Income and Poverty

Government can ensure that the election debate on welfare and tax reform is informed as well as impassioned

  • Published: Sep 10, 2014
  • Author: Peter Kenway
  • Category: Income and Poverty

The changes to taxes and benefits that came into effect in April 2013 are the Coalition’s most important single package of work and welfare reforms. Some, above all the bedroom tax, have provoked fierce opposition. Others, like the replacement of council tax benefit by council tax support, have impacted millions.

But April 13 was also the moment when the income tax personal allowance went up by the largest amount ever, returning £5 a week to the pocket of anyone earning between about £9,500 and £41,000 a year.

Add in the fact that the knock-on effects of reforms as time passes are not always the same as the immediate ones and it is clear that this package of changes will have had complex and often contradictory effects, especially at a time when the economy itself had once more started to grow again steadily.

By the general election, these changes will be two years old. Their impact – and the direction of reform that they signify – should be debated in the run up to it. Such a debate is bound to be impassioned. That is no reason, though, why it should not be informed. Since the mid-1990s, policy in this area has had an anchor in reality through the effects on household incomes revealed in the official, annual Family Resources Survey and its offshoot Households Below Average Income (HBAI).

Yet on present plans, the HBAI data for the financial year beginning in April 13 will not be published until May or June of next year, that is, after the election.

The delay in the publication of these statistics has long been a source of frustration. Statistics on the economy start to appear within just a few weeks of the end of the quarter to which they refer. While the household surveys could never be that up to date, the contrast between weeks in one case and years in the other reflects out-of-date valuations about what’s important and what’s not.

For the Coalition’s signature package of tax and benefit reforms, this won’t do. It is sure to be the subject of dispute, but without HBAI the debate will be neither properly informed nor grounded. It is for that reason that we, along with a small number of other organisations working on matters to do with poverty in different ways, have written to the Secretary of State, Iain Duncan Smith, to ask him to bring forward the publication of the 2013/14 HBAI to before the general election.

How realistic is this? When progress in reducing child poverty under the Labour government was at its quickest, these statistics were indeed routinely published in March. As progress stalled, so publication (from 2008) starting slipping back too. The Coalition is only following its predecessor’s timetable. What we are asking Duncan Smith is to put in the resources so as to revert to the practice when things were going well.

Some say that the government would never agree to this request because it is bound to provide ammunition for its critics. That it will is, I think, indisputable – but the overall balance of effects is impossible to judge. For example, the welfare reforms tend to incentivise entering paid work while the increase in the personal allowance rewards those who earn enough. How these two effects work out in combination is uncertain.

One other reason for wanting to see these statistics published before the election is that doing so will elevate and confirm the political status of poverty and disadvantage. The importance of poverty has ceased to be an argument between the main political parties but it remains one within each. The debate provoked by the publication of these statistics in the weeks leading up to the election will condition the stringent choices that the government after May has to make, whoever that government may be.

This piece first appeared on Liberal Democrat Voice on 9th September 2014.

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