Fiscal redistribution cycles: four decades of social assistance in the UK

Coady, David (2025) Fiscal redistribution cycles: four decades of social assistance in the UK. Oxford Review of Economic Policy, 41 (1). 120 - 139. ISSN 0266-903X

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Abstract

This paper describes the evolution of fiscal redistribution (FR) in the UK through social assistance transfers over the last four decades and the contribution of each of its determinants: budget effort (the share of national income devoted to redistributive transfers) and transfer progressivity (the extent to which these transfers are concentrated on lower-income households). Trends in FR have been driven by a combination of economic and political cycles. Over the 1980s and 1990s, the heavy reliance on means-tested transfers indexed to prices resulted in FR fluctuating over the ‘economic cycle’. Over recent decades, FR has been driven primarily by ‘political cycles’. Under a Labour government (1997–2010), a large expansion of coverage of in-work benefits resulted in an unprecedented, sustained increase in effort which, despite decreasing progressivity, was large enough to ensure a continuous rise in FR. This increase was reversed under a Conservative-led government from 2010 in the context of fiscal austerity, which decreased effort and increased progressivity as remaining transfers were concentrated more on lower-income households. A striking feature over the last four decades has been the sharp decline in FR to the poorest income decile under different political leadership as emphasis has shifted to reducing in-work rather than out-of-work poverty and ‘making work pay’.

Item Type:	Article
Additional Information:	© 2025 The Author
Divisions:	International Inequalities Institute
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences
JEL classification:	D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions D - Microeconomics > D6 - Welfare Economics > D63 - Equity, Justice, Inequality, and Other Normative Criteria and Measurement H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies I - Health, Education, and Welfare > I3 - Welfare and Poverty > I38 - Government Policy; Provision and Effects of Welfare Programs
Date Deposited:	31 Mar 2025 23:10
Last Modified:	24 Jun 2025 16:03
URI:	http://eprints.lse.ac.uk/id/eprint/127747

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