement much deeper cuts in social security spending than have so far been suggested to find the £12 billion reduction in spending sought by the Conservatives.

This presentation was given at the launch of the IFS Green Budget 2015.

This presentation was given at the launch of the IFS Green Budget 2015.

The coalition government has implemented changes to the benefit system that mean spending in 2015–16 will be £16.7 billion (7%) lower than it would otherwise have been. Real terms benefit spending, however, is forecast to be almost exactly the same in 2015–16 as it was in 2010–11, at £220 billion. This reflects the effect of underlying economic and demographic factors which are pushing up spending – most importantly an ageing population, but also weak wage growth and rising private rents. Of course there have been some controversial benefit cuts. But, most of the major structural changes, such as universal credit, have run into problems, and are yet to be delivered. So far then, the reforms actually in place represent an evolution of the system rather than revolution promised. These are among the findings of a new Election Briefing Note on the coalition’s reforms to the benefit system, part of a programme of work at the IFS in the run up to the election, funded by the Nuffield Foundation.

This presentation was given at a workshop on 'Expenditure-based consolidation: experiences and outcomes' organised by the European Commission Directorate-General for Economic and Financial Affairs (DG ECFIN) in Brussels on 20 January 2015.