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Welfare reform in the UK: 1997 - 2007

Author

Listed:
  • Mike Brewer

    (Institute for Fiscal Studies and Resolution Foundation)

Abstract
This paper, written at the request of the Economic Council of Sweden, presents a tour of welfare reform in the UK since the last change of government, summarising the most important changes in active labour market policies, and in measures intended to strengthen financial incentives to work. It argues that developments in the UK's active labour market policies occurred in two broad phases: first, the Government sought to strengthen ALMPs for those individuals deemed to be unemployed, through the New Deal programme. Second, the Government has reformed benefits for individuals traditionally viewed as inactive and thus excused job search activity, such as lone parents, and the sick and disabled. Accompanying these have been changes to direct taxes, tax credits and welfare benefits aiming to strengthen financial work incentives. However, financial work incentives have been strengthened by less than might be expected given the early rhetoric: the expansion in family-based tax credits have weakened the financial work incentives of (potential) second earners in families with children, many more workers now face combined marginal tax and tax credit withdrawal rates in excess of 60% than a decade ago, and a desire to achieve broad reductions in relative child poverty has led the Government to increase substantially income available to non-working families with children. We also summarise evaluations of three important UK welfare-to-work reforms (WFTC, NDYP and Pathways to Work), but without comparing their efficacy.

Suggested Citation

  • Mike Brewer, 2007. "Welfare reform in the UK: 1997 - 2007," IFS Working Papers W07/20, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:07/20
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    File URL: http://www.ifs.org.uk/wps/wp2007.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mike Brewer, 2007. "Welfare reform in the UK: 1997 - 2007," IFS Working Papers W07/20, Institute for Fiscal Studies.
    2. Francesconi, Marco & Rainer, Helmut & van der Klaauw, Wilbert, 2008. "Unintended Consequences of Welfare Reform: The Case of Divorced Parents," IZA Discussion Papers 3891, Institute of Labor Economics (IZA).
    3. Kenneth Couch & Timothy M. Smeeding & Jane Waldfogel, 2010. "Fighting poverty: Attentive policy can make a huge difference," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(2), pages 401-407.
    4. Andersen, Torben M. & Haagen Pedersen, Lars, 2008. "Distribution and labour market incentives in the welfare state – Danish experiences," Working Paper Series 2008:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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    More about this item

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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