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In 2010, the new Conservative government established the Office for Budgetary Responsibility (OBR) to provide independent and authoritative analysis of the UK's public finances. The economic case for an independent body to monitor fiscal policy was based on research by Professor Simon Wren-Lewis and his co-authors into fiscal policy rules and optimal debt policy. This research has provided important inputs to policymakers' thinking about fiscal councils, both in the UK and overseas. Work by Professor Wren-Lewis has strongly influenced and shaped the design and subsequent development of the UK's Office for Budgetary Responsibility.
Professor Paul Grout has had a significant impact on national policy on the delivery of public services by the private sector in the last five years. His research undertaken at the University of Bristol on private provision by regulated utility companies and public private partnerships, using both economic theory and empirical studies, paved the way for his central involvement in, and directly informed, key regulatory decisions. These decisions impact materially on almost every individual and organisation in the UK. His research also directly led to his appointment in 2012 to the Board of Ofgem (the Gas and Electricity Markets Authority), the UK energy regulator.
In 2007, as part of a major update of the national alcohol strategy, the UK Government announced that it would commission an independent national review of the evidence on the relationship between alcohol price, promotion and harm. Subsequently, in 2008, researchers from the University of Sheffield (UoS) were commissioned by the UK Department of Health (DoH) for an `Independent Review of the Effects of Alcohol Pricing and Promotion'.
The UoS research has played a crucial role in informing the debate and deliberations on the available Government options for interventions on alcohol consumption in England and Wales, by providing a robust evidence base to underpin the debate. The UoS research findings have been used to inform policy by senior decision-making bodies e.g. the House of Commons Health Select Committee and the UK Chief Medical Officer to inform policy. The findings have also stimulated the potential for policy intervention beyond England and Wales, e.g. in Scotland and Australia.
Southampton based research has demonstrated to policymakers the benefits of temporary migration through overseas savings and skill acquisition which contribute to the economic development of the home country. The research has challenged traditional notions about the adverse effects of the 'brain drain' and directly contributed to the design of international migration policy in labour sending countries. It has also proactively influenced the policy recommendations of international organisations (e.g. ILO, Worl Bank) regarding return migrants and their enterprise creation. The World Bank used Southampton researcher, Wahba's research and expertise when assisting the Egyptian Government in the preparation for "Mode 4" in the General Agreement on Trade in Services (GATS) in 2010.
Thousands of poor rural workers from 11 island states in the Pacific have benefited from the findings of twin research programmes led by Alan Winters of the University of Sussex — one on small island economies and one on the temporary mobility of labour. New Zealand's Recognised Seasonal Employers Scheme (RSE), which welcomes workers from poor Pacific Islands for the agricultural season, is a direct outcome of his research. Winters was also instrumental in designing and implementing the RSE in a way that permitted formal evaluation and which has become an exemplar of good practice. The evaluation shows that households in Vanuatu and Tonga benefiting from the scheme have experienced average increases in income of 35-40 per cent.
The RSE has been described by World Bank staff as `among the most effective development projects ever evaluated'. Persuaded by the positive evaluation, the Australian government has overcome longstanding reservations and introduced a nearly identical scheme, which is potentially much larger. The RSE also inspired the imaginative US response to the 2010 earthquake in Haiti, providing 1,000 temporary visas for unskilled Haitian workers. And Winters' research on temporary labour mobility and the RSE underpins developing countries' efforts to start serious negotiations on the issue in the WTO's Doha Round of trade negotiations.
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.
National and international policy on the use of competition in health care since 2006 has been strongly influenced by a series of studies conducted at the University of Bristol led by Professor Carol Propper. By providing compelling evidence on how competition affects patient care, these studies have had a major impact on policy design at the highest levels. The research has underpinned a series of political decisions to use competition and choice in the NHS and informed the design of the current regulatory structures to support these policies. Specific decisions influenced by the research relate to the structure of prices, policy on mergers, and policies to promote greater use of choice and competition to benefit patients and taxpayers.
Research at York has had a direct impact on national guidance about the use of health technologies in the NHS. It provided methods that are used to assess whether a technology is expected to be a cost-effective use of NHS resources, how uncertain this assessment is likely to be and whether additional evidence is sufficiently valuable to recommend further research to support its widespread use. It has had an impact on the technologies available in the NHS and the evidence available to support their use: improving patient outcomes; saving NHS resources and strengthening the evidence base for clinical practice. It gives an explicit signal and incentive to manufacturers; informing development decisions and the type of evidence collected. It has had an international impact on how the adequacy of evidence is judged and research is prioritised; particularly in recent reforms in the United States (US) where the principles of this value of information (VOI) analysis are informing the prioritisation of $3.8bn for `comparative effectiveness research'. It has also informed the methods used in low and middle income countries, especially national agencies in health care systems in South East Asia and South America, as well as global funding bodies.
The banking crisis that followed the collapse of Northern Rock in 2007 resulted in an urgent need to inject liquidity into the financial system. In order to resolve these issues, the Bank of England asked Professor Klemperer, an expert in auction theory, to help re-dseign its long-term market operations to allow the Bank of England to auction loans backed by financial collateral of varying quality. Since 2010, this has been adopted as the Bank of England's standard mechanism for its long-term repurchase operations. The potential impact of the new auction design extends beyond the Bank of England to other central banks, private industry and to industry regulators.
Research by Oxford econometricians provided the basis for innovative new methods for predicting periods of potential financial stress and providing protection for investors against extreme events. During periods of financial stress, equity funds tend to sharply lose value while volatility tends to increase. Adding some long volatility exposure to a standard equity portfolio can significantly improve the tail behaviour of a portfolio. However, it is expensive to continually hold volatility contracts due to the volatility risk premium. Researchers at Man Group have applied the Oxford research to create new strategies to protect against tail risk and these are incorporated in their Tail Protect fund launched in October 2009.