The Economic and Fiscal Impacts of Low Pay in Greater Manchester

This study looks at the economic and fiscal impacts of low pay in Greater Manchester, with a particular focus on those receiving working or child tax credits.

Methods

Research questions include:

  • What are the trends in spending on tax credits in Greater Manchester, nationally, and in other major cities?

  • What are the characteristics of the families and individuals that benefit from tax credits?

  • Which industries/sectors and types of firms rely most heavily on tax credits to support employee incomes in Greater Manchester and nationally?

  • What is the fiscal and economic impact of low pay? What is the economic case for reducing reliance on tax credits?

  • What are the flows into and out of tax credits, analysed over time?

  • What are the wages/hours thresholds that are likely to life substantial numbers of families (and ideally individuals) clear of the need to rely on tax credits?

  • What is the evidence for the contention that tax credits amount to an incentive for employers to adopt what might be called ‘low road’ business models and workforce strategies?

  • What should the city region do to address this issue most effectively and in light of potential further fiscal devolution? What ‘asks’ should Greater Manchester make to the UK Government to effect change at a national level?

We use a combination of cross-sectional and longitudinal analysis, with data from HMRC, the Labour Force Survey and the Annual Population Survey.

Timescale and funder

The study is funded by New Economy Manchester. It began in March 2015 and will finish in June 2015.

Outputs

The team will submit a report to New Economy in June 2015.