Budget 2019 to 2020: feasibility of distributional analysis - study

A study of the feasibility of undertaking distributional analysis for tax, benefits and public services, for different income levels and protected characteristics.


Footnotes

1. In this report this is concerned with the welfare benefits and public services provided via Scottish Government and the tax levels/rates that generates government income.

2. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/
file/871883/Budget_2020_DA_publication.pdf

3. https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/
theeffectsoftaxesandbenefitsonhouseholdincome/financialyearending2019

4. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/
458248/HM_Treasury_review_of_the_OBR_03092015.pdf

5. http://www.parliament.scot/S5_Finance/Reports/BPRG_-_Final_Report_30.06.17.pdf Recommendation 43

6. https://www.gov.scot/publications/distributional-analysis/

7. http://www.oecd.org/governance/budgeting-and-public-expenditures-in-oecd-countries-2018-9789264307957-en.htm

8. We have not included student loans. We excluded them for several reasons which are outlined in Annex D. One reason was that student loans come from the AME budget rather than resource funding – therefore we excluded these from our modelling. Also they would need to be treated as negative income and we have not included debt in gross income calculations elsewhere in the model.

9. CLG portfolio includes funding for local authorities as well as policy areas such as planning, housing, homelessness, regeneration, supporting third sector, social enterprise and social justice. The vast majority of the budget across policy areas goes to local authorities through block grant or ring fenced payments so use of POBE was thought to be the better option, acknowledging that funding going to third sector bodies will be excluded from the analysis.

10. https://www.equalityhumanrights.com/sites/default/files/cumulative-impact-assessment-report.pdf

11. https://www.sas.com/content/dam/SAS/en_gb/doc/other1/events/sasforum/slides/day1/W.Bryce%20SAS%20Forum%
20UK%20-%20HMT%20slides.pdf

12. https://www.ukdataservice.ac.uk/media/428511/chomikmcdonagh.pdf

13. The freely accessible UKMOD is now available – but was not available when the project started - see https://www.microsimulation.ac.uk/ukmod/ and EUROMOD - https://www.euromod.ac.uk/sites/default/files/country-reports/year10/Y10_CR_UK_Final.pdf

14. https://www.ifs.org.uk/uploads/Presentations/Adams_microsimulation_in_the_uk_-_taxben.pdf

15. None on model per se - see https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/
incomeandwealth/articles/theeffectsoftaxesandbenefitsonhouseholdincome/technicalreport

16. We only include taxes, we are not including charges or fees – such as care home fees, tuition fees, or charges for uses of services that may be provided by central or local government – e.g. access to sports facilities.

17. Annex B gives further details of the tax modelling. The amount of some taxes in relation to overall tax take are small – e.g. capital gains tax – as well has having limited data availability.

18. HMRC A disaggregation of HMRC tax receipts between England, Wales, Scotland & Northern Ireland. Methodology Note. October 2018

19. Non-savings, non-dividend income includes wages, pensions, taxable state benefits, profits from self-employment and rental income.

20. Verbist, G., M. Förster and M. Vaalavuo (2012), The Impact of Publicly Provided Services on the Distribution of Resources: Review of New Results and Methods, OECD Social, Employment and Migration Working Papers, No. 130, OECD Publishing, Paris. http://dx.doi.org/10.1787/5k9h363c5szq-en

21. The cumulative impact of tax and welfare reforms | Equality and Human Rights Commission (equalityhumanrights.com)

22. Verbist, G., M. Förster and M. Vaalavuo (2012), The Impact of Publicly Provided Services on the Distribution of Resources: Review of New Results and Methods, OECD Social, Employment and Migration Working Papers, No. 130, OECD Publishing, Paris. http://dx.doi.org/10.1787/5k9h363c5szq-en

23. Our data contains same-sex couples, but not enough to produce robust analysis. The EHRC, which used the same data source, found the sample of same-sex couples too small to produce results for Scotland.

24. https://www.equalityhumanrights.com/sites/default/files/cumulative-impact-on-living-standards-of-public-spending-changes.pdf

25. https://www.gov.scot/publications/scottish-social-attitudes-survey-2019-intra-household-distribution-resources/

26. https://www.resolutionfoundation.org/app/uploads/2018/07/Living-Standards-Audit-2018-3.pdf

27. https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/methodologies/
nowcastinghouseholdincomeintheukmethodology2016
(Table 1)

28. We used information from sources such as HESA to look at the socio-economic background (including deprivation levels) of students' parents.

29. These are taxes paid by businesses in the production of intermediate goods (e.g. making washers for taps) which are then passed on to the household. All indirect taxes are derived by ONS in the Effect of Tax and Benefit Dataset, derived from the Living Cost and Food Survey.

30. O'Dea C & Preston I (2014) Can We Measure Who Loses Most from Public Service Spending Cuts? Budget Perspective 2015 Paper 2 Economic and Social Research Institute, Dublin https://www.esri.ie/publications/can-we-measure-who-loses-most-from-public-service-spending-cuts

31. Redistribution from a lifetime perspective: current tax and benefit system - Institute For Fiscal Studies - IFS

32. Scotland's Census 2011 - National Records of Scotland Table DC2101SC

33. Care Home Census - Scottish Statistics on Adults Resident in Care Homes, Figures for 2007-2017 as at 31 March

34. (Note – we have merged the two older age bands to a single 75+ age band due to limited sample sizes for some groups).

35. Scotland's Census 2011 - National Records of Scotland Table DC2101SC - Ethnic group by sex by age All people

36. Two points to note here. Firstly, International students self-fund their education and do not benefit from this expenditure. Secondly, people's self-identified ethnicity does not equate to their country of birth. Many non-white British people have been born in Scotland or Britain but feel an alternative ethnic connection.

37. https://www.gov.scot/publications/fair-access-higher-education-progress-challenges/pages/5/

38. Employment rates are significantly lower for disabled people. This is the basis of a Scottish government policy to close the disability employment gap: https://www.gov.scot/publications/fairer-scotland-disabled-people-employment-action-plan/pages/2/

39. Scotland's Wellbeing: national outcomes for disabled people - gov.scot (www.gov.scot)

40. Any future development of equality data collection for key UK Government administrative tax and benefit data collections would help in conducting and interpreting distributional analysis.

41. Although this report by Scottish Social Attitudes Survey starts to build evidence on this issue: https://www.gov.scot/publications/scottish-social-attitudes-survey-2019-intra-household-distribution-resources/

Contact

Email: aileen.mcintosh@gov.scot

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