Log in
Research at LSE by Henrik Kleven and colleagues has significantly improved the design of tax policy and tax enforcement in countries as different as Pakistan and Denmark. These policy impacts can be summarised as follows:
Louise Haagh has played a major role in putting alternative welfare and employment policy options on the mainstream agenda. Haagh's comparative empirical research on basic income (BI) provides support for an approach to welfare that gives citizens unconditional, universal economic entitlements and multiple opportunities, through education, work, and social care, to acquire the economic stability needed to help themselves. Haagh has promoted this approach through a portfolio of international engagement with policy makers, international organisations and NGOs: most notably, the Council of Europe's `Rights of People Experiencing Poverty' project and its major guide Living in Dignity in the 21st Century: Poverty, Human Rights and Democracy; and her work with the Government of Canada's National Council for Welfare.
Essex research, conducted between 1994 and 2010, has provided a new way for the UK Government to measure income poverty, leading to a measure of persistent poverty being included in the Child Poverty Act 2010. The research has enriched policymakers' understanding of changes in inequality and provided a framework for the analysis of poverty dynamics. It has also changed the way in which the Joseph Rowntree Foundation approaches its research and policy work on poverty. A sub-strand of work, on how incomes change after couples separate, has informed policy development work by the charity Gingerbread.
Professors Kimberley Scharf and Benjamin Lockwood have influenced public and policy debate leading to tax policy changes in the UK and EU. Scharf estimated the impact of proposed reforms to the UK Gift Aid program, research that improved public understanding, led to the creation of an open discussion forum for affected parties, and shaped NGO/charity campaigns. Lockwood estimated the tax effects of removing VAT exemption from firms offering financial services in the EU. The methods developed were adopted by EU analysts and underpinned EU estimates of the tax advantages enjoyed by the sector, leading to the 2011-12 imposition of a Financial Transactions Tax within 11 EU member states from 2014.
Professor David Leece's research on household decision making, risk and mortgage design had a significant influence on a fundamental review of the United Kingdom's mortgage market carried out in 2003-4, and consequently has had a major continuing impact on: (i) understanding the role of mortgage market economics in the financial crisis of 2007-8; and (ii) the ability of a global investment bank (and the banking sector more widely) to understand, value and hedge risk in securitised mortgage debt.
EUROMOD, a tax-benefit microsimulation model developed at Essex, has been used by the European Commission and various national administrations to improve the evidence base for policymaking. EUROMOD enables the measurement of potential effects of policy changes on government budgets, income distribution, and work incentives in the EU. It is used by the European Commission to inform policymaking and model the outcome of austerity measures. At a national level it has been used by the Greek Government to assess the potential impact of various austerity policies, and the Austrian Government to assist in monitoring the effect of policies on meeting poverty reduction targets and to allow the public to understand the impact of policy changes. EUROMOD has also been adapted for use outside the EU and spin-offs have been developed in Serbia and South Africa that are used to model the outcomes of potential policy developments.
The new research reported on in this case study on the determinants of household indebtedness and dynamics of household finances has informed government policy decisions, aided monetary policymakers and benefited the third sector. Work on measurement and analysis of over- indebtedness was used by the Department for Business, Innovation and Skills (BIS) to create new criteria for `over-indebtedness', monitor its development over time and model the Financial Services Authority (FSA) funding levy for free-to-client money advice services. Insights on how house prices affect consumption influenced the Bank of England in revising its understanding of the `collateral channel' of house price movements in its Quarterly Model. Through serving as an expert witness to a House of Commons Select Committee Inquiry into `Debt Management' the researchers challenged existing policy measures prompting policy response. The authors also disseminated research findings through a series of non-technical reports and applied projects which have been used to inform indebtedness policy by a broad constituency of free-to-client money advice providers.
This case study describes how an economic and statistical analysis of tax policy undertaken by Chris Heady has been used to inform fiscal policy decisions, both in the UK and overseas.
The research has had a direct impact on public policy, informing HM Treasury's decision in 2011 to increase the main rate of value added tax and accelerate the reduction in the rate of corporation tax. It has also had a broader impact through contributing to the government's understanding of the role of tax policy in promoting growth, and through informing public understanding of the issue.
In addition to its significance to UK public policy, the research has had international reach as it has been presented for discussion by the international tax community and international organisations.
The research carried out by Professor Richard Blundell transformed understanding of the responsiveness of labour supply to tax and welfare reform, and fundamentally changed the public debate about taxation. This was achieved most clearly through the Mirrlees Review of Tax Reform, co-authored by Professor Blundell, and through publications that provided the key scientific evidence behind the tax rate, tax credit and benefit integration proposals. These proposals had substantive impact on policy reform at home and abroad, ranging from public debate on the fundamental principles of taxation to immediate impact on tax and welfare reform legislation, such as the business case for the Universal Credit reform.
Research at Aberystwyth has enhanced the capacity of forecasters to calibrate the scale of the impact on consumer spending of movements in house prices. Specifically research has provided improvements in the methodology used for estimating the impact of housing market shocks on consumer spending .This has impacted upon policy debates, including those in Central Banks, and informed methods of forecasting the impact of house prices on household economic behaviour. Thus a clearer understanding of an important macro-economic transmission mechanism has been provided. The research has also helped implementation of policy by assisting forecasters to calibrate the scale of the impact on consumer spending growth of movements in house prices, in particular taking into account the importance of controlling for expectations, and the distinction between behaviour in response to unanticipated versus anticipated housing market fluctuations.