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Labour's record on cash transfers, poverty, inequality and the lifecycle 1997 - 2010

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  • Hills, John

Abstract

Cash transfers (benefits and tax credits) are crucial to the way that inequalities develop over time. This paper looks at how Labour’s aims, policies and achievements on poverty and inequality related to its reforms of and spending on cash transfers. - Labour’s aims for poverty and inequality were selective. ‘Equality of opportunity’ was the stated aim, rather than equality of outcome – with a focus on lifting the lowest incomes, not reducing the highest ones. - Labour gave priority to reducing child and pensioner poverty, addressing them through a series of reforms. It increased the share of national income provided through cash transfers to children and pensioners, and increased the value of their cash transfers relative to the poverty line. - By contrast, spending on other transfers to working-age adults fell as a share of national income from the level Labour inherited, while benefits for those without children fell further below the poverty line. - By the end of the period both child poverty and pensioner poverty had fallen considerably, in circumstances where child poverty would have risen without the reforms (and pensioner poverty would have fallen less far). However, poverty for working-age adults without children increased. - The risks of poverty converged between children, their parents, pensioners, and other working age adults. Being a child or a pensioner no longer carried a much greater risk of living in poverty than for other age groups. - Overall income inequality was broadly flat, comparing the start and end of Labour’s term in office. But differences in net incomes between age groups were much lower. The smoothing of incomes that occurred across the life cycle could be seen as a striking, if unremarked, achievement.

Suggested Citation

  • Hills, John, 2013. "Labour's record on cash transfers, poverty, inequality and the lifecycle 1997 - 2010," LSE Research Online Documents on Economics 58082, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:58082
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    File URL: http://eprints.lse.ac.uk/58082/
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    References listed on IDEAS

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    1. Holly Sutherland & Ruth Hancock & John Hills & Francesca Zantomio, 2008. "Keeping up or Falling behind? The Impact of Benefit and Tax Uprating on Incomes and Poverty," Fiscal Studies, Institute for Fiscal Studies, vol. 29(4), pages 467-498, December.
    2. Machin, Stephen & Van Reenen, John, 2007. "Changes in wage inequality," LSE Research Online Documents on Economics 4667, London School of Economics and Political Science, LSE Library.
    3. Stuart Adam & James Browne, 2010. "Redistribution, work incentives and thirty years of UK tax and benefit reform," IFS Working Papers W10/24, Institute for Fiscal Studies.
    4. Gregg, Paul & Wadsworth, Jonathan (ed.), 2011. "The Labour Market in Winter: The State of Working Britain," OUP Catalogue, Oxford University Press, number 9780199587377.
    5. Robert Joyce & Luke Sibieta, 2013. "An assessment of Labour’s record on income inequality and poverty," Oxford Review of Economic Policy, Oxford University Press, vol. 29(1), pages 178-202, SPRING.
    6. Hills, John & Brewer, Mike & Jenkins, Stephen P & Lister, Ruth & Lupton, Ruth & Machin, Stephen & Mills, Colin & Modood, Tariq & Rees, Teresa & Riddell, Sheila, 2010. "An anatomy of economic inequality in the UK: report of the National Equality Panel," LSE Research Online Documents on Economics 28344, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. John Hills, 2015. "The Coalition's Record on Cash Transfers, Poverty and Inequality 2010-2015," CASE - Social Policy in a Cold Climate Working Paper 11, Centre for Analysis of Social Exclusion, LSE.
    2. repec:bla:econom:v:84:y:2017:i:334:p:157-179 is not listed on IDEAS
    3. Chris Belfield & Richard Blundell & Jonathan Cribb & Andrew Hood & Robert Joyce, 2017. "Two Decades of Income Inequality in Britain: The Role of Wages, Household Earnings and Redistribution," Economica, London School of Economics and Political Science, vol. 84(334), pages 157-179, April.

    More about this item

    Keywords

    social security; cash transfers; child poverty; pensioner poverty; New Labour; public spending; life cycle;

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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