Children were hardest hit by policy changes, along with those in their 30s and early 40s

ISER’s written evidence on how policy changes have impacted on intergenerational fairness has been published by the House of Commons Work and Pensions Select Committee.

The ISER research evidence found that:

  • The overall effect of the 2010-15 Coalition Government’s tax and benefit policies was regressive.
  • Children were hardest hit by policy changes, along with those in their 30s and early 40s.
  • The greatest beneficiaries from changes to taxes were those in their early 60s, but those in their 20s also benefited.
  • The gains that the over-65s accrued from the “triple-lock” on pensions were partly offset by cuts to other benefits, which particularly affected older pensioners.
  • Looking at the picture that would emerge in 2020/21 one finds that losses suffered by children would intensify, whilst those over 65 would lose out due to loss of benefits outweighing any gains from the triple-lock.
  • Across Europe the elderly have tended to have larger gains (or smaller losses) – this is the case in the UK, although the indexation employed has a significant effect on outcomes

The inquiry aims to answer the question of whether the current generation of people in or approaching retirement will over the course of their lifetimes have enjoyed and accumulated much more housing and financial wealth, public service usage, and welfare and pension entitlements than more recent generations can hope to receive.

The Committee is looking at

  • What has been the collective impact on different generations of policies in recent years, including welfare reform and deficit reduction with areas of protected spending?
  • To what extent is intergenerational fairness a welfare issue?
  • What effects are these changes projected to have over time?
  • Are they sustainable? What have the long-term trends been?
  • How does the welfare system interact with other areas of public expenditure and income and wealth in the wider economy, including issues of health, education and housing
  • Is the triple-lock necessary to prevent future increases in pensioner poverty.

The ISER analysis was produced using the EUROMOD microsimulation model. EUROMOD is the tax-benefit microsimulation model for the EU28 member states, based on household microdata from Eurostat’s European Union Statistics on Income and Living Conditions. It provides consistent and comparable cross-country analysis of the effects of tax-benefit policies and policy reforms on national budgets, the distribution of household incomes, and work incentives. It is used to evaluate the effectiveness of current policies, to explore the implications of change to policies or economic conditions, and to design new policies with particular goals.

Read ISER’s evidence to the committee


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