Benefits uprating 2025/26 post

src/posts/articles/Benefit-uprating-25.md

@@ -0,0 +1,47 @@
+(Image credit: gov.uk)
+
+## Key findings
+
+PolicyEngine estimates that the 1.7% benefits uprating for 2025/26:
+
+- increases government costs by [£2.5 billion](https://policyengine.org/uk/policy?focus=policyOutput.policyBreakdown&reform=1&region=uk&timePeriod=2025&baseline=69807&mode=lite)
+- lowers poverty by 1.8%
+- raises net income for 45.9% of people
+
+## Introduction
+
+Labour's announcement follows the established pattern of annual benefits uprating in the Social Security Administration Act 1992\. Benefits and tax credits rose by [6.7%](https://commonslibrary.parliament.uk/research-briefings/cbp-9872/#:~:text=DWP%20benefits%20that%20are%20linked,by%208.5%25%20from%20April%202024.) in April 2024 (matching September-to-September CPI changes). Labour have confirmed they will implement a [1.7%](https://www.theguardian.com/society/2024/oct/16/surprise-fall-inflation-badly-timed-uk-benefit-recipients) increase in April 2025, matching CPI growth from September 2023 to September 2024\. This uprating will apply to various benefits, including Universal Credit, Attendance Allowance, Carer's Allowance, Income Support and Tax Credits. The increase fulfils the statutory requirement established by Section 150 of the [Social Security Administration Act 1992](https://www.legislation.gov.uk/ukpga/1992/5/section/150/enacted), which mandates that certain benefits must rise at least in line with inflation.
+
+In this report, we analyse Labour's key proposals by modelling their impact on households. We present our estimated impacts of the 1.7% benefits uprating plan for 2025/26, providing a comprehensive view of its effects on households across the UK.
+
+## Economic impact
+
+### Budgetary impact
+
+PolicyEngine compares the actual uprating plan (increasing by 1.7%), which is the responsibility of the UK government, with a scenario where benefits are frozen at their current level for the next year. The 1.7% uprating increases government costs by £2.5 billion.
+
+### Distributional impact
+
+Our analysis shows that the uprating provides larger relative benefits for low-income households: it raises the lowest income decile's net income by 0.8%, and the top decile's by less than 0.1%.
+
+![](/images/posts/benefit_uprating/dist-income-effect.png)
+
+Uprating would benefit around 45% of the population, disproportionately those in the bottom half of the income distribution. 0.5% of the population – entirely in the lowest income decile – would gain at least 5% of their net income.
+
+![](/images/posts/benefit_uprating/win-losser.png)
+
+### Poverty impact
+
+The 1.7% benefits uprating reduces the total poverty rate (absolute, before housing costs) by 1.8% and the child poverty rate by 4.0%.
+
+![](/images/posts/benefit_uprating/poverty-effect.png)
+
+### Inequality impact
+
+Our analysis measures the impact of the 1.7% benefits uprating on inequality through multiple metrics. The reduction in inequality is shown by a 0.27% decrease in the Gini index, with smaller income shares for the highest earners – the top 10% share falls by 0.14% and the top 1% share by 0.17%.
+
+![](/images/posts/benefit_uprating/inequality-effect.png)
+
+## Conclusion
+
+Compared to leaving them fixed, uprating benefit levels by 1.7% for the 2025/26 fiscal year would cost £2.5 billion. It would benefit 45.9% of the population, disproportionately those in lower-income households, while lowering poverty by 1.8% and the Gini index of income inequality by 0.27%.

src/posts/articles/school-vat.md

@@ -1,9 +1,9 @@
 ## Key findings
 
-- We estimate a [£1.3 billion](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2025&baseline=1) revenue increase from Labour's proposal to raise the VAT rate on private schools to 20%.
-- Our analysis projects that Labour's proposal to remove tax exemptions from private schools would raise a total of £6.1 billion in tax revenue over the five-year period from FY2025 to FY2029.
-- We estimate that the Gini index of income inequality would decrease slightly by 0.04% in FY2025.
-- We also estimate that Labour's plan would lower net income for 2.8% of people.
+- We estimate a [£1.5 billion](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2025&baseline=1) revenue increase from Labour's proposal to raise the VAT rate on private schools to 20%.
+- Our analysis projects that Labour's proposal to remove tax exemptions from private schools would raise a total of £7.7 billion in tax revenue over the five-year period from FY2025 to FY2029.
+- We estimate that the Gini index of income inequality would decrease slightly by 0.01% in FY2025.
+- We also estimate that Labour's plan would lower net income for 3.3% of people.
 
 ## Introduction
 
@@ -13,17 +13,17 @@ Labour has proposed a policy change aimed at reducing educational inequality and
 
 ### Budgetary impact
 
-PolicyEngine's static analysis[^1] of Labour's plan to remove tax exemptions from private schools estimates a budgetary impact of £1.3 billion. This aligns with the Institute for Fiscal Studies [(IFS)](https://ifs.org.uk/news/removing-tax-exemptions-private-schools-likely-have-little-effect-numbers-private-sector), which projects a £1.3-1.5 billion net gain to public finances per year.
+PolicyEngine's static analysis[^1] of Labour's plan to remove tax exemptions from private schools estimates a budgetary impact of £1.5 billion. This aligns with the Institute for Fiscal Studies [(IFS)](https://ifs.org.uk/news/removing-tax-exemptions-private-schools-likely-have-little-effect-numbers-private-sector), which projects a £1.3-1.5 billion net gain to public finances per year.
 
 The chart presents PolicyEngine's estimates of the effects of Labour's proposed VAT policy on private schools over the next five years. It shows projections for both the raised tax revenue and the percentage of people experiencing lower net income from FY2025 to FY2029.
 
 | Year | Budgetary impact (£ billion)                                                                                                    | People affected (%) |
 | :--- | :------------------------------------------------------------------------------------------------------------------------------ | :------------------ |
-| 2025 | [1.3](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2025&baseline=1) | 2.8                 |
-| 2026 | [1.0](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2026&baseline=1) | 2.7                 |
-| 2027 | [1.2](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2027&baseline=1) | 3.1                 |
-| 2028 | [1.3](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2028&baseline=1) | 2.5                 |
-| 2029 | [1.3](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2029&baseline=1) | 2.5                 |
+| 2025 | [1.5](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2025&baseline=1) | 3.3                 |
+| 2026 | [1.5](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2026&baseline=1) | 3.3                 |
+| 2027 | [1.5](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2027&baseline=1) | 3.3                 |
+| 2028 | [1.6](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2028&baseline=1) | 3.4                 |
+| 2029 | [1.6](https://policyengine.org/uk/policy?focus=policyOutput.inequalityImpact&reform=60649&region=uk&timePeriod=2029&baseline=1) | 3.4                 |
 
 ### Distributional impact
 
@@ -34,7 +34,7 @@ Our analysis of Labour's proposal to remove tax exemptions from private schools
 - Deciles 7-8: Upper-middle income groups are slightly affected, experiencing small but noticeable reductions in their net income.
 - Deciles 9-10: The highest income households bear the brunt of the policy's impact, with the most significant reductions in net income, as they are the primary users of private schools.
 
-![](/images/posts/school_vat/gini-plot.png)
+![](/images/posts/school_vat/income.png)
 
 ### Winners and losers
 
@@ -44,12 +44,12 @@ Our analysis of Labour's plan reveals a targeted impact on household incomes acr
 
 ### Inequality impact
 
-Labour's proposal to remove tax exemptions from private schools is projected to have a modest impact on income inequality from FY2025. The Gini index, a common measure of income inequality, is projected to decrease by 0.04%. This suggests a slight overall reduction in income disparity across the population. The policy also appears to have a targeted impact on high-income groups, with the income share of the top 10% decreasing by 0.01%. The income share of the top 1% is also expected to decrease slightly by the same amount.
+Labour's proposal to remove tax exemptions from private schools is projected to have a modest impact on income inequality from FY2025. The Gini index, a common measure of income inequality, is projected to decrease by 0.01%. This suggests a slight overall reduction in income disparity across the population. The policy also appears to have a targeted impact on high-income groups, with the income share of the top 10% decreasing by 0.01%. The income share of the top 1% is also expected to decrease slightly by the same amount.
 
-![](/images/posts/school_vat/income.png)
+![](/images/posts/school_vat/gini-plot.png)
 
 ## Conclusion
 
-We estimate that Labour’s plan would raise £1.3 billion in revenue in FY2025, primarily affecting higher-income households, with 2.8% of the population experiencing a decrease in net income. It also would cause a modest reduction in income inequality, decreasing the Gini index by 0.04%.
+We estimate that Labour's plan would raise £1.5 billion in revenue in FY2025, primarily affecting higher-income households, with 3.3% of the population experiencing a decrease in net income. It also would cause a modest reduction in income inequality, decreasing the Gini index by 0.01%.
 
 [^1]: Our analysis does not account for potential long-term changes in consumer preferences that may result from applying different VAT rates. The analysis assumes static behavioural responses and does not model potential shifts in educational choices or school operations that might occur over time.

src/posts/posts.json

@@ -829,13 +829,22 @@
   },
   {
     "title": "Labour's reforms to VAT tax on private schools",
-    "description": "PolicyEngine projects Labour's private school tax plan would raise £6.1 billion over five years, mainly affecting wealthier households.",
+    "description": "PolicyEngine projects Labour's private school tax plan would raise £7.7 billion over five years, mainly affecting wealthier households.",
     "date": "2024-10-17 01:00:00",
     "tags": ["uk", "tax", "policy", "vat"],
     "authors": ["vahid-ahmadi"],
     "filename": "school-vat.md",
     "image": "classroom-2093744.jpg"
   },
+  {
+    "title": "Benefits uprating 2025/26",
+    "description": "PolicyEngine projects Labour's 1.7% benefits uprating would cost £2.5 billion, mainly benefiting lower-income households.",
+    "date": "2024-10-31 01:00:00",
+    "tags": ["uk", "benefit", "inflation"],
+    "authors": ["vahid-ahmadi"],
+    "filename": "Benefit-uprating-25.md",
+    "image": "benefit-uprating-post-pic.jpg"
+  },
   {
     "title": "Kamala Harris’s Earned Income Tax Credit Expansion Proposal",
     "description": "PolicyEngine projects that restoring the American Rescue Plan policy would cost $144 billion (static) or $201 billion (dynamic) over a decade, while lowering poverty by 1.6% in 2025.",