This is precisely the sort of question that tax and benefit microsimulation models are designed to answer. These models allow researchers to ask “what if” questions about the effects of tax and benefit reforms. Calculations are carried out for each household in a large dataset that is representative of the population, and this allows researchers to estimate the impact on the overall public budget, as well as how households will win or lose across the distribution of income, and by household characteristics. Such analysis is also highly relevant when designing alternative reforms.
There are several UK tax-benefit models that are regularly maintained – TAXBEN at the Institute for Fiscal Studies; IGOTM at HM Treasury; PSM at the Department for Work and Pensions; and a model initially commissioned by the ippr – but they are not widely available outside the organisation that owns them. The main exception is the UK component of the EU model, EUROMOD, the tax-benefit microsimulation model based at ISER, which has always been available, free of charge, for researchers to download, and to modify.
ISER has now been awarded funding by the Nuffield Foundation to develop a new UK model – UKMOD – using EUROMOD as a reliable, flexible, accessible and transparent tax-benefit model, and to adapt and extend it to increase its relevance for UK policy analysis. The aim is to meet the demand for tax-benefit modelling capacity among organisations and individuals outside academia, and to promote the use of microsimulation as a way to improve the evidence base to inform policy debates – to democratise, as it were, the use of tax and benefit microsimulation models.
This involves applying the highest academic standards, sharing the model with many users in different contexts, providing appropriate training, support and documentation. It builds on ISER’s experience of working closely with a range of policy-interested organisations on their specific modelling needs, and our extremely strong background in microsimulation skills. An important development of the model, given the trend towards devolving tax and benefit power, will be to produce stand-alone models for the devolved nations of the UK.
The first major release of UKMOD will be in September 2019; with this model, any organisation could potentially undertake the sort of analysis of the impact of the Autumn Budget that we are used to seeing from the IFS or the Resolution Foundation.
The project team are also providing training courses on UKMOD, free of charge: training material from the first course earlier this year can be accessed here. The course was aimed at participants from public sector and parliamentary bodies (including the House of Commons Library and their devolved equivalents, and civil servants from national and local governments). Two further courses to be held in London in October 2019 will be targeted at third sector organisations wanting to use tax and benefit microsimulation to inform their policy work – keep up to date with all project and training updates here. Later in the project, the researchers will be using UKMOD to assess different forms of Basic Income scheme for the UK, and a workshop will show how others can use UKMOD to design and test their own schemes.
To find out more, visit the UKMOD project page.
Anyone can download the EUROMOD software now here.